Ladies and gentlemen, thank you for standing by. Welcome to the Brooks Automation Second Quarter Financial Results Conference Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded Thursday, April 30, 2015. I would now like to turn the conference over to Lindon Robertson, Executive Vice President and Chief Financial Officer. Please go ahead.

Thank you, Grant, and good afternoon, everyone. We would like to welcome each of you to the second quarter financial results conference call for the Brooks fiscal year 2015. We will be covering the results of the second quarter ended on March 31 and then we will provide an outlook for the third fiscal quarter ending June 30 of this year. A press release was issued after the close of the markets today and is available at our Investor Relations page of our website, www.brooks.com, as are the illustrated PowerPoint slides that will be used during the prepared comments during the call. I would like to remind everybody that during the course of the call, we will 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 would refer you to the section of our earnings release titled Safe Harbor statement, the Safe Harbor slide on the aforementioned PowerPoint presentation on our website and our various filings with the SEC, including the Form 10-K for the fourth quarter ended September 30, 2014. We make no obligation to update these statements, should future financial data or events occur that differ from the forward-looking statements presented today. I would also like to note that we may make reference to a number of non-GAAP financial measures, which are used in addition to and in conjunction with results presented in accordance with GAAP. We believe that these non-GAAP measures provide an additional way of viewing aspects of our operations and performance, but when considered with GAAP financial results and the reconciliation of GAAP measures, they provide an even more complete understanding of the Brooks business. Non-GAAP measures should not be relied upon the exclusion of the GAAP measures themselves. On the call with me today is our Chief Executive Officer, Steve Schwartz. We will open with his remarks on the business environment and our second quarter highlights. Then we will provide an overview of the second quarter financial results and a summary of our financial outlook for the quarter ended June 30th, which is our third quarter of the fiscal year 2015. We will then take your questions. And during these prepared remarks, we will from time-to-time make reference to slides I mentioned, available to everyone on the Investor Relations page of our Brooks website. With that, I’d like to turn the call over now to our CEO, Mr. Steve Schwartz.

Thank you, Lindon. Good afternoon everyone, and thank you for joining our call. We’re glad to have the opportunity to report the results of the second quarter of our 2015 fiscal year. Over the past years, you’ve seen us make investments in growth market opportunities. In vacuum automation and automated systems, we are benefiting from the share gains we’ve earned, because of the boom and deposition in etch process steps. We’ve captured more than two dozen design wins for backend and advanced packaging automation applications, which are now beginning to bear fruit. We identified and invested in another new growth segment in the automated wafer and radical carrier cleaners and radical storage systems [indiscernible] market that is ramping as [indiscernible] align with shrink below 20 nanometer. And we’ve established a position in Life Sciences which utilizes our core technology strengths of automation and cryogenics. We’ll capitalize on the market opportunities of that business and continues to launch new products. We’ve crafted this product, market and technology portfolio by design to focus resources on high growth opportunities. In the March quarter, we were able to see the results of these investments on all fronts, as Q2 was a robust quarter in terms of revenue and earnings growth. Almost all segments of the business contributed above Q1, only our services business which delivered record profitability in Q1, came in slightly lower. All in, revenue was $139 million, up 14% quarter-over-quarter, mostly led by expansion from semiconductor frontend demand. Our Life Sciences business grew by 5% even as we took actions to reduce cost and restructure the business around efficiency and consolidation of assets. Bookings in March were $135 million, up 5% from December and consistent with our forecast for a solid June quarter. Q2 was a particularly strong quarter for our semiconductor…

Thank you, Steve. Please refer now to the PowerPoint slides available on the Brooks’ website under our Investor Relations tab. I will draw your attention to slide three, a consolidated view of our operation performance to start the remarks. Top line revenue increased 14% sequentially to $139 million, driven by higher revenue in our Brooks’ Product Solutions and Life Sciences businesses. Gross margins remain at 34% on a non-GAAP basis, revenue growth was the primary driver of the improved EPS performance in the quarter. However, we also had help from both of our recent acquisitions FluidX and Contamination Control Solutions, which were each accretive on a GAAP and non-GAAP basis in the quarter. We’ll cover more on each of our business units in the subsequent charts. Let’s now look at the segment revenue briefly outlined on page four. Brooks Product Solutions grew 19% sequentially, as we saw growth in each area of automation, Contamination Control Solutions and cryogenic vacuum products. Life Sciences revenue grew 5% sequentially, with most of this from the organic base of consumables and services, while FluidX expanded about $200,000 to $3.8 million of revenue in the quarter. Our Global Services business, BGS sequential decline is primarily currency driven. Currency impact of Brooks overall is minimized due to a majority of our BPS contracts being written in U.S. dollars out of the U.S. However, we do feel some impact in the Life Sciences business and in particular in our Global Services business, where most contracts are written in the local currency of the – where the fabs are located. Let’s go deeper into the segment starting with page five. Product Solutions business saw continued growth. Gross margins increased to a 100 basis points from the prior quarter and on higher volumes. As previously mentioned, growth in the…

Thank you. [Operator Instructions] And the first question comes from the line of Edwin Mok with Needham. Please proceed with your question.

