Brooks Automation's CEO Discusses F2Q13 Results - Earnings Call Transcript

|
 |  About: Brooks Automation, Inc. (BRKS)
by: SA Transcripts

Brooks Automation, Inc. (NASDAQ:BRKS)

F2Q13 Earnings Call

May 9, 2013 4:30 PM ET

Executives

Martin Headley – EVP and CFO

Steve Schwartz – President and CEO

Analysts

David Duley – Steelhead Securities

Patrick Ho – Stifel Nicolaus

Jairam Nathan – Sidoti

Rohan – Credit Suisse

Ben Pang – B Riley & Company

Edwin Mok – Needham & Company

Operator

Ladies and gentlemen, thank you for standing by and welcome to the Brooks Automation Q2 Financial Results Conference Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we’ll conduct a question-and-answer session. (Operator Instructions). As a reminder, this conference is being recorded Thursday, May 9, 2013.

I would now like to turn the conference over to Mr. Martin Headley, Executive Vice President and Chief Financial Officer. Please proceed.

Martin Headley

Thank you very much, James and good afternoon, everybody. I’d like to welcome each of you to the second quarter financial results conference call for Brooks’ financial year 2013. In addition to covering the results of the quarter that ended on March 31, we’ll be providing an outlook into the third quarter of our fiscal 2013 which will end on June 30.

Our press release was issued after the close of markets today and is available at the Investor Relations page of our website, www.brooks.com as are the illustrative PowerPoint slides we use during our prepared comments during today’s call.

I’d like to remind everybody that during the course of the call, we’ll be making a number of forward-looking statements within the meaning of the Private Litigation Securities Act of 1995. There are many factors that may cause actual financial results or other events to differ from those identified in such forward-looking statements.

I’d refer you to the section of our earnings release titled Safe Harbor statement, the Safe Harbor slide in the aforementioned PowerPoint presentation on our website, on the company’s various filings with the SEC. We make no obligation to update these statements should future financial data or events occur that differ from forward-looking statements presented today.

I’d also like to note we’ll also make reference to a number of non-GAAP financial measures, which are used in addition to and in conjunction with results provided in accordance with GAAP. Management believes these non-GAAP measures provide an additional way viewing aspects of our operation and performance when considered with the GAAP financial results and the reconciliation of debt measures provide a more complete understanding of the Brooks business. Non-GAAP measures should not be relied upon to the exclusion of GAAP measures.

With me today is Brooks’ President and Chief Executive Officer Steve Schwartz, who will follow my introductory remarks with some commentary on the business environment and our current initiatives. I’ll then provide an overview of the second quarter financial results and the summary of our financial outlook for the quarter ended June 30, which is the third quarter of our fiscal year.

From time to time, I will make a prepared remarks that make reference the slides available to everybody on the investor relations page of our website. To frame the events of the quarter, a summary is provided in slide three. We benefited from improved market conditions in semiconductor and generated a 50% increase in semiconductor frontend product revenues. We also saw improvements in demands for cryo products into general vacuum applications and our industrial product revenues increased 10%. As a result, we exceeded the top end of our guidance range.

Also in the technology side of our business, the integration of crossing automation, an acquisition that closed on October 29, 2012, continued to pace and on track with our plans. As a result, we generated profits from the transaction in the March quarter. The Life Science Systems market conditions were challenging in the quarter with a very cautious approach exhibited by our customers that resulted in delays in both facilitating project completions and making spending commitments.

These delays impacted the timing of completion of larger projects, deliveries of smaller instruments and consumables and some pull back in service activities. As a result, Life Science Systems posted $9.1 million in revenues for the quarter. The order environment during the quarter improved and our bookings in the quarter increased sequentially 30% of the December quarter to a $121.3 million. This represents a book-to-bill of a 104 on the technology side of our business, and a book-to-bill of 100 under Life Sciences business.

Favorable order trends continue into the current quarter. Finally we continue to execute on our balance management goals, and achieved improved receivables and the inventory management performance, that were significant contributors to our $10.7 million free cash flow generation in the quarter.

With that scene setting, let me introduce Steve.

