Earnings Call Transcript - AZTA Q1 2021

Operator, Operator

Greetings, and welcome to the Brooks Automation Q1 2021 Financial Results. During the presentation, all participants will be in a listen-only mode. Afterwards, we’ll conduct a question-and-answer session. As a reminder, this conference is being recorded, Tuesday, February 2, 2021. I would now like to turn the conference over to Sara Silverman, Director of Investor Relations. Please go ahead.

Sara Silverman, Director of Investor Relations

Thank you, Malika, and good afternoon to everyone on the line today. We would like to welcome you to our earnings conference call for the first quarter of fiscal year 2021. Our first quarter earnings press release was issued after the close of the market today.

Lindon Robertson, President & CEO

So operator, my apologies, it sounds like we're having a technical difficulty. This is Lindon. Maybe I can continue the remarks here.

Operator, Operator

Thank you.

Lindon Robertson, President & CEO

Maybe they're not hearing us. We're on. What happened? Hello. Maybe we need to get to another phone line.

Steve Schwartz, CEO

Yes.

Lindon Robertson, President & CEO

It seems we are experiencing a technical issue. This is Lindon. I will continue with the remarks here. It appears they may not be able to hear us. What has happened? Perhaps we should switch to another phone line.

Operator, Operator

One moment, please.

Sara Silverman, Director of Investor Relations

Hear me?

Lindon Robertson, President & CEO

You just came back. Are you there?

Sara Silverman, Director of Investor Relations

Yes. Lindon, can you hear me?

Steve Schwartz, CEO

Yes, Sara.

Lindon Robertson, President & CEO

Sara, we hear you now. Malika, my apologies. Here in our conference room, we lost sound and we are unclear on whether that's the transmission of Sara or if it was just our audio here in the room.

Operator, Operator

We will look into that. Ms. Silverman is back. Okay.

Sara Silverman, Director of Investor Relations

Thank you, Malika, and good afternoon to everyone on the line today. We would like to welcome you to our earnings conference call for the first quarter of fiscal year 2021. Our first quarter earnings press release was issued after the close of the market today and is available on our Investor Relations website located at brooks.investorroom.com, in addition to the supplementary PowerPoint slides that will be used during the prepared remarks today. 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 such 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 our Annual Reports on Form 10-K and our quarterly reports on Form 10-Q. We make no obligation to update these statements should future financial data or events occur that differ from the forward-looking statements presented today. We may refer 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 the 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 GAAP measures themselves. On the call with me today is our President and Chief Executive Officer, Steve Schwartz; and Executive Vice President and Chief Financial Officer, Lindon Robertson. We will open the call with remarks from Steve on highlights on the first quarter. Then Lindon will provide a more detailed look into our financial results and our outlook for the second fiscal quarter of 2021. We will then take your questions at the end of the prepared remarks. With that, I would like to turn our call over to our CEO, Steve Schwartz.

