Full Press Release Details
EXCERPTS FROM ANNUAL REPORT
Dear Fellow Shareholders
2010 was a landmark year for HBIO with the development of our new Regenerative Medicine Device business. 2010 was also a great year for our core Life
Science Research Tools business with revenue growth of 26% and non-GAAP diluted earnings per share growth of 27%.
2010 MAJOR ACCOMPLISHMENTS:
We are very pleased with our accomplishments in 2010 and are excited about our future as we
see continued strength in our core Life Science Research Tools business and the potential future growth opportunity as we enter the Regenerative Medicine Device market.
We remain committed to providing our customers the best solution and the best value, our employees a secure and positive future and our shareholders the maximum value.
As we head into 2011 we believe we are well positioned to do so.
Tools to Advance Life Science Research and Regenerative Medicine
Harvard Bioscience is a
global developer, manufacturer and marketer of a broad range of specialized scientific products used to advance life science research. In 2009, we started developing new versions of our market leading research products for the emerging field of
regenerative medicine. Regenerative medicine means using stem cells to repair damaged tissue in the body and also growing organs outside the body for transplant. The US Department of Health and Human Services states, the US market for
regenerative medicine is estimated at $100 billion. In early 2010 we launched our first regenerative medicine product, a bioreactor previously used to perform the world s first human transplant of a tissue engineered bronchus. We believe
that regenerative medicine represents a long-term growth opportunity for us.
In the thirteen years under our current
management team, revenue has grown at a compound annual rate of approximately 18.8% and our non-GAAP adjusted operating income from continuing operations has grown at a compound annual growth rate of approximately 16.7%2. This is despite two major recessions during this period.
Our goal is to become a leading provider of tools for life science research and regenerative medicine. We focus on relatively low price point products to
avoid the volatility of capital equipment. We also focus on strong brand names like Harvard Apparatus, Hoefer and Denville Scientific to help communicate the value of our products to our research customers.
Our growth strategy is to combine organic growth (driven by new product development and distribution channel expansion) with tuckunder acquisitions and
operational improvements. We have acquired 21 companies since 1997. We believe that implementing this strategy will lead to growth in non-GAAP earnings per diluted share of 15-25% on average over the next three to five years.
We believe we have a strong balance sheet, a conservative approach to financing and the financial resources to implement this tuckunder acquisition
Both our company and our management team have a strong commitment to shareholder value creation. Our management team collectively
holds approximately 19% of our outstanding shares. During 2010, we completed the second half of our $10 million share repurchase program under which we repurchased approximately 10.1% of the shares outstanding.
We believe our strategy has produced a relatively high level of earnings per share growth with a relatively
high level of consistency. We believe the regenerative medicine opportunity could have long-term growth potential.
Harvard is a registered
trademark of Harvard University. The marks Harvard Apparatus and Harvard Bioscience are being used pursuant to a license agreement between Harvard University and Harvard Bioscience, Inc.
From Inside Front Cover of the Annual Report
| For the years ended December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1997 | 1998 | 1999 | 2000 (IPO) | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | |||||||||||||||||||||||||||||||||||||||||||
| Revenues | $ | 11,464 | $ | 12,154 | $ | 26,178 | $ | 30,575 | $ | 38,088 | $ | 47,009 | $ | 52,024 | $ | 64,745 | $ | 67,431 | $ | 76,181 | $ | 83,407 | $ | 88,049 | $ | 85,772 | $ | 108,179 |
Revenue thirteen -year compound annual growth rate from 1997 to 2010: 18.8%
| For the years ended December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Reconciliation of US GAAP to Non-GAAP Adjusted: | 1997 | 1998 | 1999 | 2000 (IPO) | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | ||||||||||||||||||||||||||||||||||||||||||
