Bruker Corporation (BRKR) Q4 2018 Earnings Report, Transcript and Summary

Good day, everyone, and welcome to the Bruker Corporation Q4 2018 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions. [Operator Instructions]. And please note that today's event is being recorded. And I would now like to turn the conference over to Miroslava Minkova, Director of Investor Relations and Corporate Development. Please go ahead.

Good afternoon. I would like to welcome everyone to Bruker's fourth quarter and fiscal year 2018 earnings conference call. My name is Miroslava Minkova, and I'm the Director of Investor Relations and Corporate Development for Bruker. Joining me on today's call are Frank Laukien, our President and CEO; and Gerald Herman, our Chief Financial Officer. In addition to the earnings release we issued earlier today, during today's conference call, we'll be referencing a slide presentation. The PDF of this presentation can be downloaded from the Latest Results section on Bruker's Investor Relations website. During today's call, we'll be highlighting non-GAAP financial information. Reconciliations of our non-GAAP to GAAP financial measures are included in our earnings release and are posted on our website at ir.bruker.com. Before we begin, I would like to reference Bruker's Safe Harbor Statement which I show on Slide 2. During the course of today's conference call, we will make forward-looking statements regarding future events or the financial and operational 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 described in today's earnings release and in our Form 10-K, as well as in subsequent SEC filings, which are available on our website and on the SEC's website. Also, note that the following information is related to current business conditions and to our outlook as of today, February 11, 2019. 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 first quarter 2019 financial results in May of 2019. Therefore, you should not rely on these forward-looking statements as representing our views or outlook as of any date subsequent to today. We'll begin today's call with Frank providing a business summary. Gerald will then cover the financials for the fourth quarter and fiscal year 2018 in more detail. Now I'd like to turn the call over to Bruker's CEO, Frank Laukien. Frank?

