BRKR - Earnings call transcript Q3 2017

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Operator

Good afternoon, and welcome to the Bruker's Third Quarter 2017 Earnings Conference Call. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please also note today's event is being recorded. At this time I'd like to turn the conference call over to Ms. Investor of Head Minkova, Relations. Miroslava ahead. Ma'am, please go

Miroslava Minkova

Head like Thank to everyone My is I'm would for earnings you, Good afternoon. name the and Minkova, Jamie. to Miroslava Investor Bruker's call. Relations Bruker. welcome conference I of third XXXX quarter

on Frank Laukien, today's and and our and President are Senior Bruker's Mattacchione, Vice call Chief me President CEO; Joining Tony Financial Officer.

will presentation The earnings release clicking earnings during be call, website. we today, PDF by we today's presentation. slide this earlier the be issued to on a addition release can Bruker's In downloaded hyperlink of referencing Investor conference the on Relations

our today's non-GAAP at non-GAAP to highlighting financial ir.bruker.com. in we'll measures our financial on of included are reconciliation and website During GAAP release, call, our information. be earnings A posted are

to Safe would statement, Before Harbor I slide I show we begin, reference Bruker's on X. like which

statements call, note representing in today. not date any Therefore, company's this practice, on of do as information outlook not of financial outlook making on events course our described The uncertainties. SEC that that financial our based Form November our related such results are to future conference rely statements other include, views the we Consistent year-end other company XX-K, to forward-looking to February our business materially as but and as differ in in prior of or today, to in to prior or and information, forward-looking conditions not current should the X, of well the XXXX release those we'll such During XXXX. update or to the future new performance release with the these from reasons regarding you actual may statements subsequent intend be projections results XXXX. fourth and our events is discussed quarter risks of in as as of forward-looking differences Factors might today's Also, our following cause filings. earnings statements. that limited the and subsequent involve

a business will more third cover We quarter financials the detail. begin for in XXXX today's then will Tony with summary. providing Frank the call of

to Now, CEO, Bruker's I turn over would to Frank the call like Laukien.

Frank H. Laukien

Good you, X.X% on thank the you a basis. X. on I solid Bruker organic will on earnings today. call joining everyone, today's for us Miroslava. begin an Thank XX.X% slide with increasing XXXX third And and year-over-year afternoon, presentation had revenues quarter

Our Scientific reported Instruments quarter X.X% XXXX segment growth year-over-year. organic third of

the growth is negatively comparisons first low the year. prior about a up We and also better affected a were up on was expected. XX% non-GAAP profit an tax of XXXX, rate X% course unusually in Year-to-date by year performing delivered Bruker's EPS Year-over-year of basis. quarters business expected year-over-year had basis operating earlier the we on XXXX than as GAAP in three for

growth organic We have from contributions areas. with growth from end-market revenue year-to-date achieved improvements targeted and better our

year-to-date are raising for these we year results, XXXX. the With full our outlook

XX%, or the restructurings up BEST previous consolidations which XXXX QX Scientific quarter. about growth X% our executed Scientific organic This growth CALID organic as has years. In partially at of previously Instruments tailwind reported contributed segment, to represented FX XX.X% Looking at QX exchange million, revenue year. results, Instruments revenues or X% X.X% approximately of segment including XXXX with groups year. organic more BEST basis, segment Acquisitions this Instruments mentioned. year-over-year. was On XXXX year an of increased $XXX NANO company's up our our increase in about an factory tailwind in XXXX, from also to decline while last and X% Within in foreign growth, driven our challenges and which we an and by revenues Scientific our segment year our over by year both X.X% in closely revenue offset was both revenue by BSI XX% our of QX over an X.X% revenue was

Scientific As our intrinsically margin our Instruments XXX In non-GAAP segment. our a negative from gross geographic BEST to acquisitions as effects lower bps as predicted gross business QX currency reminder, margin margins of XXXX, than declined segment a year-over-year product, has due headwind mix. well gross and

stable of to In XXXX margin in non-GAAP QX points QX QX $X.XX of reported strong of XXXX. of operating compared EPS to basis XXXX, Our relatively QX $X.XX was compared down fairly a Bruker XXXX. XX GAAP

non-GAAP third of $X.XX low rate non-GAAP $X.XX decreased of QX unusually quarter X, show the in I primarily an versus of XXXX in Bruker's of the year-to-date QX EPS slide XXXX first of performance Our third the XXXX. quarter X.X% reflecting tax XXXX. effective through versus nine-months of XX.X% XXXX On

an up Our was negative up while of $XX X.X% minus the is first year-to-date Acquisitions growth exchange million a months modest of XXXX. nine X.X% or organic revenue year-to-date Bruker's versus was basis, X.X% On revenue contributed year-over-year. revenue of foreign the first months to XXXX. versus nine X.X%

