Azenta, Inc. (AZTA) Q4 2011 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to the Brooks Automation’s Third Quarter Financial Results Conference Call. My name is Karis, and I will be your coordinator for today. At this time, all participants are in listen-only mode. Later we will conduct a question-and-answer session. (Operator Instructions). As a reminder, today’s call is being recorded. And I would now like to turn the conference over to your host for today, Mr. Martin Headley, Chief Financial Officer. Please proceed.

Thank you, Karis, and good afternoon, everybody. I’d like to welcome each of you to the Brooks Automation fiscal 2011 fourth quarter results call. Our press release was issued after the close of markets today and is available on our site, www.brooks.com, as are the illustrative PowerPoint slides to be used during our call today. I’d like to remind everybody that during the course of the call we will be making forward-looking statements within the meanings of the Private Securities Litigation Reform Act of 1995. There are number of factors that could cause actual financial results or other events to differ significantly from those identified in such forward-looking statements. I refer you to the section of our earnings release titled “Safe Harbor Statement,” the Safe Harbor slide on our website, and to the company’s various filings with the SEC. I would also note that we’re going to 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 and should not be relied upon to the exclusion of GAAP measures. Management believes those financial measures we provide and additional way of viewing aspects of our operations but, when viewed with our GAAP results and the reconciliations to GAAP measures, provide a more complete understanding of our business. With me today is Brooks’ President and Chief Executive Officer, Steve Schwartz, who will open with remarks around the business environment and our current initiatives. I will then provide an overview of fourth quarter and full-year fiscal 2011 financials and a summary of our financial outlook for the December quarter, our first quarter of fiscal 2012. We’ll then take your questions. During our prepared remarks, we, will from time to time, make reference to the slides available to everybody online, at www.brooks.com, which are identified to assist in clarifying our comments. And with that, let me introduce Steve Schwartz.

Thank you, Martin. Today I’d like to give a brief update on results from our strategic initiatives and give some commentary as to how we see our December coming together. Fiscal year 2011 in many respects, was a very strong year for Brooks. We drove revenue to $688 million, an increase of 16% from last year, achieved record cash flow from operating activities of $88 million, ended the year with cash and marketable securities of $206 million or $3.17 per diluted share and no debt. We successfully sold our lower margin Contract manufacturing business, and acquired the businesses that formed our higher margin Life Science Systems platform. Unfortunately, these positive results have recently been over shadowed by the slowdown in semi-conductor capital equipment spending, which has been significant. And consistent with the reports from many of the companies who serve our same customers, we believe that semi-conductor related revenue in the December quarter will be lower than the September quarter. In spite of this challenging economic environment, we are pleased to report our September quarter Life Sciences revenue was slightly ahead of our expectations, and our integration activities are well under way, although cost reductions and margins on some orders were less than had been projected. Also, we’ve continued to make progress against our strategic initiatives that we outlined for you at the beginning of fiscal 2011, to gain market share in our existing businesses, to expand in the high growth markets, and to drive gross margin improvements in all of our businesses. I’d like to spend a moment to highlight some of our design win activity, that’s a result of our RD&E initiatives. Even in the down business environment, we had another strong quarter for wins in our core business and I highlighted a few of those penetrations here.…

