Mesa Labs Announces Fourth Quarter and Full Fiscal Year 2024 Results
Mesa Laboratories (NASDAQ: MLAB) reported its fourth quarter and full fiscal year 2024 results. In 4Q24, revenues rose by 6% compared to 4Q23, reaching $58,904, driven by the acquisition of GKE China. However, core organic revenues fell by 3.5%. The company also registered an operating loss of $271,284, due to a significant non-cash impairment charge. Non-GAAP adjusted operating income surged by 26.3%.
For FY24, revenues decreased by 1.3% to $216,187, with core organic revenues dropping 5.4%. The year saw an operating loss of $272,075. Non-GAAP adjusted operating income grew by 0.7%. Mesa Labs' financial performance was impacted by economic slowdowns and headwinds in the biopharmaceutical and clinical genomics sectors, despite gains in other areas and effective cost control measures.
- Revenues in 4Q24 increased by 6% compared to 4Q23.
- Sequential revenue growth of 10.2% from 3Q24.
- Non-GAAP adjusted operating income in 4Q24 increased by 26.3%.
- Adjusted operating income for the full year increased by 0.7%.
- Successful acquisition of GKE China, contributing positively to revenues.
- Extension and expansion of bank credit facility to $200 million.
- Reduction in inventory by 19.4% through improved procurement processes.
- Full FY24 revenues decreased by 1.3%.
- Core organic revenues down by 5.4% for FY24.
- Operating loss of $271,284 in 4Q24 due to a $274,533 non-cash impairment charge.
- Net loss of $254,583 in 4Q24, or $47.20 per diluted share.
- Biopharmaceutical Development division faced a 13.4% decline in core organic revenues for the full year.
- Clinical Genomics division saw a 14.2% decline in core organic revenues for the full year.
- A $236,382 impairment charge recorded in Clinical Genomics due to restructuring and market conditions.
Insights
The latest financial results from Mesa Laboratories, Inc. present a mixed bag for retail investors. First, the 6% revenue increase in 4Q24 compared to 4Q23 is a positive sign, but the decrease of 1.3% in full-year revenues compared to FY23 raises questions about the company's growth trajectory. The significant
However, it's essential to consider the core organic revenues, which decreased
For the retail investor, the critical takeaway here is the company's ability to manage costs effectively amid revenue headwinds, particularly within its Biopharmaceutical Development and Clinical Genomics divisions. The restructuring efforts in Clinical Genomics and reduced inventory levels signal management's proactive approach to address these issues. Still, the full-year revenue decline and notable impairment charges suggest ongoing vulnerabilities.
Short-term, the company might face continued challenges as it adapts to regulatory changes and economic conditions. Long-term, the acquisition of GKE and cost reduction measures could potentially provide a stable growth platform if well-executed.
Mesa Labs operates within diverse segments, important to understanding its current market position and future potential. The Sterilization and Disinfection Control (SDC) segment, accounting for 39% of 4Q24 revenues, showed robust growth driven by the GKE acquisition. However, it's important to note the
In the Calibration Solutions (CS) segment, the 1.4% growth in core organic revenues for 4Q24 and
Conversely, the Biopharmaceutical Development (BPD) and Clinical Genomics (CG) divisions faced significant headwinds. BPD’s
If the company successfully navigates these challenges, the synergies from the GKE acquisition and increased efficiency from restructuring could bolster its market position. However, the ongoing regulatory and economic uncertainties present risks that investors need to consider.
LAKEWOOD, Colo., June 05, 2024 (GLOBE NEWSWIRE) -- Mesa Laboratories, Inc. (NASDAQ:MLAB), a global leader in the design and manufacture of life science tools and critical quality control solutions, today announced results for its fourth fiscal quarter (“4Q24”) and fiscal year (“FY24”) ended March 31, 2024 (amounts in thousands).
Fourth quarter FY24 compared to fourth quarter FY23:
- Revenues increased
6% and increased10.2% vs 3Q24 - Non-GAAP core organic revenues1 decreased
3.5% - Operating (loss) was
$(271,284) which included a$274,533 non-cash impairment charge - Non-GAAP adjusted operating income excluding unusual items2 increased
26.3% and was25.4% as a percentage of revenues
Full FY24 compared to full FY23:
- Revenues decreased
1.3% - Non-GAAP core organic revenues decreased
5.4% - Operating (loss) was
$(272,075) which included a$274,533 non-cash impairment charge - Non-GAAP adjusted operating income excluding unusual items increased
0.7% and was23.4% as a percentage of revenues
We operate our business in four divisions: Sterilization and Disinfection Control (“SDC”), Clinical Genomics (“CG”), Biopharmaceutical Development (“BPD”), and Calibration Solutions (“CS”).
