Avantor (AVTR) Q2 2026 earnings call transcript

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

The press release and the presentation accompanying this call are available on our at ir. avantoursciences. com. Following our prepared remarks, we'll open the call for questions. A replay of the call will be made available on our website later today. During this call, we will make four 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 four looking statements are subject to a number of risks and uncertainties, including the set forth in our SEC filings. Actual results may differ materially from any four looking statements that we make today. These four looking statements speak only as of date they are made.

We do not assume any obligation to update these four looking statements as a result of new information, future events, or other developments. This call will include a discussion of non-GAP measures. A reconciliation of these non-GAP measures can be found in the supplemental disclosure package on our investor relations website. I will now turn the call over to Emmanuel.

Thank you, Chris. And good morning, everyone. Thank you for joining our call today. I will begin with a high level update on our second quarter performance. I will then reflect on the actions we've taken since I came into this role nearly 12 months ago and discuss the progress we are making in executing revival, our comprehensive program to sharpen strategy focus and improve execution.

Turning to side four, let me highlight a few key messages. First, we remain highly focused on executing revival, and I am very happy with the progress we made to date. Revival, deliver, measurable results and put us on a path to sustainable growth.

Second, and please let our second quarter results exceeded expectation across several key financial metrics. Those results were driven by improved performance in our VWR distribution and service segments, which return to positive organic revenue growth during the quarter. Our bioscience and medtech product segments performed near the high hand of our expectation and its position to return to growth in the second half.

Third, we delivered excellent free cash flow, enabling us to invest in the business while also paying down debt. We remain committed to reduce our adjusted net leverage ratio below three times.

Finally, we raised our 2026 organic revenue growth and adjusted EPS guidance. Our updated outlook reflects both our second quarter performance as well as higher expectation for the second half of the year. Please turn to slide five, where I will review our Q2 performance highlights. In Q2, we generated $1.69 billion of revenue, which declined 0.4% on organic basis and was up 0.5% on a reported basis. Revenue was stronger than we had anticipated, driven primarily by VWR, which grew 1.7% organically in the quarter.

VWR returned to growth earlier than we anticipated, reflecting the deliberate action taken by segment president Corey Walker and his team to strengthen the business. The segment entered the second half of 2020 with broad-based momentum, and we continue to expect growth to accelerate through the remainder of the year. I will talk more about the driver of VWR returned to growth later in my remarks.

Turning to BMP, revenue was near the high hand of our expectation driven by solid execution across the segments. On a year-over-year basis, revenue declined 5.6% organically, reflecting the impact of the discrete factors we had discussed previously. Importantly, BMP delivered sequential revenue growth from Q1 to Q2, and as anticipated, demonstrated a stable trend. In BMP, we saw stronger order intake and improving operations in the initiative again in traction, and when combined with reduced comparison headwinds from discrete factors, give us confidence that BMP will return to organic growth during the second half of 2026. I will discuss revival impact on BMP shortly. Moving down the P&L, adjusted the beta grew more than 15% sequentially from Q1, driven by increased volume in both segments.

Adjusted earning per share was 21 cents above our expectations for the quarter. Finally, one of our key strengths is our ability to consistently generate strong free cash flow. In the second quarter, excluding cash restructuring costs, we generated $152 million of free cash flow. This reflected strong conversion of adjusted net income and keepers on track to achieve our full year free cash flow guidance. We used this strong cash generation to repay $112 million of debt during the quarter, further strengthening our balance sheets and underscoring our commitment to reduce our adjusted net leverage ratio to below three times. Please turn to slide six. Last year, we launched Avento Revival, our comprehensive program to sharpen strategic focus and improve execution across the enterprise.

Revival is built on five pillars, commercial excellence, operation performance, portfolio optimization, simplification and payment. Guided by insights from customers, suppliers and associates at Gamba, we have launched initiative across each pillar that are producing measurable results. Some examples are on slide seven. We have made important go-to-market changes. We are re-segmented Avento into VWR and BMP to sharpen our focus, simplify the organization and better serve customers.

