ALGT
$122.65
Allegiant Travel Com
($.95)
(.77%)
Earnings Details
2nd Quarter June 2017
Wednesday, July 26, 2017 4:01:46 PM
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Summary

Allegiant Travel Com Misses

Allegiant Travel Com (ALGT) reported 2nd Quarter June 2017 earnings of $2.94 per share on revenue of $400.6 million. The consensus earnings estimate was $2.96 per share on revenue of $399.7 million. The Earnings Whisper number was $3.04 per share. Revenue grew 16.2% 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
$2.94
Earnings Whisper
$3.04
Consensus Estimate
$2.96
Reported Revenue
$400.6 Mil
Revenue Estimate
$399.7 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Allegiant Travel Company Second Quarter 2017 Financial Results

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

Three Months Ended
Six Months Ended
June 30,
June 30,
Unaudited
2017
2016
Change
2017
2016
Change
Total operating revenue (millions) $
400.6
$
344.9
16.2
%
$
776.5
$
693.5
12.0
%
Operating income (millions)
$
85.2
$
104.5
(18.5 )%
$
158.1
$
225.6
(29.9 )%
Net income (millions)
$
48.5
$
60.8
(20.3 )%
$
90.1
$
132.8
(32.2 )%
Diluted earnings per share
$
2.94
$
3.68
(20.1 )%
$
5.43
$
7.97
(31.9 )%
Return on capital employed*
18.2
%
25.2
%

* - see appendix for calculation, represents twelve months ended June 30

"I am pleased to announce we had our 58 consecutive profitable quarter," stated Maurice J. Gallagher Jr., chairman and CEO of Allegiant Travel Company. "I am also pleased with our 21.3 percent operating margin during this transition time for the company. We are well into the wind down of our MD-80 fleet. We have taken delivery of our first four new 186 seat A320 aircraft from Airbus as of July 26th. We expect to place into service another ten Airbus aircraft including six more new A320s throughout the remainder of 2017. We also signed an agreement to acquire an additional 13 used A320s which we announced in June 2017. This was the last transaction needed to solidify the plan to retire all the MD-80s by the end of 2019. Thank you to all of our team members for another successful quarter."

Notable highlights

Airbus growth - In June, announced the lease arrangement of 13 used A320 aircraft to be delivered in 2017 and 2018. Will take the company to 92 committed Airbus either in service or for future delivery

Network growth - As of June 30, 2017 the company is operating 382 routes versus 342 at the same time last year

New routes - Announced 28 new routes expected to begin in the third and fourth quarters of 2017

? Includes new cities of Milwaukee, Wisconsin; Norfolk, Virginia; and Gulfport, Mississippi

Shareholder returns - $92 million was returned through a combination of the recurring dividend paid in June 2017 and share repurchases during the quarter. The company:

? Will pay a dividend of $0.70 per share on September 5, 2017 to shareholders of record as of August 18, 2017

? Returned $84 million to shareholders through the repurchase of 589,000 open market shares in the quarter. This was the highest dollar amount spent in share repurchases for one quarter in the history of the company

? The Board of Directors increased the share repurchase authorization to $100 million

Second quarter 2017 revenue

-- TRASM results - Second quarter TRASM increased 3.1 percent

? Impact of Easter shift into April this year benefited the quarter contributing approximately 1.5 percentage points of TRASM

New markets (markets operating less than one year) were approximately thirteen percent of ASMs for the second quarter which is similar to last year

Third quarter 2017 revenue trends

TRASM guidance - Third quarter TRASM is expected to be between negative .5 and positive 1.5 percent versus the third quarter last year

? Increased MD-80 spares, which limits the ability to grow peak period flying, is expected to cost the third quarter one percentage point of TRASM

? Off peak flying is expected to be almost 26 percent of ASMs for the third quarter, versus approximately 22 percent last year

Second quarter cost trends

Second quarter CASM ex fuel increased 13.2 percent versus the same period last year driven by:

? New pilot agreement - Added six percentage points

? Elimination of the credit card surcharge - Added four percentage points

? In January 2017, we discontinued our credit card surcharge, which had previously been applied as a reduction to sales and marketing expense

? Irregular operations - Added two percentage points

Third quarter 2017 cost trends

Third quarter 2017 CASM ex fuel is expected to increase between sixteen and eighteen percent versus the same period last year, driven by:

