Avantor at BofA Conference: Strategic Insights Amid CEO Transition

On Tuesday, 13 May 2025, Avantor Inc. (NYSE:AVTR) took center stage at the BofA Securities 2025 Healthcare Conference, presenting a mixed bag of strategic insights. While the company showcased its robust platform and strong financial execution, it also addressed challenges such as tariff impacts and a CEO transition. Despite a slight miss on Q1 results, Avantor remains confident in navigating the current market landscape.

Key Takeaways

• Avantor’s Q1 results were slightly below expectations, yet the company demonstrated strong margin execution and free cash flow conversion.
• CEO Michael Stubblefield announced his transition after over 11 years, with the board actively seeking a successor.
• Tariff exposure is estimated at $45 million for imports from China, but the company is confident in mitigating these impacts.
• The organic sales forecast for 2025 was adjusted to a decline of -1% to +1%, influenced by NIH funding changes and sector weaknesses.
• Avantor expects to achieve $400 million in cost savings by 2027 through strategic initiatives.

Financial Results

• Margin Execution: Avantor achieved strong margin execution, aiming for a long-term EBITDA margin exceeding 20%, though current focus is around 18%.
• Revenue Growth: Revenue has grown from $400 million to $7 billion since Michael Stubblefield’s tenure began, with a 49% revenue expectation for the first half of the year.
• Free Cash Flow: The company reported best-in-class free cash flow conversion.

Operational Updates

• CEO Transition: Michael Stubblefield will step down as CEO, with the board seeking a leader with a growth mindset and focus on innovation and execution.
• Bioprocessing Segment: Despite pockets of weakness, Avantor maintains confidence in the bioprocessing market, supported by a strong order book.
• Cost Savings Plan: An expanded cost savings plan aims to reach $400 million by 2027, leveraging a new operating model and automation investments.

Future Outlook

• Tariff Mitigation: Avantor is confident in mitigating tariff impacts through alternative products and pricing strategies, with no anticipated bottom-line impact.
• Market Conditions: The company does not foresee a market recovery beyond current visibility, but remains focused on long-term margin expansion.

Q&A Highlights

• Tariff Strategies: Avantor detailed its approach to offsetting tariff headwinds, emphasizing pricing and cost reduction measures.
• Bioprocessing Performance: Concerns about controlled environment consumables were addressed, with limited destocking and improving order rates.
• Academic and Government Sector: The impact of NIH funding cuts was discussed, with adjustments made to reflect ongoing sector challenges.

Readers are encouraged to refer to the full transcript for a detailed account of the conference discussion.

Full transcript - BofA Securities 2025 Healthcare Conference:

Mike Ryskin, Analyst, Bank of America: Joining us, my name is Mike Ryskin. I’m on the Bank of America Life Science Tools and Diagnostics team. And excited to host for our next session. We are joined by Avantor and we have Michael Stubblefield, President and CEO with us. Michael, thanks so much for being here.

Michael Stubblefield, President and CEO, Avantor: Michael, thanks for having us. We’re happy to be here today.

Mike Ryskin, Analyst, Bank of America: To be the usual fireside chat, just to kick things off, let’s talk about first quarter results and how that played out. I think it came in a little bit below investor expectations. Any comments you want to make in terms of, at a high level, what you saw in the quarter versus your internal expectations versus your plan for the year?

Michael Stubblefield, President and CEO, Avantor: I think to start, what I’d just reiterate is just our confidence in the strength and resilience of our platform. I think about our lab solutions segment, We have differentiated capabilities, a broad and expanding portfolio, and a supply chain that enables us to serve more than 300,000 customers reliably around the world. In our bioscience production segment, we have a leading bioprocessing franchise, and we are the leading supplier of medical grade silicone formulations. In thinking about our financial results over the, certainly the first quarter and even back into 2024, I think you see strong margin execution, best in class free cash flow conversion, and earnings in line with our plans and our targets, and I think that’s notable, and I think it speaks to our team’s ability to execute in a relatively challenging environment, and it also underscores the impact of the structural cost actions that we have taken. On the first quarter call, we talked about some decisive actions that we’re taking to stimulate our top line, even in the midst of challenging macro backdrop.

