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Good day, and welcome to the Bruker Corporation Second Quarter 2026 Earnings Conference Call. Operator provided instructions. Please note this event is being recorded. I would now like to hand the call over to Joe Kostka, Director of Investor Relations. Please go ahead.
Good morning. I would like to welcome everyone to Bruker Corporation's Second Quarter 2026 Earnings Conference Call. My name is Joe Kostka, and I am the Director of Bruker Investor Relations. Joining me on today's call are our President and CEO, Frank Laukien; and our EVP and CFO, Gerald Herman. In addition to the earnings release we issued earlier today, during today's conference call, we will be referencing a slide presentation that can be downloaded from the Events and Presentations section of Bruker's Investor Relations website. During today's call, we will 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 of the presentation. During this conference call, we will or may make forward-looking statements regarding future events and the financial and operational performance of the company that involve risks and uncertainties, including those related to our recent acquisitions, geopolitical risks, wars or blockades, market demand, tariffs, currency exchange rates, competitive dynamics or supply chains. The company's actual results may differ materially from 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 for the period ending December 31, 2025, as updated by our other SEC filings, which are available on our website and on the SEC's website. Also, please note that the following information is based on current business conditions and on our outlook as of today, August 4, 2026. We do not intend to update our forward-looking statements based on new information, future events or for other reasons, except as may be required by law, prior to the release of our third quarter 2026 financial results expected in early November 2026. You should not rely on these forward-looking statements as necessarily representing our views or outlook as of any date after today. We will begin today's call with Frank providing an overview of our business progress. Gerald will then cover the financials for the second quarter of 2026 in more detail and comment on our full year 2026 financial outlook. Now I'd like to turn the call over to Bruker's CEO, Frank Laukien.
Thanks, Joe. Good morning, everyone, and thank you for joining us on today's second quarter 2026 earnings call. We are pleased that Bruker has returned to organic revenue growth in the second quarter and that our focus on cost reductions and profitability improvements resulted in solid margin expansion and non-GAAP EPS growth. Demand for our differentiated products and solutions improved further as our Scientific Instruments segment achieved 10% organic bookings growth year-over-year, a fourth consecutive quarter with a Scientific Instruments book-to-bill ratio above 1.0. Organic bookings in biopharma grew more than 20% in the second quarter, driven by demand for our NMR, x-ray and mass spectrometry solutions. In our academic and medical research business, bookings in Europe and China were up strongly. However, U.S. academic orders still remained weak in Q2. We saw notable Q2 order strength in our deep tech semiconductor tools and energy research technologies with both at over 50% organic order growth year-over-year. In semicon metrology, we sell robust and innovative metrology equipment for chip manufacturers with significant demand increases for high-bandwidth memory and advanced packaging driven by AI scaling. In energy research, we provide unique tools and modules for fusion energy development and high-energy physics research. These proprietary deep tech capabilities, which also include our Security Detection systems, are valuable to have in the portfolio as life science research demand recovers gradually. These deep tech tools tend to have longer delivery times, in some cases, of 9 to 24 months, determined by facility readiness, for example, for a new logic or memory chip wafer fab or for large-scale fusion development projects. As a result, some of our strong deep tech bookings will benefit our Q4 and then 2027 and even the outer years. We are continuing to take costs out to drive margin expansion and double-digit EPS growth this year and also again in 2027. We have made good progress in the second quarter, realizing more cumulative cost reductions and we are well on track for our stated goal of delivering $140 million of annualized cost savings in 2026. I would like to thank our teams for their very important efforts in this area. Effective as of July 1 of this year, Bruker has adopted a new operating structure that combines our BioSpin, Daltonics and Optics division into a new Bruker Biosystems Group led by Group President, Juergen Srega. The newly merged Biosystems Group addresses the growing need for scientific integration in the post-genomic era, which combines complementary life science research workflows into more comprehensive disease biology insights. Across post-genomic drug discovery, multiomics and applied markets, our customers connect structural, molecular and cellular information to understand complex systems biology or advanced materials research. The Biosystems Group brings together NMR, mass spectrometry, FTIR, Raman, preclinical automation, software and applications expertise in any of these areas for connected workflows from research to quality control. Examples include metabolomics, RNA characterization or protein analysis, where NMR and mass spectrometry provide important complementary insights, or, as another example, in battery research, development and battery life cycle quality control, where NMR and FTIR characterize electrolytes, electrodes and chemistry. In addition, Bruker Microbiology and Infection Diagnostics, which we sometimes abbreviate as BMID, previously a division within the