Sun Country Airlines Reports Third Quarter 2024 Results

GlobeNewswire Inc.

October 30, 2024 8:05PM GMT

Revenue of $249 million, highest third quarter on record(1)
GAAP diluted EPS of $0.04, operating income of $12 million and margin of 5.0%
Adj. diluted EPS(2) of $0.06, adjusted operating income(2) of $14 million and margin of 5.6%

MINNEAPOLIS, Oct. 30, 2024 (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, 2024.

“Sun Country is pleased to report our ninth consecutive profitable quarter with GAAP EPS of $0.04 and adjusted EPS of $0.06(2),” said Jude Bricker, Chief Executive Officer of Sun Country. “Despite the impact of the Crowdstrike outage and the hurricanes during the quarter, we delivered $249 million of total revenue, the highest third quarter on record for Sun Country. Robust growth in our charter and cargo businesses helped offset lower scheduled service revenue, demonstrating the effectiveness of our diversified business model. Additionally, our GAAP operating margin of 5.0% and adjusted operating margin of 5.6%(2) exceeded the top end of our guidance range. While third quarter unit revenue was lower than last year, we began to see year-over-year favorability in fares booked in September, which has persisted into the fourth quarter. As always, we want to thank our employees for their hard work and dedication during a challenging operating period.”

Overview of Third Quarter

 

Three Months Ended September 30,

(unaudited) (in millions, except per share amounts)

 

2024

 

2023

% Change

Total Operating Revenue

$

249.5

$

248.9

0.2

 

Operating Income

 

12.4

 

19.0

(34.9

)

Income Before Income Tax

 

3.0

 

10.1

(70.2

)

Net Income

 

2.3

 

7.6

(69.1

)

Diluted earnings per share

$

0.04

$

0.13

(69.2

)

 

Three Months Ended September 30,

(unaudited) (in millions, except per share amounts)

 

2024

 

2023

% Change

Adjusted Operating Income

(2)

$

13.9

$

20.0

(30.8

)

Adjusted Income Before Income Tax

(2)

 

4.5

 

11.1

(59.5

)

Adjusted Net Income

(2)

 

3.5

 

8.4

(58.4

)

Adjusted diluted earnings per share

(2)

$

0.06

$

0.14

(57.1

)

 

Nine Months Ended September 30,

(unaudited) (in millions, except per share amounts)

 

2024

 

2023

% Change

Total Operating Revenue

$

815.3

$

804.1

1.4

 

Operating Income

 

79.9

 

110.4

(27.6

)

Income Before Income Tax

 

52.6

 

86.5

(39.1

)

Net Income

 

39.5

 

66.5

(40.7

)

Diluted earnings per share

$

0.72

$

1.12

(35.7

)

 

Nine Months Ended September 30,

(unaudited) (in millions, except per share amounts)

 

2024

 

2023

% Change

Adjusted Operating Income

(2)

$

84.5

$

118.5

(28.7

)

Adjusted Income Before Income Tax

(2)

 

57.2

 

94.9

(39.7

)

Adjusted Net Income

(2)

 

43.0

 

72.9

(41.1

)

Adjusted diluted earnings per share

(2)

$

0.78

$

1.23

(36.6

)

Amounts presented in the tables above may not recalculate due to rounding

 

For the quarter ended September 30, 2024, Sun Country reported net income of approximately $2 million and income before income tax of $3 million, on $249 million of revenue. Adjusted income before income tax(2) for the quarter was approximately $4 million. GAAP operating income during the quarter was $12 million, while adjusted operating income(2) was $14 million, and GAAP operating margin was 5.0% and adjusted operating margin(2) was 5.6%.  

“Our third quarter results reflect the continued earnings power of our diversified business model,” said Dave Davis, President and Chief Financial Officer. “Cargo revenue per block hour grew by 16.0% year-over-year while third quarter charter revenue easily exceeded charter block hour growth. This strength partially offset the weaker third quarter scheduled service demand environment that we experienced. We expect strength in these businesses to persist, while we also see improving trends in scheduled service unit revenue in the fourth quarter and into 2025. We continue to exhibit solid cost control as our GAAP operating expense grew 3.1% while total block hours grew 3.8% in the third quarter. Adjusted CASM(3) grew by 3.7% year-over-year, largely driven by near-in reductions in scheduled service capacity. We have right-sized our scheduled service capacity to match current demand and we expect fourth quarter scheduled service ASMs to grow by slightly over 3% versus last year. We are preparing to take on additional cargo aircraft in 2025, and still expect the first aircraft to enter service in late March or early April 2025, allowing us to take full advantage of seasonally strong first quarter passenger demand.”

