Q3 2023 Bruker Corp Earnings Call

Okay.

Yeah.

Speaker 1: Greetings, ladies and gentlemen. Thank you for attending today's conference call. I would now like to turn the call over to Justin Ward, head of Investor Relations. Please go ahead. Thank you.

Greetings, ladies and gentlemen, thank you for attending today's conference call I would now like to turn the call over to Justin Ward head of Investor Relations. Please go ahead.

Thank you and good morning.

Speaker 2: I would like to welcome everyone to Bruecker Corporation's third quarter 2023 earnings conference call. My name is Justin Ward and I'm Bruecker's senior director of Investor Relations and Corporate Development.

I would like to welcome everyone to broker Corporation third quarter 2023 earnings Conference call. My name is Justin Ward and Anne <unk> Senior director of Investor Relations and corporate development. Joining me on today's call are Frank <unk>, our president and CEO, Mark Munch President of the broker Nano group and corporate Executive Vice President and Gerald Herman our.

Speaker 2: Joining me on today's call, our Frank Laukeen, our president and CEO , Mark Munch, president of the Bruder Nano Group and corporate executive vice president, and Gerald Herman, our executive vice president and CFO .

Decorative vice President and CFO.

Speaker 2: In addition to the earnings release we issued earlier today, during today's conference call, we will be referencing a flag presentation that can be downloaded from the Invent and Presentation section ofbrookers Investor Relations website.

In addition to the earnings release, we issued earlier today during today's conference call, we will be referencing a slide presentation that can be downloaded from the events and presentations section of <unk> Investor Relations website. During today's call, we will be highlighting non-GAAP financial information reconciliations of our non-GAAP to GAAP financial measures are included in our earnings release.

Speaker 2: During today's call, we will be highlighting non- GAAP financial information. Reconciliation of our non-gap to GAAP financial measures are included in our earnings release and are posted on our website at ir.bruchor.com.

And are posted on our website at IR <unk> Dot com.

Before we begin I would like to reference <unk> Safe Harbor statement, which is shown on slide two of the presentation.

Speaker 2: Before we begin, I would like to reference Brucker Safe Harbor Statement, which is shown on slide two of the presentation.

Speaker 2: During this conference call, we will be making forward-looking statements regarding future events and the financial and operational performance of the company that involve risks and uncertainties, including those related to geopolitical risks and wars, as well as to supply chain, logistics, and inflation. The company's actual results made different materially from such statements. Factors that might cause such differences include but are not limited to, both discussed in today's earnings release and in our Form 10K for the period ending December 31st, 2022.

During this conference call, we will be making forward looking statements regarding future events and financial and operational performance of the company that involve risks and uncertainties, including those related to geopolitical risks and wars as well as to supply chain logistics and inflation okay.

<unk> actual results may differ materially from such statements factors that might cause such differences include but are not limited to those discussed in today's earnings release and in our Form 10-K for the period ending December 31 2022.

As updated by other SEC filings, which are available on our website and on the Sec's website.

Speaker 2: has updated by other SEC filings which are available on our website and on the SEC's website.

Also please note that the following information is based on current business conditions and to our outlook as of today November <unk> 2023, we do not intend to update our forward looking statements based on new information future events or for other reasons, except as may be required by law prior to the release of our fourth quarter 2023 financial results.

Speaker 2: Also, please note that the following information is based on current business conditions and to our outlook as of today, November 2, 2023. We do not intend to update our forward-looking statements based on new information, future events, or for other reasons, except as may be required by law prior to the release of our fourth quarter, 2023 financial results, expected in early February , 2024.

Expected in early February 2024.

You should not rely on these forward looking statements as necessarily representing our views or outlook as of any date after today.

Speaker 2: You should not rely on these forward looking statements as necessarily representing our views or outlooks as of any date after today. We will begin today's call with Frank providing an overview of our business progress. Gerald will then cover the financials for the third quarter and the first nine months of 2023 in more detail and share our updated fiscal year 2023 financial outlook.

We will begin today's call with Frank providing an overview of our business progress Gerald will then cover the financials for the third quarter and the first nine months nine months of 2023 in more detail and share our updated fiscal year 2023 financial outlook.

Speaker 2: Now I'd like to turn the call over to Berger CEO Frank Laukeen.

Now I'd like to turn the call over to <unk> CEO Frank <unk>.

Speaker 3: Thank you, Justin, and good morning, everyone. Thank you for joining us on today's third quarter 2023 earnings call.

Thank you Justin and good morning, everyone. Thank you for joining us on todays third quarter 2023 earnings call.

In the third quarter broker has continued to deliver excellent revenue growth.

Speaker 3: In the third quarter, Rooker has continued to deliver excellent revenue growth.

Speaker 3: with three consecutive quarters of double-digit organic revenue growth here today.

With three consecutive quarters of double digit organic revenue growth year to date.

For the fourth quarter of 2003, we anticipate high single digit organic revenue growth.

Speaker 3: For the fourth quarter of 23, we anticipate five single-digit organic revenue growth.

Speaker 3: which puts us on track for three years of double digit organic revenue growth in 2021 to 2023.

Which puts us on track for three years of double digit organic revenue growth in 2021 to 2023.

In the first nine months of 2023, we have demonstrated great resilience in difficult market conditions.

Speaker 3: In the first nine months of 2023, we have demonstrated great resilience in difficult market conditions.

Speaker 3: with what we believe is industry leading organic revenue growth of 13.9% and non-GAP EPS growth of 17.5% year-to-date.

What we believe is industry, leading organic revenue growth of 13, 9% and.

And non-GAAP EPS growth of 17, 5% year to date.

Speaker 3: Given our strong, here today's financial results, solid backlog and positive outlook for the fourth quarter, we are raising our organic revenue growth guidance for fiscal year 2023 again. This time by 150 bits at the midpoint.

Given our strong year to date financial results solid backlog and positive outlook for the fourth quarter.

Raising our organic revenue growth guidance for fiscal year 2023 again.

This time by 150 bps at the midpoint.

Speaker 3: We are pleased to report solid financial results in the third quarter of 2023. We attribute this resiliency to our innovation strategy, which yields products and solutions with unique capabilities.

We are pleased to report solid financial results in the third quarter of 2023, we attribute this resiliency to our innovation strategy, which yields products and solutions with unique capabilities.

As well as to our differentiated portfolio, which is now resulting from our ongoing project accelerate <unk> transformation.

Speaker 3: as well as to our differentiated portfolio, which is now resulting from our ongoing project accelerate 2.0 transformation.

Speaker 3: These core elements of our strategy are to a significant extent shielding us from the present demand weakness. For example, in COVID testing, the ROs by a farm-up, by a processing, et cetera.

These core elements of our strategy are to a significant extent shielding us from the present demand weakness for example in Covid testing.

<unk> biopharma bio processing et cetera.

We remain positive about demand for broker scientific instruments in life Science solutions, which gives us confidence in the fourth quarter and also for a continued solid growth in 2024.

Speaker 3: We remain positive about demand for Bruker Scientific Instruments and Life Science Solutions, which gives us confidence in the fourth quarter and also for continued solid growth in 2024.

In fiscal year 2023, we have accelerated our investments in our transformative projects accelerate pseudo initiatives as well as an operational excellence and productivity we're.

Speaker 3: In fiscal year 2023, we have accelerated our investments in our transformative project Accelerate 2.0 initiatives, as well as in operational excellence and productivity. We're making further investments in recently acquired growth drivers in single-cell biology, and my colleague Mark will talk about that, as well as in previously acquired proteomics consumables, proteomics drug discovery services.

We're making further investments in recently acquired growth drivers in single cell biology, and my colleague Mark will talk about that.

As well as in previously acquired proteomics consumables <unk> struck discovery services.

Speaker 3: Euro science research tools apply solutions and scientific self.

Science research tools applied solutions and scientific software.

Speaker 3: Right, let's get to it. Turning to slide four now in the third quarter of 2023, Rooker delivered another good quarter with excellent organic growth of 10.9% and non-Gabby PPS growth of 12.1% year over year.

Right, so let's get through its turning to slide four now in the third quarter of 2023 brokerage delivered another good quarter with excellent organic growth of 10, 9% and non-GAAP EPS growth of 12, 1% year over year.

Brokers third quarter 'twenty three reported revenues increased 16, 3% year over year to $742 8 million.

Speaker 3: Proopers 3423 reported revenues increased 16.3% year over year to 742.8 million.

Speaker 3: which included an FX tailwind of 3.3%

Which included an FX tailwind of three 3%.

Speaker 3: On an organic basis, revenue is increased 10.9%.

On an organic basis revenues increased 10, 9%.

Speaker 3: which included 10.9% organic growth in our Brookers Climate and the instruments, the SI segment, and 10.2% at best, net up-intercompany elimination.

Which included 10, 9% organic growth and our broker scientific instruments BSI segment.

And 10, 2% at best net of intercompany eliminations.

Speaker 3: while growth from acquisitions added 2.1%. This implies constant exchange rate growth of 13.0% year over year.

While growth from acquisitions added two 1% this implies constant exchange rate growth of 13.0% year over year.

Speaker 3: Our third quarter 23 non-GAAP operating margin was 20.0%, which is a good level for our third quarter, albeit a decrease of 240 bits year over year, compared to a very strong operating profit margin in the third quarter of 2022.

Our third quarter 2003, non-GAAP operating margin was 20.0%, which is a good level for our third quarter, albeit a decrease of 240 bps year over year compared to a very strong operating profit margin in the third quarter of 2022.

Speaker 3: In the third quarter of 23, Bruker reported GAAP diluted EPS of $0.60 compared to $0.59 in the third quarter of 22.

In the third quarter of 2003 broker reported GAAP diluted EPS of <unk> 60.

Compared to <unk> 59 in the third quarter of 2002 on.

Speaker 3: On a non-GAAP basis, third quarter 23 diluted EPS was 74 cents, up 12.1% from 66 cents in Q3-22.

On a non-GAAP basis third quarter 2003 diluted EPS was <unk> 74.

Up 12, 1% from 66 in Q3 22.

This had a five cent tax tailwind.

Speaker 3: This had a 5 cent tax tailwind, pretty much exactly offsetting a minus 5 cent currency headwind in the quarter.

Pretty much exactly offsetting a minus 5% currency headwind in the quarter.

Speaker 3: Gerald will discuss the drivers of margins in EPS later in more detail.

Gerald will discuss the drivers of margins and EPS later in more detail.

Moving to the first nine months on slide five you can see brokers strong performance and excellent execution in the first nine months of 2023 with industry, leading organic revenue growth of 13, 9% and non-GAAP EPS growth of 17, 5%.

Speaker 3: Moving to the first nine months on slide five, you can see Bruker's strong performance and excellent execution in the first nine months of 2023 with industry-leading organic revenue growth of 13.9% and non-GAAP EPS growth of 17.5%.

Speaker 3: More specifically, our first nine months of 2023 revenues increased by 15.8% to $2.11 billion.

More specifically our first nine months of 2023 revenues increased by 15, 8% to $2 1 billion.

