Azenta, Inc. (AZTA) Q1 2021 Earnings Report, Transcript and Summary

Greetings, and welcome to the Brooks Automation Q1 2021 Financial Results. 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, Tuesday, February 2, 2021. I would now like to turn the conference over to Sara Silverman, Director of Investor Relations. Please go ahead.

Thank you. Malika, and good afternoon to everyone on the line today. We would like to welcome you to our earnings conference call for the first quarter of fiscal year 2021. Our first quarter earnings press release was issued after the close of the market today.

So operator, my apologies, it sounds like we're having a technical difficulty. This is Lindon. Maybe I can continue the remarks here.

Thank you.

Maybe they're not hearing us. We're on. What happened? Hello. Maybe we need to get to other phone line.

Yes.

[Indiscernible]

One moment, please.

Hear me?

You just came back. Are you there?

Yes. Lindon, can you hear me?

Yes, Sara.

Sara, we hear you now. Malika, my apologies. Here in our conference room, we lost sound and we are unclear on whether that's the transmission of Sara or if it was just our audio here in the room.

We will look into that. Ms. Silverman is back. Okay.

Thank you, Malika, and good afternoon to everyone on the line today. We would like to welcome you to our earnings conference call for the first quarter of fiscal year 2021. Our first quarter earnings press release was issued after the close of the market today and is available on our Investor Relations website located at brooks.investorroom.com, in addition to the supplementary PowerPoint slides that will be used during the prepared remarks today. I would like to remind everyone 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 such 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 our Annual Reports on Form 10-K and our quarterly reports on Form 10-Q. We make no obligation to update these statements should future financial data or events occur that differ from the forward-looking statements presented today. We may refer 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 the 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 to the exclusion of GAAP measures themselves. On the call with me today is our President and Chief Executive Officer, Steve Schwartz; and Executive Vice President and Chief Financial Officer, Lindon Robertson. We will open the call with remarks from Steve on highlights on the first quarter. Then Lindon will provide a more detailed look into our financial results and our outlook for the second fiscal quarter of 2021. We will then take your questions at the end of the prepared remarks. With that, I would like to turn our call over to our CEO, Steve Schwartz.

