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Nov 9, 2017 6:40 AM ET

Copa Holdings Reports Net Income of $103.8 million and EPS of $2.45 for the Third Quarter of 2017

Disclosure NewswireTM

iCrowdNewswire - Nov 9, 2017

Excluding special items, adjusted net income came in at $100.8 million, or EPS of $2.38 per share

PANAMA CITY, — Copa Holdings, S.A. (NYSE: CPA), today announced financial results for the third quarter of 2017 (3Q17). The terms “Copa Holdings” and “the Company” refer to the consolidated entity.  The following financial information, unless otherwise indicated, is presented in accordance with International Financial Reporting Standards (IFRS). See the accompanying reconciliation of non-IFRS financial information to IFRS financial information included in the financial tables section of this earnings release. Unless otherwise stated, all comparisons with prior periods refer to the third quarter of 2016 (3Q16).

 

OPERATING AND FINANCIAL HIGHLIGHTS

  • Copa Holdings reported net income of US$103.8 million for 3Q17 or earnings per share (EPS) of US$2.45, compared to net income of US$74.0 million or earnings per share of US$1.75 in 3Q16.
  • Excluding special items, the Company would have reported an adjusted net income of US$100.8 million, or adjusted EPS of US$2.38, compared to an adjusted net income of US$55.3 million or adjusted EPS of US$1.30 in 3Q16.  Special items include a non-cash gain of US$2.9 million in 3Q17 and US$19.2 million in 3Q16 related to the mark-to-market of fuel hedge contracts.
  • Operating income for 3Q17 came in at US$119.1 million, representing a 56% increase over operating income of US$76.4 million in 3Q16, as a result of 13% additional capacity, a 2.4% increase in unit revenue per available seat mile (RASM), and a 3.2% decrease in unit costs.  Operating margin for 3Q17 came in at 18.1%, compared to an operating margin of 13.4% in 3Q16.   
  • Total revenues for 3Q17 increased 15.6% to US$657.2 million.  Yield per passenger mile increased 1.3% to 12.0 centsand RASM came in at 10.6 cents, 2.4% above 3Q16. 
  • For 3Q17, consolidated passenger traffic grew 14.9% while consolidated capacity grew 13.0%. As a result, consolidated load factor for the quarter increased 1.5 percentage points to 85.7%. 
  • Operating cost per available seat mile (CASM) decreased 3.2%, from 8.9 cents in 3Q16 to 8.6 cents in 3Q17.  CASM excluding fuel costs decreased 1.2%, from 6.4 in 3Q16 to 6.3 cents 3Q17.
  • Cash, short-term and long-term investments ended 3Q17 at US$971.5 million, representing 40% of the last twelve months’ revenues.
  • Copa Airlines faced several operational challenges during the quarter, including severe weather, natural disasters and other external factors that affected the company´s financial results for the quarter and the operation of its hub in Panama City.  These events caused many flight cancelations and delays; as a result, the airline´s Completion Factor and On-Time Performance came in lower than usual, at 98.5% and 82.9%, respectively.

Subsequent Events  

  • Copa Holdings will pay its fourth quarter dividend of US$0.75 per share, on December 15, 2017, on all outstanding Class A and Class B shares, to stockholders of record as of November 30, 2017.

   

 

        
 

Consolidated Financial 
& Operating Highlights

3Q17

3Q16

Variance vs. 3Q16

2Q17

Variance vs. 2Q17

 
 

Revenue Passengers Carried (‘000)

2,518

2,231

12.9%

2,262

11.3%

 
 

RPMs (mm) 

5,330

4,637

14.9%

4,766

11.8%

 
 

ASMs (mm) 

6,221

5,506

13.0%

5,796

7.3%

 
 

Load Factor 

85.7%

84.2%

1.5 p.p.

82.2%

3.4 p.p.

