Harvard Bioscience Announces Second Quarter 2022 Financial Results

Harvard Bioscience Announces Second Quarter 2022 Financial Results




Harvard Bioscience Announces Second Quarter 2022 Financial Results

HOLLISTON, Mass., Aug. 03, 2022 (GLOBE NEWSWIRE) — Harvard Bioscience, Inc. (Nasdaq: HBIO) (the “Company”) today announced financial results for the second quarter ended June 30, 2022.

Jim Green, Chairman and CEO, said, “Our second quarter revenues were essentially flat compared to the prior year quarter as growth in our cellular/molecular product revenues were offset by reductions in pre-clinical revenues and an unfavorable foreign currency impact. Adjusted operating income for Q2 was lower than prior year due primarily to incremental investments in R&D and increased marketing expenses. Gross margin improved to 58% from 57%. On a GAAP basis, operating income for Q2 includes a $4.9 million benefit recorded associated with resolution of litigation related to a former subsidiary. Cash payments by the company associated with the settlement of the litigation were completed in Q2.”

Green continued, “Subsequent to Q2, we completed identification of non-strategic products to discontinue, with shipments for affected products expected to cease in the next few quarters. This portfolio optimization and other cost actions taken is expected to result in a reduction of approximately 5% of the global workforce. We expect these changes to support our strategic long-term growth targets, and to underpin our targets for gross margin and operating margin expansion.”

Green concluded, “Looking at the full year 2022, considering significant currency impacts, volatility in Europe and continued Covid related impacts in China, we are taking a more conservative view on revenue and expect 1-to-5% reported revenue growth and adjusted operating margin for the year of 13-to-14%.”

Quarterly Financial Results Summary   Q2’22   Q2’21  
               
Revenues   $ 29.2   million   $ 29.2   million  
               
Operating Income (GAAP)   $ 4.0   million   $ 0.1   million  
Adjusted Operating Income   $ 3.1   million   $ 4.3   million  
Operating Margin (GAAP)     13.7   %     0.2   %  
Adjusted Operating Margin     10.5   %     14.6   %  
               
Diluted Income (Loss) Per Share (GAAP)   $ 0.06       $ (0.01 )    
Diluted Adjusted Earnings Per Share   $ 0.05       $ 0.06      
               
Net Debt*   $ 45.2   million   $ 38.2   million  
               
* Debt outstanding less cash and cash equivalents          
               

For more details on performance for the three and six months ended June 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 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 8:00 a.m. Eastern Time. 

Participants 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, adjusted net income, adjusted diluted earnings per share, and adjusted EBITDA. 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. Any non-GAAP financial statement information included herein are 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.

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

                              Exhibit 1    
  HARVARD BIOSCIENCE, INC.  
  Consolidated Statements of Operations  
  (unaudited, in thousands, except per share data)  
                                   
            Three Months Ended   Six Months Ended    
            June 30, 2022     June 30, 2021     June 30, 2022     June 30, 2021    
                                   
    Revenues $ 29,208     $ 29,197     $ 57,986     $ 56,186      
    Cost of revenues   12,571       12,844       25,172       24,402      
      Gross profit   16,637       16,353       32,814       31,784      
                                   
    Operating expenses:                          
      Sales and marketing expenses   6,587       5,730       13,274       11,116      
      General and administrative expenses   5,981       6,399       12,306       12,732      
      Research and development expenses   3,497       2,701       6,717       5,188      
      Amortization of intangible assets   1,454       1,465       2,920       2,929      
      Settlement of litigation, net   (4,880 )           311            
    Total operating expenses   12,639       16,295       35,528       31,965      
                                   
    Operating income (loss)   3,998       58       (2,714 )     (181 )    
                                   
    Other (expense) income:                          
      Interest expense   (515 )     (377 )     (899 )     (788 )    
      Other (expense) income, net   (62 )     (313 )     16       (347 )    
    Total other expense   (577 )     (690 )     (883 )     (1,135 )    
                                   
