Bruker Corp Q3 2024 Earnings Call Summary

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

Question: Puneet Souda - Leerink Partners LLC - Analyst : Hi, Frank, and thanks for the questions here. So first one, you pointed out that biopharma and China won't help you in 2024. But how much of that the guide cut is due to the pushout of orders into maybe the first quarter of '25 versus orders that simply won't materialize? And you talked about high end of the mid-single-digit bookings in BSI but wondering if you saw any cancellations there in the backlog? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 05, 2024 / 1:30PM, BRKR.OQ - Q3 2024 Bruker Corp Earnings Call

Question: Puneet Souda - Leerink Partners LLC - Analyst : Okay. Got it. And then I have to ask a bit about 2025, I mean, you gave $3.10 EPS expectations before on the acquisitions update call. Just wondering any change to that or any additional thoughts on '25 just given the weakness that you're seeing from biopharma, China and some academic, too.

Question: Puneet Souda - Leerink Partners LLC - Analyst : Okay. Thank you.

Question: Michael Ryskin - BofA Securities - Analyst : Great. Thanks. Sorry, Frank, I want to follow up on that last point. I mean you made a strong point in the prepared remarks of you're confident in above-market growth and significant margin expansion in '25. So just sort of what's driving that confidence this early given there's still this visibility? And what do you see as the biggest swing factors? You talked about China stimulus a lot but like you said, there's a six month delay between orders and revenues. So that's only contributing for the second half of next year, right? So what else do you see as tailwinds that give you confidence in above-market growth next year?

Question: Michael Ryskin - BofA Securities - Analyst : Okay. That's all really helpful color, Frank. I just want to reconcile one other point though. You did touch on the backlog is really strong. Seven months, you've talked about that a number of times. You talked about bookings growth. So -- and on the other hand, you do have the revenue guide cut. And I understand that China has been weak. I understand that biopharma recovery has materialized. That's a fair point, so that's not new, and that's not debated. But if the backlogs are strong, why aren't you able to backfill some of those orders? Is that a timing perspective where it's not so easy to move things around? I guess what I'm saying is just without seven months of backlog thought that there'd be no more support for revenues? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 05, 2024 / 1:30PM, BRKR.OQ - Q3 2024 Bruker Corp Earnings Call

Question: Michael Ryskin - BofA Securities - Analyst : Oaky. Thanks, guys. Appreciate it.

Question: Patrick Donnelly - Citigroup Inc - Analyst : Hey, guys. Thank you for taking the questions. Gerald, maybe one on just kind of the dilution from the acquisitions, the margin impacts. Can you just talk about where we are on some of that? I know NanoString, obviously, the biggest one. I think the guide is for $0.15 to $0.20 this year. I know you had in the past said that could be half of that next year. Curious if that's still the right way to think about it? And just what's going on with those deals? It felt like you guys had our arms around it, but maybe that we should slipped a little bit. I just want to talk through that.

Question: Patrick Donnelly - Citigroup Inc - Analyst : Yeah. Understood. And then, Frank, maybe just on the academic government market into next year, obviously, a pretty impactful day here in the US. How are you thinking about just that outlook? What are you hearing from customers? What could change today? And just kind of that expectation going into '25 would be helpful. Thank you, guys. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 05, 2024 / 1:30PM, BRKR.OQ - Q3 2024 Bruker Corp Earnings Call

Question: Patrick Donnelly - Citigroup Inc - Analyst : Appreciate it, Frank. Hopefully, it's not three or four weeks, but we'll see.

Question: Rachel Vatnsdal - JPMorgan Chase & Co - Analyst : Good morning and thank you for taking the questions. So I wanted to follow up on one of the earlier questions here just on top line. So you reduced the top line organic growth guidance for the year by 250 basis points. Can you just break down that 250 basis point cut between some of the moving pieces that you called out across biopharma in China and if there's any other areas contributing to that? And then also, you mentioned that you're no longer assuming recoveries within biopharma in China. But can you just clarify for us, did either of those markets actually get worse sequentially? Or were you just previously a little bit more zealous on what that recovery would look like into the back half and taking that other model at this point?

Question: Rachel Vatnsdal - JPMorgan Chase & Co - Analyst : Got it. Okay. And then for my follow-up, I actually did want to dig into that order dynamic. So you talked about how orders grew in the upper mid-single digits this quarter? Can you kind of break that down for us? You mentioned China was a little bit weaker, but any other trends on that order book? And then just around book-to-bill. Can you give us book-to-bill in the quarter? And you separately talked about how book-to-bill may not be the best stat to look at Bruker on a go-forward basis. So should we still expect to get book-to-bill on a quarterly basis going forward? Will this shift to an annual stat at some point? And if so, when should we expect that shift?

Question: Tycho Peterson - Jefferies Financial Group Inc - Analyst : Hey, thanks. I know you guys don't want to really talk about '25, but you did talk about significant margin expansion. I'm wondering if you could maybe just give us a high-level framework there. And then I just want to gut check. Are you assuming a normal market next year, which you previously talked about a 4% to 5% growth?

