Avient Corporation (AVNT)

Investor Day 2021

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Dec 9, 2021

Good morning, everyone, and welcome to Avian's 2021 Investor Day. I can't tell you how excited I am to see so many of you in person here today. I think we all can agree that it's been way too long since we've been able to get together for events like this. And so really appreciate everyone making it out here today. Of course, I always also want to welcome those joining us virtually this morning. And regardless of how you elected to participate, we worked really hard to ensure that each experience is going to capture our unique story and the tremendous opportunity that we have here ahead of us. It's hard to believe it's only been 3 years since our last Investor Day when you think about how much things have changed. We completed the most significant transformational steps in the company's history, divested the PP and S business, acquired the Clearing Color business and we rebranded the company with a new name. And when you think back to that 2018 Investor Day, If you recall our strategy to invest in commercial resources to drive organic revenue growth and our M and A strategy to invest in different areas of our portfolio like our composites platform. And today you're going to hear about those investments and how they've contributed to our recent success. But today's Investor Day is not just about looking back. It's about looking forward. And you're going to gain valuable insights into the megatrends that will support our future growth. We're We're going to go deep in areas like sustainable solutions, composites and our presence in emerging regions like Asia and Latin America. You're also going to get an opportunity to hear the unique perspectives from many of our company's leaders. Following these presenter, there'll be a Q and A session. For those of you in the room, we'll have microphones so you can ask your question. And for those of you online, you can type your question into the chat box and then we'll read them aloud here in the room so everyone can hear. Of course, before we can officially kick things off, I have to remind everyone that we'll be making forward looking statements and using non GAAP measures. Please refer to the disclaimer on forward looking statements and the reconciliations of non GAAP measures, both of which are included in our presentation, which is made available on the website this morning. And with that, let's get this started. Good morning. As Joe already said, I'd like to extend a warm welcome to all of you. We do appreciate your attendance at our Investor Day. If you're here in person or if you are participating virtually via webcast, either way, It's great to be here and be able to share a story with you today. Special shout out to our front row attendee, Garo, I love you, man. Thank you. I am Bob Patterson, Chairman and CEO for Avient Corporation. And I joined the company in 2,008, What was then called PolyOne. I was Chief Financial Officer for 4 years, Chief Operating Officer for 2, And I've been CEO since 2014. And when I joined PolyOne, at the time, it was going through the very early innings Of a pretty massive cultural and portfolio transformation. And it's really hard to believe how much has changed Since I was able to buy 100,000 shares at $1.66 right? These things are pretty hard to believe. But the transformation is one that we're incredibly proud of. In the next few slides, I know to some of you are going to look like oldies, Okay. But I like to think of him as Goldie's. And I think it does help to reflect on the past just a little bit to help better appreciate where we are And how that sets the foundation for where we want to go next. So in the context of that transformation, let's first take a look at our end markets. And if you went back to 2,005, 2,006, you would see that the preponderance of our revenue was in housing, Auto, heavy industry and almost entirely in the U. S. What you can't necessarily see from this slide is Our culture, and we were way too commoditized. And candidly, we used to say, we're volume loving pound hugging pellet junkies Back then, right? And we didn't make any money doing what we were. Fast forward to 2021 and the end markets have changed Dramatically, right? It's night and day when you look at how half of our revenues now come from consumer, Packaging and Healthcare and our mix has improved far from commodity than we were in 'six and way much more towards specialty. The other aspect of our transformation is that we are now truly a global company. As we approach $5,000,000,000 in revenue, Record levels of adjusted EBITDA and EPS. We serve every major brand owner In just about every major multinational OEM and then literally thousands of other customers In just about every geography around the world. And we do so with, as I said, an improving mix of business. Now I know this is a slide you've probably seen just about every time we get up and present, but it really does help to articulate how far we've come On this volume to value journey of ours. And as our mix has improved, as our end markets have improved, so have our margins. And again, this falls into the hard to believe category, but Man Color and EM used to make 2% return on sales, right? And now we're at 17% or better. Part of what we want to share with you today are the expectations that we have for margins for each of these segments, where they can go and how we A plan to get there. But before we get to sort of the forward looking part of our presentation, let me just pause to reiterate A really important aspect, which is that we are a formulator, right? We're not a chemical company. We're not a base resin manufacturer. Many of them are suppliers to us. And we have a sweet spot, which is really putting colorants, Additives, modifiers and reinforcements together to create custom niche applications for our customers. We have 100 polymer scientists, PhDs on staff, 1,000 associates in technology roles, All dedicated and obsessed with solving our customers' toughest challenges. The questions that we get all the How do I make my product stronger? How do I make my product lighter? How about lighter and stronger? Or how do we advance shelf life with additives or improve shelf appeal with colorants? We get these questions all the time from our customers. And today, we get all those questions and one more. And that last question is always, how do I do all those things and make my product more sustainable? For us, we're so proud of the fact that we've invested heavily in a sustainable solutions portfolio. It's been the fastest growing part of the business over this time horizon, very much focused on lightweighting. And when I say lightweighting, oftentimes you think transportation and that's true, but lightweighting also has a very important role in packaging. It also includes using more eco conscious materials or helping our customers use more recycled content or simply to make Their material is more easily recyclable. This is one of the single biggest megatrends that we have to take advantage of in this Company and will be one of the 4 growth areas that Joe mentioned that we'll spend more time talking about today. So when you add the growth from sustainable solutions to what we've done in healthcare, composites, growth outside the U. S, We're having a record year. At $3 per share, we're in uncharted territory. This is a great A chart that we're very proud of when you look at our EPS trajectory over the last decade. And I think if you went back to March of 2020, I doubt that There would be a lot of people who would believe that we would be standing here today sharing these kind of numbers with you. And of course, if you think back to that time, the world was gripped by fear, fear of COVID really, right, with businesses shutting down, People were sheltering in place and maybe the highest level of fear was around our own health and safety. Investor sentiment was incredibly negative on stocks in general. But for as negative as sentiment was About the economy and business in general, it was even more negative about us. And it really was a result of The Clariant acquisition, which we had announced in December of 2019, but had not yet closed. And so I think there was a lot of investor fear that the business or perhaps that we overpaid for the business, perhaps it would be impaired As a result of the pandemic or that otherwise we wouldn't be able to complete financing and so on. I'm so glad that we had Time on our side then that we stayed calm, we moved ahead and we got the deal done on July 1 and became Avian, Which has been literally 2 of the best things that we have ever done in this company's history. Financially, the numbers for Clarion speak for themselves. And I'd ask you to just take a quick look at the chart here. We acquired just a little over $130,000,000 of EBITDA from Clarion. In 2021, which is our first full year of ownership, We're adding $205,000,000 that's a 54% increase from what we acquired. Margins have expanded over 400 basis points. And then when you look at this purchase price multiple and you compare that to what Companies are paying for deals today. I mean, it looks like we got this at a bake sale, right? I mean, it's really been an unbelievable Acquisition for us, it's been outstanding. And I look back over this last year and say, this isn't a business that Had to worry about surviving the pandemic. It's a business that thrived. And it's all about those end markets again. If you go back to my very first slide, Right, with a great presence in consumer, packaging and healthcare. But we wouldn't be able to Share this kind of success with you if it wasn't for the culture of our organization. And I firmly believe culture is everything And it is the biggest reason behind why these two companies have come together and been successful. When I took over as CEO in 2014, I said it's not enough to be a high performing company. We also have to be a great place to work. And I will admit at the time, I didn't know exactly what that meant or how we were going to get there. But we started engaging with our associates, conducting surveys and learning what it was that we needed to do to bridge that gap. And in 2018, we did get our 1st Great Place to Work certification in the U. S. So then we're standing at the end of 2020 and now we're about to conduct our first global survey inclusive of all of the Clarion associates. And the Great Place to Work Institute would tell you that when companies do major acquisitions, they almost always see their engagement Survey scores go down in the 1st year, but not ours. Ours went up. And I think that says everything about The quality of the acquisition, but how we also handled integration. Look, you don't have to take my word for it. Norbert Merklin is here today and he'll be one of the first people that you hear from, from my management team. Norbert joined us from Clarion And now runs the European Color Solid Business. And he's going to talk to you about his own perspective on how well integration is going, What it means and feels like as a Clarion associate to be part of Avian. But I look back on the integration and think In some ways, we just kept things very simple. We had 3 priorities. They were safety first, take care of our employees And take care of and retain our customers. If we do those three things and we capture the value, we always knew we'd look back on our 1st year That's a wild success and it has been that and more. But lastly, I would tell you that The name change had a way bigger impact than people probably appreciate. When we first announced that we were changing the name to Avient, By the way, long A, Avient. That may have been met with a little bit of skepticism or maybe just thinking this was marketing or otherwise. But changing the name to Avient for me meant something really important to the integration because if you think about the fact that Clariant And legacy PolyOne had been competitors forever, right? We were number 1 and number 2, respectively, in this space. And what would it mean for a Clariant associate to now have to be at PolyOne? Fortunately, we were great competitors, Competed in all the right ways around technology, service and innovation, but nevertheless, right, becoming part of the Person you've been competing with forever is a big change. So changing our name to Avient It was a great way to actually galvanize the organization around this idea that bringing 2 world leaders together Or by doing that, we could create something even better. And the message that we sent to Clariant is, you are now home. You're part of this family and it's got a new name. And we move forward together with this new mission of ours. The numbers speak for themselves. We're off to a great start with the integration. And as I said, you're going to hear from Norbert in a few minutes, Which is actually one of I think the best parts about this Investor Day is that you get to hear from somebody other than me. So in addition to me, we've got a number of other folks from my team and the areas of focus are going to be those that Joe lined out earlier. So you've all seen this slide before with respect to where we believe growth is going to come from the key mega Trends that we have available to us to capitalize on and you're going to hear about each one of these in-depth with some external factors that are driving this, Our own historic growth rates and what we're doing to invest in innovation to capture this growth. You'll also hear about what we believe to be the bottom implications for growing sales at 6.5% per year and how we put that cash to work. But ultimately, if we deliver on these plans, We will be viewed as a formulator and most importantly, we'll be valued as a formulator. So thank you very much for being here today. As Joe said, as each one of our presenters comes up, you're welcome to ask some questions. But to the extent that we don't get to all of them After each one of those reviews, I'll be back up on stage at the end to hopefully answer any remaining questions that we might have. Thank you. Good morning. It's my great pleasure to continue today's program with the exciting storyline around merging the 2 leading Global Color and Additives businesses into 1 and capturing all the benefits and the synergies which arise when bringing 2 such businesses together. The PolyOne and the Clarion Color and Additives business now Avient Color and Additives Solutions. I am Norbert Meertlein, Vice President and General Manager of our business in Europe, the Middle East and Africa. I joined Avient on July 1, 2020, the 1st day of the new company, together with 3,500 colleagues around the world from Clariant. From Clariant, we have been working over 35 years in the specialty chemicals industry in various positions in different regions. Based in Europe, I'm also a member of the Avient Operations Council. And in that, being involved in the integration work from day 1, Aiming to fulfill our vision for this joint global business, Better Together. Better together, that's the theme we have chosen to describe our vision and the ambitions we have around bringing these two businesses Into one. And actually, creating a market leader who can generate value for our customers and for Avient and its investors. Now let's have a brief look back over the last 18 months since we brought these two businesses together. Why Is it such an excellent fit? Why does it generate all the synergies and the value we want to capture? Well, First of all, because we created a true global leader, a true global leader with a complementary geographical footprint, often compensating Gaps in market presence on the other side. And with that, being able to supply all our global, regional And the numerous local customers often from sales offices or decentral technical service points. We've put together the 2 leading industry technology platforms with the most focus on sustainability, on Technology and new technologies around the megatrends of today and bringing together the people from both organizations Often with decades of experience. Of course, this all sets the base and once to best set the base for our Talent, retention for the creation of a right platform in which people feel well and Are prepared and want to drive this business forward into the future. This all is creating synergies, cost synergies and cost benefits, But also synergies on the revenue side. And Bob has already alluded into that a little bit, and I will go back to that Someone later in the presentation. As I said already before, it's about a global footprint of sites, almost 50 sites around the world, Often working in a network structure in the individual regions, trying to service our customers with a high level of supply reliability And of course, the quality they expect. PoliOne on its own has been a variation much easier. Let's talk about the integration once more. And Bob already has mentioned the key focus points, which we will which we do address every day In this integration process. And I'd like to share with you the integration triangle, which we have defined being at the Top of mind for all of our people being the guiding principle in synergies. And we've calculated a number of €85,000,000 which is Lifted up from earlier statements simply because in the course of the integration process, we realized that there is so much we can do and so much able to service our customers In a very strong and fast way as they expected from a market leader. But there's 2 more points I'd like to mention. The first one is around the health care solutions. You will also hear later more about health care and the focus in health care in Avient. It's actually a tremendous opportunity When we combine the Clariant Color and Additives health care focus with the opportunities and the focus PolyOne brought along in the health care sector Around the distribution business, but also in SEM. In both businesses, speaking and working with the health care industry In an intense way and adding a lot of these clarion concepts does now actually generate new opportunities and strengthen customer relationship in an impressive way. And it's also about cross selling. It's amazing how fast we've opened some doors for some opportunities, often leading to Some hundreds of thousands of business top line opportunities by simply adding customer relationship and network Between businesses like the SEM business and the color business. So that has created a lot of nice examples Of revenue synergies, and that's just the beginning because we are only analyzing all these customer relationship and only Speak to customers now about the new company and the benefits this new company can bring to the market. Now Talking about customer experience, we would like to share with you a few more examples also how customers perceive avient and the new Color and as it is, Avient Business in the market. What is the value preposition we can bring? How do customers see us? And what do we actually feel Avient is now being able to do different than the 2 legacy companies have been doing that in the past. And to give you the first example, I'd like to introduce to you my colleague, Stephanie Deitschar. Stephanie is actually heading the ColorWorks facility here in the U. S. In West Chicago. And the ColorWorks facility is 1 of 4 regional centers we do in marketing color To the industry. But it's not just a sales approach on color or doing some formulations. It is a real concept, a concept to bring color and Textics to the market. And that's what we want to explain to you a little bit more in detail. Stephanie is doing this by taking us into her Workspace into the ColorWorks Center, into the facility in West Chicago. We'll have prepared a video for you, and I'm sure you will enjoy that. And Welcome to Colorworks. Come on in. My name is Stephanie Deitcha. I'm the Colorworks Manager here at Avient Colorworks USCanada in West Chicago, Illinois. I've been with Avient for 6 years and celebrating my 19th year in the industry where I've had a focus On branding and commercialization of circular design products. The Avian Colorworks network is the perfect marriage between design and Technology. We have 4 strategically located centers in Murata, Italy, Sao Paulo, Brazil, Singapore and West Chicago, where I am today. This facility sits on the 2nd floor of our 125,000 square foot manufacturing facility. Once you arrive at Colorworks, you are transported into the heart of creative design and innovation at its Best. Clean minds and an open environment is meant to enhance our customer experience. Here at ColorWorks, we focus on 3 main principles, Inspiration, innovation and co creation. We blend those principles with our deep, vast knowledge of sustainable design And we're able to give our customers a unique and unprecedented experience. They can arrive with a vision And leave with a viable product ready for commercialization, all in a single day. We start first with inspiration. Consumer, societal and market trending isn't something that you would normally think of when you're thinking plastic colorant and additive manufacturing. But it is the catalyst for the work that we do here at Colorworks. Our research gives us direction, Purpose and focus for our innovation. And it allows us to anticipate what customers are going to be thinking 3, 5 or even 10 years in the future. We then use that knowledge to And counsel our customers and become a valuable trusted resource, which elevates the conversation to no longer simply be About dollars and cents. Our most popular form of trending is our color forward trend presentation. This is a marketing presentation that is meant to open doors and is a macro look at the world of color, materials and finishes For the plastics industry. It isn't necessarily choose this color. It's meant to inspire and captivate the audience, open doors for our sales Team and being a dynamic and fresh take on the global world of color. We have one of these presentations In the breakout area and I would encourage you to experience the manifestation of the future trends for yourself. Like this chip called local pride from our Color Forward 2022 presentation. It is including our laser marking Additive technology and it is permanently marked with an active QR code leading you to our Colorworks Website. Moving forward, we take that market intelligence and we partner with our vendors. And building these relationships with our vendors enables us to get access to new materials first. Having this access and integrating that into our design enables us to drive trends Rather than follow them and solidifies our position as experts in the future of our field. In addition to the research and innovation work we do, we specialize in circular design by embracing and understanding End of life of our customers product and how to design sustainability into the product during the conception phase. Colorworks West Chicago completed 1396 color designs in 2020. 