Business Wire | Aug 3, 2020 04:05PM EDT

Bruker Reports Second Quarter 2020 Financial Results

Aug. 03, 2020

BILLERICA, Mass.--(BUSINESS WIRE)--Aug. 03, 2020--Bruker Corporation (Nasdaq: BRKR) today announced financial results for its second quarter and for the six months ended June 30, 2020.

Second Quarter 2020 Financial Results

Bruker's revenues for the second quarter of 2020 were $424.6 million, a decline of 13.4% compared to the second quarter of 2019. In the second quarter of 2020, revenues declined 12.7% organically year-over-year, growth from acquisitions was 0.4%, while foreign currency translation had a negative effect of 1.1%. The reported and organic revenue declines were primarily due to COVID-19 related disruptions worldwide and softer global instrumentation demand, due to the ongoing pandemic.

Second quarter 2020 GAAP operating income was $37.9 million, compared to $53.5 million in the second quarter of 2019, representing GAAP operating margins of 8.9% and 10.9%, respectively. Non-GAAP operating income was $49.0 million in the second quarter of 2020, compared to $73.7 million in the second quarter of 2019. Bruker's second quarter 2020 non-GAAP operating margin was 11.5%, compared to 15.0% in the second quarter of 2019.

Second quarter 2020 GAAP diluted earnings per share (EPS) were $0.16, compared to $0.23 in the second quarter of 2019. Second quarter 2020 non-GAAP diluted EPS were $0.21, compared to $0.33 in the second quarter of 2019. The year-over-year declines in the Company's GAAP and non-GAAP operating income, operating margins and diluted EPS were primarily due to lower revenues associated with COVID-19 disruptions and softer academic and industrial demand, partially offset by Bruker's cost control and reduction measures.

First Six Months of 2020 Financial Results

For the first six months of 2020, Bruker's revenues were $848.6 million, a decline of 10.8% from $951.6 million in the first six months of 2019. In the first six months of 2020, revenues declined 10.3% organically year-over-year, growth from acquisitions was 0.6%, while foreign currency translation had a negative effect of 1.1%.

In the first six months of 2020, GAAP operating income was $54.3 million, compared to $95.4 million in the first six months of 2019, representing GAAP operating margins of 6.4% and 10.0%, respectively. Non-GAAP operating income was $81.2 million, compared to $136.0 million in the first six months of 2019. Bruker's non-GAAP operating margin in the first six months of 2020 was 9.6%, compared to 14.3% in the first six months of 2019.

In the first six months of 2020 GAAP EPS were $0.22, compared to $0.43 in the first six months of 2019. First half 2020 non-GAAP EPS were $0.35, compared to $0.61 in the first half of 2019. The year-over-year declines in the Company's GAAP and non-GAAP operating income, operating margins and diluted EPS were primarily due to lower revenues and demand during the pandemic.

A reconciliation of non-GAAP to GAAP financial measures is provided in the tables accompanying this press release.

Frank H. Laukien, President and CEO of Bruker, commented: "I am very proud of my 7,000 Bruker colleagues worldwide and of our excellent safety record of protecting employees and families during the pandemic. Our organization has continued to support our customers globally with exemplary dedication. Operationally, we have executed well in challenging times, with many customer laboratories closed or at reduced capacity."

He continued: "Our second quarter 2020 revenues declined less than the scenarios that we outlined during our last earnings call. Moreover, we were able to mitigate the negative impact of the pandemic on our profitability and cash flow through cost control and cost reduction measures. We continue to invest in our Project Accelerate initiatives, including infectious disease diagnostics, proteomics and metabolomics, and functional structural biology for biopharma therapeutics development and vaccine research. Bruker remains financially healthy and is well-positioned for anticipated improvements in business conditions in the second half of 2020."

Fiscal Year 2020 (FY 2020) Guidance Remains Suspended

Bruker's FY 2020 financial guidance remains suspended. While Bruker continues to expect the pandemic to have a negative year-over-year impact on the Company's third quarter 2020 financial results, Bruker anticipates a sequential improvement in financial results from the second quarter to the third quarter of 2020.

