Harvard Bioscience Announces Third Quarter 2020 Financial Results

• Operating margin up year-over-year on GAAP and adjusted basis
• Revenue improved sequentially with solid CRO/pharma demand and academic labs reopening
• Generated positive operating cash flow in Q3 with working capital improvements
  

HOLLISTON, Mass., Nov. 05, 2020 (GLOBE NEWSWIRE) -- Harvard Bioscience, Inc. (Nasdaq: HBIO) (the “Company”) today announced financial results for the three and nine months ended September 30, 2020.

Jim Green, Chairman and CEO said, “Since anticipating academic labs around the world would likely experience pandemic-related shutdowns early in the year, we moved aggressively to manage costs. These actions, combined with restructuring programs, reduced overall cost of operations delivering year-over-year adjusted operating income and margin growth.”

Green concluded, “The continued growth from CRO/pharma customers, reopening of academic labs and our lower cost of operations, are expected to drive solid operating margins throughout the rest of 2020 and allow for targeted commercial and product investments to drive revenue growth. We expect adjusted operating margins for the second half of 2020 to be in the mid to upper teens.”

Quarterly Financial Results Summary
		Q3'20		Q2'20		Q3'19
Revenue		$24.0 million		$23.3 million		$27.4 million
Operating Income (Loss) (GAAP)		$0.2 million		$0.6 million		$(1.4) million
Adjusted Operating Income		$3.6 million		$4.1 million		$3.3 million
Adjusted Operating Margin		14.8%		17.7%		12.1%
Loss per diluted share (GAAP)		($0.03)		($0.04)		($0.07)
Diluted EPS (GAAP)		$0.04		$0.05		$0.04
Adjusted Diluted EPS*		$41.6 million		$42.1 million		$48.8 million
* Debt outstanding less cash and cash equivalents

Please refer to the exhibits below for a reconciliation of certain non-GAAP to GAAP financial measures, including operating income, net income and loss, and diluted earnings per share. Please see “Use of Non-GAAP Financial Information” for additional information regarding our use of such adjusted financial information.

Webcast and Conference Call Details

Harvard Bioscience will be hosting a conference call and webcast today at 8:00 a.m. Eastern Time. You can access the live conference call by dialing the following phone numbers: toll-free 1 [phone] or international 1 [phone] and referencing the conference ID# 9438549.

The conference call will be simultaneously webcast and can be accessed through the Harvard Bioscience website. A slide presentation that will be referenced during the webcast will be posted to our Investor Relations website shortly before the webcast begins. To listen to the webcast, log on to the webcast at: http://investor.harvardbioscience.com/ and click on the Earnings Call icon.

Use of Non-GAAP Financial Information

In this press release, we have included non-GAAP financial information including adjusted operating income, adjusted net income, and adjusted diluted earnings per share. We believe that this non-GAAP financial information provides investors with an enhanced understanding of the underlying operations of the business. For the periods presented, these non-GAAP financial measures have excluded certain expenses and income primarily resulting from purchase accounting or events that we do not believe are related to the underlying operations of the business such as amortization of intangibles related to acquisitions, costs related to acquisition, disposition and integration initiatives, impairment charges, severance, restructuring and other business transformation expenses, and stock-based compensation expense. They also exclude the tax impact of the reconciling items. This non-GAAP financial information approximates information used by our management to internally evaluate the operating results of the Company. Tabular reconciliations of our adjusted operating income, adjusted net income (loss), and adjusted earnings (loss) per diluted share are included as exhibits below in this press release.

The non-GAAP financial information provided in this press release should be considered in addition to, not as a substitute for, the financial information provided and presented in accordance with GAAP and may be different than other companies’ non-GAAP financial information.

About Harvard Bioscience

Harvard Bioscience is a leading developer, manufacturer and seller of technologies, products and services that enable fundamental research, discovery, and pre-clinical testing for drug development. Our customers range from renowned academic institutions and government laboratories, to the world’s leading pharmaceutical, biotechnology and clinical research organizations. With operations in North America, Europe, and China, we sell through a combination of direct and distribution channels to customers around the world.

