Operator
Good day and welcome to the Brugger Corporation Second Quarter 2026 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on your telephone keypad. To withdraw your question, please press star then too. Please note this event is being recorded. I would now like to hand the call over to Joe Koska, Director of Investor Relations. Please go ahead.
Good morning. I would like to welcome everyone to Bruker Corporation's second quarter 2026 earnings conference call. My name is Joe Koska and I am the Director of Bruker Investor relations. Joining me on today's call are our president and CEO, Frank Laukeen, and our EVP and CFO, Gerald Herman. In addition to the earnings release we issued earlier today, during today's conference call, we will be referencing a slide presentation that can be downloaded from the events and presentation section of Brooker's investor relations website. During today's call, we will be highlighting non-GAAP financial information. Reconciliations of our non-GAAP to gap financial measures are included in our earnings release and are posted on our website at IR.Brucker.com. Before we begin, I would like to reference Bruker's safe harbor statement, which is shown on slide two of the presentation. During this conference call, we will 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 31st, 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 on our outlook as of today, August 4th, 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 third quarter 2026 financial results expected in early November 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 second quarter of 2026 in more detail and comment on our full year 2026 financial outlook. Now I'd like to turn the call over to Bruker's CEO, Frank Laukeen.
Thanks, Joe. Good morning, everyone, and thank you for joining us on today's second quarter 2026 earnings call. We are pleased that Bruker has returned to organic revenue growth in the second quarter and that our focus on cost reduction and profitability improvements resulted in solid margin expansion and non-GAAP EPS growth. Demand for our differentiated products and solutions improved further as our scientific instrument segment achieved 10% organic bookings growth year over year, a fourth consecutive quarter with a scientific instrument's book-to-bill ratio above 1.0. Organic bookings in biopharma grew more than 20% in the second quarter, driven by demand for our NMR, X-ray, and mass spectrometry solutions. In our academic and medical research business, bookings in Europe and China were up strongly. However, U.S. academic orders still remained weak in Q2. We saw notable Q2 order strength in our deep-tech semiconductor tools and energy research technologies, with both at over 50% organic order growth year-over-year. In Semicon Metrology, we sell robust and innovative metrology equipment for chip manufacturers, with significant demand increases for high-bandwidth memory and advanced packaging driven by AI scaling. In energy research, we provide unique tools and modules for fusion energy development and high energy physics research. These proprietary deep tech capabilities, which also include our security detection systems, are valuable to have in the portfolio as life science research demand recovers gradually. These deep tech tools tend to have longer delivery times, in some cases of 9 to 24 months, determined by facility readiness, for example, for a new logic or memory chip wafer fabs or for large-scale fusion development projects. As a result, some of our strong deep tech bookings will benefit our Q4 and then 2027 and even the outer years. We are continuing to take costs out to drive margin expansion and double-digit EPS growth this year, and also again in 2027. We have made good progress in the second quarter, realizing more cumulative cost reductions, and we are well on track for our stated goal of delivering $140 million of annualized cost savings in 2026. I would like to thank our teams for their very important efforts in this area. Effective as of July 1st of this year, Bruker has adopted a new operating structure that combines our BioSpin, Celtonics, and Optics division into a new Bruker Biosystems Group led by Group President Jürgen Srega. The newly merged Biosystems Group addresses the growing need for scientific integration in the postgenomic era, which combines complementary life science research workflows into more comprehensive disease biology insights. Across postgenomic drug discovery, multiomics, and applied markets, our customers connect structural, molecular, and cellular information to understand complex systems biology or advanced materials research. The biosystems group brings together NMR, mass spectrometry, FTIR, Raman, preclinical automation software, and applications expertise in any of these areas for connected workflows from research to quality control. Examples include metabolomics, RNA characterization, or protein analysis, where NMR and mass spectrometry provide important complementary insights. Or, as another example, in battery research development and battery life cycle QC, where NMR and FTIR characterize electrolytes, electrodes, and chemistry. In addition, Bruker Microbiology and Infection Diagnostics, which we sometimes abbreviate as BMIT, previously a division within the Cali group has now been established as a group under the leadership of Dr. Roskong Push. This BMIT group has a fast-growing microbiology and infection diagnostics portfolio from microbial identification, molecular diagnostics, hospital hygiene to emerging antimicrobial resistance testing and next-generation sequencing for sepsis