Good morning. My name is Emily and I will be your conference operator today. At this time, I would like to welcome everyone to Avantor's third quarter 2025 earnings results conference call. After the presentation, you will have the opportunity to ask any questions, which you can do so by pressing start, followed by the number one on your telephone keypad. I will now turn the call over to Alison Hosack, Senior Vice President of Global Communications. Ms. Hosack, you may begin the conference.

Good morning and thank you for joining us. Our speakers today are Emmanuel Ligner, President and Chief Executive Officer, and Brent Jones, Executive Vice President and Chief Financial Officer. The press release and a presentation accompanying this call are available on our Investor Relations website at ir.avantoursciences.com. A replay of this webcast will also be made available on our website after the call following our prepared remarks we will open the line for questions during this call we will be making forward-looking statements within the meaning of the u.s federal securities laws including statements regarding events or developments that we believe or anticipate may occur in the future these forward-looking statements are subject to a number of risks and uncertainties including those set forth in our sec filings Actual results might differ materially from any forward-looking statements that we make today. These forward-looking statements speak only as of the date that they are made. We do not assume any obligation to update these forward-looking statements as a result of new information, future events, or other developments. This call will include a discussion of non-GAAP measures. A reconciliation of the non-GAAP measures can be found in the press release and in the supplemental disclosure package on our Investor Relations website. With that, I will now turn the call over to Emmanuel.

Thank you, Ali, and good morning, everyone. I appreciate you joining us today. As you know, I joined Aventor a little more than two months ago. I came on board because I believe this company has a tremendous potential. I have spent my entire career in pharma and lab science industries, spending meaningful time on three different continents. I was fortunate to spend two decades at GE Life Sciences and Danaher, where I built out the Saiteva business, significantly accelerated the growth trajectory of the platform, and led its integration with PAL Life Sciences. During that time, I had a front row seat to Aventure Trajectories as a customer and supplier. I believe this experience enabled me to step into this role 10 weeks ago with a unique perspective on the company's strengths and areas for improvement. Throughout my career, the primary lessons I've learned is that there is no substitute for going to Gemba. this concept literally means visiting the place where work is done and value is created to learn and determine how to best improve our organization and for the past two months this is exactly what i have been doing i have dedicated my time toward visiting our sites meeting our people speaking with dozens of our customers and suppliers across Asia, Europe, and North America. This not only sharpened my initial instincts but also provided invaluable insights as we map out our strategy moving forward. I want to personally thank all the stakeholders for the warm welcome, open dialogue, and trust that demonstrated for my first day in the role. here are some of the important learnings first this is a great industry with strong secular tailwinds scientific collaboration is more important than ever if you talk to any pharma or biotech company right now you will hear about the multitude of ways in which they are harnessing the power of technology and ai to accelerate the next breakthrough discovery That gives us a tremendous amount of confidence in the long-term trajectory of the end markets we served and reinforces the importance of our positioning within the industry. Our recent announcement with Blue Whale Bio is a perfect demonstration of how Aventor is advancing innovation through collaboration and we are committed to continue to do our part to facilitate the research, development, manufacturing, and delivery of next-generation therapies. Second, Aventor has a solid portfolio, a committed global team, and an incredible customer reach, serving more than 300,000 customers' locations across approximately 180 countries. As someone that has spent considerable time in recent years working to scale life science businesses, those attributes will be the envy of most companies. We have significant untapped potential and numerous opportunities in front of us, and we need to capitalize on those opportunities. Third, and most importantly, there are many things we can and should do better, and we are taking immediate action to turn the business around and hold ourselves accountable for rewarding the trust our investors place in avantor starting from a commercial perspective i believe our business is overly complex with unnecessary centralization which inhibits frontline staff from most effectively meeting our customers and supplier needs and expectations customer buy from Avento because of the quality and service heritage of our incredible brands. VWR, JT Baker, Masterflex, Nusil. Those are some of the best known names in the industry and our commercial team are not being sufficiently empowered to leverage the equity of those brands. On the operation and supply chain side, I believe we need to make some investment and process enhancement to improve our ability to consistently serve our customers. Overall, I believe those challenges are generally self-inflicted. And the good news is that they are fixable with determination, focus, and time. At the conclusion of this call, I will share my primary thoughts on our plan for doing just that, which we are calling Aventor Revival. With those initial findings in mind, we strongly believe that our current share price does not reflect the long-term value of our platform. To demonstrate our long-term conviction in the prospect of this business, our board of directors has authorized a $500 million share repurchase program with immediate effect, which we will pursue opportunistically moving forward, while also delivering on our commitment to decrease net leverage. Now, I would like to turn over to Brent for a more detailed overview of our third quarter financial results and our updated full year guidance.