? New pilot agreement - Expected to add three percentage points

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

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

? Transition costs - Cost related to the fleet transition such as reduced ASMs through less utilization of MD-80s and other operational inefficiencies driven by the move to an all Airbus fleet is expected to add five percentage points

Full year 2017 cost trends

Full year 2017 CASM ex fuel is expected to remain up between ten and twelve percent, consistent with prior guidance

Maintenance and repairs expense is expected to remain between $100 and $110 thousand per in-service aircraft per month for full year 2017, consistent with prior guidance

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

Balance sheet activity and full year 2017 trends

Full year CAPEX guidance (Excluding Airbus deferred heavy maintenance) is expected to be $525 million, consistent with prior guidance

-- Raised $113 million in debt proceeds during the second quarter

? Currently have five unencumbered Airbus aircraft

Guidance, subject to revision
3Q17
Estimated TRASM year-over-year change
(0.5) to 1.5%
Fixed fee and other revenue guidance
3Q17
Fixed fee and other revenue (millions)
$17 to $19
Capacity guidance
System
3Q17
4Q17
FY17
Departure year-over-year growth
4 to 8%
7 to 11%
ASM year-over-year growth
3 to 7%
9 to 13%
9 to 11%
Scheduled
Departure year-over-year growth
4 to 8%
7 to 11%
ASM year-over-year growth
3 to 7%
9 to 13%
9 to 11%
Cost guidance
3Q17
FY17
CASM ex fuel* - year-over-year change
16 to 18%
10 to 12%
CAPEX guidance
FY17
Capital expenditures (millions)
$
525
Capitalized Airbus deferred heavy maintenance (millions) **
$
30
Aircraft leasing arrangement (millions) ***
$
150

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

** - Not included in capital expenditure total

*** - Not included in capital expenditure total, present value of leases over lease term

Aircraft fleet plan by end of period
Aircraft - (seats per AC)
1Q172Q173Q17YE17
MD-80 (166 seats)
47
45
40
37
757 (215 seats)
2
2
2
--
A319 (156 seats)
19
20
21
22
A320 (177/186 seats)
17
21
25
29
Total
85
88
88
88

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, July 26, 2017 to discuss its second 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.

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, 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 June 30,
Percent
2017
2016
change
OPERATING REVENUE:
Scheduled service revenue
$
220,615
$
189,122
16.7
Ancillary revenue:
Air-related charges
145,405
128,713
13.0
Third party products
14,304
11,965
19.5
Total ancillary revenue
159,709
140,678
13.5
Fixed fee contract revenue
11,029
6,706
64.5
Other revenue
9,261
8,345
11.0
Total operating revenue
400,614
344,851
16.2
OPERATING EXPENSES:
Aircraft fuel
85,387
60,005
42.3
Salary and benefits
92,221
68,553
34.5
Station operations
38,998
33,328
17.0
Maintenance and repairs
28,645
29,261
(2.1
)
Depreciation and amortization
30,129
25,396
18.6
Sales and marketing
12,861
5,317
141.9
Aircraft lease rentals
2,400
219
NM
Other
24,777
18,296
35.4
Total operating expense
315,418
240,375
31.2
OPERATING INCOME
85,196
104,476
(18.5 )
OTHER (INCOME) EXPENSE:
Interest income
(1,475
)
(710
)
107.7
Interest expense
8,889
7,390
20.3
Other, net
(493
)
(300
)
64.3
Total other (income) expense
6,921
6,380
8.5
INCOME BEFORE INCOME TAXES
78,275
98,096
(20.2 )
PROVISION FOR INCOME TAXES
29,800
37,249
(20.0 )
NET INCOME
$
48,475
$
60,847
(20.3 )
Earnings per share to common shareholders (1):
Basic
$
2.94
$
3.69
(20.3 )
Diluted
$
2.94
$
3.68
(20.1 )
Weighted average shares outstanding used in computing earnings per share to common shareholders (1):
Basic
16,198
16,420
(1.4
)
Diluted
16,220
16,442
(1.4
)

