Avantor (AVTR) 2026年第三季法說會：有機成長回歸，上調財測指引

Avantor (NYSE: AVTR) 在 2026 年第三季恢復有機營收成長，主要得益於終端市場轉強以及「復興」計畫下的良好執行力，為兩大營運部門提供有力支撐。管理層上調了全年有機成長、調整後 EPS 和自由現金流指引。

重點摘要

• 第三季營收為 16.98 億美元，有機成長 5.2%，按列報基準計算成長 4.6%。
• VWR 分銷與服務部門 (VWR Distribution and Services) 有機營收成長 5.8%。管理層估計，商業推廣舉措貢獻了該部門約一半的成長。
• 生物科學與醫藥科技產品部門 (BMP) 恢復成長，儘管受到客戶訂購與出貨模式約 150 個基點的逆風影響，有機營收仍成長 3.6%。
• 調整後 EBITDA 為 2.57 億美元，利潤率為 15.1%。調整後每股盈餘 (EPS) 為 0.22 美元。
• 自由現金流總計 1.56 億美元，若不計現金重組成本則為 1.69 億美元。調整後淨槓桿率自上一季的 3.3 倍降至 3.1 倍。
• Avantor 上調 2026 年展望，預計有機營收成長 0.75%-1.25%，調整後 EPS 為 0.81-0.83 美元，自由現金流為 5.25 億至 5.5 億美元。

關鍵財務數據

業務與營運表現

VWR 的成長受惠於銷量提升、商業執行力改善以及終端市場轉強。Avantor 報告稱在大客戶、中小型客戶及電子商務平台方面均取得進展。管理層估計，商業推廣舉措貢獻了 VWR 第三季約一半的成長。

VWR 的調整後營業利潤率不論是與去年同期還是上一季相比均有所下降。公司將此壓力主要歸因於業務與產品組合、通膨以及針對性的成長投資。VWR 的成長速度快於利潤率較高的 BMP 部門，而低利潤率的客戶與產品類別在 VWR 內部的貢獻也有所增加。

BMP 恢復有機成長。受惠於營運改善、健康的終端市場狀況及訂單表現，製程化學品 (Process Chemicals) 實現高個位數成長。流體處理 (Fluid Handling) 以及研究與特種化學品 (Research and Specialty Chemicals) 則出現低個位數下滑。由於銷量與產品組合改善，BMP 的調整後營業利潤率與去年同期持平，且較上一季有所提升。

Avantor 表示，2026 年期間製造產能吞吐量有所增加。供應鏈規劃、製程改善與數位製造舉措有助於提高產出、改善客戶服務，並提升特定類別的準時交付率。BMP 連續第三個季度錄得大於 1 的訂貨出貨比 (book-to-bill ratio)。

管理層形容當前需求環境為近年來最為積極樂觀的時期。大型製藥與生物科技客戶的動能持續，而北美高等教育與早期生技領域亦出現復甦跡象。美洲市場需求強勁，亞洲市場健康，但歐洲市場表現依然落後。

管理層指引

Avantor 維持其調整後 EBITDA 利潤率指引不變，並預計第四季利潤率將較第三季微幅擴大。管理層亦預計年底前調整後淨槓桿率將降至 3 倍以下。

第四季 BMP 展望包含來自個別基期比較及製程化學品高基期帶來的約 400 個基點逆風。儘管如此，管理層仍預計第四季 BMP 營收將較第三季實現微幅成長。

風險與觀察重點

• 營收組合仍是限制利潤率的因素，因為 VWR 的利潤率低於 BMP，且低利潤率類別在 VWR 內部的貢獻強勁。
• 通膨持續對獲利能力構成壓力。管理層表示 2026 年產品調價幅度在 1% 至 2% 之間，低於公司所承受的通膨水準。
• 第四季業績仍易受年底客戶支出模式，以及 BMP 個別訂單與出貨基期比較的影響。
• 歐洲市場情況持續較為疲軟，原因包含學術預算受限、高能源成本、政府資金壓力以及工業低迷（特別是在德國）。
• 管理層表示，中東持續進行的衝突加劇了通膨壓力。

分析師問答亮點

VWR 成長的可持續性：管理層表示，合約續約與客戶錢包份額 (share of wallet) 的增加對業績有所貢獻，同時中小型客戶與電子商務表現強勁。公司預計 VWR 在第四季將維持中個位數的有機成長。

利潤率與投資：Avantor 預計第四季 EBITDA 利潤率將較上一季微幅擴大，但未提供 2027 年利潤率展望。管理層表示，「復興」計畫旨在透過精簡流程、提高效率與生產力來獲得自主投資資金，並將持續投入於 AI、供應鏈及電子商務。

AI 帶來的新契機：管理層認為 AI 透過提高製藥研發生產力，有望成為整個產業的順風推手。在公司內部，VWR 正利用 AI 輔助的銷售工具與產品替代功能，以提升商業生產力與客戶服務水準。

BMP 訂單轉換：管理層表示，視產品線而定，交貨週期通常仍維持在三至六個月。儘管去年同期基期較高，仍預計第四季 BMP 營收將較上一季微幅成長。

定價策略：Avantor 確認 2026 年定價調幅為 1%-2%。管理層指出，定價雖然尚未完全抵銷通膨影響，但治理改善、工具更新及商業紀律已縮短供應商成本上升與向客戶調價之間的時間落差。

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完整財報電話會議逐字稿

管理層陳述

Operator

Ladies and gentlemen, this is the operator. Today's conference is scheduled to begin momentarily. Until that time, on music hold. Thank you for your patience.

