Bruker Corporation (BRKR) Q3 2020 Earnings Report, Transcript and Summary

Good day and welcome to the Bruker Corporation Third Quarter 2020 Earnings 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] Please note this event is being recorded. 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 third quarter 2020 earnings conference call. My name is Miroslava Minkova, Director of Investor Relations and Corporate Development. Joining me on today's call are Frank Laukien, our President and CEO; super resolution Florence fluorescence microscope. 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 is shown on Slide 2. During the course of this conference call, we'll make forward-looking statements regarding future events, and the expected future financial and operational performance of the company that involve risks and uncertainties, including risks and uncertainties related to the COVID-19 pandemic. The company's actual results may differ materially from projections or scenario estimates describing 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 and subsequent Form 10-Q filings, all of 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, November 2nd, 2020. 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 full year 2020 financial results expected in February 2021. 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 third quarter of 2020 in more detail. Now, I'd 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 today's call. I hope you and your families are well. We continue to navigate a challenging environment among a global pandemic, while the majority of our academic and research customers worldwide have returned to business under a new normal, some still operates at productivity levels that are below pre-pandemic levels in an effort to accommodate safety protocols. Against this backdrop, Bruker delivered a good third quarter with sequentially strengthened financial performance compared to the first two quarters of 2020. In Q3 2020, our revenues still declined slightly year-over-year, but our non-GAAP operating margins and non-GAAP EPS improved significantly compared to Q2 or Q1 of 2020 and approached prior year Q3 '19 levels. We are pleased with the way our teams have delivered under the circumstances. During Q3, we continued to support initiatives to understand the SARS-CoV-2 virus and the COVID-19 disease. These include functional structural biology studies by high field NMR so called long COVID patient studies by NMR and mass spec metabolomics, as well as viral protein and disease patient proteomics research by mass spectrometry. And finally, we support the discovery and development of diagnostics, therapies and vaccines with our tools. Moreover, our Bruker high-end diagnostics business continues to serve the COVID-19 PCR testing market with nucleic acid extraction and PCR test kits and equipment. In Q3 of 2020, this grew further and we generated about $8.5 million of revenues from these PCR products primarily in Europe. Together with partners, we also have been piloting COVID-19 rapid antigen tests at some of our own European sites, and in customer labs with a goal to broaden our COVID-19 test portfolio further. From an operational standpoint, our major factory sites in the US, Europe and Malaysia are operating at their new normal. We are currently not facing any significant operational constraints, although we are monitoring this resurgence of the virus in Europe and in the US carefully. Turning to financial results. Our third quarter 2020 revenues rebounded sequentially as academic customers returned. Q3 2020 revenues were still slightly below prior year level, down minus 1.9% year-over-year and down 4.6% organically. Sequentially, we generated 20% more revenue in Q3 compared to Q2 of 2020. We continue to carefully manage expenses and monitor our cost structure. As a result, our Q3 2020 non-GAAP operating margin even improved year-over-year, while our diluted non-GAAP EPS approached Q3 '19 levels. Year-to-date and including the third quarter, our key proteomics, diagnostics and biopharma initiatives continued to grow nicely, and we now anticipate that Bruker will return to healthy year-over-year revenue growth and margin expansion in 2021. I now go to Slide 4, where we show the financial highlights for the third quarter of 2020. Q3 2020 revenues declined by 1.9% year-over-year to $511.4 million. Acquisitions added 0.3% to revenue growth and foreign currency translation was favorable by plus 2.4%. On an organic basis, Bruker's Q3 '20 revenues declined 4.6% year-over-year, which was comprised of a 3% organic decline in the three Bruker Scientific Instrument groups and an approximate 20% organic decline at BEST, net of intercompany eliminations with BEST negatively impacted by reduced demand for superconductors by MRI OEM companies. Our Q3 '20 non-GAAP gross margin decreased 90 bps year-over-year to 49.6%, while our non-GAAP operating margin improved 30 bps year-over-year to 18.6%. Lower volume at NANO and BEST together with unfavorable foreign currency translation negatively impacted the gross margin performance year-over-year, while meaningful OpEx savings resulted in an operating margin gain relative to Q3 of 2019. In Q3 '20, Bruker reported GAAP diluted EPS of $0.35 per share compared to $0.39 in Q3 '19, and on a non-GAAP basis, Q3 '20 EPS was $0.42 compared to $0.43 in Q3 of '19. On Slide 5, we show Bruker's performance for the first nine months of 2020. Revenues decreased by $113 million or minus 7.7% year-over-year to $1.36 billion. On an organic basis, revenues declined 8.3% year-over-year in the first nine months comprised of a 7.9% organic decline in the Scientific Instruments Groups, and a 12.6% organic decline at BEST, net of intercompany eliminations. Acquisitions added 0.5% to our top line and foreign exchange was insignificant, up 0.1%. Year-to-date, 2020 order bookings for Bruker Scientific Instruments Group declined low single-digits organically. Order rates improved sequentially, and had positive year-over-year growth in the third quarter as customers return to labs and research activities continued to recover. During Q3 of 2020, BSI's biopharma and diagnostic markets remain solid and academic markets continued to recover, while