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Avantor (AVTR) Q3 Earnings call transcript Oct 25, 2024

Daily EarningsMonday, Oct 28, 2024 8:25 pm ET

1min read

AVTR -- BWB -- LAB --

Avantor, a leading provider of mission-critical products and services for the life sciences industry, held its third quarter 2024 earnings call on October 20, 2024. The call was led by Michael Stubblefield, President and CEO, and Brent Jones, Executive Vice President and CFO, who highlighted the company's financial performance and strategic initiatives.

Financial Performance

Avantor reported a solid financial performance in the third quarter, with reported revenue increasing sequentially to $1.71 billion, while organic revenue declined 0.7% year-over-year. The company's adjustable EBITDA margin was 17.6%, and adjusted EPS increased to $0.26. The company's disciplined approach to working capital led to best-in-class free cash flow conversion, enabling a debt reduction of over $200 million, bringing net leverage down to 3.8x.

Strategic Initiatives

Avantor has been making considerable progress in advancing its long-term growth strategy. Highlights include the expansion of its Magnetic Mixing System's portfolio with the introduction of a new tabletop mixer, the launch of several new third-party branded products, and the opening of a new flagship innovation center in Bridgewater, New Jersey. The company also successfully closed the divestiture of its clinical services assets, which will enable a focus on lab and production platforms.

Market Conditions

In the laboratory solutions segment, the company saw a modest improvement in equipment and instrumentation demand, while the bioprocessing segment continues to improve with strong order rates. The company is encouraged by the return to growth in the laboratory solutions segment, which has been flat for the past two years. The company expects mid- to high single-digit growth in bioprocessing in the fourth quarter, driven by strong order momentum.

Outlook

Looking ahead, Avantor is raising its free cash flow guidance for the year and is confident in its ability to exceed its in-year cost savings target of $75 million. The company is also making significant progress with its multiyear cost transformation initiative, with several critical work streams ahead of schedule.

Analysts' Questions

During the Q&A session, analysts focused on the company's guidance for the fourth quarter and the impact of the clinical services divestiture. The company reiterated its full-year P&L guidance, net of the impact of the divestiture, and raised its free cash flow guidance. The company also provided updates on its market positioning and competitive landscape.

Conclusion

Avantor's third quarter 2024 earnings call highlighted the company's strong financial performance and strategic initiatives, positioning it well for future growth. The company's focus on cost transformation, innovation, and market diversification is expected to drive continued success in the life sciences industry.

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