Participants

Joe Kostka; Associate Director, Investor Relations; Bruker Corp

Frank H. Laukien, Ph.D.; Chairman, President and Chief Executive Officer; Bruker Corp

Gerald N. Herman; Executive Vice President & Chief Financial Officer; Bruker Corp

Puneet Souda; Analyst; Leerink Partners

Michael Ryskin; Analyst; Bank of America

Patrick Donnelly; Analyst; Citi

Rachel Breindel; Analyst; JP Morgan

Tycho Peterson; Analyst; Jefferies

Joshua Waldman; Analyst; Cleveland Research Co

Daniel Brennan; Analyst; Cowen

Brandon Couillard; Analyst; Wells Fargo

Presentation

Operator

No Good day, and welcome to the Bruker Corporation Third Quarter 2024 earnings 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 remarks, there will be an opportunity to ask questions. To ask a question. You may press star then one on your touch-tone phone. To withdraw your question, please press star then two. Please note, this event is being recorded. I'd now like to turn the conference over to Joe Kostka, Director of Investor Relations. Please go ahead.

Joe Kostka

Good morning. I would like to welcome everyone to Bruker Corporation's Third Quarter 2024 earnings conference call. My name is Joe Kostka, and I'm the Director of Bruker Investor Relations. Joining me on today's call are Frank H. Laukien, Ph.D. our President and CEO, and Gerald N. Herman, our EVP and CFO. In addition to the earnings release we issued earlier today. During today's conference call, we will be referencing a slide presentation that can be downloaded from the events and presentations section of the Bruker of Investor Relations website. During today's call, we will be highlighting non-GAAP financial information and reconciliations of our non-GAAP to GAAP financial measures are included in our earnings release and are posted on our website at ir dot bruker.com.
Before we begin, I would like to reference Bruker's Safe Harbor statement, which is shown on slide 2 of the presentation. During this conference call, we will or may make forward looking statements regarding future events and the financial and operational performance of the Company that involve risks and uncertainties, including those related to our recent acquisitions, geopolitical risks, market demand 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, 2023, 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 to our outlook.
As of today, November fifth, 2024. 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 2024 financial results expected in early February 2025. 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 and the first nine months of 2024 in more detail and share our updated fiscal year 2020 for financial outlook. Now I'd like to turn the call over to Bruker's CEO, Frank Laukien.

Frank H. Laukien, Ph.D.

