Mesa Air Group, Inc. (NASDAQ: MESA) today reported first
quarter fiscal 2023 financial and operating results.
Fiscal First Quarter
Update:
- Total operating revenues of $147.2
million
- Pre-tax loss of $10.0 million, net loss of $9.1 million
or $(0.25) per diluted share
- Adjusted net loss1 of $4.3 million or
$(0.12) per diluted share
- Adjusted net loss excludes a $3.7 million impairment
related to intangible assets and $1.7 million related to
investments in equity securities
- As previously reported, closed on United Airlines,
American Airlines, and aircraft-related transactions
- Subsequent to quarter end, closed sale of 8 remaining
CRJ-550s to United Airlines
Jonathan Ornstein, Chairman and CEO, said, “The first quarter
was an important one for Mesa, as we executed several key
agreements that will materially enhance our operational and
financial position and alleviate significant issues that we have
faced. While block hour production continued to be challenged by
the industry-wide pilot shortage during the quarter, we believe all
the pieces are in place to begin restoring capacity across our
fleets. We are preparing for the transition of our CRJ-900
operation to United next month. Our pilot pipeline continues to
strengthen and pilot attrition has remained significantly lower
since we have enhanced our payscales and expanded our participation
in the Aviate program with United.”
Fiscal First Quarter Details:
Total operating revenues in Q1 2023 were $147.2 million, a
decrease of $0.6 million (0.4%) from $147.8 million for Q1 2022.
Contract revenue decreased $8.4 million, or 6.2%. These decreases
were driven by lower block hours, offset by increased block-hour
revenue for new pilot payscales. Mesa’s Q1 2023 results include,
per GAAP, the recognition of $5.3 million, versus the recognition
of $4.2 million of previously deferred revenue in Q1 2022. The
remaining deferred revenue balance of $18.8 million will be
recognized as flights are completed over the remaining terms of the
contracts.
Mesa’s Adjusted EBITDA1 for Q1 2023 was $21.8 million, compared
to $17.0 million in Q1 2022, and Adjusted EBITDAR1 was $25.9
million for Q1 2023, compared to $26.6 million in Q1 2022.
Mesa’s Q1 2023 results reflect a net loss of $9.1 million, or
$(0.25) per diluted share, compared to a net loss of $14.3 million,
or $(0.40) per diluted share for Q1 2022. Mesa’s Q1 2023 adjusted
net loss1 was $4.3 million, or $(0.12) per diluted share, versus an
adjusted net loss1 of $9.3 million, or $(0.26) per diluted share,
in Q1 2022. The year over year increase in adjusted net income of
$5.0 million was primarily due to increased block-hour revenue for
new pilot payscales and lower maintenance, D&A, and aircraft
rent expenses, partially offset by higher expenses for flight
operations due to increased costs for training and employee
wages.
Operationally, the Company ran a controllable completion factor
of 99.4% for American and 99.9% for United during Q1 2023. This is
compared to a controllable completion factor of 97.7% for American
and 98.3% for United during Q1 2022. This excludes cancellations
due to weather and air traffic control.
With respect to a total completion factor that includes all
cancellations, Mesa reported a total completion factor of 97.9% for
American and 99.2% for United during Q1 2023. This is compared to a
total completion factor of 95.8% for American and 95.8% for United
during Q1 2022.
For Q1 2023, 50% of the Company’s total revenue
was derived from our contracts with United, 45% from American, 3%
from DHL, and 2% from leases of aircraft to a third party.
1 See Reconciliation of non-GAAP financial measures
Balance Sheet and Cash Flow:
Mesa ended the quarter at $56.1 million in
unrestricted cash and equivalents. As of December 31, 2022, the
Company had $701.3 million in total debt secured primarily with
aircraft and engines. This amount includes $64.2 million
corresponding to the reclassification from operating lease to
finance lease on 15 CRJ-900s. Additionally, we borrowed $25.5
million in the form of a term loan from United, of which $15
million is forgivable upon the meeting of certain performance
criteria.
Conference Call Details:
Mesa Air Group will host a conference call with analysts on
February 9th at 4:30 pm EST. 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.
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 106 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, 2022, Mesa operated or leased a fleet
of 158 aircraft with approximately 293 daily departures and 2,500
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. and United Airlines, Inc. and a flight service
agreement with 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. 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.
