Segment and Geographic Information

12 Months Ended

Sep. 30, 2019

Segment Reporting [Abstract]

Segment and Geographic Information

21.    Segment and Geographic Information

Operating segments are defined as components of an enterprise that engage in business activities for which discrete financial information is available and regularly reviewed by the chief operating decision maker in deciding how to

allocate resources and to assess performance. The Company’s Chief Executive Officer is the Company’s chief operating decision maker.

The Company operates in two reportable segments: Brooks Semiconductor Solutions Group segment and Brooks Life Sciences segment. 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, and contamination control of wafer carrier front opening unified pods. The support services include repair services, diagnostic support services, and installation services in support of the products, which enable 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 for life science and bioscience customers including complete end-to-end “cold chain of custody” solutions and sample-based laboratory 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, gene synthesis, laboratory processing services, laboratory analysis, and other support services provided to a wide range of life science customers, including pharmaceutical companies, biotechnology companies, biorepositories and research institutes.

The Company considers adjusted operating income, which excludes charges related to amortization of completed technology, the acquisition accounting impact on inventory contracts acquired and restructuring related charges as the primary performance metric when evaluating the business.

In conjunction with the acquisition of GENEWIZ during the quarter ended December 31, 2018, the Company reassessed its 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 reportable segments for the fiscal years ended September 30, 2019, 2018 and 2017 (in thousands):

		Year Ended September 30, 2019
		2019		2018		2017
Revenue:
Brooks Semiconductor Solutions Group	$	446,669	$	435,018	$	378,790
Brooks Life Sciences		334,179		196,542		148,709
Total revenue	$	780,848	$	631,560	$	527,499
Operating income:
Brooks Semiconductor Solutions Group	$	69,961	$	62,511	$	42,741
Brooks Life Sciences		20,631		3,795		3,217
Reportable segment adjusted operating income		90,592		66,306		45,958
Amortization of completed technology		10,424		4,877		3,915
Acquisition accounting impact on inventory contracts acquired		184		1,896		523
Restructuring related charges		285		—		—
Amortization of acquired intangible assets		24,737		19,339		13,228
Restructuring charges		1,894		714		3,144
Other unallocated corporate expenses		7,030		8,071		10,829
Total operating income		46,038		31,409		14,319
Interest income		1,449		1,881		464
Interest expense		(22,250)		(9,520)		(408)
Gain on settlement of equity method investment		—		—		1,847
Loss on extinguishment of debt		(14,339)		—		—
Other expenses, net		(1,455)		(3,304)		(1,702)
Income before income taxes	$	9,443	$	20,466	$	14,520
		Brooks
		Semiconductor		Brooks
Assets:		Solutions Group		Life Sciences		Total
September 30, 2019	$	259,641	$	909,154	$	1,168,795
September 30, 2018		264,452		410,581		675,033

The following is a reconciliation of the Company’s reportable segments’ segment assets to the amounts presented in the accompanying Consolidated Balance Sheets as of September 30, 2019 and 2018 (in thousands):

	September 30,		September 30,
	2019		2018
Segment assets	$	1,168,795	$	675,033
Cash, cash equivalents, restricted cash, and marketable securities		342,140		251,226
Deferred tax assets		5,064		43,798
Assets held for sale		—		125,200
Total assets	$	1,515,999	$	1,095,257

Revenue from external customers is attributed to geographic areas based on locations in which customer orders are placed. Net revenue by geographic area for the fiscal years ended September 30, 2019, 2018 and 2017 are as follows (in thousands):

	Year Ended September 30,
	2019		2018		2017
North America	$	327,250	$	233,243	$	174,432
Asia / Pacific/ Other		312,237		262,706		255,825
Europe:
United Kingdom		48,764		51,690		37,283
Rest of Europe		92,597		83,921		59,959
	$	780,848	$	631,560	$	527,499

The majority of the Company’s net revenue in North America is generated in the United States which amounted to $325.3 million, $232.7 million and $172.9 million, respectively, during fiscal years ended September 30, 2019, 2018 and 2017.

The geographic location of an OEM is not indicative of where the products will eventually be used. The geographic area for the orders is determined by the onward sale of an OEM system which incorporates the sub-systems and/or components.

Property, plant and equipment by geographic area as of September 30, 2019 and 2018 are as follows (in thousands):

	September 30,
	2019		2018
North America	$	72,401	$	50,614
Asia / Pacific/ Other		15,628		492
Europe:
United Kingdom		5,019		5,494
Rest of Europe		7,621		3,388
	$	100,669	$	59,988

Property, plant and equipment located in the United States amounted to $72.3 million and $50.5 million, respectively, at September 30, 2019 and 2018.