Bruker (BRKR) Q2 Earnings Beat Estimates, Margins Expand

Bruker Corporation (NASDAQ:BRKR) delivered adjusted earnings per share (EPS) of 33 cents in the second quarter of 2019, up 32% from the year-ago figure. The figure surpassed the Zacks Consensus Estimate by 6.5%.

On a reported basis, earnings were 23 cents a share compared with the year-earlier figure of 20 cents.

Revenues in Detail

Bruker registered revenues of $490.2 million in the second quarter, up 10.5% year over year. The top line also surpassed the Zacks Consensus Estimate by 2.7%.

Excluding a positive effect of 8.7% from acquisitions and a 3% negative impact from changes in foreign currency rates, Bruker recorded organic revenue growth of 4.8% year over year.

The company’s organic revenue growth was driven by strength in Bruker Scientific Instruments (BSI) and BEST segments.

Geographically, the United States saw 16.4% growth in the reported quarter. Meanwhile, European revenues rose 3.4% year over year. Also, Asia Pacific revenues grew 13.5%. In Other category, revenues rose 12.6%.

During the second quarter, Bruker’s BioSpin Group revenues increased 7.9% from the year-ago quarter. Revenues in the NANO group rose 12.3%, fueled by a strong uptrend in the academic research and industrial research markets. CALID revenues were up 9.8% year over year.

Margin Trend

Gross margin in the quarter under review expanded 75 basis points (bps) to 47%. Meanwhile, selling, general & administrative expenses climbed 12.6% to $124.5 million. Research and development expenses went up 11.2% year over year to $48.5 million. Overall, adjusted operating margin expanded 22 bps to 11.7%.

Financial Position

Bruker exited the second quarter of 2019 with cash and cash equivalents of $282.5 million, down from $298.8 million at the end of the first quarter. Year-to-date net cash provided by operating activities was $24.8 million in comparison to $79.9 million a year ago.

2019 Guidance

Bruker reaffirmed its 2019 outlook. For the full year, the company reiterates revenue growth projection at 7-8%, including nearly 4.5-5.5% organic revenue rise and an estimated 2.5% headwind from adverse foreign currency translation. The Zacks Consensus Estimate for the metric is $2.04 billion.

The company continues to envision year-over-year expansion of 90-120 bps in adjusted operating margin over its fiscal 2018 non-GAAP operating margin of 16.8%.

For 2019, Bruker maintains adjusted EPS view at the range of $1.57-$1.61. The Zacks Consensus Estimate of $1.62 is above the guided range.

Our Take

Bruker ended the second quarter on a positive note with earnings and revenues beating the consensus mark. A strong year-over-year uptrend in constant currency revenues was encouraging. Additionally, the improvement in gross and operating margins buoys optimism in the stock. The year-over-year revenue growth across all geographies has also been impressive. The company’s strategic acquisition activities also raise optimism. Further, we are upbeat about its current focus on product development through higher R&D investment.

On the flip side, a competitive landscape and macroeconomic woes pose persistent challenges to the company.

Zacks Rank & Other Key Picks

Bruker has a Zacks Rank #2 (Buy).

A few other top-ranked companies, which posted solid results this earnings season, are Stryker Corporation (NYSE:SYK) , Baxter International Inc. (NYSE:BAX) and Intuitive Surgical, Inc. (NASDAQ:ISRG) .

Stryker delivered second-quarter 2019 adjusted EPS of $1.98, beating the Zacks Consensus Estimate by 2.6%. Revenues of $3.65 billion surpassed the Zacks Consensus Estimate by 1.4%. The company carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Baxter delivered second-quarter 2019 adjusted EPS of 89 cents, which surpassed the Zacks Consensus Estimate of 81 cents by 9.9%. Revenues of $2.84 billion beat the Zacks Consensus Estimate of $2.79 billion by 1.9%. The company holds a Zacks Rank #2.

Intuitive Surgical reported second-quarter 2019 adjusted EPS of $3.25, which beat the Zacks Consensus Estimate of $2.85. Revenues were $1.1 billion, surpassing the Zacks Consensus Estimate of $1.03 billion. The company sports a Zacks Rank #1.

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