Thank you, Miroslava, and good afternoon, everyone. Thank you for joining us on today's call. Bruker delivered another good quarter with continued revenue growth and solid margin improvements. And during the fourth quarter, our organic revenue growth was 3.4%. As expected Q4 organic revenue growth in our Bruker Scientific Instruments or BSI segment was plus 2.1% year-over-year and it was subdued following a strong Q3 2018 when our teams focused on derisking our full-year 2018 results. Our Bruker Energy & Supercon Technologies or BEST segment's organic revenue growth net of intercompany eliminations had a nice uptick and came in at plus 17.6% year-over-year in the fourth quarter of 2018. In Q4 of 2018, we again delivered solid growth in operating margin expansion. For the fiscal year 2018, Bruker's organic revenue growth was plus 4.3% slightly above the high-end of our recently raised full-year 2018 revenue guidance range. As anticipated, BSI organic revenue growth accelerated to plus 4.7% year-over-year from plus 2.7% growth in fiscal year 2017. We ended the year 2018 with solid non-GAAP operating margin expansion of plus 90 bps year-over-year and excellent non-GAAP EPS growth of plus 16% year-over-year. Overall, our teams executed very well and we believe they have positioned Bruker for further improvements in organic revenue growth and margins in fiscal year or full-year 2019. During the fourth quarter, progress continued on our Project Accelerate high growth, high margin initiatives. We launched important next-generation fluorescence microscopy products for our neuroscience and cell biology initiatives. We also closed three strategically focused acquisitions or majority investments. These included the previously announced 80% majority investment in majority interest acquisition of Hain Diagnostics as well as the more recently announced Alicona Imaging acquisition, and the majority interest investment in scientific software company, Mestrelab. These investments add further growth drivers to each of our three groups and are also expected to contribute to the improving operating margin profiles of the groups over time. Turning to specifics on Slide 4, in the fourth quarter of 2018, Bruker's revenue increased 4.4% year-over-year to $553.6 million. On an organic basis, revenue increased 3.4% year-over-year including 2.1% growth at our Scientific Instruments segment and a 17.6% increase at BEST net of intercompany eliminations. During the fourth quarter, our acquisitions added 3.2% to year-over-year revenue growth while foreign currency translation was a drag or a headwind of minus 2.2%. Our Q4 2018 non-GAAP gross margin increased 90 bps year-over-year while our non-GAAP operating margin improved 100 bps year-over-year continuing the trends from earlier this year with volume leverage and benefits from product mix. In Q4 2018, Bruker reported GAAP diluted EPS of $0.50 per share compared to a net loss of minus $0.02 in Q4 of 2017. On a non-GAAP basis Q4 2018 EPS of $0.54 increased 6% compared to $0.51 in Q4 of 2017. Gerald will provide further details later on the call. Moving on to Slide 5, I show Bruker's performance for the full-year of 2018. Our revenues increased 7.3% year-over-year to $1.896 billion and we ended 2018 with organic growth of 4.3% including 4.7% organic revenue growth in the Scientific Instruments segment, a notable step-up from fiscal year 2017 as I had noted earlier. BEST delivered 0.9% organic growth in fiscal year 2018 slightly better than what we had expected. Acquisitions added 1.6% to our top-line while foreign currency added 1.4%. End market conditions and order bookings for Bruker's academic, pharma, applied, microbiology, and Industrial Research markets remained favorable in the fourth quarter as they had been throughout 2018. During the fourth quarter and then the back half of the year, we continue to experience a weak capital spending environment in our semiconductor metrology business which is about 5% of Bruker's overall revenue. Nonetheless overall bookings for our Scientific Instruments portfolio remained quite healthy. We finished 2018 with mid-to-high-single-digits organic order growth in our BSI segment which also included solid bookings in the fourth quarter. Order growth in 2018 was driven most significantly by the CALID and Nano Groups and by our North America and China businesses. We believe these order trends position us well for 2019. Our fiscal year 2018 non-GAAP gross margin increased 70 basis points compared to 2017, while our non-GAAP operating margin rose 90 basis points, despite a strong foreign currency headwind of minus 60 bps for the full-year which by the way we faced primarily in the first half of 2018. On a GAAP basis, Bruker reported EPS of $1.14 in 2018 compared to $0.49 in 2017. In 2018, our non-GAAP EPS of $1.40 increased 16% compared to $1.21 in 2017. Our non-GAAP EBITDA was $347 million in fiscal year 2018 compared to $307 million in fiscal year 2017, a 13% year-over-year increase. We also had strong cash generation during 2018 with free cash flow rising to $191 million; while return on invested capital or ROIC a key metric for Bruker remained well north of 20%. Please turn to Slides 6 and 7 now where I provide further highlights on the fiscal year 2018 performance of our three Scientific Instruments Groups and of our BEST segment in all cases on a constant currency basis and year-over-year. 2018 BioSpin Group revenue increased in the low-single-digits to $591 million. BioSpin had good growth in their biopharma, clinical, and applied markets, as well as in the aftermarket business which more than offset more subdued results in the academic and government markets. We believe BioSpin is positioned for improved performance in 2019 given the progress it has made in pharma, applied, and aftermarket growth areas and now also technically with our gigahertz class NMR pipeline. In 2018 BioSpin's NMR Systems revenue was up modestly compared to 2017, while our applied and clinical phenomics solutions continued to perform strongly. During 2018, BioSpin did not record any gigahertz systems revenue. In 2019 we currently anticipate at least one 1.0 gigahertz system to turn into revenue in the second quarter or later as we ship two systems late in the fourth quarter of 2018 but they tend to have lengthy installations. Within BioSpin, our preclinical imaging or PCI revenue was comparable to the prior year. After BioSpin aftermarket and service revenue for NMR and PCI increased in the high-single-digits. Moving on to our CALID Group, they reported strong performance in 2018 with 2018 revenues up in the high-single-digits to $548 million. Within CALID, growth was driven by our mass spectrometry and FT-IR and Near-IR molecular spectroscopy businesses as well as contributions from our microbiology and diagnostics business and acquisitions. Daltonics mass spec revenues increased significantly in 2018 with strong organic performance in both our microbiology and life science mass spectrometry portfolios. Over the course of 2018, we clearly saw the benefits of our life science mass spectrometry portfolio transformation with strong performance in our QTOF portfolio. The early customer feedback on our timsTOF Pro System for proteomics has been encouraging and we expect meaningful revenue contributions from timsTOF Pro in 2019. Our microbiology and diagnostics business had strong results in 2018 with both instruments and consumables and services up significantly. The Bruker Hain acquisition which closed or majority acquisition in -- which closed in mid-October added to constant currency revenue growth as well. Exiting 2018, our microbiology and diagnostics franchise one of our five product areas within Project Accelerate exceeded the $150 million in revenue per year mark. Our CALID, FT-IR, Near-IR, Raman Optics products had strong results in 2018 as well driven by product innovation, consistent execution, and healthy end markets. Now, on the other hand, CALID's detection revenue in 2018 was sharply lower compared to 2017. As a result we had to start a restructuring program of our detection business to right size and consolidate it with CALID's Optics business. By midst 2019, we anticipate this should result in one CALID Factory less in Germany and a staff reduction of about 45. Looking out to 2019, given our new product cadence and recent transformation, we're quite optimistic about the sustained growth trajectory of our CALID Group. Moving on to Slide 7 now, Bruker Nano reported high-single-digit revenue growth with revenues of $568 million in 2018. Nano's results in 2018 were driven by solid academic markets and strong industrial research demand for advanced X-ray and Nano Materials Analysis products. And Nano results also included contributions from acquisitions during 2018 primarily Anasys and JPK completed in April and July 2018 respectively. In mid-December, Nano closed the Alicona Imaging acquisition, a provider of optical metrology products for lab and production applications which will begin to contribute to the Group's results in 2019. Within Nano AXS revenue was up strongly in 2018 fueled by strong demand for advanced x-ray products in both industrial, materials research, and academic government markets. Our Nano Surfaces and Nano-analysis revenues were also increased in 2018 with good organic growth supplemented by the acquisitions mentioned earlier. Nano-semiconductor metrology revenues declined relative to 2017 due to the slowdown in semiconductor capital equipment markets. Given our line-up of technology buys for 2019 which we believe are less susceptible to overall semi capital spending trends, we're actually cautiously optimistic that Bruker semi business can stabilize and improve in the second half of 2019. In 2018, revenue from semiconductor metrology markets contributed about 5% of Bruker's overall revenue. So last but not least BEST in 2018 was up modestly over 2017 as a pickup in superconductor demand in the back half of the year and the timing of some big science projects offset the declines we saw in the first half. As a reminder, our BEST superconductor and Big Science revenues can fluctuate from quarter-to-quarter and in Q4 2018 BEST revenue was up sharply. On Slide 8, I briefly review our Project Accelerate portfolio transformation initiatives. In 2018 the six initiatives within Project Accelerate in total grew at a low-double-digit pace now comprising low-to-mid 40s percentage of Bruker's total annual revenue. The five product initiatives excluding aftermarket were in the high 20s percentage of Bruker's overall revenue. From a revenue growth standpoint, the highest contributors in 2018 were our biopharma and Applied, microbiology and diagnostics, and aftermarket initiatives which all grew very nicely in 2018. In 2018, we also made progress advancing our proteomics and phenomics initiative with a rollout of timsTOF Pro and the gradual uptake of NMR phenomics. We reached technical milestones for our gigahertz and above structural biology NMR pipeline shipping two 1 gigahertz magnets late in Q4 and building the world's first hybrid high temperature superconducting 1.1 gigahertz NMR magnet which is at our factory. Our Nano Group launched important next-generation fluorescence microscopy products for our neuroscience and cell biology initiatives which I will discuss a little bit more in a moment. Last but not least we added future growth drivers to our successful microbiologies franchise acquiring a majority in Bruker Hain Diagnostics which is primarily an assay and consumables business. So for 2019, we are optimistic that the revenue growth outlook for our Accelerate portfolio will have additional growth drivers kicking in specifically the timsTOF Pro and proteomics, gigahertz class NMR for structural biology, and our next-generation fluorescence microscopy portfolio for neuroscience and cell biology. Turning to neuroscience and cell biology on Slide 9 for a moment because we typically discussed that a little bit less with our investors. We showed three rather important new products which were all introduced in the fourth quarter of 2018 and which we expect to drive growth starting by middle of 2019. As a reminder, the neuroscience and cell biology microscopy initiative involves next-generation multi photon super resolution and light sheet fluorescence microscopy systems that enable brain research and high resolution live-cell imaging research. Bruker recently introduced novel FMs, fluorescence microscopy products that drive step function performance improvements including our next-generation two photon, two P Plus multi photon microscope as well as the first ever tailorable lightest light sheet microscope and a light sheet clearing module for neuroscience research applications. We're quite excited about these launches and expect them to contribute to Project Accelerate by mid 2019. On Slide 10, we just summarize for you and show how Bruker completed eight strategically focused acquisitions in 2018, deploying over $190 million of capital. Our acquisitions are designed to support our high growth areas under Project Accelerate, strengthen our core business, and continue to improve our operating margin mix. In 2019, we expect these acquisitions in total will contribute approximately 4% to our top-line growth and will be accretive to our non-GAAP EPS. Turning to Slide 11, we show Bruker's key objectives for the next five years through 2023, with our dual strategy of transforming our portfolio via Project Accelerate and driving operational excellence in our core business, we expect to continue to gradually accelerate our organic revenue growth rate and drive sustainable multi-year margin expansion, while maintaining our disciplined capital deployment in greater than 20% ROIC. For 2019, we expect to further gradual organic revenue growth acceleration to a range between 4% and 5% or 8% to 9% on a constant currency basis and continued non-GAAP operating margin expansion of 70 to 100 basis points year-over-year. We are very pleased in how our organization has delivered on our core objectives in 2018 and we look forward to updating you on continued progress in 2019. On that note, let me now turn the call over to our CFO, Gerald Herman, who will review our Q4 and fiscal year 2018 performance in more detail and provide further color on our outlook for fiscal year 2019. Gerald?

