Revvity, Inc. (RVTY) Earnings Call Transcript & Summary

Thanks for joining us at the Raymond James Institutional Investor Conference. I'm Andrew Cooper. I cover Life Science tools here for Raymond James and happy to have the revenue team joining us this morning. We have CFO, Max Krakowiak, here to start us off with a brief presentation, and then we'll jump into some Q&A as well. So with that, I'll hand it over to Max. Thanks.

Yes. Thanks, Andrew. Appreciate you having us here, and good morning, everyone. So for today, I'll go through kind of a brief overview of revenue as a company in terms of the transformation that we've undergone over the past decade or so as well as talking about sort of the composition of the company and then what we're really most excited about going forward here. So in terms of the transformation, as I mentioned, at Revvity, it has been a crazy past couple of years. I think when you look at it about 10 years ago, Revvity was roughly 1/3 Analytical, 1/3 Life Sciences and 1/3 Diagnostics. Our Life Sciences business at that time was mostly focused on small molecule in the preclinical research space. And then for Diagnostics, we just had our reproductive health business. And so, over the past handful of years, we built up tremendous scale in both our Life Sciences and Diagnostics business, expanding into large molecule capabilities on the Life Sciences side and then expanding our Diagnostics business into other areas outside of just reproductive health, particularly in the areas of autoimmune, allergy and emerging disease. And so then we had enough scale in both our Life Sciences and Diagnostics business to divest our Analytical business. Our Analytical business also sold off the PerkinElmer brand name as a part of the divestiture. And at that time, we then formally launched ourselves as Revvity in March of 2023. And I think as Revvity, we are incredibly excited about our portfolio. We truly believe that we are in a category of one in terms of our focus on science and innovation, our higher mix of reoccurring revenue and then also really strong financial profile with market-leading positions across the entire portfolio. And so if you look at Revvity today, it's roughly a $3 billion company. It's about 50% Life Sciences and 50% Diagnostics. Again, from a mix perspective, we do have a very high reoccurring revenue mix, roughly 85% of the portfolio. And I think when you look at our different businesses within Life Sciences, again, roughly $1.5 billion of revenue. It has two main components to it. It's our Life Science Solutions business, which consists of our -- I would say, highly innovative reagents and instrumentation portfolio, and then about 15% of it is related to our software business. Our software business, the easiest way to think about it is essentially the ERP for scientists in the research labs, particularly for pharma, biotech and academic and government customers. And then, I think when you look at, again, the themes of our Life Sciences portfolio, the key word is really around innovation and how we are a true partner to our customers, particularly in the areas of our reagents, instruments and software. I think, when you look at things from a Diagnostics perspective, it's also again, roughly $1.5 billion in revenue. It's about 60% of our immunodiagnostics business, which again, this is the autoimmune, allergy, and sort of infectious disease end markets and then about 40% of it is reproductive health. This business, I would say, is more so focused in the specialized areas of Diagnostics as you look at the markets of sort of newborn screening and autoimmune, these are somewhat, I would say, smaller markets versus your general areas of Diagnostics, but they are inherently faster-growing areas of Diagnostics that really depend on a high level of science and innovation. I think one of the beauties of the Revvity portfolio is now with our Life Sciences and Diagnostics business, we are able to really partner with our customers to cover really the full continuum of care across discovery and research all the way to cure for our patients. And I'll mention it here in a little bit. We are starting to see some meaningful traction with customers and our ability to support the full workflow. One of them in particular is around Sanofi in Type 1 diabetes, where we are partnering with them both on the discovery side and their new therapeutic, but also conversely with the companion diagnostics for their new T1D therapeutic. I think in the next couple of slides, I'm going to talk just quickly on some of the big sort of near-term priorities in terms of where we're focused on, both from an innovation standpoint, but also from an operational excellence perspective. When you look at the areas of innovation, I would say there's really four real exciting growth pillars for us as a company. First is in our software business. Right now for our software business, it's probably the largest NPI cycle we've ever had within the business. So we just recently announced in the fourth quarter, Xynthetica, which is essentially a marketplace for AI models and really linking the in-silico models of AI to the wet lab research that are sort of, I would say, legacy software business supports. And then we've also got two new offerings coming out this year. The first will be BioDesign, which is, again, taking more large molecule software work for capabilities and layering that on to what has been historically a small molecule focus for us from a software perspective. And then we're also coming out with LabGistics, which is a lab management software capability, which will provide a little bit more detail as we get closer to the launch, which will be in the second half of 2026. Some other areas of innovation that we're incredibly excited about: One, I mentioned is really around this strategic partnership with customers and linking our Life Sciences and Diagnostics business. I touched upon the Sanofi opportunity, but we also won the Genomics England contract last year, which is the first country to really do large-scale genomic screening, and we believe that is really just the tip of the iceberg in terms of where that's going to go around the rest of the world. We've also got the GMP innovation, was part of our reagents business. It's a capability and capacity we finished building in 2023. This is something that will take multiple years to really get off the ground from a commercial standpoint, but we continue to make really good progress from a pipeline perspective. And then I would say the fourth pillar is really around continuing to drive robust growth in our immunodiagnostics business in the U.S. That business has been, I would say, underpenetrated from a U.S. market perspective. About 40% of the market is there. When we acquired our immunodiagnostic assets, they had less than 5% of their exposure. Last year, it got up to 20% of their revenue. It was related to the U.S. and one that we can continue to believe that we have the right to get to sort of the market entitlement of around 40%. And so that's a journey we're excited about over the next couple of years. From an operational excellence perspective, we've been very focused on Revvity in a couple of key areas. One is really around free cash flow performance. So historically, PerkinElmer at the time was generally about 70% free cash flow conversion on an annual basis. And our 2 full years is Revvity, it's been closer to about 90% free cash flow conversion. It's a testament of the portfolio, but also the operating rigor we've put around our cash flow performance. Additionally, from a capital allocation standpoint, we've been very active in share repurchases over the past couple of years since becoming Revvity and it bought back more than almost 10% of the company in the past 2 years. And then from an operational excellence perspective, we remain very focused on our margin expansion. We've got about close to 100 basis points of margin expansion planned in '26. We also expect '27 will have outsized margin expansion as you get the annualization of the cost benefits that we're driving in '26, and that's really driven across the three main buckets of headcount, and then some supply chain synergies, both from a just optimization of how we run our facilities, but also a significant amount of footprint consolidation. So as we look at sort of the LRP and what we believe this company should execute on over the long range, we believe that this is a 6% to 8% organic growth company, which is several hundred basis points above what we believe the underlying market growth of mid-single digits is for our company. Again, that is in a normal environment. The past couple of years have been more challenged, particularly as it relates to pharma biotech. And so we have been, I would say, a little bit short of what we expect from an LRP perspective. However, there are many other areas of the business that continue to perform even above their LRP targets with reproductive health and software being two of the bigger drivers of that. And then from a margin perspective, this is one area about Revvity that we remain incredibly excited about. I don't think we've had really the chance to show the full potential of Revvity from a margin perspective given the headwinds I mentioned, particularly around pharma biotech. But it is one where we do believe as Revvity, we have the opportunity to drive industry-leading margins, particularly as it relates to our ability to drive incremental margins on additional revenue, as a lot of our growth opportunities that I talked about in those four pillars do not require additional feet on the ground. And so the leverage that we can drive from an SG&A perspective in a normal market environment, we believe, is industry best. So from a 2026 perspective, just a few highlights in terms of what's embedded in our guidance. Revenue roughly around $3 billion, organic growth of 2% to 3% and then adjusted operating margin of 28%, which I mentioned is roughly 100 basis points expansion versus 2025. That leads to high single-digit EPS growth in 2026. So, in terms of the overview, and I think maybe just a couple of thoughts to leave you with is Revvity has undergone a significant amount of transformation. The past couple of years have been challenged from a pharma biotech end market perspective, but we remain incredibly excited about, I would say, some of the Revvity-specific innovation drivers we have over the next couple of years that allow us to continue to drive sort of outsized organic growth versus the market as well as, I would say, significant opportunity for us as Revvity to really drive industry-best margin expansion. So with that, Andrew, I think we'll do some Q&A.

Perfect. That was great. Thank you. If you want to, yes, take seat. Maybe going to hit the most topical, I think, question first here over the last probably 1.5 months or so, but AI has been something I feel like we can't have a conversation without talking about. So you've talked about some of it before in terms of what the impact is. But how do you think about it? What's the latest and greatest thought on what the impact of AI and drug development is for you and for your products business? And then secondly, obviously, you talked about it with Xynthetica, but what you guys are doing with AI kind of on the other side of things and whether it's more opportunity for Revvity or risk, which I think is what the market is kind of saying right now?

Yes, for sure. I think the way you phrased it at the end there is kind of how we're seeing things too. There seems to be a little bit of a disconnect, I think, versus what the market perception is on what's going to happen with AI versus what we believe is going to happen internally. I think we believe that AI is going to be a net tailwind for us as a company across both our reagents and our software business. And I think if we start on the second one, maybe from a software perspective, I think a lot of the perception in the market is that AI is going to have the ability to display software. And I think that's true to some extent. However, it's not going to impact things that are sort of a record keeper, right, where you have centralized data or things that are critical to sort of the enterprise infrastructure and how you operate your company, which if you look at our software business, that's really what we provide, right? It is the ERP for the scientists. It is where they are logging all of their wet lab research and notes and data associated with that. And it's a reason why that business is so sticky. Our net retention rate in our software business is north of 107% because it is very difficult to change from our system, just given how much of your operations are entangled in it. So I think there's sort of really kind of minimal risk there from a displacement perspective, right? I mean, I don't tell SAP, but we wouldn't move off of our ERP, just like our scientists wouldn't want to move off theirs. And I think then when you look at things from a Xynthetica standpoint with our software business, we are perfectly positioned to take advantage of where drug discovery is going with AI, right? And everyone talks about the impact of models. Well, that is what Xynthetica is. Xynthetica is the infrastructure in marketplace for where pharma companies can take what they do in our existing software today with their wet lab research and being able to pair that up with whatever AI models they're running to create sort of that consistent loop between in-silico models and wet lab data to both accelerate drug discovery, provide better drugs, but also do it at a lower cost. And so from that perspective, we're agnostic to what AI models folks are running. It is an open marketplace where they'll have Revvity models. It could be the specific pharma companies' model, it could be from ChatGPT, Cloud, you name it, even Raymond James, if you guys have a model, you can throw it in there.

Not quite yet.

I think from that perspective, we are really, truly perfectly positioning our software business to create that connection point between the in-silico models and what we offer from a signals perspective with the wet lab research. I think then when you look on the reagent side, I know this is long-winded, but I think it's the most topical discussion for us today. I think when you look at things from a reagent perspective, we also think this is going to be a net tailwind for us. And I think when you look at what's going to happen from an AI drug discovery perspective, AI is going to enable them, again, to create more ideas. However, all these ideas are still going to need wet lab validation. And I think what you're going to end up seeing is, this rate of new ideas is going to far exceed what the infrastructure is right now from a wet lab perspective, and you're going to create essentially a validation bottleneck. And what you're going to have is all these ideas that are going to need to get validated, they're going to need to get tinkered with, they're going to need to feed back into their models to then ultimately come up with a therapeutic that they're going to take to market. And I think you're going to see some real benefits from that. But it's probably going to lead again to this validation bottleneck where you're going to have more wet lab work being done to validate what's coming out of the AI models. And I think even if you look at other industries, I think there might be some parallels. I mean, if you look at what's happening from like an NGS or a bioprocessing perspective, both industries have had significant technology advancements where the costs are efficient -- the costs have come way down, efficiencies have come way up. And as a result of that, the volume has gone up as well. And the overall market size continues to increase and it's not -- the market size is not decreasing because things are getting more effective or there's better technology. And I think that's what you're going to see from a drug discovery perspective is AI is going to be a net tailwind to the industry and particularly as it relates to the wet lab research.

That was perfect. I'm definitely stealing validation bottleneck. So I'll credit you. No, that was great. Maybe just taking kind of the step back now that we've covered, like you said, probably the most pertinent thing today. You guys are looking for 2% to 3% organic growth this year, essentially the same as last year, but I think there's a lot of moving parts between that. So maybe just walk us through some of the things that are better, some of the things that are a little bit harder? And then I'm sure we'll dive into those a little bit more from there. But just kind of the overview and maybe a little bit of the macro.

Yes, sure. So from an organic growth perspective, you're right, it's relatively similar year-over-year. I think from a guidance perspective, our assumption is that the end market trends that we really saw in the fourth quarter kind of continue over the course of the year. We are not embedding any sort of market recovery from a pharma biotech or academic perspective. So that's probably the first thing I'd say. I think when you look at the different moving pieces year-over-year in terms of what's improving year-over-year, it is really the Life Science Solutions business. The first half and really three quarters of last year, we're still a challenging market environment. We did start to see some improved momentum here in the fourth quarter, and we're sort of assuming that sort of steady state we saw in the fourth quarter, what continues in '26. And so that will make the Life Sciences solution instead of being a slight decline in '25. We expect it to be sort of low single-digit growth here in 2026. In terms of reproductive health, that's another business that continues to perform incredibly well. Over the last couple of years, it's been growing above its LRP. 2026 is another year, we're expecting mid-single-digit growth above its LRP. And so that's a business that we continue to sort of accelerate here in 2026. I think, in terms of the headwinds of what's changing year-over-year, I'd just call it really probably in two buckets. One, Software growth will moderate year-over-year. It grew high teens in 2025. We have sort of a mid-single-digit assumption in 2026. That's really just a function of the revenue recognition sort of accounting rules, though of software. I think when you look at the underlying software business, we look at a metric called APV, your annualized portfolio value. And so from that perspective, the business continues to grow in the double digits, which we think is the best metric in terms of the health of that business' growth. So it's really -- I wouldn't call it out as a headwind. It is from an organic growth perspective, but the business continues to perform well. The last piece I'll mention is probably just China IDX. We are having a more prudent assumption on that business for 26. We have the DRG policy that we're lapping in the second quarter. And so we expect that business to be a slightly larger headwind in '26 versus '25.

Perfect. We'll dive in on a couple of those. I want to start with reagents. Flat year-over-year in 4Q, which was better than 3Q, and I think getting a little bit better as the year went on. So maybe just remind folks how you think about that business long term and then specifically in '26? And then I want to dive in on a couple of specific topics there.

Yes. So I mean, I think you mentioned the key numbers there for '26, right? So we are expecting sort of low single-digit growth in our reagents business, it was flat in '25. I think when you look at the long-term growth rate of that business, we believe it is a high single, low double-digit grower. I think when you look at the market growth rate over the past decade in terms of sort of the reagents research market, it's a market that grows mid- to high single digits. And so I think for right now, you've seen some turbulent over the past couple of years. But one that, again, whether it's because of AI or the fact that just pharma companies need to continue to innovate, they're coming up with their patent clip. It's one that we do think is going to return to more normalized growth rates. And then there's reasons why we should grow above it. GMP being a big piece of that.

That was one of the pieces I want to touch on. So I think you had the stat up there, 2.5x the projects advancing to GMP relative to where you were, I think, a year ago. So, can you level set where is GMP today ideally quantitatively? And what's the pace that, that business can grow to get to sort of your rightful share of a mature GMP franchise?

Yes. So In terms of the size today, it's relatively immaterial. I mean, you're talking maybe a couple a couple of million bucks. I think when you look, though, at GMP, again, we finished the sort of capability and capacity build-out in 2023. And I think when you look at some of our peers in the past when they've gone through this journey, it's been about 7 years in terms of when they finish the build-out to when they start seeing meaningful commercial traction. We are planning to do it closer in 4 to 5 years. And I think for us, again, one of the metrics you mentioned in terms of the pipeline, we are continuing to see very good traction. And although it might not show up to 2027, we've got a bunch of operational metrics, commercial metrics for the team that we're pushing and continuing to see really good traction. Just one that takes time, right? This isn't something where somebody is just buying a $500 vial of antibodies, and then you're never talking to them again an all of a sudden it's $10 million, $15 million. I mean, this is something where you're working with the customers to really sign up more of a marriage, right a long-term agreement, where there's going to be many puts and takes to it. So it's just something that takes a little bit longer from a commercial perspective to get off the ground, the one that we remain really excited about.

Perfect. And then a pretty big deal in the space with the Waters BD transaction. Any competitive disruption there? Any opportunity? Any change with that asset changing hands in terms of how you think about the competitive landscape?

Yes. I mean, I think first just off, from a competitive perspective, I think we've created a really nice competitive moat within our reagents business. And I think when you look at that competitive moat, there's really a couple of factors that drive it. One, I think we have sort of best-in-class customer service, whether that's around the fact that most of our sales reps are PhDs, and we're a true partner to the customer, whether that's around the fact that most of our reagents around the globe are delivered within 24 hours. That is a big competitive differentiation for us. And then you also look at things like we are the value-based offering in the market where we think we have the highest quality and the lowest price point. And then from an innovation standpoint, we have some of the best scientists in the world coming out with new reagents. And we come out with more than 1,000 new sort of reagent SKUs each year. And so it's an incredible level of and pace of innovation. So with that being said, I think even outside of the deal getting done, I think we have a competitive advantage. But we've seen with past deals, that can cause disruption. And it's something that we'll definitely take advantage if that should persist.

Perfect. Maybe shifting a little bit to software. You touched on a lot of it, but in terms of the near-term trends. But I guess, thinking about the last couple of years, let's say, where a lot of these customers have been holding, spending in check, you've still seen good growth in software. So maybe just talk a little bit about why that is, what enables that and kind of the dynamics there when you talk to customers about software purchases versus, like I said, not spending as much in a lot of wet lab areas.

Yes. I love talking about our software business by the way. But look, I think from a software perspective, it's not really one factor, I would say it's multiple factors that have been leading to the strong performance of that business. Again, we really look at the APV metric versus organic growth. I think if you look back over the past couple of years, it's been a low to mid-teens growth from an APV perspective. And I think as you look at those factors, right, I think one of the big factors is what I mentioned earlier. It's an incredibly sticky product, right, in software for our customers. It is changing out would be like changing your SAP to Oracle. It's just not a decision that companies take likely. So a reason why our net retention rate is sort of been north of 107% consistently over the past 4 to 5 years. And I think when you look at that net retention rate, right, there's a little bit of price, but the biggest factor of it is continuing to expand the functionality of what we offer our customers. And so whether that's customers adopting features that have already been out there and they're just expanding how they're using signals or it's the fact that we're coming out with new sort of capabilities in the marketplace that they're biting into. And I think again, when you look at over the next couple of years, we're in the biggest cycle from an innovation standpoint related to our software business than we've ever been. And it's across the biologics. It's the LabGistics, you've got Xynthetica. And those are three massive NPIs for us and ones that we're really excited about. I'd say the other area, the software business that we continue to do well and it's expanding in areas outside of just Tier 1 pharma. I think when you look at our Signals business, historically, it was focused on Tier 1 pharma. We're in 49 out of the top 50 Tier 1 pharma companies but we haven't had a ton of penetration in Tier 2 and Tier 3 pharma, which we now have e-commerce and some other things we're doing to specifically reach that end market. And then, we've also got the expansion into material sciences. And that is one that is seen, I would say, relatively robust growth over the past couple of years. We think we're still very much in the early innings of the penetration into that market. The ACD acquisition that we just announced in the fourth quarter and closed here in the first quarter, that acquisition for us is one that gives us a tremendous foothold or a stronger commercial channel in the material science market. And so we think that can help accelerate our penetration efforts there. So a lot of things to be excited about from a software perspective.

Perfect. I won't bring up the above LRP numbers, Prahlad talks about. Okay. Shifting a little bit, just the instrument side. Flat in 4Q. I think that's one you admitted was a little bit kind of lighter than what you thought. And I think it's a little bit lighter than what some others in the space broadly talked about. What about your portfolio makes that a little bit different than maybe what you hear from some of the, again, other tools players broadly when they talk about their instruments?

Yes. I mean, maybe to say it was a little bit lighter than our expectation. I think we had pretty lofty expectations coming into the fourth quarter. I'd say net-net it was a really strong fourth quarter performance for us for our instrumentation. It's the best quarter we've had in 12 quarters for our instrumentation business. It was roughly flat in the fourth quarter. I think that's the assumption, too, that we have going into '26 is again sort of a flattish instrumentation market. But we continue to see really good momentum. And actually, the area I would say we continue to see the most momentum is in our high-content screening business. That's an area where, again, even if I think you link it back to some of the comments I made around AI and where it's going with drug discovery, screening is going to play a massive role in that loop and the connection between the in-silico model and what happens from a wet lab perspective and the drug development. And so we think that product is positionally placed. And we've come out with a lot of AI applications sitting on top of our high content screening that's making that feedback loop to the in-silico models even faster.

Perfect. Just looking at the clock now, I want to shift to diagnostics a little bit. And I'll jump right into China and the DRG impacts and some of what's going on there. So has everything held kind of as you'd expected? And how do we think about sort of risk of additional change in China, if any, when you look at that franchise and thinking about the future?

Yes. Look, so I would say a couple of things. One, nothing has really fundamentally changed from what we laid out. I think we -- again, we'll anniversary the DRG headwinds here in the second quarter of '26. We did take down our assumptions in terms of what the growth rates would look like for IDX China, right? We put a little bit more prudent numbers out. But just given a lot of the volatility that's happened in that market to give ourselves a little bit more breathing room from what we have embedded from a guidance perspective, but nothing has fundamentally changed. And I think we're, again, excited about what's going to happen once we anniversary the DRG headwind here in the second quarter. And we'll just see how things play out in the time from there.

Perfect. And then, I did want to touch and you mentioned it there in the immunodiagnostics business in the U.S. You brought some automation with the AP 2400. I think you've talked about some higher throughput automation sort of on the come. So maybe just level set for us how we should think about what this next leg, this next kind of high throughput step-up opens up in terms of driving from the 20% to 40% down the road?

Yes. Maybe even just stepping back a little bit further too. As you look at our U.S. immunodiagnostics penetration, right, there's sort of two key components to it. One is on the automation, which we touched on. And then the second is continue to get further FDA approvals. I think when you look at the automation area that we've been particularly focused on is really related to our TB workflow and our Oxford franchise. And I think when you look at it from there, we've come out with the low throughput and the medium throughput. We need the high throughput. And I think when you look at the U.S. market landscape, the high throughput is the biggest piece of the market. And when you think about the reference labs and the volume there. So it's something that's, I would say, in the near-term pipeline to be announced from a commercialization standpoint, we've seen really good traction on the low and medium throughput. It's kind of right in line with our expectations in terms of the displacements. But it's also one that will take time. Even when we come out with the high throughput one, most of these contracts with reference labs are in reagent rentals. These are long-term contracts that labs generally don't break. So it will take us some time to get commercial traction. But at least where we've seen some head-to-head competition, we've had some nice wins, because of the automation.

Perfect. I know it's a hard one to answer, but latest and greatest thinking on tariffs given some of the moving parts?

Yes, look, it clearly continues to be very volatile. Tariffs are still in place. We'll have to see what happens over the next 140, 150 days or so and what ultimately gets put in place. But I think if you look at the sort of response to tariffs from a revenue perspective, when that came out last year, we were very quick to mitigate, I would say, a good chunk of what we had from an exposure standpoint. The only real remaining exposure we have is a lot of our diagnostics manufacturing is in Europe. So for those sales in the U.S., that has been a little bit of a tariff burden for us. We'll probably continue to wait and see if there's going to be a more permanent change from a tariff perspective and if we need to sort of put the investment dollars to work in terms of having an FDA manufacturing site in the U.S. But we're going to have to see how the next couple of months play out and whether this is really a permanent thing or a temporary thing.

Perfect. Operating margins, I think 4Q, you flagged, you stepped up some -- essentially some benefits for a lot of the employee base. Can you just offer a little bit of kind of magnitude there? And more importantly, as you think about the trends from here, the volume side in '26 that's driving revenue. How do we think about the drivers of what has to happen to get to 28% and then beyond that to drive you to another outsized year in '27, like you said?

Yes. So a couple of things from a margin standpoint. One, I just address the tactical question in Q4. Yes, it has been, I'd say, a couple of years of very challenging incentive payments to our employees. We finished 2025 on a strong note in Q4, so we did invest some of that back into our people. It's probably about 20 basis points for the full year. So outside of that, we would have been right at the upper end of our guidance expectation of 27.3% OM. And so that's probably the rough magnitude there. I think when you look at really 2026, right, we are stepping up to 28% operating margin. That is really a factor of the productivity initiatives that we're driving that will be completed in the first half of the year. And the main areas there are, one, taking some actions related to what's happening in China and reducing both our commercial and manufacturing footprint for our immunodiagnostics business. Second is around continued integration and delayering. Then the third one is really rooftop consolidations across our supply chain. And so those are the big three factors. And I'd say from a margin perspective, we're really excited about the outsized LRP expansion in '26. I think we'll be above our LRP in '27 as you get that annualization of the cost productivity. And so I think you'll continue to see strong margin momentum for us over the next couple of years.

Perfect. We're about out of time, so I'm just going to sneak the last one in the classic. What are folks missing? What are folks getting wrong? Or what do you want to leave us with?

Yes. I mean, I think probably three things. One, we talked about on the misconception of AI versus how we think it's going to impact our Life Sciences business. The second is, I think as you look at the organic growth of 2% to 3%, we mentioned on the earnings call, I think we have a decent amount of prudence baked into it. One to allow for some flexibility if things continue to remain volatile and maintain our guidance. But two, in the event things get better, we should have the opportunity to deliver some upside. And then the third is on margins. I mentioned it, '26 and '27 will be years where we have margin expansion above our LRP, because of our productivity initiatives. I think folks recognize it in '26. I'm not sure if that's maybe connected to '27. And the fact that over -- really over the next 4 to 5 years, we believe we will have industry-leading margins for the Life Sciences tools industry.

Great. Well, we're out of time. We'll head downstairs for a breakout in Amarante 1. Thank you so much. Appreciate it.