Industrial Research and Applied Markets continued to show softer trends due to the pandemic-driven economic slowdown. On the brighter side, BSI semiconductor metrology markets remain in an upswing. Year-to-date 2020 non-GAAP gross margin decreased 240 bps compared to the same period in 2019, while non-GAAP operating margins declined to 280 bps, as Gerald will discuss both growth and operating margins improved significantly when we look at them sequentially from Q2 to Q3 2020. On a GAAP basis, Bruker reported EPS of $0.57 in the first nine months of 2020, compared to $0.82 in the first nine months of 2019. And year-to-date 2020 non-GAAP EPS was $0.77, compared to $1.04 for in the same period in 2019. Please turn to Slide 6 and 7 are where we provide further highlights on the year-to-date 2020 performance of our three Scientific Instruments Groups, and of our BEST segment, all on a constant currency basis and in comparison, to the same period in 2019. Year-to-date, 2020 BioSpin Group revenue declined mid single-digits to $398 million. The revenue decline at BioSpin was due to COVID-19 related customer lab closures and installation delays primarily in the first half of 2020. BioSpin's performance improved sequentially and revenues were up year-over-year in the low single-digits in the third quarter as the academic market recovery continued and biopharma remained robust. During the third quarter, BioSpin received customer acceptance for a second 1.2 gigahertz and NMR system, which was successfully installed at the ETH in Zurich, Switzerland. BioSpin continues to ramp up its manufacturing and shipment activities for gigahertz systems. During the first nine months of the year, BioSpin's NMR and PCI Systems' revenue declined year-over-year due to the delayed order and installation activity as expected. BioSpin's aftermarket revenue increased slightly year-over-year and scientific software revenues were higher although of a low basis. Turning to the CALID Group, year-to-date 2020 revenues of $445 million were approximately flat compared to the same period in 2019. Molecular spectroscopy revenues decline year-over-year as FTIR/NIR markets were affected by the pandemic and economic slowdown. However, this was more than offset by solid growth in CALID's Daltonics microbiology and diagnostics, and its life science mass spectrometry business. CALID's performance also strengthened sequentially with revenues growing mid single-digits in the third quarter of 2020 year-over-year. For the first nine months of 2020, CALID's microbiology and COVID PCR testing consumables grew significantly year-over-year, our timsTOF proteomics business had a solid uptake and revenue growth year-to-date, despite the challenging conditions for instruments and customer installation delays. Finally, revenues for our FTIR and Near IR and Raman molecular spectroscopy product declined year-to-date with weakened applied and academic demand. Please turn to Slide 7 now. Bruker NANO revenues declined mid-teens to $393 million in the first nine months of 2020, reflecting slower academic, industrial and industrial research demand. This is all true for NANO's X-ray and NANO-surface, NANO-analysis tools and they all declined in revenue year-to-date. Year-to-date semiconductor metrology revenue for the NANO Group grew year-over-year as semi markets remain in a rebound. Finally, year-to-date 2020 BEST revenue declined low-teens, net of intercompany eliminations on reduced superconductor demand by MRI companies. Turning to Slide 8 now. Bruker continues to make investments in innovation that we believe will position the company for long-term profitable growth. This September, we acquired Canopy Biosciences, a leader in high-plex biomarker imaging for immunophenotyping using multiplexed fluorescence microscopy. Canopy's offering strengthens Bruker's position in Spatial Omics and targeted Multiomics Research. It complements Bruker's fluorescence microscopy portfolio and also helps our Bruker NANO Group expand its life science footprint. Canopy's ChipCytometry, manual and automated platforms and related consumables and services provide high resolution multiplexed imaging of peripheral blood mononuclear cells or PBMCs or of tissue again with applications in immunology, immuno oncology, cell therapy and targeted proteomics research. The cell CellKraft ChipCytometry platform that's our trademark CellKraft work, which is part of Canopy has advantages listed on the slide. We are very pleased to have the Canopy and CellKraft work team joined Bruker. Please remember that for high resolution spatial biology, we also recently had a very important new product introduction as we launched our Vutara VXL super resolution fluorescence microscope for industry-leading single-molecule localization and for subcellular targeted Multiomics imaging. Turning to Slide 9, we continue to make excellent progress with timsTOF 4D proteomics. At the recent human proteome organization or HUPO World Congress, Bruker's Melvin Park and Oliver Raether were awarded the HUPO science and technology award for the commercialization of Tim's trapped ion mobility spectrometry and off the passive proteomics method. We also announced significant additional innovations that HUPO, including the PaSER proteomics search engine, new work in progress, true single cell 4D proteomics workflow, this was the first, the PRM passive method for targeted quantitative proteomics or translational applications and the caps passive work flow for cross linking in structural 4D proteomics. We remain very excited about timsTOF and our opportunities in 4D proteomics. So, in conclusion, Bruker's performance strengthened sequentially in Q3 as academic markets and customer research activity continued to recover. Our core growth and margin initiatives are progressing well and we are excited about our opportunities in biopharma, microbiology and viral diagnostics. In proteomics, targeted multiomics ultra-high field NMR, software and aftermarket. Bruker remains fundamentally healthy and we expect to return to solid year-over-year revenue growth and margin expansion in 2021. And with that, I'll turn the call over to our CFO, Gerald Herman, who will review our financial performance in more detail.