Steve Schwartz

Thank you, Martin. Good afternoon, everyone and thank you for joining our call. We’re pleased to have the opportunity to be able to report the results of the second quarter of our fiscal year. As many of our customers and peers have recently reported, December was definitely the low point in the semiconductor equipment cycle.

In March, the level of order activity picked up significantly and although we still have higher expectations for the second half of the year, the 30% increase in bookings over the prior quarter was welcome news. Our March quarter revenue was slightly above the upper end of our expectations, as business was robust, and we were able to satisfy some incremental turns business.

Our Life Sciences Systems’ revenue was slightly below forecast as we continue to wait for some delayed orders that are pending. All in, we are pleased by the strong growth in our semi and adjacent markets, as revenue grew more than 35% from the December quarter even assuming a full quarter of crossing automation revenue in the December quarter.

We attribute this higher than industry accelerations to a combination of the growth in the overall market plus the market share gains we’ve been able to demonstrate as a result of our strong investment in design wins and new products. In the March quarter, we had 15 OEM design wins, of which six were for front end semi, two were for backend wafer processing applications that include the Spartan platform out of our Crossing Automation acquisition. And seven of the new design wins were for other adjacent and industrial applications.

One of the wins was for a 450 mm application for our new customer who we are particularly pleased to we have been able to win after years of trying to get designed into their 300 mm wafer diameter platforms. It’s a big win for us and a good chance to gain more follow-on business with this important customer.

From a regional standpoint, six of the wins were in Europe, five in North America, and we had one each for customers in Japan, Korea, Taiwan and China. We count an OEM design win when we receive the first order for our product we’ve designed into a customer application.

However, the design win is a necessary but not sufficient step toward making good business. What really counts is when these wins convert into follow-on business. That is when the process tool that we’re designed into are ultimately successful in the market, then we get volume business and begin to generate returns from our investment.

So we track not only our design win activity, but also our follow-on conversion rate. And although the latter of these measures is more important to us, it’s also out of our control. We’re particularly pleased that in the March quarter, we received first time follow-on orders for 16 different past design wins, making it the strongest quarter since we started to track this metric in terms of hit rate for our design wins.

We believe that in this next upturn, these market share gains will continue to drive even more revenue from the business we worked very hard to win.

To put a bit more color on the impact of our product development and design win investments, in fiscal year 2012, we finished the year with 44% of our product revenue coming from new products or products that were modified to be designed into new customer applications.

We’re tracking well toward our fiscal 2013 target of 50% of product revenue to be from these new product offerings. We plan to continue our investment in design wins and market share gains. But at the same time, we believe that we’re investing at a level that is adequate to put ourselves in the running for all meaningful pieces of business that are available.

In our Life Science Systems business, we won one new system at a pharmaceutical company and we are awarded upgrade projects to refurbish installed cold store systems at two large pharmaceutical companies, one in North America and one in Europe.

With the rising demand for biological sample storage, we’re seeing strong growth in market segments which include off-site or outsource sample storage providers and contract research providers to the pharmaceutical market. We were pleased to complete the commissioning of our first BioStore system into this growing market in the second quarter.

The automated cold storage market originated almost 20 years ago and was driven by pharmaceutical company’s needs to store and track millions of chemical compounds. By and large for the last 10 years, the pharma companies have been relatively steady purchasers of stores, consumables, devices and service and support contracts and we and our competitors have been the beneficiaries of this business.

However, during the last two quarters, as the pharma industry has continued to consolidate and relocate, we’ve seen a pause in spending, not only for the cold stores, but also for the consumables and devices that are used in conjunction with our stores. With spending we have seen lately from pharma is for tool upgrade to extend the life of older stores and/or to enhance the performance of installed tools.

2013 has started slowly for us and for other lab tool companies. And we’re only now beginning to get a sense that spending decisions are being made and orders are forthcoming.

While cold storage of compounds for big pharma customers will continue to provide revenue opportunities, we see most of the growth potential coming from the storage of biological samples driven by the rapid move to personalized medicine. We’ve been driving our product development activities to bring technologies to serve the growing and more demanding bio-storage market.

