avtr-20240331

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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FORM 10-Q

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☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission file number: 001-38912

Avantor, Inc.

(Exact name of registrant as specified in its charter)


Delaware			82-2758923
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

Radnor Corporate Center, Building One, Suite 200

100 Matsonford Road

Radnor, Pennsylvania 19087

(Address of principal executive offices) (zip code)

(610) 386-1700

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Exchange on which registered

Common stock, $0.01 par value

AVTR

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. ☒ Large Accelerated Filer ☐ Accelerated Filer ☐ Non-accelerated Filer ☐ Smaller reporting company ☐ Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

On April 22, 2024, 679,266,323 shares of common stock, $0.01 par value per share, were outstanding.

Avantor, Inc. and subsidiaries

Form 10-Q for the quarterly period ended March 31, 2024

Table of contents


			Page
Glossary			ii
Cautionary factors regarding forward-looking statements			iii

PART I — FINANCIAL INFORMATION
Item 1. Financial statements			1
Item 2. Management’s discussion and analysis of financial condition and results of operations			23
Item 3. Quantitative and qualitative disclosures about market risk			34
Item 4. Controls and procedures			34

PART II — OTHER INFORMATION
Item 1. Legal proceedings			34
Item 1A. Risk factors			34
Item 2. Unregistered sales of equity securities and use of proceeds			34
Item 3. Defaults upon senior securities			35
Item 4. Mine safety disclosures			35
Item 5. Other information			35
Item 6. Exhibits			36

Signature			38

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Glossary


			Description
we, us, our			Avantor, Inc. and its subsidiaries

Adjusted EBITDA			our earnings or loss before interest, taxes, depreciation, amortization and certain other adjustments
Adjusted Operating Income			our earnings or loss before interest, taxes, amortization and certain other adjustments
Annual Report			our annual report on Form 10-K for the year ended December 31, 2023
AOCI			accumulated other comprehensive income or loss



EURIBOR			the basic rate of interest used in lending between banks on the European Union interbank market
FASB			the Financial Accounting Standards Board of the United States
GAAP			United States generally accepted accounting principles


long-term			period other than short-term

M&A			Mergers and Acquisitions


OCI			other comprehensive income or loss

Ritter			Ritter GmbH and affiliates, a company we acquired in June 2021
RSU			restricted stock units represent awards that will vest annually and awards that contain performance and market conditions
SEC			the United States Securities and Exchange Commission
SG&A expenses			selling, general and administrative expenses
SOFR			secured overnight financing rate

VWR			VWR Corporation and its subsidiaries, a company we acquired in November 2017

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Cautionary factors regarding forward-looking statements

This report 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 report are forward-looking statements. Forward-looking statements discuss our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. These statements may be preceded by, followed by or include the words “aim,” “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “intend,” “likely,” “outlook,” “plan,” “potential,” “projection,” “prospects,” “continue,” “goal,” “objective,” “opportunity,” “near-term,” “long-term,” “assumption,” “project,” “guidance,” “target,” “trend,” “seek,” “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.

You should understand that the following important factors, in addition to those discussed under Part I, Item 1A “Risk Factors” in our Annual Report, as such risk factors may be updated from time to time in our periodic filings with the SEC and in this report, could affect our future results and could cause those results or other outcomes to differ materially from those expressed or implied in our forward-looking statements:

•disruptions to our operations;

•competition from other industry providers;

•our ability to implement our strategies for improving growth and optimizing costs;

•our ability to anticipate and respond to changing industry trends;

•adverse trends in consumer, business, and government spending;

•our dependence on sole or limited sources for some essential materials and components;

•our ability to successfully value and integrate acquired businesses;

•our products’ satisfaction of applicable quality criteria, specifications and performance standards;

•our ability to maintain our relationships with key customers;

•our ability to maintain our relationships with distributors;

•our ability to maintain our customer base and our expected volume of customer orders;

