Netherlands Wheeler at Bank of America Conference: Navigating Trade Challenges

On Wednesday, 14 May 2025, Netherlands Wheeler International (NYSE:MTD) shared its strategic insights at the Bank of America 2025 Healthcare Conference. The company reported a mixed performance with underlying growth tempered by trade uncertainties. While strong in process analytics, challenges in liquid handling and tariff impacts led to a downward revision in earnings guidance.

Key Takeaways

• Q1 underlying growth was 3%, with notable gains in process analytics (10%) and product inspection (8%).
• Fiscal Year 2025 EPS guidance was reduced by 2% to 2.5% due to tariffs and market uncertainties.
• The company emphasized its "China for China" strategy and noted the growing importance of emerging markets.
• Tariff impacts were a major focus, with potential EPS benefits from the de-escalation of China tariffs.
• Robust cash flow and margin expansion initiatives were highlighted as strengths.

Financial Results

• Underlying growth in Q1 reached 3%, excluding shipping delays.
• Process analytics grew nearly 10%, while product inspection saw an 8% increase.
• Fiscal Year 2025 EPS guidance was revised downwards by 2% to 2.5%.
• Tariffs posed a gross headwind of 7% on EPS, with net impacts reduced to 2% after mitigation efforts.
• Expected gross tariff impact was $115 million annually, with China imports accounting for $50 million.

Operational Updates

• Shipping delays affected Q1 optics, but the lab business grew in the mid-single digits.
• Liquid handling experienced slight declines, particularly in small biotech and academia.
• Tariff mitigation strategies included supply chain optimization, cost savings, and pricing adjustments.
• The "China for China" approach focuses on local development and manufacturing to align with government priorities.
• A regional supply chain strategy aims to enhance flexibility and reduce risks.

Future Outlook

• Volume growth is expected to remain flat in the second half of the year.
• Price increases are anticipated to counter tariff impacts.
• China growth projections have been adjusted to reflect a slight decline.
• Emerging markets, including Southeast Asia and India, are key growth areas.
• Reshoring initiatives in the U.S. are expected to boost productivity.

Q&A Highlights

• The impact of tariffs from China, Mexico, and Europe was discussed, with an emphasis on potential EPS benefits from China tariff de-escalation.
• Softness was observed in the academic and government sectors for consumables and instruments.
• Biopharma showed a promising start, particularly with single-use technologies.
• Core industrial growth is expected to be flat for the year.
• Margin expansion efforts focus on innovation, pricing, and supply chain optimization.

In conclusion, readers are encouraged to refer to the full transcript for a more detailed understanding of the conference discussions.

Full transcript - Bank of America 2025 Healthcare Conference:

Mike Riskin, Host, Bank of America Life Science Tools and Diagnostics team: Alright. Thanks everyone for joining us. My name is Mike Riskin. I’m on the Bank of America Life Science Tools and Diagnostics team. I’m excited to host for our next session, Netherlands Wheeler International.

And I’m joined by Sean Vidalia, chief financial officer. Sean, thanks for being here.

Sean Vidalia, Chief Financial Officer, Netherlands Wheeler International: Yeah. Thanks for hosting me, Mike. Good to see you.

Mike Riskin, Host, Bank of America Life Science Tools and Diagnostics team: Good to see you again. Do a fireside chat, but if anyone’s got any questions, just throw your arm up and we’ll get a mic over to you. Sean, maybe just to kick things off, you reported 1Q results recently, give an update to the fiscal year twenty five guide, a lot of moving pieces there. So maybe just run us through at a high level, what were the key points?

Sean Vidalia, Chief Financial Officer, Netherlands Wheeler International: Yeah. Hey, we felt like we got off to a good start this year, you know, when you kind of like look at the underlying growth, excluding this, shipping delay topic that we have, which kind of makes the optics look a little bit odd in the first quarter, we grew 3%. We saw a lot of good growth throughout the business. Our lab business grew mid single digit, excluding the shipping delay. Kind of a highlight for us was our process analytics business, which grew just under 10%, so that’s kind of a good read into bioprocessing.

