Sun Country Airlines Reports Third Quarter 2023 Results
- Sun Country Airlines reported a 12.3% increase in total operating revenue for the third quarter of 2023 compared to the same period in 2022, with a 23.5% increase in operating income and a 28.9% decrease in net income. Adjusted operating income increased by 26.2% and adjusted diluted earnings per share increased by 16.7% year-over-year. The company also announced an additional $25 million for share repurchases and extended its schedule through September 10, 2024, with new seasonal nonstop routes and new flying to Canada.
- Sun Country's revenue growth across scheduled service, charter, and cargo businesses, and the authorization of additional funds for share repurchases indicate positive financial performance and confidence in future prospects.
- None.
Revenue of
GAAP diluted EPS of
Adj. diluted EPS(2) of
MINNEAPOLIS, Nov. 07, 2023 (GLOBE NEWSWIRE) -- Sun Country Airlines Holdings, Inc. (“Sun Country Airlines,” “Sun Country,” the “Company”) (NASDAQ: SNCY) today reported financial results for its third quarter ended September 30, 2023.
“Sun Country’s diversified business model continued to deliver strong results in the third quarter, as evidenced by our strong GAAP operating results and our third consecutive quarter of year over year improvement in adjusted operating margin, adjusted pre-tax margin and adjusted earnings per share,” said Jude Bricker, Chief Executive Officer of Sun Country. “Total revenue was up by
Overview of Third Quarter
Three Months Ended September 30, | ||||||
(unaudited) (in millions, except per share amounts) | 2023 | 2022 | % Change | |||
Total Operating Revenue | $ | 248.9 | $ | 221.7 | 12.3 | |
Operating Income | 19.0 | 15.4 | 23.5 | |||
Income Before Income Tax | 10.1 | 12.9 | (22.1 | ) | ||
Net Income | 7.6 | 10.7 | (28.9 | ) | ||
Diluted earnings per share | $ | 0.13 | $ | 0.18 | (27.8 | ) |
Three Months Ended September 30, | |||||
(unaudited) (in millions, except per share amounts) | 2023 | 2022 | % Change | ||
Adjusted Operating Income (2) | $ | 20.0 | $ | 15.9 | 26.2 |
Adjusted Income Before Income Tax (2) | 11.1 | 9.7 | 14.8 | ||
Adjusted Net Income (2) | 8.4 | 7.4 | 13.9 | ||
Adjusted diluted earnings per share (2) | $ | 0.14 | $ | 0.12 | 16.7 |
Nine Months Ended September 30, | |||||
(unaudited) (in millions, except per share amounts) | 2023 | 2022 | % Change | ||
Total Operating Revenue | $ | 804.1 | $ | 667.3 | 20.5 |
Operating Income | 110.4 | 40.6 | 171.9 | ||
Income Before Income Tax | 86.5 | 14.5 | 496.3 | ||
Net Income | 66.5 | 10.4 | 540.3 | ||
Diluted earnings per share | $ | 1.12 | $ | 0.17 | 558.8 |
Nine Months Ended September 30, | |||||
(unaudited) (in millions, except per share amounts) | 2023 | 2022 | % Change | ||
Adjusted Operating Income (2) | $ | 118.5 | $ | 42.6 | 178.4 |
Adjusted Income Before Income Tax (2) | 94.9 | 22.7 | 317.7 | ||
Adjusted Net Income (2) | 72.9 | 17.9 | 308.1 | ||
Adjusted diluted earnings per share (2) | $ | 1.23 | $ | 0.29 | 322.5 |
For the quarter ended September 30, 2023, Sun Country reported net income of
“For the fourth consecutive quarter, we have seen year-over-year revenue growth across our scheduled service, charter and cargo businesses,” said Dave Davis, President and Chief Financial Officer. “Year-to-date, we have continued to see unit revenue strength with scheduled service TRASM(3) up
Notable Highlights
- Announced the extension of our schedule through September 10, 2024 including eight new domestic seasonal nonstop routes from Minneapolis and new flying to Montreal and Toronto Canada (pending final approval from the Canadian airports).
- The Company repurchased 2.1 million shares at an average price of
$15.30 during the third quarter. The board of directors approved an additional$25 million of buyback authority which brings the current repurchase authorization to$25 million .
