Brooks Automation Reports Results of First Quarter of Fiscal

|Feb 6|magazine51 min read

CHELMSFORD, Mass., Feb. 6, 2020 /PRNewswire/ -- Brooks Automation, Inc. (Nasdaq: BRKS), a leader in automation solutions for the semiconductor manufacturing and life sciences industries, today reported financial results for the first fiscal quarter of 2020, ended December 31, 2019.



Financial Results Summary




Quarter Ended








Dollars in millions, except per share data


December 31, 


September 30,



December 31, 


Change vs.






2019


2019



2018


Prior Qtr


Prior Year




Revenue


$

210


$

199



$

179


6

%

17

%



Semiconductor Solutions Group


$

119


$

105



$

113


13

%

5

%



Life Sciences


$

92


$

94



$

67


(3)

%

38

%





















Diluted EPS Continuing Operations


$

0.18


$

0.07



$

0.09


150

%

106

%



Diluted EPS Total


$

0.18


$

5.68



$

0.20


(97)

%

(11)

%





















Non-GAAP Diluted EPS Cont. Operations


$

0.23


$

0.23



$

0.17


(3)

%

37

%




Management Comments

"The results of our first fiscal quarter of 2020 showed good growth in each segment and we are solidly on track for a strong year," commented Steve Schwartz, CEO of Brooks Automation.  "Our Semiconductor Solutions business was lifted by another record quarter of revenue from Contamination Control Solutions, we delivered another quarter of gross margin improvement in Life Sciences Sample Management, and we had strong cash flow from operations."  

Summary of GAAP Results for Continuing Operations

  • Revenue of $210 million grew 17% year-over-year and diluted EPS from continuing operations was $0.18, which has doubled from $0.09 in the first quarter of 2019.
  • Life Sciences revenue of $92 million grew 38% year-over-year, helped by the acquisition and continued growth of GENEWIZ, which was acquired on November 15, 2018. The organic growth of GENEWIZ was 22% and for Sample Management 3%, year-over-year.
  • Semiconductor Solutions revenue of $119 million grew 5% year-over-year and 13% sequentially, driven by strong shipments of Contamination Control Solutions to end-user fabs and vacuum robots to OEM customers.
  • GAAP operating income was $11 million, compared to $5 million in the first quarter of 2019. The increase was driven by the growth and expanded operating margins in Life Sciences. Life Sciences margins benefited from 340 basis points expansion of gross margins in Sample Management and improved mix from a full quarter of the higher margin results of GENEWIZ compared to a half quarter a year ago.
  • Amortization of intangibles was $11 million, an increase of approximately $3 million due to carrying GENEWIZ for a full quarter in 2020 versus a half quarter of ownership in the first fiscal quarter of 2019.
  • Net interest expense was zero for the quarter, a $5 million reduction from the first quarter of 2019.
  • Cash flow from operations was $26 million in the quarter, compared to $6 million in the first quarter of 2019. The ending balance of total debt was $51 million and the balance of cash, cash equivalents, restricted cash, and marketable securities was $353 million. In January 2020, subsequent to the first quarter reporting period, the Company used $93 million of this cash balance to settle income taxes related to the 2019 gain on the sale of the Semiconductor Cryogenics business.

