Press Release

Allegiant Travel Company Third Quarter 2016 Financial Results
Third Quarter 2016 Fully Diluted Earnings per Share of $2.75

LAS VEGAS, Oct. 26, 2016 (GLOBE NEWSWIRE) -- Allegiant Travel Company (NASDAQ:ALGT) today reported the following financial results for the third quarter 2016, as well as comparisons to prior year equivalents:

  Three Months Ended
 September 30,
    Nine Months Ended
 September 30,
 
Unaudited 2016 2015 Change   2016 2015 Change
Total operating revenue (millions) $ 333.5   $ 300.0   11.2 %   $ 1,026.9     $ 951.3     8.0 %
Operating income (millions) $ 76.8   $ 77.1   (0.3 )%   $ 302.4     $ 277.9     8.8 %
Net income (millions) $ 45.5   $ 44.5   2.2 %   $ 178.3     $ 163.7     8.9 %
Diluted earnings per share $ 2.75   $ 2.62   5.0 %   $ 10.73     $ 9.55     12.4 %
Return on capital employed (LTM)*   24.8 %   18.7 %          

* - see appendix for calculation

“We had a very busy summer this year,” stated Maurice J. Gallagher, Jr., chairman and CEO of Allegiant Travel Company and I want to thank all of our team members for their tremendous effort and hard work through a challenging set of months.  It is due to them that we can announce another profitable quarter, our 55th consecutive.  In addition, John Redmond joined the company as President of Allegiant Travel Company.  John has a terrific background in the hospitality space with years of executive experience at large organizations such as MGM Resorts International and Caesars Entertainment. We also are underway in our transition of the company to an all Airbus fleet with current expectations to operate over 90 aircraft by the end of the decade.  Finally, we also launched the Allegiant World MasterCard Credit Card program in conjunction with Bank of America.  While it is too early to determine any trends, we are excited about the opportunities from this program."

Notable highlights

  • Appointment of new President - Announced John Redmond, current board member and previously chief executive officer of MGM Grand Resorts, has assumed the role of President
  • Allegiant World MasterCard - Launched the Allegiant credit card issued by Bank of America
  • Pilot agreement - Implemented new pilot agreement on August 1
  • Network growth - As of September 30, 2016 the company is operating 337 routes versus 271 at the same time last year

  Percent change vs Q3 2015
ASMs* 19 %
Cities 9 %
Routes 24 %

* - ASMs are scheduled available seat miles

  • New routes - Announced eighteen new routes that are expected to begin through the first quarter of 2017
  • New cities - Announced service to three new cities
    • One new destination: San Juan, Puerto Rico beginning in the fourth quarter of 2016
    • Two new origination cities: Trenton, New Jersey and Cleveland, Ohio beginning in the fourth quarter of 2016 and first quarter of 2017, respectively
  • Shareholder returns - $11.5 million was returned through the recurring dividend paid in September 2016 - year to date $28.2 million was returned to shareholders through recurring dividends
    • The Company will pay a fourth quarter dividend of $0.70 per share on December 6, 2016 to all shareholders of record as of November 23, 2016
    • The Company has $92 million of share repurchase authority remaining as of September 30, 2016
  • Dispatcher union vote - 34 Allegiant dispatchers voted to join the Teamsters union

Fourth quarter 2016 revenue trends

  • TRASM guidance - Fourth quarter TRASM is expected to decrease between 7.5 and 5.5 percent versus the fourth quarter last year
    • Impact of Hurricane Matthew during Columbus Day weekend is expected to negatively account for a half point of TRASM reduction in the fourth quarter
    • Impact of the later Christmas travel season in the year versus last year is expected to negatively account for one point of TRASM reduction in the fourth quarter
    • Scheduled ASMs of flights that occur during both peak flying days and the peak flying season, the highest unit revenue flights, are expected to grow 13 percent versus last year.
    • New markets (markets operating less than one year) are expected to be almost 11 percent of ASMs for the fourth quarter versus approximately 15 percent last year

