Nevada | 001-33166 | 20-4745737 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
1201 N. Town Center Drive, Las Vegas, NV | 89144 | |
(Address of principal executive offices) | (Zip Code) |
Exhibit No. | Description of Document |
Date: October 25, 2017 | ALLEGIANT TRAVEL COMPANY | ||
By: | /s/ Scott Sheldon | ||
Name: | Scott Sheldon | ||
Title: | Chief Financial Officer |
Exhibit No. | Description of Document |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
Unaudited | 2017 | 2016 | Change | 2017 | 2016 | Change | |||||||||||
Total operating revenue (millions) | $348.8 | $333.5 | 4.6 | % | $1,125.2 | $1,026.9 | 9.6 | % | |||||||||
Operating income (millions) | $42.9 | $76.8 | (44.1 | )% | $201.0 | $302.4 | (33.5 | )% | |||||||||
Net income (millions) | $22.3 | $45.5 | (51.0 | )% | $112.4 | $178.3 | (37.0 | )% | |||||||||
Diluted earnings per share | $1.39 | $2.75 | (49.5 | )% | $6.85 | $10.73 | (36.2 | )% | |||||||||
Return on capital employed* | 14.7 | % | 24.8 | % |
• | Operational improvements - 61 percent reduction in controllable cancellations in the quarter |
• | Airbus growth - Added five A320s and one A319 into revenue service during the quarter |
• | MD-80 retirements - Retired five MD-80s during the quarter - remainder expected to be retired by the end of 2018 |
◦ | MD-80s and related assets have a net book value of $42 million and are being reviewed for impairment |
• | Sunseeker Resorts - In August, announced plans to develop a hotel/condo resort in Charlotte County, Florida |
• | Network growth - As of September 30, 2017 the company is operating 373 routes versus 337 last year |
• | New aircraft base - Announced Indianapolis, Indiana as an aircraft base to support the growth in that area |
• | Shareholder returns - $11 million was returned through its recurring dividend paid in September 2017. The company: |
◦ | Will pay dividend of $0.70/share on December 5, 2017 to shareholders of record as of November 22, 2017 |
◦ | Has share repurchase authorization of up to $100 million |
• | TRASM results - Third quarter TRASM increased 0.7 percent in spite of: |
◦ | Increased MD-80 spares during the quarter which resulted in a three percent decline in peak period capacity |
◦ | Hurricane Irma: |
▪ | Approximately two percent of scheduled ASMs for the quarter were canceled |
▪ | TRASM - Expected benefit from reduced ASMs - offset by refunds and decreased demand to Florida |
• | TRASM guidance - Expect a decline between three and 0.5 percent which is influenced by: |
◦ | Hurricane Irma and the Las Vegas mass shooting |
▪ | Approximately 80 percent of fourth quarter ASMs touch Las Vegas or Florida |
▪ | So far a decrease in demand during fourth quarter |
▪ | Impact on fourth quarter TRASM expected to be approximately between 3 and 3.5 percentage points |
◦ | Peak period flying - Fourth quarter peak capacity expected to increase nine percentage points |
• | Third quarter CASM ex fuel increased 16.7 percent versus the same period last year, primarily driven by: |
◦ | Transition costs added four percentage points to increase, including: |
▪ | Reduced ASMs from fleet transition through lower utilization of MD-80s |
▪ | Other operational inefficiencies driven by the transition to an all Airbus fleet |
◦ | New pilot agreement - Added one percentage point |
◦ | Incremental depreciation from additional Airbus aircraft - Added three percentage points |
