Allegiant Travel Company · NASDAQ:ALGT
Allegiant Travel — Investor Presentation (March 2014)
33 slides from Allegiant Travel's investor presentation, Mar 3, 2014
Slide 1: Management Presentation March 2014
Management Presentation March 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 44 quarters (1) – $225mm EBITDA (2) 2013 – 2013 Return on Capital 16.4% (2) Strong balance sheet – Rated BB- and Ba3 (3) – $387mm unrestricted cash (4) – $234mm debt – Debt/EBITDA 1.3x(2) – $125mm in capital retu
Slide 4: Nationwide footprint
Nationwide footprint Based on current published schedule through August 12, 2014 227 routes, 69 operating aircraft 86 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 22 205 Routes w competition Routes wo competition Uniquely built to profitably serve small city markets 6 Competitors – overlapping routes Frontier – 1 Spirit – 1 United – 1 Southwest – 12 US Airways - 3 Delta - 4 Hawaiian – 3 Alaska – 3 American - 1 Based on current published sch
Slide 7: Ancillary air components – per passenger
Ancillary air components – per passenger 7 46.5% 28.9% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 2012 2013 YoY % change bag fees per pax 0.8% 1.9% 0.0% 0.5% 1.0% 1.5% 2.0% 2012 2013 YoY % change ticket fees per pax 2.7% 11.8% -1.0% 1.0% 3.0% 5.0% 7.0% 9.0% 11.0% 13.0% 15.0% 2012 2013 YoY % change boarding/
Slide 8: Ancillary revenue – third party products
Ancillary revenue – third party products Bundled vacation packages Very high margins – 25% of 2013 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* Developing t
Slide 9: Excellent cost structure
Excellent cost structure 11.7 JBLU 12.5 LUV 10.3 ALGT 11.8 ALK(1) 9.9 SAVE 9.5 10 10.5 11 11.5 12 12.5 13 600 700 800 900 1,000 1,100 1,200 T o tal cos t p e r A S M ( c e n ts ) Average stage length (miles) 7.3 JBLU 8.1 LUV 5.6 ALGT 7.5 ALK(1) 5.9 SAVE 5 5.5 6 6.5 7 7.5 8 8.5 600 700 800 900 1,000
Slide 10: Low costs even with low utilization
Low costs even with low utilization 7.3 JBLU 5.9 SAVE 7.5 ALK 5.6 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 – 2 0 1 3 (ce n ts ) Average daily utilization - LTM CASM ex fuel vs daily utilization 10 As of 2013, ALGT – Allegiant, ALK – Alaska mainline, JBLU – JetBlue, Save -
Slide 11: Airbus growth will help improve fuel burn
Airbus growth will help improve fuel burn 11 57 59 61 63 65 67 69 1Q12 1Q13 2Q12 2Q13 3Q12 3Q13 4Q12 4Q13 Historical ASMs per gallon Aircraft / seats Gal / BH % of AC YE13 % of AC YE14 MD-80 / 166 950 79%** 76% 757 / 223 1,100 9% 9% A319 / 156 750 5% 6% A320 / 177 780* 8% 10% 2Q14 Airbus flying ex
Slide 12: Stable maintenance costs
Stable maintenance costs $103.35 $103.01 $129.56 $102.28 $96.50 $105.00 $90 $95 $100 $105 $110 $115 $120 $125 $130 $135 2009 2010 2011 2012 2013 2014E M a int e n a n c e p e r A C p e r m o s – th o u s a n d U S D Maintenance per aircraft per month 12 Very consistent over time – 2011 impacted by
Slide 13: A320 crew training update
