Bruker Corporation

Good morning, everyone, and welcome to the Brooker Corporation fourth 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 and then one using a touchtone telephone. 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 Joe Koska, Director of Investor Relations. Please go ahead.

Good morning. I would like to welcome everyone to Brooker Corporation's fourth quarter 2025 earnings conference call. My name is Joe Koska, and I am the Director of Brooker Investor Relations. Joining me on today's call are Frank Laukeen, our President and CEO, and Gerald Herman, our EVP 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.brooker.com. Before we begin, I would like to reference Brooker's safe harbor statement, which is shown on slide two of the presentation. During this conference call, we will or may 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 our recent acquisitions, geopolitical risks, market demand, tariffs, currency exchange rates, competitive dynamics, or supply chains. The company's actual results may differ materially from such statements. Factors that may 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 to our outlook as of today, February 12, 2026. 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 first quarter 2026 financial results expected in early May 2026. You should not rely on these forward-looking statements as necessarily representing our views 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 fourth quarter and full year of 2025 in more detail and share our full year 2026 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 fourth quarter 25 earnings call. At the conclusion of a difficult year, 2025, with headwinds from academic funding, tariffs, and currencies, we are pleased that in the fourth quarter we delivered revenues ahead of our expectations. BSI, or Bruker Scientific Instruments, booked a bill in the fourth quarter was again over 1.0x. providing more confidence that we are past the trough in demand seen in the middle of 2025. We also saw strong cap-free cash flow in Q4 over $200 million after admittedly weaker cash flow earlier in 2025. The year 2025 was the first full year of ownership for the three large strategic acquisitions that we completed in the first half of 24. Both Elitech and CHEMSPEED delivered robust mid to high single-digit percentage organic revenue growth year over year, while NanoString was approximately flat due to pressure on U.S. academic funding in fiscal year 25. Encouragingly, spatial biology, including NanoString, orders were up in the double-digit percentages organically in the fourth quarter of 25 year over year. Our innovation engine continued to shine in 2025 with outstanding and very competitive product launches at the AGBT, AACR, and ASMS conferences last year. Many of these recent launches have seen strong initial demand, which we expect to drive revenue growth in fiscal year 26 and beyond. Looking to 2026, we expect continued improvements in our markets to drive demand for our differentiated post-genomic discovery, translational, and diagnostic solutions. We start the year with solid BSI segment backlog of over seven months of revenue and good bookings momentum resulting from two consecutive quarters with BSI book to bill greater than 1.0. We are pleased to see the fiscal year 26 NIH budget pass Congress with an increase in funding year-over-year and barriers to grant overhead cuts and multi-year grant funding. But for now, there is still some lingering uncertainty in the U.S. agri-gov market. The second-half improvements in 25 in biopharma and industrial research order trends and robust semi-metrology orders in Q4 positioned these end markets for improved revenue performance in 2026. Finally, BEST, which was a headwind to our overall revenue growth in 2025, should turn into a tailwind in 2026, having booked major multi-year agreements worth more than half a billion dollars over multiple years. Accordingly, we are establishing our fiscal year 2026 guidance for reported revenue growth of 45%, with 1% to 2% organic revenue growth for the full year, and an approximate 1.5% revenue growth contribution from an M&A. This all implies constant exchange rate revenue growth of 2.5% to 3.5% year-over-year in fiscal year 26. As we explained in our press release, we still expect a mid-single-digit organic revenue decline in Q1 of 26, primarily due to the strong Q1 25 year-over-year comparison. After our first quarter this year, we now expect to resume organic revenue growth in the second quarter and for the remainder of the year. We remain very committed to rapid non-GAAP operating profit margin expansion, and we aim for 250 to 300 bps operating profit margin improvement in 26, despite and including a 50 bps currency headwind. This implies, in principle, 300 to 350 bps of expected organic operating margin expansion, driven by our major cost-saving initiatives, which we now expect to exceed the upper end of our previously stated range of 100 to 120 million. Finally, in fiscal year 26, we expect non-GAAP EPS growth of 15 to 17%, despite and including a strong 8% or approximately 15 cents expected currency headwind. which again implies 23 to 25% constant exchange rate non-GAAP EPS growth compared to 25. Turning to current results now on slide four. In the fourth quarter of 25, Bruker delivered stronger revenues than expected and above the preliminary range we provided at JPM in early January. Bruker's fourth quarter 25 reported revenues of $977.2 million were approximately flat year-over-year, including a currency tailwind of 4.1%, a growth contribution from M&A of 0.8%, and an organic decline of 5.1%. Organic declines in BSI and, at best, net of intercompany eliminations were also both at 5.1% in the quarter. In the fourth quarter, our non-GAAP operating margin was 15.7%, down 240 bps year-over-year, as lower revenue volume, additional tariff costs, and currency headwinds were only partially mitigated in Q4 by our earlier cost and pricing actions. Fourth quarter, 25 non-GAAP diluted EPS was 59 cents, down from 76 cents in Q4 of 24. Gerald will discuss the drivers for margins and EPS later in more detail. As I said earlier, fourth quarter BSI book-to-bill was again meaningfully greater than 1.0 and our fourth quarter free cash flow was good at $207 million. Moving on to our 2025 full-year performance on slide five, Fiscal year 25 reported revenues increased by 2.1% to $3.44 billion. On an organic basis, revenues declined 3.7% year-over-year, consisting of a 3.5% organic decline in scientific instruments and a 5.4% organic decline at best, as always, net of intercompany eliminations. Acquisitions added 3.5% to revenue growth, and there was a 2.3% currency revenue tailwind for the year. Our 2025 non-GAAP