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Mesa Air Group Inc.$3.56$.123.49%

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 Mesa Air Group Reports Second Quarter Fiscal 2020 Results
   Monday, May 11, 2020 4:02:00 PM ET

PHOENIX, May 11, 2020 (GLOBE NEWSWIRE) -- Mesa Air Group, Inc. (NASDAQ: MESA) today reported second quarter fiscal 2020 financial and operating results.

Mesa’s Q2 2020 results reflect net income of $1.9 million, or $0.05 per diluted share, compared to net income of $13.2 million, or $0.38 per diluted share for Q2 2019.  Mesa’s Q2 2020 pre-tax income was $3.2 million, compared to $17.3 million for Q2 2019.  In addition, Mesa’s Adjusted EBITDA1 for Q2 2020 was $35.3 million, compared to $53.7 million in Q2 2019 and Adjusted EBITDAR1 was $47.6 million, compared to $67.8 million in Q2 2019. The primary reason for the $14.1 million reduction in pre-tax income from Q2 2019 to Q2 2020 was the anticipated increase in airframe and engine heavy maintenance of $10.1 million and $4.0 million in reduced revenue in March as a result of COVID-19.



“This is an incredibly difficult time for our industry and our country,” said Jonathan Ornstein, Mesa Air Group Chairman and Chief Executive Officer. “We are taking every measure to manage our resources responsibly. I am deeply appreciative of all our employees for their dedication and commitment and would also like to thank the Congress and the Administration for the very significant assistance we received under the CARES Act. We continue to work closely and cooperatively with our partners through this tumultuous period.”

“The health and safety of our employees and passengers is our top priority,” said Brad Rich, Executive Vice President and Chief Operating Officer. “Together with United and American, we continue to implement a number of procedures to ensure our aircraft and work areas are as clean and safe as possible.”

From a fleet perspective the twenty new E175s for United initially planned to be delivered starting this month have been delayed until late 2020 and early 2021. The Mesa CRJ-700 fleet of twenty aircraft that were planned to be removed will stay in the United CPA until the new E175s are delivered and are scheduled to be leased to another United Express carrier. Other fleet changes include the removal of three aircraft from the American CPA that were previously deferred. Two of these aircraft will be removed in May and one in June.

Mesa ended the quarter at $52.4 million in unrestricted cash and equivalents compared to $57.8 in Q1 FY2020. During the quarter we drew down the line of credit facility by $23 million, paid $11 million in deposits in connection with previously ordered engines, paid $3 million in capital expenditures, paid $8 million in property tax for prior periods and had $6 million in cash lease payments in excess of book lease amounts. Additionally, Mesa paid $43 million in scheduled principal payments on aircraft and engine debt. As previously disclosed, Mesa expects to receive a total of $92.5 million in connection with the Payroll Support Program under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) covering the period April through September 2020. In April Mesa received $30.8 million under the program and expects to receive $15.4 each month from June through September.

Mesa has also applied for a loan under the CARES Act and will be meeting with the Treasury Department and their advisors in the coming weeks to determine amounts that are available to Mesa. Mesa will then evaluate its participating in the loan program and determine how much if any additional debt to take on.

Due to uncertainty related to COVID-19 the company is not providing guidance at this time.

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 tables below reflect supplemental financial data and reconciliations to GAAP financial statements for the three months and six months ended March 31, 2020 and the three months and six months ended March 31, 2019. 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 March 31, 2020 
  Income Before
Taxes
  Income Tax
(Expense)/Benefit
  Net
Income
  Net Income
per
Diluted Share
 
GAAP Income  3,192   (1,307)  1,885  $0.05 
                 
Interest Expense  11,673             
Interest Income  (36)            
Depreciation and Amortization  20,469             
EBITDA  35,298             
                 
Aircraft Rent  12,285             
EBITDAR  47,583             


   Three months ended March 31, 2019 
  Income Before
Taxes
  Income Tax
(Expense)/Benefit
  Net
Income
  Net Income
per
Diluted Share
 
GAAP Income  17,335   (4,086)  13,249  $0.38 
FY19 Adjustments (1)  3,616   (852)  2,763     
Adjusted Income  20,951   (4,938)  16,012  $0.46 
                 
Interest Expense  13,772             
Interest Income  (299)            
Depreciation and Amortization  19,276             
EBITDA  53,700             
                 
Aircraft Rent  14,110             
EBITDAR  67,810             


  Six months ended March 31, 2020 
                 
  Income Before
Taxes
  Income Tax
(Expense)/Benefit
  Net
income
  Net Income
per
Diluted Share
 
GAAP Income  17,512   (4,842)  12,670  $0.36 
FY19 Adjustments             
Adjusted Income  17,512   (4,842)  12,670  $0.36 
                 
Interest Expense  24,300             
Interest Income  (94)            
Depreciation and Amortization  41,021             
Adjusted EBITDA  82,739             
                 
Aircraft Rent  23,614             
Adjusted EBITDAR  106,353             


  Six months ended March 31, 2019 
                 
  Income Before
Taxes
  Income Tax
(Expense)/Benefit
  Net
income
  Net Income
per
Diluted Share
 
GAAP Income/(Loss)  42,365   (10,035)  32,330  $0.92 
FY19 Adjustments (1)  3,616   (852)  2,763     
Adjusted Income  45,981   (10,887)  35,093  $1.00 
                 
Interest Expense  28,614             
Interest Income  (455)            
Depreciation and Amortization  37,767             
Adjusted EBITDA  111,907             
                 
Aircraft Rent  28,229             
Adjusted EBITDAR  140,136             

Adjustments for three months and six months ended March 31, 2020 and 2019:

