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Brooks Automation Inc (AZTA)
Q3Â 2020 Earnings Call
Jul 30, 2020, 4:30 p.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Operator: Greetings and welcome to the Brooks Automation Q3 2020 Financial Results. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded, Thursday, July 30, 2020.
I would now like to turn the conference over to Mark Namaroff. Please go ahead.
Mark J. Namaroff -- Director-Investor Relations
Thank you. Thank you, Malika, and good afternoon everyone on the line today. We'd like to welcome you to our earnings conference call for the third quarter of fiscal 2020. Our Q3 earnings press release was issued after the close of the market today and it is available on our Investor Relations website located at brooks.investorroom.com, as are the supplementary PowerPoint slides that we'll be using during the prepared remarks today.Before we start, I would like to remind everyone that during the course of the call, we'll be making a number of forward-looking statements within the meaning of the Private Litigations and Securities Act of 1995. There are many factors that may cause 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 our aforementioned PowerPoint presentation on our website and our various filings with the SEC, including our Annual Reports on Form 10-K -- reports on Form 10-Q. We make no obligation to update these statements and 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 all during the call today, which are used in addition to and in conjunction with results presented in accordance with GAAP. We believe that 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.
So, 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'll open the call-up with remarks from Steve on the highlights of the second quarter, and then Lindon will provide a more detailed look into our financial results for the quarter, and our outlook for the fourth quarter. And then we will have some time to take your questions after the -- after the prepared remarks.
So with that in my mind, I'd like to turn the call over to our CEO, Steve Schwartz.
Stephen S. Schwartz -- President and Chief Executive Officer
Thank you, Mark, and good afternoon, everyone. We're pleased to have you with us today as we report results, of a strong third quarter. In spite of COVID headwinds and uncertainties, we delivered a solid top line, increased profitability and strengthen our market position in each segment. And we forecast strong growth again next quarter for demonstrating the value of our unique products and services portfolio and our positions in two robust markets.Revenue of $220 million was flat sequentially with Q2, and up 8% year-over-year. Earnings per share at $0.32, was up 26% sequentially, reflecting our improvement in margins and overall resiliency in a tough environment, and different from our earnings call just three months ago, when the business outlook was particularly uncertain. We believe that we found our footing in this current stage of the COVID-19 environment. And that gives us more confidence about our near-term guidance.When we last spoke with you we were in a peculiar Life Sciences environment, where academic demand had cratered, but industrial demand and anything related to COVID-19 work was accelerating. Additionally, at that time, while our semiconductor backlog and demand environment was extremely strong, the pandemic had exposed some cracks in the global supply chain, leaving us with some uncertainty as to our ability to deliver to our customer needs.In retrospect, it was a swift action to trigger our business continuity plans that allowed us to overcome this uncertainty and keep all of our 20 plus facilities open and productive. As we manage through the quarter, what had started as a temporary working conditions solidified to become our new normal method of work. We settled into those changes with discipline a newfound enthusiasm for what's possible in a more distant work environment, supported by a committed team of essential workers who made the necessary changes to deliver for our customers. We count ourselves fortunate that we'll be able to sustain business in this mode for as long as necessary.
We're pleased to say that we've seen a steady and substantial improvement in Life Sciences demand through the quarter, to run rates that are almost as they were pre-COVID and semiconductor demand and supply are robust and still appear to be on the upswing. And I'd like to highlight one unexpected outcome in this current environment. During the quarter, we continue to win an extraordinary number of new customers in Life Sciences, as well as new design wins in semiconductor, setting us up for additional growth and share gains. I'll give some additional commentary about each of the businesses, but it's noteworthy that this new environment of limited customer contact seems to have enabled more opportunities for companies with strong brand and reputation.With this as a backdrop, I'll give some colorist to the performance of the Life Sciences and Semiconductor business units, beginning with Life Sciences.At $93 million, Life Sciences revenue was stable from Q2, down only 2% sequentially, but up 6% compared to Q3 of 2019. Life Sciences services was up 5%, and the Life Sciences products contributed an increase of 9%. As was the case in Q2 the results from each of the sub-segments within those business units varied depending upon whether COVID-19 was a headwind or a tailwind, but overall performance was strong, and we finished June with positive momentum.
