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Press release from GlobeNewswire (a Nasdaq OMX company)

Allegiant Travel Company Second Quarter 2012 Financial Results

Wednesday, August 01, 2012

Allegiant Travel Company Second Quarter 2012 Financial Results13:42 EDT Wednesday, August 01, 201238th Consecutive Profitable QuarterSecond Quarter Fully Diluted Earnings Per Share of $1.30Diluted Earnings Per Share Increased 110 Percent Versus the Prior Year LAS VEGAS, Aug. 1, 2012 (GLOBE NEWSWIRE) -- Allegiant Travel Company (Nasdaq:ALGT) today reported the following financial results for the second quarter 2012 as well as comparisons to prior year equivalents:  Unaudited2Q122Q11Change Total operating revenue (millions) $231.2 $200.4 15.3% Operating income (millions) $41.9 $20.7 102.1% Operating margin 18.1% 10.3% 7.8pp EBITDA (millions) $54.9 $30.9 77.9% EBITDA margin 23.8% 15.4% 8.4pp Net income (millions) $25.2 $11.9 110.8% Diluted earnings per share $1.30 $0.62 109.7%        "We are very proud to report our 38th consecutive profitable quarter," stated Maurice J. Gallagher, Jr., Chairman and CEO of Allegiant Travel Company. "I'd like to thank our Team Members for their great efforts and contributions to another successful quarter."Notable company highlights CASM ex-fuel declined 13.9 percent to 5.1 cents, cost per passenger ex-fuel decreased 11.4 percent to $52.98 Announced acquisition of 19 A319 aircraft Announced retirement of two MD-87s by the second quarter of 2013 Currently testing new website. Only a limited portion of web traffic is pointed to the new site. We expect to have 100 percent of traffic on it by the fourth quarter Instituted new boarding process to support carry-on bag policy Initiated service to Honolulu from Las Vegas and Fresno, Calif Announced service to Honolulu from Bellingham, Wash, Eugene, Ore, Santa Maria, Monterey, and Stockton, Calif to begin in mid November Announced service to Maui from Bellingham, Wash to begin in mid-November As of Aug 1, we have 30 MD-80s with 166 seats.  Expect all west coast scheduled MD-80s to have 166 seats by end of the third quarter of 2012.   Received ETOPS certification and Flag Carrier Status - permits international scheduled flying Since July 2, operating four 757s Started Oakland and Punta Gorda bases, currently serving eight markets and seven markets, respectivelyRevenue performance Average fare – ancillary air-related revenue per passenger grew 7.8 percent Ancillary revenues per passenger were $39.67 in the second quarter, highest in the company's history    2Q122Q11Change Scheduled Service:       Average fare - scheduled service $89.43 $91.17 (1.9)% Average fare - ancillary air-related charges $33.90 $31.45 7.8% Average fare - ancillary third party products $5.77 $5.68 1.6% Average fare - total $129.10 $128.30 0.6% Scheduled service passenger revenue per ASM (PRASM) (cents) 8.75 9.27 (5.6)% Total scheduled service revenue* per ASM (TRASM) (cents) 12.63 13.04 (3.1)% Load factor 90.1% 92.0% (1.9)pp Passengers (millions) 1.7 1.5 16.0% Average passengers per departure 140 136 2.9%         * Total scheduled service revenue includes scheduled service, ancillary air-related, and ancillary third party revenue.      