Welcome, day two of the TD Cowen Healthcare Conference. Dan Brennan, really pleased to be joined with me here on the stage, Michael Stubblefield, President and CEO of Avantor. Michael, certainly thank you for being here, and welcome. Yeah. Thank you. Happy to be here again. Awesome. Maybe we'll do, like, a high-level intro here. Excuse me. Company's been public coming up on four years under your leadership as CEO. Strategy's been pretty consistent from our vantage point. You know, deliver steady results from your consumables-oriented distribution business, allocate more investments to higher margin, faster growing proprietary products and, you know, deliver mid-single digit revenue growth and above average peer margin expansion, and look selectively for M&A to accelerate the shift in a higher margin, faster growing area. In your opinion, you know, when you look back, how has the company performed against the strategy goals over this period and also during the last year? I think it's a great place, to start. If you look back at, you know, what we set out to do when we put Avantor and VWR together and kind of started out on our journey here, we were really looking to build an integrated end-to-end, you know, life sciences leader that could provide, you know, solutions to our customers from early phase discovery all the way through our customer's journey, including, you know, the delivery of their, you know, commercialized platforms. Primarily in the biopharmaceutical area, but also in the implantable medical device space and, you know, other, you know, high-tech applications. That's what we set out to build. As we, you know, kind of now have the benefit of looking back over the last several years to see how that has played out, I couldn't be more pleased with, you know, the business that we have today. It's more resilient than it's ever been, and it's better positioned with more capabilities than we've ever had before. If I look at maybe just a couple of proof points on, you know, the value that we've created in, you know, building this, building out the strategy, you know, one of the primary drivers here really was to leverage the channel access to position our proprietary content, you know, in more places. We've seen over this time period about a 4.5-fold increase in the number of bioproduction customers that we're serving at scale. I think at the time of the combination, it was around 2,000 customers and, you know, as I look at, you know, 2022, we probably served over 9,000, you know, bioproduction customers. I think that's a pretty compelling proof point of, you know, how our strategy's played out. Interestingly enough, we've also been successful in, you know, doubling the rate of growth of our, of our lab business. In a very unique way here, you know, our strategy has been able to, you know, deliver growth for both of the legacy businesses that we've that we've brought together. You know, I think as a, you know, from a financial standpoint, I think the proof point is also pretty compelling. You know, the CAGR across this period for our core business has been over 6%, driven more than 130 basis points of margin expansion. I think EPS growth has averaged about 35% during this time period, and we doubled our free cash flow. The strategy's played out well. You know, the investments we've made in the business have certainly positioned us, you know, for, you know, I think a long runway here, and I think the financial, you know, performance has also, you know, supported the strategy. Terrific. maybe just a couple of questions, before we dig into some of the numbers, just about the distribution business and then the proprietary products business. Again, maybe from a bit of a higher level, but it'd be great to get your perspective on kind of the growth profile of that distribution business. You know, what's kind of assumed, you know, as you look out from a market share perspective, stable, gaining, losing? you know, some of the recent deals you signed, Catalent and Janssen, like, you know, what kind of impact do these bigger deals have? By the way I think about our business, I mean, it's clear what the heritage of our business has been, but as we've now integrated it, you can probably appreciate we've lost a little bit of sight to, you know, some of the original, you know, constructs of the business. We now, you know, kind of think about it probably in two parts. The first part maybe worth highlighting here is our comprehensive offering and solution to service, you know, scientists in the laboratory environment, to help enable them to generate, you know, high precision analytical results. That means then that I'm ever present in, you know, life science research. I'm present in diagnostics, QA, QC. Essentially anywhere, you know, where scientists are needing, you know, advanced solutions to help generate, you know, whatever analytical result that they're looking for is where we're gonna find ourselves, you know, which means we're in, you know, labs across the world. We've really then built out, you know, a leading platform here that's rooted in probably 3 or 4 key elements. Firstly, you know, having a very broad product offering of both products and services. You know, we talk a lot about, you know, the 6 million SKUs that we offer our customers, and that's really important in that laboratory environment, given, you know, the fragmentation of the types of