Mesa Air Group Reports Second Quarter Fiscal 2022 Results
PHOENIX, May 09, 2022 (GLOBE NEWSWIRE) -- Mesa Air Group, Inc. (NASDAQ: MESA) today reported second quarter fiscal 2022 financial and operating results.*Financial Summary Q2: *
· *Pre-tax loss of $55.2 million, net loss of $42.8 million or $(1.19) per diluted share.*
· *Adjusted net loss*^1* of $10.3 million or $(0.29) per diluted share. *
· *Adjusted net loss excludes a $39.5 million (pre-tax) non-cash charge related to 12 CRJ aircraft held for sale.**Quarter Highlights: *
· *Mesa took delivery of its third 737-400F freighter aircraft in the quarter.*
· *Added an additional E175 flight simulator.*
*Fiscal Year Q2 Results:*
Mesa’s Q2 FY22 results reflect a net loss of $42.8 million, or $(1.19) per diluted share, compared to net income of $5.7 million, or $0.14 per diluted share for Q2 FY21. Mesa’s Q2 FY22 adjusted pre-tax loss^1 was $13.1 million versus an adjusted pre-tax income^1 of $12.1 million in Q2 FY21. The year over year decrease in adjusted pre-tax income of $25.2 million was primarily due to lower block hours and the impact of the PSP program.
Jonathan Ornstein, Chairman and CEO, said, “While demand for our product remains strong, our financial results this quarter reflect the ongoing challenge of heightened pilot attrition. In January, our operational and financial performance was significantly impacted by Covid-related higher pilot absence rates which have since subsided. We remain focused on taking steps to address pilot attrition, including increased hiring, simulator capacity, and training capabilities, which has been exacerbated by the industry wide pilot shortage.”
*Fiscal Q2 details:*
Total operating revenues in Q2 2022 were $123.2 million, an increase of $25.9 million (26.7%) from $97.3 million for Q2 2021. Contract revenue increased $30.3 million. This was due to the return to normal rates from our partners which were temporarily reduced last year related to the PSP program. These were partially offset by a reduction in block hours. Mesa’s Q2 2022 results include, per GAAP, the recognition of $0.8 million of previously deferred revenue, versus the deferral of $4.9 million of revenue in Q2 2021. The remaining deferred revenue balance will be recognized as flights are completed over the remaining terms of the contracts.
Mesa’s Adjusted EBITDA^1 for Q2 2022 was $15.8 million, compared to $41.5 million in Q2 2021, and Adjusted EBITDAR^1 was $25.2 million for Q2 2022, compared to $51.5 million in Q2 2021.
Operationally, the Company ran a controllable completion factor of 96.8% for American and 96.7% for United during Q2 2022. This is compared to a controllable completion factor of 99.8% for American and 100.0% for United during Q2 2021. This excludes cancellations due to weather and air traffic control. As Covid-related cancellations declined, our controllable completion factors for both American and United were both 99.9% for the month of March.
With respect to a total completion factor that includes all cancellations, Mesa reported a total completion factor of 93.5% for American and 93.7% for United during Q2 2022. This is compared to a total completion factor of 95.0% for American and 94.2% for United during Q2 2021.
^1 See Reconciliation of non-GAAP financial measures
*Liquidity and Capital Resources: *
Mesa ended the quarter at $75.9 million in unrestricted cash and equivalents. As of March 31, 2022, the Company had $652.0 million in total debt secured primarily with aircraft and engines.
*Fleet:*
For the three months ended March 31, 2022, 47% of the Company’s total revenue was derived from our contracts with United, 46% from American, 1% from DHL, and 6% from leases of aircraft to a third party.
Below is our current and future fleet plan by partner and fleet type for FY22:
*Fleet Plan (FY22)* *Q1 (Dec '21)* *Q2 (Mar '22)* *Q3 (Jun '22)* *Q4 (Sep '22)* *Actual* *Actual* *Forecast* *Forecast*
*E-175 – UA* *80* *80* *80* *80*
*CRJ-900 – AA* *40* *40* *40* *40*
*737-400F – DHL* *2* *3* *3* *3*
*Sub-total* *122* *123* *123* *123*
*CRJ-700 Leased* *17* *18* *20* *20*
*CRJ-700 to be Leased*
*to Third party* *3* *2* *-* *-*
*CRJs Spares/Parked* *25* *13* *13* *13*
*CRJs Held for Sale* *-* *12* *12* *12*
*Total Fleet* *167* *168* *168* *168*Mesa Air Group will host a conference call with analysts on May 9^th at 4:30 pm EDT. The conference call number is 888-469-2054 (Passcode: Phoenix (7463649)). The conference call can also be accessed live via the web by visiting https://investor.mesa-air.com.
A recorded version will be available on Mesa's website approximately two hours after the call for approximately 14 days.
^*1**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 and six months ended March 31, 2022 and March 31, 2021. 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 or loss. Additionally, these calculations may not be comparable with similarly titled measures of other companies.
