bruker corporation (nasdaq: brkr)€¦ · q3 2015 earnings presentation frank laukien, president...

Bruker Corporation (NASDAQ: BRKR)

Q3 2015 Earnings Presentation

Frank Laukien, President & CEO

Anthony Mattacchione, SVP & Interim CFO

Joshua Young, VP, IR & Corporate Development November 4, 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 reports on Form 10-Q for the periods ended March 31, 2015 and

June 30, 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

Q3-15 & YTD 2015 Business Update


$0.14

$0.19

Q3-14

Q3-15

Q3 Financials

Revenues [$ m]

Non-GAAP EPS

Bruker delivers stronger, more balanced financial

performance in Q3 2015

-6%

+36%


420 396

Q3-14 Q3-15

Q3 2015 Performance

Revenues decline -$24m, or -6% y-o-y

− FX headwinds lower revenue -11% y-o-y

Organic revenue growth of +8% y-o-y, driven

by CALID and BioSpin Groups

− Europe & Asia are strongest regions

Non-GAAP operating margins expand by +470

basis points y-o-y

Non-GAAP EPS grows by +36% y-o-y despite

higher tax rate

Free cash flow of $45M in Q3-15 up compared

to $4M in Q3-14

− Higher profitability and lower working

capital drive FCF improvement

$0.46

$0.51

YTD 2014

YTD 2015

YTD Financials

Revenues [$ m]

Non-GAAP EPS

Q3-YTD Bruker is on track for a year of good margin

expansion, earnings growth and cash flow generation

-12%

+11%


1,301 1,146

YTD 14 YTD 15

Q3 YTD 2015 Performance

Revenues decline -12% y-o-y

Organic revenue growth of +2% y-o-y

1.High-single digit organic revenue growth

from CALID Group; low single digit

organic revenue growth in NANO Group

2.Low single digit organic revenue decline

in BioSpin Group

3.Europe and Asia drive YTD organic growth

Non-GAAP operating margin expands by +220

basis points y-o-y, including +115 basis points

due to CAM restructuring in 2014

Reported non-GAAP EPS grows +11%

Free cash flow of $57M increases by +$39

million, compared to $18M in Q3 YTD 2014

Bruker BIOSPIN Group

Strong revenue growth for Nuclear Magnetic Resonance (NMR) as

business rebounds in all major geographies

NMR business recovery continues as order bookings remain healthy

Preclinical imaging business reports mid-single digit organic growth

in Q3-15, but YTD weakness in order bookings continues

Positive product mix, benefits from restructuring, higher-margin

transactions, earlier than expected customer acceptances drive

improved margins

Bruker CALID Group

Delivers double-digit organic revenue growth y-o-y with strong

performance in Europe and Asia, and with strong margin expansion

Daltonics Division drives organic revenue growth in nearly all product

lines and geographies

Detection Division generates exceptional, but non-recurring revenue

growth in Q3-15 with new explosives trace detection products

Optics Division experiences flat organic revenues due to restrained

demand from industrial and high-end R&D customers

6 © Bruker Corporation

GROUP OVERVIEW:

Q3 2015 Performance

Bruker NANO Group

Organic revenue and bookings decline due to weaker demand from

most industrial market segments

AXS Division posts mid-single digit organic revenue growth: strong

demand for X-ray diffraction products and improved execution

Nano Surfaces Division revenues decline primarily due to weak

industrial, semiconductor and data storage customers

Acquisition of Jordan Valley Semiconductor (at end of October 2015)

will enable Bruker to capitalize on secular trends of smaller feature

sizes and 3D structures in semiconductor metrology market

BEST Segment

Achieved almost 10% non-GAAP operating margin

ROSATOM pilot line acceptance shifted to Q4-15

Q3-15 YTD organic bookings growth >20% y-o-y

GROUP OVERVIEW:

Q3 2015 Performance


8

A9 processor

14nm FinFET

Xeon + FPGA for Data Center

10nm FinFET 3D packaging

Social Media Cloud Computing Wearable/Portable Electronics

V - NAND

3D NAND

Acquisition of Jordan Valley Semiconductor closed enables new Bruker Semiconductor Division to capitalize on semi

trends to 3D features & smaller size nodes for:

© Bruker Corporation

Key Messages after Q3 2015:


Bruker is on track to meet or exceed its FY15 guidance for organic revenue growth, margin expansion and EPS

BIOSPIN Group is recovering after a weak start in H1 2015

CALID Group is successfully driving the adoption of new products and generating higher growth and margins

We are attracting top-notch senior managers and board members

Q3 2015 Financial Update


NON-GAAP FINANCIAL PERFORMANCE:

Q3 2015 Overview

[$ m, except EPS] Q3 2015 Q3 2014 Δ

Revenues 396.1 419.8 -6%

Operating Income 52.8 35.9 47%

Margin (%) 13.3% 8.6%

EPS $0.19 $0.14 36%

Free Cash Flow 44.7 3.6 41.1M

Strong operating margin expansion aided by an easy Q3-14 comparison and absence of CAM results

