Good morning, everyone, and welcome to the Bruker Corporation third quarter 2026 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please see 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 and then one on your touch-tone phones. To withdraw your questions, you may press star and two. Please also note today's event is being recorded. At this time, I'd like to turn the floor over to Joe Koska, Director of Investor Relations. Please go ahead.

Good morning. I would like to welcome everyone to Bruker Corporation's third quarter 2026 earnings conference call. My name is Joe Koska, and I'm the Director of Bruker Investor Relations. Joining me on today's call are our President and CEO, Frank Laukien, 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 presentations section of Bruker's investor relations website. During today's call, we will be highlighting non-GAAP financial information. Reconciliations of our non-GAAP to GAAP financial measures are included in our earnings release and are posted on our website at ir.bruker.com. Before we begin, I would like to reference Bruker's safe harbor statement, which is shown on slide 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 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 on our outlook as of today, November 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 fourth quarter and full year 2026 financial results expected in February 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 third 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 CEO, Frank Laukien. Thank you Joe. Good morning everyone and thank you for joining us on today's third quarter 26 earnings call. Bruker continues to drive significant advances in post-genomic disease biology solutions and drug discovery from proteoforms to glycobiology and from functional protein interactions to spatial biology. These foundational advances in disease biology together with strong growth drivers in specialty infectious disease diagnostics and in our deep tech and semiconductor metrology franchise are expected to lead to significant revenue growth, acceleration, and further margin expansion. Brooker's positive bookings trends continued in the fifth consecutive quarter of Brooker Scientific Instruments, or BSI, book-to-bill greater than one, as we see increasing strength in most of our end markets, and I will highlight three areas in particular. First, U.S. academic and government, or ACAGOV, In the third quarter, our BSI organic bookings in the US ECHA GOV market grew in the double-digit percentage year-over-year. This was the first quarter with year-over-year bookings growth in US ECHA GOV since the NIH funding disruption in 2025. The prior year comparison was a weak one, but this is nonetheless encouraging. And by the way, we also expect year-over-year organic bookings growth in U.S. Accagov in the fourth quarter. One could speculate that last night's blue wave in the midterms could also bode well for U.S. Accagov funding in fiscal 27 and beyond. Second, China. BSI organic bookings in China were up over 20% both in the third quarter and year-to-date. This consists of broad-based demand strength as almost all of our BSI end market orders in China grew nicely. Third, year-to-date we've seen greater than 30% organic bookings growth in BSI Semicon Metrology markets in the quarter. This robust order growth is being fueled by the AI megatrend, which requires our metrology solutions for logic, chip boundaries, high bandwidth memory, and advanced packaging. While the lead times on these orders are longer than most of our life science tools, we expect to see these semi-orders convert into revenue, mostly in fiscal year 27 and some in fiscal year 28. Speaking of artificial intelligence, Speaking of AI, artificial intelligence, in August, we started a strategic collaboration with and we did a minority investment in Attenari Technologies, a pioneer of self-driving labs and agentic AI-driven chemistry R&D. Attenari integrates our ChemSpeed lab automation and Bruker analytical measurement instruments into its agentic AI workflows. The Attenary Lab in Boston includes ChemSpeed Robotics and Bruker Benchtop NMR for small molecule synthesis and catalysis in pharmaceutical R&D and process development. All right, let's dive into the numbers. Let's turn to slide four now. For the P&L performance in the third quarter, where we achieved significant margin expansion and non-GAAP EPS growth, driven by our focus on cost discipline and execution. Our third quarter 26 reported revenues of $874 million increased 1.6% year-over-year with organic growth of 0.7%. Our third quarter 26 non-GAAP growth and operating margins were 51.3% and 16.3% respectively, both up significantly year-over-year. Our Q3 26 diluted non-GAAP EPS was 56 cents, up 24% from Q3 25. Moving to slide five, our year to date nine months Q3 26 revenues increased by 3.1% to 2.54 billion with organic revenue essentially flat. Our year to date, Non-GAAP gross margin, operating margin, and EPS were all up nicely year-over-year, and their year-to-date performance is summarized on slide five. As Gerald will explain in more detail shortly, in Q3 and year-to-date, our free cash flow also has improved considerably, and we have made excellent progress with deleveraging. Please turn to slides 6 and 7 now, where we highlight the year-to-date third quarter performance of our now reorganized three scientific instruments groups and of our best segment, all on a constant currency or CER and year-over-year basis. Year-to-date, the biosystems group revenue was $1.2 billion, up low single digits percentage year-over-year in CER. Strength in biopharma and translational research was partially offset by weakness in ECHAGOV. Biosystems saw strong CER growth in IR Raman spectroscopy and in mass spectrometry, driven in part by the top work acquisition, which was partially offset by softness in NMR. Year to date, 2026, our new or newly elevated microbiology and infection diagnostics group had revenues of 396 million which increased in the low single digits percentage driven primarily by robust molecular diagnostics revenue growth. Turning to slide seven. Year-to-date Bruker Nano revenue was $770 million with a low single-digit percentage CER decline. Robust year-to-date growth in semi-metrology and biopharma was offset by weakness in AgaGov and industrial. Semi-revenues were down double digits in the third quarter, primarily driven by our previously communicated push-outs of semi-metrology instruments from the third quarter. We had been very explicit about that in our Q2 earnings call when Gerald gave Q4 color that we expected the 20 million push out from Q3 in semi-convectrology. Finally, year to date, best revenues were up 8.3% in CER, Net-Up Intercompany Eliminations, with strong growth in research instruments, or RI, and solid growth also in superconductors. Right. Moving to slide eight, we highlight our recent acquisition of Mimetas, a leading humanized organ on a chip or NAM platform. NAM stands for New Approach Methodology. It's a commonly used term in the industry and also by the FDA. I'll let you read some of the background on Mimetas. I think it's a reading slide rather than me going through every bullet. but I think it is very important to get the higher level perspective that in addition to multiomics and spatial and structural biology and AI augmented drug discovery, one of the pain points and one of the reasons for the failure rates of so many drugs when promising drugs gets translated from mouse models or animal models to humans are toxicities, are off-target toxicities that are unique to humanized models and human physiology. And Mimetas with its humanized organs on a chip, which can be nicely automated, which have many disease models and are poised for very significant double-digit growth with high gross margins, we think are probably the best type of systems of this type on the market which is why after extensive research on that market we acquired a majority in Mimetas. We're very excited and we think this will complement our multi-omic spatial biology, structural biology in drug discovery in particular drug discovery and development in a very important way. It's a high priority for just about every biopharma company. Right. On slide nine, we touch on a few recent advances in functional proteomics with novel workflows for drug discovery and disease biology launched at the recent International UPO Conference in Singapore. Again, I will not read every bullet, but we had very significant further advances in this multi-DIAM method on our TIMS Ultra for bottom-up proteomics. for plasma proteomics, single-cell proteomics, where we see in that net more peptides and protein groups and also more isoforms, sequence variants, and all the other things that traditional MS-based methods or the affinity methods simply cannot see, but they're functionally very important for better AI frontier models or better drug discovery. On the right-hand side, our team's OMNI continues to be very focused a very successful system in the market with significant orders and here are new workflows that are really very very important one in glycobiology where with our unique trapped electron-based fragmentation I won't go into technical details but it's really crucial to do this at scale at speed and in very sensitive manners and glycobiology is tremendously important but has been traditionally very difficult to study Moreover, oligonucleotides and native RNA analysis is another important area whether mRNA is a drug target or a potential drug, a potential RNA drug and the instrument can perform outstanding workflows now in this area as well. We think this bodes well for further rapid adoption in academic medical centers which have good funding as well as in Pharma companies and biotech companies. All right, that about does it for me. In summary, the third quarter we achieved significant margin expansion and non-GAAP EPS growth and our positive booking trends continued. Our BSI organic bookings and BSI backlog are both up mid single digits percentage year to date. This helps de-risk our fourth quarter and sets us up for meaningful, further performance improvements and growth acceleration in fiscal year 27 and beyond. Let me turn the call over to our CFO, Gerald.

