Copa Holdings Reports Net Income of US$111.9 Million and EPS of US$2.52 for the Third Quarter of 2012

Excluding special items, adjusted net income came in at $97.6 million, or EPS of $2.20 per share

Nov 07, 2012, 19:40 ET from Copa Holdings, S.A.

PANAMA CITY, Nov. 7, 2012 /PRNewswire/ -- Copa Holdings, S.A. (NYSE: CPA), today announced financial results for the third quarter of 2012 (3Q12). The terms "Copa Holdings" or "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 third quarter of 2011 (3Q11).

OPERATING AND FINANCIAL HIGHLIGHTS

  • Copa Holdings reported net income of US$111.9 million for 3Q12, or diluted earnings per share (EPS) of US$2.52.  Excluding special items, Copa Holdings would have reported adjusted net income of US$97.6 million, or US$2.20 per share, an 8.3% increase over adjusted net income of US$90.2 million and US$2.03 per share for 3Q11.
  • Operating income for 3Q12 came in at US$114.1 million, a 14.9% increase over operating income of US$99.3 million in 3Q11.  Operating margin for the period came in at 19.3%, compared to 20.9% in 3Q11, as a result of a 1.7% decline in unit revenues and a 0.4% increase in unit cost as a result of increased fuel costs.
  • Total revenues increased 24.5% to US$590.4 million.  Yield per passenger mile increased 1.1% to 17.3 cents, while operating revenue per available seat mile (RASM) decreased 1.7% to 13.5 cents.   However, adjusting for a 2.7% increase in average length of haul, adjusted yields increased 2.5% and adjusted RASM remained flat year over year.
  • For 3Q12, passenger traffic (RPMs) grew 23.8% on a 26.6% capacity expansion, resulting in a consolidated load factor of 75.4% compared to 77.1% in 3Q11.
  • Operating cost per available seat mile (CASM) came in at 10.9 cents, an increase of 0.4% over 3Q11, but 3.4% lower than 2Q12. CASM excluding fuel costs came in at 6.6 cents for a decrease of 0.2% over 3Q11 and 3.6% over 2Q12.  
  • Cash, short term and long term investments ended 3Q12 at US$795.5 million, representing 37% of the last twelve months' revenues.  
  • During the third quarter, Copa Airlines took delivery of two Boeing 737-800 aircraft.  As a result, Copa Holdings ended the quarter with a consolidated fleet of 82 aircraft.
  • For 3Q12, Copa Holdings reported consolidated on-time performance of 87.2% and a flight-completion factor of 99.6%.

Consolidated Financial & Operating Highlights

3Q12

3Q11

% Change

2Q12

% Change

Revenue Passengers Carried ('000)

1,869

1,551

20.5%

1,658

12.7%

RPMs (mm)

3,294

2,660

23.8%

2,886

14.1%

ASMs (mm)

4,367

3,450

26.6%

3,923

11.3%

Load Factor

75.4%

77.1%

-1.7 p.p.

73.5%

1.9 p.p.

Yield

17.3

17.1

1.1%

17.2

0.6%

PRASM (US$ Cents)

13.0

13.2

-1.1%

12.6

3.2%

RASM (US$ Cents)

13.5

13.7

-1.7%

13.1

2.8%

CASM (US$ Cents)

10.9

10.9

0.4%

11.3

-3.4%

CASM Excl. Fuel (US$ Cents)

6.6

6.6

-0.2%

6.9

-3.6%

Breakeven Load Factor (1)

59.8%

58.6%

1.2 p.p.

63.0%

-3.2 p.p.

