HBIO - Earnings call transcript Q1 2024 | Harvard Bioscience, Inc.

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Operator

Good day, and thank you for standing by. Welcome to the Q1 2024 Harvard Bioscience Inc. 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 Reporting.

David Sirois

good and Josh, you, morning, everyone. Thank for Earnings Conference you joining the XXXX Quarter First Bioscience Call. Harvard Thank Leading the Jennifer call the today will be Jim and Officer. Executive Financial Board, Green, Chief Officer; Chief and Cote, President Chairman of . In conjunction have presentation the that will that Investors remarks call, section referenced our website posted provided at during investor.harvardbioscience.com. a be is today's with recorded we to of our future historical financial that provisions made Litigation are the future in facts, are including XXXX. statements that of to statements Act note Reform and Please events of statements discussion or performance, forward-looking pursuant Securities are expectations or today's of the made Private harbor safe

may are Securities and to obligation revise factors company's statements. today. implied. results These to the Actual release described those as filings other or statements with on made materially Please statements today's publicly and risks assumes in forward-looking expressed and refer Bioscience no are update the and forward-looking of management's uncertainties or or differ Exchange from press other Harvard Commission. any disclosures

the be supplement non-GAAP turn During substitute. are call also provided to non-GAAP financial over in non-GAAP information can which condition Jim. measures, considered to evaluating reference results. measures as and now Reconciliations operations to useful should please are I will in release. today's not a and of These ahead. go will GAAP the financial be the to earnings our certain intended company's Jim, press call, GAAP management financial related measures

James Green

everybody. Hello, David. Thanks,

we look move quarter. for at year. start presentation and of take Let's Well, had a the to tough the and start the X highlights Slide a ahead go as expected, to the and

while with cost strong the us say at targets. gross it However, growth same commercial our margins, with position I investments meeting time earnings previously for that our communicated combined to underpin reductions, will

QX I'll tough and in in QX. comparison product significantly and shipment some in that expected, as sales some year a $X slowing through we're total, example, slower had saw record X still high Europe of exacerbated issues. prior An it revenue QX. further seeing alone continued by out Asia China in to Pacific mention, also delays a Also, pushing supply chain QX, million

Now and revenue. in Revenue we EBITDA a On and million, million at loss operating $X.X revenue, of the an the million. basis, $X.X let's of came million XX.X%. last or an basis, margin look $X.X at measured at million go ahead On adjusted adjusted operating profit numbers. remained $XX.X quarter from year. Gross down strong GAAP X.X% X.X% of $X.X recorded or measured in

to Slide move the X, by for Let's at regions. revenue the looking product quarter look family and the at

products revenue Americas. primarily preclinical COVID-related So cell up molecular down starting demand the was with with Revenue were was products. X.X% the advanced Cellular reported, slow on of respiratory cell-based in modestly advanced reduced as systems. testing

hopeful start slow longer around research resolution uncertainty academic of saw be recent resolution us. We're with that this that but is the NIH in grants the some to to sales that much believe the for situation last to budget We approve, that of to more solve longer was continuing we congressional quarter. will due seem taken

Biotech, technologies. but still are our to for represent spending, biotech-related CROs tight tailwind strengths we long-term we're raises capital on potential encouraged keeping see and a improving. Pharma see

on down about were a currency and a Europe. reported headwind. CRO companies. to systems on that both revenue X% Preclinical includes was Overall, pharma tight for budgets on Moving EMEA XX% down

situation was hit for Ukraine. by The spending spending some on tight occurring Cellular research. impacted government rates economic in and is slowness academic environment that's European the higher molecular being the by government saw interest also

Preclinical in the revenue and XX% customers was continued which companies. this research year. news on down QX slower continued and molecular pharma equipment as should was half funding. awaited academic Asia continued CRO products spend Now levels, saw on Pacific. government Cellular spending moving headwinds down revenue academic slow annualize capital to of China by reported second on

continuing recent lead weakness to we're announced for We hopeful QX, in package into second conditions will the us stimulus that China Chinese though improved the entering here. see the half market

in Let's and product Slide opportunities. at X to new same designed discuss to time, our while the base move some strengthen launches business, high-growth investing new

for focus with latest the and introductions Toxicology. Society Our product started Society Neuroscience showcased at commercialization for the new

represents our XX% target strengthen we total which of primary in deliver bread-and-butter base Our to better-than-market focus which revenue, nearly to is business, growth.

introduced housing We for our We shared safety toxicology family invest to shared our leadership offering implantables and applications. continue of SoHo multi-animal expand housing in telemetry telemetry to new environments. position our to

