HBIO - Earnings call 3 2023 | Harvard Bioscience, Inc.

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Operator

Thank you for standing by, and welcome to the Harvard Biosciences Third Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Dave Sirois, Director of SEC Reportings. Please go ahead, sir.

David Sirois

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

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

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

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

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

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

be X our earnings replay as under a between found and difference well The GAAP These can & Overview, results Events website this in and our documents on call Presentations. Investor of release outlined non-GAAP today's presentation. are the as

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

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

James Green

David. Hello, you, Thank everybody.

at of the the by start look presentation a take quarter. moving highlights Let's the and for to Slide X

pleased to in North I'm that say see growth America. I'll First, strong

by similar lower did tools in and life impacted China companies, COVID, post to were we numerous demand we Pacific. However, cycle see -- Asia

the period. a compared of to down net was saw includes of Going year to X% basis. net $XXX,XXX. $X.X revenue Revenue numbers. the the million, prior products, of underlying FX products revenue on $XX.X effect that's an core This FX million from for effect roughly quarter discontinued revenue and down a as-reported last year both was QX our positive Adjusting discontinued X.X%. for

'XX. the to or of of period $XX.X FY margin same XX% Gross million XX% in improved up revenue, from

comparable from or million an X.X% year. that or period However, inventory write-down last points also operating X.X% of points. nearly by percentage or million EBITDA this from the percentage X prior FY measured $XXX,XXX Adjusted revenue, $X.X impacted Adjusted profit improvement revenue, of up included year, up $X.X 'XX X about of improved X%. million $X.X prior

versus the share earnings last $X.XX from million measurements. $XXX,XXX improvement a In GAAP up you'll $X.XX share, last measured GAAP a EPS measurements $X.XX $X.XX a bridge year. from per non-GAAP was loss from was or operations last appendix, per Adjusted an loss the from flow to year. Cash positive year. adjusted loss, find $X.X an

X.X% with by of next by the of discontinued and at the revenue X.X% slide, Starting included net reported regional X, product I improved the Slide view. Revenue as to an reduction Americas. move let's look quarter, with up and Now family products. was

tech growth software somewhat discontinued, about revenue Ponemah underlying respiratory considering held our back had Pre-clinical though enterprise needs core and by Telemetry for by post-COVID in core XX%. our So grew lower strong products.

cell-based in products some primarily slowness down were and products Molecular low-margin Cellular discontinued testing systems. on

of X.X%. also EMEA Overall, revenue but was had reduction and FX FX from discontinued, for included reported as a EMEA. X.X% Adjusting discontinued net impact and products, X.X%. was to Moving down X.X% a EMEA down roughly positive

products and was where XX%. saw down China QX to discontinued X.X%. a in FX China respiratory and in modest revenue Asia significantly the twofold. impacts moving demand pre-clinical big including negative reported a The for drop during COVID effect COVID products research. had purchased Pre-clinical primary years, Now were had Pacific. of approximately XXXX,

However, our core software to enterprise Telemetry held close and Ponemah flat.

you had measurable in demand new Society to products of presentation. products bit and Slide during Cellular would X a move we'll our a week introductions Molecular showing this Conference. next saw again, CMT some and in showcasing about the of research. at be I strong We drop where, for Neurology academic COVID, tell the exciting new that little China

years, As development therapy X and in offerings you to drug product our know, last technologies continuum. over optimized the key we've the target

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

number we a these talk Following X a showcasing you bit here. of I'll next, strategy, and be the particular little will about to offerings, in

and safety These and Microelectrode segments are highlighting that toxicology. we promising many Organoids cultures for we'll small represent Array new academic or organs First, our are pharmacology targeted area new which for a a as discovery tissue MEAs well be proxy are research and use Mesh growth such for as Platform. heart. Mesh in as believe organoids, brain can

today, for week's MEA well to presenting at the early excited Mesh technology signal measurement build single Microelectrode within We're results on heavily used new from research high-density our brain recognized using novel leadership be Society Neurology. organoid. organoids is enabling next in Arrays precise this Our on position