Great. Thanks for taking my question. And congrats for good quarter and good guidance. So first question, I just want to focus on the [indiscernible] front-end semi cap business and your commentary around that. We’ve heard some of your customer and peers within the sector talk about that market and I think in general it was – the commentary was I guess on average is how flattish sequentially going through the coming quarter, but you seems more confident or more bullish on that and you mentioned strength in the foundry area. Can you give us some color on that? Is that the market that you believe is helping you to drive growth in the June quarter, or is that some of the share gain that you have mentioned in that area that is driving growth?

Hi, Patrick – or Edwin, sorry. I think, we guide basically flat for the quarter. We see strength in all of the segments. We see continued strength in the back-end and in the front-end and in the front end in particular, we do have a pretty strong position in that batch. And in addition to the growth in this segment and others have reported already in addition to growth in the segment, we also have been gaining some share because of legacy platforms that we mentioned. So unusually without a market growth per say there are still market opportunities for growth for us because of the segments that we’re in. And the other thing we see is a good pretty strong ramp coming now in the tooth cleaners. So, it’s most of the segments in the business continued to be relatively strong, but overall guidance for us is approximately flat. But we do see good strength in all the segment where we participate.

I see. Okay. So that’s helpful actually. Just talk about film cleaner or the CCS business, you mentioned that historically you have seen that more come from logic customer base, about to see adoption or interest from memory customer. Is that something that could potentially a driver this year or is just something that we should expect to see some level of same expansion as those customers thought they got by [indiscernible] if you can give us a idea of the timeframe, you think that could potentially happen?

So Edwin, we’re starting to get some increased activity for the logic and foundry. So, we feel the order starting to come there. From a memory standpoint, they have been satisfied historically with manual tooth clears and with some products that don’t possess all the capabilities that come with our high-end product and we see that some of the applications they’re beginning to run into maybe some technical limitations. So, we’re pursuing those pretty hard, but the fact that we’re getting evaluations around the memory space give us some indication that perhaps the specification they’re changing.

Okay. Great. That’s helpful. On the Life Science area, you talk about one of the contract, the pricing was little aggressive on the competitor side. I’m just curious do you think that that could be a pricing risk in a new marketplace where you guys surf because as you guys offer these products competitors try to come in with a low price. And then, even with the $70 million that suggest shipment has to ramp-up in the back half of the year. But your booking – your book-to-bill was pretty lower this quarter. So are you expecting to just shift from your backlog?

Yes. And, yes, few questions there. One, we’ve had pricing pressure all the time. I think because we’ve been winning pretty high percentage of the large stores, it’s probably not an unexpected reaction that somebody would who really had to have the business would do something that’s below where we go. So it’s we’ve been winning in the face of price pressure all along because we think the products are better. We still think the products are better, and although anything can happen. We stand-by our products and the value that we bring. So we’ll see how it plays out. So we’re not panicked about it, but we don’t like to lose good opportunity like that. We’ll continue to put our – put good products out here at a good price, we think it’s going to be a good business. Yeah, we booked $14 million, we had revenue of $18 million. That’s a little bit backward, we’re in a little bit of backlog, but we still have considerable backlog and the ability to continue to make the back half of the year?

Okay. One last and I’ll go away. In terms of gross margin I think that you mentioned FX was a contributing factor for weak gross margin in the service business. To the extent that, obviously, we’re not printing currency here, but assuming that your thaw doesn’t change or the FX rate doesn’t change. Is this the new level of margins that we should think about for the service business?

Not entirely because as I mentioned there was some mix involved as well. So, we would expect this to come back. Edwin, I’ve also said before that once I get about 35%, it’s in the past, it was stretching what we thought economics and services business could support the high-end of mix. So, I think, I would expect somewhere between 33%, 36% in that range of course to move back and forth.

Great. That’s all I have. I’ll let the guys ask. Thank you.

Thanks, Edwin

And the next question comes from the line of Ben Rose with Battle Road. Please proceed with your question.