Kenema time, business. the expanding the At test latest [ VivaMARS, our neuropharmacology base single testing on same GLP-compliant that system. expands high-capacity ] Adding by system addressable we introduced offering onto high-capacity integrates builds our data software neuropharmacology market testing and our a to behavior the menu

large is CROs, during testing, both institutions around world, and which extremely behavior. and acquired safety platform, manages pools telemetry by for academic now and data the leading in large used biopharma The processes now tox the

management discovery. in By we inhalation up analyze our technologies to opens data. same the technologies new emerging leading opportunities and to the on combining At position applications and cellular use these research AI continue study and molecular learning time, to a platform, single data for machine system fortify

well base for our macro products acid-related above revenue high provide of X%. organized service also designed products amino new expanding and our about And array exciting up high-growth opportunities. around electrode increase commercialize new This Bioproduction driving offerings time, and we're and business. same make to and field the we're Electroporation XX% recurring consumables. at our growth, year, to revenue advanced exciting opportunities

dedicated such, with and commercial emerging to cellular bioproduction advance we've applications and to science established As application team organoids.

family around amino also acid acid systems, which for the clinical bioproduction now laboratories CGMP configurations our We're targeted significant system for recently amino in offering our analyzer today now drive We opportunity operation recurring consumable from systems. This a an is to revenue Bioproduction is world. electrofusion BTX well-known AAA also of in us. leading clinical of applications. announced compliant electroporation adapted is

high Finally, and at in leadership mesh Neuroscience. Society growth historical to both we're CRO. the for platform applications volume the in drive We cellular organoid MEA launched leveraging biopharma our position advanced

applications. showcased safety at and which lead organoid mesh in vitro toxicology the in neuro applications. discovery, analysis We're then high-volume for where and testing research compound cardiac for see for to Society to strong potential we Toxicology, applications to and and also a biopharma We interest we expect excited see

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

Jennifer Cote

Thank you, Jim.

detail. Let's jump into our financial in greater results QX

to X. you Slide please refer If can

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

the I'll in includes Our taken detail. slide out appendix. during so reconciliation our results Jim revenue financial through a financial QX, through the I more we pulled other which deck GAAP will has you the performance, adjusted corresponding out call of non-GAAP. specifically some between take activity measures the as in metrics you and key

to in margin. target but last of So -- despite this lower a a Jim This margin this $XX please reported the I'm share, XX.X%, was are QX top is year's to please margin our slide. of QX absorption QX. year XX.X%, and with as we to in excited maintain our mentioned, which basis, QX, million, XX% long-term gross was revenue in alignment our record middle performance gross refer keep year's the our slightly that was last pleased margin behind mind of that revenue gross on

expect graph XX% can continue on If please to year. the top We the the margin slide. right for we refer to

reduced down adjusted from decrease QX year. during EBITDA QX flow $X.X lower $X.X was revenue gross was adjusted EBITDA margin dollars. to the this million Our driver million primary in for and last of The

the our to strategy the opportunities continue and launched are as to in in SoHo, and academic our with CROs and applications that mentioned additional We our newly earlier. such VivaMARS of products, pharmaceutical starting invest in opportunities and companies. partners penetrate bioproduction organoids market, with key and ahead starting These growth Jim commercialization growth

expenses structure in to to labor We ongoing growth. April, action reduce early support our an our investments and implemented continue overall our to and cost our in force improve manage

run realize of $X from overall We these savings expect beginning million rate second to quarter. annual in the approximately actions

stay and $XXX,XXX the stay left, our continue and to the bottom with was to improvements operational action Move drive associated on targets. talk financial we'll of Severance about where achievement -- focused and we our adjusted reported and per per earnings Slide earnings and diluted XX. loss adjusted The about share. share highlighted share diluted loss differences in are GAAP tables per between on reconciliation the

also QX a of But drivers stock the GAAP some XXXX continue the viewed tax and drivers to amortization, when basis. XXXX be I'd like with expense. out point additional depreciation QX for between primary of on difference typical unusual income compensation, to

the with of an or per related $XXX,XXX in securities receipt These of credits include unclaimed wrapping retention or of $X.XX employee with an a $XXX,XXX share, up commissions estimated $X.X $X.XX property paid impact connection an loss equity or of audit loss to $X.XX. on and million

QX, in had year the $XXX,XXX product of sale gain a Last we line on $X.XX. approximately of or discontinued a

QX XXXX the GAAP on unusual QX and you left. XXXX items which our of these a for amount a QX versus $X.XX to swing So see total results,

