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CST: 25/05/2019 20:36:38   

Allegiant Travel Company Fourth Quarter and Full Year 2018 Financial results

115 Days ago

Fourth quarter 2018 Fully Diluted Earnings per Share of $2.56 
Full year 2018 Fully Diluted Earnings per Share of $10.00 
64th consecutive profitable quarter

LAS VEGAS, Jan. 30, 2019 (GLOBE NEWSWIRE) -- Allegiant Travel Company (NASDAQ: ALGT) today reported the following financial results for the fourth quarter and full year 2018, as well as comparisons to the prior year:

  Three Months Ended
 December 31,
    Twelve Months Ended
 December 31,
 
Unaudited 2018 2017 Change   2018 2017 Change
Total operating revenue (millions) $ 412.1   $ 379.2   8.7 %   $ 1,667.4   $ 1,511.2   10.3 %
Operating income (millions) 63.1   26.8   135.7     243.5   230.6   5.6  
Net income (millions) 41.4   83.4   (50.4 )   161.8   198.1   (18.3 )
Diluted earnings per share $ 2.56   $ 5.18   (50.6 )   $ 10.00   $ 12.13   (17.6 )

"I’m happy to report we had our 64th consecutive profitable quarter," stated Maurice J. Gallagher, Jr., chairman and CEO of Allegiant Travel Company. "The past 18 to 24 months have been challenging as we pushed through a successful onetime changeover to an all Airbus fleet. This was a major undertaking by our team. During this period we sustained a number of one-time transition costs but still maintained among industry leading operating margins on our airline activity of 15.3 percent despite a 27 percent increase in the cost per gallon of fuel in 2018.

"And these returns were accomplished despite the added challenges of our fleet transition years. I couldn’t be more pleased with where we find ourselves today as we look forward to 2019 and beyond. We are also pleased with our EPS-based reporting approach which we started in 2018. You will see our estimates for 2019 below.

"Finally, my hat is off to our team. They not only rose up to the logistical challenge of the fleet changeover during the past 18 months, but at the same time continued to elevate our operational performance and customer service standards across the board."

Highlights

  • Currently 431 routes 
       o Nearly 75 percent no competition - 90 percent of new 2018 routes no competition
       o Have identified an additional 600 routes for possible growth
  • 2019 expect higher EBITDA 
       o Revenue improvement from higher number of incremental seats
       o Greater efficiencies in labor and fuel consumption
       o Higher aircraft reliability will enable more flights during peak days
       o Higher number of charter opportunities versus the MD-80 
  • 2018 improvement in operations
       o Controllable completion - 99.7 percent, among best in industry
       o Improved operations - over $10 million in cost savings
       o On time arrival 77 percent, up nearly four percentage points over 2017 
  • Co-brand credit card 
       o Active accounts increased by approximately 60 percent versus 2017
       o Signed marketing agreement with Minor League Baseball participating clubs 
  • 2019 high yield bond refinancing 
       o $450 million term loan
       o Five year duration
       o Expected to close in early February

Shareholder returns

  • 2018 shareholder returns
       o Returned $45 million in dividends in 2018
       o Will pay dividends of $0.70 per share on March 14, 2019 to shareholders of record as of March 1, 2019
       o $100 million in share repurchase authority

2019 outlook

  • Aircraft
       o Expect to add seventeen Airbus aircraft by the end of the year
       o Have now terminated forward capital leases for eight aircraft due to extensive delivery delays
  • Scheduled and system ASM growth
       o First quarter expected to grow between four and six percent vs last year
       o Expect first quarter ASM growth to be the lowest of the year
       o Expect second quarter ASM growth to be the highest of the year due to later Easter
  • Sunseeker Resort financing
       o Expect $175 million of the estimated $420 million Sunseeker Resort construction cost
       o Provided by a well-known institutional asset manager
       o 2/3 of the loan is expected to be non-recourse to Allegiant Travel Company
       o Expect financing to close by the end of the first quarter 2019