Thank you, Frank, and thanks, everyone, for joining us today. I'm pleased to provide more detail on Brooker's third quarter 2026 financial performance, starting in slide 11. In the third quarter of 26, our results were roughly in line with our expectations on the top line, but meaningfully ahead of our expectations on margins and EPS, largely confirming the benefit of our cost-saving actions together with a positive mix in the quarter. In the third quarter of 2026, brokers' reported revenue increased 1.6% to $874 million, with organic revenue growth of 0.7%. acquisitions added 1.7% to our top line, while foreign exchange was a 0.6% headwind, resulting in constant exchange rate revenue growth of 2.4% year-over-year. BSI organic revenue declined 0.4% in the third quarter of 26, with BSI instrument revenue down mid-single digits and BSI aftermarket revenue up high single digits organically year-over-year. The organic decline in the third quarter of 26 instruments revenue was primarily driven by the previously communicated pushouts of semi-metrology instruments from the third quarter. Geographically, on a year-over-year organic basis, in the third quarter of 2026, European revenue was up low single digits. America's revenue was roughly flat, while Asia-Pacific revenue declined in the mid-single-digit percentage. BSI revenues in China were up in the low double-digit percentage in the third quarter of 2026, and for our IMEA region, revenue was up over 30%. Our BSI segment order book performance was up organically in the low single-digit percentage year-over-year, driven by strong growth in SEMI, and double-digit growth in U.S. academic government research and China academic government research, partially offset by declines in European and Japanese ACAGOV and biopharma in the third quarter, mostly due to quarterly fluctuations. Third quarter 2026 non-GAAP gross margin increased 120 basis points to 51.3%. Non-GAAP operating margin was 16.3%, up 400 basis points, driven by our cost-saving actions and favorable mix. We are on track to achieve our $140 million annualized run rate cost-out target. On a non-GAAP basis, third quarter 2026 diluted EPS was 56 cents, up 24.4% from the 45 cents we posted in the third quarter 25. Our non-GAAP effective tax rate was 28.4%, compared to 24.4% in the third quarter of 25 due to unfavorable jurisdictional mix in the third quarter of 26. On a GAAP basis, we reported a diluted loss per share of 81 cents compared to a GAAP diluted loss per share of 41 cents in the third quarter of 25. Our third quarter 26 GAAP results include a non-cash goodwill impairment charge of approximately $175 million related to Bruker Spatial Biology, where U.S. academic government research market conditions have been weak. Weighted average diluted shares outstanding in the third quarter of 2026 were 153.2 million, an increase of 1.2 million shares from the third quarter of 25. Slide 12 shows Bruker's performance for the year-to-date 2026, which has similar drivers to the third quarter. Turning to slide 13, in the third quarter of 2026, free cash flow improved $151 million year over year, driven mainly by higher net income, excluding the non-cash goodwill impairment, and improved working capital. We continued our debt deleveraging in the quarter, paying down an additional $58 million in debt. Our net leverage ratio was 2.4 times as of September 30th, 2026, and now is below our previously communicated leverage target. Turning now to slide 15, we're updating our fiscal year 26 financial outlook for currency and reconfirming our prior fiscal year 26 organic revenue growth and non-GAAP EPS guidance. We now expect reported revenue of 3.52 to 3.56 billion dollars, representing reported growth of 2.5% to 3.5% compared to fiscal year 25. We continue to expect organic revenue growth of 1% to 2% and contribution from acquisitions of approximately 1.5%. We now expect currency to be approximately neutral to reported revenue for fiscal year 26 after the recent strengthening of the U.S. dollar. 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 DPS for fiscal year 26 in a range of 210 to 215, up 15 to 17% compared to fiscal year 25. Other guidance assumptions are listed on the slide. Our fiscal year 26 ranges have been updated for foreign currency rates as of September 30th, 2026. Now some color on the fourth quarter of 2026. We expect fourth quarter organic revenue to grow in the lower mid single digits percentage year over year. We expect meaningful sequential and year over year increases in operating margin and EPS due to higher volume and favorable mix in the fourth quarter, as well as due to the compounding effects from our cost saving actions. To wrap up, third quarter 2026 was a solid quarter for Bruker, giving us improved confidence in a market recovery in many key market segments and geographies. Our cost-saving actions are well on track, positioning us for significant margin and profitability improvements in fiscal year 26, and we're driving towards further margin improvement and double-digit EPS growth in 2027. With that, I'd like to turn the call back over 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?