Quarterly Earnings Call

Bruker will host a conference call and webcast to discuss its financial results, business outlook, and related corporate and financial matters today, August 3, at 4:30 p.m. Eastern Daylight Time. To listen to the webcast, investors can go to https://ir.bruker.com and click on the "Q2 2020 Earnings Webcast" hyperlink. A slide presentation that will be referenced during the webcast will be posted to our Investor Relations website shortly before the webcast begins. Investors can also listen to the earnings webcast via telephone by dialing 1-888-437-2685 (US toll free) or +1-412-317-6702 (international) and referencing "Bruker's Second Quarter 2020 Earnings Conference Call". A telephone replay of the conference call will be available by dialing 1-877-344-7529 (US toll free) or +1-412-317-0088 (international) and entering conference number 10146589. The replay will be available beginning one hour after the end of the conference call through September 3, 2020.

About Bruker Corporation (Nasdaq: BRKR)

Bruker is enabling scientists to make breakthrough discoveries and develop new applications that improve the quality of human life. Bruker's high-performance scientific instruments and high-value analytical and diagnostic solutions enable scientists to explore life and materials at molecular, cellular and microscopic levels. In close cooperation with our customers, Bruker is enabling innovation, improved productivity and customer success in life science molecular research, in applied and pharma applications, in microscopy and nanoanalysis, and in industrial applications, as well as in cell biology, preclinical imaging, clinical phenomics and proteomics research and clinical microbiology. For more information, please visit: www.bruker.com.

Use of Non-GAAP Financial Measures

To supplement our consolidated financial statements, which are prepared and presented in accordance with U.S. generally accepted accounting principles (GAAP), we use the following non-GAAP financial measures: non-GAAP gross profit; non-GAAP gross profit margin; non-GAAP operating income; non-GAAP operating profit; non-GAAP operating margin; non-GAAP SG&A expense; non-GAAP profit before tax; non-GAAP tax rate; non-GAAP net income and non-GAAP earnings per share. These non-GAAP measures exclude costs related to restructuring actions, acquisition and related integration expenses, amortization of acquired intangible assets and other non-operational costs.

We also may refer to organic revenue growth or decline and free cash flow, which are also non-GAAP financial measures. We define the term organic revenue as GAAP revenue excluding the effect of changes in foreign currency translation rates and the effect of acquisitions and divestitures, and believe it is a useful measure to evaluate our continuing business. We define free cash flow as net cash provided by operating activities less additions to property, plant, and equipment. We believe free cash flow is a useful measure to evaluate our business because it indicates the amount of cash generated after additions to property, plant, and equipment that is available for, among other things, acquisitions, investments in our business, repayment of debt and return of capital to shareholders.

The presentation of these non-GAAP financial measures is not intended to be a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP and may be different from non-GAAP financial measures used by other companies, and therefore, may not be comparable among companies. We believe these non-GAAP financial measures provide meaningful supplemental information regarding our performance, however we urge investors to review the reconciliation of these financial measures to the comparable GAAP financial measures included in the accompanying tables, and not to rely on any single financial measure to evaluate our business. Specifically, management believes that the non-GAAP measures mentioned above provide relevant and useful information which is widely used by analysts, investors and competitors in our industry, as well as by our management, in assessing both consolidated and business unit performance.

We use these non-GAAP financial measures to evaluate our period-over-period operating performance because our management believes this provides a more comparable measure of our continuing business by adjusting for certain items that are not reflective of the underlying performance of our business. These measures may also be useful to investors in evaluating the underlying operating performance of our business and forecasting future results. We regularly use these non-GAAP financial measures internally to understand, manage, and evaluate our business results and make operating decisions. We also measure our employees and compensate them, in part, based on certain non-GAAP measures and use this information for our planning and forecasting activities.

Additional information relating to the non-GAAP financial measures used in this press release and reconciliations to the most directly comparable GAAP financial measures is provided in the tables accompanying this press release following our GAAP financial statements.

