Earnings call transcript Q2 2023

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

Operator

Thank you for standing by and welcome to Harvard Bioscience's Second Quarter 2023 Earnings Call. [Operator Instructions] I would now like to hand the call over to your host, David Sirois, Director of SEC Reporting. Please go ahead.

Dave Sirois

Thank you, Latif and good morning, everyone. Thank you for joining the Harvard Bioscience second quarter 2023 earnings conference call.

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

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

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

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

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

James Green

to Thank see start you, XXXX. to pleased David strong our supporting I'm QX and hello, everybody.

X to from simplified of an portfolio seeing few impact of includes let's Now, quarter. go on revenue year was I our down as last XX% of takes are as along presentation comparison in volume, $XX.X million from of describe Revenue includes of discontinued introductions the basis. puts product year quarter compared you million to net typical year-over-year gaining at modestly the period. The effect $XX.X the this for new of for minutes. and as-reported will much to margin which million, to the Gross the process updates in the pretty improved a prior year Slide a highlights last to further see that Jen smooth the $X.X mix already with products transition or improved a we financial traction. and product some and look

negative operations measurements. share, find points from $X.XX was revenue, Adjusted percentage related GAAP with $X.XX discuss the the from Adjusted profit per $X.XX includes Adjusted points was or measured in revenue, improved prior you from XX.X% And to GAAP appendix, our last or Cash a non-GAAP year. measurements down quite few year. percentage EPS in million flow loss. million $XXX,XXX year. $X.X from will last you'll noncash $X.X last XX.X% to Jen that adjusted of minutes. per also up share of million up in a of year. This EBITDA a a operating X bit accounting measured $X.X complexity from X bridge earnings versus

the Starting revenue the a adjusted take rates. cellular QX strong saw row with and family. had and Pacific, currency products. in to the reflect 'XXs technology as the and Americas. of move 'XX look Now EMEA We Asia impact down slowness quarter down XX% in of discontinued at product for in QX X, year revenue shows exchange to and growth we molecular last our revenue adjusted by This reported when table, the was let's X.X% to first Slide was slide roughly flat

from We products last rotate includes compared molecular and of primarily out continue net net our a sold And $X.X to of revenue predominantly through to cellular were which year low-margin distribution. revenue reduction a -- products products. million discontinued

adjusted reported and preclinical our currency up was products. revenue Next, when for discontinued and up product as XX% XX.X%

Asia when sales All down adjusted said, inhalation products, reported and was preclinical and discontinued and and respiratory X.X% for down entire we growth product up on had the had strong portfolio. by inhalation mostly slower X.X% currency were in growth, products. modestly across Americas driven EMEA very products. strong respiratory as

Let's new Slide tell and year. move X. you to about some our products of I introductions can product new exciting this

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

drug Over our the continuum. technologies and the past therapy offerings years, X development we've key to in product target optimized

new into larger CRO continue research the introduce leading and is technologies of for strategy customers the our at adapt penetration product to academic further applications and time, in and technologies Our to biotech. these industrial labs same applications pharma, in

we've more product technologies in introduced X this opportunities growth strategy, year cell-based advanced support testing. our this designed Following to

and for labs We testing in initial preclinical and expect discovery demand pharmacology. in toxicology both and BioPharma regulatory opportunity safety academic expanding

platform. that in Building like position highlight leadership our to relationship today toxicology. This introducing organoid measure high-density well targeted used on neuro research initially signals centric metabolism such mesh are the academic organoid single discovery, in our from multi-electrode as MEAs our I'd organoid. to that MEA and the cardiac applications First, inside array and new first technology is and we're activation, arrays

animal were level enable organoid historically using to full or performed models. applications testing that organ expect systems We

to applications organized multi-well expand single introduced exciting Bioscience industrial Harvard and We leverage platform to MEA from the and is applications. reputation. proof and technologies position and as with discovery industrial the giving to point This platform. and applications, where applications. next CROs designed advanced This research is multi-well to This where a CRO higher-volume applications a industrial leading MEA we well-established we BioPharma opportunities and our higher we of have our MAA research various such CRO penetrate already second-generation drive volume for in multi-well continue We've industrial our vehicle BioPharma leading and for enable in penetration and usage for us academic in another time plan great in to discovery is introduce customers, and and leadership and BioPharma. transition new an a relationship high-density

