ALGT
$173.90
Allegiant Travel Com
$2.50
1.46%
Earnings Details
4th Quarter December 2016
Tuesday, January 31, 2017 4:00:16 PM
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Summary

Allegiant Travel Com Beats

Allegiant Travel Com (ALGT) reported 4th Quarter December 2016 earnings of $2.48 per share on revenue of $335.9 million. The consensus earnings estimate was $2.40 per share on revenue of $333.6 million. The Earnings Whisper number was $2.43 per share. Revenue grew 8.0% on a year-over-year basis.

Allegiant Travel Co LLC a leisure travel company, engaged in transporting travelers in small cities to leisure destinations. The Company provides air-related services and products along with air transportation.

Results
Reported Earnings
$2.48
Earnings Whisper
$2.43
Consensus Estimate
$2.40
Reported Revenue
$335.9 Mil
Revenue Estimate
$333.6 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Allegiant Travel Company Full Year and Fourth Quarter 2016 Financial Results

Full Year 2016 Fully Diluted Earnings per Share of $13.21

Fourth Quarter 2016 Fully Diluted Earnings per Share of $2.48

Allegiant Travel Company (ALGT) today reported the following financial results for the full year and fourth quarter 2016, as well as comparisons to prior year equivalents:

Three Months Ended
Year Ended
December 31,
December 31,
Unaudited
2016
2015
Change
2016
2015
Change
Total operating revenue (millions) $
335.9
$
310.9
8.0
%
$ 1,362.8
$ 1,262.2
8
%
Operating income (millions)
$
68.1
$
93.8
(27.4 )%
$ 370.6
$ 371.7
(0.3 )%
Net income (millions)
$
41.3
$
56.7
(27.2 )%
$ 219.6
$ 220.4
(0.4 )%
Diluted earnings per share
$
2.48
$
3.38
(26.6 )%
$ 13.21
$ 12.94
2.1
%
Return on capital employed*
22.9
%
25.6
%

* - see appendix for calculation

"2016 has been a very transformational year for Allegiant," stated Maurice J. Gallagher, Jr., chairman and CEO of Allegiant Travel Company. "During this year we finalized a single fleet type plan, signed our first pilot contract agreement, launched our credit card program, and announced the appointment of John Redmond as President of Allegiant. Each of these actions is critical in the evolution of our business model in the coming years. We have also had our share of challenges this past year but through the perseverance of our team members we were able to deliver our 56th consecutive profitable quarter and another successful year."

"I am also pleased to announce we have created an Executive Vice President (EVP) level in the company. Our Senior Vice Presidents - Jude Bricker, Scott Allard and Scott Sheldon will move to these positions. Concurrently we have promoted four Vice Presidents to Senior Vice Presidents - Greg Anderson, SVP and Principal Accounting Officer, Lukas Johnson, SVP Planning, Trent Porter, SVP Financial Planning and Rob Wilson, SVP Systems. These additional positions allow more pathways upward for our talented managers. One of the core strengths of our model is our management team. Over the years we have worked hard to develop our management talent internally and we are reaping the benefits of this strategy. These additional positions and promotions reflect this success."

<span data-mce-style="text-decoration: underline;" style="text-decoration: underline;">Notable highlights</span>

$150 million additional unsecured debt - Added $150 million to the existing senior, unsecured notes due in 2019

Network growth - As of December 31, 2016 the company is operating 360 routes versus 296 at the same time last year

Percent change vs Q4 2015
ASMs*
13
%
Cities 12
%
Routes 22
%

* - ASMs are scheduled available seat miles

New routes - Announced two new routes that are expected to begin in the first quarter of 2017 and seventeen new routes that will begin in the second quarter of 2017

-- New cities - Began service to three new cities in the fourth quarter of 2016

- Two new destinations: Newark, New Jersey, and San Juan, Puerto Rico

- One new origination city: Trenton, New Jersey

Shareholder returns - $14.6 million was returned through a combination of the recurring dividend paid in December 2016 and share repurchases during the quarter

- The Company will pay a first quarter 2017 dividend of $0.70 per share on March 15, 2017 to all shareholders of record as of March 3, 2017

- The Company has $89 million of share repurchase authority remaining as of January 31, 2017

<span data-mce-style="text-decoration: underline;" style="text-decoration: underline;">First quarter 2017 revenue trends</span>

TRASM guidance - First quarter TRASM is expected to decrease between 3.5 and 1.5 percent versus the first quarter last year

- Impact of Easter shifting from the first quarter to the second quarter is expected to negatively account for a half point of TRASM reduction in the first quarter

