MLAB 10-K & 10-Q changes, risk factors and insider trading

In addition to the other information set forth in this Annualannual Report on Form 10-K andreport other documents we filed with the SEC, you should carefully consider the following factors,factors which could materially affect our business, financial condition or results of operations in future periods. The risks and uncertainties described below are those that we have identified as material, but these are not the only risks and uncertainties facing us. Our business is also subject to general risks and uncertainties that affect many other companies, such as market conditions, economic conditions, geopolitical events, changes in laws, regulations or accounting rules, fluctuations in interest rates, terrorism, wars or conflicts, major health concerns, natural disasters or other disruptions of expected business conditions. Additional risks and uncertainties not currently known to us or that we currently believe are immaterial also may impair our business, including our results of operations, liquidity and financial condition.

Our business is sensitive to general economic conditions, market disruptions and uncertainties. We have been affectedaffected, inand recentmay yearscontinue to be affected, by elevated interest rates, reduced levels of capital expenditures in the industries we serve, inflation in domestic and international markets, and labor availability constraints. In addition to these factors,addition, recent and any further significant developments or changes in international trade, national laws or policies to protect or promote domestic interests and/or address foreign competition (including the imposition of further tariffs),; slow or disrupted global economic growth,growth; increases in inflation,inflation; changes or anticipationuncertainty of potential changes inregarding governmental trade, fiscal, tax and monetary policies,policies; volatility in the currencycurrency, credit and creditcapital markets,markets; high levels of unemployment or underemployment,underemployment; changes in capital or liquidity requirements for financial institutions,institutions; government deficit reduction efforts and budget negotiation dynamics,dynamics; sequestration or government shut-downs,shutdowns; austerity measures,measures; sovereign debt defaults,defaults; and other challengesconditions that adverselynegatively affect the global economy could adversely affect us and our distributors, customers and suppliers, including by:

If growth in the global economy or in any of the markets we serve slows for a significant period, if thereeconomic isconditions significantdeteriorate deterioration in the global economy or such marketssignificantly, or if economic improvements in the global economy do not benefit the markets in which we serve,operate, our businessbusiness, results of operations and financial results could be adversely affected. We cannot predict the likelihood, duration or severity of any market disruption in financial markets or any adverse economic conditions in the U.S. or other countries.conditions. See “Our international operations subject us to a wide range of risks” for further information.

International business risks have adversely affected our business and financial statements in the past, and may do so again in the future, negatively affect our business and financial statements.future. A deterioration in diplomatic relations or trade tensions between the United States and any country wherein which we conduct business could adversely affect our future operations and lead to a decline in profitability. In fiscal year 2025,2026, we generated approximately 11%8% of our sales from operations in China and 41%45% of our sales from other non-domesticnon-U.S. countries, primarily in Europe. Accordingly, political, economic, legal, regulatory, compliance, social and business conditions in Chinathese and Europecountries generally can adversely influence our business and financial statements. Subsequent to our fiscal year end, escalating global trade tensions have resulted in tariffs on imported materials and on products we export to other countries, which could adversely impact our total revenues and profitability. Further, considerable uncertainty exists regarding the long-term effects of fiscal and monetary policies pursued domestically and internationally. Uncertainty or adverse changes to conditions in China or Europe, or the policies, laws and regulations of international governments can adversely affect the overall economic growth of countries where we make significant sales, or of the particular industries in which we participate, and can adversely affect our business and financial statements.results.

Our international operations are governedalso bysubject to the U.S. Foreign Corrupt Practices Act and similar anti-corruption laws outsidein theother United States.jurisdictions. Global enforcement of anti-corruption laws has increased in some countries in recent years. Any alleged or actual violations of these laws may subject us to government investigations andinvestigations, significant criminal or civil sanctionspenalties and other liabilities, and could negatively affect our reputation.business, reputation and financial condition.

Our growth depends in part on the growth of the markets which we serve, and visibility into ourthese markets is limitedlimited, (particularly forin marketsthose into whichwhere we sell through distribution).distributors. Our revenues and profits depend substantially on the volume and timing of orders received, which are difficult to forecast. AnyA decline or lower than expectedlower-than-expected growth in our served markets could diminish demand for our products and services, which would adversely affect our financial results. Certain of our businesses’ demand depends on customers’ capital spending budgets as well as government funding policies and interest rates, and matters of public policy and government budget dynamics as well as product and economic cycles can affect the spending decisions of these customers. Demand for our products and services is also sensitive to changes in customer order patterns, which may be affected by announced price changes, marketing or promotional programs, new product introductions, changes in distributor or customer inventory levels, or other factors. Any of these factors could adversely affect our growth and results of operations in any given period.

