Allegiant Travel Company

Good day and thank you for standing by. Welcome to the Q1 2023 Allegiant Travel Company Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during that session, you will need to press star one one on your phone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded, and I would now like to hand the conference over to your speaker today, Ms. Sherri Wilson. Ms. Wilson, please go ahead.

Thank you, Chris. Welcome to the Allegiant Travel Company's first quarter 2023 earnings call. On the call with me today are John Redmond, the company's chief executive officer, Greg Anderson, president, Scott D'Angelo, our EVP and chief marketing officer, Drew Wells, our SVP and chief revenue officer, Robert Neal, SVP and Chief Financial Officer, and a handful of others to help answer questions. We will start the call with commentary and then open it up to questions. We ask that you please limit yourself to one question and one follow-up. The company's comments today will contain forward-looking statements concerning our future performance and strategic plan. Various risk factors could cause the underlying assumptions of these statements and our actual results to differ materially from those expressed or implied by our forward-looking statements. These risk factors and others are more fully disclosed in our filings with the SEC. Any forward-looking statements are based on information available to us today. We undertake no obligation to update publicly any forward-looking statements, whether as a result of future events, new information, or otherwise. The company cautions investors not to place undue reliance on forward-looking statements, which may be based on assumptions and events that do not materialize. To view this earnings release as well as the rebroadcast of the call, feel free to visit the company's investor relations site at ir.allegiantair.com. And with that, I'll turn it over to John.

Well, thank you very much, Sherry, and good afternoon, everyone. We've hit the ground running in 2023 and continued operational strength leading to financial results. We reported earnings per share of $3.09, which compares favorably to our initial expectation and provides us confidence to raise the midpoint of our full year EPS guidance to roughly $9.75 a share. The leisure customer range remains exceptionally strong as evidenced by total revenue growth of 29% as compared to Q1 prior year, coupled with recent company history best Q1 load factors approaching 86%. These results exceeded expectations and were underpinned by a stellar operational performance with an impressive controllable completion during the quarter of 99.9%. We delivered this operational performance by growing departures 2.3% on a load factor of 85.8% during the quarter. More than 4.1 million guests traveled on our airline, helping fuel a record quarter for always credit card acquisitions of 46,000 cardholders as we ended the quarter with 435,000 active cardholders. The key focus of this management team is improving the experience of our guests and the strengthening of our brand. This is a critical tool for us in expanding our powerful customer database of 16 and a half million customers, which is growing on average by 225,000 per month. The continued demand of our product by our customers is key to us to support the 1400 incremental routes that airline growth our team has identified. Being the employer of choice for our team members is one of our top priorities. We strive to make a positive impact on our employees. Thus, I was very pleased to see Allegiant named one of Forbes America's Best Midsize Employers for 2023 and Newsweek's America's Greatest Workplaces for Diversity in 2023. In addition, prioritizing our team members also includes reaching collective bargaining agreements with our flight attendants and pilots. Getting these respective deals done is number one on my priority list. I remain optimistic about reaching agreements with these team members that these team members deserve and are proud to support. Great progress has been made with both CBAs and we would expect these to be finalized in the not too distant future. Turning to Sunseeker Resort Charlotte Harbor, I'm pleased to report we are currently on track for official opening date of October 16th. The Sunseeker team and construction crews have been working around the clock, and the remediation work related to our hurricane and other events is just about finalized. As we work through construction delays and repair work related to the hurricane, we have clear line of sight to a final budget. We've updated the Caplex miniature budget, which is inclusive of the Aileron Golf Club, including both the golf course renovation and construction of a new clubhouse and entry gate to $695 million. We are well outside of the normal hotel booking curve, yet we remain encouraged by early booking indicators. To date, we have booked roughly 2,000 transient room nights at an ADR of $407,000. with minimal advertising effort. More importantly, the ADR has been accelerating over the last two months, coming in at $540 and $460 for a business book in the months of March and April, respectively. In addition, we have over 6 million Sunseeker Resort emails and expect the number to grow to closer to 7 million emails by opening date. We continue to attract high quality group bookings as well with over 40 different groups currently contracted for rooms, food and beverage, totaling 12.7 million. There are another four groups we are in advanced conversations with on 3,000 rooms and 1.9 million in rooms, food and beverage. Last month, we unveiled 20 original world-class food and beverage concepts. These unique offerings will truly be one of a kind for the area. Furthermore, we have always looked at the resort as an incubator to launch all the IP being created, so we are excited to reveal these incredible concepts. Touching briefly on FundSeeker financials, total operating expense during Q1 23 came in right below our estimated $5 million for the quarter. We continue to expect a similar run rate in the second quarter before jumping to roughly $15 million during the third quarter, related to pre-opening expenses. All in, we currently anticipate a $1.25 loss per share for 2023 attributable to Sunseeker Resort. This amount does not include insurance recoveries related to business interruption coverage. In closing, I want to thank our employees for a tremendous quarter. Your efforts drove an exceptional operation, which is paramount for our guests, for you, our employees, and for long-term vision of this company. many of you i recently visited on my travels to several of our bases and your enthusiasm dedication and passion is infectious thank you with that i'll turn it over to gray john thank you and thank you everyone for joining today's call 2023 is off to a great start as reported in our first quarter results