Harvard Bioscience, Inc.

Good morning, and thank you for standing by. Welcome to the fourth quarter 2021 Harvard Bioscience Earnings Conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you'll need to press star 1 on your telephone. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Mr. Dave Sorois. Please go ahead.

Thank you, Captain, and good morning, everyone. Thank you for joining the Harvard Bioscience Fourth 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 Q4 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 subsequent quarterly 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 date. Also, much of today's call will focus on our non-GAAP quarterly results, which we believe better represent the ongoing economics of the business, reflects how we set and measure our incentive compensation plans, and how we manage the business internally. The differences 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, David. Good morning, everybody. Let's move to slide four of the presentation to look at the highlights for the quarter. Revenue is up 7% over a strong Q4 of 20 and up 7% over pre-COVID Q4 of 2019. Global supply chain continued to delay shipments driving backlog up to approximately two times our pre-COVID levels. Preclinical revenue was up 6% over a record strong prior quarter year. Cellular and molecular technology revenue was up 9%, with continuing recovery in spite of European headwinds. Adjusted operating margin came in at 16%, impacted by increased COGS and increased variable compensation and new investments in R&D. Adjusted gross margins came in at 60 percent in spite of higher COGS. Higher costs of goods were due to global freight costs and material inflation plus direct labor inefficiencies. OpEx was up year on year, primarily on variable compensation and growth in research and development investments. Let's move to slide five of the presentation and look at the details of the quarter. In spite of global supply headwinds, we had solid revenue growth With Q4 coming in at $33.1 million, that's up 7% over the same quarter last year. Gross margin on the GAAP basis came in at 59%. That's up 200 basis points from last year, despite higher cost of goods. This quarter had GAAP operating income of $1.7 million, or 5.1% of revenue. Our adjusted operating income was $5.3 million, so our adjusted operating margin measured 16% of revenue. Gap earnings per share in the quarter was a positive two cents, up from a negative two cents last year. Our adjusted earnings per share was eight cents, flat to a strong prior year. Our leverage ratio measured 2.7 times EBITDA. We can move to slide six. Take a quick look at the revenue in the quarter by product family. Starting with the first row of the table, our cellular and molecular technology revenue, which is primarily from academic research labs, was up 9 percent from last year, with orders and backlog up significantly from last year. Direct sales in Europe was impacted by academic lab closures from the Omicron variant. Backlog is up from last year. However, improving operations kept us stable sequentially over Q3 of this year. CMT product revenue was down about 5 percent from last year due to shipment headwinds and approximately $1 million in pruning of low-value-add products from the portfolio. Looking at the second row of the table, our preclinical product revenue was up 6 percent over a record-strong prior year. That puts us up 18 percent for the year 2021. We saw strong growth across product lines for our core customer segments of CRO, pharma, and academic labs globally. European performance was very strong across customer segments. Asia Pacific and Americas were impacted by large CRO order timing in Q4, though we see strong growth trends looking forward in 2022. Overall preclinical is now well above pre-COVID levels, up 28% from Q4 of 2019. Overall reported revenue grew 7% over last year in spite of global supply chain issues and our backlog is up substantially over pre-COVID levels. Moving to slide seven, we'll look at major activities in the quarter. Looking first at the operating environment, our productivity stabilized after the 2021 external supply chain and labor impacts. We announced retirement of our chief operating officer in January, and we're moving to a flatter organization structure with new focused leadership in research and development and in global manufacturing operations and supply chain. Pricing actions have been initiated to help combat material inflation over the upcoming quarters. Now looking at new product development, our new vice president of global R&D is on board, and we are seeing immediate benefits of strong professional product development leadership. We're ramping up investments in key strategic areas, including next generation telemetry solutions and software systems, to name a few. Brand enhancement is accelerating, and we already see positive responses from customers and employees. Now I'll turn the call over to Mike for a quick look at key financials. Mike?