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Bruker Corp Q3 2015 Earnings Report

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Bruker Corporation (NASDAQ: BRKR) Q3 2015 Earnings Presentation Frank Laukien, President & CEO Anthony Mattacchione, SVP & Interim CFO November 4, 2015 Joshua Young, VP, IR & Corporate Development Innovation with Integrity


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Bruker Corporation Safe Harbor & Reg. G Statement Any statements contained in this presentation that do not describe historical facts may constitute forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Any forward-looking statements contained herein are based on current expectations, but are subject to risks and uncertainties that could cause actual results to differ materially from those projected, including, but not limited to, risks and uncertainties relating to adverse changes in conditions in the global economy and volatility in the capital markets, the integration of businesses we have acquired or may acquire in the future, our ability to successfully implement restructuring initiatives, changing technologies, product development and market acceptance of our products, the cost and pricing of our products, manufacturing, competition, dependence on collaborative partners and key suppliers, capital spending and government funding policies, changes in governmental regulations, realization of anticipated benefits from economic stimulus programs, intellectual property rights, litigation, and exposure to foreign currency fluctuations and other risk factors discussed from time to time in our filings with the Securities and Exchange Commission. These and other factors are identified and described in more detail in our filings with the SEC, including, without limitation, our annual report on Form 10-K for the year ended December 31, 2014 and our quarterly reports on Form 10-Q for the periods ended March 31, 2015 and June 30, 2015. We will also be referencing non-GAAP financial measures in this presentation. A reconciliation of non-GAAP to GAAP results is available in our earnings press release and in this presentation. © Bruker Corporation 2


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Q3-15 & YTD 2015 Business Update © Bruker Corporation 3


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Bruker delivers stronger, more balanced financial performance in Q3 2015 Q3 2015 Performance Q3 Financials  Revenues decline -$24m, or -6% y-o-y − FX headwinds lower revenue -11% y-o-y -6% Revenues [$ m]  Organic revenue growth of +8% y-o-y, driven by CALID and BioSpin Groups 420 396 Q3-14 Q3-15 − Europe & Asia are strongest regions  Non-GAAP operating margins expand by +470 basis points y-o-y  Non-GAAP EPS grows by +36% y-o-y despite higher tax rate Non-GAAP EPS  Free cash flow of $45M in Q3-15 up compared to $4M in Q3-14 Q3-14 − Higher profitability and lower working capital drive FCF improvement © Bruker Corporation Q3-15 +36% $0.14 $0.19 4


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Q3-YTD Bruker is on track for a year of good margin expansion, earnings growth and cash flow generation Q3 YTD 2015 Performance  Revenues decline -12% y-o-y  Organic revenue growth of +2% y-o-y 1. High-single digit organic revenue growth from CALID Group; low single digit organic revenue growth in NANO Group 2. Low single digit organic revenue decline in BioSpin Group 3. Europe and Asia drive YTD organic growth  Non-GAAP operating margin expands by +220 basis points y-o-y, including +115 basis points due to CAM restructuring in 2014 YTD Financials -12% Revenues [$ m] 1,301 YTD 14 1,146 YTD 15 Non-GAAP EPS YTD 2014 +11% $0.46  Reported non-GAAP EPS grows +11%  Free cash flow of $57M increases by +$39 million, compared to $18M in Q3 YTD 2014 © Bruker Corporation YTD 2015 $0.51 5


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GROUP OVERVIEW: Q3 2015 Performance Bruker BIOSPIN Group  Strong revenue growth for Nuclear Magnetic Resonance (NMR) as business rebounds in all major geographies  NMR business recovery continues as order bookings remain healthy  Preclinical imaging business reports mid-single digit organic growth in Q3-15, but YTD weakness in order bookings continues  Positive product mix, benefits from restructuring, higher-margin transactions, earlier than expected customer acceptances drive improved margins Bruker CALID Group  Delivers double-digit organic revenue growth y-o-y with strong performance in Europe and Asia, and with strong margin expansion  Daltonics Division drives organic revenue growth in nearly all product lines and geographies  Detection Division generates exceptional, but non-recurring revenue growth in Q3-15 with new explosives trace detection products  Optics Division experiences flat organic revenues due to restrained demand from industrial and high-end R&D customers © Bruker Corporation 6


