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Mass Specs, Instrument Business Push Bruker Q4 Revenues Up 16 Percent


By Tony Fong

Led by a mass spec business that saw the "biggest margin improvement" of any of Bruker's businesses last year, the company this week reported a 16-percent increase in company-wide revenue for the fourth quarter.

For the three months ended Dec. 31, 2009, the firm posted receipts of $366.4 million, up from $315.2 million in the year-ago period. On a currency-adjusted basis, revenue was up 6 percent.

The Bruker Scientific Instruments segment, which includes its mass spectrometers, saw revenue rise 13 percent to $346.2 million in the quarter from $306.8 million a year ago on a GAAP basis.

BSI net income for the quarter rose 61 percent to $45.5 million, or 28 cents per diluted share, from $28.2 million, or 17 cents per diluted share, from Q4 2008.

The BSI segment comprises Bruker's Daltonics, ASX, Optics, and BioSpin divisions, with the mass spec business housed in Daltonics. Company officials did not break out revenue figures for the individual divisions, or for its mass specs.

During the company's fourth-quarter conference call on Thursday, however, Bruker President and CEO Frank Laukien said that instruments with life science applications, and especially mass specs, exhibited the strongest revenue growth in 2009.

While sales of instruments with industrial applications — housed in the ASX and Optics divisions — declined by 1 percent for full-year 2009, Daltonics' life science revenue rose by more than 10 percent during the year, Laukien said. Revenue and orders for BioSpin's life science business increased in the single digits.

2009 was a banner year for Bruker in terms of new mass spec introductions as it pushed out a number of new instruments, including the ultrafleXtreme MALDI-TOF/TOF, the solariX hybrid Qq-Fourier transform mass spec, and the amaZon ion trap system. In addition, it collaborated with Bio-Rad Laboratories to introduce the Lucid Proteomics system, which combines Bruker's ultrafleXtreme instrument with Bio-Rad's SELDI-based technology [See PM 06/11/09].

The company also launched the Edmass mass spec-based protein sequencer [See PM 03/12/09] and the first 18 Tesla magnet for FTMS during the year.

All the new technology, Laukien said during the conference call, translated to new revenue streams. "The biggest margin improvement in 2009 did occur in our life-science mass-spec business," he said. "A number of new products … and new solutions — it's not always just hardware platforms — are contributing positively."

Helping its mass spec business were new orders placed in the second half of 2009 as a result of global stimulus spending, especially in countries outside the US. While funding from US entities such as the National Institutes of Health and the National Science Foundation was slow to trickle down to Bruker's level, the story was different in Europe, Japan, and China, Laukien said.

For instance, in the second half of 2009 Bruker received more than 100 system orders, which generated more than $70 million in revenue as a result of stimulus funds. All five Bruker divisions benefited from such funding, but "most" of the orders were for high-end instruments, such as high-end mass specs, NMR, and pre-clinical MRI and X-ray systems, Laukien said.

In the US, most of the stimulus-related orders will be placed in the first half of 2010, with revenue not showing up on Bruker's ledger until the second half of the year and into 2011, he said.

In 2009 Bruker’s emphasis in mass specs was on new instruments. This year that will shift to the development of new applications-driven solutions for its newest platforms, Laukien said.

"You'll see more of an emphasis on that this year than necessarily new hardware boxes," he said, but added that the company "will continue to advance our base mass spec technology."

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R&D spending for 2010 is expected to remain stable as a percentage of revenue in the BSI segment, while R&D for Bruker's other segment, Bruker Energy & Supercon Technologies, or BEST, will "ramp up … and accelerate further," Laukien said.

During the fourth quarter, Bruker spent $34.6 million on R&D, compared to $33 million a year ago. For full-year 2009, R&D spending declined to $126.4 million from $133.8 million in 2008

Referring to the creation of AB Sciex earlier this month — following the completion of Danaher's acquisition of the mass spec joint venture between Life Technologies' ABI and MDS — Laukien said that despite changes in the roster of mass spec owners, the landscape has not significantly changed for Bruker from a business perspective.

"The mass spectrometry market has been and continues to be extremely competitive," he said.

In the fourth quarter, Bruker recorded a net profit of $43.6 million, or $0.26 per diluted share, up 66 percent from a profit of $26.2 million, or $0.16 per diluted share, year over year.

For full-year 2009, revenue was essentially flat compared to 2008, at $1.1 billion.

Net income in 2009 rose 24 percent to $81 million from $65.2 million in 2008 as a result of cost-reduction moves that Bruker took during the year, which included voluntary top-management salary cuts, selected staff reductions, hiring and salary freezes, and reductions in discretionary spending.

BSI revenue for the full year dropped by 1 percent to slightly more than $1 billion. Net income for the segment was $87.2 million, or $0.53 per diluted share, a 19-percent bounce from $73.5 million, or $0.44 per diluted share, in full-year 2008.

According to Laukien, the Daltonics division represented 21 percent of the BSI business in 2009. BioSpin contributed 44 percent to the segment, ASX 24 percent, and Optics 11 percent.

Bruker ended 2009 with $209.1 million in cash, cash equivalents, and restricted cash.

The company's "goal" for 2010 is to grow total revenue by 5 percent, adjusted for currency effects, said Bruker's Chief Financial Officer Brian Monahan.

Revenue from its industrial customers is forecast to grow in the low-single digits, and revenue from government, academic, healthcare, and pharma customers is forecast to grow in the mid- to high-single digits, Monahan said.

For the year, its business in Asia, excluding Japan, is expected to remain "solid," and the Americas, Europe, and Japan are expected to see "continued, gradual improvements as the macro-economic environment recovers," Monahan said.

The company did not provide comparative financial data by geography for the fourth quarter. Full-year 2009 sales in Europe made up the largest chunk of its business — 48 percent — followed by Asia-Pacific with 24 percent and the Americas with 23 percent. India, the Middle East, and Africa comprised a combined 5 percent of Bruker's business for the year.

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