Thanks, Frank and welcome to everyone. I'm pleased to join you today and review Bruker's third quarter 2020 financial highlights, starting on Slide 11. Bruker's reported revenue decreased 1.9% year-over-year to $511 million in the third quarter of 2020, which includes an organic revenue declined to 4.6%. Despite the slight revenue decline in our headwind of 60 basis points from foreign exchange, we delivered a roughly equivalent level of non-GAAP operating profit compared to Q3 2019. And our non-GAAP operating margin recovered to 18.6%, about 30 basis points above the Q3 2019 level. We reported GAAP EPS of $0.35 per share compared to $0.39 in the third quarter of 2019. On a non-GAAP basis, Q3 2020 EPS was $0.42 per share compared to $0.43 in Q3 2019. Overall, our Q3 revenue performance was favorable to the revenue decline scenarios we outlined in our Q2 2020 earnings call, while operating profit and earnings approached prior year levels, as we again drove the cost discipline and operating expense savings throughout the business. We exited Q3 2020 with $617.1 million in cash, cash equivalents and short-term investments. This reflects solid cash generation in the third quarter, and year-to-date 2020 as well as our strengthened cash position following our December 2019 debt financing. During the third quarter, we paid down $208.5 million of borrowings on our revolving credit facility. Our net debt position at the end of Q3 2020 was comparable to the end of Q3 2019. During the third quarter, we used cash to fund our strategic capital investments, acquisitions, dividends and buybacks as well as the revolver debt repayment mentioned earlier. In Q3 2020, we repurchased 127,000 shares of Bruker stock for a total of $5 million, bringing our total buybacks year-to-date to 1.34 million shares for $55 million. As of September 30th, we have $102.7 million remaining on our share repurchase authorization, which is valid until mid May 2021. At the end of Q3 2020, our working capital to revenue ratio was elevated relative to the prior year, as we carried higher inventory levels to address supply chain risks related to the COVID-19 pandemic. Slide 12 shows the revenue bridge for Q3 2020. As noted earlier, organic revenue in the quarter declined 4.6%. We had a positive revenue contribution from foreign currency translation of 2.4% and a modest positive contribution from acquisitions of 0.3%. From an organic BSI revenue perspective, Q3 2020 BioSpin revenues increased low single-digits year-over-year. As BioSpin's academic markets continue to recover and biopharma activity remained strong. CALID revenues increased mid single-digits with double-digit growth in CALID's microbiology and mass spectrometry businesses. NANO revenues declined mid-teens due to continued softness in NANO's academic, industrial and Industrial Research markets. Bruker's biopharma revenues MALDI Biotyper Consumables, Bruker high molecular diagnostic consumables and timsTOF proteomics revenues all had robust year-over-year growth once again in the third quarter. While broader academic and industrial research revenues continue to be impacted by the slow down. Third quarter semiconductor metrology revenues grew year-over-year. For our three BSI groups, third quarter systems revenue declined in the low double-digits. Well, aftermarket revenue grew high-teens year-over-year. Our book-to-bill ratio in Q3 2020 was 1.1. We exited the third quarter with higher BSI backlog year-over-year. BEST revenues declined 20.3% year-over-year net of intercompany eliminations due to reduced superconductor demand. Geographically and on an organic basis in Q3 2020, our European revenues grew low single-digits year-over-year, North America revenue declined low-teens, Asia Pacific revenue declined low single-digits. This included a steep decline in Japan, but growth in China and the rest of Asia Pacific. The rest of the world saw a revenue decline year-over-year. Slide 13 reflects our P&L results for the third quarter of 2020. On a non-GAAP basis, Q3 2020 non-GAAP gross profit margin 49.6% decreased 90 basis points from 50.5% in Q3 2019. The year-over-year reduction in gross margin was principally driven by lower volume and reduced productivity at NANO and BEST, and negative foreign exchange translation effects, which outweighed improvements in our BioSpin and CALID Groups, although below the prior year level, our gross margin recovered sequentially from the low level experienced in Q2 2020. Q3 2020 non-GAAP operating expenses were 5.2%, below Q3 2019 levels. This was due to continued cost control and certain cost reduction measures implemented earlier this year, including a restructuring in the BSI NANO segment. As a result, our Q3 2020 non-GAAP operating margin increased 30 basis points compared to Q3 2019 to 18.6%. And our non-GAAP operating profit was approximately flat year-over-year as lower operating expenses offset the Q3 2020 revenue decline. In Q3 2020, we also absorbed an approximate 60 basis point negative foreign exchange translation impact year-over-year on our non-GAAP operating margin. Q3 2020 non-GAAP interest and other expense of $5.9 million was slightly unfavorable compared to Q3 2019. During the third quarter and year-to-date, a net loss on foreign exchange transactions associated with unfavorable currency movement has more than offset lower net interest expense on our borrowings following our December 2019 debt financing. For the third quarter of 2020, our non-GAAP effective tax rate was 26.5%, a 110 basis points above the prior year quarter, which had included a significant favorable discrete tax item. Weighted average diluted shares outstanding in the third quarter of 2020 were $154.3 million, a reduction of approximately 1.3 million shares from Q3 2019 following our share repurchase activity. Finally, Q3 2020 non-GAAP EPS of $0.42 decreased 2% year-over-year, as operating expense savings partially offset the revenue decline. Slide 14 shows the year-over-year revenue bridge for the first nine months of 2020. Revenue declined $113 million or 7.7%, including a year-to-date 2020 organic decline of 8.3%. This includes a 7.9% organic decline at the three BSI groups collectively, and a 12.6% organic decline at BEST, net of intercompany eliminations. Geographically, and on an organic basis in the first nine months of 2020, Bruker's European revenue was down low single-digits year-over-year, North American revenue declined low-teens. Asia Pacific revenues declined high single-digits with double-digit drops in China and Japan. Our revenues in the rest of the world were also lower year-over-year. On slide 15, our year-to-date 2020 non-GAAP gross profit margin of 47.3% decreased 240 basis points year-over-year. Lower volume and reduced productivity from COVID-19 disruptions earlier in the year, and the ongoing economic slowdown drove the decline relative to the first nine months of 2019. Year-to-date 2020 operating expenses declined 6.5% year-over-year on cost control and cost reduction measures. All in, our non-GAAP operating margin in the first nine months of 2020 of 12.9% was 280 basis points below the prior year period. Finally, non-GAAP EPS of $0.77 was down 26% relative to the first nine months of 2019. Turning now to Slide 16, free cash flow in the first nine months of 2020 was approximately $61 million, an increase of about $28 million compared to the first nine months of 2019. During the first nine months of 2020 an increase in customer advances and favorable other items more than offset reduced cash generation from lower net income, working capital efficiencies and our continued capital expenditure investments in higher capacity and productivity. Our cash conversion cycle at the end of Q3 2020 of 263 days worsened from 227 days a year ago, with a step up driven primarily by an increase in DIO as we carried higher inventory balances due to supplier and customer lab disruptions from the pandemic. Turning now to Slide 18, In March, we suspended our guidance for 2020 due to the uncertain business conditions created by COVID-19. Business uncertainties related to the pandemic remain in many parts of the world in our visibility as it relates to customer operations and spending patterns in certain markets is still reduced. Our 2020 guidance therefore remains suspended and although we're not providing guidance as we've done in the past few quarters, that I'd like to offer some directional color on the fourth quarter. While the recovery from COVID-19 in our global academic markets is expected to continue, we still see challenges with customers operating at reduced capacities and still negatively impacted by the pandemic. Similar to Q3 2020, we believe it's better to think about a range of scenarios for the fourth quarter, with the potential for a revenue decline of between 2% and 6% year-over-year, compared to a strong Q4 2019. These scenarios assume favorable foreign currency translation of approximately 2.5% based on foreign currency rates as of September 30th, 2020. Baked into our revenue expectations for the fourth quarter are also challenging prior year comparisons in our BioSpin and CALID Groups. Please note that actual results may be outside of these scenario ranges, but this gives you our good faith estimate at this time, based on information currently available to us. While we continue to carefully monitor the resurgence of COVID-19 in Europe and here in North America, our current assumption is, that this will not lead to renewed broad-based lockdowns for our customers in academia and industry or significant deterioration in operating conditions. To conclude, we continue to manage through a challenging environment created by the pandemic. We're pleased with our sequentially strengthened financial performance in Q3 2020 and remain confident that Bruker will emerge from the pandemic, a stronger company with an exciting product portfolio and a promising long-term outlook. We look forward to updating you again on our quarterly progress during our Q4 2020 conference call anticipated in early February 2021. And with that, I'd like to turn the call over to Miroslava to start the Q&A session. Thank you very much.