•our ability to maintain and develop relationships with drug manufacturers and contract manufacturing organizations;

iii

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•the impact of new laws, regulations, or other industry standards;

•changes in the interest rate environment that increase interest on our borrowings;

•adverse impacts from currency exchange rates or currency controls imposed by any government in major areas where we operate or otherwise;

•our ability to implement and improve processing systems and prevent a compromise of our information systems or personal data;

•our ability to protect our intellectual property and avoid third-party infringement claims;

•exposure to product liability and other claims in the ordinary course of business;

•our ability to develop new products responsive to the markets we serve;

•supply chain constraints and the availability of raw materials;

•our ability to source certain of our products from certain suppliers;

•our ability to contain costs in an inflationary environment;

•our ability to avoid negative outcomes related to the use of chemicals;

•our ability to maintain highly skilled employees;

•our ability to maintain a competitive workforce;

•adverse impact of impairment charges on our goodwill and other intangible assets;

•currency fluctuations and uncertainties related to doing business outside the United States;

•our ability to obtain and maintain required regulatory clearances or approvals, which may constrain the commercialization of submitted products;

•our ability to comply with environmental, health and safety laws and regulations, or the impact of any liability or obligation imposed under such laws or regulations;

•our indebtedness, which could adversely affect our financial condition or prevent us from fulfilling our debt or contractual obligations;

•our ability to generate sufficient cash flows or access sufficient additional capital to meet our debt obligations or to fund our other liquidity needs; and

•our ability to maintain an effective system of internal control over financial reporting.

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 report. 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.

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PART I — FINANCIAL INFORMATION

Item 1. Financial statements

Avantor, Inc. and subsidiaries

Index to unaudited condensed consolidated financial statements


			Page
Unaudited condensed consolidated balance sheets			2
Unaudited condensed consolidated statements of operations			3
Unaudited condensed consolidated statements of comprehensive income or loss			4
Unaudited condensed consolidated statements of stockholders’ equity			5
Unaudited condensed consolidated statements of cash flows			6
Notes to unaudited condensed consolidated financial statements			7

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Avantor, Inc. and subsidiaries

Unaudited condensed consolidated balance sheets


(in millions)	March 31, 2024		December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	234.9	$	262.9
Accounts receivable, net of allowances of $37.7 and $35.0	1,129.7		1,150.2
Inventory	810.6		828.1
Other current assets	145.9		143.7
Total current assets	2,321.1		2,384.9
Property, plant and equipment, net of accumulated depreciation and impairment charges of $635.4 and $616.9	739.7		737.5
Other intangible assets, net (see note 7)	3,662.9		3,775.3
Goodwill, net of accumulated impairment losses of $38.8 and $38.8	5,672.0		5,716.7
Other assets	367.7		358.3
Total assets	$	12,763.4	$	12,972.7
Liabilities and stockholders’ equity
Current liabilities:
Current portion of debt	$	299.1	$	259.9
Accounts payable	573.4		625.9
Employee-related liabilities	133.0		133.1
Accrued interest	40.7		50.2
Other current liabilities	395.7		411.2
Total current liabilities	1,441.9		1,480.3
Debt, net of current portion	5,023.9		5,276.7
Deferred income tax liabilities	600.6		612.8
Other liabilities	360.7		350.3
Total liabilities	7,427.1		7,720.1
Commitments and contingencies (see note 8)
Stockholders’ equity:

Common stock including paid-in capital, 679.2 and 676.6 shares issued and outstanding	3,881.4		3,830.1
Accumulated earnings	1,551.9		1,491.5
Accumulated other comprehensive loss	(97.0)		(69.0)
Total stockholders’ equity	5,336.3		5,252.6
Total liabilities and stockholders’ equity	$	12,763.4	$	12,972.7

See accompanying notes to the unaudited condensed consolidated financial statements.