◦ | Elimination of the credit card surcharge product |
▪ | January 2017 discontinued credit card surcharge which had offset sales and marketing expense |
▪ | Added four percentage points in quarter |
◦ | Hurricane Irma - Added almost two percentage points due to flight cancellations |
• | Fourth quarter 2017 CASM ex fuel is expected to increase between seven and nine percent, primarily driven by: |
◦ | Transition costs - Expected to add three percentage points to increase, including: |
▪ | Reduced ASMs from fleet transition through lower utilization of MD-80s |
▪ | Other operational inefficiencies driven by the transition to an all Airbus fleet |
◦ | New pilot agreement - Expected to add one percentage point due to increased benefit costs |
◦ | Incremental depreciation on additional Airbus aircraft - Expected to add two percentage points |
◦ | Elimination of credit card surcharge - Expected to add three percentage points |
• | Full year 2017 CASM ex fuel |
◦ | Expected to increase between eleven and twelve percent |
◦ | Previously guided range of plus ten to twelve percent |
• | Maintenance and repairs expense |
◦ | Expected between $105 and $110 thousand per in-service aircraft per month for 2017 |
◦ | Previously guided range - between $100 and $110 thousand |
• | Total ownership expense per aircraft per month |
◦ | 2017 ownership expense per in-service aircraft - between $125 and $130 thousand per month |
◦ | Previously guided range between $125 and $135 thousand |
• | Full year CAPEX guidance is expected to be $604 million, versus prior guidance of $525 million |
◦ | Higher amount driven by expected commitment for five additional Airbus A320 in the fourth quarter |
◦ | Excludes Airbus heavy maintenance and Sunseeker resort |
• | Raised $158 million in debt proceeds during the third quarter |
◦ | Includes monies drawn from existing $56 million revolving credit facility |
◦ | Seven Airbus aircraft remain unencumbered at end of third quarter |
▪ | Includes one new A320 which was collateralized in October |
Guidance, subject to revision | |||
4Q17 | |||
Estimated TRASM year-over-year change | (3.0) to (0.5)% | ||
Fixed fee and other revenue guidance | 4Q17 | ||
Fixed fee and other revenue (millions) | $19 to $21 | ||
Capacity guidance | |||
System | 4Q17 | 1Q18 | FY17 |
Departure year-over-year growth | 7 to 11% | 8 to 12% | |
ASM year-over-year growth | 9 to 13% | 10 to 14% | 9 to 10% |
Scheduled | |||
Departure year-over-year growth | 7 to 11% | 8 to 12% | |
ASM year-over-year growth | 9 to 13% | 10 to 14% | 9 to 10% |
Cost guidance | 4Q17 | FY17 | |
CASM ex fuel* – year-over-year change | 7 to 9% | 11 to 12% | |
CAPEX guidance | FY17 | ||
Capital expenditures (millions) | $604 | ||
Capitalized Airbus deferred heavy maintenance (millions) ** | $35 | ||
Sunseeker resorts ** | $35 |
Aircraft fleet plan by end of period | |||||||||||||
Aircraft - (seats per AC) | 3Q17 | YE17 | 1Q18 | 2Q18 | 3Q18 | YE18 | |||||||
MD-80 (166 seats) | 40 | 37 | 35 | 29 | 20 | — | |||||||
757 (215 seats) | 2 | — | — | — | — | — | |||||||
A319 (156 seats) | 21 | 22 | 25 | 31 | 31 | 32 | |||||||
A320 (177/186 seats) | 26 | 29 | 34 | 42 | 45 | 50 | |||||||
Total | 89 | 88 | 94 | 102 | 96 | 82 |
Three Months Ended September 30, | Percent | |||||||||
2017 | 2016 | change | ||||||||
OPERATING REVENUE: | ||||||||||
Scheduled service revenue | $ | 183,064 | $ | 177,361 | 3.2 | |||||
Ancillary revenue: | ||||||||||
