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Allegiant Travel Company Third Quarter 2014 Financial Results

2014-10-22 16:00 ET - News Release

47th Consecutive Profitable Quarter

Third Quarter Fully Diluted Earnings Per Share of $0.80

LAS VEGAS, Oct. 22, 2014 (GLOBE NEWSWIRE) -- Allegiant Travel Company (Nasdaq:ALGT) today reported the following financial results for the third quarter 2014, as well as comparisons to prior year equivalents:

 Three Months Ended September 30,  Nine Months Ended September 30,  
Unaudited20142013Change20142013Change
Total operating revenue (millions) $265.0 $228.9 15.8% $858.1 $757.7 13.3%
Operating income (millions) $28.9 $29.2 (1.0)% $142.6 $124.5 14.5%
Operating margin10.9%12.8%(1.9)pp16.6%16.4% 0.2pp
EBITDA (millions) $51.2 $46.7 9.6% $203.4 $177.0 14.9%
EBITDA margin19.3% 20.4% (1.1)pp23.7% 23.4% 0.3pp
EBITDAR (millions) $52.8 $48.7 8.4% $216.3 $180.7 19.7%
EBITDAR margin 19.9% 21.3%(1.4)pp 25.2% 23.8%1.4pp
Net income (millions) $14.2 $17.1 (17.0)% $81.9 $74.8 9.5%
Diluted earnings per share $0.80 $0.91 (12.1)% $4.54 $3.90 16.4%
Return on capital employed * 17.5% 15.3%2.2pp      
* - see appendix for calculation

"We are very proud to report our 47th consecutive profitable quarter," stated Maurice J. Gallagher, Jr., Chairman and CEO of Allegiant Travel Company. "During this quarter we saw the departure of Andrew Levy, our President and COO. Andrew will be missed.  He has left the company in great shape. His legacy includes building a solid, capable management team which ensures the company will maintain its strong performance into the future. In addition, we have also welcomed back Kris Bauer as the airline's Senior Vice President of Operations and COO while we conduct our search for a replacement. Earlier this week, our Board of Directors approved an increase to our share repurchase authority to $100 million from its current level of $7.4 million. We continue to see strength in the business model and are demonstrating that confidence by actively returning cash to shareholders. Lastly, I want to thank all of our Team Members for their continued efforts during the past quarter."

Notable company highlights

  • Repurchased 456,296 shares during the quarter, which brings the total to 1,199,740 shares for the first nine months of 2014. Since the inception of the share repurchase program, the company has repurchased 4,692,385 shares for a total of $316.3 million through the third quarter 2014
  • Purchased two A319s in August off operating lease
  • Added three new destinations to Cincinnati. Cincinnati has become the fastest growing origination city in the company's history
  • In-service Airbus fleet accounted for over 21 percent of total ASM production in the quarter. In the quarter the company operated ten Airbus aircraft which is 14 percent of the total fleet 

Third quarter 2014 revenue performance

  • East Coast TRASM declined 1.4 percent, however capacity in these markets grew 27.3 percent. Flying on the East Coast accounted for 40 percent of entire network versus 36 percent a year ago
  • Hawaii TRASM grew 12.7 percent versus the same period a year ago
  • Average fare - ancillary air-related charges increased 2.1 percent, as we implemented a fee to print a boarding pass at the ticket counter in September 2014, and also due to continued strength in existing ancillary categories such as assigned seat fees, trip flex and priority boarding
 Three Months Ended September 30,  Nine Months Ended September 30,  
 20142013Change20142013Change
Scheduled Service:            
Average fare - scheduled service $86.01 $86.94 (1.1)% $91.80 $90.91 1.0%
Average fare - ancillary air-related charges $39.79 $38.99 2.1% $40.75 $40.49 0.6%
Average fare - ancillary third party products $4.15 $5.06 (18.0)% $4.65 $5.47 (15.0)%
Average fare - total $129.95 $130.99 (0.8)% $137.20 $136.87 0.2%
Scheduled service passenger revenue per ASM (PRASM) (cents) 8.21 8.14 0.9% 8.48 8.23 3.0%
Total scheduled service revenue per ASM (TRASM) (cents) 12.40 12.26 1.1% 12.67 12.39 2.3%
Load factor90.5%90.8%-0.3pp89.4%90.0%-0.6pp
Passengers (millions) 1.9 1.7 13.6% 6.1 5.4 12.2%
Average passengers per departure 150 150 —% 149 149 —%
Average scheduled service stage length (miles) 916 932 (1.7)% 939 957 (1.9)%
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

