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Bruker (BRKR) Q4 Earnings Surpass Estimates, Margins Rise

Bruker Corporation BRKR delivered adjusted earnings per share (EPS) of 58 cents in the fourth quarter of 2020, up 9.4% year over year. However, the figure surpassed the Zacks Consensus Estimate by 1.8%.

The adjustments include expenses related to purchased intangible amortization, income tax rate differential and restructuring costs.

GAAP EPS for the quarter was 45 cents a share, a penny ahead of the year-earlier figure.

Full-year adjusted EPS was $1.35, reflecting a 14% decline from the year-earlier figure. The metric surpassed the Zacks Consensus Estimate by 0.8%.

Revenues in Detail

Bruker registered revenues of $627.5 million in the fourth quarter, up 4.6% year over year. However, the figure surpassed the Zacks Consensus Estimate by 0.43%.

Excluding positive impact of 0.4% from acquisitions and 4.6% from changes in foreign currency rates, the company saw organic revenue decline of 0.4%.

The fall in organic revenues resulted from softer global instrumentation demand from the academic and industrial customers along with lower demand for BEST superconductors during the pandemic and economic slowdown.

Bruker Corporation Price, Consensus and EPS Surprise

 

Geographically, the United States witnessed a 17.7% decline in revenues in the reported quarter. Also, the other category’s revenues declined 19%. However, Europe revenues rose 24.4% year over year, with revenues in the Asia Pacific edging up 4.9%.

Full-year revenues were $1.99 billion, reflecting a 4.1% decrease from the year-ago period. Revenues beat the Zacks Consensus Estimate by 1%.

Segments in Detail

Bruker reports results under three segments — BSI Life Science (comprising BioSpin and CALID), BSI Nano and BEST.

In the fourth quarter, BioSpin Group revenues improved 1.5% from the year-ago quarter to $201.9 million on customer acceptance of an additional 1.2 gigahertz NMR system, ending with three 1.2 gigahertz NMR system accepted in 2020. BioSpin scientific software revenues were substantially higher, although from a modest pace during the quarter under review.

CALID revenues were up 18.6% year over year to $209.4 million, primarily resulting from continued growth in Daltonics microbiology and infectious disease diagnostics, and Life Science mass spectrometry businesses. CALID's microbiology and infectious disease consumables, which include the MALDI Biotyper Consumables and Bruker high molecular diagnostic consumables and timsTOF proteomics revenues, recorded significant growth year over year. Further, Bruker’s high-end diagnostics business gained from strength in Polymerase Chain Reaction (“PCR”) products, mainly in Europe.

Total BSI Life Science revenues were $411.3 million, up 9.5% year over year.

Revenues in the Nano group fell 4.4% to $163.4 million due to lower demand from academic, industrial and industrial research customers.

Organic revenues at the BSI segment (including BSI Life Science and BSI Nano Segments) increased 10% year over year.

In the fourth quarter, the company’s BEST segment revenues were $54.7 million, indicating a fall of 5.2% year over year, resulting from lower demand for superconductors by MRI companies.

Organically, BEST segment revenues declined 20.3% year over year, net of intercompany eliminations. At CER, the segment revenues fell 17%.

Margin Trend

In the quarter under review, Bruker’s gross profit rose 5.6% to $313 million. Gross margin expanded 49 basis points (bps) to 49.9%.

Meanwhile, selling, general & administrative expenses rose 0.08% to $130.4 million. Research and development expenses went up 22.3% year over year to $57.1 million. Adjusted operating expenses of $187.5 million increased 5.9% year over year.

Adjusted operating profit totaled $125.5 million, reflecting a 5.2% uptick from the prior-year quarter. Further, adjusted operating margin in the fourth quarter expanded 11 bps to 20%.

Financial Positions

Bruker exited 2020 with cash and cash equivalents, and short-term investments of $7 31.8 million compared with $684.9 million at the end of 2019. Long-term debt (including current portion) at the end of 2020 was $844.5 million compared with $813.3 million at the end of 2019.

Cumulative net cash flow from operating activities at the end of the fourth quarter was $333.2 million compared with $213.4 million a year ago.

The company incurred expenses of $24.6 million as payment of dividends to common stockholders and repurchased $123.2 million worth of stocks for 2020. As of Dec 31, Bruker had $34.5 million remaining under its existing share repurchase authorization.

2021 Guidance

Bruker has provided 2021 outlook considering market stabilization.

For fiscal 2021, Bruker expects revenue growth in the range of 11% to 13%, which includes revenue growth in the band of 7% to 9% on an organic basis and foreign currency revenue growth of 4%.  The Zacks Consensus Estimate for the same is pegged at  $2.15 billion.

The company expects full-year adjusted EPS in the band of $1.72-$1.77, calling for an increase of between 27% and 31% compared to 2020. The Zacks Consensus Estimate for the same is pegged at $1.73.

Our Take

Bruker ended the fourth quarter with better-than-expected results. Revenue growth across two of its segments looks impressive. Expansion of gross and operating margins is encouraging as well.  The company’s 2021 financial guidance with strong growth expectations over 2020 buoys optimism. However, year-over-year decline in revenues across geographies due to business disruptions is concerning.

On a positive note, the customer acceptance of the Avance NEO 1.2 GHz NMR system at the ETH Zurich bodes well. Bruker’s acquisition of Canopy Biosciences, LLC (a renowned name in high multiplex biomarker imaging) and collaboration with Utrecht University to advance the study of the 3-D structures and interactions of proteins by mass spectrometry look encouraging.

During fourth-quarter fiscal 2020, Bruker received FDA clearance for the MALDI Biotyper Sepsityper kit. The company expects the MALDI Biotyper business to grow in the United States in 2021 and beyond.

Zacks Rank and Stocks to Consider

Bruker currently carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the broader medical space that have already announced their quarterly results are Abbott Laboratories ABT, AngioDynamics, Inc. ANGO and Hill-Rom Holdings, Inc. HRC, each carrying  a Zacks Rank #2 (Buy).You can see the complete list of Zacks #1 Rank (Strong Buy) stocks here.

Abbott reported fourth-quarter 2020 adjusted EPS of $1.45, which surpassed the Zacks Consensus Estimate by 6.6%. Worldwide sales of $10.7 billion in the quarter outpaced the consensus mark by 7.9%.

AngioDynamics reported second-quarter fiscal 2021 adjusted EPS of a penny against the Zacks Consensus Estimate of a loss per share of 2 cents. Revenues of $72.8 million beat the consensus mark by 8%.

Hill-Rom reported first-quarter fiscal 2021 adjusted EPS of $1.53, beating the Zacks Consensus Estimate by 45.7%. Revenues of $741.1 million surpassed the consensus mark by 13.2%.

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