Harvard Bioscience Announces Third Quarter 2020 Financial Results

Disciplined cost management, cash conservation actions drive increased year-over-year operating income and reduced net debt

Holliston, Massachusetts, UNITED STATES

  • Operating margin up year-over-year on GAAP and adjusted basis
  • Revenue improved sequentially with solid CRO/pharma demand and academic labs reopening
  • Generated positive operating cash flow in Q3 with working capital improvements

HOLLISTON, Mass., Nov. 05, 2020 (GLOBE NEWSWIRE) -- Harvard Bioscience, Inc. (Nasdaq: HBIO) (the “Company”) today announced financial results for the three and nine months ended September 30, 2020.

Jim Green, Chairman and CEO said, “Since anticipating academic labs around the world would likely experience pandemic-related shutdowns early in the year, we moved aggressively to manage costs. These actions, combined with restructuring programs, reduced overall cost of operations delivering year-over-year adjusted operating income and margin growth.”

Green concluded, “The continued growth from CRO/pharma customers, reopening of academic labs and our lower cost of operations, are expected to drive solid operating margins throughout the rest of 2020 and allow for targeted commercial and product investments to drive revenue growth. We expect adjusted operating margins for the second half of 2020 to be in the mid to upper teens.”

Quarterly Financial Results Summary
  Q3'20 Q2'20 Q3'19
Revenue $24.0 million $23.3 million $27.4 million
Operating Income (Loss) (GAAP) $0.2 million $0.6 million $(1.4) million
Adjusted Operating Income $3.6 million $4.1 million $3.3 million
Adjusted Operating Margin 14.8% 17.7% 12.1%
Loss per diluted share (GAAP) ($0.03) ($0.04) ($0.07)
Diluted EPS (GAAP) $0.04 $0.05 $0.04
Adjusted Diluted EPS* $41.6 million $42.1 million $48.8 million
* Debt outstanding less cash and cash equivalents    

Please refer to the exhibits below for a reconciliation of certain non-GAAP to GAAP financial measures, including operating income, net income and loss, and diluted earnings per share. 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 8:00 a.m. Eastern Time. You can access the live conference call by dialing the following phone numbers: toll-free 1 (877) 303-7611 or international 1 (970) 315-0445 and referencing the conference ID# 9438549.

The conference call will be simultaneously webcast and can be accessed through the Harvard Bioscience website. A slide presentation that will be referenced during the webcast will be posted to our Investor Relations website shortly before the webcast begins. To listen to the webcast, log on to the webcast at: http://investor.harvardbioscience.com/ and click on the Earnings Call icon.

Use of Non-GAAP Financial Information

In this press release, we have included non-GAAP financial information including adjusted operating income, adjusted net income, and adjusted diluted 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 primarily resulting from purchase accounting or events that we do not believe are related to 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. They also exclude the tax impact of the reconciling items. This non-GAAP financial information approximates information used by our management to internally evaluate the operating results of the Company. Tabular reconciliations of our adjusted operating income, adjusted net income (loss), and adjusted earnings (loss) per diluted share 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 clinical 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 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, 2019, and in our Quarterly Reports on Form 10-Q issued in 2020 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.

For investor inquiries, please contact Michael A. Rossi, Chief Financial Officer at (508) 893-8999.

 Consolidated Statements of Operations
 (unaudited, in thousands, except per share data)
     Three Months Ended  
     September 30, 2020 June 30, 2020 September 30, 2019  
  Revenues$24,037  $23,308  $27,418   
  Cost of revenues 10,542   9,452   12,440   
   Gross profit 13,495   13,856   12,439   
  Operating expenses:          
   Sales and marketing expenses 4,588   4,279   5,294   
   General and administrative expenses  5,399   5,670   6,604   
   Research and development expenses  1,949   1,897   2,564   
   Amortization of intangible assets 1,377   1,454   1,422   
   Impairment charges -   -   460   
  Total operating expenses 13,313   13,300   16,344   
  Operating income (loss) 182   556   (1,365)  
  Other expense:          
   Interest expense, net (1,205)  (1,233)  (1,348)  
   Other (expense) income, net (392)  (191)  39   
  Other expense (1,597)  (1,424)  (1,309)  
  Loss before income taxes (1,415)  (868)  (2,674)  
  Income tax provision (benefit) (317)  713   (54)  
  Net loss$(1,098) $(1,581) $(2,620)  
  Basic and diluted loss per share$(0.03) $(0.04) $(0.07)  
  Weighted average common shares:          
   Basic and diluted 38,920   38,468   38,036   

  Consolidated Statements of Operations  
  (unaudited, in thousands, except per share data)  
     Nine Months Ended  
     September 30, 2020 September 30, 2019  
  Revenues$71,116  $85,204   
  Cost of revenues 30,783   38,116   
   Gross profit 40,333   47,088   
  Operating expenses:       
   Sales and marketing expenses  14,446   17,370   
   General and administrative expenses  17,828   17,215   
   Research and development expenses  6,336   8,070   
   Amortization of intangible assets  4,258   4,289   
   Impairment charges  -   1,401   
  Total operating expenses 42,868   48,345   
  Operating loss (2,535)  (1,257)  
  Other expense:       
   Interest expense, net (3,737)  (4,129)  
   Other expense, net (472)  (214)  
  Other expense (4,209)  (4,343)  
  Loss before income taxes (6,744)  (5,600)  
  Income tax provision (benefit) 451   (363)  
  Net loss$(7,195) $(5,237)  
  Basic and diluted loss per share$(0.19) $(0.14)  
  Weighted average common shares:       
   Basic and diluted 38,540   37,764   