Summary of Non-GAAP Results for Continuing Operations

  • Diluted EPS from continuing operations for the quarter was $0.23, up 37% from the first quarter of 2019.
  • Operating margins were 10.5%, down 50 basis points year-over-year. The current quarter includes higher SG&A expense driven primarily by the additional structure acquired with GENEWIZ and subsequent investments for its growth. The first fiscal quarter included excess professional fees of approximately $2 million, primarily associated with the previously disclosed material weaknesses that impacted operating margins negatively by approximately 100 basis points.
  • Non-GAAP gross margins were 41.6%, an increase of 20 basis points from the first quarter of 2019 driven by improved margins in Life Sciences, partially offset by lower margins in Semiconductor.
  • Life Sciences non-GAAP operating margins were 6.5%, up 250 basis points year-over-year. The improvement was primarily driven at the gross margin line which was 44.3%, up 350 basis points year-over-year. This reflects 340 basis point improvement in Sample Management gross margins and the favorable mix of acquiring the GENEWIZ business which carries higher gross margins.
  • The Semiconductor Solutions non-GAAP operating margins were 12.6%, a decline of 270 basis points. The decline reflects softer gross margins of 39.6%, lower by 210 basis points from the prior year, primarily driven by the mix of revenue.
  • Adjusted EBITDA was $32 million, up 14% from the first quarter of 2019.

A reconciliation of non-GAAP measures to the most nearly comparable GAAP measures follows the consolidated balance sheets, statements of operations and statements of cash flows included in this release.

Quarterly Cash Dividend

The Company additionally announced that the Board of Directors has reiterated a dividend of $0.10 per share payable on March 27, 2020 to stockholders of record on March 6, 2020.  Future dividend declarations, as well as the record and payment dates for such dividends, are subject to the final determination of the Company's Board of Directors.

Guidance for Fiscal Second Quarter Fiscal 2020

The Company announced revenue and earnings guidance for the second quarter of fiscal 2020.  Revenue is expected to be in the range of $213 million to $225 million and non-GAAP diluted earnings per share is expected to be in the range of $0.22 to $0.28.  GAAP diluted earnings per share for the second fiscal quarter is expected to be in the range of $0.09 to $0.15.

Conference Call

Brooks management will webcast its first quarter earnings conference call today at 4:30 p.m. Eastern Time. During the call, Company management will respond to questions concerning, but not limited to, the Company's financial performance, business conditions and industry outlook.  Management's responses could contain information that has not been previously disclosed.

The call will be broadcast live over the Internet and, together with presentation materials referenced on the call, will be hosted at the Investor Relations section of Brooks' website at www.brooks.com, and will be archived online on this website for convenient on-demand replay.  In addition, you may call 800-728-2056 (US & Canada only) or +1-212-231-2922 for international callers to listen to the live webcast.

Regulation G – Use of Non-GAAP financial Measures

The Company supplements its GAAP financial measures with certain non-GAAP financial measures to provide investors a better perspective on the results of business operations, which the Company believes is more comparable to the similar analysis provided by its peers.  These measures are not presented in accordance with, nor are they a substitute for, U.S. generally accepted accounting principles, or GAAP. These measures should always be considered in conjunction with appropriate GAAP measures.  A reconciliation of non-GAAP measures to the most nearly comparable GAAP measures is included at the end of this release following the consolidated balance sheets, statements of operations and statements of cash flows.

"Safe Harbor Statement" under Section 21E of the Securities Exchange Act of 1934

Some statements in this release are forward-looking statements made under Section 21E of the Securities Exchange Act of 1934. These statements are neither promises nor guarantees but involve risks and uncertainties, both known and unknown, that could cause Brooks' financial and business results to differ materially from our expectations. They are based on the facts known to management at the time they are made. These forward-looking statements include but are not limited to statements our revenue and earnings expectations, our ability to increase our profitability, our ability to improve or retain our market position, and our ability to deliver financial success in the future. Factors that could cause results to differ from our expectations include the following:  the volatility of the industries the Company serves, particularly the semiconductor industry; our possible inability to meet demand for our products due to difficulties in obtaining components and materials from our suppliers in required quantities and of required quality; risks and uncertainties related to the coronavirus originating in Wuhan, China and its effects on the Company's operations in China, including supply chain, and the operations of our customers in China; the inability of customers to make payments to us when due; the timing and effectiveness of cost reduction and cost control measures; price competition; disputes concerning intellectual property; uncertainties in global political and economic conditions, and other factors and other risks, including those that we have described in our filings with the Securities and Exchange Commission, including but not limited to our Annual Report on Form 10-K, current reports on Form 8-K and our quarterly reports on Form 10-Q. As a result, we can provide no assurance that our future results will not be materially different from those projected. Brooks expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any such statement to reflect any change in our expectations or any change in events, conditions or circumstances on which any such statement is based. Brooks undertakes no obligation to update the information contained in this press release.

