Q4 2023 Danaher Corp Earnings Call

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and Michael Ryskin. Thank you for watching. I'm Dr. Dan Dray, thank you very much. MMM MMM MMM MMM, and ["A House Full of Hush-Puppies"] and Good morning.

Todd: Good morning, My name is Todd and I will be your conference facilitator. This morning.

Todd: At this time I would like to welcome everyone to Danaher Corporation's fourth quarter 2023 earnings results Conference call.

Todd: All lines have been placed on mute to prevent any background noise.

Todd: After the Speakers' remarks, there will be a question and answer session.

Todd: You would like to ask a question during that time simply press. The Star then the number one on your telephone keypad.

Todd: You would like to withdraw your question. Please press Star then the number two on your telephone keypad.

Todd: I will now turn the call over to Mr. John Bedford, Vice President of Investor Relations. Mr. Bedford You May begin your conference.

Good morning, everyone and thanks for joining us on the call with US today are Rainer Blair, our President and Chief Executive Officer, and Matt Mcgrew, Our executive Vice President and Chief Financial Officer.

Todd: My name is Todd, and I will be your conference facilitator this morning. At this time, I would like to welcome everyone to Danaher Corporation's fourth quarter 2023 earnings results conference call. All lines have been placed on mute to prevent any background noise.

I'd like to point out that our earnings release, the slide presentation, supplementing today's call reconciliations and other information required by SEC regulation G relating to any non-GAAP financial measures provided during the call and had no containing details of historical and anticipated future financial performance.

Todd: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during that time, simply press the star and the number one on your telephone keypad. If you would like to withdraw your question, please press star then the number 2 on your telephone keypad. I will now turn the call over to Mr. John Bedford, Vice President of Investor Relations. Mr. Bedford, you may begin your conference. Good morning, everyone, and thanks for joining us on the call. With us today are Rainer Blair, our President and Chief Executive Officer, and Matt McGrew, our Executive Vice President and Chief Financial Officer. I'd like to point out that our earnings release, the slide presentation supplementing today's call, the reconciliations and other information required by SEC Regulation G relating to any non-GAAP financial measures provided during the call, and a note containing details of historical and anticipated future financial performance are all available on the investor section The audio portion of this call will be archived on the investors section of our website later today under the heading Events and Presentations and will remain archived until our next quarterly call. A replay of this call will also be available until February 13, 2024.

Todd: <unk> are all available on the investors section of our website Www Dot danaher.

Todd: Com under the heading quarterly earnings.

Todd: The audio portion of this call will be archived on the investors section of our website later today under.

Todd: Under the heading events and presentations.

Todd: We will remain archived until our next quarterly call.

Todd: A replay of this call will also be available until February 13th 2024.

During the presentation, we will describe certain of the more significant factors that impacted year over year performance.

Todd: <unk> materials describe additional factors that impacted year over year performance.

Todd: Unless otherwise noted.

Todd: All references in these remarks and supplemental materials to company specific.

Civic financial metrics relates to results from continuing operations and relate to the fourth quarter of 2023, and all references to period to period increases or decreases in financial metrics are year over year.

Todd: We may also describe certain products and devices, which have applications submitted and pending for certain regulatory approvals are available only in certain markets.

Todd: During the call we will make forward looking statements within the meaning of the federal Securities laws.

John Bedford: During the presentation, we will describe certain of the more significant factors that impacted year-over-year performance. Supplemental materials describe additional factors that impacted year-over-year performance, unless otherwise noted. All references in these remarks and supplemental materials to company-specific financial metrics relate to results from continuing operations and relate to the fourth quarter of 2023. Additionally, all references to period-to-period increases or decreases in financial metrics are year-over-

Including statements regarding events or developments that we believe or anticipate will or may occur in the future.

Todd: These forward looking statements are subject to a number of risks and uncertainties, including those set forth in our SEC filings and actual results might differ materially from any forward looking statements that we make today.

Todd: These forward looking statements speak only as of the date they are made.

Todd: And we do not assume any obligation to update any forward looking statements, except as required by law.

John Bedford: We may also describe certain products and devices that have applications submitted and pending for certain regulatory approvals or are available only in certain markets. During the call, we will make forward-looking statements within the meaning of the federal securities laws, including statements regarding events or developments that we believe or anticipate will or may occur in the future. These forward-looking statements are subject to a number of risks and uncertainties, including those set forth in our SEC filings, and actual results might differ materially from any forward-looking statements that we make today. Therefore, these forward-looking statements speak only as of the date they are made. And we do not assume any obligation to update any forward-looking statements, except as required by law.

Todd: With that I'd like to turn the call over to Rainer.

Thank you John and good morning, everyone. We appreciate you joining us on the call today.

Rainer: We delivered better than anticipated core revenue in each of our segments in the fourth quarter led by respiratory revenue at Cepheid.

Rainer: The combination of higher than expected revenues in our teams strong execution enabled us to exceed our margin and cash flow expectations and what remains a dynamic market environment.

Speaker Change: Now before I get into the details of our performance I wanted to briefly reflect on the progress we made to enhance our portfolio and accelerate our strategy. This year.

Speaker Change: 2023 was a transformational year for Danaher as we continued to strategically enhance our portfolio and strengthen our growth and earnings trajectory.

With that, I'd like to turn the call over to Rainer. Thank you, John. And good morning, everyone.

We appreciate you joining us on the call today. We delivered better-than-anticipated core revenue in each of our segments in the fourth quarter, led by respiratory revenue at CESIED. The combination of higher-than-expected revenues and our team's strong execution enabled us to exceed our margin and cash flow expectations in what remains a dynamic market environment. Now, before I get into the details of our performance, I wanted to briefly reflect on the progress we made to enhance our portfolio and accelerate our strategy this year. 2023 was a transformational year for Danaher as we continue to strategically enhance our portfolio and strengthen our growth and earnings trajectory. With the successful spin-off of Viralto in September, we're now a focused life sciences and diagnostics innovator. Establishing Viralto as a standalone public company was one step in our portfolio transformation over the last several years, which has increased our exposure to end markets with durable secular growth drivers. The acquisition of Abcam, which closed in December, further increases our exposure to these highly attractive markets.

Speaker Change: With the successful spinoff of <unk> also in September we are now focused life sciences and diagnostics innovator.

Speaker Change: Establishing <unk> as a stand alone public company was one step in our portfolio transformation over the last several years, which has increased our exposure to end markets with durable secular growth drivers.

Speaker Change: The acquisition of <unk>, which closed in December further increases our exposure to the highly attractive market.

Speaker Change: Now over the long term, we believe danaher will be a faster growing business with higher margins and stronger free cash flow generation.

Speaker Change: 2023 was also a challenging year operationally as pandemic tailwind became headwinds in our businesses.

Our team's commitment to executing with the Danaher business system helped us navigate these challenges, while maintaining a healthy cadence of growth investments and productivity initiatives geared towards improving our cost structure.

While we expect this transitional period to continue through the first half of 2024.

Speaker Change: These proactive steps paired with the transformation in our portfolio provide a strong foundation for sustainable long term revenue and earnings growth.

Now, over the long term, we believe Danaher will be a faster growing business with higher margins and stronger free cash flow generation. However, 2023 was also a challenging year operationally as the pandemic tailwinds became headwinds in our businesses. Our team's commitment to executing with the Danaher Business System helped us navigate these challenges while maintaining a healthy cadence of growth investments and productivity initiatives geared towards improving our cost structure. We expect this transitional period to continue through the first half of 2024. These proactive steps, paired with the transformation in our portfolio, provide a strong foundation for sustainable long-term revenue and earnings growth. So with that, let's take a closer look at our full year 2023 financial results. Sales were $23.9 billion, and core revenue declined 10%, including core revenue in our base business, which was down slightly, and a COVID-19 revenue headwind of approximately 9.5%. Our adjusted operating profit margin was 28.7%, and adjusted diluted net earnings per common share were $7.58. We also generated $5.1 billion of free cash flow, resulting in a free cash flow to net income conversion ratio of more than 120%.

Speaker Change: So with that let's take a closer look at our full year 2023 financial results.

Speaker Change: Sales were $23 9 billion and core revenue declined 10%, including core revenue in our base business, which was down slightly and a COVID-19 revenue headwind of approximately nine 5%.

Speaker Change: Our adjusted operating profit margin was 28, 7% and adjusted diluted net earnings per common share were $7 58.

Speaker Change: We also generated $5 $1 billion of free cash flow, resulting in a free cash flow to net income conversion ratio of more than 120%.

Strong free cash flow generation as one of the most important metrics at Danaher in 2023 marks the 30 <unk> consecutive year, our free cash flow to net income conversion ratio exceeded 100%.

Speaker Change: We continued to accelerate investments in innovation throughout the year, which enabled us to deliver several impactful new technologies to our customers.

Speaker Change: And biotechnology sativa is new accelerates X platform bioreactor is helping improve manufacturing yields and reduce the time and cost of biologic drug production.

Speaker Change: In life Sciences, new products, such as Itbs's polar insight and molecular devices cell expressed AI are helping accelerate the drug discovery process and bring life changing therapies to market faster.

Strong free cash flow generation is one of the most important metrics at Danaher, and 2023 marks the 32nd consecutive year our free cash flow to net income conversion ratio exceeded 100%. We continue to accelerate investments in innovation throughout the year, which enables us to deliver several impactful new technologies to our customers. In biotechnology, Cyteva's new Accelerex X-Platform bioreactor is helping improve manufacturing yields and reduce the time and cost of biologic drug production.

Speaker Change: And in diagnostics, new solutions, such as Beckman Coulters Dx Si nine next.

Speaker Change: <unk> immunoassay analyzer are enabling faster more accurate patient diagnosis.

Speaker Change: These are just a few of the many examples across danaher of how we're positioning our businesses for continued growth and delivering on our commitment to help customers solve some of the most important health challenges impacting patients around the world.

