Full Press Release Details
| David Green | Chane Graziano | Tom McNaughton | ||
| President | CEO | CFO | ||
| dgreen@harvardbioscience.com | cgraziano@harvardbioscience.com | tmcnaughton@harvardbioscience.com | ||
| Tel: 508 893 8999 | ||||
| Fax: 508 429 8478 |
HBIO Reports Fourth Quarter and Full Year 2008 Results
Holliston, MA, February 26, 2009 / Harvard Bioscience, Inc. (Nasdaq: HBIO), a global developer, manufacturer, and marketer of a broad range
of tools to advance life science research, today reported unaudited financial highlights for the fourth quarter and full year ended December 31, 2008.
Fourth Quarter Reported Results
Revenues from the Company s continuing operations for the three months ended
December 31, 2008 were $23.1 million, a decrease of $1.4 million, or 6.0%, compared to revenues of $24.5 million for the three months ended December 31, 2007. In constant currency, revenues grew by 6.4% for the fourth quarter, compared
with the fourth quarter of 2007. Income from continuing operations, as measured under U.S. generally accepted accounting principles ( GAAP ), was $1.7 million, or $0.06 per diluted share, for the three months ended December 31, 2008
compared to $2.3 million, or $0.07 per diluted share, for the same period in 2007. Included in the fourth quarter 2008 results was a $0.01 per share negative impact from currency exchange rates compared with the fourth quarter of 2007. GAAP income
from continuing operations for the fourth quarter of 2008 included $0.5 million in costs related to an asset write-off and $0.3 million of costs related to acquisition initiatives.
Non-GAAP adjusted income from continuing operations was $3.0 million, or $0.10 per diluted share, for the three months ended December 31, 2008
compared with $3.1 million, or $0.10 per diluted share, for the same period in 2007.
The Company ended 2008 with a strong balance sheet.
We had cash and cash equivalents, net of debt, totaling $12.3 million at December 31, 2008, after having repaid $6.3 million of debt and repurchasing 891,000 of the Company s shares, at a cost of $2.6 million, during the year then ended.
Full Year Reported Results
Revenues from the Company s continuing operations for the year ended December 31, 2008 were $88.0 million, an increase of 5.6% compared with revenues of $83.4 million for the year ended December 31,
2007. On a constant currency basis, revenues grew 9.2% year to year. Income from continuing operations, as measured under U.S. generally accepted accounting principles ( GAAP ), was $5.4 million, or $0.17 per diluted share, for the year
ended December 31, 2008 compared to $7.6 million, or $0.24 per diluted share, for the same period in 2007. GAAP income from continuing operations for the year ended December 31, 2008 included the effect of approximately $1.8 million in
costs related to the Company s ongoing initiative to consolidate business functions to reduce future operating expenses, $0.5 million in costs related to an asset write-off and $0.3 million of costs related to acquisition initiatives during the
Non-GAAP adjusted income from continuing operations was $9.9 million, or $0.32 per diluted share, for the year ended
December 31, 2008 compared to $9.8 million, or $0.31 per diluted share, for the same period in 2007. The 2008 results included a $0.01 per share negative impact from year to year currency exchange rate changes.
See Exhibits 4 and 5 for reconciliations of GAAP to non-GAAP adjusted income from continuing operations and GAAP earnings per diluted share from
continuing operations to non-GAAP adjusted earnings per diluted share from continuing operations.
Chane Graziano, CEO, stated,
Despite the weakening economy during the second half of 2008, we finished the year with a strong fourth quarter. Organic growth in revenues was approximately 6% and non-GAAP operating profit was a record high of $4.6 million, up approximately
18% versus 2007. We saw strength in most product lines but the highlights in revenue growth were the Harvard Apparatus catalog business in the U.S., worldwide demand for the Panlab behavioral products and Biochrom plate readers. The record non-GAAP
operating profit was largely driven by the consolidation of the plate reader business from Austria into our Biochrom subsidiary and sales, marketing and G&A for the Hoefer products from California to Harvard Apparatus in Holliston,
Mr. Graziano continued, I believe our strength in the fourth quarter demonstrates the strength of our strategy
of providing a broad range of well-established specialty products at relatively low price points, leverage of acquisition products through our distribution channels and operational improvements in the companies we acquire.
He added, As we look forward to 2009, we see a difficult economic situation with 11% foreign exchange headwinds in revenues and $0.04 earnings per
share at January 31, 2009 exchange rates. Therefore, without acquisitions we expect revenues to be in the $80.0 $85.0 million range and non-GAAP earnings per share in the $0.27 $0.32 range. For the first quarter of 2009, without
acquisitions we expect revenues to be in the $19.0 $20.0 million range and non-GAAP earnings per share in the $0.06 $0.07 range.
There are factors such as continued expansion of the distribution of the Panlab products, penetration of the U.S. market for the Biochrom products, continued impact of the catalogs we launched in 2008 and further operational improvements
could enable us to overachieve this guidance. However, it will be the acquisitions that we are able to make in 2009 that will be the major factor. Therefore,
with a strong balance sheet and a good credit line, acquisitions will be a major focus in 2009.
