ALGT
$137.05
Allegiant Travel Com
($1.35)
(.98%)
Earnings Details
3rd Quarter September 2017
Wednesday, October 25, 2017 4:01:37 PM
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Summary

Allegiant Travel Com (ALGT) Recent Earnings

Allegiant Travel Com (ALGT) reported 3rd Quarter September 2017 earnings of $1.39 per share on revenue of $348.8 million. The consensus earnings estimate was $1.37 per share on revenue of $351.3 million. Revenue grew 4.6% 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
$1.39
Earnings Whisper
-
Consensus Estimate
$1.37
Reported Revenue
$348.8 Mil
Revenue Estimate
$351.3 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Allegiant Travel Company Third Quarter 2017 Financial Results

Third Quarter 2017 Fully Diluted Earnings per Share of $1.39

Accelerate the Retirement of the MD-80 Fleet to Fourth Quarter 2018

Allegiant Travel Company (ALGT) today reported the following financial results for the third quarter 2017, as well as comparisons to the prior year:

Three Months Ended
Nine Months Ended
September 30,
September 30,
Unaudited
2017
2016
Change
2017
2016
Change
Total operating revenue (millions) $
348.8
$
333.5
4.6
%
$
1,125.2
$
1,026.9
9.6
%
Operating income (millions)
$
42.9
$
76.8
(44.1 )%
$
201.0
$
302.4
(33.5 )%
Net income (millions)
$
22.3
$
45.5
(51.0 )%
$
112.4
$
178.3
(37.0 )%
Diluted earnings per share
$
1.39
$
2.75
(49.5 )%
$
6.85
$
10.73
(36.2 )%
Return on capital employed*
14.7
%
24.8
%

"Our hearts go out to all of those involved in the tragic mass shooting in our home community," stated Maurice J. Gallagher Jr., chairman and CEO of Allegiant Travel Company. "While we mourn the victims we praise the heroes who always emerge from these tragedies, including a number of our Las Vegas maintenance personnel who provided shelter for more than 30 concert goers fleeing the melee of the shooting scene."

"Our team members produced another profitable quarter, the 59th consecutive. Typically, summer months have challenged our operations as we peak up. However, this July and August we saw meaningful improvements on just about every operational metric we track. Hurricane Irma created a unique set of challenges. We canceled 444 flights but quickly got back to work, providing our team members and customers with needed transportation to their abandoned homes in Florida. As usual, our team members rose to the challenge and did a great job responding to Mother Nature’s calamity."

"Lastly, our board of directors approved a more aggressive retirement plan for our MD-80s. We now plan to retire our last MD by the end of 2018. This is one year earlier than was previously expected. A hearty ’thank you’ goes out to the members of our fleet team, who through hard work were able to source enough used A320 aircraft to make this happen. This is the end of an era for our company. The ’80’ has been critical to our success and growth for the past 15 years - it will be missed."

Notable highlights

Operational improvements - 61 percent reduction in controllable cancellations in the quarter

-- Airbus growth - Added five A320s and one A319 into revenue service during the quarter

MD-80 retirements - Retired five MD-80s during the quarter - remainder expected to be retired by the end of 2018

??? MD-80s and related assets have a net book value of $42 million and are being reviewed for impairment

Sunseeker Resorts - In August, announced plans to develop a hotel/condo resort in Charlotte County, Florida

Network growth - As of September 30, 2017 the company is operating 373 routes versus 337 last year

New aircraft base - Announced Indianapolis, Indiana as an aircraft base to support the growth in that area

Shareholder returns - $11 million was returned through its recurring dividend paid in September 2017. The company:

??? Will pay dividend of $0.70/share on December 5, 2017 to shareholders of record as of November 22, 2017

??? Has share repurchase authorization of up to $100 million

Third quarter 2017 revenue

-- TRASM results - Third quarter TRASM increased 0.7 percent in spite of:

??? Increased MD-80 spares during the quarter, which resulted in a three percent decline in peak period capacity

??? Hurricane Irma:

??? Approximately two percent of scheduled ASMs for the quarter were canceled

??? TRASM - Expected benefit from reduced ASMs - offset by refunds and decreased demand to Florida

Fourth quarter 2017 revenue trends

-- TRASM guidance - Expect a decline between three and 0.5 percent which is influenced by:

??? Hurricane Irma and the Las Vegas mass shooting

??? Approximately 80 percent of fourth quarter ASMs touch Las Vegas or Florida

??? So far a decrease in demand during fourth quarter

??? Impact on fourth quarter TRASM expected to be approximately between 3 and 3.5 percentage points

??? Peak period flying - Fourth quarter peak capacity expected to increase nine percentage points

Third quarter cost

Third quarter CASM ex fuel increased 16.7 percent versus the same period last year, primarily driven by:

??? Transition costs added four percentage points to increase, including:

