Q3 2023 Harvard Bioscience Inc Earnings Call
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Thank you for standing by and welcome to the Harvard Biosciences third quarter 2023 earnings conference call. At this time, all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1 1 on your telephone.
Thank you for standing by and welcome to the Harvard Biosciences third quarter 2023 earnings Conference call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During this session you will need to press star one on your telephone if your question has been.
If your question has been answered and you'd like to remove yourself from the queue, please press star 1-1 again. As a reminder, today's program is being recorded. And now I'd like to introduce your host to today's program, Dave Seroi, Director of SEC Reporting. Please go ahead, sir.
Answered and you'd like to remove yourself from the queue. Please press star one again.
Today's program is being recorded and now I'd like to introduce your host for today's program, David Roy Director of SEC reporting. Please go ahead Sir.
Thank you, Jonathan, and good morning, everyone. Thank you for joining the Harvard Bioscience third quarter 2023 earnings conference.
Okay.
Thank you Jonathan and good morning, everyone. Thank you for joining the Harvard Bioscience third quarter 2023 earnings Conference call.
Before we begin, I would like to suggest that you take a moment and download a copy of a presentation that will be referred to during this call.
Before we begin I would like to suggest that you take a moment and download a copy of a presentation that will be referred to during this call.
The file is entitled Q3 2023 HBIO Quarterly Earnings Presentation and is located in the Investor Overview Events and Presentations section of our website.
Wireless entitled Q3, 2023, each by a quarterly earnings presentation is located in the Investor overview events and presentations section of our website.
Leading the call today will be Jim Green, Chairman of the Board, President and Chief Executive Officer, and Jennifer Cody, Chief Financial Officer.
Leading the call today will be Jim Green Chairman of the Board, President and Chief Executive Officer, and Jennifer Cody Chief Financial Officer.
Before I turn the call over to Jim, I will read our Safe Harbor statement.
Before I turn the call over to Jim I will read our safe Harbor statement.
In our discussion today, we may make statements that constitute forward-looking statements.
In our discussion today, we may make statements that constitute forward looking statements. Our actual results and performance may differ materially from what we have projected due to risks and uncertainties, including those described in our annual report on Form 10-K for the period ended December 31 2022.
Our actual results and performance may differ materially from what we have projected due to risks and uncertainties, including those described in our annual report on Form 10-K for the period ended December 31st, 2022.
subsequent quarterly reports on form 10Q and our other public violence.
Subsequent quarterly reports on Form 10-Q, and our other public filings.
Any forward looking statements, including those related to the company's future results and activities, represent our estimates as of today. It should not be relied upon as representing our estimates as of any.
Forward looking statements, including those related to the company's future results and activities represent our estimates as of today it should not be relied upon as representing our estimates as of any subsequent day.
Also, much of today's call will focus on our non-GaF quarterly results, which we believe better represents the ongoing economics of the business, reflects how we set and measure our incentive compensation plans, and how we manage the business internally.
Also much of today's call will focus on our non-GAAP quarterly results, which we believe better represents the ongoing economics of the business reflects how we set and measure our incentive compensation plans and how we manage the business internally.
The difference between our GAAP and non-GAAP results are outlined in the earnings release in today's presentation. These two documents, as well as a replay of this call, can be found on our website under investor overview events and presentation.
The difference between our GAAP and non-GAAP results are outlined in the earnings release and today's presentation. These two documents as well as a replay of this call can be found on our website under investor overview events and presentations.
Additionally, any material, financial, or other statistical information presented on the call, which is not included in our press release and presentation, will be archived and available in the Investor Relations section of our website.
Additionally, any material financial or other statistical information presented on the call, which is not included in our press release and presentation will be archived and available in the Investor Relations section of our website.
We'll now turn the call over to Jim. Jim, please go ahead. Thank you, David. Hello, everybody.
I will now turn the call over to Jim Jim. Please go ahead.
Thank you, David and Hello, everybody.
Let's start by moving to slide three of the presentation and take a look at the highlights for the quarter.
Let's start by moving to slide three of the presentation and take a look at the highlights for the quarter.
First I'll say that I'm pleased to see strong growth in North America. However, similar to numerous life cycle tools companies, we were impacted by post-COVID lower demand in China and Asia Pacific.
First I'll say that I'm pleased to see strong growth in North America. However, similar to numerous lifecycle tools companies. We did see we were impacted by post COVID-19 lower demand in China and Asia Pacific.
Going to the numbers, revenue for the quarter was $25.4 million. That's down 6% from last year on an as-reported basis.
Going to the numbers revenue for the quarter was $25 4 million, that's down 6% from last year on an as reported basis.
