AVTR - Earnings call transcript Q4 2024

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Operator

[Audio Gap] for example, we launched a new services offering to address capacity and space limitation challenges faced by many large pharma and biotech customers. This offering leverages cutting-edge digital tools and generative AI to automate operational tasks, providing virtual assistance to researchers at their lab bench. Already, this solution is supporting a top 10 global pharma client and reinforces our commitment to returning valuable time to scientists.

We also introduced the new Master Flex Mini Flex Panel Mountain pumps, further strengthening our fluid handling offering. And in our total Science Solutions platform, we signed several new third-party supplier agreements, enhancing our portfolio with differentiated technologies, including LGC standards, a leader in reference materials used across a wide range of industries, including pharmaceuticals, biotechnology, academia and environmental sciences. XX,XXX in materials North their to now agreement, customers our America. this certified are reference available With

Quantum SI, a leader in the protein sequencing space.

to new market and distribution agreement proud sequencing technology. This innovator are bring exclusive molecule recognition single We global capacity more. an next-generation covering platform, setting in portfolio molecular to is and operational which their continue And efficiency clone And we drug in Canada. U.S. manufacturing in discovery, is a the Novalitic, reliability milestones to excellence. hit proteometer and selection an new and their in protein standard for

In clean Poland. the for completed This and the biopharma place of outsourced resulting the installation [indiscernible] Avantor solutions positions for a meet products lower flexibility to in state-of-the-art quarter, increased we market, costs and expansion growing our end in and manufacturing in media facility customers. demand the buffer,

Additionally, times accuracy. we New at streamline Bridgeport, automation to workflows, regional significantly in center and our distribution leveraged advanced reduce increase processing Jersey order

I Americas days can few joined for in few the I region focused extremely training. brought ago, weeks business. is our growing the team the Conference, our on sales A which a together associates tell of Sales you that

to time new that will our help were strategic us the customers. the products innovative touch of our for value new energizing Joining meeting and us products It to to suppliers showcasing who was most offerings. spent their and feel deliver some continue

to few financials, on points reflect turning XXXX. want Before as Brent to a ahead a and into it over key look XXXX I dive for to highlight deeper the we

of Between the strong leverage in focused our were has services proceeds comfortably divestiture, to $X.X free on cash First, below bringing our been and billion allocation down adjusted capital pay maintaining our and optimal business. at to primarily our below able we Xx remains believe top debt clinical that from flow structure start net our is Xx. reduction net Xx priority, our leverage X.Xx, for we year. the nearly taking the is down a sustainably significant from a of our Deleveraging capital XXXX,

that, we value-driven we'll balanced a allocation achieve on Once approach. be focused capital

entering We clear margin a with focus expansion strong on growth, deleveraging. and and are innovation-driven XXXX momentum

Our end are improving. markets

is is ahead our it efficiency Our of XXXX combination and well schedule. a driving tracking a on we to greater of commercial of now execution transformation positioned turn program self-help make model are Through cost I'll growth. Brent. operating to new continued focus a year actions, and over outstanding

Unknown Executive

our Fourth $X.XX good $XX of clinical FX, of together I'm business, QX. trends from organic were in with Thank growth our X. mid-October, billion, stable X%. morning, segment compared reported revenue you, Slide impact closed into Michael, everyone. was the account to which with taking of Sales starting and delivered Solutions in we Laboratory the quarter numbers a divestiture on services the impact million

While expectations continues end resilience quarter Bioscience fourth seasonal growth. impacts were outperformed the Production high to single-digit for with bioprocessing as our straight show recover. to markets segment, muted, Within the business continue

is which million, for was modest adjusted year. versus margin improvement and a prior the gross profit $XXX versus flat XX.X% Adjusted gross quarter QX representing a

profit was gross negative Our divestiture, inflation clinical fixed cost the and leverage. impacted by services

representing at was to which with to an the sequentially cost were of work and effects efforts, was able end we these we million and on a high and improvement $XXX improved in EBITDA Adjusted and mix offset our base. margin, expectations productivity However, partially XX.X% our year-over-year. continue solid reducing diligently QX,

XX headwind basis point approximately clinical particularly divestiture October. is margin encouraging from given in services our This the

and sequentially our at Our a and performance income adjusted performance. improvement margin Interest margin important was were modest EBITDA tax cost savings in transformation and expectations. an which million operating initiative, $XXX line year. with with in expenses our continues drive was meaningful XX.X% both to a to line versus Adjusted prior contributor

a year-over-year $X.XX $X.XX sequential result, for and $X.XX quarter, were a per earnings share improvement. the adjusted As

performance EPS adjusted interest in continued flow-through our expense. the as reflects quarter in Our results of reductions the net as adjusted well EBITDA

favorability incremental flow. services expense from was debt paydown in free and outperformance clinical the driven Interest by cash divestiture

