Allegiant Travel Company · NASDAQ:ALGT
Allegiant Travel — Investor Presentation (August 2014)
36 slides from Allegiant Travel's investor presentation, Aug 12, 2014
Slide 1: Management Presentation August 2014
Management Presentation August 2014
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 46 quarters (1) – $247mm EBITDA (2) LTM 2Q14 – LTM 1Q14 Return on Capital 17.5%(2) Strong balance sheet – Rated BB- and Ba3(3) – $366 mm unrestricted cash (4) – $619 mm debt (4) – Debt/EBITDAR 2.8x(2) – $68mm sha
Slide 4: Nationwide footprint
Nationwide footprint Based on current published schedule through February 10, 2015 232 routes, 69 operating aircraft 83 small cities, 13 leisure destinations 4 Yellow dots – leisure destinations Blue dots – small cities Large dots - bases
Slide 5: Still small city focused
Still small city focused 31.0% 37.9% 20.7% 10.3% 36.9% 34.5% 14.3% 14.3% 0% 5% 10% 15% 20% 25% 30% 35% 40% <300k 300k - 600k 600k - 900k >900k % o f c it ie s Population – 25 mile catchment area 2006 2013 5 62% of cities started in 2013 < 600k people within 25 miles Origination cities – population
Slide 6: Little competition
Little competition 21 211 Routes w competition Routes wo competition Uniquely built to profitably serve small city markets 6 Competitors – overlapping routes Frontier – 2 Spirit – 1 United – 1 Southwest – 10 US Airways - 3 Delta - 5 Hawaiian – 3 Alaska – 1 American - 1 Based on current published sch
Slide 7: Historical competitive markets
Historical competitive markets 7 92% 98% 94% 94% 93% 91% 90% 91% 2007 2008 2009 2010 2011 2012 2013 Jul 2014 Percentage of routes without competition Our competitive landscape has been constant – Our low frequency, low fare model has not spurred competitive responses Source: Company filings. Route
Slide 8: Ancillary fees
Ancillary fees Fee Allegiant Spirit Checked bags 1 to 4 bags $15 - $35 1st bag $21-$30, 2nd bag $31-$40 3rd to 5th bag $76-$85 Carry-on bag $10 - $25 $26 - $35 Seat selection $0 - $90 $0 - $199 Electronic usage charge $10 $8.99 - $16.99 Call center booking fee $14.99 $15 Cancellations $75 $115 - $12
Slide 9: Growth of ancillary
Growth of ancillary 25% 30% 35% 2011 2012 2013 LTM 2Q14 Total ancillary revenue as % of total scheduled revenue 9 $89.15 $88.90 $91.69 $92.73 $125.51 $130.10 $137.43 $138.11 $60.00 $70.00 $80.00 $90.00 $100.00 $110.00 $120.00 $130.00 $140.00 $150.00 2011 2012 2013 LTM 2Q14 Average fare vs total fare
Slide 10: Ancillary revenue – third party products
Ancillary revenue – third party products Bundled vacation packages Very high margins – 22% of LTM 2Q14 pre-tax income Wholesale price for hotel & car, we manage margin, no inventory risk Hotel – dominated by Las Vegas – 2012 – LAS 34% of departures* – 2013 – LAS 31% of departures* – LTM 2Q14
Slide 11: Low costs even with low utilization
Low costs even with low utilization 7.5 JBLU 5.9 SAVE 7.6 ALK 5.8 ALGT 5 5.5 6 6.5 7 7.5 8 5 6 7 8 9 10 11 12 13 14 CA S M e x f u e l (ce n ts ) Average daily utilization - LTM CASM ex fuel vs daily utilization 11 As of LTM 2Q14 ALGT – Allegiant, JBLU – JetBlue, ALK – Alaska mainline, SAVE - Spirit
Slide 12: Airbus growth will help improve fuel burn
Airbus growth will help improve fuel burn 12 65.5 66 66.5 67 67.5 68 68.5 69 69.5 70 2Q13 3Q13 4Q13 1Q14 2Q14 Historical ASMs per gallon Aircraft / seats Gallons/ block hour*** % of AC YE13 % of AC YE14* MD-80 / 166 982 79%** 76% 757 / 215 1,076 9% 9% A319 / 156 726 5% 6% A320 / 177 763 8% 10% * - e
Slide 13: Change in seats 2009 to 2013 by Airport type
Change in seats 2009 to 2013 by Airport type 13 -4,000 -2,000 0 2,000 4,000 6,000 8,000 G4 NK WN/FL S e a ts (00 0 ’s) Non Small Medium Large Total% of US enplanements Non – 0 to .05%, Small - .05 to .25%, Medium - .25 to 1%, Large - >1% G4 = Allegiant, NK = Spirit, WN/FL = Southwest/AirTran merger
