Well, again, welcome to TD Cowen's 43rd Annual Healthcare Conference. I'm Max Masucci, one of the life science and diagnostic tools analysts here. We're pleased to be joined today by Bruker, one of the three large cap names in our coverage, and a diversified participant in several of the tools, diagnostics and other markets. With us is Executive Vice President and Chief Financial Officer, Gerald Herman. For anybody that has questions, feel free to send me an email, and I'll check it periodically. It's great to see you. Thanks for being here. Yeah, I'm delighted to be here in person. All right. So maybe just to kick off with a big picture question, you just wrapped up a strong year, both on the top and bottom line, in a unique market environment. For those that haven't been tracking the companies closely this past year, what would you consider the headline takeaways for Bruker over the past 12 months and maybe in Q4 in particular? Sure. Well, thanks. It's great to be here, and thank you for all coming. I guess in terms of headlines for 2022, probably the biggest headline is that we navigated through a pretty challenging supply chain and macro environment in the year. We did have some initial disruptions, especially in the second quarter, related to supply chain issues, and they were somewhat severe. They impacted our actual, you know, overall performance. We recovered nicely, and I think navigated well through the fourth quarter. Just in terms of overall headlines for a full year 2022, I think the key would be that we delivered organic revenue growth of 10.2% for the full year. Also very strong order bookings performance, and that exceeded 10% in 2022. That's coming off of a very strong 2021 rather, I would say it's a maybe somewhat understandable. We've delivered 19% organic revenue growth in 2021, 10% in 2022. Our expectation, which we'll talk about in a moment, is in the 8%-10% organic revenue growth for 2023. I'm very pleased to say that we, for the first time as a company, hit a 20% operating margin performance in 2022, that's an all-time record for Bruker. We've been marching our way forward, over a decade of improving operating margin expansion and did, I think just that, about 60 basis points improvement in 2022 under very difficult circumstances. I think the only other item I would add is the order bookings performance for the fourth quarter was quite strong for us. As some of you may know, we made some comments last week, regarding a continuation of that order bookings performance in the first couple of months of 2023 so far. Yep. Okay, great. I mean, that parlays into the traditional guidance question. You know, the 2023 guide, it beat consensus on the top line in the high end of the EPS range was in line with analyst expectations. Maybe starting with revenues. Organic revenue growth of 8%-10%. If we separate what you would consider the legacy or core business, you know, what would you consider that baseline organic growth to look like if you excluded the Accelerate 2.0 product line? Just to frame it for everyone, we've identified Project Accelerate 2.0 as essentially, some initiatives that are targeting specific, end markets that deliver higher organic revenue growth and higher operating margin performance. That represents a little over 50% now, about 56% of our overall revenue mix. If you take that piece out, the remaining, has actually been very healthy. I would say we've seen significant growth in that area, particularly, driven by our organic order bookings performance. Relative to the non-Project Accelerate 2.0 areas, we continue to think that those will perform quite well in 2023, largely due to the large backlog that we have associated with those products. I think for 2023, that's going to probably be potentially at the low end of that 8%-10% range, maybe even a little bit lower than that. Fundamentally, we still see good solid growth coming out of that. I would say, you know, those that are not that familiar with the story, you know, the company is very focused on innovation, even in our core markets. It's not just about some of these other breakout-related opportunities, which we'll talk about, I'm sure. It's more fundamental. It's even in our core business, we continue to innovate, strongly, and we contribute a significant amount of R&D activity even into the core business to drive that innovation and ultimately that organic revenue growth in some areas are performing extremely well in that portfolio, despite the fact that they don't meet the mark of the Project Accelerate 2.0 initiative. Yeah. Well, that's a good representation. I actually am surprised. I thought that the percentage of total revenues would be a little bit lower. Mm-hmm. Yeah. That's, that's great. It's safe to say that, you know, the 56%, is that the number that we said it? Of Project Accelerate, yes. Yeah. That would be where there could be variability in the guide, right? Is that a safest assumption? Well, I would say there's, I mean, we baked in a lot of pluses and minuses- Yeah into our overall guidance outlook for 2023. I would say if there's gonna be upside, it's more likely to be in the Project Accelerate area than it is to be in the, in the core elements of the business. There's a lot of variability, including supply chain, macro. I won't go into all the details, but you know where I'm going with that. Yeah. I know that this is a recent acquisition, but [Inscopix] is, I believe, accretive to overall company gross margins. Mm-hmm. Still, you know, low, you know, revenue contributor. You know, at this point in time, we've got some M&A questions. Yeah ... later on, so maybe we'll touch on them then. Sure. Happy to talk about those. All right, just moving to additional detail around, you know, margins and EPS assumptions in 2023. You're lifting your R&D spending to roughly 10% from around what? 9.3. 