Hello everybody and a warm welcome to Avantor's Fourth Quarter 2024 Earnings Call. My name is Emily and I'll be coordinating your call today. [Operator Instructions] I will now turn the call over to Allison Hosak, Senior Vice President of Global Communications. Ms. Hosak, you may begin your conference.

Good morning and thank you for joining us. Our speakers today are Michael Stubblefield, President and Chief Executive Officer and Brent Jones, Executive Vice President and Chief financial officer. The press release and a presentation accompanying this call are available on our Investor Relations website at ir.avantorsciences.com. A replay of this webcast will also be made available on our website after the call. Following our prepared remarks, we will open the line for questions. During this call, we will be making forward-looking statements within the meaning of the U.S. Federal Securities Laws, including statements regarding events or developments that we believe or anticipate may occur in the future. These forward-looking statements are subject to a number of risks and uncertainties, including those set forth in our SEC filing. Actual results might differ materially from any forward-looking statements that we make today. These forward-looking statements speak only as of the date that they are made. We do not assume any obligation to update these forward-looking statements as a result of new information, future events, or other developments. This call will include a discussion of non-GAAP measures. A reconciliation of 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 Michael.

Thank you, Allie, and good morning, everyone. I appreciate you joining us today. We are pleased with the momentum in our business in 2024, including our Q4 performance. There were several notable highlights, including exiting the year with high single digit organic growth in bioprocessing. We'll have a chance to discuss these highlights as we progress through the presentation. Let's turn to Slide 4, with a quick overview of our financial highlights for the quarter and full year. We return to growth in the fourth quarter with low single-digit organic growth for the enterprise, a significant milestone that reflects our sustained commercial intensity and continued market recovery. Notably, our bioprocessing business delivered a fourth consecutive quarter of outperformance, with high single-digit organic growth and strong order intake. We expanded adjusted EBITDA margin to 18.2%, the highest level in more than a year, driven by improving mix and the ongoing benefits of our multi-year cost transformation initiative. We grew adjusted earnings per share to $0.27 in the fourth quarter, up 4% sequentially and 8% year-over-year. Importantly, we continue to drive best-in-class free cash flow conversion, finishing the year with another quarter of exceptional free cash flow. We generated $222 million in the fourth quarter and $768 million for the year, representing more than 110% free cash flow conversion for the full year. Let's now take a closer look at each of our segments. Our Laboratory Solutions segment grew sequentially on an organic basis and continues to show resilience. Our commercial intensity is driving share gains with meaningful new contract wins and expanded customer relationships. Across our customer base, we are seeing increased engagement, signaling a return to normalcy. The academic end market remains strong, and many of our large pharma customers have worked through their pipeline reprioritization. These customers are now…

Thank you, Michael, and good morning, everyone. I'm starting with the numbers on Slide 5. Fourth quarter reported revenue was $1.69 billion. Taking into account a $40 million impact from the divestiture of our clinical services business, which closed in mid-October, together with the impact of FX, we delivered organic growth of 1%. Sales trends in our laboratory solution segment were stable compared to Q3. While seasonal impacts were muted, the business continues to show resilience as end markets continue to recover. Within our bioscience production segment, bioprocessing outperformed expectations for the fourth straight quarter with high single-digit growth. Adjusted gross profit for the quarter was $564 million, representing a 33.4% adjusted gross margin, which is flat versus Q3 and a modest improvement versus prior year. Our gross profit was impacted by the clinical services divestiture, inflation, and negative fixed cost leverage. However, we were able to partially offset these effects with improved mix and productivity efforts and we continue to work diligently on reducing our cost base. Adjusted EBITDA was $308 million in Q4, representing an 18.2% margin, which was at the high end of our expectations and a solid improvement sequentially and year-over-year. This is particularly encouraging given the approximately 40 basis point margin headwind from our clinical services divestiture in October. Our cost transformation initiative which continues to drive meaningful savings was an important contributor to our margin performance. Adjusted operating income was $279 million at a 16.6% margin in-line with adjusted EBITDA performance and a modest improvement both sequentially and versus prior year. Interest and tax expenses were in-line with our expectations. As a result, adjusted earnings per share were $0.27 for the quarter, a $0.01 sequential, and $0.02 year-over-year improvement. Our adjusted EPS performance in the quarter reflects the flow through of our adjusted EBITDA…

