Well, good morning, everybody. Welcome to Brooks Automation Investor Day and Analyst Day twenty sixteen. It's a real pleasure and an honor that you take your time to come and spend the day with us. We think that what we're going to show you is going to be of a lot of interest and a nice update for the company. I'm Lyndon Robertson.
I'm the CFO of the company. And I'm going to help work us our way through the presentations today with each of the presenters and the Q and A time frames. And I'll 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're going to make this as productive as possible, and that means that we're going talk to you about the future.
And as we do that, the Safe Harbor Act always obligates us to remind you that we don't necessarily obligate ourselves to update those things day to day. Also, we're going to use some non GAAP measures. And the presentation is going to be online on our website at the end of the day. And inside of those packages, you'll 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, and we'll 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. And so I want to just take a minute and introduce some of the management that's going to speak. And then we have a broader audience of management too that's going to be available helping with the demos. You've already met some of them. We're going have some lunch that you'll be able to sit with some of them during the lunchtime as well.
But first, let me introduce, we have Steve Schwartz, the CEO of the company. Steve, joined the company in 2010. He he his background is in engineering. He comes from the gods country back in the Midwest, which is where I come from. But, you know, he's had multiple degrees from Purdue University in in in engineering, and he has MBA from the University of Chicago.
But he spent the first fourteen years of his career with applied materials. And in that, as you talk to him, you'll know that he knows the semiconductor business frontwards and backwards and can explain the science of it. And since then, since 2010, he's also become one of the industry experts in the life sciences space too around sample management. And so 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, but he started his career with Brooks early on, and his background is also engineering. But during the middle of his career, he went and he did some key roles with Intel, with the IBM company. So he's worked in some of the most advanced semiconductor environments available. And then he came back to Brooks and he's been run he has run part of the sales organization.
He had, in recent years, overseen the entire semiconductor automation business. And 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. And he's driven a lot of success in that business. So 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. And so we couldn't be more pleased about Dave joining today and sharing his background and experience as well.
Then you're going to hear from Dusty Tinney. 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. And as he progressed his career, he landed eventually at PerkinElmer, and he was there thirteen years before just before coming to Brooks.
And at PerkinElmer, he ran about half the business, left as a senior vice president at PerkinElmer. And 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, and we couldn't be happier with what he's done with the business. And he's here to talk about the direction that, that's taking. And as I mentioned, I'm the CFO. My past, I spent twenty seven years with the IBM company.
I did another stint as a public CFO before coming to Brooks, an industrial company in the Midwest. But 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 little bit 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 and A time, and we think that that's a very valuable purpose of today.
So what we'll do is we'll do the first one at the end of Dave's presentation, right before the fifteen minute break, and we'll run that Q and A for we'll try to take all the questions we can, but we may cut it off after ten minutes. And then we'll do another one at the end of Dusty's. And then 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. And then 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 and A session, we'll carry microphones around so people on the webcast can also hear the questions. So with that, let me introduce Steve Schwartz, CEO of Brooks Automation. Thank you. Thank
you, Linda, 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 Linda mentioned, please use the Q and 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, semiconductor in particular, which may not be quite as familiar to you. But we're we have a very strong franchise in semiconductor. And for the semi people who have followed the company for some years now, a closer look at the life sciences business. And 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. And 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. And Dusty will be very specific about the opportunities that exist.
Now we'll re 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. And 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. So two strong businesses and a keen focus on profitability. Linda will elaborate on that very specifically as we get to the end of the presentation. Our objective is superordinate objective for us as we get to fiscal 'nineteen 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 $05,000,000,000 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. So this is probably the most striking part as we've grown a life sciences business not at the expense of the semiconductor business, but 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.
And 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. So 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 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 Kaveney will be able to walk you through later. But 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. So 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 the life sciences business. So we started with the fundamental core technical capabilities of the company, and we've since built out adjacent capabilities related to consumables sample management and now services business. So 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. So 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. And 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. And in the room today, we have two examples more than two examples.
We have 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. So where there are M and 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. And 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 is at an inflection point.
We've spent the last four years going through 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. So 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 'seventeen, when we hit 'seventeen, when we hit the start of 'seventeen, 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 'seventeen, 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 'eleven. So 2011, as a company, we, Brooks, were 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've done the first of our acquisitions, and 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. But 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. So we took a very strategic look at the product portfolio.
We understood clearly where we're going to go in life sciences. But we looked at the semiconductor portfolio, and approximately 40% of the company's revenue in fiscal 'eleven, we deemed nonstrategic. 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 28,000,000 to $30,000,000 of business, but one that we couldn't grow. We were number three positioned against two very strong competitors, and we could hang on. But 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.
And some of those products that we put together consisted of components, even robots from competitors of ours. We were literally an assembler or 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 absolute with semiconductor cycles. And the return on invested capital was high, but the gross margin profile was in the low teens. So it was a business, again, that we were particularly good at perhaps, but it was very low potential for us going forward. And the most important part, right in the center of the automation space, ATM refers to atmospheric robots.
So 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 sized 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 stand alone 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 Yasukawa Electric in Japan. So we will no longer be the distributor in North America for their atmospheric robots. In fiscal 'seventeen, our atmospheric robot business will be less than 2% of the company's revenue. So intentionally, we deemphasized this.
And fully 40% of the company's revenue, we've effectively gotten out of. So during the last five years, we intentionally got out of a significant portion of the revenue for the company. We assess the portfolio. We keep high value semi, and we keep life sciences that when we get into fiscal 'seventeen, we anticipate that fully 25% of the revenue for the company will be in life sciences. So tremendous growth potential in life sciences.
And what's more important, we've adjusted the semiconductor product portfolio so that it consists of some high growth spaces. So two thirds of the revenue that we anticipate in fiscal 'seventeen will be from high growth areas. Life sciences, Dussi 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. And Dave Jarzynkel will talk about half of his revenue in the semiconductor business, fully half of his revenue coming from opportunities 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're we have fully differentiated technology capabilities. So fiscal 'seventeen is a pretty significant turning point for us.
And again, the point of picking 'seventeen is as we exit 'sixteen four months from now, this will be the portfolio that we drive, and the product is very focused in and around semi and in 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. So this was a very deliberate transformation of the company that we spent the last few years going through. But we're particularly pleased that during this period, we grew revenue, we grew operating income and earnings per share. So revenue from 13% to 14% grew 14% from 14% to 15%, revenue grew 14%.
