Airline achieves record full-year net earnings of $368 million, up 16 per cent year over year
Announces plans to increase normal course issuer bid by 2 million shares
CALGARY, Feb. 2, 2016 /CNW/ - WestJet (TSX: WJA) today announced its fourth quarter and year-end results for 2015, with record full-year net earnings of $367.5 million, or $2.92 per diluted share. This compares with the adjusted net earnings1 of $317.2 million, or $2.46 per diluted share reported in the full-year 2014, up 16 per cent and 19 per cent, respectively. For the fourth quarter, the airline reported diluted earnings per share of $0.51, down 27 per cent from $0.70 reported last year. These fourth quarter 2015 results include a pre-tax loss on foreign exchange of $10.1 million.
This represents WestJet's 43rd consecutive quarter of profitability and based on the trailing twelve months, the airline achieved a return on invested capital of 15.3 per cent, compared with the 16.1 per cent reported in the previous quarter, and within WestJet's target range of 13 to 16 per cent.
"Today we reported the third best fourth quarter in WestJet's history to complete a record year in 2015. Notwithstanding the impact that recent economic weakness in Alberta has had on our results, our decision to increase our normal course issuer bid demonstrates our confidence in WestJet's proven business model and the financial strength of our airline," said WestJet President and CEO Gregg Saretsky. "My thanks go out to our more than 11,000 WestJetters for all their hard work in driving our continuing success as we look forward to celebrating WestJet's 20th birthday in 2016, a year which will see the launch of our exciting new wide-body service to London Gatwick."
| Operating highlights (stated in Canadian dollars) |
||||||
| Q4 2015 |
Q4 2014 |
Change |
Full-year |
Full-year |
Change |
|
| Net earnings (millions) |
$63.4 |
$90.7 |
(30.1%) |
$367.5 |
$284.0 |
29.4% |
| Adjusted net earnings (millions)1 |
$63.4 |
$90.7 |
(30.1%) |
$367.5 |
$317.2 |
15.9% |
| Diluted earnings per share |
$0.51 |
$0.70 |
(27.1%) |
$2.92 |
$2.20 |
32.7% |
| Adjusted diluted earnings per share1 |
$0.51 |
$0.70 |
(27.1%) |
$2.92 |
$2.46 |
18.7% |
| Total revenues (millions) |
$958.7 |
$994.4 |
(3.6%) |
$4,029.3 |
$3,976.6 |
1.3% |
| Operating margin |
11.8% |
14.0% |
(2.2 pts) |
14.1% |
12.0% |
2.1 pts |
| ASMs (available seat miles) (billions) |
6.525 |
6.378 |
2.3% |
26.902 |
25.584 |
5.2% |
| RPMs (revenue passenger miles) (billions) |
5.114 |
5.081 |
0.6% |
21.526 |
20.829 |
3.3% |
| Load factor |
78.4% |
79.7% |
(1.3 pts) |
80.0% |
81.4% |
(1.4 pts) |
| Segment guests |
4,893,020 |
4,826,149 |
1.4% |
20,281,376 |
19,651,977 |
3.2% |
| Yield (revenue per revenue passenger mile) |
18.75 |
19.57 |
(4.2%) |
18.72 |
19.09 |
(1.9%) |
| RASM (revenue per available seat mile) |
14.69 |
15.59 |
(5.8%) |
14.98 |
15.54 |
(3.6%) |
| CASM (cost per available seat mile) |
12.97 |
13.40 |
(3.2%) |
12.86 |
13.68 |
(6.0%) |
| CASM, excluding fuel and employee profit |
10.04 |
9.21 |
9.0% |
9.46 |
9.15 |
3.4% |
| (1) |
Full-year 2014 adjusted net earnings exclude an after-tax non-cash loss of $33.2 million recorded in the third quarter of 2014 associated with the previously disclosed sale of 10 of WestJet's oldest Boeing 737 aircraft. Refer to reconciliations in the accompanying tables for further information regarding calculations. |
Normal course issuer bid
Today, WestJet also announced that the Toronto Stock Exchange has approved WestJet's amendment to its existing normal course issuer bid to increase the maximum number of shares the Company is authorized to purchase from 4 million shares to 6 million shares during the period of May 13, 2015 to May 12, 2016.