Speaker Change: Now, let's turn to our fourth quarter results in more detail.

In life sciences, new products such as IDBS's Polar Insight and molecular devices such as CellExpress.ai are helping accelerate the drug discovery process and bring life-changing therapies to market fast. And in diagnostics, new solutions such as Beckman Coulter's DXI 9000 Next Generation Immunoassay Analyzer are enabling faster, more accurate patient diagnoses. These are just a few of the many examples across Dan and Her of how we're positioning our businesses for continued growth and delivering on our commitment to help customers solve some of the most important health challenges impacting patients around the world. Now, let's turn to our fourth-quarter results in more detail. Sales were $6.4 billion in the fourth quarter, and core revenue declined 11.5%, including a 4.5% decline in our base business and the COVID-19 revenue headwind of approximately 7%.

Speaker Change: Sales were $6 $4 billion in the fourth quarter and core revenue declined 11, 5%, including a four 5% decline in our base business and the COVID-19 revenue headwind of approximately 7%.

Speaker Change: Geographically core revenues in developed markets declined low double digits, driven by lower respiratory and COVID-19 vaccine and therapeutic revenues, coupled with ongoing investment normalization in pharma and Biopharma end market.

Speaker Change: High growth markets were down high single digits, including a mid teens decline in China, where the economic landscape remains challenging.

Speaker Change: Our gross profit margin for the fourth quarter was 59%.

Speaker Change: Our adjusted operating margin of 28, 7% was down 420 basis points, primarily due to the impact of lower volume in our biotechnology and diagnostics segments.

Speaker Change: Costs related to productivity initiatives.

Geographically, poor revenues in developed markets declined low double digits, driven by lower respiratory and COVID-19 vaccine and therapeutic revenues, coupled with ongoing investment, normalization, and pharma and biopharma end markets. High growth markets were down high single digits, including a mid-teens decline in China, where the economic landscape remains challenging. Our growth profit margin for the fourth quarter was 59%. Our adjusted operating margin of 28.7% was down 420 basis points, primarily due to the impact of lower volume in our biotechnology and diagnostic segments and costs related to productivity initiatives. Adjusted diluted net earnings per common share were $2.09, and we generated $1.2 billion of free cash flow in the quarter.

Speaker Change: Adjusted diluted net earnings per common share were $2 nine.

And we generated $1 $2 billion of free cash flow in the quarter.

Speaker Change: Now, let's take a closer look at our results across the portfolio and give you some color on what we're seeing in our end markets today.

Reported revenue in our biotechnology segment declined 21% and core revenue was down 22, 5%.

Speaker Change: Bioprocess and core revenue was down over 20% as anticipated and discovery and medical declined high teens.

Speaker Change: And bio processing base business core revenue declined high teens in the fourth quarter and was down approximately 10% for the full year 2023.

Revenue in order trends were largely consistent with what we saw in the third quarter, including our book to Bill ratio.

We were encouraged to see a modest sequential improvement in orders this quarter with some of our customers returning to normal ordering patterns.

Now let's take a closer look at our results across the portfolio and give you some color on what we're seeing in our end markets today. Reported revenue in our biotechnology segment declined 21%, and core revenue was down 22.5%. Bioprocessing core revenue was down over 20% as anticipated, and discovery and medical declined high teens. In its bioprocessing-based business, core revenue declined high teens in the fourth quarter and was down approximately 10% for the full year 2023. Revenue and order trends were largely consistent with what we saw in the third quarter, including our book-to-bill ratio. We were encouraged to see a modest sequential improvement in orders this quarter, with some of our customers returning to normal ordering patterns. But we haven't yet seen a broad-based inflection and demand. The environment in North America and Europe is stable, with customers still working through inventory built up during the pandemic. Demand and underlying activity levels in China remain weak as customers are continuing to conserve capital and prioritize programs.

Speaker Change: But we haven't yet seen a broad based inflection in demand.

Speaker Change: The environment in North America, and Europe is stable with customers still working through inventory buildup during the pandemic.

Speaker Change: Demand and underlying activity levels in China remained weak as customers are continuing to conserve capital and prioritized programs for the full year 2024, we expect core revenue in our bio processing business to be down low single digits.

Speaker Change: <unk> is an assumption of a mid to high teens revenue decline in the first half of the year, followed by a gradual improvement to our core growth rate of high single digits or better as we exit 2024.

Despite the near term headwinds from Destocking.

Speaker Change: Our confidence in health and long term growth trajectory of the biologics market remains as strong as ever underlying.

Speaker Change: Underlying demand for biologic medicines continues to rise 2023 was another record year of FDA approvals for biologic and genomic medicines and the development pipeline is meaningfully higher than at any point in history.

For the full year 2024, we expect core revenue in our bioprocessing business to be down low single digits. This includes an assumption of a mid to high teens revenue decline in the first half of the year, followed by a gradual improvement to a core growth rate of high single digits or better as we exit 2024. Despite the near-term headwinds from the stock market, our confidence in the health and long-term growth trajectory of the biologics market remains as strong as ever. Underlying demand for biologic medicines continues to rise.

Speaker Change: These positive market trends reinforce our conviction in the tremendous opportunity ahead in the high single digit long term growth trajectory for our leading bio processing franchise.

Over the last several years sativa has been accelerating investments in innovation to bring impactful new solutions to customers as they advanced therapies from the lab through to commercial production.

A great example is the recently launched <unk> protein select technology and affinity chromatography resin designed to optimize recombinant protein purification.

2023 was another record year of FDA approvals for biologics and genomic medicines, and the development pipeline is meaningfully higher than at any point in history. These positive market trends reinforce our conviction in the tremendous opportunity ahead and the high single-digit long-term growth trajectory for our leading bioprocessing franchise. Over the last several years, Cytiva has been accelerating investments in innovation to bring impactful new solutions to customers as they advance therapies from the lab through to commercial production. A great example is the recently launched Saikiva Protein Select Technology, an affinity chromatography resin designed to optimize recombinant protein purification. This new technology simplifies the purification process for recombinant proteins, of which there are currently more than 1,800 in development, and enables faster, more efficient process development.

Speaker Change: This new technology simplifies the purification process in recombinant proteins of which there are currently more than 800 in development.

Speaker Change: And enables faster and more efficient process development.

Speaker Change: Turning to our life Sciences segment reported revenue declined 1% and core revenue was down 4%.

Speaker Change: Including a low single digit decline in our base business.

Speaker Change: Our life Sciences instrument business collectively declined mid single digits with trends in the fourth quarter largely consistent with third.

Speaker Change: We saw continued growth from academic and life Science research customers globally, while investment levels at pharma and Biopharma customers remain constrained, particularly in China and in North America.

Speaker Change: We also expanded our capabilities and portfolio with the acquisition of <unk>, which closed in December 2023.

Speaker Change: The addition of add Cam to our life Sciences segment expands our presence in the highly attractive proteomics market and its furthering our strategy to help map complex diseases and accelerate the drug discovery process.

Turning to our life sciences segment, revenue declined 1% and core revenue was down 4%, including a low single-digit decline in our base, our life sciences instruments business. Collectively, we saw continued growth from academic and life science research customers globally, while investment levels at pharma and biopharma customers remain constrained, particularly in China and in North America. We also expanded our capabilities and portfolio with the acquisition of Abcan, which closed in December 2023. The addition of Abcam to our life sciences segment expands our presence in the highly attractive proteomics market, and it's furthering our strategy to help map complex diseases and accelerate the drug discovery process. We couldn't be more pleased to welcome this highly talented and incredibly innovative team to Danner.

Speaker Change: We couldnt be more pleased to welcome this highly talented and incredibly innovative team to danaher.

Speaker Change: Our genomics consumables base business was essentially flat in the quarter robust demand across plasmids proteins and gene writing and editing solutions was offset by decline in next generation sequencing and basic research.

Speaker Change: During the quarter IDT opened a new cgmp oligonucleotide manufacturing facility at their core Auvil, Iowa campus.

Speaker Change: <unk> can now offer a complete CRISPR workflow from design to analysis that supports cell and gene therapy customers in all stages of therapeutic development.

Speaker Change: This expansion of our capacity and capabilities is both enabling our customers important work today and fulfilling idt's vision of improving patient lives by facilitating faster development and commercialization of life changing therapeutics.

Our genomics consumables-based business was essentially flat in the quarter. Robust demand across plasmids, proteins, and gene writing and editing solutions was offset by a decline in next-generation sequencing and basic research. During the quarter, IDT opened a new CGMP oligonucleotide manufacturing facility at its Coralville, Iowa, campus. IDT can now offer a complete CRISPR workflow from design to analysis that supports cell and gene therapy customers at all stages of therapeutic development.

Speaker Change: Moving now to our diagnostics segment.

Speaker Change: Reported and core revenue both declined.

Speaker Change: Eight 5% with high single digit growth in our base business more than offset by lower respiratory revenue at Cepheid.

Speaker Change: Our clinical diagnostics businesses collectively delivered high single digit core revenue growth Beckman Coulter diagnostics led the way with over 10% core revenue growth, including double digit growth in both instruments and consumables and notable strength in clinical chemistry and immunoassay.

This expansion of our capacity and capabilities is both enabling our customers' important work today and fulfilling IDT's vision of improving patient lives by facilitating faster development and commercialization of life-changing therapeutics. Moving now to our diagnostics segment, reported and poor revenue both declined.

This strong performance in the fourth quarter rounds out a terrific year for Beckman, where the team has been doing a fantastic job improving their competitive positioning through new product innovation and enhanced commercial execution.

Speaker Change: In molecular diagnostics at Cepheid increased menu utilization by customers paired with recent new product innovation helped drive low teens core revenue growth in our non respiratory business, including high teens or better core revenue growth and group, a strep and sexual health.

