Good day and welcome to the Bruker Corporation Third Quarter 2020 Earnings 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 Miroslava Minkova, Director of Investor Relations and Corporate Development. Please go ahead.

Good afternoon. I would like to welcome everyone to Bruker's third quarter 2020 earnings conference call. My name is Miroslava Minkova, Director of Investor Relations and Corporate Development. Joining me on today's call are Frank Laukien, our President and CEO. In addition to the earnings release we issued earlier today, during today's conference call, we'll be referencing a slide presentation. The PDF of this presentation can be downloaded from the Latest Results section on Bruker's Investor Relations website. During today's call, we'll 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 2. During the course of this conference call, we'll make forward-looking statements regarding future events, and the expected future financial and operational performance of the company that involve risks and uncertainties, including risks and uncertainties related to the COVID-19 pandemic. The company's actual results may differ materially from projections or scenario estimates describing 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-K and subsequent Form 10-Q filings, all of which are available on our website and on the SEC's website. Also note that the following information is related to current business conditions and to our outlook as of today, November 2nd, 2020. Consistent with our prior practice, we do not intend to update our forward-looking statements based on new information, future events or other reasons prior to the release of our fourth quarter and full year 2020 financial results expected in February 2021. Therefore, you should not rely on these forward-looking statements as representing our views or outlook as of any date subsequent to today. We'll begin today's call with Frank providing a business summary. Gerald will then cover the financials for the third quarter of 2020 in more detail. Now, I'd like to turn the call over to Bruker's CEO, Frank Laukien.