Maybe the other side of that, we still saw some softness in terms of like our liquid handling business. You know, it was down slightly, and you know, that’s kind of like more exposed to some of the areas of like small biotech, academia, those types of things. But overall, we felt like we had a really good quarter. Product inspection was also kind of a highlight. It grew 8%.

I feel like the team’s executing really well there with some of the new product introductions that we have. If you kind of like dig into the P and L a little bit, the margins came in better than expected. I felt like that was a good sign of like operational execution in the quarter. A lot of the programs we have in terms of margin initiatives, I think, did quite well. And overall, we felt like, you know, the team’s doing pretty well.

Mike Riskin, Host, Bank of America Life Science Tools and Diagnostics team: Okay. And then in terms of the update to the fiscal year 2025 guide, what are pieces there?

Sean Vidalia, Chief Financial Officer, Netherlands Wheeler International: Yeah. So I mean, key topic there was like the trade war kind of had already started, right? And so there was there’s a couple elements to that. There was like the direct cost of the tariffs, but then there was also kind of the uncertainty in terms of our markets. So we adjusted our top line for some of that uncertainty.

Some of it is just some cautiousness that we have in terms of how we think the year will progress. You know, if we think about like how we initially thought the year would start off, we thought that things would start off a little slower, but we also thought things were going to get better on the back half of the year. Our current assumption is that from a volume perspective, if you kind of like just take out price increases, we feel like the second half is going to be probably more flattish, which would be more similar to the first half of the year. So we weren’t assuming things necessarily got better, but we were thinking things didn’t necessarily get worse. And that’s on a volume basis.

Now, of course, the second half of the year will benefit from a little bit higher price increases, which is part of the way that we’re mitigating some of these tariffs. From an EPS perspective, we took down our EPS by 2% on the top end and 2.5% on the midpoint. 2% of that was related to the net impact of tariffs and our mitigation activities. The gross impact on tariffs on a full year basis is and this is as of the time we guided was 7%. And then if you kind of net off the different mitigation activities that we have, whether it’s supply chain optimization, some cost savings, or pricing and pricing has kind of a different couple of different components.

One is some price increases, but also just some surcharges that we’re doing there. The net impact of that would have been 2% headwind to the full year in terms of EPS growth. And then the remaining is kind of like a combination of taking down the sales for the uncertainty in our markets, offset a little bit by a little bit better execution on the margins, but also some we had some benefits on currency, and then I think there’s a couple of smaller opportunities on the upside in terms of some of the below OP assumptions.

Mike Riskin, Host, Bank of America Life Science Tools and Diagnostics team: Okay. Maybe just on the tariff side, since you’re talking about that. Obviously, big news this week, one of the big pieces of news this week was the announcement of a temporary de escalation of China tariff situation. Could you just talk us through, you know, remind us how much of the tariff hit was for China versus Mexico versus Europe? And then in terms of the de escalation, how do you respond to that in terms of your mitigating actions?

Sean Vidalia, Chief Financial Officer, Netherlands Wheeler International: Yeah, sure. So we’d already made a lot of progress, you know, since the beginning of the year to already reduce our gross tariff exposure. So when we kind of reported, you know, a week and a half ago, you know, our estimate was that the gross tariff headwind would have been $115,000,000 and that’s on an annualized basis. And then if you kind of translate that into what it means for this year, it was about a 7% headwind to EPS. And so if you kind of do the math on that, it’s probably in the 70s or something like that.

You know, the assumptions behind that is that China was we expect China’s imports to The U. S. To be about $50,000,000 and I’ll come back and talk about that. Mexico is now more than China, but less than $100,000,000 and then the rest of the world would be about $200,000,000 that we import import into The United States. And if you think about it, we probably have seven countries in the world that produce, including The United States.

So this would be a variety of countries, but mostly Europe. And within that, the largest exposure, of course, is going to be Switzerland. So and you know, when we provided guidance, we’re providing at the rates as of that day. The one thing that’s clearly changed is the China assumption. So if you think about China, you know, that 115% change from the 140 down to where we are now with 145, I’m sorry, to where we are now, that’s probably about if you do the math on that, you probably get to a number about $60,000,000 or so.

Maybe it’s a little bit less than that. We also have a small amount of products that we sell from The United States into China. But if you look at that, that’s on an annualized basis. Now if you kind of think about what that means to our EPS this year, that would be about a gross. So there’s like one month of headwind on that.