In the quarter, we delivered on some significant internal development milestones in the Life Science Systems business that are important for our future in terms of advancements in our product portfolio. Since entering this business, we’ve been working on a family of new products that address this sample storage market opportunity. This includes three configurations of new cold stores.

The first is for products that we call the BioStore II and Sample Store II, which are high capacity, high density cold stores for biological and chemical compound storage respectively. These systems are the first Brooks designed products and they combine the best of the product characteristics from the companies that we acquired with technologies and engineering capabilities from Brooks.

We already have a win for one of these systems that we plan to install in the September quarter and we anticipate more business coming as the cost performance capability and sample storage density is far greater than any other systems in our portfolio or currently offered by anyone else in the market.

The third new product is a relatively small automated unit that’s being developed for a large OEM provider of clinical diagnostic systems who will integrate our compact store into their integrated workflow product offering for hospital and clinical applications. The product performs to design specifications and offers the potential for new and steady business stream that will be meaningful and measurable starting in about 18 months.

This advancement of the product portfolio is an investment in the future of this business, but also brings products to market, which will help to accelerate the transition from manual storage of critical biological samples to safer, higher quality and more economical automated systems.

We believe that we are now in a period where the storage systems business will begin to grow again. In the March quarter, our total bookings were approximately $9 million. However, approximately half of this occurred in the final month of the quarter. As a result, while the June quarter will be approximately flat around this $9 million level before the business begins to rebound in the September quarter.

In recent weeks, we have received verbal indications that we will receive contract awards from some significant projects. The timing of these projects turning to revenue is uncertain until commercial agreements are fully negotiated. All told, we believe that there will be at least $15 million worth of automated cold store systems business awarded in the June quarter, and we are very competitive in each of these opportunities.

Even though we’ve experienced a low in bookings, we’re committed to this business in the near-term and especially in the longer-term. And we believe firmly that our investments in new product development will bring a significant return as we continue developing this exciting new market. We’re confident that our product lineup technical capability and global footprint for sales and service will allow us to continue to build on our already market-leading position.

For the June quarter, our guidance of flat to up approximately 5% in revenue is made up of our estimate for roughly flat Life Sciences business, and approximately flat revenue from semi and adjacent markets, as we do feel the impact of a slight pause in our customer shipments to foundries. It’s important to note that in the June quarter, our guidance is net of a decrease in revenue of approximately 4% that is the intentional result of us exiting from some unprofitable product lines.

We’ve been working with customers over the last several quarters to allow them to find other sources of supply as with end-of-life certain products that we’ve identified as unprofitable.

As we look forward to remainder of the year, we are positive about how the back half of the calendar year is shaping up for both semi and adjacent markets and Life Sciences. We’re confident that market share gains we’re making in all of our businesses positions us extremely well for the future.

I’ll now turn the call back over to Martin.

Martin Headley

Thank you very much, Steve. Slide number 4, reflects the impact of the 19% sequential increase in revenues from $98 million in the December quarter to $116.6 million in the March quarter. Gross profits improved by $6.1 million to $37.4 million a gross margin rate up 32.1%. The variable contribution was limited by the decline in our highest margin rate segment these Life Science systems business.

We spent $0.5 million more on research and development, most notably associated with the new products for automated sample management stores, that Steve noted in our Life Science Systems business. Selling, general and administrative expenses were reduced by $0.6 million. although there were a number of moving pieces here, which are best explained by waterfall chart slide number 5.

We had a reduction in intangible, amortization of $0.6 million related to the Helix acquisition of 2005 with a number of the intangibles were completely amortized. We also saw $8.8 million impact to SG&A from the restructuring actions taken during the December quarter.

Organic revenue growth in the Brooks Product Solutions segment of $19.2 million generated a 36% drop through to operating profits, $7.8 million increase in profits. This was slightly below our target grow through as a result of certain low-margin situations. We’ve addressed some of these and I’ll talk more about this when discussing our guidance.

The revenue contraction in our Life Science Systems business had a particularly significant impact of nearly $1 million of the revenues in the December quarter where extremely high margin software revenues that did not repeat in the March quarter.

Additionally, as I mentioned, we had higher research and development spending associated with a significant product rollout. The Brooks Global Services business generated 4.5% organic growth from the first quarter to the second quarter and a 50% drop through from that growth.