Thank you, Gerald. I'd now like to turn the call over to the operator to begin the Q&A portion. In order to allow everyone time for questions, we ask that you limit yourself to one question and one follow-up. Thank you. Operator, we are ready to begin the Q&A.

We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Dan Leonard of Wells Fargo. Please go ahead.

Thank you. Just a question on the bookings. I'm calculating a low single-digit bookings growth in the quarter. Can you confirm that was the case? And then, you know, secondly, can you offer up some color on bookings by both academic customer segment as well as the European region as they seem to be the, you know customer group and region that our investors are most concerned about? Thank you.

So Dan, this is Frank. Hi. So that is correct. For BSI we had low-to-mid single-digit BSI order growth year-over-year in Q3. And BEST was different, because BEST we had some very, very large multiyear orders last year. But for BSI, that trend was correct. And then generally, customers in Europe and academic customers in Europe, were doing really quite well, maybe you know, in most major countries in the US, the academic market is still somewhat constrained. Although we do know it's, you know, some universities and - are struggling with lower state budgets and perhaps also or state funding constraints, perhaps lack of reduced tuition or housing, maybe less hospital income. Those are the headwinds that we're all aware of. Federal funding, I think there's generally optimism in the US and of course, the endowments are up so that's actually a positive and that in some larger universities has led to a little bit of less belt tightening. Keep in mind that for us 75% of our academic markets are outside of the US and so it's a mixed picture, but you know, it's clearly improving sequentially.

Thank you.

The next question comes from Jack Meehan of Nephron Research. Please go ahead. Mr. Meehan, your line is open. Is it perhaps muted on your side? Please go ahead.

Sorry about that, I was muted. Still learning with remote clearly. Frank, I, you know, was hoping to dig a little bit and dig a little more into the progress with the timsTOF Pro. Is there any color you can provide with us now on the size of the installed base? And how, you know, just given the backdrop with everything going on with COVID? How you expect the shape of new replacements to trend over the next couple of years?

Yeah, sort of, you know, we tend to give annual updates rather than midyear updates on the installed base and all, but timsTOF Pro adoption, despite the academic challenges, academic funding and accessibility challenges, has been really quite positive with both orders and bookings year-to-date growing in the double-digits. So that's proteomics is a very good market and the timsTOF Pro does really well within that market with its many innovations and new capabilities. I would maybe highlight that it's not only going into, you know, government and med school and academic research labs, but also quite a bit of adoption in bio, in pharma and biopharma labs. So we're satisfied with that and tend to give an update on installed base more hopefully at the end of the year.

Great. And one clarification and the scenario that you laid out for the fourth quarter, right, I believe you previously talked about a third 1.2 gigahertz system in Germany, is that included in terms of revenue recognition within that scenario?

We're including one ultra-high field gigahertz class system. It may not be a specific one in a specific country, because we have multiple systems that are in various degrees in the installation process. But one gigahertz class system is included although we, you know, it could be the system that you have mentioned, it also could be another one. So one is included, yes.

Thank you, Frank.

The next question comes from Brandon Couillard of Jefferies. Please go ahead.

Hey, good afternoon. Frank, just sticking with the NMR segment for a moment. To what extent if at all, have you begun to see some of those ultra-high field orders come from US customers? And as you look out to '21, you still think three of those units a year is kind of the top ceiling of the capacity of what you're able to ship? Or you know you think you could maybe do a little bit more next year?

So the - good question, Brandon. In the US, we, you know, we had delivered a 1.1 gigahertz some time ago to St. Jude's and we have an order in the backlog for Ohio State. But basically, the US funding hasn't come through yet at this time, so at least not in a significant way that would match the, you know, more than 10 orders in Europe. We think that's only a question of time. But you know, in the last six months, that just wasn't the top of the priority for NIH and, and CI and places like that, you know, for obvious reasons. Everybody's fighting the pandemic. But it is pretty high near the priority, the top of the priority list we understand. So we're optimistic that in the next, you know, one to two years, there will be hopefully much more significant US funding for additional orders, which would then be, you know, '20, '22, '23 revenue. To your other questions, we still have quite a bit of backlog. We have a lot of backlog for the next two years. And we expect to be at higher than three systems per year. We don't want to give 2021 guidance. But indeed as we're looking at three systems this year 2020, we expect that to be higher next year.

That's great. And then Gerald as we look out the fourth quarter, you do lap at the top profitability comp you know considering FX and you know, perhaps some OpEx spend that's coming back in the mouth, you still think you can deliver year-over-year operating margin expansion in the fourth quarter. Just help us understand some of the puts and takes to think about in the P&L? Thanks.

Yeah, so I'm not sure that we're going to deliver operating margin expansion year-over-year, in the fourth quarter, overall, where our expectation is, we can talk about this in a little more detail. When you look at our operating expense performance in the third quarter, we benefited from a number of factors. One, of course was cost control and cost reduction measures, some of which will be relaxed or have already been relaxed in the fourth quarter. Now secondly, you know, we have some headwinds, as you've already pointed out relative to the to the foreign exchange side. And third, we do continue to invest in our strategic project accelerate investments, and that's not changing actually in the fourth quarter. So fundamentally, we do expect there's going to be more pressure on the fourth quarter relative to the fourth quarter of 2019.

Great, thanks.

You're welcome.

The next question comes from Tycho Peterson of JPMorgan. Please go ahead.

Hi, guys. This is Casey on for Tycho. When speaking on the cash flow, the slide say that the lower net income then increases in CapEx and working capital were more than offset by increases in customer advances and favorable other items. Can you just talk a little bit about what those favorable other items were and I'm assuming customer advances means that you're getting more upfront payments? Can you just talk a little bit about what you're seeing in this regard?

