HBIO - Earnings call transcript Q3 2020 | Harvard Bioscience, Inc.

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Operator

Thank you for standing by, and welcome to the Third Quarter 2020, Harvard Bioscience Inc, 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 to hand the conference over to David Sirois. Thank you. ahead. go Please

David Sirois

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

of Leading Before, file presentation and the that that website. Chief Mike Green, right, statements be referred Earnings that to our President Financial and today, the our would call Presentation, this is a be QX, of Chairman will we Investor call. statements. read XXXX, Harbor during and forward-looking a Quarterly Jim constitute The All download will the the Safe call today, in discussion Executive we will take Presentations entitled statement. over may Overview the moment suggest of Board, copy to begin, I I our to is located before section Officer. Rossi, you make and Events I like turn and HBIO Jim, Officer Chief In

performance from XX-K, for those ended may Annual Form described on Our including actual XX, XXXX. Report December differ in uncertainties, have results what projected the to and materially and our risks due we period

plans and of estimates differences in results and we to the and of Any These of under outlined in ongoing Our other quarterly results, company's filings. our be the our non-GAAP the incentive XX-Q set call, Events, found as documents date. economics those can should measure business presentation. how not focus of on reflects, are website earnings forward-looking we today's manage compensation and much the we which and The our today, we'll better release two between represents Overview, Investor Presentations. how as our today's activities results and related our quarterly any statements, business internally. upon GAAP the filed believe XXXX and future represent representing public our including on as reports our Form on and estimates Also, relied non-GAAP be subsequent

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

Jim Green

you, David. everybody. morning Thank Good

points. Despite and to presentation, move Let's last from and the X at QX continued XX% XX and basis down up margin ahead new we're the and up happy Academic at to inhalation line. recover nearly and our X-X margin percentage to as look growth labs stable year, go Pharma CRO, adjusted combined quarter. in revenue operating pre-pandemic are was take was of levels. reopen, revenue slide highlights points, levels for product sales expanding a XXXX continue being the our And see our labs gross

to forward, As approach return, three expect refinance and back soon. look will our revenue, costs will and cost, we support with we continue disciplined cash profitability times, and our employees certain adding management around our as leverage debt organizational we growth

the at look operating presentation, the the Finally, to details Slide QX. X, in half we deliver mid to of beating second expect Move year. we'll upper-teens last of margin to

down last COVID-XX million all the by year QX with we coming our $XX or year. was to $X.X that's expected, million, though at XX% continued down down improvement Remember, prior XX% from As see QX revenue QX in situation. from impacted

from XXX margin basis that's an a points improvement GAAP measured of Our gross basis year. last XX.X%, on

margin last non-GAAP XX.X%, adjusted Our basis gross an improvement year. of from was XX points

negative it's $X.X from the or of a X.X% GAAP up and This operating prior quarter $X,XXX our in income million was revenue, year.

last period X.X million, income $X.X percentage XX.X%, margin over per year. improved up adjusted operating earnings operating to was negative the so our adjusted was points GAAP $X.XX. same Our share from

adjusted earnings year. Our last share $X.XX to flat was per

million, flow cash $X.X million. debt our down paid by from net $X.X and we operations was Our

move row of Slide labs table, from So on revenue product the which Cellular our by Starting down Molecular primarily was as vaccines. revenue, therapies an from first to the reopen, X, is development QX was product QX, with academic their family. It's worldwide. look restart and research XX% see down We for continuing improvement new XX%. which and improvement though and labs research at

recovery levels. second academic level the within row table, that of And our improving is revenue at at again pre-clinical the as academic is the pandemic revenue our product reopen. down, labs Looking but maintaining pre-clinical pre-COVID-XX still

X, major plan restructuring consolidation, we'll back QX. Finishing manufacturing XXXX, Slide Connecticut in and the complete. the announced and up to are downsizing restructuring look of actions that was the in now UK activities at Moving on QX

As organization. our COVID-XX new of cost products. for support related actions of inhalation in expanding QX the and a also actions taken And sustainable QX, QX the to seeing us bright side, getting we're demand lower overall in on

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

Mike Rossi

Thanks, our appendix used on practice, Jim, included results, focus that our are in this which run the our to good business. presentation. everyone. GAAP and reconciliations to adjusted I'll results to I'll P&L and or our related adjusted and speak is our results the we and liquidity, We of morning operating note, full non-GAAP

on in includes impact COVID-XX. our created Gross which by noted, certain unique prior improved eliminating margin plan, and products low-margin we our mix, to second a of of half profile year modest benefit improve versus despite restructuring from the environment product the As continue XXXX. margin the positive

improvements is we're strong XXXX. the gross continued academic line I top set recently and continue recoveries margin accelerate profitable XX% path our us uniquely lower management plan efforts cost The year December both announced $X do in efforts revenue versus of should due continued to additional noted, substantially to well gross the million sales COVID-XX, operating prior structure executed, implemented and execution margin cost mix and additional driving seasonality. target plan. QX savings. despite site and UK These along provide We income changes cost in in to with ensure Adjusted growth. the product sequentially, forth activities a improvement complete labs that on provide XXXX, note other down were margin of our as with an Connecticut, balancing as and fully post restructuring effectiveness permanent to of due to increased annualized line and gross

communicated combined OpEx over XX% million As to these of is flat $XX prior annualized activities million. to down last year was $X savings and of quarter, or the the $X quarter effect cost for essentially QX. total