We revived the VWR brand and accelerated our digital roadmap, including the real launch of VWR. com, which is driven stronger customer engagement and e-commerce performance. Across both segments, we extremely focus on commercial excellence to drive every product and service in a way that delights customers. In BMP, our commercial teams are executed with greater consistency and focus, resulting in stronger customer engagement and higher ring rates. This translates into double-digit order growth for BMP and a book-to-bill ratio of 1.1 during the second quarter, while also expanding our funnel of future growth opportunities.

Those go-to-market FOR are reflected not just in BMP's order momentum, but also in VWR's return to growth. In the manufacturing pillar, we have invested across our supply chain to improve productivity and strengthen customer service. Those investments combined with the ongoing implementation of a new self-unoperation planning process are driving execution improvements. For example, during the quarter, we increase the throughput of certain key product lines at a large manufacturing site by more than 25% on average versus the first quarter.

This progress is the direct result of revival initiatives, including the use of lean and six-figure tools to enhance equipment at time, reliability, and overall productivity.

The simplify how we work pillar delivers benefits both inside and outside the organization. One example is the recent redesign of our customers onboarding process. Growing on insights from multiple gambit walks and across functional Kizen event, we redesigned the process from end to end, reducing onboarding from 14 steps to just eight and cutting completion time from up to four days to as little as two days for complex accounts or to just minutes for simple accounts.

Finally, as I have said before, revival begins and ends with people. We move quickly to complement our strong internal talents with experience external leaders refreshing approximately 25% of our senior leadership team, and we are thriving a cultural transformation across the Danto. We are communicating more effectively, collaborating more closely in the field, holding ourselves more accountable through a disciplined focus and measurable outcomes and putting customers at the center of all what we do.

The positive impact of revival is evident not only in our improved second quarter results, but also in leading indicators such as the trends of our order book and the expansion of our commercial females that will ultimately lead to sustainable profitable growth. Please turn to slide eight. VWR returned to growth into two marks an important milestone for the segments.

While the growth inflection itself is encouraging, the underlying drivers are broad-based as I will describe giving us confidence that we are building sustainable momentum. The leadership team Korea's built over the past year has implemented meaningful changes to VWR organization structure and operating model, setting the stage for segments improved performance. With the team structure and operating modeling in place, we made deliberated decision to strengthen our capabilities, operation, brand, and commercial excellence. Together, those actions have led the foundation for the stronger performance we are seeing today. Customers turn to VWR for our global scale, the depth and breadth of our product, agnostic catalog, strong shape, and excellent service. Combined with the changes, we have taken over the past year.

Our strengths are translated into stronger financial results, including stronger growth across key customer segments. Let me review the key factor driving VWR's return to growth in Q2. The first factor was stronger performance with large global customers. As a reminder, revenue from new business win is realized gradually due to the complexity of customer implementation processes, so we can take time before the benefit of strong commercial performance are reflected in our results. Previously, we discussed several elements impacting our large global customer segments, including reconstructing activity and other industry dynamics.

While our commercial focus and execution have improved significantly over the past year, those historical pressures faced in over the course of 2025, with their cumulative impact moderating in the first quarter of this year. While they continue to represent a headwind in 2026, their impact is diminishing as we move forward, and offsetting action have been successful in driving stronger than anticipated results in this segment. Accordingly, year-over-year comparison will become increasingly favorable as the year progress, allowing our result to more fully reflect our underlying commercial momentum. Our growth rate in the second quarter benefited modestly from this improving comparison dynamic.

Over the past year, PWR team has taken thoughtful and deliberately steps to expand our relationship with large global customers. The team focused on retaining and expanding large global customer relationships, strategically developing our new customer pipeline and accelerating the onboarding process for new contracts. We have executed, well, again, the growth opportunity that our efforts have generated, and this new business is contributing to our results sooner and more meaningful than we anticipated.

Another important driver of PWR performance is improving growth in our small and mid-sized customer segments, with better e-commerce outcome playing an important role. On our last earning course, we highlighted early signs of improving trends following multiple upgrades to our platform, as well as successful relaunch of VWR. com. We advanced our digital word map in the second quarter, and customers have responded positively to those announcements, driving direct traffic, higher conversion, and improved daily sales, particularly among smaller customers who tend to have higher margin. As a result, he commerce growth accelerated as the quarter of progress and was accretive to the segment growth for the quarter.

