Bruker Corp (BRKR) 2011 Q4 法說會逐字稿

Good day ladies and gentlemen, and welcome to the Bruker Corporation quarterly earnings call. My name is Pam, and I will be your operator for today. At this time all participants are in listen-only mode. Later we will have a question and answer session. (Operator Instructions). I would now like to turn the conference over to Ms. Stacey Desrochers, Treasurer and Director of Investor Relations. Please proceed.

Thank you. Good morning and welcome to Bruker Corporation fourth quarter and full year 2011 financial results conference call. With me on today's call are Frank Laukien, Bruker's President and Chief Executive Officer, Bill Knight, Bruker's Chief Financial Officer, Tom Rosa, the Chief Financial Officer of our Bruker Energy and Supercon Technologies Inc. subsidiary, or BEST, and Brian Monahan, Bruker's Vice President of Strategic and Financial Planning.

Before we begin let me briefly cover our Safe Harbor statements. Various remarks we may make about the Company's future expectations plans and prospects constitute forward-looking statements. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors including those described in the Company's filings with the Securities and Exchange Commission. While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our estimates change, and therefore you should not rely on these forward-looking statements as representing our views as of any date subsequent to today.

In addition to the financial measures prepared in accordance with Generally Accepted Accounting Principles, or GAAP, we will discuss certain non-GAAP financial measures, including adjusted EPS, adjusted operating income, and adjusted operating margin, which are non-GAAP measures that exclude certain items. We exclude these items because they are outside of our normal operations, and/or in certain cases are difficult to forecast accurately for future periods. We believe that the use of non-GAAP measures helps investors gain a better understanding of core operating results, and future prospects consistent with how we measure and forecast the Company's performance, especially when comparing such results to previous periods or forecasts. A reconciliation of our GAAP to adjusted numbers can be found in our press release issued earlier today, and is located in the Investor Relations section of our www.bruker.com website.

Today Frank will provide an overview of our results, some financial highlights and our financial goals for 2012. Tom will describe the financial results of our BEST segment, and then Bill will discuss the financial results of our Bruker Scientific Instruments, or BSI segment, and some additional details on Bruker Corporation.

I will turn the call over to our President and CEO, Frank Laukien.

Thank you Stacey, and good morning everyone. We appreciate your joining us today. In the fourth quarter of 2011 for Bruker overall our revenue reached a new record high of $475.1 million, corresponding to a GAAP increase of 14.2%, or an increase of 12.2% excluding acquisitions and currency effects compared to the fourth quarter of 2010. On the bottom line Bruker's GAAP EPS in the fourth quarter of 2011 was $0.23 per diluted share, compared to GAAP EPS of $0.18 per diluted share in 2010. Adjusted Bruker EPS in the fourth quarter of 2011 was $0.31 per diluted share, compared to $0.28 per diluted share in the fourth quarter of 2010.

For the full year 2011 Bruker's overall revenue was $1.652 billion, which exceeds both the high end of our guidance given in late October 2011, and our preliminary estimates given at the JPM Conference in early January 2012. Our full year 2011 revenue is up 26.6% on a GAAP basis, 20.5% on a currency adjusted basis, or 9.2% organically from $1.305 billion in fiscal 2010. Bruker GAAP EPS for the full year 2011 was $0.55 per diluted share, compared to GAAP EPS of $0.58 per diluted share in 2010. Adjusted Bruker EPS for the full year 2011 was $0.86 per diluted share, compared to $0.77 per diluted share in 2010.

Let me now provide some additional color on our full year 2011 financial performance. For our Bruker Scientific Instruments segment, or BSI, revenues in 2011 increased by 26.9% over 2010 to $1.554 billion with 20.8% currency adjusted growth representing solid performance across-the-board from our four BSI operating groups. Adjusted 2011 EPS for BSI was $0.91 compared to 2010 adjusted BSI EPS of $0.81,again, slightly exceeding the high end of our adjusted BSI EPS guidance from late October 2011. Excluding our Chemical and Applied Markets division, or CAM, and our investments in the CAM division, BSI adjusted EPS would have been $1.00 exactly in fiscal 2011, which would have corresponded to a 23% year-over-year growth.

For our Bruker Energy and Supercon Technology segment, or BEST, full year 2011 GAAP revenue grew 25.3% to $113.4 million, and currency adjusted all organic revenue growth was 19.8%. For the year 2011, BEST reached adjusted operating breakeven. I am very pleased that despite two sizeable acquisitions in 2010, our balance sheet remained very solid with an intangible asset ratio at an industry-leading low level of 14%, and our debt leverage ratio at a conservative 1.2 X as of December 31, 2011.

