Well, good morning, everybody. Welcome to Brooks Automation Investor Day and Analyst Day 2016. It is a real pleasure and an honor that you take your time to come and spend the day with us. We think that what we are going to show you is going to be of a lot of interest and a nice update for the company. I am Lindon Robertson. I am the CFO of the company, and I am going to help work us our way through the presentations today with each of the presenters and the Q&A timeframes. Just tell you that one of the real intentions here is for us to get to know you more and you to get to know the broader management team as well. Take care of a little bit of housekeeping.
As you know, we are going to make this as productive as possible, that means that we are going to talk to you about the future. As we do that, the Safe Harbor Act always obligates us to remind you that we do not necessarily obligate ourselves to update those things day to day. Also, we are going to use some non-GAAP measures, the presentation is going to be online on our website at the end of the day. Inside of those packages, you will see GAAP and non-GAAP bridges and reconciliations. We always, of course, encourage you to use the GAAP combined with the non-GAAP to get the fullest story, we will be referring to both measures today. As I said, part of the intention of today is really to let you get to know more of the management team and hear from the broader management team.
I want to just take a minute and introduce some of the management that is going to speak. Then we have a broader audience of management too that is going to be available, helping with the demos. You have already met some of them, we are going to have some lunch that you will be able to sit with some of them during the lunchtime as well. First, let me introduce, we have Steve Schwartz, the CEO of the company. Steve joined the company in 2010. His background is in engineering. He comes from God's country back in the Midwest, which is where I come from. He has got multiple degrees from Purdue University in engineering, and he has an MBA from the University of Chicago.
He spent the first 14 years of his career with Applied Materials, and in that, as you talk to him, you will know that he knows the semiconductor business frontwards and backwards and can explain the science of it. Since then, since 2010, he has also become one of the industry experts in the life sciences space too, around sample management. I encourage you to get to know him through the day. Dave Jarzynka, also at the table here. Dave is our General Manager of the newly formed Semiconductor Solutions Group. Dave joined Brooks in 2004 in the last stint, he started his career with Brooks early on. His background is also engineering. During the middle of his career, he went, and he did some key roles with Intel, with the IBM company. He has worked in some of the most advanced semiconductor environments available.
He came back to Brooks, he has run part of the sales organization. He had, in recent years, overseen the entire semiconductor automation business. Most notably, I think one of the big accomplishments there is he helped lead the acquisition of our contamination control solutions business, the DMS business that we acquired. He's driven a lot of success in that business. Between his experience in the industry, the sales team, running a business, he was just a natural fit for being the General Manager of this segment. We couldn't be more pleased about Dave joining today and sharing his background and experience as well. You're going to hear from Dusty Tenney. Dusty is our President of the life sciences business. Dusty joined in 2014. Dusty's career started back with GE in their high-profile program.
As he progressed his career, he landed eventually at PerkinElmer, he was there 13 years just before coming to Brooks. At PerkinElmer, he ran about half the business, left as a Senior Vice President at PerkinElmer. He has really taken the life sciences business in a clear direction, culminating in a real solid, critical mass, a clear direction of strategy for the business. We couldn't be happier with what he's done with the business. He's here to talk about the direction that that's taking. As I mentioned, I'm the CFO. My past, I spent 27 years with the IBM company. I did another stint as a public CFO before coming to Brooks, an industrial company in the Midwest.
I've been here since 2013, and I couldn't be more excited about being on stage with you today and to talk about what Brooks has to offer going forward. We're going to talk a little bit about the past. We're going to talk a lot about the future, and we hope that we bring a lot of clarity to you. I'll mention that in this agenda, we're going to provide some Q&A time, and we think that that's a very valuable purpose of today. What we'll do is we'll do the first one at the end of Dave's presentation, right before the 15-minute break. We'll run that Q&A for, we'll try to take all the questions we can, but we may cut it off after 10 minutes. We'll do another one at the end of Dusty's.
At the end, all four of us will be up after I speak on the financial model, and you can address questions with all of us. Over lunch, feel free. I'll mention that we're also live on a webcast. Today, so as we do talk, we'll stay close to a microphone. In the Q&A session, we'll carry microphones around so people on the webcast can also hear the questions. With that, let me introduce Steve Schwartz, CEO of Brooks Automation. Thank you.
Thank you, Lindon, and good morning, everyone. We're really pleased that you're here. We've tried to construct the day around what we think will be most useful for you, but as Lindon mentioned, please use the Q&A time as you will. Today, I'm going to set the day up and talk about something about the strategy for the company, talk about life sciences, talk about semi, and we hope that there's something for everybody. We have people here who are keenly interested and keenly knowledgeable about life sciences, and we hope to be able to give you an idea about some things, some parts of the business, the Semiconductor in particular, which may not be quite as familiar to you, but we have a very strong franchise in Semiconductor.
For the semi people who have followed the company for some years now, a closer look at the life sciences business. Hopefully, we'll be able to elaborate enough that people have a good sense for how we're taking the company, how these two businesses actually fit together, and the kinds of technologies that we're bringing forward and the opportunity that exists for us. If we leave you with anything, we'd like to have you take three things away today. First, we have a very strong Semiconductor business, strong Semiconductor platform, the foundation of which is leadership positions in some key and critical technology areas. We found growth spaces inside a relatively slow-moving wafer fab equipment environment that provide exciting growth opportunities for us in semi.
In and around life sciences, we spent the last five years constructing a capability and a portfolio that now gives us a full suite of products in and around the sample management for the cold chain of condition. Dusty will be very specific about the opportunities that exist now where we encompass this entire portfolio, and some tremendous value that we'll bring from a life sciences business that will begin to be profitable as we exit this fiscal year. That's probably the most exciting point for us. Two very strong businesses, two profitable businesses, and we have a keen focus on the profitability of Brooks as a company and Brooks' two very strong business pillars as we go forward. Two strong businesses and a keen focus on profitability. Lindon will elaborate on that very specifically as we get to the end of the presentation.
Our objective, superordinate objective for us as we get to fiscal 2019, is to be able to deliver 15% operating margin out of these businesses, and we have strong confidence that we're on a path to do so. A little bit about Brooks, just to get people grounded in the foundation of the company. We're just over a half billion dollars company. 20% of the revenue comes from a life sciences business that we've grown from zero five years ago to 20% of revenue today while we grew the Semiconductor business. This is probably the most striking part, is we've grown a life sciences business, not at the expense of the Semiconductor business. While we've grown the Semiconductor business, we're headquartered in Chelmsford, Massachusetts, but our footprint allows us to satisfy Semiconductor wherever semiconductors are made, wherever tools need to be serviced.
We have a life sciences footprint that also allows us to be very successful to deal with all of the life sciences businesses at hand. Importantly, and in particular, we're also prepared for China. During the next five years, the changes that will occur in China in semiconductor, the expansion that will occur in China for life sciences, we're ready, we're positioned, and we see tremendous growth potential there during the next five years. You'll hear both speakers who follow me talk very specifically about opportunities that exist in China, but we're ready and positioned and well-established. To get everyone calibrated, we depend on two critical core technologies, of which we're the world's experts. We have automation capability that's incredibly reliable, very precise, and contaminant-free, and this is essential in the semiconductor environment.
You'll see some products here that Bob Caveney will be able to walk you through later, critical automation capability coupled with cryogenic technology that allows us close to absolute zero kinds of temperatures, plenty cold for life sciences, but allows us to create a vacuum in a semiconductor environment. It's these two core technologies that we utilize to great success in the semiconductor environment for some critical subsystem capabilities that exist in semi, and the coupling of these two technologies for automated cold sample management in the life sciences space. The foundation of the two businesses came from the core technologies of the company, and we'll continue to build on these as we move forward.
I want to emphasize that the strategic focus for the company over the last three years has been repositioning of the semiconductor business around growth spaces and utilization of critical technology to make sure that we have strong and growing number one positions in the critical markets where we participate. We've built a life sciences business. We started with the fundamental core technical capabilities of the company, and we've since built out adjacent capabilities related to consumables and sample management and now services business. We'll continue to build on the leadership position in life sciences. We've captured a market need by defining the solutions, and as we've defined the solutions and defined the needs, we're capturing that.
The opportunity we have in and around life sciences is a brand-new market, and the solutions that we bring are the ones that are being adopted by an industry that really needs answers to the sample management issue. Finally, we'll continue to be responsible stewards of capital. The number one use of our resources is organic product development, innovation, new technologies, new capabilities to meet the needs of the customer requirements, both in semiconductor and life sciences. In the room today, we have two examples, more than two examples, but examples in both markets that we brought, of products developed inside Brooks that we think are critical to enhance the next generation of capability, both in semiconductor and in life sciences. We'll continue to add capabilities to the company.
Where there are M&A opportunities that add critical capabilities that we don't have or that we want to accelerate the capability that we'd otherwise develop, we'll always be on the lookout for different acquisitions and capabilities to bring to the company, but with a very responsible look at the return on the invested capital on these investments. During the last three years, we paid a very meaningful dividend back to shareholders. The reason we're particularly enthusiastic about having you here today is the company's at an inflection point. We've spent the last four years going through a very significant transition of the semiconductor business portfolio and streamlining the business model, and on crafting a portfolio and creating a portfolio that will serve the life sciences space. We've been through a number of changes in the company during the past four years.
We are exactly at the point we want to be, as we are four months away from the start of our fiscal 2017. When we hit 2017, when we hit the start of 2017, we have exactly the semiconductor portfolio that we want. We have exactly the life sciences portfolio that we want. Both are complete. Both are in growth spaces. Both are ready to grow. We're at a critical inflection. As we get into 2017, we'll start to hit on all cylinders and really deliver on the profitability of the company. For two minutes, I'm going to take you back in time. The rest of today will be focused on the future for the company. I want to take you back to fiscal 2011. 2011, as a company, we, Brooks, where 90% of our revenue came from the semiconductor business.
We had just begun to dip our toe into life sciences. We had all intentions to plunge in. We'd done the first of our acquisitions. We had less than 2% of our revenue coming from life sciences, but we had a very clear idea about how we were going to go forward in life sciences. We had a semiconductor portfolio that really caused us to be riders of cycles. As semiconductor went up and semiconductor went down, so did we. We took a very strategic look at the product portfolio. We understood clearly where we were going to go in life sciences, but we looked at the semiconductor portfolio and approximately 40% of the company's revenue in fiscal 2011, we deemed non-strategic. It was low potential. These were some pretty good businesses, but I'll be very specific.
We had a business called Granville-Phillips in 2011, which was a vacuum instrument business. It was a great little business, around $28 million-$30 million of business, but one that we couldn't grow. We were number three position against two very strong competitors, and we could hang on. It was a business that we didn't have potential to grow, nor did it fit the strategic portfolio that we wanted going forward. Similarly, we had a contract manufacturing business that at times was as high as 30% of revenue for the company. We basically manufactured semiconductor automation products for five different customers in the semi business. Some of those products that we put together consisted of components, even robots, from competitors of ours.
We were literally an assembler, a contract manufacturer, but without the ability to grow the business and without the ability to push our technology into the space. It was a business that was going to go up and down absolutely with semiconductor cycles, and the return on invested capital was high, but the gross margin profile was in the low teens. It was a business, again, that we were particularly good at, perhaps, but it was very low potential for us going forward. The most important part, right in the center of the automation space, ATM, it refers to atmospheric robots. On the front of every process tool, maybe 500 or 1,000 process tools in semiconductor fab, there's a robot that operates in atmosphere. Not under vacuum like the robot you see here, but under atmosphere.
This is a very good size business, and in 2011, we looked around, and we had extremely low margin, great products, extremely low margin, and no fewer than 12 very strong Japanese competitors who made excellent robots as well. They competed on price. This is a highly commoditized market, and it's tough to let go of something when you think you're really good at it, but the only way to gain more business was to discount more and more. We intentionally defocused all of our activity in the standalone atmospheric robots, and at this quarter, at the end of this month, we end the last of our formal atmospheric robot relationships with a company called Yaskawa Electric in Japan. We will no longer be the distributor in North America for their atmospheric robots. In fiscal 2017, our atmospheric robot business will be less than 2% of the company's revenue.
Intentionally, we de-emphasized this and fully 40% of the company's revenue we've effectively gotten out of. During the last five years, we intentionally got out of a significant portion of the revenue for the company. We assessed the portfolio. We keep high-value semi, and we keep life sciences, so that when we get into fiscal 2017, we anticipate that fully 25% of the revenue for the company will be in life sciences. Tremendous growth potential in life sciences. What's more important, we've adjusted the semiconductor product portfolio so that it consists of some high-growth spaces. Two-thirds of the revenue that we anticipate in fiscal 2017 will be from high-growth areas. Life sciences, Dusty will talk to you about this. The opportunity for life sciences is growing 15% per year because of the space that we're in, because of the capabilities that we have.
Dave Jarzynka will talk about half of his revenue in the semiconductor business, fully half of his revenue coming from opportunities that exist in contamination control in deposition and etch, which drives the vacuum robot technology, and in advanced packaging, where the complexity of the automation for handling substrates that are different from silicon substrates provides tremendous growth opportunity because it takes us away from a commoditized space into high-growth technology areas where we have fully differentiated technology capabilities. Fiscal 2017 is a pretty significant turning point for us. Again, the point of picking 2017 is, as we exit 2016 four months from now, this will be the portfolio that we drive, and the product is very focused in and around semi and in and around life sciences.
