UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

	For the quarterly period ended: June 30, ~~2021~~2022

	OR

☐	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from __________ to _________

Commission File Number 000-25434

~~BROOKS AUTOMATION,~~AZENTA, INC.

(Exact name of registrant as specified in its charter)


Delaware	04-3040660
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

15 Elizabeth Drive

Chelmsford, Massachusetts

(Address of principal executive offices)

01824

(Zip Code)

Registrant’s telephone number, including area code: (978) 262-2400

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	~~BRKS~~AZTA	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:


Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date, ~~July 29, 2021:~~August 7, 2022: common stock, $0.01 par value and ~~74,296,729~~75,020,404 shares outstanding.

Table of Contents

~~BROOKS AUTOMATION,~~AZENTA, INC.

Table of Contents

	PAGE NUMBER

PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets as of June 30, ~~2021 (unaudited)~~2022 and September 30, ~~2020~~2021 (unaudited)	3
Consolidated Statements of Operations for the three and nine months ended June 30, ~~2021~~2022 and ~~2020~~2021 (unaudited)	4
Consolidated Statements of Comprehensive (Loss) Income for the three and nine months ended June 30, ~~2021~~2022 and ~~2020~~2021 (unaudited)	5
Consolidated Statements of Cash Flows for the nine months ended June 30, ~~2021~~2022 and ~~2020~~2021 (unaudited)	6
Consolidated Statements of Changes in Stockholders Equity for the three and nine months ended June 30, ~~2021~~2022 and ~~2020~~2021 (unaudited)	7
Notes to Consolidated Financial Statements (unaudited)	8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	3335
Item 3. Quantitative and Qualitative Disclosures About Market Risk	4750
Item 4. Controls and Procedures	4951
PART II. OTHER INFORMATION
Item 1. Legal Proceedings	5052
Item 1A. Risk Factors	5052
Item 6. Exhibits	5152
Signatures	5253

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

~~BROOKS AUTOMATION,~~AZENTA, INC.

CONSOLIDATED BALANCE SHEETS

(unaudited)

(In thousands, except share and per share data)

June 30,

September 30,

2021

2020
Assets




Current assets




Cash and cash equivalents

$
269,862

$
295,649
Marketable securities

101

67
Accounts receivable, net

234,079

188,291
Inventories

154,720

114,834
Prepaid expenses and other current assets

58,455

50,612
Total current assets

717,217

649,453
Property, plant and equipment, net

146,522

117,665
Long-term marketable securities

3,637

3,101
Long-term deferred tax assets

4,447

4,979
Goodwill

551,326

501,536
Intangible assets, net

254,937

218,325
Other assets

85,169

64,066
Total assets

$
1,763,255

$
1,559,125
Liabilities and Stockholders' Equity


Current liabilities


Current portion of long-term debt

$
—

$
827
Accounts payable

98,192

61,758
Deferred revenue

35,421

31,357
Accrued warranty and retrofit costs

8,132

8,201
Accrued compensation and benefits

43,803

43,267
Accrued restructuring costs

29

181
Accrued income taxes payable

22,232

10,094
Accrued expenses and other current liabilities

103,251

55,433
Total current liabilities

311,060

211,118
Long-term debt

49,651

49,588
Long-term tax reserves

18,410

19,168
Long-term deferred tax liabilities

16,295

17,798
Long-term pension liabilities

6,536

6,406
Long-term operating lease liabilities

45,034

31,855
Other long-term liabilities

8,440

9,578
Total liabilities

455,426

345,511
Commitments and contingencies (Note 17)




Stockholders' Equity




Preferred stock, $0.01 par value - 1,000,000 shares authorized, 0 shares issued or outstanding

—

—
Common stock, $0.01 par value - 125,000,000 shares authorized, 87,758,598 shares issued and 74,296,729 shares outstanding at June 30, 2021, 87,293,710 shares issued and 73,831,841 shares outstanding at September 30, 2020

878

873
Additional paid-in capital

1,965,705

1,942,850
Accumulated other comprehensive income

26,619

21,919
Treasury stock, at cost - 13,461,869 shares

(200,956)

(200,956)
Accumulated deficit

(484,417)

(551,072)
Total stockholders' equity

1,307,829

1,213,614
Total liabilities and stockholders' equity

$
1,763,255

$
1,559,125


	June 30,		September 30,
	2022		2021


Assets
Current assets
Cash and cash equivalents	$	1,474,189	$	227,427
Marketable securities		709,063		81
Accounts receivable, net of allowance for expected credit losses ($4,326 and $4,318, respectively)		150,274		119,877
Inventories		81,213		60,398
Prepaid expenses and other current assets		160,557		58,198
Current assets held for sale		—		311,385
Total current assets		2,575,296		777,366
Property, plant and equipment, net		154,596		130,719
Long-term marketable securities		312,027		3,598
Long-term deferred tax assets		1,926		10,043
Goodwill		464,885		469,356
Intangible assets, net		160,691		186,534
Other assets		53,296		58,068
Non-current assets held for sale		—		183,828
Total assets	$	3,722,717	$	1,819,512
Liabilities and stockholders' equity
Current liabilities
Accounts payable	$	34,576	$	42,360
Deferred revenue		33,132		25,724
Accrued warranty and retrofit costs		2,524		2,330
Accrued compensation and benefits		44,279		33,183
Accrued restructuring costs		169		304
Accrued income taxes payable		7,095		8,711
Accrued expenses and other current liabilities		73,152		103,537
Current liabilities held for sale		—		128,939
Total current liabilities		194,927		345,088
Long-term debt		—		49,677
Long-term tax reserves		1,681		1,973
Long-term deferred tax liabilities		44,286		13,030
Long-term pension liabilities		698		705
Long-term operating lease liabilities		46,719		45,088
Other long-term liabilities		6,620		6,173
Non-current liabilities held for sale		—		32,444
Total liabilities		294,931		494,178
Commitments and contingencies (Note 16)
Stockholders' equity
Preferred stock, $0.01 par value - 1,000,000 shares authorized, 0 shares issued or outstanding		—		—
Common stock, $0.01 par value - 125,000,000 shares authorized, 88,451,223 shares issued and 74,989,354 shares outstanding at June 30, 2022, 87,808,922 shares issued and 74,347,053 shares outstanding at September 30, 2021		885		878
Additional paid-in capital		1,990,281		1,976,112
Accumulated other comprehensive income		(38,493)		19,351
Treasury stock, at cost - 13,461,869 shares at June 30, 2022 and September 30, 2021		(200,956)		(200,956)
Retained earnings (accumulated deficit)		1,676,069		(470,051)
Total stockholders' equity		3,427,786		1,325,334
Total liabilities and stockholders' equity	$	3,722,717	$	1,819,512

The accompanying notes are an integral part of these unaudited consolidated financial statements.

Table of Contents

~~BROOKS AUTOMATION,~~AZENTA, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

(In thousands, except per share data)

Three Months Ended

Nine Months Ended

June 30,

June 30,


2021

2020

2021

2020


Revenue









Products

$
215,843

$
142,323

$
565,829

$
413,329

Services

99,506

78,027

285,610

237,748

Total revenue

315,349

220,350

851,439

651,077

Cost of revenue









Products

120,387

81,989

317,472

245,930

Services

50,562

45,573

149,165

137,092

Total cost of revenue

170,949

127,562

466,637

383,022

Gross profit

144,400

92,788

384,802

268,055

Operating expenses









Research and development

18,284

14,004

51,310

43,727

Selling, general and administrative

75,883

59,714

221,646

178,866

Restructuring charges

—

(29)

179

1,125

Total operating expenses

94,167

73,689

273,135

223,718

Operating income

50,233

19,099

111,667

44,337

Interest income

409

29

503

865

Interest expense

(477)

(810)

(1,485)

(2,265)

Other income (expenses), net

(1,625)

498

(147)

(1,318)

Income before income taxes

48,540

18,816

110,538

41,619

Income tax provision

9,370

5,120

20,428

5,557

Income from continuing operations

39,170

13,696

90,110

��
36,062

Loss from discontinued operations, net of tax

(4)

—

(1,168)

(182)

Net income

$
39,166

$
13,696

$
88,942

$
35,880

Basic net income per share:









Income from continuing operations

$
0.53

$
0.19

$
1.21

$
0.49

Loss from discontinued operations, net of tax

(0.00)

—

(0.02)

(0.00)

Basic net income per share

$
0.53

$
0.19

$
1.20

$
0.49

Diluted net income per share:









Income from continuing operations

$
0.53

$
0.19

$
1.21

$
0.49

Loss from discontinued operations, net of tax

(0.00)

—

(0.02)

(0.00)

Diluted net income per share

$
0.53

$
0.19

$
1.20

$
0.49

Weighted average shares used in computing net income per share:









Basic

74,296

73,759

74,195

73,473

Diluted

74,495

73,860

74,420

73,766


	Three Months Ended				Nine Months Ended
	June 30,				June 30,
	2022		2021		2022		2021

Revenue
Products	$	42,688	$	44,169	$	138,006	$	131,864
Services		90,047		84,918		279,925		244,900
Total revenue		132,735		129,087		417,931		376,764
Cost of revenue
Products		24,090		23,603		73,565		69,183
Services		49,045		43,053		146,897		129,915
Total cost of revenue		73,135		66,656		220,462		199,098
Gross profit		59,600		62,431		197,469		177,666
Operating expenses
Research and development		6,515		5,489		19,895		15,813
Selling, general and administrative		58,133		57,825		187,361		171,648
Restructuring charges		25		-		319		53
Total operating expenses		64,673		63,314		207,575		187,514
Operating loss		(5,073)		(883)		(10,106)		(9,847)
Interest income		6,822		409		9,933		503
Interest expense		(2,101)		(477)		(4,111)		(1,485)
Loss on extinguishment of debt		—		—		(632)		—
Other income (expenses), net		630		(1,651)		(1,617)		(263)
Income (loss) before income taxes		278		(2,602)		(6,533)		(11,092)
Income tax provision (benefit)		7,293		(760)		(560)		(4,620)
Loss from continuing operations		(7,015)		(1,842)		(5,973)		(6,472)
(Loss) income from discontinued operations, net of tax		(2,555)		41,008		2,159,597		95,414
Net (loss) income	$	(9,570)	$	39,166	$	2,153,624	$	88,942
Basic net (loss) income per share:
Loss from continuing operations	$	(0.09)	$	(0.02)	$	(0.08)	$	(0.09)
(Loss) income from discontinued operations, net of tax		(0.03)		0.55		28.84		1.29
Basic net (loss) income per share	$	(0.13)	$	0.53	$	28.76	$	1.20
Diluted net (loss) income per share:
Loss from continuing operations	$	(0.09)	$	(0.02)	$	(0.08)	$	(0.09)
(Loss) income from discontinued operations, net of tax		(0.03)		0.55		28.84		1.29
Diluted net (loss) income per share	$	(0.13)	$	0.53	$	28.76	$	1.20
Weighted average shares used in computing net income per share:
Basic		74,989		74,296		74,879		74,195
Diluted		74,989		74,296		74,879		74,195

The accompanying notes are an integral part of these unaudited consolidated financial statements.

Table of Contents

~~BROOKS AUTOMATION,~~AZENTA, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(unaudited)

(In thousands)

Three Months Ended

Nine Months Ended

June 30,

June 30,


2021

2020

2021

2020

Net income

$
39,166

$
13,696

$
88,942

$
35,880

Other comprehensive income, net of tax:









Foreign currency translation adjustments

4,003

3,691

4,721

7,484

Unrealized gains (losses) on marketable securities, net of tax effects of $0 during each of the three and nine months ended June 30, 2021, and $0 during each of the three and nine months ended June 30, 2020

—

—

7

Actuarial losses, net of tax effects of $3 and $4 during the three and nine months ended June 30, 2021, respectively, $2 and $4 during the three and nine months ended June 30, 2020, respectively

(21)

(13)

(20)

(25)

Total other comprehensive income, net of tax

3,982

3,678

4,701

7,466

Comprehensive income

$
43,148

$
17,374

$
93,643

$
43,346


	Three Months Ended				Nine Months Ended
	June 30,				June 30,
	2022		2021		2022		2021

Net (loss) income	$	(9,570)	$	39,166	$	2,153,624	$	88,942
Other comprehensive (loss) income, net of tax:
Foreign currency translation reclassification adjustments included in income from discontinued operation (Note 2)		—		—		(16,567)		—
Net investment hedge currency translation adjustment, net of tax effects of $13,815 and $16,733, respectively, for the three and nine months ended June 30, 2022.		41,956		—		49,081		—
Foreign currency translation adjustments		(70,179)		4,003		(85,160)		4,721
Unrealized loss on marketable securities, net of tax effects of $(911) and $(1,809), respectively, for the three and nine months ended June 30, 2022		(2,898)		—		(5,306)		—
Actuarial gains, net of tax effects of $7 and $27 during the three and nine months ended June 30, 2022, ($2) and $4 during the three and nine months ended June 30, 2021		26		(21)		108		(20)
Total other comprehensive (loss) income, net of tax		(31,095)		3,982		(57,844)		4,701
Comprehensive (loss) income	$	(40,665)	$	43,148	$	2,095,780	$	93,643

The accompanying notes are an integral part of these unaudited consolidated financial statements.

Table of Contents

~~BROOKS AUTOMATION,~~AZENTA, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(In thousands)

Nine Months Ended

June 30,


2021

2020


Cash flows from operating activities





Net income

$
88,942

$
35,880

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

Depreciation and amortization

48,684

49,760

Impairment of property, plant and equipment

—

301

Stock-based compensation

20,277

12,348

Amortization of premium on marketable securities and deferred financing costs

169

177

Deferred income taxes

(10,293)

(9,319)

Other losses on disposals of assets

225

163

Adjustment to the gain on divestiture, net of tax

948

319

Taxes paid stemming from divestiture

—

(91,500)

Accounts receivable

(40,286)

(15,719)

Inventories

(32,532)

(17,695)

Prepaid expenses and other assets

4,000

12,554

Accounts payable

23,327

11,032

Deferred revenue

(1,564)

214

Accrued warranty and retrofit costs

(286)

580

Accrued compensation and tax withholdings

(338)

1,928

Accrued restructuring costs

(153)

(609)

Accrued expenses and other liabilities

21,625

(4,347)

Net cash provided by (used in) operating activities

122,745

(13,933)

Cash flows from investing activities





Purchases of property, plant and equipment

(34,606)

(29,685)

Purchases of marketable securities

(100)

(10,843)

Sales of marketable securities

25

2,492

Maturities of marketable securities

25

42,226

Adjustment to proceeds from divestiture

(1,802)

—

Acquisitions, net of cash acquired

(92,375)

(15,743)

Issuance of a note receivable

—

(1,000)

Net cash used in investing activities

(128,833)

(12,553)

Cash flows from financing activities





Proceeds from issuance of common stock

2,583

2,332

Principal payments on debt

(828)

(828)

Payments of finance leases

(915)

(957)

Common stock dividends paid

(22,288)

(22,127)

Net cash used in financing activities

(21,448)

(21,580)

Effects of exchange rate changes on cash and cash equivalents

7,582

3,095

Net decrease in cash, cash equivalents and restricted cash

(19,954)

(44,971)

Cash, cash equivalents and restricted cash, beginning of period


302,526


305,171


Cash, cash equivalents and restricted cash, end of period

$
282,572

$
260,200


Supplemental disclosure of non-cash investing and financing activities:



Purchases of property, plant and equipment included in accounts payable

$
14,516

$
2,020

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

Cash and cash equivalents

$
269,862

$
256,633

Short-term restricted cash included in prepaid expenses and other current assets

3,570

3,567

Long-term restricted cash included in other assets

9,140

—

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

$
282,572

$
260,200


	Nine Months Ended
	June 30,
	2022		2021

Cash flows from operating activities
Net income	$	2,153,624	$	88,942
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		38,813		48,684
Stock-based compensation		10,715		20,277
Amortization of deferred financing costs and unrealized gains/losses on investments		(7,048)		169
Deferred income taxes		24,207		(10,293)
Loss on extinguishment of debt		632		—
(Gain) loss on disposals of property, plant and equipment		(100)		—
Gain on divestiture, net of tax		(2,128,761)		225
Adjustment to the gain on divestiture of semiconductor cryogenics business, net of tax		—		948
Fees paid stemming from divestiture		(52,461)		—
Taxes paid stemming from divestiture		(431,600)		—
Changes in operating assets and liabilities, net of acquisitions and divestiture:
Accounts receivable		(16,298)		(40,286)
Inventories		(61,345)		(32,532)
Prepaid expenses and other assets		(61,692)		4,000
Accounts payable		(8,320)		23,327
Deferred revenue		8,580		(1,564)
Accrued warranty and retrofit costs		(28)		(286)
Accrued compensation and tax withholdings		13,835		(338)
Accrued restructuring costs		(126)		(153)
Accrued expenses and other		41,693		21,626
Net cash (used in) provided by operating activities		(475,680)		122,745
Cash flows from investing activities
Purchases of property, plant and equipment		(59,730)		(34,606)
Purchases of technology intangibles		(4,000)		—
Purchases of marketable securities		(1,525,993)		(100)
Sales and maturities of marketable securities		503,505		50
Proceeds from divestiture, net of cash transferred		2,926,286		—
Acquisitions, net of cash acquired		—		(94,178)
Net cash provided by (used in) investing activities		1,840,068		(128,834)
Cash flows from financing activities
Proceeds from issuance of common stock		3,461		2,583
Principal payments on debt		(49,725)		(828)
Payments of finance leases		(355)		(915)
Payment for contingent consideration related to acquisition		(10,400)		—
Common stock dividends paid		(7,494)		(22,288)
Net cash used in financing activities		(64,513)		(21,448)
Effects of exchange rate changes on cash and cash equivalents		(98,972)		7,582
Net increase (decrease) in cash, cash equivalents and restricted cash		1,200,903		(19,955)
Cash, cash equivalents and restricted cash, beginning of period		285,333		257,526
Cash, cash equivalents and restricted cash, end of period	$	1,486,236	$	237,571
Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheets
	June 30,		September 30,
	2022		2021
Cash and cash equivalents of continuing operations	$	1,474,189	$	227,427
Cash and cash equivalents included in assets held for sale		—		45,000
Short-term restricted cash included in prepaid expenses and other current assets		11,564		7,145
Long-term restricted cash included in other assets		483		5,761
Total cash, cash equivalents and restricted cash shown in the consolidated statements of cash flows	$	1,486,236	$	285,333

The accompanying notes are an integral part of these unaudited consolidated financial statements.

Table of Contents

~~BROOKS AUTOMATION,~~AZENTA, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY

(unaudited)

(In thousands, except share data)

Common

Accumulated

Common

Stock at

Additional

Other

Stock

Par

Paid-In

Comprehensive

Accumulated

Treasury

Total

Shares

Value

Capital

Income

Deficit

Stock

Equity
Balance March 31, 2021

87,755,666

$
878

$
1,959,619

$
22,637

$
(516,152)

$
(200,956)

$
1,266,026
Shares issued under restricted stock and purchase plans, net

2,932

—

—

—
Stock-based compensation

6,086







6,086
Common stock dividends declared, at $0.10 per share







(7,431)



(7,431)
Foreign currency translation adjustments







4,003





4,003
Actuarial loss, net of tax effects of $3







(21)





(21)
Net income







39,166



39,166
Balance June 30, 2021

87,758,598

$
878

$
1,965,705

$
26,619

$
(484,417)

$
(200,956)

$
1,307,829

Balance March 31, 2020

87,214,622

$
872

$
1,932,893

$
7,299

$
(578,975)

$
(200,956)

$
1,161,133
Shares issued under restricted stock and purchase plans, net

7,493

—

1

1
Stock-based compensation

3,725







3,725
Common stock dividends declared, at $0.10 per share







(7,380)



(7,380)
Foreign currency translation adjustments







3,691





3,691
Actuarial losses, net of tax effects of $2







(13)





(13)
Net income







13,696



13,696
Balance June 30, 2020

87,222,115

$
872

$
1,936,619

$
10,977

$
(572,659)

$
(200,956)

$
1,174,853

Balance September 30, 2020

87,293,710

$
873

$
1,942,850

$
21,919

$
(551,072)

$
(200,956)

$
1,213,614
Shares issued under restricted stock and purchase plans, net

464,888

5

2,578

2,583
Stock-based compensation

20,277







20,277
Common stock dividends declared, at $0.30 per share







(22,287)



(22,287)
Foreign currency translation adjustments







4,720





4,720
Actuarial loss, net of tax effects of $4







(20)





(20)
Net income







88,942



88,942
Balance June 30, 2021

87,758,598

$
878

$
1,965,705

$
26,619

$
(484,417)

$
(200,956)

$
1,307,829

Balance September 30, 2019

85,759,700

$
857

$
1,921,954

$
3,511

$
(586,412)

$
(200,956)

$
1,138,954
Shares issued under restricted stock and purchase plans, net

1,462,415

15

2,317

2,332
Stock-based compensation

12,348







12,348
Common stock dividends declared, at $0.30 per share







(22,127)



(22,127)
Foreign currency translation adjustments







7,484





7,484
Changes in unrealized losses on marketable securities, net of tax effects of $0







7





7
Actuarial losses, net of tax effects of $4







(25)





(25)
Net income







35,880



35,880
Balance June 30, 2020

87,222,115

$
872

$
1,936,619

$
10,977

$
(572,659)

$
(200,956)

$
1,174,853


		Common				Accumulated
	Common	Stock at		Additional		Other
	Stock	Par		Paid-In		Comprehensive		Accumulated		Treasury		Total
	Shares	Value		Capital		Income		Deficit		Stock		Equity
Balance March 31, 2022	88,450,083	$	885	$	1,986,796	$	(7,398)	$	1,685,649	$	(200,956)	$	3,464,976
Shares issued under restricted stock and purchase plans, net	1,140		—		—		—		—		—		—
Stock-based compensation	—		—		3,485		—		—		—		3,485
Net investment hedge currency translation adjustment	—		—		—		41,956		—		—		41,956
Foreign currency translation adjustments	—		—		—		(70,179)		—		—		(70,179)
Changes in unrealized gains on marketable securities, net of tax	—		—		—		(2,898)		—		—		(2,898)
Actuarial loss, net of tax effects of $7	—		—		—		26		—		—		26
Net income	—		—		—		—		(9,570)		—		(9,570)
Other	—		—		—		—		(10)		—		(10)
Balance June 30, 2022	88,451,223	$	885	$	1,990,281	$	(38,493)	$	1,676,069	$	(200,956)	$	3,427,786

Balance March 31, 2021	87,755,666	$	878	$	1,959,619	$	22,637	$	(516,152)	$	(200,956)	$	1,266,026
Shares issued under restricted stock and purchase plans, net	2,932		—		—		—		—		—		—
Stock-based compensation	—		—		6,086		—		—		—		6,086
Common stock dividends declared, at $0.10 per share	—		—		—		—		(7,431)		—		(7,431)
Foreign currency translation adjustments	—		—		—		4,003		—		—		4,003
Actuarial losses, net of tax effects of $2	—		—		—		(21)		—		—		(21)
Net income	—		—		—		—		39,166		—		39,166
Balance June 30, 2021	87,758,598	$	878	$	1,965,705	$	26,619	$	(484,417)	$	(200,956)	$	1,307,829

Balance September 30, 2021	87,808,922	$	878	$	1,976,112	$	19,351	$	(470,051)	$	(200,956)	$	1,325,334
Shares issued under restricted stock and purchase plans, net	642,301		7		3,454		—		—		—		3,461
Stock-based compensation	—				10,715		—		—		—		10,715
Common stock dividends declared, at $0.10 per share	—		—		—		—		(7,494)		—		(7,494)
Net investment hedge currency translation adjustment	—		—		—		49,081		—		—		49,081
Foreign currency translation adjustments reclassed out of accumulated other comprehensive income related to discontinued operations	—		—		—		(16,567)		—		—		(16,567)
Foreign currency translation adjustments	—		—		—		(85,160)		—		—		(85,160)
Changes in unrealized gains on marketable securities, net of tax	—		—		—		(5,306)		—		—		(5,306)
Actuarial loss, net of tax effects of $27	—		—		—		108		—		—		108
Net income	—		—		—		—		2,153,624		—		2,153,624
Other	—		—		—		—		(10)		—		(10)
Balance June 30, 2022	88,451,223	$	885	$	1,990,281	$	(38,493)	$	1,676,069	$	(200,956)	$	3,427,786

Balance September 30, 2020	87,293,710	$	873	$	1,942,850	$	21,919	$	(551,072)	$	(200,956)	$	1,213,614
Shares issued under restricted stock and purchase plans, net	464,888		5		2,578		—		—		—		2,583
Stock-based compensation	—		—		20,277		—		—		—		20,277
Common stock dividends declared, at $0.30 per share	—		—		—		—		(22,287)		—		(22,287)
Foreign currency translation adjustments	—		—		—		4,720		—		—		4,720
Actuarial losses, net of tax effects of $4	—		—		—		(20)		—		—		(20)
Net income	—		—		—		—		88,942		—		88,942
Balance June 30, 2021	87,758,598	$	878	$	1,965,705	$	26,619	$	(484,417)	$	(200,956)	$	1,307,829

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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~~BROOKS AUTOMATION,~~AZENTA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

1. ~~Basis~~Nature of ~~Presentation~~Operation

~~The unaudited consolidated financial statements of Brooks Automation,~~Azenta, Inc. ~~and its subsidiaries~~ (“~~Brooks”~~Azenta”, or the “Company”) ~~included herein have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). All intercompany accounts~~is a leading global provider of life science sample exploration and ~~transactions have been eliminated in consolidation. In the opinion of~~ management ~~all material adjustments, which are of a normal and recurring nature and necessary for a fair statement of the financial position and results of operations and cash flows~~solutions for the ~~periods presented, have been reflected in the accompanying unaudited consolidated financial statements.~~life sciences market. The ~~results of operations for the interim periods are not necessarily indicative of the results of operations~~Company supports its customers from research to ~~be expected for the full fiscal year.~~

~~Certain information~~clinical development with its sample management, automated storage, and footnote disclosures normally included in the Company’s annual consolidated financial statements have been condensed or omitted and, accordingly, the accompanying financial information should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K filed with the United States Securities and Exchange Commission (the “SEC”) for the fiscal year ended September 30, 2020 (the “2020 Annual Report on Form 10-K”). The accompanying Consolidated Balance Sheet as of September 30, 2020 was derived from the audited annual consolidated financial statements as of the period then ended.genomic services expertise to help bring impactful therapies to market faster.

Discontinued Operations

In the fourth quarter of fiscal year ~~2018,~~2021, the Company entered into a definitive agreement to sell its semiconductor ~~cryogenics~~automation business ~~(the “Disposition”)~~ to ~~Edwards Vacuum LLC (a member of the Atlas Copco Group)~~Thomas H. Lee Partners, L.P. (“~~Edwards”~~THL”). The Company determined that the semiconductor ~~cryogenics~~automation business met the “held for sale” criteria and the “discontinued operations” criteria in accordance with Financial Accounting Standard Boards (“FASB”) Accounting Standards Codification (“ASC”) 205, Presentation of Financial Statements, (“FASB ASC 205”), as of September 30, ~~2018. On July 1, 2019, the Company completed the sale of the semiconductor cryogenics business.~~2021. Results related to the semiconductor ~~cryogenics~~automation business are included within discontinued operations. Please refer to Note 3, “Discontinued Operations” for further ~~information.~~

~~Separation~~information about the discontinued businesses. The Consolidated Balance Sheets and Consolidated Statements of Operations, and the notes to the Consolidated Financial Statements were restated for all periods presented to reflect the discontinuation of the semiconductor automation business in accordance with FASB ASC 205. The discussion in the notes to these Consolidated Financial Statements, unless otherwise noted, relate solely to the Company's continuing operations.

On ~~May 10, 2021,~~February 1, 2022, the Company ~~announced its intention to separate its business into two independent, publicly traded companies. The Company plans to spin-off its semiconductor business, which operates as~~completed the ~~Semiconductor Solutions Group segment through a pro rata distribution of shares to the Company’s common stockholders. Completion~~sale of the ~~proposed spin-off is~~semiconductor automation business for $2.9 billion in cash, subject to ~~certain conditions, including final approval by~~working capital and other customary adjustments. Net cash proceeds from the ~~Company’s Board of Directors. The Company is targeting~~sale are expected to ~~complete the separation of the business before the end of calendar year 2021.~~

be $2.5 billion, after deducting estimated taxes payable and other items, such as closing costs.

Risks and Uncertainties

The Company is subject to risks common to companies in the markets it serves, including, but not limited to, global economic and financial market conditions, fluctuations in customer demand, acceptance of new products, development by its competitors of new technological innovations, risk of disruption in its supply chain, the implementation of tariffs and export controls, dependence on key personnel, protection of proprietary technology, and compliance with domestic and foreign regulatory authorities and agencies.

