Good day, ladies and Gentlemen, thank you for standing by. Welcome to the Second Quarter Q2 2014 Harvard Bio's Earnings Conference Call. At this time all participants are in a listen only mode. Later we will conduct a question and answer session. The instructions will follow at that time. (Operator Instructions). I would like to introduce your host for today’s conference Ms. Cheryl Schneider of Dian Griesel International. Ms. Cheryl Schneider?

Thank you, Victoria, and good morning, everyone. Thank you for joining us for the Harvard Bioscience second quarter 2014 financial results conference call. Leading the call today will be Jeffrey Duchemin, CEO and President; and Robert Gagnon, Chief Financial Officer of Harvard Bioscience. But before I turn the call over to them, I will read Harvard Bioscience's Safe Harbor statements. In its discussion today, the company may make statements that constitute forward-looking statements. The company's actual results and performance may differ materially from what it has projected due to risks and uncertainties, including those detailed in its annual report on Form 10-K for the periods ended December 31, 2013 and its other public filings. Any forward-looking statements, including those related to the company's future results and activities represent its estimates as of today and should not be relied upon as representing its estimates as of any subsequent day. At this point I would like to turn the call over to Jeffrey Duchemin. Jeff, please go ahead.

Thank you, Cheryl. Good morning, everyone and welcome to our Q2 earnings call. I am pleased to report that we had a very good second quarter as revenues increased by more than 3% or 0.07% excluding the impact of currency translation. Backlog and bookings are growing and we are on track to treat the goals that we set out at the beginning of the year. I'm proud of what our team has accomplished in a relatively short amount of time. Our revenues stabilized earlier than we had anticipated. As you might recall, our goal is to stabilize our business and reverse the sales declines by the end of the year. So the fact that it happen during Q2 makes us even more excited about our strategic initiatives that have led us to this point. Our results were fueled by the organizational changes that we instituted at the end of 2013 and the implementation of our global growth strategy. The strategy is in place and working. We have made great progress in creating commercial excellent, geographic expansion and business development opportunities. Importantly, this is the first quarter in seven consecutive quarters where our revenues increased. While Rob will going to details about our financial results, I did want to provide some highlights. Revenues for the quarter increased 3% to 27 million from 26 million in last year's second quarter. And non-GAAP income from continuing operations for the second quarter was comparable to last year's second quarter and $1.9 million or $0.06 per diluted share. However, even more reflective of our strategy, we believe is a sequential quarterly growth in revenues excluding the impact of currency translation this quarter. Without that impact, revenues increased approximately 4% compared with the first quarter of 2014, that in my view is great progress. As many…

Thank you, Jeff. Consistent with previous quarters, much of my focus will be on the non-GAAP quarterly results, which we believe better represent the ongoing economics of the business, reflects how we set and measure on incentive compensation plans and how we manage the business internally. However, I will briefly review the GAAP results, the differences of which are outlined in the earnings release we issued today, which can be found on our website under Press Releases. Additionally, any material financial or other statistical information presented on the call which is not included in our press release will be archived and available in the Investor Relations section of our website. A replay of this call will also be archived at the same location on our website at www.harvardbioscience.com. Now beginning with the top-line. We’re pleased to report revenues of $27 million for the second quarter, an increase of 3.3% compared with revenues of $26.1 million in Q2 last year and 4.1% compared with revenues of $25.9 million in Q1 of this year. Currency translation resulted in a 2.6% positive impact because of a weaker U.S. dollar compared to the British pound sterling and the Euro on a year-over-year basis. Excluding currency translation revenues increased 0.7% compared to Q2 last year and 3.7% compared to Q1 of this year. Our bookings were $27.4 million in Q2 up 6.2% compared to bookings of $25.8 million in Q2 last year. Excluding currency translation bookings growth was 3.5% compared to Q2 last year. Our order backlog at the end of Q2 was approximately $6 million, up 57.9% compared to backlog of $3.8 million in Q2 last year. Excluding currency translation, backlog growth was 54.3% compared to Q2 last year. As discussed previously, we include in bookings and backlog only those orders for which we…

Thank you. (Operator Instructions). And the first question is from Paul Knight of Janney Capital. Your line is open.