Guidance, subject to revision    
     
Full year 2019 guidance     Current
Fuel cost per gallon     $2.10
Available seat miles (ASMs) / gallon     80.0 to 82.0
       
Interest expense (millions)     $70 to $80
Tax rate     24 to 25%
Share count (millions)       15.9
Earnings per share     $13.25 to $14.75
       
System ASMs - year over year change     7 to 9%
Scheduled service ASMs - year over year change     7 to 9%
       
Depreciation expense (millions)     $150 to $160
Airline operating CASM excluding fuel - year over year change     (3.5) to (1.5)%
Non airline operating income (millions)     ($17) to ($12)
       
Airline CAPEX - full year 2019      
Capital expenditures (millions)     $425 to 435
Capitalized Airbus deferred heavy maintenance (millions) *     $95 to 115
       
Sunseeker CAPEX      
Project to date (millions)     $51
Expected 2019 spend (millions)     $250 to 300
Total project spend remaining **     $420
       
Other CAPEX - full year 2019***      
Capital expenditures (millions)     $15 to 20

* - Not included in capital expenditure total
** - Of the total remaining capex, expect to receive $175m in third party financing as the last funds in the project, of which 2/3 is expected to be non-recourse to Allegiant Travel Company
*** - Includes G4 Complete Entertainment and TeeSnap


Aircraft fleet plan by end of period          
           
Aircraft - (seats per AC) YE18   1Q19   2Q19   3Q19   YE19  
A319 (156 seats) 32   37   37   38   38  
A320 (177/186 seats) 44   46   51   53   55  
Total 76   83   88   91   93  

Aircraft listed in table above include only in-service aircraft and future aircraft under contract (subject to change)

Non-airline business

For greater transparency around the non-airline portion of the business, we are providing what we believe is a better measure of controllable airline costs that excludes costs driven by non-airline entities as well as their revenue contribution.

Airline-only CASM, excluding fuel and write down Twelve Months Ended December 31,    
  2018   2017   Change
CASM (cents) 9.56     9.41     1.6 %
Adjusted for:          
  Aircraft fuel (2.99 )   (2.52 )   18.7  
  Write down of MD-80 fleet     (0.26 )   (100.0 )
  Non-airline (0.13 )   (0.07 )   85.7  
Airline-only CASM, excluding fuel and write down
6.44     6.56     (1.8 )%

Note: CASM is defined as operating expense per available seat mile.

       
Airline-only operating margin, excluding write down (millions) Twelve Months Ended December 31,    
  2018   2017   Change**
Total company operating income (GAAP) $ 243.5     $ 230.6     5.6  
Adjusted for:          
  Write down of MD-80 fleet     35.3     (100.0 )
  Non-airline operating loss 10.4     5.7     82.5  
Airline-only operating income* $ 253.9     $ 271.6     (6.5 )
           
Total company revenue (GAAP) $ 1,667.4     $ 1,511.2     10.3  
Adjusted for:          
  Non-airline revenue (8.3 )   (4.1 )   102.4  
Airline-only revenue* $ 1,659.1     $ 1,507.1     10.1  
           
Airline-only operating margin* 15.3 %   18.0 %   (2.7 )

*Denotes non-GAAP figure. We are adjusting for non-airline activities in order to allow investors to better understand and analyze our principal operating performance for the periods shown.
**Except airline-only operating margin, which is percentage point change.

Components of non-airline

  • Teesnap - golf course management solution
       o Currently manage over 590 golf courses
       o Expect to manage over 800 golf courses in 2019
  • G4 Complete Entertainment - family entertainment centers
       o Expect to have two stores open in the first half of 2019
  • Sunseeker Resorts - operating costs for Sunseeker Resort development as well as Kingsway golf course
       o Golf course acquired in 2018
       o Resort expected to be open in 2020
             ♦ Expect to include 500 hotel rooms, 189 long stay suites, restaurants, bars and other amenities

Allegiant Travel Company will host a conference call with analysts at 4:30 p.m. ET Wednesday, January 30, 2019 to discuss its fourth quarter and full year 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 75 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

