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 8.01. | Other Events |
Item 9.01. | Financial Statements and Exhibits. |
Exhibit No. | Description | |
99.1 | Press Release regarding third quarter 2015 financial results. |
Date: October 27, 2015 | SPIRIT AIRLINES, INC. |
Exhibit No. | Description | |
99.1 | Press Release regarding third quarter 2015 financial results. |
• | Adjusted net income for the third quarter 2015 increased 31.6 percent to $97.3 million ($1.35 per diluted share) compared to the third quarter 20141. GAAP net income for the third quarter 2015 increased 44.9 percent year over year to $97.1 million ($1.35 per diluted share). |
• | Adjusted pre-tax margin for the third quarter 2015 increased 560 basis points to 26.9 percent. On a GAAP basis, pre-tax margin for the third quarter 2015 increased 760 basis points to 26.9 percent. |
• | Spirit ended the third quarter 2015 with unrestricted cash and cash equivalents of $748.9 million. |
• | Spirit's return on invested capital (before taxes and excluding special items) for the twelve months ended September 30, 2015 was 28.8 percent2. |
• | Maintained its commitment to offer low fares to its valued customers; average ticket revenue per PFS for the third quarter 2015 was $66.96 with total revenue per PFS of $120.35. |
• | Introduced the "Unbundlers" campaign, helping to educate travelers about the hidden costs other airlines bundle into their fares. |
• | Launched service between the following destinations: |
◦ | Baltimore - Los Angeles (7/9/15) |
◦ | Kansas City - Los Angeles (7/9/15) |
◦ | Atlanta - Los Angeles (8/20/15) |
◦ | Atlanta - Boston (9/10/15) |
◦ | Atlanta - Fort Myers (9/10/15) |
(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 | Nine Months Ended | ||||||||||||||||||||
September 30, | Percent | September 30, | Percent | ||||||||||||||||||
2015 | 2014 | Change | 2015 | 2014 | Change | ||||||||||||||||
Operating revenues: | |||||||||||||||||||||
Passenger | $ | 319,812 | $ | 317,038 | 0.9 | $ | 901,851 | $ | 873,403 | 3.3 | |||||||||||
Non-ticket | 255,029 | 202,731 | 25.8 | 719,766 | 583,690 | 23.3 | |||||||||||||||
Total operating revenues | 574,841 | 519,769 | 10.6 | 1,621,617 | 1,457,093 | 11.3 | |||||||||||||||
Operating expenses: | |||||||||||||||||||||
Aircraft fuel | 115,899 | 171,584 | (32.5 | ) | 356,232 | 474,907 | (25.0 | ) | |||||||||||||
Salaries, wages and benefits | 95,081 | 79,087 | 20.2 | 281,175 | 232,776 | 20.8 | |||||||||||||||
Aircraft rent | 53,525 | 50,009 | 7.0 | 159,440 | 144,618 | 10.2 | |||||||||||||||
Landing fees and other rents | 34,577 | 27,735 | 24.7 | 98,487 | 77,582 | 26.9 | |||||||||||||||
Distribution | 23,074 | 20,202 | 14.2 | 65,920 | 58,930 | 11.9 | |||||||||||||||
Maintenance, materials and repairs | 21,473 | 19,622 | 9.4 | 61,904 | 56,441 | 9.7 | |||||||||||||||
Depreciation and amortization | 19,628 | 11,338 | 73.1 | 51,630 | 33,803 | 52.7 | |||||||||||||||
Other operating | 54,151 | 39,190 | 38.2 | 156,071 | 111,045 | 40.5 | |||||||||||||||
Loss on disposal of assets | 290 | 793 | nm | 1,300 | 1,658 | nm | |||||||||||||||
Special charges (credits) | (76 | ) | 18 | nm | 673 | 45 | nm | ||||||||||||||
Total operating expenses | 417,622 | 419,578 | (0.5 | ) | 1,232,832 | 1,191,805 | 3.4 | ||||||||||||||
