Calendar-year 2010 ended strongly as companies reported good growth in both industrial and life science end-markets in the calendar-year fourth quarter. Companies were also optimistic about 2011 growth prospects. For the eight businesses whose financial results are presented on pages 9–11, calendar-year fourth-quarter 2010 revenues increased 11.8%, or 7.2% organically. Illumina and Agilent Life Sciences (LS) and Chemical Analysis (CA) outdistanced other suppliers due, respectively, to the sequencing business and acquisitions. Operating profit for the quarter for the eight businesses rose 8.1%, helped by higher margins and cost cutting.

In general, industrial markets, especially applied markets such as food testing, led growth among end-markets in the quarter, as noted by Agilent CA, PerkinElmer, Thermo Fisher Scientific Analytical Technologies (AT) and Waters. Most firms also reported good growth for academic and government markets. Bruker reported that worldwide stimulus spending added $50–$60 million to 2010 revenues, while Life Technologies reported $10 million in stimulus-related revenues for the quarter. As usual, biopharmaceutical end-markets were mixed, with slower sales to big pharma, which impacted Bio-Rad Laboratories Life Sciences (LS) and PerkinElmer. Within the biopharmaceutical end-markets, Life Technologies and Thermo AT highlighted strong growth for their bioprocess production businesses.

All companies emphasized growth opportunities in Asia and emerging markets. Among emerging markets, Bruker and Waters noted strong growth in Brazil as well as Eastern Europe. Western European sales trailed other regions, although Bruker, Life Technologies and Waters noted good growth in Germany and France. US sales were healthy and, for Waters and Thermo AT, improved as the year progressed.

By product line, next-generation sequencing drove sales at Illumina and Life Technologies and contributed to Agilent LS’s sales growth. Bio-Rad LS, Illumina and Life Technologies reported strong growth for PCR-related product lines. Other areas of strength for life science products were Perkin­Elmer’s cellular imaging business and Waters’s UPLC and MS offerings. On the industrial side, Agilent CA reported double-digit growth for GC and GC/MS, and Thermo AT reported increased demand for QA/QC instrumentation.

For the eight companies, combined calendar-year 2010 sales grew 14.4%, or 9.3% organically. Operating profits rose 19.5% due to favorable year-over-year comparisons, manufacturing efficiencies and new products.

For 2011, the eight companies commented that they expect a stable spending environment. Illumina and Life Technologies stated they expect National Institutes of Health spending to be “flat.” Agilent LS and Waters emphasized good prospects in the biopharmaceutical segment. Agilent and Thermo AT noted opportunities in alternative energy. Agilent, Thermo and Waters each commented that they expect no slowdown in Chinese growth, while PerkinElmer and Life Technologies highlighted growth in emerging markets. Moderating growth for Life Technologies will be slower growth for Bioproduction and royalty revenues. Illumina growth will slow as HiSeq upgrades are completed. Information in the following company write-ups is based on financial reports, SEC filing and quarterly conference calls.

In Agilent Technologies’ fiscal first quarter, the Varian acquisition (see IBO 5/15/10) added $134 million to the combined revenues of Chemical Analysis (CA) and Life Sciences (LS). This contribution was $30 million below expectations due to order-processing delays, causing CA and LS sales to fall short by $20 million and $10 million, respectively. Orders for Varian products were strong, climbing to $190 million.

For Agilent LS, the Varian acquisition, net of the Hycor divestiture (see IBO 2/15/10), added 12% to revenue growth. Academic and government revenues climbed 12% organically. Sales to the pharmaceutical and biotech industries grew 6%. Sales to the Americas, Europe and Asia Pacific accounted for 36%, 35% and 29% of LS sales, respectively. LS adjusted operating income declined 12.7% to $48 million, and gross margin declined 100 basis points to 53% of sales. For fiscal 2011, organic LS sales are anticipated to grow 10%.

For Agilent CA, Varian contributed 35% to revenue growth. Petrochemical sales grew 12%. Sales to the Americas, Europe and Asia Pacific made up 30%, 34% and 36% of CA sales, respectively. CA adjusted operating profit slipped 3.0% to $65 million, and gross margins slipped 400 basis points to 51% of sales due to Varian’s lower margins. CA sales are projected to grow 9% organically in 2011.

