Allegiant Travel Company · NASDAQ:ALGT
Allegiant Travel — Investor Presentation (September 2013)
35 slides from Allegiant Travel's investor presentation, Sep 10, 2013
Slide 1: Management Presentation September 2013
Management Presentation September 2013
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 42 quarters (1) – $217mm EBITDA (2) LTM 2Q13 – LTM Return on Capital 15.8% (2) Strong balance sheet – Rated BB- and Ba3 (3) – $391mm unrestricted cash (4) – $145mm debt – Debt/EBITDA 0.7x(2) – $33mm in share repu
Slide 4: Nationwide footprint
Nationwide footprint Based on current published schedule through April 29, 2014 228 routes, 68 operating aircraft 85 small cities, 14 leisure destinations 4 Yellow dots – leisure destinations Blue dots – small cities Large dots - bases
Slide 5: Little competition
Little competition 21 207 5 45 85 125 165 205 Routes w competition Routes wo competition Uniquely built to profitably serve small city markets 5 Competitors – overlapping routes Frontier – 1 Spirit – 1 United – 1 Southwest – 12 US Airways - 3 Delta - 2 Hawaiian – 3 Alaska – 3 Sun Country – 1 America
Slide 6: Changing competitive landscape
Changing competitive landscape 6 Mergers – rationalizing capacity – Southwest/AirTran – rationalize markets • Operate in 12 markets that they left, 7 of which coincided with their exit – Delta/Northwest – rationalize hubs • Memphis & Cincinnati – 40% & 60% less seats than in 2007 – American/US Air
Slide 7: Matching capacity to demand
Matching capacity to demand 25% 20% 2% 5% 22% 22% 4% 14% 15% 15% 15% 15% 15% 12% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% Flights per day from Las Vegas % of weekly total ALGT LUV 7 Flights per day from Las Vegas – based on published schedules from Nov 2011 – Oct 2013 Peak day revenue premium Not
Slide 8: Staying profitable in small cities
Staying profitable in small cities 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 2011 2012 2013E Avg. block hours/AC/day 1 - Peak = sample peak frequency determined from June 11 – Aug 5, 2012, sample off peak = Aug 13
Slide 9: International service
International service(1) 2014 Small cities to Las Vegas – Hermosillo, Mexico Destination markets – Cabo Automation - payment, taxes Bilingual capabilities - website, call center, inflight & stations Regulatory 9 1 – In planning stages. Implementation of service subject to various conditi
Slide 10: Ancillary air related fees
Ancillary air related fees Carry on bag fee – introduced April 2012 – YTD 2013 total bag fees per passenger +65% YoY Manage existing fees – YTD 2013 seat fee per passenger +22% YoY Future products – loyalty program, co-branded credit card 10 $29.07 $30.24 $31.17 $35.72 $33.14 $41.18 $20 $25 $3
Slide 11: Ancillary revenue – third party products
Ancillary revenue – third party products Bundled vacation packages Very high margins – 25% of LTM 2Q13 pre-tax income Wholesale price for hotel & car, we manage margin, no inventory risk 11 Ancillary revenue – 3rd party $89.3 $106.4 $119.0 $121.5 $24.4 $29.9 $36.1 $38.3 $0.0 $20.0 $40.0 $60.0
Slide 12: Excellent cost structure
Excellent cost structure 11.6 JBLU 12.6 LUV 10.2 ALGT 11.8 ALK(1) 10.0 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) 7.1 JBLU 8.0 LUV 5.4 ALGT 7.5 ALK(1) 6.0 SAVE 5 5.5 6 6.5 7 7.5 8 8.5 600 700 800 900 1,000
Slide 13: Low cost aircraft
Low cost aircraft 13 MD-80 757 A319 A320 Depreciation/amortization or rent (1) $65 $100 $75 - $150 Seats 166 223 156 177 Gallons per block hour 950 (2) 1,100 (2) 725 – 780(3) Block hours per departure 2.4 3.6 % of 2012 scheduled departures 97% 3% % of total aircraft – EOY 2014 (3) 73% 9% 6% 13% % of
