Bruker Corp (NASDAQ: BRKR) Q2 2025 Earnings Call dated Aug. 04, 2025
Corporate Participants:
Joe Kostka — Director, Investor Relations
Frank H. Laukien — President and Chief Executive Officer
Gerald N. Herman — Executive Vice President and Chief Financial Officer
Analysts:
Puneet Souda — Analyst
Tycho Peterson — Analyst
Brandon Couillard — Analyst
Luke Sergott — Analyst
Subbu Nambi — Analyst
Daniel Brennan — Analyst
Patrick Donnelly — Analyst
Joshua Waldman — Analyst
Marta Zaremba — Analyst
Presentation:
Operator
Good day, and welcome to Bruker Corporation Second Quarter 2025 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Joe Kostka, Director of Investor Relations. Please go ahead.
Joe Kostka — Director, Investor Relations
Good morning. I would like to welcome everyone to Bruker Corporation’s second quarter 2025 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 Presentation 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 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 acquisitions, geopolitical risks, tariffs, foreign currency market demand 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 31st, 2024 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 4th, of 2025. 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 2025 financial results, expected in early November 2025. 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 and updated thoughts and assumptions around the US and global funding environment and tariffs. Gerald will then cover the financials for the second quarter of 2025 in more detail, and share our updated fiscal year 2025 financial outlook.
Now I’d like to turn the call over to Bruker CEO, Frank Laukien.
Frank H. Laukien — President and Chief Executive Officer
Thank you, Joe. Good morning, everyone, and thank you for joining us on today’s second quarter 2025 earnings call. Life Science research instruments markets are under pressure at the moment, with expected US academic funding headwinds and China stimulus delays for high end research instrumentation. In addition, global tariff, pharma pricing, and economic uncertainty in the second quarter have delayed biopharma and industrial research instrumentation investments. This resulted in lower than anticipated bookings and revenues in the second quarter. Our Bruker Scientific Instruments or BSI segment book to bill ratio was in the mid-0.9 range in the quarter, which was not great but also not too bad.
We anticipate that the third quarter will bring additional visibility on US, NIH, and NSF funding both for the remainder of fiscal year ’25 as well as for fiscal year ’26 federal research budgets. We are encouraged by several recent settlements of disputes between major universities and the federal government, and we anticipate additional settlements to allow the resumption of grants for important scientific and medical research. On academic and disease biology research, we believe that our unique post genomic tools will be in significant demand in all geographies, and in particular also when China releases its stimulus budgets for high end medical research instrumentation.
Moreover, as US tariffs for many major countries and trade blocks get settled, in early August, we believe that global biopharma, industrial, and semiconductor companies will accelerate their investments in next-generation drug discovery and development systems, as well as in research and quality control tools for advanced materials, CleanTech and semiconductor research and production. We are observing where US tariffs on Swiss imports will settle, and we anticipate that ultimately it will not be at 39%, the rate communicated last week. In a worst-case scenario for Switzerland, we intend to leverage our other European Union and US factories for products designated for the United States market.
Bruker is poised to resume above market growth, particularly in the next-generation systems, needed for disease research and drug discovery, in view of the greater biological complexity revealed by the emerging post genomic view. Similarly, the enormous investments in artificial intelligence are very beneficial for our advanced and often unique semiconductor metrology tools. Finally, we have strong positions in microbiology and infection diagnostics with an exciting roadmap of medically needed, and differentiated capabilities.
Back to our second quarter, the stronger than anticipated organic revenue decline, coupled with higher US tariffs and stiff currency trade winds from a declining US Dollars caused margins and profitability to come in below our expectations. On our first quarter call we discussed our mitigation, our mitigating price, supply chain and cost measures, but these take two to three quarters before they fully benefit our operating results.
Today, we are announcing a significantly expanded cost savings initiative that is expected to reduce our annual costs for fiscal year 2026 by $100 million to $120 million annualized. These major cost reduction reductions affect all parts of our business from supply chain and manufacturing, to our commercial, administrative and R&D investments. These are difficult, but necessary decisions to right size our cost structure to match the trough demand levels currently seen in the market.
As a result of our weaker, second quarter performance, we are lowering our guidance expectations for fiscal year ’25. We now expect approximately flat constant exchange rate revenue growth, and organic revenue decline to decline minus 2% to minus 4% for the year with a mid-teens percentage non-GAAP EPS decline year-over-year. Looking beyond 2025, even in a muted revenue growth scenario in fiscal year ’26, it is our intention to deliver very significant margin improvements and double-digit EPS growth just based on our major cost reduction initiatives. If there also is a partial growth recovery in advanced life science research and drug discovery tools in fiscal year ’26, then this could provide additional tailwinds.
Beyond 2026 we expect to return to our stated goal of organic revenue growth 200 bps to 300 bps above market which we delivered many years in a row and with rapid margin expansion and double-digit EPS growth, once academic trade, and economic uncertainty abates. This is driven by our exceptional innovation in next-generation disease research and biopharma drug discovery tools for the post genomic era. This is also driven by other Bruker specific growth drivers from semiconductor metrology for the AI revolution, to unique applied and diagnostic solutions. Turning to Slide 4 for our Q2 ’25 performance. As I just detailed in the second quarter of 2025, we faced delays in many end markets, most notably biopharma and industrial which drove both the top and bottom lines to come in below our expectations.
