Executive Summary

Q3 FY25 delivered strong top-line and non-GAAP profitability: revenues $62.84M (+17.5% YoY), AOI excluding unusual items $14.79M (+13.3% YoY), AOI margin 23.5% .
GAAP operating income rose to $5.78M (from $(0.07)M in Q3 FY24), but GAAP diluted EPS was $(0.31) driven by unrealized FX losses and interest expense; non-GAAP AOI per diluted share was $2.67 .
Broad-based strength: BPD up 31.3% core organic, CS up 18.9%, SDC up 8.2% (21.6% including GKE); CG returned to sequential growth (+10.2% vs Q2) despite China headwinds .
Management highlighted backlog build, sequential revenue growth (+8.7% QoQ) and continued deleveraging (Net Leverage Ratio 3.20; target <3.0x by end of Q2 FY26) as ongoing stock catalysts .

What Went Well and What Went Wrong

What Went Well

“The company hit on all cylinders in 3Q25 with strong sequential and year over year growth in revenues, orders, and AOI… we repaid $9.4M in debt… Net Leverage Ratio to 3.20” — Gary Owens, CEO .
BPD momentum: +31.3% core organic revenue growth; hardware/software up 69.7% YoY, consumables +20.3% YoY; sales funnels remain solid .
CS strength: +18.9% core organic revenue growth; gross margin expanded 170 bps on mix and pricing; renal care product lines drove growth .

What Went Wrong

GAAP net loss $(1.68)M and diluted EPS $(0.31) despite higher operating income, due to unrealized FX losses and interest expense .
SDC gross margin contracted 210 bps on distributor mix and FX; certain lower-margin distributor sales and currency impacted profitability .
CG gross margin would have decreased 630 bps excluding lower amortization after prior impairments; ongoing China headwinds and strategic lower-margin instrument placements in APAC to seed future consumables .

Financial Results

Consolidated P&L and Margins vs Prior Periods

Metric	Q1 FY25 (Jun 30, 2024)	Q2 FY25 (Sep 30, 2024)	Q3 FY25 (Dec 31, 2024)
Revenue ($USD Millions)	$58.17	$57.83	$62.84
Gross Profit ($USD Millions)	$37.25	$35.46	$39.75
Operating Income ($USD Millions)	$5.58	$3.51	$5.78
Net Income ($USD Millions)	$3.39	$3.43	$(1.68)
Diluted EPS (GAAP) ($)	$0.62	$0.63	$(0.31)
Gross Margin (%)	64.1% (calc from $37.25/$58.17)	61.3% (calc from $35.46/$57.83)	63.3% (calc from $39.75/$62.84)
EBIT Margin (%)	9.6% (calc from $5.58/$58.17)	6.1% (calc from $3.51/$57.83)	9.2% (calc from $5.78/$62.84)

Notes: Margins calculated directly from reported totals and cited to source data.

Non-GAAP Profitability and Leverage

Metric	Q1 FY25	Q2 FY25	Q3 FY25
AOI (non-GAAP) ($USD Millions)	$13.97	$13.41	$14.52
AOI excl. Unusual Items ($USD Millions)	$15.34	$14.35	$14.79
AOI Margin excl. Unusual Items (%)	26.4%	24.8%	23.5%
AOI per diluted share ($)	$2.58	$2.45	$2.67
Net Leverage Ratio (Total Net Leverage)*	3.41x	3.26x	3.20x

*Total Net Leverage Ratio definition per credit facility; see press release footnotes .

Segment Breakdown

Segment	Q3 FY25 Revenue ($USD Millions)	Share of Total	Core Organic Growth YoY	Q2 FY25 Revenue ($USD Millions)	Core Organic Growth YoY (Q2)
Sterilization & Disinfection Control (SDC)	$23.51	37%	8.2%	$22.21	(5.2%)
Calibration Solutions (CS)	$14.43	23%	18.9%	$12.26	8.2%
Biopharmaceutical Development (BPD)	$12.24	20%	31.3%	$11.87	27.9%
Clinical Genomics (CG)	$12.67	20%	1.9%	$11.50	(26.5%)
Total	$62.84	100%	13.2% core	$57.83	(2.8%) core

Selected KPIs

KPI	Q3 FY25	Commentary
Sequential revenue growth	+8.7% QoQ	Orders growth across all divisions drove backlog build .
Debt reduction	$9.4M repaid in quarter	Net Leverage Ratio down to 3.20x .
Gross profit YoY change	+$6.35M (to $39.75M)	Gross profit % expanded 80 bps YoY; ex non-cash charges shrank 240 bps on mix .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Core revenue growth trajectory	Q4 FY25	Not quantified	Expect YoY core revenues growth in Q4 FY25	New qualitative upward outlook
Net Leverage Ratio target	By end of Q2 FY26	Committed to drive <3.0x	Expect to be <3.0x by end of Q2 FY26	Timeline clarified
SDC production ramp	Q4 FY25	Backlog increasing	Plan to ramp production to power increased organic growth	Operational ramp-up
Dividend	Q3 FY25	—	Declared $0.16 per share; payable Mar 17, 2025	Maintained recurring dividend

Earnings Call Themes & Trends

Note: An earnings call transcript for Q3 FY25 was not available in our document tools; themes derived from management’s press release commentary across quarters.