Slide 14: Consistent revenue in any environment
Consistent revenue in any environment 14 Leisure can be stimulated in any macro environment – Corporate travel bookings dependent on inflexible travel budget 90% 90% 91% 92% 89% 89% 2008 2009 2010 2011 2012 2013 Load Factor $84.97 $70.38 $76.26 $89.15 $88.90 $91.69 2008 2009 2010 2011 2012 2013 Ba
Slide 15: US GDP not as important as fuel
US GDP not as important as fuel -3.00% -2.00% -1.00% 0.00% 1.00% 2.00% 3.00% -50.0% -40.0% -30.0% -20.0% -10.0% 0.0% 10.0% 20.0% 30.0% 40.0% 2008 2009 2010 2011 2012 2013 U S G D P Y o Y cha n g e - A L G T ALGT sensitivity to US GDP YoY avg fare (lhs) YoY system fuel price (lhs) YoY scheduled ASMs
Slide 16: This business model generates cash
This business model generates cash $127 $190 $225 $273 $331 $87 $105 $178 $395 $165 $0 $50 $100 $150 $200 $250 $300 $350 $400 $450 2011 2012 2013 2014E 2015E M ill io n s EBITDA Capex 16 See reconciliation tables for EBITDA 2014E and 2015E CAPEX represents midpoint of guided range Consensus – Consis
Slide 17: Cumulative return to shareholders
Cumulative return to shareholders $0.6 $17.4 $42.7 $96.5 $98.4 $103.4 $187.0 $260.5 $14.9 $14.9 $53.5 $53.5 $95.3 -$25 $25 $75 $125 $175 $225 $275 $325 $375 2007 2008 2009 2010 2011 2012 2013 2014 $ m m Share repurchases Dividends 17 $356m returned to shareholders since 2007 $68m remaining in share
Slide 18: Future opportunities
Future opportunities 18 Small cities are still core – New cities still remain – Plenty of connecting the dots – Impacted by weakness in regional carriers Mid sized cities providing new opportunities – Cincinnati - downsized Delta hub – Larger cities mature and grow quicker than smaller cities –
Slide 19: Existing guidance
3Q14 PRASM 0 to +2% 3Q14 TRASM 0 to +2% 3Q14 CASM ex fuel +8.5 to 10.5% FY14 CASM ex fuel +6.5 to 8.5% 3Q14 Fixed fee + other revenue $10mm to $12mm FY14 CAPEX $390mm to $400mm FY15 CAPEX $160mm to $170mm 3rd Quarter 2014 4th Quarter 2014 Full year 2014 System departures 11 to 13% 9 to
Slide 20: Appendix
Appendix _—_— allegiant’
Slide 21: GAAP reconciliation: EBITDA calculations
GAAP reconciliation EBITDA calculations 21 $mm LTM 2Q14 2013 2012 2011 Net Income 102.3 92.3 78.6 49.4 +Provision for Income Taxes 61.1 54.9 46.2 30.1 +Other Expenses 10.7 8.5 7.8 5.9 +Depreciation and Amortization 72.7 69.3 57.5 42.0 =EBITDA 246.8 225.0 190.1 127.4 + Aircraft lease rental 18.9 9.2
Slide 22: GAAP reconciliation: Return on equity
GAAP reconciliation Return on equity 22 $mm LTM 2Q14 2013 2012 2011 Net Income ($mm) 102.3 92.3 78.6 49.4 Jun 2014 Jun 2013 Dec 2013 Dec 2012 Dec 2011 Dec 2010 Total shareholders equity ($mm) 378.0 432.3 377.3 401.7 351.5 297.7 Return on equity 25% 24% 21% 15% ROE = Net income / Avg shareholders equ
Slide 23: GAAP reconciliation: Return on capital employed
GAAP reconciliation Return on capital employed calculation $mm LTM 2Q14 2013 2012 2011 + Net income 102.3 92.3 78.6 49.4 + Income tax 61.1 54.9 46.2 30.1 + Interest expense 11.7 9.5 8.7 7.2 - Interest income 1.0 1.0 1.0 1.2 174.1 155.7 132.5 85.5 + Interest income 1.0 1.0 1.0 1.2 Tax rate 37.4% 37.4
Slide 24: GAAP reconciliation: Free cash flow
GAAP reconciliation Free cash flow calculations 24 $mm LTM 2Q14 2013 2012 2011 Cash from operations 203.0 196.9 176.8 129.9 - CAPEX 215.5 177.5 105.1 88.0 = Free cash flow (12.5) 19.4 71.7 41.9 LTM 2Q14 CAPEX is cash CAPEX and does not include $142m in assumed debt included in the $236.1m SPC Aircra
Slide 25: GAAP reconciliation: Net debt
GAAP reconciliation Net debt 25 $mm Jun 2014 Dec 2013 Dec 2012 Dec 2011 Current maturities of long term debt 51.5 20.2 11.6 7.9 Long term debt, net of current maturities 567.9 214.1 139.2 138.2 Total debt 619.4 234.3 150.8 146.1 Cash and cash equivalents 335.3 97.7 89.6 150.7 Short term investments
