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What changed in Avantor, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Avantor, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+255 added−249 removedSource: 10-K (2024-02-14) vs 10-K (2023-02-14)

Top changes in Avantor, Inc.'s 2023 10-K

255 paragraphs added · 249 removed · 190 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeOur sales force is comprised of approximately 3,700 sales and sales support professionals, including over 200 sales specialists selected for their in-depth industry and product knowledge. Our sales professionals include native speakers for each of the countries in which we operate, allowing us to have high impact interactions with our customers across the globe.
Biggest changeSales channels We reach our customers throughout the Americas, Europe and AMEA via a well-trained global sales force, comprehensive websites and targeted catalogs. Our sales force is comprised of approximately 3,700 sales and sales support professionals, including over 200 sales specialists selected for their in-depth industry and product knowledge.
Our Science for Goodness sustainability platform enhances our framework for creating long-term value by embedding sound environmental, social and governance practices into our business strategy. The platform also enables us to continually measure and report progress against four key commitment pillars, which are aligned with several of the United Nations Sustainable Development Goals.
Sustainability Our Science for Goodness sustainability platform enhances our framework for creating long-term value by embedding sound environmental, social and governance practices into our business strategy. The platform also enables us to continually measure and report progress against four key commitment pillars, which are aligned with several of the United Nations Sustainable Development Goals.
Our high-purity and ultra-high purity products, such as our J.T.Baker brand chemicals, are trusted by life sciences and electronic materials customers around the world and can be manufactured at purity levels as stringent as one part-per-trillion. Similarly, our NuSil brand of high-purity, customized silicones has been trusted for more than thirty years by leading medical device manufacturers and aerospace companies.
Our high-purity and ultra-high purity products, such as our J.T.Baker brand chemicals, are trusted by life sciences and electronic materials customers around the world and can be manufactured at purity levels as stringent as one part-per-trillion. Similarly, our NuSil brand of high-purity, customized silicones has been trusted for more than 30 years by leading medical device manufacturers and aerospace companies.
For example, our global footprint offers extraordinary customer access, enabling us to serve more than 300,000 customer locations in more than 180 countries around the world. Our 118-year legacy began in 1904 with the founding of the J.T. Baker Chemical Company. In 2010, we were acquired by New Mountain Capital from Covidien plc.
For example, our global footprint offers extraordinary customer access, enabling us to serve more than 300,000 customer locations in more than 180 countries around the world. Our legacy began in 1904 with the founding of the J.T. Baker Chemical Company. In 2010, we were acquired by New Mountain Capital from Covidien plc.
Certain of our subsidiaries are required to register with these agencies, or to apply for permits and/or licenses with, and must comply with the operating, cGMP, quality and security standards of applicable domestic and foreign regulators, including the FDA, the DEA, the Bureau of Alcohol, Tobacco, Firearms and Explosives, DHHS, the equivalent agencies of European Union (EU) member states, and comparable foreign, state and local agencies, as well as various accrediting bodies, each depending upon the type of operation and the locations of storage or sale of the products manufactured or services provided by those subsidiaries in the event of noncompliance.
Certain of our subsidiaries are required to register with these agencies, or to apply for permits and/or licenses with, and must comply with the operating, cGMP, quality and security standards of applicable domestic and foreign regulators, including the FDA, the DEA, the Bureau of Alcohol, Tobacco, Firearms and Explosives, DHHS, the equivalent agencies of European Union (EU) member states, and comparable foreign, state and local agencies, as well as various accrediting bodies, each depending upon the type of 7 Table of contents operation and the locations of storage or sale of the products manufactured or services provided by those subsidiaries in the event of noncompliance.
For additional information about environmental matters, see note 13 to our audited financial statements beginning on page F-1 of this report. Available information We file or furnish annual, quarterly and current reports, proxy statements and other documents with or to the SEC. The public can obtain any documents that we file with or furnish to the SEC at www.sec.gov.
For additional information about environmental matters, see note 12 to our audited financial statements beginning on page F-1 of this report. Available information We file or furnish annual, quarterly and current reports, proxy statements and other documents with or to the SEC. The public can obtain any documents that we file with or furnish to the SEC at www.sec.gov.
Our broad portfolio of products and services, fully integrated business model and world class, global supply chain enable us to support our customers’ journey every step of the way. We have a number of distinctive capabilities that set us apart from other companies in our space.
Our broad portfolio of products and services, fully integrated business model and global supply chain enable us to support our customers’ journey every step of the way. We have a number of distinctive capabilities that set us apart from other companies in our space.
The following chart presents the approximate mix of net sales for each of those segments during 2022: Within each of our geographic segments, we sell materials & consumables, equipment & instrumentation and services & specialty procurement to customers in the biopharma, healthcare, education & government and advanced technologies & applied materials industries.
The following chart presents the approximate mix of net sales for each of those segments during 2023: Within each of our geographic segments, we sell materials & consumables, equipment & instrumentation and services & specialty procurement to customers in the biopharma, healthcare, education & government and advanced technologies & applied materials industries.
Since then, we have expanded through a series of large acquisitions which extend our global reach. In 2016, we merged with NuSil, a leading supplier of high-purity silicone products for the medical device and aerospace industries that was founded in 1985.
Since then, we have expanded through a series of large acquisitions which have extended our global reach. In 2016, we merged with NuSil, a leading supplier of high-purity silicone products for the medical device and aerospace industries that was founded in 1985.
With respect to our electronics materials products, we adhere to applicable industry guidelines which set stringent quality criteria for our products, and we are subject to import and export regulations and other restrictions regarding the safe use of these products as well.
With respect to our electronic materials products, we adhere to applicable industry guidelines which set stringent quality criteria for our products, and we are subject to import and export regulations and other restrictions regarding the safe use of these products as well.
As of December 31, 2022, approximately 5% of our employees in North America were represented by unions, and a majority of our employees in Europe were represented by workers’ councils or unions. We compete in the highly competitive life sciences industry.
As of December 31, 2023, approximately 5% of our employees in North America were represented by unions, and a majority of our employees in Europe were represented by workers’ councils or unions. We compete in the highly competitive life sciences industry.
We have made significant investments to implement common ERP and online platforms that enhance the customer experience and employ network and data security architecture. Competition We operate in a highly competitive environment with a diverse and fragmented base of competitors, many of whom focus on specific regions, customers, and/or segments.
We have made significant investments to implement common ERP and online platforms that enhance the customer experience and employ network and data security architecture. 4 Table of contents Competition We operate in a highly competitive environment with a diverse and fragmented base of competitors, many of whom focus on specific regions, customers, and/or segments.
Government regulation Our facilities that engage in the manufacturing, packaging, distribution and other biopharmaceutical and biomaterials product lines, as well as many of our products themselves, are subject to extensive ongoing regulation by U.S. governmental authorities, the EMA and other global regulatory authorities.
Government regulation Our facilities that engage in the manufacturing, packaging, distribution and other biopharmaceutical and biomaterials production, as well as many of our products themselves, are subject to extensive ongoing regulation by U.S. governmental authorities, the EMA and other global regulatory authorities.
We have aligned our performance management system through which 100% of our associates receive annual performance reviews, to support our culture of feedback to increase the focus on continuous learning and development. In the past year, we launched Career Accelerator programs focused on providing management skills training to high-performing individual contributors and early career associates in underrepresented ethnicities.
We have aligned our performance management system through which 100% of our associates receive annual performance reviews, to support our culture of feedback to increase the focus on continuous learning and development. Our Career Accelerator programs are focused on providing management skills training to high-performing individual contributors and early career associates in underrepresented ethnicities.
Globally, we see a growing trend toward data protection laws and regulations increasing in complexity and number, and we anticipate that our obligations will expand commensurately. 8 Table of contents Environmental matters We are subject to various laws and governmental regulations concerning environmental, safety and health matters, including employee safety and health, in the U.S. and other countries.
Globally, we see a growing trend toward data protection laws and regulations increasing in complexity and number, and we anticipate that our obligations will expand commensurately. Environmental matters We are subject to various laws and governmental regulations concerning environmental, safety and health matters, including employee safety and health, in the U.S. and other countries.
We operate over 35 global manufacturing facilities, including 12 facilities that are cGMP compliant and have been registered with the FDA or comparable foreign regulatory authorities. Our facilities are strategically located in North America, Europe and the AMEA region to facilitate supply chain efficiency and proximity to customers.
We operate over 45 global manufacturing facilities, including 19 facilities that are cGMP compliant and have been registered with the FDA or comparable foreign regulatory authorities. Our facilities are strategically located in North America, Europe and the AMEA region to facilitate supply chain efficiency and proximity to customers.
We monitor pending and proposed legislation and regulatory initiatives to ascertain their relevance to, and potential impact on, our business and develop strategies to address regulatory trends and developments, including any required changes to our privacy and data protection compliance programs and policies.
We monitor pending and proposed legislation and regulatory initiatives to ascertain their relevance to, and potential impact on, our business and develop strategies to address regulatory trends and developments, including any required changes to our privacy and data protection 8 Table of contents compliance programs and policies.
Our core areas of focus include compliance with regulatory and international requirements, active monitoring of regulatory agencies for changing requirements, partnering with operational leaders to meet Environment, Health & Safety (EH&S) requirements, and promoting effective communication throughout the organization.
Our core areas of focus include compliance with regulatory and international requirements, active monitoring of regulatory agencies for changing requirements, partnering with operational leaders to meet Environment, Health & Safety, Security & Sustainability (EHSSS) requirements, and promoting effective communication throughout the organization.
As of December 31, 2022, we had approximately 14,500 employees located in over 30 different countries in a variety of roles. Approximately 6,200 of our associates were employed in the U.S. We believe that our relations with our employees are good.
As of December 31, 2023, we had approximately 14,500 employees located in over 30 different countries in a variety of roles. Approximately 5,900 of our associates were employed in the U.S. We believe that our relations with our employees are good.
In aggregate, we provide approximately six million products and services, including high value specialty products developed to exacting purity and performance specifications. Our proprietary brands have been specified and trusted for decades. Our e-commerce platform makes it easy for customers to do business with us and enables digital marketing efforts that position us to capture new demand.
In aggregate, we provide millions of SKUs, including high value specialty products developed to exacting purity and performance specifications. Our proprietary brands have been specified and trusted for decades. Our e-commerce platform, Avantor ScienceCentral, makes it easy for customers to do business with us and enables digital marketing efforts that position us to capture new demand.
In November 2021, we acquired the Masterflex bioprocessing business of Antylia Scientific. Masterflex is a leading global manufacturer of peristaltic pumps and aseptic single-use fluid transfer technologies. 1 Table of contents Business segments We report financial results in three geographic segments based on customer location: the Americas, Europe and AMEA.
Masterflex is a leading global manufacturer of peristaltic pumps and aseptic single-use fluid transfer technologies. 1 Table of contents Business segments We have reported financial results in three geographic segments based on customer location: the Americas, Europe and AMEA.
Our associates reflect the communities in which we live and work, the customers we serve, and possess a broad range of thought and experiences that have helped Avantor achieve our goal of setting science in motion to create a better world. People & culture Our values give our associates a foundation for how we want to work together.
Our associates reflect the communities in which we live and work, the customers we serve, and possess a broad range of thought and experiences that have helped Avantor achieve our goal of setting science in motion to create a better world. People & culture Enhancing our Associate Experience is a strategic priority for Avantor.
Information technology We have a highly automated suite of ERP systems that promote standardization and provide business insight. Our global web infrastructure provides seamless integration with our customers and suppliers. These ERP platforms support rapid development and deployment of enhancements so that we may quickly adapt to meet the technology needs of our customers and seamlessly integrate new acquisitions.
Our global web infrastructure provides seamless integration with our customers and suppliers. These ERP platforms support rapid development and deployment of enhancements so that we may quickly adapt to meet the technology needs of our customers and seamlessly integrate new acquisitions.
Each day, our onsite service associates work side-by-side with our customers to support their workflows. Our traditional service offerings focus on the needs of laboratory scientists and include procurement, logistics, chemical and equipment tracking and glassware autoclaving.
Our services organization of over 2,500 colleagues work side-by-side with our customers to support their workflows. Our traditional service offerings focus on the needs of laboratory scientists and include procurement, logistics, chemical and equipment tracking and glassware autoclaving.
We rely on our scale, expertise, deep customer access, depth of product and value-added service offerings, marketing strategies and sales force, acquisition strategy, financial profile and management team to deliver superior solutions to our customers and provide extensive market channel access to our suppliers. Sustainability Our responsibility to improve the world through science is not one that we take lightly.
We rely on our scale, expertise, deep customer access, depth of product and value-added service offerings, marketing strategies and sales force, acquisition strategy, financial profile and management team to deliver superior solutions to our customers and provide extensive market channel access to our suppliers.
In order to maintain certain certifications of quality and safety standards for our manufacturing facilities and operations, we must comply with numerous regulatory systems, standards, guidance and other requirements, as appropriate, including, but not limited to, ICH Q7, the guidelines of the International Pharmaceutical Excipients Council, European in vitro diagnostic medical device directives, U.S. 7 Table of contents Pharmacopeia / National Formulary, as well as the European, British, Japanese, Indian and Chinese Pharmacopeia, the Food Chemicals Codex and controlled substances regulations.
In order to maintain certain certifications of quality and safety standards for our manufacturing facilities and operations, we must comply with numerous regulatory systems, standards, guidance and other requirements, as appropriate, including, but not limited to, ICH Q7, the guidelines of the International Pharmaceutical Excipients Council, European in vitro diagnostic medical device directives, U.S.
Our ability to recruit and retain such talent depends on a number of factors, including a positive work environment and culture, compensation and benefits, talent development and career growth and opportunities, and protecting the health, safety and well-being of our associates. To that end, we invest in our associates in order to be an employer of choice with limitless opportunity.
Our ability to recruit and retain such talent depends on a number of factors, including a positive and inclusive work environment and culture, compensation and benefits, talent development and career growth and opportunities, and protecting the health, safety and well-being of our associates.
In addition, our operations, and some of the products we offer, are subject to a number of complex and stringent laws and regulations governing the production, handling, transportation and distribution of chemicals, drugs and other similar products.
Pharmacopeia / National Formulary, as well as the European, British, Japanese, Indian and Chinese Pharmacopeia, the Food Chemicals Codex and controlled substances regulations. In addition, our operations, and some of the products we offer, are subject to a number of complex and stringent laws and regulations governing the production, handling, transportation and distribution of chemicals, drugs and other similar products.
Our business model is grounded in supporting our customers from breakthrough discovery to agile delivery and Avantor is embedded in virtually every stage of the most important research, scale-up and manufacturing activities in the industries we serve.
Our business model is grounded in supporting our customers from discovery to delivery and Avantor is embedded in virtually every stage of the most important research, scale-up and manufacturing activities in the industries we serve. Our comprehensive offering provides scientists all they need to conduct their research: materials & consumables, equipment & instrumentation and services & specialty procurement.
These programs are underpinned by the Avantor Business System, which drives excellence in people, processes and problem solving. These consistent lean leadership practices empower associates to continuously improve and add value to our operations and customer solutions.
In 2023, we hosted our first Avantor Leadership Experience for individuals at the Director, Vice President and Senior Vice President level. In addition, we provide programs on the Avantor Business System, which drives excellence in people, processes and problem solving. These consistent lean leadership practices empower associates to continuously improve and add value to our operations and customer solutions.
Our global network of distribution centers gives our customers security of supply and real-time flexibility, as we can reach the majority of them within 24 hours. We also have 13 innovation centers that enable extensive collaboration and customization, critical elements for serving highly regulated, specification-driven applications.
Our global network of distribution centers gives our customers security of supply and real-time flexibility. We also have 13 innovation centers that enable extensive collaboration and customization, critical elements for serving highly regulated, specification-driven applications. Information technology We have a highly automated suite of ERP systems that promote standardization and provide business insight.
Government contracts We conduct business with various government agencies and government contractors. As such, we are subject to certain laws and regulations applicable to companies doing business with the government, as well as with those concerning government contracts.
As a result, we may see fluctuations across periods as the timing of our customers’ demand for these products may change. Government contracts We conduct business with various government agencies and government contractors. As such, we are subject to certain laws and regulations applicable to companies doing business with the government, as well as with those concerning government contracts.
We believe that this is caused by factors unique to those particular product markets such as customer manufacturing schedules, inventory levels in the supply chain and government approval processes. As a result, we may see fluctuations across periods as the timing of our customers’ demand for these products may change.