and reflex testing. This modified group structure aligns Bruker more closely with markets and our customers. By organizing around connected workflows, we strengthen group level agility and our ability to prioritize investments that deliver innovation with the most impact. Following these changes, Bruker now operates in four groups, Bruker Biosystems, Bruker Nano, BMID, or Bruker Microbiology and Infection Diagnostics, and Bruker Energy and Supercon Technologies, or BEST. This new structure is expected to drive an additional $20 million of cost reductions in fiscal year 27. All right, on to the quarter. Let's turn to slide four now for the P&L performance of the second quarter. Our Q226 reported revenues of $839 million increased 5.2% year over year, with organic growth of 2.8% or 3.4% organic growth, excluding tariff-free funds in the second quarter. The revenue contribution from M&A was 1.5% and constant exchange rate or CER growth was 4.3%. And the 0.9% FX revenue tailwind was actually 50 bps lower than originally expected. BSI segment revenues were up 2.3% organically, while best achieved organic revenue growth of 8.9% net of intercompany eliminations. Our second quarter, 26 non-GAAP growth and operating margins were 52.1% and 14.1%, respectively, both up significantly year over year, albeit in comparison to a weak second quarter 25, and including a net U.S. tariff refund benefit that Gerald will describe in a moment. Our second quarter 26 diluted non-GAAP EPS was 49 cents, up 53 percent from 32 cents in the second quarter of 25. Moving to slide 5, H126 revenues increased by 3.9% to $1.66 billion. First half organic revenue was still a decline of 0.8%, consisting of a 1.4% organic decline in scientific instruments and 6.1% organic growth at best, net of intercompany eliminations. Our first half-26 non-GAAP gross margin, operating margin, and EPS were all up year-over-year and their performance is summarized on slide five. Gerald will go into more detail on the drivers shortly. Please turn to slide six and seven where we highlight the first half-26 performance of our three scientific instruments group and of best, all in constant currency and year-over-year basis. In the first half of 2016, the Biospin group revenue was $393 million, down mid-single digits percentage year-over-year. Biospin saw strong revenue growth in hospital clinical and biopharma, offset by weakness in China, AkaGov, food testing, and automation. NMR preclinical and preclinical imaging had robust order growth, both up double digits in the first half year-over-year. For the first half of 26, KALIC group revenue of $627 million increased in the mid-single-digit percentage, driven by mass spectrometry, including the TOFWORK acquisition. KALIC saw strength in biopharma, security detection, and European ACAGOV, partially offset by weaker revenues in the U.S. First half revenue growth in molecular diagnostics was solid, while microbiology was roughly flat. Please turn to slide 7 now. First half 2026 broker nano revenue was $507 million with a low single-digit percentage decline. Nano saw weakness in ACA-Gov and industrial markets, while weakness in U.S. ACA-Gov funding continued to impact spatial biology. This was largely offset by robust strength in semiconductor metrology due to AI-driven orders for memory and advanced packaging metrology tools. Finally, the first half of 26 best revenues were up 6%, net of intercompany eliminations, with strong growth in the superconductor business and solid revenue growth at research instruments, or RI. In the first half, RI secured very strong multi-year orders for fusion energy and high energy physics technologies, and I'll come back to that in a moment. So moving to slide eight and nine, on slide eight we highlight our semiconductor metrology nanotools which are now clearly moving the needle for Bruker. I won't go through the technical details but invite you to read those at your convenience. The first half 26 organic order growth was greater than 30 percent and the first half 26 organic revenue growth was greater than 15%, obviously somewhat lagging behind order growth. And this business is very profitable. It has about a 30% EBIT margin. Longer lead times in this business, which can be 9 to 24 months, can result in revenue lagging order growth by several quarters. If you go to slide 9, we touch on our other deep tech areas, our security detection on the left and energy research on the right, and those two businesses also seeing considerable strength. The first half detection orders and revenue were both upgraded, were both up approximately 20% year-over-year, whereas as I just mentioned, our first half research instruments, our iEnergy research, our orders were up well over 100% year-over-year. In general, for perspective, keep in mind that broker, our revenues tend to lag the order trends by a couple of quarters. And for these deep tech areas that I just mentioned, many of them will begin to help our revenue and P&L in Q4 of this year, and then very much into 27 and into the outer years. So in summary, in the second quarter, we achieved solid orders in many life science and markets, and we achieved very strong order growth in our so-called deep tech tools. We made further meaningful progress on our cost actions setting us up for continued margin expansion and EPS growth in fiscal year 26, and we are proactively taking additional cost out steps that are expected to add additional P&L benefits next year. So with that, let me turn the call over to our CFO, Gerald Herman. We will review Brooker's Q2 and Fiscal Year 26 outlook in more detail. Gerald.