Notable Highlights

  • Ninth consecutive profitable quarter and highest third quarter total revenue on record(1).
  • Further extended the existing lease on one 737-800 aircraft Sun Country has on lease to an unaffiliated airline. This aircraft is now expected to redeliver to Sun Country in November 2025.
  • Supported Major League Soccer by flying all 18 Liga MX teams home for 2024 Leagues Cup.

Capacity

System block hours flown during the third quarter of 2024 grew by 3.8% year-over-year. All of this growth was allocated to the passenger segment, resulting in a 5.8% increase in scheduled service ASMs and 1.7% increase in charter block hours. Scheduled service ASMs are expected to grow in the fourth quarter 2024 by slightly more than 3% over fourth quarter 2023. Cargo block hours declined in the third quarter by 3.6% year-over-year due to scheduled heavy maintenance events and the impact of the hurricanes on cargo operations in the Southeast.

Revenue

The domestic market continued to be impacted by overcapacity in the third quarter which pressured unit revenue. The Company reported total revenue of $249 million for the third quarter, which was 0.2% greater than the third quarter of 2023. Scheduled service TRASM(4) of 10.42 cents decreased 11.1% year-over-year, while scheduled service ASMs increased 5.8%. The third quarter 2024 total fare per scheduled passenger of $141 was lower than third quarter 2023 by 7.8% as scheduled service passengers grew 2.0%. The Company’s third quarter charter service revenue was $51 million, an increase of 7.0% year-over-year despite charter block hour growth of only 1.7% and the impact of lower fuel cost reimbursements from our customers.

In the third quarter of 2024, cargo revenue was $29 million, an 11.9% increase versus the third quarter of 2023 on a 3.6% decline in cargo block hours. This improvement was primarily driven by the annual rate escalation which went into effect in mid-December 2023 and the beginning of the new Amazon contract rates which went into effect in June 2024.

Cost

Third quarter CASM fell 1.9% while adjusted CASM(3) was up 3.7% year-over-year. Total GAAP operating expenses increased 3.1% year-over-year, primarily due to a 3.8% increase in total block hours. The top non-fuel expenses that grew faster than the level of flying included ground handling costs, which increased 23.3%, driven by a 5% increase in Passenger segment departures and rate increases at our outsourced ground stations. Landing fees and airport rent increased 14.5% due to the expiration of COVID assistance that airports had used to limit rate increases.

Balance Sheet and Liquidity

Total liquidity(5) was $165 million on September 30, 2024, while the Company’s net debt(6) was $532 million.

(in millions - amounts may not recalculate due to rounding)

September 30, 2024

 

December 31, 2023

 

(Unaudited)

 

 

Cash and Cash Equivalents

$

56.8

 

$

46.3

Available-for-Sale Securities

 

83.3

 

 

134.2

Amount Available Under Revolving Credit Facility

 

24.7

 

 

24.7

Total Liquidity

$

164.8

 

$

205.2

 

 

 

 

(in millions - amounts may not recalculate due to rounding)

September 30, 2024

 

December 31, 2023

 

(Unaudited)

 

 

Total Debt, net

$

351.8

 

$

401.6

Finance Lease Obligations

 

298.5

 

 

277.3

Operating Lease Obligations

 

21.4

 

 

18.8

Total Debt, net, and Lease Obligations

 

671.6

 

 

697.7

Cash and Cash Equivalents

 

56.8

 

 

46.3

Available-for-Sale Securities

 

83.3

 

 

134.2

Net Debt

$

531.5

 

$

517.2

 

Fleet

As of September 30, 2024, the Company had 44 aircraft in its passenger service fleet, operated 12 freighter aircraft in its cargo operation and had seven aircraft that are currently on lease to unaffiliated airlines.

