Three Months Ended March 31, |
||||||||
Unaudited | 2017 | 2016 | Change | |||||
Total operating revenue (millions) | $ | 375.8 | $ | 348.6 | 7.8 | % | ||
Operating income (millions) | $ | 72.9 | $ | 121.1 | (39.8 | )% | ||
Net income (millions) | $ | 41.6 | $ | 72.0 | (42.2 | )% | ||
Diluted earnings per share | $ | 2.50 | $ | 4.29 | (41.7 | )% | ||
Return on capital employed* | 19.6 | % | 25.3 | % |
* - see appendix for calculation
“We had another profitable quarter - our 57th consecutive profitable quarter,” stated
"The first quarter is always a busy time for our team. Thank you to our team members whose hard work and dedication produced these excellent results."
Notable highlights
- New Chief Marketing Officer - Announced Ponder Harrison as new executive vice president & chief marketing officer
- Network growth - As of
March 31, 2017 the company is operating 358 routes versus 298 at the same time last year - New routes - Announced 23 new routes expected to begin in the second quarter of 2017
- Includes new city ofLouisville, Kentucky
- Expansion ofDestin /Ft.Walton Beach ,Florida into a seasonal base - MD-80 bases - Expect to only have MD-80s in
Sanford /Orlando, Florida andLas Vegas, Nevada by the end of 2017 - Shareholder returns -
$14.2 million was returned through a combination of the recurring dividend paid inMarch 2017 and open market share repurchases during the quarter. The company:
- Will pay a dividend of$0.70 per share onJune 2, 2017 to shareholders of record as ofMay 19, 2017
- Has$86.8 million of share repurchase authority remaining as ofApril 25, 2017
First quarter 2017 revenue
- TRASM results - First quarter TRASM decreased 4.4 percent
- Impact of Easter shift into April this year cost the quarter 1.5 percentage points of TRASM
- Impact of weather and irregular operations resulted in a decrease of a half percentage point of TRASM - New markets (markets operating less than one year) were approximately twelve percent of ASMs for the first quarter which is similar to last year
Second quarter 2017 revenue trends
- TRASM guidance - Second quarter TRASM is expected to increase between 1.5 and 3.5 percent versus the second quarter last year
- Easter shift to second quarter is expected to add 1.5 percentage points of TRASM in the second quarter
- New markets (markets operating less than one year) are expected to be almost fourteen percent of ASMs for the second quarter, which is approximately the same amount as last year
First quarter cost trends
- First quarter CASM ex fuel increased 11.6 percent versus the same period last year driven by:
- New pilot agreement - Added eight percentage points
- Elimination of the credit card surcharge - Added two percentage points
- InJanuary 2017 , we discontinued our credit card surcharge, which was applied as a reduction to sales and marketing expense
- Incremental stock compensation grants to executives - Added one percentage point
- Incremental stock compensation expense which included retention grants issued inNov. 2016 and grants issued to both our new president and executive vice president & chief marketing officer as part of their employment agreements
Second quarter 2017 cost trends
- Second quarter 2017 CASM ex fuel is expected to increase between thirteen and fifteen percent versus the same period last year, driven by:
- New pilot agreement - Expected to add six percentage points
- Elimination of credit card surcharge - Expected to add three percentage points
- Incremental stock compensation grants to executives - Expected to add one percentage point
- MD-80 retirement - The pulling forward of two retirements is expected to add a half percentage point due to write downs
Full year 2017 cost trends
- Full year 2017 CASM ex fuel is expected to increase between nine and twelve percent, higher than prior guidance, driven by:
- New pilot agreement - Expected to add seven percentage points
- Elimination of credit card surcharge - Expected to add three percentage points