Thank you, Frank. I'm pleased to join you today and review Bruker's fourth quarter and full-year 2018 financial highlights starting on Slide 13. As you saw in our press release, Bruker's reported revenue increased 4.4% to $553.6 million in the fourth quarter of 2018 which reflects organic growth of approximately 3.4%. We reported GAAP EPS of $0.50 per share compared to a GAAP EPS loss of $0.02 in the fourth quarter of 2017 which included one-time charges related to U.S. Tax Reform. On a non-GAAP basis, Q4 2018 EPS was $0.54 per share an increase of 6% from $0.51 in Q4 2017 including a negative effect from a higher year-over-year non-GAAP tax rate. Our Q4 2018 non-GAAP operating income increased 9%, while non-GAAP operating margin of 22.2% improved 100 basis points year-over-year. This improvement was principally driven by volume leverage and favorable mix, partially offset by some dilution from acquisitions. We generated free cash flow of $112 million in Q4 2018 compared to $91.3 million in the fourth quarter of 2017 with higher net income improving cash flow generation. As of December 31, 2018, we were in a modest net debt position as we deployed cash over the course of the year for acquisitions, dividends, and the repayment of borrowings under our revolver in the first quarter of 2018. We ended Q4 2018 with somewhat higher working capital balances reflecting our revenue growth, the timing of inventory purchases and shipping activity, and our recent acquisitions. Overall, our working capital to revenue ratio was unchanged versus the prior year. Slide 14 shows the revenue bridge for Q4 2018. As noted earlier, organic revenue growth in the quarter was 3.4%. We had a positive revenue contribution from acquisitions of 3.2% primarily from our Hain, JPK, and Anasys, acquisitions which was partially offset by a foreign currency headwind of 2.2%. From an organic revenue growth perspective, our Q4 2018 growth rate of 3.4% reflects low-single-digit organic revenue growth at each of our BSI Groups and 17.6% organic revenue growth net of intercompany eliminations in the BEST segment. After strong Q3 2018 revenue growth, the softer 2.1% BSI organic revenue growth rate in the fourth quarter was expected, as our teams in Q3 had focused on derisking our full-year 2018 results. Slide 15 shows our Q4 2018 non-GAAP results. Our Q4 2018 non-GAAP gross profit margin of 51% increased approximately 90 basis points from 50.1% in Q4 2017, driven principally by volume leverage and favorable product mix within our CALID and BioSpin Groups. Q4 2018 operating expenses grew in line with our revenue growth after including expenses related to three acquisitions: Hain, Alicona, and Mestrelab in the quarter. This resulted in Q4 2018 operating margin improvement of 100 basis points versus Q4 2017 on volume pull-through and favorable mix. Looking below the line, Q4 2018 net interest and other expense of about $6 million was consistent with Q4 2017. For the fourth quarter of 2018, our non-GAAP effective tax rate was 27% compared to 24.5% in Q4 2017. The higher tax rate in Q4 2018 was primarily attributable to certain unfavorable discrete tax items in the quarter. Weighted average diluted shares outstanding in the fourth quarter were 157.4 million, up 0.50 million shares from Q4 2017 and essentially flat year-over-year. Finally, Q4 2018 non-GAAP EPS of $0.54 increased approximately 6% year-over-year driven by higher revenue and margin partially offset by a higher year-over-year effective tax rate. Slide 16 shows the year-over-year revenue bridge for the full-year 2018. Full-year 2018 revenue increased 7.3% reflecting organic growth of 4.3%, the contribution from acquisitions of 1.6% and a foreign currency tailwind of 1.4%. Organic revenue in 2018 reflected 4.7% growth at BSI led by the Nano and CALID groups and a 0.9% organic revenue gain at BEST, net of intercompany eliminations. Geographically, and on an organic basis, in 2018, Bruker's European revenue was modestly above the prior year with low-single-digit growth in the BSI segment. North American organic revenue was up low-double-digits. Asia-Pacific revenue was up mid-single-digits. China revenue was overall flat for the year and up low-single-digits in the BSI segment. However China BSI order growth remained robust both in the fiscal year as well as in the fourth quarter of 2018. On Slide 17, our full-year 2018 non-GAAP gross profit margin of 49% increased 70 basis points compared to full-year 2017. Higher volume, favorable mix, and operational improvements contributed to the increase which was partially offset by unfavorable effects from foreign currency translation. Operating expenses in 2018 increased approximately 7% year-over-year driven by the impact of acquisitions, unfavorable foreign currency translation earlier in the year, and select investments. On a non-GAAP basis in full-year 2018 we delivered an operating margin of 16.8%, a 90 basis points improvement from 2017. Significant volume leverage and operational improvements more than offset a 60 basis point negative impact from foreign currency translation which occurred primarily in the first half of 2018. In 2018, our non-GAAP tax rate landed at 26.1% about 110 basis points unfavorable to 2017, principally driven by the discrete items noted earlier. And finally, non-GAAP EPS of $1.40 in 2018 improved approximately 16% relative to 2017, reflecting strong revenue growth and margin expansion in the year. Turning to Slide 18, we generated approximately $191 million in free cash flow in 2018 compared to $111 million in 2017, an increase of $80 million. This increase was primarily driven by higher 2018 net income and an increase in customer advances, partially offset by a year-over-year uptick in capital expenditures. Our cash conversion cycle at the end of Q4 2018 of 194 days was about six days longer than at the end of Q4 2017 due to an increase in DSO attributable to late quarter shipments and revenue growth as well as an unfavorable impact from acquisitions completed in the fourth quarter of 2018. Turning now to guidance for the full-year 2019 on Slide 20, we expect Bruker's revenue in 2019 to increase approximately 6% to 7%. This includes organic revenue growth in a range between 4% and 5%, a contribution from acquisitions of approximately 4%, and therefore constant currency revenue growth of 8% to 9%. Finally, we expect a foreign currency translation revenue headwind of approximately 2% in full-year 2019. Revenue from acquisitions includes our recent Q4 transactions with Hain, Alicona, and Mestrelab, as well as partial years of Anasys and JPK in organic revenue both of which closed earlier in 2018. Our 2019 revenue outlook also assumes that at least one gigahertz class system turns into revenue in the second quarter or later in 2019. We expect our BSI segment will again lead the organic revenue growth with approximately flat organic revenue in the BEST segment. For 2019, we currently expect Bruker's non-GAAP operating margin to expand an additional 70 to 100 basis points from the 16.8% level achieved in 2018 to a full-year 2019 range of 17.5% to 17.8%. We project our full-year 2019 non-GAAP effective tax rate at about 25%. For fully diluted share count we assume 157 million shares similar to 2018. We also project capital expenditures of approximately $80 million. While this level of CapEx is above our usual run rate, we are funding several important initiatives that support further growth and productivity gains but due temporarily increase capital spending in 2019. These include investments in the project 2020 BioSpin site consolidation in Germany and our new Penang, Malaysia, final assembly and systems testing facility for the Nano Group as well as several other growth and productivity investments. We expect our capital expenditures to revert to a more typical run rate of approximately 3% of revenue in subsequent years. Our updated foreign currency assumptions are listed on the slide. Adding it all up, we expect our 2019 non-GAAP EPS to be in a range between $1.54 to $1.58 representing growth of between 10% to 13% compared to 2018. As Frank mentioned earlier, this includes modest accretion from our recently completed acquisitions. While we do not provide quarterly guidance, I would like to touch on quarterly phasing for the year. We anticipate a strong foreign exchange revenue headwind in Q1 2019 of approximately 5% compared to the full-year foreign exchange revenue headwind assumption of 2% as well as initial dilution related to further integration of recent acquisitions. Implicit in our full-year 2019 guidance is the expectation that our Q1 2019 non-GAAP operating margin and EPS will be comparable to Q1 2018 with non-GAAP operating margin expansion and EPS growth expected in Q2 2019 and thereafter. Also, as in other years, most of our profitability and cash flow is expected in the second half of the year. To wrap up, Bruker delivered another strong financial performance in 2018 posting organic revenue growth of 4.3% and EPS growth of 16% over 2017 despite foreign exchange and tax headwinds. We're entering 2019 with good momentum in many of our businesses and expected to deliver another year of gradually accelerating organic revenue growth, solid operating margin gains, and EPS growth in 2019. We look forward to updating you again on our Q1 2019 conference call in May and with that, I would like to turn the call over to Miroslava to start the Q&A session. Thank you very much.