CALID Group, has now been established as a group under the leadership of Dr. Wolfgang Busch. This BMID group has a fast-growing microbiology and infection diagnostics portfolio from microbial identification, molecular diagnostics, hospital hygiene to emerging antimicrobial resistance testing and next-generation sequencing for sepsis and reflex testing. This modified group structure aligns Bruker more closely with markets and our customers. By organizing around connected workflows, we strengthen group-level agility and our ability to prioritize investments that deliver innovation with the most impact. Following these changes, Bruker now operates in four groups: Bruker Biosystems, Bruker Nano, BMID or Bruker Microbiology and Infection Diagnostics, and Bruker Energy and Supercon Technologies, or BEST. This new structure is expected to drive an additional $20 million of cost reductions in fiscal year 2027. All right. On to the quarter. Let's turn to Slide 4 now for the P&L performance of the second quarter. Our Q2 2026 reported revenues of $839 million increased 5.2% year-over-year with organic growth of 2.8% or 3.4% organic growth, excluding tariff refunds in the second quarter. The revenue contribution from M&A was 1.5% and constant exchange rate or CER growth was 4.3% and the 0.9% FX revenue tailwind was actually 50 basis points lower than originally expected. BSI segment revenues were up 2.3% organically, while BEST achieved organic revenue growth of 8.9% net of intercompany eliminations. Our second quarter 2026 non-GAAP gross and operating margins were 52.1% and 14.1%, respectively, both up significantly year-over-year, albeit in comparison to a weak second quarter 2025 and including a net U.S. tariff refund benefit that Gerald will describe in a moment. Our second quarter 2026 diluted non-GAAP EPS was $0.49, up 53% from $0.32 in the second quarter of 2025. Moving to Slide 5. H1 2026 revenues increased by 3.9% to $1.66 billion. First half organic revenue was still a decline of 0.8%, consisting of a 1.4% organic decline in Scientific Instruments and 6.1% organic growth at BEST, net of intercompany eliminations. Our first half 2026 non-GAAP gross margin, operating margin and EPS were all up year-over-year and their performance is summarized on Slide 5. Gerald will go into more detail on the drivers shortly. Please turn to Slide 6 and 7, where we highlight the first half 2026 performance of our three Scientific Instruments groups and of BEST, all on a constant currency and year-over-year basis. In the first half of 2026, the BioSpin Group revenue was $393 million, down mid-single digits year-over-year. BioSpin saw strong revenue growth in hospital clinical and biopharma, offset by weakness in China academic/government, food testing and automation. NMR preclinical and preclinical imaging had robust order growth, both up double digits in the first half year-over-year. For the first half of 2026, CALID Group revenue of $627 million increased in the mid-single-digit percentage, driven by mass spectrometry, including the TOFWERK acquisition. CALID saw strength in biopharma, security detection and European academic/government, partially offset by weaker revenues in the U.S. First half revenue growth in Molecular Diagnostics was solid, while microbiology was roughly flat. Please turn to Slide 7 now. First half 2026 Bruker Nano revenue was $507 million with a low single-digit percentage decline. Nano saw weakness in academic/government and industrial markets, while weakness in U.S. academic/government funding continued to impact spatial biology. This was largely offset by robust strength in semiconductor metrology due to AI-driven orders for memory and advanced packaging metrology tools. Finally, the first half of 2026 BEST revenues were up 6%, net of intercompany eliminations with strong growth in the superconductor business and solid revenue growth at Research Instruments, or RI. In the first half, RI secured very strong multiyear orders for fusion energy and high-energy physics technologies, and I'll come back to that in a moment. So moving to Slide 8 and 9. On Slide 8, we highlight our semiconductor metrology nanotools, which are now clearly moving the needle for Bruker. I won't go through the technical details but invite you to read those at your convenience. The first half 2026 organic order growth was greater than 30% and the first half 2026 organic revenue growth was greater than 15%, obviously, somewhat lagging behind order growth. And this business is very profitable. It has about a 30% EBIT margin. Longer lead times in this business, which can be 9 to 24 months, can result in revenue lagging order growth by several quarters. If you go to Slide 9, we touch on our other deep tech areas, our Security Detection on the left and Energy Research on the right. And those two businesses also saw considerable strength. The first half detection orders and revenue were both up approximately 20% year-over-year, whereas, as I just mentioned, our first half research instruments, our energy research orders were up well over 100% year-over-year. In general, for perspective, keep in mind that Bruker and our orders tend to lag our revenues by a couple of quarters. And for these deep tech areas that I just mentioned, many of them will begin to help our revenue and P&L in Q4 of this year and then very much into 2027 and into the outer years. So in summary, in the second quarter, we achieved solid orders in many life science end markets, and we achieved very strong order growth in our so-called deep tech tools. We made further meaningful progress on our cost actions, setting us up for continued margin expansion and EPS growth in fiscal year 2026. And we are proactively taking additional cost out steps that are expected to add additional P&L benefits next year. So with that, let me turn the call over to our CFO, Gerald Herman, who will review Bruker's Q2 and fiscal year 2026 outlook in more detail.
