Bruker Corporation (NASDAQ: BRKR) today reported financial
results for its second quarter ended June 30, 2014.
Bruker’s revenues for the second quarter of 2014 grew by 0.5
percent to $457.4 million, compared to $454.9 million in the second
quarter of 2013. Excluding a 0.5 percent positive effect from
acquisitions and a 2.2 percent benefit from changes in foreign
exchange rates, Bruker reported a year-over-year organic revenue
decline of 2.2 percent in the second quarter of 2014.
Bruker reported second quarter 2014 GAAP operating income of
$35.4 million, or 7.7% of revenues, compared to $43.5 million, or
9.6% of revenues, in the second quarter of 2013. Second quarter
2014 GAAP earnings per diluted share (EPS) were $0.10, compared to
EPS of $0.14 in the second quarter of 2013.
On a non-GAAP basis, Bruker reported second quarter 2014
operating income of $52.7 million, or 11.5% of revenues, compared
to $53.3 million, or 11.7% of revenues, in the second quarter of
2013. Second quarter 2014 non-GAAP EPS were $0.21, compared to
$0.18 in the second quarter of 2013. Free cash flow in the second
quarter of 2014 was $5.4 million, a $28.6 million increase compared
to ($23.2) million in the second quarter of 2013. A reconciliation
of GAAP to non-GAAP financial measures is provided in the Company’s
financial tables accompanying this press release.
For the first six months of 2014, Bruker’s revenues grew 3.9
percent to $881.1 million, compared to $848.3 million in the first
six months of 2013. Excluding a 0.8 percent net positive effect
from acquisitions and divestitures, and a 1.2 percent benefit from
changes in foreign exchange rates, Bruker reported year-over-year
organic revenue growth of 1.9 percent in the first six months of
2014.
Bruker reported GAAP operating income of $56.0 million, or 6.4%
of revenues, for the first six months of 2014, compared to $55.7
million, or 6.6% of revenues, for the first six months of 2013. The
Company’s GAAP EPS for the first six months of 2014 were $0.15,
compared to $0.17 in the first six months of 2013.
On a non-GAAP basis, Bruker reported operating income of $84.8
million, or 9.6% of revenues, for the first six months of 2014,
compared to $76.9 million, or 9.1% of revenues, for the first six
months of 2013. Non-GAAP EPS for the first six months of 2014 were
$0.32, compared to $0.26 in the first six months of 2013. Free cash
flow for the first six months of 2014 was $14.7 million, a $70.7
million increase compared to ($56.0) million for the first six
months of 2013.
“Facing a difficult year-over-year comparison, we reported
second quarter 2014 results that were in line with our
expectations. Through the first six months of 2014, we have
delivered a solid combination of top-line growth, EPS, and cash
flow improvements,” said Frank Laukien, President and CEO of
Bruker. “In late July, we also took the important step of
announcing our plan to divest certain assets and implement a
significant restructuring program in our Chemical &
Applied Markets (CAM) division. As a result, we expect to reduce
CAM’s annual revenues by approximately $50 to $70 million, but
improve CAM’s profitability by $15 to $20 million annually, once
the plan is fully implemented. While we anticipate that these
actions will improve Bruker’s overall profitability in 2015 and
beyond, CAM’s operating performance in the second half of 2014 will
be adversely affected by our divestiture and restructuring
efforts.”
As a result of the revised outlook for CAM and a lower growth
outlook in some of Bruker’s other businesses, Bruker is lowering
its 2014 revenue and non-GAAP EPS guidance. The Company now expects
its full year 2014 reported revenues to grow year-over-year between
1 and 2 percent, compared to its previous guidance of 3 to 4
percent growth. The revised revenue outlook includes an expectation
that second-half 2014 revenues will be at the same level as
second-half 2013 revenues, with the fourth quarter being much
stronger than the third quarter. Given the revised growth outlook,
Bruker now expects full-year 2014 non-GAAP EPS to be in a range
between $0.78 and $0.81, compared to its previous guidance of $0.85
to $0.88.
