Harvard Bioscience Announces Fourth Quarter 2021 Financial Results

Harvard Bioscience, Inc.

• Revenue up 7% year-over-year as sales momentum continues, despite global supply chain headwinds

• Gross margin improves to 59% in Q4 driven by strengthening product mix, improved operating leverage
  

HOLLISTON, Mass., March 08, 2022 (GLOBE NEWSWIRE) -- Harvard Bioscience, Inc. (Nasdaq: HBIO) (the “Company”) today announced financial results for the period ended December 31, 2021.

Jim Green, Chairman and CEO said, “The positive trends we reported through the first three quarters of 2021 have carried through with our strong top line performance in Q4. Demand for our pre-clinical products continued to very strong, with revenue up 6% over prior year quarter, and 18% for the full year. Our CMT products also experienced meaningful growth, up 9% over prior year quarter as academic lab sales continue to recover. Operating income for Q4 was modestly lower than last year due primarily to higher material, freight and labor costs associated with ongoing global supply disruptions as well as higher variable compensation given strong performance versus our goals in 2021. Gross margin increased to 59% in Q4 on improved product mix.”

Mr. Green concluded, “With our sales momentum and a solid backlog, we expect reported revenue growth of 10-to-13% compared to 2021. This growth is net of trimming of lower value-add products. Our pre-clinical and CMT product families are both expected to deliver double digit growth in 2022. With sales efforts focused on higher value products and channels, new products launched in 2021 and improvements in internal operations, we expect to improve gross margin by over a percentage point and to deliver adjusted operating margins in the range of 15-to-16%. These anticipated profit improvements include incremental investments in sales coverage expansion and higher R&D in 2022 to underpin sustained double-digit growth over the long run.”

Quarterly Financial Results Summary	Q4'21					Q4'20
Revenues	$	33.1		million		$	31.0			million
Operating Income (GAAP)	$	1.7		million		$	2.8			million
Adjusted Operating Income	$	5.3		million		$	5.8			million
Operating Margin (GAAP)		5.1		%			8.9			%
Adjusted Operating Margin		16.0		%			18.7			%
Diluted Income (Loss) Per Share (GAAP)	$	0.02				$	(0.02	)
Diluted Adjusted Earnings Per Share	$	0.08				$	0.08
Net Debt*	$	41.6		million		$	41.1			million

* Debt outstanding less cash and cash equivalents

For more details on Q4 performance, a slide presentation that will be referenced during the webcast will be posted to our Investor Relations website shortly before the webcast begins.

Please refer to the exhibits below for a reconciliation of certain non-GAAP to GAAP financial measures, including operating income, net income and loss, diluted earnings per share and adjusted EBITDA. 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 (877) 303-7611 or international 1 (970) 315-0445 and referencing the conference ID# 1749525.

The conference call will be simultaneously webcast and can be accessed through the Harvard Bioscience website. 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, adjusted diluted earnings per share, and adjusted EBITDA. 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. Any non-GAAP financial statement information included herein are accompanied by a reconciliation to the nearest corresponding GAAP measure which 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 contract 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 and related supply chain disruptions 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, 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 (508) 893-8999.

																							Exhibit 1
		HARVARD BIOSCIENCE, INC.
		Consolidated Statements of Operations
		(unaudited, in thousands, except per share data)
											Three Months Ended							Year Ended
											December 31, 2021				December 31, 2020				December 31, 2021				December 31, 2020
			Revenues							$	33,055			$	30,984			$	118,904			$	102,100
			Cost of revenues								13,495				13,276				51,252				44,059
				Gross profit							19,560				17,708				67,652				58,041
			Operating expenses:
				Sales and marketing expenses							7,343				5,470				24,642				19,916
				General and administrative expenses							6,115				5,681				24,305				23,509
				Research and development expenses							2,951				2,349				10,799				8,685
				Amortization of intangible assets							1,452				1,452				5,840				5,710
			Total operating expenses								17,861				14,952				65,586				57,820
			Operating income								1,699				2,756				2,066				221
			Other (expense) income:
				Interest expense							(379	)			(1,094	)			(1,540	)			(4,831	)
				Debt extinguishment and related costs							-				(1,876	)			-				(1,876	)
				Other expense, net							(189	)			(334	)			(666	)			(806	)
			Total other expense								(568	)			(3,304	)			(2,206	)			(7,513	)
			Income (loss) before income taxes								1,131				(548	)			(140	)			(7,292	)
			Income tax expense								170				67				148				518
			Net income (loss)							$	961			$	(615	)		$	(288	)		$	(7,810	)
			Earnings (Loss) per common share:
				Basic earnings (loss) per common share						$	0.02			$	(0.02	)		$	(0.01	)		$	(0.20	)
				Diluted earnings (loss) per common share						$	0.02			$	(0.02	)		$	(0.01	)		$	(0.20	)
			Weighted-average common shares:
				Basic							40,840				39,021				40,343				38,640
				Diluted							43,372				39,021				40,343				38,640