We will now begin that question and answer session. Once again, to ask a question, you may press star and then one on your touch-tone phones. If you are using a speakerphone, we do ask that you please pick up your handset before pressing the keys. To withdraw your questions, you may press star and two. Our first question today comes from Puneet Sudha from Lerank Partners. Please go ahead with your question.

Hi, Frank, Gerald. Thanks for taking my questions here. First one on margin improvement, margin expansion this quarter. Great to see that. But just wondering, you know, in terms of factors that give you confidence on the step up in the fourth quarter, it is still sizable, 500 bits sequential. So just wondering in terms of cost savings that you're seeing and recognizing in the quarter and fourth quarter, any gigahertz magnets that are landing in the fourth quarter, Akagov and other AI and the $20 million order shift that you talked about as well. What are some of the drivers that give you confidence on that step up in margins?

Good morning, Puneet. Yeah, thank you for your questions. I think, you know, I mean, I think we've significantly de-risked the fourth quarter. By my math, we do no longer need a 500-bip sequential step-up. That was, I think, previously correct. But now we need to step up from where we were at 16.3%, and I think we need to step up to the high teens and that seems much more achievable given that it's likely to be about a billion dollar in revenue quarter. And indeed the recent US ACAGOV order pickup probably mostly will benefit us in 27. China ACAGOV orders have picked up earlier and they would begin to help us in Q4. The semi-shifts, some of that goes into Q4, some of that may go into early 27, but that's all good. So I think the margin and the revenue margin, EPS ramp into Q4, I mean, it's never without risk, but we think what we're saying about the color there is prudent at this point in time. But I think we... This is much significantly de-risked with another strong Q3 and obviously the margin performance and EPS performance in particular makes this much more achievable.

Thanks for clarifying that. And then on AI, Frank, obviously an important theme for a broker. You lever to it multiple ways uniquely on the Semi side and obviously the AI and bio discovery as that starts to take shape as companies are investing more in discovery and platforms there. Can you maybe, is there a way to sort of quantify the contribution today from AI and then how are you thinking about 2027 here for AI overall across the enterprise?