Fuel Gallons Consumed (Millions)

57.7

45.3

27.2%

52.1

10.6%

Avg. Price Per Fuel Gallon (US$ Dollars)

3.24

3.22

0.7%

3.32

-2.5%

Average Length of Haul (Miles)

1,763

1,716

2.7%

1,740

1.3%

Average Stage Length (Miles)

1,083

1,058

2.3%

1,063

1.9%

Departures

29,344

24,728

18.7%

27,005

8.7%

Block Hours

82,103

65,159

26.0%

74,841

9.7%

Average Aircraft Utilization (Hours)

11.2

10.6

5.5%

10.6

5.5%

Operating Revenues (US$ mm)

590.4

474.3

24.5%

515.8

14.5%

Operating Income (US$ mm)

114.1

99.3

14.9%

72.6

57.1%

Operating Margin

19.3%

20.9%

-1.6 p.p.

14.1%

5.2 p.p.

Net Income (US$ mm)

111.9

70.3

59.1%

32.0

249.7%

Adjusted Net Income (US$ mm) (1)

97.6

90.2

8.3%

58.6

66.6%

EPS - Basic and Diluted (US$)

2.52

1.59

58.8%

0.72

249.3%

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

2.20

2.03

8.1%

1.32

66.4%

# of Shares - Basic and Diluted ('000)

44,407

44,319

0.2%

44,354

0.1%

(1) Breakeven Load Factor, Adjusted Net Income and Adjusted EPS for 3Q12, 3Q11, and 2Q12 exclude non-cash charges/gains associated with the mark-to-market of fuel hedges.

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

FULL 3Q12 EARNINGS RELEASE AVAILABLE FOR DOWNLOAD AT: http://investor.shareholder.com/copa/results.cfm

3Q12 EARNINGS RESULTS CONFERENCE CALL AND WEBCAST

Date:

November 8, 2012

Time:

4:00 PM US ET (4:00 PM 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

Victor Vial, Chief Financial Officer

Copa Holdings is a leading Latin American provider of passenger and cargo services.  The Company, through its operating subsidiaries, provides service to 64 destinations in 29 countries in North, Central and South America and the Caribbean with one of the youngest and most modern fleets in the industry, consisting of 83 aircraft: 57 Boeing 737NG aircraft and 26 EMBRAER-190s. For more information visit www.copaair.com.

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

%

3Q12

3Q11

Change

2Q12

Change

Operating Revenues

Passenger Revenue

568,564

454,078

25.2%

495,029

14.9%

Cargo, mail and other

21,884

20,184

8.4%

20,814

5.1%

Total Operating Revenue

590,448

474,261

24.5%

515,843

14.5%

Operating Expenses

Aircraft fuel

186,844

145,860

28.1%

173,289

7.8%

Salaries and benefits

62,964

54,199

16.2%

61,123

3.0%

Passenger servicing

56,973

41,095

38.6%

50,943

11.8%

Commissions

23,501

19,297

21.8%

21,272

10.5%

Reservations and sales

22,203

18,680

18.9%

20,586

7.9%

Maintenance, material and repairs

23,370

16,391

42.6%

23,954

-2.4%

Depreciation

23,031

19,350

19.0%

21,214

8.6%

Flight operations

27,217

22,111

23.1%

24,991

8.9%

Aircraft rentals

18,504

13,273

39.4%

17,191

7.6%

Landing fees and other rentals

12,190

11,069

10.1%

10,931

11.5%

Other

19,561

13,656

43.2%

17,730

10.3%

Total Operating Expense

476,359

374,979

27.0%

443,224

7.5%

Operating Income

114,089

99,282

14.9%

72,619

57.1%

Non-operating Income (Expense):

Interest expense

(8,124)

(8,144)

-0.3%

(8,583)

-5.3%

Interest capitalized

0

0

nm

0

nm

Interest income

3,235

1,795

80.3%

2,741

18.0%

Other, net

13,750

(18,228)

nm

(30,981)

nm

Total Non-Operating Income/(Expense)

8,861

(24,578)

nm

(36,823)

nm

Income before Income Taxes

122,951

74,705

64.6%

35,796

243.5%

Provision for Income Taxes

11,033

4,374

152.3%

3,790

191.1%

Net Income

111,917

70,331

59.1%

32,006

249.7%

EPS - Basic and Diluted

2.52

1.59

58.8%

0.72

249.3%

Shares - Basic and Diluted

44,406,679

44,318,760

0.2%

44,353,845

0.1%

Copa Holdings, S.A.