Finally, the full quarter impact of the Crossing acquisition was a $3.7 million increase in additional revenues and a $1 million of additional profits.

The slide number 6 shows the GAAP net profit for the second quarter, GAAP net loss for the second quarter fiscal 2013 was $0.5 million or $0.01 per diluted share, which includes special charges of $1.6 million pre-tax, being the restructuring and integration charges of $800,000, and purchase accounting adjustments of $800,000. Adjusted net profit excluding these charges was $600,000 or $0.01 per share.

For those of you who look at adjusted earnings excluding stock compensation expense, those adjusted earnings were $0.05 in the quarter of compared to a loss of $0.02 in the first quarter of the fiscal year.

Our effective tax rate in the quarter was 20%, but we continue to expect an effective tax rate of 28% for the balance of the fiscal year is only about one-third of that charge giving rise to cash taxes. The non-cash tax impact creates issue with comparability of results. Thus we believe looking to adjusted EBITDA trend as an alternative is instructive. Slide number 7 illustrates this trend.

A reconciliation of this non-GAAP measure to the appropriate GAAP comparison is included as an attachment to our press release. Adjusted EBITDA was $9.2 million in the quarter with just slightly lower than average of 32% drop-through, as a result of quarter’s contraction of the Life Science Systems business.

Slide number 8 portrays how earnings and balance sheet performance contributed to the healthy cash flow performance in the quarter. We closed quarter with $145.6 million of cash and marketable securities.

The slide number 9 shows we had improvements in both receivables and inventory performance in the quarter with an $8.5 million reduction in net inventories, while supporting strong growth in our technology businesses. Receivables represented 57 days of sales and improvements of 2 days from the past 59 days of sales at the end of December.

During the quarter, we sold parts of the Swiss campus that reduced our investments in fixed assets by $2 million. We continued to monitor capital requirements closely and continued to believe that full year requirements resulting capital expenditures of between $6 million and $8 million.

Begging on slide number 10, we break our results for each of our three segments in the second quarter of fiscal 2013. In Brooks Life Science’s business, the cautious marketing environment exacerbated the lumpy trend. The variable contribution loss from the decline was marked and the business experienced high research and development expense around important new products.

All of this serve to overwhelm some of the traction we had made in streamlining the fixed cost base. We will face another challenge in quarter for this business in June that for high degree of assurance around a very high revenue quarter to close out the fiscal year.

Turning to slide number 11, representing the sequential performance of the Brooks Product Solutions segment, excluding the fair value purchase price adjustments excluded from our adjusted earnings.

As I noted earlier, organic revenues into front end semiconductor were up $20.2 million or 50%, while industrial revenues increased by $900,000 or 10%. Gross margins improved by 280 basis points to 32.8% with both volume leverage and some supply chain benefits. With no additional cost despite the full quarter of the Crossing business, the segment turned to operating profits of $3.8 million from the loss in the December trough quarter.

On slide number 12, we addressed the Brooks Global Services segment. Again, these are non-GAAP numbers to exclude fair value purchase accounting adjustments related to Crossing Automation.

We experienced 4.5% organic growth together with a full quarter of Crossing Service business. Gross margins improved 160 basis points to 30.6% and overall the segment produced $2.2 million of segment operating profit to 10.1% margin. We look to good volume leverage in the segment of the process of integrating the service capabilities of the Brooks and Crossing continues.

On slide number 13, we have a graphic representation of the quarterly revenue trends of the business since fiscal 2010 excluding the Domestic Contract Manufacturing business. Additionally in the appendix for the call slide presentation, we provide the absolute numbers behind this chart.

This data is extremely important since we note inaccuracies in some industry and analytic resources that inappropriately suggest significant declining market share for our technology businesses.

The chart also displays the midpoint of our guidance for the June quarter. We continue to see growth in front end semiconductor in adjacent markets over we project a flat to down quarter in industrial markets. Our expectations are moderated by the exit or the end-of-life of some of the low margin products with Steve made reference to.

The hand full of large automated sample store opportunities that our Life Sciences business successfully perused will not have a meaningful impact on the third quarter revenues. We have seen a flat to slightly, slightly down quarter for this business. But as Steve indicated, activity is lining up for a better September quarter into the markets.

