Copa Holdings Reports Financial Results for the Fourth Quarter of 2015

Excluding special items, adjusted net income came in at $31.7 million, or EPS of $0.73 per share

17 Feb, 2016, 17:25 ET from Copa Holdings, S.A.

PANAMA CITY, Feb. 17, 2016 /PRNewswire/ -- Copa Holdings, S.A. (NYSE: CPA), today announced financial results for the fourth quarter of 2015 (4Q15) and full year 2015. 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 financial tables section of this earnings release. Unless otherwise stated, all comparisons with prior periods refer to the fourth quarter of 2014 (4Q14).

The financial information included in this press release is preliminary as the Company has not yet issued its audited financial statements and may differ from those results. During the course of the preparation of the financial statements and related notes and our year-end audit, additional items that would require material adjustments to the preliminary financial information included in this press release may be identified.

OPERATING AND FINANCIAL HIGHLIGHTS

  • Copa Holdings reported net income of US$1.9 million for 4Q15 or earnings per share (EPS) of US$0.04, as compared to net income of US$26.2 million or EPS of US$0.59 in 4Q14. Excluding special items, which for 4Q15 includes a non-cash loss of US$25.3 million associated with the mark-to-market of fuel hedge contracts, a US$2.3 million gain associated with the mark-to-market of shares repurchased, and a US$6.9 million loss related to the devaluation of the Argentinean Peso, Copa Holdings would have reported adjusted net income of US$31.7 million or adjusted EPS of US$0.73, compared to adjusted net income of US$115.6 million or adjusted EPS of US$2.61 in 4Q14.
  • Net income for full year 2015 reached US$185.4 million or EPS of US$4.23, compared to US$361.7 million or EPS of US$8.15 for full year 2014. Excluding special items, which for 2015 includes a non-cash loss of US$21.6 million associated with the mark-to-market of fuel hedge contracts, a US$6.9 million loss related to the devaluation of the Argentinean Peso, and a US$2.3 million loss related to the devaluation of the Venezuelan Bolivar, Copa Holdings would have reported an adjusted net income of US$216.2 million or EPS of US$4.93, compared to adjusted net income of US$484.8 million or adjusted EPS of US$10.92 for full year 2014.
  • Operating income for 4Q15 came in at US$39.1 million, representing a 61.6% decrease over operating income of US$101.8 million in 4Q14, mainly as a result of a 20.2% decrease in unit operating revenue per available seat mile (RASM) and partly offset by a 30.8% drop in the all-in price of jet fuel.  As a result, operating margin for 4Q15 came in at 7.3%, compared to an operating margin of 15.6% in 4Q14.    
  • The Company reported operating income of US$266.1 million for full year 2015, representing a decrease of 48.9% over operating income of US$521.1 million in 2014.  Operating margin for full year 2015 came in at 11.8%, compared to an operating margin of 19.3% in 2014.
  • Total revenues for 4Q15 decreased 18.6% to US$532.6 million. Yield per passenger mile decreased 20.4% to 12.5 cents and RASM came in at 9.7 cents, or 20.2% below 4Q14. 
  • For 4Q15, consolidated passenger traffic grew 1.7% while consolidated capacity grew 2.0%. As a result, consolidated load factor for the quarter decreased 0.3 percentage points to 74.8%.  For full year 2015, consolidated load factor came in at 75.2%, 1.4 percentage points lower than 2014 on 4.4% capacity growth. 
  • Operating cost per available seat mile (CASM) decreased 12.4%, from 10.3 cents in 4Q14 to 9.0 cents in 4Q15, mostly as a result of a 30.8% decrease in the all-in price of jet fuel. CASM excluding fuel costs decreased 2.4% from 6.7 cents in 4Q14 to 6.5 cents in 4Q15.
  • Cash, short-term and long-term investments ended 2015 at US$1.1 billion, representing 49% of the last twelve months' revenues. Of this amount, 38% or US$422.6 million is in Venezuela the repatriation of which is subject to government currency controls.     
  • During the fourth quarter, Copa Airlines took delivery of four Boeing 737-800 aircraft, and returned 3 leased Embraer 190s. As a result, Copa Holdings ended the year with a consolidated fleet of 100 aircraft – 63 Boeing 737-800s, 14 Boeing 737-700s, and 23 Embraer-190s.
  • For 2015, Copa Holdings reported consolidated on-time performance of 90.6% and a flight-completion factor of 99.7%, maintaining its position among the best in the industry.

