Bruker Corporation (NASDAQ: BRKR) today reported financial
results for the three and six months ended June 30, 2010.
Second Quarter 2010 Financial Highlights:
- Revenue increased by 19%
year-over-year (y-o-y) to $300.9 million, or by 20% y-o-y excluding
the effects of acquisitions and foreign currency translation
- Adjusted EPS grew 114% y-o-y to
$0.15
- Adjusted operating margin for
the Bruker Scientific Instruments (BSI) segment expanded by 650
basis points y-o-y to 15.1%
First Half Year 2010 Financial Highlights:
- Revenue increased by 20% y-o-y
to $578.6 million, or by 15% y-o-y excluding the effects of
acquisitions and foreign currency translation
- Adjusted EPS grew 92% y-o-y to
$0.25
- Adjusted operating margin for
the Bruker Scientific Instruments (BSI) segment expanded by 510
basis points y-o-y to 13.1%
Adjusted operating margin and adjusted EPS are non-GAAP measures
that exclude certain items detailed later in this press release
under the heading “Use of Non-GAAP Financial Measures.”
Financial Results
In the second quarter of 2010, revenue was $300.9 million, an
increase of 19% compared to revenue of $252.5 million in the second
quarter of 2009. Excluding the effects of acquisitions and foreign
currency translation, second quarter 2010 revenue increased by 20%
year-over-year. GAAP net income for the second quarter of 2010 was
$22.6 million, or $0.14 per diluted share, compared to GAAP net
income of $12.9 million, or $0.08 per diluted share, in the second
quarter of 2009. Adjusted net income for the second quarter of 2010
was $25.0 million, or $0.15 per diluted share, compared to adjusted
net income of $12.3 million, or $0.07 per diluted share, in the
second quarter of 2009.
For the six months ended June 30, 2010, revenue was $578.6
million, an increase of 20% compared to revenue of $483.0 million
in the first half of 2009. Excluding the effects of acquisitions
and foreign currency translation, revenue for the first six months
of 2010 increased by 15% over the comparable period in 2009. GAAP
net income for the six months ended June 30, 2010 was $38.7
million, or $0.23 per diluted share, compared to GAAP net income of
$21.3 million, or $0.13 per diluted share, for the six months ended
June 30, 2009. Adjusted net income for the six months ended June
30, 2010 was $41.9 million, or $0.25 per diluted share, compared to
adjusted net income of $21.5 million, or $0.13 per diluted share,
for the six months ended June 30, 2009.
Cash flow from operations for the second quarter of 2010 was
$47.6 million, compared to $38.2 million in the second quarter of
2009. In the second quarter, on May 19, 2010, Bruker closed the
acquisition of three former Varian, Inc. chemical analysis product
lines from Agilent Technologies, Inc., for a cash purchase price of
$37.5 million. Bruker ended the second quarter of 2010 with cash,
cash equivalents and restricted cash of $190.1 million, and net
cash of $63.4 million.
Bruker’s trailing twelve months working-capital-per-revenue
ratio declined from $0.51 as of June 30, 2009, to $0.44 as of June
30, 2010.
Comment and Outlook
Frank Laukien, President and CEO, commented: “We are extremely
pleased with both our second quarter and half year results, with
record first half revenues, operating income and earnings per
share. The execution by our teams was outstanding and for the
second quarter in a row all four operating divisions in our
Scientific Instruments segment delivered double-digit organic
top-line growth year-over-year. Our new order bookings have been
very healthy, as we continue to benefit from additional stimulus
orders, with more than $30 million in additional US ARRA funded
orders received during the first half of 2010. We have also
experienced dramatic bookings growth in some of our industrial
analysis product lines, which in the first half of 2010 increased
by more than 50% compared to the first half of 2009, and again by
more than 10% sequentially compared to the second half of 2009,
even though the second half of each year is typically seasonally
stronger.”
Dr. Laukien continued: “We monitor academic and government
research budgets in Europe, and we believe that overall these will
continue to be stable or growing. While many European governments
intend to reduce spending, we believe that these reductions will
primarily target other government expenditures, while public
science and research funding will largely be protected as a key
investment in the future. For example, the just announced European
Union Seventh Framework Programme budgets EUR6.4 billion for
proposals in 2011, up 12% from 2010, and up 30% from 2009.