- Reduced ASM projections - Expected to add one percentage point
* Earlier than planned MD-80 retirements
* Lower MD-80 utilization in the second half of the year to minimize excess crew training
* Shifting international flying to 2018
- Incremental stock compensation grants to executives - Expected to add one percentage point - Maintenance and repairs expense is expected to be between
$100 and $110 thousand per in-service aircraft per month for full year 2017, higher than prior guidance
- Increase is due to more expensive parts, repairs and increased line maintenance costs - Total ownership expense per aircraft per month - Full year 2017 ownership expense per in service aircraft per month is expected to remain between
$125 and $135 thousand , consistent with prior guidance
Balance sheet activity and full year 2017 trends
- Full year
CAPEX guidance (Excluding Airbus deferred heavy maintenance) is expected to be$521 million , consistent with prior guidance - Raised
$22 million in debt proceeds during the first quarter
- Currently have eight unencumbered Airbus aircraft
Guidance, subject to revision | ||||
2Q17 | ||||
Estimated TRASM year-over-year change | 1.5 to 3.5% | |||
Fixed fee and other revenue guidance | 2Q17 | |||
Fixed fee and other revenue (millions) | $16 to $18 | |||
Capacity guidance | ||||
System | 2Q17 | 3Q17 | FY17 | |
Departure year-over-year growth | 14 to 18% | 4 to 8% | ||
ASM year-over-year growth | 11 to 15% | 3 to 7% | 8 to 11% | |
Scheduled | ||||
Departure year-over-year growth | 14 to 18% | 4 to 8% | ||
ASM year-over-year growth | 11 to 15% | 3 to 7% | 8 to 11% | |
Cost guidance | 2Q17 | FY17 | ||
CASM ex fuel* – year-over-year change | 13 to 15% | 9 to 12% | ||
CAPEX guidance | FY17 | |||
Capital expenditures (millions) | $ | 521 | ||
Capitalized Airbus deferred heavy maintenance (millions) ** | $ | 30 |
* - CASM ex fuel – cost per available seat mile excluding fuel expense
** - Not included in capital expenditure total
Aircraft fleet plan by end of period | ||||||||
Aircraft - (seats per AC) | 1Q17 | 2Q17 | YE17 | |||||
MD-80 (166 seats) | 47 | 44 | 38 | |||||
757 (215 seats) | 2 | 2 | — | |||||
A319 (156 seats) | 19 | 20 | 22 | |||||
A320 (177/186 seats) | 17 | 19 | 29 | |||||
Total | 85 | 85 | 89 |
Aircraft listed in table above include only in service aircraft, planned retirements and future aircraft under contract (subject to change)
Allegiant.®
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
Any forward-looking statements are based on information available to us today and we undertake no obligation to update publicly any forward-looking statements, whether as a result of future events, new information or otherwise.
Detailed financial information follows:
Allegiant Travel Company Consolidated Statements of Income (in thousands, except per share amounts) (Unaudited) |
||||||||||||
Three Months Ended March 31, | Percent | |||||||||||
2017 | 2016 | change | ||||||||||
OPERATING REVENUE: | ||||||||||||
Scheduled service revenue | $ | 212,097 | $ | 201,606 | 5.2 | |||||||
Ancillary revenue: | ||||||||||||
Air-related charges | 131,565 | 120,929 | 8.8 | |||||||||
Third party products | 12,742 | 11,258 | 13.2 | |||||||||
Total ancillary revenue | 144,307 | 132,187 | 9.2 | |||||||||
Fixed fee contract revenue | 11,259 | 6,800 | 65.6 | |||||||||
Other revenue | 8,174 | 8,022 | 1.9 | |||||||||
Total operating revenue | 375,837 | 348,615 | 7.8 | |||||||||
OPERATING EXPENSES: | ||||||||||||
Aircraft fuel | 84,662 | 53,659 | 57.8 | |||||||||
Salary and benefits | 96,298 | 69,208 | 39.1 | |||||||||
Station operations | 31,832 | 30,734 | 3.6 | |||||||||
Maintenance and repairs | 30,095 | 26,492 | 13.6 | |||||||||
Depreciation and amortization | 30,549 | 24,685 | 23.8 | |||||||||
Sales and marketing | 9,998 | 5,808 | 72.1 | |||||||||
Aircraft lease rentals | 164 | 233 | (29.6 | ) | ||||||||
Other | 19,351 | 16,670 | 16.1 | |||||||||
Total operating expense | 302,949 | 227,489 | 33.2 | |||||||||