Corey Walker has joined the team to lead our lab solutions segment, and he’s leaning in aggressively to evaluate all aspects of strategy and our execution. He’s partnering very closely with our commercial teams to not only, you know, retain existing accounts, we highlighted the extension of our Regeneron contract in the quarter, but also aggressively go after new accounts in this environment. We’ve had a number of actions that have been in flight now for a couple of quarters around differentiated supply chain performance, expanding our portfolio with innovative new partners, as well as investments in our digital capabilities and pricing, and those will certainly improve the top line as we move forward. And we highlighted some incremental cost actions that we’ve identified that will play out over the next several years. Okay, all

Mike Ryskin, Analyst, Bank of America: right, a lot to unpack there, I’ll dive into those over time, but the other topic I want to touch on was the other big change announced a couple of weeks ago was the CEO transition. So, I mean, at a high level, can you talk about how that decision came about? Why is now the right time and just how to think about that playing out?

Michael Stubblefield, President and CEO, Avantor: So I’ve led the Avantor business now for a bit more than eleven years, and as you can imagine, the board and I have had regular discussions around succession planning. When I think back to when I started, the business was just a bit over $400,000,000 in revenue. We have touched, you know, $7,000,000,000 here more recently. I’ve had the privilege of leading the business through a successful IPO, you know, orchestrating our organization to respond to the pandemic, and we’re incredibly proud of the role we played there. And, you know, more recently, we have, you know, stood up a new operating model that’s essentially complete.

There’s a lot, you know, I’d like to do both personally as well as professionally still, and so, you know, felt like for me it was a natural time for a transition. When I think about it from the businesses perspective, we’ve highlighted, you know, the work we’re doing to, you know, look at our strategy over the long term, and I do think having a fresh perspective in that context, you know, will be helpful for the business, and so, you know, the board and I, you know, took a look at it and, you know, agreed that now would be a good time to announce this. It gives us a long runway for us to drive a smooth transition, and you can certainly count on me to run through the tape and continue to serve as the CEO until my successor is named.

Mike Ryskin, Analyst, Bank of America: On that long runway for the transition, how should we think about timing? You know, how far along in the search are, or is the board? You know, any indication?

Michael Stubblefield, President and CEO, Avantor: Yeah, so nothing really incremental to add beyond what we announced, you know, a couple of weeks ago, which is, you know, the board has initiated a process. They’ve gotten a retained recruiter that’s now been in the market for a number of weeks. Anytime you announce these things, you certainly don’t want to draw it out longer than it needs to be, and so I know both for the organization’s perspective as well as our investors, you know, I’m sure the board will move expeditiously as they can, but certainly we’ve got the benefit of time to ensure that we get the right candidate in here with the right track record and focus on growth and value creation.

Mike Ryskin, Analyst, Bank of America: And you mentioned that track record, is there anything in particular that the board is looking for, whether it’s internal candidate, external candidate, industry expertise, just sort of what’s the right background to be the next Avantor CEO?

Michael Stubblefield, President and CEO, Avantor: Yeah, so I don’t want to get ahead of him on that, but we have a talented team internally, and you know, we have indicated that they’re also looking externally for the right leader, you know, given where we’re at today, growth mindset is critical. You know, an innovation background, you know, focus on execution and delivering results and creating tangible value, think are all going to be important attributes of the next leader for sure.

Mike Ryskin, Analyst, Bank of America: Okay, okay. All right, so going back to some of the macro and policy things that we talked about, that have happened over the last couple months, I’m going touch on tariffs, Sort of you gave a lot of color on what the tariff exposure could be in terms of COGS to China, modest in comparison to rest of the world. But could you talk a little bit more about your methodology or your thought process for tariff impact to Avantor this year, mitigation strategies against that, and just sort of how that’s being implemented over the course of the year?

Michael Stubblefield, President and CEO, Avantor: So I think we could all agree that it’s a dynamic situation as underscored by the announcements yesterday on US China trade agreements. So let me just clarify for how we see tariffs as we sit here today based on the agreements that are that are in place and the rates that are that are in play. Our biggest exposure is to imports from China into The US. We size the COGS exposure that we have on that trade lane. And based on the rates that were announced yesterday, and that are now in place, at least for the next ninety days, for the balance of 2025, probably size that exposure of roughly $45,000,000 somewhere in that range.

