PHOENIX, Dec. 03, 2018 (GLOBE NEWSWIRE) — Mesa Air Group, Inc. (NASDAQ: MESA) today reported fourth quarter and Fiscal Year 2018 financial and operating results.

Highlights for Fourth Quarter and Fiscal Year 2018 (ending September 30, 2018)

Mesa’s Q4 2018 results reflect net income of $19.4 million, or $0.65 per diluted share, compared to net income of $5.5 million, or $0.23 per diluted share for Q4 2017.  Mesa’s Q4 2018 income before taxes was $26.6 million, compared to $10.2 million for Q4 2017.  In addition, Mesa’s EBITDA¹ for Q4 2018 was $59.3 million, compared to $38.5 million in Q4 2017 and EBITDAR¹ was $73.6 million, compared to $56.7 million in Q4 2017.

Mesa reported net income of $33.3 million, or $1.32 per diluted share for the 2018 fiscal year, compared to net income of $32.8 million, or $1.40 per diluted share for the 2017 fiscal year. Excluding special items for both periods adjusted net income¹ was $31.0 million for the 2018 fiscal year compared to $32.8 million for the 2017 fiscal year. Mesa reported income before taxes of $15.8 million for the 2018 fiscal year compared to $53.7 million in the 2017 fiscal year. Excluding special items for both periods adjusted income before taxes¹ was $42.0 million compared to $53.7 million in the 2017 fiscal year. In addition, Adjusted EBITDA¹ was $163.8 million, compared to $160.8 million in the 2017 fiscal year.  Similarly, Adjusted EBITDAR¹ was $232.7 million, compared to $233.4 million in the 2017 fiscal year.

Mesa operated 112,475 block hours during the fourth quarter, an increase of 9.3% from Q3 2018 of 102,939 and an increase of 14.9% from Q2 2018 of 97,853.

“In spite of industry challenges, there were a number of positive developments in the quarter, most notably the progress we have made increasing the utilization of our aircraft through a combination of strong hiring and declining attrition among our pilots, reduced training backlog, and improved utilization of existing resources,” stated Jonathan Ornstein, Chairman and Chief Executive Officer of Mesa Air Group. “We appreciate the hard work and dedication of all of our employees for their very important and meaningful contribution to our improving operational capabilities.”

Mike Lotz, President and Chief Financial Officer continued, “On August 14, 2018, we successfully completed our IPO. Including the partial exercise of the underwriters’ option to purchase additional shares, we raised approximately $112 million and subsequently paid down $25.6 million outstanding on our revolving credit facility, reducing annual interest expense by $1.2 million per year. We are currently negotiating the purchase of ten additional aircraft currently on lease to us and hope to complete the transaction by the end of March 2019. In addition, we are finalizing negotiations to refinance our high-cost debt primarily associated with spare engine purchases by the end of this year. This is expected to result in a further reduction of interest expense going forward,” said Lotz.

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¹ See Reconciliation of non-GAAP financial measures

Outlook

The Company is providing the following guidance for the fourth quarter of FY 2018:

Fleet, Block Hours, Engine Expense – Actual and Forecast for Q1 FY 2019

	FY ’18 Q2			FY ’18 Q3			FY ’18 Q4			FY ’19 Q1
	Qtr Ended			Qtr Ended			Qtr Ended			Qtr Ended
	Mar ’18			Jun ’18			Sep ’18			Dec ’18
Fleet Count	(Actual)			(Actual)			(Actual)			(Forecast)
E-175		58			58			60			60
CRJ-900		64			64			64			64
CRJ-700		20			20			20			20
CRJ-200		1			1			1			1
Total		143			143			145			145
Production
Block Hours		97,853			102,939			112,475			114,650
Block Hours per day per Aircraft		7.7			8.0			8.5			8.7
Non Pass-Through Engine Expense	$	10.8		$	8.5		$	2.4		$	8.5

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 and twelve months ended September 30, 2018. 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 September 30, 2018
								Net Income
	Income			Income Tax		Net		per Diluted
	Before Taxes			Expense		Income		Share
Income	26,646			7,251		19,395		$	0.65
Interest Expense	15,274
Interest Income	(85	)
Depreciation and Amortization	17,420
EBITDA	59,255
Aircraft Rent	14,334
EBITDAR	73,589
Weighted-average Shares Outstanding
				Three months ended September 30, 2018
				Basic		Diluted
GAAP weighted-average common shares outstanding2				18,663		29,675

 

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² As of 9/30/18 we had 23,902,903 common shares and 10,614,990 warrants outstanding for total diluted shares outstanding of 34,517,893.

	Twelve months ended September 30, 2018
	Income Before Taxes			Income Tax Expense (Benefit)			Net Income			Net Income per Diluted Share
Income	15,829			(17,426	)		33,255			$	1.32
FY18 Adjustments (1) (2)	26,193			28,455			(2,262	)		$	(0.09	)
Non-GAAP Income	42,022			11,029			30,994			$	1.23
Interest Expense	56,867
Interest Income	(114	)
Depreciation and Amortization	65,031
Adjusted EBITDA	163,806
Aircraft Rent	68,892
Adjusted EBITDAR	232,698
Weighted-average Shares Outstanding
				Twelve months ended September 30, 2018
				Basic			Diluted
GAAP weighted-average common shares outstanding2				13,516			25,171

2018 fiscal year special items:

1. Includes one-time non-cash adjustments of $11.1 million in General and Administrative expense related to an increase in accrued compensation as a result of the increase in the fair value of the Company’s common stock at the S-1 filing date and $15.1 million related to the acquisition of nine CRJ-900 aircraft previously leased in Lease termination expense.
2. 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. Consequently, we have recorded a decrease related to our net deferred tax liabilities of $22.0 million.  The Company has also estimated an increase to its valuation allowance of $0.5 million due to the rate change.  We have recorded a corresponding net adjustment to deferred income tax benefit of $21.5 million for the period ending September 30, 2018. 

