Avantor, Inc.

Good morning. My name is Emily, and I'll be your conference operator today. At this time, I would like to welcome everyone to Avantor's fourth quarter 2025 earnings results conference call. After the presentation, you will have the opportunity to ask any questions, which you can do so by pressing start, followed by the number one on your telephone keypad. I will now turn the call over to Chris Fedick. Chris, you may begin the conference.

Thank you, operator. Good morning, and thank you all for joining us. Our speakers today are Emmanuel Ligner, President and Chief Executive Officer, and Brent Jones, Executive Vice President and Chief Financial Officer. The press release and a presentation accompanying this call are available on our investor relations website at ir.avantoursciences.com. Following our prepared remarks, we will open the call for questions. A replay of the call will be made available on our website later today. During this call, we will make forward-looking statements within the meeting of the U.S. federal securities laws, including statements regarding events or developments that we believe or anticipate may occur in the future. These forward-looking statements are subject to a number of risks and uncertainties, including those set forth in our SEC filings. Actual results may differ materially from any forward-looking statements that we make today. These forward-looking statements speak only as of the date that they are made. We do not assume any obligation to update these forward-looking statements as a result of new information future events, or other developments. This call will include a discussion of non-GAAP measures. A reconciliation of these non-GAAP measures can be found in the press release and in the supplemental disclosures package on our investor relations website. With that, let me hand the call over to Emmanuel.

Thank you, Chris, and good morning, everyone. Thank you for joining us today. I'll cover three topics to begin the call. First, project revival and our progress to date, Then our strategic objective for 2026 and how we will track our progress. And finally, my observations about the health of our end markets. I will then end the call over to Brent. We will discuss our financial performance and 2026 guide in more detail. And after Brent comments, I will make some concluding remarks. On our previous earning call, I introduced the Aventor Revival program, which is designed to sharpen our strategic focus and to improve execution across the organization. Revival consists of five pillars, evolving our go-to-market strategy, improving our operation, optimizing our portfolio, simplifying our processes, and lastly, strengthening talent and increased accountability. We are executing this plan with urgency, and in the three months since launching the program, we have already made important progress. Our top priority has been the go-to-market pillar, and recently, we made a fundamental shift in how we run the company. We now operate Aventor with two new business units, a product-agnostic channel and a channel-agnostic product business. Customers and their needs are at the center of this reorganization, and we believe that this delineation maximizes the possibility that every product and every service is delivered in a way that delights customers. Effective in Q1, we will alter our reporting segments to reflect this go-to-market approach and align external reporting with how we now manage the business internally. Next, we have recommitted to the VWR brand for our channel business. One of my earliest observations when meeting with supplier, customers, and our associate was that everyone refers to the channel as VWR. So as of a few weeks ago, the distribution channel of Aventor is once again known as VWR. We intend to capitalize on VWR tremendous brand recognition and longstanding goodwill with customers around the world. In Q4, we launched an important update to VWR e-commerce platform, and we have committed to invest in addition 10 to $15 million in 2026 to upgrade our customer's interface. Enhancing our digital capabilities is one of our highest priority given their importance to so many of our customers. In the operations pillar, our new chief operating officer, Mary Blen, has hit the ground running. Mary and her team have thoughtfully identified $20 million of investment to enhance our ability to serve customers. Next, we have established a revival project management office led by Ali Hozak that will coordinate our collective effort and will ensure accountability. Lastly, Our team across the world have embraced revival, and I am thrilled by their willingness to make the changes necessary to maximize our potential. While I am optimistic as ever about the future of Aventor, I want to be crystal clear that 2026 will be a year of transition and investment as we reinforce the foundation of this great company. Significant investment will be made across the organization with our strategic priority in mind, driving sustainable profitable top line growth we will compete vigorously but rationally and we will work relentless to ensure customers are delighted about Avento as such the most important metric to track our progress will be organic revenue growth rate and we intend to demonstrate improvement over the course of 2026. we have a significant amount of work ahead but the fruits of our label will be meaningful when we execute our revival plan successfully. We believe that Advantor can grow at a faster rate, generate attractive margin, produce strong free cash flow, and do all of this in a fair, more consistent manner. Before Brent discuss the financial, I want to share what we are seeing across some of our key markets. First, Let me echo recent comments from others in our industry. After a challenging 2025, our end markets feel more stable, though, naturally, some areas are in better shape than others. The biopharma end market contributes to be healthy, with production level growing at attractive rates, and many companies identified investments that will expand capacity or improve efficiency. The body is well for future demand from this important customer cohort. The primary growth driver of our bioprocessing business is patients' demand for biologics, which has remained strong. We expect demand for biologics to grow in 2026 and beyond based on customer development pipelines, the number of recent FDA approvals, and the pace at which existing therapies are being adopted. Customer inventory level across Jackie Baker and other processed chemicals appear to be reasonable normal, and we expect demands for our products could improve modestly in 2026, having exceeded 2025 with a book-to-bill ratio of more than one. On the MasterFlex fluid handling side, we remain well positioned in areas aligned with customer preferences, including single-use assemblies, fluid management, and modular process solution, which support flexibility and faster deployment when customers choose to invest. 2025 was a difficult year for our early-stage biotech, education, and government customers, but we are cautiously optimistic that those end markets are near the bottom. While it is difficult to predict if or when Aventura might see improved demands, we are pleased that certain headwinds facing those customers may be dissipating. The fourth quarter was one of the best quarters for biotech funding in recent years, and these momentums continue in January. Across the educational government and market, which we serve primarily with VWR, we have seen indicators of an improved funding environment in Europe and Japan, but there remains uncertainty in the U.S. which represent a large percentage of our education and government business. While we are encouraged by expectations for an NIH budget in 2026, customers remain hesitant to spend money even when it is committed and received. This, coupled with reduction in headcount and program cuts over the past year, leads us to believe that we will not see noticeable increase in customers' spend until we have an extended period of funding and outlay stability. Before I turn the call over to Brent, I want to note that we are pleased to welcome Sanjeev Mehra and Simon Diggermans to our board of directors. Sanjeev and Simon add deep global leadership, financial expertise, and strategic insight.

