Avantor, Inc. Stock

Ladies and gentlemen, this is the operator. Today's conference is scheduled to begin momentarily. Until that time, on music hold. Thank you for your patience.

Good morning. My name is Christa, and I will be your conference operator today. At this time, I would like to welcome everyone to the Avantor Third Quarter 2026 Earnings Results Conference Call. [Operator Instructions] I would now like to turn the conference over to Chris Fidyk. Chris, you may begin your conference.

Thank you, operator. Good morning, everyone, and thank you for joining us. Our speakers today are Emmanuel Ligner, President and Chief Executive Officer; Todd Garner, Executive Vice President and Chief Financial Officer; and Steve Eck, Senior Vice President and Chief Accounting Officer.

The press release and our presentation accompanying this call are available on our Investor Relations website at ir.avantorsciences.com. Following our prepared remarks, we'll open the call for questions. A replay of the call will be made available on our website later today.

During this call, we will make forward-looking statements within the meaning of the U.S. federal securities laws, including statements regarding events or developments that we believe or anticipate and 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 may differ materially from any forward-looking statements that we make today.

These forward-looking statements speak only as of the date they are made. We do not assume any obligation to update these forward-looking statements as a result of new information, future events or other developments.

This call will include a discussion of non-GAAP measures. A reconciliation of these non-GAAP measures can be found in the press release and in the supplemental disclosures package on our Investor Relations website. I will now turn the call over to Emmanuel.

Thank you, Chris, and good morning, everyone. A special welcome to Todd on his first earnings call with Avantor. Todd will introduce himself shortly, and you will hear much more from him at Investor Day on December 8.

Today, I will begin with a high-level update on our third quarter performance. I will then take a closer look at Avantor returns to revenue growth, including the progress we are making with revival, our comprehensive program to sharpen strategic focus and enhance execution.

On Slide 4, we have the key messages for the quarter. Our third quarter results make a return to organic revenue growth for Avantor. This is an important milestone on our revival journey. We have more work to do, but the quarter demonstrates why we believe the action we are taking through revivals are putting us on a path to sustainable growth.

Third quarter results exceeded our expectation across revenue and adjusted EPS. So those results were driven by strong performance in our VWR Distribution and Services segments, which accelerated meaningfully after returning to growth last quarter. Organic revenue growth in our Bioscience and MedTech product segments turned positive this quarter as anticipated with performance stronger than we had expected.

We once again generated robust free cash flow, which allow us to invest in the business and strengthen our balance sheet. We remain committed to reducing our adjusted net leverage ratio to below 3x, and we expected to achieve this objective by year-end.

Finally, we are raising our 2026 organic revenue, adjusted EPS and free cash flow guidance reflected our third quarter outperformance as well as the momentum we see across the business and in our end markets.

Please turn to Slide 5, where I will review our Q3 performance highlights. In Q3, we generated $1.698 billion of revenue represented year-over-year organic growth of 5.2% and reported growth of 4.6% exceeded our expectations. VWR organic growth accelerated to 5.8% in the quarter. This reflects continued execution against our revival priorities as well as stronger end markets. I will discuss [indiscernible] momentum in a few moments.

Turning to BMP. We were pleased to see the segments returning to revenue growth in the quarter as we had anticipated on our last earnings call. On a year-over-year basis, BMP revenue grew 3.6% organically ahead of our expectation despite a 150 basis point headwind from the unusual customers ordering and shipment patterns that we have discussed on prior calls.

We saw strong performance from process chemicals and new sales in the quarter. Importantly, our revival initiative to enhance commercial and operational execution continue to gain traction across BMP. Revival is helping the segments, delivering more consistent and predictable performance. And as a result, we believe BMP is well positioned to grow in 2027 and beyond.

Moving down the P&L. Adjusted EBITDA margin increased modestly on a sequential basis as operational outperformance and cost discipline helped us absorb headwinds from mix inflation and targeted growth investments. Adjusted EPS of $0.22 was above our expectation. [indiscernible] key strength is robust cash generation. In the third quarter, excluding cash restructuring costs, we generated $169 million of free cash flow, represented strong conversion of adjusted net income.

We used the strong cash generation to further strengthen our balance sheet, and we ended the quarter with an adjusted net leverage ratio of 3.1x.

On Slide 6, we take a closer look at our return to growth. In Q3, Avantor delivered positive organic revenue growth driven by two forces: improving execution and stronger end markets. When we launched our revival program 1 year ago, we identified five key pillars and became a series of initiatives to sharpen our strategy focused on improved execution. Those actions are increasingly embedded in our operating model and in Q3 show up in our results.

In VWR, the actions we are taking to enhance customer relationships boost commercial execution and expand our digital capabilities, continue to gain traction. We estimate that approximately half of VWR growth in Q3 was driven by our commercial initiatives.

We see progress in the same area we highlighted last quarter. We are expanding our relationships with large customers. We are performing well in small and midsized accounts and our e-commerce platform continued to show positive trends.

VWR growth acceleration in Q3 reinforce our confidence in our competitive position in the global distribution market.

In BMP, we are making steady progress on our revival initiatives to strengthen operations and enhance our supply chain. And we have driven sequential increase in manufacturing throughput during 2026.

Let me share a few examples of the progress we are making with revival across the organization. On Monday, we announced that [ Mike Santiago ] will join us from Danaher to serve as our Chief Information Officer. With Mike joining and Todd now on board, our executive leadership team is complete. I'm excited to work with this exceptional group of leaders to execute revival and create shareholder value.

In BMP, our manufacturing teams have increased output across critical product lines. In early September, a key North American manufacturing line produced more than 25,000 kilograms of product in a single week, exceeding its original design capacity target and achieving nearly 99% overall equipment effectiveness ratio flat week. This is a good example of the operational improvement we are making across BMP.

We have advanced our digital manufacturing strategy, including the development of digital workflow and electronic batch records at two key manufacturing sites. Those capabilities improve quality, reduce deviation and end delivery performance, supporting a more efficient manufacturing network over time.

Across our supply chain network, SNOP and other process improvement initiated are taking hold, contributing to improved customer service and on-time delivery across certain product categories. While I am pleased with our progress, we will continue to invest in our operation.

In VWR, we are deploying AI to improve productivity and enhance the customer experience. One example is VWR internal sales assistant or ISA, which use AI to combine customer sales and product data to help sales teams prepare for meetings, generate leads, prioritize opportunities and act on recommendation. ISA also simplified administrative tasks. Since its launch last year, ISA had been widely adopted and we have received positive feedback from our sales team, our customers and our suppliers. We plan to expand ISA and add new functionality.

VWR is also enhancing our internal cross reference platform with AI, to allow our teams to proactively identify product substitutes that offer sustainability advantage or cost saving opportunity to customers.

The key takeaway is that revival impact is broad, from leadership and operation to digital capabilities and customer-facing tools. Revival is helping us improve execution and better serve our customers and ultimately translate to the growth acceleration we see in Q3. That is the execution side of the equation.

I will now turn to end markets where we are also seeing positive signs.

Two points of contact are important to note. First, our segment respond differently to end market condition. VWR is more sensitive to market fluctuation given its significant exposure to research spending, while BMP is more heavily weighted towards production environment.

Second, we have a unique perspective on the end market. through VWR, we serve a daily needs of scientists across more than 300,000 customer sites around the world. We see lab activity as it happens. In daily order rates, and in consumption of everyday consumables, which give us a clear view into the health of the scientific ecosystem.

What we see is on [indiscernible]. The recovery that began in Q2 continued to build in Q3 and importantly, has broadened. Last quarter, we highlighted a pickup in activity among large pharma and biotech customers. That momentum has continued in Q3, our large pharma and biotech customers continue to invest in their R&D pipeline, many of which have been supplemented by business development.

We also saw green shoots of recovery demand in higher education and early-stage biotech customers in North America this quarter. For some of those customers, a more positive funding environment and translated into greater research activity. We also see strength in certain industrial subsectors such as mining.

From a geographical perspective, our Americas demand is performing very well. We are also seeing good activity in Asia, which remain a smaller region for us. We continue to see the market recovery in Europe lagging that of the Americas and Asia. On average, Europe is more challenging macro conditions, including high energy costs and government funding pressure. Any improvement in this important geography will represent a tailwind to our business.

Overall, we are encouraged by the improving tone across our end markets and believe that the demand environment is the most constructive we have seen in several years. Stronger end markets are providing a tailwind and improving execution is converting this tailwind into growth.

We believe this provides us a foundation of sustained revenue growth, and we remain focused on execution to build on our positive momentum.

Before we walk through the financials, I want to welcome Todd Garner, who joined us as the Chief Financial Officer on September 21. Todd brings 30 years of finance, operational and public company leadership experience. He most recently served as CFO of [ Com Med ].

In his first weeks, Todd has been meeting our teams around the world and getting to know our operations. As to continue to deepen its engagement in our business, Steve Eck will walk through today's results.

But first, I would like to give Todd a chance to introduce himself. Todd?

Thank you, Emmanuel, and good morning, everyone. I'm delighted to be here. When I decided to join Avantor, I was drawn to the opportunity to join a strong management team leading a high-quality, cash-generative business with trusted brands and leading positions in attractive markets.

I believe my experience and other transformation throughout my career can directly support the execution of the revival program and help drive meaningful long-term value creation for our shareholders.

In these first few weeks, I've immersed myself in the business, going around the world to listen and learn, traveling with sales reps, visiting with customers and suppliers and touring our facilities. Everything I have learned has reinforced my decision to join. I've been struck by the quality and depth of our teams, their commitment to serving customers and the rigor with which they operate.

Through revival, we are strengthening processes and building operating disciplines that support greater consistency and predictability. I'm excited to help drive revival forward.

My priorities are to continue building a deep understanding of the business and its key drivers, while bringing the transparency, financial rigor and execution discipline that I have emphasized throughout my career. I look forward to engaging with all of you in the months ahead, including at our Investor Day on December 8.

Finally, I want to recognize Steve Eck for his leadership as our interim Chief Financial Officer, and thank him for helping make my transition seamless. I'll now hand the call over to Steve to walk you through the financials. Steve?

Thank you, Todd, and good morning, everyone. Please turn to Slide 9, where I will review our consolidated financial results. In Q3, we generated $1.698 billion of revenue which grew 5.2% on an organic basis, and it was up 4.6% on a reported basis. Adjusted EBITDA was $257 million, resulting in a margin of 15.1% and adjusted EPS was $0.22. We were pleased to see our adjusted EBITDA margin expand sequentially as strong execution and expense discipline allowed us to absorb mix and inflationary pressures while also making targeted growth investments.

Free cash flow for the quarter was $156 million. Excluding cash restructuring costs, free cash flow was $169 million. Both figures were in line with expectations and underscore Avantor's strong cash generation profile. We strengthened our balance sheet in the quarter and ended the period with an adjusted net leverage ratio of 3.1x, down from 3.3x last quarter.

Please turn to Slide 10. Revenue for the VWR Distribution and Services segment was $1.23 billion in the third quarter, up 5.8% organically versus the prior year. The primary drivers of both sequential and year-over-year growth were higher volumes reflecting both improving commercial execution and stronger end markets.

Adjusted operating income for VWR was $119 million in Q3, representing an adjusted operating margin of 9.7%, the year-over-year and sequential declines in operating margin primarily reflected mix, inflationary pressures and growth investments.

The key takeaway from the VWR quarter is that our commercial execution continues to improve allowing us to benefit from a stronger demand environment across many end markets. As Emmanuel mentioned earlier, VWR's growth acceleration reinforces our confidence in VWR's competitive position in the global distribution market.

Let me now discuss performance in the Bioscience and MedTech Products segment, or BMP. I'm on Slide 11. In the third quarter, BMP revenue was $465 million, representing organic growth of 3.6% versus the prior year, exceeding our expectations. Process Chemicals grew high single digits in the quarter, driven by improving operations, healthy end market conditions and strong order performance. [ New still ] grew at a low teens rate in the quarter as we executed effectively against a healthy order book.

Fluid Handling and Research and Specialty Chemicals were down low single digits in the quarter. Last quarter, we indicated that the serum business within research and Specialty Chemicals would be a headwind to our growth rate due to the normalization of discrete customer ordering patterns and shipments in 2025. This factor was a headwind of roughly 150 basis points to BMP organic revenue growth in the third quarter as expected.

BMP saw healthy order trends across all business units in Q3 with particular strength in [ new still ] orders. Adjusted operating income for BMP was $123 million in the quarter, representing an adjusted operating margin of 26.6%. Margins were flat year-over-year despite inflationary pressures and margins increased sequentially versus the second quarter due to increased volumes and mix.

There are two key takeaways from the BMP quarter. First, BMP returned to growth, as we expected, and the segment's consistency and predictability are improving. Second, we are making steady progress with our revival actions to increase operational throughput and improve customer service, and this progress is reflected in BMP's sequential growth and margin improvement versus the second quarter.

Please turn to Slide 12. Our ability to consistently generate strong free cash flow is a key strength of Avantor. In the third quarter, excluding cash restructuring costs, we generated $169 million of free cash flow, reflecting strong conversion of adjusted net income. Our capital allocation priorities support revival and our intention to create sustainable shareholder value over the long term. First, we are making targeted investments in the business to enhance customer service, improve execution and drive organic growth. Second, we are focused on strengthening our balance sheet.

During the quarter, we reduced our net debt balance by $173 million and ended the period with net debt of $3.235 billion. Our adjusted net leverage ratio was 3.1x at the end of Q3 and we expect to reduce our adjusted net leverage ratio to below 3x by year-end.

Please turn to Slide 13, where I will discuss our increased 2026 guidance. For 2026, we have raised our organic revenue growth outlook to a range of 0.75% to 1.25%, which reflects our Q3 revenue outperformance as well as modestly higher growth assumptions for Q4. Our guidance implies Q4 organic revenue growth of 2.5% to 4.5%.

Foreign exchange is expected to be a headwind of 150 basis points to reported revenue in the fourth quarter. As a result, we now expect foreign exchange to contribute approximately 75 basis points to full year reported revenue growth.

In terms of segment performance, we expect VWR will grow mid-single digits in 4Q. This is modestly above our prior expectations and assumes the growth drivers we saw in Q3 continue in the fourth quarter, while also reflecting a range of outcomes related to year-end customer spending patterns as well as a more difficult comparison than Q3.

On the BMP side, we expect year-over-year organic growth to be flat to slightly positive in Q4, reflecting approximately 400 basis points of headwind from discrete comparisons as well as a more challenging comparison in process chemicals. We expect BMP to have modest sequential growth from Q3 to Q4.

Moving to profitability. Our adjusted EBITDA margin guidance remains unchanged, and as improved execution and operational outperformance enabled us to absorb mix and inflationary pressures while continuing to invest for growth. We anticipate that our adjusted EBITDA margin will expand modestly from Q3 to Q4. We remain highly focused on our cost discipline and our objective is to deliver a leveraged P&L in the future as we seek to simplify, reinvest and grow.

Moving down the income statement. In 2026, we now expect an adjusted effective tax rate between 22% and 22.5% and a weighted average diluted share count of 679 million shares. Taken together, these assumptions result in an adjusted EPS outlook that has been raised to $0.81 to $0.83 for the year.

Finally, we have increased our free cash flow guidance we now expect free cash flow between $525 million and $550 million in 2026, reflecting our year-to-date financial performance and the strength and consistency of Avantor's cash generation profile.

I'll now turn the call back to Emmanuel.

Thank you, Steve. Let me echo Todd's comments and express my appreciation for your excellent leadership as interim CFO.

On Slide 14, I would like to leave you with three key points from our results. First, the action we are taking as part of revival are delivering the intended results and our third quarter performance provide tangible evidence of that progress. We remain focused on executing our initiatives to simplify, reinvest and grow Avantor.

Second, we have returned to growth. [indiscernible] continued to execute well against a backdrop of strengthening end markets, and BMP delivered positive revenue growth in the quarter, reflecting the operational improvements the team is making.

Third, we continue to generate robust free cash flow, enabling us to invest for growth while keeping us on track to reduce our adjusted net leverage ratio to below 3x by year-end. Our associates around the world are committed to our customers and deserve a note of SAG. We have made excellent progress so far this year, and I'm excited about the future.

Our Investor Day will take place on December 8. At Investor Day, we will take a deeper look at our segments, our strategy, our capital allocation priorities and how revival is strengthening Avantor's foundation for sustainable growth.

We will also provide a long-term financial framework and outline our road map for value creation. The return to growth we reported today is an important milestone, but we believe it is only the beginning. We look forward to sharing our vision of Avantor's future. And now operator, we are happy to take questions.

[Operator Instructions] And your first question comes from Casey Woodring with JPMorgan.

Great. I guess my first one on the strong VWR performance here, you said half the growth was driven by commercial initiatives. Maybe can you just elaborate on that? How much of the VWR beat was driven by previously disclosed large contract wins versus some of the other commercial initiatives you have going on? Maybe just talk about the sustainability of that moving into 4Q.

Sure. Thanks, Casey and thank you for asking the question. Look, I think we share about half. And when we think about the half about the action we have taken. Yes, large contracts that we have renewed, we talk about the license to hand. We talk about the fact that the team was doing very well on growing our share of wallet there. But it's not the only bucket of positive outcome we saw I think the team is doing very well with small and midsized customers, which is definitely a very important segment for us. And then e-commerce has also demonstrated better performance.

So overall, team is executing well, and we are happy about where we stand right now. And so in that sense, when we look at the market dynamic, and the action taken by the team, and yes, we believe that those results are sustainable and that we look at our apply for Q4, and that implied about the same mid-single-digit growth for VWR in Q4.

Got it. That's helpful. And then I guess as a follow-up, just on the margin line. Do you think you can expand margins next year? The reason I ask is just you've been clear that part of revival has been focused on investing in areas of the business that have historically seen under investment.

There's also been price concessions to protect share in VWR that you've talked about. So just curious in 2027 is a year where you can normalize pricing and some of the investments in the business and start to see some of the benefit here from volumes starting to flow through?

Yes. Look, as we are right in the middle for our planning and budget process. So I think we'll we talk about much more about our guide and what we're seeing for 2027 in those details, right, during our Q4 earnings call in February.

But let me make something very clear. We are very, very pleased with the team performance, the team embracing and executing revival. We have we are definitely improving our execution and the market is getting stronger. So we will end up '26 with strong momentum, right? And which means that months after months, my confidence level is definitely increasing for next year. So more to come, more detail in our Q4 earnings call in February.

Your next question comes from the line of Vijay Kumar with Evercore ISI.

This is Daniel on for Vijay. I wanted to ask on the 4Q implied guide, about 3.5% organic at the midpoint. I'm curious, what's embedded in the assumption that implies that the organic growth is going to moderate from 5% in 3Q? I look at the comps at the corporate level, and they seem pretty similar?

Thank you, Daniel. This is Todd. Nice to meet you. The Q4 guide really assumes the continued momentum we saw in Q3. So I'll take it business by business here in a minute. [indiscernible] grew 5.8%, and we are forecasting mid-single-digit growth in Q4. So that consistent level in Q4 for VWR.

BMP on the last [indiscernible], on the Q2 call, Steve called out that there's a 400 basis point headwind on the BMP side in Q4 due to the timing of order patterns, specifically in the electronic materials business. So with that 400 basis point headwind hit in Q4, the continued momentum that we saw in Q3, if you carry that over into Q4 with that discrete issue we get to Q4 itself for BMP is going to look like flat to slightly positive, although organically, it's consistent with Q3. So that's what puts the Q4 revenue guide in that 2.5% to 4.5% range.

But we see really good momentum in the business, as Emmanuel said, we don't see things slowing down but there is that timing issue in Q4 on the BMP side.

Understood. And then just my follow-up. A lot of players in the life science tools space are starting to talk more about AI benefit I'm curious how Avantor is thinking about the AI opportunity and what that could potentially mean for growth?

It's Emmanuel. I think there is definitely a consensus in the industry about AI being a tailwind for us. I think it's all about productivity in the pharma. AI is here to help. So any increase of productivity in the money spent by pharma in developing new molecules is good for us, okay?

If you have more molecules than need research, development and manufacturing, the research part we're serving them with VWR and in the manufacturing part, we're serving them from BMP. So yes, in deal, we are very excited about AI and the impact they have potentially on the business, and we see that as a tailwind like the rest of the industry.

Your next question comes from the line of Luke Sergott with Barclays.

Thanks for the question, guys. I think just starting off here going back to the margin commentary. So the margins kind of -- they stuck around this 25.5% level on the growth side. You had a big pickup there in VWR mid-single-digit volume growth, off of 2Q. So just wondering how much of this is due to the contract renewals that you had over the last like 6 to 12 months?

And the discounting that might have gone into that versus the timing impact of the investments you made to improve your COGS and manufacturing still waiting to flow through?

Luke, this is Steve. Yes, like we said in the prepared remarks, we're very pleased with another quarter of sequential EBITDA margin expansion that we did see pressure on margins coming from a couple of specific places, which I'm happy to detail for you.

The first is mix. This is the most significant driver in the quarter and is primarily coming from VWR. As you know, VWR is about 70% of our revenues, and it did grow faster than BMP in the quarter with its lower gross margin profile that had a meaningful impact on total company gross margins.

Secondly, within VWR, why we saw growth across the segment, we saw more strength coming from product categories and customer segments that carry a lower gross margin profile. So higher mix of VWR revenues versus BMP as well as some mix dynamics within VWR that affected VWR's gross margins.

The next biggest factor that I'd point you to is inflationary pressures. We continue to see the impacts of inflation across our business, including from the ongoing conflict in the Middle East. But really pleased with the development of the EBITDA margin expansion throughout the year, and we expect to see that trend continue into the fourth quarter. So I appreciate your question.

Yes. Let me jump in here, and I'd like to maybe that back for a few minutes. One year ago, when we launched revival, we really focused on the 5 pillars, but talent, go-to-market supply chain service level with a very, very clear goal in mind, return Avantor to growth. And today, we are ahead of our expectations.

Now I've shared that in the past, we push a mindset culture internally through the organization of simplifying to reinvest for growth, which means self-funding. So the team is working to generate efficiency, productivity to form investment with a clear mindset which is profitable goals and constant operating leverage.

So revival is not done. We will and we are continuing to work really hard to position Avantor to sustainable growth, expand margin and create shareholder value. So we are right in the middle of that.

All right. I guess just a quick follow-up on that. You talked about kind of the investments you made in the couple of facilities. Any kind of color because rolling them out all wholesale.

So just talk about kind of as we think about the rest of the distribution and manufacturing organization. Like what are some early wins or improvements you've seen on those couple of facilities as we think about rolling those forward through '27, '28 and '29?

Sure. I think -- look, I think it's I think the unusual [indiscernible] this year as [indiscernible] what the BMP underlying trend and the performance of the team does, okay? We just talk about this on the Q4 guide.

We see really good progress in the implementation of the SNOP, [ Mary ], [indiscernible], our COO drive many kaizen to make sure that the plants are producing more. I share some example this quarter, last quarter as well. [ Ludovic ] is really pushing the customer centricity across the team and just two KPIs for you.

For the third quarter in a row, our book-to-bill in the BMP is positive. And if we just look at the process chemicals year-to-date, high single-digit order and high single-digit sales performance. So we really see that now we have really a stronger alignment is down to every effort with that the team is doing on the revival pillar of commercial side, go-to-market, but also supply chain service level, which is definitely improving.

Your next question comes from the line of Doug Schenkel with UBS.

Actually, I know this has come up a lot, but I kind of want to take a different angle on margins and also just Q4 guidance, just as follow-ups to the previous questions.

So the first one, it actually looks to me, as I play with the model, that VWR margin could be down under 50 basis points year-over-year in the fourth quarter or something in that neighborhood, just playing with the model. I actually would -- that would actually be a huge step in the right direction given what you've had to manage through in terms of strategic price actions and the inflationary pressures that you faced, especially in that business.

I guess my question is, am I plan with the model, right? And then I think the follow-up just to some of the other questions is as you guided Q4, it seems like you essentially maintains what you were expecting for Q4 and updated guidance largely for the magnitude of the Q3 beat. I didn't hear anything that suggested there were timing dynamics. It really sounds like pacing is a function of the year-over-year comps. I just want to make sure I have that right as well.

Sure, Doug. Nice to meet you. I will -- I'll start by saying, while we don't guide specific margins by the segments, we don't see deterioration either. So we do expect margins to expand modestly. I would put the word modestly on it between Q3 and Q4. But we do expect margin expansion. So there might be a little model tweaking there.

And as Emmanuel said, we are right in the middle of revival with the focus on the long term of developing sustainable, predictable positive profitability and growth. So we're right in the middle of that. We -- Q3 was a really good sign of progress. We think Q4 will be another sign of progress and improvement there. And so that's where we are now, and we can help you a little more with the model offline.

Okay. That sounds good. If I could ask one more. The last couple of quarters, you talked about book-to-bill of over 1. I think you talked about 1.1x for BMP a couple of quarters. You talked about solid order trends this quarter. You've talked about lead times of 30 to 90 days for many products in the portfolio.

Just keeping in mind the momentum seemingly that you have heading into your end there, and thinking about the order book, is that conversion period still the right way to think about things 30 to 90 days? Or are there instances where things are stretching a little bit?

No, 3 to 6 months, depends on the product line is the right way to look at it. No necessary change on our lead times. The team is really working to make sure that we continue through the SNOP if you have a really good so ratio with the customer.

So look, as I said, the unusual comp this year, I think, is masking the BMP underlying performance. But we look at the business also on a quarter after quarter and we have sequential increase all the year so far, and we're looking at a modest sequential increase as well in Q4. So I realize the BMP direction of travel right now.

