Good afternoon, and welcome to the Bruker's Third Quarter 2017 Earnings Conference Call. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please also note today's event is being recorded. At this time I'd like to turn the conference call over to Ms. Miroslava Minkova, Head of Investor Relations. Ma'am, please go ahead.

Thank you, Jamie. Good afternoon. I would like to welcome everyone to Bruker's third quarter 2017 earnings conference call. My name is Miroslava Minkova, and I'm the Head of Investor Relations for Bruker. Joining me on today's call are Frank Laukien, our President and CEO; and Tony Mattacchione, Bruker's Senior Vice President and Chief Financial Officer. In addition to the earnings release we issued earlier today, during today's conference call, we will be referencing a slide presentation. The PDF of this presentation can be downloaded by clicking on the earnings release hyperlink on Bruker's Investor Relations website. During today's call, we'll be highlighting non-GAAP financial information. A reconciliation 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 I show on slide 2. During the course of this conference call, we'll be making forward-looking statements regarding future events or the financial performance of the company that involve risks and uncertainties. The company's actual results may differ materially from the projections described in 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, as well as in subsequent SEC filings. Also, note that the following information is related to current business conditions and to our outlook as of today, November 2, 2017. Consistent with our prior practice, we do not intend to update our forward-looking statements based on new information, future events or other reasons prior to the release of our fourth quarter and year-end 2017 financial results in February of 2018. Therefore, you should not rely on these forward-looking statements as representing our views or outlook as of any other date subsequent to today. We will begin today's call with Frank providing a business summary. Tony will then cover the financials for the third quarter of 2017 in more detail. Now, I would like to turn the call over to Bruker's CEO, Frank Laukien.

Thank you, Miroslava. Good afternoon, everyone, And thank you for joining us on the call today. I will begin today's earnings presentation on slide 4. Bruker had a solid third quarter 2017 with revenues increasing 10.6% year-over-year and 3.4% on an organic basis. Our Scientific Instruments segment reported third quarter 2017 organic growth of 4.2% year-over-year. We also delivered year-over-year operating profit growth up 10% on a non-GAAP basis and up about 9% on a GAAP basis. Year-over-year EPS comparisons of course were negatively affected by an unusually low tax rate in the prior year 2016 as was expected. Year-to-date for the first three quarters of 2017, Bruker's business is performing better than we had expected earlier in the year. We have achieved better year-to-date organic revenue growth with contributions from end-market improvements and from our targeted growth areas. With these year-to-date results, we are raising our outlook for the full year 2017. Looking more closely at our Q3 2017 results, we reported revenues of $436 million, an increase of 10.6% year over year. Acquisitions contributed 4.8% to revenue growth, while an FX tailwind or foreign exchange tailwind increased revenues by 2.4% year-over-year. On an organic basis, our Q3 2017 revenue was up 3.4% year over year including approximately 4% organic growth in our Scientific Instruments or BSI segment as previously mentioned. This was partially offset by an organic revenue decline in our BEST segment this quarter. Within our Scientific Instruments segment, growth was driven by our NANO and CALID groups which both has challenges in 2016 and which both also executed restructurings and factory consolidations last year. In Q3 of 2017, our Scientific Instruments segment represented about 90% of the company's revenue with BEST at about 10%, up from 7% to 8% in previous years. As a reminder, our…

Thank you, Tony. Jamie, we're ready to open up the Q&A. In an effort to accommodate more of our analysts, please keep your questions to one and a follow-up.

Ladies and gentlemen, we will now begin the question-and-answer session. Our first question today comes from Brandon Couillard from Jefferies. Please go ahead with your question.

Thanks. Good afternoon. Frank or Tony, curious if you could give us a sense of how that portfolio, that basket of five or six different strategic growth areas, performed in the third quarter?

