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ML

MESA LABORATORIES INC /CO/ (MLAB)·Q2 2026 Earnings Summary

Executive Summary

  • Revenue grew 5.0% year over year to $60.74M, essentially in line with S&P Global consensus, while GAAP diluted EPS was $0.45; on S&P “Primary EPS,” MLAB delivered a substantial beat (actual 2.11 vs. 0.16 estimate), reflecting strong AOI leverage despite higher interest expense and FX/tariff headwinds . EPS/revenue estimates from S&P Global: see Estimates Context below.*
  • AOI excluding unusual items margin expanded to 25.1% (vs. 24.8% in 2Q25 and 23.5% for FY25) even with ~40 bps tariffs and ~60 bps FX headwinds; management cut annualized costs by $3.2M (net savings $2.3M to start in 3Q26), with planned reinvestment ($0.9M) in SDC to drive long‑term growth .
  • Segment mix was favorable: BPD +16.4% core organic, CS +10.8%, and CG ex‑China double‑digit growth offset a 58% China decline; SDC softened on deliveries, though bookings outpaced revenue by ~5% in the quarter .
  • Balance sheet and financing pivot executed: net leverage at 3.02x as of 9/30/25; company drew $97M on its credit facility to retire August 2025 converts, with interest expense ~ $2.7M in 2Q26 and ~$3.1M or lower per quarter thereafter at current debt levels; management expects sequential revenue increase in 3Q26 .

What Went Well and What Went Wrong

  • What Went Well

    • AOI discipline and margin execution: AOI excluding unusual items reached 25.1% of revenue (vs. 24.8% in 2Q25 and 23.5% FY25), despite tariffs/FX; “Profitability…was strong at 25.1%…impacted by headwinds of 40 bps from tariffs and 60 bps from FX” .
    • Strong BPD/CS contribution and CG ex‑China growth: BPD core organic +16.4% (Peptides instruments, delayed 1Q bookings), CS +10.8% (commercial execution, price), CG ex‑China +16.2% y/y .
    • Cost actions position 2H: $3.2M annualized cost reductions (including $2.1M in CG) with ~$2.3M net annualized savings expected beginning 3Q26; $0.9M reinvestment planned into SDC to fuel growth .

  • What Went Wrong

    • China diagnostic headwinds: CG China revenue down 58% y/y ($1.7M contraction), with management expecting continued declines for the rest of FY26 due to macro, tariffs, and regulatory factors .
    • SDC deliveries and gross margin: SDC core organic -3.2% on lower-than-expected order fulfillment; SDC gross margin fell 100 bps y/y (or ~310 bps ex prior-year inventory step-up), pressured by outside professional services and weaker USD; services spend expected to decrease in 2H .
    • Higher interest expense pressured GAAP EPS: nonoperating expense of $2.725M in 2Q26; interest costs elevated following the credit facility draw to retire converts (approx. $2.7M in 2Q26; ~$3.1M or lower/quarter thereafter) .

Financial Results

Key P&L (oldest → newest)

MetricQ2 2025Q1 2026Q2 2026
Revenue ($USD Millions)$57.833 $59.543 $60.737
GAAP Diluted EPS ($)$0.63 $0.85 $0.45
Operating Income ($USD Millions)$3.508 $3.064 $4.724
AOI (non‑GAAP) ($USD Millions)$13.413 $12.902 $14.385
AOI per share – diluted ($)$2.45 $2.32 $2.60
AOI ex‑unusual items margin (% of revenue)24.8% 21.7% 25.1%

Segment breakdown – Q2 2026

DivisionRevenue ($USD Thousands)Core Organic Revenue Growth (y/y)
SDC$22,107 (3.2)%
BPD$13,920 16.4%
CS$13,570 10.8%
CG$11,140 (3.6)%
Total$60,737 3.7% (core organic)

Additional KPIs and items

  • Net leverage ratio: 3.02x as of 9/30/25 .
  • Tariff/FX headwinds: ~40 bps tariffs and ~60 bps FX on profitability in the quarter .
  • Cost actions: $3.2M annualized reductions; ~$2.3M net annualized savings; $0.9M reinvestment into SDC beginning 3Q26 .
  • Nonoperating expense: $2.725M (vs. $(0.304)M income in 2Q25) .
  • Dividend: $0.16/share declared Oct 3, 2025 (payable Dec 15, 2025; record Nov 28, 2025) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue (sequential commentary)Q3 2026N/A“We expect revenues to sequentially increase in 3Q26.” Qualitative positive
Dividend per shareQ4 calendar 2025 payment$0.16 (declared July 3, 2025) $0.16 (declared Oct 3, 2025; payable Dec 15, 2025) Maintained

Note: No formal quantitative guidance ranges provided in the Q2 materials .

Earnings Call Themes & Trends

(Transcript not available in our document corpus; themes inferred from company press releases and 10‑Q.)