Operating income | 157,219 | 100,191 | 56.9 | 388,785 | 265,288 | 46.6 | |||||||||||||||
Other (income) expense: | |||||||||||||||||||||
Interest expense | 5,951 | 878 | nm | 13,182 | 1,088 | nm | |||||||||||||||
Capitalized interest | (3,030 | ) | (878 | ) | nm | (8,392 | ) | (1,088 | ) | nm | |||||||||||
Interest income | (233 | ) | (84 | ) | 177.4 | (544 | ) | (235 | ) | 131.5 | |||||||||||
Other expense | 166 | 81 | 104.9 | 282 | 1,557 | (81.9 | ) | ||||||||||||||
Total other (income) expense | 2,854 | (3 | ) | nm | 4,528 | 1,322 | nm | ||||||||||||||
Income before income taxes | 154,365 | 100,194 | 54.1 | 384,257 | 263,966 | 45.6 | |||||||||||||||
Provision for income taxes | 57,251 | 33,194 | 72.5 | 141,437 | 94,411 | 49.8 | |||||||||||||||
Net income | $ | 97,114 | $ | 67,000 | 44.9 | $ | 242,820 | $ | 169,555 | 43.2 | |||||||||||
Basic earnings per share | $ | 1.35 | $ | 0.92 | 46.7 | $ | 3.35 | $ | 2.33 | 43.8 | |||||||||||
Diluted earnings per share | $ | 1.35 | $ | 0.91 | 48.4 | $ | 3.34 | $ | 2.31 | 44.6 | |||||||||||
Weighted average shares, basic | 71,738 | 72,755 | (1.4 | ) | 72,432 | 72,727 | (0.4 | ) | |||||||||||||
Weighted average shares, diluted | 71,920 | 73,303 | (1.9 | ) | 72,692 | 73,284 | (0.8 | ) |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Net income | $ | 97,114 | $ | 67,000 | $ | 242,820 | $ | 169,555 | |||||||
Unrealized gain (loss) on interest rate derivative instruments, net of deferred tax expense (benefit) of ($320), $0, ($511) and $0 | (553 | ) | — | (909 | ) | — | |||||||||
Other comprehensive income (loss) | $ | (553 | ) | $ | — | $ | (909 | ) | $ | — | |||||
Comprehensive income | $ | 96,561 | $ | 67,000 | $ | 241,911 | $ | 169,555 |
September 30, | December 31, | ||||||
2015 | 2014 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 748,896 | $ | 632,784 | |||
Accounts receivable, net | 33,094 | 22,685 | |||||
Deferred income taxes | 9,643 | 9,643 | |||||
Prepaid expenses and other current assets | 126,939 | 66,029 | |||||
Total current assets | 918,572 | 731,141 | |||||
Property and equipment: | |||||||
Flight equipment | 689,603 | 204,462 | |||||
Ground and other equipment | 76,136 | 57,012 | |||||
Less accumulated depreciation | (55,521 | ) | (36,099 | ) | |||
710,218 | 225,375 | ||||||
Deposits on flight equipment purchase contracts | 275,544 | 242,881 | |||||
Aircraft maintenance deposits | 199,200 | 213,147 | |||||
Deferred heavy maintenance, net | 99,571 | 123,108 | |||||
Other long-term assets | 73,817 | 66,744 | |||||
Total assets | $ | 2,276,922 | $ | 1,602,396 | |||
Liabilities and shareholders’ equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 15,823 | $ | 13,402 | |||
Air traffic liability | 237,043 | 188,870 | |||||
Current maturities of long-term debt | 37,758 | 10,431 | |||||
Other current liabilities | 176,259 | 152,921 | |||||
Total current liabilities | 466,883 | 365,624 | |||||
Long-term debt less current maturities | 500,147 | 135,232 | |||||
Long-term deferred income taxes | 139,459 | 76,010 | |||||
Deferred gains and other long-term liabilities | 21,760 | 22,455 | |||||
Shareholders’ equity: | |||||||
Common stock | 7 | 7 | |||||