Thank you, Frank, and thank you, everyone, for joining us today. I'm pleased to provide more detail on Brooker's second quarter and first half 2026 financial performance, starting on slide 11. In the second quarter of 2026, our results came in at the low end of our expectations on the top line, but meaningfully ahead of expectations on margins in EPS. Our top line results in the second quarter of 26 were unfavorably impacted by U.S. tariff refunds and a stronger U.S. dollar, which translated into less tailwind on revenue, in total approximately 110 basis points. U.S. tariff refunds reduced our organic revenue growth from 3.4 percent to 2.8 percent, but strengthened our profitability in the quarter, adding around 200 basis points to the second quarter 26 operating margins year-over-year. Net U.S. tariffs contributed about six cents to EPS in the second quarter. Most importantly, we also saw the accumulating impact of our cost saving actions accelerate in the quarter together with favorable mix and volume. In the second quarter of 26, brokers reported revenue increased 5.2 percent to $838.5 million, reflecting a pivot to organic growth in the quarter of 2.8 percent or 3.4 percent year-over-year, excluding U.S. tariff refunds. Acquisitions contributed 1.5 percent to our top line, while foreign exchange was a 0.9% tailwind, resulting in constant exchange rate revenue growth of 4.3% year-over-year. Geographically and on a year-over-year organic basis in the second quarter of 26, our Americas and European revenues both grew approximately 10%, while Asia-Pacific revenue declined in the low double-digits percentage, including a low double-digit decline of revenue in China. For our AMEA region, revenue was down low single-digit percentage. BSI organic revenue grew 2.3% in the second quarter of 26, with low single-digit organic growth in Kaled and Bruker Nano, partially offset by flat revenue performance in Biospend. BSI systems revenue was roughly flat, and BSI aftermarket revenues were up mid-single-digits organically year over year. Our BSI segment order book performance was up organically a solid 10% year over year, driven by greater than 50% growth in semi and greater than 20% growth in biopharma, partially offset by declines in U.S. ACA Gov and food safety. Second quarter 26 non-GAAP gross margin increased 350 basis points to 52.1%. Non-GAAP operating margin was 14.1%, up 510 basis points driven by our cost-saving actions, positive net U.S. tariff impact, and favorable volume mix partially offset by foreign currency headwinds as shown on the slide. On a non-GAAP basis, second quarter 26 diluted EPS was $0.49, up 53 percent from the $0.32 in the second quarter of 25. Our non-GAAP effective tax rate was 25 percent compared to 23.6 percent in the second quarter of 25. On a GAAP basis, we reported a diluted loss per share of $0.41 compared to GAAP EPS of five cents in the second quarter of 25. Our second quarter 26 GAAP results include a non-cash goodwill impairment charges of $135 million related to our automation and spatial biology businesses, which continue to experience operating losses. Weighted average diluted shares outstanding in the second quarter of 2026, 452.8 million, an increase of 1.1 million shares from the second quarter of 2025. Slide 12 shows Bruker's performance for the first half of 2026, which has similar drivers to the second quarter. Turning to slide 13, in the second quarter of 2026, our operating cash flow improved $50 million year-over-year, driven by improved profitability and the timing of tax and vendor payments in the quarter. Free cash flow improved approximately $43 million on a year-over-year basis. On stronger EBITDA in the second quarter of 2026, Our net leverage ratio is now 2.8 times as of June 30th, 2026. Turning now to slide 15, our fiscal year 2026 financial outlook has been updated for foreign currency and effective tax rates only. We now expect a foreign exchange tailwind to revenues of 0.5% rather than 1.5% previously, resulting in reported revenue of $3.54 to $3.57 billion and representing reported growth of 3% to 4% compared to fiscal year 25. Organic revenue growth of 1% to 2% year over year, which is unchanged, and acquisitions are expected to contribute 1.5% to growth also unchanged. We continue to expect non-GAAP operating margin expansion of 250 to 300 basis points year over year, largely driven by our cost-saving actions. On the bottom line, we continue to expect non-GAAP EPS for fiscal year 26 in a range of 210 to 215, or non-GAAP EPS growth of 15 to 17 percent compared to fiscal year 25, all unchanged, as lower headwinds from foreign exchange are broadly offset by a higher effective tax rate. Other guidance assumptions are listed on the slide. Our fiscal year 2026 ranges have been updated for foreign currency rates as of June 30, 2026. Now, some color on the third quarter of 26. We expect approximately $20 million of previously planned third quarter revenue to shift into the fourth quarter, driven by semiconductor customer delivery requirements. This results in Q3 organic revenue to be roughly flat to up slightly year over year. On operating margins and EPS in the third quarter, we now expect a slight sequential decrease due to the $20 million semi-revenue shift from the third to the fourth quarter and the six-cent net U.S. tariff EPS benefit previously expected to come into the third quarter being pulled into the second quarter. On a positive note, for the fourth quarter of 2026, we now expect meaningful sequential and year-over-year increases in organic revenue growth, operating margin, and EPS due to significantly higher volume and favorable mix in the fourth quarter. To wrap up, Q2 26 was another solid bookings quarter for Booker, giving us further confidence in the gradual market recovery in several key markets and geographies. Our cost-saving actions are well on track, positioning us well for significant margin and profitability improvement in fiscal year 26, and we're driving towards further significant margin improvement and double-digit EPS growth also in 2027. With that, I'd like to turn the call over back to Joe. Thank you very much. Thanks, Gerald.
