BRUKER CORP Q3 FY2025 earnings call

• Q3 performance was better than expected with sequential improvement, including mid-single-digit organic bookings growth and Scientific Instruments book-to-bill above 1.0.
• Cost savings initiatives for 2026 are progressing towards the $100 million to $120 million target, aiming for margin expansion and double-digit EPS growth.
• BioSpin Group: Saw growth in lab automation and services but was offset by tough comparison with 2 GigaHertz class NMR systems in Q3 2024.
• CALID Group: Grew due to microbiology and infectious disease diagnostics, with life science mass spectrometry seeing early traction for new products.
• Bruker Nano: Declined slightly with weakness in advanced X-ray and Nano analysis tools but strength in spatial biology.
• BEST: Revenues declined with clinical MRI superconducting wire market improving but research instruments weaker.
• Focus areas: Spatial biology, proteomics, multiomics, innovative diagnostics, and automated AI labs as profitable growth opportunities.

In the third quarter of 2025, Bruker's reported revenue decreased 0.5% to $860.5 million, with an organic revenue decline of 4.5%. Scientific Instruments organic revenue declined 5.4%, while BEST had 6.9% organic growth net of intercompany eliminations. Year-to-date 2025, total revenue was $2.5 billion, with an organic revenue decline of 3.1%. For the BioSpin Group, CER revenue was down mid-single digits. CALID Group revenue increased in the low double-digit percentage. Bruker Nano declined in the low single-digit percentage. BEST revenues declined mid-single digits net of intercompany eliminations.

• Full year 2025 revenue expected in the range of $3.41 billion to $3.44 billion, reflecting an organic revenue decline of 4% to 5%, M&A contribution ~3.5%, and foreign currency tailwind ~2.5%, resulting in reported revenue growth guidance of 1% to 2%.
• Operating margins expected to decline ~250 basis points year-over-year.
• Non-GAAP EPS for 2025 expected in the range of $1.85 to $1.90, with double-digit EPS growth anticipated in 2026 due to cost savings initiatives despite MCP offering dilution.

• Geopolitical risks, tariffs, foreign currency fluctuations, market demand and supply chain uncertainties.
• Impact of government shutdown on grants, orders, and installations.
• Uncertainties related to NIH, NSF, and DOE budgets for research.

Q: First one on the book-to-bill, good to see more than 1, and congrats on the quarter, just given the order momentum you're seeing here. But just wondering how has that trended in the fourth quarter? Are you continuing to see the mid-teens organic order growth here? And maybe could you elaborate a bit just a number of moving parts here. How is the international momentum continued? Is it more ACA/GOV versus pharma? And maybe tell us a bit more on the academic side of the U.S. Are you starting to see some recovery there given the points you mentioned, DNP and a couple of other points you mentioned in the slide.

A: Yes. Thank you very much, Puneet. So we really don't have Q4 data yet. It's too early. So I just can't comment on Q4. There's no meaningful data available yet. Moving parts, ACA/GOV, the strength in ACA/GOV orders was primarily outside of the United States. but the United States were less weak, all right, less soft, is that a word. Anyway. So Q3 was better in the United States for ACA/GOV orders than Q2, and we saw some orders come through. I gave you some NMR examples. But of course, it was more -- it was broader than that, also included TIMS stuff and microscopes and other stuff. They're hard to say what's the trend in the U.S. because there clearly in the U.S., there was a little bit of catch-up in Q3 compared to Q2 and maybe even Q1 in ACA/GOV orders in Europe and Japan and a little bit in China also. That's why there might be green shoots were quite encouraging, and that's why our ACA/GOV orders year-over-year were up considerably in Q3. Don't think that we're now in a high teens growth trend all of a sudden. That's just a quarter and Q3 '24 was not the strongest. But anyway, it was very encouraging. And we hope that will continue in Q4, but I wouldn't -- and yes, the activity and opportunities are great and are encouraging, but I wouldn't read anything into that yet. Just too early to comment on Q4. We do need Q4 to then give more meaningful growth and margin numbers for 2026. We're not going to do that today. We're not able to do that today until we really see how Q4 comes in, particularly the orders, obviously. To the other moving pieces, Puneet, yes, biopharma has been reasonable in -- or okay, not great, but okay in the first half of the year, much better in the third half of the year in terms of orders, a particular strength there in the U.S., but also outside of the U.S., but ACA/GOV -- sorry, biopharma, particularly in the U.S. And the applied market strength, which is a good sign of macroeconomic trends, that was pretty -- that had a pretty broad international distribution. I don't know that I would highlight any geography there. So that may add some color to the admittedly multiple moving pieces and the effect of Bruker that prior order weakness now shows up in the P&L, whereas the new order improvements and encouragement and maybe this momentum if Q4 goes well, is more likely to -- will show up all in 2026. I hope that helps.

Q: Could you give us the impact of the government shutdown that you're seeing in 4Q? And is that baked into the updated outlook?

A: Well, that's a good question, and it's not formally baked into our outlook. So far, we have assumed that the effect will be relatively minor. But indeed, if this were to continue for a full second month or so, then this may delay some new grants, some orders. It could also delay some installations. So far, we haven't become aware of anything that gets -- we think that our Q4 guidance is now appropriately conservative to absorb some of that and maybe what we've seen so far, but know if there was a further multi-week or multi-month shutdown that could have additional impacts that are not presently in our guidance.

Q: I want to pick up on that margin point. So it sounds like you are committing to the 300 basis points of margin expansion even if the top line is flat. I guess, given that you're running at the high end of the $100 million to $120 million cost savings target in the near term, should we interpret the upper end of savings is simply kind of increasing confidence in hitting that margin target next year? Or could you think you could potentially do better?

A: Okay. So nice question, Tycho. I wasn't confirming a number. I know you've mentioned one. I'm not saying take that number out of your model, but I'm not confirming it either. We are -- I think the second part of your question, I think it's fair to say we hope to have increased confidence in getting to very significant margin expansion and double-digit EPS growth all in, including the MCP, and that's exactly why we're driving towards the high end of our cost-cutting target. So you're spot on with that one.