Thank you, Sara, and welcome to Brooks. Good afternoon, everyone. It's a pleasure to be able to report to you today on results from another strong quarter. It's hard to fathom that we're just six weeks away from the one-year anniversary of the first impacts of COVID on the company and all of it's changed so dramatically in the world since then. From the moment we redeemed an essential company, we began to adapt, not only to be certain that we could satisfy our customer demand, but also to sustain growth during this period. More than anything, this past year confirmed the need for our technologies, tested our operational capability, and allowed us to demonstrate to our customers that we can meet their new challenges and opportunities that they presented to us and there were many. So although, we're still in the midst of a very cautious environment, we remain bullish about our future. Today, I'll comment on results from another quarter of record revenue and highlight the key drivers that we believe will allow us to sustain this trajectory. Lindon will give color to a quarter of strong earnings and more importantly, a look at our forecast, which is quite robust. Our market opportunity comes from our unique portfolio of offerings that targets high growth, high complexity applications, where we can differentiate our solutions. We've been deliberate in our approach to achieving double-digit growth and we positioned our unique capabilities to sustain our share gains post-pandemic. In Life Sciences, we satisfied the needs of the research and clinical communities who need to manage and interrogate millions of samples each day with the highest quality and fidelity. Our BioStorage -- bio sample-based offerings are essential capabilities in the discovery pipeline. Similarly, our Semiconductor products of specialized technologies that enable more than 200 critical OEMs and device makers to produce the leading-edge semiconductor devices that fuel the information edge and are now enabling the next technology wave that will satisfy 5G, high capacity computing, autonomous vehicles and the trillions of devices that will be part of the interconnected Internet of Things. In both the Life Sciences end Semiconductor markets, our customers know us for our innovation and enabling solutions as well as our reliable execution. I'll now give some color into our business segments starting with Life Sciences. Life Sciences revenue was $118 million, up 29% year-over-year. Consistent with our aggressive share gain momentum, we added 400 more customers in the quarter as we continue to build our reputation for high quality fast turn excellence in services and products developed by some of the best scientific and engineering talent in the industry. In Services, we rode a wave of positive momentum, delivering $73 million in revenue, up 17% year-over-year. Next-generation sequencing reached $20 million in revenue, up 25% over Q1 in 2020, driven by a steady increase in volume from existing customers, but also customers drawn to our new solutions, including gene therapy workflow solutions and our single-cell analysis capabilities. Once again we demonstrated our outstanding synthesis capabilities by delivering another record quarter in Q1, up 49% year-over-year. Our strong value propositions for antibody discovery and cell and gene therapy are enablers for these exciting research areas. We continued to invest in gene synthesis capacity expansions in China and the U.S. to be able to meet this robust demand. And even though it's a mature technology, our Sanger business was up 7% year-over-year. Sanger Sequencing remains an important part of discovery and development. And although it's been a standard for more than 40 years, it still plays an extremely valuable role in the advancement of scientific discovery and we continue to grow business across the globe. In the sample and repository solutions portion of the Services business, we likewise delivered strong growth. Back to back growth -- back to a growth rate we've not seen for a couple of years as we continue to gain new customers in pharmaceutical and clinical sectors, while gaining momentum in vaccine-related services. Storage revenue was at record levels. Even without the additional $1.5 million of vaccine-related services revenue, SRS grew more than 20%. We're pleased with the positive momentum in the SRS business, which includes new business that gives us confidence in the continued strong performance throughout the year. Specifically, in the quarter we kicked off the first phase of a new contract with a large pharmaceutical company when we received the first tranche of what will be several million samples that are scheduled to be received by the end of this year. All in, we added 24 new SRS customers in the quarter. Life Sciences Products had a particularly strong quarter, delivering 50% year-over-year growth to a record $46 million. We added 100 new customers for the consumables and instruments, including many who came to us because of scarcity in consumables due to workflow demand from COVID-19-related needs. We believe that we'll be able to maintain a large percentage of these new customers, even after the impact of the pandemic subsides, not only because of our ability to meet their needs now, but as I mentioned on our last call, the COVID-19-driven shift to automated handling and processing has caused more rapid conversion to automation-capable consumables, which favors our products over many competitor offerings, driving what we believe will be a sustained demand for our consumables products beyond COVID-19 driven business. We maintained meaningful market penetration in our automated stores product lines, in our Cryostores business, we completed the installation of six BioStore III Cryo units for one customer and we now account more than 30 customers who've purchased multiple systems. Cryostore shipments remain heavily weighted to cell and gene therapy applications with more than 75% of units purchased for those applications. Our momentum continues to build and we anticipate that we'll see a faster ramp in a post-COVID world. Still, we're pleased with the adoption of this technology and the acceptance by our customers of this innovative and enabling product capability. Additionally, the backlog for