Capacity
System block hours flown during the third quarter of 2023 grew by
Charter block hours under long-term contracts comprised
Revenue
For the third quarter of 2023, the Company reported total revenue of
In the third quarter of 2023, cargo revenue was
Cost
For the third quarter of 2023, total GAAP operating expenses increased
Balance Sheet and Liquidity
Total liquidity(6) was
(in millions - amounts may not recalculate due to rounding) | September 30, 2023 | December 31, 2022 | |||
(Unaudited) | |||||
Cash and Cash Equivalents | $ | 27.0 | $ | 92.1 | |
Available-for-Sale Securities | 146.5 | 172.6 | |||
Amount Available Under Revolving Credit Facility | 24.7 | 24.7 | |||
Total Liquidity | $ | 198.1 | $ | 289.4 | |
(in millions - amounts may not recalculate due to rounding) | September 30, 2023 | December 31, 2022 | |||
(Unaudited) | |||||
Total Debt, net | $ | 435.1 | $ | 352.2 | |
Finance Lease Obligations | 263.3 | 251.3 | |||
Operating Lease Obligations | 19.4 | 26.1 | |||
Total Debt, net, and Lease Obligations | 717.8 | 629.6 | |||
Cash and Cash Equivalents | 27.0 | 92.1 | |||
Available-for-Sale Securities | 146.5 | 172.6 | |||
Net Debt | $ | 544.3 | $ | 364.9 | |
Fleet
As of September 30, 2023, the Company had 42 aircraft in its passenger service fleet, operated 12 freighter aircraft in its cargo operation, and had five aircraft held for operating lease.
Guidance for Fourth Quarter 2023
Q4 2023 | H/(L) vs Q4 2022 | ||||
Total revenue - millions | |||||
Economic fuel cost per gallon | ( | ||||
Operating income margin - percentage | (4pp) to (2pp) | ||||
Effective tax rate | |||||
Total system block hours - thousands | 36 to 37 | ||||
Conference Call & Webcast Details
Sun Country Airlines will host a conference call to discuss its third quarter 2023 results at 4:30 p.m. Eastern Time on Tuesday, November 7, 2023. A live broadcast of the conference call will be available via the investor relations section of Sun Country Airlines’ website at https://ir.suncountry.com/news-events/events-and-presentations. The online replay will be available on the same website approximately one hour after the call.
About Sun Country Airlines
Sun Country Airlines is a new breed of hybrid low-cost air carrier that dynamically deploys shared resources across our synergistic scheduled service, charter and cargo businesses. Based in Minnesota, we focus on serving leisure and visiting friends and relatives ("VFR") passengers and charter customers and providing cargo services, with flights throughout the United States and to destinations in Mexico, Central America, Canada, and the Caribbean.
End Notes
1 - | Records begin in January 2017 |
2 - | See additional details, including reconciliations to the most comparable GAAP measures, in the section titled “Non-GAAP financial measures” |
3 - | Scheduled Service TRASM includes Schedule Service revenue, Ancillary revenue, and ASM generating revenue classified within Other Revenue on the Condensed Consolidated Statement of Operations / Scheduled Service ASMs. Other Revenue includes rental revenue of approximately |
4 - | There can be no assurance that projections or estimates of future performance will be realized |
5 - | Adjusted CASM is a non-GAAP measure derived from CASM by excluding fuel costs, non-cash management stock compensation expense, costs arising from its cargo operations, depreciation recognized on our aircraft and flight equipment held for operating lease, certain commissions, and other costs of selling its vacations product from this measure. See table titled “Reconciliation of CASM to Adjusted CASM” |
6 - | Total liquidity = cash and cash equivalents + available-for-sale securities + amount available under revolver |
7 - | Net debt = current portion of long-term debt + long-term debt + finance lease obligations + operating lease obligations – cash and cash equivalents - available-for-sale securities |
Forward Looking Statements
This press release contains forward-looking statements, which involve risks and uncertainties. These forward-looking statements are generally identified by the use of forward-looking terminology, including the terms “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “likely,” “may,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “target,” “will,” “would” and, in each case, their negative or other various or comparable terminology. All statements other than statements of historical facts contained in this press release, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans, objectives of management, and expected market growth are forward-looking statements. The forward-looking statements are relating to:
• our strategy, outlook and growth prospects;
• our operational and financial targets and dividend policy;
• general economic trends and trends in the industry and markets;
• potential repurchases of our common stock; and
• the competitive environment in which we operate.
These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements.
These forward-looking statements reflect our views with respect to future events as of the date of this press release and are based on assumptions and subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking statements. These forward-looking statements represent our estimates and assumptions only as of the date of this press release and, except as required by law, we undertake no obligation to update or review publicly any forward-looking statements, whether as a result of new information, future events or otherwise after the date of this press release. We anticipate that subsequent events and developments will cause our views to change. You should read this press release completely and with the understanding that our actual future results may be materially different from what we expect. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments we may undertake. We qualify all of our forward-looking statements by these cautionary statements. 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 Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K.
