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While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so even if our estimates change, and therefore, you should not rely upon these forward-looking statements as representing our views as of any date subsequent to today.In addition to the financial measures prepared in accordance with Generally Accepted Accounting Principles or GAAP, we will discuss certain non-GAAP financial measures, including adjusted EPS, adjusted operating income, adjusted operating margins, which are non-GAAP measures that exclude certain items. We exclude these items because they are outside of our normal operations and/or in certain cases are difficult to forecast accurately for future periods. We believe that the use of non-GAAP measures helps investors gain a better understanding of our core operating results and future prospects, consistent with how we measure and forecast the company’s performance, especially when comparing such results to previous periods or forecasts. A reconciliation of our GAAP to adjusted numbers can be found in our press release issued earlier today and is located in the Investor Relations section of our bruker.com website. Today, Frank will provide an update on the business and certain overall Bruker Corporation financial highlights. Charlie will discuss the financial results of our Bruker Scientific Instruments or BSI segment and our Bruker Energy and Supercon Technologies or BEST segment. I’ll now turn the call over to our President and CEO, Frank Laukien. Frank H. Laukien Thank you, Stacey, and good morning, everyone. We appreciate you joining us today. Before I provide the business update and discuss the financial highlights for the second quarter of 2012, I would like to welcome our new sell-side analyst Sung Ji Nam from Cantor Fitzgerald and Ross Muken from ISI Group, welcome. I also would like to introduce all of you to Bruker’s new Executive Vice President and Chief Financial Officer, Mr. Charles Wagner. Charlie brings over 20 years of financial and management experience to his role, including experience as the CFO of two publicly traded companies and expertise in financial analysis, strategic planning and corporate development. We are very happy to have Charlie with us and look forward to his contribution.
So here are the financial highlights for Bruker Corporation. Our revenue in the second quarter of 2012 was $420.7 million, representing growth of 4.9% over second 2011 revenue of $401.2 million. Without the impact of changes in foreign currency and acquisitions, our organic growth rate was 10.4% in the second quarter.Revenue growth was broad-based with almost all Bruker businesses and markets contributing to the growth. The one exception was Bruker Optics were revenues declined in the second quarter. For the first half of 2012, revenue was $826.3 million corresponding to reported growth of 9.0% and organic growth of 12% over the first half of 2011. The growth in the first half was supported by over 20 new product introductions, which address an expanding array of life science, pharma, biotech, clinical, food and food safety, petrochem, environmental, homeland security, materials and nanoscience, as well as academic research and educational markets. Our product and innovation leadership are the company’s primary growth engine and our competitive positioning remains fundamentally very sound. While our organic growth rate was solid in the first half of 2012, we did see weakening demand towards the end of the second quarter. Throughout 2011 and even through April of this year, Bruker appears to be somewhat immune to the apparent European malaise. However, at the end of the May and into June of 2012, we began to see softening demand particularly in Europe and even in strong Bruker countries like Germany. Around the same time, we observed a weakening in global industrial and applied markets, including also a sequential slowdown in the semiconductor and data storage metrology markets, which had been quite robust for Bruker at the beginning of this year. Now moving on to profitability, adjusted operating income in the second quarter of 2012 was $33.0 million compared to $50.3 million in the second quarter of 2011. For the first half of 2012, adjusted operating income was $76.6 million, compared to $86.1 million in the first half of 2011. In the second quarter of 2012, our adjusted EPS was $0.12, compared to second quarter 2011 adjusted EPS of $0.19. Adjusted EPS for the first half of 2012 was $0.26, compared to $0.32 in the first half of 2011.
We entered 2012 with a target for improving our profitability, so the decline in second quarter margins and earnings was particularly disappointing. Gross margins were lower year-over-year due to a variety of factors. Mix was certainly a factor as we saw lower revenues from the high margin business like Bruker Optics and higher revenues from a low margin business like CAM. Some businesses experienced higher materials costs associated with production issues and higher unabsorbed labor cost associated with delays in converting our backlog to revenue.Read the rest of this transcript for free on seekingalpha.com