Avantor, Inc. Q4 FY2025 earnings call

• Avantor launched the revival program with five pillars: evolving go-to-market strategy, improving operations, optimizing portfolio, simplifying processes, and strengthening talent/accountability. - Reorganized into two business units: product-agnostic channel and channel-agnostic product, with VWR brand relaunched for the channel business. - Invested $10 to $15 million in 2026 to upgrade VWR e-commerce platform. - New COO Mary Blend identified $20 million investment to enhance customer service. - Established revival project management office. - Observed end markets: biopharma healthy, early-stage biotech/education/govt markets near bottom, but uncertainty in US education/govt; strong biotech funding in Q4 2025 and Jan 2026. - Welcomed Sanjit Mehra and Simon Diggumans to the board.

For the quarter, reported revenue was $1.66 billion, down 4% year over year on an organic basis. Laboratory solutions revenue was $1.116 billion, a decline of 4% versus the prior year on an organic basis. Bioscience production revenue was $548 million, reflecting an organic decline of negative 4% versus the prior year. The new segments for 2026 are VWR distribution and services (representing about 72% of 2025 enterprise revenue with an adjusted operating margin of 11.5%) and bioscience and medtech products (representing about 28% of 2025 enterprise revenue with an adjusted operating margin of 26.7%). For fiscal year 2025, Laboratory Solutions revenue was $4.4 billion, down 3% organic, and Bioscience Productions adjusted operating income was $518 million with a 24.1% margin.

• Expect organic revenue growth 2026: -2.5% to -0.5%, reported revenue growth -1.5% to +0.5%. - EBITDA margins to contract by as much as 100 to 150 basis points in 2026. - Adjusted EPS outlook 2026: 77¢ to 83¢. - Free cash flow 2026: $50 million to $550 million, back-half weighted. - Q1 2026 EPS guidance: $0.15 to $0.16 per share.

• Uncertainties in end markets, including ongoing challenges in early-stage biotech, education, and government sectors in the US. - Operational bottlenecks in supply chain impacting certain segments. - FX impacts on the balance sheet and leverage. - Headwinds in specific subsegments of bioscience and medtech products like serum, electronic materials, and NuSil.

Q: Casey Woodring asked about segment growth expectations for 2026 and Q1 phasing.

A: Brent Jones said bioscience and medtech products have difficult comps, causing a drag, and Q1 is expected to be the low point with organic revenues likely down 5% or more offset by FX.

Q: Brandon Couillard inquired about weighing investments in e-commerce vs cost savings.

A: Emmanuel Ligner stated revival combines cost transformation with growth investments, and cost out is part of optimization within revival.

Q: Brandon Couillard asked about margin guide and other investments.

A: Brent Jones said margins are impacted by segment mix, revival investments, and headwinds in bioscience and medtech, with the guide being prudent.

Q: Paul Knight asked about margin impact of investments and industry growth.

A: Emmanuel Ligner called 2026 a transition year, and Brent Jones mentioned Q4 exit rate and moving parts impacting margins.

Q: Michael Ryskin asked about margins, price, and book-to-bill.

A: Brent Jones said Q4 margin impact was from mix, and book-to-bill >1 was for process chemicals excluding serum.

Q: Dan Brennan asked about margin bridge and channel business outlook.

A: Brent Jones mentioned Q4 exit rate and moving parts, and Emmanuel Ligner spoke about VWR's improved reception and investments.

Q: Luke Sergott asked about missed opportunities and go-to-market strategy.

A: Emmanuel Ligner talked about resegmentation for customer centricity and investments in both segments.

Q: Vijay Kumar asked about new segmentations and share count.

A: Emmanuel Ligner explained go-to-market changes for customer clarity, and Brent Jones mentioned share count assumptions.

Q: Matt Larew asked about portfolio and scale in new segments.

A: Emmanuel Ligner said they're working on portfolio optimization and seeing opportunities in the new segment structure.