Azenta, Inc 10-Q for FY2020 Q3

Azenta, Inc. (AZTA)

10-Q 2020-07-31 For: 2020-06-30

Added on April 09, 2026

About this 10-Q

Azenta, Inc filed this 10-Q on July 31, 2020, covering the quarter ended June 30, 2020 (FY2020 Q3).

Headline figures

Quarter ended June 30, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $220.35M; up 8.1% from $203.88M a year earlier
Net income: $13.7M; up 88.8% from net income of $7.25M a year earlier
Diluted EPS: $0.19; up 90.0% from $0.10 a year earlier

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☒	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

	For the quarterly period ended: June 30, 2020

	OR

☐	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934


Delaware	04-3040660
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	BRKS	The Nasdaq Stock Market LLC


Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

Emerging growth company	☐

	PAGE NUMBER

PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets as of June 30, 2020 (unaudited) and September 30, 2019	3
Consolidated Statements of Operations for the three and nine months ended June 30, 2020 and 2019 (unaudited)	4
Consolidated Statements of Comprehensive Income for the three and nine months ended June 30, 2020 and 2019 (unaudited)	5
Consolidated Statements of Cash Flows for the nine months ended June 30, 2020 and 2019 (unaudited)	6
Consolidated Statements of Changes in Equity for the nine months ended June 30, 2020 and 2019 (unaudited)	7
Notes to Consolidated Financial Statements (unaudited)	8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	36
Item 3. Quantitative and Qualitative Disclosures About Market Risk	49
Item 4. Controls and Procedures	51
PART II. OTHER INFORMATION
Item 1. Legal Proceedings	53
Item 1A. Risk Factors	53
Item 6. Exhibits	55
Signatures	56


	June 30,		September 30,
	2020		2019
Assets
Current assets
Cash and cash equivalents	$	256,633	$	301,642
Marketable securities		136		34,124
Accounts receivable, net		183,167		165,602
Inventories		117,686		99,445
Prepaid expenses and other current assets		44,389		46,332
Total current assets		602,011		647,145
Property, plant and equipment, net		111,416		100,669
Long-term marketable securities		2,939		2,845
Long-term deferred tax assets		3,489		5,064
Goodwill		500,062		488,602
Intangible assets, net		226,623		251,168
Other assets		57,377		20,506
Total assets	$	1,503,917	$	1,515,999
Liabilities and Stockholders' Equity
Current liabilities
Current portion of long-term debt	$	828	$	829
Accounts payable		70,344		58,919
Deferred revenue		31,162		29,435
Accrued warranty and retrofit costs		7,881		7,175
Accrued compensation and benefits		33,847		31,375
Accrued restructuring costs		437		1,040
Accrued income taxes payable		16,253		99,263
Accrued expenses and other current liabilities		45,053		44,234
Total current liabilities		205,805		272,270
Long-term debt		49,563		50,315
Long-term tax reserves		19,609		18,274
Long-term deferred tax liabilities		10,613		20,636
Long-term pension liabilities		5,724		5,338
Long-term operating lease liabilities		29,280		—
Other long-term liabilities		8,470		10,212
Total liabilities		329,064		377,045
Commitments and contingencies (Note 17)
Stockholders' Equity
Preferred stock, $0.01 par value - 1,000,000 shares authorized, no shares issued or outstanding		—		—
Common stock, $0.01 par value - 125,000,000 shares authorized, 87,222,115 shares issued and 73,760,246 shares outstanding at June 30, 2020, 85,759,700 shares issued and 72,297,831 shares outstanding at September 30, 2019		872		857
Additional paid-in capital		1,936,619		1,921,954
Accumulated other comprehensive income		10,977		3,511
Treasury stock, at cost- 13,461,869 shares		(200,956)		(200,956)
Accumulated deficit		(572,659)		(586,412)
Total stockholders' equity		1,174,853		1,138,954
Total liabilities and stockholders' equity	$	1,503,917	$	1,515,999