37% of that work was done utilizing post consumer regrowing. In our co creation process, We are able to utilize the over 20 custom molds that we have in 3 different processes In order to help the conversation from conception to commercialization happen faster and more efficiently. Improving our accuracy of the designs and helping our customers to reach the maximum level of sustainability while maintaining their brand identity. With this co creation technique, we can complete a process that usually takes from 6 weeks to 6 months in as little As 6 hours and sometimes even less. And that is because the key decision makers are able to Discuss their visions directly with specially trained lab personnel who have extensive Experience in color and additives formulation. That combined with our ability to make iterations in 30 minutes or less Is a true game changer to the color design process. Thank you, Phil. Building these close relationships with decision makers Helps us increase not only our success rate, but our margins as well. This is our light business room where designers and marketers From major key accounts make their on-site color decisions. Customized with 3 different light sources, Cool white fluorescent, incandescent and daylight, as well as shelving units to mimic store shelves And an overall space designed for the most accurate and efficient color evaluation and approval. In one of our greatest success Stories, we were able to complete 52 color designs in 2 and a half days and received 47 approvals before they lost. Prior to COVID, we hosted over 100 customer visits a year. And that's where this space is at its best. When customers are here, They take it over and make it their own. Some say just a few hours, while others need to stay days or even weeks. It's really up to them, their project, what they're looking to achieve and the timeframe they need to achieve it in. While customers are here, it's not only about the efficient work being done. We have over 60,000 different parts For customers to gain inspiration, direction and education for the work they will do in the future. Sometimes customers arrive with just one project And end up doing the design work for many projects to come in the future, leveraging our relationship to drive new business opportunities. Our color works design centers bring to life the symphony of design where pigment meets polymer. They allow for an immersive experience, Bringing opacity, effect and tactility into the conversation and the color design process. Thank you so much for joining us on this immersive experience here ColorWorks U. S. And Canada. We hope to see you at one of our global centers very soon. Thank you very much, Stephanie. She's here with us today, so please do not hesitate to get back to her in the break or at lunchtime To get some more exciting insight of how we run ColorWorks, not only here in North America, but actually around the globe. And you'll find a number of nice exhibits outside, Which are the product of this excellent cooperation work with customers. Now let's just have a quick look to 2 more Examples of how we drive customer experience and how we want to partner with the industry and our customers Much more in detail in the future. And the first one is also around color. It's about our Instacolor concept, the Instacolor customer focused color formulation. Instacolor is a digital tool providing fast, easy, simple and cost efficient processes To bring color to the market and to bring color to our customers. Actually, when you look into the legacies, PolyOne and Clarion, There are 10,000 of color formulations in our libraries, in our labs around the world. And rather than reformulating A color formulation every time again. Instacolor ties back to the libraries and the formulations we have in our systems To make it easy for any customer to get a color formulation right on the spot based on the huge experience and the libraries we have In our technical centers around the world. It actually serves 3 purposes. The first one is speed. Any color request from a customer can be formulated literally within seconds and typically provides an excellent and 100% match To what the customer really needs. Of course, second point, it also is a much cost efficient much more cost efficient way Of bringing color to the market as we don't have to go through lots of cycles of color formulation development in our labs. And the third point, it does, in selected markets, also give us the opportunity to match color on the spot In the customer premises with some portable color reading devices in which we actually, on any Color requests the customer has are able to give a color formulation, to give a commercial offer to give various options on quality levels And to basically respond to a color request the customer has immediately. Typically, on the next day, the sample and some visual chips arrive, And we can already produce production. That's fast. That's easy. That's reliable. That's digital. A great Progress in our color marketing and an excellent tool which we will use around the world in the next few years. The second Example I'd like to share is Cycleworks. Now I don't have to tell you the importance and the dynamics In the recycling and plastic waste discussion. We'll actually get to that point much more in detail later on in what avient and color and additives can do in this market. I'd just like to highlight one point in connection to our customers and the experience our customers can take when working with AB, and that is Cycleworks, which is Actually, a mini recycling plant we have built in our own premises in Italy in which we can replicate all the processes Customers have and all the technical questions around individual solutions customers have in a mini recycling plant. Means we take the recycling, well, we collect it material, we bring it through the different loops, and we actually formulate and suggest what customers Neat in order to master the challenges from the recycling processes and recycling requirements, customers have to formulate their products. It's an excellent facility, just opened half a year ago, and it does give us an insight into the recycling work, which is Tremendous. It's unmatched. And to our knowledge, no competitor actually has invested into such a facility to really give the right response short term and fast To the industry on this tremendous trend on recycled formulations. That's what I wanted to share around the customer experience. So let me just close with one more comment. The Clariant business has been a very traditional color and additives business In Clariant for decades. It's been well linked into the specialty chemicals focus Clariant has in regard to The pigment production, additive production, dyes production. But it became clear over years that there is no right strategic fit anymore for this color and additives business. And as the more it's been amazing to see how also our people feedback to us talking about how they have arrived in Avient That they now feel there is a strategic focus again on this business. This business is core again. We are growing. We want to grow. We want to invest into this business. And many people, meanwhile, clearly say this business found home again. That's one of the most refreshing statements I got from my colleagues Going through this integration process and being here with you after almost 18 months since we came together. Thanks a lot for your attention today. I'm happy to take further questions now or later in the break, and thank you for your attention. Mike Sison, Wells Fargo. I've got 40 questions. No joking. I guess two questions. When your margins were a lot lower at Clarion, what did PolyOne or Bob and his team give you guys And able to improve those margins so significantly in a short period of time. And then number 2, you talked about or Bob talked about or you talked about market Sure. What is the market share that you think combined you have? And is there a big runway to gain a lot more share down the road. Yes, yes. I'll start with the second question because that's really a fantastic question to describe once again How we do see our future in the industry. Of course, we've brought together the 2 market leaders. But we shouldn't forget, there is a Huge space out there, which neither Clarion nor Poliwon have been covered in the past. So together, we probably do not see and it depends on the industry and on the region and on this relevant But together, we would not probably see ourselves in a position with more than 20% to 25% of market share. That means we leave at least 75% Of market share out there, which offers tremendous growth. And that's why we are not worried that we actually will not be able to find Spaces for growth. Now what have we done? We've, of course, looked at the structures, and we've worked around synergies. Of course, when you bring these two businesses together, you have the chance to look into administration synergies, purchasing synergies, Things like that, which adds to our margin that has helped and worked out very well from the beginning, from day 1. I I think we've also done a lot of things right during the pandemic. I think we've been able to respond to customers even in times of supply chain turbulences In the proper service and service level. Actually, the pandemic has probably, in a way, if you want to say, helped us Because customers felt like being well treated and well looked after in difficult times with these two Companies. And I think we have demonstrated that we have not just given a focus internally on our integration work, which, of course, is important for us, but we didn't have our customers feeling That we are just occupied with ourselves. Thank you very much. The light is so strong, I can hardly I see you. Ben is rising. Yes. Hi, Frank. Mitch, Fermium Research and Mr. Sisson. Those that Topic was addressed last night at dinner, if you would have showed up, you would have learned that. But Really impressive, really, really impressive profit growth over this past year. What can investors expect in the future? Well, I tried to outline that we are only at the beginning. We put these technology platforms together, which, of course, does not result in new products within a week. Our technology teams work Hard every day, I think Bob made that comment. Getting all the solutions around certain challenges from the industries, But being able to do that much faster now with the experience from both legacies. So we actually put these pieces of puzzle together every day further and further, and I think that will Set the base for growth. And I would almost say that's only beginning right now. And the other thing is that In our regional networks of sites, I think we've now started to put things and processes much more together, Talking about raw material selection, learning from experience from the past. So there are so many topics our experts, our people Bring to the table every day and just start working on it, that we're very confident that this will open so many doors also in the future. We will have So many ideas people bring to the table, which will benefit off in the next few years. And that's where we get the confidence from that this is Not just a stable business we can drive forward, but actually will offer growth opportunities. If I could, I'll just add maybe one other item to this as part of the integration. When you put 12 together, you're always going to be sensitive about Pricing and the customer relationships. I think, Norbert made a great point about how in some ways the pandemic probably helped us. And I believe that we have gained share as a result of size, scale, as a result of being able to move things quickly from one plant to another. Historically, if you want to a customer and said, hey, I really want to start making your product out of a new plant, they'd go, oh, I don't know, we got to qualify in Kind of stuff. But in a pandemic, it was like wherever. You know what I mean? We just got to get this stuff, not a problem. Secondly, on the pricing, All that happened way faster than I would have ever expected at the very beginning of that when you put these 2 companies like that together. But inflation, supply chain challenges have just driven us to move quickly. And I think that's one of the reasons That we've been able to move forward on margins. In terms of where we get to, Frank, there is a slide later in the deck, you probably already flipped towards it. We found what our margin goals are, but we will get there and we'll give you a bridge and a walk in terms of how we think we continue to improve the businesses going forward. Thank you very much. Good morning, everyone. I'm Walter Ripple. I'm Vice President of Sustainability. I've been in my role now for about 3 years. Prior to that, I was the Vice President and General Manager of our GLS thermoplastic elastomers business within SEM. I've been with Avient for 23 years and in the Specialty Polymers business now for 29. I'm very happy to be here with you guys today to talk about sustainable solutions and how they're driving growth for our company. Now innovation and sustainable solutions, are no question the lifeblood of our company. And we've been focused on sustainability for a long time And the results have shown. In fact, we doubled our sales from 2016 to 2020 with our sustainable solutions. So Michael and I are going to talk about some of the key growth factors for that as well as some of the sustainable solutions that will continue our growth into the future. So I wanted to start with our sustainability promise, which we developed a number of years ago. I'm going to read one sentence real quick. Avian is committed to meeting the needs of the President without compromising future generations' ability to meet their needs. I can't think of a better definition for sustainability than that. And we truly have been living by that mantra for a long time. We took the additional commitment this year and signed on to the UN Global Compact and that really is an even additional commitment To driving integrity, responsibility and sustainable growth into the future. Now we launched our latest sustainability report in July of this year. And if you haven't had a chance to read it, I really encourage you to do so. We made a number of updates including updating our 2,030 sustainability targets. We further enhanced our disclosures on environmental, social And governance impacts. And we also made new commitments around climate change. We updated our sustainability targets Because we had made some significant progress in some of the areas. So I want to highlight a couple of goals. 1, we introduced a sustainable solutions Target of 8% to 12%. We also increased our goals around greenhouse gas emissions as well as renewable energy To 60% by 2,030 100% by 2,050. And ESG rankings and ratings firms Have really taken notice. In fact, with ISS, we're now ranked in the top 10% on social and in the top 20% on environmental impacts Against our peer group. Likewise, Sustainalytics now has us in the top 17%. We also were ranked as one of America's most responsible companies By Newsweek last year and just more recently, we found out that we've been ranked there again in the top 5% of this prestigious group. We are really proud of these numbers. It really means we have a clean house and we've got a really good foundation to start on. But What we're really excited about with sustainability is it drives growth for our company. Now certainly, there is no better way for us To grow our company or help our customers to grow, then through our sustainable solutions and helping them to meet their commitments through innovation. We took our sustainability portfolio and we categorize it in the 8 ways that we help them to be more sustainable. From light weighting to decreased carbon emissions to Enabling sustainable infrastructure or helping our customers to be able to have more recycled solutions. Avianca's customers really do rely on us To help them to meet their commitments. I want to share a couple of examples that talk about our categories with the highest revenue percentage. So I'm going to start with recycle solutions. There's no more prevalent trend than recyclability and enabling a circular economy. We have a broad solution base from all of our businesses in this space. In one recent example, we helped a global OEM brand owner To launch a product that was more sustainable in the sense that it had more recycled content. We did that by developing a solution That was 62% recycled content and they were able to make that launch of 1 of a kind type of application, in this case, a women's razor For the marketplace. Just imagine all the opportunities that exist with consumer product companies that have these same types of goals. Lightweighting is another very important trend in our industry. We recently helped a trucking manufacturer to make a box truck That was lighter weight. We did that by replacing wood with composite panels at a 60% weight reduction in an application where every pound matters. Not only that, but these composite panels are more durable and have it actually extend the life of the truck, another very good sustainable component. Lightweighting is continued to be a very important growth platform for us into the future. In one other example, we enabled a more eco conscious process by developing a solution that helped the customer To color a fiber during the spin dyeing process while the fiber was being made as opposed to the normal process where it's put into a garment and then dipped in big vats of hot Chemicals. They were able to eliminate that process altogether and thereby reducing the amount of water they had to use and manufacture by 75%, Energy by 30% and it will enable them to reduce their carbon footprint by 25%. Now that's eco conscious. So these are just a few examples of why we're expecting our sustainable solutions to grow by 18% In 2021 over prior year. That's $930,000,000 or roughly 20% of overall company sales. We've been working with customers for some time to help them to meet their sustainability goals and we're both growing as a result. Now there's no question that plastics, waste and climate change truly are some of the defining challenges of our time. But these challenges represent opportunities for Avient. For 1, we have solutions that can help to enable more recycled content in our customers' materials. But on top of that, plastics remain to be one of the better sustainable solutions when you take the broader perspective into account. Take this example where we look at alternative packaging like glass and aluminum versus a plastic package. It takes 6 times the amount of water to manufacture these products. They weigh 5 times more. You have to use a minimum of 2 times more energy on average and That emits 2 times the amount of greenhouse gases. Now that is a really big deal and that's why brand owners are not so focused on Plastic elimination, but instead on recycle incorporation. And they've made very aggressive commitments publicly about that. This chart represents a significant gap between the percent of recycle being used now versus the brand owners commitment by 2025. And you can see there's a tremendous opportunity for Aviat to help them to meet their commitments. Now I'm going to invite Michael up to talk about Some of the more sustainable solutions that are going to help our customers to meet these very challenging circumstances. All right. Thanks, Walter, and good morning, everybody. I'm happy to be here. I'm Michael Garrett. I'm President for the Color, Additives and Inks Business for Europe, the Middle East and Africa, and I'm currently based In Luxembourg. I've joined Avient 8 years ago as President for Performance Products and Solutions, I spent a few years as Chief Commercial Officer before finally arriving in this role 18 months ago. Prior to Avian, I grew up in Dow Plastics and Dow Automotive. I spent 10 years with the first attempt At a DuPont Dow joint venture, before moving into private equity. And I'm Thinking about the role I'm in today, I couldn't be more excited because it's probably the most fulfilling role that I've ever had. And why is that? At breakfast today, we were talking about skiing. When I'm not at work, I love to be in the outdoors, Skiing in the mountains, hiking, camping, canoeing or scuba diving in the world's oceans. So I've always had a natural affinity For nature and the environment. So how great is it that the best impact I can have on the environment as an individual It's to simply grow my business. I mean, it's a tremendous opportunity that provides a