ALGT
$161.60
Allegiant Travel Com
$3.35
2.12%
Earnings Details
3rd Quarter September 2016
Wednesday, October 26, 2016 4:00:11 PM
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Summary

Allegiant Travel Com Beats

Allegiant Travel Com (ALGT) reported 3rd Quarter September 2016 earnings of $2.75 per share on revenue of $333.5 million. The consensus earnings estimate was $2.66 per share on revenue of $332.5 million. The Earnings Whisper number was $2.62 per share. Revenue grew 11.2% 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
$2.75
Earnings Whisper
$2.62
Consensus Estimate
$2.66
Reported Revenue
$333.5 Mil
Revenue Estimate
$332.5 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Allegiant Travel Company Third Quarter 2016 Financial Results

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

Three Months Ended
Nine Months Ended
September 30,
September 30,
Unaudited
2016
2015
Change
2016
2015
Change
Total operating revenue (millions) $
333.5
$
300.0
11.2 %
$
1,026.9
$
951.3
8.0
%
Operating income (millions)
$
76.8
$
77.1
(0.3 )%
$
302.4
$
277.9
8.8
%
Net income (millions)
$
45.5
$
44.5
2.2
%
$
178.3
$
163.7
8.9
%
Diluted earnings per share
$
2.75
$
2.62
5.0
%
$
10.73
$
9.55
12.4 %
Return on capital employed (LTM)*
24.8
%
18.7
%

* - see appendix for calculation

"We had a very busy summer this year," stated Maurice J. Gallagher, Jr., chairman and CEO of Allegiant Travel Company and I want to thank all of our team members for their tremendous effort and hard work through a challenging set of months. It is due to them that we can announce another profitable quarter, our 55th consecutive. In addition, John Redmond joined the company as President of Allegiant Travel Company. John has a terrific background in the hospitality space with years of executive experience at large organizations such as MGM Resorts International and Caesars Entertainment. We also are underway in our transition of the company to an all Airbus fleet with current expectations to operate over 90 aircraft by the end of the decade. Finally, we also launched the Allegiant World MasterCard Credit Card program in conjunction with Bank of America. While it is too early to determine any trends, we are excited about the opportunities from this program."

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

Appointment of new President - Announced John Redmond, current board member and previously chief executive officer of MGM Grand Resorts, has assumed the role of President

Allegiant World MasterCard - Launched the Allegiant credit card issued by Bank of America

-- Pilot agreement - Implemented new pilot agreement on August 1

Network growth - As of September 30, 2016 the company is operating 337 routes versus 271 at the same time last year

Percent change vs Q3 2015
ASMs*
19
%
Cities 9
%
Routes 24
%

* - ASMs are scheduled available seat miles

New routes - Announced eighteen new routes that are expected to begin through the first quarter of 2017

New cities - Announced service to three new cities <p>-- One new destination: San Juan, Puerto Rico beginning in the fourth quarter of 2016

-- One new destination: San Juan, Puerto Rico beginning in the fourth quarter of 2016

Two new origination cities: Trenton, New Jersey and Cleveland, Ohio beginning in the fourth quarter of 2016 and first quarter of 2017, respectively

Shareholder returns - $11.5 million was returned through the recurring dividend paid in September 2016 - year to date $28.2 million was returned to shareholders through recurring dividends

<p>-- The Company will pay a fourth quarter dividend of $0.70 per share on December 6, 2016 to all shareholders of record as of November 23, 2016

The Company will pay a fourth quarter dividend of $0.70 per share on December 6, 2016 to all shareholders of record as of November 23, 2016

The Company has $92 million of share repurchase authority remaining as of September 30, 2016

-- Dispatcher union vote - 34 Allegiant dispatchers voted to join the Teamsters union

<span data-mce-style="text-decoration: underline;" style="text-decoration: underline;">Fourth quarter 2016 revenue trends</span>

TRASM guidance - Fourth quarter TRASM is expected to decrease between 7.5 and 5.5 percent versus the fourth quarter last year

<p>-- Impact of Hurricane Matthew during Columbus Day weekend is expected to negatively account for a half point of TRASM reduction in the fourth quarter

Impact of Hurricane Matthew during Columbus Day weekend is expected to negatively account for a half point of TRASM reduction in the fourth quarter

Impact of the later Christmas travel season in the year versus last year is expected to negatively account for one point of TRASM reduction in the fourth 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 grow 13 percent versus last year.