Third party products performance

  • Scheduled system capacity growth in markets outside of Las Vegas diluted overall average hotel net revenue per passenger. In addition the Company's previous pre-purchase agreement for discounted rooms concluded in the third quarter 2013 making for a difficult comp year over year. The Company entered into the current pre-purchase room agreement with the same gaming company late in the fourth quarter 2013
  • Car rental net revenue continues to improve based on recently launched technology initiatives and the network growth in Florida markets
 Three Months Ended September 30,  Nine Months Ended September 30,  
Supplemental Ancillary Revenue Information Unaudited20142013Change20142013Change
Gross ancillary revenue - third party products (millions) $27.5 $28.7 (4.2)% $95.6 $97.0 (1.4)%
Cost of goods sold (millions) ($18.9) ($19.6) (3.6)% ($65.8) ($65.7) 0.2%
Transaction costs* (millions) ($0.5) ($0.5) —% ($1.4) ($1.5) (6.7)%
Ancillary revenue - third party products (millions) $8.1 $8.6 (5.8)% $28.4 $29.8 (4.7)%
As percent of gross29.3%30.1%(0.8)pp29.7%30.7%(1.0)pp
As percent of income before taxes36.6%31.3%5.3pp21.9%25.0%(3.1)pp
Ancillary revenue - third party products/scheduled passenger $4.15 $5.06 (18.0)% $4.65 $5.47 (15.0)%
             
Hotel room nights (thousands) 125.0 144.4 (13.4)% 405.3 471.0 (13.9)%
Rental car days (thousands) 198.8 195.3 1.8% 725.1 684.1 6.0%
* - Includes payment expenses and travel agency commissions.

Third quarter 2014 cost performance

  • Total operating expense per ASM (CASM) increased 6.0 percent year over year
  • CASM and CASM ex fuel were impacted by approximately $7 million of nonrecurring expenses due to the immediate vesting of all unvested equity incentive options and restricted stock triggered by the departure of Andrew Levy
  • Fuel expense per ASM decreased by 4.9 percent due to a combination of a 2.2 percent decrease in average cost per gallon and improved fuel efficiency. Our fuel efficiency metrics continued to improve as gallons per passenger declined 4.1 percent and ASMs per gallon increased by 2.8 percent versus the same period last year
  • Salary and benefits expense per ASM increased 22.3 percent versus last year driven by a 15.6 percent increase in full time equivalents (FTEs) and one-time expenses tied to the departure of Andrew Levy. Excluding these one-time expenses, salary and benefits expense per ASM would have increased 5.2 percent. This line item is still being pressured by crew training constraints that have negatively impacted our crew productivity and overall growth
  • Sales and marketing expense increased by $3.3 million from the prior year due to higher transaction costs driven by a 12.4 percent increase in scheduled service revenue, and a slight change in credit/debit card mix. Advertising expenses related to a national ad campaign and the production costs related to the completion of the company's "Game Plane" game show contributed $1.5 million during the quarter. In the third quarter of 2014, the company spent $.84 per scheduled passenger in advertising versus $0.32 per passenger in the prior year
  • Depreciation and amortization expense increased 29.6 percent due to an 11.7 percent increase in average aircraft and depreciation related to twelve owned A319 aircraft currently on lease to a European carrier. Excluding the twelve A319s, which are non ASM producing aircraft, depreciation expense per ASM would have decreased 1.7 percent. The company announced on June 13, 2014 that it had purchased the twelve A319s and it will receive lease revenue of approximately $30 million a year from these aircraft through 2018
  • Other operating expense per ASM increased 11.7 percent as the company moved flight crews to support seasonal bases in Myrtle Beach and Los Angeles and continues to use outside support for ongoing IT projects
 Three Months Ended September 30,  Nine Months Ended September 30,  
 20142013Change20142013Change
Total System*:            
Operating expense per passenger $119.76 $114.54 4.6% $115.63 $114.47 1.0%
Operating expense per passenger, excluding fuel $71.66 $63.37 13.1% $65.81 $61.18 7.6%
Operating expense per ASM (CASM) (cents) 11.21 10.58 6.0% 10.56 10.24 3.1%
Operating expense, excluding fuel per ASM (CASM ex fuel) (cents) 6.71 5.85 14.7% 6.01 5.47 9.9%
Average block hours per aircraft per day 5.0 5.1 (2.0)% 5.5 5.5 —%
Average system stage length (miles) 902 910 (0.9)% 925 936 (1.2)%
* - Total system includes scheduled service, fixed-fee contract and non-revenue flying.

