BRKR - Earnings call transcript Q1 2020

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Operator

Good afternoon, and welcome to the Bruker Corporation Q1 2020 earnings conference call. [Operator instructions] Please also note today's event is being recorded. At this time, I'd like to turn the conference call over to Miroslava Minkova, director of investor relations and corporate development. Ma'am, please go ahead.

Miroslava Minkova

Good afternoon. welcome Bruker's to conference XXXX like call. would everyone first-quarter to earnings I Miroslava investor director development. name Minkova, My is of relations corporate and

Joining our are CEO; call me our on and president Frank and financial chief Laukien, Herman, officer. Gerald today's

on we be In earlier today's latest downloaded referencing slide from today, be of PDF section issued presentation. addition the we'll earnings The call, Bruker's this during website. the a to investor release relations conference presentation results can

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

begin, I we X. safe on reference Bruker's Slide harbor statement, Before like we show would which to

Factors future company actual events of differ related the in operational course performance and in involve materially and from to, new on our pandemic. and release that The and and in earnings projections XX-K, statements. not this company's today's are results During we'll include, those website. or cause the described be regarding of financial the website discussed the limited our and scenario such differences call, the but SEC's such COVID-XX uncertainties risks may conference uncertainties, are that on risks available to which including estimates Form making might statements forward-looking

do XXXX outlook of we that subsequent in future events views note as practice, August information, these financial today, prior or not forward-looking our to the of as statements May expected to XXXX. statements our or outlook intend rely business of the our early based should release X, our second reasons to prior as forward-looking date Also for quarter following Consistent new on our today. and information any current other Therefore, representing you is to to conditions on XXXX. with update related not results

the COVID-XX call reviewing responding the pandemic. and by today's how providing a will to We challenges with is Bruker presented begin Frank business summary

will XXXX for the first Gerald of financials then quarter detail. more in the cover

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

Frank Laukien

you, today's you Good extraordinary your business These thank everyone, as for Thank I hope well. families us are usual. are as you not it's on such, afternoon, and and times, Miroslava. joining and call.

We are priorities. on four key focusing presently

As four, our namely health service pandemic COVID-XX to and for foremost, and employees, to diagnostics products and Slide support you customers. priorities on temporary continuity can first business delivering customers of our see research essential enabling and X, of partners; the the, prudent and -- No. reductions; Three, safety and maintaining other fight the cost executing and our help levels society. our

share a me few these Let of each highlights areas. on

First, families, our our and collaboration safety partners. of their employees, health valued preserving and customers the

to While facilities. throughout preventive proceeded Bruker's major are social and strict businesses our have implement protocols measures essential, other cleaning enhanced distancing, we

While many we for work colleagues of focus is placing enhanced organization our from on are remotely, are our factory service not employees whom working office feasible. home and

we Bremen, company Let our factory In work me one currently COVID-XX a been our for project Germany our with at PCR a factory. paid where Bremen, with COVID-XX in pilot offering employees pilot has in are implemented share from testing voluntary tests weekly workforce example campus, to you program April.

site. distancing accessible protocols strict employees organizations open, under field sites need sites, safety operate and our of are our to when Where customer ensure service social customer to on the be

very for everything are all are persevering for doing. our and employees to they We grateful

for and our our enabling our continuity ability technologies to team. of two focus top solutions service ensuring business for high and maintaining Number is service customers, levels another maintain our supply and areas for our level customers our is priority

cost comply our temporary with at reduced and new operating during manage April, These capacity implement several inventory parts controlled manufacturing shutdowns levels. of protocols, are of and now to and up. ramping back were sites In or safety underwent late local sites rules, March

limited up second Our being without held has do well, that some not capacity or wave. supply chain anticipate trends gradual generally second half we the COVID-XX the of continue current in and reopening supply XXXX, provided

prudent, point and suffice in this taken Third, temporary globally. cost Bruker meaningful a detail. say, we Europe Gerald work reductions. and will proceeded planned to time measures cost temporary restructuring it and previously executing Group cover But NANO in we the with in meaningful more compensation have short

preserve and ramp trained and time, again to same with the up our minimize workforce. for the our are loyal we seeking disruption At our to employees highly ability

of operational So areas important investments cost business, our in Project while pursuing savings throughout and we excellence. are in maintaining Accelerate key the

providing help therapeutic to fourth, mass and crisis. and portfolio, added microbiology have and COVID-XX infectious the spec our PCR we and notably, which diagnostics are solutions disease, and is Finally disease SARS-CoV-X Bruker combat critical Most NMR critical to technologies which a research. test used our in systems, and vaccine

coronavirus test, sample introduced as automated acid Bruker-Hain's On you in and call SARS-CoV-X simply PCR new along Slide me recently Bruker's X, are prep a assay. let I'll or with highlights give coronavirus nucleic extraction test kits it. used on tools Europe,

from small weeks planned but since increases the and about are launch, up starting of a five we are capacity basis now gradually have first We in X June, by ramping million July.

diagnostics to of are to to the related address microbiology of many needed performance the continues very highlight help I X, as which issues health and do disease Bruker's portfolio, Slide well pandemic. products our On infectious

by you out viral is for very But know, the respiratory is used pandemic, complement or during viral As other other COVID-XX itself. for it identifying ruling infections, may methods. not for important Biotyper bacterial, the nonviral instance, or direct MALDI detection detection for which

Chinese in Biotyper China, from extra example, from orders MALDI CDC QX, orders including labs. For XX had an we

of shows one interesting service our X engineer the the a on flew one Wuhan MALDI engineers, of install to of new our Chinese Biotypers one in their service pictures of One in actually of Slide who hospitals. February into middle

patients. customers grateful something heroic, but borders their to for right with and incredibly are attitude We that being on the our

in for throughout we've strong U.K. systems China, Europe, Biotyper but seen in Beyond Europe. the the MALDI growth especially

