Bruker Corp Q1 2025 Earnings Call Transcript

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

Question: Puneet Souda - Leerink Partners - Analyst : Frank, thanks for the questions here, and thanks for all the details on the tariffs for quantifying that. Could you elaborate if there was any pull forward in the quarter because of the tariff worries or any other worries in the market that the customers might have had? And are you making any impact from that as a result of that pull forward? And then in China, I appreciate you mentioned cancellations, but are you seeing any cancellations in the US or European markets, specifically maybe around the USF gigahertz magnet, I didn't hear guidance on that for the year.

Question: Puneet Souda - Leerink Partners - Analyst : Okay. That's helpful for the -- Yes. And then when we think about the offset, obviously, a lot of challenges in the market today. But when we think about the offsets of the AI chips onshoring of that, the funding initiatives in Germany, maybe lower interest rates. Can you walk us through how are you thinking about some of those offsets potentially sort of mitigating the impact maybe into the second half?

Question: Michael Ryskin - BofA Securities, Inc. - Analyst : Frank, I want to talk about the comment you made towards the end of the prepared remarks in terms of the medium-term guide being a little bit unrealistic in the current environment. So if we just focus on the US policy changes, you mentioned Trump's initial proposal is 40% cut. You don't think that will happen because Congress will offset. But let's say, 20%, 25% cut to next year's budget, just to take a number similar to what your assumptions for this year. How does Bruker offset that next year? Could you talk about how you would respond, what different levers you are, how we should think about possible ways to get around that, whether it's pharma biotech, whether it's -- Puneet just asked on AI and some of that some of the more industrial tech parts of the business. Just sort of what steps would you take to offset that US A&G cut a little bit more medium term?

Question: Michael Ryskin - BofA Securities, Inc. - Analyst : Okay. That's all really helpful. And then, Gerald, if I could squeeze in a follow-up for you. You mentioned the comments in your prepared remarks about order book and BSI down year-over-year on A&G in US and China, obviously, makes sense doing what's going on there. Any way you could quantify that either via book-to-bill or just an order growth number. And then could you touch on your backlog your existing backlog ability to offset maybe a lower order book at 1Q, 2Q this year, sort of what that buffer gives you.

Question: Patrick Donnelly - Citigroup Inc. - Analyst : Maybe one more on the tariff side. Encouraging to hear you guys offsetting that for '26, can you just talk through -- it sounds like pricing, cost initiatives moving to manufacturing around supply chain management. Can you just talk through, I guess, the new pricing assumptions, what you're doing on the manufacturing side. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 07, 2025 / 12:30PM, BRKR.OQ - Q1 2025 Bruker Corp Earnings Call Just want to talk through that confidence level of offsetting it into '26 and preserving that number and again, kind of moving into '26 with a clean slate on the tariff offset. So if you could just talk through pricing, manufacturing cost initiatives that you're using to offset it?

Question: Patrick Donnelly - Citigroup Inc. - Analyst : Okay. That's helpful. And then maybe a bit of a follow-up on Mike's question there. When you think about the academic market, Frank, I know you're talking about academic government, I think, down 20%, 25% this year. I guess when you look forward, Gerald mentioned that mid- to high teens, earnings once these headwinds are absorbed. Are you thinking that the academic market -- one of the big questions we get is this structural for the next few years, right, where this declines every year for the next few years? Or is it you rebase this year and then have opportunity for that piece to grow? How do you think about the academic government exposure here? And is this, again -- with the new administration in office, is this structural until things change on that front over the next few years?

Question: Tycho Peterson - Jefferies - Analyst : Frank, I want to dig into your pharma comments. You mentioned strengthening biopharma a few times. So did it get better as the quarter progressed? Anything you can say in April? Is that mostly timsTOF? And then in your guidance, you alluded to maybe baking in some pharma slowdown. So maybe just talk about the gives and takes.

Question: Tycho Peterson - Jefferies - Analyst : Okay. That's -- and then follow-up. Follow-up on M&A. You're adding the RECIPE deal, just over $15 million or so in revenues, but you're not really changing your contributions here. It was 2% to 3% before, now it's 2.5%. So maybe just talk a little bit about what the offsets are on M&A? And are you kind of more optimistic on revenue synergies from some of the deals, maybe just a scorecard now that we're kind of a year into these deals?

