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Allegiant Travel Company First Quarter 2018 Financial Results
First Quarter 2018 Fully Diluted Earnings per Share of $3.42

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

  Three Months Ended
 March 31,
 
Unaudited 2018 2017 Change
Total operating revenue (millions) $ 425.4   $ 380.0   12.0 %
Operating income (millions) 80.0   73.7   8.5  
Net income (millions) 55.2   42.2   30.9  
Diluted earnings per share $ 3.42   $ 2.53   35.2  

"We are proud to announce our 61st consecutive profitable quarter," stated Maurice J. Gallagher, Jr., chairman and CEO of Allegiant Travel Company. "We are in the final year of our fleet transition and are seeing impressive results. Our first quarter operating margin only declined approximately one percentage point in spite of a greater than 20 percent increase in the cost of fuel. The transition to an all-Airbus fleet has been and continues to be a substantial one-time effort.  We look forward to its completion.

“In addition, we are seeing a very positive impact from the transition to our new revenue management system. The year-over-year scheduled service load factor in March rose for the first time since 2011 without a sacrifice in March yields. Last but absolutely not least, we have continued to see a material improvement in our operations. According to the latest DOT statistics, in January our cancellation rate was the second lowest in the industry, which demonstrates our operational integrity and commitment to safety and reliability. This is directly correlated with the hard work of team members and the strong safety culture embedded throughout our system."

Shareholder returns

  • 2018 shareholder returns - $11 million in the first quarter through dividends
    • Will pay dividends of $0.70 per share on June 1, 2018 to shareholders of record as of May 18, 2018
    • Current share repurchase authority of $100 million as of April 25, 2018

Balance sheet update

  • Amended senior secured revolving credit facility to increase borrowing limit to $81 million, in the first quarter
    • The revolver is currently undrawn
  • 24 Airbus aircraft are unencumbered as of April 25, 2018

Changes to Accounting Standards

  • On January 1, Allegiant adopted several new accounting standards, including the new revenue recognition standard
  • The prior periods presented here have been recast to reflect adoption of these new standards. In particular, Allegiant is no longer disaggregating passenger revenue by scheduled service and air-related ancillary revenue
    • Including all adjustments related to the New Revenue Standard, TRASM increased 1.4 percent
    • Excluding these items, TRASM would have increased 2.5 percent over the same period last year

2018 outlook

  • Second quarter TRASM impact - Earlier Easter in the quarter is expected to decrease TRASM by two percentage points as part of Easter travel was in the first quarter of this year
  • Second quarter scheduled and system ASMs are expected to grow between ten and fourteen percent vs last year
  • 2018 fuel cost is expected to be $2.20 per gallon
  • 2018 tax rate  - 2018 effective tax rate is expected to decline to between 21 and 22 percent impacted by:
    • Adjustment of deferred tax balances due to the dissolution of foreign subsidiaries which are special purpose entities that were set up for the 12 aircraft on lease to a European carrier
     
Guidance, subject to revision    
     
Full year 2018 guidance   Previous* Current
Fuel cost per gallon   $2.17 $2.20
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   24 to 25% 21 to 22%
Share count (millions)     15.9   15.9
Earnings per share   $10 to $12 $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 $300
Capitalized Airbus deferred heavy maintenance (millions) ***   $45 $45

* - Previous guidance as of January 31, 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   41   45   50  
Total   88   99   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, April 25, 2018 to discuss its first 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 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, 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 March 31,   Percent
    2018
      2017
    change
OPERATING REVENUE:          
Passenger revenue (1) $ 396,771     $ 347,836     14.1  
Third party products   10,325       12,742     (19.0 )
Fixed fee contract revenue   10,556       11,259     (6.2 )
Other revenue   7,792       8,174     (4.7 )
Total operating revenue   425,444       380,011     12.0  
OPERATING EXPENSES:          
Aircraft fuel   106,027       84,662     25.2  
Salary and benefits   112,963       96,298     17.3  
Station operations   37,584       31,832     18.1  
Maintenance and repairs   19,270       30,095     (36.0 )
Depreciation and amortization   28,149       30,549     (7.9 )
Sales and marketing   19,078       13,331     43.1  
Aircraft lease rentals   21       164     (87.2 )
Other   22,384       19,351     15.7  
Total operating expense   345,476       306,282     12.8  
OPERATING INCOME   79,968       73,729     8.5  
OTHER (INCOME) EXPENSE:          
Interest expense   12,724       8,401     51.5  
Interest income   (1,907 )     (1,264 )   50.9  
Other, net   (240 )     (360 )   (33.3 )
Total other (income) expense   10,577       6,777     56.1  
INCOME BEFORE INCOME TAXES   69,391       66,952     3.6  
PROVISION FOR INCOME TAXES   14,198       24,785     (42.7 )
NET INCOME $ 55,193     $ 42,167     30.9  
Earnings per share to common shareholders (2):          
Basic $ 3.43     $ 2.53     35.6  
Diluted $ 3.42     $ 2.53     35.2  
Weighted average shares outstanding used in computing earnings per share to common shareholders (2):          
Basic   15,889       16,382     (3.0 )
Diluted   15,898       16,405     (3.1 )

