Bruker Corp at Morgan Stanley Global Healthcare Conference Transcript

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

Question: Tejas Savant - Morgan Stanley - Analyst : <_ALACRA_META_ABSTRACT>Maybe just to set the stage, Frank, '24 has been quite the transformational year for Bruker, multiple acquisitions, top line growth that's come in handily above the end markets, even though the end markets have been in a tough spot. Talk to us about how the years played out so far versus your initial expectations? And what are you most proud of over the last 12 months?

Question: Tejas Savant - Morgan Stanley - Analyst : Lots to unpack there, Frank.

Question: Tejas Savant - Morgan Stanley - Analyst : Maybe we'll start with instrument demand. You have pretty heavy instrument exposure. The macro has been challenging. And your instruments are big-ticket items. They're not sort of cheap to purchase. So despite that, you've been delivering solid performance year-to-date. You talked about the 5% to 7% organic growth. How has Bruker been able to execute and deliver above-market growth in the challenging macro? Part of that is innovation and you did launch a couple of interesting instruments at ASMS earlier this year as well. So just unpack that for us a little bit.

Question: Tejas Savant - Morgan Stanley - Analyst : Got it. I want to unpack China a little bit. First of all, it's about sort of 15% of your total revenue. Maybe just to set the stage, Gerald, one for you. Could you talk about your end market mix in China at the moment? How large is academic and government exposure in the region for you?

Question: Tejas Savant - Morgan Stanley - Analyst : Got it. So Frank, just to double-click on that a little bit. Is the right way to think about China for you, a bit of a headwind from continued delays before the money starts to flow down at the province level? Then you get the orders starting in 4Q ramping into the first half of next year. And then after that, what's the lag in your mind before that translates into revenue generation for you -- for us, typically, two quarters?

Question: Tejas Savant - Morgan Stanley - Analyst : And in the context of your portfolio and the end market mix, Gerald, that you just laid out as well, how should we think about long-term growth in China? And what's embedded in your -- the 6% to 8% organic growth target that you've outlined? What's baked in there for the Chinese recovery eventually?

Question: Tejas Savant - Morgan Stanley - Analyst : Got it. I want to pick up on what you just mentioned in China that the right kind of exposure and then the mix shift within even the academic budgets towards the newer modalities is providing you a degree of insulation. Does that sort of carryover even to the US and Europe? We get questions around flattish NIH budgets and pressure in horizon funding. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 06, 2024 / 2:00PM, BRKR.OQ - Bruker Corp at Morgan Stanley Global Healthcare Conference

Question: Tejas Savant - Morgan Stanley - Analyst : Got it. Switching to biopharma, Frank, you mentioned a couple of times that we're not going back to the 2020, 2021 levels of funding. But biopharma still remains the fastest-growing sort of like end market and tools. And then you also mentioned the right kind of exposure that the neuro modality is. One of the questions that we've been getting is, some of the preclinical CROs have been tucking up a spike in weakness in June, July, largely pointing to IRA and patent cliff concerns. Have you noticed that in terms of your conversations? And secondly, as far as the neuro modalities like cell and gene therapy are concerned, does pipeline reprioritization impact that modality, mainly because pharma companies might want to prioritize larger indications first?

Question: Tejas Savant - Morgan Stanley - Analyst : Got it. Fair enough. You talked about your backlog being -- I think it's about seven months at the moment and two-year path to getting it back down to five. I guess one of the questions that we often get is do you have enough of a backlog to bridge you to the other side of the macro headwinds. And on that note, I mean, the book-to-bill number, I think it's 0.95 or so at the moment. Talk to us a little bit about how you see that trending? And second, I mean, a lot of investor focus quarter-to-quarter on that book-to-bill number, as you guys know, right? So how do you think about that number internally? I mean, is it as much of a point of focus for you?

Question: Tejas Savant - Morgan Stanley - Analyst : That's actually a perfect segue to my next question. Frank, another life sciences CEO told me earlier this week that companies rarely die of starvation, but they can die from indigestion, right? And on the other hand, I kind of see where you're coming from?

Question: Tejas Savant - Morgan Stanley - Analyst : Yeah. And so I can see why you pulled the trigger on the assets that you've picked up over the last few months here? They've landed on top of each other more because it's an opportunistic time to pick up those assets, right? And so talk to us about the Bruker management process and how it's playing out with the integration of those assets? And then second, do you need to stick the landing on each of these deals to meet your medium-term outlook? Or is this more of an opportunistic shots on goal approach?

Question: Tejas Savant - Morgan Stanley - Analyst : Fair enough. To be clear, that comment was not about Bruker now, that was --

Question: Tejas Savant - Morgan Stanley - Analyst : I want to double-click on NanoString. You've guided to, I think, it was $10 million a month in revenue contribution. What's the path to 15% to 20%? I mean, is it is some improvement [overtime] just a function of being back on the market in Europe? Or what exactly do you need to do to rehabilitate that growth trajectory there? And perhaps more interesting, Frank, from your perspective, Talk to us about the combination of NanoString with CellScape. What could we see you do there from a hardware perspective? Is there a path to integrating those two instruments at some point?

Question: Tejas Savant - Morgan Stanley - Analyst : Got it. Fair enough. Just quickly on the proteomic landscape and the evolution there. You've launched the Ultra 2 timsTOF instrument at ASMS earlier this year. And there's been some sort of movement in the space, Thermo bought Olink. So as you think about the broader landscape, not just on the mass spec side, but also on the targeted front, can you just talk about your portfolio positioning there? And I think you've done PreOmics and you've got the investment in Biognosys?

Question: Tejas Savant - Morgan Stanley - Analyst : Perfect. We're out of time, but I'd be remiss if I let you get off the stage without asking you -- you're in the unenviable position of having a point estimate for '25 EPS out there. And it's a target. I get it. It's not a guide.

Question: Tejas Savant - Morgan Stanley - Analyst : It's a calculation, but it did make it on a PowerPoint slide, I suppose, in your deck.

Question: Tejas Savant - Morgan Stanley - Analyst : As you think about that number, how should we think about the degree of downside risk from the NanoString operating loss? Or do you have enough levers between the ELITech accretion, cost-outs at NanoString and the base business benefiting from maybe not a full rebound, but continued improvement in biopharma in China to essentially have enough of an offset in the portfolio at the bottom line?

Question: Tejas Savant - Morgan Stanley - Analyst : Perfect. This is great. Thank you so much, guys, for joining me. I appreciate it very much.