•Adjusted net income is our net income or loss first adjusted for the following items: (i) amortization of acquired intangible assets, (ii) losses on extinguishment of debt, (iii) charges associated with the impairment of certain assets, (iv) and certain other adjustments. From this amount, we then add or subtract an assumed incremental income tax impact on the above-noted pre-tax adjustments, using estimated tax rates, to arrive at Adjusted Net Income. We believe that this measure is useful to investors as a way to analyze the business consistently across the periods presented. This measure is used by our management for the same reason.
•Adjusted EPS is our adjusted net income divided by our diluted GAAP weighted average share count adjusted for anti-dilutive instruments. We believe that this measure is useful to investors as an additional way to analyze the underlying trends in our business consistently across the periods presented. This measure is used by our management for the same reason.
•Adjusted net leverage is equal to our gross debt, reduced by our cash and cash equivalents, divided by our trailing 12-month Adjusted EBITDA (excluding stock-based compensation expense and including the expected run-rate effect of cost synergies and the incremental results of completed acquisitions and divestitures as if those acquisitions and divestitures had occurred on the first day of the trailing 12-month period). We believe that this measure is useful to investors as a way to evaluate and measure the Company’s capital allocation strategies and the underlying trends in the business. This measure is used by our management for the same reason.
•Free cash flow is equal to our cash flows from operating activities, less capital expenditures, plus the direct costs to close acquisitions and divestitures (including income tax effects, if any) in the period. Free cash flow conversion is free cash flow divided by adjusted net income. We believe that these measures are useful to investors as they provide a view on the Company’s ability to generate cash for use in financing or investment activities. These measures are used by our management for the same reason.
Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the tables accompanying this release.
Forward-Looking and Cautionary Statements
This press release contains forward-looking 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 press release are forward-looking statements. Forward-looking statements discuss our current expectations and projections relating to our financial condition, results of operations, plans, including our cost transformation initiative, objectives, future performance and business. These statements may be preceded by, followed by or include the words “aim,” “anticipate,” “assumption,” “believe,” “continue,” “estimate,” “expect,” “forecast,” “goal,” “guidance,” “intend,” “likely,” “long-term,” “near-term,” “objective,” “opportunity,” “outlook,” “plan,” “potential,” “project,” “projection,” “prospects,” “seek,” “target,” “trend,” “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. Factors that could contribute to these risks, uncertainties and assumptions include, but are not limited to, the factors described in “Risk Factors” in our most recent Annual Report on Form 10-K, and subsequent quarterly reports on Form 10-Q, as such risk factors may be updated from time to time in our periodic filings with the SEC.
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 press release. 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.
Avantor, Inc. and subsidiaries
Unaudited condensed consolidated statements of operations
(in millions, except per share data)
Three months ended September 30,
Nine months ended September 30,
2024
2023
2024
2023
Net sales
$
1,714.4
$
1,720.2
$
5,097.0
$
5,244.4
Cost of sales
1,150.0
1,141.6
3,380.6
3,451.0
Gross profit
564.4
578.6
1,716.4
1,793.4
Selling, general and administrative expenses
439.8
368.4
1,269.7
1,119.5
Impairment charges
—
—
—
160.8
Operating income
124.6
210.2
446.7
513.1
Interest expense, net
(48.7)
(72.4)
(173.9)
(219.5)
Loss on extinguishment of debt
(2.1)
(2.0)
(6.5)
(5.9)
Other income, net
0.7
0.7
3.4
3.3
Income before income taxes
74.5
136.5
269.7
291.0
Income tax expense
(16.7)
(28.1)
(58.6)
(68.4)
Net income
$
57.8
$
108.4
$
211.1
$
222.6
Earnings per share:
Basic
$
0.08
$
0.16
$
0.31
$
0.33
Diluted
$
0.08
$
0.16
$
0.31
$
0.33
Weighted average shares outstanding:
Basic
680.3
676.0
679.3
675.4
Diluted
683.0
678.5
682.1
678.1
Avantor, Inc. and subsidiaries
Unaudited condensed consolidated balance sheets