Your next question comes from the line of Tycho Peterson with Jefferies.

I appreciate you've had a number of questions on margins. I want to maybe just ask on OpEx, higher SG&A. You called that out as an offset to profitability. Just talk a little bit about where those investments are going and when you expect to generate a return from some of that?

Tycho, this is Steve. Actually, we're pleased with the performance from an adjusted SG&A perspective this quarter. It's down modestly from the first half of 2026 levels, which I think is noteworthy because we're in the setting of a significant investment in the business for our future growth. We're in the midst of revival as Emmanuel said, but we're still displaying that cost discipline and capitalizing on opportunities to drive productivity. So we think that's heading in the right direction and as part of that story of gradual sequential EBITDA margin expansion.

And maybe Tycho, let me give you a few examples of where we want to continue to invest. I mean definitely AI. We share a couple of tools during our opening remarks, which I think is important, we'll continue to double down on this supply chain definitely. There's still a lot to do there, and [ Mary ] is taking the lease.

We also want to double down on our e-commerce platform, right? We really see some good performance there. We are happy where we are. We know that we can do more. So I don't give you a couple of examples of where we want to continue to invest.

Okay. And then can you talk more on the strength in new sell uploading, strong orders, I guess, how durable is the demand you're seeing now? Or are there kind of any onetime items in there?

Yes. No. Look, oil is a new set an excellent business is strong brand, great customer relationship, the quality is outstanding [indiscernible] reputation. Again, we had some unusual order and shipping patterns in the past, especially on the first half. But Q3, we saw double-digit revenue growth and order is strong as well, is turning to revenue. The team is executing well.

I think you may have seen there are also some of our customers that are publicly shared the fact that -- we have renewed contract [indiscernible], alright, which is an important customer of us. We have a very long relationship, more than 10 years. And we renewed that contract up to 2031, and so we're really happy of where we are. So Q4 is looking good as well for [indiscernible].

Okay. And if I could ask one last quick one. Is there anything back to margin structurally that would prevent VWR to get back to the historical 12% to 13% range longer term. Understanding, obviously, in the near term, you have inflationary pressures and other factors. But anything structurally that would prevent you from getting back to the historical range?

Look, this is a great question. I think on we talked about that in Investor Day, well, we'll give you a framework for the future.

Your next question comes from the line of Eve Burstein with Bernstein.

Congrats on the quarter, you said you saw stronger end markets in Americas and Asia, but Europe is still lagging because of more challenging macro conditions.

Can you unpack this a little bit. How much of that is weakness due to academic and government specifically versus other end markets? I'd argue that there probably isn't as good line of sight to macro improvement in Europe and the timing to expect that versus what we had in the Americas a few quarters ago. Is that fair to say? What do you think it takes to get the end market going? And then finally, VWR has a real position of strength in Europe versus the largest global distributor competitor. Can you imagine this exposure being a drag on growth in the midterm?

No, that's a great question. Look, Europe is a very important market for us. As you said, we have a leadership position there. Look, the macro environment is we're following it closely tight span on budget in Academy. There's also some industrial suffering, right? Germany, I think we highlight this.

And I think what is important is the recovery is really yet to be seen. What I think is important is that in our guide, we are looking at a static wall. So any recovery will give us a tailwind. So I think this is where we stand. It's difficult to anticipate, therefore, we take the static coal and say, okay, we'll put that in the guide.

Okay. Great. And then e-commerce has been a big focus for you. And just this week, you appointed a new Chief Information Officer. Can you talk a little bit about an e-commerce specifically, what sort of quantitative impact of the improvements that you've been making have they been having this year? What do you expect for next year?

And then for your digital transformation more broadly, which you said is still in early stages, what's the next set of digital priorities? And how are you viewing investment as a priority for excess capital.

Sure. Look, it is a very important tool because it is a tool that serves a very, very large, broad-based customers, and we want to make sure that the interface with those customers is the best we can.

So the first really important step for us was to relaunch vwr.com, which we did at the end of Q1, early Q2, and we have really good feedback on this. But this is just the beginning. What we really want is to bring our tools which is extremely easy to deal with, which provide a much more information which is much more modern, okay? So I think this is where we are continuing to invest in this.

And we have a huge amount of KPI. Number of people that visit number of people that build a card number of people that actually order the cart and what do they look at. And we really want to bring AI into this. So we got a great Chief Digital Officer a couple of months ago. Now we are complementing that with Mike as a CIO and the team is really building a strong plan that we will support with investments.

So I think , again, we want to give you more information during Investor Day. So that will be a deep dive area for us at the day in December 8.

Your next question comes from the line of Justin Bowers with Deutsche Bank.

So can you refresh us on the revival program, the various phases and how you -- and the duration of the program as you see it now?

Sure. Look, it's a 1-year program now. But as I said, we are just in the middle of it. I'm super happy the leadership team is now completed. All right. With Todd joining us a couple of weeks ago, Mike started next week. Very exciting, built a very strong team, very diverse with a great life science and med tech experience expertise. So this is really, really good.

Remember, we also implemented the leadership team with many people below. I think we talk about 65% of the entire [indiscernible] minus 2 being refreshed. We are operating in a much greater discipline right now. The culture has a stronger accountability. We are much more customer-centric. We have simplified a lot. But again, we're not done, right? We simplified, for example, the onboarding process for customers. We talked about that last quarter. Our production level, as we talk about it, especially in the production and service level are definitely improving.

But I think more importantly is our CD ratio. We spoke about that at the very beginning when I joined. We want to regain our credibility and the trust of all the stack orders. So in April, we said that VWR will return to growth. In our last call, we said that BMP will return to growth. And so it's very important that we continue to build on that credibility, to continue to build the trust with the shareholder, including investors, it is extremely important for us.

But if we look at the overall -- where we are, we're really happy, but we are serially not satisfied, okay? And so we're in the middle of it. We will continue to amplify simplification of processes to amplify our structure infrastructure systems, for example, especially as Mike is coming in, I want to really continue to strengthen our culture of execution and really, as I said earlier, just really position the company for sustainable growth. And so we're not done.

And you answer my question on leadership. So the one follow-up would be just on the investments that you're making on the BMP side. I know you called some of those out earlier in the year? Just trying to understand where we are in that process. And it does sound like the sales in the order book is filling up nicely and lead times are getting back to normal. So any additional color there would be helpful.

Yes, sure. We'll continue, [ Mary ], has put and overall supply chain strategy, which, of course, is a long-term strategy, okay? When we develop those manufacturing strategy, we do not look at next quarter, we look at the next 10 years and what could be the demand. And also, we engage with our customers. This is an industry where security of supply is very important and we have the strength to be able to manufacture in Asia, in Europe and in the U.S. So this is about this. It's about making sure that we make the product at the right place closer to customers for sustainability, but also for security of supply and redundancies.

So that's where we are right now. We are finalizing those plans. And then I think this is another thing that we can talk at Investor Day.

Your next question comes from the line of Dan Arias with Stifel.

Todd, where will pricing come in for the year? What would the net effect be for 2026? .

This is Steve. I'm happy to take that one. We're very pleased with the execution of our pricing strategy this year. To give you some perspective, last year, we saw a significantly greater cost coming from suppliers and having to absorb that, then we were able to necessarily pass on to customers. But through better governance, implementation of tools, these kinds of things, stronger commercial operations execution, we've been able to recover much better this year than last. So it's had a significantly noteworthy impact on our margins.

Yes. I can jump in as well here. Our #1 objective is pricing to offset inflation right now? Okay. And this is very important. I think we've made a lot of progress. If we look at the different metrics like price over COGS, we have improved. We definitely have better tools. I think I spoke last quarter, the fact that we have hired price leaders, we have a team which is in place.

So we have better tools. We have better visibility, we review that every month. And basically, we have a greater discipline in the commercial team. So of course, cost rise in real time and sometimes pricing recover with a lag. But I think it's -- we are in a very, very important timing right now because we are end of the year. Some of the very large customers contract give us the opportunity to detect the price up at the end of the year for the following years, and that's what we are really working hard right now.

So yes, margin some have seen a bit of a headwind on the pricing lag. But I think what is important is very good execution cost discipline as well for us, but really I'm super happy of what we have done this year versus where we were last year, and I think there's more to come.

Okay. I appreciate the qualitative commentary there. Will you be in a position to talk about what 2026 pricing is at the Investor Day and I certainly appreciate the competitive element to all of this, but pricing is also a pretty major part of the situation and thinking about what it is. It will be different about '27 versus '26 and '26 versus '25%. So when can we expect to have some numbers as far as what price will mean to growth this year or next year?

Yes, Dan. To be specific to a number, our data shows that it's our pricing is between 1% and 2% in 2026. So that's the price that we've been able to get to Steve and Emmanuel's point. That is less than we've seen from inflation, right? So we're chasing it a little bit. We're getting better at getting closer and reducing that lag between cost increases and price. But the quantification of '26 appears to us to be between that 1% and 2%.

And that's all the time we have today for questions. Emmanuel, I'd like to turn it back to you.

Thank you, and thank you all for joining us. Today, and thanks for your questions. Our third quarter results marked a return to organic growth for Avantor and we are encouraged by the momentum across the business. We believe that improving execution and stronger end markets provide a foundation for sustained revenue growth, and we remain focused on execution to build on our positive momentum.

Finally, we are looking forward to hosting you in our Investors Day on December 8, where we will share our vision for the Avantor's future. We hope that will join us and again, thank you very much for your time and interest in Avantor. Thank you.

Ladies and gentlemen, this does conclude today's conference call. Thank you for your participation, and you may now disconnect.

good morning. My name is Krista, and I will be your conference operator today. At this time, I would like to welcome everyone to Avantor's Second Quarter 2026 Earnings Conference Call. [Operator Instructions] Thank you. I will now like to turn the conference over to Chris Fidyk, Vice President of Investor Relations. Chris, you may begin.

Thank you, operator. Good morning, everyone, and thank you for joining us. Our speakers today are Emmanuel Ligner, President and Chief Executive Officer; and Steve Eck, the Senior Vice President, Interim Chief Financial Officer and Chief Accounting Officer.

The press release and our presentation accompanying this call are available on our Investor Relations website at ir.avantorsciences.com. Following our prepared remarks, we will open the call for questions. A replay of the call will be made available on our website later today.

During this call, we will make forward-looking statements within the meaning of the U.S. 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 may differ materially from any forward-looking statements that we make today. These forward-looking statements speak only as of the date they are made. We do not assume any obligation to update these forward-looking statements as a result of new information, future events or other developments.

This call will include a discussion of non-GAAP measures. A reconciliation of these non-GAAP measures can be found in the press release and in the supplemental disclosure package on our Investor Relations website.

I will now turn the call over to Emmanuel.

Thank you, Chris, and good morning, everyone. Thank you for joining our call today. I will begin with a high-level update on our second quarter performance. I will then reflect on the actions we've taken since I came into this role nearly 12 months ago and discuss the progress we are making in executing Revival, our comprehensive program to sharpen strategic focus and improve execution.

Turning to Slide 4. Let me highlight a few key messages. First, we remain highly focused on executing Revival, and I am very happy with the progress we made to date. Revival delivered measurable results and put us on a path to sustainable growth. Second, I'm pleased that our second quarter results exceeded expectations across several key financial metrics. Those results were driven by improved performance in our VWR Distribution & Service segments which returned to positive organic revenue growth during the quarter. Our Bioscience & Medtech Product segments performed near the high end of our expectation and is positioned to return to growth in the second half.

Third, we delivered excellent free cash flow, enabling us to invest in the business while also paying down debt. We remain committed to reduce our adjusted net leverage ratio below 3x. Finally, we raised our 2026 organic revenue growth and EPS adjusted guidance. Our updated outlook reflects both our second quarter performance as well as higher expectation for the second half of the year.

Please turn to Slide 5, where I will review our Q2 performance highlights. In Q2, we generated $1.69 billion of revenue, which declined 0.4% on organic basis and was up 0.5% on a reported basis. Revenue was stronger than we had anticipated, driven primarily by VWR, which grew 1.7% organically in the quarter. VWR returned to growth earlier than we anticipated, reflecting the deliberate action taken by segment President, [ Cory Walker ] and his team to strengthen the business. The segment entered the second half of 2026 with broad-based momentum, and we continue to expect growth to accelerate through the remainder of the year. I will talk more about the driver of VWR return to growth later in my remarks.

Turning to BMP. Revenue was near the high end of our expectation, driven by solid execution across the segments. On a year-over-year basis, revenue declined 5.6% organically, reflecting the impact of the discrete factors we had discussed previously. Importantly, BMP delivered sequential revenue growth from Q1 to Q2 and as anticipated, demonstrated a stable trend. In BMP, we saw strong order intake and improving operations in the second quarter. Those leading indicators provide evidence that our Revival initiatives are gaining traction and when combined with reduced comparison headwinds from discrete factors give us confidence that BMP will return to organic growth during the second half of 2026. I will discuss Revival impact on BMP shortly.

Moving down the P&L, adjusted EBITDA grew more than 15% sequentially from Q1, driven by increased volumes in both segments. Adjusted earnings per share was $0.21, above our expectations for the quarter. Finally, one of Avantor's key strengths is our ability to consistently generate strong free cash flow. In second quarter, excluding cash restructuring costs, we generated $152 million of free cash flow. This reflected strong conversion of adjusted net income and keep us on track to achieve our full year free cash flow guidance. We used this strong cash generation to repay $112 million of debt during the quarter, further strengthening our balance sheet and underscoring our commitment to reduce our adjusted net leverage ratio to below 3x.

Please turn to Slide 6. Last year, we launched Avantor Revival, our comprehensive program to sharpen strategic focus and improve execution across the enterprise. Revival is built on 5 pillars: commercial excellence, operation performance, portfolio optimization, simplification and talent. Guided by insights from customers, suppliers and associates at [ Gemba ], we have launched initiatives across each pillar that are producing measurable results.

Some examples are on Slide 7. We have made important go-to-market changes. We have resegmented Avantor into VWR and BMP to sharpen our focus, simplify the organization and better serve customers. We Revived the VWR brand and accelerated our digital road map, including the relaunch of vwr.com which has driven stronger customer engagement and e-commerce performance. Across both segments, we are extremely focused on commercial excellence to drive every product and service in a way that delights customers.

In BMP, our commercial teams are executed with greater consistency and focus, resulting in stronger customer engagement and higher win rates. This translates into double-digit order growth for BMP and a book-to-bill ratio of 1.1x during the second quarter while also expanding our funnel of future growth opportunities. Those go-to-market efforts are reflected not just in BMP's order momentum, but also in VWR's return to growth.

In the manufacturing pillar, we have invested across our supply chain to improve productivity and strengthen customer service. Those investments, combined with the ongoing implementation of a new sales and operation planning process are driving execution improvements. For example, during the quarter, we increased the throughput of certain key product lines at a large manufacturing site by more than 25% on average versus the [ first ] quarter. This progress is the direct result of Revival initiatives, including the use of Lean and Six Sigma tools to enhance equipment uptime, reliability and overall productivity.

The simplifying how we work pillar delivers benefits both inside and outside the organization. One example is the recent redesign of our customers' onboarding process. Drawing on insights from multiple Gemba walks and a cross-functional kaizen event, we redesigned the process from end to end, reducing onboarding from 14 steps to just 8 and cutting completion times from up to 4 days to as little as 2 days for complex accounts or to just minutes for simple accounts.

Finally, as I have said before, Revival begins and ends with people. We move quickly to complement our strong internal talent with experienced external leaders, refreshing approximately 25% of our senior leadership team, and we are driving a culture transformation across Avantor. We are communicating more effectively collaborating more closely in the field, holding ourselves more accountable through a disciplined focus and measurable outcomes and putting customers at the center of all what we do. The positive impact of Revival is evident not only in our improved second quarter results but also in leading indicators such as the strength of our order book and the expansion of our commercial funnel that will ultimately lead to sustainable profitable growth.

Please turn to Slide 8. VWR returned to growth in Q2 marks an important milestone for the segment. While the growth inflection itself is encouraging, the underlying drivers are broad-based, as I will describe, giving us confidence that we are building sustainable momentum. The leadership team, Cory has built over the past year has implemented meaningful changes to VWR organization structure and operating model, setting the stage for segments improved performance. With the team structure and operating model in place, we made deliberate decision to strengthen our capabilities, operation, brand and commercial excellence. Together, those actions have led the foundation for the stronger performance are seeing today.

Customers turn to VWR for our growth scale, the depth and breadth of our product agnostic catalog, strong supplier relationship and excellent service. Combined with the changes, we have taken over the past year, our strengths are translated into stronger financial results, including stronger growth across key customer segments. Let me review the key factor driving VWR's return to growth in Q2. The first factor was stronger performance with large global customers. As a reminder, revenue from new business win is realized gradually due to the complexity of customer implementation processes, so we can take time before the benefit of strong commercial performance are reflected in our results.

Previously, we discussed several elements impacting our large global customer segments, including recontracting activity and other industry dynamics. While our commercial focus and execution has improved significantly over the past year, those historical pressure faded in over the course of 2025, with the cumulative impact moderating in the first quarter of this year. While they continue to represent a headwind in 2026, their impact is diminishing as we move forward and offsetting action has been successful in driving stronger-than-anticipated results in this segment. Accordingly, year-over-year comparison will become increasingly favorable as the year progressed, allowing our result to more fully reflect our underlying commercial momentum. Our growth rate in the second quarter benefited modestly from this improving comparison dynamic.

Over the past year, VWR team has taken thoughtful and deliberate steps to expand our relationship with large global customers. The team focused on retaining and expanding large global customer relationship, strategically developing our new customer pipeline and accelerating the onboarding process for new contracts. We have executed well against the growth opportunity that our efforts have generated and this new business is contributing to our results sooner and more meaningful than we anticipated.

Another important driver of VWR performance is improving growth in our small and midsized customer segments, with better e-commerce outcome playing an important role. On our last earning calls, we highlighted early sign of improving trends following multiple upgrade to our platform as well as successful relaunch of vwr.com. We advanced our digital road map in the second quarter, and customers have responded positively to those enhancements, driving direct traffic, higher conversion and improved daily sales, particularly among smaller customers who tend to have higher margin. As a result, e-commerce growth accelerated as the quarter progressed and was accretive to the segment growth for the quarter.

Although our recent progress is encouraging, our digital transformation remains in the early stage. We continue to see substantial opportunity to enhance the customers' experience, deepen engagement and drive sustained growth in the channel particularly in Europe. Finally, why deliberate action drove the majority of VWR improved performance? An increase in pharma and biotech customer activity provided a modest tailwind during the quarter, reinforcing our decision last year to focus significantly commercial resources on those customers' groups. It is important to note that activity level in several important end markets such, as education and in certain geographies, particularly Europe, remain stable, but at a lower level than we would love to see. An improvement in those end markets could represent an additional tailwind to our growth. Overall, we are pleased by VWR improved results but remain focused on execution to sustain and build the positive momentum.

I will now turn the call over to Steve to discuss the numbers. Steve?

Thank you, Emmanuel, and good morning, everyone. Please turn to Slide 10, where I will review our consolidated financial results. In Q2, we generated $1.69 billion of revenue which declined negative 0.4% on an organic basis and was up positive 0.5% on a reported basis. Adjusted EBITDA was $254 million, resulting in a margin of 15%, and adjusted earnings per share of $0.21. Free cash flow for the quarter was $143 million. Excluding cash restructuring costs, free cash flow was $152 million. Both figures were ahead of expectations and underscore Avantor's strong cash flow profile. During the quarter, we repaid approximately $112 million of debt and ended the period with an adjusted net leverage ratio of 3.3x adjusted EBITDA. Leverage was flat sequentially.

Please turn to Slide 11. Revenue for VWR Distribution & Services segment was $1.24 billion in the second quarter, up 1.7% organically versus the prior year. The primary driver of sequential and year-over-year organic revenue growth was increased volumes from strong commercial execution. Adjusted operating income for VWR was $126 million in Q2 and representing an adjusted operating margin of 10.2%. The year-over-year decline in margin is due to primarily to mix and inflationary pressures. Sequentially, margins increased approximately 100 basis points from the first quarter due to increased volumes and improved mix.

There are 2 key takeaways from the VWR quarter. First, VWR returned to growth ahead of our expectations, and the majority of this improved performance reflects steps that we have taken to grow the segment. Second, VWR demonstrated stable sequential trends, with revenue increasing from the first quarter primarily due to strong commercial execution.

Let me now discuss the performance in the Bioscience & MedTech Products segment, or BMP. I'm on Slide 12. In the second quarter, BMP revenue was $452 million, down 5.6% organically versus the prior year. This was near the high end of our expectations, driven by solid performance across product lines. Process Chemicals grew faster than expectations, driven by healthy end market conditions, improving operations and strong order performance. Fluid Handling and NuSil were down mid-teens in the quarter, as anticipated, while Research and Specialty Chemicals declined mid-single digits organically, primarily reflecting the anticipated growth headwinds from Serum and Electronic Materials.

Last quarter, we indicated that NuSil and the Serum and Electronic Materials businesses within Research and Specialty Chemicals would be headwinds to our quarterly growth rate due to the normalization of discrete customer ordering patterns and shipments in 2025. We also indicated that we faced a difficult comparison in Fluid Handling. Collectively, these factors were a headwind of roughly 600 basis points to BMP organic revenue growth in the second quarter.

Adjusted operating income for BMP was $118 million in the quarter, representing an adjusted operating margin of 26%. The year-over-year decline in margin was primarily driven by lower volumes. Margins increased sequentially due to increased volumes and mix. There are 2 key takeaways from the BMP quarter. First, commercial performance was strong as evidenced by our order trends. During the quarter, BMP delivered double-digit order growth and a book-to-bill ratio of 1.1x. Order trends were healthy across all business units, and we saw particular strength in our Process Chemicals and Fluid Handling order books. Second, BMP demonstrated stable sequential trends with performance near high end of our expectations.

Please turn to Slide 13. Our ability to consistently generate strong free cash flow is a key strength of Avantor. In the second quarter, excluding cash restructuring costs, we generated $152 million of free cash flow reflecting strong conversion of adjusted net income. Our capital allocation priorities support Revival and our intention to create sustainable shareholder value over the long term. First, we're focused on purposeful investments in the business to enhance customer service and drive top line organic growth. Next, We are focused on strengthening our balance sheet by prioritizing excess free cash flow towards debt repayment.

During the quarter, we repaid $112 million of debt and ended the period with net debt of $3.4 billion. And over the trailing 12 months, we've repaid nearly $500 million of debt. Our adjusted net leverage ratio was 3.3x at the end of the quarter. We've made significant progress in strengthening our balance sheet, and that momentum was recognized by Moody's, which revised our ratings outlook to positive. In addition, we recently capitalized on favorable market conditions and demand for our credit to reprice one of our term loans on attractive terms in July.

We remain committed to reducing our adjusted net leverage ratio to below 3x, driven both by continued debt paydown and a return to positive adjusted EBITDA growth as performance improves. Our objective is to finish the fiscal year at or below this target.

Please turn to Slide 14, where I will discuss our increased 2026 guidance. For 2026, we have raised our organic revenue growth outlook to a range of negative 0.5% to positive 0.5%. This increase reflects our Q2 revenue outperformance as well as higher growth expectations for VWR in the second half of the year. Given the recent strength of the U.S. dollar, foreign exchange is expected to be a headwind to the reported revenue in the second half. As a result, we now expect FX to contribute about 50 basis points to full year revenue.

In terms of segment performance, we continue to expect VWR's growth rate to improve sequentially through the balance of the year. We expect BMP to return to growth during the second half, driven by improved execution and more favorable discrete comparisons. BMP growth is expected to be stronger in Q3 than in Q4 due to more favorable year-over-year comparisons. Moving to profitability. Our adjusted EBITDA margin guidance remains unchanged as operational outperformance enables us to absorb macro inflationary pressures while also making targeted growth investments. We remain highly focused on cost discipline as reflected in our overall headcount, which has declined by approximately 3% this year. Looking ahead, our objective is to deliver a more leveraged P&L.

Moving down the income statement. We now expect that net interest expense will decline modestly versus 2025, and we also assume a weighted average diluted share count for the year of 677 million shares. All other model assumptions are unchanged. Taken together, this translates to an adjusted EPS outlook that has been raised to $0.80 to $0.83 for 2026. Finally, we continue to expect free cash flow between $500 million and $550 million in 2026, reflecting Avantor's strong cash generation profile. In terms of phasing, in Q3, we expect to generate adjusted EPS between $0.20 and $0.21 per share.

The midpoint of our Q3 guidance assumes total company organic revenue growth of about 250 basis points in the third quarter, and we expect FX to be a headwind of about 125 basis points to Q3 reported revenue. We assume that BMP reported revenue in Q3 will be about flat sequentially and year-over-year, with year-over-year organic revenue growth largely offset by FX headwinds. For BMP, the impact of discrete customer ordering patterns and shipments will represent a headwind of about 150 basis points to organic growth in Q3. Finally, we expect the underlying operating margin drivers in both segments to remain relatively stable sequentially with volumes, mix and inflationary pressures expected to be the primary factors influencing any sequential changes in segment margins.

I'll turn the call back over to Emmanuel.

