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Harvard Bioscience Announces Fourth Quarter 2020 Financial Results

Mar 10,2021

Sales effectiveness focus with disciplined cost management results in improved revenues and margins while reducing debt

  • Revenue returns to pre-Covid19 levels on strong CRO/pharma sales
  • Operating margin increased year-over-year on GAAP and an adjusted basis
  • New debt facility significantly reduces annual interest expense

HOLLISTON, Mass., March 10, 2021 (GLOBE NEWSWIRE) -- Harvard Bioscience, Inc. (Nasdaq: HBIO) (the “Company”) today announced financial results for the three months and year ended December 31, 2020.

Jim Green, Chairman and CEO said, “Our fourth quarter demonstrated the benefits of our sales effectiveness focus as we delivered revenue at pre-Covid levels, or $31.0 million. Our preclinical product revenue increased 19% over Q4 2019. In addition, we are very pleased to have successfully refinanced our credit facility which is expected to save approximately $3M annually in cash interest based upon current debt levels and provides numerous other enhancements compared to the former facility.”

Green concluded, “With strong CRO/Pharma growth and recovering academic lab sales, we expect revenue to grow 8 to 12% compared to 2020. In addition, exciting new products along with removal of lower value offerings is expected to improve our profit mix, delivering adjusted operating margins in the mid-to-upper teens in 2021. We believe the strong 2020 ending and our focus on growth and new exciting products puts 2021 on plan to creating the growth oriented profitable platform we envisioned.”

 

                 
  Quarterly Financial Results Summary   Q4'20   Q3'20   Q4'19  
                 
  Revenue   $31.0 million   $24.0 million   $31.0 million  
                 
  Operating Income (GAAP)   $2.8 million   $0.2 million   $1.6 million  
  Adjusted Operating Income   $5.8 million   $3.6 million   $5.6 million  
  Operating Margin (GAAP)   8.9%   0.8%   5.3%  
  Adjusted Operating Margin   18.7%   14.8%   18.1%  
                 
  Diluted (Loss) Earnings Per Share (GAAP)   ($0.02)   ($0.03)   $0.01  
  Adjusted Diluted Earnings Per Share   $0.08   $0.04   $0.08  
                 
  Net Debt*   $41.1 million   $41.6 million   $46.7 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# 4375572.

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 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 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.


 

                                       
                                  Exhibit 1    
    HARVARD BIOSCIENCE, INC.  
    Consolidated Statements of Operations  
    (unaudited, in thousands, except per share data)  
                                       
                    Three Months Ended    
                      December 31, 2020     September 30, 2020     December 31, 2019    
                                       
      Revenues $ 30,984     $ 24,037     $ 30,972      
      Cost of revenues   13,276       10,542       13,738      
        Gross profit   17,708       13,495       17,234      
                                       
      Operating expenses:                    
        Sales and marketing expenses   5,470       4,588       5,894      
        General and administrative expenses   5,681       5,399       5,545      
        Research and development expenses   2,349       1,949       2,645      
        Amortization of intangible assets   1,452       1,377       1,457      
        Impairment charges   -       -       59      
      Total operating expenses   14,952       13,313       15,600      
                                       
      Operating income   2,756       182       1,634      
                                       
      Other expense:                    
        Interest expense   (1,094 )     (1,205 )     (1,281 )    
        Debt extinguishment and related costs   (1,876 )     -       -      
        Other expense, net   (334 )     (392 )     (255 )    
      Total other expense   (3,304 )     (1,597 )     (1,536 )    
                                       
      (Loss) income before income taxes   (548 )     (1,415 )     98      
      Income tax expense (benefit)   67       (317 )     (452 )    
      Net (loss) income $ (615 )   $ (1,098 )   $ 550      
                                       
      (Loss) earnings per common share:                    
        Basic $ (0.02 )   $ (0.03 )   $ 0.01      
        Diluted $ (0.02 )   $ (0.03 )   $ 0.01      
                                       
      Weighted average common shares:                    
        Basic   39,021       38,920       38,068      
        Diluted   39,021       38,920       39,070      
                                       
               
                                       
                                       


 

                                 
                              Exhibit 1.1  
        HARVARD BIOSCIENCE, INC.  
        Consolidated Statements of Operations  
        (unaudited, in thousands, except per share data)  
                                 
                      Year Ended December 31,  
                        2020       2019    
                                 
        Revenues $ 102,100     $ 116,176    
        Cost of revenues   44,059       51,854    
          Gross profit   58,041       64,322    
                                 
        Operating expenses:            
          Sales and marketing expenses   19,916       23,264    
          General and administrative expenses   23,509       22,760    
          Research and development expenses   8,685       10,715    
          Amortization of intangible assets   5,710       5,746    
          Impairment charges   -       1,460    
        Total operating expenses   57,820       63,945    
                                 
        Operating income   221       377    
                                 
        Other expense:            
          Interest expense   (4,831 )     (5,410 )  
          Debt extinguishment and related costs   (1,876 )     -    
          Other expense, net   (806 )     (469 )  
        Total other expense   (7,513 )     (5,879 )  
                                 
        Loss before income taxes   (7,292 )     (5,502 )  
        Income tax expense (benefit)   518       (815 )  
        Net loss $ (7,810 )   $ (4,687 )  
                                 
        Loss per common share:            
          Basic and diluted $ (0.20 )   $ (0.12 )  
                                 
        Weighted average common shares:            
          Basic and diluted   38,640       37,814    
                                 
                       
                                 


 

                         
                Exhibit 2        
    HARVARD BIOSCIENCE, INC.      
    Condensed Consolidated Balance Sheets      
    (unaudited, in thousands)      
                         