More modest exposure to the rest of the world, that probably adds another 5 or $10,000,000 of exposure. So net net, as we sit here today, based on the rates that are in place, I think about our exposure in that $30,000,000 range. So if you convert that to an EPS, that’s probably 3 to 4¢ if you were unable to mitigate any of it. Now, to be very clear, we didn’t incorporate any headwinds into our earnings in our updated guide, because we don’t think there will be any. We’re incredibly confident about our ability to offset these headwinds through a number of specific levers that we think are unique to Avantor.

Firstly, I highlighted earlier our broad and expanding portfolio and our global supply chain. That’s where we start with our customers. That’s the focus that we’ve had with our customers over the last number of months as this topic has evolved, is trying to be very transparent with them about the goods that would be impacted by tariffs, and making sure they understand what the potential alternative products could be or sourcing arrangements that we would have for them to help them mitigate the exposure to the tariffs. Secondly, we have incredibly sophisticated pricing framework, and we have the flexibility within our commercial relationships. If necessary, we can certainly pass this through, and that’s kind of how we’re framing with our customers quite honestly is, you know, look, we have alternatives, we’re being very transparent about what those alternatives will be.

But, you know, if either you don’t like the alternative, or in the cases where there isn’t an alternative, if you still want to buy, you know, here’s the price that you’re going to have to pay. And I think that has worked well with our customers. And now that at least for the short term here, we seem to have a little bit of clarity on how China is going to play out. I’m sure we’ll be able to move forward here in the coming weeks with more specificity around, is the customer ultimately going to choose an alternative product, or are they okay paying the higher tariff? And then lastly, we have taken a lot of cost actions over the last couple of years, and certainly 2025 will be another, you know, strong year of execution on that front, and that will also help offset, you know, some of the, and help mitigate some of the impacts that we see coming from tariffs.

So net net, we don’t think that we’ll have any headwinds accrue to the bottom line, which is why we haven’t incorporated anything there. The other side of it is on the revenue side. We think that it’s likely that our imports out of The US into China, which are relatively insignificant, you know, we have essentially in the second half of the year as we’ve burned down that inventory, we’ve taken that to zero, that is reflected in our current guidance. We’ve not tried to speculate on what decisions our customers are gonna take on whether to buy an alternative product or to pay a tariff impacted new price. To the extent that they do end up paying some of the tariff impacted prices, that would be a little bit of a tailwind to the top line, but we’ve not tried to reflect that in our current guidance.

Okay.

Mike Ryskin, Analyst, Bank of America: Just to clarify, that $30,000,000 you talked about earlier, is that a net income number, a COGS number, a revenue number?

Michael Stubblefield, President and CEO, Avantor: So, that would be a COGS number that, you know, if unmitigated, you know, would flow through to EPS, and I gave you the range there. In the worst of cases, it would be $03 to $04 But to be very clear, we don’t anticipate that. We’re quite confident we can offset that.

Mike Ryskin, Analyst, Bank of America: Okay. And that’s as of the yesterday new rates of 30% to China, Ten Percent, right, 30 to 10%?

Michael Stubblefield, President and CEO, Avantor: Exactly, exactly.

Mike Ryskin, Analyst, Bank of America: Okay, and that’s the biggest area that you’re concerned about is US China?

Michael Stubblefield, President and CEO, Avantor: So that’s the bulk of it, you know, as we highlighted on the first quarter call, you know, that’s the biggest exposure that we have, it’s roughly 2% of COGS, you know, that’s about 20,000,000 as I said. Rest of world is relatively smaller by comparison, and maybe it’s another 5,000,000 or $10,000,000 to get to the 30,000,000

Mike Ryskin, Analyst, Bank of America: And when you think about, know, you outlined various mitigation and whether it’s cost actions, alternatives, price, etc. As we think to 2026 and beyond, there’s no reason that you shouldn’t be continuing to be able to mitigate that. None of this is sort of temporary, and you’re not going have a surprise hit next year.

