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Bruker Corporation (NASDAQ: BRKR) Credit Suisse Healthcare Conference Mark Munch, President, BMAT Group Joshua Young, VP, Investor Relations November 13, 2013

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Page 1: Bruker Corporation (NASDAQ: BRKR)s1.q4cdn.com/927487829/files/doc_presentations/Credit Suisse... · Bruker Corporation (NASDAQ: BRKR) Credit Suisse Healthcare Conference Mark Munch,

Bruker Corporation (NASDAQ: BRKR)

Credit Suisse Healthcare ConferenceMark Munch, President, BMAT Group

Joshua Young, VP, Investor RelationsNovember 13, 2013

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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 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, 2012, 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

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Agenda

3© Bruker Corporation

1 The Bruker Story

2 Financial Update

3 Overview of BrukerMaterials Group (BMAT)

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Overview of Bruker

© Bruker Corporation 4

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Key Messages

1 We are a premium brand with a track record of innovation and strong leadership positions in a large, attractive industry: life science tools

2 We have embarked on a period of significant managerial, operational, and system changes to modernize our infrastructure & drive efficiency

3 We are restructuring our business to drive higher margins and cash flow over the next 5 years

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Company Profile

Bruker: The leading provider of high-performance scientific instruments and solutions for life science, diagnostic and applied markets.

Founded in 1960

$1.79B revenue

~6,700 employees

~82% of revenues outside of the US

~Direct sales organizations in 33 countries

~1,000 R&D professionals with strong track record of innovation

KEY FIGURES

Bruker BioSpin

BrukerCALID

Bruker Materials

Bruker Scientific Instruments

(BSI)

~94% revenue

Bruker Scientific Instruments

(BSI)

~94% revenue

Bruker Energy & Supercon Technologies

(BEST)

~6% revenue

Bruker Energy & Supercon Technologies

(BEST)

~6% revenue

Bruker ConfidentialAugust 2013 6

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Bruker’s ownership profile has changed over 5 years

7© Bruker Corporation

70%

34%

30%

66%

2008 2013

Public

Laukien Family

The Top 10 Shareholders hold 53% of the shares

Ownership Profile

Top Shareholder Percentage

11.74%

3.47%

3.29%

3.01%

1.97%

1.88%

1.87%

1.70%

1.65%

1.57%

T. Rowe Price

Fidelity

Wellington

Harris

J.P. Morgan

Select Equity Group

Wells Capital

Boston Trust

Pyramis

OppenheimerFunds

Top 10 Shareholders

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Nearly 80% of our revenues are generated outside of the United States

© Bruker Corporation 8

United States

Europe

Rest of World

Asia Pacific

2012 revenues

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We have distinct capabilities and leadership positions in many product lines

9© Bruker Corporation

Bruker

BioSpinBruker

CALIDBruker

MATBruker

BEST

1. Nuclear Magnetic Resonance (NMR)

2. Electron Paramagnetic Resonance (EPR)

3. Preclinical imaging incl. MRI, µCT, PET/SPECT, optical molecular imaging

1. Life-Science and Applied MassSpectrometry

2. MS Diagnostics

3. GC and LC chromatography

4. FT-IR/NIR/Raman

5. CBRNE Detection

1. Atomic Force Microscopy (AFM)

2. X-ray Diffraction, Crystallography, and Fluorescence

3. Optical Metrology, Profilometry

4. Spark-OES, handheld XRF

5. EDS, EBSD

1. LTS and HTS Superconductors

2. Superconductingdevices

3. ‘Big Science’ research infra-structure

Indicative: not representative of all products sold and industries served

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$1,305

$1,652

$1,791 $1,773-$1,791

Little incremental profitability despite strong revenue growth since 2010

10© Bruker Corporation

$0.72 $0.82 $0.83

$0.72- $0.76

2010 2011 2012 2013E

+$468–$486m

Flat -+$0.04

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We expect to exit 2013 with non-GAAP operating margins roughly equivalent to five years ago

© Bruker Corporation 11

10.5%

11.9%

13.8%

11.9% 12.2%

10.8%

2008 2009 2010 2011 2012 2013E

* 2013 operating margins represent mid-point of guidance

Non-GAAP Operating Margin

*

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2012 2013 2014 2015 2016 2017

2013 is the first year of a multi-year effort to transform Bruker

12© Bruker Corporation

New Leadership & Organization Simplified organizational structure New leaders & incentive structures Globalized approach to business

Incremental Profit Improvement Better expense control Evaluation: structure & processes Targeted outsourcing/restructuring

Sustained Profitable Growth Additional supply chain initiatives Improved resource allocation IT investments & process change

Complement Innovation/Growth with Margin-Performance Culture Incentives programs focus on profitability and cash flow Greater visibility and accountability

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We are taking actions in 2013 that are expected to drive $15M to $20M of cost savings in 2014

