Third Quarter Results: Agilent, Bio-Techne, Bruker, Hitachi High-Technologies, Nanostring

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Strong Finish to Fiscal Year for Agilent Technologies

Fiscal fourth quarter sales for Agilent Technologies rose 7.1% to $1.19 billion, driven by strong growth across all businesses and major geographies. Acquisitions and currency effects collectively added 1.3% to overall sales growth. Organically, sales increased 5.8%, beating the company’s estimate of 3.5%.

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By end market, in the Analytical Laboratory group, Chemical and Energy sales rose 15%, driven by broad-based growth across major regions as well as sales for exploration, refining and chemicals. Academia and Government sales grew 12%, beating company expectations. Sales growth was driven by strong demand in Europe and the Americas, with strength across most product lines. Sales in the Food end-market advanced 10% for the quarter, propelled by services, consumables and mass spec sales. Additionally, continued success in Europe and Asia further added to overall Food sales. Environmental and Forensics revenue grew modestly, up 4%, driven by increasing concerns about environmental health in Asia, particularly China. Higher demand for GC, GC/MS and ICP-MS also contributed to the end-market’s sales. Pharma and Biotech sales, however, fell 5% due to a decline in the Nucleic Acid Solutions Division (NASD) and a tough prior year comparison. In the Diagnostics and Clinical group, sales increased by 9%, supported by strong pathology and companion diagnostics sales.

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For the quarter, Agilent’s Life Sciences & Applied Markets (LSAG) segment revenue grew 4.9%, 3.8% organically, to $575.0 million, led by the Chemical and Energy, Academia and Government, and Food end-markets. Double-digit growth in MS, microfluidics and cell analysis platforms contributed to segment growth. Operating margin for the segment increased 1.2 percentage points to 24.0%, as operating profit experienced double-digit growth of 10.4% to reach $138.0 million. For the year, LSAG sales rose 4.6% to $2,169.0 million, while operating profit advanced 13.5% to $487.0 million.

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Agilent CrossLab (ACG) sales for the quarter increased 9.2% to $404.0 million. Organically, sales grew 7.8%, driven by service and consumables sales. Additionally, most regions and end-markets performed well. ACG’s operating profit grew 9.5% to $92.0 million, representing a 22.9% operating margin, up 20 basis points. For the fiscal year, segment sales climbed 7.8% to $1,531.0 million to account for 34% of total company revenues. ACG’s chemistry business also contributed to full-year segment sales, experiencing double-digit growth in its AdvancedBio column portfolio. Operating profit for the fiscal year grew 7.0% to $338.0 million.

Revenue for the Diagnostics and Genomics segment (DGG) amounted to $210.0 million for the quarter. Sales increased 8.8%, 6.7% organically, due to increased demand for pathology and molecular products, as well as continued strength for PD-L1 sales. Segment operating margin increased 120 basis points to 20.8%, while operating profit grew 15.8% to $44.0 million. For the year, DGG sales advanced 8.9% to $772.0 million as operating profit vaulted 30.7% to $149.0 million.

Geographically, sales in the Asia Pacific region accounted for 36% of total quarterly company revenues, driven by China’s strong performance. Sales in China were $233.0 million, a 6.9% increase, while sales in the rest of the Asia Pacific region grew 4.0%. Altogether, Asia Pacific sales climbed 3.7% to $424.0 million. Sales in the Americas also experienced healthy gains, as revenue increased 5.5% to $418.0 million, representing 35% of total company sales. European sales accounted for 29% of company sales, growing 13.4% in the fourth quarter to reach $347.0 million. For the full year, sales in the Asia Pacific accounted for 37%, the Americas for 34%, and in Europe for 29% of total company sales.

For the first quarter of fiscal year 2018, Agilent expects revenues to be between $1.145 billion and $1.165 billion, representing 5.3% organic growth. For full-year 2018, the company projects revenues to range from $4.72 billion to $4.74 billion. Organically, full-year revenue growth is expected to be 4.0%–4.5%. By end-market, Agilent forecasts revenue growth for Academia and Government to be 3%. Environmental and Forensics sales are also expected to grow around 3%. Chemical and Energy sales growth is projected to be 5%, while Pharma sales are expected to be between 4% and 5%. Diagnostics and Clinical sales growth is anticipated to rise 6%.


Overall Growth Propels Bio-Techne Through First Quarter

Bio-Techne’s fiscal 2018 first quarter sales increased 10.7% on a reported basis to $144.6 million. Organically, sales grew 8.0% as currency effects and acquisitions added 1% and 2% to growth, respectively. Sales growth for the quarter was heavily driven by the company’s two primary life science segments, Biotechnology and Protein Platforms, for which organic growth amounted to 9% collectively.