Thank you, Miroslava. Good afternoon, everyone and thank you for joining us on today's call. I hope you and your families are well. We continue to navigate a challenging environment amid a global pandemic. While the majority of our academic and research customers worldwide have returned to work under a new normal, some still operate at productivity levels that are below pre-pandemic levels in an effort to accommodate safety protocols. Against this backdrop, Bruker delivered a good third quarter with sequentially strengthened financial performance compared to the first two quarters of 2020. In Q3 2020, our revenues still declined slightly year-over-year, but our non-GAAP operating margins and non-GAAP EPS improved significantly compared to Q2 and Q1 of 2020 and approached prior year Q3 2019 levels. We are pleased with the way our teams have delivered under the circumstances. During Q3, we continued to support initiatives to understand the SARS-CoV-2 virus and the COVID-19 disease. These include functional structural biology studies by high-field NMR, long COVID patient studies by NMR and mass spectrometry metabolomics, as well as viral protein and disease patient proteomics research by mass spectrometry. And finally, we support the discovery and development of diagnostics, therapies and vaccines with our tools. Moreover, our Bruker high-end diagnostics business continues to serve the COVID-19 PCR testing market with nucleic acid extraction and PCR test kits and equipment. In Q3 of 2020, this grew further and we generated about $8.5 million of revenues from these PCR products primarily in Europe. Together with partners, we also have been piloting COVID-19 rapid antigen tests at some of our own European sites and in customer labs with a goal to broaden our COVID-19 test portfolio further. From an operational standpoint, our major factory sites in the U.S., Europe and Malaysia are operating at their new normal. We are currently not facing any significant operational constraints, although we are monitoring the resurgence of the virus in Europe and in the U.S. carefully. Turning to financial results. Our third quarter 2020 revenues rebounded sequentially as academic customers returned. Q3 2020 revenues were still slightly below prior year level, down minus 1.9% year-over-year and down 4.6% organically. Sequentially, we generated 20% more revenue in Q3 compared to Q2 of 2020. We continue to carefully manage expenses and monitor our cost structure. As a result, our Q3 2020 non-GAAP operating margin even improved year-over-year, while our diluted non-GAAP EPS approached Q3 2019 levels. Year-to-date and including the third quarter, our key proteomics, diagnostics and biopharma initiatives continued to grow nicely, and we now anticipate that Bruker will return to healthy year-over-year revenue growth and margin expansion in 2021. I now go to Slide 4, where we show the financial highlights for the third quarter of 2020. Q3 2020 revenues declined by 1.9% year-over-year to $511.4 million. Acquisitions added 0.3% to revenue growth and foreign currency translation was favorable by plus 2.4%. On an organic basis, Bruker's Q3 2020 revenues declined 4.6% year-over-year, which was comprised of a 3% organic decline in the three Bruker Scientific Instrument groups and an approximate 20% organic decline at BEST, net of intercompany eliminations with BEST negatively impacted by reduced demand for superconductors by MRI OEM companies. Our Q3 2020 non-GAAP gross margin decreased 90 basis points year-over-year to 49.6%, while our non-GAAP operating margin improved 30 basis points year-over-year to 18.6%. Lower volume at NANO and BEST together with unfavorable foreign currency translation negatively impacted the gross margin performance year-over-year, while meaningful operating expense savings resulted in an operating margin gain relative to Q3 of 2019. In Q3 2020, Bruker reported GAAP diluted EPS of $0.35 per share compared to $0.39 in Q3 2019, and on a non-GAAP basis, Q3 2020 EPS was $0.42 compared to $0.43 in Q3 of 2019. On Slide 5, we show Bruker's performance for the first nine months of 2020. Revenues decreased by $113 million or minus 7.7% year-over-year to $1.36 billion. On an organic basis, revenues declined 8.3% year-over-year in the first nine months comprised of a 7.9% organic decline in the Scientific Instruments Groups, and a 12.6% organic decline at BEST, net of intercompany eliminations. Acquisitions added 0.5% to our top line and foreign exchange was insignificant, up 0.1%. Year-to-date, 2020 order bookings for Bruker Scientific Instruments Group declined low single-digits organically. Order rates improved sequentially, and had positive year-over-year growth in the third quarter as customers returned to labs and research activities continued to recover. During Q3 of 2020, BSI's biopharma and diagnostic markets remained solid and academic markets continued to recover, while Industrial Research and Applied Markets continued to show softer trends due to the pandemic-driven economic slowdown. On the brighter side, BSI semiconductor metrology markets remain in an upswing. Year-to-date 2020 non-GAAP gross margin decreased 240 basis points compared to the same period in 2019, while non-GAAP operating margins declined to 280 basis points, as Gerald will discuss both growth and operating margins improved significantly when we look at them sequentially from Q2 to Q3 2020. On a GAAP basis, Bruker reported EPS of $0.57 in the first nine months of 2020, compared to $0.82 in the first nine months of 2019. And year-to-date 2020 non-GAAP EPS was $0.77, compared