Thank you, very much Steve. With our on-going transformation of the company, there are a lot of moving pieces reflected in the financials. Our results also incorporate a significant industry slowdown for semi-conductor, LED, and Data Storage Manufacturing equipment. Adverse performance against our assumptions after the margins of certain new products recently introduced by the Life Sciences Systems business, the pace of restructuring changes, reflecting themselves in the income statement, and the precipitous decline in MOCVD tool sales, after the recent LED capacity build, all had the major impact on our performance in the quarter. And as a result, we missed the bottom end of our guidance ranges for both revenues and adjusted EPS. The actual results for the quarter were adjusted diluted EPS of $0.19 on revenues of 131 million. Slide three shows some of the significant events recognized in the September quarter financials. Nexus Biosystems was acquired effective July 25, and thus the quarter reflects two months of trading activity and cost, associated with a significant integrational restructuring we commenced to merger this business together with our prior acquisition, RTS. And the Brooks Engineering, financial and management resources to all drive new product development and operational effectiveness. The slowdown in the semi-conductor markets was at the low end of our projections for the quarter. Our semi-conductor product revenues declined by 27% from June quarter levels. The shortfall in LED shipments at the end of the quarter was considerable, reflecting the market conditions noted by our ROEM customers, and there are revisions to their own forecast for LED shipments. WE continued enhancing our product development capabilities through fiscal 2011, and with the full quarter of Nexus spend in December, we’ll have reached an investment level with which we have comfort. We also initiated a substantial supply chain initiative, and…

I don’t think achieving those margin levels is solely an absorption issue. It’s also operations improvements and completing the integration. So we were anticipating lower margin levels, they’re slightly below our initial expectations where we thought they’d be in the low 40s, being 38, 39%. I think we’re a couple of quarters away from that. I think we’ve perhaps found the challenge is slightly more, but not markedly more than we anticipated and it’s just delaying that. But nothing that we believe that’s insurmountable and certainly, nothing that takes us away from believing that we’re able to harvest the potential we saw in these businesses when we made these acquisitions. Edwin Mok – Needham & Co. LLC: I see. And I think – I remember last quarter you guys talked a little bit about seasonally September is a slower quarter, right. And if I just use 10% of your midpoint of the guidance, right, which is roughly around $12 million, is that how we should think about kind of a normal run rate of this business? And obviously, you know, you guys are still growing and going up in your business, but just kind of going into how I can get a sense of that’s the level that we think we’re thinking about accomplishing?

I think you might anticipate a little higher revenue than that for the December quarter. We’ve made reference to it being seasonally a little higher. So – but we are – we definitely view this business as being above the trailing revenue rate, which was $48 million. We’re seeing the bookings come in and the growth start to realize directly. We talked about this having a growth potential of 18 to 20% and we wouldn’t back off that kind of compound annual growth rate for this business. We believe the top line will grow nicely. Edwin Mok – Needham & Co. LLC: Great. That’s very helpful there. And then just moving on to your other products, you mentioned that on the semicap side of the business, you see – you expect double-digit decline right? And we’ve heard from some of the OEM customers talk about orders picking up in the December quarter. How is that kind of reconcile with that and is it inventory adjustment on your customer side or you expect business to trough in the December quarter? If you could help me with that.

The current way we view a very uncertain world is that we anticipate the business to trough. If we interpret what our customers are saying correctly. We clearly, like everybody else, feel uncomfortable with the macroeconomic conditions and I think everybody is going to have to be very nimble in these situations. But at the moment, I’ll bet you would be – that the December is probably a trough quarter. Edwin Mok – Needham & Co. LLC: Great. I have one last question and then I’ll go away. Just in terms of operating expense, how do you kind of think about it? You know, [inaudible] in some of these new product that you guys are developing, especially in the Life Science area? Do you anticipate [inaudible] about this – by excluding restructuring charge in the coming year? And you know, how much more do we expect OpEx to increase?

I would say, if you look at our engineering spend, from a small impact from the full quarter impact of [inaudible] the Nexus acquisition, you probably see engineering running at roughly the order of magnitude that we previously expected. I think you’re going to see a couple of quarters of slightly higher SG&A as we pursue some of these other initiatives. But equally, we’re working on the relationships to build – drive that down. Over time, it gets driven down a bit as we start to recognize the cost savings from the actions we’ve taken at Brooks Life Science Systems. So I would say overall, you’re seeing something that’s closer to the peak and we will obviously adjust it to the market conditions we see as well. So other actions will be taken if necessary. Edwin Mok – Needham & Co. LLC: Actually, just to clarify that, you mentioned that you have taken some action recently, right? Is that something that we should expect to have a benefit in in some quarter or is more likely the March quarter it will be on?

