Avantor (NYSE:AVTR) reported third-quarter financial results on Wednesday. The transcript from the company’s third-quarter earnings call has been provided below.
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Summary
Avantor achieved a return to organic revenue growth in Q3 2026, with reported revenue of $1.698 billion, representing 5.2% year-over-year organic growth.
The company exceeded expectations in revenue and adjusted EPS, driven by strong performance in the VWR Distribution and Services segment and the Bioscience and MedTech Products (BMP) segment.
Avantor raised its 2026 guidance for organic revenue, adjusted EPS and free cash flow, reflecting Q3 outperformance and positive momentum in end markets.
Strategic initiatives under the Revival program are gaining traction, focusing on enhancing commercial execution, customer relationships and digital capabilities, with plans to expand AI tools and e-commerce platforms.
Management highlighted strong cash generation, with $169 million in free cash flow for Q3, and aims to reduce the adjusted net leverage ratio to below 3x by year-end.
Full Transcript
Krista (Conference Operator)
Ladies and gentlemen, this is the operator. Today’s conference is scheduled to begin momentarily. Until that time your lines will be placed back on music hold. Thank you for your patience. Good morning. My name is Krista 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. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question and answer session. If you would like to ask a question at that time, simply press star followed by the number one on your telephone keypad.
And if you would like to withdraw your question, again press star one. Thank you. I would now like to turn the conference over to Chris Siedich. Chris, you may begin your conference.
Chris Siedich (Investor Relations)
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 Ek, Senior Vice President and Chief Accounting 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 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 disclosures package on our investor relations website. I will now turn the call over to Emmanuel.
Emmanuel Ligner (President and Chief Executive Officer)
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 8th. Today I will begin with a high-level update on our third quarter performance. I will then take a closer look at Avantor’s return 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 from the quarter. Our third quarter results mark 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 actions we are taking through Revival are putting us on a path to sustainable growth. Third quarter results exceeded our expectations across revenue and adjusted EPS. Those results were driven by strong performance in our VWR Distribution and Services segment, which accelerated meaningfully after returning to growth last quarter.
Organic revenue growth in our Bioscience and MedTech Products (BMP) segment turned positive this quarter as anticipated. With performance stronger than we had expected, we once again generated robust free cash flow, which allows 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 expect to achieve this objective by year-end. Finally, we are raising our 2026 organic revenue, adjusted EPS, and free cash flow guidance, reflecting 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 $1,698,000,000 of revenue, representing year-over-year organic growth of 5.2% and reported growth of 4.6%, exceeding 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 VWR’s positive momentum in a few moments. Turning to BMP, we were pleased to see the segment 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 expectations despite a 150 basis point headwind from the unusual customer ordering and shipment patterns that we have discussed on prior calls. We saw strong performance from process chemicals and NuSil in the quarter. Importantly, our Revival initiatives to enhance commercial and operational execution continue to gain traction across BMP. Revival is helping the segment deliver 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 investment. Adjusted EPS of $0.22 was above our expectations. One of Avantor’s key strengths is robust cash generation. In the third quarter, excluding cash restructuring costs, we generated $169 million of free cash flow, representing strong conversion of adjusted net income.
We used this 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 improved execution and stronger end markets. When we launched our Revival program one year ago, we identified five key pillars and began a series of initiatives to sharpen our strategic focus and improve execution. Those actions are increasingly embedded in our operating model and, in Q3, showed 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 areas we highlighted last quarter. We are expanding our relationships with large customers, we are performing well in small and mid-sized accounts, and our e-commerce platform continues to show positive trends. VWR growth acceleration in Q3 reinforces 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 increases 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 Mikey Santiago will join us from Danaher to serve as our Chief Information Officer. With Mikey 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 a 99% overall equipment effectiveness ratio for that week. This is a good example of the operational improvements we are making across BMP.