Seasonality Our business is not seasonal, but some of our proprietary products have exhibited cyclical customer demand in prior periods. We believe that this is caused by factors unique to those particular product markets such as customer manufacturing schedules, inventory levels in the supply chain and government approval processes.
Other than our Avantor, VWR, J.T.Baker, NuSil and Masterflex trademarks, we do not consider any particular patent, trademark, license, franchise or concession to be material to our overall business. Seasonality Our business is not seasonal, but some of our proprietary products have exhibited cyclical customer demand in prior periods.
We also hold common law rights in various trademarks and service marks. Other than our Avantor, VWR, J.T.Baker, NuSil and Masterflex trademarks, we do not consider any particular patent, trademark, license, franchise or concession to be material to our overall business.
The following charts present the approximate mix of net sales for each of these groups during 2022: 2 Table of contents Products and services Our portfolio includes a comprehensive range of products and services that allows us to create customized and integrated solutions for our customers.
The following charts present the approximate mix of net sales for each of these groups during 2023: On December 7, 2023, we disclosed that the company will transition from three geographic segments to two complementary business segments focused on customer needs: Laboratory Solutions and Bioscience Production, effective January 1, 2024. 2 Table of contents Products and services Our portfolio includes a comprehensive range of products and services that allows us to create customized and integrated solutions for our customers.
In 2017, we acquired VWR, a global manufacturer and distributor of laboratory and production products and services founded in 1852 that now serves as our e-commerce platform. Avantor, Inc. was incorporated in Delaware in May 2017 in anticipation of the VWR acquisition.
In 2017, we acquired VWR, a global manufacturer and distributor of laboratory and production products and services founded in 1852. Avantor, Inc. was incorporated in Delaware in May 2017 in anticipation of the VWR acquisition. We completed our initial public offering through Avantor, Inc. and listed its shares on the New York Stock Exchange in May 2019.
Competition is driven not only by the product quality and purity across industries we serve, but also by the adaptability of the supplier as a developmental and commercial partner.
We focus on service and delivery, breadth of product line, customization capabilities, price, customer support, online capabilities and the ability to meet the special and local needs of our customers. Competition is driven not only by the product quality and purity across industries we serve, but also by the adaptability of the supplier as a developmental and commercial partner.
We have applied in the United States and certain foreign countries for registration of number of trademarks, service marks and patents, some of which have been registered and issued. We also hold common law rights in various trademarks and service marks.
In some instances, we may license our technology to third parties or may elect to license intellectual property from others. We have applied in the United States and certain foreign countries for registration of number of trademarks, service marks and patents, some of which have been registered and issued.
Our sustainability is reflected in our people, the products we create, the transformative services we provide, and the integrity with which we serve our shareholders, business partners, suppliers, customers, and communities.
Our sustainability is reflected in our people, the products we create, the transformative services we provide, and the integrity with which we serve our shareholders, business partners, suppliers, customers, and communities. Our efforts to build a more sustainable future include programs to monitor, measure, and set strategies to reduce greenhouse gas emissions and address our waste and water footprint.
Innovation, Customer-centricity, Accountability, Respect, and Excellence are the building blocks of our company culture and send a strong message to our associates, customers, suppliers, stockholders and communities: ICARE. In addition, our executive leaders serve as sponsors of our associate-centric teams (ACTs) in support of our diversity and inclusion initiatives.
Our values give our associates a foundation for how we want to work together. Innovation, Customer-centricity, Accountability, Respect, and Excellence are the building blocks of our company culture and send a strong message to our associates, customers, suppliers, stockholders and communities: ICARE.
Growth and development We invest significant resources to develop talent with the right capabilities to deliver the growth and innovation needed to support our strategy. We offer associates and their managers a number of tools to help in their personal and professional development, including career development plans, mentoring programs and in-house learning opportunities.
Growth and development We invest significant resources to develop talent with the right capabilities to deliver the growth and innovation needed to support our strategy.
Our approach involves environment, health and safety professionals and process engineers who identify risks and implement behavioral solutions to prevent accidents before they occur. A robust auditing program is in place at every facility to ensure that we measure performance and drive continuous improvement.
A robust auditing program is in place at every facility to ensure that we measure performance and drive continuous improvement.
Much of our intellectual property is know-how and asset configurations that we treat as trade secrets. These proprietary rights are important to our ongoing operations. In some instances, we may license our technology to third parties or may elect to license intellectual property from others.
Intellectual property We rely on intellectual property rights, nondisclosure and other contractual provisions and technical measures to protect our offerings, services and intangible assets. Much of our intellectual property is know-how and asset configurations that we treat as trade secrets. These proprietary rights are important to our ongoing operations.
We completed our initial public offering through Avantor, Inc. and listed its shares on the New York Stock Exchange in May 2019. In June 2021, we acquired Ritter GmbH and its affiliates, a manufacturer of high-quality robotic and liquid handling consumables used in a variety of molecular screening and diagnostic applications.
In June 2021, we acquired Ritter, a manufacturer of high-quality robotic and liquid handling consumables used in a variety of molecular screening and diagnostic applications. In November 2021, we acquired the Masterflex bioprocessing business of Antylia Scientific.
ACTs are employee resource groups that foster an inclusive work environment, build connections, create community, and promote career opportunities. Based on common 5 Table of contents interests, backgrounds or characteristics, ACTs are open to all associates and serve as a support system to promote awareness, respect, and inclusion in the workplace.
In addition, our executive leaders serve as sponsors of our Associate-Centric Teams (ACTs) in support of our diversity and inclusion initiatives. ACTs are employee resource groups that foster an inclusive work environment, build connections, create community, and promote career opportunities.
We believe we are in compliance in all material respects with such laws and regulations, and no government contract is of such a magnitude as to have a material adverse effect on our financial results.
For a discussion of risks related to government contracting requirements, refer to “Item 1A, Risk Factors.” No government contract is of such a magnitude as to have a material adverse effect on our financial results.
Customers We benefit from longstanding customer relationships, and approximately 40% of our 2022 net sales came from customers that have had relationships with us for 15 years or more. We also have a diverse customer base with no single end customer comprising more than 5% of net sales.
In addition, we offer more complex and value-added scientific research support services such as DNA extraction, bioreactor servicing, clinical and biorepository services and compound management. Customers We benefit from longstanding customer relationships, and approximately 40% of our 2023 net sales came from customers that have had relationships with us for 15 years or more.
Those relationships may include distribution, sales and marketing support as well as servicing of instruments and equipment. Many of our supplier relationships have been in place for more than twenty years. Sales channels We reach our customers throughout the Americas, Europe and AMEA via a well-trained global sales force, comprehensive websites and targeted catalogs.
Our supplier relationships are based on contracts that vary in geographic scope, duration, product and service type, and some include exclusivity provisions. Those 3 Table of contents relationships may include distribution, sales and marketing support as well as servicing of instruments and equipment. Many of our supplier relationships have been in place for more than twenty years.
Our e-commerce platform plays a vital role in how we conduct business with our customers. In 2022, approximately 70% of our transactions came from our digital channels. Our websites utilize search analytics and feature personalized search tools, customer specific web solutions and enhanced data that optimize our customers’ online purchasing experience and better integrate our customers’ processes with our own.
Our websites utilize search analytics and feature personalized search tools, customer specific web solutions and enhanced data that optimize our customers’ online purchasing experience with rich content and AI-based recommendations and better integrate our customers’ processes with our own. Our websites are designed to integrate acquisitions, drive geographical expansion and serve segmented market needs with ease.
Our websites are designed to integrate acquisitions, drive geographical expansion and serve segmented market needs with ease. Infrastructure We have more than 200 facilities strategically located throughout the globe that include manufacturing, distribution, service, research & technology and sales centers.
In addition, we have introduced digital services and solutions that streamline lab procurement and operations and have become embedded into many customers’ laboratories, such as Avantor’s Inventory Manager. Infrastructure We have more than 200 facilities strategically located throughout the globe that include manufacturing, distribution, service, research & technology and sales centers.
Suppliers We sell proprietary products we make and third-party products sourced from a wide variety of product suppliers located across the globe. Our supplier relationships are based on contracts that vary in 3 Table of contents geographic scope, duration, product and service type, and some include exclusivity provisions.
We also have a diverse customer base with no single end customer comprising more than 5% of net sales. Suppliers We sell proprietary products we make and third-party products sourced from a wide variety of product suppliers located across the globe.
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We serve as a one-stop shop, providing scientists all they need to conduct their research; materials & consumables, equipment & instrumentation and services & specialty procurement.
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Our sales professionals include native speakers for each of the countries in which we operate, allowing us to have high impact interactions with our customers across the globe. Our e-commerce platform, Avantor ScienceCentral, plays a vital role in how we conduct business with our customers. In 2023, approximately 75% of our transactions came from our digital channels.
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In addition, we offer more complex and value-added scientific research support services such as DNA extraction, bioreactor servicing, clinical and biorepository services and compound management. More than 2,100 Avantor associates are co-located with customers, working side-by-side with their scientists every day.
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As part of our commitment to accelerate sustainable practices across the supply chain, in June 2023, we launched Avantor’s Responsible Supplier Program, which was piloted with a small cohort of supplier partners in 2022. The program focuses on six priorities: climate change, deforestation, human rights, responsible packaging, waste, and water.
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We focus on service and delivery, 4 Table of contents breadth of product line, customization capabilities, price, customer support, online capabilities and the ability to meet the special and local needs of our customers.
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These priorities were selected based on their relevance to Avantor and to suppliers' businesses, enabling collaboration with supplier partners to identify sustainability challenges and solutions.
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Our efforts to build a more sustainable future include programs to monitor, measure, and set strategies to reduce greenhouse gas emissions and address our waste and water footprint.In 2022, increasing our scores across 4 major rating agencies. Employees and human capital resources Our success depends on our ability to attract, retain and motivate highly qualified and diverse talent.
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In late 2023, we announced new 2030 science-based climate targets with a goal to achieve by 2030 a 50% absolute reduction in scope 1 and 2 emissions and a 25% absolute reduction in scope 3 emissions from a 2020 baseline. We have consistently improved our sustainability scores, and in 2023 we received a Bronze Medal from EcoVadis rating agency.
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We have also launched a robust, mobile-enabled online learning platform supporting the whole person, not just job-related skill building, that offers multiple formats to address varying learning preferences and ensure accessibility. Health, safety and well-being We are committed to protecting the health, safety and well-being of our associates.
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In addition, Avantor was recognized as an Equality 100 Award: Leader in LGBTQ+ Workplace Inclusion honoree by the Human Rights Campaign Foundation’s 2023-2024 Corporate Equality Index. Employees and human capital resources Our success depends on our ability to attract, retain and motivate highly qualified and diverse talent.
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Impact of COVID-19 The evolving COVID-19 pandemic had a significant impact on our human capital management in 2022, and we continue to be vigilant in our response by following precautionary safety guidance from credible health agencies such as the World Health Organization (WHO), Centers for Disease Control and Prevention (CDC) and European Centre for Disease Prevention and Control (ECDC).
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To that end, we invest in our associates in 5 Table of contents order to be an employer of choice.
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A majority of our workforce worked remotely during some portion of the year. In our facilities where essential workers continued to work on-site, we continued or enhanced safety protocols and procedures to mitigate the spread of COVID-19.
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Based on common interests, backgrounds or characteristics, ACTs are open to all associates and serve as a support system to promote awareness, respect, and inclusion in the workplace. Additionally, Avantor’s Talent Philosophy is a part of commitment to our associates and guides our managers in their role in supporting our people and our culture.
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In addition, we offered associates a number of expanded benefits, including providing up to 10 additional days of paid time off if required to quarantine or otherwise experiencing symptoms of COVID-19, expanding access to no cost individual counseling sessions and virtual support groups under our employee assistance programs, hosting virtual wellness events and waiving 6 Table of contents telemedicine co-pays for all visits in 2022.
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We offer associates and their managers numerous tools to help in their personal and professional development, including our Avantor Career Hub which enables associates to highlight their skills, capture development plans, make connections and find new opportunities inside Avantor.
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Despite the effects of the pandemic, the size of our workforce remained steady in 2022, and we were able to avert employee layoffs related to the pandemic. Intellectual property We rely on intellectual property rights, nondisclosure and other contractual provisions and technical measures to protect our offerings, services and intangible assets.
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We have a robust portfolio of learning solutions that can be accessed in multiple formats and available to our global associates across various professional, personal and leadership development areas.
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Each year, we host a Learning & Career week program which is available to associates at all levels globally, and includes a diverse slate of learning opportunities, live sessions and on-demand resources designed to support the personal and professional growth and success of associates.
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Health, safety and well-being 6 Table of contents We are committed to protecting the health, safety and well-being of our associates. Our approach involves environment, health and safety professionals and process engineers who identify risks and implement behavioral solutions to prevent accidents before they occur.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIn addition, any completed acquisition will subject us to a variety of other risks, including: • acquisitions may have an adverse effect on our business relationships with existing or future suppliers and other business partners, in particular, to the extent we consummate acquisitions that vertically integrate portions of our business; • we may assume substantial actual or contingent liabilities, known and unknown, including environmental liabilities; • acquisitions may not meet our expectations of future financial performance; • we may experience delays or reductions in realizing expected synergies; • we may incur substantial unanticipated costs or encounter other problems associated with acquired businesses or devote time and capital investigating a potential acquisition and not complete the transaction; • we may be unable to achieve our intended objectives for the transaction; and • we may not be able to retain the key personnel, customers and suppliers of the acquired business These factors related to our acquisition strategy, among others, could have an adverse effect on our business, financial condition and results of operations.
Biggest changeIn addition, any completed acquisition will subject us to a variety of other risks, including: (i) potential adverse effects on our business relationships with existing or future suppliers and other business partners (in particular, to the extent we consummate acquisitions that vertically integrate portions of our business); (ii) the assumption of substantial actual or contingent liabilities, known or unknown, including environmental liabilities; (iii) failure to meet expectations of future financial performance; (iv) delays or reductions in realizing expected synergies; (v) substantial unanticipated costs or other problems associated with acquired businesses or devoting time and capital to investigate a potential acquisition that is not completed; (vi) failure to achieve intended objectives for a transaction; (vii) failure to retain key personnel, customers and suppliers of the acquired business; and (viii) adverse impacts resulting from impairment charges on goodwill, other intangible assets and tangible assets.
Our amended and restated certificate of incorporation provides that unless we consent to the selection of an alternative forum, the state or federal courts (as appropriate) located within the State of Delaware shall, to the fullest extent permitted by law, be the sole and exclusive forum for any (i) derivative action or proceeding brought on behalf of our company, (ii) action asserting a claim of breach of a fiduciary duty owed by any director, officer, or other employee or stockholder of our company to us or our stockholders, creditors or other constituents, (iii) action against us or any of our directors or officers involving a claim or defense arising pursuant to any provision of the Delaware General Corporation Law or our amended 23 Table of contents and restated certificate of incorporation or our amended and restated bylaws, (iv) action against us or any director or officer of the Company involving a claim or defense implicating the internal affairs doctrine, or (v) action against us or any of our directors or officers involving a claim or defense arising pursuant to the Exchange Act or the Securities Act.
Our amended and restated certificate of incorporation provides that unless we consent to the selection of an alternative forum, the state or federal courts (as appropriate) located within the State of Delaware shall, to the fullest extent permitted by law, be the sole and exclusive forum for any (i) derivative action or proceeding brought on behalf of our company, (ii) action asserting a claim of breach of a fiduciary duty owed by any director, officer, or other employee or stockholder of our company to us or our stockholders, creditors or other constituents, (iii) action against us or any of our directors or officers involving a claim 22 Table of contents or defense arising pursuant to any provision of the Delaware General Corporation Law or our amended and restated certificate of incorporation or our amended and restated bylaws, (iv) action against us or any director or officer of the Company involving a claim or defense implicating the internal affairs doctrine, or (v) action against us or any of our directors or officers involving a claim or defense arising pursuant to the Exchange Act or the Securities Act.
The loss of a significant number of customers or a reduction in orders from a significant number of customers could reduce our net sales and harm our operating results. Our operating results could be negatively affected by the loss of revenue from a significant number of our customers, including direct distributors and end users.