large automated stores is building and projects that have been slowed since the early days of the pandemic are positioned to accelerate in the second half of our fiscal year. Overall, we are seeing strong demand across all of our Life Sciences offerings. We're investing to build out our footprint with five active capacity expansion projects currently under way in three different countries. We're bullish about the prospects, not only to serve the customers and segments that have delivered this growth, but also to begin to bring more integrated solutions to the market that will deliver more value to customers in the form of streamlined and more secure workflows, but also in the ease of doing business with a single vendor, who is capable and willing to manage critical and complex portions of their workflows. Toward that end, we're proud to announce that Linda De Jesus has joined Brooks as a Chief Commercial Officer with responsibility for commercial activity across all of our Life Sciences business. Linda started with us at the beginning of January and she is already having an impact on our go-to-market approach. Her experience and track record was earned at senior positions at Thermo, Agilent and Waters Corporation and her deep understanding of the industry and vast global business experience make her a tremendous and welcome addition to our executive leadership team as we advance to the next level of capability for our customers. Our Life Sciences business is a story of exceptional growth. On our last earnings call, we noted that in the September quarter, we had surpassed $100 million in Life Sciences revenue for the first time, putting us on a trajectory for $400 million in annualized revenue. Now here we are in the middle of a quarter that's already on a path to a $500 million annualized revenue run rate, exceptional growth by any measure and a trend we intend to continue. Now I’ll turn to the Semiconductor business. In our Semiconductor segment, we remain the beneficiaries of the strong capital spending for capacity additions that are supporting the tremendous growth in semiconductor devices for mobile communications, high-capacity computing, artificial intelligence and machine learning as well as the explosion of interconnected devices enabled by the Internet of Things. Spending plans recently announced by some of the major chipmakers bode well for our outlook and we're seeing orders and backlog at record levels, seating what looks like another very strong growth year in our Semiconductor business. Our critical technology positions in automation and contamination control and the expanding need for these secular growth drivers is propelling our above-market growth with no signs of slowing down. Semiconductor revenue in the quarter was $131 million, up 11% year-over-year. This increase was led by automation products slowed slightly by contamination control, which was solid, but down in comparison to our record CCS quarter in Q1 of 2020. Nonetheless, the Semiconductor markets on a tear and we continue to outperform the market as we have for the past several years. Our automation revenue, the combination of robots and systems for process equipment was up 41% year-over-year in support of Tier 1 and Tier 2 OEMs and not just consistent with growth in this segment, but faster because of our increased market share from design wins over the past years. As a matter of fact, last quarter, we reported a 50% year-over-year growth in automation products. So these outperformance numbers are not one timers, but rather consistent with a strong sustained period of growth. Revenue from advanced packaging was once again very healthy, up 3% from Q4 to $18 million, an increase of 78% year-over-year, as we’re seeing increased investment, not only in the front-end manufacturing capacity, but in the back-end as well. We anticipate more healthy growth for advanced packaging throughout the coming year. Contamination control delivered another good quarter and that we sustained our exceptionally high market share for leading edge capacity additions. Revenue of $29 million was solid, but some $15 million below the record revenue quarter we delivered one year ago, when there was a significant capacity addition at Tier 1 foundries. Q1 was a particularly strong quarter for design win activity and continued share gain. We secured business for a number of CCS tools for a 3 nanometer pilot line. We also captured EUV pod clean tools from two DRAM manufacturers. These were our first EUV orders for memory. And we won new customers in Japan, China and Europe for image sensor, memory and logic applications, respectively. Our outlook for CCS is for the March quarter to be the start of a ramp into an even stronger June quarter. Again, our market share is strong, our product development activity is aggressive and we’re winning new share at next-generation nodes for both wafer and reticle carriers. As the opportunities present themselves, we expect to capture them. All in, the semiconductor business is robust and we believe on the verge of a long and strong period of enablement for the global economy, not only in communication and computing, but in its critical role in support of the conversion from fossil fuels to more sustainable sources of energy and a more concerted move to electrification. Each of these catalysts is a driver for our business and we are partnered with equipment makers and device makers to ensure that our capabilities enable them to satisfy these applications. In Q1, we delivered another quarter of double-digit growth from two strong businesses. The sustained outsized growth comes with tremendous prospects for continued outperformance. We have sustainable competitive advantage from both our applications of science and technology and engineering, but also from our close connections with customers in support of their critical needs. Our focus is clear, our markets are robust and demanding our solutions and we’ve established strong trusted relationships that are becoming more secure with each request we fulfill and breakthrough that we deliver. We’re off to an excellent start to 2021 and we look forward to all that we’ll deliver in the coming quarters. That concludes my formal remarks about the quarter and I’ll now turn the call over to Lindon.

