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Brooks Automation (BRKS) Q3 Earnings Beat, Revenues Up Y/Y

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Brooks Automation (BRKS - Free Report) reported third-quarter fiscal 2018 adjusted earnings of 52 cents per share that beat the Zacks Consensus Estimate by a penny and surged 26.3% year over year.

Net sales increased 22.9% year over year to $223.5 million, which comfortably surpassed the Zacks Consensus Estimate of $218 million. The year-over-year growth was driven by robust performance across both the segments. Organic growth was 14% in the quarter.

During the quarter, Brooks added 40 new customers in the life sciences segment. Moreover, the semiconductor segment won 22 new designs.

Quarter Details

Brooks Life Sciences (BLS) jumped 35% year over year to $50 million, driven by 44% surge in storage services revenues and B3 cryo sales. Organic growth was 13% in the quarter.

While PBMMI and BioSpeciMan’s acquisitions contributed handsomely, storage services’ organic growth of 22% reflected strong opportunities in the space.

Brooks Automation, Inc. Price, Consensus and EPS Surprise

Brooks Automation, Inc. Price, Consensus and EPS Surprise | Brooks Automation, Inc. Quote


Revenues from stores, consumables and instruments businesses were solid, as each segment contributed organic growth in the high-single digit percentages.

Brooks Semiconductor Solutions Group (BSSG) reported revenues of $174 million, up 20% year over year. The top-line growth benefited from strength in vacuum automation and advanced packaging space. Moreover, an anticipated rebound in the contamination control drove growth.

Vacuum automation products revenues, which include vacuum robots and fully integrated vacuum systems, jumped 26% year over year.

Brooks won nine new vacuum automation designs across the spectrum of Tier 1 and Tier 2 OEMs during the quarter. These design wins were for various applications such as front-end deposition and etch to advanced packaging.

Management stated that event packaging business revenues were $16 million in the reported quarter and is now close to 10% of the company’s semiconductor revenues. The company won four new designs that improved its position as the leading supplier of automated solutions for advanced packaging.

Contamination control revenues were $21 million including $4 million contribution from Tec-Sem, which Brooks acquired at the beginning of the quarter.

Operating Details

Gross margin expanded 100 basis points (bps) on a year-over-year basis to 40.9%. The expansion was driven by 120 bps and 10 bps increase in BSSG and BLS segments’ gross margins, respectively.

Adjusted EBITDA jumped 25.1% from the year-ago quarter to $45.9 million. Adjusted EBITDA margin expanded 30 bps on a year-over-year basis to 20.5%.

Operating expenses increased 21.7% year over year to $54.9 million due to higher research & development (R&D) expenses, and selling, general and administrative (SG&A) expenses, up 18.3% and 23%, respectively.

Operating margin expanded 110 bps on a year-over-year basis at 16.3%.

Balance Sheet & Cash Flow

As of Jun 30, 2018, cash & marketable securities were $221.5 million.

Cash flow from operations was $19 million in the third quarter.

Brooks paid $18 million on acquisitions and $7 million in dividends during the quarter.


For fourth-quarter fiscal 2018, revenues are projected between $203 million and $213 million. Adjusted EBITDA is expected in the range of $38-$45 million. Non-GAAP earnings are projected between 35 and 43 cents per share.

Brooks anticipate sluggishness in the vacuum automation products segment for fourth quarter as Tier 1 robot demand subsides. However, integrated systems business, which largely supplies Tier 2 and non-U.S. customers, is expected to remain relatively stable on a sequential basis.

Moreover, the contamination control business is expected to grow modestly, driven by contributions from both carrier cleaning and vertical management solutions.

Nevertheless, Brooks expects revenues from semiconductor solution business to decline between 10% and 12% approximately for the fourth quarter.

Zacks Rank & Stocks to Consider

Currently, Brooks Automation carries a Zacks Rank #3 (Hold).

Adobe Systems (ADBE - Free Report) , Entegris (ENTG - Free Report) and Commvault Systems (CVLT - Free Report) are stocks worth considering in the same sector. All the three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long term earnings growth rate for Adobe, Entegris and Commvault are currently pegged at 16.2%, 11.3% and 15.8%, respectively.


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