Yeah, Brandon. It's Frank. I'll take that one. I think obviously, the different growth initiatives are in very different stages. As you know, semi and microbiology were – is already pretty sizeable and others, like our big proteomics launch, literally has just occurred. So, in the aggregate, and we'll give you more color on that sort of by the end of the year and as we give 2018 guidance, obviously, in early February. Overall, it's going reasonably well, and they are growing ahead of the growth rates that we're seeing in the rest of the business, as we had anticipated. But we'll get more quantitative on that in early 2018, when we give you next year's guidance.

Thanks. And then a two-part question for Tony. Any chance you could share with us the BSI order growth in the third quarter specifically? And secondly, if you could help us bridge the delta in operating margins on a year-over-year basis between M&A and currency, and what might have been the core portfolio performance, that would be helpful.

Yeah. From a bookings perspective, and adjusting for acquisitions and currency, we're up mid-single digits in the quarter. From – bridging the gross margin, it's helpful to – the operating margin – it's helpful to take a long term – to understand our long-term perspective here, where we're really focused on expanding operating profit margin 70 basis points to 100 basis points annually. And, with the improved market conditions, with new products, with our strategic growth areas, my focus is really on making sure that comes with appropriate operating leverage. Our transformation delivered a lot of expansion already. And that's in place and sustainable, and we believe that that leverage will contribute to expansion going forward. Below operating profit, we – just to continue down the P&L, tax policy and our planning should help, as well as our share repurchase. So, we're confident that the thesis on the operating profit margin expansion, with the process I just described, will generate sustainable expansion over time.

And Brandon, just to fill, to finish it up on your question, if I understood it correctly. The year-to-date 60 bps operating profit margin expansion also again included about 40 bps, or a little bit more, of M&A dilution. So, yes, without the acquisitions, which we of course did for a reason, our operating margin expansion would've been even greater. But it's exactly as we had guided, about 40 bps of headwind. And that's also what we're still guiding to for the full year, from those acquisitions.

Very good. Thank you.

Our next question comes from Amanda Murphy from William Blair. Please go ahead with your question.

Hi, this is Matt Malcolm (35:28) speaking on behalf of Amanda Murphy today. Thank you for taking our call. Just, wanted to ask about – so we continue to see some recovery in the academic market in Europe, and I was hoping to get your perspective as to how you see the sustainability of that growth from a funding perspective over the long term?

Yeah. Again, this is Frank, Matt (35:50). So I think the European recovery, it's actually not a big surprise. Last year's wipeout, if you like, was the big surprise. I think we're back to sort of normal European patterns of low to mid-single-digit growth in the market in general. And I think academic and government research funding has simply, maybe not in every country, but in Europe in the aggregate, has simply normalized to where it has been really relatively stable, moderate growth for many, many years, with the notable exception of 2016.

Got it. Yeah. That's helpful. Thank you. And then, following up with a bit of an unrelated question. So you talked about strong aftermarket revenue growth from your LabScape within the BioSpin group. Could you talk about exactly what that is adding in terms of revenue growth, and how you see the mix of business evolving over time?

So within the BioSpin group, that had been – that has seen year-to-date a good growth rate, somewhere in the high-single digits or close to 10%. We think that has some runway, it was a little bit of an under – a little bit low-hanging fruit, but now we're really very systematically going after that. And also expanding the options from service to services to upgrades to software. So I think this will be one of the faster-growing pieces of our portfolio and particularly at BioSpin, where that opportunity years ago was a little bit underpenetrated. I don't know whether that answered your question entirely but...

No, that was helpful. We were just hoping to get a little better sense of what you're looking for there. But definitely answered it. So, thank you for taking our questions.

I think at least high-single-digit continued growth in that area maybe kind of – not grow that necessarily at 10% forever but – but we'll give you more guidance when we talk about 2018. So, that continues to be part of our faster growing areas and it delivers very good operating margins. Although, as our after market grows, in some cases, it is actually reducing gross margins a little bit but has very good operating margins and ultimately, those are more important to us.

Perfect. Thank you.

Our next question comes from Steve Willoughby from Cleveland Research. Please go ahead with your question.