XXXX. year-to-date pleased with are growth organic our in We the in revenue improvement rates

year-to-date at up all groups growing BSI with Scientific the revenue of of nine three months year-over-year first organically our the year. year-to-date the organic growth, X.X% Looking components the in was Instruments segment

nine on XX% basis Our XXXX. organic an segment of versus first BEST months was up the

declined acquisitions improvements same our seen of Scientific operational Year-to-date the expected first nine offset Instruments the have XXXX. as from dilution from points order year basis a months were negative slight prior year-over-year margin gross partially non-GAAP within versus by period we segment XX and currency. mid-single-digit Importantly, impact growth in the

year the up up operating year-over-year. profit XX that are is versus same margin non-GAAP pleased We Bruker's XX% operating year-to-date, year-to-date non-GAAP prior period, and is bps

earlier. of $X.XX all nine The along – non-GAAP year predicted to the EPS same also compared period, that guidance had non-GAAP XXXX. and months and reported had our in year, XXXX, comparisons unusually our low as first first period EPS affected for of months nine $X.XX $X.XX tax GAAP was the expected rates same we prior XXXX the XXXX compared Bruker in EPS GAAP $X.XX For year-to-date in to and in our was the of the

first in Scientific in demand, the in quarters improvements U.S. government Instruments These mid-single-digits So, on We in year, are academic update now the also year-over-year. up earlier our the three let the conditions. me Europe were segment part notably most for the better in result and more stated of you orders of end-market and recently

have few of the also We most healthier compared markets seen years. trends in industrial to much demand our last end

I to Our believe Biopharma and the year-to-date growth three together constant performance better of summary six with X to investments of XXXX. segment market do of in momentum a growth us scientific Microbiology on our provide a instruments we groups slide organic strategic Please in well. continue our and basis. Overall, revenue positioned the that areas continue will turn where and to trends X BEST our currency now markets our

comparatively favored First, product revenue revenue revenue systems despite From of with the Group single-digit Bruker is versus in up year-to-date in slightly XXXX. low-field gross BioSpin more delivered mix XXXX more revenue units margins. perspective, high-field NMR QX growth. higher in NMR profits systems with low a BioSpin the lower year-to-date XXXX, Xgigahertz

as systems of do by pre-clinical in markets We any PCI our in PCI QX As markets executed recovery XXXX. remain and the gigahertz expect XXXX. QX not imaging well both in a encourage or reminder we revenue

operating reported Finally, XXXX consolidation CALID which to to revenue growth resulted mid-single and factory in leverage. business higher service also Daltonics growth, profit continue BioSpin's post revenue digit strong margins. year-over-year. aftermarket The Group contributed The Bruker

the revenue applied year-to-date, solid markets Optics had growth up industrial demand. strong Daltonics execution and Group, improved the Within year-to-date, CALID mass-spec and products was with revenue and

XXXX. year-over-year, CALID with the was in revenue detection due in a of a down consumables XXXX. benefited CALID also to from contract large Our quarter challenging first InVivo of acquisition comparison January the

and our products. with XXXX acquisition January slide NANO Bruker now. from of high-single-digit Turning growth organic contributions revenue to X nanoindenting growth, Hysitron reported good

industrial the Within AXS growth the was XXXX. Group, European driven growth up recovery. a market's by revenues were and year-to-date, the AXS year-to-date NANO following challenging higher

Surfaces from market business as at Hysitron healthy end as the up acquisition, year-to-date, benefited which perform Bruker. Nano technology reflecting or revenues underlying well semi buys. demand, continues metrology new to were semi Semiconductor well Our

the and year semi NANO a We trends semi improved at fourth are market the in quarter healthy by for also of the finish the encouraged Group. industrial end Overall, XXXX. conditions expect strong we market to

segment had November XXXX higher the in OST, OST second the driven Bruker or acquisition, of our at then substantially revenue quarter was by its and BEST year-over-year, XXXX. – our Finally, year-to-date BEST strong year-to-date organic growth

slide Next, high-margin initiatives. over acquired X, take new important highlight On a some highlight the we course to our two quarter, or or I second of will we enabling moment for the high-growth, products new quarter. third launched the early in of products

trapped left, proteomics microbiology consumables side, of the our On Mass new franchise. and timsTOF Spectrometer new is in research page for for Pro mass our This or Organization, left-hand for our Proteome Human on proteomics or on mobility ion the Starting we the the right-hand TIMS. separation, shotgun dual-TIMS-QTOF side proteomics. recent meeting, tests the the with unique designed is of introduced at HUPO version spectrometer system

our very for we and Specifically, for sensitivity mass enables resolution higher clinical high higher new a large cohorts. and speed the while and towards serial particularly PASEF accumulation at move this also method, crucial is protein speed stands instrument. Pro using unique for the of of higher research as parallel which validation proteomics, offering combination in optimized timsTOF biomarkers fragmentation. This PASEF and analysis is

assay Aspergillus The with real-time culture to developed show in our broad-based These of towards Bruker's also early and in disease, samples rapid the our X, CE margins. assay MALDI two to without antibiotics allows directly as any for or time, for right Candida testing, platform outcomes. growing you marked detection which and key our which, with markets kit. products, Europe. our which the I was for Over need has common the fungal expands we introduced potential Aspergillus In of and business Fungiplex we September, improve or M&A assay, blood, higher patient transformation developed to Candida can well acquired the the our MERLIN, the our the as testing, Together Candida strategy as key be – On hours a of plasma, PCR or new XXXX, are faster with veterinary which portfolio molecular Fungiplex product slide most slide, IFD, hand pathogens three portfolio previously Candida side regulatory On for remain our Biotyper in unchanged. patient can proteomics products invasive resistance priorities does microbiology Fungiplex and AST. identification. elements Fungiplex know, specialty microbial Fungiplex candidiasis investments introduced human susceptibility test step. invasive MERLIN's believe achieve rapid October, rapid associated from are area antibiotic assays portfolio microbiology where The complementary serum we of Fungiplex approvals,

year-to-date acceleration improved our to growth, We with CFO, call track year. let the turn now, Tony deliver and Mattacchione. for are I'm on And our and me our commitments for our XXXX. to on pleased the over outlook

