Bruker Corporation (NASDAQ:BRKR) Q4 2022 Earnings Call Transcript

Frank Laukien : Sorry for that, I mean we’re obviously delighted by that prospect, as you know from announcements until this gets into specific grants and budgets, and then into purchase orders take some time. But that along with the Inflation Reduction Act in the US, so the CHIPS Act in the US and potential also additional stimulus that may happen in Europe. In clean tech and other energies, it all caters to our strengths. And we’re in principle very, we’re delighted and excited. But I just don’t want to caution it takes some time before, this probably won’t show up at all revenue till ’24- €˜25. But it’s great to have these medium- and long-term tailwinds as well. On the other question, I go over to Justin or to you or €“

Gerald Herman : I’m happy to respond. So relative to the €˜23 guidance relative to the margin performance. I think, as you’ve probably heard from my prepared remarks, there’s two major factors there. First of all, we posted, I think, very solid, full year €˜22 operating margin performance of 20%. That’s a record for the company. Secondly, we do expect some combined foreign exchange and acquisition related dilution on the operating margin for €˜23. There’s another factor which you’ve already referenced, which is accelerated R&D spend, we do think with some stabilization on the supply chain and some of the work we’re doing there that we will be able to bring our R&D levels back up to a 10% level in €˜23, all of that pulls the operating margin down slightly for €˜23. We expect to be able to rebound that back in €˜24.

Frank Laukien : Importantly, we expect to expand our gross margins, our non-GAAP gross margins in €˜23. And we’ve even on, if you look at the guidance slide and we’re thinking that organically our operating margin, it’s good, we’re still going to grow about 60 bps. But yes, we are acknowledging some transition margin headwinds from FX and the deliberate and very good acquisitions. But in the first year, they’re either not profitable, they have low margins. We’re very glad we did these acquisitions; I think they’ll be terrific for the company. But that gives us a temporary drag on in 2023, which we’re accepting and we think that only gives us more growth and operating margin expansion potential in the future years as we’re positioning the company continue to transform the company.

Operator: Our next question will come from Patrick Donnelly with Citi.

Patrick Donnelly: Thanks for the questions. Frank, I think this is the highest growth number I’ve seen you guys put out to start a year. You guys are typically known for layering in a pretty healthy amount of conservatism. I guess with this elevated growth numbers, they’re still that typical Bruker conservatism in there. And on the back of that, I guess what gives you the confidence to put out this type of numbers start of the year, bumping it even from what you were talking about JPM. I mean, clearly, the record backlog, I assume as part of it, does that just give you the visibility you didn’t have in prior years to get to this number. It did headwind like that semi concern that you talked about last quarter, alleviate a little bit, it’d be great to get your perspective on kind of where we stand to start the year here.