Avantor® Reports Fourth Quarter and Full-Year 2022 Results
Avantor, Inc. (NYSE: AVTR) reported its fourth-quarter and full-year 2022 financial results on February 3, 2023. The company achieved net sales of $1.80 billion for Q4, a 5.9% decline year-over-year, but saw core organic growth of 2.7%. Net income rose to $141.7 million. Full-year net sales reached $7.51 billion, up 1.7%, with core organic growth of 6.0%. Adjusted EBITDA was $1,570.7 million for the year, representing an 11.8% increase. Despite some regional sales decreases, strong performance in bioproduction and margin expansion were highlighted.
- Full-year net sales increased by 1.7% to $7.51 billion.
- Core organic sales growth of 6.0% for the full year.
- Adjusted EBITDA for the year rose by 11.8% to $1,570.7 million.
- Adjusted EBITDA margin expanded by 110 basis points to 20.9%.
- Net income for the full year increased to $686.5 million, up from $572.6 million.
- Fourth-quarter net sales declined by 5.9% year-over-year.
- Unfavorable foreign currency impact of 4.5% on Q4 net sales.
- Sales in Europe decreased by 10.1% in Q4.
Fourth Quarter
- Net sales of
$1.80 billion 5.9% ; core organic growth of2.7% - Net income of
$141.7 million $359.5 million - Diluted GAAP EPS of
$0.21 $0.32 - Operating cash flow of
$205.6 million $172.0 million
Full-Year
- Net sales of
$7.51 billion 1.7% ; core organic growth of6.0% - Net income of
$686.5 million $1,570.7 million - Diluted GAAP EPS of
$1.01 $1.41 - Operating cash flow of
$843.6 million $710.2 million - Adjusted net leverage reduced to 3.7X, down 0.5X from
December 31, 2021
"With fourth quarter results coming in line with expectations outlined on our third quarter earnings call, we realized core organic growth across all regions and delivered strong margin expansion despite ongoing macroeconomic pressures and customer destocking. Our full-year results reflect the strength and resilience of our core business, with
"As customer demand and supply chains continue to normalize with the transition from the COVID-19 pandemic, our 14,500 associates around the world are focused on driving growth and building on our track record of productivity and culture of continuous improvement," Stubblefield concluded.
Fourth Quarter 2022
For the three months ended
Diluted earnings per share on a GAAP basis was
Operating cash flow in the quarter was
Full-Year 2022
For the full-year ended
Diluted earnings per share on a GAAP basis for 2022 was
Operating cash flow for 2022 was
Adjusted net leverage was 3.7X as of
Fourth 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.
- Net sales were
$1,048.0 million 3.6% , as compared to$1,087.5 million 0.1% . - Adjusted EBITDA margin increased approximately 10 basis points to
22.0% .
- Net sales were
$617.2 million 10.1% , as compared to$686.2 million 6.3% . - Adjusted EBITDA margin decreased approximately 40 basis points to
21.2% .
AMEA
- Net sales were
$129.8 million 3.1% , as compared to$133.9 million 5.7% . - Adjusted EBITDA margin increased approximately 620 basis points to
31.1% .
Full-Year 2022 – Segment Results
- Net sales were
$4,471.2 million 5.5% , as compared to$4,237.4 million 6.1% . - Adjusted EBITDA margin increased approximately 100 basis points to
24.1% .
- Net sales were
$2,516.5 million 6.0% , as compared to$2,677.3 million 5.5% . - Adjusted EBITDA margin increased approximately 70 basis points to
20.8% .
AMEA
- Net sales were
$524.7 million 11.3% , as compared to$471.4 million 7.0% . - Adjusted EBITDA margin increased approximately 280 basis points to
27.0% .
Conference Call
About
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
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 that have been owned for less than one year 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 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 our6.250% 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 reports on Form 10-Q, as such risk factors may be updated from time to time in our periodic filings with the
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.