The loss of a significant number of customers or a significant reduction in customer orders could reduce our net sales and harm our operating results. Our operating results could be negatively affected by the loss of revenue from a significant number of our customers, including direct distributors and end users.
Our liabilities arising from past or future releases of, or 21 Table of contents exposures to, hazardous substances may exceed our estimates or adversely affect our financial statements and reputation and we may be subject to additional claims for cleanup or other environmental claims in the future based on our past, present or future business activities, and we may not be able to recover any costs under any of our indemnifications that we have.
Our liabilities arising from past or future releases of, or exposures to, hazardous substances may exceed our estimates or adversely affect our financial statements and reputation and we may be subject to additional claims for cleanup or other environmental claims in the future based on our past, present or future business activities, and we may not be able to recover any 20 Table of contents costs under any of our indemnifications that we have.
Relying on collaborative relationships is risky because, among other things, our collaborative partners may (i) not devote sufficient resources to the success of our collaborations; (ii) fail to obtain regulatory approvals 19 Table of contents necessary to continue the collaborations in a timely manner; (iii) be acquired by other companies and terminate our collaborative partnership or become insolvent; (iv) compete with us; (v) disagree with us on key details of the collaborative relationship; (vi) have insufficient capital resources; and (vii) decline to renew existing collaborations on acceptable terms.
Relying on collaborative relationships is risky because, among other things, our collaborative partners may (i) not devote sufficient resources to the success of our collaborations; (ii) fail to obtain regulatory approvals necessary to continue the collaborations in a timely manner; (iii) be acquired by other companies and terminate our collaborative partnership or become insolvent; (iv) compete with us; (v) disagree with us on key details of the collaborative relationship; (vi) have insufficient capital resources; and (vii) decline to renew existing collaborations on acceptable terms.
Any such improper actions or allegations of such acts could damage our reputation and subject us to civil or criminal investigations in the United States and in other jurisdictions and related shareholder lawsuits, could lead to substantial civil and criminal, monetary and nonmonetary penalties and could cause us to incur significant legal and investigatory fees.
Any such improper actions or allegations of such acts could damage our reputation and subject us to civil or criminal investigations in the United States and in other jurisdictions and related shareholder lawsuits, could lead to substantial civil and criminal, monetary and non monetary penalties and could cause us to incur significant legal and investigatory fees.
Changes in exchange rates can adversely affect our net sales, profits and cash flows. A substantial amount of our revenues are derived from international operations, and we anticipate that a significant portion of our sales will continue to come from outside of the United States in the future.
Changes in exchange rates can adversely affect our net sales, profits and cash flows. A substantial amount of our revenues is derived from international operations, and we anticipate that a significant portion of our sales will continue to come from outside of the United States in the future.
We must also maintain sufficient production capacity in order to meet anticipated customer demand, which carries fixed costs that we may not be able to offset if orders slow, which would adversely affect our operating margins.
We must also maintain sufficient production capacity to meet anticipated customer demand, which carries fixed costs that we may not be able to offset if orders slow, which would adversely affect our operating margins.
Many of the customers we serve have experienced significant industry-related changes in the last several years and are expected to continue to experience significant changes, including reductions in governmental payments for biopharmaceutical products, expirations of significant patents, adverse changes in legislation or regulations regarding the delivery or pricing of general healthcare services or mandated benefits, and increased requirements on quality.
Many of the customers we serve have experienced, and are expected to continue to experience, significant industry-related changes, including reductions in governmental payments for biopharmaceutical products, expirations of significant patents, adverse changes in legislation or regulations regarding the delivery or pricing of general healthcare services or mandated benefits, and increased requirements on quality.
Our failure to comply with those covenants could result in an event of default which, if not cured or waived, could result in the acceleration of all of our debt, which could adversely affect our business, earnings and financial condition. Despite our current level of indebtedness, we and our subsidiaries may still be able to incur substantially more debt.
Our failure to comply with those covenants could result in an event of default which, if not cured or waived, could result in the acceleration of all of our debt, which could adversely affect our business, earnings and financial condition. 21 Table of contents Despite our current level of indebtedness, we and our subsidiaries may still be able to incur substantially more debt.
While we believe we are able to adapt our business to maintain existing customer relationships and develop new customer relationships, if we are unsuccessful or untimely in these efforts, our results of operations may suffer.
While we believe we will be able to adapt our business to maintain existing customer relationships and develop new customer relationships, if we are unsuccessful or untimely in these efforts, our results of operations may suffer.
Our failure to implement these strategies in a cost-effective and timely manner could have an adverse effect on our business, results of operations and financial condition. 11 Table of contents Part of our growth strategy is to pursue strategic acquisitions, which will subject us to a variety of risks that could harm our business.
Our failure to implement these strategies in a cost-effective and timely manner could have an adverse effect on our business, results of operations and financial condition. Part of our growth strategy is to pursue strategic acquisitions, which will subject us to a variety of risks that could harm our business.
The level and timing of orders placed by our customers vary for a number of reasons, including individual customer strategies, the introduction of new technologies, the 13 Table of contents desire of our clients to reduce their exposure to any single supplier and general economic conditions.
The level and timing of orders placed by our customers vary for a number of reasons, including individual customer strategies, the introduction of new technologies, the desire of our clients to reduce their exposure to any single supplier and general economic conditions.
This could cause our customers to 16 Table of contents refrain from purchasing our brands in the future and in turn could impair our brand equity and adversely affect our sales. We are subject to product liability and other claims in the ordinary course of business.
This could cause our customers to refrain from purchasing our brands in the future and in turn could impair our brand equity and adversely affect our sales. We are subject to product liability and other claims in the ordinary course of business.
Either of these factors may have a material adverse effect on our business, financial position and operating results. We are subject to risks associated with doing business globally, which may harm our business. We have global operations and derive a portion of our net sales from customers outside of the United States.
Either of these factors may have a material adverse effect on our business, financial position and operating results. 12 Table of contents We are subject to risks associated with doing business globally, which may harm our business. We have global operations and derive a substantial portion of our net sales from customers outside of the United States.
Our inability to protect our intellectual property could adversely affect our business. In addition, third parties may claim that we infringe their intellectual property, and we could suffer significant litigation or licensing expenses as a result. We rely on a variety of intellectual property rights, including patents, trademarks, copyrights and trade secrets, to protect our proprietary technology and products.
In addition, third parties may claim that we infringe their intellectual property, and we could suffer significant litigation or licensing expenses as a result. We rely on a variety of intellectual property rights, including patents, trademarks, copyrights and trade secrets, to protect our proprietary technology and products.
To the extent we fail to timely introduce new and innovative products or services, adequately predict our customers’ needs or fail to obtain desired levels of market acceptance, our business may suffer. Our business, financial condition and results of operations depend upon the availability of raw materials.
To the extent we fail to timely introduce new and innovative products or services, adequately predict our customers’ needs or fail to obtain desired levels of market acceptance, our business may suffer. We depend upon the availability of raw materials.
Our success depends on our ability to attract, motivate and retain highly qualified individuals. Competition for senior management and other key personnel in our industry is intense, and the pool of suitable candidates is limited.
We are highly dependent on our senior management and key employees. Our success depends on our ability to attract, motivate and retain highly qualified individuals. Competition for senior management and other key personnel in our industry is intense, and the pool of suitable candidates is limited.
Alternatively, if a court were to find the choice of forum provision contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, operating results and financial condition.
Alternatively, if a court were to find the choice of forum provision contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, operating results and financial condition. Item 1B. Unresolved staff comments None.
We sell our products in industries that are characterized by significant technological changes, frequent new product and technology introductions and enhancements and evolving industry standards. As a result, our customers’ needs are rapidly evolving.
We sell our products in industries that are characterized by significant technological changes, frequent new product and technology introductions and enhancements and evolving industry standards. As a result, 15 Table of contents our customers’ needs are rapidly evolving.
However, our ability to manage our business and conduct our global operations while also pursuing the aforementioned growth strategies requires considerable management attention and resources and is subject to the challenges of supporting a rapidly growing business in an environment of multiple languages, cultures and customs, legal and regulatory systems, alternative dispute systems and commercial markets.
Our ability to manage our business and conduct our global operations while also pursuing our strategies for improving growth and optimizing costs requires considerable management attention and resources and is subject to the challenges of supporting a rapidly growing business in an environment of multiple languages, cultures and customs, legal and regulatory systems, alternative dispute systems and commercial markets.
Our competitors range from regional companies, which may be able to more quickly respond to customers’ needs because of geographic proximity, to large multinational companies, which may have greater financial, marketing, operational and research and development resources than we do. Such greater resources may allow our competitors to respond more quickly with new, alternative or emerging technologies.
Our competitors range from regional companies, which may be able to more quickly respond to customers’ needs because of geographic proximity, to large multinational companies, which may have greater financial, marketing, operational and research and development resources than we do, allowing for a more rapid response with new, alternative or emerging technologies.
See Item 3, “Legal Proceedings.” In addition, contamination resulting from our current or past operations or from past uses of land that we own or operate may trigger investigation or remediation obligations, which may have an adverse effect on our business, financial condition and results of operations.
In addition, contamination resulting from our current or past operations or from past uses of land that we own or operate may trigger investigation or remediation obligations, which may have an adverse effect on our business, financial condition and results of operations.
Our suppliers’ failure to provide expected raw materials or components that meet such criteria could adversely affect production schedules and contract profitability. 17 Table of contents Our business, financial condition and results of operations depend upon maintaining our relationships with suppliers. We offer products from a wide range of suppliers.
Our suppliers’ failure to provide expected raw materials or components that meet such criteria could adversely affect production schedules and contract profitability and negatively impact our results of operations. We depend upon maintaining our relationships with suppliers. We offer products from a wide range of suppliers.
Such an occurrence could also harm the environment, our reputation and disrupt our operations. Climate change, and the legal or regulatory response thereto, may have a long-term impact on our business, financial condition and results of operations. We continue to focus on strategies and systems, such as reducing greenhouse gas emissions and packaging waste, to address climate change.
Climate change, and the legal or regulatory response thereto, may have a long-term impact on our business, financial condition and results of operations. We continue to focus on strategies and systems, such as reducing greenhouse gas emissions and packaging waste, to address climate change.
We cannot provide assurance that our internal controls and compliance systems will always protect us from acts committed by employees, agents or business partners of ours (or of businesses we acquire or partner with) that would violate U.S. and/or non-U.S. laws, including the laws governing payments to government officials, bribery, fraud, kickbacks and false claims, pricing, sales and marketing practices, conflicts of interest, competition, export and import compliance, money laundering and data privacy.
Our reputation, ability to do business and financial statements may be impaired by improper conduct by any of our employees, agents or business partners. 19 Table of contents We cannot provide assurance that our internal controls and compliance systems will always protect us from acts committed by employees, agents or business partners of ours (or of businesses we acquire or partner with) that would violate U.S. and/or non-U.S. laws, including the laws governing payments to government officials, bribery, fraud, kickbacks and false claims, pricing, sales and marketing practices, conflicts of interest, competition, export and import compliance, money laundering and data privacy.
While we have taken various measures and made significant efforts and investment to ensure that our policies, processes and systems are both robust and compliant with these obligations, any failure, or perceived failure, by us to comply with the CPRA, GDPR, or with any applicable regulatory requirements or orders, including but not limited to privacy, data protection, information security, or consumer protection-related privacy laws and regulations, in one or more jurisdictions within the United States, the EU or elsewhere, could: result in proceedings or actions against us by governmental entities or individuals; subject us to significant fines, penalties, and/or judgments; require us to change our business practices; limit access to our products and services in certain countries, incur substantial costs (even if we ultimately prevail) or otherwise adversely affect our business.
While we have taken various measures and made significant efforts and investment and designed our policies, processes and systems to be robust, a failure, or perceived failure, by us to comply with any applicable regulatory requirements or orders, including but not limited to privacy, data protection, information security, or consumer protection-related privacy laws and regulations, in one or more jurisdictions within the United States, the EU or elsewhere, could result in proceedings or actions against us by governmental entities or individuals; subject us to significant fines, penalties, and/or judgments; require us to change our business practices; limit access to our products and services in certain countries, incur substantial costs (even if we ultimately prevail) or otherwise adversely affect our business. 14 Table of contents Our inability to protect our intellectual property could adversely affect our business.
Accordingly, any significant disruptions to the operations of our manufacturing or distribution centers or logistics providers for any reason, including labor relations issues, power interruptions, severe weather, fire or other circumstances beyond our control 10 Table of contents could cause our operating expenses to increase without coverage or compensation or seriously harm our ability to fulfill our customers’ orders or deliver products on a timely basis, or both.
Any significant disruptions to the operations of our manufacturing or distribution centers or logistics providers for any reason, including labor relations issues, power interruptions, severe weather, destruction or damage or other circumstances beyond our control could have a significant impact on our operating results, including an increase to our operating expenses without coverage or compensation, or seriously harm our ability to fulfill our customers’ orders or deliver products on a timely basis, or both.
We are subject to a broad range of foreign, federal, state and local environmental, health and safety laws and regulations, including those of the EPA, OSHA and equivalent local, state, and foreign regulatory agencies in each of the jurisdictions in which we operate.
We are subject to a broad range of foreign, federal, state and local environmental, health and safety laws and regulations, including those of the EPA, OSHA and equivalent local, state, and foreign regulatory agencies in each of the jurisdictions in which we operate, and we may be fined or penalized for non-compliance.
If we are unable to manufacture our products consistently, in sufficient quantities, and on a timely basis, our net sales, gross margins and our other operating results will be materially and adversely affected. Prompt shipment of our products is also very important to our business.
If we are unable to manufacture our products consistently, in sufficient quantities, and on a timely basis, our net sales, gross margins and our other operating results will be materially and adversely affected.
Accordingly, our international operations or those of our international customers could be substantially affected by a number of risks arising from operating an international business, including: • limitations on repatriation of earnings; • taxes on imports; • the possibility that unfriendly nations or groups could boycott our products; • general economic and political conditions in the markets where we operate, including actual or anticipated military or political conflicts such as the Ukraine/Russia conflict; • foreign currency exchange rate fluctuations; • potential changes in diplomatic and trade relationships, such as the United Kingdom’s exit from the European Union; • potential increased costs associated with overlapping tax structures; • potential increased reliance on third parties within less developed markets; • potential trade restrictions, tariffs and exchange controls; • more limited protection for intellectual property rights in some countries; • difficulties and costs associated with staffing and managing foreign operations; • unexpected changes in regulatory requirements; • difficulties in complying with a wide variety of foreign laws and regulations; • the risk that certain governments may adopt regulations or take other actions that would have a direct adverse impact on our business and market opportunities, including nationalization of private enterprise; • violations of anti-bribery and anti-corruption laws, such as the FCPA; • violations of economic sanctions laws, such as the regulations enforced by OFAC; 14 Table of contents • longer accounts receivable cycles in certain foreign countries, whether due to cultural differences, exchange rate fluctuation or other factors; • the credit risk of local customers and distributors; • limitations on our ability to enforce legal rights and remedies with third parties or partners outside of the United States; • import and export licensing requirements and other restrictions, such as those imposed by OFAC, BIS, DDTC and comparable regulatory agencies and policies of foreign governments; and • changes to our distribution networks.
Accordingly, our international operations or those of our international customers could be substantially affected by a number of risks arising from operating an international business, including: (i) limitations on repatriation of earnings; (ii) taxes on imports; (iii) the possibility that unfriendly nations or groups could boycott our products; (iv) general economic and political conditions in the markets where we operate, including actual or anticipated military or political conflicts, such as the Ukraine/Russia or Israel/Hamas conflicts; (v) foreign currency exchange rate fluctuations; (vi) potential changes in diplomatic and trade relationships; (vii) a global health crisis of unknown duration, such as the COVID-19 pandemic; (viii) potential increased costs associated with overlapping tax structures; (ix) potential increased reliance on third parties within less developed markets; (x) potential trade restrictions, tariffs and exchange controls; (xi) more limited protection for intellectual property rights in some countries; (xii) difficulties and costs associated with staffing and managing foreign operations; (xiii) difficulties in complying with a wide variety of foreign laws and regulations and unexpected changes thereto; (xiv) expanded enforcement of laws related to data protection and personal privacy; (xv) the risk that certain governments may adopt regulations or take other actions that would have a direct adverse impact on our business and market opportunities, including nationalization of private enterprise; (xvi) violations of anti-bribery and anti-corruption laws, such as the FCPA; (xvii) violations of economic sanctions laws, such as the regulations enforced by OFAC; (xviii) longer accounts receivable cycles in certain foreign countries, whether due to cultural differences, exchange rate fluctuation or other factors; (xix) the credit risk of local customers and distributors; (xx) limitations on our ability to enforce legal rights and remedies with third parties or partners outside of the United States; (xxi) import and export licensing requirements and other restrictions, such as those imposed by OFAC, BIS, DDTC and comparable regulatory agencies and policies of foreign governments; and (xxii) changes to our distribution networks.