Dr. systems, we Pro At timsTOF MALDI platform have in On rising being to has Beijing, business, and XXXX microbiology her of result Peking Catherine the infection. used using new in systems Biotyper University year in and been digits grown our actually Slide methods Wong, in timsTOF year. proteomics in the Pro QX as show a proteomics research. COVID-XX changes on consumable in China a star over quantify dia-PASEF identify pathways China, double services our And in in X, protein proteins COVID-XX

throughput I'll is COVID-XX scale, to but it, large COVID-XX reiterate during cohort Slide for need robustness, with for quote gave not nice Where the working what We will us you her X. research. for you the very highlighted Catherine point she and large has which exactly thank us. studies closely on I

Slide Moving X. on to

other Shows severity Australian Center Phenome spec launched global sites Bruker a NMR fluids. National partnering and to in the mass and of major recently ANPC, predict COVID-XX phenomic better COVID-XX. Center, National frontline with and using both research understand Phenome body research project The efforts on the Australian the patient on variation

to Center to and trials It and clinical conduct when of agents therapeutic metabolomics this in Phenome also research. candidates. Bruker antiviral mass of Australian numerous or other and protocols National available spec NMR vaccine The uses clinical systems plans engage also important when available

Sciences Jeremy of I for Centers. the and closer you combat examples at some at the COVID-XX. Bruker take Health Murdoch a perhaps of invite the to to Nicholson, by how Again, also ProVice just the leader are is National Chancellor Australian look University Professor These engaging help quote Phenome

on other biology So play pharmaceutical, There the important very many structural they development, biopharma important SARS-CoV research role. development, our our an tools, itself. pharma tools in play a where virus are examples in role

It's drug etc. RNA screening genes, proteins, it's these in targets, against

business with financial then continue So let overview. update me our and

turn to environment on to $XXX me million. revenues Slide first-quarter to challenging COVID-XX, a X.X% Let due QX Amid Bruker's performance, declined XXXX our starting X. operating

year. acquisitions declines an revenue a revenue to due related to The basis, mentioned in to X.X%. our declined as currency translation earlier, XX% X.X% growth, to certain China. revenues well X.X% included customers On XXXX year an added our reported inorganic revenue Our operations, our as COVID-XX foreign of Bruker's approximately I they drop headwind were disruptions of organic while was over

of quarter, China the globe, toward our we the geographies weaker across American well. North and saw spread outside COVID-XX European in results end As as major the

decreased disruptions. the COVID-XX Our In XXX of year. primarily EPS operating the drop unfavorable gross Bruker margin QX from of mix over revenue quarter bps first The to a reflects XXXX. margin $X.XX compared declined in challenges shortfall, reported non-GAAP certain resulted $X.XX XXX in On that QX over XX% GAAP diluted XXXX year margin, year $X.XX nonoperating our while of margins bps non-GAAP in XXXX, compared EPS year, XXXX. to and decreased basis, QX XXXX non-GAAP QX operational of $X.XX

to compared than Our roughly would the scientific QX XXXX. instrument three of suggest with quarter the groups XXXX healthier order decline orders flat for bookings were first revenue Bruker's

as second However, XXXX could globally gradually. disruptions COVID-XX weaken spread appears we China quarter in anticipate while bookings improving that to the be of

million delayed and XX I disruptions. Slides XXXX installations XXXX the Group where to were in closures, deliveries revenue a certain all year-over-year turn BioSpin and currency to first-quarter basis. XX digits and on best on highlights our COVID-XX declined of groups first-quarter scientific performance as three Please constant our instruments mid-single customer of $XXX.X the provide now segment, further and due and to

the higher delays. timing China. year was declined of quarter significant Preclinical the modestly year year mentioned in aftermarket the quarter. due were results above over a QX And revenue included to first of deliveries systems year, revenue installation early helped the year revenues finally, and over software drop and BioSpin's actually BioSpin's XXXX. by revenue NMR delivery prior in imaging

in the Science which in CALID's in products well due timsTOF and was decline with CALID needed revenue offset CALID infectious Our growth associated earlier, The Group help CALID's some these out molecular Mass single uptake at Life our also are to Life continued important $XXX.X in growth, revenues than health as Spectrometry first-quarter business and digits to issues, with proteomics I diagnostics good disease more pointed Spectrometry. solutions. continued million. to products and Science posted COVID-XX. microbiology XXXX microbiology Mass of performed declined a low spectroscopy, including and address drop solid

molecular disruptions the late market of demand. Bruker mid-teens in NANO declined, our related in the XX to COVID-XX analysis Please in $XXX.X our at and quarter held due NANO's the Bruker Near NANO revenue part now. Revenues x-ray to weakened surface IR globally well. declined to industrial and in turn million related in Slide on our in temporary while of particular, XXXX. up declined, Optics XXXX and COVID-XX Raman FTIR, quarter products factory, spectroscopy tools first tools disruptions revenues NANO first

NANO's as but revenue weak also deliveries a of expected, included the China. in Wuhan, major customer first remained pushouts to metrology in of XXXX quarter semiconductor

in weakened we partially elsewhere. could which signs in markets, metrology offset semi, However, in general, help see demand semiconductor recovering of demand industrial

superconductor as digits in first softened end Finally, the demand declined XXXX revenue in mid-single of quarter. BEST the toward quarter the the of

a reminder, from revenue BEST fluctuate quarter-to-quarter. can As

Slide the pleased successfully On we Florence system that the announce in world's completed University gigahertz XX, are of CERM in to was XXXX. at Italy April installation of first X.X the NMR of the

but that biology of system, today. on So have does item, and proteins this class novel their second functional certainly new first was accepted. complexes. this stable customer it worth enable a research received type homogeneous in Yes, This we quarter acceptance of of magnets structural mentioning customer is system functional

