Bruker Corp Q1 FY2026 Earnings Call

Good day, and welcome to the Bruker Corporation First Quarter 2026 Earnings Conference Call. Please note this event is being recorded. I would now like to turn the conference over to Joe Kostka, Director of Bruker's Investor Relations. Please go ahead.

Good morning. I would like to welcome everyone to Bruker Corporation's First Quarter 2026 Earnings Conference Call. My name is Joe Kostka, and I'm the Director of Bruker Investor Relations. Joining me on today's call are Frank Laukien, our President and CEO; and Gerald Herman, our EVP and CFO. 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 GAAP to non-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 of the presentation. During this conference call, we will or may 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 our recent acquisitions, geopolitical risks, wars or blockades, market demand, tariffs, currency exchange rates, competitive dynamics 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-K for the period ending December 31, 2025, 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 our outlook as of today, May 6, 2026. 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 second quarter 2026 financial results expected in early August 2026. You should not rely on these forward-looking statements as necessarily representing our views or outlook as of any date after today. We will begin today's call with Frank providing an overview of our business progress. Gerald will then cover the financials for the first quarter of 2026 in more detail and comments on our reconfirmed full-year 2026 financial outlook. Now I'd like to turn the call over to Bruker's CEO, Frank Laukien.

Thank you, Joe. Good morning, everyone. Thank you for joining us on today's first quarter '26 earnings call. While U.S. academic demand, tariff and currency headwinds have continued to pressure our year-over-year results, we are pleased that our first quarter '26 financial performance came in well ahead of expectations. We are also encouraged that in the first quarter, our Bruker Scientific Instruments segment or BSI bookings grew organically in the high-single-digits. We saw strength in industrial research orders and encouraging double-digit bookings growth year-over-year in academic orders from outside the United States. This demonstrates, we think, that our novel and performance-leading post-genomic disease biology research solutions are truly enabling and that we can expect momentum in U.S. academic demand once the NIH funding environment improves. In the first quarter, we benefited from strong demand in a few areas more unique to Bruker; our AI-driven semiconductor metrology business, and our similarly AI-driven SciY scientific software and lab digitization businesses as well as our Europe, Middle East security detection business all saw organic bookings growth of greater than 20% in the quarter. Let me give you a little bit more color. Order strength in Semi Metrology, which is now a greater than $300 million annual revenue business for Bruker, was driven by AI demand for memory chips and for advanced packaging, particularly in the U.S. and in APAC. Many of the world's top semiconductor manufacturers rely on Bruker metrology tools for front-end and back-end applications, including development for their next-generation products. The rapidly increasing need for computing power and emerging applications for artificial intelligence provide strong secular tailwinds in Semi Metrology. Another area that may have been less visible to you so far, another area of our portfolio benefiting from the AI megatrend is SciY, which is now about a $50 million revenue business. SciY offers lab digitization and scientific software going from research through development all the way to manufacturing and enabling integration, automation and digital transformation. These SciY solutions facilitate the capture, ingestion and standardization of data so that it is AI-ready, alleviating bottlenecks in the digital transformation that is revolutionizing scientific research and paves the path to so-called self-driving labs, or SDL, which can accelerate R&D, quality