Earnings call transcript: Bruker Q2 2025 misses forecasts, stock drops

Bruker Corporation, a $4.92 billion market cap company, reported its earnings for the second quarter of 2025, revealing a decrease in both revenue and earnings per share (EPS) compared to forecasts. The company reported an EPS of $0.32, falling short of the expected $0.42, marking a negative surprise of 23.81%. Revenue came in at $797.4 million, slightly below the forecasted $812.81 million, resulting in a 1.9% revenue miss. In response, Bruker’s stock price dropped 15.11% in pre-market trading, reflecting investor disappointment. According to InvestingPro analysis, the stock appears undervalued despite recent challenges, with additional insights available through the platform’s comprehensive Pro Research Report.

Key Takeaways

• Bruker’s Q2 2025 EPS of $0.32 missed the forecast by 23.81%.
• Revenue of $797.4 million was below expectations, showing a 0.4% year-over-year decline.
• The stock price fell by 15.11% in pre-market trading following the earnings release.
• The company announced a cost-saving initiative targeting €100-120 million in annual reductions.
• Bruker remains optimistic about a partial market recovery in 2026.

Company Performance

Bruker Corporation experienced a challenging second quarter in 2025, with both revenue and EPS declining compared to the same period last year. The company reported a 0.4% year-over-year decrease in revenue, primarily due to a 7% decline in organic revenue. However, acquisitions and favorable foreign exchange rates partially offset this decline. InvestingPro data shows the company maintains a strong financial health score of GOOD, with a solid current ratio of 1.57 and an Altman Z-Score of 3.44, indicating financial stability. Despite these challenges, Bruker continues to hold strong positions in several key markets, including post-genomic tools and microbiology diagnostics.

Financial Highlights

• Revenue: $797.4 million, down 0.4% year-over-year
• Earnings per share: $0.32, down 39% from $0.52 in Q2 2024
• Non-GAAP operating margin: 9%, decreased by 480 basis points year-over-year

Earnings vs. Forecast

Bruker’s actual EPS of $0.32 was significantly below the forecasted $0.42, resulting in a negative surprise of 23.81%. Revenue also fell short of expectations, with a 1.9% miss compared to the forecast. This performance contrasts with previous quarters where the company had generally met or exceeded forecasts, highlighting the challenges faced in the current market environment.

Market Reaction

Following the earnings announcement, Bruker’s stock price fell sharply by 15.11% in pre-market trading. The stock’s current price of $34.25 is near its 52-week low of $32.20, indicating investor concern over the company’s performance and future prospects. With a beta of 1.18, the stock shows higher volatility than the broader market. This decline is significant compared to broader market trends, where many stocks have shown resilience despite economic uncertainties. InvestingPro subscribers can access additional technical indicators and valuation metrics to better understand the stock’s potential recovery path.

Outlook & Guidance

Bruker has provided a cautious outlook for the remainder of 2025, with revenue guidance set between $3.43 billion and $3.5 billion, reflecting an expected organic revenue decline of 2-4%. The company anticipates a non-GAAP EPS of $1.95 to $2.05, down 15-19% from previous guidance. However, Bruker is optimistic about a significant EPS rebound in 2026, driven by its aggressive cost-cutting initiatives.

Executive Commentary

CEO Frank Laukien stated, "We are aggressively executing on our expanded cost reduction initiatives with a goal of delivering strong margin expansion and EPS growth in 2026." CFO Gerald Herman added, "We remain cautiously optimistic about our fiscal year 2026 partial recovery in Research Instruments."

Risks and Challenges

• Continued pressure in the life science research instruments market
• Delayed stimulus for high-end research instrumentation in China
• Global tariffs and economic uncertainty impacting investment decisions
• Weakness in biopharma and industrial research instrumentation sectors
• Potential challenges in achieving cost-saving targets

Q&A

During the earnings call, analysts raised concerns about academic funding challenges and the impact of tariffs on Bruker’s competitive positioning. The company addressed its cost-saving strategies and provided insights into potential market recovery in 2026.

Full transcript - Bruker Corporation (BRKR) Q2 2025:

Conference Operator: Good day, and welcome to Bruker Corporation’s Second Quarter twenty twenty five Earnings Conference Call. All participants will be in listen only mode. After today’s presentation, 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 Director of Investor Relations.

Please go ahead.

Joe Koska, Director of Investor Relations, Bruker Corporation: Good morning. I would like to welcome everyone to Bruker Corporation’s second quarter twenty twenty five earnings conference call. My name is Joe Koska, 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 earlier today, during today’s conference call, we will be referencing a slide presentation that can be downloaded from the Events and Presentations section of 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, 08/04/2025. 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 third quarter twenty twenty five financial results expected in early November twenty twenty five. 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 and updated thoughts and assumptions around The U.

S. And global funding environment and tariffs. Gerald will then cover the financials for the 2025 in more detail and share our updated fiscal year twenty twenty five financial outlook. Now I’d like to turn the call over to Bruker’s CEO, Frank Laukien.

Frank Laukien, President and CEO, Bruker Corporation: Thank you, Joe. Good morning, everyone, and thank you for joining us on today’s second quarter twenty twenty five earnings call. Life science research instruments markets are under pressure at the moment with expected U. S. Academic funding headwinds and China stimulus delays for high end research instrumentation.

In addition, global tariff, pharma pricing and economic uncertainty in the second quarter have delayed biopharma and industrial research instrumentation investments. This resulted in lower than anticipated bookings and revenues in the second quarter. Our Bruker Scientific Instruments or BSI segment book to bill ratio was in the mid 0.9 range in the quarter, which was not great, but also not too bad. We anticipate that the third quarter will bring additional visibility on U. S.