Remarkably Bruker February social installation XXXX, engineers guidelines. with in lockdown of execute through in were able pretty two this distancing while heroic and Italy complying to April

part again anticipate we X.X to expensive they're system of and protein in and is biology, to NMR the also doing interactions. a the subject on a console As only take recognition virus while structural magnet revenue contract. for revenue are quote, generally COVID-XX multiyear look of and this gigahertz at work its a system, the lease not reminder, QX, the would on probe more customer the functional doing only proteins you but invite I they the partial

Turning to Slide XX.

like environment, continues our in challenging invest Bruker XXXX. Project the to excellence, operational Despite multiyear

to reminder, and addition elevated XXXX our and BioSpin Project an of in be two a planned to BioSpin customer will The at improved is single, are budget in project Bruker productivity into growth XXXX. Germany modern, capacity XXXX spending part major sites completed customer-oriented consolidate site. in for historically a As is expected goals and grown higher interface. lean capital in The

a conclude liquidity strong let with reiterating and company that sheet Bruker solid So me is a very fundamentally by a balance position. healthy, essential

Our resilient. tools diagnostic quite life markets are science and

impact to and around challenging reflect likely is Our demand first-quarter the world. quarter of results initial of given second COVID-XX and XXXX be customer disruptions more the the XXXX

in be trends funding as medical disease long-term that believe basic as we and However, are Science, infectious diagnostics well strong. biopharma in going Life research to

XXXX As environment a COVID-XX hopefully, for and the improving half XXXX. We well Bruker business gradually in result, second of pandemic. of a the in a positioned believe is recovery

first-quarter turn detail. who will to our Gerald? with CFO, XXXX performance me So Herman, over Gerald review let that, the financial call in our

Gerald Herman

Bruker's join you decreased XXXX. reported quarter the Frank. Thanks organic of revenue highlights, very XXXX, $X.XX on and X.X%. financial an X.X% $X.XX starting compared $XXX XXXX quarter per Pleased review We the Bruker's much, first million to which today GAAP reflects XX. first in reported of of revenue to EPS of share Slide in first-quarter decline to

On XX% QX decrease XXXX. a of share, $X.XX per $X.XX a non-GAAP basis, QX in was XXXX from EPS

America Europe Our Bruker's QX decreased operations, initially own disruptions primarily XXX over basis and quarter. and income mix operating operating China of the and non-GAAP in in of XXXX to non-GAAP year margin lower to unfavorable COVID-XX while declined and revenues, North inefficiencies operating XX%, later our reflects related year. some due points This customers in X.X%

weakening experienced industrial the markets during quarter. also We

position our At Net debt with strengthening in overall $XXX.X QX after XXXX and the debt XXXX than million additional XXXX, sheet our on ended after our ago equivalents QX following remains was liquidity an the $XXX of debt cash, revolver. quarter million short-term drawdown position substantially our and December We refinancing higher cash the balance end of year our investments and cash strong. financing. slightly a in

We covenant capacity of are requirements well headroom. with within our plenty debt borrowing

investments the QX working quarter, a XX end strategic capital XXXX, and essentially from for fund During XXXX. capital ago. we was unchanged revenue our ratio dividend. the year to the bridge At to of shows cash Slide revenue used our QX

in revenue X.X%. organic declined noted quarter earlier, the As

declined a digits had and currency mid-single declined an contribution down mid-teens. BioSpin was BSI revenues from revenues foreign by revenue acquisitions in X.X%, of a headwind NANO organic perspective, of partially which X.X%. low positive We the From offset were revenue digits, single revenues CALID

declined the Science most Life to in COVID-XX Spectrometry the & mentioned, first due Mass of revenues Microbiology quarter. our operating and conditions. But grew Frank businesses As challenging Diagnostic other

eliminations. BEST revenues also declined mid-single digits net of intercompany

XXXX, in three while mid-single year. digits. the year single systems groups, QX grew an Geographically declined and America basis aftermarket North Europe revenue BSI organic digits declined our low For low and revenues on revenue over in teens,

its quarter. revenue approximately to Asia in low China in XX% due digits Pacific lockdown the drop the a much organic double with for declined of

including unfavorable XXXX of mix XXXX, XX.X% from disruptions and from Rest Latin inefficiencies basis of compared to acquisitions were markets. gross of QX QX. well increased end our as outside by in decreased QX recent as XX profit non-GAAP XXX the expenses Slide to modestly due principally as X.X% COVID-XX our the compared industrial the prior factory from revenues the cost world margin year weak America XXXX, up that XX.X% revenues, kicked QX near XXXX QX driven points non-GAAP shows lower operating expenses quarter. to savings in

reduction in shortly, QX, took actions As further I'll globe. across cost discuss we the

XXXX, by basis driven QX to In margin mix. non-GAAP decline and unfavorable XXX primarily our QX XXXX, declined our operating points compared revenue

compared to a XXXX rate repurchases. our diluted outstanding in first share $XXX.X was the XXXX approximately of shares reduction XX.X% shares QX quarter million XX.X% first X.X tax from were XXXX. Weighted non-GAAP average our XXXX, quarter following million, XXXX in the effective of of For QX

non-GAAP Finally, over of EPS lower margins. QX $X.XX driven XX% and year, decreased XXXX by revenue year

Next, profitability I'd to company. and comment actions cost cash to the briefly of taken like flow on the support we've reduction

additional initiated to within segment previously certain implemented we QX, restructuring primarily and temporary BSI NANO the COVID-XX. related measures planned actions During cost

temporary discretionary closures in for X-X Temporary many our will QX reductions in workforce, global mostly to locations, operations, temporary nonstrategic included team tiered of work in freeze manufacturing and second measures, we a did a European range million spending. measures, see the to curtailment we of of $XX our leadership to million $XX actions and effective for but which reductions timing QX, NANO of be and cost short XXXX. select the restructuring hiring salary these week impact time expect not see major the of quarter additional BSI Due of in the

