Spirit Airlines, Inc.
Feb 19, 2014

Spirit Airlines Announces Fourth Quarter and Full Year 2013 Results

Fourth Quarter Adjusted Net Income Increases 109.9 percent to $41.0 million
Full-Year Adjusted Net Income Increases 71.0 percent to $177.5 million

MIRAMAR, Fla., Feb. 19, 2014 (GLOBE NEWSWIRE) -- Spirit Airlines, Inc. (Nasdaq:SAVE) today reported fourth quarter and full year 2013 financial results.

"For the full year 2013, we delivered record profitability and return as demand for our low-cost, ultra-low fare model remained very high. These strong financial results reflect our vigilance on maintaining our cost discipline and low fare strategy while executing on our growth plan and delivering high returns for our shareholders," said Ben Baldanza, Spirit's Chief Executive Officer. "I thank all our team members who helped us achieve these results."

Revenue Performance

For the fourth quarter 2013, Spirit's total operating revenue was $420.0 million, an increase of 27.9 percent compared to the fourth quarter 2012. The year-over-year increase was driven by continued strong demand and our growth in capacity. The increase was also partly attributable to the negative revenue impact in the fourth quarter 2012 related to Hurricane Sandy.

Total revenue per available seat mile ("RASM") for the fourth quarter 2013 was 11.43 cents, an increase of 3.0 percent compared to the fourth quarter 2012 as a result of both higher average passenger yields and load factors.

Passenger flight segment ("PFS") volume for the fourth quarter 2013 grew 19.4 percent year over year. Average revenue per PFS for the fourth quarter 2013 increased 7.1 percent year over year to $132.86 primarily driven by an increase in ticket revenue per PFS. 

For the full year 2013, total operating revenue increased 25.5 percent to $1,654.4 million compared to the full year 2012 and total RASM increased 2.8 percent to 11.94 cents.

Cost Performance

Total operating expenses for the fourth quarter 2013 increased 18.8 percent year over year to $351.9 million on a capacity increase of 24.3 percent. 

Spirit reported fourth quarter 2013 cost per available seat mile excluding special items and fuel ("Adjusted CASM ex-fuel") of 5.78 cents, a decrease of 2.5 percent compared to the same period last year. Better operational performance during the fourth quarter 2013 compared to fourth quarter 2012 helped to drive lower wage expense and lower passenger re-accommodation expense. These decreases were partially offset by higher depreciation and amortization expense related to the amortization of an increased number of heavy maintenance events.

In its Investor Update dated January 15, 2014, the Company estimated that it would record $8 million of expense related to the repair and damage of the engine and aircraft associated with the engine failure experienced in October 2013. The Company now believes it will receive insurance proceeds covering all related expenses in excess of a $750,000 deductible, which was expensed in the fourth quarter.

Total operating expense for the full year 2013 was $1,372.1 million, up 19.9 percent year over year driven primarily by fuel and other expenses associated with increased flight volume. Adjusted CASM ex-fuel for the full year 2013 decreased 1.5 percent year over year to 5.91 cents.

Selected Balance Sheet and Cash Flow Items

As of December 31, 2013, Spirit had $530.6 million in unrestricted cash and cash equivalents, no restricted cash, no debt on its balance sheet, and total shareholders' equity of $769.1 million. 

For the full year 2013, Spirit incurred capital expenditures of $19.8 million. The Company paid $70.3 million in pre-delivery deposits for future deliveries of aircraft, net of refunds, and recorded an increase of $24.1 million in maintenance deposits, net of reimbursements.  

Fleet

In the fourth quarter 2013, Spirit took delivery of three new A320 aircraft, ending the year with 54 aircraft in its fleet. 

