Mesa Labs first-quarter fiscal 2011 GAAP net income increases 29% to $1.32 million

Mesa Laboratories, Inc.Aug 16 2010

Mesa Laboratories, Inc. (Nasdaq: MLAB) today reported a fifty percent increase in revenue for the fiscal first quarter ended June 30, 2010.

Highlights:

• First quarter revenues increased 50% compared to the same quarter last fiscal year
• GAAP net income increased 29% compared to the same quarter last fiscal year
• Quarterly operating income increased to $2,214,000, setting a new record
• Quarterly non-GAAP adjusted earnings per share of $0.44

For the first quarter of fiscal 2011, net sales increased 50 percent to $7,455,000 from $4,977,000 in the same quarter last year.  Of the $2,478,000 sales increase, $2,112,000 was added as a result of strategic acquisitions of product lines and operating units since the same quarter in the prior year.  Organic growth of Mesa's previously existing product lines was $366,000, or seven percent, compared to the same quarter last year.

GAAP net income for the quarter increased 29 percent to $1,320,000 or $.40 per diluted share of common stock compared to $1,026,000 or $.31 per diluted share of common stock last year.  On a non-GAAP basis, adjusted net income for the quarter increased 35 percent to $1,470,000 or $.44 per diluted share of common stock compared to $1,092,000 or $.34 per diluted share of common stock last year.  See the note below for an explanation of the calculation of adjusted net income and adjusted net income per share.

"I am happy to report a significant increase in both sales and profits this quarter," said John J. Sullivan, President and Chief Executive Officer.  "The acquisition of the Torqo product line in December of 2009 and SGM Biotech, Inc. in April of 2010 have combined to increase sales by approximately 42%.  Their contribution, coupled with good organic growth this quarter from Mesa's other product lines, resulted in the large revenue gain.  Both of these new product lines turned in excellent performance this quarter, and I am confident that this will continue for the remainder of this fiscal year.  Looking forward, I am excited about Mesa's prospects for fiscal 2011.  We should see continued improvement in both sales and profits, as the full effect of these two new acquisitions is realized and we start to see the positive impact of our integration efforts on profitability."

"While Mesa posted a significant improvement in net income over last year, it was negatively impacted this quarter by one-time expenses associated with the SGM acquisition of approximately $128,000," continued John Sullivan.  "In addition, new recurring costs associated with a higher tax rate, interest expenses on outstanding debt, and intangibles amortization all negatively impacted our net income this quarter, and these costs will continue going forward.  Regardless, our quarterly net income rose significantly and operating income reached a new record of $2,214,000.  This quarter we are initiating the reporting of two non-GAAP measures, adjusted net income and adjusted earnings per diluted share.  These non-GAAP measures eliminate the non-cash intangibles amortization expenses associated with acquisitions, such as those we have completed in the past few months.  As we continue to acquire companies and product lines, these amortization expenses will grow and temper the growth of our GAAP net income and EPS.  We are reporting these new non-GAAP measures because we believe that it provides additional information for investors that is closely tied to Mesa's operational performance."

During the first quarter of fiscal 2011, sales of the Company's medical products and services decreased five percent compared to the prior year period.  This decrease was due to lower sales of dialysis meters that was partially offset by increased sales of calibration solutions and dialysis meter service.

During the first quarter of fiscal 2011, DataTrace sales increased 22 percent compared to the same period last year.  The increase in DataTrace sales during the quarter was largely the result of improved sales of the Micropack RF products.  

Sales of Mesa's biological indicator products increased 101 percent compared to the first quarter of the prior year.  Of the increase in biological indicator products, 96% was due to the acquisition of SGM Biotech, Inc. part way through the quarter and 5% was organic growth of previously existing products.

Sales of Torqo products reached $459,000 during the first quarter of fiscal 2011, a 53 percent increase over the fourth quarter of last fiscal year, which was the first full quarter of sales for this product line.