001-35186 (Commission File Number) | 38-1747023 (IRS Employer Identification Number) |
[] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
[] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
[] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
[] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. | Results of Operations and Financial Condition. |
Item 9.01. | Financial Statements and Exhibits. |
Exhibit No. | Description | |
99.1 | Press Release regarding second quarter 2015 financial results. |
Date: July 24, 2015 | SPIRIT AIRLINES, INC. |
Exhibit No. | Description | |
99.1 | Press Release regarding second quarter 2015 financial results. |
• | Adjusted net income for the second quarter 2015 increased 12.6 percent to $74.8 million ($1.03 per diluted share) compared to the second quarter 20141. GAAP net income for the second quarter 2015 increased 18.3 percent year over year to $76.7 million ($1.05 per diluted share). |
• | Adjusted pre-tax margin for the second quarter 2015 was 21.3 percent1. On a GAAP basis, pre-tax margin for the second quarter 2015 was 21.8 percent. |
• | Spirit ended the second quarter 2015 with unrestricted cash and cash equivalents of $769.3 million. |
• | Spirit's return on invested capital (before taxes and excluding special items) for the twelve months ended June 30, 2015 was 29.4 percent2. |
• | Maintained its commitment to offer low fares to its valued customers; average ticket revenue per PFS for the second quarter 2015 was $68.35 with total revenue per PFS of $122.59. |
• | Launched service on 24 new nonstop routes in the second quarter 2015. |
• | Delivered our first SpaceFlex certified A320, which provides the cabin flexibility to add four additional Big Front Seats to this aircraft and our entire A320 fleet. |
• | Received FAA certification to add ten additional seats to the A321 aircraft scheduled for delivery this year and beyond. |
(1) | See "Reconciliation of Adjusted Net Income to GAAP Net Income" table below for more details. |
(2) | See "Calculation for Return on Invested Capital" table below for more details. |
(3) | See "Reconciliation of Adjusted Operating Expense to GAAP Operating Expense" table below for more details. |
Three Months Ended | Six Months Ended | ||||||||||||||||||||
June 30, | Percent | June 30, | Percent | ||||||||||||||||||
2015 | 2014 | Change | 2015 | 2014 | Change | ||||||||||||||||
Operating revenues: | |||||||||||||||||||||
Passenger | $ | 308,573 | $ | 302,487 | 2.0 | $ | 582,039 | $ | 556,365 | 4.6 | |||||||||||
Non-ticket | 244,848 | 196,850 | 24.4 | 464,737 | 380,959 | 22.0 | |||||||||||||||
Total operating revenues | 553,421 | 499,337 | 10.8 | 1,046,776 | 937,324 | 11.7 | |||||||||||||||
Operating expenses: | |||||||||||||||||||||
Aircraft fuel | 127,907 | 154,852 | (17.4 | ) | 240,333 | 303,323 | (20.8 | ) | |||||||||||||
Salaries, wages and benefits | 97,037 | 77,440 | 25.3 | 186,094 | 153,689 | 21.1 | |||||||||||||||
Aircraft rent | 53,127 | 48,222 | 10.2 | 105,915 | 94,609 | 12.0 | |||||||||||||||
Landing fees and other rents | 33,364 | 25,831 | 29.2 | 63,910 | 49,847 | 28.2 | |||||||||||||||
Distribution | 22,349 | 20,159 | 10.9 | 42,846 | 38,728 | 10.6 | |||||||||||||||
Maintenance, materials and repairs | 21,271 | 19,205 | 10.8 | 40,431 | 36,819 | 9.8 | |||||||||||||||
Depreciation and amortization | 17,139 | 11,344 | 51.1 | 32,002 | 22,465 | 42.5 | |||||||||||||||
Other operating | 58,173 | 36,408 | 59.8 | 101,920 | 71,856 | 41.8 | |||||||||||||||
Loss on disposal of assets | 415 | 715 | na | 1,010 | 865 | na | |||||||||||||||