Steve Schwartz, CEO

Thank you, Sara, and welcome to Brooks. Good afternoon, everyone. It's great to report on results from another strong quarter. It's hard to believe we're just six weeks away from the one-year anniversary of COVID's initial impacts on the company and how much the world has changed since then. From the moment we became an essential company, we adapted to meet customer demand and maintain growth during this period. This past year has confirmed the need for our technologies, tested our operational capabilities, and demonstrated to our customers that we can meet their new challenges and opportunities, which were numerous. Although we remain in a cautious environment, we are optimistic about our future. Today, I'll discuss results from another record revenue quarter and highlight key drivers that we believe will help us sustain this growth. Lindon will provide insights into a quarter of strong earnings and, more importantly, our robust forecast. Our market opportunity comes from our unique offerings that target high growth, complex applications, where we can differentiate our solutions. We have been intentional about achieving double-digit growth and positioning our unique capabilities to maintain our market share post-pandemic. In Life Sciences, we have effectively addressed the needs of the research and clinical communities managing millions of samples daily with the highest quality. Our biosample offerings are critical in the discovery pipeline. Similarly, our semiconductor products support over 200 essential OEMs and device makers to produce leading-edge semiconductor devices that drive the information edge and enable the next wave of technology, including 5G, high-capacity computing, autonomous vehicles, and the trillions of devices within the interconnected Internet of Things. Our customers in both Life Sciences and Semiconductor markets recognize us for our innovation and reliable execution. I will now provide insights into our business segments, starting with Life Sciences. Life Sciences revenue was $118 million, an increase of 29% year-over-year. In line with our share gain momentum, we added 400 customers in the quarter as we continue to build our reputation for high-quality service and products developed by top scientific and engineering talent. In Services, we saw strong momentum with $73 million in revenue, up 17% year-over-year. Next-generation sequencing reached $20 million in revenue, a 25% increase over Q1 2020, driven by growing volumes from existing customers and new clients attracted to our gene therapy workflow solutions and single-cell analysis capabilities. We recorded significant growth in synthesis capabilities with another record quarter, up 49% year-over-year. Our strong value propositions for antibody discovery and cell and gene therapy support these exciting research fields. We are expanding our gene synthesis capacity in China and the U.S. to meet this strong demand. Our Sanger business, although a mature technology, also grew by 7% year-over-year, remaining vital to discovery and development. In our sample and repository solutions, we experienced strong growth, reaching a rate we haven't seen in a couple of years as we gain new customers in the pharmaceutical and clinical sectors, along with momentum in vaccine-related services. Storage revenue reached record levels. Even without the additional $1.5 million from vaccine-related services, SRS grew more than 20%. We're happy with the positive momentum in the SRS business, bolstered by new business that provides confidence in continued strong performance throughout the year. Specifically, we launched the first phase of a new contract with a large pharmaceutical company, receiving the first tranche of several million samples expected by year-end. In total, we added 24 new SRS customers this quarter. Life Sciences Products had a particularly strong quarter, achieving 50% year-over-year growth to a record $46 million. We gained 100 new customers for consumables and instruments, many coming to us due to a shortage of consumables driven by COVID-19 needs. We expect to retain a significant percentage of these new customers even after the pandemic's impact subsides, driven by our ability to meet their needs and the shift toward automation-capable consumables. We maintained solid market penetration in our automated stores product lines, completing the installation of six BioStore III Cryo units for one customer and serving over 30 customers who purchased multiple systems. Cryostore shipments remain focused on cell and gene therapy applications, with over 75% of units sold for those uses. Our momentum continues to grow, and we expect to see an accelerated ramp in a post-COVID environment. We're pleased with the acceptance of this innovative technology by our customers. Additionally, the backlog for large automated stores is increasing, and projects previously delayed due to the pandemic are set to accelerate in the second half of our fiscal year. Overall, we are witnessing