to $1.04 for the same period in 2019. Please turn to Slide 6 and 7 where we provide further highlights on the year-to-date 2020 performance of our three Scientific Instruments Groups, and of our BEST segment, all on a constant currency basis and in comparison to the same period in 2019. Year-to-date 2020 BioSpin Group revenue declined mid single-digits to $398 million. The revenue decline at BioSpin was due to COVID-19 related customer lab closures and installation delays primarily in the first half of 2020. BioSpin's performance improved sequentially and revenues were up year-over-year in the low single-digits in the third quarter as the academic market recovery continued and biopharma remained robust. During the third quarter, BioSpin received customer acceptance for a second 1.2 gigahertz NMR system, which was successfully installed at ETH in Zurich, Switzerland. BioSpin continues to ramp up its manufacturing and shipment activities for gigahertz systems. During the first nine months of the year, BioSpin's NMR and MRI Systems' revenue declined year-over-year due to the delayed order and installation activity as expected. BioSpin's aftermarket revenue increased slightly year-over-year and scientific software revenues were higher albeit on a low basis. Turning to the CALID Group, year-to-date 2020 revenues of $445 million were approximately flat compared to the same period in 2019. Molecular spectroscopy revenues declined year-over-year as FTIR/NIR markets were affected by the pandemic and economic slowdown. However, this was more than offset by solid growth in CALID's Daltonics microbiology and diagnostics, and its life science mass spectrometry business. CALID's performance also strengthened sequentially with revenues growing mid single-digits in the third quarter of 2020 year-over-year. For the first nine months of 2020, CALID's microbiology and COVID PCR testing consumables grew significantly year-over-year, our timsTOF proteomics business had a solid uptake and revenue growth year-to-date despite the challenging conditions for instruments and customer installation delays. Finally, revenues for our FTIR and Near IR and Raman molecular spectroscopy products declined year-to-date with weakened applied and academic demand. Please turn to Slide 7 now. Bruker NANO revenues declined mid-teens to $393 million in the first nine months of 2020, reflecting slower academic, industrial and industrial research demand. This is true for NANO's X-ray and NANO-surface, NANO-analysis tools and they all declined in revenue year-to-date. Year-to-date semiconductor metrology revenue for the NANO Group grew year-over-year as semi markets remain in a rebound. Finally, year-to-date 2020 BEST revenue declined low-teens, net of intercompany eliminations on reduced superconductor demand by MRI companies. Turning to Slide 8 now. Bruker continues to make investments in innovation that we believe will position the company for long-term profitable growth. This September, we acquired Canopy Biosciences, a leader in high-plex biomarker imaging for immunophenotyping using multiplexed fluorescence microscopy. Canopy's offering strengthens Bruker's position in Spatial Omics and targeted Multiomics Research. It complements Bruker's fluorescence microscopy portfolio and also helps our Bruker NANO Group expand its life science footprint. Canopy's ChipCytometry, manual and automated platforms and related consumables and services provide high resolution multiplexed imaging of peripheral blood mononuclear cells or PBMCs or of tissue again with applications in immunology, immuno-oncology, cell therapy and targeted proteomics research. The CellKraft ChipCytometry platform, which is part of Canopy, has advantages listed on the slide. We are very pleased to have the Canopy and CellKraft team join Bruker. Please remember that for high resolution spatial biology, we also recently had a very important new product introduction as we launched our Vutara VXL super resolution fluorescence microscope for industry-leading single-molecule localization and for subcellular targeted Multiomics imaging. Turning to Slide 9, we continue to make excellent progress with timsTOF 4D proteomics. At the recent Human Proteome Organization or HUPO World Congress, Bruker's Melvin Park and Oliver Raether were awarded the HUPO Science and Technology Award for the commercialization of tims trapped ion mobility spectrometry and the parallel accumulation-serial fragmentation proteomics method. We also announced significant additional innovations at HUPO, including the PaSER proteomics search engine, new work in progress true single-cell 4D proteomics workflow, the first PRM parallel accumulation-serial fragmentation passive method for targeted quantitative proteomics for translational applications, and the CAPS parallel accumulation-serial fragmentation workflow for cross-linking in structural 4D proteomics. We remain very excited about timsTOF and our opportunities in 4D proteomics. So, in conclusion, Bruker's performance strengthened sequentially in Q3 as academic markets and customer research activity continued to recover. Our core growth and margin initiatives are progressing well and we are excited about our opportunities in biopharma, microbiology and viral diagnostics, in proteomics, targeted multiomics, ultra-high field NMR, software and aftermarket. Bruker remains fundamentally healthy and we expect to return to solid year-over-year revenue growth and margin expansion in 2021. And with that, I'll turn the call over to our CFO, Gerald Herman, who will review our financial performance in more detail.