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GROUP OVERVIEW: Q3 2015 Performance Bruker NANO Group  Organic revenue and bookings decline due to weaker demand from most industrial market segments  AXS Division posts mid-single digit organic revenue growth: strong demand for X-ray diffraction products and improved execution  Nano Surfaces Division revenues decline primarily due to weak industrial, semiconductor and data storage customers  Acquisition of Jordan Valley Semiconductor (at end of October 2015) will enable Bruker to capitalize on secular trends of smaller feature sizes and 3D structures in semiconductor metrology market BEST Segment  Achieved almost 10% non-GAAP operating margin  ROSATOM pilot line acceptance shifted to Q4-15  Q3-15 YTD organic bookings growth >20% y-o-y © Bruker Corporation 7


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Acquisition of Jordan Valley Semiconductor closed enables new Bruker Semiconductor Division to capitalize on semi trends to 3D features & smaller size nodes for: Social Media Xeon + FPGA for Data Center 10nm FinFET © Bruker Corporation Cloud Computing Wearable/Portable Electronics A9 processor 14nm FinFET V - NAND 3D NAND 3D packaging 8


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Key Messages after Q3 2015: Bruker is on track to meet or exceed its FY15 guidance for organic revenue growth, margin expansion and EPS BIOSPIN Group is recovering after a weak start in H1 2015 CALID Group is successfully driving the adoption of new products and generating higher growth and margins We are attracting top-notch senior managers and board members © Bruker Corporation 9


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Q3 2015 Financial Update © Bruker Corporation 10


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NON-GAAP FINANCIAL PERFORMANCE: Q3 2015 Overview [$ m, except EPS] Revenues Operating Income Margin (%) EPS Δ Q3 2015 Q3 2014 396.1 419.8 -6% 52.8 35.9 47% 13.3% 8.6% $0.19 Free Cash Flow $0.14 36% 44.7 3.6 41.1M Sep 30, 2015 Sep 30, 2014 Δ Net Cash 160.9 87.1 633.2 737.2 0.40  Strong cash flow generation driven by operational improvements and tax refunds  Working capital ratios continue to improve -14% 0.38  Strong operating margin expansion aided by an easy Q3-14 comparison and absence of CAM results 85% Working capital (WC)* COMMENTS -0.02 [$ m] WC-to-revenue ratio * WC = (Accounts Receivable + Inventory – Accounts Payable) © Bruker Corporation 11


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Q3 2015 revenue bridge Q3 2015 DRIVERS Q3 2015 Revenue for Bruker Corp. Organic Currency Divestitures Total 8.1% -10.9% -2.8% -5.6%  CALID and BioSpin Group drive organic revenue increase  Strong currency headwinds Q3 2015 Revenue Bridge [$ m] +$33.2 -$45.8 -$11.1 $419.8M $396.1M Q3 2014 Organic © Bruker Corporation Currency Divestitures Q3 2015 12


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Q3 2015 Non-GAAP Results Δ [$ m, except EPS] Q3 2015 Q3 2014 Total Revenues 396.1 419.8 -6% Gross Profit 182.7 46.1% 185.5 44.2% -2% -95.6 -107.5 -11% 24.1% 25.6% -34.3 8.7% -42.1 10.0% -19% 52.8 35.9 47% 13.3% 8.6% 32.2% 27.0% 520 bps 31.6 23.8 33% EPS $0.19 $0.14 36% Shares Outstanding 168.7 169.6 NM Margin (% of revenues) SG&A (% of revenues) R&D (% of revenues) Operating Income (% of revenues) Tax Rate Net Income* Sum of items may not total due to rounding © Bruker Corporation COMMENTS  Gross margin improvement is primarily the result of increased volume, positive product mix, restructuring actions, and the absence of CAM results  Lower operating expenses due to FX translation and absence of CAM results  Higher tax rate is the result of changes in jurisdictional mix, including lower US pretax profits  FX headwinds lower EPS by (-$0.02) in Q3-15 * Attributable to Bruker 13


