Good morning everyone, and welcome to Bruker’s first quarter 2022 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today’s presentation, there will be an opportunity to ask questions. To ask a question, you may press star and then one. To withdraw your questions, you may press star and two. Please also note that today’s event is being recorded. At this time, I’d like to turn the conference call over to Justin Ward, Senior Director of Investor Relations and Corporate Development. Sir, please go ahead.
Thank you, and good morning. I would like to welcome everyone to Bruker Corporation's first quarter 2022 earnings conference call. My name is Justin Ward, and I am Bruker's Senior Director of Investor Relations and Corporate Development.
Joining me on today's call are Frank Laukien, our President and CEO, and Gerald Herman, our Executive Vice President and CFO. 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 financial and operational performance of the company that involve risks and uncertainties, including those related to geopolitical risks, the COVID-19 pandemic, and supply chain logistics and inflation challenges. 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, 2021, 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 to our outlook as of today, May 4, 2022.
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 second quarter 2022 financial results expected in early August 2022. 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 first quarter in more detail and share our updated fiscal year 2022 financial outlook. Now, I'd like to turn the call over to Bruker's CEO, Frank Laukien.
Thanks, Justin. Good morning, everyone, and thank you for joining us on today's first quarter 2022 earnings call. If you go to slide 4, you can see that Bruker's solid 10.5% organic revenue growth in the first quarter and even stronger organic bookings growth represent a good performance in light of challenges with the war in Ukraine and lockdowns in China. As a reminder, we do not have any manufacturing operations in China. Excellent demand for our differentiated high-value scientific instruments and life science solutions resulted in continued strong momentum in organic bookings and revenue growth despite a supply chain and logistics drag. For the first quarter of 2022, our Bruker Scientific Instruments or BSI segment bookings were up strongly with all four Bruker groups with double-digit percentage organic bookings growth and our BSI book-to-bill ratio greater than 1.1.
Bruker's Q1 2022 revenues increased 7.3% year-over-year to $595 million, with a currency headwind of -4.2%. On an organic basis, revenues increased 10.5%, which included 9.5% organic growth in BSI and 21% at BEST, net of intercompany eliminations. While growth from acquisitions added about 1%. This implies constant exchange rate growth of 11.5% year-over-year. Our first quarter 2022 non-GAAP gross margin increased 140 basis points year-over-year to 52.7%, while non-GAAP operating margin was 19.5%, an increase of 110 basis points year-over-year.
Gross margin expansion was partially offset by planned investments in commercial and R&D capabilities, as well as by supply chain logistics and inflation headwinds, which more than offset currency tailwinds. In the first quarter of 2022, Bruker reported GAAP diluted EPS of $0.41 compared to $0.37 reported in Q1 of 2021. On a non-GAAP basis, Q1 2022 diluted EPS was $0.49, an increase of 11.4% from $0.44 in the first quarter of 2021. Our trailing twelve months return on invested capital was 27.6%, which puts us among the leaders in our industry. We believe this is the result of our strong Bruker management process and our focus on disciplined entrepreneurialism and organic growth, supplemented by selected bolt-on and technology acquisitions.
In summary, the first quarter of 2022 was a quarter with broad-based demand strength across virtually all Bruker businesses, with double-digit organic bookings growth, as well as further investments in Project Accelerate 2.0, plus investments in our recent acquisitions in additional proteomics, biopharma, and applied markets capabilities in the first quarter as well as in April. Please turn to slides 5 and 6 now, where we highlight the first quarter 2022 performance of our three scientific instruments groups and of our BEST segment, all on a constant currency and year-over-year basis. In the first quarter of 2022, the BioSpin Group revenue was $158 million and grew in the low single digits%. BioSpin faced a difficult comparison as there were 2 GHz-class NMRs in the first quarter of 2021, with none in the first quarter of 2022.
We continue to expect 4 gigahertz class NMRs in revenue in 2022, with a 1.2 gigahertz system just accepted in April, so this will be in Q2 revenue. BioSpin saw robust growth in revenues in our preclinical imaging business, and BioSpin achieved double-digit bookings growth. BioSpin innovations of note include our compact single-story Ascend Evo 1.0 gigahertz magnet to give more structural biology and drug discovery labs access to gigahertz technology. On the other end of the spectrum, if you like, we also launched and advanced new capabilities on our benchtop Fourier 80 FTNMR system to enable broader applications, particularly in pharmaceutical and applied markets analysis. Moving on to CALID. For the first quarter of 2022, the CALID Group revenue of $203 million increased in the low double-digit % with strong growth in microbiology and molecular spectroscopy.
Our timsTOF platform continued its adoption in 4D-Proteomics, epiproteomics, and multi-omics. In Q2, we announced key further capability enhancements for the timsTOF platform and had excellent year-over-year bookings growth. Microbiology revenue delivered strong growth driven by demand for MALDI Biotyper systems and consumables. This was coupled with a gradual recovery of our tuberculosis molecular diagnostics products platform. We are excited about the launch of our MIDplex PCR liquid array next-generation syndromic panels at the ECCMID 2022 conference in April, with more of these liquid array panels and assays to come. Please turn to slide six now. First quarter 2022 Bruker Nano revenue was $179 million and grew in the high teens%. Nano's academic, industrial, and semiconductor metrology markets all remained strong.
Revenue for our Nano advanced X-ray and Nano surfaces tools delivered strongly, strong growth in the quarter, and Nano's microelectronics and semicon metrology tools performed very well with strong bookings and backlog. Our life science fluorescence microscopy revenue was up sharply on product innovation and strong research demand. We note that our Canopy subsidiary launched the next-generation CellScape ChipCytometry instrument for high-throughput in situ spatial biology with subcellular resolution and outstanding quantitation with a 10^8 dynamic range. Very unique. Finally, first quarter BEST revenues grew in the high twenties% net of intercompany eliminations, driven by share gains and strong superconductor demand by our MRI OEM customers. BEST demand appears very healthy, but we experienced supply chain challenges.
Moving to slide seven and eight, we continue to make good progress with our Project Accelerate 2.0 initiatives, which in 2021 represented 54% of total revenues. On slide seven, we highlight our very recent introduction of the compact single-story ultra-high field NMR magnet called the Ascend Evo 1.0 GHz. It's really quite a technological marvel that, being able to put that into a single-story lab will provide many more structural biology and drug discovery researchers access to these enabling functional structural biology capabilities of gigahertz NMR. This is no longer for national labs only. But really for PI and co-PI grants and as well as for biopharma customers.
This is a result of the key hybrid technologies we've developed at 1.2 gigahertz for high temperature superconductors operating, in this case, at 4.2 Kelvin, which is convenient and also reduces helium consumption by a factor of three. That's very, very significant and very timely. Very exciting new technology. Moving on to slide 8, where we talk about Project Accelerate 2.0, our nanotechnology initiative, and here in particular, semiconductor metrology and microelectronics. I'm certainly not going to go through all the bullets on that slide. I just wanted to remind you this business, including display, package, data storage, and semiconductor metrology, was about 7% of our BSI segment revenues in 2021, and it was up in the high teens year-over-year in 2021 and up in the low twenties year-over-year in Q1 of 2022.
Strong growth business tends to have very good margins, and here are two examples. One is for next-generation chip manufacturing using X-ray diffraction tools that are quite unique. On the right, something more on 3D chips that require advanced packaging quality control, where we have very unique tools that you probably don't see from us every day, but that are absolutely crucial and enabling for a lot of these new packaging technologies that affect so much of our lives. All right, enough technology. After that outlook, in summary, Bruker continues to experience strong demand for our differentiated instruments and solutions across our portfolio.
Our Project Accelerate 2.0 high-growth, high-margin initiatives perform well, and we reiterate our intention to ramp investments for accelerated growth, especially, for example, in proteomics, in spatial biology, in biopharma and applied, as well as in nanotechnology and semicon metrology. Really firing on many cylinders or all cylinders here. I'm pleased with how well our teams have executed in a challenging supply chain and logistics environment. We benefit from being able to manage a high backlog to navigate that environment very well. As we move through fiscal year 2022, our high backlog gives us good visibility on growth. Let me now turn the call over to our Chief Financial Officer, Gerald, who will review Bruker's Q1 financial performance and then raised fiscal year 2022 outlook in more detail. Gerald.
Thank you, Frank, and thank you everyone for joining us today. I'm pleased to provide more detail on Bruker's first quarter 2022 financial performance, starting on slide 10. In the first quarter of 2022, Bruker's reported revenue increased 7.3% to approximately $595 million, which reflects an organic revenue increase of 10.5% year-over-year. We reported GAAP EPS of $0.41 per share, compared to $0.37 in the first quarter of 2021. On a non-GAAP basis, Q1 2022 EPS was $0.49 per share, an increase of 11.4% from $0.44 in the first quarter of 2021. Our Q1 2022 non-GAAP operating income grew 13.3%, and our non-GAAP operating margin increased 110 basis points year-over-year to 19.5% for the reasons Frank's already reviewed.
We finished the first quarter with cash equivalents, and short-term investments of approximately $916 million. During the quarter, we used cash to ramp selected Project Accelerate 2.0 investments, fund capital expenditures, complete several bolt-on technology acquisitions in proteomics, repay $105 million tranche of our 2012 debt, and fund share repurchases. You may recall that in May 2021, our board approved a two-year share repurchase authorization up to $500 million through May 2023. In the first quarter of 2022, we repurchased approximately 1.6 million shares for about $106 million. As a reminder, in fiscal year 2021, we repurchased 2.1 million shares for approximately $153 million.
We generated $77.8 million of operating cash flow in the first quarter of 2022, partially offset by CapEx investments, resulting in $58.8 million of free cash flow in the first quarter of 2022. This represents a $14.5 million decline from the first quarter of 2021, mostly due to the timing of tax and other payments. Turning to slide 11, shows the revenue bridge for the first quarter of 2022, as discussed earlier. Compared to the first quarter of 2021, BioSpin's first quarter 2022 organic revenue grew in the low single-digit % against a difficult comparison due to European gigahertz class NMR mix headwinds. Nano organic revenue grew in the high teens %, resulting from the strength of Nano's academic, industrial research, and semiconductor businesses.
CALID organic revenue grew high single-digit % with strong performance coming from the MALDI Biotyper platform. First quarter 2022 BSI Systems revenue increased in the high single-digit range organically, while our BSI aftermarket revenue grew in the low teens organically compared to the first quarter of 2021. Geographically and on an organic basis in the first quarter of 2022, our North American revenue grew in the low 30% range. Asia-Pacific grew in the high single-digit %, while European revenue declined in the low single digits % growth all year-over-year. Our rest of the world first quarter 2022 revenue was significantly higher in the low 40% range. Slide 12 shows our first quarter 2022 P&L performance on a non-GAAP basis.
Non-GAAP gross margin of 52.7% increased 140 basis points from 51.3% in the first quarter of 2021, principally benefiting from operating leverage from higher volume, revenue mix as our Project Accelerate initiatives performed well, partially offset by supply chain and logistics challenges. First quarter 2022 non-GAAP operating margin of 19.5% was 110 basis points higher than the 18.4% in the first quarter of 2021, driven by gross margin expansion, partially offset by increased sales and marketing investments as a percentage of revenue to support the growth of our higher margin products.
BioSpin's operating margin expansion in the first quarter of 2022 had a year-over-year headwind from two European gigahertz class systems in the first quarter of 2021 revenue, which was offset by a gain on the sale of BioSpin property. Given the headwind from lockdowns in China, we expect that our second quarter 2022 operating expense ramp for Bruker will moderately outpace our revenue ramp and result in operating margins declining slightly sequentially from the first quarter of 2022 before expanding sequentially in the second half of fiscal year 2022 versus the first half. With that, we expect the second quarter 2022 non-GAAP EPS to be similar to Q2 2021's non-GAAP EPS.
For the first quarter of 2022, our non-GAAP effective tax rate was 32.7% compared to 31.1% in the first quarter of 2021, primarily due to certain unfavorable discrete tax items. Weighted average diluted shares outstanding in the first quarter of 2022 were 161.4 million, a reduction of approximately 1.8 million shares or 1.2% from the first quarter of 2021, resulting from share repurchases over the past twelve months. Finally, first quarter 2022 non-GAAP EPS of $0.49 was up 11.4% compared to the first quarter of 2021.
Our cash conversion cycle at the end of the first quarter of 2022 was 253 days, an increase of 11 days compared to the first quarter of 2021, resulting primarily from late quarter shipments and receivables timing. Turning now to slide 15, given the broad-based strength in revenue and bookings growth in the first quarter of 2022 and our record backlog, we're increasing our guidance for organic revenue growth for the year. Our updated outlook for fiscal year 2022 includes organic revenue growth of 7%-9% year-over-year, an increase of 1% from our prior guidance. We estimate a foreign currency headwind of about 3.5%, stronger than our 2% prior foreign exchange headwind guidance. We expect acquisitions to contribute about 1.5% to growth, up from the prior guidance of 1%.
This is expected to lead to reported revenue growth in a range of 5%-7%, consistent with our prior guidance. The supply chain logistics and inflation environments remain volatile and challenging, and we are maintaining our guidance of 30-60 basis points of operating margin expansion in 2022 from the 19.4% level we delivered in 2021. On the bottom line, we reiterate our non-GAAP EPS estimated range of $2.29-$2.33 for fiscal year 2022, which would represent non-GAAP EPS growth of 9%-11% compared to 2021. We now project a non-GAAP tax rate of approximately 29.5% for fiscal year 2022. Other guidance assumptions are listed on the slide. Our fiscal year 2022 ranges have been updated for the foreign currency rates as of March 31, 2022.
For the second quarter of 2022, our outlook is for organic revenue growth in the mid- to high-single-digits year-over-year, subject of course to further COVID-related lockdowns in China or other geopolitical risks which could negatively impact that growth. To wrap up, Bruker delivered strong bookings, backlog, and solid organic revenue growth in the first quarter as the teams delivered remarkable performance in a very challenging environment. Demand momentum is broad-based across many of our businesses, giving us confidence in our ability to deliver another solid financial performance in 2022. With that, I'd like to turn the call over to Justin to start the Q&A session. Thank you very much.
Thank you, Gerald. I'd now like to turn the call over to the operator to begin the Q&A portion of the call.
As a reminder, to allow everyone time for questions, please, we ask that you limit yourself to one question and one follow-up. Operator, we're ready for the Q&A portion.
Ladies and gentlemen, at this time, if you would like to ask a question, once again, you may press star and then one to join the question queue. If you are using a speaker phone, we do ask you please pick up the handset prior to pressing the keys to ensure the best sound quality. To withdraw your questions, you may press star and two. Again, that is star and then one to join the question queue.
Our first question comes from Puneet Souda from SVB Securities. Please go ahead with your question.
Yeah, hi, Frank. Thanks for taking the question. First of all, congrats on a strong quarter here. Just first one is really on pricing. I mean, how much contribution are you seeing from pricing in the quarter on instruments? You know, what's baked into the expectations for the guide for the full year?
Well, I'll take that, if you don't mind, Puneet. It's Gerald.
Yeah.
You know, just fundamentally, one of the challenges we have, of course, from a price realization perspective is that we have quite a bit of backlog, and we're working through that backlog. So I do think what we see is not so much price realization in the first quarter, although we are expecting to see more in the latter half of the year. As you likely know, the cycle times as we work through backlog into actual product revenue takes us usually a quarter or two more significantly than in the NMR side of our business. So I'd say we're not seeing too much price realization in the first quarter, pretty modest, but I would expect to see more as we move through the rest of the year.
Okay. Got it. On the strong book-to-bill that you're seeing here, maybe could you just elaborate how much of that is NMR, how much of the new backlog that's building is more of NMR and timsTOF and other key instruments? Just trying to understand the mix there. For the 4 UHF gigahertz magnet, I think you mentioned 1 coming next quarter, but just wanted to make sure we have the cadence for the full year.
Puneet, I'll take that one. It's Frank. Thank you. So, the strength in orders is very broad-based. It is particularly strong in timsTOF. It has been quite strong in BioSpin and NMR. It has been quite strong in nanotechnology. But it's almost not fair to single something out because it's really fairly broad-based. Sure, some are growing even faster, but it's really been strong book-to-bill of 1.1 in the BSI segment, and so faster organic bookings growth and even organic revenue growth throughout Q1, continuing our momentum. On the gigahertz question, yeah, there was none in Q1 2022.
W e expect there to be one, the one we just accepted in near Munich in April already and as revenue in the second quarter. Therefore, the balance is three more in the second half of the year, and they'll probably be spread over more than one quarter, but we don't know the exact cadence of that yet.
Okay. Got it.
I hope that answers most of your questions.
Yeah, I really appreciate it. Just a quick one, if I could, ask on. Really great to see the you know the record revenues in semiconductor metrology. Frank, how much of this is coming from sort of new factories being built out and how should we expect that this to you know sort of trend through the years as these new fabs and are coming on board you know across the world? Thank you.
Yeah. That's a good question. We get asked that frequently. I'm almost glad you asked. Actually, probably just close to none of that is for new fabs that, you know, expand the geopolitical footprint away from, you know, Taiwan and most of APAC to much more semiconductor capability that Europe wants to have in Europe and the U.S. wants to have in the U.S., right? By the way, also Japan wants to have in Japan. That's an additional driver. Those are all more long-term trends. This could be more, I don't know, 2024, 2025, 2026 business. That's a very good thing because, you know, we think for 2022, 2023, just on the sheer demand from us all being on Zooms and artificial intelligence, and I don't know, maybe Bitcoin is a little less fashionable.
All the many other trends right now are still driving very strong demand. In fact, you know, the industry is behind demand for 2022, and we probably think throughout 2023. As we see it may actually line up very nicely with maybe the geopolitical investments in North America, Japan, and Europe playing a bigger role, maybe in, you know, in revenue in 2024, 2025, 2026. It's actually very strong long-term picture in nanotechnology as far as we can tell.
Great. Thanks. Congrats again.
Thank you.
Thank you.
Our next question comes from Derik De Bruin from Bank of America. Please go ahead with your question.
Hi. Thank you. Good morning. This is Peter on for Derik De Bruin. Could you quantify any impact you saw in China across the first quarter and any headwinds in the second quarter? I guess, could you discuss the extent to which you expect to recover that demand across the balance of the year?
I'll take that if you don't mind, Peter. It's Gerald. I mean, generally speaking, we've seen quite remarkable demand in China across both the bookings performance as well as in the revenue line. This has continued for quite some time, frankly. You know, mostly, not absolutely, but mostly consistently quarter by quarter. I would say the first quarter is really no exception here in 2022. We are clearly seeing some dampening relative to the, you know, the lockdowns that are going on currently. I would say this is now speaking with respect to the second quarter as opposed to the first. I think the concern of course is that if this broadens, that puts further risk into the overall execution of our revenue.
I think the way we view it is in a very strong performance from a bookings perspective in China across almost all the individual end markets, and that's very encouraging for us because now it's really about execution and our ability to do that.
With that we think we'll have mid-single to mid-to-high single digit organic revenue growth year-over-year in Q2.
Q2. Yeah.
Now if there is a massive acceleration and tightening of lockdowns, that would present additional risk. You know, we obviously assumed what sort of the levels that we're seeing today, and, you know, have been a little bit more cautious on Q2 accordingly in our color on Q2. We do think that we can catch up for the remainder of the year. We don't see anything.
Yeah. Exactly.
That at the moment that would push that into next year. You know, I think it's a quarterly cadence question and we're a bit more conservative on Q2 accordingly.
Appreciate that. I guess could you give us maybe a little bit more color on the dynamics flowing through the rest of P&L? I mean, given the strength you're seeing in the top line and the decision to maintain margin EPS guidance, if you could maybe quantify or parse out, you know, supply chain, foreign exchange, impact and so on to the OP margin if you could.
Yeah, it's Gerald again. I'll take that. So just generally on the guidance, I mean we have a number of moving factors of course, and we're trying to move, you know, we're trying to move up and consider the ups and downs that go along with that. I won't go through all the detail, but we do have that information available, and I think you can go through that in more detail with Justin if you'd like. I mean, I guess just generally what I would say is we're pretty comfortable with the guidance that we've laid out. We baked in a number of pluses and minuses, including some of the supply chain risks that you've just heard about.
We've also considered some of the strength that we see in our bookings performance into the overall picture, including at the operating margin line. I think it's pretty clear to us at this stage that our guidance reflects what we understand right now.
Very good. Thank you.
You're welcome.
Our next question comes from Brandon Couillard from Jefferies. Please go ahead with your question.
Hey, thanks. Good morning. Frank, love to get your view on kind of your assessment of kind of the global helium supply situation right now, and whether you think that's impacting NMR installation timing or perhaps orders or even kind of your own internal supply in terms of your costs.
Yeah. Good question, Brandon. Cost has gone up and you know, there are some cases where customers at universities are under allocation. They tend to turn off the kind of voluntary or delay the voluntary, you know, large helium guzzler experiments in physics first and delay those by a quarter or two. That's anecdotal, what we heard at the ENC. The regularly scheduled NMRs or MRIs in hospitals seem to be not generally affected. You know, could always be an exception. Our internal investments in CapEx in the last two years now seem very well timed for our factories in Switzerland, in France, and our superconducting factory outside of Frankfurt in Hanau as well. We've made considerable additional CapEx investments in helium reliquefaction investments.
Our factories are in really, really good shape and we just anticipated well. You see some new developments like that single story gigahertz magnet that we just did a technology introduction that takes 3 times less liquid helium. Those are. We also, I didn't highlight it on the call, we also just introduced at the end of April a Helio Smart Recovery solution. Customers if they choose to do that, and more of them do it, can capture all of the liquid helium that boils off, as we say in the industry, from their superconducting magnets and compress and pressurize it, and then send it out somewhere for reliquefication, either at their own university or at a regional site or to one of their suppliers.
You know, I think it's difficult, it's manageable, and it's more expensive, so there'll be more of that circular helium economy that we're strongly supporting with our developments and that fortunately we have invested in internally, so that our factory and final test situation is in very good shape. I think that's the answer. Yeah. It's manageable so far, but, you know, we're obviously very proactive with it for both investments as well as in terms of new capabilities for our customers and new services.
Okay, great. Now, I think you said Europe overall is down low single digits. Is that all due to the NMR installation comp from last year and-
Yeah.
-fact that out-
Oh, exactly.
underlying the
Good catch. I mean, Europe, there is a bit, you know, there. I'd say Europe is a little bit weaker among the 3 major geographies. That's a little bit slower right now than the others. In addition, in Q1, we simply had, you know, 2 gigahertz class systems, so north of $20 million of European revenue that we had in Q1 of 2021 that we don't have in Q1 of 2022. Don't pay too much attention to that piece. Yeah, Europe right now, a year ago, it was about the strongest, and I'd say right now it's among the major geographies. It's weaker than North America or most of APAC. Obviously, APAC, there's country to country differences.
Great. Thanks.
Our next question comes from Josh Waldman from Cleveland Research. Please go ahead with your question.
Good morning. Thanks for taking my questions. One for Gerald and then one for Frank. Gerald, could you spend a bit more time kind of talking through the cost-price dynamic you're seeing? I mean, it seems like margins were stronger than maybe you anticipated here in the quarter. It doesn't sound like it was price. I guess, was it more a reflection of Bruker controlling supply chain costs? And then, yeah, I forget if you mentioned, but are you still expecting kind of a 500-600 basis point step-up in the second half versus the first with respect to op margins?
Yeah. Let's just maybe I'll start with your last part of your question first. Just to clarify, we initially laid out around a 400 basis points change between first half and second half. The expectation is that we'll significantly outperform from an operating margin perspective in the second half. Just to put that back to those numbers. Just relatively speaking, I mean, we did not see much price realization in the first quarter, as I mentioned earlier. A lot of this has to do with our, I think, outstanding work that was done by our procurement and supply chain teams to manage through very challenging conditions. This is true for both, you know, materials costs, as well as logistics, air freight costs.
There's a significant number of headwinds related to the supply chain side, and I think our teams just did an outstanding job of navigating through that. In addition, you know, we did see some other elements in the mix, partly due to our Project Accelerate 2.0 initiatives, which I think is helping to pull that gross margin expansion to another level.
Yeah, I think that's really the key point. That's the fundamental trend at Bruker that you've been seeing. We'll continue to see that. We just, you know, have more and more higher gross margin systems and solutions and services that have been ramping our gross margin, and that trend continues despite some inflation headwinds right now.
Of course.
That's the fundamental driver and that at least in Q1 was stronger than even the noise from inflation and logistics spikes that we do see and try to manage around.
Yeah. Exactly.
Yeah.
So-
Yeah.
I think that's kind of the storyline. We expect to see some further cost issues in the second quarter and our ramp of some of our Project Accelerate activities occurring in the second quarter as well. You know, that's why we're a little more cautious, I'd say, on the second quarter operating margin, but expect it to re-accelerate in the second half of the year.
Got it. Okay. Then Frank, can you give an update on what you're seeing from university and government accounts, specifically in the U.S. and Europe? Yeah, I think you've previously mentioned kind of strong orders from these accounts, you know, over the last couple of quarters. I guess, how did academic and government contribute to the double-digit bookings growth here in the quarter? You know, when would you start to see kind of revenue flow through?
Well, I mean, we're beginning to see that, right? It's obviously not a short wave. It's just a long-term trend, and we're seeing that. We see how we saw that in Europe. We now see that in the US. See that in China, and you know, and some other geographies. We're also delightfully just our biopharma business, both NMR and Mass Spec is just becoming stronger and stronger. We've added an important additional capability inorganically with our Optimal acquisition in the UK on April first. That'll add further to how we integrate ours and other vendors of, you know, tools for biopharma process analytical technologies, PAT, but also, you know, upfront on the drug discovery.
I mean, we sell an awful lot of timsTOF into CROs, both metabolomics and proteomics. We sell a lot of timsTOF into even timsTOF single cell proteomics research systems into drug discovery, into very large pharma companies and newer biotech companies. NMR is doing quite well. Both of them, particularly in the U.S., but also in Europe and also in China.
China.
It's not only the academic business, the biopharma is becoming stronger and stronger for us, and it's also including some other product lines, like molecular spectroscopy for small molecule PAT. It's a good, solid picture.
Got it. Thanks for all the color.
Thank you, Josh.
Okay.
Our next question comes from Patrick Donnelly from Citi. Please go ahead with your question.
Questions. Maybe one more on the supply chain. Obviously, and Gerald, you talked a lot about the cost side of that. I'm just curious, you know, what you're seeing on that front. It seems like it was a little more disruptive last quarter. Is it something, you know, that's plateaued, it's not getting better, not getting worse, and you guys are just kind of managing through it at this point, escalating? We'd love to see your perspective on what you're seeing on the supply chain side and that risk going forward in terms of what you're seeing.
Well, I wish I could tell you that it's getting better. Unfortunately, I cannot. It's been extremely challenging, and I do need to say there has been a lot of disruption, you know, in the business, and that's also true in the first quarter relative to this issue. I think what we're starting to see is just as we had disruptions in the pandemic era, we're still working our way through those in the supply chain world. I think the teams, as I said earlier, have done just an outstanding job. There's still obviously cost pressure in the system, and we're working our way through that. Expect to have, you know, hopefully more to say in the latter half of the year, but it's challenging.
I mean, don't imagine anything disastrous. It's not that we're, you know, that something stops our NMR or mass spec business for a quarter. You know, we completely acknowledge that there's product lines where for a couple of weeks we can't do very much. We have, you know, 50 other product lines where we can continue. The benefit of being a broad-based company with many good products, excellent demand, very strong backlog, are just that we can really manage through this. You know, we're like the duck on the water. We're kicking very hard under the surface.
Yes.
It's manageable. It's not getting better this year. You know, the lockdowns in China aren't helping and all of that. It's not getting better this year. It's gonna be like this all year, and maybe well into next year.
No, that's helpful, Frank. Appreciate that. Maybe just a quick one on the orders. You know, I know you talked about the book-to-bill of 1:1. It seemed like double-digit growth on orders across the segments. What was the order growth in the quarter? Was it 10%, 20%? Obviously, double digits a little bit vague, so I'm just trying to pin that down a little bit if you could. Thank you.
It varies obviously from product line to product line and group to group. That's why we didn't, you know. The 1.1, greater than 1.1 in orders for the BSI segment is correct, and they were all double digits. I know double digit is a broad range in principle, but, you know, some in the teens, some in the twenties, right? But you know, there's obviously a mix there. In every single one of them, it was double digits. Yeah. Very strong.
Thanks.
You're welcome, Patrick.
Our next question comes from Jack Meehan from Nephron. Please go ahead with your question.
Thanks. Good morning. Frank, I was curious, with the new compact 1.0 gigahertz system, what do you think this does for the addressable opportunity for gigahertz class NMR, just demand in the market? Can you talk about from a manufacturing perspective, are there any efficiencies here that could enable you to expand the number of instruments you're able to deliver in a given year?
I love your question because it's a good one. Yeah. It's not all additive to the demand, but you know, the 1.1.2 gigahertz demand often for national centers and things like that, right, like the two NMR systems that had been funded by NSF, where we got orders previously, we had announced those. I don't think it has any impact on that. Nobody's considering when they have those big labs and the ability to and they all have helium reliquefaction capabilities by now anyway. It's really not affecting that. There is a distinct pocket of demand that's small so far at 1.0 gigahertz, 'cause so far these were also these big two-story systems.
Now those that are in the pipeline will continue to order, and they're simply delighted when we told them they're getting a smaller magnet with less footprint and less consumption. I think importantly, and to your question finally, I think it really broadens the demand there. There's a lot of single PI or more typically maybe a few co-PIs at a medical school or at a major university or a Max Planck Institute or something like that, who wouldn't get one of these national centers. Oh wow, for three or four PIs, plus a bunch of their cancer research colleagues, et cetera, they can justify it. I think we got some very interested people in asking for budgets that previously hadn't considered it.
That was just all anecdotal at that conference, at an NMR conference in Orlando, where we introduced that. We will also see some high-end biopharma and pharma demand that previously wouldn't have considered one of these two-story systems. I think it's, you know, at least more than half of that 1.0 gigahertz demand, I think it's additive, but it's not all additive. On the other part, it's really a separate production and final test line, so it just completely is additive to our gate capacity. This comes out of our normal Swiss magnet production line, everything under 3 tons. I don't wanna bore you with that. That's a normal production process, not so different from, let's say, 800 megahertz systems.
Even if we got a bunch of orders for this new magnet, it would not take away from our capacity for the two-story 1.1.2 gigahertz at all, or vice versa. We essentially, you know, more than doubled our production capabilities in that sense by taking this new magnet, if and when we get orders, straight out of a very different, a much more compact and easier production line.
Great. Then two follow-ups on CALID. First, could you just tell us what the COVID sales were in the quarter? Second, recently had a press release talking about new liquid array multiplex PCR assays. Just give us some color on the positioning here versus other multiplex players and just what you're expecting, you know, in terms of a growth ramp from some of these investments.
Yeah. Thank you. In COVID testing, which as you know, we only do in Europe and Africa, and it's all PCR, not the more popular antigen testing, that's declining. Year-over-year, it was declining considerably. It then ended up not declining quite as much as we had anticipated, so it was a little stronger, I think $1 million stronger in Q1 than what we had anticipated. It is, at this point, relatively de minimis. I think it may be something like $45 million per quarter or something like that, so it's not a big number. It has been declining. We expect it to actually hang in there at that level, maybe come down a little bit further, but it's almost a non-issue for us.
From that same R&D side and factory, namely our molecular diagnostics business, that's where our tuberculosis business and other business, and that's where these new liquid array panels are coming from that indeed go into that multiplex syndromic panel market. These are not point of care. These are for the central lab or for the lab at the hospital. It's lab, but it is much more affordable in that sense. We think it's really second generation. These don't cost $100 or $150 or euro, but, you know, sort of in that $30 or euro range. So much more affordable, nice automation. The initial ones are for the very broad range of tuberculosis resistance capabilities.
We have combined a very nice panel of seven different sexually transmitted diseases that we can all do in one test. Very often, patients are tested for one or two, and because there is no capabilities, the other ones don't get tested for, but they're also out there, and they very often get overlooked. We have in the works something on gastrointestinal that may launch. When I say launch, by the way, these are always European launches initially. So you have a series of further syndromic panels that we'll be launching this year and next, and we're building that up at you know. We're democratizing that. That's such a term that's overused, but let me use it anyway.
It just makes it much more affordable and also gets into some new areas that previously hadn't been addressed by other people's syndromic panels. I think it's just gonna be big, you know, much more affordable, especially in the lower reimbursement European markets, but then later on, eventually also in the US.
Awesome. Thank you, Frank.
You're welcome, Jack. Good questions.
Our next question comes from Rachel Vatnsdal from JP Morgan. Please go ahead with your question.
Hey, thanks for taking the questions, you guys. The first question is on spatial. You had Canopy launch that next-gen chip during the quarter. Can you talk about any early feedback that you've received and really how that launch is progressing so far? Can you also give us an update on your R&D progress for Acuity?
Two more good questions. Spatial. Right. In spatial at the AACR, we launched the Canopy CellScape system. I think it was very well received, sort of with amazement because it is so much more compact and smaller than some other early systems that were shown there, early on. Very, very good microfluidics, very good optical design, retaining its very good quantitative capabilities that I think are really, really important. It doesn't get stressed enough. Initially, people just look at the pictures, and yeah, we have single-cell and subcellular resolution. Beyond pretty pictures, it has to be quantitative single cell and spatial biology. We can do that with high throughput. We can look at, you know, 10,000 or 100,000 of cells simultaneously. It's a terrific system. I think it'll be very, very competitive.
I think it's more of a second half story where it begins to ramp and go into early access sites and so on with a full commercial ramp probably next year. It's a terrific product and technology position. Importantly, Rachel, we also now have more and more panels that are pre-configured. Yes, you have the flexibility to use your own antibodies or to add your own antibody with a bit of apps work, but it really these pre-configured panels for mouse and man on immuno-oncology and neurodegenerative research. Some of them are out, some of them are in beta testing, so it's gonna be a very important part of our strategy. To Acuity, we do not expect any product launches till this year.
We're making excellent progress there also in systems and panel and software and other designs. I think really high resolution and even super resolution spatial genomics, where you really can explore the three-dimensional position and structures within the cellular nucleus of the chromosomes, interactions on a chromosome, between chromosomes, topologically associating domains, and all of these things. All these things that so far have been mostly overlooked in genomics because they couldn't be measured, and we have this simplification that there's a bunch of chromosomes which are 1D arrays of genes and regulatory elements, and it's far more complex. It's really a three-dimensional world in that nucleus. To understand fundamental cell biology, particularly cancer biology, it seems like this is awfully important. We're
Great.
Sorry, I was gonna say it seems we were disconnected on the web, but we still seem to be on here verbally. Yep, Acuity is a 2023 and beyond story. Canopy will ramp in the second half, and it's gonna be, I think it's the best system that's out there.
Great. That's helpful. Last one from me, just on M&A. You guys have done a number of more tuck-in deals, PreOmics, ProLab, PepSep. Can you just talk about how those deals have been performing relative to your expectations? How are you thinking about capacity to do deals in the back half of this year as well? Thank you.
Well, good question. Yeah, we did the Optimal acquisition on April first, sorry. That's very much for process analytical technology and lab integration and manufacturing and testing integration for biopharma. Big way for us to connect our different systems and also have a bigger footprint in biopharma. We did the IonSense acquisition, which gets into sort of more point of need analytics from forensics to food testing. That opens up a new world. A lot of these don't lead to immediate new products, so we have to work through some of these things now for you know for a while to then come out with new solutions, and you'll see more solutions this year and next that are based on these acquisitions.
You know, some of the things on PreOmics and so on and PepSep that you mentioned from Q1 in proteomics, they're available immediately. Then again, more integrated solutions will take some time. Those are. We're very, very pleased with these acquisitions. Yes, we are judicious in how we invest, so that's why we have capacity to consider additional technology or bolt-on acquisitions where they are a good fit for, you know, for this, for the later in the year, for next year. We are certainly active in looking at what could further enhance our Project Accelerate initiatives.
Great. Thank you.
Operator, maybe we have time for one more question.
Our final question today will come from Daniel Arias from Stifel. Please go ahead with your question.
Hey, thanks for getting this. This is Daniel Arias on for Dan Arias. Maybe just to start with a broader question, just drilling into Project Accelerate 2.0 initiatives. You know, guidance going up point on the beat. I was wondering what the main drivers of outperformance, specifically within Project 2.0 are that were maybe coming in ahead of the outlook laid out at your Investor Day. Maybe it's all the above, but just wanted to get some thoughts specifically across those growth drivers compared to their outlooks. Thanks.
Yeah. Thank you, Daniel. It's really pretty much across, I mean, proteomics and lipidomics, metabolomics are doing very well. Structural biology, obviously, because of the timing of gigahertz systems and so on, was weak in Q1, but you know, overall it's doing really very well. We're doing very well in nanotechnology, semiconductor metrology, microelectronics packaging, and so on. We're doing very well in microbiology, clinical microbiology. That's been growing beautifully in the U.S., but also again in Europe. A little bit less PCR COVID testing, but you know, it's never been such a big part of what we're doing. This has been more the transition year for our molecular diagnostics as we launch some of these liquid array panels. Some have been launched for Europe, some will come out later this year.
It's gonna be the bigger commercial impact will be next year and beyond, and then eventually once we launch those in the U.S. Aftermarket is doing well. Biopharma is doing incredibly well, including biopharma proteomics with timsTOF stuff, but also with NMR. We're doing well in the applied markets, from food testing to forensics. We don't do much environmental testing, but that's just. It's really very broad and also, you know, just industrial and academic strength is good, really good.
Okay. That's helpful. Kind of related to that, and maybe more of a chance to brag, but last quarter you mentioned supply chain logistics, inflation, these things could be limiting the growth potential. I mean, growth was obviously really strong in the quarter. Just wondering if you think that's still the case, and if that's expected to continue throughout the full year, maybe to 2023 like you mentioned. Just to clarify too, you know, when you're saying limiting the growth potential, it's not saying that the outlook that you laid out at the Investor Day is at all at risk. It's more so that there's just some more obvious room for upside where some of these headwinds are potentially limiting that.
That's very perceptive. I fully agree. Yeah, I'll sound like a broken record all year. Supply chain logistics, inflation, those are risks. You know, we're in a good position to manage through them, but we'll have to manage it very hard and, you know, there could always be a quarter or stumble. That's one of our risk factors. In Q2, we are a little bit more conservative because of the China lockdowns, right? We hope we've captured that in our color for Q2. For the year, we feel good. We have so many different drivers and capabilities that when, you know, we stumble in a couple of places and get slowed down, we just, you know, accelerate elsewhere.
Hopefully you won't see it as an investor and so far, you know, it didn't trip us up last year in the second half, and it certainly didn't trip us up in Q one. But thank you.
Great. Thanks.
Time worked out.
All right. Well, that brings to an end the Q&A portion of the call. I want to thank everyone for joining us today. Bruker's leadership team looks forward to meeting with you at an event or speaking with you directly during the second quarter. Please feel free to reach out to me to arrange any follow-ups. Have a great morning. Thank you.
Ladies and gentlemen, with that, we will conclude today's conference call. We thank you for joining today's presentation. You may now disconnect your lines.