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What changed in Avantor, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Avantor, Inc.'s 2023 and 2024 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 2024 report.

+230 added−211 removedSource: 10-K (2025-02-07) vs 10-K (2024-02-14)

Top changes in Avantor, Inc.'s 2024 10-K

230 paragraphs added · 211 removed · 170 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeBased 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.
Biggest changeAdditionally, 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. Compensation and benefits We are committed to rewarding, supporting and developing the associates who make it possible to deliver on our strategy.
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.
For example, our global footprint offers extraordinary customer access, enabling us to serve more than 300,000 customer locations in approximately 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.
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.
Pharmacopeia / National Formulary, as well as the European, British, Japanese, Indian and Chinese Pharmacopeia, the Food Chemicals Codex and controlled substances regulations. 7 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.
These laws and regulations govern, among other things, air emissions, wastewater discharges, the use, handling and disposal of hazardous substances and wastes, soil and groundwater contamination and the general health and safety of our associates and the communities in which we operate. We are also subject to regulation by OSHA concerning employee safety and health matters.
These laws and regulations govern, among other things, air emissions, wastewater discharges, the use, 8 handling and disposal of hazardous substances and wastes, soil and groundwater contamination and the general health and safety of our associates and the communities in which we operate. We are also subject to regulation by OSHA concerning employee safety and health matters.
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.
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 a number of trademarks, service marks and patents, some of which have been registered and issued.
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.
We also have a diverse customer base with no single end customer comprising more than 5% of net sales. 3 Suppliers We sell proprietary products we make and third-party products sourced from a wide variety of product suppliers located across the globe.
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.
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 inclusive company culture and send a strong message to our associates, customers, suppliers, stockholders and communities: ICARE.
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 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 makes it easy for customers to do business with us and enables digital marketing efforts that position us to capture new demand.
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.
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 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.
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.
Our global network of distribution centers gives our customers security of supply and real-time flexibility. We also have 14 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.
Our products and services are as follows: • Materials & consumables include ultra-high purity chemicals and reagents, lab products and supplies, highly specialized formulated silicone materials, customized excipients, customized single-use assemblies, process chromatography resins and columns, analytical sample prep kits and education and microbiology and clinical trial kits, peristaltic pumps and fluid handling tips.
Our products and services are as follows: • Materials & consumables include ultra-high purity chemicals and reagents, lab products and supplies, highly specialized formulated silicone materials, customized excipients, customized single-use assemblies, process chromatography resins and columns, analytical sample prep kits and education and microbiology and clinical trial kits, and fluid handling tips.
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 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.
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 sales force is comprised of approximately 3,500 sales and sales support professionals, including over 200 sales specialists selected for their in-depth industry and product knowledge.
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.
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 and research & technology.
See Item 1A, “Risk factors—Risks related to regulation.” We are subject to audits by the FDA and other similar foreign regulatory bodies. To date, we have had no instances of noncompliance that have had a material impact on our operations.
See Part I, Item 1A, “Risk factors—Risks related to regulation.” We are subject to audits by the FDA and other similar foreign regulatory bodies. To date, we have had no instances of noncompliance that have had a material impact on our operations.
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.
Government regulation Our facilities that engage in the manufacturing, packaging, distribution of material used in 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.
Some of these are proprietary products that we make while others are produced by third parties; • Equipment & instrumentation include filtration systems, virus inactivation systems, incubators, analytical instruments, evaporators, ultra-low-temperature freezers, biological safety cabinets and critical environment supplies; and • Services & specialty procurement include onsite lab and production, clinical, equipment, procurement and sourcing and biopharmaceutical material scale-up and development services.
Some of these are proprietary products that we make while others are produced by third parties; • Equipment & instrumentation include filtration systems, virus inactivation systems, incubators, analytical instruments, evaporators, ultra-low-temperature freezers, peristaltic pumps, biological safety cabinets and critical environment supplies; and • Services & specialty procurement include onsite lab and production, equipment, procurement and sourcing and biopharmaceutical material scale-up and development services.
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.
Health, safety and well-being 6 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.
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.
Many of our supplier relationships are based on contracts that vary in geographic scope, duration, product and service type, and some include exclusivity provisions. 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.
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.
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 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.
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.
For additional information about environmental matters, see note 13 to our consolidated 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.
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 operate over 40 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.
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.
The following chart presents the approximate mix of net sales for each of those segments during 2024: Within our reportable 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.
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.
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, inventory and stock room management, chemical and equipment tracking and glassware autoclaving.
We are also subject to various federal, state and international laws and regulations related to privacy and data protection, including the EU’s General Data Protection Regulation (“GDPR”) as well as the California Consumer Privacy Act of 2018 (“CCPA”), which became effective on January 1, 2020 (as amended by the California Privacy Rights Act, which took effect on January 1, 2023, the “CPRA”).
We are also subject to various federal, state and international laws and regulations related to privacy and data protection, including the EU’s GDPR as well as the California Consumer Privacy Act of 2018, which became effective on January 1, 2020 (as amended by the California Privacy Rights Act, which took effect on January 1, 2023, the “CPRA”).
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.
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.
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.
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 plays a vital role in how we conduct business with our customers. In 2024, approximately 76% of our transactions came from our digital channels.
The information found on our website is not part of this or any other report filed with or furnished to the SEC. 9 Table of contents
The information found on our website is not part of this or any other report filed with or furnished to the SEC.
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.
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. Government contracts We conduct business with various government agencies and government contractors.
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.
For a discussion of risks related to government contracting requirements, refer to Part I, Item 1A, “Risk factors.” No government contract is of such a magnitude as to have a material adverse effect on our financial results.
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 believe that our relations with our employees are good. As of December 31, 2024, 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.
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.
We do this through 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.
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.
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. Based on common interests, backgrounds or characteristics, ACTs are open to all associates.
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.
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 5 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.
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. Our primary focus is to keep associates safe and free from injury.
Failure to address or comply with these laws and regulations could harm our business by leading to a renegotiation of profits or termination of the contract at the election of the government agency.
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. Failure to address or comply with these laws and regulations could harm our business by leading to a renegotiation of profits or termination of the contract at the election of the government agency.
Compensation and benefits We are committed to rewarding, supporting and developing the associates who make it possible to deliver on our strategy. To that end, we offer a comprehensive total rewards program aimed at the varying health, home-life and financial needs of our diverse and global associates.
To that end, we offer a comprehensive total rewards program aimed at the varying health, home-life and financial needs of our diverse and global associates.
