• Harvard Bioscience Announces Third Quarter 2022 Financial Results

    Source: Nasdaq GlobeNewswire / 08 Nov 2022 16:01:01   America/New_York

    HOLLISTON, Mass., Nov. 08, 2022 (GLOBE NEWSWIRE) -- Harvard Bioscience, Inc. (Nasdaq: HBIO) (the “Company”) today announced financial results for the third quarter ended September 30, 2022.

    Jim Green, Chairman and CEO, said, "Impacted by a challenging summer, our third quarter revenues were $26.9 million, down 9% from the same quarter prior year. Growth of 6% in our cellular/molecular product revenues were more than offset by a 17% reduction in sales of our higher margin pre-clinical products and a negative currency impact of approximately $1.0 million. Gross margin was down on lower revenue as well as higher costs of labor and materials, in addition to inventory charges related to the discontinuation of certain non-strategic products as a result of our previously communicated portfolio optimization. Operating margin was down from last year mainly on lower sales and lower gross margin.”

    Green continued, “In spite of headwinds in the quarter, we expect sequential revenue growth and an improved product mix in Q4 resulting in our gross margins returning to first half levels. Q4 revenue is expected to be in the $30 million dollar range, with adjusted operating margin in the range of 14% to 15%.

    We’re very pleased to see our continued investment in research and development deliver three new product introductions. First, our new Ultrospec 7500 is a premium spectrophotometer well known in the academic laboratories now also targeted to the pharma/CRO space. Second is our exclusive continuous glucose monitoring telemetry implants driving new demand in academic, pharma, and government labs focused on ever increasing diabetes.  Lastly, we’re excited to see a large Q4 order for our BTX electroporation system using our unique Flat Pack Reaction Chamber to a top pharma company for use in bioproduction. Furthering these initial inroads, we see an emerging value proposition for our BTX system, which is often used in pharmaceutical research and development to create the initial strains of a therapeutic, to be used more broadly in production.”

    Green concluded, “Looking to the future, we expect to complete our portfolio optimization and related cost actions in Q4, with anticipated annual improvements of approximately $4.0 million in gross margin and operating expense reductions of approximately $1.5 million as we enter 2023. This leaning activity, combined with improved pricing and exciting new product introductions, is expected to drive new growth and make 2023 the year the company becomes the profitable growth-oriented platform we envisioned.”

    Quarterly Financial Results Summary Q3'22 Q3'21 
            
    Revenues $      26.9million $      29.7million 
            
    Operating (Loss) Income (GAAP) $      (3.8)million $        0.5million 
    Adjusted Operating Income $        0.7million $        3.9million 
    Operating Margin (GAAP) (14.0)% 1.8% 
    Adjusted Operating Margin 2.6% 13.3% 
            
    Diluted Loss Per Share (GAAP) $    (0.08)  $    (0.00)  
    Diluted Adjusted (Loss) Earnings Per Share $    (0.01)  $      0.06  
            
    Net Debt* $      45.0million $      40.9million 
            
    * Debt outstanding less cash and cash equivalents     

    For more details on performance for the three and nine months ended September 30, 2022, a slide presentation that will be referenced during the webcast referenced below will be posted to our Investor Relations website shortly before the webcast begins.

    Please refer to the exhibits below for a reconciliation of certain non-GAAP to GAAP financial measures, including gross margin, operating income, net income and loss, diluted earnings per share and adjusted EBITDA. Please see “Use of Non-GAAP Financial Information” for additional information regarding our use of such adjusted financial information.

    Webcast and Conference Call Details

    Harvard Bioscience will be hosting a conference call and webcast today at 4:30 p.m. Eastern Time. 

