EX-99.1 2 earningsrelease1q19.htm EARNINGS RELEASE 1Q19 Exhibit


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EXHIBIT 99.1

Spirit Airlines Reports First Quarter 2019 Results

MIRAMAR, Fla., April 24, 2019 - Spirit Airlines, Inc. (NYSE: SAVE) today reported first quarter 2019 financial results.
 
First Quarter 2019
 
First Quarter 2018
 
As Reported
 
Adjusted
 
As Reported
 
Adjusted
 
(GAAP)
 
(non-GAAP)1
 
(GAAP)
 
(non-GAAP)1
Revenue
$855.8 million
 
$855.8 million
 
$704.1 million
 
$704.1 million
Operating Income (loss)
$87.8 million
 
$89.7 million
 
$(38.8) million
 
$51.2 million
Operating Margin
10.3%
 
10.5%
 
(5.5)%
 
7.3%
Net Income (loss)
$56.1 million
 
$57.5 million
 
$(44.9) million
 
$29.9 million
Diluted EPS
$0.82
 
$0.84
 
$(0.66)
 
$0.44
“Solid execution of our revenue initiatives and strong underlying demand trends drove adjusted diluted earnings per share growth of over 90 percent1 for the first quarter 2019 compared to the first quarter last year. On capacity growth of 16.9 percent year over year, for the first quarter 2019, the team delivered a total revenue per available seat mile increase of 4.1 percent driven by improvements in both ticket and non-ticket yields.  We also ran a great operation during the quarter, improving our completion factor by 70 basis points to 98.9 percent despite more weather disruptions than the year prior and delivering an on-time performance of 82.6 percent2, which was among the best in the industry,” said Ted Christie, Spirit’s President and Chief Executive Officer.

Revenue Performance
For the first quarter 2019, Spirit's total operating revenue was $855.8 million, an increase of 21.5 percent compared to the first quarter 2018, driven by a 16.0 percent increase in flight volume and increases in both passenger yields and load factor.

Total operating revenue per available seat mile ("TRASM") for the first quarter 2019 increased 4.1 percent compared to the same period last year. During the first quarter 2019, the Company's results continued to benefit from its ticket and non-ticket revenue initiatives.

On a per passenger flight segment basis, total revenue for the first quarter 2019 increased 1.6 percent year over year to $109.44 with fare revenue per passenger flight segment increasing 1.6 percent to $53.24 and non-ticket revenue per passenger flight segment increasing 1.6 percent to $56.203. The improvement in non-ticket revenue per passenger segment year over year was largely driven by dynamic pricing initiatives and improved take rates of bundled service offerings.

Cost Performance
For the first quarter 2019, total GAAP operating expenses increased 3.4 percent year over year to $768.0 million. Adjusted operating expenses for the first quarter 2019 increased 17.3 percent year over year to $766.1 million4. Drivers of the increase in adjusted operating expense compared to the first quarter last year include higher flight volume, contracted pilot rate increases, airport rent and landing fee escalations, and higher depreciation expense.  On a GAAP basis, these increases were largely offset by lower special charges year over year.

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Aircraft fuel expense increased in the first quarter 2019 by 12.2 percent year over year, due to a 15.6 percent increase in fuel gallons consumed.
 
Spirit reported first quarter 2019 cost per available seat mile ("ASM"), excluding special items and fuel (“Adjusted CASM ex-fuel”), of 5.46 cents4, an increase of 2.4 percent compared to the same period last year, primarily due to higher salaries, wages and benefits per ASM, largely driven by contracted rate increases pilots received effective March 1, 2018. This increase was partially offset by lower aircraft rent per ASM and better operational performance.

“Strong revenue performance coupled with solid cost control helped produce a 320 basis point improvement in our adjusted operating margin for the first quarter 2019,” said Scott Haralson, Spirit’s Chief Financial Officer.  “We are continuing to capture the benefits of the hard work and dedication by all our team members to profitably grow our business, improve our brand image, execute on our plan to drive revenue improvement, and maintain an industry-leading cost position.  We are committed to keeping this momentum going and delivering strong returns for our shareholders.”

Liquidity
Spirit ended the first quarter 2019 with unrestricted cash, cash equivalents, and short-term investments of $1.2 billion. Spirit generated $205.2 million of operating cash flow and ended first quarter 2019 with adjusted free cash flow of $163.8 million5.

Fleet
Spirit took delivery of five new aircraft (one A320ceo and four A320neo) during the first quarter 2019, ending the quarter with 133 aircraft in its fleet.

