Allegiant Travel Company · NASDAQ:ALGT
Allegiant Travel — Investor Presentation (May 2015)
31 slides from Allegiant Travel's investor presentation, May 14, 2015
Slide 1: Management Presentation May 2015
Management Presentation May 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 49 quarters (1) – LTM 1Q15 Adjusted EBITDA $347mm (2) – LTM 1Q15 Return on Capital 25.8%(2) Strong balance sheet – Rated BB- and Ba3(3) – Debt/adjusted EBITDAR 1.9x(2) – $120mm in share repurchases LTM 1Q15 • $38
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 5 195 226 233 247 175 200 225 250 2012 2013 2014 1Q15 Routes 6.95 7.89 8.69 8.82 6.00 7.00 8.00 9.00 2012 2013 2014 LTM 1Q15 A S M s - b ill io n s Scheduled ASMs $909 $996 $1,137 $1,164 $800 $900 $1,000 $1,100 $1,200 2012 2013 2014 LTM 1Q15 U S D - m m Total revenue 63 6
Slide 6: A very large niche
A very large niche Based on current published schedule through November 3, 2015 272 routes, 82 operating aircraft 89 small cities, 16 leisure destinations 6 Yellow dots – leisure destinations Blue dots – origination cities Large dots - bases
Slide 7: Little competition
Little competition 33 239 Routes w competition Routes wo competition Current competitive landscape Uniquely built to profitably operate in underserved markets 7 Competitors – overlapping routes Legacy carriers 33 Brand / lower cost carriers 4 ULCC carriers 2 Based on current published schedule throu
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 e a ts - millio n s Large hubs 0 50 100 150 200 250 2007 2014 S e a ts - m ill io n s Medium hubs 0 20 40 60 80 100 2007 2014 S e a ts - millio n s Small hubs Hub classification by 201
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 y ste m b lock h o u rs/ A C/ d a y 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 2 – Schedu
Slide 10: 2Q15 TRASM components
2Q15 TRASM components Guided (10) to (8)% Non demand related factors – Moving to a credit card surcharge ~(2)% – September 11 fee increase ~(1.5)% Reaction to low oil prices – Increase utilization through off peak flying • +40% YoY increase in 2Q15 off peak departures – Increase in new flying
Slide 11: Lower oil playbook
Lower oil playbook 11 4Q 2008 1Q 2009 2Q 2009 Fuel cost YoY (21.5)% (49.1)% (52.9)% TRASM YoY 24.0% 2.0% (11.8)% Sched ASMs YoY (6.1)% 8.5% 30.3% EPS YoY 285.7% 194.0% 817.8% 4Q 2014 1Q 2015 2Q 2015E Fuel cost YoY (19.7)% (39.6)% TRASM YoY 2.6% 0.0% (10) To (8)% Sched ASMs YoY 10.5% 5.6% 16 to 20% E
Slide 12: Low costs even with low utilization
Low costs even with low utilization 7.6 JBLU 5.8 SAVE 7.4 ALK 6.7 ALGT 5.9 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 CA S M e x f u e l (ce n ts ) Average daily utilization - LTM CASM ex fuel vs daily utilization 12 As of LTM 1Q15, ALGT – Allegiant, JBLU – JetBlue, ALK –
Slide 13: Airbus growth will help improve fuel burn
Airbus growth will help improve fuel burn 13 25.0% 30.0% 35.0% 40.0% 45.0% 2011 2012 2013 2014 LTM 1Q15 Fuel expense/total revenue 1 - As of LTM 1Q15 Fuel has greatest leverage to earnings – Fuel ~ 37% of total operating expense(1) – Airbus aircraft flew 24% of LTM 1Q15 scheduled block hours 62.0
Slide 14: 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 15: Airbus fleet growth
Airbus fleet growth 15 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, aircraft retirements, and is subject to change
Slide 16: Financial growth without sacrificing margin
Financial growth without sacrificing margin 20.9% 22.5% 25.0% 29.7% 19.0% 21.0% 23.0% 25.0% 27.0% 29.0% 31.0% 2012 2013 2014 LTM 1Q15 Adjusted EBITDA margin 16 $190 $224 $285 $346 $448 $446 $150 $200 $250 $300 $350 $400 $450 $500 2012 2013 2014 LTM 1Q15 2015 consensus 2016 consensus U S D - m m Adju
Slide 17: Cumulative return to shareholders
Cumulative return to shareholders $0.6 $17.4 $42.7 $96.5 $98.4 $ 1 0 3 .4 $ 1 8 7 .0 $ 3 2 6 .1 $ 3 8 0 .8 $14.9 $14.9 $53.5 $53.5 $95.3 $ 1 4 3 .4 -$50 $50 $150 $250 $350 $450 $550 2007 2008 2009 2010 2011 2012 2013 2014 2015 $ m m Share repurchases Dividends 17 $524m returned to shareholders since
Slide 18: Existing guidance
2Q15 TRASM (10) to (8)% 2Q15 CASM ex fuel 0 to 2% FY15 CASM ex fuel (13) to (10)% 2Q15 Fixed fee + other revenue $9mm to $11mm FY15 CAPEX ~$260mm 2nd Quarter 2015 3rd Quarter 2015 Full year 2015 System departures 16 to 20% 23 to 27% System ASMs 16 to 20% 21 to 25% 15 to 18% Scheduled depar
