bruker corporation (nasdaq: brkr) · 2018-04-05 · h1 2015 reconciliation of gaap and non-gaap...

Bruker Corporation (NASDAQ: BRKR)

Q2 2015 Earnings Presentation

Frank Laukien, President & CEO

Anthony Mattacchione, SVP & Interim CFO

Joshua Young, VP, Investor Relations August 5, 2015

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, our ability to successfully implement restructuring initiatives, 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, 2014 and our quarterly report on Form 10-Q for the period ended March 31, 2015. 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

Q2-15 & H1 2015 Business Update


$0.21

$0.19

Q2-14

Q2-15

Q2 Financials

Revenues [$ m]

Non-GAAP EPS

Organic revenue growth in CALID & NANO Groups

offset by organic decline in BIOSPIN and BEST

-13%

-10%


457 396

Q2-14 Q2-15

Q2 2015 Performance

Revenues decline -$61m, or -13% y-o-y

− FX headwinds lower revenue -12% y-o-y

− 2014 CAM divestitures result in -$12M

y-o-y revenue decline

Organic revenue growth improved sequentially

to +1% y-o-y, driven by Europe and China

Non-GAAP EPS of $0.19 in Q2-15

− Y-o-y gross margin comparison affected

by product mix in Q2-14 and Q2-15

− CAM restructuring benefit partially offset

by FX headwinds

− Discrete tax benefit partially offset by FX

transaction losses

$0.32

$0.32

H1 2014

H1 2015

H1 Financials

Revenues [$ m]

Non-GAAP EPS

In H1 2015, Bruker expanded operating margins

by 90 bps despite decline in revenues

-15%

flat


881 749

H1 2014 H1 2015

H1 2015 Performance

Revenues decline -15% y-o-y

Organic revenue decline of -1% y-o-y

1.Low to mid-single digit organic revenue

growth from NANO and CALID Groups

2.Double-digit organic revenue decline in

BIOSPIN Group due to weak 2014 orders

3.Europe strong, while APAC (ex-China)

declines in double digits

Non-GAAP operating margin expands by

+90 basis points y-o-y

Reported non-GAAP EPS flat, but would have

grown $0.05 or +16%, excluding FX headwind

GAAP Net income and GAAP EPS both improved

+13%, compared to H1-14

Bruker BIOSPIN Group

Mid-single digit y-o-y organic revenue decline represents sequential

improvement from Q1-15

Profitability lower due to negative product mix and the y-o-y effects

from the large, 21-Tesla research magnet revenue in Q2-14

Weak Preclinical Imaging revenue due to site delays, softer market

Good growth in NMR bookings in H1 2015, including orders from

former Agilent customers

Bruker CALID Group

Low single-digit organic revenue growth; improved margins,

primarily due to 2014 CAM restructuring

Daltonics Division growth driven by good performance from MALDI

Biotyper and MALDI TOF research products

Healthy interest in new Daltonics products introduced at ASMS 2015

Detection Division delivers strong organic revenue growth as a result

of large orders in 2014

Bruker Optics Division experienced weaker market conditions

6 © Bruker Corporation

GROUP OVERVIEW:

Q2 2015 Performance

Bruker NANO Group

Reports low single-digit organic revenue growth

Nano Surfaces Division sees weak demand in research and auto-

AFM, with good acceptance of Fluorescence Microscopy products

Nano Analytics Division drives growth for X-ray fluorescence

microanalyzers

AXS Division delivers organic revenue growth, with good bookings

NANO Group growth overall still subdued due to soft demand from

semiconductor, data storage and other industrial customers

BEST Segment

Organic revenue decline of -8%

Phase out of ITER project and some revenue shifts into H2-15 lead

to lower revenue and profitability

Strong bookings driven by major superconductor customers

Technical progress in scale-up of high current, high-temperature

superconductors (HTS)

GROUP OVERVIEW:

Q2 2015 Performance


ASMS Introduction: MALDI Tissuetyper™ a Breakthrough in Mass Spec Imaging (MSI) for

Anatomical Pathology Research

• Dramatic further improvement

in spatial resolution, image

quality and contrast of MALDI

Imaging

• Order of magnitude increase in

speed and throughput, e.g.