Finally as you may know, Bruker is very return on invested capital, or ROIC focused, and despite the two significant acquisitions in 2010, our BSI segment achieved ROIC of 22% in fiscal 2011, or 25% including our CAM investments. Speaking about CAM, as you may recall, during 2011 our new CAM division moved all three of its manufacturing locations out of former Varian, Inc. locations to new Bruker facilities, and our ICPMS factory was moved from Melbourne, Australia to Fremont, California. Our CAM division also invested in direct and indirect distribution channels and made very significant investments in R&D, in order to develop new products specifically the new Aurora M90, our new ICPMS system, plus our breakthrough new SCION triple quadrupole and single quadrupole mass spectrometers for gas chromatography detection.

Due to these very significant investments in CAM, our BSI segments full year adjusted operating margin declined from 15.6% in 2010 to 13.4% in 2011. Excluding the CAM division investments, our adjusted operating margin for the remainder of our BSI segment was 15.5% for the full year 2011. In 2011, our BSI segment launched 40 new products which address an expanding array of life science, pharma biotech, clinical, food, petrochem, environmental, Homeland Security, materials and nanoscience, as well as academic research and educational markets. The new systems introduced are focused on bringing robust easy to use, affordable, yet Best-in-Class performance solutions to routine analysis, as well as opening new scientific horizons for research customers. With the breadth of our products we now serve approximately $8 billion in addressable markets, allowing our divisions to significantly increase revenue and backlog in 2011.

In the fourth quarter of 2011 we again had excellent bookings and we ended the year 2011 with record backlog well over $1 billion. We believe the R&D initiatives, products and distribution networks are in place to continue our fast revenue growth and to expand our margins. Assuming current market and currency conditions, our full-year 2012 financial goals are currency adjusted revenue growth of 7% to 10% to reach revenue of $1.76 billion to $1.81 billion. BSI adjusted operating income of $230 million to $240 million, an increase of 15% to 18%. BSI adjusted operating margin improvement of 120 to 140 bips, basis points. BSI segment adjusted EPS of $0.94 to $0.98 compared to pro forma 2011 BSI adjusted EPS of $0.87. Please recall that both of these numbers now include $0.04 of noncash stock-based compensation expense in both 2011 and in our 2012 goals.

We intend to improve our BSI segment working capital per revenue ratio from 0.47 in fiscal 2011 to 0.45 in fiscal 2012. And we intend to increase our BSI return on invested capital, or ROIC, to the range of 23% to 25%. Last but not least, we intend to generate for Bruker overall Bruker operating cash flow of $130 million to $160 million, and we expect free cash flow of $80 million to $120 million.

With that, I will now you turn the call over to Tom Rosa, the CFO of our BEST segment.

Thanks, Frank. 2011 was a good year for BEST with revenue growth of 25.3%, currency adjusted organic revenue growth of 19.8%, and breakeven adjusted operating performance. During 2011 we received long-term low temperature superconductor, or LTS contracts, totaling more than $110 million from several leading manufacturers of clinical magnetic resonance imaging, or MRI systems, significantly increasing BEST's backlog.

These new multi-year contracts give us significant additional visibility into future demand, as we continue to move forward with our planned LTS capacity expansion in support of our major customers with long-term commitments. These orders contributed to BEST's external multi-year backlog which increased by 51% in the last 12 months, from $152.2 million as of December 31, 2010 to now $229.8 million as of December 31, 2011. These external backlog figures exclude Bruker intercompany orders. Some of this backlog will take several years to convert into revenue with deliveries scheduled through the end of 2014.

In 2011, we invested in BEST's infrastructure and R&D in order to further develop our broad technology platform in superconducting materials and devices, including $9.3 million in capital equipment designed to increase our production capacity. We also continued to make progress on the commercialization efforts of new products. During the year BEST announced an order for three Superconducting Crystal Growth Magnets from a European customer. BEST also announced that it past factory acceptance tests, and shipped a Superconducting Crystal Growth Magnet system, a follow-on order for two more CGM systems was received from the same customer in Asia in the third quarter of 2011. Superconducting Crystal Growth Magnet systems are used in the semiconductor industry, especially for larger diameter ingots in order to improve the quality of monocrystaline silicon. BEST is also making good progress on demonstrating the positive effect of Superconducting Crystal Growth Magnets on photovoltaic conversion efficiency in manufacturing yield of single crystal silicon, thus potentially increasing the overall efficiency and cost-effectiveness of solar power.

On the financial side, revenues for the BEST segment during the fourth quarter of 2011 increased by 14.7% to $33.6 million, exceeding $30 million in one quarter for the first time ever, compared to $29.3 million in the fourth quarter of 2010. Excluding the effects of foreign currency, fourth quarter revenue increased by 15.6% year-over-year. For the full year, BEST revenue increased by 25.3% to $113.4 million from $90.5 million in 2010, or by 19.8% in terms of currency adjusted organic growth.

