Azenta(AZTA) - 2021 Q4 - Annual Report

PART I Item 1. Business Brooks Automation, a global life science sample management provider, is rebranding as Azenta Life Sciences following the planned $3.0 billion sale of its semiconductor automation business - The company is a leading global provider of life science sample exploration and management solutions, serving pharmaceutical, biotechnology, and research institutions[7] - In Q4 of fiscal year 2021, the company agreed to sell its semiconductor automation business to Thomas H. Lee Partners, L.P. (THL) for approximately $3.0 billion in cash, now treated as discontinued operations[10] - The remaining life sciences business, comprising Life Sciences Products and Life Sciences Services segments, will be rebranded as Azenta Life Sciences in the first half of fiscal year 2022[10] - The business is organized into two reportable segments: Life Sciences Products (automated ultra-cold storage, consumables, instruments) and Life Sciences Services (genomic analysis, sample repository solutions, informatics)[14][15][19] - As of September 30, 2021, the company employed approximately 2,800 people and utilized 80 contingent associates, with approximately 48% of employees being gender diverse and 41% of U.S.-based employees identifying as racially diverse[34][35] Item 1A. Risk Factors The company faces risks from the COVID-19 pandemic, the pending semiconductor business sale, operational fluctuations, international complexities, and reliance on key suppliers and customers - The COVID-19 pandemic could adversely affect financial conditions through supply chain disruptions, logistics issues, and reduced customer demand[43][45][46] - The pending sale of the semiconductor automation business poses risks, including potential disruption, management distraction, and negative impacts on stock price and business prospects if the sale is not completed[50][52] - Operating results are subject to significant fluctuation due to factors like order timing, product mix, new product acceptance, and competitive pressures[53] - International operations, which accounted for 38% of revenue in FY2021, expose the company to risks such as tariffs, currency fluctuations, and political instability[57] - The company relies on a limited number of customers, with the ten largest accounting for approximately 19% of total revenue in fiscal year 2021[97] - The company's stock price is volatile, having fluctuated between a high of $109.17 and a low of $46.70 per share from the beginning of fiscal year 2020 through the end of fiscal year 2021[101] Item 1B. Unresolved Staff Comments The company reports no unresolved staff comments - None[109] Item 2. Properties The company's primary facilities include an owned 298,000 sq. ft. headquarters in Chelmsford, MA, which is part of the planned semiconductor business sale, and leased sites in Indianapolis and Suzhou Principal Facilities as of September 30, 2021 | Location | Functions | Square Footage (Approx.) | Ownership Status/Lease Expiration | | :--- | :--- | :--- | :--- | | Chelmsford, Massachusetts | Corporate headquarters, training, manufacturing, R&D and sales & support | 298,000 | Owned | | Indianapolis, Indiana | Sample storage, sales & support | 116,700 | September 2038 | | Suzhou, China | Laboratory & office | 116,800 | June 2022 | - The Chelmsford, MA facility will be included in the sale of the semiconductor automation business, after which the company will lease space there temporarily while transitioning to a new corporate headquarters[110] Item 3. Legal Proceedings The company is subject to various legal proceedings arising in the ordinary course of business but believes that none of these claims will have a material adverse effect on its consolidated financial condition or results of operations as of the report date - The company is subject to various legal proceedings from the ordinary course of business but does not expect any to have a material adverse effect on its financial condition or operations[112] Item 4. Mine Safety Disclosures This item is not applicable to the company - Not applicable[113] PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's stock symbol will change to "AZTA" on December 1, 2021, with quarterly dividends ceasing post-semiconductor business sale, and no share repurchases in fiscal year 2021 - The company's stock trading symbol will change from "BRKS" to "AZTA" on December 1, 2021[114] - The company intends to discontinue its quarterly dividend upon the completion of the sale of its semiconductor automation business[116] Comparative 5-Year Cumulative Total Shareholder Return | | 9/30/2016 | 9/30/2017 | 9/30/2018 | 9/30/2019 | 9/30/2020 | 9/30/2021 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Brooks Automation, Inc. | $100.00 | $227.15 | $265.67 | $284.25 | $358.55 | $797.18 | | Nasdaq/NYSE American/NYSE | $100.00 | $120.08 | $136.91 | $139.19 | $159.63 | $199.90 | | Peer Group | $100.00 | $162.43 | $174.41 | $205.33 | $233.59 | $359.77 | - No shares were repurchased under the company's $50.0 million share repurchase program during the fiscal year ended September 30, 2021[121] Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations This section analyzes the financial condition and operating results of the continuing Life Sciences business, detailing revenue growth, margin expansion, and liquidity, while noting the planned semiconductor business sale and rebranding Item 7A. Quantitative and Qualitative Disclosures About Market Risk The company faces market risks from interest rate fluctuations on its variable-rate term loan and foreign currency exposure from non-U.S. dollar sales, partially mitigated by forward contracts - The company is exposed to interest rate risk on its variable-rate term loan; a hypothetical 100 basis point change in interest rates would result in a $0.5 million change in annual interest expense[251] - Sales in currencies other than the U.S. dollar constituted 37% of total sales in fiscal year 2021, and the company utilizes forward contracts to mitigate currency exposure[253][254] Item 8. Financial Statements and Supplementary Data This section presents the audited consolidated financial statements for fiscal years 2019-2021, restated to reflect the semiconductor automation business as a discontinued operation Item 9. Changes in and Disagreements with Accountants on Financial Accounting and Financial Disclosure This item is not applicable to the company - Not applicable[534] Item 9A. Controls and Procedures Management and the independent auditor concluded that the company's disclosure controls and internal control over financial reporting were effective as of September 30, 2021 - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of September 30, 2021[535] - Management concluded that the company's internal control over financial reporting was effective as of September 30, 2021, based on the COSO framework[537] Item 9B. Other Information There is no other information to report for this item - None[539] PART III Item 10. Directors, Executive Officers and Corporate Governance The information required for this item is incorporated by reference from the company's definitive proxy statement for its 2022 annual meeting of stockholders - Information is incorporated by reference from the registrant's Proxy Statement[540] Item 11. Executive Compensation The information required for this item is incorporated by reference from the company's definitive proxy statement for its 2022 annual meeting of stockholders - Information is incorporated by reference from the registrant's Proxy Statement[541] Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The information required for this item is incorporated by reference from the company's definitive proxy statement for its 2022 annual meeting of stockholders - Information is incorporated by reference from the registrant's Proxy Statement[541] Item 13. Certain Relationships and Related Transactions, and Director Independence The information required for this item is incorporated by reference from the company's definitive proxy statement for its 2022 annual meeting of stockholders - Information is incorporated by reference from the registrant's Proxy Statement[542] Item 14. Principal Accountant Fees and Services The information required for this item is incorporated by reference from the company's definitive proxy statement for its 2022 annual meeting of stockholders - Information is incorporated by reference from the registrant's Proxy Statement[543] PART IV Item 15. Exhibits and Financial Statement Schedules This section lists financial statements and comprehensive exhibits filed with the Form 10-K, including key agreements and compensation plans - The Consolidated Financial Statements are included under Part II, Item 8 of the Form 10-K[544] - Key exhibits filed include the Equity Interest Purchase Agreement for the sale of the semiconductor business, credit agreements, and various executive compensation and equity incentive plan documents[545][546][547] Item 16. Form 10-K Summary No Form 10-K summary is provided - None[549]