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Bruker (BRKR) Beats on Q4 Earnings, Issues 2017 Guidance

Bruker CorporationBRKR reported adjusted earnings per share (EPS) of 46 cents in the fourth quarter of 2016, which exceeded the year-ago figure by 21.1%. Adjusted EPS was also way ahead of the Zacks Consensus Estimate of 37 cents.

Excluding one-time adjustments, Bruker reported net income of $69.0 million or 43 cents per share in the fourth quarter, exhibiting year-over-year growth of 12.4% or 19.4%, respectively.

Full-year 2016 adjusted EPS was $1.19, up 33.7% from the year-ago period and also higher than the Zacks Consensus Estimate of $1.10 by 8.2%.

Bruker Corporation Price, Consensus and EPS Surprise

Bruker Corporation Price, Consensus and EPS Surprise | Bruker Corporation Quote

Revenues in Detail

Bruker reported revenues of $470.3 million in the fourth quarter, down 1.6% year over year. The top line, however, edged past the Zacks Consensus Estimate of $467 million. Excluding a 1.9% positive effect from Bruker-OST and Jordan Valley acquisitions and a 1.3% negative effect from changes in foreign currency rates, Bruker reported a year-over-year organic revenue decline of 2.2% in the fourth quarter of 2016.

Geographically and currency adjusted, European revenues declined in the low double digits year over year in the fourth quarter. North America declined in the low single digits. Asia was up low teens, including over 20% growth in China and low double-digit growth in the region. However, Japan recorded growth in the mid-single digits.

For full-year 2016, Bruker's net sales declined 0.8% to $1.61 billion, down from $1.62 billion in 2015. The figure was also in line with the Zacks Consensus Estimate. Excluding a 2.0% positive impact from acquisitions and a 0.5% negative effect from changes in foreign currency rates, Bruker's year-over-year organic revenue decline was 2.3% for 2016.

Margin Trend

Adjusted gross margin in the reported quarter expanded 264 basis points (bps) to 46.8%, owing to the company's improvement in its BIOSPIN Group, Nano Surfaces and Daltonics product lines. However, these positives were marginally neutralized by academic and industrial market-driven volume declines observed in the fourth quarter.

Selling, general & administrative expenses decreased 2.8% to $100.1 million, while research and development expenses rose 4.1% to $38.2 million. Adjusted operating income increased 14.4% year over year to $82.1 million. The adjusted operating margin expanded 244 bps to 17.5% in the quarter.

Financial Position

Bruker exited fiscal 2016 with cash and cash equivalents and short-term investments of $500.3 million, up from $468.3 million in the prior year. Full-year net cash provided by operating activities was $154.5 million, up from $104.9 million a year ago.

Free cash flow was $93.7 million in 2016, compared with free cash flow of $195 million in the prior-year. This decline was primarily due to increased working capital.

During the reported quarter, Bruker repurchased an additional 734,000 shares at an average cost of $22.48 per share, totaling $16.5 million. Since the inception of the repurchase program on Dec 31, 2016, the company bought back 9.3 million shares for an average cost of $225 million, completing its Nov 2015 share repurchases authorization.

2017 Guidance

Bruker issued guidance for full-year 2017. Management currently expects reported revenue growth in the range of 1.5-2.5%, which includes organic revenue growth of 1-2% and growth from acquisitions of 3.5-4%. Changes in foreign currency rates are expected to have an adverse impact on reported revenues of 3% to 3.5%. The current Zacks Consensus Estimate for 2017 revenues stands at $1.65 billion.

The company also expects its 2017 adjusted operating margin to increase by approximately 40-70 bps year over year. This includes approximately 40 bps headwind in fiscal 2017 from its recent strategic acquisitions.

However, on the bottom-line front, Bruker anticipates adjusted EPS in the band of $1.05-$1.09. The current Zacks Consensus Estimate for 2017 EPS stands at $1.09, meeting the upper end of the company's guidance.

Our Take

Bruker exited fiscal 2016 on a mixed note. The company's quarterly earnings were way ahead of the Zacks Consensus Estimate. Revenues also edged past the mark but declined on a year-over-year basis. Meanwhile, the decline in organic revenues adds to our woes.

On a brighter note, the company exhibited a solid cash balance position. Further, a comparatively better performance was delivered by Bruker's BioSpin group, Nano Surfaces and Daltonics product lines. Evidently, the cost-reduction action adopted by the company in its Nano-surfaces business reaped benefits.

Zacks Rank & Key Picks

Bruker currently has a Zacks Rank #3 (Hold). Better-ranked medical stocks are Glaukos Corporation GKOS , Cardiovascular Systems CSII and Neogen Corp. NEOG . Glaukos sports a Zacks Rank #1 (Strong Buy) while Cardiovascular Systems and Neogen carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

Glaukos gained over 100% in the last one year in comparison to the S&P 500's gain of 22.8%. The company has a stellar four-quarter average earnings surprise of over 100%.

Cardiovascular Systems surged over 100% in the last one year in comparison to the S&P 500. It has a four-quarter average earnings surprise of 67.8%.

Neogen gained 35.3% in the past one year, better than the S&P 500 mark. The stock has an impressive long-term earnings growth rate of 16.7% for the next five years compared to the industry average of 15.2%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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