8.5%, with high single-digit growth in our base business more than offset by lower respiratory revenue at Cepheus. Our clinical diagnostics businesses collectively delivered high single-digit core revenue growth. Ekman Coulter Diagnostics led the way with over 10% core revenue growth, including double-digit growth in both instruments and consumables, and notable strength in clinical chemistry and immunoassay. This strong performance in the fourth quarter rounds out a terrific year for Beckman, where the team has been doing a fantastic job improving their competitive positioning through new product innovation and enhanced commercial execution. In Molecular Diagnostics at Cepheid, increased menu utilization by customers paired with recent new product innovation helped drive low teens' core revenue growth in our non-respiratory business, including high teens or better core revenue growth in group A strep and sexual health. In our respiratory business, Sethia's revenue of approximately $650 million in the quarter exceeded our expectation of $350 million. High prevalence of circulating respiratory viruses drove both higher volumes and a preference for our 4-in-1 test for COVID-19, Flu A, Flu B, and RSV.

Speaker Change: In our respiratory business <unk> revenue of.

Speaker Change: Approximately $650 million in the quarter exceeded our expectation of $350 million.

Speaker Change: The high prevalence of circulating respiratory viruses drove both higher volumes and a preference for our foreign one test for COVID-19 flu, a flu b and RSV.

Speaker Change: Based on what we saw the last two years and discussions with customers and public health experts, we believe annual respiratory revenue and a typical respiratory.

Speaker Change: Season will be approximately $1 5 billion.

Speaker Change: This increase from our initial assumption of $1 $2 billion per year is driven by an expectation of modestly higher volumes and a greater mix of our foreign one tests.

Speaker Change: The durability and continued share gains at Cepheid.

Speaker Change: Are a testament to the significant value. The gene expert provides customers at the point of care close to patients where the most impactful diagnostic and treatment decisions are made.

Speaker Change: It's 401 test has become the standard of care for clinicians given its ability to provide a fast.

Based on what we saw in the last two years and discussions with customers and public health experts, we believe annual respiratory revenue in a typical respiratory season will be approximately $1.5 billion. This increase from our initial assumption of $1.2 billion per year is driven by an expectation of modestly higher volumes and a greater mix of our 4-in-1 tests. The Durability and Continued Share Gains at Cepheid are testaments to the significant value the GeneXpert provides customers at the point of care, both to patients where the most impactful diagnostic and treatment decisions are made. Cepheid's 4-in-1 test has become the standard of care for clinicians, given its ability to provide a fast, accurate, lab-quality diagnosis for four distinct respiratory illnesses with a single, easy-to-

Speaker Change: Lab quality diagnosis for four distinct respiratory illnesses with a single easy to use cartridge.

Looking ahead with our differentiated positioning and respiratory testing, a leading installed base of more than 55000 systems.

Speaker Change: Growing adoption of the broadest molecular diagnostic test menu on the market Cepheid is well positioned to help customers meet their clinical needs and continue gaining market share.

Now, let's briefly look ahead at expectations for the first quarter and the full year 2024.

Beginning with the first quarter of 2024, we will provide guidance for core revenue growth, but will no longer report base business core revenue as the pandemic has transitioned to an endemic state.

Speaker Change: Now in the first quarter, we expect core revenue decline in the high single digit percent range.

Looking ahead, with our differentiated positioning and respiratory testing, a leading installed base of more than 55,000 systems, and growing adoption of the broadest molecular diagnostic test menu on the market, Cessia is well positioned to help customers meet their clinical needs and continue gaining market share. Now, let's briefly look ahead at expectations for the first quarter and the full year 2024. Beginning with the first quarter of 2024, we will provide guidance for core revenue growth but will no longer report base business core revenue as the pandemic has transitioned to an endemic state. Now, in the first quarter, we expect core revenue to decline in the high single-digit percent range.

Additionally, we expect the first quarter adjusted operating margin of approximately 28%.

Speaker Change: Turning to the full year 2024, we anticipate core revenue to decline in the low single digit percent range, which assumes a core revenue decline in the first half of the year before returning to growth in the second half of 2024.

Speaker Change: Additionally, we expect our full year adjusted operating profit margin to improve by approximately 50 basis points versus the full year 2023.

So to wrap up.

Speaker Change: We're pleased to deliver fourth quarter results ahead of our expectations in what remains a dynamic environment.

Speaker Change: Despite the challenges we saw throughout 2023, we continued to strengthen our portfolio with M&A and took proactive steps focused on improving our cost structure.

Additionally, we expect a first quarter adjusted operating margin of approximately 28 percent. Turning to the full year 2024, we anticipate core revenue to decline in the low single-digit percent range, which assumes a core revenue decline in the first half of the year before returning to growth in the second half of 2024. Additionally, we expect our full year adjusted operating profit margin to improve by approximately 50 basis points versus the full year 2023. So to wrap up... We're pleased to deliver fourth quarter results ahead of our expectations in what remains a dynamic environment. Despite the challenges we saw throughout 2023, we continued to strengthen our portfolio through M&A and took proactive steps focused on improving our cost structure. Our team's consistent application of the Danaher business system also drove lasting process improvements in our businesses and enabled the launch of several breakthrough solutions. So, reflecting back on the past few years, it's clear that Danaher is exiting the pandemic a much better, stronger company. We established our dental, environmental, and applied solutions segments as standalone public companies in Invista and Veralta.

Speaker Change: Our team's consistent application of the Danaher business system also drove lasting process improvements in our businesses and enable the launch of several breakthrough solutions.

Speaker Change: So reflecting back on the past few years, it's clear that danaher is exiting the pandemic a much better stronger company, we established our dental and environmental and applied solutions segments as Standalone public companies and in Vista and we're also we largely replaced their revenue.

Speaker Change: Attributes and with higher growth higher margin annuities with the acquisition of Sativa, Aldebaran and App can.

Speaker Change: Additionally, cepheid respiratory franchise is now six times larger today than it was prior to the pandemic and we expect this to be sustainable.

Speaker Change: So putting it all together, we've improved our long term growth trajectory significantly expanded margins and strengthened our free cash flow generation.

Speaker Change: So our future is bright and I'm excited about what lies ahead for danaher.

Speaker Change: The unique combination of our incredibly talented team differentiated science and technology portfolio and balance sheet Optionality all powered by the Danaher business system provides us with a strong foundation to maximize value for our customers our associates and our shareholders.

We largely replaced their revenue contribution with higher growth, higher margin annuities through the acquisition of Sightiva, Aldebaran, and Abcan. Additionally, Cephea's respiratory franchise is now six times larger today than it was prior to the pandemic, and we expect this to be sustainable. So putting it all together, we've improved our long-term growth trajectory, significantly expanded margins, and strengthened our free cash flow generation. So our future is bright, and I'm excited about what lies ahead for Danaher. The unique combination of our incredibly talented team, differentiated science and technology portfolio, and balance sheet optionality, all powered by the Danaher business system, provides us with a strong foundation to maximize value for our customers, our associates, and our shareholders. So with that, I'll turn it back over to you, John. Thanks, Rainer.

Speaker Change: So with that I will turn it back over to you John.

John Bedford: Thanks Ryder that concludes our formal comments operator, we're now ready for questions.

At this time, if you would like to ask a question. Please press star and one on your telephone keypad.

John Bedford: You may withdraw yourself from the queue by pressing star two.

John Bedford: Once again to ask a question please press star one.

John Bedford: Our first question comes from Dan Brennan with TD Cowen. Please go ahead.

Dan Brennan: Great. Thank you.

Dan Brennan: Got it thanks for the questions here.

Dan Brennan: Brian again, starting off just on bioprocess.

Dan Brennan: Could you give us a little breakdown here in terms of the outlook that you're providing say for China, and then rest of world.

Dan Brennan: And then I was hoping as well you can give us a snapshot maybe of how much inventory do you think your customers have today.

John Bedford: That concludes our formal comments. Operator, we're now ready for questions. At this time, if you would like to ask a question, please press star and one on your telephone keypad. You may withdraw yourself from the queue by pressing star 2.

Dan Brennan: How much has that changed versus the peak and kind of what does your guidance assume kind of when that inventory, which is a normal state.

Thanks, Dan and good morning.

Dan Brennan: And why don't I start off with sort of an overview here of how we've laid out the guide and then we can dig into your bio processing.

Dan Brennan: Once again, to ask a question, please press star 1. Our first question comes from Dan Brennan with TD Cowen. Please go ahead.

Dan Brennan: <unk> in a little more detail.

Dan Brennan: So our guide for the full year of 2024 on revenue was down low single digits and now let me break that open and talk about the.

Great. Thank you, guys. Thanks for the questions.

Rainer, maybe starting off just on bioprocess, could you give us a little breakdown here in terms of the outlook that you're providing, say, for China and the rest of the world? And then, as well, could you give us a snapshot, maybe, of how much inventory do you think your customers have today? And how much has that changed versus the peak? And kind of what is your guidance assumed to be when that inventory reaches a normal state? Thanks, Dan. Good morning. And why don't I start off with sort of an overview here of how we've laid out the guide, and then we can dig into your bioprocessing question in a little more detail.

Dan Brennan: Segments biotechnology.

Dan Brennan: We will be down.

Dan Brennan: Low to mid single digits.

Dan Brennan: It's different than bio processing, so keep in mind I'm now talking about the biotechnology segment in its entirety.

Dan Brennan: The guide is down low to mid single digits.

Dan Brennan: Sciences.

Low single digits, and diagnostics up low single digits and once again overall that's than down low single digits.

Dan Brennan: Paul we actually expect that dynamic to be opposite of 2023.

So our guide for the full year of 2024 on revenue is down low single digits. Now, let me break that open and talk about the segments. Biotechnology will be down, low to mid single digits. And that's different than bioprocessing. So keep in mind, I'm not talking about the biotechnology segment in its entirety. The guide is downloaded in mid-single digits, Life Sciences down low single digits, and diagnostics up low single digits.

So first half.

Dan Brennan: Returning to growth in the second half.

Paul: And now let me talk just a little bit about the assumptions around our guidance starting with bio processing.