–One small biopsy per minute

– Large image in 2.5 hours

(left: rat testis, pixel

diameter 10 μm, 395k pixels,

200 shots per pixel)

• Significant increase in ease-of-

use and robustness makes

MALDI Tissuetyper suitable

for pathology research


ASMS Introduction: MALDI

PharmaPulse™ Launch

• Fast enough for true pharma

HTS drug discovery and hit

generation ( <1sec/sample)

– 10-100x faster than

multiplexed LC/SPE-MS

• Label free detection

accelerates assay

development, reduces

complexity of screening and

minimizes artifacts from label

interference

• Low consumable costs and less

waste with 100x less solvent

than multiplexed LC/SPE-MS

–No need for SPE cartridges or

LC columns


Bruker 2015 Priorities


Continue transformation of leadership, management processes, and systems

Execute BIOSPIN rightsizing and factory consolidation

Accelerate further outsourcing of high-level assemblies in CALID and NANO

Drive profitable growth initiative

• New high-performance products

• New high-value analytical and clinical solutions

• Entry into adjacent markets

Q2 2015 Financial Update


NON-GAAP FINANCIAL PERFORMANCE:

Q2 2015 Overview

[$ m, except EPS] Q2 2015 Q2 2014 Δ

Revenues 396.0 457.4 -13%

Operating Income 42.9 52.7 -19%

Margin (%) 10.8% 11.5%

EPS $0.19 $0.21 -10%

Free Cash Flow -9.2 5.4 -14.6M

Non-GAAP operating margins decline due to negative mix and y-o-y effect of 21-Tesla research magnet in Q2-14

Free cash flow decreases y-o-y, primarily due to accounts payable and accounts receivable timing

Solid balance sheet improvement, with net cash higher and improved working capital-to-revenue ratio


COMMENTS

[$ m] Jun 30, 2015 Jun 30, 2014 Δ

Net Cash 129.0 101.9 27%

Working capital (WC)* 642.2 789.5 -19%

WC-to-revenue ratio 0.38 0.42 -0.04

* WC = (Accounts Receivable + Inventory – Accounts Payable)

Q2 2014 Organic Currency Divestitures Q2 2015

$457.4M

$396.0M

Q2 2015 revenue bridge

Organic revenue growth of 1% equally driven by CALID and NANO Groups

Divestitures completely related to divested CAM assets


Q2 2015 DRIVERS

Q2 2015 Revenue Bridge [$ m]

$3.2 -$52.6 -$12.0

Organic Currency Divestitures Total

0.7% -11.5% -2.6% -13.4%

Q2 2015 Revenue for Bruker Corp.

Q2 2015 Non-GAAP Results

Gross margin down year-over-year due to tough comparison and less profitable revenue mix

Operating spending declines by -$24M due to FX, restructuring benefit, and expense control

