MESA LABORATORIES INC /CO/

Mesa**** Laboratories, Inc.**

Notes to Condensed Consolidated Financial Statements

(unaudited)

(dollar and share amounts in thousands, unless otherwise specified)

Note*1***.Description of Business andSummary ofSignificantAccounting Policies**

Description of Business

In this quarterly report on Form10-Q, Mesa Laboratories, Inc., a Colorado corporation, together with its subsidiaries, is collectively referred to as “we,” “us,” “our,” the “Company,” or “Mesa.”

We are a global leader in the design and manufacture of life sciences tools and critical quality control solutions for regulated applications in the pharmaceutical, healthcare and medical device industries. We offer products and services to help our customers ensure product integrity, increase patient and worker safety, and improve the quality of life throughout the world. We have manufacturing operations in the United States and Europe, and our products are marketed by our sales personnel in North America, Europe and the Asia Pacific region ("APAC"), and by independent distributors throughout the world.

As of* September 30, 2025*, we managed our operations infour reportable segments, or divisions:

Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission and in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information. In the opinion of management, such unaudited information includes all adjustments, consisting of normal recurring adjustments, necessary for the fair statement of our financial position and results of operations. The results of operations for interim periods arenot necessarily indicative of results that* maybe achieved for the entire year. The year-end Condensed Consolidated Balance Sheet data was derived from audited financial statements but doesnot* include all disclosures required by accounting principles generally accepted in the United States of America. The Condensed Consolidated Financial Statements include the accounts of Mesa and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. We have madeno material changes to the application of significant accounting policies disclosed in our Annual Report on Form10-K for the fiscal year ended* March 31, 2025*. This report should be read in conjunction with the consolidated financial statements included in that report.

Our fiscal year ends on* March**31.* References in this report to a particular “year” or “quarter” refer to our fiscal year or fiscal quarters, respectively. Unless otherwise indicated, amounts shown in this report are in thousands.

Risks and Uncertainties

The preparation of financial statements requires the use of estimates and assumptions that affect reported amounts of assets and liabilities at the reporting date and revenues and expenses during the reporting periods. These estimates represent management's judgment about the outcome of future events. The global business environment continues to be impacted by cost pressures, the overall effects of economic uncertainty, regulatory changes, and other factors. Changes in, and the resulting effects of, potential government trade, stimulus or fiscal and monetary policies, interest rates, foreign currency values, supply chains, demand for goods and services, global or regional recession, or other circumstances cannot be reliably predicted. Actual results could differ from our estimates. Refer to Item1A. Risk Factorsin our Annual Report on Form10-K for the fiscal year ended* March 31, 2025*.

Recent Accounting Pronouncements

We have reviewed all recently issued accounting pronouncements and have concluded that, other than as described below, they arenot applicable to us and arenot expected to have an impact on our consolidated financial statements. We havenot adopted any new accounting standards in fiscal year2026.

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Recently Issued Accounting Pronouncements

In* December 2023,the Financial Accounting Standards Board (FASB) issued Accounting Standards Update ("ASU")2023-09, Income Taxes (Topic740): Improvements to Income Tax Disclosures*, which enhances the transparency, effectiveness and comparability of annual income tax disclosures by requiring consistent categories and greater disaggregation of information related to income tax rate reconciliations and the jurisdictions in which income taxes are paid. The guidance is effective for public business entities for fiscal years beginning after* December 15, 2024 (our fiscal year2026*), with early adoption and prospective or retrospective application permitted. Other than presentation of additional disaggregated data in our income tax footnote disclosures for annual periods, we donot expect the adoption of ASUNo. 2023-09 to have a material impact on our consolidated financial statements and disclosures.

In* November 2024,the FASB issued ASU2024*-03, Expense Disaggregation Disclosures (Subtopic220*-40): Disaggregation of Income Statement Expenses.ASU2024*-03 requires that public business entities disclose additional information about specific expense categories in the notes to financial statements at interim and annual reporting periods. The ASU is effective for fiscal years beginning after* December 15, 2026 (our fiscal year2028* for annual periods) and interim periods within fiscal years beginning after* December 15, 2027 (our fiscal year2029* for interim periods), with early adoption and prospective or retrospective application permitted. We are currently assessing the effect the adoption of this standard will have on our consolidated financial statements and disclosures, and we currently expect to disclose additional detail regarding the nature and classification of certain categories of expense once adopted.