Thank you, Frank, and thank you, everyone, for joining us today. I'm pleased to provide more detail on Bruker's second quarter and first half 2026 financial performance, starting on Slide 11. In the second quarter of 2026, our results came in at the low end of our expectations on the top line, but meaningfully ahead of expectations on margins and EPS. Our top line results in the second quarter of 2026 were unfavorably impacted by U.S. tariff refunds and a stronger U.S. dollar, which translated into less tailwind on revenue in total, approximately 110 basis points. U.S. tariff refunds reduced our organic revenue growth from 3.4% to 2.8%, but strengthened our profitability in the quarter, adding around 200 basis points to the second quarter 2026 operating margins year-over-year. Net U.S. tariffs contributed about $0.06 to EPS in the second quarter. Most importantly, we also saw the accumulating impact of our cost-saving actions accelerate in the quarter, together with favorable mix and volume. In the second quarter of 2026, Bruker's reported revenue increased 5.2% to $838.5 million, reflecting a pivot to organic growth in the quarter of 2.8% or 3.4% year-over-year, excluding U.S. tariff refunds. Acquisitions contributed 1.5% to our top line, while foreign exchange was a 0.9% tailwind, resulting in constant exchange rate revenue growth of 4.3% year-over-year. Geographically and on a year-over-year organic basis, in the second quarter of 2026, our Americas and European revenues both grew approximately 10%, while Asia Pacific revenue declined in the low double-digit percentage, including a low double-digit decline of revenue in China. For our EMEA region, revenue was down low single-digit percentage. BSI organic revenue grew 2.3% in the second quarter of 2026 with low single-digit organic growth in CALID and Bruker NANO, partially offset by flat revenue performance in BioSpin. BSI systems revenue was roughly flat and BSI aftermarket revenues were up mid-single digits organically year-over-year. Our BSI segment order book performance was up organically a solid 10% year-over-year, driven by greater than 50% growth in semi and greater than 20% growth in biopharma, partially offset by declines in U.S. academic/government and food safety. Second quarter 2026 non-GAAP gross margin increased 350 basis points to 52.1%. Non-GAAP operating margin was 14.1%, up 510 basis points, driven by our cost-saving actions, positive net U.S. tariff impact and favorable volume mix, partially offset by foreign currency headwinds, as shown on the slide. On a non-GAAP basis, second quarter 2026 diluted EPS was $0.49, up 53% from $0.32 in the second quarter of 2025. Our non-GAAP effective tax rate was 25% compared to 23.6% in the second quarter of 2025. On a GAAP basis, we reported a diluted loss per share of $0.41 compared to GAAP EPS of $0.05 in the second quarter of 2025. Our second quarter 2026 GAAP results include a noncash goodwill impairment charge of $135 million related to our automation and spatial biology businesses, which continued to experience operating losses. Weighted average diluted shares outstanding in the second quarter of 2026 were 152.8 million, an increase of 1.1 million shares from the second quarter of 2025. Slide 12 shows Bruker's performance for the first half of 2026, which has similar drivers to the second quarter. Turning to Slide 13. In the second quarter of 2026, our operating cash flow improved $50 million year-over-year, driven by improved profitability and the timing of tax and vendor payments in the quarter. Free cash flow improved approximately $43 million on a year-over-year basis. On stronger EBITDA in the second quarter of 2026, our net leverage ratio is now 2.8x as of June 30, 2026. Turning now to Slide 15. Our fiscal year 2026 financial outlook has been updated for foreign currency and effective tax rates only. We now expect a foreign exchange tailwind to revenues of 0.5% rather than 1.5% previously, resulting in reported revenue of $3.54 billion to $3.57 billion and representing reported growth of 3% to 4% compared to fiscal year 2025. Organic revenue growth of 1% to 2% year-over-year is unchanged and acquisitions are expected to contribute 1.5% to growth, also unchanged. We continue to expect non-GAAP operating margin expansion of 250 to 300 basis points year-over-year, largely driven by our cost-saving actions. On the bottom line, we continue to expect non-GAAP EPS for fiscal year 2026 in the range of $2.10 to $2.15 or non-GAAP EPS growth of 15% to 17% compared to fiscal year 2025, all unchanged as lower headwinds from