So has lower the the is When adjusted you liquidity. at removed primary Switching which a our EPS, gears driver lower cash look revenue. lot been to gross of and the dollars the unusual from margin activity, flow in EPS. adjusted

million of middle had row, If operations you from to during to compared QX, in the XXXX. $X.X we bottom QX flow refer cash million $X.X

net employers evolving associated benefit and commissions of balance allowed are credit In regulations the other million credit current CARES the February is by that provided was due guidance, included a staff IRS that we encourage COVID-XX. were our orders on cash government the a liabilities by $X.X retention of our And in sheet. of to impacted the employee This Act. the XXXX, retention received for with these by to

million and able debt to position We and were debt our QX in $X.X down million QX XXXX. compared to sold HRGN is our of QX We also by a investment in during paid $X $XXX,XXX. portion down unwind net

further will non-GAAP to discussed, be available the and items the reconciliation details appendix the on and in the presentation press in included release our As our are also in and above XX-Q.

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

James Green

Jen. you, Thank

the Take to at summary Slide year. look Moving a the X. full on

We was in be China, is difficult to We strong especially roughly see true This XXXX prior XXXX. comparison. in the XXXX. the versus expect a QX year year and QX full flat to significantly up where in first half weakness

year growth last half this versus the of second first of year. second half both the expect and We half

expect improve going We half. product commercializations meaningful to new growth funding second the and expect from we into China

in last the to margin the year. continue continue EBITDA to improving we to last mid-teens, adjusted up margins gross XX% from XX% up We from XX% expect range, and expect year,

you. Thank

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

Operator

Paul comes first KeyBanc. from with Instructions] Knight question Our [Operator

Paul Knight

here growth in the Jim, And portion on Do the from you with you the do will quarter, last overall, -- year? are what that's XXXX? 'XX you in of think in electroporation? biggest the revenue where introduced think of be products driver

James Green

been look and that mean part electroporation put key what we -- Great expect business, question. we've meaningfully And we're chart I of for out being the start us. our -- the be it of base and breaking on we're to in growth here that that meaningful bioproduction there. expanding to if that drive area. a one together expecting you on shows It's and I certainly, the certainly growth are slides, to business

And market starting also growth -- starting business. to And of XX% Electroporation the XX%. business. or of it's be is that as base into than and you production almost then bioproduction, around include that's to range bioproduction there, type we're and the our sell which -- know, now AAA applications. our We're expect better to represents product, XX% we to in at in somewhere

in growth be neighborhood be So up there, over and we at the of somewhere the driver going that's to for that our us. will XX-plus percent years. major be to business. we're expect looking of it's It of And probably -- -- ramping a

in in some year, we'll of first Maybe kind or region. this X out the So of it's point growth see there.

overall X, up As of overall business. points X we the kind growth look kind into of adding to of to that ramp for growth that we X, expect next year, to

that we're looking that's of the kind at. So number

because you to have introduce So long it's of sale to a bioproduction it. you bit a have

gene have takes make capability You in the you also production are build out to with bit facility, expanding time. to and to little for But go new the their That help that meantime, have of we're it coming certification the processes. it now technologies them a product applicable generation into cell with therapy.

us. So long-term that's a driver growth And again, winning for nice very opportunity also, see we've talked about growth and us then a really market large as also with area that's for us. for a we organoids, great

Paul Knight

your think you exposure gene do market? therapy it Is is to What XX%? the and cell XX%,

James Green

we many discovery for in gene the actual candidate migrate researchers using to come to why been and say. type good of folks a with product lot see easier the here. for our of start companies, think to That's gene much applications us use academic that to into therapy play they've cell for a side pretty pharma as the of and development hard It's production for be on, cell it's an nettle . we and Early therapy.

how of companies far this our that can much there's that hard do a small number As product kind is as transfection. to product, of it with say have of it's a only

well good so with focused so So but side, I companies, tend to well good we and brand in a a those into with applications because to think transfer we we're more have we're the get they as to known academic be biotechs and the the production very large position academics how and able develop. the larger depend will volume on capability start to it it that really and

Operator

comes question Company. next Bruce Jackson Our with from the Benchmark

Bruce Jackson

that So out is the us of second Can what from quarter, a quarter. generally the idea either X got are expectations you order over revenue? shifted second of give the rough or for but kind quarter first your down flat you've that first quarter