Good morning. My name is Christa, and I will be your conference operator today. At this time, I would like to welcome everyone to the Avantor Third Quarter 2026 Earnings Results Conference Call. [Operator Instructions] I would now like to turn the conference over to Chris Fidyk. Chris, you may begin your conference.

Chris Fidyk

Thank you, operator. Good morning, everyone, and thank you for joining us. Our speakers today are Emmanuel Ligner, President and Chief Executive Officer; Todd Garner, Executive Vice President and Chief Financial Officer; and Steve Eck, Senior Vice President and Chief Accounting Officer.

The press release and our presentation accompanying this call are available on our Investor Relations website at ir.avantorsciences.com. Following our prepared remarks, we'll open the call for questions. A replay of the call will be made available on our website later today.

During this call, we will make forward-looking statements within the meaning of the U.S. federal securities laws, including statements regarding events or developments that we believe or anticipate and occur in the future. These forward-looking statements are subject to a number of risks and uncertainties, including those set forth in our SEC filings, actual results may differ materially from any forward-looking statements that we make today.

These forward-looking statements speak only as of the date they are made. We do not assume any obligation to update these forward-looking statements as a result of new information, future events or other developments.

This call will include a discussion of non-GAAP measures. A reconciliation of these non-GAAP measures can be found in the press release and in the supplemental disclosures package on our Investor Relations website. I will now turn the call over to Emmanuel.

Emmanuel Ligner

Thank you, Chris, and good morning, everyone. A special welcome to Todd on his first earnings call with Avantor. Todd will introduce himself shortly, and you will hear much more from him at Investor Day on December 8.

Today, I will begin with a high-level update on our third quarter performance. I will then take a closer look at Avantor returns to revenue growth, including the progress we are making with revival, our comprehensive program to sharpen strategic focus and enhance execution.

On Slide 4, we have the key messages for the quarter. Our third quarter results make a return to organic revenue growth for Avantor. This is an important milestone on our revival journey. We have more work to do, but the quarter demonstrates why we believe the action we are taking through revivals are putting us on a path to sustainable growth.

Third quarter results exceeded our expectation across revenue and adjusted EPS. So those results were driven by strong performance in our VWR Distribution and Services segments, which accelerated meaningfully after returning to growth last quarter. Organic revenue growth in our Bioscience and MedTech product segments turned positive this quarter as anticipated with performance stronger than we had expected.

We once again generated robust free cash flow, which allow us to invest in the business and strengthen our balance sheet. We remain committed to reducing our adjusted net leverage ratio to below 3x, and we expected to achieve this objective by year-end.

Finally, we are raising our 2026 organic revenue, adjusted EPS and free cash flow guidance reflected our third quarter outperformance as well as the momentum we see across the business and in our end markets.

Please turn to Slide 5, where I will review our Q3 performance highlights. In Q3, we generated $1.698 billion of revenue represented year-over-year organic growth of 5.2% and reported growth of 4.6% exceeded our expectations. VWR organic growth accelerated to 5.8% in the quarter. This reflects continued execution against our revival priorities as well as stronger end markets. I will discuss [indiscernible] momentum in a few moments.

Turning to BMP. We were pleased to see the segments returning to revenue growth in the quarter as we had anticipated on our last earnings call. On a year-over-year basis, BMP revenue grew 3.6% organically ahead of our expectation despite a 150 basis point headwind from the unusual customers ordering and shipment patterns that we have discussed on prior calls.

We saw strong performance from process chemicals and new sales in the quarter. Importantly, our revival initiative to enhance commercial and operational execution continue to gain traction across BMP. Revival is helping the segments, delivering more consistent and predictable performance. And as a result, we believe BMP is well positioned to grow in 2027 and beyond.

Moving down the P&L. Adjusted EBITDA margin increased modestly on a sequential basis as operational outperformance and cost discipline helped us absorb headwinds from mix inflation and targeted growth investments. Adjusted EPS of $0.22 was above our expectation. [indiscernible] key strength is robust cash generation. In the third quarter, excluding cash restructuring costs, we generated $169 million of free cash flow, represented strong conversion of adjusted net income.

We used the strong cash generation to further strengthen our balance sheet, and we ended the quarter with an adjusted net leverage ratio of 3.1x.

On Slide 6, we take a closer look at our return to growth. In Q3, Avantor delivered positive organic revenue growth driven by two forces: improving execution and stronger end markets. When we launched our revival program 1 year ago, we identified five key pillars and became a series of initiatives to sharpen our strategy focused on improved execution. Those actions are increasingly embedded in our operating model and in Q3 show up in our results.

In VWR, the actions we are taking to enhance customer relationships boost commercial execution and expand our digital capabilities, continue to gain traction. We estimate that approximately half of VWR growth in Q3 was driven by our commercial initiatives.

We see progress in the same area we highlighted last quarter. We are expanding our relationships with large customers. We are performing well in small and midsized accounts and our e-commerce platform continued to show positive trends.

VWR growth acceleration in Q3 reinforce our confidence in our competitive position in the global distribution market.

In BMP, we are making steady progress on our revival initiatives to strengthen operations and enhance our supply chain. And we have driven sequential increase in manufacturing throughput during 2026.