Thank you. Yeah, two pieces to that. As you've pointed out, the semiconductor Metrology and within our best segmented RI also some contribution to the ASML supply chain ultimately although that's still smaller because that goes into the latest and greatest tools that they are beginning to now get more adopted. That has been quantified. I think you've written notes on that. Others have been written notes on that so I won't jump into that. and that continues to, I believe, the year-to-date order growth in that area has been 30% or higher year-to-date. And again, it also was really strong in Q3 in order performance. So that's just humming along and obviously one of the very strong growth drivers in our deep tech, broader deep tech area, but particularly in the semi metrology and a little bit in the lithography supply chain. Bio and chemistry discovery and materials discovery benefits our ChemSpeed automation orders, benefits our SciWise software, and more and more I think it will also benefit those deep biology 2.0 tools, whatever you want to call it, from bottom-up proteomics, of course, to isoforms, to incomplete proteoforms, top-down proteoforms. Lycobiology, Spatial Biology, and Structural Biology, I think, are all going. There's an excellent article in the Wall Street Journal today where, yeah, taking more shots on goal, meaning on drug targets, is helping a little bit, but it may not lead to the expected breakthroughs of curing all diseases anytime soon. which is optimistic anyway but you know I think the deeper unless you feed these frontier models with much much deeper insights into disease biology and drug targets and mechanisms of action we're not going to make all that much progress so there I think maybe not uniquely but I mean more than any other company I think we're positioned for really providing these deep disease biology tools We think that will, you know, that's still not moving the needle so far, but I think that's quite promising for 27 and I think could be seeing a very significant ramp up in the next few years, whereas people begin to move from scratching the surface that's higher with more shots on goal, which is sort of the initial approach, which is fine to, I think, the much more impactful, deeper biology for which we need our tools. That was a long answer, I apologize.

It's all good. Thanks, Frank.

Our next question comes from Tycho Peterson from Jefferies. Please go ahead with your question.

Hey, thanks. Frank, obviously a lot of improvement here in end markets. I'm wondering if you could just kind of give us a state of the various end markets. You've obviously talked a lot about academic picking up, you know, how much of what you're seeing here and now you think is durable. and then what's going on in pharma? It seems like, you know, pharma orders were down both in the EU and I don't know if in the US as well, but maybe touch on that as well.

Yeah. Gladly, Tycho. Thank you. So, Akagov, nice to see a little bit of order growth in the US. Importantly, also in China, that's been going on throughout year to date, so for several quarters. Japan is relatively weak. It's And Europe was quite very strong in Q3 of last year, 25, and was a bit weaker in Akagov than in Q3 of 26. And so that's how, you know, it's not all, we're not firing on all cylinders, but more and more. and year-to-date, I think, are the better trends. Any given quarter, these things can fluctuate, and they do. But year-to-date, I think the overall, as we said, single-digit BSI backlog and bookings, I think that kind of is a good predictor of where we might end up in revenue growth, organic revenue growth next year. Pharma, biopharma also has some fluctuations. We I think we had an excellent Q4, Q2, Q3 a bit weaker. Q1 was actually not that strong. But overall, the pharma, biopharma trends are good. They're not as strong as those who are more in the regulated space of pharma. They see stronger growth as we've seen yesterday, for instance. But I encourage that in the more CapEx heavy drug discovery front end, The trends are good, although there's some quarterly fluctuations, also for automation and software tools.

Okay, that's helpful. And then what's your latest framing on 27? You know, given mid-single digit bookings growth here, you know, BSI booked a bill above one. Obviously, the incremental cost savings look like they'll continue to flow through here. So can you just provide any updated thoughts on 27 at this point?

Well, not really beyond what we've said already. I mean, As you know, when we report, probably in early February, a report Q4 will give guidance. But, you know, I mean, we put our neck out and feel pretty comfortable and are very committed to double-digit EPS growth. But refining that further, it's too early right now. We are seeking more than 100 BIPs of further operating margin expansion. hopefully more than just 100, not 300 or 250, like 300 this year, but another meaningful step. And from this year, still relatively flattish because for us, it's always that orders kick in six to nine months before the revenue growth kicks in, as you've seen. And then we have this very strong Deep Tech orders, which have even longer conversion times, but come in at very good margins and with very good order trends. So, you know, anticipating that we will accelerate in organic bookings growth, sorry, in organic revenue growth from this year is easy because it's going to be an easy comparison. But nonetheless, you know, that should bring us to the, at least to the lower mid single digits.

Okay. And then just quickly on margins before I hop off, MIPS contributed 90 BIPs this quarter. Can you just unpack, you know, where you're seeing the biggest MIPS benefits?