	Three Months Ended				Nine Months Ended
	June 30,				June 30,
	2020		2019		2020		2019

Revenue
Products	$	142,323	$	128,397	$	413,329	$	381,827
Services		78,027		75,483		237,748		199,810
Total revenue		220,350		203,880		651,077		581,637
Cost of revenue
Products		81,989		77,203		245,930		229,580
Services		45,573		43,167		137,092		115,951
Total cost of revenue		127,562		120,370		383,022		345,531
Gross profit		92,788		83,510		268,055		236,106
Operating expenses
Research and development		14,004		14,235		43,727		41,485
Selling, general and administrative		59,714		52,596		178,866		158,509
Restructuring charges		(29)		256		1,125		685
Total operating expenses		73,689		67,087		223,718		200,679
Operating income		19,099		16,423		44,337		35,427
Interest income		29		108		865		847
Interest expense		(810)		(8,041)		(2,265)		(21,348)
Loss on extinguishment of debt		—		—		—		(9,051)
Other income (expenses), net		498		(309)		(1,318)		(1,116)
Income before income taxes		18,816		8,181		41,619		4,759
Income tax provision		5,120		7,260		5,557		400
Income from continuing operations		13,696		921		36,062		4,359
Income (loss) from discontinued operations, net of tax		—		6,333		(182)		20,731
Net income	$	13,696	$	7,254	$	35,880	$	25,090
Basic net income per share:
Income from continuing operations	$	0.19	$	0.01	$	0.49	$	0.06
Income (loss) from discontinued operations, net of tax		—		0.09		(0.00)		0.29
Basic net income per share	$	0.19	$	0.10	$	0.49	$	0.35
Diluted net income per share:
Income from continuing operations	$	0.19	$	0.01	$	0.49	$	0.06
Income (loss) from discontinued operations, net of tax		—		0.09		(0.00)		0.29
Diluted net income per share	$	0.19	$	0.10	$	0.49	$	0.35
Weighted average shares used in computing net income per share:
Basic		73,759		72,188		73,473		71,903
Diluted		73,860		72,470		73,766		72,313




		Common				Accumulated
	Common	Stock at		Additional		Other
	Stock	Par		Paid-In		Comprehensive		Accumulated		Treasury		Total
	Shares	Value		Capital		Income		Deficit		Stock		Equity

	(In thousands, except share data)
Balance September 30, 2018	84,164,130	$	841	$	1,898,434	$	13,587	$	(994,074)	$	(200,956)	$	717,832
Shares issued under restricted stock and purchase plans, net	1,517,144		16		1,532								1,548
Stock-based compensation					15,172								15,172
Common stock dividends declared, at $0.30 per share									(21,656)				(21,656)
Foreign currency translation adjustments							888						888
Changes in unrealized gains on marketable securities, net of tax effects of $0							111						111
Net income							—		25,090				25,090
Cumulative effect of adoption of ASC 606									(859)				(859)
Balance June 30, 2019	85,681,274	$	857	$	1,915,138	$	14,586	$	(991,499)	$	(200,956)	$	738,126

Balance September 30, 2019	85,759,700	$	857	$	1,921,954	$	3,511	$	(586,412)	$	(200,956)	$	1,138,954
Shares issued under restricted stock and purchase plans, net	1,462,415		15		2,317								2,332
Stock-based compensation					12,348								12,348
Common stock dividends declared, at $0.30 per share									(22,127)				(22,127)
Foreign currency translation adjustments							7,484						7,484
Changes in unrealized losses on marketable securities, net of tax effects of $0							7						7
Actuarial losses, net of tax effects of $4							(25)						(25)
Net income									35,880				35,880
Balance June 30, 2020	87,222,115	$	872	$	1,936,619	$	10,977	$	(572,659)	$	(200,956)	$	1,174,853



