HBIO - Earnings call transcript Q1 2018 | Harvard Bioscience, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Hello everyone and welcome to the 2018 First Quarter Harvard Bioscience Earnings Conference Call. My name is Michelle, and I will be your operator for today’s conference. [Operator Instructions] Please note that today’s conference is being recorded. I will now turn the call over to Mr. Corey Manchester. begin. may you Sir,

Corey Manchester

Duchemin, and Bioscience. the everyone. XXXX Harvard the Financial be call. Michelle, and Executive joining Gagnon, Robert earnings you us Leading Chief Jeffrey will today for Bioscience of call and good you, Chief Thank Officer; Harvard afternoon, Officer for conference President Thank first quarter

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

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

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

Jeffrey Duchemin

Corey. our legacy a you top on thank I we an the in highlights seeing joining Bioscience for for the to afternoon, Thanks, Harvard of line and line share quarter, DSI, some strong Good growth, number from product development. call. us begun earnings have excited QX synergies of between business highlights everyone, and bottom and am notably update

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

on During top highlighting I’ll quarter, line. first minutes results the produced few spend moving line the we line business and the strong line. in the a bottom a discussion before top to bottom

$XX.X for favorable was increase million million quarter a reflecting adjusted to XXXX. was tailwind strengthening translation revenue adjusted to first due $X contributed million over currency quarter currencies. revenue, revenue $X.X in XX% quarter First DSI our while the approximately first

year-over-year. virtually Taking Europe combined XX% electrophysiology, Revenue Europe our were were growth, PCMI product when for a Finally, from quarter families grew and at for second business approximately legacy our the quarter. our quarter. currency revenue fourth legacy look constant Coming geographic adjusted in consecutive for of standpoint. revenue revenue our the in flat a

have excellent around turning teams an done business. commercial Our job the

we we progress With will of during are DSI, confident the XXXX. acquisition continue to

revenue in XX% approximately business Our our China quarter. was for in the legacy up

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

is the Our quarter. of first quarter. the ongoing decline result in the declined weather in legacy business in a the quarter The U.S. in north-east approximately X%

This and the corporate Holliston one, indicative our quarter, Four, and in holiday. significant due due Easter During headquarters primary due weather is to approximately the facility of March, to In business. is our we to we lost Mass. days. manufacturing in five experienced timing disruptions not at shipping weather;

the while and for nearly funding already CRO in funding. continued calls due budget We to opportunities rebound academic end March NIH to in base. capabilities in through believe a improve. a overall in strong, commercial experienced The biotech increase and Harvard DSI's fiscal latest The April. The our of at legacy base approved markets and U.S. have market X% our business combined pull We organization, grow NIH in legacy the end environment. continue the spending to U.S. the and customer of will to cross-selling Bioscience's customer continue be

detail substantially shortly, In quarter. addition margins line into the XX.X%. bottom growth, gross get are adjusted points our XXX topline to percentage margin will report non-GAAP pleased this to our but improved to our we improve basis Rob quarterly

earnings to acquisition of basis DSI's X.X%, non-GAAP of points the profitability non-GAAP improved the and increased our despite only impressive results adjusted DSI. to the operating of first XX% Denville These improvements containing months adjusted and are shares improved and are of the the our Our testament per two following sale company margin XXX quarter $X.XX. to

in well are exceeding our XXXX. to performance We on and our for way financial meeting our expectations hopefully

DSI Moving progress closed at January. the made excellent of acquisition to end have we since synergies, the

a first the to in $X.X majority In reminder, bottom-line of come cost from first to servings. $X.X and the year. topline synergies expect we As year, realize between and synergies and we million the million expect

base the bringing However, and as shareholder as products we bringing leads over which Howard the Science and DSI's Life Bioscience Harvard sales synergies develop time of companies needs base long-term needs and our legacy product bundle will the combined offerings address customer offerings the customer increase line customers community. value. research long This to the top will in to legacy ways share of DSI offerings, momentum short only drive term into

the we no we’ve joined it development of technologies competencies to life highlight to trade with always XXXX. come looked flow at for good been is businesses showcased have like of spaces electrophysiology that companies One is recent shows with or capabilities. new in is that superior product the in cash generating sciences. I’d I three different. of since DSI two products DSI, acquired the in have market have Whether is Bioscience niche Harvard XXXX core company the

for development of screening system new conventional cell MCS diabetes. Use beta than method technology. multi-electrode screening This new treatment leverages the and MCS. support It new a diabetes II non-invasive, or methods. a as is beta drugs from array for This is to easier existing well as is of Type faster system cell research. MEA system first The

