MESA LABORATORIES INC /CO/ 10-Q

Item 1 . Financial Statements M esa Laboratories, Inc. Condensed Consolidated Balance Sheets (unaudited) (in thousands, except share amounts) June 30, March 31, 2025 2025 ASSETS Current assets: Cash and cash equivalents $ 21,279 $ 27,321 Accounts receivable, less allowance for credit losses of $ 1,190 and $ 1,186 , respectively 39,068 41,970 Inventories 28,106 25,365 Prepaid expenses and other current assets 9,805 8,029 Total current assets 98,258 102,685 Noncurrent assets: Property, plant and equipment, net of accumulated depreciation of $ 27,827 and $ 26,421 , respectively 31,692 32,333 Deferred tax asset 1,474 1,371 Other assets 18,868 18,324 Customer relationships, net 73,524 72,880 Other intangibles, net 23,877 23,995 Goodwill 188,050 181,760 Total assets $ 435,743 $ 433,348 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 6,270 $ 5,747 Accrued payroll and benefits 10,426 17,858 Unearned revenues 15,077 14,710 Other accrued expenses 16,070 24,601 Term loan, current portion 4,219 3,750 Convertible notes, current portion, net of debt issuance costs 97,432 97,297 Total current liabilities 149,494 163,963 Noncurrent liabilities: Deferred tax liability $ 21,563 20,181 Other noncurrent liabilities 12,657 12,472 Term loan, noncurrent portion, net of discounts and debt issuance costs 65,533 66,902 Revolving line of credit 14,000 10,000 Total liabilities 263,247 273,518 Stockholders’ equity: Common stock, no par value; authorized 25,000,000 shares; issued and outstanding, 5,501,454 and 5,455,421 shares, respectively 361,361 358,541 (Accumulated deficit) ( 185,067 ) ( 188,936 ) Accumulated other comprehensive (loss) ( 3,798 ) ( 9,775 ) Total stockholders’ equity 172,496 159,830 Total liabilities and stockholders’ equity $ 435,743 $ 433,348 See accompanying notes to Condensed C onsolidated Fi nancial Statements. Page 1 Table of Contents Mesa Laboratories, Inc. Condensed Consolidated Statements of Income (unaudited) (in thousands, except per share data) Three Months Ended June 30, 2025 2024 Revenues $ 59,543 $ 58,170 Cost of revenues 22,604 20,921 Gross profit 36,939 37,249 Operating expense: Selling 10,933 10,116 General and administrative 17,958 16,818 Research and development 4,984 4,735 Total operating expense 33,875 31,669 Operating income 3,064 5,580 Non-operating (income) expense: Interest expense and amortization of debt issuance costs 2,198 2,842 (Gain) on extinguishment of convertible notes - ( 2,887 ) Other (income) expense, net ( 6,146 ) 1,720 Total non-operating (income) expense, net ( 3,948 ) 1,675 Earnings before income taxes 7,012 3,905 Income tax expense 2,270 517 Net income $ 4,742 $ 3,388 Earnings per share: Basic $ 0.87 $ 0.63 Diluted $ 0.85 $ 0.62 Weighted-average common shares outstanding: Basic 5,465 5,397 Diluted 5,553 5,424 See accompanying notes to Condensed Consolidated Financial Statements. Page 2 Table of Contents Mesa Laboratories, Inc. Condensed Consolidated Statements of Comprehensive Income (unaudited) (in thousands) Three Months Ended June 30, 2025 2024 Net income $ 4,742 $ 3,388 Other comprehensive income: Foreign currency translation adjustments 5,977 452 Comprehensive income $ 10,719 $ 3,840 See accompanying notes to Condensed Consolidated Financial Statements. Page 3 Table of Contents Mesa Laboratories, Inc. Condensed Consolidated Statements of Stockholders’ Equity (unaudited) (dollars in thousands, except per share data) Common Stock Number of Shares Amount (Accumulated Deficit) Retained Earnings AOCI* Total March 31, 2025 5,455,421 $ 358,541 $ ( 188,936 ) $ ( 9,775 ) $ 159,830 Vesting of restricted stock units 57,348 - - - - Tax withholding on vesting of restricted stock units ( 11,315 ) ( 1,061 ) - - ( 1,061 ) Dividends paid, $ 0.16 per share - - ( 873 ) - ( 873 ) Stock-based compensation expense - 3,881 - - 3,881 Foreign currency translation - - - 5,977 5,977 Net income - - 4,742 - 4,742 June 30, 2025 5,501,454 $ 361,361 $ ( 185,067 ) $ ( 3,798 ) $ 172,496 Common Stock Number of Shares Amount (Accumulated Deficit) Retained Earnings AOCI* Total March 31, 2024 5,394,491 $ 343,642 $ ( 183,494 ) $ ( 14,755 ) $ 145,393 Vesting of restricted stock units 20,858 - - - - Tax withholding on vesting of restricted stock units ( 6,194 ) ( 571 ) - - ( 571 ) Dividends paid, $ 0.16 per share - - ( 863 ) - ( 863 ) Stock-based compensation expense - 2,928 - - 2,928 Foreign