In Life Science services, which consists of GENEWIZ, with sample storage services and informatics, revenue was $63 million, up 5% year-over-year, and down 2% sequentially. And despite the variability caused by the pandemic, our services business performed well in the quarter.GENEWIZ revenue was down approximately $4 million sequentially, but still managed to be up slightly year-over-year. The three major service lines Sanger sequencing, next generation sequencing and gene synthesis have begun to stabilize and based on the momentum over the past six weeks, we have confidence in our outlook.As we reported to you last quarter, when NGS and synthesis had record quarters, Sanger sequencing, which is heavily dependent on academic research, have been significantly impacted by a reduction of more than 50% of weekly run rates business that dropped abruptly in mid March with the shutdown of academic laboratories.And although by late April, we'd begun to see some slight rebound in our Sanger business, at that time, we didn't have enough data to declare a trend. Since then we've continued to experience a gradual increase in demand across the Sanger business to a level where for the past four weeks, we've been running steadily at approximately 90% of our pre-COVID levels. To no surprise, Europe and China are at pre-COVID levels, but we're still somewhat lower in our U.S. facilities, reflecting the slower and less complete reopening of U.S. institutions.
Still, even with the somewhat reduced U.S. academic lab activity, our Sanger recovery is a positive indicator for us and our continued share gains off to allow us meaningfully -- to meaningfully improve our Sanger performance in Q4.NGS was solid for the quarter, down slightly from Q2, but still up 7% from Q3 one year ago. Importantly, we saw a return to more regular order patterns throughout the quarter, and we anticipate a return to growth for NGS in Q4.This business comes from a mix of academic, institutional and industrial customers as well as in support of cell and gene therapy, providing us with diversification and leaving us subject to less volatility.Finally, our gene synthesis services continued to be in high demand, and we delivered yet another record quarter because of our fast turnaround and high quality product. At $12 million gene synthesis was up 22%, from Q2's record quarter, and up 31% year-over-year. We anticipate continued strength in gene synthesis in Q4.Overall, our GENEWIZ team has dealt well with the coronavirus pandemic. We've continued to serve customers who have taken extra advantage of the continuity and service that we provided throughout the pandemic. And we've continued to provide high-quality services with fast response and exceptional customer support.
In the Sample and Repository services portion of the Life Sciences business, we had performance as expected. Storage revenue was steady as it provides a safe recurring revenue stream. That said, with much of the clinical trial activity on hold, our Sample administration and registration, and sample transport revenue was down as expected, that we anticipate an increase in this area in Q4.In the quarter, we close three significant SRS contracts that are related to COVID-19. One for the storage of positive tested patient samples and two for vaccine management. Each of these deals represents multimillion dollar revenue opportunities over the coming years. And we're negotiating two more large contracts that have some urgency to close soon.And the recent realignment to form Life Sciences Services business unit is already delivering meaningful sales synergies across the service offerings. In effect, we've expanded our sales footprint for GENEWIZ and Sample Repository services. And with the addition of RURO's informatics capabilities, we not only increase the number of touch points we have with customer accounts, but we've also increased the value of our offerings.In addition to the SRS deals, I mentioned a moment ago, we're also currently engaged in multi-million dollar opportunities and include Sample Management and Genomic Services with customers who initially engaged us for one of the services, who are pleased to have us deliver both of those services. We're confident this will be a relatively fast uptake and we're enthusiastic about the potential from this added power.
Overall, the Life Sciences services business is performing extremely well in this environment, we've adapted to our customers irregular work environment, and even during a time when we've not been able to have direct contact with customers, we added more than 230 new customers in the quarter, essentially the same as our high rate of wins in the pre COVID days, when direct customer contact was the norm.Some of these wins came via our usual channels, but many new customers came to us because of our ability to deliver results for them after they lost access to their prior sources. And these are customers that we fully intend to keep. With the current momentum exiting Q3, we anticipate growth in Q4 with sequential revenue increases from all areas of the services business.And I'll turn to Life Sciences products, which consists of Automated Stores and Service for that equipment, as well as Cryogenic Sample Management equipment and consumables and instruments.
The products team delivered a very solid quarter. Revenue was essentially flat with Q2, but up 9% from Q3 one year ago. The flat sequential result was made up of decreases in stores and on site services revenue due mostly because of lack of access to customer sites caused by COVID restrictions. Balanced by COVID-19 tailwinds in our consumables business, which includes PCR tubes for diagnostic kits, which was up 16% sequentially and almost 40% year-over-year. I'll note that revenue from the stores and services businesses simply postponed, and we forecast that we'll make it up over the next few quarters.The products business unit also continued to improve gross margin performance notching up another 40 basis points sequentially and more than 800 basis points from Q3 one year ago. Additionally, we booked $20 million in large automated stores, including a significant project for a major global pharmaceutical company that will consolidate and fully automate a collection of compounds, that's been decades in the making.Our outlook for Life Sciences products is for continued growth in Q4 of at least 10% sequentially. But with further upside to that number if and as were able to have freer [Phonetic] access to customer sites so that we can continue our installation and commissioning work on stores.It's important to note that the Life Sciences products business share gains were also very high, as we added more than 120 new customers to our ranks, approximately, 100 per consumables and instruments products, and more than 20 new customers for cryogenic sample management products that serve predominantly cell and gene therapy customers.