Moving we conversion generated in of flow free to cash XXX%. over flow, which in quarter, represents $XXX the cash a million rate

leverage free $XXX capital In quarter X.Xx down at by ended by enhanced adjusted EBITDA. million cash adjusted Business Our working of paid enabled Avantor System. flow debt, disciplined over we performance continued was QX, management our the net the

remains top priority, sustainably capital allocation leverage target below we net Michael As Xx. deleveraging noted earlier, adjusted our and continue to

on results X% full $X.XX guidance. representing line was original year end our with Adjusted of in year billion, revenue decline Turning low versus to Slide prior X. a Reported the revenue organic the profit of our guidance gross range. XXXX, billion, billion a gross EBITDA $X.XX a margin. $X.X adjusted was end at representing XX.X% was representing margin the for Adjusted year the XX.X% in high

earnings operating guidance. a in per share XXXX our of able challenging Despite all in came this generated transformation-related approximately $XXX environment, adjusted of income year. billion We the for at achieve Adjusted macro in inclusive we Putting were $X.XX flow EPS spend. was million original cash $X.XX to together, million of $XXX the midpoint XX.X% at the margin. free

million exceeding $XXX original range this guidance Excluding cash $XXX generated of $XXX of adjusted significantly full we spend, million to free million. our flow year

year, cash full XXX%. over flow was free our For conversion the

for earlier, Sequentially, chemicals our to leverage $X.X well proprietary modestly. our are to exited we target. and debt billion prior had in procurement a we our on in adjusted an was quarter, $X.XX revenue performance strong paid specialty care sales, customers. Laboratory decline basis. so health and particularly grew billion X.Xx year and mentioned of of As we sub Xx this versus biopharma adjusted X% way I Encouragingly, the with year EBITDA, Solutions on XXXX sales down net organic

in of backdrop levels macro timing was the activity However, the seasonal given muted customary increase and holidays. the

quarter as Adjusted an margin. XX.X% income leverage Laboratory Adjusted full points Laboratory savings XX billion, the $XXX increased sequential a from revenue operating margin headwinds basis. expansion divestiture. from from with income Solutions fixed initiatives. our XXXX, driven XXXX our for X% QX volume a services decline organic despite clinical year operating transformation the versus cost was as For Solutions $X.XX basis continued was million well cost by This for growth margin was of on from

solutions, full adjusted income year XX% XXXX, million the For $XXX was laboratory operating with a margin.

expectations Bioscience X/X production organic about was QX, growth in which the and X% with once year million prior Bioprocessing, segment represents again revenue acceleration. $XXX a high sequential versus single-digit representing meaningful growth. of outperformed of

also strong another with basis. intake We a order sequential of saw quarter on increasing meaningfully orders

year-over-year operating income digits $XXX was Adjusted for for materials grew XX.X% double electronic an production the was stable bioscience silicones offering Our while expected representing million a sequentially quarter, with decline. margin.

from sequential XXX was favorable volume that, On operating basis, fixed adjusted I growth move to will up to as mix. points due XXXX as well a With cost income guidance. leverage basis

new XXXX double-digit our particularly we revenue of initiatives confidence margin positioned entering key are The end seeing all us our trends give progress Building on of remarks, growth XXXX. growth. EPS Michael's for model, cost bioprocessing, transformation markets, continued across expansion and growth, well opening implementation organic operating the are in in and encouraging we forecasting

X%. organic For the we expect revenue full of to X% growth year,

This segment FX. spot and current contributions headwind services reported customary order decline we clinical our a based negative from This revenue X% divestiture single-digit lab bioscience Solutions a from in we a leads view Lab expect momentum business on in represents organic organic bioprocessing, Our in another continued of basis, expect negative On to and growth reflects price. stability mid-single-digit in rates, low growth And headwind. X% X%. X% to production.

to bioprocessing expect also high digits grow we Importantly, in single mid- XXXX. to

