MESA LABORATORIES INC /CO/ 10-K

Item 8. Financial Statements and Supplementary Data REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of Mesa Laboratories, Inc. Opinion on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheet of Mesa Laboratories, Inc. (and subsidiaries) (the “Company”) as of March 31, 2025, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity and cash flows for the year ended March 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company’s internal control over financial reporting as of March 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of March 31, 2025, and the consolidated results of its operations and its cash flows for the year ended March 31, 2025, in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of March 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO. Basis for Opinion The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Annual Report on Internal Control Over Financial Reporting included in Item 9A. Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audit of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the (consolidated) financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Page 29 Table of Contents Fair Value of the Reporting Units for Goodwill Impairment Assessment As described in Note 6 to the consolidated financial statements, the Company’s consolidated goodwill balance was $181.8 million as of March 31, 2025. The Company performs an annual impairment test for goodwill as of January 1 of each year, or more frequently if facts or circumstances indicate it is more-likely-than not that a reporting unit may be impaired. The Company first has the option to perform a qualitative assessment to determine whether it is more-likely-than-not that the fair value of the reporting unit is less than the carrying amount, or to bypass the qualitative assessment and perform a quantitative assessment. As of January 1, 2025, the Company elected to bypass the qualitative assessment and perform a quantitative assessment where the Company determined the fair value of each reporting unit and compared the fair value to the reporting unit’s carrying amount. The Company estimates the fair value of each reporting unit based on a combination of an income approach, that utilizes discounted cash flows specific to each reporting unit, and a market approach, that considers guideline public company market multiples. We identified auditing the Company’s estimates of the fair value of each reporting unit for purposes of its goodwill impairment assessment as a critical audit matter. The performance of audit procedures related to management's estimates of the fair value of each reporting unit required extensive audit effort, including the use of our valuation specialists with specialized skill and knowledge pertaining to valuation techniques. Additionally, the evaluation of the audit evidence for the more significant assumptions required especially challenging and subjective auditor judgement. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. Our audit procedures related to the Company's goodwill impairment assessments included the following, among others: ● Testing the Company’s process used to develop the estimates. ● Evaluating the appropriateness of the methodologies used, and evaluating the relative weight assigned to the various methodologies used in the analysis. ● Evaluating the significant assumptions used, including the reasonableness of: ● management’s forecast of future revenues and gross margins by comparing the future revenue growth rates and gross margins to historical company data and evaluating consistency with external market and industry data. ● management’s selection of comparable entities. ● management’s selection of the discount rate and market multiples of comparable companies by comparing the underlying source information to publicly available market data. ● Testing the completeness, accuracy, and reliability of underlying data used in the Company’s analysis. ● Utilizing our valuation professionals with specialized skill and knowledge to assist in evaluating the methodologies used and the reasonableness of certain significant assumptions. /s/ Moss Adams LLP We have served as the Company’s auditor since 2024. Los Angeles, California May 28, 2025 Page 30 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of Mesa Laboratories, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheet of Mesa Laboratories, Inc. (the Company) as of March 31, 2024, the related consolidated statements of operations, comprehensive loss, stockholders' equity and cash flows for the year ended March 31, 2024, and the related notes (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2024, and the results of its operations and its cash flows for the year ended March 31, 2024, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. /s/ RSM US LLP We served as the Company's auditor from 2023 to 2024. Los Angeles, California June 28, 2024 Page 31 Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors of Mesa Laboratories, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated statements of operations, comprehensive (loss), stockholders' equity, and cash flows of Mesa Laboratories, Inc. (the “Company”) for the year ended March 31, 2023, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements referred to above present fairly, in all material respects, the results of the Company's operations and its cash flows for the year ended March 31, 2023, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion The Company's management is responsible for these financial statements. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. /s/ Plante & Moran, PLLC We served as the Company’s auditor from 1986 to 2023. Denver, Colorado May 30, 2023 Page 32 Table of Contents Mesa Laboratories, Inc. Consolidated Balance Sheets (In thousands, except share amounts) March 31, March 31, 2025 2024 ASSETS Current assets Cash and cash equivalents $ 27,321 $ 28,214 Accounts receivable, less allowances for credit losses of $ 1,186 and $ 1,321 , respectively 41,970 39,055 Inventories 25,365 32,675 Prepaid expenses and other 8,029 9,408 Total current assets 102,685 109,352 Noncurrent assets Property, plant and equipment, net 32,333 31,766 Deferred tax asset 1,371 1,292 Other assets 18,324 10,538 Customer relationships, net 72,880 85,383 Other intangibles, net 23,995 28,369 Goodwill 181,760 180,096 Total assets $ 433,348 $ 446,796 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Accounts payable $ 5,747 $ 6,041 Accrued payroll and benefits 17,858 9,935 Unearned revenues 14,710 15,478 Other accrued expenses 24,601 12,858 Term loan, current portion 3,750 - Convertible senior notes, current portion, net of debt issuance costs 97,297 - Total current liabilities 163,963 44,312 Noncurrent liabilities Deferred tax liability 20,181 19,780 Other noncurrent liabilities 12,472 15,613 Term loan, noncurrent portion, net of debt issuance costs 66,902 - Revolving line of credit 10,000 50,500 Convertible senior notes, noncurrent portion, net of debt issuance costs - 171,198 Total liabilities 273,518 301,403 Stockholders’ equity Common stock, no par value; authorized 25,000,000 shares; issued and outstanding, 5,455,421 and 5,394,491 shares, respectively 358,541 343,642 (Accumulated deficit) ( 188,936 ) ( 183,494 ) Accumulated other comprehensive (loss) ( 9,775 ) ( 14,755 ) Total stockholders’ equity 159,830 145,393 Total liabilities and stockholders’ equity $ 433,348 $ 446,796 See accompanying notes to consolidated financial statements. Page 33 Table of Contents Mesa Laboratories, Inc. Consolidated Statements of Operations (In thousands, except per share data) Year Ended March 31, 2025 2024 2023 Revenues Product $ 198,395 $ 176,796 $ 180,520 Service 42,583 39,391 38,560 Total revenues 240,978 216,187 219,080 Cost of revenues Cost of products 60,441 57,200 60,937 Cost of services 29,667 25,737 24,450 Total cost of revenues 90,108 82,937 85,387 Gross profit 150,870 133,250 133,693 Operating expense Selling 41,683 38,625 37,439 General and administrative, other than impairment of finite-lived intangible assets and goodwill 73,333 72,867 72,444 Research and development 19,518 19,300 20,490 Impairment of finite-lived intangible assets - 117,641 - Impairment of goodwill - 156,892 - Total operating expense 134,534 405,325 130,373 Operating income (loss) 16,336 ( 272,075 ) 3,320 Nonoperating expense (income) Interest expense and amortization of debt issuance costs 11,859 5,697 4,770 Gain on extinguishment of convertible senior notes ( 2,887 ) - - Other expense (income), net 1,403 ( 2,124 ) ( 1,061 ) Total nonoperating expense, net 10,375 3,573 3,709 Earnings (loss) before income taxes 5,961 ( 275,648 ) ( 389 ) Income tax expense (benefit) 7,935 ( 21,402 ) ( 1,319 ) Net (loss) income $ ( 1,974 ) $ ( 254,246 ) $ 930 Net (loss) earnings per share Basic $ ( 0.36 ) $ ( 47.20 ) $ 0.17 Diluted $ ( 0.36 ) $ ( 47.20 ) $ 0.17 Weighted-average common shares outstanding Basic 5,421 5,386 5,321 Diluted 5,421 5,386 5,361 See accompanying notes to consolidated financial statements. Page 34 Table of Contents Mesa Laboratories, Inc. Consolidated Statements of Comprehensive Income (Loss) (In thousands) Year Ended March 31, 2025 2024 2023 Net (loss) income $ ( 1,974 ) $ ( 254,246 ) $ 930 Other comprehensive income (loss) Foreign currency translation adjustments 4,980 ( 1,960 ) ( 16,461 ) Comprehensive income (loss) $ 3,006 $ ( 256,206 ) $ ( 15,531 ) See accompanying notes to consolidated financial statements. Page 35 Table of Contents Mesa Laboratories, Inc. Consolidated Statements of Stockholders’ Equity (In thousands, except share amounts) Common Stock Number of Shares Amount (Accumulated Deficit) Retained Earnings AOCI* Total March 31, 2022 5,265,627 $ 313,460 $ 76,675 $ 3,666 $ 393,801 Vesting of restricted stock units and exercise of stock options 108,737 6,997 - - 6,997 Tax withholding on restricted stock units ( 4,898 ) ( 919 ) - - ( 919 ) Dividends paid, $ 0.64 per share - - ( 3,406 ) - ( 3,406 ) Stock-based compensation expense - 12,538 - - 12,538 Foreign currency translation - - - ( 16,461 ) ( 16,461 ) Net income - - 930 - 930 March 31, 2023 5,369,466 $ 332,076 $ 74,199 $ ( 12,795 ) $ 393,480 Vesting of restricted stock units and exercise of stock options 30,418 358 - - 358 Tax withholding on restricted stock units ( 5,393 ) ( 728 ) - - ( 728 ) Dividends paid, $ 0.64 per share - - ( 3,447 ) - ( 3,447 ) Stock-based compensation expense - 11,936 - - 11,936 Foreign currency translation - - - ( 1,960 ) ( 1,960 ) Net (loss) - - ( 254,246 ) - ( 254,246 ) March 31, 2024 5,394,491 $ 343,642 $ ( 183,494 ) $ ( 14,755 ) $ 145,393 Vesting of restricted stock units and exercise of stock options 69,526 2,644 - - 2,644 Tax withholding on restricted stock units ( 8,596 ) ( 887 ) - - ( 887 ) Dividends paid, $ 0.64 per share - - ( 3,468 ) - ( 3,468 ) Stock-based compensation expense - 13,142 - - 13,142 Foreign currency translation - - - 4,980 4,980 Net (loss) - - ( 1,974 ) - ( 1,974 ) March 31, 2025 5,455,421 $ 358,541 $ ( 188,936 ) $ ( 9,775 ) $ 159,830 *Accumulated Other Comprehensive (Loss) Income. See accompanying notes to consolidated financial statements. Page 36 Table of Contents Mesa Laboratories, Inc. Consolidated Statements of Cash Flows (In thousands) Year Ended March 31, 2025 2024 2023 Cash flows from operating activities: Net (loss) income $ ( 1,974 ) $ ( 254,246 ) $ 930 Adjustments to reconcile net (loss) income to net cash provided by operating activities: Depreciation of property, plant and equipment 5,382 4,233 4,313 Amortization of acquisition-related intangibles 19,145 27,341 28,821 Stock-based compensation expense 13,142 11,936 12,538 Amortization of step-up in inventory basis 1,232 1,229 - Gain on extinguishment of convertible senior notes ( 2,887 ) - - Non-cash interest expense and debt issuance cost amortization 990 926 907 Deferred taxes ( 72 ) ( 28,421 ) ( 3,494 ) Impairment loss on goodwill and finite-lived intangible assets - 274,533 - Other 4,946 629 1,080 Cash from changes in operating assets and liabilities: Accounts receivable, net ( 2,925 ) 4,940 ( 2,121 ) Inventories 1,153 2,563 ( 10,182 ) Prepaid expenses and other assets, pending taxes 498 211 ( 510 ) Accounts payable ( 388 ) ( 97 ) ( 1,545 ) Accrued liabilities and taxes payable, pending taxes 9,504 ( 1,236 ) ( 3,360 ) Unearned revenues ( 938 ) ( 408 ) 606 Net cash provided by operating activities 46,808 44,133 27,983 Cash flows from investing activities: Acquisition of customer lists ( 250 ) - - Acquisition of businesses, net of cash acquired and holdback liabilities - ( 78,739 ) ( 4,950 ) Purchases of property, plant and equipment ( 4,249 ) ( 2,567 ) ( 4,544 ) Net cash (used in) investing activities ( 4,499 ) ( 81,306 ) ( 9,494 ) Cash flows from financing activities: Proceeds from Credit Facility borrowings 73,465 71,000 - Repayment of debt ( 44,251 ) ( 33,500 ) ( 36,000 ) Repurchase of convertible senior notes ( 71,560 ) - - Dividends paid ( 3,468 ) ( 3,447 ) ( 3,406 ) Proceeds from the exercise of stock options 