Executive Summary

Q4 FY2025 revenue of $62.135M grew 5.5% YoY and was modestly above S&P Global consensus of ~$61.9M*, while GAAP diluted EPS was -$1.31 versus ~+$0.42 consensus*; AOI margin excluding unusual items was 19.7%, down sequentially from 23.5% on higher performance-based comp accruals .
SDC led with double-digit core organic growth (+10.3%), while BPD and CS posted mid-single-digit growth; CG stabilized with +4.4% core organic growth despite ongoing China weakness .
Management highlighted strong bookings, debt paydown ($17.9M in Q4), free cash flow ($42.559M FY25), and net leverage ratio reduced to 3.01, positioning for further backlog reduction in 1H FY26 .
Tariff dynamics and FX are near-term headwinds; Mesa expects continued commercial momentum and backlog normalization to support margins as performance-based compensation normalizes and tariff pass-throughs are implemented .

Estimates marked * are retrieved from S&P Global.

What Went Well and What Went Wrong

What Went Well

SDC delivered a strong quarter: $24.749M revenue; core organic growth +10.3% with bookings strength and backlog reduction trajectory; GP% up 350 bps YoY due to prior-year GKE step-up amortization unwinding .
Company-wide bookings growth, CRM rollout across all divisions, and strategic milestones including Veridose 2.0 launch in CG; debt reduced by $17.9M in Q4 and net leverage at 3.01 as FCF reached $42.559M for FY25 .
BPD sustained demand from biopharma capital spending with hardware/software revenues up 51.2% for FY25; consumables/services up 4.9% on installed base utilization .

Management quotes:

“Quarterly revenues of $62,135 resulted in 6.3% core organic revenues growth enhanced by a very strong quarter in SDC.” — CEO Gary Owens .
“We were pleased to realize several important strategic milestones during FY25 including… launching Veridose 2.0 in the CG division… implementing Salesforce CRM across the sales teams in all four divisions.” — CEO Gary Owens .

What Went Wrong

AOI margin excluding unusual items fell to 19.7% in Q4 (vs 23.5% in Q3), primarily due to increased performance-based compensation accruals tied to accelerating commercial execution .
CG annual core organic revenue declined 10.1% on China regulatory issues and U.S. LDT regulatory disruption; strategy required lower-margin instrument sales into China to seed future consumables .
BPD GP% contracted 510 bps in Q4 and 100 bps for FY25 due to material cost inflation, wage increases, performance-based comp, and unfavorable mix; CS also faced higher performance-based personnel costs .

Financial Results

Consolidated Performance vs Prior Quarters

Metric	Q2 2025	Q3 2025	Q4 2025
Revenue ($USD Millions)	$57.833	$62.840	$62.135
GAAP Diluted EPS ($USD)	$0.63	$(0.31)	$(1.31)
Operating Income ($USD Millions)	$3.508	$5.779	$1.469
Gross Profit ($USD Millions)	$35.455	$39.754	$38.412
AOI excl. Unusual Items ($USD Millions)	$14.352	$14.788	$12.256
AOI excl. Unusual Items Margin (%)	24.8%	23.5%	19.7%

Notes: AOI excludes amortization, stock-based comp, depreciation, impairment, and removes unusual items as defined by Mesa .

Vs Wall Street Consensus (S&P Global)

Metric	Q2 2025 Consensus*	Q2 2025 Actual (PR)	Q3 2025 Consensus*	Q3 2025 Actual (PR)	Q4 2025 Consensus*	Q4 2025 Actual (PR)
Revenue ($USD Millions)	$57.500*	$57.833	$58.825*	$62.840	$61.900*	$62.135
Primary EPS ($USD)	$0.173*	$0.63	$0.190*	$(0.31)	$0.417*	$(1.31)

Estimates marked * retrieved from S&P Global. Note: S&P “Primary EPS” actuals differ from company GAAP diluted EPS; we present GAAP diluted EPS from press releases for actuals .

Segment Breakdown

Segment Revenue ($USD Millions)	Q2 2025	Q3 2025	Q4 2025
SDC	$22.205	$23.507	$24.749
CS	$12.262	$14.429	$13.257
BPD	$11.867	$12.237	$12.618
CG	$11.499	$12.667	$11.511
Total	$57.833	$62.840	$62.135

Core Organic Revenue Growth (%)	Q2 2025	Q3 2025	Q4 2025
SDC	(5.2)%	8.2%	10.3%
CS	8.2%	18.9%	3.4%
BPD	27.9%	31.3%	3.5%
CG	(26.5)%	1.9%	4.4%

KPIs

KPI	Q2 2025	Q3 2025	Q4 2025
Net Leverage Ratio	3.26	3.20	3.01
Debt Repaid ($USD Millions)	$7.438	$9.4	$17.9
Cash from Operations (FYTD/FY) ($USD Millions)	—	—	$46.808 (FY25)
Free Cash Flow (FY) ($USD Millions)	—	—	$42.559 (FY25)
Backlog Change	SDC delivery timing to benefit Q3	Backlog build to enable Q4 growth	Past-due backlog ↓ ~27% vs end of Q3; still ~$2M higher YoY

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Formal Revenue Guidance	FY26/1H	None provided	No formal numeric guidance; management expects backlog reduction over first two quarters to support revenue	Maintained (no formal guidance)
AOI excl. Unusual Items Margin	Near-term	None provided	Q4 FY25 at 19.7%; management notes higher performance-based comp drove Q4 compression; targeting improvement as backlog normalizes and comp accruals moderate	Commentary only
Tariff Impact	FY26	Not applicable	Short-term impacts mostly mitigated; ~1% of revenues paid in tariffs in 1Q26, with pass-throughs and capitalized inventory; continued vigilance	New color/update
Dividend	Q4 FY25	Prior quarterly dividend cadence	$0.16 per share declared; payable June 16, 2025 to holders of record May 30, 2025	Maintained dividend

Note: Mesa does not provide formal quantitative revenue/EPS guidance ranges in these materials .