In* July 2025,the FASB issued ASU2025*-09, Financial Instruments—Credit Losses (Topic326*): Improvements to the Measurement of Credit Losses for Receivables and Contract Assets*. ASU2025-09 introduces a practical expedient that removes the requirement to incorporate macroeconomic forecasts into the estimation of expected credit losses. The guidance is effective for fiscal years beginning after* December 15, 2025,including interim periods within those fiscal years. Prospective adoption is required, and early adoption is permitted. We intend to early adopt ASU2025*-09 for our fiscal year beginning* April 1, 2026,including interim periods. Upon adoption, we plan to elect the practical expedient allowing us to assume conditions at the balance sheet date will remain unchanged for the remaining life of the asset. We donot* expect adoption to have a material impact on our consolidated financial statements or related disclosures.

In* September 2025,the FASB issued ASU2025*-06, Intangibles—Goodwill and Other (Topic350*): Internal-Use Software*. ASU2025-06 modernizes accounting for costs incurred in the development of internal-use software by eliminating the requirement to evaluate distinct development stages. The guidance is effective for fiscal years beginning after* December 15, 2027,including interim periods within those fiscal years. ASU2025*-06 permits prospective, retrospective or modified retrospective adoption. Early adoption is permitted as of the beginning of an entity's annual reporting period. We intend to early adopt ASU2025-06 prospectively for our fiscal year beginning* April 1, 2026,including interim periods. We donot* expect the guidance to have a material impact on our consolidated financial statements or related disclosures.

Note2. Revenue

We develop, manufacture, market, sell and maintain life sciences tools and quality control instruments and related consumables.

Hardware sales include physical products such as instruments used for molecular and genetic analysis, protein synthesizers, medical meters, wireless sensor systems, data loggers, and process challenge devices. Hardware sales* may*be offered with accompanying perpetual or annual software licenses, which in some cases are required for the hardware to function.

Consumables sold by our Clinical Genomics and Biopharmaceutical Development divisions, such as reagents used for molecular and genetic analysis or solutions used for protein synthesis, are critical to the ongoing use of our instruments. Consumables such as biological and chemical indicator test strips sold by our Sterilization and Disinfection Control division are used on a standalone basis.

Revenues from hardware and consumables are recognized upon transfer to the customer, typically at the point of shipment.

We also offer maintenance, calibration and testing services. Services result in revenues recognized either over time, for example, when we are contractually obligated to perform labor and replace parts on an as-needed basis throughout a specified service period, or at a point in time, upon completion of a specific, discrete service.

We evaluate our revenues internally based on business division and the nature of goods and services provided.

The following tables present disaggregated revenues for thethree andsix months ended* September 30, 2025* and2024, respectively:

Revenues from external customers are attributed to individual countries based on the locations to which the products are shipped or exported, or locations where services are performed, as follows:

No foreign country exceeded10% of total revenues for thethree andsix months ended* September 30, 2025*.

Contract Liabilities

Our contracts have varying payment terms and conditions. Some customers prepay for products and services, resulting in contract liabilities recorded as unearned revenues or within other noncurrent liabilities in our unaudited Condensed Consolidated Balance Sheets. The significant majority of our revenues, related receivables and contract liabilities arise from contracts with original durations oftwelve months or less. Contract liabilities are recognized as revenue as we satisfy our obligations under the terms of the contracts.

A summary of contract liabilities is as follows:

Note3. Fair Value Measurements and Concentrations of Credit Risk

Our financial instruments consist primarily of cash and cash equivalents, trade accounts receivable, obligations under trade accounts payable, and debt. Due to their short-term nature, the carrying values for cash and cash equivalents, trade accounts receivable, and trade accounts payable approximate fair value and are classified within Level1 of the fair value hierarchy.

The carrying amounts of our term loan and revolving line of credit (together, the "Credit Facility") approximate fair value due to variable interest rate pricing, with the balances bearing interest rates approximating current market rates.

There wereno nonrecurring fair value adjustments or transfers between the levels of the fair value hierarchy during thethree andsix months ended* September 30, 2025*.

The financial instruments that subject us to the highest concentrations of credit risk are cash and accounts receivable. We maintain relationships and cash deposits at multiple banking institutions across the world in an effort to diversify and reduce risk of loss. Concentration of credit risk with respect to accounts receivable is limited to customers to whom we make significant sales. No customers accounted for more than10% of total trade receivables as of* September 30, 2025*.

