Fitch Ratings Update (05.29.2015) · 7/9/2015 · Review of Key Economic Indicators $0 $50,000...
Transcript of Fitch Ratings Update (05.29.2015) · 7/9/2015 · Review of Key Economic Indicators $0 $50,000...
ATTACHMENT D
RTAA Financial Update Presentation Fitch Ratings on May 29, 2015
Fitch Ratings UpdateMay 29, 2015
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Agenda• RTAA Overview and Strategic Priorities• Regional Economic Outlook• FY 2015-16 RTAA Initiatives• Air Service Market Update• Financial Overview
• Revenue • Operating Expense• Property, Plant and Equipment
• Capital Improvement Projects• Debt Service• Key Financial Ratios and Measures
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Who We AreReno-Tahoe Airport Authority
Created in 1977 by State Legislation
Owners and Operators of Reno-Tahoe International
Airport
Reno-Stead Airport
Governed by Board of Trustees appointed by: Cities of Reno and Sparks
Washoe County
Reno-Sparks Convention and Visitors Authority
A City Unto Itself…Operationally independent with
in-house police and fire departments, human resources,
accounting, etc.
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Catchment AreaThe RNO Catchment Area Includes, the Reno/Sparks MSA, Lake Tahoe and Carson City (capital of
Nevada)
Source: U.S. Census Bureau, 2010
RNO
SparksReno
Carson City
Lake Tahoe
• The RNO primary catchment area has a population of over 587,439 people
• 1.3M people in secondary catchment area
• Northern Nevada population grew 20% over the past decade
• RNO has limited competition from other airports (SMF 140 miles away, Bay Area over 200 miles)
• Las Vegas is 450 miles away-estimated drive of 7 hours
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Gateway to Lake Tahoe
Source: www.cheapflights.com, March 2011; Yahoo Maps
Lake Tahoe
RNO
SMF
Reno-Tahoe International Airport makes getting to Lake Tahoe a breezeIt take over 2 hours to get to Lake Tahoe from SMF
Distance Driving Time Distance Driving Time Distance Driving Time
Northstar California 42 miles 46 mins 116 miles 1:55 hr 74 miles 1:09 hr
Squaw Valley 48 miles 53 mins 117 miles 1:57 hr 69 miles 1:04 hr
South Lake Tahoe 58 miles 1:13 hr 115 miles 2:05 hr 57 miles 46 mins
Heavenly Ski Resort 59 miles 1:16 hr 115 miles 2:06 hr 56 miles 50 mins
Additional time & miles from SMFResort
Reno-Tahoe International Sacramento Airport
During a regular week day, on average, car rentals at
SMF cost 69% more than car rentals at RNO
Source: Reno-Tahoe International Airport Car Rental Survey
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Gateway to the Region Airport is the Gateway to the Reno-Tahoe region
$100M in terminal improvements in last five years Created an airport that provides a sense of place
You know you are in Reno-Tahoe when you land
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Strategic Plan (FY 2014-2018) RTAA Board and Staff established a vision for the future:
Five Strategic Priorities Five-year plan with flexibility and forethought Serve as a compass for the future Public process
• Airport committees• User groups• Board and staff• Public
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Strategic Plan (FY 2014-2018)
Work plans developed and resources identified Guiding Principles/Operating Practices Safety and Security ■Customer Service Financial Integrity ■ Professionalism and Ethics Environmental
Guiding Principles drive the day-to-day operations
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Regional Economic Outlook
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Economic InfluencesNational and Regional Economic Factors Modest improvement next year, bright future
Significantly lower unemployment rate
Tesla Effect
Technology / Data Centers
Industrial Real Estate Market
Unmanned Aircraft Systems
Casino / Ski Resort Development
Bowling Tournament Visitors
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Improving Unemployment Rate
51% Reduction Since 2011 (14.0% to 6.9%)
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Review of Key Economic Indicators
$0$50,000
$100,000$150,000$200,000$250,000$300,000$350,000$400,000
Washoe CountyMedian Home Sale Price
Median Home Sale Price
0.000
1.000
2.000
3.000
4.000
5.000
6.000
7.000
8.000
Millions
Washoe CountyVisitors, Passengers, Airline Seats
Passengers Available SeatsVisitors
0.0010.0020.0030.0040.0050.0060.0070.0080.0090.00
Millions
Washoe CountyTaxable Gaming Revenue
Washoe Co. Taxable Gaming Revenue
$0.000$1.000$2.000$3.000$4.000$5.000$6.000$7.000$8.000$9.000
Billions
Washoe County Taxable Sales
Washoe County Taxable Sales
* Source: Reno-Tahoe International Airport and Reno-Sparks Convention and Visitor’s Authority * Source: Nevada State Gaming Control Board
* Source: Reno/Sparks Association of Realtors * Source: State of Nevada Department of Taxation
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Tesla Battery Gigafactory
More Than JobsPuts Us on The Radar:
ManufacturingBusiness
EntrepreneursCreative Class
Research & Development Investors . . .