Paul: We're guiding to be down low single digits, and we think the first half will look a lot like second half of 2023.

Paul: Down mid to high teens.

Paul: Coming off of a fourth quarter, which showed.

Paul: Incremental improved orders versus Q3 second half.

And once again, overall, that's then down low single digits. We actually expect the dynamic to be opposite of 2023, with a slow first half, returning to growth in the second half. And now I'm going to talk just a little bit about the assumptions around our guidance, starting with bioprocessing, which we're guiding to be down low single digits. And we think the first half will look a lot like the second half of 2023, down mid to high single digits, coming off of a fourth quarter that showed incrementally improved orders versus Q3. We expect to return to mid to high single-digit growth, and we believe by then that this destocking in North America and Western Europe will have largely been completed. And, of course, the comps ease there as well.

Paul: We expect to return to mid to high single digit growth.

Paul: And we believe by then that this destocking.

Paul: In North America, and Western Europe.

We'll have largely been completed and of course the comps.

Paul: Is there as well so importantly for bio processing, we think exit rate for the year will be high single digits or better core growth.

Paul: Now if we look at life Sciences, we expect life sciences to be down low single digits for the guide.

Paul: And we expect a slow start and we should see growth improve here through the second half given some of the comps that we have seen as the normalization, particularly in the instrument business.

Continues and we've been talking about that for some time and do you expect that to continue into 2024 as well now if we look at that by end market the pharma and biotech.

Paul: Stable, but at lower levels of demand.

So importantly, for bioprocessing, we think the exit rate for the year will be high single digits or better for growth. Now, if we look at life sciences, we expect life sciences to be down low single digits for the guide. And we expect a slow start, and we should see growth improve here through the second half, given some of the comps that we have seen as the normalization, particularly in the instrument business, continues. And we've been talking about that for some time, and we expect that to continue into 2024 as well. Now, if we look at that by end market, see pharma and biotech, stable but at lower levels of demand, with academic and applied markets holding up comparatively better.

Paul: And in academic and applied markets holding up comparatively better.

Paul: Geographically.

Paul: That we see China.

Paul: With a slower macro and of course in life Sciences in particular, we have some prior year comps related to the subsidized loan program there.

Paul: And then lastly on life Sciences, we expect developed markets to be relatively consistent with 2023.

As we look at diagnostics, which we are guiding up low single digits, we see no change to.

Paul: The underlying trends patient volumes.

Paul: Normalized and in the non respiratory business, we expect growth of.

Paul: Mid single digits and of course, that's offset by lower respiratory revenue.

Geographically... We see China weak with a slower macro, and of course, in life sciences in particular, we have some prior year comps related to the subsidized loan program there. And lastly, on life sciences, we expect developed markets to be relatively consistent in 2023. As we look at diagnostics, which we are guiding up low single digits, we see no change to the underlying trends.

Which was $1 9 billion in 2023.

Paul: And we anticipate that that will be $1 6 billion in 2024.

Paul: So Dan Thats, how the year shapes up by segment and of course, then we can now perhaps talk a little bit more detail around Bioprocess, Inc.

Paul: Dan maybe just kind of put some numbers around your question as well so I think China for the year for bio processing, you should probably think about the first quarter being down similar to what we saw in Q2, three and four last year call. It north of 40.

Patient volumes have normalized, and in the non-respiratory business, we expect growth of mid-single digits. And of course, that's offset by lower respiratory revenue, which was $1.9 billion in 2023, and we anticipate that that will be $1.6 billion in 2024. So Dan, that's how the year shapes up by segment.

Speaker Change: And then I think for the full year.

Speaker Change: Even that will still be down kind of mid teens for bio processing in China.

Speaker Change: Scott.

Speaker Change: We've got dialed in as far as the rest of the World I think we'll be down in the first half and then kind of returned to growth here in the second half after we get past the Destocking and I know you asked how much kind of inventories in the channel, it's kind of hard to say, Dan I mean, we've got a kind of a moving target, but we've got a good sense that.

And of course, then we can now perhaps talk a little bit more detail about bioprocessing. Well, Dan, maybe to just kind of put some numbers around your question as well. So I think China for the year for bioprocessing, you should probably think about the first quarter being down similar to what we saw in Q2, three, and four last year, call it north of 40.

Speaker Change: We will largely be through most of the destocking.

Particularly in North America, and Europe, where it was probably the probably the biggest I think we're going to be through that here in the first half, which then sort of speaks to why we think it gets a little bit better in the second half of the year.

Speaker Change: Got it thanks, guys and then maybe a follow up just on bioprocess since that's.

And then I think for the full year, I think even that will still be down in the mid-teens for bioprocessing in China. That's sort of what we've got dialed in. And as far as the rest of the world is concerned, I think we'll be down in the first half and then kind of return to growth here in the second half after we get past the destocking. And I know you asked how much inventory is in the channel. It's kind of hard to say, Dan.

Speaker Change: Such a huge focus just in terms of the guide that you've laid out like what does that assume from kind of a kind of a book to bill or bookings trajectory as we worked through the year.

Speaker Change: And just unrelated to that several peers have.

I have already pointed to book to Bill is kind of above one obviously everyone's order books or mix of business is different but what's kind of unique about your business. Do you think is it clinical versus commercial or is it just the size of your bulk or just any any color. Why you think some of the peers have seen the turning their business faster than what you guys have seen thank you.

I mean, we've got a kind of a moving target, but we've got a good sense that we will largely be through most of the destocking, particularly in North America and Europe, where it was probably the biggest. I think we're going to be through that here in the first half, which then sort of speaks to why we think it gets a little bit better in the second half of the year. I got it.

Yes, let me give you a little bit of color on how I'm thinking about the guide or how we're thinking about the guide and maybe start with this is for bio processing.

Start with kind of a qualitative overview of what this guidance sort of is right. This guide calls for a slight improvement versus our demonstrated book to bill over the last couple of quarters, we've been in that kind of 0.885 range.

Dan Brennan: Thanks, guys. And then maybe a follow-up just on bioprocessing, because that's such a huge focus.

Just in terms of the guide that you've laid out, what does that assume from kind of a book-to-bill or bookings trajectory as we work through the year? And just kind of related to that, several peers have already pointed to book-to-bills kind of above one. Obviously, everyone's order books or mix of business is different, but what's kind of unique about your business, do you think?

Speaker Change: Over the last four or five quarters, and we we are not calling for an inflection at any point in the year, but we are assuming some modest improvement as we move through the first half into the second half as like I said before as we as we think that North America and Europe Destocking is largely behind us after the first half so no inflection sort of.

Is it clinical versus commercial, or is it just the size of your book or any color why you think some of the peers have seen a turn in their business faster than what you guys have seen? Thank you. Yeah, let me give you a little bit of color on how I'm thinking about the guide or how we're thinking about the guide. Maybe start with, this is for bioprocessing.

Speaker Change: Just kind of gets a little bit better than where we were as far as.

Speaker Change: Kind of some numbers around that Dan maybe start with the backlog. So we're starting with about a quarter and a half of backlog that's pretty consistent with where we were in 2018 2019. So I think we're back to backlog levels that are.

Let's start with kind of a qualitative overview of what this guide sort of is, right? This guide calls for a slight improvement versus our demonstrated book to build in the last couple quarters. We've been in that kind of 0.8, 0.85 range for the last four or five quarters, and we are not calling for an inflection at any point in the year, but we are assuming some modest improvement as we move through the first half into the second half, as I said before, as we think that North America and Europe destocking is largely behind us after the first half. So no inflection, sort of just kind of gets a little bit better than where we were.

Speaker Change: Relatively speaking pretty much in line with history, and then you start with that backlog and add this book to Bill assumption in there. We are assuming book to bills improve slightly like I said kind of from the eight fives into the <unk> and that those will get a little bit better every quarter as we build through the year, but we are not assuming book to bill.

Speaker Change: Well above one in any given quarter and so that kind of assumes that we get past the inventory destocking in the first half the second half gets a little bit better and that we're kind of exiting here.

As far as kind of some numbers around that, Dan, maybe start with the backlog. So we're starting with about a quarter and a half of backlog. That's pretty consistent with where we were in 2018-2019. So I think we're back to backlog levels that are, you know, relatively speaking, pretty much in line with history. And then start with that backlog and add this book-to-bill assumption in there. We are assuming book-to-bills improve slightly, like I said, kind of from the.8,.85s into the.9s and that those will get a little bit better every quarter as we build through the year. But we are not assuming book-to-bill ratios above one in any given quarter.

The first half will be down mid teens mid to high teens for the second half, we exit with high single digit or better without seeing an inflection and I think maybe I know that theres been some questions on that second half ramp as well, maybe just to give people some some.

Speaker Change: Quantitative numbers on that so the second half ramp in bioprocess assumed in this in this in this guide.

Speaker Change: Is about a 250 $250 million year over year second half increase so thats all ill call. It a six $6 5 billion.

Speaker Change: A dollar business. So yes, there is a step up but I think it's relatively modest on a business with $6 billion.

And so that kind of assumes that we get past the inventory destocking in the first half, the second half gets a little bit better, and that we're, you know, kind of exiting here. Like I said, the first half will be down mid-teens, mid-to-high teens, but the second half, we exit with high single digits or better without seeing an inflection. And I think maybe I know that there's been some questions about that second half ramp as well, maybe just to give people some quantitative numbers on that. So the second half ramp in bioprocess, assumed in this guide, is about a $250 million year-over-year second-half increase. So that's on a call it a six, six and a half billion dollar business. So yes, there is a step up, but I think it's relatively modest on a business with $6 billion to expect that we could do, you know, a couple hundred million dollars better year over year in the second half as we move past the destocking. So hopefully that helps frame the guide a little.

Speaker Change: We expect that we think we can do.

Couple of hundred million dollars better year over year in the second half as we move past the destocking. So hopefully that helps frame the guide a little.

Speaker Change: Great. Thank you guys.