Forward Looking Statements

Any statements contained in this press release which do not describe historical facts may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements regarding management's expectations for future financial and operational performance and business outlook; the impact of the COVID-19 pandemic; future funding trends in certain industries, including life sciences; future economic conditions; and statements found under the "Use of Non-GAAP Financial Measures" section of this release. Any forward-looking statements contained herein are based on current expectations, but are subject to risks and uncertainties that could cause actual results to differ materially from those indicated, including, but not limited to, risks and uncertainties relating to the length and severity of the COVID-19 pandemic, the impact of the pandemic on global economic conditions and the length and severity of any resulting recession, continued volatility in the capital markets, the integration and assumption of liabilities of businesses we have acquired or may acquire in the future, fluctuations in foreign currency exchange rates, our material weaknesses in internal controls, our ability to successfully implement our restructuring initiatives and other cost reduction initiatives, changing technologies, product development and market acceptance of our products, the cost and pricing of our products, manufacturing, competition, loss of key personnel, dependence on collaborative partners, key suppliers and contract manufacturers, capital spending and government funding policies, changes in governmental regulations, international trade disputes, the use and protection of intellectual property rights, litigation, and other risk factors discussed from time to time in our filings with the Securities and Exchange Commission, or SEC. These and other factors are identified and described in more detail in our filings with the SEC, including, without limitation, our annual report on Form 10-K for the year ended December 31, 2019, as may be updated by our quarterly reports on Form 10-Q. We expressly disclaim any intent or obligation to update these forward-looking statements other than as required by law.

-tables follow-

Bruker CorporationCONDENSED CONSOLIDATED BALANCE SHEETS (in millions) June 30, December 31,

2020 2019

ASSETS Current assets:Cash and cash equivalents $ 746.8 $ 678.3

Short-term investments 50.0 6.6

Accounts receivable, net 324.5 362.2

Inventories 665.4 577.2

Other current assets 170.5 172.0

Total current assets 1,957.2 1,796.3

Property, plant and equipment, net 335.9 306.1

Operating lease assets 60.0 65.6

Intangibles, net and other long-term assets 590.3 603.5

Total assets $ 2,943.4 $ 2,771.5

LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities:Current portion of long-term debt $ 100.7 $ 0.5

Accounts payable 119.2 118.4

Customer advances 149.9 137.9

Other current liabilities 379.9 388.8

Total current liabilities 749.7 645.6

Long-term debt 924.2 812.8

Operating lease liabilities 42.4 47.0

Other long-term liabilities 320.5 327.9

Redeemable noncontrolling interest - 21.1

Total shareholders' equity 906.6 917.1

Total liabilities and shareholders' equity $ 2,943.4 $ 2,771.5



Bruker CorporationCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Three Months Ended Six Months Ended

(in millions, except per share June 30, June 30,amounts) 2020 2019 2020 2019

Revenues $ 424.6 $ 490.2 $ 848.6 $ 951.6

Cost of revenues 238.4 259.8 470.1 506.5

Gross profit 186.2 230.4 378.5 445.1

Operating expenses:Selling, general and administrative 102.4 124.5 223.6 244.6

Research and development 44.1 48.5 92.6 94.9

Other charges, net 1.8 3.9 8.0 10.2

Total operating expenses 148.3 176.9 324.2 349.7

Operating income 37.9 53.5 54.3 95.4

Interest and other income (6.6 ) (5.9 ) (9.5 ) (9.4 )(expense), net Income before income taxes andnoncontrollinginterest in consolidated 31.3 47.6 44.8 86.0 subsidiariesIncome tax provision 7.1 10.6 10.0 18.3

Consolidated net income 24.2 37.0 34.8 67.7

Net income attributable tononcontrollinginterests in consolidated 0.1 0.5 0.2 0.4 subsidiariesNet income attributable to Bruker $ 24.1 $ 36.5 $ 34.6 $ 67.3 Corporation Net income per common shareattributable toBruker Corporation shareholders:Basic $ 0.16 $ 0.23 $ 0.22 $ 0.43

Diluted $ 0.16 $ 0.23 $ 0.22 $ 0.43

Weighted average common sharesoutstanding:Basic 153.6 156.1 153.9 156.4

Diluted 154.7 157.6 155.1 157.7



Bruker CorporationCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Three Months Ended Six Months Ended

(in millions) June 30, June 30,

2020 2019 2020 2019

Cash flows from operatingactivities:Consolidated net income $ 24.2 $ 37.0 $ 34.8 $ 67.7

