Bay Street News

Mesa Air Group Announces First Quarter Fiscal Year 2019 Results

Bay Street

PHOENIX, Feb. 04, 2019 (GLOBE NEWSWIRE) — Mesa Air Group, Inc. (NASDAQ: MESA) today reported first quarter Fiscal Year 2019 financial and operating results.

Highlights for First Quarter Fiscal Year 2019 (ending December 31, 2018)

Mesa’s Q1 2019 results reflect net income of $19.1 million, or $0.55 per diluted share, compared to net income of $22.6 million (which included a $22.4 million favorable tax adjustment related to the Tax Cuts and Jobs Act), or $0.96 per diluted share (pre-IPO) for Q1 2018. Excluding special items adjusted net income1 was $19.1 million for Q1 2019 compared to $0.2 million for Q1 2018. Mesa’s Q1 2019 income before taxes was $25.0 million, compared to $0.8 million for Q1 2018. In addition, Mesa’s EBITDA1 for Q1 2019 was $58.2 million, compared to $30.9 million in Q1 2018 and EBITDAR1 was $72.3 million, compared to $49.2 million in Q1 2018.

Mesa operated 115,000 block hours during Q1 2019, an increase of 17.7% from Q1 2018 of 97,705 and an increase of 2.2% from Q4 2018 of 102,939. Operationally we ran a 98.0% total completion factor and a 99.5% adjusted completion factor which excludes weather and other uncontrollable cancellations.

“We continue to work hard to successfully execute our plan of increased block hours, improved operational performance and profitability,” stated Jonathan Ornstein, Chairman and Chief Executive Officer. “Our pilot hiring remains strong and we continue to hire significantly above current attrition levels. We appreciate the hard work and dedication of all of our employees, and their meaningful contributions to our improving operational capabilities.”

Mike Lotz, President and Chief Financial Officer continued, “On January 29, 2019 the company closed on a $91.2 million five-year term loan at LIBOR +3.1%. The proceeds were used to pay down existing debt at LIBOR +7.25% plus yield enhancement of 1.5%. We also signed a term sheet (subject to final approvals and documentation) with GECAS for the purchase of ten (10) leased CRJ-700 aircraft currently operating at United. Upon completion of the transaction we have reduced the number of leased aircraft with third parties to 18.” 

____________________________________________________
1 See Reconciliation of non-GAAP financial measures

Outlook

The Company is providing the following guidance for the second quarter of FY 2019:

Fleet, Block Hours, Engine Expenses – Actual and Forecast for Q2 FY 2019 (unaudited)

   
                     
      FY ’18 Q2     FY ’18 Q3     FY ’18 Q4     FY ’19 Q1     FY ’19 Q2
      Qtr Ended     Qtr Ended     Qtr Ended     Qtr Ended     Qtr Ended
      Mar ’18     Jun ’18     Sep ’18     Dec ’18     Mar ’19
Fleet Count     (Actual)     (Actual)     (Actual)     (Actual)     (Forecast)
E-175     58     58     60     60     60
CRJ-900     64     64     64     64     64
CRJ-700     20     20     20     20     20
CRJ-200     1     1     1     1     1
Total     143     143     145     145     145
                     
Production                    
Block Hours     97,853     102,939     112,475     115,000     112,105
Block Hours per day per Aircraft     7.7     8.0     8.5     8.7     8.7
                     
                     
Non Pass-Through Engine Expense   $ 10.8   $ 8.5   $ 2.4   $ 2.6   $ 8.9
                     


Reconciliation of non-GAAP financial measures

Although these financial statements are prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”), certain non-GAAP financial measures may provide investors with useful information regarding the underlying business trends and performance of Mesa’s ongoing operations and may be useful for period-over-period comparisons of such operations. The table below reflects supplemental financial data and reconciliations to GAAP financial statements for the three months ended December 31, 2018 and the three months ended December 31, 2017. Readers should consider these non-GAAP measures in addition to, not a substitute for, financial reporting measures prepared in accordance with GAAP. These non-GAAP financial measures exclude some, but not all items that may affect the Company’s net income. Additionally, these calculations may not be comparable with similarly titled measures of other companies.

Reconciliation of GAAP versus Non-GAAP Disclosures (unaudited)
(In thousands, except for per diluted share)
                                 
        Three months ended December 31, 2018
                                Net Income
        Income       Income Tax   Net       per Diluted
        Before Taxes       Expense   Income       Share
Income       25,030           5,949    19,081         $ 0.55  
                                 
Interest Expense       14,842                            
Interest Income       (156 )                          
Depreciation and Amortization       18,491                            
EBITDA       58,207                            
                                 
Aircraft Rent       14,119                            
EBITDAR       72,326                            
                                 
Weighted-average Shares Outstanding        
                                 
                Three months ended
December 31, 2018		        
                Basic       Diluted        
GAAP weighted-average common shares outstanding       23,903         34,821          
                         

(In thousands, except for per diluted share)

                                 
        Three months ended December 31, 2017
                                Net Income
        Income       Income Tax       Net       per Diluted
        Before Taxes       Expense       Income       Share
Income       835           (21,789 )         22,624           $ 0.96    
FY18 Adjustments (1)       0           22,438           (22,438 )         $ (0.95 )  
Non-GAAP Income       835           (649 )         186           $ 0.01    
                                 
Interest Expense       14,131                            
Interest Income       (9 )                          
Depreciation and Amortization       15,932                            
EBITDA       30,889                            
                                 
Aircraft Rent       18,263                            
EBITDAR       49,152                            
                                 
Weighted-average Shares Outstanding        
                                 
                Three months ended
December 31, 2017		        
                Basic       Diluted        
GAAP weighted-average common shares outstanding       11,294           23,559            
                         

Three months ended December 31, 2017 special items:

          1 )     Includes adjustment for tax benefit resulting from the Tax Cuts and Jobs Act enacted during Q1 2018.  The Act reduces the corporate tax rate to 21 percent, effective January 1, 2018.

