Q2 2024 Avantor Inc Earnings Call

Operator: Good morning, my name is Emily, and I'll be your conference operator today. At this time, I would like to welcome everyone to Avantor's second quarter 2024 earnings results conference call. If you would like to ask a question today during the presentation, please do so by pressing the start button followed by the number one on your telephone keypad.

Emily: My name is Emily, and I'll be your conference operator today. At this time, I would like to welcome everyone to Avantor, the second quarter, 2024, earnings results conference call. If you would like to ask a question today during the presentation, please do so by pressing the start, followed by the number one on your telephone keypad.

Emily: Good morning. My name is Emily and I'll be your conference operator today. At this time, I would like to welcome everyone to Avantor's second quarter 2024 earnings results conference call.

Emily: If you would like to ask a question today during the presentation, please do so by pressing the star followed by the number 1 on your telephone keypad. I will now turn the call over to Christina Jones, Vice President of Investor Relations. Ms. Jones, you may begin the conference.

Christina Jones: I will now turn the call over to Christina Jones, Vice President of Investor Relations.

Christina Jones: I will now turn the call over to Christina Jones, Vice President of Investor Relations. Ms. Jones, you may begin the conference. Good morning.

Christina Jones: Ms. Jones, you may begin the conference.

Christina Jones: Good morning. Thank you for joining us. Our speakers today are Michael Stubblefield, President and Chief Executive Officer, and Bren Jones, Executive Vice President and Chief Financial Officer.

Christina Jones: Thank you for joining us. Our speakers today are Michael Stubblefield, President and Chief Executive Officer, and Bren 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.avantorsciences.com. A replay of this webcast will also be made available on our website after the call.

Christina Jones: Good morning. Thank you for joining us. Our speakers today are Michael Stubblefield, President and Chief Executive Officer, and Bren Jones, Executive Vice President and Chief Financial Officer.

Christina Jones: The press release and a presentation accompanying this call are available on our Investor Relations website at ir.avantorciances.com. A replay of this webcast will also be made available on our website after the call.

Speaker Change: The press release and a presentation accompanying this call are available on our Investor Relations website at ir.avantorsciences.com. A replay of this webcast will also be made available on our website after the call.

Christina Jones: 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 SAC filing. The actual results might differ materially from any forward-looking statements that we make today. These four looking statements speak only as of the date that they are made.

Christina Jones: 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.

Christina Jones: 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 Disclosure Package on our Investor Relations website. With that, I will now turn the call over to my. Thank you, CJ. And good morning, everyone.

Christina Jones: Following our prepared remarks, we will open the line for questions.

Christina Jones: 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.

Christina Jones: 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.

Christina Jones: 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.

Christina Jones: 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 disclosure package on our Investor Relations website.

Christina Jones: 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 Disclosure Package on our Investor Relations website.

Michael Stubblefield: With that, I will now turn the call over to Michael.

Michael Stubblefield: Thank you, CJ.

Michael Stubblefield: I appreciate you joining us today. I'm starting on slide three. We delivered another solid quarter with sequential improvement to all key financial metrics. However, with reported revenue of $1.7 billion, organic revenue declined 2%.

Michael Stubblefield: Good morning, everyone. I appreciate you joining us today. I'm starting on slide three. We delivered another solid quarter with sequential improvement to all key financial metrics. With reported revenue of $1.7 billion, organic revenue declined 2%, modestly above the midpoint of our guidance, driven by stable conditions in the lab and improved demand at our production business. Especially by our processing. Compared to the first quarter, adjusted EBIT on margin increased more than 100 basis points to 17.9%, and adjusted EPS grew double digits to 25 cents, both solidly above our guidance for the second quarter. As Brent will outline in his section, our margin improvement was driven by pricing, improved mix, and realization of savings for our multi-year cost transformation initiative.

Christina Jones: With that, I will now turn the call over to Michael.

Michael Stubblefield: Thank you, CJ, and good morning, everyone. I appreciate you joining us today. I'm starting on slide three.

Michael Stubblefield: We delivered another solid quarter with sequential improvement to all key financial metrics.

Michael Stubblefield: With reported revenue of $1.7 billion, organic revenue declined 2%, modestly above the midpoint of our guidance, driven by stable conditions in the lab and improved demand in our production business, especially bioprocessing.

Michael Stubblefield: Modestly above the midpoint of our guide, driven by stable conditions in the lab and improved demand in our production business, especially bioprocessing. Compared to the first quarter, the adjusted EBITDA margin increased more than 100 basis points to 17.9%. Adjusted EPS grew double digits to $0.25, both solidly above our guidance for the second quarter. As Brent will outline in his section, our margin improvement was driven by pricing, improved mix, and realization of savings from our multiyear cost transformation initiative. We also generated $235 million of free cash flow in the quarter, inclusive of cash costs related to achieving our transformation savings and reflecting our strong working capital performance. Year-to-date free cash flow conversion has exceeded 100%.

Michael Stubblefield: Compared to the first quarter, adjusted EBITDA margin increased more than 100 basis points to 17.9 percent and adjusted EPS grew double digits to 25 cents, both solidly above our guidance for the second quarter.

Michael Stubblefield: As Brent will outline in his section, our margin improvement was driven by pricing, improved mix, and realization of savings for our multi-year cost transformation initiative. We also generated $235 million of free cash flow in the quarter, inclusive of cash costs related to achieving our transformation savings.

Michael Stubblefield: We also generated $235 million of free cash flow in the quarter, inclusive of cash costs related to achieving our transformation savings. Reflecting our strong working capital performance, year-to-date free cash flow conversion has exceeded 100%. We paid down over $200 million of debt in the quarter and remained committed to bringing our adjusted net leverage ratio below three times. We continue to make good progress with the implementation of our new operating model, and are seeing early benefits of aligning our teams with our customer's needs in the lab and production environment.

Brent: Reflecting our strong working capital performance, year-to-date free cash flow conversion has exceeded 100%.

Michael Stubblefield: We paid down over $200 million of debt in the quarter and remain committed to bringing our adjusted net leverage ratio below three times. We continue to make good progress with the implementation of our new operating model and are seeing early benefits of aligning our teams with our customers' needs in the lab and production environment. In addition to unlocking significant operating efficiencies and streamlining execution of our operating plan, we're also realizing benefits from ongoing commercial intensive activities. Highlights from the second quarter include the launch of J.T. Baker cell lysis solution and J.T.

Brent: We paid down over $200 million of debt in the quarter and remain committed to bringing our adjusted net leverage ratio below three times.

Brent: We continue to make good progress with the implementation of our new operating model and are seeing early benefits of aligning our teams with our customers' needs in the lab and production environments.

Michael Stubblefield: Ants. In addition to unlocking significant operating efficiencies and streamlining execution of our operating plan, we're also realizing benefits from ongoing commercial intensity. Highlights from the second quarter include the launch of JT Baker, celisous solution and JT Baker, endonuclease, complimentary products to sustainably optimize the gene therapy harvest process. We also launched our Master Flex Master Sense gear pump, which has exciting applications and mRNA encapsulate. We secured subtle new contract wins and renewals, including with biopharma and CDMO customers, as well as with leading academic and government institutions. As part of our effort to bolster operational excellence and improve service levels, we recently opened our new North America customer service center in Mexico, which has modeled after similar service centers in Europe and in Asia. Sustainability is core to our strategy and the value we provide to our customers.

Brent: In addition to unlocking significant operating efficiencies and streamlining execution of our operating plan, we are also realizing benefits from ongoing commercial intensity.

Michael Stubblefield: Baker endonuclease and complementary products to sustainably optimize the gene therapy harvest process We also launched our MasterFlex MasterSense gear pump, which has exciting applications for mRNA encapsulation. We secured several new contract wins and renewals, including with biopharma and CDMO customers, as well as with leading academic and government institutions. As part of our effort to bolster operational excellence and improve service levels, we recently opened our new North America Customer Service Center in Mexico, which is modeled after similar service centers in Europe and Asia.

Brent: Highlights from the second quarter include the launch of J.T. Baker cell lysis solution and J.T. Baker endonuclease.

Brent: Complementary products to sustainably optimize the gene therapy harvest process.

Brent: We also launched our MasterFlex MasterSense gear pump, which has exciting applications and mRNA encapsulation.

Brent: We secured several new contract wins and renewals, including with Biopharma and CDMO customers, as well as with leading academic and government institutions.

Brent: As part of our effort to bolster operational excellence and improve service levels, we recently opened our new North America Customer Service Center in Mexico.

Michael Stubblefield: Sustainability is core to our strategy and the value we provide to our customers. We published our annual sustainability report in June. Highlighting the progress we have made in the past year under our science for goodness platform, including broadening our sustainable products offering and working with our suppliers to create a more sustainable supply chain. Finally, our team continues to execute our multi-year cost transformation initiative. Including aligning our manufacturing and distribution footprint with current and future areas of growth and improving our organizational efficiency.

Brent: which is modeled after similar service centers in Europe and in Asia. Sustainability is core to our strategy and the value we provide to our customers.

Michael Stubblefield: We published our annual sustainability report in June, highlighting the progress we have made in the past year under our Science for Goodness platform, including broadening our sustainable products offering and working with our suppliers to create a more sustainable supply chain. Finally, our team continues to execute our multi-year cost transformation initiative, including aligning our manufacturing and distribution footprint with current and future areas of growth and improving our organizational efficiency. Accelerated results from this program drove margin performance above our guidance range, and we are on track to meet our in-year cost savings target of $75 million in 2024.

Brent: We published our annual sustainability report in June , highlighting the progress we have made in the past year under our Science for Goodness platform.

Brent: Including broadening our sustainable products offering.

Brent: And working with our suppliers to create a more sustainable supply chain. Finally, our team continues to execute our multi-year cost transformation initiative, including aligning our manufacturing and distribution footprint with current and future areas of growth and improving our organizational efficiency.

Michael Stubblefield: Accelerated results from this program drove margin performance above our guidance range, and we are on track to meet our in-year cost savings target of $75 million in 2024. Broader market conditions remain consistent with the first quarter, and the tone of our customer dialogue continues to be constructive. It is clear to me that the power of our channel and our commercial intensity are making a difference in the current environment. In laboratory solutions, consumables, and services, they continue to perform well.

Brent: Accelerated results from this program drove margin performance above our guidance range, and we are on track to meet our in-year cost savings target of $75 million in 2024.

Michael Stubblefield: The broader market conditions remain consistent with the first quarter, and the tone of our customer dialogue continues to be constructive. It is clear to me that the power of our channel and our commercial intensity are making a difference in the current environment. In laboratory solutions, consumables and services continue to perform well, validating the strength of our positioning and relevance to our customers. Equipment and instrumentation trends were stable sequentially, and we are encouraged by continued customer engagement and activity levels. From an end-market perspective, we are still seeing pockets of inventory destocking and cautious customer spending from our biopharma customers.

Brent: The broader market conditions remain consistent with the first quarter, and the tone of our customer dialogue continues to be constructive.

Brent: It is clear to me that the power of our channel and our commercial intensity are making a difference in the current environment. In laboratory solutions, consumables and services continue to perform well.

Michael Stubblefield: This validation of the strength of our positioning and relevance to our customers. Equipment and instrumentation trends were stable sequentially, and we are encouraged by continued customer engagement and activity levels. From an end market perspective, we're still seeing pockets of inventory destocking and cautious customer spending from our Bioforma customers. At the same time, biotech funding remains up double digits year over year and well above pre-pandemic levels.

Brent: Validating the strength of our positioning and relevance to our customers. Equipment and instrumentation trends were stable sequentially, and we are encouraged by continued customer engagement and activity levels.

Brent: From an end market perspective, we're still seeing pockets of inventory destocking and cautious customer spending from our Bioforma customers.

Michael Stubblefield: At the same time, biotech funding remains up double digits year-to-year and well above pre-pandemic levels. The improved funding environment is driving positive customer sentiment and strong commercial engagement on new projects, although we do expect that it will take a few quarters for this to translate into increased sales. In our other end-markets, core diagnostic testing demand remains strong, and we saw sequential growth from our higher education and applied customers. In bioscience production, the bioprocessing end-market remains healthy with a robust pipeline of new therapies, a favorable regulatory landscape, and strong patient demand. The FDA has approved 21 biologics this year, including 14 new molecular entities across maps, cell and gene therapy, genome editing, proteins, and vaccines.

Brent: At the same time, biotech funding remains up double digits year over year and well above pre-pandemic levels.

Michael Stubblefield: The improved funding environment is driving positive customer sentiment and strong commercial engagement on new projects. However, we do expect that it will take a few quarters for this to translate into increased sales. In our other end markets, core diagnostic testing demand remains strong.

Brent: The improved funding environment is driving positive customer sentiment and strong commercial engagement on new projects.

Brent: Although we do expect that it will take a few quarters for this to translate into increased sales. In our other end markets, core diagnostic testing demand remains strong. We saw sequential growth from our higher education and applied customers.

Michael Stubblefield: We saw sequential growth from our higher education and applied customers. In bioscience production, the bioprocessing end market remains healthy, with a robust pipeline of new therapies, a favorable regulatory landscape, and strong patient demand. The FDA has approved 21 biologics this year, including 14 new molecular entities across MABS, cell and gene therapy, genome editing, proteins, and vaccines.

Brent: In bioscience production, the bioprocessing end market remains healthy with a robust pipeline of new therapies.

Speaker Change: The FDA has approved 21 biologics this year, including 14 new molecular entities across MABS, cell and gene therapy, genome editing, proteins and vaccines.

Michael Stubblefield: Customers have largely worked down excess inventory of our products, though some isolated pockets of destocking remain. Production activity is improving, but has not yet returned to levels that match underlying end-customer demand, largely a result of elevated finished goods inventory at some form of customers. In line with this backdrop, our bioprocessing business continues to gain momentum with another strong quarter of orders. Importantly, the positive order trends are converting to sales as viral processing grew high single-digit sequentially.

Michael Stubblefield: Customers have largely worked on excess inventory of our products, though some isolated pockets of destocking remain. Production activity is improving, but is not yet returned to levels that match underlying and customer demand. Largely, a result of elevated finished goods inventory at some form of customers.

Speaker Change: Customers have largely worked down excess inventory of our products, though some isolated pockets of destocking remain.

Speaker Change: Production activity is improving, but has not yet returned to levels that match underlying end-customer demand, largely a result of elevated finished goods inventory at some form of customers.

Michael Stubblefield: customers. In line with this backdrop, our bioprocessing business continues to gain momentum with another strong quarter of orders. Importantly, the positive order trends are converting to sales as bioprocessing grew a high single digit sequentially. We saw a solid performance in process ingredients and a return to growth on a year of a year basis in our food handling platform, which includes our Master Flex and single use offerings. Within our healthcare and advanced technology and markets, performance was in line with our expectations. With sustained momentum in aerospace and defense and ongoing recovery of semiconductor demand. Given it our performance year-to-date and current market conditions, we remain confident in our guidance and are reaffirming our full-year outlook.

Speaker Change: In line with this backdrop, our bioprocessing business continues to gain momentum, with another strong quarter of orders.

Speaker Change: Importantly, the positive order trends are converting to sales as bioprocessing grew high single digits sequentially.

Michael Stubblefield: We saw solid performance in processed ingredients and a return to growth on a year-over-year basis in our food handling platform, which includes our MasterFlex and single-use offers. Additionally, within our healthcare and advanced technology end markets. Performance was in line with our expectations, with sustained momentum in aerospace and defense and an ongoing recovery of semiconductor demand. Given our performance year-to-date and current market conditions, we remain confident in our guidance and are reaffirming our full-year outlook. Brett will provide additional details later in our prepared remarks. In summary, we delivered another quarter of solid performance and are encouraged by our momentum in bioprocessing, although enabled by the Avantor Business System.

Speaker Change: We saw solid performance in processed ingredients and a return to growth on a year-over-year basis in our food handling platform.

Speaker Change: which includes our MasterFlex and single-use offerings.

Speaker Change: Within our healthcare and advanced technology end markets, performance was in line with our expectations.

Speaker Change: With sustained momentum in aerospace and defense, and ongoing recovery of semiconductor demand.

Speaker Change: Given our performance year-to-date and current market conditions, we remain confident in our guidance and are reaffirming our full-year outlook.

Michael Stubblefield: Brent will provide additional details later in our prepared remarks. In summary, we delivered another quarter of solid performance and are encouraged by our momentum and bioprocessing. Enabled by the Avantor business system, we are ahead of plan in executing our cost transformation initiative and have delivered exceptional free cash flow generation, with year-to-date conversion well over 100%.

Speaker Change: Brett will provide additional details later in our prepared remarks.

Brett: In summary, we delivered another quarter of solid performance and are encouraged by our momentum in bioprocessing.

Brett: Enabled by the Avantor business system, we are ahead of plan in executing our cost transformation initiative and have delivered exceptional free cash flow generation with year-to-date conversion well over 100%.

