Avantor (AVTR) Q4 2023 earnings summary

Executive summary

• Q4 and FY 2023 revenue, adjusted EBITDA and adjusted EPS finished at the high end of updated guidance; FY free cash flow exceeded the top end of guidance.

• Market conditions remained stable, with destocking and cautious spending weighing on demand; customer signals and leading indicators were encouraging, but no end-market inflection had emerged.

Financial highlights

• Q4 revenue was $1,722.8M, down 4.0%; FY revenue was $6,967.2M, down 7.3%. Core organic growth was -4.8% in Q4 and -5.2% for FY; FX added 1.9% and 0.5%, respectively.

• Q4 adjusted EBITDA was $302.1M (17.5% margin) and adjusted EPS was $0.25; FY adjusted EBITDA was $1,309.1M (18.8% margin) and adjusted EPS was $1.06.

• Q4 net income was $98.5M and adjusted net income $166.7M; FY net income was $321.1M and adjusted net income $720.1M. Diluted GAAP EPS was $0.15 in Q4 and $0.47 for FY.

• Adjusted gross profit was $570.4M in Q4 (33.1% margin) and $2,363.8M for FY (33.9% margin).

• Free cash flow was $201.0M in Q4 and $723.6M for FY, with conversion above 120% and 100%, respectively.

Outlook and guidance

• FY 2024 organic revenue growth guidance is -2% to +1%; reported revenue is $6.85B-$7.06B, implying reported growth of -1.7% to +1.3%.

• FY 2024 adjusted EBITDA guidance is $1.19B-$1.26B, with a 17.4%-17.9% margin; adjusted EPS guidance is $0.96-$1.04.

• FY 2024 free cash flow guidance is $600M-$650M, excluding one-time cash costs for the operating model transformation and cost-savings initiative.

• Guidance assumes current market conditions continue; recovery could provide upside but is not assured. Estimates use a FY blended USD/EUR rate of 1.08.