BEST adjusted operating loss in the fourth quarter of 2011 was $0.4 million compared to an operating profit of $0.5 million in the fourth quarter of 2010. The BEST adjusted operating income for the full year of 2011 was $0.1 million, which excludes $3.4 million of S1 offering costs which were expensed in the third quarter 2011, due to the uncertainty surrounding the potential initial public offering of BEST. This compared to an adjusted BEST operating loss of $1.9 million for the year 2010. It should be noted here that BEST has an S1 registration statement on file with the SEC, and is therefore not in a position to provide standalone forecasts or forward-looking projections for the year 2012 at this time.

I will now turn the call over to the CFO of Bruker Corporation, Bill Knight.

Thanks, Tom. And good morning, everyone. As a quick recap on the top line for Bruker Corporation during the fourth quarter of 2011 revenues increased by 14.2% to $475.1 million, compared to $416.1 million in the fourth quarter of 2010. For the full year revenue increased by 26.6% to just over $1.652 billion from $1.305 billion in 2010. Excluding the effects of foreign currency translation, revenue increased by 12.5% in the fourth quarter of 2011, and by 20.5% for the full year.

Please note that in the fourth quarter of 2010 due to a change in revenue recognition policy for the then newly-acquired Bruker Nano Surfaces, or BNS division, our revenue was lower by approximately $13 million. As Frank mentioned earlier, the top line growth in 2011 was the result of solid performance across all of our operating divisions, and as we do annually I will provide some color on our 2011 revenues. As a percentage of total BSI segment revenue in 2011, the contributions from each of the four operating groups within BSI were 38% of the revenue came from the Bruker BioSpin group, 32% from the Bruker materials, or BMAT group which includes the new BMS division,21% of the revenue came from the Bruker Daltonics Group, which includes the new CAM division, and 9% from the Bruker Optics Group.

Geographically by location of end customers, BSI's breakdown of revenues for the year 2011 was as follows. 41% from Europe, 30% from Asia Pacific and Australia New Zealand, 23% from the Americas, and 6% from India, the Middle East and Africa. The region with the highest growth rate in 2011 was Asia Pacific, which increased from 27% of revenues in 2010 to 30% in 2011, primarily due to continued strong growth in China and Japan. Between our organic growth and the acquisitions done in 2010 we have further diversified Bruker geographically.

By customer end markets BSI's breakdown of revenues for 2011 was 54% from academia, medical schools and other non-profits, 30% from industrial and applied markets, 8% from biopharma, diagnostics or med tech companies, and 8% from governments. As a percentage of revenue the contributions from academic, medical schools, government and other nonprofits decreased again this year from 64% in 2010 to 62% in 2011. This is in line with our strategy of increasing revenue contributions from our industrial applied biopharma, IVD and related markets, which went up from 36% in 2010 to 38% in 2011. Lastly, for BSI, the full year 2011 breakdown by type was 80% from system sales, and 20% from service upgrades, consumables and software, which we refer to as aftermarket revenue.

Moving down the income statement for BSI, adjusted gross profit margins in the fourth quarter of 2011 was 48.3% compared to 50.8% in the fourth quarter of 2010. For the full year, adjusted gross profit margin was 48.8% compared to 49.2% in 2010. Adjusted operating income for BSI in the fourth quarter of 2011 was $64.4 million or 14.4% of revenue, compared to $67.3 million or 17.3% of revenue in the fourth quarter of 2010.

For the full year adjusted BSI operating income was $207.7 million or 13.4% of revenue, compared with $191.7 million or 15.6% of revenue in 2010. As Frank discussed earlier, we expect BSI operating margins to improve by 120 to 140 basis points during 2012.

We anticipate our CAM division will have an adjusted operating loss in the range of $9 million to $10 million in 2012 on expected revenues of greater than $100 million, which would be higher than the historical Varian revenue levels. The CAM division expects to breakeven in 2013, and its goal is $250 million in revenue and 18% adjusted operating margin by 2016. Continuing down the income statement in the fourth quarter of 2011, our GAAP effective tax rate was 24.4% and for the full year 2011 it was 35.4%. Our GAAP tax rate was negatively influenced by the outcome of two Swiss and German multi-year tax audits, and unbenefited losses due to CAM in the US. Excluding these effects our effective tax rate would have been 28.9% for the full year 2011.

Moving to the bottom line. Adjusted net income for the BSI segment in the fourth quarter of 2011 was $53.8 million, or $0.33 per diluted share, compared to net income of $49.4 million, or $0.29 per diluted share in the fourth quarter of 2010. For the full year 2011 adjusted BSI net income was $151.4 million, or $0.91 per diluted share compared to net income of $134.3 million, or $0.81 per diluted share for the full year 2010.

