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Allegiant Travel Company Second Quarter 2018 Financial Results
Globe Newswire 25-Jul-2018 4:01 PM
LAS VEGAS, July 25, 2018 (GLOBE NEWSWIRE) -- Allegiant Travel Company (NASDAQ:ALGT) today reported the following financial results for the second quarter 2018, as well as comparisons to the prior year:
Three Months Ended June 30,
Six Months Ended June 30,
Unaudited
2018
2017
Change
2018
2017
Change
Total operating revenue (millions)
$
436.8
$
401.8
8.7%
$
862.2
$
781.9
10.3%
Operating income (millions)
74.2
85.8
(13.5)
154.2
159.5
(3.3)
Net income (millions)
50.0
49.0
2.0
105.2
91.4
15.1
Diluted earnings per share
$
3.10
$
2.97
4.4
$
6.52
$
5.51
18.3
"We are proud to announce our 62nd consecutive profitable quarter," stated Maurice J. Gallagher, Jr., chairman and CEO of Allegiant Travel Company. "This is the second consecutive quarter of EPS growth, despite seeing our fuel cost per gallon increase by over 39 percent in the second quarter. This is a wonderful testament to the hard work of our team members as we navigate another busy summer.
"We are continuing our transition to an all-Airbus fleet. We have done an excellent job year-to-date but this summer was the critical period in this transition, including the timely delivery and induction of fifteen Airbus aircraft, and retirement of six MD-80s. Today we are on our schedule as planned, though some delayed deliveries in late May impacted our peak June period, in terms of top line and operations reliability. Looking forward, we should complete our transition at the end of November as scheduled.
"Our CASM-ex fuel results came in nicely. Our improved operational results as well as efficiencies from the Airbus fleet are beginning to pay dividends, and we are pleased with where the cost trend line is headed. Additionally, fuel efficiency continues to improve with the transition, with 76 vs. 72 ASMs per gallon this year compared to the same period last year.
"The Sunseeker resort project continues to move ahead. We are closing in on a financing plan and hope to announce the specifics in the next 60 to 90 days. We continue to be impressed with the many synergies and business alignments between Sunseeker and our air service presence on the west coast of Florida. Our Punta Gorda destination - a 15 minute drive from our Sunseeker location, grew over 30 percent in capacity on a trailing twelve month basis. We are on a pace to carry over 1.5 million passengers in and out of Punta Gorda this year."
Shareholder returns
2018 shareholder returns - over $22 million in the first half of the year through dividends
Will pay dividends of $0.70 per share on August 31, 2018 to shareholders of record as of August 17, 2018
Current share repurchase authority of $100 million as of July 25, 2018
2018 outlook
Third quarter scheduled and system ASMs are expected to grow between thirteen and fifteen percent vs last year
2018 full year ASM growth is expected to be between nine and eleven percent due to slower than expected aircraft deliveries
2018 fuel cost is expected to be $2.35 per gallon using the forward curve as of July 24, 2018
2018 EPS is expected to be between $9 and $10 per share due to the expected higher fuel cost
Fuel expense is expected to increase approximately $35 million from when guided in November 2017
Capitalized Airbus deferred heavy maintenance (millions) ***
$45
$45
* - Previous guidance as of April 25, 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
35
44
45
Total
88
93
94
77
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, July 25, 2018 to discuss its second 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 and mid-sized 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
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, our reliance on third parties to deliver aircraft under contract to us on a timely basis, 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 June 30,
Percent
2018
2017
change
OPERATING REVENUE:
Passenger revenue (1)
$
405,572
$
367,250
10.4
Third party products
17,799
14,304
24.4
Fixed fee contract revenue
7,653
11,029
(30.6
)
Other revenue
5,756
9,261
(37.8
)
Total operating revenue
436,780
401,844
8.7
OPERATING EXPENSES:
Aircraft fuel
122,454
85,387
43.4
Salary and benefits
101,645
92,221