Our next question will come from Vijay Kumar with Evercore ISI. Please go ahead.

Vijay Muniyappa Kumar: B J.

Good morning, Ryan and thanks for taking my question.

Vijay Muniyappa Kumar: So I guess I'll start off with.

Vijay Muniyappa Kumar: Those last comments from Matt the Q1 guidance here Reiner.

Vijay Muniyappa Kumar: Biotech in bioprocess being down low twenties.

I guess, we did see sequential order improvement in Q4 for bioprocess.

Vijay Muniyappa Kumar: What is driving and comps do get easier for your Q4 to Q1 on biotech.

Vijay Muniyappa Kumar: Comps do get easier so what is driving.

Vijay Muniyappa Kumar: The minus.

Vijay Muniyappa Kumar: 20%, maybe thought process around the Q1 guidance assumptions and also.

Vijay Muniyappa Kumar: Great, thank you guys. Our next question will come from Vijay Kumar with Evercore ISI. Please go ahead.

Vijay Muniyappa Kumar: Have you I know there was no fee cancellation policy has that stopped for danaher.

Good morning, BJ. Good morning Rainer, and thanks for taking my question. So I guess I'll start off with those last comments from Matt. The Q1 guidance here from Rainer on biotech and bioprocess being down in the low 20s. I guess we did see sequential order improvements in Q4 for bioprocess. What is driving and comes to get easier for you, you know, Q4, and Q1 on biotech come to get easier. So what is driving the minus 20% maybe thought process around the Q1 guidance assumptions and also have you? I know there was a no fee cancellation policy. Has that stopped for Dan and her?

Speaker Change: Yes, maybe I'll take I'll take a first stab at it so.

Speaker Change: So if we think about kind of the first half year I think it's probably instructive to sort of remember where we were if you remember our base business core growth in Q1 last year was actually up low single digits and for the first half of 2023, we were only down kind of low single low to mid single digits in total the second half we were down.

Speaker Change: Mid teens or high teens as everybody remembers but we do have.

Speaker Change: That comp coming in the first quarter and.

Speaker Change: And so when you think about year over year, that's really the biggest factor as far as sequential goes kind of Q4 to Q1.

Speaker Change: I would tell you that we would I think we talked about this in January our Q3 to Q4 sequential that's pretty normal that's a normal Q3 to Q4 step up I think we attributed that to a normal seasonality when we were out.

Yeah, maybe I'll take a first stab at it. So if we think about kind of the first half here, I think it's probably instructive to sort of remember where we were. If you remember, our base business core growth in Q1 last year was actually up low single digits. And for the first half of 2023, we were only down kind of low to mid-single digits in total, right? The second half, we were down, you know, mid-teens or high-teens, as everybody remembers.

Speaker Change: With JP Morgan.

Speaker Change: It's very also normal to see Q4 to Q1 stepped out so just maybe some numbers to that Q4 is usually 27% to 8% of our year and Q1 is usually $24, 25% of revenue for the year. So I mean, thats pretty normal for us to see it I think we saw it even.

Speaker Change: And kind of the heyday of 'twenty one to 'twenty two we saw a step down so I think there is a normal seasonality.

But we do have, you know, that comp coming in the first quarter. And so when you think about year over year, that's really the biggest factor. As far as sequential goes, kind of, you know, Q4 to Q1, I would tell you that we would, you know, I think we talked about this in January. Our Q3 to Q4 sequential, that's pretty normal. That's a normal Q3 to Q4 step up.

Speaker Change: I think the other big thing to remember is and it kind of ties into your last question. There Vijay we are actively trying to continue to destock and get as much of this behind us as we can and so I think we've been pretty aggressive with that we're going to remain aggressive with that I think youre seeing that hopefully here in the first half that we are and back to your kind of no fees.

I think we attributed that to normal seasonality when we were out, you know, at J.P. Morgan. And it's also very normal to see Q4 to Q1 step down. So, you know, just maybe some numbers to that. Q4 is usually 27, 28 percent of our year, and Q1 is usually 24 and 25 percent of revenue for the year. So, I mean, it's pretty normal for us to see it.

Speaker Change: It depends is the answer but.

Speaker Change: Rest assured we are we are doing what we can do.

Speaker Change: Get to the second half of the year.

Speaker Change: Understood.

Speaker Change: My follow up here <unk>.

When you look at customer activity levels for consumption, if you will.

Speaker Change: What's been the underlying activity at customer levels, when we think about drug volumes being up high singles in that space.

I think we saw it even, you know, in kind of a heyday of 21 to 22, we saw a step down. So I think there's normal seasonality. And I think the other big thing to remember is, and this kind of ties into your last question there, Vijay, we are actively trying to continue to destock and get as much of this behind us as we can. And so I think, you know, we've been pretty aggressive with that. We're going to remain aggressive with that. I think you're seeing that, hopefully, here in the first half that we are. And back to your kind of no fees question: it depends is the answer.

Speaker Change: Is that still intact.

And sort of I guess.

Speaker Change: One on diagnostics.

Last year, you guys did based diagnostics up double digits.

Speaker Change: And I think you mentioned mid singles for this year. So is that just a comp issue like diagnostics would slow down.

Thanks, P J well, starting with the activity level here for bio processing, we've really seen no change in the activity level, which continues to be along the long term growth rate that we've been talking about high single digits, 10% and thats.

But rest assured; we are doing what we can to get to the second half of the year. And I guess my follow-up here, Rainer, is when you look at customer activity levels or consumption, if you will, what's been the underlying activity at customer levels? You know, when we think about drug volumes being up, signals in that space, is that still intact? And sort of, I guess, one on our diagnostics, if you will. Last year, you guys did base diagnostics up double digits, and I think you mentioned mid-singles for this year. So is that just a comp issue? Why would diagnostics slow down?

P J: What's been important in terms of drawing the inventories down so and it aligns with how we spoke about the regional.

P J: Developments here with Western Europe, and North America are drawing down inventories more rapidly than perhaps regions that are more small biotech emerging biotech companies such as China. So the activity level continues to be strong I mentioned to you.

Thanks, Vijay. Well, starting with the activity level here for bioprocessing, we've really seen no change in the activity level, which continues to be along the long-term growth rate that we've been talking about, high single digits, 10%, and that's what's been important in terms of drawing the inventories down. And this aligns with how we spoke about the regional developments here, where Western Europe and North America are drawing down inventories more rapidly than perhaps regions that are more small biotech and emerging biotech companies such as China. So, the activity level continues to be strong. I mentioned to you during the prepared remarks that we've seen a historic level of both approvals as well as the number of projects in the biologic development pipeline.

During the prepared remarks that we've seen historically.

P J: Level of both approvals as well as number of projects in the biologic development pipeline.

P J: We continue to be very.

P J: Confident in our continued positive development there.

Speaker Change: Thank you and sorry on diagnostics runner.

Speaker Change: Yeah, Hey, Jeremy I think I think it's just it's all going to be mostly accomplished through the base business.

Speaker Change: The business outside of it I should say respiratory continues to do well for Cepheid.

Speaker Change: All of the other businesses in diagnostics no real change.

Speaker Change: To the underlying demand so it's going to be accomplish Hugh.

Thanks couple of diagnostics.

Jeremy: Fantastic. Thank you.

Speaker Change: Thanks Vijay.

Speaker Change: Our next question comes from Scott Davis with Melius Research. Please go ahead.

Scott Reed Davis: Good morning, Scott Hey, Good morning, guys. Good morning, Brian.

So, we continue to be very confident in a continued positive development there. Thank you, I'm sorry, on Diagnostics, Rainer. Yeah, Vijay, I think it's just, I think it's mostly a comp issue. The base business, you know, the business outside of, I should say, respiratory continues to do well for Cepheid, all of the other businesses and diagnostics, you know, no real change, you know, to the underlying demand. So it's going to be a comp issue. Thanks guys. All of the diagnostics.

John.

Speaker Change: Guys can you help us.

Scott Reed Davis: When volumes are kind of.

Scott Reed Davis: Still moving negative in the first half of the year, it's hard to get your arms around kind of what you've done to the cost structure.

Scott Reed Davis: With the 50 basis point guide up.

Scott Reed Davis: Is there anything that we can look at any kpis, you can share around head count reductions of rooftops or.

Scott Reed Davis: The thing that you guys have kind of tangibly done internally on cost that you can share that.

Scott Reed Davis: Helps us understand perhaps what that impact on margins will be in.

Yep. Fantastic. Thank you. Thanks, Vijay. Our next question comes from Scott Davis with Milius Research. Please go ahead. Morning, Scott. Hey, good morning, guys. Good morning, Rainer, and John.

Scott Reed Davis: Not just 24, but going forward. Thanks.

Yes.

Yes, I mean, maybe the way to think about the kind of at a high level.

Scott Reed Davis: Scott as we ended 2023 with an adjusted operating margin of call. It almost approximately 28, 5% and we think like you said, it's going to be up 50 bps here in the year.

Scott Reed Davis: Guys, can you help us, you know, when volumes are still moving negative in the first half of the year? It's hard to get your arms around kind of what you've done to the cost structure with the 50 Basis Point Guide. Is there anything we can look at, any KPIs you can share around like head count reductions or rooftops? Anything that you guys can think of.

Scott Reed Davis: We had $350 million of sort of one time costs last year.

Scott Reed Davis: Some of that if I think about what that was and the metrics around it I would tell you that there is.

Scott Reed Davis: There is a lot of.

Of heads that did come out and largely that was reflective of the lower volumes that we saw last year, particularly at Cepheid. As we went from 70 million tests down to 35, we sort of knew there would come a day when we were going to need to pull back some of that capacity and largely last year. We did that I think you also saw it at some of the other businesses in the second half.

Scott Reed Davis: Tangibly done internally on cost, perhaps with that. Yeah. Yeah, I mean, maybe the way to think about the OP, kind of at a high level.

