Bruker drives profitable growth and margin expansion by ......•Extreme resolution Magnetic...
Transcript of Bruker drives profitable growth and margin expansion by ......•Extreme resolution Magnetic...
© Bruker Corporation
Bruker drives profitable growth and margin expansion by enabling scientific discoveries and by delivering high-
performance analytical, life science and diagnostic solutions
Innovation with Integrity
Bruker Corporation Safe Harbor 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 1995. Forward-looking statements are based on current
expectations, forecasts and assumptions of our management and 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; implementation of strategies for
improving our operating margins, profitability and cash flow; changing technologies; product development and market
acceptance of our products; the cost and pricing of our products; 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 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 most
recent reports filed with the SEC, including, without limitation, our annual report on Form 10-K for the year ended December
31, 2016, 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
Key Messages & Financial Objectives
1. Bruker is a differentiated leader in attractive markets for analytical, life science and diagnostic tools, and our brand stands for innovation:
Market leader in unique, high value technologies: NMR, MALDI-TOF, MALDI BioTyper, FTMS, AFM, XRD & Superconductors
Fundamental Portfolio Transformation towards six major opportunities with higher growth and sustainable higher margins
2. We expect to accelerate revenue growth:
Select end markets improving in 2017 (e.g. Europe, Semiconductor Metrology, Industrial)
Resume revenue growth in 2017 via a combination of organic growth and M&A contributions
Goal to accelerate towards LST & DX market growth in 2018
3. We continue to drive multi-year operating margin expansion:
In 2015-2016, achieved +460 bps of 2-year cumulative non-GAAP operating margin expansion
In 2017, targeting 40-70 bps operating margin expansion (including -40 bps M&A headwind)
Operational Excellence and Portfolio Transformation are key drivers of margin expansion
Goal: expand operating margin 75-100 bps per year, on average, over a multi-year timeframe
4. We aim for high ROIC by investing in high-value innovation and disciplined M&A
BRKR Non-GAAP ROIC >20% in both FY16 and FY15
© Bruker Corporation 3
Bruker Overview • Founded in 1960
• FY2016 revenue: ~$1.6 billion
• R&D investment: ~9% of revenue
• ~75% of revenue from scientific
and diagnostic instruments
• ~6,000 employees worldwide
• After major restructuring and Transformation in 2013-2016, on to Portfolio Transformation and Operational Excellence phases
• Long-term oriented ownership: ~35% owned by insiders
• Quarterly dividend: ~$0.04/share
• Announced two-year $225M share repurchase in May 2017
35%
29%
28%
8%
BioSpin
Three Primary Life Science Tools Groups with Global Footprint Revenue breakdown in FY2016:
36%
29%
5% 30%
CALID
NANO
75%
25%
Systems
Life Science Research in Academia,
Medical Schools and Government
Pharma/Biopharma
Diagnostic Labs & Hospitals
Applied Markets
Industrial & Next-Gen Semicon Metrology
Superconductors for Science & MRI
Large, diverse end markets:
© Bruker Corporation
BEST
Service & After-market
Americas
Europe
Rest of World
APAC
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BRUKER HAS #1 OR #2 MARKET POSITION FOR >60% OF PRODUCT PORTFOLIO
© Bruker Corporation
Three Life Science Tools & Diagnostics (LST & DX) Groups
NMR/EPR & NMR Phenomics
Preclinical Imaging & MALDI Imaging
MALDI BioTyper FT-IR/NIR, X-Ray Diffraction (XRD),
Next-Gen Semicon Metrology
Atomic Force Microscopy
BioSpin Group ~$563M FY2016 revenue
• NMR/EPR for Life-Science Research & Pharma
• Applied, Industrial & Clinical MR
• Preclinical Imaging
• Services & Life-Cycle Support
NANO Group ~$455M FY2016 revenue
• Atomic Force Microscopy
• Fluorescence Microscopy for Cell Biology &
Neuroscience
• X-Ray for Materials Research, QC
• Next-Gen Semicon Metrology
• Service & After-Market business
CALID Group ~$475M FY2016 revenue
• Mass Spectrometry for
