- Net sales of $1.95 billion,
increase of 9.2%; organic net sales growth of 5.1%
- Net income of $190.4 million;
Adjusted EBITDA of $423.1
million
- Diluted GAAP EPS of $0.28;
adjusted EPS of $0.38
- Operating cash flow of $152.2
million; free cash flow of $127.7
million
- Adjusted net leverage reduced to 4.0X, in line with long-term
target range
RADNOR, Pa., April 28, 2022 /PRNewswire/ -- Avantor, Inc.
(NYSE: AVTR), a leading global provider of mission-critical
products and services to customers in the life sciences, advanced
technologies and applied materials industries, today reported
financial results for the quarter ended March 31, 2022.
"Avantor kicked off 2022 with another strong quarter across all
key financial metrics. Despite a challenging macroeconomic
environment, we continued our track record of execution by
delivering core organic growth of 7.3% and approximately 140 basis
points in Adjusted EBITDA margin expansion. Ongoing momentum in our
end markets is encouraging, particularly in Biopharma, where we
realized more than 20% growth in bioproduction," said Michael Stubblefield, President and Chief
Executive Officer of Avantor.
"We are successfully advancing our long-term growth strategy by
consistently meeting the evolving needs of our global customer base
and enabling scientific breakthroughs that create value for all
stakeholders. The investments we made during the quarter in
manufacturing capacity and innovation, as well as the strong
contributions we are realizing from our three recent acquisitions
are fortifying our position as a life sciences leader. This
continued strong performance gives us increased confidence in our
full year outlook and we are raising our adjusted EPS guidance
range," Stubblefield concluded.
First Quarter 2022
For the three months ended March 31,
2022, net sales were $1.95
billion, an increase of 9.2% compared to the first quarter
of 2021. Foreign currency translation had an unfavorable impact of
2.5% with M&A adding 6.6%, resulting in organic sales growth of
5.1%. Net income increased to $190.4
million from $164.0 million in
the first quarter of 2021 and adjusted net income was up 14.7% from
the prior year. Adjusted EBITDA increased 16.5% to $423.1 million, and Adjusted EBITDA margin
expanded by approximately 140 basis points to 21.7%, as compared to
20.3% in the comparable prior period.
Diluted earnings per share on a GAAP basis was $0.28, while adjusted EPS was $0.38.
Operating cash flow in the quarter was $152.2 million, while free cash flow in the
quarter was $127.7 million.
Adjusted net leverage was 4.0X as of March 31, 2022, down from 4.2X as of December 31, 2021, and in line with our target
leverage of 2-4X.
First Quarter 2022 – Segment Results
Management 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 $1,143.4 million,
a reported increase of 10.5%, as compared to $1,035.2 million in the first quarter of 2021.
Organic sales increased 6.0%.
- Adjusted EBITDA margin increased approximately 140 basis points
to 25.7%, as compared to 24.3% in the comparable prior period.
Europe
- Net sales were $680.4 million, a
reported increase of 4.6%, as compared to $650.4 million in the first quarter of 2021.
Organic sales increased 2.6%.
- Adjusted EBITDA margin increased approximately 90 basis points
to 21.1%, as compared to 20.2% in the comparable prior period.
AMEA
- Net sales were $126.6 million, a
reported increase of 26.6%, as compared to $100.0 million in the first quarter of 2021.
Organic sales increased 11.7%.
- Adjusted EBITDA margin increased approximately 50 basis points
to 23.1%, as compared to 22.6% in the comparable prior period.
Conference Call
Avantor will host a conference call to discuss its results
tomorrow, April 29, at 7:30 a.m. Eastern Daylight Time. A live webcast
can be accessed on the investors section of our website. Or you may
listen to the call by dialing (844) 200 6205 (domestic) or (929)
526 1599 (international) and use the conference code 889684. Prior
to the webcast, a presentation relating to the earnings call will
be available on the Company's website.
Following the live webcast, a replay of the webcast and the
slide presentation will be available at
https://ir.avantorsciences.com/investors/news-and-events/events/default.aspx.