Thank you, Gerald. Operator, we are ready to open the call to questions. In order to accommodate more of our analysts, please limit your questions to one and a follow-up.

Thank you. And we will now begin the question-and-answer session. [Operator Instructions]. And our first questioner today will be Tycho Peterson with J.P. Morgan. Please go ahead.

Hey thanks. Frank, maybe I'll just start out with some of the new products, since new product contributions are kind of a key part of the story here. Can you just talk about what's embedded in guidance for 2019 from some of these launches, timsTOF, Aeon gigahertz, NMR, in fluorescence microscopy?

Yes, we don't break out the details except obviously the gigahertz, we identified that we expect at least one of these systems in 2019 revenue in Q2 or later. And what we basically tried to indicate with our roadmap is that we think that these products for the first time will have a meaningful growth contributions in 2019. Of course, we had some revenue from them already in 2018, but I would call it needle moving and it's obviously just becoming a little bit more significant in 2019. But we don't give detailed unit numbers or dollar figures on these product groups. They will in the aggregate certainly be an additional growth driver that kicks in, in 2019 in addition to those that had already been driving our growth momentum in 2018.

All right. And then a follow-up on China. You had the orders up 20% last year but revenues were flat. Can you talk a little bit more about the demand environment and what you're expecting in I think there was a comment also made about customers derisking them. I'm not sure if that was specific to China where there was a full quarter, anything you can call out there? Thanks.

Yes, China, as you know, for some historical and homemade reasons, we had slower or modest revenue growth only in 2018 in China but our orders had really been quite strong. And that's really that trend continued into the fourth quarter of 2018. So implicit in our guidance is that China will be a bigger growth driver for us in 2019 than it has been in 2018. And I think that derisking comment was that we obviously earlier in 2018 had been concerned about having such a backend loaded Q4. And so we were reasonably successful in derisking that a little bit with a stronger Q3. So that's more of a retroactive comment, if that's what you were referring to.

And our next questioner today will be Doug Schenkel with Cowen. Please go ahead with your question.

Good afternoon. Frank, organic revenue growth for full-year 2018 was ultimately 130 basis points better than your original guidance. Can you bridge the key drivers to this outperformance? Specifically I'm thinking about things like how much of this was better than expected market conditions versus strong execution versus other factors. And then I guess building off of that as we look ahead you're expecting a slight improvement in core revenue growth at least at the midpoint of 2019 organic revenue guidance. How much of this is a continuation of what you saw in 2018 versus some other drivers?