control, and also chemical and biomolecular manufacturing. In another area, our security detection business, we are seeing significant demand for our explosive trace detection systems from airports in Europe and the Middle East as well as for CBRN detection solutions. Our security detection business has grown from a niche business a few years ago to about $70 million in revenue expected this year. Finally, we are delighted in the turnaround in our BEST segment, where we have obtained in the first quarter about $80 million of multi-year orders for our research instrument subsidiary, Fusion Technologies, Fusion Energy, and in the last 5 months, December through April, about $600 million of multi-year orders for our high-performance superconductors from major MRI customers. So, all good at BEST. So strong academic demand for our post-genomic solutions outside of the U.S. and these mentioned areas of idiosyncratic strength were contributors to our BSI book-to-bill ratio, which in Q1 was again comfortably above 1.0x, now the third consecutive quarter. This encouraging momentum is expected to carry us back to organic revenue growth in the second quarter and for the remainder of the year. Very importantly, Bruker's innovation engine has been quite impressive, we think, this year already, and we have introduced very impactful new products and solutions at recent scientific and medical conferences. These launches further strengthen our leadership position in NMR. I think we are clearly leading the way in multi-omic, high-fidelity, and high-plex spatial biology. And we're also bringing major innovations to clinical microbiology and molecular diagnostics. So let's dig in. Let's turn to Slide 4 now for the P&L performance of the business. Our Q1 reported revenues of $823 million increased 2.7% year-over-year, an FX tailwind of 4.5% and a growth contribution from M&A of 2.6% more than offset an organic decline of 4.4%. BSI segment revenues were down 5% organically, while BEST saw organic revenue growth of 3% net of inter-company eliminations. Our first quarter '26 non-GAAP gross and operating margins were 50% and 10.2%, respectively, both down year-over-year and both inclusive of significant headwinds from foreign currency trends year-over-year but also both ahead of expectations. Our Q1 '26 diluted non-GAAP EPS was $0.31, down from $0.47 in the first quarter of '25, but meaningfully ahead of our prior expectations. Please turn to Slides 5 and 6, where we highlight the first quarter constant exchange rate, or CER, revenue and bookings performance of our 3 Scientific Instruments groups and our BEST segment year-over-year. In the first quarter, BioSpin Group revenue was $198 million, with a CER decline in the high-single-digits percentage. Revenue growth in preclinical imaging systems, SciY software and our services business were more than offset by weakness in NMR systems due to soft ACA/GOV performance in China and Europe. In the first quarter, BioSpin installed the world's highest-field preclinical MRI system, an 18-Tesla preclinical system at the Champalimaud Institute in Lisbon, Portugal. However, BioSpin saw a headwind to revenue growth from the 1.2 gigahertz NMR installed in the first quarter of '25, as there were no gigahertz-class systems in Q1 of '26. In Q1, our CALID Group had revenues of $316 million with mid-single-digit percentage CER growth. CALID growth was led by molecular spectroscopy, which also saw strength in security detection orders. Microbiology and Infection Diagnostics had solid revenue growth. And in life science mass spectrometry, contributions from our recent M&A more than offset revenue softness in U.S. ACA/GOV. Encouragingly, life science mass spec orders growth in the U.S. ACA/GOV was positive in Q1 year-over-year. So perhaps it is stabilizing. Of course, we'd like it to come back and rebound, but maybe that will happen in the next couple of quarters. Turning to Slide 6 now. In Q1, Bruker Nano revenue was $246 million, with CER revenue declining a mid-single-digits percentage. Strong revenue growth in Semi Metrology was more than offset by weakness in ACA/GOV and industrial markets. Nano had