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
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)
|
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FY '18 Q2 |
|
|
FY '18 Q3 |
|
|
FY '18 Q4 |
|
|
FY '19 Q1 |
|
|
FY '19 Q2 |
|
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|
Qtr Ended |
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|
Qtr Ended |
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|
Qtr Ended |
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|
Qtr Ended |
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|
Qtr Ended |
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Mar '18 |
|
|
Jun '18 |
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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 |
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Production |
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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 |
|
|
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|
|
|
|
|
|
|
|
|
|
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|
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Non
Pass-Through Engine Expense |
|
$ |
10.8 |
|
$ |
8.5 |
|
$ |
2.4 |
|
$ |
2.6 |
|
$ |
8.9 |
|
|
|
|
|
|
|
|
|
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|
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) |
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Three months ended December 31, 2018 |
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Net
Income |
|
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|
|
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
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Aircraft Rent |
|
|
|
14,119 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDAR |
|
|
|
72,326 |
|
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|
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|
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|
|
|
|
|
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Weighted-average Shares Outstanding |
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|
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|
|
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|
Three months endedDecember 31,
2018 |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
|
Diluted |
|
|
|
|
GAAP
weighted-average common shares outstanding |
|
|
|
23,903 |
|
|
|
|
34,821 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands, except for per diluted share)
|
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|
Three months ended December 31, 2017 |
|
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|
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|
|
|
|
|
|
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 |
|
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|
|
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|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
Weighted-average Shares Outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Three months endedDecember 31,
2017 |
|
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|
|
|
|
|
|
|
|
|
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
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