Thank you for standing by, welcome to Harvard Bioscience's second quarter 2023 earnings call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone. Again, that's star one one on your telephone to ask a question. To remove yourself from the queue, you may press star one one again. I would now like to hand the call over to your host, Dave Sirois, Director of SEC Reporting. Please go ahead. Thank you, Latif, and good morning, everyone. Thank you for joining the Harvard Bioscience second 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. The file is entitled Q2 2023 HBIO Quarterly Earnings Presentation and 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 Cote, Chief Financial Officer. 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. 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, our 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 and 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-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 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. I will now turn the call over to Jim. Jim, please go ahead. Thank you, Dave. Hello, everybody. I'm pleased to see Q2 supporting our strong start to 2023. Now let's go to slide three of the presentation to look at the highlights for the quarter. Revenue in the quarter was $28.8 million, down modestly from last year on an as-reported basis. The year-over-year comparison includes the net effect of $1.6 million of discontinued products compared to the prior year period. I see this as a pretty smooth transition to our much improved and simplified portfolio, as we are already seeing new product introductions from last year gaining traction. Gross margin improved to $16.7 million, or 58% of revenue, which includes the typical puts and takes of product mix and volume, along with the impact of some financial process updates that Jen will describe for you further in a few minutes. Adjusted operating profit improved to $3.6 million, or 12.4% of revenue, up 2 percentage points from last year. Adjusted EBITDA measured $3.9 million, or 13.6% of revenue, also up 2 percentage points from prior year. GAAP earnings per share was a $0.02 loss. This includes quite a bit of non-cash related accounting complexity that Jen will discuss with you in a few minutes. Adjusted EPS measured $0.04 per share, down from $0.05 in last year. Cash flow from operations was $3.6 million versus a -$200,000 last year. In the appendix, you'll find the bridge from GAAP measurements to adjusted or non-GAAP measurements. Now, let's move to slide four. Take a look at revenue in the quarter by product family. This slide shows Q2 2023 revenue, adjusted to reflect Q2 2022's exchange rates. Starting with the first row of the table, our cellular and molecular technology revenue was down 12% as reported and down 3.6% when adjusted for currency and the impact of discontinued products. We had strong growth in Asia Pacific. EMEA was roughly flat to last year. We saw slowness in the Americas. We continue to rotate out of low-margin products, primarily sold through distribution. Our revenue includes a net reduction of $1.6 million from discontinued products compared to last year, which were predominantly cellular and molecular products. Next, our preclinical product revenue was up 10% as reported, up 11.5% when adjusted for currency and discontinued products. Asia had strong growth, driven mostly by inhalation and respiratory products. EMEA had very strong growth across the entire preclinical product portfolio. Americas was down modestly on slower sales in inhalation and respiratory products. All said, we were down 1.5% as reported and up 3.9% when adjusted for currency and discontinued products. Let's move to slide five. I can tell you about some of our exciting new products and new product introductions this year. Before I start, let me explain a little bit about this slide. Over the past 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 at the same time, adapt these technologies for further penetration into the larger industrial applications of our customers in pharma, CRO, and biotech. Following this strategy, we've introduced two more product technologies this year designed to support our growth opportunities in advanced cell-based testing. We expect initial demand in both academic labs and biopharma discovery, and expanding opportunity in preclinical regulatory testing for toxicology and safety pharmacology. First, I'd like to highlight our new Mesh MEA organoid platform. Building on our relationship, our leadership position in single-well, high-density multielectrode arrays that are used today in academic research and discovery, we're introducing the first organoid-centric MEAs that measure signals from inside the organoid. This technology is initially targeted to neuro and cardiac applications, such as activation, metabolism, and toxicology. We expect organoid-level testing to enable applications that historically were performed using full organ systems or animal models. We've next introduced our second-generation multi-well MEA platform. This multi-well platform is designed for higher volume MEA applications, giving us a vehicle to penetrate various industrial applications. This is another proof point where we leverage our leading position in high-density MEA in academic research and discovery and expand to industrial CRO and biopharma applications. We plan for advanced applications, such as organoids, to transition from the single to the