Bruker Corp Q4 2024 Earnings Call Summary

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

Question: Puneet Souda - Leerink Partners LLC - Analyst : Frank, my first question is on the guide. I mean the full year guide is 3% to 4% organic growth, which is higher -- at the higher end versus what you had before the NIH indirect announcements and direct cuts. So I'm just trying to understand what sort of gives you the confidence on the instrumentation sales? I mean, obviously, Bruker's instrumentation has more exposure to instrumentation. I mean, so just trying to understand, is it ELITech? Is it AI? Is it aftermarket service or European offsets that are counteracting through the year that sort of give you the confidence and because you're -- and you're also stepping up your margin guide. I mean, 140 bps expansion here that you have for the year, so just getting a number of inbounds on that and if you could help us understand.

Question: Puneet Souda - Leerink Partners LLC - Analyst : And could you talk a bit about the assumptions in Q1, what you're hearing from the customers in terms of instrumentation placements, their ability to take the instrument and install and get them signed off in Q1 and sort of the main question being that some of the facilities are very much supported by the indirect cuts. I mean I recall when I purchased your solariX 15 Tesla magnet many years ago, I mean we had to take down a while and that was facilities. So if you could maybe just elaborate what you're hearing from the customers and your ability to continue to install here, and any backlog cancellations that you contemplate just given the NIH backdrop?

Question: Salem Salem - Barclays Capital Inc. - Analyst : This is Salem on for Luke. Is the expectation still to play somewhere in the realm of 3 to 4 UHF NMRs this year kind of in line with before you've placed in the past couple of years? And then could you talk about the geographic concentration of the backlog in BSI? Is that relatively in line with your exposure? Or do you see it kind of higher in regions where you're seeing the most strength?

Question: Salem Salem - Barclays Capital Inc. - Analyst : That's helpful. Appreciate that. And then on operating margins, you're targeting around 140 basis points of expansion, right? And I'm just wondering if you could give some puts and takes on that kind of bucket out the assumptions on the operational improvements on the existing business versus what's continuing to come from the integration of M&A, maybe a little bit on FX as well. And kind of in that vein, I know you guys do a good amount of manufacturing in Europe. Are you guys contemplating anything on potential tariffs there? If not, how are you thinking about the potential risk?

Question: Brandon Couillard - Wells Fargo Securities, LLC - Analyst : Frank, it would be great to get an update just on the timsTOF platform. Any updated installed base figures you have, a revenue run rate for that platform, how you think about growth in '25?

Question: Brandon Couillard - Wells Fargo Securities, LLC - Analyst : And then two questions for Gerald. Could you break out the impact of currency on operating margin guidance for the year? And then secondly, inventories came down a lot sequentially. Maybe that was currency. Just how are you thinking about free cash flow conversion in '25?

Question: Madeline Mollman - Wolfe Research - Analyst : This is Madeline Mollman on for Doug. For Gerald, if conditions with the NIH or in China do deteriorate, can you talk through what levers you have at your disposal to protect the margin and EPS guidance? And then thinking about the NIH funding, specifically, if the environment does deteriorate, are there things that you can do to reduce adoption -- friction to adoption of products like funding for capital -- if funding for capital equipment becomes more challenging?

Question: Madeline Mollman - Wolfe Research - Analyst : Great. And then on the topic of the Make America Healthy Again movement, can you talk a little bit how Bruker is positioned to benefit from things like increases in food, water, environmental and PFAS testing? What's your exposure there? And do you have anything built into your guidance around that? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 13, 2025 / 1:30PM, BRKR.OQ - Q4 2024 Bruker Corp Earnings Call

Question: Rachel Vatnsdal - JPMorgan - Analyst : Perfect. So I wanted to dig into this first quarter guide. You mentioned that you're assuming flat organic growth, mid-single-digit CER. So that's really implying a mid-single-digit contribution from acquisitions. It looks like The Street was modeling a double-digit number for the first quarter in terms of M&A contribution. So can you unpack those M&A assumptions for us in the first quarter? Are there any one-timers? Is there conservatism baked into the M&A assumption? And then what type of cadence are you assuming for M&A contribution throughout the year?

Question: Rachel Vatnsdal - JPMorgan - Analyst : Got it. That's helpful. Then just for my follow-up, just regarding China stimulus. You mentioned that you had $15 million of stimulus orders in the back half of 2024. Can you walk us through what are you assuming in terms of benefit from China stimulus into the 2025 guide versus what would be upside? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 13, 2025 / 1:30PM, BRKR.OQ - Q4 2024 Bruker Corp Earnings Call And then also just where are you seeing orders either from a provincial level, from a product level, any color there would be helpful as well?

Question: Tycho Peterson - Jefferies - Analyst : A couple on guidance as well. I guess, the 2% to 3% from M&A, could you maybe just delineate between NanoString? I know that had been running below plan, Chemspeed had been running above plan. And then ELITech, are you seeing synergies with the MALDI business there yet? And then also, Gerald, expectations for further backlog reduction in '25, intentionally bringing that down. And are you guys assuming a reversal of the import/export restrictions? And then lastly, Frank, semi -- could semi accelerate from here? I think you've got a new gated architecture replacing FinFET. There's a lot more sampling and process steps needed. And maybe just talk a little bit about whether semi could actually pick up from here.

Question: Tycho Peterson - Jefferies - Analyst : Are you assuming that gets unwound, the restrictions on China?

Question: Tycho Peterson - Jefferies - Analyst : Okay. And then, Gerald, can you comment on the backlog dynamics? And then also, I had people asking about first quarter operating margins. It looks like they're pretty soft. So could you touch on that as well?

Question: Subbu Nambi - Guggenheim Securities LLC - Analyst : Frank, you mentioned timsTOF, that the new product launches is back on track. Where are you seeing most growth in terms of geography? Given recent macro funding events, especially in the U.S., could you lay out what your mass spec exposure is in the U.S. and then what is assumed in the 2025 guide?

Question: Subbu Nambi - Guggenheim Securities LLC - Analyst : Yes. So that means the NIH funding is probably not going to just have an isolated effect on mass spec. One thing you said interactome, does that mean it's top down? And should we worry about something else? Or is this what you told, Tycho, that it's manufactured elsewhere, not in the U.S.? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 13, 2025 / 1:30PM, BRKR.OQ - Q4 2024 Bruker Corp Earnings Call

Question: Subbu Nambi - Guggenheim Securities LLC - Analyst : Yes, interactome for me...