Special charges | 324 | 17 | na | 749 | 26 | na | |||||||||||||||
Total operating expenses | 431,106 | 394,193 | 9.4 | 815,210 | 772,227 | 5.6 | |||||||||||||||
Operating income | 122,315 | 105,144 | 16.3 | 231,566 | 165,097 | 40.3 | |||||||||||||||
Other (income) expense: | |||||||||||||||||||||
Interest expense | 4,419 | 103 | na | 7,231 | 210 | na | |||||||||||||||
Capitalized interest | (2,829 | ) | (103 | ) | na | (5,362 | ) | (210 | ) | na | |||||||||||
Interest income | (177 | ) | (83 | ) | 113.3 | (311 | ) | (151 | ) | 106.0 | |||||||||||
Other expense | 44 | 1,439 | (96.9 | ) | 116 | 1,476 | (92.1 | ) | |||||||||||||
Total other (income) expense | 1,457 | 1,356 | 7.4 | 1,674 | 1,325 | 26.3 | |||||||||||||||
Income before income taxes | 120,858 | 103,788 | 16.4 | 229,892 | 163,772 | 40.4 | |||||||||||||||
Provision for income taxes | 44,154 | 38,939 | 13.4 | 84,186 | 61,217 | 37.5 | |||||||||||||||
Net income | $ | 76,704 | $ | 64,849 | 18.3 | $ | 145,706 | $ | 102,555 | 42.1 | |||||||||||
Basic earnings per share | $ | 1.06 | $ | 0.89 | 19.1 | $ | 2.00 | $ | 1.41 | 41.8 | |||||||||||
Diluted earnings per share | $ | 1.05 | $ | 0.88 | 19.3 | $ | 1.99 | $ | 1.40 | 42.1 | |||||||||||
Weighted average shares, basic | 72,518 | 72,740 | (0.3 | ) | 72,784 | 72,712 | 0.1 | ||||||||||||||
Weighted average shares, diluted | 72,801 | 73,294 | (0.7 | ) | 73,083 | 73,274 | (0.3 | ) |
Three Months Ended June 30, | Six Months Ended June 30, 2015 | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Net income | $ | 76,704 | $ | 64,849 | $ | 145,706 | $ | 102,555 | |||||||
Unrealized gain (loss) on interest rate derivative instruments, net of deferred taxes of $749, $0, ($191) and $0 | 1,238 | — | (356 | ) | — | ||||||||||
Other comprehensive income (loss) | $ | 1,238 | $ | — | $ | (356 | ) | $ | — | ||||||
Comprehensive income | $ | 77,942 | $ | 64,849 | $ | 145,350 | $ | 102,555 |
June 30, | December 31, | ||||||
2015 | 2014 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 769,324 | $ | 632,784 | |||
Accounts receivable, net | 30,856 | 22,685 | |||||
Deferred income taxes | 9,643 | 9,643 | |||||
Prepaid expenses and other current assets | 62,088 | 66,029 | |||||
Total current assets | 871,911 | 731,141 | |||||
Property and equipment: | |||||||
Flight equipment | 549,517 | 204,462 | |||||
Ground and other equipment | 66,290 | 57,012 | |||||
Less accumulated depreciation | (47,219 | ) | (36,099 | ) | |||
568,588 | 225,375 | ||||||
Deposits on flight equipment purchase contracts | 267,344 | 242,881 | |||||
Aircraft maintenance deposits | 217,932 | 213,147 | |||||
Deferred heavy maintenance, net | 108,051 | 123,108 | |||||
Other long-term assets | 71,511 | 66,744 | |||||
Total assets | $ | 2,105,337 | $ | 1,602,396 | |||
Liabilities and shareholders’ equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 21,751 | $ | 13,402 | |||
Air traffic liability | 270,185 | 188,870 | |||||
Current maturities of long-term debt | 29,676 | 10,431 | |||||
Other current liabilities | 207,879 | 152,921 | |||||
Total current liabilities | 529,491 | 365,624 | |||||
Long-term debt less current maturities | 398,975 | 135,232 | |||||
Long-term deferred income taxes | 76,378 | 76,010 | |||||
Deferred gains and other long-term liabilities | 18,213 | 22,455 | |||||
Shareholders’ equity: | |||||||
Common stock | 7 | 7 | |||||
Additional paid-in-capital | 539,443 | 526,173 | |||||
Treasury stock, at cost | (83,336 | ) | (3,921 | ) | |||
Retained earnings | 627,240 | 481,534 | |||||
Accumulated other comprehensive loss | (1,074 | ) | (718 | ) | |||
Total shareholders’ equity | 1,082,280 | 1,003,075 | |||||
