Harvard Bioscience, Inc.

Thank you for standing by, and welcome to Harvard Biosciences' second quarter 2023 earnings call. At this time, all participants are in a listen-only mode. After the speaker 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. Again, that's star 1 1 on your telephone to ask a question. To remove yourself from the queue, you may press star 1 1 again. I would now like to hand the call over to your host, David Soros, Director of SEC Reporting. Please go ahead.

Thank you, Lateef, and good morning, everyone. Thank you for joining the Harvard Bioscience Second Quarter 2023 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 Q2 2023 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 Jennifer Cody, 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, 2022, 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. And I'll turn the call over to Jim. Jim, please go ahead.

Thank you, David. Hello, everybody. I'm pleased to see Q2 supporting our strong start to 2023. Now let's go to slide three of the presentation to look at the highlights for the quarter. Revenue in the quarter was $28.8 million, down modestly from last year on an as-reported basis. The year-over-year comparison includes a net effect of $1.6 million of discontinued products compared to the prior year period. I see this as a pretty smooth transition to our much-improved and simplified portfolio, as we are already seeing new product introductions from last year gaining traction. Gross margin improved to $16.7 million, or 58% of revenue, which includes the typical puts and takes of product mix and volume, along with the impact of some financial process updates that Jen will describe for you further in a few minutes. Adjusted operating profit improved to $3.6 million, or 12.4% of revenue, up two percentage points from last year. Adjusted EBITDA measured $3.9 million, or 13.6% of revenue, also up two percentage points from prior year. Gap earnings per share was a two-cent loss. This includes quite a bit of non-cash-related accounting complexity that Jen will discuss with you in a few minutes. Adjusted EPS measured $0.04 per share, down from $0.05 last year. Cash flow from operations was $3.6 million versus a negative $200,000 last year. And in the appendix, you'll find the bridge from gap measurements to adjusted or non-gap measurements. Now let's move to slide four, take a look at revenue in the quarter by product family. This slide shows Q2-23 revenue adjusted to reflect Q2-22's exchange rates. Starting with the first row of the table, our cellular molecular technology revenue was down 12% as reported and down 3.6% when adjusted for currency and the impact of discontinued products. We had strong growth in Asia Pacific. EMEA was roughly flat to last year. And we saw slowness in the Americas. We continue to rotate out of low margin products primarily sold through distribution. And our revenue includes a net revenue, a net reduction of 1.6 million from discontinued products compared to last year, which were predominantly cellular and molecular products. Next, our preclinical product revenue was up 10% as reported and up 11.5% when adjusted for currency and discontinued products. Asia had strong growth driven mostly by inhalation and respiratory products. EMEA had very strong growth across the entire preclinical product portfolio. Americas was down modestly on slower sales in inhalation and respiratory products. All said, we were down 1.5 percent as reported and up 3.9 percent when adjusted for currency and discontinued products. Let's move to slide five. I can tell you about some of our exciting new products and new product introductions this year. Before I start, let me explain a little bit about this slide. Over the past three years, we've optimized our product offerings to target key technologies in the drug and therapy development continuum. Our product strategy is to continue to introduce new technologies and applications in leading academic research labs, and at the same time, adapt these technologies for further penetration into the larger industrial applications of our customers in pharma, CRO, and biotech. Following this strategy, we've introduced two more product technologies this year designed to support our growth opportunities in advanced cell-based testing. We expect initial demand in both academic labs and biopharma discovery and expanding opportunity in preclinical regulatory testing for toxicology and safety pharmacology. First, I'd like to highlight our new mesh array organoid MEA platform. Building on our leadership position in single-well high-density multi-electrode arrays that are used today in academic research and discovery, we're introducing the first organoid-centric MEAs that measure signals from inside the organoid. This technology is initially targeted to neuro and cardiac applications such as activation, metabolism, and toxicology. We expect organoid level testing to enable applications that historically were performed using full organ systems or animal models. We've next introduced our second generation multi-well MEA platform. This multi-well platform is designed for higher volume MEA applications, giving us a vehicle to penetrate various industrial applications. This is another proof point where we leverage our leading position in high density MEA in academic research and discovery and expand to industrial CRO and biopharma applications. We plan for advanced applications such as organoids to transition from the single to the multi-well and enable penetration of higher volume industrial usage in CROs and biopharma. This is an exciting time for Harvard Bioscience, and we continue to introduce leadership, leading technologies in research and discovery and drive new opportunities in industrial applications with our CRO and biopharma customers, where we already have a well-established relationship and a great reputation. Now I'll turn the call over to Jennifer, our CFO, for a look at the key financials. Jennifer.