Scott is, you know, we ended 2023 with an adjusted operating margin of called, you know, almost approximately 28.5%. And we think, like you said, it's going to be up 50 pips this year. You know, we had 350 million in sort of one-time costs last year.

Scott Reed Davis: As well in life Sciences, and some others that have seen a little bit more difficult growth profiles I think largely it is heads there are some rooftops here and there, but I think it's more trying to get after the cost structure right size it for what's going to be a difficult first half.

Scott Reed Davis: So that we're in a good spot.

Scott Reed Davis: $350 million benefit that would've been about 150 basis points on its own and Scott.

You know, some of that, if I think about what that was and the metrics around it, I would tell you that there were a lot of heads that did come out. And, you know, largely, that was reflective of the lower volumes that we saw last year, particularly at Cepheid. As we went from 70 million tests down to 35, we sort of knew there would come a day when we were going to need to pull back some of that capacity. And largely last year, we did that. I think you also saw it at some of the other businesses in the second half, as well as in Life Sciences and some others that have seen a little bit more difficult growth profiles. I think largely it is heads. There are some rooftops here and there.

Scott Reed Davis: But we do have the lower volumes as you mentioned in bioprocess and respiratory and that basically offset all of it and so really the cost savings. If you will from that $3 50 that we deployed is what we're getting in flowing through as the 50 bps of margin expansion.

Scott Reed Davis: That should be pretty durable as we go.

Scott Reed Davis: And hopefully with a little bit better volume here.

Scott Reed Davis: Gross and.

Scott Reed Davis: Adjusted operating margin.

Scott Reed Davis: Margins, we have a little bit of volume is going to go a long way.

I would imagine so.

Guys can you help us understand.

But I think it's more trying to get after the cost structure, right size it for what's going to be a difficult first half, so that we're in a good spot. So, you know, that 350 million of benefit, that would have been about 150 basis points on its own, Scott. But, you know, we do have the lower volumes, as you mentioned, in bioprocessing and respiratory, and that basically offsets all of it. And so really, the cost savings, if you will, from that 350 that we deployed are what we're getting and flowing through as the 50 pips of margin expansion. So that should be pretty durable as we go. And hopefully, you know, with a little bit better volume here in the gross and adjusted operating margin, we have a little bit of volume that is going to go a long way. I would imagine. Guys, can you help us understand China?

Speaker Change: China I understand that.

Speaker Change: I guess consists.

Speaker Change: Consistent with last quarter, and the guide and such still pretty conservative.

Speaker Change: What how do you kind of separate.

Speaker Change: Cyclical versus kind of what I'll call, the secular which is which is.

Speaker Change: Perhaps maybe the government policy and other other impacts are out there.

I haven't been to China, while so perhaps maybe you guys can help us understand the puts and takes there and.

Speaker Change: Is that market still attractive long term or has there been some sort of change at the margin there that perhaps makes it less interesting I'll just.

Speaker Change: Kind of open it up to that it's a lot. It's a lot of white space. If you will.

Speaker Change: Scott.

Scott Reed Davis: China, Let me start with this.

We continue to believe China is an attractive market in the long term.

Scott Reed Davis: consistent with last quarter and the guide and such, still pretty conservative. How do you kind of separate the cyclical versus kind of what I'll call the cyclical? Perhaps maybe government policy and other impacts are out there. You know, I haven't been to China in a while, so perhaps maybe you guys can help...

Scott Reed Davis: That is going to be accretive to our overall growth and the reason for that is that the Chinese government and frankly, the Chinese people are prioritizing.

Scott Reed Davis: Im very few priorities they are prioritizing health care.

Scott Reed Davis: More broadly, but also more specifically in terms of building.

Scott Reed Davis: The puts and takes there. Is that market still attractive long term, or has there been some sort of change at the margin there? Just kind of open it up to that. It's a lot. It's a lot of white, Huh. Gunn.

Scott Reed Davis: And their own pharmaceutical industry with both generic and innovative and Biosimilar type drugs.

Scott Reed Davis: That process.

While it has taken a pause here or certainly slowed as the funding environment has become more difficult in the short term, we expect that process to work itself out here in the midterm.

You know, China, let me start with this. We continue to believe China is an attractive market in the long term that is going to be crucial to our overall growth. And the reason for that is that the Chinese government and, frankly, the Chinese people are prioritizing, among very few priorities, healthcare, more broadly, but also more specifically in terms of building their own pharmaceutical industry with both generic and innovative and biosimilar drugs.

Scott Reed Davis: Now for China This year as it relates to our guide.

Assuming that China will be down high single digits.

Scott Reed Davis: Yes, because of the challenging macro.

Scott Reed Davis: We expect that macro to be more challenging than perhaps even what we've seen in the health care market, but we're not planning.

Scott Reed Davis: That guide.

Scott Reed Davis: A stimulus from the Chinese government, but more of the same and then of course, the reversing of tough comps here in the second half so it's going to be.

And that process, while it has taken a pause here or certainly slowed as the funding environment has become more difficult in the short term, we expect that process to work itself out here in the midterm. Now, for China this year, as it relates to our guide, we're assuming that China will be down in the high single digits. Yes, because of the challenging macro, we actually expect that macro to be more challenging than perhaps even what we see in the healthcare market. But we're not planning in that guide a stimulus from the Chinese government but more of the same. And then, of course, the reversal of tough competitions here in the second half.

Tougher start to the year as the activity level essentially remains where it has been here in the second half of 2023.

Scott Reed Davis: Particularly in biotechnology and life Sciences, and then as we get through.

Scott Reed Davis: Those tougher comps in the first half, we'll see a second half where we're not assuming a significantly.

Scott Reed Davis: Significantly higher activity levels, but we do see the math then working in our favor longer term.

We believe the full and the requirement in China for the.

Scott Reed Davis: <unk> innovative and highly effective drugs is intact and that the invest investment will continue.

Speaker Change: Very helpful. Best of luck in 'twenty four guys. Thank you. Thanks Scott.

So it's going to be a tougher start to the year as the activity level essentially remains where it has been here in the second half of 2023, particularly in biotechnology and life sciences. And then as we get through those tougher comps in the first half, we'll see the second half. Well, we're not assuming significantly higher activity levels, but we do see the math then working in our favor. Longer term, we believe the pull and the requirement in China for innovative and highly effective drugs are intact, and that the investment will continue.

Speaker Change: Our next question comes from Michael <unk> with Bank of America. Please go ahead.

Michael: Good morning, Michael.

Michael: Hey, Rob Hey, Matt.

Michael: To follow up on a couple of your comments from earlier in the Q&A just on bioprocess to make sure I got it right.

Michael: First I think you called out that you don't expect the book to Bill above one at any point during the year. So I mean that means you'll be continuing to deplete the backlog all year, but you already cited that the backlog is sort of at a normal level was one five quarters. So I'm just wondering.

Michael: How low is that going to get over the course of the year then if.

Michael: Your book to Bill doesn't break one and then sort of related to that.

Very helpful. Best of luck in 24, guys. Thank you. Thanks, Scott. This question comes from Michael Ryskin with Bank of America. Please go ahead. Good morning, Michael.

If you've only got one to two quarters of backlog and yet you're calling for this gradual improvement as the year goes on high single digit growth rate, just sort of like what underpins that that improvement from from what you do see an <unk> to start the year.

Speaker Change: Yes, I mean, I think the way we talked about the guide I mean, I did say that it doesn't go over one but it gets pretty close in the second half I mean, if you do the math it does get pretty close to one so I think.

Hey Rainer, Hey Matt. I want to follow up on a couple of your comments from earlier in the Q&A just to make sure I got it right. I mean, the first thing you I think you called out that you don't expect a book to bill above one at any point during the year. So, I mean, that means you'll be completing the backlog all year, but you already cited that the backlog is sort of at a normal level with, you know, one and a half. How well was that going to get over the course of the year then? The Bill Doesn't Break One, and then sort of related to that, you know, if you've only gotten one to two quarters of backlog and yet Here are today's speakers. Yeah, I mean, the way we talked about the guy, I mean, I did say that it doesn't go over one, but it gets pretty close in the second half. I mean, if you do the math, it does get pretty close to one.

It is still a little bit early to two.

Speaker Change: To call, what we're going to see in 'twenty, five, but I think youre right.

Speaker Change: We are calling for gradual improvements in the book to build through the year and it will get pretty close to one but not over one in the second half that's kind of how we're thinking about it and as far as the growth rate first half to second half I think was your question is that right Mike.

Just visibility in that improvement.

Mike: Yes, well I mean.

Mike: Like I said, it's not a huge number right first half to second half you are talking about $250 million. So.

Mike: We are I think the visibility is improving a little bit here as we move into the year and we expect that it will continue to do so as we move past the inventory destocking in the first half.

Mike: And so I think with the assumption of a ramp admittedly, but only on.

So I think, you know, it's still a little bit early to call what we're going to see in 25. But I think you're right, we are calling for gradual improvements in the book to build through the year, and it will get pretty close to one, but not over one, in the second half. That's kind of how we're thinking about it. And as far as the growth rate, first half to second half, I think that was your question. Is that right, Mike?

Only have a couple of hundred million dollars I just feel like if we can get past the destocking to be aggressive with that having a second half ramp that is 250 million bucks on $6 billion not that steep in reality and frankly, we constructed the guide to have no no real kind of step up or inflection either in <unk>.

Yeah, just visibility in that. Well, I mean, like I said, it's not a huge number, right? First half to second half, you're talking about $250 million. So, you know, we are, I think the visibility is improving a little bit here as we move into the year. And we expect that it will continue to do so as we move past the inventory destocking in the first half. And so I think, you know, with the assumption of a ramp, admittedly, but only on, you know, only have a couple hundred million dollars. I just feel like, you know, if we can get past the destocking, be aggressive with that, having a second half ramp that is $250 million on $6 billion. It's not that steep, in reality.

Mike: So processing I may not happen that way and if it does happen if we do see something.