Fourth-quarter revenue for Bio-Rad Laboratories’ Life Sciences (LS) grew 1.0%, 2.2% excluding currency, to $192.9 million (see page 12) to account for 36% of sales. Revenue growth was driven by higher sales of PCR instruments, the TC10 automated cell counter and precast electrophoresis gels products. However, sales were hampered by declining European revenue. LS adjusted operating profit jumped 18.4% to $20.6 million as a result of lower manufacturing and operational expenses. Full-year LS revenue improved 2.6%, 2.2% on a currency-natural basis, to $648.1 million, or 34% of sales. Revenue growth was fueled by higher demand for electrophoresis and gene expression products, with good growth in emerging markets and Asia Pacific. For 2010, LS adjusted operating profit climbed 20.5% to $51.1 million due to improved manufacturing efficiency and lower expenses.

Bruker Scientific Instruments’ (BSI) fourth-quarter revenue grew 12.5% (see page 12), 4% organically, to $389.4 million to account for 94% of company sales. Acquisitions contributed 11.4% to revenue growth, while currency lowered sales by 3.0%. Adjusted operating profit for BSI fell 9.3% to $65.5 million due to higher operating expenses. Adjusted gross profit margin declined 30 basis points to 50.6% of sales.

Full-year Bruker BSI sales increased 15.3%, 11% organically, to $1,225.1 million. Acquisitions boosted sales by 5.7%, and currency reduced revenue by 1.2%. Systems and Aftermarket revenues were 79% and 21% of sales, respectively. The BioSpin, AXS, Daltonics and Optics divisions contributed 42%, 24%, 22% and 12% to BSI sales, respectively. The industrial/applied, academic/nonprofit, government and biopharmaceutical markets accounted for 24%, 55%, 9% and 12% of BSI sales, respectively. By region, Europe, Asia Pacific and the Americas represented 43%, 27% and 24% of BSI sales, respectively. BSI adjusted operating profit climbed 33.1% to $181.8 million. Adjusted gross profit margin improved 160 basis points to 48.9% of sales. In 2011, total Bruker revenues are expected to grow more than 18% on a currency-neutral basis to $1.55–$1.57 billion. The acquired Veeco businesses (see IBO 8/31/10) are expected to contribute over $130 million to 2011 revenues, and the acquired Varian product lines (see IBO 3/15/10) are expected to contribute $80 million.

In the fourth quarter, Illumina’s revenues jumped 44.7% to $261.3 million, including Product and Service revenue growth of 46.6% and 20.3% to account for 94% and 6% of sales, respectively. Sequencing revenue expanded by more than 70% due to strong demand and increased production capacity for the HiSeq 2000. As a result, Instrument sales grew 81% to $110.0 million. The company shipped 29 HighScanSQ systems, lifting microarray instrument revenue by more than 100%. Consumables sales rose 26% to $132 million. The order rate for the HiSeq and Genome Analyzer (GA) were comparable in the fourth quarter. Adjusted operating profit soared 60.7% to $61.5 million. Adjusted gross profit margin declined 590 basis points to 64.5% of sales due to a shift in product mix and increased GA trade-ins.

For the year, Illumina’s revenues grew 35.5% to $902.7 million, including a 34.3% and 54.1% increase in Product and Service revenues to account for 93% and 7% of sales, respectively. Instrument sales rose 44% to $324.6 million. Consumables revenues grew 29% to $505.0 million. Adjusted operating profit climbed 43.8% to $214.6 million, but adjusted gross profit margin fell 150 basis points to 67.5% of sales. For 2011, revenues are projected to grow 20% to $722 million, including Epicentre’s (see IBO 1/15/11). Adjusted gross margin is expected to climb to 70% of sales as the dilutive impact of the GA trade-in program is likely to end in the first quarter.

Fourth-quarter sales for Life Technologies grew 6.8% to $933.6 million, including 1.6% growth from acquisitions. Excluding H1N1-related revenue and a one-time Japanese forensic order, organic sales increased 9%. Excluding the one-time order and H1NI-related sales, sales to Asia Pacific and Europe climbed 17% and 5%, respectively, and sales to Japan and the Americas grew 10% each. Adjusted operating profits improved 8.7% to $245.4 million. Adjusted gross profit margin slipped 40 basis points to 64.6% of sales due to product mix, increased R&D investments and lower pricing.

Life Technologies’ Molecular Biology Systems segment reported higher genomic assay, real-time PCR and royalty revenues, which were offset by the tough H1N1 comparison. Within Genetic Systems, next-generation sequencing (NGS) and forensics revenues grew in double digits. Excluding the one-time order, CE revenue grew 10%. Cell Systems revenue benefited from double-digit growth in the BioProduction and Dynal beads businesses. The Molecular Biology Systems, Genetic Systems and Cell Systems segments accounted for 48%, 26% and 25% of fourth-quarter and year-end sales, respectively.