• Proteomics & Metabolomics • Applied & Pharma • Microbiology & Pathology
• FT-IR/NIR/Raman for Applied Markets
• CBRNE Detection for Security
• Service, Consumables & Software
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Bruker FY 2016 financials
Continued strong margin expansion and profitability improvements
46.2%
48.1%
Non-GAAP Gross Margin
13.3%
14.8%
Non-GAAP Operating Margin
$0.89
$1.19
Non-GAAP EPS
$258M
$290M
Non-GAAP EBITDA
+190 bps +150 bps +34% +$32M
FY 2015 FY 2016
© Bruker Corporation
* Non-GAAP gross margin, non-GAAP operating margin, non-GAAP EBITDA and non-GAAP EPS are non-GAAP measures. Reconciliations of these measures to the most directly comparable GAAP measures are available at the end of this presentation and on Bruker’s website at http://ir.bruker.com/investors/press-releases/earnings-releases/default.aspx
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FY 2017 Guidance
Revenue Growth y-o-y +2% to +3.5%
Non-GAAP Operating Margin Expansion y-o-y(2)(3)
+40 bps to +70 bps
Non-GAAP EPS $1.05 - $1.09
FY 2017 Guidance: Return to organic revenue growth,
sustain operating margin expansion(1)
Organic revenue growth: +1% to +2%
Acquisition revenue growth: +3.5% to +4%
FX revenue headwind: -2.5%
Non-GAAP tax rate: ~25%
Fully diluted share count: ~161M shares
Capex: ~$45M
FX assumptions as of March 31, 2017:
USD = 111.4 Yen
EUR = 1.07 USD
USD = 1.00 CHF
2017 ASSUMPTIONS
(1) As of May 3, 2017
(2)From a FY2016 non-GAAP operating margin of 14.8%.
(3)Includes approximately -40 bps cumulative negative effect from 2016 and January 2017 acquisitions. Excluding acquisitions, Bruker underlying non-GAAP operating margin expected to expand by +80 bps to +110 bps in FY 2017.
© Bruker Corporation 7
Portfolio Transformation
- starting to ‘move the needle’ in 2018 and beyond
Phenomics & Proteomics
Biopharma & Applied
Microbiology & Diagnostics
Neuroscience & Cell Microscopy
Next-gen Nanotechnology Tools
After-Market: Services, Software
& Consumables
Six Key High-Growth & High-Margin Initiatives:
Commercial Excellence
Product R&D Excellence
Operational Excellence
Portfolio
Growth
Cost
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© Bruker Corporation
• NMR for phenomics research
• International Phenome Center
Network (IPCN) with Bruker as key
NMR partner
• Phenomics to grow rapidly in next
decade in clinical research and
diagnostics
• timsTOFTM Trapped Ion Mobility,
impact II & maXis II UHR-QTOFs
• TIMS is game-changing for
MS-based phenomics
and high-throughput
clinical proteomics
Phenomics by NMR Phenomics & Proteomics by Mass Spec
Portfolio Transformation
Phenomics & Proteomics
• Structural biology with dynamics and
function
• Unique for Intrinsically Disordered
Proteins (IDPs)
• Recent breakthroughs in biological
solid-state NMR for membrane
proteins and protein aggregates (e.g.
in neurodegeneration)
Structural Biology by GHz-Class NMR
NEW Solutions at ASMS (June 2017): • MetaboScape 3.0 • Proteoform Profiling 1.0
NEW Platform at ENC (March 2017): • Next-gen Avance NEO
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© Bruker Corporation
• Label-free ultra-high throughput MS-screening on
millions of compounds in pharma drug discovery
• Accelerates drug discovery
Biopharma: rapifleX MALDI PharmaPulse™
• Extreme resolution Magnetic Resonance Mass
Spectrometry (MRMS) for
− MALDI Imaging in drug & metabolism imaging
− biomarker discovery in cancer research
Biopharma: MALDI Drug Imager™
Applied Markets: NMR FoodScreeners™
• Bruker NMR, MS and FT-IR/NIR instruments used for quality,
authenticity and safety testing in food analysis
• NMR HoneyScreener™ and WineScreener™: detect and quantify
ingredients in short, automated, high-value and low-cost analyses
Portfolio Transformation
Biopharma & Applied Market
NEW applied markets solution at ASMS (June 2017): ToxTyper 2.0E • Routine forensic toxicology of hundreds of compounds in minutes
NEW Biopharma solutions at ASMS 2017: SCiLS Lab and SCILS Cloud • Industry-leading software for large-scale, multi-
center MS Imaging research
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© Bruker Corporation
Clinical Microbiology: MALDI Biotyper
Portfolio Transformation
