XML 41 R21.htm IDEA: XBRL DOCUMENT
v3.25.0.1

INCOME TAXES | 12 Months Ended
--- | ---
Dec. 31, 2024
Income Tax Disclosure [Abstract] |
INCOME TAXES | Note 12 — INCOME TAXES The Company is subject to taxation in the U.S. and numerous international jurisdictions. In determining the effective income tax rate, the Company analyzes various factors, including annual earnings, the laws of taxing jurisdictions in which the earnings were generated, the impact of state and local income taxes, the ability to use tax credits, net operating loss carryforwards, and available planning alternatives. Discrete items, including the effect of changes in tax laws, statutory tax rates, and valuation allowances or other non-recurring tax adjustments are reflected in the period in which they occur as an addition to or reduction from, the tax provision. We recognize tax on global intangible low-taxed income (GILTI) and the deduction of foreign-derived intangible income (FDII) as a period expense in the period in which the tax is incurred. In January 2019, the Organization for Economic Co-operation and Development (OECD) announced further work in continuation of its Base Erosion and Profit Shifting project, focusing on two "pillars." Pillar One provides a framework for the reallocation of certain residual profits of multinational enterprises to market jurisdictions where goods or services are used or consumed. Pillar Two consists of two interrelated rules referred to as Global Anti-Base Erosion ("GloBe") Rules, which operate to impose a minimum tax rate of 15% calculated on a jurisdictional basis for companies with revenue above €750 million. Certain jurisdictions enacted legislation to adopt GloBE rules with effective dates beginning in 2024. As a result of the transition rules, Avient does not expect there to be a material impact to its financial statements. The Company will continue to monitor legislative and regulatory developments in this area. Income from continuing operations, before income taxes is summarized below based on the geographic location of the operation to which such earnings are attributable. Income (loss) from continuing operations, before income taxes consists of the following:
(In millions) |  | 2024 |  | 2023 |  | 2022
Domestic |  | $ | (25.3) |  |  | $ | (2.7) |  |  | $ | (82.4) |
International |  | 250.1 |  |  | 90.0 |  |  | 146.2 |
Income from continuing operations, before income taxes |  | $ | 224.8 |  |  | $ | 87.3 |  |  | $ | 63.8 |
A summary of income tax expense (benefit) from continuing operations is as follows:
(In millions) |  | 2024 |  | 2023 |  | 2022
Current income tax expense (benefit): |  |  |  |  |  |
Domestic |  | $ | 7.5 |  |  | $ | 18.5 |  |  | $ | (76.2) |
International |  | 70.4 |  |  | 53.8 |  |  | 56.4 |
Total current income tax expense (benefit) |  | $ | 77.9 |  |  | $ | 72.3 |  |  | $ | (19.8) |
Deferred income tax expense (benefit): |  |  |  |  |  |
Domestic |  | $ | (11.4) |  |  | $ | (35.8) |  |  | $ | 2.6 |
International |  | (12.4) |  |  | (25.5) |  |  | (2.1) |
Total deferred income tax (benefit) expense |  | $ | (23.8) |  |  | $ | (61.3) |  |  | $ | 0.5 |
Total income tax expense (benefit) |  | $ | 54.1 |  |  | $ | 11.0 |  |  | $ | (19.3) |
A reconciliation of the applicable U.S. federal statutory tax rate to the consolidated effective income tax rate from continuing operations along with a description of significant reconciling items is included below for the years ended December 31, 2024, 2023 and 2022.