NIH and NSF funding both for the remainder of fiscal year twenty twenty five as well as for fiscal year twenty twenty six federal research budgets. We are encouraged by several recent settlements of disputes between major universities and the federal government and we anticipate additional settlements to allow the resumption of grants for important scientific and medical research. On academic and disease biology research, we believe that our unique post genomic tools will be in significant demand in all geographies and in particular also when China releases its stimulus budgets for high end medical research instrumentation. Moreover, as U. S.

Tariffs for many major countries and trade blocks get settled in early August, we believe that global biopharma, industrial and semiconductor companies will accelerate their investments in next generation drug discovery and development systems as well as in research and quality control tools for advanced materials, clean tech and semiconductor research and production. We are observing where U. S. Tariffs on Swiss imports will settle and we anticipate that ultimately it will not be at 39%, the rate communicated last week. In a worst case scenario for Switzerland, we intend to leverage our other European Union and U.

S. Factories for products designated for The United States market. Bruker is poised to resume above market growth, particularly in the next generation systems needed for disease research and drug discovery in view of the greater biological complexity revealed by the emerging post genomic view. Similarly, the enormous investments in artificial intelligence are very beneficial for our advanced and often unique semiconductor metrology tools. Finally, we have strong positions in microbiology and infection diagnostics with an exciting roadmap of medically needed and differentiated capabilities.

Back to our second quarter, the stronger than anticipated organic revenue decline coupled with higher U. S. Tariffs and stiff currency trade wins from a declining U. S. Dollars caused margins and profitability to come in below our expectations.

On our first quarter call, we discussed our mitigation, our mitigating price, supply chain and cost measures, but these take two to three quarters before they fully benefit our operating results. Today, we are announcing a significantly expanded cost savings initiative that is expected to reduce our annual costs for fiscal year twenty twenty six by €100,000,000 to €120,000,000 annualized. These major cost reductions affect all parts of our business from supply chain and manufacturing to our commercial, administrative and R and D investments. These are difficult but necessary decisions to right size our cost structure to match the trough demand levels currently seen in the market. As a result of our weaker second quarter performance, we are lowering our guidance expectations for fiscal year twenty twenty five.

We now expect approximately flat constant exchange rate revenue growth and organic revenue decline to decline minus 2% to minus 4% for the year with a mid teens percentage non GAAP EPS decline year over year. Looking beyond 2025, even in a muted revenue growth scenario in fiscal year twenty twenty six, it is our intention to deliver very significant margin improvements and double digit EPS growth just based on our major cost reduction initiatives. If there also is a partial growth recovery in advanced life science research and drug discovery tools in fiscal year twenty twenty six, then this could provide additional tailwinds. Beyond 2026, we expect to return to our stated goal of organic revenue growth 200 to 300 bps above market, which we delivered many years in a row and with rapid margin expansion and double digit EPS growth once academic, trade and economic uncertainty abates. This is driven by our exceptional innovation in next generation disease research and biopharma drug discovery tools for the post genomic era.

This is also driven by other Bruker specific growth drivers from semiconductor metrology for the AI revolution to unique applied and diagnostic solutions. Turning to slide four for our Q2 twenty twenty five performance. As I just detailed in the 2025, we faced delays in many end markets, most notably biopharma and industrial, which drove both the top and bottom lines to come in below our expectations. Bruker’s second quarter twenty twenty five reported revenues decreased 0.4% year over year to $797,400,000 which included an FX tailwind of 2.9%. On an organic basis, revenues decreased 7%, which included a 7.2% organic decline in BSI and a 4.8% organic decline at BEST, net of intercompany eliminations.

Revenue growth from acquisitions added 3.7%, which implies a constant exchange rate CER revenue decline of 3.3 year over year. Book to bill in the quarter was in the mid 0.9% range. Our second quarter twenty twenty five non GAAP operating margin was 9%, a decrease of four eighty bps year over year as lower revenue absorption, additional tariff costs and currency headwinds were only partially mitigated in Q2 by our earlier cost and pricing actions. In our second quarter twenty twenty five, diluted non GAAP EPS was at $0.32 down 39% from $0.52 in the 2024 on organic revenue decline, impact of tariffs and foreign exchange headwinds. Gerald will discuss the drivers for margins and EPS later in more detail.

Moving to slide five, Our first half twenty twenty five revenues increased by 5% to €1,600,000,000 First half organic revenue declined 2.3% consisting of a 1.4% organic decline in Scientific Instruments or BSI and an 11.5% organic decline at BEST net of intercompany eliminations. Our first half twenty twenty five non GAAP gross and operating margin and GAAP and non GAAP EPS performance are all summarized on slide five. Please turn to slide six and seven where we highlight the first half twenty twenty five performance of our three Scientific Instruments Group and of our BEST segment all on a constant currency and year over year basis. In the 2025, BioSpin Group revenue was $4.00 $3,000,000 and was roughly flat year over year. BioSpin saw contributions from NMR, preclinical imaging and lab automation, while the scientific software business was soft.

BioSpin saw weakness in biopharma revenues and softness in orders both in academic and applied markets. For the 2025, CALID Group revenue of $566,000,000 increased in the low teens percentage with strong growth in microbiology and infection diagnostics driven by the MALDI Biotyper and the Bruker EleTech Molecular Diagnostics business. Our applied mass spectrometry business saw robust growth, which offset some softness in the life science mass spectrometry business. Turn to slide seven now. First half twenty twenty five Bruker Nano revenue was $5.00 $9,000,000 and grew in the low single digit percentage.

Spatial Biology contributed growth in the 2025, while revenues from Advanced X-ray were down year over year. Strength in Biopharma was partially offset by weakness in industrial markets. Finally, first half twenty twenty five BEST revenues declined in the low teens percentage net of intercompany eliminations due to softness in the clinical MRI market as well as a strong prior year comparison for the Research Instruments business. Moving to slide eight, we highlight some of our recent innovations in the second quarter at ASMS, obviously an almost unprecedented lineup of new and market changing instruments from our TIMMS product line as well as in NanoLC. I won’t go into these in detail today, but they significantly enhance our competitive position in traditional bottom up proteomics, while also getting us in ushering in a new era of functional proteomics and proteoform analysis with the TIMSSOMNI.

