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ALLEGIANT TRAVEL COMPANY FOURTH QUARTER AND FULL YEAR 2013 FINANCIAL RESULTS



  
ALLEGIANT TRAVEL COMPANY FOURTH QUARTER AND FULL YEAR 2013
FINANCIAL RESULTS
44th Consecutive Profitable Quarter
Fourth Quarter Fully Diluted Earnings per Share of $0.94
Full Year Fully Diluted Earnings per Share of $4.82  

LAS VEGAS. Jan. 29, 2014 - Allegiant Travel Company ( NASDAQ: ALGT ) today reported the following financial results for both the fourth quarter and full year 2013, as well as comparisons to prior year equivalents:

Unaudited Three months
ended December 31,
Twelve months ended December 31,
2013 2012 Change 2013 2012 Change
Total operating revenue (millions) $238.5 $222.8 7.0 % $996.2 $908.7 9.6 %
Operating income (millions) $30.3 $25.4 19.3 % $154.7 $132.3 17.0 %
Operating margin 12.7 % 11.4 % 1.3pp 15.5 % 14.6 % 0.9pp
EBITDA (millions) $47.9 $42.2 13.5 % $224.9 $190.1 18.3 %
EBITDA margin 20.1 % 18.9 % 1.2pp 22.6 % 20.9 % 1.7pp
EBITDAR (millions) $53.4 $42.2 26.5 % $234.1 $190.1 23.2 %
EBITDAR margin 22.4 % 18.9 % 3.5pp 23.5 % 20.9 % 2.6pp
Net income (millions) $17.5 $14.8 18.2 % $92.3 $78.6 17.4 %
Diluted earnings per share $0.94 $0.76 23.7 % $4.82 $4.06 18.7 %
Return on capital employed 16.4 % 15.6 % 0.8pp

"We are very proud to report our 44th consecutive profitable quarter," stated Maurice J. Gallagher, Jr., Chairman and CEO of Allegiant Travel Company. "This is the second consecutive year that we have grown both full year EBITDA and operating margin.  As we continue to add more efficient Airbus aircraft to our operating fleet, we have the opportunity to continue margin improvement going forward.  Thank you for the tireless efforts of our Team Members whose contributions were critical to our successful 2013."

Notable fourth quarter and full year 2013 company highlights

  • Added the Airbus A320 and A319 onto the Allegiant operating certificate  

  • Ended 2013 with three A319 and five A320 aircraft in service.  Added two more A320 aircraft in January 2014 

  • Retired five MD-80 aircraft 

  • Completed the conversion of 51 MD-80 aircraft to 166 seats.  Will add two more MD-80 aircraft configured with 166 seats to the fleet in March 2014.  We expect our MD-80 fleet to remain at 53 aircraft for the foreseeable future 

  • Returned $83 million to shareholders through the repurchase of 913,806 shares in 2013 

  • Paid a special dividend of $2.25 per share in early January 2014 

  • Added 44 new routes in 2013.  Announced five new routes and two new cities starting service first quarter 2014 

  • Delivered Allegiant2Go Mobile Boarding Pass functionality in the fourth quarter 

  • Broadened third-party purchase options via one-way package and hotel-only booking path 

  • Executed a new agreement with a large Las Vegas gaming company for the pre-purchase of rooms at discounted rates 

  • Entered into a new three year agreement with Enterprise Holdings Inc. for the sale of rental cars 

  • Included on the 100 America`s Best Small Companies list by Forbes magazine 

Fourth quarter and full year 2013 revenue performance

  • Full year ancillary air-related charges per passenger has increased every year for eight consecutive years 

  • 16th consecutive quarter of year over year increases in total fare, four percent higher than a year ago 

  • Fourth quarter Florida TRASM grew by two percent despite a 35 percent growth in ASMs  

  • Same store routes, those operated in both the fourth quarter 2013 and 2012, generated a three percent increase in TRASM

