Harvard Bioscience Inc (HBIO) 2014 Q3 法說會逐字稿

Thank you for joining us for the Third Quarter 2014 Harvard Bioscience Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions) As a reminder, this call is being recorded.

I would now like to introduce your host for today's call, Ms. Cheryl Schneider of Dian Griesel International.

Thank you very much, operator, and good morning everyone. Thank you so much for joining us for the Harvard Bioscience third quarter 2014 financial results conference call. Leading today's call will be Jeffrey Duchemin, CEO and President; and Robert Gagnon, Chief Financial Officer of Harvard Bioscience.

But before I turn the call over to management, I will read the Harvard Bioscience Safe Harbor statement. 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 period ending 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 date.

It is now my pleasure to turn the call over to Jeff Duchemin. Jeff, please go ahead.

Thank you, Cheryl. Good morning, everyone. Thank you for joining us for our third quarter 2014 conference call. I'm pleased to be addressing you today, as it is about one year ago today, November 1, 2013, that Harvard Bioscience became a pure-play company, and embarked upon its new growth strategy. Since that time, we've built a world-class organization, brought in a great team of leaders and have aggressively worked to grow our Company, and we are succeeding in the execution of our strategy.

I'm happy to note that we reported strong financial results for the third quarter, as we leveraged our growth, created operational efficiencies, improved productivity and increased our bottom line. I'm also happy to report that we're on track to achieve our financial goals for 2014. We also acquired two life science companies, Multi Channel Systems in Germany and Triangle BioSystems in North Carolina. These two acquisitions, which are expected to add to both top line and bottom line growth, have transformed Harvard Bioscience into a leader in the electrophysiology market.

Now let me provide a brief overview of our strong financial results that we achieved this quarter. Earnings per diluted share increased 50% to $0.06 per share. We grew non-GAAP income from continuing operations by 46% to $1.9 million. Operating margins increased 360 basis points to 11.5%. Revenue increased 1.2% to $25.4 million. This increase, which is on target with our expectations, shows that we are achieving our stated goal to stabilize revenues after many quarters of declines.

While we reported an increase, the increase was due substantially to currency exchange. Our bookings remain strong as well at $25.7 million, and our backlog increased more than 40% over last year's third quarter to $6.2 million. The business strategy we put in place just about a year ago, when we realigned our operations, created operational efficiencies and concentrated on growth businesses, is working.

While Rob Gagnon will discuss our financial results in more detail later on, I want to touch upon our acquisitions, global strategy, and some of our key markets. We are especially proud of our highest-profile news this quarter, namely our acquisitions of two privately-held life science companies, Multi Channel Systems headquartered in Reutlingen, Germany and Triangle BioSystems based in Durham, North Carolina, for approximately $11 million in cash. Both companies are key developers of equipment in the field of electrophysiology, and their acquisitions substantially bolster our leadership within the electrophysiology market. Together, the acquisitions are expected to add $7.5 million to $8.5 million in revenue in 2015, and these acquisitions are expected to be accretive to earnings beginning Q4 2014.

Now let me review some key aspects of our business that contributed to our results this quarter from a geographic standpoint. In the US, the academic market and government sector still remain a challenging segment. We continue to strengthen our commercial and operation teams, keeping us on track to achieve our 2014 financial objectives.

Results for the quarter and year in China continue to be softer than expected, which we believe is the result of a slower release of funds from the Chinese government. The good news is, we are in a strong position to capitalize on long-term growth as our new commercial organization continues to develop new channel relationships throughout the region.

Excluding the positive impact of currency translation, Europe has been our strongest region during Q3 and year-to-date. Organizational changes in Q4 of 2013 have taken a positive impact, and the team has done a great job executing through three quarters. As a company with global focus, we believe we are properly aligned to seize opportunities in markets throughout the world, without reliance on any one particular market. In addition to China, we have direct field sales teams in the United States, Canada, United Kingdom, Germany, France and Spain.

Now let me provide some information on the two companies we acquired. With the acquisitions of MCS and TBSI, we have become a global leader in electrophysiology, which is an important segment in both academic research and drug discovery. Multi Channel Systems develops, manufactures and markets instrumentation for extracellular recording and stimulation. Triangle BioSystems develops, manufactures and markets wireless neural interface equipment to aid in vivo neuroscience research, especially in the fields of electrophysiology, psychology, neurology and pharmacology. These two companies complement our existing electrophysiology products from our Warner Instruments brand, which is a pioneer in the field.

