Brooks Automation Reports its Fourth Quarter and Year-End Results of Fiscal 2020, Ended September 30, 2020, and Announces Quarterly Cash Dividend

CHELMSFORD, Mass., Nov. 10, 2020 /PRNewswire/ -- Brooks Automation, Inc. (Nasdaq: BRKS) today reported financial results for the fourth fiscal quarter and fiscal year, ended September 30, 2020.

Management Comments
"We delivered a robust quarter and completed a milestone year for the company," commented Steve Schwartz, President and CEO. "The Semiconductor Solutions and Life Sciences businesses each continued their momentum during the quarter, once again achieving operating margin expansion and delivering double-digit growth for the year. The growth is proof of our ability to lead and service two markets that have remained robust in spite of the pandemic. Our global team's dedication and our business model's strength keeps us positioned to address the ever-changing challenges of these unprecedented times as we move into fiscal 2021." 

Summary of GAAP Results

Fourth Quarter, Fiscal 2020

• Revenue for the fourth fiscal quarter was $246 million, up 24% year over year. Diluted EPS from continuing operations was $0.39 per share compared to $0.07 per share in the fourth quarter of 2019.
• Life Sciences revenue of $108 million grew 15% year over year and 16% sequentially. Year-over-year organic growth was 17%. Life Science Products grew 20% year over year, and Life Science Services grew 12%. Organic revenue growth in Q4, from what was previously defined as Sample Management, was 14% year-over-year.
• Semiconductor Solutions revenue was $138 million, an increase of 31% year over year and 9% sequentially. The growth was primarily driven by 50% year-over-year growth in Automation, while Contamination Control Solutions and Services each contributed single-digit growth.  

Full Year, Fiscal 2020

• Revenue for fiscal 2020 was $897 million, an increase of 15% compared to fiscal 2019, supported by double-digit growth in both Life Sciences and Semiconductor.
• Life Sciences revenue of $389 million was 16% higher than fiscal 2019. Life Sciences Products grew 9% and Life Sciences Services grew 20%, year over year. In total, the Life Sciences business organic growth was 10%, including 7% organic growth from Sample Management.
• Semiconductor Solutions revenue was $509 million, up 14% over the prior year. Growth was led by Contamination Control Solutions at 33%, while Automation products and Services increased 8% and 1%, respectively.
• Pre-tax income from continuing operations of $75 million was up $66 million from the prior year. The improvement was significantly driven by operating income of $78 million, which was up $32 million, or 70%, year over year. Net interest expense was $2 million for the year, a reduction of $19 million from 2019. In addition, the prior fiscal year included a $14 million loss on the extinguishment of debt.
• The GAAP effective tax rate was 13.3% for the year.
• Diluted EPS from continuing operations was $0.88 compared to $0.13 in 2019. Total diluted EPS for this fiscal year was $0.88 compared to $6.04 in 2019. Discontinued operations in fiscal 2019 provided $5.91 per diluted share primarily from the $409 million gain on the sale of the Semiconductor Cryogenics business.

Summary of Non-GAAP Results for Continuing Operations

Fourth Quarter, Fiscal 2020

• Diluted EPS from continuing operations for the fourth quarter was $0.47, up 100% over the prior year and up 48% sequentially.
• Operating income was $45 million, an increase of 112% year over year and 51% sequentially. Operating margin was 18.2%, up 760 basis points year over year and 470 basis points sequentially. The margin expansion was driven by gross margin improvements coupled with operating expense control.
• Gross margin was 46.6%, an increase of 490 basis points year over year and 310 basis points sequentially. Gross margin expansion was driven by improvements in both Life Sciences and Semiconductor Solutions, both sequentially and year over year.
• The total Life Sciences operating margin was 16.2%, an increase of 900 basis points year over year and 910 basis points from the prior quarter. Gross margin performance of 50.5%, which was up 790 basis points year over year and up 580 basis points sequentially, was the primary driver of improved operating margin. The Life Sciences Products business gross margin remained stable with a 50 basis point decline sequentially, and an increase of 390 basis points year over year, driven by sustained improvements achieved earlier in the fiscal year. The Life Sciences Services sequential improvement consisted of 590 basis points that was driven by improved performance, and another 350 basis points from the favorable mix effect of unwinding the Alliance support agreement with RUCDR. In the Alliance arrangement, RUCDR performed the substantive services while Brooks Life Sciences provided contract management and other support services which came at low gross margins. In this fourth fiscal quarter, we dissolved the business arrangement and going forward we will have only a nominal amount of revenue in final support of some ongoing contracts. The reported margins for Life Science Services are up 1,020 basis points year over year.
• Semiconductor Solutions operating margin was 20.2%, an increase of 720 basis points from the prior year and up 170 basis points from the third quarter of 2020. Gross margin of 43.6%, up 260 basis points year over year and 90 basis points sequentially, was the primary driver of the operating margin expansion.
• Adjusted EBITDA was $54 million, up 75% from the fourth quarter of 2019 and 34% sequentially.

Full Year, Fiscal 2020

• Non-GAAP diluted EPS from continuing operations was $1.26, a 65% increase compared to $0.76 in 2019. The increase reflects the 15% revenue growth described in the GAAP summary, 200 basis points improvement in non-GAAP operating margin, and a reduction in net interest expense of $19 million.
• The non-GAAP effective tax rate for the year was 21.9%.
• Operating income was $122 million, a 36% increase from 2019, supported by non-GAAP gross margins of 43.6%, which improved 170 basis points. The increase in gross margin was driven by 410 basis points improvement in the Life Sciences gross margin.