Yeah, sure. So first of all, we're quite pleased at the cash flow performance and generation for the third quarter and actually on an overall basis, our cash position for the company, generally, through the pandemic's been you know very positive. That's been encouraging for us, because of course, at the very beginning, we all, like many other companies had concerns from a liquidity perspective, and that's not played out. So what I would say is, the cash advances or customer advances we see are generally a reflection of stronger order performance in third quarter, as well, as what we've seen in prior quarters, customers typically need to provide you know significant customer advances to us and for our instruments. And then relative to there's a number of puts and takes that fit into the sort of favorable other items. And I don't think it's necessarily go through them in too much more detail. But just generally, we're quite pleased with the overall cash flow generation as it's played out through the third quarter. You likely know that the fourth quarter, we also typically generate more profitability and cash flow compared to other quarters in the year. So our expectation is that we'll be moving [technical difficulty] from there as well.

Got you. And then just on academic, on the 2Q call you've quantified that was down high-teens. What was that in 3Q? And what are you sort of embedding in the academic market in that 4Q scenario that you laid out? Thanks.

Direct, go ahead.

No, go ahead Gerald.

As you say so. So academic market segment performance for the third quarter's down. I'd say it's high-teens - sorry, high single-digits rather -

Low double-digits.

Low double-digits maybe is the best way to put it. And that's not surprising, particularly given what you've seen specifically for the US markets, I guess.

But it was better than it was in the second quarter.

Sequentially better - over q2 of 2020 for sure, yes.

The next question comes from Dan Brennan of UBS. Please go ahead.

Great, thanks. I was hoping maybe just a follow-up on that academic question. Frank, I know you added some color during the prepared remarks on the instrument. Could you just tease out what you're seeing from academic labs versus for instruments versus consumables? I know you don't have a big consumable service orientation, but nonetheless. And then, secondarily, in terms of the funding outlook, I know you were somewhat hopeful that we could see some more stimulus towards the academic budget. What are you seeing today? And you know, what are the prospects for a more significant rebound as we get into '21?

Good question, Dan. So actually our, you know, our consumables and aftermarket business was up pretty nicely in Q3, maybe with a little bit of service catch up from Q1 and Q2 as lab improvement - lab access improved, you know, compared to Q2 for sure. And of course, our MALDI Biotyper business has a very good consumables growth and our COVID testing and PCR testing is almost all consumables, plus we have some growing software so while we're not primarily a razorblade company, our aftermarket business is growing in terms of many aspects our aftermarket and consumables and even software business are growing nicely. As to stimulus, that's not clear yet. We do generally expect and our customers are pretty optimistic about life science research funding, in the, hopefully multiyear aftermath of this pandemic, because we've obviously been caught flatfooted. So it would seem that for most countries, they are life science research, investment and pharmaceutical, biopharma research remains high priorities. There's, of course, a lot of equity funding going into that. Having said that, there are some near-term constraints, we touched on US academic markets, some Chinese universities had temporary budget cuts. But now we hear that the next five-year plan again, there's, you know, it's for very significant investment in life sciences and healthcare technology, as well as all the technologies in general in China. So near-term, maybe still a little bit mixed in China and the US, pretty strong in Europe. And I would say medium to longer-term, while it may not be specific economic stimulus, so much as it was maybe in 2009-2010, I'm actually - and our customers are quite optimistic about at least federal or similar country, spending on life science researching and academic medical school research and translational research in general. So mix near-term still, but I think pretty healthy trends are likely in the major geographies in the mid to longer-term. I wouldn't call it stimulus so much but more strategic prioritization rather than stimulus funding.

And only one unrelated follow-up, just on the high-plex biomarker imaging market. Can you just give us some color there? I know this is a market that you've been even beginning to roll up into production and they have the acquisition, just give us a little flavor for what your - how do you think about the addressable market there for you? And what you know, what's the competitive profile of your offerings there? Thanks.

Yeah, I mean, the markets are obviously very, very large for the targeted Multiomics mostly they are targeted proteomics. So far, we've been only and we continue to be, you know, pretty strong, we're getting stronger and stronger and so called unbiased, untargeted mass spec based bottom up proteomics, if you like, and many different flavors of that. So we were quite keen and also get into a targeted omics and targeted proteomics in particular, and very often you need that to combine that with spatial imaging. So doing that high-plex imaging with that ChipCytometry platform was a very, very important technology acquisition, the business does have revenue, it's not enormous revenue. We think it has a very competitive technology base and product line. And we'll hope to tell you more about that into next year as we begin to integrate and accelerate that business.

Great. Thanks, Frank.

The next question comes from Dan Arias of Stifel. Please go ahead.

Good afternoon, guys, thanks. Frank are you able to give a snapshot on where we are right now with respect to the percentage of US and Europe lads that are open to system installations by engineer. It sounds like their order book is hanging in. I'm just trying to understand sort of the state of affairs on access and just revenue recognition for some of the bigger pieces of equipment in the portfolio?

I'd say in the US and in Europe, at least until recently all apps were open. But you know, it's just - is much more work in terms of planning, getting access, getting the health forms in planning the access. They're not running that necessarily at full capacity. But I'm not aware of any US lab closures. I mean, could there be one or the other, maybe but you know, they would have to be a local outbreak and a local quarantine situation, generally, labs are open and the same is true in Europe. Although in Europe now the travel between countries and even within countries is becoming a little bit more challenging. Now, of course, we have important reasons to go. So this is not leisure travel. So we expect to continue to have access. But things are coming up a little bit in Europe, we hope that doesn't affect our December, but December is more than half of our or about half of our revenue. So we're keeping an eye on that presently we assume that that will not have a material effect on our Q4.

Okay, just to make sure I got that right. You're saying on the US side? I mean, it sounds like the labs are open themselves. But you're saying you're not seeing any issues with access to installations in US?

Other than - exactly. You said that correctly. Other than it's a slower process and requires much more planning and back and forth. You can just show up.

Okay, and then just as a follow-up on NMR. Is there a difference if we look at the growth rates between applied market usage versus large magnet research? I'm just curious whether or when we think about the food applications that you guys are pushing into, there's sort of a difference to be had there and maybe we can think about portions of the market being a little bit resilient, given everything going on in the academic side?