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Avantor, Inc. and subsidiaries

Unaudited condensed consolidated statements of operations


(in millions, except per share data)	Three months ended March 31,
	2024		2023
Net sales	$	1,679.8	$	1,780.3
Cost of sales	1,109.3		1,155.5
Gross profit	570.5		624.8
Selling, general and administrative expenses	424.2		393.6

Operating income	146.3		231.2
Interest expense, net	(64.3)		(73.7)
Loss on extinguishment of debt	(2.5)		(2.3)
Other income, net	1.1		0.6
Income before income taxes	80.6		155.8
Income tax expense	(20.2)		(34.3)
Net income	$	60.4	$	121.5



Earnings per share:
Basic	$	0.09	$	0.18
Diluted	$	0.09	$	0.18
Weighted average shares outstanding:
Basic	678.1		674.7
Diluted	681.4		678.1

See accompanying notes to the unaudited condensed consolidated financial statements.

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Avantor, Inc. and subsidiaries

Unaudited condensed consolidated statements of comprehensive income or loss


(in millions)	Three months ended March 31,
	2024		2023
Net income	$	60.4	$	121.5
Other comprehensive (loss) income:
Foreign currency translation — unrealized (loss) gain	(22.0)		16.9
Derivative instruments:
Unrealized gain (loss)	9.8		(0.1)
Reclassification of gain into earnings	(8.5)		(6.5)
Activity related to defined benefit plans	(0.2)		(4.9)
Other comprehensive (loss) income before income taxes	(20.9)		5.4
Income tax effect	(7.1)		5.2
Other comprehensive (loss) income	(28.0)		10.6
Comprehensive income	$	32.4	$	132.1

See accompanying notes to the unaudited condensed consolidated financial statements.

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Avantor, Inc. and subsidiaries

Unaudited condensed consolidated statements of stockholders’ equity


(in millions)		Stockholders’ equity
	Common stock including paid-in capital		Accumulated earnings		AOCI		Total
		Shares							Amount
Balance at December 31, 2023		676.6	$	3,830.1	$	1,491.5	$	(69.0)	$	5,252.6
Comprehensive income (loss)		—	—		60.4		(28.0)		32.4
Stock-based compensation expense		—	12.4		—		—		12.4

Stock option exercises and other common stock transactions		2.6	38.9		—		—		38.9

Balance at March 31, 2024		679.2	$	3,881.4	$	1,551.9	$	(97.0)	$	5,336.3

Balance at December 31, 2022		674.3	$	3,785.3	$	1,170.4	$	(100.3)	$	4,855.4
Comprehensive income		—	—		121.5		10.6		132.1

Stock-based compensation expense		—	12.6		—		—		12.6

Stock option exercises and other common stock transactions		0.8	(5.5)		—		—		(5.5)

Balance at March 31, 2023		675.1	$	3,792.4	$	1,291.9	$	(89.7)	$	4,994.6

See accompanying notes to the unaudited condensed consolidated financial statements.

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Avantor, Inc. and subsidiaries

Unaudited condensed consolidated statements of cash flows


(in millions)	Three months ended March 31,
	2024		2023
Cash flows from operating activities:
Net income	$	60.4	$	121.5
Reconciling adjustments:
Depreciation and amortization	99.6		101.1

Stock-based compensation expense	12.7		12.7
Provision for accounts receivable and inventory	24.0		12.5
Deferred income tax benefit	(17.9)		(26.4)
Amortization of deferred financing costs	3.0		3.4
Loss on extinguishment of debt	2.5		2.3
Foreign currency remeasurement loss	5.3		1.8
Changes in assets and liabilities:
Accounts receivable	2.7		(52.2)
Inventory	(11.0)		7.1
Accounts payable	(43.6)		0.6
Accrued interest	(9.5)		(10.5)
Other assets and liabilities	9.3		44.1
Other	4.1		1.5
Net cash provided by operating activities	141.6		219.5
Cash flows from investing activities:
Capital expenditures	(34.7)		(28.0)


