Despite continued weakness in industrial markets, revenues for six major publicly traded analytical instrument and lab product businesses grew in the most recently ended quarter, benefitting in part from year-end budget releases and strength in Europe. Sales also climbed for each of the five businesses with fiscal years ending during the period 2013, despite weaker market conditions.

For the most recently ended quarter, combined revenues for the six businesses whose financial results are summarized on pages 9–11 rose 7.2% on a reported basis. Total organic sales rose 7.5%. Excluding Illumina, combined reported revenues rose 5.7%. Illumina and Waters each posted double-digit growth on an organic basis. On both a reported and organic basis, the combined sales growth for the six companies was the strongest quarterly performance for 2013.

Quarterly adjusted operating profits for the six businesses increased 12.1%. Illumina, Agilent Technologies Life Science and Diagnostics (LD), Agilent Chemical Analysis (CA) and Bruker each recorded double-digit increases in adjusted operating profits. Cost controls and a weak year-over-year comparison boosted the combined operating profit growth for the six companies to a record quarterly performance for 2013.

In the fourth quarter 2013, PerkinElmer and Thermo Fisher Scientific reported a boost to sales as a result of year-end budget releases, particularly from pharmaceutical companies. Waters also noted healthy demand from pharmaceutical companies. Agilent CA and Thermo described continued strength in the food safety and environmental markets. Industrial markets remained weak as noted by Thermo and Bruker. Sales growth for academic and government was mixed. Both Agilent LD and Thermo reported sales declines for the segment. But Illumina noted growth in all end-markets, including academia, while Bruker and Waters highlighted demand for select products from academic markets in Europe.

Regionally, trends were also mixed. PerkinElmer, Thermo and Waters reported double-digit growth for China, while Agilent LD noted slower instrument sales in the country. However, Agilent quarterly growth slowed during the country’s Lunar New Year. PerkinElmer and Waters noted sequential improvements in sales in Asia, outside China, India and Japan. European sales exhibited strong growth, with Agilent LD, PerkinElmer and Thermo highlighting sales growth in the region.

Both Bruker and PerkinElmer noted growth for their in vivo imaging businesses. Thermo and Waters reported strong growth for their respective Orbitrap Fusion Tribrid and Q-Tof MS product lines.

For each of the five businesses whose fiscal year end coincided with the calendar year end, revenues grew on both a reported and organic basis, up 4.8% and 5.1%, respectively, led by Illumina double-digit growth. Excluding Illumina, total reported revenues rose 2.5%, or 3.3% on an organic basis. Annual operating profits for the five businesses increased 2.2% but, excluding Illumina, fell 0.1%.

Most of the six businesses forecast mid-single digit growth for 2014. Conditions in most end-markets are expected to be similar to 2013, with some strengthening in the US and Europe and in US academic and government markets. Thermo and Waters expect strong growth in China.

Agilent Technologies Life Sciences and Diagnostics, and Chemical Analysis

Fiscal first quarter sales for Agilent Technologies Life Sciences and Diagnostics (LD) grew 6%. Pharmaceutical and biotech sales grew 7%, with strength in Europe and Japan but weakness in the US. Diagnostics and Clinical sales climbed 10%, led by demand for CGH microarrays, target enrichment products and mid-double digit growth for microfluidics products. Pathology sales were slow because of order timing. Academic and government revenue declined 10% as a result of lower research spending in the US and China. Chinese sales were negatively impacted by the Lunar New Year and soft research spending. Sales to Europe, the Americas and Asia Pacific accounted for 37%, 35% and 28% of LD revenue, respectively. LD adjusted gross profit margin advanced 200 basis points to 56.0% of sales. Adjusted operating profit jumped 22.0% to $100 million.

Organic Chemical Analysis (CA) sales for forensics and food grew 26% and 14%, respectively. Combined, environmental and food sales grew 7%. Chemical and energy sales rose 3%, with strong demand in Europe and the Middle East. Sales to Asia Pacific, Europe and the Americas accounted for 37%, 33% and 30% of CA revenue, respectively. Adjusted CA gross margin advanced 100 basis points to 52% of segment sales. CA adjusted operating profit grew 16.0% to $94 million. Combined, LD and CA sales are projected to grow 5% for fiscal 2014 to $4.03–$4.13 billion and 4% to $995–$1,020 million for the fiscal second quarter.

Bruker Scientific Instruments

Bruker Scientific Instruments (BSI) fourth quarter 2013 revenue grew 5.9% organically, including double-digit growth for BioSpin due to NMR sales in Europe. Preclinical Imaging sales rebounded sequentially due to the timing of several large MRI installations and demand for X-ray micro-CTs. CALID sales grew in the mid-single digits, led by higher sales for the Life Science and Clinical divisions. Bruker MAT (BMAT) sales declined in the mid-teens as a result of weak industrial markets, especially in Asia. Adjusted operating margin improved 80 basis points to 14.5% of sales.

