HBIO - Earnings call transcript Q4 2017 | Harvard Bioscience, Inc.

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Operator

Hello, and welcome to the Fourth Quarter 2017 Harvard Bioscience Inc. Earnings Conference Call. My name is Brandon, and I'll be your operator for the day. [Operator Instructions]. Please note, this conference is being recorded. turn to now Manchester. will I it Corey over And

You sir. may begin,

Corey Manchester

quarter, also Conference for everyone. and spend Bioscience afternoon for Earnings Chief call Executive our Brandon, and Chief Denville from President of for of you, purposes. to Robert Officer results took but to quarter Jeffrey the we Thank the will Fourth this acquisition Leading our be explicitly be today discussing good XXXX Denville, pro unless Officer; which results, forma DSI, modeling results Harvard Thank plan impacts and the and future of fourth discussed Please this afternoon afternoon, you Harvard some the Duchemin, business of We the fourth time that exclude for January. joining Quarter of results Gagnon, sale place and stated Call. of will Financial and the any us which results reminded include Bioscience. DSI in both the

Before I harbor will statements I constitute today, discussion forward-looking read to may that we Jeff, over In our safe statements. statement. our the call turn make

those of to our representing other between and report as public due should relied future Press period and our Our company's issued the release our be better and the business, related performance we results we in differences results, focus Also projected and which estimates materially outlined call -- forward-looking in results ongoing represent internally. our which, earnings economics uncertainties, statements, XX, those may filings. day. today, we upon Releases. today's estimates we on and XXXX, to December ended reflect today on Any website not including annual manage the non-GAAP detailed as under activities, our subsequent we included as including the our are set risks how will from any actual have our the measure Form XX-K and on incentive the our of what GAAP how differ and of results for and of non-GAAP quarterly represent can The plans compensation believe, business much found be

replay week Additionally, or archived information is presented at Investor available in same Relations location in our of which Jeff, available ahead. harvardbioscience.com. one our will included over will Duchemin. not the go Jeff financial release, this on on call, call website will also call any turn press now please other and for website. be our section I the at statistical material, to be the the A of

Jeffrey Duchemin

and Thanks, number us pleased call. highlights around product share strong Corey. thank fourth am a for DSI. earnings of our update Good of first in the and XXXX afternoon, launches everyone, some quarter last earnings our to an call, joining exciting including our you of quarter on results, since acquisition I color for QX recent

Gagnon, Rob after your financial CFO, our will our we provide taking that, fourth Our look to questions. detail outlook. And results quarter forward XXXX and on

organically. growth, organic solid Most the we continuing quarter Denville, of businesses, revenue line our impact excluding revenue currency approximately objectives. and quarter During execute strategic business the million, Fourth third results, $XX.X the of continue translation X.X% and quarter, disposition consecutive legacy produced from grew including top of excluding growth, reflecting to AHN. the organic fourth against was importantly, X.X%

which in our operations of Denville, January. mentioned, sold quarter this we Corey As results include

sale DSI these and XXXX, this the the we by results standpoint. and of acquisition of in a into will especially a encouraged look at are geographic Taking revenue Denville. light We our of continue from believe progress

invested legacy us, heavily were QX, Electrophysiology the this electrophysiology in continues be for key the brands acquisition, Systems quarter. in like cross-sell Triangle makes market customers our gain of fourth and as electrophysiology Our our products a quarter. these have performed on for through to where our HEKA a leading U.S. well, including a continue market U.S. we business our grew basis. BioSystems, driver This Harvard acquisitions Multi and Bioscience approximately of we've Channel especially portfolio Warner market key X% systems Much product brand, share provider Along Electronik. growth a to with in the global

We CRO base offerings product biopharma also opportunity customer -- with see customer existing base. DSI sell the significant upside customers and their electrophysiology in synergies into and to

Bioscience together, Harvard the that to products Bioscience teams, strategy We to pulling and closely customer the of our have selling -- and the into DSI DSI DSI begun legacy global base products go-to-market work base. customer into Harvard the of work DSI into develop captures legacy a commercial synergies selling