This revenue includes an out-of-fact of 1.3 million of discontinued products compared to the prior year period.
This revenue includes the net effect of $1 3 million of discontinued products compared to the prior year period.
Q3 revenue saw a net positive FX effect of $700,000.
Q3 revenue, so I'm not positive FX effect of $700000.
Adjusting for both FX and discontinued products, our underlying core revenue was down roughly 3.5%.
Adjusting for for both FX and discontinued products, our underlying core revenue was down roughly three 5%.
Gross margin improved to 14.7 million, our 58% of revenue, up from 45% in the same period of FY22.
Gross margin improved to $14 7 million or 58% of revenue up from 45% in the same period of FY 'twenty two.
However, this prior period included inventory write down that impacted FY22 comparable by about 5%.
This prior period included inventory write down that impacted FY 'twenty two comparable by about 5%.
Adjusted operating profit improved $1.8 million, or 7.3% of revenue, up from $700,000 last year, improvement of $1.1 million, or nearly 5 percentage points.
Adjusted operating profit improved $1.8 million or seven 3% of revenue up from $700000 last year, an improvement of $1 1 million or nearly five percentage points.
Adjusted EBITDA measured 2.2 million or 8.9% of revenue, also up five percentage points from the prior year.
Adjusted EBITDA measure $2 2 million or eight 9% of revenue also up five percentage points from the prior year.
Gap earnings per share was a 3 cent loss, an improvement from an 8 cent loss last year.
GAAP earnings per share was a <unk> <unk> loss and improvement from an 8% loss last last year adjusted.
Adjust the DPS, measure the positive one cent per share up from a one cent loss last year.
Adjusted EPS measured a positive <unk> <unk> per share up from a one cent loss last year.
Cash flow from operations was $4.4 million versus $600,000 last year.
Cash flow from operations was $4 $4 million versus $600000 last year.
In the appendix you'll find the bridge from gap measurements to adjusted or non-gap measurements.
In the appendix, you'll find the bridge from GAAP measurements to adjusted or non-GAAP measurements.
I'll move to the next slide, slide four. And look at the revenue by quarter, by product family, and with an improved regional view.
Now let's move to.
The next slide slide four and look at the revenue by quarter by product family and with an improved regional view.
Starting with the Americas, revenue was up 5.9% as reported and included 5.2% of net reduction of discontinued products. So considering discontinued, our underlying core revenue grew by about 11%.
Starting with the Americas revenue was up five 9% as reported and included five 2% of net reduction of discontinued products. So considering discontinued our underlying core revenue grew by about 11%.
Preclinical had strong growth in our core tech, telemetry, and Phenema Enterprise software.
Preclinical had strong growth in our core tech telemetry and Panera enterprise software.
They'll somewhat held back by post-COVID lower needs for respiratory products.
Somewhat held back by by post Covid lower needs for respiratory products.
cellular molecular products were down primarily on discontinued low margin products and some slowness in cell based testing
Cellular and molecular products were down primarily on discontinued low margin products and some slowness in cell based testing systems.
Moving to EMEA, overall EMEA revenue was down 1.4% as reported and included a 6.2% net reduction from discontinued products, but also had a positive FX impact of 7.7%. Adjusting for FX and discontinued, EMEA was down roughly 3.5%.
Moving to EMEA overall, EMEA revenue was down one 4% as reported and included a six 2% net reduction from discontinued products.
Also had a positive FX impact of seven 7% adjusting for FX and discontinued EMEA was down roughly three 5%.
Now moving to China and Asia Pacific, Q3 reported revenue was down 30%.
Now moving to China, and Asia Pacific Q3 reported revenue was down 30% FX.
FX and discontinued products had a modest negative effect of approximately 4.5%.
FX and discontinued products had a modest negative effect of approximately four 5%.
The primary impacts for twofold. Preclinical saw a big drop in demand in preclinical respiratory products, where during the COVID years, including 2022, China had significantly purchased for COVID research. However, our core telemetry and panema enterprise software held close to flat.
The primary impacts were twofold preclinical saw a big drop in demand in preclinical respiratory products, where during the Covid years, including 2022, China had significantly purchased for Covid research. However, our core telemetry and per NEMA enterprise software held close held close to flat.
CMT saw a measurable drop in cellular and molecular products, where again, during COVID, China had strong demand in academic research.
CMT saw measurable drop in cellular and molecular products, where again during COVID-19, China had strong demand in academic research.
We move to slide five of the presentation.
Let me tell you a little bit about some of our exciting new products and new introductions that we'll be showing and showcasing this next week at the Society for Neurology conference.
