ALGT
$145.95
Allegiant Travel Com
($.60)
(.41%)
Earnings Details
1st Quarter March 2017
Tuesday, April 25, 2017 4:01:42 PM
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Summary

Allegiant Travel Com (ALGT) Recent Earnings

Allegiant Travel Com (ALGT) reported 1st Quarter March 2017 earnings of $2.50 per share on revenue of $375.8 million. The consensus earnings estimate was $2.58 per share on revenue of $378.7 million. Revenue grew 7.8% 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
$2.50
Earnings Whisper
-
Consensus Estimate
$2.58
Reported Revenue
$375.8 Mil
Revenue Estimate
$378.7 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Allegiant Travel Company First Quarter 2017 Financial results

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

Three Months Ended
March 31,
Unaudited
2017
2016
Change
Total operating revenue (millions) $
375.8
$
348.6
7.8
%
Operating income (millions)
$
72.9
$
121.1
(39.8 )%
Net income (millions)
$
41.6
$
72.0
(42.2 )%
Diluted earnings per share
$
2.50
$
4.29
(41.7 )%
Return on capital employed*
19.6
%
25.3
%

* - see appendix for calculation

"We had another profitable quarter - our 57th consecutive profitable quarter," stated Maurice J. Gallagher, Jr., chairman and CEO of Allegiant Travel Company. "Our transition to an all-Airbus fleet is underway and, so far, on schedule. One-time expenses associated with this transition will be lumpy, most of which will occur from now through the summer of 2018. By the end of this year we expect to have 60 percent of the transition complete, or a fleet of 51 Airbus aircraft. We should be finished with this effort and out of the MD-80 by the end of 2019.

"The first quarter is always a busy time for our team. Thank you to our team members whose hard work and dedication produced these excellent results."

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

New Chief Marketing Officer - Announced Ponder Harrison as new executive vice president & chief marketing officer

Network growth - As of March 31, 2017 the company is operating 358 routes versus 298 at the same time last year

-- New routes - Announced 23 new routes expected to begin in the second quarter of 2017

- Includes new city of Louisville, Kentucky

- Expansion of Destin/Ft. Walton Beach, Florida into a seasonal base

MD-80 bases - Expect to only have MD-80s in Sanford/Orlando, Florida and Las Vegas, Nevada by the end of 2017

Shareholder returns - $14.2 million was returned through a combination of the recurring dividend paid in March 2017 and open market share repurchases during the quarter. The company:

- Will pay a dividend of $0.70 per share on June 2, 2017 to shareholders of record as of May 19, 2017

- Has $86.8 million of share repurchase authority remaining as of April 25, 2017

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

-- TRASM results - First quarter TRASM decreased 4.4 percent

- Impact of Easter shift into April this year cost the quarter 1.5 percentage points of TRASM

- Impact of weather and irregular operations resulted in a decrease of a half percentage point of TRASM

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

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

TRASM guidance - Second quarter TRASM is expected to increase between 1.5 and 3.5 percent versus the second quarter last year

- Easter shift to second quarter is expected to add 1.5 percentage points of TRASM in the second quarter

- New markets (markets operating less than one year) are expected to be almost fourteen percent of ASMs for the second quarter, which is approximately the same amount as last year

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

First quarter CASM ex fuel increased 11.6 percent versus the same period last year driven by:

- New pilot agreement - Added eight percentage points

- Elimination of the credit card surcharge - Added two percentage points

- In January 2017, we discontinued our credit card surcharge, which was applied as a reduction to sales and marketing expense

- Incremental stock compensation grants to executives - Added one percentage point

- Incremental stock compensation expense which included retention grants issued in Nov. 2016 and grants issued to both our new president and executive vice president & chief marketing officer as part of their employment agreements

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

Second quarter 2017 CASM ex fuel is expected to increase between thirteen and fifteen percent versus the same period last year, driven by:

- New pilot agreement - Expected to add six percentage points

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

- Incremental stock compensation grants to executives - Expected to add one percentage point

- MD-80 retirement - The pulling forward of two retirements is expected to add a half percentage point due to write downs

