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Mesa Air Group Inc.$7.68($.09)(1.16%)

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 Mesa Air Group Announces First Quarter Fiscal Year 2019 Results
   Monday, February 04, 2019 7:06:00 PM ET

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)

  • Net Income of $19.1 million or $0.55 per diluted share
  • Pre-tax income of $25.0 million compared to $0.8 million for Q1 FY 2018
  • Block hours up 17.7% compared to Q1 FY ’18
  • Revenue up by 8.2% compared to Q1 FY ‘18

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


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
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 . 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.

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 

Condensed Consolidated Balance Sheets 
(In thousands) (Unaudited)
 December 31, September 30,
 2018 2018
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
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 Hours115,000 97,705 17.7%
Departures61,534 55,364 11.1%
Average Stage Length (miles)578 548 5.5%
Passengers3,620,115 3,311,007 9.3%

Source: Mesa Air Group, Inc.

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

Jack Hellie
(602) 685-4393

Mesa Air Group Logo (black background).png

Source: Mesa Air Group, Inc.

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