Good afternoon, Steve, and good afternoon, Lindon. Prior to the announcement this week of AMAT and Tokyo Electronic Calling Officer merger, there was a concern that some companies that had done business with both separately might be consolidated as a result of the merger. Steve, could you talk about your perspective on the merger longer going through and what it might mean for the industry and for Brooks in particular?

Yeah. Sure, Ben. And we’re going to wait and see how that shapes out as well. But even for the time the deal was announced obviously we work really hard for both of those customers. And actually the behaviors that they had toward us and the things that we did for them during the last 18 months were unrelated to any deal. We aggressively went after the technical things that we have to do to win business. So, we made progress with both companies and we’re really proud of that. So, we increased the strength of our position with both of them. In terms of what happens now from the fallout standpoint it’s really not clear to us because once we – once we’re going to platform, we hope that we hang onto it. And so we’ve been aggressive. We’ve build the business with both of them and we continue to do the same kinds of things. And frankly, we’re not giving any indications about, what the implications might have been once the two companies came together. I think they were very good and very careful about that. So we didn’t have any advance indication of what changes might have been coming.

Okay, great. And it sounds like some of the challenges with regard to the UK Biocentre implementation are now behind the company, are you pretty confident in that installation serving as a reference site for Brooks?

We are – so we think challenges – we have challenges on the cost standpoint, but the products are great. I actually was there at the opening ceremony last week with dignitaries and a hundred potential customers. And they showcased it, they featured Brooks. They were really gracious and they made sure that we were front and center and present and I think it’s – I think they’re also very proud of the job that we’ve done so those are great tools and great installations they’ll be a tremendous reference site and I’ve been witnessed to it already on the 21st last week.

Okay, great. Thanks very much and congratulations on the quarter.

Thank you.

Thank you, Ben.

And the next question comes from the line of Patrick Ho with Stifel Nicolaus. Please proceed with your question.

Thank you very much. Steve, maybe first off as a follow-up to the Contamination Control business. Some of the activity that you’re starting to see on the memory side of things given some of the industry transition we’re both seeing in DRAM and in NAND flash, is there a bias to one segment of the memory that you’re seeing this increased activity?

Patrick, actually to be frankly, we can’t distinguish. We know the customers, but certainly, its NAND related, but that’s about all we know right now.

Okay. Fair enough. Going to the Life Science side for a second, with these new products coming out, the Small Sample Storage System that you talked about for some time are obviously excluding the restructuring and the efforts you’re doing to streamline the operations in that business. How do you see that aspect playing in terms of margins because typically new products have a learning curve ramp – the arc – they tend to be lower margins initially, how do you balance, I guess some of the gains that you’re trying to make on the operations front with new products that are coming out?

That’s a good question. We think we’re – we’ve done a lot to work, we think we’re in a position where – we understand the cost is extremely well, we think from a pricing standpoint, they had yet to be determined, because again, we’re rolling the products out right now, but early indications lead us to believe that it will be least consistent with the business we’ve laid out for Life Sciences in general. And then as we continue to add features and capability, we think we’ll be able to push margins even higher, but we’re confident about the early enthusiasm for the product and we’ll absolutely be clear with everybody, how those products are rolling-out, but we think it’s going to be pretty consistent with the objectives we put out in the 40%,45% range and obviously, we hope to do better as we have more learning with these products.

Great. And final question for me on your FluidX business, that’s it appears to be tracking better than expectations over the last few quarters since you acquired it. I know, as part of the – rationale behind the deal was to leverage your sales force and your team to – I guess why broadly more distribute their products. Is that part of the reason why it’s been tracking better than expected or it has I guess basically the core team that you acquired, has it just done better than you anticipate to this point?

Yeah. We – Patrick, one of things we knew was that if we could put more touch points out, more sales resources out that they had a better chance. We had a very strong European model that we started to employ now in North America. I think the benefit of – so, it’s more attention, more sales capabilities happen to drive the top-line there. The things that we’ll see as a result of combining the FluidX offering with our cold stores, is coming. So, we have some indications that we will likely be able to win some more business, as a result of having FluidX in part of our portfolio. The early returns that you’re seeing if you will are as they’re all result of building out more North American capability for example.

Great, thank you very much.

Thanks, Patrick.

[Operator Instructions] And the next question comes from the line of Atif Malik with Citi. Please proceed with your question.

Hi, thanks for taking the question, as this is Amanda Scarnati for Atif. Just a question on the semiconductor side, are you seeing any indirect impact or any direct impact from the equipment reuse rate going up at TSMC and Intel?

