Why Bruker's loss grew while cash flow recovered
A $174.5 million write-down deepened the quarterly loss. Cash generation improved as costs fell and less money was tied up in working capital.
Bruker's operating loss widened in the third quarter even as its cash flow turned positive. The main reason the figures diverged was another large write-down of goodwill, the acquisition value that sits on its balance sheet.
The $174.5 million charge followed a $134.9 million impairment in the second quarter. Together, the charges reduced goodwill by $309.4 million over the first nine months.
The next goodwill test was already signaled
Research by Ticker Byline shows that Bruker's August quarterly report had already flagged another impairment test after a reorganization of its reporting segments. That reorganization took effect on July 1.
The latest earnings release reports the resulting charge in total. It does not say how much belongs to each reorganized unit.
Goodwill is the acquisition price recorded above the value assigned to identifiable net assets. Writing it down reduces reported profit without requiring a matching cash payment in the quarter.
Costs fell and cash generation improved
The reported operating loss was $91.0 million, compared with $51.8 million a year earlier. Adjusted operating income rose to $142.6 million from $105.9 million.
The adjusted result removes the goodwill charge, acquired-intangible amortization and selected acquisition, restructuring and other costs. Bruker attributed the improvement in its adjusted operating margin mainly to cost savings, with a further contribution from sales mix.
Operating cash flow was $118.2 million, compared with a $33.2 million outflow a year earlier. Less cash was absorbed by working capital, which includes inventory, customer payments and supplier bills. After $21.5 million of spending on property, equipment and intangible assets, free cash flow was $96.7 million.
Demand still gives a mixed picture
Revenue rose to $874.0 million from $860.5 million. Organic growth, excluding acquisitions and currency effects, was just 0.7%. The scientific-instruments businesses had a 0.4% organic decline.
Bruker kept its annual organic growth forecast of 1% to 2% and adjusted earnings forecast of $2.10 to $2.15 per share. It lowered the reported revenue range to $3.52 billion to $3.56 billion from $3.54 billion to $3.57 billion as an expected currency boost disappeared.
The stronger cash quarter is encouraging, but acquisitions and debt repayments also draw on those funds. Our Bruker company profile tracks the completed deals, balance sheet and outlook alongside the earnings recovery.