2,644 358 6,997 Payment of tax withholding obligation on vesting of restricted stock ( 887 ) ( 728 ) ( 919 ) Other financing, net ( 452 ) ( 847 ) - Net cash (used in) provided by financing activities ( 44,509 ) 32,836 ( 33,328 ) Effect of exchange rate changes on cash and cash equivalents 1,307 ( 359 ) ( 1,597 ) Net (decrease) in cash and cash equivalents ( 893 ) ( 4,696 ) ( 16,436 ) Cash and cash equivalents at beginning of period 28,214 32,910 49,346 Cash and cash equivalents at end of period $ 27,321 $ 28,214 $ 32,910 Cash paid for: Income taxes $ 5,731 $ 4,591 $ 1,356 Interest $ 11,077 $ 4,648 $ 3,485 Supplemental non-cash activity: New acquisition-related consideration held back against potential indemnification losses $ - $ 8,448 $ - Contingent consideration from new acquisitions $ - $ - $ 1,190 See accompanying notes to consolidated financial statements. Page 37 Table of Contents Mesa Laboratories, Inc. Notes to Consolidated Financial Statements (dollar and share amounts in thousands, unless otherwise specified) Note 1. Description of Business and Summary of Significant Accounting Policies Description of Business In this Annual Report on Form 10 -K, Mesa Laboratories, Inc., a Colorado corporation, together with its subsidiaries is collectively referred to as “we,” “us,” “our,” the “Company,” or "Mesa." We are a global leader in the design and manufacture of life sciences tools and critical quality control solutions for regulated applications in the pharmaceutical, healthcare and medical device industries. We offer products and services to help our customers ensure product integrity, increase patient and worker safety, and improve the quality of life throughout the world. We have manufacturing operations in the United States and Europe, and our products are marketed by our sales personnel in North America, Europe and Asia Pacific, and by independent distributors in these areas as well as throughout the rest of the world. We prefer markets in which we can establish a strong presence and achieve high gross profit margins. As of March 31, 2025 , we managed our operations in four reportable segments, or divisions: ● Sterilization and Disinfection Control - manufactures and sells biological, chemical and cleaning indicators used to assess the effectiveness of sterilization, decontamination, disinfection and cleaning processes in the medical device, pharmaceutical and healthcare industries. The division also provides testing and laboratory services, mainly to the dental and pharmaceutical industries. ● Clinical Genomics - develops, manufactures and sells highly sensitive, low-cost, high-throughput genetic analysis tools and related consumables and services that enable clinical research labs and contract research organizations to perform genomic testing for a broad range of research applications in several therapeutic areas, such as screenings for hereditary diseases, pharmacogenetics, oncology related applications, and toxicology research. ● Biopharmaceutical Development - develops, manufactures, sells and services automated systems for protein analysis (immunoassays) and peptide synthesis solutions. Immunoassays and peptide synthesis solutions accelerate the discovery, development, and manufacture of biologic therapies, among other applications. ● Calibration Solutions - develops, manufactures, sells and services quality control products using principles of advanced metrology to enable customers to measure and calibrate critical parameters in applications such as renal care, environmental and process monitoring, gas flow, air quality and torque testing. Unallocated corporate expenses and other business activities are reported within Corporate and Other. Principles of Consolidation and Basis of Presentation Our Consolidated Financial Statements are prepared in accordance with the rules and regulations of the Securities and Exchange Commission and in accordance with accounting principles generally accepted in the United States (“GAAP”), and include our accounts and those of our wholly owned subsidiaries after elimination of all intercompany accounts and transactions. Management Estimates The preparation of our Consolidated Financial Statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in our Consolidated Financial Statements and accompanying notes. Actual results could differ from our estimates under different assumptions or conditions. Summary of Significant Accounting Policies Foreign Currency Exchange rate adjustments resulting from foreign currency transactions are recognized in net (loss) earnings, whereas effects resulting from the translation of financial statements are reflected as a component of accumulated other comprehensive income within stockholders’ equity. Assets and liabilities of subsidiaries operating outside the United States with a functional currency other than the U.S. dollar are translated into U.S. dollars at period end exchange rates, and revenue and expense accounts are translated at weighted average period rates. Fair Value Measurements Fair value is the price we would receive to sell an asset or pay to transfer a liability (exit price) in an orderly transaction between market participants. We determine fair value based on the following input hierarchy: Level 1: Quoted prices for identical assets or liabilities in active markets. Level 2: Observable inputs other than prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or that can be corroborated with observable market data. Level 3: Unobservable inputs supported by little or no market activity. Pricing models, discounted cash flow methodologies, and other similar techniques involving significant management judgment or estimation typically require unobservable inputs. Page 38 Table of Contents Most assets and liabilities purchased in business acquisitions are measured, recognized and disclosed at fair value in the Consolidated Financial Statements on a non-recurring basis upon acquisition, or as necessary during the measurement period. Additionally, assets such as property and equipment, operating lease assets, and goodwill and other intangible assets are measured and presented at fair value on a nonrecurring basis if determined to be impaired. Such fair value measurements require the use of Level 3 inputs. Our current liabilities generally approximate their fair values. Revenue Recognition Our revenues come from product sales, which include consumables and hardware, and services, which include discrete and ongoing maintenance, calibration, and testing services. Revenues are recognized when or as we satisfy our performance obligations under the terms of a contract, which occurs when control of the promised products or services transfers to a customer. We recognize the amount of consideration we expect to receive in exchange for transferring products or services to our customers (the transaction price) as revenue. For our revenue contracts, prices are fixed at the time of purchase and no price protections or variables are typically offered. The significant majority of our revenues and related receivables are generated from contracts with customers that are 12 months or less in duration. We generally recognize revenues as follows: Product sales: Our performance obligations related to product sales generally consist of the promise to sell tangible goods to distributors or end users. Control of these goods is typically transferred upon shipment, at which time our obligation to the customer is satisfied and revenue is recognized. Services: We generate service revenues from discrete and ongoing maintenance, calibration, and testing services performed with respect to our physical products. For discrete services, our obligation to complete specified work is satisfied and revenue is recognized upon performance of the service. Obligations arising from ongoing service contracts in which we promise to stand ready to provide maintenance or other services on an as-needed basis for a certain period of time are satisfied by completing any services that are contractually required during the contract period, if requested by the customer, or simply by the passage of time if no services are requested. For ongoing service contracts, revenue is recognized on a straight-line basis over the life of the contract in a faithful depiction of our obligation to provide services over the contract period. Purchase orders or formal contracts typically provide evidence of the existence and key terms of arrangements with customers with respect to sales of our products and services. Collectability is reasonably assured through our customer review process, and payment is typically due within 60 days or less. We expense commission costs (typically our only significant incremental cost to obtain a contract) as incurred. The substantial majority of our contracts have original durations of one year or less, and we have elected not to disclose the expected timing or allocated transaction prices of future performance obligations such as obligations to perform maintenance and repair services. Additionally, we have elected to not assess whether a significant financing component exists when the period between when we fulfill our performance obligation and when the customer remits payment is one year or less. None of our contracts contained significant financing components as of or for the fiscal years ended March 31, 2025 or 2024 . Contracts with customers may contain multiple obligations. For such arrangements, the transaction price is allocated to each obligation based on the estimated relative standalone selling prices of the promised products or services underlying each obligation. Standalone selling prices are the price at which the product or service would be sold separately. If the standalone selling price is not observable through past transactions, we estimate the standalone selling price considering available information such as market conditions and internally approved pricing guidelines. In limited circumstances, for obligations with highly variable or unobservable standalone selling prices, we may assign standalone prices to obligations based on the residual transaction price after all observable standalone selling prices have been determined. Discounts may be approved at the time of purchase and are included within a contract’s fixed transaction price. Discounts are typically allocated to obligations included in the contract based on the standalone values of such obligations. All expected and actual consideration from customers is included in the transaction price. Shipping and Handling Payments made by customers to us for shipping and handling costs are included in revenues in our Consolidated Statements of Operations, and our expenses are included in cost of revenues. We account for shipping and handling costs arising from contracts with customers as fulfillment costs. Shipping and handling for inventory and materials we purchase is included as a component of inventory on the Consolidated Balance Sheets, and is expensed to cost of revenues when products are sold. Unearned Revenues Certain of our products may be sold with associated service contracts whereby we must provide repairs, technical support, parts, and various analytical or maintenance services over a period of time. In the event these contracts are paid in advance by the customer, the associated amounts are recorded as unearned revenue liabilities and are recognized to revenue ratably over the term of the service period, generally one year. Prepayments from customers with respect to other products and services are likewise recorded as unearned revenue liabilities and are recognized to revenue when earned. Accrued Warranty Expense We typically provide assurance-type limited product warranties on our products and, accordingly, accrue for estimates of related warranty expenses. Accounts Receivable and Allowance for Credit Losses All trade accounts receivable are reported at net realizable value on the accompanying Consolidated Balance Sheets, adjusted for any write-offs and net of allowances for credit losses. Allowances for credit losses represent our best estimate and current expectation of future credit losses from trade accounts receivable. We estimate credit losses based on historical information, current and expected future economic and market conditions, and reviews of the current status of customers’ trade accounts receivable. In circumstances in which we become aware of a specific customer’s inability to meet its financial obligations, a specific reserve is recorded against amounts due to reduce the recognized receivable to the amount reasonably expected to be collected. To mitigate credit risk, we consider the creditworthiness of new and existing customers, establish credit limits, and regularly review outstanding balances and payment histories. We may require pre-payments from customers under certain circumstances and may limit future purchases until payments are made on past due amounts. We do not believe our trade accounts receivable represent