Hi, Jeff, congratulations on the quarter.

Thanks Paul.

Can you talk to the initiatives that you have made since your not-very-long-ago arrival? You are head of -- you are change in sales, change in the modifications with distributors, all of those actions in sales, what do you believe your growth rate would be even if a market was not really growing? And also where are you and kind of where do you want to be in your sales reorg?

Yes. So, going back to last year when I join the company, last August. The first thing that we did was we took a look at the organization, the way it was structured and we knew that, we wanted to approach it from a more functional standpoint. So we created functional leadership roles. One of those was a Vice President of Global Sales, a position the company never had in the past. And we knew it really to strengthen the Harvard Bioscience name in the industry, the brands, the portfolio price we had, we had to align our sales teams on a global basis. We've done that. We're executing to the plan that we have in place for 2014 and we are starting to see the results of this functional alignment. In regards to sales growth, whether the market is flat, moving forward or not, just the initiatives that we have in place, the way we’re communicating the marketing plans that we’ve implemented, we believe that growth could be somewhere in the 4% that 5% range.

And where do you think market growth is going to end up normally for Harvard Bioscience?

It’s tough to really pinpoint that at this point in time. What we’re seeing and what we’ve read from some of the analysts’ reports that have come out; research, our products are highly academic. The good news is we’re starting to see an uptick in our performance in the U.S. and Europe. But on a global basis, what we’re seeing is, is 1% to 2% growth in the segment. We think we can outperform the segment growth and we’re very bullish on the remainder of the year.

Okay. And could you highlight any product line that you feel like is extremely well positioned, Jeff? I mean as you mentioned lab products but what has the most growth outlook in your view?

Yes. So, there is a couple of product categories that we’re seeing increased business orders, the backlog is increasing. Lab Products is one of those areas with our Denville Scientific business in the U.S., our distributor business. Our Molecular Analysis business is doing quite well right now. We launched the new product called [Oxalate Pro], measures the respiratory and metabolism, animal activities and food intake. And what we’re seeing is we’re seeing increased presence of that product, the remainder of the looks very strong for that. So, I would say our Lab Products and our Molecular Analysis products are two product categories are leading the way for us right now.

And then my last question is to Rob, and that is the [Sony] closure in the UK or in the combination, does that change your view on where operating margins should be, where do you want operating margins this year and then lap that $250,000 cost, does that call out of your non-GAAP number?

Thanks Paul. Yes, let me start. The $250,000 cost did not come out of our non-GAAP number, so it's very much in those numbers. In terms of the facility consolidation that we completed in the UK this quarter, that was contemplated in the restructuring plan that we announced back in December and it's really sort of last step that we had to complete under that restructuring. Overall that component of it -- it has an annual savings in the range of about $300,000 to $400,000 for us. But again it was part of the component of that overall restructuring.

Okay, thank you very much.

Thank you. The next question is from Raymond Myers of Alere Financial Partners. Your line is open.

Great, thank you for taking the questions. I first wanted to add just pick up from where you just left off. The 250,000 of the consulting expense, what line item does that appear in the income statement?

It mostly appears on the cost of sales line, but there are some components that show up in operating expenses.

Okay, sounds good. And then R&D was picked up a little bit in the quarter; are you looking at any projects, what's the reason for that?

Yes, I would say it's really because of a couple of reasons. First off, as I mentioned in my prepared remarks, foreign currency would have a negative impact that would show an increasing trend there but also it's just the timing of personnel working on various projects. There is nothing unique going on there.

Okay, thanks. And back to the 250,000 cost, if that’s largely in gross margin, the margin actually increased just slightly sequentially, would have been a lot higher, if not for this expense. Do you expect this 250,000 to be recurring issue or is that it?