Yeah, that I don't know that there is any new trend worth mentioning. I mean, generally, some of these applied in clinical research markets and NMR, for us our important growth drivers, in addition to aftermarket and in addition to gigahertz high-field systems on which we simply also have a backlog. But you know, certainly in Q2, some of the order activity there did see delays and some of the orders did delay into Q3, some may go into Q4, and as you know, if in NMR, we get an order, we don't deliver it right away, can be typically 4 to 6 to 12 months for large systems and timing difference between orders and then revenue. Q3, NMR and BioSpin order activity was really quite good. So we did not just live off our backlog or something like that. And, you know, after a dip and clearly the delays in Q1 in China and Q2 worldwide. So hope that answered your question. So I think there's multiple growth drivers to the NMR and BioSpin business and you know, they all took a dip. And but they're big, they're clearly in recovery mode and we think we'll see growth next year, good growth.

Thanks, Frank.

Good growth in revenue this year, we're seeing some growth in orders, at least in Q3.

The next question comes from Doug Schenkel of Cowen. Please go ahead.

Hi, this is Chris on for Doug today. Thanks for taking my questions. Frank, I believe you mentioned Bruker should return to healthy revenue growth in 2021. Appreciate you don't want to be too granular, but at a high level? What are the key assumptions behind this forecast? Is it based on what you're seeing in the order book and backlog? And would it be reasonable for us to assume that Bruker could return to at least the 2019 revenue level in 2021?

Yeah, we're not prepared to do a try 2019 comparison, although it's a fair question. So of course, you're right, some of the healthy growth in 2021 or year-over-year growth, of course, part of that will have to do with weaker comparisons, especially in the first half of 2020 we're aware of that. But you know, we've also had improving order trends and our backlog has been improving and it's getting healthy, quite healthy. And the outlook that we have is, you know that our project accelerates strategic initiatives by and large, are doing well. And some of them in proteomics and diagnostics are doing particularly well. Some of them are literally being added this year. Obviously, we're not a huge COVID testing company. But we have COVID testing, something of which we had, you know, that type of testing were zero at the beginning of the year. So we're developing that into, you know, maybe a $10 million per quarter run rate business, not quite there yet, but getting there. Plus, we're getting into that high spatial biology and Multiomics targeted proteomics world so we're adding to our initiatives even during the pandemic. So there's enough, you know, and our biopharma business, as you would expect is doing well, so from a smaller basis, but it's growing really very nicely, both NMR and mass spec and some other tools. There are some headwinds out there, we've discussed them, you know, industry, industrial research, we don't expect that to recover quickly. And there'll be - still be some noisy recovery in the academic markets with some countries having temporary constraints. But I think that's going to sort itself out mostly by certainly by the middle of next year. So now I've given you lots of qualitative arguments and no numbers. But we do expect really healthy growth next year and resuming our margin expansion. So more on that with, hopefully with guidance, by, you know, by early February, when we report on Q4 and the full year and then hopefully, barring a very severe second wave that is economically disruptive, which we presently may disrupts our social life, but hopefully not the economy or the - our customers, hopefully we'll be in a position to give guidance and right now we expect healthy growth, healthy year-over-year growth and margin expansion next year, for all these reasons.

Okay. Okay just for my follow-up question. Maybe going back to Slide 9, could you talk about what technical hurdles you need to resolve to achieve single-cell proteomics historically, I think mass spec based single-cell analysis has been limited by sample preps including single-cell isolation and also data interpretation software. So could you just maybe talk about what efforts have been made on those fronts? And when should we expect you to launch a commercialized single-cell mass spec workflow? Thank you.

Very perceptive questions. Yes, indeed. The true single-cell work. There had been true single-cell results out there before, but pretty good and reproducible true single-cell work has been demonstrated by the lab of [Matias Mon] [ph], our collaborators who was also cited on this. And this was, I'd say, a bit of a breakthrough result that was shown at the Hupo meeting. And now that is a somewhat of an experimental setup still, so we're working closely, that's not a product yet. So correct on all of that, is work in progress. But we hope to make further commercial progress with you know, some of the - it has to be in this sample prep, which is not necessarily what Bruker does, plus the analysis on the instrument, those have to come together for once the software is actually there and we've made software improvements. So it's not the software limitation. But some things still have to come together and then become, you know, sort of specialty research products for single-cell proteomics or true single-cell proteomics and we hope that can occur, you know, in the next year or two.

Okay, great. Thanks for taking my questions.

The next question comes from Patrick Donnelly of Citigroup. Please go ahead.

Thanks. Frank, maybe one for you, you know just in terms of the academic side. I guess where the gating factors and getting back to growth, it sounds like the order book is trending well? Is it just a matter of lab productivity getting back towards pre-pandemic levels? I mean, is it just these delays around the actual installations? You talked about a bit earlier, is that just causing growth to lag longer from order timing to revenue conversion, just trying to get a better handle on when we should think about that kind of flip -

Yeah, yeah good question. Some of it is just timing, you know, better orders in the second half of this year tend to, you know, help revenue next year, mostly. I mean, there's some things that we, you know, deliver in the same quarter or a quarter later, but often it's two quarters. And, you know, improving backlog is helping with that. And then, you know, it's still funding issues. I mean, there's still some funding noise, some Chinese universities and some US universities and some state universities are those have the financial drag of having a big cost of all that probably has not been making money in the last six months. You know, so there's some things in - there's some selected academic funding issues that need to sort themselves out. We - in the US and in China and Europe, not so much and in many other parts of the country - the world not so much. Japan, academic funding had been weaker, Japan, funding had generally been weak so far this year. So I would add that to the mix. I think you'll get back to good general academic growth rates in most of the world next year, I'm optimistic, but it's not always based on hard data yet. And certainly the optimism of the customers and the really good life science focus and that funding is in Europe and elsewhere is encouraging. So some of it is a little bit conjecture and not all of it is based on funding it, but I think these things will sort themselves out. Plus, you know, I mean, proteomics is hot in academia. And so that's a good driver, spatial biology and spatial targeted omics are very hot areas within the rising or flat or not quite, you know, recovered tide yet. We are interested in very, very good funding areas.

Okay, yeah. Sounds like some of it's based on kind of the sentiment. I mean, have you seen the change in tone in the conversations with customers in terms of their kind of willingness to spend dollars and get back towards you know, actually using the phones on hand there?