[0057TV-E Anthony L. Mattacchione]

and provide I our some on Thank in you, XXXX Frank. performance financial QX XXXX. Starting now year-to-date on details slide will XX. additional

saw X.X%. On reported of Bruker's million XXXX. you revenue from which included press decline a $X.XX, GAAP in EPS in to QX, in was growth QX a As $XXX our our $X.XX increased of organic release, XX.X% basis,

in EPS income have last rate a revenue those unusually facility free flow basis, previously increase increase. X% debt stock roughly operating Our used declines up were year's from which last due GAAP position QX cash compared cash challenging continued a an from included XX% low our million, line and year-over-year The comparisons year-over-year, also million net in a to non-GAAP The using disclosed. quarter to program, entirely EPS net our XXXX. year. in of the position cash net with We ended non-GAAP XX, declined with our in to we XXXX. as to September borrowings. (XX:XX) to flow tax our buyback On all non-GAAP generation cash and $X.XX, were the $XX.X $X.XX million of to our $XX part free resulted was acquisitions QX fund QX in $XX.X comparable at dividends, debt credit

portfolio quarter. third to Our and to revenue the organic Hysitron primarily to foreign acquisitions. XX to months from (XX:XX) year-over-year On working X.X% our primarily B-OST, weakened X% translation. was last addition InVivo the $X.XX acquisitions due XX, the This in the over X.X%, slide capital ratio in growth and contributed currency of

aftermarket to and in industrial by digits sales organic driven an the in than year XX%. quarter NANO X.X% BEST total periods. low markets was double an sales, digits and groups. OST Foreign basis the From the flat was is the by were positive BEST including growth rose from perspective, increased versus currency an and end-market industrial organic revenue low up little gains This up perspective, translation down clinical revenue quarter an and a and and continues the basis. our be contribution organic year-to-date within year-over-year healthy grew on continue was metrology in organic particularly product From but and meet a momentum research in basis uncertainty for higher were in technology in about year. customers. NANO tailwind. a was and to growth general BioSpin buys service nodes. recovery groups sales to which the revenues the in acquisition. strong and in to the semiconductor Year-to-date, highlight continue CALID earlier significant revenue led in and both increase group low-double A an an the and nano-analysis CALID single and NANO industrial stabilized CALID for growth to revenue applications. memory following Europe business on Semi growth mass end-markets products as were and Academic future markets and our digits material with for markets on continued X-ray single period, demand mid revenue applied upswing and product year-to-date academic customers respectively. in markets spec have year-to-date we revenues BioSpin and in U.S. Optics in are prior digits. academic in manufacturing organic Semi

year-over-year increased on biopharma basis, it We in and revenue was QX for a year-to-date also organic are single-digits products Geographically healthy. remain applied up on NMR seeing markets while low growth mid-teens European basis. in particularly markets our and an

basis. solid year-over-year was digits on including industrial customers North mid-single our and recovery economies. We our higher grow continued stabilizing a academic with in marginally was good revenue from year-to-date academic see low- to European and markets European in a America to QX up

year-over-year, within Asia-Pacific revenues our were QX down in mostly segment. modestly BEST

again in in Japan and the double-digits regions. revenue increased which performance by offset in quarter in Our China soft was the Asia-Pacific steep decline a other

of Going in very forward, anticipate end-market growth moderation are growth with our a last in years. another rapid China of positive are few the and continue seeing. demand quarter rate organic we the to after improvements of we we growth Overall, pleased pace

Turning to XX. slide

exchange of the a primary BEST Our QX lower were basis the XXXX non-GAAP the business and from XXX Dilution of gross XX.X%, primarily profit margin acquisitions acquisition points was margin from decline our B-OST year-over-year. foreign translation within drivers decline.

headwinds to QX group geographic In continued to year-over-year mix addition our from and margin product factors. and similar BioSpin experience XXXX,

negative foreign and However, additional this year. inventory improvements expense standard and this up was and of administrative to about and the offset accounting by expenses this volume the accounting rates. XXXX from XXXX million of of application operational general new – X% was due new at Daltonics selling, translation QX from and standard currency year NANO acquisitions impact a $XXX QX

cost improvement and improve HR. focus, service begun the services functions, we including our and to financial As within maintain process continuous we delivery our G&A actions shared have

new was year-over-year also these on which initiatives million XXXX our more FX. QX R&D XXXX you roughly and cost X% report increased $XX acquisitions was results. QX expense and to update that will We when due we

expense Looking line, below and QX net $XXX,XXX this balances. the was XXXX $X.X or other on higher than interest more was debt and million in

XXXX results the compared of quarter low in effective to rate of tax shares up the disclosed. the was about option million, stock reflected the somewhat share diluted reserve For our in X.X% releases, Weighted In and authorized required and was or XXXX XXXX. third the predominantly third we down and experienced allowance of as year-over-year XX.X%, million. the exercise May previously we Bruker's tax repurchase our two-year XXXX, effective which in was quarter. outstanding quarter X.X of X% share the average tax in reversals by were million of non-GAAP that year's XXXX in board Last and XXX.X XXXX, U.S. offset rate new valuation buybacks, dilution this third approximately quarter were to $XXX a shares directors program