 
 

Yield

12.0

11.9

1.3%

11.8

2.1%

 
 

PRASM (US$ Cents) 

10.3

10.0

3.1%

9.7

6.4%

 
 

RASM (US$ Cents) 

10.6

10.3

2.4%

10.0

5.9%

 
 

CASM (US$ Cents) 

8.6

8.9

-3.2%

8.5

1.2%

 
 

CASM Excl. Fuel (US$ Cents) 

6.3

6.4

-1.2%

6.3

0.3%

 
 

Fuel Gallons Consumed (Millions) 

80.0

70.9

12.8%

74.1

7.9%

 
 

Avg. Price Per Fuel Gallon (US$ Dollars)

1.82

1.98

-8.0%

1.77

3.3%

 
 

Average Length of Haul (Miles)

2,117

2,079

1.8%

2,107

0.5%

 
 

Average Stage Length (Miles)

1,300

1,192

9.1%

1,259

3.2%

 
 

Departures

32,593

30,737

6.0%

31,092

4.8%

 
 

Block Hours

108,930

97,077

12.2%

102,435

6.3%

 
 

Average Aircraft Utilization (Hours)

11.7

10.5

11.7%

11.2

4.6%

 
 

Operating Revenues (US$ mm) 

657.2

568.3

15.6%

578.1

13.7%

 
 

Operating Income (US$ mm)

119.1

76.4

55.9%

83.0

43.6%

 
 

Operating Margin 

18.1%

13.4%

4.7 p.p.

14.4%

3.7 p.p.

 
 

Net Income (US$ mm)

103.8

74.0

40.2%

63.0

64.8%

 
 

Adjusted Net Income (US$ mm) (1)

100.8

55.3

82.4%

62.8

60.6%

 
 

EPS – Basic and Diluted (US$)

2.45

1.75

40.0%

1.49

64.7%

 
 

Adjusted EPS – Basic and Diluted (US$) (1)

2.38

1.30

82.2%

1.48

60.5%

 
 

# of Shares – Basic and Diluted (‘000) 

42,430

42,374

0.1%

42,419

0.0%

 
        
 

 (1Adjusted Net Income and Adjusted EPS for 3Q17, 3Q16 and 2Q17 exclude non-cash charges/gains associated with the mark-to-market of fuel hedges and 3Q16 also excludes the impact of the Venezuelan currency devaluations.

 
 

Note:  Attached to this press release is a reconciliation of non-IFRS financial measures to the comparable IFRS measures.

 
        

FULL 3Q17 EARNINGS RELEASE AVAILABLE FOR DOWNLOAD AT: http://investor.shareholder.com/copa/results.cfm

3Q17 EARNINGS RESULTS CONFERENCE CALL AND WEBCAST

 

Date:

Nov 9, 2017

  

Time:

11:00 AM US ET (11:00 AM Local Time)

  

Conference telephone number: 

877-293-5456 (US Domestic Callers)

  
 

707-287-9357 (International Callers)

  

Webcast:

http://investor.shareholder.com/copa/events.cfm

  

Speakers:

Pedro Heilbron, Chief Executive Officer

  
 

José Montero, Chief Financial Officer

  

About Copa Holdings

Copa Holdings is a leading Latin American provider of passenger and cargo services.  The Company, through its operating subsidiaries, provides service to 75 destinations in 31 countries in North, Central and South America and the Caribbean with one of the youngest and most modern fleets in the industry, consisting of 101 aircraft: 80 Boeing 737NG aircraft and 21 EMBRAER-190s. For more information visit: www.copa.com. 

CONTACT: Copa Holdings S.A.

Investor Relations: 
Ph: 011 507 304-2774
www.copa.com (IR section)

This release includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on current plans, estimates and expectations, and are not guarantees of future performance. They are based on management’s expectations that involve a number of business risks and uncertainties, any of which could cause actual results to differ materially from those expressed in or implied by the forward-looking statements. The Company undertakes no obligation to update or revise any forward-looking statement. The risks and uncertainties relating to the forward-looking statements in this release are among those disclosed in Copa Holdings’ filed disclosure documents and are subject to change without prior notice

CPA-G

 

 

Copa Holdings, S.A.

 
 

Income Statement – IFRS

 

(US$ Thousands)

            
   

Unaudited

 

Unaudited

 

%

 

Unaudited

 

%

   

3Q17

 

3Q16*

 

Change

 

2Q17

 

Change

 

Operating Revenues

          
 

Passenger revenue

 

641,244

 

550,524

 

16.5%

 

561,696

 

14.2%

 

Cargo and mail revenue

 

13,600

 

13,390

 

1.6%

 

13,994

 

-2.8%

 

Other operating revenue

 

2,325

 

4,372

 

-46.8%

 

2,398

 

-3.0%

 

Total Operating Revenue

 

657,169

 

568,286

 

15.6%

 

578,087

 

13.7%

            
 

Operating Expenses

          
 

Fuel

 

145,968

 

140,567

 

3.8%

 

130,878

 

11.5%

 

Wages, salaries, benefits and other employees’ expenses

 

103,775

 

92,039

 