Guidance for Fourth Quarter 2024

 

Q4 2024

H/(L) vs Q4 2023

Total revenue - millions

$250 to $260

2% to 6%

Economic fuel cost per gallon

$2.47 

(20)%

Operating income margin - percentage

7% to 9%

0pp to 2pp

Effective tax rate

 23%

 

Total system block hours - thousands

36.5 to 37.5

2% to 5%

 

 

 

Conference Call & Webcast Details

Sun Country Airlines will host a conference call to discuss its third quarter 2024 results at 8:30 a.m. Eastern Time on Thursday, October 31, 2024. 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, whose mission is to connect guests to their favorite people and places, to create lifelong memories and transformative experiences. Sun Country 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 service to Amazon, with flights throughout the United States and to destinations in Mexico, Central America, Canada, and the Caribbean. For photos, b-roll and additional company information, visit https://www.stories.suncountry.com/multimedia.

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 -

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 and amortization recognized on certain assets that generate lease income, certain commissions, and other costs of selling its vacations product from this measure. See table titled “Reconciliation of CASM to Adjusted CASM”

4 -

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 associated with certain assets that generate lease income of approximately $10.1 million and $5.9 million in the three months ended September 30, 2024 and 2023, respectively, and $29.2 million and $11.7 million in the nine months ended September 30, 2024 and 2023, respectively, which is not included.

5 -

Total liquidity = cash and cash equivalents + available-for-sale securities + amount available under revolver

6 -

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- amounts may not recalculate due to rounding)

 

 

 

 

 

Three Months Ended September 30,

 

 

 

 

2024

 

 

 

2023

 

 

% Change

Operating Revenues:

 

 

 

 

 

Scheduled Service

$

83,784

 

 

$

96,483

 

 

(13.2

)

Charter

 

50,769

 

 

 

47,437

 

 

7.0

 

Ancillary

 

73,211

 

 

 

70,435

 

 

3.9

 

Passenger

 

207,764

 

 

 

214,355

 

 

(3.1

)

Cargo

 

29,165

 

 

 

26,059

 

 

11.9

 

Other

 

12,541

 

 

 

8,462

 

 

48.2

 

Total Operating Revenue

 

249,470

 

 

 

248,876

 

 

0.2

 

 

 

 

 

 

 

Operating Expenses:

 

 

 

 

 

Aircraft Fuel

 

54,737

 

 

 

61,179

 

 

(10.5

)

Salaries, Wages, and Benefits

 

80,919

 

 

 

72,541

 

 

11.5

 

Aircraft Rent

 

 

 

 

22

 

 

(100.0

)

Maintenance

 

15,973

 

 

 

15,330

 

 

4.2

 

Sales and Marketing

 

7,748

 

 

 

7,569

 

 

2.4

 

Depreciation and Amortization

 

23,754

 

 

 

22,762

 

 

4.4

 

Ground Handling

 

11,568

 

 

 

9,382

 

 

23.3

 

Landing Fees and Airport Rent

 

15,979

 

 

 

13,958

 

 

14.5

 

Other Operating, net

 

26,410

 

 

 

27,127

 

 

(2.6

)

Total Operating Expenses

 

237,088

 

 

 

229,870

 

 

3.1

 

Operating Income

 

12,382

 

 

 

19,006

 

 

(34.9

)

 

 

 

 

 

 

Non-operating Income (Expense):

 

 

 

 

 

Interest Income

 

1,659

 

 

 

2,480

 

 

(33.1

)

Interest Expense

 

(11,049

)

 

 

(11,403

)

 

(3.1

)

Other, net

 

12

 

 

 

(15

)

 

NM

 

Total Non-operating Expense, net

 

(9,378

)

 

 

(8,938

)

 

4.9

 

 

 

 

 

 

 

Income before Income Tax

 

3,004

 

 

 

10,068

 

 

(70.2

)

Income Tax Expense

 

662

 

 

 

2,477

 

 

(73.3

)

Net Income

$

2,342

 

 

$

7,591

 

 

(69.1

)

 

 

 

 

 

 

Net Income per share to common stockholders:

 

 

Basic

$

0.04

 

 

$

0.14

 

 

(71.4

)

Diluted

$

0.04

 

 

$

0.13

 

 

(69.2

)

Shares used for computation:

 

 

 

 

 

Basic

 

52,876,339

 

 

 

55,435,386

 

 

(4.6

)

Diluted

 

54,780,672

 

 

 

58,595,646

 

 

(6.5

)

NM - not meaningful

 

Nine Months Ended September 30,

 

 

 

 

2024

 

 

 

2023

 

 

% Change

Operating Revenues:

 

 

 

 

 

Scheduled Service

$

313,056

 

 

$

360,607

 

 

