RADNOR, Pa., April 29, 2020 /PRNewswire/ -- Avantor, Inc.
(NYSE: AVTR), a leading global provider of mission critical
products and services to customers in the life sciences and
advanced technologies & applied materials industries, today
reported financial results for the first quarter ended March 31, 2020.
"The unprecedented global impact of the COVID-19 pandemic makes
Avantor's mission of setting science in motion to create a better
world more important now than ever before," said Michael Stubblefield, Chief Executive Officer at
Avantor. "Our commitment to supporting customers with the
mission-critical products and solutions they need to detect and
treat COVID-19 has not wavered since the pandemic emerged. We are
actively working to support their ongoing initiatives in testing,
vaccine and therapy development."
"Our strong first quarter results reflect the resiliency of our
business model. We executed well in a challenging environment and
delivered strong revenue and EBITDA growth, outstanding cash
generation and continued on the path of deleveraging our balance
sheet."
"I am extremely proud of all our associates around the world who
continue their tireless work serving our customers and living our
values every day," Stubblefield concluded.
First Quarter 2020
For the three months ended March 31,
2020, net sales were $1.52
billion, an increase of 2.6% compared to the first quarter
of 2019. Foreign currency translation had a negative impact
of approximately 1.5% resulting in organic sales growth of
4.1%. Net income increased to $47.0
million from a loss of $6.2
million in the comparable prior period. Adjusted EBITDA
increased 6% to $262.8 million, and
up 7% excluding foreign exchange translation impact.
Diluted GAAP EPS was $0.05
compared to a diluted GAAP loss per share of $0.59 for the comparable prior period, while
adjusted EPS increased 64% to $0.17.
Cash performance was strong as the company generated
$240.5 million of free cash flow, up
284% from the comparable prior period. This performance reflects
operational execution in working capital, reduced cash paid for
interest and taxes.
At March 31, 2020, adjusted net
leverage was 4.4x, down from 4.6x at December 31, 2019.
First Quarter 2020 - Segment Results
Management now uses Adjusted EBITDA to measure and evaluate the
internal operating performance of the Company's business segments.
Adjusted EBITDA is also our segment reporting profitability measure
under generally accepted accounting principles.
Americas
- Net sales were $899.1 million, a
reported increase of 4.9%, as compared to $857.3 million in the first quarter of 2019.
Organic sales increased 5.4% driven by high-single digit organic
growth in Biopharma and mid-single digit organic growth in Advanced
Technologies & Applied Materials end markets.
- Adjusted EBITDA margin increased 170 basis points to 21.1%, as
compared to 19.4% in the first quarter of 2019.
Europe
- Net sales were $544.0 million,
flat as compared to $542.1 million in
the first quarter of 2019. Organic sales increased 3.3% driven by
high-single digit organic growth in Biopharma and Healthcare end
markets.
- Adjusted EBITDA margin increased 40 basis points to 16.9%, as
compared to 16.5% in the first quarter of 2019.
AMEA
- Net sales were $75.9 million, a
reported decrease of 5.9%, as compared to $80.7 million in the first quarter of 2019.
Organic sales declined 5.1% driven by the impact of COVID-19.
- Adjusted EBITDA margin decreased 540 basis points to 17.6%, as
compared to 23.0% in the first quarter of 2019.
Conference Call
Avantor will host a conference call to discuss its results
today, April 29, at 5:00 p.m. ET. To hear the live webcast, please
see the Investors section of the Company's website at
www.avantorsciences.com. Or you may listen to the call by dialing
(866) 211-4132 (domestic) or (647) 689-6615 (international) and use
the conference code 3889814. Prior to the webcast, a presentation
relating to the earnings call will be available on the Company's
website.
Following the live webcast, an audio archive of the webcast and
the slide presentation will be available under
https://ir.avantorsciences.com/investors/events-and-presentations/.
About Avantor
Avantor is a leading global provider of mission critical
products and services to customers in the life sciences and
advanced technologies & applied materials industries. We
operate in more than 30 countries and deliver an extensive
portfolio of products and services. We set science in motion to
create a better world. For more information, please visit
www.avantorsciences.com.
