ALGT
$135.70
Allegiant Travel Com
Earnings Details
2nd Quarter June 2018
Wednesday, July 25, 2018 4:01:00 PM
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Summary

Allegiant Travel Lowers Guidance

Allegiant Travel Com (ALGT) reported 2nd Quarter June 2018 earnings of $3.10 per share on revenue of $436.8 million. The consensus earnings estimate was $2.66 per share on revenue of $436.5 million. Revenue grew 9.0% on a year-over-year basis.

The company said it expects 2018 earnings of $9.00 to $10.00 per share. The company's previous guidance was earnings of $10.00 to $12.00 per shar and the current consensus earnings estimate is $10.56 per share for the year ending December 31, 2018.

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
$3.10
Earnings Whisper
-
Consensus Estimate
$2.66
Reported Revenue
$436.8 Mil
Revenue Estimate
$436.5 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Allegiant Travel Company Second Quarter 2018 Financial Results

LAS VEGAS, July 25, 2018 (GLOBE NEWSWIRE) -- Allegiant Travel Company (NASDAQ:ALGT) today reported the following financial results for the second quarter 2018, as well as comparisons to the prior year:

 Three Months Ended
 June 30,
  Six Months Ended
 June 30,
 
Unaudited20182017Change 20182017Change
Total operating revenue (millions)$436.8 $401.8 8.7%  $862.2 $781.9 10.3% 
Operating income (millions)74.2 85.8 (13.5)  154.2 159.5 (3.3) 
Net income (millions)50.0 49.0 2.0  105.2 91.4 15.1 
Diluted earnings per share$3.10 $2.97 4.4  $6.52 $5.51 18.3 

"We are proud to announce our 62nd consecutive profitable quarter," stated Maurice J. Gallagher, Jr., chairman and CEO of Allegiant Travel Company. "This is the second consecutive quarter of EPS growth, despite seeing our fuel cost per gallon increase by over 39 percent in the second quarter. This is a wonderful testament to the hard work of our team members as we navigate another busy summer.

"We are continuing our transition to an all-Airbus fleet. We have done an excellent job year-to-date but this summer was the critical period in this transition, including the timely delivery and induction of fifteen Airbus aircraft, and retirement of six MD-80s.  Today we are on our schedule as planned, though some delayed deliveries in late May impacted our peak June period, in terms of top line and operations reliability.  Looking forward, we should complete our transition at the end of November as scheduled.

"Our CASM-ex fuel results came in nicely. Our improved operational results as well as efficiencies from the Airbus fleet are beginning to pay dividends, and we are pleased with where the cost trend line is headed. Additionally, fuel efficiency continues to improve with the transition, with 76 vs. 72 ASMs per gallon this year compared to the same period last year.

“The Sunseeker resort project continues to move ahead. We are closing in on a financing plan and hope to announce the specifics in the next 60 to 90 days. We continue to be impressed with the many synergies and business alignments between Sunseeker and our air service presence on the west coast of Florida. Our Punta Gorda destination - a 15 minute drive from our Sunseeker location, grew over 30 percent in capacity on a trailing twelve month basis. We are on a pace to carry over 1.5 million passengers in and out of Punta Gorda this year."

Shareholder returns

  • 2018 shareholder returns - over $22 million in the first half of the year through dividends
    • Will pay dividends of $0.70 per share on August 31, 2018 to shareholders of record as of August 17, 2018
    • Current share repurchase authority of $100 million as of July 25, 2018

2018 outlook

  • Third quarter scheduled and system ASMs are expected to grow between thirteen and fifteen percent vs last year
  • 2018 full year ASM growth is expected to be between nine and eleven percent due to slower than expected aircraft deliveries
  • 2018 fuel cost is expected to be $2.35 per gallon using the forward curve as of July 24, 2018
  • 2018 EPS is expected to be between $9 and $10 per share due to the expected higher fuel cost
    • Fuel expense is expected to increase approximately $35 million from when guided in November 2017
Guidance, subject to revision  
   
Full year 2018 guidancePrevious*Current
Fuel cost per gallon$2.20$2.35
Available seat miles (ASMs) / gallon77.5 to 79.577.5 to 78.5
   
Interest expense (millions)$50 to $60$50 to $60
Tax rate21 to 22%21 to 22%
Share count (millions)15.915.9
Earnings per share$10 to $12$9 to $10
   