(13.2

)

Charter

 

149,090

 

 

 

143,250

 

 

4.1

 

Ancillary

 

236,677

 

 

 

205,633

 

 

15.1

 

Passenger

 

698,823

 

 

 

709,490

 

 

(1.5

)

Cargo

 

78,560

 

 

 

74,437

 

 

5.5

 

Other

 

37,951

 

 

 

20,150

 

 

88.3

 

Total Operating Revenue

 

815,334

 

 

 

804,077

 

 

1.4

 

 

 

 

 

 

 

Operating Expenses:

 

 

 

 

 

Aircraft Fuel

 

187,229

 

 

 

185,829

 

 

0.8

 

Salaries, Wages, and Benefits

 

242,516

 

 

 

223,890

 

 

8.3

 

Aircraft Rent

 

 

 

 

2,281

 

 

(100.0

)

Maintenance

 

50,129

 

 

 

44,311

 

 

13.1

 

Sales and Marketing

 

26,819

 

 

 

26,005

 

 

3.1

 

Depreciation and Amortization

 

71,194

 

 

 

64,577

 

 

10.2

 

Ground Handling

 

32,090

 

 

 

28,299

 

 

13.4

 

Landing Fees and Airport Rent

 

44,431

 

 

 

36,847

 

 

20.6

 

Other Operating, net

 

81,003

 

 

 

81,663

 

 

(0.8

)

Total Operating Expenses

 

735,411

 

 

 

693,702

 

 

6.0

 

Operating Income

 

79,923

 

 

 

110,375

 

 

(27.6

)

 

 

 

 

 

 

Non-operating Income (Expense):

 

 

 

 

 

Interest Income

 

5,907

 

 

 

7,766

 

 

(23.9

)

Interest Expense

 

(33,238

)

 

 

(31,272

)

 

6.3

 

Other, net

 

55

 

 

 

(370

)

 

NM

 

Total Non-operating Expense, net

 

(27,276

)

 

 

(23,876

)

 

14.2

 

 

 

 

 

 

 

Income before Income Tax

 

52,647

 

 

 

86,499

 

 

(39.1

)

Income Tax Expense

 

13,180

 

 

 

19,963

 

 

(34.0

)

Net Income

$

39,467

 

 

$

66,536

 

 

(40.7

)

 

 

 

 

 

 

Net Income per share to common stockholders:

 

 

Basic

$

0.75

 

 

$

1.19

 

 

(37.0

)

Diluted

$

0.72

 

 

$

1.12

 

 

(35.7

)

Shares used for computation:

 

 

 

 

 

Basic

 

52,866,797

 

 

 

56,051,173

 

 

(5.7

)

Diluted

 

54,990,437

 

 

 

59,281,819

 

 

(7.2

)

NM - not meaningful

KEY OPERATING STATISTICS - amounts may not recalculate due to rounding

 

The following tables presents key operating statistics and metrics for the three and nine months ended September 30, 2024 and 2023.

 

 

 

 

 

 

Three Months Ended September 30,

 

 

 

 

 

2024

 

 

 

2023

 

 

% Change

 

Scheduled Service Statistics:

 

 

 

 

 

 

Revenue passenger miles (RPMs) – thousands

 

1,288,460

 

 

 

1,252,583

 

 

2.9

 

 

Available seat miles (ASMs) – thousands

 

1,530,058

 

 

 

1,446,462

 

 

5.8

 

 

Load factor

 

84.2%

 

 

 

86.6%

 

 

(2.4

)

(3

)

Revenue passengers carried

 

1,112,455

 

 

 

1,090,172

 

 

2.0

 

 

Departures

 

7,259

 

 

 

6,878

 

 

5.5

 

 

Block hours

 

21,416

 

 

 

19,935

 

 

7.4

 

 

Scheduled service TRASM

(1)

- cents

 

10.42

 

 

 

11.72

 

 

(11.1

)

 

Average base fare per passenger

$

75.31

 

 

$

88.50

 

 

(14.9

)

 

Ancillary revenue per passenger

$

65.81

 

 

$

64.61

 

 

1.9

 

 

Total fare per passenger

$

141.13

 

 

$

153.11

 

 

(7.8

)

 

Fuel gallons - thousands

 

16,565

 

 

 

15,536

 

 

6.6

 

 

 

 

 

 

 

 

 

Charter Statistics:

 

 

 

 

 