Non-GAAP Financial Measures
We sometimes use information that is derived from the Condensed Consolidated Financial Statements, but that is not presented in accordance with GAAP. We believe these non-GAAP measures provide a meaningful comparison of our results to others in the airline industry and our prior year results. Investors should consider these non-GAAP financial measures in addition to, and not as a substitute for, our financial performance measures prepared in accordance with GAAP. Further, our non-GAAP information may be different from the non-GAAP information provided by other companies. We believe certain charges included in our operating expenses on a GAAP basis make it difficult to compare our current period results to prior periods as well as future periods and guidance. The tables below show a reconciliation of non-GAAP financial measures used in this document to the most directly comparable GAAP financial measures.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except per share amounts) (Unaudited) |
Three Months Ended September 30, | ||||||||||
2023 | 2022 | % Change | ||||||||
Operating Revenues: | ||||||||||
Scheduled Service | $ | 96,483 | $ | 102,200 | (5.6 | ) | ||||
Charter Service | 47,437 | 42,899 | 10.6 | |||||||
Ancillary | 70,435 | 50,261 | 40.1 | |||||||
Passenger | 214,355 | 195,360 | 9.7 | |||||||
Cargo | 26,059 | 23,687 | 10.0 | |||||||
Other | 8,462 | 2,653 | 219.0 | |||||||
Total Operating Revenue | 248,876 | 221,700 | 12.3 | |||||||
Operating Expenses: | ||||||||||
Aircraft Fuel | 61,179 | 64,843 | (5.7 | ) | ||||||
Salaries, Wages, and Benefits | 72,541 | 58,661 | 23.7 | |||||||
Aircraft Rent | 22 | 1,949 | (98.9 | ) | ||||||
Maintenance | 15,330 | 11,018 | 39.1 | |||||||
Sales and Marketing | 7,569 | 6,827 | 10.9 | |||||||
Depreciation and Amortization | 22,762 | 17,181 | 32.5 | |||||||
Ground Handling | 9,382 | 8,669 | 8.2 | |||||||
Landing Fees and Airport Rent | 13,958 | 12,926 | 8.0 | |||||||
Other Operating, net | 27,127 | 24,235 | 11.9 | |||||||
Total Operating Expenses | 229,870 | 206,309 | 11.4 | |||||||
Operating Income | 19,006 | 15,391 | 23.5 | |||||||
Non-operating Income (Expense): | ||||||||||
Interest Income | 2,480 | 1,610 | 54.0 | |||||||
Interest Expense | (11,403 | ) | (7,493 | ) | 52.2 | |||||
Other, net | (15 | ) | 3,422 | (100.4 | ) | |||||
Total Non-operating Expense, net | (8,938 | ) | (2,461 | ) | 263.2 | |||||
Income before Income Tax | 10,068 | 12,930 | (22.1 | ) | ||||||
Income Tax Expense | 2,477 | 2,253 | 9.9 | |||||||
Net Income | $ | 7,591 | $ | 10,677 | (28.9 | ) | ||||
Net Income per share to common stockholders: | ||||||||||
Basic | $ | 0.14 | $ | 0.18 | (22.2 | ) | ||||
Diluted | $ | 0.13 | $ | 0.18 | (27.8 | ) | ||||
Shares used for computation: | ||||||||||
Basic | 55,435,386 | 58,146,606 | (4.7 | ) | ||||||
Diluted | 58,595,646 | 60,793,516 | (3.6 | ) | ||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except per share amounts) (Unaudited) |
Nine Months Ended September 30, | ||||||||||
2023 | 2022 | % Change | ||||||||
Operating Revenues: | ||||||||||
Scheduled Service | $ | 360,607 | $ | 334,679 | 7.7 | |||||
Charter Service | 143,250 | 118,526 | 20.9 | |||||||
Ancillary | 205,633 | 139,548 | 47.4 | |||||||
Passenger | 709,490 | 592,753 | 19.7 | |||||||
Cargo | 74,437 | 65,930 | 12.9 | |||||||
Other | 20,150 | 8,607 | 134.1 | |||||||
Total Operating Revenue | 804,077 | 667,290 | 20.5 | |||||||
Operating Expenses: | ||||||||||
Aircraft Fuel | 185,829 | 206,334 | (9.9 | ) | ||||||
Salaries, Wages, and Benefits | 223,890 | 178,576 | 25.4 | |||||||
Aircraft Rent | 2,281 | 7,347 | (69.0 | ) | ||||||
Maintenance | 44,311 | 35,794 | 23.8 | |||||||
Sales and Marketing | 26,005 | 23,336 | 11.4 | |||||||
Depreciation and Amortization | 64,577 | 49,364 | 30.8 | |||||||
Ground Handling | 28,299 | 24,838 | 13.9 | |||||||
Landing Fees and Airport Rent | 36,847 | 32,708 | 12.7 | |||||||
Other Operating, net | 81,663 | 68,401 | 19.4 | |||||||
Total Operating Expenses | 693,702 | 626,698 | 10.7 | |||||||
Operating Income | 110,375 | 40,592 | 171.9 | |||||||
Non-operating Income (Expense): | ||||||||||
Interest Income | 7,766 | 2,166 | 258.5 | |||||||
Interest Expense | (31,272 | ) | (23,097 | ) | 35.4 | |||||
Other, net | (370 | ) | (5,156 | ) | (92.8 | ) | ||||
Total Non-operating Expense, net | (23,876 | ) | (26,087 | ) | (8.5 | ) | ||||
Income before Income Tax | 86,499 | 14,505 | 496.3 | |||||||
Income Tax Expense | 19,963 | 4,113 | 385.4 | |||||||
Net Income | $ | 66,536 | $ | 10,392 | 540.3 | |||||
Net Income per share to common stockholders: | ||||||||||
Basic | $ | 1.19 | $ | 0.18 | 561.1 | |||||
Diluted | $ | 1.12 | $ | 0.17 | 558.8 | |||||
Shares used for computation: | ||||||||||
Basic | 56,051,173 | 58,039,201 | (3.4 | ) | ||||||
Diluted | 59,281,819 | 61,372,735 | (3.4 | ) | ||||||
KEY OPERATING STATISTICS |
The following tables presents key operating statistics and metrics for the three and nine months ended September 30, 2023 and 2022.