Additional paid-in-capital | 542,022 | 526,173 | |||||
Treasury stock, at cost | (116,083 | ) | (3,921 | ) | |||
Retained earnings | 724,354 | 481,534 | |||||
Accumulated other comprehensive loss | (1,627 | ) | (718 | ) | |||
Total shareholders’ equity | 1,148,673 | 1,003,075 | |||||
Total liabilities and shareholders’ equity | $ | 2,276,922 | $ | 1,602,396 |
Nine Months Ended September 30, | |||||||
2015 | 2014 | ||||||
Operating activities: | |||||||
Net income | $ | 242,820 | $ | 169,555 | |||
Adjustments to reconcile net income to net cash provided by operations: | |||||||
Unrealized (gains) losses on open fuel derivative contracts, net | 2,239 | — | |||||
Equity-based compensation, net | 6,999 | 6,315 | |||||
Allowance for doubtful accounts (recoveries) | 7 | (63 | ) | ||||
Amortization of deferred gains and losses | 730 | (228 | ) | ||||
Depreciation and amortization | 51,630 | 33,803 | |||||
Deferred income tax expense (benefit) | 63,960 | (395 | ) | ||||
Loss on disposal of assets | 1,300 | 1,658 | |||||
Capitalized interest | (8,392 | ) | (1,088 | ) | |||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | (10,374 | ) | (3,206 | ) | |||
Prepaid maintenance reserves | (17,488 | ) | (28,955 | ) | |||
Long-term deposits and other assets | (44,294 | ) | (36,449 | ) | |||
Accounts payable | 2,340 | (5,524 | ) | ||||
Air traffic liability | 56,960 | 48,736 | |||||
Other liabilities | 17,845 | 22,136 | |||||
Net cash provided by operating activities | 366,282 | 206,295 | |||||
Investing activities: | |||||||
Pre-delivery deposits for flight equipment, net of refunds | (87,658 | ) | (115,955 | ) | |||
Purchase of property and equipment | (451,799 | ) | (26,261 | ) | |||
Net cash used in investing activities | (539,457 | ) | (142,216 | ) | |||
Financing activities: | |||||||
Proceeds from issuance of long-term debt | 416,000 | — | |||||
Proceeds from stock options exercised | 32 | 140 | |||||
Payments on debt and capital lease obligations | (16,609 | ) | (922 | ) | |||
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 | 8,818 | 1,690 | |||||
Repurchase of common stock | (112,162 | ) | (1,501 | ) | |||
Debt issuance costs | (14,092 | ) | — | ||||
Net cash provided by financing activities | 289,287 | (6,236 | ) | ||||
Net increase in cash and cash equivalents | 116,112 | 57,843 | |||||
Cash and cash equivalents at beginning of period | 632,784 | 530,631 | |||||
Cash and cash equivalents at end of period | $ | 748,896 | $ | 588,474 | |||
Supplemental disclosures | |||||||
Cash payments for: | |||||||
Interest (net of capitalized interest) | $ | 3,851 | $ | 398 | |||
Taxes | $ | 95,135 | $ | 88,884 |
Three Months Ended September 30, | ||||||||
Operating Statistics | 2015 | 2014 | Change | |||||
Available seat miles (ASMs) (thousands) | 5,597,997 | 4,174,397 | 34.1 | % | ||||
Revenue passenger miles (RPMs) (thousands) | 4,768,692 | 3,656,842 | 30.4 | % | ||||
Load factor (%) | 85.2 | 87.6 | (2.4) pts | |||||
Passenger flight segments (thousands) | 4,776 | 3,752 | 27.3 | % | ||||
Block hours | 88,045 | 67,704 | 30.0 | % | ||||
Departures | 34,032 | 26,513 | 28.4 | % | ||||
Operating revenue per ASM (RASM) (cents) | 10.27 | 12.45 | (17.5 | )% | ||||
Average yield (cents) | 12.05 | 14.21 | (15.2 | )% | ||||
