Allegiant Travel Company · NASDAQ:ALGT
Allegiant Travel — Investor Presentation (November 2014)
34 slides from Allegiant Travel's investor presentation, Nov 5, 2014
Slide 1: Management Presentation November 2014
Management Presentation November 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 47 quarters (1) – $251mm EBITDA (2) LTM 3Q14 – LTM 3Q14 Return on Capital 17.5%(2) Strong balance sheet – Rated BB- and Ba3(3) – $458 mm unrestricted cash, $606 mm debt (4) – Debt/EBITDAR 2.7x(2) – $129mm in shar
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 cities – Filling a large void – Increasing opportunity - industry restructuring – Diversity of network - minimizes competition Flexibility – Adjust rap
Slide 5: Measured, profitable growth
Measured, profitable growth 5 171 195 226 231 150 200 250 2011 2012 2013 3Q14 Routes 5.80 6.95 7.89 8.49 5.00 6.00 7.00 8.00 9.00 2011 2012 2013 LTM 3Q14 A S M s - b ill io n s Scheduled ASMs $779 $909 $996 $1,097 $700 $750 $800 $850 $900 $950 $1,000 $1,050 $1,100 $1,150 2011 2012 2013 LTM 3Q14 U S
Slide 6: A very large niche
A very large niche Based on current published schedule through May 5, 2015 236 routes, 70 operating aircraft 82 small cities, 13 leisure destinations 6 Yellow dots – leisure destinations Blue dots – small cities Large dots - bases
Slide 7: Little competition
Little competition 23 213 Routes w competition Routes wo competition Current competitive landscape Uniquely built to profitably serve small city markets 7 Competitors – overlapping routes Frontier – 6 Spirit – 1 United – 1 Southwest – 11 US Airways - 3 Delta - 6 Hawaiian – 3 Alaska – 1 American - 1
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 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 off peak 2 – Sched
Slide 9: Low costs even with low utilization
Low costs even with low utilization 7.5 JBLU 5.9 SAVE 7.4 ALK 6.0 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 utilization - LTM CASM ex fuel vs daily utilization 9 As of LTM 3Q14 ALGT – Allegiant, JBLU – JetBlue, ALK – Alaska mainline, SAVE -
Slide 10: Low cost drivers
LTM 3Q14 cost per passenger Low cost drivers $51 $45 $50 $62 $12 $17 $11 $14 $10 $5 $9 $13 $23 $22 $49 $40 $21 $23 $30 $39 ALGT SAVE LUV JBLU 10 Source: Company filings Ownership includes depreciation & amortization + aircraft rent Other excludes special items and one-time charges for other carriers
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 LTM 3Q14 Fuel expense/total revenue 1 - As of LTM 3Q14 Fuel has greatest leverage to earnings – Fuel ~ 43% of total operating expense(1) – Airbus aircraft expected to fly about 22% of 2014 block hours 58.0 60.
