HARVARD BIOSCIENCE INC Q3 FY2025 earnings call

• Maintained financial discipline and positive cash generation, with positive operating cash flow for the quarter.
• Accelerated product adoption: SoHo Telemetry expanded into key accounts with increased recurring consumable demand; Biochrom amino acid analyzer for bioproduction performing well; launch of Incub8 Multiwell System with positive customer response; expanded distribution agreement with Fisher Scientific.
• Strengthening capital structure: In active discussions with lenders regarding refinancing, expecting resolution in Q4.
• Monitored NIH funding and government shutdown impact on timing of funding distribution.
• Saw optimism in China trade talks with expectation of reduced tariff disruption; Europe had strong order volume contributing to backlog.

Revenue for the third quarter was $20.6 million, at the high end of the guidance range. Gross margin was 58.4%, improving sequentially and exceeding guidance. Adjusted EBITDA was $2 million. By region: Americas had sequential increase but Y/Y decline; Europe had slight sequential increase but flat Y/Y; APAC (excluding China) improved, while China had Y/Y decline. By product family, preclinical sales increased sequentially and Y/Y due to telemetry and respiratory product lines. Revenue contribution percentages weren't explicitly stated, but key product lines like SoHo Telemetry, Biochrom, and Incub8 were highlighted.

• Guiding revenue for Q4 to a range of $22.5 million to $24.5 million, potentially flat at the high end.
• Gross margin guidance for Q4 is 58% to 60% due to higher volume.
• Mid-single-digit order growth in Q3 Y/Y and 4 consecutive months of Y/Y growth, leading to strongest backlog since Q1 2023.
• Lower end of Q4 revenue range reflects potential risk of prolonged U.S. government shutdown through year-end.

• Potential impact of prolonged U.S. government shutdown lasting through year-end on Q4 results.
• Uncertainty in NIH funding timing and distribution affecting academic institution orders.

Q: When we look at the uptick in preclinical systems during the quarter, was it primarily driven by CROs gearing up to run more studies?

A: We benefited from broad uptick in demand for our telemetry products, not just one region or customer group.

Q: When looking at backlog being the highest in 2 years, is the mix similar to existing product mix or is there a disproportionate product like Mesh MEA?

A: There was broad-based increase in orders across geographies and products, not one specific product or region driving the backlog.

Q: Some larger tools companies see early signs of improvement in academic and government market, what are you seeing?

A: Seen improvement reflected in Q3 results and strong backlog, but NIH funding dependence and government shutdown impact Q4 guidance.

Q: Contemplating end of government shutdown during Q4?

A: Built lower range assuming potential year-end shutdown impact in guidance.

Q: If funds don't get released in Q4, would they flow through sales in Q1 next year?

A: Funds are a timing impact, moving to Q1 or Q2 2026.

Q: Do customers have visibility on NIH funding?

A: Customer-dependent, some have no visibility while others do but waiting for funds to be released.

Q: Where are we in ERP project and flow-through from benefits?

A: Finished project in Q4, moving to one U.S. and Europe platform, benefits rolling through manufacturing and G&A, contributing to expense reduction this year.