We have advanced our digital manufacturing strategy, including the development of digital workflows and electronic batch records at two key manufacturing sites. Those capabilities improve quality, reduce deviations, and enhance delivery performance, supporting a more efficient manufacturing network over time. Across our supply chain network, S&OP and other process improvements 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 operations. In VWR, we are deploying AI to improve productivity and enhance the customer experience. One example is VWR Internal Sales Assistant, or ISA, which uses AI to combine customer, sales, and product data to help sales teams prepare for meetings, generate leads, prioritize opportunities, and act on recommendations. ISA also simplifies administrative tasks. Since its launch last year, ISA has 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 advantages or cost-saving opportunities to customers. The key takeaway is that Revival’s impact is broad—from leadership and operations to digital capabilities and customer-facing tools. Revival is helping us improve execution and better serve our customers and ultimately translates 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 context are important to note. First, our segments respond differently to end market conditions. VWR is more sensitive to market fluctuations given its significant exposure to research spending, while BMP is more heavily weighted towards production environments. Second, we have a unique perspective on the end market. Through VWR, we serve the 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 gives us a clear view into the health of the scientific ecosystem. What we see is encouraging. 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 pipelines, many of which have been supplemented by business development. We also saw green shoots of recovery in demand in higher education and early-stage biotech customers in North America this quarter.
For some of those customers, a more positive funding environment translated into greater research activity. We also see trends 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 remains a smaller region for us. We continue to see the market recovery in Europe lagging that of the Americas and Asia. On average, Europe faces 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 Gardner, who joined us as Chief Financial Officer on September 21st. Todd brings 30 years of finance, operational, and public company leadership experience. He most recently served as CFO of ComEd. In his first weeks, Todd has been meeting our teams around the world and getting to know our operations. As Todd continues to deepen his engagement in our business, Steve Ek will walk through today’s results.
But first I would like to give Todd a chance to introduce himself.
Todd Gardner (Chief Financial Officer)
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 in other transformations 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 have 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 8th. Finally, I want to recognize Steve Ek 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 (Interim Chief Financial Officer)
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 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 is $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 3.1 times, down from 3.3 times 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. NuSil 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 NuSil 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 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 3.1 times at the end of Q3, and we expect to reduce our adjusted net leverage ratio to below three times 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 Q4. 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, as improved execution and operational outperformance enable 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.
Emmanuel Ligner (President and Chief Executive Officer)
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 actions we are taking as part of Revival are delivering the intended results, and our third quarter performance provides tangible evidence of that progress. We remain focused on executing our initiative to simplify, reinvest, and grow Avantor.
Second, we have returned to growth. VWR continued to execute well against the 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 three times by year end. Our associates around the world are committed to our customers and deserve a note of thanks.
We have made excellent progress so far this year, and I’m excited about the future. Our Investor Day will take place on December 8th. 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 roadmap 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.
Krista (Conference Operator)
Thank you. Webcast attendees who would like to view the slide deck, please click the Materials button on the left side of your screen to download the slide deck. We will now begin the question-and-answer session. If you would like to ask a question, please press Star One on your telephone keypad to raise your hand and join the queue. And if you would like to withdraw your question, again press Star One. We kindly ask that you limit yourself to one question and one follow-up. For any additional questions, please requeue. And your first question comes from Casey Woodring with J.P. Morgan. Please go ahead. Great.
Casey Woodring (Analyst)
Thank you for taking my questions and congrats on the quarter. 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.
Emmanuel Ligner (President and Chief Executive Officer)
Sure. Thanks, Casey, and thank you for asking the question. Look, I think we share about a half-half, and when we think about the half about the actions we have taken: yes, large contracts that we have renewed. We talk about the license to hunt, 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 outcomes we saw. I think the team is doing very well with small and mid-sized customers, which is definitely a very important segment for us.
And then e-commerce also demonstrated better performance. So overall, the 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 dynamics and the actions taken by the team, I think, yeah, we believe that those results are sustainable, and we look at our guide for Q4, and that implies about the same: a mid-single-digit growth for VWR in Q4.
Casey Woodring (Analyst)
Got it. That’s helpful. And then I guess as a follow-up, you know, just on the margin line, do you think you can expand margins next year? The reason I ask is just, you know, you’ve been clear that part of Revival has been focused on investing in areas of the business that, you know, have historically seen underinvestment. And there’s also been price concessions to protect share in VWR that you’ve talked about. So just curious if 2027, you know, 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 volume starting to flow through.