multi-well and enable penetration of higher volume industrial usage in CROs and biopharma. This is an exciting time for Harvard Bioscience, we continue to introduce leading technologies in research and discovery and drive new opportunities in industrial applications with our CRO and biopharma customers, where we already have a well-established relationship and a great reputation. Now I'll turn the call over to Jennifer, our CFO, for a look at the key financials. Jennifer? Thank you very much, Jim. Let's jump into our Q2 and year-to-date financial results in greater detail. If you can, please refer to slide seven. As a reminder, we include discussions about our adjusted and non-GAAP financial results, which aligns with information we use to internally manage the business. Our slide deck includes the reconciliation between adjusted results and the corresponding GAAP measures on slide 12. Jim's already taken you through our revenue performance. A few more details on our gross margin, adjusted EBITDA, EPS, and cash flow. Our FY 2023 Q2 gross margin grew to 58%, compared to 57% in Q2 FY 2022. During Q2 of 2023, we aligned our global inventory costing process, which had a slightly unfavorable impact to gross margin. We aligned to a common time frame globally to amortize our capitalized inventory variances. This change happened in parallel with our annual standard cost cost roll this quarter, excuse me. As described by Jim, our gross margins will fluctuate from period to period based on the revenue mix, volume, inflation, et cetera, among other factors. Year to date, our gross margins of 59.6% are up three full percentage points compared to last year, and our outlook considers the impact of any process changes this quarter. Now let's discuss operating expenses and adjusted EBITDA. Adjusted EBITDA during Q2 was $3.9 million, compared to $3.4 million last year. Our operating expenses are reduced since last Q2, primarily as a result of the restructuring and cost reduction activities we executed during the second half of 2022. Offsetting these reductions are increases in employee compensation related to annual merit increases, as well as the fact that we've reserved for expected bonus payouts for 2023, which were not included last year. Let's take a few minutes to discuss the year-over-year variation in our GAAP EPS that Jim alluded to earlier. A large part of the variation is due to accounting charges related to the Sater litigation, which was resolved in Q2 last year. This matter is behind us, the impact of these charges is reflected in our GAAP EPS. Our adjusted EPS excludes these impacts. On a GAAP basis, our Q2 2022 results included the reversal of litigation-related reserves originally recorded the prior quarter, Q1 2022, of approximately $4.9 million. This favorably impacted last year's GAAP EPS. At that time, we received stock from Biostage as part of the settlement. Beginning in Q2 of this year, we adjusted the value of these shares to reflect mark-to-market accounting. This resulted in an unfavorable charge of approximately $1.6 million in this Q2. Taken together, these two litigation-related items create an unfavorable year-over-year swing in our GAAP EPS of $0.10 per share. We do not believe that these items reflect the fundamentals of our ongoing business. We do expect to see the impact of mark-to-market adjustments in future EPS numbers, so long as these shares remain on our balance sheet. Again, these items are excluded from adjusted EPS, and these mark-to-market adjustments are non-cash and do not impact our liquidity. The year-over-year changes in our GAAP EPS also include the favorable impact of approximately $0.02 per share as we wound down last year's restructuring activities. The above items are excluded in our adjusted diluted EPS. Further detail on the above items is available in our 10-Q. The non-GAAP reconciliation table is included in our press release and in the appendix to this presentation. I'm excited to switch gears to highlight on cash flow and liquidity. We had solid cash flow from operations of $3.6 million this quarter, representing our fourth consecutive quarter of operating cash flows. Our year-to-date paydown against our credit facility is $5.4 million. We expect modest additional investments in capital expenditures during the second half of 2023, as we invest in the consolidation of certain business tools and also invest in tooling and capital equipment related to new products. We are solidly executing against the financial targets we laid out at the start of the year. I'm now happy to hand things back to Jim to cover our 2023 guidance. All right. Thank you, Jen. Now moving to our summary on Slide 9 and a look to what we see for the year 2023. New product introductions and expanding service offerings are expected to continue to fuel new growth. For the year 2023, we expect reported revenue in the $116 million-$120 million range, inclusive of approximately 4 percentage points of discontinued product revenue compared to 2022. We expect gross margin to remain strong at around 60% level. We expect adjusted EBITDA margin in the 15%-17% range. With expanded EBITDA, combined with improving working capital, driving strong cash flows, we plan to continue significantly paying down our debt and expect to further reduce our net leverage ratio to approximately two times by the end of 2023. As I think about the remainder of 2023, I'm encouraged by our start of the year as our recent product launches