Effective 4Q24 we changed our definition of non-GAAP adjusted operating income3 (“AOI”) and non-GAAP adjusted operating income excluding unusual items to also exclude depreciation expense. Please see the reconciliation of those measures to GAAP operating (loss) income below. All prior periods have been restated to exclude depreciation expense from these non-GAAP measures.
Executive Commentary (amounts in thousands)
“Several significant strategic milestones were attained in 4Q24 including: 1) closing the acquisition of the GKE China entity on December 31, 2023; 2) extending and expanding our bank credit facility to
“Revenues of
“Annual revenues of
“Profitability as measured by our primary metric of AOI excluding unusual items was
“Looking forward, we are driving several key initiatives including deepening our presence in the Asia Pacific region and realizing synergies from our acquisition of GKE. While we are excited by the moderating headwinds in capital expenditures within the biopharmaceutical vertical we saw in 4Q24 and continue to see in 1Q25, it is too early to call a sustained recovery. We will also need to be prepared to refine our business strategy for CG to adapt to changes in FDA regulations of lab developed tests that were announced on April 29th 2024. We are still working to determine if there will be any implications to Mesa or any customers acquired after the effective date of the regulation; however, sales of consumables to our existing customers are not expected to be affected. Given our high gross profit percentages, we remain biased for organic growth and have expanded sales and marketing by 80 bps as a percentage of revenues while simultaneously expanding AOI excluding unusual items percentages as described earlier. Given our expanded options for organic growth while facing ongoing macroeconomic and regulatory uncertainty, we will continue to leverage the Mesa Way, our Lean based operating model, to stay nimble in FY25,” concluded Mr. Owens.
Financial Results (unaudited, amounts in thousands, except per share data)
Fourth Quarter Fiscal Year 2024
Total revenues were
On a non-GAAP basis, core organic revenues decreased
Full Fiscal Year 2024
Total revenues were
On a non-GAAP basis, core organic revenues decreased
| Division Performance | ||||||||||||||
| Revenues | Organic Revenues Growth4 | Core Organic Revenues Growth | ||||||||||||
| (Amounts in thousands) | Three Months Ended March 31, 2024 | Year Ended March 31, 2024 | Three Months Ended March 31, 2024 | Year Ended March 31, 2024 | Three Months Ended March 31, 2024 | Year Ended March 31, 2024 | ||||||||
| SDC | ||||||||||||||
| CG | 11,124 | 52,588 | (19.2)% | (15.6)% | (18.1)% | (14.2)% | ||||||||
| BPD | 12,186 | 40,712 | (3.3)% | (14.3)% | (2.6)% | (13.4)% | ||||||||
| CS | 12,815 | 47,763 | ||||||||||||
| Total reportable segments | | (3.8)% | (5.6)% | (3.5)% | (5.4)% | |||||||||
Sterilization and Disinfection Control (
Calibration Solutions (
Biopharmaceutical Development (
Driven by the market changes noted above and the significantly increased discount rates used in our fair value valuation models, we recorded a
Clinical Genomics (
During 4Q24 we restructured the Clinical Genomics division by installing a new general manager, eliminating 17 positions, and adjusting our businesses strategy to better position the division to drive future growth in an evolving global regulatory climate. These position eliminations are expected to result in ~
Gross profit percentage expanded by 1230 bps in the quarter but contracted by 70bps for the full year. Quarterly and annual gross profit percentage was impacted by a reduction in amortization expense running through cost of revenues resulting from the impairment charge that was recorded at the beginning of 4Q24. Absent all non-cash amortization expenses in both years, gross profit percentage would have increased by 360 bps for the quarter, with improved mix and cost containment actions more than overcoming volume decreases. For the full year, gross profit percentage absent all non-cash amortization expenses would have contracted by 130bps with volume declines offsetting our cost containment actions.
Use of Non-GAAP Financial Measures
Adjusted operating income, adjusted operating income excluding unusual items, organic revenues growth and core organic revenues growth are non-GAAP measures that exclude or adjust for certain items, as detailed within the tables in “Supplemental Information Regarding Non-GAAP Financial Measures.” As noted below, we now include depreciation expense as a non-cash addback in the definition of adjusted operating income as it better aligns with presentations of other companies within our industry. All prior period amounts have been restated to conform with the current presentation.
1 Core organic revenues growth, a non-GAAP measure, is defined as reported revenues growth excluding the impact of acquisitions, currency translation and COVID related revenues.
