Bruker (BRKR) Q3 2025 Earnings Call Transcript

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Date

Monday, Nov. 3, 2025, at 8:30 a.m. ET

Call participants

• President and Chief Executive Officer — Frank Laukien
• Executive Vice President and Chief Financial Officer — Gerald Herman
• Director of Investor Relations — Joe Kostka

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Risks

• Organic Revenue Decline — Bruker management guided to a 4%-5% organic revenue decline for 2025, citing weaker academic and research instrument demand, and order timing shifts into 2026.
• Operating Margin Compression — Non-GAAP operating margin decreased 260 basis points year over year to 12.3%, impacted by lower revenue absorption, tariffs, and foreign exchange.
• High Non-Cash Charges — The quarter included non-cash goodwill and intangibles impairment charges of $119.4 million, $34.5 million in restructuring charges, resulting in a loss per share of €0.41.
• Softness in Key Segments — EMEA region revenue declined by over 20%, and the BioSpin segment posted a double-digit decline in organic revenue.

Takeaways

• Reported revenue -- $860.5 million for the quarter, reported revenue was down 0.5%, with a 2.9% positive currency impact, and a 1.1% contribution from acquisitions.
• Organic revenue performance -- Organic revenue decreased 4.5%, with Scientific Instruments organic revenue declining 5.4%, and BEST organic revenue increased 6.9% net of intercompany eliminations.
• Non-GAAP operating margin -- 12.3% for the quarter, down 260 basis points year over year, but improved from 9% in the prior quarter.
• Non-GAAP diluted EPS -- $0.45, a decrease of 25% from $0.60 in the third quarter 2024, but up from $0.32 in the previous quarter.
• Book-to-bill ratio -- Scientific Instruments segment book-to-bill rose above 1.0x for the first time in several quarters, indicating a pickup in bookings.
• Bookings growth -- Mid-single-digit percentage organic bookings growth driven by improved government, applied, and biopharma orders; ACAGOV segment orders grew in the high teens percentage, primarily outside the U.S.
• China orders -- Scientific Instruments orders in China increased by double digits organically; management cited initial signs of stimulus funding beginning to be dispersed in China.
• Diagnostic segment performance -- CALID Group revenue increased in the low double digits year-to-date, driven by strength in microbiology diagnostics, and molecular diagnostics franchises.
• Cost savings initiatives -- Management is progressing toward the high end of its $100 million–$120 million cost-cutting target for 2026, and expects this to drive significant margin expansion and double-digit EPS growth in 2026.
• Guidance update -- Full-year revenue guidance updated to $3.41 billion–$3.44 billion, reflecting a reported 1%-2% growth, but a 4%-5% organic revenue decline; non-GAAP EPS updated to $1.85–$1.90, with $0.07 dilution from the convertible preferred offering in non-GAAP EPS guidance.
• Backlog position -- Backlog increased to approximately seven months, up from 6.5 months at the end of Q2 2025.
• Operating cash flow -- Year-to-date operating cash outflow of $95.7 million for the first nine months, attributed to lower profitability, the timing of tax and vendor payments, and restructuring expenses.
• M&A and tariff headwinds -- Operating margin guidance incorporates a 60 basis point headwind from M&A, and 60 basis points from tariffs.

Summary

Bruker (NASDAQ:BRKR) reported a sequential improvement in both revenue and non-GAAP earnings versus the previous quarter, despite a year-over-year decline resulting from weaker academic and research demand. Management highlighted stronger-than-expected order activity, particularly in international government and biopharma end markets, supporting a Book-to-Bill ratio above 1.0x in Scientific Instruments. The company reduced full-year revenue and non-GAAP earnings guidance due to late Q3 orders and customer site delays, shifting some expected Q4 revenue into 2026. Significant cost-saving actions are well underway, with management reiterating confidence in realizing $100 million–$120 million in annual savings, and double-digit non-GAAP EPS growth in 2026, even in a low-growth environment. The diagnostics and molecular division delivered double-digit revenue growth year-to-date, and the company noted emerging strength in applied markets such as security and defense, including robust demand for trace explosive detectors in Europe and South Korea.

• Management stated, "mid-single-digit percentage organic bookings growth" occurred, with outperformance in non-U.S. ACAGOV orders driving overall order growth.
• Gerald Herman highlighted that non-GAAP gross margin fell 110 basis points to 50.1% year over year.
• The quarter was impacted by a $0.01 non-GAAP EPS dilution from the September mandatory convertible preferred stock offering, which is expected to have a €0.20 dilutive impact on 2026 non-GAAP EPS.
• Orders in China, while cited by management as "green shoots" of stimulus, totaled less than $10 million and require monitoring for sustainability.
• The company reported aftermarket revenue in Scientific Instruments increased by a mid-single-digit percentage organically year over year.
• Frank Laukien indicated that "improved bookings in Q3 2025 and Scientific Instruments book-to-bill ratio above 1.0 make us optimistic that we may be past the trough in demand."
• Ongoing restructuring and non-cash impairment charges drove results to a loss.
• Management noted that their outlook does not fully factor in potential impacts from a prolonged U.S. government shutdown, but stated that "our Q4 guidance is now appropriately conservative to absorb some of that."