~~During~~Throughout the ~~COVID-19~~ pandemic, the Company’s ~~facilities~~operations have ~~remained operational with only~~not been significantly interrupted as the Company has adapted to having required ~~personnel~~employees on site and the balance of employees mostly working from home. The Company’s semiconductor and life sciences business segments fall within the classification of an “Essential Critical Infrastructure Sector” as defined by the U.S. Department of Homeland Security and have continued operations during the COVID-19 pandemic.home. The Company has followed

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government guidance in each region and ~~country and~~ has implemented the U.S. Centers for Disease Control and Prevention social distancing guidelines and other ~~applicable~~ best practices to protect the health and safety of the Company’s employees. The COVID-19 pandemic has not had a substantial negative impact on the Company’s financial results and a portion of ~~the~~this impact has been mitigated by the Company’s realignment of resources to satisfy incremental orders related to virus ~~research. As states safely reopen the economy, get people back to work,~~research and ~~ease social restrictions while minimizing the health~~vaccine development and commercialization. Future impacts ~~of COVID-19, future impacts~~ on the Company’s financial results ~~will depend on future variants of the virus and vaccine effectiveness against the variants, which~~ are not fully determinable, as the full impact of the pandemic on the economy and markets which the Company serves is as yet ~~unknown.~~unknown, but will be dependent, in part, on future variants of the virus and vaccine effectiveness against these variants and new or prolonged government responses to the pandemic. The Company’s financial results will also depend on variables including reduced demand from its customers, the degree that the supply chain may be constrained which could impact its delivery of ~~product~~products and services and the potential negative impact toon its operations if there is ~~a significant~~an outbreak among the Company’s employees, as well as the amount of incremental demand caused by research and treatments in the areas of COVID-19 or related threats.

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2. Summary of Significant Accounting Policies

Principles of Consolidation and Basis of Presentation

The accompanying Consolidated Financial Statements include the accounts of the Company and its majority-owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). All intercompany balances and transactions have been eliminated in consolidation. The Company applies the equity method of accounting to investments that provide it with the ability to exercise significant influence over the entities in which it lacks controlling financial interest and is not a primary beneficiary.

In the opinion of the Company, the accompanying unaudited consolidated financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of its financial position as of June 30, 2022, and its results of operations for the three months and nine months ended June 30, 2022, and 2021, and cash flows for the nine months ended June 30, 2022, and 2021. The consolidated balance sheet at September 30, 2021 was derived from audited annual financial statements but does not contain all of the footnote disclosures from the annual financial statements

Certain information and footnote disclosures normally included in the Company’s annual consolidated financial statements have been condensed or omitted and, accordingly, the accompanying financial information should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K filed with the United States Securities and Exchange Commission for the fiscal year ended September 30, 2021 (the “2021 Annual Report on Form 10-K”). The accompanying Consolidated Balance Sheet as of September 30, 2021 was derived from the audited annual consolidated financial statements as of the period then ended.

Use of Estimates

The preparation of unaudited consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited consolidated financial statements, ~~and~~as well as the reported amounts of revenue and expenses during the reporting period. Significant estimates are associated with recording accounts receivable, inventories, goodwill, intangible assets other than goodwill, long-lived assets, derivative financial instruments, deferred income taxes, warranty obligations, revenue ~~recognized in accordance with the percentage of completion method,~~over time, and stock-based compensation expense. The Company ~~bases its~~assesses the estimates on ~~historical experience~~an ongoing basis and ~~various other assumptions, including~~record changes in ~~certain circumstances future projections that management believes to be reasonable under~~estimates in the ~~circumstances. Although the Company regularly assesses these estimates, actual~~period they occur and become known. Actual results could differ from ~~those~~these estimates. ~~Changes in estimates are recorded in the period in which they occur and become known.~~

The full extent to which the COVID-19 pandemic will directly or indirectly impact the Company’s business, including results of operations and financial condition ~~sales, expenses, reserves and allowances, manufacturing and employee-related amounts,~~ will depend on future developments that are highly uncertain. This includes results from new information that may emerge concerning COVID-19 and any actions taken to contain or treat COVID-19, as well as the economic impact on local, regional, national and international customers and markets. The Company has made estimates of the impact of COVID-19 within its financial statements and there may be changes to those estimates in future periods.

Foreign Currency Translation

Certain transactions of the Company and its subsidiaries are denominated in currencies other than their functional currency.

Foreign currency exchange gains ~~and losses~~(losses) generated from the settlement and remeasurement of these transactions are recognized in earnings and presented within “Other income (expenses), net” in the Company’s ~~unaudited~~ Consolidated Statements of Operations. Net foreign currency transaction and remeasurement gains were $0.3 million for the three months ended June 30, 2022 and net foreign currency transaction and remeasurement losses were $1.6 ~~million and less than $0.1~~ million during the three months ended June 30, ~~2021 and 2020, respectively.~~2021. Net foreign currency transaction and remeasurement losses were ~~$1.2~~$2.9 million and ~~$2.8~~gains were $1.2 million during the nine months ended June 30, 2022 and 2021, respectively.

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The determination of the functional currency of the Company’s subsidiaries is based on their financial and ~~2020, respectively.~~operational environment and is the local currency of all of the Company’s foreign subsidiaries. The subsidiaries’ assets and liabilities are translated into the reporting currency at period-end exchange rates, while revenue, expenses, gains and losses are translated at the average exchange rates during the period. Gains and losses from foreign currency translations are recorded in “Accumulated other comprehensive income” in the Company’s Consolidated Balance Sheets and presented as a component of comprehensive income in the Company’s Consolidated Statements of Comprehensive Income.

The semiconductor automation business had foreign operations which had a cumulative translation adjustment balance of $16.6 million at the date of disposal. This amount was removed from accumulated other comprehensive income during the three months ended March 31, 2022, and included within the gain on the sale of the semiconductor automation business. As a result, the Company presented a $16.6 million reclassification adjustment in other comprehensive income for the nine months ended June 30, 2022.

Derivative Financial Instruments

The Company has transactions and balances denominated in currencies other than U.S. dollars. Most of these transactions or balances are denominated in Euros, British Pounds and a variety of Asian currencies. The Company enters into foreign exchange contracts to reduce its exposure to currency fluctuations. The arrangements typically mature in three months or less and they do not qualify for hedge accounting. Net gains and losses related to these contracts are

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recorded as a component of ~~"Other~~“Other income (expenses), ~~net"~~net” in the accompanying unaudited Consolidated Statements of Operations and are as follows for the three and nine months ended June 30, ~~2021~~2022 and ~~2020~~2021 (in thousands):


	Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended
	June 30,				June 30,				June 30,				June 30,
	2021		2020		2021		2020		2022		2021		2022		2021
Realized losses on derivatives not designated as hedging instruments	$	(961)	$	(1,719)	$	(7,295)	$	(963)
Realized gains (losses) on derivatives not designated as hedging instruments									$	848	$	(961)	$	1,903	$	(7,295)

The fair values of the forward contracts are recorded in the accompanying unaudited Consolidated Balance Sheets as “Prepaid expenses and other current assets” and “Accrued expenses and other current liabilities”. Foreign exchange contract assets and liabilities are measured and reported at fair value based on observable market inputs and classified within Level 2 of the fair value hierarchy described below due to a lack of an active market for these contracts.

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Hedging Activities

On February 1, 2022, the Company entered into a cross-currency swap agreement to hedge the variability of exchange rate impacts between the United States dollar and the Euro. Under the terms of the cross-currency swap agreement, the Company notionally exchanged approximately $1.03 billion for approximately €915 million at a weighted average interest rate of approximately 1.196%. The designated notional amount is $960 million and the actual interest rate is 1.283%. 1.283% was in the range of the market value for that day and is the true interest rate on the notional amount. This cross-currency swap agreement expires in February 2023. We have designated the cross-currency swap as a hedge of net investments against one of our Euro denominated subsidiaries which requires an exchange of the notional amounts at maturity. At the maturity of the cross currency-swap, the Company will deliver a notional amount of €852 million and receive a notional amount of $960 million at an exchange rate of 1.1261.

This cross-currency swap is marked to market at each reporting period, representing the fair values of the cross-currency swap and any changes in fair value are recognized as a component of Accumulated other comprehensive items, net, on the Statements of Comprehensive Income. Interest accrued on the cross-currency swap is recorded within Interest Income on the Consolidated Statements of Operations. For the three and nine months ended June 30, 2022, the Company recorded a gain of $55.1 million and $65.8 million, respectively, to Accumulated other comprehensive income and recorded interest income of $3.1 million and $5.1 million, respectively, on this instrument for the three and nine months ended June 30, 2022.

Fair Value Measurements

The Company measures certain financial assets and liabilities, including cash equivalents, ~~and~~ available for sale securities, accounts receivable, accounts payable, and derivative instruments at fair value. FASB ASC 820, Fair Value Measurement and Disclosures, establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ~~The following levels of inputs may be used to measure~~Available for sale securities and derivative instruments are measured at fair ~~value:~~

~~Level 1 Inputs:~~ ~~Quoted~~value based on quoted market prices ~~in active markets for identical assets~~ or liabilities as of the reporting date. Active markets are those in which transactions for the asset and liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

~~Level 2 Inputs:~~ ~~Observable~~observable inputs other than ~~prices included in Level 1, including~~ quoted market prices for identical or similar assets or ~~liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term~~liabilities. The carrying amounts of ~~the assets or liabilities.~~

~~Level 3 Inputs:~~ ~~Unobservable inputs that are significant to the~~cash equivalents, accounts receivable and accounts payable approximate their fair value ~~of the assets or liabilities and reflect an entity’s own assumptions in pricing assets or liabilities since they are supported by little or no market activity.~~

~~As of June 30, 2021, the Company had 0 assets or~~ ~~liabilities~~ ~~measured and recorded at fair value on a recurring basis using Level 3 inputs.~~due to their short-term nature.

Accounts Receivable, Allowance for Expected Credit Losses and Sales Returns

Trade accounts receivable do not bear interest and are recorded at the invoiced amount. The Company maintains an allowance for expected credit losses representing its best estimate of expected credit losses related to its existing accounts receivable and their net realizable value. The Company determines the allowance based on a number of factors, including an evaluation of customer credit worthiness, the age of the outstanding receivables, economic trends, historical experience and other information over the payment periods. The Company reviews and adjusts the allowance for expected credit losses on a quarterly basis. Accounts receivable balances are written off against the allowance for expected credit losses when the Company determines that the balances are not recoverable. Provisions for expected credit losses are recorded in “Selling, general and administrative” expenses in the Consolidated Statements of Operations. The Company determines the allowance for sales returns based on its best estimate of expected customer returns. Provisions for sales returns are recorded in "Revenue" in the Consolidated Statements of Operations. The Company does not have any off-balance-sheet credit exposure related to its customers.

Leases

The Company has operating leases for real estate and non-real estate and finance leases for non-real estate. The classification of a lease as operating or finance and the determination of the right-of-use asset (“ROU asset”) and lease liability are determined at lease inception. The ROU asset represents the Company’s right to use an underlying asset for the lease term and the lease liability represents the Company’s obligation to make lease payments arising from the lease.

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Operating lease ROU assets and liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, an incremental borrowing rate is used based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. Lease terms may include options to extend or terminate the lease

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when it is reasonably certain that the option will be exercised. Lease expense is recognized on a straight-line basis over the lease term.

The Company’s lease agreements may contain lease and non-lease components. Non-lease components primarily include payments for maintenance and utilities. Fixed payments for non-lease components are combined with lease payments and accounted for as a single lease component which increases the amount of the ROU asset and liability.

The ROU asset for operating leases is included within “Other assets” and the ROU asset for finance leases is included within “Property, plant, and equipment, net” in the accompanying unaudited Consolidated Balance Sheets. The short-term lease liabilities for both operating leases and finance leases are included within “Accrued expenses and other current liabilities” in the accompanying unaudited Consolidated Balance Sheets. The long-term lease liabilities for operating leases and finance leases are included within “Long-term operating lease liabilities”, and “Other long-term liabilities”, respectively, in the accompanying unaudited Consolidated Balance Sheets.

Recently Issued Accounting Pronouncements

In November 2021, the FASB issued Accounting Standards Update (“ASU”) 2021-10, Government Assistance (Topic 832) – Disclosures by Business Entities about Government Assistance. The amendment in this ASU requires disclosures to increase the transparency of transactions with a government accounted for by applying a grant or contribution accounting model by analogy, including (1) the types of transactions, (2) the accounting for those transactions, and (3) the effect of those transactions on an entity’s financial statements. This ASU is effective for annual periods beginning after December 15, 2021. The Company will adopt the provisions of this ASU in fiscal 2023. The Company is evaluating the effect of adopting this new accounting guidance.

Recently Adopted Accounting Pronouncements

In October 2021, the FASB issued ASU 2021-08, Business Combinations(Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. ASU 2021-08 requires an entity to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Accounting Standards Codification (“ASC 606”), Revenue from Contracts with Customers. Under current GAAP, an acquirer generally recognizes such items at fair value on the acquisition date. The ASU is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted. The standard should be applied prospectively to business combinations occurring on or after the effective date of the amendments. The Company adopted the guidance during the first quarter of fiscal year 2022. There is no accounting impact on the Company’s consolidated financial statements and related disclosures as a result of the adoption of this ASU.

In October 2020, the FASB issued ~~Accounting Standards Update (“ASU”)~~ASU 2020-10, Codification Improvements. The amendments in this ASU represent changes to clarify ~~the~~certain ASCs, correct unintended application of guidance, or make minor improvements to ~~the~~certain ASC that are not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities. ASU 2020-10 is effective for annual periods beginning after December 15, 2020 and interim periods within those annual periods, with early adoption permitted. The amendments in this ASU should be applied retrospectively. This ASU will not affect the Company's consolidated financial ~~statements.~~statements or disclosures. The Company ~~will adopt~~adopted the provisions of this ASU in the first quarter of fiscal 2022 ~~and is currently evaluating the impact this guidance may have on the disclosure to the consolidated financial statements.~~

~~In March 2020, the FASB issued ASU 2020-04,~~ ~~Facilitation of the Effects of Reference Rate Reform on Financial Reporting~~. ~~In January 2021, the FASB issued ASU2021-01~~~~, Reference Rate Reform (Topic 848): Scope~~. The amendments provide temporary optional expedients and exceptions to the GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. The provisions of the amendments are only available until December 31, 2022, when the reference rate replacement activity is expected to be completed. The Company is currently evaluating the impact this guidance may have on its consolidated financial statements and related disclosures.

~~In December 2019, the FASB issued ASU 2019-12,~~ ~~Simplifying the Accounting for Income Taxes (Topic 740)~~, which removes certain exceptions to the general principles in Topic 740 and improves consistent application of and simplifies GAAP for other areas of Topic 740 clarifying and amending existing guidance. This ASU is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2020. Early adoption is permitted. The Company will adopt the provisions of this ASU in the first quarter of fiscal 2022. The Company is currently evaluating the impact this guidance may have on its consolidated financial statements and related disclosures.

In August 2018, the FASB issued ASU 2018-14, Disclosure Framework — Changes to the Disclosure Requirements for Defined Benefit Plans, which amends ASC 715 to add, remove, and clarify disclosure requirements related to defined benefit pension and other postretirement plans. The amendments require additional disclosure for the weighted-average interest crediting rates, a narrative description of the reasons for significant gains and losses, and an explanation of any other significant changes in the benefit obligation or plan assets. The amendment removes disclosure requirements for accumulated other comprehensive income expected to be recognized over the next year, information about plan assets to be returned to the entity, and the effects of a one-percentage-point change on the assumed health care costs and the effect of this change in rates on service cost, interest cost, and the benefit obligation for postretirement

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health care benefits. The ASU is effective for fiscal years ending after December 15, 2020. Early adoption is permitted. The ASU does not amend the interim disclosure requirements of ASC 715-20. The Company ~~will adopt~~adopted the provisions of

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this ASU in the first quarter of fiscal ~~2022 and is currently evaluating the impact this guidance may have on the disclosures in the consolidated financial statements.~~

~~Recently Adopted Accounting Pronouncements~~

~~In August 2018, the FASB issued ASU 2018-13,~~ ~~Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement~~, which amends ASC 820 to add and remove disclosure requirements related to fair value measurement. The amendments include new disclosure requirements for changes in unrealized gains or losses included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. The amendments eliminated disclosure requirements for amount of and reasons for transfers between Level 1 and Level 2, valuation processes for Level 3 fair value measurements, and policy for timing of transfers between levels of the fair value hierarchy. In addition, the amendments modified certain disclosure requirements to provide clarification or to promote appropriate exercise of discretion by entities. ASU 2018-13 is effective for fiscal years beginning after December 15, 2019, including interim periods therein. The Company adopted the guidance during the first quarter of fiscal year ~~2021~~2022. There is no significant accounting impact on the Company’s consolidated financial statements and related disclosures as a result of the adoption of this ASU.

In ~~August 2018,~~December 2019, the FASB issued ASU ~~2018-15,~~2019-12, ~~Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s~~Simplifying the Accounting for ~~Implementation Costs Incurred~~Income Taxes (Topic 740), which removes certain exceptions to the general principles in ~~a Cloud Computing Arrangement That Is a Service Contract. The amendments align the requirements~~Topic 740 and improves consistent application of and simplifies GAAP for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The accounting for the service elementother areas of ~~a hosting arrangement that is a service contract is not affected by these amendments. The provisions may be adopted prospectively or retrospectively.~~Topic 740 clarifying and amending existing guidance. This ASU is effective for annual periods, including interim periods within those annual periods, beginning after December 15, ~~2019.~~2020. Early adoption is permitted. The Company adopted the ~~guidance during~~provisions of this ASU in the first quarter of fiscal ~~year~~ ~~2021~~ ~~on a~~ ~~prospective basis. There is no significant accounting impact on the Company’s consolidated financial statements and related disclosures as a result of the adoption of this ASU.~~

~~In June 2016, the FASB issued ASU 2016-13,~~ ~~Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments~~~~. The FASB subsequently issued ASU 2019-04,~~ ~~Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments~~~~, ASU 2019-05~~ ~~“Financial Instruments-Credit Losses”~~~~, ASU 2019-11,~~ ~~Codification Improvements to Topic 326, Financial Instruments - Credit Losses,~~ ~~andASU 2020-02~~,~~Financial Instruments-Credit Losses (Topic 326) and Leases (Topic 842)~~ to clarify and address certain items related to the amendments in ASU 2016-13. Topic 326 provides guidance for recognizing credit losses on financial instruments based on an estimate of current expected credit losses model. The amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. The Company adopted the guidance during the first quarter of fiscal year ~~2021~~2022. There is no significant accounting impact on the Company’s consolidated financial statements and related disclosures as a result of the adoption of this ASU.

Other

For further information with regard to the Company’s significant accounting policies, please refer to Note 2 “Summary of Significant Accounting Policies” to the Company’s consolidated financial statements included in the ~~2020~~2021 Annual Report on Form 10-K.

3. Discontinued Operations

Disposition of Semiconductor Automation Business

On ~~August 27, 2018,~~September 20, 2021, the Company entered into a definitive agreement to sell its semiconductor ~~cryogenics~~automation business to ~~Edwards~~THL. On February 1, 2022, the Company completed the sale of the semiconductor automation business for ~~$675.0 million~~$2.9 billion in cash, subject to working capital and other customary adjustments. ~~The sale closed on July 1, 2019. The Company completed the sale for $659.8 million.~~ Net cash proceeds from the sale ~~were approximately $551.7 million, net of taxes and closing costs paid and remaining~~are expected to be $2.5 billion, after excluding estimated taxes payable. ~~During the first quarter of fiscal year 2021, the final net working capital was~~

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~~determined and resulted in a negative adjustment in the amount of $1.8 million payable to Edwards, which was paid during the second quarter~~Net income from discontinued operations for June 30, 2022 is inclusive of the ~~2021 fiscal year.~~

~~In the third quarter~~pre-tax gain on sale of fiscal year 2020, Edwards asserted claims for indemnification under the definitive agreement relating to alleged breaches of representations and warranties relating to customer warranty claims and inventory. The Company cannot determine the probability of any losses or outcome of these claims including the amount of any indemnifiable losses, if any, resulting from these claims at this time. The Company believes, however, that none of these claims will have a material adverse effect on its consolidated financial position or results of operations. If the resolution of these claims results in indemnifiable losses in excess$2.6 billion. As part of the ~~applicable indemnification deductibles~~transaction, the Company recorded an $18.1 million liability related to retention bonuses and ~~indemnification escrow established under~~cash settled stock based awards for former employees of the ~~definitive agreement, Edwards would be required to seek recovery under the representation and warranty insurance Edwards obtained in connection~~Company that were conveyed with ~~the closing of~~ the transaction. The Company ~~believes that any indemnifiable losses in excess~~will remit payment to THL during fiscal 2023, at the end of the ~~applicable deductibles~~retention period and ~~indemnification escrow established in~~THL will directly pay the definitive agreement would be covered by such insurance. If Edwards is unable to obtain recovery under its insurance, however, it could seek recovery of such indemnifiable losses, if any, directly fromformer employees. Following the ~~Company.~~

~~The semiconductor cryogenics business consisted~~completion of the CTI pump business, Polycold chiller business, the related services business and a 50% share in Ulvac Cryogenics, Inc., a joint venture based in Japan. The semiconductor cryogenics business was originally acquired bysale, the Company ~~in its 2005 merger with Helix Technology Corporation. The operating results of~~no longer serves the semiconductor ~~cryogenics business had been included in the~~ ~~Brooks Semiconductor Solutions Group~~market. ~~segment before the plan of disposition.~~

In connection with the closing of the ~~Disposition on July 1, 2019,~~sale, the Company and ~~Edwards~~THL entered into a transition ~~service~~services agreement, to which both the Company and THL will provide each other with certain transition services related to finance and accounting, information technology, human resources, compliance, facilities, legal and research and development support, for time periods ranging from three to 24 months. In addition, the Company entered into 2 separate lease agreements for leases back to the Company for portions of the facilities that have served as its corporate headquarters in Chelmsford, Massachusetts, and were sold to THL as part of the sale agreement. Each lease provides for a ~~supply~~term of 24 months, which may be terminated earlier by the Company upon 90 days’ notice to THL. The transition services agreement and lease ~~agreements. The transition service agreement outlined~~agreements approximate fair value and there is no material impact to the ~~information technology, people, and facility support~~Company’s results.

During the ~~parties provided to each other for the period ending 9 months after the transaction closing date. The supply agreement allowed~~fourth quarter of fiscal 2021, the Company ~~to purchase CTI and Polycold goods at cost from Edwards up to an aggregate amount equal to $1.0 million until~~determined that the one-year anniversary of closing the Disposition. The lease agreements provide facility space in Chelmsford, Massachusetts to Edwards free of charge for three years after the transaction closing date. Edwards has the option to renew each lease at the then current market rates after the initial three-year lease term has ended. This Disposition was consistent with the Company’s long-standing strategy to increase shareholder value by accelerating the growth of its Life Sciences businesses with further acquisitions and strengthening its semiconductor automation business ~~with opportunistic acquisitions.~~

~~The Disposition~~ met the ~~"held for sale"~~ criteria ~~and the “discontinued operation” criteria in accordance with FASB ASC 205 as of September 30, 2018. As such, its operating results have been reported~~to be classified as a discontinued operation ~~for all periods presented.~~

~~The following table presents the~~and, as a result, its historical financial results ofare reflected in the Company’s financial statements as a discontinued ~~operations (in thousands):~~operation, and assets and liabilities were classified as assets and liabilities held for sale.

Three Months Ended June 30,

Nine Months Ended June 30,



2021

2020

2021

2020

Loss on discontinued operations before income taxes

$
(4)

$
-

$
(1,534)

$
(239)

Net loss from discontinued operations

(4)

-

(1,168)

(182)

~~4. Marketable Securities~~

The Company invests in marketable securities that are classified as available-for-sale and records them at fair value in the accompanying unaudited Consolidated Balance Sheets. Marketable securities reported as current assets represent investments that mature within one year from the balance sheet date. Long-term marketable securities represent investments with maturity dates greater than one year from the balance sheet date. The securities are valued using matrix pricing and benchmarking and classified within Level 2 of the fair value hierarchy because they are not actively traded. Matrix pricing is a mathematical technique used to value securities by relying on the securities’ relationship to other benchmark quoted prices.

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The following table presents the financial results of discontinued operations with respect to the semiconductor automation business (in thousands).



	Three months ended June 30,				Nine Months Ended June 30,
	2022		2021		2022		2021
Revenue
Products	$	-	$	171,674	$	244,962	$	433,964
Services		-		14,588		19,468		40,710
Total revenue		-		186,262		264,430		474,674
Cost of revenue
Products		-		96,784		141,165		248,288
Services		-		7,509		11,159		19,250
Total cost of revenue		-		104,293		152,324		267,538
Gross profit		-		81,969		112,106		207,136
Operating expenses
Research and development		-		12,795		18,486		35,497
Selling, general and administrative		480		18,058		30,622		49,998
Restructuring charges		-		-		-		126
Total operating expenses		480		30,853		49,108		85,621
Operating (loss) income		(480)		51,116		62,998		121,515
Other income, net		-		26		-		(1,300)
(Loss) gain on divestiture		(990)		-		2,560,384		-
(Loss) income before income taxes		(1,470)		51,142		2,623,382		120,215
Income tax provision		1,085		10,134		463,785		24,801
Net (loss) income from discontinued operations	$	(2,555)	$	41,008	$	2,159,597	$	95,414

On July 1, 2019, the Company sold its semiconductor cryogenics business. During the three and nine months ended June 30, 2021, the Company recorded a $1.3 million negative working capital adjustment to the gain on divestiture that was previously recorded in the fourth fiscal quarter of 2019. This adjustment is shown within other income (loss), net within the income statement for the semiconductor automation business.

The following table presents the significant non-cash items and capital expenditures for the discontinued operations with respect to the semiconductor automation business that are included in the Consolidated Statements of Cash Flows (in thousands):


	Three months ended June 30,				Nine Months Ended June 30,
		2022		2021		2022		2021
Depreciation and amortization	$	-	$	2,697	$	-	$	6,393
Capital expenditures	$	-	$	903	$	2,862	$	3,634
Stock-based compensation	$	-	$	1,742	$	8,032	$	7,705

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The carrying value of the assets and liabilities of the discontinued operations with respect to the semiconductor automation business on the Consolidated Balance Sheets as of September 30, 2021 was as follows (in thousands):


		September 30, 2021
Assets
Cash and cash equivalents	$	45,000
Accounts receivable, net		142,256
Inventories		110,735
Other current assets		13,394
Total current assets of discontinued operation	$	311,385

Property, plant and equipment, net	$	32,058
Long-term deferred tax assets		3,167
Goodwill		81,477
Intangibles, net		44,468
Other assets		22,658
Total long-term assets of discontinued operation	$	183,828

Liabilities
Accounts payable	$	68,074
Deferred revenue		7,141
Accrued warranty and retrofit costs		6,081
Accrued compensation and benefits		18,144
Accrued Income Taxes		11,702
Accrued expenses and other current liabilities		18,014
Total current liabilities of discontinued operation	$	129,156

Long-term tax reserves		2,356
Long-term deferred tax liabilities		6,548
Long-term pension liabilities		5,490
Long-term operating lease liabilities		15,425
Other long-term liabilities		2,625
Total long-term liabilities of discontinued operation	$	32,444

Acquisition within the Semiconductor Automation Business

On April 29, 2021, the Company acquired Precise Automation Inc., a leading developer of collaborative robots and automation subsystems headquartered in Fremont, California. The total cash purchase price for the acquisition was approximately $69.8 million. Precise provides the semiconductor automation business with a product offering and technology portfolio to take advantage of the opportunities in the collaborative robot market.

The allocation of the consideration included $38.7 million of technology, $2.5 million of customer relationships, $33.1 million of goodwill, $6.2 million of deferred tax liabilities, and several other assets and liabilities.

The Company applied variations of the income approach to estimate the fair values of the intangible assets acquired. The completed technology was valued using excess earnings method and the customer relationships was valued using distributor margin method, both of which have a useful life of 11 years. The intangible assets acquired are amortized over the total weighted average period of 11 years using methods that approximate the pattern in which the economic benefits are expected to be realized.

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The Company has included the financial results of the acquired operations within income from discontinued operations on its Consolidated Statements of Operations. The goodwill and intangible assets are not tax deductible.

The Company did not present a pro forma information summary for its consolidated results of operations because such results were immaterial.

During the three months ended March 31, 2022, and prior to the completion of the sale of the semiconductor automation business, the Company exercised an option acquired with the Precise acquisition, to purchase certain technology assets for $4.0 million. The technology assets and the option to purchase was deemed to have no fair value at the time of acquisition.

4. Marketable Securities

Unrealized gains and losses are excluded from earnings and reported as a separate component of ~~“Total~~“accumulated other comprehensive income, net of tax” in the accompanying unaudited Consolidated ~~Statement of Comprehensive Income~~Balance Sheets until the security is sold or matures. Gains or losses realized from sales of marketable securities are computed based on the specific identification method and recognized as a component of "Other income (expenses), net" in the accompanying unaudited Consolidated Statements of Operations. ~~During~~There were insignificant sales of marketable securities for the three and nine months ended June 30, ~~2021, there were insignificant sales of marketable securities. During the nine months ended June 30, 2020, the Company sold marketable securities with a~~ ~~fair value~~2022 and amortized cost of $2.5 million, and recognized a net gain of less than $0.1 million in this period. As a result, during the nine months ended June 30, 2020, the Company collected cash proceeds of $2.5 million from the sale of marketable securities and reclassified net unrealized holding gains of less than $0.1 million from accumulated other comprehensive income into “Other expenses, net” in the accompanying unaudited Consolidated Statements of Operations as a result of these transactions.2021.