Brent? Thank you, Emmanuel, and good morning, everyone. I'm starting with slide four for the quarter reported revenue was 1.62 billion dollars which was down five percent year-over-year on an organic basis this reflects weaker than expected top line performance primarily in lab adjusted ebitda margin was 16.5 percent and adjusted eps for the quarter was 22 Pre-cash flow was $172 million, with adjusted conversion at 124%. Turning to slide 5. Adjusted gross profit for the quarter was $527 million, representing a 32.4% adjusted gross margin. This is a decline of 100 basis points year-over-year, driven mainly by price actions in lab to protect and grow market share. We had another quarter of solid cost control with adjusted SG&A expense better than planned and prior year. Our results also benefit from reductions in incentive compensation accruals. We remain on track with our cost transformation program and continue to expect $400 million in run rate savings by the end of 2027. Adjusted EBITDA was $268 million in the quarter, representing a 16.5% margin, better than our expectations. Adjusted operating income was $237 million at a 14.6% margin. Interest and tax expense were in line with our expectations. As a result, adjusted earnings per share were $0.22 for the quarter a four cent year-over-year decline our adjusted eps performance in the quarter reflects the flow through of our adjusted ebitda results our cash generation was particularly strong with 172 million dollars in free cash flow in the quarter when adjusted for transformation related payments our free cash flow conversion was 124 percent of adjusted net income for the quarter In terms of our GAAP results, we took a $785 million impairment to the goodwill associated with our lab distribution business. This non-cash charge was necessitated in large part by the continued weakness in our share price, as well as the margin headwinds this business is facing. Our adjusted net leverage ended the quarter at 3.1 times adjusted EBITDA, down 0.1 times from Q2, as our strong cash generation enabled us to reduce net debt. Finally, we recently affected a very attractive refinancing of our near-term maturities and upsized our revolving credit facility to $1.4 billion and extended its maturity to 2030. Other than modest required term loan amortization, we now do not have any debt maturities before 2028, and all of our debt is either prepayable at par or at very modest call premia. Our debt is approximately 75% fixed rate, and our current weighted average cost of debt is just over 4%. Let's now take a closer look at each of our segments on slide 6. in laboratory solutions revenue was 1.1 billion dollars on an organic basis we declined five percent versus prior year below our expectations of negative two percent to negative four percent the market backdrop in lab is largely stable and cory walker and his team have done a great job defending and expanding business at our largest accounts the share losses we mentioned on our Q1 call have been phasing in over the past several quarters. The good news is that since Corey joined us in late March, we haven't lost any key customer accounts, and in fact, we have won about $100 million in business at two top 15 global pharma customers, which will start phasing in in 2026. With that said, customer activity continues to be at lower levels than our original expectations for the year, driven by ongoing end-market uncertainty related to basic research funding. Each of our lab businesses faced similar mid-single-digit headwinds on a year-over-year basis. Our distribution channel, which accounts for approximately two-thirds of segment revenue, was primarily impacted by weakness in consumables and equipment and instrumentation, while our chemicals and reagents were essentially flat. Our services business, approximately 20% of segment revenue saw greater than expected headwinds due to the aforementioned share loss. And our proprietary business, the balance of labs revenue, was significantly impacted by our science education business. However, our attractive proprietary lab chemicals grew mid single digits in the quarter and similarly year to date. The primary drivers of our missed two expectations were headwinds and services and higher education and k-12 while market softness is a key factor in the quarter's performance we also continue to navigate competitive pressures these need to be better mitigated by improved commercial and operational execution which as emmanuel noted at the outset is one of our key priorities as part of avantor revival Adjusted operating income for lab solutions was $124 million for the quarter with an 11.3% margin. The softer demand environment has pressured our ability to get price, which has meaningfully impacted margins year over year. On a sequential basis, the primary driver of the margin decline was lower volumes and related absorption. Turning to bioscience production, revenue was $527 million in Q3, down 4% organically on a year-over-year basis and at the low end of expectations. Bioprocessing was down low single digits year-over-year versus our expectation of flat. Within bioprocessing, processed chemicals was up low single digits but was lower than expectations. The planned maintenance downtime that impacted Q2 was remedied during the quarter, but, as Emmanuel mentioned, we continue to face other