Accordingly, we provide guidance to summarize on the slide number 14 of revenues between $116 million and $124 million. The guidance is flat to growth of 10% taking into account the actions that we are proactively taking to address low margin business, which reflects an underlying growth of 4% to 10%.

Half of these levels of revenue, we guide adjusted EBITDA between $10 million and $14 million for the June quarter. Imbedded in this guidance is continued gross margin improvement and some additional operating expenses associated with enhancing commercial and general management capabilities.

This would translate to adjusted bottom line performance of between $0.01 and $0.05 per diluted share, excluded from these projections of some residual restructuring expenses associated with the actions already announced.

Consequently, our guidance for GAAP diluted earnings per share is between breakeven and $0.04 a share. Finally, we announced that our board of directors had declared a dividend of $0.08 per share payable on March 7 – sorry, on June 7, 2013 to stockholders of record as of June 28, 2013.

With that, I’ll turn over the call to James for questions.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions). And our first question is from the line of David Duley from Steelhead Securities. Please proceed.

David Duley – Steelhead Securities

Yeah. Thanks for taking my question. I was just wondering you made some comments about having a strong second half of the calendar year, I believe. Could you talk a little bit about why you think that’s going to happen? And then also address I think the comments – the prepared comments about a pause in foundry shipments are spending.

Steve Schwartz

Yeah. Hi, David. It’s Steve. Let me go backwards on your questions. On the first one, just even the last three or four weeks, we’ve seen some push-outs of system that we had expected in June out into the September quarter. So that’s some push outs related to business. Ultimately that was headed toward foundries and I think it’s consistent with what other companies have reported.

In terms of the back half of the year, the forecast that the accountings are putting together, are certainly stronger compared to where we are today. We don’t know what level yet, but the indications we’re getting from an order standpoint give us a reasonable level of confidence that there’ll be some pickup at least beginning in the September quarter.

David Duley – Steelhead Securities

And do you – see what kind of order – do you see orders growing in the June quarter in total for Brooks?

Martin Headley

We’re certainly seeing a trend consistent with that. If it holds up through the balance of the quarter.

David Duley – Steelhead Securities

Okay. And then just final question from me. I’ll turn it over to somebody else. Could you talk a little bit about the of Life Science cost structure?

I realize you’ve tried to downsize it, but it seems like we’ve been waiting a long time for the revenue to grow here. So, how much longer are we going to wait before we address that and what kind of timeframe are we looking at and are you happy with the cost structure now, I guess.

Martin Headley

Yeah. Hi, Dave. So, we – obviously we are not pleased with the revenue line or the profitability of the business. But as I mentioned in my comments, we are absolutely committed to the market, committed to the products that we’ve developed to address the biological side of the business.

We think we have the right products in place and we are winning the business as available. So, we have very high market share, the things that we know about now we’re able to bring home. The spending from a percentage standpoint is very high and it’ll be resolved as we get the revenue up.

We indicated that we’ve got some indications that bookings will improve in the current quarter once we’re able to book the systems, we’ll get them under contract and we feel that the growth is coming here towards the back half of the year, but even orders in the June quarter won’t be as meaningful for revenue in the June quarter certainly.

It’ll start to shop in September and the more meaningfully in December, but we do feel the growth is returning to the business and we’ll probably within a couple of quarters of hopefully been able to return the business to profitability and we are definitely making the investments in the products to continue to grow the business.

David Duley – Steelhead Securities

Okay. Thanks.

Operator

Our next question is from the line of Patrick Ho from Stifel Nicolaus. Please proceed.

Patrick Ho – Stifel Nicolaus

Thank you very much. Steve, maybe first on the semiconductors side, some of the design wins that you mentioned in your prepared remarks. Can you tell how much of it was for advanced packaging type of applications or was that just too difficult to I guess characterize or break apart from where you getting these design wins.

Steve Schwartz

No, we had, Patrick, we had two data for Advance Packaging. So, they were two important and meaningful ones and look at for Martin right now to see you at the backend advance packaging run rate.