Cost performance Cost per ASM excluding fuel decreased 13.9 percent to 5.1 cents, total cost per ASM decreased 10.9 percent to 10.16 cents Aircraft fuel expense per gallon declined 2.5 percent or $.08 per gallon Fuel cost per passenger was $52.50, a $2.93 decrease or a 5.3 percent drop from the second quarter 2011 Salary and benefit expense per passenger declined 3.4 percent primarily due to outsourcing of station personnel in Las Vegas in the second quarter of 2011 and continued productivity gains Sales and marketing expense per passenger decreased 11.7 percent primarily due to an 8 percent decline in payment processing cost per passenger resulting from increased debit card usage Maintenance and repairs expense per passenger decreased 34.9 percent due primarily to a 64 percent decline in engine overhaul expenses Station operations expense per passenger increased 2.8 percent primarily due to outsourcing Las Vegas station personnel    2Q122Q11Change Total System*:       Operating expense per passenger $105.48 $115.24 (8.5)% Operating expense per passenger, excluding fuel $52.98 $59.81 (11.4)% Operating expense per ASM (CASM) (cents) 10.16 11.40 (10.9)% Operating expense, excluding fuel per ASM (CASM ex fuel) (cents) 5.10 5.92 (13.9)%         * Total system includes scheduled service, fixed-fee contract and non-revenue flying.      Third party products performance Ancillary revenue – third party products per passenger increased 1.6 percent, our ninth consecutive quarter of year over year increases Third party ancillary gross margin improved to 29.7 percent versus 28.1 percent last year 41 percent of hotel room night growth occurred outside of Las Vegas Rental car days grew 28.4 percent year over year  Supplemental Ancillary Revenue Information Unaudited (millions)2Q122Q11Change Gross ancillary revenue - third party products $32,909 $29,547 11.4% Cost of goods sold ($21,909) ($20,046) 9.3% Transaction costs* ($1,218) ($1,210) 0.7% Ancillary revenue - third party products $9,782 $8,291 18.0% As percent of gross 29.7% 28.1% 1.6pp As percent of income before taxes 24.5% 43.9% (19.4)pp Ancillary revenue - third party products/scheduled passenger $5.77 $5.68 1.6%   Hotel room nights (thousands) 204.3 186.2 9.8% Rental car days (thousands) 201.6 157.0 28.4%         * Includes payment expenses and travel agency commissions.      Balance sheet highlights Financed two 757s in the quarter for $14 million $33 million of total debt secured by six 757 aircraft Currently have $45 million in share repurchase authority  Unaudited (millions)6/30/1212/31/11Change Unrestricted cash* $390.1 $319.5 22.1% Unrestricted cash net of air traffic liability $232.4 $200.8 15.8% Total debt $156.2 $146.1 6.9% Total stockholders' equity $403.0 $351.5 14.6%            Six months ended June 30,Unaudited (millions)20122011Change Capital expenditures $61.1 $51.2 19.2% * Unrestricted cash includes investments in marketable securities.       At this time, Allegiant Travel Company provides the following guidance to investors, subject to revision.Guidance, subject to revision           Revenue guidanceJuly 20123Q12 Estimated PRASM year-over-year change (3) to (1)% (9) to (7)%       Fixed fee and other revenue guidance 3Q12 Fixed fee and other revenue (millions)   $10 to $12       Aircraft guidance  3Q12 Number of MD-80s to be converted to 166 seats*   37 to 39       Capacity guidance     System3Q124Q12 Departure year-over-year growth +2 to 6% +5 to 9% ASM year-over-year growth +14 to 18% +19 to 23% Scheduled     Departure year-over-year growth +3 to 7% +6 to 10% ASM year-over-year growth +15 to 19% +22 to 26%       Cost guidance3Q12FY12 CASM ex fuel – year-over-year change (2) to 0% (10) to (5)%       CAPEX guidance FY12 Capital expenditures (millions)  $105 to $115     Full year capacity guidanceFY12FY13 Scheduled ASM year-over-year growth +20 to 25% +20 to 25%        CASM ex fuel – cost per available seat mile excluding fuel expense    * Number of aircraft expected to be completed by end of the quarter     Allegiant Travel Company will host a conference call with analysts at 4:30 p.m. EDT today, August 1, 2012, to discuss its second quarter 2012 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.About the Company 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, www.allegiant.com. The