New markets (markets operating less than one year) are expected to be almost 11 percent of ASMs for the fourth quarter versus approximately 15 percent last year

<span data-mce-style="text-decoration: underline;" style="text-decoration: underline;">Fourth quarter and full year 2016 cost trends</span>

Full year 2016 CASM ex fuel - Consistent with prior guidance, full year 2016 CASM ex fuel is expected to increase between one and three percent

Fourth quarter 2016 CASM ex fuel - CASM ex fuel for the fourth quarter is expected to increase between ten and twelve percent versus the same period last year, primarily driven by the implementation of the new pilot agreement and increased depreciation of MD-80s as the company has solidified its plan for MD-80 retirements through the end of the summer of 2019

<p>-- The MD80 retirement schedule will add incremental depreciation expense of three million dollars in the fourth quarter and seven million dollars for the full year 2017

The MD80 retirement schedule will add incremental depreciation expense of three million dollars in the fourth quarter and seven million dollars for the full year 2017

Maintenance and repairs expense - Consistent with prior guidance, maintenance and repair expense per in service aircraft per month is expected to be between $105 and $110 thousand for full year 2016

Total ownership expense per aircraft per month - Consistent with prior guidance, full year 2016 ownership expense per in service aircraft per month is expected to remain between $105 and $110 thousand

Guidance, subject to revision
October 2016
4Q16
Estimated TRASM year-over-year change
(7) to (5)%
(7.5) to (5.5)%
Fixed fee and other revenue guidance
4Q16
Fixed fee and other revenue (millions)
$16 to $18
Capacity guidance
System
4Q16
1Q17
FY16
Departure year-over-year growth
15 to 19%
14 to 18%
ASM year-over-year growth
10 to 14%
10 to 14%
15 to 17%
Scheduled
Departure year-over-year growth
15 to 19%
14 to 18%
ASM year-over-year growth
10 to 14%
10 to 14%
15 to 17%
Cost guidance
4Q16
FY16
CASM ex fuel* - year-over-year change
10 to 12%
1 to 3%
CAPEX guidance
FY16
Capital expenditures (millions)
$ 386

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

Aircraft fleet plan by end of period
Aircraft - (seats per AC)
3Q16YE16
MD-80 (166 seats)
48
48
757 (215 seats)
4
4
A319 (156 seats)
15
17
A320 (177 seats)
16
16
Total
83
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 Wednesday, October 26, 2016 to discuss its third 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 small 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, demand for air services to our leisure destinations from the markets served by us, our dependence on our leisure destination markets, 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 September 30,
Percent
2016
2015
change
OPERATING REVENUE:
Scheduled service revenue
$
177,361
$
170,002
4.3
Ancillary revenue:
Air-related charges
127,301
107,554
18.4
Third party products
11,259
9,890
13.8
Total ancillary revenue
138,560
117,444
18.0
Fixed fee contract revenue
9,183
4,640
97.9
Other revenue
8,377
7,870
6.4
Total operating revenue
333,481
299,956
11.2
OPERATING EXPENSES:
Aircraft fuel
69,305
68,272
1.5
Salary and benefits
73,424
58,968
24.5
Station operations
32,252
26,454
21.9
Maintenance and repairs
26,263
25,369
3.5
Depreciation and amortization
25,881
24,346
6.3
Sales and marketing
5,650
4,053
39.4
Aircraft lease rentals
472
695
(32.1 )
Other
23,394
14,717
59.0
Total operating expense
256,641
222,874
15.2
OPERATING INCOME
76,840
77,082
(0.3
)
OTHER (INCOME) EXPENSE:
Interest income
(1,028
)
(301
)
241.5
Interest expense
6,938
6,687
3.8
Other, net
(61
)
(67
)
(9.0
)
Total other (income) expense
5,849
6,319
(7.4
)
INCOME BEFORE INCOME TAXES
70,991
70,763
0.3
PROVISION FOR INCOME TAXES
25,538
26,305
(2.9
)
NET INCOME ATTRIBUTABLE TO ALLEGIANT TRAVEL COMPANY
$
45,453
$
44,458
2.2
Earnings per share to common shareholders (1):
Basic
$
2.76
$
2.63
4.9
Diluted
$
2.75
$
2.62
5.0
Weighted average shares outstanding used in computing earnings per share to common shareholders (1):
Basic
16,389
16,831
(2.6
)
Diluted
16,406
16,869
(2.7
)

