Avantor Inc
For the period ended Jun 30, 2024. Filed Jul 26, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Jul 26, 2024
AVTR$15.47+2.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-04-26.
0001722482-24-000102
Item 2. Management’s discussion and analysis of financial condition and results of operationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-07-26.
0001722482-24-000145
Item 2. Management’s discussion and analysis of financial condition and results of operationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 76 previous paragraphs and 91 current paragraphs.
46 unchanged; 22 reworded; 19 added; 6 removed; 2 previous and 4 current paragraphs rearranged.
Tables are not compared: 12 previous and 13 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (19)
Current report
Three months ended
Current report
Net sales decreased $41.1 million or 2.4%, which included $6.7 million or 0.4% of unfavorable foreign currency impact. Organic net sales decreased by $34.4 million or 2.0%.
Current report
In the Laboratory Solutions segment, net sales decreased $38.1 million or 3.2%, which included $5.4 million or 0.5% of unfavorable foreign currency impact. Organic net sales decreased $32.7 million or 2.7%. Sales decline was primarily driven by decreased demand in biopharma and healthcare end markets.
Current report
Six months ended
Current report
Net sales decreased $141.6 million or 4.0%, which included $5.3 million or 0.2% of favorable foreign currency impact. Organic decline in net sales was $146.9 million or 4.2%.
Current report
In the Laboratory Solutions segment, net sales decreased $84.0 million or 3.5%, which included $3.6 million or 0.2% of favorable foreign currency impact. Organic net sales decreased $87.6 million or 3.7%. Sales decline was primarily driven by decreased demand in biopharma and healthcare end markets.
Current report
In the Bioscience Production segment, net sales decreased $57.6 million or 5.1%, which included $1.7 million or 0.2% of favorable foreign currency impact. Organic net sales decreased by $59.3 million or 5.3%. Sales decline was primarily driven by decreased demand in biopharma and healthcare end markets.
Current report
Gross margin for the three months ended June 30, 2024, expanded by 30 basis points due to improved product mix, lower inventory reserves and manufacturing productivity, partially offset by inflationary pressures. For the six months ended June 30, 2024, margin contracted 40 basis points driven by inflationary pressures and unfavorable product mix.
Current report
Net income (loss)
Current report
For the three months ended June 30, 2024, Adjusted EBITDA decreased by $37.4 million or 10.9%, which included a favorable foreign currency translation impact of $2.0 million or 0.6%.The remaining decline was $39.4 million or 11.5% primarily driven by increased operating expenses and lower sales volume.
Current report
For the six months ended June 30, 2024, Adjusted EBITDA decreased by $100.6 million or 14.6%, which included a favorable foreign currency translation impact of $3.0 million or 0.4%.The remaining decline was 103.6 million or 15.0% primarily driven by increased operating expenses and lower sales volume.
Current report
Three months ended
Current report
Adjusted Operating Income decreased $41.7 million or 13.1%, which included an unfavorable foreign currency translation impact of $2.5 million or 0.8%. The remaining decline was $39.2 million or 12.3% which is further discussed below.
Current report
In the Laboratory Solutions segment, Adjusted Operating Income declined $28.8 million or 16.0%, or 14.9% when adjusted for unfavorable foreign currency translation impact. The decrease was due to increased operating expenses primarily driven by higher accruals related to incentive compensation.
Current report
In the Bioscience Production segment, Adjusted Operating Income declined $10.2 million or 6.6%, or 6.4% when adjusted for unfavorable foreign currency translation impact. The decrease was driven primarily by increased operating expenses primarily driven by higher accruals related to incentive compensation and lower sales volume.
Current report
Six months ended
Current report
Represents net foreign currency (gain) loss from financing activities, other stock-based compensation expense (benefit) and 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.
Current report
Represents other stock-based compensation expense (benefit) and 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.
Current report
Cash flows from operating activities provided $35.0 million more cash in 2024 primarily due to improved working capital and lower outflow of income taxes, partially offset by lower operating income.
Removed paragraphs (6)
Previous report
Net sales decreased $100.5 million or 5.6%, which included $12.0 million or 0.7% of favorable foreign currency impact. Organic net sales decreased by $112.5 million or 6.3%.