Question: Rachel Vatnsdal Olson - JPMorgan Chase & Co - Analyst : Perfect. So I wanted to follow up on Mike's earlier question around order book trends. Appreciate all the color you gave us on orders in the quarter and book-to-bill as well. But can you talk to us about your expectations for bookings going forward? Do you think we've kind of hit bottom on orders? Are you expecting it to get worse as we get into the second and third quarter, given some of the headlines on NIH budget proposals? And then where are you expecting to exit this year on backlog, given you said you still have the seven months of backlog that you're working with?

Question: Rachel Vatnsdal Olson - JPMorgan Chase & Co - Analyst : Yes. No, that was great color. And then just my follow-up, I wanted to dig into some of the China stimulus comments. You called it out being a little bit slower in light of the tariff situation and provinces just being slower to release those funds. So can you unpack that for us a little bit more? How REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 07, 2025 / 12:30PM, BRKR.OQ - Q1 2025 Bruker Corp Earnings Call much seamless revenues did you guys recognize in China in the first quarter? And then are you assuming any time stimulus revenues for the rest of the year?

Question: Luke Sergott - Barclays Bank - Analyst : I just wanted to kind of dig in a little bit on the 2Q to get some cleanup modeling. Can you just help us with the guide assumptions by the segment for BSI and BEST, what's embedded there for that low single-digit constant currency growth kind of FX MA? And then on the operating profit, I understand that the cost out for that $90 million or the mitigation efforts for that $90 million turn into $45 million, like how much of that $45 million net are you guys looking to hit in that 2Q?

Question: Luke Sergott - Barclays Bank - Analyst : Okay. And then I --

Question: Luke Sergott - Barclays Bank - Analyst : Yes. Okay. Understood. And then I guess when you talk about the other regions that are doing stimulus like South Korea and Germany and Japan, like I understand that this is more of an out-year dynamic and potential tailwind, but a little context for what those countries have done in the past from a stimulus perspective. Have you done any work or have any insight there of what this could look like? Would this look like something like China stimulus in the past where you just get a huge bolus? Or is this more infrastructure and more secular?

Question: Subhalaxmi Nambi - Guggenheim Securities - Analyst : Agree, best is only 10% of the revenue. But do you expect the clinical MRI, Supercon to eventually improve for Bruker given that it's taking some time for AI trends to impact your revenue. One of the things with Bruker's strength is the diversified product portfolio and therefore, not seeing strength in one of these segments when ACA/GOV-nment is down, always remains a question. Like your -- the diversified portfolio is supposed to offset all these weaknesses. That's why I'm asking about it.

Question: Subhalaxmi Nambi - Guggenheim Securities - Analyst : That's right. Yes.

Question: Douglas Schenkel - Wolfe Research - Analyst : One question, I guess, what I would call portfolio evolution. And then just a follow-up on China. So portfolio evolution, some of your bigger acquisitions over the past couple of years ostensibly served to move your revenue mix away from China and into areas outside of academic research. I'm not saying those were the primary motivations, but they're certainly features of a lot of those deals. So China seems like a complete black box right now, and it seems like it possibly could be structural. Academic government funding, as we talked about extensively, is at risk globally. So I guess what I'm wondering is when would you expect the deals you did in '23 and '24 to grow year-over-year on a same-store sales basis? Is that going to happen in '25 and '26, are we kind of in the background starting to see the benefits of portfolio evolution? So that's --

Question: Douglas Schenkel - Wolfe Research - Analyst : Why don't we answer that, and we'll come back to China if I can.

Question: Douglas Schenkel - Wolfe Research - Analyst : Yes. My question there was just going to be -- and I know I'll keep it tight. If we think about even what you guys were saying, a month, a month and half ago, about orders related to China stimulus, it obviously sounds different today. It all has changed in that period. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 07, 2025 / 12:30PM, BRKR.OQ - Q1 2025 Bruker Corp Earnings Call My question is really, do you think, in general, your visibility on what's going on in China and what's going to happen in China is just a lot lower than it has been for the last decade and I think you have that adequately captured in guidance at this point?