Brent Jones: With that, I'll now turn it over to Brent to walk you through our second quarter results in more detail.

Brent Jones: We are ahead of plan in executing our cost transformation initiative and have delivered exceptional free cash flow generation with year-to-date conversion well over 100%. With that, I'll now turn it over to Brent to walk you through our second quarter results in more detail. Thank you, Michael, and good morning, everyone. I'm starting with the numbers on slide. Reported revenue was $1.7 billion for the quarter, declining 2% on an organic basis.

Brett: With that, I'll now turn it over to Brent to walk you through our second quarter results in more detail.

Brent Jones: Thank you, Michael, and good morning, everyone. I'm starting with the numbers on slide four. Reported revenue was $1.7 billion for the quarter, declining 2% on an organic basis. Sales trends in our laboratory solution segment were similar to the first quarter levels, and we saw sequential improvement in our bioscience production segment driven by strength and bioprocessing. Adjusted gross profit for the quarter was $583 million, and adjusted gross margin was 34.2%. This represents a 40-basis-point expansion year-over-year with favorable impacts from pricing, mix, and productivity. This also represents a 20-basis-point sequential improvement held by the relative outperformance in bioscience production.

Brent: Thank you, Michael, and good morning, everyone. I'm starting with the numbers on slide 4.

Brent: Reported revenue was $1.7 billion for the quarter, declining 2% on an organic basis.

Brent Jones: Sales trends in our laboratory solutions segment were similar to the first quarter levels, and we saw sequential improvement in our bioscience production segment driven by strength in bioprocessing. Adjusted gross profit for the quarter was $583 million, and adjusted gross margin was 34.2%. This represents a 40 basis point expansion year over year with favorable impacts from pricing, mix, and productivity. This also represents a 20-basis-point sequential improvement held by the relative outperformance in bioscience production. Adjusted EBITDA was $306 million, up $23 million sequentially.

Brent: Sales trends in our laboratory solutions segment were similar to the first quarter levels and we saw sequential improvement in our bioscience production segment driven by strength and bioprocessing.

Brent: Adjusted gross profit for the quarter was $583 million, and adjusted gross margin was 34.2%. This represents a 40 basis point expansion year over year with favorable impacts from pricing, mix, and productivity.

Brent: This also represents a 20 basis point sequential improvement held by the relative outperformance in bioscience production.

Brent Jones: Adjusted EBIDA was $306 million, up $23 million sequentially. Adjusted EBIDA margin was 17.9%, up over 100 basis points sequentially. Our sequential adjusted EBIDA improvement was driven by the increase in sales and the impact of our cost transformation initiatives up and down the P&L.

Brent: Adjusted EBITDA was $306 million, up $23 million sequentially. Adjusted EBITDA margin was 17.9%, up over 100 basis points sequentially.

Brent Jones: Adjusted EBITDA margin was 17.9%, up over 100 basis points sequentially. Our sequential adjusted EBITDA improvement was driven by the increase in sales and the impact of our cost transformation initiatives up and down the P&L. On a year-over-year basis, performance was impacted by lower sales volumes and the impact of our incentive compensation reset.

Brent: Our sequential adjusted EBITDA improvement was driven by the increase in sales and the impact of our cost transformation initiatives up and down the P&L.

Brent Jones: On a year-over-year basis, performance was impacted by lower sales volumes and the impact of our incentive compensation reset. Adjusted operating income was $277 million at a 16.3% margin, in line with adjusted EBIDA performance and the drivers just noted. Adjusted earnings per share were 25 cents for the quarter, a 3 cents sequential improvement driven by strong operating income performance. We generated $235 million of free cash flow in the quarter. Our free cash flow performance reflects our bottom line results and strong working capital performance, partially offset by cash costs of nearly $40 million from our cost transformation initiative in Q2.

Brent: On a year-over-year basis, performance was impacted by lower sales volumes and the impact of our incentive compensation reset. Adjusted operating income was $277 million at a 16.3% margin, in line with adjusted EVADOT performance and the drivers just noted.

Brent Jones: Adjusted operating income was $277 million at a 16.3% margin, in line with adjusted EVADOT performance and the drivers just noted. Adjusted earnings per share were $0.25 for the quarter, a $0.03 sequential improvement driven by strong operating income performance. We generated $235 million of free cash flow in the quarter.

Brent: Adjusted earnings per share were $0.25 for the quarter, a $0.03 sequential improvement driven by strong operating income performance.

Brent Jones: Our free cash flow performance reflects our bottom line results and strong working capital performance, partially offset by cash costs of nearly $40 million from our cost transformation initiative in Q2. When excluding cash costs related to the transformation, we've generated $385 million of free cash flow year to date. Our adjusted net leverage ended the quarter at 3.9 times adjusted EBITDA. As Michael noted, we remained focused on deleveraging and paid down over $200 million of debt in the quarter. Slide 5 outlines our segment performance. Laboratory Solutions revenue was $1.16 billion for the quarter, declining 2.7% versus the prior year on an organic basis.

Brent: We generated $235 million of free cash flow in the quarter.

Brent: Our free cash flow performance reflects our bottom line results and strong working capital performance, partially offset by cash costs of nearly $40 million from our Cost Transformation Initiative in Q2.

Brent Jones: When excluding cash costs related to the transformation, we generated $385 million of free cash flow year-to-date. Our adjusted net leverage ended the quarter at 3.9 times adjusted EBITDA. As Michael noted, we remained focused on deleveraging and paid down over $200 million of debt in the quarter.

Brent: When excluding cash costs related to the transformation, we've generated $385 million of free cash flow year-to-date.

Brent: Our adjusted net leverage ended the quarter at 3.9 times adjusted EBITDA. As Michael noted, we remained focused on deleveraging and paid down over $200 million of debt in the quarter.

Brent Jones: Slide five outlines our Savant performance. Laboratory solutions revenue was $1.16 billion for the quarter, declining 2.7% versus prior year on an organic basis. Sequentially, sales were stable at Q1 levels. Adjusted operating income for laboratory solutions was $151 million for the quarter, representing a 13.1% margin. The year-over-year adjusted operating income decline was driven by negative sales volume and the impact of our annual incentive compensation reset, partially offset by favorable mix and savings from our cost transformation initiative. Sequentially, laboratory solutions adjusted operating income was up modestly, with similar sales volume and mix at the gross margin line and incremental cost savings driving improved conversion.

Michael Stubblefield: Slide 5 outlines our segment performance.

Michael Stubblefield: Laboratory Solutions revenue was $1.16 billion for the quarter, declining 2.7% versus prior year on an organic basis. Sequentially, sales were stable at Q1 levels.

Brent Jones: Collectively, sales were stable at the Q1 level. Adjusted operating income for laboratory solutions was $151 million for the quarter, representing a 13.1% margin. The year-over-year adjusted operating income decline was driven by negative sales volume and the impact of our annual incentive compensation reset, partially offset by favorable mix and savings from our cost transformation initiative. Sequentially, Laboratory Solutions adjusted operating income was up modestly, with similar sales volume and mix at the gross margin line and incremental cost savings driving improved conversion.

Michael Stubblefield: Adjusted operating income for laboratory solutions was $151 million for the quarter, representing a 13.1% margin.

Michael Stubblefield: The year-over-year adjusted operating income decline was driven by negative sales volume and the impact of our annual incentive compensation reset, partially offset by favorable mix and savings from our cost transformation initiative.

Michael Stubblefield: Sequentially, Laboratory Solutions adjusted operating income was up modestly, with similar sales volume and mix at the gross margin line and incremental cost savings driving improved conversion. Adjusted operating income margin increased 30 basis points from Q1.

Brent Jones: Adjusted operating income margin increased 30 basis points from Q1. Bio-science production revenue was $547 million, representing an organic decline of approximately 0.3% versus prior year. Sequentially, reported revenue increased by $24 million, net of a $3 million headwind from FX. Bio-processing, representing about 2-thirds of the segment, outperformed and was down mid-single digits on an organic basis versus our expectation of down mid-to-high single digits. Sequentially, bio-processing grew high single digits as improved order rates are translating into increased sales and are supportive of continued momentum as we enter the second half of the year. Specific areas of strength include both process ingredients and fluid handling products.

Brent Jones: Adjusted operating income margin increased 30 basis points from Q1. Bioscience production revenue was $547 million, representing an organic decline of approximately 0.3% versus prior year. Consequently, reported revenue increased by $24 million, net of a $3 million headwind from FX.

Michael Stubblefield: Bioscience production revenue was $547 million, representing an organic decline of approximately 0.3% versus prior year. Sequentially, reported revenue increased by $24 million, net of a $3 million headwind from FX.

Brent Jones: Bioprocessing, representing about two-thirds of the segment, outperformed and was down mid-single digits on an organic basis versus our expectation of down mid-to-high single digits. Sequentially, bioprocessing grew high single digits as improved order rates are translating into increased sales and are supportive of continued momentum as we enter the second half of the year. Specific areas of strength include both processing gradients and fluid handling products

Michael Stubblefield: Bioprocessing, representing about two-thirds of the segment, outperformed and was down mid-single digits on an organic basis versus our expectation of down mid-to-high single digits.

Michael Stubblefield: Sequentially, bioprocessing grew high single digits as improved order rates are translating into increased sales and are supportive of continued momentum as we enter the second half of the year.

Michael Stubblefield: Specific areas of strength include both process ingredients and fluid handling products. As Michael noted, our fluid handling products return to growth on a year-over-year basis, a very encouraging sign for activity in the space.

Brent Jones: As Michael noted, our fluid handling products return to growth on a year-over-year basis, a very encouraging sign for activity in the space. Overall, bio-processing continues to show signs of improvement consistent with our view that the end market is healthy and inventory is reverting to more normalized levels. To round out the segment, biomaterials and advanced technology performed in line with expectations. Adjusted operating income for bio-science production was $144 million for the quarter, representing a 26.3% margin. Year-over-year adjusted operating income declined as a result of lower sales volume and incentive compensation headwinds. On a sequential basis, adjusted operating income saw an increase of $17 million due to a combination of higher sales and meaningful savings from our cost transformation initiative.

Brent Jones: As Michael noted, our fluid handling products returned to growth on a year-over-year basis, a very encouraging sign for activity in the system. Overall, bioprocessing continues to show signs of improvement, consistent with our view that the end market is healthy and inventory is reverting to more normalized levels. To round out the segment, biomaterials and advanced technology performed in line with expectations. Adjusted operating income for bioscience production was $144 million for the quarter, representing a 26.3% margin.

Michael Stubblefield: Overall, bioprocessing continues to show signs of improvement, consistent with our view that the end market is healthy and inventory is reverting to more normalized levels. To round out the segment, biomaterials and advanced technology performed in line with expectations.

Michael Stubblefield: Adjusted operating income for bioscience production was $144 million for the quarter, representing a 26.3% margin.

Brent Jones: Year-over-year adjusted operating income declined as a result of lower sales volume and incentive compensation. On a sequential basis, adjusted operating income saw an increase of $17 million due to a combination of higher sales and meaningful savings from our cost transformation initiative. Adjusted Operating Income Margin increased by 200 basis points from Q1. This quarter is a great example of the incrementals this business can drive with even modest top-line growth. Overall, a strong quarter for the bioscience production segment. Moving to the next slide.

Michael Stubblefield: Year-over-year adjusted operating income declined as a result of lower sales volume and incentive compensation headwinds.

Michael Stubblefield: On a sequential basis, adjusted operating income saw an increase of $17 million due to a combination of higher sales and meaningful savings from our cost transformation initiative.

Brent Jones: Adjusted operating income margin increased by 200 basis points from Q1. This quarter is a great example of the incrementals this business can drive with even modest top line growth. Overall, a strong quarter for the bio-science production segment.

Michael Stubblefield: Adjusted operating income margin increased by 200 basis points from Q1. This quarter is a great example of the incrementals this business can drive with even modest top-line growth. Overall, a strong quarter for the bioscience production segment.

Brent Jones: Moving to the next slide.

Brent Jones: As Michael said earlier, we continue to view our guidance ranges as appropriate, and we are reaffirming our full year outlook as shown on slide six. In terms of revenue, given our strong year-to-day performance and bioprocessing and continued momentum, we expect bioscience production to exceed original expectations and face the year down low single digits organically. We expect laboratory solutions to be flat to down low single digits organically.

Brent Jones: As Michael said earlier, we continue to view our guidance ranges as appropriate, and we are reaffirming our full year outlook as shown on slide 7. In terms of revenue, given our strong year-to-day performance in bioprocessing and continued momentum, we expect bioscience production to exceed original expectations and face the year down in low single digits organically. We expect laboratory solutions to be flat to down, low single digits organically, with seasonal patterns driving the rain.

Michael Stubblefield: Moving to the next slide.

Michael Stubblefield: As Michael said earlier, we continue to view our guidance ranges as appropriate, and we are reaffirming our full-year outlook as shown on slide 6.

Speaker Change: In terms of revenue, given our strong year-to-day performance in bioprocessing and continued momentum, we expect bioscience production to exceed original expectations and finish the year down low single digits organically.

Speaker Change: We expect laboratory solutions to be flat to down, low single digits organically, with seasonal patterns driving the range.

Michael Stubblefield: At an enterprise level, the midpoint of our organic growth guidance assumes normal lab seasonality, while the lower end accommodates more muted seasonal patterns. Year-to-date margin performance has significantly de-risked our adjusted EBITDA margin and EPS guidance, and our year-to-date conversion puts us in a strong position on free cash flow. For the third quarter, we expect organic revenue growth of negative 1% to plus 2%. We also expect Q3 adjusted EBITDA margins to be stable sequentially. I'll now turn the call back to Mike.

Speaker Change: At an enterprise level, the midpoint of our organic growth guidance assumes normal lab seasonality while the lower end accommodates more muted seasonal patterns.

Brent Jones: The year-to-date margin performance has significantly de-risked our adjusted EBITDA margin and EPS guidance, and our year-to-date conversion puts us in a strong position on free cash flow. For the third quarter, we expect organic revenue growth of negative revenue, and we expect that the year-to-date margin performance has significantly de-risked the year-to-date margin, and our year-to-date conversion puts us in a strong position on free cash flow.

Speaker Change: Year-to-date margin performance has significantly de-risked our adjusted EBITDA margin and EPS guidance, and our year-to-date conversion puts us in a strong position on free cash flow.

Brent Jones: For the third quarter, we expect organic revenue growth of 1% to plus 2%. We also expect Q3 adjusted EBITDA margins to be stable sequentially.

Speaker Change: For the third quarter, we expect organic revenue growth of negative one percent to plus two percent. We also expect Q3 adjusted EBITDA margins to be stable sequentially. I'll now turn the call back to Michael.

Michael Stubblefield: I'll now turn the call back to Michael.

Michael Stubblefield: Thank you, Brent. In summary, our team's commercial intensity, alignment with our customers' core research and production needs, and operational discipline generated another quarter of solid performance. Our margin expansion drivers are working. We are seeing relative strength in high margin categories, including bioprocess. And we continue to drive our multi-year cost transformation initiative. The impacts these actions are having on conversion are evident in our results.

Michael Stubblefield: Thank you, Brent. In summary, our team's commercial intensity, alignment with our customer's core research and production needs, and operational discipline generated another quarter of solid performance. Our margin expansion drivers are working. We are seeing relative strength and high margin categories, including bioprocessing, and we continue to drive our multi-year cost transformation initiative. The impacts these actions are having to converse as evident in our results, and we expect they will continue to drive strong incremental margins as end market demand fully recovers.

Michael Stubblefield: Thank you, Brent. In summary, our team's commercial intensity, alignment with our customer's core research and production needs, and operational discipline generated another quarter of solid performance.

Speaker Change: Our margin expansion drivers are working. We are seeing relative strength in high margin categories, including bioprocessing.

Speaker Change: And we continue to drive our multi-year cost transformation initiative.

Michael Stubblefield: And we expect they will continue to drive strong incremental margins as end market demand fully recovers. Additionally, the new operating model that we set up at the start of the year is generating momentum across our business sectors. Our commercial intensity is driving share gains, with meaningful new contract wins and expanded customer relationships in our biopharma, education, and applied end markets. Our customer-driven innovation agenda and internal R&D engine continue to develop products that are inherently sticky. And our integrated sales and customer excellence organization is creating a stronger, more cohesive customer experience.

Speaker Change: The impacts these actions are having to conversion is evident in our results.

Speaker Change: And we expect they will continue to drive strong incremental margins as end market demand fully recovers.

Michael Stubblefield: Additionally, the new operating model that we stood up at the start of the year is generating momentum across our business segments. Our commercial intensity is driving share gains with meaningful new contract wins and expanded customer relationships in our biopharma, education, and applied end markets. Our customer-driven innovation agenda and internal R&D engine continues to develop products that are inherently sticky, and our integrated sales and customer excellence organization is creating a stronger, more cohesive customer experience.