Thank you, Steve. In closing and on Slide 15, I would like to leave you with 3 key takeaways. First, 9 months into Revival, the operational changes we have implemented are delivering measurable results. Those improvements are increasingly evident in our operating and financial performance and reinforce the positive trajectory of the business. Second, our growth outlook has improved. VWR team is executing extremely well, and the investment and strategic initiatives taken over the past year are translating into growth. We also expect BMP will return to growth in the second half, underpinned by a strong order book, improving operations and more favorable comparisons. Third, we continue to generate strong free cash flow, enabling us to invest in the business while supporting our commitment to reduce debt and strengthen our balance sheet.

Let me thank our [indiscernible] associates around the world for their dedication to serving our customers. Thank you for embracing Revival and our new ways of working. I am very pleased with the progress we've made together this year. And finally, I am excited to share an important announcement. We plan to host our Investor Day on Tuesday, December 8 in New York City. We're looking forward to sharing a comprehensive overview of our business, strategy and financial objectives, while providing an opportunity for investors to engage more broadly with our leadership team.

Operator, we are happy to take questions.

[Operator Instructions] And your first question comes from Eve Burstein with Bernstein.

Let's start with VWR. So you said that the growth there was driven primarily by actions that you took to strengthen the franchise. How do you assess whether it really was your actions versus broader market recovery and improvement? And your guidance raise was attributed to improved expectations for VWR in the year. Is that due to expectations for broader market recovery? Or is it due to the actions you've been able to take?

Eve, thank you for your question. Indeed, we evaluated, okay? And let me start saying by the fact that we are super pleased with VWR performance and the very strong execution by the team. So indeed, more than half of the growth that we deliberated in Q2 comes from deliberated action that we're taking.

Maybe let me share a few things, splitting the market in large global customers account and midsize and smaller customers, if you don't mind. So for the large global customer accounts, in the past, we talked about some headwinds that we had in contract renewal. Well, we begin to lap those headwinds from the history. So this is point number one. Point number two, we also shared with you that we have over the past year really won many large contracts. And each time we did that, we negotiated opportunity. And the team has worked really, really hard to grab those opportunity, to turn around those opportunities into growth, and it's a license to hunt, and basically, what the team is actually doing and executing is actually gaining share of wallet inside those large accounts. So it's working well. We are a bit of advanced versus we thought we will be, and this is sustainable.

The second thing is on [indiscernible] small customers. E-commerce is really the highlight of Q2 for us. It's part of the Revival. It's part of the go-to-market. It is working. We've relaunched vwr.com, and the customers are reacting very, very well from that. So we see some really positive momentum in that segment as well. The remainder of the growth, of course, is coming from better pharma, better biotech end markets, primarily in the U.S. So it's a broad-based momentum that we see. The team is completely focused on customers, focus on execution, finding the opportunity grabbing those opportunities, turning those opportunities to growth, and this is why we're confident that VWR growth will actually accelerate in H2.

Great. That's really helpful. Maybe just to clarify one of your points in follow-up. So obviously, you've talked quite a lot about the recontracting with those large global customers and how you're mostly done with that process and so we'll start to see more of the underlying strength of the business as we move past that. If you had to quantify how much of a headwind has that been to overall growth? And so even without an underlying improvement in the market, or in other elements of your execution, how much of a tailwind are you now going to start seeing from moving pass the pricing actions and just growing with a lower base?

Yes. I think, Eve, this is a very good question. Look, I think we quantified it as more than half, okay? We don't go into those customers by customers detail just by practice.

Your next question comes from the line of Kallum Titchmarsh with Morgan Stanley.

Maybe just following up on the previous one. But on the channel specifically, good to see the growth coming through, but those growth rates are still below peer. So maybe just help us to better understand the market share dynamics you're seeing there? And any KPIs you could perhaps give us to show that that's shifting back in your favor?

Sure. Look, we have many KPIs that we are looking at, okay? We are looking at the number of new accounts. We're looking at as the -- what happened, for example, in the e-commerce platform around numbers of clicks, number of basket, which is set up numbers of conversion they send. And of course, I will -- we measure a lot of those things on a daily basis.

Look, here's what we're doing to regain market share: We've relaunched VWR brand. We've relaunched vwr.com. We made significant upgrade on the platform. We're not done. We have a whole program in place, and we are continuing to invest there. We have really good structure funnel review that really drive the customer focus by region, by segment, we really take care of when we renew a contract, what are the opportunity, what are the size of the opportunity, how the opportunities are actually being converted. We track many things. And one important thing that we've implemented recently is the pricing tools, all right? We have a much more robust pricing review again on a monthly basis. The entire executive team is part of this. Cory is leading this initiative with his team. I think we shared last call that we have a new pricing leaders.

And we work also very closely with our suppliers and partners. This is very important. This is a multiple relationship. And this is all part of Revival go-to-market. And we are just really extremely pleased that VWR is back to growth at 1.7%, growth on [indiscernible] versus previous year. And we are absolutely committed to continue to grow and to accelerate this growth. So I think it's -- this is where we are today. We know that the majority of the growth is coming from the action that we are taking, that the team is implemented and is really focused on delivering, and that will accelerate in H2.

This is Steve. I'd like to just maybe just add a little bit to what Emmanuel said and highlight a little bit. While the 1.7% growth is not quite yet market, I just want to highlight that we moved from negative 4.8% in 1Q to positive 1.7% in 2Q, and we expect that growth rate to continue to accelerate here as we get into the second half. And part of that is the sustainable improvements we've made, part of it is the comparisons from last year. So really nice development of the growth rate.

Totally understood. And then Emmanuel, nearly a year now since you took over here. So maybe just as we think about the kind of areas for investment you identified in 2026 with Revival, I guess as we've worked our way through the year, how comfortable are you that those commitments are sufficient to address the issues you had, as we think about potential costs remaining elevated into 2027?

That's a good question, Kallum. I think it's very important to understand that Revival is constantly evolving. So when we arrived, we did a [ sera ] listening to the market, the suppliers, our associates, we identify the, I would say, really high priority that we had. Mary, supply chain, is here. We have invested in supply chain. We've got talent and we brought more talent in the organization, like in the commerce platform with our new digital leader that came from Medline. All those things are reviewed on a monthly basis. Ludovic Brellier, who joined us as Head of BMPs segments, but also the transformation leaders has a a really clear operating plan for the Revival programs, and so we take project by project, I would say. And then we deliver them, we tick the box, and we move on into another one.

So there's still a lot to do. we shared many of those. I mean the last one that we shared in this call was the onboarding process, which is very important for our customers, simplifying the process, accelerating their capabilities to create an account. This is done. And then we move on to the other one. So I think we'll continue to invest. This is something very important for us. We simplify, we save and we reinvest for growth. This is the formula that we are applying.

Our next question comes from the line of Dan Brennan with TD Cowen.

I thought I would just -- if you don't mind, just go back to VWR distribution and investments that you made there, to kind of stabilize with the price. I know there was a question asked earlier. But could you just remind us, in the back half of the year, is that like fully comped out that investment because it looks like it might have been like a 3-point benefit, like you're saying in Q2? Just wondering kind of what's baked in for the back half of the year on that investment?

Look, I think in the VWR area, so the majority of the investment is on the e-commerce platform, the relaunch of the vwr.com and we'll continue to do so. So I think all our investments are baked into our guidance today.

Okay. Maybe zooming out just on the BMP segment then for a moment. Book-to-bill has been above 1x in the last couple of quarters. Obviously, growth has been challenged, but you have the idiosyncratic factors. Just can you speak a little bit about like the backlog there, kind of what the -- some of that business is backlog driven, kind of how we translate that strong book-to-bill into the outlook, whether it be in the back half? And then in '27, and then any specific color just on NuSil, which I know you guys have kind of a market leadership there? Just wondering kind of volume and price on NuSil and kind of what the outlook that's baked in on that front? .

Sure. Let me maybe start with the market. So BMP is really across diverse set of end markets, Electronic Materials. You just talked about NuSil and MedTech, of course. Our bioprocessing market with -- our Biochemicals. Look, overall, we are very pleased again with the go-to-market activity that we're doing with the commercial team. So we talked early on, on Q2 on the order intake, double-digit and the book-to-bill being positive, but I can tell you that from the first half, it's the same. It's low double-digit order book for the entire first half, which is, I think, very encouraging. And all the subsegments are in growth as well in the entire BMP. So we're super encouraged by that. The market is solid for all of those subsegments.

We have 3 things you talk about that give us a comparison. But again, the team is really focusing on finding the opportunity, converting the opportunity, bringing the order in, and then the supply chain team is working really hard to make sure that we supply the customers the best we can. And this is working well. We continue to invest. Again, this is something that takes time, but we are happy where we are right now.

So just a bit on NuSil. NuSil is doing good. Good order intake on NuSil. Price, but nothing crazy, a good price lift, but nothing crazy. Some good volume as well. Some good activity, not only in the implants, but in the new markets that we are pushing, like [indiscernible], and that's something that we can give you a bit more color when we are together at the Investor Day.

Your next question comes from the line of Vijay Kumar with Evercore ISI.

This is [ Mackenzie ] on for Vijay. First one from us. I was wondering if you could talk a little bit more about the guide cadence in the second half? And specifically, I know you've talked a few times about expecting VWR to accelerate. But could you give us any color on sort of the size of the ramp or some of the levers to the upside or downside? And how we might think about the exit rates in fourth quarter?

Sure, Mackenzie. I thought Vijay has changed voice, so I'm glad. Welcome to the call. I'm going to pass it to Steve.

Yes. Thanks, Emmanuel, and good morning, Mackenzie. Happy to step you through our assumptions around the full year guidance, which we've updated. Starting with top line. As you know, we updated the guide for the consolidated full year organic revenue growth, and that's really driven by the flow-through of VWR's outperformance in 2Q as well as our raised expectations for the business in the second half. The outlook related to BMP is generally unchanged from our initial guidance. The business continues to perform very well and in line with our plan.

We reaffirmed our adjusted EBITDA margin guidance for the full year despite the continued inflationary pressure we're absorbing. For example, we continue to see significant pressure on freight costs for both segments. A couple of other housekeeping items who are nonoperational in nature. We expect FX to be a headwind for the second half. We also have slightly lower assumptions for our share count interest expense. And if you put all that together, these are the important factors driving the updated guide of $0.80 to $0.83 for adjusted EPS for the full year.

Great. That's super helpful. And then a follow-up just on your end markets here. Advanced Tech was pretty strong, and Education & Government also grew off of a slightly tougher comp, whereas Biopharma & Healthcare declined a little bit. I'm just wondering if you can talk about the puts and takes here? What kind of drove either these end markets? And how we should be thinking about them into the second half?

All right. I think [indiscernible] probably because of BMP here. Generally speaking, in VWR, we see more pharma, more biotech activity, I would say, especially in U.S.A., in America. Other markets, we see it more or less unchanged, right? Education and Europe are probably a stable level or at the level that we were kind of expecting. So a bit low level. We wish it was a bit better. And on BMP, I think our diverse set of markets are healthy, and that is reflecting our order book -- Process Chemicals order book, in particular, double-digit for the quarter.

Your next question comes from the line of Matt Larew with William Blair.

Emmanuel, obviously, over the last year, a number of initiatives you've laid out within Revival, have moved from evaluation phase to execution phase, now being, you mentioned it's an ongoing process. By the time we get through to the December Analyst Day, do you feel like it'll largely be set in terms of the management team changes the implementation of kind of the big items you identified last year? And I guess as part of that, one thing is the portfolio review that we expect to sort of be complete by the Investor Day as well.

Thanks, Matt. Yes, I think you're right we're working hard on all the pillars, okay? And for that, the portfolio is ongoing. It's really an important part of our pillar, okay? And we are, of course, looking at every businesses, assessing any product line, any market position, the financial profile, and we are always asking ourselves are we the best owner. So we're working out on that part. And yes, we hope that we can give you some update at the Investor Day.

But what I want to say, Matt, as well is Revival is really a program which is constantly evolving. So we're going through a lot right now, but I'm sure because it's a culture as well that we want to bring to the organization of continuous improvement. So it's not because we will have made some very good progress that we will finish the year with momentum that we will still not have things that we want to do and we want to improve and we want to progress. So it's going to evolve, but we'll give you more update on the portfolio.

Okay. That's great. And then the discrete headwinds in BMP referenced 600 basis points in Q2. I think you said 150 in Q3. Maybe what is that in the fourth quarter? And then I assume that's out of the numbers for the most part of next year and thus setting up potentially a path to return to durable growth on that side of the business.

Yes. Matt, this is Steve. Happy to share there. So as you already pointed out, 2Q was the most challenging quarter. You already referenced the 3Q headwind we expect to see. The only other point to make would be related to fourth quarter, which will also be a pretty difficult comparison of about 400 basis points related to our electronic materials business. We do think it's also useful to reflect on the sequential performance of the business, which presents a little more consistent picture of the improvements and the progress we've made.

Over the course of the year, we expect to see gradual strengthening in the volumes over the course of the year. And this is really the result of 2 major things, and we talked about them in the prepared remarks. First, the operational improvements that the team has been driving and continued focus on and the development of that really strong order book. We're really excited for the building and sustainable momentum and think the profile within 2026 over the course of '26 is really gradual and improving and really strong.

Maybe I can add because I can sense behind your question is your strong interest about 2027, which, by the way, it's the same for me, you're right. So as you know, we may be a bit too early to give guidance there. But let me share a few thoughts there. I mean both VWR and the BMP team are really executing super well. We are really happy about the fact the team has embraced Revival and a new way of working.

We will exit '26 with momentum. There's no doubt about this. We will not be completely done for sure, and we'll continue to push more initiative to continuously improve the business. but we will leave the year with momentum. So 2027, every day, every month, the last 90 days, my confidence is increasing, and I'm confident and optimistic that 2027 will be a growth year.

Your next question comes from the line of [ Casey Woodring ] with JPMorgan.

Yes, I just wanted to push on the margin piece, right? You reiterated adjusted EBITDA margins for the year. Maybe just talk a little bit about gross margin expectations for the back half. I know you have some easier comps in given last year's reset, but you talked a little bit about inflationary pressure ramping here. So maybe just if you could quantify that piece and maybe walk through the moving pieces and the levers you can pull, whether that's productivity, pricing or elsewhere on gross margins?

[ Casey ], this is Steve. Thanks for your question. Yes, consolidated gross margin, the rate was essentially flat from 1Q to 2Q of this year. We do expect that rate to stay steady through the end of the year. While stability is good, obviously, we were looking for margin expansion. So what are our priorities in this regard? First, we're looking to drive as much volume as we can. We also want to successfully navigate inflationary pressures with our customers and suppliers constructively. We prefer and want to drive a strong product sales mix.

And I want to also highlight our focus on digital investment. And we mentioned it in the prepared remarks. The digital capabilities really help us connect better with our smaller customers, which tend to be better margin sales for us. So we're very focused on that. So excellent job by our teams at this point in the year in driving these things, and those are going to be the key levers as we move forward.

Okay. That's helpful. And then I guess, I appreciate the commentary on '27, but just how are you balancing kind of investment into the business that you've kind of talked about here today versus margin expansion for next year? And can you grow EPS next year?

[ Casey ], Emmanuel here. Look, I'll go back to the philosophy that we are pushing, simplifying, saving, reinvesting for growth, all right? I mean, I think last quarter, we shared that our head count is down about minus 2%. That was last quarter. At the end of this quarter, the head count is down minus 3%. And basically, our objective and what we are driving as a culture is to drive for a leverage P&L.

Your next question comes from the line of Michael Ryskin with Bank of America.

Great. I want to follow up on BMP sort of like pacing through the rest of the year. You kind of talked about improving third quarter up a little bit fourth quarter. Then the fourth quarter just based on time and comps. It's fair to think that 4Q BMP should be roughly flat organic or maybe just down a little bit? And then when you're talking about sort of like exit rates going into next year, you kind of alluded to the headwinds and some of the discrete things being passed us and really just focusing on sequential growth. So maybe I'll ask it that way. If we look at 4Q for both VWR and BMP, from a sequential perspective, is that the right jumping off point for '27 as we model out next year?

Michael, this is Steve. Happy to answer that. I'll start with organic growth for BMP. We expect modest organic growth 3Q. We do expect the organic growth in 4Q to be a little more muted because of the more difficult comp that I already described. Sequentially, on a reported basis, BMP, we expect for Q3 to be about flat sequentially with a modest uptick in the fourth quarter.

Okay. And then going back to, I think, Mackenzie's question earlier on some of the end market trends. If we look through what you kind of gave us today, it looks like the biggest step-up in 2Q relative to 1Q was actually that Advanced Technologies. So would just love to go in a little bit deeper into where Advanced Technologies sort of increase, either by customer type or product you sell? Just sort of what led that uptake? Was it more on the equipment side or on the consumables side? Just any sense of lumpiness there or sort of what drove that?

So Michael, just let's go maybe through -- and I guess your question was more a bit about VWR, isn't it?

Yes, yes.

Yes. So on VWR, as we said, so large global customers, especially the large global customers where we had renewed contracts with good opportunity, and there, it's a mix. It's a mix of what the customers really need. And it's a mix also depending on where the customers of large customers and large -- can are investing. But generally speaking, we see a good momentum in spend in large pharma. Also biotech, actually. You're right, the funding is coming back to biotech, and we see them spending money. It's a mix of equipment, a mix of consumables.

And I would say, geographically speaking, it's U.S.A. and America is really driving it, okay? For the rest, I mean, I think it's a bit unchanged. And smaller customers that we see through e-commerce platform where we really see again the impact of what we've done with vwr.com, it's very, very broad. It's very distinct. Those customers are usually not buying equipment through the e-commerce platform, but so it's a more mix of consumables and it's across many different applications.

Your next question comes from the line of Paul Knight with KeyBanc.

Emmanuel, I don't know you've been in charge for a while, what's your view on self manufacturing do you want to increase the level of self-manufacturing? Or do you think expanding vendor relationships is really the way to go in the future being kind of a noncompetitor what's your walk away and views on self-manufacturing at this time? .

It's a great question, Paul. Thank you. I think we have a lot of opportunities on sales manufacturing. It's a good service that we are providing to many people. In terms of VWR, I really like the fact that we are product agnostic. I really like the fact that we are differentiating ourselves, offering the broadest catalog that we can and offer optionality to the customers, really top products very famous brand that actually wants to work with us.

And I think this is very important, a really good relationship with supplier. And then we have also the VWR brand. So product agnostics for VWR I think is a really good position. It's a very good value proposition, and self manufacturing, I mean, for us internally, it's a business that we have. It's a service that we provide to people because we have really good capabilities and capacities, and we are capable to offer really high-quality product to the many different customers as an OEM, and it's a very good service, and it's growing actually. So I think a bit of course, is very important for us.

And then regarding BMP, obviously, a great build-out over the years. What's the next steps in your view for BMP?

Well, I think the next steps from BMP for us is just making sure that we continue to drive operational excellence, the S&OP process that we put in, which is very important to have a very good visibility of the demand and the supply and really continue to invest in reducing lead times, improving on-time delivery, making sure that we continue to serve the customers the best we can. And in Process Chemicals, in particular, we really see the impact of what the team has been driving commercially and supply chain. I mean, we talked to you in the [indiscernible] those particular product line where we are invested, where Mary and the team has done a really good job to take the output up by 25%.

This is really important for us to continue to do so, reduce lead times increase on-time delivery and not measured on our promise that -- really measure on what the customer deserves and what the customers want. So improving service level is really important. Quality, really good. Jerry, who joined us last quarter, is doing a really good job as well. And those are the areas that we'll continue to invest, and continue to improve the service level is really important.

And ladies and gentlemen, that does conclude our question-and-answer session. I would now like to turn the conference back over to Emmanuel for closing comments.

Thank you, Krista. Let me conclude the call with a reminder of the key takeaway for Q2. First, Revival is working and the team is committed to continue to improve. Second, our growth trajectory is improving. And third, we continue to generate excellent free cash flow.

Thank you for joining the call, and have a great day.

And ladies and gentlemen, that does conclude today's conference call. Thank you for your participation, and you may now disconnect.

Good morning. My name is Emily, and I will be your conference operator today. At this time, I would like to welcome everyone to Avantor's First Quarter 2026 Earnings Results Conference Call. [Operator Instructions] I will now turn the call over to Chris Fidyk, Vice President of Investor Relations. Chris, you may begin the conference.

Thank you, operator. Good morning, and thank you for joining us. Our speakers today are Emmanuel Ligner, President and Chief Executive Officer; Brent Jones, Executive Vice President and Chief Financial Officer; and Steve [indiscernible], Senior Vice President and Chief Accounting Officer. The press release and our presentation accompanying this call are available on our Investor Relations website at ir.avantorsciences.com. Following our prepared remarks, we will open the call for questions. A replay of the call will be made available on our website later today.

During this call, we will make forward-looking statements within the meaning of the U.S. 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 may 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. We do not assume any obligation to update these forward-looking statements as a result of new information, future events or other developments.

This call will include a discussion of non-GAAP measures. A reconciliation of these non-GAAP measures can be found in the press release and in the supplemental disclosure package on our Investor Relations website.

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

Good morning, and thank you for joining us today. Let me begin with a few financial highlights for the quarter. First quarter results exceeded our expectations due to improved execution in BioScience and Medtech product segments, and we have reaffirmed our full year guidance. VWR Distribution and Services generated $1.15 billion of revenue in the first quarter, down 5% organically versus the prior year. This performance was in line with our expectations despite soft market condition in Europe and adverse winter weather in the U.S.

I'm pleased to report that in the quarter, the VWR e-commerce platform showed green shoots of improved performance in traffic, conversion and revenue growth following multiple upgrades as part of our digital road map as well as the successful relaunch of vwr.com. Importantly, Q1 results provide evidence that the VWR segment is stabilizing with financial performance in line with our expectations.

Turning to BMP. BMP revenue was $431 million in the first quarter, down 2% organically versus the previous year. This was ahead of our expectations due to better-than-expected execution from process chemicals and new sales. Brent will discuss the details in his remarks, but [indiscernible] had a heavy influence on a year-over-year growth metrics. I'm pleased to report that revival efforts are already taking hold in BMP.

In Q1, we saw modest improvement in BMP operational performance and we also saw strong commercial performance given the enhanced focus with which our team are working. BMP had a book-to-bill of more than 1.1x in the quarter. Other element of the P&L, including margins were generally in line with expectations, and we generated $0.17 of adjusted EPS in the quarter ahead of our expectation. There are 3 key messages I want to convey about their first quarter.

First, Revival is already having a positive impact on Avantor. Across the organization, we see a clear improvement in execution and increased accountability. Our team has a more intense focus on serving customers and we are taking a data-driven approach to user their performance. Second, improved execution has translated into improved and more stable operational performance, most notably within the VWR platform and BMP manufacturing. Improved execution is also reflected in the strength of our order book and demand funnel.

Third, we believe that we are turning a corner financially. We believe that VWR's growth rate reached a bottom in Q1 and that BMP's growth rate will reach a bottom in Q2, which position Avantor for organic revenue growth in the second half of this year. We moved the company forward in the first quarter, and I'm encouraged by the momentum and positive energy across the organization. In the interest of continued transparency, I want to share 2 examples of actions that we have taken as part of Revival.

Please turn to Slide #4. Revival begins enhanced with people. And for Revival to be successful, we must have the right talent in place. One of the first things we have done is move with speed to recruit exceptional leaders and enhance our leadership structure. This slide summarize the change we have made to the senior leadership team, defined as my direct reports plus their direct reports. We have moved quickly to refresh approximately 25% of this leadership group filling positions such as Chief Operating Officer, Chief Procurement Officer, Head of VWR Sourcing and Head of VWR pricing.

Recently, we welcomed [ James Finn, ] our Chief Digital Officer, who joined us from Medline. And last week, we announced that [indiscernible] will join us from [ Cytiva ] to lead BMP and serve as our Chief Transformation Officer. We expect to announce the addition of other high-impact leaders soon. Many of those talent investments are self-funded with increased productivity. Year-to-date, our overall headcount is down approximately 2%.

I had a very clear vision on how the leadership team should be constructed and in short order, we have supplemented internal talent with external talent. We have a diverse set of leaders in place with skills and experience will allow us to best execute the Revival agenda.

Please turn to Slide 5. Enhancing operation is one of our 4 most priorities. So I wanted to dig deeper into action underway within this important revival pillar, which is led by our COO, Mary Blenn. In the first quarter alone, we completed over 8 weeks of kaizen events across our operational network. I participated in several of those kaizen events as did other senior executives. In parallel, we established a CapEx council that meets monthly to plan, review, sanction and monitor our capital commitments with one eye focused on near-term needs and the other high focused on long-term strategic requirements.

Our CapEx Council has sanctioned 12 projects recently, one of which is depicted in this slide. This project focuses on a downstream production process at an important North American manufacturing facility, where the current workflow is a people-intensive process with scope for improvement. We reimagine the process during a kaizen and as a consequence, are moving forward with a project to install modular automation equipment in a previously unused space in the facility. The before and after images on this slide demonstrate how this automation project will radically simplify workflows.

Furthermore, this investment will enhance quality, compliance and throughput, it will reduce our cost per unit, and it will free up capacity for the team to focus on higher-value activities. We expect to earn highly attractive returns on the capital we deploy. This is just one example of the approach we are taking globally. In all our projects, including the $20 million of incremental investment we announced previously, we use tools such as [indiscernible] and kaizen to rethink the way in which we work, and we are marrying that with rigorous data-driven analysis to measure the financial consequence of our investment.

I will conclude my opening remarks with a few words about the news that Brent will depart Avantor next month. Brent, we are all deeply thankful for your leadership and contribution to Avantor, including the development of a deep and talented finance team. I wish you and your growing family nothing but the best in the future. Thank you, Brent.