Emmanuel Ligner (President and Chief Executive Officer)
Thank you. Yeah, look, we are right in the middle of our planning and budget process. So I think we’ll talk much more about our guide and what we think 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 are definitely improving our execution, the market is getting stronger. So we will end up 26 with strong momentum, and—which means that, you know, month after month, my confidence level is definitely increasing for next year.
So more to come, more detail in our Q4 earnings call in February.
Casey Woodring (Analyst)
Understood, thank you.
Krista (Conference Operator)
Your next question comes from the line of Vijay Kumar with Evercore ISI. Please go ahead.
Daniel (Analyst)
Hey guys, this is Daniel on for Vijay. Thank you for taking our questions. 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.
Todd Gardner (Chief Financial Officer)
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. VWR just grew 5.8% and we are forecasting mid-single-digit growth in Q4. So that consistent level in Q4 for VWR. On the last quarter, 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 hitting Q4, the continued momentum that we saw in Q3, if you carry that over into Q4 with that, you know, 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.
Daniel (Analyst)
Understood, thank you. 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.
Emmanuel Ligner (President and Chief Executive Officer)
It’s Emmanuel. I think there’s definitely a consensus in the industry about AI being a tailwind for us. I think it’s all about productivity in pharma. AI is here to help. So any increase of productivity in the monetization spend by pharma in developing new molecules is good for us. Okay. If you have more molecules that need research, development and manufacturing, in the research part we’re serving them with VWR and in the manufacturing part we’re serving them from BMP.
So yes indeed, we are very excited about AI and the impact it has potentially on the business and we see that as a tailwind like the rest of the industry.
Daniel (Analyst)
Understood. Thank you for taking the questions.
Krista (Conference Operator)
Your next question comes from the line of Luke sirgoit with Barclays, please go ahead.
Luke sirgoit (Analyst at 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 six to 12 months and the discounting that might have gone into that versus the timing impact of the investments you’ve made to improve your COGS and manufacturing still waiting to flow through.
Steve (Interim Chief Financial Officer)
Yeah, good morning Luke, this is Steve. Yeah, 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 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, while 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 appreciate your question.
Emmanuel Ligner (President and Chief Executive Officer)
Let me jump in here and I’d like to maybe step back for a few minutes. One year ago when we launched Revival, we really focused on the five pillars: talent, go-to-market, supply chain, service level, with a very, very clear goal in mind. Return to growth and today we are ahead of expectations. Now I’ve shared that in the past. We push a mindset, a 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 fund investment with a clear mindset which is profitable growth 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.
Luke sirgoit (Analyst at Barclays)
All right, I guess just a quick follow-up on that. You talked about kind of these investments you made in the couple of facilities. Any kind of color, because you’re not rolling them out all wholesale. So just talk about, as we think about the rest of the distribution and manufacturing organization, what are some early wins or improvements you’ve seen on those couple facilities as we think about rolling those forward through ’27, ’28 and ’29.
Emmanuel Ligner (President and Chief Executive Officer)
I think, look, I think the unusual conditions this year really mask what the BMP underlying strength and the performance of the TM IS. Okay, we just talked about this on the Q4 guide. We see really good progress in the implementation of the S&OP. Mary Bland, our COO, has driven many kaizen to make sure that the plants are producing more. I shared some examples this quarter, last quarter as well. You know, 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. It is down to every effort 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.
Krista (Conference Operator)
Your next question comes from the line of Doug Schenkel with UBS. Please go ahead.
Doug Schenkel (Analyst)
Good morning, guys, and thank you for taking my questions. 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, you know, under 50 basis points year over year in the fourth quarter or something in that neighborhood. Just playing with the model, I actually would, you know, 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, am I playing with the model right? And then I think the follow-up just to some of the other questions is, you know, as you guided Q4, it seems like you essentially maintained 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.
Todd Gardner (Chief Financial Officer)
Doug, nice to meet you. I will. I’ll just 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. Q3 was a really good sign of progress. We think Q4 will be another sign of progress and an improvement there. And so that’s where we are now. And we can help you a little more with the model offline.