Full Year 2013 and Other Current Highlights 

 - Dallas/Fort Worth and New Orleans (1/24/13)  - Houston and Denver (6/13/13)
 - Houston and Orlando (2/14/13)  - Houston and Detroit (6/13/13)
 - Detroit and Denver (2/14/13)  - Phoenix Sky Harbor and Dallas/Fort Worth (10/24/13)
 - Dallas/Fort Worth and Minneapolis-St. Paul (4/4/13)  - Phoenix Sky Harbor and Chicago/O'Hare (11/7/13)2
 - Dallas/Fort Worth and Philadelphia (4/5/13)  - Phoenix Sky Harbor and Denver (11/7/13)
 - Houston and Los Angeles (4/25/13)  - Minneapolis-St. Paul and Los Angeles (11/7/13)
 - Dallas/Fort Worth and Oakland/  - Minneapolis-St. Paul and Orlando (11/7/13)2
San Francisco (4/25/13)  - Minneapolis-St. Paul and Phoenix (11/7/13)2
 - Dallas/Fort Worth and Los Angeles (4/25/13)  - Minneapolis-St. Paul and Tampa (11/7/13)2
 - Dallas/Fort Worth and Cancun, Mexico (4/25/13)  - Minneapolis-St. Paul and Houston (5/1/14)2
 - Baltimore/Washington and Las Vegas (4/25/13)  - Minneapolis-St. Paul and Baltimore/
 - Baltimore/Washington and Myrtle Beach (4/25/13)2 Washington (5/1/14)2
 - Philadelphia and Myrtle Beach (4/25/13)2  - Chicago O'Hare and Oakland/San Francisco (5/1/14)
 - Philadelphia and Las Vegas (4/25/13)  - Minneapolis-St. Paul and Detroit (5/22/14)2
 - Minneapolis-St. Paul and Denver (4/25/13)2  - Chicago O'Hare and Baltimore/Washington (5/22/14)2
 - Dallas/Fort Worth and Los Cabos, Mexico (6/13/13)  - Chicago O'Hare and Portland, OR (5/22/14)2
 - Dallas/Fort Worth and Latrobe/Pittsburgh (6/14/13)  

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

Conference Call/Webcast Detail

Spirit will conduct a conference call to discuss these results today, February 19, 2014, at 10:00 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 (Nasdaq:SAVE) empowers customers to save money on air travel by offering ultra low base fares with a range of optional services, allowing customers the freedom to choose only the extras they value. This innovative approach grows the traveling market and stimulates new economic activity while creating new jobs. Spirit's modern fleet, configuration and other innovations enable Spirit to burn less fuel per seat than competitors, making Spirit one of the most environmentally-friendly U.S. carriers.  Spirit's all-Airbus fleet currently operates more than 250 daily flights to over 50 destinations in the U.S., Latin America and the Caribbean. Visit Spirit at www.spirit.com.

End Notes

(1) See "Reconciliation of Adjusted Net Income to GAAP Net Income" table below for additional information.

(2) Seasonal service only.

Forward-Looking Statements

Statements in this release contain various forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which represent the Company's expectations or beliefs concerning future events. When used in this release, the words "expects," "estimates," "plans," "anticipates," "indicates," "believes," "forecast," "guidance," "outlook," "may," "will," "should," "seeks," "targets" and similar expressions are intended to identify forward-looking statements. Similarly, statements that describe the Company's objectives, plans or goals, or actions the Company may take in the future, are forward-looking statements. Forward-looking statements include, without limitation, statements regarding the Company's intentions and expectations regarding the delivery schedule of aircraft on order, announced new service routes and customer savings programs. All forward-looking statements in this release are based upon information available to the Company on the date of this release. The Company has no intent, nor undertakes any obligation to, publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, except as required by law. Forward-looking statements are subject to a number of factors that could cause the Company's actual results to differ materially from the Company's expectations, including the competitive environment in the airline industry; the Company's ability to keep costs low; changes in fuel costs; the impact of worldwide economic conditions on customer travel behavior; the Company's ability to generate non-ticket revenues; and government regulation. Additional information concerning these and other 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 and Quarterly Reports on Form 10-Q.