Thank you for the kind words, Emmanuel. It's been a privilege to serve as the CFO of this great company, and I'm grateful to have worked with such a wonderful group of people. The finance function will be in good hands with Steve, who is an outstanding leader, and I remain completely confident in Revival and Avantor's future prospects.

With that, please turn to Slide #6, where I will review our Q1 financial results. In Q1, we generated $1.581 billion of revenue, which was down 4% on an organic basis and flat year-over-year on a reported basis. Adjusted EBITDA in the quarter was $219 million, with a margin of 13.9%. Adjusted EPS in the quarter was $0.17 due to good execution in BMP, specifically process, chemicals and new sale, allowing us to outperform our expectations.

Free cash flow in the period was $25 million. Excluding restructuring costs, free cash flow in the quarter was $39 million. Both figures were within expectations and reflect a meaningful and anticipated headwind associated with customer prebates. We repaid approximately $105 million of debt and ended the quarter with an adjusted net leverage ratio of 3.3x adjusted EBITDA. Leverage increased by 0.1 points sequentially and year-over-year, primarily due to lower trailing 12-month adjusted EBITDA.

Please turn to Slide 7. Revenue for the VWR Distribution & Services segment was $1.15 billion in the first quarter, down 5% organically versus the prior year. The primary driver of the organic revenue performance was a decline in volumes with industry dynamics and European market weakness, both contributing. We estimate that severe winter weather in the U.S. negatively impacted segment revenues by about 50 basis points. The bulk of the revenue declined sequentially versus Q4 2025 is due to seasonality.

In the quarter, the VWR e-commerce platform showed green shoots of improved performance in traffic, conversion and revenue growth rates in the U.S. and Europe. This followed multiple upgrades as part of our digital road map as well as the successful relaunch of vwr.com. Enhancing our digital capabilities remains one of our top strategic priorities. Adjusted operating income for VWR was $105 million in the quarter, representing an adjusted operating margin of 9.2%.

The year-over-year decline in margin is due primarily to volume and net price capture. Increased freight costs were also a headwind. The bulk of the margin declined sequentially versus Q4 2025 is due to seasonal declines in revenues with a number of other puts and takes. There are 2 key takeaways from the VWR quarter. First, we are pleased with the positive impact our upgrades had on e-commerce performance. Second, and perhaps more importantly, the VWR platform is stabilizing with Q1 performance in line with our expectations. We will address the stability again in our guidance commentary.

I will now discuss our other segment, Bioscience and Medtech products or BMP. BMP revenue was $431 million in the first quarter, down 2% organically versus the prior year. This was ahead of our expectations due to better-than-expected execution from process chemicals and new sale. In the quarter, process chemicals grew double digits organically due to improving operations and strong order performance. Fluid handling and new sales were down double digits in the quarter, due in part to difficult comps as we had anticipated, while research and specialty chemicals declined about 100 basis points organically. Pricing was positive in the quarter.

Last quarter, we indicated new sale and the serum and electronic materials businesses within research and specialty chemicals would be headwinds to growth in 2026 and and that this comp headwind is primarily due to normalization of idiosyncratic customer ordering patterns and shipments in 2025. In the first quarter, this dynamic in aggregate was a mid-single-digit headwind and to the organic revenue growth of BMP. Adjusted operating income for BMP was $103 million in the quarter, representing an adjusted operating margin of 23.8%.

The year-over-year decline in margin is due to inventory provisions, lower volumes and mix, among other things. Key headwinds in the sequential margin decline were volume and mix. There are 2 key takeaways from the BMP quarter. First, our efforts to enhance operations are bearing fruit as our operations showed increased stability in the quarter. More specifically, BMP back orders declined modestly in Q1, and we have better line of sight to improved operational performance. Second, we had strong order performance in the quarter with a book-to-bill of more than 1.1 for the whole of BMP. Order trends were healthy across all business units, and we saw particular strength in our process chemicals order book.

I will now turn the call over to Steve Eck to discuss our guidance.

Thank you, Brent. Please turn to Slide 8. We reaffirmed our 2026 guidance this morning, but I want to make a few supplemental comments. In Q2, we expect to generate adjusted EPS of between $0.19 and $0.20 per share. Next, as everyone is aware, the Middle East conflict has created inflationary and supply chain pressures that are rippling around the world. At this stage, we are more concerned about the price of raw materials and services rather than their availability, but our concerns could evolve if the conflict persists.

As of today, we estimate that inflationary pressures stemming from the Middle East conflict represent an incremental headwind of approximately $10 million to $20 million to our 2026 operating income, and our reaffirmed guidance incorporates this headwind. We have established a task force whose responsibilities to identify, monitor and mitigate these inflationary headwinds.

Next, on VWR. The financial performance we saw in Q1 was largely in line with our expectations. We believe that VWR is turning a corner and that VWR's growth rate reached a trough in the first quarter. We expect that VWR's growth will improve gradually over the course of 2026, with the segment showing positive organic growth in the second half.

In BMP, the year-over-year comp headwinds from the idiosyncratic customer ordering patterns and shipments mentioned by Brent and new sales, serum and electronic materials will increase sequentially from Q1 to Q2, and we faced another tough comp in fluid handling as well as tougher comp and process chemicals. Therefore, we expect BMP's year-over-year organic growth in Q2 will be worse than the Q1 experienced by more than 500 basis points.

There is no new news in these comp dynamics as our assumptions about their impact are unchanged versus 90 days ago. We believe that Q2 will mark the low point for BMP growth in 2026. Finally, we expect the adjusted operating margins of both segments to increase sequentially from Q1 to Q2 in line with seasonal patterns.

I will conclude with a comment on capital allocation. Debt reduction remains the top capital allocation priority, and we remain committed to reducing our adjusted net leverage ratio sustainably below 3x. With that, let me turn the call back to Emmanuel.

Thank you, Steve. I will conclude our prepared remarks by reiterating the key takeaways from the quarter. Number one, revival is already having a positive impact on the organization. Number two, improved execution has translated into improved operational performance. And number three, we believe that we are turning a corner financially and now believe that the growth rate of VWR reached a bottom in Q1 and that the growth rate of BMP will reach a bottom in Q2. This, combined with our tangible revival progress, give me confidence that Avantor will return to positive revenue growth in the second half of this year.

Finally, I want to extend my gratitude to our Avantor associates across the globe for their dedication to serving our customers. Thank you for embracing revival and the new ways in which we are working together. I am incredibly pleased with the progress we are making together as a team.

With that, operator, we are happy to take questions.

[Operator Instructions] The first question today comes from Dan Leonard with RBC.

My first question, can you talk a bit more about any countermeasures you're taking to offset incremental inflation? And I'm thinking of transportation costs specifically, but it sounds like there are other watch areas as well.

Yes. I think, Dan, if I understand correctly your question, you're talking about the measures we are taking, again, the inflation that we are seeing. Is that correct?

Correct.

All right. Dan, first of all, thank you for the question. I think it's important to also review the fact that we have a new Chief Procurement Officer, [ Keith Balzo ] is joining us from Cytiva, I worked with them a lot in the past, is a really, really good person. We've put in place a task force. The good thing about what we see in the Middle East is that the inflation will happen in 2 areas. The first in inbound and outbound threat. And of course, the team is really looking at our contract and seeing what we can do on that side.

And then the other thing is a few critical materials, which will not be in short supply, but really where we will see inflation. So we have a task force in place already evaluating the impact. I think, Steve, in the opening remarks, talked about the $10 million to $20 million headwind that we are seeing that we are contemplating in the reforming of our guide. And I think it's really an action for us in terms of monitoring and in terms of things what we can pass to our customers.

Okay. I appreciate that. And then as a follow-up, Emmanuel, can you talk about the significance of that book-to-bill in the BMP segment? And what is the lead time required to translate that greater than 1.1 book-to-bill to revenue growth?

Yes. No, it's a very good question, Dan. Look, I think if we look at what we shared in Q4, our order intake in process chemical was high single digit in Q4. And with the operation and the Revival impact on operation, we were able to deliver a double-digit growth in Q1 in terms of revenue. The very positive things and what we are very encouraged is that in Q1, our order intake was double digit. So there is a sequential acceleration, and it's down again to revival on the commercial side.

A lot of those products are between between 30 to 60 days, 90 days lead times. It also depends on the customer that gave us some blanket order with a lot of visibility. We have asked the commercial team to work on this. to make sure that through the [indiscernible] process that we have put in place, we are helping as well the operation to have a good visibility of what is coming. So we are super encouraged with what happened in both operation and commercial due to revival. And so 60 days, 90 days. That's why we are positive and confident about the fact that we'll go back to growth in the second half of the year.

The next question comes from Patrick Donnelly with Citigroup.

I was hoping for just a few more specifics on 2Q. Helpful to hear the VWR and BMP pieces. Can you just talk about overall organic growth and then also the margins for each and how we should think about that margin cadence for 2Q and going forward?

Yes. Yes, Patrick, it's [indiscernible] take this. Look, I think for Emmanuel and Steve as well as my comments there, you see a bottoming in VWR in Q1, we expect to see continued improvement in that business sequentially. There are more shipping days in Q2 than Q1. So even keeping at the same pace that we did in Q1, even though recognizing that's a seasonally lighter quarter that easily gets us within the range of our guidance there. Even though on BMP, you'll see lower organic growth that has to do more with the idiosyncratic competition we brought up it's a nice sequential increase, but not substantial there.

You put those together, you get better fixed cost absorption against that, and then you'll see modest increases and margin against that sequentially. You marry that to revival working in other cost outs there and that very comfortably gets you to the range of our guidance.

Okay. That's helpful. And then maybe just on the BMP side, helpful comments there. Can you just talk about what you're hearing from customers? Obviously, some mixed data points out there. Are there certain segments you're seeing a little more strength? And then again, I guess, the visibility into that recovery and confidence level of that recovery as we work our way into the second half and beyond just with the market positioning there.

Yes. Patrick, I think there's not much change in terms of market dynamics versus what we shared in our last call 90 days ago, biopharma market is healthy, in particular, in bioproduction. We see that in our order book. This is also particularly in process chemicals for Q1 in terms of revenue but also in order, as I just talked about. We also see a strong funnel for us, again, we have pushed commercial team to have a better visibility on the opportunity. So we are looking at a strong funnel.

Around academy and government, nothing really changed. The market is pretty stable. There's maybe a lower level of activity than what we will prefer, and we continue to assume that customers are a bit reluctant to spend money in that part. NHI funding is stabilizing, capitalizing incremental demand that will represent upside potentially, again, if the customer decided to spend their budget. Bottom line is that the end market we exactly as we were expecting it. All right. And I think there's no assumption that there's major change during the year.

I just want to maybe add one comment. We shared in the past that despite the difficulty that we had we never let down the customers, in particular in bioprocessing. And I think we can really say that [indiscernible] I meet customers there is strong feedback about the service level and the engagement that we have. And this is again reflected in our Q1 order book and the book-to-bill, which is 1.1x.

Okay. And Brent, just to close the loop on 2Q, is there a specific organic number you can give?

We're -- you're probably talking about a decline of 500 basis points there for the quarter on top line.

The next question comes from Vijay Kumar with Evercore ISI.

Congrats on a good execution here. Brent, wishing you the best as you transition here. Maybe Emmanuel, I heard the term confidence in the business bottoming error. It sounded very constructive. And when you think about VWR bottoming out in Q1, what gives you the confidence that VWR bottomed out? And Brent, if VWR has bottomed out in Q1, why is 2Q organic minus 5% when you guys just did minus 4% in Q1?

Do you want to -- the we're talking about at the firm level there, Vijay. So you're going to see more decrementals in BMP taking the firm rate down to minus 5% there. So you'll see a sequential improvement in VWR and then going backwards by 500 basis points or more in BMP.

Yes. I was going to add that around VWR. I think we had a strong reset of VWR last year. We shared with you that we've lost market share. Q1 was really the tail of those market share loss. We have really stabilized the situation with VWR. And we also looked at the order trend, okay? We look at the contract conversion, the new contract we win, we measure the engagement of our commercial team. Everything that we are doing on VWR, in particular, around the e-commerce channel has been executed phenomenally well. We're super happy with that, with strengthening the [indiscernible]. And I think this is why we're expecting stabilization really of Q2 and then onwards positive growth.

Understood. No, that's helpful. Maybe one follow-up Emmanuel for you. We're starting the first half, somewhere down mid-single rate minus 4% to minus 5%. What improves in back half, right? Is it just comps getting easier in the back half? Or is the business turning? Is there a bridge from first half to second half, how we get to positive growth in the back half?

Sure. I think this is what I -- what we said in our opening comments, all right? So bottom for VWR Q2 bottom for BMP, stabilization of VWR. And then we have the order book that we just talked about, which is really on crashing on the BMP side. And I think basically, the confidence about the impact that revival has on the commercial intensity on the operation excellence and also on the fact that we are bringing all those talents, which some of them are already having an impact and there are many more coming.

So I think this is a combination of all of this that give us confidence that second half will be back to growth. And of course, [indiscernible] as well in terms of VWR in particular.

And Vijay, coming off -- taking the comp piece aside, not a dramatic sequential increase that we have baked in the plan, certainly, Q1 to Q2, and then we aren't getting more specific on the back half, but broadly beyond that. And just to be super clear into Q2 you'd say about minus 5% at an enterprise level, improvement in VWR coming up sequentially coming off a negative 5% in Q1. And then going backwards, about 500 basis points more in BMP, you can put that math together and gives you a clean picture for that, and that does not require a significant sequential ramp for the company in Q2.

Our next question comes from Catherine Schulte with Baird.

Maybe as you look across your manufacturing and logistics footprint, I guess, what portion of facilities would you say are in good shape today versus still needing some investment? I think you mentioned you've greenlighted projects. What kind of investment do those projects entail? And what's the time line to complete those?

Yes. Thanks, Catherine. Look, I think I visited probably all of them. I think there's maybe a few factory where I have not been like India, which I'm planning to go by the end of May and maybe 1 or 2 in the U.S. So I don't have yet the complete picture of all our sites. But look, we have excellent sites. I was recently in Poland, and Briar in France and [ Luban ] in Belgium, I think, generally speaking, the -- look, in terms of projects, there's always projects to happen in every site, right? There's not one site that consume all our CapEx or not.

Every site as their project, we encourage every leader to look at to apply lean and kaizen on the site to make sure that we have productivity, okay? I think Mary is driving a huge improvement on that side where we are measuring the productivity by site. And therefore, every site leaders are encouraged with the help of our internal lean team to come back with projects that are going to create productivity, and we just shared one of them. So those projects are very different. We did 12 in Q1, but I think we will have more coming on into the rest of the year. And I think this is where we are on curage as the team is responding very well in there.

Okay. Great. And then can you just walk through how the BMP idiosyncratic order pattern comp base throughout the year? I think you said they were a mid-single-digit headwind in 1Q will be higher in 2Q. But how does that look in the back half? And does BMP get back to positive growth at some point in the back half of the year?

Yes. I mean the idiosyncratic gets a little better in the back half of the year. If you recall, the primary driver on the back half is going to be headwinds in electronic materials, and I would just continue to think about sequential improvement here. And that's really the theme we're driving. We're really trying to talk through here is sequential stability than modest growth against that.

Yes. I think we shared in the past call that new sale, serum and electronics had actually different timing in the past. And so new steel serum giving a headwind first half, electronic material giving headwind in the second half. And I think this is important for us to continue to work with the supply chain team, but also with our customers so that we come back to a normalization of the customer ordering pattern and, therefore, shipment across the year.

Our next question comes from Casey Woodring with JPMorgan.

Maybe to start, can you walk through the price versus volume performance in the quarter? You said pricing was positive in BMP. So assuming that was down in VWR. So some more color on pricing in the quarter and updated pricing expectations for the year would be helpful. And we'll also be curious to hear your updated thoughts around gross margins and where those could land on the year, just given some of your comments around freight costs and such.

Well, so Casey, broadly in the quarter, and let's talk about this on the gross margin side. And I think the right way to think about it is sequentially. And we talked about -- we talked on the last call about taking the 31.5% gross margin -- adjusted gross margin is a jumping off point to think about to think about this year. And on a total company basis, you really had the decrementals on volume offset by pricing actions that came from the beginning of the year. And then you have other puts and takes with with freight and et cetera, there.

We saw somewhat better performance there. We like that. We believe that will continue to grind up during the year. on a full year-over-year basis, price cost spread was negative. Again, that's due to the VWR margin reset we saw beginning in the second half of of last year, but we like to set up for that. We like the execution, and then we believe you'll see a grinding up certainly into Q2. And then we're not being more specific about the back half of the year. But certainly, our guide is predicated on that gross margin improvement.

Understood. And then as a follow-up, can you just talk briefly about free cash flow performance in the quarter. You did $25 million here in 1Q, but reaffirmed the $500 million to $550 million guide. So just curious if the free cash in the first quarter was in line with your expectations. And I guess the guide does imply a pretty big step-up moving forward. So maybe just walk through how you plan on getting there, the puts and takes? And any sense for just phasing and how back-end loaded that range is?

Yes. No, certainly, Casey. So we noted that it was consistent with our expectations. Our guide is before restructuring expenses. So then it was around $40 million when you exclude restructuring expenses, we cited the significant prebate. If we had not had the significant prepay in the quarter, we would have looked a lot more like last year, and then we would expect a similar sort of ramp throughout the year. there weren't really any other significant moving pieces.

If you look at the cash flow statement, there weren't working capital swings or otherwise, it drove it different way. So really, the story in the quarter on the relative was the prebate as well as on the absolute -- on the year-over-year lower earnings. And again, that will -- it's not unusual for Q1 to be lower on a seasonal basis, and then you'll see strong continued sequential improvement, which you've seen from us.

The next question comes from Brandon Couillard with Wells Fargo.

Emmanuel, on the VWR business, you talked about some market softness in Europe would that region deteriorate sequentially? Or is that just a year-over-year comment? And then the 50 basis points of U.S. weather impact in the U.S. in the quarter. I guess I would have thought you would have made up those orders at some point in the quarter. Did those get pushed out into 2Q? How do I think about the impact of that? Or they just lost revenue in general?

Just on the weather, I think what we were saying is it did impact. But fortunately, the team works very well and finished to deliver what we were expected. So VWR in Q1 was really spot on in terms of our expectations. So again, another confidence about the team capable of being flexible and really make it works. So that's the comment. On Europe, I think there is some softness in particular in the industry in Germany and in a couple of areas like this.

Also, I think remember that in Europe, we are very proud of being the largest distributor there. And so it's the places where the market is when you are the #1 always impact you a bit more than anybody else. I think there is Look, it's an area where we didn't have a leader for a long time there. I think we have [ Christophe ] now, which is really taking care of that. We did some reorganization and the team is reverted right now. And so that's where it's -- we have confidence in the second half in Europe as well.

Got you. And then maybe Steve or Brent, on the inflationary impact, the $10 million to $20 million, nice to see you're able to absorb that in the guidance for the year. Two questions. Do your contracts generally allow for freight-related surcharges to be passed through? And number two, to what extent have you kind of, I guess, stress tested those assumptions? Are there other known unknowns that could push you above that range as you look out the next few months that you've heard about?

Brandon, let me start just a quick comment on the contract and then I'll let Brent and Steve answer for the rest. We tested that during COVID and post-COVID inflation. I don't know if you remember. So we have a tool in place for surcharge it's working well in some area, in geographical area -- other geographical area, it's a bit more difficult. But we are looking at the success story that we had post-COVID when we had huge inflation, and we are just putting a team in place to make sure that we reproduce that and not only one geography, but across the entire territory.

So the answer is, yes, maybe not every contract but a huge majority [Technical Difficulty] potential headwind we see in the year related to the Middle East conflict that we're carefully watching that situation and estimating the impact that it could have on our operating income. And like Emmanuel said, we are monitoring weekly and looking for every opportunity to mitigate that impact on our results, the best we can.

Brandon, I'd just add, you coined a phrase known unknowns there. I suspect -- I don't know if we can never know an unknown. We certainly thought very deeply about this. So we think we've identified that appropriately.

The next question comes from Matt Larew with William Blair.

I wanted to ask about the bioprocess portfolio. You referenced BMP as a category in down slightly in and then improving in the back half. Many of the bioprocessing peers, I think, at this point are closer to normalized growth in the high single digits. So Emmanuel, just curious if you think on a on a long-term basis as is now a chance to really review the business if this is a portfolio that you think can grow kind of at that market rates and maybe how long you think it will take to get back there?

Yes. No doubt. Look, the BMP negative growth into Q2 that we are anticipated. And for that segment to be at the bottom is mostly due to what we talk about the seasonality and the speed static purchasing that we've seen, in particular into serum and new sale last year, all right? So it's a really what is the core of that segment, which is processed chemical. We've seen double-digit in process chemicals in Q1 and in revenue, but also in order, a positive book-to-bill.

We think that the market is 6%, 7%, like our peers looked at it, and we are really pushing the team to make sure that we are growing at market or even above market for the rest of the year. Again, the focus that we've done on Revival around commercial intensity as well as operation, give us confidence that we'll go back in the second half of the year to grow on both segments. And we're getting -- every day, we're getting more optimistic about the business.

That's great. And then Emmanuel, you joined last July. And so then there almost a year, you referenced the 25% of kind of top leaders changing the number of folks that you've brought in from other companies. In response to Catherine's question, you've been out to most of the facilities. I guess where would you assess in terms of the structural kind of personnel changes that you would like to make the -- any kind of accidents you wanted to implement and get going? Where would you say you're at in terms of getting that started and really ready for the company to jump off versus additional structural changes that you think need to be made to position the company?

And this is a very good question. Let me first because I like to be precise. I joined mid-August exactly. So it's not yet a year, right? It may be more time to celebrate my anniversary. But I'm super the about, first of all, the reaction of the team internally, all right? We have some really good talent internally. There's absolutely no doubt. And what we are trying to do is just buying this internal talent with additional external talent. Some of the roles that we've shared today and that are in that early slide, a role that we have created, that we didn't have in the past, okay?

And so I think where I am today, well, look at need a strong right-hand person and the CFO search is on its way, someone that can really be a partner to really continue to push and execute revival. But I will say, generally speaking, at my anniversary. So in a couple of more months, I think we will be almost there. We will announce soon some additional executive member that we should be able to position a couple of weeks to share with you around [indiscernible] and CIO, and I think we will be there.

Nevertheless, let me just say one more thing. Talent is always something which is very dynamic as well, okay? And what we are trying to do is to make sure that we do not lose the talent that we have as well. But this is always something very dynamic. And I think we are constantly making sure that we are motivating our talent. And one of the things that we're doing in revival around simplification is also about changing the delegation of authority to make sure that we empower the right people to make the right decision at the right place, at the place of impact as close as possible to the business. And I think, again, this is something that the team is reacting very quickly and very nicely. And I think the first quarter, we're pretty happy with our results, and we are very optimistic about the rest of the year.

The next question comes from Michael Ryskin with Bank of America.

Great. I've got a couple of minor ones I'm going to throw in. First, you alluded to prebates a number of times. Just wondering if you could expand on that, just sort of the magnitude of it in the quarter, was that unusual for 1Q? Just sort of the impact that had on numbers is how to think about that going forward?

Yes, Michael, it's Brent. So prebates are associated with enterprise contracts with large customers. We started talking about that in Q2 or Q3 of last year. We had a meaningful impact from payments due to that in Q4 of last year, that had very significant. We're not specifically quantifying it, but it had a very significant impact on the cash flow let's also be clear. It was anticipated. It was expected in our guidance as expected and how our cadence was going to get.

Michael, I will also look at it in a sense that if you do not renew and do not win contract, you don't have prebate. So we'll look at it as well as a positive.

Okay. Okay. And then on the VWR business, I hear your comments about 1Q. You expect that to be the organic low point, and you talked about some improvement in 2Q and beyond. You've got easier comps in the second half. But still, you did post a negative 5% organic trend on a negative 3% comp. So could you just talk about share dynamics, share gains, share losses, maybe touching on the prebates and the enterprise customers there? Just confidence that, that's really stabilized and is going to be less and less of an issue going forward?

So we talked about last year, we had some share loss. I think I explained as well that you don't lose share at a one-off, all right? It's a headwind that gone month after month, it takes time for our competitors to convert the loss that -- the win that they had, which is more or less on paper at the very beginning. And this is where we are. We are, first of all, on a seasonal low quarter.

We are at the tail of those losses. And we talked also about the fact that last year, we renewed contract, we renew contract with opportunity to grow license to go hand. And this is what we are doing. We're happy about what's going on right now. And so we have that tangible point, which is stabilization, stabilization of our commercial activity we win contracts, we renew contracts. We lost some contracts. We lost some share within a contract. The customer gave us a certain share of wallet. There's a huge dynamic here. But what I can tell you is we are stabilizing. And that's the most important thing. It's a stabilization. And as we are moving into the second half of the year, we have an easy comp. And that is because we are stabilizing because we are taking the action that we are taking in particular in e-commerce that we are confident about the fact that Q1 is the bottom.

Okay. Okay. If I could squeeze in one small follow-up. To Patrick's question, I think you pushed you on 2Q organic and margins. I want to make sure I understand the margin cadence properly. It sounds like you're pointing to some gradual improvement through the year, including on the gross margin on just looking at prior seasonality that seems to go against that. Is there anything unusual in gross margin that I'm missing for this year that would explain that?

Yes, Michael, I think we're coming up sort of the rebate for the company. We have significant revival productivity initiatives. There's always the noise of mix within that. And we're also not pointing to heroic improvement in that, just the kind of classic revival productivity and other things along with along with just better top line to better absorption against it.