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.
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.
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.
The following charts present the approximate mix of net sales for each of these groups during 2024: 2 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 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.
Customers We benefit from longstanding customer relationships, and approximately 40% of our 2024 net sales came from customers that have had relationships with us for 15 years or more.
These products and services enable our customers to achieve precise analytical results in their research, diagnostic, and quality assurance and quality control activities. More than 85% of our net sales were from product and service offerings that we consider to be recurring in nature.
More than 86% of our net sales were from product and service offerings that we consider to be recurring in nature.
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.
Our approach to sustainability is reflected in our people, the products we create, the transformative services we provide, and the integrity with which we serve our stockholders, business partners, suppliers, customers, associates, and communities.
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.
Employees and human capital resources Our success depends on our ability to attract, retain and motivate highly qualified and diverse talent. As of December 31, 2024, we had approximately 13,500 employees located in over 30 different countries in a variety of roles. Approximately 5,300 of our associates were employed in the U.S.
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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.
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We completed our initial public offering through Avantor, Inc. and listed our shares on the New York Stock Exchange in May 2019. 1 Business segments We report financial results in two segments: Laboratory Solutions and Bioscience Production.
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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.
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These products and services enable our customers to achieve precise analytical results in their research, diagnostic, and quality assurance and quality control activities. We also provide mission-critical, high-purity materials and solutions to customers that support the development and production of their life-changing treatments.
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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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In addition, we offer more complex and value-added scientific research support and production services such as DNA extraction, media preparation, bioreactor servicing and compound management, and cleanroom control, monitoring, maintenance and sanitization.
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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, efficiently manage resource use, and reduce end of life impact of products. We directly engage our supply chain on these efforts through Avantor’s Responsible Supplier Program.
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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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The program enables collaboration with supplier partners to identify sustainability challenges and solutions focused on four priority topic areas: climate change, human rights, resource circularity, and natural resource conservation.
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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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As our program matures and we continue to address the evolving expectations of stakeholders, we completed a double materiality assessment in 2024, and will use this information to refine our strategy and goal setting.
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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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In 2024, Avantor received several important accolades for our efforts: Avantor received a Bronze Medal from EcoVadis, a leader in sustainability ratings, for a second year in a row; and achieved a score of 100 on the Human Rights Campaign Foundation’s 2025 Corporate Equality Index (CEI) for the second year in a row; and was recognized as a “Best Place to Work for Disability Inclusion” from Disability:In for the first time.
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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.
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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.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAccordingly, 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.
Biggest changeAccordingly, 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 changes in inflation and interest rates, instability in the global banking industry, rising energy prices, potential energy shortages and actual or anticipated military or political conflicts, such as the ongoing Ukraine/Russia or Israel/Hamas conflicts; (v) foreign currency exchange rate fluctuations; (vi) potential changes in diplomatic and trade relationships, including potential changes under the second Trump administration and political and trade uncertainty in China; (vii) a global health crisis; (viii) potential increased costs associated with overlapping tax structures; (ix) potential increased reliance on third parties within less developed markets; (x) potential changes in trade restrictions, tariffs and exchange controls, such as tariffs that may be proposed by the second Trump administration and potential retaliatory tariffs by other countries; (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.
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.
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”), 18 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.
Our subsidiaries may be required to register for permits and/or licenses with, and may be required to comply with, the laws and regulations of the FDA, the DHHS, the DEA, foreign agencies including the EMA, and other various state health departments and/or comparable state and foreign agencies as well as certain accrediting bodies depending upon the types of operations and locations of distribution and sale of the products manufactured or services provided by those subsidiaries.
Our subsidiaries may be required to register for permits and/or licenses with, and may be required to comply with, the laws and regulations of the FDA, the DHHS, the DEA, foreign agencies including the EMA, and other various state health departments and/or comparable state and 19 foreign agencies as well as certain accrediting bodies depending upon the types of operations and locations of distribution and sale of the products manufactured or services provided by those subsidiaries.
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 ability to manage our business and conduct our 10 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.
The ability of our customers to develop new products to replace sales decreases attributable to expirations of significant patents, along with the impact of other past or potential future changes in the industries we serve, may result in our customers significantly reducing their purchases of products from us or the prices they are willing to pay for those products.
The ability of our customers to develop new products to 11 replace sales decreases attributable to expirations of significant patents, along with the impact of other past or potential future changes in the industries we serve, may result in our customers significantly reducing their purchases of products from us or the prices they are willing to pay for those products.
Our ability to maintain an adequate supply of such materials and components could be impacted by the availability and price of those raw materials and maintaining relationships with key suppliers. Moreover, we are dependent upon the ability of our suppliers to provide materials and components that meet our specifications, quality standards, other applicable criteria, and delivery schedules.
Our ability to maintain an adequate supply of such materials and 16 components could be impacted by the availability and price of those raw materials and maintaining relationships with key suppliers. Moreover, we are dependent upon the ability of our suppliers to provide materials and components that meet our specifications, quality standards, other applicable criteria, and delivery schedules.
The increasing complexity and costs to comply with such evolving expectations, rules and regulations, as well as any risk of noncompliance, could adversely affect our business. Risks related to our indebtedness Our indebtedness could adversely affect our financial condition and prevent us from fulfilling our debt or contractual obligations.
The increasing complexity and costs to comply with such evolving expectations, rules and regulations, as well as any risk of noncompliance, could adversely affect our business. 21 Risks related to our indebtedness Our indebtedness could adversely affect our financial condition and prevent us from fulfilling our debt or contractual obligations.
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.
This could cause our customers to 15 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.
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.
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 9 margins.
Our exclusive forum provision shall not relieve the company of its duties to comply with the federal securities laws and the rules and regulations thereunder, and our stockholders will not be deemed to have waived our compliance with these laws, rules and regulations.
Our exclusive forum provision shall not relieve the company of its duties to comply with the federal securities laws and the rules and 23 regulations thereunder, and our stockholders will not be deemed to have waived our compliance with these laws, rules and regulations.
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.
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 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.
We also rely on our suppliers to adhere to our supplier standards of conduct, and material violations of such standards of conduct could occur that could have a material effect on our business, reputation and financial statements.
We also rely on our suppliers to adhere to our supplier standards of conduct, 20 and material violations of such standards of conduct could occur that could have a material effect on our business, reputation and financial statements.
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.
Either of these factors may have a material adverse effect on our business, financial position and operating results. 12 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.
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.