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

Jennifer Cote

Thank you Jim. very much,

business. X, refer and aligns adjusted in discussions results internally QX a financial we our detail. you to And we include our as non-GAAP reminder, financial information with into Slide jump results manage greater if and about year-to-date to can Let's please use the which

the few our performance, slide our adjusted Our EPS more and the Slide on so adjusted reconciliation corresponding EBITDA, already measures includes results cash details on revenue GAAP XX. a Jim deck gross between you through taken and has margin, flow.

Our FY to compared FY 'XX grew QX in XX% XX% margin to 'XX. gross QX

of cost to in variances. our had to parallel gross global XXXX, process with annual a globally which standard a roll capitalized aligned This aligned time our we During inventory margin. frame me. change inventory slightly common to amortize happened costing quarter, QX excuse We our this unfavorable impact

are revenue But changes year-to-date, compared period-to-period of fluctuate of margins year up gross other inflation, considers our gross will points the outlook quarter. Jim, and by our to margins X described any on based X XX.X% factors. percentage from our the volume mix, process et As -- impact last among this cetera,

last $X.X was let's million million during EBITDA Now year. and QX adjusted expenses compared $X.X operating discuss to EBITDA. Adjusted

reduction operating merit the activities Our XXXX QX, second since expected as expenses of for employee reserved payouts are as half executed not and included we were during the annual for increases result in reduced as Offsetting of well which reductions that a XXXX. restructuring bonus last increases to last fact related cost these primarily compensation the year. we've are

minutes charges satire few resolved EPS discuss our accounting large a to to to to litigation related the part variation Jim take [ph] last the in which that let's is QX year. GAAP the due A in variation year-over-year earlier. alluded of was Now

reflected of is Although charges these in is our this GAAP us, impact EPS. matter behind the

Our impacts. favorably EPS. of approximately at last recorded the impacted This we settlement. a quarter Also stock of QX prior reserves time, our adjusted included the the GAAP XXXX reversal GAAP On that EPS $X.X from part Biostage million. basis, received XXXX results excludes of year's these litigation-related QX originally as

this an QX in of $X.X in reflect to value Beginning we unfavorable charge adjusted resulted year, QX. of this shares in approximately these accounting. This the million of mark-to-market

these EPS unfavorable the swing items year-over-year litigation-related Taken GAAP do our We $X.XX fundamentals in that business. together, to We these not these do per shares ongoing of of these expect our believe reflect are excluded share. create the items see items do an two our numbers so EPS mark-to-market of not our future impact adjusted EPS balance and Again, long remain mark-to-market these on adjustments sheet. from liquidity. and as noncash adjustments impact in are

our GAAP year-over-year items our last the The release and our available wound items as diluted in adjusted EPS. our the per year's press we The presentation. changes down restructuring tables in excluded detail is also share reconciliation Further favorable the impact activities. are of XX-Q to in in included approximately this EPS non-GAAP includes above on above appendix $X.XX and in the

cash our switch to of We from and fourth $X.X million to flow flow solid cash highlight excited operations of I'm flows. quarter gears representing Now quarter, had operating cash on liquidity. this consecutive

million. $X.X pay Our against facility is credit down year-to-date our

additional tooling tools of expect expenditures business new modest equipment of in in as products. certain XXXX, also consolidation investments capital invest half and and capital We invest second the to related during the we in

the against executing solidly are year. start We financial the targets at laid we of out the

back I'm guidance. to our things happy cover And now XXXX to hand Jim to

James Green

All right. you, Jen. Thank

XXXX. summary to a the X to moving for year see look what our and Now on we Slide

are offerings New product expected expanding to and continue growth. introductions new to service fuel

to expect year range, discontinued X approximately of the XXXX, we points million revenue $XXX to reported inclusive product the percentage XXXX. million $XXX in revenue of For compared