If we see this indirect, Amanda, and we wouldn’t necessarily know. So, from a reuse standpoint, we ship our automation products and cryogenic products mostly for new tools. And so, it would be tough for us to know from a reuse standpoint on the lower-end of the scale, on the 200-millimeter business, if they ever acquire 200 millimeter product that was not – that did not have a standard mechanical interface, the smith interface and they bought load ports for example from us, those would be tools that we reuse from 200 millimeter that we might automate. But it would be tough for us to tell on current 300 millimeter products what the impact would be from a reuse standpoint.

Okay, thanks. And then, the second question on the Life Sciences business. It’s a backlog at about $47 million. How should we think about revenue linearity to get the $700 million estimated for 2015 or $70 million I’m sorry?

I’m glad you corrected that $70 million. So, the backlog is built up around systems and services and a little bit in the consumables instruments. And so, we have really good headlights into systems revenue through the backlog. Services, we sell a lot as we move along and some of that is in general service and repair, but also some of it is in upgrades that our team does. And so, that doesn’t all come out of backlog through the next couple of quarters. And then the consumables and instruments are similar. We sell a lot on in the quarter orders week-to-week from customers. But it’s tends to be a steadier stream. So, it’s not – it doesn’t pretend as much on backlog to keep a study. We have seen variations I’d say a $1 million or more in a quarter up and down, but in general, it’s a reliable – a more reliable study stream. So, in total, we are realigning on the backlog much for the balance of the year and systems and then we see a fairly normal rate of backlog and dependency on sales in the other elements of the business.

Great. Thank you.

And the next question comes from the line of Farhan Ahmad with Credit Suisse. Please proceed with your question.

Thanks for taking my question. My first question is regarding the gross margins. If I look at your annual revenues for the March quarter, they were up a good 11%. Area gross margins are down 200 bps. I just wanted to ask you like what is the reason that the gross margins are down on a year-on-year basis and how should we think about gross margin progressing from here?

Yeah. It’s a very fair question. One, just reflecting on the trends as we’ve seen, we’ve been running fair amount lower in the Life Sciences business and that has been weighing on us this past two quarters. We have also in this particular quarter – you’ve seen us running lower on the global services. So, the combination of those two by themselves are pretty difficult to offset. And then, when you look at the product solutions business, it’s not quite as weak. If you went back, we’re about a point – within a point of where we were running in the first half of last year. And at that level, what you’re seeing is a little bit of mix and when the business picks up with higher volume, where that volume comes from our largest customers with best pricing equations for them. So, this is a little bit of customer mix, but then we also – as we mentioned, we’ve just a little headwind in the CCS business as it picked up this quarter, loss of periods, some early qualification tools. So in total look I’m not – you can add up a lot of different reasons we look at this and we say we’ve got a healthy business in the BPS business and we see that the CCS business is I am looking forward now. CCS business is going to continue to help us expand, because we fully expect this as a lift to our margins at the gross margin level. We also see a clear path of improvement in life sciences. As Steve alluded to we have about 5 points of gross margin opportunity ahead of us this year in that business and our strategic I shouldn’t say strategic our tactical objective here is to get it to 40%, 45% level. We saw this next quarter think about 5 points improvement. And we’ll get a little lift back in the BGS space we expect, so we really expect margins improve, but I also have to make to that when the business is at the highest point we do see a lot of it coming from our largest customers that do have a fairly demanding pricing equation.

Got it. And then, Steve I wanted to probe you a little bit on the life sciences business you mentioned that on one of the products that you were expecting to win a order and you lost it to a competitor this quarter, because of very low pricing from the competitor and I just wanted to understand could this be a problem going forward and just that the competition increases, so much that going forward pricing could deteriorate in the market?

Yeah, Farhan it could happen, we’ve seen lower pricing before, but I think they’re generally a rational company. So it’s a little bit surprise to us without this when we’re going to win. So we’re not anticipating that this would be the norm because it’s pretty destructive behavior, but you just never know. So we don’t think so. We pay close attention to it, we still win most of the businesses are now one out of the four stores, this year we didn’t win. So it’s not good. It’s a big order and I don’t know what – what the motivations were for this time that changed the behavior to be even that more aggressive and actually the customer decision I think is – of course we don’t think it’s the right customer decision, but I can’t comment yet.

Got it. That’s all I have, thank you.

Okay. Thanks, Farhan.

Thanks, Farhan.

And there are no further questions at this time. I’ll now turn the presentation back to the main speaker.

Thank you, everyone. We appreciate your interest in Brooks and we do look forward to a chance to speak with you next quarter when we report Q3. Thank you.