Our revenue as well as results, the had up approaching Chinese on team I of approximately year recently in XX Asia, the our days China our now is overall team. speaking opportunity in there, DSI XX%. Based spent meet market revenue. with the ended to X% this the

to continue quarter. should and market, adding advantage portfolio the in the DSI increase competitive outperform our to We market. our this in growing rebounded only are positioned in nicely overall to Revenue well Europe

our we our call, in teams Europe commercial results closely the were on initiatives work brands. during our business during we all grow with As last indicated across to improving earnings year, our as

impact finish year-over-year. a the the the year X% solid year. Excluding the foreign grew positive to of AHN, impact throughout revenue The currency our of approximately European trend in culminated and QX

this worked market hard commercial the European as this demonstrated results have strengthened, year teams to stabilize our quarter. as our Our business

on of positive DSI We the are is with quarter this a especially start trend, board. confident

in quarter, Before off acquisition of handing to our DSI. product key new first spend I and want launches the a updating moments Rob, call including few initiatives on to everyone the

January. cell has a for electrofusion multifunctional applications is brand electroporation which BTX instrument, and in has launched ECM a and The cell new product XXXX both fusion BTX Our Plus transection.

a allowing and arrays MCS is MEAXXXX-Mini-System of long-term incubator, brand Additionally an to record used brain our monitoring multi-electrode product cell The launched January. inside in for new cultures slices.

drivers expect and for in both be launches the first and products January, incremental for XXXX. we began both BTX MCS the The units in growth shipping to

have on I've many with acquisition the integration worked The Knox, is are. joining of as I moving closed Bioscience tremendous some who company top blend with groups as work the Manager as commercial DSI, the -- plan DSI new January and functional well We underway, time and enthusiasm, of we XX. DSI already the as we organizations for employees, draw Harvard as that strengthen spent closely of about line are at met expertise to Kristen our for DSI to realize excited As DSI. forward. to General synergies. overall knowledge DSI's employees, on

that, together these for company's base into out turn of we shareholder in Rob been As our create chart discussion the rationale two Bioscience, The Harvard I'll customer diversification will insight has the reinforced. profitability will increase and companies course financials. value. Gagnon, over Rob? in the provide who a and the the new long-term to dig to join more sustained With the

Robert Gagnon

Revenue quarter XXXX, the Jeff. by top the the revenues was approximately revenue line. currency while impacted million, which you, fourth were the impacted translation with quarter negatively quarter during Thank Okay. $XX.X divestiture nonrecurring $XXX,XXX increase of revenues Beginning $XXX,XXX. AHN, of positively by reported. X% included approximately for a third as Fourth year-over-year, of

X.X% translation and AHN, organic in currency of revenues grew impacts the the basis an quarter. Excluding on

a modeling last I'll QX for have of for pro Additionally, GAAP turn expenses. were X.X% year forma and to year. excluding now both our million Denville, increased basis purposes. this revenue revenues and Cost cost would $XX.X on of

point meaningful non-GAAP basis As million QX, compared was A launches was largely the in contributions a portion an with of quarter Gross last $XX.X the increase XX% due to to our of result, with in of our due of to of $XX.X of expenses electrophysiology $XX.X million increase improvement compared year. was in in $XX.X gross for This XXX of were a $X.X mentioned. XX.X% quarter, an this profit QX increase margin XXXX. increase year. this last million Jeff million ramp-up fourth profit new costs for brands. Non-GAAP the the operating product QX QX million, is $XXX,XXX compared

of expenses operating While of year. margin $X.X the Operating full QX a the year increase from operating compared of And to XXXX. non-GAAP quarter, compared an X.X%. last basis our QX million, in down of X.X%. an was million to was to in in $XXX,XXX margin $XXX,XXX on QX in This compares income last operating increased QX non-GAAP were $X.X cost year fourth

QX effective several tax in effective non-GAAP approximately approximately to of rate the income rate last decrease tax tax was in XX% across favorable XX% compared was result of in Our The primarily QX year. of mix jurisdictions.