								Exhibit 2
		HARVARD BIOSCIENCE, INC.
		Condensed Consolidated Balance Sheets
		(unaudited, in thousands)
					December 31, 2021			December 31, 2020
			Assets
			Cash and cash equivalents	$	7,821		$	8,317
			Accounts receivables		21,834			17,766
			Inventories		27,587			22,262
			Other current assets		4,341			3,355
			Total current assets		61,583			51,700
			Property, plant and equipment		3,415			3,960
			Goodwill and other intangibles		85,074			91,741
			Other long-term assets		12,272			8,853
			Total assets	$	162,344		$	156,254
			Liabilities and Stockholders' Equity
			Current portion, long-term debt	$	3,235		$	1,721
			Other current liabilities		22,081			19,332
			Total current liabilities		25,316			21,053
			Long-term debt		45,095			46,286
			Other long-term liabilities		8,532			12,234
			Stockholders’ equity		83,401			76,681
			Total liabilities and stockholders’ equity	$	162,344		$	156,254

									Exhibit 3
		HARVARD BIOSCIENCE, INC.
		Condensed Consolidated Statements of Cash Flows
		(unaudited, in thousands)
				Year Ended
					December 31, 2021				December 31, 2020
			Cash flows from operating activities:
			Net loss	$	(288	)		$	(7,810	)
			Adjustments to operating cash flows		11,740				13,035
			Changes in operating assets and liabilities		(10,190	)			4,106
			Net cash provided by operating activities		1,262				9,331
			Cash flows from investing activities:
			Additions to property, plant and equipment		(1,195	)			(1,152	)
			Additions to intangible assets		(150	)			(250	)
			Net cash used in investing activities		(1,345	)			(1,402	)
			Cash flows from financing activities:
			Proceeds from borrowings		4,250				61,315
			Repayments of debt		(4,200	)			(66,912	)
			Payments of debt issuance costs		(102	)			(1,298	)
			Debt extinguishment cost		-				(599	)
			Proceeds from exercise of stock options		3,314				669
			Taxes related to net share settlemenrt of equity awards		(3,514	)			(1,142	)
			Net cash used in financing activities		(252	)			(7,967	)
			Effect of exchange rate changes on cash		(161	)			20
			Decrease in cash and cash equivalents		(496	)			(18	)
			Cash and cash equivalents at the beginning of period		8,317				8,335
			Cash and cash equivalents at the end of period	$	7,821			$	8,317