Yeah. Hi, Tech Coach Gerald. I'd say we saw some significant MIPS improvement both in our NMR business as well as in our optical microscopy business in the quarter. And that's better than what we actually anticipated. Clearly, we still have, you know, good solid performance in a number of other areas, but I'd highlight those two.

Okay. Thank you.

Welcome.

Our next question comes from Luke Sergot from Barclays. Please go ahead with your question.

Great, thanks. Just wanted to follow up on the margin side. So big margin step up here and came in well above what anybody was looking for. And so you talked about de-risking that 4Q. So just wanted to know, like, is there a pull forward on any of the cost outs? Or was this just, you talked about, you know, on Tygo's question, the 90 bps mix. You know, just anything there from a conservatism or what's embedded in 4Q because your revenue dollar didn't change. So just trying to figure out like what the difference is there versus your prior expectations for a big 4Q step up.

Yeah, again, Lucas, Gerald, I would just say with respect to the margin performance for the third quarter, I mentioned we had two more favorable elements on the mixed side. On the cost-saving side, recall that actually most of our cost-saving actions didn't kick in really until the fourth quarter of 2025 historically. So we have quite a big step up in cost-saving improvements in the third quarter of 2026. And that's part of the more significant element here. But I would say Mix was clearly better than we had expected to see even back in Q2.

Okay. And then I guess on the best beat that you guys had, you know, continued strength here all year long. Can you talk a little bit more about what is driving this is like, you know, some of the newer energy technologies like fusion and, you know, or is this just trying to think about how much is like just pricing given the supply chain constraints, etc.

Yeah, good question. So I should observe that that was pretty weak last year. So sometimes a weaker comparison helps. But nonetheless, we're very pleased with the best order trends, which are even stronger. And we don't break those out because some of our MRI superconducting wire orders, they come sort of every five years and big framework agreements. But very, very strong order growth in the research instrument side. And that is driven to your question. by ITER and fusion orders that ultimately will go towards fusion energy, certainly fusion energy range research. There are other high energy physics and advanced light sources and electron-free lasers and similar projects around the world where we just have pretty unique capabilities and unique technology that really play a role and where the order growth also has been Very, very strong. As I said, they're also plugged in a little bit into this ASML lithography supply chain in a small way. But, you know, being designed in is a good thing. So you want to be into the newest tools. So we're just delighted with that segment. And it also has seen nice margin improvement. So it's not just the growth. But the bookings growth is even higher there, even though the revenue growth is really quite nice. So it's an exciting part of our normally less appreciated deep tech in addition to the deep tech semiconductor metrology that we've quantified and that you've all had more interest and insights in this year.

Appreciate it. Thanks. Sure, Luke. Our next question comes from Subbu Nambi from Guggenheim. Please go ahead with your question.

Hey, guys. Good morning. Thank you for taking my question. As you think about 2027 framing, given all the events that have happened in the last two years, how are you approaching the philosophy when rolling all the end markets up? Should we expect a bit more conservatism next year given the jump-off point, or is it full steam ahead with some of the higher growth businesses like semis? Just any color on a proven start point would be helpful.

Yeah, super good question. Obviously, guidance coming then in early February. I'm afraid I might repeat a little bit what I said to Tycho earlier. Yeah, there is upside, but I think it's also we've all been burned by unexpected events in 25 in particular, right? And still things are, there's still a lot of areas are very dynamic and timing is hard to call. But I think... Looking for double-digit EPS growth. Of course, you'll want to know how much double-digit. We're not prepared to say that yet. And greater than 100 bps margin expansion. And I think this lower mid-single-digit organic growth. range seems reasonable to us and not overly conservative. I think we're really going to, I think we get to the more typical broker 200, 300 bps above market. That's more of a 28 or 29 thing, hopefully 28, 27 I think will still be a transition year, but with very significant organic growth improvement compared to this year.

Thank you for that. A follow-up, last quarter you indicated two-thirds of the fourth quarter revenue was covered by backlog. Are you almost fully de-risked at this point?

I'd say pretty much at this stage. We have pretty clear visibility into the backlog for the fourth quarter, and we're, you know, we still have execution-related issues, but other than that, I would say no. Pretty much.

Yeah, I mean, I guess, you know, there's about 60% instruments revenue, 40% consumables, obviously, and consumables and services, you have limited backlog. And on the instruments, you tend to have the backlog. And then it depends on sometimes issues with suppliers that and then also more typically, customer site readiness, which I mean, at any given quarter, this is not a fourth quarter thing. At any given quarter, it could be you've kind of, even if you execute perfectly just from the customers, it's sort of a plus minus 20 million uncertainty that you have because you don't know exactly when they'll be ready to take shipment. But again, all in, I think we feel obviously that we're It was not excessive, but there was more risk in our Q4 ramp previously, and now it's not a shoo-in. It never is. It's a big quarter, but it seems achievable.

All right. Thank you so much, guys. Thank you. Thank you, Subul.