Average ticket revenue per passenger flight segment ($) | 66.96 | 84.50 | (20.8 | )% | ||||
Average non-ticket revenue per passenger flight segment ($) | 53.39 | 54.04 | (1.2 | )% | ||||
Total revenue per passenger flight segment ($) | 120.35 | 138.54 | (13.1 | )% | ||||
CASM (cents) | 7.46 | 10.05 | (25.8 | )% | ||||
Adjusted CASM (cents) (1) | 7.45 | 9.80 | (24.0 | )% | ||||
Adjusted CASM ex-fuel (cents) (2) | 5.39 | 5.92 | (9.0)% | |||||
Fuel gallons consumed (thousands) | 67,684 | 51,688 | 30.9 | % | ||||
Average economic fuel cost per gallon ($) | 1.71 | 3.13 | (45.4 | )% | ||||
Aircraft at end of period | 76 | 58 | 31.0 | % | ||||
Average daily aircraft utilization (hours) | 12.8 | 12.7 | 0.8% | |||||
Average stage length (miles) | 983 | 964 | 2.0 | % | ||||
Airports served in the period | 56 | 55 | 1.8% |
Nine Months Ended September 30, | ||||||||
Operating Statistics | 2015 | 2014 | Change | |||||
Available seat miles (ASMs) (thousands) | 15,540,759 | 11,967,631 | 29.9 | % | ||||
Revenue passenger miles (RPMs) (thousands) | 13,267,314 | 10,452,588 | 26.9 | % | ||||
Load factor (%) | 85.4 | 87.3 | (1.9 | ) pts | ||||
Passenger flight segments (thousands) | 13,271 | 10,584 | 25.4 | % | ||||
Block hours | 248,941 | 196,574 | 26.6 | % | ||||
Departures | 95,240 | 75,427 | 26.3 | % | ||||
Operating revenue per ASM (RASM) (cents) | 10.43 | 12.18 | (14.4 | )% | ||||
Average yield (cents) | 12.22 | 13.94 | (12.3 | )% | ||||
Average ticket revenue per passenger flight segment ($) | 67.96 | 82.52 | (17.6 | )% | ||||
Average non-ticket revenue per passenger flight segment ($) | 54.24 | 55.15 | (1.7 | )% | ||||
Total revenue per passenger flight segment ($) | 122.20 | 137.67 | (11.2 | )% | ||||
CASM (cents) | 7.93 | 9.96 | (20.4 | )% | ||||
Adjusted CASM (cents) (1) | 7.93 | 9.86 | (19.6 | )% | ||||
Adjusted CASM ex-fuel (cents) (2) | 5.63 | 5.98 | (5.9 | )% | ||||
Fuel gallons consumed (thousands) | 187,541 | 147,766 | 26.9 | % | ||||
Average economic fuel cost per gallon ($) | 1.91 | 3.15 | (39.4 | )% | ||||
Average daily aircraft utilization (hours) | 12.8 | 12.7 | 0.8% | |||||
Average stage length (miles) | 982 | 979 | 0.3 | % |
(1) | Excludes special items. |
(2) | Excludes economic fuel expense and special items. |
Three Months Ended | |||||||
September 30, | |||||||
(in thousands) | 2015 | 2014 | |||||
Operating special items include the following (1): | |||||||
Prior years' additional federal excise tax | $ | — | $ | 9,278 | |||
Unrealized losses (gains) related to fuel derivative contracts | $ | 82 | $ | 295 | |||
Loss on disposal of assets | 290 | 793 | |||||
Special charges | (76 | ) | 18 | ||||
Total operating special items | $ | 296 | $ | 10,384 |
Three Months Ended | |||||||
September 30, | |||||||
(in thousands, except CASM data in cents) | 2015 | 2014 | |||||
Total operating expenses, as reported | $ | 417,622 | $ | 419,578 | |||
Less operating special items (1) | 296 | 10,384 | |||||
Adjusted operating expenses, non-GAAP (2) | 417,326 | 409,194 | |||||
Less: Economic fuel expense | 115,817 | 162,011 | |||||
Adjusted operating expenses excluding fuel, non-GAAP (3) | $ | 301,509 | $ | 247,183 | |||
Available seat miles | 5,597,997 | 4,174,397 | |||||