Thank you, Brent. Before we jump into Q&A, I want to thank our more than 13,500 associates across the globe for helping us deliver a great 2024. The progress we made this year implementing a new operating model and transforming our cost structure was significant and sets us up for even greater success in 2025 and beyond. With the successful transformation of our business into two complementary segments aligned with our customers' needs in the lab, and production environments, we’re better positioned than ever to execute on our growth strategy. Today, we support more than 300,000 labs around the world in 180 countries and have more than 2,500 on-site service associates working every day in customer labs. Our unparalleled footprint gives us privileged access and important insights into the challenges customers are working on. Insights we feed directly into our innovation pipeline. And our access to early phase research and development and design activities allows us to seed our custom proprietary materials into their production processes. We call it our beaker-to-bulk strategy and the model really works. Our global footprint has also enabled us to establish a highly resilient supply chain, featuring tremendous flexibility and redundancy built into our sourcing and manufacturing strategies. We plan for a wide range of scenarios and we know that things can change quickly, so we will continue actively monitoring developments and rapidly make any adjustments as needed. I am encouraged by our setup for 2025. Our sustained commercial intensity and cost transformation initiative drove sequential momentum throughout 2024. We have a solid plan for the year, and I am confident that we will continue to execute well. We expect a return to organic growth across the business, continued margin expansion and double-digit EPS growth. We will continue our best-in-class cash generation, accelerating our deleveraging. We delivered on our commitments for 2024, and I expect us to do the same in 2025. I will now turn it over to the operator to begin the question-and-answer portion of our call.

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Vijay Kumar with Evercore ISI. Please go ahead Vijay.

Michael, good morning. Thanks for taking my question. I guess at a high level, when I look at bioprocessing, some pretty good trends here in Q4. What were order trends in the quarter? And when you look at the guidance, mid-to-high single, there is a range, when you exit rate is high-single, so I'm curious was there any pull forward of orders ahead of tariffs or any macro uncertainty? Just if you can elaborate on bioprocessing assumptions?

Yes. Good morning. Vijay, thanks for the question. Yes, we agree. We had a really strong finish to the year in bioprocessing with high single-digit growth in the quarter, which builds on four consecutive quarters of outperformance for us. Nothing really unusual in terms of how the quarter developed, I don't think we’ve any evidence that there was a significant pull forward. The quarter played out pretty much in-line with our with our expectations. And I would just indicate that the underlying market fundamentals continue to be quite strong. De-stocking has largely subsided production levels have improved, we continue to see record levels of approvals. So strong order intake, another great quarter there with two month to three-month lead times, we are seeing that translate to revenue real time. Our experience in 2024, Vijay, was one of kind of gradual improvement, and that's kind of what we've planned on for 2025. And we entered the year with good momentum in an order book that sets us up for sustained recovery, as we move through the year.

Our next question comes from Michael Ryskin with Bank of America. Please go ahead.

Thanks. Just quick one following up on that, Michael just because you said sustained recovery through the year in [BP] (ph). But you are guiding to mid-single, high-single for the first quarter for bioprocess and mid-single, high single for the full-year. So this is just a matter of comps or just some concern, just some clarification question there. But then my actual question is going to be on the margins Brent, 80 bps year-over-year is the guide for 2025 to pointing to 18.5 at the midpoint. But one, you are giving a wide range on the margins a little bit wider than you have in the past in terms of its 100 bps range. Just curious why that's there. And also thoughts on margins beyond that. I think you talked about you're exiting – you are going to have an excess of $250 million in savings through '25, $300 million is the goal exiting '26. So looks like you are executing on some cost savings faster than you anticipated. Is that just a matter of timing? Or is it one of those things where as you are going through the business, you're finding more and more than you thought you would. So maybe there is some upside to that $300 million number for 2026. Thanks.