We are enthusiastic about the progress that this team is making, and the market momentum they've generated as we close out fiscal 2020 and head into 2021. Also want to calibrate you on the performance against our targets for what we previously reported as a sample management business.We're pleased to report that even in this COVID environment, we have to this point track to our commitments for the year. In Q3 sample management delivered 7% year-over-year revenue growth and gross margins continue to hold at the improved levels already at or above our targets.Furthermore, we see a clear path in Life Sciences products to achieve a 10% year-over-year growth in Q4. But we still need clinical trials to resume for us to register the same kind of gains in the sample storage portion of sample management.With the backlog we're carrying entering q4, there's plenty of opportunity, but we'll be somewhat bounded on our ability to deliver unless customers can resume their sample collections. Nonetheless, we're confident that the elements that make up what was sample management are all delivering on their potential.
To summarize the Life Sciences business, time again we've proven the value of our unique portfolio of Life Sciences capabilities. We added 350 new customers in a no-contact quarter. We continue to weather this unusual environment and have positioned ourselves for a very strong Q4. Energy and enthusiasm are high and we're pleased with both performance, and our position in Life Sciences.In the semiconductor business, we have another record quarter. Revenue at $127 million was up 2% sequentially, and up 9% year-over-year. This business has the momentum that comes with high and still expanding market share. That's compounded by the increased need for the technologies that we develop, as well as the geographic expansion the customer base in Asia, where we are particularly strong.On our last call, we mentioned that we had backlog and demand to allow us to deliver another record quarter. But at the time, we had some uncertainty in our ability to secure all of the parts we needed from our supply chain, as well as some questions about our customers ability to accept products from us, if their manufacturing lines did not need what we could produce.
By the middle of the quarter, our supply chain team had worked upstream and downstream to ensure that we were to have adequate supply and our teams were able to meet all customer demand. Noteworthy is the fact that we also had a significant mix change in our output with automation products filling in the gap from reduction in contamination control solutions. And we're forecasting Q4 to be the third consecutive record quarter for the semiconductor business.For some time now, we've outperformed the overall market for semiconductor capital equipment because of our share gains have been compounded by strong secular growth drivers, namely the increase in the number of vacuum process steps and the relatively recent and necessary introduction of contamination control process steps that are now required to produce a leading edge semiconductor. And we see this strong growth continuing into the future.Over the years, we've been speaking with you about our design win capabilities in the importance of working on products and technologies. There are still several years from high volume production. The increased market share and elevated business levels that we have today, were for the most part one several years ago, when our products were designed in the processing equipment for seven and five nanometre technology nodes
Our market capture formula is straightforward, but not simple. Our engineers and scientists engage our customers to work on their future roadmaps, our capabilities are designed in the process tools which go to pilot production lines and chip makers. And these tools are ultimately qualified for volume production. After what sometimes two or three years from a design win, chipmakers then ramp volume production and the process tool and technologies that were qualified for these stringent capabilities are the ones that are ultimately purchased in volume.So effectively, today's business is from yesterday's work. The same technology qualification practice holds true today and it's what makes us particularly enthusiastic about the future of our semiconductor business. By any past measure, Q3 was an exceptional quarter for design wins with 51 new designing wins including 16 new wins for CCS products, and seven for advanced packaging. This is future market share secured today.I'll now give some specific color from our major semiconductor business drivers to automation, advanced packaging and contamination control solutions. Our automation products accelerated in the quarter with a 20% sequential jump from Q2, up 5% from one year ago, more than making up for the digestion period we experienced in contamination control. Both vacuum robots and vacuum systems exhibited strong sequential growth driven by 5G expansion and European and Chinese customers.
Furthermore, our Q4 outlook is for vacuum automation to grow again and surpass the previous high quarter revenue from the June quarter in 2018. We had more solid performance in our advanced packaging products subsegment with revenue in a very healthy $14 million up 4% sequentially, but 30% below q3 2019 record quarter.In addition to the design wins mentioned above, we're beginning to see increased activity in the space. And we're in a strong position to benefit as more advanced packaging capacities brought online. We're still in a moderately calm environment is automotive is in a lull, but we anticipate reinvigoration in this area in 2021. The contamination control business continues to demonstrate characteristics of an exciting new technology with high growth and rapid new customer adoption.Coming off at torrid first half of 2020 which delivered $90 million of revenue, Q3 moderated to $35 million, but was still our third highest quarter ever for CCS. This is an important result for many reasons and one that gives a strong indication about the future for this business.Over the past four years, we've doubled the number of customers for CCS products, by and large this increase was driven by the need to add CCS technologies into the manufacturing process flow for companies to be able to yield at new technology notes. We've continued to win these new adoptees as we have exceptionally high market share at leading edge device technology notes.
