Lakewood, Colorado, November 6, 2019 – Mesa Laboratories, Inc. (NASDAQ:MLAB)
(we, us, our, “Mesa” or the “Company”) today reported record second quarter revenues
and adjusted operating income (“AOI”) for the three months ended September 30, 2019.
Financial Highlights
In comparison to the same quarter in the prior year, second quarter revenues increased
3% to $25.5M, operating income increased 303% to $4.6M and net income increased
208% to $3.1M or $0.71 per diluted share of common stock. Net income for the second
quarter was impacted by a $0.6M, before tax, non-cash interest charge associated with the
equity conversion feature related to our $172.5M of Convertible Notes. Operating and
net income for the second quarter in the prior year were impacted by an unusual item
consisting of a $3,300,000 expense, before tax, related to an estimate of our potential loss
associated with the TCPA lawsuit.
In comparison to the same period in the prior year, revenues for the six months ended
September 30, 2019 increased 4% to $51.8M, operating income increased 69% to
$10.0M and net income increased 47% to $7.7M or $1.82 per diluted share of common
stock. Net income for the six months ended September 30, 2019 was impacted by the
same item described above. Operating and net income for the six months ended
September 30, 2018 were impacted by the same unusual item described above.
On a non-GAAP basis, in comparison to the same quarter in the prior year, second
quarter adjusted operating income increased 87% to $7.4M or $1.72 per diluted share of
common stock. In comparison to the same period in the prior year, adjusted operating
income for the six months ended September 30, 2019 increased 35% to $15.4M or $3.65
per diluted share of common stock. Adjusted operating income for both the three and six
months ended September 30, 2018 were fully impacted by the same operating income
item described above. Excluding the unusual item in both periods for 2018, adjusted
operating income for the three and six months ended September 30, 2019 increased 2%
to $7.4M or $1.72 per diluted share of common stock and 5% to $15.4M or $3.65 per
diluted share of common stock, respectively as compared to the same periods in the prior
year.
Organic revenues growth for both the three and six months ended September 30, 2019,
excluding Packaging, was 3% (0% including Packaging). Total revenues excluding
Packaging increased 6% and 7%, respectively, for the three and six months ending
September 30, 2019.
Division Performance
• Sterilization and Disinfection Control (47% of revenues in 2Q20) delivered steady
organic and total revenues growth of 4% in the quarter. Gross margin percentage
increased 330 basis points primarily as a result of efficiencies gained both
operationally and from higher sales volumes.
- Instruments (35% of revenues in 2Q20) disappointed in the quarter with total
revenues growth of 3% driven by the recent acquisition of IBP. Organic
revenues, however, decreased 3% for the quarter. Positive mix overcame volume
headwinds enabling gross margin percentage to expand by 40 basis points.
- Cold Chain Monitoring (14% of revenues in 1Q20) had a strong topline quarter
with revenues growth of 22% in total which included 16% organically. Gross
margin percentage, however, contracted by 810 basis points due to lower than
planned service revenue volumes, higher than expected hardware prices from
certain vendors and timing associated with the completion of certain projects.
- Cold Chain Packaging (4% percent of revenues in 1Q20) proceeded as expected
in the quarter with revenues contracting by 45% while gross margin percentage
expanded by 420 basis points.
Executive Commentary
“Performance was steady in the second quarter with organic revenues growth of 3% (at
the low end of our long-term organic growth expectations), and no meaningful change to
gross margin percentage, when excluding Packaging for both items. Cold Chain
Monitoring revenues rebounded from a poor first quarter, but we are not growing
profitability in line with revenues in the way we had planned.
Strategically, the acquisition of Gryos Protein Technologies Holding AB (“GPT”) on
October 31, 2019, adds an exciting high growth vector for the Company, deepens our
commitment to serving the Biopharmaceutical Development market with mission critical
quality control instruments and consumables, and adds a tremendous influx of talent to
the overall Mesa team. For additional details on the GPT Acquisition, see our October
31st press release and investor presentation (both available on our website at
Mesalabs.com). With our recent capital raise of over $240M and the acquisition of GPT
at $180M, we retain enough capital to continue our acquisition program in the near term”
concluded Mr. Owens.
1 The non-GAAP measures of adjusted operating income and adjusted operating income per
diluted share are defined to exclude the non-cash impact of amortization of intangible assets
and stock-based compensation expense. A reconciliation between these non-GAAP measures
and their GAAP counterparts is set forth in the table below, along with additional
information regarding their use
The non-GAAP measures of adjusted operating income and adjusted operating income per share
presented in the reconciliation above are defined to exclude the non-cash impact of amortization of
intangible assets and stock-based compensation. We believe that excluding these non-cash expenses
provides the ability to better understand the operations of the Company.
We provide non-GAAP adjusted operating income and non-GAAP adjusted operating income per
share amounts in order to provide meaningful supplemental information regarding our operational
performance. Our management uses non-GAAP measures to evaluate the performance of our
business and to compensate employees. This information facilitates management’s internal
comparisons to our historical operating results as well as to the operating results of our competitors.
Since management finds this measure to be useful, we believe that our investors can benefit by
evaluating both non-GAAP and GAAP results.
Our management recognizes that items such as amortization of intangible assets and stock-based
compensation expense can have a material impact on our operating and net income. To gain a
complete picture of all effects on our profit and loss from any and all events, management does (and
investors should) rely upon the GAAP consolidated statements of income. The non-GAAP numbers
focus instead upon our core operating business.
Readers are reminded that non-GAAP measures are merely a supplement to, and not a replacement
for, or superior to financial measures prepared according to GAAP. They should be evaluated in
conjunction with the GAAP financial measures. It should be noted as well that our non-GAAP
information may be different from the non-GAAP information provided by other companies.
About Mesa Laboratories, Inc.
Mesa is a global technology innovator committed to solving some of the most critical quality
control challenges in the pharmaceutical, healthcare, industrial safety, environmental and food and
beverage industries. Mesa offers products and services through five divisions (Sterilization and
Disinfection Control, Biopharmaceutical Development, Instruments, Cold Chain Monitoring and
Cold Chain Packaging) to help our customers ensure product integrity, increase patient and worker
safety, and improve the quality of life throughout the world.
Forward Looking Statements
This press release may contain information that constitutes “forward-looking statements.”
Generally, the words “believe,” “estimate,” “intend,” “expect,” “project,” “anticipate,” “will” and
similar expressions identify forward-looking statements, which generally are not historical in
nature. However, the absence of these words or similar expressions does not mean that a statement
is not forward-looking. All statements that address operating performance, events or developments
that we expect or anticipate will occur in the future — including statements relating to revenues
growth and statements expressing general views about future operating results — are forwardlooking statements. Management believes that these forward-looking statements are reasonable as
and when made. However, caution should be taken not to place undue reliance on any such
forward-looking statements because such statements speak only as of the date when made. We
undertake no obligation to publicly update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as required by law. In addition,
forward-looking statements are subject to certain risks and uncertainties that could cause actual
results to differ materially from our historical experience and present expectations or projections.
These risks and uncertainties include, but are not limited to, those described in our Annual Report
on Form 10-K for the year ended March 31, 2019, and those described from time to time in our
subsequent reports filed with the Securities and Exchange Commission.
CONTACT: Gary Owens.; President and CEO, or John Sakys; CFO, both of Mesa Laboratories,
Inc., +1-303-987-8000
For more information about the Company, please visit its website at www.mesalabs.com