(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 September 30,
Percent
2016
2015
change*
OPERATING STATISTICS
Total system statistics:
Passengers
2,939,055
2,420,819
21.4
Revenue passenger miles (RPMs) (thousands)
2,645,533
2,235,683
18.3
Available seat miles (ASMs) (thousands)
3,121,762
2,597,658
20.2
Load factor
84.7
%
86.1
%
(1.4
)
Operating expense per ASM (CASM) (cents)
8.22
8.58
(4.2
)
Fuel expense per ASM (cents)
2.22
2.63
(15.6 )
Operating CASM, excluding fuel (cents)
6.00
5.95
0.8
ASMs per gallon of fuel
70.6
69.2
2.0
Departures
21,384
17,330
23.4
Block hours
47,739
39,347
21.3
Average stage length (miles)
864
878
(1.6
)
Average number of operating aircraft during period
84.0
74.7
12.4
Average block hours per aircraft per day
6.2
5.7
8.8
Full-time equivalent employees at end of period
3,287
2,654
23.9
Fuel gallons consumed (thousands)
44,187
37,518
17.8
Average fuel cost per gallon
$
1.57
$
1.82
(13.7 )
Scheduled service statistics:
Passengers
2,904,295
2,383,556
21.8
Revenue passenger miles (RPMs) (thousands)
2,603,849
2,204,760
18.1
Available seat miles (ASMs) (thousands)
2,997,529
2,526,292
18.7
Load factor
86.9
%
87.3
%
(0.4
)
Departures
20,398
16,563
23.2
Block hours
45,740
38,094
20.1
Total scheduled service revenue per ASM (TRASM) (cents)** 10.54
11.38
(7.4
)
Average fare - scheduled service
$
61.07
$
71.32
(14.4 )
Average fare - ancillary air-related charges
$
43.83
$
45.12
(2.9
)
Average fare - ancillary third party products
$
3.88
$
4.15
(6.5
)
Average fare - total
$
108.78
$
120.59
(9.8
)
Average stage length (miles)
869
894
(2.8
)
Fuel gallons consumed (thousands)
42,439
36,458
16.4
Average fuel cost per gallon
$
1.59
$
1.83
(13.1 )
Percent of sales through website during period
94.6
%
95.2
%
(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)
Nine Months Ended September 30,
Percent
2016
2015
change
OPERATING REVENUE:
Scheduled service revenue
$
568,089
$
556,842
2.0
Ancillary revenue:
Air-related charges
376,944
326,055
15.6
Third party products
34,482
31,663
8.9
Total ancillary revenue
411,426
357,718
15.0
Fixed fee contract revenue
22,690
11,993
89.2
Other revenue
24,743
24,745
--
Total operating revenue
1,026,948
951,298
8.0
OPERATING EXPENSES:
Aircraft fuel
182,969
216,985
(15.7
)
Salary and benefits
211,185
171,119
23.4
Station operations
96,313
74,768
28.8
Maintenance and repairs
82,016
70,488
16.4
Depreciation and amortization
75,962
73,597
3.2
Sales and marketing
16,774
16,907
(0.8
)
Aircraft lease rentals
924
2,092
(55.8
)
Other
58,363
47,402
23.1
Total operating expense
724,506
673,358
7.6
OPERATING INCOME
302,442
277,940
8.8
OTHER (INCOME) EXPENSE:
Interest income
(2,932
)
(948
)
209.3
Interest expense
21,567
20,531
5.0
Other, net
(142
)
(117
)
21.4
Total other (income) expense
18,493
19,466
(5.0
)
INCOME BEFORE INCOME TAXES
283,949
258,474
9.9
PROVISION FOR INCOME TAXES
105,669
94,853
11.4
NET INCOME
178,280
163,621
9.0
Net loss attributable to noncontrolling interest
--
(44
)
(100.0 )
NET INCOME ATTRIBUTABLE TO ALLEGIANT TRAVEL COMPANY
$
178,280
$
163,665
8.9
Earnings per share to common shareholders (1):
Basic
$
10.74
$
9.57
12.2
Diluted
$
10.73
$
9.55
12.4
Weighted average shares outstanding used in computing earnings per share to common shareholders (1):
Basic
16,493
17,010
(3.0
)
Diluted
16,514
17,050
(3.1
)