Hi. Good evening. Couple of questions for you, Frank and Tony. First, could you describe a bit more on what happened in BEST this quarter, as I remember your commentary a quarter ago suggested that it was still going to likely grow in the 15%, 20% plus range?

Yeah. So, I think there's some timing issues. We have some big science projects at BEST. And of course, we have the conductor demand primarily from the MRI OEM customers and some of our own conductor demand. And so the big science project, they can really – it's just from quarter to quarter fluctuations. So, some of that had probably been a little bit of pulling into Q2. Therefore, Q3 a little bit slower on the organic side. Overall growth was still very good, of course, primarily because of the big B-OST acquisition that still is inorganic growth this quarter. In Q4 it'll annualize and become partially organic growth. But I think it's primarily timing of big science projects, they can really fluctuate quite a bit from quarter to quarter. So, with BEST growth rates its really much better to look at them on a 12-month – on a four-quarter basis or last 12 months.

Okay. That's helpful. Thank you. Then for Tony. I was just wondering if could provide us the amount that – your EPS guidance is going up. How much of that is attributable from more positive or more favorable FX?

FX is actually lower for us. So, none of the increase in EPS is attributable to FX.

Okay.

We have...

And then last one. Oh, go ahead.

We have – Steve, we have a situation where when the dollar weakens, it translates into higher revenues but because of our European and Swiss cost base, it also translates into higher costs. And...

Sure.

...depending on where the revenues come from, that actually in some cases generates negative – not a lot, but a negative result on the bottom, on EPS and that's the way to think about it.

They're small effects in summary

Okay. Thanks. Is there any updated...

Was there more, Steve?

Yeah, I do Frank. Is there any updated timing as it relates to potential shipments of gigahertz systems? I know there are some shipment shifting last quarter. I just didn't know if there were any other changes in what your outlook is for those types of NMR machines?

Yeah, we would presently. I mean we'll give you more guidance when we give guidance for 2018. But the – maybe not the shipment but the revenue recognition, this will continue to be a system that will be revenue recognition upon acceptance. So, that is moving into at least into the second year of 2018.

Second half.

I'm sorry. What did I say?

Second year.

Oh my God. I'm sorry. Yes, Steve. The second half of 2018, I apologize.

Got it. Thank you.

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

Hi. Thanks. Good afternoon.

Hello.

Hey, Jack.

I wanted to get your thoughts on CALID. So it looked like it picked up mid-single digit now year-to-date I would guess the quarterly trend a little better. Just what are you seeing in Daltonics on the clinical side. And then, any traction coming out of the ASMS with biopharma?

Now, this is Frank. So, microbiology which is the clinical side has really normalized, it's no longer the double-digit growth area that it was years ago. Now, overall it's growing above our average. It's growing in the mid- to high-single digits with Systems now growing more slowly and Aftermarket and Consumables revenue still growing very fast, although from a lower basis. So I think it has just normalized, this is actually how we hoped to see it growing. Whereas, if you recall last year or in the first half of last year 2016 we had some China channel issues and so on, so we had a hiccup there last year. So, microbiology clinical dong well. ASMS and sort of last year's launches particularly on the pharma side of the MALDI PharmaPulse and MALDI imaging systems, mass spec imaging systems that are used in drug development, that's going really quite well. So, we're pleased with the growth in those applications this year for both research and pharma. And of course, this year's product launches at HUPO and ASMS, they will mostly contributed to next year's growth rate we expect and help.

Great. That's helpful. And then, I just listened to the commentary during the call about the improving order outlook, and your views in Europe on academic and coming here to the U.S. And then maybe my math is wrong but looking at the fourth quarter guidance I think it implies about a 1% organic growth rate. Can you just help us with some of the puts and takes and how we should think about leaping off into 2018? Thanks.

