Avantor Sees Steady Earnings, Plans Leadership Change And Strategy Shift

Avantor Inc AVTR on Friday reported adjusted EPS of 23 cents in line with consensus.

The life science tools company reported sales of $1.58 billion, missing the consensus of $1.61 billion.

Sales fell 6% compared to the first quarter of 2024. Foreign currency translation had a negative impact of 1%, resulting in a sales decline of 2% on an organic basis.

Laboratory Solutions sales were $1.07 billion, a reported decrease of 8%. Sales decreased by 3% organically.

Bioscience Production sales were $516.4 million, a reported decrease of 1%, flat on an organic basis.

“While earnings and margin performance were in line with our plan, Lab Solutions revenue was impacted by reduced demand – particularly in our Education and Government end market – following recent policy changes,” said Michael Stubblefield, president and CEO.

“We are updating our full-year outlook to reflect ongoing funding and policy-related headwinds. While we are not satisfied with our current growth trajectory, we are implementing a comprehensive strategy to strengthen our Lab Solutions segment and are committed to moving with urgency to improve performance across the business,” Stubblefield added.

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Net income increased to $64.5 million from $60.4 million in the first quarter of 2024. Net Income margin was 4.1%.

Adjusted EBITDA was $269.5 million, and Adjusted EBITDA margin was 17.0%.

Adjusted Operating Income was $242.8 million, and the margin was 15.4%.

Avantor announced significant actions across the business to accelerate growth and enhance its cost structure, increasing the cost transformation target to $400 million in gross run-rate savings by the end of 2027.

On Friday, Avantor announced that Stubblefield intends to step down as director, president, and CEO. The Board has initiated a search process to identify the company’s next CEO.

William Blair analyst Matt Larew writes, “While we acknowledge that Avantor has a possible path to outperformance as end-markets continue to return and more of the now $400 million in targeted cost savings take hold, we think the company’s below-peer growth and margin profile make the discount to peers warranted at this time.”

Larew keeps the Market Perform rating.

Price Action: AVTR stock is down 19.6% at $12.44 at last check Friday.

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