XXXX, shares of of a have we total Year-to-date, for repurchased repurchased total for million shares million. X.X $XX.X million. we During additional a $XXX.X million QX X.X an

XXXX XXXX bridge XX, million X% described. the $X.XX growth I QX tax in X.X%, $X.XX nine Finally, the in non-GAAP declined covered also growth favorable reflects from of groups of Scientific currency to On primary as year. earlier organic last X.X%, foreign year-to-date non-GAAP of Instrument increases revenue show from of items, in absence M&A Frank discussed. OST translation XXXX due points. contributions slide three was performance EPS from our and I Revenue up as year's of XXXX the reflecting profit slide the year-over-year acquisition improvement XX XX, BEST down earlier. FX QX the for first of a decline. was our gross X.X%. the driver basis the the $XX months year-to-date year-to-date segment X.X% this drivers all and Frank headwind Dilution organic or negative of year-to-date The was revenue modest margin of On

and adjusting by addition, and BioSpin effects. changes organic dilution volume, the BEST and the inventory In revenue offset higher acquisitions, at for operational NANO, the improvements mix accounting in were Daltonics from

XX.X% year-to-date the XXXX XXXX XXXX. of X% year-to-date All-in, to increased non-GAAP selected $XX half the inclusion period or in due XX.X% in expenses margin basis in improved acquisitions points the profit operating operating Our million our to approximately same of XX year-over-year first in investments year-to-date compared about to XXXX.

substantially tax disclosed due and XXXX reversals. three non-GAAP XX.X% tax higher of the previously reserve again, the than first allowance to in rate this year's Our quarters, was and was valuation XX.X% rate year-to-date last tax

income growth offset by of or due of mentioned, expected. tax EPS year's operating absence the which non-GAAP last we had declined just in $X.XX revenue X% than to as Finally, $X.XX and more items

after in three our quarters non-GAAP expectations for original EPS the ahead this we are We first pleased year. compared XXXX, are to that

generated XX, flow nine months higher cash slightly first million slide in was operating the flow same year of higher This period XXXX. of free in an by to uptick we Turning capital in reflected cash expenditures. than which in offset $XX.X the the partially

improvements. DSO payable lower and Our showed XXXX offset to QX days quarter associated was higher days This XX year's reduction last The was with in of requirements operational a lower driven inventory inventory outstanding. in for inventory cash relocations compared partially facility XXXX outstanding cycle of ongoing outstanding. the days days a decrease three third days nine three by about about conversion following reduction by and roughly days days

guidance slide we our margin revenue raising XXXX to EPS turning updated are XX, reflect translation outlook to on and performance better currency Now, full-year in operating foreign rates. expansion growth, year-to-date the

is to For XXXX, Adding tailwind it approximately we to a the project prior We full-year contribute expect our from about reported now to sales. reported increase and growth for Currency all growth of be X.X% an be X.X% guidance X.X% up, we of our XXXX now between acquisitions of X.X%. to X%. organic revenue of to to X% projected range X%, the X%. of in our revenue positive expect

for half and second through our expect also are profit we the to of The in raising the operating non-GAAP expansion expected now operating our volume projections EPS. an higher to result We flow margin margin. year additional is

basis base expansion. XX recent from XXXX, XX.X% include XX and to our For points This compared continues to acquisitions. non-GAAP the points of previous approximately basis operating our of dilution expect margin a XX our we to XXX XX points expand basis XXXX now of guidance to full-year between in basis points basis from points

Our XXXX at unchanged tax XX%. non-GAAP year projection rate fiscal is

to we in full-year non-GAAP our previous expect of our EPS diluted quarter be This is For income operating now $X.XX make for quarter revenue and the total, between In shares. and the guidance it share year-over-year. organic XXX and guidance during third of range project million continued another with a EPS our summary, In That's $X.XX. we to XXXX good of positive $X.XX. count, $X.XX XXXX, compared quarterly progress, Bruker color. growth to to growth fully solid

to continued expansion result that can optimistic the leverage over and in momentum. focus, initiatives our improvement see expect further operating discipline high markets, are With continued growth to we meaningful pleased time. growth end deliver investments are in our margin cost and in We

you in I'd session. We our like the to XXXX. updating also again to look XXXX call Miroslava to conference on start back call forward With Q&A that, the February to QX turn

Miroslava Minkova

a accommodate Thank your the you, of one more follow-up. Tony. to Jamie, effort open we're keep our In an to Q&A. questions up please analysts, ready to and

Operator

gentlemen, begin Ladies now session. we and question-and-answer the will

comes Please question. today from your from Jefferies. ahead question Couillard go first Our with Brandon

Brandon Couillard

Thanks. Frank that Tony, Good could strategic us a sense areas, basket different give portfolio, afternoon. or performed or five of of growth in you quarter? if third that the six curious how

Frank H. Laukien

Frank. that one. Brandon. Yeah, I'll It's take

in initiatives the I different stages. are think very obviously, growth different

were As proteomics microbiology big others, you know, just launch, our and has – is and semi occurred. pretty already sizeable literally like

we're in are in growing more obviously, So, anticipated. and the next give aggregate, end we had they as that more give we'll the give going it's guidance. and seeing of the we ahead of the get rest of February. that in we'll you year's the quantitative we well, on in color that reasonably But as year growth early sort XXXX early rates and XXXX, on of the business, by you Overall, when guidance,

