Avantor, Inc. Q1 FY2025 earnings call

• CEO transition: Board initiated search for new CEO, current CEO to step down once successor is in place.
• Performance: Revenue fell short due to market headwinds in education, government, and bench stage biotech.
• Actions: Corey Walker fully onboarded to Lab Solutions; delivery excellence initiative for supply chain; digital enhancements to platform; pricing optimization; portfolio expansion including new distribution agreements.
• Cost transformation: Expanding cost savings initiative to $400 million run rate gross savings by end of 2027.

In the first quarter, Lab Solutions revenue was $1.07 billion, declining 3% organically year-over-year. Adjusted operating income was $139 million with a 13.1% margin. Bioscience Production revenue was $516 million, essentially flat organically year-over-year. Adjusted operating income was $123 million with a 23.9% margin. Bioscience Production had growth in process ingredients, excipients, and double-digit growth in single-use offerings, but was offset by weaker demand in controlled environment consumables.

• Full-year organic revenue guidance revised to -1% to +1%, reported revenue decline -2% to flat.
• Q2 organic revenue guidance: Flat to modestly up.
• Adjusted EBITDA margin expected 17.5% to 18.5%.
• Adjusted EPS and free cash flow unchanged at $1.02 to $1.10 and $650 million to $700 million respectively.

• Macro and policy-related headwinds affecting end markets.
• 2% COGS exposure to China due to tariffs, with efforts to mitigate through alternate suppliers and pricing.

Q: On guidance and tariffs, how is the 200 bps reduction in organic growth parsed?

A: Largely driven by policy environment, biotech funding, and modest impact from China tariffs.

Q: On BPS segment, details on controlled environment consumables?

A: Controlled environment consumables saw lower demand due to customer usage controls, but order book remains strong in Bioprocessing.

Q: On Lab Solutions, breakdown of academic/government weakness?

A: Weakness seen in equipment and instruments, hiring freezes, and muted lab activity due to funding uncertainty, with assumptions of trends persisting.