Yes, I mean, none of our customers are holding back funds on hand. They - it's in their interest to obviously place that or to encumber those at least with orders as soon as they can. And yes, I do. I've seen a state, a slight change in incremental change in tone and that had to do with some very famous universities in this country is that, you know, initially we were really belt tightening quite a bit and, you know, throughout their expense structures and they had then noticed that you know, in addition to everything else their endowments are doing really well, probably really quite well. And so they had relaxed some of the belt tightening a little bit and they have been memos at some very famous universities to the faculty that had indicated that in recent weeks. Plus, of course, now officially all labs being open, albeit with all the social distancing and fit in and working from home as much as possible, and all the new normal, as we all say, but all labs are open at the major research universities, nobody's closed down anymore.

That's helpful. Thanks, Frank.

The next question comes from Steve Willoughby of Cleveland Research. Please go ahead.

Hi, good evening. Thanks for taking my questions. Frank, I have a couple for you, if you don't mind. I guess first and then maybe I'll just ask them all upfront, if that works. Your comments about the gigahertz system in the fourth quarter, is there a possibility we could possibly get, you know, two or three potentially installed in the fourth quarter? Or, you know, with those other ones that are sort of in process more likely fall into next year? And then secondly, you know I know your exposure to the pharma and market is, you know, has been growing, you know, wondering if you had any thoughts at this point, you know, as we sit here in early November, as it relates to what their end of year spending, you know, might look like? And then finally, just if you could provide any more color on what you're seeing from a geographic basis, because you had, you know, wider, pretty wide variation in results from a geographic perspective. So just wondering, a little bit more color there on the strength in Europe and you know China returning to growth? Thank you.

All right. Steve, okay, gigahertz, thank you for, we expect one. I mean, there is also a risk that we might have none, in which case we think we can make that up otherwise, but you know, we're aiming for one, and it's very unlikely that we would have two or three. Biopharma has been good for us in terms of orders, you know, for most for - throughout the year, particularly in the US and then also in China. But Europe, not bad either. So, for us the yearend spend or yearend budget flushes in something that we talk about much at Bruker, because it doesn't have much of an effect, maybe more of a consumable save, budget leftover, maybe I'll stuff my refrigerators for a while. We don't see that as an important trend. But biopharma funding has been good, we expect it to continue to be good, given the strong equity market and other funding trends and valuations in that space. We're - it's pretty broad-based. We were surprised here all year long that it's not just COVID drugs or vaccines, it's pretty broad-based strength and that seems to continue. I don't expect a special year end effect. And as to geographies, I mean, right. So the China recovery seems to be healthy, and there's a lot less restrictions in China than in the US or in Europe right now. So that's China seems to be strengthening, although as we've said some universities that had temporary budget cuts, it sometimes also seems to be at the headline level, and then they are funding anyway in order so our China NMR orders had been quite good, despite some of the noise, we're belt tightening. So it's a little bit of noise, that's not always so clear to us. Japan, we have nothing but potential for improvement. It's been so weak throughout the year and almost every aspect. And countries that were locked down like India and so on or even Australia are eventually coming out of the lockdown. Yeah, I, you know, I mean, there is a bit of a concern about Europe, right. Europe had been doing quite well. But Europe is now being hit pretty severely. And so far, all the schools are in closing and the companies are in closing and essential travel, which is service engineer installing them aspect is essential travel are all good. And the factories aren't affected. We have very, very good procedure and safety procedures that are factories in this new normal. So we've been - we've had essentially no cases, none of them that were transmitted at the factory. And so we don't expect any factory disclosures. But I also, a month ago wouldn't have expect that cases to go, you know, to increase as quick - as rapidly as they are increasing right now in Europe. So it's hard to predict how that will be another month or two months from now. From what we see right now we think, yeah, that that gives you the overview, we also think the US will sort itself out more, but you know, who knows how long we will have uncertainty after the election, it could be for quite some time. I don't know whether that has an effect on US spending. But I -

That's very helpful, Frank -

Anything other than things that you know already.

Thank you very much, Frank. I appreciate it.

Yeah.

Next question comes from Derik DeBruin of Bank of America. Please go ahead.

Hi, good afternoon.

Hi.

Just two - hey, two questions. So just to clarify, you said down negative 2 to negative 6 for total sales, plus 2.5% FX tailwind? What did you say for the M&A impact for the full year? For the third quarter?

It is not material.

It's not material, it's negligible.

Less than 0.5%.

For sure.

Yeah, yeah.

Got it. So Canopy didn't add anything?

Well, it added a modest amount, but not material at this stage.

Great, okay. And we talked about -

Less than 0.5% is a good way of bracketing it.

Yeah.

Yeah.

Got you. Less than 0.5%, fine. So we talked a lot about academic and government, but obviously NANO has been down, you know, pretty significantly ex semiconductor. Can we talk a little bit about the dynamics in NANO? And I know there's a chunk of that that's academic, but there's also a big chunk of that that's industrial research and can we talk about what you're sort of seeing trends in the industrial research markets? And how should we expect that to trend or what are the signs there? Thanks.

Yeah, there we don't have the visibility yet that we would like to have. So industrial and industrial research is down. Some of it is down pretty significantly. We're separating out, as you've pointed out, the semi part, which is about 6% of our revenue in most years, that's doing really quite well. And we expect the slowest recovery in that industrial and industrial research. We think that's going to recover more slowly than academic which we are - which we think will recover fully by middle of next year. And we cannot predict that when industrial and industrial research, it will come out of its deepest hole for sure. But how far that will recover or what the growth rates are for that will be next year, because of the weak comparison, we're still likely to see that up next year, year-over-year. But that's the weakest part, and the one with the least visibility.

