AVANTOR (NYSE:AVTR) Q3 2019 Earnings Conference Call - Final Transcript

Nov 05, 2019 • 08:30 am ET


AVANTOR (NYSE:AVTR) Q3 2019 Earnings Conference Call - Final Transcript


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Ladies and gentlemen, thank you for standing by and welcome to the Avantor Third Quarter Earnings Conference Call. [Operator Instructions]

I would now like to hand the conference over to your speaker today, Helen O'Donnell. Thank you. Please go ahead.

Helen O'Donnell

Thank you, operator, and good morning everyone. Thank you for joining us on today's call. Our speakers today are, Michael Stubblefield, President and Chief Executive Officer; and Tom Szlosek, Executive Vice President and Chief Financial Officer.

The press release and the presentation accompanying this call are available on our investor website at ir.avantorsciences.com. A replay of this webcast will also be available on our website following this call. Following our prepared remarks, we will open the line up for questions. I would like to note that we will be making some forward-looking statements within the meaning of the 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 might differ materially from any forward-looking statements that we make today. These forward-looking statements speak only as of the date that they are made. And we do not assume any obligation to update these forward-looking statements whether as a result of new information, future events and developments or otherwise. This call will include a discussion of non-GAAP measures, a reconciliation of these non-GAAP measures can be found in the appendix to the presentation.

With that ,I will now turn the call over to Michael.

Michael Stubblefield

Thank you, Helen and good morning everyone. We appreciate you joining our third quarter earnings call. Let's get right into the performance for the quarter. I'm on Slide 3. Organic revenue growth was 2.4% for the period, which reflected a couple of factors. First, our strong growth in the Biopharma end market continued in the quarter, we were up 7% on an organic basis and are up 10% for the year.

You may recall that Biopharma represents approximately 50% of our annual revenues and continued momentum in this end market is a critical element of our model. This growth was partially offset by low single-digit decline in education and government, which had significant growth in 2018 driven by the initiation of a new customer contract. Tom will share more details later, but this contract affected the year-over-year comparison by more than 200 basis points.

Turning to adjusted EBITDA, we continue to make excellent progress on managing product pricing, relative to product cost inflation and delivering the synergies from the VWR acquisition. However, the positive impact of these factors was offset by foreign currency headwinds and adverse product mix, which together diluted margins by approximately 100 basis points in the quarter.

The one-off issue in education and government that I mentioned previously, also contributed to the margin performance. We will provide more details in a few minutes, but we are confident that our long-term growth and margin expansion model