The next question comes from Dan Arias with Stifel.

Brent, just curious how much of the plastic ware portfolio within VWR is yours versus OEM? I ask as I'm just sort of thinking about oil sensitivity and resident put cost, trying to understand how much you have control when it comes to managing inflation just versus sort of being at the mercy of whatever the OEM provider decides to do on price, et cetera?

Dan, Emmanuel here. We have a huge portfolio, and I don't have the data. I don't think -- I'm looking at Brent right now. I don't think we have the data in front of us. So I apologize, this is something that we can follow up. What I can just reinsure is we have also a new sourcing leaders in in VWR and Emilia is really leading that. So Emilia and Keith are really working hand to hand in the task force to make sure that we are controlling and making sure that we are negotiating best deal we can and passing through the increase we manage to see.

Okay. Fair enough. Maybe just sort of looking ahead a little bit and thinking about 2027, which I know is a long ways away, but are you -- does the operational improvement that you feel like you have confidence in right now? Does that give you confidence that EBITDA margins will be up next year?

Let me answer in 2 parts. First of all, let me echo comments from over already it is April '26. It's a bit premature to talk about '27. And I just want to reiterate what I said in the past. I take my comments very seriously. And for me, it is just too early to put a detailed take in the ground. However, and saying said that, I'd like to make a few more observations on the future. look, today, we are pleased with our Q1. We are looking into a second half of the year, which is going to be positive, and we are optimistic about that.

Revival is having an impact, and I'm confident that Revival for the rest of the year will have a greater impact. And so we feel that we will exit 2026. And by the end of the year, I think as well that we will have more capital deployment flexibility a higher level of confidence across the organization and revival is going to accelerate to have an impact on the entire organization around commercial, team around operational, team around the rest of the support functions. And so all what I see today over the last 9 months almost, give me confidence, and I am optimistic that 2027 will be a growth year.

Operator, we have time for one more question, please.

Our final question today comes from the line of Dan Brennan with TD Cohen.

Great. Maybe just on the distribution business. Could you just zoom out and talk to what you're seeing in kind of the broader market? There's a lot of uncertainty, what's happening with pharma spending certainly in the U.S. academic government trends. I'm just wondering versus what you're delivering, kind of how is the broader market doing? And then related to that, like are you guys assuming positive price in the back half of the year?

Do you want to answer the price for the back of the year?

I'm sorry, Dan, we have very modest price baked into our plan here.

And then I think from an overall market -- yes, sorry, from an overall market, I would say what I just said 3 months ago, I think we are where we are academic and government stable, maybe at a low level. Education is a question mark. Education segment is a question mark. There's pocket in Europe, as we discussed about that include industrial that are really struggled given the macroeconomic environment. There are geography differences.

And again, we are in so many different segments, including mining and pharma. Look, we are thinking that from us, and that's very important, we are stabilizing. The team is motivated. We are implementing the plan that we have, in particular in digital. We're super happy to have our new Chief Digital Officer, [ Jim Finn ] and that will really help us to think that the market is probably at a low single digit, and we will be back to growth in second half. I think this is where we are today. And of course, we will continue to monitor the macro environment on this.

Maybe just a final one. I know you called out that material headwind in Q2 from the BMP across those different businesses. Is there any more sounds like it's idiosyncratic very company-specific, but you've got -- it's pretty big. So could you provide any more color on that, like the [indiscernible]? And then it sounds like Brent that current materials is a headwind in the back half of the year. Sorry, if I missed in prior calls, you got to discuss those. But any additional color you can provide on those would be helpful.

Well, look, Dan, I think we've talked about it broadly where it comes as a headwind. But in in the first half of last year due to some timing, both customer orders and our fulfillment, you saw very, very strong performance in new sale. Now that also has very strong margin contribution. That becomes -- that's a headwind right now. You also saw a very strong performance in serum. Then in the back half of the year, we saw exceptional performance in the EM business particularly in Q3.

So new sale we talked about discretely, but for the research and specialty chemicals piece of it, that EM and serum just provides a headwind in the front half in the back half to just make the segment comps more difficult. So that's why you see us calling out specifically how we're doing process chemicals and other pieces there. So they're unburdened by those comp pieces, and I continue to point you all to the sequential performance we have in these through the year, moving away from the pieces on the comps.

All right. Thank you, Steve. Thank you, Brent. Thank you, everybody, on the call to joining us today. We moved the company for 1 in the first quarter, and I'm encouraged by the momentum and positive energy across the organization, revival is having an impact. Avantor is turning a corner financially, which gives me confidence that we will return to positive growth in the second half of the year. I look forward to updating you again next quarter. And until then, be well, everyone. Thank you.

Thank you, everyone, for joining us today. This concludes our call, and you may now disconnect your lines.

Good morning. My name is Emily, and I will be your conference operator today. At this time, I would like to welcome everyone to Avantor's Fourth Quarter 2025 Earnings Results Conference Call. [Operator Instructions] I will now turn the call over to Chris [indiscernible]. Chris, you may begin the conference.

Thank you, operator. Good morning, and thank you all for joining us. Our speakers today are Emmanuel Ligner, President and Chief Executive Officer; and Brent Jones, Executive Vice President and Chief Financial Officer.

The press release and a presentation accompanying this call are available on our Investor Relations website at ir.avantorsciences.com. Following our prepared remarks, we will open the call for questions. A replay of the call will be made available on our website later today.

During this call, we will make forward-looking statements within the meaning of the U.S. 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 may 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. We do not assume any obligation to update these forward-looking statements as a result of new information, future events or other developments.

This call will include a discussion of non-GAAP measures. A reconciliation of these non-GAAP measures can be found in the press release and in the supplemental disclosures package on our Investor Relations website.

With that, let me hand the call over to Emmanuel.

Thank you, Chris, and good morning, everyone. Thank you for joining us today. I'll cover 3 topics to begin the call. First, Project Revival and our progress to date, then our strategic objective for 2026 and how we will track our progress. And finally, my observations about the health of our end markets. I will then hand the call over to Brent. We will discuss our financial performance and 2026 guide in more detail. And after Brent comments, I will make some concluding remarks.

On our previous earnings call, I introduced the Avantor Revival program, which is designed to sharpen our strategic focus and to improve execution across the organization. Revival consists of 5 pillars, evolving our go-to-market strategy, improving our operations, optimizing our portfolio, simplifying our processes and lastly, strengthening talent and increase accountability. We are executing this plan with urgency and in the 3 months since launching the program, we have already made important progress. Our top priority has been the go-to-market pillar. And recently, we made a fundamental shift in how we run the company.

We now operate Avantor with 2 new business units, a product agnostic channel and a channel-agnostic product business. Customers and their needs are at the center of this reorganization. And we believe that this delineation maximize the possibility that every product and every service is delivered in a way that delights customers. Effective in Q1, we will alter our reporting segments to reflect this go-to-market approach and align external reporting with how we now manage the business internally.

Next, we have recommitted to the VWR brand for our channel business. One of my earliest observations when meeting with suppliers, customers and our associates was that everyone refers to the channel as VWR. So as of few weeks ago, the distribution channel of Avantor is once again known as VWR. We intend to capitalize on VWR tremendous brand recognition and long-standing goodwill with customers around the world.

In Q4, we launched an important update to VWR e-commerce platform, and we have committed to invest in addition $10 million to $15 million in 2026 to upgrade our customers' interface. Enhancing our digital capabilities is one of our highest priority given their importance to so many of our customers. In the operations pillar, our new Chief Operating Officer, Mary Blenn, has hit the ground running. Mary and her team have thoughtfully identified of investment to enhance our ability to serve customers.

Next, we have established a Revival project management office led by [indiscernible] that will coordinate our collective effort and will ensure accountability. Lastly, our teams across the world have embraced Revival, and I am thrilled by their willingness to make the changes necessary to maximize our potential. While I am optimistic as ever about the future of Avantor, I want to be crystal clear that 2026 will be a year of transition and investment as we reinforce the foundation of this great company. Significant investment will be made across the organization with our strategic priority in mind, driving sustainable, profitable top line growth. We will compete vigorously, but rationally, and we will work relentless to ensure customers are delighted about Avantor.

As such, the most important metric to track our progress will be organic revenue growth rate. and we intend to demonstrate improvement over the course of 2026. We have a significant amount of work ahead, but the fruits of our label will be meaningful when we execute our Revival plan successfully. We believe that Avantor can grow at a faster rate, generate attractive margin, produce strong free cash flow and do all of this in a fair, more consistent manner.

Before Brent discusses the financials, I want to share what we are seeing across some of our key markets. First, let me echo recent comments from others in our industry. After a challenging 2025, our end markets feel more stable, though naturally some areas are in better shape than others. The biopharma end market contributes to be healthy with production level growing at attractive rates and many companies identified investments that will expand capacity or improve efficiency. The bodes well for future demand from this important customer cohort. The primary growth driver of our bioprocessing business is patient's demand for biologies, which has remained strong. We expect demand for biologies to grow in 2026 and beyond based on customer development pipelines, the number of recent FDA approvals and the pace at which existing therapies are being adopted.

Customer inventory level across J.T.Baker and other process chemicals appear to be reasonable normal, and we expect demand for our products could improve modestly in 2026, having exited 2025 with a book-to-bill ratio of more than 1.

On the Master Flex fluid-handling side, we remain well positioned in areas aligned with customer preferences including single-use assemblies, fluid management and modular process solutions, which support flexibility and faster deployment when customers choose to invest. 2025 was a difficult year for our early-stage biotech, education and government customers. But we are cautiously optimistic that those end markets are near the bottom. While it is difficult to predict if or when Avantor might see improved demand, we are pleased that certain headwinds facing those customers may be dissipating.

The fourth quarter was one of the best quarters for biotech funding in recent years, and this momentums continue in January. Across the education and government end market, which we serve primarily with VWR, we have seen indicator of an improved funding environment in the Europe and Japan, but there remains uncertainty in the U.S. which represent a large percentage of our education and government business. While we are encouraged by expectation for an NIH budget in 2026, customers remain hesitant to spend money even when it is committed and received. This, coupled with reduction in headcount and program cuts over the past year lead us to believe that we will not see a noticeable increase in customer spend until we have an extended period of funding and outlay stability.

Before I turn the call over to Brent, I want to note that we are pleased to welcome [indiscernible] Mehra and Simon Dingemans to our Board of Directors. Sanjeev and Simon had deep global leadership, financial expertise and strategic insight. Brent?

Thank you, Emmanuel, and good morning, everyone. I'm starting with Slide 4. We delivered a Q4 largely in line with expectations with organic revenue growth, adjusted EPS and free cash flow at or above our guidance. For the quarter, reported revenue was $1.66 billion, which was down 4% year-over-year on an organic basis and squarely in line with our guidance. Adjusted EBITDA margin was 15.2%. Adjusted EPS for the quarter was $0.22 and at the midpoint of guidance. Free cash flow was $117 million. Excluding transformation expenses, free cash flow was $150 million at the high end of guidance. Adjusted gross profit for the quarter was $524 million, representing a 31.5% adjusted gross margin. This is a decline of 190 basis points year-over-year driven mainly by unfavorable segment mix and product mix as well as price actions in lab to protect and grow market share.

Adjusted EBITDA was $252 million in the quarter, which came in at the low end of our expectations. This was largely driven by gross margin, but also some modest headwinds due to Revival related spending as we have kicked off this program in earnest. Adjusted operating income was $225 million at a 13.5% margin. Interest and tax expense were better than expectations, and as a result, adjusted earnings per share were $0.22 for the quarter, a $0.05 year-over-year decline.

In Q4, we purchased $75 million worth of stock under the $500 million share repurchase program our Board of Directors authorized last fall. We paid down approximately $300 million of debt in 2025 and added approximately $120 million of cash to the balance sheet. Our adjusted net leverage ended the quarter at 3.2x adjusted EBITDA, flat to last year. Leverage increased by 0.1 point sequentially, largely due to FX impacts on the balance sheet that were higher than our expectations as well as lower LTM adjusted EBITDA.

Turning to our full year results on Slide 5. Reported revenues were $6.552 billion, down 3% on an organic basis. Adjusted gross profit for the year was $2.14 billion, representing a 32.7% adjusted gross margin. Adjusted EBITDA was $1.069 billion in 2025, representing a 16.3% margin. Adjusted operating income was $958 million at a 14.6% margin. Putting all of this together, adjusted earnings per share came in at $0.90 for the year at the midpoint of our updated Q3 guidance. We generated $496 million in free cash flow in 2025. Excluding transformation spend, we generated $599 million of adjusted free cash flow. Free cash flow conversion was nearly 98% when adjusted for the cash costs related to transformation.

Laboratory Solutions revenue for the quarter was $1.116 billion, a decline of 4% versus prior year on an organic basis representing the higher end of our guidance of down mid-single digits. Sequentially, sales grew modestly on an organic basis. The market environment remains reasonably stable, albeit at lower levels of activity than we would like to see. The prolonged government shutdown certainly had an impact in the quarter but we also saw some modest end-of-year budget flush that we did our best to capitalize on, particularly with equipment and instrumentation.

Our channel business, which represents approximately 2/3 of the business, was down mid-single digits with strength in chemicals more than offset by headwinds in consumables and ENI. Our Services business was down low single digits, and our Specialty business was essentially flat with proprietary chemicals up low single digits.

For the full year 2025, Laboratory Solutions revenue was $4.4 billion, a decline of 3% versus 2024 on an organic basis. Adjusted operating income for Laboratory Solutions was $114 million for the quarter with a 10.2% margin. Adjusted operating income margin declined 290 basis points year-over-year and 110 basis points sequentially from Q3. The primary driver of the sequential margin decline was mix with stronger equipment and instrumentation and specialty procurement sales at lower margins. Pricing also contributed to the margin decline.

For the full year 2025, Laboratory Solutions adjusted operating income was $510 million with an 11.6% margin. Bioscience production revenue for the quarter was $548 million, which reflects an organic decline of negative 4% versus prior year, representing the high end of our guidance. This also represents mid-single-digit growth sequentially. Bioprocessing representing about 2/3 of the segment saw a high single-digit decline at the better end of our expectations of down high single digits to low double digits. Within bioprocessing, Process Chemicals performed as expected, down double digits year-over-year. This was largely due to the ongoing backlog we are carrying as well as a particularly difficult comparable in Q4 of 2024.

Process Chemicals was up modestly on a sequential basis. On the order side, our process chemicals business, excluding serum and a book-to-bill of more than 1 for the quarter, and this order book is up high single digits year-to-date. While we continue to have operational bottlenecks, these did not materially impact our Q4 performance versus expectations. Our backlog did not reduce meaningfully in the quarter and remains too high but this is receiving intense focus from the operations and supply chain teams in line with our Revival objectives.

As expected, single-use was up low single digits, both year-over-year and sequentially. Controlled environment consumables were down modestly sequentially and somewhat weaker than expected. For the balance of the segment, Silicones performed largely in line with expectations and Applied Solutions outperformed due to electronic materials. Adjusted operating income for Bioscience Production was $127 million for the quarter, representing a 23.2% margin, down 340 basis points year-over-year. This decline is significantly due to volume-related fixed cost absorption and mix. On a sequential basis, adjusted operating income was down 100 basis points, in part due to additional spend to drive better operational performance. For the full year 2025, Bioscience Productions adjusted operating income was $518 million with a 24.1% margin.

Please turn to Slide 8. As Emmanuel noted, we have optimized our go-to-market strategy. And as a result, we are resegmenting the business in 2026. Slide 8 graphically depicts the key elements of this resegmentation as well as our new nomenclature for the business. This resegmentation reflects how we now run the business with a product-agnostic channel on the one hand and channel-agnostic products on the other. You will find detailed disclosures in the Form 8-K we filed earlier today.

Please turn to Slide 9. The larger segment is VWR Distribution and Services coinciding with our relaunch of the VWR brand last month. This will include most of the former Laboratory Solutions segment, but now will include CEC and will no longer include our proprietary laboratory chemicals business as well as a few other small businesses where we manufacture products. The guiding principle for the VWR distribution and services segment is a product-agnostic channel primarily composed of third-party content, but that also includes VWR branded products. Over 90% of this segment will be our channel business and the balance will be our services offerings, which include our on-site services where we manage our customers' inventories and stock rooms as well as our equipment services business.

Based on 2025 revenue, the Channel piece of this segment was approximately $4.4 billion, and the Services piece was approximately $300 million. What we are now calling our VWR Distribution and Services segment represented about 72% of our enterprise revenue in 2025 and had an adjusted operating margin of 11.5% for the year.

I am now on Slide 10. The other segment will be Bioscience and Med Tech Products. This segment includes most of the former Bioscience Production segment with the addition of our proprietary laboratory chemicals business and a few other small businesses where we manufacture products and the removal of CEC. Again, the guiding principle for this new segment is a channel-agnostic product business. The components of this segment are process chemicals, fluid handling, new sale and research and specialty chemicals. As you can see by the slide, process chemicals includes our proprietary J.T. Baker products used in production environments from solvents, to salts, to excipients. Fluid Handling includes our Master Flex pumps and associated tubing as well as [indiscernible] and other fluid management solutions. NuSil includes our well-known high-purity silicones that are used in medical and industrial applications.

Finally, Research and Specialty Chemicals captures the balance of our portfolio, including diagnostic chemicals, proprietary lab chemicals, electronic materials, chemicals and serum for biologic applications. For fiscal year 2025, Process Chemicals generated approximately $500 million in revenue, Fluid Handling generated approximately $400 million in revenue, NuSil generated approximately $350 million in revenue, and Research and Specialty Chemicals generated approximately $600 million in revenue, combined what we are now calling our bioscience and med tech product segment represented about 28% of our enterprise revenue in 2025 and had an adjusted operating margin of 26.7% for the year.

Please turn to Slide 11, where I will discuss our 2026 guidance. For 2026, we expect organic revenue growth of negative 2.5% to negative 0.5%. We expect FX will contribute 1% to the top line, resulting in reported revenue growth of between negative 1.5% and positive 0.5%. We expect that VWR growth will somewhat outpace that of Bioscience and Medtech Products during the year. We continue to drive operational recovery in Process Chemicals and have the benefit of a strong order book in the business. Bioscience and Medtech Products does face difficult comps in 2026 in the Research and Specialty Chemicals subsegment, specifically in Electronic Materials and Serum as well as with NuSil. VWR will be impacted by a continuation of the various dynamics discussed on prior earnings calls. As Emmanuel mentioned earlier, we will continue to compete vigorously, but rationally and believe that this business will exit 2026 on more stable footing. We are making a variety of investments to enhance our value proposition and to better serve customers which we believe will improve the performance of this franchise over time.

Moving to profitability. We anticipate that our EBITDA margins will contract by as much as 100 to 150 basis points in 2026, similar to our margin level exiting 2025. Margins will be pressured by a variety of factors, including Bioscience and Medtech Product growth due to headwinds stated before, mix shifts Revival investments, incentive compensation reload as well as price cost spread. While our cost-saving initiatives remain on track, they will only offset a portion of the headwinds that we will face this year.

Moving below the line, we anticipate interest expense will approximate that of 2025 as FX movements offset the benefits of debt repayment, and we anticipate a tax rate of approximately 22.5%, similar to 2025's rate. Finally, we assume a fully diluted share count of 685 million shares for the year. All this translates to an adjusted EPS outlook of $0.77 to $0.83 for 2026. We expect to generate between $500 million and $550 million of free cash flow in 2026 and we once again expect our free cash flow generation to be back half weighted. Our guidance does not assume any share repurchases during 2026.

A few comments on phasing. In Q1, we expect to generate EPS of between $0.15 and $0.16 per share. We will face the same margin headwinds in Q1 that we do for the full year, but Q1 bears the additional burden of being the historically softest quarter of the year for our industry, plus our cost initiatives will have greater impact later in the year. We may also be impacted by the severe weather across the U.S. recently.

Finally, capital allocation. Debt reduction remains a top capital allocation priority as we remain committed to reducing our leverage sustainably below 3x net debt to adjusted EBITDA. We built cash and paid down a meaningful amount of debt again in 2025. At the same time, we continue to believe that our current share price fails to reflect the intrinsic value of our platform, so we may choose to repurchase shares opportunistically with excess cash.

With that, let me turn the call back to Emmanuel.

Before we move to the Q&A session, I want to spend a few moments discussing 2 important topics: Our cost base and our go-to-market strategy. I've spent my career in an organization famous for their continuous improvement mindset with a particular focus on eliminating wasteful spend and recycling it into growth orientated area. The continuous improvement mindset is central to my management philosophy. I see many opportunities for Avantor to become more efficient, while at the same time, I see many opportunities to make important growth investments across the business. With our focus on Revival, we will no longer report progress related to our previously discussed cost transformation initiative. Now we will continue to target those goals internally as a strategic objective separate from or in addition to Revival. This doesn't mean that we are no longer focused on reducing costs in the business, but I believe that we should not have competing or potential conflicting priorities as Revival is our critical focus going forward.

Through the end of 2025, we have achieved run rate savings of $265 million, ahead of our original expectation. Revival is about much more than cost. It is about driving sustainable top line growth and operating more efficiently. When you marry this to the action already taken, this will provide a strong foundation to drive improved operating leverage and margin improvement that follows from it.

Next, I want to deep dive deeper into the rationale for our new go-to-market strategy and the correspondent resegmentation of our business. Over the last 6 months, I have traveled the globe to engage with customers, suppliers, other external partners. During those travels, too frequently, I've encountered confusion and misunderstanding about who Avantor is and what we do. These confusions end today. Avantor is a house of powerful brands, brands such as J.T.Baker, Master flex, NuSil and VWR. Each of our brand has a unique heritage and offer our brands are synonymous with attributes such as quality or reliability. Our new go-to-market strategy will facilitate sharper market positioning, and will clarify our identity, allowing us to capitalize on the equity of those powerful brands. The distribution business will build on VWR history of offering private label, third-party solutions and services. while the product franchise offers a diversified portfolio of best-in-class manufacturer products. By swapping certain business activities between the 2 segments, we will better organize the company to meet customer needs as the requirement of VWR customers differ from those of J.T.Baker customers. Those pivotal changes should improve our go-to-market effectiveness by enabling each business to focus on its respective customer service needs, product life cycles and value proposition. In addition, we have created clear operational swing lanes, which in turn will result in better operational transparency and accountability.

Finally, we believe that our new structure will enable more focused and faster decision-making as each month is free to pursue its own strategy without any possible tension between a high-volume distribution engine and a product-focused manufacturing engine. To conclude, I am excited as ever about the future of Avantor and confident that the successful execution of Revival will help us reach our vast potential. The company boost a series of world-class assets, including its people, and I'm delighted by how swiftly and energetically the team has responded to change. Avantor is in transition, and 2026 will be a year where we invest purposely and sensibly to strengthen all aspects of our business. The ultimate goal, of course, is for the business to produce financial results that are far more attractive than what we have shown in recent years. Thank you again for joining the call. Operator, let's switch to Q&A, please.

[Operator Instructions] Our first question today comes from Casey Woodring with JPMorgan.

Great. Maybe just to start, you said that you expect growth to somewhat -- or growth in VWR to somewhat outpace that of Bioscience and med tech for the year. Can you just unpack that, what are your segment growth expectations for the year? And then maybe just by quarter, we can talk about what you expect in 1Q in both segments and then the phasing throughout the course of the year?

Yes, Casey, it's Brent. Thanks for the question. The there's some limitation of what we're guiding to there, but that comment really is driven by -- as we noted, frankly, in my remarks there, we have a number of particularly difficult comps in the Bioscience and Medtech Products business and in Serum, in Electronic Materials and NuSil, those are creating several hundred basis points drag on growth there. So that we expect will bring it somewhat below where the VWR channel would be there. So that's a primary driver. We're not really laying out phasing of the growth throughout the year. When we think of Q1 and what builds to Q1, we guided to $0.15 to $0.16 for the quarter, which absolutely implies it should be the low point of the year for most financial metrics. We're not getting to other elements of it. You'd expect doing the math there, the organic revenues have declined by 5% or more, which will be offset by a meaningful FX tailwind there.

Okay. Got it. That's helpful. And then just curious, you highlighted that '26 is going to be a year of transition and investment. Just on the latter piece, how are you weighing some of these investments, like the $10 million to $15 million in e-commerce versus some of the cost savings initiatives that are in place? And if you can give any update in terms of how much by way of cost savings Revival will generate? And if we see any of that in 2026?

Casey, Emmanuel. I think -- what is very important to understand is we are absolutely not abandoning our cost discipline and cost savings. We have cost transformation initiative, okay? What we really want to make sure is it's part of Revival and it's really combined it with what we are starting to do. The other thing is, as I said in my remarks, look, it comes from organization, which are very well known and where I have been very well trained on continuous improvement. And what is continuous improvement mindset is really making sure that you take out the waste, but you also reinvest this waste into opportunity that you have in this company on both segments have tremendous opportunities. So Remember, in the Revival, we have a pillar, which is about simplification, about optimization. That's where the initiative on cost out is going on. And then at the same time, we have to invest in our e-commerce channel. We have to invest in talent as well. And so this is where we are. The goal, Casey, of Revival, I mean, I don't have to remind everybody about it, but it's really about driving urgency to grow the business top line sustainably, but also profitably. So that's the goal that we have is to really make sure that we take cost out, we reinvest it and the outcome is top line growth profitably.

Our next question comes from Brandon Couillard with Wells Fargo.

Emmanuel and Brent, maybe the high level would be helpful to get your perspective on the degree to which you've kind of discounted the guide and to stress tested your assumptions, especially coming off the successive number of cuts last year. Just trying to get a feel for elements of conservatism that may be embedded in either the top line or the margin outlook for the year.

