Martin Headley - CFO Bob Lepofsky - Chief Executive Officer Steve Schwartz - President

C.J. Muse - Barclays Capital Ben Pang - Caris & Company Patrick Ho - Stifel Nicolaus David Dooley - Steelhead Securities Hari Polavarapu - Deutsche Bank

Thank you very much [Tamika], and good afternoon everybody on this dynamic day in the market. I’d like to welcome each of you to the Brooks Automation Inc.

fiscal 2010 second quarter financial results call. A press release was issued about 4 pm Eastern time this afternoon, and is available on our website, www.brooks.com.

You will also find posted there copies of the power point slides used during our call today. I’d like to remind everybody that during the course of the call we will be making forward looking statements within the meaning of the Private Securities Litigation Reform Act to date 1995.

There are a number of factors that cause actual financial results or other events to differ significantly from those identified in such forward-looking statements. And I refer you to the section of our earnings release titled Safe Harbor statement.

The Safe Harbor slide on our website and to the company’s various filings with the SEC. I would also note that we will make reference to a number of non-GAAP financial measures, which are used in addition to, and in conjunction with results presented in accordance with US GAAP, and should not be relied upon to the exclusion of those GAAP measures.

Management believes those financial measures provide an additional way of viewing aspects of our operations, that when viewed with our US GAAP results and the reconciliations to those GAAP measures provide a more complete understanding of our business. Joining me on our call today are my fellow members of the office of the Chief Executive Officer; Bob Lepofsky, Chief Executive Officer of Brooks and Steve Schwartz President of Brooks.

Bob will open the call. After which I will provide a more detailed overview of the second quarter financials and a summary of our outlook for the June quarter.

Before turning the call back to Bob for some concluding comments prior to taking your questions. Bob?

Thank you, Martin. Good day ladies and gentlemen.

We do appreciate you taking the time to join our call today. Before we begin our prepared remarks about the quarter and our outlook I want to take a moment to introduce and welcome Steve Schwartz.

Steve has joined Brooks as President and a member of the newly formed office of the Chief Executive. In his first four weeks working with us, he has been fully immersed with customers and employees including site visits across the United States, in Singapore and in Korea.

He is currently focusing his efforts on a critical review of our overall business strategy and is deeply engaged with a number of internal teams in the full Brooks Board. We are all looking forward to Steve to increase the pace of our gross strategies as we move forward.

And Steve we are all glad that you’re here. Now turning to our results, in the midst of the chaos in the markets earlier this afternoon we announced results for our second fiscal quarter which ended on March 31.

Revenue growth was up 40% sequentially and as forecasted we rebounded to strong profitability in the quarter with operating profit before non-recurring charges of the high end of our guidance of 7%. Before some positive non-recurring items that actually added $0.17 a share our diluted earnings per share were $0.16 in the quarter.

Our cash position grew again in the quarter and our working capital was effectively managed coming in at just a bit over 13% of annualized quarterly sales. Before Martin goes deeper into numbers let me take this opportunity to thank our employees and business partners throughout the world who have worked tirelessly to first manage the steepest downturn in our history and then to manage our steepest ramp as business recovered.

To put the ramp into perspective shipments to our top three OEM accounts increased 11-fold over the course of the past year, business with some of our next year accounts have grown 15 to 20 fold over the same period. Our customers and our shareholders are the principal beneficiaries of the efforts of our dedicated people who have balanced the short-term challenges while protecting our longer-term opportunities during one of the toughest periods in our history.

Simply said we could not have supported our customers’ requirements without the collaborative efforts of our entire team our permanent employees, contractors and suppliers. Turning to the business units.

Our Critical Solutions Group, which includes all of the Brooks complement product lines, had an excellent quarter. In addition to meeting customer shipment needs, they continue to record key design wins across all product lines.

Of particular note in our Robotic sector, is the progress we have made in expanding the scope of our collaboration with Yaskawa Electric. On our path to global market leadership in semiconductor and semiconductor related robotics, we are now well-positioned to offer our customers both here in the United States and throughout most of the world, a total solution that utilizes the best of Brooks leveraged by the extensive capabilities of Yaskawa as we work in a more coordinated mode in development, sales and support of advanced Robotic Solutions.

