Bruker Corporation

Good afternoon and welcome to the Bruker Corporation third quarter 2021 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Miroslava Minkova. Please go ahead.

Thank you, Gary. Good afternoon. I would like to welcome everyone to Brooker's third quarter 2021 earnings conference call. My name is Miroslava Minkova, Senior Director of Investor Relations and Corporate Development at Brooker Corporation. Joining me on today's call are Frank Lauken, our President and CEO, and Gerald Herman, our Executive Vice President and Chief Financial Officer. In addition to the earnings release we issued earlier today, during today's conference call, we'll be referencing a slide presentation. The PDF of this presentation can be downloaded from the Latest Results section on Brokers Investor Relations' website. During today's call, we'll be highlighting non-GAAP financial information. Reconciliations of our non-GAAP to GAAP financial measures are included in our earnings release and are posted on our website at ir.broecker.com. Before we begin, I would like to reference Broecker's safe harbor statement, which I show on slide two. During the course of this conference call, we'll make forward-looking statements regarding future events and the financial and operational performance of the company that involve risks and uncertainties, including those related to the ongoing COVID-19 pandemic the spread of the Delta variant, as well as ongoing supply chain challenges, global logistics, and inflationary risks. The company's actual results may differ materially from such statements. Factors that might cause such differences include, but are not limited to, those discussed in today's earnings release and in our Form 10-K, as updated by our other SEC filings, which are available on our website and on the SEC's website. Also note that the following information is related to current business conditions and to our outlook as of today, November 1st, 2021. We do not intend to update our forward-looking statements based on new information, future events, or for other reasons prior to the release of our fourth quarter 2021 financial results expected in February 2022. Therefore, you should not rely on these forward-looking statements as representing our views or outlook as of any date subsequent to today. We will begin today's call with Frank providing a summary. Gerald will then cover the financials for the third quarter in more detail. Now, I'd like to turn the call over to Brooker's CEO, Frank Laukin.