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Note4. Supplemental Information

Inventories consisted of the following:

Prepaid expenses and other current assets consisted of the following:

Accrued payroll and benefits consisted of the following:

Other accrued expenses consisted of the following:

Depreciation expense was as follows:

Note5. Goodwill and Intangible Assets

Intangible assets other than goodwill consisted of the following:

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Amortization expense for intangible assets was as follows:

Estimated future amortization expense for the fiscal years ending* March 31is presented below, based on foreign currency exchange rates in effect as of September 30, 2025:*

The change in the carrying amount of goodwill was as follows:

Note*6***.**** Indebtedness**

Credit Facility

Our senior secured credit agreement includes:

We refer to the agreement in whole as the “Credit Facility.” The Credit Facility matures in* April 2029.*

On* April 5, 2024,we borrowed $75,000 under the Term Loan to fund privately negotiated repurchases of a portion of our convertible notes ("the Notes"). On August 12, 2025,we borrowed $97,000 under the Revolver to fund the cash settlement of the remaining Notes, which matured on August 15, 2025 (*see "Convertible Notes" below).

Amounts borrowed under the Credit Facility as of* September 30, 2025bore interest at a base rate or SOFR rate, plus an applicable spread ranging from 1.5% to 3.5%, depending on our total net leverage ratio. On October 10, 2025*we amended the Credit Facility to reduce the applicable spread to 1.25% to 2.5%.

The weighted average interest rate on borrowings under the Credit Facility as of* September 30, 2025* was 7.1%. The interest rate on outstanding borrowings decreased to 6.7% following the amendment to our Credit Facility in* October 2025.*

The financial covenants in the Credit Facility include a maximum total net leverage ratio of 4.0 to1.0 on each of the testing dates between* March 31, 2025and March 31, 2026and 3.5 to1.0* on each testing date thereafter. The Credit Facility also stipulates a minimum fixed charge coverage ratio of 1.25 to1.0. Other covenants include restrictions on our ability to incur debt, grant liens, make fundamental changes to our business as defined in the contract, engage in certain transactions with affiliates, or conduct asset sales. As of* September 30, 2025*, we were in compliance with all covenants under the Credit Facility.

Term Loan

During thethree andsix months ended* September 30, 2025*, we made required quarterly principal payments on the Term Loan of $938 and $1,875, respectively.

We are required to make quarterly principal payments on the Term Loan. For the fiscal years ending* March 31,*future debt payments on the Term Loan are required as follows:

A reconciliation of the carrying amount of the Term Loan to principal outstanding was as follows:

We recognized interest expense on the Term Loan as follows:

Revolver

As of* September 30, 2025*, the outstanding balance under the Revolver was $106,000, and $19,000 remained available to be borrowed. Subsequent to* September 30, 2025*, we repaid an additional $2,000 on the Revolver.

We are obligated to pay quarterly unused commitment fees of between 0.20% and 0.35% of the Revolver’s aggregate principal amount, based on our leverage ratio.

The balance of unamortized customary lender fees related to the Revolver was $1,053 and $1,203 as of* September 30, 2025* and* March 31, 2025,*respectively.

Convert****ible Notes

On* August 15, 2025,*our outstanding 1.375% convertible Notes matured. We settled the aggregate principal balance of $97,500 as well as $670 of accrued interest in cash, using $97,000 drawn under our Revolver and $1,170 of cash on hand.

Interest expense recognized in connection with the Notes during thethree andsix months ended* September 30, 2025and2024* respectively, was as follows:

The effective interest rate on the Notes was approximately 1.9%.

The net carrying amount of the Notes was as follows:

As of* September 30, 2025,*no Notes remain outstanding.

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Note7. Stockholders' Equity

Stock-Based Compensation

On* August 22, 2025,our shareholders approved an amendment to the Mesa Laboratories Inc.2021 Amended and Restated Equity Incentive Plan (the"2021* Equity Plan"), increasing the number of shares authorized for issuance from 660 shares to 1,156 shares, an increase of 496 shares.

During thesix months ended* September 30, 2025*, we issued time-based restricted stock units ("RSUs") and performance-based restricted stock units ("PSUs") pursuant to the2021 Equity Plan.

Stock-based compensation expense is included in cost of revenues, selling, general and administrative, and research and development expense in the accompanying unaudited Condensed Consolidated Statements of Income.