This is Tony. I'll start it off and Frank might follow-up with some comments. We had talked about even last quarter that the 1-gigahert magnet was a significant expectation earlier in the year for Q4 and that has moved and we have a difficult comp with a very high Q4 and in that is some large detection shipments that won't repeat. So, that is quite sizeable. That represents about 250 to 300 basis points. So, your math is right. And with that adjustment, it's more like what you saw us deliver year-to-date. So, those two effects really do impact the growth rate but we have a range there and there's also a range of outcomes that could occur. And as you know with our business, things could accept on schedule or later so that's always a factor to keep in mind. So, if more business comes, that will obviously help the growth rate in Q4.

Thanks, Tony.

Our next question comes from Doug Schenkel from Cowen. Please go ahead with your question. Chris Lin - Cowen & Co. LLC: Hi. Good afternoon. This is actually Chris Lin on for Doug today. Thanks for taking my question. So, can you provide a bit more detail on your mid single-digit growth rate by segment? It seems like orders growth was higher in Bruker NANO? Is this right? And what was CALID and BioSpin orders growth? And then for my follow-up question. I'm not asking for 2018 guidance. But based on what you're seeing for new orders new products and market trends, could you just talk about your confidence level in achieving higher organic revenue growth in 2018? Thank you.

All right. Chris, this is Frank. So, the Scientific Instruments or BSI year-to-date mid-single-digit order growth rate, I think it is fair to say that the biggest acceleration comes from NANO, which also perhaps was most subdued for really quite a number of years because of the weak industrial. And the two more life science-oriented groups tend to be a little bit more similar for, at least, for the full year. That's our expectation on the order growth. So, yeah, NANO growth in terms of revenue and orders this year is a little bit faster than for the other groups within the BSI division. And for 2018, again, we're not giving guidance, of course. I think the Scientific Instruments business, which is about 89%, 90% of our business, we have pretty good visibility. And year-to-date, orders are up in the mid-single-digits, which is encouraging. We don't see a reason why there would be a trend change in Q4. So, that gives us confidence that our Scientific Instruments business hopefully will continue to have nice growth next year. And at BEST, a lot of the order growth for the year will depend on Q4, because there's some long-term contracts. So there we don't have full visibility yet. But overall, from what we can see today, we are encouraged that we have momentum. Remember in 2016, our organic revenue growth – well decline was really, it was a negative. In Q1 it was still negative. The three following quarters, not each one exactly the same, but encouraging step-up in organic revenue growth and we hope that this will continue with more momentum into 2018. And the evidence that we have so far all points in that direction so I think it's a reasonable expectation. Given what we know today, we will know more in early February when we give guidance. Chris Lin - Cowen & Co. LLC: Okay. Great. Thank you. Actually, I have one quick question for Tony. Could you provide free cash flow guidance?

We don't really provide guidance on free cash flow. But the color I would give is this year is like most years. And in fact, our free cash flow generation year-to-date is almost within a couple of million than it was last year. And the other consistent thing is most of the cash flow comes in Q4 which is the case this year as well. So what we usually target is conversion at GAAP net income. It's likely going to be somewhat south of that. But again, a lot of the free cash flow generation will come in Q4 similar to prior years.

Operator, next question please.

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

Hey good afternoon. Thank you. Just maybe one quick one for me. Frank, on NMR what are you seeing in terms of the percentage of high field orders that are for NEO versus the other large systems there.

NEO has been shipping for a while typically for high performance systems for NMR customers tend to order NEO sometimes for the more routine chemistry systems or so it may make less of a difference to them. And the NEO of course is slightly higher priced. So I would think that the high field systems or high performance research systems mostly or almost all are NEO Systems now as we get new orders.

Okay. That's helpful. Thank you very much.

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

Hey, thanks. Japan, can you maybe just – it sounds like that got worse sequentially. Frank, can you just talk about what's going on there? And when do you think things will bottom out?

Good question. I don't have an answer. It's been weak for us really throughout the year. I don't know that there are any trends that are meaningful. But Japan has been quite weak for us. And I don't really have any great insights about trends there.