things that our customers are working on. Being able to be that one-stop shop, you know, for our, the scientists that we serve is critical, and we certainly have a leading and quite compelling portfolio to do that. Ease of transaction and, you know, ease of doing business with us is important, so we've invested heavily in our e-commerce and digital platforms to make it easy for a scientist to find what they need and to get checked out quickly. You know, we talk a lot about those capabilities, the customized personas that we are able to deliver to the scientists to make it easy for them to, you know, to do business with us. Of course, we also view that as, you know, a leading metric for growth, is just activity across that site. You know, I think that's a pretty compelling, you know, capability that we have. Lastly, just having a supply chain that can get product to our customers, you know, same day, next day. We continue to invest to build out those capabilities to support growth, to put inventory and product close to our customers so that, you know, as they call off the demand, we're able to be there for them. We wrap all of that with, you know, some pretty compelling services that, you know, give it a more intimate relationship with our customers, give us a seat at the table to see firsthand the type of challenges and things that they're working on, that better position us to solve their challenges. You know, all of that then comes together, you know, for us in a way that allows us to continue to grow share, you know, in this part of our business. You referenced a couple of, you know, customer contracts that we highlighted in the fourth quarter. I think those are just great proof points of not only our relevance in this space, but also the momentum we have in the space. 2022 was a great year for renewals and contract wins. You know, we talk about our strategic partner accounts, which are our largest, most complex multinational accounts that we have. I think we were, you know, 100% renewals on the contracts that came due there. We had some pretty compelling new wins. We referenced, you know, Catalent in the fourth quarter. I think we start the year with a lot of momentum from a customer standpoint. For us, you know, that is a, you know, a great indicator of just the, you know, what we're able to do for our customers, the value proposition that we offer to them. It's, you know, a great show of confidence on their part to extend these relationships, because these are contracts that tend to run for you know, at least 3 years, if not 5 or, you know, some cases 7-10 years. It provides, you know, additional stickiness to our business. You mentioned earlier, you know, this is a consumables driven profile, our business with more than 85% of our revenue recurring. You know, one of the elements of this kind of sticky, you know, recurring revenue model is the longstanding, relationships that we have with our customers. Okay, great. Maybe just one more high level, and then we'll get to the numbers. Your proprietary business, which you know, is largely consumables oriented as well. We'll get to bioproduction in a moment. If you strip away bioproduction, you know, what are the key elements, leadership areas in that business? Similarly, you know, kind of what, you know, what are the key growth drivers for your proprietary products? We have simplified, I think, you know, the understanding of our business into kind of two pillars, if you will. I just talked about our lab solutions platform with, you know, the content we supply into the lab. The other part of our business model, of course, is our, you know, proprietary, you know, customized production platform. These, this integrated business is really important, or this integrated business model is important because my access to the scientist in the lab is where I customize solutions for my customers' commercial platforms, and then I scale with them and serve those platforms at commercial scale. You referenced bioproduction, which we'll get to here in a second. There are also many other platforms that make up that part of our business. We have a leading, you know, medical grade, you know, formulated silicone platform, that is specced into virtually all, implantable medical devices that would be in the body for more than 30 days. We have a pretty novel, you know, solution into the semiconductor space, aerospace and defense. There are a number of these platforms where our customers are relying on us to bring customized high purity solutions that get specced into their process. In the case of bioproduction, it's gonna be part of the regulatory filing, and in the case of a semiconductor, it, you know, will be part of their process of record. It works the same in that, once you're specced in, you'll service that platform through the life cycle of your customer's product, and it becomes a bit of an annuity in that, in that regard. So, you have this access that we get through servicing the scientists in the lab. We customize the product through our, you know, innovation capabilities, and then we service those at scale. One of the unique advantages we have in this space is our ability to produce GMP products, not just at production scale, but also offer those same products using the same quality systems to our customers in the lab. That's certainly been one of the trends that we've seen play out over the last number of years, is, you