to $X.X average to shares Our million QX year. XX.X diluted outstanding And non-GAAP cash. was as as end sheet. balance diluted quarter QX QX or I'll $X.XX year. QX million end million in million was turn income million to the million last QX of were compared the our QX per $X.X of $X.XX the year. share per with at XX.X last now $XX.X debt the weighted last $XX.X compared net million compared We Diluted of approximately finished at $X.X to for share in of or for

was January past Our this -- Denville paid this proceeds debt from of in using the transaction the full sale outstanding the January.

agreement our under million $XX $XX net today approximately turn outstanding financial now million. debt Our credit outlook. the is or of debt to new approximately as I'll of

year full to and million. revenue expect $XXX $XXX We XXXX between of report million

non-GAAP revenue line, bottom million per and non-GAAP approximately of the first to $X.XX XXXX of $X.XX. year report expect $X.XX. In of we EPS $XX.X the expect On we share and between full earnings quarter, approximately

in quarter non-GAAP a top the during EPS includes X we of the the months of and increase quarter represent reported bottom line an DSI million results We seasonality line call. for would on $XX first second an reported for increase and the our experienced our and on of on second of revenue our on bottom to to the the DSI quarter, guidance line acquisition which each the second the as quarter plan of of half only to would update As represent operations XX% XX% the of the an year up a In and provide full results quarter earnings this the of compared compared line to DSI's on quarter This top XXXX. reminder, the $X.XX, second XXX% first and by XX% as XXXX. expect in year. on reflects

the We Operator? will now from open to questions participants. call

Operator

have And from Instructions]. March. we William Janney, [Operator

William March

that talk Harvard? very first customer just more you little know see there's question. and little synergies DSI overlap. you between legacy I the a so bit potential Could Jeff, about

what to to or of kind expand in terms in either opportunities market? cross-sell are addressable So positions, products and of maybe CROs academics the

Jeffrey Duchemin

Harvard around was The Bill. Bioscience acquiring Yes, position into idea to market. biopharma the DSI

know, As close you our biopharma. XX% XX% business -- legacy business DSI, is With to of business was academic-based. of our their

XX teams devices, our sales implantable pulling with allow Bioscience the organizing Harvard products that will cross-sell us around products, is hardware, in our allow applications only surgical the that now, is electrophysiology our suite have instruments, not And some into to commercial forward. of there it believe allows base. Harvard that portfolio data but surgical runway actions only of of that but a take We're really not that products We procedures synergies. is academic balance of there DSI's software Bioscience support is academia, to to But are legacy drive moving products to collection products, XX excited biopharma. XX/XX, great, in total sales biopharma, used they beginning our into have So in of is the DSI could allow great stages products, synergies to software, these place. this. portfolio We're together, about there success there us for will the us synergies of of many

William March

could Got what into maybe assets or growth for just selling what talk you on market also China, it. products that And driving Harvard? what's is about that been region? And then -- then in DSI

Jeffrey Duchemin

doubled in take to the went a there. into sales China. going ago, the four We've implemented We of from step X X sales Four we country people years last I'm Well, China. a to back. years organization representing our

We have success. continue to great

Southeast our these cross-sell utilize has seven expanded Bioscience our our distribution ago, product really electrophysiology who in of weeks met products, Asia. excited have China, now also in a three people and was with only about most not back region, when Harvard the but who We two to throughout China And I once sales there that and we products, teams legacy pull again, Korea, team together, we're portfolio. DSI, Japan, products, I have relationships recently, the

we together, future coming is Asia products the the the both bright and the that So of within portfolios network teams collection in our two with distribution share.

William March

Got couple questions just it. the on financing. a on Rob, And model then quick of

the For first non-GAAP we should most here the acquisitions, fall charges expect in of quarter? to the

Robert Gagnon

Yes, definitely.

We'll majority of good spill we that consistent milestone. have would forma we'll there'll pro the second quarter. them, So are. in imagine costs so a will I be And previous work reflected those the that I QX. over mean, some But where they track into acquisitions, with be pretty

William March

just then highlighted XQ? with seasonality you you maybe And the Okay. that speak in to could DSI

Robert Gagnon

Yes, sure.