2 The non-GAAP measures of adjusted operating income excluding unusual items and adjusted operating income excluding unusual items per diluted share are defined to exclude the non-cash impact of amortization of intangible assets acquired in a business combination, stock-based compensation, depreciation, impairment of goodwill and long-lived assets and unusual items. Unusual items are disclosed to highlight costs that are not ongoing and are incurred as a direct result of a specific transaction, such as the consummation of an acquisition, and are identified to allow investors to understand the Company’s expectation on an ongoing basis, following the completion of acquisition and integration activities. A reconciliation of these non-GAAP measures to their GAAP counterparts is set forth below, along with additional information regarding their use.
3 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, depreciation and impairment of goodwill and long-lived assets. A reconciliation of these non-GAAP measures to their GAAP counterparts is set forth below, along with additional information regarding their use.
4 Organic revenues growth, a non-GAAP measure, is defined as reported revenues growth excluding the impact of acquisitions.
About Mesa Laboratories, Inc.
Mesa is a global leader in the design and manufacture of life science tools and critical quality control solutions for regulated applications in the pharmaceutical, healthcare and medical device industries. Mesa offers products and services to help our customers ensure product integrity, increase patient and worker safety, and improve the quality of life throughout the world.
For more information about Mesa, please visit its website at www.mesalabs.com.
Forward Looking Statements
This press release contains forward-looking statements regarding our future business expectations. Any statements contained herein that are not statements of historical fact may be forward-looking statements, including statements relating to future financial results, business conditions and strategic initiatives. Words such as “expect,” “seek,” “plan” “anticipate,” “intend,” “believe,” “could,” “should,” “estimate,” “may,” “target,” “project,” and similar expressions may also identify forward-looking statements. However, the absence of these words or similar expressions does not mean that a statement is not forward-looking. The forward-looking statements are made based on expectations and beliefs concerning future events affecting us and are subject to risks and uncertainties relating to our operations and business environments, all of which are difficult to predict and many of which are beyond our control. Risks and uncertainties that could cause actual results to differ materially from our historical experience and present expectations or projections include those relating to: our ability to successfully grow our business, including as a result of acquisitions; the results on operations of acquisitions; our ability to consummate acquisitions at our historical rate and at appropriate prices; our ability to effectively integrate acquired businesses and achieve desired results; the market acceptance of our products; reduced demand for our products that adversely impacts our future revenues, cash flows, results of operations and financial condition; conditions in the global economy and the particular markets we serve; significant developments or uncertainties stemming from actions of the U.S. government, including changes in U.S. trade policies and medical device regulations; the timely development and commercialization, and customer acceptance, of enhanced and new products and services; the inherent uncertainty of projections of revenues, growth, operating results, profit margins, expenses, earnings, margins, tax rates, tax provisions, cash flows, liquidity, demand, and competition; the effects of additional actions taken to become more efficient or reduce costs; restructuring activities; laws regulating fraud and abuse in the health care industry and the privacy and security of health and personal information; outstanding claims, legal proceedings, tax audits and assessments and other contingent liabilities; foreign currency exchange rates and fluctuations in those rates; and general economic, industry, and capital markets conditions. These risks and uncertainties also include, but are not limited to, those described in our filings with the Securities and Exchange Commission including our Annual Report on Form 10-K for the year ended March 31, 2023 and our subsequent Quarterly Reports on Form 10-Q. We assume no obligation to update the information in this press release.
The numbers presented in this press release as of and for the three months and year ended March 31, 2024 are unaudited and subject to change based upon the completion of the audit.
