MLAB · Mesa Laboratories, Inc.

Mesa Laboratories reported Q4 FY2026 results that showed a 2.6% revenue increase to $63.7 million, but core organic revenue declined 0.6% after adjusting for currency translation, indicating underlying operational headwinds. The headline strength came from the Sterilization and Disinfection Control (SDC) division, which grew organic revenues 17.7% to $29.1 million, benefiting from $2.0 million in backlog clearance, modest price increases, and favorable FX. Without the backlog reduction, SDC growth would have been approximately 9.3%. This was largely offset by a 29.9% organic decline in Biopharmaceutical Development (BPD) to $8.8 million, attributed to commercial execution issues and export controls that delayed several Peptide system shipments. The Calibration Solutions division grew modestly (2.3% organic), while Clinical Genomics managed 5.8% organic growth driven by 11.4% sales growth outside China, despite a 34% contraction in China revenue.GAAP operating income surged 87% to $2.7 million, though this included $6.7 million of CEO transition costs. On a non-GAAP basis adjusted for unusual items, adjusted operating income rose 49.2% to $18.3 million, and adjusted operating margin reached 28.7% of revenues, up from 19.7% a year ago, driven by SDC backlog clearance, improving volumes, and cost realignment actions. Management cautioned that margins are expected to moderate toward the mid-20s as product mix normalizes and SDC investment increases. Cash flow generation was solid with $42.8 million in operating cash flow and $39.6 million in free cash flow for the full year, supporting $14.7 million of debt repayment and a total net leverage ratio of 2.11. Management did not provide formal quantitative forward guidance but expects to do so with H1 FY2027 results. CFO Sakys expressed confidence that overall revenues will return to positive core organic growth in Q1 FY2027, while noting BPD remains a work in progress. Overall, the quarter reflects a mixed performance where strong SDC execution and margin expansion were partially overshadowed by BPD's challenges and the lack of near-term visibility on a turnaround.