Quarterly Earnings Call
Bruker will host a conference call and webcast to discuss its
financial results, business outlook, and related corporate and
financial matters at 4:45 p.m. Eastern Daylight Time today. To
listen to the webcast, investors can go to http://ir.bruker.com and
click on the “Events & Presentations” hyperlink. A slide
presentation that will be referenced during the webcast will be
posted to the Company’s website shortly before the webcast begins.
Investors can also listen to the earnings webcast via telephone by
dialing 1-877-270-2148 or +1-412-902-6510, and referencing
“Bruker’s Second Quarter 2014 Earnings Conference Call”. A
telephone replay of the conference call will be available by
dialing 1-877-344-7529 or +1-412-317-0088 and entering
conference number: 10049872. The replay will be available beginning
one hour after the end of the conference through August 13,
2014.
Use of Non-GAAP Financial Measures
The non-GAAP financial measures used by Bruker Corporation in
this press release are non-GAAP gross profit; non-GAAP gross profit
margin; non-GAAP operating income; non-GAAP operating margin;
non-GAAP interest and other income (expense) net; non-GAAP profit
before tax; non-GAAP tax rate; non-GAAP net income; non-GAAP
earnings per share; and free cash flow. These non-GAAP measures
exclude costs related to restructuring costs, acquisition and
related integration expenses, amortization of acquired intangible
assets and other costs that are non-recurring in nature. There are
limitations in using non-GAAP financial measures as they are not
prepared in accordance with U.S. generally accepted accounting
principles and may be different from non-GAAP financial measures
used by other companies.
We believe that the non-GAAP financial measures provide useful
and supplementary information to investors regarding our quarterly
and annual performance. It is our belief that these non-GAAP
financial measures are particularly important as Bruker implements
restructuring initiatives to expand operating margins. The
financial impact of these activities, particularly restructuring
activities, can be large and may adversely affect the comparability
of our results from period-to-period. We define free cash flow as
net cash provided by operating activities less additions to
property, plant, and equipment. We believe free cash flow is a
useful measure to evaluate our business as it indicates the amount
of cash generated after additions to property, plant, and equipment
that is available for, among other things, strategic acquisitions,
investments in our business, and repayment of debt.
We regularly use non-GAAP financial measures internally to
understand, manage, and evaluate our business results and make
operating decisions. We also measure our employees and compensate
them, in part, based on such non-GAAP measures. For the same
reasons, we also use this information for our forecasting
activities.
Non-GAAP financial measures should not be considered as a
substitute for, or superior to, measures of financial performance
prepared in accordance with GAAP. The non-GAAP financial measures
are meant to supplement, and to be viewed in conjunction with, GAAP
financial measures. They are limited in value because they exclude
charges that have a material effect on our reported results and,
therefore, should not be relied upon as the sole financial measures
to evaluate our financial results. Investors are encouraged to
review the reconciliation of the financial measures to their most
directly comparable GAAP financial measures as provided in the
tables accompanying this press release.
Forward Looking Statements
Any statements contained in this press release 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 our 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, the outcome of any actions that may be taken by
government agencies in connection with FCPA compliance matters we
have disclosed to them, changes in governmental regulations,
realization of anticipated benefits from economic stimulus
programs, intellectual property rights, litigation, 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, 2013. We expressly disclaim any intent or obligation
to update these forward-looking statements other than as required
by law.