XX. Turning to Slide

facilities productivity compared XXXX. expansion expenditures QX in XXXX include flow increase free cash flow cash of flat $XX and free was to approximately gains capital to an million production described however, earlier. Our for as essentially related does, XXXX in QX QX

was end increase of cash QX XXXX. cycle XXXX conversion QX representing compared at days, to XXX Our the of days an XX

primarily prevent step-up due as we XX carried days approximately to balances higher The declines supply by increase chain of was driven inventory to DIO and an in revenue disruptions.

to Turning Slide XX.

eased business others. may You for March that have conditions disruptions the the pandemic guidance XXXX parts in by uncertain but on recall some remain XX, significant Since suspended to in we then, due of our COVID-XX. the world to business created related

Therefore, our remains certain financial low. relates guidance And once XXXX visibility remains resume to improves. visibility, intention it particularly guidance suspended. our customers' our annual operations as markets in It's to

not give and you over some the guidance, on I providing business we of QX the directional we're would course year. any Although see in unfolding color like how to

challenging for therefore, As closures continued our uncertainties among QX better Frank we about customers in scenarios XXXX reduction of Bruker our expect believe with XXXX. breakeven our second for it's declines Europe are We, the possibly to XX% customers. and combined year-over-year expected stated, revenue more with to related to industrial U.S. of than of the quarter declines. XX% many actions, in to of profitable to the or think possible to and academic keep quarter this cost the range magnitude, second be of QX a potential due Revenue

scenario could We currently based results this actual recovery outside you the ranges, of anticipated of is a in this although us. that to half on second but at XXXX, business available good improve estimates the our note time until conditions to information these anticipate gives be Please XXXX. faith currently not

by that a pandemic, will navigate in agility emerge responding attractive portfolio our a uncertainties a strong to liquidity with challenging environment conditions, we're from this outlook. healthier changing COVID-XX. to stronger an created continuing Bruker and and market But promising with company confident and long-term we're product In conclusion, position, unprecedented with

you our QX the start Thank our with Miroslava to to over again you We look with XXXX progress that, call like session. I'd conference quarterly to August. Q&A much. And call turn forward updating to the on in early anticipated very

Miroslava Minkova

Thank call begin to to you, the like Gerald. over Q&A the the now I'd portion. to turn operator

in Just that questions, you. everyone you and order question to a Thank follow-up. one for limit to allow ask time a yourself reminder, we

Operator

first go comes [Operator your question. instructions] from Please ahead Tycho today question Peterson with Our from JPMorgan.

Tycho Peterson

the COVID a the in with start the fourth there. of I'll process. Frank. market. competitive I'm curious test thought It's you highlighted Thanks just slide

your up tests think this PCR-based Why XX scaling more. what's push competitors the if market see crowded million We move week, do to testing. COVID already you to a right not into is a for

Frank Laukien

anyway had Well, our we took owned initially testing of with Bruker-Hain a we full ago, which months XXX% are we in acquisition, PCR-based few the XX%.

have have that many, large strength many tend pretty other strength global we there, and have to access, geographies. maybe in countries but systems. very large not European to don't customer we And good certain we types. some know, you use customer different as the labs diagnostics automated markets the But have So

have good we market access. So

we in molecular million does a $XX We for have or expand diagnostics. And business about for from base than opportunity that a business, Roche space. Abbott, that When to a was that a smaller complementary us an technologies. acquired that sure, this good is

of going that's very finding our And And there's and so good traction. demand, are far, well. tests plenty

Now there. process others, of ramping we up capacity like in many our are the

Tycho Peterson

year? are and point? And the follow-up comment seeing China. on at for remainder of Can you this the a reprioritization expectations order of a government you then for China And book the funding on

Frank Laukien

starting in both the NANO sure. But China March. bookings in in instance, reported in all certainly, patterns and anecdotally, orders perhaps for patterns late probably recovering. that But have and I are order those order Well, April, answer I'm of questions. not cannot BioSpin

have on China full we China, we in terms longer-term yet. least or but a ramp-up We're about gradual in seeing in QX anecdotally. in it patterns not Because initially suspended not the patterns So only Obviously, QX order of or read year. this newspapers, going not we're the our something is to also guidance. at comment that's quarter

uncertainty. There's so much

some six So But to least weeks coming anecdotal or back Bruker at in according be data to speculating. the so. I last would seems be China

Operator

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

Chris Lin

XX% you business Chris between decline is China in for China perhaps I for China China less in experienced to XX% such ex the industrial Thanks today. to, bit and perhaps This gigahertz differences Or in durable little the compare Hey more that in a the as for contrast QX. system? semi bit QX exposure. else my point on there Doug would XX% businesses the is outlook decline and Could the guess X.X taking given you and result versus a you questions. anything ex the

Frank Laukien

QX as nice, Yes, decline QX, nonetheless. be we going into It's But the going X.X not have course, expect to in partial as not it's and recognition. gigahertz system that needle-moving because without the that but an do only China of milestone, we'll accomplishment in be any We was. details. revenue dominated to it's in QX

even decline Europe was well, in single We revenue in a digits -- the it more China. the slightly QX saw Americas XX% big mid-single decline but as in in than or in with and the

very So that QX was specific.

that it's do expect much scenarios has XX% Yes, even now expect that's or overall, at the quarter the able without probability. more be proportions, decline, we not going necessarily than out. least not greater that significant be to We give think evened you meaningful we any being in to of to revenue second but one right relative more

bit some is So little in of business -- up there parts other sense, again. picking that a the are China that are

least pharma our side, said, growth. the order I As good is business, at on seeing

Life Our Diagnostic Life Spectrometry Microbiology its & Mass healthy, best. business our so reasonably particularly are Science Science, and

reaching not the have we're may levels decline XX%, a from meaningful people as in that tell we expecting can we some know feared. quarter, what second XX% but XX%, these far So not, today, as

and exceptions, there'll probably And we QX should weak super color globally -- we major be the very more very, much perhaps, a much So be now. as Japan India geographies can be at we think more all. probably more will probably and performing the QX, evenly in dominated with as that's will you picture uneven have in right extremely be even but as performance China than give as when evenly some

Chris Lin

be Okay. follow-up. you And breakeven low Do decline profitable the to at or maybe the revenue for end expect a of quick range?