Three Months Ended September 30, | ||||||||
2023 | 2022 | % Change | ||||||
Scheduled Service Statistics: | ||||||||
Revenue passenger miles (RPMs) – thousands | 1,252,583 | 1,101,011 | 13.8 | |||||
Available seat miles (ASMs) – thousands | 1,446,462 | 1,256,755 | 15.1 | |||||
Load factor | 86.6 | % | 87.6 | % | (1.0 | ) | ||
Revenue passengers carried | 1,090,172 | 908,967 | 19.9 | |||||
Departures | 6,878 | 5,611 | 22.6 | |||||
Block hours | 19,935 | 16,947 | 17.6 | |||||
Scheduled service TRASM(1) - cents | 11.72 | 12.34 | (5.0 | ) | ||||
Average base fare per passenger | $ | 88.50 | $ | 112.44 | (21.3 | ) | ||
Ancillary revenue per passenger | $ | 64.61 | $ | 55.29 | 16.9 | |||
Total fare per passenger | $ | 153.11 | $ | 167.73 | (8.7 | ) | ||
Fuel gallons - thousands | 15,536 | 13,352 | 16.4 | |||||
Charter Statistics: | ||||||||
Departures | 2,688 | 2,359 | 13.9 | |||||
Block hours | 5,274 | 4,623 | 14.1 | |||||
Available seats miles (ASMs) - thousands | 322,722 | 286,189 | 12.8 | |||||
Fuel gallons - thousands | 3,513 | 3,056 | 15.0 | |||||
Cargo Statistics: | ||||||||
Departures | 3,432 | 3,043 | 12.8 | |||||
Block hours | 9,287 | 8,739 | 6.3 | |||||
Total System Statistics: | ||||||||
Average passenger aircraft | 42.0 | 36.8 | 14.1 | |||||
Passenger aircraft – end of period | 42 | 42 | — | |||||
Cargo aircraft – end of period | 12 | 12 | — | |||||
Aircraft held for operating lease – end of period | 5 | — | NM | |||||
Available seat miles (ASMs) – thousands | 1,791,485 | 1,553,483 | 15.3 | |||||
Departures | 13,128 | 11,072 | 18.6 | |||||
Block hours | 34,874 | 30,492 | 14.4 | |||||
Daily utilization – hours | 6.6 | 6.4 | 3.1 | |||||
Average stage length – miles | 1,005 | 1,055 | (4.7 | ) | ||||
Total revenue per ASM (TRASM) - cents | 12.11 | 12.75 | (5.0 | ) | ||||
Cost per ASM (CASM) - cents | 12.83 | 13.28 | (3.4 | ) | ||||
Adjusted CASM(2) - cents | 7.75 | 7.55 | 2.6 | |||||
Fuel gallons - thousands | 19,262 | 16,509 | 16.7 | |||||
Fuel cost per gallon | $ | 3.19 | $ | 3.93 | (18.8 | ) | ||
Employees at end of period | 2,692 | 2,354 | 14.4 |
1 – See note 3 in end notes
2 – See note 4 in end notes
“NM” stands for not meaningful
Nine Months Ended September 30, | ||||||||
2023 | 2022 | % Change | ||||||
Scheduled Service Statistics: | ||||||||
Revenue passenger miles (RPMs) – thousands | 3,900,975 | 3,565,501 | 9.4 | |||||
Available seat miles (ASMs) – thousands | 4,489,968 | 4,284,403 | 4.8 | |||||
Load factor | 86.9 | % | 83.2 | % | 3.7 | |||
Revenue passengers carried | 3,093,536 | 2,715,707 | 13.9 | |||||
Departures | 19,456 | 17,512 | 11.1 | |||||
Block hours | 61,438 | 57,585 | 6.7 | |||||
Scheduled service TRASM(1) - cents | 12.80 | 11.27 | 13.6 | |||||
Average base fare per passenger | $ | 116.57 | $ | 123.24 | (5.4 | ) | ||
Ancillary revenue per passenger | $ | 66.47 | $ | 51.39 | 29.3 | |||
Total fare per passenger | $ | 183.04 | $ | 174.63 | 4.8 | |||
Fuel gallons - thousands | 48,046 | 44,940 | 6.9 | |||||
Charter Statistics: | ||||||||
Departures | 7,816 | 6,214 | 25.8 | |||||
Block hours | 15,994 | 13,000 | 23.0 | |||||
Available seats miles (ASMs) - thousands | 961,953 | 800,698 | 20.1 | |||||
Fuel gallons - thousands | 11,063 | 9,085 | 21.8 | |||||
Cargo Statistics: | ||||||||
Departures | 9,643 | 8,310 | 16.0 | |||||
Block hours | 25,633 | 23,891 | 7.3 | |||||
Total System Statistics: | ||||||||
Average passenger aircraft | 41.8 | 35.2 | 18.8 | |||||
Passenger aircraft – end of period | 42 | 42 | — | |||||
Cargo aircraft – end of period | 12 | 12 | — | |||||
Aircraft held for operating lease – end of period | 5 | — | NM | |||||
Available seat miles (ASMs) – thousands | 5,516,826 | 5,114,134 | 7.9 | |||||
Departures | 37,295 | 32,246 | 15.7 | |||||
Block hours | 104,188 | 95,052 | 9.6 | |||||
Daily utilization – hours | 6.9 | 7.4 | (6.8 | ) | ||||