Although our return progress is encouraging, our digital transformation remains in the early stage. We continue to see substantial opportunity to enhance the customer's experience, deepen engagement, and drive sustained growth in the channel, particularly in Europe.

Finally, why deliberate action drove the majority of VWR improved performance, an increase in pharma and biotech customer activity provided a modest tailwind during the quarter, reinforcing our decision last year to focus significantly commercial resources on those customers' groups. It is important to note that activity level in several important end markets, such as education and in certain geographies, particularly Europe, remain stable but at lower level than we would like to see. An improvement in those end markets could represent an additional tailwind to our growth. Overall, we are pleased by VWR improved results that remain focused on execution to sustain and build the positive momentum. I will now turn the call over to Steve to discuss the number.

Steve, thank you Emmanuel, and good morning everyone. Please turn to slide 10 where I will review our consolidated financial results. In Q2, we generated $1.69 billion of revenue, which declined negative 0.4 percent on an organic basis and was up positive 0.5 percent on a reported basis. Adjusted EBITDA was $254 million, resulting in a margin of 15 percent, and adjusted earnings per share of 21 cents. Free cash flow for the quarter was $143 million, excluding cash restructuring costs, free cash flow was $152 million. Both figures were ahead of expectations and underscore of onto a strong cash flow profile. During the quarter, we repaid approximately $112 million of debt and ended the period with an adjusted net leverage ratio of 3.3 times adjusted EBITDA.

Leverage was flat sequentially. Please turn to slide 11. Revenue for the VWR distribution and services segment was $1.24 billion in the second quarter, up 1.7 percent organically versus the prior year. The primary driver of sequential and year-over-year organic revenue growth was increased volumes from strong commercial execution. Adjusted operating income for VWR was $126 million in Q2, representing an adjusted operating margin of 10.2 percent. The year-over-year decline in margin is due primarily to mix and inflationary pressures. Sequentially, margins increased approximately 100 basis points from the first quarter due to increased volumes and improved mix.

There are two key takeaways from the VWR quarter. First, VWR returned to growth ahead of our expectations, and the majority of this improved performance reflects steps that we have taken to grow the segment.

Second, VWR demonstrated stable sequential trends with revenue increasing from the first quarter, primarily due to strong commercial execution. Let me now discuss the performance in the Bioscience and MedTechs Product Segment, or BMP. I'm on slide 12. In the second quarter, BMP revenue was $452 million down 5.6 percent organically versus the prior year. This was near the high end of our expectations driven by solid performance across product lines. Process chemicals grew faster than expectations driven by healthy end market conditions, improving operations, and strong order performance. Fluent handling a new silver down mid-teens in the quarter as anticipated, while research and specialty chemicals declined mid-single digits organically, primarily reflecting the anticipated growth headwinds from serum and electronic materials.

Last quarter, we indicated that new so in the serum and electronic materials businesses within research and specialty chemicals would be headwinds to our quarterly growth rate due to the normalization of discrete customer ordering patterns and shipments in 2025. We also indicated that we faced a difficult comparison in fluid handling. Collectively, these factors were a headwind of roughly 600 basis points to BMP organic revenue growth in the second quarter.

Adjusted operating income for BMP was $118 million in the quarter, representing an adjusted operating margin of 26 percent. The year-over-year decline in margin was primarily driven by lower volumes. Margins increased sequentially due to increased volumes and mix. There are two key takeaways from the BMP quarter.

First, commercial performance was strong as evidenced by our order trends. During the quarter, BMP delivered double-digit order growth and a book-to-bill ratio of 1.1. Order trends were healthy across all business units, and we saw a particular strength in our process chemicals and fluid handling order books.

Second, BMP demonstrated stable sequential trends with performance near the high end of our expectations. Please turn to slide 13. Our ability to consistently generate strong free cash flow is a key strength of a long tour. In the second quarter, excluding cash restructuring costs, we generated $152 million of free cash flow, reflecting strong conversion of adjusted net income. Our capital allocation priorities support revival and our intention to create sustainable shareholder value over the long term.