We will now begin the Q&A portion of the call. As a reminder, to allow everyone time for questions, we ask that you limit yourself to one question and one follow-up. Operator?
Operator
We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. And our first question will come from Puneet Sauda of Leerik Partners. Please go ahead.
Puneet Sauda Yeah, hi, guys. Frank, Gerald, thanks for taking the questions. First one is on the tariff refund treatment. some of the peers are calling it as a pass-through with no net impact as these refunds are passed on to the customers. So just wanted to clarify on the treatment and what is embedded in the tariff refund in the second half and for the full year guide because you're reiterating it, but it does appear that if we account for the refund that it is a step down. So if you could just clarify those points.
Hi, Puneet, it's Gerald. So, with respect to the first question, with respect to the tariff refunds, as you can guess, right, some of those tariff elements were charged to individual customers and now resulted in the contra revenue element, which is considered in our press release and the materials we provided. With respect to EPS, we've also indicated that that generated roughly 200 basis points of margin expansion in the quarter for the second quarter. As far as the second half goes, we've already factored that or baked that into our earlier guide numbers. We had just actually assumed that it would be more likely recovered in the third and the fourth quarters, not in the second quarter. So we had a slightly earlier pull forward of that into the second quarter. But overall, that's already been baked into our original guidance model.
Okay. And then, yeah, that's helpful. I'll follow up later, but just maybe one quick one on Semi. You're pointing to 50% order growth there. Correct me if I'm wrong. But in terms of, I mean, the visibility into this and the timing of delivery, maybe, Frank, could you double-click? Obviously, this is a market that is fairly actionable right now, just given the AI demand. What sort of sustainability that you're hearing from the customer end uh because obviously these are you know somewhat separated from the the the leading ai companies that are driving that demand so maybe just could you elaborate a bit on the timing of the the installs and and conversion into revenue yeah um yeah i know that this is the orders are remarkable for the first half and even more so in q2 of course there'll be some fluctuations but if anything it seems to be accelerating as one would expect probably we we think and from what we read about others that are more
deeply in semiconductor lithography or metrology we think this is very sustainable this year and next and then I think the debate is whether it's sustainable at that pace in 28 and beyond. People just don't know yet. But I would think that the visibility of the sector for the next six quarters plus seems excellent. That's not necessarily our own data. That's, you know, the general what we read from the industry. It is correct that many of these orders, as wonderful as they are, they're absolutely fantastic. They usually have an even longer delivery times than an average you know nmr or mass spec so that can easily be three to sometimes you know six to eight quarters visibility is very good because those customers are very they're like almost like clockwork right and they know when they need it for a new waiver fab and and and so on so good visibility but you know a little bit of a delayed gratification as more of some that comes in in Q4. As Cheryl said, I think we'll have a very strong Q4 and then quite a bit of this goes into next year in terms of revenue and P&L help and even into 28. So, great sustainability, great visibility, slightly longer lead times.
Operator
The next question comes from Michael Reisken of Bank of America. Please go ahead.
Great. Thanks for the question. I want to I'll just go back to 2Q performance briefly. I'm not sure if we want to talk ex-tariffs or including tariffs, but overall organic was still a little bit lighter than we would have expected, especially I think in BSI. We were looking at more than like mid-single digits, especially given the comps. So you touched on academic and government, some other end markets. Again, a lot of that was expected and known. Is there anything unusual that happened in the quarter, any push-outs or timing, or just sort of how to think about TQ relative to your prior assumptions.
Yeah, Mike, thank you. So other than about the combined effect of tariff refunds on revenue, which was, as you can see, was 60 BIPs, and there is an additional 50 BIPs effect from the currency – tailwind actually being about 50 bits lower than had been expected because currency rates change. That'll become more pronounced in Q3. In Q3, that currency tailwind is on the revenues line is turning into a currency headwind. So in Q3, that takes out about, it's not organic, but it takes out about 15 million in revenue, independent of the revenue shift that Gerald had explained. But back to Q2 and to your question, so that combined effect was about 110 bps of growth rate. Still on the light side, on the revenues and on the organic revenues, and the number one and two and three reason are U.S. ACA GOV revenues in Q2, which is the result of weak orders in the second half of last year, were down more than $10 million, actually more than $15 million still year over year. So as I said earlier, yeah, the order, you know, that just takes a couple of quarters. What we're seeing there right now, that was the biggest weakness in revenue in the second quarter.
