Allegiant Travel Company Fourth Quarter and Full Year 2015 Financial Results
January 27, 2016: 04:00 PM ET
Fourth Quarter 2015 Fully Diluted Earnings per Share of $3.38 Full Year Fully Diluted Earnings per Share of $12.94
LAS VEGAS, Jan. 27, 2016 (GLOBE NEWSWIRE) -- Allegiant Travel Company (NASDAQ:ALGT) today reported the following financial results for the fourth quarter and full year 2015, as well as comparisons to prior year equivalents:
Three Months Ended
Twelve Months Ended
December 31,
December 31,
Unaudited
2015
2014
Change
2015
2014
Change
Total operating revenue (millions)
$
310.9
$
279.0
11.4
%
$
1,262.2
$
1,137.0
11.0
%
Operating income (millions)
$
93.8
$
14.8
534.0
%
$
371.7
$
157.3
136.2
%
Net income (millions)
$
56.7
$
4.8
1,082.9
%
$
220.4
$
86.7
154.2
%
Diluted earnings per share
$
3.38
$
0.27
1,151.9
%
$
12.94
$
4.86
166.3
%
Return on capital employed (LTM)*
25.6
%
19.2
%
* - see appendix for calculation
“I am happy to report that we had another profitable year,” stated Maurice J. Gallagher, Jr., chairman and CEO of Allegiant Travel Company. “The drop in global energy prices was a big contributor to these results, and once again the team executed on our unique model, generating operating margins just short of 30% for the year. We also faced operational challenges during the year. To that end, I have asked Scott Sheldon and Jude Bricker to take over certain of these areas. Scott will oversee our Inflight and Operations control areas. Jude will now lead the Flight operations and Maintenance teams, as well as taking on the title of COO of Allegiant Air. Over the past ten years, these gentlemen have demonstrated excellent managerial skills and have been critical to our success. I am confident these skills will benefit the operational groups they will be supervising. It is a great time to be at Allegiant. Once again, I want to thank every team member for their dedication and effort this past year. Thank you for all that you do."
Notable fourth quarter 2015 company highlights
Network growth - Fourth quarter scheduled service ASMs grew by 25 percent; cities by nine percent, routes by 27 percent
As of December 31, 2015 the company is selling 296 routes versus 233 routes during the same time period last year
Airbus aircraft - Added seven Airbus A320 series aircraft into service during the fourth quarter
Share repurchase - Returned approximately $7.6 million to shareholders through the repurchase of 37,400 shares during the fourth quarter
Dividend - Declared dividends of $32.8 million during the quarter
Paid a recurring dividend of $0.30 per share in early December 2015
Paid a special dividend of $1.65 per share in early January 2016
Aircraft financing - Raised $28 million in debt secured by two A319 aircraft in December
Entered into a senior secured revolving credit facility in December with the ability to borrow up to $56 million
Fourth quarter 2015 network trends
Airbus growth - Had 24 Airbus series aircraft in service on December 31, 2015 compared to 11 as of end of 2014
Airbus network - Airbus aircraft flew over 39 percent of the fourth quarter ASMs versus 23 percent a year ago
Additional bases - Added one new base in Pittsburgh, PA
Medium sized cities - Serve 18 medium sized cities on December 31, 2015 versus eight a year ago
757 fleet - Retired one 757 in October 2015
Expect to have retired the remainder of the fleet by the end of the 2017 winter holiday period
Fourth quarter 2015 revenue performance
Average fare-scheduled service - Decreased by 14 percent versus last year
Off peak flying was 24 percent of ASMs for the fourth quarter versus 20 percent a year ago