Dividend declaration
On February 1, 2016, WestJet's Board of Directors declared a cash dividend of $0.14 per common voting share and variable voting share for the first quarter of 2016, to be paid on March 31, 2016, to shareholders of record on March 16, 2016. All dividends paid by WestJet are, pursuant to subsection 89(14) of the Income Tax Act, designated as eligible dividends, unless indicated otherwise. An eligible dividend paid to a Canadian resident is entitled to the enhanced dividend tax credit.
Caution regarding forward-looking information
Certain information set forth in this news release is forward-looking information within the meaning of applicable Canadian securities law. By its nature, forward-looking information is subject to numerous risks and uncertainties, some of which are beyond the Corporation's control, including those risk factors described in WestJet's public reports and filings which are available under WestJet's profile at www.sedar.com. Readers are cautioned that undue reliance should not be placed on forward-looking information as actual results may vary materially from the forward-looking information. WestJet does not undertake to update, correct or revise any forward-looking information as a result of any new information, future events or otherwise, except as may be required by applicable law.
(1)Non-GAAP measures
This news release contains disclosure of non-GAAP performance measures including, without limitation, adjusted net earnings, adjusted diluted earnings per share, CASM, excluding fuel and employee profit share and return on invested capital. These measures are included to enhance the overall understanding of WestJet's current financial performance and to provide an alternative method for assessing WestJet's operating results in a manner that is focused on the performance of WestJet's ongoing operations, and to provide a more consistent basis for comparison between reporting periods. These measures are not calculated in accordance with, or an alternative to, GAAP and do not have standardized meanings. Therefore, they may not be comparable to similar measures provided by other entities. Readers are urged to review the section entitled "Reconciliation of non-GAAP and additional GAAP measures" in WestJet's management's discussion and analysis of financial results for the year ended December 31, 2015, which is available under WestJet's profile on SEDAR at sedar.com, for a further discussion of such non-GAAP measures and a reconciliation of such measures to GAAP. The financial information accompanying this news release was prepared in accordance with International Financial Reporting Standards unless otherwise noted.
Management's discussion and analysis of financial results and consolidated financial statements and notes for the year ended December 31, 2015, are available through the Internet in the Media and Investor Relations section of westjet.com or under WestJet's SEDAR profile at sedar.com.
Analyst conference call
WestJet will hold its quarterly analysts' conference call today, February 2, 2016, at 8 a.m. MST (10 a.m. EST). President and CEO Gregg Saretsky and Executive Vice-President of Finance and CFO Harry Taylor will discuss WestJet's fourth quarter and year end results and answer questions from financial analysts and members of the media. The conference call will be available in Toronto by calling 416-915-3239, in Vancouver by calling 604-638-5340 and across Canada and the United States through the toll-free telephone number 1-800-319-4610. The call can also be heard live through an Internet webcast accessible via the Media and Investor Relations section of westjet.com.
About WestJet
We are proud to be Canada's highest-rated airline for customer service, powered by an award-winning culture of care and recognized as one of the country's top employers. We offer scheduled service to 100 destinations in North America, Central America, the Caribbean and Europe. Through our regional airline, WestJet Encore, and with partnerships with airlines representing every major region of the world, we offer our guests more than 150 destinations in more than 20 countries. Leveraging WestJet's extensive network, flight schedule and remarkable guest experience, WestJet Vacations delivers affordable, flexible travel experiences with a variety of accommodation options for every guest. Members of our WestJet Rewards program earn WestJet dollars on flights, vacation packages and more. Our members use WestJet dollars towards the purchase of WestJet flights and vacations packages on any day, at any time, to any WestJet destination with no blackout periods ̶ even on seat sales. For more information about everything WestJet, please visit westjet.com.
