Avantor, Inc.

Good morning. My name is Krista and I will be your conference operator today. At this time, I would like to welcome everyone to the Avantours Third Quarter 2026 Earnings Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question at that time, simply press star followed by the number one on your telephone keypad. And if you would like to withdraw your question, again, press star one. Thank you. I would now like to turn the conference over to Chris Fidyk. Chris, you may begin your conference.

Thank you, operator. Good morning, everyone, and thank you for joining us. Our speakers today are Emmanuel Ligner, President and Chief Executive Officer, Todd Garner, Executive Vice President and Chief Financial Officer, and Steve Eck, Senior Vice President and Chief Accounting Officer. The press release and our 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 meaning 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 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. I will now turn the call over to Emmanuel.

Thank you, Chris, and good morning, everyone. A special welcome to Todd on his first earning call with Aventor. Todd will introduce himself shortly, and you will hear much more from him at Investors Day on December 8th. Today, I will begin with a high-level update on our third quarter performance. I will then take a closer look at Aventor returns to revenue growth, including the progress we are making with Revival, our comprehensive program to sharpen strategic focus and enhance execution. On slide four, we have the key messages for the quarter. Our third quarter results make a return to organic revenue growth for Avento. This is an important milestone on our revival journey. We have more work to do, but the quarter demonstrates why we believe the action we are taking through revivals are putting us on a path to sustainable growth. Third quarter results exceeded our expectation across revenue and adjusted EPS. Those results were driven by strong performance in our VWR distribution and services segments, which accelerated meaningfully after returning to growth last quarter. Organic revenue growth in our bioscience and medtech product segments turned positive this quarter, as anticipated, with performance stronger than we had expected. We once again generated robust free cash flow, which allow us to invest in the business and strengthen our balance sheet. We remain committed to reducing our adjusted net leverage ratio to below three times, and we expected to achieve this objective by year end. Finally, we are raising our 2026 organic revenue, adjusted EPS, and free cash flow guidance, reflected our third quarter outperformance as well as the momentum we see across the business and in our end market. Please turn to slide five where I will review our Q3 performance highlights. In Q3, we generated $1,698,000,000 of revenue representing year-over-year organic growth of 5.2% and reported growth of 4.6% exceeded our expectations. VWR organic growth accelerated to 5.8% in the quarter. This reflects continued executions against our revival priorities as well as stronger end markets. I will discuss VWR positive momentum in a few moments. Turning to BNP, we were pleased to see the segments returning to revenue growth in the quarter. as we had anticipated on our last earning call. On a year-over-year basis, BNP revenue grew 3.6% organically, ahead of our expectation, despite a 150 basis point headwind from the unusual customers ordering and shipment patterns that we have discussed on prior calls. We saw strong performance from Process Chemical and NuSeal in the quarter. Importantly, our Revival initiative to enhance commercial and operational execution continues to gain traction across BMP. Revival is helping the segments delivering more consistent and predictable performance and, as a result, we believe BMP is well positioned to grow in 2027 and beyond. Moving down the P&L, adjusted EBITDA margins increase modestly on a sequential basis as operational outperformance and cost discipline help us absorb headwinds from mix, inflation, and targeted growth investments. Adjusted EPS of 22 cents was above our expectations. One of Avantor's key strengths is robust cash generation. In the third quarter, excluding cash restructuring costs, we generated $169 million of free cash flow, represented strong conversion of adjusted net income. We used this strong cash generation to further strengthen our balance sheet, and we ended the quarter with an adjusted net leverage ratio of 3.1 times. On slide six, we take a closer look at our return to growth. In Q3, Avantor delivered positive organic revenue growth driven by two forces, improving execution and stronger end markets. When we launched our revival program one year ago, we identified five key pillars and began a series of initiatives to sharpen our strategy focused on improved execution. Those actions are increasingly embedded in our operating model and, in Q3, show up in our results. In VWR, the actions we are taking to enhance customer relationships, boost commercial execution, and expand our digital capabilities continue to gain traction. We estimate that approximately half of VWR growth in Q3 was driven by our commercial initiatives. We see progress in the same area we highlighted last quarter. We are expanding our relationships with large customers. We are performing well in small and mid-sized accounts. And our e-commerce platform continue to show positive trends. BWR growth acceleration in Q3 