The following is a summary of the amortized cost and the fair value, including accrued interest receivable ~~and~~as well as unrealized holding gains (losses) on the short-term and long-term marketable securities as of June 30, ~~2021~~2022 and September 30, ~~2020~~2021 (in thousands):


			Gross		Gross						Gross		Gross
	Amortized		Unrealized		Unrealized				Amortized		Unrealized		Unrealized
	Cost		Losses		Gains		Fair Value		Cost		Losses		Gains		Fair Value
June 30, 2021:
June 30, 2022:
U.S. Treasury securities and obligations of U.S. government agencies	$	20	$	—	$	—	$	20	$	536,322	$	(2,981)	$	93	$	533,434
Bank certificates of deposits		30		—		—		30		6,341		(45)		—		6,296
Corporate securities		3,663		—		—		3,663		372,922		(4,009)		159		369,072
Municipal securities		25		—		—		25		112,621		(334)		1		112,288
	$	3,738	$	—	$	—	$	3,738	$	1,028,206	$	(7,369)	$	253	$	1,021,090
September 30, 2020:
September 30, 2021:
Bank certificates of deposits	$	51	$	—	$	—	$	51	$	30	$	—	$	—	$	30
Corporate securities		3,101		—		—		3,101		3,624		—		—		3,624
Municipal securities										—		—		—		—
Other debt securities		16		—		—		16		25		—		—		25
	$	3,168	$	—	$	—	$	3,168	$	3,679	$	—	$	—	$	3,679

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The fair values of the marketable securities by contractual maturities at June 30, ~~2021~~2022 are presented below (in thousands):



			Amortized
	Fair Value		Cost			Fair Value
Due in one year or less	$	101	$	711,599	$	708,895
Due after one year through five years		—		313,633		309,221
Due after five years through ten years		—		—		—
Due after ten years		3,637		2,974		2,974
Total marketable securities	$	3,738	$	1,028,206	$	1,021,090

Expected maturities could differ from contractual maturities because the security issuers may have the right to prepay obligations without prepayment penalties.

The Company reviews the marketable securities for impairment at each reporting period to determine if any of the securities have experienced an other-than-temporary decline in fair value. The Company considers factors, such as the length of time and extent to which the market value has been less than the cost, the financial condition and near-term prospects of the issuer, the Company’s intent to sell, or whether it is more likely than not it will be required to sell the investment before recovery of its amortized cost basis. If the Company believes that an other-than-temporary decline in fair value has occurred, it writes down the investment to its fair value and recognizes the credit loss in earnings and the non-credit loss in accumulated other comprehensive income or loss. ~~There was an insignificant amount of securities~~Securities in an unrealized loss position as of June 30, ~~2021.~~2022 were $909.6 million. There were 0 securities in an unrealized loss position as of September 30, ~~2020.~~

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Cash equivalents of less than $0.1 million at June 30, 2021 consist of money market funds and are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices in active markets. There were 0 cash equivalents classified within Level 1 of the fair value hierarchy as of September 30, 2020. Cash equivalents of $0.1 million as of September 30, 2020, consist primarily of treasury bills and agency bonds and are classified within Level 2 of the fair value hierarchy because they are not actively traded. Cash equivalents from Level 1 and Level 2 are recorded in “Cash and cash equivalents” within the accompanying unaudited Consolidated Balance Sheet.2021.

5. Acquisitions

The Company recorded the assets acquired and liabilities assumed related to the following acquisitions at their fair values as of the acquisition date, from a market participant’s perspective. While the Company uses its best estimates and assumptions as part of the purchase price allocation process to value the assets acquired and liabilities assumed on the acquisition date, its estimates and assumptions are subject to refinement. Fair value estimates are based on a complex series of judgments about future events and uncertainties and rely heavily on estimates and assumptions. The judgments used to determine the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives, can materially impact the Company’s results of operations. The finalization of the assignment of fair values will be completed within one year after the respective acquisition date.

The Company did not present a pro forma information summary for its consolidated results of operations for the acquisitions completed because such results were immaterial.

~~Acquisitions Completed in Fiscal Year 2021~~

Abeyatech LLC

~~Precise~~

On April ~~29,~~2, 2021,, the Company acquired Precise Automation Inc. (“Precise”), a leading developer of collaborative robots and automation subsystems headquartered in Fremont, California. The total cash purchase price for the acquisition was approximately $69.6 million, subject to working capital and other adjustments. Precise provides the Company with a product offering and technology portfolio to take advantage of the opportunities in the collaborative robot market.

The allocation of the consideration included $38.9 million of technology, $2.4 million of customer relationships, $32.9 million of goodwill, $6.2 million of deferred tax liabilities, and several other assets and liabilities. The weighted useful life of all the intangible assets acquired is 11 years. The purchase price allocation was based on a preliminary valuation which is subject to further adjustments within the measurement period when additional information becomes available. The Company has included the financial results of the acquired operations in the Brooks Semiconductor Solutions Group segment. The goodwill and intangibles are ~~not~~ ~~tax deductible.~~

~~Other Acquisitions~~

~~The Company closed an acquisition during the third quarter of fiscal year 2021.~~Abeyatech LLC. The Company has included the financial results of the acquired operations within the ~~Brooks~~ Life Sciences Products segment. The ~~total net of cash~~ purchase price ~~was approximately $19.3~~includes $9.9 million ~~which includes~~cash payment and $9.4 million in contingent consideration, at present value, based on the acquired business’ performance for the twelve-month period ending December 31, 2021, subject to customary working capital adjustments and other adjustments. The acquisition enhances the breadth and depth of the Company’s offerings and expands its expertise in the ~~Brooks~~ Life Sciences Products segment. The allocation of the consideration included $11.9 million of technology, $4.4 million of goodwill, and several other assets and ~~liabilities.~~liabilities for $3.0 million. The weighted useful life of all the intangible assets acquired is 12 years. The ~~purchase price allocation was based on a preliminary valuation which is subject to further adjustments within the measurement period when additional information becomes available. The~~ goodwill and intangibles are tax deductible. During the three months ended March 31, 2022, the Company paid $10.0 million related to the contingent consideration recorded at the time of acquisition based on the achievement of business performance targets set forth in the purchase agreement.

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Trans-Hit Biomarkers, Inc.

On December 3, 2020, the Company acquired Trans-Hit Biomarkers Inc. (“THB”), a worldwide biospecimen procurement service provider based in Montreal Canada. THB has an extensive collection capability for biospecimens and clinical samples through a worldwide partner network of clinical sites and biobanks. The total cash purchase price of the acquisition was approximately ~~$15.1~~$15.1 million, net of cash acquired. The acquisition enhances the breadth and depth of the Company’s offerings and expands its expertise in the ~~Brooks~~ Life Sciences Services segment. The allocation of the consideration included $7.8 million of customer relationships, $9.3 million of goodwill, $2.4 million of deferred tax liabilities, and several other assets and liabilities. The weighted useful life of all intangibles acquired is 11 years. The ~~purchase price allocation was based on a preliminary valuation which is subject to further adjustments within the measurement period when additional information becomes available. The~~ Company has included the financial results of the acquired operations in the ~~Brooks~~ Life Sciences Services segment. The goodwill and intangibles are not tax deductible.

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~~Acquisition Completed in Fiscal Year 2020~~

~~RURO~~

On February 11, 2020, the Company acquired RURO, Inc. (“RURO”), an informatics software company based in Frederick, Maryland. RURO provides cloud-based software solutions to manage laboratory workflow and bio-sample data for a broad range of customers in the biotech, healthcare, and pharmaceutical sectors. The addition of RURO's capabilities and offerings will enable the Company to offer enhanced on-site and off-site management of biological sample inventories as well as integration solutions to its customers for their increasingly distributed workflow. The total cash purchase price of the acquisition net of cash acquired was $15.2 million after the Company’s agreement with the seller of a net working capital settlement. The Company received $0.5 million in connection with the net working capital settlement on April 1, 2021.

The allocation of the consideration primarily included $0.6 million of accounts receivable, $2.9 million of customer relationships, $2.9 million of technology assets, $11.0 million of goodwill, and $2.7 million of liabilities. The goodwill from this acquisition is reported within the Brooks Life Sciences Services segment and is ~~not~~ ~~tax deductible.~~

6. Goodwill and Intangible Assets

Goodwill represents the excess of net book value over the estimated fair value of net tangible and identifiable intangible assets of a reporting unit. Goodwill is tested for impairment annually or more often if impairment indicators are present at the reporting unit level. If events occur or circumstances change that would more likely than not reduce fair values of the reporting units below their carrying values, goodwill will be evaluated for impairment between annual tests. No triggering events indicating goodwill impairment occurred during the nine months ended June 30, ~~2021.~~2022. Please refer to Note 8, "Goodwill and Intangible Assets" to the Company's consolidated financial statements included in the ~~2020~~2021 Annual Report on Form 10-K for further information on the goodwill impairment testing performed during fiscal year ~~2020.~~2021.

The Company performs its annual goodwill impairment assessment on April ~~1st~~1^st of each year. In accordance with ASC 350, Intangibles-Goodwill and Other, the Company initially assesses qualitative factors to determine whether the existence of events or circumstances indicates that it is more likely than not that the fair value of a reporting unit is less than its carrying value. If the Company determines, based on this assessment, that it is more likely than not that the fair value of the reporting unit is less than its carrying value, it performs a quantitative goodwill impairment test by comparing the reporting unit’s fair value with its carrying value. An impairment loss is recognized for the amount by which the reporting unit’s carrying value exceeds its fair value, up to the total amount of goodwill allocated to the reporting unit. No impairment loss is recognized if the fair value of the reporting exceeds its carrying value.

During the quarter ended June 30, ~~2021,~~2022, the Company completed the annual goodwill impairment test for each of its reporting units, including the ~~Automation Solutions, Contamination Control Solutions and Global Semiconductor Services reporting units within the Brooks Semiconductor Solutions Group segment, the Brooks~~ Life Sciences Products reporting unit within the ~~Brooks~~ Life Sciences Products segment, and the ~~Sample Repository Solutions and GENEWIZ~~Life Sciences Services reporting ~~units~~unit within the ~~Brooks~~ Life Sciences Services segment. Based on the test results, the Company determined that 0no adjustment to goodwill was necessary. The Company conducted a qualitative assessment for both the ~~Automation Solutions, Global Semiconductor~~Life Sciences Services and Life Sciences Products reporting units. The Company determined that it was more likely than not that their fair values were greater than their carrying values. As a result of the analysis, the Company did not perform the quantitative assessment for these reporting units, and therefore, did not~~not~~ recognize any impairment losses.

The changes in the Company’s goodwill by reportable segment since September 30, 2021 are as follows (in thousands):



	Life Sciences		Life Sciences
	Products		Services		Total
Balance, at September 30, 2021		110,138		359,218		469,356
Adjustments		(4,422)		(49)		(4,471)
Balance, at June 30, 2022	$	105,716	$	359,169	$	464,885

During the nine months ended June 30, 2022, the Company recorded a goodwill decrease of $4.5 million primarily related to foreign currency translation adjustments.

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The components of the Company’s identifiable intangible assets as of June 30, 2022 and September 30, 2021 are as follows (in thousands):


	June 30, 2022						September 30, 2021
			Accumulated		Net Book				Accumulated		Net Book
	Cost		Amortization		Value		Cost		Amortization		Value
Patents	$	1,226	$	1,077	$	149	$	1,242	$	1,002	$	240
Completed technology		74,361		37,029		37,332		75,527		32,383		43,144
Trademarks and trade names		424		56		368		424		33		391
Non-competition agreements		681		391		290		681		249		432
Customer relationships		249,277		126,725		122,552		253,486		111,159		142,327
Other intangibles		220		220		—		246		246		—
	$	326,189	$	165,498	$	160,691	$	331,606	$	145,072	$	186,534

Amortization expense for intangible assets was $7.6 million and $9.6 million, respectively, for the three months ended June 30, 2022 and 2021. Amortization expense for intangible assets was $23.4 million and $27.9 million, respectively, for the nine months ended June 30, 2022 and 2021.

Estimated future amortization expense for the intangible assets for the remainder of fiscal year 2022, the subsequent four fiscal years and thereafter is as follows (in thousands):


2022	$	6,121
2023		30,845
2024		27,354
2025		22,574
2026		19,435
Thereafter		54,362
	$	160,691

7. Debt and Line of Credit

On October 4, 2017, the Company entered into a $200.0 million term loan with the lenders pursuant to the terms of a credit agreement. The term loan was issued at $197.6 million, or 98.8% of its par value, resulting in a discount of $2.4 million, or 1.2%, which represented loan origination fees paid at the closing.

The deferred financing costs were accreted over the term of the loan using the effective interest rate method and are included in “Interest expense” in the accompanying unaudited Consolidated Statements of Operations.

During the nine months ended June 30, 2022, the weighted average stated interest rate paid on all outstanding debt was 2.7%. During the three and nine months ended June 30, 2022, the Company incurred aggregate interest expense of $0.1 million and $0.5 million, respectively, in connection with the borrowings.

On February 1, 2022, the Company completed the sale of its semiconductor automation business and used $49.7 million of the proceeds from the sale to extinguish the outstanding balance of the term loan. The Company ~~performed the quantitative goodwill impairment test for the Contamination Control Solutions, the Sample Repository Solutions and GENEWIZ reporting units.~~also terminated its revolving line of credit which had no borrowings outstanding. The Company ~~determined that 0 adjustment to goodwill was necessary since the estimated fair values exceed their book values.~~recorded a loss on debt and line of credit extinguishment of $0.6 million.

As a result of a change in our management reporting structure and immediately post to the annual goodwill impairment test, the Company combined two components within the Brooks Life Sciences Services operating segment, Sample Repository Solutions and GENEWIZ components, into the Brooks Life Sciences Services reporting unit. The Company evaluated the aggregation criteria under ASC 350 for the two components and concluded that they exhibit

1619

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~~similar economic characteristics and meet the aggregation criteria. Post to this aggregation, the~~8. Leases

The Company has ~~five reporting units which includes the Automation Solutions, Contamination Control Solutions, Global Semiconductor Services, Brooks Life Sciences Products,~~operating leases for real estate and ~~Brooks Life Sciences Services reporting units.~~non-real estate and finance leases for non-real estate in North America, Europe, and Asia. Non-real estate leases are primarily related to vehicles and office equipment. Lease expiration dates range between 2022 and 2042.

The ~~changes in the Company’s goodwill by reportable segment since September 30, 2020 are~~components of lease expense were as follows (in thousands):

Brooks






Semiconductor

Brooks

Brooks

Solutions

Life Sciences

Life Sciences

Group

Products

Services

Other

Total
Gross goodwill, at September 30, 2020

$
637,303

$
103,278

$
349,899

$
26,014

$
1,116,494
Accumulated goodwill impairments

(588,944)

—

(26,014)

(614,958)
Goodwill, net of accumulated impairments, at September 30, 2020

48,359

103,278

349,899

—

501,536
Acquisitions and adjustments

32,911

7,493

9,386

—

49,790
Gross goodwill, at June 30, 2021

670,214

110,771

359,285

26,014

1,166,284
Accumulated goodwill impairments

(588,944)

—

(26,014)

(614,958)
Goodwill, net of accumulated impairments, at June 30, 2021

$
81,270

$
110,771

$
359,285

$
—

$
551,326


	Three Months Ended June 30,				Nine Months Ended June 30,
	2022		2021		2022		2021

Operating lease costs	$	2,468	$	1,932	$	7,028	$	5,375
Finance lease costs:
Amortization of assets		18		182		147		743
Interest on lease liabilities		-		10		5		33
Total finance lease costs		18		192		152		776
Variable lease costs		783		382		2,056		1,246
Short-term lease costs		640		56		1,357		145
Total lease costs	$	3,909	$	2,562	$	10,593	$	7,542

~~During the nine months ended June 30, 2021, the Company recorded a goodwill increase of $49.8 million primarily~~Supplemental balance sheet information related to ~~acquisitions made during the nine months ended June 30, 2021 and the impact of foreign currency translation adjustments.~~

~~The components of the Company’s identifiable intangible assets as of June 30, 2021 and September 30, 2020 are as follows (in thousands):~~

June 30, 2021

September 30, 2020

Accumulated

Net Book

Accumulated

Net Book


Cost

Amortization

Value

Cost

Amortization

Value
Patents

$
5,302

$
5,013

$
289

$
5,302

$
4,865

$
437
Completed technology

144,440

58,118

86,323

92,477

49,875

42,602
Trademarks and trade names

27,625

12,102

15,523

25,769

9,322

16,447
Non-competition agreements

731

129

601

—

—

—
Customer relationships

285,685

133,488

152,197

271,113

112,277

158,836
Other intangibles

251

248

3

245

242

3

$
464,034

$
209,098

$
254,937

$
394,906

$
176,581

$
218,325

~~Amortization expense for intangible assets was $30.8 million and $31.3 million, respectively, during the nine months ended June 30, 2021 and 2020.~~

~~Estimated future amortization expense for the intangible assets for the remainder of fiscal year 2021, the subsequent four fiscal years and thereafter~~leases is as follows (in ~~thousands)~~thousands, except lease term and discount rate):

Fiscal year ended September 30,

2021

$
10,853
2022

40,414
2023

37,125
2024

32,242
2025

26,937
Thereafter

107,366

$
254,937

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~~7. Line of Credit~~

The Company maintains a revolving line of credit under a credit agreement with Wells Fargo Bank, N.A. and JPMorgan Chase Bank, N.A. that provides for a revolving credit facility of up to $75.0 million, subject to borrowing base availability, as defined in the credit agreement. The line of credit matures on October 4, 2022 and expires no less than 90 days prior to the term loan expiration discussed below. The proceeds from the line of credit are available for permitted acquisitions and general corporate purposes.

On October 4, 2017, the Company entered into a $200.0 million Senior Secured Term Loan Facility (the “term loan”) with Morgan Stanley Senior Funding, Inc., JPMorgan Chase Bank, N.A. and Wells Fargo Securities, LLC (collectively, the “lenders”). Coincident with the entry into the credit agreement for the term loan discussed in Note 8, “Debt” below, the Company amended certain terms and conditions of the credit agreement for the line of credit. Based on the amended terms of the credit agreement, the line of credit continues to provide for a revolving credit facility of up to $75.0 million, subject to borrowing base availability. Borrowing base availability under the amended credit agreement excludes collateral related to fixed assets and is redetermined periodically based on certain percentage of certain eligible U.S. assets, including accounts receivable and inventory. The sub-limits for letters of credit were reduced to $7.5 million under the amended terms of the credit agreement. All outstanding borrowings under the credit agreement are guaranteed by the Company and Brooks Life Sciences, Inc. (fka BioStorage Technologies, Inc.), the Company’s wholly-owned subsidiary (“guarantor”), and subordinated to the obligations under the term loan which are secured by a first priority lien on substantially all of the assets of the Company and the guarantor, other than accounts receivable and inventory. Please refer to Note 8, “Debt”, for further information on the term loan transaction.

As of June 30, 2021, the Company had approximately $49.8 million available for borrowing under the line of credit. There were 0 amounts outstanding under the line of credit as of June 30, 2021 and September 30, 2020. The Company records commitment fees and other costs directly associated with obtaining the line of credit facility as deferred financing costs which are amortized over the term of the related financing arrangement. Deferred financing costs were $0.2 million and $0.4 million, respectively, at June 30, 2021 and September 30, 2020. The line of credit contains certain customary representations and warranties, a financial covenant and affirmative and negative covenants as well as events of default. The Company was in compliance with the line of credit covenants as of June 30, 2021.

~~8. Debt~~

~~Term Loans~~

On November 15, 2018, the Company entered into an incremental amendment (the “First Amendment”) to the existing credit agreement. Under the First Amendment, the Company obtained an incremental term loan in an aggregate principal amount of $350.0 million. The proceeds of the incremental term loan were used to finance a portion of the purchase price for the Company’s acquisition of GENEWIZ Group. The incremental term loan was issued at $340.5 million, or 97.3% of its par value, resulting in a discount of $9.5 million, or 2.7%, which represented financing cost of the incremental term loan. Except as provided in the First Amendment, the incremental term loan was subject to the same terms and conditions as set forth in the existing credit agreement.

On February 15, 2019, the Company entered into the second amendment to the credit agreement (the “Second Amendment”) and syndicated the incremental term loan to a group of new lenders which met the criteria of a debt extinguishment. The Company wrote off the carrying value of the incremental term loan of $340.1 million as of February 15, 2019 and recorded the syndicated incremental term loan at its present value for $349.1 million and a loss on debt extinguishment for $9.1 million. The syndicated incremental term loan was issued at $345.2 million, or 98.9% of its par value, resulting in a discount of $4.0 million which represented financing costs which are presented as a reduction of the incremental term loan principal balance in the accompanying unaudited Consolidated Balance Sheets and was accreted over the life of the incremental term loan. Except as provided in the Second Amendment with respect to an

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~~increase of the applicable interest rates, the syndicated incremental term loan was subject to the same terms and conditions as the initial incremental term loan.~~

On July 1, 2019, the Company completed the sale of its semiconductor cryogenics business and used $348.3 million of the proceeds from the Disposition to extinguish the outstanding balance of the incremental term loan. In addition, the Company used $147.0 million of the proceeds from the Disposition to extinguish a portion of the outstanding balance of the term loan. The Company recorded a loss on debt extinguishment of $5.2 million for the 2 term loans.

The Company’s obligations under the term loan are also guaranteed by Brooks Life Sciences, Inc. (fka BioStorage Technologies, Inc.) as the guarantor, subject to the terms and conditions of the credit agreement. The Company and the guarantor granted the lenders a perfected first priority security interest in substantially all of the assets of the Company and the guarantor to secure the repayment of the term loan.

The loan principal amount under the credit agreement may be increased by an aggregate amount equal to $75.0 million plus any voluntary repayments of the term loan plus any additional amount such that the secured leverage ratio of the Company is less than 3.00 to 1.00.

Subject to certain conditions stated in the credit agreement, the Company may redeem the term loan at any time at its option without a significant premium or penalty, except for a repricing transaction, as defined in the credit agreement. The Company is required to redeem the term loan at the principal amount then outstanding upon occurrence of certain events, including (i) net proceeds received from the sale or other disposition of the Company’s or the guarantor’s assets, subject to certain limitations, (ii) casualty and condemnation proceeds received by the Company or the guarantor, subject to certain exceptions, or (iii) net proceeds received by the Company or the guarantor from the issuance of debt or disqualified capital stock after October 4, 2017. Commencing on December 31, 2018, the Company was required to make principal payments equal to the excess cash flow amount, as defined in the credit agreement. Such prepayments are equal to 50% ~~of the preceding year excess cash flow amount reduced by voluntary prepayments of the term loan, subject to certain limitations.~~

The deferred financing costs are accreted over the term of the loan using the effective interest rate method and are included in “Interest expense” in the accompanying unaudited Consolidated Statements of Operations. At June 30, 2021, deferred financing costs were $0.3 million.

The credit agreement contains certain customary representations and warranties, covenants and events of default. If any of the events of default occur and are not waived or cured within applicable grace periods, any unpaid amounts under the credit agreement will bear an annual interest rate at 2.00% above the rate otherwise applicable under the terms and conditions of such agreement. The credit agreement does not contain financial maintenance covenants. As of June 30, 2021, the Company was in compliance with all covenants and conditions under the credit agreement.

In connection with the GENEWIZ acquisition, the Company assumed 3 five-year term loans for a total of $3.3 million and 2 one-year short term loans for a total of $3.2 million. The 3 five-year term loans were initiated during 2016 and matured in 2021. The principal payments were payable in 8 installments equal to 12.5% of the initial principal amount of the term loans on December 14th and June 14th of each year. The 3 five-year term loans were secured by GENEWIZ to fund equipment procurement and new building related payments and the interest rates were equal to the LIBOR plus 3.1%. The 2 one-year term loans were secured by GENEWIZ to fund operations. Both of the one-year term loans were initiated in 2018 and matured and were repaid in 2019. The interest rates of these 2 loans were 4.56% and 4.35%. There are 0 deferred financing costs related to either the five-year term loans or the one-year term loans. The 3 five-year term loans matured and were repaid in full on June 30, 2021.

During the nine months ended June 30, 2021, the weighted average stated interest rate paid on all outstanding debt was 2.8%. During the nine months ended June 30, 2021, the Company incurred aggregate interest expense of $1.3 million in connection with the borrowings, including $0.2 million of deferred financing costs amortization.

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~~The following are the future minimum principal payment obligations under all of the Company’s outstanding debt as of June 30, 2021 (in thousands):~~

Amount
Fiscal year ended September 30,

2021

$
—
2022

—
2023

—
2024

—
2025

50,000
Total outstanding principal balance

50,000
Unamortized deferred financing costs

(349)

49,651
Current portion of long-term debt

—
Non-current portion of long-term debt

$
49,651


	June 30, 2022			September 30, 2021
Operating Leases:
Operating lease right-of-use assets	$	50,748		$	49,650

Accrued expenses and other current liabilities	$	5,919		$	5,254
Long-term operating lease liabilities		46,719			45,088
Total operating lease liabilities	$	52,638		$	50,342

Finance Leases:
Property, plant and equipment, at cost	$	2,252		$	2,252
Accumulated amortization		(2,252)			(2,105)
Property, plant and equipment, net	$	-		$	147

Accrued expenses and other current liabilities	$	2		$	360
Other long-term liabilities		(10)			(10)
Total finance lease liabilities	$	(8)		$	350

Weighted average remaining lease term (in years):
Operating leases		11.63			11.33
Finance leases		-			0.53

Weighted average discount rate:
Operating leases		4.02	%		3.90	%
Finance leases		0	%		4.87	%

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~~9. Leases~~

The Company has operating leases for real estate and non-real estate and finance leases for non-real estate in North America, Europe, and Asia. Non-real estate leases are primarily related to vehicles and office equipment. Lease expiration dates range between 2021 and 2041.

~~The components of lease expense were as follows (in thousands):~~

Three Months Ended June 30,

Nine Months Ended June 30,

2021

2020

2021

2020

Operating lease costs

$
2,878

$
2,358

$
8,135

$
6,755

Finance lease costs:

Amortization of assets

182

311

745

933

Interest on lease liabilities

10

29

31

84

Total finance lease costs

192

340

776

1,017

Variable lease costs

514

448

1,578

1,314

Short-term lease costs

123

181

349

477

Total lease costs

$
3,707

$
3,327

$
10,838

$
9,563

Supplemental ~~balance sheet~~cash flow information related to leases iswas as follows (in thousands, ~~except~~unaudited):


	Three Months Ended June 30,				Nine Months Ended June 30,
	2022		2021		2022		2021
Cash paid for amounts included in measurement of liabilities:
Operating cash flows from operating leases	$	2,116	$	1,562	$	5,715	$	4,531
Operating cash flows from finance leases		-		8		4		35
Financing cash flows from finance leases		43		269		360		880

ROU assets obtained in exchange for lease liabilities:
Operating leases	$	122	$	13,652	$	7,612	$	17,733

Future lease ~~term~~payments for operating and ~~discount rate)~~finance leases as of June 30, 2022 were as follows for the remainder of fiscal year 2022, the subsequent five fiscal years and thereafter (in thousands):

June 30, 2021

September 30, 2020

Operating Leases:

Operating lease right-of-use assets

$
52,159

$
39,071

Accrued expenses and other current liabilities

$
7,489

$
7,015

Long-term operating lease liabilities

45,034

31,855

Total operating lease liabilities

$
52,523

$
38,870

Finance Leases:

Property, plant and equipment, at cost

$
2,252

$
2,540

Accumulated amortization

(1,989)

(1,246)

Property, plant and equipment, net

$
263

$
1,294

Accrued expenses and other current liabilities

$
610

$
1,135

Other long-term liabilities

(10)

348

Total finance lease liabilities

$
600

$
1,483

Weighted average remaining lease term (in years):

Operating leases

10.73

8.72

Finance leases

0.71

1.32

Weighted average discount rate:

Operating leases

4.02
%

3.92
%
Finance leases

4.81
%

4.73
%


	Operating Leases
2022	$	2,048
2023		7,797
2024		6,356
2025		5,909
2026		5,830
2027		5,634
Thereafter		34,301
Total future lease payments		67,875
Less imputed interest		(15,237)
Total lease liability balance	$	52,638

As of June 30, 2022, the Company did not have significant leases that have not commenced or not recorded in the accompanying unaudited Consolidated Balance Sheets.

9. Income Taxes

TheCompanyrecordedanincometaxprovisionof$7.3millionandbenefitof$0.6million,respectivelyduring the three and nine months ended June 30, 2022. The provisionfor the three months ended June 30, 2022, was primarily driven by a true-upof theeffective tax rate on a year-to-date basis.These changes were theresultof fluctuationsinexpectedglobalincomefromoperations.ThetaxbenefitfortheninemonthsendedJune30,2022 wasdrivenbythepre-taxlossanda$4.6milliondiscretestockcompensationwindfallbenefitfortaxdeductions thatexceeded the associated book compensation expense. Thetax benefit for the nine monthsended June 30, 2022was partiallyoffsetby a $0.7millionchargetoincreasethedeferredtaxliability toreflect achangein the blended state income tax rate resulting from the sale of the semiconductor business.