We had very good orders since ASMS already. And finally, a very serious play in bench top four d metabolomics with the TIMSS Metabo launch with very high sensitivity and because of the four dimensions and unprecedented annotation continents being very well received in the market. Let me move to Slide nine, probably the key theme for today. How are we navigating through this macro and research instruments weakness? You are aware of The U.

S. Academic funding disruption for high end research instrumentation for academic and medical research. China stimulus continues to be delayed, although our customers remain optimistic for release in the second half. And in the second quarter, we saw that drug discovery and industrial research tools saw CapEx delays and weakness in both of these segments. We’re looking forward to more visibility in what on what time frames they’ll recover once tariffs and other items settle in.

We also had more tariffs and FX cost headwinds, so a lot of headwinds in the second quarter. We focus on our industry leading innovation and continue our strategy to reaccelerate growth and enhance market share in the post genomic era in academic and medical research, but also very much in bio biopharma drug discovery tools when they come back. Very importantly, we’re broadly expanding our cost reductions, which we had begun previously, but we’re expanding those with a goal of $100,000,000 to $120,000,000 of annualized cost reductions to improve margins and profitability. And we’re obviously looking for a very significant step up in fiscal year of 2026, driven just by the cost reductions and hopefully some emerging recovery in the markets. Of course, we are seizing new opportunities in Spatial Biology and Multiomics, are very large growth drivers even if they’re muted at the moment, as well as new growth drivers in lab automation, scientific software, India improving semiconductor metrology for AI being an incredible opportunity, emerging growth in European chemical and explosives detection airport security, airline security and finally, our industrial research business in cleantech batteries fusion and we are adding to our consumables business organically and inorganically.

Conference Operator: So to

Frank Laukien, President and CEO, Bruker Corporation: wrap up, the second quarter was a challenging one for Bruker and we are aggressively executing on our expanded cost reduction initiatives with a goal of delivering strong margin expansion and EPS growth in 2026 even in a flat to low growth scenario. We are however cautiously optimistic for a fiscal year 2026 partial recovery and point to Bruker’s successful track record of rebounding very strongly from previous market disruptions in 02/2008, 2009 and in 2020 from which Bruker emerged with multiple years of double digit organic revenue growth in each scenario. We remain confident that Bruker’s innovation engine will continue to drive differentiated high value solutions in attractive markets. Our culture of disciplined entrepreneurialism and our Bruker management process will position us well for sustained financial success in the years to come. Let me now turn the call over to our CFO, Gerald Herman, who will review Bruker’s Q2 financial performance and updated fiscal year twenty twenty five outlook in more detail.

Gerald?

Gerald Herman, EVP and CFO, Bruker Corporation: Thank you, Frank, and thank you, everyone, joining us today. I’m going to go through more detail on Bruker’s second quarter and first half twenty twenty five financial performance starting on slide 11. In the 2025, our results came in below our expectations on both the top and bottom lines. In the 2025, Bruker’s reported revenue decreased 0.4 to $797,400,000 which reflects an organic revenue decrease of 7% year over year. Acquisitions contributed 3.7% to our top line, while foreign exchange was a 2.9% tailwind, resulting in constant exchange rate revenue decline of 3.3% year over year.

Geographically and on a year over year organic basis, in the 2025, our Americas revenue declined in the low double digits percentage. European revenue also declined in the low double digits percentage, while Asia Pacific revenue grew in the low single digits percentage despite a low single digit decline in China. For our EMEA region, revenue was up high single digits percentage. BSI organic revenue declined 7.2% in the 2025 with organic declines in all groups. BSI Systems declined roughly 10% and BSI aftermarket revenue was flat organically year over year.

Our order book performance in the BSI segment was down organically in the high single digit percentage year over year with softer academic government research orders in most geographies and a significant decline in biopharma orders in The U. S. Non GAAP gross margin decreased two seventy basis points to 48.6%. Q2 twenty twenty five non GAAP operating margin was 9%, impacted by weaker volume leverage, unfavorable mix, tariffs and foreign currency. On a non GAAP basis, Q2 twenty five diluted EPS was $0.32 down 38.5% from the $0.52 we posted in the 2024.

Our EPS performance was significantly impacted by the decline in the U. S. Dollar in the quarter, which resulted in a $06 headwind. Our non GAAP effective tax rate was 23.6% compared to 28.4% in the 2024, with the decrease driven mostly by favorable discrete items in the quarter. On a GAAP basis, we reported diluted EPS of $05 per share flat compared to the 2024.

Weighted average diluted shares outstanding in the 2025 were 151,700,000.0, an increase of 3,700,000.0 shares from the 2024, resulting from our follow on equity offering in May 2024. Slide 12 shows Bruker’s performance for the 2025, which has similar drivers to the second quarter. Turning to slide 13 now. During the 2025, we had a decrease in operating cash flow of $85,000,000 driven principally by the timing of tax payments and other items. We had a modest year over year increase in capital expenditures in the 2025, which resulted in a free cash outflow of $110,000,000 in the 2025.

Given the challenging market conditions, today we announced the expansion of current cost saving initiatives intended to take 100,000,000 to $120,000,000 of annualized costs out of the business. These actions cross all business units, all geographies and all functions within Bruker. This expanded cost program is already underway, but the majority of savings is expected in fiscal year twenty twenty six. These cost actions are expected to contribute approximately 300 basis points of operating margin improvement in fiscal year twenty twenty six even under flat or muted market demand conditions. Turning now to slide 15.