Okay? And so, you know, on the higher rates, so if you look at the remaining seven and a half months, you have probably now a benefit versus what we previously said of about three and a half percent of EPS or so. Okay? So that’s the gross benefit, but then some of the mitigation activities also go away. So if you think about like some of the surcharges or things that we’re already going to move.

So before we had a gross headwind for the year of 7% and we had a net headwind of about 2%. Now that gross headwind would come down, assuming everything stays the same, by about 3.5%, and we would think the net benefit would also come down. But it would probably be the net benefit to the year would probably be less than 2%.

Mike Riskin, Host, Bank of America Life Science Tools and Diagnostics team: Okay. A lot of math there.

Sean Vidalia, Chief Financial Officer, Netherlands Wheeler International: Yeah. Sorry if that’s a lot, but hopefully that provides a little bit of a framework and I just don’t want people to be kind of confused about what it can mean for this year.

Mike Riskin, Host, Bank of America Life Science Tools and Diagnostics team: No, that’s great. I should have just brought my calculator. That’s helpful. Okay. I think I got most of that.

So, and then I guess the other question I would have is, like you said, you’re already implementing some of the mitigation efforts. You’re not just going to keep putting them on, taking them off. If I could sort of rank order, what’s easiest to change, it would be price surcharges. You can just remove that.

Sean Vidalia, Chief Financial Officer, Netherlands Wheeler International: Yeah, sure. Yeah. I mean, so just to be clear on the supply chain side, we’re committed to those actions. Know, like this was kind of a learning coming out of COVID. You know, we wanted to have more flexibility in our supply chain.

There’s also a benefit for de risking the supply chain as well. So we’re committed to having more regional supply chain. It created a little bit of redundancy, but we think that’s a better structure going forward. Of course, accelerates all that, and so we’re just going to move a little bit faster and accelerate programs. On the pricing side, like I said, there’s an element of surcharges.

We’re in the process of updating some of those surcharges this week, and that was the intention, right? Like we can kind of take them up or take them down, you know, as we need given the dynamic situation and also given the magnitude that we’re facing. I mean, it would have been one thing if the tariffs were a smaller number, but at a large number, creates a situation where we needed to do something bolder on the surcharges. So we’re going to have to adjust that as well too.

Mike Riskin, Host, Bank of America Life Science Tools and Diagnostics team: Okay. And if I think about other impacts from the tariff change, think this would impact you probably the most is if I think about underlying China demand, one thing that I think doesn’t get talked about enough is the impact of 145%, one hundred and thirty five % tariffs to China that would have on the local economy on just underlying demand in the end market. Now that we think there’s a de escalation of the trade war, Does that make you feel any better about just Chinese economy market demand for the rest of the year versus where you sat on April 2 or April?

Sean Vidalia, Chief Financial Officer, Netherlands Wheeler International: Well, hey, sir, it’s definitely a positive development. Now we’ll see what how it translates into activity in the local market. You know, one of the things we were hearing a lot a couple weeks ago was that there was a lot of wait and see in the local market in terms of continuing with There was two elements to the wait and see. I think the big element was that people wanted to wait and see how these trade discussions kind of went forward. So hopefully this brings a little bit more clarity.

Now, of course, there’s a ninety day pause, so hopefully it continues the way it is, or at least close to where it is. So I think that’s a really positive development, but we’ll see. The other thing was that one of the things I had heard was on the ground, there was a lot of talk about anticipating that the government was going to be making an announcement at some point about their plans to better support the economy. Since then, you hear things from public sources as well, too, so we’ll see what happens in that regard. But I mean, if they did, of course, the combination would be a very strong signal to the local market.

I mean, we always say that in China things can move very quickly either way. And so I think that combination could be very interesting for us. But right now, we’re not updating guidance. We’re not assuming anything. But I do think we’ll learn a lot more here over the next few months when we update guidance here at the end of Q2.

Mike Riskin, Host, Bank of America Life Science Tools and Diagnostics team: Remind us what are your expectations for China as of the 1Q call for the rest of the year?