Recent recognition includes:
2015/2011/2008-2005 Canada's 10 Most-Admired Corporate Cultures (Waterstone Human Capital)
2015/2014/2013/2012 Canada's Most Attractive Employer (Randstad)
2015/2014/2013/2012 Top three brands in Canada (Canadian Business magazine)
2015 Best Employers in Canada (Aon Hewitt)
2015/2014/2013 WestJet RBC World Elite MasterCard ranked #1 in Canada (MoneySense magazine)
2015/2014/2013 WestJet RBC World Elite MasterCard ranked #1 in the Canada's Choice ranking (RewardsCanada.ca)
2014 Interbrand Canada's Best Canadian Brands (rank #20)
2014 Brands of the Year (Strategy magazine)
2014 Canada's Most Preferred Airline (Ipsos)
2014 Value Airline of the Year (Air Transport World magazine)
2014/2013/2012/2011 Highest equity score: airline, vacation package supplier brands (Harris/Decima EquiTrend Study)
Connect with WestJet on Facebook at facebook.com/westjet
Follow WestJet on Twitter at twitter.com/westjet
Subscribe to WestJet on YouTube at youtube.com/westjet
Read the WestJet blog at blog.westjet.com
Website: www.westjet.com
| Consolidated Statement of Earnings |
|||||
| (Stated in thousands of Canadian dollars, except per share amounts) |
|||||
| (Unaudited) |
|||||
| Three months ended |
Twelve months ended |
||||
| December 31 |
December 31 |
||||
| 2015 |
2014 |
2015 |
2014 |
||
| Revenue: |
|||||
| Guest |
842,546 |
884,771 |
3,557,222 |
3,599,157 |
|
| Other |
116,169 |
109,623 |
472,043 |
377,395 |
|
| 958,715 |
994,394 |
4,029,265 |
3,976,552 |
||
| Operating expenses: |
|||||
| Aircraft fuel |
182,181 |
243,816 |
814,498 |
1,090,330 |
|
| Salaries and benefits |
198,310 |
184,210 |
801,715 |
724,941 |
|
| Rates and fees |
139,534 |
128,289 |
562,745 |
520,340 |
|
| Sales and marketing |
84,009 |
85,852 |
325,127 |
325,370 |
|
| Depreciation and amortization |
75,237 |
54,696 |
264,921 |
226,740 |
|
| Aircraft leasing |
41,881 |
45,546 |
174,089 |
182,450 |
|
| Maintenance |
47,160 |
24,927 |
164,305 |
126,761 |
|
| Other |
68,847 |
64,052 |
251,147 |
235,362 |
|
| Employee profit share |
8,869 |
23,399 |
100,965 |
68,787 |
|
| 846,028 |
854,787 |
3,459,512 |
3,501,081 |
||
| Earnings from operations |
112,687 |
139,607 |
569,753 |
475,471 |
|
| Non-operating income (expense): |
|||||
| Finance income |
3,509 |
4,721 |
15,529 |
17,070 |
|
| Finance cost |
(12,953) |
(14,192) |
(53,665) |
(51,838) |
|
| Gain (loss) on foreign exchange |
(10,090) |
(2,471) |
(10,326) |
(2,064) |
|
| Loss on disposal of property and equipment |
(1,496) |
(2,849) |
(1,860) |
(48,332) |
|
| Gain on derivatives |
971 |
- |
827 |
- |
|
| (20,059) |
(14,791) |
(49,495) |
(85,164) |
||
| Earnings before income tax |
92,628 |
124,816 |
520,258 |
390,307 |
|
| Income tax expense (recovery): |
|||||
| Current |
17,873 |
28,223 |
123,939 |
114,521 |
|
| Deferred |
11,319 |
5,880 |
28,789 |
(8,171) |
|
| 29,192 |
34,103 |
152,728 |
106,350 |
||
| Net earnings |
63,436 |
90,713 |
367,530 |
283,957 |
|
| Earnings per share: |
|||||
| Basic |
0.51 |
0.71 |
2.94 |
2.22 |
|
| Diluted |
0.51 |
0.70 |
2.92 |
2.20 |
|
| Consolidated Statement of Financial Position |
|||
