UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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FORM 10-Q

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☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, ~~2022~~2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission file number: 001-38912

Avantor, Inc.

(Exact name of registrant as specified in its charter)


Delaware			82-2758923
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

Radnor Corporate Center, Building One, Suite 200

100 Matsonford Road

Radnor, Pennsylvania 19087

(Address of principal executive offices) (zip code)

(610) 386-1700

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Exchange on which registered

Common stock, $0.01 par value

AVTR

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. ☒ Large Accelerated Filer ☐ Accelerated Filer ☐ Non-accelerated Filer ☐ Smaller reporting company ☐ Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

On October ~~20, 2022, 674,204,414~~23, 2023, 676,386,215 shares of common stock, $0.01 par value per share, were outstanding.

Avantor, Inc. and subsidiaries

Form 10-Q for the quarterly period ended September 30, ~~2022~~2023

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Glossary


			Description
we, us, our			Avantor, Inc. and its subsidiaries

Adjusted EBITDA			our earnings or loss before interest, taxes, depreciation, amortization and certain other adjustments
AMEA			Asia, Middle-East and Africa
Annual Report			our annual report on Form 10-K for the year ended December 31, ~~2021~~
~~AMEA~~			~~Asia, Middle-East and Africa~~2022
AOCI			accumulated other comprehensive income or loss
~~cGMP~~			~~Current Good Manufacturing Practice~~
COVID-19			Coronavirus disease of 2019
double-digit			greater than 10%
EURIBOR			the basic rate of interest used in lending between banks on the European Union interbank market
GAAP			United States generally accepted accounting principles
~~Goldman Sachs~~			~~an investment banking firm and its affiliates~~
high single-digit			7 - 9%
LIBOR			the basic rate of interest used in lending between banks on the London interbank market
long-term			period other than short-term
low single-digit			1 - 3%
M&A			Mergers and Acquisitions
MCPS			6.250% Series A Mandatory Convertible Preferred Stock
mid single-digit			4 - 6%
OCI			other comprehensive income or loss

Ritter			Ritter GmbH and affiliates, a company we acquired in June 2021
RSU			restricted stock unit
SEC			the United States Securities and Exchange Commission
SG&A expenses			selling, general and administrative expenses
SOFR			secured overnight financing rate
Specialty procurement			product sales related to customer procurement services
VWR			VWR Corporation and its subsidiaries, a company we acquired in November 2017

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Cautionary factors regarding forward-looking statements

This report contains forward-looking ~~statements.~~statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, and are subject to the safe harbor created thereby under the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact included in this report are forward-looking statements. Forward-looking statements discuss our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. These statements may be preceded by, followed by or include the words “aim,” “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “intend,” “likely,” “outlook,” “plan,” “potential,” “projection,” “prospects,” “continue,” “goal,” “objective,” “opportunity,” “near-term,” “long-term,” “assumption,” “project,” ~~“projection,~~“guidance,” “target,” “trend,” “seek,” “can,” “could,” “may,” “should,” “would,” “will,” the negatives thereof and other words and terms of similar meaning.

Forward-looking statements are inherently subject to risks, uncertainties and assumptions; they are not guarantees of performance. You should not place undue reliance on these statements. We have based these forward-looking statements on our current expectations and projections about future events. Although we believe that our assumptions made in connection with the forward-looking statements are reasonable, we cannot assure you that the assumptions and expectations will prove to be correct.

You should understand that the following important factors, in addition to those discussed under Part I, Item 1A “Risk Factors” in our Annual Report, as such risk factors may be updated from time to time in our periodic filings with the SEC and in this report, could affect our future results and could cause those results or other outcomes to differ materially from those expressed or implied in our forward-looking statements:

•disruptions to our operations;

•competition from other industry providers;

•our ability to implement our growth strategy;

•our ability to anticipate and respond to changing industry trends;

•adverse trends in consumer, business, and government spending;

•our dependence on sole or limited sources for some essential materials and components;

•our ability to successfully value and integrate acquired businesses;

•our products’ satisfaction of applicable quality criteria, specifications and performance standards;

•our ability to maintain our relationships with key customers;

•our ability to maintain consistent purchase volumes under purchase orders;

•our ability to maintain and develop relationships with drug manufacturers and contract manufacturing organizations;

•the impact of new laws, regulations, or other industry standards;

iii

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•changes in the interest rate environment that increase interest on our borrowings;

~~iii~~

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•adverse impacts from currency exchange rates or currency controls imposed by any government in major areas where we operate or otherwise;

•our ability to implement and improve processing systems and prevent a compromise of our information systems;

•our ability to protect our intellectual property and avoid third-party infringement claims;

•exposure to product liability and other claims in the ordinary course of business;

•our ability to develop new products responsive to the markets we serve;

•the availability of raw materials;

•our ability to source certain of our products from certain suppliers;

•our ability to contain costs in an inflationary environment;

•our ability to avoid negative outcomes related to the use of chemicals;

•our ability to maintain highly skilled employees;

•our ability to maintain a competitive workforce;

•adverse impact of impairment charges on our goodwill and other intangible assets;

•fluctuations and uncertainties related to doing business outside the United States;

•our ability to obtain and maintain required regulatory clearances or approvals may constrain the commercialization of submitted products;

•our ability to comply with environmental, health and safety laws and regulations, or the impact of any liability or obligation imposed under such laws or regulations;

•our indebtedness could adversely affect our financial condition and prevent us from fulfilling our debt or contractual obligations;

•our ability to generate sufficient cash flows or access sufficient additional capital to meet our debt obligations or to fund our other liquidity needs; and

•our ability to maintain an adequate system of internal control over financial reporting.

All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing cautionary statements. In addition, all forward-looking statements speak only as of the date of this report. We undertake no obligations to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise other than as required under the federal securities laws.

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PART I — FINANCIAL INFORMATION

Item 1. Financial statements

Avantor, Inc. and subsidiaries

Index to unaudited condensed consolidated financial statements


			Page
Unaudited condensed consolidated balance sheets			2
Unaudited condensed consolidated statements of operations			3
Unaudited condensed consolidated statements of comprehensive income or loss			4
Unaudited condensed consolidated statements of stockholders’ equity			5
Unaudited condensed consolidated statements of cash flows			7
Notes to unaudited condensed consolidated financial statements			8

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Avantor, Inc. and subsidiaries

Unaudited condensed consolidated balance sheets


(in millions)	(in millions)	September 30, 2022		December 31, 2021		(in millions)	September 30, 2023		December 31, 2022
Assets	Assets					Assets
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	265.6	$	301.7	Cash and cash equivalents	$	236.9	$	372.9
Accounts receivable, net of allowances of $26.8 and $26.4		1,231.4		1,222.1
Accounts receivable, net of allowances of $33.5 and $28.2						Accounts receivable, net of allowances of $33.5 and $28.2	1,150.3		1,218.4
Inventory	Inventory	905.0		872.0		Inventory	850.3		913.5
Other current assets	Other current assets	158.1		81.4		Other current assets	147.3		153.1
Total current assets	Total current assets	2,560.1		2,477.2		Total current assets	2,384.8		2,657.9
Property, plant and equipment, net of accumulated depreciation of $488.6 and $445.2		698.2		705.5
Other intangible assets, net (see note 7)		4,099.0		5,140.3
Property, plant and equipment, net of accumulated depreciation of $579.7 and $518.4						Property, plant and equipment, net of accumulated depreciation of $579.7 and $518.4	698.3		727.0
Other intangible assets, net (see note 6)						Other intangible assets, net (see note 6)	3,788.1		4,133.3
Goodwill	Goodwill	5,511.4		5,341.1		Goodwill	5,637.7		5,652.6
Other assets	Other assets	244.6		233.1		Other assets	289.2		293.5
Total assets	Total assets	$	13,113.3	$	13,897.2	Total assets	$	12,798.1	$	13,464.3
Liabilities and stockholders’ equity	Liabilities and stockholders’ equity					Liabilities and stockholders’ equity
Current liabilities:	Current liabilities:					Current liabilities:
Current portion of debt	Current portion of debt	$	280.6	$	45.2	Current portion of debt	$	335.6	$	364.2
Accounts payable	Accounts payable	768.9		755.1		Accounts payable	655.8		758.2
Employee-related liabilities	Employee-related liabilities	120.0		199.7		Employee-related liabilities	120.0		122.4
Accrued interest	Accrued interest	38.6		49.8		Accrued interest	39.6		49.9
Other current liabilities	Other current liabilities	343.8		401.0		Other current liabilities	337.1		364.1
Total current liabilities	Total current liabilities	1,551.9		1,450.8		Total current liabilities	1,488.1		1,658.8
Debt, net of current portion	Debt, net of current portion	5,907.5		6,978.0		Debt, net of current portion	5,290.5		5,923.3
Deferred income tax liabilities	Deferred income tax liabilities	728.4		913.0		Deferred income tax liabilities	648.8		731.4
Other liabilities	Other liabilities	334.1		358.4		Other liabilities	271.3		295.4
Total liabilities	Total liabilities	8,521.9		9,700.2		Total liabilities	7,698.7		8,608.9
Commitments and contingencies (see note 8)
Commitments and contingencies (see note 7)						Commitments and contingencies (see note 7)
Stockholders’ equity:	Stockholders’ equity:					Stockholders’ equity:
MCPS including paid-in capital, 0.0 and 20.7 shares outstanding		—		1,003.7
Common stock including paid-in capital, 674.2 and 609.7 shares outstanding		3,774.5		2,752.6

Common stock including paid-in capital, 676.3 and 674.3 shares issued and outstanding						Common stock including paid-in capital, 676.3 and 674.3 shares issued and outstanding	3,817.5		3,785.3
Accumulated earnings	Accumulated earnings	1,028.7		483.9		Accumulated earnings	1,393.0		1,170.4
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(211.8)		(43.2)		Accumulated other comprehensive loss	(111.1)		(100.3)
Total stockholders’ equity	Total stockholders’ equity	4,591.4		4,197.0		Total stockholders’ equity	5,099.4		4,855.4
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	13,113.3	$	13,897.2	Total liabilities and stockholders’ equity	$	12,798.1	$	13,464.3

See accompanying notes to the unaudited condensed consolidated financial statements.

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Avantor, Inc. and subsidiaries

Unaudited condensed consolidated statements of operations


(in millions, except per share data)	(in millions, except per share data)	Three months ended September 30,				Nine months ended September 30,				(in millions, except per share data)	Three months ended September 30,				Nine months ended September 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Net sales	Net sales	$	1,856.5	$	1,834.3	$	5,717.4	$	5,478.5	Net sales	$	1,720.2	$	1,856.5	$	5,244.4	$	5,717.4
Cost of sales	Cost of sales	1,205.8		1,218.4		3,729.1		3,623.3		Cost of sales	1,141.6		1,205.8		3,451.0		3,729.1
Gross profit	Gross profit	650.7		615.9		1,988.3		1,855.2		Gross profit	578.6		650.7		1,793.4		1,988.3
Selling, general and administrative expenses	Selling, general and administrative expenses	374.9		378.7		1,109.9		1,097.0		Selling, general and administrative expenses	368.4		374.9		1,119.5		1,109.9
Impairment charges										Impairment charges	—		—		160.8		—
Operating income	Operating income	275.8		237.2		878.4		758.2		Operating income	210.2		275.8		513.1		878.4
Interest expense	Interest expense	(67.3)		(54.1)		(196.0)		(156.6)		Interest expense	(72.4)		(67.3)		(219.5)		(196.0)
Loss on extinguishment of debt	Loss on extinguishment of debt	(2.9)		—		(10.8)		(8.4)		Loss on extinguishment of debt	(2.0)		(2.9)		(5.9)		(10.8)
Other income, net	Other income, net	2.7		3.4		4.8		19.8		Other income, net	0.7		2.7		3.3		4.8
Income before income taxes	Income before income taxes	208.3		186.5		676.4		613.0		Income before income taxes	136.5		208.3		291.0		676.4
Income tax expense	Income tax expense	(41.3)		(29.7)		(131.6)		(134.4)		Income tax expense	(28.1)		(41.3)		(68.4)		(131.6)
Net income	Net income	167.0		156.8		544.8		478.6		Net income	108.4		167.0		222.6		544.8
Accumulation of yield on preferred stock	Accumulation of yield on preferred stock	—		(16.1)		(24.2)		(48.4)		Accumulation of yield on preferred stock	—		—		—		(24.2)
Net income available to common stockholders	Net income available to common stockholders	$	167.0	$	140.7	$	520.6	$	430.2	Net income available to common stockholders	$	108.4	$	167.0	$	222.6	$	520.6

Earnings per share:	Earnings per share:									Earnings per share:
Basic	Basic	$	0.25	$	0.24	$	0.81	$	0.74	Basic	$	0.16	$	0.25	$	0.33	$	0.81
Diluted	Diluted	$	0.25	$	0.24	$	0.80	$	0.73	Diluted	$	0.16	$	0.25	$	0.33	$	0.80
Weighted average shares outstanding:	Weighted average shares outstanding:									Weighted average shares outstanding:
Basic	Basic	674.1		588.5		643.0		584.1		Basic	676.0		674.1		675.4		643.0
Diluted	Diluted	679.3		598.1		680.4		593.0		Diluted	678.5		679.3		678.1		680.4

See accompanying notes to the unaudited condensed consolidated financial statements.

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Avantor, Inc. and subsidiaries

Unaudited condensed consolidated statements of comprehensive income or loss


(in millions)	(in millions)	Three months ended September 30,				Nine months ended September 30,				(in millions)	Three months ended September 30,				Nine months ended September 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Net income	Net income	$	167.0	$	156.8	$	544.8	$	478.6	Net income	$	108.4	$	167.0	$	222.6	$	544.8
Other comprehensive loss:	Other comprehensive loss:									Other comprehensive loss:
Foreign currency translation — unrealized loss	Foreign currency translation — unrealized loss	(62.1)		(38.2)		(160.1)		(55.2)		Foreign currency translation — unrealized loss	(30.4)		(62.1)		(4.8)		(160.1)
Derivative instruments:	Derivative instruments:									Derivative instruments:
Unrealized gain (loss)		20.7		—		27.7		(2.0)
Reclassification of loss (gain) into earnings		0.2		0.9		(1.1)		3.0
Unrealized gain										Unrealized gain	8.0		20.7		24.7		27.7
Reclassification of (gain) loss into earnings										Reclassification of (gain) loss into earnings	(8.4)		0.2		(22.5)		(1.1)
Activity related to defined benefit plans	Activity related to defined benefit plans	(0.1)		0.6		4.4		1.0		Activity related to defined benefit plans	(0.9)		(0.1)		(6.6)		4.4
Other comprehensive loss before income taxes	Other comprehensive loss before income taxes	(41.3)		(36.7)		(129.1)		(53.2)		Other comprehensive loss before income taxes	(31.7)		(41.3)		(9.2)		(129.1)
Income tax effect	Income tax effect	(22.2)		(2.8)		(39.5)		(6.6)		Income tax effect	(7.5)		(22.2)		(1.6)		(39.5)
Other comprehensive loss	Other comprehensive loss	(63.5)		(39.5)		(168.6)		(59.8)		Other comprehensive loss	(39.2)		(63.5)		(10.8)		(168.6)
Comprehensive income	Comprehensive income	$	103.5	$	117.3	$	376.2	$	418.8	Comprehensive income	$	69.2	$	103.5	$	211.8	$	376.2

See accompanying notes to the unaudited condensed consolidated financial statements.