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Q3 2015 Reconciliation of GAAP and Non-GAAP Results [$ m, except EPS] Q3 2015 GAAP Operating Income Q3 2014 28.2 4.9 12.7 16.2 Acquisition-Related Costs 1.2 1.4 Purchased Intangible Amortization 5.1 5.1 Other Costs 5.6 8.3 24.6 31.0 52.8 35.9 Non-GAAP Interest & Other Income (Expense), net* -4.6 -2.2 Non GAAP Profit* Before Tax 48.2 33.7 -15.5 -9.1 32.2% 27.0% -1.1 -0.8 31.6 23.8 $0.19 $0.14 Restructuring Costs TOTAL Non-GAAP Operating Income Non-GAAP Income Tax Provision Non-GAAP Tax Rate Minority Interest Non-GAAP Net Income** Non-GAAP EPS Sum of items may not total due to rounding © Bruker Corporation *Excludes $6.3M of net gains for 2014 **Attributable to Bruker 14


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Q3-15 YTD revenue bridge Q3-15 YTD DRIVERS Q3-15 YTD Revenue for Bruker Corp. Organic Currency Divestitures Total 1.9% -11.1% -2.7% -11.9%  Organic revenue growth of 1.9% driven by CALID Group  Europe is strongest region on YTD basis Q3-15 YTD Revenue Bridge [$ m] +$23.9 -$145.2 -$34.0 $1,300.9M $1,145.6M Q3-14 YTD Organic © Bruker Corporation Currency Divestitures Q3-15 YTD 15


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Q3-15 YTD Non-GAAP Results Δ [$ m, except EPS] Q3-15 YTD Q3-14 YTD Total Revenues 1,145.6 1,300.9 -12% 528.2 46.1% 584.5 44.9% -10% -287.7 -331.2 -13% 25.1% 25.5% -109.0 -132.6 -18% Operating Income 131.5 120.7 9% (% of revenues) 11.5% 9.3% 23.9% 28.0% -410 bps 86.6 77.4 12% EPS $0.51 $0.46 11% Shares Outstanding 169.1 169.5 NM Gross Profit Margin (% of revenues) SG&A (% of revenues) R&D (% of revenues) Tax Rate Net Income* 9.5% Sum of items may not total due to rounding © Bruker Corporation 10.2% COMMENTS  CALID drives most of gross margin improvement – CAM divestments in 2014 add +64 bps to gross margin  -$67M reduction in opex related to FX translation and absence of CAM results  Non-GAAP operating margin increases by +220 bps  Non-GAAP EPS headwind of (-$0.07) from FX * Attributable to Bruker 16


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Q3-15 YTD Reconciliation of GAAP and Non-GAAP Results [$ m, except EPS] Q3-15 YTD GAAP Operating Income Q3-14 YTD 75.0 60.9 Restructuring Costs 21.2 29.3 Acquisition-Related Costs -1.4 3.0 Purchased Intangible Amortization 15.5 15.1 Other Costs 21.2 12.4 TOTAL 56.5 59.8 131.5 120.7 Non-GAAP Interest & Other Income (Expense), net* -14.1 -9.7 Non-GAAP Profit* Before Tax 117.4 111.0 Non-GAAP Income Tax Provision -28.1 -31.1 23.9% 28.0% -2.7 -2.5 86.6 77.4 $0.51 $0.46 Non-GAAP Operating Income Non-GAAP Tax Rate Minority Interest Non-GAAP Net Income** Non-GAAP EPS Sum of items may not total due to rounding © Bruker Corporation * Excludes $0.2M of net losses for 2015 and $6.6M of net gains for 2014 **Attributable to Bruker 17


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Q3-15 Cash Flow Statement [$ m] Q3 2015 Q3 2014 Δ Net Income 12.9 6.3 6.6 Depreciation & amortization 13.3 17.6 -4.3 Changes in working capital* -3.0 -16.0 13.0 Other 30.9 5.6 25.3 Operating cash flow 54.1 13.5 40.6 -9.4 -9.9 0.5 44.7 3.6 COMMENTS  Higher gross margins, lower restructuring costs result in higher net income 41.1 Capital expenditures Free cash flow © Bruker Corporation  Working capital efficiency continues to improve  “Other” increases as a source of cash mostly due to tax refunds and operational improvements 18