CASM (cents) | 7.46 | 10.05 | |||||
Adjusted CASM (cents) (2) | 7.45 | 9.80 | |||||
Adjusted CASM ex-fuel (cents) (3) | 5.39 | 5.92 |
(1) | Special items include additional federal excise tax on a minority of fuel volume for the period beginning July 1, 2009 through December 31, 2013, unrealized gains and losses related to mark-to-market adjustments to outstanding fuel derivative contracts, loss on disposal of assets, and special charges. |
(2) | Excludes operating special items. |
(3) | 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 | |||||||
September 30, | |||||||
(in thousands, except per share data) | 2015 | 2014 | |||||
Net income, as reported | $ | 97,114 | $ | 67,000 | |||
Add: Provision for income taxes | 57,251 | 33,194 | |||||
Income before income taxes, as reported | 154,365 | 100,194 | |||||
Pre-tax margin, GAAP | 26.9 | % | 19.3 | % | |||
Add operating special items (1) | 296 | 10,384 | |||||
Income before income taxes, non-GAAP (2) | 154,661 | 110,578 | |||||
Adjusted pre-tax margin, non-GAAP (2) | 26.9 | % | 21.3 | % | |||
Provision for income taxes (3) | 57,361 | 36,634 | |||||
Adjusted net income, non-GAAP (2) | $ | 97,300 | $ | 73,944 | |||
Weighted average shares, diluted | 71,920 | 73,303 | |||||
Adjusted net income per share, diluted (2)(3) | $1.35 | $1.01 |
Three Months Ended | |||||||
September 30, | |||||||
(in thousands) | 2015 | 2014 | |||||
Operating income, as reported | $ | 157,219 | $ | 100,191 | |||
Operating margin, GAAP | 27.3 | % | 19.3 | % | |||
Add operating special items (1) | 296 | 10,384 | |||||
Operating income, non-GAAP (2) | $ | 157,515 | $ | 110,575 | |||
Operating margin (2) | 27.4 | % | 21.3 | % |
(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. |
Three Months Ended | |||||||
September 30, | |||||||
(in thousands, except per gallon data) | 2015 | 2014 | |||||
Fuel expense | |||||||
Aircraft fuel, as reported | $ | 115,899 | $ | 171,584 | |||
Less: | |||||||
Prior years' additional federal excise tax | — | 9,278 | |||||
Unrealized losses (gains) related to fuel derivative contracts | 82 | 295 | |||||
Economic fuel expense, non-GAAP | $ | 115,817 | $ | 162,011 | |||
Fuel gallons consumed | 67,684 | 51,688 | |||||
Economic fuel cost per gallon, non-GAAP | $ | 1.71 | $ | 3.13 |
Twelve Months Ended | |||
(in thousands) | September 30, 2015 | ||
Operating Income | $ | 478,760 | |
Add operating special items (1) | 4,550 | ||
Adjustment for aircraft rent | 210,649 | ||
Adjusted operating income (2) | 693,959 | ||
Tax (36.9%) (3) | 256,071 | ||
Adjusted operating income, after-tax | 437,888 | ||
Invested Capital | |||
Total debt | $ | 537,905 | |
Book equity | 1,148,673 | ||
Less: Unrestricted cash | 748,896 | ||
Add: Capitalized aircraft operating leases (7x Aircraft Rent) | 1,474,543 | ||
Total invested capital | 2,412,225 | ||
Return on invested capital (ROIC), pre-tax (2) | 28.8 | % | |
Return on invested capital (ROIC), after-tax (2)(3) | 18.2 | % |
(1) | Special items include unrealized gains or losses related to fuel derivative contracts, loss on disposal of assets, and special charges (credits). |
(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 September 30, 2015. |
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