Mesa Air Group will host a conference call with analysts on Tuesday, February 5 at 10:00am EST/8:00am MST. The conference call number is 888-469-2054 (Passcode: Phoenix). The conference call can also be accessed live via the web by visiting https://edge.media-server.com/m6/p/3y279bbm. A recorded version will be available on Mesa’s website approximately two hours after the call for approximately 14 days.

About Mesa Air Group, Inc.

Headquartered in Phoenix, Arizona, Mesa Air Group is the commercial aviation holding company of Mesa Airlines, a regional air carrier providing scheduled passenger service to 125 cities in 41 states, the District of Columbia, Canada, Mexico, Cuba, and the Bahamas. As of January 31, 2019, Mesa operated a fleet of 145 aircraft with approximately 623 daily departures and 3,400 employees. Mesa operates all of its flights as either American Eagle or United Express flights pursuant to the terms of capacity purchase agreements entered into with American Airlines, Inc. and United Airlines, Inc.

Forward-Looking Statements

This news release contains forward looking statements, including, but not limited to, (i) the fleet and block hours forecast of Mesa for the second quarter of fiscal 2019, (ii) the major non pass-through engine overhaul expense forecast for the same fiscal periods, and (iii) the Company’s expectations regarding completing the purchase of ten additional GECAS leased aircraft by mid-year 2019. These forward-looking statements are based on Mesa’s current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations due to changes in global, regional or local economic, business, competitive, market, regulatory and other factors, many of which are beyond Mesa’s control. Any forward-looking statement in this release speaks only as of the date of this release. Mesa undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by any applicable securities laws.

MESA AIR GROUP, INC.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts) (Unaudited)
   
  Three Months Ended December 31,
  2018       2017
 Operating revenues:          
Contract revenue $ 170,449         $ 154,389  
Pass-through and other   7,707           10,295  
Total operating revenues   178,156           164,684  
Operating expenses:                  
Flight operations   53,245           49,160  
Fuel   121           68  
Maintenance   39,802           54,347  
Aircraft rent   14,119           18,263  
Aircraft and traffic servicing   934           961  
General and administrative   12,214           10,930  
Depreciation and amortization   18,491           15,932  
Total operating expenses   138,926           149,661  
Operating income   39,230           15,023  
Other (expenses) income, net:                  
Interest expense   (14,842 )         (14,131 )
Interest income   156           9  
Other income (expense)   486           (66 )
Total other (expense), net   (14,200 )         (14,188 )
Income before taxes   25,030           835  
Income tax expense (benefit)   5,949           (21,789 )
Net income $ 19,081         $ 22,624  
Net income per share attributable to common shareholders          
Basic $ 0.80         $ 2.00  
Diluted $ 0.55         $ 0.96  
Weighted-average common shares outstanding          
Basic   23,903           11,294  
Diluted   34,821           23,559  

MESA AIR GROUP, INC. 
Condensed Consolidated Balance Sheets 
(In thousands) (Unaudited)
       
  December 31,   September 30,
  2018   2018
ASSETS      
Current assets:      
Cash and cash equivalents $ 88,600 $ 103,311
Marketable Securities   14,974   19,921
Restricted cash   3,644   3,823
Receivables, net   6,015   14,290
Expendable parts and supplies, net   17,402   15,658
Prepaid expenses and other current assets   43,018   40,914
Total current assets   173,653   197,917
         
Property and equipment, net   1,247,784   1,250,829
Intangibles, net   10,889   11,341
Lease and equipment deposits   1,838   2,598
Other assets   9,798   9,703
Total assets $ 1,443,962 $ 1,472,388
         
LIABILITIES AND STOCKHOLDERS’ EQUITY        
Current liabilities:        
Current portion of long-term debt $ 149,842 $ 155,170
Accounts payable   40,439   54,307
Accrued compensation   9,920   12,208
Other accrued expenses   31,017   29,696
Total current liabilities   231,218   251,381
         
Long-term debt, excluding current portion   727,839   760,177
Deferred credits   14,412   15,393
Deferred income taxes   45,750   39,797
Other noncurrent liabilities   29,584   31,173
Total noncurrent liabilities   817,585   846,540
Total liabilities   1,048,803   1,097,921
         
         
Stockholders’ equity:        
Common stock   236,294   234,683
Retained earnings   158,865   139,784
Total stockholders’ equity   395,159   374,467
Total liabilities and stockholders’ equity $ 1,443,962 $ 1,472,388
         

Operating Highlights (unaudited)
           
  Three months ended December 31
  2018   2017   Change
Available Seat Miles – ASMs (thousands) 2,708,899   2,308,312   17.4 %
Block Hours 115,000   97,705   17.7 %
Departures 61,534   55,364   11.1 %
Average Stage Length (miles) 578   548   5.5 %
Passengers 3,620,115   3,311,007   9.3 %

Source: Mesa Air Group, Inc.

Mesa Air Group, Inc.
Investor Relations
Brian Gillman
Investor.Relations@mesa-air.com
(602) 685-4010

Media
Jack Hellie
Media@mesa-air.com
(602) 685-4393