foreign exchange are broadly offset by our higher effective tax rate. Other guidance assumptions are listed on the slide. Our fiscal year 2026 ranges have been updated for foreign currency rates as of June 30, 2026. Now some color on the third quarter of 2026. We expect approximately $20 million of previously planned third quarter revenue to shift into the fourth quarter, driven by semiconductor customer delivery requirements. This results in Q3 organic revenue to be roughly flat to up slightly year-over-year. On operating margins and EPS in the third quarter, we now expect a slight sequential decrease due to the $20 million semi revenue shift from the third to the fourth quarter and the $0.06 net U.S. tariff EPS benefit previously expected to come into the third quarter being pulled into the second quarter. On a positive note, for the fourth quarter of 2026, we now expect meaningful sequential and year-over-year increases in organic revenue growth, operating margin and EPS due to significantly higher volume and favorable mix in the fourth quarter. To wrap up, Q2 2026 was another solid bookings quarter for Bruker, giving us further confidence in a gradual market recovery in several key markets and geographies. Our cost-saving actions are well on track, positioning us well for significant margin and profitability improvement in fiscal year 2026, and we're driving towards further significant margin improvement and double-digit EPS growth also in 2027. With that, I'd like to turn the call over back to Joe. Thank you very much.
Thanks, Gerald. We will now begin the Q&A portion of the call. Operator?
分析師問答
Operator provided instructions. And our first question will come from Puneet Souda of Leerink Partners.
First one is on the tariff refund treatment. Some of the peers are calling it as a pass-through with no net impact as these refunds are passed on to the customers. So I just wanted to clarify on the treatment. And what is embedded in the tariff refund in the second half and for the full year guide because you're reiterating it, but it does appear that if we account for the refund that it is a step down. So if you could just clarify those points.
Puneet, it's Gerald. So with respect to the tariff refunds, as you can guess, some of those tariff elements were charged to individual customers, and that resulted in a contra revenue element, which is considered in our press release and the materials we provided. With respect to EPS, we've also indicated that that generated roughly 200 basis points of margin expansion in the quarter for the second quarter. As far as the second half goes, we've already factored that into our earlier guide numbers. We had assumed that it would be more likely recovered in the third and the fourth quarters, not in the second quarter. So we had a slightly earlier pull forward of that into the second quarter. But overall, that's already been baked into our original guidance model.
Yes, that's helpful. I'll follow up later. But just maybe one quick one on semi. You're pointing to 50% order growth there, correct me if I'm wrong. But in terms of the visibility into this and the timing of delivery, maybe, Frank, could you double-click? Obviously, this is an end market that is fairly actionable right now, just given the AI demand. What sort of sustainability that you're hearing from the customer end because obviously, these are somewhat separated from the leading AI companies that are driving that demand. So maybe could you elaborate a bit on the timing of the installs and conversion into revenue?
Yes. The orders are remarkable for the first half and even more so in Q2. Of course, there will be some fluctuations. If anything, it seems to be accelerating as one would expect. We believe this is very sustainable this year and next. The debate is whether it's sustainable at that pace in 2028 and beyond; people don't know yet. But visibility of the sector for the next six quarters plus seems excellent. It is correct that many of these orders, as wonderful as they are, usually have even longer delivery times than an average NMR or mass spec. So that can easily be three to sometimes six to eight quarters. Visibility is very good because those customers are like clockwork and they know when they need it for a new wafer fab and so on. So good visibility, but a little bit of delayed gratification as more of it comes in Q4. As Gerald said, we expect a very strong Q4, and quite a bit of this goes into next year in terms of revenue and P&L help and even into 2028. So great sustainability, great visibility, slightly longer lead times.