So that, essentially, DSI has a budget business. cycles, that year-end the and high And I because tends just June think for also the a because quarter first higher the quarter fiscal been year. -- them, XX so be of to quarter natural of quarter than of

is the of some So that reflected in guidance.

absorbed our step-up they of change in quarter into to second But because a bit of As the that that get we're over effect. business, may expecting seasonality a time. in have

Operator

have From Myers. Benchmark, Raymond we

Raymond Myers

the expecting to of year XX% and Can fourth Congratulations And you let margins. me business see. margin That that this in gross you're gross first on reaching about Denville the in? ask with was you describe out the great DSI quarter. profile

Robert Gagnon

you. so the with brands. mentioned, driven by Rob. we're happy largely this And results quarter. electrophysiology it's some of I the the profitably Thank yes, Like XX% it's Ray, our of of

gross terms blended compared gross continue, about businesses. think overall, board very in they margin the to XX% with legacy new high to XX% have about margins now, We going in QX to of legacy coming is our in range on expected forward. and business, the DSI XX%. And be But the of

Raymond Myers

more Great. and How that we about much accretive in And cooperation little Massachusetts R&D with on more Minnesota. launching groups talk in talk the have possibly can you between business? that That's too, Can announced, fantastic. synergies you're the impact bit about a launching January? products

Jeffrey Duchemin

other Those two Ray, I portfolio. really from mentioned, coming portfolio, products our excited one electrophysiology that I two the coming our about, we're one only BTX from the are products mentioned.

are in were year. QX of also line and new revenue that planning the this launched product and be our extensions, We line coming with product have launched last products incremental Combined extensions new that expecting year. we line will product QX process. from extensions product We're

the three time Three incorporated expect development new mean, of neglected existing goes I launched legacy guidance. maintenance, maintenance, we to our for compete new But basis. X quarterly development. we we've something exciting attention more this talking taking now. first somewhat a products business. as years to started is product order Once products had hasn't now product had focus needed really on is expect probably business had and into those, in been growth on a years, and This launching basically that marketplace. for they that process. incremental products. years this the to at We're ago, new to the a Now launch is something forward. deferred drive not in point X got products, deferred moving we're updating so And on, about we in was through It's we that it we where years our products past or almost had business been and

Raymond Myers

that's Yes, It's exciting. great.

various these that are best you synergies. different customer Let best synergies types, What you across There's you areas, geographic your the synergies, potentially, feel distribution what synergies. synergies their ask are about see? me sales

Jeffrey Duchemin

can of all their development, the development process, in Ray. of we team. going practices. in strong to software, going Bioscience above, is exciting the are see about things look look I at that what It We're team. we're strong that look to Harvard R&D to everything. going R&D But best are currently with a products DSI here DSI to aspects do a comes the of collection, All very at data utilize take at And comes and with going think We're management currently we're to look is one at products. of where products

Ray, that, in now. right we're stages the So early of

getting of on, time week exciting is But team for updated in technology these together. goes keep what as of coming out first and we companies together two the time. we'll Our everyone synergies come next terms where see will

Raymond Myers

think to Is that And And research. see DSI where new in you curious great. area an customer the specific relatively historical business. That's clinical that is was base one I a area Harvard I synergy? about has that's

Jeffrey Duchemin

research Are your talking organizations, contract Ray?

Raymond Myers

Yes.