Brent? Thank you, Emmanuel, and good morning, everyone. I'm starting with slide four. We delivered a Q4 largely in line with expectations with organic revenue growth, adjusted EPS, and free cash flow at or above our guidance. For the quarter, reported revenue was $1.66 billion, which was down 4% year over year on an organic basis and squarely in line with our guidance. Adjusted EBITDA margin was 15.2%. Adjusted EPS for the quarter was 22 cents at the midpoint of guidance. Free cash flow was $117 million. Excluding transformation expenses, free cash flow was $150 million at the high end of guidance. Adjusted gross profit for the quarter was $524 million, representing a 31.5 percent adjusted gross margin. This is a decline of 190 basis points year over year, driven mainly by unfavorable segment mix and product mix, as well as price actions in lab to protect and grow market share. Adjusted EBITDA was $252 million in the quarter, which came in at the low end of our expectations. This was largely driven by gross margin, but also some modest headwinds due to revival-related spending as we have kicked off this program in earnest. Adjusted operating income was $225 million at a 13.5% margin. Interest and tax expense were better than expectations and, as a result, Adjusted earnings per share were $0.22 for the quarter, a $0.05 year-over-year decline. In Q4, we purchased $75 million worth of stock under the $500 million share repurchase program our board of directors authorized last fall. We paid down approximately $300 million of debt in 2025 and added approximately $120 million of cash to the balance sheet. our adjusted net leverage ended the quarter at 3.2 times adjusted EBITDA flat to last year. Leverage increased by a tenth of a point sequentially, largely due to FX impacts on the balance sheet that were higher than our expectations, as well as lower LTM adjusted EBITDA. Turning to our full year results on slide five, reported revenues were $6.552 billion, down 3% on an organic basis. Adjusted gross profit for the year was $2.14 billion, representing a 32.7% adjusted gross margin. Adjusted EBITDA was $1.069 billion in 2025, representing a 16.3% margin. Adjusted operating income was $958 million at a 14.6% margin. Putting all of this together, adjusted earnings per share came in at 90 cents for the year, at the midpoint of our updated Q3 guidance. We generated $496 million in free cash flow in 2025. Excluding transformation spend, we generated $599 million of adjusted free cash flow. Free cash flow conversion was nearly 98% when adjusted for the cash costs related to transformation. Laboratory solutions revenue for the quarter was $1.116 billion, a decline of 4 percent versus prior year on an organic basis, representing the higher end of our guidance of down mid-single digits. Sequentially, sales grew modestly on an organic basis. The market environment remains reasonably stable, albeit at lower levels of activity than we would like to see. The prolonged government shutdown certainly had an impact in the quarter, but we also saw some modest end-of-year budget flush that we did our best to capitalize on, particularly with equipment and instrumentation. Our channel business, which represents approximately two-thirds of the business, was down mid-single digits with strength in chemicals more than offset by headwinds in consumables and ENI. Our services business was down low single digits, and our specialty business was essentially flat with proprietary chemicals up below single digits. For the full year 2025, laboratory solutions revenue was $4.4 billion, a decline of 3% versus 2024 on an organic basis. Adjusted operating income for laboratory solutions was $114 million for the quarter, with a 10.2% margin. Adjusted operating income margin declined 290 basis points year over year, and 110 basis points sequentially from Q3. The primary driver of the sequential margin decline was mix, with stronger equipment and instrumentation and specialty procurement sales at lower margins. Pricing also contributed to the margin decline. For the full year 2025, laboratory solutions adjusted operating income was $510 million with an 11.6 percent margin. Bioscience production revenue for the quarter was $548 million, which reflects an organic decline of negative 4 percent versus prior year, representing the high end of our guidance. This also represents mid-single-digit growth sequentially. Bioprocessing, representing about two-thirds of the segment, saw a high single-digit decline at the better end of our expectations of down high single digits to low double digits. Within bioprocessing, processed chemicals performed as expected down double digits year over year. This was largely due to the ongoing backlog we were carrying, as well as a particularly difficult comparable in Q4 of 2024. Processed chemicals was up modestly on a sequential basis. On the order side, our processed chemicals business, excluding serum, had a book-to-bill of more than one for the quarter, and this order book is up high single digits year to date. While we continue to have operational bottlenecks, these did not materially impact our Q4 performance versus expectations. Our backlog did not reduce meaningfully in the quarter and remains too high, but this is receiving intense focus from the operations and supply chain teams in line with our revival objectives. As expected, single use was up low single digits both year over year and sequentially. Controlled environment consumables were down modestly sequentially and somewhat weaker than expected. For the balance of the segment, silicones performed largely in line with expectations and applied solutions outperformed due to electronic materials. Adjusted operating income for bioscience production was $127 million for the quarter, representing a 23.2% margin, down 340 basis points year over year. This decline is significantly due to volume-related fixed cost absorption and mix. On a sequential basis, adjusted operating income was down 100 basis points in part due to additional spend to drive better operational performance. For the full year 2025, bioscience production's adjusted operating income was $518 million with a 24.1% margin. Please turn to slide eight. As Emmanuel noted, We have optimized our go-to-market strategy and, as