The Largest Deal In The U.S. Changes
Reno-Sparks Brand Overnight
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Tesla Only Part Of The Growth!Tesla
PrimaryTesla
SecondaryEDAWNPrimary
EDAWNSecondary
Total Jobs
2013 0 0 3,460 4,360 7,8202014 0 0 3,479 4,384 7,8632015 700 1,148 4,000 5,040 10,8882016 1,000 1,640 3,500 4,410 10,5502017 3,000 4,920 3,000 3,780 14,7002018 1,800 2,952 2,500 3,150 10,4022019 0 0 2,000 2,520 4,520
5 YearTotal 6,500 10,660 15,000 18,900 51,060
17,160
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Total Projected Employment Growth
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Explosive Growth Is Coming!
150,000
170,000
190,000
210,000
230,000
250,000Tesla Projected Job GrowthEDAWN Projected Job GrowthHistoric Employment
2.2% Growth
4.9% Growth
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Transportation / Distribution Center
World’s Largest Industrial Park upon completion
Logistics and operations industry cluster - “a natural target industry for Northern Nevada,”
Location and geographic advantages, strong existing infrastructure and cost and regulatory advantages
One day truck distribution to the entire west coast
Union Pacific Railroad’s Class 1 Transcontinental rail line
Network Access Point for internet traffic - State-of-the-art digital and fiber optic highway
Internet fulfillment, bio-pharma, and hi-tech business
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Notable Reno-Tahoe Companies
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Silicon Valley Support Datacenter / Distribution / Manufacturing
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Entrepreneurial Development Success!
Reno, NV (DEC. 15, 2014) Next City will host its sixth annual Vanguard conference in Reno.Vanguard is an annual experiential urban leadership conference.IEDC
Award!
Entrepreneur.com on NBCNews.com
3 Alternative Tech Startup Cities With Less Traffic, More Housing (Infographic)
Three Western locales previously considered vacation destinations are now alternatives to Silicon Valley life at a much more affordable price.
3 Alternative Tech Startup Cities Three Western locales previously considered vacation destinations are now alternatives to Silicon Valley life at a much more affordable price.
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RNO Land Development
In ProcessHome Gardens South
≈ 45 acresMill & Rock/Northeast Quadrant
≈ 36 acresAirport South
≈ 4 acres
Pending Market DemandAirport East (Brookside)
≈ 50 acres Southeast Quadrant
≈ 25 acres Southwest Quadrant
≈ 90 acresAirport Gateway Center
≈ 7.5 acresHome Gardens North/Airport West
≈ 25 acres
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Reno-Stead - Concept Plan
Vacant Properties owned by RTAA total 2,396 acres
37% of vacant industrial land in Washoe County
* Source: Truckee Meadows Regional Planning Authority, 3rd Quarter Industrial Inventory Report
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Northern Nevada UAS Partnerships
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UAS Stead Test Range Concept
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Aviation Taxes Competitive Disadvantage
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Legislative Effort A partial abatement of taxes on aviation property and parts
will lead to growth in the aviation industry in both the short and longer‐term.
Nevada will experience significant gains in high-wage jobs and economic activity from existing Nevada-based businesses.
The employment and economic benefits will begin to occur quickly, because of pent‐up demand.
Moreover, the growth will generate tax revenues that exceed cost of the abatement.
❖ Supports designation as FAA testing site for Unmanned Aircraft Systems (UAS)
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Air Service Market Overview
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Air Service Market Update Strong Demand - Higher U.S. industry traffic of 2.5%
Merger of American & US Airways
Airline Profitability Respectable profit margins Significantly lower fuel prices Larger aircraft at bigger airports
Airline perspective – “Why fix what is not broken?”