Fourth quarter 2014 cost trends

  • CASM ex fuel is expected to increase between 9 and 11 percent
  • In comparison to last year, CASM and CASM ex fuel are both impacted by depreciation expense on twelve aircraft leased out to a European operator not producing ASMs for Allegiant. In addition, we expect higher maintenance expenses due to a larger number of planned maintenance events versus the same period last year. Full year 2014 maintenance expense per in service aircraft per month is expected to be between $105 thousand and $110 thousand 

Balance sheet highlights

  • Repurchased 456,296 number of shares of common stock for $55.8 million in the third quarter. The company has increased its share repurchase authority to $100 million
  • Purchased 82,000 square feet of additional space adjacent to our headquarters for approximately $10 million in October 2014
Unaudited (millions)9/30/201412/31/2013Change
Unrestricted cash* $457.9 $387.1 18.3%
Total debt $606.3 $234.3 158.8%
Total Allegiant Travel Company stockholders' equity $340.0 $375.7 (9.5)%
       
 Nine Months Ended September 30,  
Unaudited (millions)20142013Change
Capital expenditures $330.1 $161.6 104.3%
* - 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      
       
 October 20144Q14  
Estimated PRASM year-over-year change (4.5) to (2.5)% (2) to 0%  
Estimated TRASM year-over-year change (2) to 0% 0 to 2%  
       
Fixed fee and other revenue guidance  4Q14  
Fixed fee and other revenue (millions)   $12 to $14  
       
Capacity guidance      
System4Q141Q15FY14
Departure year-over-year growth 10 to 12% 3 to 7%  
ASM year-over-year growth 9 to 11% 0 to 4% 9 to 10%
Scheduled      
Departure year-over-year growth 10 to 12% 3 to 7%  
ASM year-over-year growth 9 to 11% 0 to 4% 9 to 10%
       
Cost guidance4Q14  FY14
CASM ex fuel – year-over-year change 9 to 11%   9.5 to 10.5%
       
CAPEX guidance  FY14FY15
Capital expenditures (millions)   $415 $160 to $170
CASM ex fuel – cost per available seat mile excluding fuel expense
       
Aircraft fleet plan by end of period
       
Aircraft - (seats per AC)YE14YE15YE16
MD-80 (166 seats) 53 53 53
757 (215 seats) 6 6 6
A319 (156 seats) 4 9 10
A320 (177 seats) 7 10 10
Total 70 78 79
Aircraft listed in table above include only in service aircraft
Allegiant Travel Company will host a conference call with analysts at 4:30 p.m. ET Wednesday, October 22, 2014 to discuss its third quarter 2014 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.

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, 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, 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 September 30, 2014 and 2013 
(in thousands, except per share amounts)
(Unaudited)
       
       
 Three Months Ended September 30,Percent
 20142013change
OPERATING REVENUE:      
Scheduled service revenue $166,893 $148,466 12.4
Ancillary revenue:      
Air-related charges 77,198 66,577 16.0
Third party products 8,051 8,646 (6.9)
Total ancillary revenue 85,249 75,223 13.3
Fixed fee contract revenue 4,899 3,985 22.9
Other revenue 7,988 1,200 565.7
Total operating revenue 265,029 228,874 15.8
OPERATING EXPENSES:      
Aircraft fuel 94,864 89,195 6.4
Salary and benefits 52,109 38,135 36.6
Station operations 21,064 19,114 10.2
Maintenance and repairs 22,562 18,310 23.2
Sales and marketing 7,808 4,514 73.0
Aircraft lease rentals 1,565 2,025 (22.7)
Depreciation and amortization 22,174 17,106 29.6
Other 14,016 11,243 24.7
Total operating expenses 236,162 199,642 18.3
OPERATING INCOME 28,867 29,232 (1.2)
As a percent of total operating revenue10.9%12.8%  
OTHER (INCOME) EXPENSE:      
Earnings from unconsolidated affiliates, net (101) (214) (52.8)
Interest income (106) (328) (67.7)
Interest expense 7,097 2,257 214.4
Total other (income) expense 6,890 1,715 301.7
INCOME BEFORE INCOME TAXES 21,977 27,517 (20.1)
As a percent of total operating revenue8.3%12.0%  
PROVISION FOR INCOME TAXES 7,866 10,520 (25.2)
NET INCOME 14,111 16,997 (17.0)
Net loss attributable to noncontrolling interest (61) (109) (44.0)
NET INCOME ATTRIBUTABLE TO ALLEGIANT TRAVEL COMPANY 14,172 17,106 (17.2)
Earnings per share to common stockholders (1):      
Basic $0.80 $0.91 (12.1)
Diluted $0.80 $0.91 (12.1)
Weighted average shares outstanding used in computing earnings per share to common stockholders (1):      
Basic 17,605 18,629 (5.5)
Diluted 17,704 18,794 (5.8)
       
