Ladies and gentlemen, thank you for standing by. Welcome to the Brooks Automation Q4 and Fiscal Year 2015 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded Thursday, November 5, 2015. I would now like to turn the conference over to Lindon Robertson, Vice President and Chief Financial Officer. Please go ahead, sir.

Thank you, Cersei, and good afternoon, everyone. We would like to welcome each of you to the fourth quarter financial results conference call for the Brooks fiscal year 2015. We will be covering the results of the fourth quarter ended on September 30, and then we will provide an outlook for the first fiscal quarter ending December 31st of this year. A 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 the call. 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 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 the Form 10-K for the fiscal year ended September 30, 2015. We make no obligation to update these statements should future financial data or events occur that differ from the 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 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 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 the GAAP measures themselves. On the call with me today is our Chief Executive Officer, Steve Schwartz. We will open with his remarks on the business environment and the highlights of the fiscal period. Then we will provide an overview of the fourth quarter financial results and a summary of our financial outlook for the quarter ended December 31, which is our first quarter of the coming fiscal year 2016. We will then take your questions. During our prepared remarks, we will, from time to time, make reference to the slides I mentioned available to everyone on the Investor Relations page of our Brooks website. With that, I'd like to turn the call over now to our CEO, Mr. 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 fourth quarter and the full year of our fiscal 2015. Q4 was an excellent quarter for Brooks that kept a very strong 2015 fiscal year. On essentially flat quarter-on-quarter revenue, we increased gross margin by 90 basis points and non-GAAP earnings per share by 10%. As you've heard from other companies, especially those of us with significant presence in the Front End Semi equipment space, late in the September quarter, we began to head into a slow period. However, the performance we were able to demonstrate in September gives us confidence that we are positioned with the market-leading and next-generation products to capitalize on the next upward movement in the market. As we recap the fiscal year, we're proud of our 14% year-over-year revenue growth, 76% increase in non-GAAP earnings per share, increases in market share across our businesses and the acceptance of new products that we've launched that will increase our market share in the coming years. With a downturn in the semiconductor business looming, we're still excited about our strong position for many reasons. We're qualified at the 10-nanometer device node at each of our current customers who have developed 10-nanometer products. We once again grew market share in the Semi Front End and we plan to do so again in 2016. We are building our position in advanced packaging with a strong base of customers and product offerings. And once again, we turned the crank on gross margin improvements and we have initiatives in place that will allow us to continue to improve. Additionally, when Life Sciences gross margins lift during fiscal 2016, our gains will be compounded. We have our broadest…

Thank you, Steve. Please refer now to the PowerPoint slides available on the Brooks website under our Investor Relations tab. I draw your attention to Slide 3, which is a consolidated view of our operating performance to start the remarks. Top line revenue increased 1% sequentially to $146 million. Gross margins improved again this quarter to exceed 37% on a non-GAAP basis. These dynamics expanded the operating margin to 10%. With additional benefits in the tax line from discrete items, net income and EPS grew 11% on a non-GAAP basis. Let's now look at our segment revenue, briefly outlined on Page 4. The sequential growth this quarter was driven by 6% growth in our Global Services line, with an increase in repair services. Life Sciences also provided growth of 2%, driven by delivery of large systems. Brooks Products Solutions declined 1% in total, but there were some moving parts under the covers. So let's turn to Page 5 and look deeper at the Product Solutions segment. Steve mentioned Contamination Control Solutions growth of 53% pushed that business line to $17 million in the quarter and $44 million for the year. Customers operating in nodes below 20-nanometer find Contamination Control to be one of the critical dependencies for yields. We saw an offsetting decline in the quarter for sales of Automation and cryogenic products. In terms of the end markets, this decline was most notable on the 200-millimeter fabs, which had previously climbed through the fiscal year. The gross margin of the Product Solutions business increased 120 basis points from the prior quarter, reflecting improved operational cost and absorption of fixed cost, along with some improved mix. You can see on Page 6 that our Global Services revenue increased 6% from the prior quarter. This was driven by that increased repair…

[Operator Instructions] Our first question comes from the line of Patrick Ho with Stifel, Nicolaus.

Steve, maybe first for you. Since you've seen many of these semiconductor cycles and you've lived through many of them, from a Brooks perspective, you noted that you're ready to turn whenever your customers turn. What are some of the tactics that, I guess, Brooks has taken over the years? How do you manage the supply chain? And what gives you confidence that if the industry suddenly turns positive, that you guys will be ready to meet customer demand?