Let me share a few examples of the progress we are making with revival across the organization. On Monday, we announced that [ Mike Santiago ] will join us from Danaher to serve as our Chief Information Officer. With Mike joining and Todd now on board, our executive leadership team is complete. I'm excited to work with this exceptional group of leaders to execute revival and create shareholder value.

In BMP, our manufacturing teams have increased output across critical product lines. In early September, a key North American manufacturing line produced more than 25,000 kilograms of product in a single week, exceeding its original design capacity target and achieving nearly 99% overall equipment effectiveness ratio flat week. This is a good example of the operational improvement we are making across BMP.

We have advanced our digital manufacturing strategy, including the development of digital workflow and electronic batch records at two key manufacturing sites. Those capabilities improve quality, reduce deviation and end delivery performance, supporting a more efficient manufacturing network over time.

Across our supply chain network, SNOP and other process improvement initiated are taking hold, contributing to improved customer service and on-time delivery across certain product categories. While I am pleased with our progress, we will continue to invest in our operation.

In VWR, we are deploying AI to improve productivity and enhance the customer experience. One example is VWR internal sales assistant or ISA, which use AI to combine customer sales and product data to help sales teams prepare for meetings, generate leads, prioritize opportunities and act on recommendation. ISA also simplified administrative tasks. Since its launch last year, ISA had been widely adopted and we have received positive feedback from our sales team, our customers and our suppliers. We plan to expand ISA and add new functionality.

VWR is also enhancing our internal cross reference platform with AI, to allow our teams to proactively identify product substitutes that offer sustainability advantage or cost saving opportunity to customers.

The key takeaway is that revival impact is broad, from leadership and operation to digital capabilities and customer-facing tools. Revival is helping us improve execution and better serve our customers and ultimately translate to the growth acceleration we see in Q3. That is the execution side of the equation.

I will now turn to end markets where we are also seeing positive signs.

Two points of contact are important to note. First, our segment respond differently to end market condition. VWR is more sensitive to market fluctuation given its significant exposure to research spending, while BMP is more heavily weighted towards production environment.

Second, we have a unique perspective on the end market. through VWR, we serve a daily needs of scientists across more than 300,000 customer sites around the world. We see lab activity as it happens. In daily order rates, and in consumption of everyday consumables, which give us a clear view into the health of the scientific ecosystem.

What we see is on [indiscernible]. The recovery that began in Q2 continued to build in Q3 and importantly, has broadened. Last quarter, we highlighted a pickup in activity among large pharma and biotech customers. That momentum has continued in Q3, our large pharma and biotech customers continue to invest in their R&D pipeline, many of which have been supplemented by business development.

We also saw green shoots of recovery demand in higher education and early-stage biotech customers in North America this quarter. For some of those customers, a more positive funding environment and translated into greater research activity. We also see strength in certain industrial subsectors such as mining.

From a geographical perspective, our Americas demand is performing very well. We are also seeing good activity in Asia, which remain a smaller region for us. We continue to see the market recovery in Europe lagging that of the Americas and Asia. On average, Europe is more challenging macro conditions, including high energy costs and government funding pressure. Any improvement in this important geography will represent a tailwind to our business.

Overall, we are encouraged by the improving tone across our end markets and believe that the demand environment is the most constructive we have seen in several years. Stronger end markets are providing a tailwind and improving execution is converting this tailwind into growth.

We believe this provides us a foundation of sustained revenue growth, and we remain focused on execution to build on our positive momentum.

Before we walk through the financials, I want to welcome Todd Garner, who joined us as the Chief Financial Officer on September 21. Todd brings 30 years of finance, operational and public company leadership experience. He most recently served as CFO of [ Com Med ].

In his first weeks, Todd has been meeting our teams around the world and getting to know our operations. As to continue to deepen its engagement in our business, Steve Eck will walk through today's results.

But first, I would like to give Todd a chance to introduce himself. Todd?

Todd Garner

Thank you, Emmanuel, and good morning, everyone. I'm delighted to be here. When I decided to join Avantor, I was drawn to the opportunity to join a strong management team leading a high-quality, cash-generative business with trusted brands and leading positions in attractive markets.

I believe my experience and other transformation throughout my career can directly support the execution of the revival program and help drive meaningful long-term value creation for our shareholders.

In these first few weeks, I've immersed myself in the business, going around the world to listen and learn, traveling with sales reps, visiting with customers and suppliers and touring our facilities. Everything I have learned has reinforced my decision to join. I've been struck by the quality and depth of our teams, their commitment to serving customers and the rigor with which they operate.

Through revival, we are strengthening processes and building operating disciplines that support greater consistency and predictability. I'm excited to help drive revival forward.

My priorities are to continue building a deep understanding of the business and its key drivers, while bringing the transparency, financial rigor and execution discipline that I have emphasized throughout my career. I look forward to engaging with all of you in the months ahead, including at our Investor Day on December 8.

Finally, I want to recognize Steve Eck for his leadership as our interim Chief Financial Officer, and thank him for helping make my transition seamless. I'll now hand the call over to Steve to walk you through the financials. Steve?