Brandon Couillard

for operating year-over-year could what Thanks. the margins basis in if a performance, growth two-part chance share and the with would secondly, bridge between be on helpful. the M&A then us Tony. us specifically? might BSI help portfolio delta in a been Any the that core have And order quarter currency, you could you and third And question

Anthony L. Mattacchione

And, the on quarter. up operating a strategic making From market our it's helpful annually. bookings comes with – margin helpful points focus here, leverage. that with gross – From our operating perspective, to currency, XXX adjusting it's the for margin long-term to conditions, and new bridging take basis operating with Yeah. long sure – appropriate improved where really products, areas, growth we're the basis understand focused digits margin, on my really acquisitions mid-single in we're with perspective expanding profit to a XX the term points is and to –

just share and sustainable, planning well that tax and going that of help, continue expansion lot Below place our will repurchase. in down Our to P&L, contribute and already. leverage we profit, as we And should policy that's the operating expansion transformation – our forward. believe to delivered a as

we're the expansion sustainable profit the thesis the described, with process So, confident over that time. just expansion, will I generate on margin operating

Frank H. Laukien

it to And The more, finish it up just profit on included Brandon, a M&A expansion year-to-date question, bps, operating correctly. margin little understood also bps to dilution. XX of your fill, I about if or bit XX again

So, would've to guided, bps operating yes, without And of reason, the been what for expansion those it's we headwind. XX still which did margin course full guiding greater. that's acquisitions, But even a our also year, had exactly we're for as about acquisitions. we the of from

Brandon Couillard

Very good. Thank you.

Operator

Our next ahead Please Amanda from from William comes your Blair. go question question. with Murphy

Unknown Speaker

on Malcolm Matt Hi, Murphy you for taking Amanda Thank today. of is our this call. (XX:XX) speaking behalf

from ask we in to see over Europe, growth a the hoping of long how see to recovery and – continue get Just, in academic wanted market that term? funding you so sustainability perspective about I perspective to was the as some the your to

Frank H. Laukien

Yeah. Again, this Frank, is Matt (XX:XX).

actually European if the recovery, big surprise. was big you the not think a I So surprise. wipeout, it's like, year's Last

of European growth in notable relatively to aggregate, been has has of but exception every where many simply the has moderate and years, simply, the of research mid-single-digit And not think government I in to we're low to sort patterns back think academic maybe I stable, in growth with market general. country, funding XXXX. in in many, the normal really Europe it for normalized

Unknown Speaker

an That's bit Got helpful. question. up then, Thank And you. of with it. unrelated a Yeah. following

growth, you growth from LabScape BioSpin what about talk within over your revenue strong So see revenue adding that aftermarket of you business evolving group. about and is of talked how in terms exactly you the the time? mix Could

Frank H. Laukien

good – now high-single the bit that under to digits runway, that systematically of from think the service options little year-to-date We little to going somewhere fruit, a And that. services group, to also – very a but has XX%. close upgrades in rate, low-hanging after expanding the an software. has really had we're bit a it been or to within BioSpin that So seen growth was some

was think that the question know I of don't will of where answered bit one your at this years our I opportunity particularly a So pieces portfolio but... whether underpenetrated. be faster-growing that ago and little entirely BioSpin,

Unknown Speaker

just We hoping what definitely of But sense No, was there. for it. looking get helpful. were you're to that little answered a better

So, our thank you taking questions. for

Frank H. Laukien

high-single-digit least – in more continued XXXX. XX% at of – talk forever think about necessarily when I growth you give grow we not area guidance but but kind that that at maybe we'll

our and So, to it be areas continues margins. part growing very good that of operating faster delivers

Although, some as it a ultimately, actually reducing us. are gross our is margins very those grows, but more after and has market margins in bit to important cases, operating good little

Unknown Speaker

you. Thank Perfect.

Operator

Willoughby next Research. ahead question Our Steve Cleveland comes from from go your Please with question.

Steve Barr Willoughby

Hi. Good Tony. you, questions evening. Couple for Frank of and

the describe BEST a more bit range? on commentary could you plus quarter, grow XX%, First, suggested I a your as happened in that quarter in remember still ago XX% what this it was going to likely

Frank H. Laukien

Yeah.

issues. timing there's I So, think some

we big conductor some demand OEM some and primarily course, BEST. projects customers science from And of the the at demand. have own of have MRI We conductor our

to from the And it's science quarter they so really – quarter just big can project, fluctuations.

quite still that this on probably still of little the B-OST had and course, of inorganic bit was timing acquisition QX a organic growth annualize pulling is But primarily the very fluctuate Overall because growth. it'll slower So, In to some growth little quarter. quarter that been of really can projects, into become from think bit big I a quarter. science of QX. of organic side. Therefore, big good, primarily they bit a it's QX partially

at to really them a rates XX – XX-month growth on look on basis or BEST much with better So, a months. last four-quarter its

Steve Barr Willoughby

is amount FX? positive Okay. your EPS of much attributable That's helpful. going Thank that us you. favorable guidance is more Then for that Tony. or provide I if was – just could up. How from the more wondering

Anthony L. Mattacchione

lower actually us. is for FX

is So, none the FX. to increase of attributable in EPS

Steve Barr Willoughby

Okay.