significant concentrations of credit risk due to our diversified portfolio of individual customers and geographical areas. Page 39 Table of Contents Differences may arise between estimated and actual losses, which could materially affect the provision for credit losses and, therefore, net (loss) earnings. We recorded $ 218 , $ 790 , and $ 736 of expense associated with credit losses for the years ended March 31, 2025 , 2024 , and 2023 , respectively. Cash Equivalents We classify any highly liquid investments with maturities of three months or less at the date of purchase as cash equivalents; no cash equivalents are included on our Consolidated Balance Sheets as of March 31, 2025 or 2024 . Inventories Inventories are stated at the lower of cost or net realizable value. Inventory is recorded to cost of products upon sale using a weighted average costing methodology. Inventories purchased as part of a business combination are recorded at fair value. Our work-in-process and finished goods inventories include the costs of raw materials, labor and overhead, which are estimated based on trailing twelve months of expense and standard labor hours for each product. We evaluate labor and overhead costs annually unless specific circumstances necessitate a mid-year evaluation for specific items. We monitor inventory costs relative to selling prices and perform physical cycle count procedures on inventories throughout the year to determine if a lower of cost or net realizable value reserve is necessary. We estimate and maintain an inventory reserve as needed for such matters as excess or obsolete inventory, shrinkage and scrap. This reserve may fluctuate as our assumptions change due to new information, discrete events, or changes in our business such as entering new markets or discontinuing a specific product; however, once inventory is written down, a new cost basis is established that is not subsequently written back up in future fiscal years. Property, Plant and Equipment Property, plant and equipment are recorded at cost, less accumulated depreciation, except for assets acquired in business acquisitions, which are recorded at fair value. Expenditures for major renewals and improvements that extend the life of the asset are capitalized, while expenditures for minor replacements, maintenance and repairs are expensed as incurred. Depreciation is calculated using the straight-line method over our assets’ estimated useful lives. Upon asset retirement or disposal, accounts are relieved of cost and accumulated depreciation, and any related gain or loss is reflected in our results of operations. In some cases, particularly with respect to business consolidation or closure activities, impairment losses or accelerated depreciation may be recorded to reflect revised remaining useful lives of assets designated to be abandoned in the future. At least annually, we evaluate and adjust as necessary the estimated useful lives of property, plant and equipment. Any changes in estimated useful lives are recorded prospectively. Estimated useful lives of significant classes of depreciable assets are as follows: Category Useful Lives in Years Buildings and building improvements 40 (or less) Manufacturing equipment 7 (or less) Office, lab and other equipment, furniture and fixtures 7 (or less) Computer equipment 3 (or less) Leasehold improvements Lesser of the economic life or the remaining term in the respective lease Land is not depreciated. Construction in progress is not depreciated until placed in service, at which time it is assigned a useful life consistent with the nature of the asset. Leases We determine whether contractual arrangements contain a lease at the inception of the arrangement. If a lease is identified, we determine whether the lease should be classified as a finance or operating lease; we did not have any finance leases during any fiscal years presented herein. Our operating leases have remaining terms of between three months and eleven years as of March 31, 2025 . A contract is a lease or contains one when ( 1 ) the contract contains an explicitly or implicitly identified asset and ( 2 ) the customer obtains substantially all of the economic benefits from the use of that underlying asset and directs how and for what purpose the asset is used during the term of the contract in exchange for consideration. We have elected to account for non-lease components of our lease contracts together with the lease components to which they relate for our operating leases. Operating lease right-of-use ("ROU") assets and lease liabilities are recognized at the lease commencement date. We do not capitalize assets or liabilities for leases with original durations of less than 12 months, and our short-term leases are not material. Operating lease liabilities represent the present value of fixed lease payments not yet paid. ROU assets represent our right to use an underlying asset and are based upon the related operating lease liability, adjusted for prepayments made prior to commencement, any initial direct costs incurred, and other applicable items. Adjustments to ROU assets would also be made for prepaid variable lease payments or impairment losses, if necessary. When readily determinable, the discount rate used to calculate the lease liability is the rate implicit in the lease, otherwise we use our incremental borrowing rate based on the information available at lease commencement. When we acquire a business, we generally retain the acquiree's classification of its leases, and we evaluate ROU assets and liabilities in accordance with ASC 842. Our leases typically contain rent escalations over the lease term. We recognize expense for these leases on a straight-line basis over the lease term. Lease expense is recorded in cost of revenues or selling, general and administrative, or research and development expense in our Consolidated Statements of Operations, depending on the nature of use of the underlying asset. Many of our leases include one or more renewal or termination options exercisable at our discretion, which are included in the initial determination of the lease term if we are reasonably certain to exercise the option. Renewal terms typically allow us to extend lease terms between one and three years. We have also entered into lease agreements that have variable payments related to certain indexes, and other variable payments based on, for example, a pro-rata portion of actual maintenance costs incurred by the lessor. Variable lease payments are recognized in the period in which those payments are incurred as lease costs. Page 40 Table of Contents Intangible Assets, Impairment Testing Our goodwill and other intangible assets result from acquisitions of businesses. Intangible assets affect the amount of future amortization expense and possible impairment losses we may incur. We amortize intangible assets with finite lives (generally ranging from three to fifteen years), using the straight-line method over the asset's useful life. We determine the useful lives of finite intangible assets based on the specific facts and circumstances related to each asset, and we evaluate the appropriateness of assigned useful lives at least annually. Changes to remaining useful lives, if necessary, are accounted for prospectively. Factors we consider when determining useful lives include the contractual term of any agreement related to the asset, the historical performance of the asset, our long-term strategy for using the asset, any laws or other local regulations which could impact the useful life of the asset, and economic factors such as competition or specific market conditions. Amortization expense is recorded within cost of revenues or general and administrative expense in the Consolidated Statements of Operations. Impairment assessments related to finite-lived intangibles are conducted if events or conditions indicate that the carrying value of an asset or asset group may not be recoverable. Events or conditions indicating potential impairment include but are not limited to changes in the competitive landscape, changes in the extent or manner in which we intend to use the assets, any internal decisions to pursue new or different technology strategies, losses of significant customers, or significant changes in business performance or in the markets and industries we serve, including adverse changes in the prices paid for our products or changes in the size of the markets for our products, or changes in the regulatory or macroeconomic environment that are likely to materially impact our future cash flows. If impairment indicators are present, we determine whether the carrying value of the underlying intangible asset or asset group is recoverable through analyses of undiscounted estimated future cash flows. If the asset or asset group is not found to be recoverable, we estimate the asset's fair value using Level 3 inputs and discounted cash flow models, and we recognize impairment losses as necessary. Goodwill is not subject to amortization. We test goodwill for impairment as of January 1st each year, or more frequently if events and circumstances indicate it is more likely than not that the fair value of a given goodwill reporting unit is less than its carrying value. Events that could indicate impairment and that would trigger interim impairment testing include but are not limited to: adverse current or expected economic, market, or industry-specific conditions, including a sustained decline in our market capitalization; sustained adverse changes or expected changes in business climate or in the operational performance of the business; adverse changes in legal factors; and adverse actions or assessments by a regulator. We monitor for indications of impairment throughout the year and perform qualitative and quantitative impairment tests as necessary based on quarterly assessments of our performance. Our annual impairment tests may begin with a qualitative assessment, and further quantitative assessments are performed i) if we determine it is more likely than not that the fair value of a reporting unit is less than the carrying amount, ii) at least every five years, or iii) if we otherwise elect to perform quantitative tests, as we did in fiscal year 2025. The fair value measurements used in testing intangible assets for impairment are typically based on discounted cash flow projection and market multiple models, using Level 3 inputs. See “Fair Value Measurements” for a description of input levels. Significant assumptions include, among others, discount rates, forecasted results including earnings before interest, taxes, depreciation and amortization (“EBITDA”), revenue, revenue growth rates, cost inputs, terminal growth rates, cash flows, customer attrition rates (for customer relationships), royalty rates and technology obsolescence rates (for patents and other intellectual property), the identification of comparable public entities, and applied market multiples. In certain cases, management uses other market information when available to estimate fair value. Impairment losses are recognized through earnings and represent excess carrying value over estimated fair value. We do not believe our goodwill and other intangible assets were impaired as of March 31, 2025. We recorded impairment losses of $ 156,892 and $ 117,641 related to goodwill and long-lived intangible assets, respectively, during our prior fiscal year. Research & Development Costs We conduct research and development activities for the purpose of developing new products and enhancing the functionality, effectiveness, reliability, and accuracy of existing products. Research and development costs are expensed as incurred. Research and development expense is predominantly comprised of labor and third -party consultant costs, as well as materials for projects, but we may from time to time purchase in-process research and development with the intention of developing a saleable product. Convertible Debt Our convertible 1.375 % Convertible Senior Notes due 2025 (the "Notes") do not have material embedded derivatives and are recorded as current liabilities in our Consolidated Balance Sheets as of March 31, 2025 as they will mature within one year of March 31, 2025. We may settle the Notes in shares of common stock or in cash. We apply the if-converted method to calculate the potentially dilutive impact of the Notes on net (loss) earnings per share. Debt issuance costs are amortized through interest expense to bring the carrying value of the Notes to face using the effective interest method over the life of the indenture governing the Notes. Stock-based Compensation We issue shares in the form of full-value awards, and in the past we have issued stock options (collectively, "stock awards"), as part of employee and non-employee director compensation pursuant the Amended and Restated Mesa Laboratories, Inc. 2021 Equity Incentive Plan (the "2021 Equity Plan"). Some shares are fully vested and remain outstanding under our Mesa Laboratories, Inc. 2014 