In total, we anticipate Q4 to be another growth quarter in the semiconductor business, share gains and new product and technology development are at a certain pace and the organization is humming. We're putting the largest strains ever on our engineering and manufacturing teams. But we're trained for this and we're ready for this business to take it to the next level. All in, we're extremely positive about our near term outlook. Life science is returning to a ramp and semiconductor demand remains strong and our factories are busy.Following on a very solid Q3, we're positioned extremely well in two great markets. And we're aiming for Q4 to be a record high in both segments. Our market position is the best it's ever been. And we feel we're getting stronger by the day. We thank our employees for living up to all the responsibilities and privileges that come with being an essential business. And we thank you as well, for your supportive Brooks.
That concludes my formal remarks about the quarter and I'll turn the call back over to Lindon.
Lindon G. Robertson -- Chief Financial Officer and Executive Vice President
Thank you, Steve. I'd like to refer your attention to the slides on the website starting with slide three. Certainly, the stable revenue on a quarter-to-quarter basis stands out against the backdrop of the COVID environment, as does the expansion of the earnings profile. We have some really good signals in the business dynamics that I want to summarize here and which I believe you'll see as we step through the details.First, the near term stability translates the year-to-year revenue growth of 8%. You'll see that our semiconductor business results reflected demand ramp as expected and supply chain execution better than we could have hoped for when we started the quarter. And the life sciences business is seeing areas of exciting growth as well as areas that are still impacted by the COVID operating environment. All in, both areas show stronger at the end of the third quarter than at the start and finished on a higher ramp up demand as we entered Q4.Next, the earnings expansion on the stable revenue bring some clarity to the potential of the business profitability. Gross margin strength in the semiconductor segment and the life sciences products business provides strong operating margin expansion. And while the life sciences service business has been lower in the COVID environment, it's easy to see there's further potential in the gross margin expansion when services strengthens that non-GAAP earnings per share grew 26% sequentially and a 60% higher than the same quarter last year.
Finally, while the business model shows its resiliency, the revenue and income growth is producing incremental cash. We have a strong balance sheet and liquidity to weather storms, but more importantly, to continue to make investments.Let's move on to slide four and review the details of the overall P&L. From a GAAP perspective, earnings per share of $0.19 was $0.06 better than last quarter. Revenue was the same at $220 million, but expansion came with stronger gross margins and reduced operating expense. Below the operating income line, other income was a quarter-to-quarter benefit of $1.7 million principally driven by more favorable foreign exchange.Looking to the right side of the page, you can see the non-GAAP performance. The gross margin line shows more than 100 basis points expansion on both compares of year-to-year in sequential. When we get to the segment pages, you will see stronger margins in semiconductor, and continued strength in life sciences and the product site, which drove the expansion. During the quarter, our cost and expenses in the business had varying dynamics. We have kept all employees on board through the crisis. And we paid employees a premium through the month of May, if their presence was required on site to meet demands.Labor was well utilized on the semiconductor side of the business, but less so on the life sciences services business with the COVID headwinds. Meanwhile, we saw lower expenses and travel and other discretionary lines as well as some employee related benefits. The R&D expense line saw lower spending in semiconductor with the completion of certain projects in the second quarter. And of course, the results of expanded gross margins and these lower operating expenses brings a significant growth in the operating income line which is a 30 million, up 15% sequentially and 15% year over year.