    Income (loss) before income taxes   3,421       (632 )     (3,597 )     (1,316 )    
    Income tax expense (benefit)   986       (222 )     848       (237 )    
    Net income (loss) $ 2,435     $ (410 )   $ (4,445 )   $ (1,079 )    
                                   
    Income (loss) per common share:                          
      Basic $ 0.06     $ (0.01 )   $ (0.11 )   $ (0.03 )    
      Diluted   $ 0.06     $ (0.01 )   $ (0.11 )   $ (0.03 )    
    Weighted-average common shares:                          
      Basic   41,304       40,152       41,256       39,960      
      Diluted     42,561       40,152       41,256       39,960      
                                   
              Exhibit 2    
  HARVARD BIOSCIENCE, INC.  
  Condensed Consolidated Balance Sheets  
  (unaudited, in thousands)  
                   
        June 30, 2022     December 31, 2021    
    Assets              
    Cash and cash equivalents $ 4,259   $ 7,821    
    Accounts receivables   17,847     21,834    
    Inventories   29,336     27,587    
    Other current assets   5,056     4,341    
    Total current assets   56,498     61,583    
    Property, plant and equipment   3,394     3,415    
    Goodwill and other intangibles   80,451     85,074    
    Other long-term assets   14,930     12,272    
    Total assets $ 155,273   $ 162,344    
                   
    Liabilities and Stockholders’ Equity              
    Current portion, long-term debt $ 2,720   $ 3,235    
    Other current liabilities   20,634     22,081    
    Total current liabilities   23,354     25,316    
    Long-term debt, net   45,764     45,095    
    Other long-term liabilities   8,651     8,532    
    Stockholders’ equity   77,504     83,401    
    Total liabilities and stockholders’ equity $ 155,273   $ 162,344    
                   
              Exhibit 3    
  HARVARD BIOSCIENCE, INC.  
  Condensed Consolidated Statements of Cash Flows  
  (unaudited, in thousands)  
                   
      Six Months Ended    
        June 30, 2022     June 30, 2021    
    Cash flows from operating activities:              
    Net loss $ (4,445 )   $ (1,079 )    
    Adjustments to operating cash flows   3,220       5,789      
    Changes in operating assets and liabilities   (951 )     (2,905 )    
    Net cash (used in) provided by operating activities   (2,176 )     1,805      
                   
    Cash flows from investing activities:              
    Additions to property, plant and equipment   (913 )     (357 )    
    Additions to intangible assets         (150 )    
    Net cash used in investing activities   (913 )     (507 )    
                   
    Cash flows from financing activities:              
    Borrowing from revolving line of credit   5,300            
    Repayment of revolving line of credit   (3,600 )     (4,000 )    
    Repayment of term debt   (1,686 )     (1,000 )    
    Payments of debt issuance costs         (102 )    
    Proceeds from exercise of stock options and stock purchases   282       2,759      
    Taxes related to net share settlement of equity awards   (780 )     (990 )    
    Net cash used in financing activities   (484 )     (3,333 )    
                   
    Effect of exchange rate changes on cash   11       (45 )    
    Decrease in cash and cash equivalents   (3,562 )     (2,080 )    
    Cash and cash equivalents at the beginning of period   7,821       8,317      
    Cash and cash equivalents at the end of period $ 4,259     $ 6,237      
                   
                        Exhibit 4  
  HARVARD BIOSCIENCE, INC.  
  Reconciliation of GAAP to Non-GAAP Financial Measures (unaudited)  
  Three Months Ended June 30, 2022  
  (in thousands, except per share data)  
     
                  Settlement,          
          Stock-Based   Acquired Assets   Restructuring,   Income      
    Statement of Operations GAAP   Compensation
  Amortization   Transformation   Taxes   ADJUSTED  
                             
    Revenues $ 29,208                             $ 29,208    
    Cost of revenues   12,571       (52 )     (9 )     (82 )           12,428    
    Gross profit   16,637       52       9       82             16,780    
                             