Bruker’s second quarter ’25 reported revenues decreased 0.4% year-over-year to $797.4 million which included an FX tailwind of 2.9%. On an organic basis revenues decreased 7.0% which included a 7.2% organic decline in BSI and a 4.8% organic decline at best, net of intercompany eliminations. Revenue growth from acquisitions added 3.7%, which implies a constant exchange rate, CER revenue decline of 3.3% year-over-year. Book to bill in the quarter was in the mid-0.9 range. Our second quarter sorry, our second quarter ’25 non-GAAP operating margin was 9%, a decrease of 480 bps year-over-year as lower revenue absorption, additional tariff costs, and currency headwinds were only partially mitigated in Q2 by our earlier cost and pricing actions. In our second quarter ’25, diluted non-GAAP EPS was at $0.32, down 39% from $0.52 in the second quarter of 2024. On organic revenue decline, impact of tariffs and foreign exchange headwinds. Gerald will discuss the drivers for margins and EPS later in more detail.
Moving to Slide 5. Our first half ’25 revenues increased by 5.0% to $1.60 billion. First half organic revenue declined 2.3%, consisting of a 1.4% organic decline in scientific instruments or BSI and an 11.5% organic decline at best net of intercompany eliminations. Our first half 2025 non-GAAP growth and operating margin and GAAP and non-GAAP EPS performance are all summarized on Slide 5.
Please turn to Slide 6 and 7 where we highlight the first half 2025 performance of our three scientific instruments group and of our best segment, all on a constant currency and year over year basis. In first half of ’25 BIOSPIN Group revenue was $403 million and was roughly flat year-over-year. BIOSPIN contributions from NMR, preclinical imaging, and lab automation while the scientific software business was solved. BioSpin saw weakness in biopharma revenues and softness in orders both in academic and and applied markets. For the first half of ’25 Cali Group revenue of $566 million increased in the low teens percentage, with strong growth in microbiology and infection diagnostics, driven by the MALDI Biotyper and the Bruker ELITech molecular diagnostics business.
Our applied mass spectrometry business saw robust growth which offset some softness in the life science mass spectrometry business. Turn to Slide 7 now. First half ’25 Bruker NANO revenue was $509 million and grew in the low-single digits percentage. Spatial biology contributed growth in the first half of ’25, while revenues from advanced X-Ray were down year-over-year. Strength in biopharma was partially offset by weakness in industrial markets. Finally, first half ’25 best revenues declined in the low teens percentage, net of intercompany eliminations due to softness in the clinical MRI market as well as a strong prior year comparison for the research instruments business.
Moving to Slide 8, we highlight some of our recent innovations in the second quarter at ASMS. Obviously an almost unprecedented lineup of new and market changing instruments from our TIMSS product line as well as in Nano LC. I won’t go into these in detail today, but they significantly enhance our competitive position in traditional bottom-up proteomics, while also getting us in ushering in a new era of functional proteomics and proteoform analysis. With the timsOmni we had very good order since ASMS already, and finally a very serious play in Benchtop 4D-Metabolomics with the tims metabol launch with very high sensitivity and because of the four dimensions and unprecedented annotation continents being very well received in the market.
Let me move to Slide 9, probably the key theme for today. How are we navigating through this macro and research instruments weakness. You are aware of the US academic funding disruption, for high end research instrumentation for academic and medical research. China stimulus continues to be delayed although our customers remain optimistic for release in the second half, and in the second quarter we saw that drug discovery and industrial research tools saw CapEx delays and weakness in both of these segments. We’re looking forward to more visibility in what on what time frames they’ll recover once tariffs and other items settle in.
We also had more tariff and FX cost headwinds, so a lot of headwinds in the second quarter. We focus on our industry leading innovation and continue our strategy to reaccelerate growth, and enhance market share in the post genomic era, in academic and medical research but also very much in biopharma drug discovery tools when they come back. Very importantly, we’re broadly expanding our cost reductions which we had begun previously, but we’re expanding those with a goal of $100 million $220 million of annualized cost reductions to improve margins and profitability. And we’re obviously looking for a very significant step up in fiscal year of ’26 driven just by the cost reductions and hopefully some emerging recovery in the markets.
Of course we are seizing new opportunities in spatial biology and Multiomics, our very large growth drivers, even if they’re muted at the moment, as well as new growth drivers in lab automation, scientific software, India improving semiconductor metrology for AI being an incredible opportunity, emerging growth in European chemical and explosives detection, airport security, airline security and finally our industrial research business in CleanTech, batteries, fusion and we are adding to our consumables business organically and inorganically. So, to wrap up, the second quarter was a challenging one for Bruker and we are aggressively executing on our expanded cost reduction initiatives, with a goal of delivering strong margin expansion and EPS growth in 2026 even in a flat to low growth scenario.
We are, however, cautiously optimistic for a fiscal year ’26 partial recovery, and point to Bruker’s successful track record of rebounding very strongly from previous market disruptions in 2008, 2009 and in 2020, from which Bruker emerged with multiple years of double-digit organic revenue growth in each scenario. We remain confident that Bruker’s innovation engine will continue to drive differentiated, high value solutions in attractive markets. Our culture of disciplined entrepreneurialism and our Bruker management process will position us well for sustained financial success in the years to come.