Fourth quarter and full year 2016 cost trends

  • Full year 2016 CASM ex fuel - Consistent with prior guidance, full year 2016 CASM ex fuel is expected to increase between one and three percent
  • Fourth quarter 2016 CASM ex fuel - CASM ex fuel for the fourth quarter is expected to increase between ten and twelve percent versus the same period last year, primarily driven by the implementation of the new pilot agreement and increased depreciation of MD-80s as the company has solidified its plan for MD-80 retirements through the end of the summer of 2019
    • The MD80 retirement schedule will add incremental depreciation expense of three million dollars in the fourth quarter and seven million dollars for the full year 2017 
  • Maintenance and repairs expense - Consistent with prior guidance, maintenance and repair expense per in service aircraft per month is expected to be between $105 and $110 thousand for full year 2016
  • Total ownership expense per aircraft per month - Consistent with prior guidance, full year 2016 ownership expense per in service aircraft per month is expected to remain between $105 and $110 thousand


Guidance, subject to revision      
       
  October 2016   4Q16    
Estimated TRASM year-over-year change (7) to (5)%   (7.5) to (5.5)%    
           
Fixed fee and other revenue guidance     4Q16    
Fixed fee and other revenue (millions)     $16 to $18    
           
Capacity guidance          
System 4Q16   1Q17   FY16
  Departure year-over-year growth 15 to 19%   14 to 18%    
  ASM year-over-year growth 10 to 14%   10 to 14%   15 to 17%
Scheduled          
  Departure year-over-year growth 15 to 19%   14 to 18%    
  ASM year-over-year growth 10 to 14%   10 to 14%   15 to 17%
           
Cost guidance 4Q16       FY16
CASM ex fuel* – year-over-year change 10 to 12%       1 to 3%
           
CAPEX guidance         FY16
Capital expenditures (millions)         $ 386   

* - CASM ex fuel – cost per available seat mile excluding fuel expense


Aircraft fleet plan by end of period        
         
Aircraft - (seats per AC)     3Q16 YE16
MD-80 (166 seats)     48   48  
757 (215 seats)     4   4  
A319 (156 seats)     15   17  
A320 (177 seats)     16   16  
Total     83   85  

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, October 26, 2016 to discuss its third quarter 2016 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.

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, 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 airfares less than half the cost of average domestic roundtrip ticket. For downloadable press kit, including photos, visit: http://gofly.us/YFuyb.

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, 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, terrorist attacks, risks inherent to airlines, demand for air services to our leisure destinations from the markets served by us, our dependence on our leisure destination markets, 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 September 30,   Percent
  2016   2015   change
OPERATING REVENUE:          
Scheduled service revenue $ 177,361     $ 170,002     4.3  
Ancillary revenue:          
Air-related charges   127,301       107,554     18.4  
Third party products   11,259       9,890     13.8  
Total ancillary revenue   138,560       117,444     18.0  
Fixed fee contract revenue   9,183       4,640     97.9  
Other revenue   8,377       7,870     6.4  
Total operating revenue   333,481       299,956     11.2  
OPERATING EXPENSES:          
Aircraft fuel   69,305       68,272     1.5  
Salary and benefits   73,424       58,968     24.5  
Station operations   32,252       26,454     21.9  
Maintenance and repairs   26,263       25,369     3.5  
Depreciation and amortization   25,881       24,346     6.3  
Sales and marketing   5,650       4,053     39.4  
Aircraft lease rentals   472       695     (32.1 )
Other   23,394       14,717     59.0  
Total operating expense   256,641       222,874     15.2  
OPERATING INCOME   76,840       77,082     (0.3 )
OTHER (INCOME) EXPENSE:          
Interest income   (1,028 )     (301 )   241.5  
Interest expense   6,938       6,687     3.8  
Other, net   (61 )     (67 )   (9.0 )
Total other (income) expense   5,849       6,319     (7.4 )
INCOME BEFORE INCOME TAXES   70,991       70,763     0.3  
PROVISION FOR INCOME TAXES   25,538       26,305     (2.9 )
NET INCOME ATTRIBUTABLE TO ALLEGIANT TRAVEL COMPANY $ 45,453     $ 44,458     2.2  
Earnings per share to common shareholders (1):          
Basic $ 2.76     $ 2.63     4.9  
Diluted $ 2.75     $ 2.62     5.0  
Weighted average shares outstanding used in computing earnings per share to common shareholders (1):          
Basic   16,389       16,831     (2.6 )
Diluted   16,406       16,869     (2.7 )

