Bruker Corporation

Good day and welcome to the Bruker Corporation third quarter 2025 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 a touch-tone phone. To withdraw your question, please press star and then two. Also, please limit yourself to one question and one follow-up. Please note this event is being recorded. I would now like to turn the conference over to Joe Costa, Director of Bruker Investor Relations. Please go ahead.

Good morning. I would like to welcome everyone to Bruker Corporation's third quarter 2025 earnings conference call. My name is Joe Costa, and I am the Director of Bruker Investor Relations. Joining me on today's call are our President and CEO, Frank Laukeen, and our EVP and CFO, Gerald Herman. 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-gap-to-gap 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 acquisitions, geopolitical risks, tariffs, foreign currency, market demand, or supply chains. 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, 2024, 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 on our outlook as of today, November 3rd, 2025. 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 full year 2025 financial results expected in February 2026. You should not rely on these forward-looking statements as necessarily representing our reviews or outlook 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 2025 in more detail and share our updated full year of 2025 financial outlook. Now, I'd like to turn the call over to Brooker's CEO, Frank Laukeen.

Thank you, Joe. Good morning, everyone, and thank you for joining us on today's third quarter 2025 earnings call. As forecasted, our third quarter revenues and earnings were down year over year, primarily due to weaker academic and research instruments demand in the first half of 2025. However, our Q3-25 performance was quite a bit better than expected and represents a meaningful sequential step up from our Q2 performance. In this third quarter, we were encouraged by our mid-single-digit percentage organic bookings growth. For the first time this year, we saw strength in bookings in the academic government market segment as well as improving biopharma and applied market orders. Interestingly, in Q3 of 25, we saw the stark contrast of a double-digit percentage organic revenue decline in the AccaGov markets year over year, compared to a double-digit percentage organic improvement in AccaGov bookings year over year. In fact, our AccaGov orders grew in the high teens percentage in Q3 25, has very robust order growth outside of the United States, more than offset a continued year-over-year softness in the U.S. A lot of moving pieces. Anyway, notably, our innovative spatial biology, proteomics, and multiomics solutions launched at AGBT, AACR, and ASMS earlier this year are being very well received by our biopharma and academic customers. And enhance our leadership in enabling tools for drug discovery and disease biology research in the post-genomic era. Biopharma and Applied also saw organic bookings growth in Q3, with Biopharma having the strongest organic order growth of all of our end markets, both in Q3 and year-to-date. Organic scientific instrument orders in China increased by double-digit percentage in the third quarter year-over-year, and we saw what may be green shoots of stimulus funding in China beginning to be dispersed. So this stronger Q3 25 order performance drove our scientific instrument segment book-to-bill ratio to greater than 1.0 for the first time in several quarters. While one quarter of improved orders is too early to call a trend, we are encouraged that our two divisions, most directly tied to macroeconomic factors, which happens to be Bruker Optics and AXS, also saw strong bookings in Q3 of 25. These two divisions often serve as a leading indicator within Bruker for changing macro market trends. However, due to the late timing of Q3 orders and certain customer site delays, we are reducing our organic revenue growth expectations for the fourth quarter and our guidance for the full year. This also de-risks our implied fourth quarter forecast to levels that we are very confident we can achieve. Finally, on this slide, our major cost savings initiatives announced last quarter are progressing very well towards the high end of our 100 million to 120 million cost down targets for 2026. And they are expected to deliver significant margin expansion and double digit EPS growth in 2026. All right, turning to slide four now. In Q3-25, continued softness in ACAGOV revenues led to year-over-year declines throughout the P&L. However, we noted sequential improvements in biopharma, microbiology, and diagnostic revenues, which led to both top and bottom line coming in better than our expectations in early August. Brooker's Q325 reported revenues decreased half a percent to $860.5 million, which included a currency tailwind of 2.9%. On an organic basis, revenues decreased 4.5%, which included a 5.4% organic decline in scientific instruments and 6.9% organic growth at best net of intercompany eliminations. revenue growth from acquisitions added 1.1%. Our third quarter 25 non-GAAP operating margin was 12.3%, a decrease of 260 bps year over year as lower revenue absorption, additional tariff costs and currency headwinds were only partially mitigated in Q3 by our earlier costs and pricing actions. Our third quarter 25 non-GAAP operating margin of 12.3% represented a meaningful sequential improvement over the 9.0% we reported in the second quarter. Our third quarter diluted non-GAAP EPS was 45 cents, down 25% from 60 cents in Q3 of 24, but up sequentially compared to the 32 cents we reported in the second quarter of 25. Carol will obviously discuss the drivers for margin in EPS later in more detail. Moving to slide five, our year-to-date Q3 revenue increased by 3.0% to $2.5 billion. Organic revenue declined 3.1% with a 2.9% organic decline in scientific instruments and a 5.5% organic decline at best net of intercompany eliminations. Our first nine months, 2025, non-GAAP growth and operating margin and GAAP and non-GAAP EPS performance are all summarized on slide