Similarly, France just announced the ‘Grand Emprunt’ stimulus-type
initiative to invest EUR11 billion on research and an additional
EUR8 billion on university budgets in 2011, an increase from
current budget levels. We are optimistic about future government
research budgets in many key European countries. Moreover, Bruker
is a very dynamic and resilient company, and our high-performance
product portfolio and diversified customer base positions us well
to continue our revenue growth and margin expansion.”
Commenting on BEST, Dr. Laukien stated: “We are also pleased
with the continued revenue growth at our BEST segment. In the last
five quarters since our Accel acquisition, the BEST external
backlog under contract has increased from $14.3 million on March
31, 2009 to over $90 million as of June 30, 2010.”
Bruker Scientific Instruments (BSI) Segment
In the second quarter of 2010, BSI revenue was $284.9 million,
an increase of 18% compared to $241.3 for the second quarter of
2009. Our new chemical analysis business, acquired on May 19, 2010,
generated revenue of $3.7 million during the last 6 weeks of the
second quarter of 2010. Excluding the effects of acquisitions and
foreign currency translation, BSI revenue for second quarter of
2010 increased by 18% over the comparable period in 2009.
Adjusted operating margin for the BSI segment in the second
quarter of 2010 was 15.1%, compared to 8.6% in the second quarter
of 2009. GAAP EPS for the BSI segment in the second quarter of 2010
was $0.15, compared to $0.08 in the second quarter of 2009.
For the six months ended June 30, 2010, BSI revenue was $545.2
million, an increase of 17% compared to revenue of $464.9 million
in the first half of 2009. Excluding the effects of acquisitions
and foreign currency translation, BSI revenue for the first six
months of 2010 increased by 14% over the comparable period in 2009.
Adjusted BSI operating margin for the six months ended June 30,
2010 was 13.1%, compared to 8.0%, for the six months ended June 30,
2009. GAAP EPS for the BSI Segment for the six months ended June
30, 2010 was $0.26 per diluted share, compared to $0.14 per diluted
share for the six months ended June 30, 2009.
Bruker Energy & Supercon Technologies (BEST)
Segment
In the second quarter of 2010, BEST revenue was $18.1 million,
an increase of 32% compared to $13.7 for the second quarter of
2009. Excluding the effects of foreign currency translation, BEST
revenue for the second quarter 2010 increased by 41% organically
over the comparable period in 2009. The GAAP BEST loss per diluted
share in the second quarter of 2010 was ($0.01), compared to
$(0.00) in the second quarter of 2009.
For the six months ended June 30, 2010, revenue for BEST was
$38.8 million, an increase of 78%, compared to revenue of $21.8
million in the first half of 2009. Excluding the effects of
acquisitions and foreign currency translation, BEST revenue for the
first six months of 2010 increased by 47% over the comparable
period in 2009. GAAP BEST loss per diluted share for the six months
ended June 30, 2010 was ($0.02), compared to ($0.02) for the six
months ended June 30, 2009.
Use of Non-GAAP Financial Measures
In addition to the financial measures prepared in accordance
with generally accepted accounting principles (GAAP), we use
certain non-GAAP financial measures, including adjusted EPS,
adjusted operating income and adjusted operating margin, which
exclude acquisition-related and restructuring and other charges. We
exclude the above items because they are outside of our normal
operations and/or, in certain cases, are difficult to forecast
accurately for future periods. We believe that the use of non-GAAP
measures helps investors to gain a better understanding of our core
operating results and future prospects, consistent with how
management measures and forecasts the company’s performance,
especially when comparing such results to previous periods or
forecasts.
For example:
We exclude certain acquisition-related charges or credits and
associated tax effects, including charges for the sale of
inventories revalued at the date of acquisition, significant
transaction costs such as legal fees and credits associated with
bargain purchases. We exclude these costs because we do not believe
they are indicative of our normal operating costs.
We exclude charges and tax effects associated with restructuring
and business divestiture activities, such as reducing overhead and
consolidating facilities. We believe that the costs related to
these restructuring and business divestiture activities are not
indicative of our normal operating costs.
