Bruker Corp at Goldman Sachs Global Healthcare Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Matt Sykes - Goldman Sachs & Company, Inc. - Analyst : I thought maybe we'd start out sort of high level, Frank, when you think about sort of all the acquisitions and changes, and you've had a lot of recent updates to your midterm guidance. Maybe just set the stage for everybody and talk about Bruker as it stands today, the growth opportunities ahead of you and how you're thinking about sort of that midterm growth algorithm for the company.

Question: Matt Sykes - Goldman Sachs & Company, Inc. - Analyst : Got it. Thank you for that.

Question: Matt Sykes - Goldman Sachs & Company, Inc. - Analyst : I think staying kind of high level, I wanted -- I would love to hear how you think about when you make these acquisitions into newer markets, like [Face Spatial], where you do have exposure to. But it seems like you're going after high-growth niche markets, where you can succeed with some level of market share. How has that strategy evolved at Bruker over the past number of years? And how do the acquisitions you've made recently fit into what may be sort of that emerging strategy of really trying to dominate high-growth niche areas of the market with your expertise?

Question: Matt Sykes - Goldman Sachs & Company, Inc. - Analyst : Got it. If we can kind of dig a little bit into the end markets and start with academic and government exposure, an area that you've had high exposure to and been very successful in area, there's obviously some concerns about funding NIH. You've talked a lot about in telling investors don't necessarily look at the overall level of -- look at what the components within NIH are in terms of where the funding is going. Proteomics is a great example if you just look at it over the last couple of years. And I also understand the private institutional funding [trends], Zuckerberg, Gates, whatever, is also making large part. Could you talk about sort of those concerns about academic funding over the course of this year into next? It has been a pretty good end market. So comps are a little bit tougher, but then the underlying dynamics of where spend is going within those budgets and then the private institutional funding that's starting to come up. And help us understand how we should be thinking about the academic end market.

Question: Matt Sykes - Goldman Sachs & Company, Inc. - Analyst : Got it. Just talking about the underlying organic growth for the business. If we -- because in lot of the acquisitions, there's some accretion dilution on -- below the line. But on the top line, they are contributive. But if we look at the underlying organic growth of the business ex acquisitions out to '27, how does that look and how is it trailing this year?

Question: Matt Sykes - Goldman Sachs & Company, Inc. - Analyst : Got it. And then could you talk about maybe using ELITech as an example? (technical difficulty) in sales force. I know there's the (technical difficulty) before. I remember when Project Accelerate 2.0 was kind of introduced, there were proteomics and diagnostics. I think proteomics has been a home run. Diagnostics might have been a little bit tougher relative to proteomics. But now with ELITech, how does that reaccelerate that diagnostics avenue for you in terms of recurring revenue, but then how are you leveraging existing sales force to drive that?

Question: Matt Sykes - Goldman Sachs & Company, Inc. - Analyst : And how do you see continued growth with ELITech being out and diagnose trends, adding to recurring revenue and margins for the business? ELITech is already coming in at accretive level of margins to where you are today.

Question: Matt Sykes - Goldman Sachs & Company, Inc. - Analyst : And also, the recurring revenue and diagnostics is just simply better than in sort of the more capital-intensive instruments. So maybe talk about how diagnostics can help drive higher recurring revenue and margins over time.

Question: Matt Sykes - Goldman Sachs & Company, Inc. - Analyst : Got it, okay. And then just kind of building off your comments on the backlog. You have had this elevated backlog. Can you talk about where that stands versus historical average? And give any color on what type of instruments are still seeing that elevated backlog? Which have come down to more normalized levels? And how should we be thinking about the backlog and perhaps book-to-bill trends over the course of this year? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JUNE 12, 2024 / 3:20PM, BRKR.OQ - Bruker Corp at Goldman Sachs Global Healthcare Conference

Question: Matt Sykes - Goldman Sachs & Company, Inc. - Analyst : Got it. And we've heard from peers about some of the challenges in terms of capital equipment demand and sales cycle is taking longer and conversions. Can you maybe give us an update on how conversations are trending with your customers? You seem to be bucking a lot of these trends that other companies are seeing. So I'd love to get your view as to mark to market on how cost conversations that customers are going and sales cycle conversions, et cetera, how those are going?

Question: Matt Sykes - Goldman Sachs & Company, Inc. - Analyst : Got it. If we pivot to China for a little bit, you guys have had pretty decent success in China. And I think at least in my view, a lot of that has to do with the level of differentiation and sophistication of your instruments. From a competitive standpoint, I think it would take quite some time for those to replicate. You're also focused more on the academic market in that area as well. We have the recently announced stimulus, which I think there's been some confusion about duration, timing, et cetera, in terms of the transmission mechanism being a lending program. It takes a little bit longer time for [build to understand]. And it's a three-year program. So there's no sense of urgency. What are you seeing so far today in China? One. Two, any kind of conversations you're having about the stimulus program? And what's your expectation for when this could actually show up in revenues? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JUNE 12, 2024 / 3:20PM, BRKR.OQ - Bruker Corp at Goldman Sachs Global Healthcare Conference

Question: Matt Sykes - Goldman Sachs & Company, Inc. - Analyst : And what are the current trends in China now? Forget stimulus, but for -- as you look for '24, does it still remain relatively healthy for you in terms of conversations, orders, growth?

Question: Matt Sykes - Goldman Sachs & Company, Inc. - Analyst : Okay. Pivoting to timsTOF platform where you've had a lot of success, you have been driving your proteomics franchise. Thermo came out with the Astral at last year's ASMS. You've said publicly that it's a competitor and there's been some customers trying to decide and it's been a viable competitor. You recently just introduced the Ultra 2. How do you see the Ultra 2? And I know it takes a while for these things to kind of come into the market and be purchased and things like that. But as a response to Astral, how do you feel about the timsTOF franchise competing against Thermo, given their recent -- their launch last year? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JUNE 12, 2024 / 3:20PM, BRKR.OQ - Bruker Corp at Goldman Sachs Global Healthcare Conference

Question: Matt Sykes - Goldman Sachs & Company, Inc. - Analyst : You kind of answered -- well, my next question should be on the NGS proteomics and how you compete with that. And clearly, one of your competitors has made a bet on that as well or trying to close that deal. But do you feel like you have the necessary offerings to be able to compete with NGS if the markets continues to shift that way?

Question: Matt Sykes - Goldman Sachs & Company, Inc. - Analyst : Just proteomics, yeah.

Question: Matt Sykes - Goldman Sachs & Company, Inc. - Analyst : Got it. Maybe in the minute or so we have left, Bruker is a sophisticated and sometimes complicated company with multiple divisions: CALID and BioSpin and Nano. If you were to kind of leave investors with a couple of thoughts of how to think about Bruker from a high level and what are some of the strengths and sort of key takeaways you want to people to have, I'd love to hear that.