All right. Thanks, Michael. I'll do my best here to try to unpack some of that and let Brent can cover your questions on margins. When I think about our experience to-date on bioprocessing, recovery has been incremental, which as I said before, probably more sustainable. There's great pipelines across all modalities, mAbs with a lot of exciting things in ADCs and biosimilars, [selling gene therapy] (ph) is looking pretty good as well. And look, we're ubiquitous across all these modalities, and we continue to drive high penetration across new therapies and we continue to put more content on each new molecule. Because I think about the progress here sequentially and moving into 2025, as we said Q1 tends to be the low point for the year. And we think mid-to-high single-digit target for that business for the quarter is a prudent place to start. And we would contemplate or expect gradual improvement off of that as we move through the year.

Okay. Michael, thanks for the question. So -- and you had a few pieces to it there. But on the margin side, look, that's a sort of the art of where the point of that is going to be -- we had that range frankly, we thought round numbers made sense, and we didn't want a sense of false precision there. I mean I think zeroing in on the midpoint as you often do, there makes a lot of sense there. This platform does have meaningful fixed costs, and we get real leverage on that. The other thing there is if we get sales at the top-end of the range there, you will see us convert even better. So that's the other reason for some breadth to the range there. And you made the comment on the cost savings, which I think both is very fair. We've -- I don't know that it is necessary that we found more, but this place can be very action oriented. If we've seen opportunities, we've executed against them because it is much better to get the cost savings in an earlier period. I don't think, I’d call for the program to outperform quite yet. But I think you'll see very strong continued momentum there. So I just think everyone should feel comfortable that we are reading into that self-help as much as we can.

The next question comes from Dan Brennan with TD Cowen. Please go ahead. Your line is now open.

Great. Thank you. I wanted to ask a question on the lab side of the business. I know in the prepared remarks, you talked about think you mentioned macro and holidays, but it was a bit light in the fourth quarter, down on, I think you had guided for flat to up low single. So just some more color on how the quarter progressed versus expectations. And then similarly, if we think about your guidance for '25, I think you talked about low single. Just would love to just find out what are the puts and takes are on that low single. And then I have a follow-up.

Yes. Great. Thanks for the question, Dan. So as we think about the context for our lab performance in 2024, we entered the year assuming that 49% of our revenues would come in the first half, 51% would come in the second half, really driven off of kind of normal seasonality as we move through the end of the year. And that's what was implied from the beginning. Based on a more muted seasonal ramp, which was contemplated by the low-end of our guide, that's clearly, where we fail. Brent mentioned a few factors. Obviously, there is a bit of noise in the macro environment at the moment. We were uncertain given kind of a mid-week holiday there at the end of the year, how that would impact these activity levels were certainly muted as we move to the last week or two of the year and there really wasn't much of a budget flush outside of high-end instrumentation, which isn't really a big part of our portfolio. But -- so I’d say, the quarter played out generally in-line with our original expectations and I think underscores the resiliency of the business. The other thing I would say, Dan, is the quarter for me really highlights just how the model is starting to work again. You see nice margin expansion, as mix continues to improve. Certainly, the cost actions are flowing through. We continue to have best-in-class free cash flow conversion margins at the high-end of the guide, delivering on our EPS guidance from beginning of the year. So I think there is a lot to like about the quarter here and some good evidence that the model is starting to work again.

Our next question comes from Rachel Vatnsdal with JPMorgan. Please go ahead, Rachel.

Hi, thanks. Good morning. Thank you for taking the question you guys. So I wanted to ask some questions related to the new administration and policy impacts. You've had a number of your peers call out a certain level of prudence embedded in their guide for risks related to this new administration and potential policy changes. I didn't necessarily hear that in your prepared remarks at all. So can you talk about have you embedded anything for policy risk into this guidance? And then along those lines, given some of the headlines we've seen so far to start the year with things like NIH budget freezes and [RFK nomination] (ph), have you seen any changes in customer behavior related to your academic and government or pharma biotech customer base?

