HomeNewsGlobeNewsWireAllegiant Travel Company Full Year and Fourth Quarter 2017 Financial Results

Allegiant Travel Company Full Year and Fourth Quarter 2017 Financial Results

Allegiant Travel Company Full Year and Fourth Quarter 2017 Financial Results ET | Source: Allegiant Travel Company

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
    • Currentshare 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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