We believe with the addition of these two companies, our expanded product line will be attractive to our customers in a wide range of life science sectors, and our Company will benefit from the increasing adoption of technologies in electrophysiology. Acquisitions remain a key part of our growth strategy. The industry remains ripe for consolidation, and there are many global targets for us to consider. It is up to us to identify, review and pursue those acquisitions that make sense to us, as we seek to complement our portfolio and offer customers the best-in-class products and technologies. With operations around the globe, the world is our palette as we add to our portfolio of companies.

So in summary, as we complete our first 12 months as a pure-play company, we are much stronger, focused organization, with a talented and driven team in place, capitalizing on our operational efficiencies and a strong balance sheet that enables us to compete in global markets. We have set what we believe are reasonable goals for all of us to achieve this first year as a pure-play company, and I'm very proud to say we're on target to reach those goals.

At this point, I will turn the discussion over to Rob Gagnon, our CFO, who'll provide more insight into our financials. Rob?

Thank you, Jeff. Consistent with previous quarters, much of my focus will be on 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. 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, as mentioned on our last earnings call, there is some level of seasonality in the business in the third quarter. As seen in previous years' performance, our revenues in the third quarter are usually down from the second quarter. However, our fourth quarter tends to be the highest in any fiscal year compared to the other three quarters.

Revenues in the third quarter were $25.4 million, an increase of approximately $300,000 compared with revenues of $25.1 million in the third quarter of last year. Currency translation accounted for the vast majority of the increase. As discussed on previous calls, this was the result of a weaker US dollar compared to the pound sterling on a year-over-year basis. Excluding currency translation, revenues were essentially flat.

Bookings were $25.7 million in Q3, essentially unchanged with Q3 of last year. Excluding the impact of currency translation, bookings decreased by approximately $400,000. And consistent with the second quarter, our book-to-bill ratio was approximately 1.01 times, as orders received continued to exceed orders shipped. We finished Q3 with backlog of approximately $6.2 million, up 40% compared to backlog of $4.4 million at the end of Q3 last year. The impact of currency translation on backlog was negligible. As discussed in the past, we include in bookings and backlog only those orders for which we have received a customer purchase order.

Now turning to cost and expenses. Cost of revenues in Q3 were $14 million, an increase of approximately $200,000 compared to $13.8 million in Q3 of last year. Excluding the impact of currency translation, cost of revenues would have been unchanged. Gross profit margin in Q3 was 45.1%, unchanged compared to Q3 of last year. Operating expenses for Q3 were $8.6 million, a decrease of over $600,000 compared to $9.2 million in Q3 of last year. Excluding the impact of currency translation, operating expenses would have decreased more than $700,000 compared to Q3 of last year. The restructuring program announced last December is the main driver behind this favorable year-over-year result.

Operating income in Q3 increased to $2.9 million, an increase of approximately $800,000 as compared to $2.1 million in Q3 of last year. And our operating margin in Q3 was 11.5% on a non-GAAP basis, an increase of 310 basis points compared with 8.4% in Q3 of last year. The 8.4% is on a pro forma basis and excludes the effects of the HART business. Our non-GAAP effective tax rate was 28.8% in Q3, an increase of 450 basis points compared to 24.3% in Q3 last year. The main driver of the increase was related to currency translation gains, and we continue to forecast our effective tax rate in the range of 28% to 30%.

Net income on a GAAP basis was $633,000, an increase of approximately $1.6 million compared with a $983,000 net loss in Q3 of last year. Our GAAP income from continuing operations was also $633,000 or $0.02 per diluted share compared with a $48,000 net loss or $0.00 per diluted share for Q3 last year on a restated basis. Our non-GAAP income from continuing operations for Q3 was $1.9 million or $0.06 per diluted share, an increase of $0.02 per diluted share or 50% compared with $0.04 per diluted share in Q3 last year. Weighted average shares outstanding was 33.4 million in Q3 compared to 30.6 million in Q3 of last year. The higher shares were primarily the result of the additional equity awards issued at the time of the HART spin-off.

