HBIO - Earnings call transcript Q1 2021 | Harvard Bioscience, Inc.

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Operator

Good day and thank you for standing by and welcome to the Q1 2021 Harvard Bioscience, Inc. earnings call. [Operator Instructions]. I will now hand the conference over to your speaker today, Dave Sirois. Please go ahead.

David Sirois

good and Amanda, you, morning, everyone. Thank for earnings conference you joining the XXXX quarter first Bioscience call. Harvard Thank

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

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

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

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

James Green

XX% don't Thank Good X and a go morning, ahead Dave. highlights That's year QX best you, last in look on everybody. for full of to our order versus growth. and of margin points XX% Why the was to over year years. in Revenue up at Adjusted year. we presentation, Slide strong QX quarter. operating move improved XX the quick X% take percentage up the

Our revenue however was molecular and chain and a Net half driven pre-clinical revenue was with and revenue America Cellular X% million by is reduced below and our was debt by times. $X global strong product leverage ratio increased issues. impacted Asia. North order by XX% up now supply growth, X

look products X marketing, pruned We we Remember improvements high-value still As the our revenue at upper to new portfolio details. and year, this outlook Slide worth about couple of of our the organic now to margin expect the last years. of and, going introductions. from this quarter increasing of up the teens presentation, focus growth the adjusted to our some includes $X product XX% get low-margin X of last growth, operating to to to Move forward XXXX, mid outlook, is over expecting improved exciting we'll XX look XX%. from million forward, over we're

That's XXX QX at revenue improvement see margin to basis of an in $XX came XX continue Gross million with we points. expected, coming last over up XX.X%. X/X% As in year. at improvement

X.X% minus of loss operating of GAAP a revenue. had quarter $XXX,XXX This or

negative share was XX so to cents XX%. up Our year. from GAAP last million, margin operating X adjusted adjusted X.X per our operating income earnings improved cents, was negative

Our adjusted cent That's share year. was a X earnings cents. up from last per negative X

flow cash down the our quarter primarily quarter. million molecular X.X% and by with product was our X, by of debt the of Move year row supply paid Starting the in revenue delays We revenue, cellular on from in materials. the table, research academic in with is first a by product global $X $X was look number family. shipment our operations Our the which at caused million. last revenue from from to disruptions labs, up chain Slide

strong as chain growth global improvement the improving with supply and However, shipments labs academic we as revenue order expect continuing resolves. reopen

again in by And XX%. pharma, Looking segments revenue and was at we're in currency labs and driven North new growth the growth our grew with order product the strong second core in academic row table, grew seeing academic our Asia. our strong up and, customer CRO, revenue preclinical in especially area, on out. very inhalation Reported of constant labs basis, XX%, revenue America systems this XX.X% going our a in of

and historical in major cellular selling, with X, in products with improved the or Slide in customer and coverage with growth, some to that territories selling especially the momentum is molecular sales new activities We American expanded our now Starting is at a look X realignment quarter. take complete January. improved preclinical let's growing North of Moving drive products items the incremental cross introduced segments. to our product our

strong managing we're supply risk our growth. increased chain Our maintain to and significantly backlog global

adjusted debt. significant the times our our to pay happy this half that a year. this first to our cost cashflow expect down improvement of under driven, On we've debt and side, leverage finish by positive the our in say continued and reduced final we half cashflow, I'm in to restructuring ongoing earnings, and X lean Europe initiatives of in complete and to communicated actions have