About Brooks Automation, Inc.

Brooks is a leading provider of life science and semiconductor manufacturing automation solutions worldwide.  The Company applies its automation and cryogenics expertise to provide a full suite of reliable cold-chain sample management solutions across life sciences in areas such as drug development, clinical research and advanced cell therapies.  Brooks recently added global capability for gene sequencing and gene synthesis services through its strategic acquisition of GENEWIZ, expanding its sample-based services offerings.  With over 40 years as a partner to the semiconductor manufacturing industry, Brooks is a provider of industry-leading precision robotics, integrated automation systems and services.  Brooks is headquartered in Chelmsford, MA, with operations in North America, Europe and Asia.  For more information, visit www.brooks.com.

INVESTOR CONTACTS:
Mark Namaroff
Director, Investor Relations
Brooks Automation
978.262.2635
[email protected]

Sherry Dinsmore
Brooks Automation
978.262.2400
[email protected]

John Mills
Senior Managing Partner
ICR, LLC
646.277.1254
[email protected]

 

BROOKS AUTOMATION, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

 (In thousands, except per share data)














Three Months Ended







December 31, 







2019


2018





Revenue











Products


$

131,862


$

125,375





Services



78,638



53,993





Total revenue



210,500



179,368





Cost of revenue











Products



79,971



74,574





Services



45,543



32,713





Total cost of revenue



125,514



107,287





Gross profit



84,986



72,081





Operating expenses











Research and development



14,401



13,148





Selling, general and administrative



59,343



53,541





Restructuring charges



576



59





Total operating expenses



74,320



66,748





Operating income



10,666



5,333





Interest income



699



423





Interest expense



(737)



(5,290)





Other expenses, net



(417)



(30)





Income before income taxes



10,211



436





Income tax benefit



(2,963)



(5,830)





Income from continuing operations



13,174



6,266





(Loss) income from discontinued operations, net of tax



(117)



8,149





Net income


$

13,057


$

14,415





Basic net income per share:











Basic net income per share from continuing operations


$

0.18


$

0.09





Basic net (loss) income per share from discontinued operations



(0.00)



0.11





Basic net income per share


$

0.18


$

0.20





Diluted net income per share:











Diluted net income per share from continuing operations


$

0.18


$

0.09





Diluted net (loss) income per share from discontinued operations



(0.00)



0.11





Diluted net income per share


$

0.18


$

0.20
















Weighted average shares outstanding used in computing net income per share:











Basic



72,972



71,450





Diluted



73,645



72,165
















 

BROOKS AUTOMATION, INC.

CONSOLIDATED BALANCE SHEETS

(unaudited)

 (In thousands, except share and per share data)