System ASMs - year over year change11 to 15%9 to 11%
Scheduled service ASMs - year over year change11 to 15%9 to 11%
   
Depreciation expense / aircraft / month (thousands)$120 to $130$115 to $120
Maintenance expense / aircraft / month (thousands)$95 to $105$80 to $85
   
Full year 2018 CAPEX guidance  
Capital expenditures (millions) **$300$300
Capitalized Airbus deferred heavy maintenance (millions) ***$45$45
* - Previous guidance as of April 25, 2018
** - Excludes Sunseeker Resorts
*** - Not included in capital expenditure total


Aircraft fleet plan by end of period    
     
Aircraft - (seats per AC)1Q182Q183Q18YE18
MD-80 (166 seats)322719
A319 (156 seats)26313132
A320 (177/186 seats)30354445
Total88939477
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 25, 2018 to discuss its second quarter 2018 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 (NASDAQ:ALGT) is focused on linking travelers in small and mid-sized 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 80 aircraft and approximately 400 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 expenses, ASM growth, 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, public perception of our safety, our reliance on our automated systems, limitation on growth as we transition to a single fleet type, our reliance on third parties to deliver aircraft under contract to us on a timely basis, 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 June 30, Percent
 2018
 2017
 change
OPERATING REVENUE:     
Passenger revenue (1)$405,572  $367,250  10.4 
Third party products 17,799   14,304  24.4 
Fixed fee contract revenue 7,653   11,029  (30.6)
Other revenue 5,756   9,261  (37.8)
Total operating revenue 436,780   401,844  8.7 
OPERATING EXPENSES:     
Aircraft fuel 122,454   85,387  43.4 
Salary and benefits 101,645   92,221  10.2 
Station operations 41,553   38,998  6.6 
Maintenance and repairs 24,611   28,645  (14.1)
Depreciation and amortization 29,833   30,129  (1.0)
Sales and marketing 18,348   13,492  36.0 
Aircraft lease rentals 75   2,400  (96.9)
Other 24,039   24,777  (3.0)
Total operating expense 362,558   316,049  14.7 
OPERATING INCOME 74,222   85,795  (13.5)
OTHER (INCOME) EXPENSE:     
Interest expense 13,156   8,889  48.0 
Interest income (1,927)  (1,475) 30.6 
Other, net (50)  (493) (89.9)
Total other expense 11,179   6,921  61.5 
INCOME BEFORE INCOME TAXES 63,043   78,874  (20.1)
PROVISION FOR INCOME TAXES 13,027   29,836  (56.3)
NET INCOME$50,016  $49,038  2.0 
Earnings per share to common shareholders (2):     
Basic$3.10  $2.98  4.0 
Diluted$3.10  $2.97  4.4 
Weighted average shares outstanding used in computing earnings per share to common shareholders (2):     
Basic 15,939   16,198  (1.6)
Diluted 15,945   16,220  (1.7)

(1) Passenger revenue previously reported as Scheduled service revenue and Ancillary air-related revenue.
(2) 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 calculations for the periods presented reflect the two-class method mandated by ASC Topic 260, "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
 2018 2017 change (1)
OPERATING STATISTICS     
Total system statistics:     
Passengers3,704,113  3,306,193  12.0 
Revenue passenger miles (RPMs) (thousands)3,276,599  2,958,808  10.7 
Available seat miles (ASMs) (thousands)3,922,294  3,584,209  9.4 
Load factor83.5% 82.6% 0.9 
Operating expense per ASM (CASM) (cents)9.24  8.82  4.8 
Fuel expense per ASM (cents)3.12  2.38  31.1 
Operating CASM, excluding fuel (cents)6.12  6.44  (5.0)
ASMs per gallon of fuel76.1  71.9  5.8 
Departures27,063  24,721  9.5 
Block hours60,707  56,056  8.3 
Average stage length (miles)858  866  (0.9)
Average number of operating aircraft during period92.0  85.3  7.9 
Average block hours per aircraft per day7.3  7.2  1.4 
Full-time equivalent employees at end of period3,840  3,628  5.8 
Fuel gallons consumed (thousands)51,516  49,858  3.3 
Average fuel cost per gallon$2.38  $1.71  39.2 
Scheduled service statistics:     
Passengers3,681,944  3,266,789  12.7 
Revenue passenger miles (RPMs) (thousands)3,245,774  2,903,257  11.8 
Available seat miles (ASMs) (thousands)3,795,815  3,436,872  10.4 
Load factor85.5% 84.5% 1.0 
Departures25,992  23,609  10.1 
Block hours58,536  53,632  9.1 
Total passenger revenue per ASM (TRASM) (cents) (2)11.15  11.10  0.5 
Average fare - scheduled service (3)$64.62  $67.76  (4.6)
Average fare - air-related charges (3)$45.53  $44.66  1.9 
Average fare - third party products$4.84  $4.38  10.5 
Average fare - total$114.99  $116.80  (1.5)
Average stage length (miles)864  869  (0.6)
Fuel gallons consumed (thousands)49,671  47,821  3.9 
Average fuel cost per gallon$2.37  $1.70  39.4 
Percent of sales through website during period93.9% 95.1% (1.2)