??? Reduced ASMs from fleet transition through lower utilization of MD-80s

??? Other operational inefficiencies driven by the transition to an all Airbus fleet

??? New pilot agreement - Added one percentage point

??? Incremental depreciation from additional Airbus aircraft - added three percentage points

??? Elimination of the credit card surcharge product

??? January 2017 discontinued credit card surcharge which had offset sales and marketing expense

??? Added four percentage points in quarter

??? Hurricane Irma - Added almost two percentage points due to flight cancellations

Fourth quarter 2017 cost trends

Fourth quarter 2017 CASM ex fuel is expected to increase between seven and nine percent, primarily driven by:

??? Transition costs - Expected to add three percentage points to increase, including:

??? Reduced ASMs from fleet transition through lower utilization of MD-80s

??? Other operational inefficiencies driven by the transition to an all Airbus fleet

??? New pilot agreement - Expected to add one percentage point due to increased benefit costs

??? Incremental depreciation on additional Airbus aircraft - Expected to add two percentage points

??? Elimination of credit card surcharge - Expected to add three percentage points

Full year 2017 cost trends

-- Full year 2017 CASM ex fuel

??? Expected to increase between eleven and twelve percent

??? Previously guided range of plus ten to twelve percent

-- Maintenance and repairs expense

??? Expected between $105 and $110 thousand per in-service aircraft per month for 2017

??? Previously guided range - between $100 and $110 thousand

-- Total ownership expense per aircraft per month

??? 2017 ownership expense per in-service aircraft - between $125 and $130 thousand per month

??? Previously guided range between $125 and $135 thousand

Balance sheet activity and full year 2017 trends

Full year CAPEX guidance is expected to be $604 million, versus prior guidance of $525 million

??? Higher amount driven by expected commitment for five additional Airbus A320 aircraft in the fourth quarter

??? Excludes Airbus heavy maintenance and Sunseeker resort

-- Raised $158 million in debt proceeds during the third quarter

??? Includes monies drawn from existing $56 million revolving credit facility

??? Seven Airbus aircraft remain unencumbered at end of third quarter

??? Includes one new A320 which was collateralized in October

Guidance, subject to revision
4Q17
Estimated TRASM year-over-year change
(3.0) to (0.5)%
Fixed fee and other revenue guidance
4Q17
Fixed fee and other revenue (millions)
$19 to $21
Capacity guidance
System
4Q17
1Q18
FY17
Departure year-over-year growth
7 to 11%
8 to 12%
ASM year-over-year growth
9 to 13%
10 to 14%
9 to 10%
Scheduled
Departure year-over-year growth
7 to 11%
8 to 12%
ASM year-over-year growth
9 to 13%
10 to 14%
9 to 10%
Cost guidance
4Q17
FY17
CASM ex fuel* - year-over-year change
7 to 9%
11 to 12%
CAPEX guidance
FY17
Capital expenditures (millions)
$604
Capitalized Airbus deferred heavy maintenance (millions) **
$35
Sunseeker resorts **
$35
Aircraft fleet plan by end of period
Aircraft - (seats per AC)
3Q17YE171Q182Q18 3Q18YE18
MD-80 (166 seats)
40
37
35
29
20
--
757 (215 seats)
2
--
--
--
--
--
A319 (156 seats)
21
22
25
31
31
32
A320 (177/186 seats)
26
29
34
42
45
50
Total
89
88
94
102
96
82

Allegiant Travel Company will host a conference call with analysts at 4:30 p.m. ET Wednesday, October 25, 2017 to discuss its third quarter 2017 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.

Allegiant

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 and rental cars. 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 more than 85 aircraft and 350 routes across the country with base airfares less than half the cost of the average domestic roundtrip ticket. For downloadable press kit, including photos, visit: http://gofly.us/iiFa303wrtF.