 

4Q13 4Q12 Change FY13 FY12 Change
Scheduled Service:
Average fare - scheduled service $94.24 $88.59 6.4 % $91.69 $88.90 3.1 %
Average fare - ancillary air-related charges $40.63 $39.89 1.9 % $40.52 $35.72 13.4 %
Average fare - ancillary third party products $4.36 $5.19 (16.0 )% $5.21 $5.48 (4.9 )%
Average fare - total $139.22 $133.67 4.2 % $137.43 $130.10 5.6 %
Scheduled service passenger revenue per ASM (PRASM) (cents) 8.32 7.99 4.1 % 8.25 8.43 (2.1 )%
Total scheduled service revenue per ASM (TRASM) (cents) 12.29 12.06 1.9 % 12.37 12.33 0.3 %
Load factor 85.2 % 86.5 % -1.3pp 88.9 % 89.4 % -0.5pp
Passengers (millions) 1.7 1.6 6.1 % 7.1 6.6 7.8 %
Average passengers per departure 141 141 - % 147 140 5.0 %
Average scheduled service stage length (miles) 940 930 1.1 % 952 918 3.7 %

  ASMs = available seat miles
PRASM = scheduled passenger revenue per scheduled available seat mile
TRASM = (scheduled passenger revenue + ancillary air revenue + ancillary third party revenue) per scheduled available seat mile

Fourth quarter and full year 2013 cost performance

  • Full year 2013 fuel expense per ASM declined six percent primarily due to a two percent decrease in gallons per passenger.  This fuel savings more than offset the one percent increase in average fuel cost per gallon.  Full year system ASMs per gallon increased seven percent versus 2012 

  • Full year 2013 CASM ex fuel rose five percent versus last year in part because aircraft utilization declined four percent.  CASM ex fuel was also negatively impacted by expenses due to an operational disruption in September, and the FAA shutdown and the subsequent delay in placing A320s into service in December.  The A320 delay drove higher expense in aircraft lease rentals as we contracted with other carriers for sub-service to fly scheduled flights, reduced crew productivity and increased expenses to temporarily assign flight crews to bases to support unplanned MD-80 flying in place of planned A320 flying 

  • Fourth quarter salary and benefits expense increased 17 percent due to a 13 percent increase in full time equivalent employees to support fleet growth and more inflight staff to crew larger gauge MD-80 aircraft, increased bonus accrual which is tied to higher levels of profitability and higher stock compensation expense 

  • Fourth quarter sales and marketing expense increased 46 percent due to advertising to support the launch of new routes 

  • Fourth quarter aircraft lease rental expense was $5.5 million due to having two leased aircraft (none a year ago) and $4.2 million of sub-service expense due to the delays in planned A320 flying 

  • Fourth quarter other expense increased 16 percent due to increases in flight crew training, contractor IT development resources, and losses on consignment and disposal of assets 

  • Certain fourth quarter non-cash expenses totaled $5.4 million for the quarter and $19.3 million for the year.  Please see the non-cash expense table in the Non-GAAP presentation for further detail 



4Q13 4Q12 Change FY13 FY12 Change
Total System*:
Operating expense per passenger $121.80 $118.49 2.8% $116.20 $111.12 4.6%
Operating expense per passenger, excluding fuel $68.68 $63.50 8.2% $62.95 $56.99 10.5%
Operating expense per ASM (CASM) (cents) 10.61 10.50 1.0% 10.33 10.37 (0.4)%
Operating expense, excluding fuel per ASM (CASM ex fuel) (cents) 5.98 5.63 6.2% 5.60 5.32 5.3%
Average block hours per aircraft per day 5.3 5.3 -% 5.5 5.7 (3.5)%
Average system stage length (miles) 922 882 4.5% 933 872 7.0%

* - Total system includes scheduled service, fixed-fee contract and non-revenue flying.

