Brooks Automation Reports Results of First Fiscal Quarter of 2019, Ended December 31, 2018

CHELMSFORD, Mass., Feb. 5, 2019 /PRNewswire/ -- Brooks Automation, Inc. (Nasdaq: BRKS) today reported financial results for the first fiscal quarter of 2019, ended December 31, 2018.



Summary




Quarter Ended








Dollars in millions, except per share data


December 31, 


September 30,



December 31, 


Change vs.






2018


2018



2017


Prior Quarter


Prior Year




Revenue


$

179


$

160



$

143


12

%

26

%



Semiconductor Solutions Group


$

113


$

109



$

95


4

%

18

%



Life Sciences


$

67


$

51



$

47


31

%

41

%





















   Diluted EPS Continuing Operations


$

0.09


$

(0.02)



$

0.02


NM


280

%



Diluted EPS Total


$

0.20


$

0.15



$

0.23


37

%

(14)

%





















   Non-GAAP Diluted EPS Cont. Operations


$

0.17


$

0.17



$

0.09


0

%

86

%





The Company provides additional non-GAAP information to provide investors a better perspective on the results of operations, which the Company believes is more comparable to the similar analysis provided by its peers.  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.

The Company announced on August 27, 2018 it had entered into a definitive agreement to sell the Semiconductor Cryogenics business to Edwards Vacuum LLC (a member of the Atlas Copco Group).  In accordance with GAAP, the Company is reporting the operating results of the Semiconductor Cryogenics business, for all periods presented, as discontinued operations.

Management Comments
"Our 2019 fiscal year is off to a strong start with overall Q1 revenue growing 26% from the prior year driven by double digit revenue growth in each of our business segments," commented Steve Schwartz, CEO of Brooks Automation. "The newly acquired GENEWIZ business is meeting our growth expectations and our Sample Management business increased organic growth to 8% and delivered a record quarter of new bookings.  And in a muted semiconductor market environment, the Semiconductor Solutions Group grew 4% sequentially, and 18% from the same quarter a year earlier.  The Brooks portfolio and team have never been stronger."

GAAP Summary, First Quarter, Fiscal 2019

  • EPS from continuing operations was $0.09 in the quarter compared to a loss of $0.02 in the fourth fiscal quarter of 2018. Revenue growth combined with 100 basis points of gross margin expansion to lift operating income to $5.3 million, 47% higher in the first fiscal quarter of 2019 compared to the fourth fiscal quarter of 2018. The improvement was partially driven by the acquisition of GENEWIZ, which was accretive to operating income in the quarter. Net interest expense increased $2.9 million compared to the fourth fiscal quarter, driven by additional debt taken at the time of the GENEWIZ acquisition. The Company reported a $5.8 million benefit from taxes in the quarter.
  • Revenue was $179 million in the first quarter, an increase of 12% compared to the fourth fiscal quarter of 2018, and 26% higher compared to the first fiscal quarter of 2018.
  • Life Sciences revenue was $67 million, 31% higher compared to the fourth quarter of 2018 and 41% higher on a year over year basis, inclusive of 8% organic growth. The GENEWIZ acquisition, which closed November 15, 2018, contributed $16 million of revenue in the quarter.
  • Semiconductor Solutions revenue was $113 million, 4% higher compared to the fourth quarter of 2018 and 18% higher on a year over year basis.
  • Cash flow from operations was $6 million in the quarter. The Company raised an additional $350 million of debt on November 15, 2018 to support the acquisition of GENEWIZ, which was purchased for a cash purchase price of approximately $450 million. At December 31, 2018, the ending balance of total debt was $541 million and the balance of cash, cash equivalents, and marketable securities was $138 million.