Full-year sales for Life Technologies grew 8.8%, 6.4% organically, to $3,594.8 million. Acquisitions, net of divestitures, and currency contributed 1.0% and 1.4% to revenue growth, respectively. Excluding H1N1-related revenue and the one-time order, organic sales increased 9%, and consumables and instrument revenues grew 8% and 14% to account for 80% and 20% of sales, respectively. Royalty revenue grew 7%, including 14% growth in the Molecular Biology Systems division. PCR sales climbed 12%, excluding H1N1-related revenue. Revenue for Genetic Systems was led by 50% growth for NGS and mid-teen growth for forensics. CE revenue grew 8%, excluding the one-time order. Cell Systems revenue included double-digit growth for Dynal beads and stem cell businesses, as well 20% growth for BioProduction. Adjusted operating profits jumped 17.4% to $1,031.3 million, and adjusted gross profit margin expanded 50 basis points to 66.8%. The company accomplished its goal of $175 million in synergies from the Applied Biosystems merger a year ahead of schedule. Despite an expected $20 million decline in PCR royalty revenue from expiring patents, 2011 organic sales are anticipated to grow in the mid-single digits. Acquisitions are projected to contribute another 1% to revenue growth.

Based on continuing operations, PerkinElmer’s fourth-quarter revenues grew 9.7%, 9% organically, to $470.0 million. Acquisitions contributed 1.3% to revenue growth, while currency lowered sales by 0.8%. Sales grew more than 20% each in Brazil, Russia, India and China. Total revenues from emerging regions grew in the mid-teens to account for more than 25% of sales. Sales to the US and Asia each grew in double digits, and European sales grew in the mid- to low single digits. Adjusted operating income climbed 13.8% to $74.2 million, but adjusted gross profit margin declined 110 basis points to 46.7% of sales due to product mix.

Fourth-quarter PerkinElmer Human Health sales grew 11.8%, 10% organically, to make up 46% of revenues. Acquisitions contributed 3%, and currency reduced sales by 1%. Diagnostics revenue improved in the mid-teens organically, led by screening revenue and more than 20% growth for medical imaging. Research sales grew in the mid-single digits organically. Diagnostics and Research revenues accounted for 26% and 20% of company sales, respectively. Adjusted operating profit for the Human Health segment grew 11.1% to $41.1 million, but declined 10 basis points as a percentage of sales to 19.1% due to acquired start-up expenses.

Fourth-quarter PerkinElmer Environmental Health sales grew 8.0%, including negative 1% from currency, to account for 54% of sales. Organic revenue for the Lab Service business grew in the low double digits to make up 24% of sales. Industrial revenue increased in the mid-single digits to represent 9%. Environmental and Safety sales grew in the high single digits to account for 21%. Adjusted operating profit for Environmental Health improved 7.7% to $39.1 million, but was flat as a percentage of sales at 15.4% due to product mix and the transfer of SCIEX ICP-MS production (see IBO 2/28/10).

PerkinElmer’s full-year revenues from continuing operations grew 9.9%, 8% organically, to $1,704.3 million, including 2% growth from acquisitions. Adjusted operating income jumped 18.2% to $233.5 million, but adjusted gross margin slipped 50 basis points to 47.0% of sales. Human Health revenue rose 8.8%, 6% organically, to account for 47% of sales, and adjusted operating income climbed 13.5% to $152.3 million. Environmental Health sales improved 10.9% to make up 59% of total sales, and adjusted operating profit jumped 19.3% to $116.3 million. The company anticipates first-quarter and full-year 2011 revenues to each grow 6% organically. Full-year Human Health revenue is expected to grow in the high single digits and Environmental Health sales should grow 5%–7%. Revenues from emerging and developed markets are expected to grow 12% and 4%, respectively.

Fourth-quarter revenue for Thermo Fisher Scientific’s Analytical Technologies (AT) grew 4.0%, 1.7% organically, to $1,240.4 million (see page 12) to account for 45% of sales. Acquisitions contributed 3.9% to growth, and currency negatively impacted sales by 1.7%. Strong revenue growth was reported for specialty diagnostic products and for industrial and applied markets. AT adjusted operating income grew 5.9% to $274.9 million. Operating income margin improved 40 basis points to 22.2% of sales due to improved cost efficiency and higher pricing.