are gaining traction, and we realize the benefits of last year's restructuring actions. We're also mindful of reports of possible headwinds affecting our industry and the broader economy that could affect us. That said, our company is in a much stronger position than we were just a year ago, and we look forward to continuing our progress. Thank you. Now I'll turn the call over to the operator to open the line for questions. Thank you. Thank you. As a reminder, to ask a question, you will need to press star one, one on your telephone. Again, that's star one, one on your telephone to ask a question. To remove yourself from the queue, you may press star one, one again. Our first question comes from the line of Paul Knight, of KeyBanc. Hi, Jim. Hi, Paul. On the guidance you provided regarding product headwind, minus 4% headwind, is that changed or kind of going to plan in terms of what you were phasing out of? Yeah, it's, it's coming out pretty much right on what we expected when we looked at the revenue that was in last year of the discontinued products and the revenue of those discontinued products in this year. The net difference is that around 4, 4%. It's been that, I think, from... We've seen that coming, and it, it's turning out to be exactly that is the case. That, that's a, you know, a, a headwind of, again, that transition. As you can see, we're, we're replacing, predominantly replacing that even as it is going through here. It's, that's a, great transition to the new, much improved product line. The DSI sales force, can you say they're part of the way there, all the way there, in terms of selling the legacy Harvard BioProduct? I would say part of the way we've been selecting which products really make sense as we, you know, basically, our strategy is take these products that historically have sold into academic research and into discovery in pharma companies, and to adapt them for much higher level commercial operations. You know, you see the introduction and now, you know, the traction with the new behavioral product, which, I mean, as you know, I mean, historically, behavior products sell in academic research for maybe, you know, $8,000-$10,000 as a capital purchase. You know, the first unit we're selling here this year to a large CRO, I mean, the first on it, of its own, is $850,000, and that'll ship and recognize in the year, and that's certainly not the last of it. That's the start of a new product offering. Clearly, we're seeing great traction with our sales force, able to bring the behavioral type technologies into the CROs. This is, you know, as you know, anything that sells into the CROs like this has to be GLP compliant, so it has to meet all the regulatory requirements for being able to generate the reports, the regulatory reports to the FDA and other regulatory agencies. This was, I think, the first one we see that happening with, and there's, there's more coming now. As, as we've said, this, things that, that I can package into higher volume industrial use. You know, again, I... You'll, you'll notice on this call, I introduced the concept that we've introduced the very first organoid-type system that's initially selling in with where we have a great reputation, and we're the market leader with these high-density MEA systems. You know, historically, that's always been in research with academic researchers and discovery parts of industry. That, we think, you know, as we start to combine that then with a large, higher volume, you know, multi-well configuration, that's going to be a real opportunity for us to move brand new growth for us, with CROs and pharma companies, as we know they're going to move more and more toward testing at the cellular level and now at the organoid level, where you can do so much more, and you don't have to use full organs, and you don't have to use nearly, the amount of animal models that have historically been used in the past. This is right in line with our strategy, and certainly, we feel like, I feel like, you know, the adoption is happening, and our force is doing pretty good at adopting that. Would the MEA technology be appropriate for... small molecule, large molecule, cell and gene-based therapies? What's it most applicable for, Jim? Well, I mean, initially, if you think about what's been done in the past, you look at something like patch clamp, where you're using the testing at a particular, one particular cell at a time, and then MEAs, historically, you'd use a cluster. Now as you can, if you can start to actually move toward having an organoid, instead of looking at a handful of cells, let's say liver, you know, with every drug that goes through testing, you have, there's something they have to do. They're going to go through six, everything goes through cardiac testing. You want to make sure that those cells, and now, if you can use organoids, you can actually, you have a proxy for the heart to see how does the heart react? What's the, does the metabolism change in that, in that organoid? Does the depolarization work properly? Does the drug have an effect on the, you know, the QT interval? That's one of the things that, you know, that's tested, I believe, on anything that's going to be eventually used in humans, has to set that level, and that's part of the initial, you know, core testing for toxicology and safety pharmacology. This is going to be something that we'll see, not only on the development side, but this will be the big opportunity I see, is if, if