|  | 2024 |  | 2023 |  | 2022 |  |
U.S. federal income tax rate |  | 21.0 | % |  | 21.0 | % |  | 21.0 | % |  |
International tax rate differential: |  |  |  |  |  |  |  |
Asia |  | 0.4 |  |  | 0.9 |  |  | 1.1 |  |  |
Europe |  | (0.8) |  |  | (5.2) |  |  | (12.4) |  |  |
North and South America |  | 2.1 |  |  | 4.5 |  |  | 5.9 |  |  |
Total international tax rate differential |  | 1.7 |  |  | 0.2 |  |  | (5.5) |  |  |
Net tax on GILTI and Subpart F Income |  | (0.5) |  |  | 2.2 |  |  | 5.9 |  |  |
International tax on certain current and prior year earnings |  | 1.6 |  |  | 3.9 |  |  | 0.2 |  |  |
Non-deductible interest |  | 0.4 |  |  | 5.3 |  |  | 2.9 |  |  |
Research and development credit |  | (1.7) |  |  | (3.7) |  |  | (5.0) |  |  |
Capital losses |  | — |  |  | (5.4) |  |  | (88.1) |  |  |
State and local tax, net |  | (0.7) |  |  | (2.3) |  |  | (4.0) |  |  |
International permanent items |  | 0.7 |  |  | (7.5) |  |  | 12.1 |  |  |
U.S. permanent items |  | 2.1 |  |  | 2.5 |  |  | 1.9 |  |  |
Net impact of uncertain tax positions |  | (1.1) |  |  | (5.3) |  |  | 12.9 |  |  |
Changes in valuation allowances |  | — |  |  | 3.6 |  |  | 15.4 |  |  |
Other |  | 0.6 |  |  | (1.9) |  |  | 0.1 |  |  |
Effective income tax rate |  | 24.1 | % |  | 12.6 | % |  | (30.2) | % |  |
The effective tax rates for all periods differed from the applicable U.S. federal income tax rate as a result of permanent items, state and local income taxes, differences in international tax rates and certain other items. Permanent items primarily consist of income or expense not taxable or deductible. Significant items impacting the effective income tax rate are described below. 2024 Significant items The consolidated effective income tax rate from continuing operations was 24.1%, which was higher than the U.S. federal rate of 21%. This higher rate was primarily driven by U.S. permanent items of 2.1%, international rate differential of 1.7% and tax associated with foreign income repatriation of 1.6%. These items were partially offset by credits associated with research and development of 1.7% and changes in uncertain tax position which resulted in a net benefit of 1.1%. 2023 Significant items The consolidated effective income tax rate from continuing operations was 12.6%, which was lower than the U.S. federal rate of 21%. This lower rate was primarily driven by the recognition of tax benefits of 7.5% associated with tax impairments of investments in affiliates, driven in part from European restructuring actions. Further, we recognized a 5.4% tax benefit from federal and state capital losses associated with an international affiliate's tax status change in 2022. Finally, we recognized tax benefits from the reduction of uncertain tax positions as well as the U.S. R&D tax credit, which reduced the tax rate, 5.3% and 3.7%, respectively. Partially offsetting these benefits were non-deductible foreign interest, 5.3%, tax associated with foreign income repatriation, 3.9%, and an increase of our valuation allowance which impacted the rate 3.6%. 2022 Significant items We recognized a net tax benefit of 88.1% in 2022 from federal and state capital loss deductions associated with an international affiliate's tax status change. We also recognized a tax benefit of 5.5% associated with earnings in foreign jurisdictions with statutory rates below the U.S. federal income tax rate. Further, the state and local tax benefit was 4.0%, driven by a U.S. tax loss. Offsetting these benefits in 2022 were the tax impact of international permanent items of 12.1%, which primarily included an unfavorable tax effect of withholding taxes. We also increased our valuation allowance, which impacted the rate 15.4%, for deferred tax assets that are unlikely to create income tax benefits before their expiration. Further, uncertain tax positions increased, which impacted the rate 12.9%, primarily associated with European restructuring charges which are not expected to realize and a tax effect of non-deductible foreign interest of 2.9%. Components of our deferred tax assets (liabilities) as of December 31, 2024 and 2023 were as follows:
(In millions) |  | 2024 |  | 2023
Deferred tax assets: |  |  |  |
Employment costs |  | 22.0 |  |  | 21.4 |
Environmental accruals |  | 35.5 |  |  | 38.5 |
Net operating loss carryforwards |  | 60.8 |  |  | 66.0 |
Operating leases |  | 9.5 |  |  | 7.8 |
Research and development |  | 53.0 |  |  | 45.8 |
Capitalized and carryforward interest |  | 78.5 |  |  | 48.7 |
Financial Derivatives |  | 4.5 |  |  | 48.3 |
Other |  | 32.7 |  |  | 52.2 |
Gross deferred tax assets |  | $ | 296.5 |  |  | $ | 328.7 |
Valuation allowances |  | (30.3) |  |  | (39.6) |
Total deferred tax assets, net of valuation allowances |  | $ | 266.2 |  |  | $ | 289.1 |
Deferred tax liabilities: |  |  |  |
Property, plant and equipment |  | $ | (100.4) |  |  | $ | (101.3) |
Goodwill and intangibles |  | (318.5) |  |  | (351.2) |
Operating leases |  | (9.7) |  |  | (7.6) |
Other |  | (16.7) |  |  | (18.3) |
Total deferred tax liabilities |  | $ | (445.3) |  |  | $ | (478.4) |
Net deferred tax liabilities |  | $ | (179.1) |  |  | $ | (189.3) |
