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Avantor, Inc. (AVTR)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 delivered mixed results: revenue fell to $1.62B (-5.3% YoY; -3.3% QoQ), Adjusted EBITDA margin compressed to 16.5%, and Adjusted EPS declined to $0.22; a non-cash $785M goodwill impairment (distribution unit) drove a GAAP net loss of $712M and -$1.04 GAAP EPS .
  • Versus S&P consensus, revenue and EPS were modest misses (Rev: $1.624B vs $1.648B est.; EPS: $0.22 vs $0.225 est.); Adjusted EBITDA was essentially in line (~$268M est. vs $267.9M actual)* .
  • FY25 outlook reset lower: organic revenue to -3.5% to -2.5% (prior -2% to 0%), Adjusted EPS to $0.88–$0.92 (prior $0.94–$0.98), with margin “mid‑16s”; FCF unchanged at $550–$600M .
  • Strategic pivot under new CEO (“Avantor Revival”): decentralize go-to-market, invest in manufacturing/supply chain to fix bioprocessing throughput/on-time delivery, strengthen digital/e‑commerce, add key leadership; Board authorized a $500M share repurchase, signaling confidence and offering a potential near-term support for the stock .

What Went Well and What Went Wrong

What Went Well

  • Strong cash generation amid top-line pressure: operating cash flow $207M and free cash flow $172M; adjusted net leverage improved to 3.1x .
  • Resilient profitability relative to expectations: Adjusted EBITDA of $267.9M (16.5%) tracked internal targets; disciplined SG&A and cost controls continued, with ongoing $400M run-rate cost program through 2027 .
  • Segment positives and commercial wins: Applied Solutions within Bioscience had a stronger quarter (electronics materials strength); Lab secured >$100M of combined wins at two top 15 global pharmas slated to phase in 2026 .

What Went Wrong

  • Laboratory Solutions underperformed: organic sales -4.9% with price/competitive intensity and softer services/education demand; segment AOI margin fell to 11.3% (from 12.9% YoY) .
  • Bioprocessing throughput issues and backlog: raw material availability, equipment uptime, and plant downtime limited shipments; book-to-bill ~1.0 with high backlog; order trends strongest in process chemicals but fulfillment lagged .
  • Impairment and margin pressure: $785M goodwill impairment in distribution business and price actions to protect share weighed on GAAP and gross margin; adjusted EPS dropped $0.04 YoY to $0.22 .

Financial Results

Headline P&L and Cash Flow vs prior year and prior quarter

MetricQ3 2024Q2 2025Q3 2025
Net Sales ($B)$1.714 $1.680 $1.624
Adjusted EBITDA ($M)$302.5 $280.0 $267.9
Adjusted EBITDA Margin (%)17.6% 16.6% 16.5%
Adjusted Operating Income ($M)$274.8 $252.0 $237.3
Adjusted OI Margin (%)16.0% 15.0% 14.6%
Adjusted EPS ($)$0.26 $0.24 $0.22
GAAP Net Income/Loss ($M)$57.8 —$(711.8)
GAAP Diluted EPS ($)$0.08 —$(1.04)
Operating Cash Flow ($M)$244.8 —$207.4
Free Cash Flow ($M)$204.0 $125.0 $171.7

Q3 2025 Actual vs S&P Global Consensus

MetricConsensusActual
Revenue ($B)$1.648*$1.624
Adjusted EBITDA ($M)$268.3*$267.9
Adjusted EPS ($)$0.225*$0.22
# EPS Estimates18*—
# Revenue Estimates15*—

Values with asterisk (*) retrieved from S&P Global.

