bruker corporation (nasdaq: brkr) · 2018-11-20 · bruker key objectives 1. accelerate revenue...

© Bruker Corporation

Bruker drives profitable growth by enabling scientific discoveries and delivering high-performance analytical, life science and diagnostic solutions.

Innovation with Integrity

Bruker Corporation (NASDAQ: BRKR)

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Bruker Corporation Safe Harbor Statement

Any statements contained in this presentation that do not describe historical facts may constitute forward-looking statements

within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on current

expectations, forecasts and assumptions of our management and are subject to risks and uncertainties that could cause actual

results to differ materially from those indicated, 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; fluctuations in foreign currency exchange rates; implementation of strategies for

improving our operating margins, profitability and cash flow; changing technologies; product development and market

acceptance of our products; the cost and pricing of our products; competition; dependence on collaborative partners, key

suppliers and contract manufacturers; capital spending and government funding policies; changes in governmental regulations;

the use and protection of intellectual property rights and other risk factors discussed from time to time in our filings with the

Securities and Exchange Commission, or SEC. These and other factors are identified and described in more detail in our most

recent reports filed with the SEC, including, without limitation, our annual report on Form 10-K for the year ended December

31, 2017, 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 2

BIOSPIN Group

BEST Group

NMR/EPR for Life-Science

&Pharma Research

Applied and Industrial NMR/EPR

Preclinical Imaging

Service & Life-Cycle Support

Mass Spectrometry for

• Proteomics & Phenomics • Applied & Bio-Pharma Markets • Microbiology & Diagnostics

FTIR/NIR/Raman for Research & Applied Markets

CBRNE Detection for Security Applications

Service, Consumables & Software

Atomic Force Microscopy

Fluorescence Microscopy for Cell Biology & Neuroscience

X-Ray for Materials Research and QC

Next-Gen Semiconductor Metrology

Service & After-Market

Market Leader in Superconductors and Physics technologies for:

• Medicine: MRI and Particle Therapy • Life Science Tools: NMR, EPR,

MRMS and MRI • Big Science & Fusion projects (e.g.

CERN, ITER, SLAC)


NANO Group

CALID Group

Bruker Overview

Differentiated Leader in Attractive Analytical, Life Science and Diagnostic Tools Markets

• Founded in 1960, Bruker brand

stands for innovation.

• Market leader in high-value analytical technologies.

• FY2017 revenue: ~$1.77 billion

• R&D investment: ~9% of revenue

• ~6,200 employees worldwide

• 2018-2020 focus: Portfolio Transformation and Operational Excellence • Long-term oriented ownership:

~36% owned by insiders

BRUKER HOLDS #1 OR #2 MARKET POSITION FOR ~70% OF OUR PRODUCT PORTFOLIO


Market Leading Positions in Scientific Instruments

NMR & EPR

Spectroscopy

Preclinical Imaging: MRI,

MPI, PET/SPECT, microCT

MALDI BioTyper for Microbiology

Atomic Force Microscopy

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Mass Spec Imaging,

MALDI-TOF & MRMS

X-Ray Diffraction Next Gen Semicon Metrology

BEST Superconductors

& Big Science Physics

FTIR/NIR Spectroscopy

& Microscopy

Atomic Force Microscopy (AFM)

Next-Gen X-ray & AFM

Semiconductor Metrology

X-Ray Diffraction (XRD)

& Crystallography

Bruker Key Objectives

1. Accelerate revenue growth:

Enhance our revenue growth rate over time with our portfolio transformation initiatives

Sustained end market improvements in ACAD/GOV, global Industrial & Applied markets

2. Transform portfolio with six high-growth, high-margin Project Accelerate initiatives:

3. Sustain multi-year operating margin expansion:

Expand operating margin 75-100 bps per year, on average, over a multi-year timeframe

Ongoing commercial and operational excellence initiatives

2015-2017A: total Non-GAAP operating margin expansion of >500 bps over 3-year period

4. Disciplined capital allocation and high ROIC:

Quarterly dividend $0.04/share; 2-year $225M share repurchase authorized in May 2017