Thank you, Joe. Good morning, everyone, and thank you for joining us on today's third quarter 2024 earnings call. Bruker continues to grow rapidly, and we have once again posted double digit year over year, see our constant exchange rates, revenue and above market organic revenue growth in Q2, three and year to date, our Q3 24, the our revenue growth was 15.7% year over year, including several strategic acquisitions that have closed earlier in the year. Our Q three 24 organic revenue growth of 3.1% and Bruker Scientific Instruments or BSI segment organic revenue growth of 3.8% year over year were above market or at the high end of the life science tools market and come on top of our strong organic growth of 10.9% in the prior year Q3 23, which obviously made for a tougher year-over-year comparison than what our peers typically face in Q three,
the testament to our multi-year project accelerate transformation into a fast growth company with increased exposure to many of the most powerful secular trends in our industry. Equally importantly, our Bruker management process and operational excellence programs are not driving rapid performance improvements in our recent strategic acquisitions in single-cell biology, spatial biology, molecular diagnostics and lab or automation and digitization.
With that, we have already delivered sequential operating improvements in Q three, which was our first full quarter, including all acquisitions. And we also expect further sequential margin improvements in Q4 in this fourth quarter, we expect low single digit organic revenue growth in comparison to an exceptional quarter Q4 of 23 when Bruker grew revenues 15.9% organically year over year, so we are not benefiting from easier comps due to revenue declines in the second half of last year by Bruker continues and sustained organic and fundamentally transformational growth. We again expect double digit constant exchange rate revenue growth year over year in the fourth quarter of 2024. It is encouraging for us that despite delayed recoveries in biopharma and China, demand orders for our differentiated both genomic multi-omics clean-tech enough solutions are gradually improving with upper mid-single digit VSI organic bookings growth in Q three year over year.
This has been the strongest organic order growth for BSI. in over a year, and we anticipate that this trend will continue supplemented by our first China stimulus orders in the fourth quarter of 2024. Please recall that for Bruker, there is typically a two-quarter lag between orders and systems revenue, so China's stimulus order could begin to benefit our P&L in the second half of 2025. Stepping back, it also has become evident that nascent recoveries in biopharma, emerging biotech CRO in China, demand will not significantly benefit our fiscal year 2024 anymore.
And accordingly, we are lowering our fiscal year 2020 for guidance. Integrating and improving our recently acquired businesses is making good progress and will further accelerate Bruker's remarkable transformation. We are confident in our ability to drive above market organic revenue growth with significant margin expansion in 2025 and beyond. If you turn to slide 4 now Bruker's Q. three 24, reported revenues increased 16.4% year over year to 864,400,000.0, which included a currency tailwind of 0.7%. On an organic basis, revenues increased 3.1%, which included 3.8% organic growth in VSI, and a 3.2% organic decline had best net of intercompany eliminations.
Revenue growth from acquisitions added 12.5%, which implies constant exchange rate or CAGR growth of 15.7% year over year. Our Q three 24 non-GAAP operating margin was 14.9%, up 110 bps sequentially by a decrease of 510 bps year over year, largely the result of our recent strategic acquisitions, which initially our margin and EPS net dilutive, but as added close to about 500 million in revenues of scale to broker, it even more importantly, have allowed us to enter or accelerate our presence in key growth markets for the next decade.
In Q. three 24, Bruker reported GAAP diluted EPS of $0.27 compared to $0.6 reported in Q3 of 23. On a non-GAAP basis, Q. three 24 diluted EPS was $0.6, down 19% from $0.74 in Q2 three of 23. Gerald will discuss the drivers for margins and EPS later in more detail. Moving to slide 9, you can see brokers performance for the first nine months of 2024 with above LST. market organic revenue growth of 4%, while non-GAAP EPS was down 12.2% as expected, due to our transformative acquisition, it's as reported, our first nine months of 2020 for revenues increased by 13.1% to $2.39 billion with constant exchange rate revenue growth of 13.2%. Year to date, first nine months organic revenue growth consisted of 4.1% organic growth in scientific instruments and 3.7% organic growth at best net of intercompany eliminations. Continue to work down our elevated backlog and await recoveries in the biopharma and China markets, which we expect to benefit us in the second half of 2025 and beyond.
Our first nine months 2024 non-GAAP gross margin and operating margin and GAAP and non-GAAP EPS performance are all summarized on slide 5. Right. Please turn to Slide 6 and 7. Now where we highlight the year to date Third Quarter 2020 for performance of our three scientific instruments groups of our BEST segment, all on a constant currency year over year basis. Year to date, our Bruker BioSpin Group revenue was $633 million and grew in the high 10s percentage.
They were two gigahertz class NMR systems in revenue in Q3 of 24, bringing us to three year to date. In the first nine months of 2024, BioSpin saw growth across academic, government and industrial research markets outside of China, as well as strong contributions from our new automation, software and services business. BioSpin has seen weaker bookings in China and BioPharm higher to date, but has growing expectations for China stimulus orders beginning in the fourth quarter of 24 and into 25 year to date, our Broadcast Group had revenue of 773 million and see our revenue increased in the low double digits percentage with growth in the optics, IR and ER AR Rahman business, as well as strong growth in microbiology infection and infectious disease diagnostics, driven by them all the Biotype franchise as well as, of course, the recently acquired Elitch molecular diagnostics business. Solid growth was partially offset by slower performance in biopharma and in the applied markets.
Please turn to Slide 7. Now year to date broken down, our revenue was EUR780 million and see our revenue grew in the mid 10s percentage with strong revenue growth in Africa, golf, industrial research and semiconductor metrology, bolstered by the AI. mega trends, our recently acquired Bruker cellular analysis and manner string businesses contributed inorganic growth. However, both of those businesses continued to be impacted by weakness in biopharma and life science instrumentation. Finally year to date 2020, for best see, our revenues grew in the low single digits net of inter-company eliminations, driven by research instruments, ROI growth in accelerator and Fusion research technology, as well as in traction from EUV. technologies for OEM.s.
I've inductor lithography tools also in support of AI. This growth was partially offset by softness in China and weak superconductor demands of our clinical MRI medtech customers. On Slide 8 and 9, I'll comment on a couple of businesses. We always like to give a couple of case studies are examples. And often we talk about industrial research and clean tech examples on slide 8, you see the rather broad set of tools and solutions that Bruker ended severe areas. Businesses and technologies listed at the bottom offer really across the battery value chain were approaching this or have approached this very strategically and really, really looked very broadly rather than insertions of just one or two technologies for one or two problems. So please check in general.
This is just one example. There are others, but this is a particularly good example of our broad strategic approach for industrial research and applied in clean tech, which, as we've said before, really isn't very similar, steady growth element. Something else. On slide 9, you may be familiar that with our Sierra SPR. systems, we had been in the ST. our business with a high performance, very sensitive instrument for some time, but we launched earlier this year, the so called Triceratops, a very high highest sensitivity, high throughput instrument that we think is market leading and its performance. So this was developed over the last two or three years organically and I think will give us a very strong play in the traditional SPR market for but provide small molecule and large molecules screening. Our new is the dynamic biosensors addition, that's an innovative company in Munich that joined us during the third quarter, and that has provides the SPR. like, but somewhat different technology shown in the middle year. I won't go deeply into details, but switch sense in particular is useful for them.
Novel fields of targeted protein degraders or molecular Glu's were, in fact, three molecules binds to each other. And it's switch center technology as a somewhat unique capability. So looking at free molecule dynamics, which is actually quite important for this latest trends in protein degraders and molecular clues. And finally, and perhaps the most exciting part of the dynamic biosensors acquisition is that we really I can open up the field of interaction cytometry, not interactions between molecules, large molecules themselves, obviously tremendously important for the fundamental research, each disease research and for the targeted and other cell therapeutic gene and cell therapies. And this single doing this at the single cell level is pretty revolutionary and unique.
So here is our Helix cyto opening up and pioneering the field of single-cell interaction cytometry summer. You haven't heard before, but you'll be hearing it again anyway. Moving back to the rest of the earnings call, Tom. In summary, Bruker again posted double-digit CAGR revenue growth and above life science tools market could be as high organic growth in Q three and year to date. However, we are not immune to the delays recoveries in biopharma and China demand during the first nine months of 2024. Accordingly, as Gerald will explain in more detail, we are adjusting our guidance, and we now expect full year 2024 c. our revenue growth of approximately 13% and or organic revenue growth for the year of 3% to 4%. We continue to focus on driving improvements in our recently acquired businesses and our core and on providing innovative, high-value solutions for the boats genomic gear-up.
We expect that our strategic expansion into single cell spatial molecular diagnostics and lab automation will further contribute to our goal of having profitable of above market growth and significant margin expansion in 2025 and in the years to come. So with that, let me turn the call over to our CFO, Gerald, who will review Bruker's financial performance and updated outlook in more detail. Gerald.

