Harvard Bioscience Announces Second Quarter 2022 Financial Results

Harvard Bioscience, Inc.

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