10-Q

United States

Securities and Exchange Commission

Washington, D.C. 20549

FORM 10-Q

(Mark one)

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

For the quarterly period ended June 30, 2017

☐     TRANSITION REPORT PURSUANT TOSECTION 13 OR 15 (d) OF THE SECURITES 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

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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post 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. (Check one):

Large accelerated filer ☐	Accelerated filer ☒	Non-accelerated filer ☐	Smaller reporting company ☐	Emerging growth company ☐
		(Do not check if a smaller reporting 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 3,758,914 shares of the Issuer’s common stock, no par value, outstanding as of July 25, 2017.

Table of Contents

Part I
1.	Financial Statements		1
		Condensed Consolidated Balance Sheets	1
		Condensed Consolidated Statements of Income	2
		Condensed Consolidated Statements of Comprehensive Income	3
		Condensed Consolidated Statements of Cash Flows	4
		Notes to Condensed Consolidated Financial Statements	5
2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		12
3.	Quantitative and Qualitative Disclosures About Market Risk		19
4.	Controls and Procedures		19
Part II
1	Legal Proceedings		20
1A.	Risk Factors		20
2.	Unregistered Sales of Equity Securities and Use of Proceeds		20
6.	Exhibits		20
	Signatures
	Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)
	Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)
	Certification of Chief Executive Officer Pursuant to Rule 13a-14(b) and 18 U.S.C. Section 1350
	Certification of Chief Financial Officer Pursuant to Rule 13a-14(b) and 18 U.S.C. Section 1350

Part I. Financial Information

Item 1. Financial Statements

Mesa Laboratories, Inc.

Condensed Consolidated Balance Sheets

(In thousands, except share amounts)

	June 30, 2017 (Unaudited)			March 31, 2017
ASSETS
Current assets:
Cash and cash equivalents	$	2,976		$	5,820
Accounts receivable, less allowances of $267 and $252, respectively		12,903			14,319
Inventories, net		13,376			13,873
Prepaid income taxes		1,676			587
Prepaid expenses and other		1,808			1,186
Assets held for sale		1,012			--
Total current assets		33,751			35,785
Property, plant and equipment, net		25,821			26,002
Intangibles, net		36,681			37,790
Goodwill		72,730			72,156
Total assets	$	168,983		$	171,733
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	2,338		$	2,168
Accrued salaries and payroll taxes		2,934			4,350
Unearned revenues		4,033			4,117
Current portion of contingent consideration		1,165			1,294
Other accrued expenses		2,503			2,999
Income taxes payable		704			514
Current portion of long-term debt		1,250			1,125
Total current liabilities		14,927			16,567
Deferred income taxes		3,644			3,554
Long-term debt, net of debt issuance costs and current portion		49,303			53,675
Contingent consideration		118			116
Total liabilities		67,992			73,912
Commitments and Contingencies (Note 8)
Stockholders’ equity:
Common stock, no par value; authorized 25,000,000 shares; issued and outstanding, 3,758,175 and 3,727,704 shares, respectively		27,428			25,925
Retained earnings		74,572			73,656
Accumulated other comprehensive loss		(1,009	)		(1,760	)
Total stockholders’ equity		100,991			97,821
Total liabilities and stockholders’ equity	$	168,983		$	171,733

See accompanying notes to condensed consolidated financial statements.

Page 1

Mesa Laboratories, Inc.

Condensed Consolidated Statements of Income

(Unaudited)

(In thousands except per share data)

	Three Months Ended June 30,
	2017		2016
Revenues	$	22,673	$	21,114
Cost of revenues		10,002		9,100
Gross profit		12,671		12,014
Operating expenses
Selling		2,679		2,424
General and administrative		6,857		5,980
Research and development		1,153		1,035
Total operating expenses		10,689		9,439
Operating income		1,982		2,575
Other expense, net		679		406
Earnings before income taxes		1,303		2,169
Income tax benefit (expense)		214		(239	)
Net income	$	1,517	$	1,930
Net income per share:
Basic	$	0.41	$	0.53
Diluted		0.39		0.51
Weighted average common shares outstanding:
Basic		3,736		3,646
Diluted		3,923		3,802

See accompanying notes to condensed consolidated financial statements.

Page 2

Mesa Laboratories, Inc.

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)

(In thousands except per share data)

	Three Months Ended June 30,
	2017		2016
Net Income	$	1,517	$	1,930
Other comprehensive income, net of tax:
Foreign currency translation		751		50
Total comprehensive income	$	2,268	$	1,980

See accompanying notes to condensed consolidated financial statements.

Page 3

Mesa Laboratories, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

	Three Months Ended June 30,
	2017			2016
Cash flows from operating activities:
Net income	$	1,517		$	1,930
Depreciation and amortization		2,278			2,170
Stock-based compensation		540			429
Amortization of debt issuance costs		28			--
Deferred income taxes		90			138
Foreign currency adjustments		(176	)		67
Adjustment to contingent consideration		300			--
Change in assets and liabilities, net of effects of acquisitions
Accounts receivable, net		1,416			2,890
Inventories, net		497			(67	)
Prepaid expenses and other		(1,711	)		(426	)
Accounts payable		170			(66	)
Accrued liabilities and taxes payable		(1,747	)		(3,584	)
Unearned revenues		(84	)		40
Contingent consideration		(437	)		111
Net cash provided by operating activities		2,681			3,632
Cash flows from investing activities:
Acquisitions		(62	)		(2,565	)
Purchases of property, plant and equipment		(1,505	)		(3,456	)
Net cash used in investing activities		(1,567	)		(6,021	)
Cash flows from financing activities:
Proceeds from the issuance of debt		--			1,500
Payments on debt		(4,250	)		(750	)
Dividends		(601	)		(583	)
Proceeds from the exercise of stock options		963			1,160
Net cash (used in) provided by financing activities		(3,888	)		1,327
Effect of exchange rate changes on cash and cash equivalents		(70	)		4
Net decrease in cash and cash equivalents		(2,844	)		(1,058	)
Cash and cash equivalents at beginning of period		5,820			5,695
Cash and cash equivalents at end of period	$	2,976		$	4,637
Cash paid for:
Income taxes	$	658		$	1,207
Interest		561			292
Supplemental non-cash activity:
Contingent consideration as part of an acquisition	$	--		$	1,168

See accompanying notes to condensed consolidated financial statements.

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Mesa Laboratories, Inc.

Notes to Condensed Consolidated Financial Statements

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

Description of Business

Mesa Laboratories, Inc. was incorporated under the laws of the State of Colorado on March 26, 1982. The terms “we,” “us,” “our,” the “Company” or “Mesa” are used in this report to refer collectively to the parent company and the subsidiaries through which our various businesses are conducted. We pursue a strategy of focusing primarily on quality control products and services, which are sold into niche markets that are driven by regulatory requirements. We prefer markets that have limited competition where we can establish a strong presence and achieve high gross margins. We are organized into four divisions across eight physical locations. Our Instruments Division designs, manufactures and markets quality control instruments and disposable products utilized in the healthcare, pharmaceutical, food and beverage, medical device, industrial hygiene, environmental air sampling and semiconductor industries. Our Biological Indicators Division provides testing services, along with the manufacturing and marketing of biological indicators and distribution of chemical indicators used to assess the effectiveness of sterilization processes, including steam, hydrogen peroxide, ethylene oxide and radiation, in the hospital, dental, medical device and pharmaceutical industries. Our Cold Chain Monitoring Division designs, develops and markets systems which are used to monitor various environmental parameters such as temperature, humidity and differential pressure to ensure that critical storage and processing conditions are maintained in hospitals, pharmaceutical and medical device manufacturers, blood banks, pharmacies and other laboratory and industrial environments. Our Cold Chain Monitoring Division also provides parameter (primarily temperature) monitoring of products during transport in a cold chain and consulting services such as compliance monitoring and validation or mapping of transport and storage containers. Our Cold Chain Packaging Division provides packaging development consulting services and thermal packaging products such as coolers, boxes, insulation materials and phase-change products to control temperature during transport.

Basis of Presentation

The accompanying condensed consolidated balance sheet as of March 31, 2017, has been derived from audited consolidated financial statements. The accompanying unaudited interim condensed consolidated financial statements have been prepared on the same basis as our annual audited consolidated financial statements and in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. In the opinion of management, such unaudited information includes all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of this interim information. Operating results and cash flows for interim periods are not necessarily indicative of results that can be expected for the entire year. The information included in this report should be read in conjunction with our audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended March 31, 2017.

The summary of our significant accounting policies is incorporated by reference to our Annual Report on Form 10-K for the year ended March 31, 2017.

Recently Issued Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers (Topic 606), which will replace most existing revenue recognition guidance in U.S. GAAP and is intended to improve and converge with international standards the financial reporting requirements for revenue from contracts with customers. The core principle of ASU 2014-09 is that an entity should recognize revenue for the transfer of goods or services equal to the amount that it expects to be entitled to receive for those goods or services. ASU 2014-09 also requires additional disclosures about the nature, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments. ASU 2014-09 allows for adoption either on a full retrospective basis to each prior reporting period presented or on a modified retrospective basis with the cumulative effect of initially applying the new guidance recognized at the date of initial application, which will be effective for the Company beginning April 1, 2018.

We plan to adopt ASU 2014-09 and its amendments on a modified retrospective basis and are continuing to assess all future impacts of the guidance by reviewing our current contracts with customers to identify potential differences that could result from applying the new guidance. Based on our preliminary review, we expect that the adoption of ASU 2014-09 will not have a material impact on our consolidated financial statements. As we complete our overall assessment, we are evaluating our accounting policies and practices, business processes, systems and controls to determine if changes are necessary to support the new revenue recognition and disclosure requirements. Our assessment will be completed during the year ending March 31, 2018.

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In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other, which eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge. ASU 2017-04 is required to be applied prospectively and we elected to early adopt ASU 2017-04 effective April 1, 2017. We do not anticipate that the adoption will have a significant impact on our consolidated financial statements.

Note 2 – Acquisitions

For the three months ended June 30, 2017, our acquisitions of businesses totaled $362,000, of which none were material in nature (see Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations).

Note 3 – Inventories

Inventories consist of the following (in thousands): 

	June 30, 2017			March 31, 2017
Raw materials	$	10,770		$	10,815
Work-in-process		365			342
Finished goods		3,801			3,604
Less: reserve		(1,560	)		(888	)
	$	13,376		$	13,873

Note 4 – Facility Relocation

In August 2016, we announced that we planned to shut down both our Omaha and Traverse City Biological Indicator manufacturing facilities and relocate those operations to the new Bozeman building. The move of those two facilities, along with the current Bozeman operations, began in March 2017 and is estimated to be completed by the end of our year ending March 31, 2018. We estimate that the total costs of the relocation will be $2,100,000 (which is comprised primarily of facility moving expenses, retention bonuses for existing personnel and payroll costs for duplicative personnel during the transition period) of which $725,000 was incurred during the year ended March 31, 2017. We incurred $522,000 in relocation costs for the three months ended June 30, 2017, of which $291,000 and $231,000 are reflected in cost of revenues and general and administrative expense, respectively in the accompanying condensed consolidated statements of income. Facility relocation costs, which are associated with our Biological Indicators segment, are as follows for the three months ended June 30, 2017:

● Retention bonuses for existing personnel of $207,000

● Duplicative employment costs of $84,000

● Moving costs of $231,000

Facility relocation amounts accrued and paid for the three months ended June 30, 2017 are as follows (in thousands):

Balance at March 31, 2017	$	673
Facility relocation expense		522
Cash payments		(594	)
Balance at June 30, 2017	$	601

Subsequent to June 30, 2017, we completed the move from the Omaha facility and subsequently sold that building for $1,116,000 (net of commission costs) which resulted in a gain of $116,000. The Omaha facility is presented on the accompanying condensed consolidated balance sheets as assets held for sale.

