Allegiant Travel Company · NASDAQ:ALGT
Allegiant Travel — Investor Presentation (February 2016)
28 slides from Allegiant Travel's investor presentation, Feb 8, 2016
Slide 1: Management Presentation February 2016
Management Presentation February 2016
Slide 2: Forward looking statements
Forward looking statements 2 This presentation as well as oral statements made by officers or directors of Allegiant Travel Company, its advisors and affiliates (collectively or separately, the "Company“) will contain forward- looking statements that are only predictions and involve risks and uncert
Slide 3: Unique business model and results
Unique business model and results Highly resilient and profitable – Profitable last 52 quarters (1) – 2015 EBITDA $469.6mm (2) – 2015 Return on Capital 25.6%(2) Strong balance sheet – Rated BB and Ba3(3) – Adjusted debt/ EBITDAR 1.4x(2) – $190mm returned to shareholders in 2015 • $54 mm in share
Slide 4: Advantages over the typical carrier
Advantages over the typical carrier 4 Leisure customer – Will travel in all economic conditions – Vacations are valued – price dependent Small/medium cities – Filling a large void – Increasing opportunity - industry restructuring – Diversity of network - minimizes competition Flexibility – Adj
Slide 5: Measured, profitable growth
Measured, profitable growth 5 195 226 233 296 175 200 225 250 275 300 2012 2013 2014 2015 Routes 6.95 7.89 8.69 10.24 6.00 7.00 8.00 9.00 10.00 11.00 2012 2013 2014 2015 A S M s - b ill io n s Scheduled ASMs $909 $996 $1,137 $1,262 $800 $900 $1,000 $1,100 $1,200 $1,300 2012 2013 2014 2015 U S D - m
Slide 6: A very large niche
A very large niche Based on current published schedule through August 16, 2016 322 routes, 83 operating aircraft 92 small/medium cities, 19 leisure destinations 6 Yellow dots – leisure destinations Blue dots – origination cities Large dots - bases
Slide 7: Little competition
Little competition 49 273 Routes w competition Routes wo competition Current competitive landscape Uniquely built to profitably operate in underserved markets 7 Competitors – overlapping routes Legacy carriers 48 Brand / lower cost carriers 6 ULCC carriers 14 Based on current published schedule thro
Slide 8: Low frequency model
Low frequency model 8 3.5 4.0 4.5 5.0 5.5 6.0 6.5 7.0 7.5 8.0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec S y ste m b lock h o u rs/ A C/ d a y 2013 2014 2015E 2016E Avg. block hours/AC/day 1 - Peak = peak is defined as 11/23 – 12/1, 12/21 – 1/3, 2/18 – 4/14, 6/3 – 8/18. Remaining is off peak 2
Slide 9: Medium and small markets still underserved
Medium and small markets still underserved 9 Categories (sorted by passengers per day each way and adjusted for alternate airports): • Large – Top 25 metro areas • Medium – 26 to 60 top metro areas • Small – all other metro areas (10.0)% (5.0)% 0.0 % 5.0 % 10.0 % 15.0 % 20.0 % 25.0 % Medium to mediu
Slide 10: Low costs even with low utilization
Low costs even with low utilization 7.8 JBLU 5.6 SAVE 7.4 ALK 5.8 ALGT 5.0 5.5 6.0 6.5 7.0 7.5 8.0 5 6 7 8 9 10 11 12 13 14 CA S M e x f u e l (ce n ts ) Average daily aircraft utilization – LTM (block hours per day) CASM ex fuel vs daily aircraft utilization 10 As of 2015, ALGT – Allegiant, JBLU –
Slide 11: Airbus fleet count
Airbus 11 Actual and projected fleet count of in service aircraft (based on signed contracts only) – end of period Total fleet includes A320, A319, MD-80 and Boeing 757 Total fleet count reflects assumptions of current market expectations, demand for Allegiant service, aircraft retirements, and is s
Slide 12: 2016 estimated cost highlights
2016 maintenance expense is expected to be between $115 and $125 thousand per aircraft per month – Expect 19 more maintenance events than completed in 2015 Total ownership expense is expected to be between $100 and $110 thousand per aircraft per month Maintenance expense is higher due to a gre
Slide 13: Cumulative return to shareholders
Cumulative return to shareholders $0.6 $17.4 $42.7 $96.5 $98.4 $ 1 0 3 .4 $ 1 8 7 .0 $ 3 2 6 .1 $ 4 5 4 .1 $14.9 $14.9 $53.5 $53.5 $95.3 $ 1 5 7 .8 $0 $100 $200 $300 $400 $500 $600 2007 2008 2009 2010 2011 2012 2013 2014 2015 $ m m Share repurchases Dividends 13 $612m returned to shareholders since
Slide 14: Existing guidance
1Q16 TRASM (13) to (11)% vs 1Q15 1Q16 CASM ex fuel (4) to (2)% vs 1Q15 FY16 CASM ex fuel 0 to 4% vs 1Q15 1Q16 Fixed fee + other revenue $11mm to $13mm FY16 CAPEX $188mm 1st Quarter 2016 2nd Quarter 2016 Full year 2016 System departures 14 to 18% 13 to 17% System ASMs 15 to 19% 12 to 16% 12
