Avantor(US:AVTR)2023-10-26 16:00Financial Performance - Net sales for the three months ended September 30, 2023, were $1,720.2 million, a decrease of $136.3 million or 7.3% compared to the same period in 2022[108][117]. - Organic net sales declined by $178.4 million or 9.6%, with a decline of 7.9% when excluding the impact of COVID-19-related products[119]. - Adjusted EBITDA for the third quarter was $317.8 million, down from $384.0 million in the prior year, reflecting a decrease of $66.2 million[117]. - Operating income for the three months ended September 30, 2023, was $210.2 million, a decrease of $65.6 million or 23.8% compared to $275.8 million for the same period in 2022[130][134]. - For the nine months ended September 30, 2023, operating income was $513.1 million, down $365.3 million or 41.6% from $878.4 million in the prior year[130][134]. - Adjusted EBITDA for the three months ended September 30, 2023, was $317.8 million, a decline of $66.2 million or 17.2% compared to $384.0 million in the same period last year[137][138]. - The nine-month Adjusted EBITDA decreased by $204.2 million or 16.9%, totaling $1,007.0 million compared to $1,211.2 million in the previous year[137][139]. - Net income for the nine months ended September 30, 2023, was $222.6 million, a decrease of $322.2 million compared to $544.8 million in the same period of 2022[152]. Regional Sales Performance - In the Americas, net sales decreased by $104.0 million or 9.3%, with organic net sales down by $105.0 million or 9.4%[120]. - In Europe, net sales decreased by $15.3 million or 2.6%, with organic net sales down by $56.4 million or 9.5%[121]. - In AMEA, net sales decreased by $17.0 million or 12.3%, with organic net sales also down by $17.0 million or 12.3%[123]. - The Americas region saw a decline in Adjusted EBITDA of $38.5 million or 14.7% for the three months ended September 30, 2023[138][140]. - In Europe, Adjusted EBITDA decreased by $27.4 million or 21.0% for the same period, driven by sales volume contraction[139][140]. Cost and Margin Analysis - Gross margin contracted to 33.6% for the three months ended September 30, 2023, down from 35.0% in the same period last year, a decline of 140 basis points[128]. - The company experienced inflationary pressures across all cost categories, impacting overall financial performance[111]. - The decline in sales was attributed to reduced customer demand, customer destocking, and the ongoing effects of the COVID-19 pandemic[118]. Cash Flow and Liquidity - Cash generated from operating activities for the three months ended September 30, 2023, was $230.7 million, while for the nine months, it was $618.4 million[145]. - The company ended the quarter with $236.9 million in cash and cash equivalents, with total liquidity amounting to $1,224.6 million[148][149]. - Cash flows from operating activities decreased by $19.6 million in 2023, primarily due to lower net income, despite improved working capital[153]. - Free cash flow was $522.6 million for the nine months ended September 30, 2023, down $15.6 million from $538.2 million in the prior year[155]. - Non-cash items increased to $475.3 million in 2023 from $350.5 million in 2022, reflecting higher depreciation and amortization[152]. - Working capital changes improved by $145.1 million, with a change from $(155.1) million in 2022 to $(10.0) million in 2023[152]. Impairments and Debt - The company recorded impairment charges of $160.8 million during the nine months ended September 30, 2023[130][132]. - There were no debt repayments due in the next twelve months other than required term loan payments of $32.8 million and receivables facility borrowing of $297.7 million[145]. Investment and Financing Activities - Investing activities used $17.2 million more cash in 2023, mainly due to the absence of cross currency swap settlement and acquisition activity[153]. - Financing activities resulted in $92.5 million more cash used in 2023, primarily due to net repayments on the receivables facility compared to net borrowings in 2022[153]. - Capital expenditures decreased slightly to $95.8 million in 2023 from $99.8 million in 2022, contributing to the reduction in free cash flow[155]. Accounting and Market Risk - There were no new accounting standards expected to materially impact the financial position or results of operations[157]. - No significant changes to market risk disclosures were reported in the Annual Report[158].