Harvard Bioscience(HBIO) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue in Q4 2024 was $24.6 million, which is 13% lower than Q4 2023 but up 12% sequentially from Q3 2024 [7][10] - Gross margin for Q4 was 57%, down from 58% in Q4 2023, with adjusted EBITDA at$ 3 million, a sequential improvement from $1.3 million in Q3 [17][19] - Full year 2024 adjusted EPS was$ 0.03 compared to $0.14 in 2023, reflecting lower gross margins offset partially by reduced operating expenses [24] Business Line Data and Key Metrics Changes - In The Americas, Q4 revenue grew 3% sequentially but was down 11% year-over-year, with preclinical sales rebounding [11] - European revenue in Q4 grew 28% sequentially but was down 7% year-over-year, driven by new product introductions [12] - APAC revenue was up 8% sequentially but down 24% year-over-year, with preclinical sales showing sequential growth but lower year-over-year due to destocking [14][15] Market Data and Key Metrics Changes - The company noted a stabilization in global revenue trends, with sequential improvements across regions [10] - The academic research segment, which constitutes about half of the business, faced headwinds due to uncertainties in NIH funding [70][72] Company Strategy and Development Direction - The company is focusing on expanding into high-growth areas such as electroporation and bioproduction, alongside new product introductions [31][32] - The implementation of a new ERP system is expected to enhance operational efficiencies and inventory management [19][80] - The company is working to extend distribution agreements in North America to increase product reach [29][96] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns about the visibility of NIH funding impacting academic research revenue, leading to cautious revenue guidance for Q1 2025 [44][72] - Despite challenges, management remains optimistic about maintaining positive EBITDA and cash flow to support operations and debt servicing [45][75] Other Important Information - The company has entered into an amendment with lenders to waive Q4 non-compliance with net leverage ratio covenants, requiring refinancing by June 30 [26][27] - Cash flow from operations was$ 1.7 million in Q4, showing sequential improvement compared to Q3 [22] Q&A Session Summary Question: What metric was breached regarding debt financing? - The net leverage ratio was impacted by three quarters of reduced revenue, affecting compliance with the covenant [49][50] Question: What was the previous debt rate and what is expected for the new transaction? - The previous rate was SOFR plus 3.75%, expected to increase by 2 to 4 percentage points in the new transaction [52][54] Question: How are new product introductions performing? - New products like MeshMEA and BTX are gaining traction, with significant sales growth in Europe [57][58] Question: Are current projects fully funded and stable? - Current academic projects are predominantly funded, with ongoing demand from pharma companies [87][90]