| (Stated in thousands of Canadian dollars) |
|||
| (Unaudited) |
|||
| December 31 |
December 31 |
||
| 2015 |
2014 |
||
| Assets |
|||
| Current assets: |
|||
| Cash and cash equivalents |
1,183,797 |
1,358,071 |
|
| Restricted cash |
68,573 |
58,149 |
|
| Accounts receivable |
82,136 |
54,950 |
|
| Prepaid expenses, deposits and other |
131,747 |
144,192 |
|
| Inventory |
36,018 |
36,658 |
|
| Assets held for sale |
- |
78,306 |
|
| 1,502,271 |
1,730,326 |
||
| Non-current assets: |
|||
| Property and equipment |
3,473,262 |
2,793,194 |
|
| Intangible assets |
63,549 |
60,623 |
|
| Other assets |
89,942 |
62,290 |
|
| Total assets |
5,129,024 |
4,646,433 |
|
| Liabilities and shareholders' equity |
|||
| Current liabilities: |
|||
| Accounts payable and accrued liabilities |
545,438 |
415,562 |
|
| Advance ticket sales |
620,216 |
575,781 |
|
| Deferred Rewards program |
117,959 |
86,870 |
|
| Non-refundable guest credits |
40,921 |
45,434 |
|
| Current portion of maintenance provisions |
85,819 |
54,811 |
|
| Current portion of long-term debt |
141,572 |
159,843 |
|
| 1,551,925 |
1,338,301 |
||
| Non-current liabilities: |
|||
| Maintenance provisions |
243,214 |
191,768 |
|
| Long-term debt |
1,033,261 |
1,028,820 |
|
| Other liabilities |
13,603 |
13,150 |
|
| Deferred income tax |
327,028 |
296,892 |
|
| Total liabilities |
3,169,031 |
2,868,931 |
|
| Shareholders' equity: |
|||
| Share capital |
582,796 |
603,287 |
|
| Equity reserves |
82,713 |
75,094 |
|
| Hedge reserves |
1,903 |
(3,179) |
|
| Retained earnings |
1,292,581 |
1,102,300 |
|
| Total shareholders' equity |
1,959,993 |
1,777,502 |
|
| Total liabilities and shareholders' equity |
5,129,024 |
4,646,433 |
|
| Consolidated Statement of Cash Flows |
|||||
| (Stated in thousands of Canadian dollars) |
|||||
| (Unaudited) |
|||||
| Three months ended |
Twelve months ended |
||||
| 2015 |
2014 |
2015 |
2014 |
||
| Operating activities: |
|||||
| Net earnings |
63,436 |
90,713 |
367,530 |
283,957 |
|
| Items not involving cash: |
|||||
| Depreciation and amortization |
75,237 |
54,696 |
264,921 |
226,740 |
|
| Change in maintenance provisions |
14,483 |
(11,113) |
35,786 |
8,413 |
|
| Change in other liabilities |
(3,237) |
(158) |
(3,192) |
(529) |
|
| Amortization of transaction costs |
1,093 |
1,204 |
4,503 |
5,015 |
|
| Amortization of hedge settlements |
340 |
350 |
1,390 |
1,400 |
|
| Gain on derivatives |
(971) |
- |
(827) |
- |
|
| Loss on disposal of property and equipment |
1,496 |
2,849 |
1,860 |
48,332 |
|
| Share-based payment expense |
4,379 |
4,316 |
17,254 |
18,626 |
|
| Deferred income tax expense/(recovery) |
11,319 |
5,880 |
28,789 |
(8,171) |
|
| Unrealized foreign exchange (gain)/loss |
20,603 |
(2,323) |
(938) |
(10,634) |
|
| Change in non-cash working capital |
(12,686) |
(588) |
199,706 |
21,349 |
|
| Change in restricted cash |
(11,259) |
(4,293) |
(10,424) |
(43) |
|
| Change in other assets |
(6,780) |
(105) |
(15,912) |
(6,833) |
|
| Purchase of shares pursuant to compensation plans |
(333) |
(166) |
(14,005) |
(10,989) |
|
| 157,120 |
141,262 |
876,441 |
576,633 |
||