Thank you, Steve. I call your attention to the slides on our website and we’ll begin with a summary highlights on Slide 3. Q1 was indeed another strong quarter. Revenue grew 19% year-over-year, driven by strong double-digit growth in both businesses. With 29% growth in Life Sciences and 11% growth in Semiconductor Solutions, we have added $39 million of additional revenue to the top line over the same quarter last year. Of course, with this level of revenue growth and a business model with profit leverage, you will see significant momentum in earnings. Non-GAAP earnings per share was $0.47, up 108% year-over-year. And under this, you’ll see significantly improved gross margins that are 470 basis points higher than a year earlier. A key point to highlight is that Life Sciences sustained 50% gross margin again. Cash flows also certainly a highlight of $44 million in cash from operations for the quarter and in fact, it’s a record for us for any first quarter when we pay out our variable compensation. Let’s move now on to Slide 4 for details of the first quarter. With revenue up 1% sequentially and 19% year-to-year, the GAAP earnings per share from continuing operations was $0.36. Referring over to the non-GAAP results on the right side of the page, you can see earnings per share for the quarter came in at $0.47. More than double last year’s results, gross margins at 46.3% expanded that 470 basis points that I’ve just highlighted, driven by 590 basis points improvement in Life Sciences and also supported by Semi with 320 basis points improvement year-over-year. The increase in operating expense reflects investments in R&D, driven by engineering projects in the Semiconductor Solutions and in SG&A with additional headcount, incremental structure from acquisitions and higher variable compensation accruals across the company. The revenue growth and gross margin expansion drove operating income up 99%, operating margins of 17.5%, up 710 basis points year-over-year and adjusted EBITDA margin was 23.2%, up 800 basis points. Below the operating income line, you’ll see favorable benefit shows up in the FX line compared to a loss a year earlier and the non-GAAP tax rate in the quarter was 22%. When you combine it all, we saw that 108% growth in the non-GAAP earnings per share. So now let’s please turn over to Page 5 for the results in our Life Science business. In the first quarter, our Life Science business generated revenue of $118 million, an increase of 29% when compared with Q1 2020 and 9% sequentially. As noted on the chart, the organic growth of the business was 32% year-over-year. We estimate revenue had a net positive impact from COVID-related demand by approximately $10 million in the quarter with the primary driver being our consumables and instruments business. If we were to exclude this, the organic growth would be approximately 20% year-over-year. The Products business grew a significant 53% year-over-year, driven by continued strong demand in the consumables and instruments. A portion of this growth, as I said, is driven by demand of our PCR plates, automation capable tubes and automation instruments, all of which have been in high demand in the COVID research environment. Life Science Services business, excluding the Alliance revenue, grew 28% year-over-year. This business is comprised of GENEWIZ and our sample repository solutions offerings. The GENEWIZ business grew 28% year-over-year and accelerated 7% quarter-over-quarter on a sequential basis, driven primarily by continued strength in NGS and synthesis demand. Excluding the alliance revenue stream, sample repository services was up 29% year-over-year. The growth was led by storage services and informatics. Now for gross margin, at 50.2% for the quarter, we are higher by 590 basis points year-over-year. Exiting the Alliance contract did contribute 210 basis points favorable mix benefit and the remaining 380 basis point increase came from improved performance of the current portfolio. The Life Science Products business gross margin was 45.7%, up 310 basis point improvement year-over-year, again driven primarily by the strength in consumables and instruments. And the Life Science Services business provided 53.1% gross margin in the quarter, up 790 basis points year-over-year, driven by volume leverage in GENEWIZ and the mix benefit of exiting the Alliance. The Services business includes approximately $2 million of revenue from the two recent acquisitions, the informatics business acquired in February 2020 and the sample procurement services business acquired in December, both of which carry higher than average gross margin. In total, the Q1 operating margin of 18.8% expanded 12 percentage points over last year. As we look into the second quarter of 2021, we expect Life Sciences revenue to be in the range of $120 million to $128 million. This range indicates another $2 million to $10 million of revenue expansion from this quarter and will support approximately 25% to 35% growth year-over-year. Let’s turn to the Semiconductor business on Slide 6. Semiconductor Solutions revenue of $131 million in the quarter increased 11% compared to the first quarter of 2020 and was down 5% sequentially. As Steve noted, the automation products grew 41% year-over-year. Within this group of products, the vacuum automation portion, including robots and systems, grew 57%. Revenue in our Contamination Controls business was down 34% year-over-year, consistent with the expectations for the quarter and Services business was actually up 15% year-over-year. Semiconductor operating margins were 16.4%, up 380 basis points year-over-year, but down a similar amount sequentially. Gross margins remained strong at 42.8%, up 320 basis points compared with last year, driven in part by favorable mix to higher margin vacuum automation and by improved cost absorption. Operating expense growth was driven by R&D and variable compensation accruals. We look forward, I’m sorry – we look toward our second fiscal quarter of 2021 and we expect Semiconductor revenue to be in the range of $147 million to $155 million. Now this would be another $16 million to $24 million of revenue expansion sequentially and supports year-over-year growth of 18% to 25%. So let’s turn over to Slide 7 for the summary of cash flow for the quarter. Operating cash flow in the first quarter was $44 million. As I referenced in the highlights, this is a historical high for our first quarter in which we pay out or annual variable comp. The profit leverage to drive higher EBITDA with the growth of the business is evident and is converting to cash flow. When I reflect in the past year, excluding the taxes paid on the gain on the sale of the Cryopump business, we’ve generated an adjusted operating cash flow of $147 million on a trailing 12 months basis. We used approximately $15 million in this quarter for CapEx and includes $5 million for the GENEWIZ China building project, so about $10 million on an operational CapEx basis. We paid $7 million of dividends to shareholders in the quarter. So let’s turn over to Slide 8 for a quick view of the balance sheet. Working capital was stable, even while current assets increased to support growth. The deferred revenue was driven upward by advanced billings on new large store systems. At the end of the first quarter, we had $323 million of cash, restricted cash, marketable securities. This is an increase of $17 million. With debt stable at $50 million, we finished the quarter with $272 million of net cash, which was also up same $17 million. Let’s turn to Slide 9 of our guidance for the second quarter of 2021. Revenue is expected to be in the range of $267 million to $283 million. With that, Semiconductor revenue, again, expected to be in the range of $147 million to $155 million and Life Science revenue expected to be in the range of $120 million to $128 million. Adjusted EBITDA is anticipated $58 million to $67 million and non-GAAP earnings per share expected to be $0.48 to $0.57 per share. Meanwhile, the GAAP earnings per share is expected to be $0.33 to $0.42. Now as we have wrapped up our prepared remarks, let me take a moment to acknowledge Sara Silverman, our new Director of Investor Relations and my apologies to Sara for the splash that we created there with the technical difficulties on her first call. But she joined us in January, began nicely bringing in experience from the sell side, operational treasury experience, and been really pleased with the partnering very closely with me through this cycle, and I know each of you can look forward, as she is, to interacting with you on the investor front. So you can find her contact information on today’s press release as well as on our website, on the Investor site of our website. So, this concludes our prepared remarks. I’ll now turn the call back over to Malika to take questions from the line.