The thing to note is when companies go through such dramatic transformations over a period of years, often this is the time when the companies will lose money as they make a pivot like this. This was a very deliberate transformation of the company that we spent the last few years going through. We're particularly pleased that during this period, we grew revenue, we grew operating income and earnings per share. Revenue from 2013 to 2014 grew 14%. From 2014 to 2015, revenue grew 14%. Operating income went 7 times, and we almost quadrupled earnings per share. The reason that we're so enthusiastic about this period, about this inflection point in the company, is it's at this moment that the real potential for the company comes out. I want to pause here just for a second to be clear.
Two years ago, we developed a model that we put out that guided what our expectations were for a range of capability in 2017. Today, as we're much closer to 2017, we're four months from starting the year, we're going to refine this range. We're going to tighten it down a little bit. It's not exactly the same range that we had when we put it out two years ago. The company's a different company. The earnings potential, the earnings capability of the company, it's still outstanding. The growth that we have from fiscal 2015 to fiscal 2017 will be tremendous. The expectations that I want to set are with ranges that are slightly tighter and slightly lower for 2017. We're going to talk to you about the timeline.
We don't back away from these higher numbers at all, we're going to talk to you about the timeline for achieving those and going past those. 2017 will be adjusted slightly, but the potential that exists out to 2019 is tremendous, and that's really the thing that we want to be able to frame today. One quick slide on semiconductor position. Dave will talk to you about it in much more detail. I'm going to explain this slide a little bit here, because we show three different segments in what we call WFE, wafer fabrication equipment. For those of you not so familiar with semi, wafer fabrication equipment is the capital that's spent on equipment that goes in to make chips. Intel gives guidance, Samsung gives guidance, Taiwan Semi, they spend capital wafer fab equipment.
Over the period of 2013 to 2015, the wafer fab equipment market grew at a CAGR of 7%. Critical and essential and important in and around this 7% growth, there are three segments where we participate fully that grew much higher than 7%. In deposition and etch, revenue for Brooks from the deposition and etch segment that's driven by the vacuum robot capabilities that we have, far and away the market leader in vacuum robots, our revenue grew 12% CAGR in deposition and etch technology. We anticipate for the next three years, this will continue. This kind of growth potential, deposition and etch will outgrow wafer fab equipment. Similarly, in a new space, a relatively small space, but one that's growing, is there's a lot of complexity around advanced packaging or wafer-level packaging. When WFE was at 7%, Brooks grew 23% CAGR in advanced packaging space.
Contamination control is a relatively new space the way it's implemented today, but it's an old space. Contamination control, the business that we're in, is in the cleaning of the wafer boxes. Periodically, in the processing of semiconductor wafers, the wafer boxes are cleaned from time to time to remove contaminants, to remove residual materials that come back into the wafer box on a wafer that's just come out of a process chamber. The critical issues here are those wafer boxes used to be cleaned occasionally in the factory, and they were cleaned with manual systems. With the line width shrink from 20 nanometer to 14 to 10 nanometer to seven nanometer, the wafer boxes, the wafer carriers are cleaned much more frequently, and they have to be done in automated systems. We identified this as a critical area.
We have critical expertise in and around contamination control and automation. We acquired a company two years ago in the contamination control space, DMS. It was a German company. One year later, we acquired a company called Contact, also in the contamination control space. We estimate our market position and market share is about 80% in this particular space today, and the growth rate we derive comes from our growth rate, as we believe that we capture most of the business. Our estimate is the market's growing about 25%. We continue to see huge potential in the wafer fab equipment space driven by contamination control. We're in three critical segments, outgrowing wafer fab equipment.
When you hear us talk about our models, our expectations for wafer fab equipment, we anticipate that somewhere between 2% and 4% growth rate higher than the growth rate of wafer fab equipment for the coming years. Just a little bit about life sciences. Without question, the landscape for life sciences sample management is changing. It's changing dramatically. I call your attention here. In 2010, there were about 500 million samples stored. In 2010. Sorry, in 2000. 2000's a critical time because prior to that, pharmaceutical companies were storing chemical compounds. They were doing drug discovery and drug development by high-throughput screening. Any cold storage, any automated systems, were really about racking and stacking and preparing assays for tens of thousands of samples. Automation was pretty critical for the ability to do high-throughput screening tests.
As we began to sequence the genome, as people realized that cures would be cell-based and biological-based, people began to store more and more biological samples for various purposes, not just for sequencing of DNA, but also for proteomics and other things that would help us to do more discovery. As diagnostic capabilities began to be enhanced, the numbers of samples would increase. In around 2010, people realized they could do population studies, specific disease studies, and people would start to collect millions of samples. The advent of colder storage systems, minus 80 degrees Celsius as opposed to minus 20, and larger systems became certainly more popular. There was still a distinct lack of operating procedures, and the collections were still managed very locally and by a specific site, not across sites and not done well.
What we've seen now today and what we anticipate going forward is that the customers recognize now that this isn't about samples. The samples are the strategic assets of a company. They need to be protected, they need to be utilized and measured, and then restored. The tracking of samples, the provenance of the samples, the ability to understand the entire cold chain of condition, and to put standard procedures and protocols so that they can ensure that 10 years or 20 years or 30 years from now, the samples are still the same valuable assets they were at one time. We're now talking about something of the order of 6 billion samples, an explosive growth in the number of samples that are stored, and the critical requirements around how do we manage those. Dusty and his team have crafted a capability to take full advantage of this.
The company that we recently acquired, BioStorage, the founders of that company were prescient. They understood that this was going to be the trend. They understood very clearly the means by which samples were to be stored, had to be managed, and the kinds of capabilities that were going to be required. We were really fortunate to be able to acquire this company after they'd had a lot of experience getting into this position, and the ramp that they're on is one that provides tremendous growth potential for the company. The position of the life sciences business is strong. We have more than 800 customers, the number of customers is growing rapidly, but each one is very different.
We go from the smallest academic institutions that are doing tests on a few tens of samples to the largest pharmaceutical companies on Earth, where they have millions and millions of samples to be managed. The one thing that they all have in common is sample integrity is key. The security of these samples is paramount. What we've done is we've assembled a capability, a full suite of capability to manage samples. Every one of these customers has different samples, does different things to the samples, and they take different capabilities from Brooks, sometimes just automated storage, sometimes automated storage and transport, all the way to services for us to manage the samples from the time the samples are collected until they're ultimately dispensed. We've created a portfolio that gives a common preservation capability, but different means by which we deliver it.
The position that we have is extremely strong. 800 customers is still a very small fraction of the potential customers that exist. It's one that we measure, that we estimate to be the potential more than 10,000 customers who might be candidates for the sample management capability that we provide. Finally, we're talking about a $1.3 billion available market in and around the space that we've crafted today. When we first got into the business, we got into the automated cold store business. We had a market opportunity between the freezers and the automated freezers, around $300 million. Subsequent to that, we added FluidX consumables capability. We made an investment in BioCision, some of the storage companies that we acquired also had consumables, and we added about a $300 million consumable opportunity.
On top of that, we developed the BioStore III Cryo and the CryoPod to give us an offering at the minus 190 degree space. We put automation for the first time into the ultra-cold storage space. With the acquisition of BioStorage Technologies, we added a half billion dollars of services capability to round out a complete portfolio from tools to processes to informatics and consumables. We added a $1.3 billion serve available market for the company, and more importantly, one that's growing at 15% CAGR. An extremely attractive opportunity, a tremendous market portfolio. A little bit about strategy for the future. The strategy for the future looks a lot like the strategy of the past. Let me be very specific. We're going to continue to extend our leadership position in semi. We have crafted the portfolio that we'll continue to drive. Dave's got leadership products.
He's got a roadmap that contains the next offerings that we'll bring to the industry that have different demands at seven nanometer and five nanometer. We're going to take full advantage of an exploding sample management business in and around life sciences. We're going to drive margin expansion across the company, but in each of these independent divisions. Dusty's got a business that's now running at more than $100 million, and it'll turn profitable by the end of this year. After four years of investment, this is going to make strong contributions to the company, and we'll continue to be responsible stewards of capital. Where does it take us? Driving this strategy gives us operating margin that we intend to take two times to fiscal 2019. Earnings per share significantly above $1 per share, a place the company's never been.
By the time we get to fiscal 2019, return on invested capital will be a very respectable 13%. You'll hear from the speakers today what contribution to each of the businesses will make to that. We're very confident about our position. We're very confident about the potential that exists, and also financially, what that means to shareholders who participate in the company. Again, strong semiconductor platform, life sciences in exactly the right position, in and around a very profitable business with a complete suite of offerings focused on profitability and getting in 2019 to operating margins of 15%. I really thank you for your time. You'll hear more about the specifics of each of these from the speakers, starting out with Dave Jarzynka, who'll give you an idea about how he's driving his semiconductor business. Thank you. Dave?
Thanks, Steve. Good morning. My name is Dave Jarzynka, responsible for the Semiconductor Group, and welcome to Brooks Semiconductor Group. I appreciate you guys taking the time here today or via WebEx. It means a lot to us to share what we have, and I look forward to more questions as we go forward. Number one, I want to start with a little bit of context of what Brooks does, and step back just a little bit. All of us probably have smartphones, video games, gadgets, televisions, things that we use every single day. Well, Brooks has probably touched those devices hundreds or even up to 1,000 times in what we do. What does that mean? How do we do that? Within those devices are semiconductor devices, there's MEMS, there's advanced packaging, there's specialty coating on those devices.
With Brooks Automation in our controlled environments and vacuum, we're helping factories and OEMs process those devices every single day. More importantly, we're solving some of the high value-added problems within those devices that allow either our end user customer or OEM to advance that technology and deliver a value proposition to you, to us, in everything that we do every day. It's a good spot to be. I'm going to give a little bit about the business today, then I'm going to move forward to what's driving our growth. Let me first start with semiconductor at a glance. Number 1, as you can see, Semiconductor Group is the largest portion of Brooks. It has been for a significant amount of time. More importantly, Semiconductor Group is a significant cash engine for the company and growth engine as it goes forward.
It is providing the capital for us to move forward in our strategy and our plan, both in semiconductor and in life science. I'm really pleased with the operating income of the business at 11% in 2015. Just to give you an example, in 2013, we were right around 4% operating income. Our business model continues to stay focused, continues to deliver on what we do as we move forward. Let's talk a little bit more about what does Semiconductor Group do? What is its mission? I'm going to step back just a little bit. This is a semiconductor wafer. For those, this is made of silicon. On here is hundreds of devices. Hundreds. Whether it's a processor for Apple or an Intel server processor or video game device that's on here or a MEMS device.
These wafers can be worth hundreds of thousands of dollars to up to $1 million, one wafer. A factory may do 30,000 of these in a month. They're extremely valuable, right? These things are worth money. This is how the industry works. What you look for is really good yield. When these go through, you want all your devices to work. That's really hard. Why is it hard? The structures on these devices. A human hair is about 75,000 nanometers. These devices are about 7,000 to 8,000 times smaller than a human hair. Today, a 10 nanometer, just to put that in perspective, DNA, I think, is around two and a half nanometer. Really small, really valued devices.
Boy, I wish my partner that moves these around every single day and touches these every single day in (current rates environments), they better be the right player in the industry. Not only today, but tomorrow, it's getting harder, right? You got to rely on a company that has depth, and that's what Brooks Semiconductor Group is all about. What we do is we provide the mission-critical transport of these, I say transport, it's not automation. We've got these, right? These are valuable. While we have these, we don't add adders, we add some value to it at the same time while we're moving these through the fab. It's a really important position to be as we move forward. Secondly, we help control the environment. We'll talk a little bit about the carriers that these go in or the vacuum subsystems that go in.
We're in some pretty good areas with the right partners where we want to be within semiconductor devices. I'm not going to throw it. It's too valuable. We're lucky to have four critical market positions within this market. Number 1 positions within the marketplace and proven leadership. Two of them you're probably very familiar with for those who cover semi. One is vacuum automation. This has been our franchise since day 1. We've developed this business for over 25 years, and we continue to grow as the market grows within depth and breadth, and we continue to be with trusted partners. Same thing with our cryogenics business. These two pieces not only are important for our semi growth, but they're also well-positioned within life sciences.
We have core competency in the company that has been able to provide a complement to that business and help out when needed. More importantly, we targeted a couple of real important segments that we didn't play in a couple years ago, and we've done very well. Number 1 is contamination control, and I'll talk about that in a little bit. It's all about this thing called a FOUP, which I'll show you in a minute. Secondly, advanced packaging, which we entered about four years ago. It was a strategic decision, and has done very well. The market is growing very well, and we're outpacing it. All of this is backed by a trusted platform. We have a global service network. I'll give you an example. 10 years ago, we were in China, we were in Taiwan, we were in Korea.
We have extreme knowledge within our installed base, working with both our OEM customers and our end user customers. What is this all about? We're enabling a process advantage. When we do our job well, whether it's selling directly to an end user, they're improving their process. Our OEMs are able to make their tools more competitive in the marketplace, either through a throughput enhancement or cleaner or faster, or compensating for something that helps the process. That's really our mission, and that's where we're really structured in what we do. I want to touch a little bit about our trusted partners and our customers. This is a real important aspect about our business model. We play in two pieces of the market, the end users, the folks that make these devices every single day, and the OEMs, the equipment makers that are providing the equipment.
Why is this important? We're very, very deep entrenched in an end user fab, understanding the high-value problems of the future. Our FOUP cleaning business gets us even deeper into this space. Not only is it a good space for FOUP cleaning, but we're learning a lot from those end users of what we need for future generation products. Secondly, we're very close and we're partnered with the OEM. Let me give you one example of doing our job right. Last year, a leading end user in Asia, needed to increase the temperature that they processed the wafers on. Very, very hot wafers. This is a significant challenge in the industry because when wafers get hot, they're harder to handle. They're slippery. They're harder to move. When they get hot, everything in the system is moving, right? You're changing the temperature in everything that you do.