Operating income went 7x, and we almost quadrupled earnings per share. So 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 '17, 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 is a different company. The earnings potential, the earnings capability of the company, it's still outstanding. The growth that we have from fiscal 'fifteen to fiscal 'seventeen 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 time line. We don't back away from these higher numbers at all, but we're going to talk to you about the time line for achieving those and going past those. So 'seventeen will be adjusted slightly, but the potential that exists out to 'nineteen 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 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. So Intel gives guidance, Samsung gives guidance, Taiwan Semi, they spend capital wafer fab equipment. And over the period of 2013 to 2015, the wafer fab equipment market grew on 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 seven percent. 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, there's a lot of complexity around advanced packaging or wafer level packaging.
And when WFE was at 7%, Brooks grew 23% CAGR in advanced packaging space. And 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, 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.
Now as the line width shrink from 20 nanometer to 14 nanometer 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. So 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's a German company.
One year later, we acquired a company called Kontakt, 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. So our estimate is the market is growing about 25%. We continue to see huge potential in the wafer fab equipment space driven by contamination control. So we're in three critical segments, outgrowing wafer fab equipment.
So when you hear us talk about our models, our expectations for wafer fab equipment, we anticipate that somewhere between 24% growth rate higher than the growth rate of wafer fab equipment for the coming years. Now 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 500,000,000 samples stored.
In 2010 sorry, in 02/2000 is 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. So any cold storage, any automated systems were really about racking and stacking and preparing assays for tens of thousands of samples. And so automation was pretty critical for the ability to do high throughput screening tests. But 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.
And as diagnostic capabilities began to be enhanced, the numbers of samples would increase. So in around 2010, people realized they could do population studies, specific disease studies, and people will start to collect millions of samples. And so the advent of colder storage systems, minus 80 degrees C as opposed to minus 20, and larger systems became certainly more popular. But 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 the company. They need to be protected. They need to be utilized and measured and then restored. So 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 ten years or twenty years or thirty 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 6,000,000,000 samples, an explosive growth in the number of samples that are stored and the critical requirements around how do we manage those.
And 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. And so 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, and the number of customers is growing rapidly. But each one is very different. So 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, and 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. So every one of these customers has different samples, does different things to the samples, and they take different capabilities from Brooks, sometimes just automated stores, sometimes automated stores 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. So 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 of more than 10,000 customers who might be candidates for the sample management capability that we provide. And finally, we're talking about a $1,300,000,000 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 $300,000,000 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 so we added about a $300,000,000 consumable opportunity. On top of that, we developed the BioStore three Cryo and the Cryo pod to give us an offering at the minus 190 degree space. So we put automation for the first time into the ultra cold storage space. And with the acquisition of BioStorage Technologies, we added $05,000,000,000 of services capability to round out a complete portfolio from tools to processes to informatics and consumables. So we added a $1,300,000,000 serve available market for the company and, more importantly, one that's growing at 15% CAGR.
So an extremely attractive opportunity, a tremendous market portfolio. So 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 road map 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, Dutch has got a business that's now running at more than $100,000,000 and it will 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. So where does it take us? Driving this strategy gives us operating margin that we intend to take 2x to fiscal 'nineteen, earnings per share significantly above $1 per share, a place the company has never been. And by the time we get to fiscal 'nineteen, return on invested capital will be a very respectable 13%.
So you'll hear from the speakers today what contributions 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 twenty nineteen to operating margins of 15%. So 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 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. So 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 and everything that we do every day. So it's a good spot to be. I'm going to give a little bit about the business today, and I'm going to move forward to what's driving our growth. Let me first start with semiconductor at a glance. Number one, 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. And 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.
So 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, what does it 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.
And on here is hundreds of devices, Hundreds. Whether it's a processor for Apple or a Intel server processor or, you know, video game device that's on here or a MEMS device. And these wafers can be worth hundreds of thousands of dollars to up to a million, one wafer. A factory may do 30,000 of these in a month. So they're extremely, extremely valuable.
Right? These things are worth money. This is how the industry works. And what you look for is really good yield. When these goes 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 seven to 8,000 times smaller than a human hair.
So today at 10 nanometer, just to put that in perspective, DNA I think is around two and a half nanometer. So really small, really valued devices. Boy, 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. And I say transport, it's not automation. We've got these, right? And these are valuable. While we have these, we don't add adders and we add some value to it at the same time while we're moving these through the It's a really important position to be as we move forward.
And 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. So 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.
So
we're lucky to have four critical market positions within this market, number one 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 one. We've developed this business for over twenty five years, and we continue to grow as the market grows with Endep and Netsch, and we continue to be with trusted partners.
Same thing with our cryogenics business. Again, 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 provided that has been able to provide a complement to that business and help out when needed. But more importantly, we targeted a couple of real important segments that we didn't play in a couple of years ago, and we've done very well. Number one is contamination control, and I'll talk about that in a little bit.
It's all about this thing called the FOUP, which I'll show you in a minute. And secondly, advanced packaging, which we entered about four years ago, was a strategic decision, has done very well. The market is growing very well, and we're outpacing it. And all of this is backed by a trusted platform. So we have a global service network.
I'll give you an example. Ten 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.
And 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 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 food cleaning business gets us even deeper into the space. So not only is a good space for food 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 wafers on, very, very hot wafers.
This is a significant challenge in the industry because when wafers get hot, they're harder to handle. 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.
So 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. And we ended up partnering with both of these folks. And what we had to do was we had to make sure we can handle hot wafers. Oh, yeah, handle them 30% faster than you 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 four 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 several years. Can you help us? The end result in this space is we solve those high value problems.
Qualified. More importantly, our OEM partner won market share. We won market share. And the end user is happy. And that's what it's all about for us, is 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 13% to 15%, 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 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 than what we've delivered. So very strong revenue growth.
We continue to improve profitability. So 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, and we streamlined the business even more. Let me give you a couple of examples. As we did this, we delivered $12,000,000 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? And last, we have an extremely large installed base.
By bringing our product groups and service groups together and that knowledge, we have over 10,000 of robots in the installed base. We're partnering with our OEM customers. We're working with end users directly, and 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 this with Steve.
I want to go a little bit deeper. So from 2013 to 2015, we've 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. But 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 in etch has grown at a rate of around 21%, so we continue to outpace the industry. Dep and etch within the industry has grown around 7%. We're growing 21%. And Wafer Lever 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 20%.