10.2
Station operations
41,553
38,998
6.6
Maintenance and repairs
24,611
28,645
(14.1
)
Depreciation and amortization
29,833
30,129
(1.0
)
Sales and marketing
18,348
13,492
36.0
Aircraft lease rentals
75
2,400
(96.9
)
Other
24,039
24,777
(3.0
)
Total operating expense
362,558
316,049
14.7
OPERATING INCOME
74,222
85,795
(13.5
)
OTHER (INCOME) EXPENSE:
Interest expense
13,156
8,889
48.0
Interest income
(1,927
)
(1,475
)
30.6
Other, net
(50
)
(493
)
(89.9
)
Total other expense
11,179
6,921
61.5
INCOME BEFORE INCOME TAXES
63,043
78,874
(20.1
)
PROVISION FOR INCOME TAXES
13,027
29,836
(56.3
)
NET INCOME
$
50,016
$
49,038
2.0
Earnings per share to common shareholders (2):
Basic
$3.10
$2.98
4.0
Diluted
$3.10
$2.97
4.4
Weighted average shares outstanding used in computing earnings per share to common shareholders (2):
Basic
15,939
16,198
(1.6
)
Diluted
15,945
16,220
(1.7
)
(1) Passenger revenue previously reported as Scheduled service revenue and Ancillary air-related 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 June 30,
Percent
2018
2017
change (1)
OPERATING STATISTICS
Total system statistics:
Passengers
3,704,113
3,306,193
12.0
Revenue passenger miles (RPMs) (thousands)
3,276,599
2,958,808
10.7
Available seat miles (ASMs) (thousands)
3,922,294
3,584,209
9.4
Load factor
83.5
%
82.6
%
0.9
Operating expense per ASM (CASM) (cents)
9.24
8.82
4.8
Fuel expense per ASM (cents)
3.12
2.38
31.1
Operating CASM, excluding fuel (cents)
6.12
6.44
(5.0
)
ASMs per gallon of fuel
76.1
71.9
5.8
Departures
27,063
24,721
9.5
Block hours
60,707
56,056
8.3
Average stage length (miles)
858
866
(0.9
)
Average number of operating aircraft during period
92.0
85.3
7.9
Average block hours per aircraft per day
7.3
7.2
1.4
Full-time equivalent employees at end of period
3,840
3,628
5.8
Fuel gallons consumed (thousands)
51,516
49,858
3.3
Average fuel cost per gallon
$
2.38
$
1.71
39.2
Scheduled service statistics:
Passengers
3,681,944
3,266,789
12.7
Revenue passenger miles (RPMs) (thousands)
3,245,774
2,903,257
11.8
Available seat miles (ASMs) (thousands)
3,795,815
3,436,872
10.4
Load factor
85.5
%
84.5
%
1.0
Departures
25,992
23,609
10.1
Block hours
58,536
53,632
9.1
Total passenger revenue per ASM (TRASM) (cents) (2)
11.15
11.10
0.5
Average fare - scheduled service (3)
$
64.62
$
67.76
(4.6
)
Average fare - air-related charges (3)
$
45.53
$
44.66
1.9
Average fare - third party products
$
4.84
$
4.38
10.5
Average fare - total
$
114.99
$
116.80
(1.5
)
Average stage length (miles)
864
869
(0.6
)
Fuel gallons consumed (thousands)
49,671
47,821
3.9
Average fuel cost per gallon
$
2.37
$
1.70
39.4
Percent of sales through website during period
93.9
%
95.1
%
(1.2
)
(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 of revenue in accordance with revenue recognition accounting rules adopted by us as of January 1, 2018. (3) Reflects division of passenger revenue between scheduled service and air-related charges in Company's booking path.
Allegiant Travel Company Consolidated Statements of Income (in thousands, except per share amounts) (Unaudited)
Six Months Ended June 30,
Percent
2018
2017
change
OPERATING REVENUE:
Passenger Revenue (1)
$
802,343
$
715,086
12.2
Third party products
28,124
27,046
4.0
Fixed fee contract revenue
18,209
22,289
(18.3
)
Other revenue
13,548
17,434
(22.3
)
Total operating revenue
862,224
781,855
10.3
OPERATING EXPENSES:
Aircraft fuel
228,481
170,049
34.4
Salary and benefits
214,608
188,519
13.8
Station operations
79,137
70,830
11.7
Maintenance and repairs
43,881
58,740
(25.3
)
Depreciation and amortization
57,983
60,678
(4.4
)
Sales and marketing
37,426
26,822
39.5
Aircraft lease rentals
96
2,564
(96.3
)
Other
46,422
44,129
5.2
Total operating expense
708,034
622,331
13.8
OPERATING INCOME
154,190
159,524
(3.3
)
OTHER (INCOME) EXPENSE:
Interest expense
25,880
17,291
49.7
Interest income
(3,834
)
(2,739
)
40.0
Other, net
(290
)
(854
)
(66.0
)
Total other expense
21,756
13,698
58.8
INCOME BEFORE INCOME TAXES
132,434
145,826
(9.2
)
PROVISION FOR INCOME TAXES
27,225
54,437
(50.0
)
NET INCOME
105,209
91,389
15.1
Earnings per share to common shareholders (2):
Basic
$6.53
$5.52
18.3
Diluted
$6.52
$5.51
18.3
Weighted average shares outstanding used in computing earnings per share to common shareholders (2):
Basic
15,898
16,290
(2.4
)
Diluted
