LAKEWOOD, Colo., June 01, 2020 (GLOBE NEWSWIRE) — Mesa Laboratories, Inc. (NASDAQ:MLAB) today announced results for the fourth quarter (“4Q20”) and full year ended March 31, 2020 (“FY20”).
Financial highlights for the quarter and year ended March 31, 2020 as compared to last year:Revenues increased 29% and 14%, respectivelyOperating income decreased 65% and 23%, respectivelyNon-GAAP adjusted operating income¹excluding unusual items increased 32% and 16%, respectivelyFinancial Results (amounts in thousands, except per share data)In comparison to the same quarter in the prior year, 4Q20 revenues increased 29% to $34,208, operating income decreased 65% to $899 and net (loss) was ($1,680), a decrease of 220% or $(0.37) per diluted share of common stock. As detailed in the Unusual Items table below, operating income for 4Q20 and 4Q19 was impacted by unusual items totaling $1,973 and $2,050, respectively. For FY20, in comparison to the prior year, revenues increased 14% to $117,687, operating income decreased 23% to $7,494, and net income decreased 82% to $1,349 or $0.31 per diluted share of common stock. As detailed in the Unusual Items table below, operating income for FY20 and FY19 were impacted by unusual items totaling $10,649 and $9,019, respectively. Total revenues, excluding the Cold Chain Packaging division (which we exited during 3Q20) increased 36% and 20% for 4Q20 and FY20, respectively. Organic revenues growth excluding the Cold Chain Packaging division was 1% and 2% while organic revenues growth (decrease) was 1% and (1)%, when including the Cold Chain Packaging division, respectively for the 4Q20 and FY20. On a non-GAAP basis, in comparison to the same quarter in the prior year, 4Q20 adjusted operating income (“AOI”) decreased 18% to $5,856 or $1.29 per diluted share of common stock. In comparison to the same period in the prior year, AOI for FY20 decreased 7% to $23,932 or $5.48 per diluted share of common stock. As detailed in the Unusual Items table below, AOI for both 4Q20 and FY20 was impacted by unusual items totaling $3,567 and $9,901, respectively, while AOI for FY19 was impacted by unusual items totaling $3,300. Excluding the unusual items for all periods in both years, AOI would have increased 32% to $9,423 and 16% to $33,833 for 4Q20 and FY20, respectively.Division PerformanceSterilization and Disinfection Control (40% of revenues in 4Q20) delivered strong results in the quarter with total and organic revenues growth of 17%. Several positive factors impacted the results for the quarter including softer performance in 4Q19 and backlog reduction from 3Q20 delivery issues, both of which we do not expect to reoccur. We also saw strength in new customer acquisitions and strong volume growth from existing customers in part due to the building of safety stock inventory related to the COVID-19 pandemic. Driven primarily by the increase in volumes, gross profit percentage increased 600 bps in the quarter to 75%. For the full year, organic revenues growth was strong at 7% and gross profit percentage improved 320 bps driven by volume growth as well as operational efficiencies.
 Instruments (28% of revenues in 4Q20) disappointed in the quarter with an organic revenues decrease of 6% and total growth of 1%. This organic reduction was driven primarily by poor March bookings in part related to the COVID-19 pandemic. Despite lower than desired volumes, we were able to expand gross profit percentage by 70 bps in the quarter due to operational efficiencies. The 4Q20 performance brought full year organic revenues contraction of 1% and total growth to 5% with the difference driven by the acquisition of IBP. Full year gross profit percentage expanded by 50 bps primarily from cost controls. 