<span data-mce-style="text-decoration: underline;" style="text-decoration: underline;">Full year 2017 cost trends</span>

Full year 2017 CASM ex fuel is expected to increase between nine and twelve percent, higher than prior guidance, driven by:

- New pilot agreement - Expected to add seven percentage points

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

- Reduced ASM projections - Expected to add one percentage point

* Earlier than planned MD-80 retirements

* Lower MD-80 utilization in the second half of the year to minimize excess crew training

* Shifting international flying to 2018

- Incremental stock compensation grants to executives - Expected to add one percentage point

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

- Increase is due to more expensive parts, repairs and increased line maintenance costs

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

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

Full year CAPEX guidance (Excluding Airbus deferred heavy maintenance) is expected to be $521 million, consistent with prior guidance

-- Raised $22 million in debt proceeds during the first quarter

- Currently have eight unencumbered Airbus aircraft

Guidance, subject to revision
2Q17
Estimated TRASM year-over-year change
1.5 to 3.5%
Fixed fee and other revenue guidance
2Q17
Fixed fee and other revenue (millions)
$16 to $18
Capacity guidance
System
2Q17
3Q17
FY17
Departure year-over-year growth
14 to 18% 4 to 8%
ASM year-over-year growth
11 to 15% 3 to 7%
8 to 11%
Scheduled
Departure year-over-year growth
14 to 18% 4 to 8%
ASM year-over-year growth
11 to 15% 3 to 7%
8 to 11%
Cost guidance
2Q17
FY17
CASM ex fuel* - year-over-year change
13 to 15%
9 to 12%
CAPEX guidance
FY17
Capital expenditures (millions)
$
521
Capitalized Airbus deferred 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)
1Q17
2Q17
YE17
MD-80 (166 seats)
47
44
38
757 (215 seats)
2
2
--
A319 (156 seats)
19
20
22
A320 (177/186 seats)
17
19
29
Total
85
85
89

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, April 25, 2017 to discuss its first 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.(R)

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 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 March 31,
Percent
2017
2016
change
OPERATING REVENUE:
Scheduled service revenue
$
212,097
$
201,606
5.2
Ancillary revenue:
Air-related charges
131,565
120,929
8.8
Third party products
12,742
11,258
13.2
Total ancillary revenue
144,307
132,187
9.2
Fixed fee contract revenue
11,259
6,800
65.6
Other revenue
8,174
8,022
1.9
Total operating revenue
375,837
348,615
7.8
OPERATING EXPENSES:
Aircraft fuel
84,662
53,659
57.8
Salary and benefits
96,298
69,208
39.1
Station operations
31,832
30,734
3.6
Maintenance and repairs
30,095
26,492
13.6
Depreciation and amortization
30,549
24,685
23.8
Sales and marketing
9,998
5,808
72.1
Aircraft lease rentals
164
233
(29.6 )
Other
19,351
16,670
16.1
Total operating expense
302,949
227,489
33.2
OPERATING INCOME
72,888
121,126
(39.8 )
OTHER (INCOME) EXPENSE:
Interest income
(1,264
)
(612
)
106.5
Interest expense
8,401
7,239
16.1
Other, net
(360
)
(363
)
(0.8
)
Total other (income) expense
6,777
6,264
8.2
INCOME BEFORE INCOME TAXES
66,111
114,862
(42.4 )
PROVISION FOR INCOME TAXES
24,479
42,882
(42.9 )
NET INCOME ATTRIBUTABLE TO ALLEGIANT TRAVEL COMPANY
$
41,632
$
71,980
(42.2 )
Earnings per share to common shareholders (1):
Basic
$
2.50
$
4.29
(41.7 )
Diluted
$
2.50
$
4.29
(41.7 )
Weighted average shares outstanding used in computing earnings per share to common shareholders (1):
Basic
16,382
16,678
(1.8
)
Diluted
16,404
16,699
(1.8
)

