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

Feb 17, 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