currency translation - - - 452 452 Net income - - 3,388 - 3,388 June 30, 2024 5,409,155 $ 345,999 $ ( 180,969 ) $ ( 14,303 ) $ 150,727 *Accumulated Other Comprehensive (Loss) Income See accompanying notes to Condensed Consolidated Financial Statements. Page 4 Table of Contents M esa Laboratories, Inc. Condensed Consolidated Statements of Cash Flows (unaudited) (in thousands) Three Months Ended June 30, 2025 2024 Cash flows from operating activities: Net income $ 4,742 $ 3,388 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation of property, plant and equipment 1,404 1,404 Amortization of intangible assets 4,553 4,061 Stock-based compensation expense 3,881 2,928 Gain on extinguishment of convertible notes - ( 2,887 ) Amortization of step-up in inventory basis - 778 Foreign currency adjustments ( 5,986 ) 826 Other 1,250 583 Cash from changes in operating assets and liabilities: Accounts receivable, net 3,436 3,482 Inventories ( 3,290 ) ( 671 ) Prepaid expenses and other assets ( 2,436 ) ( 451 ) Accounts payable 212 ( 388 ) Accrued liabilities and taxes payable ( 5,928 ) ( 1,391 ) Unearned revenues 55 ( 919 ) Net cash provided by operating activities 1,893 10,743 Cash flows from investing activities: Purchases of property, plant and equipment ( 1,009 ) ( 891 ) Net cash (used in) investing activities ( 1,009 ) ( 891 ) Cash flows from financing activities: Proceeds from debt borrowings 10,500 73,465 Debt repayments ( 7,438 ) ( 9,438 ) GKE acquisition-related holdback payment ( 9,555 ) - Repurchase of convertible notes - ( 71,560 ) Dividends paid ( 873 ) ( 863 ) Other financing, net ( 1,061 ) ( 1,023 ) Net cash (used in) financing activities ( 8,427 ) ( 9,419 ) Effect of exchange rate changes on cash and cash equivalents 1,501 ( 175 ) Net (decrease) increase in cash and cash equivalents ( 6,042 ) 258 Cash and cash equivalents at beginning of period 27,321 28,214 Cash and cash equivalents at end of period $ 21,279 $ 28,472 See accompanying notes to Condensed C onsolidated Fin ancial Statements. Page 5 Table of Contents Mesa Laboratories, Inc. Notes to Condensed Consolidated Financial Statements (unaudited) (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 quarterly report on Form 10 -Q, 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 throughout the world. As of June 30, 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 pharmaceutical, medical device and healthcare industries. The division also provides testing and laboratory services, mainly to the dental and pharmaceutical industries. ● 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 biotherapeutic 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 and torque testing. ● Clinical Genomics - develops, manufactures and sells highly sensitive 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. Basis of Presentation The accompanying unaudited Condensed Consolidated Financial Statements have been 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 (“U.S. GAAP”) for interim financial information. In the opinion of management, such unaudited information includes all adjustments, consisting of normal recurring adjustments, necessary for the fair statement of our financial position and results of operations. The results of operations for interim periods are not necessarily indicative of results that may be achieved for the entire year. The year-end Condensed Consolidated Balance Sheet data was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America. The Condensed Consolidated Financial Statements include the accounts of Mesa and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. We made no material changes to the application of our significant accounting policies disclosed in our annual report on Form 10 -K. This report should be read in conjunction with the consolidated financial statements included in our Annual Report on Form 10 -K for the year ended March 31, 2025 . Our fiscal year ends on March 31. References in this report to a particular “year” or “quarter” refer to our fiscal year or fiscal quarters, respectively. Page 6 Table of Contents 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. The global business environment continues to be impacted by cost pressures, the overall effects of economic uncertainty, regulatory changes, and other factors. Changes in, and the resulting effects of, potential government trade, stimulus or fiscal and monetary policies, interest rates, foreign currency values, supply chains, demand for goods and services, global or regional recession, or other circumstances cannot be reliably predicted. Actual results could differ from our estimates. Recent Accounting Pronouncements We have reviewed all recently issued accounting pronouncements and have concluded that, other than as described below, they are either not applicable to us or are not expected to have a significant impact on our consolidated financial statements. We have not adopted any new accounting standards in fiscal year 2026. 