Bruker Corporation (NASDAQ: BRKR)

Transcription

1 Bruker Corporation (NASDAQ: BRKR) Q Earnings Presentation February 8, 2018 Frank Laukien, President & CEO Anthony Mattacchione, SVP & CFO Miroslava Minkova, Head of Investor Relations Innovation with Integrity

2 BRUKER CORPORATION Safe Harbor & Reg. G 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 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 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, 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, key suppliers and contract manufacturers, capital spending and government funding policies, changes in governmental regulations, the use and protection of intellectual property rights, litigation, 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 filings with the SEC, including, without limitation, our annual report on Form 10-K for the year ended December 31, 2016 and subsequently filed Quarterly reports on Form 10-Q. We expressly disclaim any intent or obligation to update these forward-looking statements other than as required by law. 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. 2

3 Q & FY 2017 Business Update 3

4 Q4 2017: Solid revenue growth, margin expansion and Non-GAAP EPS growth Q Performance Q4 Financials Revenues increase +$60M, or +12.8%, y-o-y Organic revenue +4.0% y-o-y, including +3.4% in Scientific Instruments, and +11.6% in BEST segment Acquisitions add +3.6% y-o-y FX translation adds +5.2% y-o-y Revenues [$M] % Non-GAAP gross margin increases +120 bps y-o-y Non-GAAP operating margin increases +130 bps y-o-y Non-GAAP operating profit grows +20.4% y-o-y Q4-16 Q4-17 Non-GAAP EPS +11% GAAP net loss per share of $0.02, including US tax reform effects, compared to EPS of $0.43 in Q4-16 Non-GAAP EPS of $0.51, an increase of 11% compared to $0.46 in Q4-16 Q4-16 Q4-17 $0.46 $0.51 4

5 FY 2017: Return to organic revenue growth and continued operating margin expansion; low FY 2016 tax rate limits non-gaap EPS growth FY 2017 Performance FY Financials Revenue increase of +$155M, or +9.6%, y-o-y Organic revenue +3.6% y-o-y, including +2.7% in Scientific Instruments, and +14.5% in BEST Acquisitions add +4.8% y-o-y FX translation adds +1.2% y-o-y Revenues [$M] 1,611 1, % Non-GAAP gross margin consistent with FY 2016 Non-GAAP operating margin expands +80 bps y-o-y Non-GAAP operating profit grows +16% y-o-y GAAP EPS $0.49, compared to $0.95 in FY 2016 FY 2016 FY 2017 Non-GAAP EPS +2% Non-GAAP EPS $1.21, compared to $1.19 in FY 2016 Non-GAAP eff. tax rate 25.0% vs. 15.7% in FY 2016 FY 2017 ROIC of ~26.6% FY 2016 FY 2017 $1.19 $1.21 5

6 GROUP OVERVIEW: FY 2017 Operating Performance Bruker BIOSPIN Group: FY 2017 Revenue $572M BIOSPIN revenue modestly above prior year in constant currency; operating margins lower, primarily due to less favorable mix NMR revenue on par with FY 2016, with continued strong after-market revenue growth with LabScape TM and despite 1GHz revenue in 2016 PCI up slightly with good execution and PCI market recovery Bruker CALID Group: FY 2017 Revenue $499M CALID mid-single digit constant currency revenue growth, including acquisitions (primarily InVivo); operating margins improve on higher volume and 2016 restructuring Daltonics revenue grows with European academic recovery and strength in after-market services & consumables Optics revenue grows; improved industrial, applied, academic demand Detection revenue down due to large contracts in

7 GROUP OVERVIEW: FY 2017 Operating Performance Bruker NANO Group: FY 2017 Revenue $513M NANO low teens constant currency revenue growth, due to academic and industrial recovery, growth in semiconductor metrology and acquisitions AXS revenue up with European recovery, industrial and China demand Semicon metrology revenue substantially higher with both technology buys and market strength Nano Surfaces revenue higher due to Hysitron acquisition BEST Segment: FY 2017 Revenue $182M (1) BEST revenue substantially higher, driven by both B-OST acquisition (November 2016) and mid-teens organic growth Demand for MRI superconductors and Big Science projects drove BEST results in FY 2017, including some project accelerations into 2017 B-OST results ahead of M&A targets; productivity investments on-going (1) Net of intercompany eliminations. BEST Segment FY 2017 revenue prior to intercompany eliminations is $191M. 7

