Azenta (AZTA) 7 Nov 192019 Q4 Earnings call transcript

Greetings and welcome to the Brooks Automation Q4 2019 Financial Results Conference Call. [Operator Instructions] As reminder this conference is being recorded, Wednesday November 6, 2019.

I will now like to turn the conference over to Mark Namaroff, Director of Investor Relations. Please go ahead, sir.

Thank you, Chris, and good afternoon, everyone on the line today. welcome earnings our conference to yearend quarter like XXXX fiscal call. would you fourth to and We

Our earnings our press supplementary the of located the prepared release http://brooks.investorroom.com, PowerPoint was issued today, at be is after slides and remarks that available using are today. on as Investor we'll website, market Relations our the during close

the Private a the call, we the Security would to number forward-looking XXXX. I of of like the remind course everyone meaning statements of Act within be Litigation that making of during will

are cause There from actual results or forward-looking many in statements. identified differ to financial factors that may other those such events

I reports Form on statements these or our Statement, our differ on quarterly XX-K to and our would our XX-Q. Harbor the of should Safe from SEC, sections We Form various filings events Harbor future our annual website, our with our update you refer no financial presentation today. data to obligation the that slide the statements, PowerPoint Safe earnings and reports release including on entitled occur on to information presented make forward-looking

Also believe which of more be used accordance exclusion understanding themselves. results reconciliation not of the to an addition today number complete and the to GAAP Brooks’ GAAP measures referring viewing and performance, provide GAAP and of financial presented operations to results they conjunction additional that an We aspects are when non-GAAP measures upon considered even with but in of business. with measures relied with in way measures, the should the Non-GAAP financial non-GAAP GAAP. we in will our of be measures, a provide of

and Officer, President our me Executive Chief Executive Officer, Chief the is Financial today Steve with President Robertson. Lindon On Vice and and call Schwartz;

of on will for into Lindon outlook our up remarks questions more XXXX. fiscal the on quarter provide the quarter call provide the open Steve results take call. will of a highlights financial end financial look the year. from yearend quarter Then the summary the and of Then and fiscal a fourth we with We the first and your of will fiscal at detailed

over Steve, remind everyone completed day the fourth our business to the Semiconductor on that of I commentary to would Xst, July quarter, Cryogenics turning of operations. sale our in first our Before on call and the reporting continuing quarter this fiscal we've focuses like

I to call the that, Schwartz. over with Steve And CEO, turn to would like our

outlook performance with to from Thank you, Give our Mark, you pleased and $XXX XXXX strong for QX our and year-over-year, provide year overall from you Revenue spite results our fiscal here addition another of of driven fiscal by million another Brooks. afternoon equipment down some good was of organic report you environment. captained some year quarter. for mostly We're in the everyone. fourth about comments growth strong to on summary thoughts GENEWIZ with up XX% growth XXXX.

full fiscal year over million business was the up For $XXX segment. revenue up XX%

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GENEWIZ. Of

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propels of needs that of aligned very are a forecast ahead future. To need we transformative our growth, where just life that quarter fourth markets. we've sciences summarize made more position another share more concluded our the front and for into our investments our and As strong the the with more to technologies solutions roadmaps we customer with year in services they are that another from closely gains out but in our products in profitability year business us

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more the you on the I will go through give as color we charts. details

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these one-time of strongest Excluding making in the seen of was from many cash adjusted operations $XX it has flow cash company fees quarters years. one generation million the

the Investor we as in a increasing targets summary and our only sciences will our data outlook semiconductor in Day final with life positive XXXX of a are point given the hear business. As during positive for momentum the points you our confidence provided reiterating our market September

for move the now Let's slide X on of details quarter. to

year an a increase XX% reaching XX% sciences offsetting growth organic double life this quarter, than $XXX solutions. the increased decline semiconductor was ago for more to by sciences million range quarter. from increased revenue in our in driven the In this XX% a X% top-line Our life digit business

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compared Inside on X operations loss will pennies Looking per total driven per million share of were months that Earnings diluted the X $X.XX revenue the or sale the XX we're The cryogenics on continuing the charge recorded of million share to highlight in generated line. the proceeds per times cryo diluted in $X the largely one operations the on QX X.X per P&L in we the closed I and left from the XXXX. share page continuing sale for of company last of the share ownership. at the July extinguishment business from reporting with final penny discontinued the operations earnings $X.XX side the a in per a XXX sale. basis $X.XX quarter earnings by gain share debt semiconductor GAAP for the approximately

