Bruker Corporation (NASDAQ: BRKR) Q4 2014 Earnings Presentation February 19, 2015 Frank Laukien, President & CEO Charles Wagner, EVP & CFO Joshua Young, VP, Investor Relations Innovation with Integrity
Bruker Corporation Safe Harbor & Reg. G 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, 2013, and our quarterly report on Form 10-Q for the period ended September 30, 2014. 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
Q4 & FY 2014 Business Update 3
Q4-14 performance: lower revenue and EPS were in-line with expectations Q4 2014 Performance Revenues decline -$44M, or -8%, year-overyear Changes in foreign exchange rates lower revenues by -$34M, or -6% CAM divestitures result in -$8M yearover-year decline, or -1.4% Organic decline of -$3M, or -0.5%, mostly due to BEST Currency negatively impacted operating profit by -$6M, compared to Q4-13 Non-GAAP EPS of $0.30 benefits from lower tax rate in Q4-14, compared to Q4-13 Q4-14 Financials Revenues [$ m] 552 508 Q4-13 Q4-14 Non-GAAP EPS Q4-13 $0.31-8% -3% Q4-14 $0.30 4
FY 2014 performance reflects currency headwinds & softness in NMR and X-Ray markets FY 2014 Performance Revenue decline of -2% y-o-y; flat organic growth 1.BIOSPIN revenues flat; good year in Pre-Clinical Imaging division offset by second-half declines in NMR revenue 2.CALID revenues decline -5% driven by a reduction in CAM revenues of -$22M; CAM non-gaap operating loss of -$27M lowers profitability 3.NANO revenues decline -1% due to soft industrial & semi markets 4.Low single-digit organic revenue growth in Americas and flat in Europe, offset by midsingle-digit revenue decline in Asia Non-GAAP EPS declines by ($0.02) to $0.75, including negative currency impact of ($0.08) FY 2014 Financials Revenues [$ B] 1.84 1.81 FY 2013 FY 2014 Non-GAAP EPS FY 2013 $0.77 FY 2014 $0.75-2% -3% 5
GROUP OVERVIEW: FY 2014 Performance Bruker BIOSPIN Group ($623M revenue) Revenues decline in NMR business, as demand for high-field systems remains muted Pre-Clinical Imaging Division delivers robust double-digit growth, as demand for higher-field MRI systems drives growth Good growth in the Americas offset by declines in Europe Negotiating with worker s councils to right-size BIOSPIN cost structure in 2015; proposed global headcount reduction of ~9%, and consolidation of German manufacturing sites Bruker CALID Group ($554M revenue, incl. CAM) LSC renamed to Daltonics Division; >20% growth for MALDI Biotyper; former LSC Leipzig factory and CAM Fremont factory consolidated into Daltonics Bremen factory Optics Division delivers another year of profitable growth and becomes most profitable business in Bruker portfolio CAM Division restructuring expected to be completed in Q1-15; expect $50M y-o-y revenue decline from CAM shut-down in FY15 Detection Division revenues decline primarily due to export license delays; new order bookings remain strong 6
GROUP OVERVIEW: FY 2014 Performance Bruker NANO Group ($498M revenue) Solid growth in Nano Surfaces and Nano Analytics divisions, as academic and research markets strengthen Prairie and Vutara acquisitions added ~$11M to revenue in FY-14 Bookings growing in Nano Surfaces Division during H2 as AFM and life science products see increasing demand Declines in AXS and Elemental divisions due to continued weakness in industrial demand & Japan exposure BEST Segment ($153M revenue) Delivers 4% revenue growth despite delay of Rosatom pilot line Robust new order bookings as result of long-term supply agreements for superconducting wire for MRI Existing, large ITER project coming to an end, but Big Science demand remains healthy 7
Bruker 2015 Priorities Continue transformation of leadership, management processes, and systems Execute BIOSPIN rightsizing and footprint consolidation Accelerate further outsourcing of highlevel assemblies in CALID and NANO Re-accelerate profitable growth in portfolio with new products and by entering adjacent markets 8
Q4 2014 Financial Update 9