Slide 15: Appendix
Appendix — allegrant,
Slide 16: GAAP reconciliation: adjustment for special item
GAAP reconciliation Adjustment for special item 16 2014 $mm – except per share amounts Net income as reported 86.3 + Add provision for income taxes, as reported 50.8 Income before income taxes as reported 137.1 + Other expense 20.2 Operating income 157.3 + Boeing 757 fleet write down 43.3 Adjusted o
Slide 17: GAAP reconciliation: EBITDA calculations
GAAP reconciliation EBITDA calculations 17 $mm 2015 2014 2013 2012 Net Income attributable to Allegiant Travel Co. 220.4 86.7 92.3 78.6 +Total comprehensive income (loss) (.4) 1.2 .1 0 +Provision for Income Taxes 126.4 50.8 54.9 46.2 +Other Expenses 1 25.1 20.4 8.5 7.7 +Depreciation and Amortization
Slide 18: GAAP reconciliation: return on equity
GAAP reconciliation Return on equity 18 $mm 2015 2014 2013 2012 2011 Net Income attributable to Allegiant Travel Co. 220.4 113.2 92.3 78.6 49.4 Dec 2015 Dec 2014 Dec 2013 Dec 2012 Dec 2011 Total shareholders equity 350.0 294.1 377.3 401.7 351.5 Return on equity 68% 34% 24% 21% 15% ROE = Net income /
Slide 19: GAAP reconciliation: return on capital employed
GAAP reconciliation Return on capital employed calculation $mm 2015 2014 2013 2012 2011 + Net income attributable to Allegiant Travel Co. 220.4 113.2 92.3 78.6 49.4 + Income tax 126.4 66.8 54.9 46.2 30.1 + Interest expense 26.5 21.2 9.5 8.7 7.2 - Interest income 1.4 0.8 1.0 1.0 1.2 371.9 200.4 155.7
Slide 20: GAAP reconciliation: free cash flow
GAAP reconciliation Free cash flow calculations 20 $mm 2015 2014 2013 2012 2011 Cash from operations 365.4 269.8 196.9 176.8 129.9 - Cash CAPEX 252.7 279.4 177.5 105.1 86.6 = Free cash flow 112.7 (9.6) 19.4 71.7 43.3 2014 CAPEX is cash CAPEX and does not include $142m in assumed debt included in the
Slide 21: GAAP reconciliation: net debt
GAAP reconciliation Net debt 21 $mm Dec 2015 Dec 2014 Dec 2013 Dec 2012 Dec 2011 Current maturities of long term debt 74.1 53.8 20.2 11.7 7.9 Long term debt, net of current maturities 567.6 539.3 214.1 139.2 138.1 Total debt 1 641.7 593.1 234.3 150.9 146.0 Cash and cash equivalents 87.1 89.6 97.7 89
Slide 22: Revenue components
Revenue components 22 $88.90 $91.69 $91.30 $78.63 $75 $80 $85 $90 $95 2012 2013 2014 2015 Average fare - scheduled service $5.48 $5.21 $4.56 $4.29 $4.00 $4.50 $5.00 $5.50 $6.00 2012 2013 2014 2015 Average fare - ancillary third party products $35.72 $40.52 $41.37 $46.43 $30.00 $35.00 $40.00 $45.00 $
Slide 23: 2015 cost per passenger
2015 cost per passenger Low cost drivers $29 $29 $32 $38 $11 $16 $11 $13 $10 $5 $8 $14 $24 $21 $54 $44 $20 $24 $29 $39 ALGT SAVE LUV JBLU 23 Source: Company filings Ownership includes depreciation & amortization + aircraft rent Other excludes special items and one-time charges for other carriers SAV
Slide 24: Credit metrics
Credit metrics 15.6% 16.4% 19.2% 25.6% 15.7% 10% 20% 30% 2012 2013 2014 2015 LUV 2015 24 Return on capital employed 21.0% 24.0% 34.0% 68.0% 30.9% 10% 20% 30% 40% 50% 60% 70% 80% 2012 2013 2014 2015 LUV 2015 Return on equity 21.8 x 23.7 x 13.5 x 17.7 x 38.1 x 10 15 20 25 30 35 40 2012 2013 2014 2015
Slide 25: Strong cash generation
Strong cash generation $190 $225 $286 $470 $150 $200 $250 $300 $350 $400 $450 $500 2012 2013 2014 2015 $ m m 25 EBITDA $3.2 $3.6 $4.1 $6.3 $3.0 $3.5 $4.0 $4.5 $5.0 $5.5 $6.0 $6.5 2012 2013 2014 2015 $ m m EBITDA per AC Free cash flow $72 $19 -$10 $113 -$25 $0 $25 $50 $75 $100 $125 2012 2013 2014 201
Slide 26: Sources/uses of cash
Sources/uses of cash $105 $178 $279 $253 $0 $50 $100 $150 $200 $250 $300 2012 2013 2014 2015 $ m m 26 CAPEX $9.3 $22.7 $168.8 $67.9 $0.0 $50.0 $100.0 $150.0 $200.0 2012 2013 2014 2015 $ m m Debt payments Cash from operations $177 $197 $270 $365 $0 $150 $300 $450 2012 2013 2014 2015 $ m m $44 $84 $18
Slide 27: Airbus growth will help improve fuel burn
Airbus growth will help improve fuel burn 27 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% 2011 2012 2013 2014 2015 Fuel expense/total revenue 1 - As of 2015 Fuel has greatest leverage to earnings – Fuel ~ 31% of total operating expense(1) – Airbus aircraft flew 33% of 2015 scheduled block hours 55.0 57.0 5
Slide 28: Capitalization structure
Capitalization structure Actual 12/31/15 (MM USD) Debt to LTM EBITDAR Rate Maturity Unrestricted cash 397.5 LTM EBITDAR 471.9 Secured by AC 26.5 L + 2.95% Apr 2018 Secured by AC 112.7 L + 3.08% May 2018 Secured by AC 21.5 L + 2.95% May 2018 Secured by AC 27.4 3.99% Oct 2018 Secured by real estate 9.
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