Mercury Air (AMEX:MAX)
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Mercury Air Group, Inc. Reports Net Loss for Fiscal Year 2005
Third Quarter; $54.5 Million Increase in Revenue From Continuing Operations
Offset by Increased General Expenses
LOS ANGELES, May 27 /PRNewswire-FirstCall/ -- Mercury Air Group, Inc.
(AMEX:MAX), reported a net loss for the third quarter ended March 31, 2005 of
$1.87 million, or $0.62 per basic and diluted share. For the third quarter of
fiscal year 2004, the Company reported a loss of $1.82 million or $0.63 per
basic and diluted share, which included a net loss from discontinued operations
of $651 thousand or $0.22 per basic and diluted share.
Revenue from continuing operations for the third quarter of fiscal year 2005
was $158.26 million, compared to $103.78 million for the same period last year,
an increase of $54.48 million, or 52.5%. The increase in revenue from
continuing operations is primarily due to the higher aviation fuel prices
driven by higher worldwide petroleum product prices. The Company's gross
margin from continuing operations for the third quarter of fiscal year 2005 was
$4.19 million, an increase of 53.2%, compared to $2.73 million in the third
quarter of fiscal year 2004.
"While there were improved financial results from our three business units,
those figures were offset by increased general and administrative expenses,"
said Joseph A. Czyzyk, Chairman of the Board and Chief Executive Officer.
For the third quarter of fiscal year 2005, revenue for the Company's MercFuel,
Inc. ("MercFuel") subsidiary was $142.73 million, up 61.6%, compared to revenue
of $88.31 million for the third quarter of fiscal year 2004. The increased
revenue resulted from a 38.3% increase in the price of fuel and a 16.9% volume
increase. MercFuel's gross margin increased 60.2% to $2.41 million in the
third quarter compared to $1.51 million in the prior year quarter.
The Company's Mercury Air Cargo, Inc. ("Air Cargo") subsidiary had revenue of
$10.00 million in the third quarter of fiscal year 2005, an increase of 2.8%
from last year's third quarter of $9.73 million. Air Cargo's gross margin
increased $0.53 million to $0.59 million in the third quarter compared to $0.06
million in the prior year quarter.
The Company's Maytag Aircraft Corporation ("Maytag") subsidiary had revenue in
the third quarter of fiscal year 2005 of $5.32 million, down 7.4% compared to
last year's third quarter revenue of $5.75 million. Maytag's third quarter
fiscal year 2005 gross margin of $1.30 million was 11.7% higher than the prior
year's third quarter of $1.17 million.
The third quarter of fiscal year 2004 includes a loss from discontinued
operations, net of taxes, of $651 thousand. The Company sold the stock in
Mercury Air Centers, Inc., ("Air Centers") to Allied Capital in April 2004. The
net loss from discontinued operations for the third quarter of fiscal year 2004
is comprised of the results from operations from the Air Centers for the
quarter less the debt service costs recognized during the quarter on the debt
repaid with the proceeds from the sale.
For the nine month period ended March 31, 2005, the Company reported a net loss
of $2.00 million, or $0.70 per basic and fully diluted share, as compared to a
net loss of $3.64 million, or $1.18 per basic and fully diluted share for the
comparable period in fiscal year 2004. The fiscal year 2004 loss includes the
after-tax settlement expense of $1.80 million associated with the J O Hambro
Settlement and an accrual for debt premiums on the Senior Subordinated Note of
$702 thousand, net of taxes. Revenue of $437.28 million for the first nine
months of fiscal year 2005 was up $162.29 million, or 59%, compared to $274.99
million in the first nine months of fiscal year 2004. Gross margin of $13.34
million was up $3.27 million, or 32.5%, compared to $10.07 million in the same
prior year period.
For the first nine months of fiscal year 2005, revenue for the MercFuel
subsidiary was up 70.2% to $388.50 million, compared to revenue of $228.20
million in the comparable prior year period. The higher revenue resulted from
a 46.5% increase in the price of fuel and a 16.2% volume increase. For the
nine months, gross margin increased 37.4% to $6.60 million compared to the
prior year of $4.81 million.