customer VivaMARS Ponemah required as multi-animal last formal system specifically adapted initial systems. highlight We platform is our monitoring monitoring high-capacity new leverages model to clearance. we'll expertise. as April. behavior VivaMARS order our our testing announced Panlab vivo regulatory high-volume VivaMARS for industry-leading and The software first preclinical well our in activity Next, reporting

our capacity our times and developed operating CRO customer support pharma We're leverage we're to mind year. expertise in an meets to needs is this increase their later business across their and and of This revenue and our customer efficiencies, was in excellent a expand test family. more It Bioscience able VivaMARS importantly, needs lowering all to CRO with how growth. also first Harvard reducing example system costs shipment to expecting cycle of

we'll be Finally, small showcasing our SoHo model telemetry platform. new animal

shared is concurrent industry-leading such software more our environment. and extends Telemetry in with expanded on a multi-model SoHo based our and capabilities Ponemah platform leadership natural enterprise as position housing testing

cycle As for drive and lowering is revenue with expand to challenging to customers' shorter of VivaMARS, their meet growth. capacity needs platform costs and designed this test test times business operating more

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

Jennifer Cote

Thank Jim. you,

Let's jump detail. Slide you can And financial please QX our into results to greater refer X. in if

our business. to we our or results, discussion As non-GAAP reported a to GAAP adjusted also internally financial results, which manage reminder, use about we addition include information the align in with

adjusted I'll deck between detail. metrics revenue our some and GAAP measures slide you take reconciliation of includes corresponding a you Our financial through our XX. performance, already Slide our results more in on other the financial through and has taken Jim key

an FY of reminder gross factors that top our XX.X% capitalizing to inventory our to a during If in mentioned impact was like global margin process expect results approximately 'XX. our X overhead middle you QX I gross that reported out quarters. our QX had of the can on change of to point we for quarter point. during the slide, we compared would complete that to quarter, QX. unfavorable margin roll-off of This impacted X refer We last costs. margin that aligned percentage do gross this A basis, the to XX.X% middle for the please the

last discontinuance which X underlying of inventory by in last about our of low impacts, nonstrategic products, year both related percentage Taking margin Additionally, impacted points. year, a over improvement charge unfavorably as the the gross gross by prior improvement substantial an margins $X.X was seeing of our of X% are million account to year, margin about with quarter. gross into QX unusually we result these

discuss to now EBITDA. where graph top the refer expenses and Please right adjusted we'll operating

to last adjusted million $X million was year. during Our QX EBITDA compared $X.X

were during compared operating last reported to the reduced Our slightly expenses quarter QX.

reflecting our continue employees. accruals our managing this merit with and We operating year's OpEx increases for overall bonus expenses

and improvements $X.XX flow-through bottom due QX where $X.XX a Please per a basis, loss expenses. On loss to adjusted dollars $X.XX our refer of loss strong we diluted reported quarter combined improved an basis, year. left and QX diluted a per compared earnings to operating of share both earnings of adjusted On loss $X.XX. share. the we to loss stronger per reported show saw to We will lower from of share margin our the of of for last the showed a in

together for which adjustments When reserves of and results during related included foreign to forecasted jurisdictions, approximately Income looking state to which unfavorable valuation the our reported adjusted our at were excluded million, this normal annualization expense in impact charge write-offs, taxable EPS by $X.XX. our from are a our reporting. adjusting to inventory $X restructuring our quarter provisions recorded The tax entity. and resulted quarter QX, provision income of and our an the last

credit the flow if in Please flow another us Now refer operations $XXX,XXX pay solid we row, compared bottom million for our highlights facility the and middle on quarter, QX. our enabled to is improvements to gears quarter liquidity. during graph cash achieve cash where to to pay to the bringing with $X.X to to of end from reduction debt year $X.X switch our the as position we show last prior the year. $XX an This in down compared at $X.X down goals million additional quarter third million. million. These against debt year-to-date us targeted Net down

in have items release equipment CapEx investments, on to XX-Q the available lean and XXXX. we our as included our press tooling tables and presentation. in typically and new for Further non-GAAP do product appendix expect capital support details but in above to run introductions see on We reconciliation primarily we to this the our investments in in enter are increases

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

James Green

Thank you, Jen.

on to our moving Now summary Slide X.