 Biopharmaceutical Development (24% of revenues in 4Q20) revenues and gross profit percentage performed in line with previous communications for 4Q20 totaling $8,214 of revenues at an adjusted gross profit percentage of 61%, when excluding the impact of purchase accounting. The division faced headwinds in 4Q20 from COVID-19 related business closures and slowdowns, which impacted our ability to make in person sales visits as well as ship and install instruments. Despite the impact of COVID-19, full year revenues totaled $13,851 at an adjusted gross profit percentage excluding the impact of purchase accounting of 64%, which was also in line with our previous communications at the time of acquisition.Continuous Monitoring (8% of revenues in 4Q20) had a very poor 4Q20 with an organic and total revenues decrease of 31%. Declining volume strongly impacted gross profit percentage which contracted by 2000 basis points year over year. Quarterly revenues were severely impacted by COVID-19 in the month of March as healthcare service providers focused on preparing for and operating through the pandemic, and postponed other non-discretionary spending. For the full year, total revenues contracted 1% and organic revenues decreased 7%. 4Q20 performance was a significant drag on annual organic revenues growth as the year through 3Q20 had delivered organic growth of 3% and total growth of 12%. Gross profit percentages were challenging all year and subsequent to the end of the fiscal year we reorganized the business unit to enable more efficient operations as the first step in our roadmap to raise profitability to acceptable levels, which we believe encompasses gross profit percentages of at least 40%.Executive Commentary“As the COVID-19 pandemic rolled across the world in our fiscal fourth quarter, we kept our commitment to The Mesa Way by protecting our employees and continuing to fully serve our customers in the essential industries protecting society and working on a long term cure. Through them, we hope to make a small contribution that lessens the pandemic’s impact,” said Gary Owens, Chief Executive Officer of Mesa Labs.“Financially, revenues performance was mixed in the fourth quarter with strong results in SDC being partially offset by poor performance in Instruments and Continuous Monitoring, yielding a 1% total company organic revenues growth, excluding the exited business in Packaging. The Gyros Protein Technologies acquisition was in line for both revenues and gross profit percentage with previous communications at the time of acquisitions for both the quarter and fiscal year. For the year, organic revenues growth of 2%, excluding the exited business in Packaging was less than desired with total company growth of 14% driven by the acquisition of GPT and IBP. We had more success in profitability. When excluding the impact of GPT purchase accounting and Packaging, gross profit percentages expanded by 230 bps for the quarter. Additionally, AOI would have increased 32% when excluding unusual items,” added Mr. Owens.“COVID-19 negatively impacted sales in the fourth quarter due to restricted access to healthcare services customers and numerous site shutdowns across our remaining served verticals. We believe that these restrictions will continue to have a negative impact during the remainder of this fiscal year that we are unable to quantify at this time. We anticipate that our divisions that contain a higher mix of non-discretionary consumables, in particular Sterilization and Disinfection Control will perform best. Those that primarily serve biopharmaceutical and healthcare customers like Continuous Monitoring and Biopharmaceutical Development may see sales activity resume more quickly but there may be an additional lag for hardware revenues which have longer sales and revenue recognition cycles. Lastly, Instruments, with a higher mix of industrial end markets and hardware may rebound more slowly. We have successfully transitioned to working from home or proper social distancing with adequate PPE in our facilities. We have not yet had any major supply disruptions and as such, we are fully serving our customer base. Finally, travel restrictions are not impacting our ability to complete the integration of Gyros Protein Technologies in a timely manner,” Mr. Owens continued. “As we start the new fiscal year, a solid cash position combined with a strong financial and operational foundation will allow us to be flexible in responding to the challenges of managing through the pandemic and to be ready for the anticipated recovery. Longer term, we believe that our broad exposure to biopharmaceuticals, medical devices, and healthcare services provides a solid long-term organic growth trajectory and attractive acquisition opportunities,” concluded Mr. Owens. ¹ The non-GAAP measures of adjusted operating income and adjusted operating income per diluted share are defined to exclude the non-cash impact of amortization of intangible assets acquired in a business combination, stock-based compensation and impairment of goodwill and long-lived assets. A reconciliation between these non-GAAP measures and their GAAP counterparts is set forth in the table below, along with additional information regarding their use.Financial Summary (Unaudited except for the information as of and for the years ended March 31, 2020 and 2019)

Consolidated Condensed Statements of Operations



Detail of Unusual Items (Unaudited)
As discussed above, operating income and adjusted operating income have been impacted by various unusual items during the three months and years ended March 31, 2020 and 2019. The following table provides detail of such items and reconciles the impact on operating income as reported under GAAP and non-GAAP adjusted operating income. (Amounts in thousands.)
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