Doug Schenkel (Analyst)
That sounds good. And if I could ask one more. The last couple of quarters you talked about book-to-bill of over one. You know, I think you talked about 1.1 times for BMP a couple of quarters. You talked about solid order trends this quarter. You know, 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 year 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?
Thank you.
Emmanuel Ligner (President and Chief Executive Officer)
Three to six 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 S&OP to have a really good sedu ratio with the customers. So look, as I said, the unusual conditions this year I think is masking the BMP underlying performance. But we look at the business also on the 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 really like the BMP direction of travel right now.
Doug Schenkel (Analyst)
Okay, thank you guys and nice to meet you, Todd. Talk soon.
Todd Gardner (Chief Financial Officer)
Thank you.
Krista (Conference Operator)
Your next question comes from the line of Taicho Peterson with Jefferies. Please go ahead.
Taicho Peterson (Analyst)
Hey, thanks. Appreciate you’ve had a number of questions on margins. Want to maybe just ask on opex, you know, higher SG&A, you know, you called that 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.
Steve (Interim Chief Financial Officer)
Good morning Tycho, this is Steve. Actually, you know, 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, you know, we’re in the setting of 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 is part of that story of gradual, sequential EBITDA margin expansion.
Emmanuel Ligner (President and Chief Executive Officer)
Tycho, let me give you a few examples of where we want to continue to invest. Definitely, AI—we shared 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 lead. We also want to double down on our e-commerce platform. Right. We really see some good performance there. We are happy with where we are but we know that we can do more.
So those give you a couple of examples of where we want to continue to invest.
Taicho Peterson (Analyst)
Okay. And then can you talk more on the strength in NuSil, you know, our teams, strong orders. I guess, how durable is the demand you’re seeing now, or are there kind of any one-time items in there?
Emmanuel Ligner (President and Chief Executive Officer)
Yeah, NuSil is an excellent business. Strong brand, great customer relationships, the quality is outstanding and phenomenal reputation. Again, we had some unusual order and shipping patterns in the past, especially in the first half. But Q3 we saw double-digits revenue growth and orders are strong as well, turning to revenue. The team is executing well. I think you may have seen there are also some of our customers that have publicly shared the fact that we have renewed a contract, which is an important customer of ours.
We have a really long relationship, more than 10 years, and we renewed that contract up to 2031, and so we’re really happy with where we are. So, you know, Q4 is looking good as well for NuSil. Look, this is a great question. I think why don’t we talk about that at Investor Day? We’ll give you a framework for the future.
Krista (Conference Operator)
Your next question comes from the line of Eve Burstein with Bernstein. Please go ahead.
Eve Burstein (Analyst)
Great. Good morning. Congrats on the quarter and thanks so much for taking the question. 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 on 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, Avantor 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?
Emmanuel Ligner (President and Chief Executive Officer)
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—we’re following it closely. There’s tight spend on budget in academia. There’s also some industrial suffering. 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 status quo.
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 one, say okay, we’ll put that in the guide.
Eve Burstein (Analyst)
Okay, great. Thank you. 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 e-commerce specifically? What sort of quantitative impact have the improvements that you’ve been making 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?
Emmanuel Ligner (President and Chief Executive Officer)
Sure. Look, it is a very important tool because it is a tool that serves a very, very large, broad-based customer set, 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 had really good feedback on this. But this is just the beginning. What we really want is to bring a tool which is extremely easy to deal with, which provides much more information, which is much more modern in the sense. Okay, so I think this is where we are continuing to invest in this. And we have a huge amount of KPI—you know, number of people that visit, number of people that build a cart, number of, you know, people that actually order the cart and what do they look at. And we really want to bring AI into this.
So we brought a great Chief Digital Officer a couple of months ago. Now we are complementing that with Mikey as a CIO. And the team is really building a strong plan that we will support with investment. 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 on December 8th.
Eve Burstein (Analyst)
Great, thanks a lot.