reinforce our confidence in our competitive position in the global distribution market. In BMP, we are making steady progress on our revival initiatives to strengthen operations and enhance our supply chain. And we have driven sequential increase in manufacturing throughput during 2026. Let me share a few examples of the progress we are making with Revival across the organization. On Monday, we announced that Mikey Santiago will join us from Danaher to serve as our Chief Information Officer. With Mikey joining and Todd now on board, our executive leadership team is complete. I'm excited to work with this exceptional group of leaders to execute revival and create shareholder values. In BNP, our manufacturing teams have increased output across critical product lines. In early September, a key North American manufacturing line produced more than 25,000 kilograms of product in a single week, exceeding its original design capacity target and achieving a nearly 99% overall equipment effectiveness ratio for that week. This is a good example of the operational improvement we are making across BMP. We have advanced our digital manufacturing strategy, including the development of digital workflow and electronic batch records at two key manufacturing sites. Those capabilities improve quality, reduce deviation, and enhance delivery performance, supporting a more efficient manufacturing network over time. Across our supply chain network, SNOP and other process improvements initiated are taking hold. contributing to improve customer service and on-time delivery across certain product categories. While I am pleased with our progress, we will continue to invest in our operation. In VWR, we are deploying AI to improve productivity and enhance the customer experience. One example is VWR Internal Sales Assistant, or ISA, which uses AI to combine customer sales and product data to help sales team prepare for meetings, generate leads, prioritize opportunities, and act on recommendation. ISA also simplified administrative tasks. Since its launch last year, ISA had been widely adopted, and we have received positive feedback from our sales team, our customers, and our supplier. We plan to expand ISA and add new functionality. VWR is also enhancing our internal cross-reference platform with AI to allow our teams to proactively identify product substitutes that offer sustainability advantage or cost-saving opportunity to customers. The key takeaway is that revival impact is broad, from leadership and operation to digital capabilities and customer-facing tools. Revival is helping us improve execution and better serve our customers and ultimately translate to the growth acceleration we see in Q3. That is the execution side of the equation. I will now turn to end markets where we are also seeing positive signs. Two points of context are important to note. First, our segments respond differently to end market conditions. VWR is more sensitive to market fluctuations given its significant exposure to research spending, while BMP is more heavily weighted towards production environments. Second, we have a unique perspective on the end market. Through VWR, we serve a daily need of scientists across more than 300,000 customer sites around the world. We see lab activity as it happens. in daily order rates and in consumption of everyday consumables, which give us a clear view into the health of the scientific ecosystem. What we see is encouraging. The recovery that began in Q2 continued to build in Q3, and importantly, has broadened. Last quarter, we highlighted a pickup in activity among large pharma and biotech customers. That momentum has continued in Q3. Our large pharma and biotech customers continue to invest in their R&D pipeline, many of which have been supplemented by business development. We also saw green shoots of recovery demand in higher education and early stage biotech customers in North America this quarter. For some of those customers, a more positive funding environment translated into greater research activity. We also see strength in certain industrial subsectors, such as mining. From a geographical perspective, our America's demand is performing very well. We are also seeing good activity in Asia, which remains a smaller region for us. We continue to see the market recovery in Europe lagging that of the Americas and Asia. On average, Europe faces more challenging macro conditions, including high energy costs and government funding pressure. Any improvement in this important geography will represent a tailwind to our business. Overall, we are encouraged by the improving tone across our end market and believe that the demand environment is the most constructive we've seen in several years. Stronger end markets are providing a tail wing and improving execution is converting this tail wing into growth. We believe this provides us a foundation of sustained revenue growth and we remain focused on execution to build on our positive momentum. Before we walk through the financials, I want to welcome Todd Garner, who joined us as a Chief Financial Officer on September 21st. Todd brings 30 years of finance, operational, and public company leadership experience. He most recently served as CFO of ComMed. In his first weeks, Todd has been meeting our teams around the world and getting to know our operations. As Todd continues to deepen his engagement in our business, Steve Eck will walk through today's results. But first, I would like to give Todd a chance to introduce himself.