Moving profitability. to

by and XX%, solid rate execution XX% expect multiyear our We of is impact mix after is improvement This basis dilutive of clinical discussed, a transformation offset initiative, driven margins. half adjusted XX the services price, And divestiture, approximately inflation. XXXX by as EBITDA we've margins second performance favorable points cost to our from to approximately is approximately of XX.X%. of continued which exit the our this

million, strong exit the achieve over when rate million execution, expect savings run savings exit run million incremental savings to gross excess Our savings $XXX I of the and of rate improvement of of $XX $XXX exited way higher in for XXXX are an meaningfully adjusting million. XXXX. with XX% our on we divestiture. by of to $XX XX.X% in-year structural to a generate estimate We or team's an the like taking clinical and well XXXX in-year target In intend in million. and focus our EBITDA clearly cost impact to the to to margins of services with $XXX approximately $XXX original million end XXXX of our goal our would of in-year our approximately achieving than address exit Thanks adjusted rate initiatives XXXX, were hold.

initiative. progress towards substantial our As we the we impact transformation target said, make of cost self-help can have this with

also revenue of sight the Given to if need line continued our the market to at achieve this to target. we meaningful rate are fixed able exiting recovery end cost have Encouragingly, we base, we achieve high and reduce end deleveraging conversion of expense. with accelerated helped P&L, continued interest our have cash, proceeds of the services the down clinical Continuing the to range. strong together our our divestiture materially

to interest expense. expense million approximately XXXX million year-over-year, We roughly to to of $XX in million resulting interest $XXX by $XX improve million expect in $XXX

to tax similar We anticipate XX.X%. our rate at be will XXXX

long-term divestiture. $X.XX range EPS This at for clinical in the our midpoint XX% with year-over-year impact the business. our after to growth power earnings algorithm and adjusted strong of reflects the $X.XX, is Our services accounting line is $X.XX of our

any of cost free million to $XXX $XXX to with flow expenses onetime expect We prior cash savings million our initiative. associated performance cash

approximately of entitlement. adjusted exceptional XXXX, represents solidly than benefited improvements with performance, capital lower from line conversion which net XX% in While this income working our in

expect the and mid- days, we the Solutions be high A fewer is flat. our us this revenue while decline In Lab In to materials and modestly be few a selling headwinds digits expected to the first quarter to the low phasing. is margin softest in macro grow for to QX On single adjusted flat year the year-over-year comments digits. also be expected to the the segment of historically mid-XXs. bioscience environment. is single on revenue production electronic organic are grow we EBITDA will Reported basis, enterprise due first uncertainty with and expected we quarter to for bioprocessing industry. also quarter, expect year, to low to facing final

dollars revenue contemplates organic reported each full sequential in quarter. a year guidance and Our increase continued

of our of half are in As transformation XX% as second increase anticipate and of is growth each in that half of the half realized. approximately our particularly savings of typical, the results our as the volume the We the XX% pricing, well, revenue will year second year. benefits in in and incremental margins this the revenue first quarter

We down. Lastly, back we as is With to pay quarter. the to a that, each This will combination confidence believe $XX business. million prudence of a guidance I first are and modeling the the this quarter will in approximately of well-balanced Michael. our down outlook interest expense turn incremental call result continue of in trend debt for

Michael Stubblefield

you, Thank Brent.

Q&A, we in for I structure year XXXX this Before The associates want and to was implementing progress into helping us sets great cost and new model more thank globe made jump up a us transforming deliver a and the operating for our even than our success we XXXX. across beyond. significant XX,XXX greater

than successful our transformation needs better execute we X of on segments customers' positioned aligned into strategy. the growth lab, with ever and our the production in With complementary environments, our business are to

every than day we than around labs countries more more the in and world X,XXX working labs. have Today, in XXX service on-site customer support associates XXX,XXX

our privileged to us materials working activities design into into our into and challenges and development gives and access directly We And research processes. on. phase strategy production customers footprint call to unparalleled important innovation our Our custom we the really us works. are pipeline. allows feed our and Insights early access seed Beaker proprietary model the to their bulk insights it

resilient setup will so and to highly am plan strategies. of for any rapidly actively us a our XXXX. footprint and tremendous our flexibility We chain, monitoring featuring encouraged sourcing supply global built scenarios enabled adjustments also and things that wide manufacturing and as developments for redundancy make know I can Our we continue has into change establish a range needed. quickly, we by

Our sequential momentum sustained cost initiative commercial throughout intensity XXXX. and transformation drove

we that have We execute am continue well. plan solid for year, to confident a the and I will

organic expect growth. business, double-digit return and a the We to EPS across expansion margin continued growth

now best-in-class our our accelerating and commitments same deleveraging. to over us delivered to the our begin XXXX. question-and-answer call. turn for XXXX, to operator cash will in expect We the do will I I it on We portion our of continue generation, the