8 MULTI-YEAR PORTFOLIO TRANSFORMATION: On track in 2017, with significant investments; Further acceleration expected in Six Key High-Growth & High-Margin Initiatives: Proteomics & Phenomics Biopharma & Applied Microbiology & Diagnostics Neuroscience & Cell Microscopy Next-gen Nanotechnology 2017 results: ~25% of revenue grew above LST market GMs & OMs above Bruker average After-Market: Services, Software and Consumables (1) 2017 results: ~15% of revenue lower GMs, higher OMs than Bruker average (1) Services, software and consumables, excluding Microbiology after-market & consumables. Innovation with Integrity 8

9 2018 Key Priorities Position company for further organic Revenue Growth Acceleration: drive six key high-growth initiatives Transform Portfolio by investing in six key highgrowth, high-margin initiatives Sustain Margin Expansion with continued Operational & Commercial Excellence initiative Continue to Strengthen Systems by harmonizing processes, ERP and CRM platforms Disciplined Capital Allocation for sustained shareholder returns 9

10 Q & FY 2017 Financial Update 10

11 NON-GAAP FINANCIAL PERFORMANCE: Q Overview [$ m, except EPS] Q Q Δ Revenues % Operating Profit % Margin (%) 20.9% 19.6% +130 bps Non-GAAP EPS $0.51 $ % Free Cash Flow M [$ m] Dec 31, 2017 Dec 31, 2016 Δ Net (Debt)/ Cash % Working capital (WC) * % WC-to-revenue ratio $0.40 $ % COMMENTS Reported revenue +12.8%, organic growth +4.0% Operating profit up +20% Operating margin +130 bps: higher volume and operating leverage, partially offset by dilution from acquisitions and FX Free cash flow $91.3M, an increase of 14.5% y-o-y Use of cash for buybacks, dividends and M&A results in lower net cash position y-o-y Working capital up +19%, due to revenue growth, acquisitions and FX * WC = (Accounts Receivable + Inventory - Accounts Payable) 11

12 Q Revenue Bridge Q Revenue Organic Currency Portfolio Total +4.0% +5.2% +3.6% +12.8% Q DRIVERS Reported revenue +12.8% Organic revenue +4.0%, with strong growth at NANO and BEST BSI +3.4% organic Q Revenue Bridge [$M] +$18.8M +$24.6M $470.3M +$16.8M $530.5M BEST +11.6% organic (net of intercompany eliminations) Acquisitions add +3.6% to revenue growth, primarily Hysitron, B-OST and InVivo FX tailwind of $24.6M, or +5.2% Q Organic Currency Portfolio Q

13 Q Non-GAAP Results [$ m, except EPS] Q Q Δ Total Revenues % Gross Profit % Margin (% of revenues) 50.0% 48.8% +120 bps SG&A % (% of revenues) 20.9% 21.1% R&D % (% of revenues) 8.2% 8.1% Operating Profit % (% of revenues) 20.9% 19.6% +130 bps Tax Rate 24.5% 21.7% +280 bps Net Income* % EPS $0.51 $ % Shares Outstanding % COMMENTS Gross margin +120 bps: volume and operating leverage, partially offset by negative FX Opex increases driven by higher business volume, acquisitions and FX Operating margin +130 bps: positive operating leverage, which more than offset ~100 bps of headwind from acquisitions and FX Q4-17 tax rate 24.5% vs. 21.7% in Q4-16, which included valuation allowance reversals EPS up +11% on revenue growth and operating leverage Share count lower on share repurchases Sum of items may not total due to rounding * Attributable to Bruker 13

14 FY 2017 Revenue Bridge FY 2017 Revenue Organic Currency Portfolio Total +3.6% +1.2% +4.8% +9.6% FY 2017 DRIVERS Reported revenue +9.6% Organic revenue growth +3.6%, with growth at NANO, CALID and BEST FY 2017 Revenue Bridge [$M] $1,611.3M +$57.8M +$19.6M +$77.2M $1,765.9M BSI +2.7% organic BEST +14.5% organic (net of intercompany eliminations) Acquisitions add +4.8% to growth, primarily B-OST, Hysitron and InVivo FX adds $19.6M, or +1.2% FY 2016 Organic Currency Portfolio FY