Steven Eck

Thank you, Todd, and good morning, everyone. Please turn to Slide 9, where I will review our consolidated financial results. In Q3, we generated $1.698 billion of revenue which grew 5.2% on an organic basis, and it was up 4.6% on a reported basis. Adjusted EBITDA was $257 million, resulting in a margin of 15.1% and adjusted EPS was $0.22. We were pleased to see our adjusted EBITDA margin expand sequentially as strong execution and expense discipline allowed us to absorb mix and inflationary pressures while also making targeted growth investments.

Free cash flow for the quarter was $156 million. Excluding cash restructuring costs, free cash flow was $169 million. Both figures were in line with expectations and underscore Avantor's strong cash generation profile. We strengthened our balance sheet in the quarter and ended the period with an adjusted net leverage ratio of 3.1x, down from 3.3x last quarter.

Please turn to Slide 10. Revenue for the VWR Distribution and Services segment was $1.23 billion in the third quarter, up 5.8% organically versus the prior year. The primary drivers of both sequential and year-over-year growth were higher volumes reflecting both improving commercial execution and stronger end markets.

Adjusted operating income for VWR was $119 million in Q3, representing an adjusted operating margin of 9.7%, the year-over-year and sequential declines in operating margin primarily reflected mix, inflationary pressures and growth investments.

The key takeaway from the VWR quarter is that our commercial execution continues to improve allowing us to benefit from a stronger demand environment across many end markets. As Emmanuel mentioned earlier, VWR's growth acceleration reinforces our confidence in VWR's competitive position in the global distribution market.

Let me now discuss performance in the Bioscience and MedTech Products segment, or BMP. I'm on Slide 11. In the third quarter, BMP revenue was $465 million, representing organic growth of 3.6% versus the prior year, exceeding our expectations. Process Chemicals grew high single digits in the quarter, driven by improving operations, healthy end market conditions and strong order performance. [ New still ] grew at a low teens rate in the quarter as we executed effectively against a healthy order book.

Fluid Handling and Research and Specialty Chemicals were down low single digits in the quarter. Last quarter, we indicated that the serum business within research and Specialty Chemicals would be a headwind to our growth rate due to the normalization of discrete customer ordering patterns and shipments in 2025. This factor was a headwind of roughly 150 basis points to BMP organic revenue growth in the third quarter as expected.

BMP saw healthy order trends across all business units in Q3 with particular strength in [ new still ] orders. Adjusted operating income for BMP was $123 million in the quarter, representing an adjusted operating margin of 26.6%. Margins were flat year-over-year despite inflationary pressures and margins increased sequentially versus the second quarter due to increased volumes and mix.

There are two key takeaways from the BMP quarter. First, BMP returned to growth, as we expected, and the segment's consistency and predictability are improving. Second, we are making steady progress with our revival actions to increase operational throughput and improve customer service, and this progress is reflected in BMP's sequential growth and margin improvement versus the second quarter.

Please turn to Slide 12. Our ability to consistently generate strong free cash flow is a key strength of Avantor. In the third quarter, excluding cash restructuring costs, we generated $169 million of free cash flow, reflecting strong conversion of adjusted net income. Our capital allocation priorities support revival and our intention to create sustainable shareholder value over the long term. First, we are making targeted investments in the business to enhance customer service, improve execution and drive organic growth. Second, we are focused on strengthening our balance sheet.

During the quarter, we reduced our net debt balance by $173 million and ended the period with net debt of $3.235 billion. Our adjusted net leverage ratio was 3.1x at the end of Q3 and we expect to reduce our adjusted net leverage ratio to below 3x by year-end.

Please turn to Slide 13, where I will discuss our increased 2026 guidance. For 2026, we have raised our organic revenue growth outlook to a range of 0.75% to 1.25%, which reflects our Q3 revenue outperformance as well as modestly higher growth assumptions for Q4. Our guidance implies Q4 organic revenue growth of 2.5% to 4.5%.

Foreign exchange is expected to be a headwind of 150 basis points to reported revenue in the fourth quarter. As a result, we now expect foreign exchange to contribute approximately 75 basis points to full year reported revenue growth.

In terms of segment performance, we expect VWR will grow mid-single digits in 4Q. This is modestly above our prior expectations and assumes the growth drivers we saw in Q3 continue in the fourth quarter, while also reflecting a range of outcomes related to year-end customer spending patterns as well as a more difficult comparison than Q3.

On the BMP side, we expect year-over-year organic growth to be flat to slightly positive in Q4, reflecting approximately 400 basis points of headwind from discrete comparisons as well as a more challenging comparison in process chemicals. We expect BMP to have modest sequential growth from Q3 to Q4.

Moving to profitability. Our adjusted EBITDA margin guidance remains unchanged, and as improved execution and operational outperformance enabled us to absorb mix and inflationary pressures while continuing to invest for growth. We anticipate that our adjusted EBITDA margin will expand modestly from Q3 to Q4. We remain highly focused on our cost discipline and our objective is to deliver a leveraged P&L in the future as we seek to simplify, reinvest and grow.

Moving down the income statement. In 2026, we now expect an adjusted effective tax rate between 22% and 22.5% and a weighted average diluted share count of 679 million shares. Taken together, these assumptions result in an adjusted EPS outlook that has been raised to $0.81 to $0.83 for the year.

Finally, we have increased our free cash flow guidance we now expect free cash flow between $525 million and $550 million in 2026, reflecting our year-to-date financial performance and the strength and consistency of Avantor's cash generation profile.

I'll now turn the call back to Emmanuel.