Thank you, Miroslava. As you may know, this will be Miroslava's last earnings call with us. Gerald and I would like to thank her for her successful work in investor relations and corporate development over the last five years, and we wish her the best going forward. Now, good afternoon, everyone, and thank you for joining us on today's earnings call. As you can see on slide four, Brooker delivered another excellent quarter with sustained momentum in bookings, revenues, margin improvement, and EPS growth. Our teams continued to innovate and to execute very well, managing through well-publicized supply chain challenges. I am confident that Bruker is now well on track for excellent financial and operational progress in 2021. For the third quarter of 2021, Bruker's revenues increased 19.1% year over year to $609 million. On an organic basis, revenues increased 17.8% year-over-year, which included 16.8% organic growth in the broker scientific instruments groups and 29.3% at best net of intercompany eliminations. Our third quarter 21 non-GAAP gross margins expanded 210 basis points year-over-year to 51.7, while our non-GAAP operating margin reached 20.6%, an improvement of 200 bps over 18.6% in the third quarter of 2020. In the third quarter of 2021, Bruker reported GAAP diluted EPS of 57 cents compared to 35 cents reported in the prior year period. On a non-GAAP basis, The third quarter of 21 diluted EPS were 63 cents, an increase of 50% from 42 cents in the third quarter of 2020. And Q3 of 2021 included a tax benefit of approximately 6 cents on certain discrete items, as Gerald will explain later. In summary, It was an excellent third quarter with strong revenue growth, operating leverage, and favorable tax performance, which all dropped through to the bottom line, even as we continue to step up our project Accelerate 2.0 and operational excellence investments. On slide five, we show broker's performance for the first nine months of 2021. Our revenues increased by 374.4 million year over year or by 27.5 to 1.734 billion in the first nine months of 2021. On an organic basis, revenues grew 22.6% year over year, comprised of 22.9% organic growth in scientific instruments and a 19.2% organic increase At best, net of intercompany eliminations. During the third quarter of 2021, we again experienced strong demand and order bookings in both our core and project accelerate businesses. Geographically, we saw excellent order trends in North America and the Asia Pacific region, including China, with slower bookings performance in Europe, primarily due to strong comparisons from the third quarter of 2020. Year to date, third quarter 2021 order bookings for our scientific instruments groups was more than 20%. Bookings growth for our scientific instruments groups was more than 20% on an organic basis, driven by customer demand in our academic and government, life science, diagnostics, biopharma applied industrial, and our semiconductor metrology businesses. Year to date, third quarter 2021 non-GAAP growth and operating margin and GAAP and non-GAAP EPS performance all stepped up significantly year over year as our business recovered strongly from the pandemic and accelerated beyond what a recovery would imply. Please turn to slides six and seven now, where we highlight the year-to-date third quarter 2021 performance of our three scientific instruments groups and of our best segment, all on a constant currency and year-over-year basis. Year-to-date, the BioSpin group revenue grew in the low 20s percentage year-over-year to $494.4 million. During the first nine months of 2021, BioSpin saw strength in demand for its NMR, preclinical imaging, and aftermarket offerings, while system installation activities recovered. BioSpin systems revenue was up strongly year over year, including revenue recognition on three gigahertz class NMR systems year to date. During the third quarter, BioSpin achieved revenue recognition of its third gigahertz class system this year, a 1.2 gigahertz NMR installed at Utrecht University in the Netherlands. We continue to expect the fourth gigahertz class system to turn into revenue in the fourth quarter of 2021. In the third quarter, BioSpin revenue benefited from the earlier timing of revenue recognition of certain systems in China previously expected to be delayed to the fourth quarter due to timing of receipt of required paperwork in China. Year-to-date, the CALIT group revenues increased in the mid-20s percentage to $579.9 million, with continued growth in our mass spectrometry and microbiology businesses and very strong performance in our FTIR, NIRR, Raman molecular spectroscopy product lines. We again saw strong revenue growth for our TIMSTOF unbiased 4D proteomics platform, while revenue for other life science mass spec products like our research Malditoft product line rebounded as well. Please note that tomorrow, Bruker will host an ASMS 2021 scientific press conference at 11 a.m. Eastern Time, and that next week we will have the International EUPO Conference, both with significant Bruker proteomic solutions innovations, including in unbiased single-cell proteomics. Microbiology and molecular diagnostics revenue grew year over year, driven by healthy demand for multi-biotyper instruments and consumables, including accelerated growth in the U.S. This was coupled with continued recovery of Brooker Heinz tuberculosis diagnostics products, while during the third quarter of 2021, our revenue from SARS-CoV-2 PCR testing has declined further to about $5 million. Year-to-date revenues for our FTIR, NEAR-IR, and Raman molecular spectroscopy products were substantially higher year-over-year, with strong execution and a rebound from 2020 on strong global industrial applied and academic demand. Turning to slide seven now, year-to-date broker nano revenues grew in the mid-20s percentage to 504.6 million. Nano's industrial and academic businesses rebounded strongly, with industrial research outperforming our recovery expectations. Revenues for advanced X-ray, nano surfaces, and nano analysis tools all stepped up substantially versus the year-ago period. Nano's microelectronics and Semicon metrology tools continue to perform very well on a year-to-date basis with ongoing strong bookings and backlog. Life science, fluorescence microscopy revenue was up sharply year-over-year on product innovation and strong academic demand. Year-to-date, Nano revenue included a contribution from our September 2020 acquisition of Canopy Biosciences single-cell targeted proteomics tools and CRO services. Late in the third quarter of 2020, the Bruker Nano Group closed two small acquisitions, adding X-ray inspection and film thickness measurement tools to its microelectronics advanced packaging and semiconductor metrology portfolio with relatively small revenue contributions expected in the fourth quarter. Turning to best year-to-date, best revenue grew in the high teens percentage, net of intercompany eliminations, driven by contributions from big science projects and a recovery in MRI superconductor demand by our MedTech OEM customers. Best superconductor demand appears healthy, but we have seen supply chain challenges due to material shortages, and slow logistics. Moving to slides 8 and 9 now, we continue to make good progress with many of our Project Accelerate 2.0 initiatives. On slide 8, I highlight progress with our multi-biotyper franchise in the U.S. As many of you are aware, our penetration with a multibiotyper in the U.S. lags the European markets. And as you can tell here, as of June 2021, we had more than twice as many multibiotypers installed in Europe than in the U.S., so we have a lot more potential in the U.S. Since our sepsityper FDA clearance late in December 2021, we're delighted that more than 100 U.S. customers or nearly 100 U.S. customers have already obtained the workflow adoption training at the end of the third quarter, with many more scheduled for the fourth quarter. If you recall, our multibiotyper sepsityper kit for clinical microbiology provides rapid and affordable identification of more than 400 microorganisms from positive blood culture, very relevant for sepsis when every hour counts and time matters, for outcomes and survival. Year-to-date, as of the end of the third quarter of 21, this has resulted, or this has helped, with greater than 50% year-over-year multi-biotype or order growth in the U.S., including recovery from COVID, including recovery, of course, from the COVID impact in 2020. But again, it seems like it's more than just a recovery. As shown on slide nine and discussed on our second quarter 2021 conference call, in June of this year, the U.S. National Science Foundation announced a $40 million award to establish a Network for Advanced NMR, or NAN, among three U.S. academic institutions, the University of Connecticut School of Medicine, the University of Georgia Complex Carbohydrate Research Center, and the University of Wisconsin in Madison's National Magnetic Resonance Facility. Recently, we announced receipt of a second 1.1 gigahertz NMR order funded by this NSF NAN grant. The second system was ordered by the University of Georgia and will be used for solution state NMR. This follows the initial NAN-funded order for a 1.1 gigahertz NMR at the University of Wisconsin-Madison for solid state NMR. We're very encouraged by the growing interest in gigahertz class NMRs in the US, which will benefit research into a diverse set of scientific problems in functional structural biology, disease biology, and material science. So in summary, during the third quarter and the first nine months of 2021, Gruker delivered excellent progress against our strategic and financial objectives. Our core businesses have rebounded very strongly, and our project accelerate high growth, high margin initiatives continue to do well. Operationally, our teams continue to successfully navigate a challenging supply chain and logistics environment where we have invested in increased buffer inventories and vendor commitments to protect our revenue growth and our P&L. For the remainder of the year and as we move into fiscal year 2022, our high backlog flexibility positions us well to manage supply chain and logistics challenges although risks remain. We also made further investments in our dual strategy of Project Accelerate 2.0 and operational excellence. I'm very pleased with our performance year to date, and we are now well on track for an excellent year, and we are further raising our guidance for the full year 2021. Let me now turn the call over to our CFO, Gerald Herrmann, who will review our financial performance and outlook in more detail. Gerald.