Operator

[Operator Instructions] Evercore comes from Kumar Our first Vijay with ISI. question

Vijay Kumar

any QX. What bioprocessing, you exit single, curious at to guidance, on a mid- good trends you here you I of quarter? look when order Just was trends uncertainty? range, high of I'm orders Michael, can any single, I tariffs when at so if guess forward the assumptions? were high at a there ahead macro rate level, is or And some is when high in there elaborate . pretty the bioprocessing look in pull

Michael Stubblefield

have Yes. in We strong. our that I for was strong Destocking agree. we evidence on consecutive Vijay, played levels of quarter quarters the question. pull record the had our really thanks significant there builds growth for a subsided improved, see would a market Nothing us. we continue bioprocessing production X in with the has we levels And out of the just year The have quarter underlying finish in fundamentals of that terms to line Yes, quite to single-digit much with the which to outperformance high indicate with in any quarter, forward. unusual approvals. pretty developed, think how largely be continue expectations. I don't really

intake, order translate to real to strong great revenue seeing time. quarter So we're there lead another that times, with X-month X-

in improvement, that's for we gradual we've of sustained and up an good experience 'XX, the entered XXXX. sets year of that move us planned in And we through with was what for of on year. momentum book the as recovery kind order Our one Vijay, kind

Operator

comes Ryskin Bank question from next Our of Michael America. with

Michael Ryskin

quarter following you and for because for sustained Michael, to through up said first mid-single, for one high the you quick bioprocess guiding full that, Just high on single in just BP. the mid-single, the single year But are year. recovery

of the year-over-year margins than the is pointing some clarification a one, my on the wider XXXX midpoint. comps you in then the So XXX little just guide this bps on matter there. question bit its to wide in terms giving question margins, is the just concern, you to or XX.X past a of to is are some just range But for actual But be [indiscernible] going at a have range.

Just thoughts margins curious on why also that's And there. that. beyond

exiting exiting going is 'XX, about in you of through you're the million to $XXX $XXX 'XX. think -- talked an million I you're excess have savings goal

more than you matter you're cost as the faster you you thought of So a finding on more looks executing you're it Is some Or timing? things like you're where one those savings business, anticipated. of that is through just and than going would.

that 'XX. to upside $XXX some there's for maybe So million number

Michael Stubblefield

on All I right. great we the the selling would unpack prudent mid- my on I'll a date your as the we is single-digit some target to as here good do said contemplate and year. we're and with moving I low tends about think to each best we as of think think our the which put of start. modalities, Thanks, to or sequentially here I exciting to has ADCs content for and Brent sustainable. and is that quarter more progress ubiquitous all And expect try continue in let for into we we across There's high pipelines molecule. gradual QX before, therapy said, biosimilars, bioprocessing, questions off across that to we a XXXX, through high modalities, And Michael. new been year. cover can [indiscernible] on incremental, all improvement the about therapies probably and margins. to recovery place penetration of experience be to things pretty looking to that well. move across these look, new as continue drive point And Because more lot business When

Unknown Executive

thanks for question. the Michael, Okay.

costs, think want of does margin the on of makes meaningful the false midpoint point a art lot frankly, do, had didn't I range, there side, few to there. real pieces So get going we a This fixed we and that as that round it we we that. have sort that's sense in sense the be you -- look, platform sense, where a precision there. and leverage mean and -- of I But on a numbers is often of the thought of on to zeroing you there. had made

we top even get of see there if the better. thing convert will sales at other us there, range you is the The end

there. other So breadth that's for range some the reason to the

the And fair. but more, We've earlier for see I -- we've program executed period. I this would I savings, strong against the them If get because to it's But think found opportunities, in cost continued is I we very seen I we've savings think that much an you'll call know on think very momentum made comment the outperform which the that you to quite it's very there. be yet. cost both don't place can don't oriented. action necessary better

just I reading think much into that that can. feel everyone as So comfortable we're we as should self-help

Operator

question comes next Dan The from with TD Cowen. Brennan

Daniel Brennan

of about ask in macro I business. quarter, guided light it and side lab I the wanted in think I for on was remarks, a on, mentioned down prepared think had flat low the to the know fourth bit question a talked the you up you holidays, to but you single.

just if the low about And expectations. how we about think then think for more on So quarter some versus progressed talked your 'XX, single. I similarly, you guidance color

takes I follow-up. what to have find love low puts are And then that a would Just the and are out single. on just