	Three Months Ended June 30,			Nine Months Ended June 30,
	2019		2020		2019
Revenue
Products	$	23,546	$	-	$	76,227
Services		10,994		-		33,291
Total revenue		34,540		-		109,518
Cost of revenue
Products		15,451		-		47,148
Services		6,288		-		19,016
Total cost of revenue		21,739		-		66,164
Gross profit		12,801		-		43,354
Operating expenses
Research and development		2,279		-		6,605
Selling, general and administrative		4,808		(171)		17,005
Restructuring charges		24				24
Total operating expenses		7,111		(171)		23,634
Operating income		5,690		171		19,720
Other income (loss), net		418		(410)		985
Income (loss) before income taxes and earnings of equity method investment		6,108		(239)		20,705
Income tax provision (benefit)		1,610		(57)		4,850
Income (loss) before equity in earnings of equity method investment		4,498		(182)		15,855
Equity in earnings of equity method investment		1,835		-		4,876
Net income (loss)	$	6,333	$	(182)	$	20,731


	Three Months Ended		Nine months ended
	June 30, 2019		June 30, 2019
Statements of Operations:
Total revenue	$	23,209	$	68,252
Gross profit		9,905		27,134
Operating Income		5,267		14,476
Net income		3,674		9,777


			Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Losses		Gains		Fair Value
June 30, 2020:
Bank certificates of deposits	$	101	$	—	$	—	$	101
Corporate securities		2,939		—		—		2,939
Other debt securities		35		—		—		35
	$	3,075	$	—	$	—	$	3,075
September 30, 2019:
U.S. Treasury securities and obligations of U.S. government agencies	$	31,863	$	(2)	$	5	$	31,866
Bank certificates of deposits		750		—		—		750
Corporate securities		4,317		—		1		4,318
Other debt securities		35		—		—		35
	$	36,965	$	(2)	$	6	$	36,969


	Fair Value
Due in one year or less	$	136
Due after one year through five years		—
Due after five years through ten years		—
Due after ten years		2,939
Total marketable securities	$	3,075


	Fair Value of
	Assets and
	Liabilities
Accounts receivable	$	1,220
Prepaid expenses and other current assets		29
Goodwill		11,116
Intangible assets		6,042
Other assets		230
Accounts payable		(15)
Deferred revenue		(1,320)
Accrued compensation and benefits		(344)
Other current liabilities		(91)
Long-term deferred tax liabilities		(1,091)
Long-term operating lease liabilities		(147)
Total purchase price, net of cash acquired	$	15,629


	Brooks
	Semiconductor
	Solutions		Brooks
	Group		Life Sciences		Other		Total
Gross goodwill, at September 30, 2019	$	636,791	$	440,755	$	26,014	$	1,103,560
Accumulated goodwill impairments		(588,944)		—		(26,014)		(614,958)
Goodwill, net of accumulated impairments, at September 30, 2019		47,847		440,755		—		488,602
Acquisitions and adjustments		316		11,144		—		11,460
Gross goodwill, at June 30, 2020		637,107		451,899		26,014		1,115,020
Accumulated goodwill impairments		(588,944)		—		(26,014)		(614,958)
Goodwill, net of accumulated impairments, at June 30, 2020	$	48,163	$	451,899	$	—	$	500,062


	June 30, 2020						September 30, 2019
			Accumulated		Net Book				Accumulated		Net Book
	Cost		Amortization		Value		Cost		Amortization		Value
Patents	$	8,251	$	5,013	$	3,238	$	5,302	$	4,628	$	674
Completed technology		88,736		46,504		42,232		88,288		38,778		49,510
Trademarks and trade names		25,604		8,425		17,179		25,340		5,807		19,533
Customer relationships		268,913		104,942		163,971		265,450		84,047		181,403
Other intangibles		236		233		3		231		183		48
	$	391,740	$	165,117	$	226,623	$	384,611	$	133,443	$	251,168