(1) Except load factor and percent of sales through website, which is percentage point change.
(2) 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. The 2017 figure reflected has been adjusted from previously reported as a result of recast of revenue in accordance with revenue recognition accounting rules adopted by us as of January 1, 2018.
(3) Reflects division of passenger revenue between scheduled service and air-related charges in Company's booking path.

 
 
Allegiant Travel Company
Consolidated Statements of Income
 (in thousands, except per share amounts)
(Unaudited)
 
 Six Months Ended June 30, Percent
 2018
 2017
 change
OPERATING REVENUE:     
Passenger Revenue (1)$802,343  $715,086  12.2 
Third party products 28,124   27,046  4.0 
Fixed fee contract revenue 18,209   22,289  (18.3)
Other revenue 13,548   17,434  (22.3)
Total operating revenue 862,224   781,855  10.3 
OPERATING EXPENSES:     
Aircraft fuel 228,481   170,049  34.4 
Salary and benefits 214,608   188,519  13.8 
Station operations 79,137   70,830  11.7 
Maintenance and repairs 43,881   58,740  (25.3)
Depreciation and amortization 57,983   60,678  (4.4)
Sales and marketing 37,426   26,822  39.5 
Aircraft lease rentals 96   2,564  (96.3)
Other 46,422   44,129  5.2 
Total operating expense 708,034   622,331  13.8 
OPERATING INCOME 154,190   159,524  (3.3)
OTHER (INCOME) EXPENSE:     
Interest expense 25,880   17,291  49.7 
Interest income (3,834)  (2,739) 40.0 
Other, net (290)  (854) (66.0)
Total other expense 21,756   13,698  58.8 
INCOME BEFORE INCOME TAXES 132,434   145,826  (9.2)
PROVISION FOR INCOME TAXES 27,225   54,437  (50.0)
NET INCOME 105,209   91,389  15.1 
Earnings per share to common shareholders (2):     
Basic$6.53  $5.52  18.3 
Diluted$6.52  $5.51  18.3 
Weighted average shares outstanding used in computing earnings per share to common shareholders (2):     
Basic 15,898   16,290  (2.4)
Diluted 15,914   16,317  (2.5)

(1) Passenger revenue previously reported as Scheduled service revenue and Ancillary air-related revenue.
(2) 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 calculations for the periods presented reflect the two-class method mandated by ASC Topic 260, "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)
 
