Mesa Laboratories(MLAB) - 2026 Q1 - Quarterly Results

First Quarter FY26 Earnings Announcement Mesa Laboratories reported a 2.4% revenue increase and 0.4% core organic growth in 1Q26, with operating income decreasing but net income rising Overview and Key Highlights Mesa Labs reported 1Q26 revenues up 2.4% and core organic growth of 0.4%, with a significant operating income decrease but net income increase Key Financial Highlights (1Q26 vs 1Q25) | Metric | 1Q26 (Thousands) | Change vs 1Q25 | Percentage of Revenues | Source Chunks | | :----------------------------------- | :----------------- | :--------------- | :--------------------- | :------------ | | Revenues | $59,543 | +2.4% | - | [8, 9] | | Non-GAAP core organic revenues growth | - | +0.4% | - | [8, 9] | | Operating income | $3,064 | -45.1% | - | [8, 9] | | Non-GAAP adjusted operating income (AOI) excluding unusual items | $12,902 | -15.9% | 21.7% | [8, 9] | Executive Commentary CEO Gary Owens discussed 2.4% organic revenue growth, BPD revenue shifts, CG China contraction, and a decline in AOI profitability to 21.7% due to various factors - BPD experienced approximately $1.5M of expected 1Q26 revenues shifting into 2Q26 due to final tariff surcharge negotiations, but the company expects to meet first-half revenue goals[4] - SDC and CG (excluding China) showed strong growth of 7.9%, overcoming a $1.8M (69%) contraction in CG China revenues[4] - Profitability (AOI excluding unusual items as a percentage of revenues) was 21.7% in 1Q26, down from 26.4% in 1Q25 and 23.5% for FY25, primarily due to FX, strategically prioritized low-margin BPD shipments to China, and increased operating expenses[5] - The 'Mesa Way' operating model, specifically Breakthrough 7, focused on accelerating New Product Development, improving Product Launches, spreading best practices for Customer Prospecting, and Manufacturing Scrap Reduction within the Clinical Genomics division[6] Consolidated Financial Results Mesa Labs' 1Q26 consolidated results show a 2.4% revenue increase, significant GAAP operating income decrease, and a 40% net income rise Summary of Financial Performance Mesa Labs reported 1Q26 total revenues of $59.54 million, a 2.4% increase, with GAAP operating income down but net income up 40% Consolidated Financial Performance (1Q26 vs 1Q25) | Metric | 1Q26 (Thousands) | 1Q25 (Thousands) | YoY Change | Source Chunks | | :----------------------------------- | :----------------- | :----------------- | :--------- | :------------ | | Total Revenues | $59,543 | $58,170 | +2.4% | [9, 22] | | Operating Income (GAAP) | $3,064 | $5,580 | -45.1% | [9, 22] | | Net Income (GAAP) | $4,742 | $3,388 | +40.0% | [9, 22] | | Diluted EPS (GAAP) | $0.85 | $0.62 | +37.1% | [9, 22] | | Core Organic Revenues Growth (Non-GAAP) | - | - | +0.4% | [9] | | AOI (Non-GAAP) | $12,902 | $13,973 | -7.7% | [9, 26] | | AOI excluding unusual items (Non-GAAP) | $12,902 | $15,341 | -15.9% | [9, 26] | | Total Net Leverage Ratio (as of June 30, 2025) | 3.16 | - | - | [9] | Condensed Consolidated Statements of Operations Consolidated statements show increased revenues but decreased gross profit and operating income, with net income rising due to nonoperating income Condensed Consolidated Statements of Operations (Three Months Ended June 30) | (Amounts in thousands, except per share data) | June 30, 2025 | June 30, 2024 | | :------------------------------------ | :------------ | :------------ | | Revenues | $59,543 | $58,170 | | Cost of revenues | 22,604 | 20,921 | | Gross profit | 36,939 | 37,249 | | Operating expenses | 33,875 | 31,669 | | Operating income | 3,064 | 5,580 | | Nonoperating (income) expense | (3,948) | 1,675 | | Earnings before income taxes | 7,012 | 3,905 | | Income tax expense | 2,270 | 517 | | Net income | $4,742 | $3,388 | | Earnings per share (basic) | $0.87 | $0.63 | | Earnings per share (diluted) | $0.85 | $0.62 | | Weighted average common shares outstanding (Basic) | 5,465 | 5,397 | | Weighted average common shares outstanding (Diluted) | 5,553 | 5,424 | Consolidated Condensed Balance Sheets Balance sheets indicate a slight