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 stockholder lawsuits, could lead to substantial civil and criminal, monetary and non monetary penalties and could cause us to incur significant legal and investigatory fees.
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.
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 costs under any of our indemnifications that we have.
However, we face climate and environmental risks and the occurrence of one or more unexpected events, including fires, tornadoes, tsunamis, hurricanes, earthquakes, drought, storms, sea level rise, floods, and other severe hazards or accidents in the United States, the United Kingdom, the European Union or in other countries or regions in which we operate could adversely affect our operations and financial performance.
However, we face climate and environmental risks and the occurrence of one or more unexpected events, including fires, tornadoes, tsunamis, hurricanes, earthquakes, drought, storms, sea level rise, floods, and other severe hazards or accidents in the United States, the United Kingdom, the EU or in other countries or regions in which we operate could adversely affect our operations and financial performance.
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.
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.
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.
We have several high-risk chemical facilities that contain 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. Such an occurrence could also harm the environment, our reputation and disrupt our operations.
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.
Our business and results of operations may also be adversely 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.
See Item 7A. “Quantitative and qualitative disclosures about market risk.” Our business depends on our ability to use and access information systems, and any failure to successfully maintain these systems or implement new systems to handle our changing needs could materially harm our operations.
See Part I, Item 7A, “Quantitative and qualitative disclosures about market risk.” 13 Our business depends on our ability to use and access information systems, and any failure to successfully maintain these systems or implement new systems to handle our changing needs could materially harm our operations.
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.
For additional information regarding environmental matters, see note 13 to our 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.
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.
For example, as 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.
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.
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.
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.
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.
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.
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.
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.
Changes in exchange rates can adversely affect our financial condition, results of operations 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.
A pandemic could adversely affect our operations, supply chains and distribution network, and we could experience and 17 Table of contents expect prolonged unpredictable reductions in supply and demand for certain of our offerings similar to those experienced during the COVID-19 pandemic, as well as unpredictable increases in demand for certain of our offerings similar to those experienced during the COVID-19 pandemic.
A pandemic has in the past and could in the future adversely affect our operations, supply chains and distribution network, and we could experience and expect prolonged unpredictable reductions in supply and demand for certain of our offerings similar to those experienced during the COVID-19 pandemic, as well as unpredictable increases in demand for certain of our offerings similar to those experienced during the COVID-19 pandemic.
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.
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.
Many aspects of this minimum tax directive will be effective beginning in 2024. While it is uncertain whether the U.S. will enact legislation to adopt the minimum tax directive, certain countries in which we operate have adopted legislation and other countries are in the process of introducing legislation to implement the minimum tax directive.
While it is uncertain whether the U.S. will enact legislation to adopt the minimum tax directive, certain countries in which we operate have adopted legislation and other countries are in the process of introducing legislation to implement the minimum tax directive.
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.
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.
Many foreign data privacy regulations (including GDPR in the European Union) and certain state laws and regulations (including California’s CPRA) impose requirements beyond those enacted under federal law including, in some instances, private rights of action.
Many of these regulations also grant rights to individuals. Many foreign data privacy regulations (including GDPR in the EU) and certain state laws and regulations (including California’s CPRA) impose requirements beyond those enacted under federal law including, in some instances, private rights of action.
Accordingly, we focus significant efforts and resources on the development and identification of new technologies, products and services that are attractive to, and gain acceptance, in the markets we serve and further broaden our offerings.
Accordingly, we focus significant efforts and resources on the development and identification of new technologies, products and services that are attractive to, and gain acceptance, in the markets we serve and further broaden our offerings. We have been and expect to continue to utilize AI and machine learning in certain of our products and services.
Risks related to ownership of our stock Because we have no current plans to pay cash dividends on our common stock, you may not receive any return on investment unless you sell your common stock for a price greater than that which you paid for it. We have no current plans to pay cash dividends on our common stock.
If new debt is added to our current debt levels, the related risks that we now face could intensify. 22 Risks related to ownership of our stock Because we have no current plans to pay cash dividends on our common stock, you may not receive any return on investment unless you sell your common stock for a price greater than that which you paid for it.
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.
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.
The declaration, amount and payment of any future dividends on our common stock will be at the sole discretion of our Board of Directors.
We have no current plans to pay cash dividends on our common stock. The declaration, amount and payment of any future dividends on our common stock will be at the sole discretion of our Board of Directors.
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.
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.
The revenues we report with respect to our operations outside of the United States may be adversely affected by fluctuations in foreign currency exchange rates. Further, we have a substantial amount of Euro denominated indebtedness. Fluctuations in the exchange rate between U.S. dollars and Euros may have a material adverse effect on our ability to repay such indebtedness.
The revenues we report with respect to our operations outside of the United States have been in the past and may be adversely affected by fluctuations in foreign currency exchange rates. Further, we have a substantial amount of Euro denominated indebtedness, as well as intercompany loans and short-term intercompany balances between entities with the Euro as their functional currency.
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.
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. Effective January 1, 2024, we transitioned to a new operating model consisting of two complementary business segments, the Laboratory Solutions segment and the Bioscience Production segment.
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.
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. 14 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.
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.
For example, we and many of the third-party service providers we rely on use generative AI, which increases the risk that our confidential or proprietary information or personal data could be inadvertently or maliciously exposed. 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.
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.
For example, in October 2024, we divested our Clinical Services business, a component of our Laboratory Solutions reportable segment. We also 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.
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).
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). We have a broad range of stakeholders, including our stockholders, employees and customers, some of whom increasingly focus on environmental, social and governance matters.
In conjunction with our new operating model, we have also launched a cost optimization initiative.
In conjunction with our new operating model, we launched a multi-year cost transformation initiative, with the objective to deliver approximately $300 million in annual gross run-rate savings by the end of 2026. We have also committed to certain significant restructuring activities in connection with the initiative.
Removed
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.
Added
The initiative and restructuring activities are subject to a variety of known and unknown risks and uncertainties, including the potential that we may not be able to successfully execute on the initiative or achieve the anticipated benefits and cost-saving opportunities, or that achieving such benefits and opportunities may take longer to realize than expected.
Removed
If new debt is added to our current debt levels, the related risks that we now face could intensify.
Added
If we are unable to achieve the expected benefits from the initiative and manage the effects of the restructuring activities, this could have an adverse effect on our business, results of operations and financial condition. As we refine our business model, we may also pursue divestitures in line with our new operating model.