Previous report
In the Laboratory Solutions segment, net sales decreased $45.9 million or 3.8%, which included $9.0 million or 0.7% of favorable foreign currency impact. Organic net sales decreased $54.9 million or 4.5%. Sales decline was primarily driven by decreased demand in biopharma and healthcare end markets.
Previous report
Gross margin for the three months ended March 31, 2024 contracted by 110 basis points resulting primarily from unfavorable product mix.
Previous report
Net income
Previous report
Adjusted EBITDA decreased by $63.2 million or 18.3%, which included a favorable foreign currency translation impact of $1.0 million or 0.3%.The remaining decline was $64.2 million or 18.6% primarily driven by lower sales volume and unfavorable product mix.
Previous report
Cash flows from operating activities provided $77.9 million less cash in 2024 primarily due to lower income before income taxes.
Reworded paragraphs (22)
Previous wording
During the three months ended March 31, 2024, we recorded net sales of $1,679.8 million, net income of $60.4 million, Adjusted EBITDA of $283.0 million and Adjusted Operating Income of $258.4 million. Net sales decreased by 5.6%, which included a 6.3% decline in organic sales compared to the same period in 2023. See “Reconciliations of non-GAAP measures” for reconciliations of net income to Adjusted EBITDA and Adjusted Operating Income, and net income margin to Adjusted EBITDA margin and Adjusted Operating Income margin. See “Results of operations” for a reconciliation of net sales growth (decline) to organic net sales growth (decline).
Current wording
During the three months ended June 30, 2024, we recorded net sales of $1,702.8 million, net income of $92.9 million, Adjusted EBITDA of $305.6 million and Adjusted Operating Income of $277.2 million. Net sales decreased by 2.4%, which included a 2.0% decline in organic sales compared to the same period in 2023. See “Reconciliations of non-GAAP measures” for reconciliations of net income (loss) to Adjusted EBITDA and Adjusted Operating Income, and net income (loss) margin to Adjusted EBITDA margin and Adjusted Operating Income margin. See “Results of operations” for a reconciliation of net sales growth (decline) to organic net sales growth (decline).
Previous wording
reportable segments to two reportable segments, Laboratory Solutions and Bioscience Production. This structure aligns with how our Chief Executive Officer, who is our chief operating decision maker, intends to measure segment operating performance and allocate resources across our operating segments. This reportable segment change has no impact on our consolidated operating results.
Current wording
Effective January 1, 2024, we changed our operating model and reporting segment structure from three reportable segments to two reportable segments, Laboratory Solutions and Bioscience Production. This structure aligns with how our Chief Executive Officer, who is our chief operating decision maker, measures segment operating performance and allocate resources across our operating segments. This reportable segment change has no impact on our consolidated operating results.
Previous wording
maker changed the measure used to evaluate segment profitability from Adjusted EBITDA to Adjusted Operating Income. All disclosures relating to segment profitability, including those for comparative periods, have been revised as a result of this change.
Current wording
In connection with the operating model and reporting structure change, our chief operating decision maker changed the measure used to evaluate segment profitability from Adjusted EBITDA to Adjusted Operating Income. All disclosures relating to segment profitability, including those for comparative periods, have been revised as a result of this change.
Previous wording
Customer demand and required inventory levels continue to normalize in the transition from the COVID-19 pandemic. For a discussion of this trend and associated economic disruptions, and the actual operational and financial impacts that we experienced through December 31, 2023, see “Part II—Item 7—Management's discussion and analysis of financial condition and results of operations” in the Annual Report.
Current wording
Customer demand and required inventory levels continue to normalize in the transition from the COVID-19 pandemic. For a discussion of this trend and associated economic disruptions, and the actual operational and financial impacts that we experienced through December 31, 2023, see “Part II—Item 7
Previous wording
The first quarter net sales decline was driven by decreases in both segments primarily due to reduced customer demand. Unfavorable product mix contributed to contraction in gross margin. Softness in sales volume and unfavorable product mix drove Adjusted EBITDA and Adjusted Operating Income margin contraction.