Michael Stubblefield

Thanks Great. Dan. question, for Yes. the

guide, in our on entered would what come end think at of implied muted isn't beginning. of we come certainly move really we were as end by a activity impact really really much as the outside environment low the seasonality that's clearly, these muted would ramp, bit macro the holiday the move of would which XX% our Based half, first more off that's Obviously, we wasn't factors. seasonal from was our a of big at moment. end were which contemplated kind levels normal mentioned we year, noise instrumentation, the driven of the how the Brent budget flush through our few kind of as the for about or of a of where the year. last assuming was of we the a two a a midweek to year of the uncertain part So the in And and lab week that given XX% half, there's fail. in the context of in there there performance We of portfolio. second year that high-end XXXX, the revenues

so played think in the resiliency and with line the expectations -- quarter out business. our I the say But original of generally would I underscores

The other me thing again. quarter how just really the starting to I for the would say, Dan, is work model highlights is

improve. see to margin expansion Certainly, You nice flowing the continues are mix cost through. actions as

We continue of end conversion best-in-class year. have guide, delivering our margins of the to flow from free on the high EPS guidance beginning at the cash

the I again. model there's So evidence good here the starting think to like is and a that lot to about quarter some work

Operator

next Our JPMorgan. from question comes with Vatnsdal Rachel

Rachel Vatnsdal Olson

questions ask wanted policy to impacts. So new I to some the and related administration

You've in and embedded new for risks number call prepared level had didn't prudence this to certain changes. administration of related a I potential their policy all. your remarks in a of at your out hear peers guide that necessarily

and RFKenation, any those far talk seen the for have to year changes in the you some of budget you policy things freezes this with academic so And customer or government pharma then along risk about into anything lines, customer behavior your biotech can So related guidance? seen to NIH and base? have like we've headlines start embedded . given you

Michael Stubblefield

Yes. the for Rachel. Thanks questions,

attention ideas funding in of relevant this excited about the to yet the call administration. specific which funding, expected and On think formal since plans to days. likely business a It's administration A or on on been nothing is certainly to the economic only policies. focused in couple early topics, things is I been course. we're obviously really be office. environment one facts think discussed, of during to hand, friendly all lot overall they've terms that more of few business create, growth. I'd obvious your NIH weeks new just a I of being

modest relatively exposure As NIH. before, we have we've to direct said

confidence the know particularly But some that that on impacted, And funding rely footprint that I hard But and seen to funded. of environment, at are to value it think that we'll the we course, that of that to the policies all customers likely continue we'll, far our to we end outlook being adjust ultimately are what exactly me and our predict the here for good doesn't areas appear and segment, creates our in deliver course, we've customers. more exposure. about where to areas it's would be monitor year to science our the in of flexibility I of And constructive. think these of have to would business bantered get the think But extent significant language continues we accordingly. net-net, And would continue the have. what look us in But day, the the is programs. continue do to it that it's to to be a positive course, gives ensure broad we from for to leverage academic so environment the

Operator

Our with comes Wolfe Douglas Schenkel next from question Research.

Unknown Analyst

the pressure that margins? on starting how this resurgence, could Matalan And quarter for continues bioscience fourth upside trend It been both that an under could guide? in versus for also more business area to peers. has and a is seems like you If margins based been guidance, be bit and for bioprocessing of and a of the the impact particular, the Doug. on lab exacerbates, and have while have This

Michael Stubblefield

under-absorb fixed comments the do back the I those lab, have look, I do costs. if we against may And less absolutely, mean, questions mean you a we Yes. ago. to have in will fixed of couple I costs. going the original --

that's arithmetic. I think pretty

our of organic but see sides think against very about across modest we've that of this increased business allow you I prudent it both both we breadth we just scenarios, If does all look a when got at conversion. think at of also I what see that, look about would been growth kinds the there. do mean, margin guidance, ranges I there, the and you absolutely resurgence questions for we a here. better

you with side the in come it. Bioscience obviously, And of higher on margins

those But see nice to moderate lab be will margins even in impacts. growth for easier it's a increase in So very here.