Added
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
Our consolidated results of operations are comprised of many different functional currencies that translate into our U.S. dollar reporting currency. The movement of the U.S. dollar against those functional currencies, particularly the Euro, has caused significant variability in our results in the past and may continue to do so in the future.
Added
Fluctuations in the exchange rate between U.S. dollars and Euros may have a material adverse effect on our ability to repay such indebtedness.
Added
While we have implemented cybersecurity and data protection measures, our efforts to minimize the risks and impacts of cyberattacks and protect our information systems may be insufficient and we may experience significant breaches or other failures or disruptions that could compromise our systems and data and, ultimately, affect our business operations and our financial position or results of operations.
Added
New technology that could result in greater operational efficiency, such as the development and adoption of AI and machine learning technology, may further exposure our systems and businesses to the risk of cyberattacks.
Added
Our actual or perceived failure to adequately protect personal data could adversely affect our business.
Added
As with many technological innovations, there are significant risks and challenges involved in maintaining and deploying these technologies, including risks related to cybersecurity, privacy and data use practices as well as related to accuracy issues, and there can be no assurance that the use of such technologies will enhance our products or services or be beneficial to our business.
Added
Further, the regulatory landscape surrounding AI is evolving and may impose restrictions that limit the usability or effectiveness of AI in our products and services and expose us to an increased risk of regulatory enforcement and litigation. We depend upon the availability of raw materials.
Added
The 17 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. We also monitor rules and regulations related to environmental, social and governance disclosure obligations, which may expose us to increased costs associated with additional reporting obligations.
Added
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.
Added
Our reputation, ability to do business and financial statements may be impaired by improper conduct by any of our employees, agents or business partners.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

5 edited+1 added−1 removed11 unchanged
Biggest changeIn collaboration with external cybersecurity firms, we seek to gain insights into emerging threats and vulnerabilities, industry trends, and leading practices to inform our cybersecurity response, risk remediation and resilience capabilities, including by working with an external retained incident response team, receiving third-party threat intelligence, participating in incident tabletops, and performing assessments and controls testing on our enterprise environment. 23 Table of contents Our program includes procedures to oversee and identify cybersecurity risks and threats of our third-party service providers, which include third-party evaluations performed by our team of information security professionals, review of independent assessment documentation, and continuous monitoring of third-party independent posture scoring.
Biggest changeIn collaboration with external cybersecurity firms, we seek to gain insights into emerging threats and vulnerabilities, industry trends, and leading practices to inform our cybersecurity response, risk remediation and resilience capabilities, including by working with an external retained incident response team, receiving third-party threat intelligence, participating in incident tabletops, and performing assessments and controls testing on our enterprise environment.
We also perform formal risk assessment activities annually, aligned to the National Institute of Standards and Technology (NIST) 800-171 Cybersecurity Framework, as its program controls are designed to protect and maintain confidentiality, integrity, and continued availability of our data and information systems.
We also perform formal risk assessment activities annually, aligned to the National Institute of Standards and Technology (NIST) 800-171 and Cybersecurity Framework, as its program controls are designed to protect and maintain confidentiality, integrity, and continued availability of our data and information systems.
Risk Factors” for more information on how material cybersecurity attacks may impact our business. Governance Management plays a critical role in assessing and managing material risks from cybersecurity threats.
See “Item 1A. Risk Factors” for more information on how material cybersecurity attacks may impact our business. Governance Management plays a critical role in assessing and managing material risks from cybersecurity threats.
Our CISO reports quarterly and more regularly, as needed, to our executive leadership team composed of our Chief Executive Officer, Chief Financial Officer, and Chief Information Officer on cybersecurity matters, providing the leadership team with updates on enterprise risks, cybersecurity incidents, the status of ongoing initiatives, key metrics, and additional cybersecurity topics.
Our CISO reports to our executive leadership team composed of our Chief Executive Officer, Chief Financial Officer, and Chief Information Officer on cybersecurity matters, providing the leadership team with updates on enterprise risks, cybersecurity incidents, the status of ongoing initiatives, key metrics, and additional cybersecurity topics.
Although no cybersecurity incident during the year ended December 31, 2023 resulted in an interruption of our operations, known losses of critical data, or otherwise had a material impact on Avantor’s strategy, financial condition or results of operations, the scope and impact of any future incident cannot be predicted. See “Item 1A.
Additionally, we have purchased a cybersecurity risk insurance policy that would reduce the costs associated with a covered cybersecurity incident if it occurred. 24 Although no cybersecurity incident during the year ended December 31, 2024 resulted in an interruption of our operations, known losses of critical data, or otherwise had a material impact on Avantor’s strategy, financial condition or results of operations, the scope and impact of any future incident cannot be predicted.
Removed
We also include security and data protection provisions in our contractual arrangements with third-party service providers where applicable. Additionally, we have purchased a cybersecurity risk insurance policy that would reduce the costs associated with a covered cybersecurity incident if it occurred.
Added
Our program includes procedures to oversee and identify cybersecurity risks and threats of our third-party service providers, which include third-party evaluations performed by our team of information security professionals, review of independent assessment documentation, and continuous monitoring of third-party independent posture scoring. We also include security and data protection provisions in our contractual arrangements with third-party service providers where applicable.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−1 removed0 unchanged
Biggest changeOver 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.
Biggest changeApproximately 140 of these facilities are located 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 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.
Item 2. Properties As of December 31, 2024, the Company had facilities in over 30 countries, including approximately 200 significant administrative, sales, research and development, manufacturing and distribution facilities. Approximately 60 of these facilities are located in the United States across 20 states.
Removed
Item 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.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

5 edited+0 added−1 removed9 unchanged
Biggest changeSahin 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.
Biggest changeSahin served as EVP, Strategy & Business Development for Novanta, a medical, life science and industrial technology company, from September 2017 to June 2022. PART II
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.
Sokenu was General 27 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.
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.
Prior to joining Avantor, Ms. Hankamer was Vice President of Human Resources at Conquest Completion Services, LLC from May 2018 to September 2019. 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.
Brent 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.
Brent Jones 55 Executive Vice President and Chief Financial Officer Benoit Gourdier 54 Executive Vice President, Bioscience Production Christophe Couturier 59 Executive Vice President, AMEA Brittany Hankamer 44 Executive Vice President and Chief Human Resources Officer Claudius Sokenu 57 Executive Vice President, Chief Legal and Compliance Officer and Corporate Secretary James Bramwell 58 Executive Vice President, Sales and Customer Excellence Kitty Sahin 55 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.