(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 September 30,   Percent
  2016   2015   change*
OPERATING STATISTICS          
Total system statistics:          
Passengers 2,939,055     2,420,819     21.4  
Revenue passenger miles (RPMs) (thousands) 2,645,533     2,235,683     18.3  
Available seat miles (ASMs) (thousands) 3,121,762     2,597,658     20.2  
Load factor 84.7 %   86.1 %   (1.4 )
Operating expense per ASM (CASM) (cents) 8.22     8.58     (4.2 )
Fuel expense per ASM (cents) 2.22     2.63     (15.6 )
Operating CASM, excluding fuel (cents) 6.00     5.95     0.8  
ASMs per gallon of fuel 70.6     69.2     2.0  
Departures 21,384     17,330     23.4  
Block hours 47,739     39,347     21.3  
Average stage length (miles) 864     878     (1.6 )
Average number of operating aircraft during period 84.0     74.7     12.4  
Average block hours per aircraft per day 6.2     5.7     8.8  
Full-time equivalent employees at end of period 3,287     2,654     23.9  
Fuel gallons consumed (thousands) 44,187     37,518     17.8  
Average fuel cost per gallon $ 1.57     $ 1.82     (13.7 )
Scheduled service statistics:          
Passengers 2,904,295     2,383,556     21.8  
Revenue passenger miles (RPMs) (thousands) 2,603,849     2,204,760     18.1  
Available seat miles (ASMs) (thousands) 2,997,529     2,526,292     18.7  
Load factor 86.9 %   87.3 %   (0.4 )
Departures 20,398     16,563     23.2  
Block hours 45,740     38,094     20.1  
Total scheduled service revenue per ASM (TRASM) (cents)** 10.54     11.38     (7.4 )
Average fare - scheduled service $ 61.07     $ 71.32     (14.4 )
Average fare - ancillary air-related charges $ 43.83     $ 45.12     (2.9 )
Average fare - ancillary third party products $ 3.88     $ 4.15     (6.5 )
Average fare - total $ 108.78     $ 120.59     (9.8 )
Average stage length (miles) 869     894     (2.8 )
Fuel gallons consumed (thousands) 42,439     36,458     16.4  
Average fuel cost per gallon $ 1.59     $ 1.83     (13.1 )
Percent of sales through website during period 94.6 %   95.2 %   (0.6 )

* 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.


Allegiant Travel Company
Consolidated Statements of Income
(in thousands, except per share amounts)
(Unaudited)
 
  Nine Months Ended September 30,   Percent
  2016   2015   change
OPERATING REVENUE:          
Scheduled service revenue $ 568,089     $ 556,842     2.0  
Ancillary revenue:          
Air-related charges   376,944       326,055     15.6  
Third party products   34,482       31,663     8.9  
Total ancillary revenue   411,426       357,718     15.0  
Fixed fee contract revenue   22,690       11,993     89.2  
Other revenue   24,743       24,745      
Total operating revenue   1,026,948       951,298     8.0  
OPERATING EXPENSES:          
Aircraft fuel   182,969       216,985     (15.7 )
Salary and benefits   211,185       171,119     23.4  
Station operations   96,313       74,768     28.8  
Maintenance and repairs   82,016       70,488     16.4  
Depreciation and amortization   75,962       73,597     3.2  
Sales and marketing   16,774       16,907     (0.8 )
Aircraft lease rentals   924       2,092     (55.8 )
Other   58,363       47,402     23.1  
Total operating expense   724,506       673,358     7.6  
OPERATING INCOME   302,442       277,940     8.8  
OTHER (INCOME) EXPENSE:          
Interest income   (2,932 )     (948 )   209.3  
Interest expense   21,567       20,531     5.0  
Other, net   (142 )     (117 )   21.4  
Total other (income) expense   18,493       19,466     (5.0 )
INCOME BEFORE INCOME TAXES   283,949       258,474     9.9  
PROVISION FOR INCOME TAXES   105,669       94,853     11.4  
NET INCOME   178,280       163,621     9.0  
Net loss attributable to noncontrolling interest       (44 )   (100.0 )
NET INCOME ATTRIBUTABLE TO ALLEGIANT TRAVEL COMPANY $ 178,280     $ 163,665     8.9  
Earnings per share to common shareholders (1):          
Basic $ 10.74     $ 9.57     12.2  
Diluted $ 10.73     $ 9.55     12.4  
Weighted average shares outstanding used in computing earnings per share to common shareholders (1):          
Basic   16,493       17,010     (3.0 )
Diluted   16,514       17,050     (3.1 )

(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 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)
 
