Sun Country Airlines Holdings, Inc. · NASDAQ:SNCY
Sun Country Airlines — Investor Presentation (December 2023)
25 slides from Sun Country Airlines's investor presentation, December 2023
Slide 1: Sun Country Airlines
Sun Country Airlines December 2023
Slide 2: Disclaimer
Disclaimer This presentation has been prepared by the Company for informational purposes only and not for any other purpose. Nothing contained in this presentation is, or should be construed as, a recommendation, promise or representation by the presenter or the Company or any director, employee, ag
Slide 3: Business Overview
Business Overview
Slide 4: Unique, Diversified Business Model
Unique, Diversified Business Model Sun Country Business Line Synergies 1 Passenger Leisure 2 Charter (~72% of Revenue(1)) (~18% of Revenue(1)) • Unique low cost airline with focus on leisure travel • A leader in U.S. narrowbody charter • Flexible capacity model focused on peak demand • Contracted re
Slide 5: Flexible Scheduled Service Route Network
Flexible Scheduled Service Route Network ~91% of our markets are seasonal which reflects demand trends of our customer 5
Slide 6: Business Model Has Facilitated Rapid Growth…
Business Model Has Facilitated Rapid Growth… Exceeding Pre-Pandemic Levels (Revenue, $mm) $1,031 $894 $701 $623 $401 2019 2020 2021 2022 LTM Q3 2023 Our financial performance has demonstrated growth and resilience inherent in our business model 6
Slide 7: …And Outperformance in COVID and Through the Recovery
…And Outperformance in COVID and Through the Recovery 2020 Adj. EBIT Margin 2021 Adj. EBIT Margin 2022 Adj. EBIT Margin 8% (10%) (33%) 7% 5% (9%) (57%) (10%) (58%) 3% 1% (13%) SNCY ULCCs Big Four Mid Sized SNCY ULCCs Mid Sized Big Four SNCY Big Four Mid Sized ULCCs Carriers Carriers Carriers SNCY UL
Slide 8: Outperformance Continues Through YTD 2023
Outperformance Continues Through YTD 2023 YTD 2023 Adj. EBIT Margin 15% 12% 12% 10% 10% 8% 4% 0% 0% (6%) (8%) Seasonal business model – Q1 is historically the strongest Source: Public filing. 8
Slide 9: Outperformance in Pre-tax margin
Outperformance in Pre-tax margin LTM Q3 2023 Adj. Pre-Tax Margin 10.2% 10.1% 10.1% 8.7% 8.6% 6.2% 3.2% 2.2% 0.1% (4.6%) (9.8%) Not burdened with excessive debt raised through COVID Source: Public filing. 9
Slide 10: Agile Passenger Capacity Built to Capture Highest Unit Revenues
Agile Passenger Capacity Built to Capture Highest Unit Revenues Seasonal Demand Dictates Day-of-Week Capacity Determined Results in Higher Unit Revenue Monthly Schedule by Demand Patterns(1) Versus High Utilization Peers (% of Peak Day ASMs) (TRASM) (¢) Monthly Seats as % of July 2023 2022 TRASM 120
Slide 11: Experts in Executing a Seasonal Network
Experts in Executing a Seasonal Network Departures by Month at Three of Our Largest Cities MSP Departures DFW Departures (# of Departures) (# of Departures) Strong North / South demand in Winter, Strong summer demand 1,500 East / West in Summer 250 to Mexico / Caribbean 1,250 200 1,000 150 750 100 5
Slide 12: Sun Country Has Been Growing its Share at MSP
Sun Country Has Been Growing its Share at MSP Cumulative Change in MSP Point-of-Origin Passenger Share Since 2018(1)(2) 9% Current Share 7% 6% 6% 6% 18% 3% 3% 2% 2% 62% 0% 0% (1%) (2%) (3%) -5% (6%) (7%) (9%) 20% (9%) (12%) 2018 2019 2020 2021 2022 SNCY DAL Others MSP share growth has been achieved
Slide 13: Ancillary Revenue Growth Potential
Ancillary Revenue Growth Potential Ancillary Revenue per Passenger Growth Range(1)(2) Initiative Areas • Enhanced Merchandising – $2 to $5 per Pax improved offer and product of Ancillary Upside presentation on suncountry.com, $65.03 including bundled ancillary products $53.49 • New Products – introd
Slide 14: Differentiated, Leading Charter Business
