• Mesa Air Group Reports First Quarter Fiscal 2021 Results

    المصدر: Nasdaq GlobeNewswire / 09 فبراير 2021 16:01:00   America/New_York

    PHOENIX, Feb. 09, 2021 (GLOBE NEWSWIRE) -- Mesa Air Group, Inc. (NASDAQ: MESA) today reported first quarter fiscal 2021 financial and operating results.

    Highlights for the quarter:

    • $18.9 million in pretax income and positive cash flow
    • Signed 5-year extension with American Airlines for 40 aircraft
    • Received $195 million loan under the CARES Act
    • Launched cargo operations for DHL with two 737-400F aircraft
    • Placed 12 new E-175 aircraft into service with United Airlines
    • Continued improvement in operational performance
    • No furloughs despite expiration of Payroll Support Program (PSP)

    Mesa's Q1 2021 results reflect net income of $14.1 million, or $0.39 per diluted share, compared to net income of $10.8 million, or $0.31 per diluted share for Q1 2020. Mesa's Q1 2021 pre-tax income was $18.9 million, compared to $10.8 million for Q1 2020. Mesa's Q1 2021 adjusted pre-tax income1 was $18.0 million, compared to $14.3 million for Q1 2020. Mesa Q1 2021 results include, per GAAP, the deferral of $5.2 million of revenue, all of which was billed and paid by American and United during the quarter and will be recognized over the remaining terms of the contracts. The primary reason for the $3.7 million increase in adjusted pre-tax income from Q1 2020 to Q1 2021 was $11.3 million of benefit from the Payroll Support Program (“PSP”) under the CARES Act offset by the $5.2 million of deferred revenue and the impact of a 26% reduction in Contract Revenue related to reduced flying as a result of COVID-19.

    Additionally, Mesa's Adjusted EBITDA1 for Q1 2021 was $47.4 million, compared to $47.4 million in Q1 2020, and Adjusted EBITDAR1 was $57.5 million, compared to $58.8 million in Q1 2020.

    1 See Reconciliation of non-GAAP financial measures

    “While 2020 has been a challenging year for the industry, we were pleased to remain profitable and cash flow positive throughout the pandemic. In addition, we implemented a number of important strategic initiatives with our partners at American, United, and DHL. Lastly and importantly, we avoided employee furloughs despite the expiration of the PSP program,” said Jonathan Ornstein, Mesa’s Chairman and CEO. Brad Rich, Chief Operating Officer added, “Working closely with our partners and front-line employees, we added more regional aircraft, launched our 737 cargo operation, and improved overall reliability in our key contractual operational performance metrics.”

    December quarter details:

    Contract Revenue decreased by $44.6 million or 26% to $127.2 million in Q1 2021 as compared to Q1 2020 primarily as a result of the reduced block hours as a result of COVID-19. Contract Revenue increased by $29.8 million or 31% as compared to our prior quarter primarily as a result of increased block hours. Total operating expense decreased by $33.5 million, or 21.3%, to $123.4 million in Q1 2021 as compared to Q1 2020. The primary reason for the decrease was a $15.7 million lower flight operations expense due to reduced flying as a result of COVID-19 and $11.3 million benefit received through the PSP under the CARES Act. The Company recognized the benefit received through the PSP under the CARES Act as an offset to payroll expenses in Flight Operations, Maintenance and General and Administrative expense.

    Fleet:

    All of our operating revenue in the three months ended December 31, 2020 was derived from operations associated with our American and United Capacity Purchase Agreements and DHL Flight Services Agreement. For the three months ended December 31, 2020, 53% of our aircraft in scheduled service were operated for United, 46% for American and 1% was operated for DHL.

    Below is our current and future fleet plan by partner and fleet type:

             
    Fleet Plan Fiscal Year 2020 Fiscal Year 2021 
    Q3 (Jun '20)Q4 (Sep '20) Q1 (Dec '20)Q2 (Mar '21) Q3 (Jun '21)Q4 (Sep '21) 
    Actual Actual  Actual Forecast Forecast Forecast  
    E-175 - UA 60  60  72 76 80 80 
    CRJ-700 - UA 20  20  8 0 0 0 
    CRJ-900 - AA 55  54  54 45 45 45 
    737-400F - DHL 0  0  2 2 2 2 
    Sub-total 135  134  136 123 127 127 
    Leased / Spares Support         
    CRJ-700 to be leased to Third Party 0  0  12 20 20 20 
    CRJ-900 Spares Support 9  10  10 19 18 18 
    CRJ-200 Spares Support 1  1  1 1 1 1 
    Total 145  145  159 163 166 166 

    Liquidity and Capital Resources:

    Mesa ended the quarter at $181 million in unrestricted cash and equivalents compared to $99 million in Q4 FY2020. During the quarter, Mesa received $195 million from the U.S. Treasury as a five-year secured loan under the CARES Act. In November 2020, Mesa extinguished $164 million of aircraft debt utilizing $82 million of cash on hand and $82 million from United Airlines which was a prepayment under the Capacity Purchase Agreement. At the end of Q1 2021, the United prepayment balance was $48 million and was subsequently reduced to zero at the end of January 2021. In February 2021, the Company was granted $49 million in financial assistance by the U.S. Treasury under the Payroll Support Program Extension (“PSP2”) and received the first installment of $24 million in February 2021 with the balance expected to be received by the end of March. The Company is not required to issue any warrants or to repay any of the $49 million received under the PSP2 program. The PSP2 payments are conditioned on our agreement to refrain from conducting involuntary employee layoffs or furloughs through March 31, 2021 as well as prohibitions on share repurchases and dividends through March 31, 2022 and certain limitations on executive compensation.

    Forward Guidance:

    The Company is providing the following guidance for FY2021:

             
    Outlook FY 2021         
    ($ amounts in millions) Fiscal Year 2020 Fiscal Year 2021 
     Q3 (Jun '20)Q4 (Sep '20) Q1 (Dec '20)Q2 (Mar '21) Q3 (Jun '21)Q4 (Sep '21) 
     Actual Actual  Actual Forecast Forecast Forecast  
    Block Hours31,62257,622 69,24776,00085,00089,000 
    Pass Through Maintenance ($2.5)$9.3 $19.7$13.0$12.0$5.0 
    Non-Pass Through Engine and C Check$2.8$8.1 $8.3$14.0$14.0$11.0 
    Deferred Revenue $16.0$7.8 $5.2$3.7$1.5$0.2 
             

    Mesa Air Group will host a conference call with analysts on Monday, February 9 at 4:30 pm ET/1:30 pm 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/ieyn2zi2. A recorded version will be available on Mesa's website approximately two hours after the call for approximately 14 days.

    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, 2020 and the three months ended December 31, 2019. 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
    (In thousands, except for per diluted share) (Unaudited)

      Three months ended December 31, 2020 
      Income Before
    Taxes
      Income Tax
    (Expense)/Benefit
      Net
    Income
      Net Income
    per
    Diluted Share
     
    GAAP Income $18,939  $(4,821) $14,118  $0.39 
    FY21 Adjustments (1)  (950)     (950)    
    Adjusted Income  17,989   (4,821)  13,168  $0.36 
                     
    Interest Expense  9,082             
    Interest Income  (126)            
    Depreciation and Amortization  20,470             
    Adjusted EBITDA  47,415             
                     
    Aircraft Rent  10,048             
    Adjusted EBITDAR  57,463             


      Three months ended December 31, 2019 
      Income Before
    Taxes
      Income Tax
    (Expense)/Benefit
      Net
    Income
      Net Income
    per
    Diluted Share
     
    GAAP Income $14,320  $(3,535) $10,785  $0.31 
                   
    Adjusted Income $14,320  $(3,535) $10,785  $0.31 
                     
    Interest Expense  12,628             
    Interest Income  (58)            
    Depreciation and Amortization  20,552             
    EBITDA  47,442             
                     
    Aircraft Rent  11,329             
    EBITDAR
      58,771             

          1)   Includes adjustment for gain on extinguishment of debt

    About Mesa Air Group, Inc.

    Headquartered in Phoenix, Arizona, Mesa Air Group, Inc. ("Mesa" or the "Company") is a holding company whose principal subsidiary, Mesa Airlines, Inc. ("Mesa Airlines"), operates as a regional air carrier providing scheduled flight service to 116 cities in 42 states, the District of Columbia, the Bahamas, and Mexico as well as Cargo services out of Cincinnati/Northern Kentucky International Airport. As of December 31, 2020, Mesa operated a fleet of 159 aircraft with approximately 420 daily departures and 3,200 employees. Mesa operates all of its flights as either American Eagle, United Express, or DHL Express flights pursuant to the terms of the capacity purchase agreements entered into with American Airlines, Inc. (“American”) and United Airlines, Inc. (“United”) and flight services agreement with DHL (“DHL”).