Adjustments to reconcileconsolidated net income tocash flowsfrom operating activities:Depreciation and amortization 19.2 19.4 38.2 38.4

Stock-based compensation 3.1 3.0 6.4 6.1 expenseDeferred income taxes (2.2 ) (0.1 ) (1.1 ) (0.3 )

Other non-cash expenses, net 17.6 1.6 29.3 6.1

Changes in operating assets andliabilities, net of acquisitions anddivestitures:Accounts receivable 4.8 16.6 34.3 10.6

Inventories (46.1 ) (26.6 ) (107.1 ) (69.8 )

Accounts payable and accrued (35.2 ) (8.2 ) (16.1 ) 2.8 expensesIncome taxes payable, net 11.9 (11.3 ) (3.1 ) (19.2 )

Deferred revenue (1.0 ) (4.7 ) 19.6 9.2

Customer advances 5.3 (7.4 ) 21.8 (0.9 )

Other changes in operating 10.2 (8.7 ) (10.2 ) (25.9 )assets and liabilities, netNet cash provided by 11.8 10.6 46.8 24.8 operating activities Cash flows from investingactivities:Purchases of short-term - (6.4 ) (50.0 ) (6.4 )investmentsMaturity of short-term 6.1 - 6.1 - investmentsCash paid for acquisitions, (2.6 ) (55.8 ) (24.6 ) (71.9 )net of cash acquiredPurchases of property, plant (20.3 ) (18.0 ) (50.8 ) (28.6 )and equipmentProceeds from sales of 0.1 0.3 0.1 0.3 property, plant and equipmentNet proceeds from 1.6 - 3.5 - cross-currency swapagreementsNet cash used in investing (15.1 ) (79.9 ) (115.7 ) (106.6 )activities Cash flows from financingactivities:Repayment of revolving lines (96.6 ) (2.6 ) (96.6 ) (28.5 )of creditProceeds from revolving lines 100.0 160.0 297.5 200.6 of creditRepayment of 2012 Note - - - (15.0 )Purchase AgreementProceeds (Repayment) of other (0.7 ) 0.2 0.2 (4.1 )debt, netPayment of deferred financing (0.1 ) - (0.1 ) - costsProceeds from issuance of 1.3 2.7 1.9 5.8 common stock, netPayment of contingent (0.9 ) (3.6 ) (1.2 ) (4.6 )considerationPayment of dividends to (6.1 ) (6.3 ) (12.3 ) (12.6 )common stockholdersRepurchase of common Stock (50.0 ) (100.0 ) (50.0 ) (100.0 )

Cash Payments to - - (1.2 ) - noncontrolling interestNet cash (used in) provided (53.1 ) 50.4 138.2 41.6 by financing activitiesEffect of exchange ratechanges on cash, cash 7.9 2.8 (0.8 ) 0.4 equivalents and restrictedcashNet change in cash, cash (48.5 ) (16.1 ) 68.5 (39.8 )equivalents and restrictedcashCash, cash equivalents and 798.9 302.6 681.9 326.3 restricted cash at beginningof periodCash, cash equivalents and $ 750.4 $ 286.5 $ 750.4 $ 286.5 restricted cash at end ofperiod

Bruker Corporation RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (unaudited) (in millions, except per share Three Months Ended Six Months Ended Juneamounts) June 30, 30,

2020 2019 2020 2019

Reconciliation of Non-GAAPOperating Income, Non-GAAP Profit Before Tax, Non-GAAPNet Income, and Non-GAAP EPSGAAP Operating Income $ 37.9 $ 53.5 $ 54.3 $ 95.4

Non-GAAP Adjustments: Restructuring Costs 1.5 1.4 3.8 5.4

Acquisition-Related Costs (0.8 ) 6.2 (1.9 ) 11.1

Purchased Intangible 9.0 9.9 17.7 20.0 AmortizationOther Costs 1.4 2.7 7.3 4.1

Total Non-GAAP Adjustments: $ 11.1 $ 20.2 $ 26.9 $ 40.6

Non-GAAP Operating Income $ 49.0 $ 73.7 $ 81.2 $ 136.0

Non-GAAP Operating Margin 11.5 % 15.0 % 9.6 % 14.3 %

Non-GAAP Interest & Other (6.6 ) (5.9 ) (9.5 ) (9.4 ) Expense, netNon-GAAP Profit Before Tax 42.4 67.8 71.7 126.6