 

Departures

 

2,809

 

 

 

2,688

 

 

4.5

 

 

Block hours

 

5,366

 

 

 

5,274

 

 

1.7

 

 

Available seats miles (ASMs) - thousands

 

328,142

 

 

 

322,722

 

 

1.7

 

 

Fuel gallons - thousands

 

3,525

 

 

 

3,513

 

 

0.3

 

 

 

 

 

 

 

 

 

Cargo Statistics:

 

 

 

 

 

 

Departures

 

3,519

 

 

 

3,432

 

 

2.5

 

 

Block hours

 

8,957

 

 

 

9,287

 

 

(3.6

)

 

 

 

 

 

 

 

 

Total System Statistics:

 

 

 

 

 

 

Average passenger aircraft

 

43.6

 

 

 

42.0

 

 

3.8

 

 

Passenger aircraft – end of period

 

44

 

 

 

42

 

 

4.8

 

 

Cargo aircraft – end of period

 

12

 

 

 

12

 

 

 

 

Leased aircraft – end of period

 

7

 

 

 

5

 

 

40.0

 

 

Available seat miles (ASMs) – thousands

 

1,884,889

 

 

 

1,791,485

 

 

5.2

 

 

Departures

 

13,730

 

 

 

13,128

 

 

4.6

 

 

Block hours

 

36,191

 

 

 

34,874

 

 

3.8

 

 

Daily utilization – hours

 

6.8

 

 

 

6.6

 

 

3.0

 

 

Average stage length – miles

 

1,001

 

 

 

1,005

 

 

(0.4

)

 

Total revenue per ASM (TRASM) - cents

 

11.15

 

 

 

12.11

 

 

(7.9

)

 

Cost per ASM (CASM) - cents

 

12.58

 

 

 

12.83

 

 

(1.9

)

 

Adjusted CASM

(2)

- cents

 

8.04

 

 

 

7.75

 

 

3.7

 

 

Fuel gallons - thousands

 

20,344

 

 

 

19,262

 

 

5.6

 

 

Fuel cost per gallon

$

2.69

 

 

$

3.19

 

 

(15.7

)

 

Employees at end of period

 

2,965

 

 

 

2,692

 

 

10.1

 

 

1 – See note 3 in end notes

2 – See note 4 in end notes

3- Percentage point difference

 

Nine Months Ended September 30,

 

 

 

 

 

2024

 

 

 

2023

 

 

% Change

 

Scheduled Service Statistics:

 

 

 

 

 

 

Revenue passenger miles (RPMs) – thousands

 

4,335,623

 

 

 

3,900,975

 

 

11.1

 

 

Available seat miles (ASMs) – thousands

 

5,098,876

 

 

 

4,489,968

 

 

13.6

 

 

Load factor

 

85.0%

 

 

 

86.9%

 

 

(1.9

)

(3

)

Revenue passengers carried

 

3,437,005

 

 

 

3,093,536

 

 

11.1

 

 

Departures

 

22,109

 

 

 

19,456

 

 

13.6

 

 

Block hours

 

70,312

 

 

 

61,438

 

 

14.4

 

 

Scheduled service TRASM

(1)

- cents

 

10.95

 

 

 

12.80

 

 

(14.5

)

 

Average base fare per passenger

$

91.08

 

 

$

116.57

 

 

(21.9

)

 

Ancillary revenue per passenger

$

68.86

 

 

$

66.47

 

 

3.6

 

 

Total fare per passenger

$

159.95

 

 

$

183.04

 

 

(12.6

)

 

Fuel gallons - thousands

 

54,634

 

 

 

48,046

 

 

13.7

 

 

 

 

 

 

 

 

 

Charter Statistics:

 

 

 

 

 

 

Departures

 

7,638

 

 

 

7,816

 

 

(2.3

)

 

Block hours

 

15,355

 

 

 

15,994

 

 

(4.0

)

 

Available seats miles (ASMs) - thousands

 

937,057

 

 

 

961,953

 

 

(2.6

)

 

Fuel gallons - thousands

 

10,558

 

 

 

11,063

 

 

(4.6

)

 

 

 

 

 

 

 

 

Cargo Statistics:

 

 

 

 

 

 

Departures

 

9,726

 

 

 

9,643

 

 

0.9

 

 

Block hours

 

25,008

 

 

 

25,633

 

 

(2.4

)

 

 

 

 