On an organic basis first nine months revenues grew 13, 9% year over year, consisting of 14.0 organic revenue growth and scientific instruments and 12, 8% organic growth at best net of intercompany eliminations.

Speaker 3: On an organic basis, first nine months revenues grew 13.9% year-over-year, consisting of 14.0% organic revenue growth in scientific instruments and 12.8% organic growth at best, net of intercompany limit.

First nine months 2023 order bookings for BSI grew in the upper mid single digits year over year organically driven by broker bio spin in Calvert.

Speaker 3: First nine months 2023 order bookings for BSI grew in the upper mid-single digits year-over-year organically, driven by broker-biosmin and Calit.

Speaker 3: Also, our BSI book-to-bill ratio year-to-day remained above 1.0.

Also our BSI book to Bill ratio year to date remained above 1.0.

Speaker 3: and our backlog at the end of the third quarter remains strong.

And our backlog at the end of the third quarter remained strong.

And elevated in fact.

Our first nine months 2023, non-GAAP gross gross and operating margin and GAAP and non-GAAP EPS performance are all summarized on slide five.

Speaker 3: Our first nine months, 2023, non-GAAP , gross and operating margin, and GAAP and non-GAAP EPS performance are all summarized on slide five.

Speaker 3: And you can see the strong non-GaP EPS growth of 17.5% despite a 14 cents headwind from currency.

And you can see the strong non-GAAP GAAP EPS growth of 17.

5%, despite a 14th.

Headwinds from currency.

Speaker 3: Our trailing 12-month return on invested capital, a non-GAAP measure, was 23.2%, a metric that highlights our differentiated broker management process.

Our trailing 12 months return on invested capital in non-GAAP measure was 23, 2% a metric that highlights our differentiated broker management process and focus on disciplined entrepreneurial isn't organic growth supplemented by selected attractive acquisitions.

Speaker 3: focus on disciplined entrepreneurialism and organic growth, supplemented by selected attractive acquisitions.

Speaker 3: Please turn to slide six and seven, where we highlight the year-to-date third quarter 23 performance of our three scientific instruments groups and of our best segment, all on a constant currency and year-over-year basis.

Please turn to slide six and seven where we highlight that year to date third quarter 'twenty three performance of our three scientific instruments groups and of our best segment.

On a constant currency and year over year basis.

Year to date, the biotech group revenue was $541 million and grew in the high single digits percentage. This included revenue from just one gigahertz class anymore. So far this year and namely in Q3 'twenty three and for comparison. We also had one in Q3 of 'twenty two.

Speaker 3: Year-to-date, the Biospin group revenue was $541 million and grew in the high single-digit percentage. This included revenue from just one gigahertz class NMR so far this year, namely in Q3-23, and for comparison, we also had one in Q3-22.

In the fourth quarter of 'twenty three we.

Speaker 3: We expect to book revenue on one or two gigahertz class NMRs, by the way.

We expect to book revenue on one or two gigahertz class <unk> by the way.

Speaker 3: In the nine months, in the first nine months of 2023, Bruker saw growth across biopharma, academic and government markets, industrial research and applied markets, as well as in the new integrated data solutions software division with its SciY scientific and lab software platform, something that's relatively new to Bruker.

In the nine months in the first nine months of 2023 brokers saw growth across Biopharma academic.

<unk> and government markets industrial research and applied markets as well as in the new integrated data solutions software division with its side why scientific and lab software platform.

That's relatively new to broker.

Alright first nine months of 2023 are tallied group had revenue of $703 million in growth in the high teens percentage.

Speaker 3: All right. First nine months of 2023, our Cali group had revenue of 703 million and growth in the high teams percentage.

Speaker 3: with strong growth in life science mass spectrometry driven by the TIMSTOP platform and aftermarket business, as well as strong growth in our applied mass spec business and the optics near-infrared Raman business.

With strong growth in life science mass spectrometry, driven by the <unk> platform and aftermarket business as well as strong growth in our applied mass spec business and the optics infrared near infrared Rama business.

Speaker 3: In our optics business, we know two recent tender wins, very nice, for eventually over 250 so-called DE-tector, explosive trace detectors, for the Frankfurt and Zurich airports, both of which were explained in recent press releases.

Our optics business in our optics business. We know two recent tender wins very nice for eventually over 250, so called day sector explosive trace detector for the Frankfurt and surge airports both of which were explained in recent press releases.

At ASM is this year, we launched the <unk> ultra.

Speaker 3: At ASMS this year, we launched the TIMSTOP Ultra, and at the EUPO Congress in Korea in September , we announced further advances in TIMSTOP methods, consumables, and software for this next-generation, unbiased, high-fidelity, four-dimensional 4D proteomics and 4D multiomics. That's quite unique on the TIMSTOP platform and very advantageous.

And at the <unk> Congress in Korea in September we announced further advances in Tim's top methods consumables and software for this next generation unbiased high fidelity four dimensional or <unk> proteomics and 40 multi omics that's quite unique on the chips tough platform and various.

On pages.

Microbiology and infectious disease revenue was up slightly as solid demand for the multi biotype, a consumables was offset by a final drop of our modest COVID-19, molecular diagnostics revenue to now near zero.

Speaker 3: Microbiology and infectious disease revenue was up slightly as solid demand for the multibiotype or consumables was offset by a final drop of our modest COVID-19 molecular diagnostics revenue to now near zero.

Please turn to slide seven our year to date broker nano revenue was 673 million and grew in the low twenties percentage with strong revenue growth across end markets, including <unk> Gov industrial semiconductor metrology the.

Speaker 3: Please turn to slide seven now. Year-to-date, Brooker Nano revenue was $673 million and grew in the low 20s percentage with strong revenue growth across end markets, including ACAGov Industrial Semiconductor Metrology. The global investments in AI, artificial intelligence, are strong tailwinds for our semiconductor and advanced packaging metrology tools.

The global investments in AI artificial intelligence are strong tailwind for our semiconductor and advanced packaging metrology tools.

Revenues advanced X Ray and nano surface tools, all delivered strong revenue growth in the first nine months.

Speaker 3: Revenues that advanced x-ray and nanosurface tools all delivered strong revenue growth in the first

Life Science Florescence microscopy was up on product innovation and now includes a strong contribution also from our fourth quarter 'twenty two acquisition of the in scope ex neuroscience research tools.

Speaker 3: Life Science Fluorescence Microscopy was up on product innovation and now includes a strong contribution also from our fourth quarter 22 acquisition of the Inscopix Neuroscience Research Tool.

Speaker 3: Finally, year-to-date 23 best revenues grew in the mid-teens percentage net of intercompany eliminations driven by share gains and superconductor demand by our MRI OEM customers.

Finally year to date 23, best revenues grew in the mid teens percentage net of intercompany eliminations driven by share gains in superconductor demand by our MRI OEM customers as.

Speaker 3: as well as from revenue growth in advanced technologies for big science, fusion research, and key extreme EUV semiconductor technologies for semiconductor lithography tools by other large OEM customers, again, often driven by strong growth in AI demand.

As well as from revenue growth and advanced technologies for Big Science Fusion research and key extreme UV <unk> semiconductor technologies.

For semiconductor lithography tools by other large OEM customers again, often driven by strong growth in AI demand.

Right moving to slide eight and nine I will take a pause and we highlight the new broker cellular cellular analysis business and I am delighted to take at this part over to Dr. Mark Munch, our broker nano group Presidents, who drove the phenol Mac genomics acquisition now renamed to broker cellular analysis.

Speaker 3: Right, moving to slides eight and nine, I'll take a pause and we highlight the new Bruker cellular analysis business.

Speaker 3: And I'm delighted to hand this part over to Dr. Mark Munch, our Bruker Nano Group President, who drove the Phenomex acquisition, now renamed to Bruker Cellular Analysis. And Mark is now resetting the strategy and right-sizing the business. Over to you, Mark.

This end market is now resetting this strategy and right sizing the business over to you Mark.

Thank you Frank.

Speaker 4: Thank you, Frank. We're excited about our acquisition of Phenomex, this new business. As Frank mentioned, we now call Brooker's Cellular Analysis.

Excited about our acquisition of Panamax.

This new business as Frank mentioned, we now call brokerage cellular analysis.

Perfectly fit our project consulting to Plano initiatives.

Genomics was a Q1 2023 merger are pretty light <unk>, which brought together two unique and valuable platforms to beacon.

Speaker 4: Phenomex was a Q1 2023 merger of Berkeley Light and Isoplexis, which brought together two unique.

Speaker 4: Beacon, OptoFluidics platform, and the Isospark platform.

Fluidics platform and the Isa spark platform.

Together these.

Speaker 4: uh, technologies address rapidly growing market segments in antibody discovery, cell line development.

Alright technologies address rapidly growing.

Market segments and antibody discovery.

Cell line development.

Cell therapy.

Speaker 4: and gene therapy, amongst others. This helps also our Project Survey 2.0 initiative in expanding our footprint in translation research, clinical research, and biopharma.

And gene therapy amongst others.

Helps also our projects on a two point, our initiatives and expanding our footprint and translational research clinical research and Biopharma.

This is also complementary to our brokerage failure analysis.

Speaker 4: This is also complimentary to our Bruker cellular analysis and sub-cellular analysis tools. For example, our Canopy Cellscape tool, which

<unk> announced the tools for example are can be Selsky tool, which is an important tool for spatial biology, as well as examining phenotypes in cell suspensions.

Speaker 4: It's important to tool for spatial biology as well as examining phenotypes and self-spensions. So this brings a lot of opportunity for commercial synergies. Moving to...

So that's bringing a lot of opportunity for commercial synergies.

Moving to slide nine.

Just to give some financial details on the acquisition.

Panamax was acquired for 122 million, which included a $14 million bridge loan. Therefore is at attractive valuation of roughly two times revenue.

Speaker 4: The Phenomex was acquired for 122 million, which included a 14 million dollar bridge along, therefore the attractive valuation of roughly two times revenue.

Speaker 4: We closed this transaction on October 2nd, 2023, and immediately started our work on right sizing the business and optimizing cost structures, which is mostly going to happen.

Does this transaction on October 2nd 2023 and.

And immediately started our work on right sizing the business.

Optimizing cost structures.

Which is mostly going to happen here in Q4 2023.

Initial run rate is expected at business with greater than $69 per year given.

Speaker 4: Initial run rate is expected for the business to be greater than $60 million per year, given the strong tracking potential of the market segments that I spoke of and that we addressed with this. Many of these segments are somewhat new to Brooker, and so we're excited about that.

Given the strong mark tracking potential of the market.

Segments that I spoke of and that we address with as many of these segments are.

Somewhat new to broker and so we're excited about that and.

Speaker 4: And as mentioned, we see cross-selling opportunities with our existing spatial biology and cellular analysis tool.

And as mentioned, we see cross selling opportunities with our existing spatial biology and seller analysis tools.

In terms of its broker non-GAAP EPS impact, we anticipate <unk> <unk> dilutive to Q4 2023.

Speaker 4: In terms of Brooker 9 GAP EPS impact, we anticipate 12 cents diluted to Q4 2023.

Speaker 4: one-quarter sniffing impact as we work through the rapid price sizing and cost structure optimization.

