GuruFocus Premium Membership

Serving Intelligent Investors since 2004. Only 96 cents a day.

Free Trial

Free 7-day Trial
All Articles and Columns »

Brooks Automation Inc. Reports Operating Results (10-Q)

August 05, 2010 | About:

10qk

18 followers
Brooks Automation Inc. (BRKS) filed Quarterly Report for the period ended 2010-06-30.

Brooks Automation Inc. has a market cap of $526.4 million; its shares were traded at around $8.1 with and P/S ratio of 2.4. BRKS is in the portfolios of David Nierenberg of D3 Family of Funds, David Nierenberg of D3 Family of Funds, Chuck Royce of Royce& Associates, James Barrow of Barrow, Hanley, Mewhinney & Strauss, Steven Cohen of SAC Capital Advisors.

Highlight of Business Operations:

Gross margin dollars increased to $45.9 million for the three months ended June 30, 2010, an increase of 1,193.1% from $3.6 million for the same prior year period. This increase was attributable to higher revenues of $112.9 million, a $1.5 million reduction in charges for excess and obsolete inventory and a $0.4 million fixed asset impairment charge related to our fiscal 2009 restructuring plan. Gross margin dollars increased to $111.1 million for the nine months ended June 30, 2010, an increase of 722.1% from a $17.9 million loss for the same prior year period. This increase was attributable to higher revenues of $256.7 million, an asset impairment charge primarily related to intangible assets of $20.9 million which reduced the prior year gross profit, a $14.4 million reduction in charges for excess and obsolete inventory and $3.7 million of reduced amortization expense for completed technology intangible assets.

Gross margin for the three and nine months ended June 30, 2010 was reduced by $0.5 million and $1.4 million, respectively, for amortization of completed technology intangible assets, which relates primarily to the acquisition of Helix Technology Corporation (Helix) in October 2005. Amortization by operating segment for the three and nine months ended June 30, 2010 was as follows: Critical Solutions Group $0.4 million and $1.1 million, respectively; and, Global Customer Operations $0.1 million and $0.3 million, respectively. Gross margin for the three and nine months ended June 30, 2009 was reduced by $0.5 million and $5.1 million, respectively, for amortization of completed technology intangible assets. Amortization by operating segment for the three and nine months ended June 30, 2009 was as follows: Critical Solutions Group $0.4 million and $2.3 million, respectively; System Solutions Group $0.0 million and $0.3 million, respectively; and Global Customer Operations $0.1 million and $2.5 million, respectively.

Gross margin dollars for our Critical Solutions Group segment increased to $25.6 million for the three months ended June 30, 2010, an increase of 2,705.0% from $0.9 million in the same prior year period. Gross margin dollars for this segment increased to $63.9 million for the nine months ended June 30, 2010, an increase of 745.3% from $7.6 million in the same prior year period. These increases were attributable to higher revenues of $47.2 million for the three month period and $97.3 million for the nine month period, reduced charges for excess and obsolete inventory of $1.2 million for the three month period and $4.0 million for the nine month period and reduced amortization expense of $1.3 million for the nine month period. Gross margin percentage was 40.0% for the three months ended June 30, 2010 as compared to 5.4% in the same prior year period. Gross margin percentage was 38.2% for the nine months ended June 30, 2010 as compared to 10.8% in the same prior year period. These increases are primarily the result of higher absorption of indirect factory overhead on higher revenues. Other factors increasing gross margin percentage include decreased charges for excess and obsolete inventory which increased gross margin percentage by 5.1% for the three month period and 4.9% for the nine month period and reduced amortization expense for completed technology intangible assets which increased gross margin percentage by 0.7% for the nine month period.

Selling, general and administrative (SG&A) expenses were $21.2 million for the three months ended June 30, 2010, an increase of $1.6 million compared to $19.6 million in the same prior year period. The increase is primarily attributable to higher outside sales commission costs of $0.7 million on significantly higher revenues and higher depreciation expense of $0.6 million, which relates primarily to the Oracle ERP system which was placed in service in most of our U.S. based operations during the fourth quarter of fiscal year 2009. SG&A expenses were $61.0 million for the nine months ended June 30, 2010, a decrease of $11.4 million compared to $72.4 million in the same prior year period. The decrease is primarily attributable to $6.2 million of reduced litigation costs, lower labor costs of $2.7 million as we reduced our headcount to align our SG&A resources with our new management structure, a $2.8 million reduction in amortization of intangible assets and a $1.0 million reduction in software maintenance costs. The decreases in SG&A expenses were partially offset by higher depreciation expense of $1.5 million, which relates primarily to the Oracle ERP system. We settled our litigation matters with the United States Securities and Exchange Commission (the SEC) during fiscal year 2008. We have incurred minimal indemnification costs for these litigation matters during the nine months ended June 30, 2010.

We recorded restructuring charges of $2.3 million and $12.3 million for the three and nine months ended June 30, 2009, respectively, in connection with our fiscal 2009 restructuring plan. These charges through the first nine months of fiscal 2009 consist of $10.8 million of severance costs associated with workforce reductions of approximately 440 employees in operations, service and administrative functions across all the main geographies in which we operate, facility closure costs of $0.6 million to close one manufacturing operation located in the United States, and other restructuring costs of $0.9 million. The restructuring charges by segment for the three months ended June 30, 2009 were: Critical Solutions $0.3 million, Systems Solutions $1.2 million and Global Customer Operations $(0.2) million. The restructuring charges by segment for the nine months ended June 30, 2009 were: Critical Solutions $3.4 million, Systems Solutions $3.6 million and Global Customer Operations $3.1 million. In addition, we incurred $1.0 million and $2.2 million of restructuring charges for the three and nine months ended June 30, 2009, respectively, that were related to general corporate functions that support all of our segments.

Cash provided by operating activities was $17.9 million for the nine months ended June 30, 2010, and was comprised of net income of $34.7 million, which includes $12.1 million of net non-cash related charges such as $14.0 million of depreciation and amortization and $4.9 million of stock-based compensation which was partially offset by $7.8 million from our gain on sale of intellectual property rights. Further, cash provided by operations was reduced by net increases in working capital of $29.0 million, consisting primarily of $33.9 million of increases in accounts receivable and $33.7 million of increases in inventory. The increases in accounts receivable and inventory were caused by a 166.0% increase in revenues for the nine months ended June 30, 2010 as compared to the first nine months of fiscal year 2009. Our other current assets have also increased as of June 30, 2010 to reflect the $3.9 million of refundable taxes for the carryback of alternative minimum tax losses. These increases in working capital were partially offset by $44.3 million of increases in accounts payable, $1.8 million of increases in accrued warranty and retrofit costs and $1.6

Read the The complete Report

About the author:

10qk
GuruFocus - Stock Picks and Market Insight of Gurus

Rating: 3.3/5 (4 votes)

Comments

Please leave your comment:


Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK
Email Hide