(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 March 31,
Percent
2017
2016
change*
OPERATING STATISTICS
Total system statistics:
Passengers
2,881,248
2,592,907
11.1
Revenue passenger miles (RPMs) (thousands)
2,708,498
2,520,149
7.5
Available seat miles (ASMs) (thousands)
3,376,837
3,001,384
12.5
Load factor
80.2
%
84.0
%
(3.8 )
Operating expense per ASM (CASM) (cents)
8.97
7.58
18.3
Fuel expense per ASM (cents)
2.51
1.79
40.2
Operating CASM, excluding fuel (cents)
6.46
5.79
11.6
ASMs per gallon of fuel
72.1
72.3
(0.3 )
Departures
22,295
18,918
17.9
Block hours
53,193
46,270
15.0
Average stage length (miles)
903
935
(3.4 )
Average number of operating aircraft during period
84.7
82.2
3.0
Average block hours per aircraft per day
7.0
6.2
12.9
Full-time equivalent employees at end of period
3,536
3,029
16.7
Fuel gallons consumed (thousands)
46,850
41,523
12.8
Average fuel cost per gallon
$
1.81
$
1.29
40.3
Scheduled service statistics:
Passengers
2,845,480
2,567,309
10.8
Revenue passenger miles (RPMs) (thousands)
2,661,934
2,483,553
7.2
Available seat miles (ASMs) (thousands)
3,237,164
2,897,951
11.7
Load factor
82.2
%
85.7
%
(3.5 )
Departures
21,248
18,175
16.9
Block hours
50,876
44,563
14.2
Total scheduled service revenue per ASM (TRASM)** (cents) 11.01
11.52
(4.4 )
Average fare - scheduled service
$
74.54
$
78.53
(5.1 )
Average fare - ancillary air-related charges
$
46.24
$
47.10
(1.8 )
Average fare - ancillary third party products
$
4.48
$
4.39
2.1
Average fare - total
$
125.26
$
130.02
(3.7 )
Average stage length (miles)
908
940
(3.4 )
Fuel gallons consumed (thousands)
44,892
40,154
11.8
Average fuel cost per gallon
$
1.80
$
1.29
39.5
Percent of sales through website during period
95.1
%
94.3
%
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.

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

(millions)
3/31/2017
12/31/2016
Change
(unaudited)
Unrestricted cash
Cash and cash equivalents
$
64.7
$
64.7
--
%
Short-term investments
288.7
269.3
7.2
Long-term investments
172.8
124.8
38.5
Total unrestricted cash
526.2
458.8
14.7
Debt
Current maturities of long-term debt, net of related costs
88.2
86.2
2.3
Long-term debt, net of current maturities and related costs 715.4
722.0
(0.9 )
Total debt
803.6
808.2
(0.6 )
Total Allegiant Travel Company shareholders’ equity
$
503.1
$
473.6
6.2
%

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

Three Months Ended March 31,
Unaudited (millions)
2017
2016
Change
Cash provided by operating activities
$
147.0
$
160.4
(8.4
)%
Purchase of property and equipment, including capitalized interest* (58.5
)
(71.7
)
(18.4 )
Repurchase of common stock
(4.9
)
(55.6
)
(91.2 )
Cash dividends paid to shareholders
(11.7
)
(32.8
)
(64.3 )
Proceeds from the issuance of long-term debt
22.0
28.0
(21.4 )
Principal payments on long-term debt
(26.4
)
(18.7
)
41.2
%

* Includes aircraft pre-delivery deposits.

Appendix A
Additional Financial Information
(Unaudited)
Twelve Months Ended March 31,
Return on capital calculation (millions)
2017
2016
Net income attributable to Allegiant Travel Company $
189.2
$
227.5
Income tax
108.0
132.7
Interest expense
30.0
26.9
Less interest income
(3.7
)
(1.8
)
323.5
385.3
Interest income
3.7
1.8
Tax rate
36.3
%
36.8
%
Numerator
208.4
244.6
Total assets as of prior March 31
1,406.7
1,299.3
Less current liabilities as of prior March 31
425.0
394.3
Plus short term debt as of prior March 31
79.8
60.8
Denominator
1,061.5
965.8
Return on capital employed
19.6
%
25.3
%
Media Inquiries: mediarelations@allegiantair.com
Investor Inquiries: ir@allegiantair.com

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