QX. cost However, we more in reductions know, we permanent on relied

in work full time. reminder, temporary workforce our to QX, As leverage and quarter, work return of we reductions, a much last pay and

quarter. continue Finally, DSO could to million on flow, contributing debt reduce operations we with a from $X.X cash net for reductions the to and flow cash inventory

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

ratio XXXX. slightly to adjusted we stable it to solid the and are at profile. in is cash over Jim? improve the term. flow all the Based three with near perspective on compliant leverage total to on debt rest underlying and are all EBITDA times, of Our below lower we conditions taking business, actions I'll debt the that, or exist debt covenants. for the With We refinance to Jim back turn a believe facility cost market our

Jim Green

Mike. Thanks,

grow. our Let's CRO, combined move to expect Taking look to and Slide XX. continue Pharma to a we combined revenues forward,

the quarters. the reopen sequential growth labs expect is We upcoming over academic

we deliver our product much all, continuing manage continue repaying to We In pay flows, leaner cost debt. We'll Thank will sequential revenue and margins and finance work down second expect a lines. our to investment maintain while and mid quarterly at less organization improvement operating to expect level. in to we upper cash you. teens the debt, targeted half to continued

for the open the call operator, line turn I'll Q&A. the Now, over and to

Operator

Instructions]. we compile roster. Please [Operator you standby Thank Q&A the

question ahead. first Research. Lisa of Springer Your Singular Please from comes go

Lisa Springer

Thank decent you. out congratulations and pretty morning, pulling a a on Good quarter.

gross mix, the what was and with impact product product the mix QX? product Regarding the on to similar mix mix in products the margin,

Jim Green

mix of think telemetry very are QX product toward the a of heavily of margin I our leaning which highest products, QX, one heavily, products. first strong had

had negative QX a a -- heavier newer of would into us, from yes lab, come QX down in little so a QX, some prior from bit you little our starting the back is is at. be you think margin quarters, mix a mix it gross a we is the on little was of naturally normally one the to but of it's, QX bit the As it that again some lighter, overall back our shift so our to quarter, products get of noticed CMT we the into that was where mix got we know, lighter towards and, as

recognized revenue also It bit we in a a a number of heavier a quarter. mix. are that So little things couldn't of little had some, the on negative

that mean, that there company and, and in close about net to that gross in the the for to targets second real on to has pretty, we're little XXXX, this our down shift the mix XXXX, negative business about been with be a year, clear we very strong margin our up, for slight feel for the things we, that. a piece, and I be. and target it's the get overall, half lumpy on target here fairly the we're up on second the half want all up is what and moves but half we we're, So to have will But, effect that. XX-XX% and down doing second this position And to overall.

Lisa Springer

demand me provide that that color demand products. little Where and demand with coming the you QX? for more from in a around how is inhalation compared to could And the

Jim Green

treat, goes in it saw demand and was where expect started such. you The or things CRO area to terms is a the and putting us. And into be at same its thing the system. that what their kind allows to it's, then big for a medications the initial The on you what of measure subject, would to lungs you're for very a in growth back COVID trying into disease, work really particular through product, measure whether working China, and if and side, introduced other. you're and they the it's the time vaccines, what to breathing. where It's blood we first that real-time it develop of getting because Pharma exciting came or in same that get of of the we inhalation quickly

world. expected, moving the We that around initially CROs. also, pharma as in primarily and and saw Again demand

our diseases. sites to is they demand as a they're area However, going this product, be a, a driver adopt perfectly is is this a to timed type targeted for large the academic this this It's work let heavily that much in therapies going to for come be to And the this. airborne kind researching in these developing area, toward perfect large of and back, academics feeling very doing,

like this Overall, products have. we have level, back. that starting. very cellular is all situation a and expanding and with start at and products was see of academics number type do come that other to to will Pharma Cellular also that So We growing be with demand are that the really as testing really testing in think we and areas start much expect then involved of academic the just extending in demand back. area CRO specifically come also similar are at electrophysiology an a the starting we to the Other

Lisa Springer

reduction? get question And there you might you what kind might what anticipate to Is year, about of you the be able still my happen of are debt? that this kind envisioning, refinancing is rate last of and the something

Jim Green

Well, year look certainly the to some to rates and see that and like cost happen savings targeting, near a get get marketplace Mike? pressure with we're get we'd as certainly that, we think, and in year. kind so, here done at future. generate, it of done you look I'd ourselves of Certainly, done the like on that this this to it lower but want I to year, dollars far have that million savings do of that, It's as Certainly, the always that debt. things would can targeting on we're we're bank project and such, kind on will to of It's interest it what a level like. you When Mike. couple would a Mike, we to interest thinking the comment what the very

Mike Rossi

the profile. to X% have opportunity it paying be and should the we're now. now, And in in be, credit marketplace right market X% like fall is that than conditions less improved close there over right will the out people And

Operator

The Company. from question Next go ahead. Please is Bruce Jackson Benchmark of

Bruce Jackson

the fourth a quarter? operating control special off, - First have good the in any you the expense charges coming quarter, during additional do

Jim Green

that? expect you do what roughly Mike,

Mike Rossi

finishing Yes, there some there off. still were things

way total about X last X we will there'll to talked between in with savings year, over in to and year, be think And of it X so, I to million think this QX the of total. Bruce that is X million about

should are So, bucks. a we that around is But than what less which be there'll be little some left. in a million QX,

Bruce Jackson

And then talk if market. just little academic a bit we more could about the

back that from So, coming particular. But any in of is demand and you how other the fast are mentioned areas that market? coming there inhalation

Mike Rossi

quarter XX% XX, this QX, a labs from at I coming in then look, down. that maybe we've our the labs like the and down are recovering we good to level to of down is, in XX% be So in report proxy that or we neighborhood were to is as -- XX%, think seen XX initially I the numbers moving that we XX% looking our if to and somewhere XX what the you sequentially improved would thought so, back at CMT revenue think on, something around the labs for

it continue for over improved a point like, products moves expect to see to coming to we're seeing in. but natural as growth improvement been then the us, but will we is growth like news per our back to coming mentioned, general additional recovery, has as good move So expect products with you out organic about think slightly XX these looks forward. that the the is it we growth And be like That's sector underlying new quarter new I it going norm.

I'll then the be be get also you we've, with on strategic the margins, a restated show for think what low to a show strategic, into decided of able year, certainly next may business. we've driver and and you quarter certain we lines and pro might kind next there, forma you able in a of view, they As to know really real might be they not we not they product they're part that growth be is products

some I'll basis, that you and forma those remove as see show to we of what those growth. able portfolio. organic as point, working from on like the be to to looks pro it we're So, be far also, then would at what natural what we, expecting a

natural give much even into maybe strategic, in as future get ability business more are, pricing be better a And rate growth of natural because you on go forecast more with we the these power, underlying is. all that and us As and view are you'll I'll this a the mix see we XXXX, the the in products of give a to be better more valuable products QX, and by to able tailwinds, product business. what it's way, of better that and will have course,

Bruce Jackson

term up look products how some a then the products be And out that So the Is speaking new is some portfolio we the there nationalization that the of there some you product near for? pipeline have also coming or anything of going maybe on. past discussed that's get coming you out. or in can may refresh can

Michael Rossi

know the you products. already Certainly, inhalation about

is and continue test, happens more testing. that that more, going to expansion There we be it's to activities growing side, the in cellular cellular then is technology of telemetry toxicology with that is things in of what's in the implantable for able phases we the, like what we're to our, new only fastest expansion the extensions level testing being pre-clinical that's addition area. in with do implantable pre-clinical in used in our fundamental final invest level. safety going our to the to see at the the, all And You'll see business what

of to kind a in. or be invest area that to AAA an was, think area for the on type me, years. updated So improved that The long of, and it or it our say time. product that's I want of I'm was really kind left to expanding yes, continue multi-channel products, is We has to we're again, that mean been, some been alone XX refreshed going haven't

or that an doing that's amino marketplace. but analysis were research, that's the leader the in that We in technologies. area original in opportunity been real And we're clinical in. an we in So, investing okay the it's see area acid

space, it's though, introduce a used in We we've also, faster kind it's the clinical it's that's of new AAA -- baby. are product clinical about a the the expect heavily used that's born just something every some company go like just technologies. and a that new leading of of product new there seems for every to that. Even is technologies, some applications of or And let kind

has man us and become of So really a stream, installed business. that part having having not there consumable is on this a great a driven growth great shame and base, for got that a

that's natural some of we've brands platform a advanced too see of of I in tended that like. few, mean a of just the that's that's, kind when and development that taking to got region expanding So that looking that's particular with and much business, there name also some as patch be area to the first I it a also of might do. are and place others, and very research, into a brands really these basket I like strong the thought you

it heavily the Germany, were demand strong products US. sense, don't but they're not any in MTS Our you see, doesn't in why make very

start also. move you'll those to things So, see over

of the expand organization what with we're year, as way get more I'll together how a doing, putting a we're in sales So, end you showing we but give to view really through only be sales efficiency. not and products, into the of going of better that

the commercialization research and out. pharma all going So mean right space coming the with line is and natural CRO. And in stuff in it's, in about the I in it's the both excited market's where

Operator

speakers. hand this like I would time, to our conference to no are questions the There at further

Jim Green

Appreciate look listening for and day. And thank Bioscience. see joining up QX presentation. call our much you very quarter. Harvard of it next to much. Well, the the This in is you us, a have as great Thank very you on you comes end

Operator

and gentlemen, Thank concludes conference Ladies for this you the participating. call.

disconnect. You may now

Harvard Bioscience (HBIO) 7 Nov 202020 Q3 Earnings call transcript