Mike: <unk> the tire, we obviously will update update the guide and update everybody, but we're trying to just lay out how we're thinking about not having an inflection not calling an inflection things are getting a little bit better they're going to get better through the year and certainly given the math and the anticipated modest step up.

Mike: How you sort of get too.

Mike: To the second half the Thai single digits remember, we're also working on a comp of second half is going to be down high teens.

Mike: That's what gives us sort of the confidence as well.

We've got a little bit better customer visibility, we think we're going to be behind the destocking and we've got some comps that will help those numbers.

And, you know, frankly, we can construct the guide to have no, no real, you know, kind of step up or inflection either in bioprocessing. But it may not happen that way. Right. And if it does happen, if we do see something, you know, an inflection that's higher, we'll obviously update the guide and update everybody. But we're trying to just lay out how we are thinking about not having an inflection, not calling it an inflection. Things are getting a little bit better. They're going to get better and better through the year.

Speaker Change: Okay, Alright, I saw the $250 million was second half the second half not first half the second half, but I can say.

That is second half to second half second.

Speaker Change: Second half your second half I'm, sorry, yes, yes, okay, alright, well either.

Speaker Change: Bob will follow up offline for just a follow up question I wanted to ask a little bit on our life Sciences segment.

Bob: And maybe put another way I want to think about from a customer perspective can you talk about pharma and biotech outside of bioprocess supporting bioprocess side for the rest of the pharma and biotech. It seems like your outlook is still somewhat cautious youre talking about low levels of demand.

And certainly, given the math and the anticipated modest step up, you know, that's how you sort of get to a second half of tight single digits. Remember, we're also working on a comp for the second half that's going to be down in the high teens. So I think that that's what gives us sort of the confidence is, you know, we've got a little bit better customer visibility. We think we're going to be behind the de-stocking, and we've got some comps that will help those numbers. Okay, all right. I thought the $250 million was second half to second half, not first half to second half, but I can follow up on that. No, that is the second half to the second half. Yeah, that's the second half to the second half. I'm sorry.

Bob: Just curious any early signs that we're still in January still early in the year, but just sort of how those companies are thinking about budgets for the year, how how the life science segment in pharma biotech specifically recovers post 2023.

Bob: Yeah.

Bob: So Michael just to level set than coming off of Q4, which the life science tools were down mid single digit digits and that was largely consistent with Q3 and we anticipate that this.

Yep. Okay. All right. Well, either way, we'll follow up offline. For just a follow-up question, I want to ask a little bit about the life sciences segment and maybe put it another way. From a customer perspective, can you talk about pharma and biotech outside of bioprocess? Put bioprocess aside. For the rest of pharma and biotech, it seems like your outlook is still somewhat cautious. You're talking about low levels of... Just curious, any early signs?

Michael: Normalization in life Science instruments, which really began in the second half of 2023 will continue in 2024, and if we think about it by end market, we do see pharma and biotech stabilizing.

Michael: But at these lower levels of demand.

Because we believe and saw in the numbers showed here over the last.

Two years or so.

I know we're still in January, still early in the year, but just sort of how those companies are thinking about budgets for the year, how, you know, the lifestyle segment, and farm and bicycle recovers. So, Michael, just to level set then, coming off of Q4, when life science tools were down mid-single digits, and that was largely consistent with Q3, and we anticipate that this normalization in life science instruments, which really began in the second half of 2023, will continue in 2024. And if we think about it by end market, we do see pharma and biotech stabilizing, but at these lower levels of demand, just because we believe and saw, and the numbers showed here over the last two years or so, an anomalous level of buying and pulling forward of demand, whether that was China through loan subsidies or whether that was COVID dollars infused for additional research. We expect that normalization to continue. Also, in the first quarter, where we expect life sciences to be down similarly to the fourth quarter. Now, keep in mind that for us, life sciences instruments are only about 10 percent of the portfolio. So we may not be a good read across here.

Michael: A anomalous level of buying.

Michael: And pulling forward of demand whether that was China through loan subsidies or whether that was COVID-19 dollars infused for additional research.

Michael: We expect that normalization to continue here.

Michael: So in.

In the first quarter.

Michael: We expect.

Michael: Life Sciences.

To be down similarly.

Similarly to the fourth quarter now keep in mind, we for US life Sciences instrument is only about 10% of the portfolio. So we may not be a good read across here. Nonetheless, we do think it's going to take some time here in the first quarter first half in order for that normalization.

Michael: Occur, but we do believe that it's stabilizing at this lower activity level.

Michael: Thanks.

Our next question will come from Rachel that install with Jpmorgan. Please go ahead.

Rachel: I mean, we're talking so much yeah. Good morning, thanks for taking the questions. So I wanted to touch a little bit more on bio processing and you've noted that you are not modeling an inflection in that business. This year, but can you talk about if youre seeing any green shoots of a customer.

You may have gotten too lean on inventory and then if you look back at last year, you had mentioned on the <unk> call that you got in.

Rachel: Conversations with customers that shift in your expectations around bioprocess in order trends at the JP Morgan Conference last year. So can you talk to us about how the conversation with customers at the conference this year and how that's impacting the guide as well.

Nonetheless, we do think it's going to take some time here in the first quarter, first half in order for that normalization to occur. But we do believe that it's stabilizing at this lower activity level. Our next question will come from Rachel Battenstall with J.P. Morgan. Please go ahead. Thanks so much.

Speaker Change: Yeah, maybe I can start and Ryan can probably.

Speaker Change: He had more of the customer conversations and either if we're being honest.

Ryan: Yes, I mean, I think when we think about the guide and you think about green shoots I think maybe the way I would characterize it is.

Yeah, good morning. Thanks for taking the questions. So I wanted to push the envelope a little bit more on bioprocessing. You know, you've noted that you're not modeling an inflection in that business this year, but can you talk about whether you're seeing any of these green shoots from customers, signaling that they may have gotten too lean on inventory? And then if you look back at last year, you mentioned on the 4Q call that you'd had conversations with customers that shifted your expectations around bioprocessing and order trends at the JP Morgan conference last year. So can you talk to us about how those conversations with customers trended at the conference this year and how that's impacting the guide as well? Yeah, maybe I can start, and Rainer can probably do it, he had more customer conversations than I did, if we're being honest. So, yeah, I mean, when we think about the guy, and you think about green shoes, I think maybe the way I would characterize it is, us, you know. Six months ago, there were no anecdotes. There were no customers coming and saying, "I needed something quickly."

Ryan: We.

Ryan: Six months ago, there were no.

Ryan: Antidotes, there were no customers coming and saying I needed something quickly there were no pull forwards from out quarters into this quarter. I think we have started to see a little bit more of that here.

Anecdotally I don't think it is widespread enough to be able to say, we're going to be beyond. This in the next two to three months, which is why we sort of have our first half pegged, where we do but combined with our tracking of inventory. So we do know where it is that we've got a much better handle on that.

Ryan: Combined with sort of some of these anecdotes and frankly, a little bit better sort of funnels that we are seeing we do feel like we've got a little bit better visibility.

Ryan: We head into the year, which gives us the confidence as we talked about earlier to think that the destocking is going to be largely behind us as we get through the first half and that's sort of how we model into the into the book to bill slowly kind of getting up but not wanting to get.

Real aggressive and call a big inflection anywhere so that's sort of how we.

Ryan: What we've seen here over the course of the last probably three four months, so anecdotally a little bit better situation out there are hearing some good things that you want to call. It a green shoot I suppose you could but I would probably call it a <unk>.

There were no pull-forwards from, you know, previous quarters into this quarter. I think we have started to see a little bit more of that here. And anecdotally, I don't think it is widespread enough to be able to say, you know, we're going to be beyond this in the next two, three months, which is why we sort of have our first half pegged where we do. But combined with our tracking of the inventory, so we do know where it is at. We've got a much better handle on that. Combined with sort of some of these anecdotes and, frankly, a little bit better sort of funnels that we are seeing, we do feel like we've got a little bit better visibility as we head into the year, which gives us the confidence, as we talked about earlier, to think that the destocking is going to be largely behind us as we get through the first half. And that's sort of how we modeled it into the book to bill, slowly kind of getting up, but not wanting to get, you know, real aggressive and call a big inflection anywhere.

Speaker Change: Good anecdote.

Now starting to see more of those and sort.

Speaker Change: Less of the negative ones. If you will maybe Ryan you one cycle of a customer.

Speaker Change: <unk>.

Speaker Change: Just really just to confirm that we continue to see a trend of more positive conversations.

Have customers returning to normal order patterns.

Speaker Change: <unk> about.

Speaker Change: How they are planning out not only in the first the second half of the year. So all of these conversations are directionally, we believe positive and sort of support what we saw also in the sequential improvement, which was partially seasonal certainly but we also saw some improvement.

Speaker Change: Moving order patterns there so what we're looking for ultimately and that's what Matt referred to previously.

Speaker Change: As a broad based.

Speaker Change: Improvement in order patterns at.

So that's sort of how we do it. What we've seen here over the course of the last probably three, four months, so anecdotally, a little bit better situation out there, we are hearing some good things that, you know, you want to call it a green shoot, I suppose you could, but I'd probably call it a good anecdote that is now starting to see more of those and sort of less of the negative ones, if you And maybe, Ryan, you want to talk about the customer discussions at JPM?

Speaker Change: At which point, we will update accordingly, but where we sit today, we think that the first half will be.

Slower also related to some of the comps that we talked about.

Speaker Change: And that the positive development, which we've seen here in the past months will continue.

Speaker Change: Manifest itself really.

Speaker Change: Second half, where we then exit with the high single digits or better exit rate.

Just really just to confirm that we continue to see a trend of more positive conversations of customers returning to normal order patterns, thinking about how they're planning out not only the first but the second half of the year. So all of these conversations are, we believe, positive and sort of support what we saw. Also in the... Sequential improvement, which was partially seasonal, certainly, but we also saw some improving order patterns there.

