Allegiant Travel Company · NASDAQ:ALGT
Allegiant Travel — Investor Presentation (March 2015)
29 slides from Allegiant Travel's investor presentation, Mar 2, 2015
Slide 1: Management Presentation March 2015
Management Presentation March 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 48 quarters (1) – 2014 Adjusted EBITDA $285mm (2) – 2014 Return on Capital 19.2%(2) Strong balance sheet – Rated BB- and Ba3(3) – Debt/adjusted EBITDAR 2.3x(2) – $139mm in share repurchases 2014 • $86 mm in remai
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 5 171 195 226 233 150 200 250 2011 2012 2013 2014 Routes 5.80 6.95 7.89 8.69 5.00 6.00 7.00 8.00 9.00 2011 2012 2013 2014 A S M s - b ill io ns Scheduled ASMs $779 $909 $996 $1,137 $700 $800 $900 $1,000 $1,100 $1,200 2011 2012 2013 2014 U S D - m m Total revenue 57 63 66
Slide 6: A very large niche
A very large niche Based on current published schedule through November 3, 2015 271 routes, 76 operating aircraft 89 small cities, 16 leisure destinations 6 Yellow dots – leisure destinations Blue dots – small cities Large dots - bases
Slide 7: Little competition
Little competition 33 238 Routes w competition Routes wo competition Current competitive landscape Uniquely built to profitably serve small city markets 7 Competitors – overlapping routes Frontier – 7 Spirit – 1 United – 1 Southwest – 19 US Airways - 2 Delta – 7 Hawaiian – 2 Alaska – 1 JetBlue - 1 A
Slide 8: Consolidation a catalyst
Consolidation a catalyst US domestic seats 2007 vs 2014 by airport size 8 0 100 200 300 400 500 600 700 2007 2014 S ea ts - m ill io ns Large hubs 0 50 100 150 200 250 2007 2014 S ea ts - m ill io ns Medium hubs 0 20 40 60 80 100 2007 2014 S ea ts - m ill io ns Small hubs Hub classification by 2013
Slide 9: Low frequency model
Low frequency model 9 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 ys te m b lo ck h ou rs /A C /d ay 2012 2013 2014 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 off peak 0.0% 10.0%
Slide 10: Low costs even with low utilization
Low costs even with low utilization 7.5 JBLU 5.9 SAVE 7.4 ALK 6.6 ALGT 6.1 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 C A S M e x fu el ( ce nt s) Average daily utilization - LTM CASM ex fuel vs daily utilization 10 As of 2014 ALGT – Allegiant, JBLU – JetBlue, ALK – Alaska
Slide 11: Airbus growth will help improve fuel burn
Airbus growth will help improve fuel burn 11 30.0% 35.0% 40.0% 45.0% 2010 2011 2012 2013 2014 Fuel expense/total revenue 1 - As of 2014 Fuel has greatest leverage to earnings – Fuel ~ 40% of total operating expense(1) – Airbus aircraft flew 21% of 2014 block hours 58.0 60.0 62.0 64.0 66.0 68.0 70.
Slide 12: Airbus utilization
Airbus 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. Way
Slide 13: Airbus fleet growth
Airbus fleet growth 13 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 and is subject to change Continuously evaluate
Slide 14: Financial growth without sacrificing margin
Financial growth without sacrificing margin 16.4% 20.9% 22.5% 25.0% 15.0% 17.0% 19.0% 21.0% 23.0% 25.0% 27.0% 2011 2012 2013 2014 Adjusted EBITDA margin 14 $128 $190 $224 $285 $442 $458 $0 $50 $100 $150 $200 $250 $300 $350 $400 $450 $500 2011 2012 2013 2014 2015 consensus 2016 consensus U S D - m m
Slide 15: Cumulative return to shareholders
Cumulative return to shareholders $0.6 $17.4 $42.7 $96.5 $98.4 $103.4 $187.0 $326.1 $326.1 $14.9 $14.9 $53.5 $53.5 $95.3 $139.6 $0 $50 $100 $150 $200 $250 $300 $350 $400 $450 $500 2007 2008 2009 2010 2011 2012 2013 2014 2015 $ m m Share repurchases Dividends 15 $466m returned to shareholders since 2
Slide 16: Existing guidance
1Q15 PRASM (7) to (5)% 1Q15 TRASM (2) to 0% 1Q15 CASM ex fuel +6 to 8% FY15 CASM ex fuel (10) to (6)% 1Q15 Fixed fee + other revenue $9mm to $11mm FY15 CAPEX ~$230mm 1st Quarter 2015 2nd Quarter 2015 Full year 2015 System departures 6 to 10% 12 to 16% System ASMs 2 to 6% 13 to 17% 9 to 1
Slide 17: Appendix
Appendix s zi Ht _— allegiant_
Slide 18: GAAP reconciliation: Adjustment for special item