First, we're focused on purposeful investments in the business to enhance customer service and drive top-line organic growth. Next, we are focused on strengthening our balance sheet by prioritizing excess free cash flow towards debt repayment. During the quarter, we repaid $112 million of debt and ended the period with net debt of $3.4 billion, and over the trailing 12 months, we've repaid nearly $500 million of debt. Our adjusted net leverage ratio was 3.3 times at the end of the quarter.

We've made significant progress in strengthening our balance sheet, and that momentum was recognized by Moody's, which revised our ratings outlook to positive. In addition, we recently capitalized on favorable market conditions and demand for our credit to reprice one of our term loans on attractive terms in July. We remain committed to reducing our adjusted net leverage ratio to below three times, driven both by continued debt paydown and a return to positive adjusted e-bithog growth as performance improves. Our objective is to finish the fiscal year at or below this target. Please turn to slide 14, where I will discuss our increased 2026 guidance.

For 2026, we have raised our organic revenue growth outlook to a range of negative 0.5 percent to positive 0.5 percent. This increased reflects our Q2 revenue out performance, as well as higher growth expectations for VWR in the second half of the year. Given the recent strength of the US dollar, foreign exchange is expected to be a headwind to the reported revenue in the second half. As a result, we now expect FX to contribute about 50 basis points to full year revenue. In terms of segment performance, we continue to expect VWR's growth rate to improve sequentially through the balance of the year. We expect BMP to return to growth during the second half, driven by improved execution and more favorable discrete comparisons.

BMP growth is expected to be stronger in Q3 than in Q4 due to more favorable year over year comparisons. Moving to profitability, our adjusted EBITDA margin guidance remains unchanged. As operational outperformance enables us to absorb macro inflationary pressures while also making targeted growth investments. We remain highly focused on cost discipline. As reflected in our overall head count, which is declined by approximately 3 percent this year.

Looking ahead, our objective is to deliver a more leveraged P&O. Moving down the income statement, we now expect that net interest expense will decline modestly versus 2025 and we also assume a weighted average diluted share count for the year of 677 million shares. All other modeling assumptions are unchanged. Taken together, this translates to an adjusted EPS outlook that has been raised to 80 cents to 83 cents for 2026.

Finally, we continue to expect free cash flow between $500 and $550 million in 2026, reflecting upon to a strong cash generation profile. In terms of phasing, in Q3, we expect to generate adjusted EPS between 20 and 21 cents per share.

The midpoint of our Q3 guidance assumes total company organic revenue growth of about 250 basis points in the third quarter. And we expect FX to be a headwind of about 125 basis points to Q3 reported year-over-year with year-over-year organic revenue growth largely offset by FX headwinds. For BMP, the impact of discrete customer ordering patterns and shipments will represent a headwind of about 150 basis points to organic growth in Q3.

Finally, we expect the underlying operating margin drivers in both segments to remain relatively stable sequentially, with volumes, mix, and inflationary pressures expected to be the primary factors influencing any sequential changes in segment margins. I'll turn the call back over to Emmanuel.

Thank you, Steve. In closing, and on slide 15, I would like to leave you with three key taxaways. First, nine months into revival, the operational changes we have implemented are delivering measurable results. Those improvements are increasingly evident in our operating and financial performance and reinforced the positive trajectory of the business.

Second, our growth outlook has improved. The VW team is executing extremely well, and the investment and strategic initiative taken over the past year are translating into growth.

We also expect BMP will return to growth in the second half, underpinned by a stronger book, improving operations, and more favorable comparisons. Third, we continue to generate strong free cash flow, enabling us to invest in the business while supporting our commitment to reduce debt and strengthen our balance sheet. Let me thank our Avanto associate around the world for their dedication to serving our customers.

Thank you for embracing revival and our new ways of working. I am very pleased with the progress we've made together this year. And finally, I am excited to share an important announcement. We plan to host our investors day on Tuesday, December 8 in New York City. We're looking forward to sharing a comprehensive overview of our business, strategy, and financial objectives while providing an opportunity for investors to engage more broadly with our leadership team.