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

Michael Rossi

everyone. Thanks, Jim, good and morning,

for the XXXX. outlook pleased our plan very original on coming our staying our results are strategic from XXXX to with our with start We in executing focused XXXX payback and action through

performance, business and results for the run adjusted use we of in the GAAP reminder, measurements included this presentation. are adjusted reconciliations report of which L we a with to As to P appendix the & results aligns

full rapid in XXXX the in margins revenue below are with stronger a the due end outperforming any our levels and P&L, reflects volume fundamentally margin operating favorable a solutions company QX labs improvement is of product the history removed strong while with with year improved mix This recovering trend to year for improved business in year. normal academic XXXX products volume pandemic, over of at productivity. the number of March, L outlook. to On of beginning the our still continue Gross part and adjusted remained low our the pre-COVID the on associated with a expect product P reflected onset the to as year we recent & in results year-over-year CMT loss despite is higher from sales the the as of margin portfolio

see the are Adjusted We QX, towards All we've mix marketing the and down to capabilities sales products strong growth. margin reductions income to sustained operating due implemented modestly mix revenue track on due strong cost January XX% removed seen inefficiencies will while with increased noted, product in well XXXX. were support reinvesting revenue well improved to waste lean plus as as told, as we to expenses overall new as continue our over versus executing since trends XXXX. been Operating product gross gross target growth. to commercial recovery prior we in released and focus in year, as margin and the in

increased compensation incentives variable Additionally, with higher bonus and accruals. sales

reflected our goals line in our incentive in aligned and margin plans well expansion with Our are top place for XXXX outlook.

approximately $X noted design As European consolidate larger we is savings with have previously, completion restructuring centralized from in program million QX. these annualized track cost final teams for original on rates. actions of run final associated actions sites in communicated our Implementation from small into generating engineering turnaround

our in the chain, QX we On With times annualized, is these to our leverage than supply strong order and and with to to and a significant our stable. than back global strong now volume. due dynamics leverage line fulfill remain complete, from to and are X.X Cashflow additional growing bottom EBITDA, flow is Net primarily in capital our one a focus debt it business. operations collections report that, improvement turn working the of million on ago. revenue debt Customer outlook. versus full growing ratio, is very the With outlook. inventory in or full given pleased XXXX optimizing a adjusted came is less I'll discuss to cash year lower QX activities year is debt, times. our soft X.X And and line higher higher roughly keep $X supply to Jim? to prior available leading year to now Jim down attention

James Green

Thanks Mike.

Okay.

us behind Looking Let's With product marketing, move improved Slide driven and primary growth this our is effectiveness, XX, the improvements sales goal Forward. by introductions. of year, most sales structural new to

We improve growth Academic expect approximately XX% throughout and Portfolio a quality the execution a XX% providing labs of versus XXXX. sustainable revenue pruned sales year. tailwinds approximately rationalization growth We expected see low to are overall for range. potential revenue preclinical continue foundation. our recovering XX. of and supply million margin XX to certain $X basis on to We reach baseline reported teens materials, to we FY still remain very strong to closely. to FY the on global expect do which operating managing against impact upper are mid improvements Risk the adjusted, another against million $X

and volume margin mix. plans. in We finally, long-term and expect support sales growth expansion profitable gross you. increased will our And investing improve marketing continue that R&D on margin we and Thank

Q&A. Now I'll over the and operator the you. the to turn lines for open call Thank

Operator

Instructions]. [Operator

with Your KeyBanc. Knight first comes question Paul from

Paul Knight

of chain that? what Polymer getting shortages? you Is on give somewhere? X%, Jim, growth is little kind supply on it granularity a CMT stuff it? the Could of issues

James Green

are some pretty that What in starved of the we We're electronics confident may heavier manufacturers. have we that the the kinds A "We're that been line running told going more on we're things we're in sure. much look plastics taking time. always want same of we're not not I to team, to just doing that -- certain lot if We -- read in of Sure, a something don't advance types with and use to hand not mind anymore. that really make a going problem. automobile and the little orders cash risk buying chips. about working it, There with we're and Again, it's are longer to of obsolete. you an on take sure a things for is sure advance I've make capital." It's buy more have the

that So it'll while. working expect I take on We're them. little a

products -- are we saw why We running a lost for this the a too lose backlog not quarter. technologies people And a and is revenue. say, want don't a in start you sometimes for don't enough a want, it established often if problem we long." big delays. for fast low. But, pretty little the "Well, you you That's It's Because our you or backlog to see big have again, but shipping materials see aren't customers. times that We increase could

have raw material definitely it handle is a an issue. supply we side. it. is the So But But on on more it

Paul Knight

Right. what you've done? Are And marketing, growth place maybe then you the had program mentioned you Is or you there? continuing high products. to faster? in Could professional for new talk

James Green

Sure.

Paul Knight

are, it single? for And what year? that Thanks. it on double think like you what high Is Is that touch to growth or are me? say then normalized your you Is you X-parter a you willing XX% rate? think digits? Could do this

James Green

Sure.

past. marketing effort. and the One product along and effective the I've with We're company we improvement up holes understanding a don't now on would very website to on the -- in management, evolving end good customer. that a call We're I of pricing want our a -- was, brands was ties that This started of to That's seeing, product that's a properly. soon an a needs it the come getting -- product that's well, described market with So and lines where the the going improvements certainly and as a having company brands is of substantial in what our literature. side, the take see We to big and have the line going very basket you're We with professional of working will lose here

Bu much guidelines the behind start being understand. Which under our to see the then technology evolve the brands. going brands. you'll not activities. lose Harvard it's We're driver where to to You'll to that come Bioscience see supports cross-selling also easier it together these of

It's be, along. improvement. for a quarter, coming that's I really year So final state. to say, take probably to would a in But going more there's that every an

are You know where tailwinds this the business. in

And would that entire new crazy. growth. area a since new DSI we inhalation the funny, taken certainly mean, I in introduced timing like just system. of portfolio, and off tailwinds portfolio products labs, much have really pharma. thought lot that funny, We yet. a the what's We're the Perfect be growth in not that's originally seeing into labs that expansion aren't of that though academic we academic of back of CRO even

see that priced side. distribute for systems got the We're were we way our associated structure with electroporation, finding sell the that that pharma higher products, for is CROs only products up. historically tailwind the the Those had is the through CMT to that products certainly the we us. cross-selling well. and of an management expanding CRISPR effective in the sold activity have So really and picking we telemetry account through really larger, we really and that And gene our related of some a ton are doing The that's preclinical space. splicing, anything

make And see, as product we're the We're certainly that of can lot you there's adding So back sense. development things products. that in a world.

to part has this. that be a of So

this question we are Your can been deliver evidence real as the growth, as what we business. say recovers, can we double everything numbers where underpin fair we this think have we've sustained would I them. in about and to sustained year, I But and growth, know model we see if until little you it digit that certainly it's on conservative for disappointed can't long-term be in to coming we have far a especially as

of model way reps your their are around to them the how well then simplest is is like by and quota, number performing. I it way times each of organize the Now it,

So there to do number this. was ways a of

say I space started in I was now, if we're good. the a X% right certainly to get going going saying, I I good." the do going about So we're that range, we're general but to to I to good, platform like work I in, market about But probably feel do all thought than that can to That's "Look, we're the think, better given to somewhere that. have can was work off here. solid this X% to growth think it in better.

Paul Knight

when and portion related And if for to are products company look think the can products gene growing at research, then I And lastly together those like those me of your markets? what electroporation, other cellular-level at, smash you exposed of splicing, you type is to what's do them that?

James Green

intake still gene we thing growth that's primarily see in that chain Yes, solve area, area like had issues we it's that order We us limited the just the again, academics We're have components. that hard. is some growth. with in that. supply The There's to in that in to everything, But CRISPR affected certain definitely fairly we're sell space. in and nice space. splicing working

compelling a the of is involved and product new with technology, the and, be anything other in out. of this to to the demand But that do a to get more research it's happening. heavily use with some This more place way, But on all so that us at lot with again, a also want and of higher see the a we newer into larger eyeing move technology to immediate drugs there's clearly to slightly to the academic great we to based to perfect coming what volume one Now, point out working have volume still new expand is the side this to this exposure. that will a maybe even use of come able growth that customers things product, coming have academic will be vaccines to going you're basis. that's type generation to the need on into would We're want areas higher types that space. a

it's be. great So area of a interest in to a place an lot we have It's that it.

this, are been hadn't while, a look that invested that an guess think opportunity have now opportunity, guess going it I I company. we to which because after for real for I at this in, a as it's I

Operator

Chiang comes question Securities. Tim Northland from next with Your

Timothy Chiang

start thoughts it this or you going see hints do reopen? to the labs. that wanted Will be will some happen? your starting And are to on just I get Are fall? likely to this that summer you labs academic to think when more

James Green

Yes.

your in see here fall think in, clip to can and been if on. to we're And I come told some think often. going a shipments UK come we Germany haven't had And have pick there. that to the pick you have some that -- little moving mean, really bit Massachusetts, you you it's on are. the look And drive in to so as in the many and and students get where back They've have we different fast you We back researchers, people where a need in labs, Asia hard basis. is see business a going -- and they've need process orders not also of Europe's to trying been a there ton shutdowns. feeling Our a at in, It's taking depending they them mean, in you if the rotating get then on I have America, really because up in. even in been, may they states to to -- the don't students places. lab get bag, too. of the of mixed do so But back North yet The China. slower a the researcher been often that that while little already little do answer to and people people to with not come the US, even the it's up just I a semester, maybe up. bringing in see struggling like -- you We're they've question time you And to

the really of so expect. It's for kind going great really of -- to lab in a academic looking, Europe to on settings. at of and in that thought capacity products to that trail back inhalation best, probably The of to side products expanded the use our the couple be quarters. our growth of seen Europe's would We're probably of our year there is much So end back news going that most at we we've telemetry the is preclinical the

get where the lab those they think needing to bigger what the I pharma of cores to they own need trying that they're there starts of -- off phases, suite being these were that's again, trying a spinning if In spinoff in out. to help. concentrated to really company on types funding, their They zeros back. any running to lab. one that So And their a are get even we ours. getting and sight their proxy like we where pharma of all build starts the we help products is kind lost up get products on need for point without based they're small prizes labs to labs to build of trying through small the CRO do. the know to so can pre-clinical like establish what We full full they We probably that's or lab a they're and and spin a look same And

some going clearly nice all develop there's, going demand to that's be online. come pent they to as up So

Timothy Chiang

point? you how much quantify Let time disruptions. is that chain where offset And guess one is mean, of at to do that? how you or think obviously this two you things... do follow have think supply take how quarter sort me I you Jim. it'll mean, big sort just I some of a up, this I disruption

James Green

be of everybody It pros how chips been things lot before it's really It's lot electronics but is with will at of clear going a we compete of it's bringing where revenue, and spinning some and this our a now they going growth will in around up. work know things probably real back it's We the got quarters But to some here the on take do this. Again, resolve. doing supply me. they're to means of it growth chain time Which work lots side good bleeding Tesla boundary on -- a for But nice We certainly clean Yes, it up. constrained. of and and for a use. we're because these to of I've backlog the order shipment -- side. we're couple on couple else of thinking to that quarters when Again, to online. for run rates ASIC's kind a up this happen. with we're

Operator

from question next your Singular comes Springer Research. with And Lisa

Lisa Springer

us good in how and they you give refreshed products on quarter. introduced product? You it you've us or or examples Congratulations give improved two of Jim, since improved mentioned meaningful marketing was you another -- X January. were how of could Could one the terms

James Green

as Yes. adoption. you a of When you team lot product, is takes the that now thing little you into gets expect, technologies. and the a introduce to customers the it generates first while the usually for excitement see But it sales new get refreshing it does with announcing your things, really excitement, with

course, of which That great took biggest technology, we for just one, about which talked was product the inhalation a a us. first off. lot was The

Now, we that last introduced year.

that the clearly, new some products, heartbeat's new but X think, organization use start looking was with you'll that through With the things something of that used. be out. months, our of products and new It's have sales products and handful biochrome got, sales then them, the a in where that'll I are and about don't molecules teed on. happens that where see of a meeting of up out of testing the lot there's of at kind coming those. so and improvements certain weights base of our of that measuring, list roll every here specific area, products you're you in June. to X We've coming goes instruments all the come in technology Usually like out the a cellular ultimate, the other series molecular I

technology something of as you of a Some some new, it's have company. it's have to but that's refreshing,

just getting can't in You old tube. along products the with sit

driver the line the the product have part new technologies. be and It's refreshing company. of introducing You for to

Lisa Springer

have for leverage next the the year? I to What's comfort My about, target your you level by you question, do the of wanted current ask a leverage? end with

James Green

Well, year, we great to using the from the growth right the this aren't to now really business we're going anything as other much feel company balance beginning, second market making of to balance now. be point, on we'll leverage got much the the X like the half of mostly. sheet we said we better certainly in this cash than at for year. doesn't right a have capital. this be a under end times consume This At I've sheet. EBITDA the drops

to make As with hard look lot now, opportunities more on force we're of these sense out the of sure end we just we these because we're depth us products? start Do be the organically? what the to now portfolio. on, we bring other right, the we to mean, and at for some correct, opportunity the we the sales of to working when might see That's them a the coverage the maybe Do this get down, of are some a and know, make cash. But technologies Right in Some inorganic continue Do some looking for acquired things. get new you'll have the not to year, we use additional you right. either much fit portfolio I I'm investment the adjacencies the that product really thing there's the right kind right way, products. Then, invest? is looking at on what really just come adding that are to capital making of of how choice. debt get we you might now. to it so coverage understand some make at

Operator

We for with Benchmark. Bruce Jackson time question. one last That question from is have

Bruce Jackson

were To have springboard million you like target? off Looks quarter. the D What to up R kicked R&D bit an you maybe right now? spending this Prior spending annually? Do XX last the plans your spending around are a question. and downturn

James Green

of X% somewhere around were We revenue.

together, it we I to loading of don't I see that needing we investments. there Somewhere make high around to mean, But of will XX-ish. rest jump certainly operating some leverage and expect course, profit. be, getting getting right. up we're as that, areas revenue I now. and up some certainly the grow, it it right grows, are and still we as have

up ramp tooling a But some We have as to safe There'll applying there'll these basis new apex. increase at some technologies of they'll of probably capital and also and I an on more be be will products spend of new looking to revenue. some, and some X absolute R&D staying be much it, into Again, you there. X% like kind It's that get of of be kind at stuff. place. in

tell the have little ability more do throw we to became If It have it. and at that. to R the flexible something, us in forces we're we a to think I I'll be of But needed efficient D. you, use we enough. something really compelling and

Bruce Jackson

was could the of a Then, gross Do margins by you laid out think time great. September the XX% you still a end to ago, Okay, margin know you year? I target but XXXX that at long of get point. XX% gross a

James Green

do. We

be Yes, we'll exactly. into QX. XX we plus that at as get expect We

target cost still that it's a of and natural. a think it lot good structures I much and was taken sense, of Because makes place have now. the already

to little it us. and better product As happens with improving, for efficiencies, naturally we scale, get mix the more a

done second very It's years of on that. on that to all on path we that a back and think clean sales higher the run half the XX% we've the probably full improving I'd plus. the channel as say, year Bruce, have at mix comes year. rate be the not that and at that a this volume pruning I lot. the that's High end confidence products, really focus we'll that, but the

Operator

would closing for over And turn now like remarks. it to speakers I our back to their

James Green

This this I again, Bye. it's see soon. guess results us. Thank Thanks. show again, We and we'll August in Thanks presentation. ends second we'll us that quarter. join you'll you for the you. joining our hope Thanks you for

Operator

for today's conclude That participation. your call. does you Thank

disconnect. now may You

Harvard Bioscience (HBIO) 9 May 212021 Q1 Earnings call transcript