A320 crew training update 13 FAA shutdown and follow-on impact delayed pilot training 1Q14 impact is slow approval of check airmen – Check airmen are needed to sign off pilots Not expected to continue past March – March 40% of the expected block hours in 1Q14 – April block hours are expected t
Slide 14: This business model generates cash
This business model generates cash $127 $190 $225 $257 $87 $105 $178 $70 $0 $50 $100 $150 $200 $250 $300 2011 2012 2013 2014E M ill io n s EBITDA Capex 14 See reconciliation tables for EBITDA 2014E CAPEX represents midpoint of guided range Consensus – Consists of 9 EBITDA estimates reflected in Firs
Slide 15: Cumulative return to shareholders
Cumulative return to shareholders $0.6 $17.4 $42.7 $96.5 $98.4 $103.4 $187.0 $187.0 $14.9 $14.9 $53.5 $53.5 $95.3 $0 $50 $100 $150 $200 $250 $300 2007 2008 2009 2010 2011 2012 2013 2014 $ m m Share repurchases Dividends 15 $282m returned to shareholders since 2007 $39.8m remaining in share repurchas
Slide 16: Guidance
1Q14 PRASM (2) to 0% 1Q14 TRASM (4) to (2)% 1Q14 CASM ex fuel +13 to 15% FY14 CASM ex fuel +4 to 7% 1Q14 Fixed fee + other revenue $1mm to $3mm FY14 CAPEX $60mm to $80mm 1st Quarter 2014 2nd Quarter 2014 Full year 2014 System departures 8 to 11% 10 to 14% System ASMs 10 to 13% 8 to 12% 9
Slide 17: Appendix
Appendix _—_— allegiant’
Slide 18: GAAP reconciliation: EBITDA calculations
GAAP reconciliation EBITDA calculations 18 $mm 2013 2012 2011 2010 2009 2008 Net Income 92.3 78.6 49.4 65.7 76.3 35.4 +Provision for Income Taxes 54.9 46.2 30.1 37.6 44.2 19.8 +Other Expenses 8.5 7.8 5.9 1.3 1.6 .7 +Depreciation and Amortization 69.3 57.5 42.0 35.0 29.6 23.5 =EBITDA 225.0 190.1 127.
Slide 19: GAAP reconciliation: Return on equity
GAAP reconciliation Return on equity 19 $mm 2013 2012 2011 2010 2009 Net Income ($mm) 92.3 78.6 49.4 65.7 76.3 Dec 2013 Dec 2012 Dec 2011 Dec 2010 Dec 2009 Total shareholders equity ($mm) 375.7 400.5 351.5 297.7 292.0 Return on equity 24% 21% 15% 22% ROE = Net income / Avg shareholders equity
Slide 20: GAAP reconciliation: Return on capital employed
GAAP reconciliation Return on capital employed calculation $mm 2013 2012 2011 2010 + Net income 92.3 78.6 49.4 65.7 + Income tax 54.9 46.2 30.1 37.6 + Interest expense 9.5 8.7 7.2 2.5 - Interest income 1.0 1.0 1.2 1.2 EBIT 155.7 132.5 85.5 104.6 + Interest income 1.0 1.0 1.2 1.2 Tax rate 37.4% 37.1%
Slide 21: GAAP reconciliation: Free cash flow calculations
GAAP reconciliation Free cash flow calculations 21 $mm 2013 2012 2011 2010 Cash from operations 209.5 176.8 129.9 98.0 - CAPEX 178.0 105.1 88.0 98.5 = Free cash flow 31.5 71.7 41.9 (0.5)
Slide 22: GAAP reconciliation: Net debt
GAAP reconciliation Net debt 22 $mm Dec 2013 Dec 2012 Dec 2011 Dec 2010 Current maturities of long term debt 20.2 11.6 7.9 16.5 Long term debt, net of current maturities 214.1 139.2 138.2 11.6 Total debt 234.3 150.8 146.1 28.1 Cash and cash equivalents 97.7 89.6 150.7 113.3 Short term investments 25
Slide 23: Fleet plan – current order book