XXXX, only product temperature channels highlight products The new is I’d to allow the brought and but examples to we the in more Tell into details insight second With to I well pipeline that sharing our research. development forward researchers as product and as will will turn as during market. our have over These These market Physio Gagnon devices look to who like that, as been implantable additional physiological ECG, DSI. excited are Rob of Digital, from to LOX record neuroscience brought discussion products are Rob? are to about two provide financials. LOX more such

Robert Gagnon

Okay, thanks Jeff.

acquired remind DSI With results we the XXXX mind, the well of Before sold include highlight January the today the of and results portion months XX, quarter. I that XXXX. I for last on results start. to on that for in Denville as the will as the sale, everyone Denville XX, to DSI January two like the quarter the financial I prior

non-GAAP to of within the the to be non-GAAP the sale. year-over-year. first quarter DSI $XX.X first a Harvard the reported revenue Denville will quarter of revenue by was million, is for revenue XXX,XXX adjusted Denville full quarter to for quarter XXXX, for generated the revenue part topline, adjusted Inclusive prior XXXX. from X.X the Revenue amounted second first million same the compared Bioscience. as the of XX% Beginning with The quarter increase in

last XXXX QX is also for quarter. the revenue Our approximately which included million $X.X the from includes months two DSI, of revenue contribution the

million foreign translation Additionally, the tailwind was currency the favorable topline a quarter. to $X.X in

on cost Now, QX basis to $XX.X QX, of $XX.X million to year. costs a were for compared of million turning and last non-GAAP expenses, revenues in

million Denville. $XX.X of of in expectations, was This XX%. As a To due primarily this the DSI million X%. year in year. This is in largely for million, was to Denville. compared non-GAAP million, DSI as XX.X% $XX.X of increase expenses a from compares QX anticipate and of was with QX QX increase of result were XXXX the of million XXXX. our first our QX increase increase million XX% QX reiterate, Operating non-GAAP XXX-basis margin an approximately of quarter, in compared margin approximately of the to improvement gross in of non-GAAP and acquisition And million, we acquisition margins QX $X.X $XX.X non-GAAP in of to of in to an to margin meaningful increase the of last quarter range year. This $X.X operating the mix an $XX.X XXXX Gross compared operating our was in last last million, sale was point profit Non-GAAP $X.X a X%. an $X.X a gross the income million of basis XX.X% operating QX, result last year. compared $X.X result, of sale on the QX with profit

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

for were share, last share $XX.X QX, diluted QX. compared XXX,XXX Diluted of in to last per $XX.X $X.XX to for average in QX shares as or XXX,XXX income million diluted QX was outstanding per Our and weighted non-GAAP $X.XX net year. year's as compared million

the quarter the $X the year. Now compared with $XX.X to at balance Debt at of million turning of finished million to approximately was end sheet. We cash. QX QX $XX.X last million, the of end

the the debt. approximately with $X acquisition end on debt is we Our DSI January in from balance almost $XX.X when million closed million down of outstanding

the Our capacity was QX of $XX.X approximately of practical end borrowing million. as

both our to We the to guidance and between million to revenue and million report EPS. issued $XXX XXXX million. revenue of amending previous we of turning ranges between $XXX for previously compares million. guidance This full-year $XXX by financial Now our tightening $XXX expect and are now outlook,

share bottom million and the $X.XX. $X.XX expect the This quarter bottom an non-GAAP DSI $XX.X second the XXX% between between compared EPS quarter now XXXX to of we our quarter per the each between and This on XXXX. expect report a operations, line, between full-year on of the and earnings DSI's the by and of of $XX.X guidance to of previous second increase which we compares and reflects non-GAAP $X.XX full of between would in XX% and between of and and quarter, $X.XX reported seasonality and results to as In the revenue line, $X.XX, $X.XX. in On year. represent experienced XX% topline XX% second million

Before from have to participants, one make the comment I’d registration over regarding Shelf like the questions I to filing. we recent call turn more

statement. have registration new may noticed, Shelf on you As filed Monday a we

registration That had XX recall, an million. for filing April million. for Shelf registration new statement we offering years up coverage on years to statement Monday, If expired of The provide an three amount X also you will a for to and up to XX. up last another the for XX

We us Shelf, with flexibility have governance our may needs, years filing immediate initiate ago. is future the to reasons which acquisitions. meant and provide consistent plans message include was is no three to done corporate capital future which for This financial for with

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

Operator

queue Thank [Operator The first Benchmark. the Raymond comes from Myers you, sir. Instructions] with question in

line is open Your sir.