| |||||||
(in millions, except per share data) | Three months ended | Year ended | |||||
2022 | 2021 | 2022 | 2021 | ||||
Net sales | $ 1,795.0 | $ 1,907.6 | $ 7,512.4 | $ 7,386.1 | |||
Cost of sales | 1,180.5 | 1,260.1 | 4,909.6 | 4,883.4 | |||
Gross profit | 614.5 | 647.5 | 2,602.8 | 2,502.7 | |||
Selling, general and administrative expenses | 362.7 | 433.5 | 1,472.6 | 1,530.5 | |||
Operating income | 251.8 | 214.0 | 1,130.2 | 972.2 | |||
Interest expense | (69.8) | (60.8) | (265.8) | (217.4) | |||
Loss on extinguishment of debt | (1.7) | (4.0) | (12.5) | (12.4) | |||
Other (expense) income, net | (5.6) | (9.2) | (0.8) | 10.6 | |||
Income before income taxes | 174.7 | 140.0 | 851.1 | 753.0 | |||
Income tax expense | (33.0) | (46.0) | (164.6) | (180.4) | |||
Net income | 141.7 | 94.0 | 686.5 | 572.6 | |||
Accumulation of yield on preferred stock | — | (16.2) | (24.2) | (64.6) | |||
Net income available to common stockholders | $ 141.7 | $ 77.8 | $ 662.3 | $ 508.0 | |||
Earnings per share: | |||||||
Basic | $ 0.21 | $ 0.13 | $ 1.02 | $ 0.86 | |||
Diluted | $ 0.21 | $ 0.13 | $ 1.01 | $ 0.85 | |||
Weighted average shares outstanding: | |||||||
Basic | 674.2 | 609.5 | 650.9 | 590.5 | |||
Diluted | 677.1 | 619.0 | 679.4 | 599.6 | |||
| |||
(in millions) |
|
| |
Assets | |||
Current assets: | |||
Cash and cash equivalents | $ 372.9 | $ 301.7 | |
Accounts receivable, net | 1,218.4 | 1,222.1 | |
Inventory | 913.5 | 872.0 | |
Other current assets | 153.1 | 81.4 | |
Total current assets | 2,657.9 | 2,477.2 | |
Property, plant and equipment, net | 727.0 | 705.5 | |
Other intangible assets, net | 4,133.3 | 5,140.3 | |
5,652.6 | 5,341.1 | ||
Other assets | 293.5 | 233.1 | |
Total assets | $ 13,464.3 | $ 13,897.2 | |
Liabilities and stockholders' equity | |||
Current liabilities: | |||
Current portion of debt | $ 364.2 | $ 45.2 | |
Accounts payable | 758.2 | 755.1 | |
Employee-related liabilities | 122.4 | 199.7 | |
Accrued interest | 49.9 | 49.8 | |
Other current liabilities | 364.1 | 401.0 | |
Total current liabilities | 1,658.8 | 1,450.8 | |
Debt, net of current portion | 5,923.3 | 6,978.0 | |
Deferred income tax liabilities | 731.4 | 913.0 | |
Other liabilities | 295.4 | 358.4 | |
Total liabilities | 8,608.9 | 9,700.2 | |
Stockholders' equity: | |||
Mandatory convertible preferred stock including paid-in capital | — | 1,003.7 | |
Common stock including paid-in capital | 3,785.3 | 2,752.6 | |
Accumulated earnings | 1,170.4 | 483.9 | |
Accumulated other comprehensive loss | (100.3) | (43.2) | |
Total stockholders' equity | 4,855.4 | 4,197.0 | |
Total liabilities and stockholders' equity | $ 13,464.3 | $ 13,897.2 | |
| |||||||
(in millions) | Three months ended | Year ended | |||||
2022 | 2021 | 2022 | 2021 | ||||
Cash flows from operating activities: | |||||||
Net income | $ 141.7 | $ 94.0 | $ 686.5 | $ 572.6 | |||
Reconciling adjustments: | |||||||
Depreciation and amortization | 100.7 | 104.1 | 405.5 | 379.2 | |||
Stock-based compensation expense | 10.0 | 13.7 | 45.8 | 50.7 | |||
Provision for accounts receivable and inventory | 21.1 | 11.4 | 65.0 | 44.9 | |||
Deferred income tax (benefit) expense | (7.3) | 6.3 | (69.1) | (17.7) | |||
Amortization of deferred financing costs | 3.6 | 4.6 | 15.7 | 16.3 | |||
Loss on extinguishment of debt | 1.7 | 4.0 | 12.5 | 12.4 | |||
Foreign currency remeasurement loss | 5.1 | 1.3 | 10.0 | 6.7 | |||
Changes in assets and liabilities: | |||||||
Accounts receivable | 53.8 | (45.3) | (45.2) | (111.8) | |||
Inventory | 1.6 | (12.0) | (112.5) | (129.8) | |||
Accounts payable | (49.5) | 63.0 | 15.6 | 64.9 | |||
Accrued interest | 11.3 | 22.8 | 0.1 | 5.3 | |||
Other assets and liabilities | (81.3) | 36.4 | (179.3) | 56.9 | |||
Other, net | (6.9) | (3.3) | (7.0) | 3.0 | |||
Net cash provided by operating activities | 205.6 | 301.0 | 843.6 | 953.6 | |||
Cash flows from investing activities: | |||||||
