Allegiant Travel Company · NASDAQ:ALGT
Allegiant Travel — Investor Presentation (May 2018)
24 slides from Allegiant Travel's investor presentation, May 14, 2018
Slide 1: Management Presentation May 2018
Management Presentation May 2018
Slide 2: Forward looking statements
Forward looking statements 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 uncertai
Slide 3: Advantages over the typical carrier
Advantages over the typical carrier Leisure customer Built to be different – Will travel in all economic conditions – Vacations are valued – price dependent Leisure customer Small/medium cities Underserved markets – Filling a large void Little competition – Increasing opportunity - industry rest
Slide 4: Measured, profitable growth
Measured, profitable growth Total revenue Scheduled ASMs 14.00 13.40 13.03 $1,600 13.00 $1,549 $1,504 11.92 $1,500 12.00 billions $1,400 - $1,363 11.00 mm - ASMs 10.24 USD USD $1,300 $1,262 10.00 $1,200 9.00 8.69 $1,137 $1,100 8.00 $1,000 7.00 2014 2015 2016 2017 LTM 1Q18 2014 2015 2016 2017 LTM 1Q1
Slide 5: A very large niche
A very large niche Stars– leisure destinations Based on current published schedule through November 6, 2018 416 routes, 96 small/medium cities, 21 leisure destinations 5
Slide 6: Little competition
Little competition Historic level of non-competitive routes 314 321 294 255 221 207 181 161 168 136 114 98 95 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2018 Routes without competition Routes with competition Competitors – overlapping routes Legacy carriers 72 Brand/lower cost carri
Slide 7: Low frequency model
Low frequency model Leisure = seasonality Small cities = low frequency(1) Avg. block hours/AC/day 8.5 Weekly market frequency 60.0% 8.0 Peak Off peak 7.5 50.0% 7.0 40.0% 6.5 6.0 30.0% 5.5 20.0% 5.0 departures total of % System hours/AC/day block System 4.5 10.0% 4.0 0.0% 3.5 2x 3x 4x 5x or greater J
Slide 8: Low costs even with low utilization
Low costs even with low utilization LTM 1Q18 CASM ex fuel vs daily aircraft 9.0 utilization 8.5 8.4 JBLU 8.0 7.6 7.5 ALK ex fuel (cents) fuel ex 7.0 6.6 CASM 6.5 ALGT 6.0 5.5 5.4 SAVE 5.0 5.0 6.0 7.0 8.0 9.0 10.0 11.0 12.0 13.0 14.0 Average daily aircraft utilization – LTM (block hours per day) As o
Slide 9: Fleet plan
Fleet plan 120 Aircraft by seat count Total Total 110 100 100 Total 25 89 Total 82 25 80 20 EOY 23 10 60 48 38 AC count AC 22 27 40 20 37 32 37 37 0 2017 2018E 2019E 2020E MD80 (166 seats) A319 (156 seats) A320 (186 seats) A320 (177 seats) Estimated aircraft count at end of year 186 seat density pro
Slide 10: Capex & Airbus heavy maintenance
Capex & Airbus heavy maintenance Capital expenditures ($ millions) $700 Total $630 $600 35 75 $500 Total Total $395 $400 Total $390 $345 90 125 45 Millions USD $300 520 75 75 15 75 20 $200 10 $100 195 210 185 $0 2017 2018E 2019E 2020E Aircraft CAPEX Max Pax Other CAPEX Airbus Heavy Maintenance Estim
Slide 11: Cumulative return to shareholders
Cumulative return to shareholders $893m returned to shareholders since 2007 $100m remaining in share repurchase authority Reduced diluted share count by 22% since 2007** $900 Implemented quarterly cash dividend in Q1 2015 – now $0.70 per share $800 $700 $282.3 $271.0 $600 $225.3 $157.8 $500 $ mm $40
Slide 12: Unique business model and results
Unique business model and results Highly resilient and profitable – Profitable last 61 quarters (1) – LTM 1Q18 adjusted EBITDA $388mm (2) – LTM 1Q18 Return on Equity 38%(2) Strong balance sheet – Rated BB- and Ba3(3) – Adjusted debt/ EBITDAR 2.8x(2) – $136mm returned to shareholders in 2017 • $1
Slide 13: Existing guidance - 2018