Industry glossary

• Book-to-bill ratio: A metric that compares orders received (bookings) to the amount of revenue billed within a period; a ratio above 1.0x indicates demand is exceeding supply and signals future revenue growth.
• ACAGOV / AGA GOV / PACAGOV / Accagov / AGAGAV / ECAGov / Aka Gov / Akagao / AgaGov / CAGAF / ACOGAR / AGAGOV: Transcript uses multiple typo variants referring to the company's Academic and Government market segments; management references these collectively for institutional (primarily academic and government research) demand.
• BEST: Bruker Energy & Supercon Technologies; segment focused on superconducting materials and instrumentation.
• CALID: Segment focused on Clinical, Applied, and Life Science instruments, including diagnostics.
• BioSpin: Segment focused on NMR (Nuclear Magnetic Resonance) and EPR (Electron Paramagnetic Resonance) instruments and solutions.
• NMR: Nuclear Magnetic Resonance, an advanced technique used in chemical, biochemical, and medical research; ultra-high-field gigahertz class systems are high ASP (average selling price) capital instruments referenced in the call.
• MALDI Biotyper: Bruker's platform for rapid pathogen identification via matrix-assisted laser desorption/ionization (MALDI) mass spectrometry.
• TIMSSOMNI / TIMS Metabo: Recently launched mass spectrometry products mentioned as gaining early traction.
• MANDATORY CONVERTIBLE PREFERRED (MCP): Hybrid security instrument issued in September 2025, flagged as EPS dilutive in both 2025 and 2026.
• Cosmic / Cellscape / Painscape: Proprietary products in the spatial biology platform discussed by management as contributors to growth in the quarter.

Full Conference Call Transcript

Operator: Good day, and welcome to the Bruker Corporation Third Quarter 2025 Earnings Conference Call. All participants will be in a listen-only mode. By pressing the star key followed by zero, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Joe Kostka, Director of Bruker Investor Relations. Please go ahead. Good morning. I would like to welcome everyone to Bruker's Third Quarter 2025 Earnings Conference Call.

Joe Kostka: My name is Joe Kostka, and I am the Director of Bruker Investor Relations. Joining me on today's call are our President and CEO, Frank Laukien, and our EVP and CFO, Gerald Herman. In addition to the earnings release we issued today, during today's conference call, we will be referencing a slide presentation that can be downloaded from the Events and Presentations section of Bruker's Investor Relations website. During today's call, we will be highlighting non-GAAP financial information. Reconciliations of our non-GAAP to GAAP financial measures are included in our earnings release and are posted on our website at ir.bruker.com.

Before we begin, I would like to reference Bruker's Safe Harbor statement, which is shown on Slide two of the presentation. During this conference call, we will make forward-looking statements regarding future events and the financial and operational performance of the company that involve risks and uncertainties, including those related to acquisitions, geopolitical risks, tariffs, foreign currency, market demand, or supply chains. The company's actual results may differ materially from such statements. Factors that might cause such differences include, but are not limited to, those discussed in today's earnings release, and in our Form 10-Ks for the period ending 12/31/2024, as updated by our other SEC filings, which are available on our website and on the SEC's website.

Also, please note that the following information is based on current business conditions and on our outlook as of today, 11/03/2025. We do not intend to update our forward-looking statements based on new information, future events, or for other reasons, except as may be required by law, prior to the release of our fourth quarter and full year 2025 financial results expected in February 2026. You should not rely on these forward-looking statements as necessarily representing our views or outlook as of any date after today. We will begin today's call with Frank providing an overview of our business progress. Gerald will then cover the financials for 2025 in more detail and share our updated year 2025 financial outlook.

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

Frank Laukien: Thank you, Joe. Good morning, everyone, and thank you for joining us on today's third quarter 2025 earnings call. As forecasted, our third quarter revenues and earnings were down year over year primarily due to weaker academic and research instruments demand in 2025. However, our Q3 2025 performance was quite a bit better than expected and represents a meaningful sequential step up from our Q2 performance. In this third quarter, we were encouraged by our mid-single-digit percentage organic bookings growth. For the first time this year, we saw strength in bookings in the government market segment as well as improving biopharma and applied market orders.

Interestingly, in 2025, we saw the stark contrast of a double-digit percentage organic revenue decline in the AGA GOV markets year over year compared to a double-digit percentage organic improvement in ACAGOV bookings year over year. In fact, our ACCA GOV orders grew in the high teens percentage in Q3 2025 as very robust order growth outside of The United States more than offset a continued year-over-year softness in The U.S. A lot of moving pieces.

Frank Laukien: Anyway, notably, our innovative spatial biology proteomics and multiomics solutions launched at AGBT, AACR, and ASMS earlier this year are being very well received by our biopharma and academic customers and enhance our leadership in enabling tools for drug discovery and disease biology research in the post-genomic era. Biopharma and Applied also saw organic bookings growth in Q3 with biopharma having the strongest organic order growth of all of our end markets, both in Q3 and year to date. Organic Scientific Instruments orders in China increased by double-digit percentage in the third quarter year over year, and we saw what may be green shoots of stimulus funding in China beginning to be dispersed.

So this stronger Q3 2025 order performance drove our Scientific Instruments segment book-to-bill ratio to greater than 1.0x for the first time in several quarters. While one quarter of improved orders is too early to call the trend, we are encouraged that our two divisions most directly tied to macroeconomic factors, which happen to be Bruker Optics and AXS, also saw strong bookings in 2025. These two divisions often serve as a leading indicator within Bruker for changing macro market trends. However, due to the late timing of Q3 orders and certain customer sites delays, we are reducing our organic revenue growth expectations for the fourth quarter and our guidance for the full year.

This also derisks our implied fourth quarter forecast to levels that we are very confident we can achieve. Finally, on this slide, our major cost savings initiatives announced last quarter are progressing very well towards the high end of our $100 million to $120 million cost down targets for 2026. They are expected to deliver significant margin expansion and double-digit EPS growth in 2026. All right. Turning to Slide four now. In Q3 2025, continued softness in Akagawa revenues led to year-over-year declines throughout the P&L. However, we noted sequential improvements in biopharma, microbiology, and diagnostic revenues, led to both top and bottom line coming in better than our expectation in early August.

Bruker's Q3 2025 reported revenues decreased 0.5% to $860.5 million, which included a currency tailwind of 2.9%. On an organic basis, revenues decreased 4.5%, which included a 5.4% organic decline in Scientific Instruments and 6.9% organic growth at BEST net of intercompany eliminations. Revenue growth from acquisitions added 1.1%. Our third quarter 2025 non-GAAP operating margin was 12.3%, a decrease of 260 bps year over year as lower revenue absorption, additional tariff costs, and currency headwinds were only partially mitigated in Q3 by our earlier costs and pricing actions. Our third quarter 2025 non-GAAP operating margin of 12.3% represented a meaningful sequential improvement over the 9% we reported in the second quarter.