Current wording
The second quarter net sales decline was driven by decreases in the Laboratory Solutions segment primarily due to reduced customer demand. Volume declines contributed to contraction in gross profit while gross margin increased due to improved product mix, lower inventory reserves and manufacturing productivity, partially offset by inflationary pressures. Volume softness and the reset of annual incentive compensation drove Adjusted EBITDA margin and Adjusted Operating Income margin contraction.
Previous wording
In the Bioscience Production segment, net sales decreased $54.6 million or 9.5%, which included $3.0 million or 0.5% of favorable foreign currency impact. Organic net sales decreased by $57.6 million or 10.0%. Sales decline was primarily driven by decreased demand in biopharma and healthcare end markets.
Current wording
In the Bioscience Production segment, net sales decreased $3.0 million or 0.5%, which included $1.3 million or 0.2% of unfavorable foreign currency impact. Organic net sales decreased by $1.7 million or 0.3%.
Previous wording
Operating income decreased primarily from lower gross profit, as previously discussed and higher operating expenses driven by restructuring and severance charges, transformation expenses and inflationary pressures on salary expenses.
Current wording
Operating income for the three months ended June 30, 2024, increased primarily from the absence of impairment charges, partially offset by higher operating expenses driven by transformation expenses, higher accruals related to incentive compensation and inflationary pressures on salary expenses. Operating income for the six months ended June 30, 2024, increased primarily from the absence of impairment charges, partially offset by lower gross profit, as previously discussed, and higher operating expenses driven by restructuring and severance charges, transformation expenses, higher accruals related to incentive compensation and inflationary pressures on salary expenses.
Previous wording
Net income decreased primarily due to lower operating income, as previously discussed, partially offset by lower interest expense on account of debt repayments made over the last twelve months and lower income tax expense due to lower income before income taxes.
Current wording
Net income increased primarily due to higher operating income, as previously discussed, and lower interest expense due to debt repayments made over the last twelve months, partially offset by higher income tax expense due to higher income before income taxes.
Previous wording
For a reconciliation of Adjusted EBITDA and Adjusted EBITDA margin to net income and net income margin, respectively, the most directly comparable measures under GAAP, see “Reconciliations of non-GAAP financial measures.”
Current wording
For a reconciliation of Adjusted EBITDA and Adjusted EBITDA margin to net income (loss) and net income (loss) margin, respectively, the most directly comparable measures under GAAP, see “Reconciliations of non-GAAP financial measures.”
Previous wording
For a reconciliation of Adjusted Operating Income and Adjusted Operating Income margin to net income and net income margin, respectively, the most directly comparable measures under GAAP, see “Reconciliations of non-GAAP financial measures.”
Current wording
For a reconciliation of Adjusted Operating Income and Adjusted Operating Income margin to net income (loss) and net income (loss) margin, respectively, the most directly comparable measures under GAAP, see “Reconciliations of non-GAAP financial measures.”
Previous wording
In Corporate, Adjusted Operating Income decreased $0.1 million or 0.6%, due to immaterial offsetting factors.
Current wording
In Corporate, Adjusted Operating Income decreased $2.7 million due to immaterial offsetting factors.
Previous wording
Adjusted Operating Income decreased $64.7 million or 20.0%, which included a favorable foreign currency translation impact of $0.9 million or 0.3%. The remaining decline was $65.6 million or 20.3% which is further discussed below.
Current wording
Adjusted Operating Income decreased $106.4 million or 16.6%, which included an unfavorable foreign currency translation impact of $1.6 million or 0.3%. The remaining decline was $104.8 million or 16.3% which is further discussed below.
Previous wording
In the Laboratory Solutions segment, Adjusted Operating Income declined $24.0 million or 13.9%, or 13.7% when adjusted for unfavorable foreign currency translation impact. The decrease was due to lower sales volume.
Current wording
In the Laboratory Solutions segment, Adjusted Operating Income declined $52.8 million or 15.0%, or 14.3% when adjusted for unfavorable foreign currency translation impact. The decrease was due to increased operating expenses primarily driven by higher accruals related to incentive compensation and lower sales volume.
Previous wording
In the Bioscience Production segment, Adjusted Operating Income declined $40.6 million or 24.2%, or 24.3% when adjusted for favorable foreign currency translation impact. The decrease was driven primarily by lower sales volume.
