mesa-ex991

PHOENIX, May 9, 2019 (GLOBE NEWSWIRE) -- Mesa Air Group, Inc. (NASDAQ: MESA) today reported second quarter Fiscal Year 2019 financial and operating results.

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.”

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

	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

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.

	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

	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

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.

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.

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.

	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

	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

	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