operational headwinds that are impacting our throughput, including raw material availability and equipment uptime. As an example, downtime at several of our plants prevented us from shipping several orders that were due for delivery in Q3. Absent these issues, we would have delivered our bioprocessing guide for the quarter. Single-use largely performed as expected, and CEC was somewhat weaker than expected, down mid-single digits, due to commercial execution and competitive dynamics. Year-to-date and in Q3, our book-to-bill is 1.0 for bioprocessing, with particularly strong performance in processed chemicals, where order rates were up high single digits in Q3 and year-to-date, while billings are only up low single digits, indicating a solid trend. Our bioprocessing order backlog reduced modestly from Q2 to Q3, but still is too high. The team is working hard to reduce this as much as possible by the end of the year. For the balance of the segment, silicones performed as expected, and applied solutions had a stronger-than-expected quarter up low single digits on significant strength in electronic materials that we expect to continue in Q4. adjusted operating income for bioscience production was 128 million for the quarter representing a 24.2 margin margin was down year over year largely due to lower volumes and related under absorption as well as higher expense related to our operational challenges on a sequential basis volume was the primary headwind only partially offset by price and lower operating expense slide 7 shows our full year 2025 guidance this has been updated to reflect q3 performance as well as our best assessment of the current environment we now expect full year organic revenue growth of negative 3.5 percent to negative 2.5 percent based on current fx rates we expect a modest tailwind from fx of approximately 1.5 percent along with the two percent headwind from the clinical services divestiture this leads to reported revenue growth of negative four percent to negative three percent on a segment basis we expect laboratory solutions full year revenue growth to be minus mid single digits to minus low single digits organically down modestly from previous expectations of minus low single digits this implies q4 organic performance of down mid single digits. This change is due to the impact of Q3 performance, as well as expectations for continued softness in consumables and in our lab services business. We also expect additional headwinds due to the impact of the U.S. federal government shutdown. We expect bioscience production's full-year revenue growth to be minus low single digits organically, down from previous expectations of approximately flat. This implies Q4 organic performance of down mid-single digits to down high single digits. This change is largely due to reductions in our outlook for bioprocessing as well as customer pushouts in our silicones business. Bioprocessing is expected to be down low single digits for the year organically, down from previous expectations of flat to plus low single digits. This implies Q4 organic performance of down high single digits to low double digits. Recognizing this is a meaningful change, I want to break down our expectations across bioprocessing in a bit more detail. We believe processed chemicals in Q4 will be flat sequentially versus Q3 and down double digits year over year despite solid year-to-date order book performance. We previously expected a mid-single-digit contraction in Q4 for processed chemicals. This change is largely due to higher-than-expected backlogs as a result of the ongoing challenges previously discussed. Q4 is also a particularly tough comparable as processed chemicals grew meaningfully in the double digits in Q4 last year. We anticipate single-use to be up low single digits both sequentially and year-over-year in the fourth quarter we previously anticipated high single digit growth in q4 for single use controlled environment consumables are expected to be flat sequentially and down low single digits year over year we previously anticipated this business to grow modestly in q4 this business is being impacted by the competitive pressures and the general demand weakness we are seeing in consumables Moving to profitability, we expect our strong cost controls and favorable compensation accrual impact to continue into Q4. As such, we expect full-year adjusted EBITDA margins in the mid-16s. We have reduced our adjusted EPS guidance range to between $0.88 and $0.92. cents. We still expect free cash flow performance of $550 to $600 million before any one-time cash expenses associated with our cost savings initiative. The reduction in earnings from our previous guidance should be offset with strong working capital performance, and we now expect about half of the pre-bate payments anticipated for the fourth quarter to push into fiscal year 26. I also want to address near-term capital allocation. Much of our debt complex is prepayable at par, and we will continue to reduce outstanding debt as we generate cash. At the same time, with our new share repurchase authorization, we intend to buy shares opportunistically without increasing leverage. We ended the quarter at 3.1 times adjusted net leverage, and will continue to move towards our leverage target of sustainably below three times. With that, I will turn the call back to Emanuel.