And 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. And as Steve mentioned, we continue to look for, in addition, new areas.
And we're in a position of strength to do this very selectively. And our partnerships with our customers, as we see other areas to potentially grow within these segments, will take advantage out in the marketplace. Let's talk about what's driving the growth behind some of the market segments. So we're all familiar with smart handheld devices. But one of the key technologies in most of your advanced devices today is transistor technology called FinFET.
Why is it important? Well, number one, they're making on advanced technology nodes that are very small. Secondly, they require they deliver very low power. We all want better battery life in our products and what we do. And they're very difficult to make and very difficult to yield in high volume.
We're very well positioned in the DEPAGE space on this marketplace. And contamination control and food cleaning is the standard on these advanced technology nodes. So we see significant growth. And 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, right?
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 three d NAND or three d 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 actually this is one micron, by the way, one millionth of a meter, right? 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 depth 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, very little room for particles contaminates in the process.
So etch and depth growth and our fruit cleaning is positioned extremely well in this segment. And lastly, advanced packaging, which is a subsegment 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 nonstandard. You'll an example here, a very wafer that you can bend, not a typical wafer structure. These wafers are thin. They're bowed. They're potato chip.
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. So 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. And now the market is investing even more. IDMs right now across the world are investing in this type of technology for captive packaging, and Brooks is positioned really, really well in this space. I want to talk specifically about some of our areas of growth. Number one, vacuum automation.
The SAM is expanding because etch and depth continue to grow. Etch and depth has a lot more legs left to it with three d flash. Multi patterning is not going away tomorrow. EUV will most likely be used very selectively. It will come, but it will not erode from the Etch and Depth growth position.
So our SAM is expanding, and we're also positioned as the number one 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, and in accelerating. So this is a whole another part of the SAM that's coming forward as we deliver our vacuum automation solutions.
And 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. Then we went to clean automation. Then we had to get faster.
But 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. And what that requires is a lot of capability in software and algorithms and intelligence and experience on how to do that the right way, and Brooks brings that to the table. And as a next step, we need to get smarter. As 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.
So we're bringing our core competency that we've had for over twenty five years into a market that is expanding. We have a number one position. We have trusted customers. We're in a really, 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.
So think about FOUP.
How did they come up with FOUP, right? So way back when, was part of that, and I'll give just a little story. This is a FOUP. It stands for front opening unified pod, right? 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. So 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? So don't be confused by FOUP.
It is a wafer carrier, right? It's 25 wafers can fit into here. But more importantly, this is a controlled environment. The wafers are spending more time sometimes in this environment than they are in the tools. And 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, right? 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 out. Particles are getting in everywhere in it. Also, as this is an atmosphere, this is a plastic material. Water is getting into this It's being absorbed by this foop, okay? All of those things are really bad when you want to go do your next run of wafers, right?
It's not starting at ground zero. It's starting with contamination. So you got to remove this contamination from the FUP. 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 FUP. Are all the dimensions correctly? Are the labels correctly? Are there any damages? Our job is to make this a high purity carrier, right?
Next, we put it in a proprietary wet cleaning system. Then we've got to dry it out. We have a lot of intellectual property. And how do you do that effectively really quick? Then we put it in a proprietary vacuum process to get rid of all those organic compounds and gases that have contaminated this thing.
So what the market is seeing, first in logic, is, hey, the more times I bring this to this great Brooks M800 foot cleaning tool, I'm getting better yield. Let's do it more often. So a couple years ago, they had to buy, you know, 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 do. Huge value. When they open up a new semiconductor fab, the second tool in is a row in line of Brooks Brook cleaners as far as you can see. Significant impact on yield and what we do in the marketplace, okay? So this is a FOUP or Carrier of Wafers.
Let's talk about where this market is going very briefly in terms of value. So I mentioned more cleaning steps, right? Our SAM is expanding. More importantly, the memory market now has said, Hey, wait a minute. What's for three d NAND, this stuff is pretty hard.
I'm doing manual cleaning. I think there's advantage of food cleaning in this So that work is underway. The memory market will start to adopt food cleaning and conditioning. Our SAM will grow quite significantly as this market grows. We're very well positioned within three d Neat and Flash working with customers on food cleaning technology.
This market is at 24% CAGR. We're growing much faster than that. And then let's talk in terms of value. Here's where it gets even more exciting. So 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 hoop, which is one of the problems with it. Our tool in our platform is very modular and very smart, and our installed base is growing. So the next opportunity that we have is to upgrade that installed 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 installed base and our advanced technology that we're bringing to this market.
Let's talk briefly about advanced packaging. So advanced packaging is a market that the market has moved from a packaging market to what's called through silicon VIR. 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. So 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 for 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. And the reason, as I mentioned, it's about unique wafer handling and about what are those high value problems in positions. We have about 25 customers today, which is really exciting.
And we're in six applications. So we're in the bonding space. We're in the inspection space. We're in the etch space. We're in the depth space.
So 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 this. The core one of the core competencies of the company is vast software experience on how to do things 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. So our value here is very strong. It continues to grow and our SAM expanding. What happens in the future? So in 2019, we will continue to exceed market growth, very confident with the business model.
We'll 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. So 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 from the industry. Thanks for your time. I appreciate it. I think now we'll take some time for questions.
So
we're going to open
up for Q and A now, and then we'll take about a fifteen minute break. But just 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. So we have a question here from Edwin Mach. Let's use the microphone because we are on a webcast, Edwin. Thanks.
Hi, thanks for taking my question. Thanks for the presentation. So two questions, I guess, one for you, Steve. You talked about your target model likely, I guess, you said maybe coming at the low end of your previous target. Just can you maybe kind of just quantitatively talk about what drove that?
What is the change? Are you guys reinvesting more in the business and If you can kind give us some color on that. And I have a follow-up question for Dave.
You want to start, then? Yes. So actually, we're going to give you a lot more color on the target model in after the break when we do the financial model. But essentially, we're just acknowledging that it's at the lower end of the range in 2017. But it's not a backing off of the target of where we're going to get to.
So we're to be really happy with the performance improvements that we're reflecting on and where this model is going. And as you know, when you ask about the additional investments in hitting the '17, we're folded in the biostorage investment. So I think the net answer to your question is there's 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.
Yes. We'll be specific about the numbers in a moment. I think what you saw at Life Sciences in 'fifteen was slower than we'd anticipated when we put the model out. So we're it's only a shift in time, nothing more.
