UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 10, 2020
Mesa Air Group, Inc.
(Exact name of registrant as specified in its charter)
|
Nevada |
001-38626 |
85-0302351 |
|
(State or other jurisdiction |
(Commission |
(I.R.S. Employer |
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410 North 44th Street, Suite 700 |
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85008 |
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Phoenix, Arizona |
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(Zip Code) |
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(Address of principal executive offices) |
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(602) 685-4000
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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☐ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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☐ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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☐ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
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Title of Each Class |
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Trading Symbol(s) |
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Name of Each Exchange of Which Registered |
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Common Stock, no par value |
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MESA |
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Nasdaq Global Select Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒
Item 2.02 Results of Operations and Financial Condition.
On February 10, 2020, Mesa Air Group, Inc. issued a press release announcing its financial and operating results for its first fiscal quarter ended December 31, 2019. A copy of the press release is furnished as Exhibit 99.1 to this report.
In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(d)Exhibits.
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Exhibit Number |
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Description |
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99.1 |
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Press Release, dated February 10, 2020, issued by Mesa Air Group, Inc. |
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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Dated: February 10, 2020 |
MESA AIR GROUP, INC. |
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By: |
/s/ Brian S. Gillman |
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Name: |
Brian S. Gillman |
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Title: |
Executive Vice President and General Counsel |
Exhibit 99.1
Mesa Air Group Reports First Quarter Fiscal 2020 Results
February 10, 2020
PHOENIX, February 10, 2020 (GLOBE NEWSWIRE) -- Mesa Air Group, Inc. (NASDAQ: MESA) today reported first quarter fiscal 2020 financial and operating results.
Highlights
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• |
Net income of $10.8 million or $0.31 per diluted share |
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• |
Controllable completion factor of 99.8% compared to 99.5% in Q1 2019 |
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• |
Block hours increased 0.5% compared to Q1 2019 |
Mesa’s Q1 2020 results reflect net income of $10.8 million, or $0.31 per diluted share, compared to net income of $19.1 million, or $0.54 per diluted share for Q1 2019. Mesa’s Q1 2020 pre-tax income was $14.3 million, compared to $25.0 million for Q1 2019. In addition, Mesa’s EBITDA1 for Q1 2020 was $47.4 million, compared to $58.2 million in Q1 2019 and EBITDAR1 was $58.8 million, compared to $72.3 million in Q1 2019. The primary variance in pre-tax income from Q1 2019 to Q1 2020 was the anticipated increase in airframe and engine heavy maintenance of $10.7 million.
Operationally, the company ran a 99.8% controllable completion factor compared to 99.5% in Q1 2019. At United, the company operated at a 99.98% controllable completion factor in the quarter, taking only 6 cancels out of 33,876 scheduled flights compared to a 99.6% controllable completion factor in Q1 2019. At American, the company operated at a 99.5% controllable completion factor compared to a 99.2% controllable completion factor in Q1 2019. The company ran a 98.7% total completion factor, which includes weather and other uncontrollable cancellations, compared to 98.0% in Q1 2019. Mesa operated 115,562 block hours during Q1 2020, an increase of 0.5% from Q1 2019 of 115,000.
“We are pleased to see our operational performance continue to improve and we are on target to take delivery of 20 new E175s which begin in May 2020,” said Jonathan Ornstein, Chairman and Chief Executive Officer. “I would like to thank all of our employees for their hard work and dedication every day.”
“We continue to work closely with our partners to provide the highest level of customer service, reliability and on time performance,” said Brad Rich, Executive Vice President and Chief Operating Officer. “Since having access to the full complement of aircraft in our American Eagle operation, our performance has increased with November and December at a 99.7% controllable completion factor, January at 99.9% and February at 100% month-to-date.”