Discrete tax benefit in Q2-15 of ~ +$6.5 million

FX headwinds lower EPS by (-$0.01) in Q2-15


COMMENTS [$ m, except EPS] Q2 2015 Q2 2014 Δ

Total Revenues 396.0 457.4 -13%

Gross Profit 178.4 211.8 -16% Margin (% of revenues) 45.1% 46.3%

SG&A -98.0 -114.6 -14%

(% of revenues) 24.7%

25.1%

R&D -37.5 -44.5 -16% (% of revenues) 9.5% 9.7%


(% of revenues) 10.8% 11.5%

Tax Rate 10.3% 30.0% 1970 bps

Net Income* 31.9 34.9 -9%

EPS $0.19 $0.21 -10%

Shares Outstanding 169.7 169.5 NM

* Attributable to Bruker Sum of items may not total due to rounding

Q2 2015 Reconciliation of GAAP and

Non-GAAP Results

[$ m, except EPS] Q2 2015 Q2 2014

GAAP Operating Income 31.6 35.4

Restructuring Costs 5.2 10.7

Acquisition-Related Costs -2.8 0.5

Purchased Intangible Amortization 5.2 4.8

Other Costs 3.7 1.3

TOTAL 11.3 17.3

Non-GAAP Operating Income 42.9 52.7

Non-GAAP Interest & Other Income (Expense), net -6.0* -2.3

Non GAAP Profit* Before Tax 36.9 50.4

Non-GAAP Income Tax Provision -3.8 -15.1

Non-GAAP Tax Rate 10.3% 30.0%

Minority Interest -1.2 -0.4

Non-GAAP Net Income** 31.9 34.9

Non-GAAP EPS $0.19 $0.21


* Attributable to Bruker, excludes $0.2M of net losses Sum of items may not total due to rounding

H1 2014 Organic Currency Acq. & Div. H1 2015

$881.1M

$749.5M

H1 2015 revenue bridge

Organic revenue decline of -1.0%

Acquisitions & divestitures primarily relate to $24M of divested CAM assets

Weaker Euro drove most of the -$99M decline in revenues from FX rates


H1 2015 DRIVERS

H1 2015 Revenue Bridge [$ m]

-$9.3 -$99.4 -$22.9

Organic Currency Acquisitions & Divestitures Total

-1.0% -11.3% -2.6% -14.9%

H1 2015 Revenue for Bruker Corp.

H1 2015 Non-GAAP Results

H1 2015 performance is generally on track

Improved gross margins in NANO & CALID Groups offset lower BIOSPIN gross margins

– CAM restructuring adds 60 bps to gross margin

Excluding FX and CAM restructuring, operating spending is flat

Non-GAAP operating margin increases by +90 bps

Non-GAAP EPS headwind of ($0.05) from FX


COMMENTS [$ m, except EPS] H1 2015 H1 2014 Δ


Gross Profit 345.5 399.0 -13% Margin (% of revenues) 46.1% 45.3%

SG&A -192.1 -223.7 -14%

(% of revenues) 25.6%

25.4%

R&D -74.7 -90.5 -17% (% of revenues) 10.0% 10.3%


(% of revenues) 10.5% 9.6%

Tax Rate 18.2% 28.5% -1030 bps

Net Income* 55.0 53.6 3%

EPS $0.32 $0.32 NM



H1 2015 Reconciliation of GAAP and

Non-GAAP Results

[$ m, except EPS] H1 2015 H1 2014

GAAP Operating Income 46.8 56.0

Restructuring Costs 8.5 13.1

Acquisition-Related Costs -2.6 1.6

Purchased Intangible Amortization 10.4 10.0

Other Costs 15.6 4.1

TOTAL 31.9 28.8

Non-GAAP Operating Income 78.7 84.8

Non-GAAP Interest & Other Income (Expense), net* -9.5 -7.5

Non-GAAP Profit* Before Tax 69.2 77.3

Non-GAAP Income Tax Provision -12.6 -22.0

Non-GAAP Tax Rate 18.2% 28.5%

Minority Interest -1.6 -1.7

Non-GAAP Net Income** 55.0 53.6

Non-GAAP EPS $0.32 $0.32


* Attributable to Bruker, excludes $0.2M of net losses for 2015 and $0.3M of net gains for 2014

Sum of items may not total due to rounding

H1 2015 Cash Flow Statement

Higher net income includes fewer restructuring charges in H1-15 versus H1-14

Changes in working capital is lower, primarily due to accounts receivable and accounts payable timing