Jeffrey Duchemin

Yes.

biopharma, include So we in to would Once exciting us. that about CROs that's when talk I again, really segment.

scientists the in terms from trends great strategy in CROs. a difficult like And the shifts Bioscience where business. It's or our to door these also science of biopharma allows get for really to R&D within to into or business that as CROs, shifts products. of is, segment areas some our it As portfolio access in CROs, go-to-market with is DSI R&D have departments no pull us access. Harvard of salespeople pick these up to a revenue they our that switch legacy almost thing pharma are it and the now -- that products the to spend the CRO going for present in opens of But

Raymond Myers

question And last and is marketing investment. if I on there? expense. then are where was higher and It great. the you increased in That's sales quarter that's little doing a What shadows was curious the

Robert Gagnon

it's Yes, of related conferences. made Ray, is in that is investment quarter piece timing the of around product But fourth that the the due some just to Rob. of launches. some a

being And cost But with which so previous we that some on reflected will some haven't as of be a of will Harvard opportunities there's we've like spoken about in and call, XXXX integrated some well, talked that today, as DSI about good synergies coming also, part in continue. Bioscience.

we've benefits more year, synergies be of some well. past, talked as in will in that about million that so million $X.X the $X.X So cost first investment. Like offset the there there'll to than

Operator

we Springer. Lisa have Singular From Research,

Lisa Springer

Do market? will XXXX? to you you've to think improvement turned see in kind you again of Europe. European like the feel corner revenues very Do pleased was contributing with in I the the it

Robert Gagnon

business in we we because What over discuss in in that was for in it towards place one in really year, driving initiatives XXXX. a implementing team every believe, success -- X% like that of starting last turning initiatives. and And around we XXXX great stories the QX, declining quarter, we believe was great in That's Europe. in our year. we saw turnaround, would decline commercial and QX this, a I job today, shift continue end major I'm And will the into a We I Lisa, I driving momentum see Europe. in that these saw you really Europe trend as you the and of Europe initiatives us, the did and of growth. really those glad mentioned put did think the

Operator

from Capital, [Operator Instructions]. Matt Laridae And we have Campbell.

Matthew Campbell

was Jeff, if, didn't expand bit now upon realize XX your going you I could little business a is sales wondering Asia. in to force from X your I there.

business Chinese X% overall business. accounts for Your of your

talk a And bit next more how throughout little bit you expanding Asia of think a can should about little to we that So thoughts your over more? about us the years? couple about

Jeffrey Duchemin

positioned Asia we Ray, well people Bioscience right number now, and both mean, sales with we're I DSI. sorry, the think of in have, I Harvard Matt, from

on of we in access, time It's in -- to a One it's was that I there mentioned. and Japan large interesting market. market. difficult science right market has we're life I and very DSI that have. recently, distributors some spent Singapore, Japan. relationships Japan don't the with as China had now I a working things a is but

portfolio region to And I drive will growth the throughout try region. utilize throughout going believe relationships so product and to utilize expand what to we're our really try the is DSI initiatives their do to our relationships.

very overall now have. we're in And driving in positive both growth product enough of the with customers, that base some some we distributors. stages the with distribution beginning to our the throughout that. fortunate within of looks meet I meet region right terms of reception categories So current was

Robert Gagnon

that up on just wanted admit. to Matt, now coming DSI I Rob. And $XX With to business it's is million. board,

So it's becoming -- business of for us. of book book meaningful for meaningful a a business real

Matthew Campbell

on if seasonality Great. how DSI's that That's just different, you a Rob, I it, so remind Can helpful. impact if is basis? you missed does year us? us could, fiscal

Robert Gagnon

But So year. DSI's conform standalone a legacy Bio's June will fiscal Harvard fiscal was year XX. business to their as

quarter, just naturally plans. it's a So comp I it's business, end their there's in of year a as ramp-up, of fiscal think, the their bit fourth

All of has that effect. an certainly

talked bit be We've [indiscernible] in seasonality. expecting So the second And in there'll up about, a the $XX combined I sales to little the yes, a we're guidance. quarter that million company and of step-up in for yes. as reflected in

Operator

to Jeff Duchemin We will for now turn remarks. closing it back

Jeffrey Duchemin

luck to XXXX. us everyone, in all forward the speaking to of you you, best of to We end the Thanks, QX. Thank and at of look everybody.

Operator

today's concludes conference. for Ladies and gentlemen, joining. you this Thank

now may You disconnect.

Harvard Bioscience (HBIO) 1 Mar 182017 Q4 Earnings call transcript