Capital expenditures | (33.6) | (40.0) | (133.4) | (111.1) | |||
Cash paid for acquisitions, net of cash acquired | — | (2,845.2) | (20.2) | (4,014.1) | |||
Cash proceeds from settlement of cross currency swap | — | — | 42.5 | — | |||
Other | 0.5 | 1.7 | 1.5 | 3.5 | |||
Net cash used in investing activities | (33.1) | (2,883.5) | (109.6) | (4,121.7) | |||
Cash flows from financing activities: | |||||||
Debt borrowings | 82.2 | 1,700.0 | 327.2 | 2,834.6 | |||
Debt repayments | (164.0) | (210.8) | (947.0) | (533.9) | |||
Payments of debt refinancing fees and premiums | (0.6) | (18.1) | (0.6) | (40.6) | |||
Proceeds from issuance of stock, net of issuance costs | — | — | — | 967.0 | |||
Payments of dividends on preferred stock | — | (16.2) | (32.4) | (64.6) | |||
Proceeds received from exercise of stock options | 0.9 | 6.1 | 17.3 | 82.5 | |||
Shares repurchased to satisfy employee tax obligations for vested stock-based awards | (0.1) | — | (13.2) | (25.8) | |||
Net cash (used in) provided by financing activities | (81.6) | 1,461.0 | (648.7) | 3,219.2 | |||
Effect of currency rate changes on cash | 18.2 | (3.2) | (15.5) | (13.2) | |||
Net change in cash, cash equivalents and restricted cash | 109.1 | (1,124.7) | 69.8 | 37.9 | |||
Cash, cash equivalents and restricted cash, beginning of period | 287.8 | 1,451.8 | 327.1 | 289.2 | |||
Cash, cash equivalents and restricted cash, end of period | $ 396.9 | $ 327.1 | $ 396.9 | $ 327.1 | |||
| |||||||
(in millions) | Three months ended | Year ended | |||||
2022 | 2021 | 2022 | 2021 | ||||
Net income | $ 141.7 | $ 94.0 | $ 686.5 | $ 572.6 | |||
Amortization | 78.5 | 80.4 | 318.3 | 290.8 | |||
Loss on extinguishment of debt | 1.7 | 4.0 | 12.5 | 12.4 | |||
Net foreign currency loss from financing activities | 7.2 | 0.2 | 7.0 | 1.3 | |||
Other share-based compensation expense (benefit) | — | 0.2 | (3.3) | 3.0 | |||
Acquisition-related expenses1 | — | 49.9 | — | 77.8 | |||
Integration-related expenses2 | 5.6 | 7.8 | 19.2 | 15.9 | |||
Purchase accounting adjustments3 | — | — | 9.4 | 6.3 | |||
Restructuring and severance charges4 | (0.2) | 2.7 | 3.5 | 5.3 | |||
Receipt of disgorgement penalty5 | — | — | — | (13.0) | |||
Income tax (benefit) applicable to pretax adjustments | (20.5) | (10.0) | (97.6) | (65.1) | |||
Adjusted net income | 214.0 | 229.2 | 955.5 | 907.3 | |||
Interest expense | 69.8 | 60.8 | 265.8 | 217.4 | |||
Depreciation | 22.2 | 23.7 | 87.2 | 88.4 | |||
Income tax provision applicable to Adjusted Net income | 53.5 | 56.1 | 262.2 | 245.5 | |||
Adjusted EBITDA | $ 359.5 | $ 369.8 | $ 1,570.7 | $ 1,458.6 | |||
━━━━━━━━━ | |
1. | Represents legal, accounting, investment banking and consulting fees incurred related to the acquisition of acquired companies. |
2. | 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. |
3. | Represents the non-cash reduction of contingent consideration related to the Ritter acquisition and the amortization of the purchase accounting adjustment to record inventory acquired from Masterflex and Ritter at fair value. |
4. | 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. |
5. | Related to the disgorgement of disallowed trading profits from Goldman Sachs, which was a related party until |
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Earnings per share | |||||||
(shares in millions) | Three months ended | Year ended | |||||
2022 | 2021 | 2022 | 2021 | ||||
Diluted earnings per share (GAAP) | $ 0.21 | $ 0.13 | $ 1.01 | $ 0.85 | |||
Dilutive impact of convertible instruments | — | 0.02 | — | 0.04 | |||
Fully diluted earnings per share (non-GAAP) | 0.21 | 0.15 | 1.01 | 0.89 | |||
Amortization | 0.12 | 0.12 | 0.47 | 0.45 | |||
Loss on extinguishment of debt | — | 0.02 | 0.01 | 0.03 | |||
Net foreign currency loss from financing activities | 0.01 | — | 0.01 | — | |||
Other stock-based compensation expense | — | — | — | — | |||