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1 |
See Reconciliation of non-GAAP financial measures |
The company is providing the following guidance for Fiscal Year 2020 and 2021:
Block Hours, Scheduled Heavy Engine and Airframe Maintenance, Pass-through Maintenance Expense – Actual and Forecast (unaudited)
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Block Hours |
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|||||||||||||||||||
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Q1 |
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Q2 |
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Q3 |
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Q4 |
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Total |
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|||||
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FY 2020 Actual / Guidance |
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|
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Low |
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115,562 |
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109,000 |
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112,000 |
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115,500 |
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452,062 |
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High |
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115,562 |
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111,000 |
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114,000 |
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|
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118,000 |
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|
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458,562 |
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Scheduled Heavy Engine and Airframe Maintenance |
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|||||||||||||||||||
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Q1 |
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Q2 |
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Q3 |
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Q4 |
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Total |
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|||||
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FY 2020 Actual / Guidance |
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Low |
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$ |
14.8 |
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$ |
20.0 |
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|
$ |
7.0 |
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|
$ |
7.0 |
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$ |
48.8 |
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High |
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$ |
14.8 |
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$ |
23.0 |
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$ |
10.0 |
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$ |
10.0 |
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$ |
57.8 |
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Pass-through Maintenance Expense |
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|||||||||||||||||||
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Q1 |
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Q2 |
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Q3 |
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Q4 |
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Total |
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FY 2020 Actual / Guidance |
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$ |
7.4 |
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$ |
10.5 |
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$ |
9.4 |
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$ |
9.4 |
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$ |
36.7 |
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Fleet Count |
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FY '20 Q1 |
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FY '20 Q2 |
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FY '20 Q3 |
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FY '20 Q4 |
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FY '21 |
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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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FY Ended |
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Dec '19 |
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Mar '20 |
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Jun '20 |
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Sep '20 |
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Sep '21 |
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Fleet Count |
Partner |
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(Actual) |
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(Forecast) |
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(Forecast) |
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(Forecast) |
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(Forecast) |
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E-175 |
United |
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60 |
|
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60 |
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62 |
|
|
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68 |
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|
|
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80 |
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CRJ-900 |
American |
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60 |
|
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59 |
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|
59 |
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|
|
59 |
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|
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59 |
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CRJ-700 |
United |
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20 |
|
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20 |
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|
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18 |
|
|
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12 |
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— |
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Total CPA |
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140 |
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139 |
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139 |
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139 |
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139 |
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Non-CPA |
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|
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CRJ-700 |
Leased |
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— |
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— |
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|
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2 |
|
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8 |
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20 |
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CRJ-900 |
Unassigned |
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4 |
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5 |
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5 |
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5 |
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5 |
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CRJ-200 |
Unassigned |
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1 |
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1 |
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1 |
|
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1 |
|
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|
1 |
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Total Fleet |
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145 |
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|
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145 |
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|
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147 |
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|
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153 |
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|
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165 |
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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 tables below reflect supplemental financial data and reconciliations to GAAP financial statements for the three months ended December 31, 2019 and the three months ended December 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)
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Three months ended December 31, 2019 |
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|||||||||||||
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Income Before Taxes |
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Income Tax (Expense)/Benefit |
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Net Income |
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Net Income per Diluted Share |
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||||
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GAAP Income |
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|
14,320 |
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(3,535 |
) |
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|
10,785 |
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$ |
0.31 |
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|
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|
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|
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|
|
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|
|
|
|
|
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Interest Expense |
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|
12,628 |
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|
|
|
|
|
|
|
|
|
|
|
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Interest Income |
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|
(58 |
) |
|
|
|
|
|
|
|
|
|
|
|
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Depreciation and Amortization |
|
|
20,552 |
|
|
|
|
|
|
|
|
|
|
|
|
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EBITDA |
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|
47,442 |
|
|
|
|
|
|
|
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|
|
|
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|
|
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|
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|
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|
|
|
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Aircraft Rent |
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11,329 |
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|
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|
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|
|
|
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EBITDAR |
|
|
58,771 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Three months ended December 31, 2018 |
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|||||||||||||
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Income Before Taxes |
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Income Tax (Expense)/Benefit |
|
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Net Income |
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|
Net Income per Diluted Share |
|
||||
|
GAAP Income |
|
|
25,030 |
|
|
|
(5,949 |
) |
|
|
19,081 |
|
|
$ |
0.54 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Expense |
|
|
14,842 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Income |
|
|
(156 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and Amortization |
|
|
18,491 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA |
|
|
58,207 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Aircraft Rent |
|
|
14,119 |
|
|
|
|
|
|
|
|
|
|
|
|
|
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EBITDAR |
|
|
72,326 |