Raymond Myers

Thank results here. you, on congratulations and nice

Robert Gagnon

Thanks Ray.

Raymond Myers

into First channels. bit about that I of products particularly and you a products. flurry yesterday, and you little how new might us those new product could quite sales diabetes hoping tell about That the announcements was question was a the is possibly your cross-sell DSI's more and

Jeffrey Duchemin

Thanks Ray the question. for

are these pleased As internally grow come been cycle many have product recently us innovative And And story. will I technology. with develop really great we're to and what And around product last from a that we growth our business, line. coming with the ERP focus important consolidation one which years from development that, innovation Harvard company development, very technologies. talking launch business The company. talked to systems the are four we're our and IT to a new new a to being for our and it businesses lot point starting most And implementation, We'll on top Bioscience product we’ve you're in site has DSI; with DSI know several product where great we systems, very think at of going for are or the the it’s launches. products, Harvard five is get around be companies to have the life I whether multichannel around with out acquisitions everyone have transformational recently, for and launches been highly a Bioscience help legacy communications made, three-electrophysiology thankfully they see more you technology, new years two and know, have and taken exciting think place the do one beta that system. sell trying been multi-channel or from start

growing you focus of aspect of in These from know, both continue to research. will many products As and diabetes a clinical a research disease high to is allow areas growth a aspect. state us

So, for telemetry coming then we're the expand Type to product portfolio very of about continue with for implants. DSI, diabetes out their excited And systems. multi-channel II they

the also another. the they On are and the around, at And focus launched NIH they states heavily areas. LXX exciting NIH, being funded NIH. of main LXX They funded area They cardiovascular the are non-invasive Diabetes from product cardiovascular one two being neuro that look the heavily that and disorders are Digital related you where recently, PhysioTel studies. neuroscience if really disease is focus the highly funded, products and in them, technologies.

we're what billion. Alzheimer science. funded on develop an Alzheimer's. was give and are you XXXX, In in NIH. from the In million from was $XXX research. is it the do NIH of XXXX, launch In four example, X.XX trying there areas years the that funded really So, products to To highly past

can a a will that and standpoint see related developing in increase products many from neuro research the we’re these Ray. issues on as you focusing And terms of disease So, disorders. around Thanks states. launching resolve company,

Raymond Myers

basis? for A that the is thanks. guidance, a on that looks revenue Great strong, question quick on Rob, non-GAAP

Robert Gagnon

DSI. now reference It is. second of incorporates that to If XXX% in it the quarter, is

three first quarter reflects reflected the months only where months. it two So,

there pretty So, is could on the GAAP get non-GAAP and get between non-GAAP, a you basis, is it into the difference as it quarter. but small second

Raymond Myers

even weather, did seasonality with Okay even trend good. that discussed, the or it eliminating the that that could with that does weather seasonality well the suggest April, And the stronger? in be you reversing pretty about you and

Robert Gagnon

regards In second, results Ray, March. yes, never couldn't seen. in saw we of we is This something strong and our everyone is, we’ve month corporate Holliston our and across of take trees street, produce down me get weather, to sure down, previous the make saw years have mean but in in in the in was this Power the understands high strong town pretty revenue, the the office. January. day, just and business, overall in just a level I even five We employees U.S. significant you growth. Easter from weather your a seen I want and in-line headquarters I results of because to products, really is high facility right standpoint our whether extremely of U.S. four of February, manufacture it where last the to a our in think answer of we and what out timing our impacted but where the days in confidence then for falling a was comment to shut our days around question, on of would with let been quarters percentage four that in we had terms

we over what through Europe previous made see know seen the year. to We in a results would in year, We be the We midway great as on will quarters in QX. there saw we such the knew continue the I turnaround comments we’ve last Europe. think QX. saw turnaround you

consistent very expect the has China. strong see to continue will in throughout year been in for and China XXXX great another we and results Europe We us

Raymond Myers

in great. Jeff or sounds DSI that months a that favorably has one what last you Well with either now, I’ll few surprised business? question. owned for you’ve you leave not