For 2013, BSI sales grew 2.6%, 3.4% organically, to $1.84 billion. System and Aftermarket sales grew 2.3% and 4.0% to make up 81% and 19% of sales, respectively. European sales grew in the double digits and sales to the Americas grew in the low single digits. Sales to Asia declined, as higher growth in China was offset by currency headwinds in Japan. In addition, sales in Taiwan and South Korea declined due to weak demand from microelectronics markets. BSI adjusted operating profit fell 3.8% to $192.5 million due to currency, product mix and pricing pressure. BioSpin recorded high single-digit organic sales growth. Preclinical Imaging sales grew in the high single digits. CALID sales improved in the mid-single digits, with the strongest contribution from Optics. The CALID Life Science and Clinical divisions each grew in the mid-single digits, led by MALDI Biotyper and FT-MS sales. CAM underperformed expectations. BMAT sales declined in the high single digits as a result of weak industrial markets, especially in Asia. Sales for three of the BMAT divisions declined, with only Bruker Nano Surface recording higher sales. Bruker total 2014 sales are projected to grow 3%–4%, with similar growth for all three BSI groups. First quarter Bruker sales are expected to be relatively flat.

Illumina

Illumina reported 22% organic growth for the fourth quarter 2013. Roughly half of all shipments were to non-academic and government markets. Overall, Product sales grew 20.6% to account for 87% of sales. Service and Other revenue climbed roughly 35% organically. Sales to the Americas and Europe rose 31% and 19%, respectively. In Asia, sales grew 28%, including 85% growth in Japan. Adjusted gross profit margin jumped 310 basis points to 70.9% of sales due to product mix and lower warranty costs. Adjusted operating margin fell 70 basis points to 24.6% of sales as a result of increased headcount and stock-based compensation costs.

Illumina fourth quarter sequencing sales climbed 32%. Sequencing consumables revenue jumped 37% as a result of higher HiSeq utilization and a 50% sales increase for sample preparation products. Close to 70 customers have placed orders the TruSight One panel since October 2013. Sequencing service revenue benefited from quicker turnaround time and record orders for human genomes. Sequenced genomes more than doubled to 5,000. Sequencer sales were driven by existing customers’ capacity constraints and greater adoption from commercial and hospital markets. Illumina received orders for over 100 HiSeq systems, of which 90% were for the 2500. MiSeq orders totaled close to 300 units, including half from nonacademic customers. Illumina microarray sales grew 10%, including higher sales of consumables, instruments and genotyping services, and strong demand from consumer genomics and reproductive health markets. Array sales were driven by a record Infinium sample shipments, a 60% increase in sales of BlueGnome arrays for in vitro fertilization, and OncoArrays.

Illumina 2013 sales jumped 23.7%, 20% excluding acquisitions, to $1.42 billion. Product sales grew 18% organically to make up 89% of sales. Sequencing consumables revenue was particularly strong, including 55% growth for sample preparation products. Microarray sales grew 3%. Service and Other revenue grew roughly 42% organically. Overall, sales to the US, Europe and Asia grew 25.7%, 21.7% and 18.9% to account for 50%, 25% and 19% of sales, respectively. Sales to Other markets rose 34.2%. Adjusted gross profit margin advanced 60 basis points to 69.6% of sales due to product mix. Adjusted operating profit grew 16.0% to $356.4 million. The firm projected 2014 sales to grow 15%–17%.

PerkinElmer

PerkinElmer adjusted and organic fourth quarter 2013 sales grew 3%. All sales figures below are organic. Recurring sales grew in low single digits, including Service revenue growth in the mid-single digits. Instrument and component sales grew in the mid-single digits. Overall, sales in Asia and Europe each grew in the high single digits. European sales benefited from stronger biopharmaceutical sales as a result of budget releases. Sales to the Americas fell in the low single digits. Adjusted gross profit margin advanced 20 basis points to 49.0% of sales due to manufacturing consolidation. Adjusted operating profit expanded 90 basis points to 19.2% of sales due to restructuring benefits.

Within PerkinElmer Human Health (HH), quarterly Diagnostics sales benefited from demand for newborn screening and infectious disease testing, and approximately 5% organic growth for Medical Imaging. Research sales were led by double-digit growth each for in vivo imaging, microfluidics and radiometric detection. Radiochemical sales declined in the mid- to high single digits. HH adjusted operating profit climbed 8.7% to $83.8 million. Fourth quarter 2013 Environmental Health (EH) sales were led by strength in the Laboratory Services business, including mid-single digit sales growth for OneSource. Instrument sales were below expectations due to restructuring and delayed new products. Despite mid- to high single digit growth for food analysis sales, Environmental and Safety revenue declined. Industrial sales benefited from a weak year-over-year comparison. EH adjusted operating profit grew 4.9% to $40.8 million.