We have experienced problems, both as a result of the COVID-19 pandemic and otherwise, with, or delays in, our production, shipping and logistics capabilities that resulted in delays in our ability to ship finished products, and there can be no assurance that we will not encounter such problems in the future.
In addition, we have experienced problems with, or delays in, our production, shipping and logistics capabilities that have resulted in delays in our ability to ship finished products, and there can be no assurance that we will not encounter such problems in the future.
General industry changes include: • development of large and sophisticated group purchasing organizations and on-line auction sites that increase competition for, and reduce spending on, laboratory products; • consolidation of biopharmaceutical companies resulting in a rationalization of research expenditures; • increased regulatory scrutiny over drug production requiring safer raw materials; 12 Table of contents • customers’ purchasing the products that we supply directly from our suppliers; and • significant reductions in development and production activities.
General industry changes include: • development of large and sophisticated group purchasing organizations and on-line auction sites that increase competition for, and reduce spending on, laboratory products; • consolidation of biopharmaceutical companies resulting in a rationalization of research expenditures; • increased regulatory scrutiny over drug production requiring safer raw materials; • customers’ purchasing the products that we supply directly from our suppliers; and • significant reductions in development and production activities. 11 Table of contents Some of our customers have implemented, or may in the future implement, certain measures described above in an effort to control and reduce costs.
If we are unable to achieve, or improperly report on our progress toward, our carbon footprint reduction goals and commitments, the resulting negative publicity could result in the loss of business, adverse reputational impacts, diluted market valuations and challenges in attracting and retaining customers and talented employees. We are highly dependent on our senior management and key employees.
If we are unable to achieve, or improperly report on our progress toward, our carbon footprint reduction goals and commitments, this may result in litigation and/or regulatory action as well as negative publicity, which could lead to the loss of business, adverse reputational impacts, diluted market valuations and challenges in attracting and retaining customers and talented employees.
Our Board of Directors may take into account general and economic conditions, our financial condition and results of operations, our available cash and current and anticipated cash needs, capital requirements, contractual, legal, tax and regulatory restrictions and implications on the payment of dividends by us to our stockholders or by our subsidiaries to us, including restrictions under our credit agreement and other indebtedness we may incur, and such other factors as our Board of Directors may deem relevant As a result, you may not receive any return on an investment in our common stock unless you sell our common stock for a price greater than your purchase price.
Our Board of Directors may take into account general and economic conditions, our financial condition and results of operations, our available cash and current and anticipated cash needs, capital requirements, contractual, legal, tax and regulatory restrictions and implications on the payment of dividends by us to our stockholders or by our subsidiaries to us, including restrictions under our credit agreement and other indebtedness we may incur, and such other factors as our Board of Directors may deem relevant.
In addition, certain of our facilities are certified to ISO, including ISO 13485, ISO 9001, AS9100, ISO 22000 and/or ISO 14001. These standards are voluntary quality management system standards, the maintenance of which indicates to customers certain quality and operational norms.
In addition, certain of our facilities are certified to ISO, including ISO 13485, ISO 9001, AS9100, ISO 22000 and/or ISO 14001. These standards are voluntary quality management system standards, the maintenance of which indicates to customers certain quality and operational norms. Customers may rely on contractual assurances that we make with respect to ISO certificates to transact business.
If we experience significant delays in our manufacturing, shipping or logistics processes, we could damage our customer relationships, cause disruption to our customers and adversely affect our business, financial condition and operating results. We compete in highly competitive markets. Failure to compete successfully could adversely affect our business, financial condition and results of operations.
Significant delays in our manufacturing, shipping or logistics processes could damage our customer relationships, cause disruption to our customers and adversely affect our business, financial condition and operating results.
Though we often include pricing and volume incentives in our contracts, our customers are generally not obligated to purchase any fixed quantities of products, and they may stop placing orders with us at any time.
Though we often include pricing and volume incentives in our contracts, our customers are generally not obligated to purchase any fixed quantities of products, and they may stop placing orders with us at any time. If we experience a significant reduction in customer orders, increased order deferrals, our sales could decline, and our operating results may not meet our expectations.
In addition, consolidation trends in the biopharma and healthcare industries have served to create fewer customer accounts and to concentrate purchasing decisions for some customers, resulting in increased pricing pressures.
In addition, consolidation trends in the biopharma and healthcare industries have served to create fewer customer accounts and to concentrate purchasing decisions for some customers, resulting in increased pricing pressures. New competitors in low-cost manufacturing locations, particularly developing markets, may create increased pricing and competitive pressures and impede our goal to grow in those markets.
We have several high-risk chemical facilities that possess materials that could be stolen and used to make weapons. We could also be subject to an attack on our high-risk facilities that could cause a significant number of deaths and injuries. As a result, many people, including our employees, could be harmed.
We have several high-risk chemical facilities that contain materials that could be stolen and 16 Table of contents used to make weapons. We could also be subject to an attack on our high-risk facilities that could cause a significant number of deaths and injuries. Such an occurrence could also harm the environment, our reputation and disrupt our operations.
Risks related to regulation We are required to comply with a wide variety of laws and regulations, and are subject to regulation by various federal, state and foreign agencies, and our failure to comply with existing and future regulatory requirements could adversely affect our results of operations and financial condition.
If we or any of our collaborative partners terminate a collaborative arrangement, we may be required to devote additional resources to product development and commercialization or we may need to cancel some development programs, which could adversely affect our business and financial statements. 18 Table of contents Risks related to regulation We are required to comply with a wide variety of laws and regulations, and are subject to regulation by various federal, state and foreign agencies, and our failure to comply with existing and future regulatory requirements could adversely affect our results of operations and financial condition.
Customers may rely 20 Table of contents on contractual assurances that we make with respect to ISO certificates to transact business. Failure to comply with these ISO standards can lead to observations of non-compliance or even suspension of ISO or Aerospace Standard (AS) certifications or European Community (EC) Declarations of Conformity Certificates by the registrar.
Failure to comply with these ISO standards can lead to observations of non-compliance or even suspension of ISO or Aerospace Standard (AS) certifications or European Community (EC) Declarations of Conformity Certificates by the registrar. If we were to lose ISO or AS certifications or EC Declarations of Conformity, we could lose sales and customers to competitors or other suppliers.
The customers we serve have experienced, and will continue to experience significant industry-related changes that could adversely affect our business.
These factors related to our acquisition strategy, among others, could have an adverse effect on our business, financial condition and results of operations. The customers we serve have experienced, and will continue to experience, significant industry-related changes that could adversely affect our business.
If these audits or inspections identify issues or the customer perceives there are issues, the customer may decide to cease purchasing products from us which could adversely affect our business. Our reputation, ability to do business and financial statements may be impaired by improper conduct by any of our employees, agents or business partners.
We are also subject to periodic inspections or audits by our customers. If these audits or inspections identify issues or the customer perceives there are issues, the customer may decide to cease purchasing products from us which could adversely affect our business.
The effects of climate change and legal or regulatory initiatives to address climate change could have a long-term adverse impact on our business, financial condition and results of operations.
The effects of climate change and legal or regulatory initiatives to address climate change could have a long-term adverse impact on our business, financial condition and results of operations. In addition, we have established and publicly announced goals and commitments to reduce our carbon footprint, including targets to reduce greenhouse gas emissions (scope 1, scope 2 and scope 3).
Our contracts generally do not contain minimum purchase requirements, and we sell primarily on a purchase order basis. Therefore, our sales are subject to changes in demand from our customers, and these changes have been material in the past.
Therefore, our sales are subject to changes in demand from our customers, and these changes have been material in the past.
Changes in tax law relating to multinational corporations could adversely affect our tax position. The U.S. Congress, government agencies in non-U.S. jurisdictions where we and our affiliates do business, and the Organisation for Economic Cooperation and Development, or OECD, continue to focus on issues related to the taxation of multinational corporations.
Congress, foreign governments, and their agencies in non-U.S. jurisdictions where we and our affiliates do business, and the Organization for Economic Cooperation and Development (“OECD”), continue to focus on issues related to the taxation of multinational corporations. As part of this focus, the OECD has introduced a framework to implement a 15% global minimum corporate tax rate.
If new debt is added to our current debt levels, the related risks that we now face could intensify. 22 Table of contents An increase in interest rates may negatively impact our operating results and financial condition.
If new debt is added to our current debt levels, the related risks that we now face could intensify.
If a significant number of customers purchase fewer of our products, defer orders or fail to place additional orders with us, our sales could decline, and our operating results may not meet our expectations. In addition, if those customers order our products, but fail to pay on time or at all, our liquidity and operating results could be adversely affected.
In addition, if customers order our products, but fail to pay on time or at all, our liquidity and operating results could be adversely affected. Our contracts generally do not contain minimum purchase requirements, and we sell primarily on a purchase order basis.
If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results, which could lead to a loss of investor confidence in our financial statements and have an adverse effect on our stock price.
As a result, you may not receive any return on an investment in our common stock unless you sell our common stock for a price greater than your purchase price. If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results.
We face competition across our products and the markets in which we operate. We compete on several fronts, both domestically and internationally, including competing with other companies that provide similar offerings. Competition is driven by proprietary technologies and know-how, capabilities, consistency of operational performance, quality, supply chain control, price, value and speed.
Competition is driven by proprietary technologies and know-how, capabilities, consistency of operational performance, quality, supply chain control, price, value and speed.
The COVID-19 pandemic has also impacted our supply chain as we experienced disruptions or delays in shipments of certain raw materials used in the products we manufacture and in the finished goods that we sell globally.
Further, it is possible that disruptions or delays in shipments of certain raw materials used in the products we manufacture and in the finished goods that we sell globally could be similar to those experienced during the COVID-19 pandemic. The implementation of any government-mandated vaccination or testing mandates may impact our ability to retain current employees and attract new employees.
While we have implemented pricing and productivity measures to combat these pressures, they may continue to adversely impact our results. Significant interruptions in our operations could harm our business, financial condition and results of operations. Manufacturing, distribution, service and logistics problems can and do arise, and any such problems could have a significant impact on our operating results.
While we have implemented pricing and productivity measures to combat these pressures, they may continue to adversely impact our results. We compete in highly competitive markets. Failure to compete successfully could adversely affect our business, financial condition and results of operations. We face competition across our products and the markets in which we operate, both domestically and internationally.
Item 1A. Risk factors Risks related to our business and our industry The COVID-19 pandemic has impacted, and continues to pose risks to, our business, operating results, cash flows and/or financial condition, the nature and extent of which could be material.
Item 1A. Risk factors Risks related to our business and our industry Significant interruptions in our operations could harm our business, financial condition and results of operations.
For additional information regarding environmental matters, see note 13 to the consolidated financial statements beginning on page F-1 of this report. Risks related to our indebtedness Our indebtedness could adversely affect our financial condition and prevent us from fulfilling our debt or contractual obligations. We now have and expect to continue to have a significant amount of debt.
For additional information regarding environmental matters, see [note 12] to the consolidated financial statements beginning on page F-1 of this report. Changes in corporate governance and public disclosure requirements and expectations could impact compliance costs and the risks of noncompliance.
Through our online customer portal, we collect and store confidential information that customers provide in order to, among other things, purchase products and services and register on our website. We utilize commercially available third-party technology solutions, software and software systems with some proprietary configurations. We also store data using third-party cloud services.
Our actual or perceived failure to adequately protect personal data could adversely affect our business. Given the nature of our business, we collect and store confidential information that customers provide in order to, among other things, purchase products and services and register on our website.
It may be difficult for us to implement our strategies for improving growth. We plan to continue expanding our commercial sales operations and scope and complexity of our business both domestically and internationally, while maintaining our commercial operations and administrative activities.
We have announced a transition to a new operating model consisting of two complementary business segments, the Laboratory Solutions segment and the Bioscience Production segment, effective January 1, 2024, and plan to continue expanding our commercial sales operations and scope and complexity of our 10 Table of contents business both domestically and internationally, while maintaining our commercial operations and administrative activities.
Removed
The COVID-19 pandemic has affected global economies, financial markets and the overall environment in which we do business, and the extent to which it may impact our future results of operations and overall financial performance remains uncertain.
Added
Failure to anticipate and respond to competitors’ actions may adversely affect our results of operations and financial condition. It may be difficult for us to implement our strategies for improving growth and optimizing costs.
Removed
Many countries including the United States implemented measures such as quarantine, shelter-in-place, curfew, travel and activity restrictions and similar isolation measures, including government orders and other restrictions on the conduct of business operations. These measures resulted in significant and unpredictable reductions or increases in demand for certain of our offerings.
Added
In conjunction with our new operating model, we have also launched a cost optimization initiative.
Removed
We experienced, and may again experience, a decline in sales activities and customer orders in certain elements of our businesses, including our education & government and healthcare customer groups.
Added
Our businesses rely on sophisticated information systems: (i) to obtain, rapidly process, analyze, and manage data to facilitate the purchase and distribution of thousands of inventory items from numerous distribution centers; (ii) to receive, process, and ship orders on a timely basis; (iii) to account for other product and service transactions with customers; (iv) to manage the accurate billing and collections for thousands of customers; and (v) to process payments to suppliers.
Removed
While many of our customers and suppliers have returned to pre-pandemic operations, uncertainty remains as to how materially COVID-19 will affect our global operations generally if these impacts persist, worsen or re-emerge over an extended period of time.
Added
We continue to make substantial investments in data centers and information systems. To the extent our information systems are not successfully implemented or fail, or there are data center interruptions or outages, our business and results of operations may be adversely affected.
Removed
Moreover, any actions we take in response to any improvements in conditions may also vary widely by geography and by business and will likely be made with incomplete information; pose the risk that such actions may prove to be premature, incorrect or insufficient; and could have a material, adverse impact on our business, operating results, cash flows and/or financial condition.
Added
Our business and results of operations may also be adversely 13 Table of contents affected if a third-party service provider does not perform satisfactorily, or if the information systems are interrupted or damaged by unforeseen events, including due to the actions or inactions of third parties.
Removed
While conditions surrounding the COVID-19 pandemic have improved in many geographies, changes in COVID-19 infection rates regionally, nationally and globally, rapidly changing governmental directives, public health challenges and economic disruption and the duration of the foregoing, the potential impact that COVID-19 could have on the other Risk Factors described in this “Risk Factors” section remains unclear.
Added
Like other companies, the systems and networks we maintain and third-party systems and networks we use have in the past been, and will likely in the future be, subject to or targets of unauthorized or fraudulent access, including physical or electronic break-ins or unauthorized tampering, as well as attempted cyber and other security threats and other attacks such as “denial of service” attacks, phishing, untargeted but sophisticated and automated attacks, ransomware, and other disruptive software.
Removed
We refer you to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for a more detailed discussion of the potential impact of the COVID-19 pandemic and associated economic disruptions, and the actual operational and financial impacts that we have experienced to date .
Added
For example, as artificial intelligence (“AI”) continues to evolve, cyber-attackers could also use AI to develop malicious code and sophisticated phishing attempts. We are also exposed to similar risks resulting from cyber-attacks that are experienced by our third-party service providers.
Removed
The entry into the market by manufacturers in low-cost manufacturing locations also creates increased pricing and competitive pressures, particularly in developing markets, which may impede our goal to grow in those markets. Failure to anticipate and respond to competitors’ actions may adversely affect our results of operations and financial condition.
Added
Security breaches can also occur as a result of intentional or inadvertent actions by our employees, third-party service providers or their personnel or other parties.
Removed
For example, we intend to pursue the following growth strategies: (i) increase integration of our products and services into customers’ workflows; (ii) develop new products and services; (iii) expand in geographies expected to have outsized growth; (iv) continue to enhance our global online platform; (v) increase commercial excellence and operational efficiency to drive margin expansion; and (vi) pursue strategic acquisitions to expand our platform.