Our revenue guidance was calculated
using January 31, 2009 exchange rates (USD1.45/GBP and USD1.28/Euro) and assumes a continuation of the business conditions as we see them at this time. The non-GAAP adjusted earnings per diluted share from continuing operations guidance
excludes amortization of intangible assets, the impact of future acquisitions and acquisition costs in 2009, any future restructuring actions, stock-based compensation expense recognized under SFAS No. 123(R) and the utilization of deferred tax
assets that have full valuation allowances. See the table below for a reconciliation of our estimated non-GAAP adjusted earnings per diluted share from continuing operations to our estimated GAAP adjusted earnings per diluted share from continuing
operations. See Exhibits 3, 4 and 5 for reconciliations of GAAP to non-GAAP adjusted operating income from continuing operations, GAAP to non-GAAP adjusted income from continuing operations and GAAP earnings per diluted share to non-GAAP adjusted
earnings per diluted share from continuing operations for the three months and year ended December 31, 2008.
Guidance for US GAAP Earnings per Diluted Share From Continuing Operations to Adjusted Non-GAAP
Earnings per Diluted Share From
Continuing Operations
| Three Months Ended March 31, 2009 | Year Ended December 31, 2009 | |||||||||||||||
| Low Estimate | High Estimate | Low Estimate | High Estimate | |||||||||||||
| Non-GAAP adjusted diluted earnings per common share from continuing operations - A | $ | 0.06 | $ | 0.07 | $ | 0.27 | $ | 0.32 | ||||||||
| Less the impact of: Amortization of intangible assets - A | (0.01 | ) | (0.01 | ) | (0.06 | ) | (0.06 | ) | ||||||||
| Stock-based compensation (SFAS No. 123(R)) | (0.02 | ) | (0.02 | ) | (0.07 | ) | (0.07 | ) | ||||||||
| Restructuring | (0.02 | ) | (0.02 | ) | ||||||||||||
| Tax - B | 0.01 | 0.01 | 0.04 | 0.04 | ||||||||||||
| GAAP diluted earnings per common share from continuing operations - A | $ | 0.04 | $ | 0.05 | $ | 0.17 | $ | 0.22 |
| A | - | Assumes no additional acquisitions. | ||
| B | - | Tax impact of above items and utilization of deferred tax assets that have full valuation allowances. |
Operating Results for Continuing Operations
Three months ended December 31, 2008 compared to three months ended December 31, 2007:
Revenues decreased $1.4 million, or 6.0%, to $23.1 million for the three months ended December 31, 2008 compared to $24.5 million for the same period in 2007. The decrease in revenues from the prior year was wholly due to the
strengthening of the U.S. dollar. The year-to-year strengthening of the dollar had a $3.0 million, or 12%, negative effect on the Company s fourth quarter revenues. Adjusting for the effect of foreign currency fluctuation, the Company s
Harvard Apparatus and Biochrom businesses realized year-to-year organic revenue growth in the fourth quarter of 4% and 10%, respectively.
Cost of product revenues decreased $1.6 million, or 11.9%, to $11.4 million for the three months ended
December 31, 2008 compared with $13.0 million for the three months ended December 31, 2007. The decrease in cost of product revenues was primarily due to a $1.9 million effect of a strengthened U.S. dollar and manufacturing efficiencies
achieved at the Company s Biochrom business, partially offset by increases from organic sales growth. Gross profit as a percentage of revenues increased to 50.4% for the three months ended December 31, 2008 compared with 47.1% for the same
period in 2007. The increase in gross profit as a percentage of revenues was primarily due to manufacturing efficiency improvements at Biochrom of 1.1%, higher prices on certain products and improved product mix.
Sales and marketing expenses decreased $0.3 million, or 9.7%, to $2.6 million for the three months ended December 31, 2008 compared with $2.9
million for the three months ended December 31, 2007. This decrease was primarily due to the negative effect of a strengthened U.S. dollar. Excluding the impact of currency exchange rates, sales and marketing costs decreased 2% from the prior
General and administrative expenses decreased $0.3 million, or 5.7%, to $4.1 million for the three months ended
December 31, 2008 compared with $4.4 million for the three months ended December 31, 2007. The year-to-year quarterly decrease was primarily due to changes in foreign exchange rates. Excluding the effects of foreign exchange, general and
administrative expenses were flat in the fourth quarter compared with the prior year.
Research and development expenses were $0.9 million,
a decrease of $0.2 million, or 20.1%, for the three months ended December 31, 2008 compared to $1.1 million for the three months ended December 31, 2007. The decrease in research and development expenses occurred primarily in the
Company s Hoefer business unit, and was due to the completion during 2008 of a product design project started in 2007 at Hoefer.
Other, net for the fourth quarter of 2008 included $0.5 million in costs related to an asset write-off and $0.3 million of costs related to acquisition initiatives during 2008.
