Ladies and gentlemen, thank you for standing by. Welcome to the Brooks Automation Q3 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, July 31, 2014. I would now like to turn the conference over to Lindon Robertson, Executive Vice President and Chief Financial Officer. Please go ahead sir.

Thank you, Albert, and good afternoon everybody. We'd like to welcome each of you to the third quarter financial results conference call for Brooks, fiscal 2014 year. We will be covering the results of the third quarter ended on June 30th then we'll provide an outlook for the fourth fiscal quarter ending September 30 of this year. The 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 today's 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 in the aforementioned PowerPoint presentation on our website and our various filings with the SEC, including the Form 10-Q for the third quarter ended June 30, 2014. We make no obligation to update these statements, should future financial data or events occur that differ from 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 to 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 the GAAP financial results and the reconciliation of GAAP measures, provide even more complete understanding of the Brooks business. Non-GAAP measures should not be relied upon to the exclusion of the GAAP measures. On the call with me today is Brooks' 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 third quarter financial results and a summary of our financial outlook for the quarter ended September 30th, which is our fourth quarter of fiscal '14. We will then take your questions. During these prepared remarks, we will from time to time make reference to the slides available to everyone on the Investor Relations page of the Brooks website. So with that, I would like to turn the call over to our CEO, Steve Schwartz.

Thank you, Lindon. Good afternoon everyone and thank you for joining our call. We're pleased to have the opportunity to report the results of the third quarter of our 2014 fiscal year. Q3 was another very productive quarter at Brooks as we achieved several significant milestones against our strategic and operating objectives. Our semiconductor position continued to improve. Our product portfolio became more competitive and better aligned to our growth initiatives and we delivered on our Life Sciences targets, all the while putting in place the foundation for further performance improvements in the September quarter. Our revenue in the June quarter was a $117 million, down 7% from March and consistent with our outlook and guidance. Our BPS business was down 16% quarter-to-quarter, exactly in line with our forecast of down 15% to 20% and reflective of what has been reported by other companies who also supply critical subsystems to the same customer base. Our Global Services business was essentially flat but delivered another strong financial quarter with improved profitability. And we benefited from a 46% increase in revenue from our Life Sciences business which has become a significant portion of our portfolio and is positioned to be more positive contributor to the profitability going forward. In the near-term, the market environment for semi remains somewhat soft. But with meaningful product penetration gains and a bullish outlook for 2015 coupled with our substantial improvements in our Life Sciences position, we’re positive about our future. I will address each of these markets in my remarks today. First, I’ll give some color about our semi automation business. Over the last three years, we’ve steadily improved our automation portfolio and the profitability of this segment. At the top and bottom-line the changes have been gradual, however beneath the surface we’ve dramatically changed our…

Thank you, Steve. Please refer to the PowerPoint slides now available on the Brooks website under our Investor Relations tab. I draw your attention to slide three and as a reminder we close the sell of Granville-Phillips during the third quarter. Consistent with GAAP, we have category for the Granville-Phillips business as a discontinued operation in both current period and the comparative periods reported. And we have excluded the contributions from these discontinued operations from our non-GAAP results. We also closed on our acquisition of DMS on April 30th which we refer to as our Contamination Control Solutions business or CCS in this presentation. That business is included in our Brooks Product Solutions business. At the top line, the revenue came in at $117 million, a decline of 7% sequentially and in line with guidance and at the bottom line, the non-GAAP earnings per share came in at $0.05, a little higher than our guidance range. In summary, the quarter results reflect solid execution on the revenue and gross margin expectations while under running somewhat in operating expenses. As we step through the results, we see progression in our business model that is we see a more resilient semi P&L while expanding the Life Sciences business. The adjusted gross profit margin for the quarter was 36.1% compared to just 36% for the second quarter. This is after absorbing the cost associated with the new CCS acquisition. If we hold the CCS business aside, both the Product Solutions business and the Global Services segment had good quarter-to-quarter margin improvement. Life Sciences had softer margins, primarily driven by the contracts Steve referenced and which were strategic for our business expansion. The Life Sciences growth and margin supported the near breakeven quarter for that segment and it is important to note on a…

Thank you. (Operator Instructions) And our first question comes from the line of Craig Ellis with B. Riley. Please go ahead.

Thanks for taking the question and congratulations on a good margin performance. Lindon, I just wanted to follow up on the comment about the restructuring as we think about the benefit you said it’s -- the action is going to be pretty broad based, but to what extent is that going to be seen in COGS versus operating expense for the 3 million in savings?

Yes a smaller amount in COGS most of this was resource driven with a little bit of consolidation in real estate at this point so I would tell you I think of this as 75% or more in SG&A and R&D so in the OpEx area.