Added
A failure, interruption, or breach of our systems, or those of our third-party service providers, as a result of cyber-attacks or information security breaches, could disrupt our business, result in the disclosure or misuse of confidential or proprietary information or personal data, damage our reputation, cause loss of customers or revenue, increase our costs, result in litigation and/or regulatory action, and/or cause other losses, any of which may have a material adverse impact on our business operations and our financial position or results of operations.
Removed
Some of our customers have implemented, or may in the future implement, certain measures described above in an effort to control and reduce costs.
Added
Although we believe that we have robust information security procedures, controls and other safeguards in place, as cyber threats continue to evolve, we will be required to expend additional resources to continue to enhance our information security measures and/or to investigate and remediate information security vulnerabilities.
Removed
We depend on standardized procedures and multiple information systems, including our online customer portal and distribution and enterprise resource systems, for our operations, customer service and quality and safety procedures. Furthermore, we rely on information technology systems to process, transmit, store and protect electronic information, including confidential customer, supplier, employee or other business information.
Added
We are required to comply with increasingly complex and changing data privacy regulations both in the United States and beyond that regulate the collection, use, sharing, and transfer of personal data. Many of these regulations also grant rights to individuals.
Removed
Our information systems are subject to damage or interruption from power outages, computer and telecommunications failures, computer viruses, security breaches, vandalism, catastrophic events, natural disasters, terrorist attacks, hackers and other security issues as well as human error.

… 29 more changes not shown on this page.

Item 2. Properties

Properties — owned and leased real estate

1 edited+2 added−1 removed0 unchanged
Biggest changeLegal proceedings For information regarding legal proceedings and matters, see note 13 to our consolidated financial statements beginning on page F-1 of this report, which information is incorporated into this item by reference.
Biggest changeItem 3. Legal proceedings For information regarding legal proceedings and matters, see note 12 to our consolidated financial statements beginning on page F-1 of this report, which information is incorporated into this item by reference.
Removed
Properties The following table sets forth information about our key properties at December 31, 2022: Principal use Status Americas: Visalia, California Distribution and offices Owned Phillipsburg, New Jersey Manufacturing and offices Owned Paris, Kentucky Manufacturing and distribution Owned Batavia, Illinois Distribution and offices Owned West Henrietta, New York Assembly, distribution and offices Owned Bridgeport, New Jersey Distribution and offices Owned Carpinteria, California Manufacturing, research & technology and offices Leased Solon, Ohio Manufacturing, distribution and offices Leased Rochester, New York Assembly and distribution Leased Suwanee, Georgia Distribution and offices Leased Sterling, Virginia Biostorage, warehousing and offices Leased Leesburg, Virginia Biostorage and warehousing Leased Buford, Georgia Customized kitting and distribution Leased Manati, Puerto Rico Distribution and offices Owned Missouri City, Texas Distribution Leased Denver, Colorado Distribution Leased Mississauga, Ontario, Canada Distribution and offices Leased Radnor, Pennsylvania Corporate headquarters Leased Overland, Missouri Manufacturing and distribution Owned Claremont, California Customized kitting and distribution Leased Mexico City, Mexico Manufacturing and distribution Owned Devens, Massachusetts Manufacturing, distribution and offices Leased Westminster, Massachusetts Distribution Leased Barrington, Illinois Manufacturing Leased Irving, Texas Manufacturing Leased Bakersfield, California Manufacturing and research & technology Leased Twinsburg, Ohio Manufacturing and offices Leased Aurora, Ohio Manufacturing Leased Ecatepec, Mexico Manufacturing and distribution Leased Tualatin, Oregon Distribution Leased Franklin, Massachusetts Distribution Leased Bethlehem, Pennsylvania Manufacturing, distribution and offices Leased Bridgewater, New Jersey Research & technology Leased Chester, Connecticut Manufacturing and distribution Leased Chino, California Equipment design and manufacturing Leased Sparks, Nevada Manufacturing Leased 25 Table of contents Principal use Status Valencia, California Manufacturing Leased Allentown, Pennsylvania Offices Leased Europe: Schwabmuenchen, Germany Manufacturing, distribution and offices Owned Briare, France Manufacturing and distribution Owned Bruchsal, Germany Distribution Owned Gliwice, Poland Manufacturing and distribution Owned Lutterworth, United Kingdom Distribution Leased Leuven, Belgium Distribution and manufacturing Owned Karlskoga, Sweden Distribution Leased Stříbrná Skalice, Czech Republic Custom kitting, distribution and offices Leased Dublin, Ireland Distribution Leased Barcelona, Spain Distribution Leased Debrecen, Hungary Distribution Leased Milano, Italy Offices Leased Darmstadt, Germany Offices Leased Volčja Draga, Slovenia Manufacturing Leased Søborg, Denmark Distribution and offices Leased Chorley, United Kingdom Distribution, service and offices Leased AMEA: Singapore Distribution Leased Perth, Australia Manufacturing, distribution and offices Leased Panoli, India Manufacturing Leased Coimbatore, India Service center Leased Shanghai, China Research & technology and offices Leased Gwanggyo, Korea Laboratory and offices Leased Dehradun, India Manufacturing Leased Mumbai, India Research & technology Leased Chubei City, Taiwan Research & technology and offices Leased Gurgaon, India Offices Leased Changzhou, China Manufacturing Owned Item 3.
Added
Item 2. Properties As of December 31, 2023, the Company had facilities in over 30 countries, including approximately 200 significant administrative, sales, research and development, manufacturing and distribution facilities.
Added
Over 65 of these facilities are located in the United States in over 20 states and over 135 are located 24 Table of contents outside the United States, primarily in Europe and to a lesser extent in AMEA. Refer to the Consolidated Financial Statements included in this Annual Report for additional information with respect to the Company’s lease commitments.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

8 edited+7 added−6 removed0 unchanged
Biggest changeMine safety disclosures Not applicable. 26 Table of contents Information about our Executive Officers The following table sets forth certain information regarding our executive officers at January 26, 2023: Age Position Michael Stubblefield 50 Director, President and Chief Executive Officer Thomas Szlosek 59 Executive Vice President and Chief Financial Officer Gerard Brophy 57 Executive Vice President, Biopharma Production Christophe Couturier 57 Executive Vice President, AMEA Meghan Henson 53 Executive Vice President and Chief Human Resources Officer Sheri Lewis 57 Executive Vice President, Global Supply Chain Justin Miller 56 Executive Vice President, General Counsel and Secretary Frederic Vanderhaegen 55 Executive Vice President, Europe James Bramwell 56 Executive Vice President, Americas Kitty Sahin 53 Executive Vice President, Strategy and Corporate Development Unless indicated to the contrary, the business experience summaries provided below describe positions held by the named individuals during the last five years.
Biggest changeBrent Jones 54 Executive Vice President and Chief Financial Officer Benoit Gourdier 57 Executive Vice President, Bioscience Production Christophe Couturier 58 Executive Vice President, AMEA Brittany Hankamer 53 Executive Vice President and Chief Human Resources Officer Claudius Sokenu 56 Executive Vice President, Chief Legal and Compliance Officer and Corporate Secretary James Bramwell 57 Executive Vice President, Sales and Customer Excellence Kitty Sahin 54 Executive Vice President, Strategy and Corporate Development Randy Stone 57 Executive Vice President, Laboratory Solutions Unless indicated to the contrary, the business experience summaries provided below describe positions held by the named individuals during the last five years.
Michael Stubblefield became our President and Chief Executive Officer in 2014. In addition, Mr. Stubblefield also serves as a Director. Prior to joining Avantor, Mr. Stubblefield was a Senior Expert for the Chemicals Practice of McKinsey & Company, a management consulting firm, from 2013 to 2014.
Michael Stubblefield became our President and Chief Executive Officer in 2014. In addition, Mr. Stubblefield also serves as a Director. Prior to joining Avantor, Mr. Stubblefield was a Senior Expert for the Chemicals Practice of McKinsey & Company, a management consulting firm, from 2013 to 2014. R.
Christophe Couturier is our Executive Vice President, AMEA, a position he has held since April 2021. Prior to his current role, Mr. Couturier served as Executive Vice President, Services, from April 2018 to April 2021. Prior to joining Avantor, Mr.
Christophe Couturier is our Executive Vice President, AMEA, a position he has held since April 2021. Prior to his current role, Mr. Couturier served as Executive Vice President, Services, from April 2018 to April 2021. Prior to joining Avantor, Mr. Couturier served as Chief Executive Officer of Salicornia, LLC, a personal consulting company, from September 2017 to April 2018.
Prior to his current role, he served as Avantor’s Executive Vice President, Strategic Partners from November 2017 to October 2022 and as Senior Vice President, Strategic Partners and Global Export of VWR from March 2016 to November 2017. Kitty Sahin is our Executive Vice President, Strategy and Corporate Development, a position she has held since June 2022.
Prior to his current role, he served as Avantor’s Executive Vice President, Americas from October 2022 to December 2023, and as Executive Vice President, Strategic Partners from November 2017 to October 2022. Kitty Sahin is our Executive Vice President, Strategy and Corporate Development, a position she has held since June 2022. Prior to joining Avantor, Ms.
Thomas Szlosek is our Executive Vice President and Chief Financial Officer, a position he has held since December 2018. Prior to joining Avantor, Mr. Szlosek served as the Senior Vice President and Chief Financial Officer of Honeywell International, a diversified technology and manufacturing company, from April 2014 to August 2018.
Brent Jone s is our Executive Vice President and Chief Financial Officer, a position he has held since August 2023. Prior to joining the Company, Mr.
Prior to joining Avantor, Ms. Sahin served as EVP, Strategy & Business Development for Novanta, a medical, life science and industrial technology company, from September 2017 to June 2022. PART II
Sahin served as EVP, Strategy & Business Development for Novanta, a medical, life science and industrial technology company, from September 2017 to June 2022. Randy Stone is our Executive Vice President, Laboratory Solutions, a position he has held since January 2024. Prior to his current role, Mr.
Couturier served as Chief Executive Officer of Salicornia, LLC, a personal consulting company, from September 2017 to April 2018 and as Chief Financial Officer at OvaScience, a biotechnology company, from September 2016 to July 2017. Meghan Henson is our Executive Vice President and Chief Human Resources Officer, a position she has held since December 2020. Prior to joining Avantor, Ms.
Prior to joining Avantor, Ms. Hankamer was Vice President of Human Resources at Conquest Completion Services, LLC from May 2018 to September 2019. 26 Table of contents Claudius Sokenu is our Executive Vice President, Chief Legal and Compliance Officer and Corporate Secretary, a position he has held since July 2023. Prior to joining Avantor, Mr.
Henson served as Chief Human Resource Officer for XPO Logistics, a transportation and logistics provider where she led the global human resources organization from June 2016 to September 2020. Sheri Lewis is our Executive Vice President, Global Supply Chain, a position she has held since December 2020. Prior to joining Avantor, Ms.
Brittany Hankamer is our Executive Vice President and Chief Human Resources Officer, a position she has held since August 2023. Prior to assuming her current position, Ms. Hankamer served as Avantor’s Senior Vice President of Talent and People Operations from May 2021 to August 2023 and as Vice President, Human Resources from September 2019 to May 2021.
Removed
Gerard Brophy is our Executive Vice President, Biopharma Production, a position he has held since July 2018. Prior to joining Avantor, Dr.
Added
Item 4. Mine safety disclosures Not applicable. 25 Table of contents Information about our Executive Officers The following table sets forth certain information regarding our executive officers at February 9, 2024: Age Position Michael Stubblefield 51 Director, President and Chief Executive Officer R.
Removed
Brophy spent more than 14 years at GE Healthcare, a medical technology and life sciences company, in a variety of leadership positions, most recently as the Head of Cell Therapy, Life Sciences from January 2017 to July 2018, and Chief Technology Officer, Life Sciences from April 2013 to January 2017.
Added
Jones served as Executive Vice President, Chief Financial Officer and Chief Operating Officer of LifeScan Global Corporation, a medical devices company, from March 2023 until July 2023 and as LifeScan’s Chief Financial Officer from February 2020 until March 2023. Prior to that, Mr.
Removed
Lewis spent 11 years at Medtronic, a global healthcare solutions company, in a number of leadership positions, most recently as the Vice President Global 27 Table of contents Operations for the Minimally Invasive Therapies from December 2018 to December 2020, Vice President Global Supply Chain, Distribution and Logistics from March 2017 to December 2018 and Vice President Global Operations from March 2015 to March 2017.
Added
Jones served as Chief Financial Officer of Klöckner Pentaplast Group, a plastics packaging manufacturer, from April 2016 until August 2018. Benoit Gourdier is our Executive Vice President, Bioscience Production, a position he has held since January 2024. Prior to his current role, Mr. Gourdier served as Executive Vice President, Biopharma Production from October 2023 to December 2023.
Removed
Justin Miller is our Executive Vice President, General Counsel and Secretary, a position he has held since December 2017. Prior to joining Avantor, Mr. Miller was Of Counsel at Ballard Spahr LLP from December 2015 to December 2017. Prior to Ballard Spahr, Mr.
Added
Prior to joining Avantor, Mr. Gourdier spent 23 years at Merck KGaA, a chemical company, where he served in a number of leadership positions including, most recently, as Senior Vice President and General Manager, BioReliance Contract Testing Services at Millipore Sigma from September 2017 to September 2023.
Removed
Miller spent 20 years at DuPont, a science company, in a number of leadership positions within the legal group, most recently as Associate General Counsel and Chief Litigation Counsel from 2013 to 2015. Frederic Vanderhaegen is our Executive Vice President, Europe, a position he has held since October 2018. Prior to joining Avantor, Mr.
Added
Sokenu was General Counsel, Corporate Secretary and Chief Administrative Officer at Unisys, a technology company, from May 2022 to June 2023, Senior Vice President and Global Deputy General Counsel at Cognizant, an information technology services and consulting company, from March 2020 to April 2022 and Deputy General Counsel, Global Head of Litigation, Investigations and Ethics & Compliance from May 2017 to October 2018.
Removed
Vanderhaegen served as Vice President and General Manager, EMEA for Ortho Clinical Diagnostics, an in vitro diagnostics company, from June 2015 to October 2018. James Bramwell is our Executive Vice President, Americas, a position he has held since October 2022.
Added
Previously, he was a partner at Shearman & Sterling LLP and Arnold & Porter LLP. James Bramwell is our Executive Vice President, Sales and Customer Excellence, a position he has held since January 2024.
Added
Stone served as Executive Vice President, Proprietary Research Products & Materials from April 2023 to December 2023. Mr. Stone joined Avantor after 16 years at DuPont, a science company, where he served in a number of leadership roles including, most recently as President, Mobility and Materials from March 2016 to November 2022. PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

3 edited+0 added−0 removed4 unchanged
Biggest changeItem 5. Market for registrant’s common equity, related stockholder matters and issuer purchases of equity securities Principal markets for common stock Our common stock is listed on the NYSE under the symbol “AVTR.” Holders of common stock On January 26, 2023, we had 4 holders of record of our common stock.
Biggest changeItem 5. Market for registrant’s common equity, related stockholder matters and issuer purchases of equity securities Principal markets for common stock Our common stock is listed on the NYSE under the symbol “AVTR.” Holders of common stock On February 9, 2024, we had 5 holders of record of our common stock.
For more information, see note 24 to our consolidated financial statements beginning on page F-1 of this report. 28 Table of contents Stock performance graph The following graph compares the return on a $100 investment in our common stock made on May 17, 2019, the day we first began trading on the NYSE, with a $100 investment also made on May 17, 2019 in the S&P 500 Index and the S&P 500 Health Care Index.
For more information, see note 24 to our consolidated financial statements beginning on page F-1 of this report. 27 Table of contents Stock performance graph The following graph compares the return on a $100 investment in our common stock made on May 17, 2019, the day we first began trading on the NYSE, with a $100 investment also made on May 17, 2019 in the S&P 500 Index and the S&P 500 Health Care Index.
