Fourth Quarter 2017 Results: Agilent Technologies, Bio-Techne, Bruker and Waters

Agilent Lifted by Double-Digit Growth

In the first quarter of fiscal 2018, Agilent Technologies revenues grew 13.5% to $1.211 billion, exceeding the company’s expectations. Organically, Agilent sales rose 9.9%.

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By end-market, chemical and energy sales advanced 13%, representing a fourth consecutive quarter of double-digit growth. Environmental and forensics sales were also up double digits, increasing 14% driven by demand for GC and MS products. Pharmaceutical sales increased 8%, due to increased demand across instruments, consumables and services. Sales to the academic and government market rose 11%, led by strong demand in Europe and China. Lastly, sales to the food end-market increased 8%, supported by strong consumables sales, along with MS and GC sales.

Agilent’s Life Science and Applied Markets Group (LSAG) was the only segment to produce double-digit revenue growth both on a reported and organic basis. LSAG sales rose 14.4%, 11.3% organically, to $618.0 million, driven by strength across all major end-markets and geographies. In particular, MS and cell analysis sales growth, along with the rising demand in Europe and China, contributed to the strong performance by LSAG. The segment’s adjusted operating margin increased by 2.4 percentage points to 25.8%.

Agilent CrossLab Group (ACG) sales advanced 12.4% to $408.0 million, driven by continued strength in consumables and services. Organically, sales rose 7.6%. End-market growth, along with growth in most major regions, added to segment sales growth. In particular, sales in China and to food markets lifted ACG revenues. The segment delivered an adjusted operating margin of 21.6%, an increase of 130 basis points.

Sales for Agilent’s Diagnostics and Genomics Group (DGG) increased 12.8%, 8.7% organically, to $185.0 million, primarily driven by increased demand for pathology products. Continued demand for companion diagnostics services also contributed to sales growth.

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Geographically, sales in the Americas rose high single digits, amounting to $393.0 million. Sales for the region accounted for 33% of company revenues. European sales also grew high single digits, accounting for 31% of company revenues, or $381.0 million. Accounting for the largest portion of total company revenues at 36%, Asia Pacific sales rose in the high teens.

For the full year of 2018, Agilent expects total revenues to be between $4.885 billion and $4.905 billion. The company raised its full-year organic sales growth guidance from 4.25% to 5.5%. As for the fiscal second quarter, Agilent expects organic sales growth to be 4.25%, with revenues of $1.20 to $1.22 billion.


Bio-Techne Sales Up Despite Slowdown in Diagnostics

Fiscal year 2018 second quarter sales for Bio-Techne rose 17.0% to $154.2 million. Currency effects and acquisitions added 2% and 1% to sales growth, respectively. Organically, sales rose 14.0%, driven by strength in the Biotechnology and Protein Platforms segments. Together, the two segments’ sales grew 18.0% organically.

Sales for Biotechnology advanced 18.0% to $101.4 million, accounting for 66% of company revenues. Acquisitions and currency effects added 1% and 3% to segment sales growth, respectively. Organically, sales rose 14.0%, driven by broad-based expansion, with proteins, antibodies and assays all adding to segment sales growth. Sales for core reagent products grew 10.0%, while sales for the recently-acquired ACD business (see IBO 7/15/16) leaped 40.0%. Adjusted operating margin for the segment fell 30 basis points to 45.6% mainly due to an unfavorable product mix, along with additional investments in global commercial resources.

Protein Platforms revenue amounted to $29.4 million, an increase of 36.4%. Organically, sales rose 33.0%, the highest quarterly organic growth rate since the acquisition of ProteinSimple (see IBO 6/30/14). Protein Platform sales represented the eighth consecutive quarter of double-digit organic growth. Adjusted operating margin for the segment rose 12.2 percentage points to 20.8%, driven by strong productivity gains and operational results.

Bio-Techne’s Diagnostics segment sales decreased, falling 3.7% to $23.4 million due to fewer large OEM customer purchases. Similarly, segment adjusted operating margin fell 7.7% to 16.1% due to lower volume leverage.

Geographically, for the whole company, sales in the European region grew organically in the high teens. European sales benefited from continued strength in reagent and instrument product sales. All major countries in Europe delivered positive growth. Both the academic and biopharmaceutical end-markets added to European sales growth as well.

Sales in the Asia Pacific region delivered double-digit growth, driven by China’s strong performance. China’s sales were primarily led by Western brand product sales, which grew 30%, along with PrimeGene’s 20% sales growth. Sales in Japan rebounded to increase over 10%. The remaining countries in the APAC region grew in the mid-teens.

US sales accelerated 15.0%, driven by favorable customer buying patterns and a weaker prior year comparison. By end-market, biopharmaceutical sales in the US increased 20%, while academic sales grew 11%, driven by increased NIH funding, along with continued overall demand.

For fiscal 2018, Bio-Techne expects organic growth to be in the high single digits.


Robust 2017 for Bruker Scientific Instruments

Q4 2017

For Bruker’s Scientific Instruments segment (BSI), fourth quarter 2017 sales increased 11.3% to $484.3 million. Organic growth for the segment amounted to 3.4%. BSI sales accounted for 91% of total company sales. Segment operating income rose 31.7% to $96.9 million, while operating margin reached 20.0%.

Bruker BioSpin’s organic sales fell low single digits, primarily due to the unfavorable timing of system installations. However, aftermarket and service sales continued to grow, along with applied end-market sales, which include food screening labs and clinical customer revenues.