New markets (markets operating less than one year) were 16 percent of ASMs for the fourth quarter versus six percent a year ago
Average fare-total - Decreased by seven percent versus last year
Three dollar increase in the convenience fee occurred late in the fourth quarter of 2014
Other impacts on TRASM - Accounting for credit card surcharge as a reduction of cost had a two point negative impact on fourth quarter TRASM
First quarter 2016 revenue trends
TRASM guidance - First quarter TRASM is expected to decrease between 13 and 11 percent versus the first quarter last year
Off peak flying is expected to be 26 percent of ASMs for the first quarter
New markets (markets operating less than one year) are expected to be 12 percent of ASMs for the first quarter
Accounting for credit card surcharge is expected to have a 0.6 point negative impact on first quarter TRASM
Fourth quarter 2015 cost performance
CASM - Declined 34.3 percent
ASMs per gallon improved by three percent versus last year to 71.2
CASM ex fuel - Declined 32.4 percent
Excluding the $43 million 757 write-down in December 2014, CASM ex fuel declined 11.7 percent
Salary and benefits - Total labor expense increased 23.5 percent versus the same period last year
Full time equivalent employees increased by 18.0 percent associated with a 10.3 percent increase in average number of aircraft in service
Pilot pay band increase in May 2015 resulted in higher pilot pay rates
Bonus accrual increased by over 100 percent due to increased profitability
Station operations - Stations expense per departure increased four percent versus the same period last year
First quarter and full year 2016 cost trends
First quarter 2016 CASM ex fuel - CASM ex fuel is expected to decrease between four and two percent versus the same period last year
Full year CASM ex fuel - CASM ex fuel is expected to be between zero and an increase of four percent
Maintenance and repairs expense - Expected to be between $115 and $125 thousand per aircraft per month for full year 2016
Expect 12 more heavy maintenance events than last year
Expect the number of events to be spread relatively equally throughout the year
Total ownership expense per aircraft per month - Full year 2016 total of depreciation expense and aircraft lease rental expense per aircraft per month is expected to be between $100 and $110 thousand
Balance sheet highlights
2016 Capital expenditures - Expect CAPEX to be $188 million
Shareholder returns - $190 million of cash was returned to shareholders in 2015
$62 million was returned through dividends
The Company intends to pay a dividend of $0.30 per share on March 15, 2016 to all shareholders of record as of March 4, 2016
$128 million returned through share repurchases
Share repurchase authority as of January 27, 2016 is $54 million
Financing transactions - In December 2015, the Company raised $28 million in debt secured by two A319 aircraft
In December 2015, the Company entered into a senior secured revolving credit facility under which it will be able to borrow up to $56 million
Unaudited (millions)
12/31/2015
12/31/2014
Change
Unrestricted cash*
$
397.4
$
416.8
(4.7
)%
Total debt
$
641.7
$
588.8
9.0
%
Total Allegiant Travel Company stockholders’ equity
$
350.0
$
292.9
19.5
%
* - Unrestricted cash includes investments in marketable securities.
Twelve Months Ended
December 31,
Unaudited (millions)
2015
2014
Change
Capital expenditures
$
252.7
$
421.4
(40.0
)%
At this time, Allegiant Travel Company provides the following guidance to investors, subject to revision.