NON-GAAP FINANCIAL PERFORMANCE: Q4 2014 Overview [$ m, except EPS] Q4 2014 Q4 2013 Δ Revenues 508.0 552.1-8% Operating Income 63.7 81.3-22% Margin (%) 12.5% 14.7% EPS $0.30 $0.31-3% Free Cash Flow 62.2 122.4-60.2M [$ m] Dec 31,2014 Dec 31,2013 Δ Net Cash 142.5 83.7 70% Working capital (WC) * 694.6 822.6-16% COMMENTS Revenues are nearly flat, after adjusting for FX and CAM divestitures Free cash flow decline is result of lower net income and tough y-o-y comparison Working capital ratios improve as result of improved operations, outsourcing and currency changes Net cash balance beginning to build WC-to-revenue ratio 0.38 0.45-0.07 * WC = (Accounts Receivable + Inventory Accounts Payable) 10
Q4 2014 Non-GAAP Results [$ m, except EPS] Q4 2014 Q4 2013 Δ Total Revenues 508.0 552.1-8% Gross Profit 223.2 248.3-10% Margin (% of revenues) 43.9% 45.0% SG&A -117.9-117.9 NM (% of revenues) 23.2% 21.4% R&D -41.6-49.1-15% (% of revenues) 8.2% 8.9% Operating Income 63.7 81.3-22% (% of revenues) 12.5% 14.7% Tax Rate 20.0% 28.6% -860 bps Net Income* 50.3 52.2-4% COMMENTS FX reduces revenue by -$34M and gross profit by -$16M; no material effect on gross margin as % of revenues Gross margins down due to business mix Currency lowered total operating profit by -$6M Lower tax rate in Q4-14 is result of jurisdictional mix and release of valuation allowances EPS $0.30 $0.31-3% Shares Outstanding 169.6 169.0 NM Sum of items may not total due to rounding * Attributable to Bruker 11
Q4 2014 Reconciliation of GAAP and Non-GAAP Results [$ m, except EPS] Q4 2014 Q4 2013 GAAP Operating Income 44.5 61.0 Restructuring Costs 6.8 11.7 Acquisition Related Costs 1.0 2.3 Purchased Intangible Amortization 5.1 5.4 Other Costs 6.3 0.9 TOTAL 19.2 20.3 Non-GAAP Operating Income 63.7 81.3 Non-GAAP Net Interest Income (Expense) & Other -0.3* -7.2 Non GAAP Profit Before Tax 63.4 74.1 Taxes -12.7-21.2 Non-GAAP Tax Rate 20.0% 28.6% Minority Interest -0.4-0.7 Non-GAAP Net Income** 50.3 52.2 Non-GAAP EPS $0.30 $0.31 Sum of items may not total due to rounding *Excludes $0.7M of net losses for 2014 ** Attributable to Bruker 12
FY 2014 revenue bridge FY 2014 Revenue for Bruker Corp. Organic Currency FY 2014 Revenue Bridge [$ m] Acquisitions & Divestitures Total -0.4% -1.4% 0.1% -1.7% FY 2014 DRIVERS Organic revenue decline of -0.4% CAM reduces FY14 organic revenue growth by nearly 1% Big currency swings in Q4 drove overall negative currency effect for FY-14 -$8.0 -$25.4 $2.9 $1,839.4 $1,808.9 FY 2013 Organic Currency Acquisition FY 2014 13
FY 2014 Non-GAAP Results [$ m, except EPS] FY 2014 FY 2013 Δ Total Revenues 1,808.9 1,839.4-2% Gross Profit 807.7 832.5-3% Margin (% of revenues) 44.7% 45.3% SG&A -449.1-436.5 3% (% of revenues) 24.8% 23.7% R&D -174.2-190.5-9% (% of revenues) 9.6% 10.4% Operating Income 184.4 205.5-10% (% of revenues) 10.2% 11.2% Tax Rate 25.1% 27.0% -190 bps Net Income* 127.7 129.3-1% COMMENTS Gross margins are flat y-o-y after adjusting for currency Lower R&D spend reflects benefits of previous restructuring programs; investments in needed capabilities drove higher SG&A Tax rate of 25.1% benefited from tax planning activities and reserve releases EPS $0.75 $0.77-3% Shares Outstanding 169.5 168.5 NM Sum of items may not total due to rounding * Attributable to Bruker 14
FY 2014 Reconciliation of GAAP to Non-GAAP Results [$ m, except EPS] FY 2014 FY 2013 GAAP Operating Income 105.4 148.2 Restructuring Costs 36.1 25.3 Acquisition Related Costs 4.0 4.5 Purchased Intangible Amortization 20.2 20.7 Other Costs 18.7 6.8 TOTAL 79.0 57.3 Non-GAAP Operating Income 184.4 205.5 Non-GAAP Net Interest Income (Expense) & Other* -10.0-26.0 Non GAAP Profit Before Tax 174.4 179.5 Taxes -43.8-48.5 Non-GAAP Tax Rate 25.1% 27.0% Minority Interest -2.9-1.7 Non-GAAP Net Income** 127.7 129.3 Non-GAAP EPS $0.75 $0.77 *Excludes $5.9 and $2.4 million of net gains for 2014 and 2013 **Attributable to Bruker Sum of items may not total due to rounding 15