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Full Year 2015 Outlook © Bruker Corporation 19


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We are increasing our FY-2015 Guidance Updated FY 2015 Guidance Organic Revenue Growth Non-GAAP Operating Margin Expansion y-o-y Non-GAAP EPS 2015 ASSUMPTIONS Approximately +1% >150 bps $0.75 - $0.80  Changes in currency reduce revenues by (-10%)  FX generates -13% or (-$0.10) headwind to non-GAAP EPS in 2015  CAM revenues decrease by ~$50M in 2015  FY 2015 tax rate: ~24%-25%  Current currency assumptions: Yen/USD: 120 USD/EUR: 1.12 © Bruker Corporation 20


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Appendix © Bruker Corporation 21


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Q3 2015 GAAP Results Δ [$ m, except EPS] Q3 2015 Q3 2014 Total Revenues 396.1 419.8 -6% Gross Profit 167.5 167.3 NM 42.3% 39.9% -96.1 -108.0 24.3% 25.7% -34.3 -42.1 (% of revenues) 8.7% 10.0% Operating Income 28.2 4.9 (% of revenues) 7.1% 1.2% 11.8 5.5 115% EPS $0.07 $0.03 133% Shares Outstanding 168.7 169.6 NM Margin (% of sales) SG&A (% of revenues) R&D Net Income* Sum of items may not total due to rounding © Bruker Corporation -11% -19% 476% * Attributable to Bruker 22


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Balance sheet [$ m] Sep 30, 2015 Total Assets Sep 30, 2014 Dec 31, 2014 1,842.9 1,910.6 1,864.8 Working Capital* 633.2 737.2 694.6 Intangibles, Net & Other Long-Term Assets 224.1 245.9 248.6 [$ m] Sep 30, 2015 Sep 30, 2014 Dec 31, 2014 Cash, Cash Equivalents & Short-term Investments 532.3 442.3 497.5 Financial Debt 371.4 355.2 355.0 Net Cash 160.9 87.1 142.5 * WC = (Accounts Receivable + Inventory - Accounts Payable) © Bruker Corporation 23


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Q3-15 YTD GAAP Results Δ [$ m, except EPS] Q3-15 YTD Q3-14 YTD Total Revenues 1,145.6 1,300.9 -12% 497.1 547.5 -9% 43.4% 42.1% -289.2 -332.5 25.2% 25.6% -109.0 -132.6 (% of revenues) 9.5% 10.2% Operating Income 75.0 60.9 (% of revenues) 6.5% 4.7% 40.2 30.6 31% EPS $0.24 $0.18 33% Shares Outstanding 169.1 169.5 NM Gross Profit Margin (% of sales) SG&A (% of revenues) R&D Net Income* Sum of items may not total due to rounding © Bruker Corporation -13% -18% 23% * Attributable to Bruker 24


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Q3-15 YTD Cash Flow Statement [$ m] Q3-15 YTD Q3-14 YTD Δ Net Income 42.9 33.1 9.8 Depreciation & amortization 40.0 47.6 -7.6 Changes in working capital* 11.4 2.8 8.6 Other -14.7 -38.5 23.8 Operating cash flow 79.6 45.0 34.6 Capital expenditures -22.8 -26.7 3.9 Free cash flow 56.8 18.3 38.5 © Bruker Corporation 25


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Q3-15 GAAP SEGMENT RESULTS: BSI and BEST GAAP Performance [$ m] Δ Q3 2015 Q3 2014 366.6 383.4 9.3% -7.1% 32.9 40.0 -2.6% 22.6% -3.4 -3.6 396.1 419.8 -6% 25.8 0.8 NM 2.5 3.9 -36% -0.1 0.2 28.2 4.9 REVENUE Scientific Instruments (BSI) Organic Revenue Growth (%) Energy & Supercon Technologies (BEST) Organic Revenue Growth (%) Corporate Eliminations Total Revenue -4% -18% OPERATING INCOME Scientific Instruments (BSI) Energy & Supercon Technologies (BEST) Corporate Eliminations Total Operating Income 476% Sum of items may not total due to rounding © Bruker Corporation 26


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