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Avantor, Inc. and subsidiaries

Unaudited condensed consolidated statements of stockholders’ equity
(in millions) Stockholders’ equity
MCPS including paid-in capital Common stock including paid-in capital Accumulated earnings AOCI Total
Shares Amount Shares Amount
Balance at June 30, 2022 — $ — 673.9 $ 3,756.1 $ 861.7 $ (148.3) $ 4,469.5
Comprehensive income — — — — 167.0 (63.5) 103.5
Stock-based compensation expense — — — 13.7 — — 13.7
Stock option exercises and other common stock transactions — — 0.3 4.7 — — 4.7
Balance at September 30, 2022 — $ — 674.2 $ 3,774.5 $ 1,028.7 $ (211.8) $ 4,591.4
Balance at June 30, 2021 20.7 $ 1,003.7 583.7 $ 1,747.7 $ 233.1 $ 1.4 $ 2,985.9
Comprehensive income — — — — 156.8 (39.5) 117.3
Issuance of stock, net of issuance costs — — 23.8 967.0 — — 967.0
Stock-based compensation expense — — — 11.9 — — 11.9
Accumulation of yield on preferred stock — — — (16.1) — — (16.1)
Stock option exercises and other common stock transactions — — 1.9 38.8 — — 38.8
Balance at September 30, 2021 20.7 $ 1,003.7 609.4 $ 2,749.3 $ 389.9 $ (38.1) $ 4,104.8


(in millions)		Stockholders’ equity
	Common stock including paid-in capital		Accumulated earnings		AOCI		Total
		Shares							Amount
Balance at June 30, 2023		675.7	$	3,798.6	$	1,284.6	$	(71.9)	$	5,011.3
Comprehensive income (loss)		—	—		108.4		(39.2)		69.2
Stock-based compensation expense		—	9.7		—		—		9.7

Stock option exercises and other common stock transactions		0.6	9.2		—		—		9.2

Balance at September 30, 2023		676.3	$	3,817.5	$	1,393.0	$	(111.1)	$	5,099.4

Balance at June 30, 2022		673.9	$	3,756.1	$	861.7	$	(148.3)	$	4,469.5
Comprehensive income (loss)		—	—		167.0		(63.5)		103.5

Stock-based compensation expense		—	13.7		—		—		13.7

Stock option exercises and other common stock transactions		0.3	4.7		—		—		4.7

Balance at September 30, 2022		674.2	$	3,774.5	$	1,028.7	$	(211.8)	$	4,591.4

See accompanying notes to the unaudited condensed consolidated financial statements.

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Avantor, Inc. and subsidiaries

Unaudited condensed consolidated statements of stockholders’ equity (continued)


(in millions)	(in millions)	Stockholders’ equity												(in millions)	Stockholders’ equity
		MCPS including paid-in capital			Common stock including paid-in capital			Accumulated earnings (deficit)		AOCI		Total			MCPS including paid-in capital			Common stock including paid-in capital			Accumulated earnings (deficit)		AOCI		Total
		Shares	Amount		Shares	Amount									Shares	Amount		Shares	Amount
Balance at December 31, 2022														Balance at December 31, 2022	—	$	—	674.3	$	3,785.3	$	1,170.4	$	(100.3)	$	4,855.4
Comprehensive income (loss)														Comprehensive income (loss)	—	—		—	—		222.6		(10.8)		211.8
Stock-based compensation expense														Stock-based compensation expense	—	—		—	31.6		—		—		31.6

Stock option exercises and other common stock transactions														Stock option exercises and other common stock transactions	—	—		2.0	0.6		—		—		0.6

Balance at September 30, 2023														Balance at September 30, 2023	—	$	—	676.3	$	3,817.5	$	1,393.0	$	(111.1)	$	5,099.4

Balance at December 31, 2021	Balance at December 31, 2021	20.7	$	1,003.7	609.7	$	2,752.6	$	483.9	$	(43.2)	$	4,197.0	Balance at December 31, 2021	20.7	$	1,003.7	609.7	$	2,752.6	$	483.9	$	(43.2)	$	4,197.0
Comprehensive income		—	—		—	—		544.8		(168.6)		376.2

Comprehensive income (loss)														Comprehensive income (loss)	—	—		—	—		544.8		(168.6)		376.2

Stock-based compensation expense	Stock-based compensation expense	—	—		—	39.1		—		—		39.1		Stock-based compensation expense	—	—		—	39.1		—		—		39.1
Accumulation of yield on preferred stock	Accumulation of yield on preferred stock		—		—	(24.2)		—		—		(24.2)		Accumulation of yield on preferred stock	—	—		—	(24.2)		—		—		(24.2)
Stock option exercises and other common stock transactions	Stock option exercises and other common stock transactions	—	—		1.6	3.3		—		—		3.3		Stock option exercises and other common stock transactions	—	—		1.6	3.3		—		—		3.3
Conversion of MCPS into Common stock	Conversion of MCPS into Common stock	(20.7)	(1,003.7)		62.9	1,003.7		—		—		—		Conversion of MCPS into Common stock	(20.7)	(1,003.7)		62.9	1,003.7		—		—		—
Balance at September 30, 2022	Balance at September 30, 2022	—	$	—	674.2	$	3,774.5	$	1,028.7	$	(211.8)	$	4,591.4	Balance at September 30, 2022	—	$	—	674.2	$	3,774.5	$	1,028.7	$	(211.8)	$	4,591.4

Balance at December 31, 2020		20.7	$	1,003.7	580.1	$	1,737.6	$	(88.7)	$	21.7	$	2,674.3

Comprehensive income		—	—		—	—		478.6		(59.8)		418.8
Issuance of stock, net of issuance costs		—	—		23.8	967.0		—		—		967.0
Stock-based compensation expense		—	—		—	34.2		—		—		34.2
Accumulation of yield on preferred stock		—	—		—	(48.4)		—		—		(48.4)
Stock option exercises and other common stock transactions		—	—		5.5	58.9		—		—		58.9
Balance at September 30, 2021		20.7	$	1,003.7	609.4	$	2,749.3	$	389.9	$	(38.1)	$	4,104.8

See accompanying notes to the unaudited condensed consolidated financial statements.

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Avantor, Inc. and subsidiaries

Unaudited condensed consolidated statements of cash flows


(in millions)	(in millions)	Nine months ended September 30,				(in millions)	Nine months ended September 30,
		2022		2021			2023		2022
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income	Net income	$	544.8	$	478.6	Net income	$	222.6	$	544.8
Reconciling adjustments:	Reconciling adjustments:					Reconciling adjustments:
Depreciation and amortization	Depreciation and amortization	304.8		275.1		Depreciation and amortization	301.7		304.8
Impairment charges						Impairment charges	160.8		—
Stock-based compensation expense	Stock-based compensation expense	35.8		37.0		Stock-based compensation expense	31.7		35.8
Provision for accounts receivable and inventory	Provision for accounts receivable and inventory	43.9		33.5		Provision for accounts receivable and inventory	62.5		43.9
Deferred income tax benefit	Deferred income tax benefit	(61.8)		(24.0)		Deferred income tax benefit	(94.1)		(61.8)
Amortization of deferred financing costs	Amortization of deferred financing costs	12.1		11.7		Amortization of deferred financing costs	9.9		12.1
Loss on extinguishment of debt	Loss on extinguishment of debt	10.8		8.4		Loss on extinguishment of debt	5.9		10.8
Foreign currency remeasurement loss		4.9		5.4
Foreign currency remeasurement (gain) loss						Foreign currency remeasurement (gain) loss	(3.1)		4.9
Changes in assets and liabilities:	Changes in assets and liabilities:					Changes in assets and liabilities:
Accounts receivable	Accounts receivable	(99.0)		(66.5)		Accounts receivable	55.1		(99.0)
Inventory	Inventory	(114.1)		(117.8)		Inventory	9.1		(114.1)
Accounts payable	Accounts payable	65.1		1.9		Accounts payable	(95.8)		65.1
Accrued interest	Accrued interest	(11.2)		(17.5)		Accrued interest	(10.3)		(11.2)
Other assets and liabilities	Other assets and liabilities	(98.0)		20.5		Other assets and liabilities	(38.5)		(98.0)
Other, net	Other, net	(0.1)		6.3		Other, net	0.9		(0.1)
Net cash provided by operating activities	Net cash provided by operating activities	638.0		652.6		Net cash provided by operating activities	618.4		638.0
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Capital expenditures	Capital expenditures	(99.8)		(71.1)		Capital expenditures	(95.8)		(99.8)
Cash paid for acquisitions, net of cash acquired	Cash paid for acquisitions, net of cash acquired	(20.2)		(1,168.9)		Cash paid for acquisitions, net of cash acquired	—		(20.2)
Cash proceeds from settlement of cross currency swap	Cash proceeds from settlement of cross currency swap	42.5		—		Cash proceeds from settlement of cross currency swap	—		42.5
Other	Other	1.0		1.8		Other	2.1		1.0
Net cash used in investing activities	Net cash used in investing activities	(76.5)		(1,238.2)		Net cash used in investing activities	(93.7)		(76.5)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Debt borrowings	Debt borrowings	245.0		1,134.6		Debt borrowings	—		245.0
Debt repayments	Debt repayments	(783.0)		(323.1)		Debt repayments	(657.9)		(783.0)
Payments of debt refinancing fees and premiums	Payments of debt refinancing fees and premiums	—		(22.5)		Payments of debt refinancing fees and premiums	(2.3)		—
Proceeds from issuance of stock, net of issuance costs		—		967.0

Payments of dividends on preferred stock	Payments of dividends on preferred stock	(32.4)		(48.4)		Payments of dividends on preferred stock	—		(32.4)
Proceeds received from exercise of stock options	Proceeds received from exercise of stock options	16.4		76.4		Proceeds received from exercise of stock options	14.1		16.4
Shares repurchased to satisfy employee tax obligations for vested stock-based awards	Shares repurchased to satisfy employee tax obligations for vested stock-based awards	(13.1)		(25.8)		Shares repurchased to satisfy employee tax obligations for vested stock-based awards	(13.5)		(13.1)
Net cash (used in) provided by financing activities		(567.1)		1,758.2
Net cash used in financing activities						Net cash used in financing activities	(659.6)		(567.1)
Effect of currency rate changes on cash	Effect of currency rate changes on cash	(33.7)		(10.0)		Effect of currency rate changes on cash	(1.3)		(33.7)
Net change in cash, cash equivalents and restricted cash	Net change in cash, cash equivalents and restricted cash	(39.3)		1,162.6		Net change in cash, cash equivalents and restricted cash	(136.2)		(39.3)
Cash, cash equivalents and restricted cash, beginning of period	Cash, cash equivalents and restricted cash, beginning of period	327.1		289.2		Cash, cash equivalents and restricted cash, beginning of period	396.9		327.1
Cash, cash equivalents and restricted cash, end of period	Cash, cash equivalents and restricted cash, end of period	$	287.8	$	1,451.8	Cash, cash equivalents and restricted cash, end of period	$	260.7	$	287.8

See accompanying notes to the unaudited condensed consolidated financial statements.

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Avantor, Inc. and subsidiaries

Notes to unaudited condensed consolidated financial statements

1. Nature of operations and presentation of financial statements

We are a global manufacturer and distributor that provides products and services to customers in the biopharmaceutical, healthcare, education & government and advanced technologies & applied materials industries.

Basis of presentation

The accompanying condensed consolidated financial statements have been prepared pursuant to SEC regulations whereby certain information normally included in GAAP financial statements has been condensed or omitted. The financial information presented herein reflects all adjustments (consisting only of normal, recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. The results for interim periods are not necessarily indicative of the results to be expected for the full year.

We believe that the disclosures included herein are adequate to make the information presented not misleading in any material respect when read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report. Those audited consolidated financial statements include a summary of our significant accounting policies.

~~Conversion of MCPS into Common Stock~~

In May of 2022, all outstanding shares of 6.250% Series A MCPS, par value $0.01 per share automatically converted into 62.9 million shares of our common stock, in accordance with their terms. The conversion rate for each share of MCPS was 3.0395 shares of our common stock, subject to receipt of cash in lieu of fractional shares, and was determined based on the price of our common stock on the date of conversion. No outstanding shares of the MCPS remained following the mandatory conversion.

Principles of consolidation

All intercompany balances and transactions have been eliminated from the financial statements.

Use of estimates

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the amounts reported throughout the financial statements. Actual results could differ from those estimates.

Asset impairment - Ritter

~~2. Business combinations~~The Company’s long-lived assets include property, plant and equipment, finite-lived intangible assets and certain other assets. For impairment testing purposes, long-lived assets may be grouped with working capital and other types of assets or liabilities if they generate cash flows on a combined basis. We evaluate long-lived assets or asset groups for impairment whenever events or changes in circumstances indicate a potential inability to recover their carrying amounts. The test to determine if long-lived assets or asset groups are impaired first compares their carrying values to their estimated undiscounted future cash flows. If the carrying values exceed the estimated undiscounted cash flows, an impairment charge is calculated as the amount that the carrying values exceed their fair values.

~~For a description~~Persistently high customer inventory in the end markets served by Ritter and an overall slowdown in research activity has caused Ritter’s revenue to decline compared to prior expectations. Due to these sustained declines, in the second quarter of 2023, we performed an impairment test of the ~~Company’s acquisitions for the period ending December 31, 2021, refer to note 4~~Ritter asset group, which resulted in ~~the Annual Report.~~

~~Acquisition~~a fair value that was lower than its carrying value. As a result, we recorded impairment charges of ~~Masterflex~~

~~On November 1, 2021, we completed the acquisition of Masterflex for cash consideration of $2,845.3 million. In the first quarter of fiscal year 2022, we made an additional $15.3~~$106.4 million p~~ayment to taxing~~on Ritter’s finite-lived intangible assets and $54.4 million on

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~~authorities on behalf~~Ritter’s property, plant & equipment in the unaudited condensed consolidated statements of the sellers to settle a pre-acquisition liability. In the second quarter of 2022, we made an additional $4.9 million payment to the sellers to adjust for final net working capital balances, bringing the total purchase price consideration to $2,865.5 million.operations. These charges impact our Europe reportable segment.

~~The fair value of the net assets acquired on November 1, 2021 included the following:~~


~~(in millions)~~	~~November 1, 2021~~
~~Inventory~~	$	~~45.7~~
~~Property, plant & equipment~~	~~9.8~~
~~Other intangible assets~~	~~664.2~~
~~Goodwill~~	~~2,168.8~~
~~Other assets and liabilities~~	~~(3.3)~~
~~Deferred income taxes, net~~	~~(19.7)~~
~~Total net assets~~	$	~~2,865.5~~

~~The assets acquired and liabilities assumed are recorded at their fair values as part of our Americas operating segment~~Our impairment test was performed as of ~~November 1, 2021. The balances~~June 30, 2023 and utilized our latest estimates of Ritter’s projected cash flows, including revenues, gross margin, SG&A expenses, capital expenditures to maintain the acquired assets, and ~~liabilities have been updated from our prior filings to reflect additional information relating to the fair values of acquired inventory, intangible asset,~~investments in debt free net working capital, ~~and related deferred taxes. The areas of purchase accounting that remain preliminary and subject to change are limited to assessing any deferred tax impacts.~~

~~The following table summarizes the fair value of intangible assets acquired on November 1, 2021 and their related weighted average amortization period:~~


~~(in millions)~~	~~Fair value~~		~~Weighted average estimated life~~
~~Customer relationships~~	$	~~212.0~~	~~13.0 years~~
~~Developed technology - Tubing~~	~~234.4~~		~~15.0 years~~
~~Developed technology - Pumps~~	~~122.0~~		~~10.0 years~~
~~Trademark~~	~~95.8~~		~~15.0 years~~
~~Total~~	$	~~664.2~~

The goodwill represents intellectual capital and the acquired assembled workforce, which are other intangible assets that do not qualify for separate recognition. A portion of the goodwill is deductible for tax purposes.

