Harvard Bioscience, Inc.

Thank you for standing by, and welcome to the Harvard Biosciences Third Quarter 2023 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 this session, you'll need to press star 1-1 on your telephone. If your question has been answered and you'd like to remove yourself from the queue, please press star 1-1 again. As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Dave Siroy, Director of SEC Reportings. Please go ahead, sir.

Thank you, Jonathan, and good morning, everyone. Thank you for joining the Harvard Bioscience Third 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 Q3 2023 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, 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. I will now turn the call over to Jim. Jim, please go ahead.

Thank you, David. Hello, everybody. Let's start by moving to slide three of the presentation and take a look at the highlights for the quarter. First, I'll say that I'm pleased to see strong growth in North America However, similar to numerous lifecycle tools companies, we did see we were impacted by post-COVID lower demand in China and Asia Pacific. Going to the numbers, revenue for the quarter was $25.4 million. That's down 6% from last year on an as-reported basis. This revenue includes the net effect of $1.3 million of discontinued products compared to the prior year period. Q3 revenue saw a net positive FX effect of $700,000. Adjusting for both FX and discontinued products, our underlying core revenue was down roughly 3.5%. Gross margin improved to $14.7 million, or 58% of revenue, up from 45% in the same period of FY22. However, this prior period included an inventory write-down that impacted FY22 comparable by about 5%. Adjusted operating profit improved $1.8 million, or 7.3% of revenue, up from $700,000 last year, an improvement of 1.1 million, or nearly five percentage points. Adjusted EBITDA measured 2.2 million, or 8.9% of revenue, also up five percentage points from the prior year. GAAP earnings per share was a 3 cent loss, an improvement from an 8 cent loss last year. Adjusted EPS measured a positive one cent per share up from a one cent loss last year. Cash flow from operations was $4.4 million versus $600,000 last year. In the appendix, you'll find the bridge from gap measurements to adjusted or non-gap measurements. Now let's move to the next slide, slide four, and look at the revenue by quarter, by product family, and with an improved regional view. Starting with the Americas, revenue was up 5.9% as reported and included 5.2% of net reduction of discontinued products. So considering discontinued, our underlying core revenue grew by about 11%. Preclinical had strong growth in our core tech telemetry and Pneuma Enterprise software, though somewhat held back by post-COVID lower needs for respiratory products. Cellular and molecular products were down primarily on discontinued low-margin products and some slowness in cell-based testing systems. Moving to EMEA, overall EMEA revenue was down 1.4% as reported and included a 6.2% net reduction from discontinued products, but also had a positive FX impact of 7.7%. Adjusting for FX and discontinued, EMEA was down roughly 3.5%. Now moving to China and Asia Pacific, Q3 reported revenue was down 30%. FX and discontinued products had a modest negative effect of approximately 4.5%. The primary impacts were twofold. Preclinical saw a big drop in demand in preclinical respiratory products, where during the COVID years, including 2022, China had significantly purchased for COVID research. However, our core telemetry and Pneuma enterprise software held close to flat. CMT saw a measurable drop in cellular molecular products, where again, during COVID, China had strong demand in academic research. We move to slide five of the presentation. Let me tell you a little bit about some of our exciting new products and new introductions that we'll be showing and showcasing this next week at the Society for Neurology conference. As you know, over the last 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 pharma discovery, while at the same time adapting these technologies to further penetrate larger industrial applications with our customers in pharma and CROs and biotech. Following this strategy, Next, we will be showcasing a number of these offerings, and I'll talk a little bit to you about three in particular here. First, we'll be highlighting our new MeSH microelectrode array platform. These new MeSH MEAs are targeted for use in organoids, which are small tissue segments or cultures that we believe can represent a proxy for many organs such as brain and heart. Organoids are a promising growth area for academic research and discovery as well as safety pharmacology and toxicology. Our new MeSH MEAs build on our recognized leadership position in single-well high-density microelectrode arrays used heavily today, enabling precise signal measurement from within the organoid. We're excited to be presenting early research results using this novel technology on brain organoids at next week's Society for Neurology. Next, we'll highlight our new VIVA Mars high-capacity behavior monitoring system. We first announced our initial customer order last April. The vivoMARS system is specifically adapted to high-volume multi-animal model in vivo testing and formal reporting required for preclinical regulatory clearance. vivoMARS leverages our industry-leading Panema software platform, as well as our PanLab activity monitoring expertise. It is an excellent example of how we're able to leverage our expertise across all of Harvard Bioscience family. This system was developed with our CRO and pharma customer needs in mind and also meets their business needs to increase operating efficiencies, lowering costs, and more importantly, reducing test cycle times to expand capacity and support their revenue growth. We're expecting our first Viva Mars shipment to a CRO customer later in this year. Finally, we'll be showcasing our new SOHO small animal model telemetry platform. SOHO is based on our industry-leading telemetry and PANEMA enterprise software platform and extends our leadership position with expanded capabilities such as concurrent multi-model testing in a more natural shared housing environment. As with Viva Mars, this platform is designed to meet customers' challenging business needs for lowering operating costs and shorter test cycle times to expand test capacity and drive more of their revenue growth. Now I'll turn the call over to Jennifer, our CFO, for a look at key financials. Jennifer?