Bruker Corporation's Management Presents At Goldman Sachs Healthcare Conference - Conference Call Transcript

Bruker Corporation (BRKR)

Goldman Sachs Healthcare Conference

June 5, 2012 5:00 p.m. EDT

Executives

Isaac Ro – Goldman Sachs, Analyst

Stacey Desrochers – Burker Corporation, IR Director

Analysts

No Analysts

Presentation

Isaac Ro

Okay, let’s get started here. Thanks for joining us here after lunch. I'm Isaac Ro, analyst here at Goldman. And I'm happy to have Stacey Desrochers from Bruker here to talk about the company.

And for those of you who are not familiar, the company has actually had a very busy start to the summer here. You had a big showing at the ASMS Conference. You had your first-ever investor meeting last week in New York. So there’s a lot of new stuff going on, and the stock’s had a pretty good run here with lots of improvements to the franchise over the last couple of years.

So, certainly, happy to take any questions throughout the course of the next 30 or 40 minutes. If you have them, please just raise your hand.

And with that as backdrop, let me just start by saying, thanks for coming, and feel free to give us a couple minutes update for the takeaways on the analyst meeting, if you like, and the key areas of focus for the balance of the year.

Stacey Desrochers

So, Bruker Corporation is a life science tools company. As Isaac said, we had our first Analyst Day ever last Friday in New York. It was well-attended, webcast and out there for folks if you want to listen to it. But we highlighted technologies and the new businesses that we acquired in 2010.

So we had Collin D’Silva present the CAM Group which, if you're not aware, is within the Bruker Daltonics Group. It is mass specs, so, triple quads, GC themed products, and ICP-MS as well. That business is a great business for us. It has a market potential of $2 billion in addressable markets, and we have successfully revamped the entire portfolio that we bought two years ago now, and are making inroads into those new markets with that business. It will continue to be a drag on margins, so we have set forth a goal of 18% adjusted operating margins for 2014 excluding the CAM Group.

We also had Mark Munch talk about the Veeco assets that we acquired in 2010, that’s the atomic force microscopy and stylus and optical metrology group. That has -- which we now call Bruker Nano Surfaces. That business has been fantastic for us. Last year was greater than $160 million in revenue, with 20-plus percent up margin. So that’s been a fantastic acquisition.

We also had Tom Rosa from our BEST Group. So that’s the other segment, so, most of our businesses are in our BSI or scientific instruments segment. Tom talked about the BEST Group. As you might or might not be aware, we had an S1 registration that had been out there since September 2010 that we pulled in March. And so we hadn’t been able to talk through about that business for about 18 months now. So he kind of re-explained that business to folks and the various products that we’re working on.

So, the highlights for that business are that we have gotten long-term contracts with MRI suppliers to be their supplier for superconducting wire, which is a big win for that group, and have done a great job with the low-temperature superconducting wire. And one of the things that we’re doing this year is moving from our existing factory to a new factory for the wired business.

On the device side for that business, it creates beam lines and synchrotrons and RF cavities, and is working on crystal growth magnets, which is a way that you can grow silicon and solar wafers in a gravity-free environment that allowed less variability in the wafers, so you get better pull-through. That’s a future product that has good growth potential, as well as the fault current limiter, which is a high-tech surge protector for the energy grid.

So, those are all future products for that BEST business. So, he spent sometime talking about that. We expect BEST to lose about $0.04 this year, but grow at a 15% organic or 20% FX-adjusted rate, to be about $130 million in revenue this.

And then we had Werner Maas talk about the BioSpin business, since with Agilent buying Varian two years ago, that continues to be an area of interest for folks. So, he highlighted the technology that we have and the portfolio of products as compared with our competitors and some of the growth opportunities for applied markets with our juice screeners and other applied markets.

Question-and-Answer Session

Isaac Ro

Great. Very comprehensive review, and I think it does highlight the range of technologies that Bruker has. It’s certainly one of the hallmarks of the company. And so, with that in mind, want to drill down to the last part, where you touched on the BioSpin business or NMR technology, which I think is probably the single, by far, the single biggest component of the franchise. And that’s one area where you guys have had good leadership position. At the high end you had great competitive wins and so forth. And so, as we look at the secular growth of that industry or that part of the market that you’ll serve over the next few years, how do you think it’s going to play out when we put in context some of the funding challenges that are out there in the world?

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