~~Revenue from acquired companies~~

~~During the~~ ~~three and nine months ended~~ ~~September 30, 2022, Masterflex has generated revenues of $46.5 million~~ ~~and $178.7 million, respectively.~~

~~During the three and nine months ended September 30, 2022, Ritter has generated revenues of $39.6 million and $119.7 million, respectively.~~

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~~Pro forma disclosures~~

~~The following unaudited pro forma combined financial information is provided~~as well as current market assumptions for the ~~three and nine months ended September 30, 2022 and 2021. The pro forma information is~~discount rate.

We did not ~~necessarily indicative of~~identify any events or changes in circumstances that would indicate a potential inability to recover the ~~results of operations that actually would have occurred under the ownership and management of the Company.~~

(in millions) Three months ended September 30, Nine months ended September 30,
2022 2021 2022 2021
Revenue $ 1,856.5 $ 1,896.1 $ 5,717.4 $ 5,769.9
Net income 167.0 150.9 544.8 452.3

~~The unaudited pro forma combined financial information presented above includes the accounting effects~~carrying value of the Ritter ~~and Masterflex acquisitions, including, to the extent applicable, amortization charges from acquired intangible assets, depreciation~~asset group as of ~~property, plant and equipment that have been revalued, interest expense on debt acquired to finance the transactions, and the related tax effects.~~

September 30, 2023.

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3.2. Earnings per share

The following table presents the reconciliation of basic and diluted earnings per share for the three and nine months ended September 30, ~~2022:~~2023:


(in millions, except per share data)	(in millions, except per share data)	Three months ended September 30, 2022					Nine months ended September 30, 2022					(in millions, except per share data)	Three months ended September 30, 2023							Nine months ended September 30, 2023
		Earnings (numerator)		Weighted average shares outstanding (denominator)	Earnings per share		Earnings (numerator)		Weighted average shares outstanding (denominator)	Earnings per share				(in millions, except per share data)	Earnings (numerator)				Weighted average shares outstanding (denominator)		Earnings per share				Earnings (numerator)				Weighted average shares outstanding (denominator)		Earnings per share
Basic	Basic	$	167.0	674.1	$	0.25	$	520.6	643.0	$	0.81				$	108.4			676.0		$	0.16			$	222.6			675.4		$	0.33
Dilutive effect of stock-based awards	Dilutive effect of stock-based awards	—		5.2			—		6.8						Dilutive effect of stock-based awards		—			2.5							—			2.7
Dilutive impact of MCPS		—		—			24.2		30.6

Diluted	Diluted	$	167.0	679.3	$	0.25	$	544.8	680.4	$	0.80				Diluted		$	108.4		678.5			$	0.16			$	222.6		678.1			$	0.33

The following table presents the reconciliation of basic and diluted earnings per share for the three and nine months ended September 30, ~~2021:~~2022:

(in millions, except per share data) Three months ended September 30, 2021 Nine months ended September 30, 2021
Earnings (numerator) Weighted average shares outstanding (denominator) Earnings per share Earnings (numerator) Weighted average shares outstanding (denominator) Earnings per share
Basic $ 140.7 588.5 $ 0.24 $ 430.2 584.1 $ 0.74
Dilutive effect of stock-based awards — 9.6 — 8.9
Diluted $ 140.7 598.1 $ 0.24 $ 430.2 593.0 $ 0.73

For the three and nine months ended September 30, 2021, diluted earnings per share included accumulated yield on preferred stock of $16.1 million and $48.4 million, respectively, and excluded 62.9 million of common stock equivalents under the MCPS because they were anti-dilutive to the calculations.


(in millions, except per share data)	Three months ended September 30, 2022						Nine months ended September 30, 2022
	Earnings (numerator)		Weighted average shares outstanding (denominator)		Earnings per share		Earnings (numerator)		Weighted average shares outstanding (denominator)	Earnings per share
Basic	$	167.0	674.1		$	0.25	$	520.6	643.0	$	0.81
Dilutive effect of stock-based awards	—		5.2				—		6.8
Dilutive impact of MCPS	—		—				$	24.2	30.6
Diluted	$	167.0	$	679.3	$	0.25	$	544.8	680.4	$	0.80

4.3. Segment financial information

We report three geographic segments based on customer location: Americas, Europe and AMEA. Each segment manufactures and distributes solutions for the biopharmaceutical, healthcare, education & government and advanced technologies & applied materials industries. Corporate costs are managed on a standalone basis and not allocated to segments.

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The following table presents information by reportable segment:


(in millions)	(in millions)	Three months ended September 30,				Nine months ended September 30,				(in millions)	Three months ended September 30,				Nine months ended September 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Net sales:	Net sales:									Net sales:
Americas	Americas	$	1,123.2	$	1,045.0	$	3,423.2	$	3,149.9	Americas	$	1,019.2	$	1,123.2	$	3,076.8	$	3,423.2
Europe	Europe	595.1		674.7		1,899.3		1,991.1		Europe	579.8		595.1		1,816.9		1,899.3
AMEA	AMEA	138.2		114.6		394.9		337.5		AMEA	121.2		138.2		350.7		394.9
Total	Total	$	1,856.5	$	1,834.3	$	5,717.4	$	5,478.5	Total	$	1,720.2	$	1,856.5	$	5,244.4	$	5,717.4
Adjusted EBITDA:	Adjusted EBITDA:									Adjusted EBITDA:
Americas	Americas	$	262.3	$	236.3	$	846.3	$	740.0	Americas	$	223.8	$	262.3	$	711.4	$	846.3
Europe	Europe	130.3		135.5		393.0		390.4		Europe	102.9		130.3		335.8		393.0
AMEA	AMEA	35.7		29.5		101.1		80.5		AMEA	33.8		35.7		93.7		101.1
Corporate	Corporate	(44.3)		(42.1)		(129.2)		(122.0)		Corporate	(42.7)		(44.3)		(133.9)		(129.2)
Total	Total	$	384.0	$	359.2	$	1,211.2	$	1,088.9	Total	$	317.8	$	384.0	$	1,007.0	$	1,211.2

The amounts above exclude inter-segment activity because it is not material. All of the net sales for each segment are from external customers.

The following table presents the reconciliation of Adjusted EBITDA from net income, the nearest measurement under GAAP:
(in millions) Three months ended September 30, Nine months ended September 30,
2022 2021 2022 2021
Net income $ 167.0 $ 156.8 $ 544.8 $ 478.6
Interest expense 67.3 54.1 196.0 156.6
Income tax expense 41.3 29.7 131.6 134.4
Depreciation and amortization 100.6 100.0 304.8 275.1
Loss on extinguishment of debt 2.9 — 10.8 8.4
Net foreign currency (gain) loss from financing activities (1.2) (0.8) (0.2) 1.2
Other stock-based compensation (benefit) expense (1.6) 1.6 (3.3) 2.9
Acquisition-related expenses1
— 3.2 — 27.8
Integration-related expenses2
6.4 7.9 13.6 8.4
Purchase accounting adjustments3
— 6.3 9.4 6.3
Restructuring and severance charges4
1.3 0.4 3.7 2.2
Receipt of disgorgement penalty5
— — — (13.0)
Adjusted EBITDA $ 384.0 $ 359.2 $ 1,211.2 $ 1,088.9

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(in millions)	Three months ended September 30,				Nine months ended September 30,
	2023		2022		2023		2022
Net income	$	108.4	$	167.0	$	222.6	$	544.8
Interest expense	72.4		67.3		219.5		196.0
Income tax expense	28.1		41.3		68.4		131.6
Depreciation and amortization	98.0		100.6		301.7		304.8
Loss on extinguishment of debt	2.0		2.9		5.9		10.8
Net foreign currency gain from financing activities	(0.5)		(1.2)		(2.3)		(0.2)
Other stock-based compensation expense (benefit)	0.1		(1.6)		0.1		(3.3)

Integration-related expenses1	0.2		6.4		8.3		13.6
Purchase accounting adjustments2	—		—		—		9.4
Restructuring and severance charges3	6.1		1.3		18.0		3.7
Reserve for certain legal matters4	3.0		—		4.0		—
Impairment charges5	—		—		160.8		—

Adjusted EBITDA	$	317.8	$	384.0	$	1,007.0	$	1,211.2

━━━━━━━━━

1.Represents ~~legal, accounting, investment banking and consulting fees incurred related to the acquisition of acquired companies.~~

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normal operations of our business. Integration expenses are incurred over a pre-defined integration period specific to each acquisition.

3.2.Represents the non-cash reduction of contingent consideration related to the Ritter acquisition and the amortization of the purchase accounting adjustment to record inventory acquired from Masterflex ~~and Ritter~~ at fair value.

4.3.Reflects the incremental expenses incurred in the period related to initiatives to increase profitability and productivity. Typical costs included in this caption are employee severance, site-related exit costs, and contract termination costs.

4.Represents charges and legal costs in connection with certain litigation and other contingencies that are unrelated to our core operations and not reflective of on-going business and operating results.

5.As described in note ~~12.~~1.

The following table presents net sales by product line:


(in millions)	(in millions)	Three months ended September 30,				Nine months ended September 30,				(in millions)	Three months ended September 30,				Nine months ended September 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Proprietary materials & consumables	Proprietary materials & consumables	$	727.4	$	651.2	$	2,216.7	$	1,847.2	Proprietary materials & consumables	$	629.0	$	727.4	$	1,920.4	$	2,216.7
Third party materials & consumables	Third party materials & consumables	665.7		712.2		2,078.4		2,210.0		Third party materials & consumables	632.8		665.7		1,929.0		2,078.4
Services & specialty procurement	Services & specialty procurement	225.1		226.5		692.3		678.5		Services & specialty procurement	238.6		225.1		712.4		692.3
Equipment & instrumentation	Equipment & instrumentation	238.3		244.4		730.0		742.8		Equipment & instrumentation	219.8		238.3		682.6		730.0
Total	Total	$	1,856.5	$	1,834.3	$	5,717.4	$	5,478.5	Total	$	1,720.2	$	1,856.5	$	5,244.4	$	5,717.4

5.4. Supplemental disclosures of cash flow information

The following tables present supplemental disclosures of cash flow information:


(in millions)	(in millions)	September 30, 2022		December 31, 2021		(in millions)	September 30, 2023		December 31, 2022
Cash and cash equivalents	Cash and cash equivalents	$	265.6	$	301.7	Cash and cash equivalents	$	236.9	$	372.9
Restricted cash classified as other assets	Restricted cash classified as other assets	22.2		25.4		Restricted cash classified as other assets	23.8		24.0
Total	Total	$	287.8	$	327.1	Total	$	260.7	$	396.9

At September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, amounts included in restricted cash primarily represent funds held in escrow to satisfy a ~~long term~~long-term retention incentive related to the acquisition of ~~Ritter GmbH.~~Ritter.


(in millions)	(in millions)	Nine months ended September 30,				(in millions)	Nine months ended September 30,
		2022		2021			2023		2022
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Cash paid for income taxes, net	Cash paid for income taxes, net	$	182.3	$	130.2	Cash paid for income taxes, net	$	195.3	$	182.3
Cash paid for interest, excluding financing leases		187.0		154.3
Cash paid for interest, net, excluding financing leases						Cash paid for interest, net, excluding financing leases	214.2		187.0
Cash paid for interest on finance leases	Cash paid for interest on finance leases	3.8		3.8		Cash paid for interest on finance leases	3.8		3.8
Cash paid under operating leases	Cash paid under operating leases	32.2		32.4		Cash paid under operating leases	32.4		32.2
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Cash paid under finance leases	Cash paid under finance leases	3.5		3.5		Cash paid under finance leases	3.8		3.5

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6.5. Inventory

The following table presents the components of inventory:


(in millions)	(in millions)	September 30, 2022		December 31, 2021		(in millions)	September 30, 2023		December 31, 2022
Merchandise inventory	Merchandise inventory	$	514.3	$	562.9	Merchandise inventory	$	516.7	$	556.1
Finished goods	Finished goods	145.7		102.6		Finished goods	96.8		117.1
Raw materials	Raw materials	188.6		156.1		Raw materials	173.8		181.2
Work in process	Work in process	56.4		50.4		Work in process	63.0		59.1
Total	Total	$	905.0	$	872.0	Total	$	850.3	$	913.5

7.6. Other intangible assets

The following table presents the components of other intangible assets:


(in millions)	(in millions)	September 30, 2022						December 31, 2021						(in millions)	September 30, 2023						December 31, 2022
		Gross value		Accumulated amortization		Carrying value		Gross value		Accumulated amortization		Carrying value			Gross value		Accumulated amortization and impairment1		Carrying value		Gross value		Accumulated amortization and impairment1		Carrying value
Customer relationships	Customer relationships	$	4,668.3	$	1,239.6	$	3,428.7	$	5,474.2	$	1,121.6	$	4,352.6	Customer relationships	$	4,793.6	$	1,579.8	$	3,213.8	$	4,806.4	$	1,333.5	$	3,472.9
Trade names	Trade names	344.9		193.0		151.9		505.1		194.1		311.0		Trade names	353.6		218.5		135.1		354.4		205.1		149.3
Other	Other	621.6		195.5		426.1		541.5		157.1		384.4		Other	629.9		283.0		346.9		630.9		212.1		418.8
Total finite-lived	Total finite-lived	$	5,634.8	$	1,628.1	4,006.7		$	6,520.8	$	1,472.8	5,048.0		Total finite-lived	$	5,777.1	$	2,081.3	3,695.8		$	5,791.7	$	1,750.7	4,041.0
Indefinite-lived	Indefinite-lived					92.3						92.3		Indefinite-lived					92.3						92.3
Total	Total					$	4,099.0					$	5,140.3	Total					$	3,788.1					$	4,133.3

━━━━━━━━━

1.As of September 30, 2023, accumulated impairment losses on Customer relationships were $65.9 million and on Other were $40.5 million totaling $106.4 million. As of December 31, 2022, there were no accumulated impairment losses.

8.7. Commitments and contingencies

Our business involves commitments and contingencies related to compliance with environmental laws and regulations, the manufacture and sale of products and litigation. The ultimate resolution of contingencies is subject to significant uncertainty, and it is reasonably possible that contingencies could be decided unfavorably ~~for~~against us.

Environmental laws and regulations

Our environmental liabilities are subject to changing governmental policy and regulations, discovery of unknown conditions, judicial proceedings, method and extent of remediation, existence of other potentially responsible parties and future changes in technology. We believe that known and unknown environmental matters, if not resolved favorably, could have a material effect on our financial position, liquidity and profitability. Matters to be disclosed are as follows:

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The New Jersey Department of Environmental Protection has ordered us to remediate groundwater conditions near our plant in Phillipsburg, New Jersey. At September 30, ~~2022,~~2023, our accrued obligation under this order is ~~$2.6~~$2.4 million, which is calculated based on expected cash payments discounted at rates ranging from ~~3.8% in 2022~~4.5% to ~~4.3% in~~5.5% between 2023 and 2045. The undiscounted amount of that obligation is ~~$4.0~~$3.8 million.

~~Table of contents~~

We are indemnified against any losses incurred in this matter as stipulated through the agreement referenced in our Annual Report.

In 2016, we assessed the environmental condition of our chemical manufacturing site in Gliwice, Poland. Our assessment revealed specific types of soil and groundwater contamination throughout the site. We are also monitoring the condition of a closed landfill on that site. These matters are not covered by our indemnification arrangement because they relate to an operation we subsequently acquired. At September 30, ~~2022,~~2023, our balance sheet includes a liability of ~~$1.3~~$1.0 million for remediation and monitoring costs. That liability is estimated primarily on discounted expected remediation payments and is not materially different from its undiscounted amount.