Krista (Conference Operator)
Your next question comes from the line of Justin Bowers with Deutsche Bank. Please go ahead.
Justin Bowers (Analyst)
Hi, good morning and thank you for taking the question. So can you refresh us on the revival program, the various phases, and the duration of the program as you see it now?
Emmanuel Ligner (President and Chief Executive Officer)
Sure. Look, it’s a one-year program now, but as I said, we’re just in the middle of it. I’m super happy. The leadership team is now completing, all right, with Todd joining us a couple of weeks ago. Mikey starts next week. Very exciting. We’ve built a very strong team, very diverse, with great life science and medtech experience and expertise. So this is really, really good. Remember, we also complemented the leadership team with many people below.
I think we talk about 65% of the entire N minus 2 being refreshed. We are operating with much greater discipline right now. The culture is 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 talked about it—especially in the BMP production—and service levels are definitely improving.
But I think more importantly is our SEDU ratio. We spoke about that at the very beginning when I joined. We want to regain our credibility and the trust of all the stakeholders. So, you know, in April we said that Avantor 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, you know, 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 absolutely 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 Mikey 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.
Justin Bowers (Analyst)
Thank you. And you answered 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, you know, it does sound like the sales and order book is filling up nicely and lead times are getting back to normal. So any additional color there would be helpful.
Emmanuel Ligner (President and Chief Executive Officer)
Yeah, sure, we’ll continue. Mary has put an overall supply chain strategy, which of course is a long-term strategy. Okay. When we develop those manufacturing strategies, 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. You know, 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 US.
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 redundancy. 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 about at Investor Day.
Justin Bowers (Analyst)
Thank you.
Krista (Conference Operator)
Your next question comes from the line of Dan Arias with Stifel. Your line is open.
Dan Arias (Analyst)
Morning, guys. Thank you. Todd, where will pricing come in for the year? What will the net effect be for 2026?
Steve (Interim Chief Financial Officer)
Good morning, this is Steve. I’m happy to take that one. You know, we’re very pleased with the execution of our pricing strategy this year. You know, to give you some perspective, last year we saw significantly greater cost coming from suppliers and having to absorb that than 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.
Emmanuel Ligner (President and Chief Executive Officer)
Yeah, I can jump in as well here. You know, our number one 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 cost, we have improved. We definitely have better tools. I think I spoke last quarter about the fact that we have hired pricing 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, you know, costs rise in real time and sometimes pricing recovers with a lag. But I think we are in a very, very important timing right now because we are at the end of the year. Some of the very large customer contracts give us the opportunity to take the price up at the end of the year for the following years, and that’s what we are really working hard on right now. So yeah, margins have seen a bit of a headwind from the pricing lag.
But I think what is important is very good execution, cost discipline as well for us. But I really—I’m super happy with what we have done this year versus where we were last year, and I think there’s more to come.
Dan Arias (Analyst)
Okay. Appreciate the qualitative commentary there. Will you be in a position to talk about what 2026 pricing is at the Investor Day? And, you know, I certainly appreciate the competitive element to all of this, but pricing is also a pretty major part of the situation in thinking about what it is that will be different about ’27 versus ’26 and ’26 versus ’25. So, you know, when can we expect to have some numbers as far as what price will mean to growth this year or next year?
Todd Gardner (Chief Financial Officer)
Yeah. Dan, to be specific to a number, you know, our data shows that our pricing is between 1 and 2% in 2026. So that’s the pricing we’ve been able to get. To Steve’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%.
Dan Arias (Analyst)
Okay, very much appreciated. Thank you.
Chris Siedich (Investor Relations)
And that’s all the time we have today for questions. Emmanuel, I’d like to turn it back to you.
Emmanuel Ligner (President and Chief Executive Officer)
Thank you, and thank you all for joining us today and thanks for your questions. Our third quarter results mark 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 at our Investor Day on December 8th, where we will share our vision for Avantor’s future.
We hope that you will join us. And again, thank you very much for your time and interest in Avantor.
Krista (Conference Operator)
Thank you. Ladies and gentlemen, this does conclude today’s conference call. Thank you for your participation, and you may now disconnect.
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