15 FY 2017: Balanced Portfolio Across Three Scientific Instruments Groups and Across Geographies Bruker revenue breakdown, % of 2017 revenue (1)(2) : BioSpin Europe Systems 32% 38% 75% BEST 10% 29% 28% CALID Americas 29% 4% 29% APAC 25% Service & After-market (3) NANO (1) For the last twelve months, ended Dec. 31, (2) Numbers may not add due to rounding. Rest of World (3) Includes non-system revenue: services, consumables, software and accessories as reported in Bruker s 10-K filings. Life Science Research in Academia, Applied Markets Medical Schools and Government Industrial & Semiconductor Metrology Pharma/Biopharma Superconductors for Science & Microbiology and Diagnostics Medicine Bruker Corporation 15

16 FY 2017 Non-GAAP Results [$ m, except EPS] FY 2017 FY 2016 Δ Total Revenues 1, , % Gross Profit % Margin (% of revenues) 48.1% 48.1% SG&A % (% of revenues) 23.2% 24.0% R&D % (% of revenues) 9.2% 9.2% Operating Income % (% of revenues) 15.6% 14.8% +80 bps Tax Rate 25.0% 15.7% 930 bps Net Income* NM EPS $1.21 $ % COMMENTS Gross margin on par with Volume and operating leverage at CALID and NANO offset by higher BEST revenue, BioSpin mix and FX Operating margin +80 bps: operating leverage, which more than offset dilution from acquisitions & FX FY 2017 effective tax rate 25% vs. 15.7% in FY 2016 (on 2016 tax reversals) EPS up +2%; y-o-y tax effects moderate EPS growth, despite solid revenue and operating income growth Share count lower on share repurchases Shares Outstanding % Sum of items may not total due to rounding * Attributable to Bruker 16

17 FY 2017 Cash Flow [$ m] FY 2017 FY 2016 Δ Net Income Depreciation & amortization Changes in working capital* Other Operating cash flow Capital expenditures Free cash flow COMMENTS Free cash flow up $17M year-over-year: US tax reform non-cash charge of $69M lowered GAAP net income and increased other Cash earnings ~$25M higher than in 2016 Working capital: significant reduction in inventory, offset by higher volume related receivables balances Higher bonus and restructuring accruals slightly offset by an uptick in capital expenditures * WC = (Accounts Receivable + Inventory - Accounts Payable) 17

18 FY 2018 Outlook 18

19 FY 2018 Guidance: Sustained organic revenue growth, further operating margin expansion, solid non-gaap EPS growth FY 2018 Guidance Revenue Growth y-o-y Approximately +7% Non-GAAP Operating Margin Expansion y-o-y (1)(2) +50 bps to +80 bps Non-GAAP EPS $1.34 to $1.38 (1) From FY17 non-gaap operating margin of 15.6%. (2) Includes approximately -70 bps of headwind from foreign currency translation ASSUMPTIONS Organic revenue growth approximately +3% FX revenue tailwind: approximately +4% Non-GAAP tax rate: ~25% Fully diluted share count: ~156M shares Capex: ~$50M FX assumptions based on average rates in Jan. 2018: USD = Yen EUR = 1.22 USD CHF = 1.04 USD 19

20 Appendix 20

21 Q GAAP Results [$M, except EPS] Q Q Δ Total Revenues % Gross Profit % Margin (% of sales) 48.1% 46.9% SG&A % (% of revenues) 21.1% 21.3% R&D % (% of revenues) 8.2% 8.1% Operating Income % (% of revenues) 17.7% 16.4% +130 bps Net Income (Loss)* (3.4) % (Net Losses per share) / EPS ($0.02) $ % Shares Outstanding % Sum of items may not total due to rounding * Attributable to Bruker 21

22 Q Reconciliation of GAAP and Non-GAAP Results [$M, except EPS] Q Q GAAP Operating Income Restructuring Costs Acquisition-Related Costs Purchased Intangible Amortization Other Costs TOTAL Non-GAAP Operating Income Non-GAAP Interest & Other Expense, net Non GAAP Profit Before Tax Non-GAAP Income Tax Provision Non-GAAP Tax Rate 24.5% 21.7% Minority Interest Non-GAAP Net Income* Non-GAAP EPS $0.51 $0.46 Sum of items may not total due to rounding *Attributable to Bruker 22