strong demand across all Life Sciences offerings. We're investing to expand our footprint, with five active capacity expansion projects in three countries. We are optimistic about our ability to serve the customers and segments that have driven this growth while also providing more integrated solutions that deliver additional value through streamlined and secure workflows with a single vendor managing critical and complex aspects of their processes. To support this goal, we're excited to announce Linda De Jesus has joined Brooks as Chief Commercial Officer, overseeing commercial activities for all Life Sciences businesses. Linda joined us at the beginning of January and has already positively influenced our go-to-market strategy. Her experience and successful track record from senior roles at Thermo, Agilent, and Waters Corporation bring valuable industry knowledge and global business experience to our executive leadership team as we advance our capabilities for customers. Our Life Sciences business exemplifies exceptional growth. In our last earnings call, we mentioned surpassing $100 million in Life Sciences revenue for the first time, positioning us towards $400 million in annual revenue. Now, we find ourselves in a quarter on pace for a $500 million annualized revenue run rate, a remarkable growth trend we aim to maintain. Now, turning to the Semiconductor business. We continue to benefit from strong capital spending for capacity additions that support the colossal growth in semiconductor devices for mobile communications, high-capacity computing, artificial intelligence, and machine learning, as well as the proliferation of interconnected devices driven by the Internet of Things. Recent spending plans announced by major chipmakers are promising for our outlook, and we are witnessing record levels of orders and backlog, indicating another strong growth year for our Semiconductor business. Our critical technology positions in automation and contamination control are propelling our growth above market rates without signs of slowing. Semiconductor revenue in the quarter was $131 million, an increase of 11% year-over-year. This growth was led by automation products, slightly tempered by contamination control, which while solid, was down compared to our record CCS quarter in Q1 2020. Nevertheless, the Semiconductor markets are thriving, and we continue to outperform as we have in recent years. Our automation revenue, encompassing robots and systems for process equipment, rose 41% year-over-year, supporting Tier 1 and Tier 2 OEMs. This growth is consistent with the segment's expansion and reflects our increased market share from design wins in previous years. Last quarter, we reported a 50% year-over-year growth in automation products, indicating sustained robust growth rather than one-time spikes. Revenue from advanced packaging was also strong, up 3% from Q4 to $18 million, marking a 78% increase year-over-year, as investments rise in both front-end and back-end manufacturing capacity. We expect continued healthy growth in advanced packaging throughout the year. Contamination control had another solid quarter, maintaining high market share for leading-edge capacity additions. Revenue of $29 million was strong, though $15 million below the record revenue of the same quarter last year when there was significant capacity expansion at Tier 1 foundries. Q1 showed robust design win activity and continued share gain. We secured CCS business for a 3-nanometer pilot line and captured EUV pod clean tools from two DRAM manufacturers, marking our first EUV orders for memory. Additionally, we won new customers across Japan, China, and Europe for various applications. Our outlook for CCS suggests a ramp beginning in March, leading to an even stronger June quarter. Our market share remains strong, product development is aggressive, and we continue to win new share at next-generation nodes. We expect to capitalize on upcoming opportunities. Overall, the Semiconductor business is thriving, set for a prolonged and strong growth phase, not just in communications and computing but also in its essential role in transitioning from fossil fuels to sustainable energy sources and advancing electrification efforts. These catalysts drive our business, and we collaborate with equipment and device makers to ensure our capabilities meet these demands. In Q1, we demonstrated another quarter of double-digit growth from our two strong businesses, with ongoing prospects for continued outperformance. We hold a sustainable competitive edge through our application of science and engineering, along with our close connections to customers addressing their critical needs. Our focus is clear, our markets are strong, and we’re forming trusted relationships that deepen with each fulfillment and breakthrough. We are off to a strong start in 2021 and look forward to delivering more in the upcoming quarters. That concludes my formal remarks for the quarter, and I’ll now turn the call over to Lindon.

