Mercury Air Group, Inc. Reports Second Quarter Results LOS ANGELES,
Feb. 14 /PRNewswire-FirstCall/ -- Mercury Air Group, Inc.
(AMEX:MAX), reported a net loss for the second quarter ended
December 31, 2004 of $190,000, or $0.07 per basic and diluted
share, which included a net gain from discontinued operations of
$22,000 or $0.01 per basic and diluted share. For the second
quarter of fiscal 2004, the Company reported a loss of $1,517,000
or $0.48 per basic and diluted share, which included a net loss
from discontinued operations of $22,000 or $0.01 per basic and
diluted share. Revenue from continuing operations for the second
quarter of fiscal 2005 was $153.5 million, compared to $91.5
million for the same period last year, an increase of $62.0
million, or 67.8%. 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 second quarter of
fiscal 2005 was $5.2 million, an increase of 34.7%, compared to
$3.8 million in the second quarter of fiscal 2004. "Our three
business segments remain on course as we stabilize earnings and
begin allocating and budgeting significant resources for
Sarbanes-Oxley Section 404 compliance," said Joseph A. Czyzyk,
Chairman of the Board and Chief Executive Officer. For the second
quarter of fiscal 2005, revenue for the Company's MercFuel, Inc.
("MercFuel") subsidiary was $137.0 million, up 82.9%, compared to
revenue of $74.9 million for the second quarter last year. The
increased revenue resulted from a 57.5% increase in the price of
fuel and a 16.0% volume increase. For the quarter, gross margin
increased 36.1% to $2.6 million compared to $1.9 million the prior
year. The Company's Mercury Air Cargo, Inc. ("Air Cargo")
subsidiary had revenue of $11.4 million in the second quarter of
fiscal 2005, an increase of 6.6% from last year's second quarter of
$10.7 million. Air Cargo's gross margin increased 174% to $1.4
million in the second quarter compared to $0.5 million in the prior
year quarter. The Company's Maytag Aircraft Corporation ("Maytag")
subsidiary had revenue in the second quarter of fiscal 2005 of $5.0
million, down 15.8% compared to last year's second quarter revenue
of $5.9 million. Maytag's second quarter fiscal year 2005 gross
margin of $1.2M was 15.1% lower than the prior years second quarter
of $1.4M. The second quarter for fiscal 2005 includes a net gain
from discontinued operations of $22,000, compared to a loss from
discontinued operations, net of taxes, of $22,000 in the second
quarter of fiscal 2004. The Company sold the stock in Mercury Air
Centers, Inc., ("Air Centers") to Allied Capital in April 2004. The
net gain in the current quarter resulted from the Closing Working
Capital agreement between Allied Capital and the Company on
December 6, 2004. The net loss from discontinued operations for the
second quarter of fiscal 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 six month period ended December
31, 2004, the Company reported a net loss of $126,000, or $0.05 per
basic and fully diluted share, as compared to a net loss of
$1,819,000, or $0.57 per basic and fully diluted share for the
comparable period in fiscal 2004. Revenue of $279.0 million for the
first six months of fiscal 2005 was up $107.8 million, or 63%,
compared to $171.2 million in the first six months of fiscal 2004.
Gross margin of $9.4 million was up $2.1 million, or 28.7%,
compared to $7.3 million in the same year prior period. For the
first six months of fiscal 2005, revenue for the MercFuel
subsidiary was up 75.7% to $245.8 million, compared to revenue of
$139.9 million in the comparable prior year period. The higher
revenue resulted from a 51.4% increase in the price of fuel and a
15.9% volume increase. For the first half, gross margin increased
27.0% to $4.2 million compared to the prior year of $3.3 million.
The Air Cargo subsidiary had revenue of $22.6 million in the first
half of fiscal 2005, an increase of 15.3% from prior year's first
half of $19.6 million. Air Cargo's gross margin increased 113% to
$2.8 million in the first half compared to $1.3 million in the
prior year period. Maytag had revenue in the first half of fiscal
2005 of $10.3 million, down 11.9% compared to last year's first
half revenue of $11.7 million. Gross margin for the first half of
fiscal 2005 was $2.5 million, down 7.8%, when compared to the first
half of fiscal 2004's $2.7 million. The first half for fiscal 2005
includes a net gain from discontinued operations of $22,000, or
$0.01 per basic and diluted share, compared to a loss from
discontinued operations, net of taxes, of $392,000, or $0.12 per
basic and diluted share, in the first half of fiscal 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. For further information, please
contact Mike Bilello of Mercury Air Group, Inc., +1-213-486-6560.
