Allegiant Travel Company Fourth Quarter and Full Year 2018 Financial results

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:

“I’m happy to report we had our 64^th 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

* – 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 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.

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

*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)

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)

(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)

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)

(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

Summary Cash Flow

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):

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.