  Nine Months Ended September 30,   Percent
  2016   2015   change*
OPERATING STATISTICS          
Total system statistics:          
Passengers 8,410,422     7,139,876     17.8  
Revenue passenger miles (RPMs) (thousands) 7,831,436     6,734,217     16.3  
Available seat miles (ASMs) (thousands) 9,302,051     7,814,146     19.0  
Load factor 84.2 %   86.2 %   (2.0 )
Operating expense per ASM (CASM) (cents)*** 7.79     8.62     (9.6 )
Fuel expense per ASM (cents)*** 1.97     2.78     (29.1 )
Operating CASM, excluding fuel (cents) 5.82     5.84     (0.3 )
ASMs per gallon of fuel
71.6     69.8     2.6  
Departures 61,271     50,976     20.2  
Block hours 142,515     118,999     19.8  
Average stage length (miles) 896     900     (0.4 )
Average number of operating aircraft during period 83.4     73.6     13.3  
Average block hours per aircraft per day 6.2     5.9     5.1  
Full-time equivalent employees at end of period 3,287     2,654     23.9  
Fuel gallons consumed (thousands) 129,862     111,881     16.1  
Average fuel cost per gallon*** $ 1.41     $ 1.94     (27.3 )
Scheduled service statistics:          
Passengers 8,321,716     7,034,244     18.3  
Revenue passenger miles (RPMs) (thousands) 7,714,172     6,647,978     16.0  
Available seat miles (ASMs) (thousands) 8,967,614     7,612,202     17.8  
Load factor 86.0 %   87.3 %   (1.3 )
Departures 58,744     48,833     20.3  
Block hours 137,066     115,434     18.7  
Total scheduled service revenue per ASM (TRASM)(cents)** 10.92     12.01     (9.1 )
Average fare - scheduled service $ 68.27     $ 79.16     (13.8 )
Average fare - ancillary air-related charges $ 45.30     $ 46.35     (2.3 )
Average fare - ancillary third party products $ 4.14     $ 4.50     (8.0 )
Average fare - total $ 117.71     $ 130.01     (9.5 )
Average stage length (miles) 901     915     (1.5 )
Fuel gallons consumed (thousands) 125,291     108,837     15.1  
Average fuel cost per gallon*** $ 1.41     $ 1.96     (28.1 )
Percent of sales through website during period 94.3 %   95.1 %   (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.
*** Includes effect of fuel tax refund of $8.3 million in the second quarter of 2016.

Summary Balance Sheet

(millions) 9/30/2016   12/31/2015   Change
  (unaudited)        
Unrestricted cash          
Cash and cash equivalents $ 48.7     $ 87.1     (44.1 )%
Short-term investments $ 269.3     $ 245.6     9.6 %
Long-term investments $ 65.2     $ 64.8     0.6 %
Total unrestricted cash $ 383.2     $ 397.5     (3.6 )%
Debt          
Current maturities of long-term debt, net of related costs $ 137.4     $ 74.1     85.4 %
Long-term debt, net of current maturities and related costs $ 561.5     $ 567.6     (1.1 )%
Total debt $ 698.9     $ 641.7     8.9 %
Total Allegiant Travel Company shareholders’ equity $ 442.3     $ 350.0     26.4 %


Summary Cash Flow

    Nine Months Ended September 30,    
Unaudited (millions)   2016   2015   Change
Cash provided by operating activities   $ 308.1     $ 267.6     15.1 %
Purchase of property and equipment, including capitalized interest*   $ (264.1 )   $ (173.9 )   51.9 %
Repurchase of common stock   $ (63.4 )   $ (121.1 )   (47.6 )%
Cash dividends paid to shareholders   $ (55.9 )   $ (57.4 )   (2.6 )%
Proceeds from the issuance of long-term debt   $ 120.4     $ 93.0     29.5 %
Principal payments on long-term debt   $ (63.5 )   $ (46.4 )   36.9 %

* Includes aircraft pre-delivery deposits.


Appendix A
Additional Financial Information
(Unaudited)
 
    Twelve Months Ended September 30,
Return on capital calculation (millions)   2016   2015
Net income attributable to Allegiant Travel Company   $ 235.0     $ 168.5  
Income tax   137.2     97.8  
Interest expense   27.5     27.9  
Less interest income   (3.4 )   (1.2 )
    396.3     293.0  
         
Interest income   3.4     1.2  
Tax rate   36.9 %   36.7 %
Numerator   252.2     186.2  
         
Total assets as of prior September 30   1,303.9     1,269.9  
Less current liabilities as of prior September 30   358.1     326.0  
Plus short term debt as of prior September 30   69.6     51.9  
Denominator   1,015.4     995.8  
Return on capital employed   24.8 %   18.7 %

 

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