We’re updating our full 2025 outlook to reflect Q2 results and current market tariff and foreign exchange headwinds. Our outlook for fiscal year twenty twenty five now assumes revenue in a range of $3,430,000,000 to $3,500,000,000 with an organic revenue decline of 2% to 4%. Contribution from acquisitions is expected to be approximately 3.5%, and we now expect a foreign currency tailwind of 2.5% on the revenue line. This leads to updated reported revenue growth guidance in a range of two to 4% with approximately 0.5% constant exchange rate growth year over year. For operating margins in 2025, given soft market conditions, we now expect lower organic revenues, expected M and A dilution and tariff on foreign exchange headwinds to lead to an approximately two ten basis point decline in operating margins year over year.

This anticipated full year 2025 operating margin decline consists of headwinds of 40 basis points from 2024 M and A activity, 60 basis points from tariffs, 90 basis points from foreign exchange, as well as a 20 basis point decline in organic operating margin. On the bottom line, our updated fiscal year twenty twenty five non GAAP EPS is expected to be in a range of €1.95 to 2.05 which implies non GAAP EPS down 15% to 19% compared to fiscal year twenty twenty four. The midpoint of our updated EPS guidance is down €0.44 from our previous guidance, primarily driven by roughly $50,000,000 decline in expected fiscal year twenty twenty five revenue associated with the present trough in global academic, biopharma drug discovery and industrial research instrument markets as well as a higher foreign exchange headwind than previously expected of an additional €05 We expect a very significant EPS rebound in fiscal year twenty twenty six based on our significant cost cutting initiatives with or without meaningful revenue growth. Other guidance assumptions are listed on the slide. And our fiscal year twenty twenty five ranges have been updated for foreign currency rates as of 06/30/2025.

With respect to the 2025, we expect relatively weak organic revenue performance again with mid to high single digits percent decline year over year in the 2025. On EPS, we expect non GAAP EPS for the 2025 to be similar to EPS in the 2025 with a reacceleration of EPS expected in the fourth quarter. To wrap up, market, tariff and foreign exchange headwinds impacted our second quarter twenty twenty five. We remain cautiously optimistic about our fiscal year twenty twenty six partial recovery in Research Instruments and are very committed to significant margin expansion and EPS growth in fiscal year twenty twenty six and beyond. And with that, I’d like to turn the call back over to Joe.

Thank you very much.

Joe Koska, Director of Investor Relations, Bruker Corporation: Thanks, Gerald. We will now begin the Q and 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?

Conference Operator: Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your touch tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your questions, please press star then 2.

The first question comes from the line of Puneet Souda with Leerink Partners. Please go ahead.

Puneet Souda, Analyst, Leerink Partners: Yes. Hi, Frank, Joe. Thanks for taking my questions. First one on the guide, I understand the magnitude of cut. But maybe just given the backdrop of the markets, could you parse out why is the backlog, which has been strong, why is that not helping this year?

And how should we think about you talked about book to bill, but how should we think about the recovery here in the fourth quarter, given that’s an important quarter for from an instrumentation perspective? And then on fiscal twenty twenty six, Gerald talked about recovery there. How should we think about fiscal twenty twenty six? I know it’s a bit early, but would love your thoughts there.

Frank Laukien, President and CEO, Bruker Corporation: Thank you, Puneet. So backlog, we are using our backlog to some extent. Obviously, you can’t accelerate it at will as in delivery times production and delivery times are very much planned and locked in by the customers also. Our backlog has come down slightly from seven months to six point five months. So we are leveraging using that.

Yes, we think it’s actually our Q4. I know Q4 has a bit of a ramp, but we’re actually feeling pretty comfortable with that with all of our financial planning. I think that looks doable. And as we as Joe had cautioned, Q3 we think will be still somewhat weak. A little too early to talk about 26%.

We just wanted to make sure that even in the no growth scenario, we can deliver very significant margin expansion and EPS growth. Whether next year will be no growth or a partial recovery of a few percent growth, we don’t have the visibility yet and we hope to gain that in the next one or two quarters. Obviously, lot of things, a lot of moving pieces still, especially when it comes to U. S. Federal budgets.

Puneet Souda, Analyst, Leerink Partners: Got it. And then on the UHF magnets, I didn’t apologize if I missed this. I would love to know if you’re expecting that in any third quarter or fourth quarter. And there was a recent acquisition in the space of the BD assets. That channel sells your MALDI bio typer.

Do you expect any impact to the MALDI and the sales from that? Obviously, that’s a LCMS company that acquired those assets.

Frank Laukien, President and CEO, Bruker Corporation: So presently ultra high field, we don’t expect an ultra high field revenue recognition in the third quarter. We do expect one in the fourth quarter on that topic. Then you’re talking about the BD microbiology business in an acquisition process. Is that what’s yes. So

I we’ll mean, when I don’t know because obviously if Waters closes that in early twenty twenty six, we’ll see what their intentions are. Keep in mind that in these diagnostics businesses, quite honestly, the little bench top, all these top that’s 1090% is the all the assays, the content, all the regulatory approvals and all. So we can only observe that when Danaher, which has the SCIEX mass spec divisions, when they acquired Siemens microbiology, they continue to work with us on the Beckman Coulter diagnostics business in an excellent manner going forward and we’re tempted by, hey, we can build a mass spec. Anybody can build a mass spec by the multi biotyper franchise that has worked extremely well with BD. Hopefully, that will continue.

But we don’t have any until that closes, we will see in ’26, I guess. If someone wanted to develop something like this, it would be a very, very large five year investment. And by that time, of course, we’re moving on. So anyway, but it would be speculative. Quite honestly, we don’t expect it, but we don’t know.

Puneet Souda, Analyst, Leerink Partners: Got it. Okay. That’s helpful. Thanks, Frank.

Frank Laukien, President and CEO, Bruker Corporation: Would point out that we obviously sell more than half of our multi bio diapers ourselves directly. So if at some point a channel was no longer available, I think we could handle that very well.

Conference Operator: Thank you. Next question comes from the line of Tycho Peterson with Jefferies. Please go ahead.