 

 

 

 

Total System Statistics:

 

 

 

 

 

 

Average passenger aircraft

 

42.6

 

 

 

41.8

 

 

1.9

 

 

Passenger aircraft – end of period

 

44

 

 

 

42

 

 

4.8

 

 

Cargo aircraft – end of period

 

12

 

 

 

12

 

 

 

 

Leased aircraft – end of period

 

7

 

 

 

5

 

 

40.0

 

 

Available seat miles (ASMs) – thousands

 

6,108,695

 

 

 

5,516,826

 

 

10.7

 

 

Departures

 

39,879

 

 

 

37,295

 

 

6.9

 

 

Block hours

 

111,908

 

 

 

104,188

 

 

7.4

 

 

Daily utilization – hours

 

7.4

 

 

 

6.9

 

 

7.2

 

 

Average stage length – miles

 

1,100

 

 

 

1,088

 

 

1.1

 

 

Total revenue per ASM (TRASM) - cents

 

11.58

 

 

 

13.01

 

 

(11.0

)

 

Cost per ASM (CASM) - cents

 

12.04

 

 

 

12.57

 

 

(4.2

)

 

Adjusted CASM

(2)

- cents

 

7.51

 

 

 

7.56

 

 

(0.7

)

 

Fuel gallons - thousands

 

65,884

 

 

 

59,734

 

 

10.3

 

 

Fuel cost per gallon

$

2.86

 

 

$

3.12

 

 

(8.3

)

 

Employees at end of period

 

2,965

 

 

 

2,692

 

 

10.1

 

 

1 – See note 3 in end notes

2 – See note 4 in end notes

3- Percentage point difference

SUMMARY BALANCE SHEET
(Dollars in millions)
(amounts may not recalculate due to rounding)

 

 

September 30, 2024

 

December 31, 2023

 

% Change

 

(Unaudited)

 

 

 

 

Cash & Cash Equivalents

$

56.8

 

$

46.3

 

22.7

 

Other Current Assets

 

169.2

 

 

225.1

 

(24.8

)

Total Current Assets

 

226.0

 

 

271.4

 

(16.7

)

Total Property & Equipment, net

 

993.1

 

 

969.0

 

2.5

 

Other

 

390.7

 

 

383.3

 

1.9

 

Total Assets

 

1,609.9

 

 

1,623.6

 

(0.8

)

 

 

 

 

 

 

Air Traffic Liabilities

 

131.5

 

 

158.0

 

(16.8

)

Current Finance Lease Obligations

 

42.2

 

 

44.8

 

(5.8

)

Current Operating Lease Obligations

 

3.2

 

 

2.2

 

45.5

 

Current Maturities of Long-Term Debt, net

 

75.9

 

 

74.2

 

2.3

 

Income Tax Receivable Agreement Liability

 

9.5

 

 

3.3

 

187.9

 

Other Current Liabilities

 

118.5

 

 

136.2

 

(13.0

)

Total Current Liabilities

 

380.8

 

 

418.6

 

(9.0

)

Finance Lease Obligations

 

256.3

 

 

232.5

 

10.2

 

Operating Lease Obligations

 

18.2

 

 

16.6

 

9.6

 

Long-Term Debt, net

 

275.9

 

 

327.5

 

(15.8

)

Income Tax Receivable Agreement Liability

 

88.2

 

 

97.8

 

(9.8

)

Other

 

38.0

 

 

16.2

 

134.6

 

Total Liabilities

 

1,057.3

 

 

1,109.2

 

(4.7

)

 

 

 

 

 

 

Total Stockholders’ Equity

$

552.5

 

$

514.4

 

7.4

 

SUMMARY CASH FLOW
(Dollars in millions)
(Unaudited - amounts may not recalculate due to rounding)

 

 

Nine Months Ended September 30,

 

 

 

 

2024

 

 

 

2023

 

 

% Change

Net Cash Provided by Operating Activities

$

        74.3

 

 

$

        102.7

 

 

        (27.7

)

 

 

 

 

 

 

Purchases of Property & Equipment

 

        (42.6

)

 

 

        (210.6

)

 

        (79.8

)

Other, net

 

        63.6

 

 

 

        32.4

 

 

        96.3

 

Net Cash Provided by (Used in) Investing Activities

 

        20.9

 

 

 

        (178.3

)

 

        111.7

 

 

 

 

 

 

 