December 31, 


September 30,


2019


2019







Assets






Current assets






Cash and cash equivalents

$

335,319


$

301,642

Marketable securities


11,233



34,124

Accounts receivable, net


165,176



165,602

Inventories


105,181



99,445

Prepaid expenses and other current assets


46,560



46,332

Total current assets


663,469



647,145

Property, plant and equipment, net


105,296



100,669

Long-term marketable securities


3,039



2,845

Long-term deferred tax assets


6,004



5,064

Goodwill


490,370



488,602

Intangible assets, net


242,248



251,168

Other assets


48,532



20,506

Total assets

$

1,558,958


$

1,515,999

Liabilities and Stockholders' Equity






Current liabilities






Current portion of long-term debt

$

827


$

829

Accounts payable


65,306



58,919

Deferred revenue


29,042



29,435

Accrued warranty and retrofit costs


7,493



7,175

Accrued compensation and benefits


25,810



31,375

Accrued restructuring costs


844



1,040

Accrued income taxes payable


100,451



99,263

Accrued expenses and other current liabilities


53,179



44,234

Total current liabilities


282,952



272,270

Long-term debt


49,918



50,315

Long-term tax reserves


18,543



18,274

Long-term deferred tax liabilities


13,636



20,636

Long-term pension liabilities


5,397



5,338

Long-term operating lease liabilities


20,526



Other long-term liabilities


9,291



10,212

Total liabilities


400,263



377,045

Stockholders' Equity






Preferred stock, $0.01 par value - 1,000,000 shares authorized, no shares issued or outstanding




Common stock, $0.01 par value - 125,000,000 shares authorized, 87,080,017 shares issued and 73,618,148 shares outstanding at December 31, 2019, 85,759,700 shares issued and 72,297,831 shares outstanding at September 30, 2019


871



857

Additional paid-in capital


1,926,350



1,921,954

Accumulated other comprehensive income


13,154



3,511

Treasury stock at cost - 13,461,869 shares


(200,956)



(200,956)

Accumulated deficit


(580,724)



(586,412)

Total stockholders' equity


1,158,695



1,138,954

Total liabilities and stockholders' equity

$

1,558,958


$

1,515,999

 

BROOKS AUTOMATION, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(In thousands)



Three Months Ended


December 31, 


2019


2018

Cash flows from operating activities






Net income

$

13,057


$

14,415

Adjustments to reconcile net income to net cash provided by operating activities:






Depreciation and amortization


16,477



11,838

Stock-based compensation


4,410



4,467

Amortization of premium on marketable securities and deferred financing costs


67



235

Earnings of equity method investments




(1,772)

Deferred income taxes


(8,183)



(7,682)

Other gains on disposals of assets


126



6

Loss on sale of divestiture, net of tax


319



Changes in operating assets and liabilities, net of acquisitions:






Accounts receivable


1,503



(13,826)

Inventories


(4,335)



(12,260)

Prepaid expenses and current assets


6,120



1,029

Accounts payable


5,255



7,932

Deferred revenue


(720)



6,385

Accrued warranty and retrofit costs


221



572

Accrued compensation and tax withholdings


(5,755)



(13,842)

Accrued restructuring costs


(203)



(181)

Accrued expenses and current liabilities


(2,616)



8,948

Net cash provided by operating activities


25,743



6,264

Cash flows from investing activities






Purchases of property, plant and equipment


(9,614)



(3,560)

Purchases of marketable securities


(10,742)



(1,290)

Sales of marketable securities




48,904

Maturities of marketable securities


33,584



2,557

Acquisitions, net of cash acquired




(445,210)

Net cash provided by (used) in investing activities


13,228



(398,599)

Cash flows from financing activities






Proceeds from term loans, net of discount




340,540

Principal payments on debt


(414)



(1,789)

Payments of capital leases


(319)



(121)

Common stock dividends paid


(7,369)



(7,208)

Net cash provided by (used in) financing activities


(8,102)



331,422

Effects of exchange rate changes on cash and cash equivalents


2,808



(1,004)

Net increase (decrease) in cash and cash equivalents


33,677



(61,917)

Cash and cash equivalents and restricted cash, beginning of period


305,171



197,708

Cash and cash equivalents and restricted cash, end of period

$

338,848


$

135,791







Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheets






Cash and cash equivalents

$

335,319


$

135,741

Restricted cash included in prepaid expenses and other current assets


3,529



50

Total cash, cash equivalents and restricted cash shown in the consolidated statements of cash flows

$

338,848


$

135,791

Notes on Non-GAAP Financial Measures:

These financial measures are used in addition to and in conjunction with results presented in accordance with GAAP and should not be relied upon to the exclusion of GAAP financial measures. Management adjusted the GAAP results for the impact of amortization of intangible assets, restructuring charges, purchase price accounting adjustments and charges related to M&A to provide investors better perspective on the results of operations which the Company believes is more comparable to the similar analysis provided by its peers. Management also excludes special charges and gains, such as impairment losses, gains and losses from the sale of assets, as well as other gains and charges that are not representative of the normal operations of the business. In this context, the Company has also removed the effect of reversing the valuation allowance reserve on the U.S. deferred income tax assets.  Management strongly encourages investors to review our financial statements and publicly-filed reports in their entirety and not rely on any single measure.