Thanks, Frank and welcome to everyone. I'm pleased to join you today and review Bruker's third quarter 2020 financial highlights, starting on Slide 11. Bruker's reported revenue decreased 1.9% year-over-year to $511 million in the third quarter of 2020, which includes an organic revenue decline of 4.6%. Despite the slight revenue decline and a headwind of 60 basis points from foreign exchange, we delivered a roughly equivalent level of non-GAAP operating profit compared to Q3 2019. Our non-GAAP operating margin recovered to 18.6%, about 30 basis points above the Q3 2019 level. We reported GAAP EPS of $0.35 per share compared to $0.39 in the third quarter of 2019. On a non-GAAP basis, Q3 2020 EPS was $0.42 per share compared to $0.43 in Q3 2019. Overall, our Q3 revenue performance was favorable to the revenue decline scenarios we outlined in our Q2 2020 earnings call, while operating profit and earnings approached prior year levels, as we again drove cost discipline and operating expense savings throughout the business. We exited Q3 2020 with $617.1 million in cash, cash equivalents and short-term investments. This reflects solid cash generation in the third quarter and year-to-date 2020 as well as our strengthened cash position following our December 2019 debt financing. During the third quarter, we paid down $208.5 million of borrowings on our revolving credit facility. Our net debt position at the end of Q3 2020 was comparable to the end of Q3 2019. During the third quarter, we used cash to fund our strategic capital investments, acquisitions, dividends and buybacks as well as the revolver debt repayment mentioned earlier. In Q3 2020, we repurchased 127,000 shares of Bruker stock for a total of $5 million, bringing our total buybacks year-to-date to 1.34 million shares for $55 million. As of September 30th, we have $102.7 million remaining on our share repurchase authorization, which is valid until mid-May 2021. At the end of Q3 2020, our working capital to revenue ratio was elevated relative to the prior year, as we carried higher inventory levels to address supply chain risks related to the COVID-19 pandemic. Slide 12 shows the revenue bridge for Q3 2020. As noted earlier, organic revenue in the quarter declined 4.6%. We had a positive revenue contribution from foreign currency translation of 2.4% and a modest positive contribution from acquisitions of 0.3%. From an organic BSI revenue perspective, Q3 2020 BioSpin revenues increased low single-digits year-over-year as BioSpin's academic markets continued to recover and biopharma activity remained strong. CALID revenues increased mid single-digits with double-digit growth in CALID's microbiology and mass spectrometry businesses. NANO revenues declined mid-teens due to continued softness in NANO's academic, industrial and industrial research markets. Bruker's biopharma revenues, MALDI Biotyper consumables, Bruker high molecular diagnostic consumables and timsTOF proteomics revenues all had robust year-over-year growth once again in the third quarter. While broader academic and industrial research revenues continue to be impacted by the slowdown. Third quarter semiconductor metrology revenues grew year-over-year. For our three BSI groups, third quarter systems revenue declined in the low double-digits, while aftermarket revenue grew high-teens year-over-year. Our book-to-bill ratio in Q3 2020 was 1.1. We exited the third quarter with higher BSI backlog year-over-year. BEST revenues declined 20.3% year-over-year net of intercompany eliminations due to reduced superconductor demand. Geographically and on an organic basis in Q3 2020, our European revenues grew low single-digits year-over-year, North America revenue declined low-teens, Asia Pacific revenue declined low single-digits. This included a steep decline in Japan, but growth in China and the rest of Asia Pacific. The rest of the world saw a revenue decline year-over-year. Slide 13 reflects our P&L results for the third quarter of 2020. On a non-GAAP basis, Q3 2020 non-GAAP gross profit margin of 49.6% decreased 90 basis points from 50.5% in Q3 2019. The year-over-year reduction in gross margin was principally driven by lower volume and reduced productivity at NANO and BEST, and negative foreign exchange translation effects, which outweighed improvements in our BioSpin and CALID Groups, although below the prior year level, our gross margin recovered sequentially from the low level experienced in Q2 2020. Q3 2020 non-GAAP operating expenses were down 5.2%, below Q3 2019 levels. This was due to continued cost control and certain cost reduction measures implemented earlier this year, including a restructuring in the BSI NANO segment. As a result, our Q3 2020 non-GAAP operating margin increased 30 basis points compared to Q3 2019 to 18.6%. And our non-GAAP operating profit was approximately flat year-over-year as lower operating expenses offset the Q3 2020 revenue decline. In Q3 2020, we also absorbed an approximate 60 basis point negative foreign exchange translation impact year-over-year on our non-GAAP operating margin. Q3 2020 non-GAAP interest and other expense of $5.9 million was slightly unfavorable compared to Q3 2019. During the third quarter and year-to-date, a net loss on foreign exchange transactions associated with unfavorable currency movement has more than offset lower net interest expense on our borrowings following our December 2019 debt financing. For the third quarter of 2020, our non-GAAP effective tax rate was 26.5%, 110 basis points above the prior year quarter, which had included a significant favorable discrete tax item. Weighted average diluted shares outstanding in the third quarter of 2020 were 154.3 million, a reduction of approximately 1.3 million shares from Q3 2019 following our share repurchase activity. Finally, Q3 2020 non-GAAP EPS of $0.42 decreased 2% year-over-year, as operating expense savings partially offset the revenue decline. Slide 14 shows the year-over-year revenue bridge for the first nine months of 2020. Revenue declined $113 million or 7.7%, including a year-to-date 2020 organic decline of 8.3%. This includes a 7.9% organic decline at the three BSI groups collectively, and a 12.6% organic decline at BEST, net of intercompany eliminations. Geographically, and on an organic basis in the first nine months of 2020, Bruker's European revenue was down low single-digits year-over-year, North American revenue declined low-teens. Asia Pacific revenues declined high single-digits with double-digit drops in China and Japan. Our revenues in the rest of the world were also lower year-over-year. On slide 15, our year-to-date 2020 non-GAAP gross profit margin of 47.3% decreased 240 basis points year-over-year. Lower volume and reduced productivity from COVID-19 disruptions earlier in the year, and the ongoing economic slowdown drove the decline relative to the first nine months of 2019. Year-to-date 2020 operating expenses declined 6.5% year-over-year on cost control and cost reduction measures. All in, our non-GAAP operating margin in the first nine months of 2020 of 12.9% was 280 basis points below the prior year period. Finally, non-GAAP EPS of $0.77 was down 26% relative to the first nine months of 2019. Turning now to Slide 16, free cash flow in the first nine months of 2020 was approximately $61 million, an increase of about $28 million compared to the first nine months of 2019. During the first nine months of 2020 an increase in customer advances and favorable other items more than offset reduced cash generation from lower net income, working capital efficiencies and our continued capital expenditure investments in higher capacity and productivity. Our cash conversion cycle at the end of Q3 2020 of 263 days worsened from 227 days a year ago, with a step up driven primarily by an increase in days inventory outstanding as we carried higher inventory balances due to supplier and customer lab disruptions from the pandemic. Turning now to Slide 18, In March, we suspended our guidance for 2020 due to the uncertain business conditions created by COVID-19. Business uncertainties related to the pandemic remain in many parts of the world and our visibility as it relates to customer operations and spending patterns in certain markets is still reduced. Our 2020 guidance therefore remains suspended and although we're not providing guidance as we've done in the past few quarters, I'd like to offer some directional color on the fourth quarter. While the recovery from COVID-19 in our global academic markets is expected to continue, we still see challenges with customers operating at reduced capacities and still negatively impacted by the pandemic. Similar to Q3 2020, we believe it's better to think about a range of scenarios for the fourth quarter, with the potential for a revenue decline of between 2% and 6% year-over-year, compared to a strong Q4 2019. These scenarios assume favorable foreign currency translation of approximately 2.5% based on foreign currency rates as of September 30th, 2020. Baked into our revenue expectations for the fourth quarter are also challenging prior year comparisons in our BioSpin and CALID Groups. Please note that actual results may be outside of these scenario ranges, but this gives you our good faith estimate at this time, based on information currently available to us. While we continue to carefully monitor the resurgence of COVID-19 in Europe and here in North America, our current assumption is that this will not lead to renewed broad-based lockdowns for our customers in academia and industry or significant deterioration in operating conditions. To conclude, we continue to manage through a challenging environment created by the pandemic. We're pleased with our sequentially strengthened financial performance in Q3 2020 and remain confident that Bruker will emerge from the pandemic a stronger company with an exciting product portfolio and a promising long-term outlook. We look forward to updating you again on our quarterly progress during our Q4 2020 conference call anticipated in early February 2021. And with that, I'd like to turn the call over to Miroslava to start the Q&A session. Thank you very much.