Lindon Robertson, CFO

Thank you, Steve. I call your attention to the slides on our website and we’ll begin with a summary highlights on Slide 3. Q1 was indeed another strong quarter. Revenue grew 19% year-over-year, driven by strong double-digit growth in both businesses. With 29% growth in Life Sciences and 11% growth in Semiconductor Solutions, we have added $39 million of additional revenue to the top line over the same quarter last year. Of course, with this level of revenue growth and a business model with profit leverage, you will see significant momentum in earnings. Non-GAAP earnings per share was $0.47, up 108% year-over-year. And under this, you’ll see significantly improved gross margins that are 470 basis points higher than a year earlier. A key point to highlight is that Life Sciences sustained 50% gross margin again. Cash flows also certainly a highlight of $44 million in cash from operations for the quarter and in fact, it’s a record for us for any first quarter when we pay out our variable compensation. Let’s move now on to Slide 4 for details of the first quarter. With revenue up 1% sequentially and 19% year-over-year, the GAAP earnings per share from continuing operations was $0.36. Referring over to the non-GAAP results on the right side of the page, you can see earnings per share for the quarter came in at $0.47. More than double last year’s results, gross margins at 46.3% expanded that 470 basis points that I’ve just highlighted, driven by 590 basis points improvement in Life Sciences and also supported by Semi with 320 basis points improvement year-over-year. The increase in operating expense reflects investments in R&D, driven by engineering projects in the Semiconductor Solutions and in SG&A with additional headcount, incremental structure from acquisitions and higher variable compensation accruals across the company. The revenue growth and gross margin expansion drove operating income up 99%, operating margins of 17.5%, up 710 basis points year-over-year and adjusted EBITDA margin was 23.2%, up 800 basis points. Below the operating income line, you’ll see favorable benefit shows up in the FX line compared to a loss a year earlier and the non-GAAP tax rate in the quarter was 22%. When you combine it all, we saw that 108% growth in the non-GAAP earnings per share. So now let’s please turn over to Page 5 for the results in our Life Science business. In the first quarter, our Life Science business generated revenue of $118 million, an increase of 29% when compared with Q1 2020 and 9% sequentially. As noted on the chart, the organic growth of the business was 32% year-over-year. We estimate revenue had a net positive impact from COVID-related demand of approximately $10 million in the quarter with the primary driver being our consumables and instruments business. If we were to exclude this, the organic growth would be approximately 20% year-over-year. The Products business grew a significant 53% year-over-year, driven by continued strong demand in the consumables and instruments. A portion of this growth, as I said, is driven by demand of our PCR plates, automation-capable tubes and automation instruments, all of which have been in high demand in the COVID research environment. Life Science Services business, excluding the Alliance revenue, grew 28% year-over-year. This business is comprised of GENEWIZ and our sample repository solutions offerings. The GENEWIZ business grew 28% year-over-year and accelerated 7% quarter-over-quarter on a sequential basis, driven primarily by continued strength in NGS and synthesis demand. Excluding the alliance revenue stream, sample repository services was up 29% year-over-year. The growth was led by storage services and informatics. Now for gross margin, at 50.2% for the quarter, we are higher by 590 basis points year-over-year. Exiting the Alliance contract did contribute 210 basis points favorable mix benefit and the remaining 380 basis point increase came from improved performance of the current portfolio. The Life Science Products business gross margin was 45.7%, up 310 basis point improvement year-over-year, again driven primarily by the strength in consumables and instruments. And the Life Science Services business provided 53.1% gross margin in the quarter, up 790 basis points year-over-year, driven by volume leverage in GENEWIZ and the mix benefit of exiting the Alliance. The Services business includes approximately $2 million of revenue from the two recent acquisitions, the informatics business acquired in February 2020 and the sample procurement services business acquired in December, both of which carry higher than average gross margin. In total, the Q1 operating margin of 18.8% expanded 12 percentage points over last year. As we look into the second quarter of 2021, we expect Life Sciences revenue to be in the range of $120 million to $128 million. This range indicates another $2 million to $10 million of revenue expansion from this quarter and will support approximately 25% to 35% growth year-over-year. Let’s turn to the Semiconductor business on Slide 6. Semiconductor Solutions revenue of $131 million in the quarter increased 11% compared to the first quarter of 2020 and was down 5% sequentially. As Steve noted, the automation products grew 41% year-over-year. Within this group of products, the vacuum automation portion, including robots and systems, grew 57%. Revenue in our Contamination Controls business was down 34% year-over-year, consistent with the expectations for the quarter and Services business was actually up 15% year-over-year. Semiconductor operating margins were 16.4%, up 380 basis points year-over-year, but down a similar amount sequentially. Gross margins remained strong at 42.8%, up 320 basis points compared with last year, driven in part by favorable mix to higher margin vacuum automation and by improved cost absorption. Operating expense growth was driven by R&D and variable compensation accruals. We look forward, I’m sorry – we look toward our second fiscal quarter of 2021 and we expect Semiconductor revenue to be in the range of $147 million to $155 million. Now this would be another $16 million to $24 million of revenue expansion sequentially and supports year-over-year growth of 18% to 25%. So let’s turn over to Slide 7 for the summary of cash flow for the quarter. Operating cash flow in the first quarter was $44 million. As I referenced in the highlights, this is a historical high for our first quarter in which we pay out or annual variable comp. The profit leverage to drive higher EBITDA with the growth of the business is evident and is converting to cash flow. When I reflect in the past year, excluding the taxes paid on the gain on the sale of the Cryopump business, we’ve generated an adjusted operating cash flow of $147 million on a trailing 12 months basis. We used approximately $15 million in this quarter for CapEx and includes $5 million for the GENEWIZ China building project, so about $10 million on an operational CapEx basis. We paid $7 million of dividends to shareholders in the quarter. So let’s turn over to Slide 8 for a quick view of the balance sheet. Working capital was stable, even while current assets increased to support growth. The deferred revenue was driven upward by advanced billings on new large store systems. At the end of the first quarter, we had $323 million of cash, restricted cash, marketable securities. This is an increase of $17 million. With debt stable at $50 million, we finished the quarter with $272 million of net cash, which was also up the same $17 million. Let’s turn to Slide 9 of our guidance for the second quarter of 2021. Revenue is expected to be in the range of $267 million to $283 million. With that, Semiconductor revenue, again, expected to be in the range of $147 million to $155 million and Life Science revenue expected to be in the range of $120 million to $128 million. Adjusted EBITDA is anticipated $58 million to $67 million and non-GAAP earnings per share expected to be $0.48 to $0.57 per share. Meanwhile, the GAAP earnings per share is expected to be $0.33 to $0.42. Now as we have wrapped up our prepared remarks, let me take a moment to acknowledge Sara Silverman, our new Director of Investor Relations and my apologies to Sara for the splash that we created there with the technical difficulties on her first call. But she joined us in January, began nicely bringing in experience from the sell side, operational treasury experience, and been really pleased with the partnering very closely with me through this cycle, and I know each of you can look forward, as she is, to interacting with you on the investor front. So you can find her contact information on today’s press release as well as on our website, on the Investor site of our website. So this concludes our prepared remarks. I’ll now turn the call back over to Malika to take questions from the line.