I'll now turn to the balance sheet. We finished Q3 with approximately $26.7 million of cash and equivalents, an increase of approximately $1 million compared to $25.8 million from Q4 last year. Accounts receivable as of Q3 were $14.3 million compared to $13.9 million as of Q4 last year. DSO or days sales outstanding was 52 days at the end of Q3, compared to 48 days as of Q4 last year. Inventory as of Q3 was $18.1 million compared to $15.8 million as of Q4 last year. Inventory turns were 3.2 times compared to 3.7 times in Q4 last year. The increase in inventory as of Q3 is associated with production levels ahead of what is historically our strongest quarter of the year and the result of higher levels at our Denville distribution business to improve customer service levels.

In addition, this quarter, we began the process of relocating our East Coast distribution center from New Jersey to North Carolina. The move will be completed during the first quarter of next year and is expected to result in improved customer service levels, operational efficiencies and a lower cost structure.

Now continuing down the balance sheet, capital expenditures were $1.2 million for the nine months ended September 30, 2014, compared to $1.1 million for the same period last year. The increase in capital expenditures year-to-date compared to last year was due to timing of normal capital spending on maintenance capital. Over the next several quarters, we expect that the pace of capital expenditures will accelerate due primarily to the implementation of a new ERP platform across all of our locations. We expect that this project will result in additional capital of between $1 million and $1.5 million based on our current footprint and excluding the impact of future acquisitions.

Just an additional comment on the ERP program. This is a critical business initiative for us. This will allow us to organize under one system versus the nine legacy systems we have today. Just to name a few of the benefits, it will make us a more streamlined and effective organization, it will lead to better procurement decisions, provide better and more timely information on performance, and serve as a common platform for integration of future business acquisitions.

Debt as of Q3 was $23.2 million compared to $24.8 million as of Q4 last year. The decrease was due to scheduled principal payments made during the year, offset by an increase in borrowings at the end of the quarter to fund the previously announced acquisition of Triangle BioSystems on October 1.

I'll now turn to annual guidance. Previously, we had communicated 2014 guidance, which was revenue of approximately $105 million -- unchanged from prior year -- and non-GAAP EPS from continuing operations of $0.26 or an increase of approximately 20%. Today, we are increasing our 2014 guidance to reflect the two acquisitions that were announced earlier in the month, Triangle BioSystems and Multi Channel Systems, and our year-to-date financial performance. As a result, we now expect revenues of $107 million to $108 million or an increase of 2% to 3% compared to 2013 revenues of approximately $105 million, and non-GAAP EPS from continuing operations of $0.26 to $0.27 or approximately a 20% to 22% bottom line increase compared to 2013 non-GAAP EPS of $0.22.

As it relates to next year, we are currently in our annual planning process and integrating the businesses that we acquired. As we communicated previously, we expect those businesses to deliver $7.5 million to $8.5 million in revenue in 2015. And we plan to address combined 2015 financial guidance on our year-end earnings call. As mentioned, the differences between our GAAP and non-GAAP financial guidance, including EPS and reconciliations, are outlined in the earnings release we issued today, which can be found on our website under Press Releases.

We will now open the call to discuss questions from participants. Operator?

(Operator Instructions) Paul Knight, Janney Capital.

Hi, yes. Jeff, can you talk about the ERP system? I missed some of that. It's going in, or the planning of it -- just refresh what's going on there.

Hey, Paul, it's Jeff, how are you doing? I'm going to let Rob answer this question. He is leading the project.

Hi, Paul, thanks. Yes. So currently we have nine legacy systems at Harvard Bio across our footprint. A lot of them are older systems; some of them are approaching close to end of life. We kicked off a process over the past few months to implement a common ERP system across our entire network. We're expecting that cost to be in the range of $1 million to $1.5 million, and that cost will come in over the course of Q4 and throughout 2015. And it's likely, as we continue to integrate the acquisitions and execute on future acquisitions, that cost could change slightly and also push out the timeline. But that's a little bit of information on that program.

Okay. And the tax rate of 28.8% in the quarter continuing, I guess, in Q4. What's the long-term trend on your tax rate? Does it go down as you increase Asia exposure or not?

Yes. So we -- like I said, we plan at sort of the 28% to 30% range; that's historically where the business has been on average. As we continue to grow our business outside of the US, as that percentage increases, that would lower that effective tax rate. And so although it doesn't take much to move it, it's only -- like 0.5% is less than $100,000 in the tax line. But we would expect over the long run, over sort of the five-year planning, the effective tax rate -- it would be neutral to down, because of the growing business outside of the US and in Asia.