a result, we are resegmenting the business in 2026. Slide 8 graphically depicts the key elements of this resegmentation as well as our new nomenclature for the business. This resegmentation reflects how we now run the business with a product-agnostic channel on the one hand and channel-agnostic products on the other. You will find detailed disclosures in the Form 8-K we filed earlier today. Please turn to slide nine. The larger segment is VWR distribution and services, coinciding with our relaunch of the VWR brand last month. This will include most of the former laboratory solution segment, but now will include CEC and will no longer include our proprietary laboratory chemicals business, as well as a few other small businesses where we manufacture products. The guiding principle for the VWR distribution and services segment is a product-agnostic channel primarily composed of third-party content, but that also includes VWR-branded products. Over 90% of this segment will be our channel business, and the balance will be our services offerings, which include our onsite services, where we manage our customers' inventories and stockrooms, as well as our equipment services business. Based on 2025 revenue, the channel piece of this segment was approximately $4.4 billion, and the services piece was approximately $300 million. What we are now calling our VWR distribution and services segment represented about 72% of our enterprise revenue in 2025 and had an adjusted operating margin of 11.5% for the year. I am now on slide 10. The other segment will be bioscience and med tech products. This segment includes most of the former bioscience production segment with the addition of our proprietary laboratory chemicals business and a few other small businesses where we manufacture products and the removal of CEC. Again, the guiding principle for this new segment is a channel agnostic product business. The components of this segment are process chemicals, fluid handling, Nusil, and research and specialty chemicals. As you can see by the slide, process chemicals includes our proprietary JT Baker products used in production environments from solvents to salts to excipients. Fluid handling includes our master flex pumps and associated tubing, as well as skids and other fluid management solutions. Nusil includes our well-known high purity silicones that are used in medical and industrial applications. Finally, research and specialty chemicals captures the balance of our portfolio, including diagnostic chemicals, proprietary lab chemicals, electronic materials chemicals, and serum for biologic applications. For fiscal year 2025, process chemicals generated approximately $500 million in revenue, fluid handling generated approximately $400 million in revenue, new cell generated approximately $350 million in revenue, and research and specialty chemicals generated approximately $600 million in revenue. Combined, what we are now calling our bioscience and med tech product segment represented about 28% of our enterprise revenue in 2025 and had an adjusted operating margin of 26.7% for the year. Please turn to slide 11, where I will discuss our 2026 guidance. For 2026, we expect organic revenue growth of negative 2.5 to negative 0.5 percent. We expect FX will contribute 1 percent to the top line, resulting in reported revenue growth of between negative 1.5 percent and positive 0.5 percent. We expect that VWR growth will somewhat outpace that of bioscience and medtech products during the year. We continue to drive operational recovery and process chemicals and have the benefit of a strong order book in the business. Bioscience and med tech products does face difficult comps in 2026 in its research and specialty chemical subsegment, specifically in electronic materials and serum, as well as with Nusil. VWR will be impacted by a continuation of the various dynamics discussed on prior earnings calls. As Emmanuel mentioned earlier, we will continue to compete vigorously, but rationally, and believe that this business will exit 2026 on more stable footing. We are making a variety of investments to enhance our value proposition and to better serve customers, which we believe will improve the performance of this franchise over time. Moving to profitability, we anticipate that our EBITDA margins will contract by as much as 100 to 150 basis points in 2026 similar to our margin level exiting 2025. Margins will be pressured by a variety of factors, including bioscience and medtech product growth due to headwinds stated before, mix shifts, revival investments, incentive compensation reload, as well as price-cost spread. While our cost-saving initiatives remain on track, they will only offset a portion of the headwinds that we will face this year. Moving below the line, we anticipate interest expense will approximate that of 2025 as FX movements offset the benefits of debt repayment, and we anticipate a tax rate of approximately 22.5 percent, similar to 2025's rate. Finally, we assume a fully diluted share count of 685 million shares for the year. All of this translates to an adjusted EPS outlook of 77 cents to 83 cents for 2026. We expect to generate between $500 and $550 million of free cash flow in 2026, and we once again expect our free cash flow generation to be back halfway. Our guidance does not assume any share repurchases during 2026. A few comments on phasing. In Q1, we expect to generate EPS of between 15 and 16 cents per share. We will face the same margin headwinds in Q1 that we do for the full year, The Q1 bears the additional burden of being the historically softest quarter of the year for our industry, plus our cost initiatives will have greater impact later in the year. We may also be impacted by the severe weather across the U.S. recently. Finally, capital allocation. Debt reduction remains a top capital allocation priority as we remain committed to reducing our leverage sustainably below three times net debt to adjusted EBITDA. We built cash and paid down a meaningful amount of debt again in 2025. At the same time, we continue to believe that our current share price fails to reflect the intrinsic value of our platform, so we may choose to repurchase shares opportunistically with excess cash. With that, let me turn the call back to Emmanuel.