Operator, we're happy to take questions.

Good morning, Eve. And thank you for your question. Indeed, we evaluate it. Okay. And let me start saying by the fact that we are super pleased with VWR performance and the very strong execution by the team. So indeed, more than half of the growth that we deliberated into two comes from deliberated action that we've taken. Maybe let me share a few things. Splitting the market in large global customers account and mid-side and smaller customers, if you don't mind. So for the large global customers account, in the past, we talked about some headwind that we had in contract renewal. Well, we began to lap those headwinds from the history. So this is point number one. Point number two, we also shared with you that we have over the past year really won many large contracts.

And each time we did that, we negotiated opportunity. And the team has worked really, really hard to grab those opportunities, to turn around those opportunities into growth.

And you know, it's a license to hunt. And basically what the team is actually doing and executing is actually gaining share of wallet inside those large accounts. So it's working well. We are a bit of advanced versus we thought we will be in, and this is sustainable. The second thing is on mid and small customers. You know, e-commerce is really the highlight of 2.2 for us. It's part of the revival. It's part of the go-to market.

It is working. We've relaunched VWR. com and the customers are reacted very, very well from that. So, you know, we see some really positive momentum in that segment as well. The remainder of the growth, of course, is coming from better pharma, better biotech hand markets, primary in the U. S. So it's a broad-based momentum that we see. The team is completely focused on customers, focused on execution, finding opportunity, grabbing those opportunities, turning those opportunities to growth. And this is why we confident that VWR growth will actually accelerate in H2.

If you had to quantify how much of a headwind has that been to overall growth? And so even without an underlying improvement in the market or in other elements of your execution, how much of a tailwind are you now going to start seeing from moving past those pricing actions and just growing for lower days? Yeah, I think if this is a very good question. Look, I think we quantify data as more than half. Okay, we don't go into customers by customers' detail just by practice.

Maybe just following up on the previous one. But on the channel specifically, good to see the organic growth coming through. But those growth rates are still below per. So maybe just help us to understand the market's show, dynamic show seeing there, and any KPIs you could perhaps give us to show that that's shifting back in your favor.

Sure. Look, we have many KPIs that we are looking at. Okay, we are looking at the number of new account we are looking at as the what happened, for example, in the e-commerce platform around numbers of clicks, number of basket, which is set up, number of conversion this. And of course, we measure a lot of those things on a daily basis. Look, here's what we're doing to regain market share. We redone chvwr brand, we redone chvwr. com, we made significant upgrade on the platform. We're not done. We have a whole programming place and we are continuing to invest there.

We have really good structure, funnel review that redraw the customer focus, buy region, buy segment. We really take care of when we renew a contract, what are the opportunity, what are the size of the opportunity, how those opportunities are actually being converted.

We track many things. And one important thing that we've implemented recently is the pricing tools, right? We have a much more robust pricing review, again, on a monthly basis. The entire executive team is part of this, Corey is leading this initiative with this team. I think we shared last call that we have a new pricing leaders. And we work also very closely with our supplier and partners. This is very important. This is a multiple relationship. And this is all part of the revival go to market. And we are just really extremely pleased that VW is back to growth at 1.7% growth on Lyft versus previous year. And we are absolutely committed to continue to go and to accelerate this growth.

So I think this is where we are today. We know that the majority of the growth is coming from the action that we are taking, that the team is really focused on delivering. And that will accelerate in health too.

Good morning, Helen. I'd like to just maybe just add a little bit to what Emmanuel said and highlight a little bit. While the 1.7% growth is not quite yet marked, just want to highlight that we moved from negative 4.8% in 1Q to positive 1.7% in 2Q. And we expect that growth rate to continue to accelerate year as we get into the second half. And part of that is the sustainable improvements we've made. Part of it is the comparisons from last year. So really nice development of the growth rate.

