mlab20240630

mlab20240630_10q.htm

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United States

Securities and Exchange Commission

Washington, D.C. 20549

FORM 10-Q

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___ to ___

Commission File No: 0-11740

MESA LABORATORIES, INC.

(Exact name of registrant as specified in its charter)

	Colorado		84-0872291
	(State or other jurisdiction of		(I.R.S. Employer
	incorporation or organization)		Identification number)

	12100 West Sixth Avenue
	Lakewood, Colorado		80228
	(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (303) 987-8000

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name on each exchange on which registered
Common Stock, no par value	MLAB	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934, during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐

Accelerated filer ☒

Non-accelerated filer ☐

Smaller reporting company ☐

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

Indicate the number of shares outstanding of each of the Issuer’s classes of common stock, as of the latest practicable date:

There were 5,409,163 shares of the Issuer’s common stock, no par value, outstanding as of July 31, 2024.

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Table of Contents

Part I. Financial Information		1

	Item 1. Financial Statements (unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations	2
	Condensed Consolidated Statements of Comprehensive Income (Loss)	3
	Condensed Consolidated Statements of Stockholders’ Equity	4
	Condensed Consolidated Statements of Cash Flows	5
	Notes to Condensed Consolidated Financial Statements	6
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
	Item 3. Quantitative and Qualitative Disclosures about Market Risk	24
	Item 4. Controls and Procedures	25

Part II. Other Information		26

	Item 1. Legal Proceedings	26
	Item 1A. Risk factors	26
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	26
	Item 5. Other Information	26
	Item 6. Exhibits	27
	Signatures	28
	Exhibit 31.1 Certifications Pursuant to Rule 13a-14(a)
	Exhibit 31.2 Certifications Pursuant to Rule 13a-14(a)
	Exhibit 32.1 Certifications Pursuant to Rule 13a-14(b) and 18 U.S.C Section 1350
	Exhibit 32.2 Certifications Pursuant to Rule 13a-14(b) and 18 U.S.C Section 1350

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Part I. Financial Information

Item 1. Financial Statements

Mesa Laboratories, Inc.

Condensed Consolidated Balance Sheets

(unaudited)

(in thousands, except share amounts)

	*June 30,*			*March 31,*
	*2024*			*2024*
ASSETS
Current assets:
Cash and cash equivalents	$	28,472		$	28,214
Accounts receivable, less allowance for doubtful accounts of $1,057 and $1,321, respectively		35,568			39,055
Inventories		31,767			32,675
Prepaid expenses and other current assets		10,883			9,408
Total current assets		106,690			109,352
Noncurrent assets:
Property, plant and equipment, net of accumulated depreciation of $22,574 and $22,519 respectively		31,402			31,766
Deferred tax asset		1,281			1,292
Other assets		11,807			10,538
Customer relationships, net		82,238			85,383
Other intangibles, net		27,221			28,369
Goodwill		179,722			180,096
Total assets	$	440,361		$	446,796

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	5,659		$	6,041
Accrued payroll and benefits		8,338			9,935
Unearned revenues		14,634			15,478
Term loan, current portion		3,750			-
Other accrued expenses		22,484			12,858
Total current liabilities		54,865			44,312
Noncurrent liabilities:
Deferred tax liability	$	19,689			19,780
Other noncurrent liabilities		6,581			15,613
Revolving line of credit		42,000			50,500
Term loan, noncurrent portion, net of discounts and debt issuance costs		69,603			-
Convertible senior notes, net of debt issuance costs		96,896			171,198
Total liabilities		289,634			301,403
Stockholders’ equity:
Common stock, no par value; authorized 25,000,000 shares; issued and outstanding, 5,409,155 and 5,394,491 shares, respectively		345,999			343,642
(Accumulated deficit)		(180,969	)		(183,494	)
Accumulated other comprehensive (loss)		(14,303	)		(14,755	)
Total stockholders’ equity		150,727			145,393
Total liabilities and stockholders’ equity	$	440,361		$	446,796

See accompanying notes to Condensed Consolidated Financial Statements.

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Mesa Laboratories, Inc.