Our next question comes from Lu Li from Bank of America. Please go ahead with your question.

Great. Thank you for taking my questions. Maybe on the first one, on the margin, I guess for 4Q, do you still expect to see favorable mix impact? And then maybe can you comment on the cost inflation that you've seen in the quarter and then for 4Q as well?

Yeah. Hi, it's Gerald. With respect to the fourth quarter, we're pretty comfortable now where we stand. As I said earlier, we have already put in place cost-saving actions that will impact the fourth quarter, and I think that's going to be favorable. And when we look at the rest of our mix, we are expecting an ultra-high field system into the mix, and that will also help our overall picture. We do have a stronger performance also in the semi-space, which also will help our mix. So I think fundamentally the fourth quarter pieces look – pretty solid, I think, for us at this stage. And as I said earlier, cost-saving actions are already in place, so more about execution on the revenue piece at this stage.

Cost-saving actions are accumulating throughout the years, kind of a compounding effect, and should be even more also visible in Q4, and it certainly was very visible in Q3.

Got it. And then second question probably on China. So definitely year to day has been pretty strong performance. It seems like the money has like falling into kind of like the orders. I'm wondering kind of like looking forward in 2027, do you still expect kind of like pretty like durable bookings growth and maybe just like what do you hear from the customer on the market? Thank you.

China is really... Revenue earlier in the year was still going down because of weak orders in 25. I think that has reversed in Q3 with some broad revenue growth. And then year-to-date in China, you're exactly right, our order growth in China for BSI, it has been really quite good. And we expect that to continue in Q4. It's hard to read China beyond a few quarters. China, sometimes we say, well, you've got to finish the quarter to know. I think we have reasonable confidence that Q4, the strength will continue. Hopefully that can be extrapolated into 27. We have no reason to believe otherwise, but it's just also more difficult to read China over one or two year periods. But we're encouraged this year. The trends have been, order trends have been very good, expected to be continued in Q4. And by the way, also in China, Akagov, it was not only U.S. Akagov that was weak, but also China Akagov, and that has really turned in orders already earlier this year and continued in Q3.

And our next question comes from Doug Shankle from UBS. Please go ahead with your question.

Hey, good morning, guys. Thank you for taking my questions. I have one on BSI, and then I'm going to ask another 2027 question. So BSI book-to-bill has now exceeded one for five consecutive quarters, yet BSI organic revenue remains under pressure. I think you were down 1% year-to-date. With U.S. academic bookings now double-digit positive, China above 20% and semiconductor metrology above 30% year-to-date, why aren't we seeing a more meaningful revenue inflection? And what gives you confidence that the bookings you've been talking about are going to start to convert in 2027? So that's the first topic. And then more broadly on 2027, Given the momentum you've described based on trends over the last few quarters, in a scenario where you're growing, call it 4% to 5% next year, which I think is consistent with your commentary, it seems that momentum continues that BSI would grow something like 3% to 4% and best closer to 10%. Again, I'm not asking you to guide, but I just want to make sure there's nothing in my logic that is off. Thank you very much.

Your logic and math are impeccable, as always, Doug. So I'm trying to get through all the parts of your question. BSI book to bill, why has it not shown yet in Q3? The biggest part is that semi push-out that we had highlighted when Gerald gave Q3 color on Q3 during our Q2 earnings call, because otherwise semi bookings have been just very strong year-to-date, greater than 30%. The other part that also has longer conversion times is NMR and sometimes related MRI, preclinical MRI, and that certainly felt the impact of 2025 AgaGov weakness in the US and in China. So the NMR part, until that grows again, also takes a little bit longer. So NMR and semi-push out are why you haven't seen it as much yet. You will see, as we're predicting, this all implies organic BSI, organic revenue growth in Q4. I'm not saying that the Q4 rate will then therefore be indicative as an exit rate for 27, but it'll probably be closer. and other than that, I think your logic isn't something that I would object to or detect a flaw. This is one of the scenarios that you've just outlined with numbers. I'm not confirming that, but I'm also not contradicting it. It's one of the scenarios of how it could play out. It's reasonable.

Okay. All right. Thanks, Frank. I appreciate you indulging me on that. Thank you.

Our next question comes from Jack Meehan from Oberon Research. Please go ahead with your question.

Thank you. Good morning, guys. I wanted to ask about the new mid-segment. So it looks like it grew low singles in the quarter. Can you just talk about what you think is the right ongoing growth rate for this business in the medium term and any Moving Parts, you would call out. I'm not sure if there's any respiratory exposure at LA Tech or anything like that. Just helping us frame that segment would be great.

