Company Quick10K Filing
Price15.39 EPS-0
Shares581 P/E-336
MCap8,937 P/FCF45
Net Debt5,096 EBIT200
TEV14,033 TEV/EBIT70
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-06-30 Filed 2020-07-29
S-1 2020-05-18 Public Filing
10-Q 2020-03-31 Filed 2020-04-29
10-K 2019-12-31 Filed 2020-02-14
10-Q 2019-09-30 Filed 2019-11-05
10-Q 2019-06-30 Filed 2019-08-06
S-1 2019-02-08 Public Filing
8-K 2020-08-19 Enter Agreement, Exhibits
8-K 2020-07-29 Earnings, Exhibits
8-K 2020-07-17 Enter Agreement, Leave Agreement, Off-BS Arrangement, Exhibits
8-K 2020-07-14 Enter Agreement, Exhibits
8-K 2020-07-07 Other Events, Exhibits
8-K 2020-07-07 Earnings, Regulation FD, Other Events, Exhibits
8-K 2020-05-20
8-K 2020-05-18
8-K 2020-05-08
8-K 2020-04-29
8-K 2020-04-29
8-K 2020-04-22
8-K 2020-03-30
8-K 2020-02-07
8-K 2020-01-24
8-K 2019-11-05
8-K 2019-09-18
8-K 2019-08-06
8-K 2019-06-18
8-K 2019-05-23
8-K 2019-05-21

AVTR 10Q Quarterly Report

Part I - Financial Information
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II - Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.1 a2020q2ex311.htm
EX-31.2 a2020q2ex312.htm
EX-32.1 a2020q2ex321.htm
EX-32.2 a2020q2ex322.htm

Avantor Earnings 2020-06-30

Balance SheetIncome StatementCash Flow
Assets, Equity
Rev, G Profit, Net Income
Ops, Inv, Fin


Washington, D.C. 20549
For the quarterly period ended June 30, 2020
For the transition period from __________ to __________
Commission file number: 001-38912
Avantor, Inc.
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
Radnor Corporate Center, Building One, Suite 200
100 Matsonford Road
Radnor, Pennsylvania 19087
(Address of principal executive offices) (zip code)
(610) 386-1700
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, $0.01 par valueAVTRNew York Stock Exchange
6.250% Series A Mandatory Convertible Preferred Stock, $0.01 par valueAVTR PRANew York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. ☐ Large Accelerated Filer ☐ Accelerated Filer ☒ Non-accelerated Filer Smaller reporting company  Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ☒ No
On July 21, 2020, 576,568,200 shares of common stock, $0.01 par value per share, were outstanding.

Avantor, Inc. and subsidiaries
Form 10-Q for the quarterly period ended June 30, 2020
Table of contents


Table of contents
we, us, our
Avantor, Inc. and its subsidiaries
2019 Plan
the Avantor, Inc. 2019 Equity Incentive Plan, a stock-based compensation plan
Adjusted EBITDA
our earnings or loss before interest, taxes, depreciation, amortization and certain other adjustments
Annual Report
our annual report on Form 10-K for the year ended December 31, 2019
Asia, Middle-East and Africa
accumulated other comprehensive income or loss
CARESthe Coronavirus Aid, Relief, and Economic Security Act
Comprehensive Environmental Response, Compensation, and Liability Act
Current Good Manufacturing Practice
double-digitgreater than 10%
the basic rate of interest used in lending between banks on the European Union interbank market
the Financial Accounting Standards Board of the United States
United States generally accepted accounting principles
high single-digit
7 - 9%
IPOinitial public offering
JCPSJunior Convertible Preferred Stock
the basic rate of interest used in lending between banks on the London interbank market
low single-digit
1 - 3%
6.250% Series A Mandatory Convertible Preferred Stock
mid single-digit
4 - 6%
NuSil Acquisition Corp, NuSil Investments LLC and subsidiaries, a business organization with which we merged in 2016
NuSil Investors
NuSil LLC and NuSil 2.0 LLC, former owners of NuSil that are controlled by its former management
restricted stock unit
SARstand alone appreciation right
the United States Securities and Exchange Commission
SG&A expenses
selling, general and administrative expenses
Specialty procurement
product sales related to customer procurement services
VWR Corporation and its subsidiaries, a company we acquired in November 2017