CALID Group sales advanced low single digits organically, driven by strong sales of MS and Optics products. However, this was partially offset by a sales decline in the CALID Detection business, lowered due to a tough prior year comparison.

As for Bruker NANO Group sales, growth increased in the low-teens, primarily driven by the strong semiconductor metrology business. X-ray and nano-analysis products also contributed to NANO sales. Sales to the material research, industrial and academic research application markets showed notably strong.

Geographically, overall company sales in Europe increased in high single digits organically, driven by a recovery in academic and industrial sales. North American organic sales fell mid-single digits, negatively affected by the unfavorable timing of large orders. Asia Pacific revenues advanced double digits due to increased strength in most areas, including an improved performance in Japan. Sales in China, however, decelerated to mid-single digit growth for the quarter.


FY 2017

Full-year 2017 BSI revenues increased 6.1% to $1,583.9 million. Organically, sales rose 2.7%. The full year revenues accounted for 90% of total company sales. BSI operating income advanced 23.5% to $208.6 million, for which the operating margin was 13.2%.

Bruker BioSpin delivered $572.0 million in revenue. Segment operating margin slid due to a product mix of lower-profitability NMR systems. However, the segment experienced a recovery in preclinical imaging sales, driven by strength in preclinical nuclear molecular imaging.

CALID Group sales increased mid-single digits to $499.0 million. Segment operating margin improved due to higher volume and operational profitability. Daltonics mass specrometry sales, along with strength in European academic sales, lifted CALID group sales for the year. The segment’s Optics business also delivered strong results, as demand from industrial and applied end-markets improved.

Bruker NANO sales rose in the low teens, driven by strong growth contributions from nano-indenting product sales. Bruker AXS also contributed to segment growth, supported by strong sales in China and increased demand in Europe. Semiconductor metrology sales, along with NANO’s Surfaces business sales both had strong performances.

Geographically, for the entire company, European sales were up mid-single digits, with some weakness in the eastern region and UK. However, France, Spain and Germany all performed well, partially offsetting the lower sales in Eastern Europe. North American sales were down mid-single digits, while Asia Pacific revenues were up high single digits.

For fiscal 2018, Bruker expects its revenues to grow 7.0%, or 3.0% organically.


Strong Fourth Quarter 2017 Finish for Waters

Q4 2017

Fourth quarter 2017 sales for Waters rose 9.3% to $687.28 million, driven by overall broad-based strength, along with solid growth across all major geographies. Excluding currency effects, sales grew 6.3%.

By end-market, pharmaceutical sales increased 11%, 8% in constant currencies, led by strong double-digit growth in China. Solid pharmaceutical demand in the US also contributed to growth. Industrial sales increased 3%. In constant currencies, industrial sales growth was flat due to a tough prior year comparison. As for the academic and government end-markets, sales rose 17%, 13% in constant currencies, driven by strong overall results in most major geographies. Additionally, there was an increase in academic spending, primarily led by biomedical sales.

Sales for the Waters segment grew 5% to $602.45 million, driven by solid instrument sales, along with strong recurring revenues. Instrument sales for the segment rose 3%, led by increased demand for LC and MS systems. In particular, the higher-end Xevo TQ-XS and the Xevo TQS Micro both contributed to segment sales growth. Demand for LC/MS systems continued to expand in the pharmaceutical market. Recurring revenue for the segment advanced 9%, driven by HPLC and UPLC application kit sales, along with chemistry-related sales.

TA segment sales advanced 10% in constant currencies to $84.82 million, driven by instrument system sales. TA instrument sales grew 12%, led by thermal analysis products.

Overall, combined LC and LC/MS instrument sales climbed 3%, while total recurring revenues for both the Waters and TA segments increased 8%.

Geographically, Asia was the largest region revenue-wise, with $242.47 million in sales. Revenue for the region grew 7.5%, 6.1% in constant currencies, driven by China’s 14.0% sales growth. Sales in India recovered slightly. Sales in the Americas advanced 6.0%, 5.7% excluding currency effects, to $235.74 million, driven by strength across all major end-markets and products. Increased pharmaceutical spending in the US also lifted the region’s sales. European sales increased 15.7% to $209.07 million. Excluding currency effects, European sales grew 7.8%. Strength in the region was primarily driven by increased sales to pharmaceutical and medical research customers.


FY 2017

Full-year 2017 sales for Waters advanced 6.5%, 5.9% in constant currencies, to $2,309.08 million, led by strong end-market growth and solid product mix.

By end-market, sales to the pharmaceutical market grew 7.0%. Industrial sales grew 4.0% and excluding currency effects, 5.0%. Academic and government sales increased 8.0%, or 6.0% in constant currencies.

Waters segment sales for the year advanced 6.0% to $2,047.56 million, driven by strong chemistry and service sales. Recurring revenues for the segment grew 7.0%.

Sales for the TA segment increased high single digits, up 8.0%, driven by double-digit instrument sales growth. TA instrument sales rose 11.0% for the year, led by solid rheology product sales.

Geographically, sales in Asia grew 10.2% to $862.62 million, accounting for 37% of total company sales. Sales in China leaped 17.0%, lifting the Asia Pacific region’s sales growth. High single digit sales growth in India, along with solid mid-single digit growth in Japan, also contributed to overall Asian sales increase. Full-year sales in the Americas were flat, up 0.3% to $809.99 million, with US sales climbing 1.0%. European sales grew 10.3% to $636.47 million, with solid constant currency growth of 8.1%.

For the first quarter of 2018, Waters expects sales growth to be in the mid-single digits, excluding currency effects. As for the full year, the company projects a mid-single digit sales increase as well.

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