That's a good question, Callum. I think it's very important to understand that Revival is constantly evolving. So when we arrived, we did a several listening to the market, the suppliers, our associate, we identified the, I would say, really high priority that we had. Mary in supply chain is here. We have invested in supply chain with growth talents and we brought more talent in the organization, like in the e-commerce platform with our new digital leader that came from Metline. All those things are reviewed on a monthly basis. Ludwig Bolier will join us as a head of BMP segments, but also the transformation leaders has a really clear operating plan for the Revival programs. And so we take project by project, I will say, and then we deliver them, we take the box and we move on into another one.

So there's still a lot to do. We shared many of those. I mean, the last one that we share in this call was the onboarding process, which is very important for customers, simplifying the process, accelerating their capabilities to create an account. This is done. And then we move on to the other one. So I think we continue to invest. This is something very important for us. You know, we have, we simplify, we save, and then we reinvest for growth. This is the formula that we are applying.

Thank you. I thought I would just, if you don't mind, just go back to, you know, VWR distribution and the investments that you made there to kind of stabilize share with the price. I know there was a question asked earlier, but keep in mind us, in the back half of the year, is that like fully combed out that investment? Because it looks like, you know, might have been like a three point benefit like you're saying in Q2. I'm just wondering kind of what's baked in for the back half of the year on that investment. Look, I think in the VWR area, so the majority of the investment is on the e-commerce platform, the reloads of the VWR.

com, and we'll continue to do so. So I think all our investment are baked into our guidance today. Okay. Maybe zooming out just on the BMP segment then for a moment, you know, book to bill has been above one. The last couple quarters obviously growth has been challenged, but you have the idiosyncratic factors. Just can you speak a little bit about like the backlog there, kind of, you know, what the, how much of that business is backlogs are in, kind of how we translate that from book to bill into the outlook, whether it be in the back half and then in 27 and then any specific color just on new sale, which I know, you know, you guys have, you know, kind of a market leadership there, just wondering kind of, you know, volume and price on new sale and kind of what the outlet that's baked in on that front.

Thank you. Sure. Let me maybe start with the market. So the NPS is really a cross-diverse set of end-market, right, clinic materials, you just talk about new steel and med tech, of course, our bio-processing market with our bio chemicals. Look, overall, we are very pleased again with the go-to-market activity that we're doing with the commercial team. So we talk early on to, too, on the order, intake, double-digit, and the book to build being positive.

But I can tell you that from the first half, it's the same. It's loadable-digit, order book for the entire first half, which is, I think, very encouraging. And all the in the entire BNP. So we're super encouraged by that. The market is solid for all of those sub-segments.

We have those discrete things that you talk about that give us a comparison. But again, the team is really focusing on finding the opportunity, converting the opportunity, bringing the order in. And then the supply chain team is working really hard to make sure that we supply the customers the best we can. And this is working well. We continue to invest. Again, this is something that takes time, but we are happy where we are right now. So just a bit of new steel. New steel is doing good, good order intake on new steel, price, but nothing crazy, a good price left, but nothing crazy, some good volume as well, some good activity, not only in the implants, but in the new market that we are pushing, like, area or space.

And that's something that we can give you a bit more collars when we are together at the investor's day.

Thanks for taking our questions. First one, from Ox. I was wondering if you could talk a little bit more about the guide cadence in the second half. And specifically, I know you've talked a few times about expecting the EWR to accelerate, but could you give us any color on sort of the size of the ramp or some of the levers to the upside or downside and how we might think about the exit rates in fourth quarter?

Sure, Mackenzie. I thought that Vijay has changed voice, though.

I'm glad. Welcome to the call. I'm Mackenzie. I'm happy to step you through our assumptions around the full-year guidance, which we've updated. Starting with Topline, as you know, we updated the guide for the consolidated full-year organic revenue growth. And that's really driven by the flow through of the EWR's outperformance in TQ, as well as our raised expectations for the business in the second half.

The outlook related to BMP is generally unchanged from our initial guidance. The business continues to perform very well and in line with our plan. We reaffirmed our adjusted EBITDA margin guidance for the full year, despite the continued inflationary pressure we're absorbing. For example, we continue to see significant pressure on freight costs for both segments. A couple other housekeeping items for non-operational in nature. We expect FX to be a headwind for the second half. We also have slightly lower assumptions for our share count interest expense. And if you put all that together, these are the important factors driving the updated guide of 80.83 cents for adjusted EPS for the full year.

