Harvard Bioscience, Inc. :HBIO-US: Earnings Analysis: Q4, 2016 By the Numbers : March 21, 2017

Harvard Bioscience, Inc. reports financial results for the quarter ended December 31, 2016.

We analyze the earnings along side the following peers of Harvard Bioscience, Inc. – PerkinElmer, Inc., Bruker Corporation, Agilent Technologies, Inc., Thermo Fisher Scientific Inc., Johnson & Johnson, Becton, Dickinson and Company, Danaher Corporation, General Electric Company and Bio-Rad Laboratories, Inc. Class A (PKI-US, BRKR-US, A-US, TMO-US, JNJ-US, BDX-US, DHR-US, GE-US and BIO-US) that have also reported for this period.

Highlights

  • Summary numbers: Revenues of USD 26.42 million, Net Earnings of USD -1.32 million.
  • Gross margins widened from 43.15% to 43.47% compared to the same period last year, operating (EBITDA) margins now 4.00% from 5.94%.
  • Year-on-year change in operating cash flow of -2.10% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Earnings rose compared to same period last year, despite decline in operating and pretax margins.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2016-12-31 2016-09-30 2016-06-30 2016-03-31 2015-12-31
Relevant Numbers (Quarterly)
Revenues (mil) 26.42 25.01 26.14 26.96 28.37
Revenue Growth (%YOY) -6.89 -2.81 -9.25 4.66 -6.57
Earnings (mil) -1.32 -1.64 -0.71 -0.64 -17.14
Earnings Growth (%YOY) 92.3 -93.39 -304.3 54.6 -90110.53
Net Margin (%) -5 -6.55 -2.73 -2.36 -60.42
EPS -0.04 -0.05 -0.02 -0.02 -0.5
Return on Equity (%) -7.13 -8.59 -3.68 -3.27 -79.77
Return on Assets (%) -4.8 -5.79 -2.46 -2.14 -54.03

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Market Share Versus Profits

Revenues History
Earnings History

HBIO-US‘s change in revenue this period compared to the same period last year of -6.89% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that HBIO-US is holding onto its market share. Also, for comparison purposes, revenues changed by 5.63% and earnings by 19.41% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Earnings Growth Analysis

The company’s earnings growth has been influenced by the year-on-year improvement in gross margins from 43.15% to 43.47%. However the company’s overhead costs have prevented it from fully capitalizing on these gross margin improvements. In fact, the company’s operating margins (EBITDA margins) showed no improvement over the same period last year.

Gross Margin Versus EBITDA Margin

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Commodity; Low Cost, Commodity; High Cost, Differentiated; High Cost

Gross Margin Trend

Companies sometimes sacrifice improvements in revenues and margins in order to extend friendlier terms to customers and vendors. Capital Cube probes for such activity by comparing the changes in gross margins with any changes in working capital. If the gross margins improved without a worsening of working capital, it is possible that the company’s performance is a result of truly delivering in the marketplace and not simply an accounting prop-up using the balance sheet.

Gross Margin History
Working Capital Days History

HBIO-US‘s gross margin improvement has not produced any big difference in its working capital. Working capital days are currently 107.80, compared to last year’s level of 106.16 days. This leads Capital Cube to conclude that the improvements in gross margins are likely from operating decisions and not trade-offs with the balance sheet.

Gross Margin Versus Working Capital Days

Quadrant label definitions. Hover to know more

Customer Financed, Cash Starved, Supplier Financed, Cash Rich

Cash Versus Earnings – Sustainable Performance?

It is important to examine a company�s cash versus earnings numbers to gauge whether its performance is sustainable.

HBIO-US‘s change in operating cash flow of -2.10% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Operating Cash Flow Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Cash Flow based Earnings, Likely Non-cash Earnings, Low Cash Flow Base, Likely Undeclared Earnings

Margins

Despite a decline in operating (EBIT) margins as well as a decline in pretax margins, the company’s earnings rose.

EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables
EBIT Margin History
PreTax Margin History

Access our Ratings and Scores for Harvard Bioscience, Inc.

Company Profile

Harvard Bioscience, Inc. develops, manufactures, and markets broad range of specialized products, primarily apparatus and scientific instruments. The company operates through the following segment: Life Science Research Tools. The Life Science Research Tools segment is engaged in the development, manufacture and marketing of specialized products, primarily apparatus and scientific instruments, used to advance life science research at pharmaceutical and biotechnology companies, universities and government laboratories worldwide. The company’s molecular biology products consist of molecular biology spectrophotometers, DNA/RNA/protein calculators, multi-well plate readers, amino acid analysis systems, liquid dispensers, and gel electrophoresis systems, as well as liquid handling consumables primarily pipettes, pipette tips, autoradiography films, gloves, thermal cycler accessories, and reagents. It also distributes various devices, instruments, and consumable items used in experiments involving cells, tissues, organs, and animals in the fields of proteomics, physiology, pharmacology, neuroscience, cell biology, molecular biology, and toxicology. The company sells its products through catalog, Website, distributors, and direct sales force. Harvard Bioscience was founded by Dr. William T. Porter in 1901 and is headquartered in Holliston, MA.

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