In the period ended June 30, 2022, the Company did not include the U.S. business in the computation of the estimatedannualeffectiverate. We have utilized the discrete effective tax rate method, as allowed by Accounting Standards Codification (“ASC”) 740-270-30-18, “Income Taxes – Interim Reporting to calculate the interim income tax provision. TheU.S. taxbenefitwascomputed discretely ona year-to-datebasis.The taxable lossfromcontinuingoperationsintheU.S.wouldhavedrivensignificantvolatilityintheestimatedannualeffective taxrate.Consideringthelevelofpre-taxincomeforecastedintheyear,smallchangesintheforecastfortheremainder of theyear would changethe estimated annualeffective tax rate substantially.TheCompany concluded that calculatingthe taxprovisionfortheU.S.discretelywasamoreappropriatereflection of the year-to-datetax provision as of June 30, 2022.

The Company recorded an income tax benefit of $0.8 million and $4.6 million, respectively during the three and nine months ended June 30, 2021. The tax benefit for the three months ended June 30, 2021, was primarily driven by the

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benefit on loss from operations during the period and $1.5 million overall benefit from multiple releases of unrecognized tax benefits and accrued interest due to statute of limitations expirations. The benefit for the nine months ended June 30, 2021 was increased by a $2.0 million discrete stock compensation windfall benefit for tax deductions that exceeded the associated book compensation expense, respectively.

During March 2021, the United States enacted the American Rescue Plan Act of 2021 (“Act”). The company evaluated the legislation included in the Act in relation to income taxes and determined that income tax provisions included in the Act donothavea material impact on its income tax provision.

TheCompanyevaluatestherealizabilityofitsdeferredtaxassetsby tax-payingcomponent andassesses theneed fora valuationallowanceona quarterly basis.The Company evaluatesthe profitability ofeachtax-paying componentonahistoriccumulativebasisandaforward-lookingbasiswhileperformingthisanalysis.TheCompany maintainsa U.S.valuationallowancerelatedto therealizability ofcertainstate taxcredits andstatenetoperating loss carry-forwards,aswellas avaluationallowanceagainst netdeferredtaxassetson certainforeigntax-paying components as of June 30, 2022.On February 1, 2022, the Company completed the sale of its semiconductor automationbusinessthatresultedinataxablegainprimarilyrecognizedintheU.S.Duringthesecondquarteroffiscal year 2022,the Company recorded a reductionto itsvaluationallowance for the utilization of deferred tax assets thatwere previously expected to expire.Thebenefit of this valuation allowancereversalwasrecorded inincome from discontinued operations in theamount of $3.6 million since thereversalwasdriven by theincomefrom discontinued operations.

The Company maintains liabilities for uncertain tax positions. These liabilities involve judgment and estimation and are monitored based on the best available information. The Company recognizes interest related to unrecognized tax benefits asa componentof the income tax provisionor benefit.The Company recognized $0.1 millionofinterestexpenserelatedtoitsuncertaintaxpositionsduringthethreeandtheninemonthsendedJune 30, 2022.

TheCompany is subject toU.S. federal,state,local and foreign income taxes in variousjurisdictions.The amountofincometaxespaidissubjecttotheCompany’sinterpretationofapplicabletaxlawsinthejurisdictionsin which it files.

Inthenormal course ofbusiness,theCompany issubjecttoincome taxaudits invariousglobaljurisdictionsin whichitoperates.TheyearssubjecttoexaminationvaryfortheU.S.andinternationaljurisdictions,withtheearliest taxyear being2013. Based on theoutcomeoftheseexaminationsortheexpirationofstatuteoflimitationsfor specific jurisdictions,itis reasonably possible that the related unrecognized tax benefits could change from those recorded in the Company’s Consolidated Balance Sheets. The Company currently anticipates that it is reasonably possible thatthe unrecognizedtax benefitsandaccruedinterest will be reduced by $0.6million in the next twelve months due tostatute of limitations expirations. Theseunrecognized tax benefits would impact theeffective tax rate if recognized.

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~~Supplemental cash flow information related to leases was as follows (in thousands, unaudited):~~

Three Months Ended June 30,

Nine Months Ended June 30,

2021

2020

2021

2020

Cash paid for amounts included in measurement of liabilities:

Operating cash flows from operating leases

$
2,532

$
2,215

$
7,530

$
6,089

Operating cash flows from finance leases

8

22

35

77

Financing cash flows from finance leases

269

297

881

880

ROU assets obtained in exchange for lease liabilities:

Operating leases

$
14,066

$
3,026

$
19,033

$
13,753

~~Future lease payments for operating and finance leases as of June 30, 2021 were as follows for the remainder of fiscal year 2021, the subsequent four fiscal years and thereafter (in thousands):~~

Operating Leases

Finance Leases

Fiscal year ended September 30,

2021

$
2,501

$
251

2022

9,032

363

2023

7,286

-

2024

6,378

-

2025

5,779

-

Thereafter

34,475

-

Total future lease payments

65,451

614

Less imputed interest

(12,928)

(14)

Total lease liability balance

$
52,523

$
600

~~As of June 30, 2021,~~ ~~the Company has entered into leases that have not commenced with future lease payments of $15.1~~ ~~million. These leases are not yet recorded in the accompanying unaudited Consolidated Balance Sheets. These leases will commence in 2021.~~

10. ~~Income Taxes~~

The Company recorded an income tax provision of $9.4 million and $20.4 million, respectively, during the three and nine months ended June 30, 2021. The tax provision for the three months ended June 30, 2021 was primarily driven by the provision on earnings from operations during the period. The provision was partially offset by a $1.5 million benefit from the reversal of uncertain tax positions during the period. The provision for the nine months ended June 30, 2021 was primarily driven by the provision on earnings from operations during the period and was partially offset by a ~~$2.7 million discrete stock compensation windfall benefit for tax deductions that exceeded the associated book compensation expense.~~

The Company recorded an income tax provision of $5.1 million and $5.6 million, respectively, during the three and nine months ended June 30, 2020. The tax provision for the three months ended June 30, 2020 was primarily driven by the provision on earnings from operations during the period. The tax provision for the nine months ended June 30, 2020 was primarily driven by the provision on earnings from operations during the period. The tax provision was offset by a $6.1 million discrete stock compensation windfall benefit for tax deductions that exceeded the associated compensation expense in the period. During the nine months ended June 30, 2020, the Company also recorded a discrete benefit of $0.5 ~~million from a reduction of deferred tax liabilities related to the extension of a tax rate incentive in China.~~

During March 2020, the United States enacted the Coronavirus Aid, Relief, and Economic Security Act which contains numerous income tax provisions among other tax and non-tax provisions. Some of these income tax provisions have retroactive effects on years before the date of enactment. During December 2020, the United States enacted the

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Consolidated Appropriations Act 2021 which also contains numerous income tax provisions among other tax and non-tax provisions. During March 2021, the United States enacted the American Rescue Plan Act of 2021. The Company evaluated the legislation of all three Acts in relation to income taxes and determined that the income tax Acts do not have a material impact on its income tax provision.

The Company maintains liabilities for uncertain tax positions. These liabilities involve judgment and estimation and are monitored based on the best information available. The Company recognizes interest related to unrecognized tax benefits as a component of the income tax provision or benefit. The Company recognized interest expense related to its uncertain tax positions of $0.3 million and $0.8 million, respectively, during the three and nine months ended June 30, 2021.

The Company is subject to U.S. federal, state, local and foreign income taxes in various jurisdictions. The amount of income taxes paid is subject to the Company’s interpretation of applicable tax laws in the jurisdictions in which it files.

In the normal course of business, the Company is subject to income tax audits in various global jurisdictions in which it operates. The years subject to examination vary for the U.S. and international jurisdictions, with the earliest tax year being 2013. Based on the outcome of these examinations or the expiration of statutes of limitations for specific jurisdictions, it is reasonably possible that the related unrecognized tax benefits could change from those recorded in the Company’s Consolidated Balance Sheets. The Company currently anticipates that it is reasonably possible that the unrecognized tax benefits and accrued interest on those benefits will be reduced by an amount of $17.2 million in the next 12 months due to statute of limitations expirations. These unrecognized tax benefits would impact the effective tax rate if recognized.

~~11.~~ Other Balance Sheet Information

The following is a summary of accounts receivable at June 30, ~~2021~~2022 and September 30, ~~2020~~2021 (in thousands):


	June 30,		September 30,		June 30,		September 30,
	2021		2020		2022		2021
Accounts receivable	$	238,890	$	195,587	$	154,600	$	124,195
Less allowance for expected credit losses		(4,737)		(7,216)		(4,326)		(4,318)
Less allowance for sales returns		(74)		(80)
Accounts receivable, net	$	234,079	$	188,291	$	150,274	$	119,877

The decrease in the allowance for expected credit losses from September 30, 2020 is due to collections of previously reserved trade receivables in the Brooks Life Sciences Services segment during the first quarter of fiscal year 2021.

The following is a summary of inventories at June 30, ~~2021~~2022 and September 30, ~~2020~~2021 (in thousands):


	June 30,		September 30,		June 30,		September 30,
	2021		2020		2022		2021
Inventories
Raw materials and purchased parts	$	98,997	$	73,609	$	35,594	$	27,644
Work-in-process		21,356		16,461		5,855		4,787
Finished goods		34,367		24,764		39,764		27,967
Total inventories	$	154,720	$	114,834	$	81,213	$	60,398

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Reserves for excess and obsolete inventory were ~~$18.6~~$4.1 million and ~~$17.1~~$3.7 million, respectively, at June 30, ~~2021~~2022 and September 30, ~~2020.~~2021.

At June 30, ~~2021~~2022 and September 30, ~~2020,~~2021, the Company had cumulative capitalized direct costs of ~~$21.9~~$25.5 million and ~~$18.2~~$22.7 million, respectively, associated with the development of software for its internal use. As of June 30, ~~2021,~~2022, this balance included ~~$5.0~~$7.5 million associated with software assets that are still in the development stage ~~which are included within "Property, plant~~ and ~~equipment, net"~~not yet placed in ~~the accompanying unaudited Consolidated Balance Sheets.~~service. During the three and nine months ended June 30, ~~2021,~~2022, the Company capitalized direct costs of ~~$3.7~~$1.2 million and $2.8 million, respectively, associated with the development of software for its internal use.

The Company establishes reserves for estimated costs of product warranties based on historical information. Product warranty reserves are recorded at the time product revenue is recognized, and retrofit accruals are recorded at the time retrofit programs are established. The Company’s warranty obligation is affected by product failure rates, utilization levels, material usage, service delivery costs incurred in correcting a product failure and supplier warranties on parts delivered to the Company.

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The following is a summary of product warranty and retrofit activity on a gross basis for the three and nine months ended June 30, ~~2021~~2022 and ~~2020~~2021 (in thousands):


Activity -Three Months Ended June 30, 2022								Activity -Three Months Ended June 30, 2022
Balance								Balance					Balance
March 31,								March 31,					June 30,
2022								2022	Accruals		Costs Incurred		2022
$								2,491	$	663	$	(630)	$	2,524

Activity -Three Months Ended June 30, 2021	Activity -Three Months Ended June 30, 2021							Activity -Three Months Ended June 30, 2021
Balance	Balance					Balance		Balance					Balance
March 31,	March 31,					June 30,		March 31,					June 30,
2021	2021	Accruals		Costs Incurred		2021		2021	Accruals		Costs Incurred		2021
$	8,044	$	1,892	$	(1,804)	$	8,132	2,182	$	858	$	(703)	$	2,337

Activity -Three Months Ended June 30, 2020
Activity -Nine Months Ended June 30, 2022								Activity -Nine Months Ended June 30, 2022
Balance	Balance					Balance		Balance					Balance
March 31,						June 30,
2020		Accruals		Costs Incurred		2020
September 30,								September 30,					June 30,
2021								2021	Accruals		Costs Incurred		2022
$	7,910	$	1,380	$	(1,409)	$	7,881	2,330	$	1,875	$	(1,681)	$	2,524

Activity -Nine Months Ended June 30, 2021	Activity -Nine Months Ended June 30, 2021							Activity -Nine Months Ended June 30, 2021
Balance	Balance					Balance		Balance					Balance
September 30,	September 30,					June 30,		September 30,					June 30,
2020	2020	Accruals		Costs Incurred		2021		2020	Accruals		Costs Incurred		2021
$	8,201	$	5,990	$	(6,059)	$	8,132	2,211	$	1,671	$	(1,545)	$	2,337

Activity -Nine Months Ended June 30, 2020
Balance						Balance
September 30,						June 30,
2019		Accruals		Costs Incurred		2020
$	7,175	$	6,033	$	(5,327)	$	7,881

~~12.~~11. Stock-Based Compensation

The Company may issue to eligible employees options to purchase shares of the Company’s stock, restricted stock and other equity incentives which vest upon the satisfaction of a performance condition and/or a service condition. In addition, the Company issues shares to participating employees pursuant to an employee stock purchase plan, and stock awards and deferred restricted stock units to its directors in accordance with its director compensation program.

24The stock-based compensation expense for restricted stock units for continuing operations was $3.2 million and $4.0 million, for the three months ended June 30, 2022 and 2021, respectively. The stock-based compensation expense for restricted stock units for continuing operations was $10.9 million and $11.7 million the nine months ended June 30, 2022 and 2021, respectively. The stock-based compensation expense for employee stock purchase plan for continuing operations was $0.3 million and $0.3 million, respectively, for the three months ended June 30, 2022 and 2021. The stock-based compensation expense for employee stock purchase plan for continuing operations was $1.1 million and $0.8 million, for the nine months ended June 30, 2022 and 2021.

~~Table of Contents~~The information included within the remaining note is on a total company basis, and includes amounts related to our discontinued operations.

The following table reflects the total stock-based compensation expense recorded during the three and nine months ended June 30, ~~2021~~2022 and ~~2020~~2021 (in thousands):


	Three Months Ended June 30,				Nine Months Ended June 30,				Three Months Ended June 30,				Nine Months Ended June 30,
	2021		2020		2021		2020		2022		2021		2022		2021
Restricted stock units	$	5,475	$	3,348	$	18,667	$	11,361	$	3,178	$	5,475	$	18,433	$	18,667
Employee stock purchase plan		611		377		1,610		987		307		611		1,600		1,610
Total stock-based compensation expense	$	6,086	$	3,725	$	20,277	$	12,348	$	3,485	$	6,086	$	20,033	$	20,277

The fair value of restricted stock units is determined based on the number of shares granted and the closing price of the Company’s common stock quoted on the Nasdaq Stock Market on the date of grant. For awards that vest based on

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service conditions, the Company recognizes stock-based compensation expense on a straight-line basis over the requisite service period. For awards that vest subject to performance conditions, the Company recognizes stock-based compensation expense ratably over the performance period if it is probable that performance condition will be met and adjusted for the probability percentage of achieving the performance goals. The Company makes estimates of stock award forfeitures and the number of awards expected to vest. The Company considers many factors in developing forfeiture estimates, including award types, employee classes and historical experience. Each quarter, the Company assesses the probability of achieving the performance goals. Current estimates may differ from actual results and future changes in estimates.

The Company grants restricted stock units that vest over a required service period and/or achievement of certain operating performance goals. Restricted stock units granted with performance goals may also have a required service period following the achievement of all or a portion of the performance goals. The following table reflects restricted stock units, including stock awards, granted during the nine months ended June 30, ~~2021~~2022 and ~~2020:~~2021:


		Time-Based	Stock	Performance-		Time-Based	Stock	Performance-
	Total Units	Units	Grants	Based Units	Total Units	Units	Grants	Based Units
Nine months ended June 30, 2022					231,696	94,429	49,063	88,204
Nine months ended June 30, 2021	346,172	162,842	14,683	168,647	346,172	162,842	14,683	168,647
Nine months ended June 30, 2020	411,967	163,390	27,007	221,570

Time-Based Grants

Restricted stock units granted with a required service period typically have three-year vesting schedules in which one-third of awards vest at the first anniversary of the grant date, one-third vest at the second anniversary of the grant date and one-third vest at the third anniversary of the grant date, subject to the award holders meeting service requirements.

Stock Grants

The stock awards granted to the members of the Company’s Board of Directors include stock awards and deferred restricted stock units.

Certain members of the Board of Directors have elected to defer receiving their annual stock awards and related quarterly dividends until they attain a certain age or cease to provide services as the Company’s Board members. Stock awards granted in fiscal years ~~2021~~2022 and ~~2020~~2021 were vested as of the respective grant dates.

Performance-Based Grants

Performance-based restricted stock units are earned based on the achievement of performance criteria established by the Human Resources and Compensation Committee and approved by the Board of Directors. The criteria for performance-based awards are weighted and have threshold, target and maximum performance goals.

Performance-based awards granted in fiscal year 2022, 2021 ~~2020~~ and ~~2019~~2020 allow participants to earn 100% of the restricted stock units if the Company’s performance meets its target goal for each applicable financial metric, and up to a

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maximum of 200% if the Company’s performance for such metrics meets or exceeds the maximum or stretch goal. Performance below the minimum threshold for each financial metric results in award forfeiture. Performance goals will be measured over a three-year period for each year’s awards and at the end of the period to determine the number of units earned by recipients who continue to meet the service requirement. Around the third anniversary of each year’s awards’ grant date, the Company’s Board of Directors determines the number of units earned for participants who continue to meet the service requirements on the vest date.

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Restricted Stock Unit Activity

The following table summarizes restricted stock unit activity for the nine months ended June 30, ~~2021:~~2022:


		Weighted			Weighted
		Average			Average
		Grant-Date			Grant-Date
	Shares	Fair Value		Shares	Fair Value
Outstanding at September 30, 2020	1,183,009	$	36.10
Outstanding at September 30, 2021				1,088,652	$	47.35
Granted	346,172		71.81	231,696		103.00
Vested	(406,764)		36.01	(555,513)		41.50
Forfeited	(32,600)		44.27	(223,821)		39.51
Outstanding at June 30, 2021	1,089,817		47.23
Outstanding at June 30, 2022				541,014		93.96

The weighted average grant date fair value of restricted stock units granted during the three months ended June 30, 2022 and 2021 was $80.58 and ~~2020~~$104.54, respectively. The fair value of restricted stock units vested during the three months ended June 30, 2022 and 2021 was ~~$104.54~~$0.2 million and ~~$31.87,~~$0.3 million, respectively. The weighted average grant date fair value of restricted stock units granted during the nine months ended June 30, 2022 and 2021 was $103.00 and ~~2020 was~~ $71.81, ~~and $46.52, respectively. The fair value of restricted stock units vested during the three months ended June 30, 2021 and 2020 was $0.3 million and $0.2 million,~~ respectively. The fair value of restricted stock units vested during the nine months ended June 30, 2022 and 2021 ~~and 2020~~ was ~~$28.2~~$66.9 million and ~~$41.6~~$28.2 million, respectively. During the nine months ended June 30, ~~2021~~2022 and ~~2020,~~2021, the Company remitted ~~$9.7~~$25.1 million and ~~$24.1~~$9.7 million, respectively, collected from employees to satisfy their tax obligations as a result of share issuances. Such proceeds collected and remitted were insignificant during the three months ended June 30, ~~2021~~2022 and ~~2020.~~2021.

As of June 30, ~~2021,~~2022, the unrecognized compensation cost ~~related to restricted stock units~~ that are expected to vest is ~~$29.1~~$23.2 million and will be recognized over an estimated weighted average service period of approximately ~~1.7~~1.8 years.

Employee Stock Purchase Plan

The Company maintains an employee stock purchase plan that allows its employees to purchase shares of common stock at a price equal to 85% of the fair market value of the Company’s stock at the beginning or the end of the semi-annual offering period, whichever is lower. There were ~~58,124~~51,133 and ~~63,934~~58,124 shares, respectively, purchased by employees under the employee stock purchase plan during the nine months ended June 30, ~~2021~~2022 and ~~2020.~~2021.

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~~13.~~12. Earnings per Share

The calculations of basic and diluted net income per share and basic and diluted weighted average shares outstanding are as follows for the three and nine months ended June 30, ~~2021~~2022 and ~~2020~~2021 (in thousands, except per share data):


	Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended
	June 30,				June 30,				June 30,				June 30,
	2021		2020		2021		2020		2022		2021		2022		2021
Income from continuing operations	$	39,170	$	13,696	$	90,110	$	36,062
Loss from discontinued operations, net of tax		(4)		—		(1,168)		(182)
Net income	$	39,166	$	13,696	$	88,942	$	35,880
Loss from continuing operations									$	(7,015)	$	(1,842)	$	(5,973)	$	(6,472)
(Loss) income from discontinued operations, net of tax										(2,555)		41,008		2,159,597		95,414
Net (loss) income									$	(9,570)	$	39,166	$	2,153,624	$	88,942

Weighted average common shares outstanding used in computing basic earnings per share		74,296		73,759		74,195		73,473		74,989		74,296		74,879		74,195
Dilutive restricted stock units		199		101		225		293		—		—		—		—
Weighted average common shares outstanding used in computing diluted earnings per share		74,495		73,860		74,420		73,766		74,989		74,296		74,879		74,195

Basic net income per share:
Income from continuing operations	$	0.53	$	0.19	$	1.21	$	0.49
Loss from discontinued operations, net of tax		(0.00)		-		(0.02)		(0.00)
Basic net income per share	$	0.53	$	0.19	$	1.20	$	0.49
Loss from continuing operations									$	(0.09)	$	(0.02)	$	(0.08)	$	(0.09)
(Loss) income from discontinued operations, net of tax										(0.03)		0.55		28.84		1.29
Basic net (loss) income per share									$	(0.13)	$	0.53	$	28.76	$	1.20

Diluted net income per share:
Income from continuing operations	$	0.53	$	0.19	$	1.21	$	0.49
Loss from discontinued operations, net of tax		(0.00)		—		(0.02)		(0.00)
Diluted net income per share	$	0.53	$	0.19	$	1.20	$	0.49
Dividend declared per share	$	0.10	$	0.10	$	0.30	$	0.30
Diluted net (loss) income per share:
Loss from continuing operations									$	(0.09)	$	(0.02)	$	(0.08)	$	(0.09)
(Loss) income from discontinued operations, net of tax										(0.03)		0.55		28.84		1.29
Diluted net (loss) income per share									$	(0.13)	$	0.53	$	28.76	$	1.20

During the ~~three and~~ nine months ended June 30, ~~2021,~~2022, restricted stock units of ~~13,593 and 18,548, respectively,~~59,513 were excluded from the computation of diluted earnings per share as their effect would be antidilutive ~~based on the treasury stock method. During the three and nine months ended June 30, 2020, restricted stock units of 148,085 and 162,189, respectively, were excluded from the computation of diluted~~to earnings per share ~~as their effect would be antidilutive~~for continuing operations based on the treasury stock method.

~~14.~~13. Revenue from Contracts with Customers

Disaggregated Revenue

The Company disaggregates revenue from contracts with customers in a manner that depicts how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors.

The Company has 3 operating and reportable segments consisting of Brooks Semiconductor Solutions Group, Brooks Life Sciences Products and Brooks Life Sciences Services. The Company has 5 reporting units, including 3 reporting units within the Brooks Semiconductor Solutions Group operating segment, 1 ~~reporting unit within Brooks Life Sciences Products operating segment, and 1 reporting units within the Brooks Life Sciences Services~~

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~~operating segment~~. The following is revenue by ~~reporting unit~~significant business line for the three and nine months ended June 30, ~~2021~~2022 and ~~2020 (in~~2021(in thousands):

Three months ended June 30,

Nine months ended June 30,

2021

2020

2021

2020
Reporting Unit

Automation Solutions

$
122,567

$
81,656

$
320,540

$
214,627
Contamination Control Solutions

50,742

34,780

117,236

124,584
Global Semiconductor Services

12,953

10,616

36,898

31,575
Total Brooks Semiconductor Solutions Group

186,262

127,052

474,674

370,786

Brooks Life Sciences Products

48,625

30,421

146,490

91,138

Brooks Life Sciences Services

80,462

62,877

230,275

189,153
Total

$
315,349

$
220,350

$
851,439

$
651,077


	Three months ended June 30,				Nine months ended June 30,
	2022		2021		2022			2021
Significant Business Line
Life Sciences Products	$	47,369	$	48,625	$	150,861	$	146,490
Sample Repository Solutions		26,000		21,772		78,806		64,496
Genomic Services		59,366		58,690		188,264		165,778
Total	$	132,735	$	129,087	$	417,931	$	376,764

Contract Balances

Accounts Receivable, Net. Accounts receivable represent rights to consideration in exchange for products or services that have been transferred by the Company, when payment is unconditional and only the passage of time is required

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before payment is due. Accounts receivable do not bear interest and are recorded at the invoiced amount. The Company maintains an allowance for expected credit losses representing its best estimate of probable credit losses related to its existing accounts receivable and their net realizable value. The Company determines the allowance for expected credit losses based on a number of factors, including an evaluation of customer credit worthiness, the age of the outstanding receivables, economic trends, historical experience and other information through the payment periods. Accounts receivable, net were ~~$234.1~~$150.3 million and ~~$188.3~~$119.9 million at June 30, ~~2021~~2022 and September 30, ~~2020,~~2021, respectively.

Contract Assets. Contract assets represent rights to consideration in exchange for products or services that have been transferred by the Company, when payment is conditional on something other than the passage of time. These amounts typically relate to contracts ~~within the life sciences segments~~ where the right to payment is not present until completion of the contract or the achievement of specified milestones and the value of the products or services transferred exceed this constraint. Contract assets are classified as current. Contract asset balances which are included within “Prepaid expenses and other current assets” on the Company’s Consolidated Balance Sheet, were ~~$16.1~~$20.8 million and ~~$16.8~~$15.3 million at June 30, ~~2021~~2022 and September 30, ~~2020, respectively.~~

~~Deferred Commissions.~~ Deferred commissions represent a direct and incremental cost of obtaining a contract. These amounts primarily relate to sales commissions within the life sciences segments and are deferred and amortized over a 60-month period, which represents the average period of contract performance. The Company classifies deferred commissions as noncurrent as the original amortization period of this asset is greater than one year. Deferred commissions balances are included within “Other assets” on the Company’s Consolidated Balance Sheet. Deferred commissions were $0.3 million and $0.4 million, respectively, at June 30, 2021, and September 30, 2020. The Company recorded amortization expense related to deferred commissions of less than $0.1 million and $0.1 million for the three months ended June 30, 2021 and 2020, respectively. The Company recorded amortization expense related to deferred commissions of $0.1 million and $0.4 million for the nine months ended June 30, 2021 and 2020, respectively.

Contract Liabilities. Contract liabilities represent the Company’s obligation to transfer products or services to a customer for which consideration has been received, or for which an amount of consideration is due from the customer. Contract assets and liabilities are reported on a net basis at the contract level, depending on the contracts position at the end of each reporting period. Contract liabilities are included within “Deferred revenue” on the Company’s Consolidated Balance Sheet. Contract liabilities were ~~$35.4~~$33.1 million and ~~$31.4~~$25.7 million at June 30, ~~2021~~2022 and September 30, ~~2020,~~2021, respectively. Revenue recognized from the contract liability balance at September 30, ~~2020~~2021 was ~~$30.2~~$13.4 million for the nine months ended June 30, ~~2021.~~2022.

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Remaining Performance Obligations. Remaining performance obligations represent the transaction price of unsatisfied or partially satisfied performance obligations within contracts with an original expected contract term that is greater than one year and for which fulfillment of the contract has started as of the end of the reporting period. The aggregate amount of transaction consideration allocated to remaining performance obligations as of June 30, ~~2021~~2022 was ~~$65.2~~$63.7 million. The following table summarizes when the Company expects to recognize the remaining performance obligations as revenue; the Company will recognize revenue associated with these performance obligations as transfer of control occurs (in thousands):


	As of June 30, 2021						As of June 30, 2022
	Less than 1 Year		Greater than 1 Year		Total		Less than 1 Year		Greater than 1 Year		Total
Remaining Performance Obligations	$	46,552	$	18,677	$	65,229	$	35,662	$	28,010	$	63,672

Cost to Obtain and Fulfill a Contract

The Company capitalizes sales commissions when incurred if they are (i) incremental costs of obtaining a contract, (ii) expected to be recovered and (iii) have an expected amortization period that is greater than one year. As part of the Company’s cumulative effect adjustment upon the initial adoption of ASC 606, incremental costs associated with obtaining a contract were capitalized and have been classified as deferred commissions within the Company’s Consolidated Balance Sheet. These amounts primarily relate to sales commissions ~~within the Brooks life sciences segments~~ and are being amortized over a 60-month period, which represents the average period of contract performance. The Company did not capitalize any sales commissions during the ~~three and~~ nine months ended June 30, ~~2021~~2022 as the amount of sales commissions that qualified for capitalization during the reporting period was insignificant. Sales commissions incurred during the reporting period have been expensed as incurred. These costs are recorded within “Selling, general and administrative” expenses on the Company’s Consolidated Statement of Operations. The Company has concluded that none of its costs incurred in fulfillment of customer contracts meet the capitalization criteria. The Company will account for shipping and handling activities as fulfillment activities and recognize the associated expense when control of the product has transferred to the customer.