Acquisition-related expenses | — | 0.07 | — | 0.12 | |||
Integration-related expenses | 0.01 | 0.02 | 0.03 | 0.03 | |||
Purchase accounting adjustments | — | — | 0.01 | 0.01 | |||
Restructuring and severance charges | — | — | 0.01 | — | |||
Receipt of disgorgement penalty | — | — | — | (0.02) | |||
Income tax (benefit) applicable to pretax adjustments | (0.03) | (0.02) | (0.14) | (0.10) | |||
Adjusted EPS (non-GAAP) | $ 0.32 | $ 0.36 | $ 1.41 | $ 1.41 | |||
Weighted average shares outstanding: | |||||||
Diluted (GAAP) | 677.1 | 619.0 | 679.4 | 599.6 | |||
Incremental shares excluded for GAAP | — | 62.9 | — | 62.9 | |||
Normalization | — | (39.2) | — | (19.8) | |||
Share count for Adjusted EPS (non-GAAP)1 | 677.1 | 642.7 | 679.4 | 642.7 | |||
━━━━━━━━━ | |
1. | Beginning with the quarter ended |
| |||||||||||||
Free cash flow | |||||||||||||
(in millions) | Three months ended | Year ended | |||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||
Net cash provided by operating activities | $ 205.6 | $ 301.0 | $ 843.6 | $ 953.6 | |||||||||
Acquisition-related expenses paid | — | 53.2 | — | 77.8 | |||||||||
Capital expenditures | (33.6) | (40.0) | (133.4) | (111.1) | |||||||||
Free cash flow (non-GAAP) | $ 172.0 | $ 314.2 | $ 710.2 | $ 920.3 | |||||||||
Adjusted net leverage | |||||||||||||
(dollars in millions) |
| ||||||||||||
Total debt, gross | $ 6,349.1 | ||||||||||||
Less cash and cash equivalents | (372.9) | ||||||||||||
$ 5,976.2 | |||||||||||||
Trailing twelve months Adjusted EBITDA1 | $ 1,570.7 | ||||||||||||
Trailing twelve months ongoing stock-based compensation expense | 49.1 | ||||||||||||
Pro forma adjustment for projected synergies | — | ||||||||||||
$ 1,619.8 | |||||||||||||
Adjusted net leverage (non-GAAP) | 3.7 x | ||||||||||||
━━━━━━━━━ | |
1. | Represents the Adjusted EBITDA of |
| |||||||||||||||
Net sales | |||||||||||||||
(in millions) | Reconciliation of reported change to organic and core organic change | ||||||||||||||
Reported | Foreign | M&A | Organic | COVID - | Core | ||||||||||
2022 | 2021 | ||||||||||||||
Three months ended: | |||||||||||||||
$ (39.5) | $ (5.3) | $ 10.1 | $ (44.3) | $ (45.0) | $ 0.7 | ||||||||||
617.2 | 686.2 | (69.0) | (72.2) | 2.0 | 1.2 | (42.0) | 43.2 | ||||||||
AMEA | 129.8 | 133.9 | (4.1) | (9.0) | 2.0 | 2.9 | (4.7) | 7.6 | |||||||
Total | $ (112.6) | $ (86.5) | $ 14.1 | $ (40.2) | $ (91.7) | $ 51.5 | |||||||||
Year ended: | |||||||||||||||
$ 233.8 | $ (14.1) | $ 133.1 | $ 114.8 | $ (145.0) | $ 259.8 | ||||||||||
2,516.5 | 2,677.3 | (160.8) | (276.4) | 92.0 | 23.6 | (124.2) | 147.8 | ||||||||
AMEA | 524.7 | 471.4 | 53.3 | (26.6) | 43.1 | 36.8 | 3.7 | 33.1 | |||||||
Total | $ 126.3 | $ (317.1) | $ 268.2 | $ 175.2 | $ (265.5) | $ 440.7 | |||||||||
━━━━━━━━━ | |
1. | Core organic sales growth eliminates from our organic growth the impact from the change in sales of COVID-19 related offerings from 2021 to 2022. Numbers in this column are calculated by removing the impact of COVID-19 sales from the numbers in the "Organic" column. |
Adjusted EBITDA | |||||||
(in millions) | Three months ended | Year ended | |||||
2022 | 2021 | 2022 | 2021 | ||||
$ 231.0 | $ 238.4 | $ 1,077.3 | $ 978.4 | ||||
131.1 | 148.2 | 524.1 | 538.5 | ||||
AMEA | 40.4 | 33.3 | 141.5 | 113.9 | |||
Corporate | (43.0) | (50.2) | (172.2) | (172.2) | |||
Total | $ 359.5 | $ 369.7 | $ 1,570.7 | $ 1,458.6 | |||
Investor Relations Contact
Vice President, Investor Relations
+1 805-617-5297
Christina.Jones@avantorsciences.com
Media Contact
Vice President,
+1 332-239-3910
Emily.collins@avantorsciences.com
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FAQ
What were Avantor's fourth-quarter 2022 net sales?
How did Avantor perform in full-year 2022?
What was Avantor's adjusted EBITDA for 2022?
What is Avantor's core organic growth rate for 2022?
Did Avantor experience any sales declines in specific regions?