Cash flow from operations in the fourth quarter of 2011 was $92.1 million compared to $93.4 million in the fourth quarter of 2010. We ended 2011 with cash, cash equivalents, and restricted cash of $248.2 million, and net debt of $54.9 million. In 2011 we made improvements to our BSI working capital to support $1.00 of revenue, decreasing from $0.49 in 2010 down to $0.47 in 2011. We continue to see working capital and particularly inventory turns as an area of opportunity, and expect continued improvements in 2012, which will positively benefit our operating and free cash flows.

Before we open up the call for questions, I wanted to comment further on our financial goals for 2012. I won't repeat all of our goals since Frank outlined them earlier, and they also are included in our press release earlier this morning. But I did want to provide some additional information in certain areas to help with financial modeling. We expect margin growth to start slowly in the first half of the year and accelerate through the back half of the year. We expect approximately 45% of our annual revenue to be generated in the first half 2012, and 55% in the second half of the year.

Consistent with the historical trends, we expect the least amount of revenue in the first quarter, we expect Q4 to be the highest revenue quarter of the year, and quarters two and three being in the middle and roughly comparable with each other. We expect a 1% foreign currency headwind in 2012 on revenue growth. We expect our weighted average shares outstanding in 2012 to remain comparable with our fourth quarter weighted average shares outstanding which was 166.7 million.

We expect interest expense to increase in 2012 over 2011 by approximately $8 million due to the elimination of our short-term revolving debt, which was replaced by issuance of $240 million of private placement debt in January of 2012. We can expect our CapEx investments to be approximately $50 million in 2012. Lastly, we expect our tax rate to be approximately 32% in 2012. For the first quarter of 2012 we expect currency adjusted revenue of $380 million to $390 million,and BSI adjusted EPS of $0.11 to $0.13 per diluted share.

So with that, I will turn the call back over to the Operator for any questions you may have.

(Operator Instructions). Yours first question comes from the line of Peter Lawson, Mizuho Securities. Please proceed.

Bill, just a couple of things. Could you clarify,just on what happened between the preannouncement this $465 million number and now, just trying to understand the differences over a month and a half?

Of the Q4 revenue?

Yes.

We just all of our revenue forecast are based upon what we predict customer installations and acceptances will occur. We try and be a little bit conservative, but we were successful in getting that equipment installed and accepted, and the customer signed off, and that is what was reported for our revenue.

Peter, this is Frank. We didn't regard this as a preannouncement. Just tried to give some color on the fourth quarter at the JPM Conference, and that was the best estimate that we had at that time. Obviously very early in January.

Where was the biggest surprises? Was it on the BEST business or the BSI business?

Nothing stands out. It really was across the board. There is no particular segment or division that made the difference.

And then Bill, just on the low tax rate. I may have missed this. What drove that kind of 16%, 17% tax rate?

In the fourth quarter we had in the US income that we were able to benefit with previous quarters and year's losses. So that was somewhat of I will say a one-time event. We expect in 2012 as I said earlier to have an overall effective tax rate of around 32%. Which will vary slightly from quarter to quarter.

And then just final question, just on SG&A what were the moving parts there because that bounced up considerably between 3Q and 4Q?Are we missing something, or is that going to continue through to 1Q?

I think the two investments well, BEST keeps making investments and growing rapidly as you have seen. Obviously we are investing in our CAM division across-the-board in all functions of that new division from manufacturing operations to R&D and distribution. But we are also continuing to invest in the distribution of all divisions to really remain a fast growth company, and of course, also to pull along the organic margin growth that we are seeking. So there is a lot of new markets and market segments and opportunities that we are entering, so as you have seen for some time, our not so much G&A but marketing and selling there is a continued investment across all divisions, whereas G&A and R&D tends to be more constant or constant corrected for inflation.

Great. Thank you so much.

And your next question comes from the line of Ross Muken with Deutsche Bank.

Thanks for taking my question. This is Vijay in for Ross. Frank, could you talk about what the potential impact would be if the EU were to enter into a recessionary scenario, how do you see Europe growing I guess in 2012?

Yes, Europe for us remains strong, it has been strong in Q3, Q4 and we expect it to be strong going forward. Of course, there are significant differences within Europe, but with our depth and breadth in Europe, we see Europe continuing strongly. So I think Europe has entered technically I am not exactly sure but I think it has recently entered into negative growth I guess that would be a slight recession, but the demand drivers that we see in our bottom-up forecast from the various countries look generally solid again with regional differences, of course. And even in some of the countries that you would expect from the headlines to be weak, I am not talking about Greece right now, but other countries that seem to, are a concern, even they have some special programs for funding that have been approved some time ago. We expect Europe, European demand for our products to be also again solid in 2012.

Sure. And maybe a follow-up. Guidance the year 7% to 10% currency adjusted growth, what portion of that is market growth versus share gains just given your new product momentum?

