使用警語:中文譯文來源為 Google 翻譯,僅供參考,實際內容請以英文原文為主
Operator
Good day, ladies and gentlemen, and welcome to the Quarter 3, 2005 Harvard Bioscience, Inc.'s Earnings Conference Call. (OPERATOR INSTRUCTIONS) I would now like to introduce Mr. Bryce Chicoyne, Chief Financial Officer. Please go ahead, sir.
Bryce Chicoyne - CFO
Thank you. Good afternoon, This is Bryce Chicoyne, Chief Financial Officer of Harvard Bioscience. Thank you for joining us today to discuss the results of our third quarter ended September 30, 2005. Chane Graziano, our CEO, and David Green, our President, are also on the call today. After the safe harbor statement, Chane will present an overview of the quarter, and David will go into more detail with the third quarter results.
Before we begin the call, I would like to bring to your attention corrections in Exhibits 3 and 4 to the press release issued earlier this evening. The right -- the three right-hand columns of Exhibits 3 and 4 reflect financial data for 2004. These columns were inadvertently mislabled 2005, as a result of an error by the wire service. A corrected version of the press release has been issued. The 8K filed this evening has the correct dates in the exhibits.
In our discussion today, we may make statements about our future expectations, plans and prospects that constitute forward-looking statements under the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995. Our actual results may differ materially from those projected due to risks and uncertainties including those detailed in our annual report on Form 10KA for the fiscal year ended December 31, 2004. Our form 10Q for the quarterly period ended June 30, 2005, both filed with the SEC and other public filings. Any forward-looking statements represent our estimates as of today and should not be relied upon as representing our estimates of any subsequent day. Further information regarding forward-looking statements and risk factors is included in the press release issued earlier this evening reporting our third quarter results.
Please note that during this call, we may discuss non-GAAP financial measures. For each non-GAAP financial measure discussed, a presentation of the most directly comparable GAAP financial measure and a reconciliation of the differences between the non-GAAP financial measure discussed and the most directly comparable GAAP financial measure is available in the Investor Relations section of our website as part of our press release.
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. Look on the Investor Relations section and click on the Investor Presentations or website icon as appropriate. A replay of this call will also be archived at the same location on our website.
As we previously announced, we are selling our capital equipment business. This process is continuing and it would be inappropriate to give any further update at this time. Once a definitive agreement is reached, we will disclose it in a press release. As of this quarter's results, for accounting purposes, we have classified the capital equipment business as discontinued operations held for sale. Prior period results have been reclassified to reflect current period presentation. I would now like to turn the call over to Chane.
Chane Graziano - CEO
Thank you, Bryce. We are pleased with the growth in revenues, gross margins, and operating profits we reported during the quarter. The increase in demand for our core physiology products such as pumps and respiration equipment, particularly in Europe, has been a major contributor to our success. Additionally, our spectrophotometer product lines have shown double digit growth in the second quarter in a row. We are beginning to see the benefits of the investments we've made starting in fourth quarter 2004 in sales and marketing to improve our Harvard Apparatus website, strengthen our direct marketing, and expand our international distribution channels. Based on the trends we have seen emerging in our core business during the first three quarters of 2005, where increasing our fourth quarter adjusted earnings per diluted share guidance, which includes corporate costs and excludes amortization of intangible assets upward from $0.04 to a range of $0.05 to $0.06, and we are confirming our original revenue guidance of 17 million to 18 million.
Our continuing business is a broad range of well branded, relatively inexpensive life science products that have strong market positions within niche markets. We sell these products primarily through catalogs, websites and distributors. Through a combination of organic and acquisition growth, we have grown these revenues at a five-year compounded annual growth rate of approximate 20%. It is a very profitable business with adjusted operating margins typically in the mid to high teens. Our goal is to continue this growth trend in revenues and we expect in the near term to see earnings grow faster than revenues as we benefit from the investments we've made during the past year.
I will now hand the call over to David, who will further discuss third quarter results and growth initiatives for the continuing business.
David Green - President
Thank you, Chane. Third quarter results for the Apparatus and Instrumentation business were good with organic revenue growth of 5% versus Q3 last year. This excludes the unfavorable impact of foreign exchange on approximately 1%. As Chane mentioned, core product lines like pumps, ventilators, spechtrophotometers all did well in the quarter. Adjusted operating margins which include all corporate G&A costs at a percentage of revenues with the strong 16.3%, significantly up on Q1 and Q2, as we started to see the benefit of investments we've been making in sales and marketing and expanding distribution channels.
Adjusted operating margin for the continuing business excluding all corporate G&A costs was 23.7% of revenues. Note that until the capital equipment division is divested, Harvard Bioscience will continue to bear corporate costs for both divisions, and therefore we will continue to disclose Apparatus Instrumentation results and corporate G&A costs separately until the Capital Equipment Division is divested. Once the Capital Equipment Division is divested, we expect costs to decrease by an annualized $0.02 to $0.03 per share from 2005 levels. Approximately $0.02 per share of this is from a reduction in interest expense assuming we repay our current debt from proceeds of the sale, and approximately $0.01 per share is from reduced corporate G&A costs primarily related to reduction in audit and other professional fees. We continue to pursue the tuck-under part of our acquisition strategy and the environment for these acquisitions remain favorable.
We'll now open the call for any questions.
Operator
Thank you. (OPERATOR INSTRUCTIONS) Our first question comes from the line of Paul Knight with Thomas Weisel Partners. Please proceed.
Peter Lawson - Analyst
Peter Lawson in for Paul Knight. I wonder if you could just tell me about the business environment in North America. What was that like?
David Green - President
Sure, Peter. This is David here. For the continuing business, it was stronger in Europe than it was in North America, but it certainly wasn't poor in North America.
Peter Lawson - Analyst
What was that like between farmer and academia?
David Green - President
Academia has been pretty strong this year. Biotech has also been pretty strong this year. Farmers are pretty weak throughout all of this year, in North America I'm talking about.
Peter Lawson - Analyst
And what's your exposure to Asia? What is the business tone there?
David Green - President
We don't have a particularly high proportion of our revenues coming from Asia. We deal with areas like China, India, Taiwan and South Korea primarily through distributors. Business there has been good, but it's not a very large proportion of our overall revenues.
Peter Lawson - Analyst
And just finally, what's the update on the sale of the business? Where does that stand?
David Green - President
As Bryce mentioned in the introduction of the call this evening, we're in the middle of that process right now, and we don't feel it's appropriate to give any update until we get to the point where we have a definitive agreement, at which point, of course, we will disclose that in our press release.
Peter Lawson - Analyst
Okay. Thank you so much.
Operator
(OPERATOR INSTRUCTIONS)
Chane Graziano - CEO
I assume there aren't any more questions.
Operator
No, sir. You have no further questions at this time.
Bryce Chicoyne - CFO
Okay. I'd like to thank all of you for joining our third quarter conference call today. We are pleased with the results for the quarter and are optimistic about the balance of the year. Thank you and good evening.
Operator
Thank you for your participation in today's conference. This concludes our presentation. You may now disconnect. Have a great day.