company was ranked ninth in the 2011 Forbes' Best Small Companies. Allegiant was also recently named one of FORTUNE magazine's "100 Fastest-Growing Companies" for the second consecutive year. The Allegiant Travel Company logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=8305  ALGT/GUnder 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 and number of aircraft to be modified, as well as other information concerning future results of operations, business strategies, financing plans, competitive position, industry environment, potential growth opportunities, the effects of future regulation and the effects of competition. 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, the effect of the economic downturn 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, unionization efforts, our dependence on our leisure destination markets,  our competitive environment, problems with our aircraft,  our reliance on our automated systems, 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 CompanyConsolidated Statements of IncomeThree Months Ended June 30, 2012 and 2011(in thousands, except per share amounts)(Unaudited)    Three months ended June 30,Percent  20122011change OPERATING REVENUE:       Scheduled service revenue $151,648 $133,309 13.8 Ancillary revenue:       Air-related charges 57,478 45,991 25.0 Third party products 9,782 8,291 18.0 Total ancillary revenue 67,260 54,282 23.9         Fixed fee contract revenue 9,815 9,470 3.6 Other revenue 2,443 3,388 (27.9) Total operating revenue 231,166 200,449 15.3         OPERATING EXPENSES:       Aircraft fuel 94,218 86,454 9.0 Salary and benefits 33,229 29,884 11.2 Station operations 19,572 16,553 18.2 Maintenance and repairs 15,092 20,132 (25.0) Sales and marketing 5,491 5,407 1.6 Aircraft lease rentals -- 330 (100.0) Depreciation and amortization 13,162 10,156 29.6 Other 8,534 10,821 (21.1) Total operating expenses 189,298 179,737 5.3         OPERATING INCOME 41,868 20,712 102.1 As a percent of total operating revenue18.1%10.3%   OTHER (INCOME) EXPENSE:       Loss (earnings) from unconsolidated affiliates, net 81 (20) NM Interest income (267) (386) (30.8) Interest expense 2,200 2,235 (1.6) Total other (income) expense  2,014 1,829 10.1         INCOME BEFORE INCOME TAXES 39,854 18,883 111.1 As a percent of total operating revenue17.2%9.4%           PROVISION FOR INCOME TAXES 14,671 6,934 111.6         NET INCOME $25,183 $11,949 110.8As a percent of total operating revenue10.9%6.0%           Earnings per share to common stockholders (1):       Basic $1.31 $0.63 107.9 Diluted $1.30 $0.62 109.7         Weighted average shares outstanding used in computing earnings per share to common stockholders (1): Basic 19,053 18,931 0.6 Diluted 19,303 19,131 0.9         (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 CompanyOperating StatisticsThree Months Ended June 30, 2012 and 2011(Unaudited)  Three months ended June 30,Percent  20122011change* OPERATING STATISTICS      Total system statistics       Passengers 1,794,665 1,559,619 15.1 Revenue passenger miles (RPMs) (thousands) 1,636,113 1,401,610 16.7 Available seat miles (ASMs) (thousands) 1,862,262 1,576,791 18.1 Load factor 87.9% 88.9% (1.0) Operating revenue per ASM (RASM) (cents) 12.41 12.71 (2.4) Operating expense per ASM (CASM) (cents) 10.16 11.40 (10.9) Fuel expense per ASM (cents) 5.06 5.48 (7.7) Operating CASM, excluding fuel (cents) 5.10 5.92 (13.9) Operating expense per passenger $105.48 $115.24 (8.5) Fuel expense per passenger $52.50 $55.43 (5.3) Operating expense per passenger, excluding fuel $52.98 $59.81 (11.4) ASMs per gallon of fuel 62.0 58.7 5.6 Departures 13,767 12,430 10.8 Block hours 31,450 28,277 11.2 Average stage length (miles) 859 848 1.3 Average number of operating aircraft