Balance Sheet - IFRS

(US$ Thousands)

September 30,

December 31,

2012

2011

(Unaudited)

(Audited)

ASSETS

Current Assets:

Cash and cash equivalents

$          282,642

$        243,801

Short-term investments

441,349

262,345

Total cash, cash equivalents and short-term investments

723,991

506,146

Accounts receivable, net of allowance for doubtful accounts

143,057

142,297

Accounts receivable from related parties

505

704

Expendable parts and supplies, net of allowance for obsolescence

51,292

42,382

Prepaid expenses

49,745

40,058

Other current assets

17,964

22,655

Total Current Assets

986,554

754,242

Long-term investments

71,500

104,834

Property and Equipment:

Owned property and equipment:

Flight equipment

2,346,637

2,036,983

Other equipment

63,757

67,577

2,410,394

2,104,560

Less: Accumulated depreciation

(408,965)

(346,656)

2,001,429

1,757,904

Purchase deposits for flight equipment

163,696

242,287

Total Property and Equipment

2,165,125

2,000,191

Other Assets:

Net pension asset

9,685

8,974

Goodwill

27,081

25,099

Intangible asset

57,537

47,047

Other assets

120,776

125,409

Total Other Assets

215,079

206,529

Total Assets

$       3,438,258

$     3,065,796

LIABILITIES AND SHAREHOLDER'S EQUITY

Current Liabilities:

Current maturities of long-term debt

$          118,387

$        131,069

Accounts payable

105,609

92,842

Accounts payable to related parties

14,765

22,074

Air traffic liability

360,223

297,135

Taxes and interest payable

86,174

71,223

Accrued expenses payable

45,753

30,472

Other current liabilities

9,897

13,845

Total Current Liabilities

740,808

658,660

Non-Current Liabilities:

Long-term debt

1,067,549

936,657

Post employment benefits liability

6,286

5,847

Other long-term liabilities

44,635

44,657

Deferred tax liabilities

31,888

30,444

Total Non-Current Liabilities

1,150,358

1,017,605

Total Liabilities

1,891,166

1,676,265

Shareholders' Equity:

Class A - 33,391,400 shares issued and outstanding

22,496

22,495

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

7,466

7,466

Additional paid in capital

38,977

33,567

Retained earnings

1,471,258

1,324,394

Accumulated other comprehensive income (loss)

6,895

1,609

Total Shareholders' Equity

1,547,092

1,389,531

Total Liabilities and Shareholders' Equity

$       3,438,258

$     3,065,796

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

3Q12

3Q11

2Q12

Net income as Reported

$111,917

$70,331

$32,006

Special Items (adjustments):

    Unrealized (gain) loss on fuel hedging instruments (1)

(14,277)

19,845

26,587

Adjusted Net Income

$97,640

$90,177

$58,593

Shares used for Computation (in thousands)

    Basic and Diluted

44,407

44,319

44,354

Adjusted earnings per share - Basic and Diluted

2.20

2.03

1.32

Reconciliation Operating Costs per ASM

Excluding Fuel and Special Items

3Q12

3Q11

2Q12

Operating Costs per ASM as Reported

10.9

10.9

11.3

Aircraft fuel per ASM

(4.3)

(4.2)

(4.4)

Operating Costs per ASM excluding fuel

6.6

6.6

6.9

FOOTNOTES: (1) Includes unrealized (gains) losses resulting from the mark-to-market accounting for changes in the fair value of fuel hedging instruments.  For 3Q12, the Company recorded an unrealized fuel hedge gain of US$14.3 million, and for 3Q11 and 2Q12 it recorded fuel hedge losses of US$19.8 million and 26.6 million, respectively..

SOURCE Copa Holdings, S.A.



RELATED LINKS

http://www.copaair.com