We at and prior prior X to for reported as discontinued take points year Let's look full to revenue compared see full XXXX. roughly year. compared of what XXXX products a year. be to percentage expect year we includes now flat the that

range. EBITDA margin XX% XX% gross the XX% strong in and adjusted range, remain expect we to We in the expect margins to

our and FY support improved to from in pay expect EBITDA XXXX. cash significant debt flow operations We down

Xx end of We continue to leverage the reduce by approximately net to the XXXX. level

expanding business I continues bright offerings note to future. core and growth our strong, it's that team this important on introductions exciting and a to service and think focus overall, product new remains new fuel to

you. Thank

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

Operator

question first from our . the of Benchmark. line And from Instructions] Jackson [Operator comes Bruce

Bruce Jackson

do you expansion forward? sustainable the those . on nice see we how are could I job. any think going in wanted further First gross margins, XXXX? know to And

James Green

question. Bruce, distance of great spit this -- overall said We've confident we going this toward of that been as move get we're and year. to operations. our We're XX% on We year, that region. roughly would we cost think that focusing have within and that

that going and expect to going where how a even of not are said, modifications better, some we a negative effect. we accounting we're structures as had made So we forward, but today, be that to has we've bit just Jen various handle

a spite a of strong at looking gross really from still that perspective. that, wasn't were that margin all in quarter XX-plus And we percent in revenue

XX% look or we at forward, going to and our look better. has always been we goal as certainly, forward, into as get QX So

confident I'm be So gross that better we're number or year, XX% on going the side. into of going margin next that kind at to

Bruce Jackson

China Okay. any give underlying academic question the for research the on on going side. business? sense research from to the little back? is bounce that, follow-up the demand China. a that can And it us you maybe to back Great. particular that just degree color then a at us in point? region you And of coming is give X-part of products the And Can secondly, has And exposure a respiratory

James Green

That's they point, where Pacific Yes, bought entire the I probably, demand than they saw that's And taking at may a at pretty COVID our place. that this was they given product a the believe the great for respiratory going be products is that product. forward, probably without line, strong may big more and point, during Asia moving respiratory the but level of to it's see on measurable of part at amount slightly for this new China -- we in need. They question. We're lower more a We not great us. COVID research would phase.

to the were potentially and that So again, highly COVID, across we testing starting these that products electroporation we China. things really 'XX, during go think when the were there's it's And level into line. fact I it And limited purchased of back of quarter, especially kind our us to in that we products those last products saw then lot primary and in general transfection and is X XXXX, QX slowing held likely to that, seeing quarter targeted to and the because a CMT started this respiratory in to really, Asia at be is in a likely, products. products believe like higher many like things of things cell-based finding solutions of --

in and research. -- was -- So academic go of much that in did

government to I be going good and been a the certainly above to it's to small far what fast again, get to looking think like nothing COVID But is I do limited think some -- certainly about. news of stable just it able academic we'll think feel research, of associated we and that. is -- normalized will methods of base that at to wouldn't get for your start on post to headwinds going number is, number, has been that hearing move that. -- it to new It's forward I guess us fairly if with But outlook they've and these been numbers or So back else, how primary grow We're a as to second least COVID question, anybody's X we've the funding the as it. off these to it's good products. China there at back bet for a I really

Operator

comes from Singular question Frank the And Research. next line our from of DiLorenzo

Frank DiLorenzo

And of on the offerings, you interest visibility any space you newer some forward? Following that follow-on. on with talk you seeing question. a the have China elsewhere? product Could I And about organoid going your for might and have be then if

James Green

products. timing biggest Society Neurology. core our Well, very For I that's think us our with key show a business of SfN, with Perfect for number

research there. telemetry kind academic that's something for of been is Our organoids products, the lot a going that we're offerings this heavily pretty level It's a the while. research in certain an to industrial get pretty We've few We're expanding investing to a brewing years academic press. product, been of something than product. just use last into more over been but turn real

level worldwide, need the North testing Asia. for -- environment. with get lot a kind And the behavioral requirements VivaMARS So then I product, that with Every place are think capacity, required be we're you for high to does any to already both of lot a the to in product in going America, and a the needs it introduction that of have that's to there. learn need in product high and and getting new vivo GLP Europe of interest you of to this volume, formal

just is said the the about about as VivaMARS. very And very shipping We'll developing really see already first We've excited first we're publicly, that, here and be growth for we a in month. next So year. see will move We that sold customer quickly. as opportunity unit one. next That's this up for as that lot system. $XXX,XXX China. include of into we we one really lining us also one And to