We identified this and positioned a product pretty early on. We also had a leading OEM in Asia, that is number one in a few of their markets, that was trying to grow into a new space. We ended up partnering with both of these folks, and what we had to do was, we had to make sure we could handle hot wafers. Oh, yeah, handle them 30% faster than you did yesterday. I know it's hard, but now I want you to do it even faster. Oh, by the way, the precision that is needed to do this is going to be 4 times better than it was in prior history. Oh, by the way, our system is moving with temperature and things are changing. We really don't want to change that because we've been investing in it for so Can you help us?
The end result in this space is we solved those high-value problems. The products got qualified. More importantly, our OEM partner won market share, we won market share, and the end user is happy. That's what it's all about for us, are those trusted relationships, really make sure we can cultivate and grow that and solve high-value problems in the future. Let's talk about what it means for performance, just to give you an example. If you look at our revenue performance from 2013 to 2015, we've grown at about 28% CAGR. Again, that's a big piece of our strategy. We talked a little bit about our strategy to pick the right market segments and our strategy to ensure that we're targeting growth with the right products. That's been a big driver of that. Secondly, look at our operating income performance. Our operating income has grown at 84%.
That is strategy. We've done this through a position of strength. We've done this through strategy by focusing on the company in the right areas, ensuring our investments are placed in the right areas, and ensuring that as we move forward, doing things more efficiently in what we've delivered. Very strong revenue growth. We continue to improve profitability. What's next? We're not done. As we move forward, we're focused on: how do we accelerate this growth, and how do we accelerate our value to our customers across the globe? Brooks Semiconductor Group is all about that, okay? We have positioned our groups together to get even stronger on solution. We streamlined the business even more. Let me give you a couple examples. As we did this, we delivered $12 million in cost synergies to the bottom line, okay?
Secondly, we're now much more customer solution-focused than we ever have been. We go to market with a solution mindset across the board. We're just starting to look at how do we optimize our footprint across these groups. How do our factories work together? Do we need more than one factory? Do we need separate repair sites and operational sites? Last, we have an extremely large install base. By bringing our product groups and service groups together and that knowledge, we have over 10,000 of robots in the install base. We're partnering with our OEM customers, we're working with end users directly. We're positioning our products to go after this as the next phase of growth. Let's now move into those growth drivers and talk a little bit in more detail. You've seen a little bit of this with Steve. I want to go a little bit deeper.
From 2013 to 2015, we've been able to grow the business by 11% CAGR. We continue to outpace. You'll see us continuing to grow at a rate two to four points higher than the industry. More importantly, look at our growth rates in some critical segments. Contamination control has gone from an area where we didn't play to an area where it's a significant part of our business today. Deposition and etch has grown at a rate of around 21%, we continue to outpace the industry. Dep and etch within the industry is growing around 7%, we're growing at 21%. Wafer level packaging, which again, we're growing significantly above industry rates. If you look at this, the exciting piece is about 57% of our revenue is growing at a CAGR of around 22%. That's by design. We selectively targeted these segments that we went after.
We continue to cultivate the core business as well. It's very healthy, very predictable. As Steve mentioned, we continue to look for, in addition, new areas. We're in a position of strength to do this very selectively. Our partnerships with our customers, as we see other areas to potentially grow within these segments, we'll take advantage out in the marketplace. Let's talk about what's driving the growth behind some of the market segments. One of the key technologies in most of your advanced devices today is a transistor technology called FinFET. Why is it important? Number one, they're making on advanced technology nodes that are very small. Secondly, they deliver very low power. We all want better battery life in our products and what we do.
They're very difficult to make and very difficult to yield in high volume. We're very well-positioned in the DepEtch space on this marketplace, and contamination control and FOUP cleaning is the standard on these advanced technology nodes. We see significant growth. Within these spaces, we see a multiple of growth because on advanced technology nodes, they need more and more of this equipment. Secondly, the Googles of the world, the Facebooks of the world, all of our interaction is driving huge growth in server farms. This market is at an inflection point. Today, it uses disk drives, disk storage in the majority of them. The market is getting more and more comfortable with moving to what's called 3D NAND or 3D Flash. It's semiconductor devices, basically, in the marketplace. Okay? Why is that important?
If you take a look here at this device, this is one micron, by the way, one millionth of a meter. These are layers of buildup. This is a 48-layer device. This is a via that connects it all. This requires a tremendous amount of Dep and Etch. This requires a tremendous amount of precision to do this stack correctly. This is very difficult to do. The etching here has to be horizontal and vertical. Very little room for particles, contaminants in the process. Etch and dep growth and our FOUP cleaning is positioned extremely well in the segment. Lastly, advanced packaging, which is a sub-segment of this. As these devices move forward, they need to get smaller. They need to get thinner. They need to get more compact. They need more performance. Within this space, the wafers are non-standard.
You'll see an example here, a wafer that you can bend, not a typical wafer structure. These wafers are thin, they're bowed, they're potato chipped, they have rough edges. That's exactly where we've chosen to put our value, because it's hard. These are high-value problems that continue and emerge. Our atmospheric automation and vacuum automation is well-positioned to capture this growth. We targeted it four years ago. We're on a very strong growth trajectory, now the market is investing even more. IDMs right now across the world are investing in this type of technology for captive packaging, Brooks is positioned really well in this space. I want to talk specifically about some of our areas of growth. Number 1, vacuum automation. The SAM is expanding because etch and dep continue to grow. Etch and dep has a lot more legs left to it with 3D Flash.
Multi-patterning is not going away tomorrow. EUV will most likely be used very selectively. It will come, it will not erode from the etch and dep growth position. Our SAM is expanding, we're also positioned as a number 1 market leader. Another important dynamic on SAM is the large companies that make process tools, for many years, they had captive automation. They've been outsourcing this more and more every single year. This trend continues, in fact, it's accelerating. This is a whole another part of the SAM that's coming forward as we deliver our vacuum automation solutions. The market itself is growing at about a 7% CAGR. Let's talk about value within the space. Many years ago, you just needed reliable automation. We went to clean automation. We had to get faster.
Right now we're at a point of where the market wants zero variability in everything they do. Because it's so hard, they need automation and other subcomponents to act the same, not only on day one, but for the next three to five years that that product is running in a fab. What that requires is a lot of capability in software, in algorithms, in intelligence, and experience on how to do that the right way. Brooks brings that to the table. As a next step, we need to get smarter. As our customers and our systems change and adapt over time, we're positioning our vacuum automation systems to capture that through sensors, understand what to do, and in real time adjust. We're bringing our core competency that we've had for over 25 years into a market that is expanding.
We have a number 1 position. We have trusted customers. We're in a really good position to continue to grow as we move from 14 to 10 to seven nanometer. Let's talk about the second position for growth, contamination control. I want to step back one minute and describe what this is all about. I'm amazed how many people here knew what a FOUP was, by the way. When you think about FOUP, how did they come up with FOUP, right? Way back when, I was part of that, I'll just give a little story. This is a FOUP. It stands for Front Opening Unified Pod. I know why the front's there, right? The teams practically killed each other to decide if wafers should come in the front or the bottom.
They had to put the word front in, and I think they used unified because they were so shocked that they all got along and finally aligned to what the standard would be. I think the other two words are purely filler, right? Don't be confused by FOUP. It is a wafer carrier. 25 wafers can fit into here. More importantly, this is a controlled environment. The wafers are spending more time sometimes in this environment than they are in the tools. What the industry has started to track is what happens when the wafer's in here. You got a wafer sitting in here, in this device, it's outgassing. Just like your new car does, you smell it. All these fumes are coming out, and all these gases are coming out. It has maybe some resist particles hanging on. Particles are getting in everywhere in here.
As this is an atmosphere, this is a plastic material. Water is getting into this FOUP. It's being absorbed by this FOUP. All of those things are really bad when you want to go do your next run of wafers. It's not starting at ground zero, it's starting with contamination. You got to remove this contamination from the FOUP, and that's what we do in contamination control. In fact, we do it really, really well. What we do is first we inspect the FOUP. Are all the dimensions correctly? Are the labels correctly? Are there any damages? Our job is to make this a high purity carrier. Next, we put it in a proprietary wet cleaning system. We've got to dry it out. We have a lot of intellectual property, and how do you do that effectively really quick?
We put it in a proprietary vacuum process to get rid of all those organic compounds and gases that have contaminated this thing. What the market's seeing first in Logic is, hey, the more times I bring this to this great Brooks M800 FOUP cleaning tool, I'm getting better yield. Let's do it more often. A couple of years ago, they had to buy for one tool that would handle about 5,000 wafer starts. Today, one tool handles 3,000, and it's going probably to 1,500. More and more steps. This is actually a process tool and a process solution on what we're going to doing. Huge value. When they open up a new semiconductor fab, the second tool in is a row in line of Brooks FOUP cleaners as far as you can see. Significant impact on yield in what we do in the marketplace.
This is a FOUP, or carrier of wafers. Let's talk about where this market is going very briefly in terms of value. I mentioned more cleaning steps. Our SAM is expanding. More importantly, the memory market now has said, "Hey, wait a minute. For 3D NAND, this stuff is pretty hard. I'm doing manual cleaning. I think there's advantage of FOUP cleaning in this space." That work is underway. The memory market will start to adopt FOUP cleaning and conditioning. Our SAM will grow, quite significantly as this market grows. We're very well-positioned within 3D NAND flash, working with customers on FOUP cleaning technology. This market is at 24% CAGR. We're growing much faster than that. Let's talk in terms of value. Here's where it gets even more exciting.
I mentioned from washing to particle clean, but right in this space, they're now doing inspection, and the next step is to get smart of how to condition this FOUP, which is what are the problems with it. Our tool and our platform is very modular and very smart, and our install base is growing. The next opportunity that we have is to upgrade that install base and provide more value to our platform and what we're doing on advanced technology nodes. We're extremely well-positioned with our footprint and our install base and our advanced technology that we're bringing to this market. Let's talk briefly about advanced packaging. Advanced packaging is a market that the market has moved from a packaging market to what's called through-silicon via. The basic premise of it is wafers are being used to create interconnect.
They're thinned out, they're stacked on top of each other, and what that allows is very high performance, very low power, and a more denser package. It's coming closer to a dirtier back-end packaging facility, more closer to semiconductor devices. It's coming closer to Brooks. It's coming closer to us. About four years ago, we looked at this and saw a trend of packaging smaller wafers to larger wafers with 300-millimeter growth, and we targeted that trend. And right now, the first volume fabs for 300-millimeter growth from some of the large IDMs are starting to come online for advanced packaging at 10 nanometers, and they have a lot of Brooks equipment in it. Four years ago, you'd see very little Brooks equipment in this space. The reason, as I mentioned, it's about unique wafer handling and about what are those high-value problems and positions.
We have about 25 customers today, which is real exciting, and we're in 6 applications. We're in the bonding space, we're in the inspection space, we're in the etch space, we're in the dep space. We're well-covered from an application point of view, and we're well-positioned for growth within the market. Our SAM is expanding, and our value is expanding. We went from regular wafers to warp wafers, to wafers that are in separate carriers, and now we're getting smarter. I mentioned, one of the core competencies of the company is vast software experience on how to do algorithms very fast and move things in a very precise way. That value proposition is going to play an important role in this market because we're going to start to identify what does that wafer look like? How bad is it bowed?
How is it positioned, and how do you handle it, and how do you move it, and how do you keep that line moving? Our value here is very strong. It continues to grow, and our SAM is expanding. What happens in the future? In 2019, we will continue to exceed market growth. Very confident with the business model. We will exceed the market by two to four points continuously as we move forward, and our business model continues to get optimized. We'll exceed 15% operating margin for the business. Very strong as we move forward.
In summary, we've got proven success in market leadership. We're gaining share in our high-growth segments. We're increasing value for leading customers every single day, and we're positioned actually to find that value and harvest it, because we have a large amount of engineers, a large amount of people local to our customer base, and our profits are accelerating in the industry. Thanks for your time. I appreciate it. I think now we'll take some time for questions.
Yeah, Dave, thanks very much. We're going to open up for Q&A now, and then we'll take about a 15-minute break. Just any questions could pertain to Dave's or Steve's presentation, but just want to take an opportunity to see if there's any questions about the material. I have a question here from Edwin Mau. Let's use the microphone, because we are on a webcast, Edwin. Thanks.
Hi. Thanks for taking my question. Thanks for the presentation. Two questions, I guess one for you, Steve. You talk about your target model, likely, I guess you said maybe coming in a little at the low end of your previous target. Just can maybe, if I just quantitatively talk about what drove that, what is the change? Are you guys reinvesting more in the business and stuff like that? If you can give us some color on that, and I'll follow up question with Dave.
You want to start, man?
Yeah. Actually, we're going to give you a lot more color on the target model after the break when we do the financial model. Essentially, we're just acknowledging that it's at the lower end of the range in 2017. It's not a backing off of the target of where we're going to get to. You're going to be really happy with the performance improvements that we're reflecting on and where this model is going. As you know, when you ask about the additional investments in hitting that 2017, we're folding in the BioStorage investment. I think the net answer to your question is there's a little more investment there in the acquisition to hit where we are striking at 2017, but then the model continues to produce there into 2019.
Yeah. We'll be specific about the numbers in a moment. I think what you saw at Life Sciences in 2015 was slower than we'd anticipated when we put the model out. It's only a shift in time, nothing more.
Okay, great. Sorry, just a quick follow-up question for Dave.
Yeah.