Thank you. [Operator Instructions] Our first phone question is from the line of Jacob Johnson with Stephens, Inc. Please go ahead, your line is now open.

Hey, thanks for taking the questions and congrats on the quarters or on the quarter. Maybe first question just on the consumables and instruments side of things, obviously, that business has been performing really strong recently. It sounds like there has been some benefit from COVID. But Steve, from your comments, it also sounds like you think this revenue growth will be durable. So maybe can you first comment on the near-term outlook for C&I and then maybe expand on your comments around the durability of those revenues?

Sure. Jacob, thanks. We’re able to bring capacity online. So one of the reasons you say the demand has been strong since the earliest days of the pandemic. We worked pretty hard to bring on some more sourcing so that we are able to have more capacity. So you’re – I think the demand has been sustained and our ability to serve is what’s helped us to drive the business. And in terms of the durability of the business, we have yet to prove it. But what we find is that a lot of the consumables and instruments customers aren’t necessarily coming to us for COVID-specific things, but they just don’t have the source that they might have had in the past. And we believe that because of the number of instruments that remain at a relatively high level we can tell that the lines – the workflow lines are becoming more automated. So we do believe there is a shift here that’s been accelerated by the COVID environment, where some of the workflow lines are extremely high volume and can no longer be done in a manual fashion. I think that’s converting a lot more people to automated workflows. And we do believe that at least we’ll be able to sustain. We hope a significant number of the customers who come to us, who started to use our instruments and our automatable tubes and we think that will be sustainable. We’re going in another year to prove that out, but we feel pretty confident that the customers we have are really high quality customers that are – that we intend to have for a long time.

Got it, got it. That’s helpful. And then, Steve, you also – I heard you talk about cell and gene therapy a couple of times, I think, regarding a couple of different business lines. I don’t know if you guys have numbers, but maybe can you just update us on the revenues you are generating from the cell and gene therapy end market or any other kind of color you want to give around that end market?