Topic	Prior Mentions (Q1 FY25, Q2 FY25)	Current Period (Q3 FY25)	Trend
BPD capital spending and mix	Strong demand; timing delays in 1Q26 shifting ~$1.5M to Q2; hardware placements driving growth	Fourth consecutive strong quarter; hardware/software +69.7% YoY; consumables +20.3% YoY	Improving, broad-based strength
CG China/regulatory/LDT	China contraction (~69% YoY); growth ex-China +7.9%	Sequential growth +10.2%; core organic +1.9%; continued China headwinds, LDT disruption	Stabilizing ex-China; China remains a drag
SDC orders/backlog/production	Orders > revenues; reducing past due backlog	Orders +13.1% ex-GKE; backlog up; ramping production in Q4	Backlog converting; production ramp
Tariffs/FX/macros	Tariff impacts ~1% of revenues in Q1; FX headwinds, SEK appreciation	Unfavorable FX cited; gross margin mix impacts; geographical mix pressures	Persisting headwinds
Operating leverage/Mesa Way	AOI margin management; process improvements	AOI excl unusual items margin 23.5%; continued investment with sensitivity to macros	Consistent discipline

Management Commentary

“Overall revenues for the quarter of $62,840 increased 17.5%... 12.6% organic growth and 4.9% inorganic contribution from GKE… CG delivered 10.2% sequential revenues growth as the core business has stabilized despite ongoing headwinds from China and continued disruption to the U.S. LDT market” — Gary Owens, CEO .
“Profitability for the quarter as measured by our primary metric of AOI excluding unusual items grew by 13.3% versus the prior year to $14,788… gross profit percentage expanded by 80 bps but shrank by 240 bps when excluding the impact of non-cash charges. The contraction was primarily due to both product and geographical mix.” — Gary Owens .
“Looking forward, solid sales funnels and a backlog build in 3Q25 will enable year over year core revenues growth in 4Q25… recent appreciation of the US dollar, and rising recession risk in Europe… we remain highly attuned to market shifts” — Gary Owens .

Q&A Highlights

A full Q3 FY25 call transcript was not available via our document tools or company repository; key clarifications inferred from the press release:

GAAP loss drivers: Despite higher operating income, GAAP net loss and EPS were impacted “primarily by unrealized foreign currency losses and interest expense” .
AOI framework: Definition updated in 4Q24 to exclude depreciation; prior periods restated; unusual items totaled $0.27M in Q3 FY25 (vs $1.08M prior year) .
Backlog and production: Management plans to ramp SDC production in Q4 to convert backlog and support organic growth .

Estimates Context

S&P Global consensus estimates could not be retrieved due to API limits; values are unavailable at this time. Values retrieved from S&P Global.*
Third‑party context: MarketBeat shows Q3 FY25 consensus EPS $1.41 and consensus revenue $58.83M; reported EPS $2.07 (definition differs from Mesa’s AOI per share) and revenue $62.84M, indicating beats versus these third‑party estimates .
Zacks coverage also reported non‑GAAP EPS of $2.67 vs its consensus $2.45 and revenue $62.84M vs consensus, noting an EPS/revenue beat .
Given methodological differences (Mesa’s preferred non‑GAAP AOI per share vs external adjusted EPS), investors should align estimate frameworks before interpreting beats/misses .

Key Takeaways for Investors

Mix-driven but broad-based growth: BPD and CS are leading; SDC poised to convert backlog with planned Q4 production ramp; CG shows sequential recovery ex-China .
Non-GAAP profitability remains strong: AOI excl unusual items margin 23.5% despite mix and FX; continued deleveraging lowers risk profile (Net Leverage 3.20x, targeting <3.0x by end of Q2 FY26) .
Watch macro headwinds: FX and tariffs can compress margins; management is responsive via pricing, mix, and operational initiatives .
Near-term trading setup: Sequential revenue acceleration (+8.7% QoQ) and backlog build support momentum; segment wins in BPD/CS are potential catalysts, while GAAP loss optics (FX/interest) may temper sentiment .
Medium-term thesis: Diversified portfolio with improving operating leverage and disciplined capital allocation (debt paydown); sustained investment in strategic initiatives under “Mesa Way” should compound AOI margins over time .
Segment lens: Monitor SDC margin normalization post distributor mix, BPD consumables attachment after instrument placements, and CG’s ex‑China growth trajectory vs regulatory noise .
Estimate framework: Align on AOI per share vs adjusted EPS when benchmarking street expectations to avoid interpretive errors; SPGI consensus was unavailable at time of analysis.*

Footnote: *Values retrieved from S&P Global.

MESA LABORATORIES INC /CO/ (MLAB)·Q3 2025 Earnings Summary