Page 6

Note 5 – Long-Term Debt

Long-term debt consists of the following (in thousands):

	June 30, 2017			March 31, 2017
Line of credit (3.25% at June 30, 2017)	$	31,500		$	35,500
Term loan (3.25% at June 30, 2017)		19,500			19,750
Less: discount		(447	)		(450	)
Less: current portion		(1,250	)		(1,125	)
Long-term portion	$	49,303		$	53,675

On March 1, 2017, we entered into a five-year agreement (the “Credit Facility”) for an $80,000,000 revolving line of credit (“Line of Credit”), a $20,000,000 term loan (“Term Loan”) and up to $2,500,000 of letters of credit with a banking syndicate of four banks. In addition, the Credit Facility provides a post-closing accordion feature which allows for the Company to request to increase the Line of Credit or Term Loan up to an additional $100,000,000. Funds from the Credit Facility may be used to pay down the previous credit facility, finance working capital needs and for general corporate purposes in the ordinary course of business (including, without limitation, permitted acquisitions).

Line of Credit and Term Loan indebtedness bears interest at either: (1) LIBOR, as defined, plus an applicable margin ranging from 1.5% to 2.50%; or (2) the alternate base rate (“ABR”), which is the greater of JPMorgan’s prime rate or the federal funds effective rate or the overnight bank funding rate plus 0.5%. We elect the interest rate with each borrowing under the line of credit. In addition, there is an unused line fee of 0.15% to 0.35%. Letter of credit fees are based on the applicable LIBOR rate.

The Term Loan requires 20 quarterly principal payments (the first due date was March 31, 2017) in the amount of $250,000 (increasing by $125,000 each year up to $750,000 in the fifth year). The remaining balance of principal and accrued interest are due on March 1, 2022.

The Credit Facility is secured by all of our assets and requires us to maintain a ratio of funded debt to our trailing four quarters of EBIDTA (the “Leverage Ratio”), as defined, of less than 3.0 to 1.0, provided that, we may once during the term of the Credit Facility, in connection with a Permitted Acquisition for which the aggregate consideration paid or to be paid in respect thereof equals or exceeds $20,000,000, elect to increase the maximum Leverage Ratio permitted hereunder to (i) 3.50 to 1.00 for a period of four consecutive fiscal quarters commencing with the fiscal quarter in which such Permitted Acquisition occurs (the “Initial Holiday Period”) and (ii) 3.25 to 1.00 for the period of four consecutive fiscal quarters immediately following the Initial Holiday Period. The Credit Facility also requires us to maintain a minimum fixed charge coverage ratio of less than 1.25 to 1.0. We were compliant with the required covenants at June 30, 2017.

We incurred origination and debt issuance costs of $460,000 which are treated as a debt discount and are netted against amounts outstanding on the condensed consolidated balance sheets.

As of June 30, 2017, future contractual maturities of debt as are as follows (in thousands):

Year ending March 31,
2018	$	875
2019		1,625
2020		2,125
2021		2,625
2022		43,750
	$	51,000

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Note 6 – Stock-Based Compensation

Amounts recognized in the condensed consolidated financial statements related to stock-based compensation are as follows (in thousands, except per share data):

	Three Months Ended June 30,
	2017		2016
Total cost of stock-based compensation charged against income before income taxes	$	540	$	429
Amount of income tax benefit (expense) recognized in earnings		89		(47	)
Amount charged against net income	$	629	$	382
Impact on net income per common share:
Basic	$	0.17	$	0.10
Diluted		0.16		0.10

Stock-based compensation expense is included in cost of revenues, selling, and general and administrative expense in the accompanying condensed consolidated statements of income.

The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model (“Black-Scholes”). We use historical data to estimate the expected price volatility, the expected stock option life and expected forfeiture rate. The risk-free interest rate is based on the United States Treasury yield curve in effect at the time of grant for the estimated life of the stock option. The dividend yield is calculated based upon the dividend payments made during the prior four quarters as a percent of the average stock price for that period.

The following is a summary of stock option activity for the three months ended June 30, 2017:

	Number of Shares			Weighted- Average Exercise Price per Share		Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value (000s)
Outstanding at March 31, 2017		510,361		$	75.78		5.0	$	23,956
Stock options granted		93,435			122.77		5.8
Stock options forfeited		(5,866	)		96.96		5.4
Stock options expired		--			--		--
Stock options exercised		(27,135	)		54.41		--
Outstanding at June 30, 2017		570,795			84.27		5.0	$	33,701
Exercisable at June 30, 2017		185,614			61.10		4.2	$	15,260

The total intrinsic value of stock options exercised was $2,422,642 and $2,242,938 for the three months ended June 30, 2017 and 2016, respectively.

A summary of the status of our unvested stock option shares as of June 30, 2017 is as follows:

	Number of Shares			Weighted- Average Grant-Date Fair Value
Unvested at March 31, 2017		373,766		$	22.49
Stock options granted		93,435			38.83
Stock options forfeited		(5,866	)		27.95
Stock options vested		(76,154	)		20.92
Unvested at June 30, 2017		385,181			28.14

As of June 30, 2017, there was $9,120,867 of total unrecognized compensation expense related to unvested stock options. As of June 30, 2017, we have 715,803 shares available for future stock option grants.

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Note 7 - Net Income Per Share

Basic net income per share is computed by dividing net income by the weighted-average number of common shares outstanding during the reporting period. Diluted net income per share is computed similarly to basic net income per share, except that it includes the potential dilution that could occur if dilutive securities were exercised.

The following table presents a reconciliation of the denominators used in the computation of net income per share - basic and diluted (in thousands, except per share data):

	Three Months Ended
	June 30,
	2017		2016
Net income available for stockholders	$	1,517	$	1,930
Weighted average outstanding shares of common stock		3,736		3,646
Dilutive effect of stock options		187		156
Common stock and equivalents		3,923		3,802
Net income per share:
Basic	$	0.41	$	0.53
Diluted		0.39		0.51

For the three months ended June 30, 2017 and 2016, 117,000 and 184,000 outstanding stock options, respectively, were excluded from the calculation of diluted net income per share as their inclusion would have been anti-dilutive.

Note 8- Commitments and Contingencies

Under the terms of the PCD Agreement, we are required to pay contingent consideration if the cumulative revenues for our process challenge device business for the three years subsequent to the acquisition meet certain levels. The potential consideration payable ranges from $0 to $1,500,000 and is based upon a sliding scale of three-year cumulative revenues between $9,900,000 and $12,600,000, with payments made annually. Based upon both historical and projected growth rates, we initially recorded $300,000 of contingent consideration payable which represented our best estimate of the amount that would ultimately be paid. We paid $150,000 of the contingent consideration during the year ended March 31, 2016 (based upon the then current run rate projected over the entire three-year contingent consideration period).

Since the initial payment, the revenues for these products have significantly increased and as a result, during the year ended March 31, 2017 we recorded an additional $450,000 accrual (which was paid in our third quarter ending December 31, 2016.). During the three months ended June 30, 2017 revenues continued to increase and after revising our forecast for the PCD product revenues through the end of the earn-out period, we recorded an additional $300,000 accrual, which is included in other income, net in the accompanying condensed statement of operations for the three months ended June 30, 2017. The remaining contingent consideration amount is also subject to additional modification at the end of the third year of the earn-out period (October 2017) based upon the actual revenues earned over the contingent consideration period. Any changes to the contingent consideration ultimately paid will result in additional income or expense in our condensed consolidated statements of income. We will continue to monitor the results of our process challenge device business and we will adjust the contingent liability on a go forward basis, based on then current information.

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Note 9 – Comprehensive Income

The following table summarizes the changes in each component of accumulated other comprehensive income (“AOCI”), net of tax (in thousands):

	Foreign Currency Translation			AOCI
Balance at March 31, 2017	$	(1,760	)	$	(1,760	)
Unrealized gains arising during the period		751			751
Balance at June 30, 2017	$	(1,009	)	$	(1,009	)

	Foreign Currency Translation			AOCI
Balance at March 31, 2016	$	(1,151	)	$	(1,151	)
Unrealized gains arising during the period		50			50
Balance at June 30, 2016	$	(1,101	)	$	(1,101	)

Note 10 - Segment Information

We have four reporting segments: Biological Indicators, Instruments, Cold Chain Monitoring and Cold Chain Packaging. The following tables set forth our segment information (in thousands):

	Three Months Ended June 30, 2017
	Biological Indicators		Instruments		Cold Chain Monitoring		Cold Chain Packaging		Total
Revenues	$	10,183	$	8,603	$	2,917	$	970	$	22,673
Gross profit	$	6,720	$	4,908	$	894	$	149		12,671
Reconciling items (1)										(11,368	)
Earnings before income taxes									$	1,303

	Three Months Ended June 30, 2016
	Biological Indicators		Instruments		Cold Chain Monitoring		Cold Chain Packaging		Total
Revenues	$	9,467	$	8,222	$	2,317	$	1,108	$	21,114
Gross profit	$	6,087	$	4,849	$	667	$	411		12,014
Reconciling items (1)										(9,845	)
Earnings before income taxes									$	2,169

(1) Reconciling items include selling, general and administrative, research and development, and other expenses

	June 30, 2017		March 31, 2017
Total assets
Biological Indicators	$	69,430	$	67,233
Instruments		36,449		40,805
Cold Chain Monitoring		33,961		35,789
Cold Chain Packaging		21,088		20,313
Corporate and administrative		8,055		7,593
	$	168,983	$	171,733

All long-lived assets are located in the United States except for $6,712,000 and $21,214,000 which are associated with our French and Canadian subsidiaries, respectively.

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Revenues from external customers are attributed to individual countries based upon locations to which the product is shipped or exported, as follows (in thousands):

	Three Months Ended
	June 30,
	2017		2016
Net revenues from unaffiliated customers:
United States	$	13,011	$	15,511
Foreign		9,662		5,603
	$	22,673	$	21,114

No foreign country exceeds ten percent of total revenues.

Note 11 – Income Taxes

For interim income tax reporting, we estimate our annual effective tax rate and apply this effective tax rate to our year to date pre-tax income. Each quarter, the estimate of the annual effective tax rate is updated, and if the estimated effective tax rate changes, a cumulative adjustment is made. There is a potential for volatility of the effective tax rate due to several factors, including changes in the mix of the pre-tax income and the jurisdictions to which it relates, changes in tax laws and foreign tax holidays, settlement with taxing authorities and foreign currency fluctuations.

Our effective income tax rate was (16.4) percent and 11.0 percent for the three months ended June 30, 2017 and 2016, respectively. The effective tax rate for the three months ended June 30, 2017 differed from the statutory federal rate of 34 percent primarily due to the impact of share-based payment awards for employees (which was significant for the three months ended June 30, 2017), state income taxes, domestic manufacturing deductions and foreign rate differential. We anticipate that our effective tax rate for the year ending March 31, 2018 will approximate 35 to 38 percent, plus or minus the impact of excess tax benefits and deficiencies associated with share-based payment awards to employees (which may vary significantly from year to year).

Since we are subject to audit by various taxing authorities, it is reasonably possible that the amount of unrecognized tax benefits will change during the next 12 months. However, we do not expect the change, if any, to have a material effect on our financial condition or results of operations within the next 12 months.

Note 12 - Subsequent Event

In July 2017, our Board of Directors declared a quarterly cash dividend of $0.16 per share of common stock, payable on September 15, 2017, to shareholders of record at the close of business on August 31, 2017.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward Looking Statements

This report contains information that may constitute "forward-looking statements.” Generally, the words "believe," “estimate,” "expect," "project," "anticipate," "intend," "will" and similar expressions identify forward-looking statements, which generally are not historical in nature. However, the absence of these words or similar expressions does not mean that a statement is not forward-looking. All statements that address operating performance, events or developments that we expect or anticipate will occur in the future — including statements relating to revenues growth and statements expressing general views about future operating results — are forward-looking statements. Management believes that these forward-looking statements are reasonable as and when made. However, caution should be taken not to place undue reliance on any such forward-looking statements because such statements speak only as of the date when made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. In addition, forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations or projections. These risks and uncertainties include, but are not limited to those described in Part II, "Item 1A. Risk Factors" and elsewhere in this report and in our Annual Report on Form 10-K for the year ended March 31, 2017, and those described from time to time in our subsequent reports filed with the Securities and Exchange Commission.

