Mesa Laboratories, Inc. (NASDAQ: MLAB) (we, us, our, "Mesa" or the "Company") today reported an eight percent increase in revenues for the second quarter ended September 30, 2013.
Revenues for the second quarter increased eight percent to $12,676,000 as compared to $11,706,000 for the same quarter last year. Net income for the second quarter decreased 14 percent to $1,932,000 or $0.54 per diluted share of common stock as compared to $2,248,000 or $0.64 per diluted share of common stock for the same quarter last year. Net income for the second quarter was impacted by a net $638,000 (before tax) of unusual items, comprised of a $1,106,000 expense for uncollected sales tax liabilities which was partially offset by a gain of $468,000 related to the sale of the Nusonics product line. The net impact of these unusual items (after tax) reduced our net income per diluted share of common stock by $0.12 for the second quarter.
Revenues for the six months ended September 30, 2013 increased seven percent to $23,894,000 as compared to $22,266,000 for the same period last year. Net income for the six months ended September 30, 2013 decreased 13 percent to $3,792,000 or $1.06 per diluted share of common stock as compared to $4,348,000 or $1.23 per diluted share of common stock for the same period last year. Net income for the six months ended was impacted by the same second quarter unusual items noted above. The net impact of these unusual items (after tax) reduced our net income per diluted share of common stock by $0.11 for the six months ended September 30, 2013.
On a non-GAAP basis, adjusted net income (which excludes the non-cash impact of amortization of intangible assets, net of tax) for the second quarter decreased 13 percent to $2,337,0001 or $0.65 per diluted share of common stock as compared to $2,684,000 or $0.76 per diluted share of common stock for the same quarter last year. Adjusted net income for the six months ended September 30, 2013 decreased 11 percent to $4,574,000 or $1.28 per diluted share of common stock as compared to $5,167,000 or $1.46 per diluted share of common stock for the same period last year. Adjusted net income for the second quarter and the six months ended September 30, 2013 was impacted by the same second quarter unusual items noted above.
"Mesa experienced solid revenue growth during the first six months of fiscal year 2014", commented John J. Sullivan, President and CEO. "Organic growth in our Biological Indicators ("BI") division of four percent was complemented by 10 percent growth in our Instruments division, driven primarily by the Bios and SureTorque acquisitions, partially offset by the divestiture of our Nusonics line of instruments. Additionally gross profit increased by five percent for the six month period, however gross profit margin percentage for the same period decreased by two percentage points. This was due primarily to a BI product replacement initiative in the first quarter and the application of purchase accounting on assets associated with the SureTorque acquisition in the second quarter. We expect our gross profit margin percentage to recover to normal levels during the second half of the fiscal year."
"Mesa's operating income decreased by $973,000 and $1,150,000 for the second quarter and the six months ended September 30, 2013, respectively as compared to the same periods last year", continued John Sullivan. "The decrease was primarily due to the $1,106,000 (before tax) expense associated with uncollected sales tax liabilities associated with prior periods. This expense was accrued for in the second quarter, although the actual cash outlay will likely be spread out over several quarters (if not years) into the future. It is however important to note that without this unusual expense, operating income would have been relatively flat for both the second quarter and six month period. We believe that the unusual sales tax expense is behind us and as a result, we expect Mesa's profitability to return to normal levels in the second half of the fiscal year."
Financial Summary
The non-GAAP measures of adjusted net income and adjusted net income per share presented in the reconciliation above are defined to exclude the non-cash impact of amortization of intangible assets, net of tax. The tax effect is calculated using the average corporate rate for that period multiplied by the amortization. We believe that excluding these acquisition related expenses provides the ability to understand the benefits of acquisitions based on their cash return.
We provide non-GAAP adjusted net income and non-GAAP adjusted net income per share amounts in order to provide meaningful supplemental information regarding our operational performance. Our management uses non-GAAP measures to evaluate the performance of our business and to compensate employees. This information facilitates management's internal comparisons to our historical operating results as well as to the operating results of our competitors. Since management finds this measure to be useful, we believe that our investors can benefit by evaluating both non-GAAP and GAAP results.
Our management recognizes that items such as amortization of intangible assets can have a material impact on our net income. To gain a complete picture of all effects on our profit and loss from any and all events, management does (and investors should) rely upon the GAAP statements of income. The non-GAAP numbers focus instead upon our core operating business.
Readers are reminded that non-GAAP measures are merely a supplement to, and not a replacement for, or superior to financial measures prepared according to GAAP. They should be evaluated in conjunction with the GAAP financial measures. It should be noted as well that our non-GAAP information may be different from the non-GAAP information provided by other companies.