Speaker Change: Additionally, the new operating model that we stood up at the start of the year is generating momentum across our business segments.

Speaker Change: Our commercial intensity is driving share gains, with meaningful new contract wins and expanded customer relationships in our biopharma, education, and applied end markets.

Speaker Change: Our customer-driven innovation agenda and internal R&D engine continues to develop products that are inherently sticky. And our integrated sales and customer excellence organization is creating a stronger, more cohesive customer experience.

Michael Stubblefield: As always, we are focused on execution and remain confident in the opportunities that lie ahead for our business.

Michael Stubblefield: As always, we are focused on execution and remain confident in the opportunities that lie ahead for our business. Finally, I'd like to close by thanking our Avantor Associates for their dedication to serving our customers and for their many contributions to our transformation and operating results. I will now turn it over to the operator to begin the question and answer portion of our call. Thank you. 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.

Speaker Change: As always, we are focused on execution and remain confident in the opportunities that lie ahead for our business.

Michael Stubblefield: Finally, I'd like to close by thanking our avantures associates for their dedication to serving our customers, and for their many contributions to our transformation and operating results.

Speaker Change: Finally, I'd like to close by thanking our Avantor associates for their dedication to serving our customers and for their many contributions to our transformation and operating results.

Emily: I will now turn it over to the operator to begin the question-and-answer portion of our call.

Speaker Change: I will now turn it over to the operator to begin the question and answer portion of our call.

Emily: Thank you. 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 wish to be removed from the queue, you could do so by pressing Start and then two.

Speaker Change: Thank you. 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.

Michael Stubblefield: If you change your mind or you wish to be removed from the queue, you can do so by pressing star and then two. When preparing to ask your question, please ensure that your device and your microphone are unmuted locally.

Speaker Change: If you change your mind, or you wish to be removed from the queue, you could do so by pressing star and then 2. When preparing to ask your question, please ensure that your device and your microphone are unmuted locally.

Emily: When preparing to ask your question, please ensure that all devices and your microphone are unmuted locally.

Vijay Kumar: Our first question comes from the line of VJ Kumar with ever call ISI. VJ, please go ahead. Good morning, Michael, and congrats on a steady print share. Maybe my first question here on the bio processing, just given the focus. What was, you know, you mentioned de-stocking. Is there any way to quantify the de-stocking impact in the second quarter of the first half? And to get a sense for underlying growth. In what did orders do in the quarter, you know, maybe sequential and near or near trends. Maybe comments on where it came from in the consumables versus instrumentation.

Operator: Our first question comes from the line of Vijay Kumar with Evercore ISI. Vijay, please go ahead. Good morning, Michael. And congrats on a steady print share. Maybe my first question here on bioprocessing, just given the focus, what was, you mentioned de-stocking. Is there any way to quantify the de-stocking impact in the second quarter and first half and to get a sense for underlying growth? And what did orders do in the quarter?

Speaker Change: Our first question comes from the line of Vijay Kumar with Evercore ISI. Vijay, please go ahead.

Vijay Muniyappa Kumar: Good morning, Michael and

Vijay Muniyappa Kumar: Congrats on a steady print share. Maybe my first question here on the bioprocessing, just given the focus.

Vijay Muniyappa Kumar: What was, you know, you mentioned destocking. Is there any way to quantify the destocking impact in second quarter or first half and to get a sense for underlying growth?

Michael Stubblefield: You know, maybe sequential and year-on-year trends, maybe comments on where it came from in the consumables versus instrumentation. Thanks for the question, Vijay. Good to hear from you.

Speaker Change: And what did orders do in the quarter, you know, maybe sequential and near-or-near trends, and maybe comments on where it came from in the consumables versus instrumentation.

Michael Stubblefield: Thanks for the question, Vijay. Good to hear from you. You know, as we described in the prepared remarks, Vijay, you know, overall we're obviously very pleased with what we're seeing, and by processing, the fundamentals are clearly improving them. I think we're encouraged by the outlook here, as we said, you know, we had another, you know, quarter of strong orders. You asked about year over year; certainly, you know, good growth year over year as well. You know, we, we characterize it just, you know, continued momentum and how that order book is building. Perhaps more importantly, I think, Vijay, it's important to realize, you know, given our lead times and such, we are starting to see these positive trends, you know, convert to revenues, and we delivered another quarter of our performance on the platform.

Michael Stubblefield: You know, as we described in the prepared remarks, Vijay, overall, we're obviously very pleased with what we're seeing in bioprocessing, and the fundamentals are clearly improving. And I think we're encouraged by the outlook here. As we said, you know, we had another quarter of strong orders. You asked about year-over-year, certainly, you know, good growth year-over-year as well.

Speaker Change: Thanks for the question Vijay, good to hear from you.

Speaker Change: You know, as we described in the prepared remarks, Vijay, you know, overall, we're obviously very pleased with what we're seeing in bioprocessing, and the fundamentals are clearly improving.

Speaker Change: I think we're encouraged by the outlook here. As we said, you know, we had another, you know, quarter of strong orders, you asked about year-over-year, certainly, you know, good growth year-over-year as well. You know, we characterize it as just, you know, continued momentum in how that order book is building.

Michael Stubblefield: You know, we characterize it just as continued momentum in how that order book is building. Perhaps more importantly, I think, Vijay, it's important to realize that, given our lead times and such, we are starting to see these positive trends, you know, convert to revenues. And we delivered another quarter of outperformance on the platform. We went into the quarter, you know, thinking about bioprocessing being off, you know, high single digits to perhaps mid-single digits, and we obviously finished up at the high end of that.

Speaker Change: Perhaps more importantly, I think, Vijay, it's important to realize, you know, given our lead times and such, we are starting to see these positive trends, you know, convert to revenues.

Michael Stubblefield: We went into the quarter, you know, thinking about processing, being off, you know, high single digits, the perhaps mental single digits that we obviously finished up at the high end of that. And, you know, given the momentum, the order book that we, that we've realized, you know, in the quarter, it did enable us to improve our outlook on a full-year basis. We're certainly excited to see, you know, the platform return to growth, you know, exiting the year.

Speaker Change: And we delivered another quarter of outperformance on the platform. We went into the quarter, you know, thinking about file processing being off, you know, high single digits to perhaps mid-single digits, and we obviously finished up at the high end of that.

Brent Jones: And, you know, given the momentum, the order book that we've realized, you know, in the quarter, it did enable us to improve our outlook on a full-year basis. We're certainly excited to see the platform return to growth, you know, exiting the year.

Speaker Change: And, you know, given the momentum, the order book that we've realized, you know, in the quarter, it did enable us to improve our outlook on a full year basis. We're certainly excited to see, you know, the platform return to growth, you know, exiting the year.

Unknown Executive: One stood maybe a print one for you on a nice free cash print in this quarter. And in first half, any any kind of element on free cash in, you know, you didn't mention pricing, go margins. Is that, is that, you know, when volumes to normalize, you know, how should we think about margins, but can you do have a normalize, I think, operating model was, you know, 50 to 100 basis points should cost them to be implemented through that 50 to 100 basis points outlook.

Brent Jones: Maybe Brent, one for you on a nice free cash print this quarter and in the first half. Any tiny element on free cash? And you know, you didn't mention pricing margins. Is that, is that, you know, when volumes are going to normalize, how should we think about margins?

Speaker Change: Maybe Brent, one for you on a nice recap.

Speaker Change: for in this quarter and in first half. Any tiny element on free cash and, you know, you didn't mention pricing margins.

Brent Jones: Because you do have in the normalized, I think, operating model was, you know, 50 to 100 basis points. Should cost savings be incremental to that 50 to 100 basis points outlook? So thanks for the question. A few things to unpack there.

Speaker Change: Is that, is that, you know, when volumes to normalize, you know, actually we think about margins because you do have in normalized, I think, operating model was, you know, 50 to 100 basis points, should cost savings be incremental to that 50 to 100 basis points outlook? Okay.

Unknown Executive: So thanks for the question. A few things to unpack there. Look on the free cashless side; I would, I would think about it as just a performance in the first half there, little lighter in Q1, very solid in Q2. You know, if you look, we had really nice improvements and working capital days there, frankly, in all metrics. And I put that to real focus and execution. And you know, we reiterated the guide and connect with that. So I think we'll perform solidly for the year. You know, in terms of other margin acceleration and off being on the algorithm, I, I would just stick to what we stated. The algorithm there were, you know, we're still in this dynamic period right now, we have a lot of costs coming out of the business and just stick to the general way we think about the business going forward.

Brent Jones: Looking on the free cash flow side, I would think about it as just the performance in the first half there, a little lighter in Q1, very solid in Q2. You know, if you look, we had really nice improvements in working capital days there, frankly, in all metrics. And I'd put that to real focus in execution.

Speaker Change: So

Speaker Change: Thanks for the question.

Speaker Change: A few things to unpack there. Look on the free cashless side. I would think about it as just the performance in the first half there, a little lighter in Q1, very solid in Q2.

Speaker Change: If you look, we had really nice improvements in working capital days there, frankly, in all metrics. And I'd put that to a real focus in execution. And we reiterated the guide in connection with that. So I think we'll perform solidly for the year.

Brent Jones: And we reiterated the guide in connection with that. So I think we'll perform solidly for the year. You know, in terms of other margin acceleration and being on the algorithm, I would just stick to what we stated in the algorithm there.

Speaker Change: In terms of other margin acceleration and off being on the algorithm, I would just stick to what we stated in the algorithm there. We're still in this dynamic period right now. We have a lot of costs coming out of the business and just stick to the general way we think about the business going forward.

Brent Jones: We're still in this dynamic period right now. We have a lot of costs coming out of the business, and we just stick to the general way we think about the business going forward.

Unknown Executive: Thanks. Thank you.

Speaker Change: Understood. Thanks, guys.

Speaker Change: Thank you.

Tycho Peterson: Our next question comes from Tyco Peterson with Jeffries. Tyco, please go ahead. Your line is now open.

unknown: Thanks, guys. Our next question comes from Tycho Peterson with Jeffreys. Tyco, please go ahead. Your line is now open. Hey, good morning.

Speaker Change: Our next question comes from Tycho Peterson with Jeffreys.

Tycho Peterson: Hey, good morning. Maybe just want to prove in on some of the bio process recovery comments on, you know, process ingredients. You made some kind of quarter comments on API. So I'm just wondering if you can kind of put the process ingredient comments, you know, in context of, you know, where we are on the API front. And then, you know, how do we think about fluid handling products. You know, you would mention that the good kind of leading indicator. So maybe put some context around that and other remaining pockets of weakness. You can point to in the maybe expectations for the core growth exit rate for bioprocess for the year would be helpful.

unknown: I maybe just want to probe in on some of the bioprocess recovery comments on process ingredients. You've made some kind of intercourter comments on API. So I'm just wondering if you can kind of put the process ingredient comments in context of where we are on the API front, and then what do we think about fluid handling products? You mentioned that's a good kind of leading indicator. So maybe put some context around that and other remaining pockets of weakness you can point to, and then maybe expectations for the core growth exit rate for bioprocess for the year would be helpful. Thanks for the question, Tycho. It's good to hear from you. Welcome back.

Tycho: Tyco, please go ahead, your line is now open.

Tycho Peterson: Hey, good morning. I maybe just want to probe in on some of the bioprocess recovery comments on, you know, processed ingredients. You've made some kind of intercourter comments on API, so I'm just wondering if you can kind of

Speaker Change: Put the process ingredient comments, you know, in context of, you know, where we are on the on the API front. And then, you know, how do we think about fluid handling products? You know, you had mentioned that's a good kind of leading indicator. So,

Speaker Change: Maybe put some context around that and other remaining pockets of weakness you can point to and then maybe expectations for the core growth exit rate for bioprocess for the year would be helpful.

Michael Stubblefield: A few things to get into there. I think, again, just to reiterate what we've been saying, we're very pleased with the momentum that we are seeing, and it's broad-based. You asked about processing ingredients. One of the things I like about our platform, Tycho, of course, is we're going to have exposure upstream, downstream, and through fill finish, and we're seeing good momentum across the portfolio. We called out our MasterFlex and single-use platform.

Michael Stubblefield: Thanks for the question, Tycho. It's good to hear from you. Welcome back.

Michael Stubblefield: A few things to get into there. I think, you know, again, just to reiterate what we've been saying. We're, you were very pleased with the momentum that we are staying in a broad base. You asked about, you know, processing ingredients. You know, I think one thing that I like about our platform, Tycho, of course, is we're going to have exposure, you know, upstream, downstream, and through, you know, finish. And we're seeing, you know, good momentum across the portfolio. And we called out, you know, our masterplex and single use platform, you know, that platform and associated solutions actually returned to growth on a year of your basis in the quarter.

Speaker Change: Thanks for the question, Tycho. It's good to hear from you. Welcome back.

Speaker Change: A few things to get into there, I think, you know,

Speaker Change: Again, just to reiterate what we've been saying, we're very pleased with the momentum that we are seeing, and it's broad-based. You asked about processing ingredients.

Speaker Change: You know, I think one of the things I like about our platform Tyco, of course, is we're going to have exposure, you know, upstream downstream and through, you know, fill finish and we're seeing, you know, good momentum across the portfolio.

Michael Stubblefield: That platform and associated solutions actually returned to growth on a year-over-year basis in the quarter. That was a platform where we were first starting to see some of the green shoots and leading indicators turn favorable for us. Last year, we really started to see an acceleration of engineering drawing activity, and certainly that's continued and is now also starting to translate into improved revenues. I think there's a lot to like about the momentum that we have on that front.

Speaker Change: And, you know, we called out, you know, our MasterPlex and single-use platform, you know, that platform

Speaker Change: and Associated Solutions actually returned to growth on a year-over-year basis in the quarter.

Michael Stubblefield: And that was a platform where we were first starting to see some of the green shoots and leading indicators turn, you know, favorable for us. And last year, we really started to see an acceleration of engineering, growing activity, and that's continued. And now also starting to translate into improved revenues. So I think there's a lot to like about the momentum that we have on that front. You know, relative to eight guys and, you know, inventories and such. I think, you know, probably a couple ways to think about that. And, you know, I think consistent with the way we've been talking about it probably over the course of the last year or so.

Speaker Change: And that, you know, that was a platform where.

Speaker Change: But we're first starting to see some of the green shoots and leading indicators turn, you know, favorable for us, you know, last year, we really started to see an acceleration of engineering drawing activity. And that's, you know, continued and now also starting to translate into, you know, improved revenues. So,

Michael Stubblefield: Relative to APIs and inventories and such, I think there are a couple of ways to think about that, and I think consistent with the way we've been talking about it probably over the course of the last year or so, the stocking of our products is largely complete. Yes, I'm sure there are a few isolated pockets of inventory at specific customers, but, you know, largely that's getting behind us. And, you know, I think the elevated inventories of some of the APIs and bulk drug substances that we've seen at our customers continue to improve, but still not at a level where we see underlying production matching, you know, and market demand, but certainly improving. And, you know, one of the dynamics that's leading to, you know, improved growth rates.

Speaker Change: I think there's a lot to like about the momentum that we, you know, have on that front, you know, relative to APIs and, you know, inventories and such. I think, you know, probably a couple of ways to think about that. And, you know, I think consistent with the way we've been talking about it probably over the course of the last year or so,

Michael Stubblefield: The stocking of our products is largely complete. Yes, I'm sure there's a few isolated pockets of inventories at specific customers. But, you know, largely that's getting behind us. And, you know, I think the elevated inventories of some of the eight guys and both drug substances that we've seen at our customers; you know, that continues to improve. But still not at a level where we see underlying, you know, production matching, you know, and market demand, but certainly improving in one of the dynamics that's leading to, you know, the improved growth rate. I think, you know, keeping honest on the questions here, I think your last question there was, you know, just around how we see, you know, while processing, you know, trending through the balance of the year and perhaps, you know, what we see at exiting the fourth quarter.

Speaker Change: The stocking of our products is largely complete. Yes, I'm sure there's a few isolated pockets of inventories at specific customers, but largely that's getting behind us. And, you know, I think...

Speaker Change: Elevated inventories of some of the APIs and bulk drug substances that we've seen at our customers, you know, that continues to improve, but

Speaker Change: Still not at a level where we see underlying, you know, production matching, you know, and market demand, but certainly improving and, you know, one of the dynamics that's leading to.

Michael Stubblefield: I think, keep me honest on the questions here, Tycho, but I think your last question there was, you know, just around how we see bioprocessing, you know, trending through the balance of the year and, perhaps, what we see at exiting the 4th quarter. You know, I think we've indicated we're certainly looking forward to the welcome return to growth for the platform in the 4th quarter. Given the momentum, the order book, you know, we have increased, I think, our outlook on a full year basis.