Anthony L. Mattacchione

have... We

Steve Barr Willoughby

Oh, ahead. And then last one. go

Anthony L. Mattacchione

into it translates have revenues translates We European and where it we when dollar weakens, our Steve, Swiss because of costs. have cost also base, – higher situation the higher a but into And...

Steve Barr Willoughby

Sure.

Anthony L. Mattacchione

way ...depending on the revenues to think – that's but a from, in a result some cases that the negative generates negative come lot, bottom, EPS on actually where it. on not about the and

Frank H. Laukien

small summary in They're effects

Steve Barr Willoughby

Thanks. Okay. there any Is updated...

Frank H. Laukien

Steve? more, there Was

Steve Barr Willoughby

I Yeah, were it quarter. gigahertz know as of there if types other NMR Frank. those timing shipment updated are any your changes shipments just potential of didn't Is I I there is to systems? for relates there shifting machines? last know any do in what outlook some

Frank H. Laukien

the we acceptance. would we – not for will mean revenue more be guidance when the continue shipment this revenue maybe guidance you upon XXXX. a system give the will be but give that recognition recognition, presently. I But to Yeah, we'll

into the that moving second of least So, into is at year XXXX.

Miroslava Minkova

Second half.

Frank H. Laukien

I I'm sorry. What did say?

Miroslava Minkova

year. Second

Frank H. Laukien

Steve. I'm God. Oh sorry. my Yes,

I half of The XXXX, apologize. second

Steve Barr Willoughby

it. you. Got Thank

Operator

Our Jack Barclays. Please your Meehan next with question comes go from from ahead question.

Jack Meehan

Hi. afternoon. Thanks. Good

Anthony L. Mattacchione

Hello.

Frank H. Laukien

Hey, Jack.

Jack Meehan

to on wanted thoughts your get CALID. I

mid-single looked up digit it would it So like I trend year-to-date now little quarterly a better. the guess picked

Just traction seeing side. any out clinical in you then, what are of biopharma? the on coming ASMS the with And Daltonics

Frank H. Laukien

Now, Frank. is this

which microbiology that ago. really the no normalized, it's clinical was area growth longer So, the has double-digit side is it years

now it's basis. above although mid- It's and growing a Now, digits more slowly from in the fast, average. our growing very lower growing revenue Systems to growing still with Aftermarket overall high-single and Consumables

XXXX first and we so China this we a think Whereas, just has it in normalized, there is hoped we last year. growing. hiccup or to actually recall of last last channel issues you if half so how some on, year I it had had the So see year

that's ASMS in imaging mass well. are MALDI PharmaPulse clinical of on year's really that spec development, MALDI microbiology used imaging the going drug pharma dong the So, last particularly systems of quite and side well. and systems, sort launches

we applications year's launches pharma. So, year for contributed in the those research of mostly we're And both and growth course, at this this with they rate product and will year's HUPO next expect help. to ASMS, and pleased growth

Jack Meehan

the the the maybe then, during of the outlook, Europe looking at fourth here views just and takes implies call in into about And and leaping a with listened math on U.S. order you And academic to off is wrong I quarter helpful. should coming about it Thanks. improving Can and think to commentary organic how your we but That's us the help growth just the about rate. and Great. I my guidance puts then X% XXXX? think some

Anthony L. Mattacchione

QX talked about even that moved difficult and with some Frank that earlier large won't magnet with repeat. might very last QX detection a that is significant year This shipments is comments. high it in the had expectation quarter the that a in for off and have X-gigahert I'll Tony. and we was and follow-up has comp some a We start

That that basis points. represents XXX to XXX is quite sizeable. So, about

your is saw with And math like right. deliver more adjustment, us it's that So, year-to-date. what you

that's we So, a And a those but range know occur. in to you do things with mind. the later also so keep could factor range as rate of two have accept effects growth a our and could schedule impact on outcomes that always business, there there's or really

help if more the business comes, that obviously So, rate growth will in QX.

Jack Meehan

Thanks, Tony.

Operator

question Our next go from Doug comes your from Please Cowen. ahead question. with Schenkel

Chris Lin

Thanks on Chris my actually Hi. This today. is Good Doug for Lin afternoon. for question. taking

segment? more my based single-digit right? your orders Is So, And can bit this on orders was mid orders higher growth But Bruker growth And growth detail higher XXXX? achieving was a guidance. revenue It new asking provide your CALID then organic rate you in in and for Thank you. not could what like and what level by seems on confidence talk growth? NANO? just in products BioSpin market for XXXX you're new seeing I'm you for about question. trends, follow-up

Frank H. Laukien

this Chris, Frank. is right. All

fair full our BSI was the on really the of mid-single-digit quite think for year. number also a bit That's subdued weak or biggest growth. similar say for, And the because years from Instruments to Scientific little a the is expectation tend NANO, comes science-oriented two So, more life order I the at for perhaps be of to order industrial. most more it rate, groups acceleration that growth which the year-to-date least,

bit And NANO in the other revenue course. orders groups for for BSI XXXX, within we're giving a not than growth year of faster yeah, little guidance, division. terms again, is the and this So, of

think QX. I pretty business, And which mid-single-digits, We reason change XX%, is be which the would orders year-to-date, visibility. in Scientific see in we have are up XX% our the Instruments is of don't a business, encouraging. a there why trend good about

a confidence to growth for our Scientific will growth there's order gives long-term some at lot QX, that because hopefully the next of year Instruments depend the contracts. us that year. business nice will And have on continue BEST, So,

it's growth – with not far The expectation. still same, see QX in direction following so all that organic exactly momentum. encouraged And decline that that continue this negative. full in we was encouraging quarters, revenue was will growth well the hope each Remember have what so it but reasonable can today, the points it negative. In into XXXX. overall, we one a was we don't step-up revenue I and more momentum our we from we have visibility think evidence that three But organic are XXXX, there really, we So have in a yet.