Non-GAAP Income Tax Provision (9.6 ) (15.8 ) (16.6 ) (30.2 )

Non-GAAP Tax Rate 22.6 % 23.3 % 23.2 % 23.9 %

Minority Interest (0.1 ) (0.5 ) (0.2 ) (0.4 )

Non-GAAP Net Income 32.7 51.5 54.9 96.0 Attributable to Bruker Weighted Average Shares 154.7 157.6 155.1 157.7 Outstanding (Diluted) Non-GAAP Earnings Per Share $ 0.21 $ 0.33 $ 0.35 $ 0.61

Reconciliation of GAAP and Non-GAAP Gross Profit GAAP Gross Profit $ 186.2 $ 230.4 $ 378.5 $ 445.1

Non-GAAP Adjustments: Restructuring Costs 0.3 0.7 1.1 3.5

Acquisition-Related Costs - 4.8 - 6.0

Purchased Intangible 5.2 6.1 10.1 12.9 AmortizationOther Costs - 0.8 0.1 0.8

Total Non-GAAP Adjustments: 5.5 12.4 11.3 23.2

Non-GAAP Gross Profit $ 191.7 $ 242.8 $ 389.8 $ 468.3

Non-GAAP Gross Margin 45.1 % 49.5 % 45.9 % 49.2 %

Reconciliation of GAAP and Non-GAAP Selling, General and Administrative (SG& A) ExpensesGAAP SG&A Expenses $ 102.4 $ 124.5 $ 223.6 $ 244.6

Non-GAAP Adjustments: Purchased Intangible 3.8 3.9 7.6 7.2 AmortizationNon-GAAP SG&A Expenses $ 98.6 $ 120.6 $ 216.0 $ 237.4

Reconciliation of GAAP and Non-GAAP Tax Rate GAAP Tax Rate 22.7 % 22.3 % 22.3 % 21.3 %

Non-GAAP Adjustments: Tax Impact of Non-GAAP -1.1 % -0.3 % -0.7 % -0.3 % AdjustmentsU.S. Tax Reform - Toll Charge 0.0 % 0.0 % 0.0 % 1.9 %

Other Discrete Items 1.0 % 1.3 % 1.6 % 1.0 %

Total Non-GAAP Adjustments: -0.1 % 1.0 % 0.9 % 2.6 %

Non-GAAP Tax Rate 22.6 % 23.3 % 23.2 % 23.9 %

Reconciliation of GAAP and Non-GAAP Earnings Per Share (Diluted)GAAP Earnings Per Share $ 0.16 $ 0.23 $ 0.22 $ 0.43 (Diluted)Non-GAAP Adjustments: Restructuring Costs 0.01 0.01 0.02 0.03

Acquisition-Related Costs (0.01 ) 0.04 (0.01 ) 0.07

Purchased Intangible 0.06 0.06 0.11 0.13 AmortizationOther Costs 0.01 0.02 0.05 0.03

Income Tax Rate Differential (0.02 ) (0.03 ) (0.04 ) (0.08 )

Total Non-GAAP Adjustments: 0.05 0.10 0.13 0.18

Non-GAAP Earnings Per Share $ 0.21 $ 0.33 $ 0.35 $ 0.61 (Diluted) Reconciliation of GAAP Operating Cash Flow and Non-GAAP Free Cash FlowGAAP Operating Cash Flow $ 11.8 $ 10.6 $ 46.8 $ 24.8

Non-GAAP Adjustments: Purchases of property, plant (20.3 ) (18.0 ) (50.8 ) (28.6 ) and equipmentNon-GAAP Free Cash Flow $ (8.5 ) $ (7.4 ) $ (4.0 ) $ (3.8 )