And, Jeff, where are you in Asia? I know you were trying to get to as many as five people managing distributors there around turn of year. Are you there yet, and what's the status of expanding Asia?

Yes. So the goal, the objective this year was to build the commercial team. We had budgeted five headcount, which we filled all five positions this year. Next year, we'll expand into Asia; we'll expand into Japan, Korea and probably Southeast Asia. So that's the goal right now.

And where are you in terms of the progress? Were these people hired this summer; were they hired in Q1? I mean, are we seeing or are we not seeing their impact?

We went into 2014 with one position filled. We filled four positions this year; one of the positions is a Vice President of Sales for the region. Those positions have been filled in 2014. As we expand into 2015, that's where we expand into more of a regional presence in Asia -- and that goes back to Japan, Korea and Southeast Asia for now.

And lastly, is the academic world finally getting stable, better, or what's your read?

I think the US has been relatively softer than expected for not only us, but really everyone in the industry. We keep hearing that next year, 2015, we'll see some progression in terms of NIH budgeting. But right now, it's been a headwind for most people in the industry. We're doing quite well, though. Our teams are really executing. The buildup of our sales and marketing programs, especially in the US, have really allowed us to have a strong presence throughout all five of our product families, especially in the laboratory equipment supplies business, which is our Denville business, which is highly academic.

Okay, thank you.

Bryan Kipp, Janney Capital.

Hi, guys. I thought I was going to get behind somebody else. But just a quick couple of follow-ups, on the backlog build, the $6.2 million, 40% year-over-year growth -- any contribution from the recent acquisitions? I'm pretty sure they haven't closed, but just want to get confirmation there.

Yes, Bryan, it's Rob. No, you're thinking about that the right way. Those acquisitions closed 10/1, so they're not reflected in that 9/30 number, but they will be for year-end.

Okay. Any commentary on the consolidation of those things 10/1, how they're performing relative to expectations, as you're starting to ramp up?

Yes. No, we're now getting -- we're in the process of integrating those businesses and also the financial systems, and we get pretty good visibility into their performance daily; and I would say at this point they're performing as expected.

Perfect. The continued decelerate -- well, I guess we'll start here, one additional that you do have, you guys have a banking fee that you're going to incur in 4Q, is that correct?

Bryan, a banking --

Yes.

An investment banking fee.

Correct.

Sorry, I was thinking [about] banking fee. We do, yes, that's right. So not for the Triangle acquisition, but for the MCS acquisition, there was a banking fee associated with it.

Is it kind of significant, material in any sense for just modeling purposes?

Yes. No, it's about $600,000, it's in that range. And it would be -- we would highlight it in the Q4 earnings release and make sure that it was transparent to folks in the results.

And just kind of looking at run rates on costs here, you guys have really kind of -- as you highlighted a little about the cost of $600,000 reductions in year-over-year. Just thinking about run rates going forward, especially on the G&A and S&M side. Do you think the 2014 to 2015 on a -- I guess a consolidated, let's put it that way, on a 30% consolidated is a good run rate going forward? Or do you think you can get down in that 25% range over the next couple of years?

Bryan, what was the 25% range in reference --

So on a consolidated, if I looked at your sales and marketing and G&A expenses, it looks like it's about 29.6% of sales in the quarter. I'm just thinking about on the long-term rate as you consolidate some of your electrophysiology businesses, you do the ERP information via the -- facility consolidation in North Carolina, et cetera. What's kind of your long-term goal/projection? Do you think you can get it close to the 25% range, like [five a year]?

I mean that's a reasonable question to ask. As I tried to highlight in the prepared remarks, we're really going through our planning process now for next year, but I wouldn't expect to see a dramatic change in that level of spend, at least, over the near term. I think what we experienced this year is probably a pretty good modeling result, but certainly we'll cover that in the fourth quarter, as we give our financial guidance for next year.

Okay. And the last one that I have is, I guess, more product-specific business line stuff. The Denville business, I think you highlighted in the past up 30% of the business -- sorry, the lab equipment and supplies business, how is that performing relative to expectations? I think, I looked up your old acquisition 8-K release, and it said in 2009 that the expected contribution was about $19 million at the time and growing at 10% to 15% at a CAGR over the last decade. Just an update there on how that's performing relative to expectations in your mind.