Moving below the operating income line, you can see the net interest expense was 0.8 million lower by about $7 million compared with last year when we were carrying debt associated with the GENEWIZ acquisition. And as mentioned earlier, we experienced lower FX impacts this quarter.The non-GAAP tax rate for the quarter came in at about 21%, and the bottom line, non GAAP earnings per share grew that 26% sequentially and again 60% year over year. Perhaps it just helps just to take a moment to put the $0.32 cents per diluted -- per share for this quarter into perspective of where we are in terms of a leverage ramp. For all of 2019, the EPS was only $0.76.Let's turn over to slide five to discuss the segment results, starting with Life Sciences. In the third quarter, Life Sciences revenue was slightly lower sequentially at 93 million and demonstrated 6% growth compared with the third quarter last year, with some moderate headwinds due to COVID-19. On an organic basis, Life Sciences grew 5%.Growth this quarter was led by our life science products business, which consists of our automated cold storage systems, consumables and instruments and associated post warranty service. The products business experienced 9% growth driven by higher demand across all consumable lines and in particular demand for our 96 well PCR fleets which are fundamental to research for the COVID vaccine,
The automated storage systems business experience of headwinds as anticipated with the continued constraints in accessing customer sites for the installation process. In our life science services business, we achieve 5% year over year growth. This was driven with 1% growth in GENEWIZ genomic services, and 12% in sample repository solutions, formerly referred to as bio storage.In GENEWIZ where we continue to see the strongest headwinds of the corporate environment, Sanger and NGS sequencing were lower quarter to quarter, while gene genes of this has expanded. The COVID impact was most pronounced with the extended closure of academic research institutions and reprioritization of projects by commercial labs. As Steve noted, we started the quarter with our global daily run rate per second running less than 50% of that of the pre COVID days of January in February. The orders have shown a steady pick up week by week and are now just approaching the pre COVID levels. It is our assessment that this level of order rate is still coming from a subset of the market with the academic sector only partially back to work in their lives. Gene synthesis on the other hand, demonstrated nice growth during the quarter and supporting orders from COVID research activity.In total, the GENEWIZ business was lower by approximately 9%, or 4 million on a quarter to quarter basis was still finished 1% higher than a year-over-year basis.Shifting over to the sample repository solutions, which again was formerly referred to as BioStorage, that business was 10% higher on a sequential basis and 12% higher year-over-year. This growth includes $1.9 million from the rural software acquisition that we made earlier this year and also 4% organic growth.
Under the covers of the 4% growth year-over-year, we saw year-over-year expansion from the alliance and from storage buildings, but transactional services which depend on the movement of samples by customers were damping and mitigated the growth.As Steve described, while we've been pleased with the ongoing engagements for storage services, we're not seeing storage collections being managed as aggressively in this COVID environment, except in the vaccine and research initiatives.Life Science gross margin for the quarter was down 120 basis points sequentially, but still showed marked improvement of 140 basis points year-over-year. As in the past, a highlight that when we carry more revenue from the RUCDR alliance, we do see a negative mix impact. Except for this negative mix impact, we have very stable margins, quarter-to-quarter and even higher improvement on a year-over-year basis then you see on the page.That year-over-year improvement was significantly driven by the products business, which has held on to all the progress that has made over the past year and is up 870 basis points year-over-year.Meanwhile, the remaining portion of the services business, excluding the alliance, was also relatively stable sequentially, was performing 130 basis points below the levels one year ago, due to the lower labor utilization in this COVID environment.
As a reminder, we've kept all employees on board during this environment and we provided that premium pay to employees coming on site until the first of 1st June. So except for these aspects, we see no substantial changes in our pricing and cost and expect service margins to move higher as we recover the additional revenue.Looking forward to our fourth quarter, we see some recovery in life sciences in fact occurring. We are starting this quarter at a higher level of throughput and the range depends on the extent of the continued recovery. At this point, we expect life sciences to deliver revenue of $95 to $100 million sequentially. This would be up about 2% to 7%.Let's turn over slide six and review the semiconductor business. Semiconductor solutions shows nothing but strength for the quarter, generating $127 million, a 2% increase sequentially and 9% growth year-over-year. The sequential growth even though not a large number was an outstanding accomplishment given this supply chain challenges we faced last quarter.Customer demand remain high during the quarter despite COVID as fab capital spending plans continued. Our ability to meet the demand was a testament to the hard work of our semi operations team in order to satisfy the needs of our customers. Within the automation growth, which Steve described, vacuum systems to tier two OEM customers were up 26% from the second quarter, and now is at a level 5% above the prior year period. On the other hand, contamination control solutions revenue, as expected was lower by 24% sequentially, but this one still remains 22% higher year-over-year. This high level of CCS revenue $35 million in total demonstrates less dependency on boundary and increased growth capability from the broad design wins and qualifications across many customers.
We expect the demand of our FOUP cleaner and radical stalkers at leading-edge fabs will continue throughout this year, as we're qualified in memory, as well as advanced logic fabs. The profitability, I'm sorry, the profitability is another feather in the cap of the semi business.Operating margins were up 510 basis points, sequentially reaching 18.4%. This was a 320 basis point improvement in gross margin, which reached 42.7% in the quarter. The gross margin improved sequentially on a year-over-year basis, driven by improved factory absorption on hire robots and vacuum systems production and improved mix in the contamination control business, as we shift to a more diversified customer set this quarter.Looking to the fourth quarter, demand for semiconductor products remains high. And we will need to deal with continued supply chain challenges associated with the risk of COVID. We expect our semiconductor business to deliver revenue of approximately 134 to 141 million sequentially this would be up 5% to 11%.So now let's turn over to slide seven for summary of our cash flow for the quarter. We generated 26 million of operating cash flow, while affording expansion of working capital for the ramp and semiconductor solutions. We use approximately 9 million per capex resulting in 18 million of free cash flow.