Strong cash flow generation driven by operational improvements and tax refunds

Working capital ratios continue to improve


COMMENTS

[$ m] Sep 30, 2015 Sep 30, 2014 Δ

Net Cash 160.9 87.1 85%

Working capital (WC)* 633.2 737.2 -14%

WC-to-revenue ratio 0.38 0.40 -0.02

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

Q3 2014 Organic Currency Divestitures Q3 2015

$419.8M

$396.1M

Q3 2015 revenue bridge

CALID and BioSpin Group drive organic revenue increase

Strong currency headwinds


Q3 2015 DRIVERS

Q3 2015 Revenue Bridge [$ m]

+$33.2 -$45.8 -$11.1

Organic Currency Divestitures Total

8.1% -10.9% -2.8% -5.6%

Q3 2015 Revenue for Bruker Corp.

Q3 2015 Non-GAAP Results

Gross margin improvement is primarily the result of increased volume, positive product mix, restructuring actions, and the absence of CAM results

Lower operating expenses due to FX translation and absence of CAM results

Higher tax rate is the result of changes in jurisdictional mix, including lower US pre-tax profits

FX headwinds lower EPS by (-$0.02) in Q3-15


COMMENTS [$ m, except EPS] Q3 2015 Q3 2014 Δ

Total Revenues 396.1 419.8 -6%

Gross Profit 182.7 185.5 -2% Margin (% of revenues) 46.1% 44.2%

SG&A -95.6 -107.5 -11%

(% of revenues) 24.1%

25.6%

R&D -34.3 -42.1 -19% (% of revenues) 8.7% 10.0%


(% of revenues) 13.3% 8.6%

Tax Rate 32.2% 27.0% 520 bps

Net Income* 31.6 23.8 33%

EPS $0.19 $0.14 36%

Shares Outstanding 168.7 169.6 NM

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

Q3 2015 Reconciliation of GAAP and

Non-GAAP Results

[$ m, except EPS] Q3 2015 Q3 2014

GAAP Operating Income 28.2 4.9

Restructuring Costs 12.7 16.2

Acquisition-Related Costs 1.2 1.4

Purchased Intangible Amortization 5.1 5.1

Other Costs 5.6 8.3

TOTAL 24.6 31.0

Non-GAAP Operating Income 52.8 35.9

Non-GAAP Interest & Other Income (Expense), net* -4.6 -2.2

Non GAAP Profit* Before Tax 48.2 33.7

Non-GAAP Income Tax Provision -15.5 -9.1

Non-GAAP Tax Rate 32.2% 27.0%

Minority Interest -1.1 -0.8

Non-GAAP Net Income** 31.6 23.8

Non-GAAP EPS $0.19 $0.14


Sum of items may not total due to rounding *Excludes $6.3M of net gains for 2014 **Attributable to Bruker

Q3-14 YTD Organic Currency Divestitures Q3-15 YTD

$1,300.9M

$1,145.6M

Q3-15 YTD revenue bridge

Organic revenue growth of 1.9% driven by CALID Group

Europe is strongest region on YTD basis


Q3-15 YTD DRIVERS

Q3-15 YTD Revenue Bridge [$ m]

+$23.9 -$145.2 -$34.0

Organic Currency Divestitures Total

1.9% -11.1% -2.7% -11.9%

Q3-15 YTD Revenue for Bruker Corp.

Q3-15 YTD Non-GAAP Results

CALID drives most of gross margin improvement

– CAM divestments in 2014 add +64 bps to gross margin

-$67M reduction in opex related to FX translation and absence of CAM results

Non-GAAP operating margin increases by +220 bps

Non-GAAP EPS headwind of (-$0.07) from FX


COMMENTS [$ m, except EPS] Q3-15 YTD Q3-14 YTD Δ

Total Revenues 1,145.6 1,300.9 -12%

Gross Profit 528.2 584.5 -10% Margin (% of revenues) 46.1% 44.9%

SG&A -287.7 -331.2 -13%

(% of revenues) 25.1%

25.5%

R&D -109.0 -132.6 -18% (% of revenues) 9.5% 10.2%


(% of revenues) 11.5% 9.3%

Tax Rate 23.9% 28.0% -410 bps

Net Income* 86.6 77.4 12%

EPS $0.51 $0.46 11%



Q3-15 YTD Reconciliation of GAAP and

Non-GAAP Results

[$ m, except EPS] Q3-15 YTD Q3-14 YTD

GAAP Operating Income 75.0 60.9

Restructuring Costs 21.2 29.3

Acquisition-Related Costs -1.4 3.0

Purchased Intangible Amortization 15.5 15.1

Other Costs 21.2 12.4

TOTAL 56.5 59.8

Non-GAAP Operating Income 131.5 120.7

Non-GAAP Interest & Other Income (Expense), net* -14.1 -9.7

Non-GAAP Profit* Before Tax 117.4 111.0

Non-GAAP Income Tax Provision -28.1 -31.1

Non-GAAP Tax Rate 23.9% 28.0%

Minority Interest -2.7 -2.5

Non-GAAP Net Income** 86.6 77.4

Non-GAAP EPS $0.51 $0.46


* Excludes $0.2M of net losses for 2015 and $6.6M of net gains for 2014 **Attributable to Bruker