Operator

with Tycho comes question from next Our Jefferies. Peterson

Unknown Analyst

probe of things. I to want couple on a

call So academic -- I'm a low that's benefit. that did digit. think strong. academic you as government just is And a out down single not K-XX? But XQ benefit, Michael, I usually, XQ

curious in So lab. that. to of gains of where flagged terms you're your most then And single seeing peers, digits about you then are the gains. of for And kind some of share high with mid- Curious endorsing but single lastly, firmly others consistent digits. just kind bioprocess, high

is So to of of I range. much end what's And in how the market digit that your is view everybody on conservatism, mid-single out growth? what to guess, figure kind trying low

Michael Stubblefield

government the be bit throughout it prepared It's education there. as can Starting I remarks, real my with spot for in a question. performance, that's said a bright Thanks and the lumpy. Yes. [indiscernible] been our for us year,

phasing the exposure our got K-XX you've think right. I on about

sequentially that been is to we've now got when commercial sustained have a just that leading districts couple in their education those the update But intensity track materials. would So the piece our of a years of clearly over certainly in to of curriculum down relative platform. outperformance K-XX timing record higher here normal

education But continue on work we be the noise new doing confident piece I some government bit think, expected to, the the of some the the quarter. we're and of side changes of the administration weak with the that about macro think was in that business. with quite I a

the point guide there. things. When and the Look, will you a One, say think improve is I for and things from think outlook bioprocessing. QX of we're couple a about assuming low I'd

move little as the book, gradual we of a strong momentum. through comps more really the XXXX strong the course, well. Of But year as We order you year bit get view setup continued for a year, the as difficult improvement. like

trying finish a just can. we're out obviously, environment, to up as year. to positioning But reflect as think here we of we we'll to pushing set prudent gate fast that like business grow we of the some the -- to I and and we be had the be like macro great the

we're I by where think we're encouraged at.

Operator

Barclays. from next Sergott with The comes Luke question

Luke Sergott

to sequential is kind is than implies slower year Just what expected. year, bioprocessing, up it impressive pretty your growth. was so everybody on of out what figure maintaining ramp And trying then like throughout starting the another following the

going look book, And visibility especially across of as government get about -- labs? cetera, better? rest on the what's is to you you so the as funding, the et that, semis And it what the what like with U.S. and think .

Michael Stubblefield

I'd is typical business, couple Luke, our our half, the revenue things. revenues in the reiterate half. we've which for of today, Yes, a kind in that the of XX% phasing of XX% implied guidance our of our One, in first second

-- of our numbers. ramp So in here not lot a implied

comps improve get as processing a we a which from that think just I to or things on normalize. continue that to well as full year more through year, as good reflects end challenging mid-single-digit steady basis, in see standpoint, growth given market the we from high that single-digit growth move the first improvement quarter

in, us will end occur normal really to we've market lab talked in heroics fully deliver the from an our expecting as be that business, quarter. And previous with move we the quarter through conditions. stable In place we've assumption that realize that second guide we contemplated that about for price. there or to the in the years, get into needing by any on We're phases and relatively as contributions not time first should

I about the for the on to some puts Luke, helpful So and year [indiscernible] for that's setup how you. takes, of are the those think

Operator

comes Our from Citi. Patrick next with question Donnelly

Patrick Donnelly

what Can the advanced little guys bit. the he follow semi quarter I to expand up technologies. know on jumped semi there. piece a piece. Maybe know out a little and quarter a bit last margins you touched just little bit on the kind on saw Luke in in bit I of broadly the you

our that on helpful. work as part impact to outlook business would way margins through we the year the Just the of be .

Michael Stubblefield

Yes. Good question, Patrick.

some in Firstly, the it group that end our the And as that a U.S. VPS that talked out. the and larger relatively was in relatively small semi customers things in our conditions which the stable played meaningfully with of QX we quarter part of assuming here segment. pretty QX would in plan third just is remind is particularly how about be the overall market, deteriorated the here quarter, sequentially,

-- stable wasn't things basis we in assumed a about we this XXXX, to factored saw on the us. levels headwind for into it an that the half that what's will relatively of And stay we've the year. think So incremental second as guide at sequential

that taking end not any for market. in that recovery be So we'll

That It of will the in be that was year. point a the high pretty to market leanful QX. us for headwind

got a semis tough there. pretty we've for our So comp business

guide the And what that's contemplated our stabilized our I that in But sole think as to really our platform. encouraged any of move our see our a through recovery offsets bit we part year. have to platform new anticipating close not on things and and momentum that to here, we're the good stay there continue we also we've customers but so bioprocessing

Unknown Executive

Patrick, add I'd just on.

think you where have this with that that this margin You about went. had in But semis versus more what a had margins commentary that a last that piece the surprise about about connection when where us And and there. growth quarter, you with we was for of the see level mixing what level and 'XX can will that of with is means into up, guide. bioprocessing bioscience definitely growth, here setup

expectations. margin be into year. It's problematic the baked comments want -- materials to electronic just on see don't you there the to our absolutely is So in clear that