About Avantor
Avantor®, a Fortune 500 company, is a leading global
provider of mission-critical products and services to customers in
the biopharma, healthcare, education & government, and advanced
technologies & applied materials industries. Our portfolio is
used in virtually every stage of the most important research,
development and production activities in the industries we serve.
Our global footprint enables us to serve more than 225,000 customer
locations and gives us extensive access to research laboratories
and scientists in more than 180 countries. 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
sales growth on an organic basis, sales growth on a core organic
basis, Adjusted EBITDA, adjusted net income, adjusted EPS, adjusted
net leverage and free cash flow.
- Sales growth on an organic basis eliminates from our reported
net sales growth the impacts of earnings from any acquired or
disposed businesses and changes in foreign currency exchange rates.
Sales growth on a core organic basis eliminates from our organic
growth the impacts of any COVID-19 related net sales. We believe
that these measurements are useful as a way to measure and evaluate
our underlying commercial operating performance consistently across
our segments and the periods presented.
- Adjusted EBITDA is 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 as a way to analyze the
underlying trends in our core business consistently across the
periods presented.
- Adjusted net income is our net income or loss first adjusted
for the following items: (i) amortization of acquired intangible
assets, (ii) net foreign currency remeasurement gains or losses
relating to financing activities, (iii) losses on extinguishment of
debt, (iv) other costs or credits that are either isolated or
cannot be expected to recur with any regularity or predictability.
From this amount, we then add or subtract an assumed incremental
income tax impact on the above noted pre-tax adjustments, using
estimated tax rates, to arrive at Adjusted Net Income. We believe
that this measurement is useful as a way to analyze the business
consistently across the periods presented.
- Beginning with the quarter ended March
31, 2022, Adjusted EPS is our adjusted net income divided by
our diluted GAAP weighted average share count. Prior to the first
quarter of 2022, Adjusted EPS was our adjusted net income divided
by the normalized shares outstanding. The normalized shares
outstanding reflected for all periods (i) the total number of
shares of common stock outstanding following our initial public
offering, plus (ii) the dilutive effect of the assumed exercise or
conversion of instruments (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 an
additional way to analyze the underlying trends in our business
consistently across the periods presented.
- 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 expected run-rate effect of cost synergies and the
incremental results of completed acquisitions as if those
acquisitions had occurred on the first day of the trailing 12-month
period). We believe that this measurement is a useful way to
evaluate and measure the Company's capital allocation strategies
and the underlying trends in the business.
- Free cash flow is equal to our cash flow from operating
activities, excluding acquisition-related costs paid in the period,
less capital expenditures. We believe that this measurement is
useful as it provides a view on the Company's ability to generate
cash for use in financing or investment activities.
