Upload
others
View
1
Download
0
Embed Size (px)
Citation preview
INVESTOR PRESENTATIONImperial Capital Global Opportunities ConferenceSeptember 2015
Forward-looking Statements
This presentation contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect the Company’s current views with respect to certain current and future events and financial performance. Words such as “expects,” “anticipates,” “projects,” “intends,” “plans,” “believes,” “estimates,” variations of such words, and similar expressions are also intended to identify such forward-looking statements. These forward-looking statements are and will be, as the case may be, subject to many risks, uncertainties and assumptions relating to the Company’s operations and business environment, all of which may cause the Company’s actual results to be materially different from any future results, expressed or implied, in these forward-looking statements. These risks and uncertainties include, without limitation, the Company’s ability to accurately forecast quarter and year-end results; economic volatility; theprice and availability of aircraft fuel; fluctuations in demand for transportation in the markets in which the Company operates;the Company’s dependence on tourist travel; foreign currency exchange rate fluctuations; and the Company’s ability to implement its growth strategy.
The risks, uncertainties and assumptions referred to above that could cause the Company’s results to differ materially from the results expressed or implied by such forward-looking statements also include the risks, uncertainties and assumptions discussed from time to time in the Company’s other public filings and public announcements, including the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 and the Company’s Quarterly Reports on Form 10-Q, as well as other documents that may be filed by the Company from time to time with the Securities and Exchange Commission. All forward-looking statements included in this document are based on information available to the Company on the date hereof. The Company does not undertake to publicly update or revise any forward-looking statements to reflect events or circumstances that may arise after the date hereof even if experience or future changes make it clear that any projected results expressed or implied herein will not be realized.
2
Overview of Hawaiian – Hawai‘i’s Destination Carrier
• Successful travel carrier to and within Hawai‘i– Unique business model
• Neighbor Island shuttle service with 160 daily flights• Long‐haul leisure carrier from North America to Hawai‘i serving 11 cities• Long‐haul leisure carrier from International to Hawai‘i serving 11 cities
– Industry leading service, safety and reliability• Growing financial strength
– Profitable since 2007– Strong revenue growth with a diversified network– Strong financial performance– Strengthening balance sheet– Generating free cash flow– Capital allocation
3
Accelerating growth since 2010
2004 – Sydney
2010 – Tokyo (Haneda)
2011 – Seoul (Incheon)
2011 – Osaka (Kansai)
2012 – Sapporo (Chitose)
2012 – Brisbane
2013 – Auckland – March
2013 – Sendai – June
2014 – Beijing – April*
Building a Broad International PortfolioWhere we fly – Hawaii’s destination carrier
• 10.2M passengers / year• 5,400 employees• 29 cities served• 30 wide‐body aircraft• 18 narrow‐body aircraft• 200 daily departures
4
A Decade of Hawaiian Airlines
• Focused profitable growth
• Re-fleeting• Diversification of our
network• International
expansion• Strengthening our
North America and Neighbor Island network
• Moderate growth with the delivery of the A321neos
• Leading long-haul network
• Financial strength • Best customer value
