HBIO - Earnings call transcript Q2 2020 | Harvard Bioscience, Inc.

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Operator

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Harvard Biosciences Incorporated Second Quarter 2020 Earnings Conference Call. At this time all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] I would now like the turn the conference over to your host, Mr. Sirois. David begin. please Sir,

David Sirois

and the everyone. XXXX Harvard Call. Howard, joining Earnings you us for Bioscience good you, Thank morning, for Conference Thank Second Quarter

we be file presentation that that be referred Earnings to and Presentations Jim Before Presentation this located a Rossi, QX will would in Chairman call. XXXX during Officer; a call the Quarterly section & of The be Events download the Executive our our take can entitled moment suggest Board, of and copy today Chief to the Overview, I will Green, of begin, Chief President Leading website. is Investor you like HBIO Financial and Officer. Mike and

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

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

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

Jim Green

Thank everyone. you, Dave. Good morning,

to say product significantly, the of that to X a lab the pay closures our mix, with for and strict Slide to Pharma controls, down cost and and the as anticipated, at glad revenue look I'm QX. quick to combined and move were around globe. that labs margins, and Let's highlights take strong we due strong combined down debt. presentation Academic CRO drove continued our remained growing,

we forward, As we recovery. our with carefully during are expected costs look aligning this revenue levels

manage closely track targets. debt. will further cash expect our and margin to pay We original XXXX expect be on Overall down September to we to

Let's at quick look to details. move a X, the Slide

came in Non-GAAP of XXX improvement revenue $XX.X improving million, last XXX were QX XX.X%, XX.X%. was by at or basis basis from QX on GAAP margin from the prior That's basis we gross again Gross points. COVID-XX down expected, As million, points impacted an a pandemic. XX.X%, margin year. measured significantly $X.X year. adjusted

or $XXX,XXX, This quarter revenue. had GAAP X.X% operating of income of

to so per margin income adjusted GAAP our Our $X.XX. improved was XX.X%. share operating million, $X.X adjusted was operating earnings negative

earnings from QX adjusted last was up year. share per $X.XX, $X.XX Our

we debt $X.X million was operations by in from $X.X and flow cash paid million QX. Our down

down down the the orders product table, revenue, academic primarily row process labs Let's XX% move which molecular or of receive working first equipment. family. to and labs, Starting from Slide at unable shut on cellular is was research home look were our quick personnel largely by to our a product and from worldwide take X with as and revenue

overall were table, China second customers Looking of the product being from preclinical the on America came software. spite for revenues of telemetry from primarily up North down. from This row Growth expanded business and at our and academic our demand is last in systems year.

due I As this segment was in revenue academic said, lab down shutdowns. to

consolidation Let's QX move during downsizing to announced and major and restructuring in on of track to is we'll Connecticut activities of that complete. complete X, substantially fiscal XX% was is business QX. to restructuring The across overall and Slide XXXX, happened that approximately in in actions the Relating at plan the look QX. manufacturing reduction force U.K.

in in see incrementally cost we our supporting actions QX, for of cost half combination a actions second we QX to temporary took operating the strong for reductions, gross basis margins. and and million As through permanent save margins $X continued and

I'll Mike? Now financials. key turn Mike a look for over it quick the at to

Mike Rossi

good Thanks, and Jim, morning, everyone.

use On and on in the business, and results, to to we this adjusted are full operate results results adjusted reconciliations our GAAP I'll P&L, the included be appendix of operating presentation. the or note related which our the non-GAAP focused

the efforts technologies, basis nearly Harvard our to report gross QX margins operating in and and on sales XXXX. of As at performance improvements recent to lean very revenue, we due are base. meaningful set out in impact our any XX% September of Gross the higher-margin are COVID-XX margin target exceeded an track in Jim adjusted Bioscience on despite margin on we manufacturing noted, to pleased to cost ongoing to addition down quarter experience in strong

QX year result a We these site Adjusted lower increased a over our permanent drive Within put December to have basis, rationalization the generate we substantially XX% the and will a versus of Connecticut structure despite completed restructuring well the expect implemented million for QX of announced reduction. the expenses onset $X.X on company to or as $X of $X $X in prior due than anticipated U.K. measures are Also, top were on will with these as than we QX continue complete. operating COVID-XX. cost restructuring. to million, our versus sustained we margin XX% to place XXXX XXXX, in outlook rest on income moment. prior All activities and cost the reductions basis. incremental which as levers to activities to revenue actions ensure Jim on lean inform to as temporary with our continued QX, of year, hard a and in greater focus our restructuring of the date cost million speak have disciplined decline to million of gross actions a our to review XXXX in will XXXX, push operating on to

flow, to cost net due this reduce on actions based able continued were de-risk positive cash Finally, we to debt again unique in flows taken on QX cash to the environment.

thus in XXXX million the million over $X.X past by debt net reduced in and year as a $X team. have far by new We management

we Jim? debt and leverage in service of available Xs transform with Bioscience. rest in Our the we and continue to We Harvard QX are to came turn liquidity all steps back compliant I'll low With the is on perspective our are ensure Jim believe for taking all covenants. to to XXXX. obligations in ratio it necessary to that,

Jim Green

Mike. Thanks,

to forward, XX, Let's a And move we revenues continue Slide taking sorry. and to to no, Pharma I'm X expect grow. look Slide combined CRO – just

as sequential expect the academic they few labs in reopen over growth We coming quarters.

the cash all, down continuing we'll manage expect to to while September over a open call in the track We of to half and gross on will XXXX Thank Thank and operator lines, back to the In targets. margin targeted debt. flows and investment product our to our maintain be and organization continue pay the margin Q&A. second you. you, line original XXXX operating we I'll leaner turn for

Operator

first [Operator Instructions] from question comes or of from Jackson the Our Bruce Benchmark The comment Company. line

open. is line Your

Bruce Jackson

taking thank good questions. my you Hi, morning and for

Jim Green

Hi, Bruce.

Bruce Jackson

hi. yes, – Looking

quarter, the Are some particular, for that market labs start going you've this we market? Or of be – quarter see that start in so, how back could where now? So see action, the academic the year? at in got, really, September. looking fourth in like, to you it something growth before to particular the academic going rest Is do unfolding third

Jim Green

other labs activities In the we Well, starting coming the back. to slower. in with areas, it's little labs now come fast; happening areas all are back pretty see some a

the slower such, to it three going revenue like, we demand. quarters continued than two would take to to get but assumed the and Northeast was little in shutdowns with a situations to normal-type it's we With back

of you see state. of it's When spread kind it to very and come by So, mixed look at bag. excellent. kind a – back be fast out again, U.S., we very it which is China's seems the hard,

where as fast third activity The be Some the of states, we back. couple – groups week, back, different they a academic they're and coming tend have come lot later large research you of number – They and would picking come and is coming might quick. in Texas there. are in in researchers and like. it's A Northeast like in coming back, will South come then a of order will cohorts, up not one are maybe in maybe back. sites but the small coming, The then the to one group third a a back see particular grouping – into pretty as we as back. weeks Texas, But another

with things get back testing, only reestablished COVID, all but way the come work ready the equipment the for. mainly to of their preclinical up labs, get to sequencing get have they're that that not into and budgeted recently and for already place they've populations the their So and backlog in research for

out get sure it products way that's profitability we're frame what managing investments in, in tremendous the things cost structure able business. to back. really now and to need – level of taken cost of to we would again, we've to speed. sequentially comes be be amount making based stay make of targeted back three-quarter we on running get the at to why We're two- things to business, revenue, up we're and our that time that at But So the running come I'm thinking we're as the a

though it's I So the we're no, back, downturn, as comes it's this would looks as business past. managing targeted many the a even what to that in where would with is now, back, sure the actually new gives segment. chance have in and make big customer cost on to it revenue going – This by we actually, this, like – be than growth by manage – a can easier basis, gauge a think it what been the it – ways, overall, there's strategic coming mean, we to environment sequential to growing do tune have in us

into. it what strategic, while to not really might it that of put many not what comes of kind should business be business helps our and and us sense expand makes a to we lot in organize effort ways really way So drive as back, and

Bruce Jackson

Mike for of The debt question quick little our this a a expectations was on the bit Then ahead debt good. Okay, paydown. paydown quarter.

wondering, was I view a you terms So to much hit determining down of Are cash pay certain to a just this. you or philosophically, you how per are quarter, you balance trying trying how in amount? certain hit

Mike Rossi

from QX make have to looking revolver just first, covenant to that. that really, as there excess at the within mean, other I I'm is just that, with well but liquidity QX, sure the down a And I And managed one, is well. were covenants we're side to of of within looking step at all because then my managing it available did was – kind way we're expectations. the the

there quarter million really at excess of – end the about got deal $X total $X that's with, to so million liquidity. so we've revolver I look at of or of kind untapped And –

that So of to kind any second so. the into million easily, downside at scenario, we half, call going very as that we million look withstand $XX can – $X which

Jim Green

add of we're by now we're to the makes that as below ratio activities, would I We are going looking which our nice a it refinancing easier that also for to Bruce, drive commercial think look at. can And X, find the us banks leverage there. we back, showing down coming at course opportunity

Bruce Jackson

Thank All you. that’s right, me. it great, for

Jim Green

Bruce. you, Thank

Operator

you. Thank

the line of Springer Research. next from Singular question comment or from comes Lisa Our

line Your is open.

Lisa Springer

morning. Good Okay.

You the… mentioned during

Jim Green

are How morning. you, Lisa? Good

Lisa Springer

am I you. good. Thank

factor a around color margin was that you mix little product more driving improvement; the product the mix? that gross terms provide a presentation of in the during mentioned in You could

Jim Green

are We're used sure. that strong with products on conjunction the systems. seeing growth preclinical our overall our Sure, side, in implanted telemetry

sites leader large preclinical pharma the prior with testing and academic kind are clinical final the companies – into human testing. do going We very to in and CRO of that with

top – of now and So standard these a up, that's have what's on be vaccines COVID ramping of general been just been for it, couple all things a a drug development. what population sudden just treatments for and overall all for a there's the demand of capacity, of is number of to going aging driving because planned

Those there. products, generalized mix. there's a in just So space that so products really growth our positive our is among highest-gross-margin for are demand

you then new come diseases. academics, in going up then So into lot focus testing on product, the demand when They're our with again, They're it's and back, to the doing And – company. large at is to for needed as our here it's number what's areas. us the it's for target not along or the that, what's that, COVID testing. to lot pharma – look as recent, also same because of we start academics other those in now though fairly a a communicable a a get inhalation ways, right types very like and largest look then of of as in kind picking they CRO many

growing, we're So greatest now. for again, tailwinds area, in products think – that's strategic got into side, on investment the we're making course, there's that academic those as this now, right and are that demand And it's ready an real the we're of right are gives where that looking be to and what develops. portfolio putting the things the rest us is – because selective that's focusing tailwinds, we at of as opportunity the sure to

Lisa Springer

comment costs September second in great. And you restructuring December and the may could how break half on quarter? it of Okay, year versus down, the

Jim Green

that, you on have number do Mike, the roughly?

Mike Rossi

$X gotten. additional the – restructuring so, million there'll quarter, We the $X be additional QX. the savings million each so in cash comes about for from savings. is, and it's initially in that a of $X kind I the $X the the million costs that to what on about that Yes, or million had December. say that But talked we've mean, we – cost of Lisa, I'd net-net, we'll quarter out probably QX I'd – with see say I another

Lisa Springer

new product the could second of to And half lined great. on anything the you up you Okay, year? Do comment launches in have go?

Jim Green

side, the inhalation very It's tests. for of used they the immediately new in going business. Yes, product, upon to of testing an nice that where more we introduced saw We additional places growth building a on we we activity. area Also, had vector the had lot backlog it and quickly. result expanding nonhuman cellular-based see do. into a that's That's only order introducing typically

same adding and but while, for rejuvenation network-compatible, – with the a expansion, are with come so standard them help. we're that'll invested And that technology at that and for things us really sense provide at really for few then us, that So of products, as all looking people the new we process don't – are systems, them situation the well through there's at be for being that's the aren't we're are where no, on and of going shouldn't in really and really make at demand we going a ton. the in from – standard that telemetry, to making what we're puts and a – our we're number But out opportunity our for part looking becoming just build probably then as looking helps more a more many maybe a the of a us getting the implantables a strategic know, – also of portfolio. been some consumables in haven't have to time, – and

out them market, potentially So or as looking we've as sell and already up them – worked off. them to we'll some take of either those the price of be far at out

of right customer the a that as and we're That we're growth what we means – XXXX, overall, needs into based what So then process, the to our rationalization on need, and future. have year and and for end need, going to large pharma CROs get going portfolio it's academics of the for the and through kind that means segments.

Lisa Springer

that those and XXXX have question, what were? for remind gross memories, final targets you us operating margin September can the Excellent. And of us short

Jim Green

Sure, sure.

in into make when first numbers put felt to operating the I start aggressive targets was said, you stabilize actions so. our what time, I we thrown over – same three we pandemic as at XXXX place. didn't second – get and here's it, show I what away, publicly targets as this the the to sure as really, were we but months out do. time, CEO, of changes remember public or a for knew and we us Mike? pretty around on would that said operating around business, with have about the to people second Basically, as XXXX You margins came we can for was the right right, I the build structured half margins gross expect at know a and half some board we took XX% through of XX% took XXXX. to hit I I going right team, that – at see, XXXX, that half the Is were go and deal and and to the things year

Mike Rossi

exactly yes. like, up from right, XX% to Stepping That's and, XX%. XX%

and it's and gross So operating is targets. XX% the XX% margin

Jim Green

accounts. and growth thing, adjusting right make targets to, quickly. and making the margins, and operating changes a of by having to XXXX. were at It us sales forced professional a the pretty there the pretty an portfolio I kind start again, see large gross calls position quota-based having good where opportunity and for to team gave XX% vector and on on into organic the portfolio look The margins changes set XX%, aggressive, felt these I with who based put COVID it – we an us which really is these coming in good, us

in strong. in do half XXXX; whole second happy to now looks get close positioned the – going on the to really out XXXX We're again, to we're COVID good, track thing. we're back of it. And the So but spite right original to glad

Lisa Springer

Okay. that’s very Well, Thank it you much. from me.

Jim Green

Lisa. you, Thank

Operator

you. Instructions] would over in turn I remarks. like showing additional back [Operator time. to queue Thank I'm this management any the to no the call at questions closing for

Jim Green

is Sure, Harvard you. for our being for investor you thank Thank joining today, ends you. thanks and much us. Green. presentation Again, with an Jim Bioscience. for Thank very This this

Operator

Ladies in participating conference. today's concludes and This you gentlemen, thank the program. for

a may now You Everybody day. very have disconnect. good

Harvard Bioscience (HBIO) 8 Aug 202020 Q2 Earnings call transcript