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fiscal lower drove variable As sample lower and compensation this and slower accruals the semiconductor the cycle business the highlighted our for year XXXX. management mid-year, and growth

million fiscal compensation for to year an full we the or set back next target will operating additional to XXXX. resetting look XXXX see accruals expense If we in the due being approximately X achievement quarter into expectation variable

and lower Below income benefited net $X.XX and for per expense quarter was to the sequentially interest compared increase QX. year-over-year. to P&L In operating the from share comparisons sequentially XX% year-over-year total income increase from XX% or a both million $XX

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in that approximately Sciences an X.X% margins XXX you the of at came flat points increase Life and basis quarter-to-quarter. operating year-over-year see

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highlighted GENEWIZ Sciences have with management and dynamics the to the improved We growth along and transformational fourth has XX% quarter profile. an growth of and acquisition driven our of of gross total continued addition it with the the of GENEWIZ revenue carried margin its Life be in the sample

quarter we expect As we look million XXXX towards Life fiscal $XX our in the or of better. first be to of range Sciences revenue

we we basis until last see referenced quarter expectation As growth of for progress as see sample management. a expectations setting on and consistent signs solid of than we market revenue incremental are the our for potential lower

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is line at our and in our with our, Investor year on line full with and Day. in track model on in track September This shared

on of the This enough the sequential decreased wafer vacuum quarter on and [indiscernible]. Let's Semiconductor not an business our business was contamination was semiconductor software it X. CCS in automation continued third the offset in now control X% shipments the but end our robots to the the strength turn stability system year-over-year. in consistent and support improvement in solutions XXXX $XXX X% in does solutions as of carrier side and to compared million quarter expectations, with revenue slide the

semiconductor position function quarter gross front first The this starting within our solutions coming robots primarily at sequentially expected order represents pickup of XX.X% fiscal and The tier strong at and result is customer lower control by of which signs primarily the a up encouraged adjusted points and result a volumes about down our in XX contamination business. in mix OEM business for XXXX good X was of the sales systems continued are quarter. which a product this year. of OEM momentum basis our bookings margin the a provides continue We pick as the to sequential to with

full-year For gross basis increased and reflecting the favorable the margins on adjusted the control end slightly XX OEMs year-over-year and contamination systems X tier fab site. users towards points mix

margin in with This full operating year income XXXX. operating combined expense and controls points of increase resulted performance margin XX% to and basis fiscal XXX compared expansion

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now turn cash flow. Let's of slide summary X to over the for

cash the quarter million. XX achieved flow Operating in fourth

be As the referenced reflected fees sale the on cash. earlier as to GAAP closure operating accounting of requires the the that payment of use of entirely M&A cryo contingent were

again So we I'm report $XX cash of cash of million, in operations from was strongest happy years. if many quarters remove the flow to this one

contributor first were inventory payables along absolute significant a by purchase and of in year quarter million, down million of capital reduction an sales. we in inventory of earnings working categories the from Many in with and the saw an $X of the worked making this fourth-quarter $XX applications increase half

XXX XX, debt carry $XXX and million. cash of close million total a we excluding the at the marketable we of cash year, As position September net and securities our

me what over to comment expect position as X further on to allow turn the now and slide this review and we balance sheet. to Let's cash

of of You column. can that markable million cash restricted equivalents the securities yearend see the $XXX top cash at

includes an your to which towards payable sale of draw on January gain cryo liabilities the million in increase down million. the due current This me the Let taxes shows attention $XXX business. for of $XX

cash enter net those we when in have on as debt strong as take of is addition payments a significantly if sheet and larger million investment settling of $XXX it we to The to capacity balance XXXX. appropriate. available for approximately So

million for million million our better. $XX for guidance range in of sciences level XX is first Slide $XXX of million or to life with fiscal expected quarter turn to $XXX that the $XXX semiconductor the $XXX to Revenue Let's between million range XXXX. in be to

Adjusted to share $XX Non-GAAP and EBITDA is $XX to million anticipated to $X.XX. $X.XX share GAAP per per to is be share million. expected be [$X.XX] to the earnings to earnings be $X.XX per

guidance the for will year addition XX% and interest million we page provide some be expenditures In to includes for non-GAAP somewhere to expecting million be expense rate tax negligible. between the building million range we which the additional capital expect China to in in an this a $XX XX% $XX on expenditure $XX

to for Before will of I turn XXXX. the the call back operator over on I Q&A reflect our view

reserve business next our as plans a indicators indicated We commentary. of or the orders have we're commentary we're OEM by our with a XXXX. projections and and in longer-term the and the seen one model the from some control generally the semi to very product ends than the based our but As in on design come customers. case as quarter this specifically enter markets contamination encouraged beyond solutions have little encouraged we segment always semiconductor capacity for the momentum More we reach view we of in quarter backlog projections that customer the tier further out current in any

