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Allegiant Travel Company Second Quarter 2018 Financial Results

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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,
 
Unaudited 2018 2017 Change   2018 2017 Change
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 guidance Previous* Current
Fuel cost per gallon $2.20 $2.35
Available seat miles (ASMs) / gallon 77.5 to 79.5 77.5 to 78.5
     
Interest expense (millions) $50 to $60 $50 to $60
Tax rate 21 to 22% 21 to 22%
Share count (millions) 15.9 15.9
Earnings per share $10 to $12 $9 to $10
     
System ASMs - year over year change 11 to 15% 9 to 11%
Scheduled service ASMs - year over year change 11 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) 1Q18 2Q18 3Q18 YE18
MD-80 (166 seats) 32 27 19
A319 (156 seats) 26 31 31 32
A320 (177/186 seats) 30 35 44 45
Total 88 93 94 77
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:          
Passengers 3,704,113     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 factor 83.5 %   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 fuel 76.1     71.9     5.8  
Departures 27,063     24,721     9.5  
Block hours 60,707     56,056     8.3  
Average stage length (miles) 858     866     (0.9 )
Average number of operating aircraft during period 92.0     85.3     7.9  
Average block hours per aircraft per day 7.3     7.2     1.4  
Full-time equivalent employees at end of period 3,840     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:          
Passengers 3,681,944     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 factor 85.5 %   84.5 %   1.0  
Departures 25,992     23,609     10.1  
Block hours 58,536     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 period 93.9 %   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:          
Passengers 7,007,064     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 factor 83.3 %   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 fuel 76.4     72.0     6.1  
Departures 51,311     47,016     9.1  
Block hours 118,510     109,249     8.5  
Average stage length (miles) 883     883      
Average number of operating aircraft during period 90.8     85.0     6.8  
Average block hours per aircraft per day 7.2     7.1     1.4  
Full-time equivalent employees at end of period 3,840     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:          
Passengers 6,961,312     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 factor 85.3 %   83.4 %   1.9  
Departures 49,256     44,857     9.8  
Block hours 114,224     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 period 93.9 %   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 investments 343.2     352.7     (2.7)  
Long-term investments 56.4     78.6     (28.2)  
Total unrestricted cash and investments 428.6     490.7     (12.7)  
Debt          
Current maturities of long-term debt and capital lease obligations, net of related costs 144.4     214.8     (32.8)  
Long-term debt and capital lease obligations, net of current maturities and related costs 992.3     950.1     4.4  
Total debt 1,136.7     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 stock 3.0     84.9     (96.5 )
Cash dividends paid to shareholders 22.6     23.2     (2.6 )
Proceeds from the issuance of long-term debt 10.8     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 outstanding 15,939     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 outstanding 15,939     16,198     15,898     16,290  
Dilutive effect of stock options and restricted stock 44     71     63     92  
Adjusted weighted-average shares outstanding under treasury stock method 15,983     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 method 15,945     16,220     15,914     16,317  

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