Other	0.5		0.7
Net cash used in investing activities	(34.2)		(27.3)
Cash flows from financing activities:
Debt borrowings	41.2		—
Debt repayments	(210.3)		(269.5)



Proceeds received from exercise of stock options	45.5		2.6
Shares repurchased to satisfy employee tax obligations for vested stock-based awards	(6.6)		(8.1)
Net cash used in financing activities	(130.2)		(275.0)
Effect of currency rate changes on cash and cash equivalents	(5.7)		4.8
Net change in cash, cash equivalents and restricted cash	(28.5)		(78.0)
Cash, cash equivalents and restricted cash, beginning of period	287.7		396.9
Cash, cash equivalents and restricted cash, end of period	$	259.2	$	318.9

See accompanying notes to the unaudited condensed consolidated financial statements.

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Avantor, Inc. and subsidiaries

Notes to unaudited condensed consolidated financial statements

1. Nature of operations and presentation of financial statements

We are a global manufacturer and distributor that provides products and services to customers in the biopharmaceutical, healthcare, education & government and advanced technologies & applied materials industries.

Basis of presentation

The accompanying condensed consolidated financial statements have been prepared pursuant to SEC regulations whereby certain information normally included in GAAP financial statements has been condensed or omitted. The financial information presented herein reflects all adjustments (consisting only of normal, recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. The results for interim periods are not necessarily indicative of the results to be expected for the full year.

We believe that the disclosures included herein are adequate to make the information presented not misleading in any material respect when read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report. Those audited consolidated financial statements include a summary of our significant accounting policies.

Principles of consolidation

All intercompany balances and transactions have been eliminated from the financial statements.

Use of estimates

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the amounts reported throughout the financial statements. Actual results could differ from those estimates.

Segment Reporting

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 allocates resources across our operating segments.

2. New accounting standards and climate change related update by SEC

Segment Reporting

In November 2023, the FASB issued Accounting Standards Update 2023-07, Improvements to Reportable Segment Disclosures, which amends the existing segment reporting guidance (ASC Topic 280) to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount for other segment items by reportable segment and a description of its composition, the title and position of the chief operating decision maker and an explanation of how the chief operating decision maker uses the reported

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measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources.

The amendments in this update are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. We are currently evaluating the impact of our pending adoption of this standard on our financial statement disclosures.

Income Taxes

In December 2023, the FASB issued Accounting Standards Update 2023-09, Improvements to Income Tax Disclosures, which amends the existing income taxes guidance (ASC Topic 740) to require additional disclosures surrounding annual rate reconciliation, income taxes paid and other income tax related disclosures.

The amendments in this update are effective for annual periods beginning after December 15, 2024. Early adoption is permitted. We are currently evaluating the impact of our pending adoption of this standard on our financial statement disclosures.

Other

There were no new accounting standards that we expect to have a material impact on our financial position or results of operations upon adoption.

Adoption of rules to enhance and standardize climate-related disclosures for Investors

On March 6, 2024, the SEC adopted final rules to require registrants to disclose certain climate-related information in registration statements and annual reports.

On April 4, 2024, the SEC issued an order staying the final rules pending completion of judicial review of the petitions challenging the final rules. The order does not amend the compliance dates contemplated by the final rules, which are applicable to the Company for fiscal years beginning with the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2025. We are currently evaluating the impact of our pending adoption of these requirements on our financial statement disclosures.

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3. Earnings per share

The following table presents the reconciliation of basic and diluted earnings per share for the three months ended March 31, 2024:


(in millions, except per share data)	Three months ended March 31, 2024
	Earnings (numerator)		Weighted average shares outstanding (denominator)	Earnings per share
Basic	$	60.4	678.1	$	0.09
Dilutive effect of stock-based awards	—		3.3

Diluted	$	60.4	681.4	$	0.09

The following table presents the reconciliation of basic and diluted earnings per share for the three months ended March 31, 2023:

SEC Form 10-Q filed by Avantor Inc.