General Discussion

We pursue a strategy of focusing primarily on quality control products and services, which are sold into niche markets that are driven by regulatory requirements. We prefer markets that have limited competition where we can establish a strong presence and achieve high gross margins. We are organized into four divisions across eight physical locations. Our Instruments Division designs, manufactures and markets quality control instruments and disposable products utilized in the healthcare, pharmaceutical, food and beverage, medical device, industrial hygiene, environmental air sampling and semiconductor industries. Our Biological Indicators Division provides testing services, along with the manufacturing and marketing of biological indicators and distribution of chemical indicators used to assess the effectiveness of sterilization processes, including steam, hydrogen peroxide, ethylene oxide and radiation, in the hospital, dental, medical device and pharmaceutical industries. Our Cold Chain Monitoring Division designs, develops and markets systems which are used to monitor various environmental parameters such as temperature, humidity and differential pressure to ensure that critical storage and processing conditions are maintained in hospitals, pharmaceutical and medical device manufacturers, blood banks, pharmacies and other laboratory and industrial environments. Our Cold Chain Monitoring Division also provides parameter (primarily temperature) monitoring of products during transport in a cold chain and consulting services such as compliance monitoring and validation or mapping of transport and storage containers. Our Cold Chain Packaging Division provides packaging development consulting services and thermal packaging products such as coolers, boxes, insulation materials and phase-change products to control temperature during transport.

Our revenues come from two main sources – product sales and services. Product sales are dependent on several factors, including general economic conditions, both domestic and international, customer capital spending trends, competition, introduction of new products and acquisitions. Biological indicators and many of the packaging products of our Cold Chain Packaging Division are disposable and are used on a routine basis, thus product sales are less sensitive to general economic conditions. Instrument products and cold chain monitoring systems and products have a longer life, and their purchase by our customers is somewhat discretionary, so sales are more sensitive to general economic conditions. Service demand is driven by our customers’ quality control and regulatory environments, which require periodic repair and recalibration or certification of our instrument products and cold chain monitoring systems. We typically evaluate costs and pricing annually. Our policy is to price our products competitively and, where possible, we pass along cost increases in order to maintain our margins.

Gross profit is affected by our product mix, manufacturing efficiencies and price competition. Historically, as we have integrated our acquisitions and taken advantage of manufacturing efficiencies, our gross margins for some products have improved. There are, however, differences in gross margin percentages between product lines, and ultimately the mix of sales will continue to impact our overall gross margin.

Selling expense is driven primarily by labor costs, including salaries and commissions. Accordingly, it may vary with sales levels. Labor costs and amortization of intangible assets drive the substantial majority of general and administrative expense. Research and development expense is predominantly comprised of labor costs and third party consultants.

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Year Ending March 31, 2018 Acquisitions

During the year ending March 31, 2018, we completed the following acquisition:

In May 2017, we completed a business combination (the “Hucker Acquisition”) whereby we acquired substantially all of the assets (other than cash and accounts receivable) and certain liabilities of Hucker & Hucker GmbH’s (“Hucker”) business segment associated with the distribution of our biological indicator products.

Year Ended March 31, 2017 Acquisitions

During the year ended March 31, 2017, we completed the following six acquisitions (the “2017 Acquisitions”):

In November 2016, we completed a business combination (the “Mydent Acquisition”) whereby we acquired substantially all of the assets (other than cash and accounts receivable) and certain liabilities of Mydent International Corp’s business segment associated with biological indicator mail-in testing services to the dental market in the United States;

In November 2016, we completed a business combination (the “FreshLoc Acquisition”) whereby we acquired substantially all of the assets (other than cash and accounts receivable) and certain liabilities of the cold chain monitoring business of FreshLoc Technologies, Inc.;

In August 2016, we completed a business combination (the “Rapid Aid Acquisition”) whereby we acquired certain assets (consisting primarily of fixed assets) and certain liabilities of Rapid Aid Corp’s (“Rapid Aid”) business segment associated with the manufacture and sale of cold chain packaging gel products;

In July 2016, we completed a business combination (the “HANSAmed Acquisition”) whereby we acquired substantially all of the assets (other than cash and accounts receivable) and certain liabilities of HANSAmed Limited’s (“HANSAmed”) business segment associated with the distribution of our biological indicator products and mail-in testing services to the dental market in Canada;

In April 2016, we completed a business combination (the “ATS Acquisition”) whereby we acquired substantially all the assets (other than cash and certain inventories and fixed assets) and certain liabilities of Autoclave Testing Services, Inc. and Autoclave Testing Supplies, Inc., (collectively, “ATS”). ATS was in the business of supplying products and services for dental sterilizer testing in both the U.S. and Canada; and

In April 2016, we completed a business combination (the “Pulse Acquisition”) whereby we acquired substantially all of the assets (other than cash and accounts receivable) and certain liabilities of Pulse Scientific, Inc.’s (“Pulse”) business segment associated with the distribution of our biological indicator products.

General Trends and Outlook

Our strategic objectives include growth both organically and through further acquisitions. During the year ended March 31, 2017, we continued to build our infrastructure to prepare for future growth, including the addition of key personnel to our operations, sales and marketing, research and development, and finance teams and the successful rollout of phase two of our ERP implementation project.

The markets for biological indicators and cold chain packaging products remain strong, as the disposable nature of these products makes them less sensitive to general economic conditions. The worldwide market for biological indicators is growing as more countries focus on verifying the effectiveness of sterilization processes.

In general, our instruments products and cold chain services and monitoring systems are impacted more by general economic conditions than our biological indicator and cold chain packaging products. As a result, uncertainty about global economic conditions may cause businesses to postpone spending in response to tighter credit, unemployment, negative financial news and/or declines in income or asset values. Worldwide and regional economic conditions could also reduce the demand for our products and services, as our customers reduce or delay capital equipment and other types of purchases. However demand for our instruments products, and cold chain services and monitoring systems remains strong and we strive to continue to grow revenues going forward.

We are working on several research and development projects that, if completed, may result in new products for both existing customers and new markets. We are hopeful that all of our divisions will have new products available for sale in the coming year.

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Overall organic revenues growth for the three months ended June 30, 2017 was six percent resulting from organic increases of eight percent, five percent and 13 percent from the Biological Indicators, Instruments and Cold Chain Monitoring Divisions, respectively, partially offset by a decrease of 12 percent for the Cold Chain Packaging Division. We believe that the relocation of our Omaha facility to our new Bozeman facility (see Liquidity and Capital Resources for additional discussion) resulted in accelerated order rates by certain customers to ensure that they had adequate product to cover them through the move. We estimate that approximately $500,000 of Biological Indicator revenues were recognized during the three months ended June 30, 2017 that historically most likely would have been recognized in either our second or third quarter of this fiscal year. Absent this acceleration of BI revenues, organic growth would have been four percent and two percent for the overall company and the Biological Indicators Division, respectively.

Due to the recent introduction of new or modified products and the consolidation of other product sets, we elected to discontinue for sale certain products in our Instruments, Cold Chain Monitoring and Biological Indicator Divisions. As part of this process, we analyzed the remaining inventories associated with these products to determine future usability, which resulted in an increase in our inventory reserve for these products of $406,000. Overall gross margin percentage for the three months ended June 30, 2017 was 56 percent but would have been 58 percent without the impact of this additional inventory reserve.

Results of Operations

The following table sets forth, for the periods indicated, condensed consolidated statements of income data. The table and the discussion below should be read in conjunction with the accompanying condensed consolidated financial statements and the notes thereto appearing elsewhere in this report (in thousands, except percent data):

	Three Months Ended June 30,									Percent
	2017			2016			Change			Change
Revenues	$	22,673		$	21,114		$	1,559			7	%
Cost of revenues		10,002			9,100			902			10	%
Gross profit	$	12,671		$	12,014		$	657			5	%
Gross profit margin		56	%		57	%		(1	)%
Operating expenses
Selling	$	2,679		$	2,424		$	255			11	%
General and administrative		6,857			5,980			877			15	%
Research and development		1,153			1,035			118			11	%
	$	10,689		$	9,439		$	1,250			13	%
Operating income	$	1,982		$	2,575		$	(593	)		(23	)%
Net income	$	1,517		$	1,930			(413	)		(21	)%
Net profit margin		7	%		9	%		(2	)%

Revenues

The following table summarizes our revenues by source (in thousands, except percent data):

	Three Months Ended June 30,							Percent
	2017		2016		Change			Change
Biological Indicators	$	10,183	$	9,467	$	716			8	%
Instruments		8,603		8,222		381			5	%
Cold Chain Monitoring		2,917		2,317		600			26	%
Cold Chain Packaging		970		1,108		(138	)		(12	)%
Total	$	22,673	$	21,114	$	1,559			7	%

Three months ended June 30, 2017 versus June 30, 2016

Biological Indicators revenues increased primarily due to organic growth of eight percent which was achieved through existing customers, expansion into new markets and price increases. We believe that the relocation of our Omaha facility to our new Bozeman facility yielded an accelerated order rate by certain customers to ensure that they had adequate product to cover them through the move. We estimate that approximately $500,000 of Biological Indicator revenues were recognized during the three months ended June 30, 2017 that historically most likely would have been recognized in either our second or third quarter of this fiscal year. Absent this acceleration of BI revenues, organic growth would have been two percent for the Biological Indicators Division.

Instruments revenues increased by five percent primarily due to timing of orders in the prior year and modest price increases in the current year.

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Cold Chain Monitoring revenues increased by 26 percent primarily due to the FreshLoc Acquisition and organic growth of 13 percent. Organic growth in this division fluctuates quarter over quarter due to the timing of customer acceptance of certain installations and the nature and timing of orders within any given quarter.

Cold Chain Packaging revenues decreased 12 percent. We anticipate that revenues will increase for the remaining quarters this year (as compared to the results for the three months ended June 30, 2017) primarily due to the seasonality of the product line.

Gross Profit

The following summarizes our gross profit by operating segment (in thousands, except percent data):

	Three Months Ended June 30,									Percent
	2017			2016			Change			Change
Biological Indicators	$	6,720		$	6,087		$	633			10	%
Gross profit margin		66	%		64	%		2	%
Instruments		4,908			4,849			59			1	%
Gross profit margin		57	%		59	%		(2	)%
Cold Chain Monitoring		894			667			227			34	%
Gross profit margin		31	%		29	%		2	%
Cold Chain Packaging		149			411			(262	)		(64	)%
Gross profit margin		15	%		37	%		(22	)%
Total gross profit	$	12,671		$	12,014		$	657			5	%
Gross profit margin		56	%		57	%		(1	)%

Three months ended June 30, 2017 versus June 30, 2016

Biological Indicators gross profit margin percentage increased primarily due to volume based efficiencies associated with increased revenues and the impact of using internally manufactured biological indicators for our dental sterilizer testing business as opposed to the prior year where we were contractually committed to purchase a significant portion of those biological indicators from an outside supplier at a significantly higher price, partially offset by $291,000 of facility relocation costs (see Note 4 in Item 1. Financial Statements).

Instruments gross profit margin percentage decreased primarily due to product and services mix and a $163,000 increase in the related inventory reserve due to the decision to discontinue for sale certain instruments products, partially offset by certain volume based efficiencies associated with the increase in revenues in certain product lines. The gross margin percentage for Instruments would have been 59 percent without the additional inventory reserve.

Cold Chain Monitoring gross profit margin percentage increased primarily due to volume based efficiencies associated with increased revenues and the impact of the FreshLoc Acquisition, partially offset by a $216,000 increase in the related inventory reserve due to the decision to discontinue for sale certain Cold Chain Monitoring products. The gross margin percentage for Cold Chain Monitoring would have been 38 percent without the additional inventory reserve.

Cold Chain Packaging gross profit margin percentage decreased primarily due to lower revenues. Revenues for this division are seasonal in nature while a certain portion of the cost of revenues are warehousing costs which are primarily fixed and as a result, fluctuations in revenues significantly impact the gross profit margin percentage for this division. We expect revenues (and corresponding gross profit margin percentages) to increase over the remaining quarters this year (as compared to the three months ended June 30, 2017) primarily due to the seasonality of the product line.