Equity Plan (the "2014 Equity Plan"). The Equity Plans are administered by the Compensation Committee of the Board of Directors, which has the authority to grant equity awards, or to delegate its authority under the plan to make grants (subject to certain legal and regulatory restrictions), including the authority to determine the individuals to whom awards will be granted, the type and timing of awards to be granted, the number of shares to be covered by each award, vesting schedules and all other terms and conditions of the awards. For purposes of counting the shares remaining under the 2021 Equity Plan, each share underlying a full value award or stock option counts as one share used. We issue new shares of common stock upon the vesting of time-based restricted stock units ("RSUs") and performance-based RSUs ("PSUs"), and upon exercise of stock options. Page 41 Table of Contents Time-based stock awards and stock options generally vest in equal installments on the first, second and third anniversaries of the grant date, and stock options generally expire after six years. Awards granted to non-employee directors generally vest one year from the grant date. We recognize stock-based compensation expense based on the fair value of stock awards at grant date and recognize the expense over the related service period using a straight-line vesting expense schedule. The 2021 Equity Plan includes retiree provisions which result in the acceleration of stock-based compensation for expense for retiree-eligible participants. Compensation expense related to employees eligible to retire at grant date or during the award term is recognized on a straight-line basis between the grant date and the date of retirement eligibility, and the applicable retirees retain full rights to the awards upon retirement as per the plan provisions. Expense for PSUs is recognized, net of estimated forfeitures, using a straight-line vesting schedule when it is probable that performance goals will be achieved. Performance goals are determined by the Board of Directors and may include measures such as revenues growth and profitability targets. A portion of the PSUs include a total shareholder return "TSR" market condition, which compares Mesa's share price to a peer group over a three year period. The TSR is applied to applicable PSU grants as either a stand alone performance measure or as a modifier that adjusts the quantity of shares earned for company performance up or down by a maximum of 20%. Compensation expense on stock awards subject to market or performance conditions is recognized over the longer of the performance goal attainment period or time-vesting period. At each reporting period, we estimate the number of PSUs expected to vest based on our current estimate of probable achievement compared to the target metrics in the award documents, and if necessary, a cumulative-effect adjustment is recorded. The grant date fair value of the PSUs with market conditions is determined using the Monte Carlo simulation valuation model which uses Level 3 inputs. The fair value of RSUs and performance-based RSUs without a market condition are based on the closing price of Mesa's common stock on the award date, less the present value of expected dividends not received during the vesting period. RSUs we issue are equivalent to nonvested shares under applicable accounting guidance. The fair value of granted stock options is estimated on the grant date using the Black-Scholes option pricing model. The assumptions used to calculate the fair value of granted options reflect market conditions and our historical experience. The expected life of options represents the estimated period of time until exercise and is based on historical experience of similar awards for similar subsets of our employee population, giving consideration to the contractual terms, vesting schedules, and expectations of future employee behavior. Expected stock price volatility is based on the historical volatility of our own stock price over the period of time commensurate with the expected life of the award. The risk-free rate is based on the United States Treasury yield curve in effect at the time of grant nearest to the estimated life of the stock option. The dividend yield assumption is based on our anticipated cash dividend payouts. To date, we have identified no instances in which an adjustment to our observable market price would be required compared to the closing price of Mesa's common stock on the award date as an input to our fair value calculations. No stock options were awarded in fiscal year 2025. We estimate expected forfeitures using a dynamic forfeiture model based on company specific historical data when determining the amount of stock-based compensation costs to recognize each period. We allocate stock-based compensation expense to cost of revenues, selling, research and development, and general and administrative expense in the Consolidated Statements of Operations. Income Taxes Income tax expense includes U.S., state, local and international income taxes. Deferred tax assets and liabilities are recognized and reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the tax basis of existing assets and liabilities used for income tax purposes. The tax rate used to determine the deferred tax assets and liabilities is based on the enacted tax rate for the year and the manner in which the differences are expected to reverse. Valuation allowances are recorded to reduce deferred tax assets to the amount that will more likely than not be realized. From time to time, we engage in transactions in which the tax consequences may be subject to uncertainty, such as acquisitions. Significant judgment is required in assessing and estimating the tax consequences of these transactions. We prepare and file tax returns based on interpretation of tax laws and regulations. In the normal course of business, our tax returns are subject to examination by various taxing authorities. Such examinations may result in future tax, interest and penalty assessments by these taxing authorities. In determining our income tax provision for financial reporting purposes, we establish allowances for uncertain tax income positions unless we determine it is not more likely than not that such positions would be sustained upon examination, based on their technical merits. That is, for financial reporting purposes, we only recognize tax benefits taken on the tax return that we believe are more likely than not of being sustained. There is considerable judgment involved in determining whether positions taken on the tax return are more likely than not of being sustained. We adjust our tax reserve estimates periodically because of ongoing examinations by, and settlements with, the various taxing authorities, as well as changes in tax laws, regulations and interpretations. The consolidated income tax provision of any given year includes adjustments to prior year income tax accruals that are considered appropriate and any related estimated interest. Our policy is to recognize, when applicable, interest and penalties on uncertain income tax positions as part of general administrative expense. (See Note 12. “Income Taxes”). Net (Loss) Earnings Per Share Basic net (loss) earnings per share (“EPS”) is computed by dividing net (loss) income by the weighted-average number of common shares outstanding during the reporting period. Diluted (loss) earnings per share (“diluted EPS”) is computed similarly to basic EPS, except it includes the effects of potential dilution that could occur if dilutive securities vested, were exercised, or were converted. Potentially dilutive securities include stock options, RSUs and PSUs, as well as common shares underlying the Notes. Potentially dilutive securities are excluded from the calculation of diluted EPS in the event they are subject to performance conditions that have not yet been achieved as of the reporting date or if they would otherwise be antidilutive. Diluted EPS considers the impact of potentially dilutive securities except in periods in which there is a net loss; in such cases the inclusion of the potential common shares would have an antidilutive effect. See Note 10. “Net (Loss) Earnings per Share” for EPS calculations for the years ended March 31, 2025, 2024 and 2023 . Acquisition Related Contingent Liabilit ies Acquisition related contingent liabilities consist of estimated amounts due under various acquisition agreements and may be based on revenues growth, specified profitability growth metrics, or the attainment of milestones such as patent approvals. At each reporting period, we evaluate the expected probability and timing of future payments, and we adjust the contingent consideration to fair value through earnings in the Consolidated Statements of Operations. See Note 13. “Commitments and Contingencies” for information regarding existing contingent consideration liabilities as of March 31, 2025 . Page 42 Table of Contents In addition to contingent consideration liabilities, we may hold back a portion of the purchase price related to acquisitions as security against potential indemnification losses. Such holdbacks relate to circumstances that existed as of the date of acquisition, and as such they are not considered contingencies; however, amounts ultimately paid may differ from the estimates management makes upon acquisition, depending upon whether pre-acquisition liabilities are identified during the holdback period. Legal Contingencies We are party to various claims and legal proceedings that arise in the normal course of business. We record an accrual for legal contingencies when we determine it is probable we have incurred a liability and can reasonably estimate the amount of the loss (See Note 13. “Commitments and Contingencies”). Purchase Accounting for Acquisitions We account for all business combinations in which we obtain control over another entity using the acquisition method of accounting, which requires most assets (both tangible and intangible) and liabilities to be recorded at fair value at the date of acquisition. The excess of the purchase price over the fair value of identifiable acquired assets less liabilities is recognized as goodwill. We determine fair value using widely accepted valuation techniques, primarily discounted cash flow and market multiple analyses, which rely heavily on Level 3 inputs. These types of analyses require us to make and monitor assumptions and estimates regarding industry and economic factors, the profitability of future business strategies, discount rates and cash flows. For all material acquisitions, we engage external valuation specialists to aid management in preparing our fair value models. Certain adjustments to the assessed fair values of acquired assets or liabilities made subsequent to the acquisition date, but within the measurement period, are recorded as adjustments to goodwill. Any adjustments subsequent to the measurement period are recorded within earnings. We expense acquisition-related costs, such as legal and advisory fees, as incurred in general, and administrative expenses in the Consolidated Statements of Operations. Results of operations of acquired companies are included in our Consolidated Financial Statements from the date of the acquisition forward. If actual results are not consistent with our assumptions and estimates, or if our assumptions and estimates change due to new information, we may be exposed to losses. We did not acquire any businesses in fiscal year 2025. For the years ended March 31, 2024 and 2023, we acquired businesses for total net purchase prices of $ 87,187 and $ 6,140 , respectively. Risks and Uncertainties The preparation of financial statements requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the reporting date and revenues and expenses during the reporting periods. These estimates represent management's judgment about the outcome of future events. It is not possible to accurately predict the future impact of such events and circumstances. However, we have reviewed the estimates used in preparing the financial statements and have identified the following factors that have a reasonable possibility of being materially affected in the near term: ● Estimates regarding future financial performance and other inputs into fair value estimates related to impairment tests for goodwill and intangible assets that could result in additional future impairment losses. In particular, potential risks posed by escalating trade tensions and tariffs could materially impact our performance and impairment conclusions in future periods. ● Estimates regarding the recoverability of deferred tax assets and estimates regarding cash needs and associated indefinite reinvestment assertions. ● Estimates of the net realizable value of inventory. We do not believe that there are any significant risks that have not already been disclosed in the Consolidated Financial Statements. Prior Period Reclassifications Certain prior period amounts have been reclassified to conform with current year presentation. Recently Adopted Accounting Pronouncements In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2023 - 07, "Segment Reporting (Topic 280 ): Improvements to Reportable Segment Disclosures." ASU No. 2023 - 07 is intended to provide financial statement users with more information about reportable segments, including more disaggregated expense information. We adopted ASU 2023 - 07 effective for our annual fiscal year 2025 reporting period, on a retrospective basis. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements and disclosures and is reflected in Note 14. “Segment Data.” Recently Issued Accounting Pronouncements In December 2023, the FASB issued ASU No. 2023 - 09, "Income Taxes (Topic 740 ): Improvements to Income Tax Disclosures." ASU No. 2023 - 09, which enhances the transparency, effectiveness and comparability of income tax disclosures by requiring consistent categories and greater disaggregation of information related to income tax rate reconciliations and the jurisdictions in which income taxes are paid. The guidance is effective for public business entities for annual periods years beginning after December 15, 2024 ( our fiscal year 2026 ), with early adoption and prospective or retrospective application permitted. Other than presentation of additional disaggregated data in our income tax footnote disclosures for annual periods, we do not expect the adoption of ASU No. 2023 - 09 to have a material impact on our consolidated financial statement. In November 2024, the FASB issued Accounting Standards Update ("ASU") No. 2024 - 03, "Expense Disaggregation Disclosures (Subtopic 220 - 40 ): Disaggregation of Income Statement Expenses." ASU No. 2024 - 03 requires that public business entities disclose additional information about specific expense categories in the notes to financial statements at interim and annual reporting periods. The ASU is effective for fiscal years beginning after December 15, 2026 ( our fiscal year 2028 for annual periods) and interim periods within fiscal years beginning after December 15, 2027 ( our fiscal year 2029 for interim periods), with early adoption and prospective or retrospective application permitted. We are currently assessing the effect the adoption of this standard will have on our consolidated financial statement disclosures. We have reviewed all recently issued accounting pronouncements and have concluded that, other than as described above, they are either not applicable to us or are not expected to have a significant impact on our consolidated financial statements. Note 2 . Revenue We develop, manufacture, market, sell and maintain life sciences tools and quality control instruments and related consumables. Page 43 Table of Contents Hardware sales include physical products such as instruments used for molecular and genetic analysis, protein synthesizers, medical meters, wireless sensor systems, data loggers, and process challenge devices. Hardware may be offered with accompanying perpetual or annual software licenses, which in some cases are required for the hardware to function. Consumables are single-use products requiring frequent replacement in our customers' operating cycles. Consumables sold by our Clinical Genomics and Biopharmaceutical Development divisions, such as reagents used for molecular and genetic analysis or solutions used for protein synthesis, are critical to the ongoing use of our instruments. Consumables such as biological and chemical indicator test strips sold by our Sterilization and Disinfection Control division are used on a standalone basis. Revenues from hardware and consumables are recognized upon transfer to the customer, typically at the point of shipment. We also offer maintenance, calibration and testing service contracts. Services result in revenues recognized over time, for example, when we are obligated to perform labor and replace parts on an as-needed basis over a contractually specified period, or at a point in time, upon completion of a specific, discrete service. In some cases, our service contracts contain both revenues recognized over time and revenues recognized at a point in time. We evaluate our revenues internally based on business division and the nature of goods and services provided. The following tables present disaggregated revenues from contracts with customers for the years ended March 31, 2025, 2024 and 2023 : Year Ended March 31, 2025 Sterilization and Disinfection Control (1) Clinical Genomics Biopharmaceutical Development Calibration Solutions Total Consumables $ 82,736 $ 35,672 $ 17,287 $ 3,039 $ 138,734 Hardware and Software 496 7,689 19,649 31,827 59,661 Services 10,186 3,720 11,794 16,883 42,583 Total revenues $ 93,418 $ 47,081 $ 48,730 $ 51,749 $ 240,978 ( 1 ) Revenues of $ 24,815 from GKE are included in the Sterilization and Disinfection Control division during the year ended March 31, 2025. Year Ended March 31, 2024 Sterilization and Disinfection Control (1) Clinical Genomics Biopharmaceutical Development Calibration Solutions Total Consumables $ 65,459 $ 36,086 $ 17,086 $ 2,345 $ 120,976 Hardware and Software 549 12,254 12,993 30,024 55,820 Services 9,116 4,248 10,633 15,394 39,391 Total revenues $ 75,124 $ 52,588 $ 40,712 $ 47,763 $ 216,187 ( 1 ) Revenues of $ 9,289 from GKE are included in the Sterilization and Disinfection Control division during the year ended March 31, 2024 and represent sales made beginning from the acquisition date. Year Ended March 31, 2023 Sterilization and Disinfection Control Clinical Genomics Biopharmaceutical Development Calibration Solutions Total Consumables $ 55,605 $ 43,374 $ 15,800 $ 3,062 $ 117,841 Hardware and Software 692 13,347 22,079 26,561 62,679 Services 8,312 5,578 9,486 15,184 38,560 Total revenues $ 64,609 $ 62,299 $ 47,365 $ 44,807 $ 219,080 Contract Balances Our contracts have varying payment terms and conditions. Some customers prepay for products and services, resulting in either unearned revenues or customer deposits, called contract liabilities. Short-term contract liabilities are included within unearned revenues in the accompanying Consolidated Balance Sheets, and long-term contract liabilities are included within other long-term liabilities in the accompanying Consolidated Balance Sheets. The significant majority of our revenues and related receivables and contract liabilities are generated from contracts with customers with original expected durations of twelve months or less. Contract liabilities will be recognized to revenue as we satisfy our obligations under the terms of the contracts. A summary of contract liabilities is as follows: Contract liabilities as of March 31, 2024 $ 15,686 Prior year liabilities recognized in revenues during the year ended March 31, 2025 ( 9,873 ) Contract liabilities added during the year ended March 31, 2025, net of revenues recognized 8,990 Contract liabilities balance as of March 31, 2025 $ 14,803 Page 44 Table of Contents Note 3. Fair Value Measurements Our financial instruments generally consist of cash and cash equivalents, trade accounts receivable, obligations under trade accounts payable, and debt. Due to their short-term nature, the carrying values of cash and cash equivalents, trade accounts receivable, and trade accounts payable approximate fair value; they are classified within Level 1 of the fair value hierarchy. The financial instruments that subject us to the highest concentrations of credit risk are cash and accounts receivable. We maintain relationships and cash deposits at multiple banking institutions across the world in an effort to diversify and reduce risk of loss. Concentration of credit risk with respect to accounts receivable is limited to customers to whom we make significant sales. No customers accounted for more than 10% of total trade receivables as of March 31, 2025 . On April 5, 2024, we entered into separate, privately negotiated purchase agreements with a limited number of holders of our 1.375 % convertible senior notes due August 15, 2025 ( the "Notes"), through which we repurchased $ 75,000 in aggregate principal amount of the Notes. See Note 8 . "Indebtedness" for further information. As of March 31, 2025 , we had remaining outstanding $ 97,500 aggregate principal amount of the Notes. We estimate the fair value of the Notes using Level 2 inputs based on the last actively traded price or observable market input preceding the end of the reporting period. The fair value of the Notes is approximately correlated to our stock price. March 31, 2025 March 31, 2024 Carrying Value Fair Value (Level 2) Carrying Value Fair Value (Level 2) Notes $ 97,297 $ 95,063 $ 171,198 $ 163,013 The carrying amounts of our term loan and revolving line of credit (together, the "Credit Facility") on the Consolidated Balance Sheets approximate fair value due to the variable interest rate pricing on the debt, with the principal balances bearing an interest rate approximating current market rates. At March 31, 2025 exchange rates, the estimated fair value of consideration held back from the purchase price of the GKE acquisition was approximately $ 9,300 . The liability is reflected within other accrued expenses in our Consolidated Balance Sheets as of March 31, 2025. We adjusted the liability to estimated fair value through earnings throughout fiscal year 2025, which required the use of Level 3 inputs, including discount rate estimates. In April 2025, we paid $ 9,555 to the GKE sellers to settle the liability in full at the euro spot rate as of the payment date. The Belyntic acquisition in fiscal year 2023 obligated us to pay contingent consideration of up to $ 1,500 cash upon regulatory approval of certain patent applications. We estimate the fair value of the remaining contingent consideration using Level 3 inputs and a probability-weighted outcome analysis based on our expectations of patent approval leveraging our historical experience and expert input, and we adjust the estimated fair value at each reporting period through earnings. The fair value of the remaining contingent consideration was $ 731 as of March 31, 2025 , which is recorded in Other Accrued Expenses on the accompanying Consolidated Balance Sheets. There were no transfers between the levels of the fair value hierarchy during the fiscal years ended March 31, 2025 and 2024 . Note 4. Significant Transactions Acquisition of GKE, Fiscal year 2024 We acquired 100 % of the outstanding shares of GKE GmbH and SAL GmbH effective October 16, 2023, and effective December 31, 2023, we acquired 100 % of the outstanding shares of Beijing GKE Science & Technology Co. Ltd. GKE develops, manufactures and sells a portfolio of chemical sterilization indicators, biologics, and process challenge devices to protect patient safety across global healthcare markets. GKE is included in our Sterilization and Disinfection Control ("SDC") division, and GKE's strengths in chemical indicators are complementary to SDC's strengths in biological indicators as chemical and biological indicators are used in the same sterility validation workflows. Additionally, GKE’s healthcare-focused commercial capabilities in Europe and Asia greatly expand our reach in the healthcare markets in those geographies. We are working to obtain regulatory 510 (k) clearance on certain GKE products for sale in the United States, which would further expand organic revenues growth opportunities from the GKE business. We finalized our purchase price accounting of GKE during fiscal year 2024 . Total cash consideration for the GKE acquisition was $ 87,187 , net of cash acquired and financial liabilities assumed and inclusive of working capital adjustments. We funded the acquisition through a combination of cash on-hand and a total of $ 71,000 borrowed under our line of credit. During the fiscal years ended March 31, 2025 and 2024, respectively, GKE's operations contributed the following amounts to our consolidated results of operations: Year ended March 31, 2025 2024 Revenues $ 24,815 $ 9,289 Gross profit 16,510 5,357 Net income 7,580 1,046 Amortization of inventory step-up recorded in cost of revenues 1,232 1,229 Amortization of acquired intangibles recorded in cost of revenues 503 266 Amortization of acquired intangibles recorded in general and administrative expense 3,336 2,005 GKE net income includes certain intercompany management fees and other items. Page 45 Table of Contents Supplemental unaudited pro-forma information Combined revenues from Mesa and GKE for fiscal years 2024 and 2023 would have been approximately $ 229,260 and $ 241,360 , respectively, had the GKE acquisition occurred on April 1, 2022, at the beginning of our fiscal year 2023. It is impracticable for us to disclose pro-forma net earnings information regarding the combined results of the operations of Mesa and GKE as if the acquisition had occurred at an earlier date. Prior to acquisition, GKE was a privately owned company with financial statements prepared on a statutory, rather than GAAP, basis, using a different fiscal year end