tremendous amount of excitement for me. Now the question is how does Avient enable our customers to protect the environment? And simply put, in my business, we enable the incorporation of recycled content Into the packaging stream. That's a critically important objective and we help customers to address issues with mechanical recycling. So Mechanical recycling is the major form of recycling in place today and it will be for the foreseeable future. But as you know, mechanical recycling has its share of challenges. And there are a number of challenges that I've outlined here on this slide that we help Customers to overcome. And I'll go into each one of these in more detail, outlining the challenge that it represents, But also the opportunity for Avient to deliver value to our customers in helping them to overcome it. And if you spend any time with Avian Associates or visit our sites, you know that our internal mantra is challenge accepted, Which has obviously become part of our cultural element now. And we really do accept the challenges that sustainability provides And we intend to leverage the opportunity that follows to deliver value to our customers, our shareholders and to the environment. So as I get into these five areas, I'd like to start with color. And I'll start with a question. Why do brand owners care about color in the first place? Simply put, color matters. There have been numerous studies that show that color plays a very strong role in why you as a consumer select one product Over another. In some studies, it's up to 85% of the waiting on your purchase decision. So it shouldn't be surprising that consumer product companies take color very, very seriously as do we. Now, if you think about recycling, plastics by definition are recyclable. You could convert them into wood decking. They could be used as modifiers for other materials like asphalt or Concrete, they can be converted into carpets or even the fleece jackets that all of you own. This is known as open loop recycling Where a plastic goes from one application but ends up in another. But that's not what the brands are looking for. They want closed loop recycling to drive a circular economy. That is the plastic that starts in a package, gets recycled Back into the package and that is far more challenging. But where there is challenge, There is also opportunity. And some of the solutions that we can bring to bear really target what you see on this slide. So if you look at the dark end of the spectrum, that would be recycled material that probably has dozens of colors embedded into it. So it becomes very dark. But even if you strip all the color out to create that dark colored recycled material, You would still have discoloration. So I'll insert a little polymer chemistry here. Every time you put a polymer through a heat history Where you melt it, convert it, freeze it into a part. Every time it goes through a heat history, you run the risk of breaking the polymer chain, Breaking the backbone of the polymer. This is true for all plastics, but particularly true for PET. And as you break this polymer chain, that manifests itself in a couple of different ways. 1, You create unwanted molecular species. You also reduce the mechanical properties that the polymer imparts to the final product, But you also create discoloration. So if you're a brand who cares about color, you now have a discoloration challenge To overcome. And this is where Avient can provide solutions. So we provide color every day to color plastics. But we can also provide super concentrated colors that allow the brands to help mask some of the discoloration that the recycled content creates. In PET or clear packaging, our OPTICA toners help smooth out any of the color variation in the package that the recycled material creates. Our smart heat technology is patented and it's a really interesting technology because it allows Packages, bottles to be blown at a lower temperature. That lower temperature means that the polymer sees less heat history And it's subjected to less damage as a result. And lastly, we have a color simulation tool, which is proving tremendously popular With our customers, it's really a service offering that we can bring to the table to help them navigate the variability that comes with recycled resin. So let me give you an example. You're a brand and you want to produce a product at the bright end Of the color spectrum that you see on your left. And if you're using the virgin resin that you see on the left, You can see that you have quite a number of options when it comes to creating a color. Your degrees of freedom are large And your degrees of freedom are fundamentally dictated by your starting point. And that starting point is the color of your base resin. Now let's say you start with the recycled resin that you see on your right. You can see that your degrees of freedom On what your color opportunity is are greatly diminished. And if you want to have that bright yellow color for your package, You simply cannot get there. But that leads to the next question that comes out of the brand's mouth How much of the recycled content can I put in before I negatively impact the color? And this is what our color simulation tool helps The brands to understand. And here's a case study that we did recently with a brand who had access to the recycled resin that you see on the right. They want to know what their degrees of freedom are. What can we do in terms of color with access to the resin that we have today? You can see if they were to just use 100% of this recycled resin, the colors don't match up. 1 is far less vibrant than the other. So we worked with them to understand how much of the recycled resin they could incorporate. And once it was incorporated, what the formulation needed to look like to be able to achieve the colors that they desired. And they were really, really appreciative of this effort because we took what would have been weeks of iterative color design If they had attempted to do it themselves, and we took that those weeks down to hours, we were able to achieve it in an afternoon. So the brands and the converters that we work with truly value this service that we bring to them. We help to make their life easier. And they are in a very challenging environment trying to deal with all the variability that the recycled resin imparts. And recycled resin, just for the record, recycled resin in a packaging construct It's good for us. When brands or converters need to overcome The discoloration that the recycled resin creates, they end up adding more color in. We refer to this as the plus factor. Now when we first present the plus factor, we were, of course, challenged to try to monetize what the plus factor would be, Which is a bit of a challenge because it's hard to estimate based on the fact that it's driven by what is the desired color that you're trying to achieve, What level of discoloration in the recycled resin are you trying to overcome? And frankly, can the brands get access The resin that they need in the 1st place to be able to incorporate it into the system because one of the challenges that they truly face It's based on the projections that Walter showed of where they want to end up on recycled content. There is simply not enough High quality recycled resin available in the world to satisfy the growth in demand that they've laid out. So that is also a limiting factor on How far the plus factor can go, but it's net net positive for our business. We also help Them overcome decontamination, which is a really, really big thing when you think about food and beverage packaging. And it's not just about color. So packaging can be contaminated by inadequately washing out whatever the previous contents of Package or dirt, even the labels and the inks and the glues that are associated with those labels Create contamination in the recycle stream. As I said, it's not just color because if you've ever been exposed to raw recycled resin, It has a terrible odor. It's been explained to me that it smells like rotting food waste. And when I visited our Cycle Works facility in In Italy, they told me that whenever they process the resin internally, they have to open up all the doors and windows because the smell It's simply unbearable. But we do have technology that we can bring to bear to support customers here also. So our laser marking additives enable packages to be laser marked, which can help reduce the amount of labeling That goes on to the package in the 1st place. And Stephanie illustrated some of that in her presentation, where we had the QR code Laser etched into the package. Our patented Azure technology scavenges acetaldehyde In PET packaging. Now acetaldehyde is a natural byproduct when you produce PET. It exists even with virgin PET. But when you add recycled PET into the package formulation, the acetaldehyde content goes up. And therefore, the need to scavenge it becomes important because it creates an off taste in beverages. You can detect it in water, But other beverages like beer can also be soured by the acetaldehyde. And we're in the midst of launching a ProSure service offering. And this is to help build trust and confidence with the brands when it comes to NIAS compliance. And NIAS stands for non intentionally added substances and it's a huge deal In the food and beverage market. In fact, it's a show stopper. If you cannot meet the compliance standards for NIAS, you cannot launch your product. So working with our technology labs that are NIAS qualified, our know how and our expertise, We're able to provide assurance and guidance to customers in incorporating our materials to meet NIAS compliance standards With confidence and trust. The 3rd challenge we help overcome is addressing mechanical weakness. So as I mentioned, every time a polymer goes through a heat cycle, you damage the polymer backbone. It does impact color as I've mentioned, but But it also reduces the strength that that polymer imparts to the package. And it also creates problems if you're a converter. So let's say you're a large scale packaging converter running a very efficient operation on thin margins at high speed And now you introduce variable material through recycled content into that process stream. Where you end up is less efficiency, More scrap and higher rates of infield product failure. Ultimately, it results in higher cost for the converter. So the solutions we can bring to bear here are CISA antioxidant additives that if you put them into the formulation to begin with, You can reduce the amount of damage that the polymer sees as it goes through the heat cycle. Our patented reprise technology When added to a formulation helps to repair the damage that the polymer experiences. So we have one technology that helps protect the polymer And another technology that helps repair it. And our SmartKey technology, which I mentioned earlier, Has an impact on mechanical strength as well because as I mentioned, you get to blow bottles at a lower temperature Than you would without the additive contained within the formulation. That's fantastic, so the polymer sees less heat history, less damage. But it's also important because you use less energy to blow the bottle. So the converter has a cost savings opportunity And it's a lower carbon footprint way to create a packaging product. So it's a win for the converter, It's a win for Avient and it's a win for the environment. Ultimately, it helps to reduce the cost of conversion for the converter. And costs in packaging has always been a critical deal. So you may know that There's been this migration, this desired migration among brands to convert to single material monolayer Packaging constructions. And that has always been driven by cost because that's the least costly way to produce a package. But now you add in the fact that these type of packaging constructions are more recyclable and you've added fuel to the fire for brand demand To drive packaging in this direction. You may or may not know that packaging can be highly complicated. I mean, we have packaging engineering schools in the U. S. And some of it is very complicated for good reason because of the properties that are required to protect the contents of the package. But let's take a look at the ubiquitous cardboard carton. So think about the fruit juices that you You find the grocery store that come in that cardboard carton. Well, it's not actually cardboard at all. It's actually a multilayer construction that contains Cardboard, wax, plastic film and metal film. That makes it extremely challenging to recycle Even in an open loop system, but completely impossible to recycle in the closed loop system that their brands are looking for And it's more expensive. So in supporting brands and their desire to migrate to a single layer construction, We do have technology that we can bring to bear. Our Lactra UV additive protective additives Help shield dairy products from UV. And UV is a big deal because UV kills dairy. It Sours the dairy product within the package. Now we take for granted that when we go to the grocery store and we want dairy, We go to the refrigerated section of the grocery store. But in most of the world, that's simply not the case. The dairy products sit on a store shelf at ambient temperature exposed to UV and needs protection. Lactra enables the converter and the brand to create a single layer PET package That contains our additive that provides the light blocking that they desire and the single layer construction that they're demanding. Our Amazorb technology also enables single layer packaging constructions protecting the contents from oxygen. So oxygen in the air will pass through the walls of the package into the contents and spoil the contents. The thinner the wall and the fewer layers, the easier it is for the oxygen to migrate. Amazorb in the walls of the bottle captures that oxygen and spares and preserves the integrity of the contents Within the bottle. Our capture technology is patented and performs the exact same service, but through the cap Leaving the bottle walls even more pristine and available for recycling. The last area that we help our customers overcome is really with product consistency. So as I mentioned, PCR resins are inherently variable. We've talked about the variability that comes in the color. We've talked about variability in mechanical properties. But I'll go back to again your high speed packaging converter And now I've got this variable polymer that's coming into your stream and the inefficiencies that that can provide To that converter and the opportunity it means for them to generate more scrap or more field failures. While working with us in our simulation tool, We can help our customers map out a desired zone for the type of recycled material that they can incorporate. So we can help them on this is the range of colors that you need to use if you want to hit your target color design. This is the type of melt flow that you're going to have to aim for in the recycled resin. So it does not interrupt or interfere with the efficiency of your operations. So we work closely with them to map out a grid of what desirable recycled resin would look like, Which allows them in turn to go to the recycling community and set standards. These are the recycled materials that we need. These are the recycled materials that we can tolerate and therefore we can help drive efficiency back through the supply chain. This service is proving very valuable. Recently, by recently, I mean in the last few weeks, There was a large global consumer product company who had a supplier day, virtual supplier day. And as a surprise to Wes, we got called out in the middle of this call to their global supply base, pointing us out as the type of company they should emulate If they want to help them down their journey towards sustainability. That was great. We love the call out, But it was specifically because of the type of service like this that we provide them with. So this helps deepen the relationships with our customers And it also embeds us as their trusted partner when it comes to helping them to achieve Their sustainability mission. So as a result, I think we can all agree Sustainability is a big deal. It's the major market megatrend of our time. And I've only just touched on a sliver. I've touched on my business and only one market segment within my business. We serve many other market segments and Avian is filled with many other business units. But across them all, We have the opportunity to serve their sustainability needs as Walter illustrated in our 8 ways. That's why we're investing heavily in focused R and D on sustainability, adding the right resources to be able to support that And the CapEx to support our labs and helping to design new technologies to further support our customers because sustainability is a big deal and it's here now. The customer demands are great. They're looking for help and Avient can deliver. So as a result, we expect to see our sustainability portfolio continue to grow at an 8% to 12% CAGR for the foreseeable future. And if there were any parting words I could leave you with as a summary for my discussion this morning, it's that Avient enables sustainability And sustainability powers our growth. And with that, That is a bright light. Hi. Hi. Hi. Hi. Hi. Andrew Castillo from Morgan Stanley. Thank you for that presentation. That was very helpful. So I just wanted to dive into a little bit more on the CAGR, the 8% to 12%. I was wondering if you could break that down. How much of that is kind of volume versus price Or just kind of the mix improvement as you're delivering on all these different solutions. Yes. And this is not really driven by price increases. This is really Organic growth that we expect to deliver through launching of new technologies and sales of our existing technologies. So I would just view that as organic growth, Price increase, inflation independent. And kind of as a follow-up to that, you noted a lot of kind of service aspects So what you're doing and how much of that is just kind of a competitive advantage as you go with your customer, allows you to anticipate and develop new products Versus is there opportunity, as you noted, that pricing is not in that 8% to 12%, how much does that is there maybe an opportunity to price a little bit more of that kind Service aspect of what you're delivering for the customer? Yes. And we really approach it through 2 ways. If you look at The ProSure offering that I mentioned earlier that we're getting ready to launch, that will entail a premium because we're going to have to do a lot of background work And support for our customers when we deliver product to them to make them trust and feel confident that this will meet their NIAS concerns. So we're going to price that as a premium on our existing products. So there will be a service premium that comes with that. But if I look at our simulation tool and the Work we do to help customers bring recycled content into their packaging constructions, that is a competitive advantage. And so where we see that monetized Yes, through growing our sales, working on new development projects with the customer and growing share. So that we don't charge for that. That just helps us keep us a step ahead of the competition. The question here. Hi, Mike Harrison with Seaport Research Partners. You give this chart here that shows that you're up to $930,000,000 for your revenue for your suite of sustainable solutions. Do you have any way of estimating the total addressable market kind of where you think and I assume the total addressable market has grown Substantially over the past 5 years, but any thoughts on kind of what the total opportunity could look like? No, actually Mike, I don't know what the total opportunity could look like and I challenge anyone to actually know that because a large part of what the opportunity could be It's dictated on the ability for people to actually get their hands on enough recycled resin content. So there's like this governor That's built on to the pace with which they can adopt recycled resin. So 8% to 12% we see as continued strong growth, often already stronger base. Of course, the bigger the base becomes, the math doesn't work out so well once you get to the CAGR. But we still expect that these sustainable solutions will grow much faster Than individual market segments. There's just so much demand here. And really, it's just the governors on our ability to adopt recycled content. All right. And then a second question I had is, as you look at the overall sustainable solutions portfolio, Obviously, legacy PolyOne had a lot of good solutions and products in there. Clariant, I think, enhanced that. Can you maybe talk about what has happened since you brought those together in terms of addressing any potential gaps In your offering and do you still see that there are some gaps that might need to be addressed with future M and A? Yes, I mean, I'll talk to the color and additives piece, particularly since We mentioned Clariant. There's great opportunities in M and A for the other business units, particularly in composites, which is inherently also a sustainable Solution. But if I think about Clariant and PolyOne, PolyOne really had a strong franchise in PET, In clear bottles, blown bottles. Interestingly enough, Clarion had a stronger franchise in olefins, Polyethylene and polypropylene. And so now when we bring the 2 together, we have a more complete portfolio to bring to our customers. So yes, both of us were actively involved in this. I mean, we were calling on the same customers in the same markets. We understood what the customer needs were. So we were all attacking Sustainability because the need was evident. We just attacked it in different ways. So the cycle works facility that Norbert mentioned in