Slide 12: Current fleet plan
Current fleet plan 2014E 2015E 2016E 2017E 2018E A320 7 10 10 10 10 A319 4 9 12 12 24 MD-80 53 53 53 53 53 757 6 6 6 6 6 Total 70 78 81 81 93 % Airbus 16% 24% 27% 27% 37% YoY fleet growth 6% 11% 4% 0% 15% 12 Actual and projected fleet count of in service aircraft (based on signed contracts only) – e
Slide 13: Consolidation = rationalization = opportunity
Consolidation = rationalization = opportunity 312 314 316 318 320 322 324 326 2007 2014 S e a ts - millio n s Seats in fortress hubs 13 90 95 100 105 110 115 120 125 2007 2014 S e a ts - millio n s Seats in secondary hubs Fortress hubs = ORD, ATL, EWR, DFW, MIA, PHX, SEA, MSP, CLT, DTW, SFO Secondar
Slide 14: Future opportunities
Future opportunities 14 Small cities are still core – More new cities – 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 – Group mo
Slide 15: Financial growth without sacrificing margin
Financial growth without sacrificing margin 16.4% 20.9% 22.5% 22.9% 15.0% 16.0% 17.0% 18.0% 19.0% 20.0% 21.0% 22.0% 23.0% 24.0% 2011 2012 2013 LTM 3Q14 EBITDA margin 15 $128 $190 $224 $251 $283 $338 $0 $50 $100 $150 $200 $250 $300 $350 $400 2011 2012 2013 LTM 3Q14 2014 consensus 2015 consensus U S D
Slide 16: Cumulative return to shareholders
Cumulative return to shareholders $0.6 $17.4 $42.7 $96.5 $98.4 $103.4 $187.0 $316.3 $14.9 $14.9 $53.5 $53.5 $95.3 -$30 $20 $70 $120 $170 $220 $270 $320 $370 $420 2007 2008 2009 2010 2011 2012 2013 2014 $ m m Share repurchases Dividends 16 $412m returned to shareholders since 2007 $100m remaining in
Slide 17: Existing guidance
4Q14 PRASM (2) to 0% 4Q14 TRASM 0 to +2% 4Q14 CASM ex fuel +9 to 11% FY14 CASM ex fuel +9.5 to 10.5% 4Q14 Fixed fee + other revenue $12mm to $14mm FY14 CAPEX $415mm FY15 CAPEX $160mm to $170mm 4th Quarter 2014 1st Quarter 2015 Full year 2014 System departures 10 to 12% 3 to 7% System A
Slide 18: Appendix
Appendix _—_— allegiant’
Slide 19: GAAP reconciliation: EBITDA calculations
GAAP reconciliation EBITDA calculations 19 $mm LTM 3Q14 2013 2012 2011 Net Income 99.4 92.3 78.6 49.4 +Provision for Income Taxes 58.4 54.9 46.2 30.1 +Other Expenses 15.8 8.5 7.8 5.9 +Depreciation and Amortization 77.7 69.3 57.5 42.0 =EBITDA 251.3 225.0 190.1 127.4 + Aircraft lease rental 18.4 9.2 0
Slide 20: GAAP reconciliation: Return on equity
GAAP reconciliation Return on equity 20 $mm LTM 3Q14 2013 2012 2011 2010 Net Income ($mm) 99.4 92.3 78.6 49.4 65.7 Sep 2014 Sep 2013 Dec 2013 Dec 2012 Dec 2011 Dec 2010 Dec 2009 Total shareholders equity ($mm) 341.2 404.2 377.3 401.7 351.5 297.7 292.0 Return on equity 27% 24% 21% 15% 22% ROE = Net i
Slide 21: GAAP reconciliation: Return on capital employed calculation
GAAP reconciliation Return on capital employed calculation $mm LTM 3Q14 2013 2012 2011 2010 + Net income 99.4 92.3 78.6 49.4 65.7 + Income tax 58.4 54.9 46.2 30.1 37.6 + Interest expense 16.6 9.5 8.7 7.2 2.5 - Interest income 0.8 1.0 1.0 1.2 1.2 173.6 155.7 132.5 85.5 104.6 + Interest income 0.8 1.0
Slide 22: GAAP reconciliation: Free cash flow calculations
GAAP reconciliation Free cash flow calculations 22 $mm LTM 3Q14 2013 2012 2011 Cash from operations 242.9 196.9 176.8 129.9 - CAPEX 204.1 177.5 105.1 88.0 = Free cash flow 38.8 19.4 71.7 41.9 LTM 3Q14 CAPEX is cash CAPEX and does not include $142m in assumed debt included in the $236.1m SPC Aircraft