Current wording
In the Bioscience Production segment, Adjusted Operating Income declined $50.8 million or 15.8%, or 15.7% when adjusted for unfavorable foreign currency translation impact. The decrease was driven primarily by lower sales volume and unfavorable product mix.
Previous wording
The following table presents the reconciliation of net income and net income margin to Adjusted EBITDA and Adjusted EBITDA margin, respectively:
Current wording
The following table presents the reconciliation of net income (loss) and net income (loss) margin to Adjusted EBITDA and Adjusted EBITDA margin, respectively:
Previous wording
The following table presents the reconciliation of net income and net income margin to Adjusted Operating Income and Adjusted Operating Income margin, respectively:
Current wording
The following table presents the reconciliation of net income (loss) and net income (loss) margin to Adjusted Operating Income and Adjusted Operating Income margin, respectively:
Previous wording
We fund short-term cash requirements primarily from operating cash flows and credit facilities. Most of our long-term financing is from indebtedness. For the three months ended March 31, 2024, we generated $141.6 million of cash from operating activities, ended the quarter with $234.9 million of cash and cash equivalents and our availability under our credit facilities was $1,018.4 million. We have no debt repayments due in the next twelve months other than required term loan payments of $18.6 million considering the effect of repricing of the U.S. Dollar term loan as described in note 9 to our unaudited consolidated financial statements and receivables facility borrowing of $262.2 million.
Current wording
We fund short-term cash requirements primarily from operating cash flows and credit facilities. Most of our long-term financing is from indebtedness. For the three and six months ended June 30, 2024, we generated $281.1 million and $422.7 million of cash from operating activities, respectively, ended the quarter with $272.6 million of cash and cash equivalents and our availability under our credit facilities was $1,060.7 million. We have no debt repayments due in the next twelve months other than required term loan payments of $19.7 million and receivables facility borrowing of $233.3 million.
Previous wording
At March 31, 2024, $222.7 million or 94.8% of our $234.9 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.
Current wording
At June 30, 2024, $258.0 million or 94.6% of our $272.6 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.
Previous wording
Consists of typical non-cash charges including depreciation and amortization, stock based compensation expense, deferred income tax expense and others.
Current wording
Consists of typical non-cash charges including depreciation and amortization, impairments, stock based compensation expense, deferred income tax expense and others.
Previous wording
Investing activities used $6.9 million more cash in 2024. The change was primarily attributable to an increase in capital expenditures compared to the prior year.
Current wording
Investing activities used $22.4 million more cash in 2024. The change was primarily attributable to an increase in capital expenditures compared to the prior year.
Previous wording
Financing activities used $144.8 million less cash in 2024 primarily due to the net borrowings made on the receivables facility in 2024 compared to having net repayments in 2023 and higher proceeds received from stock options exercises in 2024 compared to the prior year.
Current wording
Financing activities used $143.9 million less cash in 2024 primarily due to the net borrowings made on the receivables facility in 2024 compared to having net repayments in 2023 and higher proceeds received from stock options exercises in 2024 compared to the prior year.
Previous wording
Free cash flow was $84.6 million lower in 2024 primarily due to lower income before income taxes and an increase in capital spending across the Company in 2024 as noted above.
Current wording
Free cash flow was $12.6 million higher in 2024 primarily due to higher cash flow from operating activities as previously discussed, partially offset by an increase in capital spending across the Company in 2024 as noted above.
Rearranged current paragraphs (4)
Current report — wording carried from elsewhere
—Management's discussion and analysis of financial condition and results of operations” in the Annual Report.
Current report — wording carried from elsewhere
In Corporate, Adjusted Operating Income decreased $2.8 million due to immaterial offsetting factors.
Current report — wording carried from elsewhere
As described in note 1 to our unaudited condensed consolidated financial statements.
Current report — wording carried from elsewhere
As described in note 1 to our unaudited condensed consolidated financial statements.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
Effective January 1, 2024, we changed our operating model and reporting segment structure from three
Previous report — wording carried elsewhere
In connection with the operating model and reporting structure change, our chief operating decision