Let me now turn the call over to our CFO Gerald Herman, who will review Bruker’s Q2 financial performance and updated fiscal year ’25 outlook in more detail. Gerald.
Gerald N. Herman — Executive Vice President and Chief Financial Officer
Thank you, Frank, and thank you everyone for joining us today. I’m going to go through more detail on Bruker’s second quarter and first half 2025 financial performance starting on Slide 11. In the second quarter 2025 our results came in below our expectations on both the top and bottom lines. In the second quarter 2025, Bruker’s reported revenue decreased 0.4% to $797.4 million, which reflects an organic revenue decrease of 7% year-over-year. Acquisitions contributed 3.7% to our top-line, while foreign exchange was a 2.9% tailwind resulting in constant exchange rate revenue decline of 3.3% year-over-year. Geographically and on a year over year organic basis in the second quarter 2025, our Americas revenue declined in the low-double-digits percentage.
European revenue also declined in the low-double-digits percentage, while Asia Pacific revenue grew in the low-single-digits percentage, despite a low-single-digit decline in China. For our EMEA region, revenue was up high-single-digits percentage. BSI organic revenue declined 7.2% in the second quarter of 2025, with organic declines in all groups. BSI systems declined roughly 10% and BSI aftermarket revenue was flat organically year-over-year. Our order book performance in the BSI segment was down organically in the high-single-digit percentage year-over-year with softer academic government research orders in most geographies and a significant decline in biopharma orders in the US.
Non-GAAP gross margin decreased 270 basis points to 48.6%. Q2 2025 non-GAAP operating margin was 9.0%, impacted by weaker volume leverage, unfavorable mix, tariffs, and foreign currency. On a non-GAAP basis, Q2 ’25 diluted EPS was $0.32, down 38.5% from the $0.52 we posted in the second quarter of 2024. Our EPS performance was significantly impacted by the decline in the US dollar in the quarter which resulted in a $0.06 headwind. Our non-GAAP effective tax rate was 23.6% compared to 28.4% in the second quarter of ’24, with the decrease driven mostly by favorable discrete items in the quarter.
On a GAAP basis, we reported diluted EPS of $0.05 per share flat compared to the second quarter of ’24. Weighted average diluted shares outstanding in the second quarter of 2025 were $151.7 million and increase to 3.7 million shares from the second quarter of ’24 resulting from our follow-on equity offering in May of 2024. Slide 12 shows Bruker’s performance for the first half of 2025 which has similar drivers to the second quarter. Turning to Slide 13 now, during the first half of 2025 we had a decrease in operating cash flow of $85 million driven principally by the timing of tax payments and other items, with a modest year-over-year increase in capital expenditures in the first half of ’25 which resulted in a free cash outflow of $110 million in the first half of ’25.
Given the challenging market conditions, today we announced the expansion of current cost saving initiatives intended to take $100 million to $120 million of annualized costs out of the business. These actions cross all business units, all geographies, and all functions within Bruker. This expanded cost program is already underway, but the majority of savings is expected in fiscal year 2026. These cost actions are expected to contribute approximately 300 basis points of operating margin improvement in fiscal year ’26, even under flat or muted market demand conditions.
Turning now to Slide 15, we’re updating our full year 2025 outlook to reflect Q2 results and current market tariff and foreign exchange headwinds. Our outlook for fiscal year ’25 now assumes revenue in a range of $3.43 billion to $3.50 billion with an organic revenue decline of 2% to 4%. Contribution from acquisitions is expected to be approximately 3.5% and we now expect a foreign currency tailwind of 2.5% on the revenue line. This leads to updated reported revenue growth guidance in a range of 2% to 4%, with approximately 0.5% constant exchange rate growth year-over-year. For operating margins in 2025, given soft market conditions, we now expect lower organic revenues, expected M&A dilution, and tariff on foreign exchange headwinds to lead to an approximately 210 basis point decline in operating margins year-over-year.
This anticipated full year 2025 operating margin decline consists of headwinds of 40 basis points from 2024 M&A activity, 60 basis points from tariffs, 90 basis points from foreign exchange, as well as a 20 basis point decline in organic operating margin. On the bottom line, our updated fiscal year 2025 non-GAAP EPS is expected to be in a range of $1.95 to $2.05, which implies non-GAAP EPS down 15% to 19% compared to fiscal year ’24. The midpoint of our updated EPS guidance is down $0.44 from our previous guidance, primarily driven by roughly $50 million decline in expected fiscal year ’25 revenue associated with the present trough in global academic, biopharma drug discovery, and industrial research instrument markets, as well as a higher foreign exchange headwind than previously expected of an additional $0.05.
We expect a very significant EPS rebound in fiscal year ’26 based on our significant cost cutting initiatives with or without meaningful revenue growth. Other guidance assumptions are listed on the slide, and our fiscal year ’25 ranges have been updated for foreign currency rates as of June 30th, 2025. With respect to the third quarter of 2025, we expect relatively weak organic revenue performance again with mid to high-single-digits percent decline year-over-year in the third quarter of 2025. On EPS, we expect non-GAAP EPS for the third quarter ’25 to be similar to EPS in the second quarter ’25 with a re acceleration of EPS expected in the fourth quarter.