For these is shared XXXX we've reasons life and gained momentum in our with in confidence September. additional in sciences model

the to from questions now operator our So turn that take line. Chris over prepared I'll back the remarks. call to the concludes

FBR. you. B.Riley, ahead. is Please with Our Thank question the Ellis go Craig from of Instructions] first line [Operator

business congratulations the performance remarks. the strong I'll taking with just on prepared start your Steve, the Thanks in follow-up the and question for of guys. to some

encouraging are are that things there in So very sample it happening some seems like management.

you firing like now all and like what's saw we to number you'd sounds day that it to do get wanted you and it operating progress to if to you're left of that things to where business cylinders on question at that be? a outlined improve are You where The analysts will the relative it's you'd business is to there. in to making like when business be you the where

Yes. Thanks Craig.

about go-to-market is as good feel some but rates. business. come need We're back feel a I streamlining think double-digit of inside points We're generally you that in be for right. approved XXXX We confident the out your the we that of good. couple quarters’ and we approach growth observations going to are activities we'll

assessment just, is the backlog in The flat we're the is of a more customers, feels in but opportunity current building we the that it and deliver our will confidence mentioned for demand standpoint from positive. are term there. the positive would to the We can revenue of there want still as the engagement we build and the little slightly down. generally So team revenue maybe the quarter that like things build that confidence absolutely in engagement be is I us. December of quarter more to a customer

That's the related I semi. really to is had next helpful question then

the business. stable just term as Do now you are explain secondly the So us, downward of that maybe see you orders? smiling comfortable little be you're business would in enough near-term David that look that in packaging what muted some Do these production of bit business strength on you any that a need one semi more advanced then can for you some with to make how and of that the your near would the trends the off you part of trajectory with quarter the why you the CCS was changes capacity? do more of seeing noted at but just flatter, coming and commentary analysts the have near-term frame fact you visibility shows day capacity one one at given

Craig. Thanks

First of because always think business strong all is David smiles. maybe the I

that's of it's we in you that tight feels unit of one pretty and capacity I constrained loaded know I that that understanding trying tell strong. orders and breadth build a things lot really right March the we're contamination people I of the coming December more knew We meant going keeping think more and started the but months into if we be now but was the and So looks but can by spent probably customers going that was and the A the out good out that's one but to could of reasons think customers the we factory one it like time going capacity. queue it's get good. it's heavily a and causal that I gone customers foundry like what is it I couple to but and of opportunities are them that will really have We've can balance the I of I let think the for is that large the where got take applications good balance to customers are by but a unit and and customers you we that we aren't control ago that as full tell but to as maybe it think front part. well up

we've but the good so we just in advanced we low level like go. XXXX likely that about that of confident always the XX right in more China amount might really don't flat packaging million a see so December we advanced we as positions business the some to new pick again down than the dropping advanced pick share we do. it It the is it and feels up quarter be next design are wish packaging. to that a quite had packaging confident business hopefully and pause the we just we of know support We generation some before visibility design have to I time have about the that activity we On and to we continue now some but relatively early feels said a visibility up for have the manufacturers in we've wins but particularly there and like get of begins been to continue feel

know I it is team that in position there. and all think we're customers the over front the

how the things and expenses quarter other of the think line around And items corner variable all that's impact. great the color would then The quarter first be comp model accrual question about model? just I or a given negative fiscal that you of noted financial in come would sequentially and typically as would or thanks other and first have we multi in into ask is that either should for there that expenses in calendar that be FICA if the positive impacts Lindon quarter clarification. Lindon up full the would are the more any embeds bonus item we the could that

question. Yes. It's a great

don't pressure. So any than to more million think X see fine-tune you're on that I to going the

the working since In about of divestiture was some on that fact we're management stranded our overall the we've corporate announced. concept structure around and sample on cost talked the

it we're million but to quarter quarter. pressure probably and up make think as million quarter not So of the to it I going X and X say of all would

extrapolated GENEWIZ tweak close off year Implications space to probably and on we're afford the I'll we investments as to the you we're and that I manage going and it take and gives as wins on of going highlight growth extrapolate that and design QX markup. that model for to this optimize us We in to QX to evolve afford should going pretty just all lean we think you the very R&D but previously. the model margins we're but focused in things described that do to that the out we we to constrain the not forward operating continue year or or that, result described manage going in to

yes. So

Very helpful. Thanks guys.