Gerald N. Herman

Thank you, Frank, and thank you, everyone, for joining us today. I'm pleased to provide more detail on Bruker's third quarter and year to date 2024 financial performance. Starting on Slide 11. In the third quarter of 24 groups reported revenue increased 16.4% to approximately $864 million, which reflects an organic revenue increased to 3.1% and DSI organic growth of 3.8% year over year. This is compared to a very strong prior year comp.
As a reminder, our organic growth in the third quarter of 23 was 10.9%. Q3 2024. Non-gaap operating margin decreased 510 basis points year over year to 14.9% as a result of expected dilution and from our strategic acquisitions and significant R&D investments in our post genomic tools and solutions, we were to GAAP EPS of $0.27 per share compared to $0.6 in the third quarter of 2023. On a non-GAAP basis, Q3 2024 EPS was $0.06 per share decrease of 18.9% from the $0.74 we posted in the third quarter of 2023. We generated $38.4 million of operating cash flow in the third quarter of 2024 compared to $44.1 million in the third quarter of 23.
Capital expenditure investments for $32.6 million, resulting in free cash flow of $5.8 million in the third quarter of 24. You're down about $11 million year over year on the lower growth on a GAAP net income and significant M&A related expenses, partially offset by improvements in working capital. Slide 12 shows the revenue bridge for the third quarter of 20 CHF24 is reviewed earlier compared to the third quarter of 23. Bruker BioSpin Third Quarter 24 organic revenues up in the low double digit percentage range, driven by strength in our magnetic resonance in services businesses.
In the third quarter of 2024, we recognize two gigahertz class NMR systems in revenue compared to one gigabit class system in the third quarter of 23. Bruker Nano organic revenue was up mid single digits percentage will strengthen our semiconductor and advanced x-ray businesses, partially offset by soft this improvement microscopy talent organic revenue declined low single digits percentage has strong performance from the multi Biotyper and a place and applied mass spectrometry businesses was more than offset by softness in biopharma. We delivered solid growth in the third quarter of 2024 in DSI systems and aftermarket revenue with mid single digit constant exchange rate growth in systems and strong double digit CAGR growth in aftermarket geographically and on an organic basis in the third quarter of 2024. For Americas, revenue grew in the low single digits percentage. Asia Pacific revenue, excluding China, was up double digit percentage with China declining low double digits in European revenue, declining loose single digit percentage all year over year. For our ICE or region Q. three, 2024 revenue was up mid 10s percentage year over year.
Slide 13 shows our Q3 2024 P and L performance on a non-GAAP basis, non-GAAP gross margin of 51.2% decrease to 150 basis points from 52.7% in the third quarter of 23 due to unfavorable product mix and expect to temporary dilution from our recent strategic acquisitions for the third quarter of 2020 for our non-GAAP effective tax rate was up 100 basis points due to jurisdictional mix and an unfavorable discrete item in the third quarter of 24. Weighted average shares outstanding in the third quarter of 2024 hundred and $52 million, an increase of approximately $4.7 million shares from the third quarter of 23 as a result of our follow-on equity offering completed at the end of May. Finally, third quarter 2024 non-GAAP EPS was $0.6, was down 18.9% compared to the third quarter of 2023, primarily due to the expected presumes. Slide 14 shows the year-over-year revenue bridge. For the first nine months of 2024. Reported revenue was up 13.1%, reflecting organic growth of 4.0%. Acquisitions contributed 9.2% to our top line for foreign exchange was a slight 0.1% headwind. Frank already covered the drivers for the first nine months of 2024. Non-gaap P&L results for the first nine months of 2024 are summarized on slide 15 with the drivers, largely similar to the third quarter 44. And as explained on the slide. Turning to Slide 16.
In the first nine months of 2024, we generated $61.3 million of operating cash flow, down $83.3 million compared to the first nine months of 2023, driven principally by acquisition and restructuring expenses, lower profitably IT and the timing of events, taxes and other items. We expect to see improved cash flow in the fourth quarter, the largest and most profitable quarter of the year. Turning now to Slide 18. As previously noted, by Frank, we no longer expect to see recoveries in biopharma and China markets to benefit our fiscal year 2024. And accordingly, we're moving down our 2020 for fiscal year guidance. Our outlook for fiscal year 2024 for now assumes revenues in the range of 3.34 to $3.37 billion, organic revenue growth of 3% to 4% for fiscal year 2024.
We now expect the contribution from acquisitions to be approximately 9.5% year over year and for foreign exchange to be neutral to revenue. This leads to updated fiscal year 2024 reported revenue growth guidance in a range of 12.5% to 13.5% for operating margins in 2024. We now expect fiscal year 2020 for operating margin of approximately 15% with a greater than 300 basis points headwind from our strategic acquisitions. On the bottom line, we're now guiding to a fiscal year 2020 fourth non-GAAP EPS range of two 36 to 41, down from our prior range of 2009 to 64, a result of lower top line expectation and transition headwinds from our strategic action positions.
Other guidance assumptions are listed on this slide. For fiscal year 2024 ranges have been updated for foreign currency rates as of September 30th, 2024, to add color to the fourth quarter of 2024, expectations against the backdrop of delayed improvements in biopharma and China in with organic growth of approximately 16% in the fourth quarter of 2023, which included three gigahertz class NMR as a comp, we now anticipate organic revenue growth in the fourth quarter of 2024 to be in the low single digits. As Frank mentioned earlier, we also again expect double digit constant exchange rate revenue growth year over year in the fourth quarter of 24 and further post the acquisition sequential operating margin improvement.
To wrap up, Bruker delivered above market organic revenue growth in the third quarter of 2024. We also saw signs that demand for our innovative solutions is gradually improving. We look forward to providing an update you on our fourth quarter and full year results next February. With that, I'd like to turn the call now now over to the operator to begin the Q&A portion of the call. Thank you very much.