We face competition and if we are unable to compete effectively, we may experience decreasedreduced demand for our products and services and a loss of market share, resultingwhich could result in decreased revenues. Even if we compete effectively, wecompetitive pressures may berequire requiredus to reduce prices foror offer other concessions, which could decrease our products and services, resulting in decreased profit margins.

The markets for our current and potential products are competitive. Because of the rangebreadth of productsour product and servicesservice we sellofferings and the variety of markets we serve, we encountercompete against a wide varietyrange of competitors, including several that possess both larger sales forces and greater capital resources.

In order toTo compete effectively, we must maintain strong relationships with existing key customers, continue to grow our business by establishingestablish relationships with new customers, continue to develop new products and servicesservices, toenhance maintainand protect our brand, and expand ourinto brand recognition,new and penetrate new markets, including in high growthhigher-growth markets. Our failureFailure to compete effectively or pricing pressures resulting from competition may adversely impact our results of operations.

ChangingIndustry industryconsolidation trendsand mayshifts in customer behavior could adversely affect our results of operations.

VariousShifts changes withinin the industries we serve may limit future demand for our products and negatively affect our financial performance. Such changes may include mergers within key industriesindustries, wewhich serve,could makingincrease usour more dependentreliance on fewer, larger customers foror our salessuppliers; decreased product demand driven by changes in customers' regulatory environments or standardprevailing industry practices that could reduce demand for our products; increased price competition for key products; and the introduction of new competitorcompeting products that may result in customersreduced discontinuingor newdiscontinued customer orders.

Our growth depends on the acceptance of our products and services in the marketplace, themarket penetration achieved by the companies to which we sell, and our ability to introduce and commercialize new and innovative products that meet the needs of the various markets we serve. We can offer no assurance that we will be able to continue to introduce new and enhanced products, that the products we introduce, or have introduced, will beachieve widelybroad acceptedmarket by the marketplace,acceptance, or that our direct sales team or independent distributors will successfully penetrate ourexisting variousor new markets. Our failureFailure to introduceaccurately newanticipate customer needs and enhancedpreferences; productsdevelop orviable, gaindifferentiated widespreadand acceptancecompetitive oftechnologies; ourcommercialize new products and services in a timely and cost-effective manner; protect related intellectual property and obtain required regulatory approvals, could adversely affect our financialgrowth, results.results Ifof we fail to accurately predict future customer needsoperations, and preferences,financial fail to produce viable technologies, or fail to protect the intellectual property related to such technologies, we may invest heavily in research and development of products and services that do not lead to significant revenues, which could adversely affect our profitability. Even if we successfully innovate and develop new and enhanced products and services, we may incur substantial costs in doing so, and our profitability may suffer.condition.

Our success depends largely upon the continued service of our employees and our ability to attract, retain and motivate personnel, some of whom work in competitive labor markets. The market for highly skilled workers and leaders, particularly in the areas of manufacturing, science, technology and management, is extremely competitive, and expectations from qualified talent in many areas of the labor market have recently evolved and escalated. Loss of key personnel or ouran inability to hire andqualified retain personnelemployees could materially adversely affect our business and financial statements, disrupt manufacturing efforts,activities, harmimpede our ability to meet compliance requirements, and increase backlog.backlog, or inhibit strategic growth.

Adverse changes in our relationships with, or the financial condition, performance, or purchasing patterns or inventory levels of, distributors and other channel partners could adversely affect our business, results of operations, and financial statements.condition.

We sell a significant number of products to distributors and other channel partners that have valuable relationships with end customers and end-users.end users. Some of these distributors and other partners also sell or utilize our competitors’ products or compete with us directly. Adverse changes in our relationships with these distributors and other partners, or adverse developments in their financial condition, performance or purchasing patterns, or consolidation among distributors could adversely affect our business and financial statements. We do not directly control the actions of our distributors. Our distributors may fail to comply with export laws or the terms of their distribution agreements, which could expose us to legal, financial or reputational risks and adversely affect our business and financial statements.

Geopolitical and macroeconomic pressures in the markets in which we operate may adversely affect our financial results.