Slide 19: Appendix
Appendix _—_— allegiant’
Slide 20: GAAP reconciliation: Adjustment for special item
GAAP reconciliation Adjustment for special item 20 LTM 1Q15 2014 $mm – except per share amounts Net income as reported 117.3 86.7 + Add provision for income taxes, as reported 67.1 50.8 Income before income taxes as reported 184.2 137.1 + Other expense 24.0 20.2 Operating income 208.2 157.3 + Boeing
Slide 21: GAAP reconciliation: EBITDA calculations
GAAP reconciliation EBITDA calculations 21 $mm LTM 1Q15 2014 2013 2012 Net Income 117.3 86.7 92.3 78.6 +Total comprehensive income (loss) 5.3 2.3 .6 (.4) +Provision for Income Taxes 67.1 50.8 54.9 46.2 +Other Expenses 1 24.2 20.4 8.5 7.8 +Depreciation and Amortization 89.3 83.4 69.3 57.5 =EBITDA 303
Slide 22: GAAP reconciliation: Return on equity
GAAP reconciliation Return on equity 22 $mm LTM 1Q15 2014 2013 2012 2011 Adjusted net Income 144.7 113.6 92.3 78.6 49.4 Mar 2015 Mar 2014 Dec 2014 Dec 2013 Dec 2012 Dec 2011 Total shareholders equity 303.6 342.9 294.1 377.3 401.7 351.5 Return on equity 45% 34% 24% 21% 15% ROE = Net income / Avg shar
Slide 23: GAAP reconciliation: Return on capital employed
GAAP reconciliation Return on capital employed calculation $mm LTM 1Q15 2014 2013 2012 2011 + Adjusted net income 144.7 113.6 92.3 78.6 49.4 + Income tax 82.8 66.8 54.9 46.2 30.1 + Interest expense 24.9 21.2 9.5 8.7 7.2 - Interest income 0.7 0.8 1.0 1.0 1.2 251.4 200.4 155.7 132.5 85.5 + Interest in
Slide 24: GAAP reconciliation: Free cash flow calculations
GAAP reconciliation Free cash flow calculations 24 $mm LTM 1Q15 2014 2013 2012 2011 Cash from operations 327.4 271.7 196.9 176.8 129.9 - Cash CAPEX 332.5 279.4 177.5 105.1 88.0 = Free cash flow (5.1) (7.7) 19.4 71.7 41.9 LTM 1Q15 and 2014 CAPEX is cash CAPEX and does not include $142m in assumed deb
Slide 25: GAAP reconciliation: Net debt
GAAP reconciliation Net debt 25 $mm Mar 2015 Dec 2014 Dec 2013 Dec 2012 Dec 2011 Current maturities of long term debt 60.8 53.8 20.2 11.6 7.9 Long term debt, net of current maturities 556.5 539.3 214.1 139.2 138.2 Total debt 617.3 593.1 234.3 150.8 146.1 Cash and cash equivalents 107.1 89.6 97.7 89.
Slide 26: Revenue components
Revenue components 26 $88.90 $91.69 $91.30 $88.95 $85 $90 $95 2012 2013 2014 LTM 1Q15 Average fare - scheduled service $5.48 $5.21 $4.56 $4.48 $4.00 $4.50 $5.00 $5.50 $6.00 2012 2013 2014 LTM 1Q15 Average fare - ancillary third party products $35.72 $40.52 $41.37 $42.86 $30.00 $35.00 $40.00 $45.00 2
Slide 27: LTM 1Q15 cost per passenger
LTM 1Q15 cost per passenger Low cost drivers $42 $38 $43 $54 $12 $17 $11 $14 $11 $5 $9 $13 $25 $22 $50 $41 $21 $23 $30 $38 ALGT SAVE LUV JBLU 27 Source: Company filings Ownership includes depreciation & amortization + aircraft rent Other excludes special items and one-time charges for other carriers
Slide 28: Credit metrics
Credit metrics 15.6% 16.4% 19.2% 25.8% 10.7% 5% 15% 25% 2012 2013 2014 LTM 1Q15 LUV LTM 1Q15 28 Return on capital employed 21.0% 24.0% 34.0% 45.0% 20.4% 10% 20% 30% 40% 50% 2012 2013 2014 LTM 1Q15 LUV LTM 1Q15 Return on equity 21.9 x 23.7 x 14.3 x 13.9 x 26.0 x 10 15 20 25 30 2012 2013 2014 LTM 1Q15
Slide 29: Strong cash generation
Strong cash generation $190 $225 $287 $347 $150 $200 $250 $300 $350 $400 2012 2013 2014 LTM 1Q15 $ m m 29 Adjusted EBITDA $3.2 $3.6 $4.2 $5.0 $3.0 $3.5 $4.0 $4.5 $5.0 2012 2013 2014 LTM 1Q15 $ m m Adj EBITDA per AC Free cash flow $72 $19 -$8 -$5 -$25 $0 $25 $50 $75 $100 2012 2013 2014 LTM 1Q15 $ m m
Slide 30: Sources/uses of cash
Sources/uses of cash $105 $178 $279 $333 $0 $50 $100 $150 $200 $250 $300 $350 2012 2013 2014 LTM 1Q15 $ m m 30 CAPEX $9.3 $22.7 $168.8 $177.1 $0.0 $50.0 $100.0 $150.0 $200.0 2012 2013 2014 LTM 1Q15 $ m m Debt payments Cash from operations $177 $197 $272 $327 $0 $150 $300 $450 2012 2013 2014 LTM 1Q15
Slide 31: Capitalization structure
Capitalization structure Actual 3/31/15 (MM USD) Debt to LTM Adj EBITDAR Rate Maturity Unrestricted cash 438.0 LTM Adjusted EBITDAR 353.4 Secured by AC 36.0 L + 2.95% Apr 2018 Secured by AC 126.9 L + 3.08% May 2018 Secured by AC 32.7 L + 2.95% May 2018 Secured by AC 34.6 L + 3.99% Oct 2018 Secured b