12.8%

 

99,603

 

4.2%

 

Passenger servicing

 

27,008

 

21,998

 

22.8%

 

22,883

 

18.0%

 

Airport facilities and handling charges

 

45,222

 

40,705

 

11.1%

 

42,614

 

6.1%

 

Sales and distribution

 

50,157

 

47,813

 

4.9%

 

48,942

 

2.5%

 

Maintenance, materials and repairs

 

39,777

 

32,514

 

22.3%

 

27,404

 

45.2%

 

Depreciation and amortization

 

41,847

 

35,525

 

17.8%

 

40,572

 

3.1%

 

Flight operations

 

26,535

 

23,190

 

14.4%

 

25,999

 

2.1%

 

Aircraft rentals and other rentals

 

33,382

 

34,454

 

-3.1%

 

33,614

 

-0.7%

 

Cargo and courier expenses

 

1,801

 

1,565

 

15.0%

 

1,892

 

-4.8%

 

Other operating and administrative expenses

 

22,569

 

21,494

 

5.0%

 

20,727

 

8.9%

 

Total Operating Expense

 

538,041

 

491,865

 

9.4%

 

495,127

 

8.7%

            
 

Operating Profit

 

119,128

 

76,421

 

55.9%

 

82,960

 

43.6%

            
 

Non-operating Income (Expense):

          
 

Finance cost

 

(8,639)

 

(9,682)

 

-10.8%

 

(8,938)

 

-3.3%

 

Finance income

 

4,801

 

3,505

 

36.9%

 

4,249

 

13.0%

 

Gain (loss) on foreign currency fluctuations

 

593

 

(352)

 

n/m

 

(2,858)

 

-120.7%

 

Net change in fair value of derivatives

 

2,946

 

19,225

 

-84.7%

 

175

 

n/m

 

Other non-operating (income) expense

 

(616)

 

(2,445)

 

-74.8%

 

(190)

 

224.7%

 

Total Non-Operating Income/(Expense)

 

(916)

 

10,251

 

-108.9%

 

(7,561)

 

-87.9%

            
 

Profit before taxes

 

118,212

 

86,672

 

36.4%

 

75,399

 

56.8%

            
 

Income tax expense

 

14,416

 

12,654

 

13.9%

 

12,401

 

16.2%

            
 

Net Profit

 

103,796

 

74,018

 

40.2%

 

62,997

 

64.8%

            
            
 

EPS – Basic and Diluted

 

2.45

 

1.75

 

40.0%

 

1.49

 

64.7%

 

Shares – Basic and Diluted

 

42,429,841

 

42,374,430

 

0.1%

 

42,419,150

 

0.0%

            
 

* During 2017, the Company implemented a business, planning and financial consolidation system, which resulted in a new classification of the chart of accounts.  Prior periods have been reclassified for ease of comparison.

 

   

Copa Holdings, S. A. and subsidiaries 

  

Balance Sheet – IFRS

  

(US$ Thousands)

September 30

December 31

 

2017

2016

 

 (Unaudited) 

 Audited 

   

 ASSETS 

  
   

 Current Assets 

  

Cash and cash equivalents

249,593

331,687

Restricted cash and cash equivalents

Short-term investments

565,994

483,002

Total cash, cash equivalents and short-term investments

815,587

814,689

   

Accounts receivable, net

141,173

113,408

Accounts receivable from related parties

391

499

Expendable parts and supplies, net

78,952

74,502

Prepaid expenses

40,540

58,370

Other current assets

8,487

7,650

TOTAL CURRENT ASSETS

1,085,130

1,069,118

   

Long-term investments

155,953

953

Long-term accounts receivable

2,267

1,957

Long-term prepaid expenses

29,102

26,398

Property and equipment, net

2,780,271

2,623,682

Intangible, net

77,275

69,502

Net pension asset

4,495

8,826

Deferred tax assets

17,225

18,339

Other Non-Current Assets

31,592

27,064

TOTAL NON-CURRENT ASSETS

3,098,180

2,776,721

   

TOTAL ASSETS

4,183,310

3,845,839

   

 LIABILITIES AND EQUITY 

  
   

 Current Liabilities: 

  

Current maturities of long-term debt

261,167

222,718

Accounts payable

109,732

104,590

Accounts payable to related parties

11,432

8,680

Air traffic liability

469,478

395,580

Frequent flyer deferred revenue

42,977

35,368

Taxes and interest payable

93,337

68,483

Employee benefits obligations

42,991

41,707

Income tax payable

2,845

1,401

Other Current Liabilities

2,045

4,385

TOTAL CURRENT LIABILITIES

1,036,004

882,912

   