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 fiscal 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 statements and disclosures. In November 2024, the FASB issued 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 statements and disclosures, and we currently expect to increase the level of disclosed detail once adopted. Note 2. Revenue We develop, manufacture, market, sell and maintain life sciences tools and quality control instruments and related consumables. 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 sales 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 and require 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 services. 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 of time, or at a point in time, upon completion of a specific, discrete service. We evaluate our revenues internally based on business division and the nature of goods and services provided. Page 7 Table of Contents The following tables present disaggregated revenues for the three months ended June 30, 2025 and 2024 , respectively: Three Months Ended June 30, 2025 Sterilization and Disinfection Control Biopharmaceutical Development Calibration Solutions Clinical Genomics Total Consumables $ 23,011 $ 3,836 $ 841 $ 8,085 $ 35,773 Hardware and software 89 4,288 6,975 1,217 12,569 Services 2,310 3,362 4,534 995 11,201 Total revenues $ 25,410 $ 11,486 $ 12,350 $ 10,297 $ 59,543 Three Months Ended June 30, 2024 Sterilization and Disinfection Control Biopharmaceutical Development Calibration Solutions Clinical Genomics Total Consumables $ 20,396 $ 3,922 $ 580 $ 8,112 $ 33,010 Hardware and software 169 4,837 6,886 2,183 14,075 Services 2,392 3,249 4,335 1,109 11,085 Total revenues $ 22,957 $ 12,008 $ 11,801 $ 11,404 $ 58,170 Revenues from external customers are attributed to individual countries based on the locations to which the products are shipped or exported, or locations where services are performed, as follows: Three Months Ended June 30, 2025 2024 United States $ 27,646 $ 26,861 China 5,429 6,559 Other 26,468 24,750 Total revenues $ 59,543 $ 58,170 No foreign country exceeded 10% of total revenues for the three months ended June 30, 2025 . Contract Balances Our contracts have varying payment terms and conditions. Some customers prepay for products and services resulting in unearned revenues or customer deposits called contract liabilities, which are included within unearned revenues or other noncurrent liabilities in the accompanying unaudited Condensed Consolidated Balance Sheets. The significant majority of our revenues, related receivables and contract liabilities are generated from contracts with customers with original durations of 12 months or less. Contract liabilities will be recognized as 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, 2025 $ 14,803 Prior year liabilities recognized in revenues during the three months ended June 30, 2025 ( 4,385 ) Contract liabilities added during the three months ended June 30, 2025, net of revenues recognized 4,669 Contract liabilities as of June 30, 2025 $ 15,087 Page 8 Table of Contents Note 3. Fair Value Measurements Our financial instruments consist primarily of cash and cash equivalents, trade accounts receivable, obligations under trade accounts payable, and debt. Due to their short-term nature, the carrying values for 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 June 30, 2025 . On April 5, 2024, we entered into separate, privately negotiated purchase agreements with a limited number of holders of our 1.375 % convertible notes due August 15, 2025 ( the "Notes"), through which we repurchased $ 75,000 in aggregate principal amount of the Notes. See Note 6. "Indebtedness" for further information. As of June 30, 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. The estimated fair value