Yes, Doug. So, yes, we were pleased to grow a little faster than we had originally guided and then a little bit higher and faster than we had than our updated revenue growth guidance in 2018. Certainly the mass spec portfolio, microbiology, Bruker AXS, and selected other businesses were very, very nice drivers there. Their new product cadence, their product portfolio transformation, the new consumables coming out from microbiology, as well as decent market conditions altogether played a role. And maybe I would add that actually BEST which we knew would be down are expected to be down more steeply in 2018 ended up being much closer to flat. So actually they did a little bit better compared to expectations. And I think those are sort of the highlights for 2018. Now to the second part of your question for 2019, I think the growth drivers that we had last year are likely to continue. So very good biopharma. We expect biopharma growth for NMR mass spec. We applied -- expect continued applied market growth, NMR, our optics products, microbiology, and our broader microbiology and infectious disease diagnostics business is expected to be a good growth driver although some of that is not organic yet, and our aftermarket business. So those trends, the good growth trends we expect to continue. We expect in addition that to get some organic tailwinds from proteomics and the timsTOF Pro becoming needle moving whereas last year it was rather de minimis. Gigahertz we had none last year, we're obviously hopeful that we'll have at least one this year in the middle of the year or so. And also our fluorescence microscopy portfolio for neuroscience and cell biology little bit less visible to the Street, had some very important product introductions and so hopefully by the middle of 2019, they will also begin to move this up and be another growth driver for our -- for the company overall and within the Project Accelerate initiatives. So those are the things that I would highlight.

Okay. That's really helpful, Frank, and maybe I guess building off of the last comments but moving down the P&L, as you know, you're targeting 70 to 100 basis points in operating margin expansion in 2019, how much of that is gross margin versus other drivers. And relatedly what are you embedding in there in terms of the impact of M&A and foreign exchange on margins?

I'll turn that to Gerald.

Thank you.

So with respect to continuing margin expansion -- operating margin expansion most of that's being driven by the gross margin line and there I would just say that you've seen a pretty good volume pull-through from our overall results both in Q3 and we see it -- or saw it again in the fourth quarter. We have pretty good mix going on across all the groups now. I think from a product perspective and that's also helping our overall operating margin performance. As Frank has already mentioned, the Project Accelerate initiatives also carry higher, more favorable operating margin profiles, but fundamentally it's the mixed story. I guess I would say as well as volume leverage that's improving on an overall basis. As far as foreign exchange and acquisitions, I mean, I think we've guided relative to the foreign exchange rate as being a bit of a headwind about 2% on revenue and pretty much a modest impact on EPS relative to that. And as it relates to not a lot really to say on the acquisition side other than we do have some accretion as we noted earlier on that.

Yes, I think maybe a very high level comment if I may follow-up is that most of the margin improvement in 2019 and probably in the foreseeable future most of that will come from gross margin improvements. Under Project Accelerate, we're investing in some of our R&D and then marketing and sales initiatives. We're also making some additional investments in some of the entities that we have acquired. So I think most of the margin improvement in 2019 is pretty clearly coming -- going to come or we expect it to come from gross margin improvements.

And the next questioner will be Brandon Couillard with Jefferies. Please go ahead.

Thanks, good afternoon. Frank, at a high level I would love to get your views on sort of the European markets been a mixed bag in terms of the macro picture there. I'm just curious what you're seeing from the overall outlook especially in the more industrial markets outside of the sort of the semi areas which you've already spoken to?

Yes, Brandon. So Europe as we actually had expected, is settling into more of a low-single-digit growth pattern, and, yes, we're actually not overly concerned about Brexit but of course that could be short-term month or two some disruptions there but we don't think, we're not really modeled anything into our full-year guidance in Europe from that as a significant negative impact. So Europe is one of our slower growing regions in 2019 as well. We expect most of the growth or more of the growth to come from the Americas, North America, U.S. specifically and China with continued decent growth from Japan. So Europe more back in its traditional long-term growth pattern of low-single-digits and the outside of semi to become a little bit more specific there is much semi business in Europe to begin with, so most of it is industrial, industrial research. It's in that low-single-digit growth. So where we’re growing, we're really growing from the strong secular trends from our Project Accelerate initiatives and from our product cadence. I think that's -- that allows us to grow somewhat faster than the European market perhaps but it's still Europe is growing more slowly for us in our expectations in 2019 than the Americas or China.

Thanks. Then as a follow-up given where the balance sheet is here right now with about a net cash neutral position, you didn't buy back any stock in 2018, Bruker's only stock in tools that hadn't seen any multiple expansion past four, or five years and the stock is flat relative to where it was 12 months ago. There seem to be just some disconnect with the market and what your internal outlook is which sounds much more upbeat. Just curious why the buyback didn't seem to be a higher priority right now?

Yes, I mean it is you know it's always we in our capital deployment; we first invest in the business. Then if there are any good acquisition opportunities we go for those, we fund our dividend and then we do like buybacks and we have a continued authorization. But it was just a very significant M&A spending in the aggregate in 2018 including in particular in Q4. So with over $190 million deployed in M&A. But I don't disagree that we have some capacity and certainly some motivation and desire to use that. And so it is a good point. And last year, we just primarily invested in -- we paid back some debt that was also something Gerald had mentioned. We funded our dividend of course and then for us at least more unusually high investments in M&A.

And our next questioner today will be Dan Leonard with Deutsche Bank. Please go ahead.

Thank you. My first question was hoping you could you be a little bit more specific about your expectations for growth in China in 2019. You've been talking about strong bookings all year. Does that translate into double-digit growth in China in 2019 or something more modest than that?

I'll take that one, Frank. Yes, it does translate into double-digit growth in China in 2019.

Okay. And then my follow-up hoping, Frank, if you can characterize or frame a bit more for me the timsTOF Program. I'm actually surprised that you said that contribution in 2018 was de minimis because I thought you had launched the product a couple of years ago and you've picked up some intel on it that there's adoption. So help me better understand how you expect to ramp and what does the meaningful contribution look like?

Maybe de minimis was a little too strong. I mean we had a few million of revenue of course mostly in the second half. So we launched it if you recall in September of 2017 and then until it always takes half a year before it really starts to roll. So, yes, we had a few million of revenue, I don't mean to minimize that completely but I wouldn't call it needle moving at all and first of course we have continued significant investments in software and applications development and strengthening the field support teams. So the interest is really good and we wanted to do it right rather than to do it fast. So I think all the early access customer and key opinion leaders that have been working with the system really by and large are really across the board. I could almost say we're very pleased with it. So we expect this to become more somewhat meaningful to our revenues for the first time really in 2019. That's what was implied. It's the ramps actually going, the ramp and the adoption is going well. It is a well accepted system and it just develops more and more capabilities as we launch and bring out more and more workflows and more and more software. It's a -- it has a -- it's a long, long S curve and we're still at the very beginning of that I would say.