But one quarter significant impact as we worked through the rapid right sizing and cost structure optimization.

Speaker 4: and being slightly dilutive for 2024 and accretive by 2026. And we expect.

And being slightly dilutive for 2024 and accretive by 2026.

And we expect long term double digit ROIC.

We encourage you to visit the links shown here to help get familiar with these businesses. We are very excited about.

Speaker 4: We encourage you to visit the links shown here to help get familiar with these businesses. We are very excited about the potential here in these very valuable technology platforms. Thank you, Frank.

The potential here and.

And he is very valuable technology platforms.

Thank you Frank back to you.

Alright, Thank you very much mark.

Yes. These links are actually there is a really cool website I would highly recommend that.

Speaker 3: Yes, these links are actually, there's a really cool website, I would highly recommend that.

Speaker 3: If you have a few minutes, I think it's very informative. So thank you Mark. We're excited about this attractive acquisition of a leading single cell biology business.

If you have a few minutes I think it's very informative. So thank you Mark we're excited about this attractive acquisition of a leading single cell biology business.

Speaker 3: with key technologies for all the reasons that Mark explained. Well done. So, in summary, Brooker is on track for its third year in a row of double-digit organic revenue growth and solid EPS growth, even as we have accelerated our investments in the project Accelerate 2.0 Transformation, as well as in operational excellence in capacity and productivity.

With key technologies for all the reasons that Mark explained well done. So in summary broker is on track for its third year in a row of double digit organic revenue growth and solid EPS growth, even as we have accelerated our investments in the project accelerate <unk> transformation as well as in operational excellence.

<unk> capacity and productivity.

Speaker 3: Our dual strategy is working exceedingly well right now.

Our dual strategy is working exceedingly well right now.

Speaker 3: So, Bruker's strong growth is the result of a fundamental commitment to innovating in high-value solutions for customers, as well as the result of our ongoing portfolio transformation.

So brokers strong growth is the result of a fundamental commitment to innovating and high value solutions for customers as well as the result of our ongoing portfolio transformation.

Speaker 3: Our technology and biological applications leadership in many areas combined with world-class execution via our broker management process position us well for continued outperformance.

Our technology and biological applications leadership in many areas combined with world class execution via our broker management process position us well for continued outperformance.

Speaker 3: As in other years, we expect to get fiscal year 24 guidance when we report Q4-23 financial results.

As in other years, we expect to give fiscal year 2004 guidance. When we report Q4 'twenty three financial results.

Soon we will be in early February.

Speaker 3: However, please note that we expect to deliver solid organic growth also in 2024, and we remain on track for our medium term, 2026 targets, which

However, please note that we expect to deliver solid organic growth also in 2024.

And we remain on track for our medium term 2026 targets, which we issued at our June 23, Investor day, So with that let me turn the call over to our Chief Financial Officer, Gerald Herman who will review, our financial performance and our updated fiscal 'twenty three outlook by.

Speaker 3: We issued at our June 23 investor day. So with that, let me turn the call over to our chief financial officer, Gerald Terman, we'll review our financial performance and our updated fiscal 23 outlook in much more detailed tarot.

'twenty three outlook in much more detail Gerald.

Speaker 5: Thank you, Frank, and thank you, everyone, for joining us today. I'm pleased to provide some more detail on Brucker's third quarter and the first nine months of 2023's financial performance, starting on slide 11.

Thank you Frank and thank you everyone for joining us today I'm pleased to provide some more detail and brokers third quarter and the first nine months since 2000, <unk> financial performance starting on slide 11.

Speaker 5: In the third quarter of 2023, Brookers reported revenue increased 16.3% to $742 million, which reflects an organic revenue increase of 10.9% year-over-year.

In the third quarter of 2023 brokers reported revenue increased 16, 3% to $742 million.

Which reflects an organic revenue increase of 10, 9% year over year.

Speaker 5: Re-reported GAAP EPS of 60 cents per share compared to 59 cents in the third quarter of 2022.

Reported GAAP EPS of <unk> 60 per share compared to <unk> 59 in the third quarter of 2022.

Speaker 5: On a non-gap basis, Q3 2020 VES was $0.74 per share. An increase of 12.1% from the 66 cents we posted in the third quarter of 2022.

On a non-GAAP basis, Q3, 2020, EPS was <unk> 74 per share an increase of 12, 1% from the 66, we posted in the third quarter and 22.

Gross margin performance was down 50 basis points year over year in the third quarter of 'twenty three negatively impacted by 100 basis points foreign exchange headwind, partially offset by organic and acquisition gross margin improvement by 50 basis points.

Speaker 5: Gross margin performance was down 50 basis points here over year in the third quarter of 23, negatively impacted by 100 basis points for an exchange headwind. Partially offset by organic and acquisition gross margin improvement by 50 basis points.

Our third quarter 2023, non-GAAP operating income increased three 6%, while our non-GAAP operating margin decreased 240 basis points year over year to $20 zero percent impacted by foreign exchange and acquisition headwinds as well as a challenging comparison from a strong Q3 of 'twenty two.

Speaker 5: Our third quarter 2023 non-GAAP operating income increased 3.6 percent while our non-GAAP operating margin decreased 240 basis points year-over-year to 20.0 percent impacted by foreign exchange and acquisition headwinds as well as a challenging comparison from a strong Q3 of 22.

We finished the third quarter with cash cash equivalents and short term investments of approximately $364 million.

Speaker 5: We've finished the third quarter with cash cash equivalents and short-term investments of approximately $364 million.

Speaker 5: During the third quarter, we used cash to fund selected project Accelerate 2.0 investments, acquisitions of approximately $120 million, and share repurchases of about $80 million in the third quarter.

During the third quarter, we used cash to fund selected project accelerate <unk> investments acquisitions of approximately a $120 million and share.

Purchases of about $80 million in the third quarter.

On October 2nd we closed the acquisition of genomics, which I will discuss later.

Speaker 5: On October 2nd, we close the acquisition of Phenomics, which I'll discuss later.

Speaker 5: We generated $44.1 million of operating cash flow in the third quarter of 2023. Our capital expenditure investments were $26.9 million, resulting in free cash flow of $17.2 million in the third quarter of 23. This compares with operating cash flow of $69.5 million and free cash flow of $11.8 million in the third quarter of 22.

We generated $44 1 million of operating cash flow in the third quarter of 2023.

Our capital expenditure investments were $26 9 million, resulting in free cash flow of $17 2 million in.

In the third quarter of 2003.

This compares with operating cash flow of $69 5 million and free cash flow of $11 8 million in the third quarter of 2002.

Slide 12 shows the revenue bridge for the third quarter of 'twenty three as Frank has reviewed earlier.

Speaker 5: Slide 12 shows the revenue bridge from the third quarter of 23 as Frankus reviewed earlier.

Speaker 5: Compared to the third quarter of 22, IOS spends third quarter 23 organic revenue, was up high single digits.

Compared to the third quarter of 2002, <unk> third quarter 'twenty three organic revenue was up high single digits.

Speaker 5: Both Q3 2022 and 23 had one Digger Fritz class NMR in revenue.

Both Q3, 2022, and 'twenty three had one gigahertz class <unk> EMR in revenue.

Speaker 5: We expect revenue from one or two gigahertz class and a Mars in the fourth quarter, 23 similar to the fourth quarter of 22.

We expect revenue from one or two gigahertz class <unk> in the fourth quarter 'twenty three similar to the fourth quarter of 'twenty two.

Speaker 5: Nano-organic revenue grew in the mid-teens percentage range, driven by strength in nano's industrial research, AI-driven semiconductor-and-advanced packaging metrology, as well as academic market.

Nano organic revenue grew in the mid teens percentage range driven by strength in Nanos Industrial research AI, driven semiconductor and advanced packaging metrology as well as academic markets.

Speaker 5: Caled organic revenue grew high single digit percentage with strong performance by our microbiology business.

Organic revenue grew high single digit percentage with strong performance by our microbiology business.

Speaker 5: We delivered solid growth in the third quarter of 23 in DFI systems and aftermarket revenue with low teams percentage organic growth in systems and high single digit organic growth in aftermarket.

We delivered solid growth in the third quarter of 2003, and DSI systems, and aftermarket revenue with low teens percentage organic growth in systems and high single digit organic growth in aftermarket.

Speaker 5: Geographically and on an organic basis in the third quarter of 23, our America's revenue grew in the low single digit percentage. Asia Pacific revenue grew in the teens percentage range, while European revenue had low teens percentage growth all year over year. For our IMEA region, third quarter of 23 revenue was up mid 20% year over year.

Geographically and on an organic basis in the third quarter of 2003, our Americas revenue grew in the low single digit percentage Asia Pacific revenue grew in the teens percentage range, while European revenue had low teens percentage growth all year over year.

For our EMEA region third quarter 'twenty, three revenue was up mid 20% year over year.

Slide 13 shows our third quarter 'twenty, three P&L performance on a non-GAAP basis.

Speaker 5: Slide 13 shows our third quarter 23 P&L performance on an on-gap basis.

Speaker 5: 9 gap gross margin of 52.7% decreased 50 basis points from the 53.2% in the third quarter of 22. Impacted by 100 basis points of foreign exchange headwinds, partially offset by organic and acquisition related gross margin improvements of 50 basis points.

non-GAAP gross margin of 52, 7% decreased 50 basis points from the 53, 2% in the third quarter of 'twenty two impacted by 100 basis points of foreign exchange headwinds, partially offset by organic and acquisition related gross margin improvements of 50 basis points.

Speaker 5: The third quarter of 2023 non-GOB operating margin of 20.0% was 240 basis points lower than the 22.4% margin we posted in the third quarter of 22. As we were impacted by foreign exchange and acquisition headwinds to margins and faced a difficult comparison from our strong third quarter 22 operating margin.

The third quarter of 2023, non-GAAP operating margin of 20.0% was 240 basis points lower than the 22, 4% margin we posted in the third quarter of 2002.

We were impacted by foreign exchange and acquisition headwinds to margins and faced a difficult comparison from our strong third quarter 'twenty to operating margin.

For the third quarter of 2003, our non-GAAP effective tax rate was 23, 8% compared to 34% in the third quarter of 22% driven mostly by favorable jurisdictional mix.

Speaker 5: For the third quarter of 23, our non-gap effector tax rate was 23.8%, compared to 30.4% in the third quarter of 22, driven mostly by favorable jurisdictional mix.

Speaker 5: Weighted average diluted shares are standing in the third quarter of 23, we're 147.3 million. A reduction of 1.3 million shares or 0.9% from the third quarter of 22, resulting from our share repurchases over the trailing 12 months.

Weighted average diluted shares outstanding in the third quarter of 2003 were $147 3 million a reduction of $1 3 million shares or 0.9% from the third quarter of 22, resulting from our share repurchases over the trailing 12 months.

Speaker 5: Finally, third quarter 2023 non-GAPPPS of 74 cents was up 12.1% compared to third quarter of 22, with a 5 cent tailwind from a favorable tax rate offsetting a 5 cent foreign exchange headwind.

Finally, third quarter 2023, non-GAAP EPS of <unk> 74.