9.3. 9.3 for 2022, yes. That incremental R&D spend will be focused on the proteomics and spatial offerings. Mm-hmm. Proteomics and spatial, I think, are used broadly. Mm-hmm ... as terms. It would be great to hear some additional detail around, you know, specific areas of focus. Sure ... you know, within proteomics or spatial, or specific areas of focus for the incremental spend. Yeah. Just generally speaking, what we consider to be our breakout opportunities relative to many products in our portfolio are largely in the proteomics and the spatial biology area. We define proteomics fairly broadly. We're talking about deep proteomics unbiased or even in some cases biased. We have very targeted proteomics products. We could talk more about those. I mean, generally speaking, our view is that these are really significant opportunities for Bruker and largely for the life science space generally. There's been a wide view initially that genomics was really going to be the solution to most disease biology understanding. We've concluded, I think, over the last few, almost a decade now, that while genomics has made an enormous difference to this space, it has not answered many of the significant issues associated with disease biology. You and I can have the same gene, not necessarily have the same disease. We believe that that's largely due to proteomics and more generally multi-omics when you start to look at cell structures and how they express themselves, and a better understanding of that is really critical. In this space of proteomics, we introduced a series of tools, largely in the mass spec space, especially with our timsTOF Pro product about four years ago. That product has really taken on a whole different dimension in terms of understanding of the proteome. We've, since that time, introduced a series of other products in the portfolio in the timsTOF area that have really added another level of understanding. We have a high throughput instrument. We have a kind of a workhorse product we call timsTOF Pro 2. We have a single-cell proteomics product, which is a high-end product targeted specifically around high-end research into what was targeted to be, you know, high-end research institutions, but it's now even moved into the biopharma space. Just generally, our view on proteomics is that we wanna be known as a broad-based proteomics organization that offers solutions, not just instruments. Some of that is driven, some of the acquisitions we've done, and we can talk about that more specifically in a bit if you'd like. Also we believe that there's real opportunity to not only gain market share in the proteomics space, but also to expand the market. That's a lot of what our tools do, is they generate insights that were never there before. You can look at more proteins, you can look at them differently, you can look at protein expression in a way that didn't exist literally even 2 years ago. That's permitting, you know, broader, larger cohort studies from a research perspective that you never saw in the past. On the spatial side, we have introduced a number of products. We're still in fairly early innings in the spatial biology space. It's a hot area. Fundamentally, we believe, as usual, we bring technological advantages into that space that don't exist there today. We tend to be disruptive when we introduce these products, these new technological advances into the marketplace. The MALDI Biotyper, in more clinical settings. We've done it now, I think, in the timsTOF environment, and we expect to do this more broadly in the spatial area. We have spatial proteomics elements. We have key pieces which have yet to be even launched, with genomics offerings and a series of other products that we will be introducing, that I think, again, do some of the same things we've done on the proteomics side in the spatial biology area. I would say that it's fairly early innings in the spatial area for us. It's, you know, we have the technology, I think, and the strategy to execute on that. We don't have as much in the commercial infrastructure, and that's part of what we're doing in terms of our overall spending, is focusing on continuing to fund the proteomics area and continuing now to build our commercial and our R&D infrastructures around the spatial biology area. Sorry, that's a long answer, but I think it helps people to understand the targets that we're going after in these particular spaces. Yeah. No, that is helpful, because, you know, you can have spatial phenotyping, right? There's a