S. Brandon Couillard

S. Brandon Couillard of Wells Fargo questioned the drivers behind the 90% growth in the PFAS testing business, whether there were timing benefits, and asked about the company's appetite for another large or transformative acquisition.

Answer

CEO Udit Batra attributed the sustained, strong PFAS growth to the superior sensitivity of the Xevo TQ Absolute instrument and strengthening EPA regulations, not a one-time pull-forward. On M&A, Batra described the Wyatt acquisition as a 'poster child' and confirmed an appetite for similar deals if the strategic and financial fit is right, noting valuations have become more reasonable.

S. Brandon Couillard requested an update on the timsTOF platform's performance and outlook, the impact of currency on operating margin guidance, and the forecast for free cash flow conversion in 2025.

Answer

CEO Frank Laukien described the timsTOF business as approaching $200 million, with its growth rate recovering and win rates improving after a period of competitive pressure. CFO Gerald Herman noted a 3% foreign exchange headwind is expected for 2025. Both executives highlighted strong working capital performance in Q4 and expect continued improvement in free cash flow conversion in 2025, which is a key focus.

S. Brandon Couillard questioned the reduction in the M&A contribution forecast for the year and asked for a reconciliation of the high decremental margin implied by the updated revenue and EPS guidance.

Answer

CEO Frank Laukien confirmed the M&A contribution was lowered from 10% to 9.5% due to weaker-than-expected demand in the biopharma-exposed Cellular Analysis and NanoString businesses, while ELITech and Chemspeed are performing well. CFO Gerald Herman explained the high decremental margin is due to a ~$100 million CER revenue drop being partially offset by favorable FX, while Frank Laukien added that the same FX shift created an additional 30 bps headwind to operating margin.

S. Brandon Couillard asked for an update on the Chemical and Advanced Materials business, which outperformed expectations, and its outlook. He also questioned how the company maintained its full-year guidance given the Q1 beat was offset by a lower NASD outlook.

Answer

CEO Michael McMullen and COO Padraig McDonnell attributed the strength in Chemical and Advanced Materials to secular drivers like semiconductors, batteries, and PFAS testing, noting resilience in Advanced Materials despite weakness in chemicals. CFO Robert McMahon explained that the full-year guide is maintained because the lower NASD forecast is offset by better-than-expected performance in the LSAG business, particularly from the Chemical & Advanced Materials and Academia markets.