(in millions)
September 30, 2024
December 31, 2023
Assets
Current assets:
Cash and cash equivalents
$
285.3
$
262.9
Accounts receivable, net
1,087.7
1,150.2
Inventory
779.6
828.1
Other current assets
135.6
143.7
Assets held for sale
216.5
—
Total current assets
2,504.7
2,384.9
Property, plant and equipment, net
722.8
737.5
Other intangible assets, net
3,522.7
3,775.3
Goodwill, net
5,670.6
5,716.7
Other assets
419.8
358.3
Total assets
$
12,840.6
$
12,972.7
Liabilities and stockholders' equity
Current liabilities:
Current portion of debt
$
229.7
$
259.9
Accounts payable
673.5
625.9
Employee-related liabilities
183.3
133.1
Accrued interest
39.9
50.2
Other current liabilities
401.7
411.2
Liabilities held for sale
101.7
—
Total current liabilities
1,629.8
1,480.3
Debt, net of current portion
4,691.4
5,276.7
Deferred income tax liabilities
547.3
612.8
Other liabilities
418.9
350.3
Total liabilities
7,287.4
7,720.1
Stockholders’ equity:
Common stock including paid-in capital
3,924.5
3,830.1
Accumulated earnings
1,702.6
1,491.5
Accumulated other comprehensive loss
(73.9)
(69.0)
Total stockholders’ equity
5,553.2
5,252.6
Total liabilities and stockholders' equity
$
12,840.6
$
12,972.7
Avantor, Inc. and subsidiaries
Unaudited condensed consolidated statements of cash flows
(in millions)
Three months ended September 30,
Nine months ended September 30,
2024
2023
2024
2023
Cash flows from operating activities:
Net income
$
57.8
$
108.4
$
211.1
$
222.6
Reconciling adjustments:
Depreciation and amortization
102.4
98.0
304.6
301.7
Impairment charges
—
—
—
160.8
Stock-based compensation expense
11.9
9.8
35.7
31.7
Non-cash restructuring charges
16.4
—
16.4
—
Provision for accounts receivable and inventory
16.3
19.4
55.8
62.5
Deferred income tax benefit
(22.6)
(29.4)
(75.3)
(94.1)
Amortization of deferred financing costs
2.8
3.2
8.6
9.9
Loss on extinguishment of debt
2.1
2.0
6.5
5.9
Foreign currency remeasurement (gain) loss
(0.1)
(3.0)
3.0
(3.1)
Changes in assets and liabilities:
Accounts receivable
34.2
47.2
34.2
55.1
Inventory
(7.3)
10.8
(21.5)
9.1
Accounts payable
(4.0)
(21.4)
41.9
(95.8)
Accrued interest
(16.2)
(9.7)
(16.5)
(10.3)
Other assets and liabilities
56.6
(4.2)
63.0
(38.5)
Other
(5.5)
(0.4)
—
0.9
Net cash provided by operating activities
244.8
230.7
667.5
618.4
Cash flows from investing activities:
Capital expenditures
(40.8)
(37.7)
(121.3)
(95.8)
Other
0.3
0.7
1.7
2.1
Net cash used in investing activities
(40.5)
(37.0)
(119.6)
(93.7)
Cash flows from financing activities:
Debt repayments
(214.3)
(197.6)
(585.0)
(657.9)
Payments of debt refinancing fees and premiums
—
—
—
(2.3)
Proceeds received from exercise of stock options
16.5
9.4
67.3
14.1
Shares repurchased to satisfy employee tax obligations for vested stock-based awards
(0.8)
(0.2)
(8.2)
(13.5)
Net cash used in financing activities
(198.6)
(188.4)
(525.9)
(659.6)
Effect of currency rate changes on cash and cash equivalents
7.9
(5.4)
0.6
(1.3)
Net change in cash, cash equivalents and restricted cash
13.6
(0.1)
22.6
(136.2)
Cash, cash equivalents and restricted cash, beginning of period
296.7
260.8
287.7
396.9
Cash, cash equivalents and restricted cash, end of period
$
310.3
$
260.7
$
310.3
$
260.7
Avantor, Inc. and subsidiaries
Reconciliations of non-GAAP measures
Adjusted EBITDA and Adjusted EBITDA Margin
(dollars in millions, % based on net sales)
Three months ended September 30,
Nine months ended September 30,
2024
2023
2024
2023
$
%
$
%
$
%
$
%
Net income
$
57.8
3.4
%
$
108.4
6.3
%
$
211.1
4.1
%
$
222.6
4.2
%
Amortization
75.4
4.3
%
75.4
4.4
%
225.6
4.4
%
232.7
4.4
%
Loss on extinguishment of debt
2.1
0.1
%
2.0
0.1
%
6.5
0.1
%
5.9
0.1
%
Integration-related expenses1
—
—
%
0.2
—
%
—
—
%
8.3
0.2
%
Restructuring and severance charges2
49.4
2.9
%
6.1
0.4
%
82.3
1.7
%
18.0
0.3
%
Transformation expenses3
17.1
1.0
%
—
—
%
46.6
0.9
%
—
—
%
Reserve for certain legal matters4
7.9
0.5
%
3.0
0.1
%
7.9
0.2
%
4.0
0.1
%
Other5
0.4
—
%
(0.4)
—
%
(0.4)
—
%
(2.2)
—
%
Impairment charges6
—
—
%
—
—
%
—
—
%
160.8
3.1
%
Income tax benefit applicable to pretax adjustments
(34.9)
(2.0)
%
(23.1)
(1.3)
%
(85.8)
(1.7)
%
(96.7)
(1.8)
%
Adjusted net income
175.2
10.2
%
171.6
10.0
%
493.8
9.7
%
553.4
10.6
%
Interest expense, net
48.7
2.8
%
72.4
4.2
%
173.9
3.4
%
219.5
4.2
%
Depreciation
27.0
1.6
%
22.6
1.4
%
79.0
1.5
%
69.0
1.3
%
Income tax provision applicable to Adjusted Net income
51.6
3.0
%
51.2
2.9
%
144.4
2.9
%
165.1
3.1
%
Adjusted EBITDA
$
302.5
17.6
%
$
317.8
18.5
%
$
891.1
17.5
%
$
1,007.0
19.2
%
━━━━━━━━━
1.Represents 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.
