Skywest, Inc. · NASDAQ:SKYW
Skywest — Q4 2019 Earnings Presentation
24 slides from Skywest's earnings presentation, February 2020
Slide 1: Investor Update
a ey, SKYWEST INCORPORATED INVESTOR UPDATE ———— _ Q12020. — ——>> A DELTA 4 UNITED SY American « “Maska Airlines
Slide 2: Slide 2
Slide 3: Forward Looking Statements
Forward Looking Statements In addition to historical information, this release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “forecasts,” “expects,” “intends,” “believes,” “anticipates,” “estimates,” “should,” “likely” a
Slide 4: Growth Drivers
Growth Drivers 3 PILLARS OF OUR GROWTH WORKING MARKET LEASING WITHIN SCOPE SHARE WINS PLATFORM CONSTRAINTS IN PLACE 1 2 3 I N V E S T O R U P D AT E Q1 2020 4 PR OPRIE TARY – MAY NOT BE SHARED WITHOUT PERMISSION
Slide 5: Strategic Plan
Strategic Plan UPCOMING FLEET & RISK REDUCTION & EARNINGS INITIATIVES RETURN ON CAPITAL New Aircraft Coming Used Aircraft Coming Risk Reduction Return on Capital 20 New E175s 25 Used E175s Leasing older aircraft Deploying capital towards Contract with: Contract with: and engines to 26 New and 5 Used
Slide 6: Aircraft in Service
Aircraft in Service December 31, 2019 CONTRACT PRORATE CONTRACT PRORATE CONTRACT PRORATE CONTRACT PRORATE E175 • All debt financed 156 59 - 65 - - - 32 - • Average age 3 years CRJ900 • Own (4), debt (15), lease (1) and partner financed (23) 43 43 - - - - - - - • Average age 9 years CRJ700 • Own (23)
Slide 7: 5-Year Fleet Transition
5-Year Fleet Transition = Qty. of 10 2016 2017 2018 2019 2020 E175 86 107 146 156 201 CRJ700/900 121 120 140 137 134 CRJ200 161 195 184 190 174 TOTAL TOTAL TOTAL TOTAL TOTAL 368 422 470 483 509 15% 11% 3% 5% GROWTH RATE I N V E S T O R U P D AT E Q1 2020 7 PR OPRIE TARY – MAY NOT BE SHARED WITHOUT P
Slide 8: Revenue and Adjusted EPS Growth
Revenue and Adjusted EPS Growth Excludes ExpressJet Segment Revenue 18% $6.25 55% ~50% of EPS Growth $5.30 in 2018 is from Tax Change 26% $3.43 11% $2.9 B $2.73 14% 15% $2.6 B $2.3 B $2.0 B 2016 2017 2018 2019 CAGR - EPS Growth 32% CAGR - Revenue Growth 13% 24% Excluding Tax Change • Annual EPS grow
Slide 9: Regional Market Share Q4-19
Regional Market Share Q4-19 11% ~ 600 AIRCRAFT 69 Aircraft ~ 600 AIRCRAFT Envoy 26% 31% ExpressJet PSA 183 Aircraft Mesa Piedmont Republic Republic Air Wisconsin Mesa Trans States Compass CommutAir GoJet 63% 69% 20% ~ 450 AIRCRAFT 34% ~ 100 AIRCRAFT 32 Aircraft Endeavor Horizon Republic x Compass* x
Slide 10: Deliveries for Dual-Class Aircraft
Deliveries for Dual-Class Aircraft E175s (new) CRJ900s (new) E175s (used) CRJ700s (used) 2019 2020 2021 10 7 2 16 29 1 5 10 2 19 51 12 Delivered during the year I N V E S T O R U P D AT E Q1 2020 10 PR OPRIE TARY – MAY NOT BE SHARED WITHOUT PERMISSION
Slide 11: Highlights from Fiscal 2019
Highlights from Fiscal 2019 ADJUSTED PRE-TAX INCOME $56M EPS 18% AIRCRAFT ADDED IN 2019 EARLY LEASE BUYOUT ON 10 + 7 52 NEW E175s NEW CRJ900s CRJ Aircraft in Q1 2019 44 aircraft added throughout 2018 – full year benefit realized in 2019 4 In Q3 2019 LEASING ASSETS STOCK REPURCHASES PARTIALLY OFFSET
Slide 12: Income Waterfall
Income Waterfall $ in Millions 2019 IMPROVEMENT FROM 2018 $700 $41 $600 $(115) $69 $500 $(93) $(40) $180 $400 $(540) $554 $300 $422 $200 $366 $100 $- 2018 2018 Actual E175 E175 CRJ700/900 CRJ700/900 50-seat 50-seat 2018 2018 2018 2018 Higher Higher Higher Higher Other Other Ex penses 20192019 Adjust
Slide 13: Cash Waterfall