Was up 12, 1% compared to the third quarter of 2002 with a <unk> tailwind from a favorable tax rate offsetting a five.

Foreign exchange headwinds.

Slide 14 shows the year over year revenue bridge for the first nine months of 2023 revenue was up $288 million or 15, 8%, reflecting organic revenue growth of 13, 9%.

Speaker 5: Slide 14 shows the year-over-year revenue bridge for the first nine months of 2023. Revenue was up $288 million or 15.8% reflecting organic revenue growth of 13.9%.

Speaker 5: Acquisitions added 2% to our top line, but foreign exchange was 0.1% headwind, resulting in constant currency revenue growth of 15.9% year-over-year.

Acquisitions added 2% to our top line, while foreign exchange was a 0.1% headwind.

Resulting in constant currency revenue growth of 15, 9% year over year.

Frank already covered the drivers for the first nine months.

Speaker 5: Frank already covered the drivers for the first nine months.

Speaker 5: Non-GAP P&L results for the first nine months of 23 are summarized on slide 15 with the drivers largely similar to the third quarter of 23 and as explained on the slide.

non-GAAP P&L results for the first nine months of 'twenty three are summarized on slide 15, with the drivers largely similar to the third quarter of 2003 and as explained on the slide.

Turning now to slide 16.

Speaker 5: Turning now to slide 16, in the first nine months of 2023, we generated $144.6 million of operating cash flow. Up about $42 million over the first nine months of 22, on higher profitability and favorable other items.

First nine months of 2023, we generated $144 $6 million of operating cash flow up.

About $42 million over the first nine months of 'twenty, two on higher profitability and favorable other items.

Speaker 5: We generated $69 million of free cash flow.

We generated $69 million of free cash flow.

Speaker 5: over the first nine months of 23, off about $61 million over the first nine months of 22. On higher operating cash flow and lower capital expenditures.

Over the first nine months of 'twenty, three up about $61 million over the first nine months of 'twenty, two on higher operating cash flow and lower capital expenditures.

Speaker 5: Turning now to slide 18, given our strong year-to-date results, solid backlog and positive outlook for the fourth quarter, we're again increasing our revenue guidance for the year. Our updated outlook for fiscal year 2023 includes raising our revenue guidance to a range of $2.88 to $2.91 billion.

Turning now to slide 18, given our strong year to date results solid backlog and positive outlook for the fourth quarter, we're again, increasing our revenue guidance for the year our.

Our updated outlook for fiscal year 2023 includes raising our revenue guidance to a range of $2 88 to $2 $91 billion.

This implies organic revenue growth of 11, five to 12, 5% year over year, an increase of 150 basis points from the midpoint of our prior guidance and by now up 300 basis points from the initial fiscal year 'twenty three guidance. We gave in early February.

Speaker 5: We now expect foreign currency to be about neutral to revenue for the year and acquisitions contributions of about 2.5% to our revenue growth.

We now expect foreign currency to be about neutral to revenue for the year and acquisitions contributions of about two 5% to our revenue growth.

This leads to reported and constant currency revenue growth guidance in a range of 14% to 15%.

Speaker 5: This leads to reported and constant currency revenue growth guidance in a range of 14 to 15 percent.

For operating margins in 2023, we now expect organic operating margin improvement of about 100 basis points, which is up from our prior expectation of 50 basis points.

Speaker 5: For operating margins in 2023, we now expect organic operating margin improvement of about 100 basis points, which is up from our prior expectation of 50 basis points.

Speaker 5: For non-GAP operating margins all in, we now expect 150 basis point declined from the prior year due to a 250 basis point combined headwind from foreign exchange and acquisitions. Now also including the cellular analysis business we acquired as of October 2nd, 2023.

For non-GAAP operating margins all in we now expect 150 basis point decline from the prior year.

Due to a 250 basis points combined headwind from foreign exchange and acquisitions now also including the cellular analysis business, we acquired as of October <unk> 2023.

As previously discussed we're rapidly right sizing the cellular analysis business with most cost actions expected in the fourth quarter of 2003, such that the cellular analysis business is expected to be only slightly dilutive during 2024 and accretive to non-GAAP EPS by 2026.

Speaker 5: As previously discussed, we're rapidly right-sizing the failure analysis business with most cost actions expected in the fourth quarter of 23. Such that the failure analysis business is expected to be only slightly diluted during 2024 and accretive to non-GAPPS by 2026.

And as you just heard from Marc we believe that over time cellular analysis could be another high ROIC business for broker.

Speaker 5: As you just heard from Mark, we believe that over time cellular analysis could be another high R O I C business for brokers.

Speaker 5: Cellular analysis accelerates our entry into important biologics in the cell and gene therapy tool markets leveraging its differentiated research solutions with high revenue growth and margin potential

Failure analysis accelerates our entry into important biologics and cell and gene therapy to market leveraging its differentiated research solutions with high revenue growth and margin potential.

Speaker 5: On the bottom line, excluding the new cellular analysis business, we're actually increasing our estimated non-GAPDDS guidance to a range of 260 to 265, which implies 11 to 13% year-over-year growth or up five cents from our prior guidance range of 255 to 260 for fiscal year 2023.

On the bottom line, excluding the new cellular analysis business, we're actually increasing our estimated non-GAAP EPS guidance to a range of $2 60 to $2 65, which implies 11% to 13% year over year growth were up five from our prior guidance range.

$2 55 to $2 60 for fiscal year 2023.

Speaker 5: In the fourth quarter of 2023, we expect cellular analysis to be about 12 cents dilutive to nine-gap EPS as we work through right sizing the business. Accordingly, we overall expect non-gap EPS to be in a range of 248 to 253 down 7 cents compared to our prior guidance, including that acquisition.

In the fourth quarter of 2023, we expect cellular analysis to be about <unk> <unk> dilutive to non-GAAP EPS as we work through right sizing the business. Accordingly, we overall expect non-GAAP EPS to be in a range of $2 48 to $2 53.

One seven compared to our prior guidance, including that acquisition.

Our guidance assumptions other guidance assumptions are listed on the slide our full year 2023 ranges have been updated for foreign currency rates as of September 32023.

Speaker 5: Our guidance assumptions, other guidance assumptions are listed on the slide. Our full year 2023 ranges have been updated for foreign currency rates as of September 30th of 2023.

Finally, our Investor day in June of 2023 shared financial targets for the medium term fiscal year 2026 outlook for broker.

Speaker 5: Finally, our investor day in June or 2023, I shared financial targets for the medium term fiscal year 2026 Outlook for Bruker. Are you to date 2023 financial performance and positive outlook for Q4 gives me confidence to reconfirm today our commitment to those targets, including solid growth for 2024.

Our year to date 2023 financial performance and positive outlook for Q4 gives me confidence to reconfirm today, our commitment to those targets, including solid growth for 2024.

So to wrap up.

Speaker 5: Bruecker delivered excellent organic revenue growth and strong EPS growth in the quarter and for the first nine months of 2023. And we remain confident in our fiscal year 23 outlook and beyond.

Broker delivered excellent organic revenue growth and strong EPS growth in the quarter and for the first nine months of 2023, and we remain confident in our fiscal year 'twenty three outlook and beyond and with that I'd like to turn the call over to Justin to start the Q&A session. Thank you very much. Thank you Gerald.

Speaker 5: With that, I'd like to turn the call over to Justin to start the Q&A session. Thank you very much. Thank you, Gerald.

Speaker 2: I'd now like to turn the call over to the operators to begin the Q&A portion of the call. As a reminder, to allow everyone time for questions, we ask that you limit yourself to one question and one follow-up.

I'd now like to turn the call over to the operator to begin the Q&A portion of the call as a reminder to allow everyone time for questions. We ask that you limit yourself to one question and one follow up.

Okay.

And I think operator, we're ready for the Q&A. Thank you.

Speaker 1: Absolutely. We will now begin the question and answer session. If you would like to ask a question, please first start followed by one on your telephone keypad. If for any reason, you would like to remove that question, please first start followed by two.

Absolutely we will now begin the question and answer session.

I would like to ask a question. Please press star followed by Brian on your telephone keypad.

If for any reason you would like to remove that question. Please press star followed by two.

Speaker 1: Again, to ask a question, press star 1. As a reminder, if you're using a speakerphone, please remember to pick up your handset before asking your question. We will pause it briefly as questions

Again to ask a question press star one.

As a reminder, if you're using a speaker phone. Please remember to pick up your handset before asking your question.

We will pause briefly ask questions are registered.

Speaker 1: The first question comes from Alana Puneet, Farah Wittler, Nate, partners, your line is now open. I just had a few more white books and I thought my book is closed for you.

The first question comes from the line of Puneet.

Correct.

<unk> partners. Your line is now open.

We cannot hear anything at the moment spheres.

Speaker 2: Can you start over? We couldn't hear the beginning.

Can you start over we couldn't hear the opinion I cannot hear you.

Sure.

Speaker 6: Sure. Yeah, so I was just saying congrats on a very strong quarter here. Worse is the backdrop of it.

So I was just saying congrats on a very strong quarter here versus the backdrop of industrial peers. So that's really great to see.

Speaker 6: I just wanted to clarify a question that we're getting here on the BSI book to Bill, year to date that you provided, but based on the mid-single digit growth and bookings, versus the sort of double digit high single digit growth you had in the prior two quarters for bookings, just wanted...

Just wanted to clarify a question that we're getting here on.

The BSI book to Bill year to date that you provided but based on the mid single digit growth in bookings versus the sort of double digit and high single digit growth you had in the prior two quarters for bookings just wanted to check.

Speaker 6: If the book to Bill was lower in first, I mean in the third quarter here.

If the book to Bill was lower than the first.

Third quarter here and just given a Frank what youre seeing in the end markets and in China, obviously.

Speaker 6: And just given Frank what you're seeing in the end of markets and in China, obviously nervousness out there in the market, could you maybe just help us frame? Is it still fair to think about six to eight percent growth?

And Thats out there in the market could you maybe just help us frame.

Is it still fair to.

Think about 6% to 8% growth the longer term growth algorithm for 2024 as well.

Speaker 6: The longer-term growth algorithm for 2024 as well.

Yes happy to do so if we need we're not giving 'twenty for guidance.

Speaker 3: Yes, I'm happy to do so. If we need, we're not giving 24 guidance.

Speaker 3: We've signaled solid organic revenue growth for next year. We'll give guidance.

We've signaled solid organic revenue growth for next year, we'll give guidance when we always give guidance anyway. So it is correct. In Q3, there was some weakness in bookings in China and in Japan, the rest of the World, which of course included Americas and Europe and so on.

Speaker 3: when we all was given guidance. Anyway, so it is correct. In Q3, there was some weakness in bookings in China and in Japan.

Speaker 3: The rest of the world, which of course included America's and Europe and so on, was fairly strong. And so our book to bill in Q3 was below one. As we expected, you're today, it is about one. Remember in China, we have this unusual effect, more than perhaps other peers, that we had very strong Q1 booking.

Was fairly strong.

And so our book to Bill in Q3 was below one as we expected year to date it is about one.