Let me tell you a little bit about some of our exciting new products and new introductions that will be showing in showcasing this next week at the society for Neurology Conference.
As you know, over the last three years, we've optimized our product offerings to target key technologies in the drug and therapy development continuum. Our product strategy is to continue to introduce new technologies and applications in leading academic research labs and pharma discovery. While at the same time adapting these technologies to further penetrate larger industrial applications with our customers in pharma and CROs and biotech.
As you know over the last three years, we've optimized our product offerings to target key technology, and the drug and therapy development continuum. Our product strategy is to continue to introduce new technologies and applications and leading academic research labs and pharma discovery, while at the same time adapting these technologies to further penetrate larger.
Just real applications with our customers and pharma and Crows in biotech.
Following the strategy, next we will be showcasing a number of these offerings and I'll talk a little bit to you about three in particular here.
Following this strategy next we will show we will be showcasing a number of these offerings and I'll talk a little bit to you about three in particular here.
First we'll be highlighting our new Mesh Micro Electro-Dure Ray platform.
First we'll be highlighting our new mesh micro electrode array platform.
This new MeSH MEA, these new MeSH MEAs are targeted for use in organoids, which are small tissue segments or cultures that we believe can represent a proxy for many organs such as brain and heart.
New mesh EMEA. These new message Emea's are targeted for use in organoid, which are small tissue segments. Our cultures that we believe can represent a proxy for many organs such as brain and heart.
Organoids are a promising growth area for academic research and discovery, as well as safety pharmacology and toxicology.
Organize our a promising growth area for academic research and discovery as well as safety pharmacology and toxicology.
Our new mesh MEAs build on our recognized leadership position in single-well, high-density microelectrode arrays used heavily today, enabling precise signal measurement from within the organoid. We're excited to be presenting early research results using this novel technology on brain organoids at next week's Society for Neurology.
Our new mesh maa's build on our recognized leadership position in single well high density micro electro to raise used heavily today, enabling precise signal measurement from within the Organoid.
We're excited to be presenting early research results using this novel technology on brain Organoid at next week's society for neurology.
Next, we'll highlight our new Viva Mars high capacity behavior monitoring system.
Next we'll highlight our new Veeva Mars high capacity behavior monitoring systems.
We first announced our initial customer order last April . The VivoMar system is specifically adapted to high-volume, multi-animal model in vivo testing and formal reporting required for preclinical regulatory clearance.
We first announced our initial customer order last April the.
The <unk> system is specifically adapted to high volume multi animal model in vivo testing and formal reporting required for preclinical regulatory clearance <unk> leverages, our industry, leading <unk> software platform as well as our Pan lab activity monitoring expertise.
Vimilmars leverages our industry leading Panimus software platform, as well as our pan lab activity monitoring expertise.
It is an excellent example of how we're able to leverage our expertise across all Harvard bioscience family.
It is an excellent example of how we're able to leverage our expertise across all of the Harvard Bioscience family.
This system was developed with our CRO and pharma customer needs in mind and also meets their business needs to increase operating efficiencies, lowering costs, and more importantly, reducing test cycle times to expand capacity and support their revenue growth. We're expecting our first Viva Mars shipment to a CRO customer later in this year.
This system was developed with our CRM and pharma customer needs in mind and also meet their business needs to increase operating efficiencies lowering costs and more importantly, reducing test cycle times to expand capacity and support their revenue growth.
We're expecting our first Veeva March shipment to.
<unk> CRO customer later in this year.
Finally, we'll be showcasing our new SOHO Small Animal Model Telemetry Platform. SOHO is based on our industry-leading telemetry and panema enterprise software platform, and extends our leadership position with expanded capabilities such as concurrent, multi-model testing in a more natural shared housing environment.
Finally, we'll be showcasing our new Soho small animal model telemetry platform Soho is based on our industry, leading telemetry and <unk> enterprise software platform and extend our leadership position with expanded capabilities such as concurrent multi model testing in a more natural shared housing environment as is <unk>.
As with Viva Mars, this platform is designed to meet customers' challenging business needs for lowering operating costs and shorter test cycle times to expand test capacity and drive more of their revenue growth.
This platform is designed to meet customers' challenging business for lowering operating costs and shorter test cycle times to expand test capacity and drive more of their revenue growth.
Now I'll turn the call over to Jennifer, our CFO , for a look at key financials.
I will turn the call over to Jennifer our CFO for a look at key financials Jennifer.
Thank you Jim. Let's step into our Q3 financial results in greater detail. And if you can please refer to slide seven. As a reminder, in addition to our reported gap results, we also include discussion about our adjusted or non- GAAP financial results, which align with information we used internally managed the business. Our slide deck includes the reconciliation between our adjusted results and the corresponding GAAP financial measures on slide 11.