his presentation It's a fantastic tool for us and legacy Clarion brought that in. It's an internal mini recycling plant That allows us to mimic the impact on polymer and additives as they go through multiple iterations in a recycle loop. So you can imagine you start with a virgin bottle and then it gets recycled. Let's say 25% goes back into a But that 25% goes through the recycling loop again and again and again. So how do you actually Model what the impact of those multiple heat histories are going to be on the future resin stream. Clariant launched this about a year and a half ago and I can tell you the major brands Super excited to work with us to understand what the impact of those multiple loops are going to be on their future resin supply. So that's an example of a service offering that Clearance brought to the table that PolyOne did not have access to. So if I were to summarize, we have a broader portfolio of solutions To bring to customers that were complementary and interestingly enough not that competitive. Kristen Owen from Oppenheimer. Follow-up question related to the last topic. Many of the products that you've talked about today Are for post process materials. But as you're thinking about the challenge that these brand owners having getting sort of virgin resins, Are you seeing that drive any sort of uptake in establishing or better seeding a better post recycled material From virgin, things like the CISA antioxidants that you pointed out. Yes. So I mentioned we have Some additives that we apply that repair damaged polymer, but we do have additives that we can apply upfront that helps Preserve the integrity of the polymer as it goes through the recycle stream. So those antioxidant polymer additives are a great case in point. They're there to help The integrity of the polymer as it sees multiple heat histories. So we have technologies that repair, we have technologies that help prevent damage. And then my second question is really about the additional resources that you're putting in this area. Can Can you just talk a little bit about what those resources are? Is this a digital resource effort? Is this a go to market effort? Just talk a little bit about How you see resourcing this business? Yes. So we're just recently out of our strategic plan review. And I'll tell you that for the color and additive strategic plan, It was a core element. Part of it was driving focus and making sure that our R and D teams understand that there is no stronger market megatrend For them to align to and sustainability and making sure that we are aligning the projects in our portfolio to meet those market needs. The resources we're adding are mostly in technology to help support building out the platforms. Each of these platforms I've mentioned Having a number of products within them, but each represents a great platform for further product development. So we're adding mostly technical resources to Afraid to develop new technologies to support our customers. There is a digital play as well and Norbert talked It's about the ability to do color matching, referencing our digital library. That's an important enabling technology Because if I can get a color match to a customer quickly without tying up my lab resources, It means not only do I get a response to the customer quickly and therefore have a higher chance of winning the business, but all those technology resources that were tied up And trying to do the color match can now be redeployed to focus on sustainability. And that's I've been given the queue. There are no more questions, but I did want Just a real quick question on Should have the materials. Are you dependent on the consumer to collect this material? That's the governor on growth. Is that what you're talking Well, there's 2 aspects. That is clearly a big challenge. How do you get polymer back into the recycle loop? And the consumer has a big role to Playing that. It's a large global problem and that's really where the Alliance to End Plastics Waste and our participation with them Plays a critical role. How do you make sure that the plastic gets into the recycling loop and doesn't end up in the ocean, Right. So that's one big governor on how much recycled material you can get. I saw a recent estimate in a recycling journal That in the U. S, the recycling rate actually dropped during the pandemic from around 30% to 27%. And to meet the demands that the brands have outlined, they suggest that the recycling rate would need to be between 55% 60% To meet the demands that the brands have outlined. So you can see the big gap that that creates. But also with the material that you have, getting clean, Consistent polymer is in high demand. So I showed you the variation from very pure and white to almost black. All the packaging customers want that pure white recycled resin. There's huge demand for that end of the spectrum. And so there's also a limit on How much of the polymer that gets recycled can actually fit into a space that benefits consumer packaging companies. And closing the gap, how do you close the gap? Well, that's not something that our company is in a position to do. We have to join with other companies around the world like the Dow's and the DuPont's of the world with the Alliance to end plastic waste because getting consumers to recycle more And to stop the disposable of a completely viable resource to get it back into the recycle stream is beyond the scope of Avian. It's going to take a global Plastics effort to make that happen and we try to play our part in doing that through our contributions and partnership with the Alliance to End Plastic Waste. Before I go off stage, I did want to note that Kathy Dodd, who is our President for the distribution business Could not be with us today. So Kathy will be joining us, but she'll be joining us by video, which will start shortly. And then once Kathy's Video is completed. Joe will join us back up on stage to provide some further meeting logistics before we head into break. So thank you for your time and I look forward to further questions during the break. Hello and thanks for joining us today. I am Kathy Dodd, the President of Avient Distribution. I have the pleasure to present to you on healthcare, An industry that's exciting and ever changing. 1 that is well aligned with key megatrends and aligned with Avient's growth strategy. Today, there are 3 things I'm going to talk about. First is that we have a long and proven history of success Across a full range of healthcare industry segments. 2nd, we understand the macro trends And the opportunities that arise out of them and how we will capitalize on these opportunities. And lastly, We are well positioned for future growth. By virtue of our portfolio, differentiated services And long standing relationships with leading healthcare OEMs. For Avian has been involved in healthcare For over 15 years and in that time we have built a successful track record in this industry. A track record that consists of successes across many health Care segments, a track record supported by both M and A initiatives and solid organic growth. And this growth began well before COVID and will continue into the future. Success is also supported by our key foundational strengths and capabilities. Our expansive material portfolio Meeting the enhanced performance demands of healthcare innovations, our differentiated services That bridge across the entire product development cycle and deep long standing relationships with leading global healthcare OEMs. We have built credibility over the years proving ourselves to be a strong, knowledgeable and innovative partner. A partner who enables wins by expanding on current applications as well as entirely new innovative medical platforms. For example, 5 years ago, we worked with an OEM where we mainly only distributed materials for them. And today, we have a seat at their table helping develop platforms for the coming 10 years. Healthcare companies see Avient As a partner to help them solve difficult challenges and bring their innovative medical technologies to meet the market demands. But the world is changing and trends are evolving. Trends are changing the healthcare landscape to help by meeting the needs of People around the globe. These trends are shaping innovation, an innovation that has certainly accelerated over the last 18 months. So what does this change mean for Avient? We are well positioned to respond to these changing trends With our strong partnership with key OEMs and our foundational capabilities, we are in a unique position like no one else. So let me share some details on these important trends. With the recent pandemic, it certainly raised awareness And a need to focus on protection and prevention. As COVID hit, it accelerated many innovation Forms underway. Not only driving increased needs for lab wear and mask, but sped up the development For new and growing innovations such as test kits and diagnostics. And Avient was set and ready And able to support our global partners where needed. We supported the design and materials for COVID test kits, Both the reuse component system as well as disposable cartridges. And demand for these devices will continue to grow Due to the expanded testing requirements and the desire to protect and prevent. Another trend we follow is increased life expectancy. And as this trend continues to increase, The surge of chronic illness often follows. About 20% of the U. S. Population is 65 or older And these past years has required older patients to adopt and learn how to use self managed devices for their chronic conditions. And healthcare OEMs are continuing to look to improve the design and functionality of these devices To ensure the proper utilization and dispensing of medication. These devices can help support those with High risk of heart disease or others who might be part of the anticipated 250,000,000 individuals with diabetes by 2026. Now these are certainly sad statistics. However, the increase in chronic illness is driving continued Evolution in health and wellness innovations such as connected health devices, remote monitoring for heart conditions And self administering devices such as injector pens. So take connected health. It is not a new trend, but one that is certainly evolving. Wearable devices are allowing people the freedom and dignity to continue with their daily lives While tracking and monitoring their health. These devices require performance materials and design expertise To help meet the need of the users, the fit, form and durability is important for people on the go And they want to be able to depend on the quality of these devices. As highlighted before, Avient has a solid foundation of capabilities That support such innovations. Remote monitoring devices allow the patient to not only track their health and well-being, But they can connect with their doctor remotely to help gain professional advice when needed. These devices also need the Same level of performance materials for durability, long lasting aesthetics and overall comfort. But even more important, the users need to trust that they will work and work consistently, providing accurate output. This level of user confidence will help drive further use and adoption of these already growing innovations, Such as the self administering trend, one we are also seeing expand. This growing trend is very important. It not only played a big role during the pandemic, but it is also allowing those who can't get to a doctor or prefer less in person doctor visits, A more flexible option to maintain their health. It also provides options for those with limited or no access to doctors. Really meaning it can open doors for improved medical care globally. These devices ultimately support the increased desire The need to take care of ourselves, control and manage our own health and well-being. But again, all of these devices That support the growing trends need to be designed to perform with a high level of accuracy while being easy to use. And this is really where Avient comes in. Let me share a video to highlight more. Staying healthy It's something we all deserve, and we don't have to do it alone. There are tens of thousands of health care providers across the globe whose sole Aim is to help us live our lives to the fullest. But health care is evolving. We are living longer. Self administration and home monitoring are the new normal. The global pandemic has made us more aware than ever Or of the need for prevention and protection. Advances in diagnostic and imaging technologies continue at a breakthrough pace, Even reaching the world's most underserved regions. At Avia, we combine design, engineering, material and manufacturing expertise with Stand out sustainable materials so that healthcare providers can deliver the care their patients deserve. Our design team has a deep Standing of human factors. We know that healthcare providers need safe, simple, easy to use devices. And we know that brand owners need to create products that are attractive and appealing, dependable and functional using the latest advances in material science. And we also realized that brand owners need help both navigating the complex regulatory landscape and ensuring their operations are streamlined, dependable And Costa Becker, from idea to reality, we help our customers create the products that move healthcare forward. We are Avance. You know, I really love that video. It does represent Who we are and what we do in this industry. And as the world shifts toward at home healthcare, it demonstrates how the interaction with these devices is Changing. For the patient is now also the user of the device, often alone in their own environment And usability must be simple. And Avian is the right partner. We not only bring a full portfolio of materials, But the expert service we offer are key. One of these services is Aviant Design, A service provided by a global team of industrial design experts who not only know design, but they know materials, Processes and Manufacturing. They understand how to connect the material performance to innovation And ultimately enabling a positive user experience. They're a team of experts who support our customers through the development process From concept to consumer, a process that can often be very complex and multidimensional. There are many steps along the way from the initial idea all the way to launch and we can support all the stages. Now this is best demonstrated with an example. A leading OEM asked us to help them with one of their innovations for self management. And now although they have designers, their designers rarely have the material, colorant or extensive manufacturing expertise. But Avient Designers do. They speak at the same level with our customers' designers and product development teams, Enabling them with the design and the speed of the development cycle. This successful example started in the early stages. The concept is what you see on the screen. An auto injector device used by patients to self administer IV medication. Now while on the surface this might seem like a rather simple device, some of the parts have very high mechanical requirements To allow for proper and accurate dosing of the drug being applied, while other parts support safe handling and ease of use. So this simple looking device is actually quite complex. Let me share how the Avient design team looks at and enables such innovative projects. They start with extensive research, discussion and breaking down the device to understand the mechanics and more. The team connects the performance and design characteristics to meet the needs of the user and identifies the various components Avient can Support with specialty materials and colorants. Through this research, they identified the many factors the device must serve. It needs to be easy for the patient to use. Easy to hold, grip and use with confidence. This was accomplished By using avient medical grade thermoplastic elastomers. It needs to have the look and feel of high quality To build the confidence in the device and preserve the active ingredients. The team used Avian's high density polymers to provide weight For a feel of quality. It has to meet strict regulatory requirements, which means all the materials used must comply. And Avient has an extensive portfolio of medical grade options. There was also a need to help the patients with the proper use Of these devices. And the team realized that the use of our ThermoTek polymer can help speed up the process, bringing the ingredients to room temperature, Allowing for a more comfortable administration of the medicine. Basically, when it goes into the body, it's no longer cold. Other additives and lubricants were used throughout the device as well. But lastly, the OEM values their brand image and look. And our designers delivered, using our medical grade colorants to bring their brand to life. And all this led to healthcare OEM adjusting their product development plans using this expert insight, Material selections and overall design elements. I started off by saying I would share 3 key things to Understand how we win today and tomorrow. We have long proven and successful history in the healthcare industry. We understand the macro trends and how to leverage for growth. But probably most important, we are well positioned to win And the relationships with leading healthcare OEMs are key. We are a leading partner and they look to Avian to help them with their innovations. Innovation is targeting the right segments and delivering solid growth in years to come. Thank you. All right, we're at the halfway point here. I want to thank all of you for the great questions so far. There'll be more time for questions in the second half. I also want to thank our presenters. Great job Thus far, you got to hear some of the early successes of the Clarion integration. You heard about the megatrends that will support sustainable solutions in healthcare. And in the second half, we're going to get into composites, our presence in Asia and Latin America. And then of course, Jamie and Bob will bring it home with a summary and wrap up. So let's take a short break. We'll reconvene at 11 It's about 10 minutes and we'll start promptly then. Refreshments are right outside the door. Please help yourself. All right, everybody, if we can Good morning. I'm Chris Pedersen, the President of Specialty Engineered Materials. And I really couldn't be more excited than to talk to you today about our Engineered Materials business and more specifically, our Composite Materials platform. I joined Avient 3 years ago, November of 2018. And part of that spent Nearly 30 years in the Composite Materials business. Initially starting out as an engineer at the Boeing Company, helping to Design, build and implement composite parts onto military programs. Eventually, moved on to the supply side and spent quite a bit of time with Citec, one of the largest composite material suppliers in aerospace and had a number of roles, including technology leadership and business leadership and then Most recently with Hexcel, where I had responsibility for strategy and M and A. And one of the primary reasons I joined Avient was because of the investments that we had made in composites and the platform that we had built. And there really be a chance or have a chance to be part of building, growing and creating something that I think is pretty unique in the marketplace. I think we're well On our way to do that. But before I get into the composite portfolio, I just want to touch briefly on our overall Engineered Materials business. Over the last few years, we've had tremendous growth in Engineered Materials, growing EBITDA at over 25% per year Since 2019 and over that same period, expanding EBITDA margins by 2.50 basis points. And really, that's been a result of a strategy that's been focused and alignment with key megatrends, The adoption or growth in applications of health care applications, as Kathy talked about, The tremendous pull from our customer base for sustainable solutions, as Walter and Michael talked about. And then the build out of Structure to support telecommunications and 5 gs, which has resulted in tremendous pull for our products. But the trend I want to talk about today Is the light weighting of Materials and Structures. Now whether that's for driving performance in our customers' products or reducing weight to drive fuel efficiency. It's all resulting in a tremendous pull and broad adoption for Composite Materials in the market. And if you look at just the contribution to our financial performance from our composite portfolio, it's expected to deliver $50,000,000 in EBITDA To the Engineered Materials business this year, about 30% of the EBITDA for that business. And it really hasn't happened by accident, right? We've been focused on a deliberate strategy to get into and grow composites, 5 acquisitions Since 2012. And as we look forward, it's an area that we expect to continue to do so. But before I get into our Composite Materials platform, I want to focus just a bit on a couple of fundamentals in composites because it really Sets the stage for why our composite portfolio is valuable to our customers. So composites, Fundamentally, it's really a combination of a reinforcing fiber, so carbon, glass, aramid and a polymer matrix, Thermostat or thermoplastic. And the combination of these two materials actually delivers products that have very unique performance characteristics. They take on Strength and stiffness of the reinforcing fiber, yet they have processing characteristics and other attributes of the polymer matrix. And Avian is actually in a pretty unique position that we're not really tied to any particular fiber or polymer. If a customer has a application or a need, we actually can select the right components for the application