Release Date: August 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Bruker Corp (BRKR, Financial) reported a 17.4% increase in Q2 2024 revenues, reaching $800.7 million.
- Organic revenue growth was strong at 7.4%, with BSI achieving 8.6% organic growth.
- The company maintained its full-year organic revenue growth guidance of 5% to 7%.
- Recent acquisitions, including Chemspeed, ELITech, and NanoString, are performing well and contributing to revenue growth.
- Bruker Corp (BRKR) is benefiting from strong orders in semiconductor metrology, driven by high-performance computing for the AI megatrend.
Negative Points
- Biopharma demand remains weak, impacting overall revenue growth.
- Customers in China are delaying purchase decisions, affecting short-term revenue expectations.
- Non-GAAP operating margin decreased by 150 basis points year-over-year to 13.8%, due to acquisition-related headwinds.
- GAAP diluted EPS dropped significantly to $0.05 per share in Q2 2024, compared to $0.39 in Q2 2023.
- Free cash flow was negative, with a $25.1 million outflow in Q2 2024, compared to a $10.5 million outflow in Q2 2023.
Q & A Highlights
Q: Can you elaborate on the expectations for operating margins in the third quarter and what factors could influence them?
A: Frank Laukien, CEO: There are many moving pieces, including NanoString, China, and biopharma. We expect mid-single digit organic revenue growth in Q3, with a full-year organic revenue growth of 5% to 7%. The operating profit margin for the year is expected to be around 16%, with more than 50 bps organic expansion offset by about 300 bps headwind from M&A and FX.
Q: How does Bruker plan to continue outperforming the market in terms of top-line and earnings growth?
A: Frank Laukien, CEO: Our positioning in the post-genomic era with spatial biology, single-cell, proteomics, and multiomics is driving growth. Diagnostics and semiconductor metrology are also strong areas. We aim to outgrow the market by 200-300 bps annually, supported by our diversified portfolio and strategic acquisitions.
Q: Can you provide more details on the second-quarter order trends and the book-to-bill ratio?
A: Frank Laukien, CEO: The book-to-bill ratio for BSI was in the mid-0.9 range. Organic order growth was up mid-single digits, supported by a significant backlog of about seven months. We expect continued good orders in Q3 and Q4.
Q: What are the expectations for the fourth quarter, especially regarding the year-end budget flush dynamics?
A: Frank Laukien, CEO: We do not rely on budget flush dynamics. Q4 is expected to be strong due to the buildup of orders and backlog. We anticipate continued good orders in Q4, with sequential improvements in EPS from Q2 to Q3 and Q4.
Q: Can you explain the incremental step-up in M&A contributions to revenue?
A: Frank Laukien, CEO: The incremental step-up is due to many small pieces rather than a single large factor. It includes contributions from NanoString, Chemspeed, and ELITech, among others.
Q: How is the rollout of the timsTOF Ultra2 going, and what is the outlook for the timsTOF franchise?
A: Frank Laukien, CEO: The timsTOF Ultra2 rollout is going well, and we have improved our competitive position. While revenue growth for timsTOF is not significant year-over-year, bookings and competitive positioning have improved.
Q: Are there any changes to growth assumptions by segment for the year?
A: Frank Laukien, CEO: We have lowered expectations for biopharma and China but are optimistic about semiconductor metrology, lab automation, and molecular diagnostics. The overall organic growth guidance remains at 5% to 7%.
Q: How has the market in China been affected by the stimulus package, and what are the expectations for the second half of the year?
A: Frank Laukien, CEO: There has been muted demand and orders in China due to the stimulus package, with some orders expected to come in the second half or in 2025. The sales cycle in China has lengthened, especially in academia.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