BRKR ROIC >20% (FY2017 and FY2016)


Proteomics & Phenomics

Biopharma & Applied

Microbiology & Diagnostics

Neuroscience & Cell Microscopy

Next-gen Nanotechnology Tools

After-Market: Services, Software

and Consumables

Non-GAAP operating margin and ROIC are non-GAAP measures. A reconciliation of these measures to the most directly comparable GAAP measures is available at the end of this presentation and on Bruker’s website at http://ir.bruker.com/investors/press-releases/earnings-releases/default.aspx


Bruker creates shareholder value by:

Being well-positioned in attractive life science tools & diagnostic markets

Transforming our portfolio with a focus on six high-growth, high-margin Project Accelerate initiatives

Operational & Commercial Excellence

Bruker Core Values

Bruker Core Strategies

Portfolio initiatives and cost optimization drive profitable growth

Profitable Growth

Portfolio Cost

Commercial Excellence

Product R&D Excellence

Operational Excellence

• Proteomics & Phenomics

• Biopharma & Applied

• Microbiology & Diagnostics

• Neuroscience & Cell Microscopy

• Next-gen Nanotechnology Tools

• After-Market: Services, Software

and Consumables (1)

Project Accelerate Initiatives:

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Portfolio Transformation

Fundamentally reshaping the portfolio for faster growth & continued multi-year margin expansion

2017 results: About 25% of Bruker’s revenue Grew above LST market GMs & OMs above Bruker average


(1) Services, software and consumables, excluding Microbiology after-market & consumables.

2017 results: About 15% of Bruker’s revenue Lower GMs, higher OMs than Bruker average

Portfolio

Progress with Portfolio Transformation:

timsTOF Pro and scimaX: Enabling Technologies for Clinical Proteomics, Clinical Phenomics & BioPharma

Structural Biology by GHz-Class NMR


Portfolio

New products and novel workflows to

fundamentally change life science research by

mass spec: • Revolutionary timsTOF™ Pro with PASEF opens

ultra-high sensitivity and high-throughput proteomics

• New scimaX enables high-throughput phenomics by FIA-MRMS

Both are enabling technologies for clinical

proteomics and clinical phenomics research

“The development of the scimaX will surely

be a game-changer for ultra-high resolving

power mass spectrometry.”

Professor Joseph A. Loo, UCLA Biological Chem.

David Geffen School of Medicine


timsTOF Pro for 4D LC-TIMS-MS/MS with PASEF in

proteomics research


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Portfolio

Melvin Park, Inventor of TIMS; Matthias Mann, Inventor of PASEF

Courtesy of Prof. M. Mann

Ushering in a new era for ultra-high sensitivity and high-throughput proteomics



Advantages of timsTOF Pro with Online PASEF


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Portfolio

Courtesy of Prof. M. Mann

1 50x improvement in

signal-to-noise ratios 2 Proven robustness 3 High speed with

sensitivity 4 Predicting the utility of

CCS values



MRMS launch at ASMS 2018



Portfolio

• ESI & MALDI (1 sec switch)

• Industry-leading mass resolution

(20 million extreme resolution)

• Routine, broadband Isotope Fine

Structure (IFS) research

• Best ExD dissociation toolbox

• Novel Bruker Maxwell Magnet Technology

(conduction cooled)

• No liquid N2 or Helium fill

• No quench ducts

• Small footprint

• 7Tesla, 2XR detection

MS Imaging for

drug development

Native MS for

Biopharma

Petroleomics,

DOM, core labs

Magnetic Resonance Mass Spectrometry (MRMS)

Metabolomics &

Clinical Phenomics


Hain acquisition adds breadth and new growth drivers to Bruker’s microbiology & diagnostics portfolio

Portfolio


FluoroType®: 2012

PCR with melting curve analysis

High-precision

real-time PCR: 2018

DNA•STRIP GenoType tests

• Established Hain MDx portfolio of mycobacteria tests for TB screening and resistance testing

• MDx assay portfolio for microbial and viral pathogens

• New Fluorocycler™ XT system and work-in-progress Liquid Array™ assays for cost-effective syndromic panels