Manufacture and sale of products

Our business involves risk of product liability, patent infringement and other claims in the ordinary course of business arising from the products that we produce ourselves or obtain from our suppliers, as well as from the services we provide. Our exposure to such claims may increase to the extent that we expand our manufacturing operations or service offerings.

We maintain insurance policies to protect us against these risks, including product liability insurance. In many cases the suppliers of products we distribute have indemnified us against such claims. Our insurance coverage or indemnification agreements with suppliers may not be adequate in all pending or any future cases brought against us. Furthermore, our ability to recover under any insurance or indemnification arrangements is subject to the financial viability of our insurers, our suppliers and our suppliers’ insurers, as well as legal enforcement under the local laws governing the arrangements.

We have entered into indemnification agreements with customers of our self-manufactured products to protect them from liabilities and losses arising from our negligence, willful misconduct or sale of defective products. To date, we have not incurred material costs to defend lawsuits or settle claims related to these indemnification provisions.

Litigation

At September 30, ~~2022,~~2023, there was no outstanding litigation that we believe would result in material losses if decided against us, and we do not believe that there are any unasserted matters that are reasonably possible to result in a material loss.

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9.8. Debt

The following table presents information about our debt:


(dollars in millions)	(dollars in millions)	September 30, 2022				December 31, 2021		(dollars in millions)	September 30, 2023				December 31, 2022
		Interest terms	Rate	Amount					Interest terms	Rate	Amount
Receivables facility	Receivables facility	LIBOR plus 0.90%	4.04%	$	245.0	$	—	Receivables facility	SOFR1 plus 0.80%	6.22%	$	297.7	$	327.2
Senior secured credit facilities:	Senior secured credit facilities:							Senior secured credit facilities:
Euro term loans B-3		EURIBOR plus —%	—%	—		133.9

Euro term loans B-4	Euro term loans B-4	EURIBOR plus 2.75%	2.87%	585.3		684.9		Euro term loans B-4	EURIBOR plus 2.50%	6.36%	625.6		636.7
Euro term loans B-5	Euro term loans B-5	EURIBOR plus 2.25%	2.37%	314.4		367.9		Euro term loans B-5	EURIBOR plus 2.00%	5.86%	336.0		342.0
U.S. dollar term loans B-4		LIBOR plus —%	—%	—		229.3

U.S. dollar term loans B-5	U.S. dollar term loans B-5	LIBOR plus 2.25%	4.77%	1,648.4		2,063.9		U.S. dollar term loans B-5	SOFR1 plus 2.25%	7.67%	872.7		1,488.3
2.625% secured notes	2.625% secured notes	fixed rate	2.625%	636.8		739.6		2.625% secured notes	fixed rate	2.625%	687.6		694.5
3.875% unsecured notes	3.875% unsecured notes	fixed rate	3.875%	800.0		800.0		3.875% unsecured notes	fixed rate	3.875%	800.0		800.0
3.875% unsecured notes	3.875% unsecured notes	fixed rate	3.875%	391.8		455.1		3.875% unsecured notes	fixed rate	3.875%	423.1		427.3
4.625% unsecured notes	4.625% unsecured notes	fixed rate	4.625%	1,550.0		1,550.0		4.625% unsecured notes	fixed rate	4.625%	1,550.0		1,550.0
Finance lease liabilities	Finance lease liabilities			68.2		71.2		Finance lease liabilities			67.9		68.9
Other	Other			13.4		17.4		Other			12.1		14.2
Total debt, gross	Total debt, gross			6,253.3		7,113.2		Total debt, gross			5,672.7		6,349.1
Less: unamortized deferred financing costs	Less: unamortized deferred financing costs			(65.2)		(90.0)		Less: unamortized deferred financing costs			(46.6)		(61.6)
Total debt	Total debt			$	6,188.1	$	7,023.2	Total debt			$	5,626.1	$	6,287.5
Classification on balance sheets:	Classification on balance sheets:							Classification on balance sheets:
Current portion of debt	Current portion of debt			$	280.6	$	45.2	Current portion of debt			$	335.6	$	364.2
Debt, net of current portion	Debt, net of current portion			5,907.5		6,978.0		Debt, net of current portion			5,290.5		5,923.3

━━━━━━━━━

1.SOFR includes credit spread adjustment.

Credit facilities

The following table presents availability under our credit facilities:


(in millions)	(in millions)	September 30, 2022						(in millions)	September 30, 2023
		Receivables facility		Revolving credit facility		Total			Receivables facility		Revolving credit facility		Total
Capacity	Capacity	$	300.0	$	515.0	$	815.0	Capacity	$	325.8	$	975.0	$	1,300.8
Undrawn letters of credit outstanding	Undrawn letters of credit outstanding	(13.9)		—		(13.9)		Undrawn letters of credit outstanding	(15.4)		—		(15.4)
Outstanding borrowings	Outstanding borrowings	(245.0)		—		(245.0)		Outstanding borrowings	(297.7)		—		(297.7)
Unused availability	Unused availability	$	41.1	$	515.0	$	556.1	Unused availability	$	12.7	$	975.0	$	987.7

Capacity under the receivables facility ~~depends upon maintaining a sufficient~~is calculated as the lower of eligible borrowing base or facility limit of ~~eligible~~$400.0 million. Eligible borrowing base is determined as total available accounts ~~receivable.~~receivable less ineligible accounts receivable and other adjustments. At September 30, ~~2022, $622.9 million of~~2023, total available accounts receivable ~~were available as collateral~~ under the ~~facility. The~~ receivables facility ~~is with a commercial bank and functions like a line~~were $576.2 million.

Table of ~~credit. On October 25, 2022,~~contents

In June 2023, we amended the ~~receivables~~revolving credit facility to increase its funding limit up to ~~$400.0~~$975.0 million and ~~extend~~extended the term to ~~October 27, 2025. The~~June 29, 2028. We capitalized $2.3 million of fees in connection with this transaction.

In June 2023, the Company entered into an Amendment to ~~complete this transaction were not material. The revolving credit facility under~~ the ~~senior secured credit facilities matures on July 14, 2025.~~

~~Table of contents~~

Receivables Purchase Agreement to increase the Delinquency Ratio cap from 13.0% to 16.0%.

Senior secured credit facilities

During the quarter ended September 30, ~~2022,~~2023, we made prepayments of ~~$250.0~~$210.0 million on our U.S. dollar term loan ~~B-5.~~B-5 that matures on November 8, 2027. In connection with this prepayment, we expensed ~~$2.9~~$2.0 million of previously unamortized deferred financing costs ~~related to this term loan~~ as a loss on extinguishment of debt. We also amended our U.S. dollar term loan B-5 from LIBOR based floating rate interest to SOFR based floating rate interest during the second quarter of 2023. This amendment was done in accordance with Accounting Standards Codification (ASC) 848 and had no impact on the financial statements. The Company is applying optional expedients and exceptions to certain contract modifications and hedging relationships as permitted under ASU 2020-04 and 2022-06.

Debt covenants

Our debt agreements include representations and covenants that we consider usual and customary, and our receivables facility and senior secured credit facilities include a financial covenant that becomes applicable for periods in which we have drawn more than 35% of our revolving credit facility under the senior secured credit facilities. In this circumstance, we are not permitted to have combined borrowings on our senior secured credit facilities and secured notes in excess of a pro forma net leverage ratio, as defined in our credit agreements. As we had not drawn more than 35% of our revolving credit facility in this period, this covenant was not applicable at September 30, ~~2022.~~2023.

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~~10.~~9. Accumulated other comprehensive income or loss

The following table presents changes in the components of AOCI:


(in millions)	(in millions)	Foreign currency translation		Derivative instruments		Defined benefit plans		Total		(in millions)	Foreign currency translation		Derivative instruments		Defined benefit plans		Total
Balance at June 30, 2023										Balance at June 30, 2023	$	(100.4)	$	21.9	$	6.6	$	(71.9)
Unrealized (loss) gain										Unrealized (loss) gain	(30.4)		8.0		(0.9)		(23.3)
Reclassification of gain into earnings										Reclassification of gain into earnings	—		(8.4)		—		(8.4)
Change due to income taxes										Change due to income taxes	(7.9)		0.1		0.3		(7.5)
Balance at September 30, 2023										Balance at September 30, 2023	$	(138.7)	$	21.6	$	6.0	$	(111.1)

Balance at June 30, 2022	Balance at June 30, 2022	$	(132.5)	$	4.7	$	(20.5)	$	(148.3)	Balance at June 30, 2022	$	(132.5)	$	4.7	$	(20.5)	$	(148.3)
Unrealized (loss) gain	Unrealized (loss) gain	(62.1)		20.7		—		(41.4)		Unrealized (loss) gain	(62.1)		20.7		—		(41.4)
Reclassification of loss (gain) into earnings	Reclassification of loss (gain) into earnings	—		0.2		(0.1)		0.1		Reclassification of loss (gain) into earnings	—		0.2		(0.1)		0.1
Change due to income taxes	Change due to income taxes	(17.4)		(5.0)		0.2		(22.2)		Change due to income taxes	(17.4)		(5.0)		0.2		(22.2)
Balance at September 30, 2022	Balance at September 30, 2022	$	(212.0)	$	20.6	$	(20.4)	$	(211.8)	Balance at September 30, 2022	$	(212.0)	$	20.6	$	(20.4)	$	(211.8)

Balance at June 30, 2021		$	31.1	$	(1.0)	$	(28.7)	$	1.4
Balance at December 31, 2022										Balance at December 31, 2022	$	(131.3)	$	19.9	$	11.1	$	(100.3)
Unrealized (loss) gain	Unrealized (loss) gain	(38.2)		—		0.6		(37.6)		Unrealized (loss) gain	(4.8)		24.7		(6.6)		13.3
Reclassification of loss into earnings		—		0.9		—		0.9
Reclassification of gain into earnings										Reclassification of gain into earnings	—		(22.5)		—		(22.5)
Change due to income taxes	Change due to income taxes	(2.6)		(0.2)		—		(2.8)		Change due to income taxes	(2.6)		(0.5)		1.5		(1.6)
Balance at September 30, 2021		$	(9.7)	$	(0.3)	$	(28.1)	$	(38.1)
Balance at September 30, 2023										Balance at September 30, 2023	$	(138.7)	$	21.6	$	6.0	$	(111.1)

Balance at December 31, 2021	Balance at December 31, 2021	$	(19.2)	$	0.4	$	(24.4)	$	(43.2)	Balance at December 31, 2021	$	(19.2)	$	0.4	$	(24.4)	$	(43.2)
Unrealized (loss) gain	Unrealized (loss) gain	(160.1)		27.7		4.6		(127.8)		Unrealized (loss) gain	(160.1)		27.7		4.6		(127.8)
Reclassification of gain into earnings	Reclassification of gain into earnings	—		(1.1)		(0.2)		(1.3)		Reclassification of gain into earnings	—		(1.1)		(0.2)		(1.3)
Change due to income taxes	Change due to income taxes	(32.7)		(6.4)		(0.4)		(39.5)		Change due to income taxes	(32.7)		(6.4)		(0.4)		(39.5)
Balance at September 30, 2022	Balance at September 30, 2022	$	(212.0)	$	20.6	$	(20.4)	$	(211.8)	Balance at September 30, 2022	$	(212.0)	$	20.6	$	(20.4)	$	(211.8)

Balance at December 31, 2020		$	51.8	$	(1.0)	$	(29.1)	$	21.7
Unrealized (loss) gain		(55.2)		(2.0)		1.0		(56.2)
Reclassification of loss into earnings		—		3.0		—		3.0
Change due to income taxes		(6.3)		(0.3)		—		(6.6)
Balance at September 30, 2021		$	(9.7)	$	(0.3)	$	(28.1)	$	(38.1)

The reclassifications and income tax effects shown above were immaterial to the financial ~~statements. The reclassifications~~statements and were made to either cost of sales or SG&A expenses depending upon the nature of the underlying transaction. The income tax effects in the three and nine months ended September 30, ~~2022~~2023 on foreign currency translation were due to our net investment hedge and cross-currency swap discussed in note ~~14.~~13.

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~~11.~~10. Stock-based compensation

The following table presents the components of stock-based compensation expense:


(in millions)	(in millions)	Classification	Three months ended September 30,				Nine months ended September 30,				(in millions)	Classification	Three months ended September 30,				Nine months ended September 30,
			2022		2021		2022		2021				2023		2022		2023		2022
Stock options	Stock options	Equity	$	4.1	$	4.8	$	12.1	$	14.0	Stock options	Equity	$	3.0	$	4.1	$	10.2	$	12.1
RSUs	RSUs	Equity	9.3		6.5		26.0		18.7		RSUs	Equity	6.5		9.3		20.7		26.0
Other	Other	Both	(1.3)		2.2		(2.3)		4.3		Other	Both	0.3		(1.3)		0.8		(2.3)
Total	Total		$	12.1	$	13.5	$	35.8	$	37.0	Total		$	9.8	$	12.1	$	31.7	$	35.8
Balance sheet classification:
Award classification:											Award classification:
Equity	Equity		$	13.7	$	11.9	$	39.1	$	34.2	Equity		$	9.7	$	13.7	$	31.6	$	39.1
Liability	Liability		(1.6)		1.6		(3.3)		2.8		Liability		0.1		(1.6)		0.1		(3.3)

At September 30, ~~2022,~~2023, unvested awards under our plans have remaining stock-based compensation expense of ~~$82.5~~$91.9 million to be recognized over a weighted average period of ~~1.7~~1.9 years.

Stock options

The following table presents information about outstanding stock options:


(options and intrinsic value in millions)	(options and intrinsic value in millions)	Number of options	Weighted average exercise price per option		Aggregate intrinsic value		Weighted average remaining term	(options and intrinsic value in millions)	Number of options	Weighted average exercise price per option		Aggregate intrinsic value		Weighted average remaining term
Balance at December 31, 2021		16.3	$	19.83
Balance at December 31, 2022								Balance at December 31, 2022	16.1	$	20.90
Granted	Granted	1.2	32.48					Granted	2.1	23.53
Exercised	Exercised	(0.6)	16.98					Exercised	(0.7)	15.41
Forfeited	Forfeited	(0.8)	20.07					Forfeited	(0.7)	24.83
Balance at September 30, 2022		16.1	20.90		$	58.4	6.3 years
Balance at September 30, 2023								Balance at September 30, 2023	16.8	21.29		$	36.5	5.8 years
Expected to vest	Expected to vest	4.9	23.48		15.3		8.0 years	Expected to vest	3.9	24.83		2.3		8.5 years
Vested	Vested	11.2	19.78		43.0		5.6 years	Vested	12.9	20.22		34.2		4.9 years

During the nine months ended September 30, ~~2022,~~2023, we granted stock options that have a contractual life of ten years and will vest annually over four years, subject to the recipient continuously providing service to us through such date.

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RSUs

The following table presents information about unvested RSUs:


(awards in millions)	(awards in millions)	Number of awards	Weighted average grant date fair value per award		(awards in millions)	Number of awards	Weighted average grant date fair value per award
Balance at December 31, 2021		4.4	$	19.52
Balance at December 31, 2022					Balance at December 31, 2022	4.2	$	24.29
Granted	Granted	1.1	33.57		Granted	2.1	26.21
Vested	Vested	(1.1)	18.42		Vested	(1.7)	18.80
Forfeited	Forfeited	(0.2)	26.20		Forfeited	(0.5)	29.12
Balance at September 30, 2022		4.2	24.44
Balance at September 30, 2023					Balance at September 30, 2023	4.1	26.69

During the nine months ended September 30, ~~2022,~~2023, we granted RSUs that will vest annually over three to four years, subject to the recipient continuously providing service to us ~~through each such date.~~throughout the vesting period. Certain of those awards contain performance and market conditions that impact the number of shares that will ultimately vest. ~~The~~We recorded expense ~~recorded~~ on ~~such~~these awards of $1.7 million and $2.9 million for the three months ended September 30, ~~2022~~2023 and September 30, ~~2021 was $2.9~~2022, respectively, and $3.5 million and ~~$1.6~~$7.9 million for the nine months ended September 30, ~~2022~~2023 and September 30, ~~2021 was $7.9 million and $4.4 million,~~2022, respectively.