Existing guidance - 2018 2018 FY EPS $10 to 12 per share FY 18 ASMs per gallon 77.5 to 79.5 FY 18 interest expense $50mm to $60mm FY 18 tax rate 21% to 22% FY 18 share count 15.9m FY 18 CAPEX $345mm (excludes Sunseeker resort) FY 18 fixed fee revenue $35mm FY 18 maintenance per aircr
Slide 14: Appendix
Appendix 3 i i E _— allegiant
Slide 15: GAAP reconciliation EBITDA calculations
GAAP reconciliation EBITDA calculations $mm LTM 1Q18 2017 2016 2015 Operating income as reported (GAAP) 233.4 227.2 370.6 371.7 +Depreciation and Amortization 119.3 121.7 105.2 98.1 =EBITDA 352.7 348.9 475.8 469.8 + Write down of MD-80 fleet 35.3 35.3 =Adjusted EBITDA 388.0 384.2 475.8 469.8 + Aircr
Slide 16: GAAP reconciliation Return on equity
GAAP reconciliation Return on equity $mm LTM 1Q18 2017 2016 2015 Net Income as reported (GAAP) 207.9 194.9 219.6 220.4 Mar 2018 Mar 2017 Dec 2017 Dec 2016 Dec 2015 Dec 2014 Total shareholders equity 598.3 503.1 551.8 473.6 350.0 294.1 Return on equity 38% 38% 53% 68% ROE = Net income / Avg sharehold
Slide 17: Revenue components
Revenue components Average fare - total Average fare - ancillary third party products $140 $137.23 $5.00 $4.56 $129.35 $130 $4.29 $4.34 $4.08 $4.00 $120 $117.96 $116.77 $116.78 $110 $3.00 2014 2015 2016 2017 LTM 1Q18 2014 2015 2016 2017 LTM 1Q18 * Average fare - scheduled service Average fare - anci
Slide 18: Aircraft profitability comparison
Aircraft profitability comparison Projected EBIT / AC vs projected utilization / AC 8.0 8.0 7.0 7.0 6.0 6.0 5.0 5.0 4.0 4.0 3.0 3.0 EBIT / Aircraft (in $millions) 2.0 2.0 Utilization Utilization (Block Hours / AircraftDay) 1.0 1.0 - - MD80 Utilization Airbus Utilization MD80 EBIT / Aircraft Airbus E
Slide 19: 2018 labor cost drivers
2018 labor cost drivers Flight attendant agreement – 5 year contract – Estimated 2018 ~$8m – Estimated 5yr impact ~$57m – Contract approved end of Dec 2017 Contract rate increases Rate Increases 2018 2019 2020 2021 2022 Pilots 2.5% 1.5% 1.0% 1.0% 1.0% Flight Attendants 15.5% 1.5% 1.5% 2.0% 1.0% 19
Slide 20: Pilot normalization
Pilot normalization Pilots per AC 0.7 9.8 10.0 (1.1) 1.1 9.0 (0.7) 0.3 (0.4) 8.0 0.5 7.6 1.5 7.0 6.0 5.8 5.0 4.0 3.0 2.0 1.0 - 2012 Actual AC Utilization Part 117 Pilot Contract Training Overstaffing 2018 Forecast Training Overstaffing Single Fleet 2020 Forecast Pilots/AC Increase Decrease 2018 numb
Slide 21: Drivers of 2018 capacity
Drivers of 2018 capacity 2018 YoY ASM growth expected to be between 11 to 15% – Airbus efficiency over MD80s – 4th Quarter 2018 will see least amount of growth as we end transition quickly 85 Average lines of flying 80 75 70 65 1Q 2Q 3Q 4Q 2017 2018 21
Slide 22: Network and capacity flexibility
Network and capacity flexibility Continue to be flexible with macro environment and oil price – Ability to manage capacity on a single round-trip basis % of previous year same store ASMs reduced / not flown 40% 35% Fuel spike 30% 25% Fuel spike 20% 15% Consistent high fuel 10% Low fuel 5% 0% 2007
Slide 23: Future growth
Future growth Representative Cities Tiny Origination: Grand Island, NE Small Origination: Syracuse, NY Mid-size Origination: Cincinnati, OH Large Origination: Atlanta, GA Small Destination: Savannah, GA Mid-size Destination: Austin, TX Large Destination: Las Vegas, NV city size Small Medium Destinat
Slide 24: Contribution of initiatives
Contribution of initiatives Original Actual Original Update Operating earnings annual impact -$m 1 2017 2017 2020E 2020E Fuel benefit from ASM production $6 $6 $21 $21 Ex-fuel savings (costs) (21) (29) 73 73 Credit card program 10 17 45 50 eCommerce initiatives 14 10 92 92 Pricing engine 7 2 49 49 F