Differentiated, Leading Charter Business NCAA and professional sports, Casino, VIP, US military, among other customers Overview % Charter Flying Under Long Term Contracts • Contract based business provides recurring 76% revenues 47% • Integrated scheduling capability drives efficiencies • Growth opp
Slide 15: Growing Business Under Charter Contracts
Growing Business Under Charter Contracts Recent New Customers Details • 5-year agreement to provide charter service to all Major League Soccer teams - Agreement began at the beginning of 2022 • 5-year agreement to provide charter service for Caesars Entertainment guests - Agreement began in March 20
Slide 16: Unique, Asset-Light Cargo Business
Unique, Asset-Light Cargo Business Overview Key Highlights • 12 Boeing 737-800 freighter aircraft operated on behalf of Third largest narrowbody cargo operator in the U.S(1) Amazon High margin and cash flow with stable revenue and pass- • Amazon supplies the aircraft, pays for many flight expens
Slide 17: Balance Sheet Positions Sun Country for Growth
Balance Sheet Positions Sun Country for Growth • $198m of liquidity at year end of Q3 23 provides ample capital to support growth • $230m of liquidity as of November 6, end of quarter influenced by share repurchases in late September • Manageable CAPEX requirements given mid-life passenger fleet; ca
Slide 18: Acquisition of Aircraft Currently on Lease
Acquisition of Aircraft Currently on Lease 5 737-900s • Acquired 5 737-900ERs currently on lease to Oman Air • 2023 operating income ~ $3m(1) per quarter began Q2 2023. Steps up to a higher amount in 2024 • First lease expires Q4 2024, remainder through 2025 • Expect to begin to bring these aircraft
Slide 19: Responsible Fleet Growth With Low Capital Outlays
Responsible Fleet Growth With Low Capital Outlays Total Aircraft in Service Strategy in Place to Support Fleet Growth (# of aircraft) • Sun Country maintains no order book 75 – 80(1) and acquires aircraft based on demand needs 54 54 • Focus on ownership of Boeing 737 NGs 43 with low capital commitme
Slide 20: Differentiated and Unique Aviation Company
Differentiated and Unique Aviation Company Differentiated Highly Balance Synergistic Sheet Businesses Resiliency Superior Unit Through Profitability the Cycle High Growth Contracted High Margin Recurring Strong Cash Flow Revenue Streams Sun Country was built to generate best in class performance in
Slide 21: Appendix
Appendix
Slide 22: Description of Special Items
Description of Special Items Special items, net – in millions USD FY 2019 FY 2020 FY 2021 FY 2022 CARES Act grant recognition - ($62.3) ($71.6) - CARES Act employee retention credit - (2.3) (0.8) - Contractual obligations for retired technology 1 7.6 - - - Sale of airport slot rights 2 (1.2) - - - O
Slide 23: Adjusted Operating Income
Adjusted Operating Income Adjusted operating income – in millions USD Nine Months Ended FY 2020 FY 2021 FY 2022 September 30, 2023 Operating revenue $401.5 $623.0 $894.4 $804.1 Operating income 17.4 111.9 55.7 110.4 Special items, net (64.6) (72.4) - Stock compensation expense 2.1 5.6 2.8 8.1 Other
Slide 24: Adjusted EBITDA
Adjusted EBITDA Adjusted EBITDA Reconciliation – in millions USD Nine Months Nine Months Ended September Ended September FY 2019 FY 2022 30, 2023 30, 2022 LTM Q3 2023 Net income (loss) $46.1 $17.7 $66.5 $10.4 $73.8 Provision for income taxes 14.1 6.3 20.0 4.1 22.2 Interest expense 17.2 31.0 31.3 23.
Slide 25: Adjusted LTM Q3 2023 Pre-Tax Margin
Adjusted LTM Q3 2023 Pre-Tax Margin Adjusted operating income – in millions USD Nine Months Nine Months Ended September Ended September FY 2022 30, 2023 30, 2022 LTM Q3 2023 Net income (Loss) $17.7 $66.5 $10.4 $73.8 Add: Provision for income tax expense 6.3 20.0 4.1 22.2 Income before income tax, as
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