Yeah, great. Good question, Jack. Yeah, so no, we don't have very much respiratory, not since COVID. That's de minimis for us. It's also one of the specialty diagnostics business that doesn't have that China headwind that you've seen with some others. So it's clean in that sense. its infectious disease diagnostics tools had seen lower growth recently in my clinical microbiology and continued very nice growth in primarily ELITECH-derived sample-to-answer molecular diagnostics. There, just like last year, placements of these genius platforms, that's the name, product name, has been well ahead of business plan and that then bodes well for consumables acceleration, you know, in next year and beyond. And they're also developing some very, very cool new capabilities. We hope to launch, we hope to get FDA clearance maybe before the end of the year, maybe in Q1 for the Wave product, which is the and antibiotic susceptibility testing for the U.S. there we're going to go for the U.S. market first and that will further strengthen our microbiology sepsis testing and by the way because of faster time to result can potentially save quite a few lives and or shorten ICU times and longer term health effects so it has an important societal function wrapping up. I think while right now it's a little bit slower, I think this is a high single-digit growth area long-term, and it has very, very nice margins.

Great. Thank you for all that. Gerald, one below-the-line follow-up for you. So in the guide, you raised the tax rate assumption from 26.5% to 27.5%. I was just wondering, as a As a 2027 question, as we look forward, like what you think is the right ongoing tax rate for the business and if there are any moving parts that have changed that we should be thinking about? Thanks.

I mean, I think generally our position on taxes has been relatively consistent here. We're tracking somewhere in the 27 and a half range and we have been for a period of time. We have a number of tax planning initiatives, which we won't discuss here, but just fundamentally, we've got a number of initiatives underway that are expected to benefit the tax rate going forward, particularly in 27 and 28. We could talk more about that another time, but just fundamentally, I would just say that the goal for us is to continue to drive that rate down. at least 50 basis points on a year-over-year basis in 27 and then consistently thereafter. That's our target.

Perfect.

Thank you.

Thanks.

Our next question comes from Kyle Boucher from TD Callen. Please go ahead with your question.

Hey, good morning. Thank you for taking my questions. I wanted to go back and build off of maybe a couple that were asked just around, you know, USA&G, the order book improvement. I guess, how much of the improvement that you're seeing is really, you know, easier comparisons from the back half of 2025 versus more, you know, tangible improvement in sentiment amongst those customers?

I suppose, Kyle, certainly the comparison was easier, right? We all know that. I think the U.S. agogov sector still suffers from lack of conviction. As you know, in the last federal fiscal year, a lot of the funding and budget flush came late. It wasn't linearly spent, even though the budget overall wasn't bad. And now people will begin to look, does this change with a different Congress? Same president, different Congress, who knows? But I'm not saying that USECA.gov is bouncing back, snapping back, but it is getting better. Weaker comparisons help. And people are back to, okay, well, we need these new tools. We really need them to understand disease biology. And you really do. You're just not going to get there with more of the same of what you have already. That's foundational, what you have already, sequencing, et cetera. But you need much deeper insights to understand. And then you all really need it. It's really shown. The people that do have the money, which is in biotech and big pharma, they get these latest and greatest tools. And I think that's kind of the, and also overseas people, where they do have the budgets in ECHAGOV, they're going for these tools, fully appreciating that they need to understand targets and mechanism of action, biology, and off-target effects, all these complexities, much, much better if they want to have A Better Drug Discovery and Fundamental Disease Translational Approaches. So, yeah, I think this inevitably also then strengthens. There still is a lot of state and philanthropic and other funding. And, you know, these days it's not so much traditionally the Department of Chemistry needing more NMRs or mass specs. Now it's the cancer or neurodegeneration or autoimmunity or cardiovascular disease, academic medical centers, and they have other sources of funding. So that part is really getting stronger.

Got it. Thank you. Maybe just one more sort of conceptual question. You mentioned during the call that you're below your target leverage range. Can you just talk a little bit about how you're thinking about M&A going forward now that you're under your leverage target?

Well, we did some M&A this year. MIMETAS was an important one. And it gets us into a new area in addition to our preclinical imaging, the preclinical Humanized organs on a chip model that are in some ways closer to human physiology than animal models are tremendously important. It wasn't very, very large MNA. You're right. We didn't do any of that this year. And we did some other, a couple of smaller acquisitions that were really very important for the BMIT for diagnostic, infectious disease diagnostic sequencing. in including sequencing the metagenome, which also can help sometimes in extreme cases in detecting infections directly from blood without a blood culture, and then some enrichment technology. So we did some smaller bolt-ons that were technically very, very important for our B-MID group and which I think also have in addition to good market demand I think and to Jack's question earlier I think in terms of new solutions that you'll see launched in 27 and 28 in that group microbiology and molecular diagnostics I'm we I think they'll also outgrow their markets perhaps quite significantly so we've done some M&A we have now again some more capacity for M&A you know but we also like EPS accretion. So we'll be very disciplined.

Thank you.

Our next question comes from Dan Arias from Stifel. Please go ahead with your question.