strong orders across the group, including tools for X-ray industrial research, spatial biology, high-bandwidth memory, and advanced packaging metrology, all driven by AI. Finally, first quarter BEST CER revenues grew 3%, net of intercompany eliminations, driven by our superconducting wire business. Research Instruments, RI, that business saw very strong orders in Q1, as I said earlier, from Fusion and BEST received very large multi-year superconductor orders in the last 5 months from all 3 major MRI OEM customers. Moving on to Slide 7. I won't read every detail on the next three slides, but I'll give you a highlight. We had significant NMR innovations at the Experimental NMR Conference in Asilomar in 2026 for research and pharma markets. A lot of it is software, a lot of it is AI-driven, making protein NMR much easier. In the past, protein NMR had a disadvantage compared to cryo-EM or X-ray crystallography in that it required more expertise, but that's changing rapidly. AI, with its unique abilities to get dynamic and binding information, is becoming much more accessible, namely in generating results and insights, not necessarily in how to run the spectrometer. There are some other innovations from extreme new sensitivities that enable new fields shown on the right to just a good old next-generation NMR console, the AVANCE NEO-X, which we think will unlock a replacement cycle. Moving to Slide 8. At AGBT and then following AACR, I really think Bruker is clearly leading the way in spatial biology for capturing the complexity of disease biology and integrating it from, even 3D genomics with a very unique PaintScape system that we launched to the CosMx system, which is upgradable for our customers and which, of course, was already launched a year ago. We showed multi-omic whole-human-transcriptome. We've added now a whole-mouse-transcriptome. We're doing T-cell receptors, microRNA. And most importantly, we have added high-plex proteomics. That combination of whole-transcriptome and high-plex proteomics is really very powerful and readily adopted for comprehensive pathway analysis, so just for better disease biology. We think that continues to be very unique. Enough on that slide, let me talk about Clinical Microbiology on Slide 9. We had another crucial conference, the Global ESCMID Conference, which stands for Clinical Microbiology and Infectious Disease in Munich. We introduced our new MyGenius PRO higher-throughput system, a sample-to-answer higher-throughput system for all the markets that we drive from Bruker ELITech. This is also the system that Hitachi is introducing in Japan using our molecular diagnostic assay; so it's a very important development. Meanwhile, we have many introductions in the MALDI Biotyper workflow and identification and even hospital-acquired infection workflows using the IR Biotyper. I won't go through everything; this is more for your reading if you are interested, but there is significant innovation in microbiology, typically a steady area of diagnostics. Right. So in summary, good execution, disciplined management by our teams drove us to outperform our expectations in the first quarter. Order trends are improving, including in unique areas of our diversified portfolio, and we're optimistic that improved organic growth will follow. Importantly, we are very committed to controlling and reducing costs, which is crucial to improving our margin profile rapidly. Benefits from our cost-out plan, the Bruker Management Process will be explained by Gerald, but are now clearly evident in our P&L, and we're further expanding these cost-cutting initiatives, as Gerald will discuss shortly, keeping us on track not only for significant margin expansion and strong EPS growth this year, but also into next year and beyond. Given the dynamic macro and geopolitical environment, we believe it is prudent for now to confirm our prior '26 guidance. The outperformance in Q1 has been an encouraging start to the year, and it provides us with improved visibility and confidence, and we look to build on that momentum in the second quarter. With that, let me turn things over to our CFO, Gerald Herman. Go ahead.

