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

February 05, 2010 | About:
10qk

10qk

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Brooks Automation Inc. (BRKS) filed Quarterly Report for the period ended 2009-12-31.

Brooks Automation Inc. has a market cap of $550 million; its shares were traded at around $8.52 with and P/S ratio of 2.6. BRKS is in the portfolios of David Nierenberg, Chuck Royce of ROYCE & ASSOCIATES.

Highlight of Business Operations:

Gross margin dollars increased to $26.2 million for the first quarter of fiscal year 2010, an increase of 310.9% from $6.4 million for the same prior year period. This increase was attributable to higher revenues of $32.8 million, a $5.2 million reduction in charges for excess and obsolete inventory and $1.9 million of reduced amortization expense for completed technology intangible assets, due primarily to the impairment recorded for those assets during the second quarter of fiscal 2009. These decreases were partially offset by a less favorable product mix which reduced gross margin dollars by $4.6 million. Gross margin was reduced by $0.5 million and $2.3 million for the first quarter of fiscal years 2010 and 2009, respectively, for amortization of completed technology, which relates primarily to the acquisition of Helix Technology Corporation (Helix) in October 2005.

Gross margin of our Critical Solutions Group segment increased to $15.8 million for the first quarter of fiscal year 2010, an increase of 134.1% from $6.7 million in the same prior year period. This increase was attributable to higher revenues of $7.3 million, reduced charges for excess and obsolete inventory of $1.7 million and reduced amortization expense of $0.6 million for completed technology intangible assets, due primarily to the impairment recorded for those assets during the second quarter of fiscal 2009. Gross margin for the first quarter of fiscal years 2010 and 2009 was reduced by $0.4 million and $1.0 million, respectively, for completed technology amortization related to the Helix acquisition. Gross margin percentage was 36.5% for the first quarter of fiscal year 2010 as compared to 18.8% in the same prior year period. This increase is 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 4.7%, and reduced amortization expense for completed technology intangible assets which increased gross margin percentage by 1.9%.

Gross margin of our Systems Solutions Group segment increased to $7.6 million for the first quarter of fiscal year 2010, an increase of 534.7% from a $1.7 million loss for the same prior year period. This increase was attributable to higher revenues of $24.5 million, decreased charges for excess and obsolete inventory of $3.1 million and $0.2 million of reduced amortization expense for completed technology intangible assets, due primarily to the impairment recorded for those assets during the second quarter of fiscal year 2009. Gross margin for the first quarter of fiscal 2009 was reduced by $0.2 million for completed technology amortization. Gross margin percentage increased to 16.0% for the first quarter of fiscal year 2010 as compared to (7.7)% in the same prior year period. This increase was primarily attributable to 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 12.4% and reduced amortization expense for completed technology intangible assets, which increased gross margin percentage by 0.7%. These increases in gross margin percentage were partially offset by a less favorable product mix which reduced gross margin percentage by 9.7%. The less favorable product mix is attributable to a $19.2 million increase in Extended Factory product sales, which are less profitable than other products within this segment. Extended Factory product revenues were 65% of all sales within this segment for the first quarter of fiscal year 2010, and we expect this product will continue to generate a majority of the revenue for this segment in the near term.

Gross margin of our Global Customer Operations segment increased to $2.9 million for the first quarter of fiscal year 2010, an increase of 109.8% from the $1.4 million in the same prior year period. The increase was attributable to reduced amortization expense of $1.1 million for completed technology intangible assets, due primarily to the impairment recorded for those assets during the second quarter of 2009, decreased charges for excess and obsolete inventory of $0.4 million and higher revenues of $1.0 million. Gross margin for the first quarter of fiscal years 2010 and 2009 was reduced by $0.1 million and $1.2 million, respectively, for completed technology amortization related to the Helix acquisition. Gross margin percentage was 18.3% for the first quarter of fiscal year 2010 as compared to 9.3% in the same prior year period. The increase in gross margin percentage was primarily attributable to reduced amortization expense for completed technology intangible assets which increased gross margin percentage by 7.4%, and decreased charges for excess and obsolete inventory which decreased gross margin percentage by 2.6%.

Cash provided by operating activities was $1.5 million for the first quarter of fiscal year 2010, and was comprised of a net loss of $2.9 million, which includes $7.0 million of net non-cash related charges such as $4.8 million of depreciation and amortization and $1.5 million of stock-based compensation. Further, cash provided by operations was reduced by net increases in working capital of $2.6 million, consisting primarily of $14.8 million of increases in accounts receivable and $5.2 million of increases in inventory. The increases in accounts receivable and inventory were caused by a 65.7% increase in revenues for the first quarter of fiscal year 2010 as compared to the fourth quarter of fiscal year 2009. Additionally, we paid approximately $3.0 million in annual incentive compensation payments during the first quarter of fiscal year 2010 related to the prior fiscal year. These increases in working capital were partially offset by $19.9 million of increases in accounts payable and $1.2 million of higher deferred revenues.

Cash used in investing activities was $14.4 million for the first quarter of fiscal year 2010, and is principally comprised of net purchases of marketable securities of $14.1 million and $0.5 million of capital expenditures. These uses of cash were partially offset by $0.2 million of proceeds from our sale of a minority equity investment in a closely-held Swiss public company. Our capital expenditures for the first quarter of fiscal year 2009 were $5.1 million, including $3.0 million in expenditures related to our Oracle ERP implementation. We implemented the Oracle ERP system in most of our U.S. operations in July 2009. We are currently evaluating the timing and cost to implement this system in our international locations.

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