proposition• Best operational
performance
• Modest growth• Maturing network• Expanding margins • Balance sheet
strength• Best customer value
proposition• Best operational
performance
LOOKING BACK (2010 – 2013)
CURRENT(2014 – 2017)
LOOKING FORWARD(2018 – 2020)
5
Strong financial performance
Adjusted Net Income
Adjusted EPS
Pre-tax ROIC (TTM)
Adjusted Pre-tax Margin
6
$24.7M
$0.38 /share
19.4%
7.4%
$97.1M
$1.55 /share
16.3%
6.9%
FULL YEAR 2014
After several years of investment in the business, Hawaiian’s financial performance is trending higher
1st Quarter 2015
2nd Quarter 2015
$37.5M
$0.61 /share
22.0%
10.7%
Diversified Network
• ~25% of passenger revenue
• ~90% seat share• Unrivaled flight schedule
~160 daily flights• 2/3 is local traffic• ‘Ohana by Hawaiian
rounds out portfolio
7
NEIGHBOR ISLAND NORTH AMERICA INTERNATIONAL
• ~50% of passenger revenue
• Focus on largest gateways to Honolulu and Maui with 11 gateways
• Leading Carrier from West Coast to Hawai‘i with a seat share of 29%
• Product / schedule tailored for visitors to Hawai‘i
• Per-seat cost advantage
• ~25% of passenger revenue
• Leading International Carrier to Hawai‘i with 11 Destinations
• Japan is the largest source of international visitors to Hawai‘i
• Focus on large economic centers (e.g. China)
• With slower expansion we are pivoting towards network maturity
Growing Sales of Value-Added Products and Cargo Revenue
Value-Added Product Revenue Per Passenger
2.3%
2.4%
3.0%
3.3%
2011 2012 2013 20142011 2012 2013 2014
Other HawaiianAirlines Vacations
First Class Upgrades Extra Comfort / Preferred Seat Sales
Ticket Changes Sales of HawaiianMiles
Baggage
$14.82 $15.15 $14.69
$19.72
US Carriers
Cargo Revenue as a % of Total Revenue
8
Strengthening Balance Sheet
LIQUIDITY TARGET23% to 25%
LEVERAGE TARGETBetween 3.0x and 4.0x
9 Note<1>: Liquidity includes availability under the undrawn revolving credit facility of $175MNote<2>: Aircraft Rent Expense Capitalized at 7x for Adjusted Debt
22%24%
23%
30%
34%
2011 2012 2013 2014 2Q15 TTM
Strong Liquidity –Unrestricted Cash / Revenue
4.5x 4.3x
4.9x
4.2x
3.4x
2011 2012 2013 2014 2Q15 TTM
Decrease Leverage –Adjusted Debt / Adjusted EBITDAR
Fleet replacement pauses, spending declinesA330-200 aircraft began replacing our B767s in 2010 and we complete our deliveries in 2016
3
2
4
5 5
3
1
‐
(2)
‐
(4)
(2) (2)
(1)
2010 2011 2012 2013 2014 2015 2016
A330
B767
CAPEX $145M $435M $470M $500M $440M $45M-$50MPre-Tax ROIC 15.6% 12.9% 14.1% 12.9% 16.3%
10
Wide-body 21 21 25 26 29 29 29
Free cash flow leads to Capital Allocation
11
DEBT RETIREMENT
SHARE BUYBACK
INVESTMENTS IN THE BUSINESS
• $136M in debt repurchase / retirement since 4Q14‐ $82M convertible notes‐ $54M A330 bank debt
• $100M share buyback announced April 2015‐ $18M repurchased through June 2015
• $7M contribution to pension plans in excess of minimum funding requirements
• Website redesign enhancing the customer experience and new product opportunities
• Retrofit of B717 fleet to a consistent layout providing more seats and operational efficiencies
In summary, Hawaiian is…
• Hawai‘i’s leading airline
• Profitable with improving financial metrics
• Superior brand, customer service, safety and reliability
• Market leader to and within Hawai‘i
12
Mahalo.
-13-
Third Quarter and Full Year 2015 Outlook
14
The table below summarizes the Company’s expectations for the third quarter ending September 30, 2015 and full year ending December 31, 2015, expressed as an expected percentage change compared to the results for the quarter ended September 30, 2014 or the year ended December 31, 2014 (the historical results for which are presented for reference).