-tables follow-
Bruker Corporation CONDENSED CONSOLIDATED
BALANCE SHEETS (unaudited)
(in millions) June 30 December 31,
2014 2013 ASSETS
Current assets: Cash and cash equivalents $ 389.8 $ 438.7
Short-term investments 67.8 - Accounts receivable, net 279.6 307.6
Inventories 612.1 589.8 Other current assets 116.1
95.8 Total current assets 1,465.4 1,431.9 Property, plant
and equipment, net 293.4 299.5 Intangible and other long-term
assets 245.1 256.9 Total assets $ 2,003.9 $
1,988.3
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities: Current portion of long-term debt $ 0.8 $ 0.7
Accounts payable 102.2 74.8 Customer advances 223.5 258.6 Other
current liabilities 302.0 314.5 Total current
liabilities 628.5 648.6 Long-term debt 354.9 354.3 Other
long-term liabilities 135.1 135.2 Total shareholders' equity
885.4 850.2 Total liabilities and
shareholders' equity $ 2,003.9 $ 1,988.3
Bruker
Corporation CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Three Months Ended Six Months
Ended (in millions, except per share amounts) June
30, June 30, 2014 2013 2014
2013 Revenues $ 457.4 $ 454.9 $ 881.1 $ 848.3 Cost of
revenues 256.9 253.3 500.9
472.2 Gross profit 200.5 201.6 380.2
376.1 Operating expenses: Selling, general and
administrative 115.0 107.1 224.5 213.9 Research and development
44.5 46.5 90.5 95.9 Other charges, net 5.6 4.5
9.2 10.6 Total operating
expenses 165.1 158.1 324.2
320.4 Operating income 35.4 43.5 56.0
55.7 Interest and other income (expense), net (2.3 )
(7.8 ) (7.2 ) (11.7 )
Income before income taxes and
noncontrolling interest in consolidated subsidiaries
33.1 35.7 48.8 44.0 Income tax provision 16.3
12.4 22.0 15.0
Consolidated net income 16.8 23.3 26.8 29.0
Net income attributable to noncontrolling
interests in consolidated subsidiaries
0.4 0.4 1.7 0.7
Net income attributable to Bruker Corporation $ 16.4
$ 22.9 $ 25.1 $ 28.3 Net income per
common share attributable to Bruker Corporation shareholders: Basic
$ 0.10 $ 0.14 $ 0.15 $ 0.17 Diluted $
0.10 $ 0.14 $ 0.15 $ 0.17
Weighted average common shares outstanding: Basic 167.6
166.8 167.5 166.6
Diluted 169.5 168.4 169.4
168.2
Bruker Corporation
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(in millions) Three Months Ended June 30,
Six Months Ended June 30, 2014 2013
2014 2013 Cash flows from operating activities:
Consolidated net income $ 16.8 $ 23.3 $ 26.8 $ 29.0
Adjustments to reconcile consolidated net
income to cash flows from operating activities:
Depreciation and amortization 14.8 15.0 30.0 30.2 Write-down of
demonstration inventories to net realizable value 7.6 8.2 15.2 16.0
Stock-based compensation expense 3.0 1.4 5.0 3.2 Deferred income
taxes - - 0.3 (2.6 ) Gain on disposal of product line - - (0.3 )
(0.9 ) Other non-cash expenses, net 0.5 0.6 1.5 0.3 Changes in
operating assets and liabilities, net of acquisitions: Accounts
receivable 16.1 (29.6 ) 28.9 (20.9 ) Inventories (0.4 ) 15.1 (38.4
) (21.9 ) Accounts payable and accrued expenses (13.0 ) (6.3 ) 8.9
(14.1 ) Income taxes payable 6.8 (8.9 ) 8.8 (12.9 ) Deferred
revenue (3.1 ) 2.1 1.9 5.0 Customer advances (27.2 ) (25.6 ) (34.8
) (21.9 ) Other changes in operating assets and liabilities, net
(8.9 ) (2.0 ) (22.3 ) (13.4 ) Net cash
provided by (used in) operating activities 13.0