Tycho Peterson, Analyst, Jefferies: Hey, thanks. Frank, I want to push on the cost outs. And really, idea here is earnings today are 30% below where they were ninety days ago, and then only 5¢ of that is is FX. I know you’re protecting the p and l now, but a couple things. I guess, why didn’t, you know, you initiate some of these these cost out sooner?

And are you committing to the 100,000,000 to $120,000,000 regardless even if the top line does start to come back?

Frank Laukien, President and CEO, Bruker Corporation: Good questions, Tycho. So we did start earlier. We early in the year when before any of the headwinds appeared, had an initial savings program where we just tried to grow our expand our margins more than what we had guided to initially. And we had planned an additional $25,000,000 a new $25,000,000 cost savings plan. We then when the tariffs began to appear, we expanded that to $50,000,000 plus in a second phase and which is good because most of the cost savings are kicking in next year, but about $30,000,000 of cost savings are kicking in and are part of our guidance for fiscal year twenty twenty five.

So the bigger effect will be in 2026 admittedly, but at least we do have $30,000,000 about $30,000,000 of cost savings in our fiscal year twenty twenty five guide. To the last point, Tycho, yes, we are completely committed and dialing dialed in for the 100,000,000 to $120,000,000 in cost savings. We hope to be at the upper end of that. And that’s going we expect that to happen independent of market conditions or recovery. If that gives us in a flat scenario 300 bps of margin improvement next year, that’s great.

And if the growth comes back, we don’t expect it to snap back fully, but comes back partially wonderful, then we can deliver more margin expansion and EPS growth. But we’re completely committed to that, yes.

Tycho Peterson, Analyst, Jefferies: Okay. And then on the growth side, if I go back to our conference in in June, you know, you had effectively committed to 4% growth in 26%. Now it seems like you’re you’re not wanting to go there. Maybe just talk about what has really changed, know, in the past, two months here on the growth side? And then maybe just before I jump off, one for Gerald on leverage.

Over four turns, but the covenant is 3.5 turns. Can you maybe comment on that dynamic as well?

Frank Laukien, President and CEO, Bruker Corporation: Okay. I’ll take the first part. So we were indicating at your conference that we didn’t expect growth in 2026 to come back to more traditional for us 6% to 8% levels. And that at that point, we were a little bit more optimistic that it might be maybe it wasn’t a commitment to that, but we were speculating it could be 2% to 4% organic growth next year. What has happened is that somewhat as expected The U.

S. Academic and China academic stimulus money is not flowing yet. That was somewhat expected and expected I think when we saw you at your conference. The additional U. S.

Biopharma weakness in orders was for high end drug discovery research instrumentation. I know it doesn’t hit all companies equally, but for research instrumentation we saw a significant slowdown there. And we’ll see whether once tariffs settle and some of the other political settlements kick in whether that additional headwind goes away or abates in the second half of this year and that will of course in part drive 26%. We also saw because of the economic and tariff uncertainty that’s certainly our interpretation. We saw general Europe, U.

S. And China weakness in industrial research instrument investments. So that was also something that became clear in the second half, which is why we’re more muted in we don’t have growth expectations for 2026, but we do want to be realistic and ready for a no growth scenario. That’s not our expectation. We don’t have an expectation yet, but I want to make sure that we can do the significant margin expansion and double digit EPS growth even without growth.

But please, my words are even without growth, we hope for some modest growth or partial recovery. We don’t know we don’t we cannot give guidance for 2026 of what that might be.

Gerald Herman, EVP and CFO, Bruker Corporation: And Tycho, on your question regarding leverage ratio, we don’t comment specifically on ratio dynamics quarter by quarter. I mean, can tell you that we have satisfied our debt covenants for the first and second quarters of 25,000,000 And we have a target, as I think we’ve discussed, directly in around that 2,700,000.0 range, and that’s what we’re working towards.

Frank Laukien, President and CEO, Bruker Corporation: Over several. Over Over over several.

Tycho Peterson, Analyst, Jefferies: You.

Conference Operator: Sure. Thank you. Next question comes from the line of Brandon Couillard with Wells Fargo. Please go ahead.

Brandon Couillard, Analyst, Wells Fargo: Thanks. Good morning. Gerald, just a

Analyst: follow-up there. Could you unpack the free cash flow burn in the second quarter? How much was one time? And what are you expecting for operating cash flow in the second half? And why is the CapEx coming down by a larger degree?

Gerald Herman, EVP and CFO, Bruker Corporation: Sorry, I wasn’t sure I caught the last part of your question.

Frank Laukien, President and CEO, Bruker Corporation: How is the CapEx coming down?

Brandon Couillard, Analyst, Wells Fargo: Why is the CapEx coming down?

Gerald Herman, EVP and CFO, Bruker Corporation: Yes. I think our CapEx let me just add the last part of your question first. So the CapEx is planned to scale down. We have dialed that back for the third and the fourth quarters. Mean, I we do typically have programs that are already in motion for the first and second quarters.

And that’s why you see the CapEx levels where they are. Yes. And on the cash flow burn, yes, we did have a couple of what I would describe as unusual outflows in the second quarter related specifically to some tax payments, which we highlighted. Those we don’t expect to recur. So those will we expect to get back to a normal cash flow.

And Brandon,

Frank Laukien, President and CEO, Bruker Corporation: those were sizable. Those were 50,000,000 to $60,000,000 including some tax payments for that are prepayments, some of which we expect to recover. But yes, there were some sizable tax payments in that second quarter.

Analyst: Okay. That’s helpful. And then Frank, think Gerald said BSI aftermarket was flat in the quarter. Can you kind of unpack what you saw between Diagnostics and maybe some A and G customers and just surprised to see the aftermarket utilization kind of flat in the quarter? Thanks.