Frank DiLorenzo

And on increase to total. products going your a also, Okay. the little forward, those efforts that into is of Could and as to offerings new as if total you're for also going quarter, your new revenues the in the a in you and and about recurring of that that of product percentage larger areas, were bit there going increases recurring a your offerings percentage revenues thoughts talk percentage potential revenues a XXXX, space? also see related

James Green

that's Yes, great question. a

they are with not revenue the product over recurring tend was and publicized measured think had to come recurring sell revenues right And but products identifying well very and new it offerings where first revenues. known see we new consumables, to But side. wasn't you services, you're designed capital found started area purchases, coming out where even it on clearly, that an it -- the had or recurring out, on. were because we're we that's well on We they new much I and wasn't a think I service coming here. the just very XX% that are

higher us an from or for I XX%, opportunity better. So mid-XXs to well see here into number that maybe the move

But technology new for my be is target. us. NPI of to coming a a would products lifeblood and is this out, each service longer-term a a with -- consumable That recurring and like component these NPI there is the and company critical it. of

the continue really spite can that's costs our company, company a that in you issues the we've grow expecting it a hard been go that keep technology so to really and development. that's why all needed that's we've put to we product see down So investment for had of working to a is new through, where to

in that there front this of year right Society SfN with see you You'll at Neurology. for

to fairly -- suspect keep be expect I And investing We business these to products. have substantial by driven of new our in these new percentage I areas. certainly a

Frank DiLorenzo

question. acquisition Is maybe the overall, just but of whether There's buying a weakness in forward sense space? make opportunity, in there as, to a company for opportunities to starting the that guess going space China, or opportunity smaller starting maybe just it's are players. one of there, of in might see as been something you're a lines a you're smaller partnering you product if some in opportunities, or maybe private bigger that far some not product Kind line. an lot just light see other that weakness, out of the I weakness using not

James Green

about, public this our type work that is going or question. very getting It together. make And we're the until look, certainly a finish we changes great structural year getting act feel like us our finished we took I interested very in. act was that and significant we're a that's to our I M&A something Yes, while, It's not together.

look we even are there. But places to starting that kind more where our at new been of some opportunities areas. have importantly, what -- out we of all, make investment of So the are accelerate the would to first where

clip those heavily when at business, going I what accelerate. the going of to expect like software, nice look we're new and and though. the drive in the things cell doing build call at on growing there, what ability that And We're are those continue new we to farm you look definitely needs to to telemetry, meet with advancements our those with want bioproduction you to some And invest Ponemah base things the business, and we businesses, a of at to continue areas, really see that. organoids the the core market, to that's or advanced at in we're above of are areas that X testing the

would in at maybe to that there. opportunity would there's be sense. might here, And we make looking structure might those get available harder us capital to, as being we'll X those activity X help kind the to the all better year where end definitely, either QX, potentially and we our at least given with what some get that little maybe our accelerate shape be areas But of areas. portfolio or acquisition a even for to to licensing, invest. have we there's that So be at If much can't in we the looking just environment we teaming a of feel there acceleration some opportunities be some there's something

Operator

program. further of hand question-and-answer session the [Operator to any I'd does Green the for Instructions] Jim like back This to remarks. program today's conclude

James Green

We very early year-end join the and Thank joining year ends will for much. us. Jonathan. some in for time Thank March This our be presentation. new you'll us the frame. you Thank the ends you today's in This all time February, report, that presentation. hope you,

Operator

participation today's Thank you, conclude conference. the for ladies your gentlemen, and This does program. in

You disconnect. may now Good day.

Harvard Bioscience (HBIO) 7 Nov 232023 Q3 Earnings call transcript