Allegiant Travel Company · NASDAQ:ALGT
Allegiant Travel — Investor Presentation (December 2015)
30 slides from Allegiant Travel's investor presentation, Dec 1, 2015
Slide 1: Management Presentation December 2015
Management Presentation December 2015
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 51 quarters (1) – LTM 3Q15 Adjusted EBITDA $434.6mm (2) – LTM 3Q15 Return on Capital 21.4%(2) Strong balance sheet – Rated BB and Ba3(3) – Debt/adjusted EBITDAR 1.5x(2) – $121mm in share repurchases through 9/30/
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 5 195 226 233 271 175 200 225 250 275 300 2012 2013 2014 3Q15 Routes 6.95 7.89 8.69 9.70 6.00 7.00 8.00 9.00 10.00 2012 2013 2014 LTM 3Q15 A S M s - b ill io n s Scheduled ASMs $909 $996 $1,137 $1,230 $800 $900 $1,000 $1,100 $1,200 $1,300 2012 2013 2014 LTM 3Q15 U S D - m
Slide 6: A very large niche
A very large niche Based on current published schedule through August 16, 2016 305 routes, 83 operating aircraft 92 small/medium cities, 17 leisure destinations 6 Yellow dots – leisure destinations Blue dots – origination cities Large dots - bases
Slide 7: Little competition
Little competition 50 255 Routes w competition Routes wo competition Current competitive landscape Uniquely built to profitably operate in underserved markets 7 Competitors – overlapping routes Legacy carriers 50 Brand / lower cost carriers 5 ULCC carriers 9 Based on current published schedule throu
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 6.4 ALGT 5.8 ALGT 2015 guided 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 LTM 3Q15,
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 CASM ex fuel is expected to grow between 0% and 4% versus 2015 2016 maintenance expense is expected to be between $115 and $125 thousand per aircraft per month – Expect 19 more maintenance events than expected in 2015 Total ownership expense is expected to be between $100 and $110 thousan
Slide 13: 2016 estimated capacity highlights
2016 estimated capacity highlights 13 2016 scheduled ASMs are expected to grow between 12% and 16% versus 2015 Approximately 50% of ASMs will be flown by Airbus aircraft Expect 12% of ASMs to be in markets that have been in operation for less than one year Expect off peak ASMs to grow to 24%
Slide 14: 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 4 7 .2 $14.9 $14.9 $53.5 $53.5 $95.3 $ 1 5 2 .7 $0 $100 $200 $300 $400 $500 $600 2007 2008 2009 2010 2011 2012 2013 2014 2015 $ m m Share repurchases Dividends 14 $599m returned to shareholders since
Slide 15: Existing guidance
4Q15 TRASM (10.5) to (8.5)% 4Q15 CASM ex fuel (33) to (31)% FY16 CASM ex fuel 0 to 4% 4Q15 Fixed fee + other revenue $13mm to $15mm FY15 CAPEX ~$275mm 4th Quarter 2015 1st Quarter 2016 Full year 2016 System departures 22 to 26% 14 to 18% System ASMs 22 to 26% 15 to 19% 12 to 16% Scheduled
Slide 16: Appendix
Appendix — allegrant,
Slide 17: GAAP reconciliation: Adjustment for special item
GAAP reconciliation Adjustment for special item 17 LTM 3Q15 2014 $mm – except per share amounts Net income as reported 168.5 86.7 + Add provision for income taxes, as reported 97.8 50.8 Income before income taxes as reported 266.3 137.1 + Other expense 26.6 20.2 Operating income 292.9 157.3 + Boeing
Slide 18: GAAP reconciliation: EBITDA calculations
GAAP reconciliation EBITDA calculations 18 $mm LTM 3Q15 2014 2013 2012 Net Income 168.5 86.7 92.3 78.6 +Total comprehensive income (loss) 1.7 2.3 .6 (.4) +Provision for Income Taxes 97.8 50.8 54.9 46.2 +Other Expenses 1 26.6 20.2 8.1 7.7 +Depreciation and Amortization 96.7 83.4 69.3 57.5 =EBITDA 391
Slide 19: GAAP reconciliation: Return on equity
GAAP reconciliation Return on equity 19 $mm LTM 3Q15 2014 2013 2012 2011 Adjusted net Income 195.8 113.2 92.3 78.6 49.4 Sep 2015 Sep 2014 Dec 2014 Dec 2013 Dec 2012 Dec 2011 Total shareholders equity 334.1 341.2 294.1 377.3 401.7 351.5 Return on equity 58% 34% 24% 21% 15% ROE = Net income / Avg shar
