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/
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