If you look at your semiconductor business, just even the chart that you guys highlighting the areas that you guys are seeing growth, like advanced packaging and other areas, there's a part of it which is like the pumps and the service business that you haven't talked about too much, right? Long-term, should we expect that business to be stable, shrinking? Are you not investing in it? Can you give us some color on where you stand on that business?
Sure. Thanks, Edwin. The question was, we do have a service platform as well. How is that positioned for the future, and what do we expect? Number one, we do have an existing service business. We've talked about it very publicly. It's about a $95 million run rate business. As we bring forward our new product portfolio and with our strategy, we have a lot of confidence in the value that we're going to bring to that market. I mentioned a couple of things about the install base, that our products are very well positioned to upgrade this install base.
We're creating more partnerships with our leading OEMs as well and their service strategies, and we continue to invest in more local knowledge within those areas to take advantage of not only just the repair business, but where are those high-value problems in the install base that we can address with our product portfolio. We feel really good about our value moving forward within the space, better than we have in the past.
I'll add on to the part about the cryo pumps. If you look at the evolution of the cryo pump market, two technologies in semiconductor use cryogenic pumps, ion implant and physical vapor deposition, PVD or sputter. One deposition and one ion implant. Over the years, you can see tremendous market share from Applied Materials in PVD and in ion implants. You can imagine that a single customer, if you will, for all practical purposes, a single customer would have two suppliers. There's a position where we don't anticipate there's not a great way to grow that business. Applied Materials has two suppliers, Sumitomo Heavy, SHI, and Brooks Automation in a position where they want. It's tough to extract more share up or down in that space.
There are other markets where we'll continue to drive more business from the cryogenic pump business, but the majority in and around semi is to Applied Materials. I think when you think about it from that standpoint, it's pretty clear why that position's a little bit tough to move. Still a really good profitable business, still fundamentally tremendous technology. For smaller applications, smaller customers, there's a lot of business to be had through a distribution channel. In and around Dave's main business, it's a business that's a good business but not one that we have a clear growth path to move forward.
Within the Semiconductor Solutions Group, we're bringing a lot of our business unit knowledge closer to that customer and closer to the service footprint. We're delivering that knowledge much more local and more streamlined.
For the people who want to make sure it's clear, all systems use robots. All the different 150 different process technologies going to make semiconductors, two use cryogenic pumps, which is a big part of Dave's business, but all of them use robotics. Very good. We have a question from Patrick Ho from Stifel.
Thanks a lot. Steve, first, in terms of the overall company outlook, you've talked about the restructuring and some of the repositioning on the life sciences. Can you give a little bit of color on how you're keeping investments at a relatively manageable level on the semiconductor side, particularly as you look at getting to the longer-term fiscal 2019 targets of operating margins of around 15%? How do you manage the investments, especially with some of these key technology inflections to drive semis towards that longer-term model?
Sure. It's a really excellent question in and around very specifically, how do we focus? The customer consolidation is one way. One of the things we're finding is, as customers consolidate, the demands and the needs of these customers have become a little bit more similar. Patrick, probably one of the greatest examples of one of the ways that we manage the cost is the MagnaTran LEAP automation system. When Dave talked about how do we go beyond the current capabilities to next generation, when we've been adapting a current technology, the Magnatran 7 or the Magnatran 8, to the next needs of the customer, there's a lot of developments required to put one more capability into that. The product technology that we've brought here is high temperature, spatial resolution that's never existed before, speed that's never existed before. We are beyond the incremental needs of current customers.
By focusing on a product that goes a couple of generations beyond what customers have to have today and what they have to have even at the next generation, it allows us to really leverage that R&D investment, instead of every time a customer comes with one more specific need, "I need to go 10 degrees higher in temperature," or, "I need it to be 10 microns better spatially," this product gets past that. From a SG&A standpoint, a lot of consolidation of footprint, a lot of consolidation of different operating expenses that we think we've made the company a lot more efficient. Dusty will talk very specifically about the number of changes he made inside the life sciences business, because by consolidating the acquisitions into a single footprint, we've been a lot more efficient. The most recent restructuring, it took $15 million of cost out of the company.
Lindon will talk very specifically about some things that we'll do in 2017 to continue to leverage existing assets of the company more efficiently.
Great. Maybe a question for Dave in terms.
Sure
Of the semiconductor opportunities that are ahead. You've talked about advanced packaging and how you're capitalizing upon that market growth. TSV is obviously a longer-term opportunity. How do you see Brooks's opportunities in other "advanced packaging applications," whether it's fan-out, whether it's copper pillar? How does Brooks capitalize upon those market opportunities?
Sure. Good question. For those that may be on Webex, Patrick had a question about advanced packaging. I talked about TSV, how we position for fan-out or copper or other types of packaging technologies, how do we feel about that? Number one, we are in fan-out today, one of the large investments that's happened this year in Asia. We are very active in that footprint, so we feel really good about it. TSV is early. We're well-positioned for that growth. More importantly, in the assembly and test area, which is an area that Brooks has never been in the JEDEC tray area, where a tray holds dies, instead of a silicon wafer, it's the wafer cut up into small dies.
We have launched a product this year that is starting to move in volume into that space, into the back end, that leverages our core competency in handling, but also our large software expertise in sorting. Our capability to understand what we need to do with these in trays and place them for the end user and where they need to be. We feel pretty good that we're not only just TSV centric, we have an established base in bump, an established base in fill, established base in fan-out. TSV comes, we'll be growing more, the assembly test area is also a growth opportunity for us.
Great. We have a question from Amanda, from Citi.
Hi. Steve, you spoke a little bit about the opportunity in China over the next couple of years.
Yes.
Can you sort of size where the China market is today and where you see specific growth, and if there's any competitors locally that could come in and eliminate some of that opportunity?
Sure. China's an important growth space for us today. We have capability to enable some of the smaller Chinese equipment makers to begin to enter the market with a really dependable platform. Cryo pumps that are accepted in the fab and automation systems that are accepted in the fab. At this point, it's a tremendous market for us. It's great. The profitability is good. The size is about 5% of the company's revenue, just to put it in perspective. We anticipate that as that market expands, as the number of Chinese OEMs expands, we'll need a different footprint in China. We're thinking through that right now. Right now, we have tremendous market position, probably the highest share in any region that we have is in China.
We need to make sure that we are a little bit more Chinese company as we go forward, and we're thinking through how do we participate there right now. For the next few years, it's pretty clear, beyond five years, it's what we'll think through, and we really want to determine, is there a Chinese version of the capability that we bring? Is there something we do that feels a little bit more local so that we can capture what we think will be a very sizable amount of Chinese-made product that we'll want to make sure that our product is in? Right now it's good and it's dependable, and the brand is very strong. We do anticipate either competition or tremendous opportunity, and we'll work through that during the next few years.
Great. A question from Craig Ellis, from B. Riley.
Yeah. Thanks for taking the question and all the information today. Dave, on the growth targets, the 200 to 400 basis point premium to industry, where do you have more visibility and confidence in attaining those targets? On the operating margin target, from where we are now to that 15% or better, what are the things that close that gap? Is it mix? Is it the cost reduction program that's gone in?
Sure.
What's their relative contribution? Thank you.
A couple of questions. First one, I think, was associated with what's our confidence level and what specific areas of growth for outpacing the industry, right? Number 1, when we look at the value that we're creating, and that's really our true testament, both on the end user side, we've highlighted three markets, right? Vacuum automation, contamination control, and advanced packaging, we feel really good about that value, right? We see that in momentum. We feel very confident in outpacing the industry in those areas. Very solid. Secondly, what was the second question?
Operating margins-
Operating margin
Closing the gap to target.
Closing the gap, where is that coming from? Number fact, number 1, you saw some of the value that we're creating today in the marketplace with our new products. That's definitely a piece of it, right? That goes along with that. Secondly, as we bring these semiconductor pieces closer together within the group, whether that is different business unit factories or our semiconductor factory, we see optimization for sure happening in that space. It's happening right now. We started it. I'll give you an example. We have repair centers global and we have factories. Getting those teams together to collaborate and figure out how to do that more streamlined and efficient is very logical for them. We're making it a priority now as we move forward. Feel really good about that.
From a last point of view is we've put a lot of energy into strategy and focus. As we do that, we're prioritizing our investments, we're prioritizing what we're trying to do, and we're doing those things better. As we do those better, we also see more optimization possibility within our efficiency in our factories and our delivery. Feel pretty good about it.
Thanks for that. Maybe one last one if you don't mind, Lyndon.
Yeah.
Just looking at the targets as we look out on a multi-year timeframe, are your targets attainable if we have a persistent spending backdrop like we have this year, where it's flattish overall? Do you need WFE growth to really get to your target growth rates and your target operating margin levels? Thank you.
I'll comment on this.
Sure.
I think I'll just add a little more to your previous question, too. The growth that we're counting on for this is really modest. You're going to see in the model that similar to when I laid it out in 2014, we look at pretty much a flat environment. We think that the 2-4 points is a premium growth that we have over the industry is a really confident point. You're still seeing a very modest growth rate, supporting the 4-6 point margin expansion. I'll add a little bit to this because I think this is really important for everybody to understand, and we've got people in the room from life sciences, people from semi.
When we talk about expanding a growth rate beyond a market on a sustainable basis, there's something that's really inherent in the market that we're addressing on this side. You're going to hear something very close to this on the life sciences. The markets that are driving the growth around dep and etch, around wafer level packaging, around contamination control, these aren't markets that we're having to chase. These are markets that have no friction to us. The customers are coming, asking for our partnership because we put the investment into the R&D over the last 5 years. We've developed tight partnerships with them, and we're working very closely with them. We're literally helping them to solve the next problem that they're facing. Dave was talking about the contamination control and the different aspects of the environmental control inside the FOUP box.
When I happen to join a customer at the table with the automation team around contamination control, they start asking questions about, "Well, what are you guys seeing on the evidence of the ammonia inside of the FOUP box and the chemicals?" They're looking for a consultative partner that can help them understand what the next challenge is. It's a really interesting equation. This is not like the atmospheric robot at all. The atmospheric robot, we fought for for a while, but we deselected it because there was many players there. There's not many players in this space. That's why we have such high confidence that we'll continue to sustain a 2-4 point growth premium.
Second, on the bridge, we'll show a little more on the actions that we're going to take, but you just saw us do a restructuring that took about $15 million of cost and expense out. Dave pointed to 12 in his chart as we consolidated the group. That $12 million was largely in the semiconductor space, and then there was about $3 million more that was really in corporate G&A. It'll end up affecting a little bit on both sides of the business and the allocation models. But we still see that there's opportunity there. I'm going to talk a little bit more about that later. So some of it is cost and expense takeout that is helping us to get to that margin step improvement from 15% to 17% and then to 19%. Finally, as Steve pointed out, we have advancements of the product set.
I'll highlight that in the room if you get a chance, Rob Woodward is sitting at the back table over here, and he's going to be at one of the lunch tables. He's the head of our R&D function in Brooks Automation. He and the team with Dave's team, highly engaged, developed a new product set such as the MagnaTran LEAP product that you see over here. It's these kinds of advancements, both in value engineering and taking cost out, but also in the advancement of the value of the product set. As we do this, as we help solve the problem, the value map that Dave portrayed on all three of these industry, I'll say drivers, we get increasingly more value with our customers, and they value us.
In a consolidating space, when you get valued, you either get valued and you maintain a value proposition with your customers and grow with them, or you get removed from the industry. We've been proven as a survivor, and we continue to grow with the industry and with these key customers. One of those, in the wafer level packaging, what I love about this is not just the deep relationship with the large customers, but the wafer level packaging, we have more than 25 customers in that space. It's diversifying the customer set that we're addressing. That's a great question, and I love answering it because it's high confidence. We have some explicit actions we've taken on the cost to get to the margin improvements. We see another roadmap to get some additional, and we've got the product set that takes us into the future.
That's why we're able to talk with confidence in that space. Any other questions in the room? I think we should wind up soon. It doesn't look like we have any right now, so we're going to take about a 15-minute break. That'll bring us back right at 11 o'clock. Right at 11 o'clock here Eastern Time, we'll come back on stage. We'll start with the Life Sciences, and then we will give you the full detail of the financial model. When I say full detail, you know what that means. That means I'll give you a sketchy outline of it. No, I'll give you a lot more color on that, and we'll show you what 2017 and 2019 will look like. First, you're going to hear from Dusty Tenney on the robustness of the Life Sciences business.
Look forward to seeing you back here in about 15 minutes. Thank you very much. Right. You ready to go?
Yeah.
All right. If we can gather back at the tables, I appreciate everybody's time, and I want to be respectful of yours. We're going to turn next to the evolving side of our business on Life Sciences, and it's my pleasure to introduce Dusty Tenney, the President and General Manager of our Life Sciences business here at Brooks Automation. Dusty, it's all yours.
I'll just maybe take a couple of minutes, let folks get resorted here. Last coffee. It's great to be here and introduce you to the life science side of Brooks Automation. As Lyndon had indicated, I've been with Brooks for about 18 months, and it's been an exciting timeframe in terms of our ability to really put together what would be considered the most comprehensive sample management solution in the industry. It's exciting on a couple different dimensions, specifically around the fact that we now are a solutions company. As the business has been developed over time, we started out as a capital equipment business and ultimately have transformed that into a set of products, services, and solutions that's really targeting an explosive end market around sample management.
As Dave sort of used a little bit of show-and-tell, I'm going to use a little show-and-tell. You're probably not going to be able to see my show-and-tell because it actually is something that looks like this. Ultimately at the heart of this is some type of sample that goes into some type of storage media. This happens to be a consumable that stores a biological sample. It's important, I think, for everyone to realize that that is the heart of what I'll be talking about today, is how we positioned our business to become the comprehensive sample management company in the industry. That went backwards. There we go. A couple of things I'm going to try to do today.
