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Allegiant Travel Company Full Year and Fourth Quarter 2017 Financial Results

Full year 2017 Fully Diluted Earnings per Share of $11.93
Full year 2017 Fully Diluted Earnings per Share Excluding Fourth Quarter Special Items1 was $9.55
Fourth Quarter 2017 Fully Diluted Earnings per Share of $5.13
Fourth Quarter 2017 Fully Diluted Earnings per Share Excluding Fourth Quarter Special Items1 was $2.71

LAS VEGAS, Jan. 31, 2018 (GLOBE NEWSWIRE) -- Allegiant Travel Company (NASDAQ:ALGT) today reported the following financial results for the full year as well as fourth quarter 2017, as well as comparisons to the prior year:

           
  Three Months Ended
 December 31,
    Twelve Months Ended
 December 31,
 
Unaudited   2017   2016 Change     2017   2016 Change
Total operating revenue (millions) $ 378.6   $ 335.9   12.7 %   $ 1,503.8   $ 1,362.8   10.3 %
Operating income (millions) $ 26.2   $ 68.1   (61.6 )%   $ 227.2   $ 370.6   (38.7 )%
Adjusted operating income (millions)* $ 61.5   $ 68.1   (9.7 )%   $ 262.5   $ 370.6   (29.2 )%
Net income (millions) $ 82.5   $ 41.3   99.7 %   $ 194.9   $ 219.6   (11.2 )%
Adjusted net income (millions)* $ 43.7   $ 41.3   5.8 %   $ 156.1   $ 219.6   (28.9 )%
Diluted earnings per share $ 5.13   $ 2.48   106.9 %   $ 11.93   $ 13.21   (9.7 )%
Adjusted diluted earnings per share* $ 2.71   $ 2.48   9.3 %   $ 9.55   $ 13.21   (27.7 )%

* - see appendix for reconciliation of non-GAAP financial measures

"We are proud to have produced another profitable year and our 60th consecutive profitable quarter," stated Maurice J. Gallagher, Jr., chairman and CEO of Allegiant Travel Company.  "We have achieved this record, even as oil climbed above $145 per barrel, and during one of the worst recessions in the country’s history.  Our positioning for the next 60 quarters is equally exciting.  Our transition to an all-Airbus fleet by the year end is progressing on schedule.  This return to a single fleet type will allow us to maintain the same corporate model and nimbleness we have shown in the past, able to react to both economic and competitive changes.  These industry-leading results would not have been possible without the hard work of our professional team members across all departments during the past 15 years."

Fourth quarter special items

  • MD-80 write down in the fourth quarter was $35 million
    •  Impairment caused by the accelerated retirement of the MD-80 fleet
  • Tax benefit - Received a one time tax benefit of approximately $74 million
    •  Remeasurement of deferred tax assets and liabilities due to the passage of the Tax Cuts and Jobs Act of 2017

Shareholder returns

  • 2017 shareholder returns - Returned $132 million in 2017 through dividends and open market share repurchases
    •  Will pay dividends of $0.70 per share on March 16, 2018 to shareholders of record as of March 2, 2018
    •  Current share repurchase authority of $100 million as of January 31, 2018

Balance sheet update

  • Additional secured debt - Raised $191 million, net of revolver payoff, in the fourth quarter
    •  Thirteen Airbus aircraft are unencumbered as of January 31, 2018

2018 outlook

  • 2018 tax rate impact - 2018 effective tax rate is expected to be between 24 and 25 percent
  • First quarter scheduled and system ASMs are expected to grow between ten and fourteen percent vs last year

Guidance, subject to revision          
           
Full year 2018 guidance   Previous*       Current
Fuel cost per gallon   $2.17       $2.17
Available seat miles (ASMs) / gallon   77.5 to 79.5       77.5 to 79.5
             
Interest expense (millions)   $50 to $60       $50 to $60
Tax rate   37 to 38%       24 to 25%
Share count (millions)    15.9        15.9
Earnings per share   $8 to $10       $10 to $12
             