Thanks very much, Frank, and thank you, everyone, for joining us today. I'm pleased to provide more detail on Bruker's first quarter 2026 financial performance, starting on Slide 11. Despite significant macro and foreign-exchange headwinds in the quarter, we delivered financial performance ahead of expectations we outlined in our earnings call in February. The first quarter '26 reported revenue increased 2.7% to $823.4 million, which reflects an organic revenue decrease of 4.4% year-over-year, well ahead of our original expectations. Acquisitions added 2.6% to our top-line and foreign exchange was a 4.5% revenue tailwind. The highlight of the quarter was our strong bookings performance, with BSI segment organic bookings up high-single-digits and bookings growth across all groups. We saw order strength in Academic & Government research, excluding the U.S., in industrial and semi end-markets, and geographically in Europe and the rest of the APAC region, with marked order improvement also seen in China. Back to revenue for the quarter, geographically and on a year-over-year organic basis, in the first quarter of '26, our Americas and European revenue both declined in the low-single-digits percentage, while Asia-Pacific revenue declined in the low-double-digit percentage, driven by a greater than 20% decline in revenue performance for China. In our EMEA region, revenue was up low-single-digit percentage. From an end-market perspective, we saw organic revenue growth in semi, biopharma, and hospital clinical markets more than offset by double-digit declines in Academic & Government research and industrial markets. Within the BSI segment, systems revenue declined in the low-double-digit percentage and aftermarket revenue grew in the high-single-digits percentage organically year-over-year. Q1 2026 non-GAAP gross margin decreased 130 basis points to 50%. Non-GAAP operating margin was 10.2%, a decrease of 250 basis points year-over-year. The decrease reflects headwinds of 350 basis points from lower volume and unfavorable mix, 170 basis points from foreign exchange, and 30 basis points from tariffs. These headwinds were partially offset by a 300-basis-point benefit from our cost-saving actions taken in fiscal year '25, now helping our performance in fiscal year '26. On a go-forward basis, we expect the year-over-year foreign exchange and tariff headwinds on margins to ease as we lap the introduction of U.S. tariffs and the significant depreciation of the U.S. dollar, which occurred in the second quarter of 2025. On a non-GAAP basis, Q1 '26 diluted EPS was $0.31, down from $0.47 in Q1 of '25. Our non-GAAP EPS performance includes a foreign exchange headwind of $0.05 and a $0.05 impact from the MCP offering we completed in September 2025, net of interest cost savings. On a GAAP basis, we reported diluted EPS of $0.02 compared to $0.11 in the first quarter of 2025, with the decline mostly due to lease impairment and restructuring charges related to our cost-saving actions. Beyond the $100 million to $120 million in annualized cost-saving targets that we announced last year, we're now tracking around $140 million in expected savings on an annualized basis. We cleared most European labor hurdles in the first quarter and expect to see the majority of savings reflected in our second-quarter and second-half results in fiscal year '26 and beyond. Weighted average diluted shares outstanding in the first quarter of 2026 were 152.7 million, an increase of 800,000 shares, or 0.5% from the first quarter of 2025. Turning now to Slide 12. We generated $71 million of operating cash flow in the first quarter of '26, up slightly compared to the prior year. Capital expenditure investments were $24 million, resulting in free cash flow of $47 million for the quarter, an improvement of $8 million year-over-year. We finished the quarter with cash and cash equivalents of approximately $133 million. During the quarter, we continued our deleveraging actions with $180 million debt paydown, eliminating a Swiss franc-based term loan. At the end of the first quarter, our net leverage ratio declined to 2.9x. Turning now to Slide 14. We are reconfirming our Full Year '26 outlook using the stronger execution in the first quarter to substantially de-risk the second-half ramp in growth, margins, and EPS. Therefore, we're reconfirming the following guidance: reported revenue of $3.57 billion to $3.60 billion, representing reported growth of 4% to 5% compared to fiscal year '25. Organic revenue growth of 1% to 2% year-over-year with acquisitions contributing 1.5% and an estimated foreign exchange tailwind of also 1.5%. We continue to expect organic non-GAAP operating margin expansion of 300 to 350 basis points, largely driven by our cost-saving actions, offset partially by approximately 50 basis points of foreign exchange headwind and resulting in a non-GAAP operating margin expansion of 250 to 300 basis points compared to the 12.6% operating margin posted in fiscal year '25. On the bottom line, we continue to expect non-GAAP EPS for fiscal year '26 in a range of $2.10 to $2.15 or non-GAAP EPS growth of 15% to 17% compared to fiscal year '25. We're estimating a foreign exchange headwind of 8% to fiscal year '26 EPS, implying non-GAAP CER EPS growth of 23% to 25% year-over-year. Other guidance assumptions are listed on the slide. Our fiscal year '26 ranges have been updated for foreign-currency rates as of March 31, 2026. Now to add a bit of color to the second quarter of 2026, we've now delivered 3 consecutive quarters with a BSI book-to-bill over 1 and expect to return to organic revenue growth in the second quarter. We estimate second quarter organic revenue growth to be in the low- to mid-single-digit percentage year-over-year. With the easing of tariffs and foreign exchange headwinds we experienced in the second quarter of '25 in the second quarter of '26, we expect a meaningful year-over-year step-up in non-GAAP operating margin and non-GAAP EPS with continued improvements in both metrics expected in the second half of the year. To wrap up, Bruker's first quarter '26 results were pressured by macro and market headwinds, but our teams executed very well to deliver results ahead of our expectations. Coupled with continued momentum in our order book, this gives us further confidence in our ability to deliver solid financial improvements for the remainder of the year and beyond. And with that, I'd like to turn the call back to Joe. Thank you very much.