First of all, I'm going to give you a little bit of snapshot of what the business looks like today. More so, I'm going to take the opportunity to talk about where we're going because that's equally as important in terms of the overall strategy that we have inside the business. I'll address some of the markets that we serve because it's important to really understand some of those dynamics. Clearly, we address different markets than the semi side of the business. It's important for you to understand how those markets play together, how they're similar, and how their differences ultimately has led us down the path of developing some pretty novel solutions in terms of their sample management. Lastly, I'm going to talk really about how our underlying capabilities really address some of the underlying aspects of our growth strategy.
Those capabilities that we have embedded within the business as we've acquired a number of companies have really led us down a path of some strong capabilities that ultimately drive the performance of the business. To that extent, in 2015, today we are 12% of the Brooks Automation company. In 2016, we're going to be 20%. As you'll see shortly through some materials that Lyndon will share with you, we're going to be 25% by 2019. We've embarked on a pretty aggressive strategy here over the last 18 months that really has positioned us well in this marketplace. Those strategies have really come together.
You can see that by virtue of the underlying business performance that has come through in terms of the uplift of revenues, in terms of the expansion of gross margins, then on top of that, you can see a rather significant change in the operating profit of the business. Notwithstanding that we have gone through some restructuring, that's positioned us well in terms of the revenues that we had through 250 people versus the revenues that we're currently seeing in 2016 through 412. Putting all that together, it's really positioned us well as we move forward, and ultimately, it's driven us to a pathway of rapid growth. Those strategies, as I highlighted, really evolve around the things that we're doing inside the base business and ultimately looking at accretive ways to help us build some of that underlying capability.
This year alone, we've spent some time investing in our consumables channel. We've stabilized our TwinBank platform. We developed a new B3C that supports the cryo automation, and this is the first of a series of products that we're going to be launching inside the business that supports a number of end markets that we have. We acquired BioStorage, which has added services and unique technical capabilities, specifically around genomic analysis. We continue to really build a franchise around informatics because we see at the heart of any information that goes into these little consumables that we sell as part of our solution, that the information content is ever so critical in terms of the performance of the business. As a result of that, it's really positioned us well as we move forward. We see $47 million more of revenue, which is a 69% growth rate.
Ultimately, we've got the portfolio that we've been looking for in terms of the ways to solve some of the underlying issues that our customers have in terms of sample management. As the world is changing, sample management is even changing much faster. Steve highlighted this morning a little bit about how samples have grown, and this is indicative of a number of things that are happening in the marketplace. Samples are now becoming part of the C-suite. There's a lot of discussion that's going on in terms of how to best manage samples, because at the heart of it is history where a lot of the samples have been stored in basements, not well-maintained, and ultimately, that's led to poor quality.
If you have a poor quality sample, it doesn't lead to the kind of innovation speed at which most of our customers are looking for in terms of driving innovation that leads to some of the problems that we have out in the world today, specifically around disease and health conditions. As a byproduct of that, the samples are getting a lot of visibility. It's leading to executive decisions down a pathway that ultimately from the sample base that we're trying to address, is driving a need for better sample management in the industry. To that extent, we've sort of gone down a pathway here of building a comprehensive sample management within the company. What makes up a comprehensive sample management solution? I think there's a couple pieces.
I just want to make sure as we set up the foundation and ultimately where we're heading from a strategy standpoint, that you've got that level of awareness. The first element is really centered around the fact that samples need to be stored in some type of media. I showed you at least one example. There's multiple examples of this that we have in our portfolio today, but storing samples from -20 degrees Celsius all the way down to -190 degrees Celsius is an important thing to consider. The quality of that sample over a lifetime is very important to our customers. There's two other dimensions that need to be considered. One is, how is that sample stored over time? Is it going to be used tomorrow, within the next week, or is it going to be used somewhere down the road?
There's two mechanisms that we've integrated as part of the broader sample management solution, which is around automation. We brought automation where the need for samples is very rapid, and customers are looking to automation to help them get access to those samples on pretty much a daily and a weekly basis. The other aspect is high-quality archival storage. We brought that through the acquisition of BioStorage, and what that does is it really helps customers that ultimately want to put samples in storage for a longer period of time and ultimately have access to those in light of some of the developments that are going on in their scientific research. The fourth element, which I think is important, is really centered around the ability to provide genomic analysis around that sample.
Today, researchers really want to have answers that helps them speed the development cycle around therapies and clinical developments, and ultimately providing analytics around that sample is equally as important as the storage pieces as well as how the sample is stored. The last piece, which I sort of equate to the Internet of Things, is really what I consider sort of the Internet of samples, because there's a lot of information content that today is not collected, ultimately will be very important to be collected down to the sample level in the future. A lot of disparate systems out there, but ultimately information technology and informatics will become equally as important. Those are the five elements that I think are important as you start to think about what makes up a comprehensive sample management solution, and let me tell you about our journey down that pathway.
As Steve highlighted, there's been a number of acquisitions. The business was born back in 2011, where we acquired a number of key name brands in the industry for large automated storage. We built upon that in 2014 when we acquired FluidX. The orange caps here are representative of what came from the FluidX, and you see actually some instruments that also support some of the consumables that we provide there. We also did something more strategic as well, which was to put an equity position in place for some of the cryopods that you see in the back there with a company called BioCision. They have a number of accessories that really help us manage the cold chain of custody that ultimately is equally as important that once that sample is extracted from storage, it ultimately has the custody piece that goes along with it.
In 2015, we continued to move down the strategic continuum. We actually partnered up with two companies, that being PharmaCyte and Labcyte. Those two companies are ultimately providing very disruptive technologies as it relates to consumables. This helps us build out some of the recurring revenues that I'll talk about here in a second. In 2015, we also brought in the BioStorage team as part of our business in building out that franchise. That helped us bring together the services as well as the genomic analysis piece. They are also the cornerstone of which we're developing our informatics solution, which we'll ultimately be launching in 2017. In 2016, we followed suit very quickly. We launched the BioStore III Cryo system to support the cryogenic automation market, that helped us ultimately build out some of that capability.
Here in 2016, we put a team together that spans the acquisition and the efforts in our Manchester site to include an informatics capability. In essence, through this period of time, as I've outlined as to what makes up a comprehensive sample management solution, we've taken the steps to really build that portfolio. We believe that we have the right portfolio today to make that happen. As we start to partition that out, we've got a very attractive portfolio as a byproduct of what we've done here over the last five years in building the life science business. It starts with the 800 customers that Steve mentioned in his presentation. Those are very diverse customers. They come from very diverse market segments, which doesn't give you the variation that you normally have if you're single-threaded in terms of the business performance.
The second piece of it is really centered around our ability to drive a recurring revenue stream in the business. Two years ago, the life science business was 40% recurring. With the acquisitions that we've brought into play, we are now a 65% recurring revenue business. Those two combined through our customers and through what we've done through the recurring revenue streams has positioned us well now to have more visibility to our backlog. Our backlog exceeds $200 million. That ultimately positions us well to really truly understand what we have going forward for 2017 and beyond, more so than any time ever that we've had in the development of the life science business. We've also got a lot of evidence from our customers. I put this up here because I think it's quite evident that you can see a wide range of customers that we touch today.
They go from the smallest of biobanks all the way up to the largest, most prestigious pharmaceutical companies in the world. This sort of builds on the capabilities that we had inside of our business. Then ultimately, each of the acquisitions have been quite accretive in terms of the adds that we've had with customers. Ultimately have led down the path of some expansion into what will be termed as bioscience versus life sciences, really serving a broad range of science industries that are really centered on sample management. An example that I would sort of highlight again here as we talk about that comprehensive sample management, one of the top pharmaceutical companies that are up on the board there actually buys everything that I highlighted as part of comprehensive sample management.
They buy the consumables, they buy the automated storage, they buy the archival storage, they buy our informatics solution. Of course, they also buy the genomic analysis that comes along with that. We have integrated this very quickly into our business, and because of what we've done, our customers are sort of resonating with the business model that we put together and are seeing the true value proposition that comes by virtue of having these capabilities inside the business. Let me just maybe talk a little bit about the end markets that we serve, because I think it's a framework. As you look at our business, and I sort of mentioned this internet of things, internet of samples, because there is an explosive nature around what's happening in the marketplace today.
As a result of the number of samples that are being collected, it's creating a number of healthy dynamics in terms of where we put our attention, our focus, in terms of where we're going to grow this business as a result. In fact, as you start to think about the things that are ultimately driving the sample management market, there is a confluence of probably three things. One is centered around technology. There's an explosion of technology that's making sample analysis even more sophisticated, even more in-depth than we could ever imagine in terms of understanding the characteristics of what ultimately would lead to therapies and drugs that we have in next stage. The second is really centered around information technology.
The advent of information technology is making information more readily available to understand what these samples mean in terms of the collections that our customers are using. I think the third thing is that as you look at the life science tool space, which ultimately puts a lot of demand on having samples put through them, both from a term of efficiency, but also in terms of research, is really driving some of the underpinning needs that exist in this market. As highlighted before, there's 6 billion samples that are stored globally today. That's a pretty significant number, recognizing again that has gone threefold in the last five years. Ultimately, the analogy around internet of things is that will continue to expand exponentially. Lives are being impacted pretty dramatically, both in terms of disease and environmental factors.
I know or know of at least 10 women that have had breast cancer. I've got a father-in-law that's actually on the beginning stages of Alzheimer's disease. Michael J. Fox, a familiar figure in the entertainment industry, of course, is going through Parkinson's disease, spent a lot of money and time in terms of trying to understand and characterize that. These are the underpinnings of why samples are very important, because it's the underlying research associated with the samples that ultimately drive the need and necessity to have a broader, comprehensive way of managing these samples to provide the quality results that customers are looking for.
Ultimately, those customers are looking for faster pipelines, are looking for ways to improve their therapy and drug pipelines that ultimately deem them successful in terms of solving some of the most difficult things that we have in trying to make our population much more healthier and much more viable in terms of the future going forward. Just to put that in context and recognizing again that this market is big in terms of the number of samples that are being collected, the market itself is roughly about $7 billion in size. Ultimately, as you start to look at that from an infrastructure standpoint and all the mechanisms that I talked about in that comprehensive sample management solution, it's indicative of the fact that samples are becoming the heart of all the research activity.
The advent of biologics, the advent of personalized medicine initiatives have really led down a path of an increased desire to solve some of the disease states that I had showed on the previous slide. As you think about that end market in terms of the $7 billion, we address about $1.3 billion of that. Steve highlighted this, I think, pretty well. This market is growing about 15%. It's an exciting dynamic environment. Ultimately, because of the growth there, we serve about 10% of that market today in terms of our penetration into that market. The opportunities are endless.
As with the growth of customers, as was a question that was asked this morning, it's important to understand that we are just at the first step of the ability to address many of the customers that will be going through the similar types of innovation within their respective business models and company developments. We think next here as we move from the market, it's important to really understand that we do have everything that we believe is necessary for us to support the sample management solutions that our customers are asking for. These key capabilities ultimately lead to what I would consider strengths in the marketplace, so I'm going to highlight some of those strengths so that you get a true perspective of how those play in the market and why we positioned ourselves in the way that we have.
The first is really centered around our ability to address this at the heart of our customer's workflow. I sort of put the sample in the center of the workflow there, but everything that sort of evolves around that sample is something that we're currently doing in our portfolio today, from the storage to the analysis, to the informatics capabilities. Every single element associated with that is really centered around our customers' workflows and ultimately making sure that the integrity and security and quality of the sample is maintained. The reason for that is that customers ultimately end up with a lot of samples that are put in manual freezers, not well-maintained from either an inventory standpoint, what's actually physically there, where it is, and ultimately what has happened with that sample.
We've taken the opportunity really to highlight the fact that we're putting in workflows that support what the customer's needs are and ultimately address that through a very focused effort around sample management. The second aspect that I want you to consider here is sort of where we fall in line of our competitors. I think it's important that as we've assembled these great capabilities inside of our business, it's led us to reflect on where we are in relationship to the competitive dynamics. Specifically, as I take a look at someone who does only large automation from a storage standpoint, they have some shortcomings in being able to be the single provider to our customers. Today, our customers live in a complex world, but they want a very simple interface, an effortless approach to their ability to manage these samples.
We all have experiences today through the things that we do in life, but our customers are down a pathway in terms of keeping that relationship very simple and very effortless in terms of how to manage this particular sample. The second is really around life science tools. There's a couple life science tools that play in our space. There are some shortcomings in what they ultimately offer up in terms of some of the broader informatics capabilities that are there and ultimately, the underpinnings of what I would consider the automation itself in terms of large automated stores. We've positioned ourself well.
We believe that we cover the gamut of what our customers are looking for today, and ultimately, in looking at what we cover today, doesn't necessarily mean that we're going to stop because we're progressing a number of very innovative solutions that you've seen around the room here that ultimately help us going forward. The third item is really centered around our storage, and this really ties to the recurring aspects of our business. To that extent, the ability for us to store samples for our customers via the BioStorage acquisition has led us down a pathway of some pretty significant numbers that I'm going to highlight first to you. First of all, we've stored 22 million samples since we started with the BioStorage business. Of those samples that get to five years, 80% are still in storage. Since 2010, we've increased our sample storage by three times.