    Covering Analysts who want to join the call and ask a question must register here. Once registered, you will receive the dial-in numbers and a unique PIN number

    Participants who want to join the audio-only webcast should go to our events and presentations on the investor website here

    Use of Non-GAAP Financial Information

    In this press release, we have included non-GAAP financial information including adjusted operating income, adjusted operating margin, and adjusted earnings per share. We believe that this non-GAAP financial information provides investors with an enhanced understanding of the underlying operations of the business. For the periods presented, these non-GAAP financial measures have excluded certain expenses and income resulting from items that we do not believe are representative of the underlying operations of the business, such as amortization of intangibles related to acquisitions, costs related to acquisition, disposition and integration initiatives, impairment charges, severance, restructuring and other business transformation expenses, and stock-based compensation expense, and litigation settlement expenses. They also exclude the tax impact of the reconciling items. Management believes that this non-GAAP financial information is important in comparing current results with prior period results and is useful to investors and financial analysts in assessing the Company’s operating performance. Any non-GAAP financial statement information included herein is accompanied by a reconciliation to the nearest corresponding GAAP measure which are included as exhibits below in this press release.

    The non-GAAP financial information provided in this press release should be considered in addition to, not as a substitute for, the financial information provided and presented in accordance with GAAP and may be different than other companies’ non-GAAP financial information.

    About Harvard Bioscience

    Harvard Bioscience is a leading developer, manufacturer and seller of technologies, products and services that enable fundamental research, discovery, and pre-clinical testing for drug development. Our customers range from renowned academic institutions and government laboratories, to the world’s leading pharmaceutical, biotechnology and contract research organizations. With operations in North America, Europe, and China, we sell through a combination of direct and distribution channels to customers around the world.

    For more information, please visit our website at www.harvardbioscience.com.

    Forward-Looking Statements

    This press release contains forward-looking statements within the meaning of the federal securities laws, including the Private Securities Litigation Reform Act of 1995. You can identify these statements by our use of such words as "will," "guidance," "objectives," "optimistic," "potential," "future," "expects," "plans," "estimates," "continue," "drive," "strategy," "potential," "potentially," "growth," "long-term," "projects," "projected," "intends," "believes," "goals," "sees," "seek," "develop" "possible" "new," "emerging," "opportunity," "pursue" and similar expressions that do not relate to historical matters. Forward-looking statements in this press release or that may be made during our conference call may include, but are not limited to, statements or inferences about the Company's or management's beliefs or expectations, the Company's anticipated future revenues and earnings, the strength of the Company's market position and business model, industry outlook, the impact of the COVID-19 pandemic and related supply chain disruptions on the Company’s business, the Company's business strategy, the positioning of the Company for growth, the market demand and opportunity for the Company's current products, or products it is developing or intends to develop, and the Company's plans, objectives and intentions that are not historical facts. These statements involve known and unknown risks, uncertainties and other factors that may cause the Company's actual results, performance, or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Investors should note that many factors, as more fully described under the caption “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021, and in our other filings with the Securities and Exchange Commission and as otherwise enumerated herein or therein may cause the Company's actual results to differ materially from those in the forward-looking statements. The forward-looking statements in this press release are qualified by these risk factors. The Company's results may also be affected by factors of which the Company is not currently aware. The Company may not update these forward-looking statements, even though its situation may change in the future, unless it has obligations under the federal securities laws to update and disclose material developments related to previously disclosed information.

    Investor Inquiries:

    Michael Rossi
    Chief Financial Officer
    (508)893-8999
    mrossi@harvardbioscience.com

                        
    HARVARD BIOSCIENCE, INC.
    Consolidated Statements of Operations
    (unaudited, in thousands, except per share data)
                      
      Three Months Ended
     Nine Months Ended
     
      September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021 
                      
     Revenues$26,922  $29,663  $84,908  $85,849  
     Cost of revenues 14,750   13,355   39,922   37,757  
     Gross profit 12,172   16,308   44,986   48,092  
                      
     Operating expenses:                
     Sales and marketing expenses 5,819   6,183   19,093   17,299  
     General and administrative expenses 6,324   5,458   18,630   18,190  
     Research and development expenses 2,763   2,660   9,480   7,848  
     Amortization of intangible assets 1,572   1,459   4,492   4,388  
     Settlement of litigation, net (544)  -   (233)  -  
     Total operating expenses 15,934   15,760   51,462   47,725  
                      