know, the scientists' desire to use GMP materials earlier and earlier in the process. Working with us, they can now use those materials right from the beginning of the discovery work, qualify us once, and not have to switch at any point as they scale through clinical trials or even into production, which is an important part of our value proposition. Great. Okay. Thank you for that. Maybe shifting over to like the outlook for 2023, your, you know, your core organic ex-COVID guide of 2.5%-4.5%, you basically indicated that Q4 includes a 250 basis point drag from macro headwinds. Ex those, you're kind of at 6%, which is, yeah, 4.5%, 6% at the high end, right, of your 4%-6% LRP. Maybe just walk us through how you size the different risks and to what extent you provided for some cushion in the guidance in case things worsen. Yeah. Your, your math is right. You know, the guide here is 0%-2% from an organic standpoint. The COVID headwinds in our numbers this year are certain. We're not, you know, contemplating any incremental COVID revenues in 2023. You know, we know what they were in 2022, so we know there's roughly 2.5% headwind coming from the COVID roll-off, moving from about $190 million of revenue last year to essentially zero this year. That takes you then from the organic midpoint of 1% up to the 3.5% that you that you've cited at, you know, for our guide. Now, we're contemplating about 250 basis points of macro headwinds in that number, which gets you to the 6% that you, that you referenced. That would cover things like the liquid handling consumables destocking. It would cover the destocking that we see in our single-use portfolio within our bioproduction platform, and it would cover, you know, some of the macro risks that we see in the industrial sector, particularly in the semiconductor area. That, you know, that gets you kind of the high end of our, of our guide. Probably also important then to adjust that, at least in the context of comparison to our long-term guide by acknowledging that we also are benefiting from probably, you know, 100 basis points -200 basis points incremental pricing in 2023, that is, you know, higher than our, you know, what we would typically think about in our long-term algorithm. In a normal 4%-6%, you know, growth environment for us, it would be roughly 1/3 price, 2/3 volume. You know, in this hyperinflationary environment that we're in, that formula has reversed. In 2022, it was, you know, kind of 2/3 price, 1/3 volume. You know, as we see the year playing out, inflation is, you know, continues to be stubbornly high, which has caused us to take pricing into the market at similar levels as what we had last year. Maybe it's not quite at the same level, but it's close enough probably for modeling purposes to assume that it'll be, again, kind of a 2/3 price, 1/3 volume year. The way I see the guide then is, you know, if you're starting from a base of 3.5%, you take the these macro pressures of destocking and the semiconductor headwinds we've noted gets you to 6%. You probably take out a point of price. You know, I think probably we'll have you think about our guide out of the gate here as, you know, the midpoint of our long-term algorithm, which we've, you know, outperformed over the last number of years. We think it's a prudent place to start. There's, you know, certainly, you know, some moving pieces to the number here. You know, we're gonna see some pretty pronounced headwinds here as we've guided in the first half of the year that, you know, we're expecting roll-off in the second half of the year and, you know, allow us to close the year with a pretty clean slate and, you know, presumably, you know, positioning us to get back to our long-term algorithm as we head into 2024. Great. I wanna get to margins in a moment. Just from a high level yesterday from what we heard from some of the tools vendors, I mean, generally very consistent messaging on pharma. Although, you know, one of the larger consumables players did mention that they are seeing some headwinds right now, whether it be from COVID comps, whether it be from maybe a little macro, maybe a little bit of, you know, even IRA looking ahead. Net-net, anything like as you look at your pharma business and the trends, like, I don't know what you've incorporated outside of bioproduction, more the traditional R&D side, like, how, you know, how did you factor that into 23, and has anything changed on that front? Yeah. We talked a little bit here about our, our guidance and, you know, perspective on the full year. But certainly we also, you know, on our fourth quarter call, we talked a bit about, you know, the phasing of how we saw the year playing out. You know, we were, you know, pretty particular specific about how we saw the first quarter playing out. I think that the headwinds, whether it's the COVID roll-off or the destocking dynamics that we do see in the supply chain as things reset post-COVID, are gonna be most pronounced in the first quarter. You know, between the liquid handling destocking and the consumables or the single-use destocking, we're probably talking about 500 basis points of headwinds for my business in the first quarter. You layer on top of that, you know, the incremental headwinds from a pretty pronounced slowdown in the semiconductor space, you can see then kinda how you get to our outlook on revenue for the quarter of -8% to -6% on an