On the year-to-date basis, we've generated 78 million have adjusted operating cash, which is 19 million higher than the year-to-date period of 2019. On slide eight, you'll see a summary of the balance sheet. We increased our cash position by 15 million in the quarter. And we're now carrying 263 million of cash, cash equivalents and marketable securities.With a 51 million of debt, you can see with how 213 million of net cash for operations and investments going forward. Now if you'll turn over to slide nine with me, I'll wrap-up with guidance for the fourth fiscal quarter 2020. Revenue is expected to be in the range of 229 million to 241 million.Adjusted EBITDA is anticipated to be 41 million to 49 million and non-GAAP diluted earnings per share to be $0.32 to $0.40. The GAAP diluted earnings per share is expected to be at $0.20 to $0.28. As noted on the chart, we're still operating in the COVID environment with some headwinds and certainly the risk of some changes around the world.But at all, we are seeing, we expect growth to continue for both segments in the fourth fiscal quarter, as described. So this now concludes our prepared remarks.
And I'll turn the call back over to Malika the operator who take questions from the line.
Questions and Answers:
Operator
Thank you. [Operator Instructions] And we have question in a queue. The first one is from the line of Patrick Ho with Stifel. Please go ahead. Your line is now open.
Patrick Ho -- Stifel -- Analyst
Good. Thank you very much and congrats on a really nice quarter. Maybe first of in terms of the semiconductor business, obviously you're seeing some strength continuing into the September quarter. You talked about the supply chain issues becoming better as the June quarter progress. As you look at those two variables. How much do you believe the supply chain constraints that you've seen improvements in our -- on your end versus your customers getting some alleviation is on their manufacturing side of things, which allows you to deliver products at a more quicker pace. Is it more on your end that you've seen the improvements? Or is it more on the customer end?
Stephen S. Schwartz -- President and Chief Executive Officer
Patrick, if I understood the question I think, I think we were, we know our supply chain the best that we had some discomfort about the ability to supply. We had some product coming from Malaysia some coming from India, places that became hotspots in the quarter. But we think we managed it pretty well, we went so far sometimes as to help some of those suppliers secure shipping and transportation, to be able to get parts to us. But the thing that we didn't know was, was that same supply chain back things up in our customers and just have them not need our products, so I think we were fine, securing our supply chain and being able to meet the demand, we weren't sure that the demand would necessarily hold up, from the customers but indeed everything loosened up and we were able to, we were able to shift everything that the customers wanted from us in the quarter.
Patrick Ho -- Stifel -- Analyst
Great. That's really helpful in that color. On the Life Sciences, and I think we're seeing that how diversified your portfolio and services offerings are that's allowed you to kind of meet expectations or exceed expectations. Given the -- the various moving pieces, you mentioned you saw some surprises to the upside. Some areas were weaker. How does this play into, I guess the longer term strategic vision of your life sciences portfolio is this diversification what you were looking for in terms of offsetting potential strengths and weaknesses depending on the market environment?
Stephen S. Schwartz -- President and Chief Executive Officer
So, Patrick, I think indeed that's the case. A couple things were accelerated here. I'll give you an example, when we combine to form the Life Sciences services business unit by putting in the bio storage capability in with the GENEWIZ team. What we found is an expansion to something that was on the -- on the radar for us but one that simply accelerated because of the COVID environment, and it's in the name change, we used to be the bio storage services and now it's sample and repository. We took on some vaccine contracts. So we're taking on some manufactured product, and some other capabilities to be able to distribute finished product if you will, as part of the business unit. The contract that we're forming between the customers who we had either genomic services or sample storage that sales teams are now engaged in one or the other and then they ask the customer, for example, a storage project, what will you do with those things can I help you with the measurements, and we're discovering that there are an abundance of opportunities there.
So things that we suspected we're now putting to contract. And we're discovering that the Indeed, there are there are a lot of opportunities we can have to simplify the customer supply chain and provide them just a tremendous amount of this combined service, if you will. On the Life Sciences product side, I think the team has a lot of momentum from an operating standpoint, the margin improvements continue. The confidence in the ability to go sell really reliable products is also helping from a market share standpoint that team's got a lot of momentum.
Patrick Ho -- Stifel -- Analyst
Great. And final question from me Lindon, obviously, you've probably gotten some benefits from the opex line due to lower travel and other -- I guess -- that probably aren't occurring right now. As you get to a more normalized environment, one, where do you see expenses pretending to -- increasing all. Are you able [Technical Issues] the current levels, given the current [Technical Issues] can be acquired at a future date?