Bryan, this is Jeff. So are you specifically talking about the Denville business?

Correct.

The Denville business, I would say, is right at expectations for 2014. The one thing that's thrown us off this year is the beginning of the year weather. So the weather set us back a little bit in January and February. Outside of that, I think they've been above expectations. But because of weather earlier in the year, we're right where we thought would be at this point in time.

Okay. And conversations are still ongoing to expand that into Asia, et cetera, and really penetrating other markets, correct?

I don't think we've really talked about expanding distribution outside of the US right now. But as we build our distribution strategy moving forward, there's no reason why not to think about moving outside of the US, but for right now, we just focused on the US.

All right. Thank you very much.

Thanks, Bryan.

Thanks, Bryan.

Raymond Myers, Alere Financial Partners.

Thank you for taking the questions. Jeff, on the prepared remarks, you mentioned something interesting -- that the East Coast distributor will be moving. Can you give some more detail about the cost implications of that?

Well, I'll give you the reason for the move, and I'll let Rob get into, maybe, the cost structure of how it applies to the business. But the purpose of the move is, we've put a lot of time and emphasis -- and we've communicated this quite frequently -- that distribution is a big and important part of our strategy moving forward. With that said and with the expectations of growing that business, the facility we are currently in in New Jersey is just too small. The location in North Carolina fits a couple things for us. Number one, reduction in cost; number two, it's in a location where weather-related situations such as January and February will not impact us as severe as it has in the past. Not to say that North Carolina doesn't run into weather, but -- or customers -- during weather-related issues here in the Northeast, customers don't go to work; that will continue. But I think we'll eliminate some of the situations we've run into in the past. It's a great location to be in; it allows us to increase our service levels to customers, get product to customers within a 24-hour time period. So it's a great location for us.

Rob, you want to [context]?

Yes, Ray, just in terms of the cost, the fact that we've gone and we've increased guidance for the year, I think, is indicative that the cost for the move in the fourth quarter is manageable and one that we can absorb. So it's not terribly significant to us. And in terms of the benefits going forward, as Jeff said, there is a cost benefit of making this switch, but the real story is around the service levels. So I think it's more around the business performance and top line potential as opposed to the ongoing cost savings. But the lower cost structure will be reflected in our guidance for 2015.

Great, thanks. And you increased the upper end of your EPS guidance for this year by $0.01. And I'm interested to understand how much of that was driven by organic improvement or contributed by the recent EP acquisitions.

Yes. So a good question there, Ray. So the acquisitions are clearly the primary contributing factor to the increase in EPS of $0.01 or so. The other contributing factor is, there is a small impact of foreign currency that flows through to the bottom line, but it's rather de minimis. It's the acquisitions. And consistent with where we started the year, as we talked about the restructuring that was announced last December, that was the main driver behind the 20% growth in EPS this year. And so we're pleased to report that we're on track to achieve that, but to go to the $0.27 is predominantly the acquisitions.

That's great to hear. Regarding acquisitions, can you update us on what your cash is now and your level of debt now relative to your appetite and capacity for further accretive acquisitions?

Yes, I'll start with some numbers and then Jeff can add some context around maybe appetite. So we've reported cash and debt as of 9/30; the next day, so 10/1, the cash was reduced to approximately $14 million. And our debt is in the range of about $22 million -- a little higher than $22 million. And so, as you know, we have the credit facility in place and that's available to us, as well as that $14 million, but I'll let Jeff speak to pipeline and appetite.

Yes, the pipeline is robust. I'll leave it at that. We consistently look at companies; we're consistently approached by companies, but we're taking this into 2015 like we did in 2014. It has to be very strategic to our business. If you look at our five product families, we want to make sure that we are staying within specialized segments of life science, such as electrophysiology and become market leaders within those specialized segments. So if we come across an opportunity that fits within our strategic profile, acquisitions will continue into 2015.

Excellent, thank you. That's a perfect segue actually to my next question. You mentioned strategic several times, and I wondered if you can describe in a little bit more detail how the EP acquisitions, in addition to being accretive, are strategically important to the Company.

Well, electrophysiology as a market, as a subset of life sciences, is a growing segment. The fact that we had a business, our Warner Instruments business in electrophysiology by acquiring TBSI and MCS allows us to become a market leader within electrophysiology. So it's a perfect fit for us. It fits within our core competencies as an organization. This is the prime example of our acquisition strategy, and that strategy will continue into 2015.