Operator, Operator

Thank you. Our first phone question is from Jacob Johnson with Stephens, Inc. Please go ahead, your line is now open.

Jacob Johnson, Analyst

Hey, thanks for taking the questions and congrats on the quarters or on the quarter. Maybe first question just on the consumables and instruments side of things, obviously, that business has been performing really strong recently. It sounds like there has been some benefit from COVID. But Steve, from your comments, it also sounds like you think this revenue growth will be durable. So maybe can you first comment on the near-term outlook for C&I and then maybe expand on your comments around the durability of those revenues?

Steve Schwartz, CEO

Sure. Jacob, thanks. We’re able to bring capacity online. So one of the reasons you say the demand has been strong since the earliest days of the pandemic. We worked pretty hard to bring on some more sourcing so that we are able to have more capacity. So you’re – I think the demand has been sustained and our ability to serve is what’s helped us to drive the business. And in terms of the durability of the business, we have yet to prove it. But what we find is that a lot of the consumables and instruments customers aren’t necessarily coming to us for COVID-specific things, but they just don’t have the source that they might have had in the past. And we believe that because of the number of instruments that remain at a relatively high level we can tell that the lines – the workflow lines are becoming more automated. So we do believe there is a shift here that’s been accelerated by the COVID environment, where some of the workflow lines are extremely high volume and can no longer be done in a manual fashion. I think that’s converting a lot more people to automated workflows. And we do believe that at least we’ll be able to sustain. We hope a significant number of the customers who come to us, who started to use our instruments and our automatable tubes and we think that will be sustainable. We’re going in another year to prove that out, but we feel pretty confident that the customers we have are really high-quality customers that we intend to have for a long time.

Jacob Johnson, Analyst

Got it, got it. That’s helpful. And then, Steve, you also – I heard you talk about cell and gene therapy a couple of times, I think, regarding a couple of different business lines. I don’t know if you guys have numbers, but maybe can you just update us on the revenues you are generating from the cell and gene therapy end market or any other kind of color you want to give around that end market?

Steve Schwartz, CEO

So, Jacob, it’s the moment – it’s a question that is – it’s a really good question. We don’t have all the precision that we want. When we track it on a like-for-like basis, we see 20% and 30% growth in the cell and gene therapy, but I won’t say that we’re 100% confident we’re capturing everything nor with the precision that we opt to. So, to give you an idea, these are numbers bright by our calculations that are roughly in the $6 million, $7 million a quarter and that’s up 20%, 30% from what it was a year ago. But we’ll keep working on this one. But it gives you an idea of the magnitude here. It’s healthy, but we think there’s a lot more upside here.

Jacob Johnson, Analyst

Got it. Congrats on the quarter. Thanks for taking the questions.

Steve Schwartz, CEO

Thanks, Jacob.