Speaker Change: you know, the improved, you know, growth rates.

Tycho Peterson: I think, keep me honest on the questions here, Tycho, but I think your last question there was, you know, just around how we see, you know, bioprocessing, you know, trending through the balance of the year and perhaps, you know, what we see it exiting the fourth quarter.

Michael Stubblefield: You know, I think we've indicated what's certainly looking forward to the welcome return to growth for the platform in the fourth quarter. Given the momentum to order book, you know, we have increased the, I think our outlook on a full year basis, we can, you know, see by processing, you know, probably down low single digits on a, on a full year basis, which kind of do the math on all that.

Speaker Change: I think we've indicated we're certainly looking forward to the welcome return to growth for the platform in the fourth quarter, given the momentum to order book, you know, we have increased the.

Michael Stubblefield: We, you know, we see bioprocessing, probably down low single digits on a full year basis, which kind of does the math on all that. And that leads you to an exit rate in the mid to high single digits for the platform. Thanks for your questions, Michael. Okay, thanks. And can I, just follow up quickly, just education and government.

Speaker Change: I think our outlook on a full-year basis, we see bioprocessing probably down low single digits on a full-year basis, which you kind of do the math on all that, and that leads you to an exit rate in the mid to high single-digit rate for the platform.

Michael Stubblefield: And that leads you to an exit rate in the mid to single digit rate for platform. Thanks for your questions, Psycho.

Michael Stubblefield: You mentioned some improvement there, but it was down mid single digit versus down low single digit in the first quarter. I just want to understand what you said. I just want to clarify what you said. Yes, so the end market, education, and government, you're right, down mid-single digits. There are probably three key components to that platform, Tyco. We have some exposure to K-12, which has a real seasonality component to it, kind of just the return of the school year kind of falls right on top of the quarter. And so you see some dynamics. Sometimes orders come in June or revenue comes in June, and sometimes it comes in July.

Tycho Peterson: Okay. Thanks.

Tycho Peterson: And one follow up quickly, just education and government, you had mentioned some improvements there, but it was down mid single digit versus down low single digit. And the first quarter, I just want to understand what I just want to clarify what you're saying there. Yes, so the end market education and governments, if you're right, down, down mid single digits, there's probably three key components to that platform, Psycho. We have, you know, some exposure to K through 12, which, you know, has a real seasonality component to it, kind of the, just the return of, you know, the school year, kind of falls right on top of the quarter.

Speaker Change: Thanks for your questions, Michael. Okay. Thanks. And can I, one follow-up quickly, just education and government. You had mentioned some improvement there, but it was down mid-single-digit versus down low-single-digit in the first quarter. I just want to understand what, I just want to clarify what you're saying there.

Tycho Peterson: Yes, so the end market, education and government, if you're right, down mid-single digits, there's probably three key components to that platform, Tyco. We have some exposure to K-12, which

Tycho Peterson: You know, it has a real seasonality component to it, kind of a...

Speaker Change: It's just the return of, you know, the school year kind of falls right on top of.

Michael Stubblefield: And so you see some dynamics; sometimes orders come in June, some revenue comes in June, sometimes it comes in in July. So it looks like this year, probably a little bit more weighted to the third quarter, government was down for us a bit. I think the higher education piece, which is probably the most important piece for us here. A difficult comp; I think that was the high point for the year last year. You know, leading to, you know, the results you see there. I think for us, the focus here, you know, remains on commercial intensity. Got some a lot of nice wins and ongoing share gains there.

Speaker Change: The order is coming in June , sometimes it comes in July . So it looks like this year probably a little bit more weighted to the third quarter. Government was down for us a bit. I think the higher education piece, which is probably the most important piece for us here.

Michael Stubblefield: So it looks like this year probably a little bit more weighted to the third quarter. Government was down for us a bit. I think the higher education piece, which is probably the most important piece for us here, is difficult comp. I think that was part of the high point for the year last year, leading to the results you see there. I think for us, the focus here remains on commercial intensity. We got a lot of nice wins and ongoing share gains there. I think we're encouraged to see higher education improve sequentially as we move from 1Q to 2Q. Okay, helpful.

Speaker Change: Difficult comp, I think that was part of the high point for the year last year.

Speaker Change: leading to the results you see there. I think for us, the focus here remains on commercial intensity. We've got a lot of nice wins and ongoing share gains there. I think we're encouraged to see higher education improve sequentially as we move from 1Q to 2Q.

Tycho Peterson: I think we're encouraged to see higher education improves sequentially. Thank you.

Tycho Peterson: Okay, helpful. Thank you.

Speaker Change: Okay, helpful. Thank you.

Doug Schenkel: The next question comes from Doug Schenkel with Wolf Research. Please go ahead. Your line is now open.

unknown: Thank you. The next question comes from Doug Schenkel with Wolf Research. Please go ahead; your line is now open.

Speaker Change: The next question comes from Doug Schenkel with Wolf Research. Please go ahead, your line is now open.

Doug Schenkel: Good morning, and thank you for taking my question. My first one is on bio processing. You know, recognizing your mix of consumables is a lot higher than equipment. I am just curious if you do want to comment on what you're seeing in terms of, you know, demand for each category: meeting consumables versus equipment. Kind of how you're thinking about that, you know, as you incorporate an assumption about that into, you know, your full year guidance. And then, you know, kind of related to that, you know, how does that impact margin? I would think if, you know, consumables are trending better than equipment, you know, that would actually benefit margin for the year.

unknown: Good morning, and thank you for taking my question. My first one is on bioprocessing, you know, recognizing that your mix of consumables is a lot higher than equipment. I am just curious if you'd be willing to comment on what you're seeing in terms of, you know, demand for each category, meaning consumables versus equipment, kind of how you're thinking about that as you incorporate an assumption about that into, you know, your full-year guidance, and then, you know, kind of related to that.

Douglas Anthony Schenkel: Good morning, and thank you for taking my question. My first one is on bioprocessing, you know, recognizing your mix of consumables is a lot higher than equipment.

Douglas Anthony Schenkel: I am just curious if you'd be willing to comment on what you're seeing in terms of demand for each category, meaning consumables versus equipment.

Speaker Change: Kind of how you're thinking about that, you know, as you incorporate an assumption about that into, you know, your full year guidance, and then, you know, kind of related to that.

unknown: You know, how does that impact margin? I would think if, you know, consumables are trending better than equipment, that would actually benefit margin for the year. On top of the fact that you're now expecting bioprocessing to be a little bit stronger for the year, I would think those would all be good guys for margin for the year. So any comments on that would be helpful.

Speaker Change: You know, how does that impact margin? I would think if, you know, consumables are trending better than equipment, you know, that would actually benefit margin for the year.

Michael Stubblefield: You know, on top of the fact that you're now experiencing an effecting bio processing to be a little bit stronger for the year, I would think those would all be good guys for margin for the year. So any comments on that would be helpful.

Speaker Change: You know, on top of the fact that you're now expecting bioprocessing to be a little bit stronger for the year, I would think those would all be good guys for margin for the year. So any comments on that would be helpful.

Michael Stubblefield: Thanks, Doug. So, on bioprocessing, as you indicated, really, really heavy mix and certainly favoring consumables, probably, roughly speaking, it's probably 95% consumables on our bioprocessing platform, roughly 5% equipment. And of that equipment, what we're really talking about here is primarily our perisulfic pump platform within MasterFlex. You know, good momentum across both, obviously, and, you know, interesting enough, our MasterFlex line actually returned to growth in the quarter. And I think the margin profile across, you know, our equipment, our consumables, is pretty similar within bioprocessing.

Michael Stubblefield: Thanks, Doug. So on bio processing is indicated really, really heavy mix and certainly favoring consumables, probably, roughly speaking, it's probably 95% consumables on our bio processing platform, roughly 5% equipment. And of that equipment, it's what we're really talking here is primarily. You know, our parasolpic pump platform within, within Master Flex. You know, good momentum across both obviously and, you know, interesting enough, our master flex line actually returned to growth in the quarter. And I think the margin profile across, you know, our equipment are consumed was pretty similar within bio processing. So both components of that, you know, moving in the right direction and supporting the improved output there.

Speaker Change: Thanks, Doug. So on bioprocessing, as you indicated, really, really heavy mix.

Speaker Change: And, you know, certainly favoring consumables, probably.

Speaker Change: Roughly speaking, it's probably 95% consumables on our bioprocessing platform, roughly 5% equipment. And of that equipment, what we're really talking here is primarily

Speaker Change: You know, our perisulfic pump platform within MasterFlex.

Speaker Change: You know, good momentum across both, obviously, and, you know, interesting enough, our MasterFlex line actually returned to growth, uh, in the in the quarter. And I think the margin profile across...

Speaker Change: Our equipment and our consumables are pretty similar within bioprocessing. So both components of that moving in the right direction and supporting the improved outlook there. When I think though I step back across at an enterprise level, this...

Michael Stubblefield: And I think though I step back across, you know, at an enterprise level, this discussion around consumables versus, you know, equipment. Obviously, we're a consumables driven platform. And, you know, I think that's one of the attributes of our business model that I think is particularly attractive, and particularly given the recurring nature of the revenues here, you know, above 85%. You know, one of the benefits we saw on margin this quarter was, you know, due to improving mix and certainly the ongoing recovery of consumables. The consumables driven growth is favorable for mix, just given how much of that is a proprietary content for us. Equipment was stable sequentially in our lab platform.

Michael Stubblefield: So, both components of that, you know, moving in the right direction and supporting the improved outlook there. But when I think, though, I step back across, you know, at an enterprise level, this discussion around consumables versus, you know, equipment. Obviously, we're a consumables-driven platform.

Speaker Change: In discussion around consumables versus, you know, equipment, obviously, we're a consumables driven platform. And, you know, I think that's one of the attributes of our business model. I think it's particularly attractive, and particularly given the recurring nature of.

Michael Stubblefield: And, you know, I think that's 1 of the attributes of our business model that I think is particularly attractive, and particularly given the recurring nature of the revenues here, you know, above 85%. You know, 1 of the benefits we saw on margin this quarter was due to improving mix, and certainly the ongoing recovery of consumables and the consumables-driven growth is favorable for mix, just given how much of that is proprietary content for us. Equipment was stable sequentially on our lab platform.

Speaker Change: of the revenues here, you know, above 85%.

Speaker Change: You know, one of the benefits we saw on margin this quarter was, you know, due to improving mix, and certainly the ongoing recovery of consumables and the consumables-driven growth is favorable for mix, just given how much of that is proprietary content.

Michael Stubblefield: And, you know, we'll see where that goes going forward here, but I think we like the mix that we're seeing here and, particularly, the return of, you know, the proprietary content, which, you know, carries a higher margin for us. So I think there are a lot of favorable dynamics there that support our momentum going. Okay, one real quick follow-up, you know, and Mike could be for Michael, or it could be for Brent, but given how things are trending right now, it seems like that, I think it's the 2025 exit rate target of 20% plus EBITDA margin.

Speaker Change: for us. Equipment was stable sequentially in our lab platform.

Michael Stubblefield: And we'll see where that goes going forward here, but I think we like the mix that we're seeing here, and particularly the return of, you know, the proprietary content, which carries a higher margin for us. So I think a lot of favorable dynamics there that support our momentum going forward.

Speaker Change: And, you know, we'll see where that, you know, goes going forward here. But I think we like the mix that we're seeing here, and particularly the return of

Speaker Change: you know, the proprietary content, which, you know, carries a higher margin for us. So I think a lot of favorable dynamics there that support our momentum going forward.

Brent Jones: Okay, one, one real quick follow up, you know, and Mike could be from Michael could be for Brent, but given how things are trending right now, it seems like that, I think it's the 2025 exit rate target of, you know, 20% plus you but the margin, it seems like, you know, when, when we plan to sell you're on track for that, just want to make sure that you guys agree with that. We do agree with that, Doug; it's squarely in our sights. And there's a lot of different ways to get there. The thing I'm probably most focused on is, how do we get there on driving the things that are fully within our control?

Speaker Change: Okay, one real quick follow-up, and it could be for Michael, it could be for Brent, but

Speaker Change: Given how things are trending right now, it seems like that, I think it's the 2025 exit rate target of, you know, 20% plus EBITDA margin. It seems like, at least, you know, when we play in Excel, you're on track for that. Just want to make sure that you guys agree with that.

Michael Stubblefield: It seems like, at least when we play in Excel, you're on track for that. Just want to make sure that you guys agree with that. We do agree with that. You know, Doug, it's squarely in our sights. And, you know, there are a lot of different ways to get there.

Michael Stubblefield: You know, the thing I'm probably most focused on is, you know, driving the things that are fully within our control, you know, clearly, you know, improved, you know, market recovery, you know, will help us but are not necessarily needed in order to get there. We're making great progress on our cost transformation initiative. We're ahead of plan and well on track to deliver our targets for this year.

Speaker Change: We do agree with that, you know, Doug, it's squarely in our, in our sights.

Douglas Anthony Schenkel: And, you know, there's a lot of different ways to get there.

Speaker Change: The thing I'm probably most focused on is how do we get there on driving the things that are fully within our control. Clearly, improved market recovery will help us, but not necessarily needed in order to get there.

Brent Jones: Clearly, improved market recovery will help us, but not necessarily needed in order to get there. We're making great progress on our commons transformation initiative. We're ahead of plan and well on track. We'll be back to deliver our targets for this year. And we'll be exiting the year with at a run rate there that has just roughly halfway through the program. So can we layer that in? I think it gives us a good line of sight to getting there. And then, if we can layer in improving market dynamics, I think that even gives us more of a tailwind.

Michael Stubblefield: And, you know, we'll be exiting the year at a run rate there that, you know, has us roughly halfway through the program. So you can layer that in, you know, I think it gives us a good line of sight to getting there.

Speaker Change: We're making great progress on our cost transformation initiative. We're ahead of plan and well on track to deliver our targets for this year, and we'll be exiting the year at a run rate there that has us

Speaker Change: the program, so you can layer that in. You know, I think it gives us good line of sight to getting there. And then, you know, if we can layer in, you know, improving market dynamics. I think that even gives us more of a tailwind. So.

Brent Jones: And so in short, yes, very confident on being able to deliver that squarely focused in the team. You know, I think continues to execute well against that plan.

Speaker Change: In short, yes, very confident on being able to deliver that, squarely focused, and the team, I think, continues to execute well against that plan.

Michael Stubblefield: And then, you know, if we can layer in, you know, improving market dynamics, I think that even gives us, you know, more of a tailwind. So, in short, yes, very confident in being able to deliver that squarely focused plan. And the team, you know, I think continues to execute well against that plan. Thank you very much. Our next question comes from Daniel Brennan with TD Plan. Please go ahead, your line is

Speaker Change: Thank you very much.

Daniel Brennan: Next question comes from Daniel Brennan with TD Time. The head of your line is open. Great.

Speaker Change: Our next question comes from Daniel Brennan with TD Plan. Please go ahead, your line is open.

unknown: Great, thanks for taking the questions. Congratulations on the quarter. Maybe the first one is just, you know, you have reiterated the full-year guide after the better Q2 with, you know, 3Q kind of in line. You know, your fourth quarter does imply a decent step up, like on a stack basis year over year. Maybe just speak to like the confidence in the fourth quarter. It looks like it's now with the adjusted guide for lab and bioprocess.

Daniel Brennan: Thanks for thanks for the questions, congrats on the quarter. Maybe first one is just, you know, you have reiterated the full of your guide after the better Q2 with, you know, 3Q kind of in line. You know, your fourth quarter does imply a decent step up, like on a stack basis year over year. Maybe just speak to like the confidence in the fourth quarter. It looks like it's now with the adjusted guide for lab and bioprocess. Looks like it's definitely now you've got improvement in both the climb more and bioprocess. Maybe just speak to kind of how you're kind of second half that's up, if you will.

Daniel Gregory Brennan: Great, thanks for taking the questions. Congrats on the quarter. Maybe first one is just, you know, you have reiterated the full year guide after the better Q2 with, you know, 3Q kind of in line.

Speaker Change: You know, your fourth quarter does imply a decent step up, like, on a stack basis year over year. Maybe just speak to, like, the confidence in the fourth quarter. It looks like it's now with the adjusted guide for lab and bioprocess. Looks like it's definitely...

unknown: Looks like it's definitely, you know, you've got improvement in both, but probably more in bioprocess. Maybe just speak to kind of how your kind of second half sets up, if you will. I think we do like the way the year is playing out so far, Dan, and at this point, as we see it, none of the assumptions that we laid out as we entered the year have really changed. I think all the factors that we called out there that would drive the range and the guidance are still fully intact in terms of how pricing is playing out in line with our plans. Of course, the order books are improving.

Speaker Change: Yeah, you've got improvement in both, but probably more in bioprocess. Maybe just speak to kind of how your kind of second half sets up, if you will.

Michael Stubblefield: Yeah, you know, I think we do like the way the year's playing out so far. You know, the end. And at this point, as we see it, you know, the assumptions that we laid out, you know, as we entered the year, have really changed. I think all the factors that we called out there that would, you know, drive the range and the guidance are still fully intact in terms of, you know, how pricing has played out and in line with our plans. Obviously, order books are improving. You know, there's some calendar implications to think about as we move from quarter to quarter, and that's certainly factored into the guidance. And then, you know, we've said from the beginning, there is a, I would say, a modest seasonality built into our business. We think about, you know, kind of 49% of the revenues coming in the first half.

Dan: You know, I think we do like the way the year is playing out so far, you know, Dan.

Dan: And at this point, as we see it, you know, none of the assumptions that we laid out, you know, as we as we entered the year have really changed. I think all the factors that we that we called out there that would drive the range and the guidance are still

unknown: There are some calendar implications to think about as we move from quarter to quarter, and that's certainly factored into the guidance. And then, as we've said from the beginning, there is, I would say, modest seasonality built into our business. We think about 49% of revenues coming in the first half; 51% is customary for the second half. And so, as we sit here today, I don't think anything has caused us to change our view of any of those assumptions, and as I think Brent outlined in his remarks, You know, probably the biggest variable here as we look ahead to the balance of the year is [inaudible] Great, thanks. And then I know there were a few questions just on bioprocessing, and I could have missed them.

Dan: All of these are fully intact in terms of how pricing is played out in line with our plans. The order books are improving.

Dan: There's some calendar implications to think about as we move from quarter to quarter, and that's certainly factored into the guidance.

Dan: You know, as we've said from the beginning, there is a, I would say, a modest seasonality built into our business. We think about, you know, kind of 49% of the revenues coming in the first half.

Michael Stubblefield: You know, 51% is kind of customary for the second half. And so, you know, as we sit here today, you know, I don't think anything caused to change our view of any of those assumptions. And, you know, as I think Brand outlined in his remarks. You know, probably the biggest variable here is we look ahead to the balance of the year is, you know, the production segment, you know, clearly on contract to, you know, continue to outperform. You know, we'll see how the seasonality dynamic that we normally see in the lab is and how that plays out.

Dan: 51% is kind of customary for the second half. And so, you know, as we sit here today, you know, I don't think anything caused to change our view of any of those assumptions.

Dan: You know, as I think Brent outlined in his remarks, you know, probably the biggest variable here as we look ahead to the balance of the year is

Brent: The production segment is clearly on track to continue to outperform. We'll see how the seasonality dynamic that we normally see in the lab business, how that plays out.

Michael Stubblefield: But, you know, I think in terms of confidence, you know, the ranges scenarios that are, I think, is, you know, covered by the ranges that we've given today. Great.

Brent: But, you know, I think in terms of confidence, you know, the range of scenarios there I think is, you know, covered, you know, by the ranges that we've given today.

unknown: But um, if we do the math on like a book to bill in the quarter, like, could, could you share like what we should come up with in Q2? And for the full year for bioprocessing, like what should we be expecting? I know Tycho asked about the exit rate.

Daniel Brennan: Thanks. And then I know there's been a few questions just on bioprocessing, and I could have missed it.

Speaker Change: Great. Thanks. And then I know there's been a few questions just on bioprocessing and I could have missed it, but if we do the math on like a book to bill in the quarter, like, could you share like what we should come up with in Q2?

Michael Stubblefield: But, um, if we do the math on like a book to build the quarter, like, could, could you share like what we, what we should come up with in Q2 and for the full year for bioprocessing. Like, what should we be expecting to take the rest about the exit rate? What about just like the full year outlook for that, you know, for the bioprocessing segment of your bioscience production business. Thanks, Michael. Yeah, no good questions.

Michael Stubblefield: for the full year for bioprocessing, like what should we be expecting? I know Tycho asked about the exit rate. What about just like the full year outlook for that, you know, for the bioprocessing segment of your bioscience production business? Thanks, Michael.

unknown: What about just like the full year outlook for that, you know, for the bioprocessing segment of your bioscience production business? Thanks, Michael. Yeah, no, good questions.

Michael Stubblefield: I mean, you know, relative to things like, you know, book to build, that's not a, you know, a metric that we actually, you know, monitor that closely here and for various reasons. What's not something we've, you know, historically tried to quantify, you know, I think we hang our hats here on, you know, the momentum we're seeing in the order book, given the kind of the two to three months lead times we have, you know, being able to see that order book convert to revenues in the in the quarter is, you know, encouraging for us, you know, we'll targeting, you know, somewhere in the, the low single digits, you know, range for bioprocessing in Q3, also on a, on a full year basis.

Speaker Change: Yeah, no, good questions. I mean, relative to things like book to bill, that's not a, you know, a metric that we actually...

Michael Stubblefield: I mean, you know, relative to things like, you know, book to bill, that's not a metric that we actually monitor that closely here for various reasons. So it's not something we've, you know, historically tried to quantify. You know, I think we hang our hats here on, you know, the momentum we're seeing in the order book. Given the kind of the two to three month lead times we have, being able to see that order book convert to revenues in the quarter is, you know, encouraging for us.

Speaker Change: You know, monitor that closely here for various reasons, so it's not something we've, you know, historically tried to

Speaker Change: To quantify, you know, I think we.

Speaker Change: We're going to hang our hats here on...

Speaker Change: You know, the momentum we're seeing in the order book, given the kind of the two to three month lead times we have, you know, being able to see that order book convert to revenues in the in the quarter is.

Michael Stubblefield: You know, we're targeting somewhere in the low single-digit range for bioprocessing in Q3, also on a full year basis. And so that'll have us exiting the year at a mid to high single-digit range as we enter 2025. Our next question comes from Rachel Ransdell with J.P. Morgan. Rachel, please go ahead. Perfect. Good morning.

Speaker Change: you know, encouraging for us, you know, we'll...

Speaker Change: Targeting somewhere in the low single-digit range for bioprocessing in Q3, also on a full-year basis, and so that'll have us exiting the year at a mid-to-high single-digit range as we enter 2025.

Michael Stubblefield: And so that'll have us exiting the year at a, you know, mid to high single digit range as we enter 2025.

Rachel Olson: Our next question comes from Rachel, won't so with JP Morgan. Great to please go ahead. Perfect. Good morning. Thanks for taking the questions, you guys. I wanted to dig into some of the seasonality that you talked about, especially on the lab solution segment.

Speaker Change: Our next question comes from Rachel Ransdell with J.P. Morgan. Rachel, please go ahead.

unknown: Thanks for taking the questions, you guys. I wanted to dig into some of the seasonality that you talked about, especially in the lab solution segment. So first up, could you walk us through what the typical seasonality is from quarter to quarter throughout the year in the lab solution segment? Do we all have that correct?

Rachel Marie Vatnsdal Olson: Perfect. Good morning. Thanks for taking the questions, you guys. I wanted to dig into some of the seasonality that you talked about, especially on the lab solutions segment. So, first up, could you walk us through what is typical seasonality from quarter to quarter throughout the year on the lab solutions segment, so we all have that correct?

Rachel Olson: So first up, could you walk us through what is typical seasonality from quarter to quarter throughout the year on the lab solution segment. So we all have that correct. And then also on the bioprocessing side of the business, when it appears recently called out to seasonality, trying to heading into the summer months in three Q. So walk us through using anything from the seasonality standpoint, even on orders versus revenues for bioprocessing as well. Yeah, thanks.

unknown: And then also on the bioprocessing side of the business, one of your peers recently called out some seasonality trends heading into the summer months in 3Q. So walk us through, are you assuming anything from a seasonality standpoint, even on orders versus revenues for bioprocessing as well? Yeah, thanks, Rachel. Good to hear from you.

Speaker Change: And then also on the bioprocessing side of the business, one of your peers recently called out some seasonality trends heading into the summer months in 3Q. So walk us through, are you assuming anything from a seasonality standpoint, even on orders versus revenues for bioprocessing as well?

Michael Stubblefield: You know, I think, as a general observation, seasonality isn't that big of a factor in our business. This, you know, kind of 49 first half, you know, 51% second half, you know, waiting is customary for the business. And that's, you know, the same basis on which we've managed the guidance, you know, all year. You know, there probably is, you know, some modest seasonality in our production platform, probably more due to around, you know, holiday calendars and such, but not a factor that we, you know, overweight in our thinking. It's probably a little bit more pronounced in the context of a 49 51 split. Again, in the context of a 49 51 split, a little bit more pronounced in the lab business.

Rachel Olson: Rachel, good to hear from you. You know, I think as a general observation, you know, seasonality isn't that big of a factor in our, in our business. This, you know, kind of 49 first half, you know, 51% second half, you know, waiting is customary for the, for the business. And that's, you know, the same basis that we've, you know, managed the guidance, you know, all year. There, you know, there probably is, you know, some modest, you know, seasonality in our, in our production platform, probably more dude around, you know, holiday calendars and, and such, but not a factor that we, you know, overweight in our, in our thinking. It's probably a little bit more pronounced.

Speaker Change: Yeah, thanks, Rachel. Good to hear from you.

Speaker Change: You know, though, I think.

Speaker Change: As a general, you know, observation, you know, seasonality isn't that big of a factor in our in our business, this, you know, kind of 49 first half, you know, 51% second half, you know, waiting is customary for the for the business. And that's, you know, the same basis that we've, you know, managed the guidance, you know, all year.

Michael Stubblefield: And, you know, I think the patterns that we normally see play out here are what's, you know, contemplated in, you know, the color we've given on Q3, and then you know, what that implies for, for Q4. And I think you'll see that that kind of matches what we would customarily see, of course, the business model doesn't give us transparency on the lab side, from an order book perspective to cover that period. We'll see how it plays out.

Speaker Change: You know, there probably is, you know, some modest, you know, seasonality in our, in our production platform, probably more due to around, you know, holiday calendars and such, but not a factor that we, you know, overweight in our, in our thinking. It's probably a little bit more pronounced.

Michael Stubblefield: Again, in the context of a 49 51 split, a little bit more pronounced in, in the lab business. And, you know, I think the patterns that we normally see play out here is what's, you know, contemplated in, you know, the color we've given on Q3 and then, you know, what that implies for Q4. And I think you'll see that, that, you know, kind of matches what we, you know, would customarily see. Of course, you know, the business model doesn't give us, you know, transparency on the lab side. From an order book perspective to cover that periods, we'll see how it plays out, but, you know, consistent with what we've said from the, from the beginning, we're, you know, continuing to, you know, the thing is prudent to, you know, base the guidance and the outlook based on current conditions and, you know, we're obviously leveraging, you know, some of the historical trends that we see.

Speaker Change: Again, in the context of a 49-51 split, a little bit more pronounced in the lab business.

Speaker Change: You know, I think the patterns that we normally see play out here is what's, you know, contemplated in, you know, the color we've given on Q3 and then, you know, what that implies for

Michael Stubblefield: But, you know, consistent with what we've said from the beginning, we're, you know, continuing to, I think it's prudent to, you know, base the guidance and the outlook based on current conditions. And, you know, we're obviously leveraging, you know, some of the historical, you know, trends that we see. Great.

Speaker Change: For Q4, I think you'll see that that, you know, kind of matches what we, you know, would customarily see. Of course, you know, the business model doesn't give us transparency on the lab side.

Speaker Change: From an order book perspective to cover that period, we'll see how it plays out, but, you know, consistent with what we've said from the beginning, we're, you know, continuing to, you know, I think it's prudent to, you know, base the guidance and the outlook based on current conditions, and, you know, we're obviously leveraging, you know, some of the historical, you know, trends that we see.

unknown: And then I just want to follow up on some of the earlier questions, just to clarify some of the answers here. Just, I know you guys aren't getting Book to Build, but can you tell us what orders were sequentially for bioprocessing? And then, following up on Dan's question, just full year expectations for the bioscience production segment? I know you guys have given us some details there on bioprocessing specifically, but full segment expectations there for the full year would be helpful. Thank you. Yeah, maybe take them in reverse order here.

Michael Stubblefield: Great.

Rachel Olson: And then I just want to follow up on some of the earlier questions just to clarify some of the answers here.

Michael Stubblefield: Just, I know you guys are giving us a bill. What can you tell us what orders were sequentially for bioprocessing. And then follow up on Dan's question, just fully your expectations for the bioscience production segment. I know you guys have given us some details; they are on bioprocessing specifically, but full segment expectations there for the full year would be helpful. Thank you.

Speaker Change: Great. And then I just wanted to follow up on some of the earlier questions, just to clarify some of the answers here.

Speaker Change: Just, I know you guys aren't giving book to bill, but can you tell us what orders were sequentially for bioprocessing? And then follow up on Dan's question, just fill your expectations for the bioscience production segment. I know you guys have given us some details there on bioprocessing specifically, but full segment expectations there for the full year would be helpful. Thank you.

Michael Stubblefield: Yeah, let me take them in reverse order there. You know, the expectations for the production segment and aggregate, which will include obviously are, you know, medical grades, still occurring, offering into the medical device space, as well as, you know, what we do into aerospace and defense and, and semis. While processing is, you know, roughly two thirds of that segment, so probably not much of a surprise for you that the, that's largely driving, you know, the outlook for the full year. So with, you know, while products, something expected to be down most single digits on a full year basis, that's also how we see the segment trending for the full year as well.

Michael Stubblefield: You know, the expectations for the production segment in aggregate, which would include obviously our, you know, medical grade silicone offering into the medical device space, as well as, you know, what we do in the aerospace and defense and semis. Bioprocessing is, you know, roughly two-thirds of that segment, so probably not much of a surprise for you that that's largely driving the outlook for the full year. So, with bioprocessing expected to be down low single digits on a full year basis, that's also how we see the segment trending for the full year as well.

Speaker Change: Yeah, maybe take them in reverse order there, you know, the expectations for the production segment in aggregate, which would include obviously our, you know, medical grade silicone offering into the medical device space as well as, you know, what we do into aerospace and defense and semis.

Speaker Change: File processing is, you know, roughly two-thirds of that segment, so probably not much of a surprise for you that the

Speaker Change: That's largely driving, you know, the outlook for the full year. So with, you know, bioprocessing expected to be down low single digits on a full year basis, that's also how we see the segment trending for the full year as well.

Michael Stubblefield: Getting to your questions on bioprocessing, you know, order book, again, good momentum, another great fall quarter of intake supporting not only the growth in the quarter that outperformed but leading to the improved outlook on a full year basis. You know, I think you characterized it correctly.

Michael Stubblefield: Getting to your questions on while processing, you know, order book, you know, again, good momentum, another great spot, quarter of intake, supporting not only the growth in the quarter that that outperformed, but leading to the improved outlook on a, on a full year basis. You know, I think you characterize it correctly.

Speaker Change: Getting to your questions on bioprocessing.

Speaker Change: You know, order book, you know, again, good momentum, another great fall quarter of intake supporting not only the growth in the quarter that outperformed, but leading to the improved outlook on a on a full year basis.

unknown: We haven't, you know, quantified that or a book to build historically, but it's probably safe for you to assume that our order book, you know, certainly, you know, grew in line with, you know, what you see others talking about. The next question comes from Michael Ryskin with Bank of America. Michael, please go ahead.

Michael Stubblefield: We haven't quantified that or. Book to build historically, but it probably stayed for you to assume that our order book, you know, certainly, you know, grew in line with, you know, what you see others talking about.

Speaker Change: I think you characterized it correctly, we haven't, you know, quantified that or a book to build historically, but it's probably safe for you to assume that our order book, you know, certainly, you know, grew in line with, you know, what you see others talking about.

Michael Ryskin: The next question comes from Michael Riskin with Bank of America.

Michael Ryskin: Michael, please go ahead. Great. Thanks for the question, guys. I want to switch to LPS. Seems like there's some revision on the outlook for the year there as well. You talk out to you came in mostly in line expectations. And then for the year now, you're expecting a slap and down low single digits versus prior. I think it has a lot of single digits.

Speaker Change: The next question comes from Michael Ryskin with Bank of America. Michael, please go ahead.

unknown: Great. Thanks for the question, guys. I want to switch to LPS.

Michael Stubblefield: Seems like there's some revision in the outlook for the year there as well. You know, you talked about CQ coming in mostly in line with expectations. And then for the year now, you're expecting flat to down low single digits versus prior. I think I had you at plus low single digits. So any color on what's going on there, whether it's by product category, and a lot of focus on instruments, even a small part of the business, or maybe by customer class. And I've got to follow up. Thanks. Okay, excellent. No, I think it's a good question, Michael.

Michael Riskin: Great. Thanks for the question guys. I want to switch to LPS. Seems like there's some revision on the outlook for the year there as well.

Michael Riskin: You know, you talk about CQ came in mostly in line with expectations, but then for the year now, you're expecting a...