Yes. Look, Brandon, there, number one, very, very mindful of that. There are a huge number of moving parts that are going to impact the P&L in '26. And with the timing of the magnitude of all of them is difficult to reflect. But really, we've taken all the pluses and minus in here. And I would say the guide is neither conservative nor aggressive. It's very prudent, and that's really the approach we've taken here.

Okay. Then as far as the margin guide goes, I've heard you call out $15 million for e-commerce, another $20 million for your ability to serve customers. Are there any other investments that you specifically call out? Should we view those as kind of onetime in nature as we think about what the margin could look like beyond this year?

Yes. I mean, Brandon, a few things here. The $20 million on the operations side is going to be much more capital than OpEx and certainly some of the digital are going to be capital. I think a few things we were thinking about the adjusted EBITDA margin path here. I think of Q4 as a starting point and why I wouldn't exactly call that a run rate, but I think that's an important jumping off point. Then you incorporated in our comments of biotech and -- I'm sorry, Bioscience and Medtech Products or we'll probably shorthand as BNP -- that will probably grow at a lower rate than VWR. So then you have a segment mix issue there. And then within that, the comments I made about headwinds in Serum, Electronic Materials, NuSil, those are really key drivers of margin, marrying that to -- on the VWR side, margins negatively impacted really by a continuation of the recent trends that we've seen in that business. There are some other Revival investments there. I wouldn't say -- the magnitude that Emmanuel called out are probably the really significant ones. And otherwise, these are going to be very tactical things. He's made comments about certain senior hires and all the rest of it. But that's what I would put together for the margin story.

And if I just add something, I think I shared that philosophy as well in my first call. It's also about self-funding, okay? So we spoke a lot about that internally as if there is a need of investment within Revival, we need to make sure that we sell on it, which means that we need to find optimization and waste in other areas to be able to reinvest.

The next question comes from Paul Knight with KeyBanc. Please go ahead.

As you look at this year, I guess we view it as an investment year, what kind of margin impact are these investments creating? Is it 100 bps? Is it 200 bps? Is it 50? Could you kind of give us a range on this implement Revival, fix manufacturing a bit, fix e-commerce, what is this kind of margin impact in your view that, like previous question could dissipate in future years.

That's a very good question. I think, first of all, I will qualify this year as a transition year, okay, more than an investment year. Transition means that we have a lot of change going on. We have a lot of work to do, okay? We have to make sure that we operate and we go to market differently, and we already started. And so remember, Revival that we just introduced only 3 months ago, -- and we -- the team is really in action, and I'm super thrilled by the reaction of the team and the engagement that we have. So I will call it a transition year. I will not call it an investment years. And as I said, all the investment that we need to do will need to be self-funded. So what we are guiding today is what we're guiding, and I don't think we will go in granularity that you're asking about how much Revival is investment or not. Again, if there is more investment that we'll do, which are going to be much more material, we'll share that with you guys. Three months in the road, we've already taken a lot of action. We relaunched VWR, which, by the way, received great feedback from suppliers, from customers for our own people. So the team is energized. I participated [indiscernible] conference of America. Last week, I was in Asia for the same [indiscernible] conference. And in 2 weeks, we will be in Europe. The vibration is -- the vibe and the spirit of the people is really good. So I don't know if you want to add anything, Brent, but I don't think we'll go that granular.

Yes. I mean, Paul, I would just I would also grand yourself in our comments on the exit rate coming out of 2025 in Q4 and the number of moving pieces we have, particularly in the bioscience and med tech business, which is very significant margin impact there.

Yes. And then last question would be, what do you think the growth rate of the industry is under normalized conditions?

What is normalized condition? Is it normalized condition from the market? Or is it normalized foundation from us and on which period during a transition year or not. I think -- look, what I'm still really looking into this trying to really evaluate what will be the future. What is very important is that we execute what we said, we will, that we got into the detail that we compete rationally and that we just move on. So let me -- I've been here only 6 months. So I need maybe a bit more time to come back to you, but this is a very good question.

The next question comes from Michael Ryskin with Bank of America.

Great. I don't want to beat a dead horse, but I want to go back to margins again. Just the 2026 guide, if we look at both 4Q as a jumping point, is just sort of like the total year-over-year. Wondering you guys haven't talked about a lot so far has been price and share gains and share losses you alluded to a little bit on the fourth quarter of lowering price to hold on to volume. So I was wondering if you could elaborate on that. I mean, is this a race to the bottom? Sort of how viable is that is the long-term strategy? Just could you talk about share losses, especially in the lab distribution side of things. And just once you get through all of that 2026, is this the bottom on margins? Can you expect margins to go from here? Or are we still sort of in the process of figuring that out?

Yes, Michael, thank you look, in Q4, the biggest impact on margins was mixed. There was a little price and there was a little negative price in Q4, primarily the lab business there. we're being careful with all the moving pieces going forward into '26. So that's why we're using that as a jump-off point. But our assumptions in the plan for next year include, I would say, when you look at the gross -- or when you look at the revenue outlook, we're expecting very, very flat volume on the lab side and some price, but not a dramatic amount. And we're expecting better price on the Bioscience side with a little less volume there. So that -- we think we're in a point that we can execute against that reasonably on price, and we don't see it as a race to the bottom.

And I just want to maybe make one comment. We are working really hard to make sure that Q1 is the low point.

Okay. Okay. All right. I'll follow up offline. And then for my other question, you mentioned in your prepared remarks, you had a comment about book-to-bill greater than 1. I just want to be clear on that as that was bioprocess specifically? Was that one of the subcomponents of bioprocess. And just depending on where that is, I'm kind of trying to reconcile that with the biosciences and netted guide versus the implied guide for 2026. I mean, I guess, why isn't -- if the book to bill greater than 1, why does not translate to slightly better growth in that segment? I know you called out some tough comps, but just sort of let's put that greater than 1 number on the context and what that means [indiscernible].

Yes, Michael, that as well as the full year high single-digit growth was a Process Chemicals comment and Process Chemicals excluding Serum there. And and that certainly is a better part of the story for '26.

And Mike, you remember that we have some bottlenecks in supply chain. We have identified the need to invest about $20 million. Mary and her team is working super hard to make sure that this is put in place. But as you know, a lot of those equipment or investment needed, it takes time. It's customed, it needs to be deployed. It needs to be validated. So we're super pleased to have a book-to-bill superior to 1, but there's a few things that we need to do in supply chain to debottle the net that we have right now.

The next question comes from Dan Brennan with TD Cowen.

Maybe, I guess, the first question would just be back to the margins. I know you're not going to give a lot of granularity, but a little bit more of a bridge would be really helpful if you could, I mean, going from 16.3%. I know, Brent, you're saying south 4Q, but could you just give a little more color about how we think about organic margins how we think about the investments, how we think about kind of other levers, you're talking about mix, that would really help us since I think that's the key reason soon this morning.

Well, Dan, I think you answered a lot of the question within that. Again, the Q4 exit rate is a really important grounding point. We do have a modest incentive comp reset that creates some -- and some merit that creates some headwind on the SG&A side. We're obviously running productivity actions against those things. We will have we will have those mix pieces on the bioscience and med tech side there that there are headwinds there. And then obviously, driving price and lab and putting that all together, I don't think we'll have a more concise bridge for you here. That's also why we're going to EBITDA margin generally because, look, we understand where Q1 is going to be. As Emmanuel said, we expect that to be the low point, and we'll drive sustain continued improvement throughout the year.

Okay. And then maybe Emmanuel, you talked about the tour you did with customers and the strong receptivity on VWR, the panel business. Can you just zoom out a bit on the channel business and just give a perspective how we might think about the outlook there? Like any comment on what your share in that business is, how you're competing with your biggest competitor there, Thermo. And kind of as we look out, what you think that business could sustain from a growth and margin basis to look out a few years?

Yes. Look, again, I spend a lot of time with supplier in particular and customers. Look, after a challenging 2025, I think we're seeing some stability in the market. I think [indiscernible] and the team has done a really good job to renew a really important contract for us. as I said, with opportunity and of course, those opportunities are licensed to end, I will say, okay? So it takes time to really go and convert those things. But we have -- I feel that we are looking at some -- leaving 2025 in -- 2026 story in a better position that we were living in 2025. We'll continue to compete vigorously for sure, but we want to compete also rationally, okay? I think this is very important for us. There's a variety of investment that we are doing. We are bringing a lot of talent in that organization, okay? We have a new supplier relationship leader. We have a new pricing leader, which is very important for us. We are investing into the e-commerce. We had our first release of our graded e-commerce platform in December. And I think the launch of the relaunch as our distribution brand is really, really resonated very, very well with the market. So I feel really encouraged by the feedback that I received from the VWR ecosystem. And again, I think that we will exit 2026 in a more stable footing.

The next question comes from Luke Sergott with Barclays.

Great. I just want to talk about menu, you talked a little bit about not sacrificing growth opportunities for cost savings as you had seen in the past. Can you give us some examples of what you -- as you -- the first 6 months in and looking at some of these missed opportunities, and how you would have done things differently and then we can get some more pointed questions, I guess.

Sure. I mean one example I come straight to my head is in certain, I will say, VWR specialty, we may have cut too many specialists, okay? So when you cover a territory with -- I'm going just to take an example, if you cover England with 10 specialists in the past, which was probably too many, okay, okay. But maybe cutting down to 2 is too little. And that's what we are really looking at in the go-to-market [indiscernible] of Revival. It's really looking at the specialist, the account managers, the deployment of those people by territory, by geography, according to opportunities. And so 10 was maybe too many, 2 is too little, maybe the right number is 5. And it's those type of approach that we have by country, by territory, by product segment for both VWR and one side and BNP on the others. What was the second part of your question? That was it?

I mean, just what you would have done there? I guess -- and as we think -- I mean, I'm not going to talk on the margin, obviously, but you think about the investments here, you got 3 segmentation we've seen this kind of revitalization story before with you guys. So what are the difference in the go-to-market strategy here? What kind of investments do you need to make? And then how should we think about those investments across the 2 segments? Is this going to be on like VWR, and we should expect that business to grow in '26? Or is this just like investment in trying to hold clients in without losing any more key customers?

That's a great question. Look, the basic decision for the change in the go-to-market and the resegment business is really coming from customers. And it's really about the confusion that I heard when I spent 6 months on the road, okay. We have an opportunity to be clear. We have an opportunity to leverage the identity of who we are, where we're coming from, from VWR, from J.T.Baker, from Master Flex, from NuSil. And it helped us to just better organize ourselves really being much more focused on the customers' needs and you can appreciate the customer needs of for VWR customers which want a channel, which won the fast delivery, which won the very fast services at a great price point is different than bioscience chemicals, which are designing into a process or a molecule manufacturing. And so those different needs deserve different commercial approach, different support, and that's what really motivated our decision here. It's about better organization. It's really about making sure that we can compete, that we can be more nimble more agile. And of course, one thing which I think is extremely important as well is to have better accountability across the organization. So that's really what motivated us. In terms of investment, again, we'll make investment in both segments where we see the opportunity. I'll give you an example in VWR book, there are plenty of other opportunities in the BNP segment. So we'll make investment against where we need to go after opportunity. Again, the goal is to really drive sustainable, profitable top line growth for us.

Got you. By the way, in your guide is VWR going to grow? Sorry, about jumping in there last minute.

Well, I think as I said, we feel that with investments we're doing, with the passion that is behind, we will exit 2026 in a more stable footing.

The next question comes from Vijay Kumar with Evercore.

Emmanuel, maybe one on -- given the new segmentations [indiscernible], is there -- what was the organic growth for VWR in Bioscience, Medtech in fiscal '25 because when I'm looking at the numbers, did Bioscience and Medtech grow in the '25. If it did, what was Bioscience versus Medtech, just maybe some context in this new segmentation. Is that -- like how does it help you in better aligning the business? You mentioned go-to-market, right? Like what's changed versus prior and how you go to market?

So Vijay, just on the technical side, we haven't provided that historical, but it's -- the portfolios aren't that different in the aggregate. So your growth path will be similar to what we provided on the historical segments. Emmanuel, on the segmentation change.

Look, on the go-to-market, what change is from a customer standpoint, when you want to buy a product, which is through a distribution channel, a buy to sale, you get everything in there, okay? Remember, one of the things that we moved, I think, which was in the slide was CEC. And the CEC, its mask, it's many products that you use across various places, but of course, also in Biomanufacturing. But you buy them through your indirect sourcing team. You buy them through distribution. So CEC, which was part of the BPS now is going back to VWR because the customers buy them from an indirect sourcing organization, they buy that through VWR. So it just make more sense for the customers. It is simpler for the customers to know which product is by which team, by which commercial team under which contract. So it's all about clarity, it's all about customer centricity, around their demand and how do they want to be served.

Understood. That's helpful, Manuel. Maybe my second follow-up is -- the share count, Brent. You ended, I think, at 679 . Why is it going up to 685. I think given what you mentioned about Q4 stability, can we expect EPS to grow in fiscal '27? It's a directional qualitative kind of question?

Yes. I'll take the first part and then to Emmanuel on the second. We -- just dilutive shares -- dilutive comp grants in that as well as it moves on stock price and that there's nothing dramatic underlying that assumption on the diluted share count.

Yes, I think, look, 6 months in the job, 3 months in Revival, I think it's really too early to talk about what's going to happen after this transition year. So I really want to focus on where we are today. All the work that we have to do, Revival, and then we continue to understand more, learn more and hear more from supplier customers, and we'll take it one quarter over time.

Our final question today comes from Matt Larew with William Blair.

You have the new segments here. And obviously, on the BNP side, you referenced sort of the channel agnostic being the theme. But it also spreads not cross but across end markets and customer classes and some are more scaled than others. Last quarter, you referenced the idea of M&A wanting to bring inside of a healthy organization. And this year it was about making the organization healthy. What about just from a current portfolio standpoint as you now assess the scale needed to be successful within each some of these subsegments. Emmanuel, what's your take on kind of the portfolio as it sits today and where you'd like that to be?

Yes. Look, we shared that in the past in terms of portfolio. We are doing a lot of work. We've done some really good analysis. Brent is leading this pillar inside Revival. They have targets which have been identified. And as we said in the past, everything is on the table, no table, right? We are really looking at everything. And there are some things which are going on. And of course, we will talk to them when they happen, but we're moving full speed ahead on the portfolio. I think it's very important as well to remember that I really want to make sure that this resegmentation is understood on the fact that it gives us opportunity, right? When you look at the BMP channel-agnostic it means that the team is now open to a new opportunity open to a new way to reach customers in an area like in Asia, like I was in 2 weeks ago, there is opportunity. And this is why, again, we are doing this, is making sure that we look at those 2 businesses really separately in terms of opportunity. There is opportunity, and we are enthusiastic about it. That's what we will do. But portfolio, we're working on it. And when we have things to share with you, we will do so.

Thank you. Those are all the questions we have time for today. And so I'll turn the call back to Emmanuel for closing comments.

Thank you. Thank you very much guys for joining the call today. Let me conclude by just maybe repeating what I've said in the opening remarks. Avantor is in transition and 2026 is really a year where we will invest purposefully and sensibly to really strengthen all aspects of our business. The ultimate goal for us, of course, is for the business to produce financial results that are far more attractive than what we've shown in recent years. and you have the full commitment that the team is working really, really hard on this. So thank you again for joining the call, and talk to you soon.

Thank you, everyone, for joining us today. This concludes our call, and you may now disconnect your lines.

I'll now turn the call over to Chris.

All right. Great. Welcome, everybody. Thank you for joining us today. My name is Casey Woodring from the Life Science Tools and Diagnostics team here at JPMorgan. Welcome to the conference. Pleased to be joined by the Avantor management team. We have CEO Emmanuel Ligner; CFO, Brent Jones. They're going to go through the corporate presentation here, then we'll get into Q&A. So with that, Emmanuel, all yours.

Thank you, Casey. Very good morning. Thank you for having us at JPMorgan conference. I've been coming here for a bit more than 10 years maybe now, but that's my first time to present. So it's a very exciting time to talk to you about this great company, Avantor.

As Casey said, I'm joined with Brent Jones our CFO, will be answering some questions after 15 to 20 minutes presentation about the company, but I'm also joined with Hedi Hosak, who is representing our IR team. As you know, I spend my entire career in the life science industry, GE Healthcare, GE Life Sciences, Cytiva and of course, Cerba Healthcare, my former employer. And today, I'm super excited to talk to you about Avantor.

Before we start, a quick disclaimer that I'm sure you know very, very well. We will be presenting in my presentation and in my -- in the Q&A, some forward-looking statements, which reflect our current views, but not guaranteeing future performance. Also in the presentation, it includes non-GAAP measures. A reconciliation of the non-GAAP measures is included in the appendix.

Today, my goal is to introduce you Avantor in a simple way, to share with you the passion that I have for life science, but in particular, for Avantor. I've been working as a customer, as a supplier with Avantor, VWR and all the other brands for more than 20 years since October 1, 2004, actually. This company has solid foundation and a great and rich heritage. It's a global business that support thousands of scientists around the world through their day-to-day work, which is about research, development, and manufacturing.

Our product and services are embedded in every stage of our customers' activities. I worked in GE for more than 10 years, and Jack Welch had a famous say. If you're not #1, if you're not #2, don't bother. Let me tell you about those brands. VWR, which is our distribution brand is #1 in Europe, #2 in the U.S. Masterflex is #1 in high tubing quality and pump systems for research and industrial fluid transfer. J.T. Baker is #1 in bioprocessing chemicals. And NuSil is #1 for human implant, high-purity silicone.

And the solid heritage and an incredible brand, incredible product. We're serving them, and we have such an incredible reach. We reach and serve 300,000 customer locations in more than 180 countries. We supply all the top 20 pharmaceutical companies. By nature, our products are very sticky, product and services are very sticky, and which means that it has an incredible high percentage of recurring business.

Consumables are used every day. Our high-quality products are designing in our customers' processes and stay there for a long time. And finally, this is a business which has an incredible cash flow. Over the last 3 years, we have 100% free cash flow conversion. Now when I say that, I'm sure that our entire audience today will agree with me that while we have solid foundation, there is room for meaningful improvement. I'm sure you will all agree with me that our current share price doesn't reflect the long-term value of Avantor platform.

As you know, I joined in August last year of 4 months. And in October, when we shared our Q3 results, I also introduced you and introduced the launch of the Revival program. The Revival program now is 10 weeks. And today, in addition to tell you a bit more about the company, I also want to tell you what we are doing with Revival, what is going on and what is our commitment.

So quickly a reminder of Revival, which we launched in October. It's about enhancing the go-to-market strategy. It's about improving manufacturing and supply chain organization. It's refocusing our portfolio. It's driving cost out and saving by simplification of processes, by empowering the team and it's strengthening the talent of the organization.

So over the last 10 weeks, we're acting quickly. We have created a Revival management office with project management team. And actually, every single pillar that you see on the slide today is led by one of my team's executives. It is just the beginning. It is a lot of work, but there's a lot of opportunity ahead. And we are really excited about the impact that Revival can have on the organization.

I will give you some further details of the steps that we have already made and what we're doing and what we're expecting for the rest of the year. I like this picture. I like this picture because it's a simple picture that show who we are. On one side, we have distributed lab consumables and equipment to laboratory around the world. On the other, we're manufacturing proprietary products used in life science and medical technology application.

On one side, you have the channel, which is product agnostic. On the other, you have product, which is channel agnostic. Our goal in the go-to-market pillar for Revival, which, by the way, I am leading personally, it's really adjusting our market approach to ensure that each business, each product, its services is sold the most effectively. It's reaching the customers the right way. And we are focusing on 5 key areas: customer service, commercial effectiveness, marketing, sales and talent.

Now I want to go a bit more in detail about VWR and a bit more in detail on product and again, give you an example of what we've done and what we are doing on Revival for those 2 pillars of the company. So as I shared with you at the beginning, VWR is an incredible leading distributor around the world, #1 in Europe, #2 in the U.S. It has been founded in 1852. It's a great heritage, a great brand name, great recognition of high-quality service and speed of delivery of product. And we achieved that using 400 distribution centers around the world, equipped with specialized infrastructure, and it is really renowned for the quality of service that we have provided.

It has 3 pillars. First, a private label with more than 5,000 suppliers providing us product with VWR label. And this offer alternative to our customers. Of course, we're supplying millions of SKUs from top and most renowned supplier in the world. You have only a few names here, but it's also a service that we are providing to those incredible suppliers is to give them access to the reach that VWR have.

And finally, we have really an added value services. We have more than 2,000 of our associates, which works at the customer's bench alongside the scientists and make sure that the scientists are focusing on what they do best, science. And the goal of these services is really to return time to scientists. So Revival, what does revival do? And what are we doing for the go-to-market for VWR?

Well, first of all, over the past 2 days, I've met many suppliers, many customers. And of course, over the last 4 months, a lot of our associates, everybody refer to this channel as VWR. So the first thing that we're doing is we are relaunching VWR as a distribution channel of Avantor. We are doing that next week, our sales conference of the Americas, and we will continue to do that along the year. Really, this brand is very iconic, very well recognized, and we need to capitalize on it.

We have also, in December, and I don't know if you remember in the Q3 earnings, we talked about our e-commerce platform, which had not performed the way that we wanted. Well, in December, we already launched a first update of our e-commerce channel. It is the beginning. There's many more to come. And we've committed between $10 million to $15 million in 2026 to really get back to an e-commerce platform, which is really top of the customers' mind, which is really the perfect interface for the customers.

Our marketing team is also working with supplier to recreate marketing tools as a workflow. The benefit of a distributor for customers is that we are capable of offering a complete workflow for the application of the customers, bundling many different supplier products.

Finally, the team is working on offering both strategic supplier and strategic customers great visibility and analytics about all those consumables and equipment reaching those 300,000 customers location around the world. So it is about a better customer service. It's about a better customer experience, and it's really about bringing the customers at the center of VWR to turn around the performance of this great product brand.

Let's talk now about our product. In addition to the VWR distribution, of course, we are offering manufacturing specialty product, high-quality product. J.T. Baker, high-purity chemicals, a company dated 1904 with an incredible reputation. It's about predictability batch to batch, consistency for our customers.

Masterflex, fluid handling company, as I said, incredible positioning, #1 in pump research, in fluid management. And I will explain to you how those 2 brands and 2 product lines are really helping our bioprocessing business.

And finally, NuSil, high-purity silicon for human implant. Revival for those products is about leveraging our scientists. We add value to the customers when we lean in, when we work at the bench with the customers to solve their challenges to bring them solution to enhance their processes and make their processes better.

So it is about customer intimacy. It is about commercial effectiveness. It is about marketing, leveraging those very powerful brand. But it's also about relying on a strong supply chain. It's about increasing on-time delivery. It's about reducing lead times, ultimately to better serve our customers. As you know, I spend a lot of time in the bioprocessing world at the helm of Cytiva and GE Life Sciences. And I truly believe that Avantor has a differentiated portfolio. That differentiation comes really around our chemical portfolio.

As you can see, it's a busy slide, but our chemical portfolio really are used by our customers and offer really high-quality purity chemistry from the very beginning to the very end alongside the entire processing. However, since the last 4 months in my onboarding, I was a bit surprised that we get compared with Cytiva, with Thermo, with Repligen, with Sartorius because we have a differentiated portfolio. We do not have cell culture media. We do not have a cell line. We do not have filtration. We do not have bioreactors. We do not have large skid and chromatographic columns. And we have a differentiating offer. It's those chemicals, which combined with Masterflex fluid management offer a unique differentiator.

As you know, when customers make buffer, they receive usually chemistry in big drums and large drums. And they have associated with a spoon, a big scoop one place to another into the mixers. Well, our team in our innovation center in Bridgewater, New Jersey have created a combining the Masterflex fleet management and the chemistry from J.T. Baker, a unique differentiated ready-to process, ready-to-dispense bag. It is a unique product. It is differentiated and it shows you the strength of the chemistry on the one side and the fleet management on the other.

It's about really enhancing process integration. It's about reducing contamination risk, safety for the associate and the employee of our customers, it drive efficiency. So again, remember about differentiation, it's a consumable business, which is not exposed to capital cycle, and it's a product line which are embedded in our customers' process. So I just wanted to make sure that I share that with you as this is an area that I know very, very well.

Right. Let's go back to Revival. There's 4 other pillars in Revival, all led by different people, executives. I will just start basically with talent, led by our Chief Human Resource leader, Brittany. We've moved very fast. You've seen that we've hired Mary Blenn, from former employee of GE Healthcare and Cytiva. She has an incredible experience, global experience of leading very large manufacturing operation, and she is already in action.

She has been only 10 weeks in the organization, but she has already identified the need of investing about $20 million of some equipment to make sure that we enhance our reliability. But with her team, she's already in action to work a long-term manufacturing road map, which will give us opportunity to actually simplify our supply chain, leverage the places that we have today and take cost out. So this is for the manufacturing strategy on the top left. Sorry, I started to talk about Brittany on our HRM, but that's Mary, and we are super happy to have her.

So if we go back to the talent, we are also on the final stage of recruiting a CIO, a Chief Digital Officer. We have a new IR leader, which is going to join us on February 1. We have also recruited many talents in both segments, Lab Services segment and the bioprocessing segments with a new leaders for chemistry business in the VWR channel, of course, someone as well, which is going to lead our supplier relationship, which is so important.