Average stage length – miles | 1,088 | 1,169 | (6.9 | ) | ||||
Total revenue per ASM (TRASM) - cents | 13.01 | 11.76 | 10.6 | |||||
Cost per ASM (CASM) - cents | 12.57 | 12.25 | 2.6 | |||||
Adjusted CASM(2) - cents | 7.56 | 6.91 | 9.4 | |||||
Fuel gallons - thousands | 59,734 | 54,322 | 10.0 | |||||
Fuel cost per gallon | $ | 3.12 | $ | 3.81 | (18.1 | ) | ||
Employees at end of period | 2,692 | 2,354 | 14.4 |
1 – See note 3 in end notes
2 – See note 4 in end notes
“NM” stands for not meaningful
SUMMARY BALANCE SHEET (Dollars in millions) (amounts may not recalculate due to rounding) |
September 30, 2023 | December 31, 2022 | % Change | ||||||
(Unaudited) | ||||||||
Cash & Cash Equivalents | $ | 27.0 | $ | 92.1 | (70.7 | ) | ||
Other Current Assets | 233.3 | 253.4 | (7.9 | ) | ||||
Total Current Assets | 260.3 | 345.5 | (24.7 | ) | ||||
Total Property & Equipment, net | 956.7 | 785.7 | 21.8 | |||||
Other | 384.0 | 393.3 | (2.3 | ) | ||||
Total Assets | 1,601.1 | 1,524.4 | 5.0 | |||||
Air Traffic Liabilities | 130.5 | 158.0 | (17.4 | ) | ||||
Current Finance Lease Obligations | 32.1 | 18.0 | 78.4 | |||||
Current Operating Lease Obligations | 2.3 | 6.3 | (63.7 | ) | ||||
Current Maturities of Long-Term Debt, net | 83.3 | 57.5 | 44.8 | |||||
Income Tax Receivable Agreement Liability | 1.5 | 2.3 | (33.1 | ) | ||||
Other Current Liabilities | 121.2 | 135.0 | (10.3 | ) | ||||
Total Current Liabilities | 370.9 | 377.1 | (1.7 | ) | ||||
Finance Lease Obligations | 231.2 | 233.3 | (0.9 | ) | ||||
Operating Lease Obligations | 17.1 | 19.8 | (13.8 | ) | ||||
Long-Term Debt, net | 351.8 | 294.7 | 19.4 | |||||
Income Tax Receivable Agreement Liability | 99.5 | 101.5 | (2.0 | ) | ||||
Other | 11.3 | 5.2 | 116.5 | |||||
Total Liabilities | 1,081.7 | 1,031.7 | 4.8 | |||||
Total Stockholders’ Equity | $ | 519.4 | $ | 492.7 | 5.4 | |||
SUMMARY CASH FLOW (Dollars in millions) (Unaudited - amounts may not recalculate due to rounding) |
Nine Months Ended September 30, | ||||||||||
2023 | 2022 | % Change | ||||||||
Net Cash Provided by Operating Activities | $ | 102.7 | $ | 71.7 | 43.2 | |||||
Purchases of Property & Equipment | (210.6 | ) | (177.7 | ) | 18.6 | |||||
Other, net | 32.4 | (120.0 | ) | (127.0 | ) | |||||
Net Cash Used in Investing Activities | (178.3 | ) | (297.6 | ) | (40.1 | ) | ||||
Common Stock Repurchases | (55.1 | ) | — | NM | ||||||
Proceeds from Borrowing | 119.2 | 188.3 | (36.7 | ) | ||||||
Repayment of Finance Lease Obligations | (16.4 | ) | (37.8 | ) | (56.7 | ) | ||||
Repayment of Borrowings | (35.5 | ) | (95.3 | ) | (62.8 | ) | ||||
Other, net | (1.7 | ) | (0.9 | ) | 90.5 | |||||
Net Cash Provided by Financing Activities | 10.6 | 54.2 | (80.4 | ) | ||||||
Net Decrease in Cash | (65.0 | ) | (171.7 | ) | (62.1 | ) | ||||
Cash, Cash Equivalents and Restricted Cash – Beginning of the Period | 102.9 | 317.8 | (67.6 | ) | ||||||
Cash, Cash Equivalents and Restricted Cash – End of the Period | $ | 37.9 | $ | 146.1 | (74.0 | ) |
“NM” stands for not meaningful
NON-GAAP FINANCIAL MEASURES
Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted Income Before Income Tax, Adjusted Pre-tax Margin, Adjusted Net Income, Adjusted Net Income per Share, Adjusted EBITDA and Adjusted EBITDA Margin
Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted Income Before Income Tax, Adjusted Pre-tax Margin, Adjusted Net Income, Adjusted Net Income per share, Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP measures included as supplemental disclosure because we believe they are useful indicators of our operating performance. Derivations of Operating Income and Net Income are well recognized performance measurements in the airline industry that are frequently used by our management, as well as by investors, securities analysts and other interested parties in comparing the operating performance of companies in our industry.