And our next questioner today will be Dan Arias with Citigroup. Please go ahead.

Good afternoon everyone. Thanks. Frank, maybe just following up on some of the points that you touched on, can you just spend a second on what you're seeing in terms of spending or attitudes on spending if you just compare industrial to industrial research. It sounds like maybe you're starting to see a little bit more of a difference there if I understood your semiconductor comments right. So just curious, that's correct?

Well, we've always taken out the semicon piece that's pretty identifiable about 5% of our revenue goes into that. We knew that wouldn't be strong in 2018 and that's why it played itself out. It may not deteriorate further for us but it might be flat and maybe even with a little bit of a recovery in the second half of 2019 because we have some very new technologies that are really desirable by both in foundry and memory. So we expect that not to weaken further but possibly to recover in 2019. The rest of Industrial and Applied, I think the market conditions in 2018 have been really excellent and maybe outstanding. So baked into our guidance is that that will likely slow down a little bit and get to a longer-term rate that's, that's probably more sustainable than the very high rates in 2018. That's our general market's anticipation. We actually haven't seen that yet in our data yet. Our Q4 bookings were really solid also in those areas. But just as I predicted in 2017 that Europe wouldn't continue to grow at high-single-digit rates and eventually it settled down. I would also expect that some of the overall market growth rates in 2018 will begin to cool off a little bit. I don't see any steep decline. I don't see any disruption but I think like many other companies we expect 2019 market growth including Applied and some Industrial non-semicon markets to be still positive but not as strong as in 2018 when it drew at rates that probably are not sustainable over multiple years.

Yes, that makes sense. Okay. And then maybe on the BioSpin business, can you just talk to the dynamics at the high-end of the market there for NMR. It sounds like getting in 2019 should be a little bit of a better year. I'm just curious if you think a bolus of purchasing on the cryo-EM side is starting to be passed? And then maybe with respect to the gigahertz system that was ordered in 4Q but isn't expected to be installed. Is there a chance that that gets placed in 2019 and you just want to be cautious or is the date of acceptance for the lab a 2020 date. And so it's therefore not something that you didn't have any picture at all. Thanks.

Okay to both points then. So I think cryo-EM continues to do well, I would assume that its growth rates are have perhaps also perhaps peaked. But then again that's not my business. We do see not only our ability to deliver some gigahertz class systems now and I will come back to that in a moment because you asked. But we also see more interest again obtaining, funding, and in funding applications for ultra-high-field NMR that has to do a little bit because a lot of these institutions now have cryo-EM capabilities. So Check they've made that acquisition although this is not saturated yet by any means. But in addition we now have overcome these technical hurdles and milestones to a great extent to where it makes sense for also U.S. customers and also Asian customers to go and apply for ultra-high-field funding. So over the next few years, over a multiple years, I expect there to be more interest in funding in applications and in funding ultra-high-field NMR. That won't lead to 2019 and revenue that will be 2020 and later. But I think generally ultra-high-field NMR which has suffered from the cryo-EM wallet share competition in the last few years, I think is going to be see healthier funding trends in the years to come and already I see indications of that in 2019. Sorry there's a longwinded answer to your specific question. Yes, we search for the 1 gigahertz we're very hopeful and then expect to have one of them in revenue, it won't be in Q1, it could be Q2 or Q3 more likely but both are possible. And the 1.1 gigahertz we don't know yet when we will ship that there is nothing necessarily in the customer contract that we couldn't deliver that or anything like that. So we may deliver it in the second half of this year but even in that case, there is a higher probability that would go into revenue i.e. get accepted in 2020. So that's the nitty-gritty of that.

And our next questioner today will be Puneet Souda with SVB Leerink. Please go ahead.

Yes, hi Frank. Just wanted to clarify the systems that were shipped these were two one gigahertz or one gigahertz and 1.1? And my second question was around, just what gives you confidence in 1.1 and 1.2 now having brought these two systems to field at the factory level and then having shipped them out to the customers and hopefully getting them to the field level at their labs?

Yes, so Puneet. Yes, we shipped two times 1.0 gigahertz. And hopefully we'll get one accepted in Q2 or later. We have at the factory brought a 1.1 gigahertz to field that's a technically important milestone because that's for the first time is one of these hybrid systems that uses HTS or High Temperature Superconductor inserts to get to those high-fields. We have a customer for that. So perhaps we can get revenue for that in early 2020. The system looks good, it's stable, it has great protein NMR data, so it's really a very important technical milestone. I think there'll be a lot of publications and coming out and data being shown this year at E&C for instance or later in publications from many customers that now run first samples on that really novel capability in NMR albeit right now in our factory and therefore not revenue effective yet. That's a significant milestone towards 1.2 gigahertz but the proof is in the putting of course. So we still need to achieve hopefully later this year a technical milestone on 1.2 gigahertz, where, as you know, we have more backlog particularly in Europe and if we achieve those milestones then maybe 1.2 gigahertz could also begin to contribute then to our Project Accelerate growth story in 2020 and 2021 and so on so that's kind of how this all lines up.

Got it, okay. Thanks. And then I was just hoping if your view has changed in terms of the DA and the forensics market, we saw a competitor had a larger contract in there. So I just wanted to understand from NMR perspective, is that something meaningful going forward into 2019 and 2020 on the smaller magnets?

I think there was a very specific customer case in the United States, DA, as you mentioned. We're aware of that. They purchased NMRs from a competitor or have a multi-year plan to replace their older variance. I think there were some rather customer specific, we certainly had a solution for them as well. But I think there are some -- some even some scientists that's formerly variant and made some scripting and tailored some things the way that one particular customer really liked it so good for our competitor. It's -- I don't think there's any market trend and we're continue to be interested in forensics and applications like this and NMR elsewhere. But every once in a while we obviously lose that case and this was one example here.