(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
Three Months Ended September 30, 2014 and 2013
(Unaudited)
       
 Three Months Ended September 30,Percent
 20142013change*
OPERATING STATISTICS      
Total system statistics      
Passengers 1,971,917 1,742,961 13.1
Revenue passenger miles (RPMs) (thousands) 1,867,660 1,685,208 10.8
Available seat miles (ASMs) (thousands) 2,106,214 1,886,698 11.6
Load factor 88.7% 89.3% (0.6)
Operating revenue per ASM (RASM) (cents) 12.58 12.13 3.7
Operating expense per ASM (CASM) (cents) 11.21 10.58 6.0
Fuel expense per ASM (cents) 4.50 4.73 (4.9)
Operating CASM, excluding fuel (cents) 6.71 5.85 14.7
Operating expense per passenger $119.76 $114.54 4.6
Fuel expense per passenger $48.11 $51.17 (6.0)
Operating expense per passenger, excluding fuel $71.66 $63.37 13.1
ASMs per gallon of fuel 68.9 67.0 2.8
Departures 13,607 12,077 12.7
Block hours 31,486 28,773 9.4
Average stage length (miles) 902 910 (0.9)
Average number of operating aircraft during period 69.0 61.8 11.7
Average block hours per aircraft per day 5.0 5.1 (2.0)
Full-time equivalent employees at period end 2,315 2,003 15.6
Fuel gallons consumed (thousands) 30,566 28,169 8.5
Average fuel cost per gallon $3.10 $3.17 (2.2)
Scheduled service statistics      
Passengers 1,940,348 1,707,639 13.6
Revenue passenger miles (RPMs) (thousands) 1,839,640 1,656,872 11.0
Available seat miles (ASMs) (thousands) 2,033,318 1,823,901 11.5
Load factor 90.5% 90.8% (0.3)
Departures 12,925 11,368 13.7
Average passengers per departure 150 150
Scheduled service seats per departure 168.7 168.7
Block hours 30,265 27,559 9.8
Yield (cents) 9.07 8.96 1.2
Scheduled service revenue per ASM (PRASM) (cents) 8.21 8.14 0.9
Total ancillary revenue per ASM (cents) 4.19 4.12 1.7
Total scheduled service revenue per ASM (TRASM) (cents) 12.40 12.26 1.1
Average fare - scheduled service $86.01 $86.94 (1.1)
Average fare - ancillary air-related charges $39.79 $38.99 2.1
Average fare - ancillary third party products $4.15 $5.06 (18.0)
Average fare - total $129.95 $130.99 (0.8)
Average stage length (miles) 916 932 (1.7)
Fuel gallons consumed (thousands) 29,509 27,084 9.0
Average fuel cost per gallon $3.16 $3.23 (2.2)
Percent of sales through website during period 93.8% 93.6% 0.2
       
* Except load factor and percent of sales through website, which is percentage point change.
 