Before we move to the Q&A session, I want to spend a few moments discussing two important topics, our cost-based and our go-to-market strategy. I've spent my career in organizations famous for their continuous improvement mindset, with a particular focus on eliminating wasteful spend and recycling it into growth-oriented areas. The continuous improvement mindset is central to my management philosophy. I see many opportunities for Aventor to become more efficient, while at the same time, I see many opportunities to make important growth investments across the business. With our focus on revival, we will no longer report progress related to our previously discussed cost transformation initiative. No, we will continue to target those goals internally as a strategic objective separate from or in addition to revival. This doesn't mean that we are no longer focused on reducing costs in the business, but I believe that we should not have competing or potential conflicting priorities as revival is our critical focus going forward. Through the end of 2025, we have achieved run rate saving of $265 million ahead of our original expectation. Revival is about much more than cost. It is about driving sustainable top line growth and operating more efficiently. When you marry this to the action already taken This will provide a strong foundation to drive improved operating leverage and margin improvement that follows from it. Next, I want to deep dive deeper into the rationale for our new go-to-market strategy and the correspondent re-segmentation of our business. Over the last six months, I have traveled the globe to engage with customers, suppliers, other external partners. During those travels, too frequently, I have encountered confused and misunderstanding about who Aventor is and what we do. These confusions end today. Aventor is a house of powerful brands, brands such as Jackie Baker, Masterflex, NuSeal, and VWR. Each of our brands has a unique heritage, and often our brands are synonymous with attributes such as quality or reliability. Our new go-to-market strategy will facilitate sharper market positioning and will clarify our identity, allowing us to capitalize on the equity of those powerful brands. The distribution business will build on VWR history of offering private label, third-party solution, and services, while the product franchise offers a diversified portfolio of best-in-class manufacturer products. By swapping certain business activities between the two segments, we will better organize the company to meet customer needs as the requirement of VWR customers differ from those of JT Baker customers. Those pivotal changes should improve our go-to-market effectiveness by enabling each business to focus on its respective customer service needs, product life cycles, and value proposition. In addition, we have created clear operational swing lanes, which in turn will result in better operational transparency and accountability. Finally, we believe that our new structure will enable more focus and faster decision making as each segment is free to pursue its own strategy without any possible tension between a high volume distribution engine and a product focused manufacturing engine. To conclude, I am excited as ever about the future of Aventor and confident that the successful execution of Revival will help us reach our vast potential. The company boosts a series of world-class assets, including its people, and I am delighted by how swiftly and energetically the team has responded to change. Aventor is in transition, and 2026 will be a year where we invest purposely and sensibly to strengthen all aspects of our business. The ultimate goal, of course, is for the business to produce financial results that are far more attractive than what we have shown in recent years. Thank you again for joining the call. Operator, let's switch to Q&A, please.