Martin Headley

The backend advance packaging run rate is now getting up over $25 million on an annualized rate. So, it continues to incrementally increase and we’ve got both a good business building here, which will appreciate came from kind of next to loss nothing, not too long ago.

Patrick Ho – Stifel Nicolaus

Great, maybe just a quick follow-up on that. Given that, you are a component supplier to the OEMs and others in terms of this market place. How do you see the traction of that process technique gaining hold. Do you see this as a something that really gained steam in 2013 or it’s just still probably more 2014 and 2015 story.

Steve Schwartz

We don’t know, we are getting designed in – we are not as close to it, but our indication is that it’s kind of a 2014, 2015 story.

Patrick Ho – Stifel Nicolaus

Okay, great, and then just one question on the Life Sciences and I know we’ve talked about – you know that the cold storage business both from the Biopharma as well as the biological sample segments, that you’re targeting and you can correct me if I’m wrong. Biopharma was the more saturated and mature market and growth opportunities was in the biological sample side.

Are you not seeing enough traction there to offset some of the I guess the government funding delays and some of the slowdown in spending on the pharma side or has biological sample growth story still further out from, I guess I initially may have put that traction was taking place.

Steve Schwartz

Yeah, Patrick, I think we are seeing a little bit more lumpiness than we anticipated. So, the pharma and the bio stores have been slow here in the last two quarters, both are picking up in the June quarter.

Patrick Ho – Stifel Nicolaus

Great. Thank you very much.

Operator

Our next question is from the line of Jairam Nathan from Sidoti. Please proceed.

Jairam Nathan – Sidoti

Hi, thanks for taking my question. I just wanted to first get a clarification. there were two numbers of thrown out about the Life Sciences orders, one was 9 million and a 15 million number. Can you just kind of rehearse that of what was the 15 million?

Steve Schwartz

Yeah. Sure, Jairam. This is Steve. So, we booked $9 million in the quarter for Life Sciences ad as we track the product pipeline. We look at that the large projects that we think will be awarded at a particular time. By our estimation, we believe that in the June quarter there’ll be something like $15 million of large store projects for systems that are awarded and we’re competing for each of those that we’re aware. So, we competing for what we think will be an available booking market fuel here in the June quarter of a $15 million for the systems.

Jairam Nathan – Sidoti

Okay. And given the challenges in the Life Sciences, are you seeing any pricing pressure, I know there’s some, probably only one other competition, but are you seeing any of that?

Steve Schwartz

No, it’s not. This is not an issue about pricing. This is about whether that’s not. This is not an issue of our pricing this is about where the projects going to be awarded in one quarter or the next right now. So, it’s not – although bids are competitive. We’re not – we’re typically not in a pricing battle.

Jairam Nathan – Sidoti

Okay. And my last question is on operating expense. We saw that flattened from 1Q to 2Q and given the restricting actions that you’ve taken, how should we think about that going forward?

Martin Headley

Jairam, this is Martin. I think you should take notes of my comments about the need to put on some additional commercial and general management resources. This is not replacing people from restructuring actions.

This is newly created position and that probably will slightly increase the OpEx in the third and fourth quarters versus the current levels. So, you’ll see a slight increase in research and development and a flattish kind of SG&A level where the benefits of prior actions are offset by some – as I say, some of these additional resources that need to go into the businesses.

Jairam Nathan – Sidoti

Okay. Thank you.

Operator

Our next question is from the line of Satya Kumar from Credit Suisse. Please proceed.

Rohan – Credit Suisse

Hi, this is Rohan asking the question on behalf of Satya. Thanks for taking the question. I wanted to talk to you about the margins on the Life Sciences business. How should we think about margins in June and how should we think about recovery in the life sciences gross margin?

Martin Headley

Well, clearly, what you saw with the 28.9% gross margins in the March quarter was a trough that was created by very low absorption of fixed costs. We believe that that’s a trough and we can make some modest level of improvement into the June quarter. So, you’re talking about recovery of the revenue line back to levels that we’ve seen before to get us back over 40% and that’s what we’ll be targeting if the business comes through as we believe it’s going to in the September quarter.

