Bruker Corporation

Good morning, everyone, and welcome to the Bruker Third Quarter 2022 Earnings Conference Call. All participants will be in a 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 and then one. To withdraw your questions, you may press star and two. Please also note today's event is being recorded. At this time, I'd like to turn the floor over to Justin Ward, Senior Director of Investor Relations and Corporate Development. Sir, please go ahead.

Thank you. Good morning. I would like to welcome everyone to Brooker Corporation's third quarter 2022 earnings call. My name is Justin Ward, and I am Brooker's Senior Director of Investor Relations and Corporate Development. Joining me on today's call are Frank Laukeen, our President and CEO, and Gerald Herbin, our Executive Vice President and CFO. In addition to the earnings release we issued earlier today, during today's call, we will be referencing a slide presentation that can be downloaded from the Events and Presentations section of Bruker's Investor Relations website. During today's call, we will be highlighting non-GAAP financial information. Reconciliation 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 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 elevated 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, 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 our outlook as of today, November 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 fourth quarter and fiscal year 2022 financial results expected in February 2023. You should not rely on these forward-looking statements as necessarily representing our views or outlooks as of any 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 third quarter of 2022 in more detail and share our updated fiscal year 2022 financial outlook. Now, I'd like to turn the call over to Bruker CEO, Frank Lauke.