GeopoliticalIn issues around the world can impact macroeconomic conditions and could have a material adverse impact on our financial results. For example, the ultimate impact of military conflicts (such as the conflict between Russia and Ukraine or the conflict in Israel and the surrounding areas) andaddition, trade tensionstensions, (such asincluding between China and the U.S.)U.S., oncould negatively affect fuel prices, inflation, the global supply chainchains and other macroeconomic conditionsconditions. isThese unknown andimpacts could materially harm our business by adversely affectaffecting global economic growth, disrupting discretionary spending habitspatterns, and generally decreasingreducing demand for our products and services. While our sales to Russia, Ukraine and Israel have historically produced an immaterial amount of revenues and profitability compared to the overall company, ourOur sales to China have been moresignificant substantial,in andprevious we cannot predict the impact that global conflicts or tensions may have on future financial results.periods.

We rely on information technology systems, some of which are providedprovided, hosted or managed by third parties, to process, transmit and store electronic informationinformation, (including sensitive data such as confidential business information and/or personally identifiable data relating to employees, customers, and other business partners),partners. andThese tosystems manage oralso support a variety of critical business processes and activitiesactivities, (such asincluding receiving and fulfilling orders, billing, collecting and making payments, shipping products, providing services and support to customers and fulfilling contractual obligations).obligations. Errors, defects, security issues or other vulnerabilities in our systems, third-party technologysystems, or in the integrationinteraction of third-party technologysystems with our systemstechnology could resultdisrupt inour issuesoperations thator couldotherwise harm our business. In addition, some products or software we sell to customers may connect to our systems for maintenance or other purposes. These systems, products and services (including those we acquire through business acquisitions) may be damaged, disrupted or shut down due to attacks by computer hackers, computer viruses, ransomware, human error or malfeasance, power outages, hardware failures, telecommunication or utility failures, catastrophes or other unforeseen events, and in any such circumstances our system redundancy and other disaster recovery planning may be ineffective or inadequate. Attacks may also target hardware, software and information installed, stored or transmitted in our products after such products have been purchased and incorporated into third-party products, facilities or infrastructure. Our information technology systems have been subject to computer viruses, malicious codes, unauthorized access and other cyber-attacks, and we expect the sophistication and frequency of such attacks to continue to increase. Unauthorized tampering, adulteration or interference with our products may adversely affect product functionality and result in loss of data, risk to product safety and product recalls or field actions.

Any attacks,cyber breaches,incident, incidents,system compromises orfailure, other disruptionsdisruption or damage could: interrupt our operations or the operationsthose of our customers and business partners; delay production and shipments; result in misappropriation,the destructionloss, theft, or unauthorized disclosure of our and our customers’ intellectual property, trade secrets, personal data, or other confidential information; damage customer,our reputation and relationships with customers, business partner,partners, and employee relationships, and our reputationemployees; or result in defective products or services, legal claims and proceedings, liabilityregulatory andinvestigations, penaltiesfines, underpenalties, privacy laws andor increased costs forrelated to remediation and security andenhancements. remediation, eachAny of whichthese could adversely affect our business, reputation and financial statements.results.

Further, a significant number of our employees work remotely, which exposesmay usincrease our exposure to greater cybersecurity risks. Any inabilityfailure to maintain reliable information technology systemssystems, andexercise appropriate controlscontrols, or comply with respect to global data privacy and security requirements and prevent data breaches can result in adverse regulatory consequences, business consequences and litigation.

SupplyDisruptions chainin andour supply chains, increases in costs, or manufacturing risksinefficiencies could adversely affect our financial results. In addition, our reliance upon sole or limited sources of supply for certain materials, components and services could cause production interruptions, delays and inefficiencies.

Our financial results aredepend subject to fluctuations inon the costavailability, quality and availabilitytimely delivery of componentsmaterials, components, services and commoditieslabor thatrequired we use infor our operations.