*NM - Not meaningful
(1) Passenger revenue previously reported as Scheduled service 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 March 31,   Percent
  2018   2017   change (1)
OPERATING STATISTICS          
Total system statistics:          
Passengers 3,302,951     2,881,248     14.6  
Revenue passenger miles (RPMs) (thousands) 3,094,805     2,708,498     14.3  
Available seat miles (ASMs) (thousands) 3,728,563     3,376,837     10.4  
Load factor 83.0 %   80.2 %   2.8  
Operating expense per ASM (CASM) (cents) 9.27     9.07     2.2  
Fuel expense per ASM (cents) 2.84     2.51     13.1  
Operating CASM, excluding fuel (cents) 6.43     6.56     (2.0 )
ASMs per gallon of fuel 76.7     72.1     6.4  
Departures 24,248     22,295     8.8  
Block hours 57,803     53,193     8.7  
Average stage length (miles) 910     903     0.8  
Average number of operating aircraft during period 90.7     84.7     7.1  
Average block hours per aircraft per day 7.1     7.0     1.4  
Full-time equivalent employees at end of period 3,776     3,536     6.8  
Fuel gallons consumed (thousands) 48,640     46,850     3.8  
Average fuel cost per gallon $ 2.18     $ 1.81     20.4  
Scheduled service statistics:          
Passengers 3,279,368     2,845,480     15.2  
Revenue passenger miles (RPMs) (thousands) 3,064,619     2,661,934     15.1  
Available seat miles (ASMs) (thousands) 3,602,015     3,237,164     11.3  
Load factor 85.1 %   82.2 %   2.9  
Departures 23,264     21,248     9.5  
Block hours 55,689     50,876     9.5  
Total passenger revenue per ASM (TRASM) (cents) (2) 11.30     11.14     1.4  
Average fare - scheduled service (3) $ 73.81     $ 75.24     (1.9 )
Average fare - air-related charges (3) $ 47.18     $ 47.00     0.4  
Average fare - third party products $ 3.15     $ 4.48     (29.7 )
Average fare - total $ 124.14     $ 126.72     (2.0 )
Average stage length (miles) 916     908     0.9  
Fuel gallons consumed (thousands) 46,872     44,892     4.4  
Average fuel cost per gallon $ 2.17     $ 1.80     20.6  
Percent of sales through website during period 93.8 %   95.1 %   (1.3 )

(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.
(3) Reflects division of passenger revenue between scheduled service and air-related charges in Company's booking path.


Summary Balance Sheet

(millions) 3/31/2018   12/31/2017   Change
  (unaudited)        
Unrestricted cash          
Cash and cash equivalents $ 50.8     $ 59.4     (14.5 )%
Short-term investments 341.3     352.7     (3.2 )
Long-term investments 85.6     78.6     8.9  
Total unrestricted cash and investments 477.7     490.7     (2.6 )
Debt          
Current maturities of long-term debt, net of related costs 150.5     214.8     (29.9 )
Long-term debt, net of current maturities and related costs 912.3     950.1     (4.0 )
Total debt 1,062.8     1,164.9     (8.8 )
Total Allegiant Travel Company shareholders’ equity $ 598.3     $ 551.8     8.4 %


Summary Cash Flow

  Three Months Ended March 31,    
Unaudited (millions) 2018   2017   Change
Cash provided by operating activities $ 176.3     $ 146.6     20.3 %
Purchase of property and equipment, including capitalized interest* 72.5     58.5     23.9  
Repurchase of common stock 2.2     4.9     (55.1 )
Cash dividends paid to shareholders 11.3     11.7     (3.4 )
Proceeds from the issuance of long-term debt     22.0     (100.0 )
Principal payments on long-term debt & capital lease obligations $ 102.9     $ 26.4     289.8 %

* 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 March 31,
  2018   2017
Basic:      
Net income $ 55,193     $ 42,167  
Less net income allocated to participating securities (768 )   (691 )
Net income attributable to common stock $ 54,425     $ 41,476  
Net income per share, basic $ 3.43     $ 2.53  
Weighted-average shares outstanding 15,889     16,382  
Diluted:      
Net income $ 55,193     $ 42,167  
Less net income allocated to participating securities (768 )   (690 )
Net income attributable to common stock $ 54,425     $ 41,477  
Net income per share, diluted $ 3.42     $ 2.53  
Weighted-average shares outstanding 15,889     16,382  
Dilutive effect of stock options and restricted stock 46     91  
Adjusted weighted-average shares outstanding under treasury stock method 15,935     16,473  
Participating securities excluded under two-class method (37 )   (68 )
Adjusted weighted-average shares outstanding under two-class method 15,898     16,405  