- Elimination of the credit card surcharge is expected to positively account for a half point of TRASM improvement in the first quarter

- Scheduled ASMs of flights that occur during both peak flying days and the peak flying season, the highest unit revenue flights, are expected to decline three percent versus first quarter of last year

- New markets (markets operating less than one year) are expected to be almost twelve percent of ASMs for the first quarter which is approximately the same amount from last year

<span data-mce-style="text-decoration: underline;" style="text-decoration: underline;">First quarter and full year 2017 cost trends</span>

Full year 2017 CASM ex fuel - Consistent with prior guidance, full year 2017 CASM ex fuel is expected to increase between five and nine percent

First quarter 2017 CASM ex fuel - CASM ex fuel for the first quarter is expected to increase between ten and twelve percent versus the same period last year, driven by the implementation of the new pilot agreement, increased depreciation of MD-80s as previously guided, the elimination of the credit card surcharge, and amortization of Airbus major maintenance costs as the Company began capitalizing Airbus heavy maintenance in the second quarter of 2016

Maintenance and repairs expense - Consistent with prior guidance, maintenance and repair expense per in service aircraft per month is expected to be between $90 and $100 thousand for full year 2017

Total ownership expense per aircraft per month - Consistent with prior guidance, full year 2017 ownership expense per in service aircraft per month is expected to remain between $125 and $135 thousand

<span data-mce-style="text-decoration: underline;" style="text-decoration: underline;">Balance sheet activity and full year 2017 trends</span>

CAPEX guidance - Full year CAPEX (excluding Airbus heavy maintenance) is expected to increase to $521 million versus the previous guidance of $415 million

- Increase is driven by timing of aircraft deliveries from both 2016 and 2018

Debt payments - During the fourth quarter, paid down $91 million of debt secured by aircraft and debt in the senior secured revolving credit facility

- Currently have the ability to borrow up to $56 million under senior secured revolving credit facility

-- Debt proceeds - Raised over $200 million in debt during the fourth quarter

- Added $150 million to existing senior, unsecured notes due in 2019

- Raised approximately $50 million on five A320 aircraft. Currently have five unencumbered aircraft

Guidance, subject to revision
1Q17
Estimated TRASM year-over-year change
(3.5) to (1.5)%
Fixed fee and other revenue guidance
1Q17
Fixed fee and other revenue (millions)
$15 to $17
Capacity guidance
System
1Q17
2Q17
FY17
Departure year-over-year growth
14 to 18%
14 to 18%
ASM year-over-year growth
10 to 14%
11 to 15%
8 to 12%
Scheduled
Departure year-over-year growth
14 to 18%
14 to 18%
ASM year-over-year growth
10 to 14%
11 to 15%
8 to 12%
Cost guidance
1Q17
FY17
CASM ex fuel* - year-over-year change
10 to 12%
5 to 9%
CAPEX guidance
FY17
Capital expenditures (millions)
$
521
Capitalized Airbus heavy maintenance (millions) **
$
30

* - CASM ex fuel - cost per available seat mile excluding fuel expense

** - Not included in capital expenditure total

Aircraft fleet plan by end of period
Aircraft - (seats per AC)
YE16 1Q17
MD-80 (166 seats)
47
47
757 (215 seats)
4
2
A319 (156 seats)
17
19
A320 (177 seats)
16
17
Total
84
85

Aircraft listed in table above include only in service aircraft, planned retirements and future aircraft under contract (subject to change)

Allegiant Travel Company will host a conference call with analysts at 4:30 p.m. ET Tuesday, January 31, 2017 to discuss its full year and fourth quarter 2016 financial results. A live broadcast of the conference call will be available via the Company’s Investor Relations website homepage at http://ir.allegiantair.com. The webcast will also be archived in the "Events & Presentations" section of the website.

Las Vegas-based Allegiant (ALGT) is focused on linking travelers in underserved cities to world-class leisure destinations. The airline offers industry-low fares on an all-jet fleet while also offering other travel-related products such as hotel rooms, rental cars and attraction tickets. All can be purchased only through the company website, Allegiant.com. Beginning with one aircraft and one route in 1999, the company has grown to over 80 aircraft and more than 300 routes across the country with airfares less than half the cost of average domestic roundtrip ticket. For downloadable press kit, including photos, visit: http://gofly.us/YFuyb.