Mesa Air Group will host a conference call with analysts on Tuesday, December 4 at 11:00am EST/9:00am MST. The conference call number is 888-323-9808 (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 is a regional air carrier providing scheduled passenger service to 121 cities in 39 states, the District of Columbia, Canada, Mexico, Cuba and The Bahamas. As of November 30, 2018, Mesa operated a fleet of 145 aircraft with approximately 648 daily departures and 3,412 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 first quarter of fiscal 2019, (ii) the major non pass-through engine overhaul expense forecast for the same fiscal periods, (iii) the Company’s expectations regarding completing the purchase of ten additional GECAS leased aircraft by the end of this year, and (iv) the refinancing of high-cost debt associated with spare engines by the end of this year and the impact thereof on the Company’s future interest expense. 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 September 30,								Twelve Months Ended September 30,
	2018				2017				2018				2017
Operating revenues:
Contract revenue	$	168,444			$		151,577		$	639,264			$	618,698
Pass-through and other		9,088					5,717			42,331				24,878
Total operating revenues		177,532					157,294			681,595				643,576
Operating expenses:
Flight operations		53,463					45,215			209,065				155,516
Fuel		149					152			498				766
Maintenance		39,118					46,488			193,164				210,729
Aircraft rent		14,334					18,217			68,892				72,551
Aircraft and traffic servicing		950					918			3,541				3,676
General and administrative		10,314					7,786			53,647				38,996
Depreciation and amortization		17,420					15,828			65,031				61,048
Lease termination		–					–			15,109				–
Total operating expenses		135,748					134,604			608,947				543,282
Operating income		41,784					22,690			72,648				100,294
Other (expenses) income, net:
Interest expense		(15,274	)				(12,451	)		(56,867		)		(46,110	)
Interest income		85					9			114				32
Other income (expense)		51					(67	)		(66		)		(514	)
Total other (expense), net		(15,138	)				(12,509	)		(56,819		)		(46,592	)
Income before taxes		26,646					10,181			15,829				53,702
Income tax (benefit) expense		7,251					4,698			(17,426		)		20,874
Net income	$	19,395			$		5,483		$	33,255			$	32,828
Net income per share attributable to common shareholders
Basic	$	1.04			$		0.49		$	2.46			$	3.01
Diluted	$	0.65			$		0.23		$	1.32			$	1.40
Weighted-average common shares outstanding
Basic		18,663					11,117			13,516				10,919
Diluted		29,675					23,459			25,171				23,386
MESA AIR GROUP, INC.
Condensed Consolidated Balance Sheets
(In thousands) (Unaudited)
					September 30,						September 30,
					2018						2017
ASSETS
Current assets:
Cash and cash equivalents					$	103,311					$	56,788
Marketable Securities						19,921						–
Restricted cash						3,823						3,559
Receivables, net						14,290						8,853
Expendable parts and supplies, net						15,658						15,114
Prepaid expenses and other current assets						40,914						61,525
Total current assets						197,917						145,839
Property and equipment, net						1,250,829						1,192,448
Intangibles, net						11,341						11,724
Lease and equipment deposits						2,598						1,945
Other assets						9,703						5,693
Total assets					$	1,472,388					$	1,357,649
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt					$	155,170					$	140,466
Accounts payable						54,307						44,738
Accrued compensation						12,208						9,080
Other accrued expenses						29,696						23,929
Total current liabilities						251,381						218,213
Long-term debt, excluding current portion						760,177						803,874
Deferred credits						15,393						17,189
Deferred income taxes						39,797						56,436
Other noncurrent liabilities						31,173						39,713
Total noncurrent liabilities						846,540						917,212
Total liabilities						1,097,921						1,135,425
Stockholders’ equity:
Common stock						234,683						114,456
Retained earnings						139,784						107,768
Total stockholders’ equity						374,467						222,224
Total liabilities and stockholders’ equity					$	1,472,388					$	1,357,649

Operating Highlights (unaudited)

	Three months ended September 30
	2018		2017		Change
Available Seat Miles – ASMs (thousands)	2,652,219		2,258,060		17.5	%
Block Hours	112,475		95,109		18.3	%
Departures	63,153		55,517		13.8	%
Average Stage Length (miles)	552		535		3.2	%
Passengers	3,733,543		3,248,072		14.9	%
	Twelve months ended September 30
	2018		2017		Change
Available Seat Miles – ASMs (thousands)	9,713,877		9,471,914		2.6	%
Block Hours	410,974		395,084		4.0	%
Departures	227,978		221,990		2.7	%
Average Stage Length (miles)	560		561		-0.2	%
Passengers	13,556,774		13,005,844		4.2	%

Source: Mesa Air Group, Inc.

Mesa Air Group, Inc.

Investor Relations
Brian Gillman
[email protected]
(602) 685-4010

Media
Jack Hellie
[email protected]
602-685-4393