and really bring Optimize solution to bear to their solution. The other thing to really consider in composites is the product form In that not all product forms are really ideal for every application that a customer might have. And each one of those product forms has a different Trade or a different balance of these properties you see on the triangle. So materials performance, what manufacturing processes you can use or what type of designs that you can implement. So for example, materials can be discontinuous, so a fraction of an inch in length, such as what you see in the light blue bubble. These materials are really highly compatible with complex designs. They can be used in injection molding processes to make pretty intricate structure. So where we have customers who want to develop or produce things that have some complex designs to it yet still have to have some level of performance, these types of materials are ideal. On the other hand, the dark blue bubbles, materials that have a continuous fiber reinforcement, so the fiber actually is continuous through the entire material. These offer the highest level of performance. So where we have customers with applications that really are driven by performance and really want to reduce rate. These are likely the most optimum types of material forms. Now there's a lot of area in between And there's lots of versions of these different materials, but this is what you need to understand. These trade offs need to be Need to understand these trade offs and at Avient, we do. So as a customer comes to us with an application, say they're focused on a particular manufacturing process, We can pick the right material form and then optimize for the other properties to deliver an optimized solution for them. And the beauty of the AVM portfolio is that we actually have a broad set of materials that span this entire spectrum of Manufacturing capability, performance and design flexibility. On the left, we have discontinuous materials from our PlastiComm business. Again, highly compatible with complex shapes. These are being used in such applications as an all composite seat For an off road vehicle, it's got some pretty intricate requirements and shapes to it. But also a series of continuous fiber reinforced materials from our glass forms business, Polystrand and Gordon Composite that really provide very high performance materials that can go into applications that require a high degree of performance. And most recently, with the addition of the Fiber Line business, we have engineered fibers capability, where we can take High performance fibers and through additional processing such as twisting, combining or utilizing our formulation expertise to coat them with value added capabilities, We now have the ability to actually impart special properties to those fibers for certain applications. So our strategy of investing, growing, developing Our composite portfolio is really delivering results. If I were to go back and show you the financial contribution slide again from our composite portfolio just 4 years ago, It was barely breakeven. And it's now the primary driver, the primary growth driver for our Engineered Materials business. In addition, we've had a few areas that we really got hyper focused on. 1 is in the outdoor high performance space, encompassing power sports And outdoor gear. Applications such as off road vehicles, watercraft, shooting sports, Snow sports, a number of applications that all really have pretty demanding set of requirements. And in many times, operating in environments that have some pretty demanding conditions as well. And our portfolio was able to bring solutions to bear on all of these markets. But it's not just in outdoor high performance. We have applications in other markets as well such as industrial and energy, Well, our products are composite protrusion products out of glass forms are really the primary load bearing and stiffening element in new GPS trackable, durable industrial shipping pallets. And these products allow our customers to deliver something in the market that doesn't exist. Pallets that can carry much more load at a much lighter weight than what's existing in the market. Our products also go into energy infrastructure. Again, our Pultrusion products are key enablers in energy or power grid as composite insulators, cross arms And highly durable corrosion resistant utility poles that we believe will translate to other infrastructure build areas such as that being done For telecom and 5 gs. So I'm really excited about what the future holds for our composite platform. I think it's got a very, very bright future. And it's also, as I mentioned, one of the key areas that we're focused on with our M and A strategy. Most recent example is the acquisition of our Fiber Line business in 2019. And with the acquisition of Fiber Line, one, they've been A great addition to our portfolio. 2, it's got us into a leadership position in engineered fibers and composite protrusions in the fiber optic cable space. You brought a great deal of technical expertise in this space as well as a global presence. And so, I'd like to introduce now Matt Reinhart. Matt is our GM of our Fiber Line business. So Matt's going to talk a little bit about telecom, 5 gs and how our products enable solutions in that space. Thank you, Chris. As Chris mentioned, I'm Matt Reinhart and I have the honor of leading our global Fiber Line team around the world. Thank you. I started my career, much like Chris, as an engineer and I worked 19 years for DuPont In roles ranging from manufacturing and R and D to global marketing. About 4.5 years ago, I received a phone call from 1 of my old customers, FiberLAN, Asking one to come work for them. What really excited me about Fireblind was the opportunity to rapidly grow the business. And as you saw from the results from Chris, we've been able to do that very In addition, it was the people. There's just great people at FiberLine and I've really embraced the culture and loved it and we've seen that at Avian as well. My colleagues and I joined Avient in January of 2019 and I can honestly say after 3 years of integration that Avian truly is a great place to work. For over 25 years, Fiber Line has Been supplying the telecommunications industry. And over this period, we've been able to establish a leadership position in supplying engineered fiber to fiber optic cable producers. Telecommunications is a core market for FiberLine and I'm really excited to share what the innovation of 5 gs will mean to the world And to Avian as a whole. I'll start off with a short video. But we'll tell it communications This is perhaps the most impactful innovation in my lifetime. Over the last 40 years, we've just seen a breakthrough in technology It has launched some of the largest industries and companies around the world. As I walk through my own journey through the last 4 years of telecommunication, three moments kind of highlighted some of the innovations that have happened. It starts back in the early 80s. And I can remember being picked up to go to soccer practice from one of my friends. And his father had a car phone. There's something you might see on Miami Vice, but he actually had a car phone. This is real breakthrough at the time. The ability to actually talk on a phone while driving around was revolutionary at the time And only available to a limited number of folks. Fast forward to the late 2000s and I had an opportunity to do a volunteer trip to a small village called Minzeni, Kenya. This village had no running water or electricity, yet each evening I was able to pick up my bread BlackBerry and talk to my wife and my children half a world away. At that point, mobile broadband had actually reached even some of the most remote parts of the world. In the mid-twenty 2015 2016, I had an opportunity to be an expat in Shanghai, China. And during that time, one of the hardest things for me leaving the U. S. Was leaving sports. I'm a huge sports fan and it was hard to keep up. But while traveling to taxi, I was able to actually watch college football games on my iPhone. So HD streaming was possible. From the early days of not very reliable Telephone signals to streaming HD video, telecommunications has grown by leaps and bounds. We've now entered the 5th generation of telecommunications and like its predecessors, 5 gs offers another major leap And performance, they'll launch new opportunities. There's 3 key attributes of 5 gs I'd like to highlight, Speed, low latency and ubiquity. I'll start with speed. Each generation of telecommunications offers a breakthrough in speed. 4 gs offered 100 times faster downloading speeds than 3 gs, reducing the amount of time to download a 2 hour movie from 26 hours down to 6 minutes. And 5 gs is offering another 100 time improvement versus 4 gs, reducing this time down to 3.6 seconds. Not only does this save time, but it actually also uses less energy reducing the power consumption on electronics batteries. The second area is low latency. Latency is defined as the amount of time it takes data to get from point A to point B And 5 gs offers ultra low latency with times of less than 5 milliseconds. This is essentially real time data transmission and It's going to enable major breakthroughs in virtual reality and remote control and monitoring of systems such as power grids and even remote surgeries with robots. The 3rd and perhaps most impactful part of 5 gs is ubiquity. Ubiquity basically means that you will be connected to the network Anywhere and at all times. And this is possible through a massive investment in antenna and fiber optic cable. The heart of 3 gs and 4 gs were large macro stations. These are the towers you see when you drive up and down the highway, Largely antennas and times that are camouflaged look like trees. 5 gs will leverage the same antenna, but in addition, there's going to be a need for millions of small cell antennas. These small cell antennas we've mounted on light post, on the sides of buildings and even in stadiums. And this creates a great opportunity for us at Avient As a leading supplier into these materials, it's estimated that 5 gs will use 16 times more fiber optic cable than 4 gs. I've introduced 2 key terms of the telecom lexicon, latency and ubiquity. The third is densification. Densification is a term used to describe the need to have more antenna to provide coverage of certain area. This is required for 2 main reasons. First of all, 5 gs uses millimeter wave or very high frequency Signals that transmit data. While these are extremely fast and help drive the speed I talked about earlier, they don't travel very And the signal can only go about 500 meters as opposed to 2 kilometers for 4 gs. In addition to this need, there's also a need for much greater capacity. We as consumers are using much more data than we did last year or even 3 years before. And it's estimated in the next 3 or 4 years, we'll use triple what we do today. That combined with the rapid introduction of Internet of Thing devices is going to drive a lot more need for capacity of the network and that's going to be Driving a huge amount of investment in antenna. Behind these antenna is a fiber optic cable infrastructure. Fiber optic cable is essentially the nervous system for telecommunications. Much of the investment going into fiber optic cable is driven by government Stimulus. This is necessary because as you can imagine, when you go out to rural areas, there just aren't enough consumers to pay for the massive investment required to get the telecommunications to that area. And in the U. S, just the infrastructure bill passed this last month earmarked $65,000,000,000 to drive broadband infrastructure growth. That was on top of $20,000,000,000 that was earmarked as part of the U. S. Digital Opportunity Fund, Rural Digital Opportunity Fund, investing in cable going out to rural areas. These investments are huge, but they pale in comparison to what the telecoms are spending on their networks ranging from antenna to fiber optic cable to data centers. While these lightning fast download speeds are available today in select locations, full implementation of 5 gs is going to take For a decade and require about $1,500,000,000,000 of spending. Much of what you've probably seen a lot of coverage maps. I saw a T Mobile banner coming in on a mature couple of days ago and it showed 5 gs coverage of almost all the U. S. You're probably thinking to yourself, where's all this investment going? Is it already there? The answer is not yet. We're still in the very early stages And most of what's going in today and what you see in the coverage maps is basically leveraging the 4 gs infrastructure with incrementally faster signals. Rolling out the true 100 times faster speeds is going to take this large network of small cell antennas and that's going to take another 7 to 10 years. So what does all this mean for Avian? Simply great opportunity. I mentioned earlier that we're a leading supplier of materials that go into fiber optic cable. Like to really quick kind of describe how fiber optic cable is constructed. At the heart of every fiber optic cable is the optical fiber itself. This is a very thin glass fiber It sends signals through to transmit data. Obviously, these glass thin glass fibers are very sensitive and cannot handle a load and that's where we come in as Avian. We have a number of different products that we can offer to protect the optical fiber from stress and strain, but also from moisture. We have a Pultruded rod that's used as a strength member to help push cables through ductwork. We also have high performance fibers such as Kevlar They can take the load of the cables as they're extended from tower to tower. And we have water blocking yarns that prevent water from getting into the optical fiber bundle We're transmitting through the cable into electronics. We also have great opportunities outside of the fiber optic cables In antennas and IoT devices, our EdgeTech and pre perm resins allow engineers to design Unique capability while having almost no attenuation of the high frequency signals going in and out of the devices. Avian is extremely well positioned To leverage our unique capabilities and global presence to grow in the 5 gs industry. It was a great opportunity to share this with you and I can't thank you enough for your time and I think you can see why we are so excited about 5 gs. I'll now turn it back over to Chris to share how 5 gs and composites will help drive growth in SEM. Thank you. Thanks, Matt. So, Troy covered in general our composite portfolio and tested on a few applications, Including outdoor high performance. And Matt, as you can see, covered our opportunities in 5 gs. But For Avian, it's really much bigger than that. We have a broad portfolio that can apply to many different markets, and we do. Our products are used in building and construction, for example, where our glass reinforced composite tapes are used To manufacture, durable, corrosion resistant, outdoor decking materials. They're used to manufacture very lightweight, durable doors that go into warehouse structure. In transportation, as Walter talked about in his presentation, they're used to manufacture lightweight, durable walls and floors for the trucking industry. And in the area of sporting goods, our engineered fibers, which Matt talked about, are also used to manufacture high performance athletic footwear. So we have a broad portfolio and just really excited about what the future holds for us. And if you look at our outlook, it has been and we expect our composite portfolio to really grow double digits for the foreseeable future. Be a primary growth driver for Engineered Materials but also be an enabler for Avient to deliver significant growth And sustainable growth going forward. So with that, I really appreciate your time. And Matt and I are happy to take any questions that you might have. Thank you. Just a quick question, I guess, on the 10%. I was wondering if you could give us a little bit more color By kind of the end markets that you see within composites, whether it's fiber line or how do you kind of break that down, that opportunity as we look forward? Yes. If you kind of split out our fibers business, which Matt has responsibility for and the balance of the composites business, they're both in roughly this 10% growth range. And then I guess one other area I wanted to ask about was just the competitive environment within that fiber optics market. How do you see that and what's kind of the Avient, I guess, opportunity or advantage? We really have a very unique blend of multiple products. We don't have a lot of competitors that have a 4 pull cord than we do. So we tend to compete with different people in the different product lines. It really gives us a great competitive advantage of this as we go and talk to fiber optic cable producers. We have a number of different offerings to help them meet their challenges. So we're really in a very differentiated position. To help them meet their challenges. So we're really in a very differentiated position versus all our competition. And like I said, they tend to be broken up by different suppliers in different Parts of the cable. Question here? Hey, Chris. Mike Sison, Wells Fargo. You spent a lot of your career using carbon fiber in terms of composites. A lot of your offerings are not carbon fiber. Is that an opportunity to build longer term? How would you do that? The 2 public player or the one public player is mostly aerospace. So Yes. When you look at these end markets, how do you get that part of the in your portfolio? And does it matter? Maybe you don't want to Yes, you're right. So the predominant of our the vast majority of our applications are glass or aramid. And as you know, there's Carbon fiber out there, most of it being very high performance and focus on aerospace and for good reason, that's where it should go. I think we do have opportunity. I think if you look at our markets, I think it's always going to be a mix of fibers. But I think as industrial carbon fiber really gets more mature And more available. I think that will open up some opportunities for us. Okay. Well, looks like we have no more questions, and I really appreciate your time. We're going to transition to another And, Woon Heap Mo will be up here to talk about emerging regions. Thank you. Well, good morning, everyone. Great to see all of you here today. I'm Moon Khed Moh. I'm the President of Color Additives and Inks business for the Americas and Asia region. Now I've been with Avian for 11 years now. And before Avian, I was actually with Claring Colour, for 11 years. So I'm actually in a unique position to say that I've been with the company for 22 years. So I've always been based in Asia. Now I've just recently moved to Cleveland. Recently means just a few months ago. So I'm looking I I won't say I'm looking forward to it, but I'm we'll be experiencing my first winter in Cleveland. So not really excited about it, But hey, I'm really excited to be here today to share with you the growth that we are seeing in Asia and Latin America. Now all of you are well aware. As a global company, we have presence across all the regions. Now it is important not only to allow us to better serve our global Customers in all those regions, but also our local customers in those regions. Now even though we have heavy presence in mature economies in U. S. And Europe, But we are seeing a lot of growing opportunities and growth in the growing regions of in the developing economies of Asia and Latin America. So it is going to be important for us to be able to capitalize on those growth. Now even though So the complexity of those regions actually brings a lot of the unionness of the region actually brings a lot of complexity. But we are embracing the diversity and capturing the growth opportunities. So on the left side of this chart, you can see the revenue breakdown that we have In the different regions, you can see, as I mentioned, our largest region is actually in U. S. And Canada, followed by EMEA, which is Europe, Middle East and Africa. But on the right side, you will see the projected GDP growth of the regions. It's interesting to point out, you can see Asia and Latin America actually is projected to grow at a rapid pace than U. S. So let's take a walk through the regions. Now let's start with Asia. Now Asia is huge, if you think about it, right? You have China and India are 2 most populous country in the world in 1 continent. So we really view Asia as 3 subregions: China, Southeast Asia and India. So let's start with China. Now China, number 1, in terms of population of the world, 1,400,000,000 population and the 2nd largest economy in the world. But I think really The main question that everyone might have is really how has the recent U. S.