XX% We remain strong to margin gross at around level. expect

expanded adjusted approximately ratio paying continue to our by of to the We combined driving expect EBITDA, XX% the strong With to improving in plan we end net range. to debt flows, capital with working EBITDA Xx our reduce expect and XXXX. significantly cash down further margin XX% leverage

us. Finally, We're of I'm last realized are a think industry in by product our the as our look affect we and benefits continuing broader year position we than actions. is gaining encouraged our and of economy I our of we the our XXXX, recent reports were could remainder traction ago launches restructuring a you. of the affecting much that about the stronger mindful said, also forward year's headwinds to of year as Thank That possible company progress. and just start

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

Operator

of Our Knight of Instructions] question Paul KeyBanc. first [Operator the comes line from

Paul Knight

terms in of the changed guidance you out or headwind, on provided of product were to you phasing Jim, what that regarding Is headwind. kind plan of? X% going minus

James Green

Yes. of and the last discontinued out we much expected when discontinued pretty right looked the It's we year on those was products of revenue in what coming that products at revenue the net difference we've in is that this out I is at the to year, seen it's It's around -- exactly the and that coming case. from been X%. be turning think that,

that see, a headwind that's you is So as even predominantly here. that it again, transition. we're can And going replacing through as of,

product new So improved that's much a great transition to the line.

Paul Knight

you DSI the product. can Harvard force, there, of selling the in say they're way And there way part the all of legacy terms the sales Bio

James Green

and pharma of make take them these of research products basically, have historically part a operations. strategy products higher been that really as commercial selecting is would into level and we to the our into adapt sold much for say and which way academic companies I -- discovery we've sense

in So product and I unit we're and a the it. for year the of I $XXX,XXX in know, And historically, maybe that's year. purchase. research offering. you That's its traction of a selling first mean own a ship certainly $X,XXX academic mean, not the $XX,XXX the CRO. now large behavioral recognize mean, with start I here the is which new behavioral you product of the this as last first to they'll as the introduction sale see and capital And product to the new

report force has sales generate you as technologies regulatory it able know, the all agencies. like CROs. clearly, is other seeing -- bring regulatory this regulatory to into has into the the CROs requirements traction behavioral-type so being that And the this the FDA and to able great sells to So our meet to we're anything for to be with the GLP-compliant,

MEA high-density opportunity organoid-type been now. volume, that with start we've industry. for reputation and system So concept we're And a first as one higher leader that's and that brand-new think, large introduced the happening and market that, academic we CROs with industrial first us to But said, very this this in growth can see notice package pharma with again, system. and we coming research going there's call, that we with where the use. into that's in discovery introduced that's the great was, we've of think, real higher-volume And researchers that historically, the I us on always more we I initially have with this parts as you'll multi-well a I things But move and to with to companies. configuration, for combine a then be these selling

the past. full historically at and move the amount don't have know do much you used so level at we the so to more to testing in As use cellular of level now they're can the organs, more and to nearly that models have going organoid been more don't where and animal toward have use you you

right our force So adoption this happening I feel like is the line -- at And doing adopting pretty feel in that. our and strategy. like is we with good certainly, is

Paul Knight

MEA small molecule, for, therapies. appropriate be What's the Jim? applicable gene-based With large technology, cell most for molecule, it and

James Green

through initially, start can to They're say, testing at organoid at there's but through use MEAs about look looking can you past, Well, something that -- a clamp let's to you'd through you're actually instead go testing. particular -- And cell I done the if cells, now in towards they at do. if the then as patch you with something a you of having handful what's where one using historically, you every cluster mean, a been like goes particular -- have a an drug everything going at goes time. liver, of to cardiac move testing, think