than Mesa's. Certain financial information cannot be recreated for accurate financial results. For example, prior to Mesa's ownership, GKE accounted for inventory at an unburdened rate and performed only annual inventory counts, such that we cannot accurately estimate cost of goods sold. Additionally, all transactions occurring between the three GKE entities, which are substantial, were accounted for at arms-length prior to acquisition; we eliminated intercompany transactions from a revenue perspective above, but we do not have sufficient historical detail to eliminate intercompany cost of revenues accurately. As presentation of pro-forma net earnings information would require extensive estimation and could not be sourced from sufficiently factual information reasonably aligned with GAAP, it is impracticable for us to disclose pro-forma net earnings information. Note 5. Leases We have operating leases for buildings and office equipment used in manufacturing and distribution, engineering, research and development, sales and marketing, and administration activities. The following table presents the lease balances within the Consolidated Balance Sheets related to our operating leases: Lease Assets and Liabilities Balance Sheet Location March 31, 2025 March 31, 2024 Operating lease ROU asset Other assets $ 16,382 $ 9,671 Current operating lease liabilities Other accrued expenses 3,523 2,986 Noncurrent operating lease liabilities Other noncurrent liabilities 12,380 6,613 The components of lease costs, the weighted average remaining lease term and the weighted average discount rate were as follows: Year Ended March 31, 2025 2024 2023 Operating lease expense $ 4,025 $ 3,453 $ 3,064 Variable lease expense 1,316 1,039 1,110 Short term lease expense 571 423 376 Total lease expense $ 5,912 $ 4,915 $ 4,550 Weighted average remaining lease term in years 6.8 4.6 3.3 Weighted average discount rate 6.2 % 4.1 % 2.0 % Supplemental cash flow information related to leases was as follows: Year Ended March 31, 2025 2024 2023 Cash paid for amounts included in the measurements of lease liabilities $ 4,534 $ 3,392 $ 3,017 Operating lease assets obtained in exchange for operating lease liabilities 9,863 4,265 1,426 As of March 31, 2025 maturities of lease liabilities are as follows for future years ending March 31: 2026 $ 4,236 2027 3,895 2028 1,795 2029 1,694 2030 1,694 Thereafter 6,712 Future value of lease liabilities 20,026 Less: imputed interest ( 4,123 ) Present value of lease liabilities $ 15,903 Note 6 . Goodwill and Intangible Assets, Net Goodwill Goodwill arises from the excess purchase price of acquired businesses over the fair value of acquired tangible and intangible assets, less assumed liabilities. Page 46 Table of Contents Changes in the carrying amount of goodwill were as follows: Sterilization and Disinfection Control Clinical Genomics Biopharmaceutical Development Calibration Solutions Total March 31, 2023 $ 29,559 $ 135,811 $ 83,857 $ 37,217 $ 286,444 Effect of foreign currency translation 1,021 ( 130 ) ( 32 ) ( 6 ) 853 Impairment losses - ( 118,741 ) ( 38,151 ) - ( 156,892 ) Goodwill related to GKE acquisition 48,850 - - - 48,850 Measurement period adjustment, Belyntic acquisition - - 841 - 841 March 31, 2024 $ 79,430 $ 16,940 $ 46,515 $ 37,211 $ 180,096 Effect of foreign currency translation ( 22 ) ( 12 ) 1,696 2 1,664 March 31, 2025 $ 79,408 $ 16,928 $ 48,211 $ 37,213 $ 181,760 Finite-Lived Intangible Assets Intangible assets other than goodwill were as follows: March 31, 2025 March 31, 2024 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Customer relationships $ 190,069 $ ( 117,189 ) $ 72,880 $ 189,911 $ ( 104,528 ) $ 85,383 Other intangibles 61,192 ( 37,197 ) 23,995 61,161 ( 32,792 ) 28,369 Total finite-lived intangible assets $ 251,261 $ ( 154,386 ) $ 96,875 $ 251,072 $ ( 137,320 ) $ 113,752 Amortization expense for finite-lived intangible assets was as follows: Year Ended March 31, 2025 2024 2023 Amortization in cost of revenues $ 2,641 $ 6,052 $ 6,796 Amortization in general and administrative 16,504 21,289 22,025 Total $ 19,145 $ 27,341 $ 28,821 Fiscal year 2024 goodwill impairment losses recorded in our Clinical Genomics and Biopharmaceutical Development divisions totaling $ 156,892 and impairments of other intangible assets in our Clinical Genomics division totaling $ 117,641 were primarily the result of higher weighted average cost of capital, which decreases the fair value of businesses, as well as downward revisions of expected future performance in fiscal year 2024. The range of useful lives and weighted-average remaining useful lives of amortizable intangible assets as of March 31, 2025 were as follows: Approx. Est. Useful Weighted Avg. Life Remaining Life Description (Years) (Years) Customer Relationships 5 - 12 7.2 Other Intangibles 2 - 12 5.8 The following is estimated amortization expense for the years ending March 31: Fiscal Year Amortization Expense 2026 $ 17,086 2027 16,429 2028 15,836 2029 15,307 2030 10,809 Page 47 Table of Contents Note 7. Supplemental Information Inventories consisted of the following: March 31, 2025 March 31, 2024 Raw materials $ 14,775 $ 18,335 Work in process 560 1,256 Finished goods 10,030 13,084 Total inventories $ 25,365 $ 32,675 Prepaid expenses and other consisted of the following: March 31, 2025 March 31, 2024 Prepaid expenses $ 2,364 $ 2,932 Deposits 1,752 1,898 Prepaid income taxes 1,040 1,237 Other current assets 2,873 3,341 Total prepaid expenses and other $ 8,029 $ 9,408 Property, plant and equipment consisted of the following: March 31, 2025 March 31, 2024 Land $ 889 $ 889 Buildings and building improvements 23,280 23,480 Manufacturing equipment 22,694 19,540 Computer equipment 3,093 3,613 Other 7,188 5,383 Construction in progress 1,610 1,380 Gross total 58,754 54,285 Accumulated depreciation ( 26,421 ) ( 22,519 ) Total property, plant and equipment, net $ 32,333 $ 31,766 Depreciation expense was as follows: Year Ended March 31, 2025 2024 2023 Depreciation expense in cost of revenues $ 3,160 $ 3,031 $ 3,163 Depreciation expense in operating expense 2,222 1,202 1,150 Total depreciation expense $ 5,382 $ 4,233 $ 4,313 Accrued payroll and benefits consisted of the following: March 31, 2025 March 31, 2024 Bonus payable $ 10,891 $ 3,838 Wages and paid-time-off payable 3,672 3,072 Payroll related taxes 2,475 1,956 Other benefits payable 820 1,069 Total accrued payroll and benefits $ 17,858 $ 9,935 Other accrued expenses consisted of the following: March 31, 2025 March 31, 2024 GKE acquisition holdback (current) $ 9,315 $ - Accrued business taxes 5,996 5,557 Current operating lease liabilities 3,523 2,986 Income taxes payable 2,157 1,615 Other 3,610 2,700 Total other accrued expenses $ 24,601 $ 12,858 Page 48 Table of Contents Note 8 . Indebtedness Credit Facility On March 5, 2021, we entered into a senior secured credit agreement that included 1 ) a revolving credit facility in an aggregate principal amount of up to $ 75,000 (the "Revolver"), 2 ) a swingline loan in an aggregate principal amount not exceeding $ 5,000 , and 3 ) letters of credit in an aggregate stated amount not exceeding $ 2,500 at any time. The agreement also provided for an incremental term loan or an increase in revolving commitments in an aggregate principal amount of at a minimum $ 25,000 and at a maximum $ 75,000 , subject to the satisfaction of certain conditions and lender considerations. We refer to the agreement in whole as the “Credit Facility.” On October 5, 2023, we amended the terms of the Credit Facility to increase the maximum principal amount available to us under the Revolver from $ 75,000 to $ 125,000 . On April 5, 2024, we further amended and restated the terms of the Credit Facility to: (i) Extend the maturity of the Credit Facility to April 2029; (ii) Allow proceeds from the Credit Facility to be used to redeem some or all of the Company’s Notes; (iii) Include a $75,000 senior secured term loan facility (the “Term Loan”), which is subject to principal amortization payments; and (iv) Make certain changes to the financial covenants. In conjunction with the amendment and restatement of the Credit Facility during the year ended March 31, 2025, we incurred $ 1,987 of customary lender fees and debt issuance costs paid to third parties, of which $ 1,242 relates to the Revolver and $ 745 relates to the Term Loan. The balance of unamortized fees and debt issuance costs related to the Credit Facility, including fees from the original debt issuance and all subsequent amendments and restatements, was $ 1,203 and $ 321 as of March 31, 2025 and 2024 , respectively. Unamortized debt issuance costs related to the Term Loan are reflected in the debt’s carrying value as a discount in our Consolidated Balance Sheets. All such fees are being amortized to interest expense through maturity. Amounts borrowed under the Credit Facility bear interest at either a base rate or a SOFR rate plus an applicable spread ranging from 1.5 % to 3.5 %, depending on our total net leverage ratio. The weighted average interest rate on borrowings under the Credit Facility as of March 31, 2025 was 7.2 %. The financial covenants in the Credit Facility as amended include a maximum leverage ratio of 4.50 to 1.00 on each of the quarterly testing dates through December 31, 2024; 4.0 to 1.0 on each of the testing dates between March 31, 2025 and March 31, 2026; and 3.5 to 1.0 on each testing date thereafter. The Credit Facility also stipulates a minimum fixed charge coverage ratio of 1.25 to 1.0 and a maximum senior net leverage ratio of 3.5 to 1. Other covenants include restrictions on our ability to incur debt, grant liens, make fundamental changes to our business as defined in the contract, engage in certain transactions with affiliates, or conduct asset sales. As of March 31, 2025, we were in compliance with all required covenants under the terms of the Credit Facility. Term Loan We borrowed $ 75,000 under the Term Loan on April 5, 2024, to fund privately negotiated repurchases of a portion of the Notes (see "Convertible Notes" below). We are required to make quarterly principal payments on the Term Loan. During the year ended March 31, 2025, we made required quarterly principal payments on the Term Loan of $ 3,750 . For the fiscal years ending March 31, required future principal debt payments on the Term Loan are as follows: Fiscal Year Amount 2026 $ 3,750 2027 5,625 2028 5,625 2029 7,500 2030 48,750 Total outstanding principal $ 71,250 The net carrying amount of the Term Loan was as follows: March 31, 2025 Term Loan ( 7.2 % as of March 31, 2025) $ 71,250 Less: discount and debt issuance costs ( 598 ) Less: current portion ( 3,750 ) Noncurrent portion $ 66,902 Page 49 Table of Contents There was no outstanding balance related to the Term Loan as of March 31, 2024. Revolver As of March 31, 2025 , the outstanding balance under our Revolver was $ 10,000 , and $ 115,000 was available for borrowing. We are obligated to pay quarterly unused commitment fees of between 0.20 % and 0.35 % of the Revolver’s aggregate principal amount, based on our leverage ratio. We incurred unused commitment fees of $ 269 and $ 164 for the years ended March 31, 2025 , and March 31, 2024 , respectively. Convertible Notes On August 12, 2019, we issued an aggregate principal amount of $ 172,500 of Notes. The net proceeds from the Notes, after deducting underwriting discounts and commissions and other related offering expenses payable by us, were approximately $ 167,056 . The Notes mature on August 15, 2025, unless earlier repurchased or converted, and bear interest at a rate of 1.375 % payable semi-annually in arrears on February 15 and August 15 each year beginning on February 15, 2020. The Notes are initially convertible at a conversion rate of 3.5273 shares of common stock per $1,000 principal amount of Notes, which is equivalent to an initial conversion price of approximately $ 283.50 per share of common stock. On April 5, 2024, we entered into separate, privately negotiated transactions with certain holders of the Notes to repurchase $ 75,000 aggregate principal amount of the Notes for an aggregate repurchase price of $ 71,250 in cash, plus accrued and unpaid interest of $ 160 and fees paid to third parties of $ 310 directly related to the extinguishment. We accounted for the partial repurchase of the Notes as a debt extinguishment, which resulted in the recognition of a gain on extinguishment of $ 2,887 in other income on the Consolidated Statements of Operations during the year ended March 31, 2025 . As of March 31, 2025, $ 97,500 in aggregate principal amount of the Notes remained outstanding, which we intend to pay using a combination of cash on hand and a draw on our Revolver. Noteholders may convert their Notes at their option only in the following circumstances: (i) during any calendar quarter commencing after the calendar quarter ended on December 31, 2019 ( and only during such calendar quarter), if the last reported sale price per share of our common stock exceeds 130 % of the conversion