-China trade tensions impacted the Chinese economy? So I'll use the foreign direct investment as an indicator. This year, the foreign investment that's going into China is forecasted to grow 9% Over prior year. You could also say prior year 2020, a pandemic year, might not be ordinary. Using 2020, comparing to 2019, there was actually an increase of 6%. So as you can see, there is a healthy, consistent Foreign investment that's going into China, yes, confidence in terms of the Chinese economy. Now it is also a known fact That China follows a blueprint when it comes to roll off initiatives and policies in terms of how they grow The economy. It's called the 5 year plan. So it is actually on the 14th 5 year plan right now. And this plan runs from 2021, which is this year, to 2025. Now in this plan, there's a few callouts I want to point out here, on a high level, there's going to be a focus on infrastructure, sustainability, Manufacturing competitiveness and digital economy. There's 2 key highlights in terms of infrastructure, the focus on investment in infrastructure. This time around, it's not just going to be building more roads, more high speed railway tracks. There's a specific call that there is investment going into science and technology infrastructure. What does this mean? It means accelerating the adoption of Internet of Things. And that translate to, to enable Internet of Things to happen, We'll be embracing the 5 gs technology. And 5 gs technology, for it to happen, you will need 5 gs networks, You will need 5 gs enabled devices. And as you heard from Chris and Matt earlier, we do have existing solutions in For 5 gs. And we are continuing to develop solutions for the 5 gs ecosystem, which really translate into more opportunities for us. Now on the sustainability end, there's going to be investment in infrastructure for renewable energy. So there's going to be more solar farms coming out. Again, need for materials need for materials that's going to support the infrastructure for solar farms. The other one is on Adoption and production of electric vehicles. So there's going to be push for further adoption of electric vehicles in China. So just to give context, This year, North America, we are forecasted to sell 600,000 units of electric vehicles. Now remember, There's still computer chip challenges that's impacting the automotive industry, so it's also impacting the electrical vehicle car production. Now in China, This year is forecasted to be 2,400,000 vehicles. So on a bad year, 4 times. Again, electric vehicles also creates opportunities for us, where you have heard from Walter earlier as well, lightweighting solutions And the need for new materials as well. Now in this 14, 5 year plan, there is also a call out in terms of A new strategy called the dual circulation strategy. Now in a nutshell, what it really means is that China will welcome Foreign investment, continue to welcome foreign investment. But at the same time, there's going to be a focus on driving domestic consumption. What this is going to do is that it's going to increase the prominence of the local and regional brands. Imagine a market with 1,400,000,000 consumer. And we have been establishing relationship with the local brand owners, Which allows us to grow with them as they continue to grow. So let's move to the next region, Which is Southeast Asia. Now Southeast Asia is really a combination of 10 countries. And the 10 countries have also formed an economic block, Which are also well known, which is ASEAN. So the total population in Southeast Asia is close to 670,000,000 people. Now this region has Really gained a lot of prominence recently because companies have started to adopt the China Plus one strategy. Now what it really means is that a lot of the companies are having a manufacturing side of China, and that's really to mitigate the Risk of the tariffs. So because of the proximity of the Southeast Asian countries with China, it allows the companies to continue to Tap on to the mature supply chain from China in terms of raw materials and parts. So there's a lot of Investment going into Vietnam, Indonesia, and manufacturing will be a key driver of growth for this region. Now this region also has a good balance of economies as you there's a mature economy like Singapore and developing economies like Thailand, Vietnam in Indonesia. Now Indonesia is interesting. Indonesia, growing economy. But what is interesting is that it is forecasted that Indonesia will have the 4th Largest middle class population in the world. That's after U. S, China and India. So as the middle class population in this region continues to grow, There's going to be increase in demand for better quality products, better quality service and Better health care. And that all means opportunities for us because those are our focus areas. And as you heard from Kathy as well earlier this today in terms of how we are focused in growing health care. Now what have we done Over the last 10 years in China and Southeast Asia, we have doubled our footprint, and we increased our commercial resources by 2.5 times. And that is important because having close proximity to our customers and also having the commercial resources that allows us to quickly react And response to the need of our customers for speed to market, it allows us to quickly have a short turnaround time on color designs, Which is critical for our customers in this region. And we have also invested in a regional headquarters and innovation center in Shanghai Back in 2015. And that allows us to tap into the local talents to develop and innovate solutions that actually fit the region. And that has also helped us to grow. And all of these activities has actually helped us to grow by 3x in this region. Now we are not resting on our laurels, So we have continued to invest. And one recent example is our new manufacturing site that we have invested in, In Quzhou, China. So it's strategically located. It's actually west of the Eastern Seaboard. This Site actually allows us to serve customers in West China and East China. And this site is one of the largest site Within Avian, it's actually 714,000 square feet. And what is what we are proud about this site is that We actually finished construction of the site in 18 months, and that's during a pandemic year. So The site is expected to support revenue of over $60,000,000 by 2025. The other piece that I mentioned about The growing middle class population and the demand for better quality health care. Now we are well positioned because we have health care accredited site in the region. In Singapore, our Singapore Facility is actually health care accredited. So what we would continue to do is increase the capacity and enhance the capability there. And in addition to that, we will also increase sites in the region to be health care accredited to support this growing demand. Now moving on to the next region, India. India, 2nd populous country in the world right now. But even though indication says it's going to exceed China by 2,030, based on the current slowing growth rates that we are seeing in China, I think India is going to pass China probably by 2025. But what is really important about in terms of the population size of that size, right, Is that it actually has the one of the youngest population in the world. The average of the population is 29. And what that allows is that huge talent pool, continues to fit a talent pool, which allows us to tap into. And India has a lot of initiatives as well, Made in India, Digital India. That's driving a lot of manufacturing investment And services investment as well, which also means that there is a growing middle class population in India. As I mentioned, Young population allows us to continue to grow that population, which really translate into potential opportunity for us as This middle class population grows up where there's going to be a need for better quality products from basic to better quality products. So what have we done in India? Well, we have grown our presence in India. We have 4 plants right now in India. We have increased our commercial resources. Now in India, right now, a lot of the activities is centered around West India. But we are seeing a lot of opportunities and activities going into North and South India. So we will continue to invest in our commercial resources to make sure that we are able to capture those opportunities in North and South India. That's going to be our focus. As I mentioned, in terms of the growing talent pool, we are going to leverage on it and which is also one of the factors why we are putting an innovation center in India To leverage on that. And our Chief Technology Officer, Vinat Prahayat, is going to share more on this exciting new investment later on. So let's move to a region that is closer to us, which is in Latin America. Well, Latin America has a population of about 662,000,000. I could remember earlier, it's almost close to the size of Southeast Asia, but it has more complexity Because Latin America has 33 countries and 15 dependent territories. Now even though with the complexity, Top 6 economies in this region actually generates 75% of the GDP For the whole region. And what is another interesting fact is that we have presence in these 6 countries, Not only from our commercial resources, but we actually have manufacturing sites located in these six countries. The entire region is expected to continue to grow. And Mexico being the hub of manufacturing for North America, we are seeing a lot of activities that's going into it, and it will continue To have a lot of activities where we will see a growth in the middle class population, which will drive opportunities for us as well. Now what have we done in Latin America so far? We have actually doubled our footprint, and we have invested over 5 times in terms of commercial resources. And there's a great Return of investment for us because we have actually grew revenue by over 20 times. We'll continue to Focus on investing into our facilities in terms of capacity wise and also enhancing our capability as well to make sure that We are able to capitalize on the growth of the middle class population in the region. In summary, we have been laying the foundation and building on it. We have been growing successfully. Clarent Color has actually Also, help us to increase and expanded the presence in all these regions. So we're going to continue to focus on the strategy of delighting our customers, Having short turnaround time for our customers to enable them speed to market because that's critical in all these regions And also focus on local and regional brand owners. As they grow, we grow with them. Now not forgetting, we also have local leaders that are in the region Who understands the need of the regions and which allows us to actually respond and react quickly to the needs of the region. Yes. In all, we have shown that we have proven that we are able to grow. And in combination with the macro Strong macroeconomic driver that you're seeing. We are well positioned to capitalize on the growth of these regions. With that, thank you for your time and attention, and I'll be happy to answer any questions that you might have right now or later. Hi, thank you for the comments. I'm Kristin Ong from Oppenheimer. Just wanted to ask you about The competitive positioning in these regions and how you intend to protect your price and continue to protect your IP? Great question. So in terms of competitive landscape, yes, I mean, there's a lot of local and regional competitors. Well, what's really differentiating us is that we are focused not so much on the general purpose market, right? We are focused on Right, Shuky, which is why I emphasize in terms of what we are doing from color designs and additive solutions that we are Focus on. So that really differentiates us from the competition. Now going back to your question in terms of how we intend how How we are protecting our IP. As you can see, we are developing innovation centers across the regions, and We are developing formations within that region. We do have a strong system that would that actually protects our formation From our competition. So I do believe that our current system is able to prevent to protect our IP. My follow-up question is just related to this last slide here. You've noted that 5% CAGR, Excluding sustainable solutions. Can you just clarify what is included in those sustainable solutions? Is that from The packaging side, is that 5 gs? Just help us understand the mix of that 8% to 10%. There's a mix of both from packaging, of course, and mainly packaging. Yes, as the developing regions are mainly focused on packaging. So I would say there's more packaging in that sustainable number This is 5 gs. Andrew DeCio with Morgan Stanley. Just a Quick question around just the growth overall. So you noted the manufacturing that was just commissioned, just kind of get you at least $460,000,000 I think was the number $460,000,000 or support $460,000,000 in revenue by 2025. So it seems like that alone could be meaningful growth just filling up that plant. So as you think about you talked about investing in capacity, what else is there left that you need to do to invest in? Is it commercial? Is it brand relationships? Because it seems like the capacity has kind of gotten there to some degree just with that plant alone to kind of help you get that 10% growth. Yes, great question. So the different regions have different dynamics, right? So in Latin America, for example, definitely with the growth that we are expecting, we will definitely need to invest in capacity, not only in commercial resources. But what we have over in China or Southeast Asia, for example, We do have the capacity to handle the expected growth. But what we need to do is really investing into technology resources, right? As Michael alluded to earlier as well, in terms of shifting resources, how we can do better from a color design standpoint so we can achieve resources to focus on Innovation. So that's going to be a focus for China and Southeast Asia, investment into resources, especially from a technology standpoint. India definitely will also need to invest into capacity because that's we have momentum right now. We are growing in that region. We do need to focus on that. Frank? Frank Mitsch, Fermium Research. So love the geographic breakdown, fifty North America, 25% of sales in EMEA and 25% the business that we cover. So what's CapEx at ABN breakdown geographically 2022, 2023, 2024? How are you thinking about your investment Regionally. I would say the breakdown is could be similar, but in overall, There are also CapEx investment that's going from a corporate standpoint that's going to help across all the regions. So I would say, specifically, In the regions, it would be similar in terms of what we are seeing from a revenue standpoint, but there is definitely more CapEx going into our growing regions because We are seeing more growth in Asia. So Asia does actually has more of the CapEx allocation. I would make just one clarification to that, which is that in that pie chart they showed on revenue breakdown, obviously, we have a distribution business, which is predominantly in the U. S. So if you took a $1,500,000,000 out of that in In the U. S, so if you took $1,500,000,000 out of that and then did your new pie chart, I mean, all the CapEx really goes into color and Materials and it does break down I think reasonably close by region. There's more obviously going into India with the innovation center that Vinod is going Talk about and so on, but largely it does break down by region. Mike Harrison with Seaport Research Partners. I'm curious, very impressive looking slide here showing that we've gone from, in some cases, very close to 0 revenue to a pretty substantial growth over the past 10 years. Can you talk a little bit about how margins have performed over time? And have we reached a peak yet or are we still in a phase where there's a lot of investments and spending? You mentioned the commercial resource expansion. Are we at a point yet where we have leveraged those resources and seen that show up in the margins? Or is there still Substantial margin improvement to come. And maybe on the China plant that's starting up, is that something that could Negatively impact your margin until utilization picks up until that plant is filled up. Thanks, Mike. So first off, in terms of margin expansion, actually, the margin expansion is Really good. Because our average margins for the regions is actually similar or high actually to our business. So from a margin standpoint, We are at a level where we are very comfortable with, and definitely, there's room to continue to expand on it. And in terms of the Cujo site that I mentioned just now, is this one of the facility of our 11 sites that we have in China? So It won't it will not have a negative impact on our margins because it's actually accretive to it. And remember, in terms of how we are filling it up, it's actually We are filling up at a pretty good pace, and we do believe that it will not actually, it will not be negatively impacting our margins. So All right. I got to wave. So all right. So I'm sure we If there's any additional questions later on, I'll be more than happy to answer it later on. So we'll have a short video, and our Chief Technology Officer, Vinat Prayat, is going to share with us in terms of where innovation where our innovation is next. I think it's perfect timing. It's almost noon. So good afternoon, everyone. I'm Vinod Pared, Senior Vice President and Chief Technology Officer. I'm actually the latest addition to the team. I'm being here for 191 days and 12 hours to be on time. So I'm excited and honored to be here to let you look into my crystal ball to see what the future holds for Avient. So before we get to that, let me talk about myself. So I come from a background of semiconductors. I've been in semiconductor industries for 25 plus years. I have a PhD in Quantum Engineering. It's a unique topic. And then I started my career with Sandisk Corporation, which was a start of this. I wanted to get into flash memories. Probably you all have some sand discards in your drives. From there, I moved on to Applied Materials, which is a major semiconductor equipment company. And then I was in a start up before I joined Avient. So you'll all be thinking in your minds, what does a semiconductor guy have to do with the formulating company? Hold on to your thoughts. I think the slides will talk to it, but we'll come back at the end. Okay. So, so far, you have heard from the Presidents. They talked about sustainable solutions. Kathy talked an extensive about health care. Chris talked about composites and mostly 5 gs, where are we going to go with 5 gs. And then we talked about growth in Asia and Latin America. And I want to show what we have in the pipeline from these platforms, right? So we have about 236 Our projects in these platforms. And out of that, 191 are in sustainable solutions. Just tells a lot about KPN. We really think sustainability is the biggest lever for innovation. I believe Without sustainability, there is no innovation. That's your real Holy Grail. So most of our projects, almost 80% of them are trying to address Sustainable solutions and we are only going to increase this as we go forward. So with that, let me tell what's coming next. So before we go there, I want to talk about a topic called paradigm shift, which you might be all familiar with. So I'm talking about paradigm shift that's happening with material science. So if you look at any great advancement in technology, it always has to connect to a breakthrough in material science, right? We'll talk about some examples. I want to talk something that's closer to my heart, which I have done in the past. Electronics, right? This is a classic image of the first super Computer that was built in 1960. Remember, the transistor was only invented in 1947 and just within 13 years, they built a supercomputer That could do massive calculations, but it was ginormous. It's big. It's bigger than the people sitting there. But guess everyone in a room have something that's much faster and much powerful than those things. So what happened? The laws of physics or chemistry never changed. They've been the same. It's really about material science and advancement. People come up with new materials, how to tackle it and then you advance forward. Today's cell phones that you carry are your MacBook Pros, they have 16,000,000,000 transistors and it's only a few decades since the transistor was invented. And how are people able to do this? How you are not violating boundaries despite really driving material science? And that's what got us to here. Now the question is what is next, right? What is the next leap step that's going to happen? It still is going to be in material science, but it's going to be To a class of materials that's called metamaterials. I want to use a quote from Nature, one of the most prestigious journals in science that quotes metamaterials. So at the core, it's a composite material, but it's rationally designed so that the effective material properties Our parameters go beyond that of ingredient materials. So it sounds big. It's not really big. It's composite materials. And Chris talked about how well we are doing in the composite materials. And that's why I believe Avian has a very strong position here Because of the enormous properties and parameters and engineered materials and additives that we have that can fall into these categories. The real winner is who's able to identify these and bring these to the market, right? So it kind of ties to our innovation concept. It's not like you go out, try to innovate something new, but you actually constantly look into your toolbox. You empathize with your customers, see what is their pain And try to address with it. Customization is the mother of innovation, not try to create new products all the time, but sometimes you have to do it. So with that, I want to talk about the market opportunity that this metamaterials has. This is a quote from Lux Research That does this research on different materials. And they believe that the U. S. Market is about 13,000,000,000,000 Opportunities for this meta materials. We are focused most on the 3 trillion market that is highlighted out, that's 5 gs infrastructure, Vehicle electrification, IoT, wearables and healthcare. 