Brooks Automation Reports Fourth Quarter Results of Fiscal Year Ended September 30, 2017

CHELMSFORD, Mass., Nov. 09, 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 fourth quarter of the fiscal year ended September 30, 2017.

Fiscal Fourth Quarter of 2017 Financial and Operational Highlights:

• Total revenue was $182 million;  15% growth compared to 2016 Q4;
• Life Sciences revenue was $44 million;  39% growth vs. 2016 Q4;
• Semiconductor revenue was $138 million; 10% growth vs. 2016 Q4;
• GAAP Net Income was $17 million with diluted EPS of $0.25;
• Non-GAAP Net Income was $25 million with diluted EPS of $0.35; and
• Cash flow from operations was $35 million.

Fiscal Year 2017 Financial and Operational Highlights:

• Total revenue was $693 million;  24% growth compared to 2016, with 22% organic growth;
• Life Sciences revenue was $149 million; 38% growth, with 27% organic growth;
• Semiconductor revenue was $544 million;  20% growth, with all being organic growth;
• GAAP Net Income was $63 million with diluted EPS of $0.89;
• Non-GAAP Net Income was $87 million with diluted EPS of $1.23; and
• Cash flow from operations was $96 million.

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
“Our fiscal 2017 has been a year filled with key milestones and the fourth quarter was no exception. We achieved another record for gross margins in our Semiconductor segment and for the Company, while we continued to expand our Life Sciences business,” commented Steve Schwartz, CEO of Brooks Automation.  “Life Sciences revenue grew 20% quarter over quarter to comprise 24% of our fourth quarter revenue. In early October we purchased 4titude, which will complement our existing Life Sciences business and continue to drive our Life Science’s revenue growth.  For the full fiscal year 2017, we delivered 24% top-line growth and 163% adjusted EPS growth with both segments contributing materially to this solid performance.  We finished the year in a strong position and we are poised for continued momentum in fiscal year 2018.”

GAAP Summary of Q4 Fiscal 2017
Revenue for the fourth quarter of fiscal 2017 was $182 million, flat compared to the third quarter of fiscal 2017 and 15% higher than the fourth fiscal quarter of 2016.  The flat sequential revenue reflected growth of 20% in the Brooks Life Sciences Systems segment offset by an expected 5% decline in the Brooks Semiconductor Solutions Group segment.  The year-over-year 15% growth was driven by 39% growth in Life Sciences and 10% growth in Semiconductor Solutions.  Total gross margin was 40.9% which improved 150 basis points from the third quarter of fiscal 2017.  Operating expenses of $57 million increased 8%, or $4 million, from the previous quarter, driven primarily by higher non-cash stock incentive accruals and increased R&D costs.  In the fourth quarter, the Company incurred $0.6 million of restructuring charges, compared to $0.8 million in the third quarter. GAAP net income in the quarter was $17 million and diluted earnings per share was $0.25.

The amortization of intangible assets, restructuring charges, impact of purchase price accounting adjustments, charges related to M&A 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, 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. 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 assessed to not be 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.

Discussion of Non-GAAP Results
Non-GAAP net income was $25 million in the fourth quarter, resulting in non-GAAP earnings per share of $0.35. This compares to non-GAAP net income of $25 million and non-GAAP earnings per share of $0.36 in the third quarter of fiscal 2017, and non-GAAP net income of $15 million and non-GAAP earnings per share of $0.22 in the fourth quarter of fiscal 2016.

As noted above, revenue for the fourth fiscal quarter of 2017 was $182 million, flat compared to the third fiscal quarter of 2017.  As projected, the Semiconductor Solutions revenue was 5% lower in the fourth quarter compared to the third quarter, largely driven by lower Contamination Control Solutions sales.  Growth in the Life Sciences segment offset this decline, with revenue growth of $7.2 million or 20% sequentially to $44 million.  Storage services, store systems, cryo systems, and consumables all expanded, contributing $3.7 million of the total growth.  Life Sciences also added $3.5 million of revenue from businesses acquired in the quarter, primarily from the PBMMI storage services business. 