If we are unable to maintain reliable information technology systems and appropriate controls to comply with respect to global data privacy and security requirements and prevent data breaches, we may suffer adverse regulatory consequences,regulatory, business consequences and litigation.legal consequences. As a multinational organization, we are subject to data privacy and security laws, regulations, and customer-imposed controlsrequirements in numerous jurisdictions asdue ato result of havingour access to and processing of confidential, personal and/or other sensitive data in the course of our business. TheFor EUexample, the European Union’s General Data Protection Regulation imposes strict requirements on how we collectcollect, process and processprotect personal data, including, among other things, aobligations requirementto forprovide prompt notice of data breaches to data subjects and supervisory authorities in certain circumstancesauthorities, and significant fines for non-compliance. Data privacy laws in other jurisdictions, such as California and Colorado, also impose data privacy obligations. Government enforcement actions can be costlycostly, disruptive to our operations, and cantime interrupt the regular operation of our business,consuming, and data breaches or violations of data privacy laws can result in fines, civil litigation, or reputational damage and civil lawsuits,harm, any of which may adversely affect our business, reputationbusiness and financial statements. In addition, compliance with variousevolving and increasingly complex data privacy regulations around the world may require significant expenditures and may require changes in our products or business modelsmodels, thatwhich could reduce revenues.revenues or increase costs.

This Management’s Discussion and Analysis (“MD&A”) is intended to help investors understand Mesa, our operations and our present business environment. MD&A is provided as a supplement to, and should be read in conjunction with, our Consolidated Financial Statements and the accompanying notes thereto contained in this Annual Report on Form 10-K. Unless the context requires otherwise, the terms “Mesa,” “Company,” “we,” “its,” and “our” in this Annualannual Report on Form 10-Kreport refer to Mesa Laboratories, Inc. and its subsidiaries.

This section generally discusses our fiscal years ended March 31, 20252026 and March 31, 2025 and year-to-year comparisons between fiscal year 2026 and fiscal year 2025. Discussions of fiscal year 2024 items and year-to-year comparisons between fiscal year 2025 and fiscal year 2024. Discussions of fiscal year 2023 items and year-to-year comparisons between fiscal year 2024 and fiscal year 2023 that are not included in this report can be found in “Management's Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company's Annualannual Report on Form 10-Kreport for the fiscal year ended March 31, 20242025 filed with the Securities and Exchange CommissionSEC on JuneMay 28, 2024.2025.

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 Asia Pacific,APAC, and by independent distributors in these areas as well as throughout the rest of the world. We prefer markets in which we can establish a strong presence and achieve high gross profit margins.

As of March 31, 2025,2026, we managed our operations in four reportable segments, or divisions: Sterilization and Disinfection Control, Clinical Genomics, Biopharmaceutical Development, Calibration Solutions and CalibrationClinical Solutions.Genomics. Each of our divisions is described further in "Results of Operations" below. Unallocated corporate expenses and other business activities are reported within Corporate and Other.

We strive to create stakeholder value and further our purpose of Protecting the Vulnerable® by growing our business both organically and through acquisitions, by improving our operating efficiency, and by continuing to hire, develop and retain top talent. As a business, weWe commit to our purpose of Protecting the Vulnerable® every day by taking a customer-focused approach to developing, building,building and delivering our products.products and services. We serve a broad set of industries, in particularparticularly the pharmaceutical, healthcare and medical device industries,sectors, in which the safety, quality,quality and efficacy of products areis critical. By delivering the highest quality products possible, we are committed to protecting the communities we serve.

Organic revenues growth is driven by the expansion of our customer base, increases in sales volumes, new product offerings, and price increases, and may be affected positively or negatively by changes in foreign currency rates. Our ability to increase organic revenues is affected by general economic conditions, both domestic and international, customer capital spending trends, competition, currency exchange rates, and the introduction of new products. Our policy is to price our products competitively and, where possible, we pass along cost increases to our customers in order to maintain our margins. We typically evaluate costs and pricing annually, with price increases effective January 1. We evaluate the need to increase prices at other times of the year in response to changes in regulatory policy, such as the imposition of tariffs, or significant increases in the price of inputs to our products which could result from drastic changes to the macroeconomy.products.

Our ongoing goal is to maximize value in our existing businesses and those we acquire by implementing efficiencies in our manufacturing, commercial, engineering,engineering and administrative operations. We achieve efficiencies using the four pillars that make up the Mesa Way, which is our customer-centric, lean-based system for continuouslycontinuous improving and operating the manufacturing and administrative aspects of our high-margin, niche businesses.improvement. The Mesa Way is focusedbuilt on four key pillars: "Measuring What Matters" based on our customers' perspectiveperspectives andto settingset high standards forof performance; "Empowering Teams" to improve operationally and exceed customer expectations; "Sustainably Improving" using lean-based tools designed to help us identify and prioritize the best opportunities; and "Always Learning" so that performanceto continuously improves.build knowledge and capabilities to drive long-term performance.