organic basis, -1.5% to -3.5% on a core basis. Certainly the headwinds are gonna be most pronounced. As we've two months under our belt here in the first quarter, we've got March is the longest month of the quarter, a big month ahead of us still. Things are playing out as we would've anticipated. We're definitely seeing the inventory draws occurring both on the liquid handling side as well as in single-use, as we would've anticipated. I think the piece for me that gives me some confidence in the forward outlook, you know, why we're kind of going through the destocking, is the strength of the underlying demand. We do have parts of our solution that are not, you know, subject to the destocking that we're seeing, where we're seeing, you know, really good traction. In the laboratory, for example, you know, we're off to a really terrific start here on like lab chemicals, for example, which is gonna be used right alongside these, you know, consumables that are being, you know, destocked. I kinda see that chemicals demand as an indicator of just the underlying activity, which also then supports the view that that consumables inventory must be coming down. We also see a very similar dynamic in the bioproduction space, where my excipients and process ingredients demand is off to a, you know, really, really strong start this year, buffered by the destocking that we see in the single-use, you know, tubing, particularly Masterflex and in our legacy offering. The destocking is playing out as anticipated, but there are some indicators that you could read through to at least get confident that the underlying end market demand is there and is strong, which kind of supports the outlook as the inventory, you know, resets. Great. Margins, you know, the guide is for flat EBITDA margins at the midpoint with, I think it's ±25 basis points, which is against a full year all-in reported revenue guide of flat to +2%. I guess the question is, and I know it came up on the call, but just love a little more color. Is it challenging to support flat margins at kind of, you know, flat to +2% revenue growth? I know you cited, I think we price mix productivity at Q4 as the lever. Would love a little more color on those, and in particular about this pipeline of productivity measures, which you mentioned on Q4. I might just take you back to the algorithm, right? In a normal year, we would expect to expand margins roughly 50 basis points- 100 basis points. I referenced earlier our track record has been, you know, significantly above that, even in 2022 with a lot of the pressures that we're facing, inflation and destocking and such. We still expanded margins 110 basis points. Traditionally, we've done, you know, markedly better than that. Out of the gates here, we're taking a view here that given, you know, the dynamics that we've talked about, that we see it, you know, somewhere around flattish, you know, maybe, you know, 25 basis points of compression to 25 basis points of expansion, which is, you know, clearly below our long-term algorithm. We think it's well informed by the various levers that we would normally have at our disposal to influence margin. We talk a lot about commercial excellence and how we manage kinda price relative to, you know, the inflationary pressures on our cost of goods sold. Although I mentioned prices, you know, probably trending higher than we would have in a normal year, it needs to offset the inflation that we're seeing. The way I probably think about price relative to COGS is we're getting the customary contribution to our margin expansion as we would in a normal year. We're just needing to raise price, you know, higher in order to do that. That's we're pretty well through that process. At this point in our cycle, we've got those prices in the market and, you know, as orders come in, they'll be priced at those levels. You know, I think we're in good shape from that lever. Mix is important. There's, I think we talk a lot about the importance of the growth of our proprietary offering, just given the disproportionate margins that those carry relative to our third-party offerings. When you look at the COVID roll-off, some of the destocking, certainly the semiconductor headwinds that we're seeing, those are all in pretty margin-rich product categories for us that certainly create a, you know, a headwind for us. I think if I just look at COVID, for example, and the semiconductor headwinds that we'll have to margin, it's probably more than 80 basis points on a full year basis. You can see that it's pretty meaningful. Then you're mentioning a third lever around leverage. It's a pretty, you know, significant fixed cost base to execute our model. You know, we get when, you know, in times when volumes are growing, we get a lot of leverage on that. In a traditional year, that would give us, you know, a pretty nice, you know, tailwind from a margin expansion standpoint. As you see, you know, $190 million of COVID roll-off, you see the destocking, inventory destocking, some headwinds in the industrial business, you know, volume growth is gonna be somewhat muted, which, you know, means you're gonna have some headwinds there from an absorption standpoint. Then kinda last lever that we would then pull to manage margins is around productivity. The way I typically think about productivity is we would leverage the Avantor Business System to drive productivity to offset fixed