The following is a summary of RSU and PSU award activity for thesix months ended* September 30, 2025*:

Time-based RSUs vest and settle in shares of our common stock on aone-for-one basis. The significant majority of RSUs granted to employees during thesix months ended* September 30, 2025* vest in equal installments on* June 15, 2026,** June 13, 2027and June 13, 2028.RSUs granted to non-employee directors during thesix* months ended* September 30, 2025vestone* year from the grant date. We generally recognize expense relating to RSUs, net of estimated forfeitures, on a straight-line basis over the vesting period. For time-based RSUs granted to participants who qualify as retirement-eligible under the2021 Equity Plan, we recognize expense either upon grant or over a shortened service period, depending on the retirement notification requirements applicable to participants.

During thesix months ended* September30,* 2025, the Compensation Committee of the Board of Directors approved a grant of 44 PSUs at target (“theFY26 PSUs”) to eligible employees. TheFY26 PSUs are subject to market-based performance conditions and service conditions. The market performance measurement period and service period is from* June15,* 2025 through* June 15, 2028.The number of shares that will be earned based on market performance will range from 0% to 200% of the target number of shares. If defined minimum targets arenot* met,no shares will vest.

As of* September**30,* 2025, there were 134 shares subject to options outstanding, with a weighted average exercise price per share of $191.02, an intrinsic value of $0 and a remaining contractual life of 2.5 years. Our Compensation Committee hasnot granted options to any plan participants in the current or prior fiscal year.

Note*8***.**** Earnings PerShare**

The following table presents a reconciliation of the denominators used in the computation of basic and diluted earnings per share ("EPS"):

Potentially dilutive securities include stock options and unvested time and performance based RSUs (collectively "stock awards"). Stock awards are excluded from the calculation of diluted EPS if they are subject to performance or market conditions that havenot yet been achieved as of our reporting date, or if their inclusion would be antidilutive. Shares underlying the Notes were also potentially dilutive until they matured on* August 15, 2025;however, these shares have been excluded from the diluted EPS calculation for the amount of time they remained outstanding duringthree* andsix months ended* September**30,* 2025 and2024 as assumed conversion under the if-converted method was antidilutive in each period.

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The following potentially dilutive securities were excluded from the calculation of diluted EPS:

Note*9***.**** Income Taxes**

We reported an income tax provision as follows:

For interim income tax reporting, we estimate our annual effective tax rate and apply this effective tax rate to our year-to-date pre-tax income. Each quarter, our estimate of the annual effective tax rate is updated, and if the estimated effective tax rate changes, a cumulative adjustment is made. Additionally, the tax effects of significant unusual or infrequently occurring items are recognized as discrete items in the interim period in which the events occur. There is a potential for volatility in the effective tax rate due to several factors, including changes in the mix of the pre-tax income and the jurisdictions to which they relate, changes in tax laws and foreign tax holidays, settlement with taxing authorities, and foreign currency fluctuations.

The effective tax rate for both thethree andsix months ended* September 30, 2025differed from the statutory federal rate of 21% primarily due to the impact of the valuation allowance on U.S. deferred taxes. During fiscal year2025,* we adjusted the valuation allowance related to our operations in Germany, and in fiscal year2026, we incurred higher German statutory taxes.

In* July 2025,the One Big Beautiful Bill Act (“OBBBA”) introduced several changes to U.S. tax legislation, with certain provisions becoming applicable to us in fiscal year2026.* These changes include the immediate expensing of domestic research and experimental expenditures, accelerated tax deductions for qualified property, and modifications to certain international tax frameworks. We have incorporated the applicable provisions of OBBBA into our income tax provision as of* September 30, 2025,*resulting in a reduction of U.S. current tax expense. We are continuing to evaluate the impacts of the legislation on our Consolidated Financial Statements for the annual period.

Note*10***.**** Commitments andContingencies**

We are party to various legal proceedings arising in the ordinary course of business. As of* September 30, 2025*, we arenot party to any legal proceeding that management believes could have a material adverse effect on our unaudited consolidated financial position, results of operations, or cash flows.

Note11**.**** Segment Information**

Segment information is prepared on the same basis used by our chief operating decision maker ("CODM"), our CEO, to assess segment performance, allocate resources, evaluate financial results, and make key operating decisions. Ourfour reportable segments are organized primarily by the nature of the goods and services they sell. Our CODM regularly reviews segment-level U.S. GAAP revenues and gross profit relative to forecasted and prior period amounts, as well as non-GAAP adjusted operating expense compared to budgeted amounts. Our CODM also regularly reviews non-GAAP organic revenues growth to support strategic planning and resource deployment.

The following tables set forth our segment information:

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The following table sets forth inventories by reportable segment. Our CODM isnot provided with and doesnot regularly review any other segment asset information.

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