Slide 26: Current fleet plan
Current fleet plan 2013 2014E 2015E 2016E 2017E 2018E MD-80 (150 seat) 1 0 0 0 0 0 MD-80 (166 seat) 51 53 53 53 53 53 757 (223 seat) 6 6 6 6 6 6 A319 (156 seat) 3 4 9 10 10 22 A320 (177 seat) 5 7 10 10 10 10 Total 66 70 78 79 79 91 YoY fleet growth 5% 6% 11% 1% 0% 15% 26 Actual and projected fleet c
Slide 27: Staying profitable in small cities
Staying profitable in small cities 27 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 2012 2013 2014E 2015E Avg. block hours/AC/day 1 - Peak = peak is defined as 2/13-4/9, 6/5-8/13, 11/20-12/3, 12/18-12/31. Remaining is of
Slide 28: Matching capacity to demand
Matching capacity to demand 24% 21% 1% 6% 23% 22% 4% 14% 15% 15% 15% 15% 15% 12% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% Flights per day from Las Vegas % of weekly total ALGT LUV 28 Flights per day from Las Vegas – based on published schedules for April 2014 Peak day revenue premium Not scheduled for
Slide 29: Revenue momentum
Revenue momentum 29 $89.15 $88.90 $91.69 $92.73 $85 $90 $95 2011 2012 2013 LTM 2Q14 Average fare - scheduled service $5.18 $5.48 $5.21 $4.81 $4.00 $4.50 $5.00 $5.50 $6.00 2011 2012 2013 LTM 2Q14 Average fare - ancillary third party products $31.17 $35.72 $40.52 $40.58 $25.00 $30.00 $35.00 $40.00 $45
Slide 30: LTM 2Q14 cost per passenger: Low cost drivers
LTM 2Q14 cost per passenger Low cost drivers $51 $44 $51 $62 $12 $17 $11 $14 $10 $5 $9 $13 $22 $22 $48 $39 $20 $23 $30 $39 ALGT SAVE LUV JBLU 30 Source: Company filings Ownership includes depreciation & amortization + aircraft rent Other excludes special items and one-time charges for other carriers
Slide 31: Q2 summary - revenue
Q2 summary - revenue 31 $255.8 $290.5 $23.9 $9.3 ($0.7) ($0.1) $2.4 $250 $255 $260 $265 $270 $275 $280 $285 $290 $295 2Q13 total revenue Scheduled service revenue Ancillary air- related revenue Ancillary third party revenue Fixed fee revenue Other revenue 2Q14 total revenue M ill io n s U S D Schedu
Slide 32: Q2 summary - costs
Q2 summary - costs 32 0.4% 11.3% -7.4% -1.1% 16.0% 33.3% 2.4% 3.8% -10.0% -5.0% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% Fuel Salary and benefits Station operations Maintenance and repairs Sales and marketing AC rent Depreciation Other YoY change in expenses per ASM Fuel Gallons consumed
Slide 33: Growing op margin while fuel prices growing
Growing op margin while fuel prices growing 2010 2011 2012 2013 Op margin 15.8% 11.1% 14.6% 15.5% Fuel/gal $2.30 $3.07 $3.18 $3.20 YoY 31% 34% 4% 1% Total fare $110.85 $119.05 $130.10 $137.43 YoY 7% 7% 9% 6% EPS $3.32 $2.57 $4.06 $4.82 YoY (12)% (23)% 58% 19% Sys ASMs (billions) 6.2 6.4 7.5 8.1 YoY
Slide 34: Credit metrics
Credit metrics 15.3% 15.6% 16.4% 17.5% 8.5% 0% 10% 20% 2011 2012 2013 LTM 2Q14 LUV LTM 2Q14 34 Return on capital employed 15.0% 21.0% 24.0% 25.0% 15.2% 0% 10% 20% 30% 2011 2012 2013 LTM 2Q14 LUV LTM 2Q14 Return on equity 17.7 x 21.9 x 23.7 x 21.1 x 20.3 x 0 5 10 15 20 25 2011 2012 2013 LTM 2Q14 LUV
Slide 35: Strong cash generation
Strong cash generation $140 $127 $190 $225 $247 $100 $125 $150 $175 $200 $225 $250 $275 2010 2011 2012 2013 LTM 2Q14 $ m m 35 EBITDA $2.9 $2.4 $3.2 $3.6 $3.8 $2.0 $2.5 $3.0 $3.5 $4.0 2010 2011 2012 2013 LTM 2Q14 $ m m EBITDA per AC Free cash flow $0 $42 $72 $19 -$13 -$25 $0 $25 $50 $75 $100 2010 201
Slide 36: Sources/uses of cash
Sources/uses of cash $99 $88 $105 $178 $215 $0 $50 $100 $150 $200 $250 2010 2011 2012 2013 LTM 2Q14 $ m m 36 CAPEX $31.7 $21.2 $9.3 $22.7 $159.3 $0.0 $50.0 $100.0 $150.0 $200.0 2010 2011 2012 2013 LTM 2Q14 $ m m Debt payments Cash from operations $98 $130 $177 $197 $203 $0 $50 $100 $150 $200 $250 20
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