Sean Vidalia, Chief Financial Officer, Netherlands Wheeler International: MR. Yeah. You know, so for the full year, we initially started the year thinking that China was going to grow low single digit. And now our updated guidance reflects that it’s going to be down slightly, you know. So certainly that was you know, that translates to probably around a point of the growth change that we had in terms of our total numbers.

We’ll see. You know, we in the short term, there’s a lot of uncertainty, but, know, going forward and I don’t know if you want get into the China in the future part now, but I think there’s still a lot of opportunity in terms of how China can grow in the future.

Mike Riskin, Host, Bank of America Life Science Tools and Diagnostics team: Yeah, let’s touch on that then, especially in light of reduced tariffs and yet still potential for more stimulus. Do you think this means for the Chinese economy and going forward?

Sean Vidalia, Chief Financial Officer, Netherlands Wheeler International: Yeah. Mean, of course, you know, for the economy it’s difficult to predict. But I think that for us, you know, we’re really well positioned, you know, in terms of China. You know, we have a long history there. We develop a lot of our products in China for China so we’re close to the needs of the local market, and we also make a lot of those products in China for China.

And we’ve been doing it for a very long time. So I think we have a very good situation. If you look at who we’re selling to, we’re mostly selling to Chinese private companies, you know, less amount for state owned companies, and then even fewer for multinationals. And we’re not typically selling to exporters. And then if you think about the industries that we’re selling to, it’s very similar to our global exposures, you know, life sciences, food manufacturing, chemical, which is largely specialty chemical for us.

And so then when you look at those industries, we’re very well aligned with the Chinese government’s strategic priorities, you know, kind of like wanting to have autonomy and a lot more self sufficiency for their own life science industry, technology in general, but also some of the hot segments like semiconductor being one. So we feel like we’re very well aligned with the priorities there. And then when we look at like our whole China for China story, we feel good now. Is China going to grow like it did kind of the pre all this, the reset in the last couple of years? Probably not, but we never were considering that in our long term algorithm.

If you kind of look at the updated CAGR for the last ten years in China, it’s probably already moderated to about 6%. And if you look at our long term CAGR for the company, it’s kind of the same number. So it’s like in the last ten years, you know, it’s probably more in line, but that’s okay. You know, and whether it’s high single or mid single or wherever it is, I think as long as it’s in that range, we should be good. The bigger thing, is like it’s not just about China, right?

Like there’s a lot of companies that have adopted China plus one strategies. So as we now look at the markets outside of China, like Southeast Asia, India, Eastern Europe, Central And South America, like all those other emerging markets are now bigger than China when you put them together. So they’re about 18% of our business, where China last year was about 16% of our business. And those markets are now have been growing very well. And if, you know, when people say like, Hey, are you seeing any evidence of reshoring and undershoring?

It’s hard to answer that question in The U. S. Right now. It’s still very early innings. But when you look at these geographies, you clearly have seen we’ve clearly seen like some nice growth in those parts of the world.

So as a global company, we’re also well positioned outside of China.

Mike Riskin, Host, Bank of America Life Science Tools and Diagnostics team: What’s driving that growth in EM ex China? Is it desire to diversify away from China? Is it, again, not onshoring to The U. S. But sort of reshoring?

Sean Vidalia, Chief Financial Officer, Netherlands Wheeler International: Yeah. I think as people are looking at their supply chains, you know, it’s just one of those opportunities. You know, not everything, goes from like from The China to The U. S, right? Like it’s going to be depends on the company’s needs or the country’s needs even, but probably each company is looking at this differently.

And so some are just trying to have a China plus one strategy where they’re staying in China, they’re making stuff in China, but they also want to have a little bit of redundancy in their supply chain. And some of these emerging markets clearly are opportunities and beneficiaries of that just given they’re all because they also have a low cost structure.

Mike Riskin, Host, Bank of America Life Science Tools and Diagnostics team: Okay. Let’s move on to some other parts of the market. I want to talk a little bit about academic and government, not the biggest end market for you, but still one that’s been really volatile to start the year. Can you talk us through what you’ve seen in those specific product areas where you’re seeing a little bit better maybe in consumables or instruments, and especially I’m talking about The U. S?