Michael Stubblefield, President and CEO, Avantor: No, I think we would agree with that framework. We’re being very transparent with our customers on what the optionality is to the extent that they choose to switch to products that’ll continue to flow through. If we have to put tariff surcharges in place, or incorporate that into pricing and tariffs persist into ’26, then that mechanism will survive as well. So, think we feel good about the levers that we have to offset this, not only in 2025, but beyond. Okay.

Mike Ryskin, Analyst, Bank of America: Switching to the organic guide and sort of your expectations for markets for the rest of the year. You updated the fiscal year twenty twenty five guide on the call, organic sales decline of negative one to plus one. Can you talk about, you know, what’s implied there for BPS and bioprocessing specifically versus LSS?

Michael Stubblefield, President and CEO, Avantor: Just sort

Mike Ryskin, Analyst, Bank of America: of what are the moving pieces there? What are the market conditions that rolled up to that new guide?

Michael Stubblefield, President and CEO, Avantor: Yeah, so when we put out the original guide, it was the day before, you know, some of the policy changes were announced on NIH and funding. So we didn’t anticipate that as we got into the year, and obviously that did impact how the first quarter played out. And so, consistent with how we have guided, you know, last year and even coming into this year, we’re not trying to call, you know, incremental downside that we can’t foresee. And by the same token, we’re also not trying to anticipate a market recovery that we don’t have line of sight to. As you know, we have, you know, from a structural standpoint, relatively little forward visibility just based on the shape of our order book, particularly in our lab segment, it’s more of a book and ship type framework.

So the guidance that we have now on a full year basis does contemplate the rates that we were seeing as we exited first quarter persisting through the balance of the year. Similarly, on the bioscience side of things, you know, there was a little bit of, you know, was a couple pockets of weakness in the first quarter that we don’t think are, you know, gonna play out that way on a full year basis. And so, you know, we have just applied normal seasonality to that part of the business, which means, you know, Q1 was the low point, it gets a little bit better as you move through the year. We’ve incorporated obviously the number of business days in each quarter, as well as just the visibility we have on the order book itself. So, the way that it plays out then at the enterprise level is about 49% of our revenues on a full year basis are in the first half, fifty one percent are in the second half, very similar to how we thought about this in previous years.

Mike Ryskin, Analyst, Bank of America: And you called out some of those pockets of weakness in the first quarter that you don’t expect to continue throughout the year. Can you expand on that? The primary

Michael Stubblefield, President and CEO, Avantor: one in our bioscience business was, you know, in the controlled environment consumables. You know, that’s a part of our bioprocessing platform that’s, you know, important in maintaining the integrity of the clean rooms that these therapies and these molecules are produced in. You know, we did see, you know, some modest levels of destocking there and inventory optimization in the quarter. Rates have improved as we’ve kind of moved from March into April, as we talked about on our call, and we’ve seen that, you know, continue to improve as we’ve moved into the month of May as well. Why do

Mike Ryskin, Analyst, Bank of America: you think that controlled environment consumables was experiencing that destocking? That’s not something we’ve really talked about in the past, and it didn’t really jive with anything in terms of bioprocess demand elsewhere. So it seemed like a really unusual move. What do you think was driving that?

Michael Stubblefield, President and CEO, Avantor: Well, couple of things I’d say about this category. First of all, it’s a staple. It’s a classic, you know, pick and shovel kind of product for the tool space and for our customers. They can’t run these clean rooms without the products and services that we provide in that environment. They are part of our customers’ SOPs, and in many cases, they’re also, you know, part of the regulatory filings.

It’s an incredibly steady category for us. Think mid to high single digits, you know, on steady state basis, you know, in Q4 even, you know, we drove high single digit growth in that category. So we were certainly surprised as we got into the quarter to see order rates drop off. It wasn’t widespread, it was in, you know, a handful of accounts, you know, where I think they made some decisions based on, you know, where they were at from an inventory standpoint, you know, that played out, you know, as a bit of a headwind for us in quarter, but nothing that we’re, you know, we see as structural or, you know, very widespread. As we’ve monitored the rates moving from March into April and May, you know, we see it, you know, improving each day.