Quarter Ended



December 31, 2019


September 30, 2019


December 31, 2018





per diluted




per diluted




per diluted

Dollars in thousands, except per share data 




share




share




share

Net income from continuing operations


$

13,174


$

0.18


$

5,195


$

0.07


$

6,266


$

0.09

Adjustments:



















Purchase accounting impact on inventory and contracts acquired











184



0.00

Amortization of intangible assets



10,584



0.14



8,931



0.12



7,776



0.11

Restructuring charges



576



0.01



1,209



0.02



59



0.00

Loss on extinguishment of debt







5,288



0.07





Merger costs



195



0.00



134



0.00



6,354



0.09

Restructuring related charges







285



0.00





Adjustment of valuation allowance against deferred tax assets







(233)



(0.00)





Tax Reform  (1)











(1,125)



(0.02)

Tax adjustments (2)



(5,230)



(0.07)







(4,411)



(0.06)

Tax effect of adjustments 



(2,662)



(0.04)



(3,932)



(0.05)



(3,184)



(0.04)

Non-GAAP adjusted net income from continuing operations


$

16,637


$

0.23


$

16,877


$

0.23


$

11,919


$

0.17

   Stock based compensation, pre-tax



4,410



0.06



4,941



0.07



4,176



0.06

   Tax rate



15

%




15

%




15

%


Stock-based compensation, net of tax



3,749



0.05



4,200



0.06



3,550



0.05

Non-GAAP adjusted net income excluding stock-based compensation - continuing operations


$

20,386


$

0.28


$

21,077


$

0.29


$

15,469


$

0.21




















Shares used in computing non-GAAP diluted net income per share





73,645





72,558





72,165



(1)

Adjustments are related to U.S. Federal Tax Reform Transition Tax.



(2)

The Company elected to apply the tax benefit related to the stock compensation windfall realized in the quarters ended December 31, 2019 and 2018 to the non-GAAP full year tax rate.  The Company elected to exclude a deferred tax benefit realized in the three month period ended December 31, 2019 related to the extension of the 15 percent tax rate incentive in China and a deferred tax benefit realized in the three month period ended December 31, 2018 related to a change in the Company's state effective tax rate driven by the acquisition of GENEWIZ.

 














Quarter Ended




December 31, 


September 30,


December 31, 


Dollars in thousands


2019


2019


2018


GAAP net income


$

13,057


$

412,326


$

14,415


Adjustments:











Less: Loss (income) from discontinued operations



117



(407,131)



(8,149)


Less: Interest income



(699)



(602)



(423)


Add: Interest expense



737



902



5,290


Add: Income tax benefit



(2,963)



(511)



(5,830)


Add: Depreciation



5,891



5,094



4,060


Add: Amortization of completed technology



2,674



2,764



2,007


Add: Amortization of customer relationships and acquired intangible assets



7,910



6,167



5,769


Add: Loss on extinguishment of debt





5,288




Earnings before interest, taxes, depreciation and amortization


$

26,724


$

24,297


$

17,139


 














Quarter Ended




December 31, 


September 30,


December 31, 


Dollars in thousands


2019


2019


2018


Earnings before interest, taxes, depreciation and amortization


$

26,726


$

24,297


$

17,139


Adjustments:











Add: Stock-based compensation



4,410



4,941



4,176


Add: Restructuring charges



576



1,209



59


Add: Restructuring related charges





285




Add: Purchase accounting impact on inventory and contracts acquired







184


Add: Merger costs



195



134



6,354


Adjusted earnings before interest, taxes, depreciation and amortization


$

31,907


$

30,866


$

27,912


 






