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Operating Expenses

Operating expenses for the three months ended June 30, 2017 increased as compared to the prior year as follows (in thousands):

	Increase (Decrease)
	Three Months Ended June 30, 2017
Selling	$	255
General and administrative
Personnel		388
Facility relocation		231
Employee moving costs		307
Depreciation		158
Property taxes		69
Professional services		(170	)
Other, net		(106	)
		877
Research and development		118
Operating expenses	$	1,250

Selling

Three months ended June 30, 2017 versus June 30, 2016

Selling expense increased primarily due to additional personnel related to the 2017 acquisitions. As a percentage of revenues, selling expense increased to 12 percent as compared to 11 percent in the prior period.

General and administrative

Three months ended June 30, 2017 versus June 30, 2016

General and administrative expenses increased primarily due to increased personnel, facility relocation and employee moving costs, and depreciation, partially offset by a decrease in professional services.

Research and Development

Three months ended June 30, 2017 versus June 30, 2016

Research and development expenses increased as a result of the addition of new engineers to support existing and acquired businesses.

Other Expense

Other expense for the three months ended June 30, 2017 is comprised primarily of interest expense associated with our Credit Facility and $300,000 related to an additional accrual for the PCD earn-out (see Liquidity and Capital Resources for additional discussion).

Net Income

Our income tax rate varies based upon many factors but in general, we anticipate that on a go forward basis, our effective tax rate will approximate 35 to 38 percent, plus or minus the impact of excess tax benefits and deficiencies associated with share-based payment awards to employees. The excess tax benefits and deficiencies associated with share-based payment awards to our employees have caused and, in the future, may cause large fluctuations in our realized effective tax rate based on the timing, volume, and nature of stock options exercised under our share-based incentive program. Net income for the three months ended June 30, 2017 was significantly impacted by $522,000 of facility relocation costs (see Liquidity and Capital Resources), $300,000 in PCD earn-out accruals, a $406,000 expense related to a reserve for inventory due to operational decisions to end of life certain products and a lower effective tax rate due to the volume and nature of stock option exercises that generated a significant excess tax benefit. Otherwise, net income for the three months ended June 30, 2017 varied with the changes in revenues, gross profit and operating expenses (which includes $1,604,000 of non-cash amortization of intangible assets).

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Liquidity and Capital Resources

Our sources of liquidity include cash generated from operations, working capital, capacity under our Credit Facility and potential equity and debt offerings. We believe that cash generated from these sources will be sufficient to meet our short-term and long-term needs. Our more significant uses of resources include quarterly dividends to shareholders, payment of debt obligations, long-term capital equipment expenditures and potential acquisitions.

Due to continued organic and acquisition related growth, we outgrew the capacity of our current building in Bozeman, Montana and as a result, we built a new facility in the same general area. Construction began in July 2015 and we began to move employees into the facility beginning April 2017. We have spent $17,510,000 on the development of the building and the related land, which is included in property, plant and equipment, net on the accompanying consolidated balance sheets. While the building is now functional and in use, there are a few items that still need to be completed. We estimate that this work (approximately $200,000) will be completed during the second quarter of our year ending March 31, 2018.

In August 2016, we announced that we plan to shut down both our Omaha and Traverse City Biological Indicator manufacturing facilities and relocate those operations to the new Bozeman building. The move of these two facilities, along with the current Bozeman operations, began in March 2017 and is estimated to be completed by the end of our year ending March 31, 2018. We estimate that the total costs of the relocation will be $2,100,000 (which is comprised primarily of facility moving expenses, retention bonuses for existing personnel and payroll costs for duplicative personnel during the transition period) of which $725,000 was incurred during the year ended March 31, 2017 and $522,000 was incurred during the three months ended June 30, 2017, which is reflected in cost of revenues in the accompanying consolidated statements of income (other than $231,000 which is included in general and administrative). 

In July 2017, we completed the move from the Omaha facility and subsequently sold that building for $1,200,000. After completing the move of the old Bozeman facility, we expect to be able to sell that building for approximately $2,500,000.

Working capital is the amount by which current assets exceed current liabilities. We had working capital of $18,824,000 and $19,218,000 respectively, at June 30, 2017 and March 31, 2017.

On March 1, 2017, we entered into a five-year agreement (the “Credit Facility”) for a $80,000,000 revolving line of credit (“Line of Credit”), a $20,000,000 term loan (“Term Loan”) and up to $2,500,000 of letters of credit with a banking syndicate comprised of four banks. In addition, the Credit Facility provides a post-closing accordion feature which allows the Company to request to increase the Line of Credit or Term Loan up to an additional $100,000,000.

Line of Credit and Term Loan indebtedness bears interest at either: (1) LIBOR, as defined, plus an applicable margin ranging from 1.5% to 2.50%; or (2) the alternate base rate (“ABR”), which is the greater of JPMorgan’s prime rate or the federal funds effective rate or the overnight bank funding rate plus 0.5%. We elect the interest rate with each borrowing under the line of credit. In addition, there is an unused line fee of 0.15% to 0.35%. Letter of credit fees are based on the applicable LIBOR rate.

The Term Loan requires 20 quarterly principal payments (the first due date was March 31, 2017) in the amount of $250,000 (increasing by $125,000 each year up to $750,000 in the fifth year). The remaining balance of principal and accrued interest are due on March 1, 2022.

The Credit Facility is secured by all of our assets and requires us to maintain a ratio of funded debt to our trailing four quarters of EBIDTA (the “Leverage Ratio”), as defined, of less than 3.0 to 1.0, provided that, we may once during the term of the Credit Facility, in connection with a Permitted Acquisition for which the aggregate consideration paid or to be paid in respect thereof equals or exceeds $20,000,000, elect to increase the maximum Leverage Ratio permitted hereunder to (i) 3.50 to 1.00 for a period of four consecutive fiscal quarters commencing with the fiscal quarter in which such Permitted Acquisition occurs (the “Initial Holiday Period”) and (ii) 3.25 to 1.00 for the period of four consecutive fiscal quarters immediately following the Initial Holiday Period. The Credit Facility also requires us to maintain a minimum fixed charge coverage ratio of less than 1.25 to 1.0.

As of July 31, 2017, we had $51,000,000 in outstanding indebtedness and unused capacity under our Credit Facility of $48,500,000.

In April 2015, the SEC declared effective our Universal Shelf Registration Statement which allows us to sell, in one or more public offerings, common stock or warrants, or any combination of such securities for proceeds in an aggregate amount of up to $130,000,000. The terms of any offering, including the type of securities involved, would be established at the time of sale.

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We routinely evaluate opportunities for strategic acquisitions. Future material acquisitions may require that we obtain additional capital, assume third party debt or incur other long-term obligations. We believe that we have the option to utilize both equity and debt instruments as vehicles for the long-term financing of our investment activities and acquisitions.

On November 7, 2005, our Board of Directors authorized a program to repurchase up to 300,000 shares of our outstanding common stock. Under the plan, the shares may be purchased from time to time in the open market at prevailing prices or in negotiated transactions off the market. Shares purchased will be canceled and repurchases will be made with existing cash reserves. We do not maintain a set policy or schedule for our buyback program. We have purchased 162,486 shares of common stock under this program from inception through June 30, 2017.

We have been paying regular quarterly dividends since 2003. Dividends per share paid by quarter were as follows:

	Year Ending March 31,
	2018		2017
First quarter	$	0.16	$	0.16
Second quarter		-		0.16
Third quarter		-		0.16
Fourth quarter		-		0.16

In July 2017, our Board of Directors declared a quarterly cash dividend of $0.16 per share of common stock, payable on September 15, 2017, to shareholders of record at the close of business on August 31, 2017.

Cash Flows

Our cash flows from operating, investing and financing activities were as follows (in thousands):

	Three Months Ended June 30,
	2017			2016
Net cash provided by operating activities	$	2,681		$	3,632
Net cash used in investing activities		(1,567	)		(6,021	)
Net cash (used in) provided by financing activities		(3,888	)		1,327

Net cash provided by operating activities decreased primarily due to lower decreases in accounts receivable and a $1,676,000 increase in prepaid income taxes, partially offset by increases in accrued liabilities and taxes payable.

Net cash used in investing activities for the three months ended June 30, 2017 resulted primarily from the purchase of $1,505,000 of property, plant and equipment. Net cash used in investing activities for the three months ended June 30, 2016 resulted from $2,565,000 associated with the 2017 Acquisitions and the purchase of $3,456,000 of property, plant and equipment.

Net cash used in financing activities for the three months ended June 30, 2017 resulted from the repayment of debt of $4,250,000 and the payment of dividends of $601,000, partially offset by proceeds from the exercise of stock options of $963,000. Net cash provided by financing activities for the three months ended June 30, 2016 resulted from borrowings under our Credit Facility of $1,500,000 and proceeds from the exercise of stock options of $1,160,000, partially offset by the repayment of debt of $750,000 and the payment of dividends of $583,000.

At June 30, 2017, we had contractual obligations for open purchase orders of approximately $5,500,000 for routine purchases of supplies and inventory, which are payable in less than one year.

Under the terms of the PCD Agreement, we are required to pay contingent consideration if the cumulative revenues for our process challenge device business for the three years subsequent to the acquisition meet certain levels. The potential consideration payable ranges from $0 to $1,500,000 and is based upon a sliding scale of three-year cumulative revenues between $9,900,000 and $12,600,000, with payments made annually. Based upon both historical and projected growth rates, we initially recorded $300,000 of contingent consideration payable which represented our best estimate of the amount that would ultimately be paid. We paid $150,000 of the contingent consideration during the year ended March 31, 2016 (based upon the then current run rate projected over the entire three-year contingent consideration period).

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Since the initial payment, the revenues for these products have significantly increased and as a result, during the year ended March 31, 2017 we recorded an additional $450,000 accrual (which was paid in our third quarter ending December 31, 2016.). During the three months ended June 30, 2017 revenues continued to increase and after revising our forecast for the PCD product revenues through the end of the earn-out period, we recorded an additional $300,000 accrual, which is included in other income, net in the accompanying condensed statement of operations for the three months ended June 30, 2017. The remaining contingent consideration amount is also subject to additional modification at the end of the third year of the earn-out period (October 2017) based upon the actual revenues earned over the contingent consideration period. Any changes to the contingent consideration ultimately paid will result in additional income or expense in our condensed consolidated statements of income. We will continue to monitor the results of our process challenge device business and we will adjust the contingent liability on a go forward basis, based on then current information.

Critical Accounting Estimates

Our condensed consolidated financial statements and accompanying notes have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires management to make estimates, judgments and assumptions that affect reported amounts of assets, liabilities, revenues and expenses. We continually evaluate the accounting policies and estimates used to prepare the condensed consolidated financial statements. The estimates are based on historical experience and assumptions believed to be reasonable under current facts and circumstances. Actual amounts and results could differ from these estimates made by management. Certain accounting policies that require significant management estimates and are deemed critical to our results of operations or financial position are discussed in our Annual Report on Form 10-K for the year ended March 31, 2017 in the Critical Accounting Policies and Estimates section of “Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.”

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We have no derivative instruments and minimal exposure to foreign currency and commodity market risks.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) that are designed to reasonably ensure that information required to be disclosed by us in the reports we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our management evaluated, with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures as of June 30, 2017. Based on that evaluation, our management concluded that our disclosure controls and procedures were effective at June 30, 2017.

Our management, including our Chief Executive Officer and Chief Financial Officer, is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with generally accepted accounting principles in the United States. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives. Management evaluated the effectiveness of our internal control over financial reporting based on the framework in “Internal Control – Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 2013.

Our management evaluated, with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of our internal control over financial reporting as of June 30, 2017. Based on that evaluation, our management concluded that our internal control over financial reporting was effective at June 30, 2017.

Changes in Internal Control Over Financial Reporting

There were no significant changes in our internal control over financial reporting that occurred during the three months ended June 30, 2017, that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.

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Part II. Other Information

Item 1. Legal Proceedings

See Note 8 – Commitments and Contingencies of the Notes to Condensed Consolidated Financial Statements (Part I, Item 1 of this Form 10-Q) for information regarding any legal proceedings in which we may be involved.