Network
During the quarter, Spirit continued its goal to broaden and diversify its network with new service from Austin and Indianapolis primarily to large leisure destinations.  Spirit also added new service between existing destinations, bringing its operation to over 600 daily flights to 75 destinations in the U.S., Latin America, and the Caribbean.

Conference Call/Webcast Detail
Spirit will conduct a conference call to discuss these results tomorrow, April 25, 2019, at 9:30 a.m. ET. A live audio webcast of the conference call will be available to the public on a listen-only basis at http://ir.spirit.com. An archive of the webcast will be available under Webcasts & Presentations for 60 days.

About Spirit Airlines:
Spirit Airlines (NYSE: SAVE) is committed to delivering the best value in the sky while providing an exceptional Guest experience.  We are the leader in providing customizable travel options starting with an unbundled fare.  This allows every Guest to pay only for the options they choose - like bags, seat assignments, and refreshments - something we call Á La Smarte.  We make it possible for our Guests to venture further, travel more often, and discover more than ever before.  Our Fit Fleet® is one of the youngest and most fuel-efficient in the U.S.  We operate more than 600 daily flights to 75 destinations in the U.S., Latin America, and the Caribbean, and are dedicated to giving back and improving the communities we serve.  Come save with us at www.spirit.com.  At Spirit Airlines, we go.  We go for you.

Investors are encouraged to read the Company's periodic and current reports filed with or furnished to the Securities and Exchange Commission, including its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, for additional information regarding the Company.

End Notes
(1) See "Reconciliation of Adjusted Net Income, Adjusted Pre-tax Income, and Adjusted Operating Income to GAAP Net Income" table below for more details.
(2) Preliminary data using DOT A:14 methodology.


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(3) See "Calculation of Total Non-ticket Revenue per Passenger Segment" table below for more details.
(4) See "Reconciliation of Adjusted Operating Expense to GAAP Operating Expense" table below for more details.
(5) See "Reconciliation of Adjusted Free Cash Flow to GAAP Net Operating Cash Flow" table below for more details.

Forward-Looking Statements
Statements in this release and certain oral statements made from time to time by representatives of the Company contain various forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which are subject to the “safe harbor” created by those sections. Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available to our management. All statements other than statements of historical facts are “forward-looking statements” for purposes of these provisions. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “project,” “predict,” “potential,” and similar expressions intended to identify forward-looking statements. Such forward-looking statements are subject to risks, uncertainties and other important factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. Furthermore, such forward-looking statements speak only as of the date of this release. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements. Risks or uncertainties (i) that are not currently known to us, (ii) that we currently deem to be immaterial, or (iii) that could apply to any company, could also materially adversely affect our business, financial condition, or future results. References in this report to “Spirit,” “we,” “us,” “our,” or the “Company” shall mean Spirit Airlines, Inc., unless the context indicates otherwise. Additional information concerning certain factors is contained in the Company's Securities and Exchange Commission filings, including but not limited to the Company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K.


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SPIRIT AIRLINES, INC.
Condensed Statement of Operations
(unaudited, in thousands, except per-share amounts)


 
Three Months Ended
 
 
 
March 31,
 
Percent

2019

2018
 
Change
Operating revenues:
 
 
 
 

Passenger
$
838,065

 
$
689,141

 
21.6

Other
17,731

 
14,997

 
18.2

Total operating revenues
855,796

 
704,138

 
21.5

 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
Aircraft fuel
229,636

 
204,646

 
12.2

Salaries, wages and benefits
203,901

 
155,096

 
31.5

Landing fees and other rents
59,649

 
49,630

 
20.2

Aircraft rent
45,782

 
50,191

 
(8.8
)
Depreciation and amortization
50,726

 
39,373

 
28.8

Distribution
35,719

 
30,631

 
16.6

Maintenance, materials and repairs
31,604

 
29,710

 
6.4

Special charges
—

 
89,168

 
nm

Loss on disposal of assets
1,913

 
848

 
nm

Other operating
109,062

 
93,642

 
16.5

Total operating expenses
767,992

 
742,935

 
3.4

 
 
 
 
 
 
Operating income (loss)
87,804

 
(38,797
)
 
326.3

 
 
 
 
 
 
Other (income) expense:
 
 
 
 
 
Interest expense
24,971

 
17,849

 
39.9

Capitalized interest
(2,557
)
 
(2,252
)
 
13.5

Interest income
(6,924
)
 
(4,066
)
 
70.3

Other expense
233

 
133

 
nm

Special charges, non-operating
—

 
9,201

 
nm

Total other (income) expense
15,723

 
20,865

 
(24.6
)
 
 
 
 
 
 
 
 
 
 
 
 
Income (loss) before income taxes
72,081

 
(59,662
)
 
220.8

Provision (benefit) for income taxes
16,005

 
(14,740
)
 
208.6

 
 
 
 
 
 
Net income (loss)
$
56,076

 
$
(44,922
)
 
224.8

Basic earnings (loss) per share
$
0.82

 
$
(0.66
)
 
224.2

Diluted earnings (loss) per share
$
0.82

 
$
(0.66
)
 
224.2


 
 
 
 
 
Weighted average shares, basic
68,380

 
68,222

 
0.2

Weighted average shares, diluted
68,516

 
68,222

 
0.4


 



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SPIRIT AIRLINES, INC.
Condensed Statements of Comprehensive Income (Loss)
(unaudited, in thousands)

 
Three Months Ended
 
March 31,
 
2019
 
2018
Net income (loss)
$
56,076

 
$
(44,922
)
Unrealized gain (loss) on short-term investment securities, net of deferred taxes of $39 and ($8)
130

 
(23
)
Interest rate derivative loss reclassified into earnings, net of taxes of $27 and $21
47

 
58

Other comprehensive income
$
177

 
$
35

Comprehensive income (loss)
$
56,253

 
$
(44,887
)


































 
 
 
 


 
 
 
 



 



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SPIRIT AIRLINES, INC.
Selected Operating Statistics
(unaudited)
 
Three Months Ended March 31,

 
Operating Statistics
2019

2018

Change
Available seat miles (ASMs) (thousands)
9,829,044


8,408,764


16.9
 %
Revenue passenger miles (RPMs) (thousands)
8,133,030


6,813,519


19.4
 %
Load factor (%)
82.7


81.0


1.7
  pts
Passenger flight segments (thousands)
7,820


6,537


19.6
 %
Block hours
143,429


122,954


16.7
 %
Departures
52,175


44,982


16.0
 %
Total operating revenue per ASM (TRASM) (cents)
8.71


8.37


4.1
 %
Average yield (cents)
10.52


10.33


1.8
 %
Fare revenue per passenger flight segment ($)
53.24


52.42


1.6
 %
Non-ticket revenue per passenger flight segment ($)
56.20


55.29


1.6
 %
Total revenue per passenger flight segment ($)
109.44


107.71


1.6
 %
CASM (cents)
7.81


8.84


(11.7
)%
Adjusted CASM (cents) (1)
7.79


7.76


0.4
 %
Adjusted CASM ex-fuel (cents) (2)
5.46


5.33


2.4
 %
Fuel gallons consumed (thousands)
109,828


95,003


15.6
 %
Average economic fuel cost per gallon ($)
2.09


2.15


(2.8
)%
Aircraft at end of period
133


118


12.7
 %
Average daily aircraft utilization (hours)
12.2


12.0


1.7
 %
Average stage length (miles)
1,029


1,025


0.4
 %
 
 
 
 
 
 

(1)
Excludes operating special items.
(2)
Excludes economic fuel expense and operating special items.
















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The Company is providing a reconciliation of GAAP financial information to non-GAAP financial information as it believes that non-GAAP financial measures provide management and investors the ability to measure the performance of the Company on a consistent basis. These non-GAAP financial measures have limitations as analytical tools. Because of these limitations, determinations of the Company's operating performance excluding unrealized gains and losses or special items should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. These non-GAAP financial measures may be presented on a different basis than other companies using similarly titled non-GAAP financial measures.
Calculation of Total Non-Ticket Revenue per Passenger Segment
(unaudited)

 
Three Months Ended
 
March 31,
(in thousands, except per segment data)
2019
 
2018
Operating revenues
 
 
 
Fare
$
416,345

 
$
342,695

Non-fare
421,720

 
346,446

Total passenger revenues
838,065

 
689,141

Other revenues
17,731

 
14,997

Total operating revenues
$
855,796

 
$
704,138

 
 
 
 
Non-ticket revenues (1)
$
439,451

 
$
361,443

 
 
 
 
Passenger segments
7,820

 
6,537

 
 
 
 
Non-ticket revenue per passenger segment ($)
$
56.20

 
$
55.29



(1)
Non-ticket revenues equals the sum of non-fare passenger revenues and other revenues.


Special Items
(unaudited)

 
Three Months Ended
 
March 31,
(in thousands)
2019
 
2018
Operating special items include the following:
 
 
 
Loss on disposal of assets
1,913

 
848

Operating special charges (1)
—

 
89,168

Total operating special items
$
1,913

 
$
90,016

Non-operating special items include the following:
 
 
 
Non-operating special charges (2)
—

 
9,201

Total non-operating special items
$
—

 
$
9,201

 
 
 
 
Total special items
$
1,913

 
$
99,217



(1)
Operating special charges for the first quarter of 2018 consisted of $89.2 million recognized in connection with the new pilot agreement approved in February 2018. The total amount includes a one-time $80.7 million ratification incentive bonus, including payroll taxes, and a $8.5 million adjustment related to other contractual provisions. 
(2)
Non-operating special charges for the first quarter 2018 are related to the purchase of 14 A319-100 aircraft.  The contract was deemed a lease modification which resulted in a change of classification from operating leases to finance leases for the 14 aircraft.



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Reconciliation of Adjusted Operating Expense to GAAP Operating Expense
(unaudited)
 
Three Months Ended

March 31,
(in thousands, except CASM data in cents)
2019

2018
Total operating expenses, as reported
$
767,992

 
$
742,935

Less operating special items
1,913

 
90,016

Adjusted operating expenses, non-GAAP (1)
766,079

 
652,919

Less: Economic fuel expense
229,636

 
204,646

Adjusted operating expenses excluding fuel, non-GAAP (2)
$
536,443

 
$
448,273


 
 
 
Available seat miles
9,829,044

 
8,408,764


 
 
 
CASM (cents)
7.81

 
8.84

Adjusted CASM (cents) (1)
7.79

 
7.76

Adjusted CASM ex-fuel (cents) (2)
5.46

 
5.33


(1)
Excludes operating special items.
(2)
Excludes operating special items and economic fuel expense.


Reconciliation of Adjusted Net Income, Adjusted Pre-Tax Income, and Adjusted Operating Income to GAAP Net Income
(unaudited)
 
Three Months Ended
 
March 31,
(in thousands, except per share data)
2019
 
2018
Net income, as reported
$
56,076

 
$
(44,922
)
Add: Provision (benefit) for income taxes
16,005

 
(14,740
)
Income (loss) before income taxes, as reported
72,081

 
(59,662
)
Pre-tax margin
8.4
%
 
(8.5
)%
Add special items (1)
$
1,913

 
$
99,217

Adjusted income before income taxes, non-GAAP (2)
73,994

 
39,555

Adjusted pre-tax margin, non-GAAP (2)
8.6
%
 
5.6
 %
Add: Total other (income) expense (3)
15,723

 
11,664

Adjusted operating income, non-GAAP (4)
89,717

 
51,219

Adjusted operating margin, non-GAAP (4)
10.5
%
 
7.3
 %
 
 
 
 
Provision for income taxes
16,464

 
9,612

Adjusted net income, non-GAAP (2)
$
57,530

 
$
29,943

 
 
 
 
Weighted average shares, diluted
68,516

 
68,222

 
 
 
 
Adjusted net income per share, diluted (2)
$0.84
 
$0.44
 
 
 
 
Total operating revenues
$
855,796

 
$
704,138


(1)
See "Special Items" for more details.
(2)
Excludes operating and non-operating special items.
(3)
Excludes non-operating special items.
(4)
Excludes operating special items.

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As most of the Company’s capital expenditures are related to acquiring assets to grow the business, the Company believes it is beneficial for investors to use Adjusted Free Cash Flow to asses whether the Company has sufficient liquidity.  Adjusted Free Cash Flow adjusts for Purchase of property and equipment, Pre-delivery deposits on flight equipment, net of refunds, and Proceeds from issuance of long-term debt to provide a consistent view of the Company’s liquidity regardless of how the Company chooses to finance aircraft required for growth.  Management believes investors should have a metric to assess the Company’s liquidity on a consistent basis regardless of how the Company chooses to finance assets used for growth.

Reconciliation of Adjusted Free Cash Flow to GAAP Net Operating Cash Flow
(unaudited)

 
Three Months Ended March 31,
(in thousands)
2019
 
2018
Net cash provided by operating activities
$
205,151

 
$
171,135

Less:
 
 
 
Purchase of property and equipment(1)
63,109

 
237,221

Pre-delivery deposits on flight equipment, net of refunds(1)
37,913

 
41,580

Add: Proceeds from issuance of long-term debt(2)
59,706

 
227,128

Adjusted free cash flow
$
163,835

 
$
119,462

 
 
 
 
Net cash used in investing activities
(103,951
)
 
(280,650
)
Net cash provided by financing activities
16,206

 
207,123

 
 
 
 
Net increase in cash and cash equivalents
117,406

 
97,608



(1)
Included within net cash used in investing activities in the Company's Condensed Statements of Cash Flows.
(2)
Included within net cash provided by financing activities in the Company's Condensed Statements of Cash Flows.


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