|
|
|
|
|
|
|
|
|
|
|
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Mesa Air Group will host a conference call with analysts on Monday, February 10 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/q4mi3ymq. 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 147 cities in 47 states, the District of Columbia, Canada, Mexico, Cuba and the Bahamas. As of January 31st, 2020, Mesa operated a fleet of 145 aircraft with an average of approximately 702 daily departures and 3,600 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 block hours, scheduled heavy engine and airframe maintenance, and pass-through maintenance expense forecast of Mesa for the second, third and fourth quarters of fiscal 2020, (ii) the fleet forecast for the second, third and fourth quarters of fiscal 2020 and year ended fiscal 2021, and (iii) delivery dates of the 20 E175s scheduled to begin in May 2020. 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)
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Three Months Ended December 31, |
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|||||
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2019 |
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2018 |
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||
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Operating revenues: |
|
|
|
|
|
|
|
|
|
|
Contract revenue |
|
$ |
171,800 |
|
|
$ |
170,449 |
|
|
|
Pass-through and other |
|
|
12,236 |
|
|
|
7,707 |
|
|
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Total operating revenues |
|
|
184,036 |
|
|
|
178,156 |
|
|
|
|
|
|
|
|
|
|
|
|
|
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Operating expenses: |
|
|
|
|
|
|
|
|
|
|
Flight operations |
|
|
52,644 |
|
|
|
53,245 |
|
|
|
Fuel |
|
|
169 |
|
|
|
121 |
|
|
|
Maintenance |
|
|
58,095 |
|
|
|
39,802 |
|
|
|
Aircraft rent |
|
|
11,329 |
|
|
|
14,119 |
|
|
|
Aircraft and traffic servicing |
|
|
1,064 |
|
|
|
934 |
|
|
|
General and administrative |
|
|
12,996 |
|
|
|
12,214 |
|
|
|
Depreciation and amortization |
|
|
20,552 |
|
|
|
18,491 |
|
|
|
Total operating expenses |
|
|
156,849 |
|
|
|
138,926 |
|
|
|
Operating income |
|
|
27,187 |
|
|
|
39,230 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (expenses) income, net: |
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(12,628 |
) |
|
|
(14,842 |
) |
|
|
Interest income |
|
|
58 |
|
|
|
156 |
|
|
|
Other (expense) income, net |
|
|
(297 |
) |
|
|
486 |
|
|
|
Total other (expense), net |
|
|
(12,867 |
) |
|
|
(14,200 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before taxes |
|
|
14,320 |
|
|
|
25,030 |
|
|
|
Income tax expense |
|
|
3,535 |
|
|
|
5,949 |
|
|
|
Net income |
|
$ |
10,785 |
|
|
$ |
19,081 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share attributable to common shareholders |
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.31 |
|
|
$ |
0.55 |
|
|
|
Diluted |
|
$ |
0.31 |
|
|
$ |
0.54 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding |
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
35,023 |
|
|
|
34,518 |
|
|
|
Diluted |
|
|
35,182 |
|
|
|
35,113 |
|
|
Condensed Consolidated Balance Sheets
(In thousands, except shares) (Unaudited)
|
|
|
December 31, 2019 |
|
|
September 30, 2019 |
|
||
|
ASSETS |
|
|
|
|
|
|
|
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|
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|
|
|
|
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|
CURRENT ASSETS: |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
57,763 |
|
|
$ |
68,855 |
|
|
Restricted cash |
|
|
3,448 |
|
|
|
3,646 |
|
|
Receivables, net |
|
|
24,121 |
|
|
|
23,080 |
|
|
Expendable parts and supplies, net |
|
|
22,400 |
|
|
|
21,337 |
|
|
Prepaid expenses and other current assets |
|
|
4,502 |
|
|
|
40,923 |
|
|
Total current assets |
|
|
112,234 |
|
|
|
157,841 |
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net |
|
|
1,261,267 |
|
|
|
1,273,585 |
|
|
Intangibles, net |
|
|
9,157 |
|
|
|
9,532 |
|
|
Lease and equipment deposits |
|
|
4,872 |
|
|
|
2,167 |
|
|
Operating Lease right-of-use assets |
|
|
146,071 |
|
|
|
— |
|
|
Other Assets |
|
|
8,400 |
|
|
|
8,792 |
|
|
TOTAL ASSETS |
|
|
1,542,001 |
|
|
|
1,451,917 |
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES: |
|
|
|
|
|
|
|
|
|
Current portion of long-term debt and financing leases |
|
$ |
166,089 |
|
|
$ |
165,900 |
|
|
Current maturities of operating leases |
|
|
37,674 |
|
|
|
— |
|
|
Accounts payable |
|
|
47,750 |
|
|
|
49,930 |
|
|
Accrued compensation |
|
|
10,048 |
|
|
|
11,988 |
|
|
Other accrued expenses |
|
|
34,350 |
|
|
|
28,888 |
|
|
Total current liabilities |
|
|
295,911 |
|
|
|
256,706 |
|
|
|
|
|
|
|
|
|
|
|
|
NONCURRENT LIABILITIES: |
|
|
|
|
|
|
|
|
|
Long-term debt and financing leases - excluding current portion |
|
|
641,017 |
|
|
|
677,423 |
|
|
Noncurrent operating lease liabilities |
|
|
95,992 |
|
|
|
— |
|
|
Deferred credits |
|
|
11,032 |
|
|
|
12,134 |
|
|
Deferred income taxes |
|
|
58,506 |
|
|
|
55,303 |
|
|
Other noncurrent liabilities |
|
|
1,352 |
|
|
|
24,483 |
|
|
Total noncurrent liabilities |
|
|
807,899 |
|
|
|
769,343 |
|
|
Total liabilities |
|
|
1,103,810 |
|
|
|
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; 33,039,126 (2020) and 31,413,287 (2019) shares issued and outstanding, and 1,988,472 (2020) and 3,600,953 (2019) warrants issued and outstanding |
|
|
239,783 |
|
|
|
238,504 |
|
|
Retained earnings |
|
|
198,408 |
|
|
|
187,364 |
|
|
Total stockholders' equity |
|
|
438,191 |
|
|
|
425,868 |
|
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
|
$ |
1,542,001 |
|
|
$ |
1,451,917 |
|
Operating Highlights (unaudited)
|
|
|
Three months ended |
|
|
|||||||||
|
|
|
December 31 |
|
|
|||||||||
|
|
|
2019 |
|
|
2018 |
|
|
Change |
|
|
|||
|
Available Seat Miles (thousands) |
|
|
2,735,386 |
|
|
|
2,708,899 |
|
|
|
1.0 |
% |
|
|
Block Hours |
|
|
115,562 |
|
|
|
115,000 |
|
|
|
0.5 |
% |
|
|
Departures |
|
|
62,725 |
|
|
|
61,534 |
|
|
|
1.9 |
% |
|
|
Average Stage Length (miles) |
|
|
573 |
|
|
|
578 |
|
|
|
-0.9 |
% |
|
|
Passengers |
|
|
3,697,138 |
|
|
|
3,620,115 |
|
|
|
2.1 |
% |
|
Source: Mesa Air Group, Inc.
Mesa Air Group, Inc.
Investor Relations
Brian Gillman
Investor.Relations@mesa-air.com
(602) 685-4010