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, expected capital expenditures, number of contracted aircraft to be placed in service in the future, future expansion of our Teesnap and family entertainment center businesses, the development and financing of our Sunseeker Resort, 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 after our 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 finance and successfully develop and finance a resort 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
    2018     2017   change
OPERATING REVENUE:          
Passenger revenue (1) $ 376,258     $ 341,644     10.1  
Third party products   14,015       13,313     5.3  
Fixed fee contract revenue   17,285       14,588     18.5  
Other revenue   4,556       9,609     (52.6 )
Total operating revenue   412,114       379,154     8.7  
OPERATING EXPENSES:          
Aircraft fuel   103,808       92,863     11.8  
Salary and benefits   101,578       94,291     7.7  
Station operations   38,754       34,602     12.0  
Maintenance and repairs   23,151       25,870     (10.5 )
Depreciation and amortization   36,710       29,142     26.0  
Sales and marketing   19,290       15,967     20.8  
Aircraft lease rentals   101           NM  
Other   25,634       24,402     5.0  
Special charge         35,253     NM  
Total operating expense   349,026       352,390     (1.0 )
OPERATING INCOME   63,088       26,764     135.7  
OTHER (INCOME) EXPENSE:          
Interest expense   13,574       11,659     16.4  
Interest income   (2,967 )     (1,616 )   83.6  
Other, net   12       (305 )   (103.9 )
Total other expense   10,619       9,738     9.0  
INCOME BEFORE INCOME TAXES   52,469       17,026     208.2  
PROVISION FOR INCOME TAXES   11,022       (66,350 )   (116.6 )
NET INCOME $ 41,447     $ 83,376     (50.3 )
Earnings per share to common shareholders (2):          
Basic $ 2.56     $ 5.18     (50.6 )
Diluted $ 2.56     $ 5.18     (50.6 )
Weighted average shares outstanding used in computing earnings per share to common shareholders (2):          
Basic   15,976       15,868     0.7  
Diluted   15,989       15,879     0.7  

NM - Not meaningful
(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 December 31,   Percent
  2018   2017   change (1)
OPERATING STATISTICS          
Total system statistics:          
Passengers 3,239,286     3,077,039     5.3  
Revenue passenger miles (RPMs) (thousands) 2,898,303     2,766,503     4.8  
Available seat miles (ASMs) (thousands) 3,605,069     3,430,711     5.1  
Load factor 80.4 %   80.6 %   (0.2 )
Operating expense per ASM (CASM) (cents) 9.68     10.27     (5.7 )
Fuel expense per ASM (cents) 2.88     2.71     6.3  
Operating CASM, excluding fuel (cents) 6.80     7.56     (10.1 )
ASMs per gallon of fuel 81.4     75.4     8.0  
Departures 24,300     23,322     4.2  
Block hours 55,285     53,224     3.9  
Average stage length (miles) 866     872     (0.7 )
Average number of operating aircraft during period 86.6     89.3     (3.0 )
Average block hours per aircraft per day 6.9     6.5     6.2  
Full-time equivalent employees at end of period 3,901     3,752     4.0  
Fuel gallons consumed (thousands) 44,299     45,509     (2.7 )
Average fuel cost per gallon $ 2.34     $ 2.04     14.7  
Scheduled service statistics:          
Passengers 3,183,524     3,027,401     5.2  
Revenue passenger miles (RPMs) (thousands) 2,846,246     2,717,524     4.7  
Available seat miles (ASMs) (thousands) 3,457,044     3,284,429     5.3  
Load factor 82.3 %   82.7 %   (0.4 )
Departures 23,017     22,077     4.3  
Block hours 52,814     50,764     4.0  
Total passenger revenue per ASM (TRASM) (cents) (2) 11.29     10.81     4.4  
Average fare - scheduled service (3) $ 71.23     $ 66.96     6.4  
Average fare - air-related charges (3) $ 46.96     $ 45.89     2.3  
Average fare - third party products $ 4.40     $ 4.40      
Average fare - total $ 122.59     $ 117.25     4.6  
Average stage length (miles) 877     881     (0.5 )
Fuel gallons consumed (thousands) 42,346     43,392     (2.4 )
Average fuel cost per gallon $ 2.33     $ 2.02     15.3  
Percent of sales through website during period 93.8 %   93.9 %   (0.1 )