Our gross profit is affected by many factorsfactors, including ourthe product mix, foreign currency rates, manufacturing efficiencies, costsmix of products and labor,services sold and the geographical regions in which we sell them, labor and product costs (including costs of transportingtransporting, importing and exporting goods, as well as associated tariffs), manufacturing efficiencies, foreign currency rates and price competition. Historically, as we have integrated acquisitions into our acquisitionsbusiness and taken advantage of manufacturing efficiencies, our gross profit percentages for some products have improved. There are, however, differences in gross profit percentages between product lines, and ultimately theour mix of revenues will continue to impact our overall gross profit.

At the center of our organization are highly talented people who are capable of taking on new challenges using a teamteam-based approach. Indeed, it is our exceptionally talented workforce that works togethercollaborates to continuously and sustainably improve our products, our services, and ourselves, resulting in long-term value creation for our stakeholders.

AChanges weakening or strengthening ofin foreign currenciescurrency againstexchange rates relative to the USDU.S. increasesdollar or decreasesaffect our reported revenues, gross profit margins, and operating expenses,expenses and impactsimpact the comparability of our results between periods. A strengthening or weakening of the U.S. dollar can therefore influence reported financial results even when underlying operating performance is unchanged.

Our Sterilization and Disinfection Control division manufactures and sells biological, chemical and cleaning indicators used to assess the effectiveness of sterilization, decontamination, disinfection and cleaning processes in the pharmaceutical, medical device,device and healthcare industries. The division also provides sterility assurance testing and laboratory services, mainlyprimarily to the dental and pharmaceutical industries.customers. Sterilization and Disinfection Control products are disposable and are used on a routine basis.

Our Biopharmaceutical Development division develops, manufactures, sells and services automated systems for protein analysis (immunoassays) and peptide synthesis solutions. Immunoassays and peptide synthesis solutions accelerate the discovery, development,development and manufacture of biologic therapies, among other applications.

The Calibration Solutions division develops, manufactures, sells and services quality control products using principles of advanced metrology to enable customers to measure and calibrate critical parameters in applications such as renal care, gas flow, environmental and process monitoring, gas flow, air qualitymonitoring and torque testing, primarily in medical device manufacturing, pharmaceutical manufacturing, laboratory and hospital environments.

Calibration Solutions revenues increased 8.3%3.5% for fiscal year 20252026 compared to fiscal year 2024,2025, primarily duedriven by price increases and ongoing commercial efforts to commercialestablish efforts,and particularlyrenew incontracts that incentivize utilization of our renalservice care product lines, and price increases.offerings.

The Calibration Solutions division's gross profit as a percentage of revenues increased 1.50.5 percentage points in fiscal year 20252026 compared to fiscal year 2024,2025, primarily due to increased revenues on a partially fixed cost base and product mix, partially offset by increasedan expenseunfavorable fortariff performance-based personnel costs. Approximately $10.0 millionimpact of the20 Calibrationbasis Solution division’s product revenues in fiscal year 2025 were from customers outside of the United States. While we cannot predict the impact effective or potential tariffs will have on the division, we do not expect material impacts to gross profit as a percentage of revenues at this time.points.

Selling expense increaseddecreased 7.9%2.1% for fiscal year 2025,2026 butand decreased 0.60.9 percentage points as a percentage of revenues. The increasesdecrease in dollar terms arewas primarily attributable to increasedlower performance-basedcommissions-related compensationexpense, partially offset by severance costs associated with our cost-savings initiatives. In the prior year, selling expense aswas oursomewhat financialelevated resultsdue improved,to andcosts theassociated additionwith ofa GKE'ssales sellingtraining expenses.initiative.

During the three months ended DecemberJune 31,30, 2025,2026, there were no material changes fromto the risk factors described in Part I, Item 1A. Risk Factors of our Annual Report on Form 10-K for the fiscal year ended March 31, 2025.2026.