Yes. Thanks for the questions, Rachel. I think all really relevant topics, of course. A few things on the new administration. I'd just call your attention to the obvious facts only been a couple of weeks since they've been in office. It is obviously early days. On one hand, I think we are excited about the overall business environment that this administration is likely to create, which is expected to be more business friendly and focused on economic growth. Specific to NIH funding, certainly during a lot of ideas being discussed, nothing formal yet in terms of funding plans or policies. As we've said before, we have relatively modest direct exposure to NIH. But of course, particularly in the academic segment, we know that some of our customers do rely on that funding for the programs. But from the language we've seen so far in the areas that are likely to be impacted, it doesn't appear to us that it is areas where we would have significant exposure. And at the end of the day, I think what gives me the confidence here in our outlook for the year is good science continues to get funded. And we will, of course continue to monitor the environment and adjust accordingly. But I think net-net, it is hard to predict exactly what all these policies that are being bantered about and ultimately have. But to the extent that it creates a more positive business environment, we would think that would be constructive. And of course, we will continue to look to leverage our broad footprint and flexibility to ensure we continue to deliver value to our customers.

Our next question comes from Douglas Schenkel with Wolfe Research. Please go ahead Doug.

Hi. This is Matalan on for Doug. It seems like bioscience and bioprocessing in particular, have been starting to have a bit of a resurgence, while based on the fourth quarter and also the guidance, the lab business has been more under pressure for both you and peers. If this trend continues and exacerbates, how could that impact margins? And could that be an area of upside for margins versus the guide?

Yes. I mean, look going back to the original -- the comments I may do a couple of questions ago. I mean we do have fixed costs. And absolutely, if you have less in the lab, we will under-absorb against those fixed costs. I think that's pretty arithmetic. I think when you look at our guidance, we look at all kinds of scenarios, and I think we've been very prudent about that, but we also got questions about the breadth of the ranges here. If we do see a resurgence there, both that absolutely would allow better conversion. I mean, you see just what a modest increased organic growth does for this business against margin across both sides of it there. And obviously, you come in with higher margins on the Bioscience side of it. So it is easier to see those impacts. But even a moderate increase in growth in lab will be very nice for margins here.

Our next question comes from Tycho Peterson with Jefferies. Please go ahead Tycho.

Hi, thanks. I want to probe on a couple of things. So academic government down low-single digit. But Michael, you did call out academic as strong. I'm just -- is that K-12? And I think usually, that's a 3Q benefit, not a 4Q benefit. So curious about that. And then you flagged share gains for lab. Curious where you are kind of seeing the most in terms of gains. And then lastly, just bioprocess, mid-to-high single digits consistent with some of your peers, but others are firmly kind of endorsing high single digits. So what's your view on kind of market growth? And how much conservatism, I guess, is what everybody is trying to figure out in that mid-single digit to low-end of the range. Thanks.

Yes. Thanks for the question. Tycho let’s unpack there. Starting with our education and government performance, that's been a real bright spot for us throughout the year, as I said in my prepared remarks, it can be a bit lumpy. I think you've got the phasing on our K-12 exposure about right. So that piece certainly would have been down sequentially relative to just the normal timing of when those K-12 districts update their curriculum in the materials. But we've got a track record here now over a couple of years of sustained commercial intensity that is clearly leading to outperformance in our higher education platform. I think with some of the macro noise and some of the expected changes with the new administration that the government piece was a bit weak in the quarter. But we continue to, I think be quite confident about the work we are doing on the education side of that business. When you think about the guide and the outlook for bioprocessing. Look, I think I'd say a couple of things. One, we are assuming Q1 is a low point and things will improve from there. Of course, the comps get a little bit more difficult as you move through the year as well. But we view 2025 as a year of continued gradual improvement. We really like the setup for the year, strong order book, strong momentum. I think we are trying to be prudent here out of the gate and just reflect some of the macro environment, and obviously, we will be pushing to grow that business as fast as we can. But we like the positioning we like to set up -- we had a great finish to the year. I think we are encouraged by where we are at.