To wrap up, market. tariff, and foreign exchange headwinds impacted our second quarter ’25. We remain cautiously optimistic about a fiscal year ’26 partial recovery in research instruments, and are very committed to significant margin expansion and EPS growth in fiscal year ’26 and beyond.
And with that I’d like to turn the call back over to Joe. Thank you very much.
Joe Kostka — Director, Investor Relations
Thanks Gerald. We will now begin the Q&A portion of the call. As a reminder to allow everyone time for questions, we ask that you limit yourself to one question and one follow up.
Operator?
Questions and Answers:
Operator
Thank you. We will now begin the question-and-answer session. [Operator Instructions] The first question comes from the line of Puneet Souda with Leerink Partners. Please go ahead.
Puneet Souda
Yeah. Hi Frank, Gerald, thanks for taking my questions. First one on the guide, I understand the magnitude of cut, but maybe just given the backdrop of the markets, could you parse out why is the backlog which has been strong, why is that not helping this year? And how should we think about. You talked about book to Bill, but how should we think about the recovery here in the fourth quarter, given that’s an important quarter from an instrumentation perspective. And then on fiscal ’26, Gerald talked about recovery there. How should we think about fiscal ’26? I know it’s a bit early, but would love your thoughts there.
Frank H. Laukien
Thank you, Puneet. So, backlog, we are using our backlog to some extent. Obviously, you can accelerate it at will as in delivery times, production and delivery times are very much planned and locked in by the customers. Also, our backlog has come down slightly from seven months to six and a half months. So we are leveraging that — using that. Yeah. We think it’s actually our Q4. I know Q4 has a bit of a ramp, but we’re actually feeling pretty comfortable with that. With all of our financial planning, I think that looks doable. And as we, as Gerald had cautioned, Q3 we think will be still somewhat weak.
A little too early to talk about ’26. We just wanted to make sure that even in a no growth scenario can deliver very significant margin expansion, and EPS growth. Whether next year will be no growth or a partial recovery of a few percent growth, we don’t have the visibility yet and we hope to gain that in the next one or two quarters. Obviously, a lot of things, a lot of moving pieces still, especially when it comes to US federal budgets.
Puneet Souda
Got it. And then on the UHF magnets, I didn’t apologize if I missed this. I would love to know if you’re expecting that in any third quarter or the fourth quarter. And there was a recent acquisition in the space of the BD assets that channel sells your MALDI biotyper. Do you expect any impact to the MALDI and the sales from that? Obviously, that’s a LCMS company that acquired those assets.
Frank H. Laukien
So presently ultra-high field, we don’t expect an ultra-high field revenue recognition in the third quarter. We do expect one in the fourth quarter. On that topic, then you’re talking about the BD microbiology business being in an acquisition process. Is that what. Yeah, so obviously we’ll. Yeah. I mean when I don’t know, because obviously if Waters closes that in early ’26, we’ll see what their intentions are.
Keep in mind that in these diagnostics businesses, quite honestly, the little benchtop multitop, that’s 10% and 90% is the all the essays, all the content, all the regulatory approvals and all. So we can only observe that when Danaher, which has the SCIEX mass spec divisions, when they acquired Siemens Microbiology, they continue to work with us on the Beckman Coulter Diagnostics business, and in an excellent manner going forward and weren’t tempted by, hey, we can build a mass spec, anybody can build a mass spec. But a multi biotype or franchise that has worked extremely well with BD, hopefully that will continue.
But we don’t have any, until that closes, we will see in ’26. I guess. If someone wanted to develop something like this, it would be a very, very large five-year investment and by that time of course we’re moving on. So, anyway. But it would be speculative. Quite honestly, we don’t expect it, but we don’t know.
Puneet Souda
Got it. Okay, that’s helpful. Thanks Frank.
Frank H. Laukien
I would point out that we obviously sell more than half of our MALDI biotypers ourselves directly. So, if at some point a channel was no longer available, I think we could handle that very well.
Operator
Thank you. Next question comes from the line of Tycho Peterson Jefferies, please go ahead.
Tycho Peterson
Hey, thanks. Frank. I want to push on the cost outs and really the idea here is, earnings today are 30% below where they were 90 days ago, and only $0.05 of that is FX. I know you’re protecting the P&L now, but a couple things, I guess. Why didn’t you initiate some of these cost outs sooner and are you committing to the $100 million to $120 million regardless, even if the top-line does start to come back?
Frank H. Laukien
Good questions, Tycho. So, we did start earlier, we early in the year, when before any of the headwinds appeared. We had an initial savings program where we just tried to grow our, expand our margins more than what we had guided to initially. And we had planned an additional $25 million, a new $25 million cost savings plan. We then when the tariffs began to appear, we expanded that to $50 million plus in a second phase and which is good because most of the cost savings are kicking in next year. But about $30 million of cost savings are kicking in, and are part of our guidance for fiscal year ’25.