Thank you, Jim let's jump into our Q3 financial results in greater detail and if you can please refer to slide seven.
As a reminder, in addition to our reported GAAP results. We also include a discussion about our adjusted or non-GAAP financial results, which align with information we use to internally manage the business.
Slide deck includes a reconciliation between our adjusted results and the corresponding GAAP financial measures on slide 11.
Jim has already taken you through our revenue performance, and I'll take you through some of our other key financial metrics in more detail.
Jim has already taken you through our revenue performance and I will take you through some of our other key financial metrics in more detail.
If you can please refer to the top middle of the slide on a reported basis, our Q3 gross margin was 58.1% compared to 45.2% and Q3 FY20.
If you can please refer to the top middle of the slide on a reported basis. Our Q3 gross margin was 58, 1% compared to 45, 2% in Q3 FY 'twenty two.
I would like to point out two factors that impacted our gross margin results for the court.
I would like to point out two factors that impacted our gross margin results for the quarters.
A reminder that last quarter we mentioned that we aligned our global process for capitalizing our inventory overhead costs.
Remind you that last quarter, we mentioned that we aligned our global process for capitalizing our inventory overhead costs.
This had an unfavorable impact to gross margin during this quarter of approximately one percentage point. We do expect the roll off of that change to complete during the middle of Q.
This had an unfavorable impact to gross margin during this quarter of approximately one percentage point, we do expect the roll off of that change to complete during the middle of Q4.
Additionally, last year, our Q3 gross margin was unusually low as a result of an inventory charge of $1.3 million related to the discontinuance of non-strategic products which impacted last year unfavorably by about 5%.
Additionally, last year, our Q3 gross margin was unusually low as a result of an inventory charge.
One three.
The million dollars related to the discontinuance of non strategic products, which.
Impacted last year unfavorably by about five percentage points.
Taking into account both of these impacts, we are seeing substantial improvement in our gross margins with underlying gross margin improvement by about 9% over the prior year quarter.
Taking into account both of these impacts we are seeing substantial improvement in our gross margins with underlying gross margin improvement by about 9% over the prior year quarter.
Please refer now to the top right graph where we'll discuss operating expenses and adjusted events.
Please refer now to the top right graph, where we will discuss operating expenses and adjusted EBITDA.
Our adjusted EBITDA during Q3 was 2.2 million compared to 1 million last.
Our adjusted EBITDA during Q3 with $2 2 million compared to 1 million last year.
Our reported operating expenses were slightly reduced during the quarter compared to last Q3. We continue managing our overall operating expenses with this year's OPACs reflecting merit increases and bonus accruals for our employees.
Our reported operating expenses were slightly reduced during the quarter compared to last Q3, we continue managing our overall operating expenses with this year's Opex, reflecting merit increases and bonus accruals for our employees.
Please refer to the bottom left where we will show both reported and adjusted loss earnings per share.
On a reported basis, we improved our diluted loss per share for the quarter from a loss of eight cents to a loss of three cents.
On a reported basis, we improved our diluted loss per share for the quarter from a loss of eight cents to a loss of three cents.
On an adjusted basis, Q3 showed diluted earnings per share of one cent compared to a loss of one cent in Q3 of last year.
On an adjusted basis Q3 diluted earnings per share of one time compared to a loss of one <unk>.
Q3 of last year.
We saw strong improvements due to the combined flow through of our stronger margin dollars and lower operating.
We saw strong improvements due to the combined flow through of our stronger margin and lower operating expenses.
When looking at last Q3, our results included a restructuring charge and inventory write-off which together were $2 million, which are excluded from our adjusted report.
When looking at last Q3, our results included a restructuring charge and inventory write offs, which together were $2 million, which are excluded from our adjusted reporting.
Income tax expense during the quarter related to adjusting our provisions for state and foreign jurisdictions. Adjustments to our evaluation reserves and the normal annualization of our forecasted taxable income by entity. The provision recorded this quarter resulted in an unfavorable impact to our reported EPS of approximately 2.
Income tax expense during the quarter related to adjusting our provision for state and foreign jurisdictions adjustments to our valuation reserves and the normal annualized <unk> of our forecasted taxable income by.
The provision recorded this quarter resulted in an unfavorable impact to our reported EPS of approximately <unk>.
Now, if we switch gears to highlights on cash flow and liquidity, please refer to the graph in the middle of the bottom row where we show another solid quarter with $4.4 million in cash flow from operations as compared to $600,000 last Q3.