System ASMs - year over year change   11 to 15%       11 to 15%
Scheduled service ASMs - year over year change   11 to 15%       11 to 15%
             
Depreciation expense / aircraft / month (thousands)   $120 to $130       $120 to $130
Maintenance expense / aircraft / month (thousands)   $95 to $105       $95 to $105
             
Full year 2018 CAPEX guidance            
Capital expenditures (millions) **   $290       $290
Capitalized Airbus deferred heavy maintenance (millions) ***   $45       $45

* - Previous guidance as of November 29, 2017
** - Excludes Sunseeker Resorts
*** - Not included in capital expenditure total

Aircraft fleet plan by end of period            
             
Aircraft - (seats per AC)   YE17 1Q18 2Q18 3Q18 YE18
MD-80 (166 seats)   37   32   27   19    
A319 (156 seats)   22   26   31   31   32  
A320 (177/186 seats)   30   33   42   45   50  
Total   89   91   100   95   82  

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, January 31, 2018 to discuss its full year and fourth 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.allegiant.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 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 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, departure 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, 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 December 31,   Percent
    2017     2016   change
OPERATING REVENUE:          
Scheduled service revenue $ 202,359     $ 185,325     9.2  
Ancillary revenue:          
Air-related charges   138,689       122,598     13.1  
Third party products   13,313       10,458     27.3  
Total ancillary revenue   152,002       133,056     14.2  
Fixed fee contract revenue   14,588       9,282     57.2  
Other revenue   9,609       8,220     16.9  
Total operating revenue   378,558       335,883     12.7  
OPERATING EXPENSES:          
Aircraft fuel   92,863       74,363     24.9  
Salary and benefits   94,291       80,789     16.7  
Station operations   34,602       27,739     24.7  
Maintenance and repairs   25,870       29,054     (11.0 )
Depreciation and amortization   29,142       29,254     (0.4 )
Sales and marketing   15,967       3,753     325.4  
Other   24,402       22,813     7.0  
Special charge   35,253           NM*
Total operating expense   352,390       267,765     31.6  
OPERATING INCOME   26,168       68,118     (61.6 )
OTHER (INCOME) EXPENSE:          
Interest income   (1,616 )     (908 )   78.0  
Interest expense   11,659       7,269     60.4  
Other, net   (305 )     (254 )   20.1  
Total other (income) expense   9,738       6,107     59.5  
INCOME BEFORE INCOME TAXES   16,430       62,011     (73.5 )
PROVISION FOR INCOME TAXES   (66,072 )     20,699     NM*
NET INCOME $ 82,502     $ 41,312     99.7  
Earnings per share to common shareholders (1):          
Basic $ 5.13     $ 2.49     106.0  
Diluted $ 5.13     $ 2.48     106.9  
Weighted average shares outstanding used in computing earnings per share to common shareholders (1):          
Basic   15,868       16,382     (3.1 )
Diluted   15,879       16,404     (3.2 )

