Bruker Corporation

Good day and welcome to the Brooker Second Quarter 2022 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 a touch-tone phone. To withdraw your question, please press star Please note, this event is being recorded. I would now like to turn the conference over to Justin Ward, Senior Director of Investor Relations and Corporate Development. Please go ahead.

Thank you. Good afternoon. I would like to welcome everyone to Bruker Corporation's second quarter 2022 earnings conference call. My name is Justin Ward, and I am Bruker's Senior Director of Investor Relations and Corporate Development. Joining me on today's call are Frank Laukeen, our President and CEO, and Gerald Herman, our Executive Vice President and CFO. In addition to the earnings release we issued earlier today, during today's conference call, we will be referencing a slide presentation that can be downloaded from the Events and Presentations section of Brooker's Investor Relations website. During today's call, we will 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.bruker.com. Before we begin, I would like to reference Bruker's safe harbor statement, which is shown on slide two of the presentation. During this conference call, we will 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 geopolitical and energy risks, the COVID-19 pandemic, and supply chain logistics and inflation challenges. 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 for the period ending December 31, 2021, and as updated by our other SEC filings, which are available on our website and on the SEC's website. Also, please note that the following information is based on current business conditions and to our outlook as of today, August 3, 2022. We do not intend to update our forward-looking statements based on new information, future events, or for other reasons except as may be required by law prior to the release of our third quarter 2022 financial results expected in early November 2022. You should not rely on these forward forward-looking statements as necessarily representing our views or outlook as of any other date after today. We will begin today's call with Frank providing an overview of our business progress. Gerald will then cover the financials for the second quarter and first half of 2022 in more detail and share updated fiscal year 2022 financial outlook. Now, I'd like to turn the call over to Brewker CEO, Frank Laukeen.