Remember in China, we had this unusual effect more than perhaps other peers that we had very strong Q1 bookings.

Speaker 3: We believe some of that was truly incremental as some big ticket items got funded that normally might struggle to get funding

We believe some of that was truly incremental as some big ticket items got funded that normally might struggle to get funding.

But some of it was also pull forward and so we have a bit of an uneven order pattern in China, but there is also weakness in China right now.

Speaker 2: but some of it was also pulled forward. And so we have a bit of an uneven order pattern in China, but there is also weakness in China right now. And in Q3, we saw that in China and Japan. So Booktabilia today is about one, and we also have a very good forecast for bookings in Q4. So we think we'll maintain the Booktabil of around one for the year.

And in Q3, we saw that in China and Japan.

Book to Bill year to date is above one and we also have a very good forecast for book for bookings in Q4. So we think we will maintain the book to bill of around 1% for the year.

And in our <unk>.

Speaker 3: And, you know, backlog always comes down a little bit in Q3 before our typically strong Q4. You've heard the outlook of high single digit organic revenue growth and good bookings for Q4. So, we will still be at a very significantly elevated backlog.

Backlog always comes down a little bit in Q3 before are typically strong Q4, you have heard the outlook of high single digit organic revenue growth and good bookings for Q4.

So.

We will still be at a very significantly elevated backlog.

Speaker 3: Keep in mind, I know you like the term backlog conversion, but those are customer orders, that's real demand. So anyway, we'll still have a very healthy and extended backlog that will take us, in fact, a few years to work down, going into 24. I hope that addressed most of your, or all of your questions.

Keep in mind, I know you'd like the term backlog conversion, but those are customer orders thats real demand.

So anyway, we'll still have a very very healthy and extended backlog that will take us in fact, a few years to work down going into 'twenty four.

I hope that addressed most of your all of your questions.

Speaker 6: Yeah, yeah, absolutely Frank, appreciate it. And if I could follow up, I mean, Congress on the Phenomics and the Cell Analysis Business.

Yes, yes, absolutely Frank I appreciate it and if I could follow up I mean.

Congrats on the Pheno makes in the cell analysis business.

Definitely attractive longer term.

But could you just talk a little bit about how you see that.

High end capital equipment positioned within broker you have significant experience with selling high end equipment to both research and now with the cell analysis youll be positioning well into pharma. So maybe could you talk a little bit.

Speaker 6: selling high-end equipment to both research and now with the cell analysis you'll be positioning well into pharma. So maybe could you talk a little bit on a high level about that?

High level about that and if I may just sneak in one on Tim's top any changes in customer order behaviors or dynamics, given the demos of potential competitive high resin instrument ongoing in the market right now thank you.

Speaker 6: And if I may just sneak in one on Tim's top.

Yes.

We love selling instruments, we are very innovative instruments, we keep them refreshed also in our core which are core is really doing well as well.

Only the project accelerate initiatives.

They.

Speaker 3: The beacon is another high-end instrument. The one that we just acquired was cellular analysis. But it really depends if you're addressing key markets in better faster.

The Beacon is another high end instrument. The one that we just acquired with cellular analysis, but it really depends if youre addressing key markets and in better faster.

Speaker 3: Antibody development, so maybe antibody development, set without a tool like this, you just can't develop very well by the traditional ways.

Antibody development, so maybe antibodies development that without as we will likely as you just cant develop.

Very well by the traditional ways of doing it and of course for important markets I know, there's a bit of a weakness right now in biologics and LNG therapy, but we're very happy to accelerate our push into those markets. So.

Speaker 3: doing it. And of course for important markets, I know there's a bit of a weakness right now in biologics and cell and gene therapy, but we're very happy to accelerate our push into those markets. So

Speaker 3: We, this is what we're really, really good at. And it's of course right now, the sometimes maligned academic government markets. If you're in the right spot, if you're in the post genomic trends, which is proteomics, post-trendslational modification, spatial biology.

We.

This is this is what we are really really good at and it's and it's of course right now the sometimes maligned academic government markets, if you're in the right spot if youre in the post genomic trends, which as proteomics post translational modification spatial biology antibody cell are stable.

Speaker 3: Antibody cell on stable cell line development. It's great. And I think we've positioned ourselves In the right areas. I should also add and I know you you that tends to be one of your questions

Cell line development Thats, great and I think we've positioned ourselves in the right areas I should also add and I know you that tends to be one of your questions.

Speaker 3: that the high end semiconductor and advanced packaging metrology tools in the nano group are also doing remarkably well. There's a bit of a cyclical downturn in semi, but with our technology bias and a strong push for really high performance newer packaging and chip technologies from artificial intelligence.

That the high end semiconductor and advanced packaging metrology tools in the nano group are also doing remarkably well there is a bit of a cyclical downturn in semi.

But with our technology buys into strong push for really high performance Newark packaging and chip technologies from artificial intelligence.

Speaker 3: and it's your political trends of the US rebuilding and Europe rebuilding their semi-modular industries. It's really we're not fully shielded from the economic trends that others are seeing or the macro trends but we're just more diversified and we have positioned ourselves for spatial biology, proteomics, AI and a few others to some trends that are continue to be very strong.

And these geopolitical trends of the U S rebuilding in Europe rebuilding their semiconductor industry.

It's really.

We're not we're not fully shielded from the economic trends that others are seeing are the macro trends, but we're just more diversified and we have positioned ourselves for spatial biology, proteomics AI and a few others to some trends that are continued to be very strong.

Speaker 3: All right, we should probably let some others get in with questions as well, but that's sort of a.

Alright, you should probably let some others getting with questions as well.

That's sort of.

Speaker 3: Good innovation, good portfolio, exciting new products.

Good good innovation good portfolio of exciting new products.

Once again I appreciate it Frank.

Yes.

The next question comes from the line of Derik de Bruin with Bank of America. Your line is now open.

Speaker 1: The next question comes from a line of Derek Duburn with Bank of America. Your line is now open.

Speaker 7: Hi, good morning. Thanks for taking my question. Hey, Frank, we're.

Hi, good morning, Thanks for taking my question.

Yes.

We're trying to.

Understand some of it a 90 IMAX going on in the market, particularly in the Biopharma space I know you have a.

Speaker 7: understand some of the dynamics going on in the market, particularly in the biopharma space.

Speaker 7: you know you don't have as much exposure to some of your peers right now and but there has been some confeditation in terms of instrument bias like that could you provide some incremental color on what you're seeing in biofarma and i've evolved after that

You don't have as much exposure to some of your peers right now and but but there has been some <unk> in terms of instrument buying some like that could you just provide some incremental color on what youre seeing in Biopharma and I have a follow up after that.

Speaker 3: Yeah. We see some of that as well. Biopharma investments are slowing down. Budgets are not getting spent as aggressively, especially among emerging biopharma that, you know, will keep an eye on their cash runway and so on.

Yes.

We see some of that as well.

Pharma.

<unk> are slowing down budgets are not being getting spend this aggressively, especially among emerging biopharma that will keep it on their cash runway and so on.

Also we did see.

Speaker 3: China Co business, be for NAR, for instance SAB.

China CRO business be for MMR for instance, being.

Speaker 3: pretty weak. So we're not immune to some of the trans-UCLs where we don't really do.

Pretty weak so we were not immune to.

Two to some of the trends you see elsewhere, we don't really do.

Speaker 3: bioproduction very much, or anything like that. We have very little COVID testing business. So, but we see, we can confirm some of those weaknesses. They're just, you know, a year ago, or two years ago, my God, if you weren't in biopharma, you were nothing, right? We're strong in biopharma. We've been growing very nicely, but we have so many other drivers as well. So.

Bio production very much or anything like that we have very little COVID-19 testing business. So, but we see if we can confirm some of those weaknesses there just.

A year ago or two years ago My God. If you weren't in Biopharma you, we're not seeing right. We're strong in Biopharma, we have been growing very nicely, but we have so many other drivers as well.

So.

Speaker 3: We confirm the trends, we just have many other growth. We're not firing at all cylinders, but we're firing on some lot of cylinders, and we have some very unique, upward folio positioning, and really some very innovative, high performance product lines that compete extremely well.

We confirm the trends we just have many other growth were not firing on all cylinders were firing on some a lot of cylinders and we have some very unique portfolio positioning and really some very innovative high performance product lines that compete extremely well.

Speaker 7: Great, and I'm gonna stay on the market commentary. I mean, you alluded to some metrology and semis, but what about some of the more industrial focus costs?

Great and im going to stay on the market commentary.

Alluded to some metrology in semis, but what about some of the more industrial focused customers.

Speaker 7: Chemical spending seems to be chemicals and some of those other markets that are out there. Can you sort of talk about broader macro industrial spending, Capix?

Chemical spending seems to be chemicals, and some of those other markets that are out there.

Can you just sort of talk about broader macro industrial spend in capex spend in those places.

Speaker 3: Yeah, so metrology, memory, and then there's some downturn there, and then we're seeing that in some metrology orders, but again, some very high-end orders also for advanced packaging and things that you need for very high performance, computing, and etc. for our AI.

Yes, <unk> metrology memory, and then some downturn there and we're seeing that in some metrology orders, but again some very high end orders also for advanced packaging and things that you need for very high performance computing and et cetera for our AI.

Speaker 3: General industrial, we don't really spend, we see some weakness there, but we also see, we're really a lot in industrial research and there's some really non-cyclical fast growing areas in green tech, in battery research.

General industrial we don't really spend.

We see some weakness there, but we also see where really a lot in industrial research and Theres, some really non cyclical fast growing areas in green check in battery research and in and other hydrogen economy there.

Speaker 3: in other hydrogen economy. There's some...

<unk>.

Speaker 3: There's enough green tech of an green tech economy that is a very strong growth drivers and other industrial research, industrial materials.

There is enough Green Tech clean Tech economy that has a very strong growth drivers and other industrial research industrial materials have been good for US and then I really think we have share gains that may be base hits, but they add up to we've refreshed and network, we're not neglecting our core and just.

Speaker 3: have been good for us. And then I really think we have share gains, you know, that may be base hits, but they add up to, we've refreshed and we're not neglecting our core and just, you know, milking the cow. We're investing there. This is part of our management process.

Milking the cow, we're investing there. This is part of our of our management process and so it's been it's been actually.

Speaker 3: And so yeah, it's been actually a company or a division like Rookray XFAST, right? This really has done quite well.

A company or a division like broker access right.

It's really has done has done quite well.

Speaker 3: Yes, Q3 China, older is a bit weaker, so we, you know, but again.

Yes, Q3, China orders a bit weaker so we.

But again.

Speaker 3: with a much healthier setup within industrial, towards industrial research and green tech research.

With a with a much healthier setup within industrial towards industrial research and Green Tech research.

Right.

Speaker 7: Thanks, Frank. Yeah, it's been impressive what you've done with the portfolio over the last 20 years that I've been covering the stock. So congrats.

Thanks, Frank Yes, it's been impressive what you've done with the portfolio over the last 20 years that I've been covering the stock so congrats.

We go back some time.

Speaker 8: We go back sometime very early. Thank you, sir. Thank you, sir.