3Q15 Guidance ThirdQuarter
Item 2014 Third Quarter 2015 Guidance
Cost per ASM Excluding Fuel (cents)............................ 7.80 Up 2.5% to up 5.5%Operating Revenue Per ASM (cents)............................. 14.20 Down 4% to down 7%ASMs (millions)............................................................. 4,502.9 Up 3% to up 5%Gallons of jet fuel consumed (millions)............................ 60.2 Up 0.5% to up 2.5%Economic fuel price per gallon........................................ 3.10$ $2.00 to $2.10
FY15 Guidance FullYear
Item 2014 Full Year 2015 Guidance
Cost per ASM Excluding Fuel (cents)............................ 8.15 Up 1.5% to up 3.5%ASMs (millions)............................................................. 17,073.6 Up 3% to up 5%Gallons of jet fuel consumed (millions)............................ 230.2 Up 0.5% to up 2.5%Economic fuel price per gallon........................................ 3.03$ $2.05 to $2.15
Note: Economic fuel cost per gallon estimates are based on the July 22, 2015 fuel forward curve.
BOEING 717-200
Fleet
15
N O R T H A M E R I C A & I N T E R N AT I O N A L
* As of June 30, 2015 ** Final seat count and cabin configuration to be determined
N E I G H B O R I S L A N D F U T U R E
ATR 42-500
AIRBUS A330-200
BOEING 767-300ER/EM
AIRBUS A330-800neo
AIRBUS A321neo
18 AIRCRAFT*
9 AIRCRAFT*
21 AIRCRAFT*(2 MORE ON ORDER DELIVERING 2015 / 2016)
6 ON ORDER6 PURCHASE RIGHTS(DELIVERY BEGINNING 2019)
3 AIRCRAFT* 16 ON ORDER9 OPTIONS
(DELIVERY 2017 – 2020)
Capacity: 118-128 seatsBusiness : 8 seats / Economy: 110-115 seats
Capacity: 190 seats**
Capacity: 252-264 seatsBusiness : 18 seats / Economy: 234-246 seats
Capacity: 294 seatsBusiness : 18 seats / Economy: 276 seats
Capacity: 48 seatsEconomy: 48 seats
Capacity: similar to A330-200**
Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS
($ in thousands, except CASM data) FY 2011 FY 2012 FY 2013 FY 2014 1Q2015 2Q2015GAAP Operating Expenses $1,630,176 $1,832,955 $2,022,118 $2,069,747 $469,116 $479,879
Less: aircraft fuel, including taxes and delivery (513,284) (631,741) (698,802) (678,253) (111,327) (112,519)
Less: lease termination expense (70,014) - - - -
Adjusted operating expenses - excluding aircraft fuel and lease termination
$1,046,878 $1,201,214 $1,323,316 $1,391,494 $355,789 $367,360
Available Seat Miles 12,039,933 14,687,472 16,785,827 17,073,630 4,229,686 4,441,648
CASM - GAAP (in cents) 13.54 12.48 12.05 12.12 11.09 10.80
Less: aircraft fuel and lease termination expense (in cents) (4.84) (4.30) (4.16) (3.97) (2.63) (2.53)
CASM Excluding Fuel and lease termination expense (in cents)
8.70 8.18 7.88 8.15 8.46 8.27
NON-GAAP RECONCILIATIONS
($ in thousands) FY 2011 FY 2012 FY 2013 FY 2014 1Q2015 2Q2015Net Income (Loss), GAAP $(2,649) $53,237 $51,854 $68,926 $25,883 $48,834
Add: lease termination expense, net of tax 42,008 - - - - -
Add: loss on extinguishment of debt, net of tax - - - 2,331 4,173 178
Add: changes in fair value of fuel derivatives, net of tax 3,859 2,375 (5,210) 25,864 (5,343) (11,519)
Adjusted Net Income, Non-GAAP $43,218 $55,612 $46,644 $97,121 $24,713 $37,493
The Company evaluates its financial performance utilizing various GAAP and non-GAAP financial measures, including operating income and CASM. Pursuant to Regulation G, the Company has included the following reconciliation of reported non-GAAP financial measures to comparable financial measures reported on a GAAP basis. The Company believes that excluding fuel costs from certain measures is useful to investors because it provides an additional measure of management’s performance excluding the effects of a significant cost item over which management has limited influence.