Mike Ryskin, Analyst, Bank of America: So you talked about the, you know, not expecting any particular recovery nor any further weakness through the year. But your BPS guide, I think for the year is mid plus mid single digits. So it’s a pretty meaningful acceleration from the first quarter. Is that really just tied to this controlled environment consumables? Is that the only difference between what you saw in 1Q versus your expectations for the rest of year?

Michael Stubblefield, President and CEO, Avantor: Yeah, so our guide coming into the year was mid to high single digits for bioprocessing. And, you know, we’ve scaled that back to mid single digits to take into account, you know, the pockets of weakness we saw in the first quarter, which we don’t see persisting. We’re incredibly bullish on this end market. You know, we think the end market fundamentals are incredibly strong, you know, approval rates of new therapies, production levels are up. Our order book now for quite a number of quarters, even going well back into last year, continued to outpace our revenues, and we saw that in Q1.

We see that order book strength continuing in the second quarter as well. So it’s plus or minus, you know, operating, you know, normally at this level. And, you know, we think that when you just look at the fundamentals, you know, broadly speaking, you know, we’re not concerned about, you know, the ingredients and single use side of this business, you know, continuing to run at these rates. We talked about coming into the year, Q1 is the low point from a seasonality standpoint, and, we’ll see more business days and things as we move into the rest of the year, even second quarter. You’ll see a meaningful step up here sequentially just based off of those seasonality factors and business days.

But the order book is very, very strong. And, you know, I think we’re quite confident about the outlook of that platform for 2025 and beyond.

Mike Ryskin, Analyst, Bank of America: You just touched on the order book, sounds like visibility remains pretty solid. Is there really besides what we talked about in in the controlled environment, any sign that bioprocessing is not sort of back to normal operating environment?

Michael Stubblefield, President and CEO, Avantor: It’s been a very choppy last couple years. So lead times for our platform are roughly two to three months. And that’s been in place now for, you know, well over a year as supply chains have normalized. We’ve seen order patterns for our customers as destocking has, you know, essentially, you know, been eliminated, you know, returned to normal in terms of they’re providing you orders, you know, respecting your lead times. And so when we think about visibility in that business, it’s, you know, current quarter, you know, as we sit here in the May, we’re starting to see orders flow into the third quarter as well.

And we look at it on a daily basis, and orders continue to outpace revenues as we move forward here. So visibility is within at least in that context of our lead times continues to be good. And the fundamentals continue to be quite strong.

Mike Ryskin, Analyst, Bank of America: The other question we’ve got on bioprocessing, and maybe this could be a broader pharma consumables or even Angie consumables question was, could there have been some pull forward in the first quarter from customers looking to get ahead of tariff hits, whether it’s pharma or CDMO, to stockpile more finished drug or even work in progress reagents, just to be able to relocate them to The US to get ahead of tariffs, imports from Ireland, things like that. Did you see any indication that there was any unusual order timing or patterns from your major customers?

Michael Stubblefield, President and CEO, Avantor: So I think the experience of COVID certainly taught us to say never say never, we don’t really have any indications that there was any pull forward. We watch these order rates daily, We see shipping patterns, and there was really nothing that has stood out to us. And even when you look at moving from Q4 into Q1 at both a product category level or a customer level, I think from what we can see, nothing stood out to us as unusual and none of the analytics that we run have also haven’t flagged anything that has caught our attention.

Mike Ryskin, Analyst, Bank of America: Okay, moving to some of the other end markets and maybe customer groups, I want to talk about, you know, within LSS, especially more of the traditional distribution side of the business or the legacy VWR, some that prefer the more commoditized products. How do you feel like the, you know, the competitive landscape and the share gains and share losses have gone in that market? You know, there’s always a little bit of tension between you and the other large distributor in the tool space. So just have you noticed any change in that environment? So I’d

Michael Stubblefield, President and CEO, Avantor: say a few things here. Firstly, we’ve highlighted and we’ve talked a lot about the macro environment, and the impact of some of the policy changes around, you know, NIH funding, has impacted our academic and government sector, you know, some of the market or capital market related headwinds around, biotech and then just some of the inflationary and GDP driven headwinds impacting some of the other end markets. The fact that the growth has been more challenging to come by has created you know, a more competitive environment, I would say, just broadly speaking. And it’s important to note that it’s not just a duopoly here. It is a very fragmented, you know, space.