when guidance. what give know early will we we February more Given we know in today,

Chris Lin

provide Okay. have Tony. you one quick free I Could for Great. Thank flow cash guidance? Actually, you. question

Anthony L. Mattacchione

years. million as within consistent don't comes color the year. is in provide generation cash guidance is We than cash our a other it like on is flow cash which the I well. is most this flow year-to-date But give this QX the really couple of is the And And free was would fact, last most year of year in thing case flow. almost free

conversion we of be similar going years. in what free usually south come So likely will to lot GAAP target is a of QX again, But generation It's income. somewhat cash prior to the flow that. at net

Miroslava Minkova

Operator, next please. question

Operator

Please question. comes Dan Arias go from with next Citigroup. Our your ahead from question

Daniel Arias

Hey good Thank afternoon. you.

other Frank, of in versus there. seeing Just NEO NMR quick what you are maybe percentage one me. for orders the of field that one terms the systems large for on are high

Frank H. Laukien

And while slightly course difference order NEO of routine to performance customers typically them. less shipping systems more to is chemistry sometimes for higher NMR for make high a been the NEO of systems or it NEO so the priced. has for tend a may for

or systems So field NEO or new I high as that would mostly think performance Systems systems almost orders. high we now are all research get the

Daniel Arias

you Okay. much. That's helpful. Thank very

Operator

Peterson from JPMorgan. Our next Tycho with from comes question Please ahead question. your go

Tycho W. Peterson

on things Hey, like when out? will – that sequentially. you Frank, sounds talk think you you worse do can about thanks. And can what's got there? bottom Japan, maybe just going it just

Frank H. Laukien

quite answer. about But insights been know meaningful. trends that have for weak been are have And It's great I I really are don't Japan there there. us for trends any don't has question. us. an don't Good throughout weak any that really the year. I

Tycho W. Peterson

Jordan additions I on much recent Valley, up how Okay. of contributing just disaggregate cycle strength if And growth? Hysitron, help picking the then Semi guess, us the you to could overall the some of here NANO, is versus

Frank H. Laukien

quite I is Yeah, in Semi certainly, healthy well. a it out it may an really cyclical but even continues mean basket. upswing. not be quite it – that was be the Hysitron it's to anymore, acquisition worked

into of buys, for we're into deployment towards manufacturing. buys selling selling what we're capacity new that we're memory, most still of doing is or future technology some Some technology more

into that a lot a that And contributed industrial gotten has particular. industrial Semi. academic recovery, but Europe they sell group. a So, and market for really we it's have good the to research. a sells in, – a also margin lot lot all really demand a healthier, lot industrial upswing growth and for – bigger participating And end only importantly China group into a that – more in not also, in there's European fundamental good but of particularly setup NANO in so And that we're very group opportunity

of good we growth So, drivers. a have number

Tycho W. Peterson

lines. then And guess, one those one I Okay. along last

China of there expect should be or purely moderate. we just thinking something comps, about? you going Is function mentioned a tougher that You else there is on to

Frank H. Laukien

No.

– when growing I the quite been rapidly, been we in previous that had – and It's think function comps. for it fields really weren't that's year. us a other NMR growing even for of in fast for quite

going I mean than ones that we rate, so, attractive, growth we at the seen, rates into still just but to believe. lower, slightly settle had growth it's And

Tycho W. Peterson

Okay. Thank you.

Operator

from with comes Our question Goldman go from ahead Patrick question. Donnelly Sachs. your next Please

Charles Steinman

cryo-EM Thanks an maybe update NMR. as on technology wallet dollar into and for front. hoping would incremental going on talked share be a in the what questions. on the XXXX to Steinman that dynamic where get opposed taking Charlie was In the you're It's thinking about And Patrick. how we've for about seeing to I like you're past, the a to heading beyond? that lab,

Frank H. Laukien

has minor pretty It's of none the all of been, well-known. It – are chemistry and share, systems, it NMR years, And I affected. system, of clearly the none none of is imaging for some systems, affecting Yeah. molecule a couple none that funding, almost the a there, completely effect. year. small may none that's changed hasn't of the wallet of been mean, unaffected. aftermarket, the took this high-field some mean, pharma of NMR I cryo-EM

most that drivers less more, despite little at fact is time. generally still growth NMR this. unaffected many So, NMR is obviously other but well completely by of cryo-EM very doing we margin a have funding, and point good is that this ultra-high-field bit so drivers But the in healthy,

Charles Steinman

you a Got would were, Any you just thought you opportunities the it. Thanks. around margin we're we margin on like to And us where that was margin hoping expansion sense inning what give forward? you then, front. cadence. color in on of drive what think the have I going

Frank H. Laukien

in We're... any inning expansion. the not We're We're long-term margin here. in

Anthony L. Mattacchione

game. It's a cricket

Frank H. Laukien

God. Oh

Anthony L. Mattacchione

changed I expansion believe our runway. of this. mean opportunity. plenty We there's there's I hasn't believe we significant on mean, really, point

better to and or we do points that. got as get XXX discipline the structure we year, can XX we've that growth and cost a expand to margins can market-based in long the As annually, on basis we top line, the think place

I really it's say. would a So, consistent message,

Charles Steinman

Thanks.