So, Jacob, it’s the moment – it’s a question that is – it’s a really good question. We don’t have all the precision that we want. When we track it on a like-for-like basis, we see 20% and 30% growth in the cell and gene therapy, but I won’t say that we’re 100% confident we’re capturing everything nor with the precision that we opt to. So, to give you an idea, these are numbers bright by our calculations that are roughly in the $6 million, $7 million a quarter and that’s up 20%, 30% from what it was a year ago. But we’ll keep working on this one. But it gives you an idea of the magnitude here. It’s healthy, but we think there’s a lot more upside here.

Got it. Congrats on the quarter. Thanks for taking the questions.

Thanks, Jacob.

Thanks, Jacob.

Thank you. And our next question is from the line of Patrick Ho with Stifel. Please go ahead. Your line is open.

Thank you very much and a belated Happy New Year and congrats on the nice quarter. Steve, maybe first off on the Semiconductor side. I think you mentioned in your prepared remarks about the strength, particularly with your top Tier 1 and 2 OEMs, they’re traditionally going to more advanced nodes and more advanced device structures, turns you usually see more advanced packaging type of techniques, how are you seeing the front end shifts to these more advanced nodes driving advanced packaging particularly on year end will you made a lot of inroads in terms of share wins?

Well, there is a lot packed into that. Patrick, let me try a couple of things. One of the things that we observed is there has been a much faster shift from our market leading MagnaTran 7 and MagnaTran 8 product lines. These are products that have been in the market now for more than a decade. We launched – less than two years ago we launched the MagnaTran Leap, which is a next-generation vacuum automation capability that takes us down below – at 7 nanometer and below. And the speed with which customers have transformed to this new model has been way beyond our expectations. And I give you an idea, in the September quarter to the December quarter, we shipped 4 times as many units of the MagnaTran Leap as we did – in December as we did in September and it surpassed the number of MagnaTran 7 and MagnaTran 8 robot. So it was a – it’s an overwhelming shift. And so we know the demands are there. We know the capabilities that we brought are really significant. What we see on the advanced packaging side are related. Now more than just handling a complex substrate, we see the same kinds of low contaminant, high-precision handling requirements in advanced packaging that we used to see only in the front-end. So we’re seeing more challenging environment and it’s just a continued strong demand for the products that there’s not a lot of overlap. There’s not a – we don’t see as much Tier 1 in the advanced packaging as we do Tier 2, but the breadth of the Tier 2 players and they do spend front-end and back-end advanced packaging much more so than we had even two years ago.

Great. That’s helpful. And maybe as my follow-up question, you had really strong business trends on the services side in Life Sciences. And I think you mentioned a lot of the GENEWIZ opportunities that you saw during the quarter. Can you give just a little more color on the sample storage management services business, whether anything COVID-related or additional biopharma potential uses of the sample management services in this type of environment?

Sure, Patrick. So we – generally we had good increase in the amount of storage. You think everyone’s aware for the past 18 months, we’ve had a pretty significant effort on the what used to be called the BioStorage business on our ability to continue to capture more collections and to enhance the storage capacity and capability in customers and I think we’ve been very successful there. On the COVID-related activities, indeed not just from a vaccine standpoint, but with six different companies, we’ve now begun to store the COVID positive samples. And so managing those collections has been a new and interesting challenge for us. And even in the most recent quarter, we started to have opportunities for automated stores, where the samples from patients will be taken and later when they're deemed to be positive or negative, those samples are then three hours to sorted out and so we're using automated stores for that purpose too. So across the portfolio, on the sample management side, we're seeing different opportunities to help to deal with the COVID sample. So it's a breadth of capabilities and a breadth of opportunities. I won't say any one of them is moving a couple of million dollars at a time, but they are significant in our ability to adapt our products and services to serve those immediate applications has been really strong so far.

Great. And maybe final question for Lindon in terms of cash flow generation or the outlook as you go into 2021. With a strong Semi environment, with the Life Sciences business now also starting to turn positive, especially on the upward momentum side of things, how do you look at cash flow generation given the working capital metrics look very good? Is this a potentially record setting year in cash flow generation for the company?

