Sun Country Airlines Holdings, Inc. · NASDAQ:SNCY
Sun Country Airlines — Investor Presentation (September 2021)
30 slides from Sun Country Airlines's investor presentation, Sep 9, 2021
Slide 1: Sun Country Airlines September 2021
Sun Country Airlines September 2021
Slide 2: Disclaimer
Disclaimer Confidentiality and Market Data This presentation constitutes confidential information and is provided to you on the condition that you will hold it in stric t c onfidence and not reproduce, disclose, forward or distribute it in whole or in part without the prior written consent of the Co
Slide 3: Third quarter update: Guidance for Third Quarter 2021
Third quarter update 3 Guidance for Third Quarter 2021 New guidance Previous guidance Total revenue - millions $170 to $175 $170 to $175 Fuel cost per gallon – excluding derivatives $2.14 $2.30 Operating income margin – percentage 7.0% - 9.5% 5.5% - 9.5% Effective tax rate 25% 25% Total system ASMs
Slide 4: Business Overview
Business Overview
Slide 5: A New Breed of Hybrid LCC
A New Breed of Hybrid LCC High growth low cost airline with a unique and resilient business model Serves the VFR and leisure passenger, charter and cargo sectors Differentiated low fixed cost, asset light business model Dynamically allocate capacity to match demand patterns, maximize unit revenue Le
Slide 6: Unique, Diversified Business Model
Unique, Diversified Business Model Sun Country’s symbiotic business lines share assets to maximize operating leverage 6 Sun Country Business Line Synergies Shared Foundational Assets Aircraft Pilots Shared Services Charter (~20% of Revenue (1) ) Passenger Leisure (~63% of Revenue (1) ) Cargo (~16% o
Slide 7: Agile Passenger Capacity Built to Capture Peak Demand
Agile Passenger Capacity Built to Capture Peak Demand 7 0.0% 5.0% 10.0% 15.0% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Seasonal Demand Dictates Monthly Schedule (1) Day - of - Week Capacity Determined by Demand Patterns (1) Winter MSP to warm leisure Midwest origination Summer MSP to VFR (2)
Slide 8: Superior Passenger Product Offering
Superior Passenger Product Offering Weighted Average Seat Pitch: 31" Seat Recline In - Flight Entertainment In - Seat Power 8 $144.22 $155.49 $132.04 $110.91 $98.14 $108.65 2019 2020 LTM Q2 2021 1 - Sun Country revenue/passenger = average base fare + ancillary revenue per passenger, Allegiant is ave
Slide 9: Sun Country Route Network
Sun Country Route Network 9 Current Passenger Leisure Operations ~97% of our markets are seasonal which reflects demand trends of our customer
Slide 10: Leading Charter Business
Leading Charter Business • High growth and high margin market leader in narrow body charter market • Only U.S. passenger airline with a meaningful charter business • Scheduled seamlessly with passenger business • Contract based business – provides recurring revenues • Pass - through fuel and other c
Slide 11: Cargo Business - Source of Significant, Stable Cash Flow
Cargo Business - Source of Significant, Stable Cash Flow • 12 Boeing 737 - 800 converted freighter aircraft operated on behalf of Amazon • Increased from original plan of 10 aircraft • 10 year contract, initial term six years and two additional, two - year extension options • Partnership with one of
Slide 12: Continue to Reduce CASM Even in Lower Utilization Environment
Continue to Reduce CASM Even in Lower Utilization Environment 12 Still in demand recovery phase, expect CASM to improve as we grow 7.80 7.05 6.31 7.57 6.25 9.8 9.7 9.6 5.1 6.8 2017 2018 2019 2020 1H 2021 Adjusted CASM - cents Total Utilization - hours Adjusted CASM vs Historical Utilization During C
Slide 13: Strongly Profitable Even at Lower Utilization
Strongly Profitable Even at Lower Utilization 13 Adjusted Operating Margin Versus Utilization Built to be different, difficult to replicate Sun Country, Allegiant, Frontier, Spirit Source SEC filings, 2019 is full year 2019, 1H 21 is first six months of 2021 -40% -30% -20% -10% 0% 10% 20% 30% 6.0 7.