(6.7 ) 31.5 (24.9 ) Cash flows
from investing activities: Purchases of short-term investments
(67.8 ) - (67.8 ) - Cash paid for acquisitions, net of cash
acquired - (1.3 ) - (2.1 ) Proceeds from disposal of product line -
- 0.7 0.5 Purchases of property, plant and equipment (7.6 ) (16.5 )
(16.8 ) (31.1 ) Proceeds from sales of property, plant and
equipment 0.5 - 1.1
0.6 Net cash used in investing activities
(74.9 ) (17.8 ) (82.8 ) (32.1 ) Cash
flows from financing activities: Repayment of other debt, net (0.3
) 0.2 (0.5 ) (0.5 ) Proceeds from issuance of common stock, net 1.8
0.4 4.8 4.5 Changes in restricted cash 0.3 1.8 - (1.3 ) Cash
payments to noncontrolling interest (1.1 ) -
(1.1 ) - Net cash provided by financing
activities 0.7 2.4 3.2
2.7 Effect of exchange rate changes on cash and cash
equivalents (3.0 ) 3.6 (0.8 )
(5.4 ) Net change in cash and cash equivalents (64.2 ) (18.5 )
(48.9 ) (59.7 ) Cash and cash equivalents at beginning of period
454.0 269.4 438.7
310.6 Cash and cash equivalents at end of period $ 389.8
$ 250.9 $ 389.8 $ 250.9
Bruker Corporation RECONCILIATION OF GAAP TO NON-GAAP
FINANCIAL MEASURES* (unaudited)
(in millions, except
per share amounts) Three Months Ended June 30, Six
Months Ended June 30, 2014 2013 2014
2013 Reconciliation of Non-GAAP Operating Income, Non-GAAP
Profit Before Tax, Non-GAAP Net Income, and Non-GAAP EPS
GAAP
Operating Income $ 35.4 $ 43.5 $ 56.0 $ 55.7 Non-GAAP
Adjustments: Restructuring Costs 10.7 1.8 13.1 5.0
Acquisition-Related Costs 0.5 0.3 1.6 0.9 Purchased Intangible
Amortization 4.8 5.1 10.0 10.2 Other Costs 1.3
2.6 4.1 5.1 Total Non-GAAP
Adjustments: $ 17.3 $ 9.8 $ 28.8 $ 21.2
Non-GAAP Operating Income $ 52.7 $ 53.3 $ 84.8 $ 76.9
Non-GAAP Operating Margin 11.5 % 11.7 % 9.6 % 9.1 % Non-GAAP
Interest & Other Income (Expense), net (2.3 ) (9.3 ) (7.5 )
(14.1 )
Non-GAAP Profit Before Tax 50.4 44.0 77.3 62.8
Non-GAAP Income Tax Provision (15.1 ) (13.7 ) (22.0 ) (18.8
) Non-GAAP Tax Rate 30.0 % 31.1 % 28.5 % 29.9 % Minority
Interest (0.4 ) (0.4 ) (1.7 ) (0.7 )
Non-GAAP Net Income
Attributable to Bruker 34.9 29.9 53.6 43.3 Weighted
Average Shares Outstanding (Diluted) 169.5 168.4 169.4 168.2
Non-GAAP Earnings Per Share $ 0.21
$ 0.18 $ 0.32 $ 0.26
Reconciliation of GAAP and
Non-GAAP Gross Profit
GAAP Gross Profit $ 200.5 $ 201.6 $
380.2 $ 376.1 Non-GAAP Adjustments: Restructuring Costs 6.7 - 8.9 -
Acquisition-Related Costs 0.2 0.2 0.7 0.4 Purchased Intangible
Amortization 4.4 4.7 9.2
9.5 Total Non-GAAP Adjustments: 11.3
4.9 18.8 9.9
Non-GAAP
Gross Profit $ 211.8 $ 206.5 $ 399.0 $ 386.0 Non-GAAP Gross
Margin 46.3 % 45.4
% 45.3 % 45.5 %
Reconciliation of GAAP
and Non-GAAP Interest & Other Income (Expense), net
GAAP
Interest & Other Income (Expense), net $ (2.3 ) $ (7.8 ) $
(7.2 ) $ (11.7 ) Non-GAAP Adjustments: Insurance Settlement - (1.5
) - (1.5 ) Sale of Product Line - -
(0.3 ) (0.9 ) Total Non-GAAP Adjustments: -
(1.5 ) (0.3 ) (2.4 )
Non-GAAP
Interest & Other Income (Expense), net
$ (2.3 ) $ (9.3 ) $ (7.5 )
$ (14.1 )
* Please refer to our press release for a
full explanation for the use of non-GAAP measures.
Bruker CorporationJoshua Young, +1-978-667–9580, ext. 1479Vice
President, Investor Relationsjoshua.young@Bruker.com
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