this can start to really penetrate, high volume tox and regulatory testing. As you know, if you, if you can use organoids, you basically have a proxy for each of the organs. You know, our first initial version of this, we're testing with, we're testing with, neuro, and then we'd expect that'll very quickly move to cardiac, and then, of course, it'll be involved with everything from cancer to any other treatment. You know, neuro and, and cardiac are, you know, two of the very first things that you really want to get high volume testing. If you can do it with organoids, as opposed to, you know, again, animal models or organs, it's a much more efficient and much faster way to get, get these answers. How long do you think before it would be an animal model replacement or at least reduction of? You know, it, it, it's a good question. You know, I, I think in theory, you could start to reduce animals, you know, fairly quickly. But on the other hand, it's, it's just as likely that there'll be a much higher ramp-up of the test, early testing at the cellular level and organoid level, so that you avoid taking, taking drugs that, at some point, still have to go through the next sets of animal models, that you fail them quickly if they're going to fail. You want to know tox right away. If you can find it out in 30 days versus 6 months, that's really good for you, and that actually lets you have a much higher yield of, of drugs that go through the regulatory cycle to get through the full preclinical set. I mean, again, I think that's going to be one of those choices. It'll, it'll either be. At least they'll be able to test things quicker and have much higher yields as far as not having to, you know, risk more animals for early testing that can be done, you know, at the cellular level. Then, my last question, Jim, is regarding, you know, you've obviously got the business focus on the growth product lines that you want to have and your sales distribution strategy aligned as well. Is it making your view onto M&A situations easier, and are we ever going to get M&A targets at a price that makes sense to the public market? Yeah, that's, that's a great question. You know, I've, I've always felt that if, as, as we have a clean year this year, really get to our targets that we're expecting, and for next year to be at our long-term targets, you know, our balance sheet's much, going to be much stronger. You can see what we've done with debt. You know, we're going to be in a much better position, you know, to be able to look at acquisitions. You know, I'm, I'm accustomed to looking at not just acquisitions, but also licensing structures, at products that'll help me really fill out this portfolio as I, as I go into and start to penetrate. You got bioproduction penetration. That's an area that has real interest that I'll be looking at areas there, whether that's acquisition or whether that's, you know, licensing, you know, or, you know, some collaborations. Same thing with expanding the, you know, the use of these systems for, you know, earlier testing for tox, safety pharmacology. It also gave us some time to better understand the market and the needs of the customer segments. Again, I always look at where do I have reps I know they can, you know, they can knock on the door, they're going to get in? You know, they're respected, they're understood. We have a relationship with these large CROs, these large pharma companies. What can I bring and put in their bag that's going to let me leverage what I've already got in place? There's no question, as we get to the end of this year, start to look at Q1, I'll be in a position to start to target things that make sense. We're looking now, but, you know, again, I, you know, I always believe you have to earn the right to use the balance sheet, or if we're going to do more investment in areas like that, I want to finish up what we're doing this year. And as I get to Q1, you know, we're certainly going to be in a much better position to understand where those opportunities are, and then how do we do that in a way that we can afford. Okay. Thank you, Jim. Thanks. Thanks, Paul. Thank you. Our next question comes from the line of Bruce Jackson of Benchmark. Hi, good morning, thank you for taking my questions. Hi, Bruce. Hey, hey, Jim. I wanted to talk about the discontinued product impact. You put out an estimate for the year. How much of that have we seen so far, and how is that going to roll off over the remainder of 2023? Sure. I think, when we looked, we gave a year-to-date view. I think it was around $2.5 million-$2.8 million or something like that, as a half point of the year. Yeah. We're expecting about $5-$5.5 for the total year. Is that, is that right, Jen? That's correct. That's correct. It's about $1.5 million a quarter, and will roll through pretty evenly. Yeah. That'll, that'll roll off pretty quickly here at, at the end of this year. You'll see that, again, per- fairly linear, each quarter, you know, up and down a little bit, but, like, $1.6 million was this quarter. And again, about another $2.5 million or so to go? Yep. Okay, and then is that hitting both of the bus- how is that hitting both of the business units? Is there one that's getting a disproportionate impact from the rollout- Yeah of the discontinued products? Yeah, it's really predominantly in the cellular and molecular side. These are more of the lower, individual products that typically sold through distribution. Mm-hmm. not