I think it’s more the March quarter before you start to see that. Edwin Mok – Needham & Co. LLC: Great. Thanks for clarifying that. That’s why I asked. Thank you.

Thank you.

And your next question comes from the line of (CJ Nuss). Please proceed. (CJ Nuss): Hi. It’s [inaudible]. Thanks for taking my questions. I just wanted to clarify some of the comments regarding the comments regarding the December quarter [inaudible]. It seems that EPS is partially down by higher income tax. Could we talk about what the tax expense here embedding in the guidance and how you think about that heading into 2012?

Great. I’m embedding within our guidance, a continuing tax rate in – for the full fiscal year of 3 to 4%, with it being at the higher end of that range in the early quarters and we typically will have a small benefit recognized in the fourth quarter. (CJ Nuss): Got it. And then switching gears into the gross margin side, we talked about some of the inherent costs within Life Sciences and some of the mix issues dragging down the gross margins there below your expectations. You know, at the current run rate that you’re anticipating from a revenue standpoint, do you see fiscal ’12 gross margins even getting to mid-40s or should we assume low-40s as kind of the more achievable target for the coming year.

I think for the full year as whole, you should expect mid-to-low or low-to-mid-40s if – that kind of range. So it’s more towards the low than the mid-40s. (CJ Nuss): Okay, got it. And then just the final questions, on the equipment side, how would you characterize the inventory levels at your customers of your – of Brooks Components? Have they worked through most of the inventory or you know, they just….

There are relatively few system, although there are some. And our knowledge of the rate which those are expected to move during the December quarter is in fact factored into our guidance. On the component side, we believe it to be a relatively little, almost non-existent on the robot side and relatively modest at this stage in the pump side given the rate of which pump revenues declined during the September quarter. And so we believe on the component side, we’ve seen the vast majority of any inventory correction that we’re going to see. (CJ Nuss): Thank you.

Thank you. And your next question comes from the line of David Duley. Please proceed. David Duley – Steelhead Securities: Yeah, could you give us a little bit more detail on how you think the revenue is going to break out amongst the pieces you showed in the pie chart for the December quarter?

You mean, by market? David Duley – Steelhead Securities: Yes.

I would say that clearly we talk about in prior conversations or prior question from Edwin, you’re looking at over $12 million of Life Sciences, over 10% of the business will be Life Sciences. I would say that we see the declines in the semiconductor business being more rapid than it is in the injection market, but you are also going to see the industrial piece shrink by virtue of the mixed gas cryochillers. And Steve gave the roadmap there, that that’s roughly 6 to $7 million of decline there. So that’s going to take that down by a few percentage points. When you take that into account, semiconductor comes down very slightly, Life Sciences up fairly significantly, other adjacent markets up slightly on industrial down. BGF having a consistent top line on a declining product reviews, they’re going to expand slightly as a percentage. David Duley – Steelhead Securities: And the gross margins you talked about, low 40%, was that for the Life Science business or for Brooks total?

No, that was for the Life Science business was what I thought I was addressing that. David Duley – Steelhead Securities: Okay. And did you say that the service business was going to expand as a percentage of revenue?

As a percentage of revenue, yes. David Duley – Steelhead Securities: Okay. And when the semi business recovers, would you expect – how many 10% customers would you ultimately expect to have again when the semi business gets back to a normal run rate.

In my definition, reviewing the customer as the end OEM that takes the complete tool and not any intermediate contra manufacturer, we do not anticipate any 10% customers. David Duley – Steelhead Securities: Okay. That’s it for me. Thank you.

Thank you.