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 June 30,
Percent
2017
2016
change*
OPERATING STATISTICS
Total system statistics:
Passengers
3,306,193
2,878,460
14.9
Revenue passenger miles (RPMs) (thousands)
2,958,808
2,665,753
11.0
Available seat miles (ASMs) (thousands)
3,584,209
3,178,904
12.7
Load factor
82.6
%
83.9
%
(1.3 )
Operating expense per ASM (CASM) (cents)***
8.80
7.56
16.4
Fuel expense per ASM (cents)***
2.38
1.89
25.9
Operating CASM, excluding fuel (cents)
6.42
5.67
13.2
ASMs per gallon of fuel
71.9
72.0
(0.1 )
Departures
24,721
20,969
17.9
Block hours
56,056
48,506
15.6
Average stage length (miles)
866
893
(3.0 )
Average number of operating aircraft during period
85.3
83.8
1.8
Average block hours per aircraft per day
7.2
6.4
12.5
Full-time equivalent employees at end of period
3,628
3,228
12.4
Fuel gallons consumed (thousands)
49,858
44,153
12.9
Average fuel cost per gallon***
$
1.71
$
1.36
25.7
Scheduled service statistics:
Passengers
3,266,789
2,850,112
14.6
Revenue passenger miles (RPMs) (thousands)
2,903,257
2,626,770
10.5
Available seat miles (ASMs) (thousands)
3,436,872
3,072,135
11.9
Load factor
84.5
%
85.5
%
(1.0 )
Departures
23,609
20,171
17.0
Block hours
53,632
46,763
14.7
Total scheduled service revenue per ASM (TRASM) (cents)** 11.07
10.74
3.1
Average fare - scheduled service
$
67.54
$
66.36
1.8
Average fare - ancillary air-related charges
$
44.51
$
45.16
(1.4 )
Average fare - ancillary third party products
$
4.38
$
4.20
4.3
Average fare - total
$
116.43
$
115.72
0.6
Average stage length (miles)
869
897
(3.1 )
Fuel gallons consumed (thousands)
47,821
42,698
12.0
Average fuel cost per gallon***
$
1.70
$
1.36
25.0
Percent of sales through website during period
95.1
%
93.9
%
1.2

* 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 $8.3 million fuel tax refunds in the second quarter of 2016.

Allegiant Travel Company
Consolidated Statements of Income
(in thousands, except per share amounts)
(Unaudited)
Six Months Ended June 30,
Percent
2017
2016
change
OPERATING REVENUE:
Scheduled service revenue
$
432,713
$
390,728
10.7
Ancillary revenue:
Air-related charges
276,970
249,643
10.9
Third party products
27,046
23,223
16.5
Total ancillary revenue
304,016
272,866
11.4
Fixed fee contract revenue
22,289
13,507
65.0
Other revenue
17,434
16,366
6.5
Total operating revenue
776,452
693,467
12.0
OPERATING EXPENSES:
Aircraft fuel
170,049
113,663
49.6
Salary and benefits
188,519
137,761
36.8
Station operations
70,830
64,061
10.6
Maintenance and repairs
58,740
55,753
5.4
Depreciation and amortization
60,678
50,081
21.2
Sales and marketing
22,859
11,125
105.5
Aircraft lease rentals
2,564
452
NM
Other
44,129
34,968
26.2
Total operating expense
618,368
467,864
32.2
OPERATING INCOME
158,084
225,603
(29.9 )
OTHER (INCOME) EXPENSE:
Interest income
(2,739
)
(1,321
)
107.3
Interest expense
17,291
14,629
18.2
Other, net
(854
)
(663
)
28.8
Total other (income) expense
13,698
12,645
8.3
INCOME BEFORE INCOME TAXES
144,386
212,958
(32.2 )
PROVISION FOR INCOME TAXES
54,279
80,131
(32.3 )
NET INCOME
90,107
132,827
(32.2 )
Earnings per share to common shareholders (1):
Basic
$
5.44
$
7.98
(31.8 )
Diluted
$
5.43
$
7.97
(31.9 )
Weighted average shares outstanding used in computing earnings per share to common shareholders (1):
Basic
16,290
16,549
(1.6
)
Diluted
16,317
16,574
(1.6
)