Guidance, subject to revision
January 2016
1Q16
Estimated TRASM year-over-year change
(15) to (13)%
(13) to (11)%
Fixed fee and other revenue guidance
1Q16
Fixed fee and other revenue (millions)
$11 to $13
Capacity guidance
System
1Q16
2Q16
FY16
Departure year-over-year growth
14 to 18%
13 to 17%
ASM year-over-year growth
15 to 19%
12 to 16%
12 to 16%
Scheduled
Departure year-over-year growth
14 to 18%
13 to 17%
ASM year-over-year growth
15 to 19%
12 to 16%
12 to 16%
Cost guidance
1Q16
FY16
CASM ex fuel – year-over-year change
(4) to (2)%
0 to 4%
CAPEX guidance
FY16
Capital expenditures (millions)
$
188
CASM ex fuel – cost per available seat mile excluding fuel expense
Aircraft fleet plan by end of period
Aircraft - (seats per AC)
4Q15
1Q16
YE16
MD-80 (166 seats)
51
50
46
757 (215 seats)
5
5
5
A319 (156 seats)
10
11
17
A320 (177 seats)
14
16
16
Total
80
82
84
Aircraft listed in table above include only in service aircraft, planned retirements and future aircraft under contract
Allegiant Travel Company will host a conference call with analysts at 4:30 p.m. ET Wednesday, January 27, 2016 to discuss its fourth quarter and full year 2015 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, Travel is our deal.® Las Vegas-based Allegiant Travel Company® (NASDAQ:ALGT) is focused on linking travelers in small cities to world-class leisure destinations. Through its subsidiary, Allegiant Air, the company operates a low-cost, high-efficiency, all-jet passenger airline, and offers other travel-related products such as hotel rooms, rental cars, and attraction tickets through its website, allegiant.com. The company has been named one of America’s 100 Best Small Companies by Forbes Magazine for four consecutive years. ALGT/G
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 unit revenue, future operating expense, ASM growth, departure growth, fixed-fee and other revenues, expected capital expenditures, number of contracted aircraft to be placed in service in the future, 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, volatility of fuel costs, labor issues, the effect of economic conditions on leisure travel, debt covenants, terrorist attacks, risks inherent to airlines, demand for air services to our leisure destinations from the markets served by us, our dependence on our leisure destination markets, our competitive environment, an accident involving or problems with our aircraft, our reliance on our automated systems, 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, aging aircraft and other 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
Three Months Ended December 31, 2015 and 2014
(in thousands, except per share amounts)
(Unaudited)
Three Months Ended December 31,
Percent
2015
2014
change
OPERATING REVENUE:
Scheduled service revenue
$
178,720
$
172,434
3.6
Ancillary revenue:
Air-related charges
108,262
83,257
30.0
Third party products
8,513
8,248
3.2
Total ancillary revenue
116,775
91,505
27.6
Fixed fee contract revenue
7,754
6,894
12.5
Other revenue
7,640
8,117
(5.9
)
Total operating revenue
310,889
278,950
11.4
OPERATING EXPENSES:
Aircraft fuel
61,409
79,909
(23.2
)
Salary and benefits
58,683
47,500
23.5
Station operations
27,525
21,214
29.7
Maintenance and repairs
22,087
22,191
(0.5
)
Sales and marketing
4,442
6,223
(28.6
)
Aircraft lease rentals
234
3,048
(92.3
)
Depreciation and amortization
24,499
23,054
6.3
Other
18,248
17,741
2.9
Special charge
—
43,280
NM*
Total operating expenses
217,127
264,160
(17.8
)
OPERATING INCOME
93,762
14,790
534.0
OTHER (INCOME) EXPENSE:
Interest income
(443
)
(229
)
93.4
Interest expense
5,979
7,388
(19.1
)
Other - net
(18
)
(45
)
(19.1
)
Total other (income) expense
5,518
7,114
(22.4
)
INCOME BEFORE INCOME TAXES
88,244
7,676
1,049.6
PROVISION FOR INCOME TAXES
31,536
2,928
977.0
NET INCOME
56,708
4,748
1,094.4
Net loss attributable to noncontrolling interest
