Bruker Corporation (Bruker), a diagnostic imaging company, has reported total revenues of $1.11 billion for the full year of 2008, compared with the revenues of $1.03 billion in the previous year-end. It has also reported net income of $64.9 million, or $0.39 per share, for the full year of 2008, compared with the net income of $98.9 million, or $0.60 per share, in the previous year-end.
Financial Results
In the fourth quarter of 2008, revenue was $315.2 million, against revenue of $344.8 in the fourth quarter of 2007. Excluding the effects of foreign currency translation, fourth quarter revenue decreased by 3% year-over-year. Sequentially, revenues in the fourth quarter of 2008 increased by 30%, against revenue of $242.1 million in the third quarter of 2008.
GAAP operating income in the fourth quarter of 2008 was $48.9 million, against $66.4 million in the fourth quarter of 2007. For the year 2008, GAAP operating income was $108.2 million, against $137.7 million for the year 2007. Including the adjustments in the attached reconciliation, non-GAAP operating income in the fourth quarter of 2008 was $52.6 million, against $74.0 million in the fourth quarter of 2007. For the year 2008, non-GAAP operating income was $121.2 million, against $147.3 million in 2007.
GAAP net income for the fourth quarter of 2008 was $26.2 million, or $0.16 per diluted share, against $40.3 million, or $0.24 per diluted share, in the fourth quarter of 2007. Including the adjustments in the attached reconciliation, non-GAAP net income for the fourth quarter of 2008 was $30.4 million, or $0.18 per diluted share, against $47.7 million, or $0.29 per diluted share, in the fourth quarter of 2007. For the year 2008, non-GAAP net income was $77.9 million, or $0.47 per diluted share, against $107.9 million, or $0.66 per diluted share, in 2007.
Cash flow from operations for the full year 2008 was $105.5 million, against $120.9 million in 2007. Free cash flow, defined as operating cash flow less capital expenditures, was $58.1 million during 2008, against $93.9 million during 2007. Capital expenditures for the year 2008 were $47.4 million, which was about $20 million higher than in 2007 due to the expansion of two manufacturing locations in 2008. During the year 2008, the company repaid $187.0 million of the debt incurred to finance the Bruker BioSpin Group acquisition in February 2008. As of December 31, 2008, Bruker had cash and cash equivalents of $167.7 million, and net debt of $56.1 million.
Comment and Guidance
Frank Laukien, president and chief executive officer, commented: “Our fourth quarter was again our strongest quarter of the year. In the fourth quarter of 2008, we had strong new order bookings and we ended the year 2008 with a healthy backlog. However, in 2008 our margins were well below our goals, and we have put aggressive cost-cutting initiatives in place, which include voluntary top-management salary decreases for 2009, selected staff reductions, hiring and salary freezes for 2009, and cut-backs in discretionary spending. In addition, we continue to drive numerous gross margin improvement projects, from which we expect to benefit in 2009 and beyond.”
Laukien continued with an outlook for the year 2009: “This year offers significant challenges due to the deepening global recession and uncertain outlook. Bruker is relatively well positioned to deal with these challenges, as we have an exceptionally strong technology, IP and product portfolio and broad international diversification. Bruker also derives more than 60% of its revenue from universities, medical schools, as well as other non-profit and government customers, who tend to be less sensitive to economic conditions. Some of our demand drivers are even counter-cyclical, and a few of our customers have already begun to benefit from counter-cyclical supplementary budgets and various national stimulus packages.”
Bruker’s chief financial officer Bill Knight added: “Financially, we expect to continue to have a strong balance sheet, positive operating and free cash flow, ample borrowing capacity, and clear opportunities to improve our margins, balance sheet metrics and cash flow generation. On this solid financial foundation, we will invest further in our future, even during 2009, with additional market development in attractive applied markets, including food and consumer safety, pharma PAT, forensics and toxicology, as well as in clinical research and IVD, homeland security and explosives detection, and advanced superconducting magnets and devices. Leveraging our strong technology base into these near-term additional growth and margin opportunities makes strategic sense for Bruker, and we intend to emerge from this recession as an even stronger company.”
Knight continued: “Given the apparent further deterioration of the global economy in January and February 2009, and the uncertainty of the timing and effect of various international stimulus efforts, forecasting for the full year 2009 is extremely difficult. We have nevertheless established internal financial goals for ourselves in 2009, and intend to drive Bruker towards:
A currency-adjusted low single digit percentage decline in revenue or flat revenue, an improvement in non-GAAP operating margin and EPS, and a positive net cash position before the end of 2009.”