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)
Six Months Ended June 30,
Percent
2017
2016
change*
OPERATING STATISTICS
Total system statistics:
Passengers
6,187,441
5,471,367
13.1
Revenue passenger miles (RPMs) (thousands)
5,667,306
5,185,903
9.3
Available seat miles (ASMs) (thousands)
6,961,046
6,180,289
12.6
Load factor
81.4
%
83.9
%
(2.5 )
Operating expense per ASM (CASM) (cents)***
8.88
7.57
17.3
Fuel expense per ASM (cents)***
2.44
1.84
32.6
Operating CASM, excluding fuel (cents)
6.44
5.73
12.4
ASMs per gallon of fuel
72.0
72.1
(0.1 )
Departures
47,016
39,887
17.9
Block hours
109,249
94,776
15.3
Average stage length (miles)
883
913
(3.3 )
Average number of operating aircraft during period
85.0
83.0
2.4
Average block hours per aircraft per day
7.1
6.3
12.7
Full-time equivalent employees at end of period
3,628
3,228
12.4
Fuel gallons consumed (thousands)
96,708
85,676
12.9
Average fuel cost per gallon***
$
1.76
$
1.33
32.3
Scheduled service statistics:
Passengers
6,112,269
5,417,421
12.8
Revenue passenger miles (RPMs) (thousands)
5,565,191
5,110,323
8.9
Available seat miles (ASMs) (thousands)
6,674,035
5,970,086
11.8
Load factor
83.4
%
85.6
%
(2.2 )
Departures
44,857
38,346
17.0
Block hours
104,507
91,326
14.4
Total scheduled service revenue per ASM (TRASM) (cents)** 11.04
11.11
(0.6 )
Average fare - scheduled service
$
70.80
$
72.12
(1.8 )
Average fare - ancillary air-related charges
$
45.31
$
46.08
(1.7 )
Average fare - ancillary third party products
$
4.42
$
4.29
3.0
Average fare - total
$
120.53
$
122.49
(1.6 )
Average stage length (miles)
887
917
(3.3 )
Fuel gallons consumed (thousands)
92,713
82,852
11.9
Average fuel cost per gallon***
$
1.75
$
1.33
31.6
Percent of sales through website during period
94.2
%
94.1
%
0.1

* 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 $8.3 million fuel tax refunds in the second quarter of 2016.

Summary Balance Sheet

(millions)
6/30/2017
12/31/2016
Change
(unaudited)
Unrestricted cash
Cash and cash equivalents
$
20.0
$
64.7
(69.1 )%
Short-term investments
323.1
269.3
20.0
Long-term investments
159.8
124.8
28.0
Total unrestricted cash
502.9
458.8
9.6
Debt
Current maturities of long-term debt, net of related costs
101.3
86.2
17.5
Long-term debt, net of current maturities and related costs 776.2
722.0
7.5
Total debt
877.5
808.2
8.6
Total Allegiant Travel Company shareholders’ equity
$
459.5
$
473.6
(3.0
)%

Summary Cash Flow

Six Months Ended June 30,
Unaudited (millions)
2017
2016
Change
Cash provided by operating activities
$
263.1
$
256.1
2.7
%
Purchase of property and equipment, including capitalized interest* (182.3
)
(105.2
)
73.3
Repurchase of common stock
(84.9
)
(63.3
)
34.1
Cash dividends paid to shareholders
(23.2
)
(44.4
)
(47.7 )
Proceeds from the issuance of long-term debt
134.5
28.0
380.4
Principal payments on long-term debt
(64.9
)
(39.2
)
65.6

* Includes aircraft pre-delivery deposits.

Appendix A
Additional Financial Information
(Unaudited)
Twelve Months Ended June 30,
Return on capital calculation (millions)
2017
2016
Net income attributable to Allegiant Travel Company $
176.9
$
234.0
Income tax
100.5
138.0
Interest expense
31.5
27.3
Less interest income
(4.4
)
(2.2
)
304.5
397.1
Interest income
4.4
2.2
Tax rate
36.2
%
37.1
%
Numerator
197.1
251.2
Total assets as of prior June 30
1,449.0
1,319.5
Less current liabilities as of prior June 30
443.2
386.3
Plus short term debt as of prior June 30
80.1
65.2
Denominator
1,085.9
998.4
Return on capital employed
18.2
%
25.2
%
Media Inquiries: mediarelations@allegiantair.com
Investor Inquiries: ir@allegiantair.com

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