Thank you, Brent. Clearly, we are disappointed with those results, and I am not here to make excuses of our underperformance. My focus is on addressing the root cause of those persisting challenges and implementing appropriate course correction quickly. At the beginning of this call, I introduced the concept of Aventor Revival. Our board and management team are fully aligned with this effort, which will initially focus on five key pillars. First, our go-to-market strategy. We need to evolve our approach to ensure customers and suppliers clearly understand our value proposition and complete product and servicing offering. As I mentioned in my opening remarks, we have an incredible roster of brands. Embracing VWR heritage as a leading distributor and a company heritage as a leading providing of fine chemicals and specialty materials, for example, is essential to drive growth. So we are carefully evaluating our brand architecture and we are going to give more prominence to key product and channel brands moving forward. We also intend to refocus attention to our distribution business and our value proposition to supplier and customers. We also have worked on the way to analyze and evolve our customer service and commercial organization. This work is really focused on empowering our sales representative to better serve our customers however and wherever they want to be served. This includes enhancing our e-commerce platform. Second, we need to invest strategically in our manufacturing and supply chain organization. Brent noted the operational issue we are having. In bioprocessing chemicals, the demand is there and we need to be better positioned to meet that demand at all times. The current state of our manufacturing and supply chain organization varies. with some facilities that are world-class while others are in need of investment. Third, we will be carefully scrutinizing our portfolio to ensure a focus on our core business. We are going to hold each of our businesses accountable for delivering clear growth, profitability, and return on investment targets. We are approaching this process with an open mind, but if any of those businesses are not capable of delivering those targets in a reasonable timeframe, we are going to scrutinize whether we are the right owner for them. Fourth, we need to drive net cost saving and simplify processes across the organization we are committed to being a business that generates strong operating leverage even as we invest in accelerating growth and our ongoing 400 million cost transformation program is an important step in that direction however we recognize that those savings today are not adequately falling through to the bottom line. Part of this is because we are still operating with far too much complexity today. We need to simplify our operating processes to remove barriers that prevent us from executing efficiently. Gaps in sales and operating processes are contributed to inventory and forecasting challenges, preventing us from serving our customers at the on-time rates they expect. To address this, we are focused on improving leadership accountability across the businesses. We are establishing new operating norms and cadence that will ensure the leaders across our organization are aligned and focused on top business priorities. Finally, to help do this, we must strengthen our talent and improve accountability in a few key areas very encouragingly most of the associates i've met are deeply engaged and passionate about the work they do each day they want the company to succeed they are prepared to work hard and be part of the solution they are looking for leadership and guidance on how to do that to support those efforts and accelerate improvement we will be bringing on new talent in a few key areas. A new chief operating officer, a critical role that will report to me and help reinforce consistent manufacturing, supply chain excellence, and lean operations across the organization. A new executive leadership position dedicated to the quality and regulatory function, reporting directly to me. A strategic move reflecting the critical role quality and regulatory play in safeguarding patient safety, ensuring regulatory compliance, and driving operational integrity across our global business. We are also hiring a new Chief Digital Officer to help strengthen digital commerce capabilities with our laboratory solution segments. Aventa Revival will initially be targeted toward addressing each of those focus areas. So the important action will help us drive meaningful changes and improvement across our organization over the next several quarters. But we are not stopping here. It is important to stress that those initial steps are based on my observation following about two months in the role. I'm committed to continue to meet with and learn from all our stakeholders. And as I do, rest reassures those plans will continue to evolve with a renewed focus on getting our performance back on track and created value for our shareholders. Clearly, turning business performance around will take some time, but we are confident the action we are taking will have an impact that will continue to grow over time. It's about driving simplification, process improvement, and accountability across the organization. As I noted a moment ago, our board and management team are 100% behind this effort. The recently announced addition of Greg Lusser to our board and the elevation of Greg Sumi as our next board chairman are demonstrative of our board active oversight and engagement in this project I know we must rebuild our credibility with the investment community and accountability will be my North Star you can expect regular updates on our progress against those objectives with that I will now turn the call over to the operator to begin the Q&A session thank you we will now begin the question and answer session as a reminder if you would like