RNO More Competition - Full year impact - JetBlue and Volaris
Continued existing service by current carriers
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Passenger Traffic Update• Enplaned Passenger forecast for FY 2014-15 reflects a decrease of 2.2%
• FY 2015-16 Budget is 2.9% higher than current year forecast and modestly up as compared to the adopted budget
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New Air Service New York, NY (jetBlue) Commenced on May 28, 2015 Airbus 320 with 150 Seats Daily Service to JFK
Guadalajara, Mexico (Volaris) Started Dec 16, 2014 Airbus 320 with 174 Seats Twice Weekly Service
Los Angeles, CA (American) Larger Aircraft on Sept 3, 2014 Four to Five Flights per Day To start June 5, 2015
San Jose, CA (Alaska) Service Schedule Change Business Traveler Convenience
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MAP
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Passenger Traffic Market Share Southwest market
share is projected to drop from 54% in FY 2012-13 to 42% in FY 2015-16
Merger between US Airways and American. Combined market share is forecast to be 24% in FY 2015-16
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Strategic Priority –Cargo Development
In 2014, RNO Handled over 125 Million Pounds of Air Cargo, Representing the Best Cargo Year During the Last Seven Years.
120 million
102 million
109 million 111 million 112 million
117 million
125 million
CY 2008 CY 2009 CY 2010 CY 2011 CY 2012 CY 2013 CY 2014
December 2014 was recorded as the best month ever in regards to cargo handling at RNOSource: Airline Activity Report, RNO
6.8%
A New Approach –Air Service Development
❖ The most important strategic priority for the RTIA
❖ The catalyst for economic recovery and growth within our region
❖ Has changed drastically in the past 24 months
❖ Requires resources and a team approach
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Air Service Development
Temporarily waive or discount airport fees and authorize marketing/advertising support for a maximum of 365 days to a scheduled passenger airline(s), cargo carrier(s), and seasonal and scheduled charter service to a new destination
Marketing Support - $25,000 in target marketing support both in and out of the market
Airports are limited on what they can provide per FAA Guidelines
Expanded in 2014 to build a coalition of casinos, ski resorts, local businesses, community groups, and local governmentato create a unique synergy
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Air Service Development- FY 2015
Air Service Development
Market Analysis
Airline Meetings
Leverage Resources
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Strategy Review
Strategy to Develop Resources
Tourism
Expand Financial Base
Valuation of In-Kind Support
Government
City
County
State
Business
Business Advisory Council
RNO Business Lounge
In-Kind Support
Community
Awareness Campaign
RNO Business Services
Airline Program Enrollments
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Third Party Valuation - In-Kind Support Regional Air Service Corporation (RASC) offers a
marketing resource that no other community can offer
RASC is consortium that spreads across industries (tourism, hotel, gaming, ski, etc.)
Marketing support that RASC brings provides unbeatable air service leverage. Combined Database Size Overall Social Media Reach Total Website Visitations PR outreach Other
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Route-based messaging
Timing to maximize efficiency/effectiveness
Based on “Strategic Partnerships”
Multiple Media In-Terminal
PR/Social
Online
TV
Radio
Outdoor
RTAA Marketing Support of New Routes
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Financial Results
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Airline Agreement Five (5) Year Term - Effective July 1, 2015 through June 30,
2020 Opportunity to Extend – Additional five (5) years with Board
approval Retain existing rate-setting methodology “Hybrid” approach
Airfield and Baggage Handling System – Cost Center Residual
Terminal Building – Commercial Compensatory
50/50 net revenue sharing component Enforceable Lease – Five Year Financial Commitment Extraordinary Coverage Protection
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Signatory Airlines
Non-Signatory Airlines Allegiant Air JetBlue Airlines Volaris Airlines
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Fiscal Impact Projected airline revenue of $17 million per year or $85
million over the five (5) year term Forecasted airline cost per enplaned passenger to remain
less than $9.00
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Revenue Summary• Total Revenue of $46.417 million – 2.3% above last year’s budget
• Higher airline revenue of $411,450
• Airline Cost per Enplaned Passenger of $8.39
• Non-Airline Revenue is forecasted to be 2.3% above the current year budget reflecting improved FY 2014-15 actual results
FY 2014-15 Budget
