PHOENIX, May 09, 2019 (GLOBE NEWSWIRE) -- Mesa Air Group, Inc. (NASDAQ: MESA) today reported second quarter Fiscal Year 2019 financial and operating results.

Highlights for Second Quarter Fiscal Year 2019 (ending March 31, 2019)

• Net Income of $13.2 million or $0.38 per diluted share
  
  
• Adjusted Net Income¹ of $16.0 million or $0.46 per diluted share
  
  
• Pre-tax income of $17.3 million compared to $3.0 million for Q2 FY 2018
  
  
• Adjusted Pre-tax income¹ of $21.0 million compared to $3.0 million for Q2 FY 2018
  
  
• Block hours up 14.5% compared to Q2 FY 2018
  
  
• Contract Revenue up by 8.5% compared to Q2 FY 2018
  
  
• Extinguished existing and issued new spare engine debt at lower interest rates

Mesa’s Q2 2019 results reflect net income of $13.2 million, or $0.38 per diluted share, compared to net income of $2.4 million, or $0.10 per diluted share for Q2 2018. Excluding special items, adjusted net income¹ was $16.0 million for Q2 2019, or $0.46 per diluted share, compared to $2.4 million, or $0.10 per diluted share for Q2 2018. Mesa’s Q2 2019 pre-tax income was $17.3 million, compared to $3.0 million for Q2 2018. Excluding special items, adjusted pre-tax income was $21.0 million for Q2 2019, compared to $3.0 million for Q2 2018. In addition, Mesa’s Adjusted EBITDA¹ for Q2 2019 was $53.7 million, compared to $32.0 million in Q2 2018 and Adjusted EBITDAR¹ was $67.8 million, compared to $50.3 million in Q2 2018. 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%.

Mesa operated 112,030 block hours during Q2 2019, an increase of 14.5% from Q2 2018 of 97,853. Operationally, we ran a 99.6% controllable completion factor and a 97.4% total completion factor, which includes weather and other uncontrollable cancellations. 

“We continue to execute our plan of increased block hours, which contributed to our nearly six-fold increase in pre-tax earnings year-over-year,” stated Jonathan Ornstein, Chairman and Chief Executive Officer. “We continue to make significant investments primarily in pilot training and our maintenance capabilities.”

Mike Lotz, President and Chief Financial Officer, continued, “Our Q2 year to date diluted EPS of $0.92 and adjusted diluted EPS¹ of $1.00 is consistent with our plan. The decrease in diluted EPS for Q2 versus Q1 is primarily driven by the timing of heavy maintenance events. During the Quarter we finalized our purchase agreement with GECAS for ten (10) leased CRJ-700 aircraft currently operating at United and expect to finalize the financing this quarter. Upon completion of the transaction we will have reduced the number of leased aircraft with third parties to 18."

“I am delighted to have joined Mesa and believe the company has positioned itself to be a leading U.S. regional airline, given its cost structure and improving operational performance, as evidenced by our improvement in controllable completion factor from 98.8% in Q2 2018 to 99.6% in Q2 2019,” said Brad Rich, Mesa’s recently appointed Executive Vice President and Chief Operating Officer. Rich previously served as Senior Vice President of United Express Operations for United Airlines and prior to that was President of SkyWest, Inc. “I look forward to working with our partners at United and American.”

¹ See Reconciliation of non-GAAP financial measures

Outlook

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

Fleet, Block Hours, Engine Expenses – Actual and Forecast (unaudited)

		FY '18 Q3				FY '18 Q4				FY '19 Q1				FY '19 Q2				FY '19 Q3
		Qtr Ended				Qtr Ended				Qtr Ended				Qtr Ended				Qtr Ended
		Jun '18				Sep '18				Dec '18				Mar '19				Jun '19
Fleet Count		(Actual)				(Actual)				(Actual)				(Actual)				(Forecast)
E-175			58				60				60				60				60
CRJ-900			64				64				64				64				62
CRJ-700			20				20				20				20				20
Total CPA			142				144				144				144				142
Non-CPA
CRJ-900			-				-				-				-				2
CRJ-200			1				1				1				1				1
Total Fleet			143				145				145				145				145
Production
Block Hours			102,939				112,475				115,000				112,030				115,203
Block Hours per day per Aircraft			8.0				8.5				8.7				8.6				8.9
Non Pass-Through Engine Expense		$	8.5			$	2.4			$	2.6			$	5.6			$	8.7

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 ended March 31, 2019 and the three months ended March 31, 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 March 31, 2019
		Income Before Taxes				Income Tax Expense				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
Adjusted EBITDA			53,700
Aircraft Rent			14,110
Adjusted EBITDAR			67,810

		Three months ended March 31, 2018
		Income Before Taxes				Income Tax Expense				Net Income				Net Income per Diluted Share
GAAP Income			2,980				(608	)			2,372			$	0.10
FY18 Adjustments			-				-				-
Adjusted Income			2,980				(608	)			2,372			$	0.10
Interest Expense			13,343
Interest Income			(10	)
Depreciation and Amortization			15,666
Adjusted EBITDA			31,979
Aircraft Rent			18,319
Adjusted EBITDAR			50,298

Reconciliation of GAAP versus Non-GAAP Disclosures (unaudited)
(In thousands, except for per diluted share)