Subsequent Events  

  • On February 17, 2016, the Board of Directors of Copa Holdings approved a change to the Company's dividend policy from a current payout of 40% of previous years' reported net income to 40% of previous years' adjusted net income. The Board of Directors also approved a 2016 dividend payment of US$0.51 cents per share per quarter, corresponding to 40% of Copa Holdings' adjusted consolidated net income for 2015. Dividends will be distributed quarterly during the months of March, June, September and December. The first quarterly dividend of US$0.51 cents per share will be paid on March 16 to shareholders on record as of March 3rd, 2016.

Consolidated Financial & Operating Highlights

  4Q15

Variance

vs. 4Q14

Variance

vs. 3Q15

FY 2015

Variance

vs. 2014

Revenue Passengers Carried ('000)

2,055

5.3%

3.4%

7,875

1.0%

RPMs (mm) 

4,103

1.7%

-0.3%

16,310

2.5%

ASMs (mm) 

5,486

2.0%

1.6%

21,675

4.4%

Load Factor 

74.8%

-0.3 p.p.

-1.5 p.p.

75.2%

-1.4 p.p.

Yield

12.5

-20.4%

-1.9%

13.3

-19.3%

PRASM (US$ Cents) 

9.3

-20.7%

-3.8%

10.0

-20.8%

RASM (US$ Cents) 

9.7

-20.2%

-4.3%

10.4

-20.3%

CASM (US$ Cents) 

9.0

-12.4%

-2.2%

9.2

-13.0%

CASM Excl. Fuel (US$ Cents) 

6.5

-2.4%

1.0%

6.4

-3.0%

Breakeven Load Factor (1)

68.8%

-10.3 p.p.

-1.0 p.p.

65.8%

-6.2 p.p.

Fuel Gallons Consumed (Millions) 

70.4

1.9%

1.8%

277.1

3.2%

Avg. Price Per Fuel Gallon (US$ Dollars)

1.95

-30.8%

-9.8%

2.18

-28.8%

Average Length of Haul (Miles)

1,997

-3.4%

-3.6%

2,071

1.4%

Average Stage Length (Miles)

1,222

-0.8%

-0.9%

1,236

1.9%

Departures

31,184

1.5%

1.8%

122,588

1.1%

Block Hours

97,788

0.4%

0.8%

388,355

3.0%

Average Aircraft Utilization (Hours)

10.7

-1.6%

-0.9%

10.8

-1.7%

Operating Revenues (US$ mm) 

532.6

-18.6%

-2.7%

2,250.1

-16.8%

Operating Income (US$ mm)

39.1

-61.6%

-22.7%

266.1

-48.9%

Operating Margin 

7.3%

-8.2 p.p.

-1.9 p.p.

11.8%

-7.4 p.p.

Net Income (US$ mm)

1.9

-92.6%

-69.0%

185.4

-48.7%

Adjusted Net Income (US$ mm) (1)

31.7

-72.6%

-15.3%

216.2

-55.4%

EPS - Basic and Diluted (US$)

0.04

-92.5%

-68.5%

4.23

-48.1%

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

0.73

-71.9%

-13.8%

4.93

-54.9%

# of Shares - Basic and Diluted ('000) 

43,286

-2.4%

-1.7%

43,861

-1.2%

(1) Breakeven Load Factor, Adjusted Net Income and Adjusted EPS for 4Q15, 4Q14, 3Q15, 2015 and 2014 exclude non-cash charges/gains associated with the mark-to-market of fuel hedges and shares repurchased, and the impact of the Argentinean and Venezuelan currency devaluations.

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

FULL 4Q15 EARNINGS RELEASE AVAILABLE FOR DOWNLOAD AT: http://investor.shareholder.com/copa/results.cfm

4Q15 EARNINGS RESULTS CONFERENCE CALL AND WEBCAST

Date:

February 18, 2016

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 73 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 100 aircraft: 77 Boeing 737NG aircraft and 23 EMBRAER-190s. For more information visit: www.copa.com.  

CONTACT: Copa Holdings S.A. Investor Relations: Ph: (507) 304-2431 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, therefore, subject to change without prior notice.

CPA-G

Copa Holdings, S.A.