The stock performance shown below is not necessarily indicative of future performance. 29 Table of contents Item 6. [Reserved]
The stock performance shown below is not necessarily indicative of future performance. 28 Table of contents Item 6. [Reserved]

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

61 edited+16 added−18 removed45 unchanged
Biggest changeThese increases were partially offset by higher interest expense as a result of incremental debt issued to finance the acquisitions completed in 2021, increased interest rates, and the absence of a one-time disgorgement penalty payment that we received in 2021. 35 Adjusted EBITDA For reconciliations of Adjusted EBITDA to net income or loss, see “Reconciliations of non-GAAP measures.” (dollars in millions) Year ended December 31, Change 2022 2021 Adjusted EBITDA $ 1,570.7 $ 1,458.6 $ 112.1 Adjusted EBITDA margin 20.9 % 19.8 % 110 bps Adjusted EBITDA: Americas $ 1,077.3 $ 978.4 $ 98.9 Europe 524.1 538.5 (14.4) AMEA 141.5 113.9 27.6 Corporate (172.2) (172.2) — Total $ 1,570.7 $ 1,458.6 $ 112.1 Adjusted EBITDA increased $112.1 million or 7.7%, which included an unfavorable foreign currency translation impact of $60.5 million or 4.1% and $99.5 million or 6.8% from M&A.
Biggest changeNet income (in millions) Year ended December 31, Change 2023 2022 Operating income $ 696.4 $ 1,130.2 $ (433.8) Interest expense, net (284.8) (265.8) (19.0) Loss on extinguishment of debt (6.9) (12.5) 5.6 Other income (expense), net 5.8 (0.8) 6.6 Income tax expense (89.4) (164.6) 75.2 Net income $ 321.1 $ 686.5 $ (365.4) Net income decreased primarily due to lower operating income, as previously discussed, as well as higher interest expense from rising interest rates on our variable-rate term loans, partially offset by lower income tax expense due to lower income before income taxes. 34 Adjusted EBITDA For reconciliations of Adjusted EBITDA to net income, see “Reconciliations of non-GAAP measures.” (dollars in millions) Year ended December 31, Change 2023 2022 Adjusted EBITDA $ 1,309.1 $ 1,570.7 $ (261.6) Adjusted EBITDA margin 18.8 % 20.9 % (210) bps Adjusted EBITDA: Americas $ 912.6 $ 1,077.3 $ (164.7) Europe 449.5 524.1 (74.6) AMEA 125.3 141.5 (16.2) Corporate (178.3) (172.2) (6.1) Total $ 1,309.1 $ 1,570.7 $ (261.6) Adjusted EBITDA decreased $261.6 million or 16.7%, which included a favorable foreign currency translation impact of $5.3 million or 0.3%.
Ritter GmbH is focused on supplying high-quality liquid handling consumables used in a variety of molecular screening and diagnostic applications and as part of drug discovery and clinical trial testing in pharma and biotech applications and cartridges for sealants, adhesives and inks that are used in a variety of industrial applications.
Ritter is focused on supplying high-quality liquid handling consumables used in a variety of molecular screening and diagnostic applications and as part of drug discovery and clinical trial testing in pharma and biotech applications and cartridges for sealants, adhesives and inks that are used in a variety of industrial applications.
For the variable interest rates and principal amounts used, see note 14 to our consolidated financial statements beginning on page F-1 of this report. (2) Our senior secured credit facilities would require us to accelerate our principal repayments should we generate excess cash flows, as defined, in future periods.
For the variable interest rates and principal amounts used, see note 13 to our consolidated financial statements beginning on page F-1 of this report. (2) Our senior secured credit facilities would require us to accelerate our principal repayments should we generate excess cash flows, as defined, in future periods.
These measures are discussed in the section entitled “Results of operations”; • Organic net sales growth , which is a non-GAAP measure discussed in the section entitled “Results of operations.” Organic net sales growth eliminates from our reported net sales the impacts of earnings from any acquired or disposed businesses and changes in foreign currency exchange rates.
These measures are discussed in the section entitled “Results of operations”; • Organic net sales growth (decline) , which is a non-GAAP measure discussed in the section entitled “Results of operations.” Organic net sales growth (decline) eliminates from our reported net sales change the impacts of earnings from any acquired or disposed businesses and changes in foreign currency exchange rates.
To calculate payments for principal and interest, we assumed that variable interest rates, foreign currency exchange rates and outstanding borrowings under credit facilities were unchanged from December 31, 2022 through maturity. Further, we have not considered any interest obligation on our receivables facility.
To calculate payments for principal and interest, we assumed that variable interest rates, foreign currency exchange rates and outstanding borrowings under credit facilities were unchanged from December 31, 2023 through maturity. Further, we have not considered any interest obligation on our receivables facility.
As our first lien net leverage ratio was below 3.75:1.00 at December 31, 2022, no additional prepayments were required and no such prepayments have become due since the inception of the credit facilities.
As our first lien net leverage ratio was below 3.75:1.00 at December 31, 2023, no additional prepayments were required and no such prepayments have become due since the inception of the credit facilities.
Weighing the different value indications involves judgment about their relative usefulness and comparability to the reporting unit. We did not record any impairment charges as a result of our October 1, 2022 impairment testing.
Weighing the different value indications involves judgment about their relative usefulness and comparability to the reporting unit. We did not record any impairment charges as a result of our October 1, 2023 impairment testing.
Consists of typical non-cash charges including depreciation and amortization, stock based compensation expense, deferred income tax expense and others. 2. Includes changes to our accounts receivable, inventory, contract assets and accounts payable.
Consists of non-cash charges including depreciation and amortization, impairment charges, stock based compensation expense, deferred income tax expense and others. 2. Includes changes to our accounts receivable, inventory, contract assets and accounts payable.
Changes in tax laws, regulations, agreements and treaties, currency exchange restrictions or our level of operations or profitability in each taxing jurisdiction could have an impact upon the amount of current and deferred tax balances and hence our net income. 43 Table of contents We file tax returns in each tax jurisdiction that requires us to do so.
Changes in tax laws, regulations, agreements and treaties, currency exchange restrictions or our level of operations or profitability in each taxing jurisdiction could have an impact upon the amount of current and deferred tax balances and hence our net income. We file tax returns in each tax jurisdiction that requires us to do so.
We are required to make a prepayment of 50% of our excess cash flows if our first lien net leverage ratio, as defined in our credit agreement, exceeds 4.50:1.00, a prepayment of 25% of our excess cash flows if our first lien net leverage 40 Table of contents ratio is less than or equal to 4.50:1.00 but greater than 3.75:1.00, and no prepayment if our first lien net leverage ratio is less than or equal to 3.75:1.00.
We are required to make a prepayment of 50% of our excess cash flows if our first lien net leverage ratio, as defined in our credit agreement, exceeds 4.50:1.00, a prepayment of 25% of our excess cash flows if our first lien net leverage ratio is less than or equal to 4.50:1.00 but greater than 3.75:1.00, and no prepayment if our first lien net leverage ratio is less than or equal to 3.75:1.00.
We calculate expense for some of those awards using fair value estimates based on unobservable inputs. Additionally, some of those awards contain performance or market conditions. We assess the probability of achieving those performance conditions, and in cases where partial or exceptional performance affects the size of the award, we also estimate the projected achievement level.
We calculate expense for some of those awards using fair value estimates based on unobservable inputs. Additionally, some of those awards contain performance or market conditions. We assess the probability of achieving those performance conditions, and in cases where partial or exceptional performance affects the size of the award, we also estimate the projected 42 Table of contents achievement level.
Liquidity and capital resources We fund short-term cash requirements primarily from operating cash flows, while most of our long-term financing is from indebtedness, which we use to finance transactions outside of our normal operations. Our most significant contractual obligations are scheduled principal and interest payments for indebtedness.
Liquidity and capital resources We fund short-term cash requirements primarily from operating cash flows, while most of our long-term financing is from indebtedness, which we use to finance transactions outside of our normal operations. 36 Table of contents Our most significant contractual obligations are scheduled principal and interest payments for indebtedness.
Rather, these measurements should be considered as an additional way of viewing aspects of our operations that provide a more complete understanding of our business. The key indicators that we monitor are as follows: • Net sales, gross margin, operating income and net income or loss .
Rather, these measurements should be considered as an additional way of viewing aspects of our operations that provide a more complete understanding of our business. 30 Table of contents The key indicators that we monitor are as follows: • Net sales, gross margin, operating income and net income or loss .
We are investing in a differentiated innovation model We are engaging with our customers early in their product development cycles to advance their programs from research and discovery through development and commercialization. These projects include enhancing product purity and performance characteristics, improving product packaging and streamlining workflows.
We continue to invest in a differentiated innovation model We are engaging with our customers early in their product development cycles to advance their programs from research and discovery through development and commercialization. These projects include enhancing product purity and performance characteristics, improving product packaging and streamlining workflows.
Changes in working capital may be a source or a use of cash depending on our operations during the period. 37 Table of contents We expect to fund our short-term and long-term capital needs with cash generated by operations and availability under our credit facilities.
Changes in working capital may be a source or a use of cash depending on our operations during the period. We expect to fund our short-term and long-term capital needs with cash generated by operations and availability under our credit facilities.
Amounts recorded in a business combination may change during the measurement period, which is a period not to exceed one year from the date of acquisitions, as additional information about conditions existing at the acquisition date becomes available. 44 Table of contents
Amounts recorded in a business combination may change during the measurement period, which is a period not to exceed one year from the date of acquisitions, as additional information about conditions existing at the acquisition date becomes available.
The fair value of our awards would have differed had we selected different peer companies or used a different technique to estimate volatility. Increasing our expected volatility assumption by 5 percentage points for all stock options at the date of grant would have increased our 2022 stock-based compensation expense by $2.1 million.
The fair value of our awards would have differed had we selected different peer companies or used a different technique to estimate volatility. Increasing our expected volatility assumption by 5 percentage points for all stock options at the date of grant would have increased our 2023 stock-based compensation expense by $1.6 million.
Specific risks for these critical accounting policies are described in the following sections. For all of these policies, we caution that future events rarely develop exactly as forecasted, and such estimates naturally require adjustment.
Specific risks for these critical accounting policies are described in the following sections. For all of these policies, we 40 Table of contents caution that future events rarely develop exactly as forecasted, and such estimates naturally require adjustment.
Typical costs included in this caption are employee severance, site-related exit costs, and contract termination costs. 5. As described in note 19 to our consolidated financial statements beginning on F-1 of this report.
Typical costs included in this caption are employee severance, site-related exit costs, and contract termination costs. 5. As described in note 18 to our consolidated financial statements beginning on F-1 of this report. 6.
Developing future cash flows in applying the income approach requires us to evaluate our intermediate to longer-term strategies, including, but not limited to, estimates about net sales growth, operating margins, capital requirements, 42 Table of contents inflation and working capital management.
Developing future cash flows in applying the income approach requires us to evaluate our intermediate to longer-term strategies, including, but not limited to, estimates about net sales growth, operating margins, capital requirements, inflation and working capital management.
Determination of taxable income in any jurisdiction requires the interpretation of the related tax laws and regulations and the use of estimates and assumptions regarding significant future events, such as the amount, timing and character of deductions and the sources and character of income and tax credits.
Determination of taxable income in any jurisdiction requires the interpretation of the related tax laws and regulations, including transfer pricing guidelines, and the use of estimates and assumptions regarding significant future events, such as the amount, timing and character of deductions and the sources and character of income and tax credits.
(5) Represents our transition tax obligation due over eight years to transition to the modified territorial tax system under new U.S. income tax legislation. 41 Table of contents Critical accounting policies and estimates The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the amounts reported throughout the financial statements.
(5) Represents our transition tax obligation due over eight years to transition to the modified territorial tax system under U.S. income tax legislation issued in 2017. Critical accounting policies and estimates The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the amounts reported throughout the financial statements.
Testing goodwill and other intangible assets for impairment We carry significant amounts of goodwill and other intangible assets on our consolidated balance sheet. At December 31, 2022, the combined carrying value of goodwill and other intangible assets, net of accumulated amortization and impairment charges, was $9,785.9 million or 73% of our total assets.
Testing goodwill and other intangible assets for impairment We carry significant amounts of goodwill and other intangible assets on our consolidated balance sheet. At December 31, 2023, the combined carrying value of goodwill and other intangible assets, net of accumulated amortization and impairment charges, was $9,492.0 million or 73% of our total assets.
For those income tax positions where it is not more likely than not that a tax benefit will be sustained, no tax benefit has been recognized in the financial statements. Our reserve for uncertain tax positions was $51.8 million at December 31, 2022, exclusive of penalties and interest.
For those income tax positions where it is not more likely than not that a tax benefit will be sustained, no tax benefit has been recognized in the financial statements. Our reserve for uncertain tax positions was $106.9 million at December 31, 2023, exclusive of penalties and interest.
If it becomes more likely than not that a deferred tax asset will be realized, we reverse the related valuation allowance and recognize an income tax benefit for the amount of the reversal.
We provide a valuation allowance for deferred tax assets that we believe will more likely than not go unutilized. If it becomes more likely than not that a deferred tax asset will be realized, we reverse the related valuation allowance and recognize an income tax benefit for the amount of the reversal.
We completed acquisitions to further enhance our business model We completed the acquisitions of Masterflex, Ritter GmbH, and RIM Bio in 2021. Masterflex is a leading global manufacturer of peristaltic pumps and aseptic single-use fluid transfer technologies.
Our results are impacted by our recent acquisitions to further enhance our business model We completed the acquisitions of Masterflex, Ritter, and RIM Bio in 2021. Masterflex is a leading global manufacturer of peristaltic pumps and aseptic single-use fluid transfer technologies.
We have entered into a receivables facility and a revolving credit facility that provide us access to cash to fund short-term business needs. See the section entitled “Liquidity” for additional information. Our indebtedness restricts us from paying dividends to common stockholders.
Our credit facilities provide us access to up to $1,310.0 million of borrowing capacity. We have entered into a receivables facility and a revolving credit facility that provide us access to cash to fund short-term business needs. See the section entitled “Liquidity” for additional information. Our indebtedness restricts us from paying dividends to common stockholders.
Year ended December 31, 2020 A discussion and analysis covering the year ended December 31, 2020 is included in our 2021 10-K. 36 Table of contents Reconciliations of non-GAAP measures The following table presents the reconciliation of net income or loss to non-GAAP measures: (in millions) Year ended December 31, 2022 2021 2020 Net income $ 686.5 $ 572.6 $ 116.6 Interest expense 265.8 217.4 307.6 Income tax expense (benefit) 164.6 180.4 (54.3) Depreciation and amortization 405.5 379.2 395.4 Loss on extinguishment of debt 12.5 12.4 346.8 Net foreign currency loss (gain) from financing activities 7.0 1.3 (0.7) Other stock-based compensation (benefit) expense (3.3) 3.0 1.3 Acquisition-related expenses 1 — 77.8 — Integration-related expenses 2 19.2 15.9 17.1 Purchase accounting adjustments 3 9.4 6.3 — Restructuring and severance charges 4 3.5 5.3 11.8 Receipt of disgorgement penalty 5 — (13.0) — Adjusted EBITDA $ 1,570.7 $ 1,458.6 $ 1,141.6 1.
Year ended December 31, 2021 A discussion and analysis covering the year ended December 31, 2021 is included in our 2022 10-K. 35 Table of contents Reconciliations of non-GAAP measures The following table presents the reconciliation of net income or loss to Adjusted EBITDA: (in millions) Year ended December 31, 2023 2022 2021 Net income $ 321.1 $ 686.5 $ 572.6 Interest expense, net 284.8 265.8 217.4 Income tax expense 89.4 164.6 180.4 Depreciation and amortization 402.3 405.5 379.2 Loss on extinguishment of debt 6.9 12.5 12.4 Net foreign currency (gain) loss from financing activities (3.1) 7.0 1.3 Other stock-based compensation expense (benefit) 0.3 (3.3) 3.0 Acquisition-related expenses 1 — — 77.8 Integration-related expenses 2 7.6 19.2 15.9 Purchase accounting adjustments 3 — 9.4 6.3 Restructuring and severance charges 4 26.5 3.5 5.3 Receipt of disgorgement penalty 5 — — (13.0) Reserve for certain legal matters 6 7.1 — — Impairment charges 7 160.8 — — Transformation expenses 8 5.4 — — Adjusted EBITDA $ 1,309.1 $ 1,570.7 $ 1,458.6 1.
Represents the non-cash reduction of contingent consideration related to the Ritter acquisition and the amortization of the purchase accounting adjustment to record inventory acquired from Masterflex and Ritter at fair value. 4. Reflects the incremental expenses incurred in the period related to initiatives to increase profitability and productivity.