Yes. Hi, Patrick, thanks. We've -- as you know, I think everybody's tooled the supply chain to be able to react on really short notice. And part of the need for the equipment makers to be able to react quickly is that they give us advance forecast to the best of their knowledge, probably more so than they had at any other time. So we have a really good look in terms of short cycle, both with our suppliers. Our customers understand how much lead time we need. And so they're generally able to give us that information in advance. One of the other things that transpired, particularly with the Tier 1 OEMs, is that, that you keep some inventory. And so they have some kanban capability that we supply and keep filled on a regular basis per their instruction. And so they're allowed to accelerate -- they're able to accelerate, if you will, before we can necessarily turn the whole supply chain on. But generally, it fits together. So all of us are linked that way. I think the relationships from the IC makers, all the way down to our sub suppliers are aligned around short cycle and -- that everybody's worked on over the last 5 years. And I think it's become pretty efficient.

Right. That's helpful. And maybe one Life Science question related to your BioStorage acquisition announced today. One of the things you've talked about is leveraging a lot of the different acquisitions you made like FluidX on the consumable side with the storage systems business you have. Can you give a little bit of color of how the consumables aspect at FluidX can be leveraged with this acquisition?

Yes, Patrick. And that's one of the areas that we see as a tremendous opportunity for synergy here. There hasn't been a push from the BioStorage team's standpoint necessarily to enforce one type of consumable over another. We think that the things that we're doing with PharmaSeq, we think the things that we're doing to improve the sample density and the packing density will enable the combination of Brooks and BioStorage to have offerings expanded to the customers. So in other words, our ability to do some types of events tracking at ultra-low temperatures and the ability to use the maybe higher-density FluidX consumables will provide a benefit to the current customers. So just on a consumables front, we believe that there are tremendous opportunities for synergy. It will take us some time to get there, but the 2 teams will be engaged very shortly on how to do that together. And then beyond that, a lot of the storage -- the storage actually done by BioStorage today is in manual freezers when they do a sample freezing. And we think there are opportunities as well from an Automation standpoint to expand the offering to customers that include both manual freezers and the automated stores that are in our product portfolio.

Our next question comes from the line of Jairam Nathan with Sidoti.

I just wanted to get information on the BioStorage Technology. So are they -- I'm trying to understand where they are in the supply -- on the chain. So are they a customer of yours in the sense they provide outsourced sampling storage?

They're a services provider, Jairam, so they're not a customer of ours. But we have the same -- we share the same customers, if you will. So as we mentioned, that 17 out of the top 20 biopharmaceutical companies are customers of BioStorage and in the past, we've explained to everyone that all 20 of the top pharmaceutical companies have our automated cold stores. But the services that are provided by BioStorage include all sites from some of these large companies. And so they're -- it's actually a deepening in the expansion of the current customer base for both of us when we talk about the big pharma companies.

Okay. And just back to the orders, you said you've got about, from -- for BioStorage III, so you said there were 5 system orders and 20 for the pods. And are they in your backlog -- in your order, the $12.4 million order?

Yes, that's in the backlog. We have not recognized any revenue and the delivery schedule is done in the future. But we will recognize some revenue in this first coming quarter.

Okay. And so what's the -- like is the difference between the pods and the systems that is -- is it the way the revenue is split between Brooks and your JV partner?

Yes, so our sales right now would be an integrated sale. So -- but I would just emphasize to you right now, we'll give you more specifics after we disclose the first quarter actuals on that. And so we have flexibility to make these sales either path, whether it's an integrated sale, or if it's through the channel that our partner chart helps to manage.

Okay. And last question regarding the -- your balance sheet here. So you have $240 million and you would be paying out $127 million or so. So are you comfortable with the balance, cash balance, especially going into a downturn? And is there additional liquidity around?

We're really comfortable, Jairam. It's a great question. And we've been a consistent generator of cash and we expect that to continue. It doesn't mean that we don't look at a potential for a credit line or taking on some debt. So that's a potential. We look at that scenario on a continuous basis. And we're still -- as we acquire more cash, we also look to make more strategic investments for our shareholder and for building our business. So those are all possibilities. But at this point, if you ask me, am I comfortable right now with our cash balance the way we're defined today? We're absolutely comfortable.

Our next question comes from the line of Edwin Mok with Needham & Company.

So first, just a quick -- I guess 2 housekeeping questions, your guidance does not include BioStorage, right? Is that correct? And also, what do you say the revenue was for BioStorage, not last year but the year before that?

Yes. Edwin, you're absolutely right. We've not included anything in our guidance for BioStorage. And this past year, the past 12 months was about $40 million of revenue for them.

And I think you guys provided some comp. You said that they were growing at a certain rate. What was the growth rate?

Yes. We're seeing a growth rate that's better than 20% growth rate for them on an annual basis.

So yes, if I can focus on that number a little bit. You said that there is $150 million worth of a multiyear contract that could be over the next 3 years. And if I use the 50 -- 60% of your revenue coming from those contract as a baseline, it seems like that's a really big number versus the $40 million number that they had reported last 12 months and imply a much higher growth rate than 20%. Can you help me reconcile those maths?