 

 
SPIRIT AIRLINES, INC.
Statement of Operations (1)
(in thousands, except per share data)
(unaudited)
 
 
 Three Months Ended Year Ended 
 December 31,PercentDecember 31,Percent
 20132012Change20132012Change
Operating revenues:            
Passenger $ 246,503 $ 188,721 30.6 $ 986,018 $ 782,792 26.0
Non-ticket 173,481 139,547 24.3 668,367 535,596 24.8
Total operating revenues419,984328,26827.91,654,3851,318,388 25.5
             
Operating expenses:            
Aircraft fuel 139,843 120,789 15.8 551,746 471,763 17.0
Salaries, wages and benefits 69,392 58,363 18.9 262,150 218,919 19.7
Aircraft rent 44,616 37,103 20.2 169,737 143,572 18.2
Landing fees and other rents 22,096 17,128 29.0 83,604 68,368 22.3
Distribution 16,607 13,109 26.7 67,481 56,668 19.1
Maintenance, materials and repairs 16,253 12,206 33.2 60,143 49,460 21.6
Depreciation and amortization 9,544 5,244 82.0 31,947 15,256 109.4
Other operating 33,787 32,024 5.5 144,586 127,886 13.1
Loss on disposal of assets 99 474 na 525 956 na
Special charges (credits) (314) (105) na 174 (8,450) na
Total operating expenses351,923296,33518.81,372,0931,144,398 19.9
        
Operating income68,06131,933113.1282,292173,990 62.2
             
Other (income) expense:            
Interest expense 74 6 1,133.3 214 1,350 (84.1)
Capitalized interest (74) (6) 1,133.3 (214) (1,350) (84.1)
Interest income (93) (159) (41.5) (401) (925) (56.6)
Other expense 31 95 (67.4) 283 331 (14.5)
Total other (income) expense (62) (64) na (118) (594) na
Income before income taxes68,12331,997112.9282,410174,58461.8
Provision for income taxes 24,930 12,431 100.5 105,492 66,124 59.5
Net income$ 43,193$ 19,566120.8$ 176,918$ 108,460 63.1
Basic earnings per share$ 0.59$ 0.27118.5$ 2.44$ 1.50 62.7
Diluted earnings per share$ 0.59$ 0.27118.5$ 2.42$ 1.49 62.4
             
Weighted average shares, basic 72,658 72,442 0.3 72,593 72,386 0.3
Weighted average shares, diluted 73,195 72,623 0.8 72,999 72,591 0.6
 
(1) Certain prior period amounts have been reclassified to conform to the current year's presentation.
 
 
 
SPIRIT AIRLINES, INC.
Balance Sheets (1)
(unaudited, in thousands)
     
 December 31,December 31,
 20132012
Assets    
Current assets:    
Cash and cash equivalents $ 530,631 $ 416,816
Accounts receivable, net 23,246 22,740
Deferred income taxes 16,243 12,591
Prepaid expenses and other current assets 78,955 95,210
Total current assets649,075547,357
     
Property and equipment:    
Flight equipment 9,847 2,648
Ground and other equipment 50,987 43,580
Less accumulated depreciation (25,221) (17,825)
  35,613 28,403
Deposits on flight equipment purchase contracts 157,669 96,692
Aircraft maintenance deposits 161,484 122,379
Deferred heavy maintenance, net 125,288 80,533
Other long-term assets 51,636 44,520
Total assets$ 1,180,765$ 919,884
     
Liabilities and shareholders' equity    
Current liabilities:    
Accounts payable $ 23,104 $ 24,166
Air traffic liability 167,627 131,414
Other current liabilities 145,262 121,314
Total current liabilities335,993276,894
     
Long-term deferred income taxes 48,916 33,216
Deferred credits and other long-term liabilities 26,739 27,239
Shareholders' equity:    
Common stock 7 7
Additional paid-in-capital 515,331 504,527
Treasury stock (2,291) (1,151)
Retained earnings 256,070 79,152
Total shareholders' equity769,117582,535
Total liabilities and shareholders' equity$ 1,180,765$ 919,884
     
(1) Certain prior period amounts have been reclassified to conform to the current year's presentation.
 