This Quarterly Report on Form 10-Q contains forward-looking statements which are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The forward-looking statements in this Quarterly Report on Form 10-Q do not constitute guarantees of future performance. Investors are cautioned that statements in this Quarterly Report on Form 10-Q that are not strictly historical statements, including, without limitation, express or implied statements or guidance regarding current or future financial performance and position; the effect and duration of macroeconomic conditions in relevant markets; results of acquisitions; management’s strategy, plans and objectives for future operations or acquisitions, product development and sales; adequacy of capital resources and financing plans; anticipated cost savings; and the effect of tariffs and other developments in the regulatory environment and our responses thereto constitute forward-looking statements. These forward-looking statements are based on current expectations, estimates, forecasts and projections about the industry and markets in which the Company operates, and management’s beliefs and assumptions. In addition, other written and oral statements that constitute forward-looking statements may be made by the Company or on the Company’s behalf. Words such as “seek,” “believe,” “may,” “intend,” “could,” “target,” “expect,” “anticipate,” “plan,” “estimate,” “project,” or variations of such words and similar expressions are intended to identify forward-looking statements. Such forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated, including risks associated with: our ability to successfully grow our business, including as a result of acquisitions; the effect that acquisitions have on our operations; our ability to consummate acquisitions at our historical rate and at appropriate prices, and our ability to effectively integrate acquired businesses and achieve desired results; the market acceptance of our products; technological or market viability of our products; potential reduced demand for our products, including as a result of competitive factors; conditions in the global economy and the particular markets we serve; significant developments or uncertainties stemming from governmental actions, including changes in trade policies such as tariffs,tariffs and changes in tax, medical device and other regulations; the timely development and commercialization, and customer acceptance, of enhanced and new products and services; retirement of old products and customer migration to new products; the potential inaccuracy of projections of revenues,revenue, growth, operating results, profit margins, earnings, expenses, margins, tax rates, tax provisions, liquidity, cash flows, demand, and competition; the effects of actions taken to become more efficient or lower costs; supply chain challenges; cost pressures; laws regulating fraud and abuse in our industries, privacy and security of health and personal information; product liability; information security; outstanding claims, legal and regulatory proceedings; international business challenges including anti-corruption and sanctions laws and political developments; tax audits and assessments and other contingent liabilities; foreign currency exchange rates and fluctuations in those rates; general economic, industry, and capital markets conditions; the timing of any of the foregoing; and assumptions underlying any of the foregoing. Such risks and uncertainties also include those listed in Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended March 31, 20252026 and in this report. The foregoing list sets forth many, but not all, of the factors that could impact our ability to achieve results described in any forward-looking statements. We disclaim any obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise.

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,Europe and the APACAsia Pacific region, and by independent distributors throughout the world.

As of DecemberJune 31,30, 2025,2026, we managed our operations in four reportable segments, or divisions: Sterilization and Disinfection Control, Biopharmaceutical Development ("BPD"), Calibration Solutions, and Clinical Genomics. Each of our divisions is described further in "Results of Operations" below.

Our continued growth will depend on our ability to (i) expand business with new and existing customers through ongoing commercial efforts, including in new geographic areas, (ii) manage our costs and allocate resources to ensure continued profitability of our business,profitability, (iii) identify, consummate and integrate acquisitions successfully, and (iv) develop or acquire differentiated products and services. We strive to maintain our profitability by improving the effectiveness of our sales force, by continuing to pursue cost reduction initiatives, and by taking a long-term strategic approach to investments in our business that we believe will support future commercial success.

Organic RevenuesRevenue Growth

Organic revenuesrevenue growth is driven by expansion of our customer base, increases in sales volumes, new product offerings and price increases, and may be affected positively or negatively by the impact of changes in foreign currency exchange rates on our reported revenues.revenue. Our ability to increase organic revenuesrevenue is affected by general economic conditions, both domestic and international,global economic conditions, customer capital spending trends, competition, currency exchange rates, competition, and the introduction of new products. Our policy is to price our products and services competitively and, where possible, we pass along cost increases to our customers in order to maintain our margins. We typically evaluate costs and pricing annually, with price increases effective January 1. We evaluate the need to increase prices at other times of the year in response to significant facts and circumstances that may arise, such as increases in the price of inputs to our products, or in response to changes in government or regulatory policies, for example, due to the imposition of tariffs. We are actively pursuing opportunities to expand our customer base both domestically and internationally by fostering strong relationships with existing and new customers and distributors.

Over the past decade, we have consummated a number of acquisitions of businesses, technologies, and intangiblesintangible assets such as customer lists as part of our growth strategy. Our acquisitions have allowed us to expand our product offerings and the industries we serve, globalize our company, and increase the scale at which we operate. In turn, this growth affords us the ability to improve our operating efficiency, extend our customer base, and further the pursuit of our purpose: Protecting the Vulnerable®.