Jeffrey Duchemin

has one, a of come been DSI. Number and great lot acquisition we’ve from there. have a got of there think leadership out I integration that positives the

a other Sun with fantastic has done business, our our our Knox two Karl-Heinz Boven closely General President Kristen of Yong Vice working job and think PCMI with with Managers. I electrophysiology and business.

really in synergies marketing and with I organizations come and be side of forward cost sales able and to and execute think expectations we that on the cost realize that will the and at believe worked side well collectively revenue two provided to one the these we’re revenue continue we have our extremely this point have to the teams We of synergies. together move and both ahead another time. guidance to

Raymond Myers

to it. hear you. Thank Glad

Jeffrey Duchemin

Ray. Thanks

Operator

the The Paul queue in with comes next question Knight Janney. from

open. line Your is

Paul Knight

you Hi of quarter? talk rate run in to DSI's could the Rob, revenue

Robert Gagnon

Yes.

So, is results what’s the Paul quarter first just our for was reflected in February $X million. and It under March. million for $X.X

month So, up you the for would first to an of estimate – have come you could with January.

in their step that is for had comfortable and right what is seen and what we terms as will and we past in well. in provided the up reflected the guidance it expected of we quarter. line obviously second the have performance that But with in So

Paul Knight

at Howard Bio was then also DSI what? growth at and Organic the core

Robert Gagnon

Yes.

analyze largely Overall, was like total. We’ve So, Paul rest last referencing at Jeff up the In U.S., it due was XX%, of in Europe weather. it days it the in it and remaining world down we a increased in X% was total. decline XX%. the in looked the where China it’s countries and to X%.

Paul Knight

And do better finally time Jeff? NIH long Okay. you the that’s think after

Jeffrey Duchemin

Yes. in outlay funds the months for We’ve consistency of to I seen months. say XX now would XX

see we’re was Year-to-date a with continue We up that will approved X% budget. for to increase positive significantly the outlays.

market come. I to in some for very think a we’re time favorable

Paul Knight

growth think you NIH that you’re Do rate? tracking

Jeffrey Duchemin

funds a impact there there this, to tell the over positive said out Well, – is XX direct business, last months due the the what correlation of favorable like we the come performance of to in XX and our not for have definitely outlay you funds months. can but I from U.S. I is growth see outlay a that our to

that we X% impact X%, expect be say just an of on X% our So, if the would outlays to business. will or

us. academic the favorable very for is So, market right now

Paul Knight

DSI do there cost-cutting acquisition, of easy, I at on margin, mean envision, op going or type what’s And then what you are the happen you there? have growth synergies that any guys looked margin is to

Robert Gagnon

Rob. of it’s Paul Hi

So, the working the that the now synergies. topline bit produce but to lease changes and and bottom-line a and to but up of a will benefiting synergies. that the the cost we're were we’ve renegotiate savings presently talked big facility – lease we we cost and past about enter put with day start landlord from believe in are in significant one, one into place that a reductions, with year. There the long-term are little and I’ll some million $X is certain

that. we piece. we’ve making the we progress G&A been good as probably continue some like to on integration there. realize type able to where and cost work through And other We're fees is That’s work and things so, board savings. other insurance cost biggest But cost also there

issued In terms business opposed operating of the targeting X in our X% a and going that very guidance reflected back are double-digit our to the months we operating we’re to and in profitable of operating rate that XX% to DSI. months XX% income profitability. that income reported obviously January the two margin back for as rates, was reflecting still full-year, quarter of They

Paul Knight

Okay, thanks very much.

Jeffrey Duchemin

is Paul this in functional business. get IT in any it’s comment, weekly we’re together, or teams other synergies, uncovering or to almost HR are the cost Jeff, coming one regards our Yes, just as up function that things whether the

these that really also opportunities together aware of come incurring be favorable We’re to cost companies will side. weren’t that when

two coming is companies So, these others opportunities of out great together. coming there

Paul Knight

Thank you.