• Q4-18E post-closing revenue: $6M - $8M(1)

• 2019E non-GAAP EPS accretion: +$0.01 to +$0.02

Liquid Array™

panels: 2019E and beyond

(1) Based on 10/16/2018 close. 12

Operational Excellence Example:

New products and operational excellence drive growth at Optics Portfolio

Solid foundation built on product innovation,

operational and commercial execution

Steady stream of new products targeting attractive

academic, applied and industrial markets

• New INVENIO intelligent FT-IR spectrometer for research use

• MIRA milk analyzer for expansion in food analysis solutions

• Future QCL-based IR microscopes for biologic tissue analysis and materials science research

13 © Bruker Corporation


QCL-based IR microscope

MIRA milk analyzer for the determination

of fat, protein and lactose

INVENIO innovative, next-generation FT-IR

Operational Excellence Example:

Selected Manufacturing and Final Test Moving to Bruker’s New Facility in Penang, Malaysia

Portfolio

• New Bruker manufacturing, engineering and final-test

center in Penang, Malaysia

• Planned transfer of selected Bruker NANO products:

• Lower operating costs for final assembly and

test and local third-party subassembly

production

• Establish low-cost design resources

• Operational in 2019

• 2021E NANO Group revenue from Penang:

>$50M

14 © Bruker Corporation


$0.70

$0.86

YTD FY 2017YTD FY 2018

Non-GAAP EPS

Bruker Year-To-Date 2018 financials(1)

Improved revenue growth and healthy margin expansion drive EPS

13.6% 14.5%

Non-GAAP Operating Margin

$1,235Mil

$1,342Mil

Revenues

+90 bps +23% +$107M (+8.6%)

YTD FY 2017 YTD FY 2018


* Non-GAAP gross margin, non-GAAP operating margin, and non-GAAP EPS are non-GAAP measures. Reconciliations of these measures to the most directly comparable GAAP measures are available at the end of this presentation and on Bruker’s website at http://ir.bruker.com/investors/press-releases/earnings-releases/default.aspx

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(1)For the nine months ended September 30, 2018 and 2017.

FY 2018 Guidance

Revenue Growth y-o-y +6.5% to +7%

Non-GAAP Operating Margin Expansion y-o-y(2)(3)

+50 bps to +80 bps

Non-GAAP EPS $1.36 to $1.40

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FY 2018 Guidance(1): Good revenue growth, further

operating margin expansion

Organic revenue growth:

+3.5% to 4%

Acquisition revenue growth: +1.5%

FX revenue tailwind: +1.5%

Non-GAAP tax rate: ~25%

Fully diluted share count:

~157M shares

Capex: ~$40M to $45M

FX assumptions

(Sept. 28, 2018 rates):

USD = 113.6 Yen

EUR = 1.16 USD

CHF = 1.02 USD

2018 ASSUMPTIONS

(1) As of Bruker’s November 1st, 2018 earnings conference call.

(2) From a FY17 non-GAAP operating margin of 15.9% (following a reclassification of pension expense on the company’s FY 2017 GAAP and non-GAAP financial statements as a result of the adoption of ASU No. 2017-07).

(3) Includes approximately -70 bps of headwind from foreign currency translation.



www.bruker.com

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Bruker Corporation Reconciliation of GAAP to NON-GAAP Financial Measures (unaudited)


(in millions, except per share amounts)

2018 2017 (1)

Reconciliation of Non-GAAP Operating Income, Non-GAAP Profit Before

Tax, Non-GAAP Net Income, and Non-GAAP EPS

GAAP Operating Income 156.0$ 124.2$

Non-GAAP Adjustments:

Restructuring Costs 6.7 8.5

Acquisition-Related Costs 3.9 9.4

Purchased Intangible Amortization 21.5 22.6

Other Costs 7.0 3.8

Total Non-GAAP Adjustments: 39.1$ 44.3$

Non-GAAP Operating Income 195.1$ 168.5$

Non-GAAP Operating Margin 14.5% 13.6%

Non-GAAP Interest & Other Expense, net (11.5) (16.1)

