Allegiant Travel Company

Good afternoon and thank you for standing by. Welcome to the second quarter 2023 Eulogent 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 the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Sherry Wilson, Managing Director of Investor Relations. Please go ahead.

Thank you, Michelle. Welcome to the Allegiant Travel Company's second 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 plans. 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, please feel free to visit the company's investor relations site at ir.allegiantair.com. And with that, I'll turn it over to John.

Thank you very much, Erin. Good morning, everyone. I'm thrilled to report an 18% operating margin and 99.7% controllable completion for the second quarter, among the highest in the industry during the quarter, both operationally and financially. In the face of high demand and operational complexity, the team continues to deliver. It is their exceptional efforts that have allowed us to meet and exceed our customers' expectations. Over the last year, we have increased our NPS scores by an average of 10 points and are now at the highest scores since the pandemic. I could not be prouder of the work our team members do each and every day. Thank you very much for your continued passion and dedication. Our commitment to enhancing the travel experience remained the key driver of our success. Over the years, we have invested in our services and our brand, ensuring we not only meet the evolving needs of our customers, but also create new opportunities for growth and expansion. One area that continues to pay dividends is our co-branded credit card. With over 600,000 credit cards issued, the program continues to surpass expectations. Cardholder spend has increased by 220% since 2019 and shows no signs of slowing. We believe the opening of Sunseeker Resort later this year will provide further value propositions for our cardholders and guests and help drive cardholder signups well into the future. Last quarter, I spoke about the key strategic initiatives of this management team. I'd like to provide a quick update on our progress. First and foremost, finalizing our outstanding labor contracts remains our top priority. Greg will provide additional detail around our status, but it is of the utmost importance that we continue making progress and deliver contracts that our teams are proud to support. Secondly, we are committed to continuing to deliver high operational performance. It is our obligation to our guests to strive for industry-leading performance as shown in our Q2 results. It is a necessary pillar in ensuring we protect the investments we've made over the years in our brand. Finally, I'm happy to report we remain on track to open Sun Seeker Resort in Port Charlotte, Florida in mid-October. This has been a long time coming. a project full of challenges and delays outside of our control, so to see the end in sight is remarkable. Bookings for Sunseeker continue coming in from all corners of the country, 42 states all told, which speaks volumes of the breadth of the database. To date, excluding group bookings, we have sold approximately 3,300 transient room nights and an average room rate of $410 per night. Transient room nights booked to date are impressive in that most people book hotel rooms inside 50 days of arrival. Regarding group bookings, over 50 groups have contracted or are in the process of contracting nearly 40,000 room nights. The team continues to bring in high-quality groups, and I fully expect this group room night's booked number to grow to roughly 75,000 by year end, covering all years booked. These are incredible group numbers for a property and brand that has never existed in the market. The team in Florida is in full hiring mode, looking to onboard a targeted headcount of around 1,200 personnel. We received over 5,700 applications, with over 70% of those applicants residing within a 50-mile radius of the resort, demonstrating our commitment to supporting the local economy. Underpinning this influx in applications is the unique retention bonus we announced in early July for our inaugural non-management Sun Seeker Resort team members. It provides an annual retention bonus of $10,000 for 10 years after completing 10 years of continuous full-time employment. Interestingly, we have received applications from people residing in 49 states. Given the early response, we would expect the application pool to exceed 7,000 people. With an application pool that continues to grow, this innovative program should help us attract and retain the very best hospitality professionals, and we already see evidence of this within the pool. From a financial perspective, the Sun Secret Resort budget remains at $695 million. As indicated in prior calls, costs will ramp in the third quarter due to pre-opening expenses. We estimate the total cost impact will be roughly $15 million this quarter. Consistent with last quarter, the full-year impact to consolidated EPS remains at $1.25 loss. I continue to be encouraged by the long-term value creation of Sunseeker Resorts. Upon completion of the project, the team will shift focus begin laying the groundwork for our asset-like growth trajectory. With the opening around the corner, some of you will continue to speculate about our future intentions regarding expansion plans or future projects requiring material capital outlays. We will not pursue any such projects without an equity partner. In closing, I could not be happier where we sit today. Our upward guidance revisions reflect our conviction about the balance of the year and to continue to deliver strong performance in the coming years. As such, I am pleased to announce that the Allegiant Travel Board of Directors has authorized an annual dividend of $2.40, payable in equal amounts quarterly beginning September 1st for the second quarter of 2023. We remain committed to growing profitably by enhancing our offerings, driving customer satisfaction, and delivering increased value to our shareholders. With that, I'll turn it over to Greg Anderson.