Harvard Bioscience, Inc.

Good morning, and thank you for standing by. Welcome to Harvard Bioscience Inc. Fourth 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 the session, you will need to press star 1-1 on your telephone. You will then hear an automatic message advising your hand is raised. Please note that today's conference is being recorded. I will now hand the conference over to your speaker host, Thank you, Olivia, and good morning, everyone.

Thank you for joining the Harvard Bioscience Fourth 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 Q4 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 31st, 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 differences 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 in Vincent 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.

And hello, everybody. Let's move to slide three of the presentation and take a look at the highlights for the quarter. Let me start. Let me start with saying I'm pleased to see growth in North America. However, similar to numerous life science tools companies, we were held back by post COVID lower demand in China. Revenue for the quarter was 28.2 million down a modest 1% from last year on an as reported basis. This revenue includes the net effect of $900,000 of discounted products compared to the prior year period. We did see a net positive currency effect of $400,000. So adjusting for both currency and discontinued products, underlying core revenue was up about one percentage point from the same period last year. Gross margin improved to 16.3 million or 58% of revenue, up 230 basis points from the same period last year. Our gap operating profit was $300,000, up from a negative $500,000 last year. Adjusted operating profit measured 3.3 million or 11.6% of revenue, about flat with prior year. adjusted EBITDA measured as 3.7 million or 13% of revenue, again, about flat to last year. GAAP earnings per share was a 4 cent loss, again, same as last year. And adjusted EPS measured a positive 4 cents a share, again, same as last year. Cash flow from operations came in at $4.3 million, up from 2.7 million last year. In the appendix, you'll find the bridge from GAAP measurements to adjusted or non-GAAP measurements. So let's move on to slide four and take a look at revenue in the quarter by product family and by region. Starting in the Americas, revenue was up 4.1% as reported and included a 2.1% net reduction from discontinued products. So our core revenue is up about 6%. Preclinical had strong growth in core telemetry and Pneuma Enterprise software, though overall was held back by lower demand in the respiratory products as a part of the recovery from the post-COVID timeframes. Cellular and molecular products were up in electroporation and bioproduction and up in cell-based testing, but was impacted by also the discontinued low-margin products. By the way, we're about done with discontinued products, so I don't expect to be having to talk much about this as we go forward. Moving to EMEA, overall EMEA revenue was up 3.1% as reported and included 2.1% percent net reduction from discontinued products, and a positive currency effect of 4.1%. So adjusting for currency and discontinued, EMEA was up roughly about two percentage points. Preclinical systems showed modest growth and was helped by the first installation of our new high-capacity Viva Mars behavioral system at a large CRO operation. CMT was down modestly, mostly on discontinued products. Now moving to China and Asia Pacific, Q4 reported revenue was down 15%. Adjusting for currency and discontinued products, Asia Pacific was down about 10%. Telemetry and Panema Enterprise Software held their own. Cellular and molecular products saw another tough quarter, similar to Q3. And the primary impact, again, was academic customers, where we saw continued weakness due to post-COVID government academic research funding. We see the weakness in China continuing into Q1 2024, Though we're hopeful with recent news out of China that market conditions are going to start to improve going into the second half. And at worst case, we'll at least see things annualizing at a level where we hopefully won't see so much back and forth with lumpiness like that. So let's move on to slide five. And let me tell you a little bit about some of the exciting new products and how we've positioned our base business to deliver solid growth with expanding margins And those margins then support investments to commercialize our exciting new high-growth areas like high-capacity behavior systems, advanced cell and organoids, and bioproduction electroporation applications. This year's commercialization focus, it started with new product introductions that showcased at the Society for Neuroscience, which was in Q4 just this last November. And then we're also going to be showcasing these products again at next week's Society of Toxicology. Our first focus is to strengthen our base, which is the vast majority of our business. We introduced our new SOHO shared housing telemetry family of implantables at the Society for Neuroscience last November. At the same time, we introduced our latest Panema software that integrates Viva Mars, the high capacity behavioral testing system, and now it's onto a single GLP compliant platform. The PANEMA platform, which is used by the leading CROs, biopharma, large academic institutions around the world, it processes and manages the extremely large data pools acquired during toxin safety testing, now for both telemetry and behavior. By combining these new applications in a single data management platform, the PANEMA system opens new opportunities for our customers to use emerging AI and machine language technologies to analyze these study data. And we'll be working with some of our customers to implement these types of these new machine language type of applications, which then turn into what we use for tuning our algorithms. We're also expanding our field service offerings designed to increase recurring revenues and consumables. Our second focus is expanding to high-volume industrial applications. We introduced Viva Mars, the high-capacity behavioral system, at the November Society for Neuroscience. in Q4, and we had the first commercial installation of Viva Mars in Q4 with a large CRO customer. And we're showcasing Viva Mars at next week's Society of Toxicology, where we will be meeting with many of our leading CROs and biopharma customers. Our third focus is expanding to bioproduction with our leading electroporation and electrofusion technology. In January, we established a commercial and application science team dedicated to bioproduction and advances in electroporation. And in February, we released our GLP-CGMP compliant amino acid analyzer for bioproduction quality control. This system was adapted from our clinical amino acid analyzer in operation today all around the world in leading clinical laboratories. Finally, we're focusing on commercializing our leadership position in advanced cellular applications. We launched the MeSH-MEA Organide platform at the Society for Neuroscience. We're also showcasing MeSH-MEA at next week's Society of Toxicology conference. We're excited to see strong interest for applications in research and biopharma discovery, which we expect will then lead to higher volume compound analysis and testing applications at higher volumes. Now I'll turn the call back over to Jennifer, our CFO, to give us a look at key financials. Thank you, Jen.