 Six Months Ended June 30, Percent
 2018 2017 change (1)
OPERATING STATISTICS     
Total system statistics:     
Passengers7,007,064  6,187,441  13.2 
Revenue passenger miles (RPMs) (thousands)6,371,403  5,667,306  12.4 
Available seat miles (ASMs) (thousands)7,650,857  6,961,046  9.9 
Load factor83.3% 81.4% 1.9 
Operating expense per ASM (CASM) (cents)9.25  8.94  3.5 
Fuel expense per ASM (cents)2.99  2.44  22.5 
Operating CASM, excluding fuel (cents)6.26  6.50  (3.7)
ASMs per gallon of fuel76.4  72.0  6.1 
Departures51,311  47,016  9.1 
Block hours118,510  109,249  8.5 
Average stage length (miles)883  883   
Average number of operating aircraft during period90.8  85.0  6.8 
Average block hours per aircraft per day7.2  7.1  1.4 
Full-time equivalent employees at end of period3,840  3,628  5.8 
Fuel gallons consumed (thousands)100,156  96,708  3.6 
Average fuel cost per gallon$2.28  $1.76  29.5 
Scheduled service statistics:     
Passengers6,961,312  6,112,269  13.9 
Revenue passenger miles (RPMs) (thousands)6,310,393  5,565,191  13.4 
Available seat miles (ASMs) (thousands)7,397,830  6,674,035  10.8 
Load factor85.3% 83.4% 1.9 
Departures49,256  44,857  9.8 
Block hours114,224  104,507  9.3 
Total scheduled service revenue per ASM (TRASM) (cents) (2)11.23  11.12  1.0 
Average fare - scheduled service (3)$68.95  $71.33  (3.3)
Average fare - air-related charges (3)$46.31  $45.67  1.4 
Average fare - third party products$4.04  $4.42  (8.6)
Average fare - total$119.30  $121.42  (1.7)
Average stage length (miles)889  887  0.2 
Fuel gallons consumed (thousands)96,542  92,713  4.1 
Average fuel cost per gallon$2.27  $1.75  29.7 
Percent of sales through website during period93.9% 94.2% (0.3)

(1) Except load factor and percent of sales through website, which is percentage point change.
(2) 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. The 2017 figure reflected has been adjusted from previously reported as a result of recast of revenue in accordance with revenue recognition accounting rules adopted by us as of January 1, 2018.
(3) Reflects division of passenger revenue between scheduled service and air-related charges in Company's booking path.

 
 
Summary Balance Sheet
 
(millions)6/30/2018 12/31/2017 Change
 (unaudited)    
Unrestricted cash     
Cash and cash equivalents$29.0  $59.4  (51.2)%
Short-term investments343.2  352.7  (2.7) 
Long-term investments56.4  78.6  (28.2) 
Total unrestricted cash and investments428.6  490.7  (12.7) 
Debt     
Current maturities of long-term debt and capital lease obligations, net of related costs144.4  214.8  (32.8) 
Long-term debt and capital lease obligations, net of current maturities and related costs992.3  950.1  4.4 
Total debt1,136.7  1,164.9  (2.4) 
Total Allegiant Travel Company shareholders’ equity$644.7  $553.3  16.5%


 
Summary Cash Flow
 
 Six Months Ended June 30,  
Unaudited (millions)2018 2017 Change
Cash provided by operating activities$283.2  $262.9  7.7%
Purchase of property and equipment, including capitalized interest*187.5  182.3  2.9 
Repurchase of common stock3.0  84.9  (96.5)
Cash dividends paid to shareholders22.6  23.2  (2.6)
Proceeds from the issuance of long-term debt10.8  134.5  (92.0)
Principal payments on long-term debt & capital lease obligations$142.4  $64.9  119.4%
* Includes aircraft pre-delivery deposits.
 

EPS Calculation

The following table sets forth the computation of net income per share, on a basic and diluted basis, for the periods indicated (share count and dollar amounts other than per-share amounts in table are in thousands):

 Three Months Ended June 30, Six Months Ended June 30,
 2018 2017 2018 2017
Basic:       
Net income$50,016  $49,038  $105,209  $91,389 
Less net income allocated to participating securities(659) (789) (1,427) (1,482)
Net income attributable to common stock$49,357  $48,249  $103,782  $89,907 
Earnings per share, basic$3.10  $2.98  $6.53  $5.52 
Weighted-average shares outstanding15,939  16,198  15,898  16,290 
Diluted:       
Net income$50,016  $49,038  $105,209  $91,389 
Less net income allocated to participating securities(658) (789) (1,425) (1,480)
Net income attributable to common stock$49,358  $48,249  $103,784  $89,909 
Earnings per share, diluted$3.10  $2.97  $6.52  $5.51 
Weighted-average shares outstanding15,939  16,198  15,898  16,290 
Dilutive effect of stock options and restricted stock44  71  63  92 
Adjusted weighted-average shares outstanding under treasury stock method15,983  16,269  15,961  16,382 
Participating securities excluded under two-class method(38) (49) (47) (65)
Adjusted weighted-average shares outstanding under two-class method15,945  16,220  15,914  16,317 

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Source: Allegiant Travel Company