Our third quarter diluted non-GAAP EPS was $0.45, down 25% from $0.60 in '24 but up sequentially compared to the $0.32 we reported in '25. Gerald will obviously discuss the drivers for margin and EPS later in more detail. Moving to slide five, our year-to-date Q3 revenue increased by 3% to $2.5 billion. Organic revenue declined 3.1% with a 2.9% organic decline in Scientific Instruments and a 5.5% organic decline at BEST net of intercompany eliminations. Our first nine months 2025 non-GAAP gross and operating margin and GAAP and non-GAAP EPS performance are all summarized on slide five. So please turn to slide six and seven.

Where we highlight the year-to-date third quarter performance of our three Scientific Instruments Group and of our BEST segment. All on a constant currency and year-over-year basis. Year-to-date 2025 BioSpin Group CER revenue of $612 million was shown was down mid-single digits percentage. BioSpin saw growth in lab automation and services, offset by a tough comparison with two gigahertz class NMR systems in Q3 2024 revenue versus none in 2025. BioSpin saw weakness in Akagab and biopharma revenues but improved order growth in both end markets in 2025.

Year-to-date 2025 CALID Group revenue of $879 million increased in the low double digits percentage dollars driven by microbiology and infection disease diagnostics with strength in both the MALDI Biotyper and the Alitec molecular diagnostics franchises. Life Science Mass Spectrometry is seeing early traction for recently launched products, including the new TIMSSOMNI and the new TIMS Metabo both from launched at ASMS. While our molecular spectroscopy revenues remained stable, but with strong applied markets orders in Q3 2025 as was mentioned earlier. Right, turn to Slide seven now, please. Year-to-date 2025 Bruker Nano revenue of $775 million declined in the low single digits percentage.

Revenues from advanced X-ray and nano allowed nano analysis tools were down year over year partially offset by growth in spatial biology. Strength in biopharma year-to-date revenues was offset by weakness in AGAGAV, and Software Industrial Research. And Semi Markets. Finally, year-to-date 2025 best revenue declined in the mid-single digits percentage net of intercompany eliminations. The clinical MRI superconducting wire market improved in Q3 and is now flat year to date while our best research instruments business has been weaker due to a very strong prior year comparison. So moving on to slide eight. You may have seen our press release that we had some recent NIH and NSF funded orders for advanced NMR instruments.

I won't go through all of them, but here are several very unique enabling and breakthrough tools listed on this page with the respective customers. That are really very important for our fundamental scientific research and very much so also for drug discovery and disease biology research. The aggregate value of these orders was disclosed previously. It's about $10 million. It's expected they're all expected to be installed and in revenue next year, not in Q4. And maybe the bigger message here is in that last bullet on slide eight. That our scientific instrument, ACOGARB orders, as I mentioned earlier, we were pleased we're up mid-teens percentage organically year over year in Q3 and this was despite lingering U.S. weakness.

There's been some improvements in The U.S. But primarily there are significant improvements outside of The U.S., Europe, Japan, and in China. Right. Another press release, if you go to slide nine, that we stress yet recently, there are some new, if you like, applied markets. This is not food testing. This is security and defense and homeland security. And in this case, we have a very, very nice product line that's sort of growing rapidly 30% year over year. We were highlighting some recent orders. From explosive trace detectors that you will find at a lot of European airports and an increasing number of those, but also in South Korea and in The Middle East.

They have particularly performance and usability advantages. This by the way isn't just an instrument sale. This is then five or seven years of consumables and service sales. So it's a it's a nice steady business. And we have been gaining market share and are pleased with those orders. And because of tensions and rearming in Europe, We also got some significant defense detection orders from Central European Ministry of Defense. This was not for Ukraine. But others are worried as well and are obviously there's a smaller part of Bruker that if you like is part of Applied Markets that's growing very nicely. We thought we'd highlight that for you because obviously, AgaGov was weaker this year.

So to wrap up, our third quarter P&L was still impacted by the various headwinds we seen across the industry earlier this year, However, the results came in ahead of our expectations. Our improved bookings in Q3 2025 and Scientific Instruments book-to-bill ratio above 1.0 make us optimistic that we may be past the trough in demand. Look to build on this performance in Q4 and we are increasingly confident in a fiscal year 2026 partial recovery. We expect significant improvements in our organic revenue performance compared to our meaningful decline organic decline in 2025.

Importantly, we are taking up to €120 million out of our business in fiscal year 2026 in order to drive significant margin expansion and strong double-digit EPS growth. So in perspective, our Transform project Accelerate 2.0 portfolio is fundamentally very strong. In post-genomic drug discovery and disease biology research, leveraging both proteomics and multiomics as well as spatial biology in innovative diagnostic solutions for microbiology, molecular diagnostics and now also therapeutic drug monitoring. And finally emerging really an emerging $100 million area for us is now the fast growth area of automated digitized or digital labs ready for AI or perhaps even driven by AI.

The automated AI labs, if you like, These are four major profitable growth opportunities they are complemented by our healthy diversification in industrial research, UC market semiconductor metrology and as you've seen, so applied and security markets. Combining this outstanding portfolio with operational excellence and strong execution, I am confident that by 2027 we can outgrow our markets again by 200 to 300 bps per year on average and continue our rapid margin expansion and double-digit EPS growth after overcoming the multiple AKA Gov demand new tariffs and strong currency headwinds in 2025 with a partial recovery in 2026.

So with all of that, let me turn the call over now to our CFO, Gerald Herman, who will review things in more detail. Gerald?