The Air Cargo subsidiary had revenue of $32.58 million in the first nine months
of fiscal year 2005, an increase of 11.2% from prior year's first nine months
of $29.31 million. Air Cargo's gross margin increased 147% to $3.35 million in
the first nine months compared to $1.36 million in the prior year period.
Maytag had revenue in the first nine months of fiscal year 2005 of $15.67
million, down 10.4% compared to last year's nine-month revenue of $17.49
million. Gross margin for the first nine months of fiscal year 2005 was $3.83
million, down 2.0%, when compared to the first nine months of fiscal year
2004's $3.91 million.
The first nine months of fiscal year 2005 includes a net gain from discontinued
operations of $22 thousand, or $0.01 per basic and diluted share, compared to a
loss from discontinued operations, net of taxes, of $1.04 million, or $0.34 per
basic and diluted share, in the first nine months of fiscal year 2004. The
Company sold the stock in Mercury Air Centers, Inc., ("Air Centers") to Allied
Capital in April 2004. The loss from discontinued operations is comprised of
the results from operations from the Air Centers for the quarter less the debt
service costs recognized during the quarter on the debt repaid with the
proceeds from the sale.
About Mercury Air Group
Los Angeles-based Mercury Air Group (AMEX:MAX) provides aviation petroleum
products, air cargo services and transportation, and support services for
international and domestic commercial airlines, general and government aircraft
and specialized contract services for the United States government. Mercury
Air Group operates three business segments worldwide: MercFuel, Inc., Maytag
Aircraft Corporation and Mercury Air Cargo, Inc. For more information, please
visit http://www.mercuryairgroup.com/.
Statements contained in this news release which are not historical facts are
forward-looking statements as that item is defined in the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements are subject to
risks and uncertainties that could cause actual results to differ materially
from estimated results. Such risks and uncertainties are detailed in the
Company's filings with the Securities and Exchange Commission.
Contact: David Gershwin
(213) 486-6560 x315
MERCURY AIR GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Nine Months Ended Three Months Ended
March 31, March 31,
2005 2004 2005 2004
(Unaudited) (Unaudited)
(Dollars in thousands, except per share data)
Sales and revenues:
Sales $388,998 $228,195 $142,903 $88,304
Service revenues 48,284 46,795 15,356 15,477
Total sales and revenues 437,282 274,990 158,259 103,781
Costs and expenses:
Cost of sales 378,566 219,871 139,176 85,572
Operating expenses 45,375 45,048 14,897 15,477
Total costs and expenses 423,941 264,919 154,073 101,049
Gross margin
(excluding depreciation
and amortization) 13,341 10,071 4,186 2,732
Expenses (income):
Selling, general and
administrative 11,736 7,838 4,708 2,798
Provision (recovery) for
bad debts 1,514 305 1,150 329
Depreciation and amortization 1,855 2,169 601 743
Interest and other expense 1,057 784 286 257
Hambro settlement costs 1,799
Interest and other income (306) (272) (65) (31)
Asset impairment loss 626
Total expenses (income) 16,482 12,623 6,680 4,096
Loss from continuing
operations before minority
interest and income tax
expense (3,141) (2,552) (2,494) (1,364)
Minority interest 406 (68)
Loss from continuing
operations before income
tax expense (2,735) (2,552) (2,562) (1,364)
Income tax (benefit) expense (716) 43 (691) (196)