Lindon Robertson, CFO

Thanks, Jacob.

Operator, Operator

Thank you. And our next question is from the line of Patrick Ho with Stifel. Please go ahead. Your line is open.

Patrick Ho, Analyst

Thank you very much and a belated Happy New Year and congrats on the nice quarter. Steve, maybe first off on the Semiconductor side. I think you mentioned in your prepared remarks about the strength, particularly with your top Tier 1 and 2 OEMs, they’re traditionally going to more advanced nodes and more advanced device structures, turns you usually see more advanced packaging type of techniques, how are you seeing the front end shifts to these more advanced nodes driving advanced packaging particularly on year end will you made a lot of inroads in terms of share wins?

Steve Schwartz, CEO

Well, there is a lot packed into that. Patrick, let me try a couple of things. One of the things that we observed is there has been a much faster shift from our market-leading MagnaTran 7 and MagnaTran 8 product lines. These are products that have been in the market now for more than a decade. We launched – less than two years ago we launched the MagnaTran Leap, which is a next-generation vacuum automation capability that takes us down below – at 7 nanometer and below. And the speed with which customers have transformed to this new model has been way beyond our expectations. And I give you an idea, in the September quarter to the December quarter, we shipped 4 times as many units of the MagnaTran Leap as we did – in December as we did in September and it surpassed the number of MagnaTran 7 and MagnaTran 8 robot. So it was a – it’s an overwhelming shift. And so we know the demands are there. We know the capabilities that we brought are really significant. What we see on the advanced packaging side are related. Now more than just handling a complex substrate, we see the same kinds of low contaminant, high-precision handling requirements in advanced packaging that we used to see only in the front-end. So we’re seeing more challenging environment and it’s just a continued strong demand for the products that there’s not a lot of overlap. There’s not a – we don’t see as much Tier 1 in the advanced packaging as we do Tier 2, but the breadth of the Tier 2 players and they do spend front-end and back-end advanced packaging much more so than we had even two years ago.

Patrick Ho, Analyst

Great. That’s helpful. And maybe as my follow-up question, you had really strong business trends on the services side in Life Sciences. And I think you mentioned a lot of the GENEWIZ opportunities that you saw during the quarter. Can you give just a little more color on the sample storage management services business, whether anything COVID-related or additional biopharma potential uses of the sample management services in this type of environment?

Steve Schwartz, CEO

Sure, Patrick. So we – generally we had good increase in the amount of storage. You think everyone’s aware for the past 18 months, we’ve had a pretty significant effort on the what used to be called the BioStorage business on our ability to continue to capture more collections and to enhance the storage capacity and capability in customers and I think we’ve been very successful there. On the COVID-related activities, indeed not just from a vaccine standpoint, but with six different companies, we’ve now begun to store the COVID positive samples. And so managing those collections has been a new and interesting challenge for us. And even in the most recent quarter, we started to have opportunities for automated stores, where the samples from patients will be taken and later when they're deemed to be positive or negative, those samples are then sorted out and so we're using automated stores for that purpose too. So across the portfolio, on the sample management side, we're seeing different opportunities to help to deal with the COVID sample. So it's a breadth of capabilities and a breadth of opportunities. I won't say any one of them is moving a couple of million dollars at a time, but they are significant in our ability to adapt our products and services to serve those immediate applications has been really strong so far.

Patrick Ho, Analyst

Great. And maybe final question for Lindon in terms of cash flow generation or the outlook as you go into 2021. With a strong Semi environment, with the Life Sciences business now also starting to turn positive, especially on the upward momentum side of things, how do you look at cash flow generation given the working capital metrics look very good? Is this a potentially record-setting year in cash flow generation for the company?

Lindon Robertson, CFO

Yes, Patrick, that's exactly what we expect. And I think the last two quarters, if you look at the two quarters, Q4 and Q1 combined, we're just a few million short of $100 million in that last six months. I think you're seeing indicative capability of the business going forward. So we're quite pleased about that. It's converting to cash. It's fueling our ability to invest, not just organically, but to put some on our balance sheet for potential M&A as well. And so we're really pleased with that.