		Six months ended March 31, 2019
		Income Before Taxes				Income Tax Expense				Net income				Net Income per Diluted Share
GAAP Income			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

		Six months ended March 31, 2018
		Income Before Taxes				Income Tax Expense				Net income				Net Income per Diluted Share
GAAP Income			3,815				21,181				24,996			$	1.06
FY18 Adjustments (2)			-				(22,438	)			(22,438	)
Adjusted Income			3,815				(1,257	)			2,558			$	0.11
Interest Expense			27,474
Interest Income			(19	)
Depreciation and Amortization			31,598
Adjusted EBITDA			62,868
Aircraft Rent			36,582
Adjusted EBITDAR			99,450

Adjustments for three months and six months ended March 31, 2019 and 2018:

1. Includes adjustment for loss on extinguishment of debt of $3.6 million related to repayment of the Company’s Spare Engine Facility.
   
   
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.

Mesa Air Group will host a conference call with analysts on Friday, May 10 at 1:00pm EDT/10:00am PDT. 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/ndxbvumn. 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 121 cities in 39 states, the District of Columbia, Canada, Mexico, Cuba, and the Bahamas. As of April 30, 2019, Mesa operated a fleet of 145 aircraft with approximately 601 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 third 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 GECAS leased aircraft. 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 March 31,								Six Months Ended March 31,
		2019				2018				2019				2018
Operating revenues:
Contract revenue		$	169,771			$	156,515			$	340,220			$	310,904
Pass-through and other			7,376				11,125				15,083				21,420
Total operating revenues			177,147				167,640				355,303				332,324
Operating expenses:
Flight operations			49,366				54,647				102,611				103,807
Fuel			101				130				222				198
Maintenance			45,380				51,409				85,182				105,756
Aircraft rent			14,110				18,319				28,229				36,582
Aircraft and traffic servicing			1,065				783				1,999				1,744
General and administrative			13,472				10,337				25,686				21,267
Depreciation and amortization			19,276				15,666				37,767				31,598
Total operating expenses			142,770				151,291				281,696				300,952
Operating income			34,377				16,349				73,607				31,372
Other (expenses) income, net:
Interest expense			(13,772	)			(13,343	)			(28,614	)			(27,474	)
Interest income			299				10				455				19
Loss on extinguishment of debt			(3,616	)			-				(3,616	)			-
Other income (expense)			47				(36	)			533				(102	)
Total other (expense), net			(17,042	)			(13,369	)			(31,242	)			(27,557	)
Income before taxes			17,335				2,980				42,365				3,815
Income tax expense (benefit)			4,086				608				10,035				(21,181	)
Net income		$	13,249			$	2,372			$	32,330			$	24,996
Net income per share attributable to common shareholders
Basic		$	0.38			$	0.10			$	0.93			$	1.07
Diluted		$	0.38			$	0.10			$	0.92			$	1.06
Weighted-average common shares outstanding
Basic			34,699				23,282				34,607				23,279
Diluted			34,962				23,570				35,041				23,530

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

		March 31, 2019				September 30, 2018
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	77,743			$	103,311
Marketable securities			-				19,921
Restricted cash			3,646				3,823
Receivables - less allowance for doubtful accounts			12,071				14,290
Expendable parts and supplies - less obsolescence allowance			19,229				15,658
Prepaid expenses and other current assets			47,451				40,914
Total current assets			160,140				197,917
PROPERTY AND EQUIPMENT, NET			1,237,615				1,250,829
INTANGIBLES, NET			10,437				11,341
LEASE AND EQUIPMENT DEPOSITS			6,916				2,598
OTHER ASSETS			10,178				9,703
TOTAL		$	1,425,286			$	1,472,388
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Current portion of debt and capital leases		$	147,114			$	155,170
Accounts payable			40,527				54,307
Accrued compensation			11,675				12,208
Other accrued expenses			27,344				29,696
Total current liabilities			226,660				251,381
NONCURRENT LIABILITIES:
Long-term debt and capital leases - excluding current portion			696,856				760,177
Deferred credits			14,680				15,393
Deferred income taxes			49,836				39,797
Other noncurrent liabilities			27,969				31,173
Total noncurrent liabilities			789,341				846,540
Total liabilities			1,016,001				1,097,921
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; 27,969,475 (2019) and 23,902,903 (2018) shares issued   and outstanding, and 6,780,297 (2019) and 10,614,990 (2018) warrants   issued and outstanding			237,171				234,683
Retained earnings			172,114				139,784
Total stockholders' equity			409,285				374,467
TOTAL		$	1,425,286			$	1,472,388

Operating Highlights (unaudited)

		Three months ended												Six months ended
		March 31												March 31
		2019				2018				Change				2019				2018				Change
Available Seat Miles (thousands)			2,654,286				2,313,068				14.8	%			5,363,185				4,621,380				16.1	%
Block Hours			112,030				97,853				14.5	%			227,030				195,559				16.1	%
Departures			59,225				51,679				14.6	%			120,759				107,043				12.8	%
Average Stage Length (miles)			589				588				0.2	%			583				567				2.8	%
Passengers			3,483,947				3,021,514				15.3	%			7,104,062				6,332,521				12.2	%

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

 

Source: Mesa Air Group, Inc.