     Operating (loss) income (3,762)  548   (6,476)  367  
                      
     Other expense:                
     Interest expense (749)  (373)  (1,648)  (1,161) 
     Other expense, net (179)  (130)  (163)  (477) 
     Total other expense (928)  (503)  (1,811)  (1,638) 
                      
     (Loss) income before income taxes (4,690)  45   (8,287)  (1,271) 
     Income tax (benefit) expense (1,285)  215   (437)  (22) 
     Net loss$(3,405) $(170) $(7,850) $(1,249) 
                      
     Loss per common share:                
     Basic and diluted$(0.08) $(0.00) $(0.19) $(0.03) 
                      
     Weighted-average common shares:                
     Basic and diluted 41,637   40,754   41,353   40,202  
                      


            
    HARVARD BIOSCIENCE, INC.
    Condensed Consolidated Balance Sheets
    (unaudited, in thousands)
            
       September 30, 2022  December 31, 2021 
     Assets      
     Cash and cash equivalents$5,144 $7,821 
     Accounts receivables 15,023  21,834 
     Inventories 26,116  27,587 
     Other current assets 5,535  4,341 
     Total current assets 51,818  61,583 
     Property, plant and equipment 3,555  3,415 
     Goodwill and other intangibles 77,315  85,074 
     Other long-term assets 14,325  12,272 
     Total assets$147,013 $162,344 
            
     Liabilities and Stockholders' Equity      
     Current portion, long-term debt$2,720 $3,235 
     Other current liabilities 18,640  22,081 
     Total current liabilities 21,360  25,316 
     Long-term debt, net 46,534  45,095 
     Other long-term liabilities 7,140  8,532 
     Stockholders’ equity 71,979  83,401 
     Total liabilities and stockholders’ equity$147,013 $162,344 
            


            
    HARVARD BIOSCIENCE, INC.
    Condensed Consolidated Statements of Cash Flows
    (unaudited, in thousands)
              
      Nine Months Ended
     
       September 30, 2022  September 30, 2021 
     Cash flows from operating activities:        
     Net loss$(7,850) $(1,249) 
     Adjustments to operating cash flows 5,165   8,547  
     Changes in operating assets and liabilities 1,158   (6,153) 
     Net cash (used in) provided by operating activities (1,527)  1,145  
              
     Cash flows from investing activities:        
     Additions to property, plant and equipment (1,355)  (837) 
     Additions to intangible assets -   (150) 
     Net cash used in investing activities (1,355)  (987) 
              
     Cash flows from financing activities:        
     Borrowing from revolving line of credit 7,800   2,500  
     Repayment of revolving line of credit (4,650)  (4,000) 
     Repayment of term debt (2,436)  (1,500) 
     Payments of debt issuance costs -   (102) 
     Proceeds from exercise of stock options and stock purchases 346   2,909  
     Taxes related to net share settlement of equity awards (1,167)  (2,653) 
     Net cash used in financing activities (107)  (2,846) 
              
     Effect of exchange rate changes on cash 312   (81) 
     Decrease in cash and cash equivalents (2,677)  (2,769) 
     Cash and cash equivalents at the beginning of period 7,821   8,317  
     Cash and cash equivalents at the end of period$5,144  $5,548  
              


     
    HARVARD BIOSCIENCE, INC.
    Reconciliation of GAAP to Non-GAAP Financial Measures (unaudited)
    Three Months Ended September 30, 2022
    (in thousands, except per share data)
     
               Settlement,
           
               Restructuring,
           
         Stock-Based
     Acquired Assets
     Transformation
     Income
        
     Statement of OperationsGAAP
     Compensation
     Amortization
     & Other
     Taxes
     ADJUSTED
     
                        
     Revenues$26,922  -  -  -  -  $26,922  
     Cost of revenues14,750  -  (7) (1,441) -  13,302  
     Gross profit12,172  -  7  1,441  -  13,620  
                        
