NEW YORK (GenomeWeb News) – Bruker reported today that its revenues in the third quarter were down 4 percent year over year, falling to $419.8 million from $439 million in Q3 2013.
It missed analysts' consensus estimates on the top and bottom line, leading to a 12 percent decline in its share price to $18.35 in early Friday trade on the Nasdaq.
The drop in revenues was driven by weakness in demand for the company's NMR, semiconductor, and data storage products, President and CEO Frank Laukien said on a conference call following the earnings release.
The results fell short of the average Wall Street estimate of $436.3 million. Acquisitions and divestitures accounted for a nearly 1 percent net positive effect on the quarter's revenues, while foreign exchange rates contributed a .4 percent negative effect.
Despite the company's overall decline in revenues and weakness in its NMR, semiconductor, and various industrial businesses, Bruker did see mid-single digit growth from its Life Science and Clinical division, Laukien said, adding that "good growth in our QTOF [mass spec] products combined with double-digit revenue growth from our MALDI Biotyper drove the performance."
He noted, however, that even as the MALDI Biotyper has made significant inroads in the microbiology market, MALDI-TOF instruments have ceded share in the proteomics research market to electrospray instruments.
"[MALDI-TOF] is still needed, but it is not the primary tool for proteomics anymore," he said. "So even though in the last few years, we became a pretty clear number one in MALDI-TOF for the research applications, its growth had been sluggish."
The Billerica, Mass.-based company reported a profit of $5.5 million, or $.03 per share, compared to $16.6 million, or $.10 per share, a year ago. On a non-GAAP basis, Bruker had EPS of $.14, short of the consensus Wall Street estimate of $.15.
The company's R&D costs were $42.1 million for the quarter, down 7 percent from $45.5 million in Q3 2013. Its SG&A spending was $108 million, up 2 percent from $105.7 million in the year-ago third quarter.
Bruker ended the quarter with $329.2 million in cash and cash equivalents, and $113.1 million in short-term investments
The company said it expects full year 2014 revenues of between $1.81 billion and $1.84 billion – representing between a 2 percent decline and flat growth with 2013 – and full year 2014 non-GAAP EPS to be in the range of $.72 to $.78.
At the end of Q2, Bruker predicted full-year 2014 revenue growth of between 1 percent and 2 percent, which was lowered from its full-year guidance at the end of Q1 of 3 percent to 4 percent growth.
Addressing the lowered revenue projections, Laukien said Bruker is "continuing to execute our previously announced strategy initiatives and restructuring programs," and "taking action based on the lower levels of revenue that we now expect."
He also announced that Bruker was beginning a new cost reduction program within its BioSpin division in anticipation of continued slow demand for NMR instruments. This comes a month after Agilent's announcement that it is shutting down its NMR business.
Following the release of the firm's financial results, investment bank Cantor Fitzgerald downgraded Bruker's shares to Hold from Buy and lowered the price target on its stock to $23 from $25.
In a research note, analyst Sung Ji Nam said that Bruker is making tangible progress on the operational side but noted reduced visibility into some of the company's end markets and potential continued pressure on revenue growth and margins heading into 2015.
"While we continue to think Bruker's initiatives to optimize its product portfolio and improve operating efficiency will pay off [long term], we believe [near-term] growth and margin improvement may be limited, and [we will] wait for improved visibility into end market demand before turning more constructive," she said.