																											Exhibit 4
	HARVARD BIOSCIENCE, INC.
	Reconciliation of GAAP to Non-GAAP Financial Measures (unaudited)
	Three Months Ended December 31, 2021
	(in thousands, except per share data)
												Stock-Based				Acquired Assets				Restructuring,				Income
	Statement of Operations							GAAP				Compensation				Amortization				Transformation				Taxes				ADJUSTED
	Revenues							$	33,055				-				-				-				-			$	33,055
	Cost of revenues								13,495				(35	)			(12	)			(80	)			-				13,368
		Gross profit							19,560				35				12				80				-				19,687
	Gross Margin								59.2	%																			59.6	%
	Operating expenses:
		Sales and marketing expenses							7,343				(134	)			(2	)			(277	)			-				6,930
		General and administrative expenses							6,115				(823	)			(16	)			(648	)			-				4,628
		Research and development expenses							2,951				(41	)			(10	)			(49	)			-				2,851
		Amortization of intangible assets							1,452				-				(1,452	)			-				-				-
	Total operating expenses								17,861				(998	)			(1,480	)			(974	)			-				14,409
	Operating Expenses - % of Revenues								54.0	%																			43.6	%
	Operating income								1,699				1,033				1,492				1,054				-				5,278
	Operating Margin								5.1	%																			16.0	%
	Other (expense) income:
		Interest expense							(379	)			-				-				-				-				(379	)
		Other expense, net							(189	)			-				-				-				-				(189	)
	Total other expense								(568	)			-				-				-				-				(568	)
	Income before income taxes								1,131				1,033				1,492				1,054				-				4,710
	Income tax expense								170				-				-				-				1,022				1,192
	Net income							$	961			$	1,033			$	1,492			$	1,054			$	(1,022	)		$	3,518
	Earnings per common share:
		Basic earnings per common share						$	0.02																			$	0.09
		Diluted earnings per common share						$	0.02																			$	0.08
	Weighted-average common shares:
		Basic							40,840																				40,840
		Diluted							43,372																				43,372

																											Exhibit 4.1
	HARVARD BIOSCIENCE, INC.
	Reconciliation of GAAP to Non-GAAP Financial Measures (unaudited)
	Three Months Ended December 31, 2020
	(in thousands, except per share data)
												Stock-Based				Acquired Assets				Restructuring,				Income
	Statement of Operations							GAAP				Compensation				Amortization				Transformation				Taxes				ADJUSTED
	Revenues							$	30,984				-				-				-				-			$	30,984
	Cost of revenues								13,276				(22	)			(19	)			(59	)			-				13,176
		Gross profit							17,708				22				19				59				-				17,808
	Gross Margin								57.2	%																			57.5	%
	Operating expenses:
		Sales and marketing expenses							5,470				(57	)			(2	)			(15	)			-				5,396
		General and administrative expenses							5,681				(873	)			(18	)			(478	)			-				4,312
		Research and development expenses							2,349				(54	)			(12	)			20				-				2,303
		Amortization of intangible assets							1,452				-				(1,452	)			-				-				-
	Total operating expenses								14,952				(984	)			(1,484	)			(473	)			-				12,011
	Operating Expenses - % of Revenues								48.3	%																			38.8	%
	Operating income								2,756				1,006				1,503				532				-				5,797
	Operating Margin								8.9	%																			18.7	%
	Other (expense) income:
		Interest expense							(1,094	)			-				-				-				-				(1,094	)
		Debt extinguishment and related costs							(1,876	)			-				-				1,876				-				-
		Other expense, net							(334	)			-				-				-				-				(334	)
	Total other expense								(3,304	)			-				-				1,876				-				(1,428	)
	(Loss) income before income taxes								(548	)			1,006				1,503				2,408				-				4,369
	Income tax (benefit) expense								67				-				-				-				1,034				1,101
	Net (loss) income							$	(615	)		$	1,006			$	1,503			$	2,408			$	(1,034	)		$	3,268
	(Loss) Earnings per common share:
		Basic (loss) earnings per common share						$	(0.02	)																		$	0.08
		Diluted (loss) earnings per common share						$	(0.02	)																		$	0.08
	Weighted-average common shares:
		Basic							39,021																				39,021
		Diluted							39,021																				40,810