And that's being driven by what, I mean, obviously, I mean, because the industrial research has been mixed, depending on what, you know, what company you're at, I mean, some chemicals are doing fine, some are not. It's like what sort of is the biggest impact at the end - they're just not selling product or we're just being conservative? What's the biggest -

You know, I mean, I think that's where the CFO is, of course, you know, stopped, you know, made sure they preserve - conserve cash and slow down or stop CapEx, the fastest in pharma, biopharma, that's not the case, of course, they invested more. And now they're observed, you know, and it's so industry-by-industry, I mean, you know, obviously, aerospace is not in good shape. And but automotives is recovering in many areas, because people are not flying. So there may want a new car actually bought - selling cars is not such a bad business, some of them are hurting financially, because they all need to become self-driving electric vehicles. And they may or may not have that yet. So it says some of that other you know, more other dynamics going on that has - that helps industrial research. We, I kind of expect that to recover certainly compared to 2020 as well. But I don't have the visibility to give you a good answer. I don't know. I wouldn't know what other than directionally it has to recover from this year or next year, by how quickly and how much and by with what timing on that I do not have visibility yet. However, I mean, if you want to - if I wanted to be a bit more positive or constructive, clearly compared to the deep hole, it can only go up, but I could not tell you by how much. But having that steep, steep headwind that we've been experiencing from industrial, remove next year would do a lot for our growth rate, and we think it will.

Yeah, great. Thanks, Frank.

Yeah.

The next question comes from Puneet Souda of SVB Leerink Partners. Please go ahead.

Yeah. Hi, Frank. Thanks for the question. So first one on Project Accelerate and thanks for the updates on that front. But wondering what it means, you know, as you've seen the crisis sort of, you know, go through the year and evolve. You know, what's your expectation here in terms of where Bruker wants to push harder in terms of new product launches versus less in other product lines? Main question is, I mean, since that is within your control, I'm just trying to understand should we expect a Bruker to you know innovate along the same lines. So maybe an extensions of successful platform such as 10 staff and other products, because obviously that's within your control, despite the academics. So just wanted to get a sense of that and any other priorities you care on accelerate into 2021?

Yes, Puneet. We haven't slowed down in investment - investing in innovation and in R&D at all, throughout the pandemic. And in fact, we have added, I guess, you could say within project accelerated, we've looked - we've added viral diagnostics, COVID's diagnostics, but also, you know, the winterplex, flu, flu A, flu B, RSV, that type of stuff that goes into our PCR diagnostics. So viral diagnostics was added to our previous infectious disease focus, which was more micro-bacteria or bacterial, micro-bacteria oriented. And of course, in proteomics, we've added the targeted proteomics with the ChipCytometry technology acquisition and targeted multiomics. So broadly, you could say that was within the 6 Project Accelerate areas, although it has fleshed out some of them much more than what we had in our technology and product portfolio, even at the beginning of the year. So we're doubling down, we've even accelerated with some inorganic bolt-on our capabilities, in particular, in this case, in infectious disease diagnostics and in proteomics, multiomics also added - adding the targeted capabilities. Now, these proteomics, multiomics capabilities that we will continue to innovate there very rapidly that that's one of the probably fastest growing areas, that is at an inflection point, and that we think will do really, really well and probably grow much faster than even what I had predicted in New York in June last year at our Analysts Day. That's emerging, that's probably pretty clear to you, Puneet, and many other observers, and that we're investing at that in a broader sense, also in the ecosystem, that sort of strategic for us as well as the accelerating investments in diagnostics, which, you know, is of course, bacterial diagnostics, but also viral diagnostics, and also with more and more of a focus on supporting - providing tools for cancer diagnostics.

Okay, that's very helpful. And if I could ask on NMR and you know you have had a number of installs here for large systems, [UHF] [ph] gigahertz. Now, with that experience, what's the level of confidence in terms of predictability of bringing that - those magnets up to field and thus giving you more predictability of revenue recognition, a timely revenue recognition there? Just wanted to get a sense from you now that you have had a couple of these installs? Thanks.

Yeah, I mean, over the year, our confidence has increased very significantly. And it is true that not every installation works on first try. And you know, we've had some examples where a magnet had to be reworked, just as we had predicted. But overall, we have enough irons in the fire that maybe you don't need to worry about that, we worry about that because we have enough irons in the fire to hopefully get one in into Q4 revenue, that was a question that was asked earlier. And also to have enough confidence to say, with pretty high confidence that beyond the three systems that we're anticipating for this year, next year, we're expecting more than three systems in the gigahertz class in revenue. And how many will go into that when we give guidance for 2021, but more than three. So we have pretty high confidence in that now. But we always need to do a little bit more juggling behind the scenes, because it's still, you know, leading-edge technology. And but I think overall, I think we got to have a good grip on it now.

Great, thank you.

And we have a follow-up from Dan Brennan of UBS. Please go ahead.

Hey, thanks. Thanks for taking the question. Frank maybe just one shorter-term question. So I know the comp in Q4 actually gets easier by a couple of points, 2 points. I'm just wondering at the midpoint, you're not baking in any real change versus Q3. Is that really just conservatism given maybe the COVID cases? Or did you see any pacing change and you like it through the quarter start, when you start Q4? And then just back to academics -

Are you - sorry, are you talking about revenue or margin? So can you just -

Yeah, yeah, Frank. Yes, the organic down to 2 to 6 is kind of stable with Q3, but the comp does get easier to organic growth comp those get easier in Q4 versus last year, right, by that two points because I think you grew over 7 to $1.5 billion is -

Yeah but last - last Q4 was very strong. Last Q4 was very strong. So it's not only the percentages, we also look at the absolute numbers. And, you know, Q3 last year wasn't bad, but Q4 was really quite strong. So I don't - you know it's not only conservativism it's also the prior comping Q4 will be difficult - I mean, you know, not, will be a bit tougher.

And then if you don't mind, sorry, one more on academic system, sort of the academic coming kind of where you thought this quarter, when, you know, when you're sitting down and sort of kind of how did that trend throughout the quarter? Was it in line, better or worse? I don't want to parse. You know, find points and I'm just wondering, since you have, you know -

Pretty much as we exit back, that I mean, the continuing recovery and reopening and at by the end of Q3 customers are generally back in the lab and doing their work with very few exceptions around the world. And essentially all European and US customers are back in their labs with a new normal. That's pretty much as worked out as we expected, more or less.

Great, thank you.

This concludes our question-and-answer session. I would like to turn the conference back over to Miroslava Minkova for any closing remarks.

Thank you for joining us today. Over the next several months, Bruker will participate in the Jefferson Virtual London Healthcare conference in November, and the JPMorgan Virtual Healthcare Conference in early January 2021. We hope you stay healthy and well, and we invite you to reach out to us for a virtual meeting during the quarter. Thank you and have a good evening.

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