Slide 14: Aircraft fuel
Aircraft fuel Converted MD-80s to 166 seats – Improves ASMs per gallon Growing with Airbus aircraft – Airbus is at least 15% more fuel efficient (1) than MD-80 – 177 seat A320, generate more ASMs 14 58.3 58.9 59.1 63.0 61.7 67.5 50.00 55.00 60.00 65.00 70.00 2009 2010 2011 2012 YTD 2012 YTD 2013
Slide 15: Consistency in different environments
Consistency in different environments 16% 10% 14% 15% 3% 11% 13% 14% 6% 2% 4% 4% 4% 3% 4% 3% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% 2010 2011 2012 LTM 2Q13 P re -ta x m arg in ALGT SAVE LUV JBLU LUV = Southwest Airlines; SAVE = Spirit Airlines, JBLU = JetBlue Sched ASM growth – Alleg
Slide 16: Uses of cash
Uses of cash $98 $87 $105 $121 $0 $50 $100 $150 2010 2011 2012 LTM 2Q13 $ m m 16 CAPEX $31.7 $21.2 $9.3 $11.2 $0.0 $50.0 2010 2011 2012 LTM 2Q13 $ m m Debt payments Cash from operations $98 $130 $177 $201 $0 $50 $100 $150 $200 $250 2010 2011 2012 LTM 2Q13 $ m m $69 $2 $44 $76 $0 $50 $100 2010 2011 2
Slide 17: Returning cash
Returning cash $140 $127 $190 $217 47 52 60 63 64 69 73 20 30 40 50 60 70 80 $100 $125 $150 $175 $200 $225 A v g ai rc raf t $ m m EBITDA Avg AC 17 Cash returned as a % of EBITDA 49.2% 1.5% 22.9% 35.1% 0% 10% 20% 30% 40% 50% 60% 2010 2011 2012 LTM 2Q13 $ m m See reconciliation tables EBITDA vs Avg A
Slide 18: Cumulative return to shareholders
Cumulative return to shareholders $0.6 $17.4 $42.7 $96.5 $98.4 $103.4 $136.4 $14.9 $14.9 $53.5 $53.5 $0 $20 $40 $60 $80 $100 $120 $140 $160 $180 $200 2007 2008 2009 2010 2011 2012 2013 YTD $ m m Share repurchases Dividends 18 2013 YTD as of 2nd quarter 2013 $189.9m returned to shareholders since 200
Slide 19: Appendix
Appendix _—_— allegiant’
Slide 20: GAAP reconciliation EBITDA calculations
GAAP reconciliation EBITDA calculations 20 $mm LTM 2Q13 2012 2011 2010 2009 2008 Net Income 89.1 78.6 49.4 65.7 76.3 35.4 +Provision for Income Taxes 52.5 46.2 30.1 37.6 44.2 19.8 +Other Expenses 8.0 7.8 5.9 1.3 1.6 .7 +Depreciation and Amortization 67.2 57.5 42.0 35.0 29.6 23.5 =EBITDA 216.8 190.1
Slide 21: GAAP reconciliation EBITDA calculations
GAAP reconciliation EBITDA calculations 21 $mm LTM 2Q13 2012 2011 2010 Net Income 89.1 78.6 49.4 65.7 +Provision for Income Taxes 52.5 46.2 30.1 37.6 +Other Expenses 8.0 7.8 5.9 1.3 +Depreciation and Amortization 67.2 57.5 42.0 35.0 =EBITDA 216.8 190.1 127.4 139.6 Repurchase of common stock 37.4 5.0
Slide 22: GAAP reconciliation Return on equity
GAAP reconciliation Return on equity 22 $mm LTM 2Q13 2012 2011 2010 2009 Net Income ($mm) 89.1 78.6 49.4 65.7 76.3 Jun 2013 Jun 2012 Dec 2012 Dec 2011 Dec 2010 Dec 2009 Total shareholders equity ($mm) 429.6 403.0 400.5 351.5 297.7 292.0 Return on equity 21% 21% 15% 22% ROE = Net income / Avg shareho
Slide 23: GAAP reconciliation Return on capital employed calculation
GAAP reconciliation Return on capital employed calculation $mm LTM 2Q13 2012 2011 2010 + Net income 89.1 78.6 49.4 65.7 + Income tax 52.5 46.2 30.1 37.6 + Interest expense 8.9 8.7 7.2 2.5 - Interest income 1.0 1.0 1.2 1.2 EBIT 149.6 132.5 85.5 104.6 + Interest income 1.0 1.0 1.2 1.2 Tax rate 37.1% 3
Slide 24: GAAP reconciliation Free cash flow calculations
GAAP reconciliation Free cash flow calculations 24 $mm YTD 2013 LTM 2Q13 2012 2011 2010 Cash from operations 141.1 201.2 176.8 129.9 98.0 - CAPEX 77.0 121.0 105.1 88.0 98.5 = Free cash flow 64.1 80.1 71.7 41.9 (0.5) YTD – through June 2013