Cash Waterfall $ in Millions 2019 $1,500 $(140) $1,200 $(496) $902 $200 $900 $(114) $(382) $600 $(95) $(23) $(21) $689 $300 $520 $- 2018 2018 Ending EBITDA EBITDA Early Early Lease Cap-Ex Cap-Ex Net Net Interest New Debt DebtDebt New Debt Paydown Stock Stock Dividend Dividen d Other* Other* 2019 201
Slide 14: Earnings Trajectory
Earnings Trajectory Pre-tax Income Pre-tax Margin % $ in Millions 119 $115 $ $110 $98 $98 $91 90 $ $87 $81 $76 15.4% 15.6% $66 $68 $67 12.4% $46 $52 13.3% 13.1% $45 12.2% 10.7% 11.3% 10.2% 9.7% 8.8% 8.6% 8.4% 7.0% 6.3% 5.9% Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Q1-1
Slide 15: Dividends & Share Repurchase
Dividends & Share Repurchase Dividend History Share Count & Share Repurchase $ 0.56* • 1.4 million reduction in diluted shares, $ 0.48 or 3%, since Q4 2018. $0.40 • $95 million used in 2019 to repurchase 1.7 million shares. $0.32 • $160 million remaining authorization $0.19 0.16 $ $ 0.16 * Estimated
Slide 16: Q4-19 Aircraft Summary by Financing
Q4-19 Aircraft Summary by Financing $ in Billions Debt aircraft 156 E175s $2.7 debt balance (total 222) 66 CRJs $0.3 debt balance Leased aircraft 44 CRJs $0.3 future lease obligations Owned aircraft 173 CRJs No debt outstanding 35% of fleet Partner provided aircraft 44 CRJs No financing obligation 4
Slide 17: Capital Expenditures
Capital Expenditures $ in Thousands 2019 2018 2017 2016 Capital Expenditures by Type (Actual) (Actual) (Actual) (Actual) New E175 Aircraft $ (215,000) $ (880,000) $ (548,000) $ (1,087,000) Used Aircraft (188,000) (74,000) (35,000) - Rotable Spares, Spare Engines, Other (233,000) (143,000) (106,000)
Slide 18: Free Cash Flow Analysis
Free Cash Flow Analysis $ in Thousands 2019 2018 2017 2016 (Actual) (Actual) (Actual) (Actual) EBITDA* $ 902,000 $ 809,000 $ 681,000 $ 594,000 Total Capital Expenditures (636,000) (1,097,000) (689,000) (1,153,000) Issuance of Debt for Aircraft 200,000 844,000 472,000 926,000 Net Cash Capex (436,000)
Slide 19: SkyWest - A Different Airline Model
SkyWest - A Different Airline Model RISK ME TER RISK ME TER Contract Flying Model Traditional Airline Model Network capacity fluctuations Passenger load factor and seat inventory Passenger fare volatility Fuel volatility Labor availability and costs Aircraft maintenance Operational performance Compe
Slide 20: Improvements in Risk Profile
Improvements in Risk Profile FACTORS IMPACT FACTORS IMPACT ON RISK ON RISK 1 Tail risk down $1B to $100M 9 More non-flying revenue streams (engines, aircraft) 2 2014 Revenue: $3.2B | 2019: $3.0B to 10 Very limited oil risk (unchanged) 3 2014 Cash: $547M | 2019: $520M 11 sold; loss and cash burn avoi
Slide 21: SkyWest Airlines Contract & Prorate
SkyWest Airlines Contract & Prorate As of January 1, 2020 13% CONTRACT 2,040 87% PRORATE 310 Total Flights Per Day 2,350 I N V E S T O R U P D AT E Q1 2020 21 PR OPRIE TARY – MAY NOT BE SHARED WITHOUT PERMISSION
Slide 22: Awards
Awards I N V E S T O R U P D AT E Q1 2020 22 PR OPRIE TARY – MAY NOT BE SHARED WITHOUT PERMISSION
Slide 23: Appendix: Reconciliation of Non-GAAP Financial Measures
Appendix: Reconciliation of Non-GAAP Financial Measures Reconciliation to Adjusted Net Income and Diluted Earnings per Share (unaudited) (Dollars in thousands, except per diluted share) Three months ended March 31, 2019 For the year ended December 31, 2019 Pre-tax Income Net Income Pre-tax Income Ne
Slide 24: INC.SKYWEST.COM
ey ey SKYWEST INCORPORATED —————_INC.SKYWEST.COM