Emmanuel Ligner

Thank you, Steve. Let me echo Todd's comments and express my appreciation for your excellent leadership as interim CFO.

On Slide 14, I would like to leave you with three key points from our results. First, the action we are taking as part of revival are delivering the intended results and our third quarter performance provide tangible evidence of that progress. We remain focused on executing our initiatives to simplify, reinvest and grow Avantor.

Second, we have returned to growth. [indiscernible] continued to execute well against a backdrop of strengthening end markets, and BMP delivered positive revenue growth in the quarter, reflecting the operational improvements the team is making.

Third, we continue to generate robust free cash flow, enabling us to invest for growth while keeping us on track to reduce our adjusted net leverage ratio to below 3x by year-end. Our associates around the world are committed to our customers and deserve a note of SAG. We have made excellent progress so far this year, and I'm excited about the future.

Our Investor Day will take place on December 8. At Investor Day, we will take a deeper look at our segments, our strategy, our capital allocation priorities and how revival is strengthening Avantor's foundation for sustainable growth.

We will also provide a long-term financial framework and outline our road map for value creation. The return to growth we reported today is an important milestone, but we believe it is only the beginning. We look forward to sharing our vision of Avantor's future. And now operator, we are happy to take questions.

Operator

[Operator Instructions] And your first question comes from Casey Woodring with JPMorgan.

分析師問答

Casey Woodring

Great. I guess my first one on the strong VWR performance here, you said half the growth was driven by commercial initiatives. Maybe can you just elaborate on that? How much of the VWR beat was driven by previously disclosed large contract wins versus some of the other commercial initiatives you have going on? Maybe just talk about the sustainability of that moving into 4Q.

Emmanuel Ligner

Sure. Thanks, Casey and thank you for asking the question. Look, I think we share about half. And when we think about the half about the action we have taken. Yes, large contracts that we have renewed, we talk about the license to hand. We talk about the fact that the team was doing very well on growing our share of wallet there. But it's not the only bucket of positive outcome we saw I think the team is doing very well with small and midsized customers, which is definitely a very important segment for us. And then e-commerce has also demonstrated better performance.

So overall, team is executing well, and we are happy about where we stand right now. And so in that sense, when we look at the market dynamic, and the action taken by the team, and yes, we believe that those results are sustainable and that we look at our apply for Q4, and that implied about the same mid-single-digit growth for VWR in Q4.

Casey Woodring

Got it. That's helpful. And then I guess as a follow-up, just on the margin line. Do you think you can expand margins next year? The reason I ask is just you've been clear that part of revival has been focused on investing in areas of the business that have historically seen under investment.

There's also been price concessions to protect share in VWR that you've talked about. So just curious in 2027 is a year where you can normalize pricing and some of the investments in the business and start to see some of the benefit here from volumes starting to flow through?

Emmanuel Ligner

Yes. Look, as we are right in the middle for our planning and budget process. So I think we'll we talk about much more about our guide and what we're seeing for 2027 in those details, right, during our Q4 earnings call in February.

But let me make something very clear. We are very, very pleased with the team performance, the team embracing and executing revival. We have we are definitely improving our execution and the market is getting stronger. So we will end up '26 with strong momentum, right? And which means that months after months, my confidence level is definitely increasing for next year. So more to come, more detail in our Q4 earnings call in February.

Operator

Your next question comes from the line of Vijay Kumar with Evercore ISI.

Unknown Analyst

This is Daniel on for Vijay. I wanted to ask on the 4Q implied guide, about 3.5% organic at the midpoint. I'm curious, what's embedded in the assumption that implies that the organic growth is going to moderate from 5% in 3Q? I look at the comps at the corporate level, and they seem pretty similar?

Todd Garner

Thank you, Daniel. This is Todd. Nice to meet you. The Q4 guide really assumes the continued momentum we saw in Q3. So I'll take it business by business here in a minute. [indiscernible] grew 5.8%, and we are forecasting mid-single-digit growth in Q4. So that consistent level in Q4 for VWR.

BMP on the last [indiscernible], on the Q2 call, Steve called out that there's a 400 basis point headwind on the BMP side in Q4 due to the timing of order patterns, specifically in the electronic materials business. So with that 400 basis point headwind hit in Q4, the continued momentum that we saw in Q3, if you carry that over into Q4 with that discrete issue we get to Q4 itself for BMP is going to look like flat to slightly positive, although organically, it's consistent with Q3. So that's what puts the Q4 revenue guide in that 2.5% to 4.5% range.

But we see really good momentum in the business, as Emmanuel said, we don't see things slowing down but there is that timing issue in Q4 on the BMP side.

Unknown Analyst

Understood. And then just my follow-up. A lot of players in the life science tools space are starting to talk more about AI benefit I'm curious how Avantor is thinking about the AI opportunity and what that could potentially mean for growth?

Emmanuel Ligner

It's Emmanuel. I think there is definitely a consensus in the industry about AI being a tailwind for us. I think it's all about productivity in the pharma. AI is here to help. So any increase of productivity in the money spent by pharma in developing new molecules is good for us, okay?

If you have more molecules than need research, development and manufacturing, the research part we're serving them with VWR and in the manufacturing part, we're serving them from BMP. So yes, in deal, we are very excited about AI and the impact they have potentially on the business, and we see that as a tailwind like the rest of the industry.