increase in total assets and stockholders' equity, alongside a decrease in total liabilities Consolidated Condensed Balance Sheets | (Amounts in thousands) | June 30, 2025 | March 31, 2025 | | :--------------------- | :------------ | :------------- | | Cash and cash equivalents | $21,279 | $27,321 | | Other current assets | 76,979 | 75,364 | | Total current assets | 98,258 | 102,685 | | Noncurrent assets | 337,485 | 330,663 | | Total assets | $435,743 | $433,348 | | Liabilities | $263,247 | $273,518 | | Stockholders' equity | 172,496 | 159,830 | | Total liabilities and stockholders' equity | $435,743 | $433,348 | Division Performance Analysis This section analyzes the performance of SDC, BPD, CS, and CG divisions, detailing revenue growth and profitability drivers Sterilization and Disinfection Control (SDC) SDC division achieved 7.5% core organic revenue growth, driven by strong commercial execution and improved manufacturing productivity SDC Division Performance | Metric | 1Q26 (Thousands) | Core Organic Revenues Growth | Gross Profit % Change (YoY) | Source Chunks | | :------- | :----------------- | :--------------------------- | :-------------------------- | :------------ | | Revenues | $25,410 | 7.5% | +370 bps | [10] | - Growth was driven by strong commercial execution leading to orders growth greater than revenues growth and a reduction in past-due backlog[10] - Gross profit percentage increase was primarily due to a 340 bps benefit from non-cash inventory step-up charges in 1Q25[10] Biopharmaceutical Development (BPD) BPD division saw a 7.0% core organic revenue decline due to order timing and shipping delays, impacting gross profit percentage BPD Division Performance | Metric | 1Q26 (Thousands) | Core Organic Revenues Growth | Gross Profit % Change (YoY) | Source Chunks | | :------- | :----------------- | :--------------------------- | :-------------------------- | :------------ | | Revenues | $11,486 | (7.0)% | -1,140 bps | [11] | - The decline was driven by timing of order placements and shipping delays; without these, revenues would have shown approximately 8.0% positive growth[11] - Gross profit percentage contraction was primarily due to unfavorable product mix, delayed volumes, and FX, with SEK appreciating 12.4% vs. USD[11] Calibration Solutions (CS) CS division achieved 4.8% core organic revenue growth from commercial execution and price increases, despite gross profit percentage decline CS Division Performance | Metric | 1Q26 (Thousands) | Core Organic Revenues Growth | Gross Profit % Change (YoY) | Source Chunks | | :------- | :----------------- | :--------------------------- | :-------------------------- | :------------ | | Revenues | $12,350 | 4.8% | -440 bps | [12] | - Revenues growth was driven by strong commercial execution in renal care and price increases[12] - Gross profit percentage decreased due to raw material price headwinds (tariffs), increased labor costs, and product mix[12] Clinical Genomics (CG) CG division experienced a 10.7% core organic revenue decline, primarily from a 69% contraction in China, partially offset by growth outside China CG Division Performance | Metric | 1Q26 (Thousands) | Core Organic Revenues Growth | Gross Profit % Change (YoY) | Source Chunks | | :------- | :----------------- | :--------------------------- | :-------------------------- | :------------ | | Revenues | $10,297 | (10.7)% | -420 bps | [13] | - China revenues contracted by approximately $1.8M (69%) compared to the prior year, representing 8% of total division revenues for 1Q26 (down from 19% for FY25)[13] - Growth outside of China was 7.9%, primarily from consumables, driven by new product development and commercial strategy[13] Non-GAAP Financial Measures and Supplemental Information This section defines and reconciles Mesa Labs' non-GAAP financial measures, including AOI and organic revenues growth, to GAAP Use and Definition of Non-GAAP Measures Mesa Labs uses non-GAAP measures like AOI and organic revenues growth to provide supplemental operational performance insights, excluding non-cash or non-recurring items - Non-GAAP