The honest answer is I don't know exactly. I believe this includes market share growth but I am not prepared to give you quantitative numbers, because I don't know exactly. We feel we are gaining momentum and growing our market share in most of the product lines almost across-the-board but I cannot dissect it quantitatively.

Thank you. I will step back in the queue.

Your next question comes from the line of Amanda Murphy with William Blair.

Hi, I just had some follow-up on the margin side, so in terms of the guidance for BSI operating margin improvements, I am just curious, can you help us understand the swing factor between the low end and high end range there, and then also the progression first of the year through the first half to the back half?

Sure, obviously margin growth comes from revenue growth, and as we explained that we are looking for 7% to 10%, that obviously helps our leverage our operating expenses. But we do expect the second half of the year to be stronger on the revenue growth in the first half. We also expect continued improvements in our gross profit margins on our products. Again each generation of product that is introduced I think we discussed about the 40 new products that we had in 2011. We typically will see the significant impact of those products in 2012, 2013 as they gain foothold in the marketplace. So as far as the range of operating margin improvement, it certainly will fall in that range. It really is dependent upon again the revenue growth and product improvements, the new products that hit the marketplace.

What about the offshoring initiatives that you have talked about in the past? Is that something that could have a meaningful impact in 2012?

That is continuously ongoing. It certainly, at this point I don't want to call that use a baseball term a grand slam every month or every quarter. It is steady improvement. A tenth of a percent here, a half a percent there, but those are ongoing continuous efforts so that certainly is part of the process. We continue to run more products through our existing factories which spreads that fixed factory overhead amongst many more products which helps us leverage.

And again the new product designs that come out typically have fewer parts. Faster assembly times, quicker install times, in addition to better specs and customer ease of use. But everything that we design these days and for the last couple of years, is really not only focused on the historical scientific capabilities that Bruker has had in its products, but improved cost, design for offshoring, everything that is involved with margin improvement.

And Amanda, this is Frank. You may have seen our announcement of the appointment of Stephan Westermann this morning. Best cost sourcing rather than offshoring is a big part of his mission, obviously taking that over from Bill, and we have made some very good progress on that. Again you see that trickle in really, but you see that trickle in steadily. We have made progress in 2011. You will see more progress in 2012 and 2013, and the best cost sourcing sometimes is with US or European vendors rather than with southeast Asian vendors. It really depends and we are doing it very meticulously and carefully and thoughtfully product line by product line, but it is a major initiatives, multi-year initiative.

I would also like to add these efforts and other efforts are also continuing to help with inventory turn improvements, working capital improvements which again, remains Frank mentioned Stephan Westermann his real two focused items are gross profit margin improvements and pulling cost out of that area, and then improving our working capital metrics. We did see improvement in 2011, and we expect these trends to continue not only 2012 but certainly beyond.

Okay. Thanks very much.

And your next question comes from the line of Tycho Peterson with JPMorgan. Please proceed.

Thanks for taking the question. Maybe just a follow-up on the last one on the working capital assumptions. Able to give us any quantitative thoughts on what you think we should be thinking about for working capital improvements in 2012, and maybe just touch on inventory turns and Receivables as well?

At least at the working capital ratio level we are expecting to take our BSI division from 0.47 times, so working capital per revenue dollars from 0.47 in 2011 which was an improvement over 2010 to 0.45. I think drilling deeper a lot of that comes from inventory turns. Some of that also comes from DSO improvements, but the majority comes from inventory turns.

And then BEST had an operating loss in the quarter. I think you had two small profits the prior two quarters. Obviously you are investing there as well. How do we think about profitability for that business?

On an actual basis, our Q4 profitability we had a small loss. That reflects several things. Higher depreciation, higher R&D expenses in one of our primary business units, and also the fact that compared to last year we had a very high margin project that completed in the Q4 of 2010, so we are continuing to invest in the business, and I am unfortunately not at liberty to discuss any kind of forward-looking details at this point.

But Tycho, if I may, at BEST I would almost look at more of an annual basis. The quarters do fluctuate and the margins do fluctuate given the small revenue base, well not so small any more at around $30 million run rate. If you look at the full year you will see they actually just eeked out an adjusted operating income of $0.1 million. Let's call it breakeven, but nonetheless that is obviously a significant improvement over historical adjusted operating losses. The year before that 2010 they reached EBITDA breakeven. In 2011 BEST reached adjusted operating income breakeven, and we have plans for profitable growth for BEST, but due to the S1 we cannot go into more details.

Then you talked about investing in CAM and rejuvenating the Varian portfolio there. Are you able to talk at all about the level of R&D investment you need to make for CAM specifically, and when do we start to see the benefits of some of those investments in terms of new product flow?