Thank you.

Yeah.

The next question will come from the line of Josh.

Speaker 1: The next question comes from the line of Josh Walden with Cleveland Research. Your line is now open.

The next question comes from the line of Joshua <unk> with Cleveland Research. Your line is now open.

Good morning, guys. Thanks for taking my questions. Just two for you first Franker Gerald can you provide an update on the backlog opportunity I think you said backlog remains elevated and is it still at about two months worth of kind of higher than normal backlog and then how much do you think the backlog of work.

Speaker 7: Morning guys, thanks for taking my questions. Just two for you. First, Frank or Gerald, can you provide an update on the backlog opportunity? I think you said backlog of being elevated. Is it still at about two months worth of higher than normal backlog? And then how much do you think the backlog work down can impact annual organic growth as we roll into 24 and kind of over the medium term?

<unk> can impact annual organic growth as we roll into 'twenty, four and kind of over the medium term.

Yes.

Hi, Josh.

Speaker 3: We're talking about you. We thought you had our CFO's office bug because your predictions were pretty accurate for the quarter. Thank you. Congratulations.

So we're talking about Gee, we thought you had our our Cfo's office, but because your predictions were pretty accurate for the quarter congratulations.

Speaker 3: Anyway, so backlog remains, I mean, Q3 backlogs was a little lower than Q4. So as we look at year end backlogs, we're, you know, two and a half, two and a half months, maybe three months or so, higher backlog than we traditionally had before all the rollercoats to begin in 2019 and all of that. So that'll be a multi-year story, right? We're not trying to...

Anyway, so backlog remains I mean Q3 backlog, so I was a little lower than Q4.

As we as we look at year end backlogs.

Two and a half to 225 months, maybe three months or so higher backlog than we traditionally had before all the rollercoaster began in 2019 and all of that so that'll be a multiyear story right, we're not trying to.

Speaker 3: and we can't from a capacity point of view that all out in one year. So it'll add to our organic growth, but it'll be a multi-year story. And right, so.

And we can from a capacity point of view pump that allowed in one year. So it will add to our organic growth, but it will be a multiyear story.

And.

Right so.

I think that was your question right now.

Okay.

Speaker 3: I would assume that backlog can be normalized maybe something like three years or so.

I would assume that backlog can be normalized maybe it's something like three years or so.

Speaker 7: So, hollow up is, you know, what are the things you could provide more context on the weaker trends in China? I mean, did China decline in the quarter? And I guess any context on what you're seeing by in market there and, you know, how much your outlook in China has changed? I mean, were you assuming it's slowing or is it slowing here in recent months?

One follow up.

Just wondered if you could provide more context on the weaker trends in China, I mean, China declined in the quarter and I guess any context on.

What youre seeing by end market, there and how much of your outlook.

China has changed I mean were you assuming a slowing or is the slowing here.

In recent months a surprise.

Speaker 3: Yeah, no, we were assuming a slowing because of our little micro trend, right, that we have these very strong orders in Q1. So China was relatively weak in orders in Q3, as was Japan. Rest of the world did quite well. But if I look here today, that's why over interpreting a quarter is always tricky. In the next few years, we have very strong order growth in China. I mean...

Yes, no we were assuming a slowing because of our little micro trend right that we had these very strong orders.

In Q1, so China was relatively weak in the orders in Q3 as less Japan rest of the world did quite well.

But if I look year to date Thats why I over interpreting our quarter is always tricky.

Year to date, we have very strong order growth in China.

Significantly into the double digits.

Speaker 3: significantly into the double digits, and

And.

And our forecast for Q4, we will see but that's.

Speaker 3: And our forecast for Q4, we will see, but for us, I think there was a little bit of a broker special, namely this Q1 partial pull forward, which has led to slower. That, along with China macro weakness, has made Q3 bookings in China weaker for us.

For Us I think there was a little bit of a broker special A&D. This Q1 full partial pull forward.

Which.

This has led to slower that.

Along with China macro weakness has made Q3 bookings in China weaker for us.

Speaker 2: As we acknowledged, I might have your today, there I'll be there I'll be very significant. Yeah, I might just have that revenue trend is quite different given the lead times and backlogs. So revenues are still growing nicely there. The order bolus in the early part of the year really just added onto the backlog. So it's still going to take a while for us to convert that backlog in China to revenue.

We acknowledged earlier.

Year to date, they're up they are up very significantly if I.

I might just add that revenue trend is quite different given the lead times and backlog. So revenues are still growing nicely there the order bolus in the early part of the year really just added onto the backlog. So it's still going to take a while for us to convert that backlog in China to revenues. So the weakness frankly, referring to is more so the Q3 orders, but again thats.

Speaker 9: So the weakness Frank's referring to is more so the Q3 orders, but again, that's because of the pull forward earlier in the year, orders are up year to date. Well, in the double digits there.

Does the pull forward earlier in the year orders are up year to date, while in the double digits there.

Got it thanks guys.

Thank you Josh.

Speaker 1: The next question comes from the line of John Fowler, here with US UBS. Your line is now open.

The next question comes from the line of Jon <unk> with UBS. Your line is now open.

Good morning, and congrats on the quarter.

Speaker 10: Good morning and congrats on the quarter. I appreciate the color on pharma demand, but maybe if you could provide just a little bit more color just on the overall funding environment for high end instrumentations, maybe specific with academic and government customers.

Appreciate the color on pharma demand, but maybe if you could provide just a little bit more color just on the overall funding environment for <unk>.

High end instrumentation, maybe specific with academic and government customers.

Okay, John Thank you.

<unk>.

Speaker 3: It's been good, right? I mean, academic government never grows as fast at boom times, but it also is pretty resilient. It just grows steadily generally, you know, by low single digits, sometimes by mid single digits. As I always say, it really depends where you are. I mean, academic government, including academic medical centers, we're very much more exposed to academic medical centers.

It's been good right I mean.

Academic government never grows as fast at boom times, but it also is a pretty resilient at and.

It just grows steadily generally.

Low single digit sometime mid single digits as I always say it really depends where you are I mean academic government, including academic medical centers, where very much more exposed to academic medical centers and so research proteomics research at medical schools et cetera, then.

Speaker 3: research, proteomics research, medical schools, etc. Then we were years ago. And that's a really good thing because between, you know, Philanthropy and NIH funding and just procedures, growth and all of these things and focus on cancer or neurodivine research. The...

We were years ago, and that's a really good thing because between.

Philanthropy, and NIH funding and and and just procedures growth in all of these things and focus on cancer Neuroscience research.

Speaker 3: The scientific areas in the post genomic, the post genomic trends, I think are much stronger than the genomic trends these days. And I think they will remain that way. And we're very well positioned there, Metabolomics, Lipidomics, Brokeomics, PTMs, glycomic, I just don't turn this into a techno session here. But for post genomic trends, we're beautifully positioned. Our more greater exposure into spatial and cell biology, our good drivers. So where we are.

The scientific areas in the post genomic the post genomic trends I think government is stronger than the genomic trends. These days and I think they will remain that way and we're very well positioned there metoprolol mix lipid omics proteomics Ttm's leeco mix I, just don't want to turn this into a techno session here.

But for post genomic trends, we're beautifully positioned our greater exposure into spatial and cell biology are good drivers. So where we are within this modestly growing academic government funding is much more important and so we're really we're in we're in a really I think for the next <unk>.

Speaker 3: Modestly growing academic government funding is much more important. And so we're really we're in we're in there really I think for the next decade or hopefully more we're really I think are at the sweet spot of the demand curve and funding

Hopefully more we're really I think are the sweet spot of the demand curve and funding therefore as well.

Speaker 3: So the allocation of funding and prioritization with our products is great.

So the allocation prioritizes products is great.

I guess I was trying to get at more I mean do you anticipate any change in this demand I know youre not guiding for next year, but when you look out over the next 12 months any changes when you look out there on trends I think these secular trends are the cable or maybe a couple of decades.

Speaker 10: I guess I was trying to get more, I mean, do you anticipate any change in this demand? I know you're not guiding for next year, but when you look out over the next 12 months, you see any changes when you look out there on...

Speaker 3: I think these sectoral trends are decadal or maybe a couple of decades, still early days in those and in that, but I think that it really has changed dramatically now towards the post genomic age, which is exactly what we call as the post genomic company, except we also do semi conductor and...

Early days in those in that but I think it really has changed dramatically now.

Tori supposed genomic age switches exactly where broker conference call as the post genomic company, except we also do semiconductor.

And fluid analysis, but.

Speaker 3: Right, so, you know, I mean, there might be some noise, there might, you know, maybe slower NIH budgets, but we're not exposed directly to NIH all that much. But then you have the CHIPS Act, you have the Science Act, you have the European CHIPS Act.

So I mean.

There might be some noise about maybe slower NIH budgets, but were not exposed directly to NIH all that much. But then you have the chip stock do you have the science do you have a European chipset.

China has been investing very heavily a lot of our older saw in China. This year also early were for high end life Science and Amar.

Speaker 3: China has been investing very heavily a lot of our orders in China this year, also earlier for high-end life science and a more microscopy, Tim's stuff, mass spectrometry tools. So there's a big proteomics project in China that sometimes the headlines, the headlines use if they execute that all of that, as often is the case, we'll talk any more.

Microscopy, Tim soft mass spectrometry tools.

So they are there.

There is a big proteomics project in China, that's sometimes the headlight the headline news if they execute that all of that as often is the case will dwarf anything in the west so to speak.

Speaker 3: the West, so to speak, then, you know, it just means there will be very significant investment and focus on this post-genomic investment, which is exactly where we have positioned ourselves.

It just means there will be very significant investment and focus on this post genomic investment, which is which is exactly where we have positioned ourselves.

Speaker 10: I appreciate that. If I could sneak in just one more on Phenomex or the Bruker cellular.

Depreciation.

Then if I could sneak in just one more on phenom X or the broker cellular business.

Speaker 10: Would you be willing to provide what you think could be the long-term growth rate for this business or any way to quantify any of the synergies or cross-selling opportunities there? Any additional colleague who provide on that?

Would you be willing to provide what you think it could be the long term growth rate for this business or any way to quantify any of the synergies or cross selling opportunities. There any additional color you can provide on that.

Speaker 3: We're right now focusing on getting the cost structure right. So we're, as you've seen, also our run rate of 60 million or greater is initially focusing on, you know, making it just a little bit dilutive and in the long term.

We're right now focusing on getting the cost structure right. So were as you have seen also our run rate of <unk>.

$60 million or greater.

Initially focusing on.

Making it just a little bit dilutive and then.

In the long term.

I'd, rather do that maybe when we gave color and guidance next year, we think it can swing back to being a very very good.

Speaker 3: I'd rather do that maybe when we give color and guidance next year. We think it can swing back to being a very, very good growth business, and one that eventually in terms of growth rates and CAGR, given these attractive markets, will be over the long run higher than what you see, than even our broker average. In 24, that may not be the case because of some biopharma weakness, right? But long term, we think it's accretive to our organic growth rate.

Both business and one that eventually in terms of growth rates in CAGR given these attractive markets will be over the long run higher than what you see then even our broker average in 24 that may not be the case because of some biopharma weakness right, but long term, we think it's accretive to our organic growth rate.