	Nine Months Ended
	June 30,
	2020		2019
Cash flows from operating activities
Net income	$	35,880	$	25,090
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		49,760		40,429
Impairment of property, plant and equipment		301		—
Stock-based compensation		12,348		15,172
Amortization of premium on marketable securities and deferred financing costs		177		766
Earnings of equity method investments		—		(4,876)
Deferred income taxes		(9,319)		(9,207)
Loss on extinguishment of debt		—		9,051
Other losses on disposals of assets		163		156
Loss on sale of divestiture, net of tax		319		—
Taxes paid stemming from divestiture		(91,500)		—
Changes in operating assets and liabilities, net of acquisitions and divestiture:
Accounts receivable		(15,719)		(6,456)
Inventories		(17,695)		(6,431)
Prepaid expenses and other assets		12,554		2,109
Accounts payable		11,032		(6,761)
Deferred revenue		214		4,959
Accrued warranty and retrofit costs		580		1,022
Accrued compensation and tax withholdings		1,928		(9,404)
Accrued restructuring costs		(609)		(361)
Proceeds from recovery on insurance claim		—		1,082
Accrued expenses and other liabilities		(4,347)		1,901
Net cash (used in) provided by operating activities		(13,933)		58,241
Cash flows from investing activities
Purchases of property, plant and equipment		(29,685)		(15,548)
Purchases of marketable securities		(10,843)		(1,290)
Sales of marketable securities		2,492		48,904
Maturities of marketable securities		42,226		2,557
Acquisitions, net of cash acquired		(15,743)		(442,704)
Issuance of a note receivable		(1,000)		—
Net cash used in investing activities		(12,553)		(408,081)
Cash flows from financing activities
Proceeds from term loans, net of discount		—		686,386
Proceeds from issuance of common stock		2,332		1,548


Fiscal year ended September 30,
2020	$	10,454
2021		38,714
2022		35,459
2023		32,170
2024		27,211
Thereafter		82,615
	$	226,623


	Operating Leases		Finance Leases
2020	$	2,123	$	322
2021		7,259		1,171
2022		5,491		363
2023		4,445		-
2024		4,229		-
Thereafter		20,180		-
Total future lease payments		43,727		1,856
Less imputed interest		(7,990)		(74)
Total lease liability balance	$	35,737	$	1,782


	Operating Leases		Capital Leases
2020	$	6,794	$	1,276
2021		5,520		1,171
2022		3,904		363
2023		3,110		-
2024		2,934		-
Thereafter		10,499		-
Total future lease payments		32,761		2,810
Less imputed interest		(5,685)		(150)
Total lease liability balance	$	27,076	$	2,660


	Amount
Fiscal year ended September 30,
2020	$	828
2021		—
2022		—
2023		—
2024		—
Thereafter		50,000
Total outstanding principal balance		50,828
Unamortized deferred financing costs		(437)
		50,391
Current portion of long-term debt		828
Non-current portion of long-term debt	$	49,563


	Three months ended June 30, 2020		Nine Months Ended June 30, 2020

Operating lease costs	$	2,358	$	6,755
Finance lease costs:
Amortization of assets		311		933
Interest on lease liabilities		29		84
Total finance lease costs		340		1,017
Variable lease costs		448		1,314
Short-term lease costs		181		477
Total lease costs	$	3,327	$	9,563


	As of June 30, 2020
Operating Leases:
Operating lease right-of-use assets	$	36,224

Accrued expenses and other current liabilities	$	6,457
Long-term operating lease liabilities		29,280
Total operating lease liabilities	$	35,737

Finance Leases:
Property, plant and equipment, at cost	$	2,540
Accumulated amortization		(934)
Property, plant and equipment, net	$	1,606

Accrued expenses and other current liabilities	$	1,183
Other long-term liabilities		599
Total finance lease liabilities	$	1,782

Weighted average remaining lease term (in years):
Operating leases		8.83
Finance leases		1.55

