LAKEWOOD, Colo., July 31, 2017 (GLOBE NEWSWIRE) -- Mesa Laboratories, Inc. (NASDAQ:MLAB) (we, us, our, “Mesa” or the “Company”) today reported record revenues for the first quarter ended June 30, 2017.
Revenues for the first quarter increased seven percent to $22,673,000 as compared to $21,114,000 for the same quarter last year. Operating income for the first quarter decreased 23 percent to $1,982,000 as compared to $2,575,000 for the same quarter last year. Net income for the first quarter decreased 21 percent to $1,517,000 or $0.39 per diluted share of common stock as compared to $1,930,000 or $0.51 per diluted share of common stock for the same quarter last year. Operating and net income for the first quarter ended June 30, 2017 were impacted by unusual items consisting of a $522,000 expense, before tax, related to relocation costs associated with the consolidation of our current Biological Indicator facilities in Omaha, Nebraska, Bozeman, Montana and Traverse City, Michigan into our new building in Bozeman, Montana and a $406,000 expense, before tax, related to a reserve for slow moving inventory associated with the discontinuance for sale of certain products due to the recent introduction of new or modified products and the consolidation of other product sets. Net income for the first quarter ended June 30, 2017 was also impacted by an unusual item consisting of a $300,000 expense (included in other expense, net), before tax, related to an increase in the PCD earn-out liability which resulted from higher revenues in the product line than were forecasted.
On a non-GAAP basis, adjusted operating income1 (which excludes the non-cash impact of amortization of intangible assets and stock compensation expense) for the first quarter decreased 11 percent to $4,126,000 or $1.05 per diluted share of common stock as compared to $4,625,000 or $1.22 per diluted share of common stock for the same quarter last year. Adjusted operating income for the first quarter ended June 30, 2017 was impacted by the first two items noted above.
“Mesa started out fiscal 2018 with a solid first quarter from a revenues perspective,” said John J. Sullivan, President and Chief Executive Officer. “Overall revenues were up seven percent compared to the first quarter of last year, with three of our four Divisions posting increases. Organic growth this quarter was six percent, with the Cold Chain Monitoring Division leading the way at 13 percent, along with contributions from the Instruments and Biological Indicators Divisions at five percent and eight percent, respectively. Our Cold Chain Packaging (“CCP”) Division had a difficult quarter, and revenues were 12 percent below this quarter last year. The CCP business is seasonal, with higher revenues in the summer and fall associated with flu vaccines shipments. Additionally, our revenues can vary quarter-to-quarter depending on orders from our largest CCP customer, as they adjust their packaging inventory based on anticipated demand.”
“As mentioned above, profitability for the first quarter was negatively impacted by several expenses that were one-time in nature,” Mr. Sullivan continued. “These included inventory reserves associated with product end-of-life actions across three of our Divisions and facility relocation expenses within our Biological Indicators Division. Absent these additional expenses, gross margin percentage would have increased by two percentage points, operating income would have increased 13 percent and adjusted operating income (see definition below) would have increased nine percent, all compared to this quarter last year. While we will continue to experience Biological Indicator facility relocation expenses for the remainder of the fiscal year, these should be at a lower level than the first quarter, as we have now closed the facility in Omaha, Nebraska. We will closely monitor profitability for the remainder of the fiscal year and take appropriate actions, if required. Net income was also impacted by the same expenses discussed above, partially offset by a significant decrease in our effective tax rate due to substantial tax benefits associated with stock option exercises by our employees.”
“Starting this quarter, we are changing our non-GAAP profitability metric. For many years we have been using Adjusted Net Income (“ANI”), which is GAAP net income with the addition of tax-effected intangible asset amortization. We have been using ANI and ANI per share as our primary profitability metrics, by which we measure our success, and as a component in all of Mesa’s incentive compensation plans. Upon our adoption of ASU 2016-09 at the beginning of fiscal 2016, the cumulative gains from stock option exercises by our employees and directors have resulted in a highly variable corporate tax rate. Since ANI is an after-tax metric, it has been subject to wide fluctuations based on our effective tax rate, making meaningful quarterly and annual profit comparisons difficult. We are replacing ANI with Adjusted Operating Income (“AOI”), which is calculated by adding back two of our larger non-cash expenses, intangible asset amortization and stock based compensation expense, to GAAP operating income. We believe AOI is a better reflection of the underlying strength of the core business. As this is a pre-tax calculation, it will not be subject to the same fluctuations as ANI. As has been our practice, we will not be adjusting AOI for any one-time or unusual expenses. For the current fiscal year, we have also adopted AOI as our profitability metric for our incentive compensation plans for everyone in the company.”
1 The non-GAAP measures of adjusted operating income and adjusted operating income per diluted share are defined to exclude the non-cash impact of amortization of intangible assets and stock-based compensation expense.
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