Bruker Corporation

Good morning and welcome to the Bruker Corporation first quarter 2024 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, listen to 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 one on your touchtone and telephones. To withdraw your questions, you may press star and two. As a note, today's event is being recorded. I'd now like to turn the floor over to Justin Ward, Senior Director of Investor Relations and Corporate Development. Please go ahead.

Thank you, and good morning, everybody. I would like to welcome everyone to Bruker Corporation's first quarter 2024 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 Brooker'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.brooker.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 our recent and pending acquisitions, geopolitical risks and wars, as well as supply chain, logistics, and inflation. 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, 2023, as updated by other SEC filings, which are available on our website and on the SEC websites. Also, please note that the following information is based on current business conditions and to our outlook as of today, May 2nd, 2024. 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 first quarter of 2024 in more detail and share our updated 2024 financial outlook. Now, I'd like to turn the call over to Brewker's CEO, Frank Laukeen.

Thank you, Justin. Good morning, everyone, and thank you for joining us on today's first quarter 2024 earnings call. I am excited to announce that we have just closed our ELITEC acquisition on April 30th, ahead of schedule after we received all required regulatory clearances, and also after the completion of the pre-closing carve-out of the ELITEC clinical chemistry business that we did not wish to acquire. Accordingly, please note that in addition to our earnings release, we simultaneously have issued a second press release this morning, 7 a.m. Eastern, on the closing of our ELITEC acquisition. We do encourage you to read both press releases for complementary information and perspectives. As a result, we are pleased to raise our constant exchange rate revenue growth guidance for fiscal year 2024 by 400 bps to 12 to 14%, as explained in detail later during this call. Turning to our earnings release and slide four, Bruker finished the quarter of 2024 with 1.6% organic and 5.5% constant exchange rate or CER revenue growth, despite about 15 million of revenue slippage into the second quarter, primarily, and primarily because of a rather tough comparison to a very strong first quarter of 2023, in which, if you recall, we posted 17.6% organic growth a year ago. So keep in mind that we had expected low single-digit organic revenue growth anyway in Q1 because of some pull forward of about 15, similar pull forward of about 15 million of revenues into the fourth quarter of 23 when customer site readiness and shipments just worked very well. So underlying demand for Brooker's products and solutions has remained solid with first quarter 24 booked to build for our BSI segment just below 1.0. So, in the second quarter of 2024, we expect a re-acceleration of our organic revenue growth, and we also expect double-digit constant exchange rate or CER revenue growth year-over-year. As expected in the first quarter of 2024, our margins compressed year-over-year. primarily because of the tough comparison to an unusually strong first quarter of 23, but also as a result of transitory factors such as the expected initial margin dilution from our recent acquisitions, as well as less favorable mix in this quarter. We expect significant sequential margin improvement in the remainder of the year. As we look to the remainder of 2024, With our solid backlog and pipeline, we expect to achieve above-market organic revenue and organic non-GAAP EPS growth. Accordingly, we are maintaining our fiscal year 24 guidance for organic revenue growth of 5% to 7%. Since our prior guidance in mid-February, we have closed the CHEMSPEED acquisition in the first quarter and now the ELITEC acquisition on April 30th. Both are now included in our updated guidance today. As a result, we are increasing our reported revenue guidance by $60 million for reported revenue growth of 11 to 13% year-over-year, and we are increasing our non-GAAP EPS guidance by 8 cents to 8% to 10% non-GAAP EPS growth year-over-year. Please note that our updated May 2nd guidance today does not yet include the pending nanostring acquisition, which is expected to be EPS dilutive and which we hope to close in the second quarter. For further information on the pending nanostring acquisition, I refer you to our press release issued on Monday, April 22nd. Continuing on slide four, brokers first quarter 24 reported revenues increased 5.3% year-over-year to $721.7 million, which included an M&A tailwind of 3.8%. On an organic basis, revenues increased 1.6%. which included flat organic revenues in our BSI segment and 18.9% organic growth at best, net of intercompany eliminations, while the FX HIP headwind was minor at 0.1%. This all implies constant exchange rate or CER revenue growth of 5.5% year over year. Our first quarter 2024 non-GAAP operating margin was 14.0%, down 630 bits due to the factors that I described earlier. In the first quarter of 24, Brooker reported GAAP diluted EPS of 35 cents compared to 52 cents in the first quarter of 23. On a non-GAAP basis, First quarter 24 diluted EPS was 53 cents, down from 64 cents in the first quarter of 23. Right, please turn to slides five and six now where we highlight the first quarter 24 CER performance by our three scientific instruments groups and of our best segments all year over year. In the first quarter of 24, BioSpin group revenue was 183 million with low single-digit percentage CER growth. BioSpin saw growth across biopharma, academic government, and industrial research markets without any gigahertz-class systems in Q124 revenue. By the way, in 2024, we expect revenue from three gigahertz-class NMRs