Okay, that’s helpful. And then with Life Sciences, excluding that one contract you are running at a very strong level and it looks like we are going to have a breakthrough quarter and the current quarter profitability, what are the headwinds that would cause gross margin in the future to go back towards the middle or within the current target range for Life Sciences?

Yes, this is a really good question, at this point we don’t point to any substantive headwind that we keep aside of our strategic range target that we have identified as being 40% to 45% at this point in the business. And we see this business really on a going forward basis in the longer-term exceeding that 45%, but for now on the 40% to 45%. But in general, it's a lumpier business and it does vary on our delivery and the installation and on what the makeup of each of the bits are. So couple of contracts can sway a quarter and as you can you see this quarter it was about 3.6 million contract that weighed us down.

Okay, thank you. And then the last question for Steve. Steve you mentioned three businesses that have very strong growth rates. Vacuum robot, vacuum system and atmospheric robots and think the ranges year-on-year were 50%, 25% and 25%. So, what percent of mix are those businesses? And you also made a comment that potentially we're at the bottom here and maybe we're seeing some signs of bouncing along the bottom. What do you think that might be an indication that this could be a bottom but for a potential [adaptor]?

Yes. Okay. Let me address the issue about automation. So I want to clarify one thing that vacuum robot components are up 50%, vacuum systems and the atmospheric systems, we anticipate 25% growth year-on-year, that atmospheric robotic components will continue its downward trend. So that's the first point of clarification. The robots and vacuum systems are a significant portion of an automation business. We don't break that out specifically, but just to give you an idea the automation business in the company runs in excess of $200 million per year.

Okay. And then what are the signs that you are seeing that we could be near a bottom?

So, in 2015, we're starting to get some ideas from the end users’ end, from our customers about preparation for the potential for higher bookings here towards the end of the calendar year. Everyday we get a little bit different signal, but we are bullish from the standpoint of the interactions that we're having with our customers that we're hopeful that order activity will begin to pick up. We're not ready to call anything towards the end of the September quarter or December quarter, but 2015 calendar year. We're getting a sense that ought to be ready from a ramp standpoint.

Thanks guys.

Our next question comes from the line of Edwin Mok with Needham and Company. Please proceed with your question.

Hey thanks congratulations for good quarter. So first thing actually I have just a follow up on last question. If I look at those growth rates that you laid out for vacuum robot, vacuum systems, atmospheric systems, those are obviously very strong number and you mentioned that aggregate automation business is $200 million per year. So what happened to the rest of the $100 million, are those businesses got in line with semicap or semi industry in general, do you expect that those areas to see a little bit more pressure, especially on the cryogenic side.

Yes. So we didn't break this -- so Edwin, the automation business is different from the cryogenic business. So we didn't put that in there nor do we put in for the services business. The automation business that the reason for us to call it out was the automation business growth is not as consistent with what we see in those particular platforms because we do have some down graphs over the past years and the atmospheric side of the business and the atmospheric robot side of the business. But we do see tremendous strength in the automation platforms particularly for activity with the Tier 1 OEM.

I see. But is it fair to say that the cryogenic side of the business is more stable or in line to semicap industry is that how we think about that?

That’s correct. On the cryo side the position is almost exactly with what’s happening in the semicap equipment side.

Okay. That’s fair, very helpful. And then I guess stick with the product here. I think previously you guys have guided for Life Science to come back in a little bit maybe closer to $15 million and $18 million to $19 million now guided for the September quarter. Is anything changed there because I can see a big booking number this quarter, is it just timing of revenue or is it something incremental that you’re seeing in the market?

Specific to the Life Sciences or are you talking about our total business?

Yes, sorry. On the Life Sciences I think previously you have said that this quarter you get $18 million to $19 million, this meaning to June quarter and then in September quarter you expect it to come back in a little bit because just a little timing of revenue. Now you’re guiding for flattish, I was wondering if there is anything changed there?

Yes, no it’s a great question and I try to give some more clarity on this. So, if you recall from Q1 to Q2 we showed pretty flat revenue I think it was $12.3 million to go into $12.6 million. So 12 to 12 it was very flat but at the same time we forecasted that in the second quarter told you we are working on some contracts that we’re going to be recognized in the third quarter. That contract came through in the third quarter and helped us quite a bit in the third quarter. So you see this significant step up in the third quarter 46% and we had described this from beginning of Q2 we’re going to be pure flat and then a large step up in Q3 and so now you’re looking at what appears to be another flat quarter. The level of activities actually have been quite smooth on this point. So you might think on activity basis that maybe this went from 12 to 14 to 16 then going back up to 18, 19 this next quarter. But GAAP revenue, I’m not at all trying to disagree with the GAAP revenue accounting of this; it just has the appearance that in this quarter we got the significant step-up because we had to recognize the revenue on a project to-date basis on that particular contract.