Yes, Patrick, that's exactly what we expect. And I think the last two quarters, if you look at the two quarters, Q4 and Q1 combined, we're just a few million short of $100 million in that last six months. I think you're seeing indicative capability of the business going forward. So we're quite pleased about that. It's converting to cash. It's fueling our ability to invest, not just organically, but to put some on our balance sheet for potential M&A as well. And so we're really pleased with that.

Great. Thank you very much.

Yes. Thanks, Patrick. Appreciate the call.

[Operator Instructions] Our next question is from the line of Paul Knight with KeyBanc. Please go ahead. Your line is open.

Hey, Lindon, what was organic growth? What was FX impact in the quarter?

Paul, give me a second. It was a couple of million, but it will break that out in our 10-Q. Let me say this, you'll see it in the 10-Q broken out when it's filed, but it's a modest impact.

Did you talk to COVID impact, Steve?

No, we didn't talk to COVID impact.

Right. What I highlighted was I had roughly about $10 million of positive tailwinds in the Life Sciences business in the quarter. And I have mentioned that it was substantially driven by the consumables and instruments.

Around COVID, Lindon?

Yes, that's right. Consumables and instruments, automation is a piece of that, but we had supply capabilities, where others didn't, and we also saw an attraction for high volumes driving a desire for automation capability and the tubes that we produce work in temperatures all the way to minus 190 and have automation-ready caps, barcodes on the side, 2D barcodes on the bottom, which is not necessarily an industry standard, it's a little bit of a differentiation. So capability there is quite strong, and this is why, as we highlighted, we've picked up more than 100 customers in the quarter and some of those undoubtedly were COVID-based customers that weren't finding supply other places and our aim is to delight those customers with the experience they have with us. So we expect we're going to keep them, particularly with the automation capabilities.

Why you would…

Paul, I want to make sure that we're clear on this one too. We have some of those C&I customers who might be buying consumables from us that are not for COVID, because COVID is always the first priority. So if we have a customer who need something for COVID, they get the first priority. But if they could no longer get some of their consumables because another supplier had prioritize COVID and they can buy another tube from us for their continued research, we count that in COVID-related demand that came our way.

Right. And then lastly regarding GENEWIZ, the expansion in China, where specifically, what's the square footage, what's potential contribution and timing thereof?

Yes. What I'll highlight to you is it's a significant building size. It replaces the existing four lease bases that we have in Suzhou, China. It provides us almost double the capacity in the first phase building and we have a second phase build -- when I say double what we have in Suzhou, currently, which is our second largest operational site in terms of capabilities next to our New Jersey site. And with that said, two more years later, we have the option to and likelihood to add another building on the same property. It's a Phase 2. So we have another significant step in capacity capable there. And I'd just highlight, it may not be something on everyone's radar, Suzhou is often described as sort of the Cambridge of China. It's a life science rich district. When you ride through Suzhou, you see company after company in the life science market. So resources are rich, the science is rich, capabilities, the infrastructure is beautiful. So we're really pleased with that. We expect that building to go operational by the end of this calendar year or before.

Okay. Thank you very much.

You bet. Thanks, Paul.

Thank you. And there are no further questions. I would like to turn the call back over to Lindon Robertson for any closing remarks. Thank you.

Thank you, Malika. And to everyone, one -- again, we count ourselves very fortunate in the businesses that we've positioned ourselves with, but also in this environment. We continue to hone the business. You've seen the acquisitions that we did this last quarter. We continue to apply the same rigor to our investments. We continue to grow out the business with on the investments organically as well and you could see that in our results and very pleased with the leverage model. We're excited about the ramp ahead of us, both on the Semiconductor side that seems to be a very prime environment going forward. And of course, on the Life Sciences side, it's not only -- we help to solve -- be a participant in solving the COVID challenges, but also the growth around the exciting space of cell and gene therapy and other research endeavors. So we count ourselves as vital to both spaces and we've been fortunate that all authorities around the globe have counted us vital and deemed us essential throughout this period. We look forward to producing another quarter of results that we've described and look forward to talking to you through the quarter and see you next quarter on the earnings call. And with that, thank you all for your participation.

Thank you, ladies and gentlemen. That does conclude today's call. We thank you for your participation and ask that you please disconnect your lines.