Brooks Automation Reports Results for the Fiscal Second Quarter of 2017, Ended March 31, 2017

CHELMSFORD, Mass., April 27, 2017 (GLOBE NEWSWIRE) -- Brooks Automation, Inc. (Nasdaq:BRKS), a leading worldwide provider of automation and cryogenic solutions for multiple markets, including semiconductor manufacturing and life sciences, today reported financial results for the second quarter of 2017, ended March 31, 2017.

Fiscal Second Quarter of 2017 Financial and Operational Highlights:

• Revenue was $169.3 million, 25% higher compared to Q2 2016 and 6% higher than Q1 2017;
• GAAP net income was $14.0 million with diluted EPS of $0.20;
• Non-GAAP net income was $19.8 million with diluted EPS of $0.28; and
• Cash flow from operations was $24.6 million.

Summary of GAAP and Non-GAAP Earnings

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

Management Comments

“In the second quarter, Brooks achieved several new performance milestones,” commented Steve Schwartz, CEO of Brooks Automation.  "Revenue grew 25% year over year, 6% sequentially, driven by continued strength in both segments. Life Sciences revenue grew 31% year over year and is more than 20% of total revenue despite strong Semiconductor growth, up 24% over the 2016 second quarter. Our strong top line contributed to the highest gross margins we have seen in more than ten years, $25 million of operating cash flow, and non-GAAP diluted earnings per share of $0.28 per share. Our continuing performance improvement is reflected in our results, and we thank our employees for their hard work and dedication to our customers."

GAAP Summary

Revenue for the second quarter of fiscal 2017 increased 6% to $169.3 million compared to the first quarter of fiscal 2017. The growth was driven by a 6% increase in the Brooks Semiconductor Solutions Group segment and a 4% increase in the Brooks Life Science Systems segment. Gross margin was 38.1%, up 250 basis points from the first quarter of fiscal 2017.  Operating expenses of $49.7 million increased 14% from the previous quarter.  Primary drivers of increased operating expense were higher accruals in this second fiscal quarter for performance-based compensation reflecting an improved performance outlook, and increased consulting expense.  In the second quarter, the Company incurred $0.9 million of restructuring charges compared to $1.0 million in the first quarter. GAAP net income in the second fiscal quarter was $14.0 million and diluted earnings per share was $0.20, which was even with the first fiscal quarter.

The amortization of intangible assets, restructuring charges, impact of purchase price accounting adjustments and special charges are appropriately included in the GAAP summary of earnings discussed above. The impact on earnings of such non-GAAP adjustments is referenced in the unaudited table included within this press release.

In the following analysis of the non-GAAP results, Brooks adjusted the GAAP results for the impact of amortization of intangible assets, restructuring charges, and purchase price accounting adjustments 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. Brooks also excludes special charges or gains, such as impairment losses, gains or losses from the sale of assets, as well as other gains and charges that are not representative of the normal operations of the business. Brooks currently includes a valuation allowance reserve against U.S. deferred tax assets in its GAAP results. In assessing the appropriate tax rate for the non-GAAP results, the Company evaluated the adjustments discussed above and concluded it was appropriate to maintain the valuation allowance reserve in deriving the non-GAAP tax rate.

Results of Fiscal Second Quarter of 2017 (Non-GAAP Discussion)

Non-GAAP net income was $19.8 million in the second quarter, resulting in non-GAAP earnings per share of $0.28. This compares to non-GAAP net income of $17.3 million and non-GAAP earnings per share of $0.25 in the first quarter of fiscal 2017, and non-GAAP net income of $4.9 million and non-GAAP earnings per share of $0.07 in the second quarter of fiscal 2016.

As noted above, revenue for the second fiscal quarter of 2017 was $169.3 million, up 6% compared to the first fiscal quarter of 2017. The semiconductor segment revenue increased 6% sequentially to $134.7 million.  While all key semiconductor product lines grew, cryogenic pump products led with 20% expansion from the first quarter. The life science segment revenue grew 4% sequentially to $34.7 million.  This segment reported a seasonal drop in genomic services of approximately $4 million dollars, where we observe customers consume remaining budgets in the December month.  Excluding the genomic services, the remaining balance of the life science segment grew 20% sequentially.  The primary growth driver was consumables and instruments, which expanded 45% sequentially and store systems which expanded 23%.