Thanks, Gerald. We'll now begin the Q&A portion of the call.

The first question is from Puneet Souda with Leerink Partners.

We do not hear your question.

Yes. I'm sorry. I put Michael Ryskin on the podium with Bank of America. Puneet will be next.

Congrats on the quarter, and I appreciate all that commentary. I want to start with some of your comments on demand trends outside the U.S. You talked about Academic & Government being a little bit better outside the U.S. The U.S. weakness is not surprising. Would love any additional color you can provide on how sustainable that is? You've got good visibility into order trends. Do you think that could persist going forward and especially your comments on China and Europe?

Mike, thank you. Thanks for your comments. I think the order growth in Q1 outside of the United States in Academic & Government was particularly high. That's probably not sustainable, but it's healthy. It's quite healthy and also shows that even with incremental growth in Academic & Government budgets outside of the United States that our tools are very much in demand and are a high priority. So people really want the proteomics, metabolomics, multi-omics, very differentiated tools, the second-generation proteoform tools, functional proteomics tools with timsOmni are in much demand. I think it's ushering a new era in proteomics. And yes, we're leading the way in spatial biology and strong NMR; NMR and related techniques are very powerful and becoming less the domain of just experts via AI, quite honestly, becoming more accessible, namely the results and the insights, not necessarily how to run the spectrometer. So it's good trends. And I think it shows that we're not just following macro Academic & Government trends, but we have a right to win with particularly relevant tools that are truly enabling. So I think it's a good indicator. I wouldn't quite take the outside-U.S. Q1 order rate and extrapolate from that because that was a strong quarter, but I think we can look at high single-digit growth in these types of orders. I'm optimistic that NIH funding and funding disbursement will come back now in Q2 and maybe that makes for good Q3 orders, which shall see.

And then maybe for my follow-up, the other point that I thought was really interesting was some of your commentary on some of these really niche Bruker-specific end markets or applications where you're benefiting from some of the more recent macro disruptions, security and defense, things like that. You called out a couple of those. I was just wondering, any way you could aggregate that — what percent of your portfolio in industrial is exposed to some of those end markets where you're seeing that 20% growth now? Like you said, a bunch of those might be $50 million, $70 million of revenue. So on the one-off, if things that can slip under-the-radar, but you lump them all together, that could be a nice little offset to what's going on in ACA/GOV headwinds.

Yes, it's well above 10%, right? We haven't done that exact math, but yes, a quick approximation would show that it's above 10%, greater than 12%. There are some of these idiosyncratic growth drivers. Yes, we have them too. It's clearly quite impactful and is moving the needle. It's more than 10%, 12%, but we'll aggregate that at some point. I don't have it at my fingertips.

Next, we have a question from Puneet Souda with Leerink Partners.

So, first one, actually, maybe for Gerald. On the margin side, could you elaborate a little bit on the second-half ramp? It is — I mean, first of all, congrats on the quarter, but just it is steep still. Could you maybe talk a little bit about overall, is it just organic growth recovery? Or are you expecting more from the cost initiatives? Maybe just give us the puts and takes given the ramp here.

Yes. So Puneet, it's Gerald. Generally speaking, we are expecting continued improvement in the overall revenue performance sequentially as we march through 2026. Our operating margin performance is very strongly driven by our cost-saving actions, and you've already heard me describe those in my prepared remarks. We're expecting 300 to 350 basis points of organic improvement. That gets better as we move through the year, starting in the second quarter because some of the headwinds I mentioned on foreign exchange and tariffs dissipate in the second quarter. More fundamentally, as we march through the third and the fourth quarter, we expect to see stronger operating margin performance, mostly driven by improved market conditions, as you just heard about our order performance and, of course, the cost-saving actions.