16
LeverageNON-GAAP RECONCILIATIONS
($ in thousands) FY 2011 FY 2012 FY 2013 FY 2014 TTM 2Q2015
Debt and capital lease obligations 461,971 661,241 806,473 1,049,637 946,611
Plus: Aircraft leases capitalized at 7x last 12 months’ aircraft rent
790,181 691,502 759,738 744,954 778,652
Adjusted debt and capital lease obligations 1,252,152 1,352,743 1,566,211 1,794,594 1,752,263
Income Before Income Taxes (1,082) 85,786 86,410 113,447 198,021
Add back:Interest and amortization of debt expense 24,521 43,522 50,453 64,240 62,469
Depreciation and amortization 66,262 85,599 83,050 96,374 102,515
Rent Expense 112,883 98,876 108,534 106,422 111,236
EBITDAR 202,584 313,783 328,447 380,483 474,241
Adjustments:Add: Unrealized (gains) losses on fuel hedges, net 6,432 3,958 (8,683) 43,107 16,907
Add: Loss on extinguishment of debt - - - 3,885 11,127
Add: Lease termination expense 70,014
Adjusted EBITDAR 279,030 317,741 319,764 427,475 502,275
Leverage Ratio 4.5x 4.3x 4.9x 4.2x 3.4x
The Company evaluates its financial performance utilizing various GAAP and non-GAAP financial measures, including operating income and CASM. Pursuant to Regulation G, the Company has included the following reconciliation of reported non-GAAP financial measures to comparable financial measures reported on a GAAP basis. The Company believes that excluding fuel costs from certain measures is useful to investors because it provides an additional measure of management’s performance excluding the effects of a significant cost item over which management has limited influence.
17
Return on Invested CapitalHawaiian Airlines – Return on Invested Capital (ROIC) – Working Capital Cash Methodology 1
(in ‘000s) 2010 2011 2012 2013 2014 2Q2015 TTM
Operating Income $91,278 $20,283 $129,400 $133,745 $245,132 $348,080
Add Back One-Time Charges $0 $70,014 $0 $0 $0 $0
Operating Income Less One-Time Charges $91,278 $90,297 $129,400 $133,745 $245,132 $348,080
Add Back Aircraft Rent Expense for Operating Leases $112,721 $112,883 $98,784 $108,535 $106,422 $111,236
Add Depreciation for Operating Lease Add Back 2 ($28,406) ($28,446) ($24,894) ($27,351) ($26,818) ($28,032)
Add Return on Invested Cash $197 $248 $294 $323 $347 $349
Adjusted Operating Income $175,790 $174,981 $203,585 $215,253 $325,083 $431,634
After Tax Adjusted Operating Income $108,990 $101,489 $122,130 $129,131 $195,050 $258,937
Average Total Debt and Capital Leases $225,170 $341,899 $616,704 $735,676 $1,017,084 $1,071,477
Common Equity $199,368 $286,499 $249,384 $302,141 $407,234 $378,703
Average Capitalized Operating Leases 3 $789,047 $790,180 $691,486 $759,747 $744,957 $778,653
Remove Average Excess Cash ($90,295) ($64,407) ($115,173) ($122,710) ($179,626) ($209,288)
Average Invested Capital $1,123,290 $1,354,171 $1,442,401 $1,674,855 $1,989,649 $1,965,544
Pre-Tax ROIC 15.6% 12.9% 14.1% 12.9% 16.3% 22.0%
After-Tax ROIC 9.7% 7.5% 8.5% 7.7% 9.8% 13.2%
18
Notes:1 All unrestricted cash removed from invested capital, except for working capital required to operate the business, defined as unrestricted cash equal to 15% of TTM total revenue2 Assumes 25 years useful life of aircraft and 10% salvage value3 Average capitalized operating leases equals TTM rent multiplied by 7