And the next question comes from the line of Wenge Yang. Please proceed Wenge Yang – Citigroup: Hi. Thank you for taking my question. I look at the operating expenses and try to figure out what the reason behind high operating expenses means in the quarter. And could you provide a little bit more and explain why it’s higher than your guidance and how it’s going to track in the next quarter.

Okay, the Life Science expense, if you’ll look to the Brooks Life Science System, they’re at $5 million of operating expenses in the quarter that comes from Brooks Life Science Systems. We had consulting and other supply chain initiatives associated with the operations improvement. Those costs are reflected in our selling, general and administrative expenses. Those are between 1.5 and $2 million. We had an added investment in our engineering for the Brooks Products Solutions as we really got close to completing our increase in expertise and capacity for product and supporting our new design in win opportunities, and that was $800,000. So those were the most significant pieces of the operating expense increase sequentially. In terms of versus expectation, we spent a bit more on the supply chain initiation so we initiation you going into the quarter. And as I described, we got around Brooks Life Systems, we did not get the accounting benefit for a number of the actions that we’ve taken in terms of restructuring headcount. Wenge Yang – Citigroup: Okay, so will it be – for fiscal Q1, for the Life Science supply increase, or actually the [inaudible] will become a little bit higher because we are taking the full speed months coming in the Nexus operation, right?

Correct. Wenge Yang – Citigroup: What about that consulting expense? Are they going to go away for the quarter?

No, that will be at the similar level as part of this very essential program to improve our supply chain operation’s effectiveness. Wenge Yang – Citigroup: Okay. This seems to be a bit higher than when you’ve had it in the last quarter. Is this because you totally integrated Nexus and find out the expense of that operation is higher than you expected?

I think there’s that and we’ve also decided that the [inaudible] test on our operational initiatives needed to move forward rapidly once we’d embarked on this activity. This isn’t something that can be done slowly overtime and therefore, we’ve given it substantial investment. Wenge Yang – Citigroup: And you mentioned you would see some fat off your current cost-cutting efforts starting in March quarter, correct?

From the point of view of the Brooks Life Science Systems, you also should probably see a slight roll off in some of the other costs there. And we’re also looking as we move through this quarter, obviously in a difficult time, but further actions we might take. So we’ll be addressing this as we move forward in the fiscal year. Wenge Yang – Citigroup: Okay, understand. The second question regarding your comment on that December quarter is going to be the trough, is this just based on the comments from your suppliers or you actually see some size of your own orders that are going to pick up beyond December quarter?

This is not the basis of bookings we have in house. This is on the base of what we have been notified by critical customers of their purchasing plans and manufacturing plans for the quarter. So clearly, all bets are off until the bookings are actually received. And frankly, until the product’s delivered. But the indications from our customers, some of the public pronouncements as well as seeing, for instance, solid indications of a no-new CapEx plan in Korea, all give us rise to think that at least the correct statements to say that this is the trough but it is equally possible that it isn’t. But those are the indications we have at this moment. Wenge Yang – Citigroup: And just a last question. You made a comment that LED is dropping pretty fast. And how much revenue is coming out of LED and where do you see this in the next two quarters?

I think it’s not the LED revenue for us is dropping fast, it’s the fact that this was going to be a substantial growth engine for us. In fact, one of the concerns we previously had about the market adoption of multiple reactor tools has largely been overcome with a favorable response to those tools. It’s just that there aren’t that many reactor counts being shipped currently. So it means that our growth opportunity is not transpiring as we originally believe it would rather than we see declining LED revenues. Wenge Yang – Citigroup: Okay, any indications that this trend will continue?

I would have to say if we think visibility is short in semiconductor, what we’re experiencing LEDs, it’s even shorter. Wenge Yang – Citigroup: Okay, thank you.

And your next question comes from the line of Satya Kumar. Please proceed. Satya Kumar – Credit Suisse: Hello? Yeah, hi. Thanks for taking my question.

Hi, Satya. Satya Kumar – Credit Suisse: Hi. What type of product gross margins are we looking at in the December quarter?