 Condensed Consolidated Balance Sheets 
 (unaudited, in thousands) 
   September 30, 2020 December 31, 2019  
  Cash and cash equivalents$2,806  $8,335   
  Accounts receivables 13,879   20,704   
  Inventories 22,689   22,061   
  Other current assets 4,146   2,472   
      Total current assets 43,520   53,572   
  Property, plant and equipment 4,309   4,776   
  Goodwill and other intangibles 91,962   95,786   
  Other long-term assets 9,823   10,736   
  Total assets$149,614  $164,870   
  Liabilities and Stockholders' Equity         
  Current portion, long-term debt$2,807  $6,900   
  Other current liabilities 18,441   18,412   
      Total current liabilities 21,248   25,312   
  Long-term debt 40,669   46,917   
  Other long-term liabilities 10,530   10,947   
  Stockholders’ equity 77,167   81,694   
  Total liabilities and stockholders’ equity$149,614  $164,870   

 Condensed Consolidated Statements of Cash Flows 
 (unaudited, in thousands)  
    Nine Months Ended  
   September 30, 2020 September 30, 2019  
  Cash flows from operating activities:       
  Net loss$(7,195) $(5,237)  
  Changes in operating assets and liabilities 5,360   960   
  Other adjustments to operating cash flows 8,676   10,102   
  Net cash provided by operating activities 6,841   5,825   
  Cash flows from investing activities:       
  Additions to property, plant and equipment (1,088)  (778)  
  Disposition of business -   1,020   
  Other investing activities -   (15)  
  Net cash (used in) provided by investing activities (1,088)  227   
  Cash flows from financing activities:       
  Proceeds from borrowings 9,615   4,300   
  Repayments of debt (20,251)  (11,103)  
  Other financing activities (688)  (392)  
  Net cash used in financing activities (11,324)  (7,195)  
  Effect of exchange rate changes on cash 42   (185)  
  Decrease in cash and cash equivalents (5,529)  (1,328)  
  Cash and cash equivalents at the beginning of period 8,335   8,173   
  Cash and cash equivalents at the end of period$2,806  $6,845   

 Reconciliation of GAAP to Non-GAAP Financial Measures (unaudited) 
 (in thousands, except per share data) 
   Three Months Ended   
   September 30,  June, 30 September 30,   
    2020   2020   2019   
  GAAP operating income (loss)$182  $556  $(1,365)  
  Stock-based compensation expense 1,079   769   987   
  Severance, restructuring and transformation costs 876   1,287   1,759   
  Acquired intangible assets amortization and impairments 1,377   1,455   1,882   
  Non-cash expense - acquisition accounting 51   53   59   
  Adjusted operating income$3,565  $4,120  $3,322   
  GAAP operating margin 0.8%  2.4%  -5.0%  
  Adjusted operating margin 14.8%  17.7%  12.1%  
  GAAP net loss$(1,098) $(1,581) $(2,620)  
  Stock-based compensation expense 1,079   769   987   
  Severance, restructuring and transformation costs 876   1,287   1,759   
  Acquired intangible assets amortization and impairments 1,377   1,455   1,882   
  Non-cash expense - acquisition accounting 51   53   59   
  Income taxes (A) (823)  103   (341)  
  Adjusted net income$1,462  $2,086  $1,726   
  GAAP loss per diluted share$(0.03) $(0.04) $(0.07)  
  Adjusted items after tax per share assuming dilution 0.07   0.09   0.11   
  Adjusted earnings per diluted share$0.04  $0.05  $0.04   
  Weighted average diluted common shares:          
  GAAP 38,920   38,468   38,036   
  Adjusted 40,307   39,593   38,603   
  (A)    Income taxes includes the tax effect of the adjustments to GAAP results.  

 Reconciliation of GAAP to Non-GAAP Financial Measures (unaudited) 
 (in thousands, except per share data) 
   Nine Months Ended   
   September 30,  September 30,   
    2020   2019   
  GAAP operating (loss) income$(2,535) $(1,257)  
  Stock-based compensation expense 2,641   2,193   
  Severance, restructuring and transformation costs 3,635   2,391   
  Acquired intangible assets amortization and impairments 4,258   5,690   
  Non-cash expense - acquisition accounting 159   239   
  Adjusted operating income$8,158  $9,256   
  GAAP operating margin  -3.6%  -1.5%  
  Adjusted operating margin  11.5%  10.9%  
  GAAP net loss$(7,195) $(5,237)  
  Stock-based compensation expense 2,641   2,193   
  Severance, restructuring and transformation costs 3,635   2,391   
  Acquired intangible assets amortization and impairments 4,258   5,690   
  Non-cash expense - acquisition accounting 159   239   
  Income taxes (A) (435)  (1,294)  
  Adjusted net income$3,063  $3,982   
  GAAP loss per diluted share $(0.19) $(0.14)  
  Adjusted items after tax per share assuming dilution 0.27   0.24   
  Adjusted earnings per diluted share$0.08  $0.10   
  Weighted average diluted common shares:       
  GAAP 38,540   37,764   
  Adjusted 39,824   38,251   
  (A)    Income taxes includes the tax effect of the adjustments to GAAP results.