MERCURY AIR GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF
OPERATIONS Six Months Ended Three Months Ended December 31,
December 31, 2004 2003 2004 2003 (Unaudited) (Unaudited) Sales and
revenues: Sales $246,095,000 $139,890,000 $137,161,000 $74,901,000
Service revenues 32,928,000 31,319,000 16,371,000 16,598,000 Total
sales and revenues 279,023,000 171,209,000 153,532,000 91,499,000
Costs and expenses: Cost of sales 239,390,000 134,299,000
133,350,000 71,850,000 Operating expenses 30,185,000 29,571,000
15,025,000 15,821,000 Total costs and expenses 269,575,000
163,870,000 148,375,000 87,671,000 Gross margin (excluding
depreciation and amortization) 9,448,000 7,339,000 5,157,000
3,828,000 Expenses (income): Selling, general and administrative
7,028,000 5,044,000 4,317,000 2,763,000 Provision (recovery) for
bad debts 364,000 (24,000) 87,000 (384,000) Depreciation and
amortization 1,254,000 1,426,000 619,000 713,000 Interest and other
expense 771,000 527,000 443,000 267,000 Hambro settlement costs
1,799,000 1,799,000 Interest and other income (241,000) (241,000)
(17,000) (32,000) Asset impairment loss 626,000 Total expenses
(income) 9,802,000 8,531,000 5,449,000 5,126,000 Loss from
continuing operations before minority interest and income tax
expense (354,000) (1,192,000) (292,000) (1,298,000) Minority
interest 181,000 4,000 (2,000) Loss from continuing operations
before income tax expense (173,000) (1,188,000) (292,000)
(1,300,000) Income tax benefit (25,000) 239,000 (80,000) 195,000
Loss from continuing operations, net of taxes (148,000) (1,427,000)
(212,000) (1,495,000) Discontinued operations: Loss from
discontinued operation, net of income tax (benefit) of ($251,000)
and ($14,000) for the six months and three months ended December
31, 2003, respectively (392,000) (22,000) Gain on sale of
discontinued operations, net of income tax provision of $14,000
22,000 -- 22,000 -- Net loss (126,000) (1,819,000) (190,000)
(1,517,000) Accrued preferred stock dividends 20,000 19,000 11,000
9,000 Net loss applicable to common stockholders $(146,000)
$(1,838,000) $(201,000) $(1,526,000) Income (loss) per common
share: Basic: From continuing operations, net of taxes $(0.06)
$(0.45) $(0.08) $(0.47) From discontinued operations, net of taxes
(0.12) (0.01) From sale of discontinued operations, net of taxes
0.01 -- 0.01 -- Net loss per share $(0.05) $(0.57) $(0.07) $(0.48)
Diluted: From continuing operations, net of taxes $(0.06) $(0.45)
$(0.08) $(0.47) From discontinued operations, net of taxes (0.12)
(0.01) From sale of discontinued operations, net of taxes 0.01 --
0.01 -- Net loss per share $(0.05) $(0.57) $(0.07) $(0.48) MERCURY
AIR GROUP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
December 31, June 30, 2004 2004 (Unaudited) ASSETS CURRENT ASSETS:
Cash and cash equivalents $6,316,000 $4,690,000 Restricted cash
15,414,000 Trade accounts receivable, net of allowance for doubtful
accounts of $1,882,000 and $1,556,000 at December 31 and June 30,
2004, respectively 56,912,000 50,974,000 Inventories 1,619,000
1,165,000 Prepaid expenses and other current assets 3,657,000
5,696,000 Deferred income taxes 1,451,000 1,451,000 TOTAL CURRENT
ASSETS 69,955,000 79,390,000 PROPERTY, EQUIPMENT AND LEASEHOLDS,
net of accumulated depreciation and amortization of $24,830,000 and
$24,836,000 at December 31 and June 30, 2004, respectively
7,564,000 10,349,000 NOTES RECEIVABLE, net of allowance for
doubtful accounts of $921,000 and $1,025,000 at December 31 and
June 30, 2004, respectively 1,296,000 521,000 DEFERRED INCOME TAXES
611,000 611,000 GOODWILL 4,411,000 4,389,000 OTHER INTANGIBLE
ASSETS, NET 600,000 700,000 RESTRICTED CASH 8,418,000 8,989,000
OTHER ASSETS, NET 1,226,000 1,008,000 TOTAL ASSETS $94,081,000
$105,957,000 LIABILITIES, MANDATORILY REDEEMABLE PREFERRED STOCK
AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable
$36,390,000 $33,552,000 Accrued expenses and other current
liabilities 8,559,000 11,825,000 Current portion of long-term debt
1,021,000 139,000 TOTAL CURRENT LIABILITIES 45,970,000 45,516,000
LONG-TERM DEBT 21,221,000 17,790,000 DEFERRED GAIN 9,444,000
8,130,000 OTHER LONG-TERM LIABILITY 335,000 669,000 DEFERRED RENT
943,000 1,257,000 MINORITY INTEREST -- 182,000 TOTAL LIABILITIES
77,913,000 73,544,000 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
December 31 and June 30, 2004, respectively 468,000 518,000
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 December 31 and June 30, 2004, respectively 31,000
30,000 Additional paid-in capital 21,473,000 20,737,000 Retained
earnings (accumulated deficit) (2,971,000) 14,596,000 Accumulated
other comprehensive income (loss) 193,000 (46,000) Treasury stock,
8,750 and 24,500 shares at December 31 and June 30, 2004,
respectively (43,000) (120,000) Notes receivable from officers
(2,983,000) (3,302,000) TOTAL STOCKHOLDERS' EQUITY 15,700,000
31,895,000 TOTAL LIABILITIES, MANDATORILY REDEEMABLE PREFERRED
STOCK AND STOCKHOLDERS' EQUITY $94,081,000 $105,957,000 DATASOURCE:
Mercury Air Group, Inc. CONTACT: Mike Bilello of Mercury Air Group,
Inc., +1-213-486-6560 Web site: http://www.mercuryairgroup.com/
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