New product initiatives in our pumping systems with an emphasis on environmental impact and energy savings continued in the quarter at both an increased pace and a high level of customer engagement. Our Granville-Phillips Group has now formally rolled out their first gas analysis product under the new Simplicity Solutions brand and has received an excellent customer response.

This first product which represents a totally new approach to vacuum quality measurement is just the first in a series of planned introductions in our growing Instrumentations segment. Each Simplicity Solutions product offering will be important, highly differentiated, targeted and expected to expand the breadth of applications for our technology and broaden our market reach from R&D analysis, the process monitoring and beyond.

Within our System Solutions segment, our extended factory as anticipated had another quarter of very strong sales. Unlike the December ending quarter however they delivered double-digit gross margin within model expectations and triple-digit returns on invested capital.

Customers, large and small have gone out of their way to thank us for facilitating their own ability to exceed expectations for the March quarter as a result of the outstanding performance of this group. Again in addition to keeping up with the ramp, our proprietary systems group which designs and delivers unique subsystem level automation solutions took a number of important steps to ensure their long-term future in the rapidly growing LED arena.

We have now successfully passed critical milestones set late last year that will accelerate our revenue stream for this sector each quarter moving forward. Innovative solutions from this part of Brooks are an important element of the roadmap to lower overall device production costs for critical MOCVD process tools.

Automation is a key enabling technology needed to meet the challenging manufacturing cost targets that will determine the acceptance of LED technology in illumination applications. The Brooks lifecycle solution leverages our unique engineering, low volume and high volume manufacturing capabilities allowing the MOCVD tool maker to concentrate more resources on market and process development initiatives trusting the challenges associated with the automation subsystem to Brooks.

And beyond LED production tools returning an increasing amount of our attention to the emerging requirements for future OLED device manufacturing, which are presenting Brooks with new opportunities in automation, vacuum pumping and process monitoring and control. Finally, our global operations group continues its core work of supporting a large install based tools many through ongoing contractual service agreements.

The pace of contract renewals improved in the quarter, and newly signed agreements are offsetting the conclusion of some older agreements that supported legacy products no longer part of our core business. In addition, business development activities of the group remain focused on expanding our relationships with major OEM accounts becoming their exclusive pump and robot support resource.

During the quarter, we saw a real progress in implementing plans to ensure we achieve the expected benefits of these newer engagements. And now against that backdrop, I will turn the call back to Martin and then return for some final comments before opening the call to your questions.

Martin

Thank you very much, Bob. During my prepared comments, slide references relate to the PowerPoint presentation posted on our website to accompany these remarks.

As Paul previously mentioned, Brooks reported GAAP net income attributable to Brooks of $12 million or $0.53 per diluted share. The quarter benefited from a couple of sizeable non-recurring items.

We had an after-tax gain on the sale of intellectual property rights of $7.5 million after-tax and we recognized a $3 million tax credit from the application of favorable tax loss carry back provisions introduced by the Worker, Homeownership and Business Assistance Act of 2009. Impacting in the opposite direction we had special charges of $0.5 dollars in restructuring cost related to past restructuring plan.

As a consequence our adjusted net income on a recurring basis was $10.1 million or $0.16 per diluted share. On slide number four you can see the impact of the continuing round per semiconductor capital equipment markets, that resulted in our revenues increasing sequentially by 40% so $148.4 million.

We saw a solid gross margin drop through although we have strong expanded factory sales in the mix and gross profits improved $12.7 million to $38.9 million or 26.2% of sales. Research and development spending increased very modestly to $7.7 million as we continue to build competencies supporting our significant LED and instrumentation initiatives.

Higher selling general administrative expenses reflected firstly additional stock compensation expense in the quarter associated with the annual director stop ramp this occurs each year solely in our second quarter. Secondly, higher unemployment insurance cost in the wake of our significant restructuring last year.

And third, higher performance based compensation expense as we revised upwards our performance expectations. Sequentially, before special charges, we moved from a small operating loss or $300,000 to robust profit of $10.4 million a return on sales of 7%.