Driver of cost savings this year, Puneet.

So maybe just, Frank, on Spatial and AI, two areas I just want to touch on. Maybe on AI, can you provide what level of visibility you have from the customers, your confidence in continuing to grow that here in '26 and then '27? Or is it just something that we should just observe the AI demand and the broader macro? And on the spatial side, there was an instrumentation launch in the market. Just wondering how you're thinking about potentially freezing of the market this year and then longer-term demand for NanoString products there?

Yes. The AI trend includes demand for advanced logic, next-generation logic chips and GPUs — that's been strong all along. Advanced packaging continues to be very strong. The big recent step-up benefiting us is high-bandwidth memory and advanced packaging, which is an additional boost. That looks quite durable. I don't think that was a lucky quarter or two; it looks like a durable trend. We're built into that supply chain with our semiconductor metrology tools and our RI tools that are now also north of $25 million a year. They go into lithography and the ASML supply chain. On the SciY side, lab digitization and data management for all instruments, plus scientific software to act on that data, the FAIR principles, these are strong drivers, primarily in biopharma, but also in other industries and some academic customers. Customers are investing in software and digitalization projects to make labs AI-ready and to support scale-up and manufacturing. This business will continue to grow rapidly. Regarding spatial biology, it was notable that others have introduced similar ideas, but we believe we are ahead. We have delivered whole-human-transcriptome since last year, now whole-mouse-transcriptome, T-cell receptors, microRNA, and importantly high-plex proteins, which makes pathway analysis much more powerful. I feel good about our leadership in spatial biology and expect to benefit from the trend.

The next question is from Tycho Peterson with Jefferies.

Frank, just to circle back on the semi comments. So you had a push out $40 million last quarter. Did you recapture that in this quarter? And the original guide, I think, for the year in semi was low-single-digit. Maybe just given what you're seeing in the order book, talk a little bit about how you feel about that as you go through the year?

I don't have all the details at my fingertips. I think we recaptured some of that in Q1. Some of that has to do with customer site availability. In that industry, you deliver precisely when the customer wants it, not when you have it ready. So I don't think it's completely captured, but some of it went into Q1. I don't have a crisp answer, but the answer is some, but not all.

And for the full year, is low-single-digit still what you're thinking on semi?

On revenue, I need some help from my team here. I don't have that at my fingertips. We may be able to get back to you on that during the call. Someone is nodding, so the answer seems to be, yes.

Maybe just U.S. academic, Frank — your comment that it could pick up in Q2 potentially. I'm curious what you're seeing out there. How have expectations changed since February? What gives you that confidence we'll see it maybe sooner rather than later?

It certainly seems to have bottomed or stabilized. We want more than that. A few weeks ago, we got news that a number of our NIH applicants got emails indicating they would probably get funded — checks did not come immediately, but disbursements seem to be improving. Industry reports and conversations at conferences suggest stabilization. There's still political uncertainty, but I expect some funding to be released between now and the end of the U.S. Government fiscal year in September, which could drive Q2 or Q3 orders and some into Q4. We're not banking on a full rebound for this year, and most of the impact would flow into next year's revenue, but we expect gradual improvement. We are not building significant U.S. Academic recovery into our guidance. If it comes, it would be upside.

And then just quickly for Gerald, can you give us the Q2 margin target? I don't think we got that. And should we assume BSI book-to-bill holds above 1 for Q2?

To answer your last question, yes. On your earlier question, we mentioned in my prepared remarks a low- to mid-single-digit organic revenue growth estimate for the second quarter of '26. We expect a meaningful sequential margin pickup in Q2, but we did not provide a specific numeric margin target for Q2 on the call.

The next question is from Brandon Couillard with Wells Fargo.

It'd be great to get some color on China. I think you mentioned revenues were down over 20%, but Gerald alluded to a market improvement in orders. Just unpack what you're seeing across the end markets there and whether that's maybe starting to pick up a bit.

