Harvard Bioscience, Inc.

Good day, and thank you for standing by. Welcome to the Harvard Bioscience fourth quarter 2022 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 will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Dave Sorois, Director, SEC Reporting. Please go ahead.

Thank you, Shannon, and good morning, everyone. Thank you for joining the Harvard Bioscience Fourth Quarter 2020 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 2022 HBio Quarterly Earnings Presentation and is located in the investor overview events and presentation section of our website. Leading the call today will be Jim Green, Chairman of the Board, President and Chief Executive Officer, and Jennifer Cody, Interim 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, 2021, our subsequent 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, 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 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 in 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. Hello, everyone, and thank you for joining us today. Let me start by saying that despite inflation and currency and the lingering effects of the global supply chain, we kept our heads down. and completed the previously disclosed portfolio optimization and related cost reductions. These actions are designed to support our stated goals for revenue growth with 58 to 60% gross margins and EBITDA margins in the high teens or better. Now let's go to slide three of the presentation to look at highlights for the quarter. Reported revenue for the quarter was $28.4 million, down 14% from a very strong Q4 prior year. Adjusting for a $1 million impact from currency, we were down 11%. The majority of the impact was seen in preclinical revenues, with order demand recovering later in Q4, though not in time for revenue shipments to catch up. Strong order growth with a substantially improved product portfolio points to a strong start for 2023. Adjusted gross margin recovered to 57%, consistent with historical gross margins, in spite of the remaining low margin obsolete products as they wind down. Adjusted operating margin came in at 12%. Going forward, we'll be reporting adjusted EBITDA, which in Q4 measured 13% of revenue. In the appendix, you'll find the bridge from GAAP measurements to non-GAAP adjusted EBITDA. Adjusted EPS measured 4 cents per share, down from a very strong 8 cents last year. And cash flow from operations measured $2.7 million. Now let's move to slide four, take a look at the revenue in the quarter by product family. This slide shows Q422 revenue adjusted to reflect Q421 exchange rates. Starting with the first row of the table, our cellular and molecular technology revenue was roughly flat when adjusted for currency. We had solid growth in Asia Pacific, which was offset by slowness in the Americas. Cell-based testing products were up double digits globally. We saw continued rotation out of the low margin products with revenues from discontinued products decreasing by about $300,000 versus the same quarter last year. We are seeing demand increase going forward, augmented by exciting new products with new consumables and services such as electroporation for bioproduction. Next, our preclinical products were down 19% in constant currency from a historically strong Q4 prior year. Globally, telemetry and inhalation revenue shipments were down in Q3 and early in Q4, recovering somewhat in the quarter, though much of the order improvement came later in the quarter. The China lockdown further delayed shipments, with strong order demand recovering later in the quarter as lockdowns eased. Overall, order demand recovery later in the quarter didn't help Q4 much. But strong order growth with a solid book-to-bill ratio point to a strong start for 2023. The strong US dollar compared to the Euro and British pound drove a currency impact of the $1 million I spoke of earlier. Now let's move to slide five so I can tell you about some of the exciting new product launches in the quarter. Before I start, let me take a minute to explain a little bit about this slide. Over the last three years, we've optimized our product offerings to critical areas of the drug and therapy continuum, with cellular and molecular technology products focusing on enabling research and discovery of new compounds by both biopharma companies and top academic research universities. And now more recently, we're also offering a bridge to bioproduction, where electroporation or electrofusion is a widely used method to create the new therapy, drug, or vaccine. Our preclinical systems primarily offer biotech, pharma, CRO, and large academics the ability to measure and wirelessly collect critical physiologic and behavioral information from animal models. This data has been utilized for longitudinal studies and for the safety and regulatory filings required prior to human clinical use. Our enterprise software provides efficient access to the large data pools collected during preclinical testing for data reduction. and report generation, and also for future AI-related processing as we see coming in the future. Starting with cellular and molecular technologies, in Q4 we received a large order from a top pharma company for our BTX electroporation system configured for bioproduction. This order began significant shipments in Q1 of 2023 and is expected to quickly ramp to $1 million annually primarily driven by consumption of our unique flat pack reaction chambers and augmented by expanded services. We're excited about this emerging value proposition for the BTX system in bioproduction, which is often used today in pharmaceutical research and development to create the initial strains of therapeutics and vaccines. BTX electroporation has the potential to provide substantial ongoing stream of flat pack and other consumable revenue that benefits from production quantities in addition to those historically required in research and discovery. Second, we introduced the new U7500, our premium spectrophotometer, building on our well-known Ultraspec name. This system replaces three existing models, and it's designed to better penetrate pharma and CRO companies and top academic sites, and started shipping late in Q4. Lastly, continuing to drive market leadership in preclinical wireless continuous monitoring, We launched our exclusive continuous monitoring glucose implant. This new implant allows for continuous monitoring of glucose levels and avoids the cost, inconvenience, and variability inherent in periodic manual blood draws for sampling. Glucose monitoring is expected to be an incremental growth driver in academic labs and government labs and pharma companies in the pursuit of solutions for the ever-growing problems of obesity and diabetes. This new line of implants began shipping late in Q4 and will augment new growth of our consumables and services in 2023 and beyond. Now I'll turn the call over to Jennifer Cody, our interim CFO, for a quick look at key financials. Jen?