Microbiology & Diagnostics
• MALDI Biotyper identifies bacteria, yeasts and fungi more
accurately and with short time-to-result (TTR)
• Global installed base ~2,400 systems
• Comprehensive development roadmap:
− ‘gold standard’ ID
− ID from positive blood culture in sepsis
− select antibiotic resistance & susceptibility assays
− syndromic panels
NEW Consumable Products at ECCMID (April 2017):
• MBT Star®-Carba IVD: CE-IVD assay for mass spec-based
antibiotic resistance testing on MALDI Biotyper • High-value PCR Assays (no culture): short TTR Fungiplex
Aspergillus and Carbaplex Resistance CE-IVD assays
NEW System at ASM Microbe
(June 2017): IR Biotyper • For strain typing and infection control in hospital hygiene laboratories
• rapifleX MALDI Mass Spec enabling MS Imaging in pathology translational research to complement IHC
Clinical Research: MALDI TissueTyper™
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© Bruker Corporation
Portfolio Transformation
Neuroscience & Cell Microscopy
Next-gen Optogenetics & Super-Resolution Cell Microscopy
• Simultaneous, all-optical stimulation and
imaging platforms for neuroscience research
• Multi-cell brain research: decode neural
connectivity and networks
• Deep 3D super-resolution microscopy for live-
cell research
Mouse spermatocyte courtesy of Jackson Labs
Recent Bruker Nano Acquisition (May 2017): Luxendo light sheet microscopy
• Proprietary single plane illumination microscopy
(SPIM) technique
• Reduces phototoxicity on living specimens
• Enables new research in embryology, live-cell
imaging, brain development, optogenetics
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© Bruker Corporation
Portfolio Transformation
Next-Gen Nanotechnology Tools
Next-Gen Nanotechnology: X-Ray Semiconductor Metrology
• Logic and memory makers require
next-gen nano-metrology tools to
ensure yield and quality
• Bruker next-gen atomic force
microscopy (AFM) and X-ray
metrology tools are key for
advanced nodes and 3D chip
structures
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Fast Growing After-Market Business Services, Software and Consumables
Focus on After-Market revenue
CALID 200
250
300
350
400
450
2013 2014 2015 2016
$ m
illio
ns
BIOSPIN
CALID
NANO
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Focus on Service
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From Transformation and Rightsizing (2013-2016)
to Operational & Commercial Excellence (2017-2020)
2013 2014 2015 2016 2017 2018-2020
Bruker BioSpin
Operational Excellence
& Cost Optimization
• Product R&D Excellence
• Lean Manufacturing
• Commercial Excellence
• ERP, CRM and Process
Bruker NANO
Bruker CALID
BEST
Outsourcing
Rightsizing
Rightsizing & Footprint Consolidation
Outsourcing
CAM Divestitures
Rightsizing & Footprint Consolidation
Outsourcing
Footprint Consolidation
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Portfolio Transformation: Fundamentally reshaping the portfolio
for fast growth & continued multi-year margin expansion
Six Key High-Growth & High-Margin Initiatives:
Commercial Excellence
Product R&D Excellence
Operational Excellence
Portfolio
Growth
Cost
2017 est.: About 25% of Bruker’s revenue
Growing above LST market GM & OM above BRKR average
© Bruker Corporation
Phenomics & Proteomics
Biopharma & Applied
Microbiology & Diagnostics
Neuroscience & Cell Microscopy
Next-gen Nanotechnology Tools
After-Market: Services, Software
& Consumables
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www.bruker.com
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Bruker Corporation Reconciliation of GAAP to NON-GAAP Financial Measures
© Bruker Corporation 18
(in millions, except per share amounts)
2016 2015
Reconciliation of Non-GAAP Operating Income, Non-GAAP
Profit Before Tax, Non-GAAP Net Income, and Non-GAAP EPS
GAAP Operating Income 177.2$ 145.7$
Non-GAAP Adjustments:
Restructuring Costs 20.8 29.3
Acquisition-Related Costs 11.1 (4.7)
Purchased Intangible Amortization 21.7 20.8
Other Costs 7.1 24.1
Total Non-GAAP Adjustments: 60.7$ 69.5$
Non-GAAP Operating Income 237.9$ 215.2$
Non-GAAP Operating Margin 14.8% 13.3%
Non-GAAP Interest & Other Income (Expense), net (8.8) (17.5)