We exclude the expense and tax effects associated with the
amortization of acquisition-related intangible assets because a
significant portion of the purchase price for acquisitions may be
allocated to intangible assets that have lives of 5 to 20 years.
Exclusion of these non-cash amortization expenses allows
comparisons of operating results that are consistent over time for
both our newly acquired and long-held businesses.
Bruker’s management uses these non-GAAP measures, in addition to
GAAP financial measures, as the basis for measuring the company’s
core operating performance and comparing such performance to that
of prior periods and to the performance of our competitors. Such
measures are also used by management in their financial and
operating decision-making and for compensation purposes.
The non-GAAP financial measures of Bruker’s results of
operations included in this press release are not meant to be
considered superior to or a substitute for Bruker’s results of
operations prepared in accordance with GAAP. Reconciliations of
such non-GAAP financial measures to the most directly comparable
GAAP financial measures are set forth in the accompanying
tables.
EARNINGS CONFERENCE CALL
Bruker Corporation will host an operator-assisted earnings
conference call at 10:00 a.m. Eastern Daylight Time on Wednesday,
July 28, 2010. To listen to the webcast, investors can go to
http://ir.bruker.com and click on the live web broadcast symbol.
The webcast will be available through the Company web site for 30
days. Investors can also listen and participate on the telephone in
the US and Canada by calling 800-688-0796, or +1-617-614-4070
outside the US and Canada. Investors should refer to the Bruker
Earnings Call. A telephone replay of the conference call will be
available one hour after the conference call by dialing
888-286-8010 in the US and Canada, or +1-617-801-6888 outside the
US and Canada, and then entering replay pass code 54990611. For
more information, please visit http://ir.bruker.com
CAUTIONARY STATEMENT
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, 2009, our most
recent quarterly reports on Form 10-Q and our current reports on
Form 8-K. We expressly disclaim any intent or obligation to update
these forward-looking statements other than as required by law.
Bruker Corporation
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (unaudited)
(in millions, except per share amounts) Three
Months Ended June 30, Six Months Ended June 30,
2010 2009 2010 2009
Revenues $ 300.9 $ 252.5 $ 578.6 $ 483.0 Cost of revenues
165.2 141.3 316.6
269.1 Gross profit 135.7 111.2 262.0 213.9
Operating Expenses: Selling, general and administrative 64.0 60.4
129.7 118.9 Research and development 31.2 31.1 64.0 60.2
Amortization of acquisition-related intangible assets 0.7 0.5 1.1
0.9 Other charges (credits), net 1.9 (1.0 )
2.4 (0.6 ) Total operating expenses
97.8 91.0 197.2 179.4
Operating income 37.9 20.2 64.8 34.5 Interest
and other income (expense), net (4.2 ) (2.9 )
(4.5 ) (2.8 ) Income before income taxes and
noncontrolling interest in consolidated subsidiaries 33.7 17.3 60.3
31.7 Income tax provision 10.8 4.6
21.4 10.4 Consolidated net
income 22.9 12.7 38.9 21.3 Net income (loss) attributable to
noncontrolling interests in consolidated subsidiaries 0.3
(0.2 ) 0.2 - Net income
attributable to Bruker Corporation $ 22.6 $ 12.9 $
38.7 $ 21.3 Net income per common share
attributable to Bruker Corporation shareholders: Basic $ 0.14
$ 0.08 $ 0.24 $ 0.13 Diluted $ 0.14
$ 0.08 $ 0.23 $ 0.13 Weighted
average common shares outstanding: Basic 164.3
163.3 164.2 163.3 Diluted