Well it is a very considerable R&D investment. You have begun to see that on the IPCMS and on the GCMS side. These products are well received, and our order books and our backlog on these are really quite considerable. So they are making an impact. Really the new factories until they are really humming along especially the Fremont factory, it is getting there. But moving a factory is one thing, and then getting it to run really smoothly with high volume and therefore good margins, I believe you will see that in the second quarter of this year. You are beginning to see the difference already in the first quarter of the year, but it is certainly not at a steady state yet. As for R&D we are not done with new product introductions, you will see product introductions from CAM this year 2012 and in 2013 I believe some pretty significant product introductions. You have seen the beginning, but you ain't seen nothing yet, so to speak.

Alright. And last one, did you gave tax rate guidance for 2012?If you did I may have missed it.

Yes, we said expected 32% tax rate.

Perfect. Thank you.

Your next question comes from the line of Jon Wood with Jefferies. Please proceed.

This is Brandon Couillard in for Jon. Frank and/or Bill, with respect to the BSI margins next year, can you quantify what you anticipate for the CAM dilution? Should we assume somewhere between the midpoint of the $0.09 dragin 2011 and the breakeven expectation in 2013?

For are CAM we are looking at this year 2012 at an adjusted operating loss of about $10 million, Brandon. So cutting the loss in roughly in half. So midpoint is not a bad estimate, yes.

Okay. And then Bill did I hear you correctly with respect to the first quarter revenues guidance that was $380 million to $390 million in total revenue or constant FX revenue?

It was $380 million to $390 million total revenue.

Roger. And then any chance you could give us a breakdown on how you see the Veeco and CAM revenues trending in 2012?

Directionally the Veeco, we prefer to call it Bruker NanoSurfaces, but we know what you mean, the BNS division had very fast growth last year, and will have slower growth this year, in some years they get a lot of business from data storage and semicon, which is sort of the gravy in the gravy years which they had last year. This year they will have less of that. The rest of the business is growing very nicely particularly the research AFM with their FastScan on their high end AFMs. They really have some very unique capabilities in making AFM much faster, quantitative and easier to use.

You have different growth drivers within that former Veeco, now BNS division, but they will be in the single-digit or low single-digit growth. We expect well above double, well above 10% growth for our CAM division in 2012, and in fact Bill has said, we expect to have that greater than $100 million in 2012, so for the first time then actually exceeding the highest historical Varian, Inc. revenue levels for these types of businesses which actually occurred prerecession in 2008, when they were just below $100 million, I believe. We expect to exceed that this year. I think the growth for CAM is actually higher than 20% of what is scheduled this year, or planned for this year.

Okay. That is helpful, thanks. And then lastly could you give us an update on the traction you are seeing for the MALDI BioTyper unit, any update on the installed base, and then where you stand on the FDA approval timeline?

Let me just interject to make sure on a question you asked, that is currency adjusted revenue of $380 million to $390 million, and we did also state that we expect a 1% foreign currency headwind in 2012. And then I will let Frank talk about your question.

Brandon on the MALDI BioTyper, that continued uptake around the world has been very rapid, so again growth for that high margin business has been very rapid. More on the order of 50% in the last year. We expect that growth to continue, not necessarily at that rate, but we expect continued solid growth in MBT, and we are working with the FDA, and may be able to have FDA approval in the second half of this year, but that obviously is difficult to predict.

Great. Thank you.

And your next question comes from the line of Dan Leonard with Leerink Swann. Please proceed.

Thank you. Two questions. For starters, Frank, how would you characterize the visibility you have on your revenue growth for 2012?

Dan, I would think it is excellent for the first half of the year because we have very strong backlog, and then of course, the backlog doesn't carry us through the entire year, so inevitably the visibility, it becomes less for the second half. But I think our divisions in their bottom-up analysis I think are seeing, there are some known areas of weakness. We all know about them, you all know about them but there are many area, but there are many areas in secular trends or local trends, local budgets that give us a pretty good visibility. In short it is really just about like every year.

I think we have better visibility than other years for the first hall because of our very high backlog, and for the second half of the year I think we have decent visibility. This isn't like 2009 where nobody knew what was going to happen. I think things have already in some of the industrial markets as far as I can tell in the last couple of months or so, three months, things have already stabilized, and are a little bit more upbeat, and that is the case, I see that in the US and in Europe, elsewhere. I think we have decent visibility for the year, and very good visibility for the first half of the year.

Okay. Thank you. And in my follow-up is for Bill. Bill, why is the tax rate increasing so much in 2012, and do you still have plans in place to march that downwards over time?

We certainly, we are working on realigning some of our historical legal entity structure throughout the world to get a more effective tax rate, and to allow us to make it easier to move some of our cash around. But we do expect to be in that 32% range in 2012 overall for Bruker Corporation, which is an improvement from 2011.