Thank you, Justin. Good afternoon, everyone, and thank you for joining us on today's second quarter 2022 earnings call. Turning to our slide four, in the second quarter of 2022, Brooker delivered robust bookings growth with organic bookings growth again outpacing organic revenue growth. In the second quarter, we launched several compelling product innovations across our portfolio, and our strong organic revenue growth of 8.8% was 160 bps above consensus. This solid performance came despite operational headwinds from significant supply chain and logistics delays, lockdowns in China, and the conflict in Europe. We again saw excellent demand for our differentiated high-value scientific instruments and life science solutions, as evidenced by the strong momentum in organic bookings and revenue growth. For the second quarter of 2022, our broker scientific instruments, or BSI segment, organic bookings were up double-digit percentages year over year, and our BSI book-to-bill ratio remained greater than 1%. Finally, our BSI backlog remains very high. Brooker's second quarter 22 reported revenues increased 3.1% year-over-year to $588.4 million, despite a strong FX headwind of minus 7.3%. On an organic basis, revenues increased 8.8%, which included 8.1% organic growth in BSI and 15.1% at best net of intercompany eliminations. while growth from acquisitions added 1.6%. This implies constant exchange rate growth of 10.4% year-over-year. Our second quarter 22 non-GAAP gross margin increased 180 bps year-over-year to 51.8%, while non-GAAP operating margin was 16.6%, a decrease of 70 bps year-over-year. Our gross margin expansion, despite inflation headwinds, is clearly benefiting from our Project Accelerate 2.0 margin mix, as well as from volume leverage and currency tailwinds. In the second quarter, gross profit margin expansion was more than offset by our planned Project Accelerate 2.0 operating expense OPEX investments in commercial and R&D capabilities. In the second quarter of 22, Bruker reported GAAP diluted earnings per share of 33 cents compared to 38 cents reported in the second quarter of 21. On a non-GAAP basis, second quarter of 22 diluted EPS was 45 cents up a penny from 44 cents in the second quarter of 2021. Gerald will discuss the drivers for margins and EPS later on. In summary, the second quarter of 22 again saw strong demand for our differentiated products as we ramped our OPEX investments in Project Accelerate 2.0 to capitalize on the major opportunities in proteomics and spatial biology, as well as in biopharma, applied markets, infectious disease diagnostics, cancer research, and semiconductor tools. Moving on to slide five, you can see Brooker's performance for the first half of 2022. Our revenues increased by 5.1% to $1.183 billion. On an organic basis, revenues grew 9.6% year over year, consisting of 8.8% organic growth in scientific instruments and 17.9% organic growth at best. net of intercompany eliminations. First half 2022 order bookings for brokers three scientific instruments groups grew double digits year-over-year organically, and our BSI book-to-bill ratio for the first half remained above 1.1. Geographically, our first half 2022 order bookings were up double digits year-over-year organically in all major regions. Our first half 2022 non-GAAP growth and operating margin and GAAP and non-GAAP EPS performance are all summarized on this slide five. And we are particularly pleased with our 160 bps growth margin expansion year over year, which speaks to the value of our products and solutions. Our trailing 12 months return on invested capital, a non-GAAP measure was 25.9%. which puts us among the leaders in our industry. We believe this is the result of our strong broker management process and our focus on disciplined entrepreneurialism and organic growth supplemented by selected bolt-on acquisitions. Please turn to slide six and seven, where we highlight the first half 2022 performance of our three scientific instruments groups and of our best segment, all on a constant currency and year-over-year basis. In the first half of 2022, BioSpin Group revenue was $318 million and grew in the high single-digits percentage. Please note there was one gigahertz class NMR system recognized in revenue in the first half of 2022 compared to two in the first half of 2021. We continue to expect four gigahertz class NMRs in revenue in 2022 with one in the second quarter, and we expect one in the third quarter and two in the fourth quarter. BioSpin saw robust growth in applied markets revenues as well as from services and support. BioSpin achieved organic bookings growth in excess of 20% in the first six months of 2022. BioSpin innovations of note include our new single-story 1.0 GHz magnet to make GHz NMR accessible for more functional structural biology and drug discovery laboratories. We also launched advanced capabilities on our Benchtop 4E80 FT-NMR system to enable broader applications in pharmaceutical and applied markets analysis. Switching to CALIT for the first half of 2022, the CALIT group revenue or CALIT group revenue of 394 million increased in the high single digit percentage with strong growth in life science mass spectrometry and microbiology aftermarket, but also with supply chain delays slowing revenue execution. Our TIMSTOF proteomics platform saw robust demand for applications in 4D proteomics, epiproteomics, and metabolomics. In the second quarter, we launched the TIMSTOF HT, or high-throughput system, as a higher-throughput instrument that includes a novel fourth-generation TIMS XR cell and 14-bit digitizer for greater dynamic range, enhanced peptide coverage, and more accurate quantitation in unbiased, 4D plasma and tissue proteomics. More on that on a later slide. Microbiology revenue delivered strong growth driven by demand for multi-biotyper consumables. This was coupled with a gradual recovery in our tuberculosis molecular diagnostics products. We are excited about the launch of selected liquid array next generation syndromic panels at ECMIT 2022 in April, with more to come later this year. Please turn to slide 7 now. First half 2022 broker nano revenue was $361 million and grew in the mid-teens percentage. Nano's industrial and semiconductor metrology markets all remain strong. Revenues for our advanced X-ray and nano surfaces tools delivered strong growth in the first half. Nano's microelectronics and semiconductor metrology tools performed well, again with strong bookings and backlog. Nano LifeScience fluorescence microscopy revenue was up sharply on product innovation and strong research demand. And our Canopy subsidiary launched the next generation CellScape chips cytometry instrument for high throughput in C2 spatial biology with subcellular resolution and best-in-class quantitation. Finally, first half 2022 best revenues grew in the high teens percentage net of intercompany eliminations driven by share gains and strong superconductor demand by our MRI OEM customers. Best demand appears healthy but we continue to navigate through supply chain and logistics challenges. Moving to slides eight and nine, we continue to make good progress with our Project Accelerate 2.0 initiatives, which, as a reminder, in 2022 represented about 54% of total revenues. On slide eight, we highlight three recent orders that all came in in the second quarter for our compact single-story 1 gigahertz, 1.0 gigahertz, 4 Kelvin magnet. You see it's that little guy in the middle that's really quite a technological marvel and clearly enables more structural biology researchers and even pharmaceutical companies, individual PIs, individual universities to access gigahertz NMR, which is obviously very, very powerful for pathology research and fundamental biology research, as well as even metabolomics. This now fits into a single-story lab. This compact system, it has much smaller footprint, easier to deliver and install, and quite importantly, it also reduces helium consumption by almost two-thirds. The orders came from Japan and two of them from Spain. We're very, very pleased with that. All three of these orders were received in the second quarter and subsequent to our product launch at a conference in early April. Moving on to slide nine, a very important platform for Proteomics but also for Metabolomics is, of course, our TIMSTOF platform. It now has a number of family members, and the latest one that we launched was the TIMSTOF-HT that we launched at the ASMS conference in Minneapolis in June of 2022 as sort of the ultimate high-throughput workhorse and particularly also suitable for plasma proteomics. I won't go through this slide in detail, but in terms of performance, higher and higher numbers of peptides and proteins that can be identified and quantified with excellent one percentage false discovery rates, which is really essential, I think, certainly for discovery applications and without suffering from the inevitable antigen cross-reactivity. As a bit of an update, as of the end of June, as of the end of the second quarter of 2022, our total TIMSTOF installed base of of paid units is greater than 500 units. And our revenue run rate now is greater than 125 million per annum. So excellent continued growth and excellent progress. So in summary, Bruker again experienced strong demand for our differentiated instruments and solutions across our portfolio. Our project Accelerate 2.0, high growth, high margin initiatives perform well. and we continue to ramp investments in R&D and in our commercial infrastructure in compelling opportunity areas. With that, let me now turn the call over to our CFO, Gerald Herrmann, who will review Bruker's Q2 financial performance and our fiscal 2022 outlook in more detail. Gerald.