 
SPIRIT AIRLINES, INC.
Statement of Cash Flows
(unaudited, in thousands)
     
 Year Ended December 31,
 20132012
Operating activities:    
Net income$ 176,918$ 108,460
Adjustments to reconcile net income to net cash provided by operations:    
Changes in fair value of open fuel hedge contracts 265 46
Equity based stock compensation, net 5,689 4,327
Allowance for doubtful accounts 143 78
Amortization of deferred gains, losses and debt issuance costs (558) (830)
Depreciation and amortization 31,947 15,256
Deferred income tax benefit 12,047 29,255
Loss on disposal of assets 525 956
Gain on slot sale (9,060)
Capitalized interest (214) (1,350)
Changes in operating assets and liabilities:    
Accounts receivable (461) (7,393)
Prepaid maintenance reserves (24,058) (31,567)
Long-term deposits and other assets (65,654) (68,248)
Accounts payable (1,674) 8,452
Air traffic liability 36,226 19,134
Other liabilities 24,235 46,115
Net cash provided by operating activities195,376113,631
     
Investing activities:    
Proceeds from sale of property and equipment 14
Proceeds from sale of slots 9,060
Pre-delivery deposits for flight equipment, net of refunds (70,288) (12,626)
Purchase of property and equipment (19,812) (23,771)
Net cash used in investing activities(90,100)(27,323)
Financing activities:    
Proceeds from options exercised 852 469
Proceeds from sale and leaseback transactions 6,900 12,540
Payments to pre-IPO shareholders pursuant to tax receivable agreement (26,905)
Excess tax benefits from share-based compensation 1,927 2,098
Repurchase of common stock (1,140) (1,022)
Net cash provided by (used in) financing activities8,539(12,820)
Net increase in cash and cash equivalents 113,815 73,488
Cash and cash equivalents at beginning of period416,816343,328
Cash and cash equivalents at end of period$530,631$ 416,816
Supplemental disclosures    
Cash payments for:    
Interest $ 29 $ 303
Taxes $ 85,705 $ 40,204
Non-cash transactions:    
Liability and equity related to tax receivable agreement $ (2,336) $ (1,497)
Capital expenditures funded by capital lease borrowings $ (3,234)
 
 
SPIRIT AIRLINES, INC.
Selected Operating Statistics (unaudited)
 
 Three Months Ended December 31, 
Operating Statistics20132012Change
Available seat miles (ASMs) (thousands) 3,675,972 2,956,150 24.3%
Revenue passenger miles (RPMs) (thousands) 3,167,376 2,519,392 25.7%
Load factor (%) 86.2 85.2 1.0 pts
Passenger flight segments (thousands) 3,161 2,647 19.4%
Block hours 60,596 49,625 22.1%
Departures 22,957 19,908 15.3%
Operating revenue per ASM (RASM) (cents) 11.43 11.10 3.0%
Average yield (cents) 13.26 13.03 1.8%
Average ticket revenue per passenger flight segment ($) 77.98 71.30 9.4%
Average non-ticket revenue per passenger flight segment ($) 54.88 52.73 4.1%
Total revenue per passenger flight segment ($) 132.86 124.03 7.1%
CASM (cents) 9.57 10.02 (4.5)%
Adjusted CASM (cents) (1) 9.67 10.03 (3.6)%
Adjusted CASM ex-fuel (cents) (2) 5.78 5.93 (2.5)%
Fuel gallons consumed (thousands) 45,100 36,670 23.0%
Average economic fuel cost per gallon ($) 3.17 3.31 (4.2)%
Aircraft at end of period 54 45 20.0%
Average daily aircraft utilization (hours) 12.5 12.6 (0.8)%
Average stage length (miles) 998 932 7.1%
Airports served in the period (3) 53 53 —%
       
