BRKR earnings call transcript, November 4, 2026

Tech and semiconductor metrology franchise are expected to lead to significant revenue growth, acceleration, and further margin expansion. BRUKR's positive booking trends continued in the fifth consecutive quarter of BRUKR Scientific Instruments, or BSI, book to bill greater than one, as we see increasing strength in most of our end markets, and I will highlight three areas in particular. BRUKR. First.

advanced packaging. While the lead times on these orders are longer than most of our life science tools, we expect to see these semi-orders convert into revenue, mostly in fiscal year 27, and some in fiscal year 28. Speaking of artificial, speaking of AI, artificial intelligence, in August, we started a strategic collaboration with, and we did a minority investment in Atene. Atene technologies, a pioneer of self-driving labs, and agentic AI driven chemistry R&D. Atene integrates our ChemSpeed lab automation and Bruker analytical measurement. Instruments into its agentic AI workflows. The Atene lab in Boston includes ChemSpeed Robotics and Bruker Benchtop NMR for small molecule synthesis and catalysis in pharmaceutical R&D and process development. All right, let's dive into the numbers. Let's turn to slide four now. For the P&L performance in the third quarter, where we achieved significant margin expansion and non-GAAP EPS growth, driven by our focus on cost discipline and execution. Our third quarter, 26 reported revenues of 800. 174 million increased 1.6% year over year, with organic growth of 0.7%. Our third quarter, 26 non-GAAP gross and operating margins. 51.3% and 16.3% respectively, both up significantly year over year. Our Q3 26 diluted non-GAAP EPS was 50. 46 cents, up 24% from Q3 25. Moving to slide five, our year to date nine months Q3 26 revenues increased by 3.1% to 2.54 billion with organic revenue essentially flat.

Our year to date non-GAAP gross margin, operating margin, and EPS were all up nicely year over year, and their year to date performance is summarized on slide five. As Gerald will explain in more detail shortly, in Q3 and year to date, our free cash flow also has improved considerably, and we have made excellent progress with deleveraging. Please turn to slides six and seven now, where we highlight the year to date third quarter performance. of our now reorganized three scientific instruments groups, and of our best segment, all on a constant currency, or CER, and year-over-year basis. Year to date, the biosystems group revenue was 1.2 billion, up low single-digit percentage year-over-year in CER. Strength in biopharma and translational research was partially offset by weakness in ACA-Gov. Biosystems saw strong CER growth in Raman spectroscopy and in mass spectrometry, driven in part by the tough work acquisition, which was partially offset by softness in NMR. Year-to-date, 2026, our new or newly elevated microbiology and infection diagnostics group had revenues of $396 million, which increased in the low single-digit percentage, driven primarily by robust molecular diagnostics revenue growth. Turning to slide 7. Year-to-date, BRUKR nano revenue was $770 million with a low single-digit percentage. CER decline. Robust year-to-date growth in semi-metrology and biopharma was offset by weakness in ACCA, GOV and industrial. Semi revenues were down double digits in the third quarter, primarily driven by our previously communicated push-outs of semi-metrology.

Metrology instruments from the third quarter. We had been very explicit about that in our Q2 earnings call when Gerald gave Q4 color that we expected the $20 million push-out from Q3 in semi-conmetrology. Finally, year-to-date, best revenues were up 8.3% in CER, net-up intercom. company eliminations with strong growth in research instruments or RI and solid growth also in superconductors. Right. Moving to slide 8, we highlight our recent acquisition of Mimetas, a leading humanized organ on a chip or NAM. platform. NAM stands for New Approach Methodologies, a commonly used term in the industry and also by the FDA. I'll let you read some of the background on Mimetas. I think it's a reading slide rather than me going to every bullet. But I think it is very important to get the higher level perspective that in addition to multiomics and spatial and structural biology and AI augmented drug discovery, one of the pain points and one of the reasons for the failure of so many drugs when they come, when promising drugs come from, gets translated from mouse models or animal models to humans are toxicities, are off-target toxicity. that are unique to humanized models and human physiology. And Mimetas with its humanized organs on a chip, which can be nicely automated, which have many disease models, and are poised for very significant double-digit growth with high gross margins, we think. are probably the best type of systems of this type on the market, which is why after extensive research on that market we acquired a majority in Mimetas. We're very excited and we think this will complement our multi-omics spatial biology, structural biology in drug discovery, in particular drug discovery and development.