price for each of at least 20 trading days during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter; (ii) during the five consecutive business days immediately after any 10 consecutive trading day period (such 10 consecutive trading day period, the “measurement period”) in which the trading price per $1,000 principal amount of Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price per share of our common stock on such trading day and the conversion rate on such trading day; (iii) upon the occurrence of certain corporate events or distributions on our common stock, including certain distributions, the occurrence of a fundamental change (as defined in the indenture governing the Notes) or a transaction resulting in the Company’s common stock converting into other securities or property or assets; and (iv) at any time from, and including, April 15, 2025 until the close of business on the second scheduled trading day immediately before the maturity date. Upon conversion, we will pay or deliver, as the case may be, cash, shares of our common stock, or a combination of cash and shares of our common stock. The circumstances necessary for conversion were not met during fiscal year 2025. The if-converted value of the Notes did not exceed the principal balance as of March 31, 2025 . Debt issuance costs related to the Notes remaining after the partial repurchase in fiscal year 2025 are comprised of commissions payable to the initial purchasers of $ 2,925 and third party offering costs of $ 152 . The debt issuance costs are being amortized to interest expense using the effective interest method over the remaining contractual term of the Notes. The net carrying amount of the 2025 was as follows: March 31, 2025 March 31, 2024 Principal outstanding $ 97,500 $ 172,500 Unamortized debt issuance costs ( 203 ) ( 1,302 ) Net carrying value $ 97,297 $ 171,198 We recognized interest expense on the Notes as follows: Year Ended March 31, 2025 2024 2023 Coupon interest expense at 1.375% $ 1,372 $ 2,372 $ 2,372 Amortization of debt issuance costs 546 926 907 Total $ 1,918 $ 3,298 $ 3,279 Page 50 Table of Contents The effective interest rate on the Notes is approximately 1.9 %. As of March 31, 2025 , the Notes, net of unamortized debt issuance costs, are classified as a current liability on our Consolidated Balance Sheets. Note 9 . Stock Transactions and Stock-Based Compensation (dollars and shares in thousands, except per share values) Stock-Based Compensation We issue shares in the form of stock options, RSUs and PSUs to employees and non-employee directors pursuant to the 2021 Equity Plan, and we have awards outstanding under the 2014 Equity Plan. The 2021 Equity Plan, as amended, authorizes the issuance of 660 shares of common stock to eligible participants, and there were 186 shares available for future grants under the plan as of March 31, 2025 . Under the 2014 Equity Plan, 1,100 shares of common stock were authorized and reserved for eligible participants, all of which have been issued and 43 of which remain outstanding as of March 31, 2025 . Stock-based compensation expense recognized in the Consolidated Financial Statements was as follows: Year Ended March 31, 2025 2024 2023 Stock-based compensation expense $ 13,142 $ 11,936 $ 12,538 Amount of income tax (benefit) recognized in earnings 2,068 2,718 ( 1,169 ) Stock-based compensation expense, net of tax $ 15,210 $ 14,654 $ 11,369 Time-Based Restricted Stock Units (RSUs) RSU activity under the 2021 Equity Plan was as follows (shares and dollars in thousands, except per-share data): Time-Based Restricted Stock Units Number of Shares Weighted- Average Grant Date Fair Value per Share Weighted- Average Remaining Contractual Life (Years) Aggregate Intrinsic Value Nonvested at March 31, 2024 76 $ 157.83 1.0 $ 8,325 Awards granted 117 94.30 Awards forfeited ( 11 ) 120.39 Awards distributed ( 37 ) 169.12 3,928 Nonvested as of March 31, 2025 145 $ 106.54 1.0 $ 17,197 Expected to vest 130 $ 107.29 1.1 $ 15,466 For the years ended March 31, 2024 and 2023, the weighted average fair values per RSU granted were $ 133.30 and $ 187.21 , respectively. Unrecognized stock-based compensation expense for RSUs that we have determined are probable of vesting was $ 8,116 as of March 31, 2025 and is expected to be recognized over a weighted average period of 1.9 years. The total fair value of RSUs vested was $ 6,173 , $ 5,881 , and $ 6,751 during the years ended March 31, 2025, 2024 and 2023 , respectively. The total intrinsic value of time-based RSUs distributed during the years ended March 31, 2024 and March 31, 2023 was $ 3,658 and $ 5,004 , respectively. Performance-Based Restricted Stock Units (PSUs) We grant performance-based RSUs to certain key employees. Vesting of the awards is contingent upon meeting certain service conditions, as well as meeting certain performance and/or market conditions. PSU activity under the 2021 Equity Plan was as follows (shares and dollars in thousands, except per-share data): Performance-Based Restricted Stock Units Number of Shares Weighted- Average Grant Date Fair Value per Share Weighted- Average Remaining Contractual Life (Years) Aggregate Intrinsic Value Nonvested at March 31, 2024 56 $ 240.96 2.6 $ 6,142 Awards granted 42 102.57 Awards forfeited ( 1 ) 112.24 Awards distributed ( 12 ) 302.06 1,306 Nonvested as of March 31, 2025 85 $ 166.31 1.6 $ 10,101 Expected to vest 81 $ 168.98 1.7 $ 9,654 For the years ended March 31, 2024 and 2023 , the average fair value per PSU granted was $ 132.29 and $ 182.14 , respectively. Unrecognized stock-based compensation expense for PSUs that we have determined probable of vesting was $ 5,346 as of March 31, 2025 and is expected to be recognized over a weighted average period of 1.9 years. Total fair value of PSUs vested was $ 3,492 , $ 0 and $ 1,926 during the years ended March 31, 2025, 2024 and 2023 , respectively. There were no PSUs vested or distributed during the fiscal year 2024, and the total intrinsic value of PSUs distributed during the year ended March 31, 2023 was $ 1,776 . Page 51 Table of Contents During the year ended March 31, 2025 , the Compensation Committee of the Board of Directors created a plan to award 41 PSUs at target (“the FY25 PSUs”) to eligible employees. Of the 41 PSUs granted, 23 PSUs have a grant date fair value of $ 89.82 and are subject to service and company financial performance conditions. The financial performance measurement period is from April 1, 2024 through March 31, 2027. The remaining 18 PSUs have a grant date fair value of $ 119.54 and are subject to service and market conditions, with the market performance period measured from June 18, 2024 through June 18, 2027. The service period for all of the FY25 PSUs is from June 18, 2024 through June 18, 2027. The quantity of shares that will be earned based upon either company financial performance or market performance will range from 0 % to 200 % of the targeted number of shares; if the defined minimum targets are not met, no shares will vest. As of March 31, 2025, based on actual performance during the partial performance period, a performance adjustment to change the awards expected to vest was not deemed necessary for the FY25 PSUs. In October 2021, the Compensation Committee of the Board of Directors granted a special long-term equity award consisting of performance stock units subject to both performance and service conditions to our Chief Executive Officer. Based on actual achievement of the performance metrics as of the performance period ended March 31, 2024, 35 shares are expected to vest and be distributed, of which 12 were distributed in fiscal year 2025. The remaining 23 shares will vest in equal installments on each of October 27, 2025 and October 27, 2026. Stock Options We used the Black-Scholes option-pricing model to estimate the fair value of stock option awards granted. There were no options granted during the year ended March 31, 2025. The weighted average assumptions utilized in the model in prior years were as follows: Year Ended March 31, 2024 2023 Weighted-average value at grant date $ 130.07 $ 185.60 Expected life (years) 3.52 3.52 Expected dividend yield 0.07 % 0.07 % Volatility 37.82 % 37.29 % Risk-free interest rate 4.16 % 3.55 % Using the assumptions in the tables above, the weighted-average Black-Scholes fair value per share at grant date for the years ended March 31, 2024 and 2023 were $ 42.76 and $ 58.94 , respectively. The fair values are before the estimated effect of forfeitures, which reduces the amount of expense recorded in our Consolidated Statements of Operations. Stock option activity under the 2021 Equity Plan and 2014 Equity Plan as of March 31, 2025 , and changes for the years then ended, are presented below (shares and dollars in thousands, except per-share data): Stock Options Shares Subject to Options Weighted- Average Exercise Price per Share Weighted-Average Remaining Contractual Life (Years) Aggregate Intrinsic Value Outstanding as of March 31, 2024 194 $ 181.89 3.2 $ 26 Awards granted - - Awards forfeited or expired ( 17 ) 155.06 Awards exercised or distributed ( 22 ) 123.17 24 Outstanding as of March 31, 2025 155 $ 192.92 2.7 $ 52 Exercisable awards as of March, 31, 2025 112 $ 211.36 2.2 $ 18 Exercisable awards and awards expected to vest, March 31, 2025 153 $ 193.71 2.7 $ 49 The total intrinsic value of stock options exercised during the years ended March 31, 2024 and March 31, 2023 was $ 24 , and $ 6,902 , respectively. Unrecognized stock-based compensation expense for stock options expected to vest as of March 31, 2025 was $ 917 and is expected to be recognized over a weighted average period of 1.1 years. The total fair value of options vested was $ 2,168 , $ 2,749 , and $ 2,763 during the years ended March 31, 2025, 2024 and 2023 , respectively. In November 2005, our Board of Directors approved a program to repurchase up to 300 shares of our outstanding common stock. Under the program, shares of common stock may be purchased from time to time in the open market at prevailing prices or in negotiated transactions off the market. Shares of common stock repurchased will be cancelled and repurchases of shares of common stock will be funded through existing cash reserves. There were no repurchases of our shares of common stock under this plan during the years ended March 31, 2025 , 2024 or 2023 . As of March 31, 2025 , we have repurchased 162 shares under this plan. Page 52 Table of Contents Under applicable law, Colorado corporations are not permitted to retain treasury stock. The price paid for repurchased shares is allocated between common stock and retained earnings based on management’s estimate of the original sales price of the underlying shares. Note 10. Net (Loss) Earnings Per Share (dollars and shares in thousands, except per share values) The following table presents a reconciliation of the denominators used in the computation of basic and diluted net (loss) earnings per share: Year Ended March 31, 2025 2024 2023 Net (loss) earnings available for shareholders $ ( 1,974 ) $ ( 254,246 ) $ 930 Weighted average outstanding shares of common stock 5,421 5,386 5,321 Dilutive effect of stock options - - 26 Dilutive effect of unvested stock awards - - 14 Fully diluted shares 5,421 5,386 5,361 Basic (loss) earnings per share $ ( 0.36 ) $ ( 47.20 ) $ 0.17 Diluted (loss) earnings per share $ ( 0.36 ) $ ( 47.20 ) $ 0.17 The following stock awards were excluded from the calculation of diluted EPS as their inclusion would be anti-dilutive: Year Ended March 31, 2025 2024 2023 Assumed conversion of convertible debt 351 608 608 Stock awards that were anti-dilutive 386 268 154 Total stock awards excluded from diluted EPS 737 876 762 Shares underlying the Notes were excluded from the diluted EPS calculation for the years ended March 31, 2025, 2024 and 2023 as the impact of the assumed conversion of the Notes calculated under the if-converted method was anti-dilutive. Note 11 . Employee Benefit Plan s We adopted the Mesa Laboratories, Inc. 401 (k) Retirement Plan effective January 1, 2000. Under this plan, we match 100 % of the first 4 % of eligible pay contributed by each eligible employee, and contributions vest immediately. Participation is voluntary, and employees are eligible on the first day of the month following their start date. Our contributions to the Mesa Laboratories, Inc. 401 (k) retirement plan were $ 1,645 , $ 2,078 and $ 1,768 during the years ended March 31, 2025, 2024 and 2023 , respectively. Note 12 . Income Taxes Provision for Income Taxes Earnings (loss) before income taxes were as follows: Year Ended March 31, 2025 2024 2023 Domestic $ 12,615 $ ( 233,853 ) $ 1,887 Foreign ( 6,654 ) ( 41,795 ) ( 2,276 ) Total earnings (loss) before income taxes $ 5,961 $ ( 275,648 ) $ ( 389 ) The components of our provision for income taxes were as follows: Year Ended March 31, 2025 2024 2023 Current tax provision: U.S. Federal $ 3,994 $ 3,002 $ 593 U.S. State 1,212 1,678 538 Foreign 2,790 2,330 1,070 Total current tax expense 7,996 7,010 2,201 