I appreciate it thanks for taking the questions.

Thank you John.

Thank you.

Speaker 11: Thank you.

Speaker 1: The next question comes from the line of Patrick Donnelly with City. Your line is now open.

The next question comes from the line of Patrick Donnelly with Citi. Your line is now open.

Hey, guys. Thanks for taking the questions.

Speaker 7: Hey guys, thanks for taking the questions. Gerald, maybe one for you to start, understanding not giving 24 guidance.

Gerald maybe one for you to start.

I understand youre, not giving guidance, but.

Speaker 12: But just on the margins, as you think about high level, the moving pieces as we work our way into next year, obviously this year you've had the FX headwind, the M&A headwind, the core organic, obviously.

But just on the margins as you think about high level, the moving pieces as we work our way into next year. Obviously this year you've had the FX headwind the M&A headwinds the core organic op margin expansion that you guys flagged as 100 bps. So as you look into next year, what should we be thinking about as those moving pieces. Obviously the dilution from the deal you flagged you guys or stripping out <unk>.

Speaker 12: flag to the 100 bips. So if you look into next year, what should we be thinking about as those moving pieces? Obviously the dilution from the deal you flagged, you guys are stripping out costs pretty aggressively, which is good to see. But maybe just talk high level, how you think about that margin algorithm.

Pretty aggressively which is good to see.

But maybe just talk high level, how do you think about that margin algorithm next year.

Speaker 5: I like Patrick. I guess I'd say, you know, perhaps just stay tuned. We're going to go through that in more detail in February . Obviously you've seen some of the moving parts who get a lot of pieces here, but they're pretty optimistic in the long term. So I think I'll leave it at that for just today.

Alright, Patrick I guess I would say.

Perhaps just stay tuned.

We're going to go through that in more detail in February.

Obviously, you've seen some of the moving parts you get a lot of pieces here, but we're pretty optimistic in the long term so.

I think I'll leave it at that just today.

Speaker 5: We want you to come back for the February 24 call for sure, Patrick.

We want you to come back for the February 24 call for sure Patrick.

I'll be there I appreciate it.

Speaker 12: I'll be there. I appreciate it. And then Frank, maybe just, maybe just on China, obviously a few questions there. But when you think about the backlog, is that backlog above kind of the, call it nine months for the company, or are we at a year backlog in China?

And then Frank maybe just maybe just on China, obviously, a few questions there, but when you think about the backlog.

Is that backlog.

Kind of the call it nine months for the company I mean are we had a year backlog in China.

And if it is given that visibility how sticky is that order backlog, how often do you see cancellations I think theres just a concern with what's happening over there that maybe the backlog isn't quite as firm as other areas I'd be curious as you look historically, what you've seen there and again if you can frame up the backlog for us in China, specifically would be helpful.

Speaker 12: And if it is given that visibility, how sticky is that order of backlog? How often do you see cancellations? I think there's just a concern with what's happening over there that maybe the backlog isn't quite as firm as other areas. I'd be curious if you look historically what you've seen there. And again, if you can frame up the backlog for us in China.

Yes.

Speaker 3: Yeah, no, I mean, we, except for we very rarely, if ever, see any order cancellations, and it is extremely rare. And then, of course, we usually have a down payment or something like that that we retain. When there were regulatory changes in in semiconductor and what the US would allow it to be.

Except for we very rarely if ever see any order cancellations.

It's extremely rare and then of course, we usually have a down payment or something like that that we retain.

They were regulatory changes.

Semiconductor and what the U S would allow it to be.

Delivered to China, I think we have to have but we have corrected for all about a year ago or thereabouts. So thats all long in our system.

Speaker 3: Delivered to China. I think we had to have we had but we are corrected for all of that a year ago Or there about so that's all long in our system

Speaker 3: Other than that, yeah, the China backlog is, good call, good question, the China order backlog is a little bit higher than our average backlog. I don't want to quantify it specifically. We don't go into that granularity, but it is above our corporate average, and that has to do also with the fact that there's some, that China bought a lot of big ticket systems throughout, also in Q2, a lot.

Other than that the China backlog is good good call. Good questions. The China order backlog is a little bit higher than our average backlog.

I don't want to quantify it specifically, we don't go into that granularity, but it is above our corporate average and that has to do also with the fact that there are some that China bought a lot of big ticket systems.

Also in Q2 alone in Q1.

Some of that has.

Speaker 3: Some of that will even go into next year. So, yes, the China backlog is a little bit stronger. And other than a geopolitical crisis, we think there's risk for the entire industry, right? Geopolitically, who knows what will happen over the next 10 years. But in terms of broker risk and broker order cancellations, we just don't see that. We have valuable instruments. We make our try to really do great things for our customers. So.

Some of that will even go into next year. So yeah, so China backlog, a little bit stronger than in other than a geopolitical.

Crisis.

We think we can.

Yes, there is risk for the entire industry geopolitically, who knows what will happen over the next 10 years, but in terms of broker risk and Bruce our order cancellations. We just don't see that we have.

Valuable instruments, we make or try to.

Really do great things for our customers.

So we are a reliable company.

Yes, I appreciate it.

Speaker 13: Yeah, appreciate it.

Thank you.

Thank you.

The next question comes from the line of Rachel <unk> with Jpmorgan. Your line is now open.

Speaker 1: The next question comes from a line of Rachel Finstell with JP Morgan. Your line is now open.

Hey, Thanks for taking our questions and congrats on the strong clarity about.

Speaker 14: Great, thanks for taking the questions and congrats on the strong core you guys.

Speaker 14: I wanted to follow up on some of these China comments here around the weaker orders. Can you give us what the book-to-bill was in China this quarter? And then just given some of your peers' flag that that market has also really continued to weaken throughout 3Q and into October , can you give us any more color on when you started to see the weakness in orders? And then specifically, were there any types of end markets, you know, customer types or even product types where you're seeing that more pronounced weakness?

I wanted to follow up on some of the China comment here around the weaker orders can you give us what inputs can tell was in China. This quarter and then just given some of your peers have flagged that that market is also really continuing to weaken throughout and.

Through October or can you give us any more color on when you started to see the weakness in orders and then specifically were there any types of end market customer types or even product types, we are seeing that more pronounced weakness.

Speaker 3: So we don't get booked to bill by country or by region.

So we don't give book to bill by country or by region.

We acknowledge that in Q3 bookings were down year over year in China and Japan.

Speaker 3: We acknowledged that in Q3 bookings were down year-rear in China and in Japan and elsewhere, in the major geography.

And up.

Elsewhere in the major geographies.

Speaker 3: Right, we don't look at daily or weekly order patterns, like maybe more of a consumables business model. Right, we always, if all geographies get more than half of our orders in the third month of each quarter. So the type of.

Right.

We don't we don't look at daily or weekly order patterns like maybe a more of a consumables business model right.

We always in all geographies get more than half of our orders in the third month of each quarter. So the type of trend.

Trends within the quarter that some people have described and that you probably are asking about.

Speaker 3: trends within the quarter that some people have described and that you probably are asking about.

Speaker 3: We just don't even see that in our data. So

We just don't we just don't even see that in our data.

No.

Speaker 3: Right, we did notice that CRO business and for biopharmacy, our business in China about the year already had been weak and I'm sure 2, 3 was not an exception.

Right.

<unk> data.

Did notice that the CRO business for Biopharma and CRO business in China. The year already had been weak and I am sure of Q3 was not an exception.

Okay.

Speaker 3: That's about it. That's not gonna answer all of your questions about, but you get a lot of color from other Avengers that see more this monthly pattern or even weekly patterns, which we don't.

Or is that that's about it.

That's not going to answer all of your questions about but you get a lot of color from other vendors.

Let's see more of this monthly pattern or even weekly patterns, which we don't.

Okay fair enough. Thanks.

Speaker 14: Very nice things. And then I just want to ask around budget plus St. Mx within that high single digit organic growth that you guys are assuming for 4K. What's your assumption on budget flash? Have you started to see any of those orders or customer conversations around that December dynamic? Yeah, really any color there. Thank you.

And then I just wanted to ask around budget flush dynamics within that high single digit organic growth that you guys are Denis <unk>. What's your assumption on budget plus have you started to see any of those orders or a customer conversations around that December dynamic and yes really any color there. Thank you.

And in this industry for a long time it budget flush is still one of these enigmatic terms to us it doesn't it again. It is it is one of the things that I think implies much more to consumables and.

Speaker 3: in this industry for a long time and budget slush is still one of these enigmatic terms to us. It does it again, it is one of the things that I think applies much more to consumables and companies and for us.

Companies and for Us.

Speaker 3: We're never really looking for that. And so we're just not a good data point to give you color on that. So we have, just like in other years, we have no expectations for any budget slush. It just doesn't, it doesn't work that way at Bruker. That's a Bruker specific answer, I realize, so.

We're never really looking for that.

We're just not a good data point to give you color on that so we have just like in other years, we have no expectations for any budget flush.

It just doesn't it doesn't work that way it broker thats the broker specific answer I realize so.

Okay.

Speaker 3: So, I don't mean to frustrate you, Rachel, but budget slush for us isn't one of the things that we look for, and will there be one this year or not? Can't comment really.

So let me defer Australia Rachel.

As such for US isn't one of these is one of the things that we look for and that would be one this year or not can comment drilling.

Okay.

Speaker 9: Again, that's it for me. Thank you. We just don't have the insights into that, I should say. Yeah.

Okay. That's helpful. Just don't have any insights into that I should say, yes.

Thank you.

The next question comes from the line of Jack Meehan with me from Research. Your line is now open.

Speaker 1: The next question comes from the line of Jack Meehan, Whitney from Research. Your line is now open.

Thank you good morning.

Speaker 15: Thank you. Good morning. I wanted to ask a question on Phenomex.

I wanted to ask a question on <unk>.

Speaker 15: First, could you talk about just what you're doing in terms of the integration through your end where that maybe just a little bit more detail and what you're focused on? And then I wanted to clarify in the dilution commentary. So you said it was slightly dilutive in 2024. I just wanted to clarify is that incremental to the 12 cents in 4Q, or is that relative to the trend line from...

First could you talk about just what youre doing in terms of the integration.

Through year end.

Maybe just a little bit more detail on what you're focused on.

And then I wanted to clarify on the dilution commentary. So you said it was slightly dilutive in 2024.

I just wanted to clarify is that incremental to the 12 from <unk> or is that relative to the trend line from prior to the deal getting announced.

I'll turn things over to Mark in a moment.

Speaker 9: I'll turn things over to Mark in a moment, but the slightly diluted, I'm not sure, I fully understood the question, but obviously that implies being much less dilutive per quarter than the 12th and one time bolus that we have as a headwind in Q423. Again, when we...

But but the slightly diluted if I'm not sure I fully understood. The question, but obviously that implies being much less dilutive per quarter than the 12 cents onetime bonus that we have as a headwind in Q4 dollars 23.

Again, when we give guidance.

Early February for next year, we will but much less per quarter than the 12 six.