Operator

Your next question comes from the line of Luke Sergott with Barclays.

Luke Sergott

Thanks for the question, guys. I think just starting off here going back to the margin commentary. So the margins kind of -- they stuck around this 25.5% level on the growth side. You had a big pickup there in VWR mid-single-digit volume growth, off of 2Q. So just wondering how much of this is due to the contract renewals that you had over the last like 6 to 12 months?

And the discounting that might have gone into that versus the timing impact of the investments you made to improve your COGS and manufacturing still waiting to flow through?

Steven Eck

Luke, this is Steve. Yes, like we said in the prepared remarks, we're very pleased with another quarter of sequential EBITDA margin expansion that we did see pressure on margins coming from a couple of specific places, which I'm happy to detail for you.

The first is mix. This is the most significant driver in the quarter and is primarily coming from VWR. As you know, VWR is about 70% of our revenues, and it did grow faster than BMP in the quarter with its lower gross margin profile that had a meaningful impact on total company gross margins.

Secondly, within VWR, why we saw growth across the segment, we saw more strength coming from product categories and customer segments that carry a lower gross margin profile. So higher mix of VWR revenues versus BMP as well as some mix dynamics within VWR that affected VWR's gross margins.

The next biggest factor that I'd point you to is inflationary pressures. We continue to see the impacts of inflation across our business, including from the ongoing conflict in the Middle East. But really pleased with the development of the EBITDA margin expansion throughout the year, and we expect to see that trend continue into the fourth quarter. So I appreciate your question.

Emmanuel Ligner

Yes. Let me jump in here, and I'd like to maybe that back for a few minutes. One year ago, when we launched revival, we really focused on the 5 pillars, but talent, go-to-market supply chain service level with a very, very clear goal in mind, return Avantor to growth. And today, we are ahead of our expectations.

Now I've shared that in the past, we push a mindset culture internally through the organization of simplifying to reinvest for growth, which means self-funding. So the team is working to generate efficiency, productivity to form investment with a clear mindset which is profitable goals and constant operating leverage.

So revival is not done. We will and we are continuing to work really hard to position Avantor to sustainable growth, expand margin and create shareholder value. So we are right in the middle of that.

Luke Sergott

All right. I guess just a quick follow-up on that. You talked about kind of the investments you made in the couple of facilities. Any kind of color because rolling them out all wholesale.

So just talk about kind of as we think about the rest of the distribution and manufacturing organization. Like what are some early wins or improvements you've seen on those couple of facilities as we think about rolling those forward through '27, '28 and '29?

Emmanuel Ligner

Sure. I think -- look, I think it's I think the unusual [indiscernible] this year as [indiscernible] what the BMP underlying trend and the performance of the team does, okay? We just talk about this on the Q4 guide.

We see really good progress in the implementation of the SNOP, [ Mary ], [indiscernible], our COO drive many kaizen to make sure that the plants are producing more. I share some example this quarter, last quarter as well. [ Ludovic ] is really pushing the customer centricity across the team and just two KPIs for you.

For the third quarter in a row, our book-to-bill in the BMP is positive. And if we just look at the process chemicals year-to-date, high single-digit order and high single-digit sales performance. So we really see that now we have really a stronger alignment is down to every effort with that the team is doing on the revival pillar of commercial side, go-to-market, but also supply chain service level, which is definitely improving.

Operator

Your next question comes from the line of Doug Schenkel with UBS.

Douglas Schenkel

Actually, I know this has come up a lot, but I kind of want to take a different angle on margins and also just Q4 guidance, just as follow-ups to the previous questions.

So the first one, it actually looks to me, as I play with the model, that VWR margin could be down under 50 basis points year-over-year in the fourth quarter or something in that neighborhood, just playing with the model. I actually would -- that would actually be a huge step in the right direction given what you've had to manage through in terms of strategic price actions and the inflationary pressures that you faced, especially in that business.

I guess my question is, am I plan with the model, right? And then I think the follow-up just to some of the other questions is as you guided Q4, it seems like you essentially maintains what you were expecting for Q4 and updated guidance largely for the magnitude of the Q3 beat. I didn't hear anything that suggested there were timing dynamics. It really sounds like pacing is a function of the year-over-year comps. I just want to make sure I have that right as well.

Todd Garner

Sure, Doug. Nice to meet you. I will -- I'll start by saying, while we don't guide specific margins by the segments, we don't see deterioration either. So we do expect margins to expand modestly. I would put the word modestly on it between Q3 and Q4. But we do expect margin expansion. So there might be a little model tweaking there.

And as Emmanuel said, we are right in the middle of revival with the focus on the long term of developing sustainable, predictable positive profitability and growth. So we're right in the middle of that. We -- Q3 was a really good sign of progress. We think Q4 will be another sign of progress and improvement there. And so that's where we are now, and we can help you a little more with the model offline.

Douglas Schenkel

Okay. That sounds good. If I could ask one more. The last couple of quarters, you talked about book-to-bill of over 1. I think you talked about 1.1x for BMP a couple of quarters. You talked about solid order trends this quarter. You've talked about lead times of 30 to 90 days for many products in the portfolio.

Just keeping in mind the momentum seemingly that you have heading into your end there, and thinking about the order book, is that conversion period still the right way to think about things 30 to 90 days? Or are there instances where things are stretching a little bit?