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
quarterly report on Form 10-Q, 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,
|
2022
|
|
2021
|
Net sales
|
$
1,950.4
|
|
$
1,785.6
|
Cost of
sales
|
1,260.5
|
|
1,172.8
|
Gross
profit
|
689.9
|
|
612.8
|
Selling, general and
administrative expenses
|
382.9
|
|
346.5
|
Operating
income
|
307.0
|
|
266.3
|
Interest
expense
|
(64.8)
|
|
(51.5)
|
Loss on
extinguishment of debt
|
(1.8)
|
|
(5.2)
|
Other income,
net
|
1.4
|
|
1.8
|
Income before income
taxes
|
241.8
|
|
211.4
|
Income tax
expense
|
(51.4)
|
|
(47.4)
|
Net income
|
190.4
|
|
164.0
|
Accumulation of yield
on preferred stock
|
(16.1)
|
|
(16.1)
|
Net income available
to common stockholders
|
$
174.3
|
|
$
147.9
|
|
|
|
|
Earnings per
share:
|
|
|
|
Basic
|
$
0.29
|
|
$
0.25
|
Diluted
|
$
0.28
|
|
$
0.25
|
Weighted average
shares outstanding:
|
|
|
|
Basic
|
610.1
|
|
581.1
|
Diluted
|
681.3
|
|
589.1
|
|
|
|
Avantor, Inc. and
subsidiaries
|
Unaudited
condensed consolidated balance sheets
|
|
(in
millions)
|
March 31,
2022
|
|
December 31,
2021
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
283.6
|
|
$
301.7
|
Accounts receivable,
net
|
1,345.4
|
|
1,222.1
|
Inventory
|
896.0
|
|
872.0
|
Other current
assets
|
81.3
|
|
81.4
|
Total current
assets
|
2,606.3
|
|
2,477.2
|
Property, plant and
equipment, net
|
699.9
|
|
705.5
|
Other intangible
assets, net
|
5,013.0
|
|
5,140.3
|
Goodwill
|
5,265.2
|
|
5,341.1
|
Other
assets
|
252.0
|
|
233.1
|
Total
assets
|
$
13,836.4
|
|
$
13,897.2
|
Liabilities and
stockholders' equity
|
|
|
|
Current
liabilities:
|
|
|
|
Current portion of
debt
|
$
44.7
|
|
$
45.2
|
Accounts
payable
|
818.2
|
|
755.1
|
Employee-related
liabilities
|
134.9
|
|
199.7
|
Accrued
interest
|
39.8
|
|
49.8
|
Other current
liabilities
|
409.5
|
|
401.0
|
Total current
liabilities
|
1,447.1
|
|
1,450.8
|
Debt, net of current
portion
|
6,815.8
|
|
6,978.0
|
Deferred income tax
liabilities
|
854.4
|
|
913.0
|
Other
liabilities
|
361.1
|
|
358.4
|
Total
liabilities
|
9,478.4
|
|
9,700.2
|
Stockholders'
equity:
|
|
|
|
Mandatory convertible
preferred stock including paid-in capital
|
1,003.7
|
|
1,003.7
|
Common stock including
paid-in capital
|
2,749.3
|
|
2,752.6
|
Accumulated
earnings
|
674.3
|
|
483.9
|
Accumulated other
comprehensive loss
|
(69.3)
|
|
(43.2)
|
Total stockholders'
equity
|
4,358.0
|
|
4,197.0
|
Total liabilities and
stockholders' equity
|
$
13,836.4
|
|
$
13,897.2
|
|
|
|
Avantor, Inc. and
subsidiaries
|
Unaudited
condensed consolidated statements of cash flows
|
|
(in
millions)
|
Three months
ended March 31,
|
2022
|
|
2021
|
Cash flows from
operating activities:
|
|
|
|
Net income
|
$
190.4
|
|
$
164.0
|
Reconciling
adjustments:
|
|
|
|
Depreciation and
amortization
|
114.5
|
|
89.0
|
Stock-based
compensation expense
|
10.7
|
|
11.4
|
Provision for accounts
receivable and inventory
|
15.9
|
|
7.9
|
Deferred income tax
(benefit)
|
(22.3)
|
|
(5.3)
|
Amortization of
deferred financing costs
|
4.4
|
|
3.9
|
Loss on extinguishment
of debt
|
1.8
|
|
5.2
|
Foreign currency
remeasurement (gain) loss
|
(1.8)
|
|
2.7
|
Changes in assets and
liabilities:
|
|
|
|
Accounts
receivable
|
(137.3)
|
|
(106.8)
|
Inventory
|
(46.4)
|
|
(54.3)
|
Accounts
payable
|
73.2
|
|
30.3
|
Accrued
interest
|
(10.0)
|
|
(17.7)
|
Other assets and
liabilities
|
(46.2)
|
|
(5.9)
|
Other, net
|
5.3
|
|
2.5
|
Net cash provided by
operating activities
|
152.2
|
|
126.9
|
Cash flows from
investing activities:
|
|
|
|
Capital
expenditures
|
(24.5)
|
|
(15.1)
|
Cash paid for