to ask a question today please do so now by pressing start followed by the number one on your telephone keypad. If you change your mind or you feel like your question has already been answered you can press start followed by two to remove yourself from the queue. To allow everyone a chance to ask a question during Q&A we request that you please limit yourself to one question and one follow-up. Our first question today comes from Vijay Kumar with Evercore ISI. Vijay please go ahead.

Hi, guys. Thank you for taking my question. And Emmanuel, welcome to your inaugural earnings call. Maybe high level, as you've reviewed the business, and you've come with bioprocessing background, when you look at these declines, what is your confidence that these are fixable, solvable issues? And I'm curious on how the quarter played out.

Relatively, your prior expectations was the quarter um uh did progress um um in line and did things worsen in september october i'm curious when did these issues uh crop up thanks bj thanks for uh for the kind uh welcoming world um look first of all i i am confident that it's flexible over the last two months i really spent a lot of time uh on the field with the people with our customers a dozen of customers and supplier. And I think the first thing which I was really, really super pleased about is the conviction by the people that, you know, they have the passion about the brand, they have the passion about the product, they have the passion about the customers. What the team need is really leadership. And I think on the quarter, look, it is a very disappointed number. There's absolutely no doubt about this. And there's no excuses about the fact that, you know, we just dropped the ball on a couple of areas. And, again, I think I share that around the SNOP. It's really about a better communication. It's about visibility. It's about execution. It's about accountability. And that's why Brent and myself are putting new norms, new cadence to make sure that the team is really working together. I think, again, it is fixable. So those are just the five pillars that I just identified in my first eight weeks. Then, of course, we'll continue to learn. We'll continue to stick with a key shareholder. And this plan will evolve without any doubt.

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

Hey, Vijay, Manuel again. Look, I'm taking a fresh look at at all the numbers all right because i want accuracy um and so let me look at those numbers again and then we'll come back to you when we have a good understanding of 2026 understood thanks guys thank you our next question comes from michael riskin with bank of america michael please go ahead great thanks for taking the question um and appreciate all the all the candid color during the prepared remarks.

You touched on share losses and competitive dynamics briefly in the prepared remarks, but just talking about, you know, 1Q2Q dynamics. Can we talk about that a little bit deeper? I mean, I think it's pretty evident based on the results over the last couple of years, especially in the lab solution segment, but also in buy size. There's been pretty deep share losses to your competitors. I appreciate all your color on, you know, operational steps to fix that but given the portfolio and given the markets you play in how do you plan to stem that tide of share loss and just could you just give it some confidence in invisibility to correct that because that seems to be sort of the biggest structural challenge you're facing yes michael um look here's my understanding um i think we've lost some share without any doubt in the lab services business.