five. So, please turn to slide six and seven, where we highlight the year-to-date third quarter performance of our three scientific instruments group and of our best segments, all on a constant currency and year-over-year basis. Year-to-date 2025, BioSpin group CR revenue, F612 million was shown, excuse me, was down mid single digits percentage. BioSpin saw growth in lab automation and services offset by a tough comparison with two gigahertz class NMR systems in Q3 24 revenue versus none in Q3 of 25. BioSpin saw weakness in ACADUB and BioPharma revenues, but improved order growth in both end markets in the third quarter of 2025. Year-to-date 2025, Cowlick Group revenue of $879 million increased in the low double-digit percentage, driven by microbiology and infection disease diagnostics. with strength in both the Maldi Biotyper and the Alitech Molecular Diagnostics franchises. Life Science Mass Spectrometry is seeing early traction for recently launched products, including the new TIMS Omni and the new TIMS Metabo, both launched at ASMS. While our molecular spectroscopy revenues remain stable, but with strong applied markets orders in Q3-25, as was mentioned earlier. Right, turn to slide seven now, please. Year-to-date 2025, brooker nano revenue of $775 million declined in the low single-digit percentage. Revenues from advanced X-ray and nano analysis tools were down year-over-year, partially offset by growth in spatial biology. Strength in biopharma year-to-date revenues was offset by weakness in agar-garb and software industrial research and semi-markets. Finally, year-to-date 2025, best revenues declined in the mid-single-digit percentage net of intercompany eliminations. The clinical MRI superconducting wire market improved in Q3 and is now flat year-to-date, while our best research instruments business has been weaker due to a very strong prior year comparison. So, moving on to slide eight, you may have seen our press release that we had some recent NIH and NSF-funded orders for advanced NMR instruments. I won't go through all of them, but here are several very unique enabling and breakthrough tools listed on this page with the respective customers that are really very important for fundamental scientific research, and very much so also for drug discovery and disease biology research. The aggregate value of these orders was disclosed previously. It's about $10 million. They're all expected to be installed and in revenue next year, not in Q4, and maybe the Bigger message here is in that last bullet on slide eight, that our scientific instrument ACADABO orders, as I mentioned earlier, we were pleased we're all up mid-teens percentage organically year over year in Q3, and this was despite lingering US weakness. There's been some improvements in the US, but primarily there's significant improvements outside of the US, Europe, Japan, and in China. Right. Another press release, if you go to slide 9, that we stressed yet recently, there are some new, if you like, applied markets. This is not food testing. This is security and defense and homeland security. And in this case, we have a very, very nice product line that's sort of growing rapidly, 30% year over year. And we were highlighting some recent orders from explosive trace detectors that you will find at a lot of European airports, an increasing number of those. but also in South Korea and the Middle East. They have particularly performance and usability advantages. This, by the way, isn't just an instrument sale. This has been five or seven years of consumables and service sales, so it's a nice, steady business, and we have been gaining market share and are pleased with those orders. And because of tensions and rearming in Europe, we also got some significant defense detection orders from a Central European Ministry of Defense. This was not for Ukraine, but others are worried as well. And obviously, this is a smaller part of Bruker that, if you like, is part of applied markets. That's growing very nicely. We thought we'd highlight that for you because, obviously, Akagab was weaker this year. So, to wrap up, our third quarter P&L was still impacted by the various headwinds we've seen across the industry earlier this year. However, the results came in ahead of our expectations. Our improved bookings in Q3-25 and scientific instruments book-to-bill ratio above 1.0 make us optimistic that we may be past the trough in demand. We look to build on this performance in Q4, and we are increasingly confident in a fiscal year 26 partial recovery. We expect significant improvements in our organic revenue performance compared to our meaningful decline, organic decline in 25. Importantly, we are taking up to $120 million in cost out of our business in fiscal year 26 in order to drive significant margin expansion and strong double-digit EPS growth. So in perspective, our Transform Project Accelerate 2.0 portfolio is fundamentally very strong. In post-genomic drug discovery and disease biology research, leveraging both proteomics and multiomics, as well as spatial biology, in innovative diagnostic solutions for microbiology, molecular diagnostics, and now also therapeutic drug monitoring, And finally, emerging, really an emerging $100 million area for us is now the fast growth area of automated, digitized, or digital labs ready for AI or perhaps even driven by AI, the automated AI labs, if you like. These are four major profitable growth opportunities today. and they are complemented by our healthy diversification in industrial research, UC market, semiconductor metrology, and, as you've seen, applied and security markets. Combining this outstanding portfolio with operational excellence and strong execution, I am confident that by 2027, we can outgrow our markets again by 200 to 300 dips per year on average and continue our rapid margin expansion and double-digit EPS growth. after overcoming the multiple Akagov demand, new tariffs, and strong currency headwinds in 2025, with a partial recovery in 2026. So with all of that, let me turn the call over now to our CFO, Gerald Herman, who will review things in more detail. Gerald.