The next question comes from Luke Sergott with Barclays. Please go ahead, Luke.

Great thanks guys. Just kind of like following up on what everybody is trying to figure out is starting the year slower than what was expected. And then so it implies another pretty sequential impressive ramp throughout the year, bioprocessing, maintaining your growth. And so as you look across the rest of the book, what is it going to get better? And what's the visibility on that, like especially as you think about U.S. semis and the government funding, et cetera, with labs?

Yes, Luke, a couple of things. One, I'd reiterate kind of the phasing that we've implied in our guidance today, which is typical for our business, 49% of our revenue in the first half, 51% of our revenues in the second half. So -- not a lot of ramp here implied in our numbers. I think from a processing standpoint, we see mid-single digit growth to high single-digit growth in the first quarter as well on a full year basis, which given that comps improve or get more challenging as we move through the year, that just reflects good steady improvement from that end-market as things continue to normalize. In the lab business, we have contemplated relatively stable end-market conditions. We are not really expecting or needing any heroics to occur there for us to deliver on our guide with an assumption that will realize normal contributions from price. And that that phases in, as we've talked about in previous years, as we move through the first quarter and should be in place fully by the time that we get into the second quarter. So those are some of the puts and takes, Luke, on how I think about the setup for the year, so hopefully that's helpful to you.

Our next question comes from Patrick Donnelly with Citi. Patrick, please go ahead. Your line is now open.

Hi, guys. Thanks for taking the question. Maybe to follow up a little bit on Luke there. I know he touched on the semi piece. Can you guys just kind of expand a little bit on what you saw in the quarter broadly in advanced technologies. I know the semi piece jumped out last quarter and bit the margins a little bit. Just the outlook on that part of the business, as we work our way through the year impact to margins would be helpful. Thank you guys.

Yes. Good question, Patrick. Firstly, just remind the group here that semi is a relatively small part of our overall VPS segment. And as we talked about it in the third quarter, the conditions in that end-market, particularly with some of the larger customers here in the U.S. deteriorated pretty meaningfully in Q3 and our Q4 plan was assuming that things would be relatively stable sequentially, which is how the quarter played out. So it wasn't an incremental headwind on a sequential basis to us. And -- as we think about what's factored into the guide for 2025, we have assumed that things will stay relatively stable at the levels that we saw in the second half of this year. So we will not be taking any recovery in that for that end-market. It will be a pretty meaningful headwind to us in Q1. That was the high point of that market for the year. So we've got a pretty tough comp for our semis business there. And so that's also part of what we've contemplated in our guide there that offsets the good momentum on our new sole platform and our bioprocessing platform. But we continue to stay close to our customers and I think we are encouraged to see that things have stabilized a bit here, but not really anticipating any recovery, as we move through the year.

Patrick, I'd just add on. You had a piece about margins in connection with semis there. And we had commentary last quarter, that was more about a surprise versus where that went. But when you think about what the setup for '25 is here and what that means with this level of bioprocessing growth with this level of bioscience growth, that will definitely have us mixing up, and you can see that into the margin guide. So -- just want to be clear that you don't see the comments on electronic materials there is problematic to margin in the year. It is absolutely baked into our expectations.

Our next question comes from Tejas Savant with Morgan Stanley. Please go ahead.

Good morning and thanks for taking the time here. Brent, a couple of quick cleanups in the guide for you. Can you just remind us of how the 200 bps FX headwind and the top-line impacts EBITDA and then the EPS-line? And second, bioprocessing, a lot of questions here, but Michael, can you confirm that in steady state, you still expect that to be a double-digit grower for you? And then lastly, on M&A. You guys have been pretty cautious on sort of reprioritizing that. Brent, you mentioned cost outs and debt pay downs. That said, a lot of your peers are opportunistically dusting off their M&A playbooks given a more benign regulatory backdrop and a decent rate environment. And you don't want to presumably sort of miss the boat, so to speak, on the pick of the litter, right, among the assets out there. So could we see you sort of revisit that strategy a little bit sooner than you've indicated recently. Thank you.