Segment Performance (Q3 2025 vs Q3 2024)

SegmentNet Sales Q3’24 ($M)Net Sales Q3’25 ($M)Reported Δ YoYFX ImpactM&A/DivestitureOrganic Δ YoY
Laboratory Solutions1,171.5 1,096.5 (6.4%) +2.6% (4.1%) (4.9%)
Bioscience Production542.9 527.3 (2.9%) +1.4% 0.0% (4.3%)
Total1,714.4 1,623.8 (5.3%) +2.2% (2.8%) (4.7%)
SegmentAdjusted Operating Income Q3’24 ($M)Margin Q3’24Adjusted Operating Income Q3’25 ($M)Margin Q3’25
Laboratory Solutions151.5 12.9% 123.6 11.3%
Bioscience Production138.1 25.4% 127.7 24.2%
Corporate(14.8) —(14.0) —
Total274.8 16.0% 237.3 14.6%

KPIs and Balance Sheet

KPIQ3 2024Q2 2025Q3 2025
Adjusted Net Leverage (x)——3.1x
Cash & Equivalents ($M)——$251.9
Total Debt, Gross ($M)——$3,874.2
Book-to-bill (Bioprocessing)——~1.0

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Organic Revenue GrowthFY 2025-2% to 0% -3.5% to -2.5% Lowered
Reported Revenue GrowthFY 2025~-2% midpoint -4% to -3% Lowered
Adjusted EBITDA MarginFY 202516.5%–17.0% “Mid‑16s” Lowered
Adjusted EPS ($)FY 20250.94–0.98 0.88–0.92 Lowered
Free Cash Flow ($M)FY 2025550–600 550–600 Maintained
Lab Solutions (Org. growth)FY 2025-LSD to flat -MSD to -LSD; Q4 -MSD implied Lowered
Bioscience Production (Org. growth)FY 2025~Flat -LSD; Q4 -MSD to -HSD implied Lowered
Bioprocessing (Org. growth)FY 2025Flat to +LSD -LSD; Q4 processed chemicals down DD YoY, single-use +LSD Lowered

Earnings Call Themes & Trends

TopicQ1 2025 (Q‑2)Q2 2025 (Q‑1)Q3 2025 (Current)Trend
AI/digital & e‑commerceRolled out AI-enabled e‑commerce; pricing tool enhancements Navigator AI, digital buying platform; validate digital investments Hiring Chief Digital Officer; elevate e‑commerce to empower sales Strengthening
Supply chain/operationsDelivery excellence initiative Bioprocessing plant maintenance extended; backorders Throughput headwinds (raw materials, equipment uptime); missed shipments; targeted investments planned Near-term challenged; investment-led fix
Pricing/competitionHeightened competitive intensity in Lab Pricing to protect/grow share; margin pressure Modest price vs COGS inflation; focus on absolute OI and share Persistent pressure
Academic/Gov & macroNIH/funding uncertainty; demand caution A&G mid-single digit growth in Q2 vs weak market A&G down double digits in Q3; U.S. shutdown a Q4 headwind Worsening
Bioprocessing demandOrder book strong; single-use DD growth Flat YoY; customer-specific headwinds; recovery expected Orders high in process chemicals; backlog/throughput constraining billings; book-to-bill ~1.0 Demand intact; execution headwinds
Tariffs/trade2% COGS China exposure; offsets planned Offsetting tariff costs via price/sourcing No new tariff impact flagged; FX modest tailwind for FY25 Managed
Capital allocationDeleveraging priority Leverage target <3x; FCF prebate timing $500M buyback; refinance extends maturities; leverage 3.1x Balanced deleveraging + buybacks
Leadership/strategyCEO transition initiated [106 not read]; actions in Lab New CEO starting Aug; Lab wins and pricing discipline “Avantor Revival”: decentralize GTM, invest in ops, tighten accountability; add COO, Quality/Reg, CDO Strategic reset underway

Management Commentary

  • “We are making decisive, meaningful changes aimed at improving execution, accountability and financial performance…evolve our go-to-market…invest strategically in our manufacturing and supply chain…carefully scrutinizing our portfolio.”
  • “Our Board…has authorized a $500 million share repurchase program…we will pursue opportunistically while also delivering on our commitment to decrease net leverage.”
  • “Operational headwinds…raw material availability and equipment uptime…downtime at several plants prevented us from shipping several orders…absent these issues, we would have delivered our bioprocessing guide.”
  • “We expect full year adjusted EBITDA margins in the mid 16s…reduced adjusted EPS guidance to $0.88–$0.92…still expect free cash flow of $550–$600 million.”
  • “We took a $785M impairment to goodwill associated with our Lab distribution business…necessitated by continued weakness in our share price as well as margin headwinds.”