So, the bigger effect will be in ’26, admittedly, but at least we do have about $30 million of cost savings in our fiscal year ’25 guide. To the last point Tycho, yes, we are completely committed and dialed in for the $100 million to $120 million in cost savings. We hope to be at the upper end of that, and that’s going to. We expect that to happen independent of market conditions or recovery. If that gives us in a flat scenario, $300 million[Phonetic] dips of margin improvement next year, that’s great.
And if the growth comes back, we don’t expect it to snap back fully, but comes back partially wonderful. Then we can deliver more margin expansion and EPS growth. But we’re completely committed to that. Yes.
Tycho Peterson
Okay. And then on the growth side, if I go back to our conference in June, you had effectively committed to 4% growth in ’26. Now it seems like you’re not wanting to go there. Maybe just talk about what has really changed, in the past two months here on the growth side. And then maybe just before I jump off one for Gerald on leverage, over four turns. But the covenant is three and a half turns. Can you maybe comment on that dynamic as well?
Frank H. Laukien
Okay, I’ll take the first part. So, we were indicating at your conference that we didn’t expect growth in ’26 to come back to more traditional for us 6% to 8% levels. And that at that point we were a little bit more optimistic that it might be. Maybe it wasn’t a commitment to that, but we were speculating it could be 2% to 4% organic growth next year. What has happened is that somewhat as expected, the US academic and China academic stimulus money is not flowing yet. That was somewhat expected and expected I think when we saw you at your conference, the additional US biopharma weakness in orders was for high end drug discovery research instrumentation.
I know it doesn’t hit all companies equally, but for research instrumentation we saw a significant slowdown there, and we’ll see whether once tariffs settle and some of the other political settlements kick in, whether that additional headwind goes away or abates in the second half of this year. And that will of course in part drive ’26. We also saw because of the economic and tariff uncertainty, that’s certainly our interpretation, we saw general Europe, US, and China weakness in industrial research instrument investments. So that was also something that became clearer in the second half, which is why we’re more muted in our, we don’t have growth expectations for ’26 but we do want to be realistic and ready for a no growth scenario.
That’s not our expectation. We don’t have an expectation yet, but I want to make sure that we can do the significant margin expansion and double-digit EPS growth even without growth. But please, my words are even without growth, we hope for some modest growth, a partial recovery. We don’t know. We cannot give guidance for ’26 of what that might be.
Gerald N. Herman
And Tycho, on your question regarding leverage ratio, we don’t comment specifically on ratio dynamics quarter by quarter. I mean I can tell you that we have satisfied our debt covenants for the first and second quarters of ’25, and we have a target, as I think we’ve discussed directly, in around that 2.7 range. And that’s what we’re working towards over several years right now.
Tycho Peterson
Thank you.
Gerald N. Herman
Sure.
Operator
Thank you. Next question comes from the line of Brandon Couillard with Wells Fargo. Please go ahead.
Brandon Couillard
Hey, thanks. Good morning, Gerald.Just to follow up there because you unpack the free cash flow burn in the second quarter. How much, was one-time, and what your. What are you expecting for operating cash flow in the second half and why isn’t CapEx coming down by a larger degree?
Gerald N. Herman
Sorry, I wasn’t sure I caught the last part of your question.
Brandon Couillard
How is the CapEx coming down? Why is the CapEx coming down?
Gerald N. Herman
Yeah. I think our CapEx. Let me just ask the last part of your question first. The CapEx is planned to scale down. We have dialed that back for the third and the fourth quarters, and we do typically have programs that are already in motion for the first and second quarters. And that’s why you see the CapEx levels where they are.
Yeah. And on the cash flow burn, yes, we did have a couple of what I would describe as unusual outflows in the second quarter related specifically to some tax payments which we highlighted those we don’t expect to recur. So, those will we expect to get back to a normal cash flow.
Frank H. Laukien
And Brandon, those were sizable. Those were $50 million to $60 million including some tax payments for that are prepayments, some of which we expect to recover. But yeah, there were some sizable tax payments in that second quarter.
Brandon Couillard
Okay, that’s helpful. And then Frank, I think Gerald said BSI aftermarket was flat in the quarter. Can you kind of unpack what you saw between diagnostics and maybe some A&G customers and just surprisingly, the aftermarket utilization kind of flatten the quarter. Thanks.
Frank H. Laukien
That granularity we do not have. Obviously, the diagnostics business has been growing very nicely sort of according to plan. Although placements for the ELITech molecular diagnostics business, which you don’t see in revenue, placements, new platforms going out there generate future revenues. But placements there, that’s one of the highlights of the quarter or for the first half of the year are way ahead of our plan. So, the ELITech business in placements is doing great, and in terms of growth and margin expansion, it’s according to plan.
So, that gives an indirect partial answer to what you’re saying, namely they’re of course 80% or 90% consumables based, and they are as well as the multi biotyper or consumables are doing well. Therefore, aftermarket in other segments was also down partially. But we don’t have granular percentages on that. Hope that helps.
Joe Kostka
Mr. Couillard, are you done with the question?
Brandon Couillard
Yeah. Great, thanks.
Operator
Thank you. Next question comes from the line of Luke Sergott with Barclays. Please go ahead.
