PHOENIX, Dec. 03, 2018 (GLOBE NEWSWIRE) -- Mesa Air Group, Inc. (NASDAQ: MESA) today reported fourth quarter and Fiscal Year 2018 financial and operating results.
Highlights for Fourth Quarter and Fiscal Year 2018 (ending September 30, 2018)
Mesa’s Q4 2018 results reflect net income of $19.4 million, or $0.65 per diluted share, compared to net income of $5.5 million, or $0.23 per diluted share for Q4 2017. Mesa’s Q4 2018 income before taxes was $26.6 million, compared to $10.2 million for Q4 2017. In addition, Mesa’s EBITDA1 for Q4 2018 was $59.3 million, compared to $38.5 million in Q4 2017 and EBITDAR1 was $73.6 million, compared to $56.7 million in Q4 2017.
Mesa reported net income of $33.3 million, or $1.32 per diluted share for the 2018 fiscal year, compared to net income of $32.8 million, or $1.40 per diluted share for the 2017 fiscal year. Excluding special items for both periods adjusted net income1 was $31.0 million for the 2018 fiscal year compared to $32.8 million for the 2017 fiscal year. Mesa reported income before taxes of $15.8 million for the 2018 fiscal year compared to $53.7 million in the 2017 fiscal year. Excluding special items for both periods adjusted income before taxes1 was $42.0 million compared to $53.7 million in the 2017 fiscal year. In addition, Adjusted EBITDA1 was $163.8 million, compared to $160.8 million in the 2017 fiscal year. Similarly, Adjusted EBITDAR1 was $232.7 million, compared to $233.4 million in the 2017 fiscal year.
Mesa operated 112,475 block hours during the fourth quarter, an increase of 9.3% from Q3 2018 of 102,939 and an increase of 14.9% from Q2 2018 of 97,853.
“In spite of industry challenges, there were a number of positive developments in the quarter, most notably the progress we have made increasing the utilization of our aircraft through a combination of strong hiring and declining attrition among our pilots, reduced training backlog, and improved utilization of existing resources,” stated Jonathan Ornstein, Chairman and Chief Executive Officer of Mesa Air Group. “We appreciate the hard work and dedication of all of our employees for their very important and meaningful contribution to our improving operational capabilities.”
Mike Lotz, President and Chief Financial Officer continued, “On August 14, 2018, we successfully completed our IPO. Including the partial exercise of the underwriters’ option to purchase additional shares, we raised approximately $112 million and subsequently paid down $25.6 million outstanding on our revolving credit facility, reducing annual interest expense by $1.2 million per year. We are currently negotiating the purchase of ten additional aircraft currently on lease to us and hope to complete the transaction by the end of March 2019. In addition, we are finalizing negotiations to refinance our high-cost debt primarily associated with spare engine purchases by the end of this year. This is expected to result in a further reduction of interest expense going forward,” said Lotz.
__________
1 See Reconciliation of non-GAAP financial measures
Outlook
The Company is providing the following guidance for the fourth quarter of FY 2018:
Fleet, Block Hours, Engine Expense - Actual and Forecast for Q1 FY 2019
| FY '18 Q2 | FY '18 Q3 | FY '18 Q4 | FY '19 Q1 | ||||||||
| Qtr Ended | Qtr Ended | Qtr Ended | Qtr Ended | ||||||||
| Mar '18 | Jun '18 | Sep '18 | Dec '18 | ||||||||
| Fleet Count | (Actual) | (Actual) | (Actual) | (Forecast) | |||||||
| E-175 | 58 | 58 | 60 | 60 | |||||||
| CRJ-900 | 64 | 64 | 64 | 64 | |||||||
| CRJ-700 | 20 | 20 | 20 | 20 | |||||||
| CRJ-200 | 1 | 1 | 1 | 1 | |||||||
| Total | 143 | 143 | 145 | 145 | |||||||
| Production | |||||||||||
| Block Hours | 97,853 | 102,939 | 112,475 | 114,650 | |||||||
| Block Hours per day per Aircraft | 7.7 | 8.0 | 8.5 | 8.7 | |||||||
| Non Pass-Through Engine Expense | $ | 10.8 | $ | 8.5 | $ | 2.4 | $ | 8.5 | |||
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 and twelve months ended September 30, 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 September 30, 2018 | |||||||||
| Net Income | |||||||||
| Income | Income Tax | Net | per Diluted | ||||||
| Before Taxes | Expense | Income | Share | ||||||
| Income | 26,646 | 7,251 | 19,395 | $ | 0.65 | ||||
| Interest Expense | 15,274 | ||||||||
| Interest Income | (85 | ) | |||||||
| Depreciation and Amortization | 17,420 | ||||||||
| EBITDA | 59,255 | ||||||||
| Aircraft Rent | 14,334 | ||||||||
| EBITDAR | 73,589 | ||||||||
| Weighted-average Shares Outstanding | |||||||||
| Three months ended September 30, 2018 | |||||||||
| Basic | Diluted | ||||||||
| GAAP weighted-average common shares outstanding2 | 18,663 | 29,675 | |||||||
__________
2 As of 9/30/18 we had 23,902,903 common shares and 10,614,990 warrants outstanding for total diluted shares outstanding of 34,517,893.