Sean Vidalia, Chief Financial Officer, Netherlands Wheeler International: Yeah. So U. S. Academic and government together is a low single digit percentage of our global business. So it’s a small part of our business.

Now, if I kind of like peel back our product categories, one product category that has more exposure there would be our pipette business. Okay? And so when I look at that business, like I mentioned, it was down slightly in the first quarter. That business has been under a little bit more pressure in the last couple years. I mean, they were the ones that also kind of got felt some of the headwinds with some of the small biotech funding challenges.

You know, that’s the one part of the business that would be exposed to early research, which is a smaller part of our offering to the market, but that’s the one part that would be exposed there. Kind of during the second half of last year, I would have said we were starting to see actually good activity on the consumable side, which was like a good read into activity in labs, but the instrument business was still softer. In Q1, we saw more softness on both sides between consumables and on the instrument side. So clearly starting to see some softer conditions there. You know, when you talk to the team, you know, I feel like it’s a little bit of this academia topic.

But also I think the small biotech for us is still a little bit soft as well, too.

Mike Riskin, Host, Bank of America Life Science Tools and Diagnostics team: Did you see that can you talk about how that played out through the quarter? Did you see any deterioration as it kind of stabilized? We’re getting a little bit of a mixed signal in terms of sort of where the trough was?

Sean Vidalia, Chief Financial Officer, Netherlands Wheeler International: We yeah, I don’t recall. Yeah, yeah. Okay.

Mike Riskin, Host, Bank of America Life Science Tools and Diagnostics team: All right. Fair enough. And then maybe let’s pivot to biopharma. You talked about smaller biotech, but maybe biopharma as a whole, especially, you know, on bioprocessing. That’s fared a little bit better for you to talk about process analytics.

Can you talk about what you’re seeing in that end market?

Sean Vidalia, Chief Financial Officer, Netherlands Wheeler International: Yeah, so we have a really good start to the year, like I mentioned in the opening comments. So process analytics are the inline sensors that we have in the reactors. One of our competitive advantages are that we were the first company to have in line sensors in bioreactors, so we’ve always had like a strong brand in this area. It started with our pH sensors, which was kind of like coming from the analytical instrument side. But then over the years, we’ve expanded a wide range of parameters.

And if you think about these parameters, they’re kind of monitoring the environment, right, especially with living organisms, oxygen levels, CO2 levels, pH levels, etcetera. And so that part of the business, saw we had a good quarter. The part that actually did the best was probably the area that was benefited from single use technologies. You know, so if you think about like our PendoTech acquisition a few years back, you know, very good results in the quarter. And in general, we just felt like we saw good trends on the single use.

And so we’re definitely optimistic about this business going forward, you know, and we feel in just conversations that we’ve had recently, I’m not talking this week, but just, you know, kind of leading up to our guidance, we felt pretty good about the market. And just like all the new modalities out there and the opportunities for production in the world, I just think that as people think about their supply chains, we’re going to benefit. If you step back and just look at our life science exposure in total, right? And so I’ll pivot a little bit here, if you don’t mind. Life sciences, which for us is like traditional pharma and then biopharma, we would also put CDMOs in that category and testing labs, That’s about 40% of our business.

But if you look at that, I’d estimate that about two thirds of that is related to a combination of production in QAQC labs. And so we very much think that we can benefit from these trends of investments in manufacturing around the world. The other third, of course, would be research and development, but within that we’re going to be more exposed on the development side, late stage development, than on the early research side. But then kind of back to bioprocessing and process analytics, we feel pretty good. And keep in mind, within bioprocessing, it’s not just process analytics, right?

We also provide other solutions, like including from our core industrial business, like just the whole process of filling and formulation that goes into the bioreactors. We provide a lot of process control there. So we have load cells that are underneath the reactor. They’re connected to our terminals with software, and then that software helps to determine the formulation of the ingredients, the pace, and everything, And then it can also as a monitoring device, a mechanism, I should say, during the process.

Mike Riskin, Host, Bank of America Life Science Tools and Diagnostics team: Do you think that end market has turned a corner here in the first quarter? It’s been a little bit volatile the last couple of quarters or Yeah.