growth and operating margin and GAAP and non-GAAP EPS performance are all summarized on slide five. Margins and EPS were down year over year as a result of dilution from our strategic acquisitions that closed in the first half of 24, volume deleverage, and strong currency and tariff headwinds. So please turn to slide six and seven where we highlight the 2025 constant exchange rate performance of our three scientific instruments groups and of our best segment year-over-year. In 2025, biosiming group revenue was $879 million and declined in the mid-single-digit percentage. Solid revenue growth in ChemSpeed Lab automation was more than offset by declines in NMR instrumentation. BioPharma revenues were weak, resulting from soft bookings in the first half of 25. In the fourth quarter of 25, we had revenue from a 1.2 GHz NMR in the UK, our second GHz class NMR of 2025, compared to four GHz NMRs in 2024. The two fewer gigahertz systems resulted in a roughly 25 million revenue headwind for to 25 revenues. We're expecting just one gigahertz NMR system in revenue in 26 as present gigahertz class NMR funding activity, which is healthy, but would likely not yet come in as revenue in 26, but may well refill our gigahertz NMR pipeline for 27 and beyond. For 2025, the CALIT group had revenue of $1.2 billion and constant exchange rate growth in the high single-digit percentage with growth in microbiology and infection diagnostics driven by ELITEC molecular diagnostics, as well as by our optics division driven by our applied market security detection growth. This was partially offset by softness in mass spectrometry As strong orders for the recently launched TIMSS Omni and TIMSS Metabo mass spectrometers were expected to start to convert into revenue mostly in 2026. On slide 7, Bruker Nano, 25 revenues. was $1.1 billion and declined to the low single-digits percentage as solid growth in spatial biology driven by nanostring and robust biopharma growth was more than offset by declines in ECHA-Galvin industrial markets. Semiconductor metrology revenues were flat for the year with a strong semi-order book in Q4 of 2025, which is expected to drive stronger semi-performance in 2026. Finally, 2025 best revenues declined in the mid single digits percentage net of intercompany eliminations due to soft superconducting demand for clinical MRI systems. However, we received major multi-year orders at the end of the fourth quarter of 25 and at the very beginning of Q1 of 26 for superconducting wire from large MRI manufacturers totaling more than 500 million. This is over multiple years. Also, our research instruments business, which is part of BEST, received more than $40 million in orders for enabling technology for the extreme light infrastructure, something that we had a press release on previously. And this also is expected to go into revenue mostly late in 2026. Moving to slide 8 now, we highlight our Project Accelerate 3.0 portfolio expansion strategy. And we talked about that a little bit at the JPMorgan conference. We remain very focused on our leadership and expanding our leadership in post-genomic disease research and drug discovery tools, primarily proteomics and multiomics, and of course, a core focus also on spatial biology. We continue to expand and focus in novel diagnostics, novel and differentiated diagnostics opportunities. with novel microbiology and infectious disease molecular diagnostics opportunities. I'll highlight that our Elitech molecular diagnostics business had very strong placements in fiscal year 25, which bodes well for fiscal year 26 revenue growth. In microbiology, we're entering the rapid AST market with the Wave platform, hoping to get FDA clearance for the first claim in this year, in 2026. And in molecular diagnostics, we intend to expand into second-generation affordable syndromic panels on our genia systems. Finally, a very important trajectory for us is that our proteomic and spatial biology translational research tools increasingly are expected to enter laboratory-developed tests, or LDT, markets here in the U.S. and elsewhere in CLIA laboratories. We're excited about our next-gen automated and digitized self-driving labs, something that we just announced on Monday at the SLAS conference here in Boston. And as I've mentioned earlier, our security, defense, and airport detection business, something that was lingering for a number of years but where we have differentiated capabilities, is growing nicely at this point, particularly in Europe and overseas. And finally, we continue to benefit from the AI boom indirectly in that our semiconductor metrology tools for new nodes and advanced packaging have seen solid order growth and particularly strong order growth in the fourth quarter. With that, let me conclude soon on slide nine, where you see where we give you our annual update on our Revenue mix for the BSI segment, which, as you know, is 93% of our revenue. We are pleased that, step by step, our aftermarket component of revenue is increasing. A year ago, in 2024, it was 35%. Now it's at 38%, and, in fact, that part was growing organically also in 2025. Our end market growth is, as you would expect, now more than 60% of our revenue coming from the Project Accelerate 3.0 focus areas, and with particularly good growth that we're expecting also in terms of orders and revenue from biopharma, from diagnostics, and from semiconductor metrology. Finally, by geography, As you all know, U.S. biopharma and industrial growth looked stronger, certainly in orders in the second half of the year. U.S. agar.gov is still weak and had been here throughout 2020, weak throughout 2025, except for the first quarter. The rest of APEC has been very, very resilient and strong. And China, which used to be 16% to 17% of our revenue, has continued to decline, although we saw some nice order growth in Q4, and it's now about 40%, just under 14% of our revenue. Right. In summary, 2025 was indeed a challenging year for Broker. We faced multiple unexpected significant headwinds, and we responded by continuing to innovate, launching novel and differentiated high-value solutions. We've also focused on cost deficiencies, taking very significant costs out in order to take a large step in 26 towards greater than 20% operating margins in the next few years. In the medium term, beyond 2026, we expect our organic growth profile to return to a CAGR that is 200 to 300 bps above the LSTDX market growth rate, and we will continue to focus on continued major margin expansion steps in 27 and 28 as well, while driving continued double-digit non-GAAP EPS growth. We believe that our transformed portfolio is now poised to achieve EBITDA margins greater than 25% over time. With that, let me turn the call over to Gerald, our CFO.