Bruker Corporation (BRKR)

Lazard Capital Markets Healthcare Conference Call

November 16, 2011 9:30 a.m. ET

Executives

Stacey Desrochers - Director of Investor Relations

Analysts

Stephen Unger - Lazard Capital Markets

Presentation

Stephen Unger

-

Lazard Capital Markets

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Hi, good morning. I think we need to get started with our presentation today in the life science tools track. This is Bruker Corporation. Bruker is a company that I have covered for quite some time. When it was Bruker Daltonics and there has been several combinations of Bruker related companies over the last few years, and the company now is a significant player in many, many, many markets. The presentation today is from Stacey Desrochers, who is the Treasurer and Director of Investor Relations, and should give a full presentation with may be perhaps a question -- or a time for a question or two at the end. And with that I am going to hand it over to Stacey.

Stacey Desrochers

Thank you, Steve. Good morning, everyone. I’d just like to show your attention to the safe harbor statement. As you know any statements contained in this presentation do not describe historical facts and may constitute forward-looking statements. And I would advise you to look at any of our filings with the Securities and Exchange Commission for additional information.

Bruker is a high-performance life-science materials and research tools company. We have premier brand with leading market share in key markets. We are a proven innovator with an extensive IP portfolio and we have a diversified customer base. This slide shows where we are globally. The green dots are our major manufacturing locations. Majority of which are in the United States and then in Europe. Within Europe, they are in Germany, Switzerland and France. The yellow dots are our service and sales offices that support our products. And our key customers which are in the academic QA, QC, forensics, food, feed, environmental, materials research customers.

Bruker Corporation is made up of two segments. Our scientific instruments segment or BSI segment, and our Bruker Energy and Supercon Technologies or BEST segment. Our BSI segment includes the Bruker BioSpin group, which is our NMR, MRI and EPR group. Bruker Daltonics is our Mass Spec group. This includes our traditional Mass Spec products along with the products we purchased last year from Agilent, which we now call our Cam group, and also our Bruker Detection group.

The Bruker MAT group, or materials. That has the historical Bruker AXS group within it along with the acquisition we did last year of the Veeco assets which are the ASM and SOM product lines. And then Bruker Optics is our FT-IR, Raman spectroscopy group. Bruker Energy and Supercon Technologies produces superconducting and devices.

In June of this year we talked about having a record backlog of over a $1 billion for the first time ever. Our estimated revenue for fiscal year 2011 will be $1.62 billion to $1.64 billion with BSI adjusted EPS of $0.87 to $0.90. We have some longer term or medium term goals, as we like to talk about our 2014 of a 10% growth rate for the out years. That would get us to over $2 billion in revenue by the end of 2014. We have adjusted operating target of greater than 18% by the end of 2014, which implies approximately 100 basis point improvement from 2012 through 2014.

This slide shows our revenue for 2010, broken down by product, customer and geography. Majority of our sales are from systems sales. So 79% of our revenue comes from systems sales 21% of it comes from service, consumables and service. Majority of our revenue comes from academic, medical school, 55% of it. 9% from government, 12% from pharma, and then 24% from industrial and applied. We would expect when we put this pie chart together, for 2011, that we would see an increase in our industrial and applied customer base as a result of the acquisitions that we did last year of the CAM assets along with the Veeco assets, because they had more industrial and applied customers.

When we look at our revenue split by geography, 43% of our revenues comes from Europe, 27% from Asia Pacific, 24% from the Americas and then 6% from EMEA. So far through the first nine months of 2011 we have had 8% growth which is FX and acquisition adjusted growth. We had EPS of $0.56 which is a 17% increase over the prior nine months of last year. Our adjusted gross margin has increased by 50 basis points to 49%, and our BEST group had revenue of $79.8 million which is a FX adjusted growth rate of 22%.

Just to refresh your memory around some of the major acquisitions that we did last year. We purchased three business lines from Agilent, which were acquired divestitures, when the purchased the Varian business. We purchased the ICP-MS business, Lab GC and the GC-QQQ-MS business. We had an adjusted purchase price of $32.5 million. These products really helped complete our mass spec portfolio offering.

During the first half of 2011, we spent time integrating those business into Bruker facilities, so we moved the Lab GC business from an existing Agilent facility in the Netherlands to our own facility in the Netherlands. We moved the GC-QQQ from a Varian facility in California into a new Bruker facility in California. And then also moved the ICP-MS from Australia into that same facility in California. We also at the same time consolidated one of our sales offices into a new facility. So we went from four offices to one with that.

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