Thank you, Gerald. I'd now like to turn the call over to the operator to begin the Q&A portion. In order to allow everyone time for questions, we ask that you limit yourself to one question and one follow-up. Thank you. Operator, we are ready to begin the Q&A.

We will now begin the question-and-answer session. The first question comes from Dan Leonard of Wells Fargo. Please go ahead.

Thank you. Just a question on the bookings. I'm calculating a low single-digit bookings growth in the quarter. Can you confirm that was the case? And then, can you offer some color on bookings by both academic customer segment as well as the European region, as they seem to be the customer group and region that investors are most concerned about? Thank you.

So Dan, this is Frank. That is correct. For BSI we had low-to-mid single-digit BSI order growth year-over-year in Q3. BEST was different because BEST had some very large multiyear orders last year. For BSI, that trend was correct. Generally, customers in Europe and academic customers in Europe were doing quite well in most major countries. In the U.S., the academic market is still somewhat constrained. We do know some universities are struggling with lower state budgets and reduced tuition or housing revenue and perhaps lower hospital income. Those are headwinds we're aware of. Federal funding, I think there's generally optimism in the U.S. and, of course, endowments are up so that's positive and in some larger universities that has led to a little less belt tightening. Keep in mind that for us 75% of our academic markets are outside the U.S., so it's a mixed picture, but it's clearly improving sequentially.

Thank you.

The next question comes from Jack Meehan of Nephron Research. Please go ahead. Mr. Meehan, your line is open.

Sorry about that, I was muted. Still learning with remote work clearly. Frank, I was hoping to dig a little into the progress with the timsTOF Pro. Is there any color you can provide now on the size of the installed base? Given the backdrop with everything going on with COVID, how do you expect the shape of new replacements to trend over the next couple of years?

We tend to give annual updates rather than midyear updates on the installed base, but timsTOF Pro adoption, despite the academic challenges, has been really quite positive with both orders and bookings year-to-date growing in the double-digits. Proteomics is a very good market and the timsTOF Pro does well within that market with its innovations and new capabilities. I would highlight that it's not only going into government, medical school and academic research labs, but also into pharma and biopharma labs. So we're satisfied with that and tend to give an update on installed base more at the end of the year.

Great. And one clarification on the scenario you laid out for the fourth quarter. I believe you previously talked about a third 1.2 gigahertz system in Germany. Is that included in the revenue recognition within that scenario?

We're including one ultra-high field gigahertz class system. It may not be a specific one in a specific country, because we have multiple systems in various stages of installation. But one gigahertz class system is included. It could be the one you mentioned or another one. So one is included, yes.

Thank you, Frank.

