Brooks Automation's CEO Presents At Citi Technology Conference (Transcript)

Brooks Automation Inc. (BRKS)

Citi Technology Conference Call

September 04, 2012, 03:45 pm ET


Steve Schwartz - President & CEO

Martin Headley - EVP & CFO


Atif Malik - Citigroup


Atif Malik - Citigroup

Let’s get started here. My name is Atif Malik. I am part of the specialty semiconductors at (inaudible) team at Citi. It's my pleasure to welcome Steve Schwartz, CEO of Brooks Automation and Martin Headley, CFO at Brooks Automation. Steve is going to give a presentation on the company and then we're going to have a Q&A session. Steve?

Steve Schwartz

Thanks very much. I will just give a brief presentation. Actually, Martin and I will share the duties here. We will step quickly through just to give you an update on things that are going on at Brooks. Really wanted to highlight pretty significant growth opportunities here at Brooks and very specifically the means by which we are going about growing the company and I think you will see very different from who we’ve been and where we’ve been over the past couple of years.

First, I want to talk about things that are unique growth opportunities for Brooks. One, we have a very significant market position, market presence in and around semiconductor and adjacent space. These are things related to automation, the creation and monitoring of vacuum capabilities, that are essential for semiconductor and for what we call adjacent spaces and at the same time the expansion of what we call adjacent spaces that is MEMS systems, LED, the OLED and the wafer backend provides some pretty unique growth opportunities, so that we can participate.

We will also be participating in very high growth market segments and finally I would like to spend a little bit of time talking about the developing markets related to life sciences, where there is a convergence of automation and cryogenics, two core technical capabilities for the company that provide an opportunity to manage the cold compound and biological storage of samples that are essential to the development of personalized medicines.

So we have a very unique spot in a rapidly growing market, taking core capabilities from the semiconductor and adjacent space in to life sciences. This is an exciting area for the company and I think we have made great strides just one year in to the business.

So very specifically, in and around the semiconductor and the core businesses for the company, we participate in available market of about $1.5 billion and we have about 30% market share. The capabilities for the company are around robotics, both atmospheric and vacuum handling robotics, the creation of vacuum by cryogenics and we have cryochillers that are used to create vacuums in much larger spaces than are required for semiconductor and those are things that are related to active displays for tablets and mobile devices if you will.

We have capability of vacuum instruments, a very high gross margin business, a very profitable vacuum instruments in Longmont, Colorado and we are a significant global service capability around the world that between the life sciences and the core businesses for the company is running now more than $90 million per year for service and support.

We add to that this new market segment I mentioned earlier, Automated Sample Management, it’s market size right now about a $150 million. So it's relatively small market growing at approximately 20% per year. We have market share today of about 40% that we're winning almost 60% of the new opportunities to come. So we fully anticipated that as we continue to participate in this business, as we develop new products that organically that we will be able to grow our position in this market in this fast growing market by at least 20% per year.

Let me spend a moment now talking about the key drivers in the core businesses for the company, that is the semiconductor and adjacent space. Every time there is semiconductor content, semiconductor front end we participated in the ways that we always have for Brooks for automation and for vacuum capability.

When we look at the adjacent spaces, the form factor actually has a very big impact for us. So we have the semiconductor content whether it's on a laptop or a PC or a tablet, but when we talk about the mobility aspect of this, when we talk about the display, we have applications related to vacuum for the coating of the display, when the accelerometer keeps the image upright. We have MEMS devices that we participate in. For the lighting of the screens, we have LED applications and so when we look at the semiconductor content, we are participants just like we used to be.

But when we talk about the mobility capability here, it adds significant amount of growth opportunity for the company and in particular when we talk about the things that we do with robotics and with cryogenics, everyone of the adjacent spaces gives us additional opportunities.

So when we look at a $1.5 billion [same], when we look at the growth opportunities that exist over the next three years, that will be incremental approximately $300 million of opportunities associated with the adjacent spaces.

We also see that there is a longer-term opportunity that exists in the move to wafer shift from 300 millimeters diameter to 450 millimeter as this is a pretty abrupt discontinuity in terms of the automation, in terms of the requirements of the systems of the robotics and of the cryogenics, it will require new products in every area and at the EUV lithography, although it’s difficult for us to say exactly what the incremental opportunities will be, we know that from a cleanliness standpoint that it might provide the opportunity for an increase in vacuum requirements.

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