Frank Laukien, President and CEO, Bruker Corporation: That granularity we do not have. Obviously, the Diagnostics business has been growing very nicely sort of according to plan, although placements for the EleTech Molecular Diagnostics business, which you don’t see in revenue placements, new platforms going out there generate future revenues, but placements there that’s one of the highlights of the quarter or for the first half of the year are way ahead of our plan. So the Elevatek business in placements is doing great. And in terms of growth and margin expansion, it’s according to plan. So that gives an indirect partial answer to what you’re saying.

Namely, are, of course, 80% or 90% consumable space. And they or as well as the multi biocide for consumables are doing well. Therefore, aftermarket in other segments was also down partially, but we don’t have granular percentages on that. Hope that helps.

Conference Operator: Mr. Kriyad, are you done with your question?

Luke Segart, Analyst, Barclays: Yes.

Gerald Herman, EVP and CFO, Bruker Corporation: Great. Thanks.

Conference Operator: Thank you. Next question comes from the line of Luke Segart with Barclays. Please go ahead.

Brandon Couillard, Analyst, Wells Fargo: Great. Thanks. Just wanted to talk a little bit about like the underlying dynamics as you think about that more muted growth in the ’26, particularly around China because we’ve heard from peers right now that they’re starting to see some of the stimulus flow through. So have you guys started to see any of that? And then as you think about those dynamics in the ’26, a more muted growth, also following up here on Tycho’s question, kind of is that just assuming the current market environment just continues there?

Just trying to figure out like if China should start getting better, what would in that more muted growth scenario, what’s getting worse?

Frank Laukien, President and CEO, Bruker Corporation: Well, a muted growth scenario in our maybe we should a muted growth scenario is still a growth scenario. Right now, we’re seeing a decline in our scientific and industrial and biopharma research markets. So a muted growth scenario, even a no growth scenario next year would be better than the headwinds that we’re observing right now. We don’t mean muted growth scenario, meaning a decline next year, at least at this point. That’s not what we’re anticipating.

So maybe with that clarification, we also do not expect a market growth or for us a 6% to 8% organic growth snapback next year. Hopefully, we’ll get there by 27%, but let’s not comment on that one right now. China stimulus for high end research instrumentation, we have not seen those releases yet. We’ve seen reasonable tender activity in China lately, including into July, but that wasn’t necessarily the high end stimulus funding. That was just normal China activity, which maybe is getting a little bit stronger.

Our Chinese customers that are looking for shovel ready large projects that include NMR and mass spec and high end microscopes remain very optimistic that this is just a question of time until the provinces release it, Perhaps once there is greater clarity or maybe there is greater clarity that there may not that there’s probably isn’t going to be an all out China U. S. Trade war during that time. We think the provinces held back to see whether they needed a rainy day fund. Anyway, so China stimulus not released yet for our high end research instrumentation and remarkable optimism by the customers that it’s going to happen.

We just don’t know exactly when. We do also expect that as tariffs settle in and the new economic world order is emerging for trade that CFOs in major industrial and biopharma companies will be less reluctant to release CapEx investments because they do need the research capabilities, whether it’s industrial material, semiconductor or, of course, drug discovery. So in that sense, we expect an improvement in 2026 compared to 2025, but we cannot quantify it at this moment. Having said all of that, and we don’t want to rely on that improvement even with no growth, we expect to deliver the 300 bps or greater in margin improvement. That’s

Brandon Couillard, Analyst, Wells Fargo: That’s the takeaway. Okay, great. Thanks. Then

Frank Laukien, President and CEO, Bruker Corporation: for a follow-up, when

Brandon Couillard, Analyst, Wells Fargo: you’re we’ve talked about this a little bit before about with the NIH and the or The U. S. Academic funding issues. And how you ultimately kind of see this shaking out, it’s more of a democratization from the coast or from the IVs of the high end users of the institutions going more towards like state systems and things like that. So are you starting to see do you have an update on how you kind of see this ultimately playing out with the funding releases and over the next few years?

Frank Laukien, President and CEO, Bruker Corporation: We have we can read some tea leaves, yes. So I think well, I don’t think NIH budgets will be flat or up. I don’t think they’ll be down 40% either, ditto, for NSF or DOE researchers. So We assume that the deal will be that they’ll be down and that we’re if they’re down 20%, that’s not unrealistic from what we’re expecting, but maybe they’re only down 10%. We shall see.

So that’s the bigger picture. The other trend that you’ve mentioned that this is not only temporarily, but longer term, going to be a more level playing field away from the coast or also investments that aren’t primarily in Massachusetts and Northern California. I think that trend political trends, I continue to see that. So I think some very excellent universities elsewhere may be able to get a bigger piece of the pie. And this is even after some of the already announced and potentially pending settlements of the government with some very well known universities.

We do see NSF for 2025 calling for some final presentations on big ticket NMR items. I don’t know whether what they will do with that and whether there is then 2025 funding that may still come through even while we’re mostly focused on ’26 budgets. There are some encouraging signs. We a couple of things went through with NIH budgeting and the customers got ordering from us two days later. But it’s not needle moving yet.

So it’s early days and we don’t have clear visibility yet. There are some signs that maybe the worst of the academic funding crisis could be over soon, but we do not expect a snapback to the full growth rates we had previously.

Brandon Couillard, Analyst, Wells Fargo: Great. Thank you.

Conference Operator: Thank you. Next question comes from the line of Subbu Nambi with Guggenheim. Please go ahead.

Subbu Nambi, Analyst, Guggenheim: Hey, guys. I had a question on 2025 guide itself. If the cost savings aren’t hitting until 2026 and the headwind to EPS is getting worse with FX, how are you thinking about the second half just given the soft orders in the quarter?

Frank Laukien, President and CEO, Bruker Corporation: Super good question. So we do think that of our cost savings for the full year ’25, about $30,000,000 of cost savings will kick in and will benefit us this year. They’re being overwhelmed by the headwinds from the previous M and A, from the organic decline of 2% to 32% to four percent that we’re now projecting as well as currency and tariffs. But they are meaningful. Just to a bigger they’re kicking in to a much greater extent than in 2026.