Adjusted gross margin was 41.3% in the fourth quarter, up 130 basis points from the prior quarter.  The Semiconductor Solutions segment adjusted gross margin was 42.3% in the fourth quarter compared to 40.5% in the prior quarter reflecting improved production costs and revenue mix.  The Life Sciences segment adjusted gross margin was 38.2% in the fourth quarter compared to 38.0% in the prior quarter, supported by improved margins in the core systems business.  In summary, the total adjusted gross profit increased by $2.5 million compared to the prior quarter, supported by 20% growth of adjusted gross profit in Life Sciences and approximately flat adjusted gross profit in the Semiconductor segment on lower revenue with higher margins.

Bookings for the Semiconductor Solutions segment in the fourth quarter totaled $142 million, compared to $131 million in the third quarter.  Backlog for the segment finished at $115 million, $4 million above the third quarter ending backlog.  Bookings in the Life Sciences segment totaled $35 million of new contract value in the fourth quarter, compared to $42 million in the third quarter. 

Fourth quarter non-GAAP operating expenses were $49 million, an increase of 10%, or $4.3 million, compared to the third quarter.  The sequential change was driven by a 10% increase in SG&A and a 7% increase in R&D.  Within operating expenses, $2.0 million of the increase was a non-cash charge to the stock compensation accrual for long term incentive plans.

Adjusted EBITDA was $37 million in the fourth quarter, an improvement of $0.8 million, or 2%, compared to the third fiscal quarter.  Cash flow from operations increased from $18 million in the third quarter to $35 million in the fourth quarter, and culminated in $96 million total cash from operations for fiscal 2017.  The Company's balance of cash, cash equivalents, and marketable securities was $104 million as of September 30, 2017 compared to $120 million at the end of the third quarter.  Impacting cash on the balance sheet were dividends paid of $7 million and  cash used for acquisitions of $39 million.

Fiscal Year 2017 Results (non-GAAP discussion)
For fiscal 2017, total revenue increased 24% to $693 million compared to revenue of $560 million for fiscal 2016 with Life Science revenue growth of 38% and Semiconductor Solutions growth of 20%.  Adjusted net income was $87 million, which improved 167% compared to $33 million of adjusted net income in fiscal year 2016.

Subsequent Events
On October 5, 2017, the Company announced the acquisition of 4titude, Ltd., a manufacturer of scientific consumables for biological sample materials used in a variety of genomic analytical applications, for approximately $66 million in cash, subject to customary working capital and other adjustments.  The Company also announced it had secured a seven year $200 million senior secured term loan.  

Quarterly Cash Dividend
The Company additionally announced that the Board of Directors has reiterated a dividend of $0.10 per share payable on December 22, 2017 to stockholders of record on December 1, 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 First Quarter of Fiscal 2018
The Company announced revenue and earnings guidance for the first quarter of fiscal 2018. Revenue is expected to be in the range of $182 million to $188 million. The Company’s newly established debt is estimated to drive $2.2 million of interest expense. Non-GAAP diluted earnings per share is expected to be in the range of $0.27 to $0.32. GAAP diluted earnings per share for the first quarter is expected to be in the range of $0.19 to $0.24, reflecting the impact of amortization, purchase price accounting, charges related to M&A and anticipated restructuring charges.

Conference Call
Brooks management will webcast its fourth quarter earnings conference call today at 8:30 a.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 800-954-0648 (US & Canada only) or 415-226-5357 to listen to the live webcast.
           
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.

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. Brooks currently includes a valuation allowance reserve against U.S. deferred tax assets in its GAAP results. In assessing the appropriate tax rate for non-GAAP results, the Company evaluated the adjustments discussed above and concluded it was appropriate to maintain the valuation allowance reserve in establishing the non-GAAP tax rate. Management strongly encourages investors to review our financial statements and publicly-filed reports in their entirety and not rely on any single measure.

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