Operator

Thank you. We'll now begin the question and answer session. To ask a question, you may press star then one on your touch-tone phone. If you're using a speakerphone, please pickup your handset before pressing the keys. In the interest of time, please limit yourself to one question and one follow-up. And to withdraw your question, please press star then two. At this time, we'll pause momentarily to assemble our roster. And our first question comes from Puneet Souda from Leerink Partners. Please go ahead.

Question and Answer Session

Puneet Souda

Hi, Frank, and thanks for the questions here. So first one on you pointed out biopharma and China won't help you in 2024. But how much of that the guide is due to the pushout of orders into the maybe the first quarter of 25 versus orders that simply won't materialize? There's some and you talked about high end of the mid single digit bookings and BSI., but wondering if you saw any cancellations there in the backlog.

Frank H. Laukien, Ph.D.

Okay, 0.8 and oh eight we have had no may never have seem to have any material cancellations. I'm not aware of any material cancellations or that's not an issue for us. Yes, biopharma after and biotech after being seemingly may be improving somewhat in the ability for biotech to raise funding, I think that has slowed down a little bit biopharma.
We see a lot of cost cutting side restructuring program consolidation. And so they still seem to be preoccupied by that. And we really thought that we would get some lift from biopharma with a bit of a recovery in the second half of this year. There are some green shoots, but I wouldn't call it a trend yet. China is pretty significant. If you really think year to date, the cumulative effect of China orders being weaker is in the double digits is actually about 20% decline year over year. So that's not far from $100 million in total over several quarters. And the cumulative effect of China orders even in Q2 and Q3, we saw that again seemingly getting pushed back as people are waiting for stimulus funding. And you know, by now it has accumulated to where this isn't going to help us this year anymore like and help our P & L anymore as we thought it might be in the second half of this year. Come on the encouraging side, there really is a lot of activity.
We are beginning to see stimulus orders cannot quantify them yet, but it's probably going to be particularly beneficial for our bio spend business, but we're also seeing it for other big ticket items, mass spectrometers, microscopes, et cetera. So from that and I would add we the life science. I've seen this from other companies, the weakness in life science instrumentation generally in related to biopharma, but also US academic spending isn't super strong right now, perhaps a little bit of hesitancy prior to the election of. So this is these effects do add up to or we indeed wanted to lower our and why it's needed to lower our guidance for the for the fourth quarter and for the rest of the year. So the pain kind of in that

Puneet Souda

and I have to asking, but about $25 million, you did $3.10 on EPS expectations before on the acquisitions Update Call. I'm just wondering any change to that or any additional thoughts on 25, just given the weakness that you're seeing on from biopharma, Chongqing, China and some academic, too.

Frank H. Laukien, Ph.D.

Yes. We're starting from a lower base than anticipated. That's that's a given also on since my a lot of the stimulus orders from China probably will be mostly for big ticket items. Those inherently tend to have, you know, two, three quarters delivery times. So as I said in the call, all right, we benefit from China stimulus and then half of the year. So we're not giving guidance for 2025 because Q4 will be so important. But it is definitely it makes complete sense to lower estimates for 2025. Let me say that pretty clearly, and we will win obviously based on Q4, then give give our new 25 guidance.

Puneet Souda

Okay. Thank you.

Operator

The next question comes from Michael Ryskin from Bank of America. Please go ahead.

Michael Ryskin

Great. Thanks. Sorry, Frank, I want to follow up on that last point you made you made a strong point in the in the prepared remarks of you're confident and above market growth and significant margin expansion at 25. So just sort of what's driving that confidence to certainly given they're still this visibility and all these years swing factors. You talked about China stimulus a lot. But like you said, there's six month delay between orders and revenues. So that's only contributing for the second half of next year. Right? So what else do you see as tailwinds that gives you confidence about margin progression?

Frank H. Laukien, Ph.D.

Yes. Very good question, Michael. So on. We are we still have signaled pretty significant around excess backlog, if you like, with still about seven months of backlog, which are normalized should be about five months. But beyond that, I mean, we've really had some very, satisfied with the way the diagnostics business is going from all the Biotype to the newly acquired Ali SEC diagnostics. It seems to be generally as others have reported as well stronger at the moment and life science tools and very good demands from throughout the year and particularly in Q three for semiconductor metrology, that's really going to be strong driver. And so we're pleased with us from academic and government spending in other parts of the world in the rest of Asia Pac outside of China, it has been actually strong, reasonably strong in the same in Europe. So there are enough strong drivers that is that of our strong drivers.
There are things that are solid and there are things that facility and how we are waiting for the recovery. We're actually quite optimistic about China, seeing a significant step up in orders in Q4 and in the first half of next year because of that stimulus funding. But it's still difficult to quantify because we don't know what we can look at the opportunity funnel and we can apply our average percentage Wainwright rate that we normally have because it's a plateau. And how many of these projects will all be funded by some orders are coming in. We did receive stimulus orders in already in October as expected. How much that will add up to we don't value. Yes. So I think we're in good shape and certainly also for the first half of the year to outgrow the market and five, the second half of the next year at 2025, we do believe or anticipate that there will be some biopharma recovery and also that indeed, China orders will take up after the pretty pronounced weakness in the first nine months of this year.
So that for both parts of the year, I think we're in good shape for next year to to outgrow the market what market growth will be. Of course, we don't know yet the loss will for other companies that build that kind of set the market level probably with their guidance and our guidance, which we hope to give in early February, that will set the tone for 2025. But I think the fundamental trends that we have with that multi-omics proteomics, these are all very good markets, spatial biology. We think there will be a lot of demand for that. And yes, lab automation is actually a little bit countercyclical lab automation and six and stuff and digitization companies that are cutting costs, cutting sites are making investments there. So I think our can speed acquisition is very nicely place. The biggest driver, this strong single driver, I would say, semi.

