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Bruker (BRKR) Q4 Earnings Miss Estimates, Revenues Beat

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Bruker Corporation (BRKR - Free Report) delivered adjusted earnings per share (EPS) of 53 cents in the fourth quarter of 2019, down 1.9% year over year. Moreover, the figure lagged the Zacks Consensus Estimate by 8.6%.

GAAP EPS for the quarter was 44 cents a share, marking a 12% decline from the year-earlier figure.

Full-year adjusted EPS was $1.57, reflecting a 12.1% increase from the year-earlier figure of $1.40. The metric lagged the Zacks Consensus Estimate by 3.7%.

Notably, Bruker released preliminary top-line results for fourth-quarter and 2019 on Feb 18, 2020. The company’s final earnings announcement was pending due to an income tax-related internal investigation.

Revenues in Detail

Bruker registered revenues of $599.9 million in the fourth quarter, up 8.4% year over year. Further, the top line surpassed the Zacks Consensus Estimate by 2.4%.

Excluding a positive impact of 4.3% from acquisitions and a 1.1% negative impact from changes in foreign currency rates, the company recorded organic revenue growth of 5.2% and growth of 9.5% at constant exchange rate (CER) year over year.

Bruker Corporation Price, Consensus and EPS Surprise

 

Bruker Corporation Price, Consensus and EPS Surprise

Bruker Corporation price-consensus-eps-surprise-chart | Bruker Corporation Quote


Geographically, the United States witnessed 5.9% growth in the reported quarter. Also, revenues in the Asia Pacific grew 22.4%, whereas the Other category’s revenues rose 1.2%. Meanwhile, Europe revenues declined 0.4% year over year.

Full-year revenues were $2.07 billion, reflecting a 9.3% increase from the year-ago period. Revenues beat the Zacks Consensus Estimate by 0.7%.

Segments in Details

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

In the fourth quarter, Bruker’s BioSpin Group revenues grew 10.6% from the year-ago quarter, fuelled by the acceptance of a 1.1-gigahertz NMR system. CALID revenues were up 14.7% year over year, fuelled by strong growth in all major CALID areas, including life science mass spec solutions, microbiology and FTIR/NIR molecular spectroscopy tools. Total BSI Life Science revenues were $375.6 million, up 12.5% year over year.

Revenues in the NANO group rose 2.6%, dented by a steep year-over-year decline in the company’s semiconductor metrology business and weaker results in some of the NANO industrial research businesses.

Organic revenue growth and revenue growth at CER of the BSI segment (including BSI Life Science and BSI Nano Segments) were 5.8% and 10.3% year over year, respectively.

In the fourth quarter, the company’s BEST segment’s revenues were $57.7 million, indicating an improvement of 3.8% year over year. However, organically, the BEST segment declined 0.5% year over year, net of intercompany eliminations. At CER, the segment rose 2.8%.

Margin Trend

In the quarter under review, Bruker’s gross profit rose 8.6% to $296.3 million. Gross margin expanded 11 basis points (bps) to 49.4%.

Meanwhile, selling, general & administrative expenses grew 11.1% to $130.3 million. Research and development expenses went up 4.2% year over year to $46.7 million. The adjusted operating expenses escalated to $177 million, up 9.2% year over year.

Adjusted operating profit totaled $119 million, reflecting a 7.8% increase from the prior-year quarter. However, adjusted operating margin in the fourth quarter dipped 11 bps to 19.9%.

Financial Position

Bruker exited the year with cash and cash equivalents, and short-term investments of $684.9 million compared with $322.4 million at the end of 2018. Long-term debt at the end of 2019 was $812.8 million compared with $322.6 at the end of 2018.

At the end of 2019, cash flow from operating activities was $213.4 million compared with $239.7 million at the end of 2018.

2020 Guidance Update

Bruker refrained from providing any guidance for 2020 due to the challenging business conditions created by the coronavirus (COVID-19) pandemic. The company expects to provide a business update on its first-quarter 2020 earnings conference call in early May 2020.

Bruker anticipates that revenues and earnings will be lower in the first quarter of 2020 than in the prior-year quarter. Its second-quarter 2020 results are expected to be significantly affected by COVID-19-related disruptions to the company’s operations, customer operations, and global supply chains and logistics.

Our Take

Bruker ended the fourth quarter on a mixed note, with earnings lagging the consensus mark but revenues beating the same. A year-over-year uptrend in revenues across most geographies has been impressive. The company’s segmental performance also bodes well. Its acquisition activities also raise optimism. Further, we are upbeat about its current focus on product development through higher R&D investment. Additionally, the improvement in gross margin buoys optimism on the stock.

However, a competitive landscape and macroeconomic woes, stemming from the pandemic, pose persistent challenges to the company. Also, the contraction in the operating margin is concerning.

Zacks Rank & Key Picks

Currently, Bruker carries a Zacks Rank #3 (Hold).

Some better-ranked stocks, which reported solid results this earnings season, are STERIS plc (STE - Free Report) , ResMed Inc. (RMD - Free Report) and Penumbra, Inc. (PEN - Free Report) .

STERIS reported third-quarter fiscal 2020 adjusted EPS of $1.45, outpacing the Zacks Consensus Estimate by 1.4%. Its net revenues of $774.3 million outpaced the consensus estimate by 3.3%. The company sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

ResMed currently carries a Zacks Rank #2 (Buy). It reported second-quarter fiscal 2020 adjusted EPS of $1.21, surpassing the Zacks Consensus Estimate by 19.8%. Its revenues of $736.2 million outpaced the consensus mark by 1.5%.

Penumbra delivered fourth-quarter 2019 EPS of 22 cents, outpacing the Zacks Consensus Estimate by 22.2%. Its fourth-quarter revenues of $145.3 million surpassed the consensus estimate by 2.6%. The company currently sports a Zacks Rank #1.

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