and carrying amount of the Notes were as follows: June 30, 2025 March 31, 2025 Carrying Value Fair Value (Level 2) Carrying Value Fair Value (Level 2) Notes $ 97,432 $ 96,708 $ 97,297 $ 95,063 The carrying amounts of our term loan and revolving line of credit (together, the "Credit Facility") approximate fair value due to the variable interest rate pricing on the debt, with the balance bearing an interest rate approximating current market rates. There were no nonrecurring fair value adjustments or transfers between the levels of the fair value hierarchy during the three months ended June 30, 2025 . Page 9 Table of Contents Note 4. Supplemental Information Inventories consisted of the following: June 30, 2025 March 31, 2025 Raw materials $ 16,089 $ 14,775 Work in process 626 560 Finished goods 11,391 10,030 Total inventories $ 28,106 $ 25,365 Prepaid expenses and other current assets consisted of the following: June 30, 2025 March 31, 2025 Prepaid expenses $ 4,302 $ 2,364 Deposits 1,732 1,752 Prepaid income taxes 465 1,040 Other current assets 3,306 2,873 Total prepaid expenses and other current assets $ 9,805 $ 8,029 Accrued payroll and benefits consisted of the following: June 30, 2025 March 31, 2025 Wages and paid-time-off payable $ 4,013 $ 3,672 Payroll related taxes 3,277 2,475 Bonus payable 2,269 10,891 Other benefits payable 867 820 Total accrued payroll and benefits $ 10,426 $ 17,858 In June 2025 we paid fiscal year 2025 bonuses that were accrued as of March 31, 2025. Other accrued expenses consisted of the following: June 30, 2025 March 31, 2025 Accrued business taxes $ 6,039 $ 5,996 Current operating lease liabilities 3,752 3,523 Income taxes payable 2,419 2,157 GKE acquisition holdback - 9,315 Other 3,860 3,610 Total other accrued expenses $ 16,070 $ 24,601 In April 2025, we remitted payment to the GKE sellers to settle the GKE acquisition holdback liability in full. Depreciation expense was as follows: Three Months Ended June 30, 2025 2024 Depreciation expense in cost of revenues $ 810 $ 862 Depreciation expense in operating expense 594 542 Total depreciation expense $ 1,404 $ 1,404 Page 10 Table of Contents Note 5. Goodwill and Intangible Assets, Net Intangible assets other than goodwill consisted of the following: June 30, 2025 March 31, 2025 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Customer relationships $ 197,565 $ ( 124,041 ) $ 73,524 $ 190,069 $ ( 117,189 ) $ 72,880 Other intangibles 62,849 ( 38,972 ) 23,877 61,192 ( 37,197 ) 23,995 Total intangible assets $ 260,414 $ ( 163,013 ) $ 97,401 $ 251,261 $ ( 154,386 ) $ 96,875 Amortization expense for intangible assets was as follows: Three Months Ended June 30, 2025 2024 Amortization in cost of revenues $ 702 $ 647 Amortization in general and administrative 3,851 3,414 Total $ 4,553 $ 4,061 For the following fiscal years ending March 31, future amortization expense is estimated as follows, based on foreign currency exchange rates as of June 30, 2025: Fiscal Year Amortization Expense Remainder of 2026 $ 13,338 2027 17,261 2028 16,620 2029 16,047 2030 11,360 The change in the carrying amount of goodwill was as follows: Sterilization and Disinfection Control Biopharmaceutical Development Calibration Solutions Clinical Genomics Total March 31, 2025 $ 79,408 $ 48,211 $ 37,213 $ 16,928 $ 181,760 Effect of foreign currency translation 4,450 1,632 73 135 6,290 June 30, 2025 $ 83,858 $ 49,843 $ 37,286 $ 17,063 $ 188,050 Page 11 Table of Contents Note 6 . Indebtedness Credit Facility Our senior secured credit agreement, as previously amended, includes: (i) A revolving credit facility with an aggregate principal amount of up to $ 125,000 (the "Revolver"), (ii) A term loan with a maximum principal amount of $ 75,000 , which is subject to escalating quarterly principal payments (the "Term Loan"), (iii) A swingline loan with an aggregate principal amount not exceeding $ 5,000 , and (iv) Letters of credit with an aggregate stated amount not exceeding $ 2,500 at any time. We refer to the agreement in whole as the “Credit Facility.” The Credit Facility matures in April 2029 and allows us to use proceeds from borrowings to redeem some or all of our Notes. 