The next question comes from Michael Ryskin of Bank of America.
I want to just go back to Q2 performance briefly. I'm not sure if you want to talk ex tariffs or including tariffs, but overall organic was still a little bit lighter than we would have expected, especially I think in BSI, we were looking at more something like mid-single digits, especially given the comps. So you touched on academic and government, some other end markets. Again, a lot of that was expected and known. Is there anything unusual that happened in the quarter? Any pushouts or timing? Or just sort of how to think about Q2 relative to your prior assumptions?
Other than the combined effect of the tariff refunds on revenue, which was 60 basis points, and an additional 50 basis points effect from the currency tailwind being lower than expected because currency rates changed, which will become more pronounced in Q3, the main drivers were as I described. In Q3, that currency tailwind on revenues turns into a currency headwind, which takes out about EUR 15 million in revenue independent of the revenue shift that Gerald explained. Back to Q2 and your question, the biggest reasons were U.S. academic/government weakness. Our U.S. academic/government revenues in Q2, which were impacted by weak orders in the second half of last year, were down more than $10 million, actually more than $15 million year-over-year. That was the biggest weakness in revenue in the second quarter.
Okay. And if I could squeeze a follow-up, just, Gerald, maybe for you. The margin ramp through the second half of the year, I mean, obviously, margins came in better in Q2, but a lot of that was tariffs. If you could just walk us through the margin ramp in Q3 and the rest of the year. I know it's a big second point. So I would love to get some clarity on that.
In terms of the third quarter, we are expecting some shift of revenue, particularly related to semi, as Frank noted. We received strong orders and some of the revenue, because of customer timing, is moving to the fourth quarter. In addition, we did have a shift of what we expected from a tariff perspective from the third quarter into the second. So we think margins are likely to be somewhat down from what we initially expected for Q3. On the revenue line, we expect to be flat to slightly up organically in the third quarter. Then we expect a strong fourth quarter, driven by higher volume and better mix. There are a number of elements: the semi pushout into Q4, an ultra-high field coming into the fourth quarter, and mix improvements. We believe fourth quarter revenue could be around the $1 billion range. We've achieved similar levels in the past and we expect to execute to those levels.
The next question comes from Tycho Peterson of Jefferies.
Gerald, I'm going to actually pick up right there on margins. So you mentioned mix. I mean, is some of that coming from the pricing actions you took last year coming out of backlog? And then how are you thinking about input costs here going forward? Also, are you backing off the 300 to 350 basis points of core margin expansion? You had that in the deck last quarter. I didn't see you reiterate that. And then the incremental cost actions, how do we think about those flowing through into 2027?
There's a lot there. On the cost actions, we're well on track. We're north of the $140 million run rate. Frank mentioned the adoption of a new operating structure for Bruker, and that's going to contribute additional savings beyond the $140 million we are planning for in 2026 that will mostly hit in 2027, but some will hit earlier. We're well on track with strong cost-saving actions going forward beyond what we've already delivered. We delivered about $30 million in cost savings in the second quarter alone. Regarding the margin cadence, the third quarter has shifted a little further into the fourth due to the semi pushout and the tariff timing. We continue to expect strong fourth quarter performance. The mix story will include pricing benefits from adjustments made in 2025 into 2026, including in the fourth quarter. However, the biggest piece for the fourth quarter is volume. With the scale we expect to deliver, volume is more important than mix. We do expect better mix with respect to semi and ultra-high field and other key businesses performing strongly in the fourth quarter based on current visibility.
If you look at Slide 15, our guidance continues to be based on an operating margin improvement of 250 to 300 basis points reported, including a 50 basis point headwind for the year. That is unchanged.
And then on the COGS side, Gerald, just inflationary memory chips, tungsten, et cetera?
From an energy cost perspective, we've already baked those assumptions into the guide earlier. We're not seeing significant pressure at this stage. We are having some supply chain challenges around components, mostly in the electronics side, but at this stage, we're pretty comfortable that that's already been baked into our current guide.
Okay. And then, Frank, just in terms of the order book, I appreciate the color on semis. Just can you maybe talk about elsewhere, academic and government, maybe where you're feeling a little bit better. You talked last quarter about some signs of improvement there.