And Dan, this is Brian. I would add that the 32% excludes the $10 million of CAM losses which are mostly US based which we can't benefit, so excluding that we would we in the high-20s for the tax rate so more comparable to 2011. Probably slight improvements over 2011.

Which is why we are not giving specific guidance which suggests by 2013 and 2014 we should be able to improve that further as CAM reaches breakeven and then profitability.

Okay. Thank you.

Your next question comes from the line of Dan Arias with UBS. Please proceed.

Hi, thanks for the questions. Bill am I doing the math right in saying that the BSI out margins if you exclude CAM were 16.7% or so for the fourth quarter? And if so what was that up sequentially, I know you said it was 15.1% for the first nine months, but are you able to give us a 3Q to 4Q improvement?

It was 15.5% for the full year from you exclude CAM, and the way we reported 2011 which was excluding stock compensation, you will note that in our forecast for 2012 we are changing that to include that in our adjusted numbers.

If I look at the 4Q number excluding CAM are you able to give us the sequential basis point improvement just going to the 15.5% overall for the year?

Sequentially, this is Brian, between Q3 and Q4 CAM's results were pretty comparable. So it had about the same impact in both Q3 and Q4, and as Frank described earlier, we certainly expect improved profitability or lower losses throughout the course of 2012, so Q3 and Q4 the CAM results, the impact on the overall business in BSI was comparable.

Okay. Thanks. And I guess just on a follow-up to the BNS question, does that segment, do you see the operating margins expanding meaningfully for that business, or is the 20%-plus op number now expected to be close to the 20%-plus number that we are looking at further down the road?

We expect that to be roughly similar as in this year, and resume growth in the margin numbers and in the revenue for that business in 2013, 2014.

Thanks, Frank. I guess just lastly can you comment on the purchase of the MICROcaliX products? What does that do for you, and maybe if you could quantify the sales gain there, that would be great?Thanks a lot.

Yes, that is not a huge acquisition. And the effect of that might be on the order of $1.5 million to $2 million of revenues for 2012, so it is a very interesting technology that we also will use in other parts of our product line, and so I expect some steady growth, but it is a niche product. It is an important niche product that closed a gap that we had quite candidly, so it is financially not enormous but I think it was again, a very good ROIC acquisition that filled a small technology gap in an interesting and expanding market, particularly where SAXS and NMR come together in structural biology.

Okay. Thank you.

Your next question comes from the line of Derik De Bruin with Bank of America. Please proceed.

Hi, good morning.

Good morning Derik.

There has been some changes in some of the share instrumentation grant programs at NIH and stuff. Can you just talk about what your order activity is, your quote activity is from the US labs right now? Are they still aggressively, are people still looking at big ticket items for capital equipment?Could you just quantify a little bit about the US market?

Well in 2011 where are we have real data, the US market has generally been quite strong for us. Now it really depends more on what product lines, what applications, what new research fields they are focusing on. That is always the issue for us. The total size of the budget is less important for us, and whether that goes up and down then what do they allocate it to, that is really the gain for us, and generally there the trends have been favorable.

I don't know that I have any great insight into how that will come out in Q1 or Q2, but I don't have anything very remarkable to report. We expect general academic funding in the US to be one of the weaker areas in 2012, and we have expected that for some time. But I have to say we expected that already in the second half or throughout 2011, and then actually didn't come through because it was stronger than what we had anticipated, but again that may not be the overall budgets, that may be more the allocation and the scientific priorities of the customers and of the funding agencies.

Great. Is there anything that the nuclear chemical biological radiological detection business has been relatively flattish from what your commentary has been in the past. I guess are you expecting anything unusual in that? Any tenders that are out there right now?

Yes. We were disappointed with our CBRNE detection. We actually thought we would get and could deliver some larger orders, and we could not get all of the orders/export permits/letter of credit, all of the things that you need to line up by the end of the year. So hope to be able to do that this year. So we think we will have a much healthier year this year, but it was indeed at the bottom line it was disappointing last year, not because of total demand of our products, really simply because of the complicated timing in that field order, end user certificate, export permit, and letters of credit.

I don't want to bore you with all of the details, but it didn't line up for us to deliver it, so we actually had some things in inventory that we will be able to ship sooner. This year will be the big year for that division to really enter the explosives detection, the electrical explosive stray detection, there are some very interesting trends, because as we may have all read in the newspaper, bad guys are getting creative with new explosives types. Therefore the analytical environment for explosives detection have really changed after being about the same for 20 years, have changed pretty dramatically, and we that even though we are entering that field late, we can comply with a lot of the new requirements, analytical requirements, so we are actually pretty bullish on getting a strong start in explosives detection with some novel technologies.

Is that business higher or lower margin? If I remember correctly just based on some of the MOD orders in the past, those were not exactly high-margin businesses. Has the pricing and margins gotten better on that, or is it still very cut throat?