Michael Ryskin

Okay. That's all really have a call, Frank, I just want to reconcile one other point, though. You did touch on backlogs really strong seven months. You've talked about a number of times, you talked about bookings growth. So I can on the other hand, you do have the revenue guide kind of understand that China has been weak. Understand a biopharma company has materialized. That's all fair points and find new, and that's not debated. But at the back of strong, why are you able to backfill some of those orders? Is that a timing perspective where it's not solicited moves around? I guess what I'm saying is just within seven months of backlog thought that there be no support for rents?

Frank H. Laukien, Ph.D.

Yes. Well, if you look at it sequentially and we of course, did then the step-up sequentially from this year, Q3 2Q for still very substantial, right? We're not quite reaching CAD1 billion fourth quarter. It looks more like in oh nine, 65 and 70 or so is the implication that's pretty close to 1 billion. That's by far the largest fourth quarter that that we've had and the step-up from Q3 to Q4 is very significant. That's about $100 million actually. So it's a it's not that we like ambition here. I think it's just the as you as you look at how these as you look, how these things line up, I think that's a prudent guidance cut further for the fourth quarter.

Michael Ryskin

Yes. Thanks. Yes, for sure.

Operator

The next question comes from Patrick Donnelly from Citi. Please go ahead.

Patrick Donnelly

Hey, guys. Thank you for taking the questions from Gerald, maybe one on, I'm just kind of the dilution from the acquisition, the margin impact. Can you just talk about where we are on some of that? I know NanoString, obviously the biggest one, I think the guidance for 15 to $0.2 this year. I know you had in the past you said it could be half of that next year. Curious if that's still the right way to think about it? And just what's going on with those deals have been telling you guys had your arms around it to mitigate dilution slipped a little bit. Just want to talk through that.

Gerald N. Herman

Yes, hi, Patrick. I would say generally on the acquisition, integration activities are on track. So we are progressing nicely on we've talked about historically the Bruker management process and how that supply now into all these newer acquisitions in including more you just mentioned that you will do solution picture for us for 24. And what we see post for for 20 fives is pretty solid. And we are modifying or on solution expectations with respect to 2024 or 2025 right now. So it was we went through those metric, I think fundamentally as this.
So the type of maybe to add to that contract, um, the NanoString and cellular analysis businesses, we're still aiming to bring those to breakeven in 2026. And I think we're on track for that with really good management and really good enthusiasm by the acquired businesses, very aligned management team there. So yes, we expect pretty significant margin improvement in each of the next three years. That's that's really on track. It would help. Of course, you have a little bit more strength in life science tools and biopharma on that with that are weighing is not fully materializing at. And so we will end its science tools on. We confirm that the demand there is on the weak side right now, still?

Frank H. Laukien, Ph.D.

Yes, understood. And Im, Frank, maybe just on the academic government market into next year, obviously a pretty impactful day here in the US. How are you thinking about that outlook? What are you hearing from customers? What could change today? And just kind of that expectation going into 25 would be helpful. Thank you, guys.

Gerald N. Herman

Yes, that's a good run rate on. So once we know the outcome of this election, which may be denied maybe in three, four weeks, comes from those in the biopharma industry are more concerned about one outcome. Those the knockout golf are concerned about the other outcome. And and I think right now, the uncertainty doesn't help quite honestly, because people don't know where it's going. And my eight non nonpolitical. But my interpretation is that if there was one way or the other split, governments that perhaps would avoid extreme moves on taxation and price control and NIH funding, maybe that would be the best outcome for the businesses in our in our sector, including ourselves. But until we know that may be made, I know that in and out of it, it's not only about the presidency. I know that's an exciting rates there, but also about how House and Senate lineup and was split government, I think maybe some optimism and predictability of all that they're going to be tariffs. Other taxes, are there more price controls may come back right now? There's a lot of uncertainty at hesitant to say that what I would say, I appreciate it, Frank. Hopefully it's not three or four weeks, but we'll see. Yes, maybe the House and Senate, we can figure out a cluster of have much.

Operator

Yes. The next question comes from Rachel Breindel that from though from JP Morgan. Please go ahead.

Rachel Breindel

Good morning and thank you for taking the questions. I wanted to follow-up on one of the earlier question, Sharon, just on top line, we reduced the topline organic growth guidance for the year, maintenance 30 basis points. Can you just break down at 250 basis point type between some of the moving pieces that you called out across biopharma in China? And if there's any other areas contributing to that? And then also, you mentioned that you're no longer assuming in a recovering within biopharma in China. But can you just clarify for us to address that market actually get worse sequentially? Are you just, you know, previously a little bit more color on what that recovery will look like into the back half and taking them out of them online that plant?

Frank H. Laukien, Ph.D.

Right. So arms guarded, Rachel, I think So top line, the effect of China is even stronger than biopharma. So China, maybe two thirds biopharma, one-third, roughly. And in terms of things that have some that are slowing us down a little bit there. And as we talk about recovery, we're actually optimistic on bookings are more optimistic on bookings, but believe that generally those Mizuno now it's November that really won't help us. And the P & L and revenue anymore, at least in a meaningful in a significant way. Some orders will help us in the first half and the others in the second half of last year. So we do believe in China recovery being very likely with the stimulus program. We cannot quite quantify it yet, but we're very optimistic about that. And while biopharma at some point will be done with our cost cutting, right, and they're pretty aggressive about it everywhere. So I think at some point, they'll find a new level to where they're reinvesting. I can call the timing on that one. So China, I'm pretty optimistic that we have so much activity and orders beginning to come in. I'd be very surprised if we didn't have reasonably good China orders in Q4 after a relatively weak orders all year long and yes, Q3 for your lab plus a cyclical parts. Part of your question, Q. three, China orders were lower than what we had expected and some of those that we would have still been able to deliver and this year, but now with Q4 than even that Ternium of mostly into Q4 and perhaps also into Q1 and Q2, just not going to happen this year anymore.