Slide five demonstrates how end market trends continue to be driven by strong demands from our semiconductor OEM customers with 85% of revenues into semiconductor end market, with three OEMs contributing about half of this share. Slide number six, sets out how the revenues and operating profits before non-recurring income and special charges reached from the December quarter, our first quarter of fiscal 2010 to the March quarter.

The Critical Solutions business provided additional operating profit of $6.7 million on $16.8 million of incremental revenues, up 40% slightly off from our model drop through as result of mix. We continue to clean out the legacy product situations to create the potential for this occasional mix performance.

The Systems Solutions business provided $5.4 million of incremental profits on $25.5 million higher revenues, with the extended factory business firing in all cylinders in the quarter; we regard this as an excellent step forward for this segment. Finally, our Service business provided $0.4 million of additional profits on slightly lower sales from the benefits of growth of higher margin repair operations as we exited some very low margin Legacy onsite labor service business.

The drags on our sequential performance have already referred to. These being high running plant insurance costs, highest stock compensation expense and higher performance-based compensation expenses.

Slide seven shows the progression of adjusted EBITDA to 11.7% of revenues in the March quarter. The EBITDA improvements over the past five quarters, has been $44 million on a $111 million of additional revenues.

From a Reg G perspective, please note that the adjusted EBITDA reconciliations are provided as a supplement to each of our quarterly earnings releases. We generated cash of $14.4 million in the quarter as shown in slide number eight.

Restructuring cash outflows were $1.4 million around the levels you should expect to see on a quarterly basis through the balance of the fiscal year. We utilized $8.3 million of additional networking capital and supporting the ramp, somewhat higher than planned as a result of additional inventories arising from the deferral of a significant program at a major customer.

Cash flows from operations were $7.8 million. Additionally, we generated $7.8 million of cash from the sale of Legacy Intellectual Property rights of which we used $900,000 to acquire the residual intellectual property rights of privately-owned Blueshift.

We anticipate those rights being highly complimentary to our future plans for the robot business. Capital expenditures for the quarter were $700,000 a modestly higher rate of capital spending is projected for the balance of the fiscal year, but full year spending should be less than $4 million.

Looking at our critical balance sheet accounts, it was set out on slide nine. You’ll note the growth in cash and marketable securities from $111.4 million to $125.8 million.

This includes those securities classified as long-term in our balance sheet which are nevertheless freely marketable and can be considered gradually liquid. We continue to put our focus on effective working capital management as a critical path to enhance return on invested capital.

Overall, our working capital velocity improved with working capital reduced to 13.3% of annualized quarter sales. In this area, receivables performance improved again with a DSO reduction of four days which limited the impact on receivables from increased revenue levels to $14.4 million.

The inventories increased by $13.7 million, the most significant casual factors being the deferral of a significant customer program and some significant systems that had delivery date shortly after quarter end. Overall inventory turns are headed in the right direction improving from 3.6 to 4.2 turns.

Day’s payable outstanding moved out one day with payables increased by $19.8 million. Accrued restructuring costs decreased by $1.2 million from continuing cash payments.

In the next three slides, I will briefly cover our sequential segment performance. On slide number 10, we summarized the sequential results of our Critical Solutions segment.

The topline increased sequentially by 39% with the strongest growth once again in our vacuum and atmospheric robot product lines that have greatest focus in semiconductor markets. Gross profits improved by $6.8 million to a margin percentage of 37.6%.

Operating expenses increased by $1 million from higher corporate and shared service cost allocations given the relative growth of the business. The segment reported a segment operating income of $7.7 million with 12.8% of revenues.

In slide number 11, we will review the systems solution segment. Revenues here grew by 54% heavily driven by sales through largest semi-conductor OEMs from our extended factory business.

Gross margins improved by $5.5 million to $13.1 million or 18% of revenues. The relative growth of this segment also resulted in higher corporate and shared service cost allocations.

The result being a segment operating income of $4.1 million or 5.7% of revenues. The global customer operation results set out on slide 12 shows 400,000 of gross profit non-growth on nominally flat revenues, with the mix favoring in high margin repairs as well as better margin performance from those repair operations, the gross margin improved to 21.2%.