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~~15.~~14. Segment and Geographic Information

Operating segments are defined as components of an enterprise that engage in business activities for which discrete financial information is available and regularly reviewed by the chief operating decision maker in deciding how to allocate resources and to assess performance. The Company’s Chief Executive Officer is the Company’s chief operating decision maker.

The Company operates in 32 reportable segments: the ~~Brooks Semiconductor Solutions Group segment, the Brooks~~ Life Sciences Products segment and the ~~Brooks~~ Life Sciences Services segment. These reportable segments also represent the Company’s operating ~~segments.~~segments. The Company previously operated in 23 reportable segments: the ~~Brooks~~ Semiconductor Solutions Group segment, ~~and~~ the ~~Brooks~~ Life Sciences ~~segment. The Brooks Life Sciences segment consisted of the Sample Management operating~~Products segment, and the ~~GENEWIZ operating~~Life Sciences Services segment. As discussed in Note 3, “Discontinued Operations”, our Semiconductor Solutions Group reportable segment ~~that aggregated into one reportable segment. During fiscal year 2020,~~has been classified as a discontinued operation. The sale of the ~~Company reorganized its operating segments to better align with its~~semiconductor automation business ~~activities in connection with its recent acquisitions and the Company’s strategic vision.~~was completed on February 1, 2022. Historical information has been adjusted to reflect the new reportable segments.

The ~~Brooks Semiconductor Solutions Group~~Life Sciences Products segment provides ~~a variety of products,~~automated cold sample management systems for compound and biological sample storage, equipment for sample preparation and handling, consumables, and instruments, that help customers manage samples throughout their research discovery and development workflows. The segment’s product offerings include automated cold storage systems, cryogenic storage systems, consumables and instruments and the associated services ~~and~~business for these products.

The Life Sciences Services segment provides comprehensive sample management programs, integrated cold chain solutions, ~~that enable improved throughput and yield in controlled operating environments,~~informatics, as well as ~~an extensive~~sample-based laboratory services to advance scientific research and support drug development. The segment’s service offerings include sample storage, genomic sequencing, gene synthesis, laboratory processing services, laboratory analysis, biospecimen procurement services and other support services which are provided to a wide range of ~~support services.~~ life science customers, including pharmaceutical companies, biotechnology companies, biorepositories and research institutes. Our Sample Repository Solutions business is a global leader in sample and material storage and management and provides a full suite of reliable cold and ultra-cold chain solutions.

The ~~solutions include atmospheric~~Company considers adjusted operating income, which excludes charges related to amortization of completed technology, the acquisition accounting impact on inventory contracts acquired, restructuring related charges and ~~vacuum robots, robotic modules, tool automation systems, contamination control~~other special charges, such as impairment losses, as the primary performance metric when evaluating the business.

Table of ~~carrier pods and reticle storage.~~ Contents

The ~~support services include repair services, diagnostic support services, and installation services in support~~following is the summary of the ~~products,~~financial information for the Company’s reportable segments for the three and nine months ended June 30, 2022 and 2021 (in thousands):


	Three Months Ended June 30,					Nine Months Ended June 30,
	2022		2021		2022		2021
Revenue:
Life Sciences Products	$	47,369	$	48,625	$	150,861	$	146,520
Life Sciences Services		85,366		80,462		267,070		230,244
Total revenue	$	132,735	$	129,087	$	417,931	$	376,764

Operating loss:
Life Sciences Products	$	2,216	$	5,060	$	11,895	$	16,492
Life Sciences Services		2,251		5,774		14,997		18,316
Reportable segment adjusted operating income		4,467		10,834		26,892		34,808
Amortization of completed technology		1,810		2,173		5,424		6,200
Amortization of other intangible assets		5,745		7,396		18,064		21,657
Restructuring charges		25		—		319		53
Tariff adjustment		—		—		(486)		5,414
Other unallocated corporate expenses		1,960		2,148		13,677		11,331
Total operating loss		(5,073)		(883)		(10,106)		(9,847)
Interest income		6,822		409		9,933		503
Interest expense		(2,101)		(477)		(4,111)		(1,485)
Loss on extinguishment of debt		—		—		(632)		—
Other income (expenses), net		630		(1,651)		(1,617)		(263)
Income (loss) before income taxes	$	278	$	(2,602)	$	(6,533)	$	(11,092)




Assets:		Life Sciences Products		Life Sciences Services		Total
June 30, 2022	$	319,632	$	876,589	$	1,196,221
September 30, 2021		278,769		780,238		1,059,007

The following is a reconciliation of the Company’s reportable segments’ segment assets to the corresponding amounts presented in the accompanying unaudited Consolidated Balance Sheets as of June 30, 2022 and September 30, 2021 (in thousands):


	June 30,		September 30,
	2022		2021
Segment assets	$	1,196,221	$	1,059,007
Cash and cash equivalents, restricted cash, and marketable securities		2,507,326		244,012
Deferred tax assets		1,926		10,043
Other assets		17,244		11,237
Assets held for sale		—		495,213
Total assets	$	3,722,717	$	1,819,512

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Revenue from external customers is attributed to geographic areas based on locations to which ~~enable customers~~customer orders are shipped. Net revenue by geographic area for the three and nine months ended June 30, 2022 and 2021 (in thousands) are as follows:


		Three Months Ended June 30,				Nine Months Ended June 30,
	2022		2021		2022		2021
Geographic Location:
North America	$	88,557	$	83,638	$	285,283	$	236,939
Europe		25,042		27,009		75,863		82,412
China		12,906		11,077		33,936		33,869
Asia Pacific/ Other		6,230		7,363		22,849		23,544
Total	$	132,735	$	129,087	$	417,931	$	376,764

Revenue for the United States comprises 99% of the revenue for North America for the three and nine months ended June 30, 2022 and 2021.

15. Significant Customers

The Company had no individual customer that accounted for 10% or more of its consolidated revenue for each of the three and nine months ended June 30, 2022 and 2021. There was no customer that accounted for more than 10% of the Company’s accounts receivable balance as of both June 30, 2022 and September 30, 2021.

16. Commitments and Contingencies

Tariff Matter

In fiscal year 2021, as part of the Company’s continued integration of GENEWIZ, which was acquired in November 2018, the Company initiated a review during first quarter of fiscal year 2021, with the assistance of a third party consultant, of the transaction value that the Company has used to calculate tariffs on inter-company imports of samples shipped from its GENEWIZ business. As a result of the third-party review and in light of a new interpretation surrounding the valuation method used to calculate the estimated transaction value, the Company revised its estimate of the tariffs owed as a result and recorded a liability of $6.1 million in the second quarter of fiscal 2021. As of March 31, 2022, the accrual was $7.4 million. During the three months ended June 30, 2022, the Company submitted a payment in the amount of $5.9 million to the customs authorities related to November 2021 and prior periods. The customs authorities will review the Company’s calculation of tariffs for these periods and determine if any further tariffs are owed. As of June 30, 2022 and September 30, 2021, the accrual for these tariffs was $1.8 million and $7.0 million, respectively, which includes estimates for any additional liability for tariffs owed related to recurring operating activity. The Company does not expect to incur any significant penalties associated with the tariffs.

Purchase Commitments

At June 30, 2022, the Company had non-cancellable commitments of $78.6 million, primarily comprised of purchase orders for inventory of $65.0 million, information technology related commitments of $13.1 million, and China facility commitments of $0.4 million.

Contingencies

Table of Contents

Edwards asserted claims for indemnification under the definitive agreement relating to alleged breaches of representations and warranties relating to customer warranty claims and inventory.The Company cannot determine the probability of any losses or outcome of these claims including the amount of any indemnifiable losses, if any, resulting from these claims at this time, however, the Company believes that none of these claims will have a material adverse effect on its consolidated financial position or results of operations. If the resolution of these claims results in indemnifiable losses in excess of the applicable indemnification deductibles and indemnification escrow established under the definitive agreement, Edwards would be required to seek recovery under the representation and warranty insurance Edwards obtained in connection with the closing of the transaction. The Company believes that any indemnifiable losses in excess of the applicable deductibles and indemnification escrow established in the definitive agreement would be covered by such insurance. If Edwards is unable to obtain recovery under its insurance, however, it could seek recovery of such indemnifiable losses, if any, directly from the Company. In the event of unexpected subsequent developments and given the inherent unpredictability of these matters, there can be no assurance that the Company’s assessment of any claim will reflect the ultimate outcome, and an adverse outcome in certain matters could, from time to time, have a material adverse effect on the Company’s consolidated financial position or results of operations in particular quarterly or annual periods.

17. Fair Value Measurement

The fair value measurement guidance establishes a fair value hierarchy which requires an entity to maximize ~~process tool uptime~~the use of observable inputs and ~~productivity. This segment also provides end-user customers with spare parts~~minimize the use of unobservable inputs when measuring fair value. The following levels of inputs may be used to measure fair value:

Level 1 Inputs: Quoted prices in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset and ~~enhancement upgrades~~liability occur in sufficient frequency and volume to ~~maximize tool productivity.~~provide pricing information on an ongoing basis.

Level 2 Inputs: Observable inputs other than prices included in Level 1, including quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 Inputs: Unobservable inputs that are significant to the fair value of the assets or liabilities and reflect an entity’s own assumptions in pricing assets or liabilities since they are supported by little or no market activity.

The Company measures certain assets, including the cost and equity method investments, at fair value on a nonrecurring basis when they are deemed to be other-than-temporarily impaired. The fair values of these investments are determined based on valuation techniques using the best information available, and may include quoted market prices, market comparable, and discounted cash flow projections. An impairment charge is recorded when the cost of the investment exceeds its fair value and this condition is determined to be other-than-temporary.

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~~The Brooks Life Sciences Products segment provides automated cold sample management systems for compound~~

Financial Assets and biological sample storage, equipment for sample preparation and handling, consumables and instruments, that help customers manage samples throughout their research discovery and development workflows. The segment’s product offerings include automated cold storage systems, cryogenic storage systems, consumables and instruments and the associated services business for these products.

The Brooks Life Sciences Services segment provides comprehensive sample management programs, integrated cold chain solutions, informatics, as well as sample-based laboratory services to advance scientific research and support drug development. The segment’s service offerings include sample storage, genomic sequencing, gene synthesis, laboratory processing services, laboratory analysis, and other support services which are provided toLiabilities Measured at Fair Value on a ~~wide range of life science customers, including pharmaceutical companies, biotechnology companies, biorepositories and research institutes.~~

The Company considers adjusted operating income, which excludes charges related to amortization of completed technology, the acquisition accounting impact on inventory contracts acquired and restructuring related charges as the primary performance metric when evaluating the business.Recurring Basis

The following istables summarize assets and liabilities measured and recorded at fair value on a recurring basis in the ~~summary~~accompanying Consolidated Balance Sheets as of ~~the financial information for the Company’s reportable segments for the three and nine months ended~~ June 30, ~~2021~~2022 and ~~2020~~September 30, 2021 (in thousands):

Three Months Ended June 30,

Nine Months Ended June 30,

2021

2020

2021

2020

Revenue:







Brooks Semiconductor Solutions Group

$
186,262

$
127,052

$
474,674

$
370,786

Brooks Life Sciences Products

48,625

30,421

146,490

91,138

Brooks Life Sciences Services

80,462

62,877

230,275

189,153

Total revenue

$
315,349

$
220,350

$
851,439

$
651,077

Operating income:

Brooks Semiconductor Solutions Group

$
44,797

$
23,414

$
99,637

$
55,120

Brooks Life Sciences Products

9,138

2,482

28,295

4,988

Brooks Life Sciences Services

13,783

4,109

41,501

15,695

Reportable segment adjusted operating income

67,718

30,005

169,433

75,803

Amortization of completed technology

3,352

2,779

8,060

8,194

Amortization of other intangible assets

7,733

7,611

22,690

23,137

Restructuring charges

—

(29)

179

1,125

Tariff adjustment

—

—

5,414

—

Other unallocated corporate expenses (income)

6,400

545

21,423

(990)

Total operating income

50,233

19,099

111,667

44,337

Interest income

409

29

503

865

Interest expense

(477)

(810)

(1,485)

(2,265)

Other income (expenses), net

(1,625)

498

(147)

(1,318)

Income before income taxes

$
48,540

$
18,816

$
110,538

$
41,619

Brooks



Semiconductor

Brooks Life

Brooks Life

Assets:

Solutions Group

Sciences Products

Sciences Services

Total

June 30, 2021

$
433,108

$
259,592

$
779,798

$
1,472,498

September 30, 2020

296,289

214,196

737,967

1,248,452


			Fair Value Measurements at Reporting Date Using
			Quoted Prices in				Significant
			Active Markets for		Significant Other		Unobservable
	June 30,		Identical Assets		Observable Inputs		Inputs
Description	2022		(Level 1)		(Level 2)		(Level 3)
Assets:
Cash equivalents	$	330,546	$	330,546	$	—	$	—
Available-for-sale securities		1,021,090		417,059		604,031		—
Foreign exchange contracts		32		—		32		—
Net investment hedge		65,814		—		65,814		—
Total assets	$	1,417,482	$	747,605	$	669,877	$	—
Liabilities:
Foreign exchange contracts		294		—		294		—
Total liabilities	$	294	$	—	$	294	$	—


			Fair Value Measurements at Reporting Date Using
			Quoted Prices in				Significant
			Active Markets for		Significant Other		Unobservable
	September 30,		Identical Assets		Observable Inputs		Inputs
Description	2021		(Level 1)		(Level 2)		(Level 3)
Assets:
Cash equivalents	$	21	$	21	$	—	$	—
Available-for-sale securities		3,679		—		3,679		—
Foreign exchange contracts		153		—		153		—
Total assets	$	3,853	$	21	$	3,832	$	—
Liabilities:
Foreign exchange contracts		165	$	—		165		—
Acquisition-related contingent consideration		9,400		—		—		9,400
Total liabilities	$	9,565	$	—	$	165	$	9,400

Cash Equivalents

Cash equivalents consist of money market funds and are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices in active markets.

Available-For-Sale Securities

Available-for-sale securities primarily consist of municipal securities, bank certificate of deposits and U.S. government backed securities, and as such are classified as Level 1. Investments classified as Level 2 consist of debt securities that are valued using matrix pricing and benchmarking because they are not actively traded. Matrix pricing is a mathematical technique used to value securities by relying on the securities’ relationship to other benchmark quoted prices.

Foreign Exchange Contracts

Foreign exchange contract assets and liabilities are measured and reported at fair value based on observable market inputs and classified within Level 2 of the fair value hierarchy due to a lack of an active market for these contracts.

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~~The following~~Net Investment Hedge

Net investment hedge assets is ~~a reconciliation~~measured and reported at fair value based on observable market inputs and classified within Level 2 of the ~~Company’s reportable segments’ segment assets~~fair value hierarchy due to a lack of an active market for these contracts.

Acquisition-related Contingent Consideration

Acquisition-related contingent consideration is measured and reported at fair value using the real options method based on the unobservable inputs that are significant to the ~~corresponding amounts presented~~fair value and classified with Level 3 of the fair value hierarchy. The amount is contingent based on the acquired business’ performance for the twelve-month period ending December 31, 2021. Please refer to Note 5, “Acquisitions” for further detail. Changes in the ~~accompanying unaudited Consolidated Balance Sheets as~~fair value of ~~June 30, 2021~~contingent consideration resulting from a change in the underlying inputs are recognized in results of operations until the arrangement is settled.

Financial Assets and ~~September 30, 2020 (in thousands):~~

June 30,

September 30,

2021

2020
Segment assets

$
1,472,498

$
1,248,452
Cash and cash equivalents, restricted cash, and marketable securities

286,310

305,694
Deferred tax assets

4,447

4,979
Total assets

$
1,763,255

$
1,559,125

Liabilities Measured at Fair Value on a Nonrecurring Basis

~~Revenue from external customers is attributed to geographic areas based on locations in which customer orders are placed. Net revenue by geographic area for~~During the three months and nine months ended June 30, 2022 and 2021, ~~and 2020 (in thousands) are as follows:~~the Company did not record any material other-than-temporary impairments on financial assets required to be measured at fair value on a nonrecurring basis.

Three Months Ended June 30,

Nine Months Ended June 30,

2021

2020

2021

2020
Geographic Location:

Asia / Pacific/ Other

China

$
55,062

$
30,228

$
137,945

$
76,435
Taiwan

29,844

15,266

73,350

91,993
Republic of Korea

28,994

22,369

77,982

46,296
Other

37,186

31,552

105,861

93,245

151,086

99,415

395,138

307,969
North America

USA

108,344

79,032

290,883

243,883
Other

2,110

850

22,947

2,117

110,454

79,882

313,830

246,000
Europe

53,809

41,053

142,471

97,108
Total

$
315,349

$
220,350

$
851,439

$
651,077

18. Subsequent Event

On July 1, 2022, the Company closed its previously announced acquisition of Barkey Holding GmbH and its subsidiaries ("Barkey"), a leading provider of controlled rate thawing devices for customers in the medical, biotech and pharmaceutical industries, headquartered in Leopoldshöhe, Germany. The ~~geographic location~~acquisition was completed with a purchase price of ~~an OEM~~approximately €80.0 million, subject to customary adjustments. The acquisition is ~~not indicative of where~~expected to expand the ~~products will eventually~~Company’s existing offerings and capabilities within its Life Sciences Products segment.

On August 8, 2022, the Company, through its wholly-owned subsidiary, Azenta Luxembourg, S.a.r.l, entered into a definitive agreement to acquire °B Medical Systems S.a.r.l and its subsidiaries (“B Medical”), a global leader in temperature-controlled storage and transportation solutions. The purchase price to be ~~used.~~paid by Azenta at closing is approximately €410 million. Additional consideration, up to €50 million, may be paid contingent upon achieving future performance milestones. The ~~geographic area for the orders~~transaction is ~~determined by the onward sale of an OEM system which incorporates the sub-systems and/or components.~~expected to close in October 2022, upon meeting customary closing conditions.

~~16. Significant Customers~~

~~The Company had no individual customer that accounted for 10% or more of its consolidated revenue during the three and nine months ended June 30, 2021.~~ ~~The Company had no individual customer that accounted for 10% or more of its consolidated revenue during the three months ended June 30, 2020.~~ The Company had one customer that accounted for 10% or more of its consolidated revenue, at 11%, during the nine months ended June 30, 2020. There was one customer that accounted for more than 10% of the Company’s accounts receivable balance, at 11%, as of June 30, 2021 and no customer that accounted for more than 10% of the Company’s accounts receivable balance as of September 30, 2020.

~~17. Commitments and Contingencies~~

~~GENEWIZ Tariff Matter~~

As part of the Company’s continued integration of GENEWIZ, which was acquired in November 2018, the Company initiated a review, with the assistance of a third party consultant, of the transaction value that the Company has used to calculate tariffs on inter-company imports of samples shipped from its GENEWIZ business. As a result of the

~~Table of Contents~~

third-party review and in light of a new interpretation surrounding the valuation method used to calculate the estimated transaction value, the Company revised its estimate of the tariffs owed and as a result recorded a liability of $6.1 million in the second quarter of 2021. Of the total liability, $2.8 million is for the period prior to the acquisition of GENEWIZ and an additional $3.3 million is for the period since the Company acquired GENEWIZ in November 2018. The Company intends to pay any tariffs determined to be owed. The Company does not expect to incur any significant penalties associated with such tariffs. As a result of the change in estimate, basic net income per share decreased $0.07 for the nine months ended June 30, 2021. Diluted net income per share also decreased $0.07 for the same period.

~~Letters of Credit~~

As of June 30, 2021, the Company had approximately $1.3 million of letters of credit outstanding related primarily to customer advances and other performance obligations. These arrangements guarantee the refund of advance payments received from the Company’s customers in the event that the product is not delivered, or warranty obligations are not fulfilled in accordance with the contract terms. These obligations could be called by the beneficiaries at any time before the expiration date of the particular letter of credit if the Company fails to meet certain contractual requirements. None of these obligations were called during the nine months ended June 30, 2021, and the Company currently does not anticipate any of these obligations to be called in the near future.

~~Purchase Commitments~~

At June 30, 2021, the Company had non-cancellable commitments of $288.0 million, including primarily purchase orders for inventory of $254.6 million, information technology related commitments of $18.0 million, and China facility commitments of $15.2 million.

~~Contingencies~~

The Company is subject to various legal proceedings, both asserted and unasserted, that arise in the ordinary course of business. The Company cannot predict the ultimate outcome of such legal proceedings or in certain instances provide reasonable ranges of potential losses. The Company may also have certain indemnification obligations pursuant to claims made under the definitive agreement it entered into with Edwards in connection with the Company’s sale of its semiconductor cryogenics business. See Note 3 “Discontinued Operations” for further information. However, as of the date of this report, the Company believes that none of these claims will have a material adverse effect on its consolidated financial position or results of operations. In the event of unexpected subsequent developments and given the inherent unpredictability of these matters, there can be no assurance that the Company’s assessment of any claim will reflect the ultimate outcome, and an adverse outcome in certain matters could, from time to time, have a material adverse effect on the Company’s consolidated financial position or results of operations in particular quarterly or annual periods.

~~18. Subsequent Events~~

~~Dividend~~

On August 3, 2021, the Company’s Board of Directors declared a cash dividend of $0.10 per share payable on September 24, 2021 to common stockholders of record as of September 3, 2021. Dividends are declared at the discretion of the Company’s Board of Directors and depend on the Company’s actual cash flows from operations, its financial condition and capital requirements and any other factors the Company’s Board of Directors may consider relevant. Future dividend declarations, as well as the record and payment dates for such dividends, will be determined by the Company’s Board of Directors on a quarterly basis.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The Management’s Discussion and Analysis of Financial Condition and Results of Operations, or MD&A, describes principal factors affecting the results of our operations, financial condition and liquidity as well as our critical accounting policies and estimates that require significant judgment and thus have the most significant potential impact on our unaudited consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. Our MD&A is organized as follows:

●

Overview. This section provides a general description of our business and operating segments as well as a brief discussion and overall analysis of our business and financial performance, including key developments affecting the Company during the three and nine months ended June 30, ~~2021~~2022 and ~~2020.~~2021.

●

Critical Accounting Policies and Estimates. This section discusses accounting policies and estimates that require us to exercise subjective or complex judgments in their application. We believe these accounting policies and estimates are important to understanding the assumptions and judgments incorporated in our reported financial results.

●

Results of Operations. This section provides an analysis of our financial results for the three and nine months ended June 30, ~~2021~~2022 as compared to the three and nine months ended June 30, ~~2020.~~2021.

●

Liquidity and Capital Resources. This section provides an analysis of our liquidity and changes in cash flows as well as a discussion of available borrowings and contractual commitments.

You should read the MD&A in conjunction with our unaudited consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q. In addition to historical information, the MD&A contains forward-looking statements that involve risks and uncertainties. You should read “Information Related to Forward-Looking Statements” below for a discussion of important factors that could cause our actual results to differ materially from our expectations.

Sale of the Semiconductor ~~Cryogenics~~Automation Business

In the fourth quarter of fiscal year ~~2018,~~2021, we entered into a definitive agreement to sell our semiconductor ~~cryogenics~~automation business to ~~Edwards Vacuum LLC (a member of the Atlas Copco Group)~~Thomas H. Lee, Partners, L.P., or ~~Edwards,~~THL, for ~~approximately $675.0 million~~ $3.0 billion in cash ~~which was~~ subject to customary adjustments. ~~We originally acquired~~In connection with the planned divestiture of the semiconductor ~~cryogenics~~automation business ~~in 2005 as part of~~and our continued focus on our life sciences businesses, we changed our corporate name from “Brooks Automation, Inc.” to “Azenta, Inc.” and our common stock started to trade on the ~~acquisition of Helix Technology Corporation.~~ Nasdaq Global Select Market under the symbol “AZTA” on December 1, 2021.

On ~~July~~February 1, ~~2019,~~2022, we completed the sale of our semiconductor automation business for $2.9 billion in cash, subject to working capital and other customary adjustments. Net proceeds from the sale are expected to be $2.5 billion, net of estimated taxes payable. Since our founding in 1978, we had been a leading automation provider and partner to the global semiconductor manufacturing industry. With the completion of the sale of the semiconductor ~~cryogenics business. Any results related to~~automation business, we no longer serve the semiconductor ~~cryogenics~~market. The semiconductor automation business ~~have~~has been classified as a discontinued ~~operations.~~

~~Separation~~

~~On May 10, 2021, we announced~~operation and, unless otherwise noted, this MD&A relates solely to our ~~intention to separate our business into two independent, publicly traded companies. We plan to spin -off~~continuing operations and does not include the operations of our semiconductor business, which operates as our Semiconductor Solutions Group segment through a pro rata distribution of shares to our common stockholders. Completion of the proposed spin-off is subject to certain conditions, including final approval by our Board of Directors. We are targeting to complete the separation of the business before the end of calendar year 2021.automation business.

Impact of the COVID-19 Pandemic

~~During~~We have implemented business continuity plans designed to address the COVID-19 pandemic and minimize the disruption to ongoing operations. Since the beginning of the COVID-19 pandemic in March 2020, however, our ~~facilities have remained operational with only required personnel on site,~~business has been impacted at various times by reduced demand for services from customers experiencing lockdowns and quarantines, travel restrictions impacting our ability to service our products, supply chain constraints, increased competition for talent, and governmental mandates at times constraining our employees’ ability to work at our facilities. Since the ~~balance~~beginning of ~~employees working~~the COVID-19 pandemic in March 2020, however, our business has been impacted at various times by reduced demand for services from ~~home. Both~~customers experiencing lockdowns and quarantines, travel restrictions impacting our ~~semiconductor~~ability to service our products, supply chain constraints, increased competition for talent, and ~~life sciences segments fall within the classification of “Essential Critical Infrastructure Sector” as defined by the U.S. Department of Homeland Security and have continued operations~~governmental mandates at times constraining our employees’ ability to work at our facilities. Recently, during the ~~COVID-19 pandemic. We have followed government guidance~~third quarter ended June 30, 2022, we experienced a two-week facility closure in ~~each region and~~Suzhou, China as a result of local

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~~country~~government protocols and mandates. As we expect the pandemic to continue to evolve, we will continue monitoring and assessing the effects of the COVID-19 pandemic on our business. However, we cannot at this time accurately predict what effects these conditions will ultimately have implemented U.S. Centers for Disease Control and Prevention social distancing guidelines and other applicable best practices to protect the health and safety of our employees. In the Life Sciences business,on our operations ~~are accepting customer orders for all of their offerings and are fast tracking customer requests which support research and development and testing related~~due to ~~the COVID-19 virus. The Semiconductor Solutions business continues~~uncertainties relating to supply critical chip manufacturing equipment and support services globally. The COVID-19 pandemic has not had a substantial negative impact on our financial results and a portion of the impact has been mitigated by our realignment of resources to satisfy incremental orders related to virus research. As states safely reopen the economy, get people back to work, and ease social restrictions while minimizing the health impacts of COVID-19, future impacts on our financial results will depend on future variants of the virus, ~~and~~ vaccine effectiveness against the variants, ~~which are not fully determinable, as~~ the ~~full impact~~duration of any future outbreak and the pandemic itself, and the length of the ~~pandemic on~~travel restrictions and business closures imposed by the ~~economy and markets which we serve is as yet unknown.~~governments of impacted countries. Our financial results will also depend on variables including reduced demand from our customers, the degree that the supply chain may be constrained which could impact our delivery of ~~product~~products and services and the potential negative impact toon our operations if there is ~~a significant~~an outbreak among our employees, as well as the amount of incremental demand caused by research and treatments in the areas of COVID-19 or related threats.

Information Related to Forward-Looking Statements

This Quarterly Report on Form 10-Q contains statements that are, or may be considered to be, forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995, as amended, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. All statements that are not historical facts, including statements about our beliefs or expectations, are forward-looking statements. These statements may be identified by such forward-looking terminology as “expect,” “estimate,” “intend,” “believe,” “anticipate,” “may,” “will,” “should,” “could,” “continue,” “likely” or similar statements or variations of such terms. Forward-looking statements include, but are not limited to, statements that relate to our future revenue, margins, costs, earnings, profitability, product development, demand, acceptance and market share, competitiveness, market opportunities and performance, levels of research and development, the success of our marketing, sales and service efforts, outsourced activities, operating expenses, anticipated manufacturing, customer and technical requirements, the ongoing viability of the solutions that we offer and our customers’ success, tax expenses, our management’s plans and objectives for our current and future operations and business focus, our ability to retain, hire and integrate skilled personnel, the impact of the COVID-19 pandemic on our operations and results, including as a result of local mandates, any prolonged lock downs, or series of temporary closures, our ability to identify and address increased cybersecurity risks, including as a result of employees working remotely, the expected benefits and other statements relating to our divestitures and acquisitions, including sale of the ~~separation~~semiconductor automation business and the semiconductor cryogenics business, the adequacy, effectiveness and success of our business ~~into two independent, publicly traded companies,~~transformation initiatives, our ability to continue to identify acquisition targets and successfully acquire and integrate desirable products and services and realize expected revenues and revenue synergies, our adoption of newly issued accounting guidance, the levels of customer spending, our dependence on key suppliers or vendors to obtain services for our business on acceptable terms, including the impact of supply chain disruptions, general economic conditions, the sufficiency of financial resources to support future operations, and capital expenditures. Such statements are based on current expectations and involve risks, uncertainties and other factors which may cause the actual results, our performance or our achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include the Risk Factors which are set forth in our Annual Report on Form 10-K for the fiscal year ended September 30, ~~2020,~~2021, or the ~~2020~~2021 Annual Report on Form 10-K, filed with the U.S. Securities and Exchange Commission, or SEC, on November ~~18, 2020,~~24, 2021, as updated and/or supplemented in subsequent filings with the SEC, including under Item 1A “Risk Factors” in Part II of ~~this~~our Quarterly Report on Form ~~10 Q.~~10-Q for the quarter ended December 31, 2021 as filed with the SEC on February 9, 2022 or the First Quarter Form 10-Q, and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022 as filed with the SEC on May 16, 2022, or the Second Quarter Form 10-Q. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof and are based on information currently and reasonably known to us. We do not undertake any obligation to release revisions to these forward-looking statements to reflect events or circumstances that occur after the date of this Quarterly Report on Form 10-Q or to reflect the occurrence or effect of anticipated or unanticipated events. Precautionary statements made herein should be read as being applicable to all related forward-looking statements wherever they appear in this Quarterly Report on Form 10-Q. Any additional precautionary statements made in our ~~2020~~2021 Annual Report on Form 10-K should be read as being applicable to all related forward-looking statements whenever they appear in this Quarterly Report on Form 10-Q.