																											Exhibit 4.2
	HARVARD BIOSCIENCE, INC.
	Reconciliation of GAAP to Non-GAAP Financial Measures (unaudited)
	Year Ended December 31, 2021
	(in thousands, except per share data)
												Stock-Based				Acquired Assets				Restructuring,				Income
	Statement of Operations							GAAP				Compensation				Amortization				Transformation				Taxes				ADJUSTED
	Revenues							$	118,904				-				-				-				-			$	118,904
	Cost of revenues								51,252				(118	)			(63	)			(327	)			-				50,744
		Gross profit							67,652				118				63				327				-				68,160
	Gross Margin								56.9	%																			57.3	%
	Operating expenses:
		Sales and marketing expenses							24,642				(507	)			(8	)			(652	)			-				23,475
		General and administrative expenses							24,305				(3,416	)			(65	)			(3,028	)			-				17,796
		Research and development expenses							10,799				(128	)			(42	)			(455	)			-				10,174
		Amortization of intangible assets							5,840				-				(5,840	)			-				-				-
	Total operating expenses								65,586				(4,051	)			(5,955	)			(4,135	)			-				51,445
	Operating Expenses - % of Revenues								55.2	%																			43.3	%
	Operating income								2,066				4,169				6,018				4,462				-				16,715
	Operating Margin								1.7	%																			14.1	%
	Other (expense) income:
		Interest expense							(1,540	)			-				-				-				-				(1,540	)
		Other expense, net							(666	)			-				-				-				-				(666	)
	Total other expense								(2,206	)			-				-				-				-				(2,206	)
	(Loss) income before income taxes								(140	)			4,169				6,018				4,462				-				14,509
	Income tax (benefit) expense								148				-				-				-				3,387				3,535
	Net (loss) income							$	(288	)		$	4,169			$	6,018			$	4,462			$	(3,387	)		$	10,974
	Earnings (Loss) per common share:
		Basic earnings (loss) per common share						$	(0.01	)																		$	0.27
		Diluted earnings (loss) per common share						$	(0.01	)																		$	0.25
	Weighted-average common shares:
		Basic							40,343																				40,343
		Diluted							40,343																				43,153

																											Exhibit 4.3
	HARVARD BIOSCIENCE, INC.
	Reconciliation of GAAP to Non-GAAP Financial Measures (unaudited)
	Year Ended December 31, 2020
	(in thousands, except per share data)
												Stock-Based				Acquired Assets				Restructuring,				Income
	Statement of Operations							GAAP				Compensation				Amortization				Transformation				Taxes				ADJUSTED
	Revenues							$	102,100				-				-				-				-			$	102,100
	Cost of revenues								44,059				(65	)			(78	)			(80	)			-				43,836
		Gross profit							58,041				65				78				80				-				58,264
	Gross Margin								56.8	%																			57.1	%
	Operating expenses:
		Sales and marketing expenses							19,916				(263	)			(8	)			(140	)			-				19,505
		General and administrative expenses							23,509				(3,121	)			(68	)			(3,957	)			-				16,363
		Research and development expenses							8,685				(198	)			(56	)			11				-				8,442
		Amortization of intangible assets							5,710				-				(5,710	)			-				-				-
	Total operating expenses								57,820				(3,582	)			(5,842	)			(4,086	)			-				44,310
	Operating Expenses - % of Revenues								56.6	%																			43.4	%
	Operating income								221				3,647				5,920				4,166				-				13,954
	Operating Margin								0.2	%																			13.7	%
	Other (expense) income:
		Interest expense							(4,831	)			-				-				-				-				(4,831	)
		Debt extinguishment and related costs							(1,876	)			-				-				1,876				-				-
		Other expense, net							(806	)			-				-				-				-				(806	)
	Total other expense								(7,513	)			-				-				1,876				-				(5,637	)
	(Loss) income before income taxes								(7,292	)			3,647				5,920				6,042				-				8,317
	Income tax expense								518				-				-				-				1,469				1,987
	Net (loss) income							$	(7,810	)		$	3,647			$	5,920			$	6,042			$	(1,469	)		$	6,330
	Earnings (Loss) per common share:
		Basic earnings (loss) per common share						$	(0.20	)																		$	0.16
		Diluted earnings (loss) per common share						$	(0.20	)																		$	0.16
	Weighted-average common shares:
		Basic							38,640																				38,640
		Diluted							38,640																				39,985

														Exhibit 5
		HARVARD BIOSCIENCE, INC.
		Reconciliation of GAAP to Non-GAAP Financial Measures (unaudited)
		(in thousands)
				Three Months Ended						Year Ended
					December 31, 2021			December 31, 2020			December 31, 2021			December 31, 2020
			Operating income	$	1,699		$	2,756		$	2,066		$	221
			Stock-based compensation expense		1,033			1,006			4,169			3,647
			Acquired asset amortization		1,492			1,503			6,018			5,920
			Restructuring and transformation costs		1,054			532			4,462			4,166
			Adjusted operating income		5,278			5,797			16,715			13,954
			Depreciation expense		470			469			1,781			1,922
			Adjusted EBITDA	$	5,748		$	6,266		$	18,496		$	15,876