Michael Stubblefield: Just any color on what's going on there, whether it's by product category and a lot of focus on instruments, even the small part of the business, or maybe my customer class.

Michael Riskin: flat to down low single digits versus prior, I think I had you at plus low single digits. So just any color on what's going on there, whether it's by product category, I know a lot of focus on instruments, even a small part of the business, or maybe by customer class. And I've got a follow-up. Thanks.

Michael Ryskin: And I've got to follow up.

Michael Ryskin: Thanks. Okay.

Michael Stubblefield: You know, as we talked in Q1 on the lab part of our business, you know, we were, you know, I think, encouraged by what we're seeing on, you know, the consumables side of the business, particularly, you know, lab chemicals and, you know, some of the diagnostic formulations that we have, you know, showing some good momentum, you know, services has been a, you know, an element of growth for us, you know, this year, and then, you know, just given, you know, some of the friction in the system on, you know, capital spending, particularly within biopharma, you know, we called out, you know, equipment and instrumentation, you know, headwinds in the first quarter, and as we now move into the second quarter, I don't think we've seen really any change in dynamics. I think we characterize it as pretty stable overall, which, you know, implies, you know, continued momentum on the consumable side and, you know, similar performance on equipment and instruments, you know, and encouragingly, you know, it certainly didn't deteriorate as we move forward.

Michael Stubblefield: No, I think it's a good question, Michael Deb. You know, as we talked in Q one on the lab part of our business, you know, we were, you know, I think encouraged by what we're seeing on, you know, the consumables side of the business, particularly, you know, lab chemicals and, you know, some of the diagnostic formulations that we have, you know, showing some momentum. You know, services has been a, you know, an element of growth for us. You know, this year. And then, you know, just given, you know, some of the friction in the system on, you know, capital spending, particularly within biopharma, you know, we called out, you know, equipment and instrumentation, you know, headwinds in the first quarter.

Michael Riskin: Okay, excellent. No, I think it's a good question, Michael. You know, as we talked in Q1 on the lab part of our business,

Speaker Change: We were, I think, encouraged by what we're seeing on the consumables side of the business, particularly lab chemicals and some of the diagnostic formulations that we have showing some good momentum.

Speaker Change: You know, services has been a, you know, an element of growth for us, you know, this year, and then, you know, just given, you know, some of the friction in the system on, you know, capital spending, particularly within biopharma.

Speaker Change: We called out equipment and instrumentation headwinds in the first quarter. As we now move into the second quarter, I don't think we've seen really any change in dynamics. I think we characterized it as pretty stable overall.

Michael Stubblefield: And as we now move into the second quarter, I don't think we've seen really any change dynamics. I think we characterize it as pretty stable overall, which, you know, implies, you know, continued momentum on the consumables side. And, you know, similar performance on equipment instruments, you know, encouragingly, you know, it's, you know, it's sort of ended deteriorate as we, as we move forward. And, you know, one of the things that we watch pretty closely there is, again, just activity levels and, you know, opportunity pipelines. And we continue to be encouraged by what we're seeing there, thing a little bit longer than maybe historical to convert those things to orders, but nevertheless, some really good science.

Speaker Change: you know, implies, you know, continued momentum on the consumable side, and

Speaker Change: similar performance on equipment and instruments. Encouragingly, it certainly didn't deteriorate as we move forward.

Michael Stubblefield: One of the things that we watched pretty closely there is, again, just activity levels and, you know, opportunity pipelines, and we continue to be encouraged by what we're seeing there. It's taking a little bit longer than maybe usual to convert those things to orders, but nevertheless, some really good signs. We actually have, you know, a business within our lab that does, on an OEM basis, a lot of electrical board design and manufacturing for a lot of the lab equipment and instruments.

Speaker Change: One of the things that we watched pretty closely there is, again, just activity levels and

Speaker Change: And we continue to be encouraged by what we're seeing there, take a little bit longer than maybe historical to convert those things to orders, but nevertheless, some really good signs. We actually have

Michael Stubblefield: Especially how, you know, a business within our lab that does, on an OEM basis, a lot of electrical board design and manufacturing for a lot of the, you know, lab equipment and instruments in that, those tend to be a bit of a leading indicator for us. We are really starting to see some, you know, reinitiation of projects that have been halted and, you know, good, you know, good project pipeline there. So, you know, characterize it as, you know, stable sequentially. And if you just look at, you know, the performance here today, which, you know, was a little bit below, you know, where we excited last year, primarily due to the trends that we've described here on, you know, and kind of consistent with our methodology here of just continuing.

Speaker Change: You know, a business within our lab that does, on an OEM basis, a lot of electrical board design and manufacturing for a lot of the, you know, lab equipment and instruments.

Michael Stubblefield: And that does tend to be a bit of a leading indicator for us. We are really starting to see some, you know, re-initiation of projects that have been halted and, you know, a good project pipeline there. So, you can characterize it as stable sequentially, and if you just look at the performance here today, which You know, which was a little bit below where we exited last year, primarily due to the trends that we've described here on E&I, you know, and kind of consistent with our methodology here of just continuing, you know, managing guidance according to, you know, current conditions. You see that then reflected on a full year basis.

Speaker Change: That those tend to be a bit of a leading indicator for us. We are really starting to see some re-initiation of projects that have been halted and good project pipeline there. So, characterize it as stable, sequentially, and if you just look at the performance year-to-date, which

Speaker Change: You know, which was a little bit below, you know, where we exited last year, primarily due to the trends that we've described here on E&I, you know, and kind of consistent with our methodology here of just continuing to

Michael Stubblefield: You know, manage guidance according to, you know, current conditions. You see that then reflected on a, on a full year basis. So, you know, lab running a bit, a bit below that depends entering the year, you know, production out performance, you know, leading us to the, the full year reiteration. Okay.

Michael Stubblefield: So, you know, lab running a bit, a bit below the trends entering the year, you know, production outperformance, you know, leading us to the full year reiteration. Okay, um, let me, let me ask a quick follow-up to that, and then I'll throw in my second question.

Speaker Change: Manage guidance according to current conditions, you see that then reflected on a full year basis. So, lab running a bit below the trends entering the year, production outperformance, leading us to the full year reiteration.

Michael Stubblefield: I just want to make sure on the LPS again, is there, you know, any sign that you're potentially losing share to one of your competitors? Because we have heard more encouraging trends elsewhere. And it does seem like the broader end market in terms of biopharma and academia is starting to trend in the right direction. So I mean, I hear you that you're seeing encouraging signs and things are stable, but it is still a guide. So I just want to dive deeper into that.

Michael Ryskin: Let me, let me ask a quick follow-up to that, and then I'll throw on the second question. I just want to make sure on the LPS again. And so there, you know, as many sign you're potentially losing share to one of your competitors, because we have heard more encouraging trends elsewhere, and it does seem like the broader end market in terms of platform and academic is starting to trend in the right direction.

Speaker Change: Okay, let me let me ask a quick follow up to that and then I'll throw in my second question. I just want to make sure on the

Speaker Change: LPS, again, is there, you know, is there any sign you're potentially losing share to one of your competitors?

Speaker Change: Because we have heard more encouraging trends elsewhere and it does seem like the broader end market in terms of biopharma and academic is starting to trend in the right direction. So, I mean, I hear you that you're seeing encouraging signs and things are stable, but it is still a guy down.

Michael Stubblefield: So, I mean, I hear you that you're seeing encouraging signs and things are stable, but it is still a guy down to just want to dive into that deeper.

Michael Ryskin: And then the follow-up is on the, the total guide update. I mean, just sort of doing a quick and easy some of the parts you've got. Two-thirds of your business, which is LPS, LSS, sorry, where you're guiding down by a few percent, and then you got one third of your business, which is BPS, where you're guiding up by a few percent. So, is there, is there some rounding in there? It doesn't seem like that should add up to a full reiterate. You know, you should be taking your BPS up significantly more to outweigh the relative sizing of it.

Michael Stubblefield: And then the follow up is on the total guide update. I mean, just sort of doing a quick and easy sum of the parts, you've got two-thirds of your business, which is LPS, or LSS, sorry, where you're guiding down by a few percent, and then you've got one-third of your business, which is BPS, where you're guiding up by a few percent. So, Is there, is there some rounding in there?

Speaker Change: I want to dive into that deeper, and then the follow-up is on the...

Speaker Change: The total guide update, I mean, just sort of doing a quick and easy sum of the parts, you've got two-thirds of your business, which is LPS, LSS, sorry, where you're guiding down by a few percent, and then you've got one-third of your business, which is BPS, where you're guiding up by a few percent. So,

Michael Stubblefield: It doesn't seem like that should add up to a full reiterate. You know, you should be taking your BPS up significantly more to outweigh the relative sizing of it. So I'm just wondering where I'm missing the map.

Speaker Change: Is there is there some rounding in there? It doesn't seem like that should add up to a full reiterate. You know, you should be taking your BPS up significantly more to outweigh the relative sizing of it. So I'm just wondering where I'm missing the math.

Michael Ryskin: I'm just wondering where I'm missing the math. Thanks.

Michael Stubblefield: Yeah, both good questions. So, you know, firstly, the question on just, you know, share performance in Q1 or Q2, I think, in a lab business. I think you'll see from what's been announced. Our lab business stacks up well against, you know, every number that's certainly that we've, you know, seen, including, you know, some of the numbers that were released this, this way. Well, you know, the market's bigger than, you know, kind of the two leading players there. And, you know, it's our strong view, and we think we've got a lot of data support that we continue to enhance our position.

Michael Stubblefield: Thanks. Yeah, both good questions. So, you know, firstly, the question on just the share performance in Q1, or Q2, I think, in the lab business, I think you'll see from what's been announced, our lab business backs up well against, you know, every number that we've, you know, seen, including, you know, some of the numbers that were released this week. But, you know, the market's bigger than, you know, kind of the two leading players there.

Speaker Change: Thanks.

Speaker Change: Yep.

Speaker Change: Both good questions. So, you know, firstly, the question on just the, you know, share performance in Q1, or Q2, I think, in the lab business, I think you'll see from what's been announced.

Speaker Change: Our lab business stacks up well against, you know, every number that certainly that we've, you know, seen in including.

Speaker Change: Some of the numbers that were released this week. The market is bigger than the two leading players there, and it's our strong view and we think we got a lot of data to support that. That we continue to enhance our position and we talked a lot about our commercial intensity over the last 12 to 18 months that's driving a lot of customer wins and renewals.

Michael Stubblefield: And, you know, it's our strong view, and we think we've got a lot of data to support that, that we continue to enhance our position. And we've talked a lot about our commercial intensity over the last 12 to 18 months that's driving a lot of customer wins and renewals, including in the second quarter across all of our key end markets. You mentioned academia.

Michael Stubblefield: And we talked a lot about our commercial intensity over the last 12 to 18 months that it's driving, you know, a lot of customer wins and renewals, including in the second quarter across, you know, all of our key markets. You mentioned academia; you know, we saw a sequential growth moving from one Q to Q there. So, I think we like to set up there, and you know, it's been an area of strong focus for us.

Speaker Change: Including in the second quarter across all of our key end markets. You mentioned academia.

Michael Stubblefield: You know, we saw sequential growth, moving from 1Q to 2Q there. So I think we like the setup there. And, you know, it's been an area of strong focus for us. So, yeah, I think we were really confident in our value proposition and our, you know, competitive position. Relative to your second question on trying to unpack the math at a segment level, I'd probably caution you against trying to be too precise there in your math.

Speaker Change: We saw sequential growth moving from 1Q to 2Q there, so I think we like to set up there and it's been an area of strong focus for us.

Michael Stubblefield: So, yeah, I think we were really confident in our value proposition and our competitive position.

Speaker Change: Yeah, I think we're really confident in our value proposition and our, you know, competitive position. Relative to your second question on trying to unpack the math at a segment level, you know, I'd probably caution you against trying to be too precise there in your math.

Michael Stubblefield: Well, for your second question on trying to unpack the math at a segment level, you know, probably caution you against trying to be too precise there in your math. You know, I think that at an enterprise level, you know, we've reiterated the, the guide, the assumptions we had, you know, coming into the year with you all still hold and, you know, I think the ranges that we've provided. You know, for each of the two segments, you know, get you into the range there of at an enterprise level. So, would probably cross me against, you know, trying to get, you know, too detailed there, you know, within the, you know, the ranges that we've implied it.

Michael Stubblefield: You know, I think at an enterprise level, we've reiterated the guide, the assumptions we had, you know, coming into the year, we think all still hold. And, you know, I think the ranges that we've provided, you know, for each of the two segments, you know, gets you into the range there at an enterprise level, would probably caution you against trying to get too detailed there within the ranges that we've implied. Assume that it's, you know, all supportive of our full year guidance. Thanks. The next question comes from Jack Meehan with Nephron Research.

Speaker Change: You know, I think at an enterprise level, we've reiterated the guide, the assumptions we had, you know, coming into the year, we think all still hold and, you know, I think the ranges that we've provided, you know, for each of the two segments, you know, gets you into the range there of at an enterprise level. So,

Speaker Change: Would probably caution you against, you know, trying to get, you know, too detailed there, you know, within the, you know, the ranges that we've implied it.

Michael Stubblefield: You know, assume that it's, you know, all supportive of our, our full year guidance.

Speaker Change: And, you know, assume that it's, you know, all supportive of our full-year guidance.

Speaker Change: Thanks.

Jack Meehan: The next question comes from Jack, me, and with Nipron research.

Brent Jones: Jack, please go ahead. Thank you. Good morning, guys. I was wondering if you could just give us a mark to market on the 300 million cost savings program. How's that going? And if you, you know, you see, you've maintained your margin forecast for the year, just, you know, any thoughts around kind of getting to the targets that you laid out back in December, what the phasing should look like.

Speaker Change: The next question comes from Jack Meehan with Nephron Research. Jack please go ahead.

unknown: Jack, please go ahead. Thank you. Good morning, guys. I was wondering if you could just give us a mark to market on the $300 million cost savings program. How's that going? And if you, you know, have maintained your margin forecast for the year, just, you know, any thoughts around, I'm kind of getting to the targets that you laid out back in December, what the phasing should look like. Yeah, Jack, it's Brent.

Jack Meehan: Thank you. Good morning, guys.

Jack Meehan: I was wondering if you could just give us a mark to market on the $300 million cost savings program. How's that going? And if you, you know, so you've maintained your margin forecast for the year, just, you know, any thoughts around kind of getting to the targets that you laid out back in December , what the phasing should look like?

Brent Jones: Yeah, Jack, it's Brent. Thanks for the question. Again, look, we, you know, going back to the cost transformation program, you know, we have or pillars on it, or effectiveness footprint cost to serve and procurement. The, you know, the ones that you can move more quickly on there, depending upon the geography or effectiveness, as well as procurement, reasonably, as we said, you know, that's, we have a lot of momentum there. And you're seeing that both sequential impact on us, as well as each in quarter. You, you heard Michael talk about, you know, we're going to exit the year to really nice right there.

Brent Jones: Thanks for the question. Look, we're going back to the cost transformation program, you know, we had four pillars in it, org effectiveness, footprint, cost to serve, and procurement, the ones that you can move more quickly on there, depending upon the geography or org effectiveness, as well as procurement, reasonably, as we said, you know, that's, we have a lot of momentum there. And you're seeing that both the sequential impact on us, as well as each in a quarter. You heard Michael talk about, you know, we're going to exit the year at a really nice rate there.

Jack Meehan: Yeah, Jack, it's Brent. Thanks for the question.

Brent: Look, we going back to the cost transformation program, you know, we had four pillars on it, org effectiveness, footprint, cost to serve and procurement.

Speaker Change: The ones that you can move more quickly on there, depending upon the geography or effectiveness, as well as procurement reasonably. As we said, we have a lot of momentum there, and you're seeing that both sequential impact on us, as well as each in quarter.

Brent Jones: So, and I think where it really ties together and for someone else's question is that, with self-help, is getting us a long way there towards exiting next year with a 20% EBITDA margin. So I'd say I think all the pieces are in place there, and it's, frankly, just a question of phasing and timing of the execution there.

Brent Jones: So, and I think we're really ties together and persona else's question is that that what the self help is, is getting us a long way there towards exiting next year with the 20% of it done margin. So I think all the pieces are in place there, and it's frankly just a question of phasing and timing of the execution there, but we're very confident we're going to hit the 75 this year.

Speaker Change: You heard Michael talk about, you know, we're going to exit the year at a really nice rate there. So, and I think where it really ties together, and for someone else's question, is that with the self-help is getting us a long way there.

Speaker Change: To the next slide. Thank you. Thank you. Okay. So, as I mentioned, we're going to be moving towards exiting next year with 20% EBITDA margin. So, I'd say I think all the pieces are in place there, and it's frankly just a question of phasing and timing of the execution there. But we're very confident we're going to hit the 75 this year.