Use of non-GAAP Financial Measures
To evaluate our performance, we monitor a number of key
indicators. As appropriate, we supplement our results of operations
determined in accordance with U.S. generally accepted accounting
principles ("GAAP") with certain non-GAAP financial measurements
that we believe are useful to investors, creditors and others in
assessing our performance. These measures should not be considered
in isolation or as a substitute for reported GAAP results because
they may include or exclude certain items as compared to similar
GAAP-based measures, and such measures may not be comparable to
similarly-titled measures reported by other companies. Rather,
these measures should be considered as an additional way of viewing
aspects of our operations that provide a more complete
understanding of our business. We strongly encourage investors to
review our consolidated financial statements included in reports
filed with the SEC in their entirety and not rely solely on any
one, single financial measurement or communication.
The non-GAAP financial measures used in this press release are
organic sales, Adjusted EBITDA,
adjusted net income, adjusted EPS, adjusted net leverage, free cash
flow and unlevered free cash flow.
- Organic sales eliminate from our reported net sales the impacts
of earnings from any acquired or disposed businesses and changes in
foreign currency exchange rates. We believe that this measurement
is useful to investors as a way to measure and evaluate our
underlying commercial operating performance consistently across our
segments and the periods presented. This measurement is used by our
management for the same reason.
- Adjusted EBITDA is used by investors to measure and evaluate
our operating performance exclusive of interest expense, income tax
expense, depreciation, amortization and certain other adjustments.
We believe that this measurement is useful to investors as a way to
analyze the underlying trends in our core business consistently
across the periods presented. This measurement is used by our
management for the same reason.
- Adjusted EPS is our diluted earnings per share adjusted to
normalize the number of shares outstanding for our position
immediately after our initial public offering and to exclude
amortization and various other items on an after-tax basis. The
normalization of shares reflects for all periods (i) the total
number of shares of common stock outstanding following our initial
public offering, as well as (ii) the dilutive effect of the assumed
exercise or conversion of instruments following our initial public
offering (including our 6.250% Series A mandatory convertible
preferred stock assuming the lowest rate of conversion into common
stock). We believe that this measurement is useful to investors as
an additional way to analyze the underlying trends in our business
consistently across the periods presented. This measurement is used
by our management for the same reason.
- Adjusted net leverage is equal to our gross debt, reduced by
our cash and cash equivalents, divided by our trailing 12-month
Adjusted EBITDA (excluding stock-based compensation expense and
including the run-rate effect of synergies). We believe that this
measurement is useful to investors as a way to evaluate and measure
the Company's capital allocation strategies and the underlying
trends in the business. This measurement is used by our management
for the same reason.
- Free cash flow and unlevered free cash flow are equal to our
cash flow from operating activities, excluding capital expenditures
and, in the case of unlevered free cash flow, excluding our cash
interest net of tax. We believe that these measurements are useful
to investors as they provide a view on the Company's ability to
generate cash for use in financing or other investment activities.
These measurements are used by management for the same reason.
Reconciliations of these non-GAAP financial measures to the most
directly comparable GAAP financial measures are included in the
tables accompanying this release.
Forward-Looking and Cautionary Statements
This press release contains forward-looking statements. All
statements other than statements of historical fact included in
this press release 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," "project,"
"projection," "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.
Factors that could contribute to these risks, uncertainties and
assumptions include, but are not limited to, the factors described
in "Risk Factors" in our most recent Annual Report on Form 10-K and
our Form 10-Q that will be filed later today, as such risk factors
may be updated from time to time in our periodic filings with the
SEC.
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 press
release. 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.