The next question comes from Brandon Couillard of Jefferies. Please go ahead.

Hey, good afternoon. Frank, sticking with the NMR segment for a moment. To what extent, if at all, have you begun to see some of those ultra-high field orders come from U.S. customers? And as you look out to 2021, do you still think three of those units a year is kind of the top ceiling of capacity, or could you do more next year?

In the U.S., we delivered a 1.1 gigahertz some time ago to St. Jude's and we have an order in the backlog for Ohio State. But U.S. funding hasn't come through in a significant way yet, so recently we haven't seen as many orders as in Europe. We think it's a question of time and expect more U.S. funding in the next one to two years. In the last six months priorities have been focused on the pandemic. We still have a lot of backlog for the next two years and we expect to be higher than three systems per year. We don't want to give 2021 guidance now, but we do expect more than three systems next year.

And Gerald, as we look out to the fourth quarter, given FX and perhaps some OpEx spend returning, do you still think you can deliver year-over-year operating margin expansion in the fourth quarter? Just help us understand the puts and takes to think about in the P&L. Thanks.

I'm not sure we will deliver operating margin expansion year-over-year in the fourth quarter overall. When you look at our operating expense performance in the third quarter, we benefited from cost control and cost reduction measures, some of which will be relaxed or have already been relaxed in the fourth quarter. Secondly, we have some headwinds from foreign exchange. Third, we continue to invest in our strategic Project Accelerate initiatives and that is not changing in the fourth quarter. Fundamentally, we expect more pressure on the fourth quarter relative to the fourth quarter of 2019.

Great, thanks.

The next question comes from Tycho Peterson of JPMorgan. Please go ahead.

Hi, guys. This is Casey on for Tycho. When speaking on the cash flow, the slide says that the lower net income then increases in CapEx and working capital were more than offset by increases in customer advances and favorable other items. Can you talk a little about what those favorable other items were? And I'm assuming customer advances means you're getting more upfront payments. Can you elaborate on what you're seeing in this regard?

We're pleased with the cash flow performance and generation for the third quarter and year-to-date. At the pandemic's beginning, we had concerns about liquidity and that's not played out. The customer advances we see are generally a reflection of stronger order performance in the third quarter; customers typically provide significant advances for our instruments. Relative to the favorable other items, there are a number of puts and takes that fit into that line; it's not necessary to go through them in much more detail here. Generally, we're quite pleased with overall cash generation in Q3. You likely know that the fourth quarter typically generates more profitability and cash flow compared to other quarters in the year, so our expectation is we'll be moving forward from there as well.

Got you. And then on academics, on the Q2 call you quantified that it was down high-teens. What was that in Q3? And what are you embedding in the academic market for the Q4 scenario you laid out? Thanks.

Academic market segment performance for the third quarter was down, I'd say, low double-digits. And that's not surprising, particularly given what you've seen specifically in the U.S. markets. It was better than Q2 though; sequentially it improved.

But it was better than it was in the second quarter.

The next question comes from Dan Brennan of UBS. Please go ahead.

Great, thanks. I was hoping for a follow-up on the academic question. Frank, could you tease out what you're seeing from academic labs versus instruments versus consumables? I know you don't have a big consumable service orientation, but nonetheless. And second, on funding outlook, what are you seeing today? What are the prospects for a more significant rebound as we get into 2021?

Our consumables and aftermarket business was up nicely in Q3, with some service catch-up from Q1 and Q2 as lab access improved. Our MALDI Biotyper business has very good consumables growth and our COVID PCR testing is almost all consumables, plus we have growing software. So while we're not primarily a razor-blade company, our aftermarket, consumables and software businesses are growing. Regarding stimulus, it's not clear yet. We generally expect customers to be optimistic about life science research funding in the multiyear aftermath of this pandemic because there's a clear strategic priority for life science investment. There are near-term constraints in some places; some Chinese universities had temporary budget cuts. But we hear that longer-term plans include significant investment in life sciences and healthcare technology. Near-term it's mixed in China and the U.S. is mixed in parts, but Europe seems strong. Medium to longer-term, research funding and strategic prioritization of life sciences look healthy. I wouldn't call it stimulus so much as strategic prioritization.

And one unrelated follow-up on the high-plex biomarker imaging market from the Canopy acquisition. Can you give some color on addressable market and competitive profile and how you think about integrating that into Bruker?