Unless the context indicates otherwise, references in this Quarterly Report on Form 10-Q to “we”, “us”, “our” and “the Company” refer to ~~Brooks Automation,~~Azenta, Inc. and its consolidated subsidiaries.

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OVERVIEW

We are a leading global provider of ~~semiconductor manufacturing automation solutions for the semiconductor industry, and~~ life science ~~sample-based services~~sample exploration and management solutions for the life sciences market. InWe support our customers from research to clinical development with our sample management, automated storage, and genomic services expertise to help our customers bring impactful therapies to market faster. We understand the ~~semiconductor manufacturing market, we provide precision robotics, integrated automation systems~~importance of sample integrity and ~~contamination control solutions to semiconductor fabrication plants, or fabs,~~offer a broad portfolio of products and ~~original equipment manufacturers, or OEMs, worldwide. In~~services spanning across the life ~~sciences market, we offer a full suite~~cycle of samples from procurement and sourcing, automated storage platforms, genomic services and solutions for analyzing, managing, and storing biological and chemical compound samples to advance research and development for clinical, pharmaceutical, and other scientific endeavors. Our life sciences solutions include gene sequencing and synthesis, a broad ~~suite~~range of ~~high-throughput automated cryogenic storage products, related~~ consumables, informatics and data software, and sample ~~inventory software, as well as fully outsourced solutions for sample storage, transport,~~management solutions. Our expertise and ~~inventory management. Our~~ leadership positions ~~and our global support capability in each of these markets~~ make us a ~~valued business~~trusted partner to ~~the largest semiconductor and semiconductor capital equipment manufacturers and~~ pharmaceutical, biotechnology, and life sciences research institutions ~~in the world.~~globally. In total, ~~we employ~~our life sciences business employs approximately ~~4,000~~2,900 full-time employees, part-time employees and contingent workers worldwide and have sales in ~~more than~~approximately 80 ~~countries.~~countries. We are headquartered in Chelmsford, Massachusetts and have operations in North America, Asia, and Europe.

In the semiconductor capital equipment market, equipment productivity and availability are critical factors for our customers, who typically operate equipment under demanding temperature and/or vacuum environments. We are a leader in wafer automation and contamination controls solutions and services that are designed to improve throughput, yield, and cost of ownership of tools in semiconductor fabs. Our product offerings include vacuum and atmospheric robots, turnkey vacuum and atmospheric wafer handling systems, as well as wafer carrier cleaning and reticle storage systems. We also capture the complete life cycle of value through our global service network of expert application and field engineers who are located close to our customers. Our services include rapid refurbishment of robots to stringent specifications, upgrades to improve equipment productivity, and proactive monitoring and diagnostics for predictive risk management and improved up-time of the installed base. A majority of our research and development spending advances our current product lines and drives innovations for new product offerings. We invest in research and development initiatives within the Brooks Semiconductor Solutions Group segment to maintain continued leadership position in the markets we serve. Our investments in Vacuum Automation and Contamination Control include ramping our intelligent vacuum robot platform, MagnaTran LEAP^TM~~, with new designs at customers releasing tools for semiconductor technology nodes at 10 nanometers and below. In addition, our new PuroMaxx LEAP~~^TM carrier clean product line brings new innovation to handle new contamination control challenges at 3nm and below. As the market for extreme ultraviolet, or EUV, lithography expands, we will continue our investment in EUV pod cleaning and reticle storage. Our initiatives with our Guardian LEAP^TM product line for EUV reticle storage will employ new innovation to solve many contamination challenges with EUV reticles. In the third quarter of fiscal year 2021, we acquired collaborative robots and automation subsystems developer Precise Automation, Inc., or Precise, a leading developer of collaborative robots and automation subsystems headquartered in Fremont, California. The acquisition is expected to expand our existing offerings within the Brooks Semiconductor Solutions Group segment.

In the life sciences sample management market, we utilize our core technology competencies and capabilities in automation and cryogenics to provide comprehensive bio-sample management solutions to a broad range of end markets within the life sciences industry. Our offerings include automated ultra-cold storage freezers, ~~consumable~~ sample storage containers, instruments which assist in the workflow of sample management, genomic services and both on-site and off-site full sample management services. We expect the life sciences sample management market to remain one of our principal markets for our product and service offerings and provide favorable opportunities for the growth of our overall business. Over the past several years, we have acquired and developed essential capabilities required to strategically address the sample management needs across multiple end markets within the life sciences industry.

Our life sciences portfolio includes products and services that we acquired to bring together a comprehensive capability to service our customers’ needs in the sample-based services arena. We continue to develop the acquired products and services offerings through the combined expertise of the newly acquired teams and our existing research and development resources. ~~This~~We believe our approach of acquisition, investment, and integration has allowed us to accelerate our internal development and that of the acquired entity, significantly decreasing our time to market.

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We have also strengthened and broadened our product portfolio and market reach by investing in internal product development. ~~For the fiscal years ended 2020, 2019 and 2018, more than 29% of our cumulative research and development spending was focused on innovating and advancing solutions in the life sciences market.~~ We expect to continue investing in research and development and making strategic acquisitions with the objective of expanding our offerings in the life sciences market.

Within our Life Sciences Products segment, we have developed and continue to develop automated biological sample storage solutions for operating in ultra-low temperature environments. We have a complete line up of automated stores from ambient temperatures to -190°. Our ~~customers are using our automated storage solutions from room temperature to -196°C. Our BioStore™ II’s~~BioStore’s ™ unique design allows ~~dual~~controlled temperature storage down to -80°C with the industry’s highest throughput of sample retrieval. ~~We recently launched the BioStore™ IIIv that compliments the BioStore™ III Cryo product line and offers improved data management and sample security for vaccines and biologics stored at -80°C.~~

Within our Life Sciences Services segment, our ~~GENEWIZ~~genomics services business advances research and development activities inby gene sequencing, synthesis, editing and related ~~services~~services. We offer a comprehensive, global portfolio that has both broad appeal in the life sciences industry as well as enable customers to ~~meet market demands. Recently, enabled by newly developed proprietary technologies, GENEWIZ launched a~~select the best solution for their research challenge. This portfolio ~~of new services, targeting~~ also offers unique solutions for~~analysis of~~ ~~adeno-associated virus, a common vector used in~~ key markets such as cell and gene ~~therapy. We will continue to focus on developing processes~~therapy, antibody development, and ~~technologies that can streamline~~biomarker discovery by addressing genomic complexity and throughput challenges. Our sample ~~to data workflow.~~repository solutions business is a global leader in sample storage and management, and provides a full suite of reliable cold and ultra-cold chain solutions.

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Business and Financial Performance

Our performance for the three and nine months ended June 30, 2022 and 2021 are as follows:


	Three Months Ended June 30,				Nine Months Ended June 30,
Dollars in thousands	2022		2021		2022		2021
Revenue	$	132,735	$	129,087	$	417,931	$	376,764
Cost of revenue		73,135		66,656		220,462		199,098
Gross profit		59,600		62,431		197,469		177,666
Operating expenses
Research and development		6,515		5,489		19,895		15,813
Selling, general and administrative		58,133		57,825		187,361		171,648
Restructuring charges		25		-		319		53
Total operating expenses		64,673		63,314		207,575		187,514
Operating loss		(5,073)		(883)		(10,106)		(9,848)
Interest income		6,822		409		9,933		503
Interest expense		(2,101)		(477)		(4,111)		(1,485)
Loss of extinguishment of debt		—		—		(632)		—
Other income (expense), net		631		(1,651)		(1,617)		(263)
Loss before income taxes		279		(2,602)		(6,533)		(11,092)
Income tax benefit (provision)		7,293		(760)		(560)		(4,620)
Loss from continuing operations	$	(7,014)	$	(1,842)	$	(5,973)	$	(6,472)
Income from discontinued operations, net of tax		(2,555)		41,008		2,159,597		95,414
Net income	$	(9,569)	$	39,166	$	2,153,624	$	88,942

Three Months Ended June 30, ~~2021~~2022 Compared to Three Months Ended June 30, ~~2020~~2021

Results of Operations – - Revenue increased 3% as compared to the prior fiscal year period driven by a 6% increase in our Life Sciences Services segment, partially offset by a 3% decrease in our Life Sciences Products segments. Gross margin was 44.9% for the three months ended June 30, ~~2021 increased 43% to $315.3 million,~~2022, as compared to the corresponding period of the prior fiscal year. Gross margin was 45.8% for the three months ended June 30, 2021, as compared to 42.1% for the corresponding period of the prior fiscal year, an increase in gross profit of $51.6 million. Operating expenses were $94.2 million during the three months ended June 30, 2021, as compared to $73.7 million during the corresponding period of the prior fiscal year, an increase of $20.5 million. Operating income was $50.2 million during the third quarter of fiscal year 2021, as compared to $19.1 million48.4% for the corresponding period of the prior fiscal year. ~~Income~~Operating expenses increased $1.4 million compared to the three months ended June 30, 2021, driven by increases in both research and development expenses and selling, general and administrative expenses. We reported an operating loss of $5.1 million for the three months ended June 30, 2022, as compared to operating loss of $0.9 million for the corresponding prior fiscal year period due to a decrease in gross profit and operating expenses. Loss from continuing operations was ~~$39.2~~$7.0 million as compared to $1.8 million for the ~~third quarter of fiscal year 2021, as compared to $13.7~~three months ended June 30, 2021. During the three months ended June 30, 2022, we recorded a $2.6 million ~~for the corresponding period of the prior fiscal year.~~net loss from discontinued operations.

Nine Months Ended June 30, ~~2021~~2022 Compared to Nine Months Ended June 30, ~~2020~~2021

Results of Operations – - Revenue increased 11% as compared to the prior fiscal year period driven by both our Life Sciences Services and Life Products segments which increased 16% and 3%, respectively. Gross margin was 47.2% for both the nine months ended June 30, 2022 and 2021. Operating expenses increased $20.1 million compared to the nine months ended June 30, 2021, ~~increased 31% to $851.4 million, as compared to the corresponding period~~driven by increases in both research and development expenses and selling, general and administrative expenses. We reported an operating loss of the prior fiscal year. Gross margin was 45.2% for the nine months ended June 30, 2021, as compared to 41.2% for the corresponding period of the prior fiscal year, an increase in gross profit of $116.7 million. Operating expenses were $273.1 million during the nine months ended June 30, 2021, as compared to $223.7 million during the corresponding period of the prior fiscal year, an increase of $49.4 million. Operating income was $111.7 million during the nine months ended June 30, 2021, as compared to $44.3 million for the corresponding period of the prior fiscal year. Income from continuing operations was $90.1$10.1 million for the nine months ended June 30, ~~2021,~~2022, as compared to ~~$36.1~~an operating loss of $9.8 million for the corresponding ~~period of the~~ prior fiscal ~~year.~~year period due to an increase in operating expenses. Loss from continuing operations was $6.0 million and $6.5 million, respectively, for the nine months ended June 30, 2022 and 2021. During the nine months ended June 30, 2022, we recorded a net gain on the sale of our semiconductor automation business of $2.1 billion, which is included within net income from discontinued operations.

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June 30, ~~2021~~2022 Compared to September 30, ~~2020~~2021

Cash Flows and Liquidity - Cash and cash equivalents and restricted cash as presented on our Consolidated Statements of Cash Flows is on a total company basis and ~~marketable securities~~ were ~~$286.3 million at~~$1.5 billion as of June 30, ~~2021, as~~2022 compared to ~~$305.7~~$285.3 million atas of September 30, ~~2020.~~2021. The ~~decrease~~increase of ~~$19.4 million from September 30, 2020~~$1.2 billion was ~~comprised~~attributable to $2.9 billion of cash inflows related to the sale of ~~$122.7 million from operating activities;~~our semiconductor automation business, partially offset by $431.6 million of taxes paid related to the sale of the automation semiconductor business, cash outflows ~~from investing~~for the net change in operating assets and ~~financing activities which include $92.4~~liabilities of $83.7 million, ~~for acquisitions, $34.6~~$1.5 billion related to purchases of marketable securities, $59.7 million for capital expenditures, $1.0 million related to the acquisition of technology intangible assets and ~~$22.3~~financing activities of $64.3 million. Financing activities include $49.7 million for ~~dividends. Cash inflows~~the extinguishment of debt and $10.4 million related to the payments of acquisition related contingent consideration. The effects of foreign exchange reduced our cash balance by $99.0 million. The net proceeds from ~~operating activities~~the sale of the semiconductor automation business was ~~comprised~~approximately $2.5 billion after payment of ~~$148.9 million of earnings, including $88.9 million of net income~~taxes and ~~$60.0 million of adjustments to net income for non-cash items, partially offset by $26.2 million of cash used for the changes in operating assets and liabilities.~~other expenses.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our unaudited consolidated financial statements are prepared in accordance with Generally Accepted Accounting Principles, or GAAP. The preparation of the interim consolidated financial statements requires us to make estimates and

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judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to revenue, intangible assets, goodwill, inventories, income taxes, and stock-based compensation. We base our estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances. We evaluate current and anticipated worldwide economic conditions, both in general and specifically in relation to the semiconductor and life science industries, that serve as a basis for making judgments about the carrying values of assets and liabilities that are not readily determinable based on information from other sources. Actual results may differ from these estimates under different assumptions or conditions that could have a material impact on our financial condition and results of operations.

For further information with regard to our significant accounting policies and estimates, please refer to Note 2, "Summary of Significant Accounting Policies" in the Notes to the unaudited consolidated financial statements included in Item 1 "Consolidated Financial Statements" of this Quarterly Report on Form 10-Q and in the Notes to our audited consolidated financial statements included in Part II, Item 8 “Financial Statements and Supplementary Data” in our ~~2020~~2021 Annual Report on Form 10-K.

Recently Issued and Adopted Accounting Pronouncements

For a summary of recently issued and adopted accounting pronouncements applicable to our unaudited consolidated financial statements, please refer to Note 2, "Summary of Significant Accounting Policies" in the Notes to the unaudited consolidated financial statements included in Item 1 "Consolidated Financial Statements" of this Quarterly Report on Form 10-Q.

RESULTS OF OPERATIONS

~~Three~~Please refer to the commentary provided below for further discussion and ~~Nine Months Ended~~analysis of the factors contributing to our results from operations for the three and nine months ended June 30, ~~2021 Compared~~2022 as compared to ~~Three~~the three and ~~Nine Months Ended~~nine months ended June 30, ~~2020~~2021.

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Revenue

~~We reported~~Our revenue performance for the three and nine months ended June 30, 2022 and 2021 is as follows:


	Three Months Ended June 30,						Nine Months Ended June 30,
Dollars in thousands	2022		2021		% Change		2022		2021		% Change
Life Sciences Products	$	47,369	$	48,625	(3)	%	$	150,861	$	146,520	3	%

Life Sciences Services	$	85,366	$	80,462	6	%	$	267,070	$	230,244	16	%

Total revenue	$	132,735	$	129,087	3	%	$	417,931	$	376,764	11	%

Three months ended June 30, 2022 compared to three months ended June 30, 2021

Revenue increased 3% driven by a 6% increase in our Life Sciences Services segment, partially offset by a 3% decline in our Life Sciences Products segment during the three months ended June 30, 2022 as compared to the corresponding prior year period.

Our Life Sciences Products segment revenue decreased 3% driven by decreased demand for our consumables and instruments; partially offset by increased revenue in our automated cold sample management systems.

Our Life Sciences Service segment revenue increased 6% driven by increased revenue in both our sample repository solutions and genomics services businesses. Sample repository solutions revenue increased 19% due to growth in our storage services. Genomic services revenue increased 1% due to an increase in our Next Generation Sequencing, or NGS, business.

Revenue generated outside the United States was $44.8 million, or 34% of ~~$315.3 million~~total revenue, for the three months ended June 30, ~~2021,~~2022, as compared to ~~$220.4~~$46.2 million, or 36% of total revenue, for the corresponding period of the prior fiscal year. No individual customer that accounted for more than 10% of our consolidated revenue for the three months ended June 30, 2022 or 2021.

Nine months ended June 30, 2022 compared to nine months ended June 30, 2021

Revenue increased 11% driven by increases in both our Life Sciences Products and our Life Sciences Services segments during the nine months ended June 30, 2022 as compared to the corresponding prior year period.

Our Life Sciences Products segment revenue increased 3% driven by increased revenue in our automated cold sample management systems and infrastructure services, partially offset by a decrease in demand for our consumables and instruments.

Our Life Sciences Service segment revenue increased 16% driven by increased revenue in both our sample repository solutions and genomics services businesses. Sample repository solutions revenue increased 22% due to growth in our storage, logistics services, informatics and sample procurement services. Genomic services revenue increased 14% due to an increase ~~of $95.0~~in demand across all service lines.

Revenue generated outside the United States was $134.6 million, or ~~43%. We reported~~32% of total revenue, ~~of $851.4 million~~ for the nine months ended June 30, ~~2021,~~2022, as compared to ~~$651.1~~$142.4 million, or 38% of total revenue, for the corresponding period of the prior fiscal ~~year, an increase~~year. No individual customer that accounted for more than 10% of ~~$200.4 million,~~our consolidated revenue for the nine months ended June 30, 2022 or ~~31%.~~ 2021.

The COVID-19 pandemic has had varying impacts on our business for the three and nine months ended June 30, ~~2021. Further discussion of these impacts by each segment are discussed in the paragraphs below.~~

Our Brooks Semiconductor Solutions Group segment reported revenue of $186.3 million for the three months ended June 30, 2021, compared to $127.1 million for the corresponding period of the prior fiscal year, an increase of $59.2 million, or 47%. During the three months ended June 30, 2021, Automation revenue increased $43.2 million, driven by vacuum robots and systems, and services revenue increased $2.3 million. The acquisition of Precise in April 2021 added $3.3 million of revenue. Contamination control solutions revenue increased $16.0 million primarily driven by our carrier clean solutions and reticle stocker solutions product lines. For the nine months ended June 30, 2021, our Brooks Semiconductor Solutions Group segment reported revenue of $474.7 million, compared to $370.8 million for the corresponding period of the prior fiscal year, an increase of $103.9 million, or 28%. During the nine months ended June 30, 2021, Automation revenue increased $111.2 million, driven by vacuum robots and systems, and services revenue increased $5.3 million. The acquisition of Precise added an additional $3.3 million of revenue. These increases were partially offset by a decline in contamination control solutions revenue of $7.3 million. The semiconductor markets are cyclical and may fluctuate significantly from quarter to quarter. Demand for our Brooks Semiconductor Solutions Group segments’ products and services is affected by these cycles and a prolonged effect of2022. We estimate that the COVID-19 pandemic ~~could negatively~~had a positive net impact ~~demand for our products~~of approximately $1 million and services in this segment. To date, we have experienced some disruption in our supply chain and operations as a result of the COVID-19 pandemic, which has impacted the timing of some shipments to customers. We do not believe, however, that COVID-19 pandemic has resulted in a negative impact to our bookings or demand for our products in this segment.$13 million,

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~~Our Brooks Life Sciences Products segment reported revenue of $48.6 million for the three months ended June 30, 2021, as compared to $30.4 million for the corresponding period of the prior fiscal~~ year, an increase of $18.2 million, or 60%. For the nine months ended June 30, 2021, our Brooks Life Sciences Products segment reported revenue of $146.5 million, as compared to $91.1 million for the corresponding period of the prior fiscal year, an increase of $55.4 million, or 61%. The increase in revenue for both the three and nine months ended June 30, 2021 as compared to the same periods in the prior year was primarily driven by demand for consumables and instruments. Revenue related to our automation cold sample management systems and infrastructure services also contributed to the increase in revenues in these periods.

~~Our Brooks Life Sciences Services segment reported revenue of $80.5 million for the three months ended June 30, 2021, as compared to $62.9 million for the corresponding period of the prior fiscal~~ year, an increase of $17.6 million, or 28%. Revenue from GENEWIZ increased $21.1 million, or 56%, as compared to the prior period. All service lines increased with the most significant impact coming from next generation sequencing, Sanger sequencing and gene synthesis services. We reported a decrease in revenue from Sample Repository Services of $3.5 million due to a decline in outsourced genomic services which were provided through an alliance with Infinity BiologiX LLC, formerly RUCDR, that was terminated in the fourth quarter of fiscal year 2020. Offsetting this decrease were increases in revenue across several product lines, including storage services and sample administration. The acquisition of Trans-Hit Biomarkers Inc., or THB, in December 2020 added $0.9 million of revenue for the three months ended June 30, 2021. For the nine months ended June 30, 2021, our Brooks Life Sciences Services segment reported revenue of $230.3 million, as compared to $189.1 million for the corresponding period of the prior fiscal year, an increase of $41.1 million, or 22%. Revenue from GENEWIZ increased $45.4 million, or 38%, as compared to the prior period. All service lines increased with the most significant impact coming from next generation sequencing and gene synthesis services. We reported a decrease in revenue from Sample Repository Services of $4.3 million due to the decline in outsourced genomic services as described previously. Offsetting this decline were increases across several product lines, including storage services and informatics, which was driven by the acquisition of RURO. In total, the acquisitions of RURO and THB added $4.4 million of revenue for the nine months ended June 30, 2021 as compared to the prior year period.

We estimate the impact of the COVID-19 pandemic on our two life sciences segments’ revenue for the three and nine months ended June 30, 2021, an increase to revenue of approximately $12 million and $39 million, respectively.

Revenue generated outside the United States was $206.6 million, or 66% of total revenue, for the three months ended June 30, 2021, as compared to $141.3 million, or 64% of total revenue, for the corresponding period of the prior fiscal year. Revenue generated outside the United States was $541.6 million, or 64% of total revenue, for the nine months ended June 30, 2021, as compared to $342.4 million, or 59% of total revenue, for the corresponding period of the prior fiscal year. We had no individual customer that accounted for more than 10% of our consolidated revenue for the three and nine months ended June 30, 2021. We had no individual customer that accounted for more than 10% of our consolidated revenue for the three months ended June 30, 2020.We had one customer that accounted for more than 10% of our consolidated revenue for the nine months ended June 30, 2020.

~~Operating Income~~

We reported operating income of $50.2 million for the three months ended June 30, 2021, as compared to $19.1 million for the three months ended June 30, 2020. The increase of 163% was driven by higher gross profit of $51.6 million, partially offset by an increase in operating expenses of $20.5 million. Within operating expenses, selling, general, and administrative expenses increased $16.2 million, and research and development expenses increased $4.3 million. Restructuring expenses were essentially flat compared to the prior year period.

During the nine months ended June 30, 2021, we reported operating income of $111.7 million, compared to $44.3 million for the corresponding period of the prior fiscal year. The increase of 152% was driven by higher gross profit of $116.7 million, partially offset by an increase in operating expenses of $49.4 million. Within operating expenses, selling, general, and administrative expenses increased $42.8 million, and research and development expenses increased $7.6 million. Restructuring expenses decreased $1.0 million. Operating income for the nine months ended June 30, 2021 included $5.5 million of cost accrued for tariff liabilities on intercompany import activity in fiscal years 2016 through 2020. The costs resulted from an internal review of the transaction value used to calculate tariffs on intercompany

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~~imports of samples shipped from~~respectively, on our GENEWIZ business. The drivers of the changes in gross profit, research and development, and selling, general and administrative expenses for the periods presented are discussed in further detail below.

~~Operating income for our Brooks Semiconductor Solutions Group segment was $43.5 million~~revenue for the three months ended June 30, 2022 and 2021 and approximately $21 million and $39 million, respectively, on our revenue for the nine months ended June 31, 2022 and 2021.

Operating Loss

Our operating income performance for the three and nine months ended June 30, 2022 and 2021 is as follows:


	Three Months Ended June 30,						Nine Months Ended June 30,
Dollars in thousands		2022			2021			2022			2021
Revenue:
Life Sciences Products	$	47,369		$	48,625		$	150,861		$	146,520
Life Sciences Services		85,366			80,462			267,070			230,244
Total revenue	$	132,735		$	129,087		$	417,931		$	376,764

Operating income:
Life Sciences Products	$	2,216		$	5,060		$	11,895		$	16,492
Life Sciences Products adjusted operating margin		5	%		10	%		8	%		11	%
Life Sciences Services	$	2,251		$	5,774		$	14,997		$	18,316
Life Sciences Services adjusted operating margin		3	%		7	%		6	%		8	%
Segment adjusted operating income	$	4,467		$	10,834		$	26,892		$	34,808
Total segment adjusted operating margin		3	%		8	%		6	%		9	%

Amortization of completed technology		1,811			2,173			5,424			6,200
Amortization of acquired intangible assets		5,745			7,396			18,064			21,657
Restructuring charges		23			—			319			53
Tariff adjustment		—			—			(486)			5,414
Other unallocated corporate expenses		1,961			2,148			13,677			11,332
Total operating loss	$	(5,073)		$	(883)		$	(10,106)		$	(9,847)
Total operating margin		(4)	%		(1)	%		(2)	%		(3)	%

Three months ended June 30, 2022 compared to ~~$22.7 million for the corresponding period of the prior fiscal year. Operating income for the~~ three months ended June 30, 2021 ~~included $1.2~~

We reported an operating loss of $5.1 million during the three month period ending June 30, 2022, compared to an operating loss of $0.9 million in the prior fiscal year period. The increase in operating loss was due to a decrease in gross profit of $2.8 million and an increase in operating expenses of $1.4 million. Within operating expenses, research and development expenses increased $1.0 million and selling, general, and administrative expenses increased $0.3 million.

Life Sciences Products segment adjusted operating income decreased $2.8 million and adjusted operating margin decreased 5.7 percentage points compared to the prior fiscal year period. The decrease in adjusted operating income was driven by a decrease in gross profit of $1.8 million and higher operating expenses of $1.0 million. Adjusted operating income for our Life Sciences Products segment excludes charges for amortization related to completed technology ~~as compared to $0.7~~of $0.3 million ~~of these charges incurred during the corresponding period of the prior fiscal year. Operating income~~and $0.4 million for both the three months ended June 30, 2021 also includes a $0.1 million charge related to the purchase accounting impact on inventory. Adjusted operating income for our Brooks Semiconductor Solutions Group segment, which excludes the charges mentioned above, was $44.8 million for the three months ended June 30, 2021, as compared to $23.4 million for the corresponding period of the prior fiscal year. Operating income for our Brooks Semiconductor Solutions Group segment was $97.6 million for the nine months ended June 30, 2021 as compared to $52.9 million for the corresponding period of prior fiscal year. Operating income for the nine months ended June 30, 2021 included $1.9 million of charges for amortization related to completed technology, as compared to $2.2 million of these charges incurred during the corresponding period of the prior fiscal year. Operating income for the three months ended June 30, 2021 also includes a $0.1 million charge related to the purchase accounting impact on inventory. Adjusted operating income for our Brooks Semiconductor Solutions Group segment, which excludes the charges mentioned above, was $99.6 million for the nine months ended June 30, 2021, compared to $55.1 million for the corresponding period of the prior fiscal year.2022 and 2021. Please refer to Note ~~15,~~14, “Segment Information” in the Notes to the unaudited consolidated financial statements included in Item 1 "Consolidated Financial Statements" of this Quarterly Report on Form 10-Q.