Operator

comes from Lisa Research. Singular the in next with question queue Springer The

open. line Your is

Lisa Springer

more that continue about the to a is Thank more bit really attributed the nice the color to product turn in gross to and anticipate during little if could you improvement mix, which ask nice more to you you. that give I favorable product margin wanted you Congratulations you about year? going quarter. basically and mix on a

Robert Gagnon

there products. we And by it’s guess mix DSI what I Lisa, Rob. product Hi are the mean

and product So, margins to businesses. of and That gross are legacy the in at software the gross XX% which higher some there. the you are low-to-mid will a business range. we had is And the family some a overall DSI's to I margin much driving they in give profitability big Denville, example, that piece DSI that the XX% highly then so XX% overall has profitable, our of range, an margins compares of that’s divest

mean So its out Denville that’s we and by really are and what in. mix, products DSI coming product coming it is

to still to we expect forward, Going gross be margins XX%. XX%

with As you see, we two DSI. XX% months can that only achieved of

opportunity some there great expand So, is to further. margins

quarter second but can up we are potentially guidance the quarter, a we today. up that a see if As we third even more, and get move bit, into into the tighten bit that where at we’ll that’s

Lisa Springer

a was in the And XX% much that Okay. nice of from gain. How DSI? gain Europe,

Jeffrey Duchemin

Jeff. this Lisa is

initiatives marketing can The you year to in way good put believe activated far due continue Bioscience last we last the has of we initiatives so been businesses. XXXX. through marketing year. and we’ve in made sales place will and from and majority The legacy the in results some Harvard we put remember the that growth to coming were year sales If seen and Europe see

Lisa Springer

Okay. Thank you.

Operator

Okay. The next the from from queue question Larry comes Haimovitch HMTC. in

Larry Haimovitch

company Jeff. to of of revenue at for account total this questions, hi China what Couple it point? Rob, continues you, for be does tremendous Hi the a percent performer

Jeffrey Duchemin

DSI XX%. including about is So, it

Larry Haimovitch

And geographic for It’s fastest fastest growing geographic the XX%? it’s region. you. the region

Jeffrey Duchemin

has been, Larry. It yes

Larry Haimovitch

can the don't said a Rob discuss terms And strategy better you you I for to to what’s you with wanted the that very that debt, of the some then the in balance shape, carry sheet in getting question you debt us obviously during long debt down second, much paid about want overall quarter, address the time.

the strategy that potentially the You it that have time down, do could going at appears shelf-up, going net what’s higher be particularly rates overall are to a it and interest debt could when be a you? a for but way, that headwind whittled you

Robert Gagnon

than we’ve strong but really we high higher generation. very levered flow Yes you level. We're very historically a sheet, very not that’s at Larry, have balance where level, of a then, comfortable that so four this over we’re strong know times, cash that’s just at

today with continue of facility. covenants term feel we our in cushion the under we where into. the comfortable And adequate could five-year we we facility that entered have feel We that and comfortable are we about

that Shelf, of have reiterate remarks the any what offering. my equity terms we initiate this at said point I’ll in of plans sort prepared I to no In just

Larry Haimovitch

rough Rob, and year, for ballpark then flow XXXX? the for cash a guestimate your one more what’s generation question. in Cash flow

Robert Gagnon

maybe talk can of start I’ll EBITDA around with do the about what So, requirements. we is capital assumptions and some I’ll then

range $XXX Our $XXX to million. guidance, million the have in we of talked about revenue

XX% about of talked the margins operating have you $XX of to That range put million XX%. We would in $XX operating income. million to of

have We $X million year. about a of depreciation

be would about $X midpoint it that needs So call about a as million. capital million roughly and are our million the $XX is year. Maintenance $X CapEx

Larry Haimovitch

free million XX XX% rate. So, tax tax and about

you say roughly ballpark that kind gets flow is a as cash in that $XX ballpark So of generation, to good guess? million

Robert Gagnon

in it’s U.S. closer we tax we is and cash Well tax to assets rate have and X not. be in taxpayer to to X% Keep so years up substantial a so won't for XX%. mind, the our

good So, tax as generation there cash some through is leveraging flow well there assets.

Larry Haimovitch

So, generating very XX, say number. cash less in XX% approximately year, just a ballpark ballpark you’re this million $XX

Robert Gagnon

Anything else?

Larry Haimovitch

you. thank No,

Robert Gagnon

you. Great. Thank

Jeffrey Duchemin

Larry. Thanks

Operator

call to the over Jeff. turn now back I’ll

Jeffrey Duchemin

making we time earnings forward our Thank for speaking everybody. QX appreciate you next to everyone and quarter. you to We Thank look it for call. you

Operator

participating. Ladies and Thank gentlemen for teleconference. concludes this you today's

may You disconnect. now

Harvard Bioscience (HBIO) 2 May 182018 Q1 Earnings call transcript