    Gross Margin   57.0 %                     57.5 %  
                             
    Operating expenses:                        
    Sales and marketing expenses   6,587       (192 )     (1 )     (255 )           6,139    
    General and administrative expenses   5,981       (923 )     (15 )     (825 )           4,218    
    Research and development expenses   3,497       (72 )     (9 )     (50 )           3,366    
    Amortization of intangible assets   1,454             (1,454 )                    
    Settlement of litigation, net   (4,880 )                 4,880                
    Total operating expenses   12,639       (1,187 )     (1,479 )     3,750             13,723    
                             
    Operating Expenses – % of Revenues   43.3 %                     47.0 %  
                             
    Operating income (loss)   3,998       1,239       1,488       (3,668 )           3,057    
                             
    Operating Margin   13.7 %                     10.5 %  
                             
    Other expense:                        
    Interest expense   (515 )                             (515 )  
    Other expense, net   (62 )                             (62 )  
    Total other expense   (577 )                             (577 )  
                             
    Income before income taxes   3,421       1,239       1,488       (3,668 )           2,480    
    Income tax expense (benefit)   986                         (517 )     469    
    Net income (loss) $ 2,435     $ 1,239     $ 1,488     $ (3,668 )   $ 517     $ 2,011    
                             
    Income per share $ 0.06                     $ 0.05    
                             
    Diluted weighted average common shares   41,304                       42,561    
                             
                        Exhibit 4.1  
  HARVARD BIOSCIENCE, INC.  
  Reconciliation of GAAP to Non-GAAP Financial Measures (unaudited)  
  Three Months Ended June 30, 2021  
  (in thousands, except per share data)  
                             
          Stock-Based   Acquired Assets   Restructuring,   Income      
    Statement of Operations GAAP   Compensation   Amortization   Transformation   Taxes   ADJUSTED  
                             
    Revenues $ 29,197                             $ 29,197    
    Cost of revenues   12,844       (31 )     (17 )     (100 )           12,696    
    Gross profit   16,353       31       17       100             16,501    
                             
    Gross Margin   56.0 %                     56.5 %  
                             
    Operating expenses:                        
    Sales and marketing expenses   5,730       (131 )     (2 )     (73 )           5,524    
    General and administrative expenses   6,399       (969 )     (16 )     (1,108 )           4,306    
    Research and development expenses   2,701       (33 )     (11 )     (249 )           2,408    
    Amortization of intangible assets   1,465             (1,465 )                    
    Total operating expenses   16,295       (1,133 )     (1,494 )     (1,430 )           12,238    
                             
    Operating Expenses – % of Revenues   55.8 %                     41.9 %  
                             
    Operating income   58       1,164       1,511       1,530             4,263    
                             
    Operating Margin   0.2 %                     14.6 %  
                             
    Other expense:                        
    Interest expense   (377 )                             (377 )  
    Other expense, net   (313 )                             (313 )  
    Total other expense   (690 )                             (690 )  
                             
    (Loss) income before income taxes   (632 )     1,164       1,511       1,530             3,573    
    Income tax (benefit) expense   (222 )                       1,040       818    
    Net (loss) income $ (410 )   $ 1,164     $ 1,511     $ 1,530     $ (1,040 )   $ 2,755    
                             
                             
    (Loss) income per share $ (0.01 )                   $ 0.06    
                             
    Diluted weighted average common shares   40,152                       43,425    
                             

                        Exhibit 4.2  
  HARVARD BIOSCIENCE, INC.  
  Reconciliation of GAAP to Non-GAAP Financial Measures (unaudited)  
  Six Months Ended June 30, 2022  
  (in thousands, except per share data)  
     
                  Settlement,          
          Stock-Based   Acquired Assets   Restructuring,
  Income      
    Statement of Operations GAAP   Compensation
  Amortization   Transformation   Taxes   ADJUSTED  
                             
    Revenues $ 57,986                             $ 57,986    
    Cost of revenues   25,172       (88 )     (20 )     (157 )           24,907    
    Gross profit   32,814       88       20       157             33,079    
                             