TopicPrevious Mentions (Q4 FY25 and Q1 FY26)Current Period (Q2 FY26)Trend
Tariffs/FXTariff exposures discussed; mitigated via pricing; FX headwinds cited in FY25 and 1Q26 margin commentary .~40 bps tariff and ~60 bps FX headwinds; cost structure aligned to new tariff/FX reality .Persistent headwind; cost response underway.
China/CGFY25: CG annual decline driven by China market and LDT regulatory issues; Q1: CG China −69% y/y; ex‑China +7.9% .CG China −58% y/y (~$1.7M); ex‑China +16.2%; continued China declines expected in FY26 .China remains a drag; ex‑China momentum improving.
BPDFY25: strong capex cycle in NA/EU; Q1: timing delays pushed ~$1.5M into Q2 .BPD +16.4% core organic; aided by delayed 1Q bookings, strong Peptides instruments .Demand resilient; timing normalized.
SDCFY25: strength with backlog reduction plan; Q1: strong growth (core +7.5%) .Deliveries below plan; bookings ~5% > revenue; reinvestment planned to fuel growth .Near‑term softness; pipeline/backlog supportive.
Cost structureFY25: operating discipline; cash flow used to de‑lever; Q1: AOI margin compressed; tariff surcharges implemented .$3.2M annualized reductions; net $2.3M savings; reinvest $0.9M in SDC; benefits start 3Q26 .Accelerated efficiency; targeted reinvestment.
Financing/interestFY25 year‑end de‑levering; plan to address 2025 converts .Retired $97.5M converts via $97M revolver draw; interest ~$2.7M in 2Q26, ~$3.1M or lower/quarter thereafter .Dilution avoided; interest a near‑term EPS headwind.

Management Commentary

  • “Solid execution and market stability across Europe and North America helped deliver 5.0% organic (3.7% core organic) revenue growth in 2Q26…BPD growth…continued strength in CS, and double‑digit growth in CG excluding China overcame softness in SDC deliveries and strong but expected headwinds in CG China (58% decrease versus prior year)…we expect revenues to sequentially increase in 3Q26.” — Gary Owens, CEO .
  • “Profitability…was strong at 25.1% versus 24.8% in 2Q25 and 23.5% for the whole of FY25. Quarterly performance was impacted by headwinds of 40 bps from tariffs and 60 bps from FX. During the quarter, we significantly reduced our cost structure…These actions are expected to generate $2.3M of net annualized cost savings.” .
  • On SDC: “The decline was driven primarily by lower‑than‑expected order fulfillments…Bookings…were approximately 5% greater than revenues for the quarter.” .
  • On BPD: “The strong increase in revenues was driven primarily by higher sales of Peptides instruments… and the previously mentioned delayed bookings from 1Q26.” .
  • On CG: “A contraction in China revenues of approximately $1.7M, or 58% versus the same quarter prior year…We expect continued decreases in China revenues for the rest of the fiscal year.” .

Q&A Highlights

The Q2 FY26 earnings call transcript was not available in our document set; we relied on the company’s 8‑K/press release and 10‑Q for themes and disclosures -. No additional Q&A clarifications could be captured.

Estimates Context

Actuals vs. S&P Global consensus (Q2 2026)

MetricConsensusActualNotes
Revenue ($USD)$60,733,330*$60,737,000*Essentially in line; 3 covering estimates*
Primary EPS ($)$0.16*$2.1084*Large beat; 3 covering estimates*

Values marked with an asterisk (*) were retrieved from S&P Global.

Interpretation: Revenue tracked consensus closely, while S&P “Primary EPS” showed a substantial upside surprise, consistent with strong AOI and cost controls offsetting higher interest/FX/tariffs .*

Key Takeaways for Investors

  • Mix tailwinds (BPD/CS strength and CG ex‑China growth) and disciplined cost actions lifted AOI margin to 25.1% despite tariffs/FX; expect operating leverage to persist into 2H with savings visible from 3Q26 .
  • China remains the principal overhang in CG, but ex‑China growth is robust; management explicitly expects further China pressure through FY26 .
  • Sequential revenue increase expected in 3Q26, with bookings > revenue in SDC signaling near‑term improvement as fulfillment normalizes .
  • Financing pivot removed convert overhang (reduced dilution risk) but raised quarterly interest burden (~$2.7M in 2Q26; ~$3.1M or lower thereafter), tempering GAAP EPS vs. AOI performance .
  • Dividend maintained at $0.16/share; balance sheet at 3.02x net leverage provides a line of sight to de‑levering as savings and cash generation accrue .
  • Consensus setup: Revenue in line and a sizable S&P “Primary EPS” beat should support estimate revisions higher on profitability; watch for ongoing China diagnostics drag and tariff/FX developments.*
  • Tactical lens: Positive skew from sequential growth commentary and BPD/CS momentum; monitor SDC delivery cadence and interest expense trajectory as key prints for near‑term stock reaction .

References: Company 8‑K/press release and 10‑Q for Q2 FY26, Q1 FY26 press release/8‑K, FY25 press release; financing/dividend releases; S&P Global estimates as noted - - - - .