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

Cash and Liquidity

• Cash flow from operations for the fourth quarter was $52 million. On a full year basis, excluding the $92 million tax payment made in the second quarter for the gain on the sale of the Semiconductor cryogenics business, cash flow from operations increased 24% to $129 million. This compares to cash from operations in 2019 of $104 million excluding the transaction fees associated with the sale of the Semiconductor cryogenics business.
• The Company ended the fourth quarter with a total balance of cash, cash equivalents, restricted cash, and marketable securities of $306 million. With total debt of $51 million, net cash at September 30, 2020 was $255 million.

Quarterly Cash Dividend
The Company additionally announced that the Board of Directors has reiterated a dividend of $0.10 per share payable on December 17, 2020 to stockholders of record on December 4, 2020.  Future dividend declarations, as well as the record and payment dates for such dividends, are subject to the final determination of the Company's Board of Directors.

Guidance for First Quarter Fiscal 2021
The Company announced revenue and earnings guidance for the first quarter of fiscal 2021.  Revenue is expected to be in the range of $237 million to $251 million and non-GAAP diluted earnings per share is expected to be in the range of $0.37 to $0.47.  GAAP diluted earnings per share for the first fiscal quarter is expected to be in the range of $0.27 to $0.37.

Conference Call and Webcast
Brooks management will webcast its fourth quarter earnings conference call today at 4:30 p.m. Eastern Time. During the call, Company management will respond to questions concerning, but not limited to, the Company's financial performance, business conditions and industry outlook.  Management's responses could contain information that has not been previously disclosed.

The call will be broadcast live over the Internet and, together with presentation materials referenced on the call, will be hosted at the Investor Relations section of Brooks' website at www.brooks.investorroom.com, and will be archived online on this website for convenient on-demand replay.  In addition, you may call 800-897-4057 (US & Canada only) or +1-212-231-2914 for international callers to listen to the live webcast.

Regulation G – Use of Non-GAAP financial Measures
The Company supplements its GAAP financial measures with certain non-GAAP financial measures to provide investors a better perspective on the results of business operations, which the Company believes is more comparable to the similar analysis provided by its peers.  These measures are not presented in accordance with, nor are they a substitute for, U.S. generally accepted accounting principles, or GAAP. These measures should always be considered in conjunction with appropriate GAAP measures.  A reconciliation of non-GAAP measures to the most nearly comparable GAAP measures is included at the end of this release following the consolidated balance sheets, statements of operations and statements of cash flows.

"Safe Harbor Statement" under Section 21E of the Securities Exchange Act of 1934
Some statements in this release are forward-looking statements made under Section 21E of the Securities Exchange Act of 1934. These statements are neither promises nor guarantees but involve risks and uncertainties, both known and unknown, that could cause Brooks' financial and business results to differ materially from our expectations. They are based on the facts known to management at the time they are made. These forward-looking statements include but are not limited to statements about our revenue and earnings expectations, our ability to increase our profitability, our ability to improve or retain our market position, and our ability to deliver financial success in the future. Factors that could cause results to differ from our expectations include the following:  the impact of the COVID-19 global pandemic on the markets we serve, including our supply chain, and on the global economy generally, the volatility of the industries the Company serves, particularly the semiconductor industry; our possible inability to meet demand for our products due to difficulties in obtaining components and materials from our suppliers in required quantities and of required quality; the inability of customers to make payments to us when due; the timing and effectiveness of cost reduction and cost control measures; price competition; disputes concerning intellectual property; uncertainties in global political and economic conditions, and other factors and other risks, including those that we have described in our filings with the Securities and Exchange Commission, including but not limited to our Annual Report on Form 10-K, current reports on Form 8-K and our quarterly reports on Form 10-Q. As a result, we can provide no assurance that our future results will not be materially different from those projected. Brooks expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any such statement to reflect any change in our expectations or any change in events, conditions or circumstances on which any such statement is based. Brooks undertakes no obligation to update the information contained in this press release.

About Brooks Automation
Brooks (Nasdaq: BRKS) is a leading provider of life science sample-based solutions and semiconductor manufacturing solutions worldwide.  The Company's Life Sciences business provides a full suite of reliable cold-chain sample management solutions and genomic services across areas such as drug development, clinical research and advanced cell therapies for the industry's top pharmaceutical, biotech, academic and healthcare institutions globally.  Brooks Life Sciences' GENEWIZ division is a leading provider of DNA gene sequencing and gene synthesis services.  With over 40 years as a partner to the semiconductor manufacturing industry, Brooks is a provider of industry-leading precision vacuum robotics, integrated automation systems and contamination control solutions to the world's leading semiconductor chip makers and equipment manufacturers.  Brooks is headquartered in Chelmsford, MA, with operations in North America, Europe and Asia.  For more information, visit www.brooks.com.

INVESTOR CONTACTS:
Mark Namaroff
Director, Investor Relations
Brooks Automation
978-262-2635
[email protected]

Sherry Dinsmore
Brooks Automation
978-262-2400
[email protected]

Notes on Non-GAAP Financial Measures:
These financial measures are used in addition to and in conjunction with results presented in accordance with GAAP and should not be relied upon to the exclusion of GAAP financial measures. Management adjusted the GAAP results for the impact of amortization of intangible assets, restructuring charges, purchase price accounting adjustments and charges related to M&A to provide investors better perspective on the results of operations which the Company believes is more comparable to the similar analysis provided by its peers. Management also excludes special charges and gains, such as impairment losses, gains and losses from the sale of assets, as well as other gains and charges that are not representative of the normal operations of the business. Management strongly encourages investors to review our financial statements and publicly-filed reports in their entirety and not rely on any single measure.