Fleet plan – current order book 2013 2014E 2015E MD-80 (150 seat) 1 0 0 MD-80 (166 seat) 51 53 53 757 (223 seat) 6 6 6 A319 (156 seat) 3 4 10 A320 (177 seat) 5 7 9 Total 66 70 78 YoY fleet growth 5% 6% 11% 23 Actual and projected fleet count of in service aircraft – end of period
Slide 24: Staying profitable in small cities
Staying profitable in small cities 24 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 2011 2012 2013 2014E 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
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 from April 2014 Peak day revenue premium Not scheduled for
Slide 26: Revenue momentum
Revenue momentum 26 $76.26 $89.15 $88.90 $91.69 $70 $75 $80 $85 $90 $95 2010 2011 2012 2013 Average fare - scheduled service $4.34 $5.18 $5.48 $5.21 $4.00 $4.50 $5.00 $5.50 $6.00 2010 2011 2012 2013 Average fare - ancillary third party products $30.24 $31.17 $35.72 $40.52 $20.00 $25.00 $30.00 $35.00
Slide 27: Q4 summary - revenue
Q4 summary - revenue 27 $222.8 $238.5 $18.0 $5.1 ($0.9) ($6.2) ($0.3) $210 $215 $220 $225 $230 $235 $240 $245 $250 4Q12 total revenue Scheduled service revenue Ancillary air- related revenue Ancillary third party revenue Fixed fee revenue Other revenue 4Q13 total revenue M ill io n s U S D Scheduled
Slide 28: Q4 summary - costs
Q4 summary - costs 28 -5.1% 12.0% -9.3% -19.2% 40.0% -0.1% 10.8% -30.0% -20.0% -10.0% 0.0% 10.0% 20.0% 30.0% 40.0% Fuel Salary and benefits Station operations Maintenance and repairs Sales and marketing Depreciation Other YoY change in expenses per ASM Fuel Gallons consumed increased 0.04%, while co
Slide 29: 2013 cost per passenger
2013 cost per passenger Low cost drivers $53 $44 $52 $62 $11 $16 $11 $14 $10 $5 $10 $14 $22 $21 $46 $37 $20 $24 $30 $37 ALGT SAVE LUV JBLU 29 Source: Company filings Ownership includes depreciation & amortization + aircraft rent Other excludes special items and one-time charges for other carriers Ot
Slide 30: Growing op margin vs growing fuel prices
Growing op margin vs growing fuel prices 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 15%
Slide 31: Credit metrics
Credit metrics 15.3% 15.6% 16.4% 5.9% 0% 10% 20% 2011 2012 2013 LUV 2013 31 Return on capital employed 15.0% 21.0% 24.0% 10.5% 0% 10% 20% 30% 2011 2012 2013 LUV 2013 Return on equity 17.7 x 21.9 x 23.7 x 16.7 x 0 5 10 15 20 25 2011 2012 2013 LUV 2013 Interest coverage 1.2 x 0.8 x 1.3 x 2.5 x 0 1 2 3
Slide 32: Strong cash generation
Strong cash generation $140 $127 $190 $225 $100 $125 $150 $175 $200 $225 $250 2010 2011 2012 2013 $ m m 32 EBITDA $2.9 $2.4 $3.2 $3.6 $2.0 $2.5 $3.0 $3.5 $4.0 2010 2011 2012 2013 $ m m EBITDA per AC Free cash flow $0 $42 $72 $32 -$25 $0 $25 $50 $75 $100 2010 2011 2012 2013 $ m m ($122) ($173) ($202)
Slide 33: Sources/uses of cash
Sources/uses of cash $99 $88 $105 $178 $0 $50 $100 $150 $200 2010 2011 2012 2013 $ m m 33 CAPEX $31.7 $21.2 $9.3 $22.7 $0.0 $50.0 2010 2011 2012 2013 $ m m Debt payments Cash from operations $98 $130 $177 $210 $0 $50 $100 $150 $200 $250 2010 2011 2012 2013 $ m m $69 $2 $44 $84 $0 $50 $100 2010 2011
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