Sorry, just a quick follow-up question for Dave. If you look at your semiconductor business, just even the chart that you guys are 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 Palms and the service business that you haven't talked about too much, right? Should we expect 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.
Edward. So the question was, we do have a service platform as well. How is that positioned for the future? And what do we expect? So number one, we do have an existing service business.
We've talked about it very publicly. It's about a $95,000,000 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 bring to that market. I mentioned a couple of things about the installed base that our products are very well positioned to upgrade this installed 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 installed base that we can address with our product portfolio. So we feel really good about our value moving forward within this space, better than we have in the past.
And I'll add on to the part about the cryopumps. So if you look at the evolution of the cryopump market, two technologies in semiconductor use cryogenic pumps, ion implant and physical vapor deposition, PVD or sputter. So one deposition and one ion implant. Over the years, you could see tremendous market share from Applied Materials in PVD and in ion implant. You can imagine that a single customer, if you will, for all practical purposes, single customer would have two suppliers.
So 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 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, the majority in and around semi is to Applied Materials. So I think when you think about it from that standpoint, it's pretty clear why that position is a little bit tough to move.
Still a really good profitable business, still fundamentally tremendous technology. And for smaller applications, smaller customers, there's a lot of business to be had through a distribution channel. But 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.
And within semiconductor group, we're bringing a lot of our business unit knowledge closer to that customer and closer to the service footprint. So we're delivering that knowledge much more local and more streamlined. So for the
people who I want to make sure it's clear. All systems use robots. All the different 150 different process technologies going to make semiconductor to use cryogenic pumps, which is a big part of Dave's business, but all of them use robotics.
We have a question
from Patrick Ho from Stifel. 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 twenty nineteen 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. So one 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 MagLEAP automation system.
So when Dave talked about how we go beyond the current capabilities to next generation, when we've been adapting a current technology, the MagneTran seven or the MagneTran eight, 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 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. So 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 and D investment instead of every time a customer comes up with one more specific need, I need to go 10 degrees higher in temperature or I need to be 10 microns better spatially, this product gets past that. From an SG and 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 $15,000,000 of cost out of the company, and Lyndon will talk very specifically about some things that we'll do in 'seventeen to continue to leverage existing assets of the company more efficiently. Great.
And maybe a question for Dave in terms of the
is, is,
the
packaging applications, whether it's fan out, whether it's copper pillar? How does Brooks capitalize upon those market opportunities?
Sure. Good question. So for those that may be on Webex, Patrick had a question about advanced packaging. I talked about TSV. How are we positioned for fan out or copper or other types of packaging technologies?
How do we feel about that? So number one, we are in fan out today, one of the large investments that 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.
And then more importantly, in the assembly and test area, which is an area that Brooks has never been in, in the jetic tray area, where a tray holds dies. So 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. So 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. So 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.
Now TSV comes, we'll be growing more. And then the assembly test area is also a growth opportunity for us.
Great. A question from Amanda from Citi.
Steve, you spoke a little bit about the opportunity in China over the next couple of years. 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. So China is 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, cryopumps that are accepted in the fab and automation systems that are accepted in the fab. So 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. But we anticipate that as that market expands, as the number of Chinese OEMs expands, we'll need a different footprint in China. So we're thinking through that right now. But right now, we are we have tremendous market position.
Probably the highest share in any region that we have is in China, but 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. So for the next few years, it's pretty clear. But 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 want to make sure that our product is in.
So 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.
Dave, on the growth targets, the 200 basis to 400 basis points premium to industry, where do you have more visibility and confidence in attaining those targets? And then 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? And what's the relative contribution?
Thank you.
So 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 one, 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? And we see that in momentum.
So we feel very confident in outpacing the industry in those areas. So very, very solid. Secondly, what was the second question?
Margins and closing the gap to target.
So closing the gap, where is that coming from? So number of fact, number one, you saw some of the value that we're creating today in the marketplace with our new products. So 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 as our teams start to I'll give you an example. We have repair centers globally 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 just we're making it a priority now as we move forward. So feel really good about that.
And then from the last point of view is we've put a lot of energy into strategy and focus. So 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. And 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 Just mind, looking at the targets, as we look out on a multiyear time frame, are your targets attainable if we have persistent spending backdrop like we have this year where it's flattish overall? Or 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, and I think I'll just add a little more to your previous question, too. But the growth that we're counting on for this is really, really modest. You're going to see in the model that similar to when I laid it out in 2014, we just we look at pretty much a flat environment. And we think that the two to four points premium growth that we have over the industry is a really confident point. So you're still seeing a very modest growth rate, supporting the four to six point margin expansion.
I'll add a little bit to this because I think this is really important for everybody to understand, we've 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, and you're going to hear something very close to this on the Life Sciences. That the markets that are driving the growth around depth and etch, around wafer level packaging, around contamination control, these aren't markets that we're having to chase. These are markets that have like no friction to us. The customers are coming, asking for our partnership because we put the investment into the R and D over the last five years.
We've developed tight partnerships with them, and we're working very closely with them. We're helping 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 food 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 food box and the chemicals? And they're looking for a consultative partner that can help them understand what the next challenge is.
And so 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, and that's why we have such high confidence that we'll continue to sustain a two to four 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 restructuring that took about $15,000,000 of cost out cost and expense out.
Dave pointed to $12,000,000 in his chart as we consolidated the group. That $12,000,000 was largely in the semiconductor space, and then there was about $3,000,000 more that was really in corporate G and A, and it will 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 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 'fifteen to 'seventeen and then to 'nineteen.
And then finally, as Steve pointed out, we have advancements of the product set. And 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 and D function in Brooks Automation. He and the team, with Dave's team highly engaged, developed the new products such as the Magnetriol and LEAP product that you see over here. And it's these kinds of advancements, both in value engineering of same cost of, but also in the advancement of the value of the product set.
And as we do this, as we help solve the problem, the value map that Dave portrayed on all three of these industries, I'll say, drivers, we get increasingly more value with our customers. And they value us. And 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. And we've been proven as a survivor, and we continue to grow with the industry and with these key customers. And 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.
So it's diversifying the customer set that we're addressing. So 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 road map 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 on 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 fifteen minute break.
I've got that will bring us back right at 11:00. So right at 11:00 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 and we'll show you what '17 and '19 will look like. But first, you're gonna hear from Dusty Tinney on the robustness of the life sciences business. So look forward to seeing you back here in about fifteen minutes. Thank you very much.