OPERATING INCOME | 72,888 | 121,126 | (39.8 | ) | ||||||||
OTHER (INCOME) EXPENSE: | ||||||||||||
Interest income | (1,264 | ) | (612 | ) | 106.5 | |||||||
Interest expense | 8,401 | 7,239 | 16.1 | |||||||||
Other, net | (360 | ) | (363 | ) | (0.8 | ) | ||||||
Total other (income) expense | 6,777 | 6,264 | 8.2 | |||||||||
INCOME BEFORE INCOME TAXES | 66,111 | 114,862 | (42.4 | ) | ||||||||
PROVISION FOR INCOME TAXES | 24,479 | 42,882 | (42.9 | ) | ||||||||
NET INCOME ATTRIBUTABLE TO ALLEGIANT TRAVEL COMPANY | $ | 41,632 | $ | 71,980 | (42.2 | ) | ||||||
Earnings per share to common shareholders (1): | ||||||||||||
Basic | $ | 2.50 | $ | 4.29 | (41.7 | ) | ||||||
Diluted | $ | 2.50 | $ | 4.29 | (41.7 | ) | ||||||
Weighted average shares outstanding used in computing earnings per share to common shareholders (1): | ||||||||||||
Basic | 16,382 | 16,678 | (1.8 | ) | ||||||||
Diluted | 16,404 | 16,699 | (1.8 | ) |
(1) The Company's unvested restricted stock awards are considered participating securities as they receive non-forfeitable rights to cash dividends at the same rate as common stock. The Basic and Diluted earnings per share for the periods presented reflect the two-class method mandated by accounting guidance for the calculation of earnings per share. The two-class method adjusts both the net income and the shares used in the calculation. Application of the two-class method did not have a significant impact on the Basic and Diluted earnings per share for the periods presented.
Allegiant Travel Company Operating Statistics (Unaudited) |
||||||||||
Three Months Ended March 31, | Percent | |||||||||
2017 | 2016 | change* | ||||||||
OPERATING STATISTICS | ||||||||||
Total system statistics: | ||||||||||
Passengers | 2,881,248 | 2,592,907 | 11.1 | |||||||
Revenue passenger miles (RPMs) (thousands) | 2,708,498 | 2,520,149 | 7.5 | |||||||
Available seat miles (ASMs) (thousands) | 3,376,837 | 3,001,384 | 12.5 | |||||||
Load factor | 80.2 | % | 84.0 | % | (3.8 | ) | ||||
Operating expense per ASM (CASM) (cents) | 8.97 | 7.58 | 18.3 | |||||||
Fuel expense per ASM (cents) | 2.51 | 1.79 | 40.2 | |||||||
Operating CASM, excluding fuel (cents) | 6.46 | 5.79 | 11.6 | |||||||
ASMs per gallon of fuel | 72.1 | 72.3 | (0.3 | ) | ||||||
Departures | 22,295 | 18,918 | 17.9 | |||||||
Block hours | 53,193 | 46,270 | 15.0 | |||||||
Average stage length (miles) | 903 | 935 | (3.4 | ) | ||||||
Average number of operating aircraft during period | 84.7 | 82.2 | 3.0 | |||||||
Average block hours per aircraft per day | 7.0 | 6.2 | 12.9 | |||||||
Full-time equivalent employees at end of period | 3,536 | 3,029 | 16.7 | |||||||
Fuel gallons consumed (thousands) | 46,850 | 41,523 | 12.8 | |||||||
Average fuel cost per gallon | $ | 1.81 | $ | 1.29 | 40.3 | |||||
Scheduled service statistics: | ||||||||||
Passengers | 2,845,480 | 2,567,309 | 10.8 | |||||||
Revenue passenger miles (RPMs) (thousands) | 2,661,934 | 2,483,553 | 7.2 | |||||||
Available seat miles (ASMs) (thousands) | 3,237,164 | 2,897,951 | 11.7 | |||||||
Load factor | 82.2 | % | 85.7 | % | (3.5 | ) | ||||
Departures | 21,248 | 18,175 | 16.9 | |||||||
Block hours | 50,876 | 44,563 | 14.2 | |||||||
Total scheduled service revenue per ASM (TRASM)** (cents) | 11.01 | 11.52 | (4.4 | ) | ||||||
Average fare - scheduled service | $ | 74.54 | $ | 78.53 | (5.1 | ) | ||||
Average fare - ancillary air-related charges | $ | 46.24 | $ | 47.10 | (1.8 | ) | ||||
Average fare - ancillary third party products | $ | 4.48 | $ | 4.39 | 2.1 | |||||
Average fare - total | $ | 125.26 | $ | 130.02 | (3.7 | ) | ||||
Average stage length (miles) | 908 | 940 | (3.4 | ) | ||||||
Fuel gallons consumed (thousands) | 44,892 | 40,154 | 11.8 | |||||||
Average fuel cost per gallon | $ | 1.80 | $ | 1.29 | 39.5 | |||||
Percent of sales through website during period | 95.1 | % | 94.3 | % | 0.8 |
* Except load factor and percent of sales through website, which is percentage point change.