The average age of our samples in storage is four years. Of all the samples that we've stored over the timeframe that BioStorage has been in business, which is the 22 million, 65% of those are actually in storage today. This really speaks to the annuity and the power of sample management. We have contracted with our customers in an evergreen state, and ultimately, many of the contracts that start off as one to three-year engagements, clearly, as you've seen here, ultimately span beyond just the three-year timeframe, which again, is the value proposition that I'm espousing. The fourth element is that we have a very, very strong install base, and we actually have an install base that's three times larger than any of our closest competitors in the automated stores area.
This fact in itself creates an environment where we have tremendous touch with our customers, tremendous follow-up. We are selling consumables through that channel, and of course, this opens up an opportunity for us to sell other aspects of our portfolio, the new release of the B3C, some of the consumables that we've talked about, and even upgrades to systems that have been out in the field for greater than 10 years. This is another value proposition that we see in terms of key capabilities. The last item I'll just sort of footnote here because I think it's important for everyone in the audience to realize that we have very, very strong market positions. The first is really centered around automated stores. We are the number 1 provider of large automated stores in the marketplace. The second is the consumables that you see that are capped by orange.
We are the number 2 provider for biological sample management. The third piece, which I think sort of fits well with the acquisition of BioStorage, they are the market leader for pure-play comprehensive sample management. The solutions that we've been able to provide in context with the base business have been tremendous in terms of that, but they are the number 1 player. I'll just highlight the fact that we do have a very strong technology focus, that ultimately that technology is now being used to help us drive the informatics capabilities that we're going to launch in 2017 in support of that broader comprehensive management solution. That gave you a great perspective, hopefully, of some of the underlying capabilities. Let's just maybe take a couple moments here now to talk about how we're going to drive the growth.
I think as you start to think about the key things that make up the growth, the first thing I'll just note is that we do have a very, very strong base business. Within that base business, we had a range of stores, we had a range of consumables, we had some informatics, and we provided service on the equipment as well, and that sort of served as the base. The base ultimately is pretty important to us, and we believe that by virtue of the aggressive approach that we're taking in terms of streamlining investments that we're making, that will ultimately help us get there. To that extent, we've done a couple of things that I think I'll just note here. First of all, the B3C investment.
We have not only applications in the existing markets today, but we're also making investments that help us expand those market applications into things like cell lines and clinical applications going forward. The second is that we developed a TwinBank platform that is the large automated store. We're moving that downstream to ultimately address some of the broader needs that biobanks are looking for, smaller, more automated stores, so we're making some investments there. The third is really centered around the fact that consumables are pretty important, primarily because of recurring revenue and the margin that we get through our consumables line.
We've aligned ourselves with two prominent names in the industry that ultimately help us differentiate some capabilities, because plastic, even though it may look like plastic, there's quite a differentiation in what we're trying to do, both with Labcyte and with PharmaCyte in terms of making this a truly smart sample. The fourth element is really leveraging some of the underpinnings of our informatics capability, and that helps us really bring together the entire solution and bring information content together for customers that clearly have disparate systems today. All those put together really helps us drive the 13% CAGR that is shown on the chart. As you start to think about that growth rate to get to $110 million, we believe that through the investments that we're making on the base business, that that will enable that to take place.
The second growth dimension is centered around taking this great asset that came in via BioStorage and really building out some of the underlying capabilities that we have within that business. It centers on new customers, it centers on existing customers, and it centers on our menu expansion. What we found as we've worked very closely with the team at BioStorage, and even through some of the strategic relationships that we have that were mutual when that piece of the business came in, is that typically, a client will start with a specific lab, and then once we demonstrate the capabilities of sample management, they'll open up the door to other labs. That has been replicated, so we have a sort of a captive customer base from the standpoint of offering more capabilities as well as more solutions to support their business.
New customers are equally as important, I'm not going to downplay the importance of that. We have seen our customer base grow pretty much at a 20% growth rate here over the last couple of years. Expanding that customer base and reaching that touch, not only through our sales arms, but also by word of mouth from our customers, because we have built quite a prominent brand in the marketplace, and that reputation ultimately is spinning well in terms of the ability for our customers to drive that. The other aspect I just want to highlight is the fact that we do more than just storage on samples. We actually do some genomic analysis. I think it's important from a value standpoint that our customers are asking Brooks to take that on.
That really is an expansion of the capabilities beyond just storage, which I think is relatively simple in the context of it, very sophisticated in the sense of the regulatory requirements that are required, but ultimately shows the value that we're bringing from a scientific standpoint to help our customers ultimately down the pathway of developing drugs and therapies in a much faster way, given the needs and necessities from that standpoint. Bringing that all together, that will result in roughly about a 20% growth rate on the current business. That takes us up to roughly about $80 million over the period of 2019. Combining that is the third element of our growth strategy, which is really centered around markets. Markets have two different dimensions.
The first is geographic expansion, the second is in markets that we don't play today that are ultimately adjacent to areas that we're focused on. Clearly, we've made a couple of strategic plays into the Chinese market. We actually work through a number of partners that we have there today on a range of everything that we have in the current portfolio. We believe that there's great potential on small numbers, of course, at this point in time for us to grow that very quickly. We also believe that the area of cell lines will open up here in the future, and ultimately the B3C plays an important segue to that on top of the clinical area, which ultimately opens up some opportunities where we've actually started to penetrate into those markets.
Our brand is very important here, and as we've acquired these companies, it's been an important element in terms of the recognition that we're currently getting in the marketplace, and ultimately we'll evolve that brand to a single brand so that the customer experience is as outstanding as it is today. What are the implications from a financial perspective on the life science business? Putting this all together, we are going to navigate a 30% growth rate across the business through the 2019 period. That takes us up over $200 million. The implications associated with the operating performance of the business, I think, are quite evident there. We're going to convert that revenue at about 40% with some limited investments that we would make in terms of some of the infrastructure pieces, and ultimately that converts over to a 16%-18% operating margin.
It's a pretty powerful engine now that we've got ourselves positioned. I think the important thing here to realize is, one, we're going to be profitable in Q4, and throughout 2017, the profit engine will start. That's the inflection point that I think Steve referenced this morning. You ultimately see here in a couple of minutes when Lyndon talks about the implications associated with the confluence between the life science business and the semiconductor business and the impact that these financials bring going forward. Just to put maybe some final thoughts from this morning. I just want to highlight that this has been an exciting time for me, coming out of a pretty large life science tools company. I came to Brooks primarily because I wanted to do something new and unique and novel.
Brooks has been a company that's really vested its interest in this life science space through a number of acquisitions that have taken place. The resultant of that has been the most comprehensive sample management solution in the industry today. Because of that, there's a couple things I'll just footnote as well. First of all, the recurring nature of our business is significant. It's 65% of our portfolio. This gives us more visibility to what we have inside our business and ultimately helps us move down a path of much more predictability in terms of the forward look that we have going forward and ultimately to deliver the financial results that I talked about before.
The other aspect of it is that by virtue of this business that we bought called BioStorage, we have a large backlog, and that backlog is a very strong position for us to really understand how we navigate our customers and ultimately build upon that to make our business even stronger. At the heart of this is the fact that we will be profitable in Q4, and we will be profitable going forward in 2017 through 2019, as evidenced by the financial numbers. I think those aspects that I think the broader industry has been positioned to look at, the investments that we've made ultimately positioning for the most comprehensive sample management solution in the industry enables us to really deliver on the strengths that I think I've highlighted here and ultimately where we could be going forward.
I just wanted to thank you for the opportunity here to share with you some perspectives on the business and ultimately the opportunities that we have going forward in the life science segment.
Dusty, thanks very much. We're going to pause now for some more Q&A with Dusty and have Steve join in the Q&A, feel free to address, but we'll just focus on life sciences for a moment, see if you have questions on that, and then I'll take you into the financials and what this all reflects in total. Let me just pause, see if any questions. Craig?
Yeah.
Let's wait for the microphone.
Yeah.
In fact, I might just ask each person, just introduce yourself, name and firm, and on the webcast, they'll hear that also.
Thanks, Lindon. Craig Ellis, B. Riley Financial. Thanks for all the details, Dusty. Back to the early part of the presentation, it looks like the company's market share is about 10% now. As we look out to the target horizon in fiscal 2019, what would you expect your share to be? It looks like you're serving about 19% of the TAM now. What will that served market go to over the next couple of years? Thank you.
I think there's a couple of dynamics there. You're right on the 10%. I sort of highlighted that in the chart from that standpoint. If you look at the growth rate, clearly we're forecasting that we're going to be growing faster. The number that we have on the table is $200 million plus. If we look at the underlying growth rate of the market at 15%, we're going to grow faster than that underlying growth rate. I'll sort of put that out there, somewhere between 15%-20% as our targeted growth rate. I think that sort of takes us in a position from a broader company perspective that leads us down the path of the strength that we're highlighting here.
I think in terms of the market that Craig, you may be referencing a $7 billion total market. We have a $1.3 billion served market growing to a $2 billion market. I believe that market growth rate is 13%. Do I recall that correctly?
15.
Yeah, 13%.
Yeah.
That's our selected addressable market growth rate. The $7 billion would be growing slower, probably high single digit.
Correct.
7% to 8% is what I recall. It'll be growing a bit slower than that. Think of the total market in the 7%-8%, the selected market being 13%, and then the revenue growth taking us to $200 million at 15%.
Edward Marks with Needham & Company. Thanks for taking my question. First, I guess I have a two-part question. First, just look at your place, suggest your recurring revenue part of the business, which include BioStorage, right? It seems like you guys are really confident about that, and you talk a lot about your backlog on that. Can you maybe kind of help us think about how much of that is driven by just customer expansion and as you sell more to existing or selling more to existing customer? In terms of kind of growth there, are we talking about expanding the service in a customer? In terms of that backlog, how much of that is actually contracted? I'll follow up.
Okay. Multidimensional question there. I think let's just talk about the recurring revenue streams, which was the 65% that I said that we've added up. There's a couple of different aspects that build that. The BioStorage services is one. The second is the consumables piece of our business. The third is the services, and the fourth is the informatics piece. Those are the four elements that we are developing that ultimately help us down that pathway. Your question in terms of how all those things play together going forward, we've clearly have made those investments, and as you start to think about the annuity stream that we have with the BioStorage business, what we typically see from a contract standpoint is a three-year commitment.
As evidenced, clearly there's a longer-term aspect associated with those samples staying in storage, which at least in my mind, is the annuity piece of the business and ultimately strengthen. As we increase those four elements that I mentioned, I think those are the four elements that will help us continue to expand the annuity base and ultimately help us even be more predictive in terms of what the future has for us going forward.
That's very helpful. On the tools side of the business, your traditional TwinBank and now the new product you guys are launching. From my understanding, it's traditionally your TwinBank product has a lot of customization, which kind of a drag and the business is very lumpy. Do you see that changing or does that still continue to be like that in the foreseeable future?
I think there's a couple dynamics that we're contemplating. I think you captured it pretty well. Early on, I think we were quite attuned to adapting the platform to support our customers' needs, whether that be height related, physical size related. Here recently, we've taken that tack, but we've also going down a path of productization because we're actually seeing customers that want smaller stores that have the same kind of automation that we have in our larger stores. We're actually moving down a path now to actually have a product that doesn't need the level of customization that some of the typical customers that we've experienced, whether that be physical size of the room or storage requirements that have driven some of the customization that you referred to.
We're complementing that now with what would be considered a standard product offering that we'll be launching actually with a customer here in the next six months.
Very good. If there's nothing else, I'll get started on the financial roll-up, and that'll take us into the lunch break. Look, I'm going to reflect just once more on the recent performance, and then we'll talk about some of the updates to the business model. I'm going to get out of this feedback range here. Then finally, we'll roll into the 2017 and 2019 update, and I know that's what a lot of people are anxious to see. First, as a reminder, while we've been in this transformation, it hasn't been without some productive gains in the business. We've had good revenue growth. We have had a really good, solid foundation of profit improvement. I think it's really notable from a financial perspective as well, the strength of the balance sheet that this has built.
We've been generating a typical $50 million a year consistently over the last three years of cash. It's enabled a significant amount of acquisitions. I'll show you that in a minute. $68 million of cash on the balance sheet, no debt. We haven't had debt for years. I'll highlight to you that we filed an 8-K overnight, where we closed on the credit revolver this last week. It's just for additional liquidity as a fallback if we had a down cycle. We don't anticipate immediately tapping into that revolver. That's why we went for a non-funded credit line. This balance sheet has been a significant element of our strategy that's allowed us to execute the transformation.
When you look at this display of what we've done with that cash, and that's what this is intended to do, is to show you just where have we used this cash. Over the course of the last three years, we've deployed a little more than a half a billion dollars of cash. A couple of hundred million into the organic investments, the support of the R&D that's producing organic products on both sides of the business. We've injected CapEx where we needed to. It's a pretty low capital amount in our business, so typically about $8 million a year. I have guided that you should think of it being $10 million-$15 million going forward with the addition of the BioStorage business. It'll bring us up a little bit.
On the acquisition side, you can see we're just short of a quarter of a billion dollars of cash that we've been able to deploy toward acquisitions to building this business. This is after divesting of a business that funded $85 million of that. We've put 45% of our cash back into work into key growth areas, and that is the element of the strategy, the deliberate strategy that we've been on and remained on throughout. Certainly not to be overlooked, we've returned $85 million in the three years back to the shareholder in the form of dividends. We established the dividend back in 2011. We increased it in 2014, we look at it on a regular basis, the management and the board, in terms of what we would do that dividend going forward in terms of being able to increase that.