I don’t think we’re providing guidance at granularity on that at the moment. It is depending up on the final mix, that’s one of the uncertainities that’s embodies within out range. Our range is the mixture of – the mix of product as well as the absolute level of the top line. But you would anticipate with decline that – in the top line, that it’s going to be done somewhat. I don’t think we’re in the position to provide guidance around that at the moment, Satya. Satya Kumar – Credit Suisse: Okay. I mean, I guess that I assumed that the Life Sciences were slightly higher gross margins than services were sort of flattish would be a reasonable sort of…

I think that’s a reasonable assumption, yes. Satya Kumar – Credit Suisse: Okay. I was intrigued by a comment on this granular market going down in the December quarter. I was wondering you could give us some perspective as to how big that market was for you, perhaps this calendar year. And you mentioned it was growing from last year, so I’m wondering if you could also give that?

Well, I think as Steve made mention up in his prepared remarks, this had grown this business line for mixed gradual, it had grown to $14 million is a bit high. And the majority of those revenues were for these applications.

Yes. Satya, just to give you some color on that – in the first quarter of the fiscal year, we had around $8 million of revenue. And it grew to approximately 10, approximately 12, approximately 14. So steady growth just through the fiscal year. Satya Kumar – Credit Suisse: Okay, and it was growing sort of last year as well from a pretty low level?

Yeah. It grew for the – a couple of – about 3/4s before that as well, yes. Satya Kumar – Credit Suisse: Right. Do you think that the weakness that you’re seeing in this particular market segment is because of the overall slowdown in these aid of capacity conditions for that, or are there some technology shifts happening from perhaps, or displaced or maybe has a different mix?

It would be. I think, Satya, however, I think what we’re seeing is several quarters of enormous numbers of tools going in, and business hasn’t dropped to zero. We’re going to go to something just about half of the current level and we’re at the ready to begin shipping tools again. There’s been a lot of capacity put into place and I think – what we see is just a pause right now in what we think is growing. We also are quite aware that the tools that are used for these applications are being redesigned and I think it’s one of those things where, so similar to the discount in LED, likely there’s a different type of higher capacity tool on the way that we’ll be asked to serve. Satya Kumar – Credit Suisse: Okay. And switching gears to semis, how much do you think 450 millimeter could represent in 2012 for you given that you’re engaged with five or more customers at this point. Getting to double-digit type levels, percentage of revenues in 2012…

It would be a few million dollars probably for the whole year. Satya Kumar – Credit Suisse: Okay. And lastly on the product business, if I sort of think that you’re Life Science bookings were double digits in the September quarter or there abouts, and assuming that customer operations is one to one, book to bill is obviously very low in the [inaudible] business. And if I look at the commentary from your OEM customers that books are up 20 to 35% on average, it gets to be a high percentage. But in terms of the actual levels of billings, it’s not necessarily a much higher level. Looking at the type of activity that you’re seeing right now in the December quarter for the new orders and perhaps a pipeline into next year, are you also thinking about the shipment pipeline that is developing relate to the levels that you were seeing earlier in this year?

Well, I think that you’ll recollect the third quarter had actually a very strong book to bill for our core business. So I think part of it was that we had strong bookings ahead in the third quarter that were being going through the pipeline in the fourth quarter. So that’s one reason why even though that book to bill was very low, it doesn’t necessarily have implications into the – into the first quarter. In terms of our profile for our fiscal 2012, it’s clearly a view that this is going to be a backend loaded year, backend loaded, both in terms of operational improvement on margins and backend loaded on revenues for our BPS segment as well as for our Brooks Life Science Systems segment. So the profile will be for a slower start to the fiscal year but we still think that the fiscal year has a very significant opportunity to it. Satya Kumar – Credit Suisse: Okay. Thank you.

