Avantor's Conservative Guidance Is Realistic Post Q1 Earnings Performance: Analyst

Avantor Inc AVTR reported first-quarter net sales of $1.68 billion, a decrease of 5.6% year-over-year, almost in line with the consensus of $1.68 billion.

Foreign currency translation had a favorable impact of 0.7%, resulting in a sales decline of 6.3% on an organic basis.

Adjusted EBITDA was $283 million, down from $346.2 million a year ago, and adjusted EBITDA margin was 16.8%. Adjusted operating income was $258.4 million, down $323.1 million a year ago, and adjusted operating income margin was 15.4%.

The company reported an adjusted EPS of $0.22, down 29 cents a year ago, beating the consensus of 20 cents.

Operating cash flow was $141.6 million, while free cash flow was $106.9 million. Adjusted net leverage was 4.0x as of March 31, 2024.

Laboratory Solutions net sales were $1.12 billion, down 3.8%. Sales declined 4.5% on an organic basis.

Bioscience Production net sales were $523 million, down 9.5%. Sales declined 10% on an organic basis.

Guidance: Avantor reiterates 2024 revenue guidance of $6.85 billion-$7.06 billion compared to the consensus of $6.96 billion.

The company forecasts 2024 adjusted EPS of 96 cents to $1.04 versus a consensus of $1.01.

William Blair notes that Bioscience Production outperformed expectations, while Laboratory Solutions fell slightly short due to equipment and instrumentation weaknesses. 

The analyst writes that Avantor’s guidance is conservative and achievable, particularly after these results. 

The upcoming call is expected to concentrate on the sequential progress for the rest of the year, the ramp-up of $75 million in cost savings, performance across customer segments, and metrics like inventory depletion and normalized order activity. 

William Blair values Avantor stock at 18 times their 2024 adjusted EBITDA estimate and rates it as Market Perform.

Price Action: AVTR shares are down 3.7% at $24.20 at the last check Friday.

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