Here's why I'm super encouraged is, you know, we have Corey that took the lead of this business six, seven months ago. And what him and the team is doing is really having, I will say, a fighting spirit back. And what we've observed over the last six to seven months is that we have not lost any new renewal of any large key account contract. And I think this is really important for us. And on the contrary, we have the opportunity to grow our share of wallet in those accounts. Now, we have some barrier that we need to fix and some challenges. I mean, e-commerce is one of them. And this is why we're taking really a quick action to recruit a digital officer to help us to really get this e-commerce platform to engage with our customers in a much more leaner way to provide not only product, but really workflow, which is so important for the customers. On bioprocessing, look, my view is the following. You know, really, our key product line in the bioprocessing is our bioprocessing chemicals. And when we look at our order intake year to date, our order intake is on a high single-digit level. So we're there. I met customers that clearly said to us, we want to work with you. We want to do better. We can give you more businesses. We need to fix a couple of things like our service level, in particular our on-time delivery. And this is why it's so important to work on the SNOP, to look on the different plants that need upgrade.

And that's what we're doing. and we are doing um as fast as possible on this okay thanks and if i can have a follow-up um on the event or revival um dynamic um i mean i think that certainly resonates you call it out a couple times that you believe the business is overly complex unnecessary centralization um we've heard that from a number of our channel checks as well um what what are the steps to fixing that right i mean it's a it's a huge organization there's a lot of levels um seems like there's gonna need to be some deep changes there uh but from an operational perspective that seems to be the easiest six but could you talk us through the process to get there and how long that could take

um uh it's it's really early days for me i remember so look we we're going to start to really work on the go-to market really understand how we can decentralize more of the decision making closer to the customers and as you know there's different region with different dynamic And so we really need to empower the local team to really drive a decision. I think the other thing is, look, we have two really important businesses. One is our lab services. It's VWR. It's a distribution business. We have a very strong brand there. And then the other one is a bioscience business with brands like JT Baker. I think we need to make sure that those brands are more, I would say, front at the customer's level to make sure that we engage with the customers with the brand they want to work with. The observation that I have, Michael, is many customers told me, we love VWR, we want to continue to work with VWR. Some even say, well, we didn't know that VWR was part of Avantor. And that's why I'm talking about brand revival and really making sure that we are improving our engagement with the customers. Service level is very, very important. And this is why we are looking at what do we need to do in the plant, which I need of investment to make sure that we raise our service level on the bioprocessing. Again, as we said earlier, the demand is there. It's for us to really make sure we operate better.

Great. Thank you.

Thank you. Our next question comes from Dan Brennan with TV Cohen. Dan, please go ahead.

Thanks for the questions. Maybe just to start on the lab side of the business, could you just describe, I know you discussed pricing in the opening remarks. Just give us a sense in 3Q and kind of 4Q how we think about that price-value mix, if you will, and then kind of any thoughts. I know you're not ready to talk about 26, but is the assumption that price gets better? Just any visibility on that? And then maybe the second part would just be more strategically, as you've looked at, you know, since you've been on board, you've looked at the lab market. Obviously, you've talked about share loss, but you've studied that now recently. Any way to characterize in that context, like how much share you think VWR has lost over the last two or three years?

Just to give us the framework for if you're able to kind of regain that or stabilize it, what the opportunity might be. okay so hey on uh on the price volume dynamic i mean certainly in connection with the comments and share on that you know there is some down volume we are getting price not not exactly the levels we'd like to see but we're certainly seeing price coming through and um uh you know on and and we expect a similar dynamic in q4 on that so and when you look at q3 q3 performance sequentially to q4 you know the main the main dynamic in lab is a modest increase really related to number of days and seasonality in europe there so what you're really hearing from us is stability through to q4 and that dynamic will continue on the pricing side as well on the market share uh look i think we've lost a couple of large accounts and we know them and And that's something which is tracking.

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

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

Yeah, that's a great question. Look, I'm super excited about the portfolio we have, in particular around the chemicals, you know, acid-based, we have adjuvants, we have also, you know, viral inactivation products, which are proprietary. So we have a really good portfolio, and I think we have a good commercial team. And again, as I said, our order intake year-to-date is high single digits. So basically, it gave me the confidence that the demand is there. It's for us to make sure that we serve the customers better. And all the customers that I've met are super satisfied with that part of the portfolio. So I'm confident that the portfolio is good. And also, the recent announcement we've made, like Blue Whale, is very encouraging about the fact that we will continue to collaborate with, you know, strategic innovation that will give us a differentiated portfolio in the future. So quite exciting about the bioprocessing portfolio.