Allegiant Travel Company
Consolidated Statements of Income
Nine Months Ended September 30, 2014 and 2013
(in thousands, except per share amounts)
(Unaudited)
       
       
 Nine Months Ended September 30,Percent
 20142013change
OPERATING REVENUE:      
Scheduled service revenue $559,587 $493,700 13.3
Ancillary revenue:      
Air-related charges 248,432 219,904 13.0
Third party products 28,338 29,733 (4.7)
Total ancillary revenue 276,770 249,637 10.9
Fixed fee contract revenue 10,508 12,267 (14.3)
Other revenue 11,229 2,075 441.2
Total operating revenue 858,094 757,679 13.3
OPERATING EXPENSES:      
Aircraft fuel 308,308 294,762 4.6
Salary and benefits 145,845 118,951 22.6
Station operations 63,453 58,670 8.2
Maintenance and repairs 64,590 56,773 13.8
Sales and marketing 22,269 15,727 41.6
Aircraft lease rentals 12,897 3,693 249.2
Depreciation and amortization 60,355 51,890 16.3
Other 37,826 32,758 15.5
Total operating expenses 715,543 633,224 13.0
OPERATING INCOME 142,551 124,455 14.5
As a percent of total operating revenue16.6%16.4%  
OTHER (INCOME) EXPENSE:      
Earnings from unconsolidated affiliates, net (173) (384) (54.9)
Interest income (545) (806) (32.4)
Interest expense 13,817 6,739 105.0
Total other (income) expense 13,099 5,549 136.1
INCOME BEFORE INCOME TAXES 129,452 118,906 8.9
As a percent of total operating revenue15.1%15.7%  
PROVISION FOR INCOME TAXES 47,900 44,391 7.9
NET INCOME 81,552 74,515 9.4
Net loss attributable to noncontrolling interest (340) (283) 20.1
NET INCOME ATTRIBUTABLE TO ALLEGIANT TRAVEL COMPANY 81,892 74,798 9.5
Earnings per share to common stockholders (1):      
Basic $4.56 $3.92 16.3
Diluted $4.54 $3.90 16.4
Weighted average shares outstanding used in computing earnings per share to common stockholders (1):      
Basic 17,848 18,925 (5.7)
Diluted 17,912 19,042 (5.9)
       
(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 Company
Operating Statistics
Nine Months Ended September 30, 2014 and 2013
(Unaudited)
       
 Nine Months Ended September 30,Percent
 20142013change*
OPERATING STATISTICS      
Total system statistics      
Passengers 6,188,299 5,531,774 11.9
Revenue passenger miles (RPMs) (thousands) 5,979,798 5,482,699 9.1
Available seat miles (ASMs) (thousands) 6,776,554 6,184,503 9.6
Load factor 88.2% 88.7% (0.5)
Operating revenue per ASM (RASM) (cents) 12.66 12.25 3.3
Operating expense per ASM (CASM) (cents) 10.56 10.24 3.1
Fuel expense per ASM (cents) 4.55 4.77 (4.6)
Operating CASM, excluding fuel (cents) 6.01 5.47 9.9
Operating expense per passenger $115.63 $114.47 1.0
Fuel expense per passenger $49.82 $53.29 (6.5)
Operating expense per passenger, excluding fuel $65.81 $61.18 7.6
ASMs per gallon of fuel 69.5 67.4 3.1
Departures 42,783 38,606 10.8
Block hours 102,300 95,196 7.5
Average stage length (miles) 925 936 (1.2)
Average number of operating aircraft during period 68.7 63.2 8.7
Average block hours per aircraft per day 5.5 5.5
Full-time equivalent employees at period end 2,315 2,003 15.6
Fuel gallons consumed (thousands) 97,511 91,797 6.2
Average fuel cost per gallon $3.16 $3.21 (1.6)
Scheduled service statistics      
Passengers 6,095,857 5,430,771 12.2
Revenue passenger miles (RPMs) (thousands) 5,901,375 5,400,035 9.3
Available seat miles (ASMs) (thousands) 6,599,798 5,997,938 10.0
Load factor 89.4% 90.0% (0.6)
Departures 41,017 36,568 12.2
Average passengers per departure 149 149
Scheduled service seats per departure 168.6 168.4 0.1
Block hours 99,226 91,575 8.4
Yield (cents) 9.48 9.14 3.7
Scheduled service revenue per ASM (PRASM) (cents) 8.48 8.23 3.0
Total ancillary revenue per ASM (cents) 4.19 4.16 0.7
Total scheduled service revenue per ASM (TRASM) (cents) 12.67 12.39 2.3
Average fare - scheduled service $91.80 $90.91 1.0
Average fare - ancillary air-related charges $40.75 $40.49 0.6
Average fare - ancillary third party products $4.65 $5.47 (15.0)
Average fare - total $137.20 $136.87 0.2
Average stage length (miles) 939 957 (1.9)
Fuel gallons consumed (thousands) 94,875 88,716 6.9
Average fuel cost per gallon $3.20 $3.26 (1.8)
Percent of sales through website during period 93.8% 93.7% 0.1
       
* Except load factor and percent of sales through website, which is percentage point change.