^*1**Reconciliation** of GAAP versus Non-GAAP Disclosures*
(In thousands, except for per diluted share) (Unaudited)
*Three Months Ended March 31, 2022* *Three Months Ended March 31, 2021* *Income (Loss) Before Taxes* *Income Tax (Expense)/ Benefit* *Net Income (Loss) * *Net Income (Loss) per Diluted Share * *Income Before Taxes* *Income Tax (Expense)/ Benefit* *Net Income * *Net Income per Diluted Share *
GAAP Income (Loss) $ (55,165 ) 12,382 (42,783 ) $ (1.19 ) $ 7,579 (1,890 ) 5,689 $ 0.14
Adjustments ^(1) (2) (3) 39,843 (9,097 ) 30,746 $ 0.85 4,508 (1,124 ) 3,384 $ 0.09
Loss on Investments, Net ^(4) 2,261 (522 ) 1,739 $ 0.05
Adjusted Income (Loss) (13,061 ) 2,763 (10,298 ) $ (0.29 ) 12,087 (3,014 ) 9,073 $ 0.23
Interest Expense 8,120 8,755
Interest Income (42 ) (79 )
Depreciation and Amortization 20,747 20,705
Adjusted EBITDA 15,764 41,468
Aircraft Rent 9,434 9,992
Adjusted EBITDAR $ 25,198 $ 51,460
(1) Includes adjustment for lease termination expense of $4.5 million for the three months ended March 31, 2021 related to the purchase of a CRJ-900 aircraft, which was previously leased from Bombardier Capital.
(2) Includes adjustment for impairment charges of $39.5 million for the three months ended March 31, 2022 related to certain of the Company's aircraft which are classified as held for sale.
(3) Includes adjustment for operating lease right of use asset impairment charges of $0.4 million during the three months ended March 31, 2022 related to the abandonment of one of the Company's leased facilities.
(4) Includes losses resulting from changes in the fair value of the Company's investments in equity securities of $2.3 million for the three months ended March 31, 2022. *Six Months Ended March 31, 2022* *Six Months Ended March 31, 2021* *Income (Loss) Before Taxes* *Income Tax (Expense)/ Benefit* *Net Income (Loss)* *Net Income (Loss) per Diluted Share* *Income Before Taxes* *Income Tax (Expense)/ Benefit* *Net Income **
* *Net Income per Diluted Share*
GAAP Income (Loss) $ (73,551 ) 16,494 (57,057 ) $ (1.58 ) $ 26,518 (6,711 ) 19,807 $ 0.52
Adjustments ^(1)(2)(3)(4) 39,843 (9,097 ) 30,746 $ 0.85 3,558 (900 ) 2,658 $ 0.07
Loss on Investments, Net ^(^5) 8,723 (1,992 ) 6,731 $ 0.19
Adjusted Income (Loss) (24,985 ) 5,405 (19,580 ) $ (0.54 ) 30,076 (7,611 ) 22,465 $ 0.59
Interest Expense 16,050 17,837
Interest Income (93 ) (205 )
Depreciation and Amortization 41,775 41,175
Adjusted EBITDA 32,747 88,883
Aircraft Rent 19,020 20,040
Adjusted EBITDAR $ 51,767 $ 108,923
(1) Includes adjustment for gain on extinguishment of debt of $1.0 million related to repayment of the Company’s aircraft debts during the six months ended March 31, 2021.
(2) Includes adjustment for lease termination expense of $4.5 million for the six months ended March 31, 2021 related to the purchase of a CRJ-900 aircraft, which was previously leased from Bombardier Capital.
(3) Includes adjustment for impairment charges of $39.5 million for the six months ended March 31, 2022 related to certain of the Company's aircraft which are classified as held for sale.
(4) Includes adjustment for operating lease right of use asset impairment charges of $0.4 million during the six months ended March 31, 2022 related to the abandonment of one of the Company's leased facilities.