So a lot of things already done in talent on the last 10 weeks, a lot of things going on in manufacturing with that $20 million needed and the entire plant being developed. Brent is leading our optimization of our portfolio. A lot of analysis have been done, a lot of decision has been made and a lot of things are already in progress. As you can imagine, I'm not going to share many details about this, but more to come soon.

And then finally, Corey Walker, our leaders of our Lab Services Solutions segment, VWR is leading the simplification work. It's about driving cost out. It's about optimization. And they're really focusing right now on the process of order to cash. So the team is in place. The value stream mapping is being done, and we are going to work on this optimization of order to cash for both channel segments and the product segments. A lot to be done, still a lot to come, but we strongly believe that the Revival plan will be really helpful to revamp the performance of Avantor overall.

A couple of more slides. I think a slide which is always very, very important in JPMorgan, it's the capital allocation priorities. This is just reinforcing the message that we gave in our Q3 earnings. Look, we have a commitment to continue to reduce our debt and reduce our leverage. At the end of Q3, we were at 3.1. We will continue to target to have a sustainability below 3. It's a full commitment for us. At the same time, and it's back to my comment at the beginning around the share price, which we believe don't really how do I say, don't really just reflect the value of Avantor portfolio and solid product line.

So the Board of Directors has authorized Brent and myself to go after 500 million share buyback. But this is something that we are going to do on an opportunistic way without increasing our leverage. I think that Revival is going to give us the opportunity in the near future to go back to M&A. But as you can imagine, I think we need to have the house in order. We need to be simpler. We need to have better talent. We need to have better go-to-market and stronger supply chain to be able to go back to M&A to welcome any new technologies that we think will fit our portfolio.

Finally, a quick summary. I cannot be more excited to be first back to the life science industry to be here with you today, but also to lead this incredible business. Incredible heritage, strong brand, strong product. The customers that I've met, the suppliers that I've met all want us to do better, want us to work with us. They want to give us more, and I'm really excited about the future. There's a lot of work to do, but the opportunity is there.

Revival is in action. The team is committed to it, and it has already started to show some improvement of our performance, and I'm super excited about this program because the team has really embraced it. And not only my leadership team, but also the rest of the organization. We are acting with urgency to become more competitive and to serve our customers better and come back to growth.

Finally, I just want to remind everybody, and this is a good reminder before the Q&A session that we will be sharing our Q4 performance and our guidance for 2026 on February 11, and I'm looking forward to talk to you then. Thank you very much. Let's go back to Q&A session now. Thank you.

Great. Thank you, Emmanuel. Maybe to start, just can you talk about how you view the Avantor business in the marketplace as it stands today and your strategic vision moving forward? Obviously, coming from Cytiva, you must have a good understanding of Avantor's legacy bioproduction portfolio. But would just be curious to hear what attracted you to Avantor as a whole? And what are the key initiatives over your first 12 to 18 months on the job?

Yes, sure. Look, as I said, I joined Whatman in October 2004, and VWR was a very important distributor of Whatman. And those 2 brands are incredible legacy and strength. I don't know if you know, but Whatman date 1773 and Avantor and VWR 1852. I mean it's -- you need to be very, very humble when you lead a company like this because they have such a great legacy and you are a custodian of those brands.

So I was always having a great relationship with the VWR team with former CEO, Manuel Brocke-Benz and a couple of other people. And so when John pick up the phone and called me about it, I was very exciting because I knew VWR because I knew what VWR can do for a supplier. And guess what, GE Healthcare was also buying all the consumables through VWR. So I knew as well what a VWR can do and what a distributor can do for a customer side. So that was the first really excitement. It's great brand, great services and something which is really great.

On the other side, when I was leading Cytiva, we purchased a lot of chemicals from J.T. Baker, some amino acids, some glucose, some salt for the buffer business from the cell culture media business of Cytiva. So I knew as well the reputation. I knew as well the quality of the product. And I think what is exciting when you are a leader is, look, it's great to manage great business, great product in great times. I think there's always a challenge to manage businesses that need to be turned around, and this company needed to be turned around.

So I had a great discussion with John Peacock. We thought that it will be great that I bring my experience of supplier, customers and partner of Avantor in the bioprocessing into this business. And so I said yes. And he said, yes as well. So lucky me. But no, it's a great business and I'm super exciting about it. It's a great industry as well.

You gave a lot of detail on revival here today. I guess, which specific elements of the program are being prioritized for immediate execution and which are expected to drive longer-term transformation? Maybe if you could just walk us through the expected time lines for each of those 5 pillars that you talked about today.

Sure. Well, I think the first thing that we need to realize is it's going to be an evolving project, right? I think it's going to be step by step. We will focus on first things and then we find some other things. So I think there's a beginning, it's very difficult to tell you when there is an end. We are leading those 5 pillars at the same time, right? And that's why we have those 5 executives leading them, right? So we're recruiting talent. We are working through the portfolio. Mary is working on the supply chain. I'm working on the go-to-market. Corey is working on the simplification and cost out and empowerment of the team.

So I think we're really working all those 5 things at the same time because they are all very, very important. And they're all kind of coordinated as well. When you look at the go-to-market, if you redeployed your commercial team in certain area and redeployed commercial effectiveness tools, you need to make sure which portfolio you have. So you need to have the portfolio, I would say, cleanup done at the same time in parallel because if they're done after, you have to redo it again. So I think it's very important that we lead all those things at the same time. And look, just by refocusing the organization on the customers, we can already see, I would say, a funnel of opportunity, which is good. And that's why excited us. So we are going to push hard on this.

What specific financial and operational KPIs are you going to use to measure the progress of Revival? And can you just share your short, medium and long-term targets for those metrics, if you can share any today? And where would you see as the greatest execution risk as you implement some of these changes with Revival?

So let me first talk about the last part of your question, which is about the risk. Organization change is always risky. It's always hard. It's very often come from the top. What I am excited about is usually your most resistant layer of your organization to change are your middle layer. Those -- in an organization like us, we are 13,500 people, it's about a group of between 300 and 500 leaders. This is usually the hardest bit to change, and they are the most important people to change. What I'm exciting here is actually they are the team which actually really won't change. And they are the one that when I met with them, are excited about the change.

So I think it will be faster than other change that I may have done in the past. In terms of KPI, I mean, I think Brent can help us here. But what Brent and I are doing, I mean, we both come from Danaher, Brent from Pall and me from Cytiva, and we all worked a lot with bowlers and a lot of KPIs. And so we're working on building those bowlers. So every single team has their own bowler, so there's multiple facets of it. But it's about measuring the customer satisfaction. It's about measuring on-time delivery. Of course, it's about measuring the funnel, the funnel conversion, the funnel growth. And ultimately, it should be measuring a leading indicator about where we're going and what's going to be the performance of the business. So Brent, I don't know if you want to add anything?

No, I would just say there, as Emmanuel noted, 10 weeks into Revival, still getting the work streams going. As you see the effects, as we have '26 guidance, we'll start giving more on what KPIs you should measure us against there.

Maybe we can move on to the Lab Solutions business. So you've highlighted that the impact of prior share losses could create a drag to the business in future quarters. What's your strategy for accelerating the transition and ramp-up of new contract wins? And how should we think about those wins offsetting the drag from prior losses here moving forward?

So you have the contract win, which is very important. And within this win, you have, of course, making sure that the share of wallet gain is coming. So the team is organizing those strategic accounts. There's a lot of engagement from Corey on that side. But we should not forget as well that there is a very important hands of customers, which we do not deal with contract, okay? But we deal with the e-commerce platform. And those customers are very important because they are smaller customers, sometimes customers which are around the 10,000 or 50,000 purchasing a year, but you have to serve them very well. And the way to engage with them is really through the e-commerce platform.

So the revamping of the e-commerce platform is very important for us. I shared that we had our first version, which has been deployed in December. There's many more to come. We have a commitment of $10 million to $15 million investment this year to make sure that we launch a much more powerful tool. Our customers are not looking at a product. They're looking for a solution. They are looking for a workflow.

And so the other initiative that we have with the marketing team to really work with our supplier and our scientists to make sure that we offer a complete workflow to the customers because it simplifies their life. They may be looking for centrifuge. They may be looking for a small centrifuge. But in fact, behind that demand, they are doing Western blotting. They are doing genomics, they're doing proteomics analysis. And therefore, they need the whole full offering.

And by revamping our web page to have an easy search to have a complete workflow offering and revamping our marketing workflow, we will be able to really regain our market share and regain our, I would say, trust in our customers. I think the rest in terms of the logistics, in terms of the on-time delivery and in terms of service level is impeccable. It's really, really good. I think it's more than connection with the customers and interaction with the customers that we really need to revamp in particular, for that sale of small customers, which are very, very important.

And how should investors think about the time line for margin recovery in Lab Solutions? And what framework are you using to balance share growth against margin protection in a competitive environment that is seeing more of your customers bundling and cutting prices?

I'm going to start and then Brent, you can jump in after. Look, we have the right to win, okay? And it's always a difficult balance between price, but it's also a very important volume game here, okay? You have an infrastructure. I spoke about those 40 different incredible distribution centers that we have around the world. So the balance between making sure that you have the right price to win the volume and getting that volume is very important for the recovery of margin. Do you want to add something?

Yes. I mean, look, ultimately, you want to compound earnings and driving volume is the most critical part to absorb there. And look, we have to have volumes the system. Typically when you have those pressures when you have new contracts, you have lower price and they rise over time as you get mix volume otherwise, we're just seeing a lot of intensity of that right now. And again, you'll see that when we talk about the '26 expectations.

Okay. That's helpful. Maybe moving on to Bioscience production. So other bioprocessing players had indicated that the market is going to grow high single digits in '26, primarily driven by consumables growth. How should we think about bioprocessing growth within Biosciences production relative to overall end market growth for Avantor here? And how should we factor in competitive pressures and then the commercial execution headwinds experienced in 2025 in controlled environment consumables and process chemicals?

Look, I think we're pretty happy with where the commercial effectiveness is and with the team winning business, okay? I think in Q3, I shared that our order book and our order intake in bioprocessing and in chemicals, in particular, was high single digit, okay? And so I think it's a good signal that the customer trust us that our commercial team has a winning business. And we have really good share, good positioning. And as I said, in bioprocessing chemicals, we're the #1 company.

I think the combination of the chemicals and Masterflex and the buffer really give us a lot of opportunity. What we have to do is we need to have better supply chain. It's about supply chain. It's all good to have an order, but if you cannot deliver the product, it's on time when the customers want it, it's not helping. So it's a combination of this commercial effort and supply chain effort. And so for us, really on priority on the bioprocessing and on the chemicals is very important that we invest quickly those $20 million of equipment and different assets that we have looked at doing because it's going to help us the ability to be much more reliable to have much more capacity in some of niche products, and this is very important.

So Mary Blenn is full speed ahead on this, and it is very important for us that we do it quickly so that we serve our customers. But the good news is even if we had had a bit of a hiccup on the supply chain side, we didn't let down any customers and the customers want to continue to do business with us. They want to give us more. So I'm pretty confident that fixing supply chain will really help us to go back to the high single-digit growth that we see at the end of Q3 in our order book. Do you want to add something?

No, just in your comment there was on process chemicals.

That was on process chemicals, sorry.

Yes. Yes, that was.

Yes. Okay. And how should investors think about the reshoring opportunity for Avantor? Your portfolio is very consumables heavy. How should we view the potential benefit here relative to other bioprocessing players maybe with more equipment-heavy portfolios? Just curious on Avantor's single-use heavy portfolio. Could that be a competitive differentiator? Maybe walk us through how you're thinking about reshoring.

Well, I think there's very similar opportunities. I think the equipment is always -- give you some lumpiness, and there's always cycle around equipment, which we are lucky that we don't have. So I think it's about compounding. It's about making sure that you're designing your chemicals and your fleet management tools into customers' process and helping them to succeed. And so it's a compounding effect really in that sense. So I think the opportunity is pretty similar.

Okay. And Brent, maybe one for you just on the model here. Can you walk through the moving parts of the adjusted operating margin line for 2026 and whether 4Q could be a good jump-off point? And then maybe if you can help quantify some of the puts and takes on the gross margin line, like incentive comp inflation? Just any color on that.

I would say we'll look forward to giving you all that color on Feb 11.

I did give you a hint about the answer at the end of my presentation.

Okay. Fair enough. We'll wait to hear about that. Maybe one shifting back to the lab business. Given the heightened competitive pressure in LS within the distribution channel, do you see Avantor's portfolio as more competitive or differentiated for certain types of biopharma and biotech customers, whether that be different size or development stage?

That is a very good question. I don't know if you noticed in my very simple way of the business of looking at the business with channel on one side, product on the other. I talk about something which I think is very important in terms of differentiation. It's called channel, which is product agnostic. I think our major competitor is not necessarily product agnostic, and that's the feedback that we got from our customers. So I think this is where the VWR channel can be really differentiated is by really concentrating on what does the customers want, and that's what we want to do.

Interesting point. And then maybe on the academic and government side, can you just walk through the K-12 customer headwinds you've experienced? That business was down, I think, double digits in the third quarter. NIH funding is not a direct correlation here, but obviously, the overall market uncertainty is seemingly impacting your academic and government exposure. So can you just maybe talk about how you expect that market to perform in 2026?

Yes. I think there -- I mean, look, I'm not the one decided of what government will fund in academy. So there's always a bit of a worry there. Science and education is definitely suffering in that side. I think funding, we've seen some good funding at the end of Q4, actually, some leftover budget is always good. Look, I think the government understands that academy is very, very important and innovation is very, very important. So I think that the good science will always be funded. The good project has always been funded, maybe not at the level in the past, but I think it's going to continue to be there, and we are a strong supplier in there. But it's not the only segment that we are supplying.

I think this is a beauty about a business like VWR is we're serving the mining industry, we're serving the oil and gas industry. We are serving the food and beverage industry. Of course, we're serving the health care, the private and the academy and the fundamental research that are done there. So I think it's for us to make sure that we navigate those different segments and put our efforts where the funding and where the money is.

Got you. Coming up here at time. Maybe just in closing, what are you most excited for in 2026? It seems like you guys have a lot on the horizon, but if you can kind of narrow it down, what are you most excited for?

Yes. I mean very exciting about Revival because I think it is really the right program. The team is very embraced about this. And look, I think maybe something for you guys. I think I'm also very exciting because we will have an opportunity probably in the second half, end of Q3, end of Q4 to have an Investor Day and to welcome us to our place and spend a lot of time with you to share you more about the Revival because we will have had more time behind. Remember, it's only 10 weeks now and then really be able to talk about the future because I think the future is bright for Avantor.

All right. We'll look forward to that. And we'll close that. Thank you very much.

Thank you.

Thank you.

Thank you, Emmanuel and Brent. Thank you everybody for joining us. Enjoy the rest of the conference.

Good morning. My name is Emily, and I will be your conference operator today. At this time, I would like to welcome everyone to Avantor's Third Quarter 2025 Earnings Results Conference Call. [Operator Instructions] I will now turn the call over to Allison Hosak, Senior Vice President of Global Communications. Ms. Hosak, you may begin the conference.

Good morning, and thank you for joining us. Our speakers today are Emmanuel Ligner, President and Chief Executive Officer; and Brent Jones, Executive Vice President and Chief Financial Officer. The press release and a presentation accompanying this call are available on our Investor Relations website at ir.avantorsciences.com. A replay of this webcast will also be made available on our website after the call. Following our prepared remarks, we will open the line for questions.

During this call, we will be making forward-looking statements within the meaning of the U.S. 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. We do not assume any obligation to update these forward-looking statements as a result of new information, future events or other developments.

This call will include a discussion of non-GAAP measures. A reconciliation of the non-GAAP measures can be found in the press release and in the supplemental disclosure package on our Investor Relations website.

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

Thank you, Ali, and good morning, everyone. I appreciate you joining us today. As you know, I joined Avantor a little more than 2 months ago. I came on board because I believe this company has a tremendous potential. I spent my entire carrier in pharma and life science industries, spending meaningful time on 3 different continents. I was fortunate to spend 2 decades at GE Life Sciences and Danaher, where I build out the Cytiva business, significantly accelerated the growth trajectory of the platform and led its integration with Pall Life Sciences. During that time, I had a front row seat to Avantor trajectories as a customer and supplier. I believe this experience enabled me to step into this role 10 weeks ago with a unique perspective on the company's strengths and area for improvement.

Throughout my carrier, the primary lessons I've learned is that there is no substitute for going to Gemba. This concept literally means visiting the place where work is done and value is created to learn and determine how to best improve our organization. And for the past 2 months, this is exactly what I have been doing. I have dedicated my time towards visiting our sites, meeting our people, speaking with dozens of our customers and supplier across Asia, Europe and North America. This not only sharpened my initial instincts, but also provided invaluable insights as we map out our strategy moving forward. I want to personally thank all the stakeholders for the warm welcome, open dialogue and trust that demonstrated for my first day in the role.

Here are some of the important learnings. First, this is a great industry with strong secular tailwinds. Scientific collaboration is more important than ever. If you talk to any pharma or biotech company right now, you will hear about the multitude of ways in which they are harnessing the power of technology and AI to accelerate the next breakthrough discovery. That gives us a tremendous amount of confidence in the long-term trajectory of the end markets we serve and reinforces the importance of our positioning within the industry. Our recent announcement with Bluewell Bio is a perfect demonstration of how Avantor is advancing innovation through collaboration, and we are committed to continue to do our part to facilitate the research, development, manufacturing and delivery of next-generation therapies.

Second, Avantor has a solid portfolio, a committed global team and an incredible customer reach, serving more than 300,000 customers location across approximately 180 countries. As someone that has spent considerable time in recent years working to scale life science businesses, those attributes will be the envy of most companies. We have significant untapped potential and numerous opportunity in front of us, and we need to capitalize on those opportunities. Third and most importantly, there are many things we can and should do better, and we are taking immediate action to turn the business around and all ourselves accountable for rewarding the trust our investors place in Avantor.

Starting from a commercial perspective, I believe our business is overly complex with unnecessary centralization, which inhibits frontline staff from most effectively meeting our customers and supplier needs and expectations. Customers buy from Avantor because of the quality and service heritage of our incredible brands, VWR, GentiBaker, Masterflex, NuSil, those are some of the best-known names in the industry, and our commercial team are not being sufficiently empowered to leverage the equity of those brands. On the operation and supply chain side, I believe we need to make some investment and process enhancement to improve our ability to consistently serve our customers. Overall, I believe those challenges are generally sales inflicted. And the good news is that they are fixable with determination, focus and time.

At the conclusion of this call, I will share my preliminary thoughts on our plan for doing just that, which we are calling Avantor Revival. With those initial finding in mind, we strongly believe that our current share price does not reflect the long-term value of our platform. To demonstrate our long-term conviction in the prospect of this business, our Board of Directors has authorized a $500 million share repurchase program with immediate effect, which we will pursue opportunistically moving forward, while also delivering on our commitment to decrease net leverage.

Now I would like to turn it over to Brent for a more detailed overview of our third quarter financial results and our updated full year guidance. Brent?

Thank you, Emmanuel, and good morning, everyone. I'm starting with Slide 4. For the quarter, reported revenue was $1.62 billion, which was down 5% year-over-year on an organic basis. This reflects weaker-than-expected top line performance primarily in lab. Adjusted EBITDA margin was 16.5% and adjusted EPS for the quarter was $0.22. Free cash flow was $172 million with adjusted conversion at 124%.

Turning to Slide 5. Adjusted gross profit for the quarter was $527 million, representing a 32.4% adjusted gross margin. This is a decline of 100 basis points year-over-year, driven mainly by price actions in lab to protect and grow market share. We had another quarter of solid cost control with adjusted SG&A expense better than plan and prior year. Our results also benefit from reductions in incentive compensation accruals. We remain on track with our cost transformation program and continue to expect $400 million in run rate savings by the end of 2027.

Adjusted EBITDA was $268 million in the quarter, representing a 16.5% margin, better than our expectations. Adjusted operating income was $237 million at a 14.6% margin. Interest and tax expense were in line with our expectations. As a result, adjusted earnings per share were $0.22 for the quarter, a $0.04 year-over-year decline. Our adjusted EPS performance in the quarter reflects the flow-through of our adjusted EBITDA results.

Our cash generation was particularly strong with $172 million in free cash flow in the quarter. When adjusted for transformation-related payments, our free cash flow conversion was 124% of adjusted net income for the quarter.

In terms of our GAAP results, we took a $785 million impairment to the goodwill associated with our lab distribution business. This noncash charge was necessitated in large part by the continued weakness in our share price as well as the margin headwinds this business is facing. Our adjusted net leverage ended the quarter at 3.1x adjusted EBITDA, down 0.1x from Q2 as our strong cash generation enabled us to reduce net debt.

Finally, we recently effected a very attractive refinancing of our near-term maturities and upsized our revolving credit facility to $1.4 billion and extended its maturity to 2030. Other than modest required term loan amortization, we now do not have any debt maturities before 2028 and all of our debt is either prepayable at par or at very modest call premium. Our debt is approximately 75% fixed rate, and our current weighted average cost of debt is just over 4%.

Let's now take a closer look at each of our segments on Slide 6. In Laboratory Solutions, revenue was $1.1 billion. On an organic basis, we declined 5% versus prior year, below our expectations of negative 2% to negative 4%. The market backdrop in lab is largely stable, and Cory Walker and his team have done a great job defending and expanding business at our largest accounts. The share losses we mentioned on our Q1 call have been phasing in over the past several quarters. The good news is that since Cory joined us in late March, we haven't lost any key customer accounts, and, in fact, we have won about $100 million in business at 2 top 15 global pharma customers, which will start phasing in, in 2026.

With that said, customer activity continues to be at lower levels than our original expectations for the year, driven by ongoing end market uncertainty related to basic research funding. Each of our lab businesses faced similar mid-single-digit headwinds on a year-over-year basis. Our distribution channel, which accounts for approximately 2/3 of segment revenue was primarily impacted by weakness in consumables and equipment and instrumentation while our chemicals and reagents were essentially flat.

Our services business, approximately 20% of segment revenue, saw greater-than-expected headwinds due to the aforementioned share loss, and our proprietary business the balance of Labs revenue was significantly impacted by our science education business. However, our attractive proprietary lab chemicals grew mid-single digits in the quarter and similarly year-to-date. The primary drivers of our miss to expectations were headwinds in services and higher education and K-12. While market softness is a key factor in the quarter's performance, we also continue to navigate competitive pressures. These need to be better mitigated by improved commercial and operational execution, which, as Emmanuel noted at the outset, is one of our key priorities as part of Avantor Revival.

Adjusted operating income for Lab Solutions was $124 million for the quarter with an 11.3% margin. The softer demand environment has pressured our ability to get price, which has meaningfully impacted margins year-over-year. On a sequential basis, the primary driver of the margin decline was lower volumes and related absorption.

Turning to bioscience production. Revenue was $527 million in Q3, down 4% organically on a year-over-year basis and at the low end of expectations. Bioprocessing was down low single digits year-over-year versus our expectation of flat. Within bioprocessing, process chemicals was up low single digits but was lower than expectations. The planned maintenance downtime that impacted Q2 was remedied during the quarter. But as Emmanuel mentioned, we continue to face other operational headwinds that are impacting our throughput, including raw material availability and equipment uptime. As an example, downtime at several of our plants prevented us from shipping several orders that were due for delivery in Q3, absent these issues, we would have delivered our bioprocessing guide for the quarter.

Single use largely performed as expected and CEC was somewhat weaker than expected, down mid-single digits due to commercial execution and competitive dynamics.

Year-to-date, and in Q3, our book-to-bill is 1.0 for bioprocessing with particularly strong performance in process chemicals, where order rates were up high single digits in Q3 and year-to-date, while billings are only up low single digits, indicating a solid trend. Our bioprocessing order backlog reduced modestly from Q2 to Q3, but still is too high. The team is working hard to reduce this as much as possible by the end of the year. For the balance of the segment, silicones performed as expected and Applied Solutions had a stronger-than-expected quarter, up low single digits on significant strength in electronic materials that we expect to continue in Q4.

Adjusted operating income for bioscience production was $128 million for the quarter, representing a 24.2% margin. Margin was down year-over-year largely due to lower volumes and related under-absorption as well as higher expense related to our operational challenges. On a sequential basis, volume was the primary headwind, only partially offset by price and lower operating expense.

Slide 7 shows our full year 2025 guidance. This has been updated to reflect Q3 performance as well as our best assessment of the current environment. We now expect full year organic revenue growth of negative 3.5% to negative 2.5%. Based on current FX rates, we expect a modest tailwind from FX of approximately 1.5%, along with the 2% headwind from the Clinical Services divestiture, this leads to reported revenue growth of negative 4% to negative 3%.

On a segment basis, we expect Laboratory Solutions full year revenue growth to be minus mid-single digits to minus low single digits organically, down modestly from previous expectations of minus low single digits. This implies Q4 organic performance of down mid-single digits. This change is due to the impact of Q3 performance as well as expectations for continued softness in consumables and in our lab services business.

We also expect additional headwinds due to the impact of the U.S. federal government shutdown. We expect Bioscience Productions full year revenue growth to be minus low single digits organically, down from previous expectations of approximately flat. This implies Q4 organic performance of down mid-single digits to down high single digits. This change is largely due to reductions in our outlook for bioprocessing as well as customer pushouts in our silicones business. Bioprocessing is expected to be down low single digits through the year organically, down from previous expectations of flat to plus low single digits. This implies Q4 organic performance of down high single digits to low double digits.