Condensed Consolidated Statements of Operations

(unaudited)

(in thousands, except per share data)

	*Three Months Ended June 30,*
	*2024*			*2023*

Revenues	$	58,170		$	50,645
Cost of revenues		20,921			19,462
Gross profit		37,249			31,183
Operating expense:
Selling		10,116			8,976
General and administrative		16,818			18,060
Research and development		4,735			4,811
Total operating expense		31,669			31,847
Operating income (loss)		5,580			(664	)
Nonoperating expense:
Interest expense and amortization of debt issuance costs		2,842			1,048
(Gain) on extinguishment of convertible senior notes		(3,197	)		-
Other expense (income), net		2,030			(775	)
Total nonoperating expense, net		1,675			273
Earnings (loss) before income taxes		3,905			(937	)
Income tax expense (benefit)		517			(388	)
Net income (loss)	$	3,388		$	(549	)

Earnings (loss) per share:
Basic	$	0.63		$	(0.10	)
Diluted	$	0.62		$	(0.10	)

Weighted-average common shares outstanding:
Basic		5,397			5,372
Diluted		5,424			5,372

See accompanying notes to Condensed Consolidated Financial Statements.

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Mesa Laboratories, Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(unaudited)

(in thousands)

	*Three Months Ended June 30,*
	*2024*		*2023*

Net income (loss)	$	3,388	$	(549	)
Other comprehensive income (loss):
Foreign currency translation adjustments		452		(6,661	)
Comprehensive income (loss)	$	3,840	$	(7,210	)

See accompanying notes to Condensed Consolidated Financial Statements.

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Mesa Laboratories, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(unaudited)

(dollars in thousands, except per share data)

	*Common Stock*
	*Number of Shares*			*Amount*			*(Accumulated Deficit) Retained Earnings*			AOCI*			*Total*
March 31, 2024		5,394,491		$	343,642		$	(183,494	)	$	(14,755	)	$	145,393
Exercise of stock options and vesting of restricted stock units		20,858			-			-			-			-
Tax withholding on vesting of restricted stock units		(6,194	)		(571	)		-			-			(571	)
Dividends paid, $0.16 per share		-			-			(863	)		-			(863	)
Stock-based compensation expense		-			2,928			-			-			2,928
Foreign currency translation		-			-			-			452			452
Net income		-			-			3,388			-			3,388
June 30, 2024		5,409,155		$	345,999		$	(180,969	)	$	(14,303	)	$	150,727

	*Common Stock*
	*Number of Shares*			*Amount*			*(Accumulated Deficit) Retained Earnings*			AOCI*			*Total*
March 31, 2023		5,369,466		$	332,076		$	74,199		$	(12,795	)	$	393,480
Exercise of stock options and vesting of restricted stock units		20,074			52			-			-			52
Tax withholding on vesting of restricted stock units		(5,260	)		(712	)		-			-			(712	)
Dividends paid, $0.16 per share		-			-			(859	)		-			(859	)
Stock-based compensation expense		-			2,968			-			-			2,968
Foreign currency translation		-			-			-			(6,661	)		(6,661	)
Net (loss)		-			-			(549	)		-			(549	)
June 30, 2023		5,384,280		$	334,384		$	72,791		$	(19,456	)	$	387,719

*Accumulated Other Comprehensive Income (Loss).

See accompanying notes to Condensed Consolidated Financial Statements.

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Mesa Laboratories, Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited)

(in thousands)

	*Three Months Ended June 30,*
	*2024*			*2023*
Cash flows from operating activities:
Net income (loss)	$	3,388		$	(549	)
Adjustments to reconcile net income to net cash from operating activities:
Depreciation of property, plant and equipment		1,404			914
Amortization of acquisition-related intangibles		4,061			7,220
Stock-based compensation expense		2,928			2,968
Gain on extinguishment of convertible notes		(3,197	)		-
Amortization of step-up in inventory basis		778			-
Other		1,409			513
Cash from changes in operating assets and liabilities:
Accounts receivable, net		3,482			6,456
Inventories		(671	)		(1,244	)
Prepaid expenses and other assets		969			(2,448	)
Accounts payable		(388	)		(539	)
Accrued liabilities and taxes payable		(2,811	)		(3,217	)
Unearned revenues		(919	)		(135	)
Net cash provided by operating activities		10,433			9,939
Cash flows from investing activities:
Purchases of property, plant and equipment		(891	)		(270	)
Net cash (used in) investing activities		(891	)		(270	)
Cash flows from financing activities:
Proceeds from the issuance of debt, net		73,465			-
Repayment of debt		(9,438	)		(8,000	)
Repurchase of convertible debt		(71,250	)		-
Dividends paid		(863	)		(859	)
Other financing, net		(1,023	)		(660	)
Net cash (used in) financing activities		(9,109	)		(9,519	)
Effect of exchange rate changes on cash and cash equivalents		(175	)		(684	)
Net increase (decrease) in cash and cash equivalents		258			(534	)
Cash and cash equivalents at beginning of period		28,214			32,910
Cash and cash equivalents at end of period	$	28,472		$	32,376

See accompanying notes to Condensed Consolidated Financial Statements.