** Various components of this measurement do not have a direct correlation to ASMs. These figures are provided on a per ASM basis to facilitate comparison with airlines reporting revenues on a per ASM basis.
Summary Balance Sheet
(millions) | 3/31/2017 | 12/31/2016 | Change | |||||||
(unaudited) | ||||||||||
Unrestricted cash | ||||||||||
Cash and cash equivalents | $ | 64.7 | $ | 64.7 | — | % | ||||
Short-term investments | 288.7 | 269.3 | 7.2 | |||||||
Long-term investments | 172.8 | 124.8 | 38.5 | |||||||
Total unrestricted cash | 526.2 | 458.8 | 14.7 | |||||||
Debt | ||||||||||
Current maturities of long-term debt, net of related costs | 88.2 | 86.2 | 2.3 | |||||||
Long-term debt, net of current maturities and related costs | 715.4 | 722.0 | (0.9 | ) | ||||||
Total debt | 803.6 | 808.2 | (0.6 | ) | ||||||
Total Allegiant Travel Company shareholders’ equity | $ | 503.1 | $ | 473.6 | 6.2 | % |
Summary Cash Flow
Three Months Ended March 31, | ||||||||||
Unaudited (millions) | 2017 | 2016 | Change | |||||||
Cash provided by operating activities | $ | 147.0 | $ | 160.4 | (8.4 | )% | ||||
Purchase of property and equipment, including capitalized interest* | (58.5 | ) | (71.7 | ) | (18.4 | ) | ||||
Repurchase of common stock | (4.9 | ) | (55.6 | ) | (91.2 | ) | ||||
Cash dividends paid to shareholders | (11.7 | ) | (32.8 | ) | (64.3 | ) | ||||
Proceeds from the issuance of long-term debt | 22.0 | 28.0 | (21.4 | ) | ||||||
Principal payments on long-term debt | (26.4 | ) | (18.7 | ) | 41.2 | % |
* Includes aircraft pre-delivery deposits.
Appendix A Additional Financial Information (Unaudited) |
|||||||
Twelve Months Ended March 31, | |||||||
Return on capital calculation (millions) | 2017 | 2016 | |||||
Net income attributable to Allegiant Travel Company | $ | 189.2 | $ | 227.5 | |||
Income tax | 108.0 | 132.7 | |||||
Interest expense | 30.0 | 26.9 | |||||
Less interest income | (3.7 | ) | (1.8 | ) | |||
323.5 | 385.3 | ||||||
Interest income | 3.7 | 1.8 | |||||
Tax rate | 36.3 | % | 36.8 | % | |||
Numerator | 208.4 | 244.6 | |||||
Total assets as of prior March 31 | 1,406.7 | 1,299.3 | |||||
Less current liabilities as of prior March 31 | 425.0 | 394.3 | |||||
Plus short term debt as of prior March 31 | 79.8 | 60.8 | |||||
Denominator | 1,061.5 | 965.8 | |||||
Return on capital employed | 19.6 | % | 25.3 | % |
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