Slide 25: GAAP reconciliation Net debt
GAAP reconciliation Net debt 25 $mm Jun 2013 Dec 2012 Dec 2011 Dec 2010 Current maturities of long term debt 12.0 11.6 7.9 16.5 Long term debt, net of current maturities 133.1 139.2 138.2 11.6 Total debt 145.1 150.8 146.1 28.1 Cash and cash equivalents 86.4 89.6 150.7 113.3 Short term investments 27
Slide 26: Q2 summary - revenue
Q2 summary - revenue 26 $231.2 $255.8 $13.7 $19.0 $0.6 ($6.7) ($1.9) $210 $220 $230 $240 $250 $260 $270 2Q12 total revenue Scheduled service revenue Air-related revenue Third party revenue Fixed fee revenue Other revenue 2Q13 total revenue M ill io n s U S D Scheduled rev 10.8% growth in passengers,
Slide 27: Q2 summary - costs
Q2 summary - costs 27 -10.1% 4.5% -9.5% 17.3% -13.8% 18.3% 13.0% -20.0% -15.0% -10.0% -5.0% 0.0% 5.0% 10.0% 15.0% 20.0% Fuel Salary/benefits Station operations Maintenance Sales/marketing Depreciation Other YoY change in expenses per ASM Fuel Gallons consumed increased 4.7%, while cost per gallon de
Slide 28: Continuous growth
Continuous growth 136 160 171 195 46 51 57 63 68 70 76 40 45 50 55 60 65 70 75 80 100 110 120 130 140 150 160 170 180 190 200 2009 2010 2011 2012 2013E 2014E 2015E # o f a ir c raf t # o f ro u te s Routes Aircraft 28 Above data represents values at end of period
Slide 29: Revenue momentum
Revenue momentum 29 $76.26 $89.15 $88.90 $92.19 $92.73 $70 $75 $80 $85 $90 $95 $100 2010 2011 2012 YTD 2012 YTD 2013 Average fare - scheduled service $4.34 $5.18 $5.48 $5.56 $5.66 $4.00 $4.50 $5.00 $5.50 $6.00 2010 2011 2012 YTD 2012 YTD 2013 Average fare - ancillary third party products $30.24 $31.
Slide 30: Our website is our only store
Our website is our only store 30 29mm unique visitors in 2012 Low acquisition costs Low transaction costs – High debit card usage – Debit discount 93% of 2Q13 sales were through the site
Slide 31: LTM 2Q13 cost per passenger
LTM 2Q13 cost per passenger Low cost drivers $54 $44 $54 $62 $10 $16 $11 $13 $11 $5 $10 $13 $21 $21 $45 $36 $19 $24 $29 $36 ALGT SAVE LUV JBLU 31 Source: Company filings Ownership includes depreciation & amortization + aircraft rent Other excludes special items and one-time charges for other carrier
Slide 32: Better equipped to handle higher fuel
Better equipped to handle higher fuel 2008 2012 % change System ASMs (billions) 4.4 7.5 71% Average # of aircraft 36 60 67% Avg fare – scheduled service $84.97 $88.90 5% Avg ancillary - total $29.43 $41.20 40% Avg fare - total $114.40 $130.10 14% Pre-tax margin 11.0% 13.7% 32 $1.73 $3.22 $4.06 $3.37
Slide 33: Credit metrics
Credit metrics 15.3% 15.6% 15.8% 3.3% 0% 10% 20% 2011 2012 LTM 2Q13 LUV LTM 2Q13 33 Return on capital employed 15.0% 21.0% 21.0% 5.5% 0% 10% 20% 30% 2011 2012 LTM 2Q13 LUV LTM 2Q13 Return on equity 17.7 x 21.9 x 24.2 x 12.0 x 0 5 10 15 20 25 30 2011 2012 LTM 2Q13 LUV LTM 2Q13 Interest coverage 1.2 x
Slide 34: Strong cash generation
Strong cash generation $140 $127 $190 $217 $100 $125 $150 $175 $200 $225 2010 2011 2012 LTM 2Q13 $ m m 34 EBITDA $2.9 $2.4 $3.2 $3.4 $2.0 $2.5 $3.0 $3.5 $4.0 2010 2011 2012 LTM 2Q13 $ m m EBITDA per AC Free cash flow $0 $42 $72 $80 -$25 $0 $25 $50 $75 $100 2010 2011 2012 LTM 2Q13 $ m m ($122) ($173)
Slide 35: Existing guidance
3Q13 PRASM +1.5 to 3.5% 3Q13 TRASM +0.5 to 2.5% 3Q13 CASM ex fuel +7 to 9% FY13 CASM ex fuel +2 to 5% 3Q13 Fixed fee + other revenue $3mm to $5mm FY13 CAPEX $170mm to $180mm 3rd Quarter 2013 4th Quarter 2013 Full year 2013 System departures (10) to (8)% (3) to 1% System ASMs 2 to 4% 6 to
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