Thank you, Justin. Good morning, everyone, and thank you for joining us on today's third quarter 2022 earnings call. Turning to slide four, in the third quarter of 2022, Brooker delivered robust organic revenue growth of 12.7%, well above the mid-single-digit outlook provided on our Q2 2022 earnings call. Our teams executed well despite operational headwinds from lingering supply chain and logistic delays. lockdowns in China, and the conflict in Europe. We again saw good demand for our differentiated high-value scientific instruments and life science solutions, and our third quarter 2022 scientific instruments segment book-to-bill ratio was again greater than one. With a strong Q3, we have now made up for our somewhat weaker second quarter, where, if you recall, we experienced some revenue delays due to supply chain and logistics. For the third quarter of 2022, brokers reported revenues increased 4.9% year-over-year to $638.9 million, despite a very strong currency headwind of minus 9%. On an organic basis, revenues increased 12.7%, which included 12% organic growth in scientific instruments and 20.3% organic growth at best net of intercompany eliminations, while growth from acquisitions added 1.2%. This implies a constant exchange rate growth of 13.9% for the quarter year over year. Our third quarter 22 non-GAAP gross margin increased 150 bps year-over-year to 53.2%, while non-GAAP operating margin was 22.4%, an increase of 180 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 our core operational excellence drive, volume leverage, pricing, and currency tailwinds. Importantly, we were able to deliver strong operating margin expansion in the third quarter despite our previously announced additional Project Accelerate 2.0 OPEX investments in commercial and R&D capabilities, particularly in proteomics and spatial biology. In the third quarter of 22, Bruker reported gap diluted earnings per share of 59 cents, up from 57 cents reported in the third quarter of 21. On a non-gap basis, third quarter 22, diluted EPS was 66 cents, up from 63 cents in the third quarter of 21. And Gerald will discuss the drivers for margins and EPS later. So in summary, the third quarter of 22 again saw solid demand for our differentiated products. and robust margin expansion, even as we executed certain planned OPEX investments in Project Accelerate 2.0 to capitalize on the major opportunities we see in proteomics and spatial biology, as well as in biopharma-applied infectious disease diagnostics, cancer research, and semiconductor tools. Let me now look at the year-to-date third quarter performance and moving to slide C. Slide 5, I apologize, you can see Brooker's performance for the first nine months of 22. Our revenues increased by 5.1% to $1.822 billion. On an organic basis, revenues grew 10.7% year over year, consisting of 9.9% organic growth in scientific instruments and 18.7% organic growth at best net of intercompany eliminations. First nine months 2022 order bookings for brokers three scientific instruments groups were double digits year-over-year organically. Geographically, our year-to-date third quarter 2022 BSI order bookings were led by mid-teens growth in Europe and APAC with Americas growing in the single digits. Our first nine months 2022 non-GAAP gross and operating margin and GAAP and non-GAAP EPS performance are all summarized on slide five, and we are very pleased with our 80 BIPs operating margin expansion year over year, despite high inflation and the planned investments in our project accelerate initiatives. Our trailing 12 months return on invested capital, a non-GAAP measure, was 24.6%. which puts us amongst 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 year-to-date third quarter 2022 performance of our three scientific instruments groups and of our best segment, all on a constant currency-based currency and year-over-year basis. For the first nine months of 2022, the BioSpin group revenue was 493 million and grew in the mid single digits percentage-wise. Please note, there were two gigahertz class NMR systems recognized in revenue in the first nine months of 2022 compared to three in the first nine months of 2021. We now expect three to four gigahertz class NMRs in revenue for the full year 2022, which means one or two are expected in the fourth quarter. BioSpin saw robust growth in services and support revenues, as well as strong growth in the preclinical imaging business. Moving to CALIT for the first nine months of 2022, The Kellett Group revenue of $601 million increased low double-digit percentage with strong growth in life science mass spectrometry and microbiology aftermarket, but still with supply chain delays slowing revenue execution. Our TIMSTOF platform in particular saw robust demand for applications in 4D proteomics, epiproteomics, and metabolomics. with double-digit growth year over year in revenues and bookings. Please turn to slide seven now. For Brooker Nano, for the first nine months of 22, revenue was $559.8 million and grew in the high teens percentage on a constant currency basis. Revenues for our NanoSurfaces tools delivered very strong growth in the first nine months while our advanced x-ray business also grew. Bruker Nano's microelectronics and semiconductor metrology tools performed well with strong bookings and backlog. Life Science fluorescence microscopy revenue showed year-to-date growth, a result of product innovation and Life Science research academic demand. Finally, First nine months 2022, best revenue grew in the high teens percentage net of intercompany eliminations driven by excellent execution under adverse conditions and strong superconductor demand by MRI OEM customers. Best demand appears healthy, but we continue to navigate through difficult supply chain issues. Moving to slides eight and nine, we highlight some important applications and innovations of our instruments. On slide 8, we highlight recent TIMSTOF purchases by BioMS, a Swedish national infrastructure consortium for biological mass spectrometry. They did acquire six TIMSTOF systems for three institutes in order to advance high-throughput proteomics workflows for clinical research and in future emerging laboratory-developed tests. The TIMSTOFS HTs were used for plasma cell and tissue proteomics, and we're delighted that they also all obtained TIMSTOFS SCPs for single-cell proteomics, but really also generally used for very low samples amount, such as, of course, sorted and single cells, but also for immunopeptidomics, FFPE slides, specific tissue sections, et cetera. A very nice case example of success of going to broader clinical proteomics research. Switching to slide nine, often we talk about magnets here. I really want to talk about the science and the novel functional structural biology research that's being enabled by other probe technology, in particular NMR probes. There is a new eight millimeter cryoprobe for 15N, a very, normally a very insensitive nucleus, but with a special 15N Trozy experiment developed by Professor Hari Arthanari and other coworkers. We've reached dramatic sensitivity and very significantly increased resolution for complex larger proteins and for these pathobiologically very important intrinsically disordered proteins. And there is a very nice statement here that I let you read that allows really a great expansion of the applicability of liquids NMR to more and more protein systems, including intrinsically disordered proteins. On the solid-state NMR side, there has been dramatic further progress with 160 kilohertz magic angle spinning, or MAS probe. Imagine that's something that rotates 160,000 times per second, and this is mechanical rotation, not radio frequency. Anyway, with this new probe, which is completely unique as far as we're concerned, it's used for biological applications by Professor Guido Pintacuta at Lyon in France, and it significantly enhances the ability of high-field NMR to push structural, cellular, and disease biology research in solid-state NMR, for instance, for membrane proteins, amyloid, neurodegenerative diseases, and many other fundamental biology and disease biology questions. So after this non-financial excursion into what we're doing, in summary, Bruker delivered a strong third quarter with good organic growth and margin expansion. While the macro environment remains difficult to forecast for 2023, we also believe that the strong demand for our differentiated products and solutions combined with our strong backlog will make Bruker quite resilient in the coming year. We expect to give fiscal year 2023 guidance when we report our results for the fourth quarter of 22 in February. With that, let me turn the call over to our CFO, Gerald Herman, for further details. Gerald.