If I could squeeze the ball up, just Gerald, maybe for you. So the margin ramp through the second half of the year, I mean, obviously, there's the margins came in better in 2Q, but a lot of that was tariffs. If you could just walk us through the margin ramp in 3Q in the rest of the year, I know that's a big second point. So I would love to get some clarity on that. Thanks.
Yeah, in terms of the, I mean, I mentioned in my prepared remarks on the third quarter, we are expecting some shift of revenue, particularly related to semi, as Frank was just noting. Got strong orders in some of the revenue because of customer timing is moving to the fourth quarter. In addition, we, as I mentioned earlier, we did have a shift of what we expected from a tariff perspective over the third quarter into the second. So we think from a margin perspective, we think this is likely going to be somewhat down from what we initially expected. And on the revenue line, we think we're going to be sort of flat to slightly up from an organic perspective in the third quarter. Then, of course, we have a strong expected fourth quarter, significant growth there. There's a bunch of factors related to that. There's the push-out I just described in semi. We have a much stronger expectation around – we have an ultra-high field coming into the fourth quarter. We have a number of mixed improvements that are much better in that we have a much higher volume. And as I think you know, we get to a much better story in terms of our overall EPS growth in the fourth quarter. It's shaping up to be a larger fourth quarter than we had expected, likely in around the billion-dollar range. We've done this level of revenue growth in the past in the fourth quarter, so I think we just can execute to those levels, and that's our expectation at the moment.
Operator
The next question comes from Tycho Peterson of Jefferies. Please go ahead.
Okay, thanks. Gerald, I'm going to actually pick up right there on margins. So you mentioned mixed. I mean, is there, you know, some coming from the pricing actions you took last year coming out of backlog, and then how are you thinking about input costs here, you know, going forward. Also, are you backing off the 300 to 350 basis of core margin expansion? You had that in the deck last quarter. I didn't see you reiterate that. And then the incremental cost actions, how do we think about those flowing through into 27?
Okay. Well, there's a lot there. Let's start in the reverse order. On the cost actions, we're well on track. We're North of the $140 million, Frank mentioned the adoption of a new operating structure for Bruker, and that's going to contribute some more additional savings beyond the $140 million we were planning for in 2026. That will mostly hit in 2027, but still some – so we're well on track with, I would say, strong cost-saving actions even going forward beyond what we've already delivered. By the way, just from a cost-savings perspective, we have delivered about $30 million in cost-saving actions in the second quarter, so we're kind of right on track to where we expect it to be. With respect to the other questions, let's sort of take one at a time here. I think our cadence with respect to the third quarter has just now shifted a little bit further into the fourth. As I said earlier, we have a strong setup in the fourth quarter, typically, even seasonally for broker, and it appears they're going to have another one of those as we march into the fourth quarter of 26. The mix story, we are going to get some and continue to get some pricing benefit from adjustments we made in 2025 into 26, including in the fourth quarter. The biggest piece, I'd say, for the fourth quarter performance is really going to be about volume. With the scale that we will deliver in the fourth quarter, I think the volume piece is going to be much more important, actually, than just the mix elements. But we do expect better mix with respect to SEMI or also Highfield and some of our other key businesses are going to perform more strongly in the fourth quarter, based on what we see at this stage.
I think, Tyco, to your operating margin question, if you even look at our slide 15, so if we haven't been clear enough, yeah, that continues to be based, our guidance continues to be based on an operating margin up 250 to 300 BIPs reported, including a 50 BIPs headwind. And so detailed a little bit on our slide 15 on the outlook. So that is unchanged.
And then on the COG side, Gerald, just inflationary, you know, memory chips, tungsten, et cetera?
Yeah, that seems to be, I mean, from an energy cost perspective, we've already baked that into the guide earlier. We're not seeing, at least at this stage, any significant pressure there. At this point, we are having some supply chain challenges around componentry, mostly on the electronic side.
But at this stage, we're pretty comfortable that that's already been baked in to our current guide okay and then Frank just in terms of the order book I appreciate the color on semis just can you maybe talk about you know elsewhere academic and gov maybe where you're feeling a little bit better you know you talked last quarter about some signs of improvement there yeah it's it's the US still weak as I said and then so we're seeing the encouraging NIH outlay outlays but they did not yet translate into significant Q2 orders. We will observe what's happening in Q3, and of course the Q3 budget flush, which seems to be underway, could for us also mean decent Q4 U.S. ECAGov bookings, but we'll see. In Q2 already, the ECAGov orders outside of the U.S., particularly in the EU, was up more than 10%. And in China, the orders were up more than 20% for ACAGOV in Q2. So remember, China was down on revenue, but then on orders, it was up more than 20% in ACAGOV. So that's that six months delay that you usually see at Rucker. So yeah, ACAGOV, which, you know, I think that really supports the strength of our ASMS mass spec introduction. So the new things we can do with our NMRs and of course our, you know, even our other spatial biology and other tools or so that the portfolio and I think is spot on. I think the innovation will have major impact if we only had a little bit more U.S. funding, but maybe that's coming and where we have funding, it really, it is, it has a big impact. So that bodes well for AkaGov competitiveness and market shares gains, except it's starting right now in Europe and in APAC and China in particular.