Sean Vidalia, Chief Financial Officer, Netherlands Wheeler International: Mean, for us, we’ve seen gradual improvement here over the, I think, the past year, and certainly it’s going in the right direction. I mean, with all the noise in the market right now, we’ll see how things play out. But I’d be surprised if this one wasn’t didn’t do better. Like if we look at our portfolio and if we look at our lab portfolio, I’d be surprised that that isn’t above average at the end of the year. Okay.

Mike Riskin, Host, Bank of America Life Science Tools and Diagnostics team: Maybe pivoting to industrials briefly, you called out some delays in the quarter, some timing components. Can you give us a little bit more color on that and sort of what’s your update?

Sean Vidalia, Chief Financial Officer, Netherlands Wheeler International: Yeah. Mean, so if you think about it, so when you say industrial, I mean, there’s two parts industrial. There’s core industrial and then there’s product inspection. I think you’re referring to core industrial. So core industrial is 25% of our business.

About 60% of core industrial serves a combination of pharma, biopharma, food manufacturing, manufacturing, and chemical, okay? And so it’s a little bit more secular than it would have been ten or fifteen years ago, and I think that’s part of the reason why it’s been a little bit more resilient in the last few years with like weaker PMIs. But despite that, we’re not immune to the economy. And so I think we definitely have felt a little bit of softness here at the start to the year. And then in terms of how we thought about our guidance for the full year, I think our guidance for the full year is flattish for the core industrial business overall and then for the full year.

The other thing about core industrial is that it has a much higher mix of China than the rest of the business so than the other divisions. And so of course that’s part of it too. So then when we entered the year, we were definitely hearing about things kind of delayed and kind of put off, but especially on the China side, especially on the China side. So we’ll see how it goes. I mean, if you kind of look at the different end markets, chemicals certainly is an area that’s softer relative to the other end markets, probably a little bit more cyclicality there.

You know, even though our business is mostly specialty chem, I’m sure there’s a more cyclical nature there than you would get with the other end mark, core end markets that we have. Okay.

Mike Riskin, Host, Bank of America Life Science Tools and Diagnostics team: You touched on this topic a couple of times throughout the chat. You talked about, you know, re shoring and impact that would have. We’re starting to see some press releases, some announcements, but I don’t know how much, you know, of this has already been done versus this is planning for the next one, two, three years. So can you talk about what you would see from a way of reshoring, if that’s one of the effects of this tariff? Yeah.

You know,

Sean Vidalia, Chief Financial Officer, Netherlands Wheeler International: when we think about the tariffs, we think about three elements, right? We think about the direct costs and we have mitigation plans in place for that. We think about the short term uncertainty and we’ve updated our guidance for that. But then we think about the future, right? And I really believe that there’s opportunity for us going forward here.

Now, there’s a lot of numbers and commitments out there in terms of, you know, intentions to invest in The U. S. Of course, that can change. You know, some of that might have been planned anyhow. But, you know, regardless, my sense is it’s going to be more than it would have been in the pre COVID days.

You know, if you think about our business pre COVID, probably eighty to ninety percent of that business would have been replacement, you know, in the West, you know, in The US and in Europe. And we have a replacement cycle, that situation, because typically replacement cycles occasionally would have gotten delayed as economic conditions softened. And then there was a pent up demand afterwards. During COVID, we had a little bit, maybe an acceleration of replacement cycle, which has kind of caused this longer cycle of softness over the last two to three years. At some point, this replacement cycle is going to kick in and we thought we were starting to see the early signs of that as we exited last year.

If you think about our analytical instruments during the second half of last year, we were really starting to see some good growth. Now I think things have maybe paused again on that, but at some point that will come back. And the average age, the average life, I should say, of our instruments tends to be around seven years. So we’re five years out from COVID, so at some point this is going to turn in, this will come back. But on top of that, we have investments.

So the way I’m, long way of answering is whatever we get is going to be a benefit on top of what we normally would have gotten in the pre COVID days. And I feel as a global company, we’re really well positioned for that. You know, we’ve literally have had companies asking us, even from China, you know, can you help us out in other countries in the world? Of course, we have a lot of strength in Europe. We have a lot of opportunities to move with some of these companies if they want to bring things.

