Segment Information

9 Months Ended

Jun. 30, 2019

Segment Reporting [Abstract]

Segment Information

14. Segment Information

The Company operates in two reportable segments: Brooks Semiconductor Solutions Group and Brooks Life Sciences. Brooks Life Sciences consists of two operating segments aggregated into one reportable segment.

The Brooks Semiconductor Solutions Group segment provides a variety of products, services and solutions that enable improved throughput and yield in controlled operating environments, as well as an extensive range of support services. The solutions include atmospheric and vacuum robots, robotic modules, tool automation systems, contamination control of wafer and reticle carriers and reticle management systems. The support services include repair services, diagnostic support services, and installation services in support of the products, which enable the customers to maximize process tool uptime and productivity. This segment also provides end-user customers with spare parts and productivity enhancement upgrades to maximize tool productivity.

The Brooks Life Sciences segment provides comprehensive life cycle sample management solutions to life science and bioscience customers including complete end-to-end “cold chain of custody” solutions and a variety of sample-based lab services such as genomic sequencing and gene synthesis to advance scientific research and support drug development. The segment’s product offerings include automated cold sample management systems for compound and biological sample storage, equipment for sample preparation and handling, consumables, and informatics that help customers manage samples throughout their research discovery and development work flows. The segment’s service offerings include sample storage, genomic sequencing, gen synthesis, lab processing services, lab analysis, and other support services provided to a wide range of life science customers, including pharmaceutical companies, biotechnology companies, biorepositories and research institutes.

Revenue and adjusted operating income (loss) are two key metrics used by the chief operating decision maker when assessing operating results and management performance as resources are allocated to each of the operating segments. The adjusted operating income (loss) for each segment includes selling, general and administrative expenses directly attributable to the segment, and corporate allocations for general and administrative support. Amortization of acquired intangible assets (excluding completed technology), restructuring and other charges, pension settlement, in-process research and development, and other unallocated corporate expenses are excluded from the segments’ adjusted operating income (loss). Please refer to Note 20, "Segment and Geographic Information" to the Company’s consolidated financial statements included in the 2018 Annual Report on Form 10-K for further information on the operating segments’ description and accounting policies.

In conjunction with the acquisition of GENEWIZ during the quarter ended December 31, 2018, the Company reassessed Brooks segment reporting structure and determined that GENEWIZ represents a separate operating segment based on ASC 280, Segment Reporting (“ASC 280”). As permitted by ASC 280, the Company elected to aggregate the Sample Management operating segment and the GENEWIZ operating segment as a single reportable segment titled Brooks Life Sciences. The aggregation was based on similarities in long-term forecasted economic characteristics, particularly adjusted operating income, similarity in services they offer, the customers they serve, the nature of their service delivery models, and their regulatory environments. The Company believes that the aggregated presentation is more useful to investors and other financial users. Management formally assesses the long-term financial outlook of its operating segments on an annual basis as part of its strategic planning process and more frequently on an informal basis. The customer bases of the operating segments overlap, serving life science and bioscience customers in the pharmaceutical and bio-technology companies as well as academic and government institutions. Both of these operating segments provide services relating to the biological samples needed to advance non-clinical and clinical research,

serving scientific and business operations functions. In a typical customer workflow, a biological sample is collected, processed and analyzed with results interpreted and used to make scientific judgements. Critical or valuable samples are then annotated and stored for many years in environments where they can be easily retrieved for additional study. These operating segments provide services across this workflow. Both of these operating segments offer services meeting the standards of Good Manufacturing Practices set forth by the U.S. Food and Drug Administration.

The following is the summary of the financial information for the Company’s operating and reportable segments for the three and nine months ended June 30, 2019 and 2018 (in thousands):

	Brooks
	Semiconductor		Brooks
	Solutions Group		Life Sciences		Total
Three Months Ended June 30, 2019:
Revenue
Products	$	105,443	$	22,954	$	128,397
Services		10,597		64,886		75,483
Segment revenue	$	116,040	$	87,840	$	203,880
Gross profit	$	47,493	$	36,017	$	83,510
Segment operating income		19,322		4,202		23,524
Depreciation expense		504		4,196		4,700
Three Months Ended June 30, 2018:
Revenue
Products	$	111,840	$	23,438	$	135,278
Services		10,820		26,265		37,085
Segment revenue	$	122,660	$	49,703	$	172,363
Gross profit	$	48,227	$	18,588	$	66,815
Segment operating income		17,915		677		18,592
Depreciation expense		911		1,991		2,902
Nine Months Ended June 30, 2019:
Revenue
Products	$	309,439	$	72,388	$	381,827
Services		32,185		167,625		199,810
Segment revenue	$	341,624	$	240,013	$	581,637
Gross profit	$	139,393	$	96,713	$	236,106
Segment operating income		53,450		8,936		62,386
Depreciation expense		2,438		10,728		13,166
Nine Months Ended June 30, 2018:
Revenue
Products	$	293,196	$	68,886	$	362,082
Services		33,033		76,799		109,832
Segment revenue	$	326,229	$	145,685	$	471,914
Gross profit	$	130,180	$	53,281	$	183,461
Segment operating income		45,058		778		45,836
Depreciation expense		2,878		5,579		8,457
Assets:
June 30, 2019	$	263,013	$	917,515	$	1,180,528
September 30, 2018		264,452		410,581		675,033

The following is a reconciliation of the Company’s operating and reportable segments’ operating income and segment assets to the corresponding amounts presented in the accompanying unaudited Consolidated Statements of Operations for the three and nine months ended June 30, 2019 and 2018 and Consolidated Balance Sheets as of June 30, 2019 and September 30, 2018 (in thousands):

		Three Months Ended			Nine Months Ended
		June 30,			June 30,
	2019		2018		2019		2018
Segment operating income	$	23,524	$	18,592	$	62,386	$	45,836
Amortization of acquired intangible assets		6,187		5,080		18,569		14,296
Restructuring charges		256		81		685		129
Other unallocated corporate expenses		658		884		7,705		3,617
Total operating income	$	16,423	$	12,547	$	35,427	$	27,794

	June 30,		September 30,
	2019		2018
Segment assets	$	1,180,528	$	675,033
Cash, cash equivalents and marketable securities		159,761		251,226
Deferred tax assets		25,345		43,798
Assets held for sale		127,226		125,200
Total assets	$	1,492,860	$	1,095,257