Gerald Herman: Thank you, Frank, and thank you, everyone, for joining us today. Pleased to provide some more detail on Bruker's third quarter and year-to-date 2025 financial performance. Starting on Slide 11. In 2025, our results came in above our expectations on both the top and bottom lines. In 2025, Bruker's reported revenue decreased 0.5 percent to $860.5 million, reflecting an organic revenue decrease of 4.5% year over year. Acquisitions contributed 1.1% to our top line while foreign exchange was a 2.9% tailwind. Geographically and on a year-over-year organic basis, in 2025, our Americas revenue declined in the low single-digit percentage. European revenue was roughly flat while Asia Pacific revenue declined in the mid-single-digit percentage including flat performance in China.

For our EMEA region, revenue declined by over 20%. Scientific Instruments organic revenue segment declined 5.4% in 2025 as mid-single-digit organic growth in CALID was more than offset by a double-digit organic decline in BioSpin and a high single-digit organic decline in Bruker Nano. BSI Systems revenue declined roughly 10%, while BSI aftermarket revenue increased mid-single-digit percentage organically year over year. Frank mentioned earlier, our order bookings performance in the DSI segment was up organically in the mid-single-digit percentage year over year and our BSI book-to-bill ratio for the third quarter was above 1.0. Non-GAAP gross margin decreased 110 basis points to 50.1%.

Q3 2025 non-GAAP operating margin was 12.3% impacted by tariffs, foreign exchange, and the headwind from the prior year comparison of two gigahertz class NMRs in our third quarter 2024 revenue. On a non-GAAP basis, Q3 2025 diluted EPS was $0.45, down 25% from $0.60 in the third quarter 2024 but improved sequentially and well ahead of our expectations. Our EPS in 2025 includes a $0.01 dilution from the mandatory convertible preferred offering we completed in September, and benefited from a lower non-GAAP effective tax rate of 24.4%. On a GAAP basis, we reported diluted loss per share of €0.41 reflecting non-cash goodwill and intangibles impairment charges of $119.4 million and restructuring charges in the third quarter of $34.5 million.

Non-GAAP weighted average diluted shares of outstanding in 2025 were 152 million flat compared to 2024. Slide 12 shows Bruker's performance on a year-to-date basis for 2025, which has similar drivers to those in the third quarter. Turning now to slide 13. In the first nine months of 2025, we had operating cash outflow of $95.7 million driven by lower profitability, timing of tax and key vendor payments, and restructuring expenses. We expect to see improved cash flow in the fourth quarter, our largest and most profitable quarter of the year, always our strongest cash flow quarter. Turning now to slide 15.

We are updating our full-year 2025 forecast and outlook to reflect Q3 results, order timing, and the impact of our September mandatory convertible preferred offering. Our outlook for the full year of 2025 now assumes revenue in a range of $3.41 billion to $3.44 billion, reflecting an organic revenue decline of 4% to 5%. Late order bookings in the third quarter as well as certain site readiness issues are expected to push a portion of revenue we previously expected in the fourth quarter into fiscal year 2026. The full-year 2025 revenue growth contribution from acquisitions is expected to be approximately 3.5% and we expect a foreign currency tailwind of about 2.5%.

This leads to updated reported revenue growth guidance of 1% to 2%. For operating margins in 2025, we now expect approximately a 250 basis point decline in operating margins year over year. This consists of headwinds of 60 basis points from M&A, 60 basis points from tariffs, 65 basis points from foreign exchange, as well as a 65 basis point decline in organic operating margin. On the bottom line, our updated full-year 2025 guide now reflects non-GAAP EPS in a range of $1.85 to $1.90. This includes a $0.07 dilution from our mandatory convertible preferred offering we completed in September.

For your modeling, we expect the MCP offering to have a roughly €0.20 dilutive impact on our fiscal year 2026 EPS. Despite this dilution, we continue to expect double-digit non-GAAP EPS growth in fiscal year 2026 due to the significant cost savings initiatives we're implementing this year. Other guidance assumptions are listed on the slide. For full-year 2025, ranges have been updated for foreign currency rates as of 09/30/2025. With respect to 2025, we still expect relatively soft organic revenue performance with a mid to high single-digit percentage decline year over year due to lingering effects of weaker orders earlier in the year.

We expect non-GAAP EPS for the fourth quarter to show significant sequential improvement but still be down meaningfully year over year, as implied by our guidance. To wrap up, the first half of 2025 market headwinds adversely impacted our financial performance in the full year 2025. However, we're encouraged by our solid order performance in 2025 and expect to drive improved P&L performance in full year 2026 and beyond. With our cost savings plans well on track, fully committed to significant margin expansion and double-digit EPS growth in fiscal year 2026. With that, I'd like to turn the call back over to Joe.

Joe Kostka: Thanks very much. Thanks, Gerald. We will now begin the Q&A portion of the call. As a reminder to allow everyone time for questions, we ask that you limit yourself to one question and one follow-up. Operator?

Operator: We will now begin the question and answer session. If you're using a speakerphone, please pick up the handset before pressing the keys. Our first question comes from Puneet Souda with Leerink Partners. Please go ahead.

Puneet Souda: Yes. Hi, Frank. Thanks for taking my questions here. First one on the book-to-bill, good to see more than one and congrats on the quarter. Just given the order momentum you're seeing here, but I'm just wondering how has that trended in the fourth quarter? Are you continuing to see the mid-teens organic order growth here? And maybe could you elaborate a bit just a number of moving parts here? How has the international momentum continued? Is it more I could go versus pharma? And maybe tell us a bit more on the academic side of The U.S. Are you starting to see some recovery there?

Given the points you mentioned, D and P and a couple of other points you mentioned in the slide?

Frank Laukien: Yes. Thank you very much, Puneet. So we really don't have Q4 data yet. It's too early. So I just can't comment on Q4. There's no meaningful data available yet. Moving parts, Aka Gov the strength in Accagov orders was primarily outside of The United States. But The United States were less weak, all right, less soft, is that a word? Anyway, so Q3 was better in the United States for ACOGAR orders than Q2 and we saw some orders come through. I gave you some NMR examples, but of course, it was more it was broader than that, also included timestop And Micro Microscopes And Other Stuff. They're Hard To Say What's The Trend In The U.S.

Because they're clearly in The U.S. There was a little bit of catch-up in Q3. Compared to Q2 and maybe even Q1. In aga gov orders in Europe and Japan and a little bit in China also that's why there might be green shoots. Were quite encouraging. And that's why our CAGAF orders year over year were up considerably in Q3. Don't think that we're now in a high teens growth trend all of a sudden. That's just a quarter in Q3 2024 was not the strongest. But anyway, was very encouraging. And we hope that we'll continue in Q4. But I wouldn't and yes, the activity and opportunities are great and are encouraging.

But I wouldn't read anything into that yet. Just too early to comment on We do need Q4 to then give more meaningful growth and margin numbers for 2026. We're not going to do that today. We're not able to do that today until we really see how Q4 comes in, particularly orders, obviously. To the other moving pieces Puneet, yes, biopharma has been reasonable in or cave not great, but okay in the first half of the year, much better in the third half of the year in terms of orders. A particular strength there in The U.S. But also outside of The U.S. But PACAGOV sorry, biopharma particularly in The U.S.

And the applied market strength, which is a good sign of macroeconomic trends That was pretty that had a pretty broad international distribution. I don't know that would highlight any geography there. So that may add some color to the admittedly multiple moving pieces and the effect of Bruker that prior order weakness now shows up in the P&L whereas the new order improvements and encouragement and maybe it is momentum if Q4 goes well. It's more likely to show it will show up all in 2026. Hope that helps.

Puneet Souda: Got it. That's very helpful. And anything on the ultra-high frequency gigahertz NMR's? How are you thinking about those? Obviously, tougher comp in the third quarter, but as you go into '26, how is the momentum there? I know we've been waiting for U. To acquire more of those instruments.

Frank Laukien: Thank you. Yes, The U.S. is the enigma there, but obviously there's also other geographies and I still can't call The U.S. Trends. Obviously, nothing has come through so far. So we'll see. We're expecting at least one order for the gigahertz class in Q4, not in The U.S, And there's a number of cases brewing around the world and including in The U.S. But today it's too early to do that. So when we give guidance for '26 presumably in 2026, We can also comment on what has come in or where we have clear line of sight for ultra-high field for the gigahertz class. So yes, nothing in revenue in Q3, We expect hopefully one order in Q4.

Sometimes these things get delayed by a quarter. Anyway, it's just not such a big part of our business anymore. I know they're easier to count. And indeed in Q3 a lot of our organic decline had to do with these two gigahertz class systems in 2024 revenue, which accounted for more than $25 million of our revenue and comes with nice operating profits. And margins. It did have an effect on Q3, And anyway, that's the color I can give you. More to come when we give guidance in early February. Got it. Thank you.

Operator: And the next question comes from Michael Ryskin with Bank of America. Please go ahead. Michael, your line may be on mute.

Anika: Hi. This is Mike on for, this is Anika on for Mike. You give us the impact of the government shutdown that you're seeing in 4Q? And is that baked into the updated outlook? Thank you.

Frank Laukien: Well, that's a good question and it's not formally baked into our outlook. So far we have assumed that the effect will be relatively minor. But indeed, if this were to continue for a full second month or so then this may delay some new grants, some orders It could also delay some installations. So far, we become aware of anything that gets we think that our Q4 guidance is now appropriately conservative to absorb some of that and maybe what we've seen so far but know if there was a further multi-week or multi-month shutdown that could have additional impacts that are not presently in our guidance.

Anika: Understood. Thank you. And then I know that you're not formally guiding on 2026 today. But you called out meaningful improvement versus the minus 4% to 5% organic in 2025. Can is it fair to assume that you can grow revenues in 2026 or are we looking at flat year over year? Thank you.

Frank Laukien: We're not making that assumption yet. A fair question, of course. We really do want to see our Q4 2025 bookings in order then to give hopefully reliable guidance in February '26. So yes, I mean, this year 25%, we're coming down organically quite a bit, right? We undoubtedly can do much better than that next year, but we're not presently I don't want to state any assumptions because then you will take them as guidance in they're not. But we just want to make sure that with the significant cost cutting that we're doing even without growth which our assumption, but even without growth, we can expand our operating profit margins very significantly.

Say 250 bps to 300 bps or something like that. And yes, we expect we continue to expect double-digit EPS growth even after absorbing the roughly $20 dilution that Gerald mentioned during his prepared remarks for the additional dilution from the mandatory convert that we did in September. So we still expect to do double-digit non-GAAP EPS growth next year. And with that's without that's simply for math mathematically, that's simply we're not this is without growth. Without growth is not our preliminary guidance. Period. But that's what we're looking at right now. We can help preliminary guidance for us right now on growth does not make sense until we've seen our Q4 orders.

Bruker that's going to be very important for next year.

Anika: Understood. Thank you for the color.

Operator: And the next question comes from Tycho Peterson with Jefferies. Please go ahead.

Tycho Peterson: Hey. Thanks. Frank, I wanna pick up on that margin. So it sounds like you are committing to this 300 basis points of margin expansion even if the top line is flat. Guess, Given that you're running at the high end of the $100 million to $120 million cost savings target, in the near term. Should we interpret the upper end of savings as simply kinda increasing confidence in hitting that margin target next year? Or could you think, you could potentially do better?

Frank Laukien: Okay. So nice question, Tycho. I wasn't confirming a number. Yeah. I know you've mentioned one. I'm not saying take that number out of your model, but I'm not confirming it either. We are I think the second part of your question, I think it's fair to say we hope to have increased confidence in getting to very significant margin expansion and double-digit EPS growth all in. Including the MCP and that's exactly why we're driving towards the high end of our cost-cutting target. So you're spot on with that one.