165.8 164.7 165.7 164.5
Reconciliation of adjusted
operating income, net income and earnings per share forthe
three and six months ended June 30, 2010 and 2009 (unaudited) (a)
(b)
(in millions, except per share
data)
(in millions, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30, 2010
2009 2010 2009 Reconciliation of
Adjusted Operating Income GAAP operating income (a) $ 37.9 $
20.2 $ 64.8 $ 34.5 Cost of revenues charges (c) 0.2 - 0.2 -
Amortization of acquisition-related intangible assets (d) 0.7 0.5
1.1 0.9 Other charges (credits), net (e) 1.9
(1.0 ) 2.4 (0.6 ) Adjusted operating income $
40.7 $ 19.7 $ 68.5 $ 34.8 Adjusted
operating margins 13.5 % 7.8 % 11.8 % 7.2 %
Reconciliation of Adjusted Net Income GAAP net income (a) $
22.6 $ 12.9 $ 38.7 $ 21.3 Cost of revenues charges (c) 0.2 - 0.2 -
Amortization of acquisition-related intangible assets (d) 0.6 0.4
1.0 0.8 Other charges (credits), net (e) 1.6
(1.0 ) 2.0 (0.6 ) Adjusted net income $ 25.0
$ 12.3 $ 41.9 $ 21.5
Reconciliation of Adjusted Earnings Per Share GAAP earnings
per share (a) $ 0.14 $ 0.08 $ 0.23 $ 0.13 Cost of revenues charges
(c) - - - - Amortization of acquisition-related intangible assets
(d) - - 0.01 - Other charges (credits), net (e) 0.01
(0.01 ) 0.01 - Adjusted earnings
per share $ 0.15 $ 0.07 $ 0.25 $ 0.13
(a) “GAAP” (reported) results were determined in
accordance with U.S. generally accepted accounting principles
(GAAP) (b) Adjusted results are non-GAAP measures and for income
measures exclude certain charges to cost of revenues (see note c
for details); amortization of acquisition-related intangible assets
(see note d for details); and restructuring and other charges (see
note e for details); the tax consequences of the preceding items
(see note f for details) (c) Reported results in 2010 include
charges for the sale of inventories revalued at the date of
acquisition (d) Reported results in 2010 and 2009 include charges
for the amortization of acquisition-related intangible assets (e)
Reported results within other charges (credits) in 2010 include
$1.0 million of charges associated with the divestiture of a
manufacturing facility, and $0.5 million of charges associated with
short-term transition services agreements and $0.4 million in
charges for professional fees associated with our chemical analysis
division acquisition in the second quarter. Reported results within
other charges (credits) in 2009 included a net gain of $1.0 million
on the acquisition of ACCEL Instruments (f) The charges described
in notes c, d and e have been tax effected using enacted tax rates
in the jurisdiction in which the charge was recorded
Reconciliation of BSI and BEST
reportable segments to the consolidated results of
BrukerCorporation for the three and six months ended June
30, 2010 and 2009 (unaudited) (a)(b)
Segment Data Bruker
(in millions, except per share amounts) Bruker
Energy & Corporate, Consolidated
Scientific Supercon Adjustments Bruker
Three Months Ended June 30, 2010: Instruments
Technologies & Eliminations Corporation
Revenue $ 284.9 $ 18.1 $ (2.1 ) $ 300.9 Gross profit
- GAAP 133.4 3.1 (0.8 ) 135.7 Cost of revenues charges (c)
0.2 - - 0.2 Gross
profit - adjusted 133.6 3.1 (0.8 ) 135.9 Gross profit margin -
adjusted 46.9 % 17.1 % 45.2 % Operating income (loss) - GAAP
40.4 (1.7 ) (0.8 ) 37.9 Amortization of acquisition-related
intangible assets (d) 0.6 0.1 - 0.7 Other charges (e) 1.9
- - 1.9 Operating
income (loss) - adjusted 42.9 (1.6 ) (0.8 ) 40.5 Operating margin -
adjusted 15.1 % (8.8 %) 13.5 % Net income (loss)
attributable to Bruker Corporation - GAAP 25.1 (2.0 ) (0.5 ) 22.6