13© Bruker Corporation

• Closing CAM plant/R&D facility in Europe• Closing BEST CGM business unit in Europe• Closing BMI plant

Q4 2013 Facility

Closures

• On-going outsourcing of BioSpin and other Groups’ non-core manufacturing

• Power Electronics divestiture in Q1

Outsource& Divest

• BMAT H2 13 headcount reduction of ~150• Single-site consolidation of AXS factory• Reducing fixed costs in all BMAT divisions

AdditionalH2-2013 Actions

• Ensure timely execution of 2013 programs• Analyzing additional restructuring

opportunities for 2014 and beyond

Next Steps

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Financial Update

© Bruker Corporation 14

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15.5%

10.8%

Q3 12

Q3 13

Q3 Financials

Revenues [$ m]

Operating Margin*

Weak industrial markets, decline in BioSpinrevenues and tough y-o-y comparison drive results

-2%

-470 bps

* Non-GAAP

© Bruker Corporation 15

448 439

Q3 12 Q3 13

Q3 2013 Performance

Organic revenue decline 2.4% year-over-year

1.Weak industrial demand leads to low-single digit decline of BMAT revenues

2.BioSpin performance affected by double-digit decline in its Pre-Clinical Imaging Division’s revenue

3.BEST Q3 13 revenue down due to ~$16M Rosatom license transaction in Q3 12

Y-o-y non-GAAP operating margin decline primarily driven by ~$16M in operating income contribution from Rosatom in Q3 12

Non-GAAP EPS of $0.20, compared to non-GAAP EPS of $0.28 in Q3 12

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YTD 2013 Non-GAAP Results

[$ m] YTD 2013 YTD 2012 ΔTotal Revenues 1,287.3 1,274.1 1%

Gross Profit 584.2 604.9 -3%Margin (% of sales) 45.4% 47.5%

SG&A -318.6 -313.9 1%

(% of revenues) 24.7% 24.6%

R&D -141.4 -145.0 -2%(% of revenues) 11.0% 11.4%

Operating Income 124.2 146.0 -15%(% of revenues) 9.6% 11.5%

Net Income* 77.1 91.6 -16%

EPS $0.46 $0.54 -15%

Shares Outstanding 168.4 167.3 NM

16© Bruker Corporation

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

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Bruker FY 2013 Guidance

Revenue Growth (reported) -1% to 0%

Restructuring Costs ~$20-$25M

Non-GAAP Tax Rate ~25%-27%

Non-GAAP EPS $0.72 - $0.76

17© Bruker Corporation

Lowering FY 2013 Guidance

Full year revenues of $1,780M to $1,800M, reflect assumption for organic revenue growth of 0% to 1%

BMAT Q4 13 revenue down double-digits y-o-y, compared to strong Q4 12

Rosatom revenue of $5.7M in FY2013 down from $16.4M in FY2012

Currency assumptions against US dollar: Yen/USD: 98 EUR/USD: 1.35

ASSUMPTIONS

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Overview of Bruker Materials Group (BMAT)

© Bruker Corporation 18

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BMAT Profile

Bruker Advance X-ray Solutions Division

(AXS)

Bruker Advance X-ray Solutions Division

(AXS)

Bruker Nano Surfaces Division

(BNS)

Bruker Nano Surfaces Division

(BNS)

Bruker Nano Analytical Division

(BNA)

Bruker Nano Analytical Division

(BNA)

Bruker Elemental Division

(BEL)

Bruker Elemental Division

(BEL)

Over $500M Revenue

~60% Industrial

~40% Academic/Gov’t

~24% N Amer; 32% Europe; 44% APAC/Japan

~Over 280 R&D professionals

KEY FIGURES

August 2013 19Bruker Confidential

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Application Areas and Markets Served in the BMAT Group

Academic / Gov’t research

– Material Science

– Life Science

Industrial materials research

– Metals / Ceramics

– Polymers / Composites

– Electronic materials

Microelectronics

– Semiconductor wafer

– Semiconductor packaging

– Display

– Data storage

Green technology

– HBLED

– Solar

– Battery

Heavy industries processing

– Metals processing / Refractories

– Cement

– Metal scrap

Materials finishing

– Metals finishing

– Polymer coatings

Minerals / Mining / Petrochem

Medical materials

Pharmaceutical

Mining

August 2013 20Bruker Confidential

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Bruker Nano SurfacesUnmatched Imaging and Metrology Performance

World’s highest performance AFMs, 3D optical microscopes, stylus profilers, and mechanical testers

– Atomic Force Microscopy

– Provides unmatched nanoscale characterization of electrical, magnetic, compositional and material properties

– Dimension FastScan, MultiMode 8, Dimension Icon, BioScope Catalyst, Dimension FastScan Bio, Innova, Dimension Edge, Insight 3DAFM, InSight-450 3DAFM