The targeted Multiomics and targeted proteomics markets are very large. Historically we've been strong in unbiased untargeted mass spec proteomics, and we wanted to strengthen targeted proteomics and spatial imaging. ChipCytometry was an important acquisition as it provides high-plex imaging capabilities. The acquired business has revenue, not enormous yet, but a competitive technology base and product line. We'll provide more detail next year as we integrate and accelerate that business.

The next question comes from Dan Arias of Stifel. Please go ahead.

Good afternoon, guys, thanks. Frank, are you able to give a snapshot on where we are right now with respect to the percentage of U.S. and European labs that are open to system installations by engineers? It sounds like order book is holding. I'm trying to understand the state of access and revenue recognition for some of the bigger pieces of equipment in the portfolio.

In the U.S. and Europe, laboratories are generally open, although access requires more planning, health forms and coordination. They're not running necessarily at full capacity. I'm not aware of any widespread U.S. lab closures; there could be local outbreaks. The same is true in Europe, but travel within Europe is becoming more challenging. Our installations are essential travel, so we expect to continue to have access. Our factories are operating under robust safety procedures. We are monitoring the situation closely but presently assume no material effect on Q4.

Okay, just to confirm — labs are open and you're not seeing issues with access to installations in the U.S.?

Correct. Labs are open; access is slower and requires more planning and coordination. You cannot just show up.

The next question comes from Doug Schenkel of Cowen. Please go ahead.

Hi, this is Chris on for Doug today. Thanks for taking my questions. Frank, you said Bruker should return to healthy revenue growth in 2021. I appreciate you don't want to be granular, but at a high level, what are the key assumptions behind this forecast? Is it based on order book and backlog? Would it be reasonable to assume Bruker could return to at least 2019 revenue levels in 2021?

We're not prepared to directly compare to 2019 now. Some healthy growth in 2021 will reflect easier comparisons to the first half of 2020, but we also have improving order trends and a healthy backlog. Our Project Accelerate strategic initiatives are progressing well, particularly in proteomics and diagnostics. We're adding capabilities and making bolt-on acquisitions, such as in viral diagnostics and ChipCytometry for targeted proteomics. While industrial and industrial research markets remain softer and some academic markets have temporary constraints, we expect these to resolve, likely by mid-next year. Biopharma has been strong and is a growth driver. So the outlook is based on a combination of improving orders and backlog, strength in key areas like proteomics, diagnostics and biopharma, and ongoing strategic investments. We expect healthy year-over-year growth and margin expansion next year, and we hope to provide guidance in early February when we report Q4 and the full year 2020 results.

Okay. One follow-up: on Slide 9 you mentioned true single-cell proteomics workflows in progress. Historically mass spec single-cell analysis has been limited by sample prep, single-cell isolation and data analysis software. Could you discuss what technical hurdles need to be resolved, what efforts you've made, and when we might expect a commercial single-cell mass spec workflow?

Those are perceptive questions. True single-cell results have been demonstrated, notably by the lab of Matthias Mann, which was a breakthrough. That is still somewhat of an experimental setup, so it's work in progress and not a product yet. The sample prep (which is not traditionally Bruker's main domain) and the instrument analysis have to come together. We've improved software, so it's not the software limitation alone; the overall workflow must be integrated. We hope to make commercial progress with specialty research products for true single-cell proteomics in the next year or two.

The next question comes from Patrick Donnelly of Citigroup. Please go ahead.

Thanks. Frank, on the academic side, where are the gating factors to getting back to growth? It sounds like order book is trending well. Is it a matter of lab productivity getting back toward pre-pandemic levels and installation delays causing growth to lag? I'm trying to get a better handle on timing.

Some of it is timing. Orders in the second half of this year help revenue next year. There's still funding noise; some Chinese and U.S. universities had temporary budget cuts. Europe is generally stronger. Japan has been weak. We expect most academic markets to be back to good growth next year. It's a mix of order timing, installation scheduling and funding resolution. We expect many of these issues to sort themselves out by mid-next year. Proteomics and spatial biology are hot and are driving demand.

Have you seen a change in tone in conversations with customers in terms of willingness to spend?

Yes. Some major universities initially tightened belts but have relaxed constraints as endowments recovered, and we've seen memos at some institutions indicating less belt tightening. Officially, most major research labs are open with new safety protocols. Customers are not holding back funds; it's in their interest to place orders when possible.

The next question comes from Steve Willoughby of Cleveland Research. Please go ahead.

Hi, thanks for taking my questions. Frank, a couple from me. First, on the gigahertz system in the fourth quarter, is there a possibility to get two or three installed in Q4, or are the other systems likely to fall into next year? Second, your exposure to pharma has been growing. Any thoughts on what their end-of-year spending might look like as we sit in early November? And third, any more color on geographic trends, including Europe strength and China returning to growth? Thank you.