23 FY 2017 GAAP Results [$M, except EPS] FY 2017 FY 2016 Δ Total Revenues 1, , % Gross Profit % Margin (% of sales) 46.0% 46.1% SG&A % (% of revenues) 23.6% 24.2% R&D % (% of revenues) 9.2% 9.2% Operating Income % (% of revenues) 12.2% 11.0% +120 bps Net Income* % EPS $0.49 $ % Shares Outstanding % Sum of items may not total due to rounding * Attributable to Bruker 23

24 FY 2017 Reconciliation of GAAP and Non-GAAP Results [$M, except EPS] FY 2017 FY 2016 GAAP Operating Income Restructuring Costs Acquisition-Related Costs Purchased Intangible Amortization Other Costs TOTAL Non-GAAP Operating Income Non-GAAP Interest & Other Expense, net Non GAAP Profit Before Tax Non-GAAP Income Tax Provision Non-GAAP Tax Rate 25.0% 15.7% Minority Interest Non-GAAP Net Income* Non-GAAP EPS $1.21 $1.19 Sum of items may not total due to rounding *Attributable to Bruker 24

25 Q Cash Flow [$ m] Q Q Δ Net Income (Loss) (3.0) Depreciation & amortization Changes in working capital* Other Operating cash flow Capital expenditures Free cash flow COMMENTS Free cash flow up $11.6M, or +15% y-o-y: US tax reform non-cash charge of $69M lowered GAAP net income and increased other Cash earnings higher than in Q4-16 Working capital: higher volume related receivables balances Higher bonus and restructuring accruals slightly offset by an uptick in capital expenditures * WC = (Accounts Receivable + Inventory - Accounts Payable) 25

26 Balance Sheet [$M] Dec 31, 2017 Dec 31, 2016 Total Assets 1, ,808.4 Working Capital* Intangibles, Net & Other Long-Term Assets [$M] Dec 31, 2017 Dec 31, 2016 Cash, Cash Equivalents & Short-term Investments Financial Debt Net Cash * WC = (Accounts Receivable + Inventory - Accounts Payable) 26

27 Q GAAP SEGMENT RESULTS: BSI and BEST GAAP Performance [$ m] Q Q Δ REVENUE Scientific Instruments (BSI) % Organic Revenue Growth (%) +3.4% -0.3% Energy & Supercon Technologies (BEST) % Corporate Eliminations Energy & Supercon Technologies (BEST), net of corporate eliminations Organic Revenue Growth (%) % % +31% Total Revenue % OPERATING INCOME Scientific Instruments (BSI) % Energy & Supercon Technologies (BEST) % Corporate Eliminations Total Operating Income % Sum of items may not total due to rounding 27

28 FY2017 GAAP SEGMENT RESULTS: BSI and BEST GAAP Performance [$ m] FY 2017 FY 2016 Δ REVENUE Scientific Instruments (BSI) 1, , % Organic Revenue Growth (%) +2.7% -1.7% Energy & Supercon Technologies (BEST) % Corporate Eliminations Energy & Supercon Technologies (BEST), net of corporate eliminations Organic Revenue Growth (%) % % +53% Total Revenue 1, , % OPERATING INCOME Scientific Instruments (BSI) % Energy & Supercon Technologies (BEST) % Corporate Eliminations Total Operating Income % Sum of items may not total due to rounding 28

29 FY 2017 Non-GAAP EBITDA [$M, except EPS] FY 2017 FY 2016 Δ Non-GAAP Net Income* $192.2 $192.3 NM GAAP Interest Expense, Net % Non-GAAP Income Tax Provision % GAAP Depreciation Expense % GAAP Amortization of Demonstration Inventories % Total Adjustments % Non-GAAP EBITDA $307.0 $ % Sum of items may not total due to rounding * Attributable to Bruker 29

30 FY 2017 Return on Invested Capital [$M, except EPS] FY 2017 FY 2016 Δ Non-GAAP Operating Income $276.1 $ % Non-GAAP Income Tax Provision % Non-GAAP Operating Income after Tax % Average Total Invested Capital: Average Long-Term Debt % Average Current Portion of Long-Term Debt % Average Shareholder s Equity NM Less Average Cash and Cash Equivalents % Total Average Invested Capital % Return on Invested Capital 26.6% 27.0% -0.4% Sum of items may not total due to rounding * Attributable to Bruker 30