The U.S. is still weak. We're seeing encouraging NIH outlays, but they did not yet translate into significant Q2 orders. We'll observe Q3 and the quarter-end budget flush, which could mean decent Q4 U.S. academic/government bookings for us. In Q2, academic/government orders outside of the U.S., particularly in Europe, were up more than 10% and in China orders were up more than 20% for academic/government. So remember, China was down on revenue, but on orders it was up more than 20% in academic/government. There's typically a six-month delay that you see at Bruker. Biopharma has been strong in the last two to three quarters and again in Q2—timsOmni, timsTOF systems, NMRs, spatial biology, X-ray are all quite good. The deep tech areas are also terrific, though they have longer delivery times driven by customer readiness rather than our capacity.
The next question comes from Subbu Nambi of Guggenheim.
Then this will be at least the second year in a row where there is a timing dynamic challenge at the top line and seemingly a push out to Q4 or maybe even 2027. First, can you explain steps you're taking to improve visibility? And second, at Doug's bus tour in May, you indicated that 4% was a good starting point for 2027 revenue growth expectation. Given the timing dynamics, if this revenue gets pushed out to 2027, would that be on top of that 4%?
Good questions. What are we doing to improve visibility? Strong orders are helping; we've had improving orders and a book-to-bill above 1 for four quarters, which helps visibility. The visibility is sometimes impacted by the deep tech orders that have longer delivery times. Yes, Q4 should have a nice mid-single-digit organic growth rate. It's a little bit of a roller coaster with Q1 and Q3 weaker, Q4 stronger. For the year, our guidance reflects organic revenue growth of 1% to 2%, which is a transition year because 2025 was a year of organic decline for known reasons. Whether Q4 is indicative of 2027 growth is too early to say; give us more time to see bookings in Q3 and Q4. We generally believe in further organic growth acceleration in 2027 compared to 2026, but we cannot quantify that at this time.
I don't think anything changed structurally. The tariff refunds came in faster than we expected, mostly in June, which boosted Q2 margins and EPS more than anticipated. We thought the government would slow-walk them; they did not. We'll still have some refunds in Q3 and Q4 but to a lesser extent. Q3 on the margin side is still okay, but sequentially Q2 overshot a little because of these refunds arriving faster than expected.
The next question comes from Luke Sergott of Barclays.
Just a quick one on the bookings. Just to clear up. So the bookings, were they down quarter-over-quarter? I'm just trying to get a level set of the overall dollar size that you guys had.
Sequentially, bookings were up. It's low single digits up organically from the previous quarter.
Okay. Great. And then as you think about the Q4 step-up here and in light of the strong bookings that you guys have had, how much of that Q4 step over the $1 billion number is already covered in your backlog?
Q4 will be more than $1 billion. A lot of that is in our backlog now, and we also receive ongoing orders. I don't have an exact number at my fingertips, but more than 50% is in backlog and probably closer to two-thirds. We will follow up with more precise detail later.
All right. That's a bucket list to stump you twice, Frank. I appreciate it.
Yes. On what needs to get better for the back end: almost everything is pretty good now. Applied markets like food testing are a bit weak, but that's small for us. U.S. academic/government is the one outlier—if it stays weak, we'll still step up next year; if it comes back modestly, we'll take a bigger step. Biopharma has been great in the last few quarters. Many areas are doing well, and the deep tech orders are a very positive driver, although they generally have nine months or longer delivery times driven by the customers, not our capacity.
The next question comes from Casey Woodring of JPMorgan.
Yes, just a follow-up on the deep tech piece. I appreciate the comments on semi, but you also flagged strong security detection and energy research orders in the first half of the year. I guess is the strength that you're seeing there and the outperformance, was that something you had expected to begin the year? And was that contemplated in the guide? Or is this kind of incrementally better than expected? And then how do you view the sustainability of both of those businesses in terms of demand as we look into 2027, especially on the security side?
On security detection, that was better than expected but not hugely better. We expected strong orders; the results were incrementally better than our expectation. The product line is differentiated and security and defense concerns are not abating, so we expect sustainable growth there with good margins. Energy research greatly exceeded what we had expected in both timing and amount—orders were well over 100% year-over-year. At that high growth rate it's not sustainable indefinitely, but the business is very sustainable because many orders are for 2027, 2028 and even 2029, with large multi-year projects. Their win rate has been ahead of expectations, and we're delighted.