Great.

is question the ahead. of Knight Janney. Paul go next line with Our Please from

can? what Hi to about right on of stores talk there profitability if large and half up? And on market you you now cell the the get done science or Congrats you the you attribute life taken Steve. Can Is well it how have business? much would you steps quarter. to gene

little probably and $XX million rough the owe answer bit to we could give idea. that's probably but So $X a just on gene think that fraction cell to attributed an out a you million of you later a Paul I I

the a as aware is handling significant. you're around However, getting redirected now the in bio gene. cell pretty store more have and Indianapolis GENEWIZ we're making the the and are lines and investments We Indianapolis customer cell in that and that support in in cryopod considerable Cryo in we offerings storage BX the of transport and now in amount cells some of applications the

little forward. think right crystal bit the a but and range be for a X% a it's better I us good that will now you answer really So give about in little to question more as go certainly we it's

on then the – stores And business

were making stores good progress. On automated the large they

activities cost the really be XXXX and going exit to be fit think purchasing the is of there I we over past of the focus performance we're related efficiency but a the lot a the that that tools business the I on around on bring the there's manufacturing We're lot that that of activity of is phase installations, the and that improve the out specifically when I had good related if from to streamlined gross stores. down getting XX% quarters that things and and the think a improvements are side lot to more see I the activity as of the way think anyway coming activity but to a the and start we of install margin chute there's of there. will focused lot the the are team in XX% getting on you kinds guess in

we're accomplished it. energized So say around I'd but XX% XX%

Is I attribute GENEWIZ like think space? seems out year-over-year you that the level best GENEWIZ. I've coming that's that it XX% added was, pro-forma What footage growth it lab Steve you've on lastly of heard of number the would with then And square to?

GENEWIZ level day problems by the for them important what find every for solve going one like said strong America scientists keep customer in be bring time another customer deliver. they one is adding just customers adding it capability we're capture we more Hey These they about new capability Paul, and not able talked and capacity to in XXX the team. we are service incredibly more of and just Europe, and solving going We're the impressed we're brings every to capabilities to this and to North team the because seem customers speaks in and Lyndon constrain them. of

pleased really sustain as long we're don't So how the the good but as team know will we by performance. it's numbers it show. a We

we got never And we pinch we and I the see too back next little turn are quarter. pretty making, add is the what a focus turn away operationally any wait to Well, color know wholeheartedly. somebody so points that pretty have a that where we that them space for customer this once conversation the just do in is we is space to will is we requirements invite because sequencing a a capacity this you've regularly

So we'd like to keep them.

pretty carefully. capacity we So the watch

Thanks.

line Please question with the Patrick is Ho from ahead. Our next Stifel. go

of and Steve strategy across effect the board first year? giving much. on a the and tangible things. side life you XXXX consumables that impact seeing off growth you potential maybe sciences, is would having that on go-to-market mentioned strategy is heading very the service some you more particularly that Is for Thank confidence an

Patrick, a think it's Yes of I combination everything.

have people are inside in the time really things I how so and doing the support spend bring think we with the capturing were so that the but them with investor that out that do at specifically and and are talk can we about they internal much don't more and that capability. who do we of support customers offerings we they we the strong when internally company out rather business the how say analysts

it part the go of I think been the that's South. first salespeople

been us to to streamline not who then to now made some the turn we people really to and keep more I backlog bringing have that are that's shipped some and work ought do. think to company sure really the we go-to-market offerings we had we be and active we're right customers. to with the but add we've ultimately and solid get have more can people to progress add we're help after to think quickly do and going activities sales the something the we the I has that capturing That's impact have we team business going we think And engaged to and particularly make biggest that more product

which Right. market. that you're That's the thing follow-up recovery vacuum top not you here that turns on see see on some of we're surprise major a equipment spending wafer helpful in of fab my given mentioned tier robots and starting to the starting is side to of semiconductor business the the

is on with high-volume both two guess leading-edge over new you at past that now high-volume some customers? we're deposition how starting Can see tools or side these you're seeing had [action] also the you the that hit top to your tier characterize, year to have I may hit Given starting design nodes.