Full year and first quarter 2014 cost trends

  • Full year CASM ex fuel is expected to increase between four and seven percent due to a more normalized maintenance and repair expense of between $100 thousand and $110 thousand per aircraft per month, start-up expenses in non-airline subsidiaries (which do not generate airline capacity or ASMs) and continued investment in operations and IT management 

  • First quarter 2014 CASM ex fuel is expected to increase between 13 and 15 percent due to expenses associated with the delay in training A320 crews resulting from the FAA shutdown and its continued effects and the subsequent delay in placing the A320 on the certificate, lower than planned capacity growth due to the same issue, higher maintenance expense due to substantially more heavy maintenance events scheduled in the quarter, and start-up expenses in two new non airline initiatives which do not generate airline capacity or ASMs.  The effects of the A320 delays and non-airline activities are expected to account for 53 percent of the increase in CASM ex fuel for the quarter 

Third party products performance

  • Full year transportation net revenue (revenue derived from car rentals) increased 11 percent 

  • Las Vegas represented 82 percent of hotel net revenue in 2013, down from 87 percent in 2012 and 90 percent in 2011 

  • Full year hotel net revenue excluding the effect of an air discount increased 25 percent versus last year.  In the fourth quarter of 2012, the company phased out offering an air discount tied to hotel sales in order to increase overall company profitability 

Supplemental Ancillary Revenue Information
Unaudited (millions)
4Q13 4Q12 Change FY13 FY12 Change
Gross ancillary revenue - third party products $23.8 $24.9 (4.4 )% $120.7 $119.0 1.4 %
Cost of goods sold ($16.2 ) ($16.2 ) - % ($81.9 ) ($79.0 ) 3.7 %
Transaction costs* ($0.2 ) ($0.6 ) (66.7 )% ($1.8 ) ($3.9 ) (53.8 )%
Ancillary revenue - third party products $7.3 $8.2 (11.0 )% $37.0 $36.1 2.5 %
As percent of gross 30.7 % 32.8 % (2.1)pp 30.7 % 30.3 % 0.4pp
As percent of income before taxes 26.3 % 34.9 % (8.6)pp 25.2 % 29.0 % (3.8)pp
Ancillary revenue - third party products/scheduled passenger $4.36 $5.19 (16.0 )% $5.21 $5.48 (4.9 )%
Hotel room nights (thousands) 124.7 137.5 (9.3 )% 595.7 690.1 (13.7 )%
Rental car days (thousands) 160.7 169.1 (5.0 )% 844.9 763.4 10.7 %

* - Includes payment expenses and travel agency commissions.

Balance sheet highlights

  • Returned $42 million to shareholders through a special dividend of $2.25 per share 

  • Repurchased 913,806 shares of common stock for $83 million in 2013.  The company has $40 million in repurchase authority remaining 

  • Cumulative return of capital in the form of re-purchases of shares and special dividends totals $277 million as of January 2014 

  • $178 million in capital expenditures during 2013,  83 percent for the purchase of eight Airbus series aircraft and a new headquarters building 

  • Issued $106 million in debt in 2013,  $96 million secured by eight A320 series aircraft and $10 million by the new headquarters building 

  • Paid down $23 million in debt including $10.5 million previously secured by four 757 aircraft.  $9 million in debt remains secured by the remaining two 757 aircraft in our fleet as well as a term loan due in 2017 of $122 million secured by MD-80 aircraft and parts 

  • 2014 CAPEX is expected to be between $60 and $80 million primarily driven by two A320 purchases occurring at the end of 2014 and IT projects 

Unaudited (millions) 12/31/2013 12/31/2012 Change
Unrestricted cash* $387.1 $352.7 9.8 %
Total debt $234.3 $150.9 55.3 %
Total Allegiant Travel Company stockholders` equity $375.7 $400.5 (6.2 )%


...
For the Year
ended December 31,
Unaudited (millions) 2013 2012 Change
Capital expenditures $177.6 $105.1