Operator

question Our comes Stanley. from Savant Morgan Tejas next with

Tejas Savant

impacts thanks confirm the just in Good a couple FX Brent, here. morning quick guide bps taking the of top for remind you. double-digit then can time lot And you? and expect M&A. the a of steady questions line bioprocessing, you cleanups and be you XXX Can And then in but us and Michael, EPS that state, grower you second, EBITDA headwind how lastly, here, of the for still that for the to line? a on

off been on peers debt You a your mentioned said, lot that. reprioritizing have M&A litter, the to pretty you given cost playbooks out right, a more backdrop sort That cautious assets sort speak, And among decent pay there. downs. don't guys boat, dusting environment. you are and want outs pick of on the of to and regulatory their of benign Brent, of the the rate a miss so opportunistically presumably

of revisit see recently. So sooner could bit little than we indicated you that strategy a sort you've

Unknown Executive

quick modeling real Tejas. cleanups the here there, So on

exposure we're XX% -- but have So we significant to U.S. euro. the than in business, dollar more the our

footnotes you'll X.XX. we're modeling on a based year of off page there that see dollar in the So the

Now what we realized in 'XX was X.XX.

what math on the about that's headwind. So gets basis a X% you

of So EBITDA, revenue be that rolls as EPS. that'd of approximately $XX $X.XX million of that's $XXX million of kind down,

the impact. modeling that's FX So

Michael Stubblefield

think you And the -- had. then X I just [indiscernible] other questions

platform that X the the positioning level of bioprocessing, Firstly, fully we I is X impact that we recent Yes, And growth for earlier the as our of highlighted including XX% on in a course, conference platforms. double-digit still think we year, conviction more at ahead, we on see XX%, have look as to we commercialized than penetration top today the blockbusters. of with growing over like,

positioning. very, strong very So

for innovation will us market on Our cylinders on hitting play strong the in over conviction out to end term. is and how continue that all engine long we have

squarely standpoint, and our couple leverage over on good we've down M&A debt. paying $X billion at the paid of been enter over last as X.Xx years. stands down an We question. From we well Obviously, XXXX. focused

So in we year. Xx said point as some point, at we'll And certainly some at that this our have flexibility here. we'll below definitely remarks, prepared get

and that I building in think we our where As and be important it long-term part can we to relates business think our we to active focus have to we over some playbook, significant value an our pipelines those continue of clear M&A, linking pipelines strategies. remains And areas add time. of

are below X committed would times. sustainably we running But reiterate business the to I that

transition think see allocation And prudent policy. more through a as be you'll into we this I us flexible here work so

Operator

RBC comes Conor Markets. next with McNamara question Capital from Our

Conor Noel McNamara

margin at Michael, about business? when you your Can and new was accretive year. talk the of down the distribution new And you agreements third-party agreements overall the start the that to we about third-party talked business term think about in the returns How just call. the impact business. should then growth? the And to if are agreements quarter those of that longer these to just

Michael Stubblefield

questions, up. Yes. that Thanks bringing Really for Conor. great

So for in the business about anticipating year, XXXX. as single-digit for the for we that low growth think setup lab our platform we're

that organic forward certainly to we're returning to growth. So looking

contemplates being growth low our to that long-term business mid-single-digit growth. Our algorithm, algorithm

business, are bring have you that where things customers normalizing. is to one to course, that to most portfolio of technologies certainly certainly, solve So the grow that get envelope attributes into on their to of we're the starting you your ensuring And how right important differentiated help them challenges. current

But centers And into with supplier bringing technologies important their the work and those portfolio, do working market. market. the bring of we community includes own course, innovations part the is and so help we the to an have vibrant innovation them in of the to a very model R&D that our

highlight is XXX,XXX of And so I in in would, regard one quarter. was Conor. trying somewhat really, milestones of just a to that these nature. year, average, on the new the in And incremental we roughly today you And what more for notable each launch products some

good is how kind so And And focus have is to business. we into just important that year. model I operating shows the sense there is that us new get of a data think going our setup bringing you for another can it the our and this the point that

move of some having grow into here supply looking us to together as with forward with we of impact arrangements, these again we pricing, So 'XX. for platform new are the that technologies,

Operator

Matthew Our next with Goldman question comes Sachs. from Sykes

Unknown Analyst

is This for Matt. Ivy on

could large customer there emerging about XQ, -- takes a puts any And large cohorts? there? biotech in more seasonally understand terms pharma versus talk I So impact seeing and you then can you're you in is provide but or of muted what

Michael Stubblefield

Yes, happy to.