Media Inquiries: mediarelations@allegiantair.com

Investor Inquiries: ir@allegiantair.com

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, limitation on growth as we transition to a single fleet type, risk of breach of security of personal data, 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 and balances, the ability to finance aircraft under contract, 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, the ability to successfully develop a hotel-condo project in Southwest Florida, 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
2017
2016
change
OPERATING REVENUE:
Scheduled service revenue
$
183,064
$
177,361
3.2
Ancillary revenue:
Air-related charges
130,818
127,301
2.8
Third party products
12,348
11,259
9.7
Total ancillary revenue
143,166
138,560
3.3
Fixed fee contract revenue
11,831
9,183
28.8
Other revenue
10,708
8,377
27.8
Total operating revenue
348,769
333,481
4.6
OPERATING EXPENSES:
Aircraft fuel
80,421
69,305
16.0
Salary and benefits
88,788
73,424
20.9
Station operations
37,148
32,252
15.2
Maintenance and repairs
28,870
26,263
9.9
Depreciation and amortization
31,894
25,881
23.2
Sales and marketing
13,884
5,650
145.7
Aircraft lease rentals
533
472
12.9
Other
24,315
23,394
3.9
Total operating expense
305,853
256,641
19.2
OPERATING INCOME
42,916
76,840
(44.1 )
OTHER (INCOME) EXPENSE:
Interest income
(1,454
)
(781
)
86.2
Interest expense
10,041
6,938
44.7
Other, net
(400
)
(308
)
29.9
Total other (income) expense
8,187
5,849
40.0
INCOME BEFORE INCOME TAXES
34,729
70,991
(51.1 )
PROVISION FOR INCOME TAXES
12,436
25,538
(51.3 )
NET INCOME
$
22,293
$
45,453
(51.0 )
Earnings per share to common shareholders (1):
Basic
$
1.39
$
2.76
(49.6 )
Diluted
$
1.39
$
2.75
(49.5 )
Weighted average shares outstanding used in computing earnings per share to common shareholders (1):
Basic
15,852
16,389
(3.3
)
Diluted
15,862
16,406
(3.3
)
Allegiant Travel Company
Operating Statistics
(Unaudited)
Three Months Ended September 30,
Percent
2017
2016
change*
OPERATING STATISTICS
Total system statistics:
Passengers
3,045,642
2,939,055
3.6
Revenue passenger miles (RPMs) (thousands)
2,672,963
2,645,533
1.0
Available seat miles (ASMs) (thousands)
3,220,246
3,121,762
3.2
Load factor
83.0
%
84.7
%
(1.7 )
Operating expense per ASM (CASM) (cents)
9.50
8.22
15.6
Fuel expense per ASM (cents)
2.50
2.22
12.6
Operating CASM, excluding fuel (cents)
7.00
6.00
16.7
ASMs per gallon of fuel
72.6
70.6
2.8
Departures
22,723
21,384
6.3
Block hours
49,932
47,739
4.6
Average stage length (miles)
842
864
(2.5 )
Average number of operating aircraft during period
89.7
84.0
6.8
Average block hours per aircraft per day
6.1
6.2
(1.6 )
Full-time equivalent employees at end of period
3,704
3,287
12.7
Fuel gallons consumed (thousands)
44,346
44,187
0.4
Average fuel cost per gallon
$
1.81
$
1.57
15.3
Scheduled service statistics:
Passengers
2,998,476
2,904,295
3.2
Revenue passenger miles (RPMs) (thousands)
2,618,446
2,603,849
0.6
Available seat miles (ASMs) (thousands)
3,073,360
2,997,529
2.5
Load factor
85.2
%
86.9
%
(1.7 )
Departures
21,498
20,398
5.4
Block hours
47,481
45,740
3.8
Total scheduled service revenue per ASM (TRASM) (cents)** 10.61
10.54
0.7
Average fare - scheduled service
$
61.05
$
61.07
--
Average fare - ancillary air-related charges
$
43.63
$
43.83
(0.5 )
Average fare - ancillary third party products
$
4.12
$
3.88
6.2
Average fare - total
$
108.80
$
108.78
--
Average stage length (miles)
849
869
(2.3 )
Fuel gallons consumed (thousands)
42,193
42,439
(0.6 )
Average fuel cost per gallon
$
1.80
$
1.59
13.2
Percent of sales through website during period
93.3
%
94.6
%
(1.3 )
Allegiant Travel Company
Consolidated Statements of Income
(in thousands, except per share amounts)
(Unaudited)
Nine Months Ended September 30,
Percent
2017
2016
change
OPERATING REVENUE:
Scheduled service revenue
$
615,777
$
568,089
8.4
Ancillary revenue:
Air-related charges
407,789
376,944
8.2
Third party products
39,394
34,482
14.2
Total ancillary revenue
447,183
411,426
8.7
Fixed fee contract revenue
34,120
22,690
50.4
Other revenue
28,140
24,743
13.7
Total operating revenue
1,125,220
1,026,948
9.6
OPERATING EXPENSES:
Aircraft fuel
250,470
182,969
36.9
Salary and benefits
277,307
211,185
31.3
Station operations
107,979
96,313
12.1
Maintenance and repairs
87,611
82,016
6.8
Depreciation and amortization
92,571
75,962
21.9
Sales and marketing
36,744
16,774
119.1
Aircraft lease rentals
3,098
924
235.3
Other
68,440
58,363
17.3
Total operating expense
924,220
724,506
27.6
OPERATING INCOME
201,000
302,442
(33.5 )
OTHER (INCOME) EXPENSE:
Interest income
(4,193
)
(2,102
)
99.5
Interest expense
27,332
21,567
26.7
Other, net
(1,254
)
(972
)
29.0
Total other (income) expense
21,885
18,493
18.3
INCOME BEFORE INCOME TAXES
179,115
283,949
(36.9 )
PROVISION FOR INCOME TAXES
66,715
105,669
(36.9 )
NET INCOME
112,400
178,280
(37.0 )
Earnings per share to common shareholders (1):
Basic
$
6.85
$
10.74
(36.2 )
Diluted
$
6.85
$
10.73
(36.2 )
Weighted average shares outstanding used in computing earnings per share to common shareholders (1):
Basic
16,142
16,493
(2.1
)
Diluted
16,160
16,514
(2.1
)
Allegiant Travel Company
Operating Statistics
(Unaudited)
Nine Months Ended September 30,
Percent
2017
2016
change*
OPERATING STATISTICS
Total system statistics:
Passengers
9,233,083
8,410,422
9.8
Revenue passenger miles (RPMs) (thousands)
8,340,269
7,831,436
6.5
Available seat miles (ASMs) (thousands)
10,181,292
9,302,051
9.5
Load factor
81.9
%
84.2
%
(2.3 )
Operating expense per ASM (CASM) (cents)***
9.08
7.79
16.6
Fuel expense per ASM (cents)***
2.46
1.97
24.9
Operating CASM, excluding fuel (cents)
6.62
5.82
13.7
ASMs per gallon of fuel
72.2
71.6
0.8
Departures
69,739
61,271
13.8
Block hours
159,181
142,515
11.7
Average stage length (miles)
870
896
(2.9 )
Average number of operating aircraft during period
86.6
83.4
3.8
Average block hours per aircraft per day
6.7
6.2
8.1
Full-time equivalent employees at end of period
3,704
3,287
12.7
Fuel gallons consumed (thousands)
141,054
129,862
8.6
Average fuel cost per gallon***
$
1.78
$
1.41
26.2
Scheduled service statistics:
Passengers
9,110,745
8,321,716
9.5
Revenue passenger miles (RPMs) (thousands)
8,183,636
7,714,172
6.1
Available seat miles (ASMs) (thousands)
9,747,395
8,967,614
8.7
Load factor
84.0
%
86.0
%
(2.0 )
Departures
66,355
58,744
13.0
Block hours
151,988
137,066
10.9
Total scheduled service revenue per ASM (TRASM) (cents)** 10.91
10.92
(0.1 )
Average fare - scheduled service
$
67.59
$
68.27
(1.0 )
Average fare - ancillary air-related charges
$
44.76
$
45.30
(1.2 )
Average fare - ancillary third party products
$
4.32
$
4.14
4.3
Average fare - total
$
116.67
$
117.71
(0.9 )
Average stage length (miles)
875
901
(2.9 )
Fuel gallons consumed (thousands)
134,906
125,291
7.7
Average fuel cost per gallon***
$
1.76
$
1.41
24.8
Percent of sales through website during period
94.1
%
94.3
%
(0.2 )