Got it. That's helpful. And then maybe just a quick follow-up. Europe grew 10%. Maybe just walk through what you're seeing across the businesses in that region.
Europe was healthy for NMR and other BioSpin tools, including EPR and preclinical imaging. Mass spec offerings performed well. Molecular diagnostics, ELITech in particular, is doing great and placed instruments ahead of plan, which bodes well for consumables pull-through. Biopharma was solid in Europe in the quarter as well.
The next question comes from Dan Arias of Stifel.
Frank, just a follow-up on your comments around revenue recognition timing tied to the metrology business. What portion of the portfolio falls into that bucket of six-plus quarters when it comes to acceptance and just hitting the P&L? Just trying to get my hands around on pie charts, et cetera, within that business.
The deep tech portfolio is about 15% of our overall portfolio. I can't readily break out exactly how much of that has three to four quarters delivery times versus six-plus quarters, but roughly the deep tech portfolio with longer delivery times of three to six quarters is about 15% of our portfolio. That excludes Supercon Technologies, which is a different rhythm with multi-year framework contracts.
Okay. Helpful. And then just maybe on input costs, which you guys referenced before, the market for helium is pretty tight again. How much is that a factor for your magnets business at this point? I mean it's been material in the past, but I know that you guys have worked to have those machines be less helium intensive than they used to be. So just kind of trying to check in on whether that's something to think about.
We consider helium supply carefully. It's manageable because we've taken proactive steps. At our factories and final test sites that use helium, we capture and liquefy helium and are at roughly 80% to 90% liquefaction. Many newer magnets have considerably lower helium consumption. We also offer helium capture, recompression, repurification and liquefaction solutions for labs. So while it's not pain-free, it's been greatly mitigated and at an overall financial level it's not something we need to highlight; it's manageable.
The next question will come from Jack Meehan of Operon Research.
I wanted to dig a little bit more into CALID first. The microbiology business flat year-to-date. Can you just give us an update on what you're seeing in MALDI? Historically, that's been a pretty steady double-digit grower. Are there any regional or competitive dynamics you would call out?
I don't think there are significant competitive dynamics at play; it's more about quarterly fluctuations. They ended up getting some very large deals expected to deliver in Q3 and Q4, for instance in Latin America and other places. That caused some timing differences. Generally, the instruments business tends to be mid to high single-digit growth now, while aftermarket for that business tends to be double-digit growth. That's our expectation for the year.
Great. Okay. And then I appreciate all the color in terms of the cost savings program cadence. I was wondering if you could talk about how you feel about the trajectory on margins into 2027. How much of that can we assume builds into next year versus areas you might be looking to reinvest?
We're not ready to provide 2027 guidance yet, but we intend to again grow our margins well above 100 basis points next year from our 2026 basis. We aim for double-digit, hopefully mid-teens non-GAAP EPS growth next year as well. Our longer-term goal is to drive back toward a 20% EBIT operating margin as quickly as possible and then more gradually move up into the low 20s in EBIT and mid-20s in EBITDA.
Congrats on Operon.
Okay. We can do one more question.
One more question. Our next question will come from Brendan Digan of Citi.
This is Albert Hu on for Brendan. I just want to circle back on the Q4 growth. I kind of want to exactly understand what is baked in. We got the $20 million push out from Q3, the ultra-high field that was originally supposed to be in Q2, got pushed to Q4. Am I missing anything here? And can you remind us what exactly got pushed out in the first place? And then what's the confidence level that it will get pushed out again?
The third element is currency: Q3 is the switchover point where a revenue currency tailwind turns into a revenue currency headwind. For the year, that's part of the FX adjustment we made. Q4 growth is mostly the EUR 20 million in deliveries shifting from Q3 to Q4, driven by customer site readiness. The ultra-high field expected in Q4 has installation risk—these things are never guaranteed because we must install them—but our delivery and installation success ratio is greater than 80%. The NMR business can reallocate installations if one slides, so we're comfortable with our strong Q4 expectation. Q3 should be okay, but sequentially not as strong as initially expected.
This concludes our question-and-answer session. I would like to turn the call back over to Joe Kostka for any closing remarks.
Thank you for joining us today. Bruker's leadership team looks forward to meeting with you at an event or speaking with you directly during the third quarter. Feel free to reach out to me to arrange a follow-up. Have a good day.
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