    Gross Margin   56.6 %                     57.0 %  
                             
    Operating expenses:                        
    Sales and marketing expenses   13,274       (346 )     (3 )     (370 )           12,555    
    General and administrative expenses   12,306       (1,714 )     (30 )     (1,919 )           8,643    
    Research and development expenses   6,717       (114 )     (19 )     (127 )           6,457    
    Amortization of intangible assets   2,920             (2,920 )                    
    Settlement of litigation, net   311                   (311 )              
    Total operating expenses   35,528       (2,174 )     (2,972 )     (2,727 )           27,655    
                             
    Operating Expenses – % of Revenues   61.3 %                     47.7 %  
                           
    Operating (loss) income   (2,714 )     2,262       2,992       2,884             5,424    
                             
    Operating Margin   -4.7 %                     9.4 %  
                           
    Other (expense) income:                        
    Interest expense   (899 )                             (899 )  
    Other income, net   16                               16    
    Total other expense   (883 )                             (883 )  
                           
    (Loss) income before income taxes   (3,597 )     2,262       2,992       2,884             4,541    
    Income tax expense   848                         165       1,013    
    Net (loss) income $ (4,445 )   $ 2,262     $ 2,992     $ 2,884     $ (165 )   $ 3,528    
                             
    (Loss) income per share $ (0.11 )                   $ 0.08    
                             
    Diluted weighted average common shares   41,256                       42,696    
                             
                        Exhibit 4.3
 
  HARVARD BIOSCIENCE, INC.  
  Reconciliation of GAAP to Non-GAAP Financial Measures (unaudited)  
  Six Months Ended June 30, 2021  
  (in thousands, except per share data)  
     
          Stock-Based   Acquired Assets   Restructuring,
  Income          
    Statement of Operations GAAP   Compensation
  Amortization   Transformation   Taxes     ADJUSTED    
    Revenues $ 56,186                             $ 56,186    
    Cost of revenues   24,402       (51 )     (36 )     (153 )           24,162    
    Gross profit   31,784       51       36       153             32,024    
                                 
    Gross Margin   56.6 %                     57.0 %  
                                 
    Operating expenses:                            
    Sales and marketing expenses   11,116       (224 )     (4 )     (114 )           10,774    
    General and administrative expenses   12,732       (1,803 )     (33 )     (1,954 )           8,942    
    Research and development expenses   5,188       (54 )     (22 )     (294 )           4,818    
    Amortization of intangible assets   2,929             (2,929 )                    
    Total operating expenses   31,965       (2,081 )     (2,988 )     (2,362 )           24,534    
                                 
    Operating Expenses – % of Revenues   56.9 %                     43.7 %  
                                 
    Operating income   (181 )     2,132       3,024       2,515             7,490    
                                 
    Operating Margin   -0.3 %                     13.3 %  
                                 
    Other expense:                            
    Interest expense   (788 )                             (788 )  
    Other expense, net   (347 )                             (347 )  
    Total other expense   (1,135 )                             (1,135 )  
                                 
    (Loss) income before income taxes   (1,316 )     2,132       3,024       2,515             6,355    
    Income tax (benefit) expense   (237 )                       1,784       1,547    
    Net (loss) income $ (1,079 )   $ 2,132     $ 3,024     $ 2,515     $ (1,784 )   $ 4,808    
                                 
                                 
    (Loss) income per share $ (0.03 )                   $ 0.11    
                                 
    Diluted weighted average common shares   39,960                       42,954    
                                 

                          Exhibit 5    
  HARVARD BIOSCIENCE, INC.
 
  Reconciliation of GAAP to Non-GAAP Financial Measures (unaudited)
 
  (in thousands)
 
     
      Three Months Ended   Six Months Ended    
        June 30, 2022     June 30, 2021     June 30, 2022     June 30, 2021    
    Operating income $ 3,998     $ 58   $ (2,714 )   $ (181 )    
    Stock-based compensation expense   1,239       1,164     2,262       2,132      
    Acquired asset amortization   1,488       1,511     2,992       3,024      
    Settlements, restructuring and transformation costs   (3,668 )     1,530     2,884       2,515      
    Adjusted operating income   3,057       4,263     5,424       7,490      
    Depreciation expense   376       446     758       891      
    Adjusted EBITDA $ 3,433     $ 4,709   $ 6,182     $ 8,381