Harvard Bioscience, Inc.

Good day, and thank you for standing by. Welcome to the Q1 2024 Harvard Bioscience, Inc. 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, please press star 1-1 on your telephone and wait for your name to be announced. 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 of SEC Reporting.

Thank you, Josh, and good morning, everyone. Thank you for joining the Harvard Bioscience First Quarter 2024 Earnings Conference Call. Leading the call today will be Jim Green, Chairman of the Board, President and Chief Executive Officer, and Jennifer Cody, Chief Financial Officer. In conjunction with today's recorded call, we have provided a presentation that will be referenced during our remarks that is posted to the Investors section of our website at investor.harvardbioscience.com. Please note that statements made in today's discussion that are not historical facts, including statements or expectations of future events or future financial performance, are forward-looking statements and are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Actual results may differ material materially from those expressed or implied. Please refer to today's press release or other disclosures on forward-looking statements. These factors and other risks and uncertainties are described in the company's filings with the Securities and Exchange Commission. Harvard Bioscience assumes no obligation to update or revise any forward-looking statements publicly, and management statements are made as of today. During the call, management will also reference certain non-GAAP financial measures, which can be useful in evaluating the company's operations related to our financial condition and results. These non-GAAP measures are intended to supplement GAAP financial information and should not be considered a substitute. Reconciliations of GAAP to non-GAAP measures are provided in today's earnings press release. I will now turn the call over to Jim. Jim, please go ahead.

Thanks, David. Hello, everybody. Let's go ahead and start, move to slide three of the presentation, take a look at the highlights for the quarter. Well, as expected, we had a tough start to the year. However, I will say that with strong gross margins combined with previously communicated cost reductions, they position us to underpin our commercial investments for growth while at the same time meeting our earnings targets. Also, as expected, significantly slower sales in China and Asia Pacific continued through Q1, further exacerbated by some slowing in Europe. And in total, a tough comparison to a record high prior year Q1. I'll also mention we're still seeing some supply chain issues. An example, Q1 saw one product alone that had $1 million in revenue shipment delays pushing it out of Q1. So now let's go ahead and look at the numbers. Revenue in the quarter came in at $24.5 million, down $5.5 million from last year. Gross margin remained strong at 60.3%. On a GAAP basis, we recorded an operating loss of $2.3 million. On an adjusted basis, operating profit measured 1.2 million or 4.8% of revenue. An adjusted EBITDA measured 1.6 million or 6.6% of revenue. Let's move to slide four, look at the revenue for the quarter, byproduct family, and looking at the regions. So starting with the Americas, revenue was down 6.6% as reported. Preclinical revenue was slow on reduced demand of COVID-related respiratory products. Cellular and molecular products were up modestly in advanced cell, primarily with advanced cell-based testing systems. We saw slow sales in academic research with NIH grants that seemed to be taken longer to approve, but we believe much of that's due to the uncertainty that was around the congressional continuing resolution situation last quarter. We're hopeful that the more recent, longer budget resolution will start to solve some of this for us. Pharma and CROs are still keeping tight strings on spending. though we're encouraged to see biotech-related capital raises improving. Biotechs we see represent a potential long-term tailwind for our technologies. Moving on to Europe, overall EMEA revenue was down 16% as reported, that includes about a 1% currency headwind. Preclinical systems were down on tight budgets for both pharma and CRO companies. Cellular molecular saw some slowness on tight government spending for academic research. The European economic environment is being impacted by the higher interest rates, and government spending also was hit by the situation that's occurring in Ukraine. Now moving to China and Asia Pacific. Q1 reported revenue was down 35% on continued slower spend levels, which should annualize in the second half of this year. Preclinical revenue was down on continued slow capital equipment spending by pharma and CRO companies. Seller molecular products saw continued headwinds as academic customers awaited news on government academic research funding. We see the weakness in China continuing into Q2, though we're hopeful that the recent announced Chinese stimulus package will lead to improved market conditions entering the second half for us here. Let's move to slide five and discuss some new product launches designed to strengthen our base business while at the same time investing in new high growth opportunities. Our commercialization focus started with new product introductions showcased at the latest Society for Neuroscience and the Society for Toxicology. Our primary focus is to strengthen our bread and butter based business, which represents nearly 85% of total revenue, and which we target to deliver better than market growth. We invest to continue our leadership position in telemetry for safety and toxicology applications. We introduced our new SOHO shared housing telemetry family of implantables to expand our offering to multi-animal shared housing environments. At the same time, we introduce our latest Panema software that integrates Viva Mars, the high capacity behavior testing system, onto a single GLP compliant data system. Adding high capacity neuropharmacology testing expands our addressable market by expanding the test menu offering to neuropharmacology and builds on our base business. The Panema platform, which is used by the leading CROs, biopharma, large academic institutions around the world, processes and manages extremely large data pools acquired during toxin safety testing, now for both telemetry and now for behavior. By combining these new applications on a single data management platform, the Panema system opens up opportunities to use emerging AI and machine learning technologies to analyze study data. At the same time, we continue to fortify our leading position in cellular, molecular, and inhalation technologies for research and discovery. And also at the same time, We're expanding our field service offerings designed to increase recurring revenue and consumables. This year, we're driving to commercialize exciting new high-growth opportunities. Electroporation and amino acid-related products make up around 10% of our revenue, and advanced microelectrode array products, about 5%. Bioproduction and organized provide exciting new opportunities for high growth, well above our base business. As such, we've established commercial and application science teams dedicated to bioproduction and to advance cellular applications with emerging organoids. We're now offering bioproduction configurations of our well-known BTX family of electroporation and electrofusion systems. Bioproduction is an opportunity to drive significant recurring consumable revenue for us. We recently also announced a CGMP compliant amino acid analyzer, also now targeted for bioproduction applications. This AAA system is adapted from our clinical amino acid systems, which is in operation today in leading clinical laboratories around the world. Finally, we're leveraging our historical leadership position in advanced cell applications to drive high-volume growth in both biopharma and CRO. We launched the MeSH MEA organoid platform at the Society for Neuroscience. We also showcased MeSH organoid at the Society for Toxicology, where we see a potential for in vitro neuro and cardiac safety and toxicology applications. We're excited to see strong interest for applications in research and biopharma discovery, which we expect to then lead to high volume compound analysis and testing applications. Now I'll turn the call over to Jennifer, our CFO, to take a look at the key financials.