Tycho Peterson: Okay. And then just probing a little bit on your assumptions. We're not talking numbers for '26, but just A and G, the outlook there, assuming flattish NIH budget. I mean, just talk a little bit about some of the gives and takes around, you know, multiyear grants. I assume you're not expecting any budget flush here in the near term, but then as we think about next year, do you think, you know, A and G orders, you know, will grow? And then can you flush out your comments on China stimulus? You know, how material was that And how do you think about that for next year?

Frank Laukien: Yes, are all very important questions, right? So there was a little bit of a budget flush for the fiscal year 2025. And orders sorry, and funding coming out of NIH, you all report that very well. Did improve in the third quarter and particularly in September. I'm aware of a cancer center that had fantastic NIH funding and cash coming in the door. To where they even were flat or higher than the previous year. There was a mini budget flush. It went into a lot of multiyear brands. It went into things that they could fund readily. It went into a few instruments too, We sold some NMR's and some tims stuff and some other stuff.

It wasn't very strong yet, which is why the strength in academic bookings in for us in Q3 came from outside The U.S. But The U.S. did improve a little bit sequentially It just wasn't a growth driver yet year over year. So that was that. NIH budget for 2026 and NSF budget while we're at it, we are not necessarily assuming that it's flat. We'd be delighted that it's flat. If we have to take 10% or 15% down, I think that will work for us too. I just wanna be it's hard to predict these things, these things. So we're not necessarily baking in an NIH budget flat.

Again, delighted if it happens, but we can also work with it being down 10% or 15%. As you know, it's then actually more important whether the stuff actually gets dispersed regularly or gets held up for the majority of the year. But we are along with Q4 bookings we're also looking forward to clarity on NIH and NSF and DOE budgets for research for fiscal year 2026. Hopefully, that all comes in calendar Q4 to give us more visibility. China, yes, some green shoots, yes. So they were less than $10 million in orders. Clearly, well, in orders anyway, but in clearly seemingly stimulus-related orders where customers said, yes, this is stimulus money being released.

So less than $10 million not and again, I think that's a green shoot. And we'll need to again see how that continues in Q4. But I think in Q2 there was none of that. So it's a little bit better, right? So China contributed, but Japan and quite honestly Europe were really strong. ECAGov orders. In Q3. So that's the color around the world.

Tycho Peterson: Okay. Thanks. And then lastly, just mentioned an order push out. Can you quantify how large that was in the one you mentioned in your prepared comments?

Frank Laukien: You mean revenue push out? Yes, there's a few sites that have that want delivery in Q1 rather than in Q4. So that also added to some of the more conservative guidance that we now have for the full year, but really implied for Q4 because that's all that's left.

Tycho Peterson: Okay. Thanks.

Frank Laukien: And I think I mentioned a lot it is true that I mean, it's always true that we get more than half the orders in a quarter and the third month of every quarter. But yes, a lot of the orders and in the order improvement really became clear in September. So if all of these orders had come in July, maybe some of them would have made it into Q4. But now there's some small stuff will go into Q4, it always does. But most of the larger orders go into next year. Most of the larger orders that came in, in September will be revenue in next year, I should be precise.

Tycho Peterson: Thank you.

Operator: Thanks. The next question comes from Luke Sergott with Barclays. Please go ahead.

Luke Sergott: Great. Thanks for the questions. Just want to talk on China. I know you're coming in flat here. Things kind of improved sequentially. Just talk about what you're seeing there more broadly. Pull forward, you talked a little bit about the stimulus, the murders row of key questions. But how are guys thinking about 4Q and the exit rate? And ultimately, we kind of seeing some type stabilization here? Or is this just kind of like a one-off?

Frank Laukien: Well, good questions. I wouldn't read too much into starting backwards, Luke. Wouldn't read too much into the Q4 2025 exit rate. That's just Q3 and Q4 relatively weak on the P&L is pretty much the result of weak orders. And yes, and some current new currency and tariff challenges early in the year. We can work our way through those and offset them and more than offset them by next year. But only partially this year. So I wouldn't I would hesitate to take any given quarter this year as modeling some for next year. On China, yes, China was a little bit better, right, sequentially.

Not only in academics, not only some of the less than $10 million I think it was closer to $6 million or something like that. In stimulus green shoots China felt a little better in Q3. Perhaps all around than in Q2 when they were probably staring down a trade war barrel and maybe now maybe now there's maybe that gets but that seems to have even before the meeting that just happened recently that maybe the maybe the whole world is getting a little bit more optimistic that well, we know the new tariff setup and there are not likely to be major trade wars. But hard to say, right?

China was a little better in Q3 than in Q2.

Luke Sergott: All right. Thanks. And then from turning to the spatial and the demand that you guys are seeing there, can you talk a little bit about the cadence for the instruments versus the consumables? And then the push here and ability to use your existing scale as this kind of hits the core to push further with academic government customers or deeper into pharma?

Frank Laukien: Yes, good question. Yes, spatial biology was all right, slightly better orders or somewhat better orders in Q3, including international, I believe, as well. That's both consumables and instruments. Remember some of the new workflows like the whole transcriptome on the Cosmic of course, also will run on existing systems. They may need some upgrades, but you don't always need a new system for that. But I think there was also strength in Cosmic and Cellscape orders.

Painscapes is still very new, so a lot of that is sort of will take a little while and have a number of labs that are going to have placements of the Painscapes through this new spatial genomics and look at dysfunction in cancer and infectious disease. Before that turns into papers, before that turns into revenues. That's the set that's super interesting, but it's not going to be a big contributor yet, whereas Cosmics and Cellscape are doing well also including some of the consumables. So yes, Facial Biologies, is doing better. Of course, we could use more U.S. Academic funding. It was quite dependent well, two-thirds of that is academic government.

And one-third is biopharma, and so that strengthening in biopharma also is good for spatial biology. And as you know, that so far in The U.S, that's stronger than the EtaGov growth.

Luke Sergott: Great. Thanks.

Operator: The next question comes from Subbu Nambi with Guggenheim. Please go ahead.

Subbu Nambi: Hey, thank you for taking my question. Frank, some of the major end markets in 2026 like diagnostics and maybe semis, what do those look like next year? Can any tech be a low double-digit growth in your mind?