range of different types of spatial offerings, and there can be different call points, right? Yeah, for sure. No, absolutely. I mean, I guess in the early sales interactions for some of the spatial-. Yes ... offerings, you know, how have those interactions gone? Have they been largely competitive displacing? Yeah ... or, you know, first time adopters of spatial technology? I would say in the spatial area, our focus has been kind of. First of all, we've only launched the. We've got some offerings already in the spatial area before we launched the Canopy CellScape instrument, which is kind of one of the, I think, probably cutting edge instruments that we talked more about. Essentially, some of our other instruments have been focused more on, you know, phenotyping and being able to use biomarkers in a specific way. I think for the first time, our CellScape instrument really gives us different capabilities in this space. We think this goes up against some of the best that are offered in the industry, both in terms of high dynamic range, the sensitivity, our resolution capabilities, and just insights in a way that, you know, we think quantitation in particular, and this is something we probably should talk a little bit about. Bruker's famous for not just delivering high technology instruments, but also being able to reproduce experiments over and over again and have you get quantitation in a way that is meaningful from a research perspective. Our target in the spatial area has been focused on key opinion leaders and identifying, you know, who those players are. Having introduced the CellScape product into them and then allowing them to use that product in their environment. It's a really, I would say, very positive reaction so far. We've got a number of orders. We launched the product in late Q2 of 2022. We've got a number of orders in a very significant pipeline at this stage. I think the differentiated technology makes a big difference here. Our biggest challenge at the moment is really just commercial, you know, getting the channel structures put in place and being able to execute on that. Again, we've got some experience doing this in other parts of our portfolio. We just have to execute well, and it has to be funded, hence the investments that we're planning to make in this space in 2023. We think it's the right time to make significant investments in this space, in both spatial and in the proteomics area. Well, we saw a few acquisitions last year that were more related to the consumables, right? Yeah. Some adjacent markets associated- Yeah ... with some of our proteomics spaces, yes. I would imagine with some of the expanded capabilities in spatial, I mean, Is that, you know, gonna come at a premium, you know, price, I guess, let's say, but end user? I guess I'd say relative to the M&A activity we did, we've done a number of smaller tuck-in acquisitions, which are either technology feeds or synergistic acquisitions, largely in the proteomic space, but certainly in others. On the spatial side, we completed a $80 million, s orry, a $100 million acquisition of Inscopix, which you mentioned earlier. This is a very interesting acquisition for us because this is a company that established essentially a niche market in brain circuitry and tracking, you know, free roaming animal behavior against brain neural activity. It's the first company that we're aware of that it actually has sort of, I'll call this spatial tracking of neural activity connected to directly to behavior. Why is that important? I think from a neuroscience perspective, it's hugely important for looking at neurodegenerative diseases, whether we're talking about Alzheimer's, dementia, or even more specific neurological disorders, you know, including some of the more challenging elements that are out there. Moving into that area is significant for us. It allows us to really explore the neuro area more fully than we had previously. We have some products in that space, but this is now a much broader application of that. I think it has significant growth opportunities, and while it's accretive at the revenue and the gross margin line, it still needs some work on the operating margin line, and we'll be working hard to, You know, some R&D and infrastructure, as sales and marketing infrastructure into that business. That's one area. I mean, the other that we have yet to launch but is a company we've developed in conjunction with Harvard Medical School associated with genomics. It's a company we call Acuity Genomics. For those of you that are really interested in this, I encourage you to come into our investor day, which is gonna be scheduled for June 15th in the Boston area, where you'll see more details around the genomics offerings that we will then have combined with some neuroscience and some of our, you know, fluorescence microscopy tools that are already in the spatial area. I'd say those are significant acquisitions. We did a small acquisition of a different technology in neuroscience as well. Very well-funded markets. I think there's really significant growth opportunities there. Yeah. It just seemed like the right time, you know, to maybe narrow in on yeah, neuroscience and also clean tech. Yeah. We'll talk more about that in June. I mean, we do have some interesting technologies that are already used mostly in our some of our other smaller core elements of the business, we're now developing those into more significant technologies that we think can be really significant in the clean tech or green tech area. I mean, one of them is around the production of superconducting cavities that are used in wind farms. We see this as. We received some orders, you know, in the fourth quarter. We related to that. We also have received an order for some fusion-related activities that are largely China-based. Interestingly, we're a U.S.