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 June 30, 2025 was 7.2 %. The financial covenants in the Credit Facility include a maximum leverage ratio of 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 June 30, 2025 , we were in compliance with all covenants under the Credit Facility. Term Loan We borrowed $ 75,000 under the Term Loan on April 5, 2024, to fund the privately negotiated repurchases of a portion of our Notes (see “Convertible Notes” below). During the three months ended June 30, 2025 , we made required quarterly principal payments on the Term Loan of $ 938 . We are required to make quarterly principal payments on the Term Loan. For the following fiscal years ending March 31, future debt payments on the Term Loan are required as follows: Fiscal Year Amount Remainder of 2026 $ 2,813 2027 5,625 2028 5,625 2029 7,500 2030 48,750 Total principal remaining $ 70,313 The net carrying amount of the Term Loan was as follows: June 30, 2025 March 31, 2025 Term Loan $ 70,313 $ 71,250 Less: discount and debt issuance costs ( 561 ) ( 598 ) Less: current portion ( 4,219 ) ( 3,750 ) Noncurrent portion $ 65,533 $ 66,902 We recognized interest expense on the Term Loan as follows: Three Months Ended June 30, 2025 2024 Interest expense (7.2% and 8.4% as of June 30, 2025 and 2024, respectively) $ 1,292 $ 1,439 Amortization of discount and debt issuance costs 37 35 Total interest and amortization of discount and debt issuance costs $ 1,329 $ 1,474 Page 12 Table of Contents Revolver As of June 30, 2025 , the outstanding balance under the Revolver was $ 14,000 , and $ 111,000 was available for borrowing. Subsequent to June 30, 2025 , we repaid an additional $3,000 on the Revolver. 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. In July 2025, we paid $ 77 in unused commitment fees for the three months ended June 30, 2025. The balance of unamortized customary lender fees related to the Revolver was $ 1,128 and $ 1,203 as of June 30, 2025 and March 31, 2025, respectively. Convert ible Notes On August 12, 2019, we issued an aggregate principal amount of $ 172,500 of the 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. The Notes are initially convertible, subject to certain conditions, 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 . 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 unaudited Condensed Consolidated Statements of Income during the three months ended June 30, 2024. As of June 30, 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. Upon conversion, we will pay or deliver, as the case may be, cash, shares of our common stock, or a combination of both. Under the terms of the indenture, the Notes became convertible April 15, 2025, and will remain convertible until the close of business on the second scheduled trading day immediately preceding the maturity date ( August 13, 2025). No Notes have been converted as of the date of this filing. As of June 30, 2025 , the Notes were classified as a current liability on our unaudited Condensed Consolidated Balance Sheets. The if-converted value of the Notes did not exceed the principal balance as of June 30, 2025 . The net carrying amount of the Notes was as follows: June 30, 2025 March 31, 2025 Principal outstanding $ 97,500 $ 97,500 Unamortized debt issuance costs ( 68 ) ( 203 ) Net carrying value $ 97,432 $ 97,297 We recognized interest expense on the Notes as follows: Three Months Ended June 30, 2025 2024 Coupon interest expense at 1.375% $ 335 $ 367 Amortization of debt issuance costs 135 145 Total interest and amortization of debt issuance costs $ 470 $ 512 The effective interest rate on the Notes is approximately 1.9 %. Page 13 Table of Contents Note 7. Stockholders' Equity Stock-Based Compensation During the three months ended June 30, 2025 , we issued time-based restricted stock units ("RSUs") and performance-based restricted stock units ("PSUs") pursuant to the Mesa Laboratories, Inc. Amended and Restated 2021 Equity Incentive Plan, which authorizes the issuance of 660 shares of common stock to eligible participants. Stock-based compensation expense is included in cost of revenues, selling, general and administrative, and research and development expense in the accompanying unaudited Condensed Consolidated Statements of Income. The following is a summary of RSU and PSU award activity for the three months ended June 30, 2025 : Time-Based Restricted Stock Units Performance-Based Restricted Stock Units Number of Shares Weighted- Average Grant Date Fair Value per Share Number of Shares Weighted- Average Grant Date Fair Value per Share Outstanding as of March 31, 2025 145 $ 106.54 85 $ 166.31 Awards granted (1) 90 95.31 44 99.56 Awards forfeited ( 2 ) 104.02 - - Awards distributed ( 53 ) 114.67 ( 4 ) 174.73 Outstanding as of June 30, 2025 180 $ 98.57 125 $ 142.39 ( 1 ) Balances for PSUs granted are reflected at target. Outstanding time-based RSUs vest and settle in shares of our common stock on a one -for- one basis. RSUs granted to employees during the three months ended June 30, 2025 vest in equal installments on June 15, 2026, June 13, 2027 and June 13, 2028. We generally recognize the expense relating to RSUs, net of estimated forfeitures, on a straight-line basis over the vesting period, or for time-based RSUs granted to participants who qualify as retirement-eligible under our plan, over a shortened service period. We grant PSUs to certain key employees. The number of shares earned is determined at the end of each performance period based on our achievement of certain pre-defined targets in accordance with the related award agreement. Outstanding PSUs vest upon completion of service periods described in the award agreements. We recognize expense for PSUs based on the probable outcome of achieving performance targets on a straight-line basis over the service period. During the three months ended June 30, 2025, the Compensation Committee of the Board of Directors approved a grant of 44 PSUs at target (“the FY26 PSUs”) to eligible employees. The FY26 PSUs have a grant date fair value of $ 99.56 per unit and are subject to both service and market-based performance conditions. The service period and market performance measurement period is from June 15, 2025 through June 15, 2028. The number of shares that will be earned based on market performance will range from 0 % to 200 % of the target number of shares. If the defined minimum targets are not met, no shares will vest. As of June 30, 2025, there were 134 shares subject to options outstanding, with a weighted average exercise price per share of $ 190.87 and a remaining contractual life of 2.8 years. Our Compensation Committee has not granted options to any plan participants in the past two fiscal years. Page 14 Table of Contents Note 8 . Earnings Per Share The following table presents a reconciliation of the denominators used in the computation of basic and diluted earnings per share ("EPS"): Three Months Ended June 30, 2025 2024 Net income available for shareholders $ 4,742 $ 3,388 Weighted average outstanding shares of common stock 5,465 5,397 Dilutive effect of stock options - - Dilutive effect of RSUs and PSUs 88 27 Fully diluted shares 5,553 5,424 Basic earnings per share $ 0.87 $ 0.63 Diluted earnings per share $ 0.85 $ 0.62 Potentially dilutive securities include stock options and unvested time and performance based RSUs (collectively "stock awards"), as well as common shares underlying our Notes. Stock awards are excluded from the calculation of diluted EPS if they are subject to performance or market conditions that have not yet been achieved as of our reporting date, or if they are antidilutive. The following potentially dilutive securities were excluded from the calculation of diluted EPS: Three Months Ended June 30, 2025 2024 Assumed conversion of the Notes 344 373 Stock awards that were anti-dilutive 161 209 Total securities excluded from diluted EPS 505 582 Shares underlying the Notes were excluded from the diluted EPS calculation for the three months ended June 30, 2025 and 2024 as the impact of the assumed conversion of the Notes calculated under the if-converted method was antidilutive. Page 15 Table of Contents Note 9 . Income Taxes We reported an income tax provision as follows: Three Months Ended June 30, 2025 2024 Income tax expense $ 2,270 $ 517 Effective tax rate 32.4 % 13.2 % For interim income tax reporting, we estimate our annual effective tax rate and apply this effective tax rate to our year-to-date pre-tax income. Each quarter, our estimate of the annual effective tax rate is updated, and if the estimated effective tax rate changes, a cumulative adjustment is made. Additionally, the tax effects of significant unusual or infrequently occurring items are recognized as discrete items in the interim period in which the events occur. There is a potential for volatility in the effective tax rate due to several factors, including changes in the mix of the pre-tax income and the jurisdictions to which they relate, changes in