Item 1A. Risk factors

We are affected by risks specific to us as well as factors that affect all businesses operating in a global market.  The significant factors known to us that could materially adversely affect our business, financial condition or operating results are described in our Annual Report on Form 10-K for the year ended March 31, 2017, under the heading “Part I – Item 1A. Risk Factors.”  There have been no material changes to those risk factors.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

On November 7, 2005, our Board of Directors adopted a share repurchase plan which allows for the repurchase of up to 300,000 of our common shares. This plan will continue until the maximum is reached or the plan is terminated by further action of the Board of Directors. We made the following repurchases of our common stock, including settlement of loans to employees for the exercise of stock options:

	Shares Purchased		Average Price Paid		Total Shares Purchased as Part of Publicly Announced Plan		Remaining Shares to Purchase Under Plan
April 2017		--	$	--		162,486		137,514
May 2017		--		--		162,486		137,514
June 2017		--		--		162,486		137.514
Total		--		--

Item 6. Exhibits

31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101	The following financial information from the quarterly report on Form 10-Q of Mesa Laboratories, Inc. for the quarter ended June 30, 2017, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Statements of Income, (ii) Condensed Consolidated Balance Sheets, (iii) Condensed Consolidated Statements of Comprehensive Income, (iv) Condensed Consolidated Statements of Cash Flows, and (v) Notes to the Condensed Consolidated Financial Statements.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

MESA LABORATORIES, INC.

(Registrant)

DATED: August 1, 2017	BY:	/s/ John J. Sullivan, Ph.D.
		John J. Sullivan, Ph.D.
		Chief Executive Officer
DATED: August 1, 2017	BY:	/s/ John V. Sakys
		John V. Sakys
		Chief Financial Officer

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EX-31.1

Exhibit 31.1 Certifications Pursuant to Rule 13a-14(a)

I, John J. Sullivan, Ph.D., certify that:

1. I have reviewed this quarterly report on Form 10-Q of Mesa Laboratories, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 1, 2017                                            /s/ John J. Sullivan, Ph.D.

John J. Sullivan, Ph.D.

Chief Executive Officer

EX-31.2

Exhibit 31.2 Certifications Pursuant to Rule 13a-14(a)

I, John V. Sakys, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Mesa Laboratories, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 1, 2017                                           /s/ John V. Sakys

John V. Sakys

Chief Financial Officer

EX-32.1

Exhibit 32.1 Certifications Pursuant to Rule 13a-14(b) and 18 U.S.C Section 1350

In connection with the Quarterly Report of Mesa Laboratories, Inc. (the “Company”) on Form 10-Q for the fiscal quarter ended June 30, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John J. Sullivan, Ph.D., Chief Executive Officer of the Company, certify, pursuant to Rule 13a-14(b) and 18 U.S.C. § 1350, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 1, 2017                                           /s/ John J. Sullivan, Ph.D.

John J. Sullivan, Ph.D.

Chief Executive Officer

EX-32.2

Exhibit 32.2 Certifications Pursuant to Rule 13a-14(b) and 18 U.S.C Section 1350

In connection with the Quarterly Report of Mesa Laboratories, Inc. (the “Company”) on Form 10-Q for the fiscal quarter ended June 30, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John V. Sakys, Chief Financial Officer of the Company, certify, pursuant to Rule 13a-14(b) and 18 U.S.C. § 1350, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 1, 2017                                           /s/ John V. Sakys

John V. Sakys

Chief Financial Officer

XML

Document And Entity Information - shares	3 Months Ended
	Jun. 30, 2017	Jul. 25, 2017
Document Information [Line Items]
Entity Registrant Name	MESA LABORATORIES INC /CO
Entity Central Index Key	0000724004
Trading Symbol	mlab
Current Fiscal Year End Date	--03-31
Entity Filer Category	Accelerated Filer
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Entity Common Stock, Shares Outstanding (in shares)		3,758,914
Document Type	10-Q
Document Period End Date	Jun. 30, 2017
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q1
Amendment Flag	false

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($) $ in Thousands	Jun. 30, 2017	Mar. 31, 2017
ASSETS
Cash and cash equivalents	$ 2,976	$ 5,820
Accounts receivable, less allowances of $267 and $252, respectively	12,903	14,319
Inventories, net	13,376	13,873
Prepaid income taxes	1,676	587
Prepaid expenses and other	1,808	1,186
Assets held for sale	1,012
Total current assets	33,751	35,785
Property, plant and equipment, net	25,821	26,002
Intangibles, net	36,681	37,790
Goodwill	72,730	72,156
Total assets	168,983	171,733
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable	2,338	2,168
Accrued salaries and payroll taxes	2,934	4,350
Unearned revenues	4,033	4,117
Current portion of contingent consideration	1,165	1,294
Other accrued expenses	2,503	2,999
Income taxes payable	704	514
Current portion of long-term debt	1,250	1,125
Total current liabilities	14,927	16,567
Deferred income taxes	3,644	3,554
Long-term debt, net of debt issuance costs and current portion	49,303	53,675
Contingent consideration	118	116
Total liabilities	67,992	73,912
Commitments and Contingencies (Note 8)
Stockholders’ equity:
Common stock, no par value; authorized 25,000,000 shares; issued and outstanding, 3,758,175 and 3,727,704 shares, respectively	27,428	25,925
Retained earnings	74,572	73,656
Accumulated other comprehensive loss	(1,009)	(1,760)
Total stockholders’ equity	100,991	97,821
Total liabilities and stockholders’ equity	$ 168,983	$ 171,733

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($) $ / shares in Thousands, $ in Thousands	Jun. 30, 2017	Mar. 31, 2017
Allowance for doubtful accounts receivable	$ 267	$ 252
Common stock, par value (in dollars per share)	$ 0	$ 0
Common stock, shares authorized (in shares)	25,000,000	25,000,000
Common stock, shares issued (in shares)	3,758,175	3,727,704
Common stock, shares outstanding (in shares)	3,758,175	3,727,704

XML

Condensed Consolidated Statements of Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Revenues	$ 22,673	$ 21,114
Cost of revenues	10,002	9,100
Gross profit	12,671	12,014
Operating expenses
Selling	2,679	2,424
General and administrative	6,857	5,980
Research and development	1,153	1,035
Total operating expenses	10,689	9,439
Operating income	1,982	2,575
Other expense, net	679	406
Earnings before income taxes	1,303	2,169
Income tax benefit (expense)	214	(239)
Net income	$ 1,517	$ 1,930
Net income per share:
Basic (in dollars per share)	$ 0.41	$ 0.53
Diluted (in dollars per share)	$ 0.39	$ 0.51
Weighted average common shares outstanding:
Basic (in shares)	3,736	3,646
Diluted (in shares)	3,923	3,802

XML

Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Net income	$ 1,517	$ 1,930
Other comprehensive income, net of tax:
Foreign currency translation	751	50
Total comprehensive income	$ 2,268	$ 1,980

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Acquisitions	$ (62)	$ (2,565)
Purchases of property, plant and equipment	(1,505)	(3,456)
Net cash used in investing activities	(1,567)	(6,021)
Cash flows from operating activities:
Net income	1,517	1,930
Depreciation and amortization	2,278	2,170
Stock-based compensation	540	429
Amortization of debt issuance costs	28
Deferred income taxes	90	138
Foreign currency adjustments	(176)	67
Adjustment to contingent consideration	300
Change in assets and liabilities, net of effects of acquisitions
Accounts receivable, net	1,416	2,890
Inventories, net	497	(67)
Prepaid expenses and other	(1,711)	(426)
Accounts payable	170	(66)
Accrued liabilities and taxes payable	(1,747)	(3,584)
Unearned revenues	(84)	40
Business Combination, Contingent Consideration Arrangements, Change in Amount of Contingent Consideration, Liability	(437)	111
Net cash provided by operating activities	2,681	3,632
Cash flows from investing activities:
Proceeds from the issuance of debt		1,500
Payments on debt	(4,250)	(750)
Dividends	(601)	(583)
Proceeds from the exercise of stock options	963	1,160
Net cash (used in) provided by financing activities	(3,888)	1,327
Effect of exchange rate changes on cash and cash equivalents	(70)	4
Net decrease in cash and cash equivalents	(2,844)	(1,058)
Cash and cash equivalents at beginning of period	5,820	5,695
Cash and cash equivalents at end of period	2,976	4,637
Cash paid for:
Income taxes	658	1,207
Interest	561	292
Supplemental non-cash activity:
Contingent consideration as part of an acquisition		$ 1,168

XML

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

3 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Organization, Consolidation, Basis of Presentation, Business Description and Accounting Policies [Text Block]

Note

1

-Description of Business and Summary of Significant Accounting Policies

Description of Business

Mesa Laboratories, Inc. was incorporated under the laws of the State of Colorado on

March 26, 1982.

The terms “we,” “us,” “our,” the “Company” or “Mesa” are used in this report to refer collectively to the parent company and the subsidiaries through which our various businesses are conducted. We pursue a strategy of focusing primarily on quality control products and services, which are sold into niche markets that are driven by regulatory requirements. We prefer markets that have limited competition where we can establish a strong presence and achieve high gross margins. We are organized into

four

divisions across

eight

physical locations. Our Instruments Division designs, manufactures and markets quality control instruments and disposable products utilized in the healthcare, pharmaceutical, food and beverage, medical device, industrial hygiene, environmental air sampling and semiconductor industries. Our Biological Indicators Division provides testing services, along with the manufacturing and marketing of biological indicators and distribution of chemical indicators used to assess the effectiveness of sterilization processes, including steam, hydrogen peroxide, ethylene oxide and radiation, in the hospital, dental, medical device and pharmaceutical industries. Our Cold Chain Monitoring Division designs, develops and markets systems which are used to monitor various environmental parameters such as temperature, humidity and differential pressure to ensure that critical storage and processing conditions are maintained in hospitals, pharmaceutical and medical device manufacturers, blood banks, pharmacies and other laboratory and industrial environments. Our Cold Chain Monitoring Division also provides parameter (primarily temperature) monitoring of products during transport in a cold chain and consulting services such as compliance monitoring and validation or mapping of transport and storage containers. Our Cold Chain Packaging Division provides packaging development consulting services and thermal packaging products such as coolers, boxes, insulation materials and phase-change products to control temperature during transport.

Basis of Presentation

The accompanying condensed consolidated balance sheet as of

March 31, 2017,

has been derived from audited consolidated financial statements. The accompanying unaudited interim condensed consolidated financial statements have been prepared on the same basis as our annual audited consolidated financial statements and in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. In the opinion of management, such unaudited information includes all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of this interim information. Operating results and cash flows for interim periods are

not

necessarily indicative of results that can be expected for the entire year. The information included in this report should be read in conjunction with our audited consolidated financial statements and notes thereto included in our Annual Report on Form

10

-K for the year ended

March 31, 2017.

The summary of our significant accounting policies is incorporated by reference to our Annual Report on Form

10

-K for the year ended

March 31, 2017.

Recently Issued Accounting Pronouncements

In

May 2014,

the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU")

2014

-

09,

Revenue from Contracts with Customers (Topic

606

)

, which will replace most existing revenue recognition guidance in U.S. GAAP and is intended to improve and converge with international standards the financial reporting requirements for revenue from contracts with customers. The core principle of ASU

2014

-

09

is that an entity should recognize revenue for the transfer of goods or services equal to the amount that it expects to be entitled to receive for those goods or services. ASU

2014

-

09

also requires additional disclosures about the nature, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments. ASU

2014

-

09

allows for adoption either on a full retrospective basis to each prior reporting period presented or on a modified retrospective basis with the cumulative effect of initially applying the new guidance recognized at the date of initial application, which will be effective for the Company beginning

April 1, 2018.

We plan to adopt ASU

2014

-

09

and its amendments on a modified retrospective basis and are continuing to assess all future impacts of the guidance by reviewing our current contracts with customers to identify potential differences that could result from applying the new guidance. Based on our preliminary review, we expect that the adoption of ASU

2014

-

09

will

not

have a material impact on our consolidated financial statements. As we complete our overall assessment, we are evaluating our accounting policies and practices, business processes, systems and controls to determine if changes are necessary to support the new revenue recognition and disclosure requirements. Our assessment will be completed during the year ending

March 31, 2018.

In

January 2017,

the FASB issued ASU

2017

-

04,

Intangibles – Goodwill and Other

, which eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge. ASU

2017

-

04

is required to be applied prospectively and we elected to early adopt ASU

2017

-

04

effective

April 1, 2017.

We do

not

anticipate that the adoption will have a significant impact on our consolidated financial statements.