Luke Sergott
Great, thanks. Just wanted to talk a little bit about like the underlying dynamics as you think about that more muted growth in the ’26, particularly around China because we’ve heard from peers right now that they’re starting to see some of the stimulus flow through. So, have you guys started to see any of that? And then as you think about those Dynamics in the ’26 on more muted growth, also following up here on Tycho’s question, but kind of, is that just assuming the current market environment just continues there, just trying to figure out like if China should start getting better, what would in that more muted growth scenario, what’s getting worse?
Frank H. Laukien
Well, a muted growth scenario in our — maybe a muted growth scenario is still a growth scenario. Right now, we’re seeing a decline in our scientific and industrial and biopharma research markets. So, a muted growth scenario, even a no growth scenario next year would be better than the headwinds that we’re observing right now. We don’t mean muted growth scenario meaning a decline next year. At least at this point. That’s not what we’re anticipating. So maybe with that clarification we also do not expect a market growth or for us a 6% to 8% organic growth snapback next year.
Hopefully we’ll get there by ’27, but let’s not comment on that one right now. China stimulus for high end research instrumentation, we have not seen those releases yet. We’ve seen reasonable tender activity in China lately, including into July, but that wasn’t necessarily the high-end stimulus funding that was just normal China activity which maybe is getting a little bit stronger. Our Chinese customers that are looking for shovel ready large projects that include NMR and mass spec and high-end microscopes remain very optimistic that this is just a question of time until the provinces release it.
Perhaps once there is greater clarity, or maybe there is greater clarity that there may not that there probably isn’t going to be an all-out China US trade war during that time, we think the provinces held back to see whether they needed a rainy-day fund. Anyway, so China stimulus not released yet for our high-end research instrumentation, and remarkable optimism by the customers that it’s going to happen. We just don’t know exactly when. We do also expect that as tariffs settle in and the new economic world order is emerging for trade that CFOs in major industrial and biopharma companies will be less reluctant to release CapEx investments because they do need the research capabilities whether it’s industrial material, semiconductor or of course drug discovery.
So in that sense we expect an improvement in ’26 compared to ’25, but we cannot quantify it at this moment. Having said all of that and we don’t want to rely on that improvement even with no growth we expect to deliver the 300 bps or greater in margin improvement. That’s the.
Luke Sergott
That’s the takeaway. Okay, great, thanks. And then for follow up. [Speech Overlap] When you’re. We talked about this a little bit before about with the NIH and the or the US academic funding issues, and how you ultimately kind of see this shaking out where whether it’s a more of a democratization from the coast or from the ivies of the high, end users of the institutions going more towards like state systems and things like that. So are you starting to see, do you have an update on how you kind of see this ultimately playing out with the funding releases and over the next few years.
Frank H. Laukien
We have;, we can read some tea leaves. Yeah. So, I think, I don’t think NIH budgets will be flat or up. I don’t think they’ll be down 40% either. Ditto for NSF or DOE research or. So, we assume that the deal will be that they’ll be down and we’re. If they’re down 20%, that’s not unrealistic from what we’re expecting. But maybe they’re only down 10%. We shall see. So that’s the bigger picture. The other trend that you’ve mentioned that this is not only temporarily but longer term going to be a more level playing field away from the coast or also investments that aren’t primarily in Massachusetts and Northern California.
I think that trend, political trend, I continue to see that. So, I think some very excellent universities elsewhere may be able to get a bigger piece of the pie. And this is even after some of the already announced and potentially pending settlements of the government with some very well-known universities. We do see NSF for ’25 calling for some final presentations on big ticket NMR items. I don’t know whether what they will do with that and whether there is then ’25 funding that may still comes through. Even while we’re mostly focused on ’26 budgets, there are some encouraging signs.
We, a couple of things went through with NIH budgeting and the customers got ordering from us two days later. But it’s not needle moving yet. So it’s early days, and we don’t have clear visibility yet. There are some signs that maybe the worst of the academic funding crisis could be over soon, but we do not expect a snap back to the full growth rates we had previously.
Luke Sergott
Great, thank you.
Operator
Thank you. Next question comes from the line of Subbu Nambi with Guggenheim. Please go ahead.
Subbu Nambi
Hey guys, I had a question on 2025 guide itself. If the cost savings aren’t hitting until 2026 and the headwind to EPS is getting worse with FX, how are you thinking about the second half just given the soft orders in the quarter?
Frank H. Laukien
Super good question. So, we do think that of our cost savings for the full year ’25, about $30 million of cost savings will kick in and will benefit us this year. They’re being overwhelmed by the headwinds from, the previous M&A, from the organic decline of 2% to 3% — 2% to 4% that we’re now projecting as well as currency and tariffs. But they are meaningful that just to a bigger they’re kicking in to a much greater extent than in 2026. And of course we’ve only recently, within the last several weeks have expanded our cost cutting initiative very significantly and more than doubled it from what we had previously already planned to counteract tariffs.
Did that answer your question or did I miss something? Subbu.
Subbu Nambi
No, that did Frank. I was just hoping for some more granularity in terms of the bridging between revenue and EPS to hit the 4Q ramp, but partially definitely answered the question.