So here real quick on the modeling cleanups there, Tejas. So the – we are more than 50% U.S. dollar in our business, but we have significant exposure to the euro. So you'll see in the footnotes on the page there that we are modeling based off a year dollar of $1.03. Now what we realized in '24 was $1.08. So that's what on the math basis gets you about a 2% headwind. So that's kind of $135 million of revenue as that rolls down, that would be approximately $25 million of EBITDA, $0.03 of EPS. So that's the FX modeling impact.

And then Tejas I think – cleanup the other two questions you had. Firstly, on bioprocessing, Yes, I think our conviction level on double-digit growth for that platform is still fully impact as we highlighted at a recent conference earlier in the year, we like, of course, the positioning we have today with more than 85% penetration of the commercialized platforms. And as we look ahead, we see that growing to over 90%, including five of the five top blockbusters. So very, very strong positioning. Our innovation engine is hitting on all cylinders there and we continue to have strong conviction on how that end market will play out for us over the long term. From an M&A standpoint, good question. Obviously, we've been squarely focused on paying down debt. We paid down well over $2 billion over the last couple of years. and our leverage stands at 3.2 times, as we enter 2025. So we'll definitely get below 3 times at some point this year. And as we said in our prepared remarks, at that point, we'll certainly have some flexibility here. As it relates to M&A, that remains an important part of our long-term playbook, and we continue to be active in building our pipelines and linking those pipelines to our business strategies. And I think we have some clear areas of focus where we think we can add significant value over time. But I would reiterate that we are committed to running the business sustainably below 3 times. And so I think you will see us be prudent here as we work through this transition into a more flexible allocation policy.

Our next question comes from Conor McNamara with RBC Capital Markets. Please go ahead.

Great. Thanks for taking the question. Michael, you talked about the new distribution agreements at the start of the call. Can you just talk about the impact of those agreements to your overall third-party business? And if that business was down in the quarter and the year. How should we think about longer term when that returns to growth? And then just are these new agreements margin accretive to the third-party business.

Yes. Really great questions, Conor. Thanks for bringing that up. So as we think about the setup for our lab business for the year, we are anticipating low single-digit growth for that platform in 2025. So we are certainly looking forward to returning that to organic growth. Our algorithm, our long-term growth algorithm contemplates that business being low to mid-single-digit growth. So certainly, we are starting to get into that envelope where things are certainly normalizing. And one of the important attributes on how you grow that business, of course, is ensuring that you have the right portfolio to bring differentiated technologies to your customers to help them solve their most current challenges. And so we have a very vibrant innovation portfolio, and that includes the work we do in our own R&D centers and bringing those technologies into the market. But of course, an important part of the model is working with the supplier community to help them bring their innovations to the market. And so really, what I was just trying to highlight for you today some of the more notable milestones in that regard in the quarter. And each one of these is somewhat incremental in nature. And we would, on average launch roughly 100,000 new products a year, Conor. And so you can kind of get a sense there for how important this is to our business. And I think it is just another good data point that shows the focus that our new operating model is bringing us and the setup that we have going into the year. So with some of these new technologies, new supply arrangements, together with the impact of pricing, we’re looking forward to having that platform grow again for us here as we move into '25.

Our next question comes from Matthew Sykes with Goldman Sachs. Please go ahead.

Hi. This is Ivy on for Matt. Thanks for taking my questions. So I understand there is a more muted impact seasonally in 4Q, but can you talk about what you're seeing in terms of large -- or large pharma versus emerging biotech customer cohorts? And then any puts and takes you could provide there?