~~12.~~11. Other income or expense, net

The following table presents the components of other income or expense, net:
(in millions) Three months ended September 30, Nine months ended September 30,
2022 2021 2022 2021
Net foreign currency gain (loss) from financing activities $ 1.2 $ 0.8 $ 0.2

$ (1.2)
Income related to defined benefit plans 1.4 2.6 4.4

7.6
Other1
0.1 — 0.2 13.4
Other income, net $ 2.7 $ 3.4 $ 4.8 $ 19.8

~~━━━━━━━━━~~

1.~~We recognized $13.0 million of other income during the nine months period ended~~ ~~September 30, 2021~~ ~~related to the disgorgement of disallowed trading profits from Goldman Sachs, which was a related party until December 31, 2020.~~


(in millions)	Three months ended September 30,				Nine months ended September 30,
	2023		2022		2023		2022
Net foreign currency gain from financing activities	$	0.5	$	1.2	$	2.3	$	0.2
Income related to defined benefit plans	0.3		1.4		1.0		4.4
Other	(0.1)		0.1		—		0.2
Other income, net	$	0.7	$	2.7	$	3.3	$	4.8

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~~13.~~12. Income taxes

The following table presents the relationship between income tax expense and income before income taxes:


(in millions)	(in millions)	Three months ended September 30,						Nine months ended September 30,						(in millions)	Three months ended September 30,						Nine months ended September 30,
		2022			2021			2022			2021				2023			2022			2023			2022
Income before income taxes	Income before income taxes	$	208.3		$	186.5		$	676.4		$	613.0		Income before income taxes	$	136.5		$	208.3		$	291.0		$	676.4
Income tax expense	Income tax expense	(41.3)			(29.7)			(131.6)			(134.4)			Income tax expense	(28.1)			(41.3)			(68.4)			(131.6)
Effective income tax rate	Effective income tax rate	19.8		%	15.9		%	19.5		%	21.9		%	Effective income tax rate	20.6		%	19.8		%	23.5		%	19.5		%

Income tax expense in the quarter is based upon the estimated income for the full year. The composition of the income in different countries and adjustments, if any, in the applicable quarterly periods influences our expense.

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The relationship between pre-tax income and income tax expense is affected by the impact of losses for which we cannot claim a tax benefit, non-deductible expenses, and other items that increase tax expense without a relationship to income, such as withholding taxes and changes with respect to uncertain tax positions.

The change in the effective tax rate for the three and nine months ended September 30, ~~2022~~2023 when compared to the three ~~months ended September 30, 2021, is primarily due to lower tax benefits resulting from fewer option exercises in 2022 compared to 2021. The change in the effective tax rate for the~~and nine months ended September 30, 2022, ~~when compared~~is primarily due to the ~~nine months ended September 30, 2021, is driven by~~establishment of new valuation allowances against deferred tax assets not expected to be realized as a ~~one time~~result of an impairment recognized in the second quarter of 2023, as well as the impact ~~due to changes~~ of a partial limitation on the tax ~~rates in certain~~deduction of ~~our European tax jurisdictions in 2021.~~executive compensation expense.

~~14.~~13. Derivative and hedging activities

Hedging instruments:

We engage in hedging activities to reduce our exposure to foreign currency exchange rates and interest rates. Our hedging activities are designed to manage specific risks according to our strategies, as summarized below, which may change from time to time. Our hedging activities consist of the following:

•Economic hedges — We are exposed to changes in foreign currency exchange rates on certain of our euro-denominated term loans and notes that move inversely from our portfolio of euro-denominated intercompany loans. The currency effects for these non-derivative instruments are recorded through earnings in the period of change and substantially offset one another;

•Other hedging activities — Certain of our subsidiaries hedge short-term foreign currency denominated business transactions, external debt and intercompany financing transactions using foreign currency forward contracts. These activities were not material to our consolidated financial statements.

Cash flow hedges of interest rate risk

In April of 2023, the Company executed a $100.0 million interest rate swap to convert SOFR based floating rate interest to fixed rate interest. The transaction is intended to mitigate our exposure to fluctuations in interest rates and will terminate on October 27, 2025. In addition, in April of 2023, we amended our $750.0 million interest rate swap from LIBOR based floating rate interest to SOFR based floating rate interest. This amendment was done in accordance with ASC 848 and had no impact on the financial statements. The Company is applying optional expedients and exceptions to certain contract modifications and hedging relationships as permitted under ASU 2020-04 and 2022-06.

Our objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow

~~Table of contents~~

hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. 

For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in AOCI and subsequently reclassified into interest expense in the same period(s) during which the hedged transaction affects earnings. Amounts reported in AOCI related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. During the next twelve months, the Company estimates that an additional ~~$11.3~~$20.3 million will be reclassified as a reduction to interest expense.

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As of September 30, ~~2022,~~2023, the Company had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk:

(dollars in millions)
Interest rate derivative Number of instruments Notional
Interest rate swaps 1 $ 750.0

(dollars in millions)

Interest rate derivative

Number of instruments

Notional

Interest rate swaps

850.0

Effect of cash flow hedge accounting on AOCI

The table below presents the effect of cash flow hedge accounting on AOCI for the three and nine months ended September 30, ~~2022~~2023 and September 30, ~~2021.~~2022.

(in millions)
Hedging relationships Amount of gain or (loss) recognized in OCI on Derivative Location of gain or (loss) reclassified from AOCI into income Amount of gain or (loss) reclassified from AOCI into income
Three months ended September 30, Nine months ended September 30, Three months ended September 30, Nine months ended September 30,
2022 2021 2022 2021 2022 2021 2022 2021
Interest rate products 19.4 — 22.0 — Interest (expense) (1.1) — (3.6) —
Total $ 19.4 $ — $ 22.0 $ — $ (1.1) $ — $ (3.6) $ —



(in millions)
Hedging relationships	Amount of gain or (loss) recognized in OCI on Derivative								Location of gain or (loss) reclassified from AOCI into income	Amount of gain or (loss) reclassified from AOCI into income
	Three months ended September 30,				Nine months ended September 30,					Three months ended September 30,				Nine months ended September 30,
	2023		2022		2023		2022			2023		2022		2023		2022

Interest rate products	4.9		19.4		15.0		22.0		Interest income (expense)	5.2		(1.1)		12.7		(3.6)

Total	$	4.9	$	19.4	$	15.0	$	22.0		$	5.2	$	(1.1)	$	12.7	$	(3.6)

Effect of cash flow hedge accounting on the income statement

The table below presents the effect of our derivative financial instruments on the statement of operations for the three and nine months ended September 30, ~~2022~~2023 and September 30, ~~2021.~~2022.

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		Three months ended September 30,		Nine months ended September 30,										Three months ended September 30,					Nine months ended September 30,
		2022			2021	2022		2021										2023				2022			2023		2022
(in millions)	(in millions)	Interest income (expense)				Interest income (expense)			Interest income (expense)		Interest income (expense)				(in millions)					Interest income (expense)								Interest income (expense)				Interest income (expense)		Interest income (expense)
Total amounts of line items presented in the statements of operations where the effects of cash flow hedges are recorded	Total amounts of line items presented in the statements of operations where the effects of cash flow hedges are recorded	$	(67.3)			$	—		$	(196.0)	$	—			Total amounts of line items presented in the statements of operations where the effects of cash flow hedges are recorded					$	(72.4)							$	(67.3)			$	(219.5)	$	(196.0)

Amount of loss reclassified from AOCI into income		$	(1.1)			$	—		$	(3.6)	$	—
Amount of gain (loss) reclassified from AOCI into income													Amount of gain (loss) reclassified from AOCI into income			$	5.2						$	(1.1)		$	12.7			$	(3.6)

Net investment hedges

We are exposed to fluctuations in foreign exchange rates on investments ~~it holds~~we hold in foreign entities, specifically our net investment in Avantor Holdings B.V., a EUR-functional-currency consolidated subsidiary, against the risk of changes in the EUR-USD exchange rate.

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For derivatives designated as net investment hedges, the gain or loss on the derivative is reported in AOCI as part of the cumulative translation adjustment. Amounts are reclassified out of AOCI into earnings when the hedged net investment is either sold or substantially liquidated.

As of September 30, ~~2022,~~2023, we had the following outstanding foreign currency derivatives that were used to hedge its net investments in foreign operations:


(value in millions)
Foreign currency derivative	Number of instruments	Notional sold		Notional purchased
Cross-currency swaps	1	€	732.1	$	750.0

Effect of net investment hedges on AOCI and the income statement

The table below presents the effect of our net investment hedges on AOCI and the statement of operations for the three and nine months ended September 30, ~~2022~~2023 and September 30, ~~2021.~~2022.

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(in millions)	(in millions)													(in millions)
Hedging relationships	Hedging relationships	Amount of gain or (loss) recognized in OCI on Derivative				Location of gain or (loss) recognized in income on Derivative (amount excluded from effectiveness testing)	Amount of gain or (loss) recognized in income on Derivative (amount excluded from effectiveness testing)			Hedging relationships			Amount of gain or (loss) recognized in OCI on Derivative						Location of gain or (loss) recognized in income on Derivative (amount excluded from effectiveness testing)	Amount of gain or (loss) recognized in income on Derivative (amount excluded from effectiveness testing)
		September 30,					September 30,						September 30,							September 30,
		2022		2021				2022			2021				2023		2022					2023		2022
Three months ended:	Three months ended:													Three months ended:
Cross currency swaps	Cross currency swaps	$	48.6	$	—		Interest income	$	3.3		$	—		Cross currency swaps	$	22.8	$	48.6			Interest income	$	3.2	$	3.3
Total	Total	$	48.6	$	—			$	3.3		$	—		Total	$	22.8	$	48.6				$	3.2	$	3.3
Nine months ended:	Nine months ended:													Nine months ended:
Cross currency swaps	Cross currency swaps	$	79.4	$	—		Interest income	$	6.4		$	—		Cross currency swaps	$	9.6	$	79.4			Interest income	$	9.5	$	6.4
Total	Total	$	79.4	$	—			$	6.4		$	—		Total	$	9.6	$	79.4				$	9.5	$	6.4

The Company did not reclassify any other deferred gains or losses related to cash flow ~~hedge~~hedges from accumulated other comprehensive income (loss) to earnings for the three and nine months ended September 30, ~~2022~~2023 and September 30, ~~2021.~~

2022.

The table below presents the fair value of our derivative financial instruments as well as their classification on the Balance Sheet as of September 30, ~~2022~~2023 and December 31, ~~2021:~~2022:

~~Asset derivatives~~

~~Liability derivatives~~

~~September 30, 2022~~

~~December 31, 2021~~

~~September 30, 2022~~

~~December 31, 2021~~

~~(in millions)~~

~~Balance sheet location~~

~~Fair value~~

~~Balance sheet location~~

~~Fair value~~

~~Balance sheet location~~

~~Fair value~~

~~Balance sheet location~~

~~Fair value~~

~~Derivatives designated as hedging instruments:~~

~~Interest rate products~~

~~Other current assets~~

~~25.6~~

~~Other current assets~~

—

~~Other current liabilities~~

—

~~Other current liabilities~~

—

~~Foreign exchange products~~

~~Other current assets~~

~~30.7~~

~~Other current assets~~

—

~~Other current liabilities~~

—

~~Other current liabilities~~

—

~~Total~~

~~56.3~~

—

~~Termination of interest rate and cross-currency swaps~~

In July 2022, we terminated our existing $750.0 million cross-currency swap maturing April 30, 2025 and monetized $42.5 million of cash proceeds. We simultaneously entered into new on-market $750.0 million fixed-to-fixed cross-currency swap to hedge our exposure to changes in foreign exchange rates of its

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foreign investments. The purpose of this swap is to replace the swap that we terminated in July. The new swap matures on April 30, 2025. Cross-currency swaps involve the receipt of functional-currency fixed-rate amounts from a counterparty in exchange for making foreign-currency fixed-rate payments over the life of the agreeme~~nt.~~



	Derivative assets						Derivative liabilities
	September 30, 2023			December 31, 2022			September 30, 2023			December 31, 2022
(in millions)	Balance sheet location	Fair value		Balance sheet location	Fair value		Balance sheet location	Fair value		Balance sheet location	Fair value
Derivatives designated as hedging instruments:
Interest rate products	Other current assets	$	28.5	Other current assets	$	26.2	Other current liabilities	$	—	Other current liabilities	$	—
Foreign exchange products	Other current assets	—		Other current assets	—		Other current liabilities	(21.3)		Other current liabilities	(21.4)
Total		$	28.5		$	26.2		$	(21.3)		$	(21.4)

Non-derivative financial instruments which are designated as hedging instruments:

We designated all of our outstanding €400.0 million 3.875% senior unsecured notes, issued on July 17, 2020, and maturing on July 15, 2028, as a hedge of our net investment in certain of our European operations. For instruments that are designated and qualify as net investment hedges, the foreign currency

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transactional gains or losses are reported as a component of AOCI. The gains or losses would be reclassified into earnings upon a liquidation event or deconsolidation of a hedged foreign subsidiary.

Net investment hedge effectiveness is assessed based upon the change in the spot rate of the foreign currency denominated debt. The critical terms of the foreign currency notes match the portion of the net investments designated as being hedged. At September 30, ~~2022,~~2023, the net investment hedge was equal to the designated portion of the European operations and was considered to be perfectly effective.

The accumulated (gain) ~~loss~~ related to the foreign currency denominated debt designated as net investment hedges classified in the foreign currency translation adjustment component of AOCI was ~~$(59.8)~~$(28.5) million and ~~$3.5~~$(24.3) million as of September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively.

The amount of ~~(gain)~~gain related to the foreign currency denominated debt designated as net investment hedges classified in the foreign currency translation adjustment component of other comprehensive income or loss for the three and nine months ended September 30, ~~2022~~2023 and September 30, ~~2021~~2022 are presented below:


(in millions)	(in millions)	Three months ended September 30,				Nine months ended September 30,				(in millions)	Three months ended September 30,				Nine months ended September 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Net investment hedges	Net investment hedges	$	(27.1)	$	(11.0)	$	(63.3)	$	(26.2)	Net investment hedges	$	(13.5)	$	(27.1)	$	(4.2)	$	(63.3)

~~15.~~14. Financial instruments and fair value measurements

Our financial instruments include cash and cash equivalents, accounts receivable, accounts payable and debt.

Certain financial and nonfinancial assets and liabilities are measured at fair value on a nonrecurring basis and are subject to fair value adjustments in certain circumstances, such as when there is evidence of impairment. As discussed in note 1, during the second quarter of 2023, property, plant and equipment, customer relationships and developed technology related to the Ritter asset group were deemed to be impaired and their carrying values were reduced to estimated fair values of $25.9 million, $31.4 million and $19.3 million, respectively. This was the result of an impairment charge of $160.8 million. The Company estimates the fair value of the Ritter asset group using Level 3 inputs, which included a discounted cash flow analysis.

Assets and liabilities for which fair value is only disclosed

The carrying amount of cash and cash equivalents was the same as its fair value and is a Level 1 measurement. The carrying amounts for trade accounts receivable and accounts payable approximated fair value due to their short-term nature and are Level 2 measurements.