Air-related charges | 130,818 | 127,301 | 2.8 | |||||||
Third party products | 12,348 | 11,259 | 9.7 | |||||||
Total ancillary revenue | 143,166 | 138,560 | 3.3 | |||||||
Fixed fee contract revenue | 11,831 | 9,183 | 28.8 | |||||||
Other revenue | 10,708 | 8,377 | 27.8 | |||||||
Total operating revenue | 348,769 | 333,481 | 4.6 | |||||||
OPERATING EXPENSES: | ||||||||||
Aircraft fuel | 80,421 | 69,305 | 16.0 | |||||||
Salary and benefits | 88,788 | 73,424 | 20.9 | |||||||
Station operations | 37,148 | 32,252 | 15.2 | |||||||
Maintenance and repairs | 28,870 | 26,263 | 9.9 | |||||||
Depreciation and amortization | 31,894 | 25,881 | 23.2 | |||||||
Sales and marketing | 13,884 | 5,650 | 145.7 | |||||||
Aircraft lease rentals | 533 | 472 | 12.9 | |||||||
Other | 24,315 | 23,394 | 3.9 | |||||||
Total operating expense | 305,853 | 256,641 | 19.2 | |||||||
OPERATING INCOME | 42,916 | 76,840 | (44.1 | ) | ||||||
OTHER (INCOME) EXPENSE: | ||||||||||
Interest income | (1,454 | ) | (781 | ) | 86.2 | |||||
Interest expense | 10,041 | 6,938 | 44.7 | |||||||
Other, net | (400 | ) | (308 | ) | 29.9 | |||||
Total other (income) expense | 8,187 | 5,849 | 40.0 | |||||||
INCOME BEFORE INCOME TAXES | 34,729 | 70,991 | (51.1 | ) | ||||||
PROVISION FOR INCOME TAXES | 12,436 | 25,538 | (51.3 | ) | ||||||
NET INCOME | $ | 22,293 | $ | 45,453 | (51.0 | ) | ||||
Earnings per share to common shareholders (1): | ||||||||||
Basic | $1.39 | $2.76 | (49.6 | ) | ||||||
Diluted | $1.39 | $2.75 | (49.5 | ) | ||||||
Weighted average shares outstanding used in computing earnings per share to common shareholders (1): | ||||||||||
Basic | 15,852 | 16,389 | (3.3 | ) | ||||||
Diluted | 15,862 | 16,406 | (3.3 | ) |
Three Months Ended September 30, | Percent | |||||||||
2017 | 2016 | change* | ||||||||
OPERATING STATISTICS | ||||||||||
Total system statistics: | ||||||||||
Passengers | 3,045,642 | 2,939,055 | 3.6 | |||||||
Revenue passenger miles (RPMs) (thousands) | 2,672,963 | 2,645,533 | 1.0 | |||||||
Available seat miles (ASMs) (thousands) | 3,220,246 | 3,121,762 | 3.2 | |||||||
Load factor | 83.0 | % | 84.7 | % | (1.7 | ) | ||||
Operating expense per ASM (CASM) (cents) | 9.50 | 8.22 | 15.6 | |||||||
Fuel expense per ASM (cents) | 2.50 | 2.22 | 12.6 | |||||||
Operating CASM, excluding fuel (cents) | 7.00 | 6.00 | 16.7 | |||||||
ASMs per gallon of fuel | 72.6 | 70.6 | 2.8 | |||||||
Departures | 22,723 | 21,384 | 6.3 | |||||||
Block hours | 49,932 | 47,739 | 4.6 | |||||||
Average stage length (miles) | 842 | 864 | (2.5 | ) | ||||||
Average number of operating aircraft during period | 89.7 | 84.0 | 6.8 | |||||||
Average block hours per aircraft per day | 6.1 | 6.2 | (1.6 | ) | ||||||
Full-time equivalent employees at end of period | 3,704 | 3,287 | 12.7 | |||||||
Fuel gallons consumed (thousands) | 44,346 | 44,187 | 0.4 | |||||||
Average fuel cost per gallon | $ | 1.81 | $ | 1.57 | 15.3 | |||||
Scheduled service statistics: | ||||||||||
Passengers | 2,998,476 | 2,904,295 | 3.2 | |||||||
Revenue passenger miles (RPMs) (thousands) | 2,618,446 | 2,603,849 | 0.6 | |||||||
Available seat miles (ASMs) (thousands) | 3,073,360 | 2,997,529 | 2.5 | |||||||
Load factor | 85.2 | % | 86.9 | % | (1.7 | ) | ||||
Departures | 21,498 | 20,398 | 5.4 | |||||||
Block hours | 47,481 | 45,740 | 3.8 | |||||||
Total scheduled service revenue per ASM (TRASM) (cents)** | 10.61 | 10.54 | 0.7 | |||||||