       
 Year Ended December 31, 
Operating Statistics20132012Change
Available seat miles (ASMs) (thousands) 13,861,393 11,344,731 22.2%
Revenue passenger miles (RPMs) (thousands) 12,001,088 9,663,721 24.2%
Load factor (%) 86.6 85.2 1.4 pts
Passenger flight segments (thousands) 12,414 10,423 19.1%
Block hours 231,148 192,403 20.1%
Departures 90,284 78,582 14.9%
Operating revenue per ASM (RASM) (cents) 11.94 11.62 2.8%
Average yield (cents) 13.79 13.64 1.1%
Average ticket revenue per passenger flight segment ($) 79.43 75.11 5.8%
Average non-ticket revenue per passenger flight segment ($) 53.84 51.39 4.8%
Total revenue per passenger flight segment ($) 133.27 126.50 5.4%
CASM (cents) 9.90 10.09 (1.9)%
Adjusted CASM (cents) (1) 9.89 10.15 (2.6)%
Adjusted CASM ex-fuel (cents) (2) 5.91 6.00 (1.5)%
Fuel gallons consumed (thousands) 171,931 142,991 20.2%
Average economic fuel cost per gallon ($) 3.21 3.30 (2.7)%
Average daily aircraft utilization (hours) 12.7 12.8 (0.8)%
Average stage length (miles) 958 909 5.4%
Airports served in the period (3) 56 55 1.8%
 
(1)  Excludes unrealized mark-to-market gains and special items as described in the "Reconciliation of Adjusted Net Income to GAAP Net Income" table below.
(2)  Excludes all components of fuel expense, including realized and unrealized mark-to-market hedge (gains) and losses, and special items as described in the "Reconciliation of Adjusted Net Income to GAAP Net Income" table below.
(3)  Includes airports served during the period that had service canceled as of the end of the period. Previously, we reported only airports served during the period with continuing operations.

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 an analytical tool. Because of these limitations, determinations of Spirit'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.

 
Reconciliation of Adjusted Net Income to GAAP Net Income
(unaudited)
 
 
 Three Months EndedYear Ended
 December 31,December 31,
(in thousands, except per share data)2013201220132012
Net income, as reported$ 43,193$ 19,566$ 176,918$ 108,460
Add: Provision for income taxes 24,930 12,431 105,492 66,124
Income before income taxes, as reported 68,123 31,997 282,410 174,584
Pre-tax margin, GAAP16.2%9.7%17.1%13.2%
Add: Unrealized mark-to-market (gains) and losses(1) (3,224) (414) 265 46
Add special items (2):        
Loss on disposal of assets 99 474 525 956
Special charges (credits) (314) (105) 174 (8,450)
Income before income taxes, non-GAAP (3) 64,684 31,952 283,374 167,136
Pre-tax margin, non-GAAP (3)15.4%9.7%17.1%12.7%
Provision for income taxes (4) 23,671 12,414 105,852 63,303
Adjusted net income, non-GAAP (3)$ 41,013$ 19,538$ 177,522$ 103,833
         
Weighted average shares, basic 72,658 72,442 72,593 72,386
Weighted average shares, diluted 73,195 72,623 72,999 72,591
     
Adjusted net income per share, basic$ 0.56$ 0.27$ 2.45$ 1.43
Adjusted net income per share, diluted$ 0.56$ 0.27$ 2.43$ 1.43
 
(1) Unrealized mark-to-market (gains) and losses are comprised of non-cash adjustments to aircraft fuel expense.
(2) Special items include loss on disposal of assets and special charges (credits). Special charges (credits) for 2012 include: (i) recognition of a gain on the sale of four carrier slots at Ronald Reagan National Airport, and (ii) offering costs related to the sale of 12.1 million shares of common stock by certain stockholders affiliated with Indigo Partners LLC.
(3) Excludes unrealized mark-to-market (gains) and losses and special items.
(4) Assumes same marginal tax rate as is applicable to GAAP net income. 
 
 
Reconciliation of Adjusted CASM ex-fuel to CASM
(unaudited)
         
 Three Months EndedYear Ended
 December 31,December 31,
(in thousands, except CASM data in cents)2013201220132012
Total operating expenses, as reported$ 351,923$ 296,335$ 1,372,093$ 1,144,398
Less: Unrealized mark-to-market (gains) and losses (3,224) (414) 265 46
Less special items:        
Loss on disposal of assets 99 474 525 956
Special charges (credits) (314) (105) 174 (8,450)
Operating expenses, non-GAAP (1) 355,362 296,380 1,371,129 1,151,846
Less: Economic fuel expense, non-GAAP 143,067 121,203 551,481 471,717
Operating expenses excluding fuel, non-GAAP (1) (2)$ 212,295$ 175,177$ 819,648$ 680,129
         