| Investing activities: |
|||||
| Aircraft additions |
(318,064) |
(228,106) |
(841,491) |
(694,200) |
|
| Aircraft disposals |
132 |
75,597 |
83,348 |
75,655 |
|
| Other property and equipment and intangible additions |
(15,714) |
(5,506) |
(64,789) |
(46,586) |
|
| (333,646) |
(158,015) |
(822,932) |
(665,131) |
||
| Financing activities: |
|||||
| Increase in long-term debt |
17,732 |
16,507 |
153,112 |
613,885 |
|
| Repayment of long-term debt |
(42,099) |
(41,445) |
(171,490) |
(308,588) |
|
| Shares repurchased |
(4,010) |
(9,856) |
(123,813) |
(39,431) |
|
| Dividends paid |
(17,246) |
(15,334) |
(69,711) |
(61,313) |
|
| Issuance of shares pursuant to compensation plans |
120 |
56 |
156 |
96 |
|
| Cash interest paid |
(7,936) |
(9,421) |
(47,305) |
(39,507) |
|
| Change in non-cash working capital |
3,755 |
2,864 |
21 |
4,866 |
|
| (49,684) |
(56,629) |
(259,030) |
170,008 |
||
| Cash flow from operating, investing and financing activities |
(226,210) |
(73,382) |
(205,521) |
81,510 |
|
| Effect of foreign exchange on cash and cash equivalents |
(9,672) |
6,707 |
31,247 |
20,556 |
|
| Net change in cash and cash equivalents |
(235,882) |
(66,675) |
(174,274) |
102,066 |
|
| Cash and cash equivalents, beginning of period |
1,419,679 |
1,424,746 |
1,358,071 |
1,256,005 |
|
| Cash and cash equivalents, end of period |
1,183,797 |
1,358,071 |
1,183,797 |
1,358,071 |
|
| Supplemental disclosure of operating cash flows |
|||||
| Cash interest received |
3,577 |
4,776 |
16,349 |
17,243 |
|
| Cash taxes paid |
(25,667) |
(10,894) |
(114,752) |
(204,489) |
|
| CASM, excluding fuel and employee profit share |
|||||||
| (Stated in thousands of Canadian dollars, except percentage, mile and per unit data) |
|||||||
| (Unaudited) |
|||||||
| WestJet excludes the effects of aircraft fuel expense and employee profit share expense to assess the operating performance of the business. Fuel expense is excluded from operating results due to the fact that fuel prices are impacted by a host of factors outside WestJet's control, such as significant weather events, geopolitical tensions, refinery capacity and global demand and supply. Excluding this expense allows WestJet to analyze its operating results on a comparable basis. Employee profit share expense is excluded from operating results due to its variable nature and excluding this expense allows greater comparability. |
|||||||
| Three months ended December 31 |
Twelve months ended December 31 |
||||||
| ($ in thousands) |
2015 |
2014 |
Change |
2015 |
2014 |
Change |
|
| Operating expenses |
846,028 |
854,787 |
(8,759) |
3,459,512 |
3,501,081 |
(41,568) |
|
| Aircraft fuel expense |
(182,181) |
(243,816) |
61,635 |
(814,498) |
(1,090,330) |
275,832 |
|
| Employee profit share |
|||||||
| expense |
(8,869) |
(23,399) |
14,530 |
(100,965) |
(68,787) |
(32,178) |
|
| Operating expenses, |
|||||||
| adjusted |
654,978 |
587,572 |
67,406 |
2,544,049 |
2,341,964 |
202,086 |
|
| ASMs |
6,524,788,975 |
6,378,247,018 |
2.3% |
26,902,227,359 |
25,584,033,077 |
5.2% |
|
| CASM, excluding above |
|||||||
| items (cents) |
10.04 |
9.21 |
9.0% |
9.46 |