Our ongoing goal is to maximize value in our businesses by implementing efficiencies in our manufacturing, commercial, engineering and administrative operations. We achieve efficiencies using thea Mesagrowth Way,mindset. We continue to promote a culture that values learning, continuous improvement and accountability. We believe this culture strengthens our customer-centric,execution lean-basedso systemthat forwe continuouscan improvement.enhance Thecustomer Mesa Way is built on four key pillars: "Measuring What Matters" based on our customers' perspectivesoutcomes and setting high standards of performance; "Empowering Teams" to improve operationally and to exceed customer expectations; "Sustainably Improving" using lean-based tools designed to help us identify and prioritize the best opportunities; and "Always Learning" to continuously build knowledge and capabilities to drivecreate long-term performance.stakeholder value.

Our gross profit is affected by many factors, including the mix of products and services sold and the geographical regions in which we sell them, labor and product costs (including costs of transporting, importing and exporting goods, as well as associated tariffs), manufacturing efficiencies, foreign currency rates and price competition. Historically, as we have integrated acquisitions into our business and taken advantage of manufacturing efficiencies, our grossGross profit percentages fordiffer some products have improved. There are, however, differences in gross profit percentages betweenamong product lines, and ultimately our mix of revenuesrevenue will continue to impact our overall gross profit.

At the center of our organization are talentedskilled people who are capable of taking on new challenges using a team-based approach. Indeed, it is our exceptionally talentedexceptional workforce that collaborates to find ways to continuously and sustainably improve our products, our services, and ourselves, resulting in long-term value creation for our stakeholders.

Our Sterilization and Disinfection Control division manufactures and sells biological, chemical and cleaning indicators used to assess the effectiveness of sterilization, decontamination, disinfection and cleaning processes in the pharmaceutical, medical device and healthcare industries. The division also provides sterility assurance testing and laboratory services, mainlyprimarily to the dental and pharmaceutical industries.customers. Sterilization and Disinfection Control products are disposable and are used on a routine basis.

Gross profit as a percentage of revenuesrevenue for the Biopharmaceutical Development division increased 0.5 percentage pointsdecreased for the three months ended DecemberJune 31,30, 20252026 versus the comparable prior year period. The increase wasperiod, primarily dueas toa higherresult revenuesof lower revenue on a partially fixed cost base,base and product mix, partially offset by a decrease in professional services expenses, as we engaged outside expertise in the impactsprior ofyear foreignto currencyimprove translationour andproduction tariffs.processes.

Gross profit as a percentage of revenuesrevenue for the Biopharmaceutical Development division decreasedincreased 4.18.0 percentage points for the ninethree months ended DecemberJune 31,30, 2025,2026 versus the comparable prior year period. The increase was primarily due to thefavorable impactsproduct mix, as higher-margin immunoassays revenue represented a greater proportion of foreignthe currencydivision's translationtotal revenue and tariffs.lower Unfavorablemargin productinstruments mixrepresented a smaller portion of total peptides systems revenue. Efficiencies in our supply chain management and higher revenue on a partially fixed cost base also contributed to the decline, as higher-margin immunoassays revenues represented a smaller share of total revenues, while hardware represented a larger share.increase.

The Calibration Solutions division develops, manufactures, sells and services quality control products using principles of advanced metrology to enable customers to measure and calibrate critical parameters in applications such as renal care, gas flow, and environmental and process monitoring, gas flow and torque testing.monitoring.

GrossRevenue profitfor asthe aCalibration percentageSolutions ofdivision revenuesincreased decreased by 1.0 and 1.1 percentage points, respectively,7.6% for the three and nine months ended DecemberJune 31,30, 20252026 versus the comparable prior year period, primarily due to unfavorableincreased sales volumes across several product mixlines and increasedthe personnel-relatedimpact costsof thatprice we expect will support future growth.increases.

The Clinical Genomics division develops, manufactures and sells highly sensitive high-throughput genetic analysis toolsinstruments, consumables and related consumables and services that enable clinical research labs and contract research organizations to perform genomic testing foracross a broad range of research applications in several therapeutic areas, such as screenings forincluding hereditary diseases,disease screenings, pharmacogenetics, oncology related applications and toxicology research.