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The following table presents the gross amounts, which exclude unamortized deferred financing costs, and the fair values of debt instruments:


(in millions)	(in millions)	September 30, 2022				December 31, 2021				(in millions)	September 30, 2023				December 31, 2022
		Gross amount		Fair value		Gross amount		Fair value			Gross amount		Fair value		Gross amount		Fair value
Receivables facility	Receivables facility	$	245.0	$	245.0	$	—	$	—	Receivables facility	$	297.7	$	297.7	$	327.2	$	327.2
Senior secured credit facilities:	Senior secured credit facilities:									Senior secured credit facilities:
Euro term loans B-3		—		—		133.9		133.7

Euro term loans B-4	Euro term loans B-4	585.3		576.5		684.9		683.6		Euro term loans B-4	625.6		626.4		636.7		627.5
Euro term loans B-5	Euro term loans B-5	314.4		309.9		367.9		367.7		Euro term loans B-5	336.0		338.2		342.0		340.7
U.S. dollar term loans B-4		—		—		229.3		224.9

U.S. dollar term loans B-5	U.S. dollar term loans B-5	1,648.4		1,604.1		2,063.9		2,029.1		U.S. dollar term loans B-5	872.7		873.3		1,488.3		1,485.5
2.625% secured notes	2.625% secured notes	636.8		581.9		739.6		758.2		2.625% secured notes	687.6		658.9		694.5		658.5
3.875% unsecured notes	3.875% unsecured notes	800.0		652.8		800.0		810.9		3.875% unsecured notes	800.0		689.4		800.0		672.0
3.875% unsecured notes	3.875% unsecured notes	391.8		339.3		455.1		475.3		3.875% unsecured notes	423.1		390.1		427.3		396.5
4.625 % unsecured notes	4.625 % unsecured notes	1,550.0		1,377.5		1,550.0		1,629.8		4.625 % unsecured notes	1,550.0		1,413.1		1,550.0		1,407.6
Finance lease liabilities	Finance lease liabilities	68.2		68.2		71.2		71.2		Finance lease liabilities	67.9		67.9		68.9		68.9
Other	Other	13.4		13.4		17.4		17.4		Other	12.1		12.1		14.2		14.2
Total	Total	$	6,253.3	$	5,768.6	$	7,113.2	$	7,201.8	Total	$	5,672.7	$	5,367.1	$	6,349.1	$	5,998.6

The fair values of debt instruments are based on standard pricing models that take into account the present value of future cash flows, and in some cases private trading data, which are level 2 measurements.

Item 2. Management’s discussion and analysis of financial condition and results of operations

~~In addition to historical financial information, this~~This discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results may differ materially from those contained in or implied by any forward-looking statements. ~~You should carefully read~~See “Cautionary factors regarding forward-looking ~~statements” for additional information.~~statements.”

Basis of presentation

This discussion should be read in conjunction with the accompanying condensed consolidated financial statements and notes. Pursuant to SEC rules for reports covering interim periods, we have prepared this discussion and analysis to enable you to assess material changes in our financial condition and results of operations since December 31, ~~2021,~~2022, the date of our Annual Report. Therefore, we encourage you to read this discussion and analysis in conjunction with the Annual Report.

Overview

We are a leading global provider of mission critical products and services to customers in the biopharmaceutical, healthcare, education & government and advanced technologies & applied materials industries. We have global operations and an extensive product portfolio. We strive to enable customer success through innovation, cGMP manufacturing and comprehensive service offerings. The depth and breadth of our portfolio provides our customers a comprehensive range of products and services and allows us to create customized and integrated solutions for our customers.

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During the three months ended September 30, ~~2022,~~2023, we recorded net sales of ~~$1,856.5~~$1,720.2 million, net income of ~~$167.0~~$108.4 million and Adjusted EBITDA of ~~$384.0~~$317.8 million. Net sales ~~increased~~decreased by ~~1.2%~~7.3%, which included ~~4.5%~~a 9.6% decline in organic ~~growth~~sales compared to the same period in ~~2021.~~2022. See “Reconciliations of non-GAAP measures” for a reconciliation of net income to Adjusted EBITDA and “Results of operations” for a reconciliation of net sales growth (decline) to organic net sales ~~growth.~~growth (decline).

Factors and current trends affecting our business and results of operations

The following updates the factors and current trends disclosed in the Annual Report. These updates could affect our performance and financial condition in future periods.

~~Our results are impacted by acquisitions~~

~~We completed the acquisitions~~

Table of Masterflex, Ritter GmbH, and RIM Bio in 2021. Masterflex is a leading global manufacturer of peristaltic pumps and aseptic single-use fluid transfer technologies. Ritter GmbH is focused on supplying high-quality liquid handling consumables used in a variety of molecular screening and diagnostic applications and as part of drug discovery and clinical trial testing in pharma and biotech applications. RIM Bio provides a complete range of single-use 2D bags, 3D bags, tank liners, bag assemblies and multi-bag manifolds used in the manufacturing of biologics including monoclonal antibodies (mAbs), vaccines, cell and gene therapies, and recombinant proteins.contents

Our results ~~continue to be~~were impacted by the ~~ongoing global~~continuing effects of the coronavirus ~~outbreak~~pandemic

~~The results for each of our three regions~~Customer demand and required inventory levels continue to ~~be impacted by~~normalize in the transition from the COVID-19 pandemic, which has impacted our results for the three ~~and nine~~ months ended September 30, ~~2022, as described further in the “Results of operations” section below.~~2023. For a discussion of the impact of the COVID-19 pandemic and associated economic disruptions, and the actual operational and financial impacts that we experienced through December 31, ~~2021,~~2022, see “Part II—Item 7—Management's discussion and analysis of financial condition and results of operations” in the Annual Report. For additional discussion of the potential impact of the COVID-19 pandemic and associated economic disruptions on our results, see “The COVID-19 pandemic has adversely impacted, and continues to pose risks to, our business, operating results, cash flows and/or financial condition, the nature and extent of which could be material.” included in “Part I—Item 1A—Risk factors” in the Annual Report.

We have been impacted by supply chain constraints and inflationary pressures

We have experienced ~~challenges in sourcing certain products~~inventory fluctuations and ~~raw materials~~build up at customers as a result of global supply chain disruptions and have experienced inflationary pressures across all of our cost categories. While we have implemented pricing and productivity measures to combat these pressures, they may continue to adversely impact our results.

Fluctuations in foreign currency rates impact our results

Our consolidated results of operations are comprised of many different functional currencies that translate into our U.S. Dollar reporting currency. The movement of the U.S. Dollar against those functional currencies, particularly the Euro, has caused significant variability in our results and may continue to do so in the future.

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Key indicators of performance and financial condition

To evaluate our performance, we monitor a number of key indicators including certain non-GAAP financial measurements that we believe are useful to investors, creditors and others in assessing our performance. These measurements should not be considered in isolation or as a substitute for reported GAAP results because they may include or exclude certain items as compared to similar GAAP-based measurements, and such measurements may not be comparable to similarly-titled measurements reported by other companies. Rather, these measurements should be considered as an additional way of viewing aspects of our operations that provide a more complete understanding of our business.

The key indicators that we monitor are as follows:

•Net sales, gross margin, operating income and net income or loss. These measures are discussed in the section entitled “Results of ~~operations;”~~operations”;

•Organic net sales growth, which is a non-GAAP measure discussed in the section entitled “Results of operations.” Organic net sales growth (decline) eliminates from our reported net sales change the ~~impacts~~impact of ~~earnings from any acquired or disposed businesses and~~ changes in foreign currency exchange rates. We believe that this measurement is useful to investors as a way to measure and evaluate our underlying commercial operating performance consistently across our segments and the periods presented. This measurement is used by our management for the same reason. Reconciliations to the change in reported net sales, the most directly comparable GAAP financial measure, are included in the section entitled “Results of ~~operations;”~~operations”;

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•Adjusted EBITDA and Adjusted EBITDA margin, which are non-GAAP measures discussed in the section entitled “Results of operations.” Adjusted EBITDA is used by investors to measure and evaluate our operating performance exclusive of interest expense, income tax expense, depreciation, amortization and certain other adjustments. Adjusted EBITDA margin is Adjusted EBITDA divided by net sales as determined under GAAP. We believe that these measurements are useful to investors as a way to analyze the underlying trends in our business consistently across the periods presented. This measurement is used by our management for the same reason. A reconciliation of net income or loss, the most directly comparable GAAP financial measure, to Adjusted EBITDA is included in the section entitled “Reconciliations of non-GAAP ~~measures;”~~measures”;

•Cash flows from operating activities, which we discuss in the section entitled “Liquidity and capital resources—Historical cash ~~flows;”~~flows”;

•Free cash flow, which is a non-GAAP measure, is equal to our cash ~~flow~~flows from operating activities, plus acquisition-related costs paid in the period, less capital expenditures. We believe that this measurement is useful to investors as it provides a view on the Company’s ability to generate cash for use in financing or investing activities. This measurement is used by management for the same reason. A reconciliation of cash flows from operating activities, the most directly comparable GAAP financial measure, to free cash ~~flows,~~flow, is included in the section entitled “Liquidity and capital resources—Historical cash flows.”

Results of operations

We present results of operations in the same way that we manage our business, evaluate our performance and allocate our resources. We also provide discussion of net sales and Adjusted EBITDA by geographic segment based on customer location: Americas, Europe and AMEA. Corporate costs are managed on a standalone basis and not allocated to segments.

Executive summary


(dollars in millions)	Three months ended September 30,						Change
	2023			2022
Net sales	$	1,720.2		$	1,856.5		$	(136.3)
Gross margin	33.6		%	35.0		%	(140) bps
Operating income	$	210.2		$	275.8		$	(65.6)
Net income	108.4			167.0			(58.6)
Adjusted EBITDA	317.8			384.0			(66.2)
Adjusted EBITDA margin	18.5		%	20.7		%	(220) bps

The third quarter net sales decline was driven by decreases in all three regions primarily due to declines in customer demand, the impact of customer destocking, and COVID-19 related headwinds. Unfavorable product mix and inflationary factors contributed to contraction in gross margin. Softness in sales volumes along with unfavorable product mix drove Adjusted EBITDA margin contraction.

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~~Executive summary~~

(dollars in millions) Three months ended September 30, Change
2022 2021
Net sales $ 1,856.5 $ 1,834.3 $ 22.2
Gross margin 35.0 % 33.6 % 140 bps
Operating income $ 275.8 $ 237.2 $ 38.6
Net income 167.0 156.8 10.2
Adjusted EBITDA 384.0 359.2 24.8
Adjusted EBITDA margin 20.7 % 19.6 % 110 bps

Third quarter net sales growth was driven by our biopharma and advanced technologies & applied materials end markets, as well as the impact of the Masterflex acquisition that we completed in the prior year, partially offset by unfavorable foreign currency impact and COVID-19 related headwinds. Commercial excellence, growth of our proprietary materials and consumables product group and sales of higher-margin products offered by recently acquired companies contributed to expansion in both gross margin and Adjusted EBITDA margin.

Net Sales

Three months ended


(in millions)	(in millions)	Three months ended September 30,				Reconciliation of net sales growth to organic net sales growth														(in millions)		Three months ended September 30,								Reconciliation of net sales growth (decline) to organic net sales growth (decline)
						Net sales growth				Foreign currency impact				M&A impact				Organic net sales growth												Net sales growth (decline)				Foreign currency impact				Organic net sales growth (decline)
		2022		2021								2023												2022
Americas	Americas	$	1,123.2	$	1,045.0			$	78.2			$	(4.0)			$	30.5			$	51.7		Americas	$	1,019.2			$	1,123.2			$	(104.0)			$	1.0			$	(105.0)
Europe	Europe	595.1		674.7		(79.6)				(93.4)				7.1				6.7		Europe		579.8				595.1				(15.3)				41.1				(56.4)
AMEA	AMEA	138.2		114.6		23.6				(9.1)				8.9				23.8		AMEA		121.2				138.2				(17.0)				—				(17.0)
Total	Total	$	1,856.5	$	1,834.3	$	22.2			$	(106.5)			$	46.5			$	82.2	Total		$	1,720.2			$	1,856.5			$	(136.3)			$	42.1			$	(178.4)

Net sales ~~increased $22.2~~decreased $136.3 million or ~~1.2%~~7.3%, which included ~~$106.5~~$42.1 million or ~~5.8%~~2.3% of ~~unfavorable~~favorable foreign currency ~~impact and $46.5~~impact. Organic net sales decreased by $178.4 million or ~~2.5% of M&A impac~~t~~. Organic growth was $82.2 million or 4.5% (7.8%~~9.6% (declining 7.9% when excluding the impact of sales of COVID-19-related products in both periods, referred to herein as COVID-19 related headwinds or tailwinds) ~~and was primarily due to growth in our proprietary products and services.~~.

In the Americas, net sales ~~increased $78.2~~decreased $104.0 million or ~~7.5%~~9.3%, which included ~~$4.0~~$1.0 million or ~~0.3%~~0.1% of ~~unfavorable~~favorable foreign currency ~~impact and $30.5~~impact. Organic net sales decreased by $105.0 million or ~~2.9% of M&A impac~~t~~. Organic growth in net sales was $51.7 million or 4.9% (8.8%~~9.4% (7.9% excluding COVID-19 headwinds). Additional information on organic net sales ~~growth~~ by end market (with approximate percentage of total organic net sales for the region) is as follows:

•Biopharma (55%) — Sales ~~grew mid single-digits,~~declined double-digits, primarily due to ~~strong growth in sales of proprietary materials in biopharma production driven by our chemicals and serum product offerings, partially offset by~~ reduced ~~sales~~customer demand, as well as the roll-off of COVID-19 ~~related products.~~

~~Table~~revenues for vaccines, in addition to destocking of ~~contents~~lab products and single-use solutions.

•Healthcare (10%) — Sales ~~were flat as strong~~increased low single-digits primarily due to growth in our formulated silicones offering for medical ~~grade silicone business was~~implants, partially offset by ~~declines~~destocking and demand softness in ~~COVID-19 related~~consumables offerings ~~for diagnostic testing.~~to customers in this end market.

•Education and government (15%) — Sales increased low single-digits primarily due to ~~increases in lab chemicals and equipment & instrumentation~~continued strong growth to ~~government~~higher education customers, partially offset by ~~lower sales of COVID-19 related offerings to university research~~weaker demand from K-12 and government customers.

•Advanced technologies & applied materials (20%) — Sales ~~increased~~decreased double-digits driven by ~~strong sales to~~softness in the demand for our semiconductor and electronic device ~~customers.~~offerings.

In Europe, net sales decreased ~~$79.6~~$15.3 million or ~~11.8%~~2.6%, which included ~~$93.4~~$41.1 million or ~~13.9%~~6.9% of ~~unfavorable~~favorable foreign currency ~~impact and $7.1 million or 1.1% of M&A impac~~t.impact. Organic net sales ~~increased $6.7~~decreased $56.4 million or ~~1.0% (4.8%~~9.5% (8.6% excluding COVID-19 headwinds). Additional information on organic net sales ~~growth by end market (with approximate percentage of total organic net sales for the region) is as follows:~~

•~~Biopharma (50%)~~ — Sales grew low single-digits driven by double-digit growth in our production chemicals and single-use offerings, partially offset by lower sales of COVID-19 related offerings for vaccines, PPE and diagnostic testing.