And of course, we’ve only recently within the last several weeks have expanded our cost cutting initiative very significantly and more than doubled it from what we had previously already planned to counteract tariffs. Did that answer your question, or did I miss something, Subbu?

Subbu Nambi, Analyst, Guggenheim: No. That did, Frank. I was just hoping for some more granularity in terms of the bridging between revenue and EPS to hit the 4Q ramp. But partially, definitely answered the question.

Gerald Herman, EVP and CFO, Bruker Corporation: Subbu, it’s Gerald. I’ll just add Frank’s reference to that $30,000,000 the bulk of that’s going to hit for fiscal year twenty twenty five in the fourth quarter. So we’re and then the remaining larger majority of it is going to hit in fiscal year twenty twenty six. So we are seeing some improvement in our guide expectations around the fourth quarter versus the third quarter, just to help you with respect to that.

Subbu Nambi, Analyst, Guggenheim: Perfect. Thank you, guys.

Conference Operator: Thank you. Next question comes from the line of Dan Brennan with TD Cowen. Please go ahead.

Joe Koska, Director of Investor Relations, Bruker Corporation0: Great. Thank you. Thanks for the questions. Just on MAH, Frank and Gerald. Frank, you’re obviously the largest U.

S. Academic government player amongst the large tools. So you should have, I think, more skin in the game and a view here. Kind of you’re thinking about down 10% to 20 and we’ll see where things land in 2026. But I think there’s been more optimism, I think, been raised here given the Senate appropriation, saying up 1%, and folks think that a CR could be likely.

So I’m just wondering when you think down 10% to 20% kind of A, what’s the mechanism to get there? And B, if things were better, would you expect your customers would spend that money? Or what does your commercial team think about? Would they be reticent just given recissions and things like that?

Frank Laukien, President and CEO, Bruker Corporation: So the 10% to 20%, I want to be I don’t have an expectation. There’s been too many surprises to have an expectations fiscal year twenty twenty six budget. I know the Senate Committee marked it up and had a small increase and the administration was initially setting for a 40% decrease. I just want to be prepared for NIH budgets being down 20% for ’26 and deliver the margin expansion. For this year fiscal year twenty twenty five, we expect U.

S. Academic government to be down 20% to 25%. That’s what we said last quarter already. So this is a fiscal this is our calendar year 2025. And that plays out about as we said so far, it’s down about minus 15% for the first half of the year.

And so by for the full year 2025 calendar year for us, U. S. Academia being down 20% to 25% seems like a realistic expectation. I think we hit I don’t think it’s going to be worse than that. So funding is still flowing.

And then for next year, as I said, I have no predictions. I’ve stopped making predictions there. I just want to be prepared for a 20% fiscal year 2026 government fiscal year 2026 NIH budget reduction. And if it’s better than that, I’ll be delighted and we can more can flow through our bottom top and bottom line in 2026.

Joe Koska, Director of Investor Relations, Bruker Corporation0: Great. And maybe

Frank Laukien, President and CEO, Bruker Corporation: I think customers will spend in a heartbeat. If they get grants, they can’t give the grants to universities who are struggling otherwise financially. When they get specific grants, think they’ll order in a heartbeat.

Joe Koska, Director of Investor Relations, Bruker Corporation0: That’s great. Thank you. And then maybe just one on the backlog and kind of bookings. Obviously, book to bill has been weak now for, I think, four or so quarters. Can you just remind us in a given year what percent of your revenue growth comes from that backlog?

What’s book and bill? I think there’s been some concern like could book or even grow in ’26 just given you had four consecutive quarters of week book to bills, but obviously bookings turn up and that would support growth. So can you

Brandon Couillard, Analyst, Wells Fargo: just walk through a little

Joe Koska, Director of Investor Relations, Bruker Corporation0: bit of kind of the visibility and the mix between conversion and kind of new turns? Thank you.

Frank Laukien, President and CEO, Bruker Corporation: Yes. I mean, we now have aftermarket consumable service software of more than $1,000,000,000 so it’s become a significant it’s become a meaningful part of Bruker that, of course, you know, tends to flow turn into revenue pretty much in the quarter when it gets when it gets ordered. We also have smaller, you know, bench top and, you know, sub $100,000 scientific instruments that very often, you know, achieve revenue in in the same quarter or within two or three months after they get after they get ordered. So some things maybe maybe, you know, there’s some part of our revenue that turns more quickly, And then there’s, of course, some revenue where sometimes order to revenue can be eighteen to thirty months or so. So we have that mix.

So our backlog is still elevated at six point five months. This is the BS this is the backlog of six point five months. We expect that eventually to level out with a new mix as we have more consumables, more Elitec and things like that, more now we added some metabolomics consumables and some therapeutic drug monitoring consumables with some recent smaller acquisitions. So we expect that six point five months eventually to go down to about five months of backlog as the new normalized level. So we still have some cushion from backlog for the second half and for next year.

But of course, we also need the bookings.

Joe Koska, Director of Investor Relations, Bruker Corporation0: Got it. Great. Thank you, Frank.

Conference Operator: Thank you. Next question comes from the line of Patrick Donnelli, Citi. Please go ahead.

Analyst: Hey, guys. Thanks for taking the questions. Frank or Joe, want to touch a little more on the second half cadence. The 4Q step up still seems pretty steep. I mean I think if you’re talking about 3Q looking at similar earnings, call it $0.32 it implies around $0.90 in 4Q.

And again, the revenue kind of stepped up with that. So I just want to talk through the visibility into that 4Q number. It did sound like things are maybe getting a little more challenging at the end of the quarter. So can you just talk about the visibility and confidence in that 4Q ramp?