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Mesa Laboratories, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

(dollar and share amounts in thousands, unless otherwise specified)

Note 1. Description of Business and Summary of Significant Accounting Policies

Description of Business

In this quarterly report on Form 10-Q, Mesa Laboratories, Inc., a Colorado corporation, together with its subsidiaries, is collectively referred to as “we,” “us,” “our,” the “Company,” or “Mesa.”

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, 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 June 30, 2024, we managed our operations in four reportable segments, or divisions:

	●	Sterilization and Disinfection Control - manufactures and sells biological, chemical and cleaning indicators which are used to assess the effectiveness of sterilization, decontamination, disinfection, and cleaning processes, including steam, hydrogen peroxide, ethylene oxide, radiation, and other processes in the medical device, pharmaceutical, and healthcare industries. The division also provides testing and laboratory services, mainly to the dental and pharmaceutical industries.
	●	Clinical Genomics - develops, manufactures and sells highly sensitive, low-cost, high-throughput genetic analysis tools and related consumables and services that enable clinical research labs and contract research organizations to perform genomic testing for a broad range of research applications in several therapeutic areas, such as screenings for hereditary diseases, pharmacogenetics, oncology related applications, and toxicology research.

●

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

●

Calibration Solutions - 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 environmental and process monitoring, dialysis, gas flow, air quality and torque testing.

Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission and in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information. In the opinion of management, such unaudited information includes all adjustments, consisting of normal recurring adjustments necessary for the fair statement of our financial position and results of operations. The results of operations for interim periods are not necessarily indicative of results that may be achieved for the entire year. The year-end Condensed Consolidated Balance Sheet data was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America. The Condensed Consolidated Financial Statements include the accounts of Mesa and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. We made no material changes to the application of our significant accounting policies disclosed in our annual report on Form 10-K. This quarterly report should be read in conjunction with the consolidated financial statements included in our annual report on Form 10-K for the year ended March 31, 2024.

Our fiscal year ends on March 31. References in this Quarterly Report to a particular “year” or “quarter” refer to our fiscal year or fiscal quarters, respectively.

Risks and Uncertainties

The preparation of financial statements requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the reporting date and revenues and expenses during the reporting periods. These estimates represent management's judgment about the outcome of future events. The global business environment continues to be impacted by cost pressures, the overall effects of economic uncertainty on customers' purchasing patterns, high interest rates, and other factors. It is not possible to accurately predict the future impact of such events and circumstances. Actual results could differ from our estimates.

Recently Issued Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures." ASU No. 2023-07 requires all annual disclosures currently required by Topic 280 to be included in interim periods and requires disclosure of significant segment expenses regularly provided to the chief operating decision maker ("CODM"), a description of other segment items by reportable segment, and applicable additional measures of segment profit or loss used by the CODM when allocating resources and assessing business performance. The ASU is effective for fiscal years beginning after December 15, 2023 (our fiscal year 2025 for annual periods), and interim periods within fiscal years beginning after December 15, 2024 (our fiscal year 2026 for interim periods) on a retrospective basis. We are currently assessing the effect the adoption of this standard will have on our consolidated financial statement disclosures.

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In December 2023, the FASB issued ASU No. 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures." ASU No. 2023-09, which enhances the transparency, effectiveness and comparability of income tax disclosures by requiring consistent categories and greater disaggregation of information related to income tax rate reconciliations and the jurisdictions in which income taxes are paid. The guidance is effective for public business entities for fiscal years beginning after December 15, 2024 (our fiscal year 2026), with early adoption permitted. We are currently assessing the effect the adoption of this standard will have on our consolidated financial statement disclosures.

We have reviewed all recently issued accounting pronouncements and have concluded that, other than as described above, they are either not applicable to us or are not expected to have a significant impact on our consolidated financial statements.

Note 2. Significant Transactions

GKE - Fiscal Year 2024 Acquisition

We acquired 100% of the outstanding shares of GKE GmbH and SAL GmbH effective October 16, 2023, and upon approval by applicable Chinese regulators, effective December 31, 2023, we acquired 100% of the outstanding shares of Beijing GKE Science & Technology Co. Ltd. (“GKE China.” Together with GKE GmbH and SAL GmbH, “GKE” or the "GKE acquisition").