Speaker 3: early February for next year, but much less per quarter than the $0.12 is what we mean by slightly diluted. Now for your modeling.

What we mean by slightly dilutive.

Now for your modeling.

Speaker 3: Sorry Mark, but I'll turn things over to you. For your modeling, assume that it's a little bit more diluted in the first half and a little less diluted in the second half. But on average, it's going to be much less diluted. Guys, we just don't want to give guidance today for 24. We're not going to do it. So that's why we stick to adjectives. I know you would like numbers. Mark without numbers, Matt, turn things over to you and you can at least qualitatively discredit, describe some of the strategy resetting and right sizing with...

Sorry, Martin and then I'll turn things over to you for your modeling assume that it's a little bit more dilutive in the first half and a little less dilutive in the second half, but on average it's going to be much less dilutive.

We just don't want to give guidance today for 'twenty four we're not going to do it. So that's why we stick to adjectives I know you would like numbers, Mike without numbers May I turn things over to you and you can at least qualitatively descript describe some of the strategy resetting and right sizing with.

Yes, Mark Munch iffy.

Speaker 4: Yeah. Mark, much of you that over here. Sure. Sure. Yeah. The types of things you're doing.

Sure sure, yes, the types of things we're doing.

Speaker 4: So, I think the character is out of any first of all, we're kind of accelerating, they were already doing some integration, but we're really accelerating on a faster pace.

Okay.

First of all we're kind of accelerating they were already doing some integration, but we're really accelerating on a faster pace.

In terms of our M&A expertise, we're pretty good at that.

Speaker 4: pretty good at that. And so, and then one of the things we're doing is getting them over to the Brooker Magiard process to kind of crystallize and sharpen the strategy that they have. And that's kind of helpful in terms of highlighting then where to focus, where not to focus, is then in terms of cost.

And so and then one of the things we're doing is getting them over to broker management process to kind of crystallize and sharpened the strategy.

<unk>.

It's kind of helpful.

In terms of highlighting them where to focus where not to focus on that in terms of cost.

Speaker 4: Certainly headcount my personal cost also overhead

Certainly head count personnel costs also overhead.

Speaker 4: extreme line allowed overhead structure. There's some consolidation also going on in terms of sites as well as they're carrying a fair amount of depreciation expense kind of unnecessarily in the business preserving. So there's just a number of items across many fronts where we're

Streamline allowed overhead structure.

There is some consolidation.

Also going on in terms of sites as well as they are carrying a fair amount of.

Yes.

Depreciation expense kind of unnecessarily in the business pursuing so there's just a number of items across many fronts, where we are.

Speaker 4: We're kind of operationally optimizing cost optimizing the

Kind of operationally optimizing cost optimizing the business and then doing pretty rapidly.

Yes.

Speaker 3: Mark's fantastic as that and of course also drove the acquisition to very strategic but also very good at integration. Of course, the in the number of jobs affected will be well over 100 unfortunately and we're taking tens of millions of costs out on an annualized basis. During that integration process, stay tuned for more detail on that when we give guidance in early February .

Mark some marks fantastic at that and of course also drove the acquisition so very strategic but also very good at integration of course the.

The number of jobs affected will be well over 100, Unfortunately and.

And then we're taking tens of millions of cost out on an annualized basis.

During that integration process stay tuned for more bit more detail on that when we when we gave guidance in early February.

Speaker 2: Jack, did that hit the point or was there something else we, yeah. And maybe one more follow-up here for the Q&A, Jack, thanks.

Jack did that hit the point so was there something else we.

And maybe one more follow up here for the Q&A Jack Thanks.

Okay, Yes.

The rollout of Tim's tops.

<unk> you.

Might've impacted life science mass spec sales in the quarter you didn't call. It out within college just was wondering if the initial rollout could have actually had a short term dampening effect as customers kind of reevaluated what they are buying.

Yeah, that's true so the Australia is more competitive than the previous orbit drop. So a lot of people are taking a look and that previously would have just ordered theyre not taking while there is an ultra from broker and there isn't astral and they both came out at the same time. So people are taking a look we're doing more detailed demos as people really try to.

Drill down into that.

Yeah.

Speaker 3: still have a lot of, you know, high-blind and orders that are coming through, but people are taking a closer look and the high end proteomics mass market with the astral introduction and the ultra-introduction has become more complex.

We still have a lot of.

Pipeline and orders that are coming through but people are people are taking a closer look at the high end proteomics mass spec market with the Australian introduction.

And the ultra introduction has become more competitive.

Thank you so I think operator actually maybe we'll take questions I think from one more caller.

Speaker 9: So I think I'll probably actually maybe, what will take questions, I think, from one more caller?

Absolutely.

The final question comes from the line of Dan Arias with Stifel. Your line is now open.

Speaker 1: The final question comes from a line of Dan, areas with stifle, your line is now open.

Okay.

Speaker 10: Hey, good morning guys, thanks for squeezing me in here. Frank, maybe just a follow up on the instrument portfolio.

Hey, good morning, guys. Thanks for squeezing me in here, Frank maybe just a follow up on the instrument portfolio.

Speaker 7: guys have a fairly wide range of points there. I'm curious whether as you've watched the man devolved, you've noticed any...

You guys have a fairly wide range of price points, there I'm curious, whether you've launched demand evolve you've noticed any.

Any breakpoints with thresholds within certain customer groups or end markets just when it comes to.

Speaker 7: Any breakpoints or thresholds within certain customer groups or end markets?

Speaker 7: being above or below a certain level seeming to draw less friction or more friction on orders. Has a trend emerged there at all?

Being above or below a certain level assuming to draw less friction or more friction on orders is a trend emerge there at all.

Can you give me an example, Dan I wanted to make sure I understand the question.

Speaker 3: Can you give me an example? Dan, I want to make sure I understand the question.

Well I'm just thinking about the different product lines that you have and the price points that are attached to them and whether or not you are seeing some.

Speaker 7: Well, I'm just thinking about the different product lines that you have and the price points that are attached to them, and whether or not you're seeing some where the price sensitivity, the order book has evolved has gotten lower, or whether you're seeing certain customers.

Where the price sensitivity of the order book has evolved has gotten lower or whether youre seeing certain customers just draw out their timelines, depending on where the ASB happened to fall basically price sensitivity in the instrument market for you guys.

Speaker 7: Draw out their timelines depending on where the ASB happens to fall. Basically price sensitivity and instrument market for you guys.

Speaker 3: Yeah, sometimes we see we have the effect of currencies that people in some of the currencies that have been weakening

Yes, sometimes we see it we have the effect of currencies, but people in some of the currencies that have been weakening.

Speaker 3: China China a little bit right in and sure.

Yes.

So China right.

Israel most recently.

Speaker 3: real most recently have you know budgeted bar instruments and then just before they're about to buy their currency drops you know

We have budgeted for our instruments and then just before they're about to buy their currency drops.

7%, but thats not a brand new trends, so we always wrestle with that.

Speaker 3: some percent. But that's not a brand new trend, so we always wrestle with it and we try to figure it out with the customers. But it's not really a recent trend. It's just one of the things we deal with.

We try to figure it out with the customers, but that's not really a recent trend.

That's just one of the things we deal with from time to time.

Speaker 3: Haven't seen any portfolio inflection points or so.

I haven't seen any portfolio inflection points or so.

Have not seen any.

Speaker 3: have not seen any. I mean, we actually had pretty good price realization. We didn't talk about that much. So price realization was behind inflation previously. We're now sort of where price realization at least keeps up with inflation and maybe even turns slightly positive. So our pricing power has remained.

Our we actually had pretty good price realization, we didn't talk about that much. So price realization was behind inflation previously, we're now sort of where price realization.

At least it keeps up with inflation and maybe even turn slightly positive. So our pricing power has remained.

A very solid and our competitiveness is remains solid so.

Speaker 3: You know, we're very solid and our competitiveness has remained solid.

Speaker 3: So again, they'll need to obey the question anyway, but the short answer would be no, we haven't really seen any portfolio inflection points or something.

Again there'll be to abate the question anyway, but the answer the short answer would be no, we havent really seen any or slowly and inflection points or something.

Speaker 3: or an excessive price, or significant price sensitivity. I mean, price is always important, but ultimately what's the best performance or what gives you the researcher of the results that you need. There's some industries that I've conducted that they'll buy the best and worse for them.

Ori or excessive price or significant price sensitivity.

Price is always important but it ultimately.

What's the best performance or what gives you the researcher.

Results that you need.

<unk> semiconductor they'll buy the best works for them.

Speaker 3: You know, if a billion dollars out, it depends on it.

For $1 billion.

Yes.

Hey, guys.

Speaker 9: The high end of proteomics is remote to the fun things going people want the best as opposed to a lower not a lot of lower end proteomics sales right now. For example, okay that's helpful.

The high end of proteomics this.

The funding is going people want the best as opposed to lower not a lot of flow oriented proteomics sales right now.

For example, okay. That's helpful.

Just figured I'd say, okay, if I could Frank if I could just sneak.

Speaker 7: Can I just sneak one more in on Berkeley lights? If I may, those guys had some plans for some additions in the portfolio, just in terms of lower cost instruments and some application specific stuff. Does your plan call for carrying forward that roadmap of their?

Can I just sneak one more in on Berkeley lights.

If I may those guys had some plans for some additions in the portfolio just in terms of lower cost instruments in some application specific stuff does your plan call for carrying forward that room up roadmap of theirs.

It may be early to say, but mark would you like to comment or deferred until next year.

Speaker 3: Maybe early to say, but Mark, would you like to comment or defer it until next year?

Speaker 4: No, we can comment on it. So, you know, that's correct. From, you know, for example, the beacon platform, they had launched some lower priced position products in terms of the beacon quest and beacon select.

We can comment.

So.

That's correct.

For example, the Beacon platform.

They had launched in lower priced.

Position product in terms of the Beacon Quest and deacon select in 2023, and those will continue onward.

Speaker 4: 2023 and those will continue onward and then It's kind of you know You know and what that's about by ways is helping expand to new segments new markets So all that those kind of part of world

And then.

Ted.

Okay.

What that's about is helping expand to new segments, new markets. So all of that kind of product roadmap trends.

<unk>.

Okay. Thank you guys.

Okay.

Thank you I would now like to pass the conference back over to the management team.

Speaker 1: Thank you. I would now like to pass the conference back over to the management team.

Speaker 9: Thank you, everyone, for joining us today. I do want to know, Brooker's CFO Gerald's Herman will be presenting at the Jeffries Conference in London on November 14th. And Brooker's leadership team looks forward to meeting with you at an event or speaking with you directly during the fourth quarter. Be sure to reach out to me to arrange any follow-ups and have a great day.

Thank you everyone for joining us today I do want to note brokers CFO Gerald Herman will be presenting at the Jefferies Conference in London on November 14th and brokers leadership team looks forward to meeting with you had an event or speaking with you directly during the fourth quarter PCL free to reach out to me to arrange any follow ups and have a great day.

Speaker 1: That concludes today's conference call. Thank you for your participation. You may now disconnect your line.

That concludes today's conference call. Thank you for your participation you may now disconnect your lines.