Emmanuel Ligner

No, 3 to 6 months, depends on the product line is the right way to look at it. No necessary change on our lead times. The team is really working to make sure that we continue through the SNOP if you have a really good so ratio with the customer.

So look, as I said, the unusual comp this year, I think, is masking the BMP underlying performance. But we look at the business also on a quarter after quarter and we have sequential increase all the year so far, and we're looking at a modest sequential increase as well in Q4. So I realize the BMP direction of travel right now.

Operator

Your next question comes from the line of Tycho Peterson with Jefferies.

Tycho Peterson

I appreciate you've had a number of questions on margins. I want to maybe just ask on OpEx, higher SG&A. You called that out as an offset to profitability. Just talk a little bit about where those investments are going and when you expect to generate a return from some of that?

Steven Eck

Tycho, this is Steve. Actually, we're pleased with the performance from an adjusted SG&A perspective this quarter. It's down modestly from the first half of 2026 levels, which I think is noteworthy because we're in the setting of a significant investment in the business for our future growth. We're in the midst of revival as Emmanuel said, but we're still displaying that cost discipline and capitalizing on opportunities to drive productivity. So we think that's heading in the right direction and as part of that story of gradual sequential EBITDA margin expansion.

Emmanuel Ligner

And maybe Tycho, let me give you a few examples of where we want to continue to invest. I mean definitely AI. We share a couple of tools during our opening remarks, which I think is important, we'll continue to double down on this supply chain definitely. There's still a lot to do there, and [ Mary ] is taking the lease.

We also want to double down on our e-commerce platform, right? We really see some good performance there. We are happy where we are. We know that we can do more. So I don't give you a couple of examples of where we want to continue to invest.

Tycho Peterson

Okay. And then can you talk more on the strength in new sell uploading, strong orders, I guess, how durable is the demand you're seeing now? Or are there kind of any onetime items in there?

Emmanuel Ligner

Yes. No. Look, oil is a new set an excellent business is strong brand, great customer relationship, the quality is outstanding [indiscernible] reputation. Again, we had some unusual order and shipping patterns in the past, especially on the first half. But Q3, we saw double-digit revenue growth and order is strong as well, is turning to revenue. The team is executing well.

I think you may have seen there are also some of our customers that are publicly shared the fact that -- we have renewed contract [indiscernible], alright, which is an important customer of us. We have a very long relationship, more than 10 years. And we renewed that contract up to 2031, and so we're really happy of where we are. So Q4 is looking good as well for [indiscernible].

Tycho Peterson

Okay. And if I could ask one last quick one. Is there anything back to margin structurally that would prevent VWR to get back to the historical 12% to 13% range longer term. Understanding, obviously, in the near term, you have inflationary pressures and other factors. But anything structurally that would prevent you from getting back to the historical range?

Emmanuel Ligner

Look, this is a great question. I think on we talked about that in Investor Day, well, we'll give you a framework for the future.

Operator

Your next question comes from the line of Eve Burstein with Bernstein.

Eve Burstein

Congrats on the quarter, you said you saw stronger end markets in Americas and Asia, but Europe is still lagging because of more challenging macro conditions.

Can you unpack this a little bit. How much of that is weakness due to academic and government specifically versus other end markets? I'd argue that there probably isn't as good line of sight to macro improvement in Europe and the timing to expect that versus what we had in the Americas a few quarters ago. Is that fair to say? What do you think it takes to get the end market going? And then finally, VWR has a real position of strength in Europe versus the largest global distributor competitor. Can you imagine this exposure being a drag on growth in the midterm?

Emmanuel Ligner

No, that's a great question. Look, Europe is a very important market for us. As you said, we have a leadership position there. Look, the macro environment is we're following it closely tight span on budget in Academy. There's also some industrial suffering, right? Germany, I think we highlight this.

And I think what is important is the recovery is really yet to be seen. What I think is important is that in our guide, we are looking at a static wall. So any recovery will give us a tailwind. So I think this is where we stand. It's difficult to anticipate, therefore, we take the static coal and say, okay, we'll put that in the guide.

Eve Burstein

Okay. Great. And then e-commerce has been a big focus for you. And just this week, you appointed a new Chief Information Officer. Can you talk a little bit about an e-commerce specifically, what sort of quantitative impact of the improvements that you've been making have they been having this year? What do you expect for next year?

And then for your digital transformation more broadly, which you said is still in early stages, what's the next set of digital priorities? And how are you viewing investment as a priority for excess capital.

Emmanuel Ligner

Sure. Look, it is a very important tool because it is a tool that serves a very, very large, broad-based customers, and we want to make sure that the interface with those customers is the best we can.

So the first really important step for us was to relaunch vwr.com, which we did at the end of Q1, early Q2, and we have really good feedback on this. But this is just the beginning. What we really want is to bring our tools which is extremely easy to deal with, which provide a much more information which is much more modern, okay? So I think this is where we are continuing to invest in this.

And we have a huge amount of KPI. Number of people that visit number of people that build a card number of people that actually order the cart and what do they look at. And we really want to bring AI into this. So we got a great Chief Digital Officer a couple of months ago. Now we are complementing that with Mike as a CIO and the team is really building a strong plan that we will support with investments.

So I think , again, we want to give you more information during Investor Day. So that will be a deep dive area for us at the day in December 8.

Operator

Your next question comes from the line of Justin Bowers with Deutsche Bank.