Avantor, Inc. and
subsidiaries
|
Unaudited
condensed consolidated statements of operations
|
|
(in millions,
except per share data)
|
Three months
ended
March 31,
|
2020
|
|
2019
|
Net sales
|
$
|
1,519.0
|
|
|
$
|
1,480.1
|
|
Cost of
sales
|
1,017.1
|
|
|
1,004.9
|
|
Gross
profit
|
501.9
|
|
|
475.2
|
|
Selling, general and
administrative expenses
|
343.5
|
|
|
337.6
|
|
Operating
income
|
158.4
|
|
|
137.6
|
|
Interest
expense
|
(94.5)
|
|
|
(128.6)
|
|
Other income
(expense), net
|
0.8
|
|
|
(5.1)
|
|
Income before income
taxes
|
64.7
|
|
|
3.9
|
|
Income tax
expense
|
(17.7)
|
|
|
(10.1)
|
|
Net income
(loss)
|
$
|
47.0
|
|
|
$
|
(6.2)
|
|
Accumulation of yield
on preferred stock
|
(16.1)
|
|
|
(71.8)
|
|
Net income (loss)
available to common stockholders
|
$
|
30.9
|
|
|
$
|
(78.0)
|
|
|
|
|
|
Earnings (loss) per
share:
|
|
|
|
Basic
|
$
|
0.05
|
|
|
$
|
(0.59)
|
|
Diluted
|
$
|
0.05
|
|
|
$
|
(0.59)
|
|
Weighted average
shares outstanding:
|
|
|
|
Basic
|
573.7
|
|
|
132.8
|
|
Diluted
|
581.3
|
|
|
132.8
|
|
Avantor, Inc. and
subsidiaries
|
Unaudited
condensed consolidated balance sheets
|
|
(in
millions)
|
March 31,
2020
|
|
December 31,
2019
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
346.3
|
|
|
$
|
186.7
|
|
Accounts receivable,
net
|
1,041.1
|
|
|
988.8
|
|
Inventory
|
686.1
|
|
|
711.2
|
|
Other current
assets
|
123.1
|
|
|
134.8
|
|
Total current
assets
|
2,196.6
|
|
|
2,021.5
|
|
Property, plant and
equipment, net
|
556.0
|
|
|
557.0
|
|
Other intangible
assets, net
|
4,097.7
|
|
|
4,220.2
|
|
Goodwill
|
2,736.4
|
|
|
2,769.4
|
|
Other
assets
|
199.5
|
|
|
205.2
|
|
Total
assets
|
$
|
9,786.2
|
|
|
$
|
9,773.3
|
|
Liabilities and
equity
|
|
|
|
Current
liabilities:
|
|
|
|
Current portion of
debt
|
$
|
14.3
|
|
|
$
|
93.5
|
|
Accounts
payable
|
610.9
|
|
|
560.2
|
|
Employee-related
liabilities
|
114.0
|
|
|
114.3
|
|
Accrued
interest
|
135.0
|
|
|
74.2
|
|
Other current
liabilities
|
252.4
|
|
|
232.3
|
|
Total current
liabilities
|
1,126.6
|
|
|
1,074.5
|
|
Debt, net of current
portion
|
5,040.4
|
|
|
5,023.0
|
|
Deferred income tax
liabilities
|
767.4
|
|
|
785.4
|
|
Other
liabilities
|
411.7
|
|
|
428.2
|
|
Total
liabilities
|
7,346.1
|
|
|
7,311.1
|
|
Stockholders'
equity:
|
|
|
|
Mandatory convertible
preferred stock including paid-in
capital
|
1,003.7
|
|
|
1,003.7
|
|
Common stock
including paid-in capital
|
1,748.0
|
|
|
1,748.1
|
|
Accumulated
deficit
|
(158.3)
|
|
|
(203.7)
|
|
Accumulated other
comprehensive loss
|
(153.3)
|
|
|
(85.9)
|
|
Total stockholders'
equity
|
2,440.1
|
|
|
2,462.2
|
|
Total liabilities and
equity
|
$
|
9,786.2
|
|
|
$
|
9,773.3
|
|
Avantor, Inc. and
subsidiaries
|
Unaudited
condensed consolidated statements of cash flows
|
|
(in
millions)
|
Three months
ended
March 31,
|
2020
|
|
2019
|
Cash flows from
operating activities:
|
|
|
|
Net income
(loss)
|
$
|
47.0
|
|
|
$
|
(6.2)
|
|
Reconciling
adjustments:
|
|
|
|
Depreciation and
amortization
|
96.5
|
|
|
98.3
|
|
Stock-based
compensation expense
|
8.4
|
|
|
4.8
|
|
Provision for
accounts receivable and inventory
|
13.6
|
|
|
7.7
|
|
Deferred income tax
benefit
|
(4.2)
|
|
|
(21.5)
|
|
Amortization of
deferred financing costs
|
6.9
|
|
|
10.4
|
|
Foreign currency
remeasurement loss
|
6.7
|
|
|
7.2
|
|
Changes in assets and
liabilities:
|
|
|
|
Accounts
receivable
|
(80.1)
|
|
|
(54.2)
|
|
Inventory
|
5.3
|
|
|
(41.2)
|
|