5 gs, Matt talked about 5 gs. We are in the 4 gs plus regime. We are going 5 gs and 6 gs that only needs more better materials, low dissipation factor, right, low latency. How do you get those materials? And we have those properties in some of our engineered materials. The key is how do you connect them and put them into wire and cable and applications. Vehicle electrification, the biggest thing that drives electrification is battery technology. When the first Electric car came, most of us did not even believe in it. We thought, oh, I have a V12 engine. That's probably the biggest powerful engine. Now you can tell Tesla XS It's much faster than any Vitol out there. But what people want more is how can I go 600 miles and how can I charge in 15 minutes, Right? What does that mean? That means you have to drive a lot of current in a very short time to charge a battery that will take you to that distance. Again, it's management of thermal properties, Right. How can you charge a battery that fast and not fry other electronics? How do you make sure you do not have interference between these properties or these materials? So it's really at the bottom of material science and how you develop those. IoT wearables, I believe all of us have some kind of Fitbit or O ring, something that's monitoring us, helping us to look at what's my heart rate, what's my blood pressure in the morning and so on. The health care has completely changed as Kathy Dodd mentioned. It went from hospital centric to patient centric, right? We are our own doctors. Today, you can talk to a doctor on a Zoom video to get fully diagnosed and whatever you need, go get your test done, have your medication sent to Your CVS pharmacy or whatever your local pharmacy is, right? So technology is advancing it, but along with that, it's always material science Driving it and there's a lot of these opportunities where we believe that AVN can play a major role. So with that, I think your question would be like how does ABN create or capture value, right? So it's really about adaptation. I believe that we have the engineered material solutions in our toolbox. I'm not going to go create a new material that's going to Solve some problem there. We're going to look at what we have, customize it so that we can apply to it. That's your fastest low hanging fruit. But sometimes, of course, you have to go and create something new. So I'll talk about some of these potential disruptive markets That we're going to focus on this is for future within corporate technology, what that we want to focus, where we want to be 5 years from now, 10 years from now. So we'll focus on semiconductors, robotics. With robotics, I'm referring to robotics and health care And healthcare and AI. The reason why we focus on semiconductor, you already know, right? Big companies like Samsung, TSMC have already announced major investment in the U. S. We are talking about tens of 1,000,000,000 of dollars Either in the state of Arizona or in the state of Texas, right? The chip shortage is a big problem. Human beings are The biggest consumers of data, right? We never have enough of our cell phone. We'll never have enough of our bandwidth. We always want more. We want to be faster. We want to do more. I have a 1 gig Internet and sometimes my bandwidth is so bad because my kid is doing multitasking with this iPad and his Xbox game and whatever. I have to go and turn off the router so that I have some bandwidth to do my work. That's how it is. It was not that 10 years ago. It's like you'll never be enough, right? And Because all devices are trying to connect to each other. It's all Internet of Things is all connected to each other. So bandwidth requirement is there. And so processing comes to that perspective. Robotics in healthcare, I believe that there will be a phase where we will have robotics Solving some of our processes or medical issues. For example, if you have a cancer that's locally be treatable, There could be places or in the future where you might have devices that would just treat just the local areas using robotics so that you don't have to go through a chemo or a full body exposure. Healthcare, again, is completely changing from what we are today, right? AI is really semiconductors on steroids. It's really trying to do high computing with very low power. It's all about parallelism, right? Just like us because we can multitask. Most of This multitask, we're talking, we're typing, we're listening. Some people can listen to music and still write papers and so on, right? So it's all about parallelism and that's what AI is trying to be. It's trying to be like you and me or even smarter than you and me. I hope we don't get to that case That we still be the smarter one than AIAC. But you can imagine this all these disruptive markets are interconnected And they all have a massive innovation needs. So it makes absolute sense that we play in those areas if we have the toolbox, if we have materials to play. So it's really two things, right? I'm a big fan of Doctor. Seuss and I've read a lot of Doctor. Seuss books. It's all probably because of my kid as well. But one quote I always stick in my mind is like imagine what you can do. And I think it's very simple, but it's very unique. In these fields, what can I do to get there? I think that's the first thing. And the second thing is really believe that you can do that, Right. Once you have these 2, I think the sky is the limit and you can go into these markets. So with that, I'll talk about okay, We talked about what we are innovating and which fields and I'll give you a glimpse. This is the crystal ball. I'll give you a glimpse of what our Platform technologies that we have today that we can take and apply right away today. Like I don't have to wait. I just have to make sure my platforms are customized to go there. For example, the top 2, they are connected because it's robotics and healthcare. So if you look at those, for example, let's talk about ambient control, either in robotics or biopharma packaging. Michael Garrett talked about various scavenging technologies that we have today in the packaging industry, OTIS scavenging, UV blocker, right? We can totally apply those to bioforming packaging because people wants to get away from glass bottled wires. How do you make that happen? Glass is a very good blocker of all the things. Is there a polymer that can do that? Yes, absolutely, we have the solution. We just have to make sure that we meet all the requirements with additional to the FDA approvals and so on. And once we have that, That's a lateral tangent that you can go on. Other things like functionalized biocompatible resins, right? We have a huge portfolio of advanced elastomers and composites, which has these functional characteristics that we can apply to get into these fields. Let's look down into the 2 buckets of semiconductors and AI. I talked about semiconductors is really driving computation power, Right. So power is I2C and I2 is the current that flows through any chip that generates heat. So it's really all about controlling how much heat the chip generates and how you dissipate it, right? You all remember like in the past when your Computers were slow or sluggish. They get so hot. Can you feel it like you put it on your lap and you're doing something, it gets hard and hard. It's because it's just The thermal management of those chips are limited. And today, they have come with technologies to control it, but I believe the requirement is going to be even much higher. And that's where we have unique technologies that can actually completely shield the heat from transferring from one chip to the other. This is where polymeric materials or these new engineered materials would play a major role. Low dissipation, We talked about 5 gs, the next generation 5 gs or 6 gs, which are we are talking in the order of few 100 gigahertz transmission speed. So anytime you transmit something through a wire, what do you want is you want to have minimum loss of signal, right? So that means you don't have to boost up the signal to send it through long areas. So if you can reduce the dissipation, then you can send the signals with very low power to long areas and that's what is the driving factor for 5 gs plus and 6 gs. And we have some of those capabilities within us, which can do those dissipation, low dissipation factor. EMI shielding, electromagnetic interference shielding, Right. You have seen that when you put your phone next to your radio, your radio picks a noise, remember, like in the older days like or when you're in a Conference call, you have your phone very close to that Polycom, the old receiver, you'll hear the static noise. That's the EMI shielding. We didn't care about it those times because you just move the phone, you're fine. But when you have chips sitting next to each, you can just move a chip, you need to shield it. Today, they're shielded by using metal. They basically use an aluminum metal and shield it off, it's great. But that doesn't work where they get the density of the chips much tighter, right? Intel, TSMC, these guys are talking about 3 nanometer, 4 nanometer transistor technologies. It's very small, Trying to get them very close. We have materials that can actually go in there. So those are areas where we could go in. So Again, the opportunities are limited. It's really looking at how you have adapt what you have, customize it to go into this market. But of course, we will also look at some new technologies like, for example, this advanced barrier technologies that has certain requirements, which I will not share here because it's Our IP stills at this point, but we are working on those, all functional additives, right? There is a whole industry that's revolving around additive manufacturing And that all really relates on functional additives. Again, that's the whole strength of Avient. That's why Avient is really fit. We are really a formulator. We are not a base resin maker. We don't go after base resins. We really can't say, this is what the customer wants. This is the base resin. I have few additives. I'm going to put in boom, boom, boom. I'm going to give you 3 of those metrics, right? You want EMI? Okay, there you go. You want low dissipation? There you go. Want thermal management, there you go. If you want electrical conductivity, I can give it, right? The battery technology, all these needs multiple requirements and that's where By blending this properly, picking the right formulation, we can get there. And I can tell you, I'm only here for 6 months. I have seen the talent that this team has. We've only have a 1,000 scientists with 100 PhDs. They can come with ideas really fast, and we really innovate at a pace that I'm very happy to see where we are. We always have brainstorming sessions. We have 4 hours we can hash off 250 ideas. I'm not kidding, 250 ideas in 4 hours. And we work follow on to see where we can go in there. But we have to take it to a much bigger level because some of these markets move really, really fast. You already know. Semiconductors, as they say, a chip is almost like having a baby. You only have 9 months, you need to have the next chip. They won't wait for 18 months, right? Other industries can work for 2 years, 3 years and get there. So how do you go from our pace today to go there? That's why we need to have a lot more global innovation And that's where I'm leading to the next slide. So, Mohr, talk a little bit about our innovation center that we're going to have in India. It's called innovative, sustainable, holistic accelerator. We really want to look at holistic approaches to really drive innovation. The reason this is in India has nothing to do with the fact that I came from India. It's because of other reasons. First thing is The young population that we have in India that are talented, willing to work on these areas to really drive innovation for us. Most importantly, we already have a manufacturing site and there is a land right next to it. So we could build an R and D center That is working within India to drive some of these innovations. And again, all the disruptive markets that I talked about, Semiconductors, AI, robotics, healthcare. Guess what? All of the disruptions are happening in Asia. I wish some of them were happening in the U. S. And the U. S. Government is taking steps to bring it back in, but today mostly it's happening in Asia, either it's in Singapore or it's in Taiwan, Korea and China. So India is a very good epicenter to drive these innovations. And lastly, these are all Highly capital intensive markets, right. It's very hard for Avian to go and jump into semiconductors tomorrow because we just have to buy all those tools. We cannot do that. Being in India gives us access to universities like IITs, where we are able to access the state of the art Tools, by putting our own people in there, having our PhD students in there, driving innovation, doing this for us. So that way, we don't have to do a huge lot of capital investment into those semiconductor equipment tools or healthcare related tools. We could focus our investment on our processing requirements like our extrusion lines or our materials, right? So that's where we can spend. But still there is a reasonable amount of CapEx that we're going to spend within corporate technology in India and globally. This is all one group. There is no like India and U. S. And Europe doing separately. We are all needed together in this together. So in India, apart from doing the R and D resource, we are also going to focus on supporting our existing businesses. Colors and SCM and India itself have their own business that we are running in India and sometimes it helps to do some of our Rapid customer requests or raw material formulations in India so that the teams in the U. S. And Europe can actually Deploy those resources into pure R and D. So it's a very good package. And finally, the cost of doing R and D in India is definitely much Cheaper than doing it elsewhere. So all these factors makes us believe that this is a very good investment for us and that's something that the board has also Approved for us to go forward with. So we talked about innovation. We talked about Where are we going to do and how we're going to do? And I want to talk about you all want to know where is this going to lead us, right? So I believe that we would see 11% CAGR growth from our innovations over the next 5 years. There is no doubt this we will get. And how do I say that is because of the world class vitality index numbers that we have 35%. That tells us All the projects that we have in the pipeline for the next 5 years are all going to be solid gold. I can tell that today. It's all going to be solid gold. They'll make it. And that's why that vitality index uses that confidence to get there. So with that, I want to come back to The first question that probably pointed your mind, why is a guy from semiconductors here in Avian? So now you see the dots and why I'm here. It's because material science development is key for any technology. And I am deeply Tired into innovation, it's almost Mike. It's me to say. And so when I look at Avient, the culture, The talent that we have and the mindset and again, the various possibilities that we have within different BUs, All of this can be tied into these markets. It's really taking them, customizing them and applying them. And that's why I'm very happy to be here, And I believe this is the right place for me. So with that, I'll stop and I'll take any questions that you may have. Thank you for the presentation. You really highlighted a lot of the talent that's being placed in driving innovation. But I'm wondering from your position as CTO, what you're thinking about in terms of the digital infrastructure Sure that needs to exist within the organization to apply that same sort of blueprint that we saw in examples like The color to the vast library of innovation that already exists within the organization today. Thank you. That's a very good question. I did not touch that today. I'm also a big part of data. So we actually have a huge data science within corporate technology. And what we use it, we are using data to predict some of our experiments and DOEs. For example, we are able to predict our formulations without not having to do DOE. We are able to predict opportunities that we get. So predictive analysis is a key, and we actually Monitor all of our innovations through a digital software that we use. We also have a software that looks at ideation phases, looks at our stage gate processes. We have different Stage gate processes for different products, right. Ideation cannot be a 5 typical 5 stage gate, a shorter one that really sees how fast and feasible you are. We have periodic brainstorming sessions like I talked about. All these are available on a shared data folder. We have this Globally, not just in one place, right? So we have folks from every place to work together. Our IP portfolio is really strong And we try to even beef it up by doing this. We ask people to collaborate outside the group on purpose And we have them all on a data center so that you're able to see. So I think by doing this, we are able to keep the digital up, It's not as good as a high-tech company from where I come from, but this is a very good starting point, I believe. And I think as we grow and as we get into these markets, all these things will be So then anybody that fits into our shoes later in the carrier are able to see what the company has done and where we are going forward. Okay. I think that's my cue. So with that, I would like to pass on to my colleague and our super Star, our Chief Financial Officer, Jamie Pex. Nice job, Benoit. Thank you so much for the very kind introduction. Like you said, my name is Jamie Beggs. I'm Senior Vice President and Chief Financial Officer. And as we were preparing for today, I have to say that I was sorely disappointed that I didn't get an intro video. I didn't get cool walk up music. I just had to follow the knob, Which is a very hard act to follow. So I joined Avance a little over a year ago and what you heard about today is exactly one of the reasons why To join the company and relocate to Cleveland. It's about growth and transformation. Take a look at what we're set to deliver in 2021, Record EPS of $3 per share. And if we rewind back to 2020 at the height of the pandemic, We while most companies went backwards, we grew. In fact, virtually every quarter since the Clariant acquisition, we have posted record results. The decade long strategy of transforming our portfolio towards specialty products and high end growth markets has reached an inflection point. We've been deliberate about where we've invested resources, what technologies we developed and of course been strategic on the M and A front with acquisitions like Clariant And divestitures like PP and S. This has enabled us to align ourselves to the 4 key growth drivers that you've heard about today, All of which have fueled the performance during the current year as well as most importantly has set a foundation for future steady growth. And this is transcended across all of our segments, all of which have outperformed during the year. We've been able to execute this Strategy against a backdrop of very challenging conditions, unprecedented inflation, lack of raw material availability And significant labor shortages has created headwinds of more than $300,000,000 We are one of the few companies that went early with a series of price increases That have more than offset this inflation. It's also covered the other myriad of costs that we've incurred in order to provide world class service And products to our customers around the globe. Delivering short term performance is not the only part of our strategy. It is also delivering long term value. Beyond EPS growth, EBITDA margin expansion And generating a high level of free cash flow, we have also been prioritizing our capital towards higher returning investments That have and will continue to outperform. The fact is our portfolio transformation has created tremendous value for our shareholders From underlying share performance to 11 consecutive years of dividend increases as well as over $1,000,000,000 of share repurchases. And our balance sheet is in a fabulous position to continue these investments to create value for our shareholders as we look for acquisitions to expand our sustainable solutions portfolio As well as increase the breadth of our composite technologies. I can tell you this, our company has never been in a better position to excel, To thrive and to grow. So that takes me back to why are we here today. The growth you've heard about isn't about share shift or Cost cutting, although if you followed Avient for a while, it has been the hallmark of some of our historical success. The growth you've heard about today is the demand we see For our solutions to solve the world's most challenging material science problems. And for each of the growth drivers that you've heard about today, we've provided 3 sets of information. First, we provided market data as an external data point of the demand that we're seeing. 2nd, We provided historical performance to provide confidence in our ability to execute. And then lastly, we've also provided our growth projections for the 6 point percent annual growth that we expect over the long run. Let's do a quick recap of each of the 4 growth drivers. 