Harvard Bioscience Inc. Reports First Quarter 2015 Financial Results

HOLLISTON, Mass., April 30, 2015 (GLOBE NEWSWIRE) -- Harvard Bioscience, Inc. (Nasdaq:HBIO), a global developer, manufacturer and marketer of a broad range of solutions to advance life science, reported financial highlights for the three months ended March 31, 2015.

Jeffrey A. Duchemin, President and Chief Executive Officer of Harvard Bioscience, stated, "Our results this quarter largely reflect the impact in foreign currency, weak sales in the academic and government markets and weather in the Northeast. With approximately 35 percent of our business in Europe, foreign exchange headwinds, caused by the strengthening dollar versus the euro, affected customer grants and budgets and consequently impacted our revenue. Early in the quarter we experienced softer-than-expected sales from our academic and government customers, but as the quarter progressed we saw improvements in both sectors. Although the quarter is disappointing, it does not reflect anything fundamental business-wise other than that we must remain committed to our focus on growing our business globally, staying lean by constantly assessing operational efficiencies, adding complementary new products and assessing acquisitions that enhance our core business. Everyone at the company is on board and addressing each of these factors. While it is still early in the second quarter, we have begun to see improvements from the actions we were swift to take."

Mr. Duchemin added, "During Q1, we continued to execute according to our strategic plans. We acquired HEKA Electronik, began shipping from our new Denville Scientific distribution facility in North Carolina, and appointed a new Vice President of Sales at Denville who is also a member of our executive leadership team. We are on track to complete the consolidation of our UK manufacturing facility with our Holliston facility, as we optimize our manufacturing footprint and reduce the number of sites, creating worldwide operational efficiencies. Additionally, the integration of our late 2014 acquisitions, Triangle BioSystems and Multi Channel Systems MCS GmbH, are proceeding according to plan. We also completed the first phase of our ERP launch, which will create additional operational efficiencies."

Mr. Duchemin continued, "As we extend our global commercial operations, China remains a high priority, as do Japan, Korea and other markets in Asia, as we leverage our presence in that region and increase our distribution capabilities there."

Mr. Duchemin concluded, "Our backlog is strong and ahead of last year. We have already begun to see improvements with our customers in government and academic markets. Our long-term strategy is in place. We are also keenly aware of the effect the strengthening of the U.S. dollar has on our business, and are adjusting our financial outlook based on those economics and our expectations. I'll repeat in closing, we remain committed to commercial excellence and organic growth, new product launches, global business development and acquisitions as well as operational efficiencies."

First Quarter Reported Results

Revenues for the three months ended March 31, 2015 were $25.8 million, a decrease of approximately 0.5%, or $0.1 million compared to revenues of $25.9 million for the three months ended March 31, 2014. Revenues for the three months ended March 31, 2015 include the acquisitions of Multi Channel Systems MCS GmbH ("MCS"), Triangle BioSystems, Inc. ("TBSI") and HEKA Electronik ("HEKA").  

Revenues from acquisitions were offset by a negative impact of currency translation.  The strengthening of the U.S. dollar resulted in negative accounting translation of approximately $1.1 million, and revenues from international customers were negatively impacted as a stronger U.S. dollar resulted in fewer international shipments.  In addition, we experienced softness in the Academic and Government end markets because of budget delays and weather conditions.  For a reconciliation of changes in revenues, refer to Exhibit 8 below.

Net loss, as measured under U.S. generally accepted accounting principles ("GAAP"), was $1.4 million, or $0.04 per diluted share, for the three months ended March 31, 2015 compared to net income of $0.7 million, or $0.02 per diluted share, for the same quarter in 2014. Overall, the unfavorable year-to-year quarterly GAAP earnings comparison was due primarily to a decrease in revenues, costs to relocate and consolidate certain facilities, and higher acquisition costs.

Net income, on a non-GAAP basis, was $0.8 million, or $0.02 per diluted share, for the three months ended March 31, 2015, compared to $1.7 million, or $0.05 per diluted share, for the three months ended March 31, 2014. For a reconciliation between the GAAP and non-GAAP net income, refer to Exhibits 5 and 6 below. Overall, the unfavorable year-to-year quarterly non-GAAP earnings comparison was due primarily to a decrease in revenues and costs to relocate and consolidate certain facilities.                       

Financial Guidance

The Company is updating its financial guidance for the full year 2015 issued on February 26, 2015 to reflect the additional negative impact of foreign currency due to the strengthening of the U.S. dollar and the weaker-than-expected Q1.

The Company expects revenues to be approximately $110 million to $112 million. Included in this guidance is the Company's expectation that the negative impact of foreign currency will lower revenues by between $8 million and $10 million, based on current foreign currency exchange rates and lower demand experienced in Q1. 

The Company expects to report full-year 2015 non-GAAP diluted earnings per share of $0.21 to $0.23. This translates to GAAP diluted earnings per share of approximately $0.07 to $0.09.

Included in the above guidance is the Company's expectation that it will incur costs of approximately $750,000 to $1 million, or approximately $0.02 per diluted share, on a non-GAAP basis, to relocate and consolidate certain manufacturing and distribution facilities in 2015. The Company expects that its actions to relocate and consolidate these facilities will result in savings of approximately $750,000 to $1 million annually beginning in 2016.

The Company may incur charges, realize gains or experience other events in 2015 that could cause actual results to vary from this guidance. Refer to Exhibit 7 below for a reconciliation between the GAAP and non-GAAP diluted earnings per share guidance.