XML

Note 2 - Acquisitions

3 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Mergers, Acquisitions and Dispositions Disclosures [Text Block]

Note

2

– Acquisition

s

For the

three

months ended

June 30, 2017,

our acquisitions of businesses totaled

$362,000,

of which

none

were material in nature (see Item

2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations).

XML

Note 3 - Inventories

3 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Inventory Disclosure [Text Block]

Note

3

–

Inventories

Inventories consist of the following (in thousands):

 

	June 30, 2017			March 31, 2017
Raw materials	$	10,770		$	10,815
Work-in-process		365			342
Finished goods		3,801			3,604
Less: reserve		(1,560	)		(888	)
	$	13,376		$	13,873

XML

Note 4 - Facility Relocation

3 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Restructuring and Related Activities Disclosure [Text Block]

Note

4

– Facility Relocation

In

August 2016,

we announced that we planned to shut down both our Omaha and Traverse City Biological Indicator manufacturing facilities and relocate those operations to the new Bozeman building. The move of those

two

facilities, along with the current Bozeman operations, began in

March 2017

and is estimated to be completed by the end of our year ending

March 31, 2018.

We estimate that the total costs of the relocation will be

$2,100,000

(which is comprised primarily of facility moving expenses, retention bonuses for existing personnel and payroll costs for duplicative personnel during the transition period) of which

$725,000

was incurred during the year ended

March 31, 2017.

We incurred

$522,000

in relocation costs for the

three

months ended

June 30, 2017,

of which

$291,000

and

$231,000

are reflected in cost of revenues and general and administrative expense, respectively in the accompanying condensed consolidated statements of income. Facility relocation costs, which are associated with our Biological Indicators segment, are as follows for the

three

months ended

June 30, 2017:

● Retention bonuses for existing personnel of $207,000

● Duplicative employment costs of $84,000

● Moving costs of $231,000

Facility relocation amounts accrued and paid for the

three

months ended

June 30, 2017

are as follows (in thousands):

Balance at March 31, 2017	$	673
Facility relocation expense		522
Cash payments		(594	)
Balance at June 30, 2017	$	601

Subsequent to

June 30, 2017,

we completed the move from the Omaha facility and subsequently sold that building for

$1,116,000

(net of commission costs) which resulted in a gain of

$116,000.

The Omaha facility is presented on the accompanying condensed consolidated balance sheets as assets held for sale.

XML

Note 5 - Long-term Debt

3 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Debt Disclosure [Text Block]

Note

5

–

Long-T

erm Debt

Long-term debt consists of the following (in thousands):

	June 30 , 2017			March 31, 201 7
Line of credit (3.25% at June 30, 2017)	$	31,500		$	35,500
Term loan (3.25% at June 30, 2017)		19,500			19,750
Less: discount		(447	)		(450	)
Less: current portion		(1,250	)		(1,125	)
Long-term portion	$	49,303		$	53,675

On

March 1, 2017,

we entered into a

five

-year agreement (the “Credit Facility”) for an

$80,000,000

revolving line of credit (“Line of Credit”), a

$20,000,000

term loan (“Term Loan”) and up to

$2,500,000

of letters of credit with a banking syndicate of

four

banks. In addition, the Credit Facility provides a post-closing accordion feature which allows for the Company to request to increase the Line of Credit or Term Loan up to an additional

$100,000,000

.

Funds from the Credit Facility

may

be used to pay down the previous credit facility, finance working capital needs and for general corporate purposes in the ordinary course of business (including, without limitation, permitted acquisitions).

Line of Credit and Term Loan indebtedness bears interest at either: (

1

) LIBOR, as defined, plus an applicable margin ranging from

1.5%

to

2.50%;

or (

2

) the alternate base rate (“ABR”), which is the greater of JPMorgan’s prime rate or the federal funds effective rate or the overnight bank funding rate plus

0.5%.

We elect the interest rate with each borrowing under the line of credit. In addition, there is an unused line fee of

0.15%

to

0.35%.

Letter of credit fees are based on the applicable LIBOR rate.

The Term Loan requires

20

quarterly principal payments (the

first

due date was

March 31, 2017)

in the amount of

$250,000

(increasing by

$125,000

each year up to

$750,000

in the

fifth

year). The remaining balance of principal and accrued interest are due on

March 1, 2022.

The Credit Facility is secured by all of our assets and requires us to maintain a ratio of funded debt to our trailing

four

quarters of EBIDTA (the “Leverage Ratio”), as defined, of less than

3.0

to

1.0,

provided that, we

may

once during the term of the Credit Facility, in connection with a Permitted Acquisition for which the aggregate consideration paid or to be paid in respect thereof equals or exceeds

$20,000,000,

elect to increase the maximum Leverage Ratio permitted hereunder to (i) 

3.50

to

1.00

for a period of

four

consecutive fiscal quarters commencing with the fiscal quarter in which such Permitted Acquisition occurs (the “Initial Holiday Period”) and (ii) 

3.25

to

1.00

for the period of

four

consecutive fiscal quarters immediately following the Initial Holiday Period. The Credit Facility also requires us to maintain a minimum fixed charge coverage ratio of less than

1.25

to

1.0.

We were compliant with the required covenants at

June 30, 2017.

We incurred origination and debt issuance costs of

$460,000

which are treated as a debt discount and are netted against amounts outstanding on the condensed consolidated balance sheets.

As of

June 30, 2017,

future contractual maturities of debt as are as follows (in thousands):

Year ending March 31,
2018	$	875
2019		1,625
2020		2,125
2021		2,625
2022		43,750
	$	51,000

XML

Note 6 - Stock-based Compensation

3 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

Note

6

–

Stock-B

ased Compensation

Amounts recognized in the condensed consolidated financial statements related to stock-based compensation are as follows (in thousands, except per share data):

	Three Months E nded June 30 ,
	2017		2016
Total cost of stock-based compensation charged against income before income taxes	$	540	$	429
Amount of income tax benefit (expense) recognized in earnings		89		(47	)
Amount charged against net income	$	629	$	382
Impact on net income per common share:
Basic	$	0.17	$	0.10
Diluted		0.16		0.10

Stock-based compensation expense is included in cost of revenues, selling, and general and administrative expense in the accompanying condensed consolidated statements of income.

The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model (“Black-Scholes”). We use historical data to estimate the expected price volatility, the expected stock option life and expected forfeiture rate. The risk-free interest rate is based on the United States Treasury yield curve in effect at the time of grant for the estimated life of the stock option. The dividend yield is calculated based upon the dividend payments made during the prior

four

quarters as a percent of the average stock price for that period.

The following is a summary of stock option activity for the

three

months ended

June 30, 2017:

	Number of Shares			Weighted- A verage Exercise Price per Share		Weighted- A verage Remaining Contractual Term		Aggregate Intrinsic Value (000s)
Outstanding at March 31, 2017		510,361		$	75.78		5.0	$	23,956
Stock options granted		93,435			122.77		5.8
Stock options forfeited		(5,866	)		96.96		5.4
Stock options expired		--			--		--
Stock options exercised		(27,135	)		54.41		--
Outstanding at June 30, 2017		570,795			84.27		5.0	$	33,701
Exercisable at June 30, 2017		185,614			61.10		4.2	$	15,260

The total intrinsic value of stock options exercised was

$2,422,642

and

$2,242,938

for the

three

months ended

June 30, 2017

and

2016,

respectively.

A summary of the status of our unvested stock option shares as of

June 30, 2017

is as follows:

	Number of Shares			Weighted- A verage Grant-Date Fair Value
Unvested at March 31, 2017		373,766		$	22.49
Stock options granted		93,435			38.83
Stock options forfeited		(5,866	)		27.95
Stock options vested		(76,154	)		20.92
Unvested at June 30, 2017		385,181			28.14

As of

June 30, 2017,

there was

$9,120,867

of total unrecognized compensation expense related to unvested stock options. As of

June 30, 2017,

we have

715,803

shares available for future stock option grants.

XML

Note 7 - Net Income Per Share

3 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Earnings Per Share [Text Block]

Note

7

- Net Income Per Share

Basic net income per share is computed by dividing net income by the weighted-average number of common shares outstanding during the reporting period. Diluted net income per share is computed similarly to basic net income per share, except that it includes the potential dilution that could occur if dilutive securities were exercised.

The following table presents a reconciliation of the denominators used in the computation of net income per share - basic and diluted (in thousands, except per share data):

	Three Months Ended
	June 30 ,
	2017		2016
Net income available for stockholders	$	1,517	$	1,930
Weighted average outstanding shares of common stock		3,736		3,646
Dilutive effect of stock options		187		156
Common stock and equivalents		3,923		3,802
Net income per share:
Basic	$	0.41	$	0.53
Diluted		0.39		0.51

For the

three

months ended

June 30, 2017

and

2016,

117,000

and

184,000

outstanding stock options, respectively, were excluded from the calculation of diluted net income per share as their inclusion would have been anti-dilutive.

XML

Note 8 - Commitments and Contingencies

3 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

Note

8

-

Commitments and

Contingencies

Under the terms of the PCD Agreement, we are required to pay contingent consideration if the cumulative revenues for our process challenge device business for the

three

years subsequent to the acquisition meet certain levels. The potential consideration payable ranges from

$0

to

$1,500,000

and is based upon a sliding scale of

three

-year cumulative revenues between

$9,900,000

and

$12,600,000,

with payments made annually. Based upon both historical and projected growth rates, we initially recorded

$300,000

of contingent consideration payable which represented our best estimate of the amount that would ultimately be paid. We paid

$150,000

of the contingent consideration during the year ended

March 31, 2016 (

based upon the then current run rate projected over the entire

three

-year contingent consideration period).

Since the initial payment, the revenues for these products have significantly increased and as a result, during the year ended

March 31, 2017

we recorded an additional

$450,000

accrual (which was paid in our

third

quarter ending

December 31, 2016.).

During the

three

months ended

June 30, 2017

revenues continued to increase and after revising our forecast for the PCD product revenues through the end of the earn-out period, we recorded an additional

$300,000

accrual, which is included in other income, net in the accompanying condensed statement of operations for the

three

months ended

June 30, 2017.

The remaining contingent consideration amount is also subject to additional modification at the end of the

third

year of the earn-out period (

October 2017)

based upon the actual revenues earned over the contingent consideration period. Any changes to the contingent consideration ultimately paid will result in additional income or expense in our condensed consolidated statements of income. We will continue to monitor the results of our process challenge device business and we will adjust the contingent liability on a go forward basis, based on then current information.

XML

Note 9 - Comprehensive Income

3 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Comprehensive Income (Loss) Note [Text Block]

Note

9

– Comprehensive Income

The following table summarizes the changes in each component of accumulated other comprehensive income (“AOCI”), net of tax (in thousands):

	Foreign Currency Translation			AOCI
Balance at March 31, 2017	$	(1,760	)	$	(1,760	)
Unrealized gains arising during the period		751			751
Balance at June 30, 2017	$	(1,009	)	$	(1,009	)

	Foreign Currency Translation			AOCI
Balance at March 31, 2016	$	(1,151	)	$	(1,151	)
Unrealized gains arising during the period		50			50
Balance at June 30, 2016	$	(1,101	)	$	(1,101	)

XML

Note 10 - Segment Information

3 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

Note

10

-

Segment Information

We have

four

reporting segments: Biological Indicators, Instruments, Cold Chain Monitoring and Cold Chain Packaging. The following tables set forth our segment information (in thousands):

	Three Months Ended June 30, 2017
	Biological Indicators		Instruments		Cold Chain Monitoring		Cold Chain Packaging		Total
Revenues	$	10,183	$	8,603	$	2,917	$	970	$	22,673
Gross profit	$	6,720	$	4,908	$	894	$	149		12,671
Reconciling items (1)										(11,368	)
Earnings before income taxes									$	1,303

	Three Months Ended June 30, 2016
	Biological Indicators		Instruments		Cold Chain Monitoring		Cold Chain Packaging		Total
Revenues	$	9,467	$	8,222	$	2,317	$	1,108	$	21,114
Gross profit	$	6,087	$	4,849	$	667	$	411		12,014
Reconciling items (1)										(9,845	)
Earnings before income taxes									$	2,169

( 1 ) Reconciling items include selling, general and administrative, research and development, and other expenses

	June 30, 2017		March 31, 201 7
Total assets
Biological Indicators	$	69,430	$	67,233
Instruments		36,449		40,805
Cold Chain Monitoring		33,961		35,789
Cold Chain Packaging		21,088		20,313
Corporate and administrative		8,055		7,593
	$	168,983	$	171,733

All long-lived assets are located in the United States except for

$6,712,000

and

$21,214,000

which are associated with our French and Canadian subsidiaries, respectively.