Rachel Breindel

Got it. Okay. And then for my follow-up, actually, did want to thank you can start ordering dynamic. So you talked about how orders grew in the upper mid-single digits this quarter. Can you kind of break that down price? You mentioned China wants a little bit weaker, but any other trends on that order book? And then just around booked about can you give us book-to-bill in the quarter and you separately and talk about how bookings are may not be, you know, the best start to look at Bruker on a go-forward basis. How should we still expect to get possible on a quarterly basis going forward will be shipped in Ingolstadt at some point and lifestyle? When should we expect that shift?

Frank H. Laukien, Ph.D.

The other questions, write a book to bill in the third quarter and year to date has been below one and about 0.9 on that. We don't we do expect that to give that gave that update annually. I think it's a more useful Sagar annually, but since you asked, that's so that's where it was sort of book to bill in line with what it had been in the first half of the year. No, no greater weakness or something like that. In fact, as you say, you know, the other the other measures that days in terms of organic VSI bookings growth has been the SBSIO. organic bookings growth in in for actually five quarters. So you know, but it's nothing to write home about yesterday that it is encouraging is going in there direction. This despite the China weakness in biopharma weakness, which tells you that everything else is growing in the high single digits since these are the two bad guys. Biopharma and China clearly are a drag and in China is down year over year. So the other parts of the business have pretty good growth momentum. Now we could certainly for the first half of the year of next year, I think we're in pretty good shape for the second half of next year. We could have we could use some anticipated assist from China stimulus funding and from biopharma turning the corner.

Operator

The next question comes from Tycho Peterson from Jefferies. Please go ahead.

Tycho Peterson

Thanks. No, I don't want to really talk about 25, but you did talk about significant margin expansion. I'm wondering if you could maybe give us a high-level framework there. And then I just wanted to check, are you assuming a normal market next year, which you've previously talked about as 4% to 5% growth

Frank H. Laukien, Ph.D.

in reverse order, we would assume a more muted recovery maybe with a normal market by 26 or maybe in the second half of next year? We're not sure, but we don't expect a snap back in our estimates for next year. We expect an issue improvement over 24 for the full year for the market and thought a normalized market yet, if that were to surprise us and it goes back to normalized growth rates of 45%, that degrade. But right now we're modeling we're expecting that for 26. And I'm sorry, the first part of your question was

Tycho Peterson

you talked about significant. I characterize it as significant margin expansion and 25, the Street's at 110 basis points. What it means in your view?

Frank H. Laukien, Ph.D.

Yes, not north of that. So higher than 100 basis points higher than our. Yes, I it's too early because it will depend on Q4 orders, and that's not only the biggest close to $1 billion in revenue, but it's also very big quarter for orders. So we'll need those to give more meaningful numbers. But we're working very hard, not only in cost avoidance, cost reductions, cost reductions, some headcount reductions throughout the business and of course, and particularly working on the on the newly acquired businesses that are generally all dilutive to margins as we anticipated by that strategic expansions. So with that, we would expect north of how the number that you've mentioned that and margin improvement will be driving very hard for for that. But I cannot give you greater bracketing or something like that. Fairly clear. That's going to be more aggressive that protects.

Tycho Peterson

Okay. And then a follow up on semi. You know, I am just curious if you can flesh out your comments there more in I know demand trends have been strong, but obviously some of the recent data points haven't been great. So what are you seeing and what do you segment out next year on the semicon?

Frank H. Laukien, Ph.D.

Well, year to date and in Q three, our semi orders have seen very nice growth, double-digit, sometimes in certain segments, even greater than 20%. So certain instruments segment, sorry to clarify. So we think we should have a semi would be at the high end of the Bruker growth rate next year. Whatever that number will be. The organic growth rate, semi will probably be leading the charge.

Tycho Peterson

Okay.

Frank H. Laukien, Ph.D.

I didn't give you numbers, I realize this, but I can't really look at it. I also do not have the numbers. It's not just that I want to go into that type of granularity, but that specific number I don't have at my fingertips either and wouldn't really until we get. This is only fair question cycle, obviously. But I think if you ask that one again, when we gave guidance for 2025 in early February, then Ben will be able to give you some color on here's our average guidance, and this will be weaker, and this will be strong breadth. Semi will be up there among the strongest.

Tycho Peterson

Okay. But no crack based on what we saw from ask them now and coming in are kind of end market data points. That is that fair.

Frank H. Laukien, Ph.D.

So our RI. business that is in the ASML. supply chain with they're not metrology, but lithography technologies that not complete systems but systems that they eventually are in that size supply chain that is in the ASML. supply chain. They have all accounted for them, slowing down a little bit, some of their initial expansion for EUV and and the next generation of EUV tools. So that's all baked in. He's still nice growth for us, fronting device growth because we're getting into a new market. And we're all of a sudden part of an important small but important part of that supply chain. So for us, this is almost all upside.

Tycho Peterson

Great. Thanks.

Operator

The next question comes from Josh Waldman from Cleveland Research. Please go ahead.

Joshua Waldman

Hey, guys. Thanks for taking my questions. A couple for you. First, Gerald, I wondered if you could provide more color on what the business grew in the quarter, excluding the 200 placements and I guess how that compared versus your expectation. I mean, it seems like the U.S. I may have declined in the quarters that right here. Just curious where you're most prime minister where you've seen Mr. Brus pullback and how that informs your assumption for sequential progression into Q4?