Quarter Ended


Dollars in thousands


December 31, 2019


September 30, 2019


December 31, 2018

GAAP gross profit/margin percentage


$

84,986


40.4

%


$

80,153


40.2

%


$

72,081


40.2

%

Adjustments:



















Amortization of completed technology



2,674


1.3




2,764


1.4




2,007


1.1


Restructuring related charges







285


0.1






Purchase accounting impact on inventory and contracts acquired











184


0.1


Non-GAAP adjusted gross profit/gross margin percentage


$

87,660


41.6

%


$

83,202


41.8

%


$

74,272


41.4

%




















 






















Brooks Semiconductor Solutions Group



Quarter Ended

Dollars in thousands


December 31, 2019


September 30, 2019


December 31, 2018

GAAP gross profit/margin percentage


$

46,300


39.0

%


$

42,262


40.2

%


$

45,915


40.7

%

Adjustments:



















Amortization of completed technology



732


0.6




868


0.8




937


0.8


Purchase accounting impact on inventory and contracts acquired











184


0.2


Non-GAAP adjusted gross profit/margin percentage


$

47,032


39.6

%


$

43,130


41.1

%


$

47,036


41.7

%

 






















Brooks Life Sciences



Quarter Ended

Dollars in thousands


December 31, 2019


September 30, 2019


December 31, 2018

GAAP gross profit/margin percentage


$

38,686


42.2

%


$

37,891


40.2

%


$

26,166


39.3

%

Adjustments:



















Amortization of completed technology



1,942


2.1




1,896


2.0




1,070


1.6


Restructuring related charges







285


0.3






Non-GAAP adjusted gross profit/margin percentage


$

40,628


44.3

%


$

40,072


42.6

%


$

27,236


40.9

%

 































Brooks Semiconductor Solutions Group


Brooks Life Sciences


Total Segments



Quarter Ended


Quarter Ended


Quarter Ended



December 31, 


September 30,


December 31, 


December 31, 


September 30,


December 31, 


December 31, 


September 30,


December 31, 

Dollars in thousands


2019


2019


2018


2019


2019


2018


2019


2019


2018

GAAP operating profit


$

14,268


$

12,726


$

16,141


$

4,032


$

4,586


$

1,590


$

18,300


$

17,312


$

17,731

Adjustments:




























Amortization of completed technology



732



868



937



1,942



1,896



1,070



2,674



2,764



2,007

Purchase accounting impact on inventory and contracts acquired







184













184

Restructuring related charges











285







285



Non-GAAP adjusted operating profit


$

15,000


$

13,594


$

17,262


$

5,974


$

6,767


$

2,660


$

20,974


$

20,361


$

19,922

 































Total Segments


Corporate


Total



Quarter Ended


Quarter Ended


Quarter Ended



December 31, 


September 30,


December 31, 


December 31, 


September 30,


December 31, 


December 31, 


September 30,


December 31, 

Dollars in thousands


2019


2019


2018


2019


2019


2018


2019


2019


2018

GAAP operating profit (loss)


$

18,300


$

17,312


$

17,731


$

(7,634)


$

(6,702)


$

(12,398)


$

10,666


$

10,610


$

5,333

Adjustments:




























Amortization of completed technology



2,674



2,764



2,007









2,674



2,764



2,007

Amortization of customer relationships and acquired intangible assets









7,910



6,167



5,769



7,910



6,167



5,769

Restructuring charges









576



1,209



59



576



1,209



59

Purchase accounting impact on inventory and contracts acquired







184













184

Merger costs









195



134



6,354



195



134



6,354

Restructuring related charges





285














285



Non-GAAP adjusted operating profit (loss)


$

20,974


$

20,361


$

19,922


$

1,047


$

808


$

(216)


$

22,021


$

21,169


$

19,706





























 

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SOURCE Brooks Automation