Weighted average discount rate:
Operating leases		4.29	%
Finance leases		4.72	%


	Three months ended June 30, 2020		Nine Months Ended June 30, 2020
Cash paid for amounts included in measurement of liabilities:
Operating cash flows from operating leases	$	2,215	$	6,089
Operating cash flows from finance leases		22		77
Financing cash flows from finance leases		297		880


Activity -Three Months Ended June 30, 2020
Balance						Balance
March 31,						June 30,
2020		Accruals		Costs Incurred		2020
$	7,910	$	1,380	$	(1,409)	$	7,881

Activity -Three Months Ended June 30, 2019
Balance						Balance
March 31,						June 30,
2019		Accruals		Costs Incurred		2019
$	7,202	$	2,257	$	(2,269)	$	7,190

Activity -Nine Months Ended June 30, 2020
Balance						Balance
September 30,						June 30,
2019		Accruals		Costs Incurred		2020
$	7,175	$	6,033	$	(5,327)	$	7,881

Activity -Nine Months Ended June 30, 2019
Balance						Balance
September 30,						June 30,
2018		Accruals		Costs Incurred		2019
$	6,340	$	6,419	$	(5,569)	$	7,190


		Time-Based	Stock	Performance-
	Total Units	Units	Grants	Based Units
Nine months ended June 30, 2020	411,967	163,390	27,007	221,570
Nine months ended June 30, 2019	792,103	330,006	38,708	423,389


		Weighted
		Average
		Grant-Date
	Shares	Fair Value
Outstanding at September 30, 2019	1,782,726	$	24.63
Granted	411,967		46.52
Vested	(898,222)		26.03
Forfeited	(105,410)		34.94
Outstanding at June 30, 2020	1,191,061		36.08


	Brooks Semiconductor		Brooks Life
	Solutions Group		Sciences		Total
Three months ended June 30, 2020
Point in time	$	125,237	$	27,001	$	152,238
Over time		1,815		66,297		68,112
	$	127,052	$	93,298	$	220,350

Three months ended June 30, 2019
Point in time	$	115,910	$	23,121	$	139,031
Over time		130		64,719		64,849
	$	116,040	$	87,840	$	203,880

Nine Months Ended June 30, 2020
Point in time	$	364,720	$	72,661	$	437,381
Over time		6,066		207,630		213,696
	$	370,786	$	280,291	$	651,077

Nine Months Ended June 30, 2019
Point in time	$	339,537	$	71,270	$	410,807
Over time		2,087		168,743		170,830
	$	341,624	$	240,013	$	581,637


		As of June 30, 2020
	Less than 1 Year		Greater than 1 Year		Total
Remaining Performance Obligations	$	35,213	$	19,927	$	55,140


Exhibit No.		Description

31.01		Certification of the Company’s Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.02		Certification of the Company’s Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32		Certification of the Company’s Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101		The following material from the Company’s Quarterly Report on Form 10-Q, for the quarter ended June 30, 2020, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) the unaudited Consolidated Balance Sheets; (ii) the unaudited Consolidated Statements of Operations; (iii) the unaudited Consolidated Statements of Comprehensive Income; (iv) the unaudited Consolidated Statements of Cash Flows; (v) the unaudited Consolidated Statements of Changes in Equity; and (vi) the Notes to the unaudited Consolidated Financial Statements. The instance document does not appear in the Interactive Data File because XBRL tags are embedded in the iXBRL document.

104		Cover Page Interactive Data File (formatted as iXBRL and contained in Exhibit 101).


	BROOKS AUTOMATION, INC.

Date: July 31, 2020	/s/ Lindon G. Robertson
	Lindon G. Robertson
	Executive Vice President and Chief Financial Officer
	(Principal Financial Officer)

Date: July 31, 2020	/s/ David Pietrantoni
	David Pietrantoni
	Vice President-Finance and Corporate Controller
	(Principal Accounting Officer)