The measures described above have limitations as analytical tools. Some of the limitations applicable to these measures include: they do not reflect the impact of certain cash and non-cash charges resulting from matters we consider not to be indicative of our ongoing operations; and other companies in our industry may calculate these non-GAAP measures differently than we do, limiting each measure’s usefulness as a comparative measure. Because of these limitations, the following non-GAAP measures should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP and may not be the same as or comparable to similarly titled measures presented by other companies due to the possible differences in the method of calculation and in the items being adjusted.
For the aforementioned reasons, Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted Income Before Income Tax, Adjusted Pre-tax Margin, Adjusted Net Income, Adjusted Net Income per Share, Adjusted EBITDA and Adjusted EBITDA Margin have significant limitations which affect their use as indicators of our profitability. Accordingly, readers are cautioned not to place undue reliance on this information.
Reconciliation of GAAP Operating Income to Adjusted Operating Income Dollars in millions – Unaudited - amounts may not recalculate due to rounding |
The following table presents the reconciliation of GAAP operating income to adjusted operating income. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
Operating Revenue | $ | 248.9 | $ | 221.7 | $ | 804.1 | $ | 667.3 | |||||||
Operating Income | 19.0 | 15.4 | 110.4 | 40.6 | |||||||||||
Stock Compensation Expense | 1.0 | 0.5 | 8.1 | 2.0 | |||||||||||
Adjusted Operating Income | $ | 20.0 | $ | 15.9 | $ | 118.5 | $ | 42.6 | |||||||
Operating Income Margin | 7.6 | % | 6.9 | % | 13.7 | % | 6.1 | % | |||||||
Adjusted Operating Income Margin | 8.1 | % | 7.2 | % | 14.7 | % | 6.4 | % | |||||||
Reconciliation of GAAP Income Before Income Tax to Adjusted Income Before Income Tax Dollars in millions – Unaudited - amounts may not recalculate due to rounding |
The following table presents the reconciliation of GAAP income before income tax to adjusted income before income tax. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
Net Income | $ | 7.6 | $ | 10.7 | $ | 66.5 | $ | 10.4 | |||||||
Add: Provision for Income Tax Expense | 2.5 | 2.3 | 20.0 | 4.1 | |||||||||||
Income Before Income Tax, as reported | 10.1 | 12.9 | 86.5 | 14.5 | |||||||||||
Pre-tax margin | 4.0 | % | 5.8 | % | 10.8 | % | 2.2 | % | |||||||
Stock Compensation Expense | 1.0 | 0.5 | 8.1 | 2.0 | |||||||||||
Tax Receivable Agreement adjustment (1) | — | (3.5 | ) | (0.4 | ) | 5.0 | |||||||||
Gain on asset transactions, net (2) | — | (0.2 | ) | — | (0.3 | ) | |||||||||
Loss on refinancing credit facility | — | — | — | 1.6 | |||||||||||
Secondary offering costs | — | — | 0.6 | — | |||||||||||
Adjusted Income Before Income Tax | $ | 11.1 | $ | 9.7 | $ | 94.9 | $ | 22.7 | |||||||
Adjusted Pre-tax margin | 4.5 | % | 4.4 | % | 11.8 | % | 3.4 | % |
(1) | This represents the adjustment to the TRA for the period, which is recorded in Non-Operating Income (Expense) | |
(2) | Due to changes in the Company’s operations, Management determined that, beginning in the fourth quarter of 2022, certain asset transactions will no longer be included as adjustments to Adjusted Net Income because these transactions are part of our recurring operations. This change was made prospectively beginning in the fourth quarter of 2022, and no prior period amounts have been adjusted | |
Reconciliation of GAAP Net Income and Earnings per Share to Adjusted Net Income and Adjusted Earnings per Share Dollars and shares in millions, except for per share – Unaudited - amounts may not recalculate due to rounding |
The following table presents the reconciliation of GAAP net income and earnings per share to adjusted net income and adjusted earnings per share. |
Three Months Ended September 30, | ||||||||||||||
2023 | 2022 | |||||||||||||
Dollars | Per Share - diluted | Dollars | Per Share - diluted | |||||||||||
Net Income | $ | 7.6 | $ | 0.13 | $ | 10.7 | $ | 0.18 | ||||||
Stock Compensation Expense | 1.0 | 0.02 | 0.5 | 0.01 | ||||||||||
Tax Receivable Agreement adjustment (1) | — | — | (3.5 | ) | (0.06 | ) | ||||||||
Gain on asset transactions, net (2) | — | — | (0.2 | ) | — | |||||||||
Income tax effect of adjusting items, net (3) | (0.2 | ) | — | (0.1 | ) | — | ||||||||
Adjusted Net Income | $ | 8.4 | $ | 0.14 | $ | 7.4 | $ | 0.12 | ||||||
Diluted share count | 58.6 | 60.8 |
Nine Months Ended September 30, | |||||||||||||||
2023 | 2022 | ||||||||||||||
Dollars | Per Share - diluted | Dollars | Per Share - diluted | ||||||||||||
Net Income | $ | 66.5 | $ | 1.12 | $ | 10.4 | $ | 0.17 | |||||||
Stock Compensation Expense | 8.1 | 0.14 | 2.0 | 0.03 | |||||||||||
Tax Receivable Agreement adjustment (1) | (0.4 | ) | (0.01 | ) | 5.0 | 0.08 | |||||||||
Gain on asset transactions, net (2) | — | — | (0.3 | ) | (0.01 | ) | |||||||||
Loss on refinancing credit facility | — | — | 1.6 | 0.03 | |||||||||||
Secondary offering costs | 0.6 | 0.01 | — | — | |||||||||||
Income tax effect of adjusting items, net (3) | (2.0 | ) | (0.03 | ) | (0.7 | ) | (0.01 | ) | |||||||
Adjusted Net Income | $ | 72.9 | $ | 1.23 | $ | 17.9 | $ | 0.29 | |||||||
Diluted share count | 59.3 | 61.4 |
(1) | This represents the adjustment to the TRA for the period, which is recorded in Non-Operating Income (Expense) | |
(2) | Due to changes in the Company’s operations, Management determined that, beginning in the fourth quarter of 2022, certain asset transactions will no longer be included as adjustments to Adjusted Net Income because these transactions are part of our recurring operations. This change was made prospectively beginning in the fourth quarter of 2022, and no prior period amounts have been adjusted | |
(3) | The tax effect of adjusting items, net is calculated at the Company’s statutory rate for the application period | |
Reconciliation of GAAP Net Income to Adjusted EBITDA Dollars in millions – Unaudited - amounts may not recalculate due to rounding |
The following tables present the reconciliation of net income to adjusted EBITDA for the periods presented below. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
Net Income | $ | 7.6 | $ | 10.7 | $ | 66.5 | $ | 10.4 | |||||||
Interest Income | (2.5 | ) | (1.6 | ) | (7.8 | ) | (2.2 | ) | |||||||
Interest Expense | 11.4 | 7.5 | 31.3 | 23.1 | |||||||||||
Stock Compensation Expense | 1.0 | 0.5 | 8.1 | 2.0 | |||||||||||
Tax Receivable Agreement adjustment (1) | — | (3.5 | ) | (0.4 | ) | 5.0 | |||||||||
Secondary offering costs | — | — | 0.6 | — | |||||||||||
Gain on asset transactions, net (2) | — | (0.2 | ) | — | (0.3 | ) | |||||||||
Provision for Income Taxes | 2.5 | 2.3 | 20.0 | 4.1 | |||||||||||
Depreciation and Amortization | 22.8 | 17.2 | 64.6 | 49.4 | |||||||||||
Adjusted EBITDA | $ | 42.8 | $ | 32.7 | $ | 183.0 | $ | 91.5 | |||||||
Adjusted EBITDA margin | 17.2 | % | 14.8 | % | 22.8 | % | 13.7 | % |
(1) | This represents the adjustment to the TRA for the period, which is recorded in Non-Operating Income (Expense) | |
(2) | Due to changes in the Company’s operations, Management determined that, beginning in the fourth quarter of 2022, certain asset transactions will no longer be included as adjustments to Adjusted Net Income because these transactions are part of our recurring operations. This change was made prospectively beginning in the fourth quarter of 2022, and no prior period amounts have been adjusted. | |
Adjusted CASM
Adjusted CASM is a non-GAAP measure derived from CASM by excluding fuel costs, costs related to our cargo operations, stock based compensation, depreciation recognized on our aircraft and flight equipment held for operating lease, certain commissions and other costs of selling our vacations product from this measure as these costs are unrelated to our airline operations and improve comparability to our peers. Adjusted CASM is an important measure used by management and by our board of directors in assessing quarterly and annual cost performance. Adjusted CASM is also a measure commonly used by industry analysts and we believe it is an important metric by which they compare our airline to others in the industry, although other airlines may exclude certain other costs in their calculation of Adjusted CASM. The measure is also the subject of frequent questions from investors.