*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 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 December 31,   Percent
  2017   2016   change*
OPERATING STATISTICS          
Total system statistics:          
Passengers 3,077,039     2,717,769     13.2  
Revenue passenger miles (RPMs) (thousands) 2,766,503     2,451,391     12.9  
Available seat miles (ASMs) (thousands) 3,430,711     3,073,455     11.6  
Load factor 80.6 %   79.8 %   0.8  
Operating expense per ASM (CASM) (cents)** 10.27     8.71     17.9  
Fuel expense per ASM (cents) 2.71     2.42     12.0  
Operating CASM, excluding fuel (cents)** 7.56     6.29     20.2  
ASMs per gallon of fuel 75.4     71.6     5.3  
Departures 23,322     21,070     10.7  
Block hours 53,224     48,191     10.4  
Average stage length (miles) 872     868     0.5  
Average number of operating aircraft during period 89.3     83.3     7.2  
Average block hours per aircraft per day 6.5     6.3     3.2  
Full-time equivalent employees at end of period 3,752     3,416     9.8  
Fuel gallons consumed (thousands) 45,509     42,933     6.0  
Average fuel cost per gallon $ 2.04     $ 1.73     17.9  
Scheduled service statistics:          
Passengers 3,027,401     2,682,148     12.9  
Revenue passenger miles (RPMs) (thousands) 2,717,524     2,416,503     12.5  
Available seat miles (ASMs) (thousands) 3,284,429     2,954,118     11.2  
Load factor 82.7 %   81.8 %   0.9  
Departures 22,077     20,003     10.4  
Block hours 50,764     46,225     9.8  
Total scheduled service revenue per ASM (TRASM) (cents)*** 10.79     10.78     0.1  
Average fare - scheduled service $ 66.84     $ 69.10     (3.3 )
Average fare - ancillary air-related charges $ 45.81     $ 45.71     0.2  
Average fare - ancillary third party products $ 4.40     $ 3.90     12.8  
Average fare - total $ 117.05     $ 118.70     (1.4 )
Average stage length (miles) 881     879     0.2  
Fuel gallons consumed (thousands) 43,392     41,237     5.2  
Average fuel cost per gallon $ 2.02     $ 1.70     18.8  
Percent of sales through website during period 93.9 %   93.8 %   0.1  

* Except load factor and percent of sales through website, which is percentage point change.
** These numbers reflect the special charge (impairment charge) in 2017. CASM without regard to the impairment charge is shown on Appendix A.
*** 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.

 
Allegiant Travel Company
Consolidated Statements of Income
(in thousands, except per share amounts)
(Unaudited)
  Twelve Months Ended December 31,   Percent
    2017     2016   change
OPERATING REVENUE:          
Scheduled service revenue $ 818,136     $ 753,414     8.6  
Ancillary revenue:          
Air-related charges   546,476       499,542     9.4  
Third party products   52,707       44,940     17.3  
Total ancillary revenue   599,183       544,482     10.0  
Fixed fee contract revenue   48,708       31,972     52.3  
Other revenue   37,751       32,963     14.5  
Total operating revenue   1,503,778       1,362,831     10.3  
OPERATING EXPENSES:          
Aircraft fuel   343,333       257,332     33.4  
Salary and benefits   371,599       291,974     27.3  
Station operations   142,581       124,052     14.9  
Maintenance and repairs   113,481       111,070     2.2  
Depreciation and amortization   121,713       105,216     15.7  
Sales and marketing   52,711       20,527     156.8  
Aircraft lease rentals   3,098       924     235.3  
Other   92,840       81,178     14.4  
Special charge   35,253           NM*
Total operating expense   1,276,609       992,273     28.7  
OPERATING INCOME   227,169       370,558     (38.7 )
OTHER (INCOME) EXPENSE:          
Interest income   (5,808 )     (3,010 )   93.0  
Interest expense   38,990       28,836     35.2  
Other, net   (1,559 )     (1,226 )   27.2  
Total other (income) expense   31,623       24,600     28.5  
INCOME BEFORE INCOME TAXES   195,546       345,958     (43.5 )
PROVISION FOR INCOME TAXES   644       126,368     (99.5 )
NET INCOME   194,902       219,590     (11.2 )
Earnings per share to common shareholders (1):          
Basic $ 11.94     $ 13.23     (9.8 )
Diluted $ 11.93     $ 13.21     (9.7 )
Weighted average shares outstanding used in computing earnings per share to common shareholders (1):          
Basic   16,073       16,465     (2.4 )
Diluted   16,095       16,489     (2.4 )