Total liabilities and shareholders’ equity | $ | 2,105,337 | $ | 1,602,396 |
Six Months Ended June 30, | |||||||
2015 | 2014 | ||||||
Operating activities: | |||||||
Net income | $ | 145,706 | $ | 102,555 | |||
Adjustments to reconcile net income to net cash provided by operations: | |||||||
Unrealized (gains) losses on open fuel derivative contracts, net | 4,257 | — | |||||
Equity-based compensation, net | 4,743 | 3,872 | |||||
Allowance for doubtful accounts (recoveries) | 8 | (33 | ) | ||||
Amortization of deferred gains and losses | 397 | (178 | ) | ||||
Depreciation and amortization | 32,002 | 22,465 | |||||
Deferred income tax expense (benefit) | 559 | (395 | ) | ||||
Loss on disposal of assets | 1,010 | 865 | |||||
Capitalized interest | (5,362 | ) | (210 | ) | |||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | (8,137 | ) | (14,188 | ) | |||
Prepaid maintenance reserves | (4,621 | ) | (14,286 | ) | |||
Long-term deposits and other assets | (10,930 | ) | (27,020 | ) | |||
Accounts payable | 7,856 | (1,462 | ) | ||||
Air traffic liability | 90,056 | 64,331 | |||||
Other liabilities | 39,327 | 7,819 | |||||
Net cash provided by operating activities | 296,871 | 144,135 | |||||
Investing activities: | |||||||
Pre-delivery deposits for flight equipment, net of refunds | (70,971 | ) | (94,009 | ) | |||
Purchase of property and equipment | (308,163 | ) | (7,430 | ) | |||
Net cash used in investing activities | (379,134 | ) | (101,439 | ) | |||
Financing activities: | |||||||
Proceeds from issuance of long-term debt | 296,000 | — | |||||
Proceeds from stock options exercised | 23 | 63 | |||||
Payments on debt and capital lease obligations | (8,940 | ) | (511 | ) | |||
Proceeds from sale and leaseback transactions | 7,300 | — | |||||
Payments to pre-IPO shareholders pursuant to tax receivable agreement | — | (5,643 | ) | ||||
Excess tax benefits from equity-based compensation | 8,504 | 1,225 | |||||
Repurchase of common stock | (79,415 | ) | (1,222 | ) | |||
Debt issuance costs | (4,669 | ) | — | ||||
Net cash provided by financing activities | 218,803 | (6,088 | ) | ||||
Net increase in cash and cash equivalents | 136,540 | 36,608 | |||||
Cash and cash equivalents at beginning of period | 632,784 | 530,631 | |||||
Cash and cash equivalents at end of period | $ | 769,324 | $ | 567,239 | |||
Supplemental disclosures | |||||||
Cash payments for: | |||||||
Interest (net of capitalized interest) | $ | 1,758 | $ | 326 | |||
Taxes | $ | 54,198 | $ | 52,093 |
Three Months Ended June 30, | ||||||||
Operating Statistics | 2015 | 2014 | Change | |||||
Available seat miles (ASMs) (thousands) | 5,213,299 | 4,008,507 | 30.1 | % | ||||
Revenue passenger miles (RPMs) (thousands) | 4,481,064 | 3,506,459 | 27.8 | % | ||||
Load factor (%) | 86.0 | 87.5 | (1.5) pts | |||||
Passenger flight segments (thousands) | 4,514 | 3,569 | 26.5 | % | ||||
Block hours | 83,861 | 65,732 | 27.6 | % | ||||
Departures | 32,164 | 25,353 | 26.9 | % | ||||
Operating revenue per ASM (RASM) (cents) | 10.62 | 12.46 | (14.8 | )% | ||||
Average yield (cents) | 12.35 | 14.24 | (13.3 | )% | ||||
Average ticket revenue per passenger flight segment ($) | 68.35 | 84.75 | (19.4 | )% | ||||
Average non-ticket revenue per passenger flight segment ($) | 54.24 | 55.15 | (1.7 | )% | ||||
Total revenue per passenger flight segment ($) | 122.59 | 139.90 | (12.4 | )% | ||||
CASM (cents) | 8.27 | 9.83 | (15.9 | )% | ||||
Adjusted CASM (cents) (1) | 8.33 | 9.80 | (15.0 | )% | ||||
Adjusted CASM ex-fuel (cents) (2) | 5.80 | 5.95 | (2.5)% | |||||