during period 59.3 51.0 16.3 Average block hours per aircraft per day 5.8 6.1 (4.9) Full-time equivalent employees at period end 1,750 1,559 12.3 Fuel gallons consumed (thousands) 30,048 26,868 11.8 Average fuel cost per gallon $3.14 $3.22 (2.5)        Scheduled service statistics       Passengers 1,695,650 1,462,126 16.0 Revenue passenger miles (RPMs) (thousands) 1,561,405 1,323,051 18.0 Available seat miles (ASMs) (thousands) 1,732,601 1,438,659 20.4 Load factor 90.1% 92.0% (1.9) Departures 12,155 10,789 12.7 Block hours 28,799 25,470 13.1 Yield (cents) 9.71 10.08 (3.7) Scheduled service revenue per ASM (PRASM) (cents) 8.75 9.27 (5.6) Total ancillary revenue per ASM (cents) 3.88 3.77 2.9 Total scheduled service revenue per ASM (TRASM) (cents) 12.63 13.04 (3.1) Average fare - scheduled service $89.43 $91.17 (1.9) Average fare - ancillary air-related charges $33.90 $31.45 7.8 Average fare - ancillary third party products $5.77 $5.68 1.6 Average fare - total $129.10 $128.30 0.6 Average stage length (miles) 900 889 1.2 Fuel gallons consumed (thousands) 27,692 24,329 13.8 Average fuel cost per gallon $3.32 $3.47 (4.3) Percent of sales through website during period 91.5% 87.9% 3.6         * Except load factor and percent of sales through website, which is percentage point change.Allegiant Travel CompanyConsolidated Statements of IncomeSix Months Ended June 30, 2012 and 2011(in thousands, except per share amounts)(Unaudited)  Six months ended June 30,Percent  20122011change OPERATING REVENUE:       Scheduled service revenue $313,282 $261,842 19.6 Ancillary revenue:       Air-related charges 112,622 91,307 23.3 Third party products 18,904 15,280 23.7 Total ancillary revenue 131,526 106,587 23.4         Fixed fee contract revenue 19,446 21,492 (9.5) Other revenue 4,763 3,759 26.7 Total operating revenue 469,017 393,680 19.1         OPERATING EXPENSES:       Aircraft fuel 196,629 165,641 18.7 Salary and benefits 66,497 60,749 9.5 Station operations 39,101 33,026 18.4 Maintenance and repairs 36,557 36,347 0.6 Sales and marketing 10,951 10,657 2.8 Aircraft lease rentals -- 645 (100.0) Depreciation and amortization 25,132 20,046 25.4 Other 15,971 18,030 (11.4) Total operating expenses 390,838 345,141 13.2         OPERATING INCOME 78,179 48,539 61.1 As a percent of total operating revenue16.7%12.3%   OTHER (INCOME) EXPENSE:       Loss (earnings) from unconsolidated affiliates, net 36 (14) NM Interest income (511) (662) (22.8) Interest expense 4,274 3,031 41.0 Total other (income) expense  3,799 2,355 61.3         INCOME BEFORE INCOME TAXES 74,380 46,184 61.1 As a percent of total operating revenue15.9%11.7%           PROVISION FOR INCOME TAXES 27,494 17,082 61.0         NET INCOME $46,886 $29,102 61.1As a percent of total operating revenue10.0%7.4%           Earnings per share to common stockholders (1):       Basic $2.45 $1.53 60.1 Diluted $2.42 $1.52 59.2         Weighted average shares outstanding used in computing earnings per share to common stockholders (1): Basic 19,021 18,920 0.5 Diluted 19,234 19,116 0.6         (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 CompanyOperating StatisticsSix Months Ended June 30, 2012 and 2011(Unaudited)  Six months ended June 30,Percent  20122011change* OPERATING STATISTICS      Total system statistics       Passengers 3,593,706 3,100,240 15.9 Revenue passenger miles (RPMs) (thousands) 3,336,354 2,851,721 17.0 Available seat miles (ASMs) (thousands) 3,778,909 3,194,577 18.3 Load factor 88.3% 89.3% (1.0) Operating revenue per ASM (RASM) (cents) 12.41 12.32 0.7 Operating expense per ASM (CASM) (cents) 10.34 10.80 (4.3) Fuel expense per ASM (cents) 5.20 5.19 0.2 Operating CASM, excluding fuel (cents) 5.14 5.62 (8.5) Operating expense per passenger $108.76 $111.33 (2.3) Fuel