Okay. And then on NANO, I guess, if you could just help us disaggregate how much of the strength here is Semi cycle picking up overall versus Hysitron, Jordan Valley, some of the recent additions contributing to the growth?

Yeah, it was quite a healthy basket. I mean the Hysitron acquisition worked out really quite well. Semi is – it may not even be that cyclical anymore, but it's certainly, it continues to be in an upswing. Some of that we're selling into memory, we're selling into some capacity buys, or most of what we're doing is still new technology buys for future technology deployment towards more manufacturing. So, it's not only a good end market upswing that we're participating in, but we have really more of a fundamental setup for a bigger growth and good margin opportunity in Semi. And – but very importantly also, there's a lot – the NANO group sells a lot into academic research. And that has gotten a lot healthier, particularly also for that group in Europe in particular. And they sell a lot into industrial – so European industrial and China industrial demand recovery, all really contributed to that group. So, we have a number of good growth drivers.

Okay. And then I guess, one last one along those lines. You mentioned you expect China to moderate. Is that just purely a function of tougher comps, or is there something else going on there we should be thinking about?

No. I think that's a function of comps. It's been – it had been growing for us in NMR and other fields for quite – for really quite rapidly, even when we weren't growing that fast in the previous year. And so, I mean at that growth rate, it's just going to settle into still attractive, but slightly lower, growth rates than the ones we had seen, we believe.

Okay. Thank you.

Our next question comes from Patrick Donnelly from Goldman Sachs. Please go ahead with your question. Charles Steinman - Goldman Sachs & Co. LLC: It's Charlie Steinman on for Patrick. Thanks for taking the questions. In the past, we've talked about a wallet share dynamic in the lab, where maybe the incremental dollar would be going to a technology like cryo-EM as opposed to NMR. I was hoping to get an update on what you're seeing on that front. And how you're thinking about that heading into 2018 and beyond?

Yeah. It's a pretty minor effect. I mean, almost all of NMR is completely unaffected. I mean, none of the chemistry system, none of the small molecule systems, none of the pharma systems, none of the aftermarket, none of the imaging are affected. It may – it has been, for a couple of years, affecting some high-field NMR funding, that's been well-known. And there, cryo-EM clearly took some wallet share, and that hasn't changed this year. So, we have generally a little bit more, less ultra-high-field funding, but obviously so many other good growth drivers and margin drivers that NMR is still very healthy, despite the fact that cryo-EM is doing well at this point in time. But most of NMR is completely unaffected by this. Charles Steinman - Goldman Sachs & Co. LLC: Got it. Thanks. And then, just on the margin cadence. I was hoping you would give us a sense of where you thought we were, like what inning we're in on the margin front. Any color around what opportunities you think you have to drive that margin expansion going forward?

We're not in any inning here. We're in the long-term margin expansion. We're...

It's a cricket game.

Oh God.

I mean really, our point hasn't changed on this. I mean, we believe there's significant expansion opportunity. We believe there's plenty of runway. As long as we can get market-based or better growth on the top line, we think that we can expand margins annually, 70 to 100 basis points a year, and we've got the cost structure and the discipline in place to do that. So, it's really a consistent message, I would say. Charles Steinman - Goldman Sachs & Co. LLC: Thanks.

Our next question comes from Derik de Bruin from Bank of America. Please go ahead with your question.

Hi. This is Juan (54:20) for Derik de Bruin. Thank you. My first question is regarding your M&A pipeline. How healthy it is, and if you expect to be as active in M&A as you've been recently in the near – in the future?

Well we're not a very acquisitive company. I would normally say, although, in order to contribute to our portfolio, we did make some M&A investments in the last 18 months or so. Mostly to invest capital where we wanted to save time, where we wanted to add software or consumables or other capabilities that otherwise might have taken five, seven years or so to build up. So, I would expect our M&A activity to generally come down, because I think most of the opportunities that we have for growth and margin expansion are really more on the organic growth and other business development. If there are selected smaller add-on technologies or capabilities, we will always take a look at that, but we don't really have an M&A pipeline, because we're not a very acquisitive company.