And now that you’ve finished that contract or you mentioned in Japan, you expect your revenue to stay at this level, because of some order contract that you guys booked purposely or just some contract that you expect to book this quarter?

We continue to work the momentum that we have built in the year and our signings. As Steve pointed out, we had $74 million of signings over the last 12 months. And I think, you could see that’s substantial growth opportunity for us and it's been building with the second quarter and third quarter bookings we still have a lot to work on. So we see the revenue being pretty solid in this coming quarter and the pipeline, we expect will continue to produce opportunity.

Yes, Edwin, if I can add a little bit to that. The systems and services business, the revenue that we recognized is generally already booked. So we have a pretty good look at that. The consumables and some of those things turn in the quarter, so we don't have as much visibility to that. But we're talking about as something close to 70% of the next quarter revenue, we understand pretty well. And we generally have a good idea on the consumables in devices side what that revenue will be. So we’re pretty confident in what the revenue outlook ought to be for September.

Great, that's helpful color. And then on the guidance, I noticed that you guys made point, it's similar in terms of revenue from June to September but it kind of implied me little bit better profitability. And I know noticed in the June quarter you actually have a very low non-GAAP tax rate right? I was wondering what are the moving parts on the guidance; is it the gross margin coming back because of this Life Sciences contract you mentioned or is that other pieces that drive to slightly better profitability for the quarter?

Yes, there is a couple of dynamics there. You are right, so we think that the revenue could be approximately flat and plus or minus some. And margins actually, we expect to continue to gain traction at the flat level of revenue that will get almost a point of traction as we expect. We do have little pressure on expense but mostly mitigated by the restructuring action. And then as you very astutely point out, we had some pretty good tax benefit in the third quarter, partly from the charges that we took. And in the fourth quarter, we’ll return to a more normal tax rate. And just to give a little more color on the tax rates that you might want to use, we are still headed to about a 30% tax rate for the year on a non-GAAP basis without the tax discrete items -- without the tax discrete but we see that opportunity to go to 20% overall for the year. But in the fourth quarter this will be pretty close to 30% to possibly having an opportunity to get to 25% whereas in the third quarter it was low single-digit with discrete items that we were able to take benefits on.

Great. That’s all I have. Thank you.

Thank you Edwin.

Our next question comes from the line of Patrick Ho with Stifel Nicolaus. (Operator Instructions).

Thank you very much. And I also like to echo my sentiments on a nice quarter, especially on the Life Sciences. And Steve, first off on the semiconductor side, post SEMICON West, there was a increasing chatter regarding advanced packaging once again and we’ve heard some positive commentary coming out of some of the sub-cons regarding the traction in that growing market. Based on some of the comments you said about the backend slightly being up offsetting the frontend in September, is that being driven by advanced packaging? And I guess maybe as a follow up to that, what do you see in terms of the growth prospects of that marketplace; do you see a hockey stick type of curve or more of a gradual step up?

Patrick, I wish I could answer the second part, but we are not sure. We do see growth in the advanced packaging, so that's the driver for us. So that part feels healthy, even during this period where things have been a little bit slower, we've also been out gaining a little bit of share. We're pretty bullish on what that could be, but the market seems to be little bit muted yet. So we are standing by, we are encouraged by the position that we have. But we still - it feels like we're going to need at least another quarter to see a real uptick here.

Okay. So Steve, you guys are seeing like the big volume buys that maybe the pure play equipment guys are starting to see in that marketplace.

We anticipate that we'll hopefully see some of that during this quarter.

Okay, great. On the Life Sciences and can you give an update on I guess some of the development work you have been doing on the minus 150 degrees? And maybe update us on kind of the timing of when you would like to get kind of data products out there for customers to evaluate?

Sure, I’ll -- Patrick I’ll say what I’m comfortable to say right now. We’re investing pretty significantly. We have very strong team, people working on the next generation minus 150 product, we have two actually that we're working on, and we anticipate that we will -- our target is to have two beta systems in the field in calendar 2015 and we're schedule for that. So we’re very pleased by the performance customers have seen, the work that we've done, the systems that we have. And we’re positive that we'll begin to get some real customer feedback before the end of calendar ‘15.

Great, that's all I have for now. Thank you.

Okay. Thanks Patrick.

Our next question comes from the line of John Pitzer with Credit Suisse. Please go head.

Hi, this is Farhan asking the question on behalf of John. My first question like on the bookings for Life Sciences, did you mention it this quarter; I didn't see it on the presentation?