Gerald N. Herman
Subbu. It’s Gerald. I’ll just add, Frank’s reference to that $30 million. The bulk of that’s going to hit for fiscal year ’25 in the fourth quarter. So, we’re and then the remaining more larger majority of it’s going to hit in fiscal year ’26. So, we are seeing some improvement in our guide expectations around the fourth quarter versus the third quarter. Just to help you with respect to that.
Subbu Nambi
Perfect. Thank you, guys.
Gerald N. Herman
Thank you.
Operator
Thank you. Next question comes from the line of Dan Brennan with TD Cowen. Please go ahead.
Daniel Brennan
Great. Thank you. Thanks for the questions. Maybe just on NIH Frank and Gerald, Frank, you’re obviously the largest US Economic government player amongst the large tools, so you should have I think more skin in the game and of you here. So, kind of you’re thinking about down 10% to 20% and we’ll see where things land in 2026. But I think there’s been more optimism I think has been raised here given the seven appropriations saying up 1% and folks think that, a CR could be likely. So, I’m just wondering when you think down 10% to 20% kind of a what’s the mechanism to get there and B if things were better, would you expect your customers would spend that money or what does your commercial team think about would they be reticent just given, rescissions and things like that?
Frank H. Laukien
Oh, so the 10% to 20% I want to be I don’t have an expectation. I, there’s been too many surprises to have an expectations of fiscal year ’26 budgets. I know the Senate committee marked it up and had a small increase, and the administration was initially setting for a 40% decrease. I just want to be prepared for NIH budgets being down 20% for ’26 and deliver the margin expansion. For this year, fiscal year ’25, we expect the US academic government to be down 20% to 25%. That’s what we said last quarter already. So this, is the fiscal, this is our calendar year ’25, and that plays out about as we said so far, it’s down about minus 15% for the first half of the year.
And so by for the full year ’25 calendar year for us cadet[Indecipherable] US academia being down 20% to 25% seems like a realistic expectation. I don’t think it’s going to be worse than that. So funding is still flowing, and then for next year, as I said, I have no predictions. I’ve stopped making predictions there. I just want to be prepared for a 20% fiscal year ’26, government fiscal year ’26 NIH budget reduction. And if it’s better than that, I’ll be delighted. And we can, more can flow through our bottom, top and bottom line, in ’26.
Daniel Brennan
Great.
Frank H. Laukien
I think customers will spend in a heartbeat if they get grants. They can’t give the grants to the general, to the universities who are, struggling otherwise financially when they get specific grants, I think they’ll order in a heartbeat.
Daniel Brennan
That’s great. Thank you. And then maybe just one on the backlog and kind of bookings. Obviously, the book to bill has been weak now for I think four or so quarters. Can you just remind us in a given year what percent of your revenue growth comes from that backlog? What’s book and bill? I think there’s been some concern like could, broker even grow in ’26, just given you’ve had four consecutive quarters of week book to bills. But obviously bookings turn up and that would support growth. So can you just walk through a little bit of, kind of the visibility and the mix between conversion and kind of new turns.
Thank you.
Frank H. Laukien
Yeah, I mean, we now have aftermarket consumable service software of more than a $1 billion. So, it’s become a significant, it’s become a meaningful part of Bruker that of course, tends to flow, turn into revenue pretty much in the quarter when it gets, ordered. We also have smaller benchtop and sub $100,000 scientific instruments that very often achieve revenue in the same quarter within two or three months after they get ordered. So, some things, maybe there’s a some part of our revenue that turns more quickly, and then there’s of course some revenue where sometimes order to revenue can be 18 to 30 months or so.
So, we have that mix. So, our backlog is still elevated at six and a half months. This is the BS; this is the backlog of six and a half months. We expect that eventually to level out with a new mix as we have more consumables, more ELITech and things like that. More now we added some metabolomics consumables and some therapeutic drug monitoring consumables with some recent smaller acquisitions. So, we expect that six and a half months eventually to go down to about five months of backlog as a new normalized level. So we still have some cushion from backlog for the second half and for next year. But of course, we also need the bookings.
Daniel Brennan
Got it. Great. Thank you, Frank.
Operator
Thank you. Next question comes from the line of Patrick Donnelly, Citi. Please go ahead.
Patrick Donnelly
Hey guys, thanks for taking the questions. Frank or Gerald.
Gerald N. Herman
Hi Patrick.
Patrick Donnelly
I want to touch a little more on just the second half cadence. The 4Q step up still seems pretty steep. I mean, I think if you’re talking about 3Q looking at similar earnings, call it $0.32, it implies around $0.90 in 4Q, and again the revenue kind of step up with that. So just want to talk through the visibility into that 4Q number. It did sound like things were maybe getting a little more challenging at the end of the quarter. So, can you just talk about the visibility and confidence in that 4Q ramp?
Gerald N. Herman
Yeah, Patrick, it’s Gerald. I’ll take this. And Frank may want to add some more color. So just generally in terms of the, the scaling or graduating this into the fourth quarter, as you already know, our fourth quarter is really not a quarter. It tends to be more like a 30% of the number on an annualized basis. So, we do see a more significant ramp historically, and we have no reason to believe that that will not happen for 2025. And fundamentally I would also say, as I mentioned earlier in the comment to Subbu, we do have some cost savings that are going to get kicked into the fourth quarter that’s already planned and scheduled.