FY 2014 Cash Flow Statement [$ m] FY 2014 FY 2013 Δ Net Income 59.6 81.8-22.2 Depreciation & amortization 59.7 61.3-1.6 Changes in working capital* -1.6-10.6 9.0 Other -3.4 12.5-15.9 Operating cash flow 114.3 145.0-30.7 Capital expenditures -33.8-50.3 16.5 Free cash flow 80.5 94.7-14.2 COMMENTS FY-14 free cash flow decline due to lower net income, partially offset by lower capex spending Lower net income impacted by higher restructuring charges Good progress on inventory, offset by higher receivables Lower capex due to timing of projects; capex expected to be higher in FY-15 16
2015 Outlook 17
Changes in currency continue to be strong headwind to revenue and EPS in 2015 FX y-o-y effect 2014* FX y-o-y effect 2015E** ($25m) ($17m) ($22m) ($0.09) ($0.08) ($135m) Revenue Non-GAAP Op. Profit EPS Revenue Non-GAAP Op. Profit EPS *Difference between 2013 average FX rates and 2014 average FX rates **Difference between FX rates as of Jan 16, 2015 and average FX rates in 2014 18
Bruker FY 2015 Outlook FY 2015 Financial Outlook Revenues (organic) Non-GAAP Operating Margin Approximately +1% y-o-y >100 bps y-o-y 2015 ASSUMPTIONS Changes in currency reduce revenues by 7-8%, with biggest impact in Q1-Q3 CAM related revenues decrease by $50M in 2015 Non-GAAP EPS Approximately flat with 2014 Capex of approximately $45M Tax rate: 26-28% Current currency assumptions: Yen/USD: 1.17 EUR/USD: 1.16 19
Appendix 20
Q4 2014 GAAP Results [$ m, except EPS] Q4 2014 Q4 2013 Δ Total Revenues 508.0 552.1-8% Gross Profit 215.8 235.9-9% Margin (% of sales) 42.5% 42.7% SG&A -118.5-118.3 NM (% of revenues) 23.3% 21.4% R&D -41.6-49.1-15% (% of revenues) 8.2% 8.9% Operating Income 44.5 61.0-27% (% of revenues) 8.8% 11.0% Net Income* 26.1 35.2-26% EPS $0.15 $0.21-29% Shares Outstanding 169.6 169.0 NM Sum of items may not total due to rounding * Attributable to Bruker 21
Q4 2014 revenue bridge Q4 2014 Revenue for Bruker Corp. Organic $552.1 Currency Q4 2014 Revenue Bridge [$ m] $-2.8 $-34.2 Acquisitions & Divestitures -$7.1 Total -0.5% -6.2% -1.3% -8.0% $508.0 Q4 2014 DRIVERS Organic revenue decline of -0.5% primarily result of lower BEST revenue in Q4-14 Currency effect of -$34M is the result of the dollar strengthening against nearly all global currencies in Q4 Largest effects are vs. Yen and Euro Net acquisitions & divestitures of -$7.1M is the net effect of the CAM divestitures and the acquisition of Vutara Q4 2013 Organic Currency Acquisition Q4 2014 22
Q4 2014 Cash Flow Statement [$ m] Q4 2014 Q4 2013 Δ Net Income 26.5 35.9-9.4 Depreciation & amortization 12.1 15.9-3.8 Changes in working capital* -4.4 22.0-26.4 Other 35.1 57.6-22.5 Operating cash flow 69.3 131.4-62.1 Capital expenditures -7.1-9.0 1.9 Free cash flow 62.2 122.4-60.2 * WC = (Accounts Receivable + Inventory - Accounts Payable) 23
Balance sheet [$ m] Dec 31, 2014 Dec 31, 2013 Δ Total Assets 1,864.8 1,988.3-6% Working Capital* 694.6 822.6-16% Intangible & Other Long-Term Assets 248.6 256.9-3% [$ m] Dec 31, 2014 Dec 31, 2013 Δ Cash, Cash Equivalents & Short-term Investments 497.5 438.7 13% Financial Debt 355.0 355.0 NM Net Cash 142.5 83.7 70% * WC = (Accounts Receivable + Inventory - Accounts Payable) 24
FY 2014 GAAP Results [$ m, except EPS] FY 2014 FY 2013 Δ Total Revenues 1,808.9 1,839.4-2% Gross Profit 763.3 805.2-5% Margin (% of sales) 42.2% 43.8% SG&A -451.0-437.9 3% (% of revenues) 24.9% 23.8% R&D -174.2-190.5-9% (% of revenues) 9.6% 10.4% Operating Income 105.4 148.2-29% (% of revenues) 5.8% 8.1% Net Income* 56.7 80.1-29% EPS $0.33 $0.48-31% Shares Outstanding 169.5 168.5 NM Sum of items may not total due to rounding * Attributable to Bruker 25
Q4 SEGMENT RESULTS: BSI and BEST GAAP Performance [$ m] Q4 2014 Q4 2013 Δ REVENUE Scientific Instruments (BSI) 475.8 511.0-7% Organic Revenue Growth (%) 0.6% 5.9% Energy & Supercon Technologies (BEST) 36.7 46.6-21% Organic Revenue Growth (%) -14.1% 17.4% Corporate Eliminations & Other -4.5-5.5 Total Revenue 508.0 552.1-8% OPERATING INCOME Scientific Instruments (BSI) 51.3 54.9-7% Energy & Supercon Technologies (BEST) -7.6 2.8 371% Corporate Eliminations and Other 0.8 3.3 Total Operating Income 44.5 61.0-27% Sum of items may not total due to rounding 26