Yes, the bookings is about $9 million this quarter. And we said that there is a backlog of about $38 million and the 12 month backlog and then we have some additional go beyond one year ahead of us.

Got it. And Steve you’ve talked about the atmospheric robots business being not very attractive for Brooks, and you guys exiting or like de-prioritizing that market. I just wanted to understand like in terms of the business impact in terms of how large that business was say two years ago and how much is that right now. It will help us to understand like what rest of your business has done over that period of time.

Yes. So Farhan, I can give you a general idea. So three years ago actually to give you a marker, three years ago it was in excess of 15% of the automation portfolio and this year we anticipated it will be just under 5%.

Got it. So, and your automation portfolio is about $200 million a year?

Yes, that’s in rough numbers a little bit bigger than that.

Got it. And you’ve talked about Life Sciences opportunity of automated gross stores of about $200 million over the next two to three years. How should we think about that progressing, is it something like that is going to be bigger in the later part of the second quarter and is it smaller right now or do you expect like that where the business is right now?

Yes. It’s a part and that’s what that’s the current look and I think every day we add and subtract from this prospect list but these are real opportunities identified by all of our account execs around the world. So, the real names associated with this we’ll keep working that and over the next couple of quarters we will determine the level of confidence there. But the real opportunity is in as we can in them into near-term and further out will be then and try to give some color to it.

Got it. Thank you. That’s all I have.

(Operator Instructions). Our next question comes from the line of David Duley with Steelhead Securities. Please go ahead.

Thanks for taking my question. Steve, if customers like Applied and Lam see shipment growth in the December quarter, is there any reason to think that your revenue won’t also increase in the semiconductor space in December?

Yes, David. We try not to comment too much on specific customers, but whatever drives their business certainly drives our business.

Yes. Those are just the biggest customers in the industry I can think of so I didn’t mean to it…

Right.

I was wondering if the funding guys start to shipment growth in December is there anything hurdles to keep your revenue from growing during that same quarter?

No, absolutely not. We’re prepped and we would to grow quickly.

Okay. And as far as the Life Sciences, you mentioned there is going to I guess in the profitability in this upcoming coming quarter, congratulations on that, that's a great thing after the drag that it's been over last few quarters. And do you expect that to be ongoing and what gross margin levels would we anticipate let's say throughout 2015?

Yes. We're going to try to keep the expectation here bit in the range of this kind of revenue level, where we're still not quite $100 million run rate 40%, 45% is a good estimate for gross margin, we'll continue to work to improve it. But as we continue to put new stores out there and new customers there is necessarily some cost will incur they want to pay close attention to. But I think 40% to 45% is a really good range. As Lindon mentioned, our expectations are that we get $100 million in higher that we have to be able to routinely exceed 45% gross margin for that business.

And as you already mentioned, you are kind of already at this 40% to 45% on your backup, but the impact of that one contract?

Yes.

So kind of going forward, when we're modeling things, whatever revenue number we get we've taken in gross margin in the low-40s I guess?

Dave what I would say about this is so much in my comments earlier, this is a lumpier business and the contracts can sway a quarter, that's why ranges in the 40% to 45% expectation. Actually if you go back a couple of quarters, a few quarters, we've exceeded 45% and we've been down in that 40% range and pretty consistently right in that target range of 40 to 45 on average and we just because of the lumpiness we just say that the right place to be modeling us. But we see opportunity as we scale with broader synergies and being able to leverage our structure. And finally as we continue future track of doing more integration of the acquisitions that we have done that we think there is opportunity to get it above that 45% range in the strategic horizon, but for now 40%, 45% is a very reasonable range for to move around it.

And how do you view the gross margins of the Brooks Product Solutions group, can you get to a 40% gross margin rate in that business overtime sometimes the biggest business that’s the biggest delta?

I probably wouldn’t call out 40% but we see it getting better, if 38%, 39% is what we set our sights on and next call it one to two years, and as I said we were pretty pleased with this quarter, we think the CCS business as we add that in, I just we described last quarter when we acquired it that we would see in 2015 approximately an estimate for next year for us is about 40 million was about 40% margins. So we are pretty happy with our outlook with our portfolio to continue to expand this.

Well you just answered my final question which is what is the clean business target for next year. So with that thank you very much.

Alright. Thank you Dave.

Mr. Schwartz there are no further questions at this time I will now turn the call back to you for closing remarks.

Well thank you everyone for your interest in Brooks and we certainly look forward to speaking with you when we report results from our fiscal 2014 fourth quarter. Thank you.

Ladies and gentlemen that does concludes the conference call for today. We thank you for your participation and ask that you please disconnect your line.