Stephen S. Schwartz -- President and Chief Executive Officer
It's a really good question Patrick, and as I mentioned in my remarks. You know that we had some projects pause or so, or finish I should say in the semiconductor space in the R&D. And SG&A you are exactly right, had some light areas in this environment. We do see a couple million pressure going forward on a, you know, in the near-term. We think it should be safe to be in that range a couple million higher, but we also don't expect all the discretionary to come back right away.
Patrick Ho -- Stifel -- Analyst
Great. Thank you very much and congrats again.
Stephen S. Schwartz -- President and Chief Executive Officer
Great. Thank you very much and congrats again.
Lindon G. Robertson -- Chief Financial Officer and Executive Vice President
Great. Thank you very much and congrats again.
Operator
Thank you. And our next question is from the line of Jacob Johnson with Stephens Inc. Your line is open.
Jacob Johnson -- Stephens Inc -- Analyst
Hey, thanks. And I'll echo Patrick's comments. Congrats on strong quarter. I guess first question. Can we just have an update on the synergies between the BioStorage business and GENEWIZ, now that these businesses are managed under one roof? It sounds like you guys have seen some initial wins, but any other color and kind of realizing the synergies from these two businesses?
Stephen S. Schwartz -- President and Chief Executive Officer
Yes, thanks Jacob. Lindon and I'll share the response. I think we're starting to see top-line synergies, but frankly the businesses -- is not performing at a high speed yet so we won't see some of those cost synergies yet, but we're really bullish The combination of the teams the fact that the leader of the sample or processing [Phonetic] services business came from GENEWIZ. She is one of GENEWIZ leaders. She knows how to operate inside the environment. So the connections with sales, the connections with the account teams and customers so far has been outstanding.
We are looking to get volume built up in both sides of the business as a result of this combination and there we'll be able -- to be a little bit more articulate about what some of the profitability synergies are. But right now we're starting to see it on the top-line. We mentioned three contracts. We called out three contracts that over the next three years, each of them, you know exceeds $1 million. So a small start, but all meaningful. And really representative of what we think is possible by the combination of these businesses.
Lindon G. Robertson -- Chief Financial Officer and Executive Vice President
You know, Jacob, I just add, what we see is mostly in the people, in our business pulling this together and taking the leadership from GENEWIZ was integrating with the leadership from the BioStorage background. We've got people from the science. We got people from precision medicine backgrounds. We got people from the infrastructure background working together. And this -- the strategies that we've had around the hub, the sample hub, the strategies we've had around sample processing in the insight that they're offering from the customer side of things, the science side of things, is just been really impactful on how we can propose to these customers.
Further than on the cost and in synergy there, we're seeing how we can combine and propose cross offerings to customers, and then make that synergistic sale, you know from the same sales team as well as leverage the value statement. And of course, we've got some lab space being developed inside BioStorage, which GENEWIZ make use of and some lead opportunities going back and forth. So it's starting to happen. You know we're not -- we've said so far. We wouldn't you know surface numbers for a model, but we're certainly seeing it start to happen.
Jacob Johnson -- Stephens Inc -- Analyst
It sounds like you've had some nice wins there. Maybe just one more for me. You know, your analysts day last year, you talked about some efforts to expand your penetration into the academic in government markets. With academic labs, kind of close those, I guess they're opening back up or open back up, is this is still a focus or have you reallocated resources to kind of focus on pharma and biotech clients in the current environment?
Stephen S. Schwartz -- President and Chief Executive Officer
Yes, Jacob, it was still very much a focus. And we look forward to report on some meaningful results, as we get into 2021, so it's still a real area for focus in and an area for great traction actually.
Jacob Johnson -- Stephens Inc -- Analyst
Great. Thanks, Steven.
Stephen S. Schwartz -- President and Chief Executive Officer
You bet. Thanks, Jacob.
Operator
Thank you. And our next question is from the line of John Pitzer with Credit Suisse. Please go ahead. Your line is open.
Stephen S. Schwartz -- President and Chief Executive Officer
Hi, John.
Jacob Johnson -- Stephens Inc -- Analyst
Hey, guys. This is -- sorry, this is Diane. I'm here for John right now, and -- but congrats on the great quarter guys.
Stephen S. Schwartz -- President and Chief Executive Officer
Thank you.
Jacob Johnson -- Stephens Inc -- Analyst
I just had a question about the semiconductor solutions side of the business. We've heard a lot recently about worries of WFE spending withstanding into the second half, memory, spot pricing with a little bit weak, Intel pushing out capex. Just wondering what are some drivers you can kind of point us to, to how this business has kind of historically outgrown the industry or been relatively insulated, whether that's on the product side, design wins, kind of the diversified set of your customers. Just kind of would love to hear a little bit more about that going forward.