(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)
Nine Months Ended September 30,
Percent
2016
2015
change*
OPERATING STATISTICS
Total system statistics:
Passengers
8,410,422
7,139,876
17.8
Revenue passenger miles (RPMs) (thousands)
7,831,436
6,734,217
16.3
Available seat miles (ASMs) (thousands)
9,302,051
7,814,146
19.0
Load factor
84.2
%
86.2
%
(2.0
)
Operating expense per ASM (CASM) (cents)***
7.79
8.62
(9.6
)
Fuel expense per ASM (cents)***
1.97
2.78
(29.1 )
Operating CASM, excluding fuel (cents)
5.82
5.84
(0.3
)
ASMs per gallon of fuel
71.6
69.8
2.6
Departures
61,271
50,976
20.2
Block hours
142,515
118,999
19.8
Average stage length (miles)
896
900
(0.4
)
Average number of operating aircraft during period
83.4
73.6
13.3
Average block hours per aircraft per day
6.2
5.9
5.1
Full-time equivalent employees at end of period
3,287
2,654
23.9
Fuel gallons consumed (thousands)
129,862
111,881
16.1
Average fuel cost per gallon***
$
1.41
$
1.94
(27.3 )
Scheduled service statistics:
Passengers
8,321,716
7,034,244
18.3
Revenue passenger miles (RPMs) (thousands)
7,714,172
6,647,978
16.0
Available seat miles (ASMs) (thousands)
8,967,614
7,612,202
17.8
Load factor
86.0
%
87.3
%
(1.3
)
Departures
58,744
48,833
20.3
Block hours
137,066
115,434
18.7
Total scheduled service revenue per ASM (TRASM)(cents)** 10.92
12.01
(9.1
)
Average fare - scheduled service
$
68.27
$
79.16
(13.8 )
Average fare - ancillary air-related charges
$
45.30
$
46.35
(2.3
)
Average fare - ancillary third party products
$
4.14
$
4.50
(8.0
)
Average fare - total
$
117.71
$
130.01
(9.5
)
Average stage length (miles)
901
915
(1.5
)
Fuel gallons consumed (thousands)
125,291
108,837
15.1
Average fuel cost per gallon***
$
1.41
$
1.96
(28.1 )
Percent of sales through website during period
94.3
%
95.1
%
(0.8
)

* 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.

<span data-mce-style="text-decoration: underline;" style="text-decoration: underline;">Summary Balance Sheet</span>

(millions)
9/30/2016
12/31/2015
Change
(unaudited)
Unrestricted cash
Cash and cash equivalents
$
48.7
$
87.1
(44.1 )%
Short-term investments
$
269.3
$
245.6
9.6
%
Long-term investments
$
65.2
$
64.8
0.6
%
Total unrestricted cash
$
383.2
$
397.5
(3.6
)%
Debt
Current maturities of long-term debt, net of related costs
$
137.4
$
74.1
85.4
%
Long-term debt, net of current maturities and related costs $
561.5
$
567.6
(1.1
)%
Total debt
$
698.9
$
641.7
8.9
%
Total Allegiant Travel Company shareholders’ equity
$
442.3
$
350.0
26.4
%

<span data-mce-style="text-decoration: underline;" style="text-decoration: underline;">Summary Cash Flow</span>

Nine Months Ended September 30,
Unaudited (millions)
2016
2015
Change
Cash provided by operating activities
$
308.1
$
267.6
15.1
%
Purchase of property and equipment, including capitalized interest*
$
(264.1 )
$
(173.9 )
51.9
%
Repurchase of common stock
$
(63.4
)
$
(121.1 )
(47.6 )%
Cash dividends paid to shareholders
$
(55.9
)
$
(57.4
)
(2.6
)%
Proceeds from the issuance of long-term debt
$
120.4
$
93.0
29.5
%
Principal payments on long-term debt
$
(63.5
)
$
(46.4
)
36.9
%

* Includes aircraft pre-delivery deposits.

Appendix A
Additional Financial Information
(Unaudited)
Twelve Months Ended September 30,
Return on capital calculation (millions)
2016
2015
Net income attributable to Allegiant Travel Company
$
235.0
$
168.5
Income tax
137.2
97.8
Interest expense
27.5
27.9
Less interest income
(3.4
)
(1.2
)
396.3
293.0
Interest income
3.4
1.2
Tax rate
36.9
%
36.7
%
Numerator
252.2
186.2
Total assets as of prior September 30
1,303.9
1,269.9
Less current liabilities as of prior September 30
358.1
326.0
Plus short term debt as of prior September 30
69.6
51.9
Denominator
1,015.4
995.8
Return on capital employed
24.8
%
18.7
%
Media Inquiries: mediarelations@allegiantair.com
Investor Inquiries: ir@allegiantair.com

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