Great. You ready go? Yeah. I'm gonna introduce you. He has the All right.
If we can gather back at the tables, I appreciate everybody's time. I want to be respectful of yours. So we're going to turn next to the evolving side of our business on life sciences. And it's my pleasure to introduce Dusty Tinney, the president and general manager of our life science business here at Brooks Automation. Dusty, it's all yours.
Yeah. I'll just maybe just take a couple minutes, let folks get restorted here. Last coffee and It's great to be here and introduce you to the life science side of Brooks Automation. As Linda had indicated, I've been with Brooks for about eighteen months, and it's been an exciting time frame in terms of our ability to really put together what would be considered the most comprehensive sample management solution in industry. It's exciting on a couple of different dimensions and 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 You're probably not going be able to see my show and tell because it actually is something that looks like this. And ultimately, at the heart of this is some type of sample that goes into some type of storage media, and this happens to be a consumable that stores a biological
that
we a
industry. And
So 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, but 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 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 in the semi side of the business. But 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 the 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 Linden will share with you, we're going to be 25% by 2019. We embarked on a pretty aggressive strategy here over the last eighteen months that really has positioned us well in this marketplace, and those strategies have really come together. And 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. And 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, and that's positioned us well in terms of the revenues that we had through two fifty people versus the revenues that we're currently seeing in 2016 through 04/12. So 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. And 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. And we continue to really build a franchise 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 $47,000,000 more of revenue, which is a 69% growth rate. And 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. So 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, but 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. So 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, it is driving a need for better sample management in the industry.
And to that extent, we've sort of gone down a pathway here of building a comprehensive sample management within the company. So what makes up a comprehensive sample management solution? I think there's a couple of pieces I just want to make sure as we sort of set at the foundation and ultimately where we're heading from a strategy standpoint that you've got that level of awareness. I think 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 minus 20 degrees Celsius all the way down to minus 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 be used tomorrow, within the next week? Or is it going to be used somewhere down the road? So there's two mechanisms that we've integrated as part of the broader sample management solution, which is around automation. So 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 weekly basis. The other aspect is high quality archival storage.
So 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, 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. So 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. So 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 Fluid X. The orange caps here are representative of what came from the Fluid X. 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.
And they have a number of accessories that really manage 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 Pharmaseek and LabSite. And those two companies are ultimately providing very disruptive technologies as it relates to consumables. So this helps us build out some of the recurring revenues that I'll talk about here in a second.
And in 2015, we also brought in the BioStorage team as part of our business in building out that franchise. So 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 BioStorage III cryo system to support the cryogenic automation market, and that helped us ultimately build out some of that capability.
And here in 2016, we put a team together that spans the acquisition and the efforts in our Manchester site to include an informatics capability. So in essence, through this period of time, as I've outlined as to what makes up a comprehensive management solution sample management solution, we've taken the steps to really build that portfolio. And we have we believe that we have the right portfolio today to make that happen. So as we start to partition that out, we've got a very, 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 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 $200,000,000 and 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 business. We've also got a lot of evidence from our customers. And 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.
And then ultimately, each of the acquisitions have been quite accretive in terms of the adds that we've had with customers and ultimately have led down the path of some expansion in 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. And of course, they also buy the genomic analysis that comes along with that. So we have integrated this very, 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 business. Let me just maybe just 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 sort of Internet of Things, Internet of Samples because there is an explosive nature around what's happening in the marketplace today. And 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. And 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 in making information more readily available to understand what these samples mean in terms of the collections that our customers are using. And 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 6,000,000,000 samples that are stored globally today. And that's a pretty significant number, recognizing again that, that has gone threefold in the last five years.
And then ultimately, the analogy around Internet of Things is that will continue exponentially. Lives are being impacted pretty dramatically, both in terms of disease and environmental factors. And 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, has gone 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, 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. And ultimately, those customers are looking for faster pipelines. They're 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 and trying to make our population much more healthier and much more viable in terms of the future going forward. So 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, there are the market itself is roughly about $7,000,000,000 in size.
And 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 the path of an increased desire to solve some of the disease states that I showed on the previous slide. And as you think about that end market in terms of the $7,000,000,000 we address about $1,300,000,000 of that. And Steve highlighted this, I think, pretty well. This market is growing about 15%.
It's an exciting dynamic environment. And 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. As we think next year, 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. 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 customers' 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 stories 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. But we've taken the opportunity really to highlight the fact that we're putting in workflows that support what the customers' 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 with our competitors. And 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. And 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 are 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. And life science there's a couple of science tools that play in our space. But 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.
So we've positioned ourselves 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. So 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 22,000,000 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 3x. The average age of our samples in storage is four years. And of all the samples that we've stored over the time frame that BioStorage has been in business, which is the $22,000,000 65% of those are actually in storage today.
So this really speaks to the annuity and the power of sample management. We have contracted with our customers in an evergreen kind of 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 time frame, which, again, is the value proposition that I'm espousing. The fourth element is that we have a very, very strong installed base. And we actually have an installed base that's 3x 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. 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 ten years. So 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 one 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 two 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 one player.
And 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 So that gave you a great perspective, hopefully, of some of the underlying capabilities. So let's just maybe take a couple of moments here now to talk about how we're going to drive the growth. So I think, as you start to think about the key things that make up the growth, one 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 the investments that we're making, that will ultimately help us get there. And 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 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've 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. So 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 LabSite and with PharmaSeq 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. And as you start to think about that growth rate to get to 110,000,000 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. So it centers on new customers and it centers on existing customers and it centers on our menu expansion.
So what we found as we've worked very closely with the team at BioStorage and even through some of the relationships 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. And 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, and 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 that reach and 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. And then 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. And I think it's important from a value standpoint that our customers are asking Brooks to take that on. And 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.
So 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 $80,000,000 over the period of 2019. Combining that, is the third element of our growth strategy, which is really centered around markets. And 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.
So clearly, we've made a couple of strategic plays into the Chinese market. We actually worked 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, 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. So 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 $200,000,000 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, converts over to a 16% to 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. And that's the inflection point that I think Steve referenced this morning. And you ultimately see here in a couple of minutes when Linen 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. And 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. But the resultant of that has been the most comprehensive sample management solution in the industry today. And because of that, there's a couple of 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 to 2019 as evidenced by the financial numbers.
And 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'll be going forward. So 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.