James Green

say, third. don't I at and stronger Yes. the second you historically, typically are I quarter the the splits. look would environment typically give But fourth I the than quarter business, and don't -- the level first the of when

starting can and frame. typically to be to quarters. had I the year-end funding you due to had don't was environmental into back expended And say we're that yet across we're then always the that year time kind government and change I -- get that know budgets during yet natural of you change that that the the needed year with academic the

we the be we headwind things throughout expect second is see we expect things There'll half But would sequential half, the -- certainly, expect the to we improving by to where see see some the second China. see improvement. adding because up then from year here. And to really

We tide. the going introducing really moves the they to started take second on. expect product year or same time, last here the quarter. introductions, that over to reversing these At the new so. into time That be hedge the We

into more So to start we that, half. we as though, the shipments second we expect meaningfully really shipping revenue for get as

last even think the I -- we'll at So of basically again, in mostly I driven looking would we're to going year, really second some see kind total of But year. the to flat forward. improvement see We sequentially half. certainly, would expect level

Bruce Jackson

capture with Okay. an potential contracts things of on stimulus? organization they And then are can How eye they you've that. new confident like and got an some that this China, that's keeping

James Green

just depressed the the very we're things been few China holding approval the in university research we didn't they Again, like happening, And and do known really of were forward and to Asia do. we had that researchers feel Well, well very there. purchasing. really what full off with budget companies just the and Academic -- they often, there's been because has that the approval what that is was kind Pacific. go has part saw they

the announcements So X-year see X-year came Chinese had XX% they in with the think about with that, budget period. we expect growth out that over indicated should March, a to way the that plan the back overall clear government

some So level if where are. nothing we're to certainly of certainly, of else, we annualizing we'll -- off see growth

orders. really But not? question get ready are starting pop to good faster is explore place The and be, now real it will the back their news does people to or

we well, for last part that's So a QX at be of of business that growth will the as just but annualize a unfortunate, through the we've least If we will for we be significant QX. as into headwind it and going us. seen China is think like annualizes, to quarters couple get here

Operator

from Our with comes Singular next question Frank DiLorenzo Research.

Harrison Schrage

it second on in track also I with growth on second because funding. make event? QX year. like Can following potentially mean, in next growth or coming for half talked about year. it I getting easy back QX you this you half China back Would wondering quarters? multiple of that talked about sustained of looks that be the was Just the and be in the might you

James Green

we're we picking the Yes. things mean, see going second to expect -- into I up half.

see QX, shipments QX, headwind segment. to a So comparable a we that quarters basis been moving expect now. revenue by up back into Again, on that's a for few

And a of wanted types -- we and on we're areas it. that and support was the waiting primarily now areas academic in clear it announcement, of were and they -- big these they And research budgetary. -- clearly again, to they was part identified

So we're see to that. happy pretty

should that working start go ahead should start on. So they're -- that work they're for and free preparing the now customers do the here to the feel -- to

Frank DiLorenzo

Okay.

recurring fiscal Regarding anything of or like percentage a for you do that? target have revenue, a goal 'XX, the our revenues?

James Green

long-term Yes. business. a mean, we're I I able be double-digit clearly, this expecting to expect have -- to be well, growth growth, our

underpin strong So a how growth or growth to take 'XX. toward we're that XX% in expect the to pathway of I getting can into nice half, being coming kind be vector should I would that second targeting the better with

we And should of see then the into dovetail to again, XXXX. really right back second up. that half things really is So 'XX pick where starting

Frank DiLorenzo

Okay.

granularity on the and Just you one the rationale the areas us we're little give other thing. it? Could behind cost a more that in initiatives,

James Green

areas like area my to taking take need fund work garner are that the expanding you have can spend some organoid I commercialization We're interesting, is -- that should to do then growth bioproduction. you new you have the you we're if with I on. and always Yes. of a certain philosophy that and in activities efficiencies these because really it into

I'm business. you the delivering for same but to the pay also, EBITDA at time, for that when number the committed So

and bit So a have as we can there's to be find find out platform those we it's we see do to we be if that need like start but where advantage both. to investments. gets the some continue of things margin, spend in the of an to to like as improvement role, I a make able of order areas savings to And to gross opportunity looking the to in reduce better -- feel tight built really take are really we we

Operator

now call [Operator Instructions] the Green like further I would turn remarks. over any at I'm not for questions And to to closing showing time. Jim any this back

James Green

I you with This you'll presentation. here. today's everybody. back thanks, us sticking QX next for appreciate us this August Well, ends year. hope join We of in

this ends you. So presentation. Have Thank the Thanks. great a day.

Operator

Thank you. This your conference. for Thank you concludes the participation.

You may disconnect. now

Harvard Bioscience (HBIO) 7 May 242024 Q1 Earnings call transcript