Appendix A
Consolidated Statements of Income
As Recast for Adoption of New Accounting Standard on January 1, 2018
Twelve Months Ended December 31, 2017
(in thousands, except per share amounts)
(Unaudited)

On January 1, 2018, the Company adopted Accounting Standard Update ("ASU") 2014-09: Revenue from Contracts with Customers (the “New Revenue Standard”). In accordance with the transition provisions of this new standard, the Company has recast certain 2017 financial information previously reported in accordance with GAAP in effect as of December 31, 2017 to reflect the expected effects of adoption. This recast financial information is labeled “As Recast” and is included for supplemental purposes only. The adoption and related disclosures required by GAAP will be reported in the Company’s report on Form 10-Q for the quarter ended March 31, 2018.

        New Revenue Standard    
    As Reported   Deferred Revenue
Method
  Reclassifications   As Recast
OPERATING REVENUE:                
Passenger revenue*   $ 818,136     $ 3,463     $ 550,440     $ 1,372,039  
Ancillary revenue:                
Air-related charges   546,476         (546,476 )    
Third party products   52,707             52,707  
Fixed fee contract revenue   48,708             48,708  
Other revenue   37,751             37,751  
Total operating revenue   1,503,778     3,463     3,964     1,511,205  
OPERATING EXPENSES:                
Aircraft fuel   343,333             343,333  
Salary and benefits   371,599             371,599  
Station operations   142,581             142,581  
Maintenance and repairs   113,481             113,481  
Depreciation and amortization   121,713             121,713  
Sales and marketing   52,711         3,964     56,675  
Aircraft lease rentals   3,098             3,098  
Other   92,840             92,840  
Special charge   35,253             35,253  
Total operating expense   1,276,609         3,964     1,280,573  
OPERATING INCOME   227,169     3,463         230,632  
OTHER (INCOME) EXPENSE:                
Interest expense   38,990             38,990  
Interest income   (5,808 )           (5,808 )
Other, net   (1,559 )           (1,559 )
Total other (income) expense   31,623             31,623  
INCOME BEFORE INCOME TAXES   195,546     3,463         199,009  
PROVISION FOR INCOME TAXES   644     1,178         1,822  
NET INCOME   $ 194,902     $ 2,285     $     $ 197,187  
Earnings per share to common shareholders (1):                
Basic   $ 11.94             $ 12.08  
Diluted   $ 11.93             $ 12.07  
Weighted average shares outstanding used in computing earnings per share to common shareholders (1):    
Basic   16,073             16,073  
Diluted   16,095             16,095  

*Labeled as "Scheduled service revenue" in previous filings.

    As Reported   As Recast
Operating Stats:        
Total System ASMs   13,612,003     13,612,003  
Scheduled Service ASMs   13,031,824     13,031,824  
TRASM (cents)   10.88     10.93  
CASM (cents)   9.38     9.41  


Consolidated Statements of Income
As Recast for Adoption of New Accounting Standard on January 1, 2018
(in thousands, except per share amounts)
(Unaudited)

As previously discussed, on January 1, 2018, the Company adopted the New Revenue Standard. The following table presents the As Recast quarterly and annual 2017 Consolidated Statements of Income.