So, we’re pretty confident that you’re going to see a pretty significant lift in the operating margin and EPS performance for the fourth quarter. I think your math as usual, Patrick, is not terribly far off what our estimates are for the fourth quarter. So that’s kind of the, I’d say at a high level, our expectations are still some flat to down, revenue growth for the fourth quarter given market conditions, but improved profitability given the scale we get, as you already know, we get significant, leverage down to the bottom line on higher volume and the expectation is,
Frank H. Laukien
And this is just typical for us,
Gerald N. Herman
Yeah.
Frank H. Laukien
We tend to have pretty huge fourth quarters and every year we do and then often it’s even better than what we had anticipated. So, our fourth quarter pattern. So, we feel comfortable with the cadence.
Two more questions perhaps?
Patrick Donnelly
Yeah, yeah, sure.
Operator
Thank you. Next question comes from the line of Josh Waldman with Cleveland Research. Please go ahead.
Joshua Waldman
Morning guys. Thanks for taking my questions. Two for you. First, Frank, on the academic side, I think Gerald mentioned softer academic orders in most geographies. I wondered if you could comment on what you’re seeing in Europe. Is that market getting worse on the academic side and I guess more broadly, are there other geographies that step down unexpectedly? And then within the US academic environments, wondered if you could talk on the timing of potential revenue recovery. I mean, how long would it take to kind of work through the softer order book to flush this kind of like through the revenue side.
Frank H. Laukien
Or on the academic
Joshua Waldman
When on the. Academic side, when would you need to see a recovery in orders for that to show up in revenue and does it hit points?
Frank H. Laukien
Yeah. So clearly on the academic orders, the two bad guys are the US and China. For us, that’s where we have the most pronounced reduction in orders in the first half from the academic and academic medical research market. Europe, rest of APAC that just fluctuates up and down. There’s really no trend that’s discernible there. Q2 wasn’t strong, but I think that’s. If you look at it then over several quarters then it’s the US and China that I think are crucial. In the academic side, how long would. Well, obviously with less backlog we can do faster deliveries.
So, there are some products, ultra-high field NMR or very large stem microscopes or so that indeed sometimes take one or two years to deliver. But it’s a ’26 story. Even if orders came in in August, September and I don’t expect a lot of, I don’t expect that necessarily there could be some US orders that come through before the end of our fiscal year at the end of September, there’s a possibility of that, by now these are higher end systems. This will go into ’26. I don’t think there is any step up to be expected in ’25 anymore.
Joshua Waldman
Got it. And then Frank, on tariffs, I’m curious if you think you’re seeing tariffs negatively impact your competitive position and new opportunities at all. I’m thinking on the price or surcharge front, does it seem like customers are either holding off on placing orders because of price increases or surcharges or maybe even looking to other suppliers?
Frank H. Laukien
Yeah. if I look at each of our market segments, in spatial biology, main competitor is US, were US NMR, main competitor is Japanese where European Union ended up at a level playing field with the new tariffs. In mass spec a lot of the other mass spec companies manufacture in Europe, also in Germany, in Singapore, etc. So, and you go down the line, X-Ray, etc. It turns out that there hasn’t been a significant distortion competitively from the new pitch[Phonetic], from the new tariff picture. Again, we’re still observing Switzerland. That’s obviously somewhat of a pathological number at the moment.
We expect that to be less and maybe be more in line with what we have in Europe or from Malaysia. And either way in NMR and MRI we have the most flexibility to say okay, I mean almost immediately could turn on a dime and say any of these systems for the US market come from Germany or from France where we have large factories. So, there we could move very, very quickly if come August 7th, that Swiss number was still extraordinarily high for a while. So, the short answer would have been we think there is no competitive shifts based on that. It’s just a cost headwind.
All right. We’ll have one more question and then we’ll wrap things up for today.
Operator
Thank you. Next question comes from the line of Rachel Vatnsdal with J P Morgan. Please go ahead.
Marta Zaremba
Hello, this is Marta Zaremba on Rachel from J P Morgan. Thanks for taking the question. I just wanted to clarify your comments on tariffs just now. What are you assuming in your guide for Swiss tariffs at this point? Are you assuming 39% or something lower? And then perhaps more broadly, if you could give more color on your updated tariff assumptions given the changes in Swiss tariffs but also European tariffs. Thank you.
Frank H. Laukien
Yeah. For the European Union and Israel we’re at 15% where Malaysia we’re at 19%. Switzerland we’re presently modeling at 15%. In a worst-case scenario that we didn’t shift supply chain and it was 39%. That could be an additional $10 million hit that we presently don’t have here. But we think that’s just not going to happen. A, we think the number will be lower and B, in that case we will just not ship from Switzerland. We will build our NMRs, and which is primarily an NMR story, and make them in Germany or France. So that’s why I think our modeling is appropriate.
Marta Zaremba
Thank you.
Operator
Thank you. This concludes our question-and-answer session. I would like to turn the conference back over to Joe Kostka for closing remarks.
Joe Kostka
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 any follow up. Have a good day.
Operator
[Operator Closing Remarks]