Mesa Laboratories, Inc. (MLAB-NASDAQ)

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May 1, 2009 Issue

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Mesa Laboratories Is Focused On A Three-Pronged Growth Strategy Of Shoring Up Their Distribution Channels, Introducing New Products Into The Marketplace And Seeking Out Acquisitions

Company Profile:

Mesa Laboratories designs, manufactures and markets instruments and disposable products utilized in connection with industrial applications and healthcare. For industrial applications, which includes pharmaceutical, food, medical devices, and petrochemical, the Company presently markets the DATATRACE® data logging systems, NUSONICS® Concentration Analyzers and Flow Meter products, and RAVEN Biological Indicators. For healthcare applications, the Company markets Dialysate Meters used in kidney dialysis and RAVEN Biological Indicators, which are used by hospitals and dental offices to assure sterility. The Company is continually performing research and development to expand the application of its technology.

Dr. John J. Sullivan, Ph.D.
President and CEO

Dr. Sullivan holds a BS degree in Biology and a Ph.D. degree in Food Science. In 1982, Dr. Sullivan joined the U.S. Food and Drug Administration’s Seattle District Laboratory as a Senior Research Scientist and worked there until 1988. In 1988 Dr. Sullivan joined Varian, Inc., a major analytical instrument manufacturer, and served in various capacities in Research and Development, Sales and Marketing Management and in Business Development until 2004. Dr. Sullivan joined the Mesa Laboratories in 2004 and held the positions of Vice President of Sales and Marketing and President and Chief Operating Officer before being promoted to Chief Executive Officer in 2009.


Medical Instruments & Supplies

Mesa Laboratories, Inc.
12100 West Sixth Avenue
Lakewood, CO 80228
Phone: 303-987-8000

Interview conducted by: Lynn Fosse, Senior Editor,, Published – May 1, 2009

Dr. Sullivan, you have taken over leadership of Mesa during a trying time in the economy; what is the vision at Mesa today and has it changed at all in the last few months?
Dr. Sullivan: “Our vision is a long-term view of how we want to build our business and we do not believe that the short-term economic turmoil is going to change that at all. We make our strategic growth decision based on that logic and right now, we have a three-pronged approach to growth; those are to shore up our distribution channels, to introduce new products into the marketplace and to seek out acquisitions. We do not plan on changing from that strategy because of the short-term turmoil.”


CEOCFO: Will you tell us about the products you make and what the market is for them?

Dr. Sullivan: “We have three primary product lines. The first one is in the medical field, where we make quality control instruments for dialysis clinics. There are thousands of these dialysis clinics in and outside the US and they use our instruments to ensure that their dialysis machines are operating properly. Another product line that we have is data loggers, with our DataTrace® product line. These are instruments that are used to measure critical parameters in the manufacturing process in food, pharmaceuticals and medical devices. The parameters that they measure are temperature, relative humidity and pressure. Most of these data loggers are used in quality control of the sterilization process. Our third product line is a consumable product line; these are biological indicators, also used for sterility quality control. Many of them are also used for the pharmaceutical and medical device industry in their manufacturing operations for sterility assurance. They are also used in the healthcare setting in hospitals and dental offices.”


CEOCFO: Is there a common thread between the areas, and why are you in those particular fields?

Dr. Sullivan: “All of our products are used to facilitate critical quality control processes.”


CEOCFO: What is the competitive landscape like for you in the various areas that you are involved in?

Dr. Sullivan: “It varies by the product line. In the medical product line, there are two other companies that manufacture quality control meters. In the data logger product line, at least in the the area of the data logger market in which we operate, worldwide, there are probably five or six serious competitors. Here in the United States, we have very good market share; outside of the U.S., we have room to grow. For data loggers, there is really only one competitor that is manufacturing here in the United States; the others are manufacturing in Europe. On the biological indicator side, there are probably five or six manufacturers of biological indicators; two or three others here in the U.S. and a couple in Europe. We also have a good market share in the biological indicator market, at least in the industrial and dental office area, where we dominate that market segment.”


CEOCFO: What sets Mesa products apart?

Dr. Sullivan: “We make innovative products for niche applications. We also make products that are very high quality. We are small and nimble, so we can respond to customers, and when they have a special application, we can fill that pretty quickly. This is especially true with the biological indicators and data loggers, where there are special applications and special products that then led to the creation of standard products in our lines.”


CEOCFO: Where are the manufacturing facilities?

Dr. Sullivan: “We manufacture the electronic instruments in Colorado and the biological indicators in Nebraska. We are all U.S. based.”


CEOCFO: What is your international presence now and what is the strategy going forward?
Dr. Sullivan: “We currently derive about 25% of our revenue from sales outside of the United States. We have about 100 active distributors for the various product lines. Improving our distribution channels is part of our strategic growth initiative. We support those distributors that we currently have and in countries where we don’t have a distributor, we are actively locating new ones.”


CEOCFO: Please tell us more about your strategy for the future.

Dr. Sullivan: “It is based on growing both our top line revenue and our net income. We won’t grow revenue just for the sake of growing the revenue. Top line growth must be accompanied with bottom line growth, as well. As mentioned, we have a three-pronged approach to growth, including improving our distribution channels, getting new products on the market faster, and actively seeking out new acquisitions.”


CEOCFO: What are you looking to acquire, and what do you look for in new products?

Dr. Sullivan: “As far as products go we have a relatively small R&D staff, but they are very productive. We have been focusing lately on getting new products out in the DataTrace product line. Our recent introduction of new radio frequency data loggers over the past 12 months has been very well received and these instruments are revolutionary for the type of market that they are in. We continue to build on that success. As far as acquisitions go, we look for acquisitions that are somehow synergistic with what we are currently doing. That synergy could be in marketplaces or technology; we also look for a financial fit with a company or product line that works well with our current strategy.”


CEOCFO: What it the financial picture like for you today?

Dr. Sullivan: “Our revenue is approximately $20 million per year and our net income is in the low to mid 20% range. Mesa has had a long history of good cash flow and very good net income. Our plan is to continue that in the future.”


CEOCFO: In closing, why should potential investors look at Mesa?

Dr. Sullivan: “Our track record illustrates that Mesa has a long history of growth, both revenue and net income. We hope that investors would look at the long-term prospects of the company and that fact that we are company that watches out for the shareholders. We are always interested in growth, always interested in preserving our bottom line, and in the last several years we have been paying a good dividend. Therefore, we hope to attract investors that have that long-term perspective.”


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“We have been focusing lately on getting new products out in the DataTrace product line. Our recent introduction of new radio frequency data loggers over the past 12 months has been very well received and these instruments are revolutionary for the type of market that they are in.” - Dr. John J. Sullivan, Ph.D. does not purchase or make
recommendation on stocks based on the interviews published.