     Gross Margin45.2%              50.6%  
                        
     Operating expenses:                  
     Sales and marketing expenses5,819  (147) (1) 120  -  5,791  
     General and administrative expenses6,324  (919) (8) (942) -  4,455  
     Research and development expenses2,763  (73) (8) (10) -  2,672  
     Amortization of intangible assets1,572  -  (1,572) -  -  -  
     Settlement of litigation, net(544) -  -  544  -  -  
     Total operating expenses15,934  (1,139) (1,589) (288) -  12,918  
                        
     Operating Expenses - % of Revenues59.2%              48.0%  
                        
     Operating (loss) income(3,762) 1,139  1,596  1,729  -  702  
                        
     Operating Margin-14.0%              2.6%  
                        
     Other expense:                  
     Interest expense(749) -  -  -  -  (749) 
     Other expense, net(179) -  -  (80) -  (259) 
     Total other expense(928) -  -  (80) -  (1,008) 
                        
     Loss before income taxes(4,690) 1,139  1,596  1,649  -  (306) 
     Income tax benefit(1,285) -  -  -  1,244  (41) 
     Net loss$(3,405) $1,139  $1,596  $1,649  $(1,244) $(265) 
                        
     Loss per share$(0.08)             $(0.01) 
                        
     Diluted weighted average common shares41,637              41,637  
                        


     
    HARVARD BIOSCIENCE, INC.
    Reconciliation of GAAP to Non-GAAP Financial Measures (unaudited)
    Three Months Ended September 30, 2021
    (in thousands, except per share data)
                      
         Stock-Based   Acquired Assets  Restructuring,  Income    
     Statement of Operations
    GAAP Compensation Amortization Transformation Taxes ADJUSTED 
                        
     Revenues$29,663  -  -  -  -  $29,663  
     Cost of revenues13,355  (32) (15) (94) -  13,214  
     Gross profit16,308  32  15  94  -  16,449  
                        
     Gross Margin
    55.0%             55.5% 
                        
     Operating expenses:                  
     Sales and marketing expenses6,183  (149) (2) (261) -  5,771  
     General and administrative expenses5,458  (790) (16) (426) -  4,226  
     Research and development expenses2,660  (33) (10) (113) -  2,504  
     Amortization of intangible assets1,459  -  (1,459) -  -  -  
     Total operating expenses15,760  (972) (1,487) (800) -  12,501  
                        
     Operating Expenses - % of Revenues53.1%             42.1% 
                        
     Operating income548  1,004  1,502  894  -  3,948  
                        
     Operating Margin1.8%             13.3% 
                        
     Other expense:                  
     Interest expense(373) -  -  -  -  (373) 
     Other expense, net(130) -  -  -  -  (130) 
     Total other expense(503) -  -  -  -  (503) 
                        
     Income before income taxes45  1,004  1,502  894  -  3,445  
     Income tax expense215  -  -  -  580  795  
     Net (loss) income$(170) $1,004  $1,502  $894  $(580) $2,650  
                        
                        
     (Loss) income per share$(0.00)             $0.06  
                        
     Diluted weighted average common shares40,754              43,500  
                        


     
    HARVARD BIOSCIENCE, INC.
    Reconciliation of GAAP to Non-GAAP Financial Measures (unaudited)
    Nine Months Ended September 30, 2022
    (in thousands, except per share data)
     
               Settlement,
           
               Restructuring,
           
         Stock-Based
     Acquired Assets
     Transformation
     Income
        
     Statement of Operations
    GAAP
     Compensation
     Amortization
     & Other
     Taxes
     ADJUSTED
     
                        
     Revenues$84,908  -  -  -  -  $84,908  
     Cost of revenues39,922  (88) (27) (1,598) -  38,209  
     Gross profit44,986  88  27  1,598  -  46,699  
                        