•~~Healthcare~~ ~~(10%) — Sales increased double-digits primarily due to strong growth in our medical grade silicone offering.~~

•~~Education & government (10%)~~ ~~— Sales declined high single-digits driven by decreased sales of equipment & instrumentation in the education end market and by COVID-19 related headwinds in the government end market.~~

•~~Advanced technologies & applied materials (30%)~~ ~~— Sales decreased low single-digits due to softer industrial demand and COVID-19 headwinds.~~

In AMEA, net sales increased $23.6 million or 20.6%, which included $9.1 million or 8.0% of unfavorable foreign currency impact and $8.9 million or 7.8% of M&A impact. The organic increase in net sales was $23.8 million or 20.8% (15.1% excluding COVID-19 tailwinds). Additional information on organic net sales growth by end market (with approximate percentage of total organic net sales for the region) is as follows:

•Biopharma (50%) — Sales ~~increased~~declined double-digits, primarily due to ~~growth in sales~~reduced customer demand and destocking of ~~proprietary materials in biopharma production~~lab consumables and single-use solutions as well as the roll-off of COVID-19 revenues for vaccines.

•Healthcare (10%) — Sales declined double-digits primarily due to reduced customer demand and destocking of lab consumables.

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•Education & government (10%) — Sales were flat driven by ~~our chemicals~~improved activity in academia and ~~single-use product offerings.~~government labs offset by destocking of lab consumables.

•Advanced technologies & applied materials ~~(40%~~(30%) — Sales decreased low single-digits primarily driven by reduced customer demand and destocking of lab consumables.

In AMEA, net sales decreased $17.0 million or 12.3%. There was no material foreign currency impact to net sales. Organic net sales decreased $17.0 million or 12.3% (5.4% excluding COVID-19 headwinds). Additional information on organic net sales by end market (with approximate percentage of total organic net sales for the region) is as follows:

•Biopharma (45%)— Sales decreased low single-digits due to the roll-off of COVID-19 revenues associated with vaccine production.

•Advanced technologies & applied materials (45%) — Sales ~~grew~~declined double-digits primarily driven by ~~growth of~~softness in our proprietary offerings into the semiconductor ~~industry as well as strong industrial demand in the region.~~industry.

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Nine months ended


(in millions)	(in millions)	Nine months ended September 30,				Reconciliation of net sales growth to organic net sales growth														(in millions)		Nine months ended September 30,								Reconciliation of net sales growth (decline) to organic net sales growth (decline)
						Net sales growth				Foreign currency impact				M&A Impact				Organic net sales growth												Net sales growth (decline)				Foreign currency impact					Organic net sales growth (decline)
		2022		2021												2023								2022														Organic net sales growth (decline)
Americas	Americas	$	3,423.2	$	3,149.9			$	273.3			$	(8.8)			$	123.0			$	159.1		Americas	$	3,076.8			$	3,423.2			$	(346.4)			$	(3.7)				$	(342.7)
Europe	Europe	1,899.3		1,991.1		(91.8)				(204.1)				90.1				22.2		Europe		1,816.9				1,899.3				(82.4)				19.4					(101.8)
AMEA	AMEA	394.9		337.5		57.4				(17.6)				41.1				33.9		AMEA		350.7				394.9				(44.2)				(8.0)					(36.2)
Total	Total	$	5,717.4	$	5,478.5	$	238.9			$	(230.5)			$	254.2			$	215.2	Total		$	5,244.4			$	5,717.4			$	(473.0)			$	7.7				$	(480.7)

Net sales ~~increased $238.9~~decreased $473.0 million or ~~4.4%~~8.3%, which included ~~$230.5~~$7.7 million or ~~4.1%~~0.1% of ~~unfavorable~~favorable foreign currency ~~impact and $254.2 million or 4.6% of M&A impac~~t.impact. Organic ~~growth~~decline in net sales was ~~$215.2~~$480.7 million or ~~3.9% (7.1%~~8.4% (5.3% excluding COVID-19 headwinds).

In the Americas, net sales ~~increased $273.3~~decreased $346.4 million or ~~8.7%~~10.1%, which included ~~$8.8~~$3.7 million or ~~0.3%~~0.1% of unfavorable foreign currency ~~impact and $123.0 million or 3.9% of M&A impac~~t.impact. Organic ~~growth~~decline in net sales was ~~$159.1~~$342.7 million or ~~5.1% (8.2% excluding COVID-19 headwinds) for reasons similar to the three month period.~~

~~In Europe, net sales decreased $91.8 million or 4.6%, which included $204.1 million or 10.2% of unfavorable foreign currency impact and $90.1 million or 4.5% of M&A impac~~t~~. Organic growth in net sales was $22.2 million or 1.1% (5.2%~~10.0% (6.8% excluding COVID-19 headwinds) for reasons similar to the three month period, ~~as well as modest growth~~ in ~~our advanced technologies & applied materials business.~~addition to the roll-off of COVID-19 testing and PPE revenues.

In ~~AMEA,~~Europe, net sales ~~increased $57.4~~decreased $82.4 million or ~~17.0%~~4.3%, which included ~~$17.6~~$19.4 million or ~~5.2%~~1.0% of ~~unfavorable~~favorable foreign currency ~~impact and $41.1 million or 12.2% of M&A impac~~t.impact. Organic ~~growth~~decline in net sales was ~~$33.9~~$101.8 million or ~~10.0% (7.6%~~5.3% (2.9% excluding COVID-19 ~~tailwinds)~~headwinds) for reasons similar to the three month period, ~~partially offset by~~in addition to the ~~impact~~roll-off of ~~supply constraints and~~ COVID-19 ~~related lockdowns~~testing.

In AMEA, net sales decreased $44.2 million or 11.2%, which included $8.0 million or 2.0% of unfavorable foreign currency impact. Organic decline in ~~China in~~net sales was $36.2 million or 9.2% (4.4% excluding COVID-19 headwinds) for reasons similar to the ~~second quarter~~three month period.

Table of ~~2022.~~contents

Gross margin


		Three months ended September 30,				Change	Nine months ended September 30,				Change		Three months ended September 30,				Change	Nine months ended September 30,				Change
		2022		2021			2022		2021				2023		2022			2023		2022
Gross margin	Gross margin	35.0	%	33.6	%	140 bps	34.8	%	33.9	%	90 bps	Gross margin	33.6	%	35.0	%	(140) bps	34.2	%	34.8	%	(60) bps

Three and nine months ended

Gross margin for the three and nine months ended September 30, ~~2022 increased~~2023 contracted by 140 basis points and 9060 basis points, respectively, resulting primarily from ~~commercial excellence and favorable~~unfavorable product mix ~~in our proprietary materials business,~~and the impact of inflationary pressures, partially offset by lower distribution costs.

Operating income


(in millions)	Three months ended September 30,				Change		Nine months ended September 30,				Change
	2023		2022				2023		2022
Gross profit	$	578.6	$	650.7	$	(72.1)	$	1,793.4	$	1,988.3	$	(194.9)
Operating expenses (excluding impairment charges)	368.4		374.9		(6.5)		1,119.5		1,109.9		9.6
Impairment charges	—		—		—		160.8		—		160.8
Operating income	$	210.2	$	275.8	$	(65.6)	$	513.1	$	878.4	$	(365.3)

Three months ended

Operating income decreased primarily from lower gross profit, as previously discussed, partially offset by lower operating expenses driven by lower accruals related to incentive compensation.

Nine months ended

Operating income decreased primarily from lower gross profit, as previously discussed, as well as higher operating expenses driven by asset impairment charges recorded in the second quarter of 2023, the accrual of a ~~favorable impact from sales of higher gross margin products from acquired companies.~~long-term retention incentive, inflation and investments made to grow the business, partially offset by lower accruals related to incentive compensation.

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~~Operating~~Net income
(in millions) Three months ended September 30, Change Nine months ended September 30, Change
2022 2021 2022 2021
Gross profit $ 650.7 $ 615.9 $ 34.8 $ 1,988.3 $ 1,855.2 $ 133.1
Operating expenses 374.9 378.7 (3.8) 1,109.9 1,097.0 12.9
Operating income $ 275.8 $ 237.2 $ 38.6 $ 878.4 $ 758.2 $ 120.2


(in millions)	Three months ended September 30,				Change		Nine months ended September 30,				Change
	2023		2022				2023		2022
Operating income	$	210.2	$	275.8	$	(65.6)	$	513.1	$	878.4	$	(365.3)
Interest expense	(72.4)		(67.3)		(5.1)		(219.5)		(196.0)		(23.5)
Loss on extinguishment of debt	(2.0)		(2.9)		0.9		(5.9)		(10.8)		4.9
Other income, net	0.7		2.7		(2.0)		3.3		4.8		(1.5)
Income tax expense	(28.1)		(41.3)		13.2		(68.4)		(131.6)		63.2
Net income	$	108.4	$	167.0	$	(58.6)	$	222.6	$	544.8	$	(322.2)

Three and nine months ended

Operating income increased primarily from higher gross profit, as previously discussed. For the three months ended September 30, 2022, we have lower operating expenses driven by productivity and foreign currency impacts. On a year to date basis, the increase in operating expenses is driven by an additional $39.5 million in non-cash amortization expense related to intangible assets generated in our 2021 acquisitions, as well as investments in our workforce made over the course of 2021 and into 2022.

~~Net income~~
(in millions) Three months ended September 30, Change Nine months ended September 30, Change
2022 2021 2022 2021
Operating income $ 275.8 $ 237.2 $ 38.6 $ 878.4 $ 758.2 $ 120.2
Interest expense (67.3) (54.1) (13.2) (196.0) (156.6) (39.4)
Loss on extinguishment of debt (2.9) — (2.9) (10.8) (8.4) (2.4)
Other income, net 2.7 3.4 (0.7) 4.8 19.8 (15.0)
Income tax expense (41.3) (29.7) (11.6) (131.6) (134.4) 2.8
Net income $ 167.0 $ 156.8 $ 10.2 $ 544.8 $ 478.6 $ 66.2

~~Three months ended~~

Net income ~~increased~~decreased primarily due to ~~higher~~lower operating income, as previously ~~discussed. This growth was~~discussed, as well as higher interest expense from rising interest rates on our variable-rate term loans, partially offset by ~~higher interest expense driven by incremental debt issued in the fourth quarter of 2021 to finance the Masterflex acquisition,~~ loss on the extinguishment of our debt resulting from lower optional prepayments onof our term loans and ~~higher~~by lower income tax expense ~~driven by higher~~due to lower income before income ~~taxes and lower tax deductions resulting primarily from fewer stock option exercises in 2022 compared to 2021.~~

~~Nine months ended~~

Net income increased primarily due to higher operating income, as previously discussed. This was partially offset by higher interest expense as a result of incremental debt issued to finance the acquisitions completed in 2021, and lower other income resulting from the absence of a one-time disgorgement penalty payment that we received in 2021.

~~Table of contents~~

taxes.

Adjusted EBITDA and Adjusted EBITDA margin

For a reconciliation of Adjusted EBITDA to Net income, the most directly comparable measure under GAAP, see “Reconciliations of non-GAAP financial measures.”


(dollars in millions)	(dollars in millions)	Three months ended September 30,						Change		Nine months ended September 30,						Change		(dollars in millions)	Three months ended September 30,						Change		Nine months ended September 30,						Change
		2022			2021					2022			2021						2023			2022					2023			2022
Adjusted EBITDA:	Adjusted EBITDA:																	Adjusted EBITDA:
Americas	Americas	$	262.3		$	236.3		$	26.0	$	846.3		$	740.0		$	106.3	Americas	$	223.8		$	262.3		$	(38.5)	$	711.4		$	846.3		$	(134.9)
Europe	Europe	130.3			135.5			(5.2)		393.0			390.4			2.6		Europe	102.9			130.3			(27.4)		335.8			393.0			(57.2)
AMEA	AMEA	35.7			29.5			6.2		101.1			80.5			20.6		AMEA	33.8			35.7			(1.9)		93.7			101.1			(7.4)
Corporate	Corporate	(44.3)			(42.1)			(2.2)		(129.2)			(122.0)			(7.2)		Corporate	(42.7)			(44.3)			1.6		(133.9)			(129.2)			(4.7)
Total	Total	$	384.0		$	359.2		$	24.8	$	1,211.2		$	1,088.9		$	122.3	Total	$	317.8		$	384.0		$	(66.2)	$	1,007.0		$	1,211.2		$	(204.2)

Adjusted EBITDA margin	Adjusted EBITDA margin	20.7		%	19.6		%	110 bps		21.2		%	19.9		%	130 bps		Adjusted EBITDA margin	18.5		%	20.7		%	(220) bps		19.2		%	21.2		%	(200) bps

Three months ended

Adjusted EBITDA ~~increased $24.8~~decreased $66.2 million or ~~6.9%~~17.2%, which included a favorable foreign currency translation impact of $7.1 million. The remaining decline was $73.3 million or 19.0% which is further discussed below.

In the Americas, Adjusted EBITDA declined $38.5 million or 14.7%, or 14.8% when adjusted for favorable foreign currency translation impact. The decrease was driven by lower sales volumes, unfavorable manufacturing variances and product mix, partially offset by reduced operating expenses and lower distribution costs.

Table of contents

In Europe, Adjusted EBITDA declined $27.4 million or 21.0%, or 26.4% when adjusted for favorable foreign currency translation impact. The decrease was driven by sales volume contraction and unfavorable product mix, partially offset by reduced operating expenses, distribution costs and favorable manufacturing variances.

In AMEA, Adjusted EBITDA declined $1.9 million or 5.3%. There was no material foreign currency translation impact to Adjusted EBITDA. The decrease was driven by lower sales volume and inflationary pressures, partially offset by lower operating expenses and distribution costs.

In Corporate, Adjusted EBITDA increased $1.6 million or 3.6% reflecting continued cost containment across the corporate functions.

Nine months ended

Adjusted EBITDA decreased $204.2 million or 16.9%, which included an unfavorable foreign currency translation impact of ~~$21.2~~$1.7 million or ~~5.9% and $19.6~~0.1%. The remaining decline was $202.5 million or ~~5.5% from M&A. The remaining growth was $26.4 million or 7.3%.~~16.8% which is further discussed below.

In the Americas, Adjusted EBITDA ~~grew $26.0~~declined $134.9 million or ~~11.0%~~15.9%, or ~~5.1%~~15.8% when adjusted for unfavorable foreign currency translation impact. Lower gross profit from sales volume decline and unfavorable product mix was partially offset by commercial excellence and lower distribution costs.

In Europe, Adjusted EBITDA declined $57.2 million or 14.6%, or 15.0% when adjusted for favorable foreign currency translation impact due to lower gross profit from sales volume decline and unfavorable product mix, partially offset by commercial excellence.

In AMEA, Adjusted EBITDA declined $7.4 million or 7.3%, or 5.3% when adjusted for unfavorable foreign currency translation impact ~~and M&A. Higher~~due to lower gross profit ~~driven by commercial excellence~~from sales volume decline and ~~favorable mix related to sales of our higher-margin proprietary products was~~inflationary pressures, partially offset by ~~inflationary factors and investments in our workforce made over the course of 2021 and into 2022.~~

In Europe, Adjusted EBITDA declined $5.2 million or 3.8%, but increased 9.0% when adjusted for unfavorable foreign currency translation impact and M&A. The increase was driven by higher gross profit resulting from favorable product mix and commercial excellence. This increase was partially offset by inflationary factors and investments in our workforce made over the course of 2021 and into 2022.

In AMEA, Adjusted EBITDA grew $6.2 million or 21.0%, or 14.2% when adjusted for unfavorable foreign currency translation impact and M&A. Increases driven by higher gross profit were partially offset by inflationary factors and losses on foreign currency revaluations.lower distribution costs.

In Corporate, Adjusted EBITDA declined ~~$2.2~~$4.7 million or ~~5.3%~~3.6% reflecting investments in our workforce made over the course of ~~2021~~2022 and into ~~2022 and increased equity-classified stock-based compensation expense.~~

~~Nine months ended~~

Adjusted EBITDA increased $122.3 million or 11.2%, which included an unfavorable foreign currency translation impact of $44.0 million or 4.0% and $95.1 million or 8.7% from M&A. The remaining growth was $71.2 million or 6.5%.2023.