*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 calculations for the periods presented reflect the two-class method mandated ASC Topic 260, "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)
  Twelve Months Ended December 31,   Percent
  2017   2016   change*
OPERATING STATISTICS          
Total system statistics:          
Passengers 12,310,122     11,128,191     10.6  
Revenue passenger miles (RPMs) (thousands) 11,106,772     10,282,827     8.0  
Available seat miles (ASMs) (thousands) 13,612,003     12,375,505     10.0  
Load factor 81.6 %   83.1 %   (1.5 )
Operating expense per ASM (CASM) (cents)** 9.38     8.02     17.0  
Fuel expense per ASM (cents)** 2.52     2.08     21.2  
Operating CASM, excluding fuel (cents)** 6.86     5.94     15.5  
ASMs per gallon of fuel 73.0     71.6     2.0  
Departures 93,061     82,341     13.0  
Block hours 212,405     190,706     11.4  
Average stage length (miles) 870     889     (2.1 )
Average number of operating aircraft during period 87.3     83.3     4.8  
Average block hours per aircraft per day 6.7     6.3     6.3  
Full-time equivalent employees at end of period 3,752     3,416     9.8  
Fuel gallons consumed (thousands) 186,563     172,796     8.0  
Average fuel cost per gallon** $ 1.84     $ 1.49     23.5  
Scheduled service statistics:          
Passengers 12,138,146     11,003,864     10.3  
Revenue passenger miles (RPMs) (thousands) 10,901,161     10,130,675     7.6  
Available seat miles (ASMs) (thousands) 13,031,824     11,921,733     9.3  
Load factor 83.7 %   85.0 %   (1.3 )
Departures 88,432     78,747     12.3  
Block hours 202,752     183,290     10.6  
Total scheduled service revenue per ASM (TRASM) (cents)*** 10.88     10.89     (0.1 )
Average fare - scheduled service $ 67.41     $ 68.47     (1.5 )
Average fare - ancillary air-related charges $ 45.02     $ 45.40     (0.8 )
Average fare - ancillary third party products $ 4.34     $ 4.08     6.4  
Average fare - total $ 116.77     $ 117.95     (1.0 )
Average stage length (miles) 876     895     (2.1 )
Fuel gallons consumed (thousands) 178,298     166,528     7.1  
Average fuel cost per gallon** $ 1.83     $ 1.48     23.6  
Percent of sales through website during period 94.0 %   94.2 %   (0.2 )

* Except load factor and percent of sales through website, which is percentage point change.
** Includes effect of $8.3 million fuel tax refunds in the second quarter of 2016. Additionally, the CASM numbers reflect the special charge (impairment charge) in 2017. CASM without regard to the impairment charge is shown on Appendix A.
*** 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.

Summary Balance Sheet

(millions) 12/31/2017   12/31/2016   Change
  (unaudited)        
Unrestricted cash          
Cash and cash equivalents $ 59.4     $ 64.7     (8.2 )%
Short-term investments 352.7     269.3     31.0  
Long-term investments 78.6     124.8     (37.0 )
Total unrestricted cash and investments 490.7     458.8     7.0  
Debt          
Current maturities of long-term debt, net of related costs 214.8     86.2     149.2  
Long-term debt, net of current maturities and related costs 950.1     722.0     31.6  
Total debt 1,164.9     808.2     44.1  
Total Allegiant Travel Company shareholders’ equity $ 547.9     $ 473.6     15.7 %

Summary Cash Flow

  Twelve Months Ended December 31,    
Unaudited (millions) 2017   2016   Change
Cash provided by operating activities $ 384.8     $ 346.9     10.9 %
Purchase of property and equipment, including capitalized interest* 580.2     325.2     78.4  
Repurchase of common stock 90.5     66.4     36.3  
Cash dividends paid to shareholders** 45.7     67.5     (32.3 )
Proceeds from the issuance of long-term debt 497.5     321.2     54.9  
Principal payments on long-term debt $ 138.9     $ 154.1     (9.9 )%

* Includes aircraft pre-delivery deposits.
** 2016 amount includes a special dividend declared in December 2015 and paid in January 2016.


Appendix A
Non-GAAP Presentations
Three and Twelve Months Ended December 31, 2017 and 2016
(Unaudited)

Adjusted operating income (also referred to as operating income excluding special item), adjusted net income (also referred to as net income as adjusted for special items), adjusted diluted earnings per share (also referred to as diluted earnings per share as adjusted for special items), total operating expense less special item and total operating expense less fuel and special item all eliminate the effect of the non-cash impairment charge for the accelerated retirement of the MD-80 fleet which is not reflective of our ongoing operating performance. As such, all of these are non-GAAP financial measures. The net income and earnings per share measures also eliminate the effect of the one-time adjustment to tax expense attributable to the Tax Cuts and Jobs Act of 2017.