Brent Jones: Okay. And then there were some questions, I guess, around I was wondering if you could just talk at the segment level. You know, as you consider what the total company guide is for the third quarter in the year, kind of like what we should assume, you know, at the segment level for the third quarter. Any comments on phasing on margin line to that would be helpful.

Brent Jones: But we're very confident we're going to hit 75% this year. Okay, and then there were some questions I guess around, I was wondering if you could talk at the segment level, you know, as you consider what the total company guide is for the third quarter of the year, kind of like what we should assume at the segment level for the third quarter, and any comments on phasing on the margin line, too. That would be helpful. Certainly, yes.

Speaker Change: Okay, and then there were some questions, I guess, around, I was wondering if you could...

Speaker Change: Just talk at the segment level, you know, as you consider what the total company guide is for the third quarter in the year, kind of like what we should assume, you know, at the segment level for the third quarter, any comments on phasing on margin line too, that would be helpful.

Brent Jones: Certainly, yes. So, in terms of two, three, we'd expect on a sequential basis, you know, flat to modest growth in lab solutions. And then as a, it's Michael noted earlier down most single digits and in BPS and the bioprocessing in two, three there. In terms of margin, we expect gross margins to be pretty similar in two, three to Q2 on a sequential basis.

Brent Jones: So in terms of Q3, we'd expect, on a sequential basis, flat to modest growth in web solutions and, as Michael noted earlier, down low single digits in BPS and in bioprocessing. And in terms of margin, we expect gross margins to be pretty similar in Q3 to Q2 on a sequential basis. Oh, I'm sorry.

Speaker Change: Certainly, yes. So in terms of Q3, we'd expect on a sequential basis, you know, flat to modest growth in web solutions. And then as Michael noted earlier, down low single digits.

Speaker Change: I'm sorry, in BPS and in bioprocessing in Q3 there. In terms of margin, we expect gross margins to be pretty similar in Q3 to Q2 on a sequential basis and

Brent Jones: And, oh, I'm sorry. And then my comment there were year-over-year. I'm sorry on those. And yeah. Yeah. And got much sequential in year-over-year backwards. But gross margin to be very similar on a sequential basis and, frankly, the SGA cost base to be very similar sequential as well. Got it. Sorry, just to confirm lab solutions, flat to modest growth year over year. Yeah, bioprocessing. Yeah, flat to mostly higher year over year and BPS overall, and bioproduction down low single digit year over year. Great.

Brent Jones: And my comments there were year over year. I'm sorry about that and, Yeah, and got my sequential and year over year backwards. But gross margin to be very similar on a sequential basis, and frankly, the SG&A cost base to be very similar sequentially as well. Got it. Sorry, just to confirm, lab solutions, flat demands for year over year. Yeah, biocrossing.

Speaker Change: Oh, I'm sorry, and my comments there were year over year, I'm sorry, on those, and the

Speaker Change: Yeah, and got my sequential year-over-year backwards, but gross margin to be very similar on a sequential basis, and frankly, the SG&A cost base to be very similar sequentially as well.

Speaker Change: Got it. Sorry, just to confirm, lab solutions, platinomics growth, year-over-year, bioprocessing. Yeah, platinomically higher year-over-year and BPS overall and bioproduction down low single digits year-over-year.

unknown: Yeah, flat demands higher year over year and BPS overall and bioproduction down low single digits year over year. Great, thank you. The next question comes from Matt Sykes with Goldman Sachs. Please go ahead, your line is open. Good morning. Thanks for taking my question. Maybe just the first one, Michael, for you.

Speaker Change: Great, thank you.

Matt Sykes: The next question comes from Matt Sykes with Goldman Sachs. Please go ahead. Your line is open.

Speaker Change: The next question comes from Matt Sykes with Goldman Sachs. Please go ahead, your line is open.

Matt Sykes: Good morning. Thanks for taking my question. Maybe just the first one, Michael. For you, you made some comments about biotech funding, resulting in some elements of starting a positive momentum; yet large farmer remains somewhat constrained. Just what are your expectations for large farmers who go into the back half of the year, and do you need large farmers to really recover in terms of spend in order to get back to what we consider normalized, specifically bioprocessing industry growth. So, on the biotech side, you know, funding, you know, obviously through the first half of the year has been up, you know, considerably year over year, and, you know, above pre-pandemic levels.

Michael Stubblefield: You made some comments about biotech funding, resulting in some elements of starting positive momentum, yet large pharma remains somewhat constrained. Just what are your expectations for large pharma as we go into the back half of the year? And do you need large pharma to really recover in terms of spend in order to get back to what we would consider normalized, specifically bioprocessing industry growth?

Matthew Carlisle Sykes: Good morning. Thanks for taking my question. Maybe just the first one, Michael, for you. You made some comments about biotech funding resulting in some elements of starting a positive momentum, yet large pharma remains somewhat constrained.

Speaker Change: Just what are your expectations for large pharma as we go into the back half of the year and do you need large pharma to really recover in terms of spend in order to get back to what we would consider normalized, specifically bioprocessing industry growth?

Michael Stubblefield: So, on the biotech side, funding, you know, obviously, through the first half of the year has been up, you know, considerably year over year and, you know, above pre-pandemic levels. So, if relative to where it was at last year, we certainly see that is one of the. You know, bright spots that support the improved market recovery expectations here, consistent with, I think, historical experience, you see the uptick in biotech funding, but it's likely you'll take a few quarters before that translates.

Michael: So, on the biotech side, you know, funding, you know, obviously through the first half of the year has been up, you know, considerably year over year.

Michael Stubblefield: So, you know, relative to what was that last year, we certainly see, you know, that is one of the, you know, bright spots that supporting the improved market recovery expectations here. You know, consistent with, I think, historical experience, you see the uptick in biotech funding; you know, it's likely you'll take, you know, a few quarters before that translates. And for us, you know, that results in, you know, primarily momentum in the lab. You're talking about new projects getting started and, you know, labs being built out in such that we would, that we would engage with there.

Michael: And, you know, above pre pandemic levels, so relative to where it was at last year, we certainly see, you know, that is one of the.

Michael: You know, bright spots that supporting the improved, you know, market recovery expectations here, you know, consistent with, I think, historical experience, you see the uptick in biotech funding, you know, it likely will take, you know, a few quarters before that translates. And for us.

Michael Stubblefield: And for us, you know, that results in primarily momentum in the lab, as you're talking about new projects getting started and labs being built out and such that we would engage with there. So good funding, a lot of good activity.

Michael: You know, that results in primarily momentum in the in the lab as you're talking about new projects getting started and

Michael Stubblefield: So, good funding, a lot of good activity level. And I think this is one of the data points we look to in terms of being encouraged as we look forward, you know, relative to large, you know, pharma, obviously. You know, we have kind of exposure to that on both of our segments, if you will. You know, the R&D activities that we support them with, you know, you look at the pipelines, the science that's being developed here. I think there's a lot to like about the setup going forward on, you know, what these customers are working on, and you know, we're right there to help them with new innovative solutions on the production side of things.

Michael Stubblefield: And I think that's one of the data points we look to in terms of being encouraged as we, as we look forward, you know, relative to large, you know, pharma, obviously, we have kind of exposure to that on both of our segments, if you will, the R&D activities that we support them with, you know, the pipelines, the science that's being developed here. I think there's a lot to like about the setup going forward on, you know, what these customers are working on.

Michael: you know, labs being built out and such that we would, that we would engage with there. So,

Speaker Change: Good funding, a lot of good activity level, and I think that's one of the data points we look to.

Speaker Change: In terms of being encouraged as we as we look forward, you know, relative to large, you know, pharma, obviously, you know, we have kind of exposure to that on both of our of our segments, if you will, you know, the R&D activities that we support them with.

Michael Stubblefield: You know, that's really linked to the commercial platforms that are out there and, you know, the inpatient demand. So, we looked closely at, you know, a number of new, you know, liquid entities getting approved, a number of new launches that are coming into the market, which continues to run it at record levels. It's been, you know, really, really strong for half of the year. And of course, we're well positioned across all of these, you know, products and customers. And, you know, with the destocking of our products, you know, coming to an end and improving, you know, health of, you know, pharma and, you know, product inventories, you know, I think there's a lot to like about the setup.

Michael Stubblefield: And, you know, we're right there to help them with new innovative solutions on the production side of things. You know, that's really linked to the commercial platforms that are out there and, you know, patient demand.

Speaker Change: You know, that's really linked to the commercial platforms that are that are out there. And, you know, the inpatient demand. So we looked closely at, you know, number of new, you know, molecular entities getting approved, number of new launches that are coming into the market.

Michael Stubblefield: So we look closely at, you know, the number of new molecular entities getting approved, and the number of new launches that are coming into the market, which continues to run at record levels. It's been a really, really strong first half of the year. And, of course, we're well positioned across all of these products and customers and, you know, with the destocking of our products coming to an end and improving the health of, you know, pharma and, you know, product inventories. You know, I think there's a lot to like about the setup we've outperformed all year.

Speaker Change: which continues to run at record levels. It's been a really, really strong first half of the year. And of course, we're well positioned across all of these products and customers.

Speaker Change: And, you know, with the destocking of our products, you know, coming to an end and improving, you know, health of, you know, pharma and, you know, product inventories.

Michael Stubblefield: We've outperformed all year, you know. You see us, you know, improving the outlook as we move into the second half of the year. And, you know, we should return to growth as we exit the year. So getting getting pretty close, I think, to not only the order dynamics, you know, looking a lot more normal as they as they used to. But I also, you start to see the performance of the platform, looking a lot more similar to what we'll expect as we move into 2025.

Michael Stubblefield: You know, you see us, you know, improving the outlook as we move into the second half of the year, and, you know, we should return to growth as we exit the year. So we are getting pretty close, I think, to not only the order dynamics, you know, looking a lot more normal as they used to, but also you start to see the performance of the platform looking a lot more similar to what we would all expect as we move into 2020. Great, thanks.

Speaker Change: You know, I think there's a lot to like about this setup. We've outperformed all year, you know, you see us, you know, improving the...

Speaker Change: The Outlook as we move into the second half of the year, and we should return to growth as we exit the year.

Speaker Change: Getting pretty close, I think, to not only the order dynamics looking a lot more normal as they used to, but also you start to see the performance of the platform looking a lot more similar to what we would all expect as we move into 2025.

Brent Jones: And then Brent, just on pricing, you guys call it out in your deck as a benefit this quarter. Could you maybe quantify what the pricing was in the quarter and what benefit you saw, and then what pricing expectations are embedded in your full year guide for 24? Yeah, I mean, we typically look to get 100 to 200 basis points of price there. I would say everything is going really exactly to plan there. And there wasn't a significant difference. You know, we do have more of the pricing impact into Q2 just due to the timing of the year. But I wouldn't say it was a dramatic story there.

Brent Jones: Great.

Brent Jones: Thanks. And then, Brent, just done pricing.

Brent Jones: You guys call it out and on your deck as a benefit this quarter. Did you maybe quantify what the pricing was in the quarter and what benefits on and what pricing expectations are embedded in your full year guide for 24? Yeah, I mean, we typically look to get 100 to 200 basis points of price there. I would say everything is rolling really exactly to plan there. And there wasn't a significant difference. You know, we do have more of the pricing impact into Q2, just due to the timing of the year. But I wouldn't say it was a dramatic story there.

Brent: Great, thanks. And then Brent, just on pricing, you guys called it out in your deck as a benefit this quarter. Could you maybe quantify what the pricing was in the quarter and what benefit you saw, and then what pricing expectations are embedded in your full year guide for 24?

Brent Jones: That's really just executing against the plan. The next question comes from Conor McNamara with RBC Capital Markets. Conor, please go ahead.

Brent: Yeah, I mean, we typically look to get 100 to 200 basis points of price there. I would say everything is rolling.

Speaker Change: We're really exactly the plan there. And there wasn't significant difference. You know, we, you do have more of the pricing impact into Q2 just due to timing of the year. But I wouldn't say it was a dramatic story there. That's really just executing against plan.

Brent Jones: That's really just executing against plan.

Conor Mcnamara: Next question comes from Conor McNamara with RBC Capital Markets.

Conor Mcnamara: Conor, please go ahead. Thanks. Good morning, guys, and congrats on a nice quarter. First off, I'm just on the inter-quarter progression, either from an order perspective or customer activity or however you want to characterize it. How did things progress throughout the quarter? And can you comment on, you know, how things actually did June, and if you can, what you're seeing through July.

Brent: The next question comes from Conor McNamara with RBC Capital Markets. Conor, please go ahead.

unknown: Good morning, guys, and congratulations on a nice quarter. First off, on the inter-quarter progression, either from an order perspective or customer activity, or however you want to characterize it, how did things progress throughout the quarter? And can you comment on how things exited June and, if you can, what you're seeing through July? Thanks for the question, Conor.

Conor Noel McNamara: Thanks. Good morning, guys, and congrats on a nice quarter.

Conor Noel McNamara: First off, on the inter-quarter progression, either from an order perspective or customer activity or however you want to characterize it, how did things progress throughout the quarter and can you comment on how things exited June and, if you can, what you're seeing through July ?

Michael Stubblefield: Thanks for the question, Conor. Appreciate the support. If we look at the quarter, I'm not sure there's anything that necessarily stands out to me, Conor, in terms of, you know, in the quarter dynamics. It played out largely in line with what we would have expected. We certainly exited the, you know, the quarter with some good momentum. And, you know, as we sit here in the early days of Q3, I think, you know, we've seen that, you know, continue and certainly reflected in our, you know, thoughts here as we, as we talked about the third and fourth quarter.

Michael Stubblefield: I appreciate the support. You know, if we look at the quarter, I'm not sure there's anything that necessarily stands out to me, Conor, in terms of, you know, intra-quarter dynamics. It played out largely in line with what we would have expected.

Speaker Change: Thanks for the question, Conor. I appreciate the support. If you look at the quarter, I'm not sure there's anything that necessarily stands out to me, Conor, in terms of, you know, in the quarter dynamics.

Michael Stubblefield: We certainly exited the quarter with some good momentum. And, you know, as we sit here in the early days of Q3, I think, you know, we've seen that, you know, continue. And that's certainly reflected in our thoughts here as we talk about the third and fourth quarters. Great, thanks.

Speaker Change: It played out largely in line with what we would have expected. We certainly exited the quarter with some good momentum. And as we sit here in the early days of Q3, I think we've seen that continue, and that's certainly reflected in our...

Speaker Change: You know, thoughts here as we as we talked about the third and fourth quarter.

Michael Stubblefield: Great.

Michael Stubblefield: And then just, I do realize it's a small piece of business for you, but what kind of, what kind of trends are you seeing in China? Yeah, I would first acknowledge your point there that it is a relatively small part of the business. I'd say it's tracking in line with our plan, which has relatively modest expectations for the year, just given the stocking dynamics that we see in the region, which are probably a little bit more of a headwind there than what we see anywhere else in the world. Some of the stimulus things being talked about there don't really influence our business one way or another.

Michael Stubblefield: Thanks.

Michael Stubblefield: And then just, I, I do realize a small piece of business for you, but what kind of trends are you seeing in China? Yeah, would, would first acknowledge your point there that it is a relatively small part of the business. I'd say it's tracking in line with our plan, which has, you know, relatively modest expectations for the year, just given the stocking dynamics that we see in the region, which probably a little bit more of a headwind there than what we see anywhere else in the world. So, you know, some of the stimulus things that, you know, being talked about there, don't really, you know, influence our business, you know, one way or another.

Speaker Change: Great, thanks. And then just, I do realize it's a small piece of business for you, but what kind of, what kind of trends are you seeing in China?

Speaker Change: Yeah, I would first acknowledge your point there that it is a relatively small part of the business. I'd say it's tracking in line with our plan, which has, you know, relatively modest.

Speaker Change: For the year, just given the stocking dynamics that we see in the region, which probably a little bit more.

Speaker Change: headwind there than what we see anywhere else in the world. Some of the stimulus things that being talked about there don't really influence our business one way or another. I think that

Michael Stubblefield: So, you know, I think the best way to characterize it for us is it's, you know, performing in line with expectations. Probably got a little bit longer runway to get back to, you know, normal compared to our other, you know, core regions that we support.

Michael Stubblefield: I think the best way to characterize it for us is that it's performing in line with expectations. Probably has a little bit longer runway to get back to normal compared to our other core businesses. Great. Thank you for the question. Appreciate it. The next question comes from Luke Sergott with Barclays. Luke, please go ahead.

Speaker Change: Best way to characterize it for us is it's, you know, performing in line with expectations, probably got a little bit longer runway to get back to, you know, normal compared to our other core regions that we support.

Michael Stubblefield: Great. Thanks for the question.

Speaker Change: Great. Thanks for the question. Appreciate it.

Luke Sergott: The next question comes from Luke, so I've got with Barclays. Luke, please go ahead. Great.