Now if we switch gears to highlights on cash flow and liquidity. Please refer to the graph in the middle of the bottom row, where we show another solid quarter with $4 4 million in cash flow from operations as compared to 600000 last Q3.
This enabled us to pay down an additional 2.8 million against our credit facility during the quarter, bringing our year to date pay down to 8.3 million dollars.
This enabled us to pay down an additional $2 8 million against our credit facility during the quarter, bringing our year to date pay down to $8 $3 million.
Net debt at third quarter end compared to prior year is down $11 million.
Net debt at third quarter and compares to prior year is down $11 million.
These improvements position us to achieve our targeted debt reduction goals for the
These improvements position us to achieve our targeted debt reduction goals for the year.
We've typically run lean on capital investments, but we do expect to see increases in capex primarily to support investments in tooling and equipment for our new product introductions as we enter 2020.
We have typically run lean on capital investments, but we do expect to see increases in capex, primarily to support investments in tooling and equipment for our new product introductions as we enter 2024.
Further details on the above items are available in our 10-Q and non gap reconciliation tables included in our press release and in the appendix to this presentation. And I'm now happy to hand back to Jim to cover. 2023 guide.
Further details on the above items are available in our 10-Q and non-GAAP reconciliation tables included in our press release and in the appendix to this presentation.
And I'm now happy to hand back to Jim to cover 2023 guidance.
Thank you, Jen. Now moving to our summary on slide nine, take a look at what we see for the full year 2023. We now expect 2023 full year reported revenue to be roughly flat compared to prior year. And that includes five percentage points of discontinued products as compared to prior year.
Thank you Jan now moving to our summary on slide nine let's take a look at what we see for the full year 2023, we now expect 2023 full year reported revenue to be roughly flat compared to prior year and that includes five percentage points of discontinued products as compared to prior year.
We expect gross margin to remain strong in the 60% range. We expect adjusted even to margins in the 13 to 14%.
We expect gross margin to remain strong in the 60% range and we expect adjusted EBITDA margins in the 13% to 14% range.
We expect our approved EBITDA and cash flow from operations to support significant debt paydown in FY 2023.
We expect our improved EBITDA and cash flow from operations to support significant debt pay down in FY 2023.
continue to reduce net leverage to approximately the two times level by the end of 2023.
We continue to reduce net leverage to approximately the two times level by the end of 2023.
I think it's important to know that overall our core business remains strong and this team continues to focus on exciting new product introductions and expanding service offerings to fuel new growth and a bright future.
I think it's important to know that overall, our core business remains strong and this team continues to focus on exciting new product introductions, and expanding service offerings to fuel new growth and a bright future.
Thank you, now I'll turn the call over to Jonathan our operator to open the line for questions. Thank you. Thank you. And ladies and gentlemen, once again, if you have a question at this time, please press star 11 on your telephone. One moment for our first question.
Thank you and now I'll turn the call over to Jonathan our operator to open the line for questions. Thank you.
Thank you and ladies and gentlemen, once again, if you have a question at this time. Please press star one on your telephone one moment for our first question.
And our first question comes from the line of Bruce Jackson from Benchmark. Your question please.
And our first question comes from the line of Bruce Jackson from Benchmark. Your question. Please.
Hi, good morning and thanks for taking my question. First on the gross margins, nice job. I wanted to know how sustainable do you think those are going forward and could we see any further expansion in 2024?
Hi, good morning, and thanks for taking my question.
First time, the gross margins.
Nice job I wanted to know how sustainable do you think those are growing in Florida and could we see any further expansion in 2024.
Hi, Bruce.
Great question. You know, we've been focusing on our overall cost of operations.
Great question, we've been focusing on our overall cost of operations.
We're confident that, as we had said, that this year we would move toward that roughly 60% region. We think we're going to get within spitting distance of that this year. So we expect that going forward, we're going to be not just where we are today, but even better, as Jen said. We've made some modifications to how we handle various accounting structures, and that has had a bit of a negative effect. In spite of that, we still were looking at
We're confident that and as we have said that this year, we would move toward that roughly 60% region. We think we're going to get within spitting distance of that this year. So we expect we expect that going forward, we're going to we're going to be not just where we are today, but even better as Jen said, we've made some modifications to how we handle.
Various accounting structures and that has had a bit of a negative effect in spite of that we still were looking at.
you know, 58 plus percent gross margin in a quarter that really wasn't all that strong from revenue perspective.
58, plus percent gross margin in a quarter that really wasn't all that strong from a revenue perspective. So as we look forward certainly as we look into Q4 and going forward. Our goal. Our goal has always been to get it 60% or better.
So as we look forward, certainly as we look into Q4 and going forward, our goal has always been to get it 60% or better. So going into next year, I'm confident that we're going to be at that 60% or better kind of number on the gross margin side.