    Forward-Looking Statements

    Certain statements contained in this press release that are not historical facts contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, that are subject to the “safe harbor” created by those sections. Forward-looking statements can be identified by the use of words such as “estimate,” “anticipate,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “seek,” “approximate” or “plan,” or the negative of these words and phrases or similar words or phrases. Forward-looking statements, by their nature, involve estimates, projections, goals, forecasts and assumptions and are subject to risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. For more information on risk factors for Mesa Air Group, Inc.’s business, please refer to the periodic reports the Company files with the Securities and Exchange Commission from time to time. Many of the risks identified in the periodic reports have been and will continue to be heightened as a result of the ongoing and numerous adverse effects arising from the COVID-19 pandemic. These forward-looking statements herein speak only as of the date of this press release and should not be relied upon as predictions of future events. Mesa Air Group, Inc. expressly disclaims any obligation or undertaking to update or revise any forward-looking statements contained herein, to reflect any change in Mesa Air Group, Inc.’s expectations with regard thereto, or any other change in events, conditions or circumstances on which any such statement is based, except as required by law.

    MESA AIR GROUP, INC.
    Condensed Consolidated Statements of Operations
    (In thousands, except per share amounts) (Unaudited)

      Three Months Ended
    December 31,
     
      2020  2019 
    Operating revenues:        
    Contract revenue $127,158  $171,800 
    Pass-through and other  23,213   12,236 
    Total operating revenues  150,371   184,036 
             
    Operating expenses:        
    Flight operations  36,964   52,644 
    Fuel  390   169 
    Maintenance  52,864   58,095 
    Aircraft rent  10,048   11,329 
    Aircraft and traffic servicing  901   1,064 
    General and administrative  13,073   12,996 
    Depreciation and amortization  20,470   20,552 
    CARES Act Grant Recognition  (11,311)   
    Total operating expenses  123,399   156,849 
    Operating income  26,972   27,187 
             
    Other (expenses) income, net:        
    Interest expense  (9,082)  (12,628)
    Interest income  126   58 
    Other (expense) income, net  923   (297)
    Total other (expense), net  (8,033)  (12,867)
             
    Income before taxes  18,939   14,320 
    Income tax expense  4,821   3,535 
    Net income $14,118  $10,785 
             
    Net income per share attributable to common shareholders        
    Basic $0.40  $0.31 
    Diluted $0.39  $0.31 
             
    Weighted-average common shares outstanding        
    Basic  35,531   35,023 
    Diluted  36,647   35,182 


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

      December 31,
    2020
      September 30,
    2020
     
    ASSETS       
             
    CURRENT ASSETS:        
    Cash and cash equivalents $181,300  $99,395 
    Restricted cash  3,634   3,446 
    Receivables, net  15,412   13,712 
    Expendable parts and supplies, net  22,760   22,971 
    Prepaid expenses and other current assets  12,897   16,067 
    Total current assets  236,003   155,591 
             
    Property and equipment, net  1,194,061   1,212,415 
    Intangibles, net  7,722   8,032 
    Lease and equipment deposits  1,851   1,899 
    Operating Lease right-of-use assets  114,666   123,251 
    Other Assets  514   742 
    TOTAL ASSETS $1,554,817  $1,501,930 
             
    LIABILITIES AND STOCKHOLDERS’ EQUITY       
             
    CURRENT LIABILITIES:        
    Current portion of long-term debt and financing leases $99,745  $189,268 
    Current portion of deferred revenue  51,253   9,389 
    Current maturities of operating leases  44,712   43,932 
    Accounts payable  47,576   53,229 
    Accrued compensation  7,029   12,030 
    Other accrued expenses  37,581   45,478 
    Total current liabilities  287,896   353,326 
             
    NONCURRENT LIABILITIES:        
    Long-term debt and financing leases - excluding current portion  624,116   542,456 
    Noncurrent operating lease liabilities  53,570   62,531 
    Deferred credits  5,176   5,705 
    Deferred income taxes  69,111   64,275 
    Deferred revenue, net of current portion  26,504   14,369 
    Other noncurrent liabilities  4,147   1,409 
    Total noncurrent liabilities  782,624   690,745 
    Total liabilities  1,070,520   1,044,071 
             
    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; 35,532,162 (2021) and 35,526,918 (2020) shares issued
     and outstanding, and 4,899,497 (2021) and 3,600,953 (2019) warrants
     issued and outstanding
      255,092   242,772 
    Retained earnings  229,205   215,087 
    Total stockholders' equity  484,297   457,859 
    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,554,817  $1,501,930 

    Operating Highlights (unaudited)

      Three months ended  
      December 31  
      2020  2019  Change  
    Available Seat Miles (thousands)  1,670,943   2,735,386   -38.9% 
    Block Hours  69,247   115,562   -40.1% 
    Departures  35,344   62,725   -43.7% 
    Average Stage Length (miles)  637   573   11.2% 
    Passengers  1,829,714   3,697,138   -50.5% 

    Source: Mesa Air Group, Inc.

    Mesa Air Group, Inc.
    Investor Relations
    Brian Gillman
    Investor.Relations@mesa-air.com
    (602) 685-4010


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