really part of what I would call our strategic selling proposition. Again, predominantly on the cellular and molecular side, I mean, you know, probably 95%+ of it's there, I'm guessing, but it's really predominantly CMT. Okay. Okay. A follow-up question on the new product front. You talked about the MA- MEA launch. Last quarter, you talked about the BTX for bioproduction, and then, and also in previous quarters, you've talked about glucose monitoring. Are those still growth drivers for you? Yeah, you, you bet they are there, 'cause they're, they're new for us. They're new areas, new spaces, new customers, incremental growth. We know that, you know, certainly bioproduction, we've seen some headwinds over... Everybody's talking about headwinds, but for us, because we haven't -- since we're going from, you know, a very small number, negligible, to, you know, meaningful numbers, you know, it doesn't really affect us, you know. In the longer run, certainly, we, we hope to see all of that turn around. We think we have a great offering, and, you know, we will be, starting to showcase this more. We'll, we'll be at the bioproduction, show coming up later this month in Boston. I wanna make sure that we're ready for this, and I like the idea, you know, now that I've got, you know, real deals and I've got, you know, real customers, already adopting it, you know, I've got a great, a great case and, you know, I think a good selling proposition here. Okay, great. Thank you very much. Thanks, Bruce. Appreciate it. Thank you. Our next question comes from the line of Christopher Sakai of Singular Research. Hi, Chris. Hi, Jim, and then this is the same for Chris. Just wanted to see if you can give us a little bit more color on gross margins, which decreased from first quarter to 58% from 61.2%. What were the drivers? Yeah, I guess, first of all, I'd say, you know, a couple things. First of all, you know, there's always gonna be puts and takes on, on mix and volume. We did have a couple of other things. You know, we launched the new product, that, you know, when you launch a new product like the new, multi-well, you know, there's always gonna be some startup costs there and some inefficiencies associated with that. That had some effect. Then, you know, really looking forward, you know, we've, we've looked through this, and I think, Jen also mentioned some accounting-level changes on how we put... You know, this, this company's been around for a long time, and, you know, with multiple sites, there were some, some areas where the way things were accounted for manufacturing accounting, it weren't, they weren't identical everywhere, and they needed to be synchronized so that we didn't have things like how you depreciate, you know, something, through the cost roll, how things depreciate as far as purchase price variance and that. Again, I'm not an expert on it, so that's why I'm, I'm an engineer. I like to let the finance people do the, the hard work like that. In general, I mean, just aligning that, there was some effect on gross margin with that realignment of that process. And we've considered all that going forward as we look to what we look at for the rest of the year and for our year outlook. Thanks. On the cellular and molecular products, if you can give us more color, in terms of weakness in North America and also, what's happening in EMEA? Yeah, that's. You know, it's interesting because, you know, they operated a little differently this year. This, you know, last year, EMEA was weak, U.S. was strong. This year, EMEA is very strong, and we're talking of, you know, about, pretty much across the board. I mean, especially in the preclinical side, that really picked up nicely in EMEA. Asia is very strong this year. U.S. was a little slower in that. Now, we, again, I said when I look at something slowing down a little bit, I look at, well, what slowed down? What we saw some slowing on was the inhalation related products. Now, could that be because we had a much larger year last year in the U.S. with inhalation? Probably. So it is, it does seem to be fairly narrow in terms of the product, and it, again, it could very well be more of, of, you know, a harder comparison on that level with, you know, last year, a lot of things still, you know, being purchased that were really dealing with COVID, COVID-related products. You know, inhalation was one of the key product areas that, you know, we introduced at about the right time with COVID and got heavy use very quickly. But, you know, we're kind of past the, the COVID world there, and I think that's gonna settle into kind of a standard type of, of operation. Again, because it's growing, we see it growing in Europe, we see it growing in China and, you know, not so much here, it, it, it does ask some questions, but again, it's, it, it's limited again, just, you know, basically to one product line. Okay. Thank you very much. That's all I have. Thanks, Chris. Well, at this point, I don't think there's any more questions. I guess I should ask first the operator. Do we have any more questions coming in, or I think we've covered them all? No, sir. All right. Great. Well, I, I think that this will end the call. Let me thank you for joining us. This ends today's presentation. Hope you'll come join us in the fall for our third-quarter results of fiscal 2023. Thank you very much, and this ends the presentation. This concludes today's conference call. Thank you for participating. You may now disconnect.