~~Operating~~Life Sciences Services segment adjusted operating income decreased $3.5 million and adjusted operating margin decreased 4.5 percentage points compared to the prior fiscal year period. The decrease in adjusted operating income was driven by higher operating expenses of $2.2 million and a decrease in gross profit of $1.3 million. Adjusted operating income for our ~~Brooks~~ Life Sciences ~~Products~~Services segment ~~was $8.7~~excludes charges for amortization related to completed technology of $1.6 million and $1.7 million for the three months ended June 30, 2022 and 2021, as compared to $2.2 million for the corresponding period of the prior fiscal year. Operating income for our Brooks Life Sciences Products segment includes charges for amortization related to completed technology of $0.4 million and $0.3 million for the three months ended June 30, 2021 and 2020, respectively. Adjusted operating income for our Brooks Life Sciences Products segment, which excludes the charges mentioned above, was $9.1 million for the three months ended June 30, 2021, as compared to $2.5 million for the corresponding period of the prior fiscal year. During the nine months ended June 30, 2021, operating income for our Brooks Life Sciences Products segment was $27.3 million, as compared to $4.1 million for the corresponding period of the prior fiscal year. Operating income for our Brooks Life Sciences Products segment includes charges for amortization related to completed technology of $1.0 million and $0.9 million, respectively, for the nine months ended June 30, 2021 and 2020. Adjusted operating income for our Brooks Life Sciences Products segment, which excludes the charges mentioned above, was $28.3 million for the nine months ended June 30, 2021, as compared to $5 million for the corresponding period of the prior fiscal year. Please refer to Note ~~15, “Segment Information” in the Notes to the unaudited consolidated financial statements included in Item 1 "Consolidated Financial Statements" of this Quarterly Report on Form 10-Q.~~

Operating income for our Brooks Life Sciences Services segment was $12.2 million for the three months ended June 30, 2021, as compared to $2.0 million for the corresponding period of the prior fiscal year. Operating income for our Brooks Life Sciences Services segment includes charges for amortization related to completed technology of $1.7 million and $1.8 million for the three months ended June 30, 2021 and 2020, respectively. Adjusted operating income for our Brooks Life Sciences Service segment, which excludes the amortization expense was $13.8 million for the three months ended June 30, 2021, as compared to $4.1 million for the corresponding period of the prior fiscal year. During the nine months ended June 30, 2021, operating income for our Brooks Life Sciences Services segment was $30.9 million, as compared to $10.2 million for the corresponding period of the prior fiscal year. Operating income for our Brooks Life Sciences Services segment includes charges for amortization related to completed technology of $5.2 million for both the nine months ended June 30, 2021 and 2020. The nine months ended June 30, 2021 also includes $5.5 million of cost accrued for tariff liabilities in the nine months ended June 30, 2021 discussed above. Adjusted operating income for our Brooks Life Sciences Service segment, which excludes the charges mentioned above, was $41.5 million for the nine months ended June 30, 2021, as compared to $15.6 million for the corresponding period of the prior fiscal year. Please refer to Note 15,14, “Segment Information” in the Notes to the unaudited consolidated financial statements included in Item 1 "Consolidated Financial Statements" of this Quarterly Report on Form 10-Q.

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Nine months ended June 30, 2022 compared to nine months ended June 30, 2021

We ~~estimate that~~reported an operating loss of $10.1 million during the ~~impact~~nine month period ending June 30, 2022, compared to an operating loss of $9.8 million in the ~~COVID-19 pandemic on our two life sciences segments’~~prior fiscal year period. The increase in operating ~~income~~loss was ~~a net~~due to an increase in operating expenses of ~~approximately $7~~$20.0 million; partially offset by an increase in gross profit of $19.8 million. Within operating expenses, selling, general, and administrative expenses increased $15.7 million, and ~~$22~~research and development expenses increased $4.1 million. Restructuring charges increased $0.3 million. Operating income for the nine months ended June 30, 2021 included $5.4 million of cost accrued for tariff liabilities on intercompany import activity in fiscal years 2016 through 2020 and $0.7 million of tariff liabilities related to activity during the three and nine months ended June 30, ~~2021, respectively. The increase was primarily driven by the revenue impacts to the life sciences segments noted above and lower expenses related to travel and trade shows.~~

~~Gross Margin~~

~~We reported gross margins of 45.8% for the three months ended June 30, 2021, as compared to 42.1% for the corresponding period of the prior fiscal~~ year. Gross margin for the third quarter of fiscal year 2021 as compared to the corresponding period of the prior fiscal year increased in all segments. The Brooks Life Sciences Services segment gross margins increased by 8.1 percentage points, the Brooks Life Sciences Products segment gross margins increased by 3.0 percentage points and the Brooks Semiconductor Solutions Group segment gross margins increased by 1.9 percentage points as compared to the corresponding period of the prior fiscal year. Cost of revenue for the three months ended June 30, 2021, included $3.4 million of charges related to amortization of completed technology, as compared to $2.8 million during the corresponding period of the prior fiscal year. The three months ended June 30, 2021 also included a charge of $0.1 million related to the purchase accounting impact on inventory. There were no such charges in the same period in the prior year. Excluding amortization and the purchase accounting impact on inventory, gross margin expanded 3.4 percentage points during the three months ended June 30, 2021, as compared to the corresponding period of the prior fiscal year.2021. During the nine months ended June 30, ~~2021,~~2022, upon the completion of an independent study, we ~~reported gross margins~~recorded a benefit of ~~45.2%, as compared~~$0.5 million related to ~~41.2%~~the accrual for the ~~corresponding period of the prior~~ fiscal year. Gross margins increased in all segments. The Brooks Life Sciences Services segment gross margins increased by 5.3 percentage points, the Brooks Semiconductor Solutions Group segment gross margins increased by 3.6 percentage points and the Brooks years 2016 through 2020, as described above.

Life Sciences Products segment ~~gross margins increased by 3.1~~adjusted operating income decreased $4.6 million and adjusted operating margin decreased 3.4 percentage points as compared to the ~~corresponding period of the~~ prior fiscal ~~year. Cost~~year period. The decrease in adjusted operating income was driven by higher operating expenses of ~~revenue~~$7.1 million; partially offset by an increase in gross profit of $2.5 million. Adjusted operating income for our Life Sciences Products segment excludes charges for amortization related to completed technology of $0.7 million and $1.0 million for the nine months ended June 30, 2022 and 2021, ~~included $8.1 million of charges related~~respectively. Please refer to ~~amortization of completed technology, as compared to $8.2 million during the corresponding period of the prior fiscal year, and charges of $6.1 million accrued for the tariff liabilities discussed~~Note 14, “Segment Information” in the ~~“Operating Income” section above. The nine months ended June 30, 2021 also included a $0.1 million charge related~~Notes to the ~~purchase accounting impact~~unaudited consolidated financial statements included in Item 1 "Consolidated Financial Statements" of this Quarterly Report on ~~inventory. There were no such charges for the nine months ended June 31, 2020. Excluding amortization, the purchase accounting impact on inventory,~~Form 10-Q.

Life Sciences Services segment adjusted operating income decreased $3.3 million and ~~the $5.5 million of tariff charges related to prior fiscal years, margins expanded 4.3~~adjusted operating margin decreased 2.3 percentage ~~points during the nine months ended June 30, 2021, as compared to the corresponding period of the prior fiscal year.~~

~~Our Brooks Semiconductor Solutions Group segment reported gross margins of 44.0% for the three months ended June 30, 2021, as compared to 42.1% for the corresponding period of the prior fiscal~~ ~~year.~~points. The ~~increase of 1.9 percentage points~~decrease in adjusted operating income was driven by ~~volume leverage from our automation products~~an increase in operating expenses of $14.0 million, partially offset by an increase in gross profit of $10.6 million and ~~favorable product mix. Cost of revenue for the three months ended June 30, 2021 included $1.2 million of~~excludes charges for amortization related to completed technology ~~as compared to $0.7~~of $4.7 million ~~of these charges incurred during the corresponding period of the prior fiscal year. In addition, the three months ended June 30, 2021 included a charge of $0.1~~and $5.2 million related to the purchase accounting impact on inventory. There were no such charges in the corresponding period of the prior fiscal year. Excluding the impact of the amortization of completed technology and the purchase accounting impact on inventory, gross margins increased 2.0 percentage points during the three months ended June 30, 2021, as compared to the corresponding period of the prior fiscal year. During the nine months ended June 30, 2021, our Brooks Semiconductor Solutions Group segment reported gross margins of 43.6%, as compared to 40.0% for the corresponding period of the prior fiscal year. The increase of 3.6 percentage points was driven by volume leverage from our automation products and favorable product mix. Cost of revenue for the nine months ended June 30, 2022 and 2021, ~~included $1.9~~respectively. Adjusted operating income also excludes a benefit of $0.5 million and a charge of ~~charges~~$5.5 million, respectively for amortization related to completed technology, as compared to $2.2 million of these charges incurred during the corresponding period of the prior fiscal year. The nine months ended June 31, 2021 also included a $0.1 million charge related to the purchase accounting impact on inventory. Excluding the impact of the amortization of completed technology and the purchase accounting impact on inventory, gross margins increased 3.4 percentage points during the nine months ended June 30, 2022 and 2021 related to tariff charges for the fiscal years 2016 through 2020, as ~~compared~~described above. Please refer to Note 14, “Segment Information” in the Notes to the ~~corresponding period~~unaudited consolidated financial statements included in Item 1 "Consolidated Financial Statements" of ~~the prior fiscal year.~~this Quarterly Report on Form 10-Q.

~~Our Brooks Life Sciences Products segment reported gross margins of 46.6% for the three months ended June 30, 2021, as compared to 43.6% for the corresponding period of the prior fiscal~~ ~~year. The increase of 3.0 percentage points~~

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Gross Margin

Our gross margin performance for the three and nine months ended June 30, 2022 and 2021 is as follows:


	Life Science Products						Life Science Services						Azenta Total
	Three Months Ended June 30,						Three Months Ended June 30,						Three Months Ended June 30,
Dollars in thousands	2022			2021			2022			2021			2022			2021
Revenue	$	47,369		$	48,625		$	85,366		$	80,462		$	132,735		$	129,087
Gross profit		21,026			22,655			38,573			39,772			59,600			62,431
Gross margin		44.4	%		46.6	%		45.2	%		49.4	%		44.9	%		48.4	%
Adjustments:
Amortization of completed technology		251			432			1,560			1,742			1,811			2,174
Tariff adjustment		—			—			—			(83)			—			(83)
Adjusted gross profit	$	21,277		$	23,087		$	40,133		$	41,431		$	61,411		$	64,522
Adjusted gross margin		44.9	%		47.5	%		47.0	%		51.5	%		46.3	%		50.0	%

	Life Science Products						Life Science Services						Azenta Total
	Nine Months Ended June 30,						Nine Months Ended June 30,						Nine Months Ended June 30,
Dollars in thousands	2022			2021			2022			2021			2022			2021
Revenue	$	150,861		$	146,520		$	267,070		$	230,244		$	417,931		$	376,764
Gross profit		70,006			67,232			127,475			110,431			197,469			177,666
Gross margin		46.4	%		45.9	%		47.7	%		48.0	%		47.2	%		47.2	%
Adjustments:
Amortization of completed technology		722			985			4,702			5,215			5,424			6,200
Tariff adjustment		—			—			(486)			5,414			(486)			5,414
Adjusted gross profit	$	70,728		$	68,217		$	131,691		$	121,060		$	202,407		$	189,280
Adjusted gross margin		46.9	%		46.6	%		49.3	%		52.6	%		48.4	%		50.2	%

Three months ended June 30, 2022 compared to three months ended June 30, 2021

Total gross margin increased 3.5 percentage points to 44.9% compared to the prior three month fiscal year period driven by decreased gross margin in both our Life Sciences Products segment and our Life Sciences Services segment.

Life Sciences Products segment gross margin decreased 2.2 percentage points. The decrease was primarily driven by ~~volume leverage related to increased sales~~the mix of products sold in our consumables and instruments ~~product lines.~~business, one time inventory adjustments and higher logistics costs. Cost of revenue included $0.3 million and $0.4 million of charges for amortization related to completed technology for the three months ended June 30, 2022 and 2021, ~~as compared to $0.3 million for the corresponding period of the prior fiscal year.~~respectively. Excluding the impact of the amortization of completed technology, margins ~~expanded 3.0~~decreased 2.6 percentage points during the three months ended June 30, 2021, as compared to the corresponding period of the prior fiscal year. During the nine months ended June 30, 2021, our Brooks Life Sciences Products segment reported gross margins of 45.9%, as compared to 42.8% for the corresponding period of the prior fiscal year. The increase of 3.1 percentage points was primarily driven by volume leverage related to increased sales in our consumables and instruments product lines. Cost of revenue for the nine months ended June 30, 2021 and 2020 included $1.0 million of charges for amortization related to completed technology, as compared to $0.9 million in the same period of the prior fiscal year. Excluding the impact of the amortization of completed technology, margins expanded 2.8 percentage points during the nine months ended June 30, 2021,2022, as compared to the corresponding period of the prior fiscal year.

~~Our Brooks~~ Life Sciences Services segment ~~reported~~ gross margin decreased 4.2 percentage points driven by decreased gross margin in both the genomic services business and sample repository solutions business. The decrease in the genomic services business was due to the impact of lower sales as well as mandated COVID related measures in China that reduced customer orders and production at our Suzhou, China location. The decrease in gross margin in the sample repository solutions business is mainly driven by higher labor costs in the storage solutions business. Excluding the impact of the amortization of completed technology, Life Sciences Services margins ~~of 49.4% for~~decreased 4.5 percentage points during the three months ended June 30, ~~2021,~~2022, as compared to ~~41.4% for~~ the corresponding period of the prior fiscal year.

~~year. The increase~~

Table of ~~8.1 percentage points was driven by volume leverage, as well as the~~ Contents

~~favorable~~

~~benefit of 4.4 points from the reduction of outsourced genomic services under the alliance contract referenced above. Cost of revenue for the three~~Nine months ended June 30, 2022 compared to nine months ended June 30, 2021

Total gross margin increased 0.1 percentage points to 47.2% compared to the prior nine month fiscal year period driven by decreased gross margin in our Life Sciences Services segment; partially offset by an increase in gross margin in our Life Sciences Products segment.

Life Sciences Products segment gross margin increased 0.5 percentage points. The increase was primarily driven by cost reduction initiatives within our automated storage systems business and ~~2020~~increased productivity. Cost of revenue included ~~$1.7~~$0.7 million and $1.0 million, respectively, of charges for amortization related to completed technology ~~as compared to $1.8 million in~~for the ~~corresponding period of the prior fiscal year.~~nine months ended June 30, 2022 and 2021. Excluding the impact of the amortization of completed technology, margins expanded 6.8 percentage points during the three months ended June 30, 2021, as compared to the corresponding period of the prior fiscal year. During the nine months ended June 30, 2021, our Brooks Life Sciences Services segment reported gross margins of 47.9%, as compared to 42.6% for the corresponding period of the prior fiscal year. The improvement of 5.3 points was driven by volume leverage and revenue mix, partially offset by the impact of the $5.5 million of cost accrued for the tariff liabilities as discussed above. The revenue mix benefit included 3.6 points from the reduction of outsourced genomic services under the alliance contract referenced above. Cost of revenue for the nine months ended June 30, 2021 and 2020 both included $5.2 million of charges for amortization related to completed technology and $5.5 million related to the tariff charges discussed above. Excluding the impact of the amortization of completed technology, and the $5.5 million of tariff charges related to prior periods, margins expanded 7.10.3 percentage points during the nine months ended June 30, ~~2021,~~2022, as compared to the corresponding period of the prior fiscal year.

Life Sciences Services segment gross margin decreased 0.2 percentage points driven by the sample repository solutions business, partially offset by an increase in gross margin in the genomic services business. The decrease in gross margin in the sample repository solutions business primarily related to increased employee related costs within our storage solutions business. The increase in the genomic services gross margin was primarily driven by $6.1 million accrued for tariff liabilities during the nine months ended June 30, 2021 as discussed in the “Operating Income (Loss)” section above, as compared to the nine months ended June 30, 2022, in which we recorded a benefit of $0.5 million related to the accrual for the fiscal years 2016 through 2020 based on the results from an independent study. Excluding the impact of the amortization of completed technology and the tariff adjustment, margins decreased 3.3 percentage points during the nine months ended June 30, 2022, as compared to the corresponding period of the prior fiscal year due to higher labor costs and the product mix in our sample repository solutions business.

Research and Development Expenses

~~Research~~Our research and development ~~expenses were $18.3 million and $51.3 million, respectively, during~~expense for the three and nine months ended June 30, 2022 and 2021 is as follows:


	Three Months Ended June 30,							Nine Months Ended June 30,
Dollars in thousands	2022			2021				2022			2021
Life Sciences Products	$	3,314		$	2,724			$	10,543		$	7,422
Percent Revenue		2.5	%		2.1	%	%		2.5	%		2.0	%

Life Sciences Services	$	3,200		$	2,765			$	9,352		$	8,391
Percent Revenue		2.4	%		2.1	%			2.2	%		2.2	%

Total research and development expense	$	6,514		$	5,489			$	19,895		$	15,813
Percent Revenue		4.9	%		4.3	%			4.8	%		4.2	%

Research and development expenses for the three months ended June 30, 2022 increased $1.0 million as compared to ~~$14.0~~the three months ended June 30, 2021, driven by a $0.6 million increase in our Life Sciences Products segment and ~~$43.7~~a $0.4 million ~~respectively, during~~increase in our Life Sciences Services segment. Research and development expenses for the ~~corresponding periods of~~nine months ended June 30, 2022 increased $4.1 million as compared to the ~~prior fiscal~~ ~~year.~~three months ended June 30, 2021, driven by a $3.1 million increase in our Life Sciences Products segment and a $1.0 million increase in our Life Sciences Services segment. The increase ~~of $4.3 million and $7.6 million, respectively, during~~for the three and nine months ended June 30, ~~2021 as compared to the corresponding periods of fiscal year 2020,~~2022, in Life Sciences Products was driven by ~~all~~continued investment in automated stores, cryogenic stores, and instruments. The increase for the three ~~operating segments. Incremental research~~ and ~~development expenses~~nine months ended June 30, 2022, in Life Sciences Services was primarily related to ~~acquisitions were $0.4~~continued development of our services lines.

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Selling, General and Administrative Expenses

Our selling, general and administrative expenses for the three and nine months ended June 30, 2022 and 2021 is as follows:


	Three Months Ended June 30,						Nine Months Ended June 30,
Dollars in thousands	2022			2021			2022			2021
Life Sciences Products	$	15,746		$	15,284		$	48,289		$	44,298
Percent Revenue		11.9	%		11.8	%		11.6	%		11.8	%

Life Sciences Services	$	34,677		$	32,892		$	107,342		$	94,318
Percent Revenue		26.1	%		25.5	%		25.7	%		25.0	%

Corporate	$	7,710		$	9,649		$	31,730		$	33,032
Percent Revenue		5.8	%		7.5	%		7.6	%		8.8	%

Total selling, general and administrative expense	$	58,133		$	57,825		$	187,361		$	171,648
Percent Revenue		43.8	%		44.8	%		44.8	%		45.6	%

Total selling, general and administrative expenses increased $0.3 million and ~~$0.7~~$15.7 million, respectively, for the three and nine months ended June 30, ~~2021. The drivers of the increase~~2022 as compared to ~~research and development expenses by segment are discussed in more detail below.~~

~~Research and development expenses in our Brooks Semiconductor Solutions Group segment were $12.8 million and $35.5 million, respectively, during~~ the three and nine months ended June 30, 2021, ~~as compared to $9.6 million and $30.6 million, respectively, during the corresponding periods of the prior fiscal~~ ~~year. The increase of $3.2 million and $4.9 million, respectively, during the three and nine months ended June 30, 2021 as compared to the corresponding periods of fiscal year 2020 was~~ driven by ~~higher payroll related costs~~increases in both our segments and ~~project spend to support new product development initiatives~~an increase in unallocated corporate expenses.

Within our ~~product sets, as well as the expense structure added from the Precise acquisition.~~

~~Research and development~~segment expenses in our Brooks Life Sciences Products segment were $2.7 million and $7.4 million, respectively, during the three and nine months ended June 30, 2021, as compared to $2.0 million and $6.5 million, respectively, during the corresponding periods of the prior fiscal year. The increase of $0.8 million and $1.0 million, respectively, during the three and nine months ended June 30, 2021 as compared to the corresponding period of fiscal year 2020 was driven by higher program and outside services costs.

~~Table of Contents~~

Research and development expenses in our Brooks Life Sciences Services segment were $2.8 million and $8.4 million, respectively, during the three and nine months ended June 30, 2021, as compared to $2.4 million and $6.7 million, respectively, during the corresponding periods of the prior fiscal year. The increase of $0.4 million and $1.7 million, respectively, during the three and nine months ended June 30, 2021 as compared to the corresponding period of fiscal year 2020 was primarily driven by higher payroll related costs and project costs.

~~Selling, General and Administrative Expenses~~

~~Selling,~~discussed below, we allocate certain corporate general and administrative expenses ~~were $75.9 million for the three months ended June 30, 2021, as compared to $59.7 million for the corresponding period of the prior fiscal~~ year. The increase of $16.2 million was driven by $10.2 million from segment selling, general and administrative expenses, $5.9 million from corporate expenses not allocated to our segments and $1.0 million of incrementalincluding costs related to acquisitions. The segment selling, general and administrative expenses are discussed in further detail below. The increase in unallocated corporate expenses was primarily driven by mergers and acquisition related expenses, which were $6.3 million for the three months ended June 30, 2021, compared to nominal charges for the three months ended June 30, 2020. Merger and acquisition expenses for the three months ended June 30, 2021 included $5.8 million of costs related to the separation of the Company. Unallocated corporate expenses also include amortization primarily related to customer relationship intangible assets, which were $7.7 million and $7.6 million for the three months ended June 30, 2021 and 2020, respectively.

In connection with the announcement of the separation of our business into two publicly-traded companies, we announced that the Automation company will retain the Brooks Automation, Inc. name and the Life Sciences company will be rebranded at the time of the separation. In connection with the rebranding, management is assessing the utility, remaining useful life and fair values of the Life Sciences trademark and tradename assets. The total net book value of these intangible assets is $14.3 million as of June 30, 2021. The conclusion of management’s assessment of the impact of the rebranding could result in an impairment charge of the asset values or an acceleration of amortization expense in future periods.

~~Selling, general and administrative expenses were $221.6 million for the nine months ended June 30, 2021, as compared to $178.9 million for the corresponding period of the prior fiscal~~ year. The increase of $42.8 million was driven by $21.6 million from the segment selling, general and administrative expenses, $21.2 million from corporate expenses not allocated to our segments and $2.7 million of incremental costs related to acquisitions. The segment selling, general and administrative expenses are discussed in further detail below. The increase in unallocated corporate expenses was primarily driven by mergers and acquisition related expenses, which were $21.1 million for the nine months ended June 30, 2021, compared to $0.5 million for the nine months ended June 30, 2020. Merger and acquisition expenses for the nine months ended June 30, 2021 included $19.6 million of costs related to the separation of the Company. Unallocated corporate expenses also include amortization primarily related to customer relationship intangible assets, which were $22.7 million and $23.1 million for the nine months ended June 30, 2021 and 2020, respectively.

~~Selling, general and administrative expenses at the segment level, which are discussed below, include corporate allocations from~~ shared corporate ~~function~~functions which include finance, information technology, human resources, legal, executive, governance, logistics and ~~compliance,~~compliance. In total, corporate general and administrative expense allocated to segments decreased $1.5 million for the three months ended June 30, 2022, due to lower variable ~~compensation. During~~compensation expense and increased $4.6 million for the nine months ended June 30, 2022, due to staffing and labor cost increases to support the standalone Life Sciences company.

Life Sciences Products segment selling, general and administrative expenses increased $0.5 million and $4.0 million, respectively, for the three and nine months ended ~~June 30, 2021, corporate allocated expenses increased $3.8 million and $7.4 million respectively, compared to the corresponding prior periods,~~ primarily ~~due~~related to higher ~~variable compensation accruals and IT infrastructure~~allocated costs.

~~Selling,~~Life Sciences Services segment selling, general and administrative expenses ~~in our Brooks Semiconductor Solutions Group segment were $25.7~~increased $1.8 million and ~~$74.1~~$13.0 million, respectively, for the three and nine months ended June 30, ~~2021,~~2022 related to investments in the commercial organization and lab support personnel. In addition, bad debt expense was higher for the nine months ended June 30, 2022 due to a reversal that occurred in the first fiscal quarter of 2021.

Unallocated corporate expenses decreased $1.9 million for the three months ended June 30, 2022 as compared to ~~$21.2~~the comparable prior year period primarily due to lower merger and acquisition costs and costs related to the separation of our company as well as lower amortization of intangible assets. During the fourth fiscal quarter of 2021, we impaired tradename intangibles due to the rebranding of our company. Partially offsetting these decreases were charges related to transformation and rebranding efforts during the three months ended June 30, 2022, which were not present in the prior fiscal year period. Unallocated corporate expenses decreased $1.3 million for the nine months ended June 30, 2022 as compared to the comparable prior year period, primarily due to lower merger and acquisition costs and costs related to the separation of the Company as well as lower amortization of intangible assets. These decreases were partially offset by costs related to transformation and rebranding efforts, which were not present in the prior fiscal year period.

Restructuring Charges

Restructuring charges increased by less than $0.1 million and ~~$65.0~~$0.3 million, respectively, for the three and nine months ended June 30, 2022 as compared to the three and nine months ended June 30, 2021. The three and nine months ended June 30, 2022 includes charges for actions taken related to the transformation of our business. Costs savings from these actions are expected to be realized in future periods.

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Non-Operating Income (Expenses)

Interest income – We recorded interest income of $6.8 million and $9.9 million, respectively, for the three and nine months ended June 30, 2022, as compared to $0.4 million and $0.5 million, respectively, for the corresponding periods of the prior fiscal year. The increase in interest income in the three and nine month periods ended June 30, 2022 as compared to the same periods in the prior fiscal year is due to interest earned on the proceeds from the sale of ~~$4.5~~the semiconductor automation business, including interest accrued on a net investment hedge, during the three and nine month periods ended June 30, 2022. Please refer to the Derivative Instruments section of Note 2, “Summary of Significant Accounting Policies” in the Notes to the unaudited consolidated financial statements included in Item 1 “Consolidated Financial Statements” of this Quarterly Report on Form 10-Q.

Interest expense – During the three and nine months ended June 30, 2022 we recorded interest expense of $2.1 million and ~~$9.1~~$4.1 million, respectively, as compared to $0.5 million and $1.5 million, respectively, during the corresponding periods of the prior fiscal year. Interest expense for the three and nine months ended June 30, 2022, is primarily related to interest on cash held in one of our German subsidiaries that is denominated in EUR, which carries a negative interest rate. Interest expense for the three and nine months ended June 30, 2021, is primarily related to ~~higher variable compensation~~interest expense ~~and corporate allocated costs, which were driven by~~on our term loan. The term loan was settled on February 1, 2022 using the ~~factors discussed above, as well as~~proceeds from the ~~Precise acquisition which added $0.5~~sale of the semiconductor automation business.

Other income (expenses), net – We recorded other income of $0.6 million ~~of costs~~ for the three months ended June 30, 2022 and we recorded other expense of $1.6 million for the nine months ended June 30, ~~2021. These increases were partially offset by lower travel and trade show expenses.~~

~~Table~~2022, as compared to other expense of ~~Contents~~

~~Selling, general and administrative expenses in our Brooks Life Sciences Products segment were $11.2~~$1.7 million and ~~$32.5~~$0.3 million, respectively, for the three and nine months ended June 30, ~~2021, compared to $9.0 million and $28.4 million, respectively, for the corresponding periods of the prior fiscal year.~~2021. The ~~increase of $2.2 million and $4.1 million, respectively,~~change for the three ~~and~~months ended June 30, 2022 as compared to the corresponding prior fiscal year period is primarily due to foreign exchange gains. The change for the nine months ended June 30, ~~2021 over~~2022 from the corresponding ~~periods of the~~ prior fiscal year ~~was~~period is primarily driven by higher sales commission expenses, variable compensation expense and corporate allocated costs, which were driven by the factors discussed above. These items were partially offset by lower expenses relateddue to ~~travel.~~foreign currency exchange losses.

Selling, general and administrative expenses in our Brooks Life Sciences Services segment were $24.9 million and $71.1 million, respectively, for the three and nine months ended June 30, 2021, compared to $21.6 million and $63.6 million, respectively, for the corresponding periodsIncome Tax Provision / Benefit

We recorded an income tax provision of the prior fiscal year. The increase of $3.3 million and $7.5 million, respectively, for the three and nine months ended June 30, 2021 over the corresponding periods of the prior fiscal year was primarily driven by variable compensation expense and infrastructure costs related to acquisitions, partially offset by lower travel expenses and lower bad debt expense.

~~Non-Operating Income (Expenses)~~

~~Interest income -~~ During the three and nine months ended June 30, 2021, we recorded interest income of $0.4 million and $0.5 million, respectively, as compared to less than $0.1 million and $0.9 million, respectively, during the corresponding periods of the prior fiscal year.

~~Interest expense -~~ During the three and nine months ended June 30, 2021, we recorded interest expense of $0.5 million and $1.5 million, respectively, as compared to $0.8 million and $2.2 million, respectively, during corresponding periods of the prior fiscal year.