Fuel gallons consumed (thousands) | 63,134 | 49,401 | 27.8 | % | ||||
Average economic fuel cost per gallon ($) | 2.08 | 3.13 | (33.5 | )% | ||||
Aircraft at end of period | 73 | 57 | 28.1 | % | ||||
Average daily aircraft utilization (hours) | 12.9 | 12.8 | 0.8% | |||||
Average stage length (miles) | 974 | 976 | (0.2 | )% | ||||
Airports served in the period | 57 | 54 | 5.6% |
Six Months Ended June 30, | ||||||||
Operating Statistics | 2015 | 2014 | Change | |||||
Available seat miles (ASMs) (thousands) | 9,942,762 | 7,793,234 | 27.6 | % | ||||
Revenue passenger miles (RPMs) (thousands) | 8,498,622 | 6,795,746 | 25.1 | % | ||||
Load factor (%) | 85.5 | 87.2 | (1.7 | ) pts | ||||
Passenger flight segments (thousands) | 8,494 | 6,833 | 24.3 | % | ||||
Block hours | 160,896 | 128,870 | 24.9 | % | ||||
Departures | 61,208 | 48,914 | 25.1 | % | ||||
Operating revenue per ASM (RASM) (cents) | 10.53 | 12.03 | (12.5 | )% | ||||
Average yield (cents) | 12.32 | 13.79 | (10.7 | )% | ||||
Average ticket revenue per passenger flight segment ($) | 68.52 | 81.43 | (15.9 | )% | ||||
Average non-ticket revenue per passenger flight segment ($) | 54.71 | 55.76 | (1.9 | )% | ||||
Total revenue per passenger flight segment ($) | 123.23 | 137.19 | (10.2 | )% | ||||
CASM (cents) | 8.20 | 9.91 | (17.3 | )% | ||||
Adjusted CASM (cents) (1) | 8.20 | 9.89 | (17.1 | )% | ||||
Adjusted CASM ex-fuel (cents) (2) | 5.76 | 6.01 | (4.2 | )% | ||||
Fuel gallons consumed (thousands) | 119,857 | 96,078 | 24.7 | % | ||||
Average economic fuel cost per gallon ($) | 2.02 | 3.15 | (35.9 | )% | ||||
Average daily aircraft utilization (hours) | 12.8 | 12.8 | — | |||||
Average stage length (miles) | 982 | 988 | (0.6 | )% |
(1) | Excludes special items. |
(2) | Excludes economic fuel expense and special items. |
Three Months Ended | |||||||
June 30, | |||||||
(in thousands) | 2015 | 2014 | |||||
Operating special items include the following: | |||||||
Unrealized losses (gains) related to fuel derivative contracts | $ | (3,669 | ) | $ | 467 | ||
Loss on disposal of assets | 415 | 715 | |||||
Special charges | 324 | 17 | |||||
Total operating special items | $ | (2,930 | ) | $ | 1,199 | ||
Non-operating special items include the following: | |||||||
Settlement paid to Pre-IPO Stockholders | $ | — | $ | 1,388 | |||
Total non-operating special items (1) | $ | — | $ | 1,388 |
Three Months Ended | |||||||
June 30, | |||||||
(in thousands, except CASM data in cents) | 2015 | 2014 | |||||
Total operating expenses, as reported | $ | 431,106 | $ | 394,193 | |||
Less operating special items (2) | (2,930 | ) | 1,199 | ||||
Adjusted operating expenses, non-GAAP (3) | 434,036 | 392,994 | |||||
Less: Economic fuel expense | 131,576 | 154,385 | |||||
Adjusted operating expenses excluding fuel, non-GAAP (4) | $ | 302,460 | $ | 238,609 | |||
Available seat miles | 5,213,299 | 4,008,507 | |||||
CASM (cents) | 8.27 | 9.83 | |||||
Adjusted CASM (cents) (3) | 8.33 | 9.80 | |||||
Adjusted CASM ex-fuel (cents) (4) | 5.80 | 5.95 |
(1) | Non-operating special charges relate to the settlement paid to the Pre-IPO Stockholders in excess of the liability the Company had previously estimated related to the Company's Tax Receivable Agreement. |
(2) | See "Special Items" for more detail. |
(3) | Excludes operating special items. |
(4) | Excludes operating special items and economic fuel expense as described in the "Reconciliation of Economic Fuel Expense to GAAP Fuel Expense" table below. |
Three Months Ended | |||||||
June 30, | |||||||
(in thousands, except per share data) | 2015 | 2014 | |||||
Net income, as reported | $ | 76,704 | $ | 64,849 | |||
