• Revenue: Increased 16.4% year over year to $864.4 million in Q3 2024.
• Organic Revenue Growth: 3.1% overall, with 3.8% growth in the Bruker Scientific Instruments (BSI) segment.
• Non-GAAP Operating Margin: 14.9%, down 510 basis points year over year.
• GAAP Diluted EPS: $0.27, compared to $0.60 in Q3 2023.
• Non-GAAP Diluted EPS: $0.60, down 19% from $0.74 in Q3 2023.
• Operating Cash Flow: $38.4 million in Q3 2024, compared to $44.1 million in Q3 2023.
• Free Cash Flow: $5.8 million in Q3 2024.
• Revenue from Acquisitions: Added 12.5% to revenue growth.
• Fiscal Year 2024 Revenue Guidance: Expected to be in the range of $3.34 to $3.37 billion.
• Fiscal Year 2024 Organic Revenue Growth Guidance: 3% to 4%.
• Fiscal Year 2024 Non-GAAP EPS Guidance: $2.36 to $2.41.

• Warning! GuruFocus has detected 5 Warning Signs with BRKR.

Release Date: November 05, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Bruker Corp (NASDAQ:BRKR) reported a 16.4% year-over-year increase in Q3 2024 revenues, reaching approximately $864 million.
• The company achieved a 3.1% organic revenue growth, with the Bruker Scientific Instruments (BSI) segment growing by 3.8% year-over-year.
• Strategic acquisitions contributed significantly to revenue growth, adding 12.5% to the top line.
• Bruker Corp (NASDAQ:BRKR) anticipates further sequential margin improvements in Q4 2024.
• The company is optimistic about the impact of China's stimulus orders, which are expected to benefit the P&L in the second half of 2025.

Negative Points

• Bruker Corp (NASDAQ:BRKR) lowered its fiscal year 2024 guidance due to delayed recoveries in the biopharma and China markets.
• Non-GAAP operating margin decreased by 510 basis points year-over-year to 14.9%, primarily due to dilution from strategic acquisitions.
• The company reported a decline in non-GAAP EPS by 18.9% from the previous year, attributed to acquisition-related expenses and lower profitability.
• Biopharma and China markets have been weaker than expected, impacting overall revenue growth.
• The backlog remains elevated, with a book-to-bill ratio below one, indicating potential challenges in converting orders to revenue.

Q & A Highlights

Q: How much of the guidance is due to the pushout of orders into the first quarter of 2025 versus orders that simply won't materialize? Did you see any cancellations in the backlog? A: We have not experienced any material cancellations. The biopharma sector has seen cost-cutting and restructuring, which delayed expected recovery. In China, orders have been weaker, with a cumulative effect of about a 20% decline year-over-year. We are beginning to see stimulus orders, which should benefit us in the second half of 2025. (Frank H. Laukien, CEO)

Q: What gives you confidence in above-market growth and significant margin expansion in 2025 despite current uncertainties? A: We have a strong backlog and are seeing good demand in diagnostics and semiconductor metrology. We expect China stimulus orders to benefit us in the second half of 2025. Additionally, our strategic expansions into high-growth markets like multi-omics and lab automation position us well for future growth. (Frank H. Laukien, CEO)

Q: Can you discuss the dilution from acquisitions and the margin impact? Are you still on track to mitigate this dilution? A: Integration activities are on track, and we are progressing well with our management processes. We expect significant margin improvement in the next three years, aiming for breakeven in 2026 for the NanoString and cellular analysis businesses. (Gerald N. Herman, CFO)

Q: How are you thinking about the academic and government market outlook into 2025, especially with the current U.S. political climate? A: The uncertainty around the U.S. elections is causing hesitancy in spending. A split government might avoid extreme moves on taxation and funding, which could stabilize the market. We are monitoring the situation closely. (Frank H. Laukien, CEO)

Q: What is the impact of China's stimulus on your business, and how do you expect it to unfold? A: We are optimistic about receiving China stimulus orders, which should benefit us in the second half of 2025. The stimulus is expected to support academic research and big-ticket items, particularly benefiting our BioSpin business. However, the exact impact is difficult to quantify at this stage. (Frank H. Laukien, CEO)

For the complete transcript of the earnings call, please refer to the full earnings call transcript.