Well, the issue that was discovered was discovered in the quarter by our new Head of Ops. He has been going around -- going out to all of our manufacturing sites, doing his due diligence. So as a relates to that particular site in this issue, it's resolved and it's behind us at this point. I don't foresee this coming up again, but of course the as he goes around and learns the business, there certainly could be things to come up from time-to-time. But certainly this is behind us and not expecting it to happen going forward.

Sounds good. Let me talk -- ask about your sales force realignment a little bit. Can you describe some of the specific actions you've taken and what opportunities you see to make the sales force more effective?

Yes. So the sales force realignment, the biggest thing is, we have multiple businesses that have made up Harvard Bioscience over the years that led to multiple sales organizations, customer service departments, tech support. What we've done is we’ve aligned all of these functional operations in to one organization. The line of communication is much better today than it was a year ago. The type of training we give our sales people is completely has been revamped from where we were a year ago. Our compensation plans, the way we compensate our sales people, the change in behavior, the types of products that they’re focused on, it's a complete restructure of our sales organization and sales process. The other impact to the business and where we think we will see growth coming forward is on a geographic basis, some of the things we're doing in emerging markets. Last year, we had one sales person in China, today we have a team of five. As we move forward, we hope to continue to create sales and marketing positions in Asia in 2015. So we are in the beginning stages of revamping our global commercial organization but that’s where we are today.

How soon do you think that increase in China sales force can start to have some positive contribution?

Well I think we are already seeing it as I stated in my write up Q1 and Q2 were a little bit sluggish in China I think everyone in the industry is seeing that right now but the way our channel managers are approaching new distribution partners our reach into Southeast Asia, Korea, Japan places like that we are already starting to see stronger relationships being built, our backlog is increasing and that’s we believe Q3 and Q4 will be stronger for us.

That sounds good. I want to ask you about bookings trend a little bit? Our bookings were up a little over 6% in the second quarter there seems to be nice trend revenue growth was 3% why wouldn’t we expect revenue growth to trend toward bookings growth?

I think it’s a great question bookings typically leads to revenue growth the one thing with bookings the backlog is a timing kind of a timing situation where some of the orders will come in Q3 some will come in Q4 or some could come into 2015 but what we believe is as the year progress our growth versus prior year will continue to increase the goal is that 4% to 5% that I had mentioned earlier in Paul’s question.

Nice okay, good. It’s a little early in the quarter to ask this but we are about a month end into the quarter so I will give it a shot what kind of look you have so far visibility to growth in the current quarter?

Yes it’s a tough question to answer as you know Ray, all I can say is we had a great Q2, the teams are in place, the teams are executing and we feel confident that Q3 and Q4 going to be strong for Harvard Bioscience.

Nice. And I have one housekeeping question. What was the total long and short-term debt at the end of the second quarter?

Ray, the short-term debt is about $5 million. The total debt is $22 million. About $20 million the term loan two of its credit line.

It looks like then you have paid down the short-term debt a little bit since the first quarter?

Yes, it's a five year term loan. So there is quarterly payment. There has been two payments made year-to-date.

Okay. Very good. Thank you for taking the questions.

Thanks Ray.

Thanks Ray.

Thank you. (Operator Instructions). And the next question is from Bryan Kipp of Janney Capital. Your line is open.

Hey, guys, just had a couple of follow-ups. Thanks for taking the time.

Hey Brian.

Hey Brian. How are you?

Good, and you guys? Congrats again. I am reiterating what everybody else has said. So I just had a couple of other ones. So top line, I mean how did it track through 2Q? Did you see some more support in the back half versus the front half of the quarter and just kind of get an understanding there.

No, it's been a steady increase, there has been no front end at the quarter, back end at the year. But as you can remember from our last earnings call, the backlog activity has been increasing and it's increased once again. And that's really translating into the improvement in our topline growth.