All right, great to hear. And then maybe one final question: a lot of what was talked about are related to reducing the cost structure, we touched a little bit on acquisitions. Is there anything else that would contribute to restoring organic revenue growth to the business, and maybe give us a hint at that growth trajectory for 2015?

Yes, I think it's the focus of the sales and marketing teams, along with operations. One of the things we've done this year is, we've put a lot of emphasis on increasing the talent pool within the organization. I think we've done a great job of that. I'll give you an example. Our last -- was it Q4 of 2013, we made an organizational change and we made some changes to our commercial teams in Europe. Europe is our top-performing region this year, and it's specifically due to the performance of our operations team, our sales and marketing team in Europe. This is a prime example of how we see organic growth continuing in other regions of the world. As we make these changes, as we increase the talent pool, as we increase our focused marketing activities, marking programs, things like that, we believe organic growth will fall.

Thank you. I'll get back in queue.

Thanks, Ray.

(Operator Instructions) Jack Wallace, Sidoti & Company.

Good morning, Jeff and Rob, Thanks for taking my questions.

Good morning, Jack.

Just wanting to start a little deeper on the acquisitions here, the ENP market, roughly how big is that on a global basis?

About $100 million.

And after the acquisitions, roughly what market share do you have now?

So we're about 15%, Jack. So roughly 6% to 7% to 15%, something like that.

Okay, so you roughly double your market size; and then with the product lines that were acquired, are these kind of add-on products? Are there products bought and sold at the same time? I guess help me get a better understanding for when you're -- you're going into the market with now a larger portfolio of products in this segment, how the new -- newly acquired product lines are going to fit in with that sales process?

So our current business or the current business that we've had for quite some time, the Warner Instruments business, is a patch clamp business. What TBSI and MCS bring to the table are both in vitro and in vivo products within electrophysiology. Now you can take all of these components as one and almost create a package opportunity for scientists. So this is the strategic initiative behind these acquisitions.

Got you. Thank you. That's helpful. And then when you're looking at other acquisitions, is that the same mindset or are there maybe other market segments where you're either weak or do not have a presence that you're looking to get into?

Yes, I mean, I think we've said it all along. If we come across something that we believe is outside of a current product family that we have, but we have capabilities, we have core competencies around managing that business on a global basis, there is no reason for us not to be attracted to that. But at this point in time, we have our five product families, and we're pretty specific to the types of products and innovation that we're looking at, especially around the M&A activity.

Okay. Thanks. And then with China, obviously, it's been soft last couple of quarters, possibly due to the political environment there. Is there any, I guess, insight on when we might see that swing back up into the quicker growth mode, where it had been previously? I mean we're just seeing the reports that there is -- that China has said they're going to be putting a ton of money into the life science research area, and obviously that's a great tailwind for a tool provider -- or tool manufacturer, excuse me. Any idea when we might see that inflection point, when the higher growth rates will return to that segment?

Well, the good news is China continues to state that they want to be a market leader in life sciences. So that's great for us. We can't predict exactly when funds will be released. But the newly formed commercial team we have in China, what they're doing is, they're establishing new relationships with new channel partners. We've looked at legacy channel partners that we have that just weren't working out. We've made changes. So as we progress and as we move forward, even without the releasing of funds, I believe there is ample opportunity for us to grow in China.

And just going back to the two acquisitions in the ENP market, you mentioned that the market is growing, is it growing at clip bit better than the rest of the business, is that somewhere in the, maybe, high single digits?

I don't have any direct information on where it's growing, but I can tell you this, it's growing faster than the laboratory consumable product categories or small instrumentation, such as some of the other product families that we have within Harvard Bioscience today. And once again, this is the attractiveness of these types of acquisitions: they're growing faster than the businesses; they're growing faster than the overall academic market in terms of the products that we currently play in. So it leads to a win situation for us moving forward.

That's great. Thanks for the comments, guys. I'll hop back in queue.

Thanks, Jack.

(Operator Instructions) I'm showing no further questions at this time. I'd like to turn the call back over to Mr. Jeff Duchemin for any further remarks.

Thank you, everyone. This concludes our Q3 2014 earnings call. We look forward to announcing Q4 results in Q1 of 2015. Thank you.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may all disconnect. Everyone have a great day.