Operator
The next question comes from Sabu Nambi of Guggenheim. Please go ahead.
Hey, guys. Thank you for taking my question. Dean, this will be at least the second year in a row where there is a timing dynamic challenge at the top line and seemingly a push out to Q4 or maybe even 2027. First, can you explain steps you're taking to improve visibility? And second, at Doug's bus tour in May, you indicated that 4% was a good starting point for 2027 revenue growth expectation. Given the timing dynamics, if this revenue gets pushed out to 27, would that be on top of that 4%? Thank you so much.
So, Subu, very good questions. Yeah, I mean, what are we doing to increase visibility? Strong orders, right? We've had improving orders with better book to bill above one and pretty good order growth in the scientific instrument segment, again, in Q2 and now four orders in a row. that is helping us with visibility the visibility sometimes however is you know and especially in these deep tech orders um uh for q4 and for next year um so yeah q q q4 will should have a nice mid single digit organic growth rate so it's a little bit you know it's a little bit of a roller coaster with q2 growth and q4 organic growth and q q1 and q3 q1 was down q3 will be flat to slightly up. But for the year, it's what we've been aiming for and what's in our guidance, namely the organic revenue growth of 1% to 2%, which is a transition year, admittedly, but it comes from a year of 25 where we were declining organically for all the factors that you know. Whether Q4, the Q4 growth rate is then what an indicative of our 27 growth rate is too early to say, so give us a bit more time to see how bookings are, obviously in Q3 and yes, also in Q4, and then we'll be able to comment on that. We generally believe, of course, in a further growth acceleration in 27, organic growth acceleration in 27 compared to 26, but we cannot quantify that at this time.
Thank you for that, Frank. And Gerald, I know you kind of explained this on the call on margins. You previously indicated that even with flat top-line growth, you would be able to meet margin targets in Q3. You pointed to progress, including facility rationalization, timing as support. Some of it was just structural. What changed? Is it just this product mix? And do you get this back at some point over the subsequent one or two quarters? Thank you so much.
I don't think anything changed. Gerald was just talking about sequential. What happened is that we had assumed that we would get the tariff refunds maybe rateably over Q2, Q3, Q4, and remarkably they came in rather quickly, mostly in June. So that's why our margins, that's why we pointed it out in Q2, our operating margins and our EPS had a greater benefit than we had expected from the tariff refunds coming in faster. we'll still have some in Q3, Q4, but to a lesser extent. So Q3 is still okay, also on the margin side, but sequentially Q2, in a good way, we overshot a little bit, primarily because of these tariff-free funds that really came in the last half of June, quite honestly, faster than we had expected. We thought the government would slow walk them. They did not.
Operator
The next question comes from Luke Sergat of Barclays. Please go ahead.
Great. Just a quick one on the bookings, just to clear up. So the bookings, were they down quarter over quarter? I'm just trying to get a level set of the overall dollar size that you guys had.
So you mean sequentially?
Were they down sequentially? No. They were up sequentially.
We're scrambling for the numbers, but they were up, yeah.
Okay, great. And then as you think about the 4Q step up here, and in light of the strong bookings that you guys have had, how much of that 4Q step over the billion dollars, roughly about that number, is already covered in your backlog?
So it's obviously going to be more than a billion, right, to do the math. It's 1.02 to 1.04 or something like that. Yeah, roughly close to that. Percentage of that, a lot of that is in our backlog now, but of course, we also get some, you know, we get some ongoing orders. I don't have a number right now, more than 50% for sure, but I don't have an exact number, probably two-thirds. But again, sorry, I do not have a, you've stopped us twice. We do not have exact numbers for both of your questions. Well, we will, however, when we call you back, because we just don't have it at our fingertips.
All right. That's a, that's a bucket list to stump you twice, Frank. So I appreciate it. Thanks.
Yeah. Wow. Luke, you're on a roll. More questions. Luke, do you have any other question? I'm sorry to do this to you. Oh yeah.
So, yeah. So, so on the, um, and just sticking on the guide here, as you guys think about the pickup and, and in the business, but like from a demand perspective, what needs to get better? is it all on the academic side? Are you seeing continued momentum on the pharma? Anything there from a geography or M market that needs to actually improve for you to realize that back at the 4Q guide?