Contact:
Mesa Air Group, Inc.MediaMedia@mesa-air.comInvestor
RelationsDoug CooperIR@mesa-air.com
MESA AIR GROUP, INC.Consolidated
Statements of Operations and Comprehensive (Loss) Income
(In thousands, except per share amounts) (Unaudited)
|
|
Three Months EndedDecember
31 |
|
|
|
2022 |
|
|
|
2021 |
|
Operating revenues: |
|
|
|
|
Contract revenue |
|
$128,450 |
|
|
$136,894 |
|
Pass-through and other revenue |
|
|
18,723 |
|
|
|
10,863 |
|
Total operating revenues |
|
|
147,174 |
|
|
|
147,757 |
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
Flight operations |
|
|
58,320 |
|
|
|
47,598 |
|
Maintenance |
|
|
48,287 |
|
|
|
58,981 |
|
Aircraft rent |
|
|
4,083 |
|
|
|
9,586 |
|
General and administrative |
|
|
13,988 |
|
|
|
12,578 |
|
Depreciation and amortization |
|
|
15,203 |
|
|
|
21,028 |
|
Impairment of assets |
|
|
3,719 |
|
|
|
— |
|
Other operating expenses |
|
|
1,126 |
|
|
|
1,972 |
|
Total operating expenses |
|
|
144,727 |
|
|
|
151,743 |
|
Operating income (loss) |
|
|
2,447 |
|
|
|
(3,986 |
) |
|
|
|
|
|
Other income (expense), net: |
|
|
|
|
Interest expense |
|
|
(11,276 |
) |
|
|
(7,930 |
) |
Interest income |
|
|
71 |
|
|
|
51 |
|
Loss on investments, net |
|
|
(1,679 |
) |
|
|
(6,462 |
) |
Other income (expense), net |
|
|
417 |
|
|
|
(59 |
) |
Total other expense, net |
|
|
(12,467 |
) |
|
|
(14,400 |
) |
|
|
|
|
|
Income (loss) before taxes |
|
|
(10,020 |
) |
|
|
(18,386 |
) |
Income tax expense (benefit) |
|
|
(930 |
) |
|
|
(4,112 |
) |
Net income (loss) |
|
$(9,090 |
) |
|
$(14,274 |
) |
|
|
|
|
|
Net income (loss) per share attributable to common
shareholders |
|
|
|
|
Basic |
|
$(0.25 |
) |
|
$(0.40 |
) |
Diluted |
|
$(0.25 |
) |
|
$(0.40 |
) |
|
|
|
|
|
Weighted-average common shares outstanding |
|
|
|
|
Basic |
|
|
36,378 |
|
|
|
35,963 |
|
Diluted |
|
|
36,378 |
|
|
|
35,963 |
|
MESA AIR GROUP, INC.Consolidated
Balance Sheets(In thousands, except shares)
(Unaudited)
|
|
December 31,2022 |
|
September 30,2022 |
ASSETS |
|
|
|
|
|
|
|
|
CURRENT
ASSETS: |
|
|
|
|
Cash and cash equivalents |
|
$56,077 |
|
|
$57,683 |
|
Restricted cash |
|
|
3,343 |
|
|
|
3,342 |
|
Receivables, net |
|
|
13,115 |
|
|
|
3,978 |
|
Expendable parts and supplies, net |
|
|
25,509 |
|
|
|
26,715 |
|
Prepaid expenses and other current assets |
|
|
3,953 |
|
|
|
6,616 |
|
Total current assets |
|
|
101,997 |
|
|
|
98,334 |
|
|
|
|
|
|
Property and
equipment, net |
|
|
945,545 |
|
|
|
865,254 |
|
Intangible assets,
net |
|
|
— |
|
|
|
3,842 |
|
Lease and equipment
deposits |
|
|
1,781 |
|
|
|
6,085 |
|
Operating lease
right-of-use assets |
|
|
11,896 |
|
|
|
43,090 |
|
Deferred heavy
maintenance, net |
|
|
10,311 |
|
|
|
9,707 |
|
Assets held for
sale |
|
|
73,000 |
|
|
|
73,000 |
|
Other assets |
|
|
14,984 |
|
|
|
16,290 |
|
TOTAL ASSETS |
|
$1,159,514 |
|
|
$1,115,602 |
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES: |
|
|
|
|
Current portion of long-term debt and finance
leases |
|
$88,802 |
|
|
$97,218 |
|
Current portion of deferred revenue |
|
|
1,204 |
|
|
|
385 |
|
Current maturities of operating leases |
|
|
5,354 |
|
|
|
17,233 |
|
Accounts payable |
|
|
51,257 |
|
|
|
59,386 |
|
Accrued compensation |
|
|
9,097 |
|
|
|
11,255 |
|
Other accrued expenses |
|
|
30,561 |
|
|
|
29,000 |
|
Total current liabilities |
|
|
186,275 |
|
|
|
214,477 |
|
|
|
|
|
|
NONCURRENT
LIABILITIES: |
|
|
|
|
Long-term debt and finance leases, excluding current
portion |
|
|
597,816 |
|
|
|
502,517 |
|
Noncurrent operating lease liabilities |
|
|
9,533 |
|
|