Summary Balance Sheet

(millions)
9/30/2017
12/31/2016
Change
(unaudited)
Unrestricted cash
Cash and cash equivalents
$
74.0
$
64.7
14.4
%
Short-term investments
351.5
269.3
30.5
Long-term investments
76.9
124.8
(38.4 )
Total unrestricted cash
502.4
458.8
9.5
Debt
Current maturities of long-term debt, net of related costs
165.8
86.2
92.3
Long-term debt, net of current maturities and related costs 845.7
722.0
17.1
Total debt
1,011.5
808.2
25.2
Total Allegiant Travel Company shareholders’ equity
$
473.8
$
473.6
--
%

Summary Cash Flow

Nine Months Ended September 30,
Unaudited (millions)
2017
2016
Change
Cash provided by operating activities
$
296.4
$
308.1
(3.8
)%
Purchase of property and equipment, including capitalized interest* (333.7
)
(264.1
)
26.4
Repurchase of common stock
(90.4
)
(63.4
)
42.6
Cash dividends paid to shareholders
(34.5
)
(55.9
)
(38.3 )
Proceeds from the issuance of long-term debt
292.5
120.4
142.9
Principal payments on long-term debt
(88.0
)
(63.5
)
38.6
Appendix A
Additional Financial Information
(Unaudited)
Twelve Months Ended September 30,
Return on capital calculation (millions)
2017
2016
Net income attributable to Allegiant Travel Company $
153.7
$
235.0
Income tax
87.4
137.2
Interest expense
34.6
27.5
Less interest income
(6.2
)
(2.6
)
269.5
397.1
Interest income
6.2
2.6
Tax rate
36.3
%
36.9
%
Numerator
175.6
252.2
Total assets as of prior September 30
1,538.4
1,309.4
Less current liabilities as of prior September 30
479.5
363.6
Plus short term debt as of prior September 30
137.5
69.6
Denominator
1,196.4
1,015.4
Return on capital employed
14.7
%
24.8
%

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