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.
Item 4. Mine safety disclosures Not applicable. 26 Information about our Executive Officers The following table sets forth certain information regarding our executive officers at February 3, 2025: Age Position Michael Stubblefield 52 Director, President and Chief Executive Officer R.
Removed
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

4 edited+1 added−0 removed3 unchanged
Biggest changeThe stock performance shown below is not necessarily indicative of future performance. 28 Table of contents Item 6. [Reserved]
Biggest changeThe stock performance shown below is not necessarily indicative of future performance. Securities Authorized for Issuance Under Equity Compensation Plans The information required by this item is incorporated by reference to the applicable information in our 2025 Proxy Statement (defined below). 29 Item 6. [Reserved]
The information in this section is not “soliciting material,” is not deemed “filed” with the SEC and is not to be incorporated by reference in any of our filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this report, except to the extent that we specifically incorporate such information by reference.
The information in this section is not “soliciting material,” is not deemed “filed” with the SEC and is not to be incorporated by reference in any of our filings under the Securities Act of 1933, as amended, or the 28 Securities Exchange Act of 1934, as amended, whether made before or after the date of this report, except to the extent that we specifically incorporate such information by reference.
Item 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.
Item 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 3, 2025, we had 6 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. 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.
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.
Added
For more information, see note 24 to our consolidated financial statements beginning on page F-1 of this report.

Item 7. Management's Discussion & Analysis

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

58 edited+38 added−27 removed37 unchanged
Biggest changeYear 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.
Biggest changeReconciliations of non-GAAP measures The following table presents the reconciliation of net income and net income margin to Adjusted EBITDA and Adjusted EBITDA margin, respectively: (dollars in millions, % based on net sales) Year ended December 31, 2024 2023 2022 $ % $ % $ % Net income $ 711.5 10.5 % $ 321.1 4.6 % $ 686.5 9.1 % Interest expense, net 218.8 3.2 % 284.8 4.1 % 265.8 3.5 % Income tax expense 142.4 2.1 % 89.4 1.3 % 164.6 2.2 % Depreciation and amortization 405.5 6.0 % 402.3 5.7 % 405.5 5.4 % Loss on extinguishment of debt 10.9 0.2 % 6.9 0.1 % 12.5 0.2 % Integration-related expenses 1 — — % 7.6 0.1 % 19.2 0.3 % Purchase accounting adjustments 2 — — % — — % 9.4 0.2 % Restructuring and severance charges 3 82.8 1.2 % 26.5 0.4 % 3.5 — % Transformation expenses 4 58.9 0.9 % 5.4 0.1 % — — % Reserve for certain legal matters, net 5 9.2 0.2 % 7.1 0.1 % — — % Other 6 (3.9) (0.2) % (2.8) — % 3.7 — % Impairment charges 7 — — % 160.8 2.3 % — — % Gain on sale of business 8 (446.6) (6.6) % — — % — — % Pension termination charges 9 9.3 0.2 % — — % — — % Adjusted EBITDA $ 1,198.8 17.7 % $ 1,309.1 18.8 % $ 1,570.7 20.9 % 1.
A reconciliation of cash flows from operating activities, the most directly comparable GAAP financial measure, to free cash flows, is included in the section entitled “Liquidity and capital resources—Historical cash flows.” Results of operations We present results of operations in the same way that we manage our business, evaluate our performance and allocate our resources.
A reconciliation of cash flows from operating activities, the most directly comparable GAAP financial measure, to free cash flow, is included in the section entitled “Liquidity and capital resources—Historical cash flows.” Results of operations We present results of operations in the same way that we manage our business, evaluate our performance and allocate our resources.
As future events and their effects cannot be determined with precision, actual results could differ significantly from those estimates. We consider the policies and estimates discussed below to be critical to an understanding of our financial statements because their application places the most significant demands on our judgment.
As future events and their effects cannot be determined with precision, actual results could differ significantly from those estimates. 44 We consider the policies and estimates discussed below to be critical to an understanding of our financial statements because their application places the most significant demands on our judgment.
We believe that this measurement is useful to investors as it provides a view on the Company’s ability to generate cash for use in financing or investing activities. This measurement is used by management for the same reason.
We believe that this measurement is 32 useful to investors as it provides a view on the Company’s ability to generate cash for use in financing or investing activities. This measurement is used by management for the same reason.
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.
We have been impacted by supply chain constraints and inflationary pressures 30 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.
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.
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 Part I, 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.
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.
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.
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.
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, 2024 and 2023, substantially all of Avantor, Inc.’s net assets were subject to those restrictions.
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.
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, 2024 through maturity. Further, we have not considered any interest obligation on our receivables facility.
These measurements should not be considered in isolation or as a substitute for reported GAAP results because they may include or exclude certain items as compared to similar GAAP-based measurements, and such measurements may not be comparable to similarly-titled measurements reported by other companies.
These measures should not be considered in isolation or as a substitute for reported GAAP results because they may include or exclude certain items as compared to similar GAAP-based measures, and such measures may not be comparable to similarly titled measures reported by other companies.
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.
As our first lien net leverage ratio was below 3.75:1.00 at December 31, 2024, 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, 2023 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, 2024 impairment testing.
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.
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 2024 stock-based compensation expense by $1.1 million.
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.
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.
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.
We calculate expense for some of those awards using fair 46 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.
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.
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 $83.3 million at December 31, 2024, exclusive of penalties and interest.
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 .
Rather, these measures should be considered as an additional way of viewing aspects of our operations that provide a more complete understanding of our business. 31 The key indicators that we monitor are as follows: • Net sales, gross margin, operating income, operating income margin, net income or loss and net income or loss margin .
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.
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.
As appropriate, we supplement our results of operations determined in accordance with GAAP with certain non-GAAP measures that we believe are useful to investors, creditors and others in assessing our performance.
As appropriate, we supplement our results of operations determined in accordance with U.S. GAAP with certain non-GAAP financial measurements that we believe are useful to investors, creditors and others in assessing our performance.
We believe that we have sufficient capital resources to meet our liquidity needs. At December 31, 2023, $249.2 million or 95% 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.
We believe that we have sufficient capital resources to meet our liquidity needs. At December 31, 2024, $217.7 million or 83% 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.
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.
Our business continues to be impacted by the transition from the global COVID-19 pandemic 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 two segments, as described further in the “Results of operations” section.
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.
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, 2024, the combined carrying value of goodwill and other intangible assets, net of accumulated amortization and impairment charges, was $8,899.4 million or 73% of our total assets.