Table of contents
Cautionary factors regarding forward-looking statements
This report contains forward-looking statements. All statements other than statements of historical fact included in this report 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.
In the first quarter of 2020, we updated our risk factors to reflect new developments in the scale and scope of the new global coronavirus pandemic under Part II, Item 1A, “Risk Factors.” You should also understand that the following important factors, in addition to those discussed under “Risk Factors” in our Annual Report, as such risk factors may be updated from time to time in our periodic filings with the SEC and in this report, could affect our future results and could cause those results or other outcomes to differ materially from those expressed or implied in our forward-looking statements:
disruptions to our operations;
competition from other industry providers;
our ability to implement our growth strategy;
our ability to anticipate and respond to changing industry trends;
adverse trends in consumer, business, and government spending;
our dependence on sole or limited sources for some essential materials and components;
our ability to successfully value and integrate acquired businesses;
our products’ satisfaction of applicable quality criteria, specifications and performance standards;
our ability to maintain our relationships with key customers;
our ability to maintain our relationships with distributors;

Table of contents
our ability to maintain consistent purchase volumes under purchase orders;
our ability to maintain and develop relationships with drug manufacturers and contract manufacturing organizations;
the impact of new laws, regulations, or other industry standards;
changes in the interest rate environment that increase interest on our borrowings;
adverse impacts from currency exchange rates or currency controls imposed by any government in major areas where we operate or otherwise;
our ability to implement and improve processing systems and prevent a compromise of our information systems;
our ability to protect our intellectual property and avoid third-party infringement claims;
exposure to product liability and other claims in the ordinary course of business;
our ability to develop new products responsive to the markets we serve;
the availability of raw materials;
our ability to avoid negative outcomes related to the use of chemicals;
our ability to maintain highly skilled employees;
adverse impact of impairment charges on our goodwill and other intangible assets;
fluctuations and uncertainties related to doing business outside the United States;
our ability to obtain and maintain required regulatory clearances or approvals may constrain the commercialization of submitted products;
our ability to comply with environmental, health and safety laws and regulations, or the impact of any liability or obligation imposed under such laws or regulations;
our indebtedness could adversely affect our financial condition and prevent us from fulfilling our debt or contractual obligations;
our ability to generate sufficient cash flows or access sufficient additional capital to meet our debt obligations or to fund our other liquidity needs; and
our ability to maintain an adequate system of internal control over financial reporting.
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 report. We undertake no obligations to update or

Table of contents
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.

Table of contents
Item 1. Financial statements
Avantor, Inc. and subsidiaries
Index to unaudited condensed consolidated financial statements


Table of contents
Avantor, Inc. and subsidiaries
Unaudited condensed consolidated balance sheets
(in millions)
June 30, 2020
December 31, 2019
Current assets:
Cash and cash equivalents
$415.3  $186.7  
Accounts receivable, net of allowances of $25.5 and $18.6
983.7  988.8  
737.8  711.2  
Other current assets
155.5  134.8  
Total current assets
2,292.3  2,021.5  
Property, plant and equipment, net of accumulated depreciation of $339.0 and $307.8
551.8  557.0  
Other intangible assets, net (see note 8)
4,057.7  4,220.2  
2,761.2  2,769.4  
Other assets
204.0  205.2  
Total assets
$9,867.0  $9,773.3  
Liabilities and stockholders’ equity
Current liabilities:
Current portion of debt
$14.3  $93.5  
Accounts payable
581.0  560.2  
Employee-related liabilities
116.3  114.3  
Accrued interest
74.2  74.2  
Other current liabilities
267.9  232.3  
Total current liabilities
1,053.7  1,074.5  
Debt, net of current portion
5,063.8  5,023.0  
Deferred income tax liabilities
788.0  785.4  
Other liabilities
420.7  428.2  
Total liabilities
7,326.2  7,311.1  
Commitments and contingencies, see note 10
Stockholders’ equity:
MCPS including paid-in capital, 20.7 shares outstanding
1,003.7  1,003.7  
Common stock including paid-in capital, 576.3 and 572.8 shares outstanding
1,744.0  1,748.1  
Accumulated deficit
(98.1) (203.7) 
Accumulated other comprehensive loss
(108.8) (85.9) 
Total stockholders’ equity
2,540.8  2,462.2  
Total liabilities and stockholders’ equity
$9,867.0  $9,773.3  

See accompanying notes to the unaudited condensed consolidated financial statements.