| US GAAP operating income (loss) | $ | 2,119 | $ | 2,412 | $ | 1,196 | $ | (10,438 | ) | $ | 3,112 | $ | 5,425 | $ | 7,173 | $ | 8,384 | $ | 7,924 | $ | 8,690 | $ | 9,533 | $ | 8,479 | $ | 8,055 | $ | 10,218 | |||||||||||||||||||||||||||
| Restructuring and severance related expenses | 474 | 302 | 1,771 | 516 | 498 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Inventory write-down due to restructuring | 252 | 159 | 79 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock compensation expense | 3,284 | 14,676 | 2,656 | 1,269 | 519 | 69 | 1,934 | 2,335 | 2,003 | 2,514 | 2,756 | |||||||||||||||||||||||||||||||||||||||||||||
| In-process research and development expense | 159 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Amortization of intangible assets | 27 | 368 | 604 | 956 | 595 | 891 | 1,582 | 1,664 | 1,697 | 1,824 | 1,966 | 1,844 | 2,364 | |||||||||||||||||||||||||||||||||||||||||||
| Fair value adjustments to costs of product sales | 336 | 258 | 50 | 61 | 90 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounts receivable reserve adjustment related to acquisition | (237 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-GAAP adjusted operating income | $ | 2,119 | $ | 2,439 | $ | 4,848 | $ | 4,842 | $ | 6,883 | $ | 7,763 | $ | 8,919 | $ | 10,293 | $ | 9,890 | $ | 12,371 | $ | 13,753 | $ | 14,471 | $ | 13,088 | $ | 15,768 |
Non-GAAP thirteen -year adjusted operating income from continuing operations compound annual growth rate from 1997 to 2010:
See Exhibit 1 on the inside rear cover of this annual report for a reconciliation of US GAAP diluted earnings per common share
from continuing operations to non-GAAP adjusted diluted earnings per common share from continuing operations.
HARVARD BIOSCIENCE, INC.
of US GAAP Diluted Earnings Per Common Share from Continuing Operations to Non-GAAP Adjusted Diluted Earnings Per Common Share from Continuing Operations (unaudited)
| For the years ended December 31, | ||||||||||||||||||||
| 2006 | 2007 | 2008 | 2009 | 2010 | ||||||||||||||||
| US GAAP earnings per diluted share from continuing operations | $ | 0.21 | $ | 0.24 | $ | 0.17 | $ | 0.24 | $ | 0.65 | ||||||||||
| Restructuring and severance related expenses | 0.06 | 0.02 | 0.02 | |||||||||||||||||
| Inventory write-down due to restructuring | 0.01 | 0.01 | ||||||||||||||||||
| Stock compensation expense | 0.06 | 0.07 | 0.06 | 0.08 | 0.09 | |||||||||||||||
| Amortization of intangible assets | 0.05 | 0.06 | 0.06 | 0.06 | 0.08 | |||||||||||||||
| Asset write-down | 0.02 | |||||||||||||||||||
| Direct acquisition cots | 0.01 | 0.01 | 0.01 | |||||||||||||||||
| Gain from adjustment of acquisition contingencies | (0.09 | ) | (0.01 | ) | ||||||||||||||||
| Income taxes (A) | (0.06 | ) | (0.07 | ) | (0.07 | ) | (0.03 | ) | (0.47 | ) | ||||||||||
| Accounts receivable reserve adjustment related to acquisition | (0.01 | ) | ||||||||||||||||||
| Non-GAAP adjusted earnings per diluted share from continuing operations | $ | 0.26 | $ | 0.31 | $ | 0.32 | $ | 0.30 | $ | 0.36 |
Forward-Looking Statements
This Annual Report contains forward-looking statements, which can be identified by our use of guidance, objectives,
emerging, long-term, growth, potential, future, expects, plans, achieve, could, will, lead, opportunity,
estimate, continue, strategy, intend, believe, see and similar expressions. Such statements include, but are not limited to, statements or inferences about our beliefs, plans or
objectives, our anticipated future revenues and earnings, the strength of our market position and business model, the outlook for the life sciences industry and the field of regenerative medicine, our ability to execute our business strategy, our
positioning for growth and the market demand and opportunity for our products.
These statements involve known and unknown risks,
uncertainties and other factors that may cause the Company s actual performance to be materially different from any future performance expressed or implied by the forward-looking statements. Such factors include our failure to consummate
acquisitions, expand our product offerings or introduce new products, including in the field of regenerative medicine, the current and anticipated size of the regenerative medicine market, our ability to manage our growth, and factors described
under Item 1A. Risk Factors in our 2010 Form 10-K or in our other public filings.