So going into next year I'm confident that we're going to be at that 60% or better kind of number on the gross margin side.
Okay, great. And then a two-part follow-up question on China. Can you maybe give us a little color on the underlying demand for the products in China from the academic research side? And you know, is that going to bounce back at any point? And then secondly, can you give us just a sense of the degree of exposure that that particular region has to the respiratory research business and is it coming back?
Okay, Great and then a two part follow up question on China can you maybe give us a little color on the underlying demand.
So the products in China from the academic research side.
Is that going to bounce back at any point that circuit.
Mike can you give us just a sense of the degree of exposure that that particular region has to the respiratory research business or is it coming back.
Yeah, that's a great question. And we, we, you know, in China and Asia Pacific, is where we saw pretty strong demand for the new respiratory products during the entire COVID phase. And, you know, they probably, at this point, you know, I would believe that they may be bought more than they need, you know, they may, and at this point given, you moving forward, it would went without the amount of COVID research that was taken place, we're probably gonna see more at this slightly lower level on the respiratory product. You know, that's, that's not a great big part of our product line, you know, but it's measurable for us.
Yes, that's a great question.
In China, and Asia Pacific is where we saw pretty strong demand for the new respiratory products during the entire Covid phase.
They probably at this point.
<unk> believes that they may be bought more than they need and at this point given you're moving forward with.
The amount of Covid research that was taken place, we're probably going to see more at a slightly.
Slightly lower level on the respiratory product.
Not a great big part of our product line, but its measurable for us. So when I think of the two primary things that held us back in this quarter and really we started seeing it potentially starting last quarter and it's likely to to go into into Q4, It's really limited to these respiratory products in China and then there is kind of general slowing that we saw.
So when I think of the two primary things that held us back in this quarter, and really we started seeing it potentially starting last quarter and then it's likely to go into Q4, it's really limited to these respiratory products in China and then this kind of general slowing that we saw across the CMT line. And that again is highly likely, we believe, to be the fact that a lot of things were purchased.
And across the CMT line and that again, its highly likely we believe to be the fact that a lot a lot of things were up were purchased at a higher level during.
at a higher level during, you know, 2020-21-22, especially in Asia. Because many of those products were targeted to finding solutions to COVID, you know, things like products like our, you know, cell-based testing products and electric electric operation and transfection products.
'twenty 2021 'twenty, two especially in Asia, because many of those products were targeted to finding solutions to COVID-19.
Things like products like our cell based testing products.
Electric electric operation and transaction products, so and much of that did go in was an academic research. So I think as for your second question.
So, and much of that did go in, was in academic research. So, I think for your second question, academic research, the outlook is that it's gonna get back to a normalized number, how fast it will get back to add or above these COVID numbers. Is, you know, I certainly wouldn't bet on that, but I think if nothing else, well, at least, you know, move to a good stable base and start to grow off of that.
Academic research.
Theres the outlook is that it's going to get back to a normalized number how fast that gets it will it get back at or above. These COVID-19 numbers is I certainly wouldn't bet on that but I think if nothing else, we'll at least move to a good stable base and start to grow off of that.
You know, if anybody's guess what the government's going to do there as far as. You know, some of these new funding methods that they've been we've been hearing about, we're certainly looking forward to it.
It's anybody's guess, what the government is going to do there as far as some of these new funding methods if they've been we've been hearing about.
Certainly looking forward to it.
You know, but again, I think it's good to just to be able to feel like the two primary headwinds for us has been really associated with. Post COVID in China and limited to a fairly small number of products.
But again I think it's good news just to be able to feel like the two primary headwinds for us has been really associated with.
Post Covid in China, and limited to a fairly small number of products.
Thank you.
Thanks, Bruce. Thank you one moment for our next question.
Okay. Thanks Bruce.
One moment for our next question.
and our next question comes from the line of Frank D. Lorenzo from singular research. Your question please. Good morning and thanks for taking my call. Following on with the, hi, how are you? Following on with the China question, could you talk about interest you might be seeing for some of your newer products offering the organoid space and elsewhere? And if you have any visibility on that going forward, then I'll have a follow on thing.
And our next question comes from the line of Frank Dilorenzo from singular research. Your question. Please.
Yes, good morning, and thanks for taking my call.
Following the offering.
Hi, how are you.
Following on with the China question could you talk about.
Interest you might be seeing for some of your newer product offerings.
Organoid space and elsewhere, and if you have any visibility on that going forward.
And then I'll have a follow on thanks.