So Dusty, thanks very much. And we're going to pause now for some more Q and A with Dusty and I'll have Steve join in the Q and A, so feel free to address. But we'll just focus on Life Sciences for a moment, see if you have questions on that, then I'll take you into the financials and what this all reflects in total. But let me just pause to see if any questions. Craig?
Yes. Let's wait for the microphone. In fact, I might just ask each person just introduce yourself, name and firm on the webcast, they'll hear that also.
Thanks, Linden. 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 'nineteen, what would you expect your share to be? And then 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. So let's 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 be growing faster. The number that we have on the table is $200,000,000 plus.
So if we look at the growth rate the underlying growth rate of the market at 15%, we're going to grow faster than that underlying growth rate. And so I'll sort of put that out there somewhere between 1520% 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.
So I think in terms of the market that Craig may you may be referencing, dollars 7,000,000,000 total market, and we have a 1,300,000,000 served market growing to a $2,000,000,000 market. And I believe that market growth rate is 13%.
Do I recall that correctly? 15%.
Yes, percent. So that's our selected addressable market growth rate. The $7,000,000,000 would be growing slower, probably high single digit, So 7% to 8% is what I it will be growing a bit slower than that. So think of the total market in the 78%, the selected market being 13% and then the revenue growth taking us to $200,000,000 at 15%.
Edward Malte with Needham and Company. So first, I guess, have two part question. First, just look at your like you suggest your recurring part of your recurring revenue part of the business, which include biostorage, right? It seems like you guys are really confident about that, and you talked a lot about your backlog on that. Can you maybe kind of help us kind of think about how much of that is driven by just customer expansion and as you sell more to existing or selling more from to existing customer?
And in terms of kind of growth there, are we talking about expanding the service and the customer? And in terms of that backlog, how much of that is actually contracted? And then I have a follow-up.
Okay. Multidimensional question there. So I think let's just talk about the recurring revenue streams, which was the 65 that I said that we've added up. So 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. So 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 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. But 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 of '19.
And two side of the business, your traditional Trinh Bank and now the new product you guys are launching. From my understanding, it's traditionally your Trinbank product has a lot of customization, which is 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 of 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 hype related, physical size related. But here, recently, we've taken that tack, but we've also gone 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 largest stores. So 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.
So 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 will 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 get out of this feedback range here. And then finally, we'll roll into the 'seventeen and 'nineteen update, and I know that's what a lot of people are anxious to see.
So 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. And 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 $50,000,000 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. But $68,000,000 cash on the balance sheet, no debt. We haven't had debt for years. I'll highlight to you that we filed an eight ks 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, but we don't anticipate immediately tapping into that revolver. It's a that's why we went for a nonfunded credit line. But this balance sheet has been a significant element of our strategy that's allowed us to execute the transformation. And 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 $500,000,000 of cash, a couple 100,000,000 into the organic investments, the support of the R and 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 $8,000,000 a year. I have guided that it will you should think of it being 10,000,000 to $15,000,000 going forward with the addition of the BioStorage business. It will bring us up a little bit. On the acquisition side, you can see we're just short of $0.02 $5,000,000,000 of cash that we've been able to deploy toward acquisitions to building this business.
This is after divesting of a business that funded $85,000,000 of that. But we've we put 45% of our cash back into work into key growth areas, and that is the element of the strategy, the delivered strategy that we've been on and we remained on throughout. And then certainly not to be overlooked, but we've returned $85,000,000 in the three years over back to the shareholder in the form of dividends. We established the dividend back in 2011. We increased it in 2014.
And 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, but 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. And 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 look back.
You've seen us continuously talk about cost takeout and some restructuring initiatives over time. And if you go back into 'fourteen or even into 2013, you heard us start talking about outsourcing and manufacturing lines, and we continuously look at anything inside our shop that we can put outside. And we did a couple of initial steps in 'fourteen, 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.
So we had three significant systems capable businesses that we had still maintained the footprint and a lot of the resources around. And we set a schedule in place. And by the September, we had exited all of the Poway, California location and substantively Spokane, and we've since closed the Spokane location. And so that restructuring is done. We've now centered our competency center and our manufacturing center in Manchester in The U.
K. And that took $6,000,000 of fixed cost structure out. And then most recently, we did the more significant restructuring of the business, simplifying the semiconductor side of things as well as the corporate structure, taking $15,000,000 of annual cost out. These are all significant. And the portion that I would tell you that is not fully in our results yet is the last steps of that 15,000,000 And you'll see, as I've described previously, you started to see the bulk of it in this quarter and the final $1,000,000 benefit on a quarterly basis next quarter, which is our fourth fiscal quarter.
We closed on September 30, the year. And then highlighting to you that as we look into 'seventeen, we see about $8,000,000 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. And 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 just about similar to our last restructuring, perhaps about 75% out of the operating expense and 5,000,000 to $6,000,000 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 had we 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. So you'll see services in the semi business, and you have services in the life sciences business. When you you've seen the split. In 2015, about 12% was life sciences. And then we split out the global services and the BPS or the product solutions business to make up the other 88.
And so that's very clear. It's just going be the combination simple combination of those two. We're not remixing businesses, so it's going be very easy. And I also offer up to you that in our publishing of our financials, we'll maintain the visibility of the information through the MD and A analysis that you'll see the margins of each of the services and product solutions in semiconductor business. Going forward to 'seventeen, I highlight a target, and I think I'll clarify something.
So in 2017, our objective life sciences will be 25%, and you'll see that in just a moment in in the model. So it's gonna be 75%, 7025% life sciences starting to as the people say, you know, a million here, a million there, pretty soon it adds up the real money. Now we're we're getting to real we're already in a 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. And I just thought that this portrayal may be a good one for you to reference, and it will be out on our website as well for reference if you want to take another look at it and ask questions later.
But people ask me, well, what is the business of BioStorage? What's it look like when it culminates in revenue? And 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 started out in the bottom in the first quarter of relocating some samples, and that's a and that incurs revenue.
So there's a charge for the relocation services. And then the next layer there that you see at the beginning is the registration of samples. And as we register samples, there's also a fee for bringing the samples in, putting it into storage, and getting the registration. And then 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. And so 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.
And the vast the majority of our contracts have an evergreen clause. But sample by sample, it's a per sample charge. And 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, the 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. But if they did, in the final aspect, you would see this retrieval fee and disposition of the sample. But the important point to know is when we sign the contract and we think and we talk about contract value. So this last quarter, we booked $28,000,000 of contracts in the BioStorage business.