Average fare - scheduled service | $ | 61.05 | $ | 61.07 | — | |||||
Average fare - ancillary air-related charges | $ | 43.63 | $ | 43.83 | (0.5 | ) | ||||
Average fare - ancillary third party products | $ | 4.12 | $ | 3.88 | 6.2 | |||||
Average fare - total | $ | 108.80 | $ | 108.78 | — | |||||
Average stage length (miles) | 849 | 869 | (2.3 | ) | ||||||
Fuel gallons consumed (thousands) | 42,193 | 42,439 | (0.6 | ) | ||||||
Average fuel cost per gallon | $ | 1.80 | $ | 1.59 | 13.2 | |||||
Percent of sales through website during period | 93.3 | % | 94.6 | % | (1.3 | ) |
Nine Months Ended September 30, | Percent | |||||||||
2017 | 2016 | change | ||||||||
OPERATING REVENUE: | ||||||||||
Scheduled service revenue | $ | 615,777 | $ | 568,089 | 8.4 | |||||
Ancillary revenue: | ||||||||||
Air-related charges | 407,789 | 376,944 | 8.2 | |||||||
Third party products | 39,394 | 34,482 | 14.2 | |||||||
Total ancillary revenue | 447,183 | 411,426 | 8.7 | |||||||
Fixed fee contract revenue | 34,120 | 22,690 | 50.4 | |||||||
Other revenue | 28,140 | 24,743 | 13.7 | |||||||
Total operating revenue | 1,125,220 | 1,026,948 | 9.6 | |||||||
OPERATING EXPENSES: | ||||||||||
Aircraft fuel | 250,470 | 182,969 | 36.9 | |||||||
Salary and benefits | 277,307 | 211,185 | 31.3 | |||||||
Station operations | 107,979 | 96,313 | 12.1 | |||||||
Maintenance and repairs | 87,611 | 82,016 | 6.8 | |||||||
Depreciation and amortization | 92,571 | 75,962 | 21.9 | |||||||
Sales and marketing | 36,744 | 16,774 | 119.1 | |||||||
Aircraft lease rentals | 3,098 | 924 | 235.3 | |||||||
Other | 68,440 | 58,363 | 17.3 | |||||||
Total operating expense | 924,220 | 724,506 | 27.6 | |||||||
OPERATING INCOME | 201,000 | 302,442 | (33.5 | ) | ||||||
OTHER (INCOME) EXPENSE: | ||||||||||
Interest income | (4,193 | ) | (2,102 | ) | 99.5 | |||||
Interest expense | 27,332 | 21,567 | 26.7 | |||||||
Other, net | (1,254 | ) | (972 | ) | 29.0 | |||||
Total other (income) expense | 21,885 | 18,493 | 18.3 | |||||||
INCOME BEFORE INCOME TAXES | 179,115 | 283,949 | (36.9 | ) | ||||||
PROVISION FOR INCOME TAXES | 66,715 | 105,669 | (36.9 | ) | ||||||
NET INCOME | 112,400 | 178,280 | (37.0 | ) | ||||||
Earnings per share to common shareholders (1): | ||||||||||
Basic | $6.85 | $10.74 | (36.2 | ) | ||||||
Diluted | $6.85 | $10.73 | (36.2 | ) | ||||||
Weighted average shares outstanding used in computing earnings per share to common shareholders (1): | ||||||||||
Basic | 16,142 | 16,493 | (2.1 | ) | ||||||
Diluted | 16,160 | 16,514 | (2.1 | ) |
Nine Months Ended September 30, | Percent | |||||||||
2017 | 2016 | change* | ||||||||
OPERATING STATISTICS | ||||||||||
Total system statistics: | ||||||||||
Passengers | 9,233,083 | 8,410,422 | 9.8 | |||||||
Revenue passenger miles (RPMs) (thousands) | 8,340,269 | 7,831,436 | 6.5 | |||||||
Available seat miles (ASMs) (thousands) | 10,181,292 | 9,302,051 | 9.5 | |||||||
Load factor | 81.9 | % | 84.2 | % | (2.3 | ) | ||||
Operating expense per ASM (CASM) (cents)*** | 9.08 | 7.79 | 16.6 | |||||||
Fuel expense per ASM (cents)*** | 2.46 | 1.97 | 24.9 | |||||||
Operating CASM, excluding fuel (cents) | 6.62 | 5.82 | 13.7 | |||||||
ASMs per gallon of fuel | 72.2 | 71.6 | 0.8 | |||||||
Departures | 69,739 | 61,271 | 13.8 | |||||||
Block hours | 159,181 | 142,515 | 11.7 | |||||||
Average stage length (miles) | 870 | 896 | (2.9 | ) | ||||||
Average number of operating aircraft during period | 86.6 | 83.4 | 3.8 | |||||||