GKE develops, manufactures and sells a highly competitive portfolio of chemical sterilization indicators, biologics, and process challenge devices to protect patient safety across global healthcare markets. GKE is included in our Sterilization and Disinfection Control ("SDC") division, and GKE's strengths in chemical indictors are complementary to SDC's strengths in biologic indicators, as chemical and biologic indicators are used in the same sterility validation workflows. Additionally, GKE’s healthcare-focused commercial capabilities in Europe and Asia greatly expand our reach in the healthcare markets in those geographies. We are working to obtain regulatory 510(k) clearance on certain GKE products for sale in the United States, which would further expand organic revenues growth opportunities from the GKE business.

We finalized our purchase price accounting of GKE during fiscal year 2024. Total cash consideration for the GKE acquisition was $87,187, net of cash and financial liabilities and inclusive of working capital adjustments. Of the total acquisition price, approximately $9,200 (at June 30, 2024 exchange rates) is being held back for a period of 18 months from the acquisition closing as security against potential indemnification losses. We funded the acquisition through a combination of cash on-hand and a total of $71,000 borrowed under our line of credit.

During the three months ended June 30, 2024, GKE's operations contributed $6,254 to our consolidated revenues and $3,820 to our gross profit, including $778 of inventory step-up amortization recorded to cost of revenues. Additionally, amortization expense of $532 was recorded to general and administrative expense and $110 was recorded to cost of revenues related to intangibles acquired as part of the GKE acquisition during the three months ended June 30, 2024.

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Note 3. Revenue

We develop, manufacture, market, sell and maintain life sciences tools and quality control instruments and related consumables.

Hardware sales include physical products such as instruments used for molecular and genetic analysis, protein synthesizers, medical meters, wireless sensor systems, data loggers, and process challenge devices. Hardware sales may be offered with accompanying perpetual or annual software licenses, which in some cases are required for the hardware to function.

Consumables are typically used on a one-time basis and require frequent replacement in our customers' operating cycles. Consumables sold by our Clinical Genomics and Biopharmaceutical Development divisions, such as reagents used for molecular and genetic analysis or solutions used for protein synthesis, are critical to the ongoing use of our instruments. Consumables such as biological indicator test strips sold by our Sterilization and Disinfection Control division are used on a standalone basis.

Revenues from hardware and consumables are recognized upon transfer to the customer, typically at the point of shipment.

We also offer maintenance, calibration, and testing service contracts. These contracts result in revenues recognized over time, for example, when we are obligated to perform labor and replace parts on an as-needed basis over a contractually specified period, or at a point in time, upon completion of a specific, discrete service. In many cases, our contracts contain both revenues recognized over time and revenues recognized at a point in time.

We evaluate our revenues internally based on business division and the nature of goods and services provided.

The following tables present disaggregated revenues for the three months ended June 30, 2024 and 2023, respectively:

	*Three Months Ended June 30, 2024*
	*Sterilization and Disinfection Control (1)*		*Clinical Genomics*		*Biopharmaceutical Development*		*Calibration Solutions*		*Total*

Consumables	$	20,396	$	8,112	$	3,922	$	580	$	33,010
Hardware and software		169		2,183		4,837		6,886		14,075
Services		2,392		1,109		3,249		4,335		11,085
Total revenues	$	22,957	$	11,404	$	12,008	$	11,801	$	58,170

⁽¹⁾Revenues of $6,254 from GKE are included in the Sterilization and Disinfection Control division during the three months ended June 30, 2024.

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	*Three Months Ended June 30, 2023*
	*Sterilization and Disinfection Control*		*Clinical Genomics*		*Biopharmaceutical Development*		*Calibration Solutions*		*Total*

Consumables	$	13,707	$	8,769	$	4,486	$	509	$	27,471
Hardware and software		81		3,427		2,691		7,078		13,277
Services		2,139		1,173		2,712		3,873		9,897
Total revenues	$	15,927	$	13,369	$	9,889	$	11,460	$	50,645

Revenues from external customers are attributed to individual countries based upon the locations to which the products are shipped or exported, or locations where services are performed, as follows:

	*Three Months Ended June 30,*
	*2024*		*2023*
United States	$	26,861	$	26,537
China		6,559		6,113
Other		24,750		17,995
Total revenues	$	58,170	$	50,645

Other than China, no foreign country exceeded 10% of total revenues for the three months ended June 30, 2024 and 2023.