Frank Laukien: Yeah. I mean diagnostics is very important. For us, right? It's well above $500 million. They both are they've done well in 2025 both the clinical microbiology and the molecular diagnostics that are both in that infectious disease division. Multi biotyper, good growth very good growth in consumables and software and so on. Now in that business, I think it's 60% aftermarket which is service consumables, but also database subscriptions. So very healthy there. The diagnostics business, the Elevatec business primarily is a delight this year. It's growing nicely. It's expanding. It's this year 25%. So it's growing its margins. It's growing which is nice this year. It's actually I don't know the exact growth rate.

It's growing somewhere in single digits, maybe even high single digits. Which is lovely. Its placements have really outperformed significantly I know you can't take placements to the bank, but next year you will be. So they had a lot of placements of their InGenius and BeGenius stations. The commercial synergies with Bruker are really working. And they're getting into countries and into labs they previously couldn't get. So I think their placements are something like 20% or more ahead of their business plan. Which isn't revenue this year as when these things systems are placement under reagent rentals then it takes six months until you really have the revenue ramp.

But hopefully then you have five to seven years of really solid revenue. And consumables pull through. So that's going really well. Semi, Semi is you have to look at it on an annual basis. I think we had two this year, we'll have two quarters of orders and two quarters of not so fantastic orders. Over the year, it's all right. I think it's flattish this year. I don't think there's anything structural there. And revenue-wise, it's been a little weaker. We expect that to improve next year. So semi won't really to look at on an annual level. And it's a very nice margin contributor. Semi now all is approaching or is around $300 million in annual revenue.

So it's also pretty meaningful for us.

Subbu Nambi: Thank you for that, Frank. Just a follow-up. And it's very along with the Diagnostics business, has some of the best incremental margins. So those are very core to us. These are not niches for us even though we love the post-genomic era. Both of those are just really important core businesses. Can you unpack where you saw orders incrementally positive from a product perspective? Is it the lower price equipment? And then how have consumables been in back? Any color you could share there.

Frank Laukien: So it's prime for the for diagnostics, for molecular diagnostics and the Aliejac, Remember They're Primarily Active In Europe, in selected countries, in Asia, like not in China, for instance, in parts of Africa, parts of Latin America. And the strength there has been particularly in Europe. The placement strength that I mentioned. And no, I think small business. Can you repeat the question, Subbu? I'm sorry. What was I thought you were referring to diagnostics, but

Subbu Nambi: Yes. Was there My full question was diagnostics. Yeah. I'm sorry. I'm backing up. In general, the order strength that you saw this quarter where did you see, the strength coming from a product perspective? Either diagnostics or outside of diagnostics?

Gerald Herman: And I think Subbu, it's Gerald. I'd say that the orders strength in the third quarter was coming from larger ASP-based instruments. We did have some volume particularly coming out of our optics and AXS businesses. Which tend to have lower ASPs. But I'd say the bulk of the performance in the orders was particularly coming out of the European markets as well, just to clarify that. We saw considerable strength in the European markets both in the AccuCov side.

Frank Laukien: So I think I can answer it now. So it took me a second. The strength in orders in 2025 had very little to do with Diagnostics. Diagnostics is just coming along and it's fine. But the more discrete items were strength in aca gov outside of The U.S, biopharma and applied. And so that does none of those include diagnostics.

Subbu Nambi: Thank you for that.

Operator: And the next question comes from Casey Woodring with JPMorgan. Please go ahead.

Casey Woodring: Great. Thank you for taking my questions. On orders, historically, orders improved sequentially in 4Q in your business, but you've talked here today about some catch-up in academic and government in 3Q. So can you just maybe walk through what the range of outcomes looks like in 4Q from an order exit rate perspective? How safe is it to assume orders step up sequentially? Or are there scenarios wherein orders could be flat down in 4Q? I have a follow-up. Thanks.

Frank Laukien: Sure, Casey. Okay. So the in Echagov, Where We Observed A Little Bit Of Catch Up Was In The U.S. I don't think that there wasn't any hold back Well, in The U.S. And in China a little bit. In the rest of the world, think that catch up, I'm not aware of that. But China and The U.S. And Akagat have been holding back And that's why Q2 orders, for instance, in both of those geographies were weak. So to your second part of your question, Q4 is always strong. So there's the question for Q4 will not be will it be up sequentially over Q3 That's pretty much a given.

But whether what the trend will be year over year compared to Q4 of last year.

Casey Woodring: Got it. I hope that helps. And then yeah. No. No. That definitely helps. And then my second one, quickly, on backlog, I think last quarter you noted you had six point five months, and you talked about that going down to five months in a normalized environment. Maybe just walk through kind of how you're seeing that play out over the course of 'twenty six? Thank you.

Gerald Herman: Well, what I can this is Gerald. You see, what I can comment on is that we currently have about seven months of backlog through 2025, which is actually up now from the six point five months we quoted at the end of the second quarter. I mean, guess, to a large extent, it really depends on our 2026 performance is really going to depend on how we how it looks like for the fourth quarter in terms of revenue performance. Based on our guide, it looks like we will still carry considerable backlog into the 2026 period.

Casey Woodring: Right. K. Great. Thank you.

Operator: You're welcome. Thank you. And the next question comes from Brandon Couillard with Wells Fargo. Please go ahead.

Brandon Couillard: Hey, Joe. Thanks for taking the questions. Just a couple of housekeeping items. Can you give us an updated interest expense number for the year? What's the run rate for the fourth quarter? And is that a good figure to assume for '26? And is the impact of the share count from the MCP offering about 13 million shares? Thanks.

Gerald Herman: Yes. To answer your last question first, the answer is yes. Roughly. And then the first part, we'll go through Brendan, a little more modeling on the interest because it gets a little complicated. Partly because we you may know we had some gains, some foreign exchange gains that get covered in that line well. So somewhere in that range, but you're quoting on interest is correct, but we'll talk more about that in our modeling discussions.