tax laws and foreign tax holidays, settlement with taxing authorities, and foreign currency fluctuations. The change in the effective tax rate for three months ended June 30, 2025 compared to the prior year period is primarily due to prior year valuation allowance adjustments related to our operations in Germany, as well as an increase in German statutory taxes in the current fiscal year. The effective tax rate for the three months ended June 30, 2025 differed from the statutory federal rate of 21 % primarily due to the valuation allowances previously established on the U.S. deferred taxes and varying applicable tax rates in foreign jurisdictions. In July 2025, certain key elements of the Tax Cuts and Jobs Act that were previously temporary were made permanent, including 100% bonus depreciation, the expensing of domestic research costs, and the limitation on business interest expense deductions. Accounting Standards Codification Topic 740, Income Taxes , requires the effects of enacted changes in tax laws and rates on deferred tax balances to be recognized in the period of enactment. We are currently evaluating the impact updated regulations will have on our Consolidated Financial Statements beginning in the second quarter of fiscal year 2026. Note 10 . Commitments and Contingencies We are party to various legal proceedings arising in the ordinary course of business. As of June 30, 2025 , we are not party to any legal proceeding that management believes could have a material adverse effect on our unaudited consolidated financial position, results of operations, or cash flows. Page 16 Table of Contents Note 11 . S egment Information Segment information is prepared on the same basis that our chief operating decision maker ("CODM"), 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. Our CODM uses segment revenues, organic revenues growth (non-GAAP), and gross profit to allocate resources and to assess segment performance. Monthly, the CODM reviews forecast-to-actual and prior-to-current period variances in segment revenue and in segment gross profit to inform decisions regarding capital and personnel deployment. Our CODM also reviews non-GAAP adjusted operating income, defined as operating income excluding non-cash items such as depreciation, amortization and stock-based compensation, to further manage operations. The following tables set forth our segment information: Three months ended June 30, 2025 Sterilization and Disinfection Control Biopharmaceutical Development Calibration Solutions Clinical Genomics Total Revenues (a): $ 25,410 $ 11,486 $ 12,350 $ 10,297 $ 59,543 Less Depreciation in cost of revenues 450 89 105 166 810 Amortization in cost of revenues 139 372 - 191 702 Other cost of revenues (b) 6,655 4,719 5,203 4,515 21,092 Total segment cost of revenues 7,244 5,180 5,308 4,872 22,604 Gross Profit (c) $ 18,166 $ 6,306 $ 7,042 $ 5,425 $ 36,939 Reconciling items: Operating expense $ 33,875 Operating income 3,064 Nonoperating (income), net ( 3,948 ) Earnings before income taxes $ 7,012 Three months ended June 30, 2024 Sterilization and Disinfection Control Biopharmaceutical Development Calibration Solutions Clinical Genomics Total Revenues (a): $ 22,957 $ 12,008 $ 11,801 $ 11,404 $ 58,170 Less Depreciation in cost of revenues 419 46 185 212 862 Amortization in cost of revenues 111 345 - 191 647 Non-cash GKE inventory step-up amortization 778 - - - 778 Other cost of revenues (b) 6,091 3,658 4,374 4,511 18,634 Total segment cost of revenues 7,399 4,049 4,559 4,914 20,921 Gross Profit (c) $ 15,558 $ 7,959 $ 7,242 $ 6,490 $ 37,249 Reconciling items: Operating expense $ 31,669 Operating income 5,580 Nonoperating expense, net 1,675 Earnings before income taxes $ 3,905 (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 any non-cash inventory step-up amortization expense. (c) Gross profit as presented is consistent with GAAP measurement principles and our CODM's review of segment information. Page 17 Table of Contents The following table sets forth inventories by reportable segment. Our CODM is not provided with and does not regularly review any other segment asset information. June 30, March 31, 2025 2025 Sterilization and Disinfection Control $ 6,269 $ 5,545 Biopharmaceutical Development 5,944 4,934 Calibration Solutions 5,887 5,110 Clinical Genomics 10,006 9,776 Total inventories $ 28,106 $ 25,365 Page 18 Table of Contents