Common Stock Repurchases

 

        (11.5

)

 

 

        (55.1

)

 

        (79.1

)

Proceeds from Borrowing

 

        10.0

 

 

 

        119.2

 

 

        (91.6

)

Repayment of Finance Lease Obligations

 

        (26.2

)

 

 

        (16.4

)

 

        59.8

 

Repayment of Borrowings

 

        (60.8

)

 

 

        (35.5

)

 

        71.3

 

Other, net

 

        (3.0

)

 

 

        (1.7

)

 

        76.5

 

Net Cash Provided by (Used in) Financing Activities

 

        (91.5

)

 

 

        10.6

 

 

NM

 

 

 

 

 

 

 

Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash

 

        3.8

 

 

 

        (65.0

)

 

        105.8

 

Cash, Cash Equivalents and Restricted Cash – Beginning of the Period

 

        63.7

 

 

 

        102.9

 

 

        (38.1

)

Cash, Cash Equivalents and Restricted Cash –

End of the Period

$

        67.4

 

 

$

        37.9

 

 

        77.8

 

NM - 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,

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Operating Revenue

$

249.5

 

 

$

248.9

 

 

$

815.3

 

 

$

804.1

 

Operating Income

 

12.4

 

 

 

19.0

 

 

 

79.9

 

 

 

110.4

 

Stock Compensation Expense

 

1.5

 

 

 

1.0

 

 

 

4.6

 

 

 

8.1

 

Adjusted Operating Income

$

13.9

 

 

$

20.0

 

 

$

84.5

 

 

$

118.5

 

 

 

 

 

 

 

 

 

Operating Income Margin

 

5.0 %

 

 

 

7.6 %

 

 

 

9.8 %

 

 

 

13.7 %

 

Adjusted Operating Income Margin

 

5.6 %

 

 

 

8.1 %

 

 

 

10.4 %

 

 

 

14.7 %

 

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,

 

2024

 

2023

 

 

2024

 

 

2023

 

Net Income

$

        2.3

 

 

$

        7.6

 

 

$

      39.5

 

 

$

      66.5

 

Add: Provision for Income Tax Expense

0.7

 

 

2.5

 

 

13.2

 

 

20.0

 

Income Before Income Tax, as reported

3.0

 

 

10.1

 

 

52.6

 

 

86.5

 

Pre-tax margin

1.2

 %

 

4.0

 %

 

6.5

 %

 

10.8

 %

 

 

 

 

 

 

 

 

 

 

 

 

Stock Compensation Expense

1.5

 

 

1.0

 

 

4.6

 

 

8.1

 

Tax Receivable Agreement adjustment

(1)

 

 

 

 

 

 

(0.4

)

Secondary offering costs

 

 

 

 

 

 

0.6

 

Adjusted Income Before Income Tax

$

        4.5

 

 

$

      11.1

 

 

$

      57.2

 

 

$

      94.9

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Pre-tax margin

1.8

 %

 

4.5

 %

 

7.0

 %

 

11.8

 %

(1) This represents the adjustment to the TRA for the period, which is recorded in Non-Operating Income (Expense)

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,

 

 

2024

 

 

2023

 

Dollars

 

Per Share - diluted

 

Dollars

 

Per Share - diluted

Net Income

$

2.3

 

 

$

0.04

 

 

$

7.6

 

 

$

0.13

 

Stock Compensation Expense

 

1.5

 

 

 

0.03

 

 

 

1.0

 

 

 

0.02

 

Income tax effect of adjusting items, net

(1)

 

(0.3

)

 

 

(0.01

)

 

 

(0.2

)

 

 

 

Adjusted Net Income

$

3.5

 

 

$

0.06

 

 

$

8.4

 

 

$

0.14

 

 

 

 

 

 

 

 

 

Diluted share count

 

54.8

 

 

 

 

 

58.6

 

 

 

 

Nine Months Ended September 30,

 

 

2024

 

 

2023

 

Dollars

 

Per Share - diluted

 

Dollars

 

Per Share - diluted

Net Income

$

39.5

 

 

$

0.72

 

 

$

66.5

 

 

$

1.12

 

Stock Compensation Expense

 

4.6

 

 

 

0.08

 

 

 

8.1

 

 

 

0.14

 

Tax Receivable Agreement adjustment

(2)

 

 

 

 

 

 

 

(0.4

)

 

 

(0.01

)