Add: Provision for income taxes | 44,154 | 38,939 | |||||
Income before income taxes, as reported | 120,858 | 103,788 | |||||
Pre-tax margin, GAAP | 21.8 | % | 20.8 | % | |||
Add operating special items (1) | (2,930 | ) | 1,199 | ||||
Add: non-operating special charges (1) | — | 1,388 | |||||
Income before income taxes, non-GAAP (2) | 117,928 | 106,375 | |||||
Adjusted pre-tax margin, non-GAAP (2) | 21.3 | % | 21.3 | % | |||
Provision for income taxes (3) | 43,084 | 39,910 | |||||
Adjusted net income, non-GAAP (2) | $ | 74,844 | $ | 66,465 | |||
Weighted average shares, diluted | 72,801 | 73,294 | |||||
Adjusted net income per share, diluted (2) | $1.03 | $0.91 | |||||
Estimated impact from unusual number of cancellations, delays, and other non-recurring items: | |||||||
Revenue loss | $ | 5,000 | |||||
Total operating revenues (4) | $ | 558,421 | |||||
Expense impact | $ | 15,000 | |||||
Total adjusted operating expense (2)(4) | $ | 419,036 | |||||
Net income impact | $ | 12,694 | |||||
Total adjusted net income (2)(4) | $ | 87,538 | |||||
Total adjusted net income per share, diluted (2)(4) | $ | 1.20 |
(1) | See "Special Items" for more details. |
(2) | Excludes operating and non-operating special items. |
(3) | Assumes same marginal tax rate as is applicable to GAAP net income. |
(4) | Excludes the impact from the unusual number of cancellations, delays, and other non-recurring items during the second quarter 2015. |
Three Months Ended | |||||||
June 30, | |||||||
(in thousands) | 2015 | 2014 | |||||
Operating income, as reported | $ | 122,315 | $ | 105,144 | |||
Operating margin, GAAP | 22.1 | % | 21.1 | % | |||
Add operating special items (1) | (2,930 | ) | 1,199 | ||||
Operating income, non-GAAP (2) | $ | 119,385 | $ | 106,343 | |||
Operating margin (2) | 21.6 | % | 21.3 | % |
(1) | See "Special Items" for more detail. |
(2) | Excludes operating special items. |
Three Months Ended | |||||||
June 30, | |||||||
(in thousands, except per gallon data) | 2015 | 2014 | |||||
Fuel expense | |||||||
Aircraft fuel, as reported | $ | 127,907 | $ | 154,852 | |||
Less Unrealized losses (gains) related to fuel derivative contracts | (3,669 | ) | 467 | ||||
Economic fuel expense, non-GAAP | $ | 131,576 | $ | 154,385 | |||
Fuel gallons consumed | 63,134 | 49,401 | |||||
Economic fuel cost per gallon, non-GAAP | $ | 2.08 | $ | 3.13 |
Twelve Months Ended | |||
(in thousands) | June 30, 2015 | ||
Operating Income | $ | 421,732 | |
Add operating special items (1) | 14,639 | ||
Adjustment for aircraft rent | 207,133 | ||
Adjusted operating income (2) | 643,504 | ||
Tax (35.9%) (3) | 231,018 | ||
Adjusted operating income, after-tax | 412,486 | ||
Invested Capital | |||
Total debt | $ | 428,651 | |
Book equity | 1,082,280 | ||
Less: Unrestricted cash | 769,324 | ||
Add: Capitalized aircraft operating leases (7x Aircraft Rent) | 1,449,931 | ||
Total invested capital | 2,191,538 | ||
Return on invested capital (ROIC), pre-tax (2) | 29.4 | % | |
Return on invested capital (ROIC), after-tax (2)(3) | 18.8 | % |
(1) | Special items include unrealized gains or losses related to fuel derivative contracts, loss on disposal of assets, special charges (credits), and additional federal excise tax on a minority of fuel volume for the period beginning July 1, 2009 through December 31, 2013 recorded in the third quarter 2014. |
(2) | Excludes special items as described above. |
(3) | Assumes same marginal tax rate as is applicable to GAAP net income for the twelve months ended June 30, 2015. |
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