BRKS

Brooks Automation, Inc. (BRKS)

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Brooks Automation, Inc. (BRKS)

Citi 2013 Global Technology Conference

September 3, 2013 10:30 am ET

Executives

Steve Schwartz - CEO

Martin Headley - CFO

Analyst

Terence Whalen - Citigroup

Presentation

Terence Whalen - Citigroup

[Call starts abruptly] to Citi's Annual Technology Conference. I'm Terence Whalen, Citi's Semiconductor Capital Equipment and Specialty Semiconductor Analyst. It's a pleasure to have Brooks here. With us from Brooks is CEO, Steve Schwartz, and CFO, Martin Headley. Welcome.

Steve Schwartz

Thanks, Terence.

Martin Headley

Thank you.

Question-and-Answer Session

Terence Whalen - Citigroup

Let's just jump right in and start with a higher level question about your industry outlook for this year. How you go about looking at inputs, think about the wafer fab equipment market more broadly?

Martin Headley

Right. Well, obviously, the challenge towards is we see the market one step removed. We see it largely through the lens of our OEM customers. So we are very often following on what do our OEM customers say and what do we see in the same information that everyone could see out there. I will say that we are seeing very cautious development in terms of possibly a challenge with some of the end users, the larger end users spending at least on front-end equipment the same level that we've indicated in the CapEx forecast. And so we would not see an aggressive calendar year '14 spend -- a calendar year '13 spend, which probably bodes well for calendar year '14 spend at this juncture.

We've not seen the ramp in order at this stage clearly we gave guidance with pretty much a flat to down quarter on semi spend in the September quarter. We're not seeing any change in the trajectory of our orders that suggest a really rapid ramp in the early part of the December quarter. So we would be fairly modest in our outlook at this stage. The other inputs we get are the kind of quote alarms from our OEM customers, which tend to be around a, if you're ready to ramp, you're ready to ramp when they are in a position where we might be letting orders, we're not seeing much of that activity although we're starting to see some.

Terence Whalen - Citigroup

And may be Steve a question for you, just taking a step back. If there are three points to your vision for the company over the next three to five years what would those be?

Steve Schwartz

Yes, so for sure, making more out of the core business for the company. So we got the revenue levels even that we have today were right around a $120 million report that company needs to be more profitable. So I think from an operating action standpoint we're taking the right ones, we're improving gross margin and things that will be sustainable for the company. We continue to make very aggressive investments in design-in wins for the next technologies even around the core business that will be called adjacent space, we like the MEMS area, we like the wafer level packaging, and back-end kinds of applications. We continue to make very strong market position gains in LED and as these adjacent markets continue to grow along with the semiconductor we think the investment in these design wins is critical.

And then finally we've made a growth initiative out of the life science's space. There is a fundamental opportunity that exists for people who have been doing automation that holds the cold temperatures. And so we began two years ago by acquiring a presence in the life science systems market that enables us to take the two core capabilities of the company automation and the cryogenic expertise we have and participate in what we think will be a significant growth opportunity driven by personalized medicine as this automated cold storage market moves from storing chemical compounds at relatively cold temperatures to storing biological samples and things related to personalized medicine at ultra-cold temperatures. And we think those are the three most key initiatives for the company sustained growth in the core business and more profitability and the growth factor that allows us to use core capabilities to participate in a really exciting life sciences market opportunity.

Terence Whalen - Citigroup

And maybe we can expand on that in terms of life science and then ask some semi questions later.

Steve Schwartz

Sure.

Terence Whalen - Citigroup

We've seen some volatility in the business in terms of very good growth outlook. I think 20-ish percent bookings growth recently. But in other quarters there have been some slower developments, how should customers think about the demand profile of that business and the growth rate of life science?

Steve Schwartz

So it's a good commentary if you get this question allowed, but we also focus on it significantly as a company. Just in the June quarter we had a 100% increase in bookings, we booked from $9 million, we booked $18 million plus in the June quarter the amount of capital spend that comes is a little bit lumpier than we had anticipated. The good part about the business is these are projects that we've seen coming. And so we track them, we manage them, we work to capture them. Our ability to just to move that is going to be very important. We added some industry experts, some life science's professionals into the business different from the semi group and they are helping us to balance this is one.

We really believe in the growth opportunities that exists both in the current business that serves our pharmaceutical industry. We have automated cold storage that all of the top 20 pharmaceutical companies. But as we begin to penetrate on the biological life sciences side we think it's really important that we're able to build enough backlog to have a very healthy pipeline so we could show steadier growth in the business.

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