Year ended December 31, 2008 compared to year ended December 31, 2007:
increased $4.6 million, or 5.6%, to $88.0 million for the year ended December 31, 2008 compared to $83.4 million for the same period in 2007. The Company s Panlab subsidiary, acquired during the fourth quarter of 2007, accounted for a $6.8
million increase in revenues. A strengthening of the U.S. dollar during 2008 had a $3.0 million negative impact on revenues during the year. Excluding the effect of currency rate changes, the Company s Harvard Apparatus business reported a
slight revenue decrease (less than 1%), and the Biochrom business reported 3% organic growth compared with 2007. Biochrom s organic growth came primarily from sales of its new microliter spectrophotometer product.
Cost of product revenues increased $2.7 million, or 6.3%, to $45.9 million for the year ended December 31, 2008 from $43.2 million for the year
ended December 31, 2007. The Company s Panlab subsidiary was acquired in the fourth quarter of 2007, and only that quarter s
operating results were included in the Company s results in 2007. Therefore, Panlab accounted for a $4.4 million increase in cost of product revenues
during 2008. At Biochrom, the additional production costs of its organic sales growth were in large part offset by cost savings derived from consolidating the Asys manufacturing operation into Biochrom s site. The effects of a strengthened U.S.
dollar reduced 2008 cost of product revenues by $1.9 million compared with 2007.
Gross profit as a percentage of revenues decreased to
47.9% for the year ended December 31, 2008 compared with 48.3% for the same period in 2007. The decrease in gross profit as a percentage of revenues was primarily due to certain inventory write-downs related to our consolidation plan (see
Restructuring on the following page).
Sales and marketing expenses increased $0.6 million, or 6.0%, to $11.0 million for the
year ended December 31, 2008 compared to $10.4 million for the year ended December 31, 2007. The inclusion of a full year of sales and marketing costs at our Panlab subsidiary caused an increase of $0.8 million in 2008. That increase was
partially offset by the effects of changes in currency exchange rates, which reduced sales and marketing expenses by $0.1 million in 2008 compared with 2007.
General and administrative expenses increased $0.3 million, or 2.0%, to $15.1 million for the year ended December 31, 2008 compared with $14.8 million for the year ended December 31, 2007. The inclusion of a
full year s results of our Panlab subsidiary caused an increase in general and administrative expenses of $0.6 million in 2008. Additionally, the implementation of the Company s shareholder rights plan during 2008 cost $0.1 million. Those
increases were partially offset by the effects of changes in currency exchange rates, which reduced general and administrative expenses by $0.3 million in 2008 compared with 2007.
Research and development expenses were $4.0 million, an increase of $0.3 million for the year ended December 31, 2008 compared to $3.7 million for
the year ended December 31, 2007. The increase in research and development expenses was primarily due to expenses of $0.5 million at Panlab, partially offset by the effects of currency rate changes.
Other, net for the year ended December 31, 2008 included the effect of $0.5 million in costs related to an asset write-off and $0.3 million of costs
related to acquisition initiatives during 2008. For the year ended December 31, 2007, other, net included $0.03 million of costs related to acquisition initiatives.
The Company ended the fourth quarter of 2008 with cash and cash equivalents of
$13.7 million compared to cash and cash equivalents of $17.9 million held by its continuing operations at December 31, 2007. As of December 31, 2008, the Company had no borrowings outstanding on its revolving credit facility. The Company
had a $5.5 million outstanding balance on the revolving credit facility at December 31, 2007. Additionally, the Company s Panlab subsidiary had $1.4 million and $2.3 million in bank debt remaining at December 31, 2008 and 2007,
respectively. Total cash and equivalents, net of debt, was $12.3 million and $10.1 million at December 31, 2008 and December 31, 2007, respectively.
Trade receivables were $15.1 million and inventories were $11.9 million as of December 31, 2008
compared to trade receivables of $14.8 million and inventories of $15.0 million as of December 31, 2007. Outstanding days of sales, or DSO, were 60 days for the three months ended December 31, 2008 and 56 days for the three months ended
December 31, 2007. Inventory turns were 3.4 times for the three months ended December 31, 2008 compared with 3.6 times for the same period of 2007.
The Company spent $2.6 million to repurchase 891,000 shares of its common stock during 2008.
During the quarter ended March 31, 2008, the management of Harvard Bioscience committed to an ongoing initiative to consolidate
business functions to reduce operating expenses. Our actions in 2008 were related to the separation of our electrophoresis product lines from our spectrophotometer and plate reader product lines. As part of these initiatives we made changes in
management, completed the consolidation of the Hoefer electrophoresis administrative and marketing operations from San Francisco, California to the headquarters of the Harvard Apparatus business in Holliston, Massachusetts and consolidated the
activities of our Asys Hitech subsidiary in Austria to the Company s Biochrom subsidiary s facility located in Cambridge UK. The combined costs of these activities recorded in the year ended December 31, 2008 were $1.8 million.
These charges were comprised of $1.0 million in severance payments, $0.3 million in inventory impairment charges related to the
discontinuance of certain product lines (included in cost of product revenues), $0.1 million in facility closure costs and $0.4 million in various other costs.