Diluted net income (loss) per common share attributable to
Bruker Corporation - GAAP $ 0.15 $ (0.01 ) $ (0.00 ) $ 0.14
Weighted average shares outstanding: 165.8 164.3 164.3 165.8
Three Months Ended June 30, 2009: Revenue $ 241.3 $
13.7 $ (2.5 ) $ 252.5 Gross profit - GAAP 109.6 1.6 - 111.2
Cost of revenues charges (c) - -
- - Gross profit - adjusted 109.6 1.6 - 111.2
Gross profit margin - adjusted 45.4 % 11.7 % 44.0 %
Operating income (loss) - GAAP 20.4 (0.7 ) 0.5 20.2 Amortization of
acquisition-related intangible assets (d) 0.4 0.1 - 0.5 Other
charges (credits), net (e) - (1.0 ) -
(1.0 ) Operating income (loss) - adjusted 20.8 (1.6 )
0.5 19.7 Operating margin - adjusted 8.6 % (11.7 %) 7.8 %
Net income (loss) attributable to Bruker Corporation - GAAP 13.2
(0.8 ) 0.5 12.9 Diluted net income (loss) per common share
attributable to Bruker Corporation - GAAP $ 0.08 $ (0.00 ) $ 0.00 $
0.08 Weighted average shares outstanding: 164.7 163.3 164.7
164.7
Segment Data Bruker
(in millions, except per share amounts) Bruker
Energy & Corporate, Consolidated
Scientific Supercon Adjustments Bruker
Six Months Ended June 30, 2010: Instruments
Technologies & Eliminations Corporation
Revenue $ 545.2 $ 38.8 $ (5.4 ) $ 578.6 Gross profit
- GAAP 255.9 7.2 (1.1 ) 262.0 Cost of revenues charges (c)
0.2 - - 0.2 Gross
profit - adjusted 256.1 7.2 (1.1 ) 262.2 Gross profit margin -
adjusted 47.0 % 18.6 % 45.3 % Operating income (loss) - GAAP
68.1 (2.2 ) (1.1 ) 64.8 Amortization of acquisition-related
intangible assets (d) 0.9 0.2 - 1.1 Other charges (e) 2.4
- - 2.4 Operating
income (loss) - adjusted 71.4 (2.0 ) (1.1 ) 68.3 Operating margin -
adjusted 13.1 % (5.2 %) 11.8 % Net income (loss)
attributable to Bruker Corporation - GAAP 42.3 (2.8 ) (0.8 ) 38.7
Diluted net income (loss) per common share attributable to
Bruker Corporation - GAAP $ 0.26 $ (0.02 ) $ (0.00 ) $ 0.23
Weighted average shares outstanding: 165.7 164.2 164.2 165.7
Six Months Ended June 30, 2009: Revenue $ 464.9 $
21.8 $ (3.7 ) $ 483.0 Gross profit - GAAP 211.0 2.2 0.7
213.9 Cost of revenues charges (c) - -
- - Gross profit - adjusted 211.0 2.2
0.7 213.9 Gross profit margin - adjusted 45.4 % 10.1 % 44.3 %
Operating income (loss) - GAAP 36.5 (3.1 ) 1.1 34.5
Amortization of acquisition-related intangible assets (d) 0.7 0.2 -
0.9 Other charges (credits), net (e) - (0.6 )
- (0.6 ) Operating income (loss) - adjusted
37.2 (3.5 ) 1.1 34.8 Operating margin - adjusted 8.0 % (16.1 %) 7.2
% Net income (loss) attributable to Bruker Corporation -
GAAP 23.5 (3.4 ) 1.2 21.3 Diluted net income (loss) per
common share attributable to Bruker Corporation - GAAP $ 0.14 $
(0.02 ) $ 0.01 $ 0.13 Weighted average shares outstanding:
164.5 163.3 164.5 164.5
Bruker Corporation
CONDENSED CONSOLIDATED BALANCE
SHEETS (unaudited)
(in millions) June 30,
December 31, 2010 2009 ASSETS
Current assets: Cash, cash equivalents and restricted cash $ 190.1
$ 209.1 Accounts receivable, net 161.5 184.1 Inventories 424.5
422.8 Other current assets 58.5 57.5 Total current
assets 834.6 873.5 Property, plant and equipment, net 199.3
223.4 Intangible and other long-term assets 106.6
75.1 Total assets $ 1,140.5 $ 1,172.0
LIABILITIES
AND SHAREHOLDERS' EQUITY Current liabilities: Short-term
borrowings $ 25.1 $ 22.0 Accounts payable 53.6 49.8 Customer
advances 212.0 219.2 Other current liabilities 252.5
249.2 Total current liabilities 543.2 540.2 Long-term debt
101.6 115.7 Other long-term liabilities 83.1 97.3 Total
shareholders' equity 412.6 418.8 Total
liabilities and shareholders' equity $ 1,140.5 $ 1,172.0
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