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Then we will have a short break and then Tom Rosa will talk about the BEST division and then Werner Maas will talk about the BioSpin division. And Frank will wrap up and we will have another open session for more questions. Now, I would like to turn it over to Frank Laukien, our President and CEO.Frank Laukien Thank you very much Stacy and good morning to all of you. Thank you very much. We are very pleased that many of you could join us for this inaugural analyst and investor day. Before I get started with my overview of the company which I am going to keep short today, because I think the really interesting part today is of course that it allows you an opportunity to drill a little deeper into some of the market opportunities, technologies, product lines and into some of our divisions. But by the way do not read anything into which divisions are present here today and which divisions therefore are not present here today that’s just inevitable. We didn’t want to make this a full day event. And I promise you will have all the divisions that are not presenting here today, we will have them next year or in two years or whenever we repeat this analyst day. Certainly, we were focusing a little bit on the divisions that perhaps are newer to Bruker clearly from the two acquisitions in 2010, the CAM division and Mark's Bruker Nano Surfaces, BNS division are newer, BEST was very well characterized though at the S-1 level and the S-1 level has a lot of information but of course zero forward-looking information. So I think Tom will be able to give you a lot more insight into BEST strategy and then our plans going forward. And of course Bruker BioSpin been being our largest and oldest division that’s how we started 52 years ago has really a lot of interesting momentum, a lot of new products.
So those are the ones that we pick today, but it wasn’t cherry picking because those are the cherries that are not presented today. So, we are also little bit kept in mind we just were at ASMS at the press conference there, so we didn’t make this a Bruker Daltonic life science focus because quite a few of you were at ASMS or have read about what’s going at ASMS, who made a very well attended press conference there. Yesterday we had a big investor group visit us up in Boston. We spent the majority of that time talking about our very strategic MALDI Biotyper products, so we won't talk about it today. So please don’t read anything in to what we're discussing or not discussing. It's -- you see about half of the divisions presented here today and therefore half of them are not present and we will promise to present them to you next year in more detail.Also just to get it out of the way, we do not update guidance today or give new guidance. We don’t do that generally during the year. We give our goals, our financial goals for the year and then we’re not in the habit of updating guidance quarterly and we don’t intend to do that. We have done it from time to time and we’ve noticed that street expectations and what we might be expecting for the rest of the year for a certain quarter or so. If there was a huge discrepancy, we would reserve the right to do that, but generally we run with our goals for the year, with the first quarter, so far we are ahead of our goals for the year. We’re certainly on track and we’re ahead. But we're going to update guidance because that was one of the questions that I've read in a few of the pieces that came out prior to this analyst day. Will Bruker update guidance? So the answer is no.
So, with that let me take you through my piece of the agenda and that is to give you an overview. I know many of you are very familiar and I’ll just make some comments on the environments that we see, on the opportunities, on the growth drivers and of course on our strategic priorities and then I will speak a little bit about life science, mass spectrometry. Not all of you were at ASMS. So, I will give you an update on that before turning it over to my colleagues.So I am not going to read every word on that slide. Those slides are available to you. And sometimes we just get the question, well how did this all start. Where did this all come from? Well it's a 52 year old company that got started in 1960 by an engineer by the name of Bruker and that's my father who was a professor of physics at the time with the technical university of Caldura and it has really grown primarily through organic growth and through product development and through entering new markets. There have been over the years some pivotal acquisitions, often if you looked how we got into mass spectrometry with the 1980 it was actually in peril with a small internal development that's the predecessor of today's FTMS product line as well as an acquisition that we did in Bremen Germany of a small company that built mobile quadrupole mass spectrometers. That's still a part of our product line for Daltonics, but it is a relatively small one and everything else we then either developed internally or very often in collaborations with other universities, the time of flight product line was initially developed not from MALDI because MALDI hadn’t been invented yet, but was developed with a technical university in Munich.
You will hear later on about DNP-NMR. Werner will enlighten you in what that means and what it does more importantly we developed that in the last few years together with MIT and the list goes on and on. I just want to give you a flavor of, this was not a VC funded company. This was a privately held company, it is today of course a completely publicly-held company. There are no more privately held divisions, with the acquisition of the Bruker BioSpin largest and original division in the year 2008. It's now a very simple corporate structure, of course the path how we got here had its complications, but today. I think you see many of the elements of focus on organic growth, focus on your customers, focus on products, high demands for return on invested capital, EPS non-GAAP EPS accretion isn't everything, that's not sufficient.I think you see those themes in wanting to create long-term value and with a goal of creating the leading player in our industry of life science tools and scientific instrumentation. This slide you maybe familiar with and that's the slide that doesn't and shouldn't be changing that sort of the big, the strategy points, the goals that we have, we are a premier brand for the high-performance scientific instrumentation. We are really pretty good at that business model. We speak to it pretty closely. Yes, we have some scientific instruments that are now applied to clinical microbiology and to some new applications. Our best division certainly and deliberately is outside of the scientific instrument space and you will hear more about that. Our financial goals are we want to be a growth company. We want to be a fast growing company. We've always been good at that, that seems to be in our DNA and with the investment we have in R&D and more importantly the excellent output we get from our R&D, we can drive very good profitable growth along with margin expansion along with balance sheet and working capital improvement and always with a focus on ROIC.