Clinical Genomics’ gross profit as a percentage of revenuesrevenue increased 5.67.9 percentage points and 1.7 percentage points, respectively, for the three and nine months ended DecemberJune 31,30, 20252026 versus the comparable prior year periods, despite lower revenues.period. The increasesincrease in gross profit as a percentage of revenuesrevenue werewas primarily attributable to price increases and manufacturing and supply chain efficiency improvements, lower personnel-related costs attributable to our cost mitigation efforts in the prior quarter, and favorable geographic product mix, as sales outside of China typically generate higher margins. Gross profit as a percentage of revenues for the nine months ended December 31, 2025 was also positively impacted by product mix, as higher-margin consumables represented a greater portion of the division's total revenues.improvements.

Operating expense wasdecreased flat5.6% for the three months ended DecemberJune 31,30, 2025 and increased 2.8% for the nine months ended December 31, 2025,2026 versus the comparable prior year periods.period. Operating expense as a percentage of revenuesrevenue decreased 2.2 percentage points and 0.53.7 percentage points for the three and nine months ended DecemberJune 31,30, 2025, respectively,2026 versus the comparable prior year periods. Among other factors, reported selling, general and administrative, and research and development expenses increased due to the weakening of the U.S. dollar against the euro and Swedish krona for the three and nine months ended December 31, 2025 versus the comparable prior year periods.period.

Other expense (income), net primarily consists of gains and losses on foreign currency transactions. In particular, duringDuring the nineprior monthsyear endedperiod, Decemberthe 31,U.S. 2025,dollar weweakened recognizedsignificantly against the euro, resulting in unrealized foreign currency gains of approximately $5.8$6.1 million related tofrom an intercompany U.S. dollar-denominated loan issued in fiscal year 2024 to one of our wholly owned, euro-denominated subsidiaries.

Our effective income tax rate was 21.0%35.0% and 20.3%,32.4%, respectively, for the three and nine months ended DecemberJune 21,30, 2025 compared to 24.4%2026 and 6.5% for the comparable prior year periods.2025. The effective tax rate for the three months ended DecemberJune 31,30, 20252026 approximated the federal statutory rate of 21%, but was impacted by the valuation allowance on U.S. deferred taxes, offset by the foreign differential rate. The effective tax rate for the nine months ended December 31,and 2025 differed from the statutory federal rate of 21% primarily due to the impact of the valuation allowance on U.S. deferred taxes, partially offset by the foreign rate differential.taxes.

Our future effective income tax rate depends on various factors, such as changes in the realizability of deferred tax lawsassets, includingtax OBBBA,laws, regulations, accounting principles, or interpretations thereof, and the geographic composition of our pre-tax income. We carefully monitor these factors and adjust our effective income tax rate accordingly. We currently expect a reasonable possibility of a favorable impact on our effective tax rate within the next 12 months from a potential partial release of the U.S. valuation allowance, although the timing and amount remain subject to our ongoing assessment and other factors affecting the tax rate.

Net income varies with changes in revenues,revenue, gross profit, operating expense, and currency exchange rate fluctuations. Net income included $13.5$4.4 million, $11.1$2.4 million and $4.0$1.3 million of non-cash amortization of intangible assets, stock-based compensation expense, and depreciation expense, respectively, for the ninethree months ended DecemberJune 31,30, 2025.2026.

Our sources of liquidity include cash generated from operations, cash on hand, and cash available from borrowings under our Credit Facility. We believe these sources of cash are sufficient to meet our ongoing operating needs, scheduled debt service obligations, dividend payments and anticipated capital expenditures. As of DecemberJune 31,30, 20252026 and March 31, 2025,2026, we held $29.0$30.7 million and $27.3$26.9 million of cash, respectively.

We routinely evaluate opportunities for strategic acquisitions. Future material acquisitions may require us to obtain additional capital, assume third-party debt or incur other long-term obligations. We believe that we have the ability to issue more equity or debt in the future in order to finance our acquisition and investment activities; however, additional equity or debt financing, or other transactions, may not be available on acceptable terms, if at all.

We have paid regular quarterly dividends since 2003. We paid dividends of $0.16 per share during the three months ended DecemberJune 31, 2025, as well as each quarter of fiscal years30, 2026 and 2025.

In JanuaryJuly 2026, we announced that our Board of Directors declared a quarterly cash dividend of $0.16 per share of common stock, payable on MarchSeptember 16,15, 2026, to shareholders of record at the close of business on FebruaryAugust 28,31, 2026.