Once to those you to and work the QT actually organoids, change if cells heart an a make does how use organoid, heart see for in drug the -- that properly? the proxy have the metabolism and effect on You does Does the you react. you want now sure depolarization have that can the segments. can

on initial So -- to safety pharmacology. that believe, anything in that's things for that level part and that's and of one that core the I toxicology has tested, testing to going eventually used fit that's humans be of

see and will very and are or organoids, and for answers. deal high-volume get So really I to this very testing. is the if big more and if the with much you the faster want we'll not a opposed organoids to as can And testing. other with get know, efficient animal first basically you of of going to be the they then, But from if everything initial start side, neuro we're again, to models only And penetrate as really these version on a to be quickly you our proxy high-volume course, opportunity can it's organs, move expect you way you something much be will to we're involved see that organs. tox to regulatory any this use can with things will development have this, each cardiac. of a cardiac that of first And testing treatment. cancer neuro then that we'd X this And

Paul Knight

long animal do you a it replacement an be How release model of? before would think reduction or

James Green

It's a good question.

you going have of them the or I sets higher if animal be as at to early avoid that in through level you drugs models you other organoid fairly taking there'll quickly some hand, a reduce next quickly. point, that at to that level the think go the to fail. so still ramp-up they're of But theory, that, fail on just cellular likely start it's much animals the testing could

know You right talks want away. to

that's versus have actually find months, to X out you. that for you good much set. get that cycle really lets preclinical full And If regulatory XX in of days drugs a yield the it higher the go can you through through

again, quicker to as So test be think animals can cellular will risk to level. able more be done those be I they'll at having choices. things much the I yields that's far one of not mean, -- higher least testing early be have that as to It at for either and going

Paul Knight

regarding as to that in to ever And last view growth sense then easier? to Jim, M&A you've going on business want you the distribution got have strategy get public well. Is it M&A are And question, the my lines product aligned your on making obviously a sales focus makes is the to situations at we market? that targets your price

James Green

have be a our our balance that thought really That's this our year, a stronger. Yes. clean to sheet much always long-term get that to question. great as be we year expecting we're for is targets targets, going I've to next at year

interest we've to that to into a out position what go to an at see some looking to going better whether portfolio acquisitions. look -- with products We're some has and in really That's also structures the I'm for understand market and pharmacology. It penetration. the got looking with better at thing penetrate, me can licensing areas or customer stage of and acquisitions you real licensing us be the to at that done gave fill systems of be that You at needs that's segments. as also help might just not will bioproduction much able but there use I acquisitions these debt. expanding the I'll earlier or to tox time be for start accustomed this testing collaborations. Same area I whether that's

get they're the reps. they're Again, at on I door, going look I I they always know to respected, in. can understood. where have knock do They're

what leverage I've large relationship companies; CROs, can put let going bring bag place. their and large these in already these with in have what me We I a to pharma that's got

look things areas more to get to to I to to we do that in but in believe I that. what and right understand always I'll afford. in looking QX, We're where this finish we're investment do year, you to like if we're as can target now the better doing end a a sheet we're of certainly we a how make that up as way be start question at to use no balance opportunities the position have in QX, we sense. to going get to the I want that start do So again, or earn this year to and are then much position those

Operator

of Benchmark. line question comes Jackson of Our the from next Bruce

Bruce Jackson

wanted I impact. -- was I discontinued Jim, talk product the to about

the we seen So much to an And far? going year. have so out is over of you off estimate XXXX? put remainder that roll How for how that of the

James Green

Sure.

I we -- a looked view. think gave year-to-date when we

I think that Is it and year year. to million $X.X $X the Jen? of as was that around or we're about a for like point about the expecting right, $X.X something total X.X million million

Jennifer Cote

correct. correct. a pretty we'll roll evenly. about That's quarter $X.X That's It's million and through

James Green

Yes.

fairly So or that this here up will roll year, down each go. linear end so to this off again, another million pretty about of the see bit, quarter, you'll again, like $X.X million quickly And and that, a was little $X.X at quarter.