Deferred tax provision: U.S. Federal 63 ( 20,387 ) ( 1,432 ) U.S. State 13 ( 1,853 ) ( 210 ) Foreign ( 137 ) ( 6,172 ) ( 1,878 ) Total deferred tax (benefit) ( 61 ) ( 28,412 ) ( 3,520 ) Total income tax expense (benefit) $ 7,935 $ ( 21,402 ) $ ( 1,319 ) Page 53 Table of Contents A reconciliation of our income tax provision and the amounts computed by applying statutory rates to earnings (loss) before income taxes was as follows (percentages may not perfectly sum due to rounding): Year Ended March 31, 2025 2024 2023 Amount % Amount % Amount % Earnings (loss) before income taxes $ 5,961 $ ( 275,648 ) $ ( 389 ) Federal income taxes at statutory rates 1,251 21.0 % ( 57,886 ) 21.0 % ( 82 ) 21.0 % State income taxes, net of federal benefit 317 5.3 % ( 2,508 ) 0.9 % ( 1,075 ) 276.3 % Compensation adjustments 2,283 38.3 % 2,738 ( 1.0 %) 1,506 ( 387.1 %) Research and development credit ( 1,054 ) ( 17.7 %) ( 1,093 ) 0.4 % ( 1,010 ) 259.6 % Return to provision adjustment 516 8.7 % ( 182 ) 0.1 % ( 125 ) 32.1 % Subpart F, GILTI, & FDII ( 484 ) ( 8.1 %) ( 412 ) 0.1 % ( 127 ) 32.6 % Foreign rate differential 2,047 34.3 % ( 566 ) 0.2 % ( 313 ) 80.5 % Permanent difference 47 0.8 % 479 ( 0.2 %) 33 ( 8.5 %) Goodwill impairment - - % 32,594 ( 11.8 %) - - % Valuation allowance 3,019 50.6 % 5,398 ( 2.0 %) ( 126 ) 32.4 % Other ( 7 ) ( 0.1 %) 36 - % - - % Total income tax expense (benefit) ( $ 7,935 133.1 % $ ( 21,402 ) 7.8 % $ ( 1,319 ) 339.1 % Effective income tax rate 133.12 % 7.76 % 339.07 % Deferred Tax Assets and Liabilities Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Components of our deferred tax assets (liabilities) were as follows: 2025 2024 Deferred tax assets: Capitalized research expenditures $ 8,148 $ 5,116 Credits 2,774 2,528 Allowances and reserves 2,687 3,033 Stock compensation deductible differences 1,632 1,346 Operating lease liabilities 1,860 2,182 Inventories 1,153 668 Net operating loss 3,219 6,633 Other 265 187 Deferred tax assets, gross 21,738 21,693 Valuation allowance ( 8,999 ) ( 5,975 ) Deferred tax assets, net 12,739 15,718 Deferred tax liabilities: Operating lease right-of-use assets ( 1,843 ) ( 2,120 ) Goodwill and intangible assets ( 26,854 ) ( 28,694 ) Property, plant and equipment ( 2,273 ) ( 2,813 ) Other ( 579 ) ( 579 ) Total deferred tax liabilities ( 31,549 ) ( 34,206 ) Deferred tax asset/(liabilities) ( 18,810 ) ( 18,488 ) Valuation Allowance In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. In evaluating the need for a valuation allowance, management takes into account various factors, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies, and results of recent operations. Based on this evaluation, we have concluded that a valuation allowance is necessary on our U.S. and certain German operations and we do not expect to fully realize our deferred tax assets as of March 31, 2025 . The following table summarizes the changes in our valuation allowance for deferred tax assets: Year Ended March 31, 2025 2024 Beginning balance $ 5,975 $ 582 Additions charged to income tax expense and other accounts 3,657 5,398 Deductions from reserves ( 637 ) ( 5 ) Cumulative translation adjustment 4 - Ending balance $ 8,999 $ 5,975 Page 54 Table of Contents Net Operating Loss Credit and Carryforwards As of March 31, 2025 , we had U.S. and Foreign net operating loss (“NOL”) carryforwards consisting of the following: March 31, 2025 Expiration Date Pre-2018 federal NOL carryforwards $ - N/A Post-2018 federal NOL carryforwards - Indefinite State NOL carryforwards 9,094 March 31, 2030 Foreign NOL carryforwards 11,671 Indefinite As of March 31, 2024, we had U.S. and Foreign NOL carryforwards consisting of the following: March 31, 2024 Expiration Date Pre-2018 federal NOL carryforwards $ - N/A Post-2018 federal NOL carryforwards - Indefinite State NOL carryforwards 8,709 March 31, 2035 Foreign NOL carryforwards 22,595 Indefinite As of March 31, 2025 , we had U.S. tax credit carryforwards consisting of the following: March 31, 2025 Expiration Date Federal research tax credit carryforwards $ - N/A State research tax credits carryforwards 3,492 March 31, 2036 Federal foreign tax credit carryforwards 15 March 31, 2037 As of March 31, 2024, we had U.S. tax credit carryforwards consisting of the following: March 31, 2024 Expiration Date Federal research tax credit carryforwards $ - N/A State research tax credits carryforwards 3,181 March 31, 2036 Federal foreign tax credit carryforwards 15 March 31, 2037 Undistributed earnings in foreign subsidiaries For the year ended March 31, 2025 , provisions have not been made for income taxes on $ 59,873 of undistributed earnings that were deemed permanently reinvested in foreign subsidiaries at March 31, 2025 . Determination of the amount of unrecognized deferred income tax liabilities on these earnings is not practicable because such liability, if any, depends on certain circumstances existing if and when remittance occurs. A deferred tax liability will be recognized if and when we no longer plan to permanently reinvest these undistributed earnings. Uncertain Tax Positions Uncertain tax positions, if ever recognized in the financial statements, would be recorded in the consolidated statements of operations as part of the income tax provision. A reconciliation of the beginning and ending amount of unrecognized tax benefits, exclusive of interest and penalties, included in the deferred tax liability on our accompanying Consolidated Balance Sheets is as follows: Year Ended March 31, 2025 2024 Beginning balance $ - $ 92 (Decrease) increase related to prior period tax positions - ( 92 ) Increases related to current period tax positions - - Ending balance $ - $ - As of March 31, 2025 , we have not recorded any gross unrecognized tax benefits. We recognize interest and penalties accrued on uncertain income tax positions in other expense and general and administrative expense, respectively. Interest and penalties included in other long-term liabilities on our accompanying Consolidated Balance Sheets were $0 for each of the years ended March 31, 2025, 2024 and 2023 . We do not expect a material change in unrecognized tax benefits or interest in the next 12 months. We file income tax returns in the U.S. various states and foreign jurisdictions. In the normal course of business, we are subject to examination by taxing authorities throughout the world. The following tax years remain subject to examination: Significant Jurisdictions Open Years U.S. Federal 2021 - 2023 U.S. States 2021 - 2023 Foreign 2017 - 2023 Note 13. Commitments and Contingencies We are party to various legal proceedings arising in the ordinary course of business. As of March 31, 2025 , we are not party to any legal proceeding that management believes could have a material adverse effect on our consolidated financial position, results of operations, or cash flows. In April 2025, we paid the GKE sellers $ 9,555 to fully settle the portion of the acquisition price that had been held back against potential indemnification losses. Note 14. Segment Data Segment information is prepared on the same basis that our chief operating decision maker, our CEO, uses to manage our segments, evaluate financial results, and make key operating decisions. Our four reportable segments are organized primarily by the nature of the goods and services they sell. The CODM uses segment revenue, organic revenues growth (non-GAAP), and gross profit to allocate resources and to assess the performance of our segments. Monthly, the CODM reviews forecast-to-actual and prior-to-current period variances in segment revenue and in segment gross profit when making decisions to allocate capital and personnel to the segments. Our CODM also reviews operating income, adjusted to exclude non-cash items such as depreciation, amortization and stock based compensation, on a consolidated basis to further manage operations. The accounting policies of our operating segments are the same as those described in Note 1 . "Description of Business and Summary of Significant Accounting Policies." Page 55 Table of Contents The following tables set forth our segment information: Sterilization and Disinfection Control (d) Clinical Genomics Biopharmaceutical Development Calibration Solutions Corporate and Other (e) Total Company Year Ended March 31, 2025 Revenues (a) $ 93,418 $ 47,081 $ 48,730 $ 51,749 $ - $ 240,978 Less: Depreciation in cost of revenues 1,419 680 224 837 - 3,160 Amortization in cost of revenues 503 765 1,373 - - 2,641 Non-cash GKE inventory step-up amortization 1,232 - - - - 1,232 Other cost of revenues (b) 25,604 19,966 17,220 20,275 10 83,075 Total segment cost of revenues 28,758 21,411 18,817 21,112 10 90,108 Gross Profit (c) $ 64,660 $ 25,670 $ 29,913 $ 30,637 $ ( 10 ) $ 150,870 Reconciling items: Operating expense $ 134,534 Operating income 16,336 Nonoperating expense, net 10,375 Earnings before income taxes $ 5,961 Year Ended March 31, 2024 Revenues (a) $ 75,124 $ 52,588 $ 40,712 $ 47,763 $ - $ 216,187 Less: Depreciation in cost of revenues 1,204 937 224 666 - 3,031 Amortization in cost of revenues 266 4,448 1,338 - - 6,052 Non-cash GKE inventory step-up amortization 1,229 - - - - 1,229 Other cost of revenues (b) 19,123 20,125 13,750 19,550 77 72,625 Total segment cost of revenues 21,822 25,510 15,312 20,216 77 82,937 Gross Profit (c) $ 53,302 $ 27,078 $ 25,400 $ 27,547 $ ( 77 ) $ 133,250 Reconciling items: Operating expense $ 405,325 Operating (loss) ( 272,075 ) Nonoperating expense, net 3,573 (Loss) before income taxes $ ( 275,648 ) Year Ended March 31, 2023 Revenues (a) $ 64,609 $ 62,299 $ 47,365 $ 44,807 $ - $ 219,080 Less: Depreciation in cost of revenues 818 1,130 314 901 - 3,163 Amortization in cost of revenues - 5,675 1,121 - - 6,796 Other cost of revenues (b) 17,271 23,009 15,590 19,518 40 75,428 Total segment cost of revenues 18,089 29,814 17,025 20,419 40 85,387 Gross Profit (c) $ 46,520 $ 32,485 $ 30,340 $ 24,388 $ ( 40 ) $ 133,693 Reconciling items: Operating expense $ 130,373 Operating income 3,320 Nonoperating expense, net 3,709 (Loss) before income taxes $ ( 389 ) (a) Intersegment revenues are not significant and are eliminated to arrive at consolidated totals. Revenues as presented are consistent with GAAP measurement principles and our CODM's review of segment information. (b) Other segment cost of revenues for each reportable segment includes product costs, personnel costs (including stock based compensation), and other manufacturing and overhead costs necessary to produce and sell our products and services, excluding depreciation, amortization, and non-cash inventory step-up amortization expenses. (c) Gross profit as presented is consistent with GAAP measurement principles and our CODM's review of segment information. (d) Includes GKE results beginning upon acquisition in fiscal year 2024. (e) Unallocated corporate expenses and other business activities are reported within Corporate and Other. Certain depreciation expense classified reflected in Corporate and Other in fiscal years 2024 and 2023 has been recast to conform to current year presentation. Page 56 Table of Contents Changes in the Sterilization and Disinfection Control division are primarily attributable to the GKE acquisition consummated in the third quarter of fiscal year 2024. The following table sets forth net inventories by reportable segment. Our chief operating decision maker is not provided with any other segment asset information. In addition to sales of our products, inventories decreased in fiscal year 2025 primarily due to adjustments to realizable value and amortization of non-cash inventory step-up from the GKE acquisition. March 31, March 31, 2025 2024 Sterilization and Disinfection Control $ 5,545 $ 7,014 Clinical Genomics 9,776 11,813 Biopharmaceutical Development 4,934 6,304 Calibration Solutions 5,110 7,544 Total inventories $ 25,365 $ 32,675 The following table sets forth a summary of long-lived assets by geographic area. Long-lived assets exclude goodwill and intangible assets acquired in a business combination, deferred tax assets and other non-tangible assets. The increase in long-lived assets in Sweden is primarily due to right of use assets associated with a ten -year operating lease that commenced in fiscal year 2025 related to a facility used by our Biopharmaceutical Development division for manufacturing and administrative purposes. March 31, March 31, 2025 2024 United States $ 29,200 $ 32,229 Sweden 11,634 1,271 Germany 6,712 7,596 Other 1,169 1,208 Total long-lived assets $ 48,715 $ 42,304 Revenues from external customers are attributed to individual countries based upon locations to which the product is shipped or exported, as follows: Year Ended March 31, 2025 2024 2023 United States $ 116,615 $ 106,395 $ 117,281 China 25,312 24,933 25,797 Other 99,051 84,859 76,002 Total revenues $ 240,978 $ 216,187 $ 219,080 No customer accounts for 10% or more of our consolidated revenues. No foreign country other than China exceeds 10% of total revenues. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.