1) Includes adjustment for loss on extinguishment of debt of $3.6 million related to repayment of the Company’s Spare Engine Facility. 
Mesa Air Group will host a conference call with analysts on Monday, May 11 at 4:30pm ET/1:30pm PT. 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/mmc/p/ieyn2zi2 . 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, Inc. is the holding company of Mesa Airlines, a regional air carrier providing scheduled passenger service to 103 cities in 35 states, the District of Columbia and Mexico. As of April 30th, 2020, Mesa operated a fleet of 145 aircraft with approximately 194 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 the, (i) expected terms, timing and benefits of the CARES Act funding and the outcome of the Company’s meeting with the Treasury Department, (ii) fleet forecast for the third and fourth quarters of fiscal 2020 and year ended fiscal 2021, and (iii) expected delivery dates of the 20 E175s currently scheduled to begin in fourth quarter fiscal 2020, all of which involve risks and uncertainties that could cause actual results to differ materially from those currently expected. Risks and uncertainties that may affect future results include those that are described from time to time in the Company’s filings with the Securities and Exchange Commission (“SEC”).

These forward-looking statements represent the judgment of the Company, as of the date of this release, and the Company disclaims any intent or obligation to publicly update or review any forward-looking statements, 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
March 31,
  Six Months Ended
March 31,
 
  2020  2019  2020  2019 
Operating revenues:                
Contract revenue $165,781  $169,771  $337,581  $340,220 
Pass-through and other  14,115   7,376   26,351   15,083 
Total operating revenues  179,896   177,147   363,932   355,303 
                 
Operating expenses:                
Flight operations  52,891   49,366   105,535   102,611 
Fuel  188   101   358   222 
Maintenance  64,335   45,380   122,430   85,182 
Aircraft rent  12,285   14,110   23,614   28,229 
Aircraft and traffic servicing  1,336   1,065   2,401   1,999 
General and administrative  14,500   13,472   27,496   25,686 
Depreciation and amortization  20,469   19,276   41,021   37,767 
Total operating expenses  166,004   142,770   322,855   281,696 
Operating income  13,892   34,377   41,077   73,607 
                 
Other (expenses) income, net:                
Interest expense  (11,673)  (13,772)  (24,300)  (28,614)
Interest income  36   299   94   455 
Loss on extinguishment of debt     (3,616)     (3,616)
Other (expense) income, net  937   47   641   533 
Total other (expense), net  (10,700)  (17,042)  (23,565)  (31,242)
                 
Income before taxes  3,192   17,335   17,512   42,365 
Income tax expense  1,307   4,086   4,842   10,035 
Net income $1,885  $13,249  $12,670  $32,330 
                 
Net income per share attributable to common shareholders                
Basic $0.05  $0.38  $0.36  $0.93 
Diluted $0.05  $0.38  $0.36  $0.92 
                 
Weighted-average common shares outstanding                
Basic  35,141   34,699   35,082   34,607 
Diluted  35,265   34,962   35,220   35,041 


MESA AIR GROUP, INC.
Condensed Consolidated Balance Sheets
(In thousands, except shares) (Unaudited)

   March 31,
2020
  September 30,
2019
 
ASSETS       
         
CURRENT ASSETS:        
Cash and cash equivalents $52,399  $68,855 
Restricted cash  3,441   3,646 
Receivables, net  14,182   23,080 
Expendable parts and supplies, net  22,378   21,337 
Prepaid expenses and other current assets  5,911   40,923 
Total current assets  98,311   157,841 
         
Property and equipment, net  1,242,797   1,273,585 
Intangibles, net  8,782   9,532 
Lease and equipment deposits  13,973   2,167 
Operating Lease right-of-use assets  140,753    
Other Assets  7,124   8,792 
TOTAL ASSETS  1,511,740   1,451,917 
         
LIABILITIES AND STOCKHOLDERS’ EQUITY       
         
CURRENT LIABILITIES:        
Current portion of long-term debt and financing leases $168,171  $165,900 
Current maturities of operating leases  43,648    
Accounts payable  49,246   49,930 
Accrued compensation  12,406   11,988 
Other accrued expenses  27,138   28,888 
Total current liabilities  300,609   256,706 
         
NONCURRENT LIABILITIES:        
Long-term debt and financing leases - excluding current portion  619,793   677,423 
Noncurrent operating lease liabilities  78,698    
Deferred credits  10,242   12,134 
Deferred income taxes  59,791   55,303 
Other noncurrent liabilities  1,255   24,483 
Total noncurrent liabilities  769,779   769,343 
Total liabilities  1,070,388   1,026,049 
         
STOCKHOLDERS' EQUITY:        
Preferred stock of no par value, 5,000,000 shares authorized; no shares issued
  and outstanding
      
Common stock of no par value and additional paid-in capital, 125,000,000
  shares authorized; 35,194,902 (2020) and 31,413,287 (2019) shares issued
  and outstanding, and 0 (2020) and 3,600,953 (2019) warrants
  issued and outstanding
  241,059   238,504 
Retained earnings  200,293   187,364 
Total stockholders' equity  441,352   425,868 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,511,740  $1,451,917 

Operating Highlights (unaudited)

   Three months ended 
  March 31 
  2020 2019 Change 
Available Seat Miles (thousands)  2,611,940  2,654,286  -1.6%
Block Hours  108,305  112,030  -3.3%
Departures  55,435  59,225  -6.4%
Average Stage Length (miles)  619  589  5.1%
Passengers  2,838,412  3,483,947  -18.5%

Source: Mesa Air Group, Inc.

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

1 See Reconciliation of non-GAAP financial measures

 

Mesa Air Group Logo (black background).png

Source: Mesa Air Group, Inc.


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