Patrick Ho, Analyst

Great. Thank you very much.

Lindon Robertson, CFO

Yes. Thanks, Patrick. Appreciate the call.

Operator, Operator

Our next question is from Paul Knight with KeyBanc. Please go ahead. Your line is open.

Paul Knight, Analyst

Hey, Lindon, what was organic growth? What was FX impact in the quarter?

Lindon Robertson, CFO

Paul, give me a second. It was a couple of million, but it will break that out in our 10-Q. Let me say this, you'll see it in the 10-Q broken out when it's filed, but it's a modest impact.

Paul Knight, Analyst

Did you talk to COVID impact, Steve?

Steve Schwartz, CEO

No, we didn't talk to COVID impact.

Lindon Robertson, CFO

Right. What I highlighted was I had roughly about $10 million of positive tailwinds in the Life Sciences business in the quarter. And I have mentioned that it was substantially driven by the consumables and instruments.

Paul Knight, Analyst

Around COVID, Lindon?

Lindon Robertson, CFO

Yes, that's right. Consumables and instruments, automation is a piece of that, but we had supply capabilities, where others didn't, and we also saw an attraction for high volumes driving a desire for automation capability and the tubes that we produce work in temperatures all the way to minus 190 and have automation-ready caps, barcodes on the side, 2D barcodes on the bottom, which is not necessarily an industry standard, it's a little bit of a differentiation. So capability there is quite strong, and this is why, as we highlighted, we've picked up more than 100 customers in the quarter and some of those undoubtedly were COVID-based customers that weren't finding supply other places and our aim is to delight those customers with the experience they have with us. So we expect we're going to keep them, particularly with the automation capabilities.

Paul Knight, Analyst

Why you would…

Steve Schwartz, CEO

Paul, I want to make sure that we're clear on this one too. We have some of those C&I customers who might be buying consumables from us that are not for COVID, because COVID is always the first priority. So if we have a customer who needs something for COVID, they get the first priority. But if they could no longer get some of their consumables because another supplier had prioritized COVID and they can buy another tube from us for their continued research, we count that in COVID-related demand that came our way.

Paul Knight, Analyst

Right. And then lastly regarding GENEWIZ, the expansion in China, where specifically, what's the square footage, what's potential contribution and timing thereof?

Lindon Robertson, CFO

Yes. I want to emphasize that this is a large building size. It will replace our existing four lease bases in Suzhou, China, and will nearly double our capacity in the first phase. Suzhou is currently our second largest operational site in terms of capabilities, following our New Jersey site. Furthermore, we have the option and a strong possibility to add another building on the same property in two more years as part of Phase 2, which will significantly increase our capacity. It's also worth noting that Suzhou is often referred to as the Cambridge of China due to its concentration of life sciences. The area is rich in life science companies and offers excellent resources and infrastructure. We are very pleased with this development and anticipate that the building will be operational by the end of this calendar year or sooner.

Paul Knight, Analyst

Okay. Thank you very much.

Lindon Robertson, CFO

You bet. Thanks, Paul.

Operator, Operator

Thank you. And there are no further questions. I would like to turn the call back over to Lindon Robertson for any closing remarks. Thank you.

Lindon Robertson, CFO

Thank you, Malika. And to everyone, we feel very fortunate in the businesses we have positioned ourselves with, especially in this environment. We are continually refining the business. You have seen the acquisitions we made last quarter, and we are maintaining the same level of rigor in our investments. We are also growing the business organically, which is reflected in our results, and we are very pleased with our leverage model. We are excited about the future, particularly on the Semiconductor side, which appears to be a promising environment. On the Life Sciences side, we are not only contributing to addressing COVID challenges but also experiencing growth in the exciting areas of cell and gene therapy and other research initiatives. We view ourselves as essential in both fields, and we have been fortunate that authorities worldwide have recognized us as vital and essential during this time. We are looking forward to delivering another quarter of results as discussed, and we anticipate further engagement with you throughout the quarter and during next quarter's earnings call. Thank you all for your participation.

Operator, Operator

Thank you, ladies and gentlemen. That does conclude today's call. We thank you for your participation and ask that you please disconnect your lines.