Loss from continuing operations,
net of taxes (2,019) (2,595) (1,871) (1,168)
Discontinued operations:
Loss from discontinued
operation, net of income
tax (benefit) of ($359) and
($108) for the nine months and
three months ended
March 31, 2005 and 2004,
respectively (1,043) (651)
Gain on sale of discontinued
operations, net of income
tax provision of $14 22
Net loss (1,997) (3,638) (1,871) (1,819)
Accrued preferred stock
dividends 29 28 9 9
Net loss applicable to common
stockholders $(2,026) $(3,666) $(1,880) $(1,828)
Income (loss) per common share:
Basic:
From continuing operations,
net of taxes $(0.71) $(0.84) $(0.62) $(0.41)
From discontinued operations,
net of taxes (0.34) (0.22)
From sale of discontinued
operations, net of taxes 0.01
Net loss per share $(0.70) $(1.18) $(0.62) $(0.63)
Diluted:
From continuing operations,
net of taxes $(0.71) $(0.84) $(0.62) $(0.41)
From discontinued operations,
net of taxes (0.34) (0.22)
From sale of discontinued
operations, net of taxes 0.01
Net loss per share $(0.70) $(1.18) $(0.62) $(0.63)
MERCURY AIR GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, June 30,
2005 2004
(Unaudited)
ASSETS (Dollars in thousands)
CURRENT ASSETS:
Cash and cash equivalents $275 $4,690
Restricted cash 15,414
Trade accounts receivable,
net of allowance for doubtful
accounts of $2,808 and $1,556 at
March 31, 2005 and June 30, 2004,
respectively 59,757 50,974
Inventories 3,330 1,165
Prepaid expenses and other
current assets 4,579 5,696
Deferred income taxes 1,451 1,451
TOTAL CURRENT ASSETS 69,392 79,390
PROPERTY, EQUIPMENT AND LEASEHOLDS,
net of accumulated depreciation and
amortization of $25,531 and $24,836 at
March 31, 2005 and June 30, 2004,
respectively 7,461 10,349
NOTES RECEIVABLE, net of allowance
for doubtful accounts of $921 and $1,025
at March 31, 2005 and June 30, 2004,
respectively 1,300 521
DEFERRED INCOME TAXES 611 611
GOODWILL 4,411 4,389
OTHER INTANGIBLE ASSETS, NET 550 700
RESTRICTED CASH 8,450 8,989
OTHER ASSETS, NET 1,127 1,008
TOTAL ASSETS $93,302 $105,957
LIABILITIES, MANDATORILY REDEEMABLE
PREFERRED STOCK AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $37,204 $33,552
Accrued expenses and other
current liabilities 8,918 11,825
Current portion of long-term debt 1,178 139
TOTAL CURRENT LIABILITIES 47,300 45,516
LONG-TERM DEBT 20,716 17,790
DEFERRED GAIN 9,474 8,130
OTHER LONG-TERM LIABILITY 837 669
DEFERRED RENT 628 1,257
MINORITY INTEREST 182
TOTAL LIABILITIES 78,955 73,544
COMMITMENTS AND CONTINGENT LIABILITIES
(Note 4)
MANDATORILY REDEEMABLE PREFERRED STOCK:
Series A - $0.01
par value; 1,000,000 shares authorized;
462,627 shares outstanding at
March 31, 2005 and June 30, 2004,
respectively 478 518
STOCKHOLDERS' EQUITY:
Preferred stock -- $0.01 par value;
authorized 2,000,000 shares; no shares
outstanding Common stock -- $0.01
par value; authorized 18,000,000 shares;
3,056,355 and 2,954,819 shares
outstanding at March 31, 2005 and
June 30, 2004, respectively 31 30
Additional paid-in capital 21,443 20,737
Retained earnings (accumulated deficit) (4,822) 14,596
Accumulated other comprehensive
income (loss) 176 (46)
Treasury stock, 12,500 and 24,500
shares at March 31, 2005 and
June 30, 2004, respectively (61) (120)
Notes receivable from officers (2,898) (3,302)
TOTAL STOCKHOLDERS' EQUITY 13,869 31,895
TOTAL LIABILITIES, MANDATORILY
REDEEMABLE PREFERRED
STOCK AND STOCKHOLDERS' EQUITY $93,302 $105,957
DATASOURCE: Mercury Air Group, Inc.
CONTACT: David Gershwin of Mercury Air Group, Inc., +1-213-486-6560,
ext. 315
Web site: http://www.mercuryairgroup.com/