Speaker Change: The next question comes from Luke Sergott with Barclays. Luke please go ahead.

unknown: Great, thanks for the question here. I just kind of wanted to dig in here on the 3Q sequential improvement across the business, particularly in bioprocessing. Just from a number of perspectives, because we haven't heard that from any of your peers, we just want to get a better understanding of the drivers there.

Luke Sergott: Thanks for the question here. I just kind of wanted to dig in here on the 3Q sequential improvement across the business, particularly in bio processing. Just from a number perspective, because we haven't heard that from any of your peers, I just wanted to get a better understanding of the drivers there. You know, if it's kind of like an idiosyncratic to particular customers and how they order or anything like that, just give us confidence where you get that visibility. Yeah, a couple of things, I guess, Luke. First of all, thanks for the question, but there's nothing, you know, particularly stands out to me as I look at, you know, the dynamics of, you know, the lead to the print in Q2 versus, you know, how we see the setup for Q3. Clearly, you know, the order book as it's, you know, shaping up is giving us, you know, confidence in what we're seeing.

Luke England Sergott: Great, thanks for the question here. I just kind of wanted to dig in here on the 3Q sequential improvement across the business, particularly in bioprocessing.

Luke England Sergott: Just from a number of perspective, because we haven't heard that from any of your peers, we just want to get a better understanding of the drivers there. You know, if it's kind of like idiosyncratic to particular customers and how they order or anything like that, just give us confidence where you get that visibility.

Michael Stubblefield: You know, if it's kind of like idiosyncratic to particular customers and how they order anything like that, just give us confidence where you get that visibility. Yeah, a couple of things, I guess, Luke, first the things to the question, but there's nothing, you know, particularly stands out to me as I look at, you know, the dynamics of, you know, the lead to the print in Q2 versus, you know, how we see the setup for Q3, clearly, you know, the order book as it's, you know, shaping up is giving us, you know, confidence in what we're seeing.

Luke England Sergott: Yeah, a couple of things, I guess, Luke, firstly, thanks for the question, but...

Speaker Change: There's nothing that particularly stands out to me as I look at the dynamics of what led to the print in Q2 versus how we see the setup for Q3.

Speaker Change: Clearly, the order book, as it's shaping up, is giving us confidence in what we're seeing. We had another really solid quarter of order intake in the quarter.

Michael Stubblefield: We had a, you know, another really solid quarter of order intake in the quarter that, you know, I think, you know, matches with what we're seeing from just a customer sentiment perspective and supports are used that we've, that we shared here on, on the second half, you know, that order book, you know, does support, you know, continued growth of, you know, our single use platform, which has been an area that, you know, we've been really focused on. And, you know, our ingredients, you know, an experience platform is looking good as well, so, you know, the maps, you know, platforms clearly, you know, continue to drive the lion's share of the revenues, but these new modalities, particularly some of the momentum that we see on gene therapy, is helping our business as well.

Michael Stubblefield: We had another really solid quarter of order intake in the quarter that, you know, I think, you know, matches with what we're seeing from just a customer sentiment perspective and, you know, supports our views that we've shared here on the second half. That order book does support continued growth of our single-use platform, which is, you know, been an area that we've been really focused on, and, you know, our ingredients, you know, and So, you know, the maps, you know, platforms clearly continue to drive the lion's share of the revenues, but these new modalities, particularly some of the momentum that we see in gene therapy, are helping our business as well. So, I'd say it's a broad base across products, modalities, and customers here.

Speaker Change: That, you know, I think, you know, matches with what we're seeing from just a customer sentiment perspective and, you know, supports our views that we've shared here on the second half.

Speaker Change: you know, that order book, you know, does support.

Speaker Change: continued growth of our single use platform, which has been an area that we've been really focused on.

Speaker Change: And, you know, our ingredients, you know, in the excipient's platform is looking good as well.

Speaker Change: The MABS platform clearly continues to drive the lion's share of the revenues, but these new modalities, particularly some of the momentum that we see on gene therapy, is helping our business as well. So, I'd say it's broad-based across products, modalities, and customers here.

Michael Stubblefield: So, I'd say it's, you know, broad base across products, modalities, and customers here. And, you know, we're excited and pleased to see, you know, this part of our business, you know, starting to fall back in line with, you know, our expectations. Got it.

Brent Jones: And, you know, we're excited and pleased to see this part of our business, you know, starting, you know, fall back in line with, you know, our expectations. And then just the last one here for Brent, you know, great, great margin progression, plenty of questions on this. I guess what I'm thinking about it is you're on track here to hit your guide or at least the low end for the back half of the year.

Speaker Change: And, you know, we're excited and pleased to see, you know, this part of our business, you know, starting to, you know, fall back in line with, you know, our expectations.

Speaker Change #100: And then just the last one here for Brent.

Brent: You know, you have a great, great margin progression and plenty of questions on this.

Speaker Change #101: What I'm thinking about it is you're on track here to hit your guide, or at least to the low end.

Brent Jones: Just like how much of this is due to when you guys are doing the cost outs and kind of right sizing that cost structure, you're finding more than what you thought was there? Or is this more of just kind of, oh, things are kind of progressing faster than we expected? Just trying to get a sense of like, you know, how much juice is left in that squeeze versus, you know, it's a timing issue. Yeah, no, Luke, thanks.

Speaker Change #102: For the back half, you know, through the year, just like how much of this is due to when you guys are doing the cost outs and kind of right sizing that cost structure, you're finding, you're finding more.

Speaker Change #103: Than what you thought was there? Or is this more of just kind of, oh, things are kind of progressing faster than we expected. Just trying to get a sense of like, you know, how much juice is left in that squeeze versus, you know, it's a timing issue.

Brent Jones: And I think it's, I think it's a really good point to highlight there. I would, I would definitely put it on the latter there that it's around execution. I think we dimensionalized the opportunity here very well. When you dig into a program like this, you always find places that are a little larger than you'd expect and places where the juice is and what the squeeze is there.

Speaker Change #103: Yeah, no, Luke, thanks. And I think it's, I think it's a really good point to highlight there. I would.

Speaker Change #104: I would definitely put it to the ladder there that it's around execution. I think we had dimensionalized the opportunity here very well.

Speaker Change #105: When you dig into a program like this, you always find places that are a little larger than you'd expect and places that

Brent Jones: But I think what I'd really emphasize about it is not only are we getting at it faster, which is allowing us to de-risk the margin for the year, but a question we've gotten is, OK, is this much transformation going to cause confusion in the business? And I think what I'd say is it's not an easy thing to do, but not only are we getting at the cost, but we're also getting at the top line.

Speaker Change #105: you know, that the juice is and what the squeeze is there, but I think what I really emphasize on it is, you know, not only are we getting at it,

Speaker Change #105: faster, which is allowing us to de-risk the margin for the year. But a question we've gotten is, okay, is this much transformation going to cause confusion in the business?

Speaker Change #105: And, you know, I think what I'd say is it's not an easy thing to do, but not only are we getting at the cost, but we're also getting at the top line. So I think it's proof that we're hitting the right areas at the right times, and we're being really prudent about it.

Brent Jones: So I think it's proof that we're hitting the right areas at the right times and we're being really prudent about it. And you're seeing it both in the P&L on the expense side as well as on the revenue side that the org is still really focused. Great, thanks. We have time for one more question, and so our final question today comes from the line of Tejas Savant with Morgan Stanley. Please go ahead.

Speaker Change #105: And you're seeing it both in the P&L on the expense side as well as on the revenue side that the org is still really focused.

Speaker Change #106: Great, thanks.

Speaker Change #106: [inaudible]

Speaker Change #107: We have time for one more question and so our final question today comes from the line of Tejas Savant with Morgan Stanley . Please go ahead.

unknown: Hey guys, thank you. Michael, I'll ask you a two-parter. One, just really a cleanup on BPS. On your bulk drug substance, you know, destock comments, are there any ways for you to improve visibility there? And how should we be thinking about, you know, guardrails around time to normalization? And can you help us think through how much of a drag that was on your 2Q autogrowth, which, you know, you said was pretty good? And then separately, one for Brent.

Tejas Savant: Hey guys, thank you. Michael, I'll ask a two-parter. One, just really a cleanup on BPS. On your bulk drug substance, you know, destock comments,

Tejas Savant: Are there any ways for you to improve visibility there, and how should we be thinking about guardrails around time to normalization, and can you help us think through how much of a drag that was on your 2Q autogrowth, which you said was pretty good. And then separately, one for Brent.

Michael Stubblefield: Margins here, again, like 70 bps of upside versus your own guide, Brent. So can you just pass that out for us between, you know, pricing versus the bioprocessing mix help versus the cost outs? And are any of these sort of timing-related in nature in your mind, which is why you decided to keep the margin outlook for the year unchanged? Thanks, Tejas, for the question.

Tejas Savant: Margins here, again, like 70 bps of upside versus your own guide Brent, so can you just pass that out for us between, you know, pricing versus the bioprocessing mix help versus the cost outs and are any of these sort of timing related in nature in your mind, which is why you decided to keep the margin outlook for the year unchanged?

Michael Stubblefield: Appreciate the support. In our bio processing business, certainly one of the things that we try to triangulate is, you know, not only the inventories that are customers of our products but also, you know, we watch closely what they're reporting on their balance sheets or inventories of their products.

Brent: Thanks Tejas for the question, appreciate the support. On our bioprocessing business...

Speaker Change #109: You know, certainly one of the things that we, you know,

Speaker Change #109: try to triangulate is, you know, not only the inventories that are customers of our products, but also, you know, we watch closely what they're reporting on their balance sheets or inventories of their products.

Michael Stubblefield: And ultimately, all that gets reflected in, you know, their production plans they share with us, and as it gets reflected in orders. So, you know, consistent with what they're telling us and what we see in terms of, you know, where inventories stand, you see that being reflected in the order book and, you know, with the momentum that we see there and then living through revenue. I think we're, you know, very, very encouraged with how those things are trending, given that, you know, we're still, you know, platform is still below what you'd see for a long-term growth rate.

Speaker Change #109: And ultimately all that gets reflected in their production plans they share with us and as it gets reflected in orders. So consistent with what they're telling us and what we see in terms of where our inventories stand, you see that being reflected in the order book and with the momentum that we see there.

Speaker Change #109: And then living through to revenue, I think we're...

Speaker Change #109: You know, you're very, very encouraged with, you know, how those things are trending, you know, given that, you know, we're still, you know, platform is still, you know, below what you'd see from a long term growth rate, that evidence that there's still

Michael Stubblefield: There's evidence that there's still room for improvement there, but the trends are very, very favorable and, you know, seem to be accelerating for us. So nothing particular that I would call out there around, you know, our customers' inventory, we see it improving rates; production rates don't quite yet match, you know, what we see from in-market demand, but certainly starting to close the gap there. Perfect. Yeah, on the margin side there.

Speaker Change #109: So there's, you know, still, you know, room for improvement there, but the trends are very, very favorable and, you know, seem to be accelerating for us.

Speaker Change #109: Nothing particular that I would call out there around, you know, our customers inventory, we see it improving.

Speaker Change #109: rates.

Speaker Change #109: Production rates don't quite yet match what we see from an in-market demand, but it's certainly starting to close the gap there. Brent, I think you've got it. Perfect. Yeah, on the margin side there, so let me break it down to gross margin as well as EBITDA margin. So on the gross margin side,

Brent Jones: So let me break it down to gross margin and then to EBITDA margin. So, on the gross margin side, Q2 had a lot of aspects that were like Q1. Obviously, we had the sequential BPS improvement that was very helpful there, really, as well as pricing actions coming more to fruition. I would say there was a significant balance of price and mix there on the gross margin side. But I'd be remiss if I also didn't highlight some of the cost actions as well as really good productivity, you know, because in an inflation environment with this much dynamism, not just holding the line but improving on gross margin is not the easiest thing.

Brent: Q2 had a lot of aspects that were like Q1, obviously we had

Brent: And, you know, the sequential BPS improvement that was very helpful there, really, as well as pricing actions coming more to fruition, I would say a significant balance of price and mix there on the gross margin side.

Brent: But I'd be remiss if I also didn't highlight some of the cost actions as well as really good productivity, you know, because in an inflation environment with this much dynamism, not just holding the line but improving on gross margin there is not the easiest thing.

Brent Jones: And then on the OPEX side, that's confirmation of very direct transformation impacts, you know, offsetting our incentive comp reset and other things there, as well as, again, just general good execution on the cost side generally. So, really a balance of the two, obviously, larger impact on this.

Brent: And then on the OPEX side, that's confirmation of very direct transformation impacts, you know, offsetting our incentive comp reset and other things there, as well as again, just general good execution on the cost side generally. So, really a balance of the two, obviously a larger impact on the...

Brent Jones: SG&A line there, but really consistent with our other comments. Got it. Thanks, guys. Appreciate it. Welcome.

Brent: SG&A line there, but really consistent with our other comments.

Michael Stubblefield: Thanks, guys.

Michael Stubblefield: Appreciate it. Welcome.

Speaker Change #110: Got it. Thanks guys, appreciate it.

Emily: We have time for no further questions.

Michael Stubblefield: We have time for no further questions. Also, I'll turn the call back to Michael for closing remarks. Yeah, thank you all for joining us today. A couple of things I'd like to cover here at the close. Just reiterate your assumptions for the 3rd quarter, organic growth minus 1 to 2%, the segment level on a year-over-year basis, we'd anticipate flat to modest growth in the lab business and a low single-digit decline in our production segment, and then live through on a full year basis.

Michael Stubblefield: Also, I'll turn the call back to Michael for closing remarks. Yeah, thank you all for joining us today. A couple of things I'd like to cover here in the closed. Just reiterate your assumptions for the third quarter, you know, organic growth. Minus one to 2% the segment level on a year of year basis would anticipate flat to modest growth in the lab business in most single digit decline in in our production segment and then living through on a full year basis, we've obviously reaffirmed our full year guidance with lab now expected to be down most single digits to flat with our production segment with improving outlook here down most single digits.

Speaker Change #110: We have time for no further questions. Also, I'll turn the call back to Michael for closing remarks.

Michael: Thank you all for joining us today. A couple of things I'd like to cover here in the close. Just to reiterate our assumptions for the third quarter. Organic growth, minus one to two percent. The segment level, on a year-over-year basis, we'd anticipate flat to modest growth.

Speaker Change #110: in the lab business, and low single-digit decline in our production segment, and then living through on a full-year basis. We've obviously reaffirmed our full-year guidance with lab.

Michael Stubblefield: We've obviously reaffirmed our full-year guidance with lab, now expected to be down low single digits to flat with our production segment, and with an improving outlook here down low single digits. Really pleased with how the year's playing out. The assumptions that drove our guidance as we entered the year are still fully intact, Clearly, very solid performance against our plan. We call out again and reinforce the strong momentum we're seeing in our bioprocessing business, and we're confident in our ability to deliver our plan for the year. But it's unfortunately not predicated on any market recovery or improved conditions.

Speaker Change #110: Now expected to be down low single digits to flat with our production segment with improving

Michael Stubblefield: Really pleased with how the year’s playing out; the assumptions that drove our guidance as we entered the year are still fully intact. Clearly, very solid performance against our plan would call out again and reinforce the strong momentum we’re seeing in our processing business and, you know, our confident ability to deliver our plan for the year. And it’s unfortunately not predicated on any market recovery or improved conditions. We've talked here today about the meaningful progress that we're making on a transformation initiative, and we're well on track to meet our targets for the year, as well as, you know, over the three of life of the program.

Speaker Change #110: Outlook here down those single digits. Really pleased with how the year's playing out. The assumptions that drove our guidance as we entered the year are still fully intact. Clearly very solid performance against our plan.

Speaker Change #110: Call out again and reinforce the strong momentum we're seeing in our bioprocessing business and we're confident in our ability to deliver our plan for the year and it's unfortunately not predicated on any market recovery or improved conditions.

Michael Stubblefield: We've talked a bit here today about the meaningful progress that we're making on our transformation initiative, and we're well on track to meet our targets for the year, as well as over the 3-year life of the program. And, as always, we look forward to updating you when we get a chance to meet again in October. Until then, be well, everyone. Thank you everyone for joining us today. This concludes our call, and you may now disconnect your line.

Speaker Change #110: We've talked a bit here today about the meaningful progress that we're making on our transformation initiative, and we're well on track to meet our targets for the year, as well as, you know, over the three-year life of the program.

Michael Stubblefield: And as always, we look forward to updating you when we get a chance to meet again in October. Until then, be well everyone.

Speaker Change #110: And as always, we look forward to updating you when we get a chance to meet again in October . Until then, be well, everyone.

Emily: Thank you, everyone, for joining us today.

Emily: This concludes our call, and you may now disconnect your line.

Speaker Change #111: Thank you everyone for joining us today. This concludes our call and you may now disconnect your line.