For more information, please visit our website at www.harvardbioscience.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the federal securities laws, including the Private Securities Litigation Reform Act of 1995. You can identify these statements by our use of such words as "will," "guidance," "objectives," "optimistic," "potential," "future," "expects," "plans," "estimates," "continue," "drive," "strategy," "potential," "potentially," "growth," "long-term," "projects," "projected," "intends," "believes," "goals," "sees," "seek," "develop" "possible" "new," "emerging," "opportunity," "pursue" and similar expressions that do not relate to historical matters. Forward-looking statements in this press release or that may be made during our conference call may include, but are not limited to, statements or inferences about the Company's or management's beliefs or expectations, the Company's anticipated future revenues and earnings, the strength of the Company's market position and business model, industry outlook, the impact of the COVID-19 pandemic on the Company’s business, the Company's business strategy, the positioning of the Company for growth, the market demand and opportunity for the Company's current products, or products it is developing or intends to develop, and the Company's plans, objectives and intentions that are not historical facts. These statements involve known and unknown risks, uncertainties and other factors that may cause the Company's actual results, performance, or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Investors should note that many factors, as more fully described under the caption “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019, and in our Quarterly Reports on Form 10-Q issued in 2020 and in our other filings with the Securities and Exchange Commission and as otherwise enumerated herein or therein may cause the Company's actual results to differ materially from those in the forward-looking statements. The forward-looking statements in this press release are qualified by these risk factors. The Company's results may also be affected by factors of which the Company is not currently aware. The Company may not update these forward-looking statements, even though its situation may change in the future, unless it has obligations under the federal securities laws to update and disclose material developments related to previously disclosed information.

For investor inquiries, please contact Michael A. Rossi, Chief Financial Officer at [phone].

	HARVARD BIOSCIENCE, INC.
	Consolidated Statements of Operations
	(unaudited, in thousands, except per share data)
					Three Months Ended
					September 30, 2020				June 30, 2020				September 30, 2019
		Revenues			$	24,037			$	23,308			$	27,418
		Cost of revenues				10,542				9,452				12,440
			Gross profit			13,495				13,856				12,439
		Operating expenses:
			Sales and marketing expenses			4,588				4,279				5,294
			General and administrative expenses			5,399				5,670				6,604
			Research and development expenses			1,949				1,897				2,564
			Amortization of intangible assets			1,377				1,454				1,422
			Impairment charges			-				-				460
		Total operating expenses				13,313				13,300				16,344
		Operating income (loss)				182				556				(1,365	)
		Other expense:
			Interest expense, net			(1,205	)			(1,233	)			(1,348	)
			Other (expense) income, net			(392	)			(191	)			39
		Other expense				(1,597	)			(1,424	)			(1,309	)
		Loss before income taxes				(1,415	)			(868	)			(2,674	)
		Income tax provision (benefit)				(317	)			713				(54	)
		Net loss			$	(1,098	)		$	(1,581	)		$	(2,620	)
		Basic and diluted loss per share			$	(0.03	)		$	(0.04	)		$	(0.07	)
		Weighted average common shares:
			Basic and diluted			38,920				38,468				38,036

		HARVARD BIOSCIENCE, INC.
		Consolidated Statements of Operations
		(unaudited, in thousands, except per share data)
					Nine Months Ended
					September 30, 2020				September 30, 2019
		Revenues			$	71,116			$	85,204
		Cost of revenues				30,783				38,116
			Gross profit			40,333				47,088
		Operating expenses:
			Sales and marketing expenses			14,446				17,370
			General and administrative expenses			17,828				17,215
			Research and development expenses			6,336				8,070
			Amortization of intangible assets			4,258				4,289
			Impairment charges			-				1,401
		Total operating expenses				42,868				48,345
		Operating loss				(2,535	)			(1,257	)
		Other expense:
			Interest expense, net			(3,737	)			(4,129	)
			Other expense, net			(472	)			(214	)
		Other expense				(4,209	)			(4,343	)
		Loss before income taxes				(6,744	)			(5,600	)
		Income tax provision (benefit)				451				(363	)
		Net loss			$	(7,195	)		$	(5,237	)
		Basic and diluted loss per share			$	(0.19	)		$	(0.14	)
		Weighted average common shares:
			Basic and diluted			38,540				37,764

	HARVARD BIOSCIENCE, INC.
	Condensed Consolidated Balance Sheets
	(unaudited, in thousands)
			September 30, 2020				December 31, 2019
		Assets
		Cash and cash equivalents	$	2,806			$	8,335
		Accounts receivables		13,879				20,704
		Inventories		22,689				22,061
		Other current assets		4,146				2,472
		Total current assets		43,520				53,572
		Property, plant and equipment		4,309				4,776
		Goodwill and other intangibles		91,962				95,786
		Other long-term assets		9,823				10,736
		Total assets	$	149,614			$	164,870
		Liabilities and Stockholders' Equity
		Current portion, long-term debt	$	2,807			$	6,900
		Other current liabilities		18,441				18,412
		Total current liabilities		21,248				25,312
		Long-term debt		40,669				46,917
		Other long-term liabilities		10,530				10,947
		Stockholders’ equity		77,167				81,694
		Total liabilities and stockholders’ equity	$	149,614			$	164,870