—
(46
)
NM*
NET INCOME ATTRIBUTABLE TO ALLEGIANT TRAVEL COMPANY
$
56,708
$
4,794
1,082.9
Earnings per share to common stockholders (1):
Basic
$
3.38
$
0.29
1,065.5
Diluted
$
3.38
$
0.27
1,151.9
Weighted average shares outstanding used in computing earnings per share to common stockholders (1):
Basic
16,728
17,377
(3.7
)
Diluted
16,789
17,450
(3.8
)
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 for the periods presented reflect the two-class method mandated by accounting guidance for the calculation of 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
Three Months Ended December 31, 2015 and 2014
(Unaudited)
Three Months Ended December 31,
Percent
2015
2014
change*
OPERATING STATISTICS
Total system statistics:
Passengers
2,360,735
1,966,058
20.1
Revenue passenger miles (RPMs) (thousands)
2,210,736
1,846,164
19.7
Available seat miles (ASMs) (thousands)
2,712,464
2,169,062
25.1
Load factor
81.5
%
85.1
%
(3.6
)
Operating expense per ASM (CASM) (cents)
8.00
12.18
(34.3
)
Fuel expense per ASM (cents)
2.26
3.68
(38.6
)
Operating CASM, excluding fuel (cents)
5.74
8.49
(32.4
)
ASMs per gallon of fuel
71.2
69.0
3.2
Departures
17,677
14,178
24.7
Block hours
41,432
33,272
24.5
Average stage length (miles)
900
898
0.2
Average number of operating aircraft during period
76.2
69.1
10.3
Average block hours per aircraft per day
5.9
5.2
13.5
Full-time equivalent employees at end of period
2,846
2,411
18.0
Fuel gallons consumed (thousands)
38,071
31,422
21.2
Average fuel cost per gallon
$
1.61
$
2.54
(36.6
)
Scheduled service statistics:
Passengers
2,320,853
1,921,585
20.8
Revenue passenger miles (RPMs) (thousands)
2,173,930
1,810,322
20.1
Available seat miles (ASMs) (thousands)
2,623,873
2,093,833
25.3
Load factor
82.9
%
86.5
%
(3.6
)
Departures
16,850
13,423
25.5
Block hours
39,969
31,983
25.0
Total scheduled service revenue per ASM (TRASM)** (cents)
11.26
12.61
(10.7
)
Average fare — scheduled service
$
77.01
$
89.74
(14.2
)
Average fare — ancillary air-related charges
$
46.65
$
43.33
7.7
Average fare — ancillary third party products
$
3.67
$
4.29
(14.5
)
Average fare — total
$
127.33
$
137.36
(7.3
)
Average stage length (miles)
914
916
(0.2
)
Fuel gallons consumed (thousands)
36,817
30,298
21.5
Average fuel cost per gallon
$
1.61
$
2.57
(37.4
)
Percent of sales through website during period
94.4
%
94.5
%
(0.1
)
* Except load factor and percent of sales through website, which is percentage point change. ** 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
Twelve Months Ended December 31, 2015 and 2014
(in thousands, except per share amounts)
(Unaudited)
Twelve Months Ended December 31,
Percent
2015
2014
change
OPERATING REVENUE:
Scheduled service revenue
$
735,563
$
732,020
0.5
Ancillary revenue:
Air-related charges
434,317
331,689
30.9
Third party products
40,177
36,587
9.8
Total ancillary revenue
474,494
368,276
28.8
Fixed fee contract revenue
19,747
17,403
13.5
Other revenue
32,384
19,347
67.4
Total operating revenue
1,262,188
1,137,046
11.0
OPERATING EXPENSES:
Aircraft fuel
278,394
388,216
(28.3
)
Salary and benefits
229,802
193,345
18.9
Station operations
102,294
84,667
20.8
Maintenance and repairs
92,575
86,781
6.7
Sales and marketing
21,349
28,492
(25.1
)
Aircraft lease rentals
2,326
15,945
(85.4
)
Depreciation and amortization
98,097
83,409
17.6
Other
65,649
55,566
18.1
Special charge
—
43,280
NM*
Total operating expenses
890,486
979,701
(9.1
)
OPERATING INCOME
371,702
157,345
136.2
OTHER (INCOME) EXPENSE:
Interest income
(1,391
)
(774
)
79.7
Interest expense
26,510
21,205
25.0
Other - net
(136
)
(217
)
25.0
Total other (income) expense
24,983
20,214
23.6
INCOME BEFORE INCOME TAXES
346,719
137,131
152.8
PROVISION FOR INCOME TAXES
126,389
50,828
148.7
NET INCOME
220,330
86,303
155.3
Net loss attributable to noncontrolling interest
(44
)
(386
)
(88.6
)