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Biotechnology sales advanced 9.6% to $95.1 million, representing 66% of total company revenues. Organically, sales rose 6.0%, with 3% growth from acquisitions and 1% growth due to favorable currency effects. Sales for the segment were driven by strong antibody revenue growth and Advanced Cell Diagnostics (ACD) sales. Antibody sales were largely boosted by a 30% increase in Novus brand revenue, along with high-single digit sales for the R&D System brand. ACD sales also experienced significant growth, vaulting more than 40% due to increasing demand for its RNA-ISH technology. Additionally, sales of the company’s multiplex assays increased by around 25.0%. Adjusted operating margin fell 2.0 percentage points to 46.9% due to recent acquisitional costs of ACD.

Diagnostics revenue increased modestly by 3.1% to $25.0 million, supported by mid-single digit sales growth in hematology and glucose-based controls. Unfavorable timing of orders from consumers, along with a difficult prior year comparison, partially offset those gains. Adjusted operating margin for the quarter fell 2.7 percentage points due to lower margin mix of product sales. Segment revenue accounted for around 17% of total company sales.

Revenue for Protein Platforms soared 25.9% to $24.6 million, representing 17% of total company sales. Organically, sales rose 25.0%, with 1% growth coming from favorable currency effects. Segment sales growth increased by double-digits for the seventh consecutive quarter. The segment’s strong performance was driven primarily by its major product categories, Biologics, Simple Western, Simple Plex and Single-Cell Western. Simple Western and Simple Plex sales grew more than 20% and 100%, respectively. Adjusted operating margin for the segment surged 11.3 percentage points to 12.4%.

Geographically, the US accounted for the largest portion of the company’s sales at 56%. US sales grew in the mid-single digits, driven by the academic and biopharmaceutical end-markets. The biopharmaceutical market boosted the US’ robust sales and provided even more growth to the European region’s sales. EMEA sales accounted for 27% of total company sales, driven by Europe’s strong double-digit organic growth. EMEA’s organic growth reached the low teens due to broad-based success, with particularly strong sales for the company’s reagents and instrument product categories. Within Europe, most of the major countries’ sales growth advanced in both the academic and biopharmaceutical end-markets.

In Asia Pacific, sales represented about 14% of total company revenues, driven by China and South Korea’s strong performance. Overall APAC sales leaped nearly 30% for the quarter, for which China’s sales grew around 20% organically, propelled by the company’s Western brands, for which sales grew over 30%. Japan similarly advanced, with double-digit organic growth for the quarter.

For the remainder of fiscal 2018, Bio-Techne expects organic growth to be around 8%.


Solid Third Quarter for Bruker Scientific Spurs Guidance Upgrade

Bruker’s revenues for the third quarter totaled $435.6 million, an increase of 10.6% on a reported basis. Currency effects, along with acquisitions, added 2.4% and 4.8% to overall sales growth, respectively. Organically, sales grew 3.4%, driven by improved academic, governmental, industrial and semiconductor metrology (semi) end-markets. Operating profit increased 8.7% to $49.9 million, while operating margin fell 20 basis points to 11.45%.

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Geographically, Europe accounted for 35% of total company sales, driven by mid-teens organic growth. Academic and industrial end-market sales in Europe continued to recover, supported by an improving European economy. The Americas represented 31% of total company sales, growing in the mid-single digits. APAC sales fell slightly due to a weak performance in Bruker’s BEST segment, along with a significant decline in Japanese sales. However, sales in China were up double digits, driven by increased funding and disbursements for research and applications.

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Bruker Scientific Instruments (BSI) segment revenue advanced 8.0% to $390.6 million, driven by continued strength in biopharma and microbiology revenue growth. Excluding acquisitions that added 1.8% growth and currency effects that added 2.0% growth, organic growth amounted to 4.2%. The segment’s operating profit remained relatively flat, falling just half a percent to $43.1 million. Operating margin fell 95 basis points to 11.0%. Overall, segment sales represented about 90% of total company revenue.

BSI’s BioSpin group’s revenue growth remained flat, supported by sales of low-field NMR systems. Pre-clinical imaging sales experienced a continued recovery. Similarly, BioSpin’s aftermarket and service sales continued to grow, as both were up low double digits.

Revenue for the CALID group increased mid-single digits, driven by strong MS sales to academic and clinical consumers. Both Daltonics and Optics products experienced significant revenue growth, supported by improved demand in the applied and industrial markets. InVivo, acquired earlier this year (see IBO 1/15/17), also added strong consumables sales growth to CALID’s revenue. CALID’s Detection sales, however, fell due to weakened demand along with a tough prior-year comparison.