With the lower corporate and share service cost allocations, the segment operating loss was narrowed to $0.5 million. After a focus on the past quarter I will provide some commentary on our outlook.

As Bob mentioned earlier although the June quarter has come in to clearer focus, there is a degree of circumspection from some of our customers around the September quarter at this time. However in evaluating the likely business levels to use for both our internal plans and external guidance, we add to these views the trends provided by firm bookings momentum, our unique insight into real time manufacturing plants at our major OEM customers through our extended factory relationship as well as the extensive contact we have with end users through our global field service network.

In terms of order bookings, those bookings were $151 million in the March quarter, a sequential increase of 11% representing yet another quarter with book-to-bill over one, a trend we see continued into April. Also we’ve seen OEM manufacturing plants follow a tendency to trend up rather than trend down.

Taking all the proceeding into account for the balance of the year, we see continuing growth in revenue and profits from second quarter levels. In the June quarter, we’re looking at revenues in excess of $150 million, that continuing growth together with margin expansion should result in adjusted diluted earnings per share before special charges of between $0.18 and $0.20 for the June quarter.

With the balance of profits improvement and reduced balance sheet investment to create those earnings, we believe we are driving increased value. As our return on invested capital which was 18.5% in the March quarter, should improve to nicely over 20% in the June quarter.

And with that I’ll turn the call back to Bob.

Thank you, Martin. As I said last quarter, we have a lot going in Brooks.

The first half of our fiscal year that began last September was dominated by the steep ramp and output to support the expanding needs of our semiconductor OEM accounts. We expect that the second half will see an increasing emphasis on our strategic initiatives, be that improved cost price structures of existing products or the growing impact of new products and increasing our penetration into new market segments.

We have returned to solid profitability and based on our shared view, both our own people and our customers, we are currently on track to meet or exceed the best operating financial performance delivered to our shareholders in the entire history of Brooks. From the solid foundation that we now have, we expect to continue to grow the top line, enhance the bottom-line and accelerate the work needed to broaden our market reach and rate of future growth Operator we would like to now open the lines for questions

Good afternoon. Thank you for taking my questions.

I guess first question, in terms of your improved visibility for the second half of calendar 2010, can you talk about the drivers there? I guess first, in terms of the confidence on sustainability for semis?

And then also, can you talk a little bit about what kind of mix shift you see in terms of your new products in the quarter and I guess whether it’s percentage wise or revenue target wise, how we should think about that.

I think we are seeing no particular major shift in the mix of our business going forward. We clearly see some movement from increasing our instrumentation business both from momentum in its own end markets as well as the introduction of Simplicity Solutions.

We of course had minimal LED revenues in the first half; we see some increase in the second half of the calendar year but still modest levels that LED momentum will really come into play in fiscal 2011 and beyond. I think if you probably see momentum elsewhere in kind of the some of the adjacent markets such as data storage where we see a nice degree of activity going on at the moment.

So, there is definitely a broadening out of where semiconductor related equipment is going beyond a very narrow band of end users with the drivers of the momentum in the first half of our fiscal year.

Very helpful.

C.J. as Martin suggested in his prepared remarks, we are feeling good through June a level of uncertainty on the top line in the September ending quarter, questions about the December ending quarter.

However, with a muted top line and with change in mix of products reduction of impact of the extended factory we actually see pretty good bottom line even on a muted top line.

My follow-up question, how should we think about gross margin moving from year as extended factory moves, lowers the percentage of the mix? Any kind of guidelines you can provide there?

I suggest that you are going to see sequentially kind of similar rates of improvement when you have seen over the past couple of quarters increasing and as things improve probably even greater potential. I think of it in terms of around about the rate of improvement you have seen in gross margins over the last couple of quarters.

Very helpful, thanks.

Just a follow-up on the previous question. If you look specifically at the extended factory, I think that was the one that you guys have about 18% gross margin in this quarter, is that right?

It’s within the segment that has the 19% gross margin on a blended basis between the Brooks-designed systems, the extended factory systems.

What’s the range that we can expect on that division of gross margin? Where are you guys modeling that, in terms of a range?