It includes an estimate. If the customer only signed two year contract, we only show two years of contract value. If they show if they signed seven years, by the way, we cut it off at five, Okay? We only put talk about a five year value. And often, it's an evergreen.
If it's evergreen, we'll just talk about a five year value. And the history of the business, as Dusty showed earlier, is the sample stay in a four to five year time frame. And so 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 will be in storage, and it renews.
And if the first year sign runs out or if the contract term runs out, we lay in another year into our backlog inside the business. This is why we're reluctant to talk about the backlog of the business in aggregate, but 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. But 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. But today, we have a total of $237,000,000 in our total Life Sciences backlog. On the left side, you can see that 65% of our business now is that recurring revenue stream.
Now 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. And the revenue so far this year has been $47,000,000 in the business, and we're looking at $76,000,000 of bookings so far. So we've had a net new business of that $29,000,000 net addition versus what we booked compared to what we recognized as revenue. So we believe that each quarter, we'll start talking about this on the net new bookings, how many contracts we signed, 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.
And so 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 will include adjustments up and down occasionally. Recurring revenue is a key to the business model. And so when you think about that now, where does this these initiatives, the things that have evolved, where does it take us into a financial target and financial model? So let me show you the update to the fiscal year 'seventeen model.
I put it here in the same context that we have in the past, but I've added EPS. If you look across the page, I've given you the snapshot of 'thirteen, 'fifteen and 'seventeen, you can look at the other periods. We do not guide on a outside our current quarter, so I didn't put a 2016 in yet. But in 2017, this is a range of what we estimate. And we believe that our revenue will be somewhere in that $610,000,000 to $650,000,000 Of this, dollars 160,000,000 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, but we believe it will be a modest to positive end of this range. However, you know, we don't know if it will tweak down or not. So we've given you a slightly negative to a slightly positive range on semi. In the gross margin, this is a change, and 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. And so 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. But for on this time line, 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.
So we think that's about 26%. This brings us to a 12% operating income next year in that range. So we believe that the EBITDA, dollars 90,000,000 to $110,000,000 and I'll just clarify, it overlaps with the range we showed previously. So I could claim that we're on this range, but I do acknowledge that it includes the BioStorage business. So we've comprehended the investment that we've made in the acquisition.
And we 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. So we're very excited about this. We think that the model that we had put out in 'fourteen served us really well. It's guided us. It's guided us in 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. And 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. And 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? And we want to see the profit. And when I talked to the life science investors, they said, where is all the top line growth? And they never mentioned profit, and that's the investment mode that they're in.
And so 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. And so what we're saying in 'seventeen, as Dusty pointed out, is life sciences is going to be profitable. So 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. If we look at I want to give you a bridge, by the way. I should have I just departed from my presentation mode. So I got to take you back through the 'fifteen to 'nineteen. My apologies.
But let me finish my thought on 'nineteen. We're going to show you that 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 'seventeen. In 2000 as I've mentioned, there are different tenets to the model. But 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.
But we have IP revenue in the past that is going away through this year. And so when you compare 'fifteen to 'seventeen, we have about a $0.12 impact to the drop of the IP income. So we have to start making that up. And as I said, Life Sciences is a key element of this. The margin improvement will help us about $0.08 and then the growth of that business is about $0.22 I'll tell you that the $0.22 is just about half and half, half on BioStorage, the net addition of the biostorage business revenue with the structure there, and then the other half on the growth of the legacy business.
So this is all engines running equation, and Dusty has 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. And in that mode, I think this is almost it's all within our site. Most of it's done already.
A lot of some of it is right in front of us to execute before as we go into 'seventeen. Most of it will be done when we enter 'seventeen. There will be a little portion of it that happens in the first few months of our fiscal year 'seventeen, first six months. And 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, but 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, and the nature of having a valuation allowance on the books actually helps to reflect that. So that $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 Now 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 $200,000,000 and we believe the margin will be in that upper end of 43% to 45%. Both businesses will manage for operating expense productivity. It means something different on both. And we expect more growth in Life Sciences on a continuous basis. It's not a cycle.
It's continuous. So 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. And if it's a modest growth, then expect flat operating expense. If it's flat revenue, then expect us to continue to yield some productivity out of the expense equation.
And some of that will be out of the business itself, some of will be we continue to work on the corporate back offices as well. So we have opportunity to support that equation. What this means, and each of the leaders has talked about, is on the semiconductor side, we expect our margins operating margin to get to that 15% to 17% level just in the semiconductor space. And as one of the questions highlighted, 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 we'll grow two to four points faster than it. In the life science business, which now in 2019, we're expecting to be 30% of our business, will be in that 16% to 18%. So by then, it'll be a stronger business on an operating margin and on a continuous basis than the semi, and it will be lifting the company. And the question then remains, then what do we do to continue to propel that in future years beyond 20%? And so that question is not lost on us.
But by 'nineteen, 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. And 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.
And so 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 and ROIC that hits the 13% level by 2019. And that is a key metric for us as a senior management team. That's how we evaluate our investments when we go after the any acquisition or any significant investment inside the business, and that's how we tune our plans as well. So I think this business model, 'seventeen is going to be a very important milestone.
It's an inflection year for us. We're right at the inflection, and 2019 demonstrates what where we think the power of the business model takes us. When you wanna 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 'nineteen time frame, I want to emphasize, if you take $200,000,000 out of life sciences, this would show a, again, a modestly down to modestly up semi only on the premise that it's a weak semi market. And we still believe that over this time that our entire semi business will grow two to four points faster on the product side, faster than the market.
This will produce an operating income in the range of 100,000,000 to 1 and $30,000,000 and as Steve highlighted earlier, one to one point three zero dollars 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. And 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 or financial picture that we've shown you on the financial model. And 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 return making returns to the shareholders. Bringing you back to the overriding messages.
Remember earlier this morning, Steve said, when you walk away today, what are the 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 to us just 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, and we believe that we will do that, and you'll see that show up also in our margins. Life sciences poised for that growth, profitable growth. So we're at the inflection point that we see it becoming profitable starting in the fourth fiscal quarter in September, and then it stays profitable through 'seventeen and improves all the way to 'nineteen. We believe we've got what we need there. The focus on the entire business is around the execution of those two pieces.
Back up from this as an investor side, and 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%, and we see it going to 25% and then 30%. It's clearly becoming a substantive life science company.