The SEC has adopted rules (Regulation G) regulating the use of non-GAAP financial measures. Because of our use of non-GAAP financial measures in this press release to supplement our consolidated financial statements presented on a GAAP basis, Regulation G requires us to include in this press release a presentation of the most directly comparable GAAP measure, which is operating income, net income, earnings per share or operating expenses and a reconciliation of the non-GAAP measures to the most comparable GAAP measure. Our utilization of non-GAAP measurements is not meant to be considered in isolation or as a substitute for net income or other measures of financial performance prepared in accordance with GAAP. Neither adjusted operating income, adjusted net income, adjusted diluted earnings per share, total operating expenses less special item nor total operating expense less fuel and special item are GAAP measurements and our use of these measures may not be comparable to similarly titled measures employed by other companies in the airline and travel industry. The reconciliations of these measures to the most comparable GAAP measure for the periods indicated below follow.

Reconciliation of Non-GAAP Financial Measures

  Three Months
Ended December 31,
  Twelve Months
Ended December 31,
  2017   2017
Reconciliation of operating income excluding special item (millions)      
Operating income as reported (GAAP) $ 26.2     $ 227.2  
Special item:      
Write down of MD-80 fleet 35.3     35.3  
Operating income excluding special item* 61.5     262.5  


  Three Months
Ended December 31,
  Twelve Months
Ended December 31,
  2017   2017
Reconciliation of operating CASM, excluding special item (millions)      
Total operating expense (GAAP) $ 352.4     $ 1,276.6  
Special item:      
Write down of MD-80 fleet 35.3     35.3  
Total operating expense less special item* 317.1     1,241.3  
System available seat miles 3,430.7     13,612.0  
Cost per available seat mile (cents) as reported 10.27     9.38  
Cost per available seat mile excluding special item (cents)* 9.24     9.12  


  Three Months
Ended December 31,
  Twelve Months
Ended December 31,
  2017   2017
Reconciliation of operating CASM, excluding fuel and special item (millions)              
Total operating expense (GAAP) $ 352.4     $ 1,276.6  
Less aircraft fuel expense 92.9     343.3  
Total operating expense less fuel* 259.5     933.3  
Special item:      
Write down of MD-80 fleet 35.3     35.3  
Total operating expense less fuel and special item* 224.2     898.0  
System available seat miles 3,430.7     13,612.0  
Cost per available seat mile (cents) as reported 10.27     9.38  
Cost per available seat mile excluding fuel and special item (cents)* 6.54     6.60  


  Three Months
Ended December 31,
  Twelve Months
Ended December 31,
  2017   2017
Reconciliation of net income as adjusted for special items (millions)      
Net income as reported (GAAP) $ 82.5     $ 194.9  
Special items:      
Write down of MD-80 fleet 35.3     35.3  
Less benefit related to tax reform (74.1 )   (74.1 )
Net income as adjusted for special items* 43.7     156.1  


  Three Months
Ended December 31,
  Twelve Months
Ended December 31,
  2017   2017
Reconciliation of diluted earnings per share as adjusted for special items      
Net income as reported (GAAP) $ 82.5     $ 194.9  
Net income as adjusted for special items (in millions)* $ 43.7     $ 156.1  
       
Diluted shares used for computation (thousands) 15,879     16,095  
       
Diluted earnings per share as reported (per share) (GAAP) $ 5.13     $ 11.93  
       
Diluted earnings per share as adjusted for special items (per share)* $ 2.71     $ 9.55  

* Denotes Non-GAAP figure.

1Special items include a charge for the MD-80 impairment and the tax benefit due to the passage of the Tax Cuts and Jobs Act of 2017. See appendix for reconciliation of non-GAAP financial measures.

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Allegiant Travel Company