Okay. I just wanted to parlay into this too in light of, I mean, I think it was kind of alluded to previously, but you do see FX right now. There is some support there I think we have right now about 2.1% benefit in the quarter because the strong Pound again and Euro is moderating a little bit we still see support there. In light of that and the strong bookings, and the strong book-to-bill I understand organic growth if could be some volatility naturally in the business but in light of say 2% support we’re seeing so far, how can you have an adjusted or why did you decide not to adjust your top-line estimates for the full year?

Hi Brian it’s Rob. I appreciate that. I think what we have is average -- an average rate for the Pound Sterling 154 last year it was 168 in the quarter in the second quarter and I think it may have gone up a bit more in the third quarter. But look still it only amounts about $600,000 to $700,000 it’s a fairly de minimus amount and overall we’re focused on organic growth in the business we’re now just focused on the FX trends from one quarter to the next but clearly 600,000 could reverse rather quickly in just a couple of days over a period of time. So, we just didn’t feel comfortable at this point, trying to predict where that would go in terms of FX.

Completely understand. Just kind of wanted to see how you guys looked at it. And I guess in addition, I think you guys alluded to additional global operations you announced 2 million in cost reductions in the past anything else anything incremental above that 2 million you think you can pull through?

One of the things we just announced today was the restructuring of a facility, two facilities that we have in the UK so we’ve been working on that. Our new Vice President of Global Ops was or has been looking at our manufacturing sites on a global basis. And then at this point in time nothing to announce.

Okay. But that those two facilities are consolidated that $2 million estimate you guys had previously or not?

Yes, yes Brian just to be clear that our UK facility consolidation that was the last remaining item as part of that restructuring that was announced in December.

Okay. And then the 1 million you guys had mentioned in the past about putting back into the business, have you allocated that yet?

Yes, we've -- that was part of the global commercial changes to the organization, sales and marketing position, the headcount in Asia and things like that.

All right and China similar mix product life, I know you guys have five people on the ground, just commentary around that if it's more focused in an area versus another on the product category?

Yes, all of the products except the laboratory products. The laboratory products are primarily the Denville Scientific plastic lines of products which are typically distributed in the U.S. So the majority of the products or the four of the product categories that we have, which is fluidics; molecular analysis; cell analysis; animal behavior products.

Okay. And I mean the last one you guys have talked about it, potential acquisition pipeline. How is that tracking right now; is there anything you guys are interested in, anything on the horizon or just thoughts around that would be great.

Yes, it's clearly an important part of our strategy. We've communicated that over and over again and we spent a lot of time looking and evaluating companies. There is nothing to announce today but it remains a very important part of our strategy moving forward.

That's it for me. Thank you.

Thanks Brian.

Thank you. (Operator Instructions). The next question is from Paul Knight of Janney Capital. Your line is open.

Hi Paul.

Hi Paul, please check that if your line is on mute.

Sorry. The last question on Janney side is your 52% backlog increased, was -- I know that’s part of your sales work but what were the ordinary events behind that type of large year-over-year change?

I would just attribute to the sales and marketing activities in the organization, the realignment. There is nothing specific other than the fact that we've hired some very talented people, we have an aligned organization, I think we have a very good plan in place, we're executing to it.

Thank you very much, Jeff.

Thanks Paul.

Thank you. (Operator Instructions). And at this time, there are no further questions in the queue. I like to turn the call back over to Mr. Duchemin for closing remarks.

As I stated at the beginning of our call today, I'm very proud of our company's achievements. We have essentially rebuilt the Harvard Bioscience team in well under a year. Our team has made great progress and implanting our global growth strategy including creating commercial excellence and organic growth reinvigorating product development and seeking business development and acquisition opportunities. I am optimistic about our company's future outlook and I thank you our shareholders for your continued support and look forward to what we expect will be a fruitful year for all of us. Thank you for calling in. See you next quarter. Thank you.

Thank you. Ladies and gentlemen, this concludes today's conference. You may now disconnect.