Brandon, it's Gerald. We did have a significant drop in overall revenue in the first quarter, but that's largely driven by weaker order demand in the prior year, so some of that is a comp effect. The first quarter order performance in China was solid — coming off relatively softer comps, but still encouraging to see improvement on an order basis in the first quarter.

Okay. And Frank, care to touch on the BioSpin leadership given Falko Busse’s departure recently? He's been there a long time, and leadership in BSI has been stable over the past decade. Just curious if you have any more color.

Yes. On China, I wanted to add that because of some recent news, some diagnostic businesses of other companies are under pressure in China from reimbursement or competitive factors. Most of our diagnostics businesses have very little exposure to China; they are primarily focused on Europe, the U.S. and the rest of the world ex-China. So that's a headwind we largely do not have. Regarding BioSpin leadership, Falko has effectively left, though he remains with us for a transition period. We have stepped other people into leadership roles and are taking the opportunity to reorganize a bit, including group structures, and we'll probably give you a better idea of the new group structures by mid-July. I think it's on a very good path. I expect a team with closer customer focus and impactful, customer-driven innovation that is also cost-effective and accountable. I'm pleased with the direction for BioSpin and we'll provide more detail in July.

The next question is from Doug Schenkel with Wolfe Research.

I want to follow up on one of Tycho's questions. In Q2, the year-over-year comparison is the most favorable of the year. Previously, you indicated you were expecting better than low-single-digit to mid-single-digit organic growth. So with those two observations in mind, was there any pull-forward of revenue into Q1 at the expense of Q2? And are you still expecting Q2 to be the highest organic growth quarter of the year?

Very discerning question. I don't think we had a lot of pull-forward — maybe there was something like $8 million to $10 million that one could argue was pulled forward into Q1, but it's not particularly material and is typical quarterly fluctuation. It's not an unusual number. As we see it right now, the cadence is indeed that the organic revenue growth in Q2 would probably be the highest of the year, partly because Q2 of '25 was a weaker comp. We'll see how it plays out, but that's how it lined up initially and that side still looks correct.

Okay. And then I don't know if this is a Frank or Gerald question. Some unfortunate geopolitical developments and ongoing uncertainty can lead to increased demand for Bruker products and services, but on the flip side there are increases in freight and input costs. Keeping in mind you did not change your guidance for the year — the 250 to 300 basis points of margin expansion — does that suggest you have fully captured and feel comfortable that within that range you will be able to overcome any freight, input, or related costs?

Yes, Doug, it's a fair question. The short answer is yes. We have built into the guide the variability associated with related energy costs. We think moderate increases will be absorbed through the elements we've already laid out, including the cost-saving actions. So we're comfortable with where we are.

As you've noticed, we have not increased guidance despite the Q1 outperformance. We want even more confidence in our guidance. We are expanding our cost-cutting efforts to ensure the margin ramp continues into 2027. Some of this headroom also serves as a cushion against increasing freight costs, helium costs, and similar inputs. We believe we've got those risks baked in, which is why we kept our guidance unchanged for now.

The next question is from Subbu Nambi with Guggenheim.

Could you walk us through some of the other end-market assumptions besides Academia for second quarter and how that will step up for third quarter? Any puts and takes there?

With respect to the guide, we don't provide a lot of detail on the end-market elements. What we can say is we continue to expect strength in Academic & Government outside the U.S., strength in certain industrial markets and in the semiconductor space for sure. Those would be some of the core elements supporting the second-quarter and subsequent step-up.

I would add that the clinical microbiology and molecular diagnostics business will do well. Placements for the Bruker ELITech molecular diagnostics last year were more than 30% higher than our business plan, which bodes well for consumables pull-through the following year. In Q1, placements were excellent, about 40% ahead of plan. Initially that shows up as equipment placements, but it creates a buildup of consumables afterward. Those are things to keep an eye on, in addition to the other areas we've discussed.