Thank you. We will now begin the question and answer session. As a reminder, if you would like to ask a question today, please do so now by pressing start followed by the number one on your telephone keypad. If you change your mind or you feel like your question has already been answered, you can press start followed by two to withdraw yourself from the queue. To allow everyone a chance to ask a question during Q&A, we request that you please limit yourself to one question and one follow up only. Our first question today comes from Casey Woodring with JP Morgan. Casey, please go ahead.

Great. Thanks for taking my questions. Maybe just to start, you said that you expect growth in VWR to somewhat outpace that of bioscience and med tech for the year. Can you just unpack that? What are your segment growth expectations for the year? And then maybe just by quarter, we can talk about what you expect in 1Q in both segments and then the phasing throughout the course of the year.

Yeah, Casey, it's Brent. Thanks for the question. There's some limitation of what we're guiding to there, but That comment really is driven by, as we noted, and frankly, in my remarks there, we have a number of particularly difficult comps in the bioscience and med tech products business, in serum, in electronic materials, and new sill. Those are creating several hundred basis points drag on growth there. So that, we expect, will bring it somewhat below where where the VWR channel would be there. So that's a primary driver. We're not really laying out phasing of the growth throughout the year. When we think of Q1 and what builds the Q1, you know, we got into 15 to 16 cents for the quarter, which absolutely implies it should be the low point of the year for most financial metrics. While we're not getting into other elements of it, you'd expect in the math there that organic revenues would decline by 5% or more, which will be offset by a meaningful decrease. FX tailwind there.

Okay, got it. That's helpful. And then, you know, just curious, you highlighted that in 2026, this is going to be a year of transition and investment. Just on the latter piece, how are you weighing some of these investments like the 10 to 15 million in e-commerce versus some of the cost savings initiatives that are in place? And if you can give any update in terms of how much by way of cost savings Revival will generate and if we'll see any of that in 2026. Thank you.

Casey, Emmanuel, I think what is very important to understand is we are absolutely not abandoning our cost discipline and cost saving. We have cost transformation initiative, okay? What we really want to make sure is it's part of revival and it's really combined with what we are starting to do. The other thing is, as I said in my remarks, look, I come from organizations which are very well known and where I have been very well trained on continuous improvement. And what is continuous improvement mindset is really making sure they take out the waste, but you also reinvest this waste into opportunity that you have. And this company on both segments have tremendous opportunity. So remember in the revival, we have a pillar which is about simplifications, about optimization. That's where the initiative on cost out is going on. And then at the same time, we have to invest in our e-commerce channel. We have to invest in in talent as well and so this is this is where we are the the goal casey of revival i mean i i don't have to remind everybody about it but it's really about driving urgency to grow the business top line sustainably but also profitably so that's the goal that we have is to really make sure that we take cost out we reinvest and it's it's and the outcome is top line grows profitably

Great, thank you.

Our next question comes from Brandon Couillard with Wells Fargo. Brandon, please go ahead.

Hey, thanks. Good morning. Emmanuel and Brent, maybe the high level would be helpful to get your perspectives on the degree to which you've kind of discounted the guide and kind of stress tested your assumptions, especially coming off the successive number of cuts last year, just trying to get a feel for

um elements of conservatism that may be embedded in either the top line or the margin outlets for the year yeah look brandon they're uh number one very very mindful of that there are a huge number of moving parts that they're going to impact the p l and 26 and you know with the timing and the magnitude of all of them is difficult to

reflect but really we've taken all the pluses and minus in here and i would say the guide is neither conservative nor aggressive it's uh it's very prudent and and that that's really the approach we've taken here okay um then as far as the margin guide goes i've heard you call out 15 million for e-commerce another 20 million for um your ability to serve customers are there any other investments that you specifically call out? Should we view those as kind of one time in nature as we think about, you know, what the margin could look like beyond this year? Thanks.

Yeah, I mean, Brandon, a few things. The 20 on the operations side is going to be much more capital than OpEx, and certainly some of the digital are going to be capital. I think a few things we were thinking about the adjusted EBITDA margin path here. Think of Q4 as a starting point, and Well, I wouldn't exactly call that a run rate, but I think that's an important jumping off point. Then you incorporate in our comments of biotech and, I'm sorry, bioscience and medtech products, or we'll probably shorthand as BMP. You know, that will probably grow at a lower rate than VWR, so then you have a segment mix issue there. And then within that, the comments I made about headwinds and serum, electronic materials, new sales, those are really key drivers of margin. Marrying that to, on the VWR side, margins negatively impacted really by a continuation of the recent trends that we've seen in that business. There are some other revival investments there I wouldn't say. The magnitudes that Emmanuel called out are probably the really significant ones, and otherwise these are going to be very tactical things. He's made comments about certain senior hires and all the rest of it. That's what I would put together for the margin story.

And if I just add something, I think I shared that philosophy as well in my first call. It's also about self-funding. So we spoke a lot about that internally as if there's a need of investment within Revival, we need to make sure we self-fund it, which means that we need to find optimization and waste in other areas to be able to reinvest.

Thank you. The next question comes from Paul Knight with KeyBank. Please go ahead. Paul, your line is now open. Please proceed with your question.