Allegiant Travel Company
Non-GAAP Presentations
Three and Nine Months Ended September 30, 2014 and 2013
(Unaudited)

 "EBITDA" represents earnings before interest expense, income taxes, depreciation and amortization. EBITDAR is EBITDA less aircraft lease rentals expense. Neither EBITDA nor EBITDAR is 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 and EBITDAR are included as supplemental disclosures because we believe they are useful indicators of our operating performance. Further, both EBITDA and EBITDAR are well-recognized performance measurements that are frequently used by securities analysts, investors and other interested parties in comparing the operating performance of companies. We believe EBITDA and EBITDAR are useful in evaluating our operating performance compared to our competitors because their calculation generally eliminates the effects of financing and income taxes and the accounting effects of capital spending and acquisitions and lease versus purchase decisions, which items may vary between periods and for different companies for reasons unrelated to overall operating performance. The following represents the reconciliation of EBITDA and EBITDAR 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 measures EBITDA and EBITDAR 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 measures to the most comparable GAAP measure.  Our utilization of non-GAAP measurements 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. Neither EBITDA nor EBITDAR is a GAAP measurement and our use of these measures 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 September 30,Percent
(in thousands)20142013change
Net income attributable to Allegiant Travel Company  $ 14,172  $ 17,106 (17.2)%
Plus (minus)      
Interest income (106) (328) (67.7)%
Interest expense 7,097 2,257 214.4%
Provision for income taxes 7,866 10,520 (25.2)%
Depreciation and amortization 22,174 17,106 29.6%
EBITDA$51,203 $46,661 9.7%
Aircraft lease rentals 1,565 2,025 (22.7)%
EBITDAR$52,768 $48,686 8.4%
       
Total revenue $265,029 $228,874 15.8%
EBITDA margin19.3%20.4% (1.1)pp
EBITDAR margin19.9%21.3% (1.4)pp
 
 Nine Months Ended September 30,Percent
(in thousands)20142013change
Net income attributable to Allegiant Travel Company 81,892 74,798 9.5%
Plus (minus)      
Interest income (545) (806) (32.4)%
Interest expense 13,817 6,739 105.0%
Provision for income taxes 47,900 44,391 7.9%
Depreciation and amortization 60,355 51,890 16.3%
EBITDA$203,419 $177,012 14.9%
Aircraft lease rentals 12,897 3,693 249.2%
EBITDAR$216,316 $180,705 19.7%
       
Total revenue $858,094 $757,679 13.3%
EBITDA margin23.7%23.4% 0.3pp
EBITDAR margin25.2%23.8% 1.4pp
 
Appendix A
Additional Financial Information
(Unaudited)
     
 Twelve Months Ended September 30,
Return on capital calculation (millions)20142013
Net income attributable to Allegiant Travel Company  $ 99.4  $ 89.6
Income tax 58.4 53.2
Interest expense 16.6 8.9
Less interest income (0.8) (1.0)
  173.6 150.7
     
Interest income 0.8 1.0
Tax rate 37.0% 37.3%
Numerator109.995.1
     
Total assets as of prior September 30 843.9 821.1
Less current liabilities as of prior September 30 227.9 210.3
Plus short term debt as of prior September 30 13.6 11.6
Denominator629.6622.4
Return on capital employed17.5%15.3%
     
     
To provide more transparency into operating expenses for the quarter, the company experienced the following non-cash expense items in the third quarter of 2014.
     
     
Non-cash items (millions)3Q143Q13
Stock based compensation $9.3 $2.7
Loss - disposed assets 1.2 2.0
Total of selected non-cash items $10.5 $4.7
CONTACT: Media Inquiries: Jessica Wheeler
         mediarelations@allegiantair.com
         
         Investor Inquiries: Chris Allen
         ir@allegiantair.com

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