Non-GAAP Profit Discussion for Continuing Operations

  • Non-GAAP EPS for the quarter was $0.17, an improvement of 86% year over year. Improved earnings were driven predominantly by 26% year over year revenue growth and improved gross margins.
  • Non-GAAP gross margins were 41.4%, an improvement of 130 basis points compared to the fourth quarter of 2018 and 190 basis points higher than the first quarter of 2018. Life Sciences gross margins were 40.9%, up 440 basis points compared to the first quarter of 2018, driven by a 130 basis points improvement in Sample Management and the addition of the higher margin GENEWIZ business. The Semiconductor Solutions business also expanded margins 70 basis points year over year to 41.7%.
  • Adjusted EBITDA in the quarter was $28 million, up from $22 million in the prior quarter and $18 million in the first quarter of 2018. The adjusted EBITDA margin improved 150 basis points sequentially to 15.6% and reflects 320 basis points improvement from the first quarter of 2018.
  • Operating margin improved 160 basis points sequentially and 240 basis points from first quarter 2018 to 11.0% driven primarily by revenue growth and improved gross margins.
  • Net interest expense increased $2.9 million sequentially in the quarter to $4.9 million reflecting the additional debt utilized to fund the GENEWIZ acquisition.

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.

Pending Sale of the Semiconductor Cryogenics Business  
As previously disclosed, the completion of the sale of the Company's Semiconductor Cryogenics business is conditioned upon, among other things, certain regulatory approvals, including the approval of the Committee on Foreign Investment in the United States (CFIUS).  The Company and the buyer continue to pursue the necessary clearances, but now expect that the CFIUS process will extend into the second calendar quarter.  Accordingly, the Company now expects to complete the sale within the June quarter.  The Company and the buyer remain fully committed to completing the sale as expeditiously as possible. 

Quarterly Cash Dividend
The Company additionally announced that the Board of Directors has reiterated a dividend of $0.10 per share payable on March 22, 2019 to stockholders of record on March 1, 2019.  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 2019
The Company announced revenue and earnings guidance for the second quarter of fiscal 2019.  Revenue is expected to be in the range of $190 million to $200 million and non-GAAP diluted earnings per share from continuing operations is expected to be in the range of $0.07 to $0.12.  GAAP diluted earnings per share for the second quarter is expected to be in the range of $0.01 to $0.06.

Conference Call
Brooks management will webcast its first quarter earnings conference call today at 5:30 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 800-915-4217 (US & Canada only) or +1-212-231-2921 for international callers to listen to the live webcast.

About Brooks Automation, Inc.
Brooks is a leading worldwide provider of automation equipment and services solutions for multiple markets including semiconductor manufacturing and life sciences.  Brooks' automation technologies, engineering competencies and global service capabilities provide customers speed to market and ensure high uptime and rapid response, which equate to superior value in their mission-critical controlled environments.  Since 1978, Brooks has been a leading partner to the global semiconductor manufacturing market as a provider of precision automation and vacuum solutions.  In 2011, Brooks applied its automation and cryogenics expertise to meet the needs of the life sciences industry for reliable ultra-cold storage of compound and biological samples.  Today, Brooks' offers comprehensive sample management solutions including on-site infrastructure for temperatures of ‑20°C to -196°C, and outsource service solutions for collection, transport, processing, long-term storage, protection, retrieval and disposal of customer samples.  Brooks recently completed the strategic acquisition of GENEWIZ Group, expanding Brooks' sample-based offerings with a leading global capability in gene sequencing and synthesis services.  Brooks is headquartered in Chelmsford, MA, with operations in North America, Europe and Asia. For more information, visit www.brooks.com.

"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 about whether CFIUS will approve the sale of our Semiconductor Cryogenics business or the expected timing for completion of the sale, our revenue and earnings expectations, our ability to increase our profitability, our ability to improve or retain our market position, the expected financial results from our recently acquired GENEWIZ business 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; 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, the risk that CFIUS does not approve the sale of the Cryogenics business 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.