Great. Thank you.

Thank you. Our next question comes from Luke Sergot with Barclays. Luke, please go ahead.

Hey, guys. Thanks for the question here. Appreciate all the updates and everything you're thinking about, Boat. As you think about when you're looking at 26 and the overall market rate, you know, just relation to how you guys are going to grow. What's your outlook for the market, I guess, given that the underlying demand that you've seen, especially across what your peers have said too?

I think on the peers' comments, you know, we need to look at apple to apples. And again, I think what is important for me is to make sure that I remind everybody that our portfolio on bioprocessing is really primarily around chemicals okay so it's a unique differentiated portfolio um especially was from the company that that i'm coming from and so i think it's very important that we we think that it as of today your today um the direction is order intake high single digits what i need to do is i really need to take a fresh look at the 2026 numbers the market you know what do we need we we think we can do what's going to be

the impact of the five pillar of revival plans how fast we can get some in impact on this some will have an impact quickly some will take more time and i'll come back to you as soon as i have a better view okay i was just trying to figure out what your overall outlook for the for your particular market looked like and then we can kind of make the assumption there on what you guys can do from a growth perspective that's fine um i guess just from a follow-up here um you talked about the bioprocessing plant the downtime there is this what does this do to is this just like a planned you know regular maintenance downtime that you guys had and you know do you need you talked a little bit about kind of building some redundancy is this is this what you're kind of referring to so that you don't miss out on the quality and the reliability that that market completely relies on as number one?

Look, I visited several of our chemical plants. We have really world-class plants, super modern, very well-run, with a very, I would say, dedicated team. Some are just in need of upgrade, okay? And so some of the tools are a bit old, and so therefore they break down. So they give us a bit an unreliability of runtime delivery. So service level for some plants are excellent. Some are not where we should be. And this is what I'm talking about, strategic investment. There is some investment that are needed. We need to be very surgical about this. And that's just, I will say, on the plants themselves. themselves. The second thing is about the processes. You know, it's about how do we give visibility to the plant of what's going to be the demand, having a good understanding that the plant are putting in place the planning to make sure that the product will be delivered as the customers requested. And then, of course, at the quality which is requested. So it's really around the processes that today are not as simple as they should be, not as smooth as they should be and with a bit also of lack of accountability so um strategic investment on one side and i think it's also about talent one of my remarks was about the fact that the team is super passionate and want to do well and they want to fix the issue and they want to do better the they need direction they need someone which is going to help them to focus and they need leadership and this is also why we are far advanced into a recruit of a chief operating officer someone which have a global experience a long-term experience of leading different type of plants including chemistry plants someone which is a black bear someone that have a lean mindset a productivity mindset and and we're on the final stage of that recruitment That will really help, as well, the team to drive and improve plant's performance. Great. Thanks.

Thank you. Our next question comes from Tycho Peterson with Jefferies. Tycho, please go ahead.

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

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

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

Well, look, Tycho, we believe our current share price really does not reflect the long-term value of the company, especially in the turnaround. So the program is just basically to make sure that we demonstrate our commitment to the long-term value of the company, okay? And our confidence to the business, our confidence about the fact that we can turn around the performance with revival plans. And we look in terms of capital education, M&A is always an opportunity, but when you bring M&A, you need to make sure that you're going to bring the company into a company which is operating really really well all right and integration of an acquisition needs to be done with a team which have simple processes which have really great talent in that are going to be able to execute the the acquisition and the integration super well and so I think right now you know it's just a conviction that the business is going to do better that we are going to turn it around and I think it was it was the right message and the right things to do okay and then the last one on bioscience you you quoted a number of kind of shipping uh timing issues are you assuming those come back in the fourth quarter it was a little bit unclear what's actually baked in the guidance from a kind of timing and recapture perspective yes i think the team has already started um to do some good job in in q3 but not on not enough um and we'll continue to do so so yes we're going to see some improvement in q4 um but as i said as well some of the plants need some uh equipment investment and you know those things sometimes take some time so um we're working as fast as possible uh you have my commitment to to really um focus on executing uh the demand as much as