Operator: And the next question comes from Josh Waldman with Cleveland Research. Please go ahead.

Josh Waldman: Hey. For you. First, I wondered if you could talk a bit more about what you're seeing in Europe. Was it primarily ACA Gov accounts that improved there? Or did you also see pharma and applied accounts improve well? And then I guess at this point, what's your confidence level on the sustainability and stronger orders? I mean, are there any one-off funding programs or anything like that released in the third quarter that leave you I guess, nervous about the durability of stronger orders there?

Gerald Herman: Yeah. I guess I'd say generally speaking, Europe was stronger. We did see strength in both PACAGOV as well as Applied and Biopharma. So those are good signs and I don't think there were specific one-offs related to those trends. So I think we're more confident. But I would say we need to see, as Frank has repeated, a couple of times here, we need to see the fourth quarter order performance in order to confirm that specifically. But all of those markets, in particular, on the Akagao side, European, we're not being driven by one-off improvements or orders.

Josh Waldman: Got it. Okay. And then a follow-up. I wondered if you could provide more color on what you're seeing out of pharma. I mean, sounds like you saw a sequential improvement in bookings. I forget if you commented on what orders look like year over year. And does it seem like accounts are trying to push orders through by year-end, or does this seem like maybe a change in how viewing medium-term investment in research tools?

Frank Laukien: Good questions. Josh, this is Frank. I'm not aware of any particular drives to get orders in place before the end of the calendar year. So I would take this as biopharma having invested less now for so there was a kind of a COVID or immediate post-COVID boom. Well, then there was a hangover, right? This was an and then some concerns about most favorite nations pricing and how much CapEx did they need to move things in production to The U.S, and many of them are now committed to doing that. Over it happen overnight.

So maybe that has cleared the decks a little bit to where they are investing in tools that will make drug discovery more efficient and give them better insights. And those tools, that's what we provide you. Yes, you need sequencers, but you need a hell of a lot more than that. To really have deeper disease biology and then drug target, drug mechanism of action insights. So that hopefully the still very poor yield and an enormous expense at length of bringing a successful drug to market will improve and that requires they are the biggest integrated fans of this hypothesis or thesis.

Or facts, I would say, that we are in the post-genomic era and we need to understand the disease biology and the drug mechanisms a lot better. To get better to get less attrition and more yield and better drug discovery. So they completely agree with that. They may not use the same terminology but that's how they're investing.

Gerald Herman: And I would just add that the third quarter performance on revenue was good, okay? And the order performance from biopharma across the globe was strong. The third quarter. An order perspective. Got it.

Operator: Guys. And the next question comes from Doug Schenkel with Wolfe Research. Please go ahead.

Doug Schenkel: Hey, good morning, guys. Thanks for fitting me in. Gerald, how do we balance what you've talked about in terms of on the cost savings initiatives, and, you know, like, you sound as good as ever on those. You've exhibited some confidence about what you can do in 2026 from a margin expansion standpoint? Seemingly in any growth environment? I mean, at one point, I think, last quarter, you talked about getting 300 basis points of margin expansion next year. Even in a flat growth environment. On the other hand, you know, I think you increased your assumption for organic operating headwinds by 45 basis points for the year, which is pretty material with one quarter to go.

So I'm just trying to figure out, like, how do we balance these things? And is there some risk that the benefits that you expect to occur over time are gonna take a little bit longer to show up in the P&L just because of maybe the environment we're in and the fact that I think a lot of these changes that you're making are being done outside The U.S. where regulations can work, against you. Again, I'm just trying to think about this as we, you know, try to set you guys up to with realistic targets for 2026?

Gerald Herman: Yes. Sure. Nice to hear from you, Doug. So here's what I'd say. First, our cost-saving initiatives will be and we expect them to be at the high end of the range we quoted this $100 million to $120 million for fiscal year 2026. And we're fully committed to that. And actually, we're well on track with that 95% of the actions that needed to be taken to realize that are already underway or have been fully implemented. So very confident with respect to that. And I think more generally, our expectation around margin expansion of closer to 300 is where we are. Even under relatively weaker revenue conditions for '26. That's the position we've taken.

And I think we're holding to that. I think the issue for us as you already know, I think Doug is some of these activities around cost savings do take a bit of time just because we have to go through a process particularly in Europe and a lot of our cost-saving actions are driven around Europe because of our footprint. So there's going to be a slight likely delay in some of this as we're going to see more of it hitting in 2026 as opposed to in the first. So that doesn't take us off the target. And let me also I mean, so we did get Europe, there are other economic problems and layoffs by other companies.

So we got very good cooperation, for instance, in Germany and France, which can be difficult from our workers' councils and committee d'entreprise. They've agreed. They've approved that what we're doing is reasonable and protects the core and all of that. So good cooperation. When Gerald said that, yes, Q1 will have so the $120 million for the year, we're very committed to that. And Q1 will have, I don't know, 90% or 5% of the run rate cost savings implemented. That's right. A few things just the way they're timed will come in, in Q2. But it's not going to be a big modeling difference, Doug or anybody else. But yes, that's how it flows.

And the $120 million is not some sort of a Q4 run rate. That's for the full year. Exactly.

Gerald Herman: And just to your earlier part of your question, I mean, did have with respect to 2025, we do have some mix challenges in the fourth quarter for 2025 that we didn't see in the previous year as well. So I think you're going to see some you did see a change in the overall guide from an organic operating margin impact with respect to the fourth quarter. So that's the explanation for that, Doug.

Doug Schenkel: Okay. I'll leave it there. Thank you, guys.

Operator: This concludes our question and answer session. Now I would like to turn the conference back over to Joe Kostka, for any closing remarks.

Joe Kostka: Thank you for joining us today. Bruker's leadership team looks forward to meeting with you at an event or speaking with you directly during the fourth quarter. Feel free to reach out to me to arrange any follow-up. Have a good day.

Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

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