CONTACTS:
Sherry Dinsmore
Brooks Automation
978.262.2400
sherry.dinsmore@brooks.com

John Mills
Partner
ICR, LLC
646.277.1254
john.mills@icrinc.com

 

BROOKS AUTOMATION, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

(In thousands, except per share data)














Three Months Ended







December 31, 







2018


2017





Revenue











Products


$

141,732


$

105,772





Services



37,636



36,827





Total revenue



179,368



142,599





Cost of revenue











Products



83,481



63,529





Services



23,806



24,811





Total cost of revenue



107,287



88,340





Gross profit



72,081



54,259





Operating expenses











Research and development



13,148



11,405





Selling, general and administrative



53,541



37,929





Restructuring charges



59







Total operating expenses



66,748



49,334





Operating income



5,333



4,925





Interest income



423



149





Interest expense



(5,290)



(2,181)





Other expenses, net



(30)



(1,924)





Income before income taxes



436



969





Income tax benefit



(5,830)



(650)





Income from continuing operations



6,266



1,619





Income from discontinued operations, net of tax



8,149



14,867





Net income


$

14,415


$

16,486





Basic net income per share:











Basic net income per share from continuing operations



0.09



0.02





Basic net income per share from discontinued operations



0.11



0.21





Basic net income per share


$

0.20


$

0.23





Diluted net income per share:











Diluted net income per share from continuing operations



0.09



0.02





Diluted net income per share from discontinued operations



0.11



0.21





Diluted net income per share



0.20



0.23
















Dividend declared per share



0.10



0.10
















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











Basic



71,450



70,183





Diluted



72,165



70,864
















 

BROOKS AUTOMATION, INC.

CONSOLIDATED BALANCE SHEETS

 (In thousands, except share and per share data)








December 31, 


September 30,


2018


2018


(unaudited)




Assets






Current assets






Cash and cash equivalents

$

135,791


$

197,708

Marketable securities


28



46,281

Accounts receivable, net


164,516



125,192

Inventories


110,070



96,986

Prepaid expenses and other current assets


42,063



31,741

Current assets held for sale


68,334



66,148

Total current assets


520,802



564,056

Property, plant and equipment, net


96,124



59,988

Long-term marketable securities


2,489



7,237

Long-term deferred tax assets


23,287



43,798

Goodwill


490,525



255,876

Intangible assets, net


279,233



99,956

Other assets


22,304



5,294

Non-current assets held for sale


61,967



59,052

Total assets

$

1,496,731


$

1,095,257

Liabilities and Stockholders' Equity






Current liabilities






Current portion of long-term debt

$

9,527


$

2,000

Accounts payable


70,814



55,873

Deferred revenue


31,091



25,884

Accrued warranty and retrofit costs


6,851



6,340

Accrued compensation and benefits


20,799



29,322

Accrued restructuring costs


464



659

Accrued income taxes payable


6,131



6,746

Accrued expenses and other current liabilities


37,068



30,405

Current liabilities held for sale


8,335



7,388

Total current liabilities


191,080



164,617

Long-term debt


531,282



194,071

Long-term tax reserves


14,635



1,102

Long-term deferred tax liabilities


15,555



7,135

Long-term pension liabilities


4,499



4,255

Other long-term liabilities


8,979



5,547

Non-current liabilities held for sale


506



698

Total liabilities


766,536



377,425

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, 85,417,038 shares issued and 71,955,169 shares outstanding at December 31, 2018, 84,164,130 shares issued and 70,702,261 shares outstanding at September 30, 2018


854



841

Additional paid-in capital


1,902,888



1,898,434

Accumulated other comprehensive income


15,134



13,587

Treasury stock at cost - 13,461,869 shares


(200,956)



(200,956)

Accumulated deficit


(987,725)



(994,074)

Total stockholders' equity


730,195



717,832

Total liabilities and stockholders' equity

$

1,496,731


$

1,095,257

 

BROOKS AUTOMATION, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(In thousands)








Three Months Ended


December 31, 


2018


2017

Cash flows from operating activities






Net income

$

14,415


$

16,486

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






Depreciation and amortization


11,838



8,521

Stock-based compensation


4,467



4,809

Amortization of premium on marketable securities and deferred financing costs


235



122

Earnings of equity method investments


(1,772)



(2,180)

Deferred income tax benefit


(7,682)