measures are used to provide meaningful supplemental information regarding operational performance, helping investors understand operating results consistent with management's internal measurements[28] - Organic revenues growth excludes the impact of acquisitions, and core organic revenues growth further excludes currency translation[14] - Adjusted operating income (AOI) excludes non-cash impacts of amortization of intangible assets, stock-based compensation, depreciation, and impairment of goodwill and long-lived assets. AOI excluding unusual items further removes non-ongoing, specific transaction-related items[15][29][32] - Total Net Leverage Ratio is defined as total debt minus unrestricted cash (in excess of $10M) compared to 12 months trailing EBITDA, where EBITDA is a non-GAAP metric adjusted for interest, taxes, depreciation, amortization, unusual charges, and stock compensation[16] Reconciliation of Non-GAAP Measures This section reconciles GAAP financial measures to non-GAAP AOI and organic/core organic revenues growth, detailing adjustments for non-cash and unusual items GAAP Operating Income to Non-GAAP Adjusted Operating Income (AOI) This table reconciles GAAP operating income to non-GAAP AOI, detailing adjustments for amortization, stock-based compensation, and depreciation Reconciliation of GAAP Operating Income to Non-GAAP AOI | (Amounts in thousands, except per share data) | June 30, 2025 | June 30, 2024 | | :-------------------------------------------- | :------------ | :------------ | | Operating income (GAAP) | $3,064 | $5,580 | | Amortization of intangible assets | 4,553 | 4,061 | | Stock-based compensation expense | 3,881 | 2,928 | | Depreciation expense | 1,404 | 1,404 | | AOI (non-GAAP) | $12,902 | $13,973 | | Unusual items – before tax: | | | | Non-cash GKE inventory step-up | -- | 778 | | GKE integration costs | -- | 590 | | Total impact of unusual items on AOI – before tax | -- | $1,368 | | AOI excluding unusual items (non-GAAP) | $12,902 | $15,341 | | AOI per share - diluted (non-GAAP) | $2.32 | $2.58 | | AOI excluding unusual items per share – diluted (non-GAAP) | $2.32 | $2.83 | Organic and Core Organic Revenues Growth This table reconciles total revenues growth to organic and core organic revenues growth, showing acquisition and currency translation impacts Organic and Core Organic Revenues Growth Reconciliation | Metric | Three Months Ended June 30, 2025 | | :-------------------------------- | :------------------------------- | | Total revenues growth | 2.4% | | Impact of acquisitions | --% | | Organic revenues growth (non-GAAP) | 2.4% | | Currency translation | (2.0)% | | Core organic revenues growth (non-GAAP) | 0.4% | Additional Company Information This section provides company background, forward-looking statement disclaimers, and investor contact information About Mesa Laboratories, Inc. Mesa Labs is a global leader in life science tools and quality control solutions for pharmaceutical, healthcare, and medical device industries - Mesa is a global leader in life science tools and critical quality control solutions for regulated applications[17] - The company serves the pharmaceutical, healthcare, and medical device industries[17] Forward-Looking Statements This section outlines forward-looking statements, subject to risks including acquisitions, market acceptance, economic conditions, and currency fluctuations - Statements regarding future financial results, business conditions, and strategic initiatives are forward-looking and subject to risks and uncertainties[19] - Risks include successful business growth, acquisition integration, market acceptance, global economy, U.S. trade policies, product development, and foreign currency fluctuations[19] - The company assumes no obligation to update the information in the press release[19] Mesa Laboratories Contacts Investor relations contact information for Mesa Laboratories, including key personnel and contact details, is provided - Investor contacts: Gary Owens (President and CEO), John Sakys (CFO)[20] - Contact details: 1-303-987-8000, investors@mesalabs.com[20]