Slide 14: Decline in Fleet Costs Over Time
Decline in Fleet Costs Over Time 14 P&L Total Expense per AC (1) per Month $266 $246 $246 $207 2018 2019 2020 2021 Cash Payments (2) per AC (1) per Month $339 $354 $295 $246 2018 2019 2020 2021 USD in 000s USD in 000s Better fleet deals and transition from leased to owned aircraft has significantly
Slide 15: Capital Light Model
Capital Light Model 15 Current Order Book (1) Source: Company filings, CAPA, Form 41 Financial Data. 1. As of most recent available data (July 2021 for Allegiant, Q2 2021 for Southwest, Spirit, JetBlue, Frontier and Sun Country). 2. Sun Country revenue defined as 2019 revenue ($701mm) plus Amazon De
Slide 16: Resilient and Positioned for Growth
Resilient and Positioned for Growth
Slide 17: Best Performance During COVID in 2020
Best Performance During COVID in 2020 17 Cargo only fully ramped up in November 2020 Source: Company filings using results adjusted to remove identified one - time items See appendix for reconciliation to operating margin 2020 Adjusted Operating Margin 4.9% - 14.2% - 39.9% - 44.7% - 48.0% - 51.3% -
Slide 18: Financial Momentum Continuing During Recovery
Financial Momentum Continuing During Recovery 18 Multi - segment business strategy offsets some of leisure demand weakness Source: Company filings See appendix for reconciliation to operating margin 1 st Half 2021 Adjusted Operating Margin 4.6% 4.6% - 21.4% - 23.6% - 25.5% - 33.2% - 35.1% - 35.9% -
Slide 19: Deleveraged Through the Crisis
Deleveraged Through the Crisis 19 Leverage has remained nearly unchanged through COVID 1. Represents change in adjusted debt (financial debt + operating leases) since February 2020, including reductions for amortiza tio n and repayment, through Q2 2021 Source Company filings Adjusted Gross Debt Chan
Slide 20: Crises Historically Create Opportunity for ULCC Growth
Crises Historically Create Opportunity for ULCC Growth 20 Set up to succeed in difficult times 9/11 and 2001 Recession 1.7% 60.5% Legacy Carriers ULCCs 2000 - 2005 - 11.7% 22.7% Legacy Carriers ULCCs 2007 - 2012 Great Recession Source: T - 100 Legacy includes American, Delta and United. American his
Slide 21: Fleet Plan: Responsible Growth
Fleet Plan: Responsible Growth 21 Aircraft in Service Strategy in Place to Support Fleet Growth With no aircraft order book and experience purchasing mid - life aircraft, Sun Country can opportunistically acquire aircraft at best prices • Restructured fleet with a focus on ownership of Boeing 737 -
Slide 22: Balance Sheet Positions Sun Country for Growth
Balance Sheet Positions Sun Country for Growth 22 • $336m (1) in total liquidity, 73% of LTM total revenue (2) • Free cash flow (3) positive in 1H 2021 • De minimis non aircraft debt • Mid - life, low CAPEX passenger fleet; cargo segment asset - lite 1 – Cash and equivalents + $25m in undrawn revolv
Slide 23: In Summary…
In Summary… 23 Resilient and Diverse Business Model Low Cost Capital Light Operations Outperformance in Difficult Environments Well Positioned for High Growth in Rebound Poised for Long - Term Growth Beyond the Rebound
Slide 24: Appendix
Appendix
Slide 25: Description of Special Items
Description of Special Items Special Items, Net – in millions USD FY 2018 FY 2019 FY 2020 LTM 2Q 2021 1H 2020 1H 2021 CARES Act grant recognition $0.0 $0.0 ($62.3) ($102.4) ($31.5) ($71.6) CARES Act employee retention credit - - (2.3) (3.1) - (0.8) Contractual obligations for retired technology - 7.
Slide 26: Non-GAAP Reconciliation – Adj EBITDAR
Non - GAAP Reconciliation – Adj EBITDAR Adjusted Earnings Before Interest, Taxes, Depreciation & Amortization and Aircraft Rent (“EBITDAR”) is included as a suppleme nta l disclosure because we believe it is a useful indicator of our operating performance. Adjusted EBITDAR is a well recognized perfo
Slide 27: Non-GAAP Reconciliation – Adj Operating Income
Non - GAAP Reconciliation – Adj Operating Income Adjusted Operating Income is included as a supplemental disclosure because we believe it is a useful indicator of our operati ng performance. Adjusted Operating Income is a well recognized performance measurement in the airline industry that is freque
Slide 28: Non-GAAP Reconciliation – Adj Pre-tax Income
Non - GAAP Reconciliation – Adj Pre - tax Income Adjusted Pre - tax Income is included as a supplemental disclosure because we believe it is a useful indicator of our operating pe rformance. Adjusted Pre - tax Income is a well recognized performance measurement in the airline industry that is freque
Slide 29: Non-GAAP Reconciliation – Adj Net Income
Non - GAAP Reconciliation – Adj Net Income Adjusted Net Income is included as a supplemental disclosure because we believe it is a useful indicator of our operating per for mance. Adjusted Net Income is a well recognized performance measurement in the airline industry that is frequently used by our
Slide 30: Non-GAAP Reconciliation – Adj CASM
Non - GAAP Reconciliation – Adj CASM Adjusted CASM, which is a non - GAAP financial measure, is also a key airline cost metric and excludes fuel costs, costs related t o our freighter operations (starting in 2020 when we launched our freighter operation), certain commissions and other costs of selli
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