cost inflation, and we've got a really good track record of doing that. In a hyperinflationary environment that we're in, we're not needing to kind of start a whole new set of activities. We have an ongoing pipeline of productivity that we're driving. Inflation is higher this year, we're, you know, and it's, we've been in that environment for a couple of years, so we've been doubling down on, you know, things like automation and footprint optimization and, you know, leveraging a pretty well-developed, you know, offshore capability that we have. We have over 2,000 associates that are sitting in low-cost regions in, you know, Pune and Coimbatore, India and, you know, Bucharest, Romania and in Mauritius that give us a, you know, a nice footprint to be able to, you know, manage some of these costs. We'll, you know, pull that lever hard again this year to try to offset the inflation notwithstanding, you know, there's going to be some, you know, certainly some headwinds coming from that. That's how we think about it. You know, the, I don't think we view any of these headwinds as any more than transitory. You know, I think we've got an agile model that allow us to deal with them this year. I think, you know, I think we see, you know, clear line of sight to, you know, the long-term, you know, margin expansion algorithm clearly being, you know, intact. Great. Thank you for that. Maybe jumping into bioproduction here. I think your base ex COVID grew over 20 in 2022, and your guide assumes mid-teens, I believe, in 2023, and that's also, I guess, within your LRP. You know, it's, you look at Sartorius, Repligen, you look at Danaher, you try to pull those numbers out and, you know, certainly your numbers are probably towards the upper end of that. I mean, Sartorius has certainly been up there, but there's been a lot of volatility in the market from this inventory drag roll-off. I guess, asking you, like what really drives that growth? Obviously, you're a leader in buffers and excipients, you have this single-use capability. But just give us a little flavor for is your SAM growing at that level? Are you growing ahead of it? Are you gaining share? Just kinda what are, you know, what are the key components of your growth? This is a really important part of the story to understand. As we sit here today, bioproduction is about 25% of our overall, you know, group revenues. You know, it's a space that we continue to outgrow the market probably by 200 basis points -400 basis points and probably have done that now for at least the nine years that I've been running the business. I think it speaks to just how well-positioned we are in this space with the technologies that we have. We're gonna touch these molecules probably more intimately than almost anybody out there with a comprehensive GMP offering that allows us to provide, you know, critical enabling content into the, you know, upstream processes around cell culture. All of the additives and, you know, carbohydrates and minerals, you know, vitamins, everything that the cell needs to have to sustain life and to promote protein expression, you know, we're gonna be providing all that content. As you move downstream into purification, you know, we have a complete line of chromatography resins. We're a leading supplier of buffers and high purity chemicals that promote the viral clearance activities. We're gonna have a leading franchise around excipients that are used in the formulation step. We're gonna connect all that with, you know, a pretty comprehensive and in fact the only end-to-end aseptic fluid management solution in the industry. You know, starting with the peristaltic pumping technology that we acquired from Masterflex, through with the tubing and manifolds, components and assemblies, 2D, 3D bags that are used, you know, throughout this workflow. We're very well positioned. You know, the single-use, you know, trend, you know, has been a really nice growth driver for the business, growing well above 20% for, you know, a number of years now. The chemicals piece, you know, continues to grow, you know, mid-teens plus, and it's all, you know, driven by a pretty strong and growing, you know, monoclonal antibody environment. As we look ahead, you know, our technologies are also, you know, relevant in the emerging modalities of cell and gene therapy, as well as in mRNA and, you know, in other platforms. You know, we're running a model here where we're trying to be lined up, you know, behind all these modalities, you know, across all of the candidates and, you know, virtually every stage of the development. You know, I referenced earlier the number of customers that we're supplying in this space of more than 9,000. If you look at the number of customers that are in phase 1 through phase 3 clinical trials, you're gonna come up with a number that looks an awful lot like that. Which is to say, you know, we're gonna be, you know, standing behind nearly every candidate that's out there, which gives us more shots on goal, obviously, and, you know, puts us in a position on having to pick winners and losers. Our content is relevant to virtually every, you know, development that's out there. We have, you know, the purification capabilities, you know, to provide, you know, relevant content. We have, you know, more than 13 innovation centers that allow us to do the customization work that our customers need us to do. I have a leading