Bruce Jackson

is one then products? And that of how of is that discontinued is the the from roll business -- there it disproportionate units? both off Is of hitting Okay. the hitting impact both getting a

James Green

through it's Yes, and products part our lower the the are side. of individual I typically of really These would call what strategic sold cell molecular more in predominantly not selling proposition. really distribution, that

there, it's but of predominantly I and on mean, it again, percent probably side, I'm predominantly XX-plus really the So guessing molecular cell CMT.

Bruce Jackson

front. new then, product a question on the follow-up And Okay.

MEA about about drivers for monitoring. in for then quarter, those you bioproduction talked glucose you? still the Last growth So you about Are quarters, the also you talked launch. talked previous and BTX

James Green

Yes.

going I There customers for a us. because new for bioproduction, affect bet very to see make Since be this we think show I will and the real run, new meaningful think and morning about to like number, that a But this up us that talking I've we're coming offering. we're customers I some Boston. got a to because at great we real know is in turn selling that and it later month idea good negligible got new bioproduction And longer We we proposition the haven't. headwinds sure from around. hope we have in be but numbers small all a areas, they're everybody this got We ready certainly, I've they here. adopting we'll incremental are for really the case over, now we've doesn't growth. great deals certainly, headwinds I've seen spaces, You us. new that starting already it, to want showcase are

Operator

comes Research. from of the Christopher question Our Sakai of next line Singular

Unidentified Analyst

Sean [ph] Chris. This is for

more from give What gross Just you see can to bit wanted were XX% drivers? from to XX.X%. first us quarter which margins little on color decreased if a the

James Green

a first -- Yes. guess, couple the saw we I say things. of the of I'd all,

be a multi-well with always couple some First volume. things. inefficiencies We start-up product there's of going you associated always when to other have mix the that and takes of all, a there's puts new launch on a We product new that. going and some there new like did and -- costs be launched to

be I So changes really put this didn't accounting, in rules, some have and looking something that And were areas as things how variance things they sites. is level synchronized like needed purchase around for And the this we've time manufacturing we some that. and has through looked some effect. accounting price long a far we multiple everywhere. the There things company depreciate then also through weren't with mentioned on were identical Jen to way that it as think where you how accounting depreciate so they -- for forward, cost how

the that that. it, that rest that's the like and engineer, Again, an was like an do work realignment I at look hard expert in of look aligning outlook. general, year forward year we with as considered not what our process. finance we margin all And the mean, to some so people going I'm to just that, of the we've for let I effect But on that on gross for there I'm why

Unidentified Analyst

in us happening products, also of what's more the in America weakness On EMEA. molecular you cellular terms North if color in can and give and

James Green

EMEA have and board. in year, Yes. year, especially weak. very operate talking a we're year. picked -- that the EMEA. is across was mean, differently they It's this because U.S. Last strong much side, little up pretty we I in was preclinical EMEA strong. the nicely interesting This really about

Asia a little year. is this strong very slower in was U.S. that.

again, I little I and slowing a look was say, some bit, down something we at Now products. at what said down look I on when and slowed inhalation what slowing the related -- saw

Now because U.S. that a that be with in year had year could we last probably. larger inhalation, the much

So product. -- it in it terms is the does seem to be fairly of narrow

again, again, past just growing growing, world because And it type the with of being again, COVID-related of settle time into that inhalation a still in harder operation. heavy here. it's there line. we're COVID it very things think growing see not ask could kind with that see very about we're well the Europe, one a on of and But limited with really a but level COVID and products of right product questions does last It that quickly. again, and at got some was lot areas introduced we much to in it's But we year, comparison standard be use that's the of kind more of key basically I and China one dealing we product so going purchased COVID, to

Or in? take those I'll this first I them have operator. think at line, guess more questions. we've I cured any the questions I all. any coming ask Do should Well, more we

Operator

sir. No,

James Green

that this the Great. I will call. end then, Well, think

in ends for results today's you presentation. third presentation. I This hope Let and joining 'XX. our this much join quarter you fall us. the for of very end fiscal Thank you'll the thank me us come

Operator

you today's Thank for concludes call. participating. conference This

now may disconnect. You

Harvard Bioscience (HBIO) 8 Aug 232023 Q2 Earnings call transcript