Financial Data and Key Metrics Changes - Sales grew 9% as reported and 8% in constant currency, with non-GAAP earnings per share at $2.95, up 12% year on year [9][10][21] - GAAP EPS was $2.47, with gross margin at 58.3% and adjusted operating margin at 29.1% [21][24] - Free cash flow was $159 million after funding $23 million of capital expenditures, with a net debt position of $1.1 billion at the end of the quarter [22][24] Business Line Data and Key Metrics Changes - Instruments grew mid-single digits, led by high single-digit growth in the LC and mass spec portfolio [9][10] - Recurring revenue grew 11%, driven by 9% service growth and double-digit chemistry growth [10][21] - Chemistry benefited from approximately $8 million of sales pull forward related to tariff dynamics, with overall constant currency growth rate at 7% and chemistry up 10% [11][21] Market Data and Key Metrics Changes - By end market, pharma grew low double digits, industrial grew 6%, and academic and government declined low single digits [11][17] - In the Americas, growth was partially offset by weakness in the TA division, particularly in macro-sensitive polymer and materials testing applications [10][11] - China grew high single digits, with strong performance across all end markets, particularly in pharma and CDMO segments [20][76] Company Strategy and Development Direction - The company is focused on three strategic pillars: commercial execution, revitalizing innovation, and capturing long-term growth in high-growth adjacencies [12][15] - The pending combination with BD's biosciences and diagnostic solutions business is expected to accelerate entry into high-growth adjacencies and enhance the company's growth trajectory [27][28] - The company is raising its full-year 2025 constant currency sales growth guidance to 5.5% to 7.5% and non-GAAP EPS guidance to $12.95 to $13.05 [16][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong momentum of the core business and the positive impact of the upcoming combination with BD [27][28] - The company anticipates a gradual return to growth for BD's biosciences and diagnostics solutions business, with expected growth rates improving in the coming years [31][32] - Management remains cautious about the impact of tariffs and macroeconomic conditions on certain segments, particularly in the TA division [10][71] Other Important Information - The company expects to deliver $345 million in adjusted EBITDA synergies by year five from the combination with BD, with $200 million in cost synergies and $290 million in revenue synergies [34][39] - The microbiology business from BD is seen as a strategic fit with significant value creation opportunities, particularly in infectious disease diagnostics [46][49] Q&A Session Summary Question: Can you provide an update on the replacement cycle in LC and competitive dynamics? - Management noted that the LCMS segment continues to grow high single digits, with strong replacement activity among large pharma customers and increasing growth in the CDMO customer base [57][58] Question: What is the timeline for bringing new products to market in microbiology? - Management indicated that it would take approximately three to five years to fully realize the opportunities in microbiology, with potential product introductions in two to three years [63][64] Question: How sustainable is the growth in China? - Management reported double-digit growth in China, driven by strong performance across all end markets, and remains cautiously optimistic for the back half of the year [76][78] Question: What are the drivers behind the operating margin being lighter than expected? - Management explained that the margin impact was primarily due to geographical mix and tariff remediation costs, with expectations for progressive improvement in margins in the second half of the year [82][84] Question: Can you elaborate on the $8 million sales pull forward? - Management expressed confidence in the $8 million figure based on order patterns and customer discussions, indicating it may impact both Q3 and Q4 [85][86]

Financial Data and Key Metrics Changes - The company reported sales of $771 million, reflecting a 9% increase as reported and an 8% increase in constant currency compared to the previous year [16] - Non-GAAP earnings per share (EPS) were $2.95, up 12% year on year, while GAAP EPS was $2.47 [19] - Gross margin for the quarter was 58.3%, and adjusted operating margin was 29.1%, impacted by regional sales mix and tariff surcharges [20] Business Line Data and Key Metrics Changes - Instruments grew in mid-single digits, led by high single-digit growth in the liquid chromatography (LC) and mass spectrometry (MS) portfolio [7] - Recurring revenue grew 11%, driven by 9% service growth and double-digit chemistry growth [8] - Chemistry benefited from approximately $8 million in sales pull forward related to tariff dynamics, with overall constant currency growth rate at 7% and chemistry up 10% [10] Market Data and Key Metrics Changes - By end market, pharma grew low double digits, industrial grew 6%, and academic and government declined low single digits [9][16] - In the Americas, growth was partially offset by weakness in the TA division, particularly in macro-sensitive polymer and materials testing applications [8] - Asia grew 14%, driven by double-digit growth in China, India, and Japan, while Europe grew 8% [18] Company Strategy and Development Direction - The company is focused on three strategic pillars: commercial execution, revitalizing innovation, and capturing long-term growth in high-growth adjacencies [11] - The pending combination with BD's biosciences and diagnostic solutions business is expected to accelerate entry into high-growth adjacencies and enhance the company's growth trajectory [26] - The company raised its full-year 2025 constant currency sales growth guidance to 5.5% to 7.5% and adjusted EPS guidance to $12.95 to $13.05 [15][23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong momentum of the core business and the positive impact of the upcoming combination with BD [26] - The company anticipates a gradual return to growth for BD's biosciences and diagnostics solutions business, with expected growth rates of 4.5% in 2026 and 5% in 2027 [31] - Management acknowledged ongoing industry headwinds in pharma drug discovery and academic funding but remains optimistic about the overall growth potential [30][97] Other Important Information - The company plans to use free cash flow to pay down $100 million of debt and increase cash reserves in the second half of the year [22] - The company expects to deliver $345 million in adjusted EBITDA synergies from the combination with BD by year five, with $200 million in cost synergies and $290 million in revenue synergies [33][37] Q&A Session Summary Question: Can you provide an update on the replacement cycle in LC and competitive dynamics? - Management noted that the LCMS segment continues to grow high single digits, with strong replacement activity among large pharma customers and increasing growth in the CDMO customer base [55] Question: What is the timeline for bringing new products to market in microbiology? - Management indicated that it would take approximately three to five years to fully realize the opportunities in microbiology, with potential product introductions in two to three years [61] Question: How do you expect the margin to evolve in the fourth quarter? - Management expects progressive improvement in margins as volume leverage kicks in, with specific impacts from geographical mix and tariff remediation costs [80] Question: Can you elaborate on the $8 million sales pull forward? - Management expressed confidence in the $8 million figure based on order patterns and discussions with customers, indicating it may impact both Q3 and Q4 [84] Question: What is the outlook for the drug discovery business? - Management stated that the drug discovery segment remains slow, with no significant changes expected in the replacement cycle for this area [97]