Sum of items may not total due to rounding

Q3-15 Cash Flow Statement

Higher gross margins, lower restructuring costs result in higher net income

Working capital efficiency continues to improve

“Other” increases as a source of cash mostly due to tax refunds and operational improvements


COMMENTS [$ m] Q3 2015 Q3 2014 Δ

Net Income 12.9 6.3 6.6

Depreciation & amortization 13.3 17.6 -4.3

Changes in working capital* -3.0 -16.0 13.0

Other 30.9 5.6 25.3

Operating cash flow 54.1 13.5 40.6

Capital expenditures -9.4 -9.9 0.5

Free cash flow 44.7 3.6 41.1

Full Year 2015 Outlook


Updated FY 2015 Guidance

Organic Revenue Growth Approximately +1%

Non-GAAP Operating Margin Expansion y-o-y

>150 bps

Non-GAAP EPS $0.75 - $0.80


We are increasing our FY-2015 Guidance

Changes in currency reduce revenues by (-10%)

FX generates -13% or (-$0.10) headwind to non-GAAP EPS in 2015

CAM revenues decrease by ~$50M in 2015

FY 2015 tax rate: ~24%-25%

Current currency assumptions: Yen/USD: 120 USD/EUR: 1.12

2015 ASSUMPTIONS

Appendix


Q3 2015 GAAP Results

[$ m, except EPS] Q3 2015 Q3 2014 Δ

Total Revenues 396.1 419.8 -6%

Gross Profit 167.5 167.3 NM

Margin (% of sales) 42.3% 39.9%

SG&A -96.1 -108.0 -11%

(% of revenues) 24.3% 25.7%

R&D -34.3 -42.1 -19%

(% of revenues) 8.7% 10.0%


(% of revenues) 7.1% 1.2%

Net Income* 11.8 5.5 115%

EPS $0.07 $0.03 133%




Balance sheet

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

Cash, Cash Equivalents & Short-term Investments

532.3 442.3 497.5

Financial Debt 371.4 355.2 355.0

Net Cash 160.9 87.1 142.5


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

Total Assets 1,842.9 1,910.6 1,864.8

Working Capital* 633.2 737.2 694.6

Intangibles, Net & Other Long-Term Assets

224.1 245.9 248.6

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

Q3-15 YTD GAAP Results

[$ m, except EPS] Q3-15 YTD Q3-14 YTD Δ

Total Revenues 1,145.6 1,300.9 -12%

Gross Profit 497.1 547.5 -9%

Margin (% of sales) 43.4% 42.1%

SG&A -289.2 -332.5 -13%

(% of revenues) 25.2% 25.6%

R&D -109.0 -132.6 -18%

(% of revenues) 9.5% 10.2%


(% of revenues) 6.5% 4.7%

Net Income* 40.2 30.6 31%

EPS $0.24 $0.18 33%




Q3-15 YTD Cash Flow Statement

[$ m] Q3-15 YTD Q3-14 YTD Δ

Net Income 42.9 33.1 9.8

Depreciation & amortization 40.0 47.6 -7.6

Changes in working capital* 11.4 2.8 8.6

Other -14.7 -38.5 23.8

Operating cash flow 79.6 45.0 34.6

Capital expenditures -22.8 -26.7 3.9

Free cash flow 56.8 18.3 38.5


Q3-15 GAAP SEGMENT RESULTS:

BSI and BEST GAAP Performance

[$ m] Q3 2015 Q3 2014 Δ

REVENUE

Scientific Instruments (BSI) 366.6 383.4 -4%

Organic Revenue Growth (%) 9.3% -7.1%

Energy & Supercon Technologies (BEST) 32.9 40.0 -18%

Organic Revenue Growth (%) -2.6% 22.6%

Corporate Eliminations -3.4 -3.6

Total Revenue 396.1 419.8 -6%

OPERATING INCOME

Scientific Instruments (BSI) 25.8 0.8 NM

Energy & Supercon Technologies (BEST) 2.5 3.9 -36%

Corporate Eliminations -0.1 0.2

Total Operating Income 28.2 4.9 476%


Sum of items may not total due to rounding

bruker corporation (nasdaq: brkr)€¦ · q3 2015 earnings presentation frank laukien, president...

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