Mesa Laboratories Contacts:
Gary Owens; President and CEO,
John Sakys; CFO
1-303-987-8000
investors@mesalabs.com
Financial Summary (Unaudited except for the information as of and for the year ended March 31, 2023)
| Condensed Consolidated Statements of Operations | ||||||||||||
| (Amounts in thousands, except per share data) | Three Months Ended March 31, | Year Ended March 31, | ||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||
| Revenues | $ | 58,904 | $ | 55,591 | $ | 216,187 | $ | 219,080 | ||||
| Cost of revenues | 22,348 | 22,390 | 82,937 | 85,387 | ||||||||
| Gross profit | 36,556 | 33,201 | 133,250 | 133,693 | ||||||||
| Operating expenses excluding impairment | 33,307 | 32,684 | 130,792 | 130,373 | ||||||||
| Impairment of goodwill and long-lived assets | 274,533 | -- | 274,533 | -- | ||||||||
| Operating (loss) income | (271,284 | ) | 517 | (272,075 | ) | 3,320 | ||||||
| Nonoperating expense (income) | 4,048 | 794 | 3,573 | 3,709 | ||||||||
| Loss before income taxes | (275,332 | ) | (277 | ) | (275,648 | ) | (389 | ) | ||||
| Income tax (benefit) provision | (20,749 | ) | (888 | ) | (21,402 | ) | (1,319 | ) | ||||
| Net (loss) income | $ | (254,583 | ) | $ | 611 | $ | (254,246 | ) | $ | 930 | ||
| (Loss) earnings per share (basic) | $ | (47.20 | ) | $ | 0.11 | $ | (47.20 | ) | $ | 0.17 | ||
| (Loss) earnings per share (diluted) | (47.20 | ) | 0.11 | (47.20 | ) | 0.17 | ||||||
| Weighted average common shares outstanding: | ||||||||||||
| Basic | 5,394 | 5,349 | 5,386 | 5,321 | ||||||||
| Diluted | 5,394 | 5,381 | 5,386 | 5,361 | ||||||||
| Consolidated Condensed Balance Sheets | ||||
| (Amounts in thousands) | March 31, 2024 | March 31, 2023 | ||
| Cash and cash equivalents | ||||
| Other current assets | 81,138 | 86,065 | ||
| Total current assets | 109,352 | 118,975 | ||
| Property, plant and equipment, net | 31,766 | 28,149 | ||
| Other assets | 303,655 | 514,708 | ||
| Total assets | | |||
| Liabilities | ||||
| Stockholders’ equity | 145,393 | 393,480 | ||
| Total liabilities and stockholders’ equity | ||||
| Reconciliation of Non-GAAP Measures | ||||||||||||||
| (Unaudited) | ||||||||||||||
| GAAP Operating (Loss) Income to Non-GAAP Adjusted Operating Income (“AOI”) | ||||||||||||||
| (Amounts in thousands, except per share data) | Three Months Ended March 31, | Year Ended March 31, | ||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||
| Operating (loss) income (GAAP) | $ | (271,284 | ) | $ | 517 | $ | (272,075 | ) | $ | 3,320 | ||||
| Amortization of intangible assets | 4,961 | 7,248 | 27,341 | 28,821 | ||||||||||
| Stock-based compensation expense | 2,792 | 2,679 | 11,936 | 12,538 | ||||||||||
| Depreciation expense | 1,334 | 1,117 | 4,233 | 4,313 | ||||||||||
| Impairment of goodwill and long-lived assets | 274,533 | -- | 274,533 | -- | ||||||||||
| AOI (non-GAAP) | $ | 12,336 | $ | 11,561 | $ | 45,968 | $ | 48,992 | ||||||
| Unusual items – before tax | ||||||||||||||
| Non-cash GKE inventory step-up1 | $ | 817 | $ | -- | $ | 1,229 | $ | -- | ||||||
| GKE acquisition costs2 | -- | -- | 835 | -- | ||||||||||
| GKE integration costs3 | 960 | -- | 1,400 | |||||||||||
| Restructuring costs | 825 | -- | 1,073 | -- | ||||||||||
| Agena integration costs4 | -- | 268 | -- | 970 | ||||||||||
| Belyntic acquisition costs5 | -- | -- | -- | 172 | ||||||||||
| Total impact of unusual items on AOI – before tax | $ | 2,602 | $ | 268 | $ | 4,537 | $ | 1,142 | ||||||
| AOI excluding unusual items (non-GAAP) | $ | 14,938 | $ | 11,829 | $ | 50,505 | $ | 50,134 | ||||||
| AOI per share - basic (non-GAAP) | $ | 2.29 | $ | 2.16 | $ | 8.53 | $ | 9.21 | ||||||
| AOI per share - diluted (non-GAAP) | 2.29 | 2.15 | 8.53 | 9.14 | ||||||||||
| AOI excluding unusual items per share – basic (non -GAAP) | 2.77 | 2.21 | 9.38 | 9.42 | ||||||||||
| AOI excluding unusual items per share – diluted (non-GAAP) | 2.77 | 2.20 | 9.38 | 9.35 | ||||||||||
| Weighted average common shares outstanding: | ||||||||||||||
| Basic | 5,394 | 5,349 | 5,386 | 5,321 | ||||||||||
| Diluted | 5,394 | 5,381 | 5,386 | 5,361 | ||||||||||
1 Non-cash cost of revenues expense associated with the step up to fair value of GKE inventory due to application of purchase accounting
2 GKE acquisition costs primarily consist of legal services related to the stock purchase agreement, professional services for due diligence procedures and quality of earnings report, and various other consultants.