Gerald Herman, EVP and CFO, Bruker Corporation: Yes. Patrick, it’s Gerald. I’ll take this, and Frank may want to add some more color. So just generally, in terms of the scaling or graduating this into the fourth quarter, as you already know, our fourth quarter is really not a quarter. It tends to be more like a 30 of the number on an annualized basis.

So we do see a more significant ramp historically. And I we have no reason to believe that that will not happen for 2025. And fundamentally, I would also say, as I mentioned earlier in the comment to Subaru, we do have some cost savings that are going to get kicked into the fourth quarter that’s already planned and scheduled. So we’re pretty confident that you’re going to see a pretty significant lift in the operating margin and EPS performance for the fourth quarter. I think your math as usual Patrick is not terribly far off what our estimates are for the fourth quarter.

So that’s kind of the I’d say at a high level, our expectations are still some flat to down revenue growth for the fourth quarter given market conditions, but improved profitability given the scale. We get as you already know, we get significant leverage down to the bottom line on higher volume and the expectation is

Frank Laukien, President and CEO, Bruker Corporation: And this is just typical for us. We tend to have pretty huge fourth quarters. And every year we do and then some often it’s even better than what we had anticipated to our fourth quarter pattern. So we feel comfortable with the cadence. Two more questions perhaps?

Analyst: Yes, sure.

Conference Operator: Thank you. Next question comes from the line of Josh Waldman with Cleveland Research. Please go ahead.

Luke Segart, Analyst, Barclays: Good morning, guys. Thanks for taking my questions. Two for you. First, Frank, on the academic side, I think Gerald mentioned softer academic orders in most geographies. I wonder if you could comment on what you’re seeing in Europe.

Is that market getting worse on the academic side? Or and I guess more broadly, are there other geographies that, stepped down unexpectedly? And then within The US, academic environments, wondered if you could talk on the timing of potential revenue recovery. I mean, how long would it take to kinda work through the software order book to flush this kinda, like, through the through the revenue side?

Frank Laukien, President and CEO, Bruker Corporation: K. I’m sorry. The on the academic

Luke Segart, Analyst, Barclays: Yeah. When on the academic side, when would you need to see a recovery in orders for that to show up in revenue? And does it hit 26?

Conference Operator: Yeah. So

Frank Laukien, President and CEO, Bruker Corporation: clearly, on the academic orders, two bad guys are The US and China. For us, that’s where we have the most pronounced reduction in orders in the first half from the academic and academic medical research market. Europe, rest of APAC, that just fluctuates up and down. There’s really no trend that’s discernible there. Q2 wasn’t strong, but I don’t I think that’s if you look at it then over several quarters then it’s The U.

S. And China that I think are crucial in academic side. How long well, obviously with less backlog we can do faster deliveries. So there are some products ultra high field NMR or very large stem microscopes or so that indeed sometimes take one or two years to deliver. But it’s a 26 story even if orders came in in August, September.

I don’t expect a lot of I don’t expect that necessarily. There could be some U. S. Orders that come through before the end of our fiscal year at the September. There’s a possibility of that.

By now, these are higher end systems. This will go into 2026. I don’t think there is any step up to be expected in 2025 anymore.

Luke Segart, Analyst, Barclays: Got it. And then, Frank, tariffs. I’m curious if you think you’re seeing tariffs negatively impact your competitive position and new opportunities at all? I’m thinking on the price or surcharge front, does it seem like customers are either holding off on placing orders because of price increases or surcharges or maybe even looking to other suppliers?

Frank Laukien, President and CEO, Bruker Corporation: Yeah. If I look at each of our market segments, in spatial biology, main competitor is U. S, we’re U. S, NMR, main competitor is Japanese, where European Union ended up at a level playing field with the new tariffs. In mass spec, a lot of the other mass spec companies manufacture in Europe, also in Germany, in Singapore, etcetera.

So and you go down the line, X-ray, it turns out that there hasn’t been a significant distortion competitively from the new tariff picture. Again, we’re still observing Switzerland. That’s obviously somewhat of a pathological number at the moment. We expect that to be less and maybe be more in line with what we have in Europe or from Malaysia. And either way in NMR or in MRI, we have the most flexibility to say, okay, I mean, almost immediately could turn on a dime and say any of these systems for The U.

S. Market come from Germany or from France where we have large fab factories. So there we could move very, very quickly if come August 7 that Swiss number was still extraordinarily high for a while. So the short answer would have been we think it’s we think there is no competitive shifts based on that. It’s just a cost headwind.

Right. We’ll have one more question and then we’ll wrap things up for today.

Conference Operator: Thank you. Next question comes from the line of Rachel Wattensdall with JPMorgan. Please go ahead.

Joe Koska, Director of Investor Relations, Bruker Corporation1: Hello. This is Martha Zaremba on for Rachel from JPMorgan. Thanks for taking the question. I just wanted to clarify your comments on tariffs just now. What are you assuming in your guide for Swiss tariffs at this point?

Are you assuming 39% or something lower? And then perhaps more broadly, if you could give more color on your updated tariff assumptions given the changes in Swiss tariffs, but also European tariffs? Thank you.

Frank Laukien, President and CEO, Bruker Corporation: Yes. For European Union and Israel, we’re 15%, where Malaysia, we’re at 19%, Switzerland, we’re presently modeling at 15%. In a worst case scenario that we didn’t shift supply chain and it was 39%, that could be an additional €10,000,000 hits that we presently don’t have here. But we think that’s just not going to happen. A, we think the number will be lower.

And B, in that case, we will just not ship from Switzerland. We will build our NMRs and which is primarily an NMR story and make them in Germany or France. So that’s why I think our modeling is appropriate.

Joe Koska, Director of Investor Relations, Bruker Corporation1: Thank you.

Conference Operator: Thank you. This concludes our question and answer session. I would like to turn the conference back over to Joe Koska for closing remarks.

Joe Koska, Director of Investor Relations, Bruker Corporation: 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 third quarter. Feel free to reach out to me to arrange any follow-up. Have a good day.

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

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