Bruker (BRKR) Q3 2014 earnings summary

Executive summary

• Q3 2014 revenue was $420 million, down 4.4% YoY, and non-GAAP EPS was $0.14, down 30%; results fell below the reduced outlook amid weakness across all three BSI groups.

• Management accelerated restructuring and cost actions in CAM and BioSpin while continuing investment in innovation and adjacent markets, with a focus on improving margins and cash flow.

Financial highlights

• Q3 reported revenue declined 4.4% YoY; organic revenue fell 4.8%, acquisitions added 0.8%, and FX reduced revenue 0.4%.

• Q3 non-GAAP operating margin was 8.6%, down 220 bps YoY, including a 40-bp FX headwind; non-GAAP gross margin was 44.2%, down 90 bps.

• 9M reported revenue grew 1.1%, while organic revenue declined 0.4%; non-GAAP EPS was $0.46, flat YoY.

• 9M free cash flow was $18 million, up $46 million YoY, supported by working-capital improvements and lower capital expenditures.

Outlook and guidance

• FY14 revenue guidance was reduced to $1.81–$1.84 billion and non-GAAP EPS to $0.72–$0.78, reflecting weakness in NMR and AXS and potential Q4 variability.

• Q4 FX could reduce reported revenue growth by as much as 4 percentage points YoY; management expected a largely neutral EPS effect as weaker euro benefits are offset by other currencies.

• Q4 restructuring charges were expected at approximately $10 million, bringing FY14 charges to nearly $40 million before additional BioSpin rightsizing costs.

• BioSpin MRS revenue was expected to decline at a low-single-digit rate for FY14; Preclinical Imaging was expected to grow at a double-digit rate and BNS at a mid-single-digit rate.