Rohan – Credit Suisse

And also like on Life Sciences, you mentioned there were some softer revenue that was pushed out. So, just wanted to kind of understand the mix portion of it. How should we think about that business is like, related to software. Is that coming back and we should think about gross margins in similar level at December on similar revenues or is that a decline?

Martin Headley

In December, we would continue to believe given the likely strength in the revenues, given this very strong pipeline of large projects that certainly if they don’t hit fully in September should make a nice contributions to December quarter should enable a continuation of those 40 plus margin levels into the December quarter.

We’ll have some modest level of software revenues along the way. It’ll be nothing like as meaningful as it was in the first quarter of this fiscal year that produce the slightly outsized gross margin levels for the revenue levels we had.

Rohan – Credit Suisse

And then, one question on your new customer. Like you feels like this customer is one of the large OEM. Is it fair to say like it’s fairly large OEM and not a small customer?

Martin Headley

Yeah. Is it in reference to the 450 millimeter win?

Rohan – Credit Suisse

Yeah. You mentioned like there was a new customer for the first time that you won the 450 millimeter business.

Martin Headley

Yes. I’m sorry, and the question?

Rohan – Credit Suisse

And the question was, is it like one of the major customers that you probably did not have like it is one of the large semi-cap OEMs or is it...?

Steve Schwartz

Yeah, it’s because it’s a new customer, all of the – I think, the ones we considered to be the largest OEMs are already existing customers but this would be a next year, very important, very successful customer but it would be considered as Tier 2 provider but one that can drive a lot of volume.

Rohan – Credit Suisse

Thank you. That’s all I have.

Operator

(Operator Instructions). Our next question is from the line of Ben Pang from B Riley & Company. Please proceed.

Ben Pang – B Riley & Company

Thanks for taking my question. First, the clarification on the Life Sciences, somebody asked the question earlier about the order served available market or opportunity. Is the $15 million like your total booking opportunity for all the different verticals in that space that you serve?

Steve Schwartz

No, Ben, just the systems. And historically, our systems business has been about 50% of revenue.

Ben Pang – B Riley & Company

Okay.

Steve Schwartz

So, the projects that we’re talking about really are only the, this the cold store systems booking opportunity.

Ben Pang – B Riley & Company

So, I guess based on your commentary about flat orders, your expectations, you would just get one-third of that. Is that how I think about it?

Martin Headley

No, let me try again. So, the part that’ll be flat, Ben, is the $9 million in the March quarter will be flat to slightly down maybe in the June quarter – in the current quarter.

Ben Pang – B Riley & Company

Okay. But was your book-to-bill also going to be one?

Martin Headley

Yes. So, we booked $9 million in the March quarter and we anticipate to have considerably more success than that in the June quarter.

Ben Pang – B Riley & Company

Okay, okay.

Martin Headley

We would see a significantly better one book to bill for the Life Sciences business in the June quarter. It’s likely.

Ben Pang – B Riley & Company

Okay. I was just confused with the math there.

Martin Headley

We’re about 65% plus share in the cold store business wins and we don’t intend to step backward here.

Ben Pang – B Riley & Company

Okay. In terms of the semiconductor business, are your Tier I customers or your Tier II customers as strong as the Tier I guys. Is there any difference between the momentum you’re seeing with the larger equipment providers versus the smaller ones?

Martin Headley

We have seen a strong momentum in the larger guys. I think in the second Tier. It matters geographically where they are. We have seen weaker demands from our Korean OEM customer base because of the much lower levels of activity going on within Korea. So, it’s more geographically based than anything else Ben.

Ben Pang – B Riley & Company

Okay. And then, on the Crossings Automation, you commented about $3.2 million, I think in the revenue contribution, is that correct?

Martin Headley

Incrementally, yes.

Ben Pang – B Riley & Company

Okay.

Steve Schwartz

Well the run rate...

Martin Headley

That means about $13 million of crossing business in the quarter.

Ben Pang – B Riley & Company

Okay, okay. That clarified that for me. And my final question, in terms of the other segments, are you guys starting to see the display business – your display applications pickup?

Steve Schwartz

Yeah, Ben, not meaningfully different from where we’ve been.