That's helpful. And my follow-up to Doug's question — from the Middle East conflict, would you expect additional tailwinds to the defense business? At what point does that become an upside to the current guide based on your starting assumptions at the beginning of the year?

Remember, our products measure and detect rather than engage. Detection is important and people are concerned about threats. We've seen increased investment in detection capabilities in Europe and elsewhere due to security concerns. Our detection business has doubled over a few years and is now meaningful. I expect that to continue. I don't think it will affect our guidance this year materially; it's one of many tailwinds. Larger orders tend to be multi-year and roll into 2027 and beyond. These are longer-term trends rather than immediate one-quarter impacts.

The next person in the queue is Casey Woodring with JPMorgan.

I wanted to follow up on some of the margin-ramp questions and ask about mix dynamics. Curious to hear what mix impact was on the Q1 margin? And then how much of a mix tailwind do you need to see to hit that second-half margin step-up and your visibility into that? And then just a follow-up on the cost-outs, is the $140 million in expected annualized savings expected to hit by year-end this year?

I'll start in the reverse order. On the $140 million of annualized savings, those pieces will be phased into quarters as we move forward. You will not see the full $140 million in the P&L by the end of this year. As we move into 2027, you'll start to see their full impact. With respect to mix, in Q1 we had somewhat unfavorable mix, mostly driven by the gigahertz-class system that was present in Q1 of '25 but not in Q1 of '26. We expect mix to improve as we march through the rest of 2026. We've had a couple of quarters of challenging mix issues, and we expect that to improve. The operating margin performance is being secured by the significant cost-saving actions, and we expect to see a ramp of operating margin improvement sequentially through Q2, Q3, and Q4.

And then just a quick follow-up. On BEST, you talked about the major orders coming through on the MRI side, up to $600 million now. Can you talk a bit about how incremental those orders really are? I believe some are with existing customers. Curious about lead-times and if it's safe to assume those would start to contribute maybe in the first half of '27, or is there any possibility that happens in '26?

They are not all incremental, but after a period of uncertainty and moderate organic decline last year, we see this year as already being a tailwind for BEST. Some of these orders are kicking in this year, but many are multi-year — two, five, or seven-year orders — so their revenue contribution stretches into 2027 and 2028. It bodes well for continued moderate organic growth in BEST versus last year's decline. Some fusion orders at RI are incremental, but many of these are longer-term and stabilize the business for healthy single-digit organic growth in the coming years.

The next question is from Patrick Donnelly with Citi.

Frank, maybe one for you on Academic & Government. Appreciate the commentary on the U.S. and a little bit on China. Can you talk about what you're seeing in Europe? We've seen some mixed data points from others on that region for Academic & Government. Curious what you guys are seeing and expectations going forward there.

I wish I had a better crystal ball. One quarter can be volatile. Q1 was good in Europe for Academic & Government. I expect single-digit growth there, and if I had to be more specific, mid- to high-single-digit organic growth opportunity given the strength in demand, defense-related funding, and priorities in proteomics, spatial biology, and a recovery in NMR. There will be quarterly fluctuations, but overall I see a solid opportunity in Europe.

Understood. And Gerald, I wanted to pin you down on some Q2 moving pieces. Is there an ultra-high-field system in the quarter? And then a follow-up on margins — previously folks were thinking mid-teens for Q2; what should we model?

We don't expect a gigahertz-class system in Q2 of '26, so please factor that into your modeling. Generally speaking, we are expecting a significant step-up in operating margin performance in the second quarter sequentially and year-over-year. From an EPS perspective, we expect to do better in Q2 than we did sequentially from Q1. We did not provide a specific Q2 margin number on the call, but the sequential improvement should be meaningful.

One last note — we probably should wrap up around 9:00 because there is another company starting their earnings call, and we want to be respectful of that.

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

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 second quarter. Feel free to reach out to me to arrange any follow-up. Have a good day. Thank you.

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