|
16,732 |
|
Deferred credits |
|
|
2,869 |
|
|
|
3,082 |
|
Deferred income taxes |
|
|
16,705 |
|
|
|
17,719 |
|
Deferred revenue, net of current portion |
|
|
17,607 |
|
|
|
23,682 |
|
Other noncurrent liabilities |
|
|
28,938 |
|
|
|
29,219 |
|
Total noncurrent liabilities |
|
|
673,468 |
|
|
|
592,951 |
|
Total liabilities |
|
|
859,743 |
|
|
|
807,428 |
|
|
|
|
|
|
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; 36,378,550 (2023) and 36,376,897 (2022) shares issued
and outstanding, 4,899,497 (2023) and 4,899,497 (2021) warrants
issued and outstanding |
|
|
259,864 |
|
|
|
259,177 |
|
Retained earnings |
|
|
39,907 |
|
|
|
48,997 |
|
Total stockholders' equity |
|
|
299,771 |
|
|
|
308,174 |
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
|
$1,159,514 |
|
|
$1,115,602 |
|
MESA AIR GROUP, INC.Operating
Highlights (unaudited)
|
|
Three months ended |
|
|
December 31 |
|
|
2022 |
|
|
2021 |
|
|
Change |
|
Available seat miles
(thousands) |
|
1,175,745 |
|
|
2,104,621 |
|
|
-44.1 |
% |
Block
hours |
|
50,940 |
|
|
86,079 |
|
|
-40.8 |
% |
Average stage length
(miles) |
|
565 |
|
|
644 |
|
|
-12.3 |
% |
Departures |
|
27,776 |
|
|
43,447 |
|
|
-36.1 |
% |
Passengers |
|
1,746,376 |
|
|
2,693,468 |
|
|
-35.2 |
% |
Controllable
completion factor* |
|
|
|
|
|
|
American |
|
99.36 |
% |
|
97.17 |
% |
|
2.3 |
% |
United |
|
99.96 |
% |
|
98.33 |
% |
|
1.7 |
% |
Total completion
factor** |
|
|
|
|
|
|
American |
|
97.85 |
% |
|
95.76 |
% |
|
2.2 |
% |
United |
|
99.21 |
% |
|
97.58 |
% |
|
3.6 |
% |
*Controllable completion factor excludes
cancellations due to weather and air traffic control**Total
completion factor includes all cancellations
1Reconciliation 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 nine months
ended December 31, 2022 and December 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.
1Reconciliation of
GAAP versus non-GAAP
Disclosures(In thousands, except for per diluted share)
(Unaudited)
|
Three Months Ended December 31, 2022 |
|
Three Months Ended December 31, 2021 |
|
Income(Loss)BeforeTaxes |
IncomeTax(Expense)/ Benefit |
NetIncome(Loss) |
NetIncome(Loss) perDilutedShare |
|
Income(Loss)BeforeTaxes |
IncomeTax(Expense)/ Benefit |
NetIncome |
NetIncome perDilutedShare |
GAAP income (loss) |
$(10,020 |
) |
$930 |
|
$(9,090 |
) |
$(0.25 |
) |
|
$(18,386 |
) |
$4,112 |
|
$14,274 |
|
$(0.40 |
) |
Adjustments(1)(2) |
|
5,398 |
|
|
(589 |
) |
|
3,313 |
|
$0.13 |
|
|
|
6,462 |
|
|
(1,470 |
) |
|
4,992 |
|
$0.14 |
|
Adjusted income |
|
|
|
|
|
|
|
|
|
(loss) |
|
(4,622 |
) |
|
341 |
|
|
(4,281 |
) |
$(0.12 |
) |
|
|
(11,924 |
) |
|
2,642 |
|
|
(9,282 |
) |
$(0.26 |
) |
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
11,276 |
|
|
|
|
|
|
7,930 |
|
|
|
|
Interest income |
|
(71 |
) |
|
|
|
|
|
(51 |
) |
|
|
|
Depreciation and
amortization |
|
15,203 |
|
|
|
|
|
|
21,028 |
|
|
|
|
Adjusted EBITDA |
|
21,786 |
|
|
|
|
|
|
16,983 |
|
|
|
|
Aircraft rent |
|
4,083 |
|
|
|
|
|
|
9,586 |
|
|
|
|
Adjusted EBITDAR |
$25,869 |
|
|
|
|
|
$26,569 |
|
|
|
|
(1) |
Includes
adjustment for impairment charges of $3.7 million during our three
months ended December 31, 2022, related to the intangible asset
under the American CPA. |
(2) |
Includes losses resulting from changes in the fair value of the
Company's investments in equity securities of $1.7 million and $6.5
million for the three months ended December 31, 2022 and 2021,
respectively. |
Source: Mesa Air Group, Inc.
Mesa Air (NASDAQ:MESA)
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