Ben Pang – B Riley & Company

Is that surprising to you or do you have, I mean different forecast for the year or...?

Steve Schwartz

Not surprising in the sense that there are inventory situations to take into account. But other than that, we are seeing high level of discussion around future orders. So, it is consistent with other commentary you’ve seen about that space. So, it’s pent up potential Ben and we’re preparing but at present not yet.

Ben Pang – B Riley & Company

Excellent and congratulations on very good quarter.

Steve Schwartz

Thank you.

Martin Headley

Thank you.

Operator

Our next question is from the line of Edwin Mok from Needham & Company. Please proceed.

Edwin Mok – Needham & Company

Hi. Thanks for taking my question. First question is I think last quarter you guys talked about winning a vacuum robot at a major Japanese customer, did that revenue ramp in this quarter and how do you kind of think about that business opportunity there?

Steve Schwartz

At this stage, its early stage of a production. So that has not ramped at this stage. We think it’s a well positioned application from a well positioned OEM, but we haven’t seen anything that really move the needle in the current quarter.

Edwin Mok – Needham & Company

Great. That’s helpful. And then second question is if I take your frontend customer or the revenue coming from the finance side plus the incremental industrial revenue that you mentioned, right? It seems like you guys called there is more growth beyond that on the non-semi area. Can you help us all in terms of explain why you had that growth?

Steve Schwartz

In the non-semi area?

Edwin Mok – Needham & Company

Yeah. Those driving the growth on non-semi...

Martin Headley

Well, if you look at the non-semi area besides the industry, we basically saw about roughly a $2 million improvements in products into adjacent technology markets. The big start to that movement was associated with backend semiconductor. So, as we kind of previously make reference to we are continuing to improve our penetration into what we believe is going to be a very significantly growing area for wafer level movements in the backend.

Edwin Mok – Needham & Company

Great. Thanks for reconciling that for me. And then the third question is, if I take your guidance and adding back to roughly, I think you said $4 million worth of business that you guys are exiting right? And then based on assumption that’s Life Science is flattish, Industrial was maybe kind of flattish to potentially even down a little bit. That will imply semi actually is growing quite robustly as midpoint maybe up 10% sequentially. Did I get that math correctly, how they are going to think about it?

Martin Headley

No, you’ve got that’s exactly right. We find the frontend semi business, although it’s take a pause, it’s still a growing market for us. And we are encouraged because of that’s about the potential for what might happen in the back half of the year even though it’s a very cloudy situation.

Edwin Mok – Needham & Company

Great. Thanks a lot. And then one quick question on Life Science, the $50 million opportunity that you guys are going after, Am I clear that what do you think is those are opportunities you don’t necessarily win all of them historically you had 55% trend that you’ll go after, but that’s only system and on top of that you’re going to get some incremental comp parts and service revenue, is that the way, what do you think about that.

Martin Headley

Yeah, the way is typically you look at the run rate that we’ve been going at with consumable, services, and devices, that has been somewhere in the $6 to $8 million range. It took a little bit of revenue in the March quarter. So, you’ve got that level of business going on as well as the opportunities that come from these handfuls of a very significant larger store opportunity, but frankly we feel very, very strongly placed and we’re going to trying to win them all. Whether we will, we will see.

Edwin Mok – Needham & Company

Great. One last question. Martin, we like you, but just curious where is the CFO search is going, where are we on that process.

Steve Schwartz

Hi Edwin. We’re still in process and we’ve been fortunate to see some good candidates, but as soon as we are definitive, we will announce for sure, but we’re still in the process.

Edwin Mok – Needham & Company

What is the timeframe for that, maybe as an early downtime.

Steve Schwartz

Well, we’re certainly ready. That’s going to take us a little bit of time, but Martin has graciously agreed to stay with us into the summer and we’re going to take him on that through the transition, we hope.

Edwin Mok – Needham & Company

Great. That’s all I have. Thank you.

Operator

There are no further questions from the phone lines at this time. I’ll turn the call back to you.

Steve Schwartz

Okay. Thank you everyone for your interest in Brooks and we do look forward to speaking with you when we report our results for fiscal 2013 third quarter. Thank you.

Operator

Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines. Thank you.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!