Release Date: May 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Harvard Bioscience Inc maintained strong gross margins at 60.3%, aligning with their long-term target despite a decrease in revenue.
- The company has implemented cost reductions to support commercial investments for growth and meet earnings targets.
- New product launches and commercialization efforts, such as VivaMARS and SoHo, are expected to drive future growth.
- Harvard Bioscience Inc is expanding into high-growth opportunities with bioproduction and organoids, which are anticipated to contribute significantly to future revenue.
- The company has a robust pipeline of innovative products, including electroporation and amino acid related products, which make up around 10% of their revenue.
Negative Points
- Revenue for Q1 2024 was down by $5.5 million from the previous year, indicating a tough start to the year.
- Significant slowdown in sales in China and Asia Pacific, with a 35% decrease in reported revenue, continuing through Q1.
- Supply chain issues resulted in a $1 million revenue shipment delay for one product alone, pushing it out of Q1.
- Overall EMEA revenue was down 16% as reported, affected by tight budgets and economic challenges including higher interest rates and impacts from the situation in Ukraine.
- Harvard Bioscience Inc recorded an operating loss of $2.3 million on a GAAP basis for Q1 2024.
Q & A Highlights
Q: On the quarter, where are you with electroporation? Do you think that's the biggest driver of growth here in 2024? And overall, what portion of revenue in '24 do you think will be from products introduced in the last year?
A: James Green - Harvard Bioscience Inc - Chairman of the Board, President, Chief Executive Officer: Electroporation and bioproduction are key parts of our business and are expected to drive meaningful growth. These areas represent about 10% of our business. We are also expanding our AAA product to sell into bioproduction applications. We expect these areas to contribute about 1-2% growth this year, potentially increasing in the following years.
Q: What do you think your exposure is to the cell and gene therapy market? Is it 10%, 20%?
A: James Green - Harvard Bioscience Inc - Chairman of the Board, President, Chief Executive Officer: It's hard to quantify exactly, but our products are extensively used by academic researchers and in the discovery side of pharma companies for initial development for cell and gene therapy. We are focusing on transferring this capability to production applications to capture more of this market.
Q: So the second quarter is generally either flat or down over the first quarter, but you've got that one order that shifted out from the first quarter. Can you give us a rough idea of what your expectations are for second quarter revenue?
A: James Green - Harvard Bioscience Inc - Chairman of the Board, President, Chief Executive Officer: Historically, Q2 and Q4 are stronger than Q1 and Q3 due to academic and year-end budget cycles. We expect some sequential improvement in Q2, with more significant growth expected in the second half of the year as new product introductions gain traction and the headwind from China reverses.
Q: How confident are you that you can capture some of the new stimulus in China?
A: James Green - Harvard Bioscience Inc - Chairman of the Board, President, Chief Executive Officer: We are well-positioned in China and expect to benefit from the new stimulus package announced by the Chinese government. This should clear the way for increased orders as academic researchers feel more confident in their budget approvals.
Q: Regarding recurring revenue, do you have a target or goal for fiscal '24?
A: James Green - Harvard Bioscience Inc - Chairman of the Board, President, Chief Executive Officer: Our long-term goal is to achieve double-digit growth. We are focusing on underpinning this with strong growth in the second half of '24, which should set a solid foundation for continued growth into 2025.
Q: Could you give us a little more granularity on the cost initiatives, the areas therein and the rationale behind it?
A: James Green - Harvard Bioscience Inc - Chairman of the Board, President, Chief Executive Officer: We are continuously looking for efficiencies to fund our growth initiatives while committing to delivering our EBITDA targets. This involves balancing cost reductions with investments in commercialization and new areas like organoid work and bioproduction.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