-based company. Very interesting dynamic going on there. Those are relatively small elements in our portfolio right now, but those could grow to be significant over time, for sure. Yeah. Of course, a proactive approach towards, you know, ESG effort. Yeah, for sure. Absolutely. Maybe, yeah, going back to, you know, margins, profitability and whatnot. Sure. Outside of the slight uptick in the R&D spend, what are the other variable factors that could impact your ability to meet the target of 50 basis points of organic operating margin expansion in 2023? Yeah. Well, certainly, there's ups and downs here. The up sides we've talked a little bit about already in terms of our Project Accelerate initiatives, and hopefully those will deliver or over-deliver from what we originally planned. I mean, the downsides, of course, are some of the macro elements. Mm. associated with what's going on from an inflation and from a recession, potential recession perspective in some geographies. Of course, there's still the supply chain issues. We're not past that at this stage in my mind. We experienced some supply chain issues in the fourth quarter of 2022, and so far we haven't seen anything thus far in the first quarter, but I think it's going to take some quarters for this to level out. I think there is some risk with respect to that side. Then there's the other piece which we haven't spent a lot of time talking about here, but I've been talking to investors about, which is more, you know, price realization versus the inflation elements. Just to talk about that for 10 seconds. In fiscal year 2022, we mentioned the fact that, you know, because of our backlog levels and the fact that we tend to have fairly long cycles in our products, you know, generally speaking, we were very proactive in our pricing actions to increase prices to accommodate inflation increases both at the wage level, but at the materials level as well in 2022. We estimate that we had about 100 basis points of headwind in fiscal year 2022 related to that. That's net of price realization and inflation overtaking it. We estimate that in 2023, that's still gonna be a headwind. We estimate that to be about 50 basis points headwind, you know, to margins on in 2023. There are some, you know, risks associated with that. Right now, with the backlog that the company has in place, as well as what I think are really interesting technological advances in a number of our key markets, together with what we've seen even in the fourth quarter around biopharma growth, particularly here in the U.S., but in other places as well. We think there's some ups and downs, but when you bake it all in, you know, we get to this 8%-10% organic revenue growth and very solid EPS growth for the year. Yeah. I was spot-checking the installed base exiting 22 versus 21. Yeah. it expanded, like, 41%. Yeah. in both years. Yeah. Right. I was curious, you know, within timsTOF, if you could maybe call out, you know, any of the... Is it the workhorse? Is it the single cell? You know, which of the platforms... Yeah. you know, seem to be either gaining momentum or sustaining... Yeah. You know, that strong biopharma growth you saw this past year. The way we look at this is we really look at it as a portfolio generally, meaning, you know, every year we add another instrument into that portfolio and develop broader solutions as the market demands, and we've been really responsive to that, I think. Overall, our growth rates, you know, in this space have been really remarkable. I guess I would say we start off typically in the early discovery. I'm sorry, in the very sort of academic institutions or the government research institutions. With this portfolio, we've actually started to see migration rapidly into the biopharma space. This, I think, is a result of the strength of the instruments and some of the solutions we're offering, but also the fact that there's so much interest in the overall proteome as a vehicle for understanding better disease biology. I think that's driving some very significant growth. We think that we're still on the early stages of that S curve from a growth perspective. To answer your question directly, Max, I think the workhorse has been the primary driver. I think the timsTOF Pro 2 is the product that we've seen the most uptick on. I have to say, I was actually surprised in the single-cell proteomic space to see as much interest and purchase activity in that instrument. It carries about $1 million price tag, so it's not a cheap instrument, but we've seen