Yes, there are, you know, two large players in this space, but there’s also quite a number of important, you know, smaller regional players that are, you know, critical to meeting the collective needs of end markets. When we look at how these competitive dynamics are playing out at an account level, we see a few different things, you know, happening. We highlighted, you know, at least at a handful of accounts, some shifting of, you know, within categories at some of these accounts, but we also noted, you know, quite a number of new account wins and extensions. You know, so the, I would say the bar for our customers or potential customers to consider, you know, new suppliers has probably been lowered, you know, just given the macro environment. And, you know, when that plays out at your customer, it can be a little bit painful.

But on the other hand, you know, we see it as a significant opportunity for us as well to go into accounts where maybe we haven’t historically had such a strong presence. And so, you know, flipping them into the actions that we announced, I think it puts a spotlight on how important that is, and how bullish we are about the impact of the actions. We have an incredibly strong platform, we’re extremely well positioned with a great portfolio, a great supply chain, and we can provide an incredible set of services to this marketplace. And so under Corey’s leadership, he and the team are leaning in aggressively to drive activity at the account level, both to defend existing business as well as to go after new business. And when we think about the second quarter, we think there’ll be some, certainly incorporated into the guide is, you know, continuation of the current market conditions, but, you know, we anticipate being somewhere in that low single digit to flat, you know, range, and, you know, with the actions that we’re taking, you know, we see opportunity here to drive some upside over time.

Mike Ryskin, Analyst, Bank of America: Okay. You touched on these things in a couple different areas, but I want to ask about academic and government, maybe tie that into the instrument side of the portfolio. Obviously, lot of weakness there from US policy, NIH cuts, things like that. Remind us sort of what your exposure is to US academic and government, US NIH, what your expectation is for the rest of the year from that customer group?

Michael Stubblefield, President and CEO, Avantor: It’s about 5% of our enterprise revenues are linked to the higher education in The US region, and as I mentioned earlier, the policy changes and funding changes that were announced you know, happened to come out the day after, you know, we made our full year, you know, guidance. We didn’t have the opportunity to take that into account. The environment shortly thereafter, those announcements turned decisively, you know, cautionary, and, you know, when we look at an individual university account, it probably impacted them in two or three specific ways. You know, firstly, I think very naturally, you know, broad movement to preserve cash and optimize cash. And, you know, the easiest way to do that is to, you know, pull back on capital spending.

And so, you know, you’re not there to equipment and instrument, you know, softness comes from that dynamic of just preserving the cash that you’ve got in an uncertain funding environment. We also saw either a freeze or a pullback in hiring, which in a consumables driven model like Avantor has, we’re an activity driven business, meaning we need the lights to be on, we need scientists and labs doing research. That’s an important part of the growth algorithm. So, you know, a pullback in hiring or even, you know, layoffs, you know, can be a bit detrimental, it ultimately leads to fewer, you know, new programs getting started, which an important part of the model. And that does bring in the breadth of the portfolio, not just equipment and instruments, but also, you know, consumables.

So, you know, we saw, you know, general weakness across the board, and it happened pretty quickly after, you know, some of these changes were announced. And so, we’ve seen it stable, know, from February, March, April into May, you know, we haven’t really seen much change once we saw that initial step down. And so, you know, those rates have been factored into the outlook that we updated at the end of as part of our first quarter call.

Mike Ryskin, Analyst, Bank of America: So for ANG and US ANG for the rest of the year, you’re essentially assuming what you saw in March, April continues at that level throughout? We are. Okay. All right.

Michael Stubblefield, President and CEO, Avantor: No additional deterioration and conversely, upside either.