Table of contents
Avantor, Inc. and subsidiaries
Unaudited condensed consolidated statements of operations
(in millions, except per share data)
Three months ended June 30,
Six months ended June 30,
Net sales
$1,478.7  $1,532.4  $2,997.7  $3,012.5  
Cost of sales
988.1  1,041.3  2,005.2  2,046.2  
Gross profit
490.6  491.1  992.5  966.3  
Selling, general and administrative expenses
324.0  372.0  667.5  709.6  
Operating income
166.6  119.1  325.0  256.7  
Interest expense
(92.1) (115.1) (186.6) (243.7) 
Loss on extinguishment of debt
  (70.2)   (70.2) 
Other income, net
4.2  15.6  5.0  10.5  
Income (loss) before income taxes
78.7  (50.6) 143.4  (46.7) 
Income tax (expense) benefit
(18.5) 1.9  (36.2) (8.2) 
Net income (loss)
60.2  (48.7) 107.2  (54.9) 
Accumulation of yield on preferred stock
(16.2) (48.2) (32.3) (120.0) 
Accretion of make whole premium on series A preferred stock
  (220.4)   (220.4) 
Net income (loss) available to common stockholders
$44.0  $(317.3) $74.9  $(395.3) 
Earnings (loss) per share:
$0.08  $(0.98) $0.13  $(1.73) 
$0.08  $(0.98) $0.13  $(1.73) 
Weighted average shares outstanding:
575.6  323.4  574.6  228.6  
582.1  323.4  581.7  228.6  

See accompanying notes to the unaudited condensed consolidated financial statements.

Table of contents
Avantor, Inc. and subsidiaries
Unaudited condensed consolidated statements of comprehensive income or loss
(in millions)
Three months ended June 30,
Six months ended June 30,
Net income (loss)
$60.2  $(48.7) $107.2  $(54.9) 
Other comprehensive income (loss):
Foreign currency translation — unrealized gain (loss)
44.7  12.3  (24.1) 3.4  
Derivative instruments:
Unrealized gain (loss)
0.7  (1.2) 2.3  (1.5) 
Reclassification of gain into earnings
(0.7)   (0.8) (0.3) 
Defined benefit plans:
Unrealized (loss) gain
(0.2) 0.1  0.2    
Reclassification of gain into earnings
(0.1) (0.1) (0.2) (0.3) 
Other comprehensive income (loss) before income taxes
44.4  11.1  (22.6) 1.3  
Income tax effect
0.1  0.3  (0.3) 0.5  
Other comprehensive income (loss)
44.5  11.4  (22.9) 1.8  
Comprehensive income (loss)
$104.7  $(37.3) $84.3  $(53.1) 

See accompanying notes to the unaudited condensed consolidated financial statements.

Table of contents
Avantor, Inc. and subsidiaries
Unaudited condensed consolidated statements of stockholders’ equity
(in millions)
Stockholders’ equity
MCPS including paid-in capitalCommon stock including paid-in capitalAccumulated deficitAOCITotal
Balance at March 31, 2020
20.7  $1,003.7  574.9  $1,748.0  $(158.3) $(153.3) $2,440.1  
Comprehensive income
—  —  —  —  60.2  44.5  104.7  
Stock-based compensation expense
—  —  —  10.3  —  —  10.3  
Accumulation of yield on preferred stock
—  —  —  (16.2) —  —  (16.2) 
Stock option exercises and other common stock transactions
—  —  1.4  1.9  —  —  1.9  
Balance at June 30, 2020
20.7  $1,003.7  576.3  $1,744.0  $(98.1) $(108.8) $2,540.8  
Balance at March 31, 2019
  $  132.8  $(2,814.6) $(247.7) $(76.1) $(3,138.4) 
Issuances, net of issuance costs
20.7  1,003.7  238.1  3,232.0  —  —  4,235.7  
Conversion of JCPS
—  —  194.5  1,562.0  —  —  1,562.0  
Comprehensive (loss) income
—  —  —  —  (48.7) 11.4  (37.3) 
Stock-based compensation expense
—  —  —  48.7  —  —  48.7  
Accumulation of yield on preferred stock
—  —  —  (48.2) —  —  (48.2) 
Accretion of make whole premium on series A preferred stock
—  —  —  (220.4) —  —  (220.4) 
Exercise of warrants
—  —  3.4  —  —  —  —  
Award reclassification
—  —  —  8.8  —  —  8.8  
Balance at June 30, 2019
20.7  $1,003.7  568.8  $1,768.3  $(296.4) $(64.7) $2,410.9  
See accompanying notes to the unaudited condensed consolidated financial statements.