Stephen S. Schwartz -- President and Chief Executive Officer
Diane, thanks. It's a really good question. It's a one that we ask everyday. But let me give you a little bit. color. So we have the really strong foundry drivers in anything that's at the leading edge technology has a high content of vacuum technologies, where we have particularly high share. And of course, the contamination control is essential and pervasive. So that's been a driver to-date. When we look forward, we anticipated that at the end of 2020, maybe early 2021, we might begin to see some additional Tier 1 foundry spending for even 3-nanometer, but we understand that it will be pushed a little bit. That said, any activity in China, just to give you some indication is an outsize driver for us because there are a number of OEMs who are dependent upon our vacuum automation technologies, both at the robot and systems level. And it's something that we don't see in a big way, maybe measuring overall WFE, but because we have such high content, that it doesn't take a whole lot of that spending to move the needle for Brooks. And I think you've that over the past years as we continue to expand outside of WFE just because of the content we have.
Similarly -- the actually the region with the largest number of CCS customers for us in the world is China by a lot. So the number of CCS customers is highest in China. And that's been a really an exceptional region for us. And so when we mentioned 16 design wins for CCS products, you know to pretty significant win base in China in order.
Jacob Johnson -- Stephens Inc -- Analyst
Great. Thank you very much.
Stephen S. Schwartz -- President and Chief Executive Officer
Great. Thank you very much.
Operator
Thank you. [Operator Instructions] Next question is from line of Joseph Conway with Needham. Please go ahead. Your line is open.
Stephen S. Schwartz -- President and Chief Executive Officer
Hi Joe.
Joseph Conway -- Needham -- Analyst
Hi, guys. Hey, thanks for taking the questions. So, for the first one, appreciate the color on the GENEWIZ, was nice to see Sanger bouncing back a little bit. But given the slower return academic research, I guess, first question, do you have a view of the percentage of the academic customer base that has returned to normal? And then, where do you see that by the end of the calendar year? Thanks.
Stephen S. Schwartz -- President and Chief Executive Officer
So Joe, we're hopeful that we'll be back to 100% of where we were pre-COVID. Right now, here's the dilemma for us is we don't know if some of the things that we received were just pent-up, things that people finally got back and we saw a pretty strong surge. But I will tell you that we've had about five consecutive weeks, at almost flat levels that are about 90% of the level that we had before. So we're still digesting in the customer base in particular, but the academic labs are not uniformly back. It's still pretty regional. But we anticipate that if we get -- to be within 10% that where we've been, is already what we think is really strong performance. We're modeling that in our future. But we're hopeful that we'll be higher than that by the time we get to year, just to give you an example. But that's how we based our forecast, kind of stay in at these levels for now.
Joseph Conway -- Needham -- Analyst
Okay, great. And then last question. You're getting a lot of questions from investors on Intel and their delay of the 7-nanometre chips. So we're just curious has that affect your business and is this having an impact on the outlook for contamination control or design in wins? Thanks.
Stephen S. Schwartz -- President and Chief Executive Officer
Yeah. And so for us, it's difficult to say in the near term what would happen, but the capacity will go somewhere. And the technologies that are required to manufacture those devices, whether by Intel or by somebody else will still go to manufacturing capability.So we will catch up to it. We're just not sure in what country and what fab, but we're pretty confident in the technologies that are required and our market share and market position. And so ultimately, we care some but we don't have to care necessarily where it ends up to, to be secure in our market position about serving.
Joseph Conway -- Needham -- Analyst
Okay. Great. Thanks for that and congrats on the great quarter you guys.
Stephen S. Schwartz -- President and Chief Executive Officer
Thank you, Joe.
Lindon G. Robertson -- Chief Financial Officer and Executive Vice President
Thank you, Joe.
Operator
Okay. Thank you. And there are no further questions after this one. Thank you.
Mark J. Namaroff -- Director-Investor Relations
Malika, thank you very much for coordinating us, and to all the analysts and investors, we really appreciate the attention and the time that you give us. And we'll take one last opportunity to just say thank you for the employees of Brooks around the globe that have not just participated, but they remain diligent and dedicated to everything we had to deliver throughout this crisis, and it's still tense and still stressful, so we appreciate them every day. More importantly, or equally important, I should say our customers still need us and they're looking for us to do more this next quarter than what we did this last quarter. So, we look forward to doing again, and talking to you all again this time next quarter. So thank you very much.
Operator
[Operator Closing Remarks]
Duration: 46 minutes
Call participants:
Mark J. Namaroff -- Director-Investor Relations
Stephen S. Schwartz -- President and Chief Executive Officer
Lindon G. Robertson -- Chief Financial Officer and Executive Vice President
Patrick Ho -- Stifel -- Analyst
Jacob Johnson -- Stephens Inc -- Analyst
Joseph Conway -- Needham -- Analyst