Days Inventory Outstanding is calculated as follows: GAAP Average Inventorybalance divided by (GAAP Revenue less Non-GAAP Gross Profit (defined above)) Days Payable Outstanding is calculated as follows: GAAP Average AccountsPayable balance divided by (GAAP Revenue less Non-GAAP Gross Profit (definedabove) plus the Change in GAAP Inventory balance) Days Sales Outstanding is calculated as follows: GAAP Average AccountsReceivable balance divided by GAAP Revenue

Bruker CorporationREVENUE (unaudited) Three Months Ended Six Months Ended June(in millions) June 30, 30,

2020 2019 2020 2019

Revenue by Group:Bruker BioSpin $ 125.1 $ 150.9 $ 246.0 $ 278.7

Bruker CALID 132.7 140.5 273.2 288.7

Bruker Nano 125.5 151.0 245.6 291.8

BEST 44.8 51.9 91.0 99.7

Eliminations (3.5 ) (4.1 ) (7.2 ) (7.3 )

Total Revenue $ 424.6 $ 490.2 $ 848.6 $ 951.6

Revenue by End CustomerGeography:United States $ 102.6 $ 126.2 $ 212.0 $ 243.8

Europe 154.4 166.3 299.3 321.4

Asia Pacific 136.1 153.8 273.3 306.0

Other 31.5 43.9 64.0 80.4

Total Revenue $ 424.6 $ 490.2 $ 848.6 $ 951.6

Reconciliation of GAAPReported Revenue Growth to Total BrukerOrganic Revenue GrowthGAAP Revenue as of Prior $ 490.2 $ 443.7 $ 951.6 $ 875.4 Comparable PeriodNon-GAAP Adjustments:Acquisitions and divestitures 1.7 38.6 6.0 64.5

Organic (62.2 ) 21.2 (98.4 ) 44.7

Currency (5.1 ) (13.3 ) (10.6 ) (33.0 )

Total Non-GAAP Adjustments: (65.6 ) 46.5 (103.0 ) 76.2

Non-GAAP Revenue $ 424.6 $ 490.2 $ 848.6 $ 951.6

Revenue Growth -13.4 % 10.5 % -10.8 % 8.7 %

Organic Revenue Growth -12.7 % 4.8 % -10.3 % 5.1 %

Reconciliation of GAAPReported Revenue Growth to Bruker Scientific Instruments ^(1)Organic Revenue GrowthGAAP Revenue as of Prior $ 442.4 $ 402.4 $ 859.2 $ 789.4 Comparable PeriodNon-GAAP Adjustments:Acquisitions and divestitures 1.7 37.5 5.1 63.5

Organic (56.2 ) 13.7 (90.6 ) 34.8

Currency (4.6 ) (11.2 ) (8.9 ) (28.5 )

Total Non-GAAP Adjustments: (59.1 ) 40.0 (94.4 ) 69.8

Non-GAAP Revenue $ 383.3 $ 442.4 $ 764.8 $ 859.2

Revenue Growth -13.4 % 9.9 % -11.0 % 8.8 %

Organic Revenue Growth -12.7 % 3.4 % -10.5 % 4.4 %

Reconciliation of GAAPReported Revenue Growth to BEST, net of Intercompany EliminationsOrganic Revenue GrowthGAAP Revenue as of Prior $ 47.8 $ 41.3 $ 92.4 $ 86.0 Comparable PeriodNon-GAAP Adjustments:Acquisitions and divestitures - 1.0 1.0 1.0

Organic (6.0 ) 7.5 (7.9 ) 9.9

Currency (0.5 ) (2.0 ) (1.7 ) (4.5 )

Total Non-GAAP Adjustments: (6.5 ) 6.5 (8.6 ) 6.4

Non-GAAP Revenue $ 41.3 $ 47.8 $ 83.8 $ 92.4

Revenue Growth -13.6 % 15.7 % -9.3 % 7.4 %

Organic Revenue Growth -12.5 % 18.2 % -8.5 % 11.6 %



^(1) Bruker Scientific Instruments (BSI) revenue reflects the sum of the BSILife Science and BSI Nano Segments as presented in our 2019 Form 10-K.

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CONTACT: Miroslava Minkova Director, Investor Relations & Corporate Development Bruker Corporation T: +1 (978) 663-3660, ext. 1479 E: Investor.Relations@bruker.com