Justin Bowers

So can you refresh us on the revival program, the various phases and how you -- and the duration of the program as you see it now?

Emmanuel Ligner

Sure. Look, it's a 1-year program now. But as I said, we are just in the middle of it. I'm super happy the leadership team is now completed. All right. With Todd joining us a couple of weeks ago, Mike started next week. Very exciting, built a very strong team, very diverse with a great life science and med tech experience expertise. So this is really, really good.

Remember, we also implemented the leadership team with many people below. I think we talk about 65% of the entire [indiscernible] minus 2 being refreshed. We are operating in a much greater discipline right now. The culture has a stronger accountability. We are much more customer-centric. We have simplified a lot. But again, we're not done, right? We simplified, for example, the onboarding process for customers. We talked about that last quarter. Our production level, as we talk about it, especially in the production and service level are definitely improving.

But I think more importantly is our CD ratio. We spoke about that at the very beginning when I joined. We want to regain our credibility and the trust of all the stack orders. So in April, we said that VWR will return to growth. In our last call, we said that BMP will return to growth. And so it's very important that we continue to build on that credibility, to continue to build the trust with the shareholder, including investors, it is extremely important for us.

But if we look at the overall -- where we are, we're really happy, but we are serially not satisfied, okay? And so we're in the middle of it. We will continue to amplify simplification of processes to amplify our structure infrastructure systems, for example, especially as Mike is coming in, I want to really continue to strengthen our culture of execution and really, as I said earlier, just really position the company for sustainable growth. And so we're not done.

Justin Bowers

And you answer my question on leadership. So the one follow-up would be just on the investments that you're making on the BMP side. I know you called some of those out earlier in the year? Just trying to understand where we are in that process. And it does sound like the sales in the order book is filling up nicely and lead times are getting back to normal. So any additional color there would be helpful.

Emmanuel Ligner

Yes, sure. We'll continue, [ Mary ], has put and overall supply chain strategy, which, of course, is a long-term strategy, okay? When we develop those manufacturing strategy, we do not look at next quarter, we look at the next 10 years and what could be the demand. And also, we engage with our customers. This is an industry where security of supply is very important and we have the strength to be able to manufacture in Asia, in Europe and in the U.S. So this is about this. It's about making sure that we make the product at the right place closer to customers for sustainability, but also for security of supply and redundancies.

So that's where we are right now. We are finalizing those plans. And then I think this is another thing that we can talk at Investor Day.

Operator

Your next question comes from the line of Dan Arias with Stifel.

Daniel Arias

Todd, where will pricing come in for the year? What would the net effect be for 2026? .

Steven Eck

This is Steve. I'm happy to take that one. We're very pleased with the execution of our pricing strategy this year. To give you some perspective, last year, we saw a significantly greater cost coming from suppliers and having to absorb that, then we were able to necessarily pass on to customers. But through better governance, implementation of tools, these kinds of things, stronger commercial operations execution, we've been able to recover much better this year than last. So it's had a significantly noteworthy impact on our margins.

Emmanuel Ligner

Yes. I can jump in as well here. Our #1 objective is pricing to offset inflation right now? Okay. And this is very important. I think we've made a lot of progress. If we look at the different metrics like price over COGS, we have improved. We definitely have better tools. I think I spoke last quarter, the fact that we have hired price leaders, we have a team which is in place.

So we have better tools. We have better visibility, we review that every month. And basically, we have a greater discipline in the commercial team. So of course, cost rise in real time and sometimes pricing recover with a lag. But I think it's -- we are in a very, very important timing right now because we are end of the year. Some of the very large customers contract give us the opportunity to detect the price up at the end of the year for the following years, and that's what we are really working hard right now.

So yes, margin some have seen a bit of a headwind on the pricing lag. But I think what is important is very good execution cost discipline as well for us, but really I'm super happy of what we have done this year versus where we were last year, and I think there's more to come.

Daniel Arias

Okay. I appreciate the qualitative commentary there. Will you be in a position to talk about what 2026 pricing is at the Investor Day and I certainly appreciate the competitive element to all of this, but pricing is also a pretty major part of the situation and thinking about what it is. It will be different about '27 versus '26 and '26 versus '25%. So when can we expect to have some numbers as far as what price will mean to growth this year or next year?

Todd Garner

Yes, Dan. To be specific to a number, our data shows that it's our pricing is between 1% and 2% in 2026. So that's the price that we've been able to get to Steve and Emmanuel's point. That is less than we've seen from inflation, right? So we're chasing it a little bit. We're getting better at getting closer and reducing that lag between cost increases and price. But the quantification of '26 appears to us to be between that 1% and 2%.

Operator

And that's all the time we have today for questions. Emmanuel, I'd like to turn it back to you.

Emmanuel Ligner

Thank you, and thank you all for joining us. Today, and thanks for your questions. Our third quarter results marked a return to organic growth for Avantor and we are encouraged by the momentum across the business. We believe that improving execution and stronger end markets provide a foundation for sustained revenue growth, and we remain focused on execution to build on our positive momentum.

Finally, we are looking forward to hosting you in our Investors Day on December 8, where we will share our vision for the Avantor's future. We hope that will join us and again, thank you very much for your time and interest in Avantor. Thank you.

Operator

Ladies and gentlemen, this does conclude today's conference call. Thank you for your participation, and you may now disconnect.