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.
Consists of non-cash charges including depreciation and amortization, impairment charges, stock-based compensation expense, deferred income tax expense, non-cash restructuring charges, pension termination charges, gain on sale of business and others. 2. Includes changes to our accounts receivable, inventory, contract assets and accounts payable.
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.
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.
Adjusted EBITDA margin is Adjusted EBITDA divided by net sales as determined under GAAP. We believe that these measurements are useful to investors as a way to analyze the underlying trends in our business consistently across the periods presented.
Adjusted EBITDA margin is Adjusted EBITDA divided by net sales as determined under GAAP. We believe that these measurements are useful to investors as ways to analyze the underlying trends in our business consistently across the periods presented. These measurements are used by our management for the same reason.
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.
Our most significant contractual obligations are scheduled principal and interest payments for indebtedness. 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.
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.
At December 31, 2024, our valuation allowance on deferred tax assets was $214.1 million, $149.2 million of which relates to foreign net operating loss carry forwards that are not expected to be realized.
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.
Represents the non-cash reduction of contingent consideration related to the Ritter acquisition and the amortization of the purchase accounting adjustment to record Masterflex inventory at fair value. 3. Reflects the incremental expenses incurred in the period related to restructuring initiatives to increase profitability and productivity.
See “Reconciliations of non-GAAP measures” for a reconciliation of net income to Adjusted EBITDA and “Results of operations” for a reconciliation of net sales growth to organic net sales growth.
See “Reconciliations of non-GAAP measures” for reconciliations of net income to Adjusted EBITDA and Adjusted Operating Income, and net income margin to Adjusted EBITDA margin and Adjusted Operating Income margin. See “Results of operations” for a reconciliation and explanation of changes of net sales growth (decline) to organic net sales growth (decline).
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.
See “Cautionary factors regarding forward-looking statements.” Overview For the fiscal year ended December 31, 2024, we recorded net sales of $6,783.6 million, net income of $711.5 million, Adjusted EBITDA of $1,198.8 million and Adjusted Operating Income of $1,089.8 million. Net sales declined 2.6% which included 2.1% organic net sales decrease compared to the same period in 2023.
Represents charges and legal costs in connection with certain litigation and other contingencies that are unrelated to our core operations and not reflective of on-going business and operating results. 7. As described in note 4 to our consolidated financial statements beginning on F-1 of this report. 8.
Represents charges and legal costs, net of recoveries, in connection with certain litigation and other contingencies that are unrelated to our core operations and not reflective of on-going business and operating results. 6. Represents other stock-based compensation expense (benefit). 7. As described in notes 10 and 11 to our consolidated financial statements beginning on F-1 of this report. 8.
A reconciliation of net income or loss, the most directly comparable GAAP financial measure, to Adjusted EBITDA is included in the section entitled “Reconciliations of non-GAAP measures”; • Cash flows from operating activities , which is discussed in the section entitled “Liquidity and capital resources—Historical cash flows”; and • Free cash flow , which is a non-GAAP measure, is equal to our cash flow from operating activities, plus acquisition-related costs paid in the period, less capital expenditures.
A reconciliation of net income or loss and net income or loss margin, the most directly comparable GAAP financial measures, to Adjusted Operating Income and Adjusted Operating Income margin, respectively, are included in the section entitled “Reconciliations of non-GAAP measures”; • Cash flows from operating activities , which we discuss in the section entitled “Liquidity and capital resources—Historical cash flows”; • Free cash flow , which is a non-GAAP measure, is equal to our cash flows from operating activities, less capital expenditures, plus direct transaction costs and income taxes paid related to acquisitions and divestitures (as applicable) in the period.
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.
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 revenues from acquisitions and divestitures that occurred in the last year (as applicable) and changes in foreign currency exchange rates.
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.
In the Bioscience Production segment, Adjusted Operating Income declined $177.0 million or 22.7%, or 22.9% 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.
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.
We increased our liquidity and mitigated the impact of interest rate volatility 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 are also developing new products in emerging areas of science such as cell and gene therapy. Changes in foreign currency exchange rates are impacting our financial condition and results of operations Our consolidated results of operations are comprised of many different functional currencies that translate into our U.S. dollar reporting currency.
Changes in foreign currency exchange rates are impacting our financial condition and results of operations Our consolidated results of operations are comprised of many different functional currencies that translate into our U.S. dollar reporting currency.
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.
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 Laboratory Solutions segment, net sales decreased $264.1 million or 5.3% which included $30.8 million or 0.6% of favorable foreign currency translation impact.
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).
In the Bioscience Production segment, net sales decreased $281.1 million or 11.2%, which included $10.4 million or 0.4% of favorable foreign currency translation impact. Organic net sales decreased $291.5 million or 11.6% (decline of 8.9% excluding COVID-19 headwinds).
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.
Represents 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 38 operations of our business. Integration expenses are incurred over a pre-defined integration period specific to each acquisition. 2.
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.
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.
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.
In 2024, we made prepayments of $690.0 million and $526.4 million on U.S. dollar term loan B-6 and Euro term loan B-4, respectively, which reduced our variable-rate debt.
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.
(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 Laboratory Solutions $ 4,738.3 $ 5,002.4 $ (264.1) $ 30.8 $ (294.9) Bioscience Production 2,228.9 2,510.0 (281.1) 10.4 (291.5) 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.
Reconciliations to the change in reported net sales, the most directly comparable GAAP financial measure, are included in the section entitled “Results of operations”; • Adjusted EBITDA and Adjusted EBITDA margin , which are non-GAAP measures discussed in the section entitled “Results of operations.” Adjusted EBITDA is used by investors to measure and evaluate our operating performance exclusive of interest expense, income tax expense, depreciation, amortization and certain other adjustments.
Reconciliations to the change in reported net sales, the most directly comparable GAAP financial measure, are included in the section entitled “Results of operations”; • Adjusted EBITDA and Adjusted EBITDA margin , which are non-GAAP measures discussed in the section entitled “Results of operations.” Adjusted EBITDA is our net income or loss adjusted for the following items: (i) interest expense, (ii) income tax expense, (iii) amortization of acquired intangible assets, (iv) depreciation expense, (v) losses on extinguishment of debt, (vi) charges associated with the impairment of certain assets, (vii) gain on sale of business, (viii) and certain other adjustments.
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.