Gerald Herman

and that gradually relative we're that it moment. stabilization does range ground on say at our the it that's just that reopening XX% expectation. at certainly provided, to that generally the low and assume one in seeing implies that's do, I will implies some and that's reopen, our that Europe China decline, the XX%, signals And expectation, We U.S. it the speaking, I would to and the also of end, that would some in the also activity. see

And to would United hear be at everything be Europe. in that moment States in the itself seems playing we true and at least out also the

So at assumptions a we stage. range reasonable of this is scenario pretty think series that

Chris Lin

my and well. hope everyone is taking questions for Thanks I doing

Operator

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

Puneet Souda

Thanks. Frank. Hi,

expectation So U.S. in funding XXXX. is and the funding first question there some expectation, is in on

as result the at government and on unclear But of we closer this stronger to XXXX. for conversations in had your your overall in epidemic. a European moment. funding expectation given based customers the academic customers Europe there being funding and sort that is of the with magnitude Obviously, position there What's

Frank Laukien

back. in of the parts world, and U.S. I timing funding Puneet, in of think not pulling academic in by the They're certainly many And world. I driven is question mean, academic the other spending is of in much a part, governments. Europe

exceptions they're it's universities But think, not in elsewhere, U.S., maybe the southern lot anything there students COVID-XX academia as in research, quite few chatter life but the and well and And to course, and in European a aren't few of proposals are funding, a life writing just budgets of well be in with pharmaceutical India, about strong. a that's virology is there in of else whatever science research, anything, grant related science maybe be countries the they're increasing but as think, as closed. lot the professors a labs, not in and labs, including as going I writing for about it's really doing. Europe noise, and really, if papers And the in universe, that might I

bit So quite a there activity. is of

but COVID the from is you're It's directly course, slowed lab work The is is And a closed, research it home. sector academic unless is of down. of not working that it's doing lot -- working.

expect that We to reopen.

actually, into and and turns funding when government specific So approvals life for this chatter academic science, grant and noise fundings.

actually optimistic timing pretty be without perhaps the we a and even customers, levels, to return being predict there not able maybe to that going precise is are funding Our to only but previous our business, a life science would business research diagnostics of particular. us multiyear and mass bolus and research funding. fundamental NMR spec our also benefit Which increased beyond in and in microscopy in

Puneet Souda

X.X be other That's that might expect when near you -- earlier ship helpful. to here. lower is that to at orders orders And X.X it I impacted on and out. the the the NMR appreciate In demand the going side, very and gigahertz NMR be the term. But you look

second you seeing of expectation on the you're on and out that you contracts status here the So with here or of those sort us do of stand expect push where the those that quarter. When customers where signed give a of the you can the to those, questions your what's any are committed deliver have rest have been already and a then to What's there commitments And sense funding? in them? magnet?

Frank Laukien

Yes.

The no These can solid. that's reverse So in is contracts see. order, those question solid I as are as there, commitment. starting completely far about the contractual funding there costs, is

tell, maybe that quite and Therefore, the bookings. up for down -- well, and maybe to be pharma to the for it the but at of looks like necessarily we or demand clinical in NMR with not -- it's systems, the than applied really down so, is NMR in doing to picking now flat all for your demand terms especially really, again It's for early NMR much. our jumping is China even NMR a lower and class beginning, with screening. digits, declining the gigahertz mid-single or that too lower Maybe going which funding question. do Funding not little introduction to be

as in of we showed at Center, the are you research many crisis type this That's important National places. metabolomics of but projects these Australian Phenome interest in research the

be I doing will think BioSpin general. in OK actually

we of sense. Now would this part some the point, these question, at in three that to going gigahertz factory maybe to or plus, year. thought not central gigahertz systems We're your be limited four and be of delivering

circumstances that installation to Italy pleased we got We're in down, able actually particularly although in accepted had and the that wasn't all but Italy, we difficult faster and still Italy, locked than hotspot done. of we're was Florence in installation the get

will it So I gated. be think

as be be far will to delays or other nothing with as there see. X.X European I deliveries Could U.K. So canceled can the

cases? for since gigahertz three usually including acceptance. And have we the still months that slide all may -- can, cannot this these deliver acceptances Italy. one and systems hope delivered, year, the or That's year perhaps get we we of or into I few that two installation year months? system six for this X.X for on need could Will a accepted they next possible. because

demand dampen be there. I a So will but the expectations backlog the bit, would little the and

complete visibility is can -- to it installations, have there factory deliver begin and that. The on we presently deliver on not will And depend them. is when we and don't that

the them eager let will start have do waiting, accept and to Although obviously, their if those allow to they're us customers so delivery that been administrations installations.

Puneet Souda

I we second the timsTOF. sort here Thank that if positioning Okay. second expectation and could book Maybe you. the impact This good helpful. the in half quarter. uptick have And of and one, the if what we is of the XXXX, that sort on then What's here saw instrument? a go provide us Thanks. this if of That's in a despite competitive -- you the as into instrument. you very sense in have you last your on you squeeze quarter? could for expect into order And could

Frank Laukien

Well, they is very changed. have even have customers competitive as their lab proteomics proteomics will positioning attractive the another will almost from on vendors. proteomics technology hasn't It number a though other timsTOF a if systems will, or and market, second many in want to you technology passive well, the of that undoubtedly

other to robustness network need throughput, doing its networks. its particularly when run attributes or the competitive doing that good or uptick, figure addition to proteomics proteins samples where screening a the So are important, even do to positioning and perhaps trying they COVID-XX is research, of is especially people enthusiasm and protein the continued protein about out lot perhaps about in

it's research to time. have So at good disease this system for a

shape, we I'm initial stage the at And good are in are system. the is customers ramp-up where glad pretty happy their and with the

for I into second the that don't visibility the of have year. So half

in the goals So in quarter it's I that our recovery for But how revenue figure year. timsTOF set because Pro want both was orders the experience, don't half. to so will and our out over second first out to the our grow in hard far, quick to be year continued