Non-GAAP Profit Before Tax 183.6 152.4

Non-GAAP Income Tax Provision (47.0) (38.7)

Non-GAAP Tax Rate 25.6% 25.4%

Minority Interest (1.5) (1.3)

Non-GAAP Net Income Attributable to Bruker 135.1 112.4

Weighted Average Shares Outstanding (Diluted) 157.2 159.9

Non-GAAP Earnings Per Share 0.86$ 0.70$

Nine Months Ended September 30,

(1) The Company adopted Accounting Standards Update (ASU) 2017-07 as of January 1, 2018 under the retrospective approach. Accordingly, the 2017 income statement accounts have been restated to reflect ASU 2017-07.

Bruker Corporation Reconciliation of GAAP to NON-GAAP Financial Measures (Unaudited)



2018 2017 (1)

Reconciliation of GAAP and Non-GAAP Gross Profit

GAAP Gross Profit 627.2$ 559.8$





Other Costs - 0.7

Total Non-GAAP Adjustments: 19.0 26.3

Non-GAAP Gross Profit 646.2$ 586.1$

Non-GAAP Gross Margin 48.2% 47.4%

Reconciliation of GAAP and Non-GAAP Tax Rate

GAAP Tax Rate 28.7% 23.7%


Tax Impact of Non-GAAP Adjustments -0.2% 1.5%

U.S. Tax Reform- Toll Charge -2.6% 0.0%

Other Discrete Items -0.3% 0.2%

Total Non-GAAP Adjustments: -3.1% 1.7%

Non-GAAP Tax Rate 25.6% 25.4%






2018 2017 (1)

Reconciliation of GAAP and Non-GAAP Earnings Per Share (Diluted)

GAAP Earnings Per Share (Diluted) 0.65$ 0.51$





Other Costs 0.04 0.02

Income Tax Rate Differential (0.04) (0.08)


Non-GAAP Earnings Per Share (Diluted) 0.86$ 0.70$

Reconciliation of GAAP Operating Cash Flow and Non-GAAP Free Cash Flow

GAAP Operating Cash Flow 107.4$ 50.7$


Purchases of property, plant and equipment (28.9) (31.3)

Non-GAAP Free Cash Flow 78.5$ 19.4$

Reconciliation of Impact of Adoption of ASU 2017-07

Cost of revenues (1.3) (2.0)

Selling, general and administrative (0.4) (0.5)

Research and development (0.5) (0.7)

Interest and other income (expense), net 2.2 3.2

Net Impact to Net Income and Earnings per Share: - -





(in millions)

2018 2017

Reconciliation of GAAP Reported Revenue Growth to Organic Revenue Growth

GAAP Revenue as of Prior Comparable Period 1,235.4$ 1,141.0$


Acquisitions and divestitures 11.2 60.4

Currency 37.6 (5.1)

Organic 57.8 39.1


Non-GAAP Revenue 1,342.0$ 1,235.4$

Organic Revenue Growth 4.7% 3.4%


Total Bruker

For more information, visit Bruker’s website at https://ir.bruker.com/investors/press-releases/earnings-releases/default.aspx

With respect to the Company's outlook for 2018 non-GAAP operating margin, non-GAAP EPS and non-GAAP tax rate, we are not providing the most directly comparable GAAP financial measures or corresponding reconciliations to such GAAP financial measures on a forward-looking basis, because we are unable to predict with reasonable certainty certain items that may affect such measures calculated and presented in accordance with GAAP without unreasonable effort. Our expected non-GAAP operating margin, tax rate and EPS ranges exclude primarily the future impact of restructuring actions, unusual gains and losses, acquisition-related expenses and purchase accounting fair value adjustments. These reconciling items are uncertain, depend on various factors outside our management’s control and could significantly impact, either individually or in the aggregate, our future period operating margins, EPS and tax rate calculated and presented in accordance with GAAP.

https://ir.bruker.com/investors/press-releases/earnings-releases/default.aspx





bruker corporation (nasdaq: brkr) · 2018-11-20 · bruker key objectives 1. accelerate revenue...

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