Good morning, guys. Thank you. Frank, on the 20 million in pushed off revenues, can you just refresh the view on confidence and timing there? And then more broadly, I guess, just how are you finding the conversation on timing associated with Semi-Product, Acceptance, Revenue, Recognition. Obviously, you're seeing pushback on data center build-outs. It seems like it could build based on last night's results. But then if you read about permits and construction activity, that still seems pretty good. So I guess, what would you say about the error bars around timing? Are they getting wider, narrower, or kind of just staying the same?

It's a good question, Dan. I'd say it's kind of staying the same. These big fab projects are within a fab, adding additional lines is remarkably on time. I mean, that's one industry that runs extremely well managed, but that doesn't mean you cannot have a one-quarter shift or sometimes a two-quarter shift. So that all continues as before, actually, with usually you can really plan very well. Things don't get delayed by a year in that industry. RevRec is not problematic there. When we ship and install, these systems work. I mean, these are very robust, high-volume manufacturing metrology systems. These are not finicky scientific. I mean, they're extreme nanoscience, but they're very, very robust and high-throughput systems. Yeah, data center build-out in the U.S., but, I mean, we'll have to realize the U.S. is only a small... It's only a fraction, not a small fraction. It's an increasing, but still a smallish fraction compared to what's going on in Japan and in APAC, a little bit in Europe. But it's mostly in China itself where we can only deliver lower end systems, but that's booming. And then the rest of APAC and big build out in Japan and of course Taiwan and Korea and Singapore are all are all investing very heavily. So that build-out is, if anything, it's accelerating. Yep. Okay.

Okay, helpful. And then just, Gerald, maybe a bookings clarification. Were BSI bookings up during the quarter? You had said mid-singles year-to-date, but the first two quarters of the year were double digits. So just trying to square away the 3Q number in order to get to the nine-month range here. Thank you.

Yeah, I think the bookings performance is low single digit in the third quarter.

Third quarter last year was very, very strong. So actually, I think that's Q3 of 25 and bookings were very strong. So yeah, it is up sequentially. Well, sorry, it's up year over year, low single digits. And it's up sequentially in the mid to high single digits compared to Q2 of 26. It's all good.

Yeah, it's all moving. The momentum is there, I'd say, yes. Yeah, okay. Thank you. Yeah, you're welcome.

Our next question comes from Albert Hu from Citi. Please go ahead with your question.

Perfect. Thanks for taking the question. Maybe on the previous question on semis, you guys called out, you know, nothing's really changed here. So are you guys still expecting that business to be around, call it 300 million to end the year, mid to high single digit growth, 30% EBIT margins? And does that translate to just given the bookings to maybe like a mid-teens grower, call it 400 million business next year? Appreciate the call and Apple follow up.

Good question. You may have stumped us slightly. I think we're not prepared to discuss that type. We don't give 27 guidance. We're certainly not giving granularity yet. But directionally, I can't reproduce all the math that you have in your head right now, but I think the direction is correct. And yeah, that business, if anything, would accelerate in revenue growth next year compared to this year. That is also correct. and its order growth has already been very good. And we hope that, we think that will continue into 27 and then, you know, beyond 27, we follow what the industry thinks and the industry hasn't really taken a position on 28, 29 yet, but they're pretty sure that 27 things will continue to hum along with very fast growth rates.

Got it. Okay. And then I think you previously called out some potential NIH Budget Flush in September. Is that what you guys saw that drove the double-digit A&G bookings this quarter? And I guess, do you expect that to flow through given the six to nine-month conversion time for A&G to grow next year? Or how should we kind of juggle just the strong double-digit bookings and the forward thinking? I appreciate it.

Yeah, right, Albert. I think the double-digit bookings in Q3 had a lot to do with the week Q3 of last year and maybe some incremental orders that came, but there was a budget flush at NIH for sure. That's well documented. Most of that, we think, will help us with Q4 orders and perhaps some of that will still You know, take a little bit of time and go into Q1 orders. So the budget flush that was not significantly responsible for improved bookings in Q3. I think it's just, you know, there's a lot of pent-up demand. People need the newer tools. At some point, they just do whatever it takes within their university or academic medical center or research hospital to get the new tools. and they're getting used to this slightly less predictable federal funding and they're just dealing with this new, and you know, they're settling into that and are now kind of back to where they're placing orders for what they really need. And then the budget flush that did take place probably for us primarily helped, will help Q4 and Q1 bookings. Perfect. Thanks so much.

And with that, And with that, ladies and gentlemen, we will be ending today's question and answer session. I would like to turn the floor back over to Joe Koska for closing comments.

Thank you for joining us today. The Brokers leadership team looks forward to meeting with you at an event or speaking with you directly during the fourth quarter. Feel free to reach out to me to arrange any follow-ups. Have a good day.

and with that ladies and gentlemen we'll conclude today's conference call and presentation. We thank you for joining. You may now disconnect your lines.