Puneet Souda

Great. Okay. you. Thank

Operator

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

Mike Ryskin

deliveries of that? follow-up Hey, a about I prepared on Derik. didn't in but cancellations for you comments the that times customer guys. the earlier number of want point out disruptions, your Ryskin or This like remarks a necessarily to order on couple of call you placing delayed is Mike made anything regarding and an up were came on the comments in some

How loading to clear these within any in want week lot there the you sense there recognize able dock? coming simple the some back work. And of of months, after these should backlog? once things a asking quickly you constraint terms any it start as a to is to labs, I'm revenue. through? improve be can this is, people start back move I lift it to or are some on quarantines as better of coming near-term And bottleneck two of is how of and Or coming conditions think waiting you you a could guess people or the get I these quickly to what do just this over

do what get through in Sort as of these expect which the deliveries you bottleneck? near-term the pacing could we once come through of some

Frank Laukien

last deliveries. We'll recall, had be couldn't then and could and were revenue. Like wanted some make even March, deliver. I they couple therefore, of weeks in or There to to deliver, India, where deliveries sites number some installations, couldn't in of this we We start we deliver customer but certainly of even a also no can't we I "Look, countries you at installations some backlogged some all." said,

deliveries. there's backlog So on some

Again, more not a backlog of we're a service I installations. little Although paralyzed. there, be and on think, will field bit

more in planning it's We a are doing and lot just some In calling takes field all time. service installations and many countries, checking locations. ahead and customer of

some social There the and And are rules course, usual of where and others. cleaning impossible and distancing backlogged. and it's nearly countries where will we be

we the care QX, of cases up, we'll a we the have be -- where during catching backlog be installations even So that service to throughout for it but have new course, reopening backlog new year, a we'll take also, and of. could if a have gradual there's

field training think I go that, So and and be that with there. force things significant capacity other service our limits although will don't

we'll and QX up accessibility early for in for and QX site in catching the of think the year. somewhat remainder be reduced late I backlogged the

Mike Ryskin

I through ask mentioned stay That's commentary lower the XQ follow-up the helpful. I And in a if aiming margins think I then to the positive could decremental volumes. you quite on mean, profitable from on quarter.

gross some through and and Can the both that the year? of how is SG&A, in volumes reverse decrementals steps of the you margin quickly to you're later walk of if us returned the the of some line some on it sort taking on

Gerald Herman

Yes. It's Gerald.

which some And we prepared in my actions. remarks, already So mentioned are I restructuring way. this under introduced

second we'll some So there benefit see sure in the for quarter.

introduced to won't little some But I into QX a and bit through temporary of also go QX. intended most We measures, laundry list them. those are cost and

in $XX savings and see quarter. we'll off, $XX benefit, second the so to million that is I expectation to our million think So related I carved cost

investments Associated we're are. where make pretty expenditures. permanent with we general, measures. structure, our those continuing And We're with temporary comfortable to mean, around in I thereafter, in cost capital

about quarter CapEx we've increased saw, the here, You in first $XX our million. spending

major we're Project are expansion. sidetracking improvements We've need and relative perspective. Those productivity to an a from I out making Accelerate the point production for those. continuing program. got R&D including some our course, initiatives, the We're that to OpEx, not in to facility both for of we And invest of gains are part still

our we think I the things what would make So a generally, I our guess are in decline, range experience And there in going cost quarter on that Hopefully, here overall mix third I clearly now. up would the in we a quarter, we I cost And begin traditional done more, of first -- the the I that similar of there's some be only in way, expectation in quarter, structure, think a we've that in I there we move XX% call to impact we're talking just saw something on revenue basis, to structure move XX% the second margin. out quarter, about into we'll flex I second the second able to our and if the point in temporary reopen quarter. would is need a first as to if mean, is that other and that scenario to ourselves back comment see to quarter.

Mike Ryskin

and we quarter that the Got came revenue with to QX so you. cost will margin. the in therefore, be decremental not drop high. margin QX in Because lower Well, improved And second decremental in could The as the quite and think quickly. quickly QX. an cuts occur better was

Frank Laukien

but big our time short work Overall, getting support reduced the -- furloughs, measures and quick fact, workforce. start to layoffs down we're our to European favorable because to our not of in hard have for temporary a are European footprint, or work general to keep very not have afterwards. keep government And even X, where very trying to very,

recovery. were way able never ready be to and again there to in And start furloughed time to and us this very the because up quarters that's we go into the our of XXXX, very later and a to and happened when let go ramp demand That intention overtime quickly few able we all the be much workforce. is for a

Operator

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

Carolina Ibanez-Ventoso

the Frank, you is for you some your but on Project continued mentioned of for activities Dan. question. Ibanez-Ventoso shutdowns and reduced also some in Carolina Thank investments Hi. This in sites. Accelerate,

to be just by speak still that you that delayed on ramp, may COVID? launches track Accelerate Project or activities those versus are Can and separating slowed

Frank Laukien

Good Yes. question.

initiatives, the Our And semiconductor metrology. last had first track anything, all year yet of them not that one on and track. Project on been was quarter not in either if Accelerate they're

remotely also working world becoming the for recovery because in healthier. metrology That top and for now IT and us appetite we're infrastructure. right has additional a logic makes a more on seeing bit our voracious for bookings, it demand, in semiconductor, that optimistic But memory semiconductor of trends and is

looking That as probably also diagnostics is was areas indications weak year probably more back, that weak the positive of in one independent in area. much COVID last still of and science and So least quite beyond QX at had is predicted. we are coming the life

we're disruptions yes, directionally no on Project Accelerate invest there. initiatives, So in track, continuing remain our to they and

Carolina Ibanez-Ventoso

Okay. going given expectations your And priorities seem hospital be for spending are the imaging what forward demand where at moment? to

Frank Laukien

demand? hospital of type what For

Carolina Ibanez-Ventoso

For imaging demand.