[indiscernible], of it's you So will, kind if there. I think

and We some activities on couple reprioritizing notable a and number their pipelines are preclinical large by quite such. adjustments There's rather spend they've what as there encouraged headwinds been of out And to a for pharma. working return row, Europe in pharma starting there. [indiscernible] lab the a across to well quarter to growth seeing our see and growth, to as large [indiscernible] Americas, space, large actually pretty both business that in nice a a nice in we're as quarters seeing we're of and in now of we with been through had

end spectrum, last year. story. each know it year. end whole QX It activities. every a the of the up, meaningful on a pretty doesn't basis, On year-over-year And the the is and and the took but of funding of of it tell quarter the course, probably in we biotech fell through was biotech sequentially other jump that

we levels a the normally to seeing of us. growing. some would are the headwind by expect. there momentum the and bit we not continue a some bit the of be as activity And seeing particularly what large levels we're be encouraged see notably activity continues so for But level we're of that the of with bifurcated. But But doing activity start-up okay pickup traditional across to We again. a seeing space, there more same and established pharma biotechs we're the

Operator

Couillard Our from comes Brandon next Fargo. question Wells with

Brandon Couillard

just a clarification. Brent,

I days be sequentially Could in you year? Are as the think the flat first other through move selling mentioned fewer any guidance? . there you Is as contribution aware variances down well? quarter. to just organic quantify relative the impact the and that the we of to

Michael Stubblefield

takes bioscience and on makes about a to there an the But from I'm about have about but mid the there -- think people sequentially but there, we're and being high by it's recognize We The does full here, cautious just don't that outlier always -- us the caution set up we're not are certainly -- stable. up that's QX down there down being an I the the quarter, It's out figure and QX. in then with there, think not there's process think I you puts there year-over-year, business no, what lab being and very with again, being other you you're of there. when that's where talking that on hearing QX blend mid- that noise other sorry, year impact.

Operator

Research. with comes Jack Our next from Nephron question Meehan

Jack Meehan

would the low Thank good the it in for something market, One you're was why step up the which Two the fourth you, Interest or follow-ups. Michael, education sequentially. quarter. $XX any factors Or onetime model quarter. comments in $XX seeing Was holidays quick expense, in morning. else XQ? Brent. anything Was on in the that that there on just declined just just seasonal there? And million then singles for and million

Unknown Executive

accounting there's guide a [indiscernible] -- unamortized we decent to there. fees a there. have through interest had little you or amortized running have our bit amount FX in And also we out of the [indiscernible] of year [indiscernible] there going Jack, Yes, through debt expense the and with do is

cost the average deleveraging have the just you when sort XX, down the throughout there, for year So that's of of year. dollar kind

Michael Stubblefield

Jack, on then, And question your education.

means of to given space, earlier, with continue couple in we're on ed commercial be off meaningful into just higher probably this note very intensity we're we also I sustained to there. in in our would think thoughts driven trend things quarter. share the or some reiterate, share the that X as shared had well I the continuing biopharma gains piece the momentum uncertainty ed that of us, -- government spot on but be for driving somewhat The [indiscernible]. A I quarters K-XX we more move some XXXX. a really little satisfied of the X was the And things change. associated the side their you higher as of sequentially we into we a updates piece would administration presumably the muted particularly and some that to just in quarter, how muted continues exposure But to the anticipate [indiscernible] with to in bit is the -- have note owing XQ, districts bright manage

Operator

turn all we you. over closing will time I for call are to for Thank Michael have comments. Those the today. back questions now the

Michael Stubblefield

Thank certainly joining Yes. I you, today. appreciate and us all you

XXXX. key Just would of here we turn messages to reiterate some our as

of platform momentum continued We're We are expectations the bioprocessing. growth. to our by anticipating and in leadership returning encouraged

discipline System, you free margin performance Business our continued execution strong Avantor generation. Another leveraging cash flow and should year and of around our expect

in we to guide that we're again. the midpoint I growth starting at quite markets think again model notable. end here see And encouraged I of our think double-digit working EPS cooperate is our

updating So Until again, next. well, certainly you. forward everyone. look I we appreciate you We you to then, meet today. joining Thank be when us

Operator

today. This Thank call, disconnect for concludes you, now us our you lines. everyone, joining your and may

Avantor (AVTR) 7 Feb 252024 Q4 Earnings call transcript