Sorry. My question is a two-piece. Yeah. Can you hear me? Tad Piper- But yeah yeah we can now yeah. Tad Piper- yeah. Tad Piper- If you look at this year you I guess we view it as an investment year um. Tad Piper- What kind of margin impact are these investments, creating is it 100 bits is 200 bits is it 50 could you kind of give us a range on this, you know implement revival. fixed manufacturing a bit, fixed e-commerce? What is this kind of margin impact in your view that, like previous question, could dissipate in future years?

That's a very good question. I think, first of all, I will qualify this year as a transition year, okay, more than an investment year. Transition means that we have a lot of change going on. We have a lot of work to do, okay? We have to make sure that we operate and we go to market differently, and we already started. And so remember Revival that we just introduced only three months ago, and the team is really in action, and I'm super thrilled by the reaction of the team and the the engagement that we have. So I will call it a transition year. I will not call it an investment year. And as I said, all the investment that we need to do will need to be self-funded. So what we are guiding today is what we're guiding. And I don't think we will go in granularity that you're asking about, you know, how much revival is investment or not. Again, if there is more investment that we'll do, which are going to be much more material, we'll share that with you guys. Three months in the road, we already take a lot of action. We relaunched BWR, which, by the way, I received great feedback from suppliers, from customers, from our own people. So the team is energized. I participated in a self-conference of America. Last week I was in Asia for the STEM self-conference. And in two weeks, we will be in Europe. The vibration is, the vibe and the spirit of the people is really good. So I don't know if you want to add anything, Brad, but I don't think we'll go that granular.

Yeah, I mean, Paul, I would just, I would also ground yourself in our comments on the exit rate coming out of 2025 in Q4 and the number of moving pieces we have, particularly in the bioscience and medtech business, which is very significant margin impact there.

Yeah.

And then last question would be, what do you think the growth rate of the industry is under normalized conditions?

What is normalized condition? Is it normalized condition from the market or is it normalized condition from us and on which period, you know, during the transition year or not? I think, look, I'm still really looking into this, trying to really evaluate what will be the future. What is very important is that we execute what we said we will, that we go into the detail, that we compete. rationally, and that we just move on. So let me, I've been here only six months, so I need maybe a bit more time to come back to you, but this is a very good question.

Thanks.

Thank you. The next question comes from Michael Riskin with Bank of America. Please go ahead, Michael.

Great. Thanks for taking the question. I don't want to be the dead horse, but I want to go back to margins again. Just the 2026 guide, if we look at, you know, both 4Q as a jumping point, just sort of like the total year over year. One thing you guys haven't talked about a lot so far has been price and share gains and share losses. You alluded to it a little bit on the fourth quarter of lower in price to hold on to volume. So I was wondering if you could elaborate on that. I mean, is this a race to the bottom? Sort of, you know, how viable is that as a long-term strategy? Just to talk about, you know, share losses, especially in the lab distribution side of things. And just, you know, once you get through all of that in 2026, is this the bottom on margins? Can we expect margins to go from here? Or are we still sort of in the process of figuring that out? Thanks.

Yeah, Michael, thank you. Look, in Q4, the biggest impact on margins was mixed. There was a little price and there was a little negative price in Q4, primarily the lab business there. We're being careful with all the moving pieces going forward into 26. So that's why we're using that as a jump off point. But our assumptions in the plan for next year include, I would say, when you look at the gross or when you look at the revenue outlook, we're expecting very, very flat volume on the lab side and some price, but not a dramatic amount. And we're expecting better price on the bioscience side with a little less volume there. So I'd say that we think we're at a point that we can execute against that reasonably on price there, and we don't see it as a race to the bottom.

And I just want to maybe make one comment. We are working really hard to make sure that you, is the low point.

Okay. Okay. All right. I'll follow up offline. And then for my other question, you mentioned in your prepared remarks, you had a comment about book to build greater than one. I just want to be clear on that. Is that with bioprocess specifically? Was that one of the subcomponents of bioprocess? And just, you know, depending on where that is, I'm kind of trying to reconcile that with the Biosciences and Method Guide, which is the implied guide for 2026. I mean, I guess why isn't, if the book is built greater than one, why doesn't that translate to slightly better growth in that segment? I know you called out some tough comments, but just sort of, you know, let's put that greater than one number into context and what that means. Thanks.

Yeah, Michael, that as well as the full-year high single-digit growth was a processed chemicals comment, and processed chemicals excluding serum there. And, you know, and that certainly is a better part of the story for 26.

And, Mike, you remember that we have some bottleneck in supply chain. We have identified the need to invest about 20 million. Mary and her team is working super hard to make sure that this is put in place. But as you know, a lot of those equipment or investment needed, it takes time. It's custom made. It needs to be deployed. It needs to be validated. So, you know, we're super pleased to... have a book to build superior to one, but there's a few things that we need to do in supply chain to de-bottle the NAIC that we have right now.

All right. Thanks. I'll leave it there.

Thanks. The next question comes from Dan Brennan with TD Cohen. Dan, please go ahead.