Yes, happy to. So I think it is kind of [a teller to cities] (ph) if you will there. We are rather encouraged by what we are seeing out of large pharma. There's been quite some notable headwinds there on preclinical activities as they've been reprioritizing pipelines and working through a number of adjustments to their spend and such. And now for a couple of quarters in a row, we are starting to see large pharma return to growth, and we actually had a pretty nice quarter with large pharma in our lab business and seeing across that space, both in Europe as well as in the Americas, a nice return to growth there. On the other end of the spectrum, of course, is the biotech activities. And we know that on a year-over-year basis, biotech funding was up but it probably doesn't tell the whole story. It took a pretty meaningful jump in Q1 of last year. And it fell sequentially each and every quarter through the end of the year. And so activity levels there continue to be a bit bifurcated. We see some of the more established biotechs doing okay and growing. But the traditional start-up we're not seeing the same level of activity there as what we would normally expect. But that continues to be a bit of a headwind for us. But we are encouraged by some of the activity levels we're seeing across the space, particularly and notably the momentum we are seeing with large pharma pickup again.

Our next question comes from Brandon Couillard with Wells Fargo. Please go ahead, Brandon.

Thanks, good morning. Brent, just a clarification. I think you mentioned fewer selling days in the first quarter. Is that down sequentially as well? Could you just quantify the contribution and the impact relative to the flat organic guidance? Are there any other variances to be aware of as we move through the year?

On Q1 that's down year-over-year, it's not down sequentially there, but certainly that does have an impact. It is not where the full year figure there. But no, I think when you think about the Q1 set up there, again, we are talking about being -- lab being stable. We recognize there's the other noise out here, but there are always puts and takes in the business there and then you blend that with bioscience being up mid there and -- I'm sorry, by a process of mid-to-high that's just -- we're being cautious about the quarter, and I don't think that makes us an outlier with what you are hearing from other people there caution on Q1.

Our next question comes from Jack Meehan with Nephron Research. Please go ahead Jack.

Thank you, and good morning. Two quick follow-ups. One was just on the model for Brent. Interest expense, $50 million in the fourth quarter. Was there anything onetime in the $45 million in 4Q? Or why would it step up sequentially. And then for Michael, just any comments on the education market, which declined low singles in the quarter. Was that just seasonal factors holidays or something else that you're seeing there? Thank you.

Yes, Jack, we had -- there's a little bit of accounting in the interest expense there with unamortized fee -- or amortized fees going through and we also do have a decent amount of [euro] (ph) debt, so you have FX running through out there. And our guide to the year is [1.80 to 1.90] (ph) there. So 50, when you have deleveraging throughout the year there, that's just sort of the kind of dollar cost average down for the year.

And then, Jack, your question on education. I think I shared some thoughts on this earlier, but just to reiterate, we continue to be very satisfied with the share gains we're driving in the higher ed space, we are probably seven or eight quarters into that trend driven-off of our sustained commercial intensity there. And we also had -- I would note some really meaningful share gains on the biopharma side of things as well in the quarter. A couple of things to note in 4Q, the K-12 exposure that we have is a little bit more muted in the quarter, particularly as you move sequentially just given how the districts manage their curriculum updates and such. The government piece was somewhat muted presumably owing to some of the uncertainty associated with the administration change. But -- the higher ed piece continues to be a bright spot for us, and we would anticipate that momentum continuing into 2025.

Thank you. Those are all the questions we have time for today. I will now turn the call back over to Michael for closing comments.

Yes. Thank you, and I certainly appreciate you all joining us today. Just would reiterate some of our key messages here as we turn to 2025. We are encouraged by our expectations of returning the platform to growth. We are anticipating continued momentum and leadership in bioprocessing. Another year of strong margin performance and leveraging our Avantor Business System, you should expect continued discipline and execution around our free cash flow generation. I think, our guide at the midpoint here of double digit EPS growth is, quite notable. And I think we're encouraged that we see our model working again in end markets starting to cooperate again. So again, I appreciate you joining us today. We certainly look forward to updating you when we meet next. Until then, be well everyone. Thank you.

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