(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)

  Twelve Months Ended December 31,   Percent
    2018     2017   change
OPERATING REVENUE:          
Passenger Revenue (1) $ 1,533,701     $ 1,372,037     11.8  
Third party products   58,060       52,707     10.2  
Fixed fee contract revenue   50,286       48,708     3.2  
Other revenue   25,400       37,751     (32.7 )
Total operating revenue   1,667,447       1,511,203     10.3  
OPERATING EXPENSES:          
Aircraft fuel   445,814       343,333     29.8  
Salary and benefits   413,892       371,599     11.4  
Station operations   161,019       142,581     12.9  
Maintenance and repairs   99,015       113,481     (12.7 )
Depreciation and amortization   129,351       121,713     6.3  
Sales and marketing   73,514       56,675     29.7  
Aircraft lease rentals   868       3,098     (72.0 )
Other   100,515       92,840     8.3  
Special charge         35,253     NM  
Total operating expense   1,423,988       1,280,573     11.2  
OPERATING INCOME   243,459       230,630     5.6  
OTHER (INCOME) EXPENSE:          
Interest expense   53,762       38,990     37.9  
Interest income   (9,226 )     (5,808 )   58.8  
Other, net   (395 )     (1,559 )   (74.7 )
Total other expense   44,141       31,623     39.6  
INCOME BEFORE INCOME TAXES   199,318       199,007     0.2  
PROVISION FOR INCOME TAXES   37,516       859     NM  
NET INCOME $ 161,802     $ 198,148     (18.3 )
Earnings per share to common shareholders (2):          
Basic $ 10.02     $ 12.14     (17.5 )
Diluted $ 10.00     $ 12.13     (17.6 )
Weighted average shares outstanding used in computing earnings per share to common shareholders (2):          
Basic   15,941       16,073     (0.8 )
Diluted   15,967       16,095     (0.8 )

NM - Not meaningful
(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)

  Twelve Months Ended December 31,   Percent
  2018   2017   change (1)
OPERATING STATISTICS          
Total system statistics:          
Passengers 13,750,199     12,310,122     11.7  
Revenue passenger miles (RPMs) (thousands) 12,307,247     11,106,772     10.8  
Available seat miles (ASMs) (thousands) 14,899,874     13,612,003     9.5  
Load factor 82.6 %   81.6 %   1.0  
Operating expense per ASM (CASM) (cents) 9.56     9.41     1.6  
Fuel expense per ASM (cents) 2.99     2.52     18.7  
Operating CASM, excluding fuel (cents) 6.57     6.89     (4.6 )
ASMs per gallon of fuel 77.8     73.0     6.6  
Departures 101,212     93,061     8.8  
Block hours 230,123     212,405     8.3  
Average stage length (miles) 868     870     (0.2 )
Average number of operating aircraft during period 91.0     87.3     4.2  
Average block hours per aircraft per day 6.9     6.7     3.0  
Full-time equivalent employees at end of period 3,901     3,752     4.0  
Fuel gallons consumed (thousands) 191,471     186,563     2.6  
Average fuel cost per gallon $ 2.33     $ 1.84     26.6  
Scheduled service statistics:          
Passengers 13,606,103     12,138,146     12.1  
Revenue passenger miles (RPMs) (thousands) 12,145,601     10,901,161     11.4  
Available seat miles (ASMs) (thousands) 14,340,674     13,031,824     10.0  
Load factor 84.7 %   83.7 %   1.0  
Departures 96,554     88,432     9.2  
Block hours 220,760     202,752     8.9  
Total passenger revenue per ASM (TRASM) (cents) (2) 11.10     10.93     1.6  
Average fare - scheduled service (3) $ 67.01     $ 67.90     (1.3 )
Average fare - air-related charges (3) $ 45.71     $ 45.14     1.3  
Average fare - third party products $ 4.27     $ 4.34     (1.6 )
Average fare - total $ 116.99     $ 117.38     (0.3 )
Average stage length (miles) 875     876     (0.1 )
Fuel gallons consumed (thousands) 183,798     178,298     3.1  
Average fuel cost per gallon $ 2.32     $ 1.83     26.8  
Percent of sales through website during period 93.8 %   94.0 %   (0.2 )