FY 2015-16 Budget
Dollar Change
% Change
Airline Revenue $14,980,252 $15,391,702 $411,450 2.7%
Non-Airline Revenue 28,747,526 29,394,923 647,397 2.3%
Total Operating Revenue 43,727,778 44,786,625 1,058,847 2.4%
Non-Operating Revenue 1,637,600 1,630,300 (7,300) (0.4%)
Total Revenue $45,365,378 $46,416,925 $1,051,547 2.3%
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Airline Cost Per EPAX Trend
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Airline Cost per Enplaned PassengerBy Benchmark Airports
$0 $2 $4 $6 $8 $10 $12 $14 $16 $18 $20
Pittsburgh InternationalSacramento County
Lambert-St. Louis InternationalSan Jose InternationalOakland International
Cincinnati/Northern KentuckyIndianapolis InternationalAnchorage International
John Wayne Airport- Orange CountyPort Columbus International
Austin-BergstromReno-Tahoe International
Tucson InternationalJacksonville Aviation Authority
San Antonio InternationalFresno Yosemite International
William B Hobby - HoustonNashville International
Raleigh-Durham International
FY 2015-16 CPE of $8.39
2014 ACI-NA Benchmarking Survey
Reflecting 2013 Results
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Non-Airline Revenue
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• Non-Airline revenues of $29.394 million, an increase of $647,397 or 2.3%
• Improvement in revenues per transaction - public parking and rental car
• Significantly higher Box Hangar occupancy
• Offset by lower Net Win percentage - gaming
• Lower cost recovery in Reimbursed Services-disposal fees
• Lower UAS Testing revenue offset by lower expenses
NON-AIRLINE REVENUE FY 2014-15 Budget
FY 2015-16 Budget
Dollar Change
Parking & Ground Trans $8,504,900 $8,975,800 $ 470,900
Auto Rental 5,879,900 6,267,600 387,700
Non-Terminal Rent 5,059,800 5,347,700 287,900
Baggage Handling System 1,720,826 1,644,603 (76,223)
Gaming 1,125,400 1,014,800 (110,600)
Retail 1,035,400 1,003,200 (32,200)
Food and Beverage 885,800 885,800 ---
Other Reimbursed Svc. 910,100 820,520 (89,580)
Aircraft Fees-Reno 810,600 820,000 9,400
Terminal Rents, Other 831,700 785,100 (46,600)
Advertising 662,900 660,000 (2,900)
Stead 795,200 598,200 (197,000)
Other Concessions 485,700 548,700 63,000
Miscellaneous 39,300 22,900 (16,400)
GRAND TOTAL $28,747,526 $29,394,923 $647,397
RTAA Non-Airline Revenue
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FY 2015-2016 Expenditure Budget• Proposed budget of $39.144 million is 1.5% higher than the prior year budget
• Proposed budget is 2.1% above the updated FY 2014-15 forecast
• Increase of $516,000 or 2.0% in Personnel Services
BUDGET2014-15
UPDATED FORECAST
2014-15BUDGET2015-16
DOLLAR CHANGEBUDGET FORECAST
A B C C - A C - B
Personnel Services $25,771,165 $25,496,524 $26,286,995 $515,830 $790,471
Utilities & Communications 2,862,700 2,885,317 2,919,063 56,363 33,746
Purchased Services 5,627,235 5,607,861 5,592,574 (34,661) (15,287)
Materials & Supplies 1,905,619 1,884,327 1,909,125 3,506 24,798
Administrative Expenses 2,403,054 2,457,220 2,436,631 33,577 (20,589)
Total $38,569,773 $38,331,249 $39,144,387 $574,614 $813,139
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Outstanding Senior Debt and RatiosOutstanding Debt(as of 3/31/2015)
Series: 2005Principal Outstanding: $23.4 million
Total Remaining Debt Service: $29.7 million
Final Maturity: July 1, 2026Annual Debt Service: $2.5 million
Key Ratios - FY 2015Debt perEnplaned Passenger: $18
Debt ServiceCoverage: 2.98x
Only one series of senior lien bonds remain outstanding (Series 2005) Debt service is primarily paid for through parking revenues With a first call date of July 1, 2015, RTAA is looking to refinance
through a direct loan/ private placement
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Debt Service Overview In 2014-15, partial repayment of Subordinate Lien Notes of $2.913 million
Direct Loan/ Private Placement – Refinance of 2005 Bonds
Estimate savings of $184,000 or $3.2 million over next 11 years
Existing 2005 Debt Service
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Debt Service Coverage RatioNet revenues including pledged Passenger Facility Charges, as defined in an airports bond ordinance, divided by principal and interest requirements for the fiscal year.
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FY 2015-16 Proposed BudgetKey Benchmarks
Financial Measurements FY 2014-15Budget
FY 2015-16 Proposed Budget
Landing Fee per 1,000 lbs. units $2.93 $3.09
Average Terminal Rental Rate $62.45 $62.39
Net Revenue Available for Sharing * $178,700 $565,600
Airline Cost Per EPAX $8.15 $8.34
Net Cash Flow to RTAA – Discretionary * $2.47 million $3.02 million
Days Cash on Hand 344 Days 361 Days
* Details of Net Revenue Available for Sharing and Net Cash Flow to RTAA contained in Appendix
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Days Cash on Hand• Unrestricted cash and investments divided by annual operating and maintenance
expenditures and multiplied by 365.