Revenues from external customers are attributed to individual countries based upon locations to which the product is shipped or exported, as follows (in thousands):

	Three Months Ended
	June 30 ,
	201 7		201 6
Net revenues from unaffiliated customers:
United States	$	13,011	$	15,511
Foreign		9,662		5,603
	$	22,673	$	21,114

No

foreign country exceeds

ten

percent of total revenues.

XML

Note 11 - Income Taxes

3 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Income Tax Disclosure [Text Block]

Note

11

– Income Taxes

For interim income tax reporting, we estimate our annual effective tax rate and apply this effective tax rate to our year to date pre-tax income. Each quarter, the estimate of the annual effective tax rate is updated, and if the estimated effective tax rate changes, a cumulative adjustment is made. There is a potential for volatility of the effective tax rate due to several factors, including changes in the mix of the pre-tax income and the jurisdictions to which it relates, changes in tax laws and foreign tax holidays, settlement with taxing authorities and foreign currency fluctuations.

Our effective income tax rate was (

16.4

) percent and

11.0

percent for the

three

months ended

June 30, 2017

and

2016,

respectively. The effective tax rate for the

three

months ended

June 30, 2017

differed from the statutory federal rate of

34

percent primarily due to the impact of share-based payment awards for employees (which was significant for the

three

months ended

June 30, 2017),

state income taxes, domestic manufacturing deductions and foreign rate differential. We anticipate that our effective tax rate for the year ending

March 31, 2018

will approximate

35

to

38

percent, plus or minus the impact of excess tax benefits and deficiencies associated with share-based payment awards to employees (which

may

vary significantly from year to year).

Since we are subject to audit by various taxing authorities, it is reasonably possible that the amount of unrecognized tax benefits will change during the next

12

months. However, we do

not

expect the change, if any, to have a material effect on our financial condition or results of operations within the next

12

months.

XML

Note 12 - Subsequent Event

3 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Subsequent Events [Text Block]

Note

12

- Subsequent Event

In

July 2017,

our Board of Directors declared a quarterly cash dividend of

$0.16

per share of common stock, payable on

September 15, 2017,

to shareholders of record at the close of business on

August 31, 2017.

XML

Significant Accounting Policies (Policies)

3 Months Ended

Jun. 30, 2017

Accounting Policies [Abstract]

Basis of Accounting, Policy [Policy Text Block]

Basis of Presentation

The accompanying condensed consolidated balance sheet as of

March 31, 2017,

has been derived from audited consolidated financial statements. The accompanying unaudited interim condensed consolidated financial statements have been prepared on the same basis as our annual audited consolidated financial statements and in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. In the opinion of management, such unaudited information includes all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of this interim information. Operating results and cash flows for interim periods are

not

necessarily indicative of results that can be expected for the entire year. The information included in this report should be read in conjunction with our audited consolidated financial statements and notes thereto included in our Annual Report on Form

10

-K for the year ended

March 31, 2017.

The summary of our significant accounting policies is incorporated by reference to our Annual Report on Form

10

-K for the year ended

March 31, 2017.

New Accounting Pronouncements, Policy [Policy Text Block]

Recently Issued Accounting Pronouncements

In

May 2014,

the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU")

2014

-

09,

Revenue from Contracts with Customers (Topic

606

)

, which will replace most existing revenue recognition guidance in U.S. GAAP and is intended to improve and converge with international standards the financial reporting requirements for revenue from contracts with customers. The core principle of ASU

2014

-

09

is that an entity should recognize revenue for the transfer of goods or services equal to the amount that it expects to be entitled to receive for those goods or services. ASU

2014

-

09

also requires additional disclosures about the nature, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments. ASU

2014

-

09

allows for adoption either on a full retrospective basis to each prior reporting period presented or on a modified retrospective basis with the cumulative effect of initially applying the new guidance recognized at the date of initial application, which will be effective for the Company beginning

April 1, 2018.

We plan to adopt ASU

2014

-

09

and its amendments on a modified retrospective basis and are continuing to assess all future impacts of the guidance by reviewing our current contracts with customers to identify potential differences that could result from applying the new guidance. Based on our preliminary review, we expect that the adoption of ASU

2014

-

09

will

not

have a material impact on our consolidated financial statements. As we complete our overall assessment, we are evaluating our accounting policies and practices, business processes, systems and controls to determine if changes are necessary to support the new revenue recognition and disclosure requirements. Our assessment will be completed during the year ending

March 31, 2018.

In

January 2017,

the FASB issued ASU

2017

-

04,

Intangibles – Goodwill and Other

, which eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge. ASU

2017

-

04

is required to be applied prospectively and we elected to early adopt ASU

2017

-

04

effective

April 1, 2017.

We do

not

anticipate that the adoption will have a significant impact on our consolidated financial statements.

XML

Note 3 - Inventories (Tables)

3 Months Ended

Jun. 30, 2017

Notes Tables

Schedule of Inventory, Current [Table Text Block]

	June 30, 2017			March 31, 2017
Raw materials	$	10,770		$	10,815
Work-in-process		365			342
Finished goods		3,801			3,604
Less: reserve		(1,560	)		(888	)
	$	13,376		$	13,873

XML

Note 4 - Facility Relocation (Tables)

3 Months Ended

Jun. 30, 2017

Notes Tables

Schedule of Restructuring Reserve by Type of Cost [Table Text Block]

Balance at March 31, 2017	$	673
Facility relocation expense		522
Cash payments		(594	)
Balance at June 30, 2017	$	601

XML

Note 5 - Long-term Debt (Tables)

3 Months Ended

Jun. 30, 2017

Notes Tables

Schedule of Debt [Table Text Block]

	June 30 , 2017			March 31, 201 7
Line of credit (3.25% at June 30, 2017)	$	31,500		$	35,500
Term loan (3.25% at June 30, 2017)		19,500			19,750
Less: discount		(447	)		(450	)
Less: current portion		(1,250	)		(1,125	)
Long-term portion	$	49,303		$	53,675

Schedule of Maturities of Long-term Debt [Table Text Block]

Year ending March 31,
2018	$	875
2019		1,625
2020		2,125
2021		2,625
2022		43,750
	$	51,000

XML

Note 6 - Stock-based Compensation (Tables)

3 Months Ended

Jun. 30, 2017

Notes Tables

Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Table Text Block]

	Three Months E nded June 30 ,
	2017		2016
Total cost of stock-based compensation charged against income before income taxes	$	540	$	429
Amount of income tax benefit (expense) recognized in earnings		89		(47	)
Amount charged against net income	$	629	$	382
Impact on net income per common share:
Basic	$	0.17	$	0.10
Diluted		0.16		0.10

Share-based Compensation, Stock Options, Activity [Table Text Block]

	Number of Shares			Weighted- A verage Exercise Price per Share		Weighted- A verage Remaining Contractual Term		Aggregate Intrinsic Value (000s)
Outstanding at March 31, 2017		510,361		$	75.78		5.0	$	23,956
Stock options granted		93,435			122.77		5.8
Stock options forfeited		(5,866	)		96.96		5.4
Stock options expired		--			--		--
Stock options exercised		(27,135	)		54.41		--
Outstanding at June 30, 2017		570,795			84.27		5.0	$	33,701
Exercisable at June 30, 2017		185,614			61.10		4.2	$	15,260

Schedule of Nonvested Restricted Stock Units Activity [Table Text Block]

	Number of Shares			Weighted- A verage Grant-Date Fair Value
Unvested at March 31, 2017		373,766		$	22.49
Stock options granted		93,435			38.83
Stock options forfeited		(5,866	)		27.95
Stock options vested		(76,154	)		20.92
Unvested at June 30, 2017		385,181			28.14

XML

Note 7 - Net Income Per Share (Tables)

3 Months Ended

Jun. 30, 2017

Notes Tables

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	Three Months Ended
	June 30 ,
	2017		2016
Net income available for stockholders	$	1,517	$	1,930
Weighted average outstanding shares of common stock		3,736		3,646
Dilutive effect of stock options		187		156
Common stock and equivalents		3,923		3,802
Net income per share:
Basic	$	0.41	$	0.53
Diluted		0.39		0.51

XML

Note 9 - Comprehensive Income (Tables)

3 Months Ended

Jun. 30, 2017

Notes Tables

Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block]

	Foreign Currency Translation			AOCI
Balance at March 31, 2017	$	(1,760	)	$	(1,760	)
Unrealized gains arising during the period		751			751
Balance at June 30, 2017	$	(1,009	)	$	(1,009	)

	Foreign Currency Translation			AOCI
Balance at March 31, 2016	$	(1,151	)	$	(1,151	)
Unrealized gains arising during the period		50			50
Balance at June 30, 2016	$	(1,101	)	$	(1,101	)

XML

Note 10 - Segment Information (Tables)

3 Months Ended

Jun. 30, 2017

Notes Tables

Schedule of Segment Reporting Information, by Segment [Table Text Block]

	Three Months Ended June 30, 2017
	Biological Indicators		Instruments		Cold Chain Monitoring		Cold Chain Packaging		Total
Revenues	$	10,183	$	8,603	$	2,917	$	970	$	22,673
Gross profit	$	6,720	$	4,908	$	894	$	149		12,671
Reconciling items (1)										(11,368	)
Earnings before income taxes									$	1,303

	Three Months Ended June 30, 2016
	Biological Indicators		Instruments		Cold Chain Monitoring		Cold Chain Packaging		Total
Revenues	$	9,467	$	8,222	$	2,317	$	1,108	$	21,114
Gross profit	$	6,087	$	4,849	$	667	$	411		12,014
Reconciling items (1)										(9,845	)
Earnings before income taxes									$	2,169

Reconciliation of Assets from Segment to Consolidated [Table Text Block]

	June 30, 2017		March 31, 201 7
Total assets
Biological Indicators	$	69,430	$	67,233
Instruments		36,449		40,805
Cold Chain Monitoring		33,961		35,789
Cold Chain Packaging		21,088		20,313
Corporate and administrative		8,055		7,593
	$	168,983	$	171,733

Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas [Table Text Block]

	Three Months Ended
	June 30 ,
	201 7		201 6
Net revenues from unaffiliated customers:
United States	$	13,011	$	15,511
Foreign		9,662		5,603
	$	22,673	$	21,114

XML

Note 1 - Description of Business and Summary of Significant Accounting Policies (Details Textual)	3 Months Ended
	Jun. 30, 2017
Number of Operating Segments	4
Number of Physical Locations in Which Entity is Organized	8

XML

Note 2 - Acquisitions (Details Textual)	3 Months Ended
	Jun. 30, 2017 USD ($)
Series of Individually Immaterial Business Acquisitions [Member]
Business Combination, Consideration Transferred	$ 362,000

XML

Note 3 - Inventories - Summary of Inventories (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Mar. 31, 2017
Raw materials	$ 10,770	$ 10,815
Work-in-process	365	342
Finished goods	3,801	3,604
Less: reserve	(1,560)	(888)
Total	$ 13,376	$ 13,873

XML

Note 4 - Facility Relocation (Details Textual) - Relocation of Omaha and Traverse City Biological Indicator Manufacturing Facilities [Member] - USD ($)	1 Months Ended	3 Months Ended	12 Months Ended
	Jul. 31, 2017	Jun. 30, 2017	Mar. 31, 2017
Restructuring and Related Cost, Expected Cost			$ 2,100,000
Restructuring Charges		$ 522,000
Subsequent Event [Member] | Building [Member]
Proceeds from Sale of Property, Plant, and Equipment	$ 1,116,000
Gain (Loss) on Disposition of Property Plant Equipment	$ 116,000
Facility Relocation, Retention Bonuses for Existing Personnel [Member] | Biological Indicators [Member]
Restructuring Charges		207,000
Facility Relocation, Duplicative Employment Costs [Member] | Biological Indicators [Member]
Restructuring Charges		84,000
Facility Relocation, Moving Costs [Member] | Biological Indicators [Member]
Restructuring Charges		231,000
Cost of Sales [Member]
Restructuring Charges		291,000	$ 725,000
General and Administrative Expense [Member]
Restructuring Charges		$ 231,000