Gerald N. Herman

I think we have one last year we're going to generate you had one in LA in the prior year quarter and we had to in the third quarter. So I would say what I would say generally here, Josh, is I think the trends we discussed earlier around biopharma in China. We're probably the areas I would say we're most from certain disappointing. If we can put that, put it that way relative to our expectations, we did have has Frank's already discussed. We did have solid growth from a revenue perspective in the SME part of the business. Industrial Clean Tech was quite solid. So we had very significant encouraging bridge provides, I would say, the two that we've called out, and this is particularly relevant relevant, true PSI on. So it would be that biopharma and in China, which is on on the gigahertz class since you're asking two of them into three of this year, one of them was eight was really intended originally for the first quarter of this year is the University of Georgia was one of the systems and that was supposed to, but that ended up needing we work. So it moved from Q1 to Q2 three. And the Korea system had always been planned for Q2 three, and that's comparable to a q three system last year when we grew 11% organically and also at one gig, our IT system. So if you want to adjust for two versus one gig, our IT system take $10 million or so, you ended model that. And for Q4 last year we had three gigahertz class systems and six was 15.9% organic growth. This year to four. We're planning for zero or one site. Okay. And then, Frank, a follow-up on your previous comments. As you think about recent order trends to contemplate what you think you can drive from the backlog, do you think of low single digit growth implied here in H. two is the right way to think about the medium term, just given the typical two-quarter lag and rev rack and your comments on recovery into So half of 25, but no, no, no, no, no, no, that's actually not at all know that that's not the right way to think about this thinking about you've got to look at 23, 11% organic growth in Q3 and 16% organic growth in Q4. If I look at our comps, so as I said earlier, I don't mean to be defensive here, but we're not just recovering from last year's crop. We're putting that on to our growth numbers on top of growth of very, very good growth numbers organically 11% and 16% respectively in the third and fourth quarter of last year. Now Gramercy fully our Q1 comparison will get a lot easier, right. And Q. four Q. two comparisons will also not be comparisons to prior year quarters with double-digit organic growth rate as what we're facing right now. So the answer isn't in our clearly now don't don't take our second half 24 growth rates extrapolate from that. They're only growth rate because of pretty amazing growth numbers in the second half, organic growth numbers in the second half of 23 that nobody else was even close to.

Joshua Waldman

Understood. Okay. Thank you. Again,

Gerald N. Herman

thanks for asking the question actually, because that's up. I think that's an important one for for everyone.

Operator

The next question comes from Dan Brennan from TD. Cowen. Please go ahead.

Daniel Brennan

Great, thanks, and thanks for the questions. And maybe just on kind of China's stimulus, Frank, since you called it out a few callers to maybe the first one is like what should we be looking at as kind of a stimulus program? You know, kind of we've tracked like a CNY500 billion monetary stimulus. Is that the right one? Are there others? And then be like do you expect as the Chinese government is and is expected to announce new large Fiskars fiscal excuse me, stimulus measures? Do you expect more money to come in the instruments from that? And then I know you said during your prior Q&A that you really can't size it yet in terms of the impact for Bruker. But anything any way to think about potential impact patients for Bruker first case?

Frank H. Laukien, Ph.D.

So I'm not aware of your good questions. So the further a Chinese fiscal stimulus is not baked into this in any way. The previously announced stimulus side is making it to the provinces. And then each province moves that their own base and with somewhat of their own priorities, although with a general framework of investing in scientific and medical innovation that so on, we're talking about, right, how quickly it arrived, whether it arrives in with orders in Q4, some of that will arrive in Q4. We think it's not going to be a single quarter bolus this time, but maybe the orders come in in Q beginning in Q4 and for all of next year, we kind of think it will be predominantly in Q4 in H1 of next year. So that's the one we're talking about and sizing that. I mean, yes, I would say it would be, you know, 100 bps of growth would be at the low end of that. However, it's not all it depends when that all come, then it could help us next year, mostly next year. Some of that could also go into 26. And yes, it might be more than that, but it's just very difficult because we cannot use our normal percentage. You know, will you have a pretty good feeling of 10 opportunities are probably going to get six or seven, whatever the numbers are. And this time as the yield is just not knowable yet has so many people applied for these programs are a lot of our cost of. We think we continue to think it will can benefit academic research and big ticket items in part particular which for which positions us very well within our business. I expect BioSpin to benefit the most.

Daniel Brennan

Great. And then maybe just a follow-up just on biopharma, since that's been a weak spot here. I mean, would you care to give us a sense of what that business is growing for you? I don't think you've done that in the past, but other other tools cures will give us a biopharma number. So just wondering in Q3 and how that compared to the first half? And then related to that, like what should we be looking at? Do you think as a a proxy for when this improves? I mean headlines from agree, but we just did analysis on biopharma spending and it actually looked okay from an R&D basis. So is R&D not the right metric to look at? Or just what should we be monitoring to see kind of when this concern? Thank you.

Frank H. Laukien, Ph.D.

Right. So biopharma. Yes, just trying to look at revenue versus bookings numbers in Q2 to Q3, year to date, it is down, although not nearly down. So biopharma has a catch all, including biotech and CRO is down for us this year, not as much as China. So it's generally had been around 2016% of our revenue, but that's going up. We wanted to grow also inorganically in biopharma. So our cellular analysis business, our spatial analysis business, NanoString are Kim speed business. They all benefit much to us to a much more significant than Bruker has traditionally. So very roughly at Bruker traditionally had 15% of its revenue from biopharma. That's trending towards 29%. So we're doing that at the worst time as biopharma is weak. But who cares? It'll it'll come back. And by that time, we will be very pleased that our exposure right now or opportunity in biopharma will have gone up further towards that 20% and beyond 20%, which we strategically wanted to have to recall a long time ago, it was very close to 10%. So we were 30 under represented there, so a down year to date, but not as much as China. And eventually, I think it will be at 20% plus of our overall revenue. Maybe that helps you to triangulate for a couple more questions. two more questions. Okay.

