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Bruker Q4 Revenues up 9 Percent; Job Cuts Ahead

NEW YORK (GenomeWeb News) – Bruker today said that revenues for its fourth quarter rose 9 percent year over year, and it beat the average analyst estimates on the top and bottom lines.

Despite the strong finish to the year, a company official said on a conference call following the release of the results that restructuring initiatives are expected to result in layoffs this year.

The company brought in revenues of $517.3 million for the three months ended Dec. 31, 2012, up from $475.1 million in Q4 a year ago and surpassing the consensus Wall Street estimate of $483.7 million. Excluding currency effects and contributions from acquisitions and divestitures, revenues were up 10 percent year over year, Bruker said.

The Bruker Scientific Instruments segment recorded $482.1 million in revenues, an 8 percent improvement from $445.8 million during the fourth quarter of 2011, while Bruker Energy & Supercon Technologies posted $37.8 million in revenues during the quarter, up 13 percent from $33.6 million a year ago.

Its profit in the quarter dropped to $12.8 million, or $.08 per share, compared to a profit of $39.1 million, or $.23 per share, a year ago. Non-GAAP EPS of $.28 beat the average Wall Street expectation of $.24.

In the quarter, Bruker took a charge of $22 million related to intangible and fixed asset impairments and a write-down of goodwill at the company's Chemical & Applied Markets (CAM) division. It also took $2 million in charges in its BEST segment related to fixed asset impairments and restructuring.

Its R&D spending jumped 13 percent year over year to $50.3 million from $44.7 million, and its SG&A costs increased 6 percent to $124.5 million from $117.0 million.

For full-year 2012, Bruker increased revenues 8 percent to $1.79 billion from $1.65 billion in 2011, and it beat the consensus Wall Street estimate of $1.76 billion. Organically, revenues climbed 12 percent year over year, the firm said.

Bruker Scientific Instruments revenues climbed to $1.67 billion for the year, up 8 percent from $1.55 billion a year ago, while BEST was up 20 percent to $136.2 million from $113.4 million a year ago.

Net income for 2012 fell to $77.5 million, or $.46 per share, from a profit of $92.3 million, or $.55 per share, a year ago. Non-GAAP EPS was $.83, topping the average of $.79 expected by analysts.

Its R&D climbed to $195.3 million, a 10 percent increase from $177.2 million, while SG&A costs grew 9 percent to $442.4 million from $406.6 million.

Bruker ended 2012 with $310.6 million in cash and cash equivalents.

"Despite the challenges posed by weaker European economies, softness in US academic markets, and the slowing of several industrial and applied market segments, Bruker's innovation engine generated excellent top-line growth throughout 2012," Bruker President and CEO Frank Laukien said in a statement. "We are also pleased with our improving margins in the second half of 2012, and we recognize that we need to translate more of our healthy revenue growth into higher profits and cash flow."

On the call, he added that Bruker is working on clinical trials to receive approval from the US Food and Drug Administration for its MALDI Biotyper. Laukien said that the firm is hoping for FDA approval in the second half of the year.

Commenting on the uncertainty surrounding the US funding environment, he deemed it "really bad and at this point we're simply, perhaps conservatively, assuming that is not going to change soon."

The US funding environment may not benefit Bruker until 2014. "So we have assumed the somewhat dire state of affairs in US academic spending throughout 2013 that we saw in the last few quarters of 2012," he said.

Following disappointing second quarter earnings results, the firm evaluated its operations and eventually implemented changes to streamline the decision-making process. Included in the changes was the reorganization of 10 operating divisions within Bruker Scientific Instruments into three groups. Also, new management hires were made, including a new CFO and two new group presidents.

"As Bruker enters 2013, we are analyzing and implementing various initiatives to drive increased profitability and cash flow," CFO Charles Wagner said in a statement. "In addition to ongoing improvements in operational processes and systems, we are taking targeted actions to optimize the cost structure of certain businesses."

For full-year 2013 Bruker anticipates revenues to grow in the 4 to 5 percent range year over year, he said, while adjusted EPS is anticipated to increase between 6 and 10 percent.

He also said that the company expects "more than 150 employees leaving the company or being transferred to a contract manufacturer or other strategic partner over the next 15 months," related to facility exits in CAM and BEST and an increase in outsourcing in other divisions.

The company expects to incur $20 million to $25 million in restructuring charges in 2013 resulting from the initiatives, he said.

In Tuesday morning trade on the Nasdaq, shares of Bruker were up 11 percent at $18.58.