Frank Laukien

Imaging, or along resonance those imaging like something lines? magnetic

Carolina Ibanez-Ventoso

Yes.

Frank Laukien

med Yes. Well, we don't a -- company. we're not tech

have So or We imaging systems. research we -- don't really pathology imaging systems. microscopy we don't have radiology

dampened But a digits, resonance not med We purchase solid. has little radiology via superconducting not that the tech we're provider we're indirectly and demand, been hospital magnetic primary so our radiology pathology MRI, and applications routine single materials, the applications. imaging -- looks large, who bit, the radiology, major low pretty only companies an or by imaging, that in support but for

Carolina Ibanez-Ventoso

you. Thank

Operator

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

Steve Willoughby

my for Hope and Hi. two one and for Frank is Frank Gerald. for guess, taking One Good everyone I evening well. doing question. first. thanks questions you. for

If some agencies the you themselves? color relates How academic and it also maybe say federal could reminder guess, versus revenue of a just provide us, your as universities much customers. I to customers from and revenue academic would you funding from to comes then

have year fall the the some semester? as you relates Gerald. relates and for XXXX, a guys for increased it half it follow-up the I given of to of expectations back like coming look as is there to to customers uncertainty possibly are then what the hearing in from what even these And universities then And

Frank Laukien

lot I'd be to Yes. I or definition, There that endowment it United United the the few government universities funding outside States. or philanthropy say mean exceptions. outside tends for fund per isn't There's of a the of States, federal universities. of a the governments

the to in trends general in States might the rest do extrapolate United not world. of whatever think I the So academic see you

very academic not roughly, and solid. So XX% government of to in funding are be U.S. Their the tend funded. our is they customers

use I and grant or struggle their BI happens And mass professor it it they but or universities NMR, which spec administration. some for use the U.S., that if spend think have may be their their the administrations, funding it In to purpose on it grant. be got to NIH that. for may to a for a also, can't have the take in that They they'll

be or and will so. actually may I'm I So that affect endowments maybe that spending some indirectly down acknowledge philanthropic -- very

But way. that itself out and we'll sort plays whether to second derivative, see that a even of that's need

Our they who for life it on to If tend budget grants. university holes. they'll was what U.S. other get science a research grant, spend not grant federal customers get major and the on

be I or it decade. call for optimistic academic With next healthy. it have, of wake-up pretty pandemic But prioritized five science spending life a delays terms think next Or will of timing infectious time even earlier, better I'm might spending become because as the bit fundamentally, and and that will remains R&D in delays. spending the research. I healthcare be said this a been I will in whatever government years there it XX So for has disease fundamental and probably think

I that's but So my all am you. that bullish, I think Thank assessment.

Steve Willoughby

totally of with you commentary agree provided expectations as you're making. the to I you, revenue Yes. relates cuts it and Frank. Gerald, cost your you. Thank the some

over we the any I a on flow today. just XQ, the Given Just cash overall, have you cash is about you year think Maybe related flow, for how guess, as it what idea seeing remainder maybe? year? I presume should of the but probably better have full thoughts to you're

Gerald Herman

first we the have don't all, year. good providing the latter half well, visibility into Yes. -- of very We're not really of

from saw pretty in providing the generally, really flow first much not would and we cash related been we're has I guess cash profitability or it. information say to our just to what guidance solid. position So quarter, flow connected I

second We're overly not decline confident well. there profitability in this concerned revenue stage. further all a quarter, that we're from that into a even the perspective following at And at pretty about as

to a is the we've has view think been our cash general see way got it. I flow through we moving systems, the strong So would liquidity expect position, the

So I the probably I can it's color think offer. only overall,

Steve Willoughby

you. Thank

Operator

Our your Please Kumar next ahead question from from question. comes go with ISI. Evercore Vijay

Vijay Kumar

around guess, at comments of I the guess being Thanks guys. some one and as for question. back looked I maybe taking XXXX. more being recovery my sort peers, perhaps normalized. the Hey, your of on, half they've Frank, XQ

curious Or being why just a seeing guys the different? -- just you anything I'm recovery think are XXXX is you event? about when it conservatism

Frank Laukien

we may sequentially this over will hole we think significant actually Well, sequential The in whether would you see I year, year, the get expect a sequential expect. I that's is it QX what same do or QX. year recovery talk way. question after better believe QX a I in

and QX have -- I the QX visibility to have Will don't we that year necessarily be or guidance, comment that. for 'XX imply provide 'XX on what QX 'XX that enough to to will QX enough instance, trends, don't year-over-year 'XX year to over

year-over-year so yes, recovery, tell. too to sequential recovery, early whether So

Vijay Kumar

become into And some one, is the will curve change I COVID pandemics, thrown does -- In will, being Frank? as you a How guess, proteomics I I that or, Bruker provides, solutions of that world, is one sort kind of may. genomics if more that Understood. structural more post money organisms, last research important. of understanding feel like demand these the if from

Frank Laukien

market not my data that's that more but market they my can That's and so, analysis would colleagues. think to. point I of or demand

and proteins that proteins biology and structural genes screening it. some drug of important, spike on on is these top against on on glycosylation RNA networks and of protein a So

and happen tools. spec to those terrific mass be For NMR

only are that some important tools well. I They're not But be patients. ones. on in as do some in Other one one may, genomics course, our and things some the demand. particular, of of argue mean, be sequencing that there'll can would meta

well pretty difficult. which proteomics areas really need and and some of structural But some one mutations. And important there's of biology the minor But really support functional our will for where sequence look the actually viruses. this technologies glycomics, is may really, for shine. is perhaps other SARS-CoV-X for are course, I to want of think the the at virus known, And those

Vijay Kumar

guys. Thanks, Great.