1st, Sustainable solution. This is the single largest opportunity that we have as a company. We've never seen so much customer pool As brand owners race to meet their commitments to use more recycled content. It is the number one inbound that we get from our packaging customers. And as we talked about today, If there was enough recycled content to meet these commitments they've laid out, the growth rates that you see on this slide would be grossly understated. However, this provides us an elongated opportunity to grow double digits for years to come. And this is only one end market. There are several other end markets and applications that want to use more recycled content and they're going to run into the same challenges as the brand owners And we have the solutions to be able to help them. Increasing the use of recycled content is only one of the 8 ways that we help our customers reach their Sustainability goals. We have the technical know how and product portfolio to drive 8% to 12% growth into the future. On the healthcare front, this industry really has accelerated during the pandemic. Many of us are a lot more comfortable with virtual care And a lot of us are taking a significant amount of ownership in our own health. This has driven a significant increase And the number of wearable devices being produced, the types and breadth of disposable applications as well as increased performance requirements. Kathy mentioned that we have over 15 years of developing long standing relationships with key OEMs. And as they adapt to the changing evolution of this space, We're in a great position to grow 8% to 10% into the future, which is consistent with what we've grown in the past and obviously well positioned to do so Continuously going forward. On the composites front, we've assembled a series of bolt on acquisitions over the past few years To develop a portfolio of technologies that generate the next that represent the next generation of wood, glass and metal replacement. We've also been deliberate about investing in resources to service industries like outdoor high performance, certain industrial applications And of course, the telecommunications market. The rapid evolution of data transmission and the required infrastructure needed Does represent one of the fastest growing areas for our composites team. They are well on their path to deliver 10% sustained growth Into the future. Lastly, our global footprint has benefited greatly from emerging regions. 10 years ago, we had little to no presence in China. I'm sorry, we had some presence in China and little to no presence in India and Latin America. And we see ample opportunity to continue to grow, especially when you add on the growth drivers. Bernard talked about the other opportunity that we have with Expanding our capabilities and also expanding the breadth of our resources in these regions. We're well on our path, as you can see from our historic growth to continue this 8% to 10% growth. But even more importantly, if you strip those growth drivers out, there's still a very healthy level of demand that's going to really boost up how we expect to grow into the future. So I want to pause for a minute on this slide. I think most of you guys have already started your models and And I want to be able to help you out a little bit, finance professional to finance professional. So as we presented the growth drivers, we presented them in their entirety. That is the best way to describe what we're trying to go accomplish with our customers. But as you can imagine, there is some overlap between some of the growth drivers. Let me give you an example. Composites, as Chris mentioned, a lot of those applications go into light weighting. Well, light weighting is also a sustainable solution. So for simplicity, we kept sustainable solutions whole and when there is overlap between the other growth drivers, we took it out and we applied it to our 2021 sales. This should provide a good basis for all your models. We've also conveniently put on the right hand side the annual growth rates that have been talked about today So how we get to the 6.5%. It's also important for us to talk about margins. As you can imagine, we're producing a lot of value for our customers. And as these solutions come into our portfolio, they do carry a higher contribution margin than our base business. And as they become a larger part of our portfolio, they will be accretive to the segments. In addition, Norbert talked about our Synergies that we still have left to go get with the Clarion acquisition that will also drive margin expansion for Color. And as we take a look at both segments, both of them have Margin targets are north of 20% and they're well on their way to be able to achieve them. So where does this leave us? 6.5% growth with accretive margins will result in double digit EBITDA growth and even higher double digit EPS growth. And as we continue to deliver these results consistently, you're going to see a multiple that is more akin to a formulator like Bob mentioned earlier, Which will result in a higher stock price, which goes back into why we're really here, which is to create value for our shareholders. So I hope you can see from today's presentation that I have a lot of confidence in my decision to bear the winters of the Midwest. This will be my second one coming up, Binag and Mo. So, I can definitely say that I'm very proud of being part of this team. But ultimately, why I really came to Avient is because of culture. I will tell you this from my experience, you do not get these types of results Unless you have a high performing team that is 100% aligned. And I'm really glad that today gave us an opportunity for you to see some of the business leaders that I work with On an everyday basis. We have diverse perspectives. We collaborate. We challenge each other. We drive results. And hopefully, we inspire our teams to do the same. So how are we actually going to accomplish all this? I will tell you, we're going to do it together as a team. We are a great place to work. And I know how you guys write up your reports. That won't be the headline that comes out of today's discussion. But I can tell you that is the reason why Avient has been successful historically and why we're going to be successful in the future. So before I turn it over to Bob to wrap up the day for us, I'd love to take any questions that you may have. Hi, Mike. Hi. Mike Harris, Goldman Sachs. Hey, Jamie, I noticed when you put up the EBITDA margin expansion goals, the 20%, didn't really see a timeframe around that. So if you could kind of speak to what the Expectations are in terms of getting to that 20%? Yes, that's a great question. Thanks for asking it. We purposely haven't defined some of the Timeframes here because we do expect these to take for we do expect these things to take a little bit of time because if you take a look at sustainable solutions, The timing of actually how some of those things come to fruition is not completely dependent on our ability to execute, right? So both Businesses, as you can see from looking at our historical performance, has increased those margins over time. But I would expect that within a 2 to 4 year period, that's likely when we'll Start to see those delivered more consistently. Okay. And just as a follow-up, as the supply chains normalize and product prices start to come down, What does that mean for your distribution business? I would love to know when that would happen, first of all, because supply chain conditions have not Gotten any better. Obviously, we're still struggling with a lot of raw material availability. From a core business, from the SEM and Color businesses, When we see deflation and hopefully some reprieve from all the work we have to do to get customer products to our customers, That's going to be a great opportunity for those businesses to hang on to margins, right? That's something that I think is going to be a tailwind for those two businesses. For distribution, it really comes into managing inventory, right? So we do look to have margins in that 5% to 6.5%. That's historically what they've been able to deliver even in inflationary or deflationary environment. And so as long as we're able to manage that inventory term that's To us, it's just good execution and distribution than it is about anything else on the inflation side. Hi, Mike. Hey, Jamie. Just a question on the other GDP growth area, that's about $2,000,000,000 in sales. A lot of times when I see that there is potential for some of that to be slower, maybe some of those technologies get older, customers Change products and such. So when you think about that 2,000,000,000 Is it all 2% to 3%? Do you have higher growth rates in there? Is there some slower growth rates? And maybe talk about how to keep that where you want it to be. So maybe some perspective on that. So the majority of distribution is in that number, right? So if you take a look at distribution, it's mainly a U. S. Base business, we do have some business over in Asia. So that will give you a good indication. Some of distribution is also in healthcare. As Kathy mentioned, A lot of our success in healthcare actually started in distribution. So as we started to develop more customer relationships, those Relationships transitioned over to our, I would say, more profitable businesses. So that's how I would think about that if you're taking a look at those areas. It's not because we see a certain Industry or certain technology not growing as fast. It's really the dynamics with distribution. Great. I'm really surprised I didn't get the 2022 budget numbers. So Frank Mitch from your research. Just curious what your 2022 budget. Seriously, I was going to ask about capital allocation and How should we think about uses of cash? You did put up a slide talking about buybacks and dividend hikes, etcetera, etcetera. Can you enlighten us? Well, I don't want to steal Bob's thunder since he is definitely going to hit that. So if he doesn't answer your question, I'm happy to come back on stage To be able to answer that for you, yes. All right. Sounds good. Thank you. Thank you. All right. Well, thank you again for your time and attention Today at our Investor Day, I think one of the most important responsibilities that I have as CEO is to get The right people on the bus and I couldn't ask for a better team. It's the best team that we have ever had in this company. I think it does show in the results, But it's absolutely present at all times in our culture and I can't echo enough what Jamie said at the end With respect to this being a great place to work, how much that means to us and how important I think that is to driving growth in the future. There really are only 2 other areas that I want to touch on before we conclude and take any final questions, and one is Capital allocation. So one area that I'm going to talk about briefly is acquisitions. So when I think about How we put cash to work in the business. Of course, we're going to fund our organic growth strategies in these four growth areas. And but we also really want to bring new technologies into the company and grow the business through acquisition. There's a dozen or so here on these slides. Obviously, we talked a lot about Clariant today being the largest in our history. But these bolt on acquisitions have really provided the background and the backdrop for us getting into new markets, Helping us to build platforms like composites and our expectation is that we'll continue to prioritize that. Of course, we want to continue to increase the dividend every year as we have before. And then ultimately, we can opportunistically buy back shares as well. There's a slide in here that I already referenced with respect to Clarion. I don't intend to cover that again, but I do want to show you One on the bolt on acquisitions. And the investment thesis here is a bit different than with Clariant in the sense that Oftentimes, these bolt ons are family owned, smaller companies, that have great technologies, but need investment to grow. And that's been a big focus for us is adding commercial resources to help expand markets, improve the technology and ultimately Increased sales and operating income from these businesses. And you can see we've substantially increased the commercial resources, the composite bolt on acquisitions we've By composite, I mean altogether, substantially improved operating income and margins. And our expectation is that's going to continue to be An important part of our growth strategy. So while all the comments today have been around these growth areas and very much an organic story, We certainly will put capital to work for acquisitions in the future. So next, I just want to talk A little bit about valuation and many of you have seen, the peer slides that we've used in the past. And so I'll be referencing those again today. We are a specialty formulator and as you heard today, very much focused on sustainable solutions. We're asset light. As a specialty formulator, we don't require a significant amount of capital investment. Even with respect to the things that we're doing from an innovation perspective, that's largely people, that's largely talent. And one of the things that has come up through the course of this day a couple of times has been some questions around resources. And just recall that in 2015, 2016, 2017 and so on, we were hiring commercial resources at 8%, 9% Per year. And that's what's allowed us to be in the position that we are today to capitalize on these growth strategies. So We have more to come, right, with respect to people. But as you can see from an asset standpoint, we are asset light And compare quite favorably to the peer sets. We're also high touch and you've heard this a few times today, right, With respect to the number of associates that we have in technology roles, I mean, we outnumber sales. And that really just tells The importance that technology plays in engaging with our customers and literally 1,000 if not 1,000,000 of custom formulations. So when you combine Asset Light with high touch, expanding margins, all that results in very high free cash flow conversion, Which again has us very favorable from a peer set perspective. Lastly, on margins, We've talked about our margin expansion opportunity. When I look at formulators versus the other specialty chemical specialty companies that are in here, What's interesting to note is that formulators don't necessarily always have the highest margins, but they do deliver consistently, Right. And they deliver consistently through cycles. And as a result of that, command a higher multiple. We've talked a lot about the Transformation of this company over the last 15 years. And as a result of those transformational efforts, we have seen an expansion in our multiple as you can see on the Well, as you can see on the left hand side of the slide, but there's room to grow and there's room to grow as a formulator. And ultimately, what we intend to do is to consistently deliver on our results, be viewed as a formulator and ultimately valued As a formulator. So key takeaways from today. The culture is everything. It all starts and ends with people. Well, as I said, I've got the best team that I've ever had. We've got the best team worldwide that we've ever had. We are a specialty formulator. We do intend to consistently deliver on the goals that we've set today, generate a high level of free cash flow, Put capital to work for select acquisitions, continue to invest in innovation. And as I said, I think when we do all those things, We will be viewed as a formulator and valued as a formulator. So with that, I'd love to take any remaining questions that you have today. Thank you, Bob. Andrew Pescela from Morgan Stanley. So I just wanted to touch on growth. It seems like a lot of it, as we talk through a lot of the opportunities, seems like it's still kind of conservative. And I think That's typically the approach that you've taken in the past. So as you think about, for example, like the plus factor, the $100,000,000 opportunity there, and just kind of innovation as well, Opportunity for premium pricing, how do you view that from a perspective of conservatism and incremental opportunity beyond that? Yes. I mean, I think when Jamie was doing her recap, she commented on, for example, the growth assumptions around sustainable Solutions and plus factor is a big part of that. I think that there are some gating factors in there with Respect to availability of recycled content. If we had all the recycled content that brand owners Needed and wanted and could achieve their goals, I think we would blow ours away as well. So the $100,000,000 really is I think a very narrow We'll focus at really just looking at brand owners. As you saw today, they won't always be able to go to 100% recycled content. It might be 25 or 50 and so on. So I think that moderates that number. But at this point, We're focused on the brand owners and their stated commitments, but then there's all the other businesses out there and smaller customers who I just think don't have this As a priority, they will eventually. And I think that presents even more growth opportunity for us. And then just to kind of follow-up on that. One thing that kind of struck me again, there's a lot of growth here. In the past, I think part of the reason Maintaining kind of the distribution segment has been the overlap and the kind of the exposure it gives you to some of your customers and also some of the kind of insight it might give As we look at kind of the slides, one thing that strikes me is having that kind of ABX distribution and how much That kind of impacts how you kind of screen from a margin perspective or just looking at other metrics. So what as You have such an opportunity from a growth perspective across the businesses. Does it still make sense to have that distribution business? Or is there more opportunity to kind of unlock value And look, I think the distribution business has been a great one for us over the years. Just look at The last year in particular did $70,000,000 of EBITDA and this year it's going to do $94,000,000 So it has been growing well. I've always really appreciated and loved the interconnectivity between distribution and our other segments. Sometimes I think that investors Maybe under the impression that I would never consider doing something different and that's just not true. But I think at the Present time with the portfolio that we have, it's still a good fit for us. But as I say in the future, if there is Catalysts or things change and we feel differently about it. We could always change direction. Just wanted to pass first on the Guidance for the long range growth drivers and whatnot, that excludes any M and A in what you've outlined? Yes. Okay. And is there any sort of way of thinking about conceptually how you feel you'll be able to Allocate capital over a 3 to 5 year period and what kind of impact M and A may have on the business? To me, Acquisitions have been the hardest thing in the world to predict, right? And you go through periods of time and you think, Oh my gosh, there's just absolutely nothing going on right now. And then all of a sudden you've got 2 or 3 that you can work on simultaneously. So We've always found deals, right? We've put the right ones in place. We look at a lot. I'm very proud of the fact that We don't buy something just for the sake of doing so. So we're very, I think, prudent with our capital. But I would say that's going to be the preponderance use of cash outside of, again, funding our organic growth initiatives. It's just really hard to say how you can model that in 1 year after the other. And then just a follow-up on the M and A side. So you Made the choice and it certainly played out well to invest in the composite side and you took the hit early on, on the margins and whatnot. Is that Still something that you would consider doing in the future through M and A? Would you be willing to take that longer view and put in an investment that could be diluted for a while? I mean, I think for the right opportunity that would certainly make sense. I think we had a unique one, 5 or 6 years ago with respect To 2 particular elements of composite technology, which you're correct, at the operating income level was Not generating income, but we were also adding cost, right, with respect to commercial resources to help bring that to fruition. So I would never say never that, that wouldn't happen again. But when I think about where we want to grow and where we want to focus in M and A, I think for the most part, you're going to see us be bringing things in that are already at a positive operating income level. When you look at the bolt ons, right, and those margins going from 9% to 21%, I think that's the right Framework to think about future bolt ons. So I kind of want to come back to the 2022 question more from an earnings growth Perspective, you've shared this view that long term you expect to be able to deliver 15% plus EPS growth. But I'm kind of curious as we think about the $3 number for 2021 and then start to think about 22, that puts us at like a 345 baseline, but I also think about Price versus cost having weighed on your margins and supply chain issues etcetera, plus some additional synergies. So Is 22% kind of tracking toward higher than that 15% number as your baseline assumption as you're starting to think about next year's Look, I think the 15% is a good number to think about over a longer period of time. That's Going to start next year, right? So next year is the 1st year of 15 plus percent. We don't have formal guidance at this point. I believe we'd be doing that sometime after we issue our Q4 results, but it's a great starting point. I mean with Look, through all this, no one's even really asked about demand. And at this point, demand conditions continue to remain strong. And I believe as long as that continues, we would be able to do that or better next year. Seeing no other questions, and none in the chat Function, Kyle, great. Okay. Well, listen once again, we just want to say thank you to everyone who was able to attend our Investor Day today. I just couldn't be more grateful for the team that I have, the support that I get from all of you. We obviously have a very compelling story, one that we're very proud of and one we're very excited about. It's our job to ultimately deliver on these goals. And as I said, I think we will ultimately be viewed as a formulator, valued as a formulator. So thank you very much again for today.

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