Speaker Change: Great and then my follow up I wanted to just press a little bit more on the pace of recovery within bio processing.

Speaker Change: One of your cares has slowly been picking up their book to Bill sequentially over the last few corner I think just recently crossed that one level and that said, though danaher is really one of the few companies or only and that has been actively working with customers to manage their inventory levels. So I appreciate the guidance isn't modeling massive inflection at some point this year in bio processing.

Speaker Change: How should we think about that impact and managing our customers' inventory levels and what that does to the pace of our property and is there. Some reason why we shouldn't in Margaretville paced recovery V shaped recovery, where danaher. Thank you.

So what we're looking for, ultimately, and that's what Matt referred to previously, is a broad-based improvement in order patterns. At that point, we will update accordingly, but where we sit today, we think that the first half will be slower, also related to some of the comps that we talked about, and that the positive development which we've seen here in the past months will continue and then manifest itself really in the second half, where we then exit with high single digits or better exit rates. Great And then in my follow-up, I wanted to just press a little bit more on this page of recovery within bioprocessing. So one of your peers has slowly been picking up their book to bill sequentially over the last few quarters; they just recently crossed that 1.0 level. That said, though, Danaher is really one of the few companies, or only, that has been actively working with customers to manage their inventory levels.

Speaker Change: Yes.

Speaker Change: I think it's a little bit tougher when everybody is going to be while we are all in the same kind of boat I think everybody will have a slightly different timing.

Danaher: About when we get through sort of the inventory destocking. So I think part of it is going to be.

Danaher: Of our portfolio part of it is going to be the geographic mix, we have and part of it is going to be just sort of our customers and where we were kind of heavier or not so I think there's a lot that goes into it. So I think it'll be a little bit different for everybody I think.

Danaher: Each modality might be different as well so cell culture media might be different from chromatography and filtration. So I think all of those things combined sort of our what we're seeing I don't think everybody can see it in a different time and I think you saw that with us in the first half of last year.

Danaher: Only down low singles and I think some other folks were down mid teens or more right. So I think there is going to be a little bit of a lag in timing.

Your second question could we see a V. I mean, it's possible, but we did not want to kind of model that in to for a lack of a better we don't have.

So while I appreciate the guidance, you know, isn't modeling a massive inflection at some point this year in bioprocessing, how should we think about the impact of managing your customers' inventory levels on what that does to the pace of recovery? And is there some reason why we shouldn't see more of a v-paced recovery, v-shaped recovery, excuse me, for Danaher? Thank you. Yeah, well, I mean, I think it's a little bit tough, right?

Danaher: Enough confidence right now we have not seen it in the order book of enough magnitude and duration to be able to call the turn.

Danaher: The V shape recovery is it possible sure anything is possible, but if we get if we see that we obviously, we would talk about it but we're going to exit the year here at high single digits from a from a high single digit plus frankly, as we as we exit the year.

When everybody is going to be, while we are all in the same kind of boat, I think everybody will have a slightly different timetable about when we get through sort of the inventory destocking. So I think part of it is going to be, you know, the breadth of our portfolio, part of it's going to be the geographic mix we have, and part of it's going to be just sort of, you know, our customers and where we were kind of heavier or not. So I think there's a lot that goes into it. So I think it'll be a little bit different for everybody. I think every kind of each modality might be different as well. So cell culture media might be different from chromatography and filtration.

Danaher: We do better than this forecast.

Danaher: That we have here in the nines that will have obviously an impact on at some point.

The exit trajectory I suspect it depends on what happens specifically.

Danaher: Specifically, if it happens earlier I think it would have an impact but again, we're not planning for it when we see it we will obviously update and let people know but for this guide it is.

Danaher: Trying to be transparent with everybody that's what we're expecting for what we're planning for.

Speaker Change: Great. Thank you.

Speaker Change: Our next question comes from Puneet <unk> with Leerink partners. Please go ahead.

puneet: Good morning, Hi, yes.

Yes, Thanks Rainer.

So I think all of those things combined sort of are what we're seeing, and I think everybody's going to see it at a different time. And I think you saw that with us in the first half of last year. You know, we were only down low singles, and I think some other folks were down, you know, mid-teens or more, right?

puneet: My first question I'm tempted to ask you about processing, but let me say instrumentation first.

It.

puneet: Could you tell us what you're expecting for growth in instrumentation in 2024, and maybe if you could provide some context on the instrumentation recovery and when can we potentially start to see that at a normalized sort of growth level.

So I think there is going to be a little bit of a lag in timing. Could, to your second question, could we see a V? I mean, it's possible, but we did not, you know, want to kind of model that in to, you know, for a lack of a better word, we don't have enough confidence right now. We have not seen it in the order book of enough magnitude and duration to be able to call a turn of a V-shaped recovery. Is it possible?

puneet: So we think our life science instrumentation business.

For the year be down low single digits and Thats based really on a softer first half of the year.

puneet: Then slow.

puneet: Persistent improvement here in the second half of the year what are some of the drivers of that well first of all here in the first half we are looking at some pretty significant comps.

Sure. Anything's possible. And if we see that, obviously, we would talk about it. But, you know, we're going to exit the year here at high single digits from a high single digit plus, frankly, as we exit the year. And if we do better than this forecast, you know, that we have here in the nines, that will obviously have an impact on, you know, at some point, the exit trajectory, I suspect. It depends on when it happens.

puneet: You will recall the China loan program in particular in the first half of last year.

puneet: Put us into mid to high teens growth.

And of course at the current activity levels that will result in a softer first half year. We also talked about the fact that pharma biopharma.

puneet: <unk>.

puneet: Constraining their investment a bit more along the lines of just recently having.

puneet: Change out their installed base, taking advantage of additional dollars available during the pandemic and normalizing here as we get through the.

Specifically, if it happens earlier, I think it would have an impact. But, again, we're not planning for it. When we see it, we will obviously update and let people know. But for this guide, it is, you know, trying to be transparent with everybody.

The first half of the year.

puneet: I think geographically China remains weak.

puneet: And we don't expect that to improve here, if anything that will be a second half of the year dynamics So life Sciences.

That's what we're expecting or what we're planning. Great, thank you. Our next question comes from Puneet Suda with Lear Inc. Partners. Please go ahead. Yeah, hi. Yeah, thanks, Rainer. My first question is tempted to ask about bioprocessing, but I'll stick with instrumentation first.

puneet: Starting to stabilize really at the activity levels of the second half of last year, we expect that to continue through the first.

puneet: And then see gradual improvement here in the second half of the year also from a comp perspective.

Speaker Change: Got it that's helpful and then on <unk> could you update us on the DBS efforts there and what are you seeing in terms of the <unk> antibodies markets and expectations that you have for <unk> and 'twenty four.

You know, could you tell us what you're expecting for growth and instrumentation in 2024 and maybe if you could provide some context on the instrumentation recovery and when we could potentially start to see that at a normalized sort of growth level? So we think our life science instrumentation business will for the year be down low single digits. And that's based really on a softer first half of the year and then slow, but persistent improvement in the second half of the year. What are some of the drivers of that?

And lastly, if I could just ask about after the <unk> spin how are you thinking about.

Speaker Change: Deployment of World. Thank you.

Speaker Change: So first of all AB Cam, we couldnt be more pleased than having.

Speaker Change: Close that early here in December they had a good finish to the year and we.

Well, first of all, here in the first half, we are looking at some pretty significant comps. You will recall the China loan program, in particular, in the first half of last year put us into mid to high-teens growth. And of course, at the current activity levels, that will result in a softer first half here. We also talked about the fact that pharma and biopharma are constraining their investment a bit more along the lines of just recently having changed out their installed base, taking advantage of additional dollars available during the pandemic and normalizing here as we get through the first half of the year. If we think geographically, China remains weak.

Speaker Change: We are working with the team and we're up and running and of course, you can imagine the DBS implementation is proceeding in a focused way where the team is is really pulling so at Cannes.

Is on the way.

Then as it relates to capital deployment.

Speaker Change: You heard my comments earlier around our balance sheet, Optionality, which is strong we believe differentiated and post the <unk> spin will continue as we always have to work on deploying that capital to strengthen our portfolio.

And we don't expect that to improve here. If anything, that'll be a second half of the year dynamic. So life sciences is starting to stabilize really at the activity levels of the second half of last year. We expect that to continue through the first and then see gradual improvement here in the second half of the year, also from a comp perspective.

Speaker Change: <unk> continued to be active as always.

Speaker Change: Great. Thank you.

Thank you. This does conclude today's question and answer session I will now turn the call back to John Bedford for any additional or closing remarks.

Thanks Todd.

John Bedford: For follow ups.

John Bedford: Have a good day thanks.

That's helpful. And then on ABCAM, could you update us on the DBS efforts there and what you are seeing in terms of the REO antibody markets and expectations that you have for sort of ABCAM in 24? And lastly, if I could just ask about after the Veralta spin, how are you thinking about, you know, capital deployment overall?

Speaker Change: This does conclude today's call. We thank you for your participation you may disconnect at anytime.

Speaker Change: No.

Speaker Change: Oh.

Speaker Change: [music].

Thank you. So first of all, ABCAM, we couldn't be more pleased to have closed that early here in December. They had a good finish to the year, and we are working with the team, and we're up and running. And, of course, you can imagine the DBS implementation is proceeding in a focused way where the team is really pulling. So ABCAM is on the way.

Then as it relates to capital deployment, you heard my comments earlier around our balance sheet optionality, which is strong, and we believe differentiated. And post the Viralto spin, we'll continue, as we always have, to work on deploying that capital to strengthen our portfolio and continue to be active as always. Great, thank you. Thank you. This does conclude today's question and answer session. I will now turn the call back to John Bedford for any additional or closing remarks. Thanks, Todd. Everyone, we're around for follow-ups. Have a good rest of your day. Thanks. This does conclude today's call. We thank you for your participation. You may disconnect at any time. Transcript Emily Beynon