All right. I think back in there, it's probably because of B&T here. Generally speaking, in VWR, we see more former mobile tech activity, I would say, especially in USA, in America.

Other markets, we see it more or less unchanged, right? Education and Europe are probably a stable level or at a level that we were kind of expecting. So a bit low levels, we wish it was a bit better. And on B&P, I think, you know, all divers' set of markets are healthy. And that is reflecting our order book, Professor Kimiko's order book in particular, dealing with double digits for the quarter.

Good morning, everyone. You know, Manuel, obviously over the last year, the number of initiatives you've laid out within Revival have moved from evaluation phase to execution phase. You know, now, Dean, you mentioned it's been ongoing process. You know, by the time we get through to the December annual stage, you feel like you'll largely be set in terms of the management team changes, the implementation of kind of the one thing is the portfolio review. Is that something you'd expect to sort of be complete by the yesterday as well? Thanks, Matt. Yeah, I think you're right. We're working hard on all the pillars. Okay. And for that, the portfolio is ongoing. It's really an important part of our pillar.

Okay. And we are of course looking at every business is assessing any product line, any market, position, the financial profile. And we are always asking ourselves, you know, are we the best owners? So we're working out on that part. And yes, we hope that we can give you some investors today. But what I want to say, Matt, as well as Revival is really a program which is constantly evolving. So we're going through a lot right now. But I'm sure because it's a culture as well that we want to bring to the organization of continuous improvement. So it's not because we will have made some very good progress that we will finish the year with momentum, that we will still not have things that we want to do and we want to improve and we want to progress.

So, you know, it's going to evolve, but we'll give you more update on the portfolio. Okay.

That's great. And then the discrete headwinds in BMP reference 600 basis points in Q2, I think you said 150 and Q3. Maybe what is that in the fourth quarter? And then I assume that's out of the numbers for the most part next year and thus setting up essentially a path to return a more durable growth on that side of business. Yeah.

Good morning, Matt. This is Steve. Happy to share there. So as you already pointed out, TQ, with the most challenging quarter, you already referenced the three key headwind we expect to see. The only other point to make would be related to the fourth quarter, which will also be a pretty difficult comparison of about 400 basis points related to our electronic materials business. We do think it's also useful to reflect on the sequential performance of the business, which presents a little more consistent picture of the improvements in the progress we've made. Over the course of the year, we expect to see, you know, gradual strengthening in the volumes over the course of the year. And this is really the result of two major things, you know, and we talked about them in the prepared marks.

First, the operational improvements that the team has been driving and continue to focus on, and the development of that really strong order book. We're really excited for the building and sustainable momentum. And I think the profile within 2026 over the course of 26 is really gradual and improving and really strong.

Maybe I can add because I can sense behind your question is, is your strong interest about 2027? Which by the way, it's the same for me, right? So as you know, we may be a bit too early to give guidance there, but let me share a few thoughts here. I mean, both VWR and the BMP team are really executing super well. We are really happy about the fact the team has embraced revival and the new way of working. We will exit 26 with momentum.

There's no doubt about this. We will not be completely done for sure, and we'll continue to push more initiators to continue to improve the business. But we will leave the year with momentum. So 2027, you know, every day, every month, you know, the last 90 days, my confidence is increasing, and I'm confident then optimistic that 2027 will be a growth year.

Good morning, Casey. This is Steve. Thanks for your question. Yeah, consolidated gross margin. The rate was essentially flat from one to two pure this year. We do expect that rate to space steady through the end of the year. While stability is good, obviously, we were looking for a margin expansion. So what are our priorities in this regard?

First, we're looking to drive as much volume as we can. We also want to successfully navigate inflationary pressures with our customers and suppliers constructively. We prefer and want to drive a strong product sales mix. We want to also highlight our focus on digital investment. We mentioned it in the prepared remarks. The digital capabilities really help us connect better with our smaller customers, which tend to be better margin sales for us. So we're very focused on that. So excellent job, bar teams to this point in the year and driving these things. And those are going to be the key levers as we move forward.

