It has been about a month since the last earnings report for Bruker (BRKR). Shares have added about 7.5% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Bruker due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Bruker Q1 Earnings Miss Estimates, Guidance Suspended
Bruker delivered adjusted earnings per share of 14 cents in the first quarter of 2020, down 50% year over year. Moreover, the figure lagged the Zacks Consensus Estimate by 36.4%.
GAAP earnings per share for the quarter was 7 cents a share, marking a 65% decline from the year-earlier figure.
Revenues in Detail
Bruker registered revenues of $424 million in the first quarter, down 8.1% year over year. Further, the top line lagged the Zacks Consensus Estimate by 1.2%.
Excluding a positive impact of 0.9% from acquisitions and a 1.1% negative impact from changes in foreign currency rates, the company recorded organic revenue decline of 7.9% and decline of 9.2% at constant exchange rate (CER) year over year.
The fall in reported and organic revenues resulted from disruptions arising from the coronavirus pandemic and a 30% year-over-year revenue decline in China.
Geographically, the United States witnessed a 6.9% decline in revenues in the reported quarter. Also, revenues in the Asia Pacific fell 9.9% and the Other category’s revenues declined 10.9%. Further, Europe revenues fell 6.6% year over year.
Segments in Details
Bruker reports results under three segments — BSI Life Science (comprising BioSpin and CALID), BSI NANO and BEST.
In the first quarter, BioSpin Group revenues fell 5.4% from the year-ago quarter to $120.9 million due to the delay in certain deliveries and installations due to customer closures and COVID-19 disruptions. This sub-segment also saw a significant revenue decline in China.
CALID revenues were down 5.2% year over year to $140.5 million, primarily resulting from fall in molecular spectroscopy revenues. The decline more than offset the continued growth in microbiology and diagnostics and Life Science Mass Spectrometry.
Total BSI Life Science revenues were $261.4 million, down 5.3% year over year.
Revenues in the NANO group fell 14.7% to $120.1 million fueled by global disruptions due to the pandemic as well as lower industrial market demand.
Organic revenues and revenues at CER of the BSI segment (including BSI Life Science and BSI Nano Segments) declined 8.2% and 8.5% year over year, respectively.
In the first quarter, the company’s BEST segment’s revenues were $46.2 million, indicating a fall of 3.3% year over year resulting from lower demand for superconductor toward the quarter-end.
However, organically, the BEST segment revenues declined 4.3% year over year, net of intercompany eliminations. At CER, the segment fell 4.7%.
In the quarter under review, Bruker’s gross profit fell 10.4% to $192.3 million. Gross margin contracted 118 basis points (bps) to 45.3%.
Meanwhile, selling, general & administrative expenses rose 0.9% to $121.2 million. Research and development expenses went up 4.5% year over year to $48.5 million. Adjusted operating expenses of $169.7 million rose 1.9% year over year.
Adjusted operating profit totaled $22.6 million, reflecting a 53.1% decline from the prior-year quarter. Further, adjusted operating margin in the first quarter plunged 512 bps to 5.3%.
Bruker exited the first quarter with cash and cash equivalents, and short-term investments of $851.7 million compared with $684.9 million at the end of 2019. Long-term debt at the end of the first quarter was $914.8 million compared with $812.8 at the end of 2019.
At the end of the first quarter, cash flow from operating activities was $35 million compared with $14.2 million in the year-ago period.
Bruker, on Mar 27, suspended its 2020 financial guidance due to challenging business conditions created by the pandemic. However, the company expects to witness more pronounced negative impact on second-quarter 2020 results.
The company had expected to provide a business update during its first-quarter 2020 earnings conference call in early May 2020. However, it has not provided any guidance as of now.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -64.63% due to these changes.
Currently, Bruker has a subpar Growth Score of D, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Bruker has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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