– 3D Optical Microscopy

– Offers unrivaled rapid, non-contact measurement of surface texture and roughness

– ContourGT systems, NPFLEX, SP9900+, HD9800+

– Stylus Profilometry

– Measures thin film roughness, step heights and stress– Dektak XT, Dektak XTL

– Tribology and Mechanical Testing

– Measures friction, wear and material mechanical properties with highest accuracy under widest range of conditions

– UMT-1/-2/-3

Bruker Confidential

Dektak XT

Dimension FastScan

ContourGT-I

August 2013 21

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Bruker AXSWorld’s Leading Analytical X-ray Systems for Materials Research

Innovative biological and chemical crystallography, bulk material and surface sensitive X-ray diffraction, X-ray scattering, and wavelength and energy dispersive X-ray fluorescence analysis for heavy industries, semiconductor, and life sciences

– X-ray Diffraction and Scattering

– Offers materials characterization and quality control of crystalline or non-crystalline materials (i.e., powders, solid blocks, thin films or liquids)

– D8 ADVANCE, D8 DISCOVER, D8 FABLINE, D2 PHASER, N8 HORIZON, NANOSTAR, MICRO Series, D4 ENDEAVOR

– Single Crystal X-ray Diffraction (SC-XRD)

– Provides accurate and precise measurements of molecular dimensions unmatched by other science techniques

– D8 QUEST, D8 VENTURE, SMART X2S, MICROSTAR

– X-ray Micro Computed Tomography (Micro-CT)

– Non-invasive 3D X-ray microscopy– SKYSCAN 1272/1172/1173/1174/1176/1178/2011/2140

– X-ray Fluorescence (XRF)

– Combines highest accuracy and precision with simple and fast sample preparation for elemental analysis

– S8 LION, S8 DRAGON, S8 TIGER, S8 TIGER ECO, S2 RANGER

Bruker Confidential

D8 ADVANCE

SKYSCAN 1172

S8 TIGER

D8 QUEST

August 2013 22

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Bruker ElementalComplete Portfolio of Element Analysis

Innovative solutions to elevate quality and process control for wide range of customers in metal processing and chemical industries

– Optical Emission Spectrometers (OES)

– Analyze directly and simultaneously chemical elements, from sub-ppm to percentage levels, from pure metals trace analysis to high alloyed grades

– Q4 Mobile, Q8 CORONADO, Q6 COLUMBUS, Q8 MAGELLAN

– CS/ONH Analyzers

– Analyze rapidly and simultaneously carbon, sulfur, oxygen, nitrogen and hydrogen in a wide variety of solid materials

– G4 ICARUS CS HF, G8 Galileo ONH, G4 Phoenix DH

– Handheld X-ray Fluorescent (XRF) Spectrometers

– Analyze quantitatively and non-destructively nearly any element, from magnesium to uranium, in diverse applications, including metal analysis, scrap sorting, mining and exploration, and environmental screening

– S1 TITAN, S1 SORTER, Tracer III Series, Tracer IV Series, S1 TURBO SD/SDR

Bruker Confidential

Q8 MAGELLAN

G4 ICARUS S1 TITAN

August 2013 23

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Bruker Nano AnalyticalAdvanced Analysis in Electron Microscopy

A powerful and broad range of systems for energy-dispersive (EDS) and wavelength-dispersive (WDS) X-ray spectrometry, electron backscatter diffraction analysis (EBSD), as well as micro-X-ray fluorescence and micro computed tomography for electron microscopes. Plus micro-XRF instruments.

– EDS, WDS, EBSD

– QUANTAX EDS for SEM/TEM, QUANTAX WDS, QUANTAX WDS EBSD

– Micro-XRF and Micro-CT for SEM

– QUANTAX Micro-XRF, Micro-CT for SEM

– Micro-XRF and TXRF

– Micro-XRF provides highest spatial resolution with spot sizes down to 25um, and TXRF is only X-ray technology with detection limits in low ppb range

– M4 TORNADO, M1 MISTRAL, M1 ORA, S2 PICOFOX, ARTAX

Bruker Confidential

QUANTAX EDS

M4 TORNADO

QUANTAX Micro-XRF

August 2013 24

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A Strong Foundation

Premier brand for high-performance life-science, diagnostics and analytical scientific instruments

Strong innovation track record, taking concrete actions to improve profitability & cash flow

Excellent customer relationships and collaborations

25© Bruker Corporation

…with Realistic Upside Potential

Strong organic growth opportunities remain

Profitability and cash flow improvements represent value

Commitment to continuous improvement: further foundation building underway in terms of new management and processes, systems and operational excellence

Why Invest in Bruker?

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14. November 2013 26

© Copyright Bruker Corporation. All rights reserved

Bruker ConfidentialAugust 2013 26