in a very important way. It's a high priority for just about every biopharma company. Right, on slide nine we touch on a few recent advances in functional proteomics with novel workflows for drug discovery and disease biology launched at the recent international UPRO conference in Singapore. Again I will not read every bullet but we had very significant further advances in this multi-DIA method on our TIM-SALTRA for bottom-up proteomics, for plasma proteomics, single-cell proteomics where we see in that net more peptides and protein groups and also more isoforms, sequence variants and all the other things that traditional MS-based methods or the affinity methods simply cannot see, but they're functionally very important for better AI frontier models or better drug discovery. On the right-hand side, our TIM-SOMNI continues. It continues to be in the market with significant orders and here are new workflows that are really very, very important, one in glycobiology. Where with our unique trapped electron-based fragmentation, I won't go into technical details, but it's really crucial to do this at scale, at speed and in very sensitive manners. And glycobiology is tremendously important, but has been traditionally very difficult to study. Moreover, oligonucleotides and native RNA analysis. is another important area, whether mRNA is a drug target or a potential drug, a potential RNA drug, and the instrument can perform outstanding workflows now in this area as well.

This bodes well for further rapid adoption in academic medical centers, which have good funding, as well as in pharma companies and biotech companies. All right, that about does it for me. In summary, the third quarter, we achieved significant margin expansion and non-GAAP EPS growth and our positive bookings booking trends continued. Our BSI organic bookings and BSI backlog are both up mid single digits percentage year to date. This helps de-risk our fourth quarter. And sets us up for meaningful further performance improvements and growth acceleration in fiscal year 27 and beyond. Let me turn the call over to our CFO, Gerald.

Thank you, Frank, and thanks everyone for joining us today. I'm pleased to provide more detail on BRKR's third quarter 2026 financial performance, starting in slide 11. In the third quarter 2026 financial performance, our results were roughly in line with our expectations on the top line, but meaningfully ahead of our expectations on margins and EPS, largely confirming the benefit of our cost-saving actions together with a positive mix in the quarter. In the third quarter of 2026, BRKR's reported revenue increased 1.6% to 860. $174 million with organic revenue growth of 0.7%. Acquisitions added 1.7% to our top line, while foreign exchange was a 0.6% headwind, resulting in constant exchange rate revenue growth. Of 2.4% year over year. BSI organic revenue declined 0.4% in the third quarter of 26, with BSI instrument revenue down mid single digits and BSI aftermarket. Revenue up high single digits organically year over year. The organic decline in the third quarter of 26 instruments revenue was primarily driven by the previously communicated push-outs of semi-metrology. Anthropology instruments from the third quarter. Geographically, on a year-over-year organic basis in the third quarter of 2026, European revenue was up low single digits percentage. America's revenue was roughly flat, while Asia-Pacific revenue declined in the mid single digits percentage. BSI revenues in China were up in the low double-digit percentage in the third quarter of 2026. And for our IMEA region, revenue was up over 30%. Our BSI segment order.

Thank you 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?

Hi, Frank, Gerald.

Thanks for taking my questions here. First one on margin improvement, margin expansion this quarter, great... to see that. But just wondering, you know, in terms of factors that give you confidence on the step up in the fourth quarter, it is still sizable, 500 bps sequential. So just wondering in terms of... Cost savings that you're seeing and recognizing in the quarter and fourth quarter, any gigahertz magnets that are landing in the fourth quarter, ACA.gov and other AI and the order... $20 million order shift that you talked about as well. What are some of the drivers that give you confidence on that step up in margin?

Good morning, Puneet.

Yeah, thank you for your questions. I think, you know, I mean, I think we've significant... ...de-risked the fourth. By my math, we do no longer need a 500 dip sequential step up. That was, I think, previously correct. But now... We need to step up from where we were at 16.3%, and I think we need to step up to the high teens, and that seems much more achievable, given that it's likely to be about a billion dollar in revenue quarter. And indeed, the recent U.S. ACA-Gov order pickup probably mostly will benefit us in 27. China ACA-Gov. Orders have picked up earlier, and they would begin to help us in Q4. The semi-shift, some of that goes into Q4, some of that may go into early 27. But that's all good. So I think the margin and the revenue margin EPS ramp into Q4, I mean, it's never without risk, but we think what we're seeing. Saying about the color there is prudent at this point in time. But I think this is much significantly de-risk with another strong Q3 and obviously the margin performance and EPS performance. In particular, makes it much more achievable.

Thanks for clarifying that.