Operator

go Bruin Derik Please comes of question with next ahead de from from America. question. your Our Bank

Unknown Speaker

de healthy This you've in you Thank Juan active near to M&A (XX:XX) you. Bruin. recently is be your Derik been if for is, question it as regarding How – and expect in M&A first future? in My the Hi. the is pipeline. as

Frank H. Laukien

months or a so. we're normally to some Mostly M&A where years so contribute software company. five, in consumables portfolio, that not Well we to otherwise to invest we to order capabilities capital acquisitive taken or wanted where to to build have might add last time, or seven XX make investments would say, other or very wanted did our the save in I although, we up.

M&A really very a business smaller development. we not acquisitive selected at a technologies are because other to but If because M&A down, our there always that, we growth for most an or add-on have opportunities expansion will look growth company. So, we I capabilities, pipeline, we're on the I are activity think have organic that generally come expect take the margin more really and would and of don't

Unknown Speaker

operating early Got would a as to next you talk about it. little but know that expansion to XXXX, of be XXX margin still I And a you. too year? may it points Thank follow-up. about see basis bit expect

Frank H. Laukien

tends I'll we'll and long-term sort guidance. of be that's this at when have just have to our that never many expectation. years Obviously, guidance, we're revisit exactly XXXX leave to bps linear, that year it and average give we think on raised that. just I better feeling our our about XX is over but

of more is response a long-term my XXXX-specific. So, than goal rather

Unknown Speaker

Okay. Thank you.

Frank H. Laukien

Thanks.

You're welcome.

Operator

Souda Our go your from Leerink ahead Puneet Please with next question comes question. Partners. from

Puneet Souda

hand, trying understand question. into can whole help for you're Frank. Just how space On going us Hi, the proteomics viewing you overall? understand. one taking Maybe that's to you hand, peptide have it mapping, the other of have if other Thanks serve which through large on market. is more can a And the as the disordered proteins you on hand, the intrinsically high-field But molecules well. NMR. competitive timsTOF

the that or us part as of help understand you next optimization two. over how at So, the look just year portfolio to

Frank H. Laukien

largest are also just participant interesting we top-down looking have those launched is the I is us. largest spectrometry always bottom but because is market. and be also think But proteomics they been I feasible. which what with it's one had doable. of looking of recent think for at shotgun There, role that question, especially traditional will scientifically get been in Good proteomics very they important course if increasing proteins previously and approaches so and years, at simply up and a important the They've important and mass I in less towards of weren't a product middle-down research not which higher now an the Puneet, intact we we more clinical volume as are us. all and think mean research to proteomics us exciting to to we've validation

But of think we proteins, us. will access pursue with intrinsically tools labs. And or Now, regional doable have once which once the are everybody often with they most and not including wave at X-ray people cryo-EM will one to to one, have one. to facilities access biology proteins, we our funding of people and disordered structural NMR and unstructured very course, unique have interest the is national and

disease for intrinsically the think biology in in devastating scientific I are important. will diseases disordered I investment proteins for reasons, become more think but fundamental research so important many which and also

that So will after you high is field take wave proteins. as and field, high on my guidance cryo-EM wave, see funding long focused the that term prediction NMR primarily don't a disordered ultra intrinsically

They're drivers. to is of So and areas. proteomics a our important actually all us lot of important growth key focus one

Puneet Souda

of meaningfully European expectations biopharma? sense And Okay. overall grow small in the core That's markets of there mean segment your a that's sense a can I follow and where think helpful. What's portfolio, just then up, biopharma Got stabilized it. it what your of revenue. with But in labs? What's stands help the I academic in understand, obviously your us having already.

Frank H. Laukien

good big we development couple we've applications. lot in of are a markets, we're Yeah on a put not enough markets. last in why are, participant a those growing they're still of and product of pharma, I those the and years and primarily internal solutions mean biopharma very Which focus attractive, rates is

and pharma here throughput mass-spec and mass-spectrometry development. high NMR or mass-spec make of screening, And imaging in and difference from in growth revenue validation. for strategic beginning primarily, the throughput to Some are free drug Others both high one to unique or off are in to generate organically But areas. races we're development label applications. our it's MALDI other in NMR and developing more solutions reaction biopharma monitoring a screening

multi-year these can products our be from This we we think that drive we will that we attractive areas of over time So, still modest growth very will offer. expect unique rather over one markets grow exposure our horizon, a strategically. to to

Puneet Souda

Thanks, Frank.

Frank H. Laukien

It early is days. somewhat still

Puneet Souda

Thank Okay. helpful. you. Very

Operator

closing remarks. time, showing questions. to And turn management gentlemen and I'd additional for at over ladies like call back conference the this to I'm no any

Miroslava Minkova

you Thank evening. for joining this us

you in good in London participate During our the or We the invite you meet conference Thank at will at a Bruker us the have quarter, headquarters Jefferies to evening. Massachusetts. in us and Healthcare fourth visit in Billerica, mid-November. Conference

Operator

do you gentlemen, that thank call. Ladies We conference does today's conclude and for attending.

lines. You may now disconnect your

Bruker (BRKR) 2 Nov 172017 Q3 Earnings call transcript