(5) Includes losses resulting from changes in the fair value of the Company's investments in equity securities of $8.7 million for the six months ended March 31, 2022.*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 110 cities in 40 states, the District of Columbia, the Bahamas, and Mexico as well as cargo services out of Cincinnati/Northern Kentucky International Airport. As of March 31, 2022, Mesa operated a fleet of 168 aircraft with approximately 349 daily departures and 2,800 employees. Mesa operates all of its flights as either American Eagle, United Express, or DHL Express flights pursuant to the terms of capacity purchase agreements entered into with American Airlines, Inc., United Airlines, Inc., and 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
March 31, Six Months Ended
March 31, *2022* *2021* *2022* *2021*
*Operating revenues:*
*Contract revenue* $ 111,988 $ 81,712 $ 248,882 $ 208,870
*Pass-through and other revenue* 11,225 15,568 22,088 38,781
*Total operating revenues* 123,213 97,280 270,970 247,651
*Operating expenses:*
*Flight operations* 42,410 37,403 90,008 74,367
*Maintenance* 47,357 51,773 106,338 104,637
*Aircraft rent* 9,434 9,992 19,020 20,040
*General and administrative* 7,860 11,164 20,438 24,237
*Depreciation and amortization* 20,747 20,705 41,775 41,175
*Lease termination* — 4,508 — 4,508
*Impairment of assets held for sale* 39,475 — 39,475 —
*Other operating expenses* 685 941 2,657 2,232
*Government grant recognition* — (55,967 ) — (67,278 )
*Total operating expenses* 167,968 80,519 319,711 203,918
*Operating income (loss)* (44,755 ) 16,761 (48,741 ) 43,733
*Other income (expense), net:*
*Interest expense* (8,120 ) (8,755 ) (16,050 ) (17,837 )
*Interest income* 42 79 93 205
*Loss on investments, net* (2,261 ) — (8,723 ) —
*Other income (expense), net* (71 ) (506 ) (130 ) 417
*Total other (expense), net* (10,410 ) (9,182 ) (24,810 ) (17,215 )
*Income (loss) before taxes* (55,165 ) 7,579 (73,551 ) 26,518
*Income tax expense (benefit)* (12,382 ) 1,890 (16,494 ) 6,711
*Net income (loss)* $ (42,783 ) $ 5,689 $ (57,057 ) $ 19,807
*Net income (loss) per share attributable to common shareholders*
*Basic* $ (1.19 ) $ 0.16 $ (1.58 ) $ 0.56
*Diluted* $ (1.19 ) $ 0.14 $ (1.58 ) $ 0.52
*Weighted-average common shares outstanding*
*Basic* 36,048 35,628 36,005 35,579
*Diluted* 36,048 39,432 36,005 38,382
*
*
*MESA AIR GROUP, INC.
**Condensed Consolidated Balance Sheets
*(In thousands, except shares) (Unaudited)
March 31,
2022 September 30,
2021
*ASSETS*
*CURRENT ASSETS:*
*Cash and cash equivalents* $ 75,896 $ 120,517
*Restricted cash* 3,351 3,350
*Receivables, net* 6,849 3,167
*Expendable parts and supplies, net* 26,255 24,467
*Prepaid expenses and other current assets* 7,608 6,885
*Total current assets* 119,959 158,386
*Property and equipment, net* 1,064,349 1,151,891
*Intangible assets, net* 6,281 6,792
*Lease and equipment deposits* 8,371 6,808
*Operating lease right-of-use assets* 79,706 93,100
*Deferred heavy maintenance, net* 5,289 3,499
*Assets held for sale* 36,528 —
*Other assets* 32,873 36,121
*TOTAL ASSETS* $ 1,353,356 $ 1,456,597
*LIABILITIES AND STOCKHOLDERS’ EQUITY*
*CURRENT LIABILITIES:*
*Current portion of long-term debt and finance leases* $ 111,671 $ 111,710
*Current portion of deferred revenue* 2,675 6,298
*Current maturities of operating leases* 16,601 32,652
*Accounts payable* 76,733 61,476
*Accrued compensation* 10,285 12,399
*Other accrued expenses* 31,406 33,657
*Total current liabilities* 249,371 258,192
*NONCURRENT LIABILITIES:*
*Long-term debt and finance leases, excluding current portion* 521,457 539,700
*Noncurrent operating lease liabilities* 29,936 33,991
*Deferred credits* 3,508 3,934
*Deferred income taxes* 53,281 69,940
*Deferred revenue, net of current portion* 26,868 28,202
*Other noncurrent liabilities* 36,394 34,591
*Total noncurrent liabilities* 671,444 710,358
* Total liabilities* 920,815 968,550
*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; 36,126,724 (2022) and 35,958,759 (2021) shares issued
and outstanding, and 4,899,497 (2022) and 4,899,497 (2021) warrants
issued and outstanding* 257,923 256,372
*Retained earnings* 174,618 231,675
*Total stockholders' equity* 432,541 488,047
*TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY* $ 1,353,356 $ 1,456,597
*
*
*MESA AIR GROUP, INC.
**Operating Highlights *(unaudited)
Three months ended *March 31* *2022* *2021* *Change*
*Available Seat Miles (thousands)* 1,616,896 1,771,498 -8.7%
*Block Hours* 65,613 73,942 -11.3%
*Average Stage Length (miles)* 671 690 -2.8%
*Departures* 31,983 35,270 -9.3%
*Passengers* 1,921,635 1,684,043 14.1%
*Controllable Completion Factor**
American 96.76% 99.83% -3.1%
United 96.71% 99.99% -3.3%
*Total Completion Factor***
American 93.51% 95.01% -1.6%
United 93.74% 94.22% -0.5%
*Controllable Completion Factor excludes cancellations due to weather and air traffic control
**Total Completion Factor includes all cancellations
Source: Mesa Air Group, Inc.
Mesa Air Group, Inc.
Media
Jacqueline Palmer
Media@mesa-air.com
Investor Relations
Susan M. Donofrio
IR@mesa-air.com