Great. Thank you. Thanks for the questions. maybe i guess the first question would just be back to the margins i know you're not going to give a lot of granularity but a little bit more of a bridge would be really helpful if you could i mean going from 16.3 i know brett you said you're saying start with 4q but could you just give a little more color about how we think about organic margins how we think about the investments how we think about you know kind of other levers you know you're talking about mix um that would really help us since i think that's the key reason why it's down this morning

Well, Dan, I think you answered a lot of the question within that. Again, the Q4 exit rate's a really important grounding point. We, you know, we do have a modest incentive comp reset that creates some, you know, and some merit that creates some headwind on the SG&A side. You know, we're obviously running productivity actions against those things. You know, we will have those mixed pieces on the bioscience and med tech side there. That their headwinds there, and then obviously driving, you know, driving price and lab and putting that all together. I don't think we'll have a more. Concise bridge for you here. We're, uh, that's also why we're going to even margin generally, because look, we, you know, we understand where Q1 is going to be is manual. So we expect that to be the low point and we'll drive sustained continued improvement throughout the year.

Okay. And then maybe Emmanuel, you know, you talked about the tour you did with customers and the strong receptivity on VWR, the channel business. Can you just zoom out a bit on the channel business and just give a perspective how we might think about the outlook there? Like any comment on what your share in that business is, how you're competing with your biggest competitor, Thermo, and kind of as we look out, you know, what you think that business could sustain from a growth and margin basis to about a few years. Thank you.

Yeah, look, again, I spend a lot of time with suppliers in particular and customers. Look, after a challenging 2025, I think we're seeing some stability in the market. I think Corey and the team have done a really good job to renew a really important contract for us. as I said, with opportunity. And of course, those opportunities are licensed to end, I will say. Okay, so it takes time to really go and convert those things. But we have, I feel that we are looking at some you know, leaving 2026 in a better position than we were leaving 2025. We'll continue to compete vigorously, for sure, but we want to compete also rationally, okay? I think this is very important for us. So there's a variety of investment that we are doing. We are bringing a lot of talent in that organization, okay? We have a new supplier relationship leader. We have a new pricing leader, which is very important. For us, we are investing into the e-commerce. We had our first release of our upgraded e-commerce platform in December. And I think the relaunch, I would say, of VWR as our distribution brand is really, really resonated very, very well with the market. So I feel really encouraged by the feedback that I received from the VWR ecosystem. And again, I think that we will exit 2026 in a more stable footing.

Great. Thank you.

The next question comes from Luke Sergot with Barclays. Luke, please go ahead.

Great. Thanks for the question, guys. I just want to talk about, Emmanuel, you talked a little bit about, you know, not sacrificing growth opportunities for, you know, cost savings as you had seen in the past. Can you give us some examples of what you, you know, as you're, you know, the first six months in and looking at some of these missed opportunities? you know, and how you would have done things differently. And then we can get some more pointed questions, I guess.

Sure. I mean, one example that comes straight to my head is in certain, I will say, VWR speciality, we may have cut too many specialists. Okay. So when you cover a territory, I'm going just to take an example. If you cover England with 10 specialists in the past, which was probably too many. Okay, we're okay. But maybe cutting down to two is too little. And that's what we are really looking at in the go-to-market pillar of Revival. It's really looking at the specialist, the account manager, the deployment of all those people by territory, by geography, according to opportunities. And so 10 was maybe too many, two is too little, maybe the right number is five. And it's those type of approach that we have by country, by territory, by product segments for both VWR on one side and BMP on the other. What was the second part of your question?

No, that was, I mean, just what you would have done. I guess. And as we think, I mean, I'm not going to talk on the margin, obviously, but, you know, you think about the investments here, you got the resegmentation, we've seen this kind of, uh, revitalization story before with, with you guys. So, you know, what are the difference in the go-to-market strategy here? What kind of investments did you need to make? Um, And then, you know, how should we think about those investments across the two segments? Is this going to be on like BWR and we should expect that business to grow in 26? Or is this just like investment and trying to hold clients in without losing any more key customers?

That's a great question. the basic decision for the change in the go-to-market and the resegment business is really coming from customers. And it's really about the confusion that I heard when I spent six months on the road. Okay, we have an opportunity to be clearer. We have an opportunity to leverage the identity of who we are, where we're coming from, from BWR, from JT Baker, from MasterFlex, from Lucille, And it's helped us to just better organize ourselves, really being much more focused on the customer's needs and you can appreciate the customer needs of for VWR customers, which want a channel, which want the fast delivery, which want the very fast services at a great price point, is different than bioscience chemicals, which are, you know, designing into a process for a molecule manufacturing. And so those different needs deserve different commercial approach, different support. And that's what really motivated our decision here. It's about better organization. It's really about making sure that we can compete, that we can be more nimble and more agile. And of course, one thing which I think is extremely important as well is to have better accountability across the organization. So that's really what motivated us. In terms of investment, again, we'll make investment in both segments where we see the opportunity. I'll give you an example in VWR, but there's plenty of other opportunity in the BMP segment. So we'll make investment against where we need to go after opportunity. Again, the goal is to really drive sustainable, profitable top-line growth for us.