Years ended December 31, 2024, 2023 and 2022 Executive summary (dollars in millions) Year ended December 31, 2024 vs. 2023 2023 vs. 2022 2024 2023 2022 Net sales $ 6,783.6 $ 6,967.2 $ 7,512.4 $ (183.6) $ (545.2) Gross margin 33.6 % 33.9 % 34.6 % (30) bps (70) bps Operating income $ 1,084.8 $ 696.4 $ 1,130.2 $ 388.4 $ (433.8) Operating income margin 16.0 % 10.0 % 15.0 % 600 bps (500) bps Net income $ 711.5 $ 321.1 $ 686.5 $ 390.4 $ (365.4) Net income margin 10.5 % 4.6 % 9.1 % 590 bps (450) bps Adjusted EBITDA $ 1,198.8 $ 1,309.1 $ 1,570.7 $ (110.3) $ (261.6) Adjusted EBITDA margin 17.7 % 18.8 % 20.9 % (110) bps (210) bps Adjusted Operating Income $ 1,089.8 $ 1,211.8 $ 1,477.3 $ (122.0) $ (265.5) Adjusted Operating Income margin 16.1 % 17.4 % 19.7 % (130) bps (230) bps In 2024, the net sales decline was driven by decreases in both segments primarily due to reduced customer demand.
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.
While we have implemented pricing and productivity measures to combat these pressures, they may continue to adversely impact our results. 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.
When applicable, we may not have total borrowings in excess of a pro forma net leverage ratio, as defined.
When applicable, we may not have total borrowings in excess of 43 a pro forma net leverage ratio, as defined. This covenant was not applicable at December 31, 2024, and our historical net leverage has been below the covenant requirement.
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.
As described in note 4 to our consolidated financial statements beginning on F-1 of this report. 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 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.
Our U.S. business has significant liquidity via our unused working capital facilities, which satisfy our day-to-day cash operating needs. 41 Historical cash flows The following table presents a summary of cash provided by (used in) various activities: (in millions) Year ended December 31, Change 2024 2023 Operating activities: Net income $ 711.5 $ 321.1 $ 390.4 Non-cash items 1 81.9 533.0 (451.1) Working capital changes 2 89.9 (21.3) 111.2 All other (42.5) 37.2 (79.7) Total $ 840.8 $ 870.0 $ (29.2) Investing activities: Capital expenditures $ (148.8) $ (146.4) $ (2.4) Cash proceeds from sale of disposal group, net of cash and cash equivalents sold 585.2 — 585.2 Other 2.5 2.7 (0.2) Total $ 438.9 $ (143.7) $ 582.6 Financing activities (1,281.2) (843.7) (437.5) 1.
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 believe that cash generated by operations, together with available liquidity under our credit facilities, will be adequate to meet our current and expected needs for cash prior to the maturity of our debt, although no assurance can be given in this regard. 40 Liquidity The following table presents our primary sources of liquidity: (in millions) December 31, 2024 Receivables facility Revolving credit facility Total Unused availability under credit facilities: Capacity $ 247.6 $ 975.0 $ 1,222.6 Undrawn letters of credit outstanding (15.3) (3.1) (18.4) Outstanding borrowings (125.0) — (125.0) Unused availability $ 107.3 $ 971.9 1,079.2 Cash and cash equivalents 261.9 Total liquidity $ 1,341.1 Our availability under our receivables facility depends upon maintaining a sufficient borrowing base of eligible accounts receivable.
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.
Contractual obligations The following table presents our contractual obligations at December 31, 2024: (in millions) Payments due by period Total Short-Term Long-Term Debt: Principal (1)(2) $ 4,077.8 $ 821.1 $ 3,256.7 Interest (1) 536.9 159.2 377.7 Operating leases 236.1 37.8 198.3 Purchase obligations (3) 326.6 113.6 213.0 Other liabilities: Underfunded defined benefit plans (4) 92.0 6.2 85.8 Transition tax payments (5) 19.3 19.3 — Other 4.7 1.1 3.6 Total $ 5,293.4 $ 1,158.3 $ 4,135.1 (1) Includes finance lease liabilities.
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.
In 2023, operating income decreased primarily from lower gross profit, as previously discussed, as well as higher operating expenses driven by asset impairment charges recorded in 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. 35 Net income (in millions) Year ended December 31, 2024 vs. 2023 2023 vs. 2022 2024 2023 2022 Operating income $ 1,084.8 $ 696.4 $ 1,130.2 $ 388.4 $ (433.8) Interest expense, net (218.8) (284.8) (265.8) 66.0 (19.0) Loss on extinguishment of debt (10.9) (6.9) (12.5) (4.0) 5.6 Other (expense) income, net (1.2) 5.8 (0.8) (7.0) 6.6 Income tax expense (142.4) (89.4) (164.6) (53.0) 75.2 Net income $ 711.5 $ 321.1 $ 686.5 $ 390.4 $ (365.4) In 2024, net income increased primarily due to higher operating income, as previously discussed, as well as lower interest expense due to debt repayments on our variable-rate debt, partially offset by higher income tax expense due to higher income before income taxes.
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.
The remaining decline of $270.8 million or 18.4% is discussed below. In the Laboratory Solutions segment, Adjusted Operating Income declined $96.4 million or 12.6%, or 13.1% 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 and distribution costs.
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.
As described in notes 10 and 11 to our consolidated financial statements beginning on F-1 of this report. 8. As described in note 4 to our consolidated financial statements beginning on F-1 of this report. 9. As described in note 17 to our consolidated financial statements beginning on F-1 of this report.
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.
A discussion and analysis of historical cash flows covering the year ended December 31, 2022 is included in the 2023 Form 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.
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).
Organic net sales decreased by $148.5 million or 2.1% which is discussed below. In the Laboratory Solutions segment, net sales decreased $128.2 million or 2.7% which included $5.5 million or 0.1% of favorable foreign currency translation impact and $42.4 million or 0.9% of impact related to our Clinical Services divestiture. Organic net sales decreased by $91.3 million or 1.9%.
Net 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%.
Adjusted EBITDA and Adjusted EBITDA margin For reconciliations of Adjusted EBITDA and Adjusted EBITDA margin to net income and net income margin, respectively, the most directly comparable measures under GAAP, see “Reconciliations of non-GAAP measures.” (dollars in millions) Year ended December 31, 2024 vs. 2023 2023 vs. 2022 2024 2023 2022 Adjusted EBITDA $ 1,198.8 $ 1,309.1 $ 1,570.7 $ (110.3) $ (261.6) Adjusted EBITDA margin 17.7 % 18.8 % 20.9 % (110) bps (210) bps In 2024, Adjusted EBITDA decreased $110.3 million or 8.4%, which included a favorable foreign currency translation impact of $3.3 million or 0.3%.