XML

Note 4 - Facility Relocation - Facility Relocation Costs (Details) - Relocation of Omaha and Traverse City Biological Indicator Manufacturing Facilities [Member]	3 Months Ended
	Jun. 30, 2017 USD ($)
Beginning balance	$ 673,000
Facility relocation expense	522,000
Cash payments	(594,000)
Ending balance	$ 601,000

XML

Note 5 - Long-term Debt (Details Textual)		4 Months Ended	12 Months Ended
	Mar. 01, 2017 USD ($)	Jun. 30, 2017 USD ($)	Feb. 28, 2022 USD ($)
Debt Issuance Costs, Gross	$ 460,000
Credit Facility [Member]
Debt Instrument Convenant, Maximum Leverage Ration, During the Initial Holiday Period	3.5
Debt Instrument Covenant, Maximum Leverage Ratio, Immediately Following the Initial Holiday Period	3.25
Debt Instrument Covenant, Fixed Charge Coverage Ratio	1.25
Credit Facility [Member] | After March 31, 2016 [Member]
Debt Instrument Covenant, Ratio of Funded Debt to Consolidated EBITDA	3
Credit Facility [Member] | Term Loan [Member]
Long-term Debt, Gross	$ 20,000,000
Line of Credit Facility, Periodic Payment, Number of Quarterly Payments	20
Line of Credit Facility, Annual Increase (Decrease) in Periodic Payment, Principal		$ 125,000
Debt Instrument, Periodic Payment, Principal		$ 250,000
Debt Instrument, Additional Carrying Amount	$ 100,000,000
Credit Facility [Member] | Term Loan [Member] | Scenario, Forecast [Member]
Debt Instrument, Periodic Payment, Principal			$ 750,000
Line of Credit [Member]
Debt Instrument, Term	5 years
Line of Credit [Member] | Debt Instrument, Variable Rate Base CBFR Using One Month LIBOR [Member]
Debt Instrument, Basis Spread on Variable Rate Used to Calculate Commercial Bank Floating Rate	0.50%
Line of Credit [Member] | Minimum [Member]
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage	0.15%
Line of Credit [Member] | Minimum [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument, Basis Spread on Variable Rate	1.50%
Line of Credit [Member] | Maximum [Member]
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage	0.35%
Line of Credit [Member] | Maximum [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument, Basis Spread on Variable Rate	2.50%
Line of Credit [Member] | Credit Facility [Member]
Line of Credit Facility, Additional Maximum Borrowing Capacity	$ 100,000,000
Debt Instrument, Term	5 years
Line of Credit Facility, Maximum Borrowing Capacity	$ 80,000,000
Letter of Credit [Member] | Credit Facility [Member]
Line of Credit Facility, Maximum Borrowing Capacity	$ 2,500,000

XML

Note 5 - Long-term Debt - Components of Long-term Debt (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Mar. 31, 2017
Long-term debt	$ 51,000
Less: discount	(447)	$ (450)
Less: current portion	(1,250)	(1,125)
Long-term portion	49,303	53,675
Line of Credit [Member]
Long-term debt	31,500	35,500
Term Loan [Member]
Long-term debt	$ 19,500	$ 19,750

XML

Note 5 - Long-term Debt - Components of Long-term Debt (Details) (Parentheticals)	Jun. 30, 2017
Line of Credit [Member]
Line of credit, interest rate at end of period	3.25%
Term Loan [Member]
Term loan, interest rate at end of period	3.25%

XML

Note 5 - Long-term Debt - Future Contractual Maturities of Debt (Details) $ in Thousands	Jun. 30, 2017 USD ($)
2018	$ 875
2019	1,625
2020	2,125
2021	2,625
2022	43,750
Total	$ 51,000

XML

Note 6 - Stock-based Compensation (Details Textual) - USD ($)	3 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period, Intrinsic Value	$ 2,422,642	$ 2,242,938
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized	$ 9,120,867
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant	715,803

XML

Note 6 - Stock-based Compensation - Allocation of Share-based Compensation (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Total cost of stock-based compensation charged against income before income taxes	$ 540	$ 429
Amount of income tax benefit (expense) recognized in earnings	89	(47)
Amount charged against net income	$ 629	$ 382
Basic (in dollars per share)	$ 0.17	$ 0.10
Diluted (in dollars per share)	$ 0.16	$ 0.10

XML

Note 6 - Stock-based Compensation - Summary of Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	12 Months Ended
	Jun. 30, 2017	Mar. 31, 2017
Outstanding (in shares)	510,361
Outstanding (in dollars per share)	$ 75.78
Outstanding (in dollars per share)	$ 84.27	$ 75.78
Outstanding (Year)	5 years	5 years
Outstanding	$ 33,701	$ 23,956
Stock options granted (in shares)	93,435
Stock options granted (in dollars per share)	$ 122.77
Stock options granted (Year)	5 years 292 days
Stock options forfeited (in shares)	(5,866)
Stock options forfeited (in dollars per share)	$ 96.96
Stock options forfeited (Year)	5 years 146 days
Stock options expired (in shares)
Stock options expired (in dollars per share)
Exercisable (in shares)	185,614
Stock options expired (Year)
Stock options exercised (in shares)	(27,135)
Exercisable (in dollars per share)	$ 61.10
Exercisable (Year)	4 years 73 days
Exercisable	$ 15,260
Stock options exercised (in dollars per share)	$ 54.41
Outstanding (in shares)	570,795	510,361

XML

Note 6 - Stock-based Compensation - Summary of Unvested Options (Details)	3 Months Ended
	Jun. 30, 2017 $ / shares shares
Unvested (in shares) | shares	373,766
Unvested (in dollars per share) | $ / shares	$ 22.49
Stock options granted (in shares) | shares	93,435
Stock options granted (in dollars per share) | $ / shares	$ 38.83
Stock options forfeited (in shares) | shares	(5,866)
Stock options forfeited (in dollars per share) | $ / shares	$ 27.95
Stock options vested (in shares) | shares	(76,154)
Stock options vested (in dollars per share) | $ / shares	$ 20.92
Unvested (in shares) | shares	385,181
Unvested (in dollars per share) | $ / shares	$ 28.14

XML

Note 7 - Net Income Per Share (Details Textual) - shares	3 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Employee Stock Option [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	117,000	184,000

XML

Note 7 - Net Income Per Share - Computation of Net Income Per Share - Basic & Diluted (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Net income available for stockholders	$ 1,517	$ 1,930
Weighted average outstanding shares of common stock (in shares)	3,736	3,646
Dilutive effect of stock options (in shares)	187	156
Common stock and equivalents (in shares)	3,923	3,802
Basic (in dollars per share)	$ 0.41	$ 0.53
Diluted (in dollars per share)	$ 0.39	$ 0.51

XML

Note 8 - Commitments and Contingencies (Details Textual)			3 Months Ended			12 Months Ended
	Oct. 15, 2014 USD ($)	Nov. 06, 2013	Jun. 30, 2017 USD ($)	Dec. 31, 2016 USD ($)	Jun. 30, 2016 USD ($)	Mar. 31, 2017 USD ($)	Mar. 31, 2016 USD ($)	Oct. 15, 2014 CAD
Business Combination, Contingent Consideration, Liability			$ 118,000			$ 116,000
Business Combination, Contingent Consideration Arrangements, Change in Amount of Contingent Consideration, Liability			(437,000)		$ 111,000
Business Combination, Subsequent Adjustment to Initial Contingent Consideration Liability			300,000
PCD [Member]
Business Combination, Contingent Consideration, Liability	$ 300,000
Business Combination, Payment of Contingent Consideration				$ 450,000			$ 150,000
Business Acquisition, Earn Out Period for Determination of Contingent Consideration	3 years
Business Combination, Contingent Consideration Arrangements, Range of Outcomes, Value, Low | CAD								CAD 0
Business Combination, Contingent Consideration Arrangements, Range of Outcomes, Value, High	$ 1,500,000
PCD [Member] | Other Expense, Net [Member]
Business Combination, Contingent Consideration Arrangements, Change in Amount of Contingent Consideration, Liability						$ 450,000
Business Combination, Subsequent Adjustment to Initial Contingent Consideration Liability			$ 300,000
PCD [Member] | Minimum [Member]
Business Acquisition, Revenue Required in Three Years Subsequent to Acquisition for Payment of Contingent Consideration	9,900,000
PCD [Member] | Maximum [Member]
Business Acquisition, Revenue Required in Three Years Subsequent to Acquisition for Payment of Contingent Consideration	$ 12,600,000
Amega Scientific Corporation [Member]
Business Acquisition, Earn Out Period for Determination of Contingent Consideration		3 years

XML

Note 9 - Comprehensive Income - Changes in Accumulated Other Comprehensive Income (Details) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Unrealized gains arising during the period	$ 751	$ 50
Balance	(1,009)	(1,101)
Balance	(1,760)	(1,151)
Accumulated Foreign Currency Adjustment Attributable to Parent [Member]
Unrealized gains arising during the period	751	50
Balance	(1,009)	(1,101)
Balance	$ (1,760)	$ (1,151)

XML

Note 10 - Segment Information (Details Textual)	3 Months Ended
	Jun. 30, 2017 USD ($)
Number of Operating Segments	4
FRANCE
Long-Lived Assets	$ 6,712,000
CANADA
Long-Lived Assets	$ 21,214,000

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Note 10 - Segment Information - Operating Segment Information (Details) - USD ($) $ in Thousands		3 Months Ended
		Jun. 30, 2017	Jun. 30, 2016
Gross profit		$ 12,671	$ 12,014
Reconciling items	[1]	(11,368)	(9,845)
Earnings before income taxes		1,303	2,169
Revenues		22,673	21,114
Biological Indicators [Member]
Gross profit		6,720	6,087
Reconciling items	[1]
Earnings before income taxes
Revenues		10,183	9,467
Instruments [Member]
Gross profit		4,908	4,849
Reconciling items	[1]
Earnings before income taxes
Revenues		8,603	8,222
Cold Chain Monitoring [Member]
Gross profit		894	667
Reconciling items	[1]
Earnings before income taxes
Revenues		2,917	2,317
Cold Chain Packaging [Member]
Gross profit		149	411
Reconciling items	[1]
Earnings before income taxes
Revenues		$ 970	$ 1,108

[1] Reconciling items include selling, general and administrative, research and development, and other expenses.

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Note 10 - Segment Information - Operating Segment Asset Reconciliation (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Mar. 31, 2017
Assets	$ 168,983	$ 171,733
Corporate, Non-Segment [Member]
Assets	8,055	7,593
Biological Indicators [Member] | Operating Segments [Member]
Assets	69,430	67,233
Instruments [Member] | Operating Segments [Member]
Assets	36,449	40,805
Cold Chain Monitoring [Member] | Operating Segments [Member]
Assets	33,961	35,789
Cold Chain Packaging [Member] | Operating Segments [Member]
Assets	$ 21,088	$ 20,313

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Note 10 - Segment Information - Revenues From External Customers (Details) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Revenues	$ 22,673	$ 21,114
UNITED STATES
Revenues	13,011	15,511
Foreign [Member]
Revenues	$ 9,662	$ 5,603

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Note 11 - Income Taxes (Details Textual)	3 Months Ended		12 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Mar. 31, 2018
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent	34.00%
Effective Income Tax Rate Reconciliation, Percent	(16.40%)	11.00%
Scenario, Forecast [Member] | Minimum [Member]
Effective Income Tax Rate Reconciliation, Percent			35.00%
Scenario, Forecast [Member] | Maximum [Member]
Effective Income Tax Rate Reconciliation, Percent			38.00%

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Note 12 - Subsequent Event (Details Textual)	1 Months Ended
	Jul. 31, 2017 $ / shares
Subsequent Event [Member]
Common Stock, Dividends, Per Share, Declared	$ 0.16