Quite honestly, almost everything is pretty good now. Applied markets of food analysis is a little weak, but that's small for us anyway. And USACOGov clearly This is the one outlier, even with U.S. ECAGov, even if it's stayed weak, we'll take a growth step up next year. And if U.S. ECAGov came back, at least in a modest way, then, you know, obviously we take a bigger growth step up next year. So more and more areas, biopharma has been great in the last two or three quarters. And again, in Q2. So pharma, biopharma, the tools that we sell into that, Tim's Omnis, Tim's Subsystems, NMRs, Spatial Biology, X-ray, it's really all quite good. Plus then what people sometimes call these idiocratic growth drivers because they're not what we call them deep tech now because they're just not all life science, but they're absolutely terrific. However, you know, with this delayed gratification of them typically having nine, sometimes longer, not nine months or longer delivery times, and that's driven by the customers, not by our capacity.
Great. Thank you. Just on your other question around bookings growth sequentially, it is up, but I'd say it's low single digits up organically from the previous quarter.
Sequentially. Yeah. Yeah.
Operator
Next question comes from Casey Woodring of JPMorgan. Please go ahead.
Great. Thanks for taking my questions. Just to follow up on the deep tech piece, I appreciate the comments on Semi, but you also flagged strong security detection and energy research orders in the first half of the year. I guess it's the strength that you're seeing there and the outperformance. Was that something you had expected to begin the year, and was that contemplated in the guide, or is this kind of incrementally better than expected? And then how do you view the sustainability of both of those businesses in terms of demand as we look into 2027, especially on the security side?
On the security side, that was better than expected, but not hugely better. We expected strong security detection orders, but probably not greater than 20%. sense, so it was incrementally better than what we had expected. We have a very good product line there and differentiated products, plus security and defense concerns are not evading, so that looks very sustainable. I think that business for, as far as I can see or anybody can see, we would expect good good growth trends there and with good margins in security detection that started, you know, whatever, a couple of years ago, and it's just been getting stronger. It was incrementally stronger than expected, but partly baked in. A lot of these orders are for things that you deliver to an airport sometime middle of next year, so it doesn't all go into Q2, Q3, Q4. And energy research that greatly exceeded in certain terms of timings and amount that greatly exceeded what we had expected it's well over a hundred percent at that level at that high growth rate it's not sustainable but that business is very sustainable because a lot of some of these orders are literally for 27 28 and some going to 29 so they'll they'll they'll have very good on continue continuing revenue growth in the foreseeable future. But they've been batting, I don't know, they've been batting 800 or something instead of the usual batting 400, to use baseball terminology. They've just done really, really well. And their order success rate and win rate has been ahead of their own expectations, and we're delighted.
Got it. That's helpful. And then maybe just a quick follow-up. Europe grew 10%. Maybe just walk through what you're seeing across the businesses in that region.
Thank you. And what region was that? I didn't catch it.
Europe grew 10%. So just maybe unpack that performance. Thank you.
I believe it was healthy on NMR, on other Biospin tools as well, EPR and preclinical imaging. It was healthy on the mass spec offerings. I don't have it for all the other divisions. It was very healthy also on molecular diagnostics. Our Alitech business is just doing great, and they just keep growing and placing instruments ahead of business plan last year. They thought that might settle a little bit. It hasn't had first-half placements in molecular diagnostics. The Alitec business was ahead, well ahead of business plan, and that then bodes very well as the consumables pull through that builds on that larger installed base. Those were some of the highlights.
And I'd just add biopharma was solid as well in that quarter in Europe.
Operator
The next question comes from Dan Arias of Stifel. So, please go ahead.
Hey, guys. Frank, just a follow-up on your comments around revenue recognition timing tied to the metrology What portion of the portfolio falls into that bucket of six-plus quarters when it comes to acceptance and just hitting the P&L? Just trying to get my hands around on pie charts, et cetera, within that business.
Okay. Hi, Dan. Thinking for a moment. Okay. the deep tech portfolio is maybe all together is around 15 percent of our portfolio now i cannot break out how much of that would have three or four quarters delivery time versus six and longer that i that i can't break out readily okay but the deep tax portfolio with a longer Superdelivery times of, let's say, three to six quarters is about 15% of our portfolio. And that does not include, in this case, we have not, 15%, we have not included Supercon technologies. I guess you could also call that deep tech, but I didn't put that into that bucket. Here I looked at instruments and systems and modules rather than superconducting wires. So if you, yes, so 15% is deep tech, semiconductor metrology, security detection, energy research. But in this case, I did not bundle the Supercondom solutions into that, that of course they have, you know, they get these five or seven year framework contracts that has a very different rhythm.