Full-year Thermo Fisher Scientific AT revenue rose 11.0%, 5.9% organically, to $4,611.8 million to make up 43% of sales. Acquisitions contributed 5.6% to revenue growth, while currency reduced sales by 0.5%. Revenue for the analytical instrument business grew in the high single digits, led by MS and molecular spectroscopy sales, to account for 50% of AT sales. Specialty diagnostics sales grew in the mid-teens to account for 33%. The biosciences business made up 17% of AT sales, as demand for bioprocess production products escalated. AT adjusted operating income improved 17.5% to $984.2 million, and operating margins climbed 110 basis points to 21.3% of sales. Excluding Dionex, the company forecast total 2011 revenues to grow 5%–6% to $11.33–$11.45 billion, with acquisitions and currency each adding 0.8% growth.

Fourth-quarter revenues for Waters climbed 12.8% to $483.6 million. Product sales grew 14.0% to account for 73% of sales, including a 15.3% jump in Instrument sales. Service revenue improved 9.4%. Overall demand from specialty, generic, CRO and biotech customers grew in double digits. Sales from environmental and food markets were strong and accounted for roughly 7% and 6% of sales, respectively. Government and university sales grew in the mid-single digits. Excluding currency, sales to Asia, the US, Europe and Japan grew 32%, 10%, 5% and 4%, respectively. Adjusted operating income rose 15.6% to $152.5 million, and gross margin improved 53 basis points to 60.9% of sales.

For the year, Waters’s revenues improved 9.7% to $1,643.4 million. Product sales grew 10.9% to account for 71% of revenues. Instrument sales jumped 11.6%, and Service revenue grew 6.7%. Sales to pharmaceutical and applied customers climbed 12% and 14%, respectively. Sales of QTOF SYNAPT products were a highlight. Government and academic sales grew 5%. On a currency-neutral basis, sales to Asia, Japan and the rest of the world grew 20.7%, 14.3% and 9.9% to account for 21%, 11% and 7% of sales, respectively. European and US sales improved 3.8% and 8.7%, respectively, to make up 30% of sales each. Adjusted operating income grew 12.2% to $465.7 million, and gross profit margin was unchanged at 60.3% of sales due to product mix. For 2011, sales are expected to grow in the high single digits, including 1% growth from currency. First-quarter revenues are projected to grow 9%–10%, including 1% growth from currency.

 Bar Graph: Q4 CY10 Revenue Growth for Eight Companies

 Reported      11.8%

 Exc. Acq.      6.2%

 Organic        7.2%

 Agilent FY11 Q1

                Rev. ($M)   % Total Rev    % Rev. Growth    % Org. Growth

 LS 

   Sale        $404              27%            19%               7%

   Order       $442                             32%              11%

 CA

   Sales       $349              23%            43%               8%

   Orders      $388                             60%              16%

 Bar Graph: Q4 CY10 Revenue Growth ($US)

                              US Dollars

 Bio-Rad (LS)                   1.0%

 Thermo Fisher Sci. (AT)        4.0%

 Life Technologies              6.8%

 PerkinElmer                    9.7%

 Bruker (BSI)                  12.5%

 Waters                        12.8%

 Agilent (LS & CA)             28.9%

 Illumina                      44.7%

 Life Technologies FY10 Q4

                               Rev. ($M)   % Org. Growth    % Growth Ex. H1N1

 Molecular Biology Sys          $445.0          -1%                 4%

 Genetic Systems                $246.0          11%                16%

 Cell Systems                   $238.0          11%                11%

 Bar Graph: Q4 CY10 Adj. Operating Profit Growth ($US)

                               OP 

 Bruker (BSI)                 -9.3%

 Agilent (LS & CA)            -7.4%

 Thermo Fisher Sci. (AT)       5.9%

 Life Technologies             8.7%

 PerkinElmer                  13.8%

 Waters                       15.6%

 Bio-Rad (LS)                 18.4%

 Illumina                     60.7%

 Waters FY10

                                              Q4                          FY

                                  Rev. ($M)    % Rev. Grow.     Rev. ($M)     % Rev. Grow. 

 Waters Div.                       $431.8           12.9%         $1,471.4        8.9%

   Instrument Systems              $246               16%           $773           11%

   Chemistry Consum.                $69                9%           $264            9%

   Service                         $117               10%           $434            6%

 TA Div.                            $51.8           11.4%           $172.0       16.6%

   Instrument Systems               $40               13%           $130            9%

   Service                          $12                7%            $42           11%