Well, I think with SFN, that's our biggest show, Society for Neurology, perfect timing for us with a number of our very key core business products. Our telemetry products, we're expanding the offerings there. You know, we're pretty certain that organoids is gonna get a lot of press.
Okay, well I think with <unk>, that's our biggest shelf society for neurology.
Perfect timing for us with a number of our very key core business products, our telemetry products, we're expanding the offerings there.
Yes.
We're pretty certain that organoid, just going to get a lot of press.
It's been something that's been kind of brewing in academic research for a while. We've been investing pretty heavily over the last few years to turn this into something more than just an academic research product, but a real industrial level use product. So I think we're going to learn a lot there.
It's been something that's been kind of brewing and academic research for a while we've been investing pretty heavily over the last few years to turn this into something more than just an academic research product, but a real industrial level used product. So I think we're going to learn a lot there.
And then with the introduction of the new Vivo Mars product, that's already getting a lot of interest worldwide, both in North America, Europe and Asia, every place that does the formal in vivo testing for with the behavioral requirements that are required for any product.
And then with the introduction of the new <unk> product.
That is already getting a lot of interest worldwide.
Both in North America, Europe, and Asia every place that does that does the formal in vivo testing for.
With the behavioral requirements that are required for any any any product.
You need to get to this kind of level of product and you need to have high volume, high capacity, and it needs to be in a GLP environment. So we're real excited about Viva Mars. We see that developing very quickly. We've already sold the first one. We'll be shipping it, shipping the very first unit here next month.
You need to get to this kind of level of product and you need to have high volume high capacity and it needs to be in a GOP environment. So we're real excited about <unk>, we see that developing very quickly. We've already sold the first one will be shipping it shipping their very first unit here next month on that.
And that, as we've said publicly, is about $850,000 system. That's just for one to one customer. And we see this as really lining up a lot of growth opportunity for us as we move into next year. And that'll also include China.
As we've said publicly is about $850000 system. That's just for one to one customer and we see this as really lining up a lot of growth growth opportunity for us as we move into next year and that will also include China.
Can you also talk a little bit about for the quarter, the percentage of revenues that were related to recurring revenues and also a new product offerings and you're going into 2024. There is a potential for increases in those areas, we have a larger percentage of recurring revenues as in the total and also.
Okay could you.
You also talk a little bit about for.
For the quarter the percentage of revenues that were.
Related to recurring revenues and also our new product offerings and going into 2024.
There is a potential for increases in those areas.
Larger percentage of recurring revenues is the total and also.
your thoughts on new products going forward if you're going to see that.
Your thoughts on new products going forward, if you're going to see that.
increases a percentage of your total offerings and your efforts in that space.
The increase as a percentage of your total losses in your assets in that space.
Yeah, that's great. Great questions. I think you're right on. We had first started identifying where we were on recurring revenues and.
Yeah, that's great great questions I think youre right on.
At first started identifying.
Identifying where we were on recurring revenues.
You know, I think it was fair, it wasn't known very well because it wasn't publicized much or even measured very well here. But we had found that we're over 35% on the recurring revenue side. And clearly that's an area where you see the new products coming out and the new service offerings that are coming out. They are designed to not just sell new product and capital purchases, but they tend to come with consumable services.
I think it's fair it wasn't well known very well because it wasn't publicized much or even measured very well here, but we had we had found that were were over 35% on a recurring revenue side and clearly that's an area, where you see the new products coming out and the new service offerings that are coming out. They are designed to not just sell a new product.
Capital purchases, but they.
Tend to come with consumable services recurring revenue so.
recurring revenues. So, you know, I see an opportunity here for us to move that number from 35 percent well, well higher, you know, into the mid 40s or maybe better. That would be my longer term, longer term target. But with each of these new products coming out, there is a, um,
See an opportunity here for us to move that number from 35% well higher into the mid <unk> or maybe better that would be my longer term the longer term target, but with each of these new products coming out there is a.
a service and a consumable and a recurring component to it.
Our service and our consumable and a recurring component to it.
NPI, you know, like NPI is the lightblood of a company like this and technology is critical for us. So that's why you see, you know, in spite of, you know, the issues that we've all had to go through, you know, we've been working hard to keep our costs down so that we can continue to put the investment where it really is needed for a company, a technology company that's expecting to really grow. And that's a new product development. You'll see that, you know, right there in front of you at SFN this year with study neurology.
NPI is the lifeblood of a company like this in technology is critical for US. So that's why you see it.
In spite of the issues that we've all had to go through we have been working hard to keep our costs down. So that we can continue to put the investment where it really is needed for a company a technology company that is expecting to really grow and thats, a new product development Youll see that right. There in front of you at <unk> This year with society neurology.