NET INCOME ATTRIBUTABLE TO ALLEGIANT TRAVEL COMPANY
$
220,374
$
86,689
154.2
Earnings per share to common stockholders (1):
Basic
$
12.97
$
4.87
166.3
Diluted
$
12.94
$
4.86
166.3
Weighted average shares outstanding used in computing earnings per share to common stockholders (1):
Basic
16,923
17,729
(4.5
)
Diluted
16,962
17,782
(4.6
)
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 for the periods presented reflect the two-class method mandated by accounting guidance for the calculation of 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
Twelve Months Ended December 31, 2015 and 2014
(Unaudited)
Twelve Months Ended December 31,
Percent
2015
2014
change*
OPERATING STATISTICS
Total system statistics:
Passengers
9,500,611
8,154,357
16.5
Revenue passenger miles (RPMs) (thousands)
8,944,952
7,825,962
14.3
Available seat miles (ASMs) (thousands)
10,526,610
8,945,616
17.7
Load factor
85.0
%
87.5
%
(2.5
)
Operating expense per ASM (CASM) (cents)
8.45
10.95
(22.8
)
Fuel expense per ASM (cents)
2.64
4.34
(39.2
)
Operating CASM, excluding fuel (cents)
5.81
6.61
(12.1
)
ASMs per gallon of fuel
70.2
69.4
1.2
Departures
68,653
56,961
20.5
Block hours
160,431
135,572
18.3
Average stage length (miles)
900
918
(2.0
)
Average number of operating aircraft during period
74.3
68.8
8.0
Average block hours per aircraft per day
5.9
5.4
9.3
Full-time equivalent employees at end of period
2,846
2,411
18.0
Fuel gallons consumed (thousands)
149,951
128,933
16.3
Average fuel cost per gallon
$
1.86
$
3.01
(38.2
)
Scheduled service statistics:
Passengers
9,355,097
8,017,442
16.7
Revenue passenger miles (RPMs) (thousands)
8,821,908
7,711,696
14.4
Available seat miles (ASMs) (thousands)
10,236,075
8,693,631
17.7
Load factor
86.2
%
88.7
%
(2.5
)
Departures
65,683
54,440
20.7
Block hours
155,403
131,210
18.4
Total scheduled service revenue per ASM (TRASM)** (cents)
11.82
12.66
(6.6
)
Average fare — scheduled service
$
78.63
$
91.30
(13.9
)
Average fare — ancillary air-related charges
$
46.43
$
41.37
12.2
Average fare — ancillary third party products
$
4.29
$
4.56
(5.9
)
Average fare — total
$
129.35
$
137.23
(5.7
)
Average stage length (miles)
915
934
(2.0
)
Fuel gallons consumed (thousands)
145,654
125,173
16.4
Average fuel cost per gallon
$
1.87
$
3.05
(38.7
)
Percent of sales through website during period
95.1
%
93.8
%
1.3
* Except load factor and percent of sales through website, which is percentage point change. ** 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.
Appendix A
Additional Financial Information
(Unaudited)
Twelve Months Ended December 31,
Return on capital calculation (millions)
2015
2014
Net income attributable to Allegiant Travel Company (1)
$
220.4
$
113.3
Income tax
126.4
66.8
Interest expense
26.5
21.2
Less interest income
(1.4
)
(0.8
)
371.9
200.5
Interest income
1.4
0.8
Tax rate
36.5
%
37.1
%
Numerator
237.0
126.6
Total assets as of prior December 31
1,235.1
930.2
Less current liabilities as of prior December 31
362.0
290.7
Plus short term debt as of prior December 31
52.6
20.2
Denominator
925.7
659.7
Return on capital employed
25.6
%
19.2
%
(1) Net income attributable to Allegiant Travel Company for the twelve months ended December 31, 2014 is adjusted. Refer to calculation below for reconciliation.
Twelve Months Ended
Reconciliation of net income attributable to Allegiant Travel Company adjusted for special item (in thousands)
December 31, 2014
Net income as reported
$
86,303
Add: provision for income taxes
50,828
Income before income taxes, as reported
137,131
Special item:
Write down of Boeing 757 fleet after tax
43,280
Adjusted income before income taxes
180,411
Provision for income taxes
66,752
Adjusted net income
113,659
Net loss attributable to noncontrolling interest
(386
)
Adjusted net income attributable to Allegiant Travel Company
$
113,273
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