Harvard Bioscience, Inc.

Good morning, ladies and gentlemen. Thank you for standing by. And welcome to the Harvard Spires Science, Inc. First Quarter 2022 Earnings Conference Call. At this time, all participants are on 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 will need to press the star, then the one key on your touch-tone telephone. Please be advised that today's conference may be recorded. If you recall operating systems at any time, please press star, then zero. I would now like to hand the conference over to your host today, Dave Sorais.

Thank you, Olivia, and good morning, everyone. Thank you for joining the Harvard Bioscience First Quarter 2022 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 2022 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 31st, 2021, our subsequently filed quarterly reports on Form 10-Q, and our other public filings. Any forward-looking statements, including those related to the company's future results and activities, represents 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 represents the ongoing economics of the 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 overviews, 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.

Thanks, Dave. Let's go to slide four of the presentation and take a look at the highlights for the quarter. Revenue was up 7% over last year, with preclinical up 7% and cellular and molecular up 10%. We saw significant order delays from China from the lockdown there, though we do already see China recovering later this quarter and expect a strong second half. Cost of goods continue to run high from global supply chain disruptions, inefficient labor, and higher freight costs. Adjusted operating margin came in at 8% versus 12% last year, impacted by shipment revenue delays, inflation, and investments that we made for growth. Gross margins came in at 57%, flat the prior year, with mixed improvements offset by an increase in COGS. Higher COGS continued from global freight costs, material inflation, plus direct labor inefficiencies. OpEx was temporarily up on timing of sales and marketing activities versus a COVID-driven low prior year. Research and development investments increased as planned to support our long-term growth. Finally, the 8K-announced litigation settlement puts the legal distraction behind us. If we move to slide five of the presentation, we'll look at the details in the quarter. In spite of global supply chain headwinds and delays in shipments to China, we had solid revenue growth, with Q1 coming in at $28.8 million, up 7 percent over last year. Gross margin on GAAP basis came in at 56.2 percent. That's up 100 basis points. from last year despite the higher cost of goods. This quarter had GAAP operating income of negative 6.7 million, which included a $5 million charge related to the litigation settlement. Our adjusted operating income was 2.4 million, so our adjusted operating margin measured 8.2% of revenue. GAAP earnings per share in the quarter was a loss of 17 cents. Our adjusted earnings per share was 4 cents, down a penny from prior year. We consumed about $2 million in cash, and our net debt increased by $3 million in the quarter. Our leverage ratio measured 2.9 times EBITDA. I'll move 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 technology revenue was up 7% from last year, impacted by shipment delays to China on their lockdown, and global supply chain disruptions continue to hamper our revenue shipments. Order intake from North America remains strong across the portfolio. We saw delays from the China lockdown recovering late in this quarter, and also we see a real strong second half. European orders were delayed on COVID lockdowns in January and February, but have started recovering slowly. Looking at the second row of the table, our preclinical product revenue was up 10% over a strong prior year, However, we did experience revenue shipment delays in China and continue to be hampered by these disruptions in the global supply chain. Order intake was very strong in North America. We saw delays, though, in China from the lockdown, but as we said on CMT, we do see things recovering here later in this quarter, and we see a very strong second half. This quarter, currency impacted revenue by about half a million dollars. Our overall reported revenue was 7% over last year. Now I'll turn it over to Mike for a quick look at the key financials. Mike?