CapEx spending well-managed in H1-15


COMMENTS [$ m] H1 2015 H1 2014 Δ

Net Income 30.0 26.8 3.2

Depreciation & amortization 26.7 30.0 -3.3

Changes in working capital* 14.4 18.8 -4.4

Other -45.6 -44.1 -1.5

Operating cash flow 25.5 31.5 -6.0

Capital expenditures -13.4 -16.8 3.4

Free cash flow 12.1 14.7 -2.6

Full Year 2015 Outlook


FY 2015 Financial Outlook (unchanged)

Revenues (organic) Approximately +1%

Non-GAAP Operating Margin

>100 bps

Non-GAAP EPS Approximately flat with 2014


Bruker FY 2015 Outlook

Changes in currency reduce revenues by -9% to -10%

FX generates -12% or (-$0.09) headwind to non-GAAP EPS in 2015

CAM related revenues decrease by ~$50M in 2015

Capex of up to $40M

Tax rate: ~25%-27% in H2 2015

Current currency assumptions: Yen/USD: 122 USD/EUR: 1.11

2015 ASSUMPTIONS

Appendix


Q2 2015 GAAP Results

[$ m, except EPS] Q2 2015 Q2 2014 Δ


Gross Profit 169.4 200.5 -16%

Margin (% of sales) 42.8% 43.8%

SG&A -98.5 -115.0 -14%

(% of revenues) 24.9% 25.1%

R&D -37.5 -44.5 -16%

(% of revenues) 9.5% 9.7%



Net Income* 21.9 16.4 34%

EPS $0.13 $0.10 30%




Q2 2015 Cash Flow Statement

[$ m] Q2 2015 Q2 2014 Δ

Net Income 23.1 16.8 6.3

Depreciation & amortization 13.2 14.8 -1.6

Changes in working capital* -16.1 1.8 -17.9

Other -21.7 -20.4 -1.3

Operating cash flow -1.5 13.0 -14.5

Capital expenditures -7.7 -7.6 -0.1

Free cash flow -9.2 5.4 -14.6


* WC = (Accounts Receivable + Inventory - Accounts Payable)

Balance sheet

[$ m] Jun 30, 2015 Jun 30, 2014 Dec 31, 2014

Cash, Cash Equivalents & Short-term Investments

493.6 457.6 497.5

Financial Debt 364.6 355.7 355.0

Net Cash 129.0 101.9 142.5


[$ m] Jun 30, 2015 Jun 30, 2014 Dec 31, 2014

Total Assets 1,820.4 2,003.9 1,864.8

Working Capital* 642.2 789.5 694.6

Intangibles, Net & Other Long-Term Assets

232.8 245.1 248.6

* WC = (Accounts Receivable + Inventory - Accounts Payable)

H1 2015 GAAP Results

[$ m, except EPS] H1 2015 H1 2014 Δ


Gross Profit 329.6 380.2 -13%

Margin (% of sales) 44.0% 43.2%

SG&A -193.1 -224.5 -14%

(% of revenues) 25.8% 25.5%

R&D -74.7 -90.5 -17%

(% of revenues) 10.0% 10.3%



Net Income* 28.4 25.1 13%

EPS $0.17 $0.15 13%




Q2 SEGMENT RESULTS:

BSI and BEST GAAP Performance

[$ m] Q2 2015 Q2 2014 Δ

REVENUE

Scientific Instruments (BSI) 366.2 421.5 -13%

Organic Revenue Growth (%) 0.6% -2.5%

Energy & Supercon Technologies (BEST) 30.8 41.4 -26%

Organic Revenue Growth (%) -8.1% 6.3%

Corporate Eliminations -1.0 -5.5

Total Revenue 396.0 457.4 -13%

OPERATING INCOME

Scientific Instruments (BSI) 28.7 31.2 -8%

Energy & Supercon Technologies (BEST) 2.6 4.4 -41%

Corporate Eliminations 0.3 -0.2

Total Operating Income 31.6 35.4 -11%


Sum of items may not total due to rounding

bruker corporation (nasdaq: brkr) · 2018-04-05 · h1 2015 reconciliation of gaap and non-gaap...

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