Yes.

I think the answer the question Patrick. is in there

share. been without So, to gain we've able I think question

very that been Some generation latest placement precise to wafers we indeed we're higher of relate technologies those that contamination a in are much brought to the of accumulating really tools and in robots tool the couple of particular the beginning wins years and much we've severe those over more the shift. of that's the see in and past temperature,

gains business. are the we and Dave talked share the show anticipate So better new hit tools out to that increased vacuum here about gains those we market robot that begin as to be XXXX profitability beginning up that and the will to report of share in

very Thank Great. you much.

Thanks Patrick.

[Operator next from of Instructions] Jacob question is Johnson ahead. the line go Our Stephens. with Please

management sample these customers to maybe new on existing sales Hey of up initiatives? people working adding new terms those you're commentary more is or sell in following this people now this Steve just more adding sales thanks. into about your in customers is

us. that a thing for to on mentioned can is got to that large some have other we focus particular we want we expand accounts characteristics we've accounts accounts like be Jacob that Yes. of to I the large think also

for mostly presence. it's customers to greater where a have we at deeper So have and penetrations new

of that continue to those customers exceptional in do the that they'll job are currently large are from win more approach we teams and the doing covering are are. really the who after continue So currently accounts to business way some customers we're same not accounts an accounts but how

growth really to the tease organic down interested you I business flow of could would if kind it obviously quarter this in management quarter? but sample that sample then nice out and management the Got be margins how on

again? Jacob could you tie together that for question back me

quarter. life margin in expansion Yes. I saw sciences is guess the my questions you nice

margins help extent GENEWIZ kind the a interested understand basis? performed how and year-over-year to would to I a quantify I and management margins but think sample was on expanded of also to think that just you management sample probably want

Yes.

segment quarter year question X.X% because ago income margins two XXX in so points, So simple the businesses XXX and a in it's similar at a our almost between we the have quarter. really operating basis up it's points GENEWIZ actually good op year-over-year income basis we're the this didn't this quarter

they one we're We're is amount sample the So the quarter exactly place management into in has to the similar and equally GENEWIZ but GENEWIZ the that be profit taking on companies. to quarter. in by point encouraged the encouraged pretty brought next happen this still fluctuation strength of the

million if XX you look One thing on that came Sciences at management. of improvement just a it to was year-over-year operating but sample in million, total of about that company Life the also XX note addition difference the significant from GENEWIZ of up income the year-to-year

a we're know this the this impact was it So to question will impact, going now. it's cycle in seeing Well, the think year our life I sciences. diversification when to the finishing the of have life early have people of I going is impact? in transformation XX% our revenue

don't question has think higher I more the absolutely the we the it still highlight we I'll grow structure margin to need your be leverage operating as right. expense sample much for is had So see management as continue gross gross at we growth see where that higher margins. SG&A have continue and We'll fuel that on you'll of to to top-line and it's a but GENEWIZ margins. with expand to out leverage

question to going lot of chance these sort have if segment you're be and therapy a question most there. seeing mabye strength on a I and you and cell on I customers? sciences life appreciate areas that where Lindon obviously the from last of just give just answer you gene your interested what but answer the Paul's

So on on and cryo can that right stores we quantify the bio the the is storage, one storage. now in so bio

we'll of a that So side we research as find therapy the to gene more critical in or for really obvious handling ultimately side we gene an development we're is on cells for cell that there's which it's as storage is breakdown we sure. business and beginning along the and to but stores. need handling side the the is going chain cell on clear that But the what and opportunity seeing significant for understand handle the therapy the dosing in the work think and be samples automated of what in the we're not retains again and institutions the the expansion the manufacturing a on

the it. the Got quarter. on Thanks for Congrats taking questions.

Jacob. Thanks

And there are on the this questions lines phone at further no time.

quarter. express be just their We their as outlined So to we weeks as Chris with day were attention, two here the as can investor that up that we're in this. surprise it way obviously before excited up well any audience like we investments first the this be well as hours I We're pleased wrapped that there so as thanks finish competence you the track Brooks. wrapped in that no us and we gives year. fiscal the to the on my to shouldn't We more us but surprises research

we the frame. We look season. feel and so you We much. very head Thank a We talking forward like a you to that just the you it toward to give we're time in January time wish good really appreciate all spot all best as you holiday and us. confidence you in

thank participation for That you your the conference and for today. ask that lines. please call your conclude we disconnect you does