(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.


Summary Balance Sheet

(millions) 12/31/2018   12/31/2017   Change
  (unaudited)        
Unrestricted cash          
Cash and cash equivalents $ 81.5     $ 59.4     37.2 %
Short-term investments 314.5     352.7     (10.8 )
Long-term investments 51.5     78.6     (34.5 )
Total unrestricted cash and investments 447.5     490.7     (8.8 )
Debt          
Current maturities of long-term debt and capital lease obligations, net of related costs 580.3     214.8     170.2  
Long-term debt and capital lease obligations, net of current maturities and related costs 691.4     950.1     (27.2 )
Total debt 1,271.7     1,164.9     9.2  
Total Allegiant Travel Company shareholders’ equity $ 690.3     $ 553.3     24.8 %

Summary Cash Flow

  Twelve Months Ended December 31,    
Unaudited (millions) 2018   2017   Change
Cash provided by operating activities $ 356.5     $ 390.7     (8.8 )%
Purchase of property and equipment, including capitalized interest 334.8     580.2     (42.3 )
Repurchase of common stock 3.7     90.5     (95.9 )
Cash dividends paid to shareholders 45.2     45.7     (1.1 )
Proceeds from the issuance of long-term debt 211.2     497.5     (57.5 )
Principal payments on long-term debt & capital lease obligations $ 232.2     $ 138.9     67.2 %

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
December 31,
  Twelve Months Ended
December 31,
  2018   2017   2018   2017
Basic:              
Net income $ 41,447     $ 83,376     $ 161,802     $ 198,148  
Less net income allocated to participating securities (504 )   (1,102 )   (2,106 )   (2,965 )
Net income attributable to common stock $ 40,943     $ 82,274     $ 159,696     $ 195,183  
Earnings per share, basic $ 2.56     $ 5.18     $ 10.02     $ 12.14  
Weighted-average shares outstanding 15,976     15,868     15,941     16,073  
Diluted:              
Net income $ 41,447     $ 83,376     $ 161,802     $ 198,148  
Less net income allocated to participating securities (503 )   (1,102 )   (2,104 )   (2,962 )
Net income attributable to common stock $ 40,944     $ 82,274     $ 159,698     $ 195,186  
Earnings per share, diluted $ 2.56     $ 5.18     $ 10.00     $ 12.13  
Weighted-average shares outstanding 15,976     15,868     15,941     16,073  
Dilutive effect of stock options and restricted stock 29     60     53     74  
Adjusted weighted-average shares outstanding under treasury stock method 16,005     15,928     15,994     16,147  
Participating securities excluded under two-class method (16 )   (49 )   (27 )   (52 )
Adjusted weighted-average shares outstanding under two-class method 15,989     15,879     15,967     16,095  

Non-GAAP Presentation

Airline-only operating income excluding write down, airline-only revenue and airline-only operating margin excluding write down all eliminate non-airline revenue and expenses, and the effect of the non-cash impairment charge for the accelerated retirement of the MD-80 fleet in 2017, which are not reflective of our principal operating performance. As such, all of these are non-GAAP financial measures.

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 and total revenue. Our utilization of non-GAAP measurements is not meant to be considered in isolation or as a substitute for operating income or other measures of financial performance prepared in accordance with GAAP. Neither operating income, total revenue, or operating margin less non-airline items and write down 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. 

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