GAAP reconciliation Adjustment for special item 18 2014 $mm Net income as reported 86.3 + Add provision for income taxes, as reported 50.8 Income before income taxes as reported 137.1 + Other income 20.2 Operating income 157.3 + Boeing 757 fleet write down 43.3 Adjusted operating income 200.6 - Othe
Slide 19: GAAP reconciliation: EBITDA calculations
GAAP reconciliation EBITDA calculations 19 $mm 2014 2013 2012 2011 Net Income 86.7 92.3 78.6 49.4 +Provision for Income Taxes 50.8 54.9 46.2 30.1 +Other Expenses 20.4 8.5 7.8 5.9 +Depreciation and Amortization 83.4 69.3 57.5 42.0 =EBITDA 241.3 225.0 190.1 127.4 + Write down of Boeing 757 fleet 43.3
Slide 20: GAAP reconciliation: Return on equity
GAAP reconciliation Return on equity 20 $mm 2014 2013 2012 2011 2010 Adjusted net Income ($mm) 113.2 92.3 78.6 49.4 65.7 Dec 2014 Dec 2013 Dec 2012 Dec 2011 Dec 2010 Dec 2009 Total shareholders equity ($mm) 294.1 377.3 401.7 351.5 297.7 292.0 Return on equity 34% 24% 21% 15% 22% ROE = Net income / A
Slide 21: GAAP reconciliation: Return on capital employed
GAAP reconciliation Return on capital employed calculation $mm 2014 2013 2012 2011 2010 + Adjusted net income 113.2 92.3 78.6 49.4 65.7 + Income tax 66.8 54.9 46.2 30.1 37.6 + Interest expense 21.2 9.5 8.7 7.2 2.5 - Interest income 0.8 1.0 1.0 1.2 1.2 200.4 155.7 132.5 85.5 104.6 + Interest income 0
Slide 22: GAAP reconciliation: Free cash flow calculations
GAAP reconciliation Free cash flow calculations 22 $mm 2014 2013 2012 2011 Cash from operations 269.8 196.9 176.8 129.9 - Cash CAPEX 279.4 177.5 105.1 88.0 = Free cash flow (9.6) 19.4 71.7 41.9 2014 CAPEX is cash CAPEX and does not include $142m in assumed debt included in the $236.1m SPC Aircraft A
Slide 23: GAAP reconciliation: Net debt
GAAP reconciliation Net debt 23 $mm Dec 2014 Dec 2013 Dec 2012 Dec 2011 Current maturities of long term debt 53.8 20.2 11.6 7.9 Long term debt, net of current maturities 539.3 214.1 139.2 138.2 Total debt 593.1 234.3 150.8 146.1 Cash and cash equivalents 89.6 97.7 89.6 150.7 Short term investments 2
Slide 24: Revenue components
Revenue components 24 $89.15 $88.90 $91.69 $91.30 $85 $90 $95 2011 2012 2013 2014 Average fare - scheduled service $5.18 $5.48 $5.21 $4.56 $4.00 $4.50 $5.00 $5.50 $6.00 2011 2012 2013 2014 Average fare - ancillary third party products $31.17 $35.72 $40.52 $41.37 $25.00 $30.00 $35.00 $40.00 $45.00 20
Slide 25: 2014 cost per passenger
2014 cost per passenger Low cost drivers $48 $43 $48 $60 $12 $17 $11 $14 $11 $5 $9 $13 $24 $22 $49 $40 $21 $23 $30 $38 ALGT SAVE LUV JBLU 25 Source: Company filings Ownership includes depreciation & amortization + aircraft rent Other excludes special items and one-time charges for other carriers ALG
Slide 26: Credit metrics
Credit metrics 15.3% 15.6% 16.4% 19.2% 8.5% -5% 5% 15% 25% 2011 2012 2013 2014 LUV 2014 26 Return on capital employed 15.0% 21.0% 24.0% 34.0% 16.1% 0% 10% 20% 30% 40% 2011 2012 2013 2014 LUV 2014 Return on equity 17.7 x 21.9 x 23.7 x 13.4 x 22.0 x 0 5 10 15 20 25 2011 2012 2013 2014 LUV 2014 Interes
Slide 27: Strong cash generation
Strong cash generation $127 $190 $225 $285 $100 $125 $150 $175 $200 $225 $250 $275 $300 2011 2012 2013 2014 $ m m 27 Adjusted EBITDA $2.4 $3.2 $3.6 $4.1 $2.0 $2.5 $3.0 $3.5 $4.0 $4.5 2011 2012 2013 2014 $ m m Adj EBITDA per AC Free cash flow $42 $72 $19 -$10 -$25 $0 $25 $50 $75 $100 2011 2012 2013 2
Slide 28: Sources/uses of cash
Sources/uses of cash $87 $105 $178 $270 $0 $50 $100 $150 $200 $250 $300 2011 2012 2013 2014 $ m m 28 CAPEX $21.2 $9.3 $22.7 $168.8 $0.0 $50.0 $100.0 $150.0 $200.0 2011 2012 2013 2014 $ m m Debt payments Cash from operations $130 $177 $197 $270 $0 $50 $100 $150 $200 $250 $300 2011 2012 2013 2014 $ m
Slide 29: Capitalization structure
Capitalization structure Actual 12/31/14 (MM USD) Debt to LTM Adj EBITDAR Rate Maturity Unrestricted cash 416.8 LTM Adjusted EBITDAR 300.5 Secured by AC 38.5 L + 2.95% Apr 2018 Secured by AC 131.5 L + 3.08% Nov 2018 Secured by AC 34.9 L + 2.95% May 2018 Secured by AC 36.8 L + 3.99% Oct 2018 Secured
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