2.Reflects the incremental expenses incurred in the period related to restructuring initiatives to increase profitability and productivity. Costs included in this caption are specific to employee severance, site-related exit costs, and contract termination costs. The expenses recognized in 2024 represent costs incurred to achieve the Company’s publicly-announced cost transformation initiative.
3.Represents incremental expenses directly associated with the Company’s publicly-announced cost transformation initiative, primarily related to the cost of external advisors.
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.Represents net foreign currency (gain) loss from financing activities and other stock-based compensation expense (benefit).
6.Related to impairment of the Ritter asset group.
Avantor, Inc. and subsidiaries
Reconciliations of non-GAAP measures (continued)
Adjusted Operating Income and Adjusted Operating Income Margin
(dollars in millions, % based on net sales)
Three months ended September 30,
Nine months ended September 30,
2024
2023
2024
2023
$
%
$
%
$
%
$
%
Net income
$
57.8
3.4
%
$
108.4
6.3
%
$
211.1
4.1
%
$
222.6
4.2
%
Interest expense, net
48.7
2.8
%
72.4
4.2
%
173.9
3.4
%
219.5
4.2
%
Income tax expense
16.7
1.0
%
28.1
1.6
%
58.6
1.2
%
68.4
1.3
%
Loss on extinguishment of debt
2.1
0.1
%
2.0
0.1
%
6.5
0.1
%
5.9
0.1
%
Other income, net
(0.7)
—
%
(0.7)
—
%
(3.4)
(0.1)
%
(3.3)
—
%
Operating income
124.6
7.3
%
210.2
12.2
%
446.7
8.7
%
513.1
9.8
%
Amortization
75.4
4.3
%
75.4
4.4
%
225.6
4.4
%
232.7
4.4
%
Integration-related expenses1
—
—
%
0.2
—
%
—
—
%
8.3
0.2
%
Restructuring and severance charges2
49.4
2.9
%
6.1
0.4
%
82.3
1.7
%
18.0
0.3
%
Transformation expenses3
17.1
1.0
%
—
—
%
46.6
0.9
%
—
—
%
Reserve for certain legal matters4
7.9
0.5
%
3.0
0.1
%
7.9
0.2
%
4.0
0.1
%
Other5
0.4
—
%
0.1
—
%
1.4
—
%
0.1
—
%
Impairment charges6
—
—
%
—
—
%
—
—
%
160.8
3.1
%
Adjusted Operating Income
$
274.8
16.0
%
$
295.0
17.1
%
$
810.5
15.9
%
$
937.0
17.9
%
━━━━━━━━━
1.Represents 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.
2.Reflects the incremental expenses incurred in the period related to restructuring initiatives to increase profitability and productivity. Costs included in this caption are specific to employee severance, site-related exit costs, and contract termination costs. The expenses recognized in 2024 represent costs incurred to achieve the Company’s publicly-announced cost transformation initiative.
3.Represents incremental expenses directly associated with the Company’s publicly-announced cost transformation initiative, primarily related to the cost of external advisors.
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.Represents other stock-based compensation expense (benefit).
6.Related to impairment of the Ritter asset group.
Avantor, Inc. and subsidiaries
Reconciliations of non-GAAP measures (continued)
Earnings per share
(shares in millions)
Three months ended September 30,
Nine months ended September 30,
2024
2023
2024
2023
Diluted earnings per share (GAAP)
$
0.08
$
0.16
$
0.31
$
0.33
Dilutive impact of convertible instruments
—
—
—
—
Fully diluted earnings per share (non-GAAP)
0.08
0.16
0.31
0.33
Amortization
0.11
0.11
0.33
0.34
Loss on extinguishment of debt
0.01
—
0.01
—
Integration-related expenses
—
—
—
0.01
Restructuring and severance charges
0.07
0.01
0.12
0.03
Transformation expenses
0.03
—
0.07
—
Reserve for certain legal matters
0.01
—
0.01
0.01
Other
—
—
—
—
Impairment charges
—
—
—
0.24
Income tax benefit applicable to pretax adjustments