For now, I'll say that our direction is to stay steady. We don't see a lot more acquisitions that we need, as Dusty said. I feel like we got everything within our capabilities that we need. If we were to do something, it may be small in forms of informatics or something opportunistic on either side of the business, we're pretty satisfied with what we've got and what our growth platform is now to completely satisfy our customers. With that said, we believe we can generate cash now and accumulate some additional cash and go forward in terms of what the next stage of strategy would be in terms of what those returns to shareholders would be, absent additional requirements to acquire. Let's now think about an update to the business model. I'm not on the financial roll-up yet.
I'm on the initiatives that we've taken and what we are taking that affects the business model. First, let's just look back. You've seen us continuously talk about cost takeout and some restructuring initiatives over time. If you go back into 2014 or even into 2013, you heard us start talking about outsourcing and manufacturing lines, we continuously look at anything inside our shop that we can put outside. We did a couple of initial steps in 2014, yielded about a couple of million of reduction in that year. That continued to pay back over even to today.
2015, when we entered the calendar year, actually, we came to the street and said, "Look, we're just about to consolidate the life sciences businesses that we acquired." We had three significant systems, capable businesses that we had still maintained the footprint and a lot of the resources around, we set a schedule in place, by the end of September, we had exited all of the Poway, California, location substantively Spokane, we've since closed the Spokane location. That restructuring is done. We've now centered our competency center and our manufacturing center in Manchester in the U.K. That took $6 million of fixed cost structure out. Most recently, we did the more significant restructuring of the business, simplifying the semiconductor side of things as well as the corporate structure, taking $15 million of annual cost out. These are all significant.
The portion that I would tell you that is not fully in our results yet is the last steps of that $15 million. You'll see, as I've described previously, you started to see the bulk of it in this quarter and the final $1 million benefit on a quarterly basis next quarter, which is our fourth fiscal quarter. We close on September 30th of the year. Highlighting to you that as we look into 2017, we see about $8 million of additional opportunity for us to take out. There's some further consolidation of sites, and you can think of this primarily in the range of how do we consolidate repair with manufacturing and how do we rearrange our repair centers.
We really are excited to see our teammates grab this opportunity in terms of, this is truly a lean and often a Kaizen-driven event where we're able to take our teammates and come up with a solution in integrating these consolidations. Additionally, we have some targets on our operating expense to again yield some additional savings there. I would think in general, I know one of your questions is going to be, well, what percentage is OpEx and what percentage is cost? Think of it as just about similar to our last restructuring, perhaps about 75% out of operating expense and $5 million-$6 million and the rest of it out of cost. Let's go to the next step. We've talked a lot about simplification.
This is not what I would call high substance, but I think it's important to our analysts in the room, we have a lot of analysts, in how our publishing of our results will go forward. On the left side, you can see that we've always reported on three segments. On the right side, you'll see going forward, we'll start reporting on two segments. We'll consolidate the Brooks Product Solutions and Global Services into a Semiconductor Solutions Group. For clarity for everybody, I think many people are very familiar, but some are not, both sides of the business have a significant services element. You'll see services in the semi business, and you have services in the life sciences business. You've seen the split.
In 2015, about 12% was life sciences, then we split out the Global Services and the BPS, or the Product Solutions business, to make up the other 88%. That's very clear. It's just going to be the simple combination of those two. We're not remixing businesses, so this will be very easy. I also offer up to you that in our publishing of our financials, we'll maintain the visibility of the information through the MD&A analysis that you'll see the margins of each of the services and Product Solutions in the semiconductor business. Going forward to 2017, I highlight a target, and I think I'll clarify something. In 2017, our objective is life sciences will be 25%, and you'll see that in just a moment in the model. It's going to be 75% semi, 25% life sciences.
Starting to, as people say, $1 million here and $1 million there, pretty soon it adds up to real money. We're already in real life science business at 20%, next year, 25% of our business. Another initiative that I want to talk about, because I get so many questions on the BioStorage acquisition. I just thought that this portrayal may be a good one for you to reference, and it'll be out on our website as well for reference, if you want to take another look at it and ask questions later. People ask me, "Well, what is the business of BioStorage? What's it look like when it culminates in revenue?" I just put down a profile of a typical contract. Not every single contract looks exactly like this, but the vast majority look a lot like this.
They start out in the bottom, in the first quarter, of relocating some samples, that incurs revenue. There's a charge for the relocation services. The next layer there that you see at the beginning is the registration of samples. As we register samples, there's also a fee for bringing the samples in, putting it into storage, and getting the registration. You see this wave of storage, and the storage is a very constant recurring revenue stream. It's not contractually recurring, but in practice, it's very recurring. This is important to understand. Now, when we sign this contract, it's also key to understand that it may be signed as a one-year contract, it might be signed as a five-year contract, it might be an evergreen contract. The majority of our contracts have an evergreen clause.
Sample by sample, it's a per sample charge. On a per sample charge, the contract remains in effect as long as it's in storage. When it comes out of storage, by the way, it shows a conceptual final quarter. It seldom materializes like this. In fact, I don't know that it's ever materialized like this. Samples tend to either stay or they come out over time, but they don't all come out at once. If they did, in the final aspect, you would see this retrieval fee and disposition of the sample. The important point to know is when we sign the contract and we talk about contract value, so this last quarter, we booked $28 million of contracts in the BioStorage business. It includes an estimate. If the customer only signed a two-year contract, we only show two years of contract value.
If they sign seven years, by the way, we cut it off at five. Okay? We only talk about a five-year value. Often it's an evergreen. If it's evergreen, we'll just talk about a five-year value. The history of the business, as Dusty showed earlier, is the samples stay in a four to five-year timeframe. This is very much an estimate. It's very different in terms of a contract signed in semi or even in the infrastructure sale because you know exactly what you're going to deliver. This includes an estimate of how long it'll be in storage, and it renews. If the first year runs out or if the contract term runs out, we lay in another year into our, quote-unquote, "backlog" inside the business.
This is why we're reluctant to talk about the backlog of the business in aggregate, I'm going to give you a snapshot of it today because I think it's impactful, just indicative of what the total backlog is. I want to emphasize, it's not the metric that I would advise that everybody looks at, because there are estimates in this, and we will take estimates up and we'll take estimates down in the backlog as they evolve. Today, we have a total of $237 million in our total life sciences backlog. On the left side, you can see that 65% of our business now is that recurring revenue stream. The metric that I do think, and as Dusty and Steve and I have studied this, we think it's indicative in the operating period that we report on to talk about the net new business momentum.
The revenue so far this year has been $47 million in the business. We're looking at $76 million of bookings so far. We've had a net new business of that $29 million net addition versus what we booked compared to what we recognized as revenue. We believe that each quarter, we'll start talking about this on the net new bookings, how many contracts we sign, how much revenue we realized, and you'll get this flavor. In the backlog, understand that some things are going to come out, some things are going to be added, it's indicative in terms of size. I recognize it's important for you to get a feel for it, but I wouldn't necessarily track, because it'll include adjustments up and down occasionally.
Recurring revenue is a key to the business model, when you think about that now, where does these initiatives, the things that have evolved, where does it take us into a financial target and financial model? Let me show you the update to the fiscal year 2017 model. I put it here in the same context that we have in the past, I've added EPS. If you look across the page, I've given you the snapshot of 2013, 2015, and 2017. You can look at the other periods. We do not guide on outside our current quarter, so I didn't put a 2016 in yet. In 2017, this is a range of what we estimate. We believe that our revenue will be somewhere in that $610 million-$650 million. Of this, $160 million will be in life sciences.
Again, as I have in the past, the range around the semi business is there because we don't know exactly where it's going to be up or down, we believe it'll be a modest to a positive end of this range. However, we don't know if it'll tweak down or not, we've given you a slightly negative to a slightly positive range on semi. In the gross margin, this is a change, there's been three tenets to our model that we've talked about, life science revenue, and then life science margin, as well as semi margin. 38% is a change from what we showed before. As our target in the past had been 40%, we've moderated this to 38% in 2017. We still believe we get it to 40% when you look forward into the 2019. We'll talk about that in a minute.
On this timeline, we're at about 38%, we believe, next year. Operating expense, we've reflected the restructuring that we have done and what we anticipate in terms of additional productivities and the investments, we think that's about 26%. This brings us to a 12% operating income next year in that range. We believe that the EBITDA, $90 million-$110 million, and I'll just clarify, it overlaps with the range we showed previously, I could claim that we're on this range, but I do acknowledge that it includes the BioStorage business. We've comprehended the investment that we've made in the acquisition, and we've now got a business that says in 2017, we'll take the EPS from in the range of $0.90 compared to the $0.45 that we had last year in 2015. We're very excited about this.
We think that the model that we'd put out in 2014 served us really well. It's guided us, it's guided us both in our investments, but also in our convictions, and I think that we've stayed pretty true to this in keeping our investors up to date on this. This is, as Steve said at the outset of the meeting, this is a bit of an update. While it's a bit softer based on our acquisitions being counted in this, let me take you to 2019, because the power of this model is something that's going to continue. Remember, we've got a dichotomy in the room. We have some people focused on semi and some people focused on life sciences. It's really interesting. When I talk to semi-based investors, they're saying, "Man, when does the life science business get the profit?
We want to see the profit." When I talk to the life science investors, they said, "Where is all the top-line growth?" They never mention profit, and that's the investment mode that they're in. It's an interesting transformation for Brooks because we have some investments. We always knew it was going to take some time to make this transition. What we're saying in 2017, as Dusty pointed out, is life sciences is going to be profitable. It is going to be profitable. We're going to continue to feed the growth, but it's not going to be at the height of the model. It's not a fully mature business. I want to give you a bridge, by the way. I just departed from my presentation mode, so I got to take you back through to 2015 to 2019.
My apologies, let me finish my thought on 2019. We're going to show you in 2019, we will continue to progress the model, and it will get richer on the life sciences business. Before I go there, I want to give you some proof points on what's my confidence in 2017. As I've mentioned, there are different tenets to the model, first I wanted to make sure that you've all caught, and I highlight this in various calls in the past on earnings as well as in analyst conferences, we have IP revenue in the past that is going away through this year. When you compare 2015 to 2017, we have about a $0.12 impact of the drop of the IP income. We have to start making that up. As I said, life sciences is a key element of this.
The margin improvement will help us about $0.08, then the growth of that business is about $0.22. I'll tell you that the $0.22 is just about half and half on BioStorage, the net addition of the BioStorage business revenue with the structure there, then the other half on the growth of the legacy business. This is an all engines running equation, and Dusty's done a great job bringing that back in concert as a team. In the semi margins and the corporate efficiencies, we've talked about the cost efficiencies and restructuring. This is going to contribute about $0.20 of this. In that mode, I think this is almost all within our sight. Most of it's done already. Some of it is right in front of us to execute as we go into 2017.
Most of it will be done when we enter 2017. There will be a little portion of it that happens in the first few months of our fiscal year 2017, the first six months. Then the final step is, if you may recall, last quarter, we put a valuation allowance on the books against the tax. It's an interesting dynamic on the valuation allowance. As we do that, it doesn't change our ability to use the deferred tax assets. It just causes us to put a reserve against it, because according to GAAP, there may be a risk that we don't use all of it eventually. We'll continue to use it. The interesting aspect is now our GAAP tax rate will actually reflect more closely our cash tax rate. Since we had the deferred tax assets, we were not incurring a cash obligation on U.S.
taxes already, the nature of having a valuation allowance on the books actually helps to reflect that. That $0.07 is sort of a natural add into the EPS as well and emulates the cash-based tax equation. This is how we go from the $0.45 to the $0.90. Let me give you the view of 2019. As each of our leaders have highlighted, on the semiconductor side, you have the revenue engine moving and gross margin expansion to a 39% level. As he talked about the incremental value, we believe by 2019, we'll be in the range of 39% on the aggregate of the semiconductor business. In the life sciences space, you've got the business growing to something in excess of $200 million, and we believe the margin will be in that upper end of 43%-45%.
Both businesses will manage for operating expense productivity. It means something different on both. We expect more growth on life sciences on a continuous basis. It's not a cycle. It's continuous. We'll feed it with some operating expense, but at a lower rate than what the revenue is growing. On the semiconductor side, we expect there to be some cycles, if it's modest growth, expect flat operating expense. If it's flat revenue, expect us to continue to yield some productivity out of the expense equation, some of that will be out of the business itself. Some of it will be we continue to work on the corporate back offices as well. We have opportunity to support that equation.
What this means, and each of the leaders has talked about, is on the Semiconductor Solutions Group side, we expect our operating margin to get to that 15%-17% level just in the semiconductor space. As one of the questions highlighted, this will be on a very modest cycle. This will be on a very modest cycle of revenue. Think of it as a flat semi environment, and our assumption is we'll grow 2-4 points faster than that. In the life science business, which now in 2019, we're expecting to be 30% of our business, will be in that 16%-18%. By then, it'll be a stronger business on an operating margin and on a continuous basis than the semi, and it'll be lifting the company. The question then remains, what do we do to continue to propel that in future years beyond 20%?
That question is not lost on us. By 2019, we think this is the right range to call for the 2019, and we've done some careful planning on this, similar as we did a couple of years ago. I know that while that model adjusts, we feel a lot of confidence in our ability to see this. The operating margins in aggregate, we're saying it's going to exceed 15%. Obviously, it should average out to 16%-17% here in the middle. We think the right objective for us to leave you with is that we see this getting above that 15% level. This all supports with the balance sheet planning that we do, an ROIC that hits the 13% level by 2019. That is a key metric for us as a senior management team.