That ends to be one of our higher margin businesses.

Alright. And I guess is there any desire to do, potentially share buybacks, or anything like that, or is it still mostly your big focus is in terms of doing capital deployment for small bolt-ons?

I think the focus is on the latter. I wouldn't completely rule it out, but it is not a priority to do share buybacks, so I think our repayment of debt and small bolt-ons is our priority for capital deployment.

And M&A for 2012 seems to be right around 1%?

It is probably just under 1%.

Just under 1%. Okay. Great. Thanks.

And your last question comes from the line of Isaac Ro with Goldman Sachs. Please proceed.

Good morning. Thanks for squeezing me in this morning. I first wanted to ask about your growth assumptions for BNS just to revisit that topic. In the past you have guided to a 20%-plus CAGR, 20% or 15% for that area, and you also mentioned that this year that is going to be a slightly slower growth area, so it just implies that 2013 will be in excess of 20%. And I wanted to square that up with your previous comments, given the importance of that business to the growth profile of your overall business in the outyears?

Yes, that business has, most of it is not cyclical, has a cyclical component of maybe 15% to 20% of its business. I don't have all of the numbers in front of me, but I think your assumption is essentially correct that they are looking for slower growth this year, or that is the reality that they are facing likely, at least in the first half of the year, and they are looking for very fast growth from a reversing cycle, but also from their new product lines, and products that they still have in the pipeline for 2013 and 2014.

Okay. So 20% long term is still a fair CAGR 2012 through 2015, is an overall growth rate, is that right?

I believe so.

Okay. Secondly and more quantitatively, can you comment on the success you have had in expanding the NMR market, I know at the low end I know you had some of your new product launches there in that last year or so? And then sort of what your expectations are for that market over the next one to two years as the competition there rebounds perhaps more aggressively?

Yes, there is sort of a steady multi-year effort to come out with, to not only focus on the high-end research capabilities and the ultra high field magnets, but also on routine use ease of applications driven NMR systems, I think those are in the early seed stage to some extent. So the market is growing, but from a relatively small base. Of course the routine 300 or 400 megahertz chemistry, clinical chemistry market, that has always been there and that is healthy. As to competitive positioning, I think in 2011, we are very satisfied with our competitive position with NMR. It hasn't changed dramatically one way or the other, and we continue to invest in new products and solutions at both the high end research, and if you like, and also in the routine NMR space. So we are cautiously optimistic that we will hold our own in NMR.

Got it. Thanks a bunch.

And you do have a follow-up question from the line of Peter Lawson. Please proceed.

Just on PITTCON and ASMS, what are the expectations for some new products coming through, whether the key products that have been highlighted, and do you think it is a better than last year at PITTCON?

Definitely not, because in this year we will have a very de minimis PITTCON penetration, we essentially don't exhibit in the even years, because we focus on the ANALYTICA, which is a month later in Munich. So we go back and forth now every year, ANALYTICA in even, and PITTCON in odd years. So PITTCON for us will be, will not be a priority this year. ASMS of course is always very important. And if I may simply substitute ANALYTICA for PITTCON in your question, at ANALYTICA and ASMS as well as the specialty conferences, the Microscopy Conference in August, or the ENC NMR Conferences in April and August. We expect the strong new product flow as in prior years. However sorry to disappoint, we just don't go into a lot of details about what type of products we may bring out with for competitive reasons.

But you think the highlight is really for ANALYTICA this year?

Yes and no. All of the generalist conferences, like PITTCON and ANALYTICA overall are of diminishing importance, whereas the specialty conferences, like an ASMS, or the EMC NMR Conference, or a specialty and preclinical MRI conferences, really are more of our focus, rather than bringing things out for a generalist conference like a PITTCON or ANALYTICA, as the case may be. So I think it will be much more spread out throughout the year, and more likely to see significant intersections at the SCION came out at a Pesticides Symposium in Florida last July. That is really more relevant than a PITTCON for example, just as an example. So I would expect more at the specialty conferences, and still healthy product flows at the generalist, ANALYTICA and PITTCON, but they are not as important to us as the sum of all of the specialist conferences that we really focus on markets, and where there are many more budgeted customers.

Okay. And Bill, what is the expectations for total interest income other for 2012? You said there was an $8 million delta on interest expense?

Stacey, do you want to take that one?

11? I think it is $11 million is what we have for total.

Got you. Thank you.

And there are no further questions at this time.

Okay. We would like to thank you for participating today, and we look forward to seeing you, or some of you at some of our press conferences, at PITTCON, ANALYTICA, or ASMS later, and of course of speaking to you at future conferences and on future earnings calls. Thank you very much. And have a good day.

Ladies and gentlemen. Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect, and have a great day.