footprint with GMP capabilities in all three regions of the world, which gives us access and coverage, you know, around the world. You kind of put all that together, and we're running a model here that for, you know, nearly a decade now, has outgrown the broader market by probably 200 basis points -400 basis points. I think we're set up for another year like that. You know, we're certainly focused on, you know, another year of double-digit growth in the space. About half of our COVID roll-off this year will come from vaccines, which, you know, will temper the number a bit. On a core basis, we would still envision, you know, another year of double-digit growth in bioproduction. Like the 22% you had last year, was there something, was it a comp? Was there something that elevated that number, some traction? Mid-teens certainly would be great, but like, how come the step down from 22- 15? Again, I'm not taking away from the 15. Yeah. Our LRP contemplates, you know, mid-teens plus growth is what we would anticipate in this space, which I think, you know, ties well to the expectation that if the, you know, the broader, you know, space is growing, low to mid-teens, we're gonna be growing a bit faster than that, just given the makeup of our portfolio. We've been running, you know, a bit above, you know, 20% the last, you know, few years. I don't think necessarily have line of sight that we continue to grow at those levels. If the underlying demand is, you know, stronger than what our algorithm would imply, we would certainly, you know, be there amongst some of the highest growers in our space. Great. The advanced tech and applied materials segment, I believe, grew high single% last year. Typically grows mid-single%. I think that's what you focus on for 2023. You've already mentioned here about the semiconductor impact that you've kind of baked in. Can you just kind of unpack that segment a little bit? That mid-single%, like, what kind of gets you there? Like, what are the puts and takes there, and have you baked in enough cushion such that if, you know, things go south here, that, you know, you could still hit that number? Yeah. You're talking about a like a grouping of revenues that's probably about 25% of our, of our group, you know, totals. It's split across probably more than a dozen different application and end markets with no single end market application area comprising more than about 1%-2% of our revenues. Semiconductors is a good example. Oil and gas, pet chem, mining, food and beverage, aerospace, defense. These are, you know, kind of a sampling of some of the things that we would do. It's the same business model, right? You know, if you're in the lab of one of these, you know, customers, you're supplying all of the same, you know, consumables and chemicals, reagents, equipment, instruments to facilitate, in this case, probably a QA/QC, you know, analytical result. Or, you know, we're specced in with customized, you know, content into their production platforms in the case of aerospace and defense or in semiconductors, for example. The business model works the same as in our, as in our life sciences, you know, business, leveraging the same infrastructure. Typically a mid-single digit, you know, grower and important contribution of margin to our, to our business. It grew well above that last year. It was, you know, high singles, low double digits virtually every quarter, really led by, you know, strength in the semiconductor space. You know, I think it's been well published what's going on with the semiconductor reset at an industry level that will have, you know, that space off, you know, in a pretty meaningful, you know, way this year. you know, think, you know, more than, you know, double digits, you know, kind of numbers. Net-net, what we're taking into our 0%-2% full year guide here is the expectation that the applied markets for us are down low single digits. Compared to a high single digit, you know, baseline for 2022, you know, we think, you know, probably more in terms of low single digits, which you kind of put it on a double stack basis, it gets you back to that mid-single digit growth that we would expect in our long term algorithm. We have about 50 seconds left. I have a couple left, but maybe we'll just hit the M&A proof point. I haven't met Kitty yet, but certainly Ritter and Masterflex, you know, went through some bumps here, some, you know, beyond your control, but hopefully in a better spot now. Just what's the outlook this year? Are you guys Should we be surprised to see you deploy capital this year if you found the right deal, or do you wanna get a little more traction for Ritter and Masterflex and show they're, you know, on the pace you expected, so it'll be more of a 2024 event? Yeah. You know, we've been busy building the out and extending the capabilities, focused on driving the commercial synergies of the deals that we, you know, we closed in 21. You know, the market really isn't open for M&A. You see the odd deal here or there. Our, I think our near-term priority continues to be deleveraging. You know, we ended the year at 3.7x. We've generated a lot of cash this year and we'll look to preserve, you know, flexibility for when the market is more conducive to deals. Terrific. Well, we're out of time. Michael, thank you very much for being here. Thanks to all, everyone for being in the room. Thank you. Thank you. Thank you, all.