Accounts
payable
|
67.0
|
|
|
5.4
|
|
Accrued
interest
|
60.8
|
|
|
59.7
|
|
Other assets and
liabilities
|
24.5
|
|
|
5.5
|
|
Other, net
|
0.7
|
|
|
(0.9)
|
|
Net cash provided by
operating activities
|
253.1
|
|
|
75.0
|
|
Cash flows from
investing activities:
|
|
|
|
Capital
expenditures
|
(12.6)
|
|
|
(12.4)
|
|
Other
|
0.7
|
|
|
4.5
|
|
Net cash used in
investing activities
|
$
|
(11.9)
|
|
|
$
|
(7.9)
|
|
Avantor, Inc. and
subsidiaries
|
Unaudited
condensed consolidated statements of cash flows
(continued)
|
|
(in
millions)
|
Three months
ended
March 31,
|
2020
|
|
2019
|
Cash flows from
financing activities:
|
|
|
|
Debt
borrowings
|
$
—
|
|
|
$
3.6
|
|
Debt
repayments
|
(63.8)
|
|
|
(109.7)
|
|
Payments of dividends
on preferred stock
|
(16.1)
|
|
|
—
|
|
Other
|
6.8
|
|
|
—
|
|
Net cash used in
financing activities
|
(73.1)
|
|
|
(106.1)
|
|
Effect of currency
rate changes on cash
|
(8.5)
|
|
|
(1.8)
|
|
Net change in cash
and cash equivalents
|
159.6
|
|
|
(40.8)
|
|
Cash, cash
equivalents and restricted cash, beginning of period
|
189.3
|
|
|
187.7
|
|
Cash, cash
equivalents and restricted cash, end of period
|
$
|
348.9
|
|
|
$
|
146.9
|
|
|
|
|
|
|
|
|
|
Avantor, Inc. and
subsidiaries
|
Reconciliations of
non-GAAP measures
|
|
(in
millions)
|
Three months
ended
March 31,
|
2020
|
|
2019
|
Net income
(loss)
|
$
|
47.0
|
|
|
$
|
(6.2)
|
|
Amortization
|
77.4
|
|
|
78.6
|
|
Net foreign currency
loss from financing activities
|
1.6
|
|
|
6.2
|
|
Restructuring and
severance charges
|
1.2
|
|
|
5.5
|
|
VWR transaction,
integration and planning expenses
|
3.6
|
|
|
6.3
|
|
Other
|
0.7
|
|
|
(0.8)
|
|
Income tax benefit
applicable to pretax adjustments
|
(19.6)
|
|
|
(21.4)
|
|
Adjusted Net
Income
|
111.9
|
|
|
68.2
|
|
Interest
expense
|
94.5
|
|
|
128.6
|
|
Depreciation
|
19.1
|
|
|
19.7
|
|
Income tax provision
applicable to Adjusted Net Income
|
37.3
|
|
|
31.5
|
|
Adjusted
EBITDA
|
$
262.8
|
|
|
$
248.0
|
|
Avantor, Inc. and
subsidiaries
|
Reconciliations of
non-GAAP measures (continued)
|
Earnings per
share
|
|
(shares in
millions)
|
Three months
ended
March 31,
|
2020
|
|
2019
|
Diluted earnings
(loss) per share (GAAP)
|
$
|
0.05
|
|
|
$
|
(0.59)
|
|
Dilutive impact of
convertible instruments
|
0.02
|
|
|
0.57
|
|
Normalization*
|
—
|
|
|
0.01
|
|
Fully diluted
earnings (loss) per share (non-GAAP)
|
0.07
|
|
|
(0.01)
|
|
Amortization
|
0.12
|
|
|
0.12
|
|
Net foreign currency
loss from financing activities
|
—
|
|
|
0.01
|
|
Restructuring and
severance charges
|
—
|
|
|
0.01
|
|
VWR transaction,
integration and planning expenses
|
0.01
|
|
|
0.01
|
|
Other
|
—
|
|
|
—
|
|
Income tax benefit
applicable to pretax adjustments
|
(0.03)
|
|
|
(0.03)
|
|
Adjusted EPS
(non-GAAP)
|
$
|
0.17
|
|
|
$
|
0.11
|
|
|
|
|
|
Weighted average
shares outstanding:
|
|
|
|
Diluted
(GAAP)
|
581.3
|
|
|
132.8
|
|
Incremental shares
excluded for GAAP
|
73.9
|
|
|
130.2
|
|
Normalization*
|
(12.5)
|
|
|
379.7
|
|
Share count for
Adjusted EPS (non-GAAP)
|
642.7
|
|
|
642.7
|
|
|
|
*
|
Adjusted EPS reflects
the share count of 642.7, the proforma fully diluted share
count
that was determined
immediately following our May 2019 initial public
offering. That
share count assumes
the mandatory convertible preferred stock is converted at the
lowest conversion
ratio and does not reflect the vesting or exercise of any stock-based
awards following the
IPO.