          December 31, 2020     December 31, 2019      
      Assets                  
        Cash and cash equivalents $ 8,317   $ 8,335        
        Accounts receivables   17,766     20,704        
        Inventories   22,262     22,061        
        Other current assets   3,355     2,472        
                Total current assets   51,700     53,572        
        Property, plant and equipment   3,960     4,776        
        Goodwill and other intangibles   91,741     95,786        
        Other long-term assets   8,853     10,736        
           Total assets $ 156,254   $ 164,870        
                         
      Liabilities and Stockholders' Equity                  
        Current portion, long-term debt $ 1,721   $ 6,900        
        Other current liabilities   19,332     18,412        
                Total current liabilities   21,053     25,312        
        Long-term debt   46,286     46,917        
        Other long-term liabilities   12,234     10,947        
        Stockholders’ equity   76,681     81,694        
           Total liabilities and stockholders’ equity $ 156,254   $ 164,870        
                         
                         


 

                     
                Exhibit 3    
    HARVARD BIOSCIENCE, INC.  
    Condensed Consolidated Statements of Cash Flows  
    (unaudited, in thousands)  
                     
          Year Ended December 31,    
          2020       2019      
      Cash flows from operating activities:              
      Net loss $ (7,810 )   $ (4,687 )    
      Adjustments to operating cash flows   13,035       12,690      
      Changes in operating assets and liabilities   4,106       42      
      Net cash provided by operating activities   9,331       8,045      
                     
      Cash flows from investing activities:              
      Additions to property, plant and equipment   (1,152 )     (1,216 )    
      Disposition of business   -       1,002      
      Other investing activities   (250 )     (15 )    
      Net cash used in investing activities   (1,402 )     (229 )    
                     
      Cash flows from financing activities:              
      Proceeds from borrowings   61,315       4,300      
      Repayments of debt   (66,912 )     (11,703 )    
      Payments of debt extinguishment and issuance costs   (1,897 )     -      
      Other financing activities   (473 )     (221 )    
      Net cash used in financing activities   (7,967 )     (7,624 )    
                     
      Effect of exchange rate changes on cash   20       (30 )    
      (Decrease) increase in cash and cash equivalents   (18 )     162      
      Cash and cash equivalents at the beginning of year   8,335       8,173      
      Cash and cash equivalents at the end of year $ 8,317     $ 8,335      
                     
                     
                     
                     


 

                           
                           
                    Exhibit 4      
  HARVARD BIOSCIENCE, INC.    
  Reconciliation of GAAP to Non-GAAP Financial Measures (unaudited)    
  (in thousands, except per share data)    
                           
      Three Months Ended      
        December 31,     September 30,     December 31,      
        2020      2020      2019       
                           
    GAAP operating income $ 2,756     $ 182     $ 1,634        
    Stock-based compensation expense   1,006       1,079       841        
    Severance, restructuring and transformation costs   532       876       1,551        
    Acquired assets amortization and impairments   1,503       1,428       1,575        
    Adjusted operating income $ 5,797     $ 3,565     $ 5,601        
                           
    GAAP operating margin   8.9 %     0.8 %     5.3 %      
                           
    Adjusted operating margin   18.7 %     14.8 %     18.1 %      
                           
    GAAP net (loss) income $ (615 )   $ (1,098 )   $ 550        
    Stock-based compensation expense   1,006       1,079       841        
    Severance, restructuring and transformation costs   532       876       1,551        
    Debt extinguishment and related costs   1,876       -       -        
    Acquired assets amortization and impairments   1,503       1,428       1,575        
    Income taxes (A)   (1,034 )     (823 )     (1,472 )      
    Adjusted net income $ 3,268     $ 1,462     $ 3,045        
                           
    GAAP (loss) earnings per diluted share $ (0.02 )   $ (0.03 )   $ 0.01        
    Adjusted items after tax per share assuming dilution   0.10       0.07       0.07        
    Adjusted earnings per diluted share $ 0.08     $ 0.04     $ 0.08        
                           
    Weighted average diluted common shares:                      
    GAAP   39,021       38,920       38,068        
    Adjusted   40,810       40,307       39,070        
                           
    (A)    Income taxes includes the tax effect of the adjustments to GAAP results.      
                           


 

                           
              Exhibit 4.1            
  HARVARD BIOSCIENCE, INC.        
  Reconciliation of GAAP to Non-GAAP Financial Measures (unaudited)        
  (in thousands, except per share data)        
                           
               
      Year Ended December 31,        
        2020     2019            
                           
    GAAP operating (loss) income $ 221   $ 377            
    Stock-based compensation expense   3,647     3,030            
    Severance, restructuring and transformation costs   4,166     3,943            
    Acquired assets amortization and impairments   5,920     7,503            
    Adjusted operating income $ 13,954   $ 14,853            
                           
    GAAP operating margin   0.2%     0.3%            
                           
    Adjusted operating margin   13.7%     12.8%            
                           
    GAAP net loss $ (7,810)   $ (4,687)            
    Stock-based compensation expense   3,647     3,030            
    Severance, restructuring and transformation costs   4,166     3,943            
    Debt extinguishment and related costs   1,876     -            
    Acquired assets amortization and impairments   5,920     7,503            
    Income taxes (A)   (1,469)     (2,766)            
    Adjusted net income $ 6,330   $ 7,023            
                           
    GAAP loss per diluted share $ (0.20)   $ (0.12)            
    Adjusted items after tax per share assuming dilution   0.36     0.30            
    Adjusted earnings per diluted share $ 0.16   $ 0.18            
                           
    Weighted average diluted common shares:                      
    GAAP   38,640     37,814            
    Adjusted   39,985     38,373            
                           
    (A)    Income taxes includes the tax effect of the adjustments to GAAP results.