acquisitions, net of cash acquired
|
(15.3)
|
|
—
|
Other
|
0.3
|
|
0.5
|
Net cash used in
investing activities
|
(39.5)
|
|
(14.6)
|
Cash flows from
financing activities:
|
|
|
|
Debt
borrowings
|
—
|
|
—
|
Debt
repayments
|
(111.9)
|
|
(208.6)
|
Payments of debt
refinancing fees and premiums
|
—
|
|
—
|
Payments of dividends
on preferred stock
|
(16.1)
|
|
(16.1)
|
Proceeds received from
exercise of stock options
|
5.7
|
|
19.9
|
Shares repurchased to
satisfy employee tax obligations for vested stock-based
awards
|
(4.9)
|
|
(16.2)
|
Net cash used in
financing activities
|
(127.2)
|
|
(221.0)
|
Effect of currency
rate changes on cash
|
(4.2)
|
|
(5.4)
|
Net change in cash,
cash equivalents and restricted cash
|
(18.7)
|
|
(114.1)
|
Cash, cash
equivalents and restricted cash, beginning of period
|
327.1
|
|
289.2
|
Cash, cash
equivalents and restricted cash, end of period
|
$
308.4
|
|
$
175.1
|
|
|
|
Avantor, Inc. and
subsidiaries
|
Reconciliations of
non-GAAP measures
|
|
(in
millions)
|
Three months
ended March 31,
|
2022
|
|
2021
|
Net income
|
$
190.4
|
|
$
164.0
|
Amortization
|
92.2
|
|
68.0
|
Loss on
extinguishment of debt
|
1.8
|
|
5.2
|
Net foreign currency
loss from financing activities
|
0.1
|
|
0.8
|
Other stock-based
compensation (benefit) expense
|
(1.3)
|
|
0.6
|
Acquisition-related
expenses
|
—
|
|
3.0
|
Integration-related
expenses1
|
3.9
|
|
—
|
Purchase accounting
adjustments2
|
(4.4)
|
|
—
|
Restructuring and
severance charges3
|
1.9
|
|
1.6
|
Income tax (benefit)
applicable to pretax adjustments
|
(25.8)
|
|
(17.7)
|
Adjusted Net
income
|
258.8
|
|
225.5
|
Interest
expense
|
64.8
|
|
51.5
|
Depreciation
|
22.3
|
|
21.0
|
Income tax provision
applicable to Adjusted Net income
|
77.2
|
|
65.1
|
Adjusted
EBITDA
|
$
423.1
|
|
$
363.1
|
|
|
1.
|
Represents
non-recurring direct costs incurred with third parties to integrate
acquired companies. These expenses represent incremental costs and
are unrelated to normal operations of our business. Integration
expenses are incurred over a pre-defined integration period
specific to each acquisition.
|
2.
|
Represents the
non-cash reduction of contingent consideration related to the
Ritter acquisition.
|
3.
|
Reflects the
incremental expenses incurred in the period related to initiatives
to increase profitability and productivity. Typical costs included
in this caption are employee severance, site-related exit costs,
and contract termination costs.
|
|
|
|
Avantor, Inc. and
subsidiaries
|
Reconciliations of
non-GAAP measures (continued)
|
|
Earnings per
share
|
|
(shares in
millions)
|
Three months
ended March 31,
|
2022
|
|
2021
|
Diluted earnings per
share (GAAP)
|
$
0.28
|
|
$
0.25
|
Dilutive impact of
convertible instruments
|
—
|
|
0.01
|
Fully diluted earnings
per share (non-GAAP)
|
0.28
|
|
0.26
|
Amortization
|
0.14
|
|
0.11
|
Loss on
extinguishment of debt
|
—
|
|
0.01
|
Net foreign currency
loss from financing activities
|
—
|
|
—
|
Other stock-based
compensation (benefit) expense
|
—
|
|
—
|
Acquisition-related
expenses
|
—
|
|
—
|
Integration-related
expenses
|
0.01
|
|
—
|
Purchase accounting
adjustments
|
(0.01)
|
|
—
|
Restructuring and
severance charges
|
—
|
|
—
|
Income tax (benefit)
applicable to pretax adjustments
|
(0.04)
|
|
(0.03)
|
Adjusted EPS
(non-GAAP)
|
$
0.38
|
|
$
0.35
|
|
|
|
|
Weighted average
shares outstanding:
|
|
|
|
Diluted
(GAAP)
|
681.3
|
|
589.1
|
Incremental shares
excluded for GAAP
|
—
|
|
62.9
|
Normalization
|
—
|
|
(9.3)
|
Share count for
Adjusted EPS (non-GAAP)1
|
681.3
|
|
642.7
|
|
|
1.
