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 2016Change  2017 2016Change
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) YE171Q182Q183Q18YE18
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:     
Passengers3,077,039  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 factor80.6% 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 fuel75.4  71.6  5.3 
Departures23,322  21,070  10.7 
Block hours53,224  48,191  10.4 
Average stage length (miles)872  868  0.5 
Average number of operating aircraft during period89.3  83.3  7.2 
Average block hours per aircraft per day6.5  6.3  3.2 
Full-time equivalent employees at end of period3,752  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:     
Passengers3,027,401  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 factor82.7% 81.8% 0.9 
Departures22,077  20,003  10.4 
Block hours50,764  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 period93.9% 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:     
Passengers12,310,122  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 factor81.6% 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 fuel73.0  71.6  2.0 
Departures93,061  82,341  13.0 
Block hours212,405  190,706  11.4 
Average stage length (miles)870  889  (2.1)
Average number of operating aircraft during period87.3  83.3  4.8 
Average block hours per aircraft per day6.7  6.3  6.3 
Full-time equivalent employees at end of period3,752  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:     
Passengers12,138,146  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 factor83.7% 85.0% (1.3)
Departures88,432  78,747  12.3 
Block hours202,752  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 period94.0% 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 investments352.7  269.3  31.0 
Long-term investments78.6  124.8  (37.0)
Total unrestricted cash and investments490.7  458.8  7.0 
Debt     
Current maturities of long-term debt, net of related costs214.8  86.2  149.2 
Long-term debt, net of current maturities and related costs950.1  722.0  31.6 
Total debt1,164.9  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 stock90.5  66.4  36.3 
Cash dividends paid to shareholders**45.7  67.5  (32.3)
Proceeds from the issuance of long-term debt497.5  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 fleet35.3  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 fleet35.3  35.3 
Total operating expense less special item*317.1  1,241.3 
System available seat miles3,430.7  13,612.0 
Cost per available seat mile (cents) as reported10.27  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 expense92.9  343.3 
Total operating expense less fuel*259.5  933.3 
Special item:   
Write down of MD-80 fleet35.3  35.3 
Total operating expense less fuel and special item*224.2  898.0 
System available seat miles3,430.7  13,612.0 
Cost per available seat mile (cents) as reported10.27  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 fleet35.3  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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