And your next question comes from the line of Patrick Ho. Please proceed. Patrick Ho – Stifel Nicolaus: Thank you very much. I know it’s early in the integration process in your Life Sciences business, but in terms of both Nexus and RTS, can you give us any little bit of color in terms of the leverage you may be able to get in terms of I guess the product portfolio and how much of the integration process may be necessary between those two entities within now the entire division?

Yeah, so Patrick, there is some product overlap. But – some product portfolio overlap, so some pretty big sized stores and the certain temperature range. What we found is that in one of the organizations we had, for example, very strong software capability we have to leverage across the entire portfolio. In another, we have a really superb design capability. And how we spend the next two quarter pulling these two groups together so we have basically a single engineering organization even though two, now three locations and it would include Chelmsford. There’s a lot to be gained here. But we’re finding that there’s expertise that we can leverage, if you will, from different parts of the organization. More adjustment has to be made. And what we’ll do with some of the resources when we combine the three entities is work on the next-generation products as well because we have some unique skills and we put some technologies from the Brooks Chelmsford team in with the industry expertise, we think that will give a very powerful next-generation product development engine for us. Patrick Ho – Stifel Nicolaus: Okay, that’s very helpful. The second question in the Life Sciences business, and maybe Martin, I know you gave a little bit of color in terms of where the expenses are going, maybe if you could go one stop below. In terms of that division, how much of it would you characterize as kind of the infrastructure build out, you know, trying to integrate versus say the customer penetration cost because I’m assuming that you just mentioned that you had some new product introductions. How much of the cost and expenses are I guess going into those two different buckets maybe on a percentage basis?

I don’t know the exact order at this time to give you an accurate representation of it only to give you kind of an overall sense of the picture, which is the – with some new products here, new products that both RTS and Nexus were introducing literally at the time of our acquisition, there are in those situations, always are a lot of field support costs associated with addressing those new product issues. Those are largely reflected in a reduction in gross margins rather than in the operating expenses. Clearly, the other thing that we have is that in those introductions, particularly when they are, for instance, in some of the areas of instruments around the full-blown stores, we have to have the right capabilities to sell that equipment and those are being developed as well. So the majority of those costs around the new product introductions are probably in costs than they are in the selling mix expense although there are some in selling expenses. Patrick Ho – Stifel Nicolaus: Okay, great. And I guess just in terms of infrastructure build out, I guess, you know, at a very high level, how many quarters do you see in terms of I guess not only just the integration costs, but I'm assuming you have to build out, you know, teams, you have to build out and hire new people. How many quarters do you think that will…

No, Patrick, I think we have adequate personnel right now for the businesses. So it’s reconciliation of who does what job because we do have some duplication and I think it’s taking the best talents and putting them in the right spots right now. Patrick Ho – Stifel Nicolaus: Okay, great. Thanks a lot.

And your next question comes from the line of Ben Pang. Please proceed. Ben Pang – Caris & Co.: Thanks for taking my question. On the Life Sciences business, what’s the customer concentration like just in that area in terms of the number of customers as well as the geographic region?

Hi, Ben. We have 170 systems installed in just under 100 customers. Just to give you an idea. When we do an assessment to how many bio storage potential customers there are, whether they do it by a manual freezer, a nitro doer, we measure that in thousands of potential. But we have just under 100 customers in our install base. And most of the business is Europe and North America. A little bit of penetration in Japan just beginning, but a majority of the market opportunity exists in North America and in Europe. Ben Pang – Caris & Co.: Okay. So when you were talking earlier about, I guess, the cycle for market share gains in this area, you kind of gave a timeframe of like a year to a year and half. Is that right?

That’s about right. Ben Pang – Caris & Co.: Okay, and how do you go about approaching that because your customer base is so large? I mean, how do we think about the market share, you know, it’s such a different type of customer concentration as your other businesses?