We want to be above 20% ROIC and if we can drive it towards 25% and 30% even better. Very customer focused, very product focused, not so much focused on acquisitions, although we sometimes do smaller acquisitions which we then nurture maybe complete the product line, leverage our global distribution that has often been a very successful model for us. When I took the company public in 2000, one of the concerns that I couldn’t admit to was that we didn't have the full global distribution today, we very clearly came to toe to toe with any company. The companies that we are facing, the larger competitors, there are some companies that are larger, but there also tend to be sometimes are more conglomerates or becoming more like conglomerates.So we are really competing typically with their scientific instruments businesses or divisions or segments or whatever they may call it which are of the same order of magnitude as we are. We are at about $1.6 billion to $1.7 billion. Some of them are maybe above $2 billion, but we are competing with equal-sized companies and we can go in terms of distribution, in terms of service, in terms of customers for it. Today we are absolutely world class and can go toe to toe and in fact in many areas for instance recently with a lot of funding in Central and Eastern Europe and some other areas we found that even some larger companies sometimes we have better distribution than they do. So distribution for us is clearly no longer a limitation and continued steady improvement of our distribution and global capabilities has been an ongoing theme I think that will continue and it has been one of our strengths quite honestly. What I think, I think many of you are familiar with our markets, so that at the bottom we have diversified markets and that's a strength. We don't just depend on pharma, we don't just depend on government spending or one of the other and having this geographical diversity and market diversity and product line diversity has made us very, very resilient and robust to even in the year 2009, which was a difficult year where the scientific instruments or analytical instruments, life science tool space whatever you want to call it, shrunk, probably on average by about 6%. We still grew about 2% in currency adjusted. I think one thing that I really wanted to stress today and in fact I will have my colleagues do it to a great extent is what’s in that busy yellow box.
Other than our product competitiveness and market share gains if perhaps the most important take home message for many of you is what’s in that box and what does it mean. Why is Bruker benefiting? Why is Bruker benefiting may be disproportionately from some of those science and technology trends or new requirements. I will refer to some of them, not on this slide. I will let you just read it here, but we will come back to those, Mark Munch will talk to you about 450 mm fabs or shrinking feature sizes.I will talk to you about biologic drugs, Werner Mass will discuss preclinical imaging. I will talk to you a little bit more about next-generation proteomics and what that means that a lot of that is related to our life science mass spectrometry product lines. And of course you will hear more about the opportunities for superconducting materials and devices or Supercon-enabled devices. So these growth drivers within these very, very large budgets that are out there are far more important than whether Mediterranean Europe is weak or whether NIH budget is flat or goes down 3% or goes up 1.5%. Those along with the competitiveness of our product line, our ability to gain market share which is really excellent and it is happening pretty much across the product lines are the big drivers. I think that’s why you see exceptional growth from Bruker and I would say you should continue to expect exceptional profitable growth from Bruker. The total (inaudible) actually at a recent meeting of the Analytical and Life Science Systems Association or LSSA was actually have involved since. I finally got a total global number of how big its global life science R&D in academia, university, pharma, biotech and elsewhere diagnostics company and globally this is all, this is the world. And it appears to be close to $250 billion. So the global R&D spending is very large. It’s growing faster in the emerging market, in the developing world; or the emerging markets are no longer emerging. They have emerged. They are very powerful, large markets. Its growing more slowly in the U.S. than in Europe but the CAGR is still around 3% to 4%.
If you look at life science tools, analytical instruments, actually I see very different numbers from analysts $575 billion. The sources that we’ve used for this total addressable market, addressable in principle we’re not in all of those markets. Those include markets like (inaudible) analysis or genomics markets that we’re not in. It is about $47 billion and our Served Addressable Market or SAM has really increased quite a bit in recent years because of new product initiatives but also because of some of the acquisitions that we’ve done, the acquisition of the former Veeco Metrology Division, Bruker Nano Surface is now and assets which we originally part of. Some of them from Varian Inc. but in the meantime have added quite a bit to that. So what's emerging in CAM as you will see from Collin goes away beyond to what Varian Inc. did originally when we acquired those product lines.That has increased our addressable market, our Served Addressable Market and you will see we list some of the product lines. We've also listed some of the average growth rates in recent years. So there are some very fast growing areas and there are some other areas where I think with new product initiatives like for instance the ones that Werner Maas will explain for the Bruker BioSpin Group, we think we can reaccelerate the growth in those markets and grow the markets and grow with them. Read the rest of this transcript for free on seekingalpha.com