Adjusted gross margin, which excludes amortization, purchase accounting impacts and special charges, was 39.0% in the second quarter, up 270 basis points from the prior quarter.  The semiconductor segment non-GAAP adjusted gross margin was 38.7% in the second quarter compared to 36.4% in the prior period reflecting improved absorption of overhead, particularly in cryogenic pump products, and improved services cost of repair.  The life science segment non-GAAP adjusted gross margin was 40.1% in the second quarter compared to 35.7% in the prior period, primarily due to a lower mix of genomic service revenue within the BioStorage service offerings. In summary, the total non-GAAP adjusted gross profit increased by $8.0 million compared to the prior sequential quarter, driven by $9.4 million of increased revenue and improved margins across both segments.

Bookings for the semiconductor segment in the second quarter totaled $171.6 million, compared to $122.8 million in the first quarter.  The life science segment booked a total of $48.1 million of new contract value in the quarter, compared to $64.2 million in the first quarter.

Non-GAAP operating expense of $44.6 million increased 13%, or $5.1 million sequentially. The growth was $0.5 million in Research and Development expense, and $4.6 million in SG&A. The SG&A expansion was driven primarily by increased accruals for higher performance based compensation and increased consulting expense.

Adjusted EBITDA was $30.8 million, which improved 20% from the first fiscal quarter. The semiconductor segment reported non-GAAP segment operating profit of $20.8 million, or 15.4% of revenue. The life science segment reported $2.0 million of operating profit, or 5.7% of revenue.

Cash flow from operations was $24.6 million in the second quarter. The Company's cash, cash equivalents, and marketable securities was $110.1 million as of March 31, 2017, an increase of $21.1 million from the end of the first fiscal quarter.

Quarterly Cash Dividend

The Company additionally announced that the Board of Directors has reiterated a dividend of $0.10 per share payable on June 23, 2017 to stockholders of record on June 2, 2017. 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 Third Fiscal Quarter 2017

The Company announced revenue and earnings guidance for the third quarter of fiscal 2017. Revenue is expected to be in the range of $175 million to $180 million and non-GAAP diluted earnings per share is expected to be in the range of $0.29 to $0.33. GAAP diluted earnings per share for the third quarter is expected to be in the range of $0.21 to $0.25, reflecting the impact of amortization, purchase price accounting and anticipated restructuring charges.

Conference Call

Brooks management will webcast its second 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 800-679-0308 for domestic callers and +1 303-223-2684 for international callers.

About Brooks Automation, Inc.

Brooks is a leading worldwide provider of automation and cryogenic solutions for multiple markets, including semiconductor manufacturing and life sciences. Brooks' 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 cryogenic vacuum solutions.  Since 2011, Brooks has applied its automation and cryogenics expertise to meet the sample storage needs of customers in the life sciences industry.  Brooks' life sciences offerings include a broad range of products and services for on-site infrastructure for sample management in temperatures of ‑20°C to -150°C, as well as comprehensive outsource service solutions across the complete life cycle of biological samples including collection, transportation, processing, storage, protection, retrieval and disposal.  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 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; 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.

CONTACTS:
Lynne Yassemedis
Brooks Automation
978.262.2400
lynne.yassemedis@brooks.com 

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

Notes on Non-GAAP Financial Measures:
The information in this press release is for: internal managerial purposes; when publicly providing guidance on future results; and as a means to evaluate period-to-period comparisons. 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 believes these financial measures provide an additional way of viewing aspects of our operations, that, when viewed with our GAAP results and the accompanying reconciliations to the corresponding GAAP financial measures, provide a more complete understanding of our business. Management strongly encourages investors to review our financial statements and publicly-filed reports in their entirety and not rely on any single measure.

The press release includes financial measures which exclude the effects of special charges such as restructuring charges and acquisition related charges. Management believes these measures are useful to investors because it eliminates accounting charges that do not reflect Brooks' day-to-day operations. Tables reconciling GAAP to the non-GAAP measures are presented below.