Operator

with next Dan from Please question. UBS. go Brennan your ahead Our comes question from

John Sourbeer

seeing in digging then John what you Thanks. be This Dan. XQ color what can that for outlook? segments. Sourbeer to frame a Is there point us and happened more any XQ Maybe now? provide into of or any And more comparison to there on time is could that is that you could your on industrial predicate you're

Frank Laukien

qualitative. very very, it's Well,

had COVID a line. So of within we actually semi time may started. the being pandemic before that different that recover already sooner even industrial, had indications said We on

tends may in And months, the recover like it be last will what weakening. industrial looks metrology four so semi seen demand we've other part even the to as

a lot not energy, to obviously right to those of do industries, have is We automotive good now exposure which hurting. industries a thing are because and to aerospace

some have materials We research.

to Some of hard this into other space, we But are our and have tools industrial read. go markets. those

I presently would think those will and demand. are that hesitant to invest observe

is not and quickly probably And few that are weakening, probably all actually back that thing we'll come funding, boom rather of when weak three quarters. was estimate came if long. weaker fact, were then, quarters, our lot within they is because And best see from or a So of now in times quickly stimulus two we they any they pretty other back, for a demand. indication, and industrial that could XXXX, markets prolonged the XXXX,

aerospace, future. Also, pandemic the more like necessarily predict than temporarily. industries that this structurally not certain But just does maybe affects

the aerospace to hard. the perhaps hit said, energy Although, industry structurally exposure or have pretty little we very as I which are industries, to

John Sourbeer

think compare for past? any you it. frame predicate could Got or you in the time this that. And that Thanks to

Frank Laukien

the course, less cut than, I steps from retaining our very XXXX have it's I we Well, that rules. and and and of work but temporarily. time were of That our mean we at XXXX, was far very investments a was impact, 'XX an economic costs cost short temporary very, We the good comparison are, other we helpful that's might most comparison time. workforce. took We used mean best costs in by perfect the then from in

of the had and don't I is among that recall a nothing So of little growth least but the Will predicting organic some those timing, the growth be but at by out itself had we'll the we analogies. useful, ever within this repeat bit longer, some I'm two in follow playbook. might thinking exact from but had that It's some exactly 'XX, comparable, years year, that timing years like exactly 'XX, coming we time that, a we've period, last after that were of XXXX, maybe that? we and best best decades. far There that about that

John Sourbeer

that if And in how any U.S. business? In there I beginning changes ask or in seeing the EU are the up. in Are impacting could open a you anything follow-up. and it's your to areas

Frank Laukien

Well, Central so or opening schools be countries much opening some because or they're in Europe. salons might up nail not in they or it's Northern up whatever certain

us really here in United Europe tends U.S., to and the Southern down, affect right. the In There's talk geographic it's patterns mostly tell. up locked opening States. about early don't and France be more too to the

it's meaningful not probably us So for yet.

So installations, not make is than maybe academic the to Europe least, along. has limping Europe other deliveries. including to business, make sometimes that than been comment only been And other business Southern and We've there France, with been able able in delays. at we've everywhere, has been,

Purchasing to asked applications. to orders occurring. People we're are but working departments home. complete, sector doing it's is is are completely Sometimes hold from big are that closed this back, that us. not grant Purchase

it's going, but slow So it's going.

John Sourbeer

for my Thanks question. taking

Operator

Needham. your Steve with comes Please from go our And Unger ahead question question. from next

Steve Unger

if on COVID-XX in performance Frank, the the me for curious comment Thanks could Great. fitting in. you I was environment. MALDI Biotyper's

utilization as April. consumables perhaps far month As in of the

Frank Laukien

question. for was the month that year. first quarter in it I of don't Steve, good good, year know double-digit Yes, April. over it good very have I growth the

north a consumables pace, So at XX% QX. growing were growth of instruments were pretty growing, in high I think, but even

was of apparently we growth Slide And in consumables. -- our slide, XX% It's X. on that one about have on even

that looked go so healthy. ahead. And Yes,

Steve Unger

So this clearly net a environment. in beneficiary

Frank Laukien

Yes.

you or devices, because want much infections, in out is to a out rule assisted, Some anybody ruling co have any of ventilator-assisted is discover Or bacterial. in used least VAP, it med at who tech or ventilator aren't pneumonia, infections. other which time, anymore bacterial all may fungal sudden a

to that If know. in you will have the well doctors addition want COVID, to

of and fungal ago. microbiology, actually, to and entirely There months is testing. the in testing, bit sort this actually halo a clear viral of is there bacterial So us three there of quite wasn't is

or And we even ago. so three this months than has would have four stronger been anticipated

Steve Unger

And year? your new plans Great. then That's introduction helpful. for product does COVID-XX impact this

Frank Laukien

are in have going Only that and really. canceled some Not the conferences conferences some is virtual. been sense

did So conference, not are for instance, been the April and middle which they a have the Paris canceled or big in But would conferences ECCMID place virtual at virtual altogether. to microbiology was our of product just happen of maybe take conferences. independent launches, be going launches in

that testing we're would not on wasn't had answer short be affect The on plans forward the work previously. really. year obviously that some With more incremental no, drive planned. And we you'll that see to the in going as as COVID doesn't It really progresses.

Steve Unger

helpful. That's Great.

Operator

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

Miroslava Minkova

today. us joining for you Thank

healthy quarter, we We of to you second Thank Jefferies virtual will virtual a healthcare During a out the Bruker and evening. during us and to meeting and well, in quarter. invite the you good UBS reach hope conferences. Bank participate and the you, stay have for America,

Operator

we'll We do today's presentation. with Ladies and joining. thank for gentlemen, that you conclude

You lines. may now disconnect your

Bruker (BRKR) 9 May 202020 Q1 Earnings call transcript