But it’s also not things all coming here. They’re going in all different directions, and we can move with them. And again, as a global company, we’re well suited for that. And then another thing is as people move things, there’s going to be a tendency to look for more automated solutions, because things probably will cost a little bit more after you move it. You’re going to have a little bit more redundancy.

And so they’re going to look for ways to achieve more productivity. And as they do that, they’re going to look for more automated solutions. So that’s a strength of our portfolio. You know, we really do well there and I think that we’ll benefit from that.

Mike Riskin, Host, Bank of America Life Science Tools and Diagnostics team: When you think about whatever assuring cycle will or won’t happen, where would Medalla participate the most? If I could think of sort of like chronologically, are you in the early, very early in the build out? Are you later stage, I guess it’s going to marry?

Sean Vidalia, Chief Financial Officer, Netherlands Wheeler International: It’s going to be, I mean, you know, I could give you an example of what we are in early stage, but it’s a very small part of the opportunity. I mean, you know, it’s going to really come to when they buy or purchase all the instrumentation and equipment for the facility, and then kind of like all the QAQC labs in the facility as well, too. So the timing is a difficult one to answer. It depends on if it’s a total greenfield and they actually have to build a building first or whether they have a facility that they can move into rather quickly.

Mike Riskin, Host, Bank of America Life Science Tools and Diagnostics team: Okay. I want to a couple of last comments. I want to touch on the P and L and margin expansion opportunity. You’ve seen some impressive margin expansion over time. You’ve obviously got some near term headwinds in 2024 and 2025.

As you think beyond that, can you sort of walk us through the various levers of the P and L?

Sean Vidalia, Chief Financial Officer, Netherlands Wheeler International: Yeah, I mean, you know, in terms of the P and L, you want me to talk about how to expand margins or? Yes, the margin runway. Yeah, I mean, I think, you know, one of the strengths of our organization is that we have a lot of different programs to attack these challenges. And like we have, and then we have a strong culture of, I would say, continuous improvement and agility. So I think if you kind of look at it, you know, growing volume is the number one thing, right?

And so you need innovation to grow volume, so we have a lot of programs around that. The Spinnaker program helps us do that. The pricing program, The pricing is a reflection of the strong value proposition we have, and that starts again with innovation. And so the pricing program realizes that value that we provide to customers. Our products tend to be an average price of less than $10,000 We’re typically selling to the end user who understands and appreciates that value.

And then we have someone who’s a direct salesperson who can articulate it. So we have a lot of success in that program as well. We have the Spinnaker program, I mean the sterndrive program, which is operational excellence in the supply chain. And then we have a lot of different things there. We have some new sophistication in terms of how we’re using technology to do topics like should cost analysis to help us get smarter about diagnosing opportunities and identifying opportunities.

And then we have the Blue Ocean Program, which helps us harmonize processes around the world, and as we do that, we can automate them and also leverage our shared service centers. So we have a lot of different things at our disposal to help us continue to improve margins, and then we have a natural mix benefit. The products that are growing the fastest tend to be our highest margin businesses as well, too. So we feel very good about that. But I think it also comes back to the culture of continuous improvement behind all of that.

Mike Riskin, Host, Bank of America Life Science Tools and Diagnostics team: We got about thirty seconds left. I’ll just go straight to my concluding question. What do you think is most underappreciated or misunderstood on my

Sean Vidalia, Chief Financial Officer, Netherlands Wheeler International: Yeah, no, I’d like to think we’re pretty well understood. We try to, you know, be as clear as we can in our communication. If I’m asked a question like that, I like to remind people about our strong cash flow. We tend to convert cash flow at about 100%, plus or minus, depending on the year. But in these times, too, I think we also benefit from our diversity.

There’s a lot of ways to look at our diversity, but the way that we provide solutions throughout a customer’s entire value chain, and as there’s opportunities that arise, we can kind of lean into those opportunities. And with all this reshoring, it’s probably a good example of how we can do that, you know, with the solutions that we provide through the value chain.

Mike Riskin, Host, Bank of America Life Science Tools and Diagnostics team: Okay, right. With that, I think we’ll end it there. Thanks so

Sean Vidalia, Chief Financial Officer, Netherlands Wheeler International: much, Sean. Thank you.

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