And then on AI, Frank, obviously an important theme for a broker. You levered to it in multiple ways. Uniquely on the SEMI side and obviously the AI bio discovery as that starts to take shape as companies are investing more in discovery and platforms there. Can you maybe, is there a way to sort of quantify the contribution? Today from AI and then how are you thinking about 2027 here for AI overall across the enterprise? Thank you. Yeah, two pieces to that, as you've pointed out, the semiconductor metrology and within our best segmented RI, also some contribution to the ASML supply chain, ultimately, although that's still smaller because that goes into the latest and greatest tools that they are beginning to now. Get more adopted. That has been quantified. I think you've written notes on that. Others have been written notes on that, so I won't jump into that. And that continues to, I believe, the year-to-date order growth. In that area has been 30% or higher year-to-date. And again, it also was really strong in Q3 and order performance. So that's just humming along and obviously one of the very strong growth drivers in our... Deep Tech, broader Deep Tech area, but particularly in the semi-metrology and a little bit in the lithography supply chain. Bio-discovery or bio and chemistry discovery and materials. Bio-discovery benefits our KempSpeed automation orders. Kemp benefits our Sci-Fi software. And more and more, I think it will also benefit those Deep Biology 2.0.

Whatever you want to call it, that, you know, from bottom-up proteomics, of course, to isoforms, to incomplete proteoforms, top-down, glycobiology, spatial biology, and structural biology, I think, are all. There's an excellent article in the Wall Street Journal today where, yeah, taking more shots on goal, meaning on drug targets, is helping a little bit, but it may not lead to the expected breakthroughs of curing all diseases anytime soon, which is up. Anyway, but, you know, I think the deeper, unless you feed these frontier models with much, much deeper insights into disease biology and drug targets and mechanisms of action, we're not going to make all that much progress. So there, I think, maybe not uniquely, but I mean, more than any other company, I think we're positioned for really providing these disease biology tools. We think that will, you know, that's still not moving the needle so far. But I think that's quite promising for 27 and I think could be seeing a very significant ramp up in the next few years, whereas people begin to move from scratching the surface at higher with more shots on goal. Which is sort of the initial approach, which is fine to, I think, the much more impactful, deeper biology for which you need our tools. That was a long answer. I apologize. No, it's all good.

Thanks, Frank.

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

Our next question comes from Luke Sergat from Barclays. Please go ahead with your question. Great, thanks. Just wanted to follow up on the margin side.

Our next question comes from Sibu Nambi from Guggenheim. Please go ahead with your question.

Our next question comes from Luli from Bank of America. Please go ahead with your question. Great.

And our next question comes from Doug Schenkel from UBS. Please go ahead with your question.

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

Our next question comes from Kyle Boucher from TD Cowan. Please go ahead with your question.

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

Our next question comes from Albert Hugh from

Thanks for taking the question.

Maybe on the previous question on semis, you guys called out, you know, nothing's really changed here. So are you guys still expecting that business to be around, call it 300 million to end the year, mid to high single digit growth, 30% EBIT margins? And does that translate to just given the bookings to maybe like a mid-teens grower, call it 400 million business? Next year, appreciate the call and have a follow-up.

Good question. You may have stumped us slightly. I think we're not prepared to discuss that type, we're not, we don't give 27 guidance. We're certainly not giving granularity yet, but directionally, I can't reproduce all the math that you have in your head right now, but I think the direction is correct. And yeah, that business.

If anything would accelerate in revenue growth next year compared to this year, that is also correct. And it's order growth has already been very good. And we hope that we think that will continue into 27 and then, you know, beyond 27, we follow what the industry thinks and the industry hasn't really taken a position on 28, 29 yet, but they're pretty sure that 27, things will continue to hum along with very fast growth rates. Okay. Right. And then I think you previously called out some potential NIH budget flush in September. Is that what you guys saw that drove the double digit A&G bookings this quarter? And I guess, do you expect that to flow through given the six to nine months conversion time for A&G to grow next year? Or how should we kind of juggle just the strong double digit? I think the double digit bookings in Q3 had a lot to do with the week Q3 of last year, and maybe summing incremental orders that came, but there was a budget flush at NIH for sure. That's well documented. Most of that, we think, will help us with Q4 orders, and perhaps some of that will still. You know, take a little bit of time and go into Q1 orders. So the budget flush, that was not significantly responsible for improved bookings in Q3. I think it's just, you know, that a lot of pent up demand. People need the newer tools. At some point, they just do whatever it takes within their university or academic medical center or research hospital to get the new tools.

And they're getting used to this slightly less predictable federal funding. And they're just dealing with this new and, you know, they're settling into that and are now kind of back to where they're placing orders for what they really. And then the budget flush that did take place.

Thanks so much.

And with that, ladies and gentlemen, we will be ending today's question and answer session. I would like to turn the floor back over to Joe Koska for closing comments.