Harvard Bioscience, Inc.

Good day, and thank you for standing by, and welcome to the Q1 2021 Harvard Bioscience, Inc. Earnings Call. At this time, all participant lines are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone keypad. If you require further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Dave Schwarz. Please go ahead.

Thank you, Amanda, and good morning, everyone. Thank you for joining the Harvard Bioscience First Quarter 2021 Earnings Conference Call. Before we begin, I would like to suggest that you take a moment and download a copy of a presentation that will be referred to during this call. The file is entitled Q1 2021 HBio Quarterly Earnings Presentation and is located in the Investor Overview Events and Presentations section of our website. Leading the call today will be Jim Green, Chairman of the Board, President and Chief Executive Officer, and Mike Rossi, Chief Financial Officer. Before I turn the call over to Jim, I will read our Safe Harbor Statement. In our discussion today, we may make statements that constitute forward-looking statements. Our actual results and performance may differ materially from what we have projected due to risks and uncertainties, including those described in our annual report on Form 10-K for the period ended December 31, 2020, our subsequently filed reports on Form 10Q, and our other public filings. Any forward-looking statements, including those related to the company's future results and activities, represent our estimates as of today and should not be relied upon as representing our estimates as of any subsequent day. Also, much of today's call will focus on our non-GAAP quarterly results, which we believe better represent the ongoing economics of business, reflects how we set and measure our incentive compensation plans and how we manage the business internally. The difference between our GAAP and non-GAAP results are outlined in the earnings release and today's presentation. These two documents, as well as a replay of this call, can be found on our website under Investor Overview, Events, and Presentations. Additionally, any material, financial, or other statistical information presented on the call, which is not included in our press release and presentation, will be archived and available in the investor relations section of our website. I will now turn the call over to Jim. Jim, please go ahead.

Thank you, Dave. Good morning, everybody. Why don't we go ahead and move to slide four of the presentation, take a quick look at the highlights of the quarter. Revenue was up 14% year over year on strong order growth. Adjusted operating margin improved to 12% versus 2% in Q1 of last year. That's up 10 full percentage points, and our best Q1 in years. Our preclinical product revenue was up 24%, driven by North America and Asia. Cellular and molecular revenue increased 3%, with strong order growth. However, revenue was impacted by global supply chain issues. And net debt was reduced by $2 million, and our leverage ratio is now below 2.5 times. As we look forward, we're increasing our revenue outlook, now expecting 10% to 14% growth over 2020. up from our last quarter outlook of 8% to 12%. And remember, this includes about $5 million worth of low-margin products pruned from the portfolio over the last couple years. We still expect adjusted operating margin improvements to get to the mid to upper teens. And going forward this year, our business high-value organic growth, improved marketing, and exciting new product introductions. We move to slide five of the presentation. We'll look at some of the details. As expected, we continue to see revenue improvement with Q1 coming in at $27 million, up 13.5% over last year. Gross margin came in at 57.2%. That's an improvement of 260 basis points. This quarter had a gap operating loss of minus $200,000, or 0.9% of revenue. Our adjusted operating income was $3.2 million, so our adjusted operating margin improved to 12%. Gap earnings per share was negative two cents, up from negative 12 cents last year. Our adjusted earnings per share was five cents, that's up from a negative one cent last year. Our cash flow from operations was $1 million, and we've paid down our debt by $2 million in the quarter. Move on to slide six, look at the revenue. in the quarter by product family. Starting with the first row of the table, our cellular and molecular product revenue, which is primarily from academic research labs, was up 2.6% from last year, with revenue shipment delays caused by global supply chain disruptions in a number of our materials. However, we expect continuing improvement as academic labs reopen with strong quarter growth and improving revenue shipments as the global supply chain resolves. Looking at the second row of the table, Our preclinical product revenue was up 24%, again driven by strong order growth in our core customer segments of CRO, pharma, and academic labs in North America and in Asia. And we're seeing very strong growth in academic labs in this area, especially with our new inhalation systems going out. Reported revenue grew 13.5%, and on a constant currency basis, our revenue grew 10%. Moving to slide seven, take a look at the major activities in the quarter, starting with some of the items that drive growth. Our North American sales realignment is complete with expanded territories and improved coverage, and momentum is growing in incremental product cross-selling, especially with our historical cellular and molecular products now selling to our preclinical customer segments. We introduced nine new or improved products in January. Our backlog increased significantly, and we're managing our global supply chain risk to maintain strong growth. On the cost and cash flow side, we have communicated our final restructuring actions in Europe to complete our lean initiatives and expect to finish this in the first half of this year. I'm happy to say that we've reduced our debt leverage to under 2.5 times, driven by significant improvement in adjusted earnings, ongoing positive cash flow, and continued pay down of our debt. Now I'll turn the call over to Mike for a quick look at some of the key financials. Mike?