(689)

Other gains on disposals of assets


6



Accounts receivable


(13,826)



(16,157)

Inventories


(12,260)



(5,518)

Prepaid expenses and current assets


1,695



3,285

Accounts payable


7,932



4,449

Deferred revenue


6,385



1,376

Accrued warranty and retrofit costs


572



87

Accrued compensation and tax withholdings


(13,842)



(11,145)

Accrued restructuring costs


(181)



(592)

Accrued expenses and current liabilities


8,282



362

Net cash provided by operating activities


6,264



3,216

Cash flows from investing activities






Purchases of property, plant and equipment


(3,560)



(2,700)

Purchases of marketable securities


(1,290)



(26,875)

Sales of marketable securities


48,904



Maturities of marketable securities


2,557



100

Acquisitions, net of cash acquired


(445,210)



(65,074)

Proceeds from sales of property, plant and equipment




200

Net cash used in investing activities


(398,599)



(94,349)

Cash flows from financing activities






Proceeds from term loan


340,540



197,554

Payment of deferred financing costs




(318)

Repayment of term loan


(1,789)



Repayment of capital lease


(121)



Common stock dividends paid


(7,208)



(7,057)

Net cash provided by financing activities


331,422



190,179

Effects of exchange rate changes on cash and cash equivalents


(1,004)



1,671

Net increase (decrease) in cash and cash equivalents


(61,917)



100,717

Cash and cash equivalents, beginning of period


197,708



101,622

Cash and cash equivalents, end of period

$

135,791


$

202,339

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, 2018


September 30, 2018


December 31, 2017





per diluted




per diluted




per diluted

Dollars in thousands, except per share data    




share




share




share

Net income (loss) from continuing operations


$

6,266


$

0.09


$

(1,212)


$

(0.02)


$

1,619


$

0.02

Adjustments:



















Purchase accounting impact on inventory and contracts acquired



184



0.00







1,160



0.02

Amortization of intangible assets



7,776



0.11



6,530



0.09



5,492



0.08

Restructuring charges



59



0.00



585



0.01





Merger costs



6,354



0.09



4,309



0.06



613



0.01

Adjustment of valuation allowance against deferred tax assets







690



0.01





Tax Reform - rate change applied to deferred tax liabilities (1)



(1,125)



(0.02)







(671)



(0.01)

Tax adjustments (2)



(4,411)



(0.06)









Tax effect of adjustments 



(3,184)



(0.04)



868



0.01



(1,920)



(0.03)

Non-GAAP adjusted net income from continuing operations


$

11,919


$

0.17


$

11,770


$

0.17


$

6,293


$

0.09

   Stock based compensation, pre-tax



4,176



0.06



4,587



0.06



4,563



0.06

   Tax rate



15

%




9

%




15

%


Stock-based compensation, net of tax



3,550



0.05



4,188



0.06



3,970



0.06

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


$

15,469


$

0.21


$

15,958


$

0.22


$

10,263


$

0.14




















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





72,165





71,085





70,864



(1)

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



(2)

The Company has elected to apply the tax benefit related to the stock compensation windfall realized in the quarter ended December 31, 2018 to the non-GAAP full year tax rate and to exclude the benefit of a change in the deferred tax benefit realized in the three months ended December 31, 2018 related to a change in the Company's state effective tax rate related to the acquisition of GENEWIZ. 

 































Quarter Ended





















December 31, 


September 30, 


December 31, 



















Dollars in thousands


2018


2018


2017



















GAAP net income


$

14,415


$

10,351


$

16,486



















Adjustments:




























Less: Discontinued operations



(8,149)



(11,563)



(14,867)



















Less: Interest income



(423)



(688)



(149)



















Add: Interest expense



5,290



2,679



2,181



















Add: Income tax provision (benefit)



(5,830)



2,580



(650)



