    1Q17   2Q17   3Q17   4Q17   FY17
OPERATING REVENUE:                    
Passenger revenue*   $ 347,836     $ 367,250     $ 315,308     $ 341,645     $ 1,372,039  
Third party products   12,742     14,304     12,348     13,313     52,707  
Fixed fee contract revenue   11,259     11,029     11,831     14,589     48,708  
Other revenue   8,174     9,261     10,708     9,608     37,751  
Total operating revenue   380,011     401,844     350,195     379,155     1,511,205  
OPERATING EXPENSES:                    
Aircraft fuel   84,662     85,387     80,421     92,863     343,333  
Salary and benefits   96,298     92,221     88,788     94,292     371,599  
Station operations   31,832     38,998     37,148     34,603     142,581  
Maintenance and repairs   30,095     28,645     28,870     25,871     113,481  
Depreciation and amortization   30,549     30,129     31,894     29,141     121,713  
Sales and marketing   13,331     13,492     13,884     15,968     56,675  
Aircraft lease rentals   164     2,400     533     1     3,098  
Other   19,351     24,777     24,315     24,397     92,840  
Special charge               35,253     35,253  
Total operating expense   306,282     316,049     305,853     352,389     1,280,573  
OPERATING INCOME   73,729     85,795     44,342     26,766     230,632  
OTHER (INCOME) EXPENSE:                    
Interest income   (1,264 )   (1,475 )   (1,454 )   (1,615 )   (5,808 )
Interest expense   8,401     8,889     10,041     11,659     38,990  
Other, net   (360 )   (493 )   (400 )   (306 )   (1,559 )
Total other (income) expense   6,777     6,921     8,187     9,738     31,623  
INCOME BEFORE INCOME TAXES   66,952     78,874     36,155     17,028     199,009  
PROVISION FOR INCOME TAXES   24,785     30,018     12,955     (65,936 )   1,822  
NET INCOME   $ 42,167     $ 48,856     $ 23,200     $ 82,964     $ 197,187  
Earnings per share to common shareholders (1):                    
Basic   $ 2.53     $ 2.97     $ 1.44     $ 5.16     $ 12.08  
Diluted   $ 2.53     $ 2.96     $ 1.44     $ 5.16     $ 12.07  
Weighted average shares outstanding used in computing earnings per share to common shareholders (1):    
Basic   16,382     16,198     15,852     15,868     16,073  
Diluted   16,404     16,220     15,862     15,879     16,095  

*Labeled as "Scheduled service revenue" in previous filings.

    1Q17   2Q17   3Q17   4Q17   FY17
Operating Stats:                    
Total System ASMs   3,376,837     3,584,209     3,220,246     3,430,711     13,612,003  
Scheduled Service ASMs   3,237,164     3,436,872     3,073,360     3,284,429     13,031,824  
TRASM (cents)   11.14     11.10     10.66     10.81     10.93  
CASM (cents)   9.07     8.82     9.50     10.27     9.41  


2017 Quarterly Adjustments to Statements of Income
Resulting From Adoption of New Accounting Standard on January 1, 2018
(in thousands)
(Unaudited)

As previously discussed, on January 1, 2018, the Company adopted the New Revenue Standard. The following table presents certain selected line items As Recast from the Company's quarterly and annual 2017 Consolidated Statements of Income.

    FY17 As
Reported
  1Q17   2Q17   3Q17   4Q17   FY17 As
Recast
Passenger revenue   $ 1,364,612     $ 4,174     $ 1,230     $ 1,426     $ 597     $ 1,372,039  
                         
Sales and marketing   52,711     3,333     631             56,675  
                         
Provision for income taxes   644     306     218     519     135     1,822  


Consolidated Balance Sheets
As Recast for Adoption of New Accounting Standard on January 1, 2018
December 31, 2017
(in thousands)
(Unaudited)

As previously discussed, on January 1, 2018, the Company adopted the New Revenue Standard. The following table presents the effects of the adoption of the New Revenue Standard on the December 31, 2017 consolidated balance sheet.

    As Reported   New Revenue
Standard
  As Recast
CURRENT ASSETS:            
Cash and cash equivalents   $ 59,449     $     $ 59,449  
Restricted cash   11,190         11,190  
Short-term investments   352,681         352,681  
Accounts receivable   71,057         71,057  
Expendable parts, supplies and fuel, net   17,647         17,647  
Prepaid expenses   23,931         23,931  
Other current assets   5,320         5,320  
TOTAL CURRENT ASSETS   541,275         541,275  
Property and equipment, net   1,512,415         1,512,415  
Long-term investments   78,570         78,570  
Deferred major maintenance, net   31,326         31,326  
Deposits and other assets   16,571         16,571  
TOTAL ASSETS   $ 2,180,157     $     $ 2,180,157  
CURRENT LIABILITIES:            
Accounts payable   $ 20,108     $     $ 20,108  
Accrued liabilities   105,127         105,127  
Air traffic liability   210,184     (5,885 )   204,299  
Current maturities of notes payable, net of related costs   214,761         214,761  
TOTAL CURRENT LIABILITIES   550,180     (5,885 )   544,295  
Long-term debt, net of current maturities and related costs   950,131         950,131  
Deferred income taxes   118,492     2,064     120,556  
Other noncurrent liabilities   13,407         13,407  
TOTAL LIABILITIES:   1,632,210     (3,821 )   1,628,389  
SHAREHOLDERS' EQUITY:            
Common stock, par value $.001   23         23  
Treasury stock   (605,655 )       (605,655 )
Additional paid in capital   253,840         253,840  
Accumulated other comprehensive loss, net   (2,840 )       (2,840 )
Retained earnings   902,579     3,821     906,400  
TOTAL EQUITY   547,947     3,821     551,768  
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY   $ 2,180,157     $     $ 2,180,157  


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Allegiant Travel Company