|
Beginning with the
quarter ended March 31, 2022, we have conformed our Adjusted EPS
share count to reflect our diluted GAAP share count.
|
|
|
|
Avantor, Inc. and
subsidiaries
|
Reconciliations of
non-GAAP measures (continued)
|
|
Free cash
flow
|
|
(in
millions)
|
Three months
ended March 31,
|
2022
|
|
2021
|
Net cash provided by
operating activities
|
$
152.2
|
|
$
126.9
|
Capital
expenditures
|
(24.5)
|
|
(15.1)
|
Free cash flow
(non-GAAP)
|
$
127.7
|
|
$
111.8
|
|
|
Adjusted net
leverage
|
|
(dollars in
millions)
|
March 31,
2022
|
Total debt,
gross
|
$
6,943.9
|
Less cash and cash
equivalents
|
(283.6)
|
|
$
6,660.3
|
|
|
Trailing twelve
months Adjusted EBITDA*
|
$
1,598.1
|
Trailing twelve
months ongoing stock-based compensation expense
|
48.9
|
Pro forma adjustment
for projected synergies
|
—
|
|
$
1,647.0
|
|
|
Adjusted net leverage
(non-GAAP)
|
4.0 x
|
|
|
*
|
Represents the
Adjusted EBITDA of Avantor for the trailing twelve-month period
plus management's best estimates of the incremental results
attributable to acquired companies as if such acquisitions had been
completed on the first day of such trailing twelve-month period, as
permitted by our debt covenants. Such estimates and financial
information for acquired companies may or may not have been
audited, and in certain instances may have been prepared on a basis
other than U.S. GAAP though we believe these differences in the
basis of accounting to be immaterial for the purpose of presenting
net leverage.
|
|
|
|
Avantor, Inc. and
subsidiaries
|
Reconciliations of
non-GAAP measures (continued)
|
|
Net
sales
|
|
(in
millions)
|
|
|
Reconciliation of
reported change to organic and core organic change
|
March 31,
|
|
Reported
change
|
|
Foreign
currency
impact
|
|
M&A
impact
|
|
Organic
|
|
COVID-19
|
|
Core
organic**
|
2022
|
|
2021
|
Three months
ended:
|
|
|
Americas
|
$
1,143.4
|
|
$
1,035.2
|
|
$ 108.2
|
|
$
(1.0)
|
|
$
47.1
|
|
$
62.1
|
|
$
(18.6)
|
|
$
80.7
|
Europe
|
680.4
|
|
650.4
|
|
30.0
|
|
(39.5)
|
|
52.4
|
|
17.1
|
|
(23.7)
|
|
40.8
|
AMEA
|
126.6
|
|
100.0
|
|
26.6
|
|
(2.8)
|
|
17.7
|
|
11.7
|
|
3.1
|
|
8.6
|
Total
|
$
1,950.4
|
|
$
1,785.6
|
|
$ 164.8
|
|
$
(43.3)
|
|
$
117.2
|
|
$
90.9
|
|
$
(39.2)
|
|
$
130.1
|
**Core organic sales growth eliminates from our organic growth
the impacts of any COVID-19 related net sales. Numbers in this
column are calculated by removing the impact of COVID-19 sales from
the numbers in the "Organic" column.
|
|
Adjusted
EBITDA
|
|
|
Three months ended
March 31,
|
(in
millions)
|
2022
|
|
2021
|
Americas
|
$
294.2
|
|
$
252.0
|
Europe
|
143.4
|
|
131.1
|
AMEA
|
29.3
|
|
22.6
|
Corporate
|
(43.8)
|
|
(42.6)
|
Total
|
$
423.1
|
|
$
363.1
|
Media Contact
Allison
Hosak
Senior Vice President, Global Communications and Brand
Avantor
908-329-7281
Allison.Hosak@avantorsciences.com
Investor Relations Contacts
Tommy Thomas, CPA
Vice President, Investor Relations
Avantor
781-375-8051
Tommy.Thomas@avantorsciences.com
Christina Jones
Vice President, Strategy
Avantor
805-617-5297
Christina.Jones@avantorsciences.com
Source: Avantor and Financial News
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