 LAKEWOOD, Colo., Aug. 06, 2020 GLOBE NEWSWIRE -- Mesa Laboratories, Inc. NASDAQ:MLAB today announced results for the first quarter 1Q21. Financial highlights for the quarter ended June 30, 2020 as compared to last year: Revenues increased 14 Operating income decreased 41 Non-GAAP adjusted operating income1 excluding unusual items decreased 2 Financial Results amounts in thousands, except per share dataIn comparison to the same quarter in the prior year, 1Q21 revenues increased 14 to 29,941, operating income decreased 41 to 3,198, and net income was 1,025, a decrease of 78 or 0.22 per diluted share of common stock. As detailed in the Unusual Items table below, operating income for 1Q21 was impacted by unusual items totaling 364.Total revenues, excluding the Cold Chain Packaging division which we exited during 3Q20 increased 20 for 1Q21, while organic revenues declined 4 quarter over quarter. On a non-GAAP basis, in comparison to the same quarter in the prior year, 1Q21 adjusted operating income AOI decreased 1 to 7,820 or 1.67 per diluted share of common stock. As detailed in the Unusual Items table below, AOI for 1Q21 was impacted by unusual items totaling 20. Excluding the unusual items, AOI would have decreased 2 to 7,800 for 1Q21. A reconciliation of non-GAAP measures is provided in the tables below.Division Performance Sterilization and Disinfection Control 44 of revenues in 1Q21 delivered strong results in the quarter with total and organic revenues growth of 8. The primary performance driver was accelerated ordering in 4Q20 which was fulfilled in this quarter. Without the associated backlog draw down, revenues would have been roughly flat year over year. Increased volumes again delivered strong margin performance with gross profit percentage expanding 610 bps year over year. We expect revenues growth to slow, perhaps in a significant fashion in 2Q21 as customer level inventories correct after the run up in 4Q20 and 1Q21. Instruments 25 of revenues in 1Q21 organic revenues contracted 20 in the quarter. With greater exposure to industrial capital equipment and governmental spending, we expect continued weakness in Instruments orders and revenues to persist throughout the COVID-19 pandemic. Division gross profit percentage contracted 270 bps quarter over quarter primarily due to lower sales volumes. Biopharmaceutical Development 20 of revenues in 1Q21 experienced disappointing softness, as the slow-down in biopharmaceutical lab activity impacted both hardware and consumable sales. Returning to pre-COVID-19 performance will depend on the pace of lab reopenings and implementation of procedures to allow our teams to travel to and safely work at customer sites. While gross profit percentage performance was very positive at 71 when excluding purchase accounting true up adjustments, revenues were not high enough for the division to contribute meaningfully to the bottom line. Continuous Monitoring 11 of revenues in 4Q20 organic revenues contracted 2 in the quarter while also benefiting from a strong backlog position entering the quarter. Our ability to sell, install, and service our systems has been hampered by our limited ability to travel to and enter customer sites in the healthcare industry. The healthcare segment did begin to open meaningfully towards the end of the quarter and if this trend continues, we expect to see service and installation activity normalize in our second and third fiscal quarters. Greater new system sales should follow but the weakened economic position of hospital and decreased capital budgets may delay this division returning to growth. Division gross profit percentage decreased 1060 bps quarter over quarter primarily due to low service revenues volumes. We also reorganized the business unit during the quarter, which we believe will allow it to operate more efficiently moving forward. This reorganization was one step in our road map to improve the divisions operations and resulting gross profit percentage.Executive Commentary The first quarter showed the resilience of our business, The Mesa Way operating model, and our team. We navigated dramatic changes in both customer demand and internal operations to deliver for our customers, a large number of which are actively fighting for patients of COVID-19 or working on a long-term cure. The Mesa Way was central to this endeavor, enabling us to quickly align priorities, empower teams closest to the customer to make critical decisions, and drive experiments that rapidly opened new ways to service our customers, said Gary Owens, Chief Executive Officer of Mesa Labs.Financially, organic revenues, which contracted 4 Biopharmaceutical Development is excluded as it was acquired effective 3Q20 were buoyed by backlog burn in our Sterilization and Disinfection Control division. Solid overall revenue performance versus expectations and cost reduction measures enabled overall gross profit as a percentage of revenues to expand by 340 basis points when excluding Packaging from the prior year, and 260 basis points when also excluding the impact of true-up adjustments related to purchase accounting in the current quarter. Adjusted operating income excluding unusual items decreased 2 from the prior year as our strong performance in the Sterilization and Disinfection Control division was offset by lower volumes and profits in our other divisions. We continue to be forward invested in sales and other operating costs in our Biopharmaceutical Development division as we believe the downturn in revenues is COVID-19 related and thus temporary.Order performance when excluding Packaging prior year and Biopharmaceutical Development current year was roughly in line with our expectations and contracted in the low-teens due to COVID-19 related headwinds in demand. While we see some green shoots of activity in the biopharmaceutical vertical, medical device and industrial verticals remain weak. Healthcare is a mixed bag as we are dependent on surgical volumes for Sterilization and Disinfection Control and capital budgets for Continuous Monitoring. Regardless of the pace and shape of recovery, we remain in a strong financial position with high operating cash flow and a cash position reinforced by 146M of net proceeds related to an equity raise completed in June, 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 March 31, 2020 Consolidated Condensed Statements of Income Amounts in thousands, except per share dataThree Months Ended June 30, 20202019 Revenues29,941 26,288 Cost of revenues 9,973 10,149 Gross profit 19,968 16,139 Operating expenses 16,770 10,747 Operating income 3,198 5,392 Nonoperating expense 2,816 32 Earnings before income taxes 382 5,360 Income tax benefit expense 643 763 Net income1,025 4,597 Earnings per share basic0.23 1.18 Earnings per share diluted 0.22 1.13 Weighted average common shares outstanding: Basic 4,528 3,901 Diluted 4,669 4,086 Consolidated Condensed Balance Sheets Amounts in thousandsJune 30, 2020March 31, 2020 Cash and cash equivalents230,951 81,380 Other current assets 38,805 41,412 Total current assets 269,756 122,792 Property, plant and equipment, net 21,796 22,066 Other assets 285,181 275,348 Total assets576,733 420,206 Liabilities194,499 200,193 Stockholders equity 382,234 220,013 Total liabilities and stockholders equity576,733 420,206 Amounts in thousands, except per share dataThree Months Ended June 30, 20202019 Operating income GAAP3,198 5,392 Amortization of intangible assets 3,354 1,672 Stock-based compensation expense 1,268 868 Adjusted operating income non-GAAP7,820 7,932 Adjusted operating income per share basic1.73 2.03 Adjusted operating income per share diluted1.67 1.94 Weighted average common shares outstanding: Basic 4,528 3,901 Diluted 4,669 4,086 Biopharmaceutical Development Segment Revenues GAAP5,949 -- Gross profit GAAP4,466 -- Impact of non-cash true-up adjustments related to GPT purchase accounting on gross profit GAAP 258 -- Adjusted gross profit non-GAAP4,208 -- Gross profit percentage GAAP 75 -- Adjusted gross profit percentage non-GAAP 71 -- Detail of Unusual Items UnauditedAs discussed above, operating income and adjusted operating income have been impacted by various unusual items during the three months ended June 30, 2020. 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. 