But about 15%, I think, is the question that you're, 15% is probably what you're looking for. yeah helpful um and then just maybe on you know input costs which you guys referenced before the the market for helium is pretty tight again how much is that a factor for your magnus business at this point i mean it's been material in the past i know that you guys have worked to have those machines be less helium intense than they used to be so just kind of trying to check in on whether that's something to think about thanks yeah that's something we think about and of course there is even blockades and all, right?
So it's manageable because we've taken so many proactive steps in recent years. First of all, at our factories and final test sites that use a lot of helium, they really all have helium reliquification, reliquefaction, sorry, that's the terminology. So we capture all of it and reliquify all of it. And I think we're at 80, 90% that we liquefy. In addition, many of our newer magnets for the customers and also for our deliveries and installations have considerably lower helium consumption and we've offered now for some years, we and also some other third-party vendors, helium gas captures and recompression, repurification, liquefaction solution. So, more and more of the larger labs are equipped with that. So, I'm not saying it's pain-free, but it's been greatly mitigated. And I'd say at the overall financial level, it's not something we need to highlight. It's manageable.
Yeah, fair enough. Okay. Thank you, Frank.
Operator
The next question will come from Jack Meehan of Operon Research. Please go ahead.
Good morning, everyone. I want to dig a little bit more into Caled first. The microbiology business flat year-to-date, can you just give us an update on what you're seeing in Maldi? Historically, that's been a pretty steady double-digit grower.
Are there any regional or competitive dynamics you would call out? um hi jack uh so i uh no i don't think so i think there's just also some quarterly fluctuations they ended up getting some very large deals that they'll expect to deliver in q3 and q4 for instance in latin latin america and some other places so i think that's more of a fluctuation generally that instruments business tends to be maybe now a mid sometimes high single digit grower but the aftermarket for that business tends to be in the double-digit grower so and
that's also our expectation for the year great okay and then appreciate all the color in terms of the cost savings program cadence was wondering if you could humor us and just talk about like how you feel about the trajectory on margins in the 2027 how much of that you know we can assume just kind of builds into the next year versus areas you might be looking to reinvest?
Okay. Well, we're not ready for 27 color or guidance. But yes, we very much intend to, again, grow our margins well above 100 BIPs next year as well from our 26 basis. And of course, We're looking for double-digit, hopefully mid-teens, EPS, non-GAAP EPS growth next year as well. As we had said, and that that won't end with 27, we're really on a – our goal is to drive back towards a 20% EBIT operating margin as quickly as possible and then more gradually move up to the low 20s in EBIT and mid-20s in EBITDA. great thank you frank congrats on offer on yes congratulations yeah one more question are we one more question yeah okay yeah operator we can do one more question one more question okay our
Operator
next question will come from brendan dygen of city please tell ahead hi this is albert who on for Brandon.
Speaker 12
I just want to circle back on the 4Q growth. I kind of want to exactly understand what is baked in. We got the 20 million push out from 3Q, the ultra high field that was originally supposed to be in 2Q got pushed to 4Q. Am I missing anything here? And can you remind us why exactly they got pushed out in the first place?
And then what's the confidence level that it won't get pushed out again thank you okay so the third item is of course that um currency has turned this year this year um with q3 being the switch over point where a revenue currency tailwind turns into a revenue currency headwind so for the year as you've seen that's the fx part that we adjusted in our overall guidance it's now a half percent tailwind and It used to be 1.5% tailwind, and the biggest effect of that is in Q3 and in Q4. So that's not organic, so maybe it shouldn't be a concern, but just saying. Q4 growth, yeah, mostly the $20 million in deliveries that I think are shifting from, that Gerald said, are shifting from Q3 to Q4. It's almost all semi. That's simply when the sites are ready, when the customers are ready. and of course it's a little different in the mix from what we had expected at the beginning of the year we're a little bit more a little bit more semi heavy and and and faster turning akagav or so in the US still weaker than we had expected because monies are coming out later and the ultra high field that we are expecting in Q4 revenue you know I mean these things are never guaranteed because we have to install them, but I think our success ratio of delivery and success on installations is greater than 80%. But don't get hung up on that either. The NMR business always has the ability to make it up. If one slides out, they'll try to put something else. So we're pretty comfortable with our strong Q4 guidance or implied guidance for Q4 at this point. I think that's simply what happens every year. We try to smooth it out a little bit and then during the year some customer delays or sometimes technical delays come in. So I think we'll be cool in Q4 and Q4 should be a good quarter and Q3 should be okay. But sequentially not as strong as what we had expected.
Operator
This concludes our question and answer session. I would like to turn the call back over to Joe Koska for any closing remarks.
Thank you for joining us today. Brokers leadership team looks forward to meeting with you at an event or speaking with you directly during the third quarter. Feel free to reach out to me to arrange a follow-up. Have a good day.
Operator
The conference has now concluded. Thank you for attending today's presentation and you may now disconnect.