Long-term debt

918,642

961,414

Other long – term liabilities

132,529

114,268

Deferred tax Liabilities

53,493

44,974

TOTAL NON-CURRENT LIABILITIES

1,104,664

1,120,656

   

TOTAL LIABILITIES

2,140,668

2,003,568

   

 EQUITY 

  

Issued Capital

  

Class A – 33,778,404 issued and 31,185,641 outstanding

21,030

20,988

Class B – 10,938,125 shares issued and outstanding

7,466

7,466

Additional Paid-In Capital

71,123

64,986

Treasury Stock

(136,388)

(136,388)

Retained Earnings

1,812,092

1,552,547

Net Income

269,178

334,544

Other Comprehensive Income

(1,859)

(1,872)

TOTAL EQUITY

2,042,642

1,842,271

   

TOTAL LIABILITIES AND EQUITY

4,183,310

3,845,839

   

* During 2017, the Company implemented a business, planning and financial consolidation system, which resulted in a new classification of the chart of accounts.  Prior periods have been reclassified for ease of comparison.

 

 

Copa Holdings, S. A. and subsidiaries 

             
 

Consolidated Statement of Cash Flows

             
 

For the nine months ended September 30, 

             
 

(In US$ thousands)

             
          

2017

 

2016

 

2015

          

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

Cash flow from operating activities 

        

522,527

 

384,822

 

236,743

 

Cash flow used in investing activities 

        

(344,088)

 

(170,057)

 

(39,658)

 

Cash flow used in financing activities 

        

(260,533)

 

(197,677)

 

(282,982)

 

Net (decrease) increase in cash and cash equivalents 

        

(82,094)

 

17,088

 

(85,897)

 

Cash and cash equivalents at January 1

        

331,687

 

204,715

 

207,437

 

Cash and cash equivalents at September 30

        

$    249,593

 

$    221,803

 

$    121,540

               
 

Short-term investments

        

565,994

 

540,502

 

484,242

 

Long-term investments *

        

155,953

 

954

 

428,259

 

Restricted cash and cash equivalents **

        

 

10,128

 

48,702

 

Total cash and cash equivalents and investments at September 30

        

$    971,540

 

$    773,387

 

$ 1,082,743

               
 

* Long-term investments include $427 million at September 2015 of cash in Venezuela.

 

** Restricted cash corresponds to a margin calls to secure derivative financial instruments transactions. 

Copa Holdings, S.A.

NON-IFRS FINANCIAL MEASURE RECONCILIATION

This press release includes the following non IFRS financial measures: CASM Excluding Fuel, Adjusted Net Income and Adjusted EPS. This supplemental information is presented because we believe it is a useful indicator of our operating performance and is useful in comparing our performance with other companies in the airline industry. These measures should not be considered in isolation, and should be considered together with comparable IFRS measures, in particular operating income and net income. The following is a reconciliation of these non-IFRS financial measures to the comparable IFRS measures:

 

        
        
 

Reconciliation of Adjusted Net Income

      
 

and Adjusted EPS

 

3Q17

 

3Q16

 

2Q17

        
 

Net profit as Reported

 

$103,796

 

$74,018

 

$62,997

        
 

Special Items (adjustments):

      
 

Gain (loss) due to devaluation of Venezuelan Bolivar

   

(484)

  
 

Net change in fair value of derivatives

 

2,946

 

19,225

 

175

 

Adjusted Net Income

 

$100,850

 

$55,278

 

$62,822

        
 

Shares used for Computation (in thousands)

      
 

     Basic and Diluted

 

42,430

 

42,374

 

42,419

        
 

Adjusted earnings per share – Basic and Diluted

 

2.38

 

1.30

 

1.48

        
 

Reconciliation of Operating Costs per ASM

      
 

Excluding Fuel (CASM Excl. Fuel)

 

3Q17

 

3Q16

 

2Q17

        
 

Operating Costs per ASM as Reported

 

8.6

 

8.9

 

8.5

 

Aircraft fuel per ASM

 

(2.3)

 

(2.6)

 

(2.3)

 

Operating Costs per ASM excluding fuel 

 

6.3

 

6.4

 

6.3

        

 

SOURCE Copa Holdings, S.A.

Related Links

http://www.copa.com

Contact Information:

Copa Holdings, S.A.

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