Add: Depreciation



4,060



3,122



2,835



















Add: Amortization of completed technology



2,007



1,487



904



















Add: Amortization of customer relationships and acquired intangible assets



5,769



5,043



4,588



















Earnings before interest, taxes, depreciation and amortization


$

17,139


$

13,011


$

11,328













































































Quarter Ended





















December 31, 


September 30, 


December 31, 



















Dollars in thousands


2018


2018


2017



















Earnings before interest, taxes, depreciation and amortization


$

17,139


$

13,011


$

11,328



















Adjustments:




























Add: Stock-based compensation



4,176



4,587



4,563



















Add: Restructuring charges



59



585





















Add: Purchase accounting impact on inventory and contracts acquired



184





1,160



















Add: Merger costs



6,354



4,309



613



















Adjusted earnings before interest, taxes, depreciation and amortization


$

27,912


$

22,492


$

17,664













































































Quarter Ended













December 31, 2018


September 30, 2018


December 31, 2017










Dollars in thousands


$


%


$


%


$


%










GAAP gross profit/gross margin percentage


$

72,081


40.2

%


$

62,620


39.2

%


$

54,259


38.1

%










Adjustments:




























Amortization of completed technology



2,007


1.1




1,487


0.9




904


0.6











Purchase accounting impact on inventory and contracts acquired



184


0.1








1,160


0.8











Non-GAAP adjusted gross profit/gross margin percentage


$

74,272


41.4

%


$

64,107


40.2

%


$

56,323


39.5

%




































































Brooks Semiconductor Solutions Group












Quarter Ended










Dollars in thousands


December 31, 2018


September 30, 2018


December 31, 2017










GAAP gross profit/margin percentage


$

45,915


40.7

%


$

43,774


40.2

%


$

38,494


40.5

%










Adjustments:




























Amortization of completed technology



937


0.8




1,152


1.1




533


0.6











Purchase accounting impact on inventory and contracts acquired



184


0.2



















Non-GAAP adjusted gross profit/margin percentage


$

47,036


41.7

%


$

44,926


41.3

%


$

39,027


41.0

%




































































Brooks Life Sciences












Quarter Ended










Dollars in thousands


December 31, 2018


September 30, 2018


December 31, 2017










GAAP gross profit/margin percentage


$

26,166


39.3

%


$

18,846


37.1

%


$

15,762


33.2

%










Adjustments:




























Amortization of completed technology



1,070


1.6




335


0.7




371


0.8











Purchase accounting impact on inventory and contracts acquired











1,160


2.4











Non-GAAP adjusted gross profit/margin percentage


$

27,236


40.9

%


$

19,181


37.7

%


$

17,293


36.5

%




































































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


2018


2018


2017


2018


2018


2017


2018


2018


2017

GAAP operating profit (loss)


$

16,141


$

13,316


$

11,718


$

1,590


$

382


$

(1,396)


$

17,731


$

13,698


$

10,322

Adjustments:




























Amortization of completed technology



937



1,152



533



1,070



335



371



2,007



1,487



904

Purchase accounting impact on inventory and contracts acquired



184











1,160



184





1,160

Non-GAAP adjusted operating profit


$

17,262


$

14,468


$

12,251


$

2,660


$

717


$

135


$

19,922


$

15,185


$

12,386



























































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


2018


2018


2017


2018


2018


2017


2018


2018


2017

GAAP operating profit (loss)


$

17,731


$

13,698


$

10,322


$

(12,398)


$

(10,082)


$

(5,397)


$

5,333


$

3,616


$

4,925

Adjustments:




























Amortization of completed technology



2,007



1,487



904









2,007



1,487



904

Amortization of customer relationships and acquired intangible assets









5,769



5,043



4,588



5,769



5,043



4,588

Restructuring charges









59



585



1



59



585



1

Purchase accounting impact on inventory and contracts acquired



184





1,160









184





1,160

Merger costs









6,354



4,309



613



6,354



4,309



613

Non-GAAP adjusted operating profit (loss)


$

19,922


$

15,185


$

12,386


$

(216)


$

(145)


$

(195)


$

19,706


$

15,040


$

12,191





























 

SOURCE Brooks Automation, Inc.