Full-year 2013 reported sales for PerkinElmer grew 2.4%, 2% organically, to $2.12 billion. Product and Service revenues grew 1.6% and 4.3% to make up 69% and 21% of sales, respectively. Reported sales to the US, Europe and China grew 1.9%, 3.8% and 17.9% to account for 39%, 18% and 12% of revenues, respectively. Japanese sales fell 16.3% to make up 4%, primarily due to currency. Sales to Other International markets improved 0.7% to account for 27%. Adjusted gross margin contracted 120 basis points to 47.8% of sales because of pricing pressure, product mix and inflation. As a result, adjusted operating income slipped 2.3% to $344.6 million.

Within HH, 2013 Diagnostics sales were driven by prenatal, newborn and infectious disease screening, especially in emerging markets. Medical Imaging sales declined slightly. Research sales benefited from demand for informatics and in vivo imaging systems. Radiometric detection sales declined due to lower government spending in the US and Europe, and weak demand in Japan. HH adjusted operating profit improved 0.6% to $264.1 million due to lower operating expenses. Full-year EH sales were driven by higher sales for Laboratory Services, partially offset by lower Environmental and Safety, and Industrial sales. EH adjusted operating profit fell 8.9% to $119.1 million due to pricing pressure, higher sales of lower gross margin products and increased investments. For 2014, PerkinElmer projected sales to grow 4%–6% organically, including 1.5%–2.0% growth from new products. Diagnostic sales are expected to grow in the mid- to high single digits. Research sales are predicted to grow in the low to mid-single digits. Environmental and Safety sales are expected to grow in the mid-single digits. First quarter sales are expected to grow 4%–6% to $525–$535 million.

Thermo Fisher Scientific Analytical Technologies

Fourth quarter 2013 revenue for Thermo Fisher Scientific Analytical Technologies (AT) grew 6% due to strong sales for BioProcess Production, life sciences MS and chromatography products, especially in Asia Pacific. Timing of orders from delayed projects also contributed to growth, especially in Europe and the industrial and pharmaceutical markets. Pharmaceutical and biotech markets sales climbed more than 10% organically for Thermo as a whole. Demand from applied markets was strong, led by environmental and food testing. Industrial sales rose but remained soft. Academic and government sales declined. AT adjusted operating income margin expanded 45 basis points to 20.4% of sales.

Thermo AT 2013 revenue grew 3% organically to $4.13 billion to make up 32% of sales. AT adjusted operating income grew 2.5% to $767.8 million. AT operating margin was flat at 18.6% of sales. Full-year 2014 company sales are expected to grow 27%–29%, 3%–4% organically, to $16.63–$16.83 billion. The acquisition of Life Technologies, which grew roughly 2% in 2013, is expected to grow 2%–3% organically in 2014 and add roughly $4 billion in sales. AT 2014 sales are projected to grow above the company average.

Waters

Waters fourth quarter 2013 sales grew 10% organically. Instrument and recurring sales accounted for 57% and 43% of revenues, respectively. Currency-neutral sales in Asia (excluding Japan) grew 15%, including double-digit growth in China. In India, sales were slightly slower. Japanese sales grew 3% excluding currency. US sales grew 10% due to increased pharmaceutical spending and strong industrial, chemical and food analysis markets. Adjusted gross margin declined 50 basis points to 59.5% of sales because of currency and product mix. Adjusted operating margin slipped 10 basis points to 32.1% of sales

Within the Waters Division, fourth quarter 2013 sales grew 9% organically. Demand was driven by applied and life science markets with the exception of large pharmaceutical customers. The recovery in pharmaceutical demand was driven by CROs and biotech. Recurring sales grew 9%, including 10% growth for chromatography consumables and high single-digit growth for service revenue. Instrument sales also grew 9% due to demand for Q-Tof systems. Sales of tandem quadrupole systems were flat due to a strong year-over-year comparison. TA Division sales grew 16%.

Full-year 2013 sales for Waters grew 5% organically to $1.90 billion. Recurring and instrument sales grew 6% and 4% organically to make up 47% and 53% of revenues, respectively. Within the Waters Division, sales of high-end MS systems to overseas academic and biotech markets were strong. Sales of core chromatography instruments were down for the year. Overall, demand in Asia was strongest, especially in China, for which sales grew 13.1% to make up 13% of sales. Total adjusted gross margin declined 120 basis points to 58.9% of sales due to currency and product mix. Adjusted operating income fell 0.9% to $536.8 million. For 2014, sales are expected to grow in the mid-single digits organically, including slightly lower growth for the first quarter.