So 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, and I'm going to bring the leadership team up for additional Q and A. And I really appreciate the time that you guys have spent with us. We're proud to position the company the way we have and present it to you the way we have. But at the same time, we recognize we may have left some gaps in questions.
So we're going to open up for some more Q and A before lunch, and then we'll shut down.
Sachin Kulkarni, Jefferies. In terms of M and A, what hurdle rates do you consider when deploying capital in terms of like ROIC and all that? Yes. So our weighted average cost
of capital tends to be calculated around 12%. And we look for a on the deal for to hit something accretive to that or being higher than that within three to five years at a minimum. And most all of our cases come 20% or better, but at a minimum, three to five years better than the 13% level. And all of our cases, in the last few years have supported that when we set out in the acquisition. So the second test we put to that is also a net present value of the cash generated from those acquisitions when we acquire them.
And we look at a downside. And if we were even to have to divest or something, will we be able to yield that cash back? And that's kind of a sanity check to us. But 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 a semiconductor side, we'll look for a shorter term ROIC objective, but that's the hurdle rate. Let's use the microphone. Introduce yourself.
Patrick Ho, it's Steve Famiklos. Looking at your longer term target model, particularly for 2019, you give gross margins for the semiconductor business at around 39%. 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?
Yes. I'll let me comment on first and I'll see if David and Steve want to join in. But first, I'll highlight that we have a headwind, first that I have I want to acknowledge that IP income goes away, and that's in our revenue line on that side of the business. Then but we're also seeing the downturn of the atmospheric going away, that was a lower margin business. And so that's a little bit of a tailwind in terms of the margin percentage that you're asking about.
But 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. And then a mindset that takes cost out. And then you and when I say the demo, it's not just the robot that's on display, but it's also the contamination control, the value we bring to a more diverse set of customers in the wafer level packaging. And these things give us value in the market, but they also are highly valued by the customers partnering with us and buying from us. And so we see that as we advance the product line, it produces that kind of margin.
Anything you'd add?
Just a couple of other notes on that. So number one, I talked about the installed 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. And then secondly, talk a little bit about, I mentioned before, efficiencies.
I see if you look at the fixed costs that we have to support our operations, as we bring semiconductor group together, we see more synergies in that and allowing us to be more variable depending where our business is. So that will give us better absorption through
the cycles and better margins moving forward. And 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?
Yes. Let me give you two examples. It's a really good question, Patrick. Number one, in contamination control, our food cleaning platform is completely modular and upgradable. So we start with base level food cleaning.
Some of you have seen the inspection station that inspects hoops. That is a completely upgradable option for the tool. In addition, there are other options on the cleaning cycle, on what level of performance. So now we're reaching a massive installed base as these soup 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 MagnaTrend LEAP, number one, it's 100% backwards plug and play compatible with the installed base.
That's a term opportunity for us and our partners. Our partners are very excited about that. And it's very software intensive. Our performance enhancements are software upgradable. So 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.
So we feel really good about those two platforms.
Edmond Moff with Needham and Company. So, Landon, just in terms of going through your model, if I take the 2019 target versus your 'seventeen 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's the first question. And second question, what is your tax rate you used to come up with the 'nineteen EPS target?
The operating expense would be up just modestly from 'seventeen to 'nineteen, but it'd be almost flat, but it's up just a touch. And then in the tax rate, we have the 2015% to 20% guidance out, and that's what we're following, so expected in the 15% to 20% the future going forward. The question remains let me say it this way, at 'seventeen, we used 15% to 20%. We used the high end and a little higher than in 'nineteen as we get out there because we may use the deferred tax assets. That remains to be seen.
So we put a little contingency in the tax rate in 'nineteen, and that depends on the rate and pace of profits materializing in The U. S. Versus outside The U. S. Yes.
This is Nikki on for Farhan. So recently, there has been a lot of excitement on OLED. Can you just talk about your exposure on the display side? And does Brooks benefit from the OLED transition?
Thank So 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 inline systems, and they need a vacuum level.
So we feel really good about that segment.
Everyone in the back of the room, let me go to that question and come back to Craig.
It's Chris Reed here from Ajeti. Could you talk a few words about cash generation and how that might develop given you've talked about the profit side? Thanks.
Yes. Thanks, Chris. So on the cash capability, we're very pleased with. So we're seeing increased cash capability obviously with the growth as well as the profits. Let me emphasize one point.
Two gentlemen on both sides of me, they both know their positions. Dave Jay, we have by the way, if you don't recognize Dave Jarzynka, if you can't repeat that name, we all call him Dave Jay. But Dave is 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, but as we start generating a profit that he'll start to produce cash this next year as well. And so we're actually encouraged on the cash.
We did not put a cash model, cash target out in the 'seventeen and 'nineteen frame. But Chris, we expect this the cash engine to improve at the $50,000,000 and above that we've been generating. Thanks for the question. Craig?
Yes. Thanks, Linda. 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 forecast period to the fiscal 'nineteen 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 Yes. The
It's really what are the issues that could take the business above
the
target level performance in fiscal 'nineteen? And what are the factors that could preclude the business from getting to target level in 2019?
Good question. So number one 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.
And 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. So that's one key indicator is technology investment. Secondly is what is happening from a position of three d NAND.
We do see three d NAND being very well positioned in the memory segment of needing advanced DEP and Etch. And so that investment in three d NAND are being adopted by enterprise is very key for us. And we're seeing 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. And 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. So those are some of
the key factors that we look like. 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. So 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. And 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 or 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. So 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. So 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. Like I said before, we've invested in China over ten years ago with knowledge and capability. The food cleaning market is going very well in China, etch and depth and advanced packaging, especially on the vacuum side and what we do there. So feel really good about that trajectory, and we're going to continue to invest appropriately as we move and produce more value for the China market.
So on the life sciences side?
No, I
think on life I'll talk about the upside aspects. I think there's probably two dimensions. One is actually back sitting in the corner of the room there. This is a product that we just launched and 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 will 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. And ultimately, our customers are now becoming our selling force in terms of the references that we're getting that ultimately span that. And 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 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, that will play out extremely well. My only downside scenario is really around the capital the large capital purchases that are out there. And as I mentioned, we're moving a couple of 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. But by virtue of everything that we have in the 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. 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.
And so if we could spend more time with you, we would love that opportunity. We often invite people into the 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. While 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. And 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 and Simi with Dave. But then we're going to mix things up, so feel free to migrate where you need to after we get started. And thank you very much. We really appreciate the interest and time that you spend with Brooks Automation.