Major compounder and resin distributor PolyOne Corp. is seeing "minimal disruption" to its business in Europe and the Americas as a result of the coronavirus.
On a March 20 call with analysts, Chairman, President and CEO Robert Patterson said PolyOne has instituted extensive preventative health and safety measures including restricting visitors and travel, while promoting social distancing and remote working arrangements.
"So far, we have had minimal disruption in Europe and the Americas. Keep in mind that despite all this going on, the world is still trying to keep working," Patterson said.
With its per-share stock price sliding, PolyOne scheduled the special investor conference call to address expectations for the first quarter and the status of the company's previously announced acquisition of the Clariant Masterbatch business.
Most of the analysts' questions were about the Clariant deal. They quizzed Patterson about whether the coronavirus could impact final terms of the deal, or the financing or regulatory approval.
Patterson emphasized that the deal is still going forward, and that Avon Lake, Ohio-based PolyOne could close on the purchase as early as June 2.
Patterson also reaffirmed the company's earnings expectations for the first quarter. PolyOne cited strong performance from its North American businesses, which is helping to offset early first quarter impacts of the COVID-19 virus in China. The company also expects to end the first quarter with a cash position of $1.25 billion.
Asked about the potential impact of a recession on PolyOne, Patterson harkened back to the economic downturns of 2001 and 2008-09.
If there's a recession now that's somewhere between the severity of those two, Patterson said it could impact earnings before interest, taxes, depreciation and amortization by 20 percent.
But he added that PolyOne now has "unusual circumstances" that could cushion the potential economic blow.
"We have nowhere near as much concentration in housing and autos we once did. And ... much of our sales now are in health care, consumer and packaging, so I think we're in a better spot than we've ever been before with respect to the markets we saw how that would play out in a recession," Patterson said.
Patterson added that layoffs are unlikely at this point.
"We actually believe, because we need to keep our facilities, open and running, we actually need to find ways to be more flexible with respect to our workforce and how to deploy them to the greatest effect, while minimizing any, you know, issues with respect to the virus," Patterson said.
PolyOne announced plans Dec. 19 to acquire the Clariant unit for $1.45 billion. The unit has annual sales of $1.1 billion. With the Clariant operations, PolyOne will add 46 manufacturing sites and technology centers in 29 countries and about 3,600 employees.
PolyOne employs 5,600 worldwide and posted sales of $2.9 billion in 2019. The firm is a founding member of the Alliance to End Plastic Waste.