	HARVARD BIOSCIENCE, INC.
	Condensed Consolidated Statements of Cash Flows
	(unaudited, in thousands)
				Nine Months Ended
			September 30, 2020				September 30, 2019
		Cash flows from operating activities:
		Net loss	$	(7,195	)		$	(5,237	)
		Changes in operating assets and liabilities		5,360				960
		Other adjustments to operating cash flows		8,676				10,102
		Net cash provided by operating activities		6,841				5,825
		Cash flows from investing activities:
		Additions to property, plant and equipment		(1,088	)			(778	)
		Disposition of business		-				1,020
		Other investing activities		-				(15	)
		Net cash (used in) provided by investing activities		(1,088	)			227
		Cash flows from financing activities:
		Proceeds from borrowings		9,615				4,300
		Repayments of debt		(20,251	)			(11,103	)
		Other financing activities		(688	)			(392	)
		Net cash used in financing activities		(11,324	)			(7,195	)
		Effect of exchange rate changes on cash		42				(185	)
		Decrease in cash and cash equivalents		(5,529	)			(1,328	)
		Cash and cash equivalents at the beginning of period		8,335				8,173
		Cash and cash equivalents at the end of period	$	2,806			$	6,845

	HARVARD BIOSCIENCE, INC.
	Reconciliation of GAAP to Non-GAAP Financial Measures (unaudited)
	(in thousands, except per share data)
			Three Months Ended
			September 30,				June, 30				September 30,
				2020				2020				2019
		GAAP operating income (loss)	$	182			$	556			$	(1,365	)
		Stock-based compensation expense		1,079				769				987
		Severance, restructuring and transformation costs		876				1,287				1,759
		Acquired intangible assets amortization and impairments		1,377				1,455				1,882
		Non-cash expense - acquisition accounting		51				53				59
		Adjusted operating income	$	3,565			$	4,120			$	3,322
		GAAP operating margin		0.8	%			2.4	%			-5.0	%
		Adjusted operating margin		14.8	%			17.7	%			12.1	%
		GAAP net loss	$	(1,098	)		$	(1,581	)		$	(2,620	)
		Stock-based compensation expense		1,079				769				987
		Severance, restructuring and transformation costs		876				1,287				1,759
		Acquired intangible assets amortization and impairments		1,377				1,455				1,882
		Non-cash expense - acquisition accounting		51				53				59
		Income taxes (A)		(823	)			103				(341	)
		Adjusted net income	$	1,462			$	2,086			$	1,726
		GAAP loss per diluted share	$	(0.03	)		$	(0.04	)		$	(0.07	)
		Adjusted items after tax per share assuming dilution		0.07				0.09				0.11
		Adjusted earnings per diluted share	$	0.04			$	0.05			$	0.04
		Weighted average diluted common shares:
		GAAP		38,920				38,468				38,036
		Adjusted		40,307				39,593				38,603
		(A)    Income taxes includes the tax effect of the adjustments to GAAP results.

	HARVARD BIOSCIENCE, INC.
	Reconciliation of GAAP to Non-GAAP Financial Measures (unaudited)
	(in thousands, except per share data)
			Nine Months Ended
			September 30,				September 30,
				2020				2019
		GAAP operating (loss) income	$	(2,535	)		$	(1,257	)
		Stock-based compensation expense		2,641				2,193
		Severance, restructuring and transformation costs		3,635				2,391
		Acquired intangible assets amortization and impairments		4,258				5,690
		Non-cash expense - acquisition accounting		159				239
		Adjusted operating income	$	8,158			$	9,256
		GAAP operating margin		-3.6	%			-1.5	%
		Adjusted operating margin		11.5	%			10.9	%
		GAAP net loss	$	(7,195	)		$	(5,237	)
		Stock-based compensation expense		2,641				2,193
		Severance, restructuring and transformation costs		3,635				2,391
		Acquired intangible assets amortization and impairments		4,258				5,690
		Non-cash expense - acquisition accounting		159				239
		Income taxes (A)		(435	)			(1,294	)
		Adjusted net income	$	3,063			$	3,982
		GAAP loss per diluted share	$	(0.19	)		$	(0.14	)
		Adjusted items after tax per share assuming dilution		0.27				0.24
		Adjusted earnings per diluted share	$	0.08			$	0.10
		Weighted average diluted common shares:
		GAAP		38,540				37,764
		Adjusted		39,824				38,251
		(A)    Income taxes includes the tax effect of the adjustments to GAAP results.