Non-GAAP Profit Before Tax 229.1 197.7
Non-GAAP Income Tax Provision (35.9) (43.4)
Non-GAAP Tax Rate 15.7% 22.0%
Minority Interest (0.9) (3.3)
Non-GAAP Net Income Attributable to Bruker 192.3 151.0
Weighted Average Shares Outstanding (Diluted) 162.2 169.1
Non-GAAP Earnings Per Share 1.19$ 0.89$
GAAP Diluted Earnings Per Share 0.95$ 0.60$
Twelve Months Ended December 31,
Bruker Corporation Reconciliation of GAAP to NON-GAAP Financial Measures
© Bruker Corporation 19
Reconciliation of GAAP and Non-GAAP Gross Profit
GAAP Gross Profit 742.5$ 708.6$
Non-GAAP Adjustments:
Restructuring Costs 11.0 21.2
Acquisition-Related Costs 2.1 2.5
Purchased Intangible Amortization 18.7 18.7
Other Costs 0.1 -
Total Non-GAAP Adjustments: 31.9 42.4
Non-GAAP Gross Profit 774.4$ 751.0$
Non-GAAP Gross Margin 48.1% 46.2%
(in millions, except per share amounts)
Reconciliation of GAAP and Non-GAAP Interest & Other Income (Expense), net
GAAP Interest & Other Income (Expense), net 0.4$ (17.7)$
Non-GAAP Adjustments:
Bargain Purchase Gain (9.2) -
Sale of Product Line - 0.2
Non-GAAP Interest & Other Income (Expense), net (8.8)$ (17.5)$
Reconciliation of GAAP Revenue and Non-GAAP Revenue
GAAP Revenue as of Prior Comparable Period 1,623.8$ 1,808.9$
Non-GAAP Adjustments:
Acquisitions and divestitures 32.4 (37.1)
Currency (8.3) (184.4)
Organic (36.6) 36.4
Total Non-GAAP Adjustments: (12.5) (185.1)
Non-GAAP Revenue 1,611.3$ 1,623.8$
Organic Revenue Growth -2.3% 2.1%
2016 2015
Bruker Corporation Reconciliation of GAAP to NON-GAAP Financial Measures
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Reconciliation of Non-GAAP EBITDA
Non-GAAP Net Income Attributable to Bruker (from above) 192.3$ 151.0$
Non-GAAP Adjustments:
Interest Expense, net 1 12.9 11.8
Non-GAAP Income Tax Provision (from above) 35.9 43.4
Depreciation Expense 2 32.6 32.5
Amortization of Demonstration Inventories 3 16.5 19.4
Total Non-GAAP Adjustments: 97.9 107.1
Non-GAAP EBITDA 290.2$ 258.1$
Reconciliation of GAAP Depreciation and Amortization per the Statement of Cash Flows
GAAP Depreciation and Amortization 54.3$ 53.3$
Depreciation Expense 32.6 32.5
Purchased Intangible Amortization 21.7 20.8
54.3$ 53.3$
1 GAAP Interest Expense, net
2 GAAP depreciation expense, as reconciled to the Statement of
3 GAAP write-down of demonstration inventories to net
realizable value per the Statement of Cash Flows
(in millions, except per share amounts) 2016 2015
Bruker Corporation Reconciliation of GAAP to NON-GAAP Financial Measures
© Bruker Corporation 21
(in millions, except per share amounts)
Reconciliation of Non-GAAP Return on Invested Capital (ROIC)
Non-GAAP Operating Income (from above) 237.9$ 215.2$
Less: Non-GAAP Income Tax Provision (from above) (35.9) (43.4)
Non-GAAP Operating Income after Tax 202.0$ 171.8$
Average Total Invested Capital:
Average Long-Term Debt 328.8$ 310.1$
Average Current portion of Long-Term Debt 10.4 0.7
Average Total Shareholders' Equity 713.0 752.3
Less: Average Cash and Cash Equivalents (304.8) (293.3)
Average Total Invested Capital 747.4$ 769.8$
Return on Invested Capital (ROIC) 27.0% 22.3%
For more information, visit Bruker’s website at http://ir.bruker.com/investors/press-releases/earnings-releases/default.aspx
With respect to the Company's outlook for 2017 non-GAAP operating margin, non-GAAP EPS and non-GAAP tax rate, we are not providing the most directly comparable GAAP financial measures or corresponding reconciliations to such GAAP financial measures on a forward-looking basis, because we are unable to predict with reasonable certainty certain items that may affect such measures calculated and presented in accordance with GAAP without unreasonable effort. Our expected non-GAAP operating margin, tax rate and EPS ranges exclude primarily the future impact of restructuring actions, unusual gains and losses, acquisition-related expenses and purchase accounting fair value adjustments. These reconciling items are uncertain, depend on various factors outside our management’s control and could significantly impact, either individually or in the aggregate, our future period operating margins, EPS and tax rate calculated and presented in accordance with GAAP.
2016 2015