Release Date: February 13, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: Frank, my first question is on the guide. The full year guide is 3% to 4% organic growth, which is higher than expected given the NIH indirect announcements and direct cuts. What gives you confidence in the instrumentation sales? Is it ELITech, AI, aftermarket service, or European offsets? A: Frank Laukien, CEO: There are multiple growth drivers outside the U.S., including biopharma recovery, China stimulus funding, and strong performance in microbiology, semiconductor, AI, and applied markets. We have built in some NIH uncertainty into our guidance, but we are confident in achieving 3% to 4% organic growth and 5% to 7% constant exchange rate revenue growth.
Q: Could you talk about the assumptions in Q1 regarding instrumentation placements and any potential backlog cancellations due to NIH funding cuts? A: Frank Laukien, CEO: We have not heard of any backlog cancellations. We are cautious on Q1, expecting mid-single-digit CER revenue growth and near-flat organic growth. We have built in a cushion for uncertainty, but no specific issues with lab readiness or funding have been reported.
Q: Can you talk about academic government budgets in Europe and China, and the impact of the China stimulus? A: Frank Laukien, CEO: China stimulus funding is expected to be spread out over multiple quarters, with some impact in 2025 and 2026. Europe has been reasonably good recently, and while ACA/GOV may not be great this year, we have other growth drivers that do not depend on ACA/GOV.
Q: For the deal dilution this year, is $0.08 to $0.10 the right way to think about it? A: Gerald Herman, CFO: Yes, you are correct. We are moving from roughly $0.15 to $0.20 plus dilution in 2024 to $0.08 to $0.10 in 2025 on the EPS line, with the goal of near breakeven in 2026.
Q: Do you have an update on biopharma recovery timing? Are you expecting that to be in the second half of this year? A: Frank Laukien, CEO: We expect a gradual recovery in biopharma, starting in the first half of the year and potentially getting stronger in the second half.
Q: Is the expectation still to place 3 to 4 UHF NMRs this year, and what is the geographic concentration of the backlog in BSI? A: Frank Laukien, CEO: We expect to place 3 ultra-high field systems in 2025, with the geographic breakdown of backlog consistent with our overall exposure. The backlog level is over 7 months, similar to the third quarter.
Q: Could you give some puts and takes on the 140 basis points of operating margin expansion, and are you contemplating any potential tariffs in Europe? A: Frank Laukien, CEO: The 140 bps expansion includes some organic headwinds and a little FX tailwind. We have flexibility in manufacturing locations and can respond to tariff changes if needed.
Q: Could you provide an update on the timsTOF platform and its growth prospects for 2025? A: Frank Laukien, CEO: The timsTOF platform is recovering with improved win rates and is expected to grow. It is a meaningful business for us, approaching a $200 million run rate, and we are investing heavily in proteomics and related areas.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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