Consolidated Balance Sheets: |  |  |  |
Non-current deferred income tax assets |  | $ | 81.3 |  |  | $ | 92.3 |
Non-current deferred income tax liabilities |  | $ | (260.4) |  |  | $ | (281.6) |
As of December 31, 2024, we had gross state net operating loss carryforwards of $66.6 million that expire between 2025 and 2038 or that have indefinite carryforward periods. Various international subsidiaries have gross net operating loss carryforwards totaling $225.7 million that expire between 2025 and 2041 or that have indefinite carryforward periods. As of December 31, 2024, no tax provision has been made on approximately $93.1 million of undistributed earnings of certain non-U.S. subsidiaries as these amounts continue to be indefinitely reinvested consistent with our policy. The cash that is permanently reinvested is typically used for operations. It is not practical to estimate the additional income taxes and applicable withholding taxes that would be payable on the remittance of such undistributed earnings. Tax on certain foreign earnings as of December 31, 2024 and 2023 included in the Other deferred tax liabilities line in the table above are $9.7 million and $9.2 million, respectively. We made worldwide income tax payments of $74.2 million, $156.4 million and $109.7 million in 2024, 2023, and 2022, respectively. We received refunds of $8.3 million, $5.2 million and $29.4 million in 2024, 2023, and 2022, respectively. A reconciliation of unrecognized tax benefits is as follows:
|  | Unrecognized Tax Benefits
(In millions) |  | 2024 |  | 2023 |  | 2022
Balance as of January 1, |  | $ | 16.9 |  |  | $ | 25.4 |  |  | $ | 19.8 |
Increases as a result of positions taken during current year |  | 0.3 |  |  | 1.9 |  |  | 10.6 |
Increases as a result of positions taken for prior years |  | 0.7 |  |  | 0.4 |  |  | 0.4 |
Reductions for tax positions of prior years |  | (0.6) |  |  | (10.7) |  |  | (4.3) |
Decreases as a result of lapse of statute of limitations |  | (3.2) |  |  | (0.6) |  |  | (0.6) |
Other, net |  | (0.5) |  |  | 0.5 |  |  | (0.5) |
Balance as of December 31, |  | $ | 13.6 |  |  | $ | 16.9 |  |  | $ | 25.4 |
We recognize interest and penalties related to uncertain tax positions in the tax provision. We had $2.5 million accrued as of December 31, 2024 and 2023. Expected tax settlements during the next twelve months are expected to be a benefit of $5.8 million to our unrecognized tax positions. If all unrecognized tax benefits were recognized, the net impact on the tax provision would be a benefit of $13.6 million. In December 2024, Avient received a Notice of Deficiency (Notice) from the U.S. Internal Revenue Service (IRS) proposing an adjustment to the 2019 tax year resulting from a disallowed capital loss. The proposed incremental tax liability associated with the Notice is $23.8 million. We disagree with the Notice and will vigorously contest it by filing a petition in U.S. Tax Court in the first quarter of 2025. However, there can be no assurance this dispute with the IRS will be resolved favorably. As of December 31, 2024, no income tax provision has been recorded related to this matter. An unfavorable resolution in U.S. Tax Court could result in cash tax payments, plus interest, and adversely impact the effective tax rate. With limited exceptions, we are no longer subject to U.S. federal, state and international tax examinations for periods preceding 2021.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for income tax. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-12 Reference 2: http://www.xbrl.org/2003/role/exampleRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 231 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482663/740-10-55-231 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12C -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-12C Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12B -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-12B Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 270 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org/1943274/2147477891/740-270-50-1 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SAB Topic 6.I.5.Q1) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479360/740-10-S99-1 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 946 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 13 -Publisher FASB -URI https://asc.fasb.org/1943274/2147480990/946-20-50-13 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480678/235-10-S99-1 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/740/tableOfContent Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 14 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-14 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-21 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 17 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-17 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479360/740-10-S99-2 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 30 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482603/740-30-50-2 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration