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Bruker Corporation (NASDAQ: BRKR)
Q3 2014 Earnings Presentation
Frank Laukien, President & CEO
Charles Wagner, EVP & CFO
Joshua Young, VP, Investor Relations November 6, 2014
Innovation with Integrity
Any statements contained in this presentation that do not describe historical facts may constitute
forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995.
Any forward-looking statements contained herein are based on current expectations, but are subject to
risks and uncertainties that could cause actual results to differ materially from those projected, including,
but not limited to, risks and uncertainties relating to adverse changes in conditions in the global economy
and volatility in the capital markets, the integration of businesses we have acquired or may acquire in the
future, changing technologies, product development and market acceptance of our products, the cost and
pricing of our products, manufacturing, competition, dependence on collaborative partners and key
suppliers, capital spending and government funding policies, changes in governmental regulations,
realization of anticipated benefits from economic stimulus programs, intellectual property rights,
litigation, and exposure to foreign currency fluctuations and other risk factors discussed from time to time
in our filings with the Securities and Exchange Commission. These and other factors are identified and
described in more detail in our filings with the SEC, including, without limitation, our annual report on
Form 10-K for the year ended December 31, 2013. We will also be referencing non-GAAP financial
measures in this presentation. A reconciliation of non-GAAP to GAAP results is available in our earnings
press release and in this presentation.
Bruker Corporation
Safe Harbor & Reg. G Statement
© Bruker Corporation 2
Q3 & YTD 2014 Business Update
© Bruker Corporation 3
$0.20
$0.14
Q3-13
Q3-14
Q3-14 Financials
Revenues [$ m]
Non-GAAP EPS
Q3 2014 revenue and profitability down
year-over-year
-4%
-30%
© Bruker Corporation 4
439
420
Q3-13 Q3-14
Q3 2014 Performance
Revenues decline 4% y-o-y
1.BioSpin and BMAT Group revenues decline,
due to weak year-to-date orders
2.CALID revenue decline driven by CAM
restructuring
3.Revenue declines across Asia more than
offset good growth in the Americas
4.BEST delivered strong revenue growth
Non-GAAP EPS decline of 30% y-o-y driven by
lower revenue and higher tax rate in Q3-14
$0.46
$0.46
YTD 2013
YTD 2014
Q3-14 YTD Financials
Revenues [$ B]
Non-GAAP EPS
Q3-14 YTD performance adversely affected by
demand, CAM restructuring, and currency
+1%
flat
© Bruker Corporation 5
1.29 1.30
YTD 2013 YTD 2014
Q3-14 YTD Performance
Revenue growth of 1% y-o-y
1.BioSpin revenue growth of 2%, led by
strength in Pre-Clinical Imaging division
2.BMAT revenue decline of 1% driven by
weak semi & data storage demand
3.CALID revenue decline of 1% due to $15M
CAM decline, timing of Detection projects
4.Low single-digit revenue growth in Europe,
mid-single digit growth in Americas, offset
by high-single digit revenue decline in Asia
Non-GAAP EPS flat y-o-y, including negative
currency impact of $0.04
FCF improves by $46M, totaling $18M for YTD
2014, compared to ($28M) for YTD 2013
Bruker BioSpin Group
Revenue decline in NMR partially offset by growth in Pre-Clinical
Imaging Division
Good growth in the Americas offset by declines in Europe & Asia
After generating above-market growth from 2010-2013, NMR
demand has slowed; YTD NMR order bookings decline y-o-y
In process of identifying actions to right-size BioSpin cost
structure; Agilent exit from NMR market may benefit 2015
Bruker CALID Group
LSC Division growth driven by Q-TOF products and MALDI Biotyper
Optics Division continues healthy growth and improved profitability
Detection Division negatively impacted by export license delays
CAM Division revenues decline by $10M y-o-y in quarter
Good progress on CAM restructuring: ICP-MS products sold to
Analytik Jena in September; GC products sold to TechComp on
October 31st; restructuring and product transfer ongoing
6 © Bruker Corporation
GROUP OVERVIEW:
Q3 2014 Performance & Outlook
Bruker MAT Group
BMAT Group revenue declines high-single digits
Revenue declines across 3 of 4 Divisions
Semiconductor & data storage demand remains weak
Steep decline in Asia offsets growth in Europe & Americas
Demand sluggish from Minerals & Mining and Metals markets
Bookings growing in Nano Surfaces Division, but AXS Division
bookings remain weak
Continued investment in the life science/cell biology markets
BEST Segment
Strong revenue growth driven by healthcare and ‘Big Science’
customers
Higher profitability also due to recent expense reductions and
restructuring actions
GROUP OVERVIEW:
Q3 2014 Performance & Outlook
7 © Bruker Corporation
Commitment to transforming Bruker for
better performance
© Bruker Corporation 8
• Continue existing transformation to drive towards operational excellence: redesign-to-cost; outsourcing; procurement initiatives; restructuring, etc.
• Committed to making investments that drive innovation and enable entry into new growth markets
• Complete the CAM Division restructuring in H1-15
• Execute plans for right-sizing BioSpin in H1-15
Q3 2014 Financial Update
© Bruker Corporation 9
NON-GAAP FINANCIAL PERFORMANCE:
Q3 2014 Overview
[$ m, except EPS] Q3 2014 Q3 2013 Δ
Revenues 419.8 439.0 -4%
Operating Income 35.9 47.3 -24%
Margin (%) 8.6% 10.8%
EPS $0.14 $0.20 -30%
Free Cash Flow 3.6 28.3 -24.7M
Lower revenue reflects weak YTD bookings and a $10M revenue decline in CAM Division
Profitability decline due to lower revenues, despite good control over spending
Solid improvements in working capital reflects lower inventory and FX benefits
Continue to maintain healthy net cash position
10 © Bruker Corporation
COMMENTS
[$ m] Sep 30,2014 Dec 31,2013 Δ
Net Cash 87.1 83.7 4%
Working capital (WC)* 737.2 822.6 -10%
WC-to-revenue ratio 0.40 0.45 -0.05
* WC = (Accounts Receivable + Inventory – Accounts Payable)
Q3 2013 Organic Currency Acquisition Q3 2014
$439.0 $419.8
Q3 2014 revenue bridge
Organic revenue decline of $21.2M, as revenue in all three Groups declines
Strengthening dollar in September drove the slight revenue headwind; bigger impact expected on Q4-14 revenues
Acquisition impact from prior acquisitions of Prairie and Vutara in BMAT Group
11 © Bruker Corporation
Q3 2014 DRIVERS
Q3 2014 Revenue Bridge [$ m]
$-21.2 $-1.5 $3.5
Organic Currency Acquisitions & Divestitures Total
-4.8% -0.4% 0.8% -4.4%
Q3 2014 Revenue for Bruker Corp.
Q3 2014 Non-GAAP Results
Gross margins are down primarily due to lower volumes and negative mix
Operating expenses remain well-controlled, despite investments in new capabilities
Q3-13 had an unusually low tax rate due to jurisdictional mix of profits and certain discrete items
12 © Bruker Corporation
COMMENTS [$ m] Q3 2014 Q3 2013 Δ
Total Revenues 419.8 439.0 -4%
Gross Profit 185.5 198.2 -6% Margin (% of sales) 44.2% 45.1%
SG&A -107.5 -105.4 2%
(% of revenues) 25.6%
24.0%
R&D -42.1 -45.5 -7% (% of revenues) 10.0% 10.4%
Operating Income 35.9 47.3 -24%
(% of revenues) 8.6% 10.8%
Tax Rate 27.0% 20.0% 700 bps
Net Income* 23.8 33.8 -30%
EPS $0.14 $0.20 -30%
Shares Outstanding 169.6 168.7 NM
* Attributable to Bruker Sum of items may not total due to rounding
Q3 2014 Reconciliation of GAAP and
Non-GAAP Results
[$ m] Q3 2014 Q3 2013
GAAP Operating Income 4.9 31.5
Restructuring Costs 16.2 8.6
Acquisition Related Costs 1.4 1.3
Purchased Intangible Amortization 5.1 5.1
Other Costs 8.3 0.8
TOTAL 31.0 15.8
Non-GAAP Operating Income 35.9 47.3
Non-GAAP Net Interest Income (Expense) & Other -2.2* -4.7
Non GAAP Profit Before Tax 33.7 42.6
Taxes -9.1 -8.5
Non-GAAP Tax Rate 27.0% 20.0%
Minority Interest -0.8 -0.3
Non-GAAP Net Income** 23.8 33.8
Non-GAAP EPS $0.14 $0.20
13 © Bruker Corporation
*Excludes $6.3M of net gains for 2014 ** Attributable to Bruker
Sum of items may not total due to rounding
Q3-13 YTD Organic Currency Acquisition Q3-14 YTD
$1,287.3 $1,300.9
Q3-14 YTD revenue bridge
Growth in BioSpin offset by declines in CALID and BMAT on YTD basis
Stronger Euro versus dollar on YTD basis drives positive currency contribution
BMAT acquisitions of Vutara and Prairie drive a positive 0.8% revenue contribution
14 © Bruker Corporation
Q3-14 YTD DRIVERS
Q3-14 YTD Revenue Bridge [$ m]
-$5.2 $8.8 $10.0
Organic Currency Acquisitions & Divestitures Total
-0.4% 0.7% 0.8% 1.1%
Q3-14 YTD Revenue for Bruker Corp.
Q3-14 YTD 2014 Non-GAAP Results
Gross margins are down primarily due to changes in foreign exchange rates
Operating margins are down ~90 basis points due to changes in foreign exchange rates
Tax rate is consistent with full year guidance of 25-28%
15 © Bruker Corporation
COMMENTS
* Attributable to Bruker Sum of items may not total due to rounding
[$ m] Q3-14 YTD Q3-13 YTD Δ
Total Revenues 1,300.9 1,287.3 1%
Gross Profit 584.5 584.2 NM Margin (% of sales) 44.9% 45.4%
SG&A -331.2 -318.6 4%
(% of revenues) 25.5% 24.7%
R&D -132.6 -141.4 -6% (% of revenues) 10.2% 11.0%
Operating Income 120.7 124.2 -3% (% of revenues) 9.3% 9.6%
Tax Rate 28.0% 25.9% 210 bps
Net Income* 77.4 77.1 NM
EPS $0.46 $0.46 NM
Shares Outstanding 169.5 168.4 NM
Q3-14 YTD Reconciliation of GAAP to
Non-GAAP Results
[$ m] Q3-14 YTD Q3-13 YTD
GAAP Operating Income 60.9 87.2
Restructuring Costs 29.3 13.6
Acquisition Related Costs 3.0 2.2
Purchased Intangible Amortization 15.1 15.3
Other Costs 12.4 5.9
TOTAL 59.8 37.0
Non-GAAP Operating Income 120.7 124.2
Non-GAAP Net Interest Income (Expense) & Other* -9.7 -18.8
Non GAAP Profit Before Tax 111.0 105.4
Taxes -31.1 -27.3
Non-GAAP Tax Rate 28.0% 25.9%
Minority Interest -2.5 -1.0
Non-GAAP Net Income** 77.4 77.1
Non-GAAP EPS $0.46 $0.46
16 © Bruker Corporation
Sum of items may not total due to rounding *Excludes $6.6 and $2.4 million of net gains for 2014 and 2013 **Attributable to Bruker
Q3-14 YTD Cash Flow Statement
Cash conversion cycle improves by 29 days compared to Q3-13
– DIO: 230
– DSO: 60
– DPO: 48
– CCC: 241
Capex spending is down significantly y-o-y
17 © Bruker Corporation
COMMENTS [$ m] Q3-14 YTD Q3-13 YTD Δ
Net Income 33.1 45.9 -12.8
Depreciation & amortization 47.6 45.4 2.2
Changes in working capital* 2.8 -32.6 35.4
Other -38.5 -45.1 6.6
Operating cash flow 45.0 13.6 31.4
Capital expenditures -26.7 -41.3 14.6
Free cash flow 18.3 -27.7 46.0
2014 Guidance
© Bruker Corporation 18
Bruker’s revised FY 2014 Guidance
Revenues (reported) $1.81 - $1.84 billion
Non-GAAP EPS $0.72 to $0.78
19 © Bruker Corporation
Bruker FY 2014 Guidance
FX changes reduce Q4-14 revenue by 4% y-o-y
Excluding currency impact, Q4-14 revenue flat or declining y-o-y due to CAM restructuring and YTD demand weakness
Tax rate: 25-28%
Wide EPS range due to potential variability in Q4-14 results
Capex expected to be around $40M in FY2014
Current currency assumptions: Yen/USD: 110 EUR/USD: 1.26
ASSUMPTIONS
Appendix
© Bruker Corporation 20
Q3 2014 GAAP Results
[$ m] Q3 2014 Q3 2013 Δ
Total Revenues 419.8 439.0 -4%
Gross Profit 167.3 193.2 -13%
Margin (% of sales) 39.9% 44.0%
SG&A -108.0 -105.7 2%
(% of revenues) 25.7% 24.1%
R&D -42.1 -45.5 -7%
(% of revenues) 10.0% 10.4%
Operating Income 4.9 31.5 -84%
(% of revenues) 1.2% 7.2%
Net Income* 5.5 16.6 -67%
EPS $0.03 $0.10 -70%
Shares Outstanding 169.6 168.7 NM
21 © Bruker Corporation
* Attributable to Bruker Sum of items may not total due to rounding
Q3-14 YTD GAAP Results
[$ m] Q3-14 YTD Q3-13 YTD Δ
Total Revenues 1,300.9 1,287.3 1%
Gross Profit 547.5 569.3 -4%
Margin (% of sales) 42.1% 44.2%
SG&A -332.5 -319.6 4%
(% of revenues) 25.6%
24.8%
R&D -132.6 -141.4 -6%
(% of revenues) 10.2% 11.0%
Operating Income 60.9 87.2 -30%
(% of revenues) 4.7% 6.8%
Net Income* 30.6 44.9 -32%
EPS $0.18 $0.27 -33%
Shares Outstanding 169.5 168.4 NM
22 © Bruker Corporation
Sum of items may not total due to rounding * Attributable to Bruker
Balance sheet
[$ m] Sep 30, 2014 Dec 31, 2013 Δ
Cash, Cash Equivalents & Short-term investments
442.3 438.7 1%
Financial Debt 355.2 355.0 NM
Net Cash 87.1 83.7 4%
23 © Bruker Corporation
[$ m] Sep 30, 2014 Dec 31, 2013 Δ
Total Assets 1,910.6 1,988.3 -4%
Working Capital* 737.2 822.6 -10%
Intangible & Other Assets 245.9 256.9 -4%
* WC = (Accounts Receivable + Inventory - Accounts Payable)
Q3 2014 Cash Flow Statement
Lower profit, higher working capital are the primary drivers of y-o-y difference in free cash flow
24 © Bruker Corporation
COMMENTS [$ m] Q3 2014 Q3 2013 Δ
Net Income 6.3 16.9 -10.6
Depreciation & amortization 17.6 15.2 2.4
Changes in working capital* -16.0 9.0 -25.0
Other 5.6 -2.6 8.2
Operating cash flow 13.5 38.5 -25.0
Capital expenditures -9.9 -10.2 0.3
Free cash flow 3.6 28.3 -24.7
Q3 SEGMENT RESULTS:
BSI and BEST GAAP Performance
[$ m] Q3 2014 Q3 2013 Δ
REVENUE
Scientific Instruments (BSI) 383.4 410.6 -7%
Organic Revenue Growth (%) -7.1% 0.6%
Energy & Supercon Technologies (BEST) 40.0 32.5 23%
Organic Revenue Growth (%) 22.6% -27.1%
Corporate Eliminations & Other -3.6 -4.1
Total Revenue 419.8 439.0 -4%
OPERATING INCOME
Scientific Instruments (BSI) 0.8 33.8 -98%
Energy & Supercon Technologies (BEST) 3.9 -0.8 588%
Corporate Eliminations and Other 0.2 -1.5
Total Operating Income 4.9 31.5 -84%
25 © Bruker Corporation
Sum of items may not total due to rounding