Mike Ryskin, Analyst, Bank of America: I want to talk a little bit about the cost actions you’ve announced, both more recently, just over the last couple of years. You’ve expanded your cost savings plan to 400,000,000 exiting 2027. Just sort of where are the areas where you’re able to take out the most cost? And how do you balance that between sort of staying nimble in this environment, make sure you’re not cutting too far? So a couple

Michael Stubblefield, President and CEO, Avantor: of things I think to highlight here. Firstly, this has been an important aspect of us being able to deliver on our margin, cash flow, and profitability targets last year as well as in the first quarter, and it does underscore I think the team’s ability to execute. We announced the original $300,000,000 program in connection with the new operating model, and there were a lot of costs that just fell out of the model when you went from three regions to just two business units. You take Brent’s finance function, for example, you no longer had three reporting segments, and now just two. And so you’re able to cut proportionally.

And that played out really across the organization. You know, coming off a number of years of high inflation, the procurement lever has been, you know, a really, you know, solid contributor to our targets over the last couple of years. And then we have made significant investments in our business. The last two or three years have all been record levels of investments in footprint optimizations and expansions, investments in digitization, robotics, automation, to help combat some of the inflationary factors that we see, then did enable, you know, significant, you know, rooftop consolidation and footprint optimization. We call it transformation for a reason and, you know, why it was playing out initially over a three year period.

And now as we’ve expanded it, you know, we’ve added another year to the program. We’re making significant investments to change the way work is getting done, to make it sustainable. All the while, we continue to invest at record levels to continue to grow the business and position us for sustained growth over the long term.

Mike Ryskin, Analyst, Bank of America: On the topic of some of those cost outs, you previously talked about a 20% or greater than 20% EBITDA margin, sort of longer term exit rate once some of the market uncertainty dies down. If anything, I think we’ve probably seen more market uncertainty since then. So how would you characterize your thoughts about that, you know, long term margin opportunity and the roadmap to get there? Yeah, so a couple

Michael Stubblefield, President and CEO, Avantor: of things. Firstly, the target of exceeding 20% is not really aspirational. Run at those levels before. And this is a really important part of the Avantor story is our ability to drive margin expansion with price over COGS, performance each year, growing proprietary content, you know, growth of our bioscience production segment is a nice contributor margin expansion. And then of course, the cost actions that we’re taking.

But we do have, you know, a significant footprint that in an environment where volumes are contracting can be And that’s what you’ve seen over the last couple of years. So volume growth is an important part of the story here. And we said coming into the year that we were targeting to exit at 20%, or taking into account our clinical services divestiture 19.6% on an adjusted basis, we expected to exit at those rates this year, and so that we could get most of the way there, you know, based on the self help actions that we’ve been driving, but that we did need to see, you know, some market recovery to help offset some of the absorption. Clearly, things have turned more cautionary since we got into the year, and so as we’ve updated our margin guide for the year, I think we’re centered on 18, we’ll see where we get on an exit rate, not likely to be in that mid-19s.

But over the long term, whether that’s in ’26 or ’27, as these markets normalize, I think the margin expansion part of this story is going to be an important one.

Mike Ryskin, Analyst, Bank of America: Okay, we’re almost out of time. So maybe just a quick closing question, Michael, as you look back at your lengthy tenure at Avantor, just sort of what do you think is still most underappreciated or misunderstood about the business?

Michael Stubblefield, President and CEO, Avantor: Look, the platform has come a long way. I highlighted where it was at when I started and kind of where we’re sitting here today. There’s a lot still to be done here. I would just reiterate our confidence in not only the strength, but also the resiliency of the platform, its positioning. And when I look at the segments and the capabilities that we have, the market needs a strong Avantor, both in the lab as well as in the production environment.

We have a terrific portfolio supply chain that allows us to deliver to our customers with confidence. We’re doing all the right things to drive top line growth. The team is incredibly introspective, and working hard to tweak the strategy you know, to ensure that even in a macro environment like we’re in, that you can still, you know, drive, you know, top line momentum. And of course, we are doing all the right things, you know, to continue to make the business more productive, with the self help cost actions that we’re taking.

Mike Ryskin, Analyst, Bank of America: Great. And with that, thanks everyone for joining us. We’re out of time. Michael, thank you. It’s been a pleasure.

Thank you. Look forward to

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