Table of contents
Avantor, Inc. and subsidiaries
Unaudited condensed consolidated statements of stockholders’ equity (continued)
(in millions)
Stockholders’ equity
MCPS including paid-in capitalCommon stock including paid-in capitalAccumulated deficitAOCITotal
Balance at December 31, 2019
20.7  $1,003.7  572.8  $1,748.1  $(203.7) $(85.9) $2,462.2  
Impact of new accounting standard
—  —  —  —  (1.6) —  (1.6) 
Comprehensive income (loss)
—  —  —  —  107.2  (22.9) 84.3  
Stock-based compensation expense
—  —  —  19.5  —  —  19.5  
Accumulation of yield on preferred stock
—  —  —  (32.3) —  —  (32.3) 
Stock option exercises and other common stock transactions
—  —  3.5  8.7  —  —  8.7  
Balance at June 30, 2020
20.7  $1,003.7  576.3  $1,744.0  $(98.1) $(108.8) $2,540.8  
Balance at December 31, 2018
  $  132.8  $(2,746.8) $(238.4) $(66.5) $(3,051.7) 
Impact of new accounting standard
—  —  —  —  (3.1) —  (3.1) 
Issuances, net of issuance costs
20.7  1,003.7  238.1  3,232.0  —  —  4,235.7  
Conversion of JCPS
—  —  194.5  1,562.0  —  —  1,562.0  
Comprehensive (loss) income
—  —  —  —  (54.9) 1.8  (53.1) 
Stock-based compensation expense
—  —  —  52.7  —  —  52.7  
Accumulation of yield on preferred stock
—  —    (120.0) —  —  (120.0) 
Accretion of make whole premium on series A preferred stock
—  —  —  (220.4) —  —  (220.4) 
Exercise of warrants
—  —  3.4  —  —  —  —  
Award reclassification
—  —  —  8.8  —  —  8.8  
Balance at June 30, 2019
20.7  $1,003.7  568.8  $1,768.3  $(296.4) $(64.7) $2,410.9  

See accompanying notes to the unaudited condensed consolidated financial statements.

Table of contents
Avantor, Inc. and subsidiaries
Unaudited condensed consolidated statements of cash flows
(in millions)
Six months ended June 30,
Cash flows from operating activities:
Net income (loss)
$107.2  $(54.9) 
Reconciling adjustments:
Depreciation and amortization
194.3  201.3  
Stock-based compensation expense
20.0  55.7  
Provision for accounts receivable and inventory
23.3  16.7  
Deferred income tax benefit
(22.1) (60.3) 
Amortization of deferred financing costs
13.1  19.3  
Loss on extinguishment of debt
Foreign currency remeasurement loss (gain)
4.1  (7.6) 
Changes in assets and liabilities:
Accounts receivable
(16.1) (73.1) 
(46.4) (71.2) 
Accounts payable
31.1  23.4  
Accrued interest
Other assets and liabilities
33.6  (47.2) 
Other, net
0.2  (1.4) 
Net cash provided by operating activities
342.3  69.1  
Cash flows from investing activities:
Capital expenditures
(26.1) (26.4) 
1.7  6.1  
Net cash used in investing activities
(24.4) (20.3) 
Cash flows from financing activities:
Debt borrowings
Debt repayments
(67.5) (1,822.0) 
Payments of contingent consideration
Proceeds from issuance of stock, net of issuance costs
Redemption of series A preferred stock
Payments of dividends on preferred stock
Proceeds received from exercise of stock options
Net cash used in financing activities
(86.4) (67.8) 
Effect of currency rate changes on cash
(2.9) (1.1) 
Net change in cash and cash equivalents
228.6  (20.1) 
Cash, cash equivalents and restricted cash, beginning of period
189.3  187.7  
Cash, cash equivalents and restricted cash, end of period
$417.9  $167.6  

See accompanying notes to the unaudited condensed consolidated financial statements.