Bruker NANO group’s sales rose high single digits, propelled by semiconductor revenue. Recently acquired Hysitron (see IBO 2/1/17) also added to group revenue with solid nanoindenting product sales. Similarly, AXS sales also added to the group’s overall revenue, driven by an improved European market and faster industrial growth. Overall, improved industrial end-market growth contributed to NANO’s strong quarterly performance.

For the year, Bruker expects its total revenue growth to be 8%-8.5%, an upgrade from the previous guidance of 4.5%–6.0%. Acquisitions are expected to add 4.5% to sales growth, while currency effects are projected to contribute about 1.0%. Organically, the company projects revenue to grow between 2.5% and 3.0%, up from the previously projected 1.5%–2.0%.


SMS Sales Continue to Slip for Hitachi High-Technologies

Hitachi High-Technologies’ Science and Medical Systems (SMS) first-half results were unfavorable as sales fell 5.3% to ¥87.5 billion ($780 million at ¥111.7 = $1). However, despite falling short on a year-over-year basis, SMS sales still exceeded company expectations of ¥84.6 billion ($760 million). SMS operating profit for the half decreased 33.0% to 9.7 ¥billion ($90 million), again beating the company’s own expectation of ¥8.1 billion ($70 million).

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Electron Microscope revenue increased 14.5% to ¥15.8 billion ($140 million), driven by strong demand in Asia and Europe. However, electron microscope demand in Japan remained flat. Scientific Instruments sales leaped 20.6% to ¥12.9 billion ($120 million), primarily due to a recovery in demand for analyzers. Electron Microscope and Scientific Instrument sales accounted for 18% and 15% of SMS sales, respectively.

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The Biotechnology and Medical segments overall experienced strong sales of immunodiagnostic analyzers and clinical chemistry, driven by growth in China. Sales for Biotechnology Products alone vaulted 36.4% to ¥9.0 billion ($80 million), accounting for 10% of total SMS sales. Medical Products revenue fell 18.8% to ¥49.8 billion ($450 million), still representing the largest amount of SMS sales at 57%.

Geographically, overall company sales remained largely dependent on Asia, where sales accounted for 40% of total revenues. Sales in Asia advanced 23.6% to ¥134.1 billion ($1.2 billion), driven by strong sales growth in China, while sales in Japan grew 8.9% to ¥126.3 billion ($1.13 billion). Conversely, both North America and Europe experienced a decrease in sales, falling 13.3% and 14.4% to ¥25.4 billion ($230 million) and ¥39.3 billion ($350 million), respectively. Sales in Other regions of the world totaled ¥10.4 billion and accounted for 3% of total company sales.

For the full fiscal year 2018, Hitachi High-Technologies expects SMS sales to be ¥188.5 billion ($1.69 billion), a decrease from the previously projected ¥190.5 billion ($1.71 billion).


Collaborations Drive Third Quarter Sales for Nanostring

Third quarter revenues for Nanostring Technologies advanced 12.9% to $27.0 million, driven by Collaborations and Prosigna (IVD) sales growth. Product and services revenue fell 11.7% to $16.9 million due to weak instrument and consumable sales.

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Instrument sales declined 35.6% to $4.4 million primarily due to a significant cutback in systems sold. Segment sales were further impacted by weak academic sales, lowering instrument system placements worldwide by 40%. Service revenue increased dramatically for the quarter due to an increase in the number of instruments covered by service agreements. Collaborations revenue experienced significant growth as well, advancing 111.9% to $10.1 million, largely driven by increased revenue from the Merck and Lam collaborations.

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Consumables sales excluding IVD sales decreased, dipping 12.5% to $9.0 million. The contraction in sales was due to a large reduction in consumables sales to biopharmaceutical and academic end-users. However, IVD sales advanced 47.3% to $1.7 million, partially offsetting the negative consumables sales. Together, overall consumables revenue decreased 6.5% to $10.7 million to account for approximately 40% of total company revenues.

Geographically, sales in the Americas remained robust, advancing 19.5% to $20.0 million. Sales were supported by increased demand in the US and South America, especially for IVD. In Europe and the Middle East, sales were relatively flat, dropping just half a percent to $4,911.0 million. Sales in Asia Pacific experienced a 7.6% decline, decreasing to $2,045.0 million due to weak instrument and consumable sales.

For the full year, Nanostring expects its product and service revenue to be $68–$71 million, a downgrade from the previous projection of $81–$85 million. Gross margin for Product and Services is now expected to be 56%, versus the previous guidance of 57%–58%. Operating loss is expected to be between $38 and $41 million. Overall company sales are projected to total $109–$112 million, a decrease from the previous guidance of $114–$118 due to lower-than-expected third quarter results. The new guidance signifies revenue growth of 26%.

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