Contract Balances

Our contracts have varying payment terms and conditions. Some customers prepay for products and services, resulting in unearned revenues or customer deposits, called contract liabilities. Short-term contract liabilities are included within unearned revenues in the accompanying unaudited Condensed Consolidated Balance Sheets, and long-term contract liabilities are included within other noncurrent liabilities in the accompanying unaudited Condensed Consolidated Balance Sheets. The significant majority of our revenues and related receivables and contract liabilities are generated from contracts with customers with original durations of 12 months or less. Contract liabilities will be recognized to revenue as we satisfy our obligations under the terms of the contracts.

A summary of contract liabilities is as follows:

Contract liabilities as of March 31, 2024	$	15,686
Prior year liabilities recognized in revenues during the three months ended June 30, 2024		(3,805	)
Contract liabilities added during the three months ended June 30, 2024, net of revenues recognized		2,877
Contract liabilities as of June 30, 2024	$	14,758

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Note 4. Fair Value Measurements

Our financial instruments consist primarily of cash and cash equivalents, trade accounts receivable, obligations under trade accounts payable, and debt. Due to their short-term nature, the carrying values for cash and cash equivalents, trade accounts receivable, and trade accounts payable approximate fair value; they are classified within Level 1 of the fair value hierarchy.

The financial instruments that subject us to the highest concentration of credit risk are cash and accounts receivable. We maintain relationships and cash deposits at multiple banking institutions across the world in an effort to diversify and reduce risk of loss. Concentration of credit risk with respect to accounts receivable is limited to customers to whom we make significant sales. No customers accounted for more than 10% of total trade receivables as of June 30, 2024.

On April 5, 2024, we entered into separate, privately negotiated purchase agreements with a limited number of holders of our 1.375% convertible senior notes due August 15, 2025 (the "Notes"), through which we repurchased $75,000 in aggregate principal amount of the Notes. See Note 7. "Indebtedness" for further information. As of June 30, 2024, we had remaining outstanding $97,500 aggregate principal amount of the Notes. We estimate the fair value of the Notes using Level 2 inputs based on the last actively traded price or observable market input preceding the end of the reporting period. The fair value of the Notes is approximately correlated to our stock price.

The estimated fair value and carrying value of the Notes were as follows:

	*June 30, 2024*				*March 31, 2024*
	*Carrying Value*		*Fair Value (Level 2)*		*Carrying Value*		*Fair Value (Level 2)*
Notes	$	96,896	$	92,016	$	171,198	$	163,013

The carrying amount of the term loan and revolving line of credit (together, the "Credit Facility") on the Condensed Consolidated Balance Sheets approximates fair value due to the variable interest rate pricing on the debt with the balance bearing an interest rate approximating current market rates.

For the GKE acquisition, we held back approximately $9,200 (at June 30, 2024 exchange rates) for a period of 18 months from the acquisition closing as security against potential indemnification losses. We estimate the fair value of consideration held back to be $8,900, using Level 3 inputs, and we adjust the estimated fair value at each reporting period through earnings.

During fiscal year 2023, we acquired substantially all of the assets and certain liabilities of Belyntic GmbH’s peptide purification business (“the Belyntic acquisition”). The Belyntic acquisition obligates us to pay contingent consideration of up to $1,500 cash upon regulatory approval of certain patent applications (see Note 11. "Commitments and Contingencies"), of which $750 has not yet been paid. We estimate the fair value of the remaining contingent consideration is $650, using Level 3 inputs and a probability-weighted outcome analysis based on our expectations of patent approval, leveraging our historical experience and expert input, and we adjust the estimated fair value at each reporting period through earnings.

Amounts recognized or disclosed at fair value in the unaudited condensed consolidated financial statements on a nonrecurring basis include the initial recognition and disclosure of most assets and liabilities purchased in business acquisitions and any related measurement period adjustments. Additionally, assets such as property and equipment, operating lease assets, goodwill and other intangible assets are adjusted to fair value if determined to be impaired. We recorded no impairments during the three months ended June 30, 2024 or June 30, 2023. Fair values of such assets and liabilities require measurement using Level 3 inputs.

There were no transfers between the levels of the fair value hierarchy during the three months ended June 30, 2024 or June 30, 2023.

Note 5. Supplemental Information

Inventories consisted of the following:

	*June 30, 2024*		*March 31, 2024*
Raw materials	$	19,031	$	18,335
Work in process		682

SEC Form 10-Q filed by Mesa Laboratories Inc.