Harvard Bioscience(US:HBIO)2020-11-06 21:55Revenue Performance - Revenue for the three months ended September 30, 2020 was $24.0 million, a decrease of approximately $3.4 million, or 12.3%, compared to $27.4 million for the same period in 2019, primarily due to the impact of the COVID-19 pandemic [97]. - Revenues for the nine months ended September 30, 2020 were $71.1 million, a decrease of approximately $14.1 million, or 16.5%, compared to $85.2 million for the same period in 2019 [106]. Cost of Revenues - Cost of revenues decreased to $10.5 million for the three months ended September 30, 2020, a decrease of $1.9 million, or 15.3%, compared to $12.4 million for the same period in 2019, resulting in a gross margin of 56.1% [98]. - Cost of revenues decreased to $30.8 million, a reduction of $7.3 million, or 19.2%, resulting in a gross margin of 56.7% for the nine months ended September 30, 2020, compared to 55.3% in 2019 [107]. Expenses - Sales and marketing expenses decreased by $0.7 million, or 13.3%, to $4.6 million for the three months ended September 30, 2020, due to ongoing restructuring and lower travel costs [99]. - Sales and marketing expenses decreased by $2.9 million, or 16.8%, to $14.4 million for the nine months ended September 30, 2020, primarily due to restructuring and cost reduction initiatives [108]. - General and administrative expenses were $5.4 million for the three months ended September 30, 2020, a decrease of $1.2 million, or 18.2%, compared to $6.6 million for the same period in 2019 [100]. - General and administrative expenses increased by $0.6 million, or 3.6%, to $17.8 million, mainly due to higher employee severance and restructuring costs [110]. - Research and development expenses were $1.9 million for the three months ended September 30, 2020, a decrease of $0.6 million, or 24.0%, compared to $2.6 million for the same period in 2019 [101]. - Research and development expenses were $6.3 million, a decrease of $1.7 million, or 21.5%, compared to $8.1 million for the same period in 2019 [112]. Interest and Tax - Interest expense was $1.2 million for the three months ended September 30, 2020, a decrease of $0.1 million, or 10.6%, compared to $1.3 million for the same period in 2019 [103]. - Interest expense decreased to $3.7 million, a reduction of $0.4 million, or 9.5%, compared to $4.1 million in 2019, due to reduced borrowings [114]. - The effective tax rate was 22.4% for the three months ended September 30, 2020, compared with 2.0% for the same period in 2019, primarily due to the mix of forecasted income or losses in different jurisdictions [104]. - The effective tax rate was (6.7)% for the nine months ended September 30, 2020, compared to 6.5% for the same period in 2019, influenced by the mix of income and losses in various jurisdictions [115]. Restructuring and Cash Flow - The 2019 Restructuring Plan is expected to deliver annualized run-rate savings of $4.0 million to $5.0 million, with additional savings of approximately $1.0 million from expanded restructuring efforts [92][93]. - Approximately $4.4 million of cash payments were made related to restructuring activities through the nine months ended September 30, 2020 [94]. - Cash provided by operations increased to $6.8 million for the nine months ended September 30, 2020, compared to $5.8 million in 2019, primarily due to improved working capital management [120]. Debt and Interest Rates - Total debt, net of cash and cash equivalents, was $41.6 million at September 30, 2020, down from $46.7 million at December 31, 2019 [118]. - The company had available borrowing capacity under the revolving line of credit of $7.3 million as of September 30, 2020 [126]. - As of September 30, 2020, the weighted effective interest rate on the term loan was 8.9% [141]. - An increase of 1% in interest rates would result in an approximate interest expense increase of $0.1 million [141]. - An increase of 2% in interest rates would lead to an approximate interest expense increase of $0.2 million [141]. COVID-19 Impact - The company continues to monitor the impact of COVID-19 on operations and has implemented a mitigation plan to reduce expenses, including work hour and salary reductions [90].