Available seat miles 3,675,972 2,956,150 13,861,393 11,344,731
         
CASM (cents) 9.57 10.02 9.90 10.09
Adjusted CASM (cents) (1) 9.67 10.03 9.89 10.15
Adjusted CASM ex-fuel (cents) (2) 5.78 5.93 5.91 6.00
         
 
Reconciliation of Adjusted Operating Income to GAAP Operating Income
(unaudited)
         
 Three Months EndedYear Ended
 December 31,December 31,
(in thousands)2013201220132012
Operating income, as reported$ 68,061$ 31,933$ 282,292$ 173,990
Operating margin, GAAP16.2%9.7% 17.1% 13.2%
Add: Unrealized mark-to-market (gains) and losses (3,224) (414) 265 46
Add special items:        
Loss on disposal of assets 99 474 525 956
Special charges (credits) (314) (105) 174 (8,450)
Operating income, non-GAAP (1)$ 64,622$ 31,888$ 283,256$ 166,542
Operating margin (1)15.4%9.7% 17.1% 12.6%
         
(1)  Excludes unrealized fuel hedge (gains) and losses and special items as described in the "Reconciliation of Adjusted Net Income to GAAP Net Income" table above.
(2)  Excludes all components of fuel expense, including realized and unrealized fuel hedge (gains) and losses, and special items as described in the "Reconciliation of Adjusted Net Income to GAAP Net Income" table above.

The Company's economic fuel cost per gallon differs from GAAP results in that it only includes the cash settlements related to fuel hedge contracts that settled during the period, whereas the GAAP results also include the non-cash mark-to-market impact of all fuel hedge contracts expected to settle in future periods.   The Company believes that net fuel hedge adjustments provide management and investors the ability to better assess and compare its performance.

         
Reconciliation of non-GAAP Economic Fuel Expense to GAAP Fuel Expense        
(unaudited)        
         
 Three Months EndedYear Ended
 December 31,December 31,
(in thousands, except per gallon data)2013201220132012
Fuel Expense        
Aircraft fuel, as reported $ 139,843 $ 120,789 $ 551,746 $ 471,763
Less: Unrealized mark-to-market (gains) and losses (1) (3,224) (414) 265 46
Economic fuel expense, non-GAAP$ 143,067$ 121,203$ 551,481$ 471,717
         
Fuel gallons consumed 45,100 36,670 171,931 142,991
         
Economic fuel cost per gallon, non-GAAP$ 3.17$ 3.31$ 3.21$ 3.30
 
 
Calculation of Return on Invested Capital
(unaudited)
   
 Twelve Months Ended
(in thousands)December 31, 2013
Operating Income $ 282,292
Add: Unrealized mark-to-market losses (1) 265
Add special items:  
Special charges (credits) 174
Loss on disposal of assets 525
Adjustment for aircraft rent 169,737
Adjusted Operating Income (2)$ 452,993
Tax (37.4%) (3) 169,419
Adjusted Operating Income, after-tax$ 283,574
Invested Capital  
Total debt $ —
Book equity 769,117
Less: Unrestricted cash 530,631
Add: Capitalized aircraft operating leases (7x Aircraft Rent) 1,188,159
Total Invested Capital$ 1,426,645
   
Return on Invested Capital (ROIC), pre-tax 31.8%
Return on Invested Capital (ROIC), after-tax 19.9%
   
(1)  Unrealized mark-to-market (gains) and losses are comprised of non-cash adjustments to aircraft fuel expenses.
(2)  Excludes unrealized mark-to-market (gains) and losses and special items as described in the "Reconciliation of Adjusted Net Income to GAAP Net Income" table above. 
(3)  Assumes same marginal tax rate as is applicable to GAAP net income for the year ended December 31, 2013. 
CONTACT: Investor Inquiries: InvestorRelations@spirit.com/954-447-7920

         Media Inquiries: MediaRelations@spirit.com/954-628-4827