And just quickly last one if you could update us on scimaX if there was any that was also launched with timsTOF any progress there on that product? Thank you.

scimaX is doing well, it was actually launched later, it was launched in the summer of 2018. So about nine months after timsTOF and it's really well received including by pharma customers, including by conservative Japanese pharma customers. So we have we got a number of orders we're satisfied with that, it didn't may move the needle at all in 2018, so it'll begin it's obviously more of a niche market but we'll begin to make some give us some revenue and margins in 2019 and delightfully it's going into quite a few laps that previously just wouldn't have touched Magnetic Resonance mass spectrometry because of the need for a magnet and the previous need for cryogen refills. But this system yet has a magnet but you almost don't notice it and you never need to fill in cryogens is really getting very good customer reception. So early orders look good, I think that could begin its gradual ramp up in 2019. And very nice that normally these systems just go to academic government accounts and here maybe half of them or so, I don't have the exact numbers right now into U.S., European and Japanese pharma accounts in terms of orders that will turn revenue into -- will turn into revenue in 2019. It's also being adopted now into phenomics into a first into the Jeremy Nicholson Lab in Perth, Western Australia, which will be a major new phenomics centre where they're interested in using it for flow injection analysis very high throughput phenomics where you use no chromatography at all but do very fast a few minutes cycle times and go through very large number of body fluid samples in that case. So there is additional growth driver I think that needs a lot of validation and software development in 2019. But again that could be a nice additional growth driver in phenomics for that scimaX system by 2020 and I probably spent too much time on that particular question but it gives you the roadmap for scimaX.

And our next questioner today will be Jack Meehan with Barclays. Please go ahead.

Hi, good afternoon. I want to focus on CALID; first I had a few questions on detection. Could you remind me what portion of CALID is related to detection? How did that perform in the fourth quarter and then with the restructuring is there any headwind embedded in the 2019 outlook?

Okay. So detection in 2018 was only around $30 million or so in revenue, we had at some point had bigger plans for it. But when they didn't materialize we decided to restructure that consolidated factory by mid-2019 with another proteomics factory in Germany actually. And while it was a significant growth and margin drain in 2018, we expect 2019 to be a story or much or a meaningful headwind in 2019 because of the decisive restructuring and cost actions that we're taking. So it hopefully will not create any negative headlines for us in 2019, that's our present expectations whereas in 2018 it was a drag on the CALID Group.

Great. And then as a follow-up, can you give us an update on the commercialization plans now with Hain and within the -- could you give us a breakdown the 4% M&A contribution, how much you expect to come from that?

So I'll take the first part of that question and then turn this over to the second part to Gerald. Hain we're beginning to use their excellent European and also African channels for some of our consumables and assays in microbiology. And in addition we're exploring into what countries we want to introduce them where they previously had not been active such as Japan and China and also the United States. We will not approach this broadly but where we think very selectively we have the best opportunities more over they have a nice new product cadence which they will roll out in their existing primarily European and African markets in 2019 and beyond. And then maybe the second part of the question on the accretion from Hain, I could give that to Gerald.

Yes, with respect to Hain, we previously indicated that our revenue accretion would be about $40 million on a year-over-year basis for that particular acquisition. And then, in terms of accretion, I mean we're not being specific for every acquisition relative to that. But generally I would say we expect modest accretion from Hain as well as our other acquisitions.

And the $40 million number is the full-year number --

Right.

It's a little bit less than that in the acquisition part of it because we had Hain in the fourth quarter already.

Got it. So I think M&A was about $80 million overall in the 2019 outlook. Could you just what the remainder beyond Hain where we should be allocating that?

We think we should go through that offline I think.

Yes, it's a list of acquisitions. Jack, I'm happy to walk you through it, it's Alicona, it's JPK, and it's Anasys, Mestrelab. So there is -- it's a list of acquisitions in there.

Sounds good. Thank you.

The second largest is Alicona because that was closed very late in 2018, so its full revenue will come in, in 2019 but we're just happy to walk you through it offline perhaps. But the $80 million or about 2% of our revenue growth for 2019 is about that's correct, that's according to our guidance.

And our next questioner today will be Sung Ji Nam with BTIG. Please go ahead.

Hi, thanks for taking my question. I just have one multipart question on the Rapid Toxtyper. If I recall this correctly, I believe you launched this in Europe a little less than a year ago. I was wondering, Frank, if you might be able to comment how that's performing, obviously you're taking share potentially from the molecular ID competitors there and then also could you -- would you be able to comment on the timing for the U.S. regulatory clearance? Thank you.

Right. That's correct, the Rapid Toxtyper which is an assay for fast identification using the multi biotyper system from positive blood cultures was introduced in April 2018 at the ECCMID Microbiology Conference in Europe and we're slowly ramping that up in Europe, it's changing the workflow in the hospital is a long sales cycle and it takes relatively lengthy hospital-by-hospital evaluation of the value of changing their methods. So I would say it's not contributing significantly into our revenue but as this is a consumable story and if you can convert their workflow, our long-term expectations for that are positive. But it's a slow ramp just to set the expectation. We actually think that in terms of revenue potential the U.S. will be higher because of the reimbursement situation being more favorable in the United States. And as you have indicated in your question, Sung Ji, we are pursuing FDA clinical trials at this point for the Rapid Toxtyper and it would be a reasonable scenario, if we could submit and maybe get FDA clearance before the end of this year. Of course you can never predict how a regulator will act. So but that's our hope that this will also begin to contribute in 2020. And we also continue to see a gradual pick up in Europe. But it is really not just a catalog sale it's a hospital-by-hospital validation. If they then build it into their workflow because it’s really beneficial, it is affordable, it has a great cost benefit ratio then over time you can build a nice growing business but it is not a fast ramp.

Great. Thank you.

It does not to start -- to end a little bit more positively, it does help us sell MALDI Biotypers. So our MALDI Biotyper clinical market share is probably as strong as it's ever been. People want that capability and they want to go with the right instrument platform to make sure that they're not locked out from that in the future.

And our next questioner today will be Ross Muken with Evercore. Please go ahead.

Hey guys, this is Luke on for Ross today. So I just kind of want to figure out the dynamics of the two 1 gigahertz NMR placements, so if you guys shipped two why wouldn't you expect to have those two instruments of your be embedded in your 2019 guidance?

Yes, we shipped them both in late Q4. There are the leading edge technology systems. There are systems that installations and acceptance is at a customer site could still have carry risk. And so we did not want to rely and we cannot rely on both of those going into 2019 revenue. So we've put in at least one, it is possible that we could get two of these systems, the two that we shipped into revenue in Q2, Q3 or later in the year even. But that really doesn't change our organic growth guidance of 4% to 5%. I mean they are big ticket items but they're not so big. And if one of them drops in or drops out, we'll compensate for that with other systems revenue. So as exciting -- as excited as we are, this is beginning to contribute. It's not going to make or break our guidance or it's all embedded into our organic growth guidance of 4% to 5% for the year.