~~Other income (expenses), net -~~ ~~During the three and nine months ended June 30, 2021, we recorded other expense net of $1.6 million and $0.1 million, respectively, compared to other income, net of $0.5~~$7.3 million for the three months ended June 30, ~~2020~~2022 and ~~other expense, net~~income tax benefit of ~~$1.3~~$0.6 million ~~for~~during the nine months ended June 30, 2020. The primary driver of the increase in other expenses, net in the three months ended June 30, 2021 as compared to the same period in the prior year was due to an increase in foreign currency exchange losses of $1.5 million. The primary driver of the decrease in other expenses, net for the nine months ended June 30, 2021 as compared to the same period in the prior year was due to a decrease of foreign exchange losses of $1.6 million.2022. T

~~Income Tax Provision~~

~~We recorded an income tax provision of $9.4 million and $20.4 million, respectively, during the three and nine months ended June 30, 2021. The~~he tax provision for the three months ended June 30, ~~2021~~2022 was primarily drivenbyatrue-upofthe ~~provision~~ effectivetaxrateon ~~earnings~~ayear-to-datebasis.Thesechangesweretheresultoffluctuationsin expected global income from ~~operations during the period.~~ operations.The ~~provision was partially offset by a $1.5 million~~tax benefit ~~from the reversal of uncertain tax positions during the quarter. The provision~~ for the nine months ended June 30, ~~2021~~2022, was ~~primarily~~ driven by the ~~provision on earnings from operations during the period~~pre-tax loss and ~~was partially offset by~~ a ~~$2.7~~$4.6 million discrete stock compensation windfall benefit for tax deductions that exceeded the associated book compensation expense. The tax benefit for the nine months ended June 30, 2022, was partially offset by a $0.7 million charge to increase the deferred tax liability to reflect a change in the blended state income tax rate that results from the sale of the semiconductor business assets.

We recorded an income tax ~~provision~~benefit of ~~$5.1~~$0.8 million and ~~$5.6~~$4.6 million, respectively during the three and nine months ended June 30, ~~2020.~~2021. The tax ~~provision~~benefit for the three months ended June 30, ~~2020~~2021, was primarily driven by the ~~provision~~benefit on ~~earnings~~loss from operations during the ~~period.~~period and $ 1.5 million overall benefit from multiple releases of unrecognized tax benefits and accrued interest due to the status of limitation expirations. The tax ~~provision~~benefit for the nine months ended June 30, ~~2020~~2021, was ~~primarily driven by the provision on earnings from operations during the period. The tax provision was offset~~further increased by a ~~$6.1~~$2.0 million discrete stock compensation windfall benefit for tax deductions that exceeded the associated book compensation ~~expense~~expense.

Discontinued Operations

Discontinued operations for the three and nine months ended March 31, 2022 and 2021 include our semiconductor automation business. In the fourth quarter of fiscal year 2021, we entered into a definitive agreement to sell our semiconductor automation business to THL for $3 billion in cash, subject to net working capital and other adjustments. On February 1, 2022, we completed the ~~period. During~~sale of our semiconductor automation business to THL for $2.9 billion in cash, subject to net working capital and other adjustments. Net cash proceeds from the divestiture are expected to be $2.5 billion after estimated taxes payable.The nine months ended June 30, ~~2020, we also~~2021 include an adjustment recorded ~~a discrete benefit~~in the first fiscal quarter of ~~$0.5 million~~2021 to our previously recorded gain on sale from ~~a reduction of deferred tax liabilities related to the extension of a tax rate incentive in China.~~our semiconductor cryogenics business, which was completed on July 1, 2019.

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~~Discontinued Operations~~

On July 1, 2019, we completed the sale of the semiconductor cryogenics business which we include as a discontinued operation in our unaudited consolidated financial statements included elsewhere in this Quarterly Report on Form 10 Q. During the first quarter of fiscal year 2021, the final net working capital was determined which resulted in our payment of an additional $1.8 million to Edwards in the nine months ended June 30, 2021. We generated a net lossRevenue from discontinued operations ~~net of tax of $1.2~~was $264.4 million for the nine months ended June 30, ~~2021 related to our semiconductor cryogenics business. We recorded a nominal loss related to our semiconductor cryogenics business~~2022, we did not have revenue from discontinued operations for the three months ended June 30, ~~2021~~. ~~We did not record income or~~2022. Revenue from discontinued operations was $186.3 million and $474.7 million, respectively, for the three and nine months ended June 30, 2021. Net loss ~~related to our semiconductor cryogenics business~~from discontinued operations was $2.6 million for the three months ended June ~~30, 2020~~. ~~We generated a~~30. 2022 and net ~~loss~~income from ~~discontinued~~discontinue operations ~~of $0.2 million~~was $2.2 billion for the nine months ended June 30, ~~2020 related to our~~2022. Net income from discontinued operations was $41.0 million and $96.6 million, respectively, for the three and nine months ended June 30, 2021. Net income from discontinued operations for the three and nine months ended June 30, 2022 includes the net gain on the sale of the semiconductor ~~cryogenics business.~~automation business of $2.1 billion. The ~~net loss~~income from discontinued operations only includes direct operating expenses incurred that (1) are clearly identifiable as costs being disposed of upon completion of the sale and (2) will not be continued by usour company on an ongoing basis. Indirect expenses which supported the semiconductor ~~cryogenics~~automation business and which ~~will remain~~remained as part of ~~our~~the continuing operations, are not reflected in ~~net loss~~income from discontinued operations.

LIQUIDITY AND CAPITAL RESOURCES

Our semiconductor solutions business represents slightly more than half of our revenue and is dependent on the demand for semiconductor capital equipment which historically has experienced periodic downturns. We believe that we have adequate resources to satisfy our working capital, financing activities, debt service and capital expenditure requirements for the next twelve months. The ~~cyclical nature of our served markets and uncertainty in the~~ current global economic environment, including the uncertainty related to the COVID-19 pandemic, make it difficult for us to predict longer-term liquidity requirements with sufficient certainty. We may be unable to obtain any required additional financing on terms favorable to us, if at all. If adequate funds are not available to us on acceptable terms or otherwise, we may be unable to successfully develop or enhance products and services, respond to competitive pressure or take advantage of acquisition opportunities, any of which could have a material adverse effect on our business, financial condition and operating results.

The discussion of our cash flows and liquidity that follows ~~does not include the impact of the disposition of the semiconductor cryogenics business and is~~ stated on a total company consolidated ~~basis.~~basis and excludes the impact of discontinued operations.

Overview of Cash Flows and Liquidity

Our cash and cash equivalents, restricted cash and marketable securities as of June 30, ~~2021~~2022 and September 30, ~~2020~~2021 consist of the following (in thousands):



	June 30, 2021		September 30, 2020		June 30, 2022		September 30, 2021
Cash and cash equivalents	$	269,862	$	295,649	$	1,474,189	$	227,427
Restricted cash		12,710		6,877		12,047		12,906
Cash and cash equivalents and restricted cash						1,486,236		240,333
Short-term marketable securities		101		67		709,063		81
Long-term marketable securities		3,637		3,101		312,027		3,598
	$	286,310	$	305,694	$	2,507,326	$	244,012

Cash, cash equivalents and restricted cash					$	1,486,236	$	240,333
Cash and cash equivalents included in assets held for sale						—		45,000
					$	1,486,236	$	285,333

Our cash ~~is held in numerous locations throughout the world.~~and cash equivalents, restricted cash and marketable securities were $2.5 billion as of June 30, 2022. As of June 30, ~~2021,~~2022, we had cash, ~~and~~ cash equivalents and restricted cash of ~~$269.9 million,~~$1.5 billion, of which ~~$206.1 million~~$1.1 billion was held outside of the United States. If these funds are needed for ~~our U.S.~~the United States operations, we would need to repatriate these funds. ~~Although under current~~As a result of changes in U.S. tax ~~laws~~legislation, any repatriation ~~of these fund to~~in the ~~United States~~future would likely not result in ~~further~~ U.S. federal income ~~tax, it is uncertain whether this will be~~tax. During the ~~case in the future based on changes~~quarter ended September 30, 2021 we repatriated foreign cash to the U.S. in planning for the sale of the discontinued operation and recognized all related tax ~~laws that may be enacted. Our~~costs. Aside from these actions, our intent is to reinvest ~~these funds~~the remaining foreign cash outside of the United States and our current operating plans do not demonstrate a need to repatriate these funds for our U.S. operations. ~~As of June 30, 2021 and September 30, 2020, we~~We had marketable securities of $1.0 billion and $3.7 million as of June 30, 2022 and ~~$3.2 million,~~September 30, 2021, respectively. Our marketable securities are generally readily convertible to cash without ana material adverse impact.

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Nine Months Ended June 30, ~~2021~~2022 Compared to Nine Months Ended June 30, ~~2020~~2021

Overview

Divestiture and Extinguishment of Debt

On February 1, 2022, we completed the sale of our semiconductor automation business for $2.9 billion in cash, subject to net working capital and other adjustments. Net cash proceeds from the divestiture are expected to be $2.5 billion after estimated taxes payable and other items, such as closing costs. Upon closure of the sale on February 1, 2022, we utilized $49.7 million of ~~earnings, including $88.9 million~~proceeds to extinguish outstanding debt related to our term loan. We also terminated our revolving line of ~~net income and $60.0 million~~credit, which had no borrowings outstanding. As of ~~adjustments to net income for non-cash items, partially offset by $26.2 million of cash used for the changes in operating assets and liabilities.~~June 30, 2022, we have no outstanding debt on our balance sheet.

Operating Activities

Cash flows from operating activities can fluctuate significantly from period to period as earnings, working capital needs and the timing of payments for income taxes, restructuring activities and other operating charges impact reported cash flows.

Cash ~~provided by~~outflows from operating activities ~~was $122.7~~of $475.7 million for the nine months ended June 30, 2022, resulted from net income of $2.2 billion, adjusted to exclude the effect of non-cash operating adjustments of $2.1 billion which includes $2.1 billion on the net gain on sale of the semiconductor automation business, transaction fees paid related to the sale of $52.5 million; partially offset by a usage of cash from changes in our net operating assets and liabilities of $83.7 million, primarily driven by increases in inventory for both the continuing operations and discontinuing operations business and increased in accounts receivable and prepaid expenses and other assets; partially offset by an increase in accrued expenses and other liabilities and accrued compensation. Additionally, the company paid $431.6 million in cash taxes related to the sale of the semiconductor automation business during the nine months ended June 30, 2022.

Cash flows from operating activities of $122.7 million for the nine months ended June 30, 2021, ~~and was comprised primarily of $148.9 million of earnings, including~~resulted from net income $88.9 million, adjusted to exclude the effect of ~~net income and~~non-cash operating charges of $60.0 million, ~~of adjustments to net income for non-cash items. Partially offsetting these items was the net use of cash of $26.2 million for the~~partially offset by an increase in net operating assets ~~and liabilities.~~of $26.2 million. The net increase in operating assets and liabilities consisted primarily of increases in accounts receivable and inventory, partially offset by increases to accrued expenses and other liabilities, accrued compensation and accounts payable.

~~Cash used in operating activities was $13.9~~Table of Contents

Discontinued operations contributed $2.2 billion and $95.4 million ~~during~~of net income to the nine months ended June 30, ~~2020, comprised primarily of $91.5 million of cash taxes paid~~2022 and 2021, respectively. Net income from discontinued operations for the nine months ended June 30, 2022 includes a gain on the sale of the semiconductor ~~cryogenics~~automation business ~~and a use~~ of ~~cash of $12.1 million related to increases in net operating assets and liabilities partially offset by~~ ~~$89.6 million of ea~~rnings, comprised of $35.9 million of net income, and $53.7 million of adjustments to net income for non-cash items. The net increase in operating assets and liabilities consisted primarily of an increase in inventory partially offset by increases in ~~accrued expenses and other liabilities, accrued compensation and accounts payable~~.$2.1 billion.

Investing Activities

Cash flows ~~used in~~provided by investing activities consist primarily of proceeds from divestitures, cash used for acquisitions, capital expenditures and purchases of marketable securities as well as cash proceeds generated from sales and maturities of marketable securities. Cash provided by investing activities was $1.8 billion during the nine months ended June 30, 2022 and included $2.9 billion of proceeds from the sale of the semiconductor automation business, net of cash transferred; partially offset by cash outflows for the purchase of marketable securities of $1.5 billion, capital expenditures of $59.7 million, and the acquisition of technology intangible assets of $4.0 million. Cash used in investing activities was $128.8 million during the nine months ended June 30, 2021, and included ~~cash outflows for acquisitions of $92.4 million and~~ capital expenditures of $34.6 ~~million.~~ ~~Cash used in investing activities was $12.6~~ million ~~during the nine months ended June 30, 2020. Cash used in investing activities during the nine months ended June 30, 2020 included cash outflows for capital expenditures~~and acquisitions of $29.7 million, $15.7 million for the acquisition of RURO, and $10.8 million for the purchases of marketable securities. These outflows were partially offset by cash inflows from the maturities and sales of marketable securities of $44.7$92.4 million.

Financing Activities

Cash outflows for financing activities were ~~$21.4~~$64.5 million during the nine months ended June 30, 2022 which primarily consisted of cash outflows of $49.7 million to extinguish the term loan, $10.4 million for the payments of acquisition related contingent consideration and $7.5 million related to dividend payments. Cash used in financing activities was $21.4 million during the nine months ended June 30, 2021, which primarily consisted of cash outflows for cash dividend payments of $22.3 million. ~~Cash used in financing activities was $21.6 million during the nine months ended June 30, 2020 which primarily consisted of cash outflows for cash dividend payments of $22.1 million.~~

China Facility

In April 2019, we committed to construct a facility in Suzhou China, to consolidate the multiple locations in Suzhou, ~~operations of~~China related to the ~~GENEWIZ~~genomics business and provide infrastructure to support future growth. The facility is being constructed in two

~~Table~~ phases. During the third fiscal quarter of ~~Contents~~

~~phases. We have incurred $23.2 million of capital expenditures to date related to~~2022, we completed the construction of phase one of the ~~facility,~~facility. The total cost transferred from construction in progress at June 30, 2022, was $42.4 million, which ~~includes $6.2~~included $7.1 million ~~and $13.8 million, respectively,~~of costs incurred for the ~~three and~~ nine months ended June 30, ~~2021.~~2022.

Capital Resources

Term ~~Loans~~Loan and Line of Credit

On October 4, 2017, we entered into a $200.0 million term loan with Morgan Stanley Senior Funding, Inc., JPMorgan Chase Bank, N.A. and Wells Fargo Securities, LLC pursuant to the terms of a credit agreement with the lenders. The term loan was issued at $197.6 million, or 98.8% of its par value, resulting in a discount of $2.4 million, or 1.2%, which represented loan origination fees paid at the closing. ~~The loan principal amount may be increased by an aggregate amount equal to $75.0 million plus any voluntary repayments of~~

On February 1, 2022, we settled the ~~term loan plus any additional amount such that our secured leverage ratio is less than 3.00 to 1.00.~~

The term loan matures and becomes fully payable on October 4, 2024. Installment principal payments equal to 0.25% of the initial principal amount of the term loan are payable on the last day of each quarter, with any remaining principal amount becoming due and payable on the maturity date. Subject to certain conditions stated in the credit agreement, we may redeem the term loan at any time at our option without a significant premium or penalty, except for a repricing transaction, as defined in the credit agreement. We are required to redeem the term loan at the principal amount then outstanding upon the occurrence of certain events, as set forth in the credit agreement.

~~On July 1, 2019, in connection with the completion of~~Term Loan using proceeds from the sale of ~~our~~the semiconductor ~~cryogenics~~automation business ~~we used $147.0 million of the cash proceeds from the transaction to extinguish a portion of the outstanding balance at July 1, 2019 of the term loan.~~as discussed above.

The credit agreement, as amended, contains certain customary representations and warranties, covenants and events of default. As of June 30, 2021, we were in compliance with all covenants and conditions under the credit agreement, as amended.

~~At June 30, 2021, the outstanding principal balance of the term loan was $49.7 million, excluding unamortized deferred financing costs of $0.3 million.~~

Borrowings under the term loan are subject to a variable interest rate. As a result, we may experience exposure to interest rate risk due to the potential volatility associated with the variable interest rate on the term loan. If rates increase, we may be subject to higher costs of servicing the loan which could reduce our profitability and cash flows.

~~In connection with our acquisition of GENEWIZ Group in November 2018, we assumed three five-year term loans, which matured and were repaid in full on June 30, 2021.~~

During the nine months ended June 30, 2021, the weighted average stated interest rate on the term loans was 2.8%. During the nine months ended June 30, 2021, we incurred aggregate interest expense of $1.3 million on the term loans, including $0.2 million of deferred financing costs amortization. Our debt service requirements are expected to be funded through our existing sources of liquidity and operating cash flows.

~~Line of Credit~~

~~Facility~~

~~We maintain~~Company also maintained a revolving line of credit ~~under a credit agreement~~ with Wells Fargo Bank, N.A. and JPMorgan Chase Bank, N.A. that ~~provides~~provided for a revolving credit facility of up to $75.0 million, subject to borrowing base availability, as defined in the credit agreement. The line of credit matures on October 4, 2022. The proceeds from the line of credit are available for permitted acquisitions and general corporate purposes.

~~Table of Contents~~

~~As of June 30, 2021,~~million. On February 1, 2022, we had approximately $49.8 million available for borrowing under the line of credit. There were no amounts outstanding pursuant to the line of credit as of June 30, 2021. The amount of funds available for borrowing under the credit agreement may fluctuate each period based on our borrowing base availability. The credit agreement contains certain customary representations and warranties, a financial covenant, affirmative and negative covenants, as well as events of default. We were in compliance with the credit agreement as of June 30, 2021. Although we believe we will be able to generate sufficient cash in the United States and foreign jurisdictions to fund future operating costs, we securedalso terminated the revolving line of credit, ~~as an additional assurance for maintaining liquidity in the United States during potentially severe downturns of the cyclical semiconductor market, and for strategic investments or acquisitions.~~

~~Dividends~~

On August 3, 2021, our Board of Directors declared a cash dividend of $0.10 per share payable on September 24, 2021 to common stockholders of record as of September 3, 2021. Dividends are declared at the discretion of our Board of Directors and depend on actual cash flow from operations, our financial condition, debt service and capital requirements, and any other factors our Board of Directors may consider relevant. We intend to pay quarterly cash dividends in the future; however, the amount and timing of these dividends may be impacted by the cyclical nature of certain markets we serve or the impact of the COVID-19 pandemic. We may reduce, delay or cancel a quarterly cash dividend based on the severity of a cyclical downturn or if the effects of the COVID-19 pandemic are prolonged.which had no borrowings outstanding.

Share Repurchase Program

On September 29, 2015, our Board of Directors approved a share repurchase program for up to $50.0 million worth of our common stock. The timing and amount of any shares repurchased will be based on market and business conditions, legal requirements and other factors and repurchases may be commenced or suspended at any time at our discretion. There were no shares repurchased under this program during the nine months ended June 30, ~~2021~~2022 and there have been no shares repurchased under this program since its inception.

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Contractual Obligations and Requirements

At June 30, ~~2021,~~2022, we had non-cancellable commitments of ~~$288.0~~$78.6 million, ~~including~~comprised primarily of purchase orders for inventory of ~~$254.6~~$65.0 million, information technology related commitments of ~~$18.0~~$13.1 million, and China facility commitments of ~~$15.2~~$0.4 million.

At June 30, 2021, we had approximately $1.3 million of letters of credit outstanding related primarily to customer advances and other performance obligations. These arrangements guarantee the refund of advance payments received from our customers in the event that the product is not delivered, or warranty obligations are not fulfilled in accordance with the contract terms. These obligations could be called by the beneficiaries at any time before the expiration date of the particular letter of credit if we fail to meet certain contractual requirements. None of these obligations were called during the nine months ended June 30, 2021, and we currently do not anticipate any of these obligations to be called in the near future.

Off-Balance Sheet Arrangements

As of June 30, ~~2021,~~2022, we ~~did not have any~~had no obligations, assets or liabilities which would be considered off-balance sheet ~~arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K.~~arrangements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to a variety of market risks, including fluctuations in foreign currency exchange rates and changes in interest rates affecting ~~interest payments on our term loan and~~ investment return on our cash and cash equivalents, restricted cash and short-term and long-term investments.

~~Table of Contents~~

Interest Rate Exposure

Our term loan has a variable interest rate which subjects us to interest rate risk. Our primary interest rate risk exposure results from changes in the short-term LIBOR rate, the federal funds effective rate and the prime rate. During the nine months ended June 30, 2021, the weighted average stated interest rate on all of our then outstanding term loans was 2.8%. At June 30, 2021, the outstanding term loans principal balance on our remaining term loan was $49.7 million, net of unamortized deferred financing costs of $0.3 million. During the nine months ended June 30, 2021, we incurred cash interest expense of $1.1 million on all of our then outstanding term loans. A hypothetical 100 basis point change in interest rates would result in a $0.4 million change in interest expense incurred during the nine months ended June 30, 2021.

Our cash and cash equivalents and restricted cash consist principally of money market securities that are short-term in nature. At June 30, ~~2021,~~2022, our total short-term and long-term investments were ~~$3.7 million,~~$1 billion, consisting mostly of short term Treasury securities, highly rated corporate debt securities and other debt securities. At June 30, ~~2021,~~2022, we had ~~an insignificant~~$7.4 million amount of securities in an unrealized loss position. A hypothetical 100 basis point change in interest rates would result in an ~~insignificant~~approximate $8 million increase in interest income earned during the nine months ended June 30, ~~2021.~~2022.

On February 1, 2022, in connection with the completion of the sale of its semiconductor automation business, the Company used $49.7 million of the cash proceeds from the sale of the semiconductor automation business to extinguish the total remaining outstanding balance of its term loan. The Company also closed its revolving credit facility of which had no borrowings. During the nine months ended June 30, 2022, we incurred cash interest expense of $0.7 million on the term loan. The term loan had a variable interest rate which subjected us to interest rate risk. Our primary interest rate risk exposure resulted from changes in the short-term LIBOR rate, the federal funds effective rate and the prime rate.

Currency Rate Exposure

We have transactions and balances denominated in currencies other than the U.S. dollar. Most of these transactions or balances are denominated in Euros, British Pounds and a variety of Asian currencies. Sales in currencies other than the U.S. dollar were approximately ~~38%~~37% and ~~39%~~42% of our total sales, respectively, during the nine months ended June 30, ~~2021~~2022 and ~~2020.~~2021. These sales were made primarily by our foreign subsidiaries, which have cost structures that substantially align with the currency of sale.

In the normal course of our business, we have liquid assets denominated in non-functional currencies which include cash, short-term advances between our legal entities and accounts receivable which are subject to foreign currency exposure. Such balances were approximately ~~$103.2~~$88.4 million and ~~$142.9~~$119.4 million, respectively, at June 30, ~~2021~~2022 and September 30, ~~2020,~~2021, and related to the Euro, British Pound and a variety of Asian currencies. We mitigate the impact of potential currency translation losses on these short-term intercompany advances by the timely settlement of each transaction, generally within 30 days. We also utilize forward contracts to mitigate our exposures to currency movement. We incurred foreign currency gains and losses of ~~$1.2~~$1.9 million and ~~$2.8~~$7.3 million during the nine months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively, which related to the currency fluctuation on these balances between the time the transaction occurred and the ultimate settlement of the transaction. A hypothetical 10% change in foreign exchange rates at June 30, ~~2021~~2022 and ~~2020~~2021 would result in an approximate change of ~~$2.8~~$0.1 million and less than ~~$0.1~~$2.7 million, respectively, in our net income during the nine months ended June 30, ~~2021~~2022 and ~~2020.~~

2021.

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Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures. As of the end of the period covered by this report, and pursuant to Rules 13a-15(e) and 15d-15(e) under the ~~Securities~~ Exchange Act, ~~of 1934,~~ the Company’s management, including our chief executive officer and chief financial officer, has concluded that our disclosure controls and procedures are effective.

Change in Internal Controls. There were no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

We are subject to various legal proceedings, both asserted and unasserted, that arise in the ordinary course of business. We cannot predict the ultimate outcome of such legal proceedings or in certain instances provide reasonable ranges of potential losses. However, as of the date of this Quarterly Report on Form 10-Q, we believe that none of these claims will have a material adverse effect on our consolidated financial condition or results of operations. In the event of unexpected subsequent developments and given the inherent unpredictability of these legal proceedings, there can be no assurance that our assessment of any claim will reflect the ultimate outcome and an adverse outcome in certain matters could, from time to time, have a material adverse effect on our consolidated financial condition or results of operations in particular quarterly or annual periods.

Item 1A. Risk Factors

You should carefully review and consider the information regarding certain factors that could materially affect our business, consolidated financial condition or results of operations set forth under Item 1A. Risk Factors in our ~~2020~~2021 Annual Report on Form ~~10-K.~~10-K as updated under Part II, Item 1A. Risk Factors in our First Quarter Form 10-Q and our Second Quarter 10-Q. There have been no material changes from the risk factors disclosed in our ~~2020~~2021 Annual Report on Form 10-K, ~~other than the addition of the risk factor set forth below.~~First Quarter Form 10-Q and Second Quarter Form 10-Q. We may disclose changes to risk factors or additional factors from time to time in our future filings with the SEC.

~~Our plans to separate into two independent, publicly traded companies may not be completed on the currently contemplated timeline or at all and may not achieve the intended benefits.~~

On May 10, 2021, we announced our intention to separate our business into two independent, publicly traded companies. We plan to spin off our semiconductor business, which operates as our Semiconductor Solutions Group segment, through a pro rata distribution of shares to our common stockholders. The proposed separation is subject to various conditions, is complex in nature, and may be affected by unanticipated developments, credit and equity markets, or changes in market conditions. As independent, publicly traded companies, each of the resulting companies will be smaller and less diversified than our business, with a narrower business focus, and they may be more vulnerable to changing market conditions.

We may not be able to achieve the full strategic and financial benefits that we anticipate to result from the separation, or such benefits may be delayed or not occur at all. We may experience negative reactions from financial markets if we do not complete the separation in a reasonable time period, or at all. Following the proposed separation, the combined value of the shares of the two publicly traded companies may not be equal to or greater than what the value of our common stock would have been had the proposed separation not occurred. In addition, the cost and resources required to effectuate the separation may be significantly higher than what we currently anticipate.

~~Any of these factors could have a material adverse effect on our business, financial condition, results of operations, cash flows or the price of our common stock.~~

~~Table of Contents~~

Item 6. Exhibits

The following exhibits are included herein:


Exhibit No.		Description

3.1		Agreement on the Sale and Transfer of Shares, dated as of June 7, 2022, by and among Azenta Germany GmbH, Thomas Barkey, Swissfinity I Beteiligungs and Christian Barkey (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed on June 8, 2022).
31.01		Certification of the Company’s Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.02		Certification of the Company’s Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32		Certification of the Company’s Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101		The following material from the Company’s Quarterly Report on Form 10-Q, for the quarter ended June 30, ~~2021,~~2022, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) the unaudited Consolidated Balance Sheets; (ii) the unaudited Consolidated Statements of Operations; (iii) the unaudited Consolidated Statements of Comprehensive Income; (iv) the unaudited Consolidated Statements of Cash Flows; (v) the unaudited Consolidated Statements of Changes in Stockholders Equity; and (vi) the Notes to the unaudited Consolidated Financial Statements. The instance document does not appear in the Interactive Data File because XBRL tags are embedded in the iXBRL document.

104		Cover Page Interactive Data File (formatted as iXBRL and contained in Exhibit 101).

*		Certain schedules and exhibits have been omitted from this Exhibit pursuant to Item 601(a)(5) of Regulation S-K. Azenta, Inc. will furnish a copy of any omitted schedule or exhibit to the U.S. Securities and Exchange Commission or its staff upon request.

5152

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	~~BROOKS AUTOMATION,~~AZENTA, INC.

Date: August ~~5, 2021~~9, 2022	/s/ Lindon G. Robertson
	Lindon G. Robertson
	Executive Vice President and Chief Financial Officer
	(Principal Financial Officer)

Date: August ~~5, 2021~~9, 2022	/s/ ~~David Pietrantoni~~Vandana Sriram
	~~David Pietrantoni~~Vandana Sriram
	Vice President-Finance and Corporate Controller
	(Principal Accounting Officer)

5253


	Brooks
	Semiconductor		Brooks		Brooks
	Solutions		Life Sciences		Life Sciences
	Group		Products		Services		Other		Total
Gross goodwill, at September 30, 2020	$	637,303	$	103,278	$	349,899	$	26,014	$	1,116,494
Accumulated goodwill impairments		(588,944)		—				(26,014)		(614,958)
Goodwill, net of accumulated impairments, at September 30, 2020		48,359		103,278		349,899		—		501,536
Acquisitions and adjustments		32,911		7,493		9,386		—		49,790
Gross goodwill, at June 30, 2021		670,214		110,771		359,285		26,014		1,166,284
Accumulated goodwill impairments		(588,944)		—				(26,014)		(614,958)
Goodwill, net of accumulated impairments, at June 30, 2021	$	81,270	$	110,771	$	359,285	$	—	$	551,326


Fiscal year ended September 30,
2021	$	10,853
2022		40,414
2023		37,125
2024		32,242
2025		26,937
Thereafter		107,366
	$	254,937


	Amount
Fiscal year ended September 30,
2021	$	—
2022		—
2023		—
2024		—
2025		50,000
Total outstanding principal balance		50,000
Unamortized deferred financing costs		(349)
		49,651
Current portion of long-term debt		—
Non-current portion of long-term debt	$	49,651


	Operating Leases		Finance Leases
Fiscal year ended September 30,
2021	$	2,501	$	251
2022		9,032		363
2023		7,286		-
2024		6,378		-
2025		5,779		-
Thereafter		34,475		-
Total future lease payments		65,451		614
Less imputed interest		(12,928)		(14)
Total lease liability balance	$	52,523	$	600