Hey, KSA Emmanuel here. I'll go back to the feet of the feet that we are pushing, simplifying, saving, reinvesting for growth, all right? I mean, I think last quarter we share that our headcount is down about minus 2%. That was last quarter. At the end of this quarter, the headcount is down minus 3%. And basically, our objective and what we are striving as a culture is to drive for lever HP&M. Understood.

Good morning, Michael. This is Steve. Happy to answer that. You know, start with organic growth for BMP. We expect modest organic growth in 3Q. We do expect the organic growth in 4Q to be a little more muted because of the more difficult comp that I already described sequentially, you know, on a reported basis BMP, we expect for Q3 to be about flat sequentially with a modest uptick in the fourth quarter.

Sure, Michael. Just let's go maybe through, I guess your question was more a bit about VWR's on it. Yeah. Yeah. Yeah. So on VWR, as we said, so large global customers, especially the large global customers where we had renewed contracts with good opportunity. And there, it's the mix of what the customers really need. And it's also in, depending of where the customers of large customer and logic are invested. But generally speaking, we see a good momentum span in large farmer, also biotech, actually, all right. The funding is coming back to biotech, and we see them spending money. It's a mix of equipment, a mix of consumables. And I would say geographically speaking, it's USA and America is really driving it.

Okay. For the rest of the day, I think it's a bit unchanged. And smaller customers that we see through e-commerce platform where we really see, again, the impact of what we've done with vWR. com, it's very, very broad. It's very, very distinct. Those customers are usually not buying equipment through the e-commerce platform, but so it's a more mix of consumables. And it's across many different applications. Okay. Thanks.

Now, now that you've been in charge for a while, what's your view on self-manufacturing? Do you want to increase the level of self-manufacturing, or do you think expanding vendor relationships is really the way to go in the future, being kind of a non-competitive? What's your walk away and views on self-manufacturing at this time? It's a great question, Paul. Thank you.

I think we have a lot of opportunities on self-manufacturing. It's a good service that we're providing to many, many people. In terms of vWR, you know, I really like the fact that we are product agnostic. I really like the fact that we are dis-constrating ourselves, offering the broader catalog that we can and offer optionality to the customers. You know, really top product, very, very famous brand that actually wants to work with us. And I think this is very important, really good relationship with the supplier. And then we have all sorts of vWR brands. So product agnostic for vWR, I think it's a really good position and it's a very good value proposition. And self-manufacturing, I mean, for us, internally, it's a business that we have.

It's a service that we provide to people because we have really good capabilities and capacities and we are capable to offer really high quality products to the many different customers as an OEM. And it's a very good service and it's growing, actually. So I think a bit, of course, is very important for us.

And then regarding BMP, obviously, a great build-out over the years. What's the next steps in your view for BMP? Well, I think the next step from BMP for us is just making sure that we continue to drive operational excellence, the SNOP process that we put in, which is very important to have a very good visibility of the demand and the supply, and really continue to invest in, you know, reducing lead time, improving on time delivery, making sure that we continue to serve the customers the best we can. And, you know, in process chemical, in particular, we really see the impact of what the team has been driving commercially and supply chain. I mean, we talked to you in the preamble about, you know, those parts of the product line where we are invested, we're marrying the team has done a really good job to take the output by up by 25 percent.

This is really important for us to continue to do so, reduce lead times, increase on time delivery, and not measured on our promise date, but really measure on what the customers deserve and what the customers want. So, improving service level is really important. Quality is really good. Jerry, the joiners last quarter is doing a really good job as well, and those are the areas that will continue to invest and continue to continue to improve the service level that is really important. Thank you.

I would now like to turn the conference back over to Emmanuel for closing comments. Thank you, Christel. Let me conclude the call with a reminder of the key takeaway for Q2.

First, revival is working, and the team is committed to continue to improve. Second, our growth trajectory is improving. And third, we continue to generate excellent free cash flow. Thank you for joining the call, and have a great day.