Got it. Thank you. And as a follow-up. I know that it may be a little bit too early to talk about 2018, but would you still expect to see about 100 basis points of operating margin expansion next year?

I think that tends to be our 75 bps on average over many years is sort of our long-term expectation. I'll just leave it at that. Obviously, that's never exactly linear, but we're feeling better about this year and have raised our guidance, and we'll just have to revisit that when we give 2018 guidance. So, my response is more of a long-term goal rather than 2018-specific.

Okay. Thank you.

Thanks. You're welcome.

Our next question comes from Puneet Souda from Leerink Partners. Please go ahead with your question.

Hi, Frank. Thanks for taking the question. Maybe if you can help us understand how you're viewing the whole proteomics space overall? Just trying to understand. On one hand, you have timsTOF that's going into peptide mapping, which is more of a competitive market. But on the other hand, it can serve large molecules as well. And on the other hand, you have the intrinsically disordered proteins through high-field NMR. So, help us just to understand how you look at that as part of the portfolio optimization over the next year or two.

Good question, Puneet, and I think those are all important to us. I mean proteomics is important to us and the traditional bottom up shotgun proteomics for which we've just launched what we think will be a very exciting product especially as we get towards higher volume and more clinical research and validation is important to us. There, we had been less of a participant in recent years, so I think that it's also is one of the largest if not the largest market. But of course with mass spectrometry looking at intact proteins and looking at top-down and middle-down approaches which also have an increasing role in proteomics research simply because they are now feasible. They've always been scientifically interesting but previously they weren't doable. Now, they are doable and very often with our unique tools is of interest to us. And of course, structural biology which we pursue with NMR and X-ray and including the unstructured proteins, intrinsically disordered proteins, we think once the cryo-EM funding wave and once most people have access to one, not everybody will have one. But people will have access to one at regional facilities or national labs. I think for scientific and fundamental biology but also for disease research reasons, I think the investment in intrinsically disordered proteins which are so important in many devastating diseases will become more important. So my long term prediction and don't take that as guidance is that after the cryo-EM wave, you will see a high field, ultra high field NMR funding wave primarily focused on intrinsically disordered proteins. So a lot of important growth drivers. They're actually all important to us and proteomics is one of our key focus areas.

Okay. Got it. That's helpful. And then just a follow up, What's your sense of portfolio, where it stands in the biopharma labs? I think that's a small segment of your overall revenue. But help us understand, I mean what can grow meaningfully there and obviously with the core academic in European markets having stabilized already. What's your sense of expectations in biopharma?

Yeah I mean those are attractive, very big markets, they're still growing a good rates and we are, we're not enough of a participant in those markets. Which is why in the last couple of years we've put a lot of primarily internal product and solutions development focus on pharma, and biopharma applications. Some are off to the races and beginning to make a difference and generate revenue both in NMR from reaction monitoring to mass-spec high throughput screening, label free high throughput screening or MALDI mass-spec imaging in drug development. Others are in development or in validation. But it's one of our other strategic growth areas. And here primarily, organically we're developing more unique NMR and mass-spectrometry solutions for pharma and biopharma applications. So, over time over a multi-year horizon, we expect our still rather modest exposure to these attractive markets to grow from unique products that we think we can offer. This will be one of our growth areas that we will drive very strategically.

Thanks, Frank.

It is still somewhat early days.

Okay. Very helpful. Thank you.

And ladies and gentlemen at this time, I'm showing no additional questions. I'd like to turn the conference call back over to management for any closing remarks.

Thank you for joining us this evening. During the fourth quarter, Bruker will participate in the Jefferies Healthcare Conference in London in mid-November. We invite you to meet us at the conference or visit us at our headquarters in Billerica, Massachusetts. Thank you and have a good evening.

Ladies and gentlemen, that does conclude today's conference call. We do thank you for attending. You may now disconnect your lines.