Average block hours per aircraft per day | 6.7 | 6.2 | 8.1 | |||||||
Full-time equivalent employees at end of period | 3,704 | 3,287 | 12.7 | |||||||
Fuel gallons consumed (thousands) | 141,054 | 129,862 | 8.6 | |||||||
Average fuel cost per gallon*** | $ | 1.78 | $ | 1.41 | 26.2 | |||||
Scheduled service statistics: | ||||||||||
Passengers | 9,110,745 | 8,321,716 | 9.5 | |||||||
Revenue passenger miles (RPMs) (thousands) | 8,183,636 | 7,714,172 | 6.1 | |||||||
Available seat miles (ASMs) (thousands) | 9,747,395 | 8,967,614 | 8.7 | |||||||
Load factor | 84.0 | % | 86.0 | % | (2.0 | ) | ||||
Departures | 66,355 | 58,744 | 13.0 | |||||||
Block hours | 151,988 | 137,066 | 10.9 | |||||||
Total scheduled service revenue per ASM (TRASM) (cents)** | 10.91 | 10.92 | (0.1 | ) | ||||||
Average fare - scheduled service | $ | 67.59 | $ | 68.27 | (1.0 | ) | ||||
Average fare - ancillary air-related charges | $ | 44.76 | $ | 45.30 | (1.2 | ) | ||||
Average fare - ancillary third party products | $ | 4.32 | $ | 4.14 | 4.3 | |||||
Average fare - total | $ | 116.67 | $ | 117.71 | (0.9 | ) | ||||
Average stage length (miles) | 875 | 901 | (2.9 | ) | ||||||
Fuel gallons consumed (thousands) | 134,906 | 125,291 | 7.7 | |||||||
Average fuel cost per gallon*** | $ | 1.76 | $ | 1.41 | 24.8 | |||||
Percent of sales through website during period | 94.1 | % | 94.3 | % | (0.2 | ) |
(millions) | 9/30/2017 | 12/31/2016 | Change | |||||||
(unaudited) | ||||||||||
Unrestricted cash | ||||||||||
Cash and cash equivalents | $ | 74.0 | $ | 64.7 | 14.4 | % | ||||
Short-term investments | 351.5 | 269.3 | 30.5 | |||||||
Long-term investments | 76.9 | 124.8 | (38.4 | ) | ||||||
Total unrestricted cash | 502.4 | 458.8 | 9.5 | |||||||
Debt | ||||||||||
Current maturities of long-term debt, net of related costs | 165.8 | 86.2 | 92.3 | |||||||
Long-term debt, net of current maturities and related costs | 845.7 | 722.0 | 17.1 | |||||||
Total debt | 1,011.5 | 808.2 | 25.2 | |||||||
Total Allegiant Travel Company shareholders’ equity | $ | 473.8 | $ | 473.6 | — | % |
Nine Months Ended September 30, | ||||||||||
Unaudited (millions) | 2017 | 2016 | Change | |||||||
Cash provided by operating activities | $ | 296.4 | $ | 308.1 | (3.8 | )% | ||||
Purchase of property and equipment, including capitalized interest* | (333.7 | ) | (264.1 | ) | 26.4 | |||||
Repurchase of common stock | (90.4 | ) | (63.4 | ) | 42.6 | |||||
Cash dividends paid to shareholders | (34.5 | ) | (55.9 | ) | (38.3 | ) | ||||
Proceeds from the issuance of long-term debt | 292.5 | 120.4 | 142.9 | |||||||
Principal payments on long-term debt | (88.0 | ) | (63.5 | ) | 38.6 |
Twelve Months Ended September 30, | |||||||
Return on capital calculation (millions) | 2017 | 2016 | |||||
Net income attributable to Allegiant Travel Company | $ | 153.7 | $ | 235.0 | |||
Income tax | 87.4 | 137.2 | |||||
Interest expense | 34.6 | 27.5 | |||||
Less interest income | (6.2 | ) | (2.6 | ) | |||
269.5 | 397.1 | ||||||
Interest income | 6.2 | 2.6 | |||||
Tax rate | 36.3 | % | 36.9 | % | |||
Numerator | 175.6 | 252.2 | |||||
Total assets as of prior September 30 | 1,538.4 | 1,309.4 | |||||
Less current liabilities as of prior September 30 | 479.5 | 363.6 | |||||
Plus short term debt as of prior September 30 | 137.5 | 69.6 | |||||
Denominator | 1,196.4 | 1,015.4 | |||||
Return on capital employed | 14.7 | % | 24.8 | % |
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