Operator

Next question comes from Brandon Couillard from Wells Fargo. Please go ahead.

Brandon Couillard

Thanks. Combined home center looks like the M&A contribution for the years coming down boosted the margin somewhat 9.5% contribution versus the prior tenant that rounding Yum. And if Okay, any color, just now finally, tech and seeding manufacturing have performed Alex.
I can speak great brandon couillard analysis and NanoString a bit weaker than expected and primarily the biopharma piece, which is various you figured it out immediately brand and exactly. We took that from 10% to 9.5% because the biopharma demand for cellular analysis and spatial biology, he has been weaker than we had expected a space that's part of that's related about our M&A that's related to the to the biopharma piece, can speed actually remarkably strong. It also serves other industries, but I said it's low land to add countercyclical in that even big pharma, I will consider very big CapEx investments and software investments, even if they're cutting program sites and people and Alex, it's chugging along spreads. That makes sense. Does the guidance range down to $55 million in terms of revenue EPS range, $0.23, that would imply a hundred close to 100% decremental margin from. Can you just help me reconcile that math and why that makes sense, sir?

Frank H. Laukien, Ph.D.

So it's a little complicated, but when we stood on from the guidance, we actually dropping about $60 million on from our previous guidance level. That translate to actually into about $100 million of CE. or rather than home. That's mostly driven by biopharma in China, as we've talked about earlier here, and we do get a slight benefit from foreign exchange elements that you may recall that when the USD weekends, we have a strengthening relevant revenue, we had a tailwind. So you take that $100 million CER. offsetted by on benefit related to funding exchange hit the 60 that I was referring to earlier.

Gerald N. Herman

And on the operating margin is the other way around the FX changes that have been with the dollar weakening perhaps because of the election or something like that. We got an additional 30 bps of margin headwind. So yes, it comes to how it comes together to last question, and then I think we'll need to let you all go into the rest of your day here. What my time for one more question. Yes, we can do one more.

Operator

The next question comes from Luca Solca from Barclays. Please go ahead.

Great. Thanks for squeezing me in. Tom. I just wanted to kind of follow up on the China stimulus and how the U.S. talked about early demand and the final kind of building there. But given we don't really know how the stimulus is going to shake out through the next year, you know, however that however that comes through, but is there a chance that the actual funds flowing through are not going to be enough there to satisfy that demand and that could ultimately the lead to that elevated the elevated backlog of seven months incentive go into five months? Just kind of as you think about how that kind of patients through? Right.

Frank H. Laukien, Ph.D.

The good questions on. So some of that China's stimulus will come through. We are seeing some of it come through now. Some of it is going into tenders. We think those tenders are in our favorable for us and we think there specifically funded. So it's not that we worry about. Is it coming at all? It's just up and I will at some point at 100 bps to growth. Yes. But could that be the second half of next year and the first half of 26 that's kind of would be a delayed help from the stimulus. It also could be a bigger effect. Certainly the activity is much, much larger and you know, had someone raised expectations, but it could be Cigna. Secondly more. So the funnel looks really good for big ticket items in particular and not only anymore, but also on the mass spec and take microscope side and engine or some other devices, preclinical imaging, APRU damage. So we're pretty optimistic that it will for all while we're optimistic that it will help us much given sort of hopefully the lower end of how much we might get from it hopefully will be more, but it's too early to tell yet guidance from a timing thing right. And then hear from a from a pharma perspective.

I know you guys don't you talk about 15, 20% of those revs and that's going higher some of your total RAB. So can you just kind of walk us through what you're seeing on you typically play more upstream on the drug to drug discovery side. So can you talk about where particular things got a lot weaker for you for what you were originally expecting an and kind of the funnel or early demand outside for that as you exit the year?

Frank H. Laukien, Ph.D.

Well, we will not surprise. Did I hear that CROs got hit the hardest right? And not only China in ARO's panel, but also, of course, you know that some some geopolitical gain for Indian or American or European CROs, CRO demand that when big pharma costs, the first half was against the new CROs and then they cut internally. But we're seeing some pretty big pharma just doing a lot of cost cutting kind of whether they needed or not. This is a good time for them to kind of streamline their programs, reduced programs of consolidate sites to reduce headcount of. I am delighted to say that our proteomics and post genomic era customers are not taking the brunt of that. So again, the with the post genomic markets and proteomics multi-omics, we're in a sweet spot because our customers are in a sweet spot. But even if they lose headcount or lab space, they're not getting a CapEx budget to spend right now in Q3 or Q4 while or some other group is being eliminated or reduced or something like that. So on and get our biotech up, emerging biotech funding has been tough. And even even sort of early seed and see these days now pretty difficult. And B and C is has remained difficult. So I don't think there is a step up their selected biotechs that do it because they have a very compelling second stage program. But in general, I'd say that the capital markets funding is still very, very difficult from what we are observing. And you know that also delays, leases or purchases of new instruments.

Great. Thanks. Got it. Okay. Sorry.

Frank H. Laukien, Ph.D.

Okay. Thank you very much. Sorry around a little over today. I'm hoping will be an eventful day in there for America. Thank you very much for joining us today, nonetheless, and thank you for your interest. So our parks conference has now concluded.

Operator

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