That's how we evaluate our investments when we go after any acquisition or any significant investment inside the business, and that's how we tune our plans as well. I think this business model, 2017 is going to be a very important milestone. It's an inflection year for us. We're right at the inflection, and 2019 demonstrates where we think the power of the business model takes us. When you want to put a number on this, and I know some of you do, we're going to show you these numbers on the bars. In the 2019 timeframe, I want to emphasize, if you take $200 million out of life sciences, this would show, again, a modestly down to modestly up semi, only on the premise that it's a weak semi market.
We still believe that over this time that our entire semi business will grow 2-4 points faster on the product side, faster than the market. This will produce an operating income in the range of $100 million-$130 million, and as Steve highlighted earlier, $1-$1.30 in the EPS. We believe that this is an achievable objective. We think that we have our entire business structured around this. We've got Dusty and Dave running two engines that are solidly positioned. When you think about that, it comes back to, well, what are the proof points? We've got a continuing steady profit-improving picture.
We've got the long-term profit model, a financial picture that we've shown you on the financial model, we've got a track record of effective capital deployment that includes a balance of organic, and I've described to you probably softer acquisitions going forward, and still a focus on making returns to the shareholder. Bring you back to the overriding messages. Remember earlier this morning, Steve said, "When you walk away today, what are the key messages we hope you walk away with?" One is that the semiconductor platform has never been stronger than what it is right now. We're a leader in the space. We've got customers that don't partner with us just because their procurement shop wants us. It's because their developers want us at the table helping to solve the next problem.
That growth in a premium space, in a cyclical market, is really key to outperform that industry, we believe that we will do that, you'll see that show up also in our margins. Life science is poised for that growth, profitable growth. We're at the inflection point that we see it becoming profitable starting in the fourth fiscal quarter in September, then it stays profitable through 2017 and improves all the way to 2019. We believe we've got what we need there. The focus on the entire business is around the execution of those two pieces. You back up from this as an investor side, I just emphasize to you, think about the power of this. We're currently viewed as a semi company. We've got the life sciences going. Last year, 12%.
This year, it's already 20%, we see it going to 25% then 30%. It's clearly becoming a substantive life sciences company. With that, we believe as it executes to 15% with both engines supporting it, we've really built an asset that the investors should be very happy and very proud of in terms of the ownership. With that, I wrap up this element, I'm going to bring the leadership team up for additional Q&A. I really appreciate the time that you guys have spent with us. We're proud to position the company the way we have and to present it to you the way we have. At the same time, we recognize we may have left some gaps in questions. We're going to open up for some more Q&A before lunch, then we'll shut down.
Hi, Sachin Kulkarni, Jefferies. In terms of M&A, what hurdle rates do you consider when deploying capital in terms of ROIC and all that?
Yeah. Our weighted average cost of capital tends to be calculated around 12%, and we look for, on the deal, for to hit something accretive to that or being higher than that within three to five years at a minimum. Most all of our cases come in 20% or better, but at a minimal three to five years better than the 13% level. All of our cases in the last few years have supported that when we set out in the acquisition. The second test we put to that is also a net present value of the cash generated from those acquisitions when we acquire them. We look at a downside and if we were even to have to divest of something, will we be able to yield that cash back? That's kind of a sanity check to us.
The ROIC is key to us. You'll find that in our, what I'll call longer term strategic horizon plays, such as when we look at the life sciences business, we'll tolerate more to the five-year ROIC objectives. When we look at more near term, on the semiconductor side, we'll look for a shorter term ROIC objective, but that's the hurdle rate.
Thank you.
Yep. Patrick. Let's use the microphone, sir. Thanks. Go ahead. Introduce yourself, please.
Patrick Ho, Stifel Nicolaus. Looking at your longer term target model, particularly for 2019, you give gross margins for the semiconductor business at around 39%.
Yes.
Given that you removed the atmospheric robots business from the long-term model, what are some of the key levers that can get that gross margin, whether it's above 40% longer term or even below that 39% target you have?
Yeah. Let me comment on first, and I'll see if Dave and Steve want to join in. First, I'll highlight that we have a headwind, first, that I want to acknowledge, that IP income goes away, that's in our revenue line on that side of the business. We're also seeing the downturn of the atmospheric going away, that was a lower margin business. That's a little bit of a tailwind in terms of the margin percentage that you're asking about. I think what's most important in this engine is the product set that you see on demonstration today and what takes us into the future. A mindset that takes cost out.
When I say the demo, it's not just the robot that's on display, it's also the contamination control, the value we bring to a more diverse set of customers in the wafer level packaging. These things give us value in the market, they also are highly valued by the customers partnering with us and buying from us. We see that as we advance the product line, it produces that kind of margin. Anything to add?
Just a couple other notes on that. Number one, I talked about the install base. I think that's a good opportunity for Brooks and our customers as well. We'll be putting more attention to that as we look to upgrade some of our solutions and provide more value, and we expect that at a higher margin profile. Secondly, I mentioned before, efficiencies. I see if you look at the fixed costs that we have to support our operations, as we bring Semiconductor Solutions Group together, we see more synergies in that and allowing us to be more variable depending where our business is. That'll give us better absorption through the cycles and better margins moving forward.
Maybe as a follow-up, Dave, to your comments about the semiconductor services side of the business, what are some of the options or offerings you're doing maybe to drive some of these higher margin solutions, whether stuff like predictive maintenance, things that your customers are doing to drive their service margins higher. Are you taking similar steps on your end?
Yeah. Let me give you two examples. It's a really good question, Patrick. Number one, in contamination control, our FOUP cleaning platform is completely modular and upgradable. We start with base level FOUP cleaning. Some of you have seen the inspection station that inspects FOUPs. That is a completely upgradable option for the tool. In addition, there are other options on the cleaning cycle on what level of performance. Now we're reaching a massive install base as these FOUP cleaners have been deployed over the last three years, and they are now coming out of warranty and into levels of upgrade and paid service associated with that. Secondly, if you look at our new platform, the MagnaTran LEAP, number one, it's 100% backwards plug-and-play compatible with the install base. That's an opportunity for us and our partners. Our partners are very excited about that.
It's very software intensive. Our performance enhancements are software upgradable. It allows our customers to select the value that they want, and then when it's in the field, to potentially upgrade that value, whether throughput enhancement, repeatability enhancement, and this comes with a complete diagnostics and service package that allows predictive maintenance and allows a service offering on top of that. We feel really good about those two platforms.
Hi. Edwin Mau from Needham & Company. Lindon, just in terms of going through your model, if I take a look at 2019 target versus your 2017 target, it seems to imply that your OpEx will be flat from that period or even down a little bit, even though you expect to grow your revenue quite a bit. What gives you confidence you can keep your OpEx line? That is the first question. Second question, what is your tax rate you used to come up with the 2019 EPS target?
The operating expense would be up just modestly from 2017 to 2019. It would be almost flat, but it is up just a touch. Then, in the tax rate, we have the 15%-20% guidance out, and that is what we are following. Expect it in the 15%-20% in the future going forward. The question remains, let me say it this way. At 2017, we used 15%-20%. We used a high end and a little higher then in 2019 as we get out there because we may use the deferred tax assets. That remains to be seen. We put a little contingency in the tax rate in 2019. That depends on the rate and pace of profits materializing in the U.S. versus outside the U.S.
Yes.
Hi. This is Nikki Ahn for Farhan. Recently, there has been a lot of excitement on OLED. Can you just talk about your exposure on the display side? Does Brooks benefit from the OLED transition? Thank you.
You want to take it?
Yeah. Go ahead.
In OLED, for those not familiar, OLED is an organic LED display. The market is growing very rapidly. The biggest play for Brooks is in specialty coatings within our cryogenics group. We provide vacuum subsystems that do a lot of the coating, and that is a pure play for us. A lot of these screens are moving to in-line systems, and they need a vacuum level. We feel really good about that segment.
Yeah. Have one in the back of the room. Let me go to that question, then we'll come back to Craig.
Hi, it's Chris Reid here from Majedie. Could you talk a few words about cash generation and how that might develop, given you've talked about the profit side? Thanks.
Yeah. Thanks, Chris. On the cash capability, we're very pleased with. We're seeing increased cash capability, obviously, with the growth as well as the profits. Let me emphasize one point. The two gentlemen on both sides of me, they both know their positions. I'm sorry, Dave. By the way, if you don't recognize David Jarzynka, if you can't repeat that name, we all call him Dave J. Dave knows that he's been the source of cash for the last few years, and he'll continue to be the source of cash. Dusty has known that he's been the source of investment, the place where we place the investment. As we start generating a profit, that he'll start to produce cash this next year as well. We're actually encouraged on the cash.
We did not put a cash model, cash target out in the 2017 and 2019 frame, Chris, we expect the cash engine to improve at the $50 million and above that we've been generating. Thanks for the question. Craig?
Yeah, thanks, Lyndon. Craig Ellis, B. Riley. A question for both Dusty and Dave. Can you talk about the risks that you're most closely monitoring, both on the upside and the downside, as you look out over the forecast period to the fiscal 2019 target financial model?
I'll start off. I just want to make sure I understood the question. I think it was, what are we monitoring to really understand the long-term model in terms of the-
Yeah. It's really, what are the issues that could take the business above-
Yep
the target level of performance in fiscal 2019, What are the factors that could preclude the business from getting to target level in 2019?
Good question. Number 1 is we always look at advanced technology nodes. How are the customers adopting the technology? Is it yielding well? Is it progressing well? That really ties into capital investment. For example, right now at 10 nanometer, our things are going fairly well. At 14, it was a little bit slow. 10 nanometer looks like a really good, strong node with some teeth, so we're happy about that. Then we're even beyond that, into the seven and five nanometer range. We're starting to qualify our products today, and we'll actually start to do shipments to those technology nodes as we get into 2017. That's one key indicator is technology investment. Secondly is what is happening from a position of 3D NAND. We do see 3D NAND being very well-positioned in the memory segment of needing advanced depth and etch.
That investment in 3D NAND or being adopted by enterprise is very key for us. You've seen very public announcements, I think, of the amount of companies and new companies jumping into that space because they see it as a significant opportunity. What do we look for in terms of what could be a down cycle that happens? Technology stalling is always a down cycle, where they're just not yielding enough. We don't expect that to happen. Of course, the macro environment, we don't spend a lot of time on that because we can't control it. Then the last point would be, how well are our product sets doing? I'd say in general, there is pull for our new product investments.
We're not in push mode right now, and that's a key sign that I look for is how much are we pushing or selling versus our customers pulling us in that direction that they need to qualify these products. Those are some of the key factors that we look at.
I would emphasize, just to round out the semi point of that question, is that in the model that we laid out, it's a very flat set of numbers. When you do the arithmetic, you'll see we put in flat revenue, so it's actually down to up, and we only do that because we can't call the cycle. The purpose of our modeling is really to demonstrate to you what can the power of the earnings be. It's not because we expect our revenue to be down nor are we calling our revenue to be up. What we've described for you is our revenue, we believe, will be two to four points faster than what that industry supports. We recognize we're in a cycle, and as Dave points out, that investment cycle is going to have a lot to determine where we land.
When you look at the numbers, keep that in mind that we put that in a very modest, and I think that served us very well in this last model for the last couple of years.
One last comment that I skipped. I feel really good about our China position right now.
Yeah.
Like I said before, we've invested in China over 10 years ago with knowledge and capability. The FOUP cleaning market is going very well in China, etch and depth, and advanced packaging, especially on the vacuum side and what we do there. Feel really good about that trajectory, we're going to continue to invest appropriately as we move and produce more value for the China market.
On the life sciences side?
I think on life science, I'll talk about the upside aspects. I think there's probably two dimensions. One is actually, in fact, sitting in the corner of the room there. This is a product that we just launched, ultimately expanding the applications that we have around that technology, around cryogenic storage is a big part of that strategy. The second element from an upside standpoint would really be the continuation of what we see as a growth trajectory around the BioStorage piece of our business. We've got widespread adoption going on in the marketplace right now in terms of the model, ultimately, our customers are now becoming our selling force in terms of the references that we're getting that ultimately span that.
The third piece, which I try to highlight here, albeit that it's a small part of our revenue base at this point in time, is around informatics, because that, at least in my mind, is a platform strategy that if we can be successful in integrating the pieces that we bought through BioStorage and the work that we were doing in advance of that will play out extremely well. My only downside scenario is really around the large capital purchases that are out there. As I'd mentioned, we're moving a couple different aspects. One is the question that was asked around the fact that we've taken a lot of these large stores, and we've configured them to support our customer needs.
Ultimately, we're coming downstream now to support that end market to address, I think, a broader need that's there, but that's probably one of the areas just in the sense that these are multimillion-dollar programs, long cycles that go along with them and ultimately create some of that variation that we would have. By virtue of everything that we have in a portfolio, of course, we're normalizing some of the challenges that I think that we had in the portfolio when we came into 2015.
All right. Well, I want to take the opportunity to just say thank you again. I appreciate the time that you guys always put in with our business, and some of you are new to the equation. I just invite you to know that Steve and I both make ourselves pretty widely available when we're not in a quiet period. If we could spend more time with you, we would love that opportunity. We often invite people when you're in the Boston area, let us know in advance, and we'll try to pair up with you to visit us at Chelmsford at our location and show you some of the activities there. Those of you in the room, you have a unique benefit today to see some of that activity here along the walls. Well, we're just about to break for lunch.
I was asked to remind everybody, when you received your name tag, you also had a table number on your name badge, and ask that you at least start at that table, and we'll start lunch. We'll have some of the executives at each of the table and generate some questions. We've tried to pair up some of the life science analysts with Dusty, some of the semi with Dave. We're going to mix things up, so feel free to migrate where you need to after we get started. Thank you very much. We really appreciate the interest and time that you spend with Brooks Automation