We expect one gigahertz class system in Q4; two or three is unlikely. Biopharma has been good for us throughout the year, particularly in the U.S. and China and Europe as well. We don't see a material year-end budget flush effect for us, beyond normal consumable patterns. Biopharma funding is strong and broad-based, not just COVID-related. China recovery seems healthy with fewer restrictions than Europe or the U.S. Japan has been weak and has potential for improvement. Europe had been doing well but is experiencing a surge in cases; we are monitoring it carefully. Factories are operating with strong safety procedures, and we have had essentially no operational COVID transmissions at our factories. We presently assume no material effect on Q4, but we will continue to watch developments closely.

Thank you very much, Frank. I appreciate it.

Next question comes from Derik DeBruin of Bank of America. Please go ahead.

Hi, good afternoon. Two quick items. First, to clarify, you said down negative 2% to negative 6% for total sales in Q4 with roughly a 2.5% FX tailwind. What did you say for the M&A impact for the third quarter or full year? Second, NANO has been down significantly excluding semiconductor. Can you talk about dynamics in NANO and what you're seeing in industrial research markets and how that should trend?

It is not material.

It's not material; less than 0.5%. Canopy added a modest amount but not material at this stage.

Got it. Less than 0.5%. Great. Now about NANO — can we talk about what's driving the weakness ex-semiconductor? Is industrial research demand just weak, conservative spending, or is it sector-specific?

Industrial and industrial research demand is down and is the weakest area with the least visibility. Semiconductor metrology is performing well and is a bright spot. Industrial markets like aerospace and certain manufacturing sectors have been negatively impacted, whereas some areas like automotive show mixed behavior. Industrial research will recover more slowly than academic markets; we expect improvement next year, but the timing and magnitude are uncertain. Removing the industrial weakness would materially help overall growth, but we lack precise visibility on how fast that will happen.

Thanks, Frank.

The next question comes from Puneet Souda of SVB Leerink Partners. Please go ahead.

Hi, Frank. Thanks. On Project Accelerate, given the crisis and how the year evolved, what's Bruker's priority in terms of pushing harder on new product launches versus other product lines? Should we expect Bruker to innovate along the same lines — extensions of successful platforms like timsTOF — or reallocate? Any priorities for Project Accelerate into 2021?

We haven't slowed down R&D and investments during the pandemic. Project Accelerate has been broadened in areas such as viral diagnostics and targeted proteomics. We added viral diagnostics to our infectious disease focus and expanded targeted Multiomics via the Canopy acquisition. We're doubling down and have even accelerated some inorganic bolt-ons in infectious disease diagnostics and proteomics. Proteomics and Multiomics are among the fastest growing areas and are an important focus. We're investing in the ecosystem and in diagnostics, including bacterial and viral diagnostics and cancer diagnostics. So we continue to invest heavily and accelerate in these strategic areas.

Thanks. One follow-up on NMR — with experience from installs of large magnets, what's the level of confidence now in predictability of bringing these magnets up to field and timely revenue recognition? Any improvement in predictability?

Our confidence has increased significantly. Not every installation works on the first try and sometimes we need to rework a magnet, but overall we have more experience and better processes. We have enough backlog and improved confidence that beyond three systems this year, we expect more than three systems next year. We have a good grip on installations now, though they are still leading-edge and require careful execution.

And we have a follow-up from Dan Brennan of UBS. Please go ahead.

Thanks. One shorter-term question. Q4 comps get easier by a couple of points versus Q3. You're not baking in a real change versus Q3 in your scenarios. Is that conservatism given COVID cases, or did you see any pacing change as you entered Q4? And on academics, did Q3 trend as you expected through the quarter?

Q4 last year was very strong, so the comparison is not trivial even if percentages look easier. We remain somewhat cautious given the surge in cases. Regarding Q3 academic trends, recovery and reopening progressed as expected and by the end of Q3 customers were generally back in their labs and doing research with few exceptions.

Great, thank you.

This concludes our question-and-answer session. I would like to turn the conference back over to Miroslava Minkova for any closing remarks.

Thank you for joining us today. Over the next several months, Bruker will participate in the Jefferson Virtual London Healthcare conference in November, and the JPMorgan Virtual Healthcare Conference in early January 2021. We hope you stay healthy and well, and we invite you to reach out to us for a virtual meeting during the quarter. Thank you and have a good evening.

Conference has now concluded. Thank you for attending today's presentation. You may now disconnect.