     Gross Margin
    53.0%             55.0% 
                        
     Operating expenses:                  
     Sales and marketing expenses19,093  (493) (4) (250) -  18,346  
     General and administrative expenses18,630  (2,633) (38) (2,861) -  13,098  
     Research and development expenses9,480  (187) (27) (137) -  9,129  
     Amortization of intangible assets4,492  -  (4,492) -  -  -  
     Settlement of litigation, net(233) -  -  233  -  -  
     Total operating expenses51,462  (3,313) (4,561) (3,015) -  40,573  
                        
     Operating Expenses - % of Revenues60.6%             47.8% 
                        
     Operating (loss) income(6,476) 3,401  4,588  4,613  -  6,126  
                        
     Operating Margin-7.6%              7.2% 
                        
     Other expense:                  
     Interest expense(1,648) -  -  -  -  (1,648) 
     Other expense, net(163) -  -  (80) -  (243) 
     Total other expense(1,811) -  -  (80) -  (1,891) 
                        
     (Loss) income before income taxes(8,287) 3,401  4,588  4,533  -  4,235  
     Income tax (benefit) expense(437) -  -  -  1,409  972  
     Net (loss) income$(7,850) $3,401  $4,588  $4,533  $(1,409) $3,263  
                        
     (Loss) income per share$(0.19)             $0.08  
                        
     Diluted weighted average common shares41,353              42,665  
                        


                                          
    HARVARD BIOSCIENCE, INC.
    Reconciliation of GAAP to Non-GAAP Financial Measures (unaudited)
    Nine Months Ended September 30, 2021
    (in thousands, except per share data)
                        
         Stock-Based
     Acquired Assets
     Restructuring,
     Income
        
     Statement of Operations
    GAAP
     Compensation
     Amortization
     Transformation
     Taxes
     ADJUSTED
     
                        
     Revenues$85,849  -  -  -  -  $85,849  
     Cost of revenues37,757  (83) (51) (247) -  37,376  
     Gross profit48,092  83  51  247  -  48,473  
                        
     Gross Margin56.0%             56.5% 
                        
     Operating expenses:                  
     Sales and marketing expenses17,299  (373) (6) (375) -  16,545  
     General and administrative expenses18,190  (2,593) (49) (2,380) -  13,168  
     Research and development expenses7,848  (87) (32) (408) -  7,321  
     Amortization of intangible assets4,388  -  (4,388) -  -  -  
     Total operating expenses47,725  (3,053) (4,475) (3,163) -  37,034  
                        
     Operating Expenses - % of Revenues55.6%             43.1% 
                        
     Operating income367  3,136  4,526  3,410  -  11,439  
                        
     Operating Margin0.4%             13.3% 
                        
     Other expense:                  
     Interest expense(1,161) -  -  -  -  (1,161) 
     Other expense, net(477) -  -  -  -  (477) 
     Total other expense(1,638) -  -  -  -  (1,638) 
                        
     (Loss) income before income taxes(1,271) 3,136  4,526  3,410  -  9,801  
     Income tax (benefit) expense(22) -  -  -  2,365  2,343  
     Net (loss) income$(1,249) $3,136  $4,526  $3,410  $(2,365) $7,458  
                        
                        
     (Loss) income per share$(0.03)             $0.17  
                        
     Diluted weighted average common shares40,202              43,113  
                        


     
    HARVARD BIOSCIENCE, INC.
    Reconciliation of GAAP to Non-GAAP Financial Measures (unaudited)
    (in thousands)
     
      Three Months Ended
     Nine Months Ended
     
      September 30, 2022
     September 30, 2021
     September 30, 2022
     September 30, 2021
     
     Operating income$(3,762) $548 $(6,476) $367 
     Stock-based compensation expense 1,139   1,004  3,401   3,136 
     Acquired asset amortization 1,596   1,502  4,588   4,526 
     Settlements, restructuring and transformation costs 1,729   894  4,613   3,410 
     Adjusted operating income 702   3,948  6,126   11,439 
     Depreciation expense 364   420  1,122   1,311 
     Adjusted EBITDA$1,066  $4,368 $7,248  $12,750 
                    

     


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