|
Avantor, Inc. and
subsidiaries
|
Reconciliations of
non-GAAP measures (continued)
|
Free cash flow
and unlevered free cash flow
|
|
(in
millions)
|
Three months
ended
March 31,
|
2020
|
|
2019
|
Net cash provided by
operating activities
|
$
|
253.1
|
|
|
$
|
75.0
|
|
Capital
expenditures
|
(12.6)
|
|
|
(12.4)
|
|
Free cash flow
(non-GAAP)
|
240.5
|
|
|
62.6
|
|
Cash interest (net of
tax)1
|
20.2
|
|
|
43.5
|
|
Unlevered free cash
flow (non-GAAP)
|
$
|
260.7
|
|
|
$
|
106.1
|
|
|
1 Cash interest tax-effected
using tax rates of 26% for the three months ended March 31, 2020
and 2019.
|
Net
leverage
|
|
(dollars in
millions)
|
March 31,
2020
|
Total debt,
gross
|
$
|
5,181.2
|
|
Less cash and cash
equivalents
|
(346.3)
|
|
|
$
|
4,834.9
|
|
|
|
Trailing twelve
months Adjusted EBITDA
|
$
|
1,046.0
|
|
Trailing twelve
months ongoing stock-based compensation expense
|
35.8
|
|
Pro forma adjustment
for projected synergies
|
20.3
|
|
|
$
|
1,102.1
|
|
|
|
Net leverage
(non-GAAP)
|
4.4
|
x
|
Avantor, Inc. and
subsidiaries
|
Reconciliations of
non-GAAP measures (continued)
|
Net
sales
|
|
(in
millions)
|
March 31,
|
|
Reconciliation of
reported change to
organic change
|
|
Reported
change
|
|
Foreign
currency
impact
|
|
Organic
|
2020
|
|
2019
|
|
|
|
Three months
ended:
|
|
|
|
|
|
|
|
|
|
Americas
|
$
|
899.1
|
|
|
$
|
857.3
|
|
|
$
|
41.8
|
|
|
$
|
(4.5)
|
|
|
$
|
46.3
|
|
Europe
|
544.0
|
|
|
542.1
|
|
|
1.9
|
|
|
(15.8)
|
|
|
17.7
|
|
AMEA
|
75.9
|
|
|
80.7
|
|
|
(4.8)
|
|
|
(0.7)
|
|
|
(4.1)
|
|
Total
|
$
|
1,519.0
|
|
|
$
|
1,480.1
|
|
|
$
|
38.9
|
|
|
$
|
(21.0)
|
|
|
$
|
59.9
|
|
Media Contact
Allison Hosak
Senior Vice President, Global Communications
Avantor
908-329-7281
Allison.Hosak@Avantorsciences.com
Investor Relations Contact
Tommy J. Thomas, CPA
Vice President, Investor Relations
Avantor
781-375-8051
Tommy.Thomas@Avantorsciences.com
View original
content:http://www.prnewswire.com/news-releases/avantor-reports-first-quarter-2020-results-301049637.html
SOURCE Avantor and Financial News