3 GKE integration costs primarily consist of consulting costs for the integration of the acquiree, including the implementation of the enterprise resource planning tool, professional accounting and valuation services, and legal costs related to employee contracts and managing director appointments.
4 Agena integration costs primarily consist of consulting costs for the integration of the acquiree, including the implementation of the enterprise resource planning tool and professional accounting and valuation services.
5 Belyntic acquisition costs primarily consist of legal services related to the stock purchase agreement.
| Organic and Core Organic Revenues Growth (Unaudited) | ||||
| Three Months Ended March 31, 2024 | Year Ended March 31, 2024 | |||
| Total revenues growth | (1.3)% | |||
| Impact of acquisitions | (9.8)% | (4.3)% | ||
| Organic revenues growth (non-GAAP) | (3.8)% | (5.6)% | ||
| Currency translation | --% | |||
| COVID related revenues | --% | |||
| Core organic revenues growth (non-GAAP) | (3.5)% | (5.4)% | ||
Supplemental Information Regarding Non-GAAP Financial Measures
In addition to the financial measures prepared in accordance with generally accepted accounting principles (GAAP), we provide non-GAAP adjusted operating income, non-GAAP adjusted operating income per share amounts, non-GAAP adjusted operating income excluding unusual items, non-GAAP adjusted operating income excluding unusual items per share amounts, non-GAAP organic revenues growth, and non-GAAP core organic revenues growth in order to provide meaningful supplemental information regarding our operational performance. We believe that the use of these non-GAAP financial measures, in addition to GAAP financial measures, helps investors to gain a better understanding of our operating results, consistent with how management measures and forecasts its operating performance, especially when comparing such results to previous periods and to the performance of our competitors. Such measures are also used by management in their financial and operating decision-making and for compensation purposes. This information facilitates management's internal comparisons to our historical operating results as well as to the operating results of our competitors. Since management finds this measure to be useful, we believe that our investors can benefit by evaluating both GAAP and non-GAAP results.
The non-GAAP measures of adjusted operating income and adjusted operating income per share presented in the reconciliation above are defined to exclude the non-cash impact of amortization of intangible assets acquired in a business combination, stock-based compensation, depreciation and impairment of goodwill and long-lived assets. To calculate adjusted operating income, we exclude, as applicable:
- Impairments of long-lived assets as such charges are outside of our normal operations and in most cases are difficult to accurately forecast.
- Stock-based compensation expense as it is a non-cash charge and costs calculated for this expense vary in accordance with the stock price on the date of grant.
- Depreciation expense as it is a non-cash charge.
- The expense associated with the amortization of acquisition-related intangible assets as a significant portion of the purchase price for acquisitions may be allocated to intangible assets that have lives of up to 20 years. Exclusion of amortization expense allows comparisons of operating results that are consistent over time for both our newly acquired and long-held businesses and with both acquisitive and non-acquisitive peer companies.
The non-GAAP measures of adjusted operating income and adjusted operating income per share presented in the reconciliation above are defined as Adjusted Operating Income less unusual items that are not on-going and are related to a specific transaction. We exclude these unusual items as they are outside of normal operations and are not on-going.
Our management recognizes that items such as amortization of intangible assets, stock-based compensation expense, depreciation expense and impairment losses on goodwill and long-lived assets can have a material impact on our operating and net income. To gain a complete picture of all effects on our profit and loss from any and all events, management does (and investors should) rely on the GAAP consolidated statements of operations. The non-GAAP numbers focus instead on our core operating business.
Readers are reminded that non-GAAP measures are merely a supplement to, and not a replacement for, or superior to, financial measures prepared according to GAAP. They should be evaluated in conjunction with the GAAP financial measures. Our non-GAAP information may be different from the non-GAAP information provided by other companies.
FAQ
What were Mesa Labs' 4Q24 revenue figures?
How did Mesa Labs' FY24 revenues compare to FY23?
What was the impact of the GKE China acquisition on Mesa Labs' revenues?
What was Mesa Labs' operating loss in 4Q24?
How did Mesa Labs' non-GAAP adjusted operating income perform in 4Q24?
What were the core organic revenue trends for Mesa Labs in FY24?
What significant financial initiative did Mesa Labs undertake in 4Q24?
What were the key challenges for Mesa Labs' Clinical Genomics division in FY24?
What restructuring actions did Mesa Labs take in the Clinical Genomics division?
What was Mesa Labs' net loss in 4Q24?