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Capital Improvement Update
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Project Name Estimated Cost Funding
RNO Taxiway C and Connectors Reconstruction $9,123,874 93.75% FAA Grants; 6.25% General Purpose
RTS Taxiway C Reconstruction & Edge Lighting 2,144,667 93.75% FAA Grants; 6.25% Special Fund
RNO Digital Radio System Upgrade 1,526,440 42% PFC68% General Purpose
RNO Central Disposal Facility 1,500,000 Passenger Facility Charge
RNO Airport Communication Center System 1,495,800 Passenger Facility Charge
RNO FIDS and Terminal Paging Replacement 1,266,750 Passenger Facility Charge
RNO Airfield Pavement Maintenance 829,100 General Purpose
RNO Landside Pavement Maintenance 593,000 General Purpose
RTS Nevada Army Guard Access Road, Ph. 1 531,150 Special Fund
RNO Deicing Materials Storage Facility 380,000 Passenger Facility Charge
RNO RAC Asphalt Rehabilitation - 1551 National Guard Way (Hertz)
360,000 Customer Facility Charge
RNO RAC Asphalt Rehabilitation - 2555 Aviation Way 250,000 Customer Facility Charge
RTS Building 7003 (FBO Office) Roof Replacement 160,000 Special Fund
Grand Total $20,160,781
FY 2015-16 Capital Improvements
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Future Development Beyond FY 2015-16
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Reno-Tahoe - Airside FundingAirfield Pavement Maintenance RTAA
ARFF Vehicles FAA Grant/ PFC
Runway 16R Keel Section FAA Grant
Southwest Cargo Apron FAA Grant/ PFC BackedBonds
Snow Removal Equipment PFC
Terminal Apron, Phase 18 FAA Grant
Reno-Tahoe – Landside & Terminal
Funding
Jet Bridge Replacement PFCLandside Pavement Maintenance RTAAPassenger Sterile Area Exit Lane FAA GrantRental Car Facility Renewal CFCTerminal Elevator Replacement PFCThird Party Cargo Facilities PrivateThird Party GA East Hangars Private
Reno-Stead Airport FundingConcrete Apron FAA Grant
Runway 8/26 Rehabilitation FAA Grant
Land Infrastructure Private
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RTAA prudently manages its operations despite passenger traffic challenges
Non-Airline Revenue is budgeted to increase and remain at two-thirds of total operating revenue
Regional Economy and Land Development Opportunities – Significant upswing
CIP remains modest and does not require additional GARBs
Airline CPE remains stable and at competitive levels
RTAA continues to control operating costs and prudently manage its debt structure
Senior Lien debt service coverage remains very strong at or above 2.9x coverage
Liquidity is strong. Recent decrease due to prudent decisions to partially pre-pay $2.9 million of Subordinate Lien Notes and to keep Airline CPE at competitive levels.
Summary and Conclusion
Questions?
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Appendix
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Financial Overview(In Thousands) FY 2013-14
ActualFY 2014-15
BudgetFY 2015-16
BudgetVariance
Forecast to Budget
Operating Revenue
Airline (Before Profit Sharing) $ 14,699 $ 15,159 $ 15,838 $ 679
Non-Airline 29,188 28,748 29,395 647
Non-Operating Revenue 1,697 1,638 1,630 (7)
Total Revenue 45,586 45,545 46,863 1,319
O&M Expenditures (36,147) (38,570) (39,144) (575)
Net Available for Debt Service 9,439 6,975 7,802 827
Debt Service after PFCs (4,583) (3,785) (3,663) 122
Net Revenue After Debt Service $ 4,856 $ 3,190 $ 4,055 $ 866
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Financial Overview(In Thousands) FY 2013-14
ActualFY 2014-15
BudgetFY 2015-16
BudgetVarianceBudget
To Budget
Net Revenue After Debt Service A $4,856 $3,190 $4,055 $866Profit Sharing Calculation
Gaming Revenue- 35% (463) (394) (355) 39Capital Asset Repayment (1,864) (2,210) (2,729) (518)Profit Sharing Adjustments (762) (228) (79) 148
Net Revenue Available-Sharing 1,767 358 892 534Airline Share 50% 50% 50%
Airline Profit Sharing B 884 179 446 267Net Revenue to RTAA A-B 3,973 3,011 3,609 599Funds Committed to Rental Car (939) (545) (590) (44)Net Revenue to RTAA $ 3,033 $ 2,466 $ 3,019 $ 554
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FY 2015-16 Budget by Division Operations/Public Safety and Maintenance represent 61% of the Budget
Questions?