~~Table of contents~~

In the Americas, Adjusted EBITDA grew $106.3 million or 14.4%, or 7.0% when adjusted for unfavorable foreign currency translation impact and M&A. Higher gross profit from commercial excellence and favorable product mix related to sales of our higher-margin proprietary products was partially offset by inflationary factors, including freight, and investments in our workforce made over the course of 2021 and into 2022.

In Europe, Adjusted EBITDA grew $2.6 million or 0.7%, or 4.7% when adjusted for unfavorable foreign currency translation impact and M&A, due to higher gross profit from favorable product mix and commercial excellence. This was partially offset by inflationary factors, including freight, and investments in our workforce made over the course of 2021 and into 2022.

~~In AMEA, Adjusted EBITDA grew $20.6 million or 25.6%, or 9.3% when adjusted for unfavorable foreign currency translation impact and M&A. Increases driven by higher gross profit were offset byinflationary factors, including freight.~~

In Corporate, Adjusted EBITDA declined $7.2 million or 5.9% reflecting investments in our workforce made over the course of 2021 and into 2022 and increased equity-classified stock-based compensation expense.

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Reconciliations of non-GAAP financial measures

The following table presents the reconciliation of net income to Adjusted EBITDA:
(in millions) Three months ended September 30, Nine months ended September 30,
2022 2021 2022 2021
Net income $ 167.0 $ 156.8 $ 544.8 $ 478.6
Interest expense 67.3 54.1 196.0 156.6
Income tax expense 41.3 29.7 131.6 134.4
Depreciation and amortization 100.6 100.0 304.8 275.1
Loss on extinguishment of debt 2.9 — 10.8 8.4
Net foreign currency (gain) loss from financing activities (1.2) (0.8) (0.2) 1.2
Other stock-based compensation (benefit) expense (1.6) 1.6 (3.3) 2.9
Acquisition-related expenses1
— 3.2 — 27.8
Integration-related expenses2
6.4 7.9 13.6 8.4
Purchase accounting adjustments3
— 6.3 9.4 6.3
Restructuring and severance charges4
1.3 0.4 3.7 2.2
Receipt of disgorgement penalty5
— — — (13.0)
Adjusted EBITDA $ 384.0 $ 359.2 $ 1,211.2 $ 1,088.9


(in millions)	Three months ended September 30,				Nine months ended September 30,
	2023		2022		2023		2022
Net income	$	108.4	$	167.0	$	222.6	$	544.8
Interest expense	72.4		67.3		219.5		196.0
Income tax expense	28.1		41.3		68.4		131.6
Depreciation and amortization	98.0		100.6		301.7		304.8
Loss on extinguishment of debt	2.0		2.9		5.9		10.8
Net foreign currency gain from financing activities	(0.5)		(1.2)		(2.3)		(0.2)
Other stock-based compensation expense (benefit)	0.1		(1.6)		0.1		(3.3)

Integration-related expenses1	0.2		6.4		8.3		13.6
Purchase accounting adjustments2	—		—		—		9.4
Restructuring and severance charges3	6.1		1.3		18.0		3.7
Reserve for certain legal matters4	3.0		—		4.0		—
Impairment charges5	—		—		160.8		—

Adjusted EBITDA	$	317.8	$	384.0	$	1,007.0	$	1,211.2

━━━━━━━━━

1.Represents ~~legal, accounting, investment banking and consulting fees incurred related to the acquisition of acquired companies.~~

2.~~Represents~~ non-recurring direct costs incurred with third parties and the accrual of a long-term retention incentive to integrate acquired companies. These expenses represent incremental costs and are unrelated to normal operations of our business. Integration expenses are incurred over a pre-defined integration period specific to each acquisition.

3.2.Represents the non-cash reduction of contingent consideration related to the Ritter acquisition and the amortization of the purchase accounting ~~adjustments~~adjustment to record inventory acquired from Masterflex ~~and Ritter~~ at fair value.

5.As described in note 121 to our unaudited ~~interim~~condensed consolidated financial statements.

Liquidity and capital resources

We fund short-term cash requirements primarily from operating cash ~~flows.~~flows and credit facilities. Most of our long-term financing is from indebtedness. For the three and nine months ended September 30, ~~2022,~~2023, we generated ~~$258.3~~$230.7 million and ~~$638.0~~$618.4 million of cash from operating activities, ended the quarter with ~~$265.6~~$236.9 million of cash and cash equivalents and our availability under our credit facilities was ~~$556.1~~$987.7 million. We have no debt repayments due in the next twelve months other than required term loan payments of ~~$31.7~~$32.8 million and receivables facility borrowing of ~~$245.0~~$297.7 million.

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Liquidity

The following table presents our primary sources of liquidity:


(in millions)	(in millions)	September 30, 2022						(in millions)	September 30, 2023
		Receivables facility		Revolving credit facility		Total			Receivables facility		Revolving credit facility		Total
Unused availability under credit facilities:	Unused availability under credit facilities:							Unused availability under credit facilities:
Capacity	Capacity	$	300.0	$	515.0	$	815.0	Capacity	$	325.8	$	975.0	$	1,300.8
Undrawn letters of credit outstanding	Undrawn letters of credit outstanding	(13.9)		—		(13.9)		Undrawn letters of credit outstanding	(15.4)		—		(15.4)
Outstanding borrowings	Outstanding borrowings	(245.0)		—		(245.0)		Outstanding borrowings	(297.7)		—		(297.7)
Unused availability	Unused availability	$	41.1	$	515.0	$	556.1	Unused availability	$	12.7	$	975.0	$	987.7
Cash and cash equivalents	Cash and cash equivalents					265.6		Cash and cash equivalents					236.9
Total liquidity	Total liquidity					$	821.7	Total liquidity					$	1,224.6

~~We fund short-term cash requirements primarily from operating cash flows.~~ Some of our credit line availability depends upon maintaining a sufficient borrowing base of eligible accounts receivable. We believe that we have sufficient capital resources to meet our liquidity needs.

At September 30, ~~2022, $229.5~~2023, $215.6 million or ~~86.4%~~91.0% of our ~~$265.6~~$236.9 million in cash and cash equivalents was held by our non-U.S. subsidiaries and may be subject to certain taxes upon repatriation, primarily where foreign withholding taxes apply.

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Historical cash flows

The following table presents a summary of cash provided by (used in) various activities:


(in millions)	(in millions)	Nine months ended September 30,				Change		(in millions)	Nine months ended September 30,				Change
		2022		2021					2023		2022
Operating activities:	Operating activities:							Operating activities:
Net income	Net income	$	544.8	$	478.6	66.2		Net income	$	222.6	$	544.8	(322.2)
Non-cash items1	Non-cash items1	350.5		347.1		3.4		Non-cash items1	475.3		350.5		124.8
Working capital changes2	Working capital changes2	(155.1)		(175.1)		20.0		Working capital changes2	(10.0)		(155.1)		145.1
All other	All other	(102.2)		2.0		(104.2)		All other	(69.5)		(102.2)		32.7
Total	Total	$	638.0	$	652.6	$	(14.6)	Total	$	618.4	$	638.0	$	(19.6)
Investing activities	Investing activities	$	(76.5)	$	(1,238.2)	$	1,161.7	Investing activities	$	(93.7)	$	(76.5)	$	(17.2)
Cash paid for acquisitions, net of cash acquired	Cash paid for acquisitions, net of cash acquired	(20.2)		(1,168.9)		1,148.7		Cash paid for acquisitions, net of cash acquired	—		(20.2)		20.2
Capital expenditures	Capital expenditures	(99.8)		(71.1)		(28.7)		Capital expenditures	(95.8)		(99.8)		4.0
Cash proceeds from settlement of cross currency swap	Cash proceeds from settlement of cross currency swap	42.5		—		42.5		Cash proceeds from settlement of cross currency swap	—		42.5		(42.5)
Financing activities	Financing activities	(567.1)		1,758.2		(2,325.3)		Financing activities	(659.6)		(567.1)		(92.5)

━━━━━━━━━

1.Consists of typical non-cash charges including depreciation and amortization, impairments, stock based compensation expense, deferred income tax expense and others.

2.Includes changes to our accounts receivable, inventory, contract assets and accounts payable.

Cash flows from operating activities provided ~~$14.6~~$19.6 million less cash in ~~2022~~2023 primarily due to ~~higher~~lower net income, partially offset by improved working capital and lower payments for ~~interest and tax, higher~~ incentive compensation payments for fiscal year ~~2021~~2022 company ~~performance, and higher payments to customers under our rebate programs driven by the strong 2021 volumes. These items were partially offset by higher operating income.~~performance.

Investing activities used ~~$1,161.7~~$17.2 million ~~less~~more cash in ~~2022, reflecting~~2023. The change was primarily attributable to the ~~cash paid for acquisitions in the previous year as well as cash we received from the settlement~~absence of a cross currency swap settlement and acquisition activity in ~~the third quarter~~2023 which provided a net cash inflow of ~~2022. These items were~~$22.3 million in 2022, partially offset by ~~increased~~a reduction in capital ~~spending across the Company~~expenditures compared to the prior year.

Financing activities used ~~$2,325.3~~$92.5 million more cash in ~~2022~~2023 primarily due to the net repayments made on the receivables facility in 2023 compared to having net borrowings in 2022. This was partially offset by lower repayments on our term loans in 2023 compared to the prior year. In 2021, financing activities provided $1,758.2 million of cash primarily due to issuances of new debt and secondary equity offerings to finance our acquisitions. In 2022, we used $567.1 million of cash primarily to pay down our term loans.

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Free cash flow


(in millions)	(in millions)	Nine months ended September 30,				Change		(in millions)	Nine months ended September 30,				Change
		2022		2021					2023		2022
Net cash provided by operating activities	Net cash provided by operating activities	$	638.0	$	652.6	$	(14.6)	Net cash provided by operating activities	$	618.4	$	638.0	$	(19.6)
Acquisition-related expenses paid		—		24.6		$	(24.6)

Capital expenditures	Capital expenditures	(99.8)		(71.1)		(28.7)		Capital expenditures	(95.8)		(99.8)		4.0
Free cash flow	Free cash flow	$	538.2	$	606.1	$	(67.9)	Free cash flow	$	522.6	$	538.2	$	(15.6)

Free cash flow was ~~$67.9~~$15.6 million lower in ~~2022~~2023 due to the changes in cash flows from operating activities noted above, ~~and an increase~~partially offset by slight reduction in capital spending across the Company in ~~2022, principally reflecting growth-related expansions in our global supply chain.~~2023.

Indebtedness

For information about our indebtedness, refer to the section entitled “Liquidity” and note 98 to our unaudited condensed consolidated financial statements included in Part I, Item 1 — “Financial statements.”

New accounting standards

There were no new accounting standards that we expect to have a material impact on our financial position or results of operations upon adoption.

Item 3. Quantitative and qualitative disclosures about market risk

There have been no significant changes to the disclosures about market risk included in our Annual Report.

Item 4. Controls and procedures

Management’s evaluation of disclosure controls and procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)), as of the end of the period covered by this report. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, ~~2022,~~2023, the design and operation of our disclosure controls and procedures were effective to accomplish their objectives at the reasonable assurance level.

Changes in internal control over financial reporting

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934) during the fiscal quarter ended September 30, ~~2022~~2023, that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

~~Table of contents~~

PART II — OTHER INFORMATION

Table of contents

Item 1. Legal proceedings

For additional information regarding legal proceedings and matters, see note 87 to our unaudited condensed consolidated financial statements included in Part I, Item 1 — “Financial Statements,” which information is incorporated into this item by reference.

Item 1A. Risk factors

For information regarding factors that could affect the Company's results of operations, financial condition and liquidity, see the risk factors discussed in Part I, Item 1A “Risk Factors” in our Annual Report. There have been no material changes to the risk factors disclosed in Part I—Item 1A of the Annual Report.

Item 2. Unregistered sales of equity securities and use of proceeds

None.

Item 3. Defaults upon senior securities

None.

Item 4. Mine safety disclosures

Not applicable.

Item 5. Other information

~~Amendment to A/R Facility~~

On October 25, 2022, certain subsidiaries of the Company amended and extended its accounts receivable securitization facility (the “A/R Facility”) by entering into Amendment No. 2 to Receivables Purchase Agreement and Reaffirmation of Performance Guaranty among Avantor Receivables Funding, LLC, VWR International, LLC, PNC Bank, National Association, as Administrator, LC Bank, Related Commitment Purchaser and Purchaser Agent for the PNC Purchaser Group (the “RPA Amendment”).

The RPA Amendment extends the final stated maturity date on the A/R Facility to October 27, 2025 and maintains the interest rate on borrowings to SOFR plus a spread based on the Company’s then current first lien net leverage ratio. Funding levels under the A/R Facility were increased to an amount not to exceed $400.0 million.

The A/R Facility will continue to include customary representations and covenants under the agreements and includes a minimum funding threshold of not less than 25% of the A/R Facility’s funding limit.

The Company paid customary fees to the arranger in connection with the RPA Amendment. The foregoing is a summary of the material terms of the RPA Amendment, does not purport to be complete, and is qualified in its entirety by reference to the RPA Amendment, a copy of which is attached as Exhibit 10.2 to this Quarterly Report on Form 10-Q, which is incorporated herein by reference.None.

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Item 6. Exhibits

Location of exhibits

Exhibit no.

Exhibit description

Form

Exhibit no.

Filling date

10.1

Amendment ~~No.2 to the Avantor, Inc. 2019 Employee Stock Purchase Plan~~

~~10.2~~

~~Amendment~~ No.2 4 dated as of ~~October 25, 2022~~September 19, 2023 to the Receivables Purchase Agreement, dated as of March 27, 2020 (as amended by Amendment ~~No. 1~~No.1 to Receivables Purchase Agreement, dated as of December 21, ~~2021)~~2021, Amendment No.2 to Receivables Purchase Agreement, dated as of October 25, 2022 and Amendment No. 3 to Receivables Purchase Agreement, dated as of June 14, 2023), among Avantor Receivables Funding, LLC, VWR International, LLC, ~~the various conduit purchasers from time to time party thereto, the various purchaser agents from time to time thereto, the various LC participants from time to time party thereto and~~Avantor Funding, Inc., as performance guarantor, PNC Bank, National Association, as administrator, LC Bank, Related Committed Purchaser and Purchaser Agent, and Wells Fargo Bank, National Association, as Related Committed Purchaser, Purchaser Agent and LC ~~Bank~~Participant

31.1

Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2

Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1

Certification of Principal Executive Officer pursuant to 18 U.S.C. 1350 (Section 906 of the Sarbanes-Oxley Act of 2002)

32.2

Certification of Principal Financial Officer pursuant to 18 U.S.C. 1350 (Section 906 of the Sarbanes-Oxley Act of 2002)

101

XBRL exhibits

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

━━━━━━━━━

* Filled herewith

** Furnished herewith

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	Avantor, Inc.

Date: October ~~28, 2022~~27, 2023	By:	/s/ Steven Eck
		Name:	Steven Eck
		Title:	Senior Vice President, Chief Accounting Officer (Principal Accounting Officer)

4138


(in millions, except per share data)	Three months ended September 30, 2021					Nine months ended September 30, 2021
	Earnings (numerator)		Weighted average shares outstanding (denominator)	Earnings per share		Earnings (numerator)		Weighted average shares outstanding (denominator)	Earnings per share
Basic	$	140.7	588.5	$	0.24	$	430.2	584.1	$	0.74
Dilutive effect of stock-based awards	—		9.6			—		8.9
Diluted	$	140.7	598.1	$	0.24	$	430.2	593.0	$	0.73