Like I said, it's better than 20% growth rate. We will give you more details, but you're reading it correctly. We hedge just a little bit, but we're really bullish on what that -- what's already under contract and then we can build as even in this coming quarter as we pick them up. So as we close this business, honestly, you can look back over the last 12 months. That's key for us, but our diligence looks deep into the backlog, into the customer relationships and under the contract. And I'll just add to that, Edwin. One of the significant attributes of this business is its services and the stickiness, the loyalty to that revenue streams, the customers. So once the customers put them in to storage, they've loved the company, the service that they provide. It's not all about storage, it's about other services that they provide, including transportation and management and the retrieval of the samples. So all of these are opportunities for the company to generate the revenue stream. But it's a really, really steady repeatable and growth business. So as you add a customer, you keep that customer generally. It's very unusual for somebody to step away.

Great. That is good color. And one last question on BioStorage. Just if I look at that acquisition, also FluidX, right, and then there's clearly some synergy between that and your sample storage equipment business that you guys have. But it seems like the Life Science business is going to be more, like I would say, more about service and consumable and less about capital equipment sale. Is that -- you guys have been working on this for a few years. Is that kind of like the direction that you feel the business is going and that's why you guys are making this acquisition, and that's the direction that you see, where the growth will come from?

Edwin, absolutely. We do believe that's the case. But we've also constructed the hardware, as you say, to be enabling in this regard. So the automated sample stores, our ability to define consumables that particularly ensure the safety of the samples and economic storage of the samples is extremely important. But we've been building out along this cold chain of condition, but we do consider the tools that we provide to be enabling, and among those, especially our ability to expand the offering for the storage and sample management for tissue and cells and things that need to be stored below minus 150-degrees C. So these are enabling technologies that we want to add into the services business. The bulk of the services business today is at storage around minus 70- or minus 80-degrees C. And we think to expand the opportunity with the services included for the extremely cold temperatures down below minus 150 is an expansion opportunity that will be enabled by the hardware products that we brought to market.

That's actually extremely helpful. Going back your cold -- semicon business, I have 2 questions. First is why is CCS down so much in the December quarter? I mean, if 1/3 of your decline come from CCS, that imply a $5 million, $6 million revenue rate for -- in the December quarter. And how do you see that business as you go through calendar 2016?

Sure. I'll help you with the arithmetic a little bit. The CCS business is down a lot because it was certainly up a lot in the fourth quarter. And we shifted into the 16-nanometer and 10-nanometer lines. And so we had foundries that took a lot more product in the fourth quarter and they're down in the December quarter. That's the bulk of the difference. And so we're talking about going from approximately $17 million in that business to something in the $8 million to $9 million range in that business, 1 quarter over the next.

I see. Okay. Great. And then lastly on the semicon business. Steve, like Patrick saying, you've been through a few of these cycles, and I wanted to kind of get your sense about where customers are right now. Are you seeing them reducing inventory of your hardware, resulting in discount? I mean, you guys aren't the only one, but I've got reporting I have 30%-type sequential decline in your semicon business. And do you see that normalizing as you get into the first half of '16 or calendar first half of '16?

Yes. I suppose. We don't -- and we don't think of it so much as the amount of the inventory because they don't -- our customers don't -- during these times, maybe they burn off a little bit. But we actually look at the shipments by our OEM customers, not their revenue. So if an OEM reports revenue down 10%, but shipment is down 20%, you -- our indicator is the shipments from those customers. So revenue comparisons are sometimes a little bit difficult because the pattern of our business is different. So there's some inventory probably, but their forecasts are just generally down and then we cut back production to meet the forecasts that they have.

[Operator Instructions] Our next question comes from the line of Farhan Ahmad with Crédit Suisse.

I have a question on BioStorage. Can you talk about what is the operating and gross margin profile of the business? And if you could provide some quantification around the synergies that you expect.

Yes, Farhan, I really appreciate the question, but at this point, we don't -- we haven't picked them up in and we're just not going to guide on the operating structure right at this point. We have offered to you that they will be accretive very quickly for us as we pick them up. And if you were -- I'll share this, I'll add the color of this, that the margins there we're picking the company up at today are very comparable to our total Brooks margins and that we would expect some improvement in that on the gross margin, but obviously, a lighter structure, and it will be accretive as we pick them up.

And Farhan, in terms of the synergies, that's going to take the time when our teams get together. We have some ideas about the synergies, but until we get together with the BioStorage team and work those out together, it would be premature to communicate. But by the time we're on the call next quarter, we'll be able to give you some very specific thoughts on that.

Mr. Schwartz, there are no further questions at this time. I'll turn the call back to you.

Okay, Cersei, thank you. And thanks, everyone, for your interest in Brooks. We look forward to speaking with you when we report the results from our fiscal 2016 first quarter. Thanks very much.

Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines.