Earnings call transcript Q1 2023

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Operator

Good day, and thank you for standing by. Welcome to Harvard Bioscience First Quarter 2023 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Dave Sirois, Director of -- SEC Director. Please go ahead.

Dave Sirois

good and Amy, you, morning, everyone. Thank for Earnings Conference you joining the XXXX Quarter First Bioscience Call. Harvard Thank

Before we Earnings Events a of begin, take I QX Investor this would like to Overview, is file is and be to website. entitled a our located call. will the The a HBIO suggest section download copy and that and of Quarterly Presentations presentation XXXX referred during Presentation moment that you in

the will Financial be and Jim Leading Board, the of Jennifer Chief President Executive Chairman Interim call Officer. and Officer; today Chief Green, Cote,

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

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

The the ongoing outlined between which incentive are set internally. and and business, our manage statements, quarterly forward-looking upon as compensation we represent and of results relied economics we measure release on today's the GAAP be non-GAAP including in call much results of not plans Also, our represents differences believe reflects non-GAAP should will today's future better Any estimates day. the estimates to business as any our our as the representing our and the results, and of how of we earnings today and activities, those related presentation. subsequent how focus company's

Overview, & our call well of Presentations. website as replay under documents, this two can be These a found on Events Investor as

and the is or website. in our information available our presented included call, archived the presentation, and any material, in other will Relations Investor of statistical be Additionally, section which financial press release not on

over turn now the call please to ahead. Jim, will Jim. I go

James Green

Dave. Thank Hello, everybody. you,

years platform envisioned. two I phase us am in on growth how and behind last to focus me to have we the by pleased saying profitable now the start Let turnaround the delivering

impact Let's at consider I underlying XX% basis. the points go $X.X $X.X above of XX% of $XX discontinued Reported million Gross quarter the I from QX currency X% three negative as-reported an to margin think presentation for core the five revenue highlights That's was see improved of million, and $XX.X about a last of year. for look the products, Slide million to on over quarter. year. around revenue. growth or When last of percentage million, to take up the

operating improved from measured Adjusted points. revenue, XX% from year. $X.X or to million, $X of last operations share, year. or in last Cash-flow $X.XX bridge $X.XX from per to EPS measurements measured of year. positive the negative up a year. improved share negative also $X.X GAAP. GAAP from $X.XX was last earnings $X.X Adjusted from last the million points $X.XX you'll to per find appendix, million non-GAAP And versus a profit seven XX% up Adjusted up percentage revenue, percentage million, seven EBITDA

offset growth cellular the Europe. and in which molecular discontinued the family. technology when our to with Starting Take exchange We was shows impact four. first by Slide quarter the 'XX of the QX revenue includes at products. in Pacific, look row was adjusted 'XX's rates. reflect somewhat from in currency product an This slowness Asia Move roughly the a by adjusted QX to revenue solid for table, flat and had Americas the revenue slide

new BTX driven by Electroporation growth was in Cell-based strong. testing bioproduction. focus products up our were

approximately product $X.X sold prior decreased distribution by through We sales discontinued continue rotate year. low-margin of primarily out versus to million products and

XX.X% on a Next, constant up up and reported, our was basis. as preclinical product currency XX.X% revenue

$X.X in and dollar respiratory said, million negative telemetry as software, and compared impact year. of $X.X reported, enterprise Ponemah compared the to X% last negative of includes in $X.X million and British currency pound strong discontinued to growth impact a a growth strong this we impact grew systems. of caused systems. of US currency million. products saw had All Asia and respiratory euro Americas further

Now let's five. move bit little can Slide the of tell you to a introductions. exciting about new product I some

Before slide. little a I start, this let about me bit explain

we've areas critical offerings Over and the continuum. optimized to last three therapy the drug years, product of our

and time, to penetrate larger to these is introduce technologies continue apply to pharma, in applications at strategy CROs technologies research and industrial with product same applications new and customers biotech. Our in academic further the our

is approach revenue to higher like and our far introduced with I'd this with customers. strong to preclinical products highlight on capitalizing ASPs products the do of A points this key we've to so that by offer recurring new three higher-value year. this benefit We streams. call

of this volume report the use, from attractive it builds of and system to academic use System, been and been new lab for been metabolism the has for technology which new SmartUssing permeability customers. already installed ease pleased in Starting our Ussing is left, SmartUssing a pharma Europe. labs, proven in in making Epithelial our at I'm system which higher on designed has CROs pharma research has needs and first for that large studies,

stimulation, lab opens Stimulation use, follows operate. STGX modularity technology and in on which our In opposed higher-value highly to of and labs product Building trained theme access is Generator. techs our to simplicity, enables new as the PhDs in use industrial where to ease the this middle our of automation of ease new leadership

announce monitoring heavily and data a used tracking after our CROs by our high-precision software, end, quarter Ponemah today GLP-compliant combines customer. activity high-capacity safety CRO Last, for is pharma which the regulatory we're excited and system This received for with efficacy, from reporting. the enterprise order to we large behavior first new and that system our collection

basis offering ASPs, systems the higher we well of research our revenue This line level and the higher content, provide product academic and dollars. technology with is recurring into the thousands of expect substantially ASPs products. hundreds industrial-level of compared ranging additional substantially expanded Scalable industrial to streams higher with focused to new

As order in is this an example, of first $XXX,XXX. excess

a CFO, at for turn Cote, I'll Jen? over Now, financials. Interim look call the our key Jennifer to

Jennifer Cote

Thank you, Jim. share in to greater financial results be able excited I'm our detail. to QX

can you refer If Slide please seven. to

reminder, manage will to in discussion my measurements we business, focus GAAP use and included reconciliation the for the financial internally with performance, adjusted our on deck. results aligns P&L results corresponding measures a which is As and the slide between adjusted

revenue In details cash-flows. and margin FY 'XX fluctuate has from will also you based QX gross and our XX%. margin was in strong additional take volume, This margin already you factors. improvement 'XX. on some XX% general, and consecutive taken a our of through QX is our QX over Jim of performance, mix impacts and to balance on expenses, sheet XX% compared through period-to-period chain revenue other I'll supply gross FY of inflation,

the stronger products. We which we of realizing had of a margins, are during products higher also has average of improvements mix and of impact and QX, our the pricing impact preclinical discontinued mix lower

with entered increases margin and also portfolio the complete. as to QX pricing We costs, improvements, our in related of with demonstrated our headcount labor overhead QX. our rationalization XXXX together these are reductions lower in now The improvement implementation are

more adjusted improvements reporting and presentation now difference adjusted on comparable the on fixed discussed depreciation our with We to our consistent cash-flow operating our believe QX, of to adjusted margin closely focus are EBITDA; we The is assets. EBITDA. change is on a Moving with in other aligns primary this companies.

adjusted Our increased $X.X or QX in million The margin. primarily or $X.X driven million XX%, our EBITDA improvement to QX was gross X% compared was XXXX. by

employee in reduction cost see favorable for our are of activities These QX impact also our in our We partially incentive annual plan. offset QX by accruals results.

quarter, also and in in new equipment As invest the in business tooling do capital capital last related mentioned we an to and expect in we increase invest XXXX, tools certain of products. consolidation expenditures as

Turning third focus FY cash-flow operations is cash-flow my continued our our to attention our together QX on management. strong operations. result consecutive positive This of in working represents million capital provided 'XX, from EBITDA, $X.X our quarter our a of with and cash-flow, was by

downwards. will DSO shift We implement continue keep improved that continue and to activities to our our start steady inventory to

that reduced in results solid strong great 'XX. FY EBITDA a to also our debt The to million gross debt cash-flows are share adjusted and in during reduction $X.X excited We margins, net start QX. operating we combination strong net of our by and

hand cover guidance. now to XXXX this back our to Jim I'll

James Green

you, Thank Jen.

Now we've deliver range, of percentage we profitable to of XXXX. the that revenue discontinued platform reported We that's see expanding we and our we moving what new from to the our for see all growth the to see mid-single-digit portfolio summary X growth now XXXX. points running the compared cost four and approximately improved in on a look year inclusive structure, expect growth envisioned. XXXX revenue a and product stronger With Slide recurring products, through revenues, year as

We strong level. expect gross margins to the XX% at remain

EBITDA, significantly pay XX% We expanded in working our to with combined the improving strong expect driving range. XX% adjusted capital margin plan EBITDA cash-flows, to we With debt. down

Finally, this reduced leverage to to our plan X.Xx, leverage to levels reduce debt quarter, by XXXX. further our Xx we end we approximately and of the debt

Thank you.

over Thank the turn I'll line to to operator you. call the Now, the questions. open for

Operator

from with our [Operator And Instructions] Paul first question Knight is KeyBanc.

Paul Knight

guess, a Jim, all, you Can where that process? like you now what And where first Hey with sales and congratulations are are you on of with your you do talk, reorganization? looks force have great I what quarter.

James Green

effectively performance. products What sales we've for where force and high-end deliver is Paul, about able and there. again, to technologies the to Thanks, now the sites research fit advanced and academic approach and comments thanks, we're our your kind we've established done continue

expanded sales CROs the of at call able reach our have to also But pharma companies. force same time, industrial to be on the segments and our we've

split focused the the So, focus is for academic are on a there's people a a side technology. bit advancing of There on there. who

you substantial growth, to the the also side more being much in But we ASPs for and in recurring now revenues products, where but the recurring design growth -- industrial said, see process. revenue these I also, generating like see and we're them introduced not into working only

at works a as mix today. two. good point, the And it's far how I'd coverage as that much shape say in So pretty this final we're the of

Paul Knight

Can of mean, new new little on the that? from Slide to sales every getting year? new how last or I five then quarter, you you're products? And products Or to XX% this a product XX% is you talk granular quantify in like more on do launches.

James Green

I components. business, great to split -- a expect look me, when overall the at that To X That's growth see into Yes. main typically I of I question.

Our biggest revenues last recurring XX% and the revenues. that -- inflection today addition and indicated revenue product had recurring and business. that basis, those of see that also revenue over recurring more is is reported I toward change we that driver now our of They introductions report move the you more more on quarter of new the we because I our

our at of existing big So product what then would improved new new see with shoot how would look if drivers pricing do growth, as development at new introductions, When see to portfolio. primarily look it's -- And and you XX% you volume I drives that, far expect that it's product improvements. I growth, as expansion also with the we expect growth see for to like along I and to products. something that typically, and

underpin see with a that products. Now, these of nice product expanding introductions and But that now, targets I it me of business. to we deliver also out course, I've again, of growth to be portfolio, going and mix have then be And my the end the it's also if rotating set much existing for have growth cannibalized. new better lower is on our it targets that some us can predominantly lets

If us the our about of products segments to about sold $XX get these that not arguably as are you right million margin, over the the get you margin are when think took then, less -- that of profile back changing. size business, taken as size through revenue that lower in and out with dramatically and allowed we've since CEO, distribution. mainly see to strategic I But

of very we're the than discontinued, in products see that much product migration with margin better. more new that that that -- we're XX% gross the range. our more well And And measured and than into with you replacing we've again,

Paul Knight

at me are -- supply time you you Okay. kind And of would chain. be for on that through that this period? the other then last through question Are

James Green

Yes.

some much and get think see bought you are there. I ship. to to not hard It's find. ahead, did to up But certainly are. -- inflation. are sure had to have year, could and last -- think just see. to on we're we of Things with We're starting it's seeing purchase we things where also buy improved wanted some really we now improvements I produce situations that we to if And see can starting come dramatically. we that price we make continue down. so mean, about And

that freight. to numbers improve with at the buy don't that we will here. disruptions we have sure prices, in of certainly, flow the -- So, making supply overall for saw is see our to but quite is inventories we same that But goes too. And somewhat capital make really We take on chain through to kind the of improving. Freight building start higher here our thing did in past. focus sure we bit had our will up to could working we time But on extra ship. worked a ahead

year, that's So, improve too. this going to

So down. day, at and those improvements in have get our smoothed lets EBITDA end bit. us drive the things cash-flow combination of quite of debt much capital, the improved really that a working out But the

got but see if positioning impacts. for at But to we've going is the very else small make to everything some solid something headroom looks us. if know never this do sure happen, we You we're point,

Paul Knight

I then debt? And the just on debt. paying have or Are more long Okay. down one you short

James Green

Typically debt priced the on be paid first. higher

would that on the So, working overall. then be getting it shorter. And down we're

a We that's hedged, not the so we're piece first. in part well. And have pay the we hedge hedged off that's place, pretty that put

Operator

Bruce And with The Company. Jackson question is our Benchmark from next

Bruce Jackson

Congratulations on quarter. the

James Green

you. Bruce. Thanks, Thank

Bruce Jackson

impact life drop-off of that. There's space. of now the So a a tool in around just been a activity the kind general question research about COVID-XX right science in

are types know, of for out do business? drop-off going You there research respiratory some any products. have you of curious demand respiratory on products? that I'm that seen helping Or research are kind disease to other those in have

James Green

Well, Yes. XXXX, a like bump there's what a think, little we see looked bit the respiratory specifically very COVID no I in products. question did of certainly, and around type

slowed of somewhat, continue what new same stay had as grow also see in And those some which a to us us it. -- our really It of keep of helping it not called we forward. introduced demand a we to see, that levels part down is business but close of look drop-off and helping SmartStudy, version is we to

products, and seen most see really associated products -- of our didn't are a any we itself We really as for you heavily -- COVID development because with know, se of used used most of drug but or drop-off our per haven't vaccine. any

and the substituted if been So typical it, the through in other in it some if vaccine pipeline situations for technologies of the like they're that and development such. a diabetes were what that we there's for COVID, same coming drugs new utilized have with neurological using that like were saw with that in cancer would and the drugs in

going back. But of the of and to drugs them on the development the and see that rotating natural specific are that's rotate less drugs pipeline be in more to We back that COVID. to may

we're That bit the I COVID, see more on for thing growth So, for path we main a think us, forward. here a bump the had in of it of us XXXX. is going out, a natural and settled

Bruce Jackson

question is quick quarter bit in of you're sequentially big. sometimes there? same little pretty that quarter up down, kind then revenue and you is you in quarter the second pattern a flat the then one and revenue And then year? us guidance see to Great. third give generally on the this just expect Can of fourth Generally, like to Okay. cadence. Is

James Green

Yes.

had rotation the rolling end we're newer for expected that, that look of to replace nice I I start in move growth flattish and some see when we is and with to of morphology then the be with But the fact out some it, half. new if growth year, back originally strong seen then to up of the to we in first the what we've our and we'd products -- really I products. not low the here most kind here the year, with the toward second the in somewhat that products all thought half think the of front able

a certainly, might are second mitigate rotation in. I seeing think year, some be that's of QX really see overtake to out. the growth we're and kind flattish the products when of seeing underlying the kind of that kicking the QX So when But again, of still we half, to view again, But nice the that. of rest new in because, least at this improvement we to

is that real this know too. don't way this year, typically be of year QX, and I typical strongest But as to as to QX. that certainly, been going cycle, QX So, just be likely because a purchasing far is our has it's again the quarter

get But I quarter, about looking we've digits, minus. mid-single we as taken -- talked what from plus last with overall about think or to side. at the better revenue next I'll I see, had underpin the revenue be on to you So, time, up able

that And being headwind. net of points again, about four

see you've line so the cost a bottom a strong we that have So, seen to position. we and develop, very our and of as like this now looks what year of continuing much better

Our And we EBITDA overall underpinned new products, see cost on come gross organization again, in back has you path that measure that and growth the you that these are margin, nice a margins, too. dramatically. by the is in down

combination of were products the we to new and an this is the portfolio altogether platform improved So product shows planning build. and

Bruce Jackson

my for great. you me. questions. it Okay, for That's, taking Thank

James Green

Bruce. you, Thank

Operator

[Operator Singular Research. is Sakai Instructions] our Chris And from question with next

Unidentified Analyst

versus growth from was you can, to is wondering for I Chris Hi have guys. in I of -- overall the [indiscernible] wondering you an that yes, an product terms quantify if the the to growth and was price see. increase in new This extent can the experienced? I you contribution extent volume

James Green

will tend expect We that but not seeing report I are the specifically, be maybe I those two that expansion both and we nicely. a we're growth half of with of half overall of on on would really us, half the better-priced and on would kicking existing other expansion products includes and than new maybe -- that are products that out little to be say would volume or In price, driving portfolio. Yes. volume for general, better the both in them products split

the the revenue end consumables $X to at a the somewhere we've on we're product of new You've others. expected introduced year around products with introduced, now many this seen to deal alone annualize grow That's and year. bioproduction that our that stream year. we of one on new million That's that last working in

large new that behavioral introduction might the at The $XXX,XXX, talked as picked with move large the in we on revenue that's recognize a going that, will expect about studies our the start by with of and have where real they're to research year. into very system. of large behavioral And doing CROs to I the pharma -- a high-capacity studies. initial CRO, rest areas over that being of to new that sites academic opportunity expect, order and core you grow and up

for area So, a new growth this whole is us. incremental

you of now for that systems this need maybe kind what when past, technology, of research, think you about and expansion you dollars $XX,XXX we reduction collection, academic and system. have thousands especially If they're behavioral and combine for for the with a we're into regulatory telemetry submissions. them hundreds of real might talking it data a of in a what's required sell Well,

lot really see expansion with through focus lot designed to our time new we're the really again, of growth current services, but portfolio. our So a you -- recurring also with products, our on know revenues at happy bringing that they're and also of that same a new coming to in of

So to vectors moving it's the have in direction. position right a both good

Unidentified Analyst

EMEA. gaining probably I'm in interpreting of like maybe you not how in wrong, -- Great. new if on? Americas? the here looks can it positive in and maybe what's But and traction Asia as in products, is, give color Asia that into EMEA. Talking are and terms momentum more translate Americas maybe And us going Is it happening -- what's might is Asia of you great and telemetry, as if EMEA

James Green

been strong up. telemetry. stepped has three all areas. really see developing come the across in of we back very in seeing, Asia, board, that that demand It's actually It's just Lot and We're of the Asia one our was back EMEA of last driver. our for growth telemetry a poorly That year. in mid terms as long-term products. a pretty operating come drop-offs big had That's while nicely.

very growing recovering, Americas, with relative So yes, see -- on but also we US is certainly, basis, EMEA nicely, very growing we don't the Asia fast, and that discount America. a continuing.

it's when it hard differentiate it's one of when don't three you hide just to outperforming because this the regions performing well, we no all them quite one that So, well in that's rest, -- all really fact see to the got really the doing are -- gets space. that are doesn't

Unidentified Analyst

Great.

new product are in next building is in up new the momentum like couple get like even the In to and there as orders midterm, you So products. new and more pipeline, of continue further the the do pharma? distributors, was XXXX? end mix in of changing years, do see how the maybe you see changing government, CRO, that it you like customers end OEM How from academics, customers, mix what

James Green

Yes. a applicability Strategically, very question. great That's see is that very new research nicely that spaces. the technologies such. designing industrial growth much for of the the and see grow there, will more being we with we them funding us taking But and for strong academic opportunity as NIH continue into those a great with to still

in segments, segments, growth that's streams, to -- both academic is on you'll in recurring industrial too. you'll and the see research I industrial So, I what see but you'll growth the think where expect revenue see growth of and expanded see what you'll

more expect be to of and business commercial and our that pharma, report migration side -- CROs I So, much we'll more the continue with segments. to on a will industrial

areas like what's transfection drugs. the new leading development of academic our discounting still research. edge there edge We to the and need in electroporation happening in to be technologies, and continue to for with at at not especially be the still But

growth along to think on your going I with side again, that's industrial see the this. to answer -- So, we're question, more

Operator

time. over for And I I'm Thank no now to further call at back Jim you. this turn like questions remarks. the closing showing would Green to

James Green

the you'll join for us fiscal summer We This for Thank us. second joining for you quarter thank And this our in ends hope you. today's ends Well, XXXX. results presentation. the presentation. Okay.

Operator

this And call. today's concludes participating. Thank you conference for

You may now disconnect.

Harvard Bioscience (HBIO) 25 Apr 232023 Q1 Earnings call transcript