Table of contents
Avantor, Inc. and subsidiaries
Notes to unaudited condensed consolidated financial statements
1. Nature of operations and presentation of financial statements
We are a global manufacturer and distributor that provides products and services to customers in the biopharmaceutical, healthcare, education & government and advanced technologies & applied materials industries.
Basis of presentation
We have prepared these condensed consolidated financial statements pursuant to SEC regulations whereby certain information normally included in GAAP financial statements has been condensed or omitted. The financial information presented herein reflects all adjustments (consisting only of normal, recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. The results for interim periods are not necessarily indicative of the results to be expected for the full year.
We believe that the disclosures included herein are adequate to make the information presented not misleading in any material respect when read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report. Those audited consolidated financial statements include a summary of our significant accounting policies, updates to which are included in note 2.
Principles of consolidation
All intercompany balances and transactions have been eliminated from the financial statements.
Use of estimates
The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the amounts reported throughout the financial statements. Actual results could differ from those estimates.
Global coronavirus outbreak
The ongoing coronavirus outbreak known as COVID-19 has adversely affected global economies, financial markets and the overall environment in which we do business, and the extent to which it may impact our future results of operations and overall financial performance remains uncertain.
In response to the COVID-19 outbreak, on March 27, 2020, the United States Government enacted the CARES Act, which provides financial stimulus to qualifying businesses. We expect to benefit from the provisions under the CARES Act that allow for an increased deduction of business interest for income tax purposes for fiscal years 2019 and 2020, and for the deferral of payments for certain employment taxes incurred through the end of fiscal year 2020. We expect benefits of $29.5 million and $17.0 million for fiscal years 2019 and 2020, respectively, from the

Table of contents
increased business interest deduction. We will apply the 2019 benefit to our fiscal year 2020 estimated tax payments.
Secondary offering
On May 26, 2020, we completed a secondary offering of 51.75 million shares of our common stock held by certain of our stockholders at the public offering price of $16.25 per share, including the full exercise by the underwriters of their option to purchase up to 6.75 million additional shares of common stock. No shares were sold by us, and we received no proceeds from this offering. Fees incurred to complete this transaction were expensed and immaterial.
2. Summary of significant accounting policies
Interim update to segment reporting policy
During the quarter ended March 31, 2020, our Chief Executive Officer, who is our chief operating decision maker, changed the measure he uses to evaluate segment profitability from Management EBITDA to Adjusted EBITDA. All disclosures relating to segment profitability, including those for comparative periods, have been revised as a result of this change.
3. New accounting standards
New tax standard
In December 2019, the FASB issued a new standard to simplify the accounting for income taxes by removing certain exceptions to the existing guidance and also providing for additional clarification. This standard encompasses multiple amendments, and requires adoption either retrospectively, prospectively, or using a modified retrospective approach, depending on the amendment. For the amendments in which we are given the choice between adopting retrospectively or on a modified retrospective basis, we expect to adopt on a modified retrospective basis. All other amendments will be adopted using the method prescribed by the standard. The standard is effective on January 1, 2021 and we are currently evaluating its impact. Two of the provisions included in this amendment that are most relevant to us are: 1) the provision requiring companies to recognize a franchise (or similar) tax that is partially based on income as an income-based tax and account for any incremental amount incurred as a non-income-based tax, and 2) the provision requiring companies to evaluate when a step-up in the tax basis of goodwill should be considered part of the business combination in which the book goodwill was originally recognized and when it should be considered a separate transaction.
New credit losses standard
In June 2016, the FASB issued a new standard that modifies the recognition of credit losses related to financial assets. Under the new standard, an entity must measure and record its total expected credit losses, rather than recording such losses when it is probable that they have occurred, as was required under the previous standard. We adopted the new guidance on January 1, 2020 using a modified retrospective approach applied to our portfolio of trade receivables as

Table of contents
of that date. On the adoption date, we (i) recorded a $1.6 million cumulative effect adjustment to increase accumulated deficit, (ii) increased our allowance for credit losses to accounts receivable by $2.2 million, and (iii) recognized a $0.6 million reduction to deferred income tax liabilities.
There were no other new accounting standards that we expect to have a material impact to our financial position or results of operations upon adoption.
4. Earnings or loss per share
The following table presents the reconciliation of basic and diluted earnings per share for the three and six months ended June 30, 2020:
Three months ended June 30, 2020Six months ended June 30, 2020
(in millions, except per share data)
Earnings (numerator)Weighted average shares outstanding (denominator)Earnings per shareEarnings (numerator)Weighted average shares outstanding (denominator)Earnings per share
$44.0  575.6  $0.08  $74.9  574.6  $0.13  
Dilutive effect of stock-based awards
  6.5    7.1