Avantor returned to year-over-year sales growth in the third quarter, with revenue and adjusted earnings per share exceeding management’s expectations. The life-sciences and advanced-technology supplier also raised its full-year outlook for organic revenue growth, adjusted EPS and free cash flow, though the announcement provided no revised target figures.
The results showed improving sales across both business segments, but profitability was mixed: adjusted net income declined from a year earlier, and VWR Distribution & Services’ adjusted operating margin fell.
Key details
- Sales rose 4.6% to $1.698 billion. Excluding the impact of currency movements, organic sales increased 5.2%. Foreign exchange reduced reported growth by 0.6 percentage points.
- GAAP net income was $203.4 million, compared with a net loss of $711.8 million in the year-earlier quarter. GAAP diluted EPS was 30 cents. Adjusted net income was $146.4 million, down from $151.1 million, and adjusted diluted EPS was 22 cents.
- Operating profitability included both reported and adjusted measures. Operating income was $139.5 million, with an 8.2% margin; adjusted operating income was $227.6 million, with a 13.4% margin. Adjusted EBITDA was $256.9 million, equal to a 15.1% margin.
- VWR Distribution & Services sales increased 5.0% to $1.234 billion, or 5.8% organically. Adjusted operating income was $119.4 million, versus $132.0 million a year earlier, and its margin was 9.7%. Avantor attributed the margin decline to an unfavorable product mix and higher selling, general and administrative costs, partly offset by higher sales volume.
- Bioscience & Medtech Products sales increased 3.5% to $464.5 million, or 3.6% organically. Adjusted operating income rose to $123.4 million from $119.3 million, and the segment’s adjusted operating margin was 26.6%.
- The full-year outlook was raised for organic revenue growth, adjusted EPS and free cash flow. No updated ranges or dollar targets were included in the announcement.
- Avantor said strong free cash flow helped it further strengthen its balance sheet, but did not provide a cash-flow figure or quantify the change.
Plain-English implications
The return to growth spans both segments: VWR’s organic growth accelerated, while Bioscience & Medtech returned to organic growth. The quarter’s earnings picture is less uniform than the revenue trend: adjusted net income was lower year over year, and VWR’s adjusted margin weakened even as sales grew. The improved full-year outlook reflects management’s stronger expectations for revenue growth, adjusted earnings and cash generation, without specifying the size of the revisions.