Question: Tycho Peterson - Jefferies Financial Group Inc - Analyst : You talked about significant -- you characterized it as significant margin expansion at '25. The Street's at 110 basis points. I'm just curious if you can give us maybe what significant means in your view?

Question: Tycho Peterson - Jefferies Financial Group Inc - Analyst : Okay. And then a follow-up just on semi. I'm just curious if you can flesh out your comments there more. I know demand trends have been strong but obviously, some of the recent data points haven't been great. So what are you seeing? And what are you thinking about next year on the semi front?

Question: Tycho Peterson - Jefferies Financial Group Inc - Analyst : But no crack based on what we saw from ASML and some of the other kind of end market data points. Is that fair?

Question: Tycho Peterson - Jefferies Financial Group Inc - Analyst : Great. Thanks.

Question: Joshua Waldman - Cleveland Research Company LLC - Analyst : Hey, guys. Thanks for taking my questions. A couple for you. First, Gerald, I wondered if you could provide more color on what the business grew in the quarter, excluding the two 1 gig placements? And I guess how that compared versus your expectation? I mean it seems like BSI may have declined in the quarter. Is that right? Just curious where you're most surprised or where you've seen the most pullback and how that informs your assumption for sequential progression into Q4?

Question: Joshua Waldman - Cleveland Research Company LLC - Analyst : Okay. And then Frank, a follow-up on your previous comments. As you think about recent order trends, you contemplate what you think you can drive from the backlog. Do you think the low single-digit growth implied here in H2 is the right way to think about the medium term, just given the typical 2-quarter lag in rev rec and your comments on recovery into second half of '25? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 05, 2024 / 1:30PM, BRKR.OQ - Q3 2024 Bruker Corp Earnings Call

Question: Joshua Waldman - Cleveland Research Company LLC - Analyst : Understood. Okay, thank you.

Question: Daniel Brennan - TD Cowen - Analyst : Great. Thanks for the questions. Maybe just on kind of China stimulus, Frank, since you've called it out, a series of times. I was just hoping I can ask a few questions here, just to get some color. So maybe the first one is like what should we be looking at as kind of a stimulus program kind of we've tracked like a $500 billion on monetary stimulus? Is that the right one? Or are there others? And then B, like do you expect as the China government is expected to announce a new large fiscals -- excuse me, stimulus measures, do you expect more money to come in to instruments from that? And then I know you said during your prior Q&A that you really can't size it yet in terms of the impact for Bruker. But any way to think about potential implications for Bruker?

Question: Daniel Brennan - TD Cowen - Analyst : Great. And then maybe just as a follow-up, just on biopharma since that's been a weak spot here. I mean would you care to give us a sense of what that business is growing for you? I don't think you've done that in the past, but other tools peers will give us a biopharma number. So just wondering in Q3 and how that compared to the first half? And then related to that, like what should we be looking at? Do you think as like a proxy for when this improves? I mean the headlines don't look great, but we just did an analysis on biopharma spending, and it actually looked okay from an R&D basis. So is R&D not the right metric to look at? Or just -- what should we be monitoring to see kind of when this can turn? Thank you.

Question: Daniel Brennan - TD Cowen - Analyst : Great. --

Question: Brandon Couillard - Wells Fargo & Co - Analyst : Hey, thanks. Good morning. So it looks like the M&A contribution for the year is coming down, at least at the margin, talk about 9.5% contribution versus the prior 10%. Is that rounding? And if -- any color just on ELITech, Chemspeed and NanoString have performed? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 05, 2024 / 1:30PM, BRKR.OQ - Q3 2024 Bruker Corp Earnings Call

Question: Brandon Couillard - Wells Fargo & Co - Analyst : Okay. The guidance rates came down $55 million in terms of revenue. EPS ratings $0.23. That would imply 100 -- close to 100% decremental margin. Can you just help me reconcile that math and why that makes sense?

Question: Luke Sergott - Barclays - Analyst : Great. Thanks for squeezing me in. I just wanted to kind of follow up on the China stimulus and how the -- you talked about early demand and the funnel kind of building there. But given we don't really know how the stimulus is going to shake out through the next year, however that comes through. But is there a chance that the actual funds flowing through are not going to be enough there to satisfy that demand, and that could ultimately lead to the elevated backlog of seven months instead of going to five months? Just kind of as you think about how that kind of paces through?

Question: Luke Sergott - Barclays - Analyst : Yeah. Got it. It's all timing thing. All right. And then here from a pharma perspective, I know that you guys don't -- you talked about 15%, 20% of those revs and that's going higher of your total revs. So can you just kind of walk us through what you're seeing on -- you typically play more upstream on the drug discovery side. So can you talk about where particular things got a lot weaker for you for what you were originally expecting and the kind of the funnel or early demand outset for that as you exit the year?

Question: Luke Sergott - Barclays - Analyst : Great. Thanks.