9.15 |
3.4% |
|
| Return on invested capital |
||||
| (Stated in thousands of Canadian dollars, except percentages) |
||||
| (Unaudited) |
||||
| ROIC is a measure commonly used to assess the efficiency with which a company allocates its capital to generate returns. Return is calculated based on our earnings before tax, excluding special items, finance costs and implied interest on our off-balance-sheet aircraft leases. Invested capital includes average long-term debt, average finance lease obligations, average shareholders' equity and off-balance-sheet aircraft operating leases. |
||||
| ($ in thousands) |
December 31 2015 |
December 31 |
Change |
|
| Earnings before income taxes |
520,258 |
390,307 |
129,951 |
|
| Special item(i) |
- |
45,459 |
(45,459) |
|
| Adjusted earnings before income taxes |
520,258 |
435,766 |
84,492 |
|
| Add: |
||||
| Finance costs |
53,665 |
51,838 |
1,827 |
|
| Implicit interest in operating leases(ii) |
91,397 |
95,786 |
(4,389) |
|
| 665,320 |
583,390 |
81,930 |
||
| Invested capital: |
||||
| Average long-term debt(iii) |
1,181,748 |
1,033,529 |
148,219 |
|
| Average shareholders' equity |
1,868,748 |
1,683,671 |
185,077 |
|
| Off-balance-sheet aircraft leases(iv) |
1,305,668 |
1,368,375 |
(62,707) |
|
| 4,356,164 |
4,085,575 |
270,589 |
||
| Return on invested capital |
15.3% |
14.3% |
1.0 pt. |
|
| (i) |
Pre-tax non-cash loss recorded in the third quarter of 2014 associated with the sale of 10 aircraft to Southwest. |
| (ii) |
Interest implicit in operating leases is equal to 7.0 per cent of 7.5 times the trailing 12 months of aircraft lease expense. 7.0 per cent is a proxy and does not necessarily represent actual for any given period. |
| (iii) |
Average long-term debt includes the current portion and long-term portion. |
| (iv) |
Off-balance-sheet aircraft operating leases are calculated by multiplying the trailing 12 months of aircraft leasing expense by 7.5. At December 31, 2015, the trailing 12 months of aircraft leasing expenses totaled $174,089 (December 31, 2014 – $182,450). |
| Adjusted net earnings/Adjusted diluted earnings per share |
||||
| (Stated in thousands of Canadian dollars, except percentages) |
||||
| (Unaudited) |
||||
| WestJet excludes the effect of the after-tax non-cash loss related to the 10 aircraft sold to Southwest being classified as held for sale in the third quarter of 2014 from net earnings to calculate an adjusted diluted earnings per share. |
||||
| Twelve months ended December 31 |
||||
| ($ in thousands, except share and per share data) |
2015 |
2014 |
Change |
|
| Net earnings |
367,530 |
283,957 |
83,573 |
|
| Adjusted for: |
||||
| Special item(i) |
- |
33,231 |
(33,231) |
|
| Adjusted net earnings |
367,530 |
317,188 |
50,342 |
|
| Weighted average number of shares outstanding - diluted |
125,964,541 |
129,142,940 |
(3,178,399) |
|
| Adjusted diluted earnings per share |
2.92 |
2.46 |
18.7% |
|
| (i) |
After-tax non-cash loss recorded in the third quarter of 2014 associated with the sale of 10 aircraft to Southwest. |
SOURCE WestJet
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