15,914
16,317
(2.5
)
(1) Passenger revenue previously reported as Scheduled service revenue and Ancillary air-related 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)
Six Months Ended June 30,
Percent
2018
2017
change (1)
OPERATING STATISTICS
Total system statistics:
Passengers
7,007,064
6,187,441
13.2
Revenue passenger miles (RPMs) (thousands)
6,371,403
5,667,306
12.4
Available seat miles (ASMs) (thousands)
7,650,857
6,961,046
9.9
Load factor
83.3
%
81.4
%
1.9
Operating expense per ASM (CASM) (cents)
9.25
8.94
3.5
Fuel expense per ASM (cents)
2.99
2.44
22.5
Operating CASM, excluding fuel (cents)
6.26
6.50
(3.7
)
ASMs per gallon of fuel
76.4
72.0
6.1
Departures
51,311
47,016
9.1
Block hours
118,510
109,249
8.5
Average stage length (miles)
883
883
—
Average number of operating aircraft during period
90.8
85.0
6.8
Average block hours per aircraft per day
7.2
7.1
1.4
Full-time equivalent employees at end of period
3,840
3,628
5.8
Fuel gallons consumed (thousands)
100,156
96,708
3.6
Average fuel cost per gallon
$
2.28
$
1.76
29.5
Scheduled service statistics:
Passengers
6,961,312
6,112,269
13.9
Revenue passenger miles (RPMs) (thousands)
6,310,393
5,565,191
13.4
Available seat miles (ASMs) (thousands)
7,397,830
6,674,035
10.8
Load factor
85.3
%
83.4
%
1.9
Departures
49,256
44,857
9.8
Block hours
114,224
104,507
9.3
Total scheduled service revenue per ASM (TRASM) (cents) (2)
11.23
11.12
1.0
Average fare - scheduled service (3)
$
68.95
$
71.33
(3.3
)
Average fare - air-related charges (3)
$
46.31
$
45.67
1.4
Average fare - third party products
$
4.04
$
4.42
(8.6
)
Average fare - total
$
119.30
$
121.42
(1.7
)
Average stage length (miles)
889
887
0.2
Fuel gallons consumed (thousands)
96,542
92,713
4.1
Average fuel cost per gallon
$
2.27
$
1.75
29.7
Percent of sales through website during period
93.9
%
94.2
%
(0.3
)
(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 of revenue in accordance with revenue recognition accounting rules adopted by us as of January 1, 2018. (3) Reflects division of passenger revenue between scheduled service and air-related charges in Company's booking path.
Summary Balance Sheet
(millions)
6/30/2018
12/31/2017
Change
(unaudited)
Unrestricted cash
Cash and cash equivalents
$
29.0
$
59.4
(51.2)
%
Short-term investments
343.2
352.7
(2.7)
Long-term investments
56.4
78.6
(28.2)
Total unrestricted cash and investments
428.6
490.7
(12.7)
Debt
Current maturities of long-term debt and capital lease obligations, net of related costs
144.4
214.8
(32.8)
Long-term debt and capital lease obligations, net of current maturities and related costs
992.3
950.1
4.4
Total debt
1,136.7
1,164.9
(2.4)
Total Allegiant Travel Company shareholders' equity
$
644.7
$
553.3
16.5
%
Summary Cash Flow
Six Months Ended June 30,
Unaudited (millions)
2018
2017
Change
Cash provided by operating activities
$
283.2
$
262.9
7.7
%
Purchase of property and equipment, including capitalized interest*
187.5
182.3
2.9
Repurchase of common stock
3.0
84.9
(96.5
)
Cash dividends paid to shareholders
22.6
23.2
(2.6
)
Proceeds from the issuance of long-term debt
10.8
134.5
(92.0
)
Principal payments on long-term debt & capital lease obligations
$
142.4
$
64.9
119.4
%
* 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 June 30,
Six Months Ended June 30,
2018
2017
2018
2017
Basic:
Net income
$
50,016
$
49,038
$
105,209
$
91,389
Less net income allocated to participating securities
(659
)
(789
)
(1,427
)
(1,482
)
Net income attributable to common stock
$
49,357
$
48,249
$
103,782
$
89,907
Earnings per share, basic
$
3.10
$
2.98
$
6.53
$
5.52
Weighted-average shares outstanding
15,939
16,198
15,898
16,290
Diluted:
Net income
$
50,016
$
49,038
$
105,209
$
91,389
Less net income allocated to participating securities
(658
)
(789
)
(1,425
)
(1,480
)
Net income attributable to common stock
$
49,358
$
48,249
$
103,784
$
89,909
Earnings per share, diluted
$
3.10
$
2.97
$
6.52
$
5.51
Weighted-average shares outstanding
15,939
16,198
15,898
16,290
Dilutive effect of stock options and restricted stock
44
71
63
92
Adjusted weighted-average shares outstanding under treasury stock method
15,983
16,269
15,961
16,382
Participating securities excluded under two-class method
(38
)
(49
)
(47
)
(65
)
Adjusted weighted-average shares outstanding under two-class method
