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Bruker (NASDAQ:BRKR) - A Leader in Scientific Instrumentation Poised for Continued Growth
Published on September 24, 2024 | Ticker: BRKR

Bruker Corporation is a leading developer, manufacturer, and distributor of high-performance scientific instruments and analytical and diagnostic solutions. The company's products enable customers to explore life and materials at microscopic, molecular, and cellular levels across a diverse array of end markets, including life science research, pharmaceuticals, biotechnology, applied markets, cell biology, clinical research, microbiology, in-vitro diagnostics, nanotechnology, and materials science research.

Business Overview

Bruker operates four reportable segments: the Bruker Scientific Instruments (BSI) BioSpin Segment, the BSI CALID Segment, the BSI NANO Segment, and the Bruker Energy & Supercon Technologies (BEST) Segment. In fiscal year 2023, the company generated annual revenue of $2,964.5 million and net income of $427.2 million, with annual operating cash flow of $350.1 million and free cash flow of $243.2 million.

Financials

For the first quarter of 2024, Bruker reported revenue of $721.7 million, up 5.3% year-over-year. This growth was driven by a 3.8% contribution from acquisitions, partially offset by a 0.1% headwind from foreign exchange. On an organic basis, revenue increased 1.6% year-over-year. The company's gross profit margin decreased to 48.9% in the first quarter of 2024, compared to 52.5% in the same period of 2023, primarily due to product mix, acquisitions, and unfavorable foreign exchange rate movements.

Segment Performance

Bruker's BSI BioSpin Segment generated revenue of $182.8 million in the first quarter of 2024, with low single-digit percentage constant currency growth. The segment saw growth across biopharma, academic/government, and industrial research markets, though it did not have any gigahertz-class system revenue in the quarter. The company expects to see revenue from three gigahertz-class NMRs, including one in the second quarter of 2024.

The BSI CALID Segment reported revenue of $227.9 million in the first quarter of 2024, with a low single-digit percentage constant currency decline. This was primarily due to the timing of shipments slipping from the first quarter into the second quarter, as well as a tough comparison to a strong prior-year period.

Bruker's BSI NANO Segment achieved revenue of $240.4 million in the first quarter of 2024, with mid-teens percentage constant currency growth. This was driven by strong performance in academic/government, industrial, and semiconductor metrology end markets, with the artificial intelligence megatrend continuing to be a tailwind for the company's semiconductor metrology and advanced packaging tools business.

The BEST Segment reported high-teens percentage constant currency revenue growth, net of intercompany eliminations, in the first quarter of 2024. This was driven by solid superconductor demand, as well as growth in Big Science and FUSION research projects and the company's emerging extreme UV (EUV) technologies for semiconductor lithography tools.

Geographic Performance

Geographically, Bruker's revenue performance in the first quarter of 2024 was mixed. The Americas region grew in the mid-single-digit percentage range, while Europe grew in the high single-digit percentage range. Asia Pacific revenue declined in the single-digit percentage range, primarily due to softness in Japan.

Outlook

Looking ahead, Bruker is maintaining its fiscal year 2024 guidance for organic revenue growth of 5% to 7%. The company has updated its reported revenue guidance to a range of $3.29 billion to $3.35 billion, representing growth of 11% to 13% year-over-year. This updated guidance includes the recently closed acquisitions of ELITech and Chemspeed, as well as an estimated 1% foreign currency headwind.

On the bottom line, Bruker is guiding to non-GAAP earnings per share (EPS) in the range of $2.79 to $2.84 for fiscal year 2024, representing growth of 8% to 10% compared to 2023. The company expects its non-GAAP operating margins to improve sequentially in the second quarter and significantly in the second half of 2024, despite an estimated 110 basis point headwind from acquisitions and foreign exchange.

Recent Developments

Bruker's recent acquisition activity has been a key focus for investors. In the first quarter of 2024, the company completed the acquisitions of Chemspeed and ELITech, which are expected to be accretive to the company's margins and earnings. Additionally, Bruker announced the pending acquisition of NanoString, which will bolster the company's spatial biology capabilities. While the NanoString acquisition is expected to be dilutive to earnings in 2024, Bruker is confident in the strategic benefits and long-term value creation potential of this transaction.

Conclusion

The company's strong portfolio of high-value scientific instrumentation, coupled with its disciplined approach to capital allocation and strategic M&A, positions Bruker well for continued growth and value creation. With a diverse end market exposure, robust financial profile, and a commitment to innovation, Bruker remains an attractive investment opportunity in the scientific instrumentation space.

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