Adjusted CASM excludes fuel costs. By excluding volatile fuel costs that are outside of our control from our unit metrics, we believe that we have better visibility into the results of operations and our non-fuel cost initiatives. Our industry is highly competitive and is characterized by high fixed costs, so even a small reduction in non-fuel operating costs can lead to a significant improvement in operating results. In addition, we believe that all domestic carriers are similarly impacted by changes in jet fuel costs over the long run, so it is important for management and investors to understand the impact and trends in company-specific cost drivers, such as labor rates, aircraft and maintenance costs, and productivity, which are more controllable by management.
We have excluded costs related to the cargo operations and depreciation recognized on our aircraft and flight equipment held for operating lease as these operations do not create ASMs. During the nine months ended September 30, 2023, the Company acquired five 737-900ERs that are currently on lease to an unaffiliated airline. Depreciation expense on these aircraft materially began during the three months ended June 30, 2023. Adjusted CASM further excludes other adjustments, as defined in the relevant reporting period, that are not representative of the ongoing costs necessary to our airline operations and may improve comparability between periods. We also exclude stock compensation expense when computing Adjusted CASM. The Company’s compensation strategy includes the use of stock-based compensation to attract and retain employees and executives and is principally aimed at aligning their interests with those of our stockholders and at long-term employee retention, rather than to motivate or reward operational performance for any particular period. Thus, stock-based compensation expense varies for reasons that are generally unrelated to operational decisions and performance in any period.
As derivations of Adjusted CASM are not determined in accordance with GAAP, such measures are susceptible to varying calculations and not all companies calculate the measures in the same manner. As a result, derivations of Adjusted CASM as presented may not be directly comparable to similarly titled measures presented by other companies. Adjusted CASM should not be considered in isolation or as a replacement for CASM. For the aforementioned reasons, Adjusted CASM has significant limitations which affect its use as an indicator of our profitability. Accordingly, readers are cautioned not to place undue reliance on this information.
Reconciliation of CASM to Adjusted CASM Amounts may not recalculate due to rounding, dollar amounts in millions |
The following table presents the reconciliation of CASM to Adjusted CASM. |
Three Months Ended September 30, | |||||||||
2023 | 2022 | ||||||||
Operating Expenses - mm | Per ASM (cents) | Operating Expenses - mm | Per ASM (cents) | ||||||
CASM | $ | 229.9 | 12.83 | $ | 206.3 | 13.28 | |||
Less: | |||||||||
Aircraft Fuel | 61.2 | 3.41 | 64.8 | 4.17 | |||||
Stock Compensation Expense | 1.0 | 0.06 | 0.5 | 0.03 | |||||
Cargo expenses, not already adjusted above | 26.4 | 1.48 | 23.6 | 1.52 | |||||
Sun Country Vacations | 0.2 | 0.01 | 0.2 | 0.01 | |||||
Aircraft and Flight Equipment Held for Operating Lease, Depreciation Expense | 2.2 | 0.12 | — | — | |||||
Adjusted CASM | $ | 138.8 | 7.75 | $ | 117.2 | 7.55 | |||
Available seat miles (ASMs) - mm | 1,791.5 | 1,553.5 |
Nine Months Ended September 30, | |||||||||
2023 | 2022 | ||||||||
Operating Expenses - mm | Per ASM (cents) | Operating Expenses - mm | Per ASM (cents) | ||||||
CASM | $ | 693.7 | 12.57 | $ | 626.7 | 12.25 | |||
Less: | |||||||||
Aircraft Fuel | 185.8 | 3.37 | 206.3 | 4.03 | |||||
Stock Compensation Expense | 8.1 | 0.14 | 2.0 | 0.04 | |||||
Cargo expenses, not already adjusted above | 77.2 | 1.40 | 64.0 | 1.25 | |||||
Sun Country Vacations | 0.9 | 0.02 | 0.8 | 0.02 | |||||
Aircraft and Flight Equipment Held for Operating Lease, Depreciation Expense | 4.5 | 0.08 | — | — | |||||
Adjusted CASM | $ | 417.2 | 7.56 | $ | 353.6 | 6.91 | |||
Available seat miles (ASMs) - mm | 5,516.8 | 5,114.1 |
FAQ
What were Sun Country Airlines' total operating revenue and operating income for the third quarter of 2023?
What is the revenue guidance for the fourth quarter of 2023?
How many aircraft were in Sun Country Airlines' passenger service fleet as of September 30, 2023?