Earnings Call Themes & Trends

(Transcript not available in our document set; themes inferred from Q2–Q4 press releases.)

Topic	Previous Mentions (Q2 FY25)	Previous Mentions (Q3 FY25)	Current Period (Q4 FY25)	Trend
Tariffs/Macro	China headwinds impact CG; LDT disruption in U.S.	Expect need to adapt to US policy changes; rising recession risk in Europe	Tariff escalations/partial reductions; near-term impacts mostly mitigated; detailed regional revenue sourcing	Elevated but managed
CG China	Core organic -26.5%; sequential stabilization	+1.9% core organic; sequential growth, turnaround plan traction	+4.4% core organic; ongoing China weakness; U.S. LDT restrictions vacated in March (may be appealed)	Gradual stabilization ex-China
BPD Demand	Hardware/software up 109% YoY; strong funnels	Hardware/software up 69.7% YoY; strong funnels	FY25 hardware/software +51.2%; consumables/services +4.9%	Solid demand; mix pressure
Backlog/Execution	SDC delivery timing; reduce backlog over next two quarters	Backlog build to enable Q4 growth	Past-due backlog reduced ~27% vs Q3 end; targeting further reduction in 1H FY26	Improving backlog
Operating Leverage/Comp	AOI excl. unusual items margin 24.8%	23.5% (comp accruals raised)	19.7% (comp accruals muted profitability)	Margin compression near term
Technology/CRM	—	—	Salesforce CRM implemented across sales teams; Mesa Way process improvements (45 events)	Execution enablers
Product/PGx	—	—	Veridose 2.0 launched (CG)	New product launch

Management Commentary

“Profitability for the quarter, using our preferred metric of AOI excluding unusual items as a percentage of revenues, was muted at 19.7% primarily due to increased performance-based compensation expense associated with accelerating commercial execution success during the back half of the year.” — CEO Gary Owens .
“For the year we generated $46,808 of cash flows from operations and $42,559 of free cash flow… used primarily to pay down debt, including $17,900 during the fourth quarter, which reduced our total Net Leverage Ratio to 3.01.” — CEO Gary Owens .
“Given… a high recurring service and consumables mix (~75% of revenues for FY25)… the short-term impacts of increased tariffs have been mostly mitigated.” — CEO Gary Owens .
“We were pleased to realize several important strategic milestones during FY25 including… launching Veridose 2.0 in the CG division… implementing Salesforce CRM… and accelerating traction with the Mesa Way by completing 45 discrete process improvement events.” — CEO Gary Owens .

Q&A Highlights

The Q4 FY2025 earnings call transcript was not available in our document set; Q&A highlights and any clarifications cannot be assessed.

Estimates Context

Revenue slightly beat consensus each quarter (Q2–Q4), with the largest beat in Q3: $62.840M actual vs ~$58.825M consensus* . In Q4, $62.135M vs ~$61.9M consensus* .
GAAP diluted EPS diverged from S&P Primary EPS consensus framework; Q4 GAAP EPS was -$1.31 vs ~+$0.42 consensus*, suggesting substantial below-consensus GAAP EPS driven by tax expense and non-operating items despite AOI stability .
We expect models to adjust for: higher performance-based compensation impacting AOI margins in Q4, tariff/FX impacts and mix in BPD/CS, and continued China genomics weakness offset by North America consumables strength .

Estimates marked * retrieved from S&P Global.

Key Takeaways for Investors

Revenue resilience with consistent beats vs consensus, led by SDC strength and stable CG ex-China; however, GAAP EPS volatility reflects tax and non-operating items, making AOI-based profitability a clearer lens near term .
Near-term margin compression (AOI margin 19.7%) driven by performance-based comp accruals should ease as accruals normalize and backlog reduction improves throughput .
BPD demand remains healthy but mix/FX pressures weigh on gross margin; watch hardware/software vs consumables mix and SEK/USD dynamics .
Deleveraging is a positive catalyst: $17.9M Q4 debt paydown, FY25 FCF $42.559M, net leverage at 3.01 with management targeting <3.0x .
Tariffs are a manageable headwind; Mesa has pass-through mechanisms and a high recurring consumables base (~75% FY25 revenue) to mitigate impacts .
CG turnaround continues: Veridose 2.0 launch and stronger North America consumables; monitor China recovery and any LDT regulatory appeals .
Trading setup: near-term sentiment hinges on margin trajectory and backlog execution; medium-term thesis centers on recurring revenue mix, Mesa Way operational improvement, and continued deleveraging .

MESA LABORATORIES INC /CO/ (MLAB)·Q4 2025 Earnings Summary