This is going to sound a little bit familiar to you. When tools kind of get to be about $1 million and the sales cycle is about that long and you’ve got a global sales force, you know what that sales cycle looks like. So we have people that go with response to quotation who understand the technical details, we send product managers to help them understand the opportunity and there’s a lot of back and forth that take place. But we have a pretty significant global sales organization made up now of both Nexus and RTS personnel. And Nexus, actually a year before we acquired them, had acquired a company called RIM, who was the leader the very large storage area. So we have a very experienced, very capable account team backed up by skilled application and product people who really know how to address the technical issues that the customer has. Ben Pang – Caris & Co.: Great. And then this is a follow up for Martin. When you answered the question regarding the LED opportunity, I actually didn’t quite understand the answer that you gave in terms of why you’re seeing the slowdown right now, but why you think the underlying growth rate is much stronger. Can you repeat the answer again, please?

Well, the answer is, or maybe I was not addressing the question exactly head on. I think the questions I interpreted was what’s the impact on – for decline in our LED revenues. My response was gravitating towards our issue has not been LED revenues are declined, it’s that they’ve not grown the way that we have – were projecting. And that in fact, for the LED reactor shipments that are being made, more of those are on multiple cluster arrangements than we had previously projected. So from that point of view, it was favorable but that the overall market conditions around the number of reactors going into the market was not favorable. Ben Pang – Caris & Co.: Okay, so you are still seeing I guess a favorable condition in terms of the cluster tool, essentially, right?

Yes, and I think you’ll have heard positive statements elsewhere around that. Ben Pang – Caris & Co.: Okay, and my last question is regarding the service, the 17% pie. Is that like primarily weighted towards the semi front end or is that pie similarly spit up with the industrial et cetera?

No, it is mostly, not exclusively, but about order of magnitude, you know, around 90% of it being semiconductor. The difference there is those sales are predominately to the fabs and foundries running to the OEMs. So it’s a different customer base and it has a different profile to it by virtue of being repair service and spare parts. The spare parts are perhaps the most cyclical piece around the repair piece. Ben Pang – Caris & Co.: Thank you very much.

Thanks.

(Operator Instructions). And your next question comes from the line of Edwin Mok. Please proceed. Edwin Mok – Needham & Co. LLC: Hi. Thanks for taking a follow up. Just a quick question. In the last quarter, you guys talked about potentially a consumable business within your Life Science Group. Now that you have integrated Nexus, how do you kind of view that? Do you see that as a growth driver potentially?

We do, Edwin. So the consumable business right now, between the consumables and service, probably about, gosh, we anticipate even next quarter, probably somewhere around the 20% of the business. Edwin Mok – Needham & Co. LLC: So you are already generating around 20% of your sales coming from that side?

Yeah, there are times when it’s higher, but right, the consumable business is a pretty steady part of the Life Sciences business.

Interesting, one of the areas we’re just going through is developing the project management to really exploit the consumables opportunity. And that team’s been put together within Brooks Life Science Systems. So it’s now for them to grow that business. Edwin Mok – Needham & Co. LLC: Okay, that’s helpful. And then on the cryogenic commentary, you guys talked about, you know, I guess moving the industry group. Can I ask you just to clarify, di that business actually grew on the September quarter versus the June quarter and if it did, how much did it grow? And yo mentioned about a pause, right, is it – the level of decline is that back to where you saw that business a year ago, last quarter? How do we kind of think about that?

Well, this actually…

The chillers? About six quarters ago. Edwin Mok – Needham & Co. LLC: I see. But did the seat of the business grew essentially in the September quarter?

Yes, they grew very nicely. They did again, yes. Edwin Mok – Needham & Co. LLC: I see. Great. I just wanted to clarify that. Thanks.

And at this time, there are no further questions in queue.

Well, thank you, everyone. We appreciate your interest and participation today, and we look forward to speaking with you on next quarter’s call.

And ladies and gentlemen, this concludes today’s conference. Thank you for your participation. You may now disconnect. Have a wonderful day.