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.
Free cash flow (in millions) Year ended December 31, Change 2024 2023 Net cash provided by operating activities $ 840.8 $ 870.0 $ (29.2) Capital expenditures (148.8) (146.4) (2.4) Divestiture-related transaction expenses and taxes paid 76.3 — 76.3 Free cash flow $ 768.3 $ 723.6 $ 44.7 42 Free cash flow was $44.7 million higher in 2024 driven by changes in cash flows from operating activities noted above.
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.
In the Bioscience Production segment, Adjusted Operating Income declined $43.7 million or 7.3%. The impact of foreign currency translation impact was immaterial. The decrease was driven primarily by lower sales volume, unfavorable product mix and higher annual incentive compensation expenses, partially offset by savings from our cost transformation initiative.
Removed
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.
Added
Segment Change Effective January 1, 2024, we changed our operating model and reporting segment structure from three reportable segments to two reportable segments, Laboratory Solutions and Bioscience Production. This structure aligns with how our Chief Executive Officer, who is our CODM, measures segment operating performance and allocates resources across our operating segments.
Removed
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.
Added
This reportable segment change has no impact on our consolidated operating results. In connection with the operating model and reporting structure change, our CODM changed the measure used to evaluate segment profitability from Adjusted EBITDA to Adjusted Operating Income. All disclosures relating to segment profitability, including those for comparative periods, have been revised as a result of this change.
Removed
RIM Bio provides a complete range of single-use 2D bags, 3D bags, tank liners, bag assemblies and multi- bag manifolds used in the manufacturing of biologics including monoclonal antibodies (mAbs), vaccines, cell and gene therapies, and recombinant proteins.
Added
Our results are impacted by a divestiture to further refine our business model We completed the sale of our Clinical Services business, a component of the Company’s Laboratory Solutions reportable segment, on October 17, 2024, pursuant to a definitive agreement that was signed on August 16, 2024.
Removed
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.
Added
The Clinical Services business has not been classified as a discontinued operation as it did not represent a strategic shift that will have a major effect on the Company’s operations and financial results.
Removed
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.
Added
These projects include enhancing product purity and performance characteristics, improving product packaging and streamlining workflows. We are also developing new products in emerging areas of science such as cell and gene therapy.
Removed
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.
Added
We continue to advance our cost transformation initiative to reduce our expenses We are advancing a global cost transformation initiative to further enhance productivity through increased organizational efficiency, footprint optimization, reduced cost-to-serve and procurement savings that are expected to generate approximately $300 million in run rate gross cost savings by the end of 2026.
Removed
While we have 29 Table of contents implemented pricing and productivity measures to combat these pressures, they may continue to adversely impact our results.
Added
A reconciliation of net income or loss and net income or loss margin, the most directly comparable GAAP financial measures, to Adjusted EBITDA and Adjusted EBITDA margin, respectively, are included in the section entitled “Reconciliations of non-GAAP measures”; • Adjusted Operating Income and Adjusted Operating Income margin , which are non-GAAP measures discussed in the section entitled “Results of operations.” Adjusted Operating Income is our net income or loss adjusted for the following items: (i) interest expense, (ii) income tax expense, (iii) amortization of acquired intangible assets, (iv) losses on extinguishment of debt, (v) charges associated with the impairment of certain assets, (vi) gain on sale of business, (vii) and certain other adjustments.
Removed
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.
Added
This measurement is our segment reporting profitability measure under GAAP. Adjusted Operating Income margin is Adjusted Operating Income divided by net sales as determined under GAAP. We believe that these measurements are useful to investors as ways to analyze the underlying trends in our business consistently across the periods presented.
Removed
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.
Added
These measurements are used by our management for the same reason.
Removed
Also, we fully repaid U.S. dollar term loan B-4, Euro term loan B-3 and made a total prepayment of $555.0 million on U.S. dollar term loan B-5 which resulted in reduction of our annual cost of interest.
Added
We also provide discussion of net sales and Adjusted Operating Income by segment: Laboratory Solutions and Bioscience Production. Corporate costs are managed on a standalone basis, certain of which are allocated to our reportable segments.
Removed
To protect against rising interest rates, we entered into an interest rate swap and a cross currency swap that collectively convert interest payments on $750.0 million of our U.S. dollar term loan from U.S. dollar variable-rate to a Euro fixed-rate.
Added
Volume declines and inflationary pressures, partially offset by savings from our cost transformation initiative, contributed to contraction in gross margin and gross profit. Operating income was driven primarily by the gain on sale of our Clinical Services business.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

11 edited+0 added−0 removed2 unchanged
Biggest changeFor 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.
Biggest changeFor the year ended December 31, 2024, a 10% strengthening of the U.S. dollar compared to all other currencies would have decreased net income by $16.2 million and decreased Adjusted Operating 47 Income by $30.6 million.
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.
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. Certain of our U.S. subsidiaries carry Euro-denominated debt.
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
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.
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.
At December 31, 2023, a 100 basis point increase to the applicable variable rates of interest would have increased the amount of interest by $11.4 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.
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.
For example, an optional debt repayment of €100 million on December 31, 2024 and December 31, 2023, with a 10% weakening of the U.S. dollar would have caused us to pay an additional $10.3 million and $11.1 million, respectively, to extinguish that debt.
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.
Borrowings under these facilities bear interest at variable rates based on prevailing LIBOR, EURIBOR and SOFR rates in the financial markets. At December 31, 2024, the Company had $100.0 million of interest rate swaps to convert variable rate interest to fixed rate interest.
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.
Changes to those market rates affect both the amount of cash we pay for interest and our reported interest expense. At December 31, 2024, 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 $5.2 million per annum.
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.
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.
We 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.
We 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, 2024, we had borrowings of $617.7 million under our senior secured credit facilities and our receivables facility.
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.
At December 31, 2024, a 100 basis point decrease in the market rate of interest would have increased their aggregate fair value by $99.9 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. 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. Interest rate risk We carry debt that exposes us to interest rate risk. A portion of our debt consists of variable-rate instruments.
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 Operating Income by $19.6 million. Interest rate risk We carry debt that exposes us to interest rate risk. A portion of our debt consists of variable-rate instruments.

Other AVTR 10-K year-over-year comparisons