Integration expenses are incurred over a pre-defined integration period specific to each acquisition. 3. Represents the non-cash reduction of contingent consideration related to the Ritter acquisition and the amortization of the purchase accounting adjustment to record Masterflex and Ritter inventory at fair value. 4. Reflects the incremental expenses incurred in the period related to initiatives to increase profitability and productivity.
At December 31, 2022, our valuation allowance on deferred tax assets was $179.7 million, $155.0 million of which relates to foreign net operating loss carry forwards that are not expected to be realized.
At December 31, 2023, our valuation allowance on deferred tax assets was $206.1 million, $159.6 million of which relates to foreign net operating loss carry forwards that are not expected to be realized.
Represents legal, accounting, investment banking and consulting fees incurred related to the acquisition of acquired companies. 2. Represents non-recurring direct costs incurred with third parties to integrate acquired companies. These expenses represent incremental costs and are unrelated to normal operations of our business. Integration expenses are incurred over a pre-defined integration period specific to each acquisition. 3.
Represents legal, accounting, investment banking and consulting fees incurred related to the acquisition of acquired companies. 2. Represents non-recurring direct costs incurred with third parties and the accrual of a long-term retention incentive to integrate acquired companies. These expenses represent incremental costs and are unrelated to normal operations of our business.
We also have obligations to make payments under operating leases, to purchase certain products and services and to fund defined benefit plan obligations primarily outside of the United States. In addition to contractual obligations, we use cash to fund capital expenditures, taxes, and dividends on our MCPS for which the last payment was made in May 2022.
We also have obligations to make payments under operating leases, to purchase certain products and services and to fund defined benefit plan obligations primarily outside of the United States. In addition to contractual obligations, we use cash to fund capital expenditures and taxes.
We lowered our weighted average annual cost of interest and simplified our capital structure In 2022, we amended our receivables facility to increase its funding limit up to $400.0 million and extended the term to October 27, 2025.
In 2022, we amended our receivables facility to increase its funding limit up to $400.0 million and extended the term to October 27, 2025.
See “Cautionary factors regarding forward-looking statements.” Overview For the fiscal year ended December 31, 2022, we recorded net sales of $7,512.4 million, net income of $686.5 million and Adjusted EBITDA of $1,570.7 million. We also generated net sales growth of 1.7% which included 2.4% organic growth compared to the same period in 2021.
See “Cautionary factors regarding forward-looking statements.” Overview For the fiscal year ended December 31, 2023, we recorded net sales of $6,967.2 million, net income of $321.1 million and Adjusted EBITDA of $1,309.1 million. Net sales declined 7.3% which included 7.8% organic decrease compared to the same period in 2022.
Additional information on 33 organic net sales growth by end market (with approximate percentage of total organic net sales for the region) is as follows: • Biopharma (55%) — Sales grew low single-digits, primarily due to growth in sales of proprietary materials in biopharma production driven by our chemicals and serum product offerings, partially offset by reduced sales of COVID-19 related offerings for vaccines, PPE and diagnostic testing. • Healthcare (10%) — Sales were flat as growth in our medical grade silicone business was offset by declines in COVID-19 related offerings for diagnostic testing. • Education and government (15%) — Sales declined mid single-digits primarily driven by softness in lab consumables sales in the education end market and COVID-19 related headwinds in the government end market. • Advanced technologies & applied materials (20%) — Sales increased high single-digits driven by strong sales to our semiconductor and electronic device customers.
Additional information on organic net sales by end market (with approximate percentage of total organic net sales for the region) is as follows: • Biopharma (55%) — Sales declined double-digits, primarily due to the roll-off of COVID-19 revenues for vaccines and diagnostic testing, in addition to reduced customer demand and destocking of lab products and single-use solutions. • Healthcare (10%) — Sales declined low single-digits as growth in our medical grade silicone business was offset by declines in COVID-19 related offerings for diagnostic testing. 32 • Education and government (15%) — Sales increased low single-digits primarily due to continued strong growth to higher education customers, partially offset by weaker demand from K-12 and government customers. • Advanced technologies & applied materials (20%) — Sales decreased double-digits driven by softness in the demand for our semiconductor and electronic device offerings.
Additional information on organic net sales growth by end market (with approximate percentage of total organic net sales for the region) is as follows: • Biopharma (50%) — Sales grew low single-digits driven by double-digit growth in our production chemicals and single-use offerings, partially offset by lower sales of COVID-19 related offerings for vaccines, PPE and diagnostic testing. • Healthcare (10%) — Sales declined low single-digits as growth in our medical grade silicone business was more than offset by declines in COVID-19 related offerings for diagnostic testing. • Education & government (10%) — Sales declined mid single-digits driven by decreased sales of lab chemicals and consumables in the education end market and from COVID-19 related headwinds in the government end market. ▪ Advanced technologies & applied materials (30%) — We experienced low single-digit growth driven by increased sales of proprietary materials and consumables, and equipment and instrumentation.
Additional information on organic net sales by end market (with approximate percentage of total organic net sales for the region) is as follows: • Biopharma (50%) — Sales declined high single-digits, primarily due to the roll-off of COVID-19 revenues for vaccines in addition to reduced customer demand and destocking of lab consumables and single-use solutions. • Healthcare (10%) —Sales declined double-digits primarily due to reduced customer demand and destocking of lab consumables along with the roll-off of COVID-19 revenues for diagnostic testing. • Education & government (10%) —Sales declined low single-digits driven by COVID-19 related headwinds in the government end market. ▪ Advanced technologies & applied materials (30%) — We experienced low single-digit growth driven by increased sales of proprietary materials and consumables, and equipment and instrumentation.
Liquidity The following table presents our primary sources of liquidity: (in millions) December 31, 2022 Receivables facility Revolving credit facility Total Unused availability under credit facilities: Capacity $ 357.7 $ 515.0 $ 872.7 Undrawn letters of credit outstanding (13.7) — (13.7) Outstanding borrowings (327.2) — (327.2) Unused availability $ 16.8 $ 515.0 531.8 Cash and cash equivalents 372.9 Total liquidity $ 904.7 Our availability under our receivables facility depends upon maintaining a sufficient borrowing base of eligible accounts receivable.
Liquidity The following table presents our primary sources of liquidity: (in millions) December 31, 2023 Receivables facility Revolving credit facility Total Unused availability under credit facilities: Capacity $ 335.0 $ 975.0 $ 1,310.0 Undrawn letters of credit outstanding (15.4) — (15.4) Outstanding borrowings (221.0) — (221.0) Unused availability $ 98.6 $ 975.0 1,073.6 Cash and cash equivalents 262.9 Total liquidity $ 1,336.5 Our availability under our receivables facility depends upon maintaining a sufficient borrowing base of eligible accounts receivable.
We also provide discussion of net sales and Adjusted EBITDA by geographic 32 Table of contents segment based on customer location: the Americas, Europe and AMEA. Corporate costs are managed on a standalone basis and not allocated to segments.
We also provide discussion of net sales and Adjusted EBITDA by geographic segment based on customer location: the Americas, Europe and AMEA.
At December 31, 2022 and 2021, substantially all of Avantor, Inc.’s net assets were subject to those restrictions. Our senior secured credit facilities require or may require us to make certain principal repayments prior to maturity We are required to make quarterly payments on our senior secured credit facilities, with the balance due on the maturity date.
Our senior secured credit facilities require or may require us to make certain principal repayments prior to maturity We are required to make quarterly payments on our senior secured credit facilities, with the balance due on the maturity date.
Estimating valuation allowances on deferred tax assets We are required to estimate the degree to which tax assets and loss carryforwards will result in a future income tax benefit, based on our expectations of future profitability by tax jurisdiction. We provide a valuation allowance for deferred tax assets that we believe will more likely than not go unutilized.
Each reporting unit had a fair value that was in excess of its carrying value, and our indefinite-lived intangible assets did not show any indications that their fair value was more likely than not below their carrying value. 41 Table of contents Estimating valuation allowances on deferred tax assets We are required to estimate the degree to which tax assets and loss carryforwards will result in a future income tax benefit, based on our expectations of future profitability by tax jurisdiction.
The movement of the U.S. dollar against those functional currencies, particularly the Euro, has caused significant variability in our results and may continue to do so in the future.
The movement of the U.S. dollar against those functional currencies, particularly the Euro, has caused significant variability in our results and may continue to do so in the future. See Item 7A, “Quantitative and qualitative disclosures about market risk.” Key indicators of performance and financial condition To evaluate our performance, we monitor a number of key indicators.
When applicable, we may not have total borrowings in excess of a pro forma net leverage ratio, as defined. This covenant was not applicable at December 31, 2022, and our historical net leverage has been below the covenant requirement.
When applicable, we may not have total borrowings in excess of a pro forma net leverage ratio, as defined.
Ritter’s revenues declined in 2022 compared to prior expectations, primarily from reduced customer demand for medical fluid handling tips due to a decrease in COVID-19 testing. We are taking measures to replace these revenues; however, if these measures are not successful, we may be required to impair Ritter’s long-lived assets.
Ritter’s revenues declined in 2023 compared to prior expectations, primarily from reduced customer demand for medical fluid handling tips due to a decrease in COVID-19 testing.
Additional information on organic net sales growth by end market (with approximate percentage of total organic net sales for the region) is as follows: • Biopharma (50%) — Sales declined by mid single-digits as double-digit growth in process ingredients, chromatography resins, excipients and single use solutions was offset by lower sales of COVID-19 related offerings for vaccines and PPE and lower lab consumable sales. 34 • Advanced technologies & applied materials (40%) — Sales grew double-digits primarily driven by strong demand for our proprietary offerings into the semiconductor industry.
Additional information on organic net sales by end market (with approximate percentage of total organic net sales for the region) is as follows: • Biopharma (45%) — Sales increased low single-digits due to increased demand for our bioprocessing customers. • Advanced technologies & applied materials (50%) — Sales declined double-digits primarily driven by softness in our proprietary offerings into the semiconductor industry.
In Europe, net sales decreased $160.8 million or 6.0%, which included $276.4 million or 10.3% of unfavorable foreign currency impact and $92.0 million or 3.4% of M&A impact. Organic net sales growth was $23.6 million or 0.9% (5.5% excluding COVID-19 headwinds).
In Europe, net sales decreased $96.1 million or 3.8%, which included $50.5 million or 2.0% of favorable foreign currency translation impact. Organic net sales decreased $146.6 million or 5.8% (decline of 3.9% excluding COVID-19 headwinds).
The acquisition of VWR was partially funded by the issuance of debt by Avantor Inc.’s wholly-owned subsidiary, Avantor Funding, Inc. Certain of those debt agreements prevent Avantor Funding, Inc. from paying dividends or making other payments to Avantor, Inc., subject to limited exceptions.
Certain of the debt agreements entered into by our wholly-owned subsidiary, Avantor Funding, Inc., prevent it from paying dividends or making other payments to Avantor, Inc., subject to limited exceptions. At December 31, 2023 and 2022, substantially all of Avantor, Inc.’s net assets were subject to those restrictions.
In the Americas, net sales increased $233.8 million or 5.5%, which included $14.1 million or 0.3% of unfavorable foreign currency impact and $133.1 million or 3.1% of M&A impact. Organic growth in net sales was $114.8 million or 2.7% (6.1% excluding COVID-19 headwinds).
In AMEA, net sales decreased $49.5 million or 9.4%, which included $7.1 million or 1.3% of unfavorable foreign currency translation impact. Organic net sales decreased $42.4 million or 8.1% (decline of 4.2% excluding COVID-19 headwinds).
At December 31, 2022, $349.4 million or 94% of our cash and cash equivalents was held by our non-U.S. subsidiaries and may be subject to certain taxes upon repatriation, primarily where foreign withholding taxes apply. 38 Table of contents Historical cash flows The following table presents a summary of cash provided by (used in) various activities: (in millions) Year ended December 31, Change 2022 2021 Operating activities: Net income $ 686.5 $ 572.6 $ 113.9 Non-cash items 1 485.4 492.5 (7.1) Working capital changes 2 (161.6) (175.5) 13.9 All other (166.7) 64.0 (230.7) Total $ 843.6 $ 953.6 $ (110.0) Investing activities (109.6) (4,121.7) 4,012.1 Cash paid for acquisitions, net of cash acquired (20.2) (4,014.1) 3,993.9 Capital expenditures (133.4) (111.1) (22.3) Cash proceeds from settlement of cross currency swap 42.5 — 42.5 Financing activities (648.7) 3,219.2 (3,867.9) 1.
Our U.S. business has significant liquidity via our undrawn working capital facilities and therefore management has been comfortable operating with minimal cash balances in the U.S. 37 Table of contents Historical cash flows The following table presents a summary of cash provided by (used in) various activities: (in millions) Year ended December 31, Change 2023 2022 Operating activities: Net income $ 321.1 $ 686.5 $ (365.4) Non-cash items 1 533.0 485.4 47.6 Working capital changes 2 (21.3) (161.6) 140.3 All other 37.2 (166.7) 203.9 Total $ 870.0 $ 843.6 $ 26.4 Investing activities: (143.7) (109.6) (34.1) Cash paid for acquisitions, net of cash acquired — (20.2) 20.2 Capital expenditures (146.4) (133.4) (13.0) Cash proceeds from settlement of cross currency swap — 42.5 (42.5) Financing activities (843.7) (648.7) (195.0) 1.
In 2022, we used $648.7 million of cash primarily to pay down our term loans. 39 Table of contents Free cash flow (in millions) Year ended December 31, Change 2022 2021 Net cash provided by operating activities $ 843.6 $ 953.6 $ (110.0) Acquisition-related expenses paid — 77.8 (77.8) Capital expenditures (133.4) (111.1) (22.3) Free cash flow $ 710.2 $ 920.3 $ (210.1) Free cash flow was $210.1 million lower in 2022 due to changes in cash flows from operating activities noted above, as well as an increase in capital spending in 2022, principally reflecting growth-related expansions in our global supply chain.
Free cash flow (in millions) Year ended December 31, Change 2023 2022 Net cash provided by operating activities $ 870.0 $ 843.6 $ 26.4 Capital expenditures (146.4) (133.4) (13.0) Free cash flow $ 723.6 $ 710.2 $ 13.4 Free cash flow was $13.4 million higher in 2023 due to changes in cash flows from operating activities noted above, partially offset by an increase in capital spending in 2023, principally reflecting growth-related expansions in our global supply chain. 38 Table of contents A discussion and analysis of historical cash flows covering the year ended December 31, 2021 is included in the 2022 Form 10-K.
Our results are being impacted by the ongoing global coronavirus outbreak The COVID-19 pandemic continues to effect global economies, financial markets and the overall environment in which we do business as further described in Part I, Item 1A, “Risk factors.” The outbreak continued to impact the full year results of our three segments, as described further in the “Results of operations” section.
Our results are being impacted by the transition from the global coronavirus outbreak Customer demand and required inventory levels continue to normalize in the transition from the COVID-19 pandemic. The transition from the outbreak continued to impact the full year results of our three segments, as described further in the “Results of operations” section.
Organic growth was $175.2 million or 2.4% (6.0% when excluding the impact of sales of COVID-19-related products in both periods, referred to herein as COVID-19 related headwinds or tailwinds) and was primarily due to growth in our proprietary products and services.
Organic net sales decreased by $586.4 million or 7.8% (decline of 5.2% when excluding the impact of sales of COVID-19-related products in both periods, referred to herein as COVID-19 related headwinds or tailwinds). In the Americas, net sales decreased $399.6 million or 8.9%. There was no material foreign currency translation impact to net sales.
Contractual obligations The following table presents our contractual obligations at December 31, 2022: (in millions) Payments due by period Total Short-Term Long-Term Debt: Principal (1)(2) $ 6,349.1 $ 364.2 $ 5,984.9 Interest (1) 1,370.9 273.1 1,097.8 Operating leases 136.1 39.1 97.0 Purchase obligations (3) 552.2 114.9 437.3 Other liabilities: Underfunded defined benefit plans (4) 84.2 6.3 77.9 Transition tax payments (5) 46.4 11.6 34.8 Other 5.0 1.1 3.9 Total $ 8,543.9 $ 810.3 $ 7,733.6 (1) Includes finance lease liabilities.