Got you. Thank you. Oh, by the way, in your guide, is VWR going to grow? Sorry about jumping in there last minute.

Well, I think, as I said, we feel that with investment we're doing, with the passion that is behind, we will exit 2026 in a more stable footing.

All right, gotcha. Thanks.

The next question comes from Vijay Kumar with Evercore. Vijay, please go ahead.

Hey, guys, thanks for taking my question. Emanuel, maybe one on, you know, given the new segmentations, is there, what was the organic growth for BWR in bioscience and medtech in fiscal 25? Because when I'm looking at the numbers, did bioscience and medtech grow in 25? If it did, what was Bioscience versus MedTech, just maybe some context in this new segmentation. Is that, like, how does it help you in better aligning the business? You know, you mentioned go-to-market, right? Like, what's changed versus prior and how do you go to market?

So here, Vijay, just on the technicals there, we haven't provided that historical, but it's The portfolios aren't that different in the aggregate, so your growth path will be similar to what we provided on the historical segments, manual on the segmentation change.

Look, on the go-to-market, what changes is from a customer standpoint, when you want to buy a product which is through a distribution channel, a buy-to-sell, know you get everything in there okay remember one of the things that we move i think which was in the slide was a cec and the cec it's love it's mask it's many products that you use um across various places but of course also in biomanufacturing but you buy them through your indirect sourcing team you buy them through a distribution so you know cec which was part of the BPS. Now it's going back to VWR because the customers buy them from an indirect sourcing organization. They buy them through VWR. So it just makes more sense for the customers. It is simpler for the customers to know which product is served by which team, by which commercial team, under which contract. So it's all about clarity. It's all about customer centricity around their demands, and how do they want to be served?

Understood. That's helpful, Emmanuel. Maybe my second follow-up is, hey, the share count, Brent, you ended, I think, at 679. Why is it going up to 685? And given what you mentioned about Q4 stability, can you expect EPS to grow in fiscal 27? It's a directional qualitative kind of question.

Yeah, but I'll take the first part and then do the manual on the second. Just dilutive shares, dilutive comp grants and that, as well as it moves on stock price and that, so there's nothing dramatic underlying that assumption on the diluted share count.

I think, look, six months in the job, three months in revival, I think it's really too early to talk about what's going to happen after this transition year. So I really want to focus on where we are today, all the work that we have to do, revival, and then we continue to understand more, learn more, hear more from supplier, customers, and we'll take it one quarter of the time.

Thank you.

Thank you. Our next question comes from Matt LaRue. Thank you. Our final question today comes from Matt LaRue with William Blair. Matt, please go ahead.

Good morning. Thanks for squeezing me in. You have the new segments here, and obviously on the BNP side, you referenced sort of the channel agnostic being the theme. But it also spreads not just across channels, but across end markets. and customer classes, and some are more scaled than others. Last quarter, you referenced the idea of M&A, wanting to bring M&A inside of a healthy organization, and this year was about making the organization healthy. What about just from a current portfolio standpoint, as you now assess the scale needed to be successful within each some of these sub-segments. Manuel, what's your take on kind of the portfolio that sits today and where you'd like that to be?

Yeah, look, we shared that in the past in terms of portfolio. We are doing a lot of work. We've done some really good analysis. Brent is leading this pillar inside Revival. There's targets which have been identified. And, you know, as we said in the past, everything is on the table. No taboo, right? We are really looking at everything. And there's some things which are going on. And, of course, we will talk to them when they happen. But we're moving full speed ahead on the portfolio. I think it's very important as well to remember that I really want to make sure that this resegmentation is understood and the fact that it gives us opportunity. When you look at the BMP channel agnostics, it means that the team is now open to new opportunity, open to new way to reach customers. And in an area like in Asia, like I was in two weeks ago, there is opportunity. And this is why, again, we are doing this, is making sure that we look at those two businesses individually uh really separately uh in terms of opportunity there is opportunity and we are we are enthusiastic about it that's what we will do but uh portfolio we're working on it and when we have uh things to share with you we will do so okay thank you thank you those are all the questions we have time for today and so i'll turn the call back to emmanuel for closing comments thank you thank you very much For joining the call today, let me conclude by just maybe repeating what I've said in the opening remark. Aventura is in transition, and 2026 is really a year where we will invest purposefully and sensibly to really strengthen all aspects of our business. The ultimate goal for us, of course, is for the business to produce financial results that are far more attractive than what we've shown in recent years. And you have the full commitment that the team is working really, really hard on this. So thank you again for joining the call, and talk to you soon.

Thank you, everyone, for joining us today. This concludes our call, and you may now disconnect your lines.