Income Statement - IFRS

(US$ Thousands)

Unaudited

Unaudited

%

Unaudited

%

Unaudited

Audited

%

4Q15

4Q14

Change

3Q15

Change

2015

2014

Change

Operating Revenues

Passenger Revenue

512,148

633,081

-19.1%

523,531

-2.2%

2,166,725

2,619,857

-17.3%

Cargo, mail and other

20,453

21,127

-3.2%

23,716

-13.8%

83,338

85,211

-2.2%

Total Operating Revenue

532,601

654,208

-18.6%

547,247

-2.7%

2,250,063

2,705,067

-16.8%

Operating Expenses

Aircraft fuel

136,881

194,147

-29.5%

149,197

-8.3%

602,776

820,694

-26.6%

Salaries and benefits

70,409

81,606

-13.7%

71,902

-2.1%

289,514

299,182

-3.2%

Passenger servicing

63,689

70,320

-9.4%

65,175

-2.3%

258,302

268,762

-3.9%

Commissions

19,556

25,582

-23.6%

22,632

-13.6%

88,557

99,115

-10.7%

Reservations and sales

24,882

23,813

4.5%

19,636

26.7%

88,051

93,766

-6.1%

Maintenance, material and repairs

31,528

23,188

36.0%

25,946

21.5%

111,181

101,421

9.6%

Depreciation

34,084

31,515

8.2%

35,485

-3.9%

134,888

115,147

17.1%

Flight operations

34,028

34,461

-1.3%

30,928

10.0%

130,930

132,156

-0.9%

Aircraft rentals

31,530

30,151

4.6%

30,409

3.7%

122,218

112,082

9.0%

Landing fees and other rentals

13,481

13,745

-1.9%

14,585

-7.6%

56,703

53,746

5.5%

Other

33,456

23,847

40.3%

30,796

8.6%

100,854

87,911

14.7%

Total Operating Expense

493,524

552,375

-10.7%

496,691

-0.6%

1,983,975

2,183,981

-9.2%

Operating Income

39,077

101,833

-61.6%

50,556

-22.7%

266,089

521,086

-48.9%

Non-operating Income (Expense):

Interest expense

(8,922)

(7,957)

12.1%

(8,271)

7.9%

(33,155)

(29,529)

12.3%

Interest income

8,155

6,396

27.5%

5,728

42.4%

25,947

18,066

43.6%

Other, net

(25,414)

(79,331)

-68.0%

(37,600)

-32.4%

(36,227)

(111,316)

-67.5%

Total Non-Operating Income/(Expense)

(26,181)

(80,892)

-67.6%

(40,143)

-34.8%

(43,435)

(122,780)

-64.6%

Income before Income Taxes

12,895

20,942

-38.4%

10,413

23.8%

222,653

398,306

-44.1%

Provision for Income Taxes

10,970

(5,214)

n/a

4,200

n/a

37,230

36,639

1.6%

Net Income

1,925

26,156

-92.6%

6,213

-69.0%

185,423

361,667

-48.7%

EPS - Basic and Diluted

0.04

0.59

-92.5%

0.14

-68.5%

4.23

8.15

-48.1%

Shares - Basic and Diluted

43,285,727

44,354,963

-2.4%

44,030,111

-1.7%

43,861,084

44,395,453

-1.2%

 

 

Copa Holdings, S.A.

Balance Sheet - IFRS

(US$ Thousands)

December 31,

September 30,

December 31,

2014

2015

2014

 (Unaudited) 

 (Unaudited) 

 (Audited) 

ASSETS

Current Assets:

Cash and cash equivalents

$              202,661

$              121,540

$              221,443

Restricted cash and cash equivalents

64,228

48,702

52,425

Short-term investments

416,005

484,242

492,735

Total cash, cash equivalents and short-term investments

682,894

654,483

766,603

Accounts receivable, net of allowance for doubtful accounts

108,802

123,096

121,258

Accounts receivable from related parties

642

1,826

892

Expendable parts and supplies, net of allowance for obsolescence

62,247

59,910

59,954

Prepaid expenses

48,894

52,565

56,793

Other current assets

6,681

81,243

5,949

Total Current Assets

910,160

973,124

1,011,449

Long-term investments

423,474

428,259

396,802

Property and Equipment:

Owned property and equipment:

Flight equipment

3,049,689

2,955,926

2,725,407

Other equipment

101,876

98,021

89,257

3,151,565

3,053,947

2,814,664

Less: Accumulated depreciation

(743,982)

(720,511)

(630,503)

2,407,583

2,333,436

2,184,161

Purchase deposits for flight equipment

243,070

276,504

321,175

Total Property and Equipment

2,650,653

2,609,941

2,505,336

Other Assets:

Net pension asset

22,241

21,341

13,784

Goodwill

20,380

19,243

20,380

Intangible asset

49,046

45,335

36,915

Deferred tax Assets

21,918

22,594

17,235

Other assets

68,228

72,097

88,973

Total Other Assets

181,813

180,611

177,287

Total Assets

$           4,166,100

$           4,191,935

$           4,090,874

LIABILITIES AND SHAREHOLDER'S EQUITY

Current Liabilities:

Current maturities of long-term debt

$              245,514

$              258,990

$              187,646

Accounts payable

96,745

105,555

125,412

Accounts payable to related parties

5,605

10,712

6,749

Air traffic liability

370,994

352,283

408,012

Taxes and interest payable

60,241

59,809

63,110

Accrued expenses payable

71,808

63,432

81,291

Other current liabilities

128,643

105,901

109,277

Total Current Liabilities

979,550

956,682

981,497

Non-Current Liabilities:

Long-term debt

1,055,184

997,657

928,964

Post employment benefits liability

17,154

16,588

11,262

Other long-term liabilities

65,479

66,006

57,747

Deferred tax liabilities

46,546

45,940

36,296

Total Non-Current Liabilities

1,184,363

1,126,192

1,034,269

Total Liabilities

2,163,913

2,082,874

2,015,766

Shareholders' Equity:

Class A - 33,455,857 issued and  31,017,103 outstanding

20,924

20,924

20,859

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

7,466

7,466

7,466

Additional paid in capital

57,455

56,390

53,486

Treasury Stock

(136,388)

(58,080)

(18,426)

Retained earnings

2,049,129

2,083,801

2,011,485

Accumulated other comprehensive (loss)

3,601

(1,439)

238

Total Shareholders' Equity

2,002,186

2,109,061

2,075,108

Total Liabilities and Shareholders' Equity

$           4,166,100

$           4,191,935

$           4,090,874

 

 

Copa Holdings, S. A. and subsidiaries 

Consolidated Statement of Cash Flows

For the twelve months ended December 31, 

(In US$ thousands)

2015

2014

2013

(Unaudited)

(Audited)

(Audited)

Cash flow from operating activities 

329,928

384,892

830,265

Cash flow used in investing activities 

(245,595)

(152,853)

(565,720)

Cash flow used in financing activities 

(91,650)

(142,420)

(201,268)

Net (decrease) increase  in cash and cash equivalents 

(7,317)

89,619

63,277

Cash and cash equivalents at January 1

221,443

139,110

76,094

Effect of exchange rate change on cash

(11,465)

(7,286)

(261)

Cash and cash equivalents at December 31 *

$               202,661

$               221,443

$               139,110

Short-term investments **

416,005

492,735

992,579

Long-term investments ***

423,474

396,802

37,590

Restricted cash and cash equivalents ****

64,228

52,425

-

Total cash and cash equivalents and investments at December 31

$            1,106,368

$            1,163,405

$            1,169,279

* At December 2015 and 2014, cash and cash equivalents include $11.3 million and $26.1 million, respectively, of cash in Venezuela which the Company expects to use over the next quarter as part of the normal operations in that country.

** Short term - investments include $135.7 million of cash in Venezuela at December 2014.  

*** Long term - investments include $422.6 million and $322.9 million at December 2015 and 2014 of cash in Venezuela, respectively.  

**** Restricted cash correspond 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 Net Income

Excluding Special Items

4Q15

4Q14

3Q15

Net income as Reported

$1,925

$26,156

$6,213

Special Items (adjustments):

     Unrealized gain (loss) on fuel hedging instruments 

(25,315)

(89,058)

(26,800)

     (Loss) gain due to devaluation of Venezuelan Bolivar

146

(350)

(2,100)

     (Loss) gain due to devaluation of Argentinean Peso

(6,901)

0

0

Unrealized gain (loss) on shares repurchase 

2,296

0

(2,296)

Adjusted Net Income

$31,699

$115,564

$37,408

Shares used for Computation (in thousands)

     Basic and Diluted

43,286

44,355

44,030

Adjusted earnings per share - Basic and Diluted

0.73

2.61

0.85

Reconciliation Operating Costs per ASM

Excluding Fuel and Special Items

4Q15

4Q14

3Q15

Operating Costs per ASM as Reported

9.0

10.3

9.2

Aircraft fuel per ASM

2.5

3.6

2.8

Operating Costs per ASM excluding fuel 

6.5

6.7

6.4

SOURCE Copa Holdings, S.A.



RELATED LINKS

http://www.copa.com