Perhaps really helpful, thanks. And then I guess just a quick cleanup on just given all the macro noise and Europe slowing down, China kind of more muted, now obviously the U.S. government shutdown, did you guys see any pull-forwards given the different dynamics in those markets?

Not that we're aware of. The U.S. government closure and the one that we had already I don't know where there's another one coming. It adds up to us believing that we will have a bit of a subdued Q1, as Gerald pointed out earlier, but that's again in our full-year guidance. So we just expect a somewhat slow start in Q1 and that's one of the many little factors that we cannot really readily quantitate in why we believe that Q1 will be maybe comparable to last year in EPS and margin and with relatively slow growth and that we really take off faster in Q2 and beyond of this year. We have not built into our guidance any massive macro disruption. We just don't see any sign of that so far at all in our Q4 data. And so we -- it gives everybody a little bit of pause and caution but no we have not modeled any major macro disruption as we don't have any real indications in our data.

And our next questioner today will be Patrick Donnelly with Goldman Sachs. Please go ahead.

Thanks. Frank, maybe one for you I know historically you've talked about 2018 and 2019 as a period where you're going to get to market growth maybe even get above it at some point. Can you just help us frame what you guys think market growth is currently given peers have also accelerated and then where you guys are in terms of achieving that goal kind of getting there or maybe even above market growth?

Yes, I think in 2018 with 4.7% growth for our BSI segment, and only 4.3% overall for Bruker but 4.7% BSI growth, I think we're in the range of where market growth is, as market growth may have been in the 4% to 6% range, this is maybe our estimate for 2018 maybe a little bit on the higher side of that in 2018 because it was a good year. So there are some competitors that are growing faster but I think we're getting there and I think we will continue to gradually accelerate our organic revenue growth as is implied in our 2019 guidance and in our optimism also for the years beyond that. While I would think that overall the market growth will become just a little bit slower than the 2018 market growth rates that I don't think are sustainable over multiple years. I think we are getting there.

That's helpful. And then maybe just one on the aftermarket revs. I know that's been a big focus for you guys internally. Nice to see that growth, can you just help us think where we are in that process? I know the attach rate was a lot lower than you guys wanted a few years ago. And again the big internal focus so, could you just talk through the initiatives there and where we stand?

Yes, in NMR we're perhaps somewhere in the middle innings of moving up there. There we started earlier in many of the other businesses mass spec or the optics business, we're actually these initiatives have started somewhat later. And then of course without any innings because it's I think the consumables growth that we have in microbiology and now also in this primarily consumable science business that of course we expect continued rather steep ramp ups for many years to come and with no end insights because that's -- there's it's not an attached rate per se. So that's -- I can't see into the future indefinitely but I think for the next three to five years, we continue to believe that the aftermarket growth initiatives for Bruker in the aggregate will continue to be one of these initiatives that grows excuse me organically faster than the corporate average, so probably in the high-single-digits for the next three to five years. And then in some areas we may be in the later innings but others that don't really have any innings like microbiology and diagnostics, I hope that that consumable growth as well as software growth you'll see more and more of a scientific software strategy at Bruker still very early days that that will continue to drive that general aftermarket consumables and software initiatives. So that gives you a little bit of color.

And our last questioner today will be Daniel Brennan with UBS. Please go ahead.

Great, thanks for taking the questions. Frank, I was hoping I know Gerald went over it earlier in the prepared remarks but could you just break down again like how much Accelerate contributed in 2018 to your total growth versus non-Accelerate and when we think about 2019 just kind of how does that break down? Thanks.

I don't think we gave any very specific rates but you may have heard and that's our five product initiatives in 2018 are now in the high 20s of our revenue. That's obviously a nice pick up from even a year ago. And in the aggregate the all six growth initiatives including the large aftermarket initiatives are now in the low to mid 40s percent of our revenue. Moreover we can say that in 2018, the organic revenue growth rates of all of the Project Accelerate initiatives has been higher meaningfully higher than our overall growth rate. And that's even though some of those as you can see from that roadmap slide are really only beginning to kick in, in 2019 and others really won't kick until 2020. So the ones that are -- the ones that are firing the cylinders that are firing are firing strongly. And I think so to speak more cylinders are coming online in 2019 and even more in 2020 and beyond. So I think and the margin profile is right as well. They do have higher margins, non-GAAP operating margins on average, and that's already the case even though we still have heavy investments in some of them. So I think we're -- I'm extremely pleased with our strategy. I think we're spot on. It is not the only part of the strategy. The operational excellence and continuous improvements and margin improvement and growth acceleration in our core businesses is also very important. These aren't legacy businesses, as is exciting as Project Accelerate is we're driving this in a very broad-based fashion to continue to make this sustainable -- deliver sustainable profitable growth acceleration with margin expansion. That was a long answer, I apologize.

No, no, no. That's fine and then maybe just related to that on the non-Accelerate side, are there opportunities for restructuring on that side obviously you're focused on I guess stabilizing that business while growing the Accelerator. How do we think about all the different businesses in kind of non-Accelerate side and what kind of what the opportunities are there?

No, I think they're not. No, I think many of them are doing better and better and are nicely picking up a little bit on their growth profiles or having nice margin expansion. So I'm really very pleased with the one business that we were in, there is two businesses that we weren't pleased with in 2018, one was detection and that was clearly a restructuring case, we're downgrading them from a division to a business area of another division, we're eliminating a factory and some headcount here. So that wasn't a huge division but it's one where we took action and that should be fully evident by middle of 2019. And then simply because BEST can fluctuate from year to year, it had terrific growth here in 2017, we thought we would shrink organically in the low-single-digits. It actually ended up being just about flat. So they did better than expected. So that's not a restructuring case that's just simply, that has different secular trends and different market trends. And so after a very fast growth in 2017 that had ended up being about flat in 2018.

And this will conclude our question-and-answer session. I would now like to turn the conference back over to Miroslava Minkova for any closing remarks.

Thank you for joining us this evening. During the first quarter, Bruker will participate in Leerink Healthcare Conference in New York City and the Cowen Healthcare Conference in Boston. We invite you to meet us at these conferences or visit us at our Headquarters in Zurich or Massachusetts. Thank you and have a good evening.

The conference has now concluded. Thank you for attending today's presentation and you may now disconnect your lines.