This covenant was not applicable at December 31, 2023, and our historical net leverage has been below the covenant requirement. 39 Table of contents Contractual obligations The following table presents our contractual obligations at December 31, 2023: (in millions) Payments due by period Total Short-Term Long-Term Debt: Principal (1)(2) $ 5,580.0 $ 259.9 $ 5,320.1 Interest (1) 1,106.5 263.6 842.9 Operating leases 144.1 40.5 103.6 Purchase obligations (3) 459.8 130.2 329.6 Other liabilities: Underfunded defined benefit plans (4) 98.3 7.2 91.1 Transition tax payments (5) 34.8 15.5 19.3 Other 5.0 1.2 3.8 Total $ 7,428.5 $ 718.1 $ 6,710.4 (1) Includes finance lease liabilities.
We have been impacted by supply chain constraints and inflationary pressures We have experienced challenges in sourcing certain products and raw materials as a result of global supply chain disruptions and have experienced inflationary pressures across all of our cost categories. 30 Table of contents While we have implemented pricing and productivity measures to combat these pressures, they may continue to adversely impact our results.
While we have 29 Table of contents implemented pricing and productivity measures to combat these pressures, they may continue to adversely impact our results.
A discussion and analysis of historical cash flows covering the year ended December 31, 2020 is included in the 2021 10-K. Indebtedness A significant portion of our long-term financing is from indebtedness. The purpose of this section is to disclose how certain features of our indebtedness influence our liquidity and capital resources.
Indebtedness A significant portion of our long-term financing is from indebtedness. The purpose of this section is to disclose how certain features of our indebtedness influence our liquidity and capital resources. Additional detail about the terms of our indebtedness may be found in note 13 to our consolidated financial statements beginning on page F-1 of this report.
Net sales (in millions) Year ended December 31, Reconciliation of net sales growth to organic net sales growth Net sales growth Foreign currency impact M&A impact Organic net sales growth 2022 2021 Americas $ 4,471.2 $ 4,237.4 $ 233.8 $ (14.1) $ 133.1 $ 114.8 Europe 2,516.5 2,677.3 (160.8) (276.4) 92.0 23.6 AMEA 524.7 471.4 53.3 (26.6) 43.1 36.8 Total $ 7,512.4 $ 7,386.1 $ 126.3 $ (317.1) $ 268.2 $ 175.2 Net sales increased $126.3 million or 1.7%, which included $317.1 million or 4.3% of unfavorable foreign currency impact and $268.2 million or 3.6% of M&A impac t .
Net sales (in millions) Year ended December 31, Reconciliation of net sales growth (decline) to organic net sales growth (decline) Net sales growth (decline) Foreign currency impact Organic net sales growth (decline) 2023 2022 Americas $ 4,071.6 $ 4,471.2 $ (399.6) $ (2.2) $ (397.4) Europe 2,420.4 2,516.5 (96.1) 50.5 (146.6) AMEA 475.2 524.7 (49.5) (7.1) (42.4) Total $ 6,967.2 $ 7,512.4 $ (545.2) $ 41.2 $ (586.4) Net sales decreased $545.2 million or 7.3%, which included $41.2 million or 0.5% of favorable foreign currency translation impact.
Years ended December 31, 2022 and 2021 Executive summary (dollars in millions) Year ended December 31, Change 2022 2021 Net sales $ 7,512.4 $ 7,386.1 $ 126.3 Gross margin 34.6 % 33.9 % 70 bps Operating income $ 1,130.2 $ 972.2 $ 158.0 Net income 686.5 572.6 113.9 Adjusted EBITDA 1,570.7 1,458.6 112.1 Adjusted EBITDA margin 20.9 % 19.8 % 110 bps Net sales growth was driven by our biopharma and advanced technologies & applied materials end markets, as well as the impact of all the acquisitions that we completed in the prior year, partially offset by unfavorable foreign currency impact and COVID-19 related headwinds.
Corporate costs are managed on a standalone basis and not allocated to segments. 31 Years ended December 31, 2023 and 2022 Executive summary (dollars in millions) Year ended December 31, Change 2023 2022 Net sales $ 6,967.2 $ 7,512.4 $ (545.2) Gross margin 33.9 % 34.6 % (70) bps Operating income $ 696.4 $ 1,130.2 $ (433.8) Net income 321.1 686.5 (365.4) Adjusted EBITDA 1,309.1 1,570.7 (261.6) Adjusted EBITDA margin 18.8 % 20.9 % (210) bps Net sales decline was driven by decreases in all three regions primarily due to declines in customer demand, the impact of customer destocking, and COVID-19 related headwinds.
Cash flows from operating activities provided $110.0 million less cash in 2022 primarily due to higher payments for interest and tax, higher incentive compensation payments made in fiscal year 2022, and higher customer prebate payments made in connection with newly signed supply agreements. This was partially offset by higher operating income and favorable changes in net working capital.
Cash flows from operating activities provided $26.4 million more cash in 2023 primarily due to the change in net working capital, lower 2023 payments for incentive compensation payments pertaining to fiscal year 2022 company performance, partially offset by lower net income. Investing activities used $34.1 million more cash in 2023.
In Europe, Adjusted EBITDA declined $14.4 million or 2.7%, but grew 2.5% when adjusted for unfavorable foreign currency translation impact and M&A. The growth was driven primarily by higher gross profit from favorable product mix. This was partially offset by inflationary factors and investments in our workforce made over the course of 2021 and into 2022.
In Europe, Adjusted EBITDA declined $74.6 million or 14.2%, or 15.7% when adjusted for favorable foreign currency translation impact. The decrease was driven by lower sales volume and unfavorable product mix, partially offset by reduced operating expenses, distribution costs and favorable manufacturing variances.
The remaining growth was $73.1 million or 5.0%. In the Americas, Adjusted EBITDA grew $98.9 million or 10.1%, or 4.3% when adjusted for unfavorable foreign currency translation impact and M&A.
In AMEA, Adjusted EBITDA declined $16.2 million or 11.4%, or 10.4% when adjusted for unfavorable foreign currency translation impact. The decrease was driven by lower sales volume and inflationary pressures, partially offset by lower distribution costs. In Corporate, Adjusted EBITDA declined $6.1 million or 3.5% , or 3.3% when adjusted for unfavorable foreign currency translation impact.
This was partially offset by higher amortization expense driven by the completion of our acquisitions in the prior year as well as inflation and investments in our workforce made over the course of 2021 and into 2022.
The decrease was driven by investments in our workforce made over the course of 2023.
Operating income (in millions) Year ended December 31, Change 2022 2021 Gross profit $ 2,602.8 $ 2,502.7 $ 100.1 Operating expenses 1,472.6 1,530.5 (57.9) Operating income $ 1,130.2 $ 972.2 $ 158.0 Operating income increased primarily from higher gross profit, as previously discussed, as well as the absence of acquisition costs incurred in the prior year and lower incentive compensation expense.
Gross margin Year ended December 31, Change 2023 2022 Gross margin 33.9 % 34.6 % (70) bps Gross margin decreased (70) basis points resulting primarily from unfavorable product mix and the impact of inflationary pressures, partially offset by lower distribution costs. 33 Operating income (in millions) Year ended December 31, Change 2023 2022 Gross profit $ 2,363.8 $ 2,602.8 $ (239.0) Operating expenses (excluding impairment charges) 1,506.6 1,472.6 34.0 Impairment charges 160.8 — 160.8 Operating income $ 696.4 $ 1,130.2 $ (433.8) Operating income decreased primarily from lower gross profit, as previously discussed, as well as higher operating expenses driven by asset impairment charges recorded in the second quarter of 2023, accrual of a long-term retention incentive, inflation and investments made to grow the business, partially offset by lower accruals related to incentive compensation.
Removed
The total carrying value of Ritter’s net assets, excluding goodwill, which is part of our Europe reporting unit, was $247.0 million as of December 31, 2022, including $164.7 million of finite-lived intangible assets and $129.2 million of property, plant & equipment.
Added
We are taking measures to replace these revenues; however, due to these sustained declines, we performed an impairment test of the Ritter asset group, which resulted in a fair value that was lower than its carrying value.
Removed
In 2021, we issued $396.5 million and $738.1 million of term loans that mature on June 9, 2026 and June 9, 2028, respectively. The debt bears interest at variable rates. We also issued $800.0 million aggregate principal amount of 3.875% senior unsecured notes.
Added
As a result, we recorded impairment charges of $106.4 million on Ritter’s finite-lived intangible assets and $54.4 million on Ritter’s property, plant & equipment in the second quarter of 2023 in the unaudited condensed consolidated statements of operations.
Removed
The notes are due on November 1, 2029, with interest payable semi-annually on May 1 and November 1 of each year. Additionally, we also amended our senior secured credit facilities and issued $900.0 million of incremental U.S. dollar term loan at LIBOR plus 2.25%.
Added
We have been impacted by supply chain constraints and inflationary pressures We have experienced inventory fluctuations and build up at customers as a result of global supply chain disruptions and have experienced inflationary pressures across all of our cost categories.
Removed
We reduced our expenses through a global restructuring program Under a global restructuring program, which concluded on December 31, 2020, we combined sales and marketing resources, eliminated redundant corporate functions, optimized procurement and our manufacturing footprint, and implemented best practices throughout the organization.
Added
We increased our liquidity and mitigated the impact of rising rates In June 2023, we amended the revolving credit facility to increase its funding limit up to $975.0 million and extended the term to June 29, 2028. We capitalized $2.3 million of fees in connection with this transaction.
Removed
From inception of the program through its completion on December 31, 2020, we have recognized $129.8 million of charges and have spent $9.6 million on capital projects, the vast majority of these expenses were incurred through 2020 with an immaterial amount incurred in 2021 and 2022.
Added
We also amended our U.S. dollar term loan B-5 from LIBOR based variable-rate rate interest to SOFR based variable-rate rate interest. We made prepayments of $680.0 million and $21.5 million on U.S. dollar term loan B-5 and Euro term loan B-4, which reduced our variable-rate debt.
Removed
Through December 31, 2020, we believe that we have generated over $220.0 million of annualized cost synergies, which we believe will favorably impact our results in 2023 and beyond. The program was originally envisioned to last for three years following the VWR acquisition and has concluded.
Added
To further protect against rising interest rates, in April 2023, we entered into an interest rate swap to convert payments on $100.0 million of our U.S. dollar debt from SOFR based variable rate interest to fixed rate interest.
Removed
See Item 7A, “Quantitative and qualitative disclosures about market risk.” 31 Table of contents Key indicators of performance and financial condition To evaluate our performance, we monitor a number of key indicators.
Added
Unfavorable product mix and inflationary factors contributed to contraction in gross margin. Softness in sales volumes along with unfavorable product mix drove Adjusted EBITDA margin contraction.
Removed
Commercial excellence, growth of our proprietary materials and consumables product group and sales of higher-margin products, including those offered by recently acquired companies contributed to expansion in both gross margin and Adjusted EBITDA margin.
Added
Organic net sales decreased by $397.4 million or 8.9% (decline of 6.1% excluding COVID-19 headwinds).
Removed
In AMEA, net sales increased $53.3 million or 11.3%, which included $26.6 million or 5.6% of unfavorable foreign currency impact and $43.1 million or 9.1% of M&A impact. Organic net sales growth was $36.8 million or 7.8% (7.0% excluding COVID-19 tailwinds).
Added
The remaining decrease was $266.9 million or 17.0%. In the Americas, Adjusted EBITDA decreased $164.7 million or 15.2%. There was no material foreign currency translation impact to Adjusted EBITDA. The decrease was driven by lower sales volumes and unfavorable product mix, partially offset by reduced operating expenses and lower distribution costs.
Removed
Gross margin Year ended December 31, Change 2022 2021 Gross margin 34.6 % 33.9 % 70 bps Gross margin increased 70 basis points resulting primarily from commercial excellence and favorable product mix in our proprietary materials business, as well as a favorable impact from sales of higher gross margin products from acquired companies.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

9 edited+2 added−0 removed2 unchanged
Biggest changeWe have also issued fixed-rate secured and unsecured notes. None of our other financial instruments are subject to material interest rate risk. At December 31, 2022, we had borrowings of $2,794.2 million under our credit facilities. Borrowings under these facilities bear interest at variable rates based on prevailing LIBOR, EURIBOR and SOFR rates in the financial markets.
Biggest changeWe have also issued fixed-rate secured and unsecured notes. None of our other financial instruments are subject to material interest rate risk. At December 31, 2023, we had borrowings of $1,989.1 million under our senior secured credit facilities and our receivables facility.
Item 7A. Quantitative and qualitative disclosures about market risk Foreign currency exchange risk Although we report our results and financial condition in U.S. dollars, a significant portion of our operating and financing activities are denominated in foreign currencies, principally the Euro but also many others. Our U.S. subsidiaries carry significant amounts of Euro-denominated debt.
Item 7A. Quantitative and qualitative disclosures about market risk Foreign currency exchange risk Although we report our results and financial condition in U.S. dollars, a significant portion of our operating and financing activities are denominated in foreign currencies, principally the Euro but also many others. Our U.S. subsidiaries carry Euro-denominated debt.
For example, an optional debt repayment of €100 million on December 31, 2022 and December 31, 2021, with a 10% weakening of the U.S. dollar would have caused us to pay an additional $10.7 million and $11.4 million, respectively, to extinguish that debt.
For example, an optional debt repayment of €100 million on December 31, 2023 and December 31, 2022, with a 10% weakening of the U.S. dollar would have caused us to pay an additional $11.1 million and $10.7 million, respectively, to extinguish that debt.
At December 31, 2021, a 100 basis point increase to the applicable variable rates of interest would have increased the amount of interest by $27.9 million per annum. Our senior secured notes and senior unsecured notes bear interest at fixed rates, so their fair value will increase if interest rates fall and decrease if interest rates rise.
At December 31, 2022, a 100 basis point increase to the applicable variable rates of interest would have increased the amount of interest by $20.4 million per annum. Our senior secured notes and senior unsecured notes bear interest at fixed rates, so their fair value will increase if interest rates fall and decrease if interest rates rise.
This does not result in any material risks from an earnings perspective because the exposure from these instruments is substantially hedged by offsetting exposures from intercompany borrowing arrangements.
This does not result in any material risks from an earnings perspective because the exposure from these instruments is substantially hedged by offsetting 43 Table of contents exposures from intercompany borrowing arrangements.
Changes to those market rates affect both the amount of cash we pay for interest and our reported interest expense. At December 31, 2022, a 100 basis point increase to the applicable variable rates of interest including our interest rate swap would have increased the amount of interest by $20.4 million per annum.
Changes to those market rates affect both the amount of cash we pay for interest and our reported interest expense. At December 31, 2023, a 100 basis point increase to the applicable variable rates of interest taking into account our interest rate swap would have increased the amount of interest by $11.4 million per annum.
For the year ended December 31, 2021, a 10% strengthening of the U.S. dollar compared to all other currencies would have decreased net income by $10.9 million and decreased Adjusted EBITDA by $61.9 million. Interest rate risk We carry a significant amount of debt that exposes us to interest rate risk. A portion of our debt consists of variable-rate instruments.
For the year ended December 31, 2022, a 10% strengthening of the U.S. dollar compared to all other currencies would have decreased net income by $14.3 million and decreased Adjusted EBITDA by $60.3 million. Interest rate risk We carry debt that exposes us to interest rate risk. A portion of our debt consists of variable-rate instruments.
At December 31, 2022, a 100 basis point decrease in the market rate of interest would have increased their aggregate fair value by $147.1 million. At December 31, 2021, a 100 basis point decrease in the market rate of interest would have increased their aggregate fair value by $201.7 million.
At December 31, 2023, a 100 basis point decrease in the market rate of interest would have increased their aggregate fair value by $130.6 million. At December 31, 2022, a 100 basis point decrease in the market rate of interest would have increased their aggregate fair value by $147.1 million. Item 8.
For the year ended December 31, 2022, a 10% strengthening of the U.S. dollar compared to all other currencies would have decreased net income by $14.3 million and decreased Adjusted EBITDA by $60.3 million.
For the year ended December 31, 2023, a 10% strengthening of the U.S. dollar compared to all other currencies would have increased net income by $17.5 million and decreased Adjusted EBITDA by $51.6 million.
Added
Borrowings under these facilities bear interest at variable rates based on prevailing LIBOR, EURIBOR and SOFR rates in the financial markets. At December 31, 2023 the Company had $850.0 million of interest rate swaps to convert variable rate interest to fixed rate interest.
Added
Financial statements and supplementary data The information required by this item is included at the end of this report beginning on page F-1. Item 9. Changes in and disagreements with accountants on accounting and financial disclosure None. 44 Table of contents

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