Recognizing this is a meaningful change, I want to break down our expectations across bioprocessing in a bit more detail. We believe process chemicals in Q4 will be flat sequentially versus Q3 and down double digits year-over-year despite solid year-to-date order book performance. We previously expected a mid-single-digit contraction in Q4 for process chemicals. This change is largely due to higher-than-expected backlogs as a result of the ongoing challenges previously discussed. Q4 is also a particularly tough comparable as process chemicals grew meaningfully in the double digits in Q4 last year. We anticipate single use to be up low single digits, both sequentially and year-over-year in the fourth quarter. We previously anticipated high single-digit growth in Q4 for single use.

Controlled environment consumables are expected to be flat sequentially and down low single digits year-over-year. We previously anticipated this business to grow modestly in Q4. This business is being impacted by the competitive pressures and the general demand weakness we are seeing in consumables.

Moving to profitability. We expect our strong cost controls and favorable compensation accrual impact to continue into Q4. As such, we expect full year adjusted EBITDA margins in the mid-16s. We have reduced our adjusted EPS guidance range to between $0.88 and $0.92. We still expect free cash flow performance of $550 million to $600 million before any onetime cash expenses associated with our cost savings initiative. The reduction in earnings from our previous guidance should be offset with strong working capital performance, and we now expect about half of the prepaid payments anticipated for the fourth quarter to push into fiscal year '26.

I also want to address near-term capital allocation. Much of our debt complex is prepayable at par, and we will continue to reduce outstanding debt as we generate cash. At the same time, with our new share repurchase authorization, we intend to buy shares opportunistically without increasing leverage. We ended the quarter at 3.1x adjusted net leverage and will continue to move towards our leverage target of sustainably below 3x.

With that, I will turn the call back to Emmanuel.

Thank you, Brent. Clearly, we are disappointed with those results. And I am not here to make excuses of our underperformance. My focus is on addressing the root cause of those persisting challenges and implementing appropriate course correction quickly. At the beginning of this call, I introduced the concept of Avantor Revival. Our Board and management team are fully aligned with this effort, which will initially focus on 5 key pillars. First, our go-to-market strategy. We need to evolve our approach to ensure customers and suppliers clearly understand our value proposition and complete product and servicing offering. As I mentioned in my opening remarks, we have an incredible roster of brands. Advancing VWR heritage as a leading distributor and a company heritage as a leading provider of fine chemicals and specialty materials, for example, is essential to drive growth. So we are carefully evaluating our brand architecture, and we are going to give more prominence to key product and channel brands moving forward.

We also intend to refocus attention to our distribution business and our value proposition to supplier and customers. We also have worked on the way to analyze our end evolve our customer service and commercial organization. This work is really focused on empowering our sales representative to better serve our customers however and wherever they want to be served. This includes enhancing our e-commerce platform.

Second, we need to invest strategically in our manufacturing and supply chain organization. Brent noted the operational issue we are having. In bioprocessing chemicals, the demand is there, and we need to be better positioned to meet that demand at all times. The current state of our manufacturing and supply chain organization varies with some facilities that are world-class, while others are in need of investment.

Third, we will be carefully scrutinizing our portfolio to ensure our focus on our core business. We are going to hold each of our businesses accountable for delivering clear growth, profitability and return on investment targets. We are approaching this process with an open mind, but if any of those businesses are not capable of delivering those targets in a reasonable time frame, we are going to scrutinize whether we are the right owner for them.

Fourth, we need to drive net cost savings and simplify processes across the organization. We are committed to being a business that generates strong operating leverage even as we invest in accelerating growth, and our ongoing $400 million cost transformation program is an important step in that direction. However, we recognize that those savings today are not adequately falling through to the bottom line. Part of this is because we are still operating with far too much competitive today. We need to simplify our operating processes to remove buyer that present us from executing efficiently. Gaps in certain operating processes are contributed to inventory and forecasting changes, preventing us from serving our customers at the on-time rates they expect. To address this, we are focused on improving leadership accountability across the businesses. We are establishing new operating norms and cadence that will ensure the leaders across our organization are aligned and focused on top business priorities.

Finally, to help to do this, we must strengthen our talent and improve accountability in a few key areas. Very encouragingly, most of the associates I have met are deeply engaged and passionated about the work they do each day. They want the company to succeed. They are prepared to work hard and be part of the solution. They are looking for leadership and guidance on how to do that. To support those efforts and accelerate improvement, we will be bringing on new talent in a few key areas: a new Chief Operating Officer, a critical role that will report to me, and [indiscernible] consistent manufacturing, supply chain excellence and lean operations across the organization. A new executive leadership position dedicated to the quality and regulatory function, reporting directly to me, a strategic move, reflecting the critical role quality and regulatory play in safeguarding patient safety, ensuring regulatory compliance and driving operational integrity across our global business.

We are also hiring a new Chief Digital Officer to help strengthen digital commerce capabilities with our Laboratory Solutions segments. Avantor Revival will initiatively be targeted toward addressing each of those focus areas. So important action will help us drive meaningful changes and improvement across our organization over the next several quarters. But we are not stopping here. It is important to stress that those initial steps are based on my observation following about 2 months in the role. I'm committed to continue to meet with and learn from all our stakeholders. And as I do, rest reassures, those plans will continue to evolve with a renewed focus on getting our performance back on track and created value for our shareholders.

Clearly, turning business performance around will take some time, but we are confident the actions we are taking will have an impact that will continue to grow over time. It's about driving simplification, process improvement and accountability across the organization. As I noted a moment ago, our Board and management team are 100% behind this effort. The recently announced addition of Greg Laser to our Board and the elevation of Greg Sumi as our next Board Chairman are demonstrative of our Board active oversight and engagement in this project.

I know we must rebuild our credibility with the investment community and accountability will be my north star. You can expect regular updates on our progress against those objectives.

With that, I will now turn the call over to the operator to begin the Q&A session.

[Operator Instructions] Our first question today comes from Vijay Kumar with Evercore ISI.

Emmanuel, welcome to [indiscernible] earnings call. Maybe high level, as you've reviewed the business, right, and you come with bioprocessing background, when you look at these declines, right, what is your confidence that these are fixable, solvable issues. And I'm curious on how the quarter played out, it relatively to prior expectations? Was the quarter progress in line and did things worsened in September, October? I'm curious when did these issues crop up.

Thanks, Vijay. Thanks for the kind welcoming world. Look, first of all, I'm confident that it's flexible. Over the last 2 months, I really spent a lot of time on the field with the people, with our customers, dozen of customers and supplier. And I think the first thing, which I was really, really super pleased about is the conviction by the people that they have the passion about the brand, they have the passion about the product, they have the passion about the customers. What the team need is really leadership. And I think on the quarter, look, it is a very disappointed numbers. There is absolutely no doubt about this. And there's no excuses about the fact that we just dropped the ball on a couple of areas. And again, I think I share that around the [indiscernible]. It's really about a better communication. It's about visibility, it's about execution, it's about accountability, and that's why Brent and myself are putting new norms, new cadence to make sure that the team is really working together.

I think, again, it is fixable. Those are just the 5 pillars that I had just identified in my first 8 weeks. Then of course, we'll continue to learn. We'll continue to speak with a key shareholder and we -- this plan will evolve without any doubt.

Understood. And then Brent, maybe 1 for you on when you look at '26, some of your peers have given outlooks right in the low single-digit range. Is -- can the business grow in 2026? You mentioned $100 million of lab contribution. On paper looks like lab shore in bioprocessing it feels like some of these were unique customer situations that was largely tied to fiscal '25, and it should grow, but can the business grow at a high level in 2016?

Vijay, Emmaneul, again. look, I'm taking a fresh look at all the numbers, all right, because I want accuracy. And so let me look at those numbers again and then we'll come back to you when we have a good understanding of 2026.

Our next question comes from Michael Ryskin with Bank of America.

appreciate all the candid color during the prepared remarks. You touched on share losses and competitive dynamics briefly in the prepared remarks, but just talking about 1Q, Q2 dynamics. Can you talk about that a little bit deeper? I mean, I think it's pretty evident based on the results over the last couple of years, especially in the Lab Solutions segment, but also in Bioscience. There's been pretty deep share losses to your competitors. I appreciate all your color on operational steps to fix that. But given the portfolio and given the markets you play in, how do you plan to stem that tide of share loss? And just could you just give us some confidence in the visibility to correct that because that seems to be sort of the biggest structural challenge you're facing?

Yes, Michael. Look, this is my understanding, I think we've lost some share without any doubt in the lab services business. Here's why I'm super encouraged is we have Cory that took the lead of this business 6, 7 months ago. And what is -- what him and the team is doing is really having, I will say, a fighting spirit back. And what we have observed over the last 6 to 7 months is that we have not lost any new renewal of any large key account contract. And I think this is really important for us. And on the contrary, we have the opportunity to grow our share of wallet in those accounts.

Now we have some area that we need to fix and some challenges. I mean, e-commerce is 1 of them, and this is why we're taking really a quick action to recruit digital officer to help us to really get this e-commerce platform to engage with our customers in a much more leaner way to provide not only product, but really workflow, which is so important for the customers. On bioprocessing, my view is the following. Really, our key product line in the bioprocessing is our bioprocessing chemicals. And when we look at our order intake year-to-date, our order intake is on a high single-digit level. So we're there. I met customers that clearly said to us, we want to work with you, we want to do better. We can give you more businesses. We need to fix a couple of things like our service level, in particular, on-time delivery. And this is why it's so important to work on the SNOP to look from the different plants that need upgrade. And that's what we're doing, and we are doing as fast as possible on this.

Okay. And if I can have a follow-up. On the Avantor Revival dynamic, I mean, I think it's certainly but you called out a couple of times that you believe the business has overly complex unnecessary centralization. We've heard that from a number of our channel checks as well. What are the steps to fixing that, right? I mean it's a huge organization. There's a lot of levels. It seems like there's going to be some deep changes there. But from an operational perspective, that seems to be the easiest fix. But could you talk us through the process to get there, and how long that could take?

It's really early days for me, you have to remember. So look, we're going to start to really work on the go-to-market, really understand how we can decentralize more of the decision-making closer to the customers. And as you know, there's different regions with different dynamics. And so we really need to empower the local team to really drive the decision. I think the other thing is, look, we have 2 really important business. One is our Lab Services, it's VWR, it's a distribution business. We have a very strong brand there. And then the other1 is bioscience business with brands like JT Baker. I think we need to make sure that those brands are more, I would say, front at the customer's level to make sure that we engage with the customers with the brand they want to work with.

The observation that I have, Michael, is, many customers told me, we love VWR. We want to continue to work with VWR, some even say, well, we didn't know that VWR was part of Avantor. And that's why I'm talking about brand revival and really making sure that we are improving our engagement with the customers. Service level is very, very important, okay? And this is why we are looking at what do we need to do in the plant, which are in need of investment to make sure that we raise our service level on the bioprocessing. Again, as we said earlier, the demand is there, it's for us to really make sure we operate better.

Our next question comes from Dan Brennan with TD Cowen.

Maybe just to start on the lab side of the business, could you just describe -- I know you discussed pricing in the opening remarks. Just give us a sense in 3Q and kind of 4Q how we think about that price volume mix, if you will? And then kind of any thoughts, I know you're not ready to talk about '26, but is the assumption that price gets better? Just any visibility on that?

And then maybe the second part would just be, more strategically, as you've looked at -- since you've been on board, you've looked at the lab market. Obviously, you've talked about share loss, but you studied that now recently. Any way to characterize in that context, like how much share you think VWR has lost over the last 2 or 3 years, just to give us a framework for if you're able to kind of regain that or stabilize at what the opportunity might be?

Okay. So on on the price volume dynamic, I mean, certainly in connection with the comments and share on that, there is some down volume. We are getting price, not exactly the levels we'd like to see, but we're certainly seeing price coming through and we expect a similar dynamic in Q4 on that. So when you look at Q3 performance sequentially to -- the main dynamic in lab is a modest increase really related to number of days and seasonality in Europe there. So what you're really hearing from us is stability through to Q4, and that dynamic will continue on the pricing side as well. Do you want to hit this share?

On the market share, look, I think we've lost a couple of large accounts, and we know them, and that's something which is tracking -- and I think what is important to understand is when you lose a key account contract, the time that it takes to lose this account as there is many, many different sites around the world, it takes time. On the same way when you renew a contract and then you have an opportunity to grow your share of wallet, it also takes time to ramp up. This is where the commercial effectiveness is very important because you go at every single lab convert the customers. So either from a loss standpoint or from a gain standpoint, the dynamic drag on several quarters. And I think that's where we are. So this is sometimes where it's difficult to really evaluate the amount of market share that we've lost. But we know the contract that we've lost in the past.

And maybe just on bioprocessing manual since you've got such significant domain experience there. Just kind of how would you characterize the Avantor portfolio today? I mean when you think about this market recovery in consumables that they have been growing double digits, equipment is still under pressure from a market basis. How do you think of Avantor's position with their current portfolio as we look ahead into, say, in the next 12 to 24 months? Can they get back to market growth above or below? Just what are the key variables there?

That's a great question. Look, I'm super excited about the portfolio we have, in particular, around the chemicals, as [indiscernible], we have adjuvant, we have also viral inactivation product, which are proprietary. So we have really good portfolio, and I think we have a good commercial team. And again, as I said, our order intake year-to-date is high single digit. So basically, it gives me the confidence that the demand is there. It's for us to make sure that we serve the customers better and all the customers that have made are super satisfied with that part of the portfolio.

So I'm confident that the portfolio is good. And also the recent announcement we've made like Bluewell is very encouraging about the fact that we will continue to collaborate with strategic innovation that will give us a differentiated portfolio in the future. So quite exciting about the bioprocessing portfolio.

Our next question comes from Luke Sergott with Barclays.

I appreciate like all the updates and everything you're thinking about, but as you think about when you're looking at '26 and the overall market rate in just relation to how you guys are going to grow, what's your outlook for the market, I guess, given that the underlying demand that you've seen, especially across what your peers have said so?

I think on the peer's comment, we need to look at apples-to-apples. And again, I think what is important for me is to make sure that I remind everybody that our portfolio on bioprocessing is really primarily around chemicals in case it's a unique differentiated portfolio especially from the company that I'm coming from. And so I think it's very important that we think that it -- as of today, year-to-date, direction is order intake, high single digits. What I need to do is I really need to take a fresh look at the 2026 numbers, the market, what do we -- we think we can do, what's going to be the impact of the 5 pillar of revival plan, how fast we can get some impact on this? Some will have an impact quickly, some will take more time, and I'll come back to you as soon as I have a better view.

Okay. I was just trying to figure out what your overall outlook for the -- for your particular market look like? And then we can kind of make the assumption there on what you guys can do from a growth perspective, but that's fine. I guess just from a follow-up here, you talked about the bioprocessing plant, the downtime there. Is this -- what does this do to? Is this just like a planned regular maintenance downtime that you guys had? And do you need -- you talked a little bit about kind of building some redundancies. Is this what you're kind of referring to so that you don't like miss out on the quality and the the reliability that, that market completely relies on is number one.

Look, I visited several of our chemical plants. We have really world-class plants, super modern, very well run with a very, I would say, dedicated team. Some are just in need of upgrade, okay? And so some of the tools are a bit old and so therefore, they break down. So they gave us a bit of an unreliability of on-time delivery. So service level for some plants are excellent, some are not where we should be. And this is what I'm talking about strategic investment. There is some investments that are needed. We need to be very surgical about this. And that's just, I will say, on the plant themselves.

The second thing is about the processes. It's about how do we give visibility to the plant, what's going to be the demand, having a good understanding that the plants are putting in place, the planning to make sure that the product will be delivered as the customers requested. And then, of course, at the quality which is requested. So it's really around the processes that today are not as simple as they should be, not as smooth as they should be and with a bit also of lack of accountability. So strategic investment on 1 side, and I think it's also about talent.

One of my remarks was about the fact that the team is super passionated and want to do well and they want to fix the issue and they want to do better. They need direction. They need someone which is going to help them to focus and they need leadership. And this is also why we are far advanced into a recruit of a Chief Operating Officer, someone which have a global experience, a long-term experience of leading different type of plants, including chemistry plants, someone which is a black bear, someone that has a lean mindset of productivity mindset. And we are on the final stage of that recruitment. That will really help as well the team to drive and improve plant performance.

Our next question comes from Tycho Peterson with Jefferies.

I want to go back to the pricing question earlier because I think it's an important point. I think the message coming out of last quarter and admittedly Emmanel, was before you started was that onto is willing to trade price to hold share. That's not what we heard from Brent a minute ago. So I guess are you committing to actually taking price in the lab market next year? And can you maybe quantify what you're expecting there? Because I think that was a very different message than we heard coming out of 2Q.

Yes. Tycho, just to be clear that, I mean, we I mean there are raw materials and there are -- there's inflation in the channel. We are getting priced against that. The margin pressure you're seeing is a differential from the price to the COGS. I mean there -- so when we've talked about also giving price to drive share in that, it's relative to the inflation against the products we're selling. So it actually is the same message, but I take your point on the nuance. And look, it's in the lab, we've continued to say that we're about accreting operating income there. And we absolutely are doing the actions to drive volume, to drive share in that connection. The new contracts, which, as Emmanuel made the comments, we're seeing the impact of the contract losses on share there. It will take time, both on the defense and the new contract wins to see those come in there. But we absolutely are looking to accrete operating income and then obviously, over time, margin.

Okay. And then a capital deployment question. I mean given everything going on, and it's still early days, Emmanuel, why is this the right time to be buying back stock? It's a little bit confusing given that you're just kind of stepping in here. There's a lot of moving pieces. It's still a volatile backdrop. Maybe talk to the rationale of the buyback right now.

Well, look, Tycho, we believe our current share price really does not reflect the long-term value of the company, especially in the turnaround. So the program is just basically to make sure that we demonstrate our commitment to the long-term value of the company, okay? And we are confident to the business, the confidence about the fact that we can turn around the performance with Revival plan. we -- look, in terms of capital allocation, M&A is always an opportunity, but when you bring M&A, you need to make sure that you're going to bring the company into a company which is operating really, really well, right? Integration of an acquisition needs to be done with a team which have simple processes, which have really great talent in that are going to be able to execute the acquisitions and the integration super well. And so I think right now, it's just a conviction that the business is going to do better, that we are going to turn it around. And I think it was the right message and the right thing to do.

Okay. And then the last 1 on Bioscience. You quoted a number of kind of shipping timing issues. Are you assuming those come back in the fourth quarter? It was a little bit unclear what's actually baked into guidance from a kind of timing and recapture perspective.

Yes. I think the team has already started to do some good job in Q3, but not enough, and will continue to do so. So yes, we are going to see some improvement in Q4. But as I said as well, some of the plants need some equipment investment and you know those things sometimes take some time. So we're working as fast as possible. You have my commitment to really focus on executing the demand as much as possible and as fast as possible.

Our next question comes from Patrick Donnelly with Citi.

Brent, maybe a follow-up on the pricing side, certainly understand some of the cadence there. Can you just talk about, I guess, the moving pieces on margins just high level as we get into next year in terms of what pricing rolls through next year, and how to annualize pressures margins versus some of the offsets? What levers do you guys have to pull? Obviously, you've done some cost out initiatives over the last couple of years. How much more room is there on macro versus some of the pricing pressures? Maybe just a high-level 1 piece on margins would be helpful.

Well, we'll -- an important question, Patrick, and I -- per other comments here, probably won't make significant comment into '26. But when you -- when you think about our margin dynamics broadly here, gross margin down year-over-year, largely driven, and following on the Tyco question, we are getting modest price against it, but we're absorbing more inflation. So that's been the primary driver of the lab pricing into the gross margin. Now on a sequential basis, you saw pressure in gross margin. That was more just mix of the relative businesses because we didn't have the same level of growth in bioscience as well as primarily there on the business basis and continuing on that.

Look, Emmanuel made the comments that we need to continue to drive at cost broadly and get net cost out rather than offset inflation and offset FX. And the -- but when you think about key drivers here, obviously, getting price and getting price against COGS are really important in the business. The differential segment mix is really, really important. And that hurt us in Q3. And then finally, productivity, which to project Revival, Chief Operating Officer, driving better productivity in plants, those will be key parts of it. And when we come with the views on '26, that will certainly be wrapped in our commentary.

Can I just add something? I'm absolutely committed to really improve not only the top line but also the bottom line, right? We need to be an operation which is leveraged, and so this is what we're going to do. So part of the Revival of course, we talked about simplification processes. It also means productivity gain. That is going to be very, very important. And I think that we will make sure that the entire leadership is really focused behind it.

Understood. And maybe just a quick 1 on the academic government side. You touched a little bit on the prepared remarks. What are the expectations there? Obviously, you had the government shutdown, you guys have some exposure. But maybe just talk about what you're seeing on that front, and what the expectations are going forward for that market, a lot of noise there? Appreciate it.

Yes, Patrick, you saw we were down in academic and government in Q1. We had a nice up mid-single digits in Q2 and then down double digits in Q3. And I think, frankly, we saw some of the pent-up concerns come through in Q3. Significant impact was K-12 before the school season started there as well as other softness that we saw through consumables in the form of higher ad there. We -- the U.S. government shutdown is certainly going to exacerbate that. That is really a key driver of the reduction of the lab guidance for Q4 and for the year down to the mid-single digits, that differential as well as the headwinds to consumables. But we're certainly forecasting that continue to be somewhat challenged.

Our next question comes from Doug Schenkel with Wolfe Research.

A few questions. Emmanuel, it's only been 8 weeks. There's a lot going on here. Is it reasonable to expect you to outline your full assessment and strategic framework by early Q1? Or is that too aggressive? So that's my first question.

My second is really for Brent. Emmanuel talked a lot about new hires and investments. Revenue growth is likely to remain challenging for the next several quarters. Margin comparisons are notably tough in the first half of next year. So when I just look at that fact pattern, my words not yours given you don't want to talk too much about 2026, but it just seems hard to see a scenario where we would get meaningful EBITDA expansion in 2026, maybe no expansion at all given those 3 observations. Is there anything you think I'm missing? And then really, the last 1 is for both of you. Recognizing it's been a tough period for tools in terms of downward estimate revisions. I think the challenge is, to be fair, have lingered a bit more for Avantor than for most of the group.

Clearly, visibility and forecasting has been a challenge for you guys for the past few quarters. Do you think this is systems that requires more investment? Or is this more a function of just competitive dynamics maybe evolving in a way that you didn't anticipate?

Doug, thanks for your question. Look, I think, in terms of timing, when I came, I spoke with the Board, I spoke with the team and I said I needed 100 days to really learn the business, meet everybody that include all the stakeholders, our people, the customers and a few main investors. And look, after 60 days, I already need to be in action because, first of all, there are some few things which are absolutely obvious, some challenges that we need to fix. And that's what I shared with you. And indeed, in Q1, I'll come back with you with further thoughts and with further strategic vision, absolutely. I'll let Brett answer the question and then I'll come back to the other part.

Yes. Look, like you're -- I mean, you're absolutely there on the facts and those are the harder comparators if you look at the trend of this year. I would just go back to 1, we don't want to signal a lot about '26 now because there's more work to do there. But again, it's about driving Revival and not just how it impacts operations, but also purely on the cost to serve. And getting to the top line and the conversion. And beyond that, we'll update you when we talk about '26.

And Doug, on the market, my sense is the following. I think production is solid. I think in the R&D aspect from an academic standpoint and even from a pharma, there is some uncertainty and uncertainty is never good. So I would say it's a mixed market dynamic.

Our next question comes from Dan Leonard with UBS.

My first question is on the Revival program. Emmanuel, can you the cost impacts of that program? It seems like there's a lot of extra money to be spent on e-commerce, on investment needs in manufacturing on new hires. And I'm just trying to think about how to balance that with margin objectives?

Dan, thanks for your question. Look, I think it's early days for me to really put a number to it. We're really pushing the program as soon as possible and making sure we make our plan. I don't want also to rush on giving you a number, which is not accurate. Look, I really want to gain accuracy about numbers, any numbers that we're going to put in front of you. So let us put the plan together, let's say, review the plant. Let's make sure that the plant will have an impact. And I think it's back to a further question earlier, I really want to give you answers about how much, when, what we will see by when, it will take several quarters without any doubt, but it's early days for me. So let me come back to you when we have a precise plan and accurate number.

Understood. And then a follow-up. You referenced a couple of large clients you lost from a share loss perspective. How would you characterize the risk of further big share loss? I can't imagine you have large contracts that turn over every year. Are we in a period of stability now for some time? Or are there further just big opportunities ahead in either direction?

Great question, Dan. Look, what I've discussed with Cory and what we've discussed with the team is that most of our very large key account contract has been renewed. We've kept them. And on the contrary, we have opportunity to gain share of wallet in those accounts. So I think we are in a much more stable position right now. However, as I explained earlier, the loss that we've seen in the past, they're still having an impact on us, okay? It takes time for those large contracts to switch over the same way that it takes time for us to ramp up the share of wallet games. So I think we are in a much more stable area. I think Cory is a very good leader that is bringing a lot of rigor in the business, and for that standpoint, I'm confident about the future of the lab business.

Those are all the questions we have time for today. And so I'll now turn the call back over to Emmanuel for closing remarks.

Thank you, Emily, and thank you, everybody, for joining us. Today, we just outlined the beginning of our, I will say, next chapter called Avantor Revival. I want you guys to remember and to know that we are moving with urgency to improve our performance. I want to regain your trust. I want to be accurate. I want us to be accurate, and I'm looking forward to give you a further update on our progress in the next quarter. Be well, everybody. Thank you.

Thank you, everyone, for joining us today. This concludes our call, and you may now disconnect your lines.