Secondary offering costs

 

 

 

 

 

 

 

0.6

 

 

 

0.01

 

Income tax effect of adjusting items, net

(1)

 

(1.1

)

 

 

(0.02

)

 

 

(2.0

)

 

 

(0.03

)

Adjusted Net Income

$

43.0

 

 

$

0.78

 

 

$

72.9

 

 

$

1.23

 

 

 

 

 

 

 

 

 

Diluted share count

 

55.0

 

 

 

 

 

59.3

 

 

 

 

(1) The tax effect of adjusting items, net is calculated at the Company’s statutory rate for the application period  

(2) This represents the adjustment to the TRA for the period, which is recorded in Non-Operating Income (Expense)

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,

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Net Income

$

2.3

 

 

$

7.6

 

 

$

39.5

 

 

$

66.5

 

Interest Income

 

(1.7

)

 

 

(2.5

)

 

 

(5.9

)

 

 

(7.8

)

Interest Expense

 

11.0

 

 

 

11.4

 

 

 

33.2

 

 

 

31.3

 

Stock Compensation Expense

 

1.5

 

 

 

1.0

 

 

 

4.6

 

 

 

8.1

 

Tax Receivable Agreement adjustment

(1)

 

 

 

 

 

 

 

 

 

 

(0.4

)

Secondary offering costs

 

 

 

 

 

 

 

 

 

 

0.6

 

Provision for Income Taxes

 

0.7

 

 

 

2.5

 

 

 

13.2

 

 

 

20.0

 

Depreciation and Amortization

 

23.8

 

 

 

22.8

 

 

 

71.2

 

 

 

64.6

 

Adjusted EBITDA

$

37.6

 

 

$

42.8

 

 

$

155.7

 

 

$

183.0

 

 

 

 

 

 

 

 

 

Adjusted EBITDA margin

 

15.1

 %

 

 

17.2

 %

 

 

19.1

 %

 

 

22.8

 %

(1) This represents the adjustment to the TRA for the period, which is recorded in Non-Operating Income (Expense)

 

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 and amortization recognized on certain assets that generate lease income, 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. We have entered into a series of aircraft-related transactions where we act as an aircraft lessor. As of September 30, 2024, we leased or subleased seven aircraft. 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,

 

 

2024

 

 

2023

 

Operating Expenses- mm

 

Per ASM (cents)

 

Operating Expenses- mm

 

Per ASM (cents)

CASM

$

237.1

 

12.58

 

$

229.9

 

12.83

Less:

 

 

 

 

 

 

 

Aircraft Fuel

 

54.7

 

2.90

 

 

61.2

 

3.41

Stock Compensation Expense

 

1.5

 

0.08

 

 

1.0

 

0.06

Cargo expenses, not already adjusted above

 

27.1

 

1.45

 

 

26.4

 

1.48

Sun Country Vacations

 

0.2

 

0.01

 

 

0.2

 

0.01

Leased Aircraft, Depreciation and Amortization Expense

 

2.0

 

0.10

 

 

2.2

 

0.12

Adjusted CASM

$

151.5

 

8.04

 

$

138.8

 

7.75

 

 

 

 

 

 

 

 

Available seat miles (ASMs) - mm

 

1,884.9

 

 

 

 

1,791.5

 

 

 

Nine Months Ended September 30,

 

 

2024

 

 

2023

 

Operating Expenses- mm

 

Per ASM (cents)

 

Operating Expenses- mm

 

Per ASM (cents)

CASM

$

735.4

 

12.04

 

$

693.7

 

12.57

Less:

 

 

 

 

 

 

 

Aircraft Fuel

 

187.2

 

3.06

 

 

185.8

 

3.37

Stock Compensation Expense

 

4.6

 

0.07

 

 

8.1

 

0.14

Cargo expenses, not already adjusted above

 

77.4

 

1.28

 

 

77.2

 

1.40

Sun Country Vacations

 

1.0

 

0.02

 

 

0.9

 

0.02

Leased Aircraft, Depreciation and Amortization Expense

 

6.3

 

0.10

 

 

4.5

 

0.08

Adjusted CASM

$

458.9

 

7.51

 

$

417.2

 

7.56

 

 

 

 

 

 

 

 

Available seat miles (ASMs) - mm

 

6,108.7

 

 

 

 

5,516.8

 

 

 

 

 

 

 

 

 

 

 

 

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