Under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, statements in this press release that are not historical facts are forward-looking statements. These forward-looking statements are only estimates or predictions based on our management’s beliefs and assumptions and on information currently available to our management. Forward-looking statements include our statements regarding future unit revenue, future operating expense, ASM growth, departure growth, fixed-fee and other revenues, expected capital expenditures, number of contracted aircraft to be placed in service in the future, timing of aircraft retirements, as well as other information concerning future results of operations, business strategies, financing plans, industry environment and potential growth opportunities. Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as the words "believe," "expect," "guidance," "anticipate," "intend," "plan," "estimate", "project", "hope" or similar expressions.

Forward-looking statements involve risks, uncertainties and assumptions. Actual results may differ materially from those expressed in the forward-looking statements. Important risk factors that could cause our results to differ materially from those expressed in the forward-looking statements generally may be found in our periodic reports filed with the Securities and Exchange Commission at www.sec.gov. These risk factors include, without limitation, an accident involving, or problems with, our aircraft, our reliance on our automated systems, volatility of fuel costs, labor issues and costs, the ability to obtain regulatory approvals as needed, the effect of economic conditions on leisure travel, debt covenants, terrorist attacks, risks inherent to airlines, our competitive environment, our reliance on third parties who provide facilities or services to us, the possible loss of key personnel, economic and other conditions in markets in which we operate, governmental regulation, increases in maintenance costs and cyclical and seasonal fluctuations in our operating results.

Any forward-looking statements are based on information available to us today and we undertake no obligation to update publicly any forward-looking statements, whether as a result of future events, new information or otherwise.

Detailed financial information follows:

Allegiant Travel Company
Consolidated Statements of Income
(in thousands, except per share amounts)
(Unaudited)
Three Months Ended December 31,
Percent
2016
2015
change
OPERATING REVENUE:
Scheduled service revenue
$
185,325
$
178,720
3.7
Ancillary revenue:
Air-related charges
122,598
108,262
13.2
Third party products
10,458
8,513
22.8
Total ancillary revenue
133,056
116,775
13.9
Fixed fee contract revenue
9,282
7,754
19.7
Other revenue
8,220
7,640
7.6
Total operating revenue
335,883
310,889
8.0
OPERATING EXPENSES:
Aircraft fuel
74,363
61,409
21.1
Salary and benefits
80,789
58,683
37.7
Station operations
27,739
27,525
0.8
Maintenance and repairs
29,054
22,087
31.5
Depreciation and amortization
29,254
24,499
19.4
Sales and marketing
3,753
4,442
(15.5
)
Aircraft lease rentals
--
234
(100.0 )
Other
22,816
18,248
25.0
Total operating expense
267,768
217,127
23.3
OPERATING INCOME
68,115
93,762
(27.4
)
OTHER (INCOME) EXPENSE:
Interest income
(908
)
(473
)
92.0
Interest expense
7,269
5,979
21.6
Other, net
(255
)
12
NM
Total other (income) expense
6,106
5,518
10.7
INCOME BEFORE INCOME TAXES
62,009
88,244
(29.7
)
PROVISION FOR INCOME TAXES
20,699
31,536
(34.4
)
NET INCOME ATTRIBUTABLE TO ALLEGIANT TRAVEL COMPANY
$
41,310
$
56,708
(27.2
)
Earnings per share to common shareholders (1):
Basic
$
2.49
$
3.38
(26.3
)
Diluted
$
2.48
$
3.38
(26.6
)
Weighted average shares outstanding used in computing earnings per share to common shareholders (1):
Basic
16,382
16,728
(2.1
)
Diluted
16,404
16,789
(2.3
)

NM - Not meaningful

(1) The Company’s unvested restricted stock awards are considered participating securities as they receive non-forfeitable rights to cash dividends at the same rate as common stock. The Basic and Diluted earnings per share for the periods presented reflect the two-class method mandated by accounting guidance for the calculation of earnings per share. The two-class method adjusts both the net income and the shares used in the calculation. Application of the two-class method did not have a significant impact on the Basic and Diluted earnings per share for the periods presented.

Allegiant Travel Company
Operating Statistics
(Unaudited)
Three Months Ended December 31,
Percent
2016
2015
change*
OPERATING STATISTICS
Total system statistics:
Passengers
2,717,769
2,360,735
15.1
Revenue passenger miles (RPMs) (thousands)
2,451,391
2,210,736
10.9
Available seat miles (ASMs) (thousands)
3,073,455
2,712,464
13.3
Load factor
79.8
%
81.5
%
(1.7
)
Operating expense per ASM (CASM) (cents)
8.71
8.00
8.9
Fuel expense per ASM (cents)
2.42
2.26
7.1
Operating CASM, excluding fuel (cents)
6.29
5.74
9.6
ASMs per gallon of fuel
71.6
71.2
0.6
Departures
21,070
17,677
19.2
Block hours
48,191
41,432
16.3
Average stage length (miles)
868
900
(3.6
)
Average number of operating aircraft during period
83.3
76.2
9.3
Average block hours per aircraft per day
6.3
5.9
6.8
Full-time equivalent employees at end of period
3,416
2,846
20.0
Fuel gallons consumed (thousands)
42,933
38,071
12.8
Average fuel cost per gallon
$
1.73
$
1.61
7.5
Scheduled service statistics:
Passengers
2,682,148
2,320,853
15.6
Revenue passenger miles (RPMs) (thousands)
2,416,503
2,173,930
11.2
Available seat miles (ASMs) (thousands)
2,954,118
2,623,873
12.6
Load factor
81.8
%
82.9
%
(1.1
)
Departures
20,003
16,850
18.7
Block hours
46,225
39,969
15.7
Total scheduled service revenue per ASM (TRASM)** (cents) 10.78
11.26
(4.3
)
Average fare - scheduled service
$
69.10
$
77.01
(10.3 )
Average fare - ancillary air-related charges
$
45.71
$
46.65
(2.0
)
Average fare - ancillary third party products
$
3.90
$
3.67
6.3
Average fare - total
$
118.71
$
127.33
(6.8
)
Average stage length (miles)
879
914
(3.8
)
Fuel gallons consumed (thousands)
41,237
36,817
12.0
Average fuel cost per gallon
$
1.70
$
1.61
5.6
Percent of sales through website during period
93.8
%
94.4
%
(0.6
)

* Except load factor and percent of sales through website, which is percentage point change.

** Various components of this measurement do not have a direct correlation to ASMs. These figures are provided on a per ASM basis to facilitate comparison with airlines reporting revenues on a per ASM basis.

Allegiant Travel Company
Consolidated Statements of Income
(in thousands, except per share amounts)
(Unaudited)
Year Ended December 31,
Percent
2016
2015
change
OPERATING REVENUE:
Scheduled service revenue
$
753,414
$
735,563
2.4
Ancillary revenue:
Air-related charges
499,542
434,317
15.0
Third party products
44,940
40,177
11.9
Total ancillary revenue
544,482
474,494
14.8
Fixed fee contract revenue
31,972
19,747
61.9
Other revenue
32,963
32,384
1.8
Total operating revenue
1,362,831
1,262,188
8.0
OPERATING EXPENSES:
Aircraft fuel
257,332
278,394
(7.6
)
Salary and benefits
291,974
229,802
27.1
Station operations
124,052
102,294
21.3
Maintenance and repairs
111,070
92,575
20.0
Depreciation and amortization
105,216
98,097
7.3
Sales and marketing
20,527
21,349
(3.9
)
Aircraft lease rentals
924
2,326
(60.3 )
Other
81,178
65,649
23.7
Total operating expense
992,273
890,486
11.4
OPERATING INCOME
370,558
371,702
(0.3
)
OTHER (INCOME) EXPENSE:
Interest income
(3,010
)
(1,452
)
107.3
Interest expense
28,836
26,510
8.8
Other, net
(1,226
)
(75
)
NM
Total other (income) expense
24,600
24,983
(1.5
)
INCOME BEFORE INCOME TAXES
345,958
346,719
(0.2
)
PROVISION FOR INCOME TAXES
126,368
126,389
--
NET INCOME
219,590
220,330
(0.3
)
Net loss attributable to noncontrolling interest
--
(44
)
NM
NET INCOME ATTRIBUTABLE TO ALLEGIANT TRAVEL COMPANY
$
219,590
$
220,374
(0.4
)
Earnings per share to common shareholders (1):
Basic
$
13.23
$
12.97
2.0
Diluted
$
13.21
$
12.94
2.1
Weighted average shares outstanding used in computing earnings per share to common shareholders (1):
Basic
16,465
16,923
(2.7
)
Diluted
16,489
16,962
(2.8
)

NM - Not meaningful

(1) The Company’s unvested restricted stock awards are considered participating securities as they receive non-forfeitable rights to cash dividends at the same rate as common stock. The Basic and Diluted earnings per share for the periods presented reflect the two-class method mandated by accounting guidance for the calculation of earnings per share. The two-class method adjusts both the net income and shares used in the calculation. Application of the two-class method did not have a significant impact on the Basic and Diluted earnings per share for the periods presented.

Allegiant Travel Company
Operating Statistics
(Unaudited)
Year Ended December 31,
Percent
2016
2015
change*
OPERATING STATISTICS
Total system statistics:
Passengers
11,128,191
9,500,611
17.1
Revenue passenger miles (RPMs) (thousands)
10,282,827
8,944,952
15.0
Available seat miles (ASMs) (thousands)
12,375,505
10,526,610
17.6
Load factor
83.1
%
85.0
%
(1.9
)
Operating expense per ASM (CASM) (cents)***
8.02
8.45
(5.1
)
Fuel expense per ASM (cents)***
2.08
2.64
(21.2 )
Operating CASM, excluding fuel (cents)
5.94
5.81
2.2
ASMs per gallon of fuel
71.6
70.2
2.0
Departures
82,341
68,653
19.9
Block hours
190,706
160,431
18.9
Average stage length (miles)
889
900
(1.2
)
Average number of operating aircraft during period
83.3
74.3
12.1
Average block hours per aircraft per day
6.3
5.9
6.8
Full-time equivalent employees at end of period
3,416
2,846
20.0
Fuel gallons consumed (thousands)
172,796
149,951
15.2
Average fuel cost per gallon***
$
1.49
$
1.86
(19.9 )
Scheduled service statistics:
Passengers
11,003,864
9,355,097
17.6
Revenue passenger miles (RPMs) (thousands)
10,130,675
8,821,908
14.8
Available seat miles (ASMs) (thousands)
11,921,733
10,236,075
16.5
Load factor
85.0
%
86.2
%
(1.2
)
Departures
78,747
65,683
19.9
Block hours
183,290
155,403
17.9
Total scheduled service revenue per ASM (TRASM)** (cents) 10.89
11.82
(7.9
)
Average fare - scheduled service
$
68.47
$
78.63
(12.9 )
Average fare - ancillary air-related charges
$
45.40
$
46.43
(2.2
)
Average fare - ancillary third party products
$
4.08
$
4.29
(4.9
)
Average fare - total
$
117.95
$
129.35
(8.8
)
Average stage length (miles)
895
915
(2.2
)
Fuel gallons consumed (thousands)
166,528
145,654
14.3
Average fuel cost per gallon***
$
1.48
$
1.87
(20.9 )
Percent of sales through website during period
94.2
%
95.1
%
(0.9
)

* Except load factor and percent of sales through website, which is percentage point change.

** Various components of this measurement do not have a direct correlation to ASMs. These figures are provided on a per ASM basis to facilitate comparison with airlines reporting revenues on a per ASM basis.

*** Includes effect of fuel tax refund of $8.3 million in the second quarter of 2016.

Summary Balance Sheet
(millions)
12/31/2016
12/31/2015
Change
(unaudited)
Unrestricted cash
Cash and cash equivalents
$
64.7
$
87.1
(25.7 )%
Short-term investments
269.3
245.6
9.6
Long-term investments
124.8
64.8
92.6
Total unrestricted cash
458.8
397.5
15.4
Debt
Current maturities of long-term debt, net of related costs
86.2
74.1
16.3
Long-term debt, net of current maturities and related costs 722.0
567.6
27.2
Total debt
808.2
641.7
25.9
Total Allegiant Travel Company shareholders’ equity
$
473.6
$
350.0
35.3
%
Summary Cash Flow
Year Ended December 31,
Unaudited (millions)
2016
2015
Change
Cash provided by operating activities
$
346.9
$
365.4
(5.1
)%
Purchase of property and equipment, including capitalized interest* (325.2
)
(252.7
)
28.7
Repurchase of common stock
(66.4
)
(129.5
)
(48.7 )
Cash dividends paid to shareholders
(67.5
)
(62.4
)
8.2
Proceeds from the issuance of long-term debt
321.2
121.0
165.5
Principal payments on long-term debt
(154.1
)
(67.9
)
127.0 %

* Includes aircraft pre-delivery deposits.

Appendix A
Additional Financial Information
(Unaudited)
Year Ended December 31,
Return on capital calculation (millions)
2016
2015
Net income attributable to Allegiant Travel Company $
219.6
$
220.4
Income tax
126.4
126.4
Interest expense
28.8
26.5
Less interest income
(3.0
)
(1.5
)
371.8
371.8
Interest income
3.0
1.5
Tax rate
36.5
%
36.5
%
Numerator
238.0
237.0
Total assets as of prior December 31
1,358.3
1,241.0
Less current liabilities as of prior December 31
395.1
367.9
Plus short term debt as of prior December 31
74.1
52.6
Denominator
1,037.3
925.7
Return on capital employed
22.9
%
25.6
%
Media Inquiries: mediarelations@allegiantair.com
Investor Inquiries: ir@allegiantair.com

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