Slide 20: GAAP reconciliation: Return on capital employed
GAAP reconciliation Return on capital employed calculation $mm LTM 3Q15 2014 2013 2012 2011 + Adjusted net income 195.8 113.2 92.3 78.6 49.4 + Income tax 113.7 66.8 54.9 46.2 30.1 + Interest expense 27.9 21.2 9.5 8.7 7.2 - Interest income 1.2 0.8 1.0 1.0 1.2 336.2 200.4 155.7 132.5 85.5 + Interest i
Slide 21: GAAP reconciliation: Free cash flow calculations
GAAP reconciliation Free cash flow calculations 21 $mm LTM 3Q15 2014 2013 2012 2011 Cash from operations 343.1 271.7 196.9 176.8 129.9 - Cash CAPEX 265.2 279.4 177.5 105.1 86.6 = Free cash flow 77.9 (7.7) 19.4 71.7 43.3 2014 CAPEX is cash CAPEX and does not include $142m in assumed debt included in
Slide 22: GAAP reconciliation: Net debt
GAAP reconciliation Net debt 22 $mm Sep 2015 Dec 2014 Dec 2013 Dec 2012 Dec 2011 Current maturities of long term debt 69.6 53.8 20.2 11.7 7.9 Long term debt, net of current maturities 566.2 539.3 214.1 139.2 138.1 Total debt 635.8 593.1 234.3 150.9 146.0 Cash and cash equivalents 78.5 89.6 97.7 89.6
Slide 23: Revenue components
Revenue components 23 $88.90 $91.69 $91.30 $81.43 $80 $85 $90 $95 2012 2013 2014 LTM 3Q15 Average fare - scheduled service $5.48 $5.21 $4.56 $4.46 $4.00 $4.50 $5.00 $5.50 $6.00 2012 2013 2014 LTM 3Q15 Average fare - ancillary third party products $35.72 $40.52 $41.37 $45.70 $30.00 $35.00 $40.00 $45.
Slide 24: LTM 3Q15 cost per passenger
LTM 3Q15 cost per passenger Low cost drivers $33 $29 $36 $43 $11 $16 $11 $13 $10 $5 $8 $14 $24 $21 $53 $43 $20 $24 $29 $38 ALGT SAVE LUV JBLU 24 Source: Company filings Ownership includes depreciation & amortization + aircraft rent Other excludes special items and one-time charges for other carriers
Slide 25: Credit metrics
Credit metrics 15.6% 16.4% 19.2% 21.4% 13.0% 10% 20% 2012 2013 2014 LTM 3Q15 LUV LTM 3Q15 25 Return on capital employed 21.0% 24.0% 34.0% 58.0% 25.5% 10% 20% 30% 40% 50% 60% 70% 2012 2013 2014 LTM 3Q15 LUV LTM 3Q15 Return on equity 21.8 x 23.7 x 13.5 x 15.6 x 32.5 x 10 15 20 25 30 35 2012 2013 2014
Slide 26: Strong cash generation
Strong cash generation $190 $225 $287 $435 $150 $200 $250 $300 $350 $400 $450 2012 2013 2014 LTM 3Q15 $ m m 26 Adjusted EBITDA $3.2 $3.6 $4.2 $6.0 $3.0 $3.5 $4.0 $4.5 $5.0 $5.5 $6.0 2012 2013 2014 LTM 3Q15 $ m m Adj EBITDA per AC Free cash flow $72 $19 -$8 $78 -$25 $0 $25 $50 $75 $100 2012 2013 2014
Slide 27: Sources/uses of cash
Sources/uses of cash $105 $178 $279 $265 $0 $50 $100 $150 $200 $250 $300 2012 2013 2014 LTM 3Q15 $ m m 27 CAPEX $9.3 $22.7 $168.8 $60.0 $0.0 $50.0 $100.0 $150.0 $200.0 2012 2013 2014 LTM 3Q15 $ m m Debt payments Cash from operations $177 $197 $270 $343 $0 $150 $300 $450 2012 2013 2014 LTM 3Q15 $ m m
Slide 28: Airbus growth will help improve fuel burn
Airbus growth will help improve fuel burn 28 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% 2011 2012 2013 2014 LTM 3Q15 Fuel expense/total revenue 1 - As of LTM 3Q15 Fuel has greatest leverage to earnings – Fuel ~ 32% of total operating expense(1) – Airbus aircraft flew 29% of LTM 3Q15 scheduled block hours
Slide 29: Aircraft utilization
Aircraft utilization Airbus aircraft allows previously marginal flying to be profitable – Longer routes (Bismarck, ND to Orlando) – Off-peak day flying (Columbus, OH to St. Pete Wed/Sat 2x weekly) – Off-peak season flying (Syracuse, NY to St. Pete in September) – Previously canceled markets (Ft. W
Slide 30: Capitalization structure
Capitalization structure Actual 9/30/15 (MM USD) Debt to LTM Adj EBITDAR Rate Maturity Unrestricted cash 325.5 LTM Adjusted EBITDAR 439.7 Secured by AC 28.9 L + 2.95% Apr 2018 Secured by AC 117.4 L + 3.08% May 2018 Secured by AC 27.9 L + 2.95% May 2018 Secured by AC 29.8 3.99% Oct 2018 Secured by re
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