Bruker Corporation

Good day, and welcome to the Bruker Corporation first quarter 2023 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 then one on your touchtone phone, and 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 Mr. Justin Ward. Please go ahead, sir.

Good morning. I would like to welcome everyone to Bruker Corporation's first quarter 2023 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 presentation section of Bruker'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 be making 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 risks 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 on our Form 10-K for the period ended December 31st, 2022, 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, May 4th, 2023. 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 second quarter 2023 financial results expected in early August 2023. You should not rely on these forward-looking statements as necessarily representing our views or outlook as of any date after today. With that said, we will begin today's call with Frank providing an overview of our business progress. Gerald will then cover the financials for the first quarter in more detail and share our updated fiscal year 2023 financial outlook. Now I'd like to turn the call over to Brucker's CEO, Frank Laukeen.

Thanks, Justin. Good morning, everyone, and thank you for joining us on today's first quarter 2023 earnings call. Bruker achieved an excellent start to the year and I commend our team members globally for their hard work and contributions. We are advancing our project Accelerate 2.0 high growth, high margin initiatives with particular focus on the large opportunities in proteomics and spatial biology, while also investing in operational excellence, productivity, and our growth capacity for the next 10 years. Turning to slide four, in the first quarter, Bruker posted strong organic revenue growth of 17.6%. The robust demand for our differentiated high-value scientific instruments and life science solutions was relatively broad based across the portfolio, and bookings and backlog for Bruker have remained strong. For the first quarter of 2023, Bruker's revenue Revenues increased 15.2% year-over-year to $685.3 million despite a currency headwind of minus 4.5%. On an organic basis, revenues increased 17.6% and acquisitions added 2.1% to growth, which implies first quarter constant exchange rate growth of 19.7% year-over-year. This included 18.4% organic growth in our scientific instrument segment and 9.7% organic growth in our best segment, net of intercompany eliminations. Our first quarter 23 non-GAAP growth margin increased 70 basis points year over year to 53.4%, while our non-GAAP operating margin was 20.3%, an increase of 80 bps year-over-year. Our strong performance on the top line drove margin expansion from volume leverage despite our stepped up investments in commercial and R&D capabilities. The strong revenue growth combined with margin expansion resulted in non-GAAP operating profit growth of 20.4% year-over-year in the first quarter. In the first quarter 23, Brewker reported gap diluted EPS of 52 cents compared to 41 cents reported in the first quarter of 2022. On a non-gap basis, first quarter 23 diluted EPS was 64 cents, an increase of 30.6% from 49 cents in the first quarter of 22. Our trailing 12 months return on invested capital was 24%, a metric that reflects well upon the differentiated broker management process and our focus on disciplined entrepreneurialism and organic growth, supplemented by strategic acquisitions of complementary skills and technologies. In summary, the first quarter of 23 was an excellent quarter with revenue growth across all broker scientific instruments groups with continued strong bookings as well as ramping investments in Project Accelerate 2.0, particularly in proteomics. Please turn to slides five and six now, where we highlight the first quarter 23 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 quarter of 23, the BioSpin group revenue of 180 million grew in the high teens percentage on a constant currency basis, even without any gigahertz class revenue in the first quarter. BioSpin saw robust growth in revenues across its full portfolio, including NMR and MRI preclinical imaging. Notably, we received two orders from the United Kingdom for 1.2 GHz NMRs for life science and green tech materials research. Please note that we now do not expect any GHz class revenue in the first half of 2023, but after some system final test delays, we now expect three or four GHz class NMR systems in the revenue for the second half of 2023. For the first quarter of 2023, the Kelley Group revenue of $237 million increased low 20s percentage on a constant currency basis with strong life of science, mass spec, and vibrational spectroscopy businesses. Our Timstuff platform continues its adoption in 4D proteomics, epiproteomics, and multiomics. In the first quarter, we announced key further capability enhancements and had excellent year-over-year bookings growth. Please turn to slide six now, first quarter. Bruker Nano revenue was $210 million and grew in the low 20% on a constant currency basis. Nano's academic, industrial, and green tech research and high-end semiconductor metrology revenues all remain strong. Revenues for advanced X-ray and Nano surfaces tools also delivered strong growth in the quarter. Nano's microelectronics and semiconductorology tools performed well with strong bookings and backlog. Life science fluorescence microscopy revenue was up sharply on product innovation and strong research demand, as well as our InScopix acquisition, which we did in the fourth quarter of last year. Finally, first quarter best revenues grew in the high single-digit percentage net of intercompany eliminations, driven by share gains and strong superconductor demand by MRI OEM customers, but meaningfully constrained by supply chain challenges. Moving to slides seven and eight now. On slide seven, we just highlight the two new orders for 1.2 gigahertz NMRs that we received recently. Interestingly, they're both used for structural functional biology and life science research. but also for a lot of green tech and materials research in the UK. These systems will be placed at the University of Warwick and University of Birmingham, which interestingly also both already have Bruker 1.0 gigahertz NMRs. This is really a UK scientific infrastructure investment, not only for these two universities that host the systems, but really will be used broadly by the UK scientific community. I think it's really quite exemplary. And it is interesting, of course, to see the life science research, but also how much materials, biofuels, energy storage research is being done at these universities. I won't read them, but I draw your attention to the two quotes that are on slide seven. They're actually very self-explanatory and very good. Moving on to slide eight. having certain sample prep and software innovations that support our Tim's Talk 4D proteomics business. On the left, you see an innovation by our friends and majority-owned business, Preomics, out of the Munich area. And it's really a new workflow, but it's a very important one. Their very compact tabletop benchtop system, the beatbox, is now also qualified for, importantly, for tissue proteomics for an FFPE workflow. And a gentleman from the University of Copenhagen said, this breakthrough now allows us to process large cohorts of FFPE tissues quickly, reproducibly, and with greater precision, enabling large-scale tissue biobank projects. The beatbox gives excellent, deep, unbiased proteomics results for pathology research in this particular case. So this is an important further enhancement of our consumables and automation and sample prep business at Preomics. Switching to software in support of immunopeptidomics, which is very important in research and I think now for the first time has reached the sensitivity and throughput levels where it could really be used on small tumor biopsy samples. We collaborate with an external Canadian company that provides the NOVOR algorithm for AI-informed and GPU-enabled immunopeptidomics. For those of you, as a reminder, immunopeptides are very important in immuno-oncology targeting. They're also not expressed in the genome, so you really have to sequence them de novo. And doing that at scale with sensitivity and excellent software is another important area in this case in immuno-oncology research and in the future hopefully also in immuno-oncology applications in the clinic. Right, after this science excursion, I'd like to go back and just summarize. Bruker again made excellent progress and continues to experience strong demand for our differentiated instruments and solutions across our portfolio. Our project Accelerate 2.0 high-growth, high-margin initiatives performed well. We reiterate our intention to ramp investments for accelerated growth, especially in proteomics, spatial biology, biopharma and applied markets, as well as in Semicon metrology. Very pleased with how well our teams have executed to begin the year. As we move through fiscal year 2023, our high backlog continues to give us very good visibility, and we are raising our revenue growth and EPS guidance for the full year 2023. So with that, let me turn the call over to our CFO, Gerald Herman, who will review Brooker's first quarter financial performance and raise fiscal year 2023 guidance in more detail. Gerald.