possible and as fast as possible okay thanks thank you our next question comes from patrick donnelly with city patrick please go ahead hey guys thank you for taking the question um brent maybe a follow-up on the pricing side you certainly understand uh understand some of the cadence there can you just talk about i guess the moving pieces on margins just high level as we get into next year in terms of what pricing rolls through next year and how to annualize pressures margins versus some of the offsets you know what levers do you guys have to pull on if We've done some cost-out initiatives over the last couple of years. How much more room is there on that front versus some of the pricing pressures? Maybe just the high-level moving piece on margins would be helpful.

Well, an important question, Patrick, and I, you know, per our other comments here, probably won't make significant comment into 26, but, you know, when you think about our margin dynamics broadly here, you know, gross margin down year over year, largely driven, And, you know, it's falling on the type of question, you know, we are getting modest price to get it against it, but we're absorbing more inflation. So that's, that's been the primary driver, the lab pricing into the gross margin. Now, on a sequential basis, you saw pressure and gross margin. That was more just mix of the relative businesses, because we didn't have the same level of growth and bioscience as well as primary, primarily there on the business basis and continuing on that. But look, Emmanuel made the comments that we need to continue to drive at cost broadly and get net cost out rather than offset inflation and offset FX. And, you know, the but when you think about key drivers here, obviously getting price and getting price against COGS are really important in the business. The differential segment mix is really, really important. and that hurt us in Q3, and then finally productivity, which to Project Revive, to Avanto Revival, Chief Operating Officer, driving better productivity at plants. Those will be key parts of it, and when we come with the views on 26, that'll certainly be wrapped in our commentary.

Can I just add something, Patrick?

Patrick.

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

Understood. Thanks, Emmanuel. And maybe just a quick one on the academic government side. You touched a little bit on the prepared remarks. You know, what are the expectations there? Obviously, we had the government shutdown. You guys have some exposure there. Maybe just talk about what you're seeing on that front and what the expectations are going forward for that market. A lot of noise there. I appreciate it.

Yeah, Patrick. you know you saw we were we were down in academic and government q1 we had a nice of mid single digits in q2 and then down double digits in q3 and i think frankly we saw some of the pent-up concerns come through in q3 significant impact was k through 12 you know before the school season started there as well as other softness that we saw through consumables uh in the form of higher ed there. The U.S. government shutdown is certainly going to exacerbate that. That is really a key driver of the reduction of the lab guidance for Q4 and for the year down to the mid single digits, that differential, as well as the headwinds to consumables. But we're certainly forecasting that that continue to be somewhat challenged.

Thanks, Matt. Yep.

Thank you. Our The next question comes from Doug Schenkel with Wolf Research. Doug, please go ahead.

Thank you, and good morning, everybody. A few questions. Emanuel, you know, it's only been eight weeks. There's a lot going on here. Is it reasonable to expect you to outline your full assessment and strategic framework by early Q1, or is that too aggressive? So that's my first question. My second is really for Brent. Emanuel talked a lot about new hires and investments. Revenue growth is likely to remain challenging for the next several quarters. Margin comparisons are notably tough in the first half of next year. So when I just look at that fact pattern, my word's not yours, given you don't want to talk too much about 2026, but it just seems hard to see a scenario where we would get meaningful EBITDA expansion in 2026, maybe no expansion at all, given those three observations. Is there anything you think I'm missing? And then really the last one is for both of you. Recognizing it's been a tough period for tools in terms of downward estimate revisions, I think the challenges, to be fair, have lingered a bit more for Avant Tour than for most of the group um you know clearly visibility and forecasting has been a challenge for you guys the past few quarters do you think this is systems and requires more investment or is this more you know a function of just you know competitive dynamics maybe evolving in a way that you didn't anticipate thank you hey dog good morning thanks for thanks for your question look i think um in

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

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

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

Thank you. Our next question comes from Dan Leonard with UBS. Please go ahead.

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

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

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

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

Got it.

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

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

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