| Twelve months ended September 30, 2018 | ||||||||||||
| Income Before Taxes | Income Tax Expense (Benefit) | Net Income | Net Income per Diluted Share | |||||||||
| Income | 15,829 | (17,426 | ) | 33,255 | $ | 1.32 | ||||||
| FY18 Adjustments (1) (2) | 26,193 | 28,455 | (2,262 | ) | $ | (0.09 | ) | |||||
| Non-GAAP Income | 42,022 | 11,029 | 30,994 | $ | 1.23 | |||||||
| Interest Expense | 56,867 | |||||||||||
| Interest Income | (114 | ) | ||||||||||
| Depreciation and Amortization | 65,031 | |||||||||||
| Adjusted EBITDA | 163,806 | |||||||||||
| Aircraft Rent | 68,892 | |||||||||||
| Adjusted EBITDAR | 232,698 | |||||||||||
| Weighted-average Shares Outstanding | ||||||||||||
| Twelve months ended September 30, 2018 | ||||||||||||
| Basic | Diluted | |||||||||||
| GAAP weighted-average common shares outstanding2 | 13,516 | 25,171 | ||||||||||
2018 fiscal year special items:
- Includes one-time non-cash adjustments of $11.1 million in General and Administrative expense related to an increase in accrued compensation as a result of the increase in the fair value of the Company’s common stock at the S-1 filing date and $15.1 million related to the acquisition of nine CRJ-900 aircraft previously leased in Lease termination expense.
- 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. Consequently, we have recorded a decrease related to our net deferred tax liabilities of $22.0 million. The Company has also estimated an increase to its valuation allowance of $0.5 million due to the rate change. We have recorded a corresponding net adjustment to deferred income tax benefit of $21.5 million for the period ending September 30, 2018.
Mesa Air Group will host a conference call with analysts on Tuesday, December 4 at 11:00am EST/9:00am MST. The conference call number is 888-323-9808 (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 is 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 November 30, 2018, Mesa operated a fleet of 145 aircraft with approximately 648 daily departures and 3,412 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 first quarter of fiscal 2019, (ii) the major non pass-through engine overhaul expense forecast for the same fiscal periods, (iii) the Company’s expectations regarding completing the purchase of ten additional GECAS leased aircraft by the end of this year, and (iv) the refinancing of high-cost debt associated with spare engines by the end of this year and the impact thereof on the Company’s future interest expense. 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 September 30, | Twelve Months Ended September 30, | ||||||||||||||
| 2018 | 2017 | 2018 | 2017 | ||||||||||||
| Operating revenues: | |||||||||||||||
| Contract revenue | $ | 168,444 | $ | 151,577 | $ | 639,264 | $ | 618,698 | |||||||
| Pass-through and other | 9,088 | 5,717 | 42,331 | 24,878 | |||||||||||
| Total operating revenues | 177,532 | 157,294 | 681,595 | 643,576 | |||||||||||
| Operating expenses: | |||||||||||||||
| Flight operations | 53,463 | 45,215 | 209,065 | 155,516 | |||||||||||
| Fuel | 149 | 152 | 498 | 766 | |||||||||||
| Maintenance | 39,118 | 46,488 | 193,164 | 210,729 | |||||||||||
| Aircraft rent | 14,334 | 18,217 | 68,892 | 72,551 | |||||||||||
| Aircraft and traffic servicing | 950 | 918 | 3,541 | 3,676 | |||||||||||
| General and administrative | 10,314 | 7,786 | 53,647 | 38,996 | |||||||||||
| Depreciation and amortization | 17,420 | 15,828 | 65,031 | 61,048 | |||||||||||
| Lease termination | - | - | 15,109 | - | |||||||||||
| Total operating expenses | 135,748 | 134,604 | 608,947 | 543,282 | |||||||||||
| Operating income | 41,784 | 22,690 | 72,648 | 100,294 | |||||||||||
| Other (expenses) income, net: | |||||||||||||||
| Interest expense | (15,274 | ) | (12,451 | ) | (56,867 | ) | (46,110 | ) | |||||||
| Interest income | 85 | 9 | 114 | 32 | |||||||||||
| Other income (expense) | 51 | (67 | ) | (66 | ) | (514 | ) | ||||||||
| Total other (expense), net | (15,138 | ) | (12,509 | ) | (56,819 | ) | (46,592 | ) | |||||||
| Income before taxes | 26,646 | 10,181 | 15,829 | 53,702 | |||||||||||
| Income tax (benefit) expense | 7,251 | 4,698 | (17,426 | ) | 20,874 | ||||||||||
| Net income | $ | 19,395 | $ | 5,483 | $ | 33,255 | $ | 32,828 | |||||||
| Net income per share attributable to common shareholders | |||||||||||||||
| Basic | $ | 1.04 | $ | 0.49 | $ | 2.46 | $ | 3.01 | |||||||
| Diluted | $ | 0.65 | $ | 0.23 | $ | 1.32 | $ | 1.40 | |||||||
| Weighted-average common shares outstanding | |||||||||||||||
| Basic | 18,663 | 11,117 | 13,516 | 10,919 | |||||||||||
| Diluted | 29,675 | 23,459 | 25,171 | 23,386 | |||||||||||
| MESA AIR GROUP, INC. | |||||||||||||||
| Condensed Consolidated Balance Sheets | |||||||||||||||
| (In thousands) (Unaudited) | |||||||||||||||
| September 30, | September 30, | ||||||||||||||
| 2018 | 2017 | ||||||||||||||
| ASSETS | |||||||||||||||
| Current assets: | |||||||||||||||
| Cash and cash equivalents | $ | 103,311 | $ | 56,788 | |||||||||||
| Marketable Securities | 19,921 | - | |||||||||||||
| Restricted cash | 3,823 | 3,559 | |||||||||||||
| Receivables, net | 14,290 | 8,853 | |||||||||||||
| Expendable parts and supplies, net | 15,658 | 15,114 | |||||||||||||
| Prepaid expenses and other current assets | 40,914 | 61,525 | |||||||||||||
| Total current assets | 197,917 | 145,839 | |||||||||||||
| Property and equipment, net | 1,250,829 | 1,192,448 | |||||||||||||
| Intangibles, net | 11,341 | 11,724 | |||||||||||||
| Lease and equipment deposits | 2,598 | 1,945 | |||||||||||||
| Other assets | 9,703 | 5,693 | |||||||||||||
| Total assets | $ | 1,472,388 | $ | 1,357,649 | |||||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||||||
| Current liabilities: | |||||||||||||||
| Current portion of long-term debt | $ | 155,170 | $ | 140,466 | |||||||||||
| Accounts payable | 54,307 | 44,738 | |||||||||||||
| Accrued compensation | 12,208 | 9,080 | |||||||||||||
| Other accrued expenses | 29,696 | 23,929 | |||||||||||||
| Total current liabilities | 251,381 | 218,213 | |||||||||||||
| Long-term debt, excluding current portion | 760,177 | 803,874 | |||||||||||||
| Deferred credits | 15,393 | 17,189 | |||||||||||||
| Deferred income taxes | 39,797 | 56,436 | |||||||||||||
| Other noncurrent liabilities | 31,173 | 39,713 | |||||||||||||
| Total noncurrent liabilities | 846,540 | 917,212 | |||||||||||||
| Total liabilities | 1,097,921 | 1,135,425 | |||||||||||||
| Stockholders' equity: | |||||||||||||||
| Common stock | 234,683 | 114,456 | |||||||||||||
| Retained earnings | 139,784 | 107,768 | |||||||||||||
| Total stockholders' equity | 374,467 | 222,224 | |||||||||||||
| Total liabilities and stockholders' equity | $ | 1,472,388 | $ | 1,357,649 | |||||||||||
Operating Highlights (unaudited)
| Three months ended September 30 | ||||||
| 2018 | 2017 | Change | ||||
| Available Seat Miles - ASMs (thousands) | 2,652,219 | 2,258,060 | 17.5 | % | ||
| Block Hours | 112,475 | 95,109 | 18.3 | % | ||
| Departures | 63,153 | 55,517 | 13.8 | % | ||
| Average Stage Length (miles) | 552 | 535 | 3.2 | % | ||
| Passengers | 3,733,543 | 3,248,072 | 14.9 | % | ||
| Twelve months ended September 30 | ||||||
| 2018 | 2017 | Change | ||||
| Available Seat Miles - ASMs (thousands) | 9,713,877 | 9,471,914 | 2.6 | % | ||
| Block Hours | 410,974 | 395,084 | 4.0 | % | ||
| Departures | 227,978 | 221,990 | 2.7 | % | ||
| Average Stage Length (miles) | 560 | 561 | -0.2 | % | ||
| Passengers | 13,556,774 | 13,005,844 | 4.2 | % | ||
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