You know, we have to keep investing in these areas. And I expect, you know, I certainly expect that a fairly substantial percentage of our new business to be driven by these new products.
We have to keep investing in these areas and I suspect.
Certainly expect a fairly substantial.
Percentage of our new business to be driven by these new products.
Okay, just one other question, there's been a lot of weakness in the space overall, not just using some weakness in China, but some of the bigger players.
Okay. I guess just one other question on there's been a lot of weakness in the space overall, not just you're seeing some weakness in China, but some of the bigger players.
Kind of in light of that weakness, are there opportunities you're starting to see out there, maybe smaller opportunities, whether it's product lines or maybe a smaller private company that might make sense for you going forward as far as if not an acquisition opportunity, maybe a partnering opportunity or just buying a product line. Is that something you're starting to see in the space? Thank you.
Kind of in light of that weakness are there opportunities.
Starting to see out there may be small opportunities, whether it's product lines or maybe a smaller private companies that might.
It makes sense for you going forward as far as if not an acquisition opportunity maybe a partnering opportunity than just buying a product line is up.
Something you're starting to see in the space. Thank you.
Yeah, that's a great question. It's certainly something that we're very interested in. You know, it took us a while and I was very, very public about look, we're not going to make significant structural changes or our type work until we finish. Getting our act together and I feel like this is the year that we finished getting our act together. So we have been starting to look at where, first of all, what kind of opportunities are out there, but even more importantly, where are the places that we would make the investment to accelerate.
Yes, that's a great question, it's certainly something that we're very interested in it took us a while and I was very very public about look we're not going to make significant structural changes our R&R M&A type work until we finish.
Getting our act together and I feel like this is the year that we finished getting our act together. So we have been starting to look at where first of all what kind of opportunities are out there, but even more importantly, where are the places that we would make the investment to accelerate.
some of our new areas. We're going to continue to invest heavily in what I call the things that really drive the ability of the farm to meet the needs of the business, the base business, that's things like our Penema software, telemetry, those are core businesses, and we're going to continue to build on that. And those we expect to see growing at a nice clip, at or above market. With the new areas though, and when you look at bioproduction and you look at...
Some of our some of our new areas, we're going to continue to invest heavily in what I call. The things that really drive the ability of the farm to meet the needs of the business the base business Thats things like our <unk> software telemetry those are core businesses and we're going to continue to build on that and those we expect to see growing at a nice clip.
At or above market with the new areas, though and when you look at bio production and you look at some of what we're doing in advanced cell testing with the Organoid and new advancements. There those are two areas that we definitely want to accelerate so those would be two areas that we would be looking to potentially either there is maybe some licensing.
some of what we're doing in advanced cell testing with organoids and new advancements there. Those are 2 areas that we definitely want to accelerate. So those would be 2 areas that we would be looking to potentially. You know, either there's maybe some licensing, some acquisition activity there for acceleration, or maybe even some kind of a teaming environment. It might make sense.
Some acquisition activity there for acceleration or maybe even some kind of a teeming environment might make sense. If there is something that we feel we just can't get to given all the opportunities we have in our portfolio to invest but definitely there's opportunity there and as with our capital structure being in much better shape at the end of the year here, we get to Q1.
If there's something that we feel we just can't get to, given all the opportunities we have in our portfolio to invest.
But definitely there's opportunity there and as with our capital structure being in much better shape at the end of the year here, we get to Q1, you know, we'll be looking a little harder at, you know, where, where and what might be available to help us accelerate at least those two areas.
We will be looking at a little harder at where we're and what might be available to help us accelerate at least those two areas.
Okay. Thank you.
Thank you Frank.
Thank you. Once again, if you have a question, please press star 1 1 on your telephone.
Thank you.
Once again, if you have a question. Please press star one on your telephone.
Okay.
And this does conclude the question and answer session of today's program. I'd like to hand the program back to Jim Green for any further remarks. Thank you, Jonathan. Thank you all for joining us. This ends today's presentation. We hope you'll join us in the new year for our year-end report. And that'll be sometime in the February , early March time frame. Thank you very much. This ends the presentation.
And this does conclude the question and answer session of today's program I'd like to hand, the program back to Jim Green for any further remarks.
Thank you Jonathan Thank you all for joining US. This ends today's presentation. We hope you will join us in the new year for our year end report and that'll be some time in February early March timeframe. Thank you very much this into the presentation.
Thank you ladies and gentlemen for your participation at today's conference. This does conclude the program. You may now disconnect. Good day.
Thank you, ladies and gentlemen for your participation in today's conference. This does conclude the program you may now disconnect good day.
Okay.
Okay.
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