Slide 23: GAAP reconciliation: Net debt
GAAP reconciliation Net debt 23 $mm Sep 2014 Dec 2013 Dec 2012 Dec 2011 Current maturities of long term debt 51.9 20.2 11.6 7.9 Long term debt, net of current maturities 554.4 214.1 139.2 138.2 Total debt 606.3 234.3 150.8 146.1 Cash and cash equivalents 86.2 97.7 89.6 150.7 Short term investments 2
Slide 24: Consistent revenue in any environment
Consistent revenue in any environment 24 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 25: 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 25 Flights per day from Las Vegas – based on published schedules for April 2014 Peak day revenue premium Not scheduled for
Slide 26: Revenue momentum
Revenue momentum 26 $89.15 $88.90 $91.69 $92.32 $85 $90 $95 2011 2012 2013 LTM 3Q14 Average fare - scheduled service $5.18 $5.48 $5.21 $4.59 $4.00 $4.50 $5.00 $5.50 $6.00 2011 2012 2013 LTM 3Q14 Average fare - ancillary third party products $31.17 $35.72 $40.52 $40.73 $25.00 $30.00 $35.00 $40.00 $45
Slide 27: Q3 summary - revenue
Q3 summary - revenue 27 $228.9 $265.0 $18.4 $10.6 ($0.6) $0.9 $6.8 $215 $225 $235 $245 $255 $265 $275 3Q13 total revenue Scheduled service revenue Ancillary air- related revenue Ancillary third party revenue Fixed fee revenue Other revenue 3Q14 total revenue M ill io n s U S D Scheduled revenue 13.6
Slide 28: Ancillary fees – key to keeping low base fares
Ancillary fees – key to keeping low base fares 25% 30% 35% 2011 2012 2013 LTM 3Q14 Total ancillary revenue as % of total scheduled revenue 28 $89.15 $88.90 $91.69 $92.32 $125.51 $130.10 $137.43 $137.64 $60.00 $70.00 $80.00 $90.00 $100.00 $110.00 $120.00 $130.00 $140.00 $150.00 2011 2012 2013 LTM 3Q1
Slide 29: Ancillary revenue – third party products
Ancillary revenue – third party products Bundled vacation packages Very high margins – 23% of LTM 3Q14 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 3Q14 –
Slide 30: Q3 summary - costs
Q3 summary - costs 30 -4.7% 22.3% -1.3% 10.4% 54.9% -30.7% 16.1% 11.7% -40.0% -30.0% -20.0% -10.0% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% Fuel Salary and benefits Station operations Maintenance and repairs Sales and marketing AC rent Depreciation Other YoY change in expenses per ASM Fuel Gallons c
Slide 31: 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 32: Credit metrics
Credit metrics 15.3% 15.6% 16.4% 17.5% 8.8% 0% 10% 20% 2011 2012 2013 LTM 3Q14 LUV LTM 3Q14 32 Return on capital employed 15.0% 21.0% 24.0% 27.0% 16.0% 0% 10% 20% 30% 2011 2012 2013 LTM 3Q14 LUV LTM 3Q14 Return on equity 17.7 x 21.9 x 23.7 x 15.1 x 21.8 x 0 5 10 15 20 25 2011 2012 2013 LTM 3Q14 LUV
Slide 33: Strong cash generation
Strong cash generation $127 $190 $225 $251 $100 $125 $150 $175 $200 $225 $250 $275 2011 2012 2013 LTM 3Q14 $ m m 33 EBITDA $2.4 $3.2 $3.6 $3.8 $2.0 $2.5 $3.0 $3.5 $4.0 2011 2012 2013 LTM 3Q14 $ m m EBITDA per AC Free cash flow $42 $72 $19 $39 $0 $25 $50 $75 $100 2011 2012 2013 LTM 3Q14 $ m m ($173)
Slide 34: Sources/uses of cash
Sources/uses of cash $87 $105 $178 $204 $0 $50 $100 $150 $200 $250 2011 2012 2013 LTM 3Q14 $ m m 34 CAPEX $21.2 $9.3 $22.7 $159.0 $0.0 $50.0 $100.0 $150.0 $200.0 2011 2012 2013 LTM 3Q14 $ m m Debt payments Cash from operations $130 $177 $197 $243 $0 $50 $100 $150 $200 $250 $300 2011 2012 2013 LTM 3Q
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