expense per passenger $54.71 $53.43 2.4 Operating expense per passenger, excluding fuel $54.05 $57.90 (6.6) ASMs per gallon of fuel 61.7 58.7 5.1 Departures 27,733 24,667 12.4 Block hours 64,743 57,644 12.3 Average stage length (miles) 873 866 0.8 Average number of operating aircraft during period 58.4 51.0 14.5 Average block hours per aircraft per day 6.1 6.2 (1.6) Fuel gallons consumed (thousands) 61,289 54,414 12.6 Average fuel cost per gallon $3.21 $3.04 5.6        Scheduled service statistics       Passengers 3,398,035 2,906,324 16.9 Revenue passenger miles (RPMs) (thousands) 3,189,133 2,683,861 18.8 Available seat miles (ASMs) (thousands) 3,520,258 2,903,687 21.2 Load factor 90.6% 92.4% (1.8) Departures 24,483 21,392 14.4 Block hours 59,364 51,714 14.8 Yield (cents) 9.82 9.76 0.6 Scheduled service revenue per ASM (PRASM) (cents) 8.90 9.02 (1.3) Total ancillary revenue per ASM (cents) 3.74 3.67 1.9 Total scheduled service revenue per ASM (TRASM) (cents) 12.64 12.69 (0.4) Average fare - scheduled service $92.20 $90.09 2.3 Average fare - ancillary air-related charges $33.14 $31.42 5.5 Average fare - ancillary third party products $5.56 $5.26 5.7 Average fare - total $130.90 $126.77 3.3 Average stage length (miles) 916 905 1.2 Fuel gallons consumed (thousands) 56,546 49,048 15.3 Average fuel cost per gallon $3.39 $3.29 3.0 Percent of sales through website during period 91.3% 88.9% 2.4         * Except load factor and percent of sales through website, which is percentage point change.Allegiant Travel CompanyNon-GAAP PresentationsQuarters Ended June 30, 2012 and 2011(Unaudited) "EBITDA" represents earnings before interest expense, income taxes, depreciation and amortization. EBITDA is not a calculation based on generally accepted accounting principles and should not be considered as an alternative to net income or operating income as indicators of our financial performance or to cash flow as a measure of liquidity. EBITDA is included as a supplemental disclosure because we believe it is a useful indicator of our operating performance. Further, EBITDA is a well-recognized performance measurement that is frequently used by securities analysts, investors and other interested parties in comparing the operating performance of companies. We believe EBITDA is useful in evaluating our operating performance compared to our competitors because its calculation generally eliminates the effects of financing and income taxes and the accounting effects of capital spending and acquisitions, which items may vary between periods and for different companies for reasons unrelated to overall operating performance. The following represents the reconciliation of EBITDA to net income for the periods indicated below. The SEC has adopted rules (Regulation G) regulating the use of non-GAAP financial measures. Because of our use of the non-GAAP financial measure EBITDA 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 net income, and a reconciliation of the non-GAAP measure to the most comparable GAAP measure.  Our utilization of a non-GAAP measurement 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. EBITDA is not a GAAP measurement and our use of it may not be comparable to similarly titled measures employed by other companies in the airline and travel industry. The reconciliations to GAAP net income follow.  Three months ended June 30,Percent(in thousands)20122011change Net income $25,183 $11,949 110.8Plus (minus)       Interest income (267) (386) (30.8) Interest expense 2,200 2,235 (1.6) Provision for income taxes 14,671 6,934 111.6 Depreciation and amortization 13,162 10,156 29.6EBITDA$54,949 $30,888 77.9CONTACT: Media Inquiries: Brian Davis mediarelations@allegiantair.com Investor Inquiries: Chris Allen ir@allegiantair.com