That business I think as Bob made reference to in his prepared remarks is in the low double-digits, it was performing well at that level, it has some upside as we would further utilize capacity and have some favorable mix impact but its in that kind of range.

Okay. So, kind of at that higher end of what your expectations are already?

It’s already performing quite nicely, yes.

And then in terms of the SG&A, you commented that the current quarter, you wanted a year adjustment for bonuses and things, what does the SG&A look like going into the rest of the year?

I think you should look at it being slightly moderated from where was in the current quarter but probably slightly more than we had in our first quarter as we are clearly adding bandwidth and capabilities to support the growth of the business.

Okay, and finally, is there a tax rate the guidance for next year, or then to the rest of this year?

I would say my best advice at the moment is that the 7% rate that we suggested without the discreet items, but we clearly the benefit of which we got in the current quarter that 7% right or so is still the best to use at this point in time.

Thank you very much.

Thank you.

Yes, this is Anupam here for Satya; I had a question regarding your lead times. With the recent increase in demand, how are you lead times performing, I mean what have your expectations been from, say, three months ago to now?

Hello.

Lead time are clearly contracting as the demands on our supply chain are coming much more in sync with the demands from our customer.

So you are not seeing any increase in the times?

No, just the opposite.

Thanks a lot, and congratulations, guys, on a nice quarter. In terms of the LED business and I guess the building backlog you’re probably seeing on that segment, Bob, what kind of confidence can you give me as that starts coming out in terms of revenues that you won’t I guess on the extended factory side see another type of these pressures that you got on the semiconductor side, would that business pick up?

Well our current extended factory operations that serve the semiconductor OEMs operate on a fairly simple model although it is a lower margin model. The reason it is a lower margin model there is that we are producing customer designed automation solutions.

The work we are doing in the LED space is across the broad spectrum. We supply critical components and in our lifecycle solutions approach to MOCVD tools, we have Brooks designed proprietary automation, and the business model is somewhat different there.

And we provided some color in terms of the expectation of lifecycle solutions in a number of our public presentations over the last six months, and that model is playing out quite well for us.

In terms of the balance sheet, Martin, once you guys start generating cash, I guess to your expectations, what’s the thought of that use of cash, you know, again, once you get that growing on a going forward basis?

I think strategically we believe that there are a number of product gaps or enhancements could build out this business very nicely, and that becomes the first priority moving forward. So it’s with that in mind that we would see utilizing the cash that we build at this point in time.

Could you guys review just a little bit about why fiscal year 2011 you’ll see an increase in your LED revenues? Why is it tied to that fiscal year?

And then second question, what were the percentages on the two big customers during the quarter?

Our references there to our significant acceleration compared to 2010, we think that 2011 will be the first of a series of significant years in that space. As you see a fundamental change in terms of the incorporation of automation solutions in MOCVD tools, so the work that we have been doing in the past six months in continuing through this year, really relates to at the system level an entire new generation of tools.

The next generation tools that come out, that will be more highly automated, perhaps cluster tools, you’re going to have greater content in?

The need for automation is absolutely critical to meeting the cost targets particularly for further deployment in the illumination sector.

And the percentage of the large customers?

Dave, two customers that are over 10% in the current quarter, one of those was over 20% and one was in the mid teens.

My question is in the context of your comments relating to uncertainty in the September quarter and questions for the December quarter. Have you heard about these questions and concerns from your major customers in the context of macroeconomic deterioration that we are seeing?

And if not, what is you thinking about how much of a drag that it can impose into the back half of the year?

I think all of the participants in the sector have been cautious about the second half and that certainly, the caution expressed by our customers and public statements in our discussions privately with them are centered on the broader global economic conditions later in the year.

In the context of what you see in the second half, where do you see more of the drag coming? Is it on the topline or is it on the margin?

As we said even with alluded topline by nature of the activities initiated internally at Brooks, we see even on a flat topline basis as an example we would have sequential improvements in our bottom line by those things that are within our control, changing product mixes, et cetera.

Thank you, operator and in closing, we just want to thank our participants for your support during the trying times and we look forward to sharing with you, our future progress. Have a good evening and thank you.