Q&A Highlights

  • Pricing vs margin: Management emphasized taking price against COGS while prioritizing absolute operating income and share protection; margin accretion expected as volume from wins ramps .
  • Bioprocessing execution: Plant uptime/raw materials constrained Q3 shipments; team targeting process investments and new COO to standardize lean ops; expect some improvement in Q4 but fixes take time .
  • Lab share stability: Most large key-account contracts renewed; no recent key account losses; opportunities to grow share of wallet; near-term headwinds in services and education persist .
  • Outlook tone: CEO underscored accountability and urgency under “Avantor Revival,” with further strategic detail to come by early 2026 planning cycle; FY25 guidance embeds continued softness in Lab and bioprocessing pushouts .
  • Capital deployment: Buybacks will be “opportunistic without increasing leverage;” debt mostly fixed and termed out to 2028+, revolver extended to 2030 .

Estimates Context

  • Revenue: $1.624B actual vs $1.648B consensus* (modest miss) .
  • Adjusted EPS: $0.22 actual vs $0.225 consensus* (slight miss) .
  • Adjusted EBITDA: $267.9M actual vs ~$268.3M consensus* (in line) .
  • Coverage breadth: 15 revenue and 18 EPS estimates contributed to consensus*.

Values with asterisk (*) retrieved from S&P Global.

Key Takeaways for Investors

  • Execution, not demand, is the near-term swing factor: Bioprocessing orders are healthy (process chemicals up HSD in orders), but plant uptime/raw materials and backlog conversion constrain revenue; “Revival” capex/ops fixes are the key catalyst path .
  • Lab recovery will be slower: Academic/government and K‑12 were notably soft; competitive pricing to protect share weighs on margins; volume from >$100M new wins slated for 2026 should help operating leverage over time .
  • 2025 reset largely de‑risked near-term prints: Lowered FY25 revenue/EPS and “mid‑16s” margin reflect Q3 reality and Q4 headwinds (gov’t shutdown risk, bioprocessing pushouts); FCF held at $550–$600M, a supportive underpinning .
  • Shareholder return optionality: New $500M buyback and improved maturity profile provide downside support and flexibility while management executes operational turnaround .
  • Watch list into Q4/2026: (1) Bioprocessing backlog burn/OTD improvement, (2) Lab pricing discipline vs share/volume trends, (3) cadence of “Revival” hires (COO/CDO/Quality) and plant investments, (4) free cash conversion, (5) any portfolio actions from the strategic review .
  • Strategic partnerships bolster long-term differentiation: Digital traceability (“Smart Consumables” with p‑Chip) and BlueWhale Bio collaboration in CAR‑T manufacturing support Avantor’s positioning in next‑gen therapies .
  • Impairment is non‑cash, but underscores distribution margin headwinds; focus on mix/efficiency and brand architecture (VWR, J.T.Baker) to restore profitability in Lab .

Additional Relevant Q3 Press Releases

  • Partnership with p‑Chip to embed microtransponders in lab consumables (“Smart Consumables”) for secure COI traceability .
  • Partnership with BlueWhale Bio to accelerate CAR‑T manufacturing via Synecta CDNP platform; produce GMP-grade CDNP materials .
  • Board Chairman transition effective Jan 1, 2026 (Gregory L. Summe to succeed Jonathan Peacock) .

Notes: All non-GAAP figures are as defined and reconciled in company materials . The $785M goodwill impairment relates to the Distribution reporting unit and is non-cash .