very, very strong growth in that particular instrument. We have a range of others. We have some with high throughput. We have a flex instrument that has multi-characteristics. So there's a whole range, essentially suited to a particular application, but we're targeting, you know, pretty significant growth in that space. This has been kind of our leading product to get into the biopharma marketplace more directly and certainly continue our strength in the academic government research side. Yeah. I did just receive a question- Sure. that's on my list, so I'm gonna... before I get to that, I just wanna ask, you know, for the single-cell version of timsTOF. Mm-hmm. You know, is there anything you can offer on maybe the gross margin on the, on the instrument, and then what you've seen for early... Yeah. users in terms of utilization? Yeah. We don't talk about margins by product, generally speaking. Yeah. I can just tell you that the good thing about the timsTOF portfolio more broadly is it's above the margin, the gross margin, and operating margin profile of the company on average. That's really important for us because what this means is over time, as that growth continues, the mix of these types of products helps to pull up the gross margin performance for the company. That's, of course, what's funding a lot of our ongoing R&D activities and more commercial infrastructure. It's a quite important piece, that's all I can say for that I'm sorry. Yeah. Maybe I'll try one more before lobbing this question in, but, for the CellScape, for example. Yeah. Yeah. I mean, would that be a product that would require a customer to, you know, reach a certain level of utilization before it's accretive to total company gross margins, or is it off the bat capital? I think off the bat, you know, these products, especially where we have pricing flexibility around, kind of the technological advantage that's offered there, we wanna be market competitive, but the flip side is we need to generate the margin profile, especially at the gross margin level, in order for us to continue to fund research development on an ongoing basis. We price them accordingly, I guess is the way I would put that. Okay. We expect that product to be accretive at both the gross and the operating margin will quickly as soon as we start to see more uptick. Great. All right. I'm gonna lob in the question now. Sure. -that I had on my list that I was also emailed. It's around regional exposure in China in particular. Sure. Sure. I know it's been less than a month since your earnings call, but, you know, the headlines around the China COVID policies continue to dominate the headlines. Sure. Mm-hmm. How are you previously contemplating, you know, your performance in China, at the time you introduced the 2023 guide? Sure. Have you observed any recent trends in that region that might be outside of the bounds of what you were, expecting? Sure. First of all, China's an important market for us. It's about 16% or 17% of our overall revenue base. We don't have any production operations there. We have no R&D activities there. We do have large and growing commercial activities there, China remains a very important market for us and for many of our peers, for sure. I guess I would say just to level set it, 2022 was a significant year of growth for us in China. We saw teens level growth at the revenue level and at the order bookings level for the year, we continued to see strength in China in the fourth quarter. I would also offer that, you know, there's a lot of... Even having worked through all that COVID-related lockdowns and navigating through that in 2022, we posted some pretty good numbers. I think that speaks to the level of differentiation of our product line in China. There's a lot of conversation. I get a lot of these questions about, you know, well, how do you deal with Buy China versus your products? We do have some products that are go head to head with Chinese products. Generally speaking, because our products are at the leading technological edge, if you really wanna do cutting edge research, you need our instruments. You're not gonna get those necessarily very locally. The other thing I would add on China is there's a, there was a recent stimulus package introduced by the Chinese government in Q4. It's early days, but we did start to see some strength coming, you know, order bookings performance coming out of China in the fourth quarter, and we continue to see that so far in the first quarter. I would expect to see that throughout some of 2023. This takes a long time to trickle its way down into individual, you know, research projects. The first thing that if you're applying for a grant or a loan at low interest rates in China, is you need to have kind of shovel-ready instruments, and we qualify with that with most of our instruments. We do think that'll yield a tailwind over time here, especially as we move through 2023. Well, that's great. That's great because the way the email was worded, I wasn't sure if stim was short term impact or stimulus. You answered both. Thanks for joining us. I think we're out of time. Well, thank you all. Thanks for everybody for joining. Thank you very much.