Copa Holdings Reports Net Income of US$6.2 Million and EPS of US$0.14 for the Third Quarter of 2015

Excluding special items, adjusted net income came in at $37.4 million, or EPS of $0.85 per share

Nov 12, 2015, 17:10 ET from Copa Holdings, S.A.

PANAMA CITY, Nov. 12, 2015 /PRNewswire/ -- Copa Holdings, S.A. (NYSE: CPA), today announced financial results for the third quarter of 2015 (3Q15). 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 2014 (3Q14).

OPERATING AND FINANCIAL HIGHLIGHTS

  • Copa Holdings reported net income of US$6.2 million for 3Q15, or diluted earnings per share (EPS) of US$0.14.  Excluding special items, Copa Holdings would have reported an adjusted net income of $37.4 million, or $0.85 per share, a 62.5% decrease from adjusted net income of US$99.8 million and US$2.25 per share for 3Q14.
  • Operating income for 3Q15 came in at US$50.6 million, a 54.5% decrease from operating income of US$111.1 million in 3Q14.  Operating margin for the period came in at 9.2% or 7.5 percentage points below 3Q14, as a result of lower unit revenues. 
  • Total revenues decreased 17.5% to US$547.2 million. Yield per passenger mile decreased 20.1% to 12.7 cents and operating revenue per available seat mile (RASM) decreased 19.1% to 10.1 cents.   
  • For 3Q15, passenger traffic (RPMs) grew 1.8% on a 1.9% capacity expansion.  As a result, consolidated load factor came in at 76.3%, or 0.1 percentage points below 3Q14.
  • Operating cost per available seat mile (CASM) declined 11.8% to 9.2 cents. CASM, excluding fuel, increased 0.3% to 6.4 cents.
  • Cash, short term and long term investments ended 3Q15 at US$1.08 billion, representing 45% of the last twelve months' revenues. Of this amount, 39% is in Venezuela pending repatriation due to government currency controls.
  • During the third quarter, as part of the Company's share repurchase program, Copa Holdings entered into a US$100 million accelerated share repurchase program (ASR).  
  • 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 99 aircraft. 
  • For 3Q15, Copa Holdings reported consolidated on-time performance of 89.8% and a flight-completion factor of 99.8%, maintaining its position among the best in the industry.

SUBSEQUENT EVENTS

  • 4Q15 Dividend Payment - Copa Holdings will pay its fourth quarter dividend of US$0.84 per share on December 15, 2015, on all outstanding Class A and Class B shares, to stockholders of record as of November 30, 2015. 

  

Consolidated Financial & Operating Highlights

3Q15

3Q14

% Change 

2Q15

% Change 

Revenue Passengers Carried ('000)

1,987

1,937

2.6%

1,868

6.4%

RPMs (mm) 

4,116

4,043

1.8%

3,933

4.6%

ASMs (mm) 

5,397

5,296

1.9%

5,359

0.7%

Load Factor 

76.3%

76.3%

-0.1 p.p.

73.4%

2.9 p.p.

Yield

12.7

15.9

-20.1%

13.2

-3.9%

PRASM (US$ Cents) 

9.7

12.2

-20.2%

9.7

0.5%

RASM (US$ Cents) 

10.1

12.5

-19.1%

10.0

0.9%

CASM (US$ Cents) 

9.2

10.4

-11.8%

9.1

0.8%

CASM Excl. Fuel (US$ Cents) 

6.4

6.4

0.3%

6.2

3.5%

Breakeven Load Factor (1)

69.8%

62.2%

7.6 p.p.

66.0%

3.8 p.p.

Fuel Gallons Consumed (Millions) 

69.2

68.2

1.5%

67.9

1.9%

Avg. Price Per Fuel Gallon (US$ Dollars)

2.16

3.12

-30.8%

2.30

-6.1%

Average Length of Haul (Miles)

2,071

2,088

-0.8%

2,105

-1.6%

Average Stage Length (Miles)

1,233

1,236

-0.2%

1,243

-0.8%

Departures

30,619

30,325

1.0%

30,094

1.7%

Block Hours

97,053

95,819

1.3%

95,694

1.4%

Average Aircraft Utilization (Hours)

10.8

11.0

-1.8%

10.8

-0.4%

Operating Revenues (US$ mm) 

547.2

663.7

-17.5%

538.4

1.7%

Operating Income (US$ mm)

50.6

111.1

-54.5%

49.2

2.8%

Operating Margin 

9.2%

16.7%

-7.5 p.p.

9.1%

0.1 p.p.

Net Income (US$ mm)

6.2

66.0

-90.6%

64.1

-90.3%

Adjusted Net Income (US$ mm) (1)

37.4

99.8

-62.5%

41.0

-8.7%

EPS - Basic and Diluted (US$)

0.14

1.49

-90.5%

1.46

-90.3%

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

0.85

2.25

-62.2%

0.93

-8.7%

# of Shares - Basic and Diluted ('000) 

44,030

44,404

-0.8%

44,038

0.0%

(1)Breakeven Load Factor, Adjusted Net Income and Adjusted EPS for 3Q15, 3Q14, and 2Q15 exclude non-cash charges/gains associated with the mark-to-market of fuel hedges and charges/gains related to the Venezuelan currency.  . Additionally, 3Q15 exclude mark-to-market of share repurchase.  Note: Attached to this press release is a reconciliation of non-IFRS financial measures to the comparable IFRS measures.

FULL 3Q15 EARNINGS RELEASE AVAILABLE FOR DOWNLOAD AT: http://investor.shareholder.com/copa/results.cfm

3Q15 EARNINGS RESULTS CONFERENCE CALL AND WEBCAST

Date:

November 13, 2015

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

Jose 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 74 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: 76 Boeing 737NG aircraft and 25 EMBRAER-190s. For more information visit: www.copa.com.

CONTACT: Copa Holdings S.A. Investor Relations:  Ph: (507) 304-2431 www.copaair.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.

Copa Holdings, S.A.

Income Statement - IFRS

(US$ Thousands)

Unaudited

Unaudited

%

Unaudited

%

3Q15

3Q14

Change

2Q15

Change

Operating Revenues

Passenger Revenue

523,531

643,719

-18.7%

517,508

1.2%

Cargo, mail and other

23,716

19,974

18.7%

20,846

13.8%

Total Operating Revenue

547,247

663,693

-17.5%

538,354

1.7%

Operating Expenses

Aircraft fuel

149,197

212,591

-29.8%

155,908

-4.3%

Salaries and benefits

71,902

74,016

-2.9%

69,204

3.9%

Passenger servicing

65,175

68,791

-5.3%

63,315

2.9%

Commissions

22,632

22,934

-1.3%

20,383

11.0%

Reservations and sales

19,636

22,122

-11.2%

22,033

-10.9%

Maintenance, material and repairs

25,946

24,186

7.3%

27,999

-7.3%

Depreciation

35,485

28,070

26.4%

33,855

4.8%

Flight operations

30,928

34,014

-9.1%

32,605

-5.1%

Aircraft rentals

30,409

28,083

8.3%

30,034

1.3%

Landing fees and other rentals

14,585

13,498

8.1%

14,889

-2.0%

Other

30,796

24,327

26.6%

18,973

62.3%

Total Operating Expense

496,691

552,633

-10.1%

489,197

1.5%

Operating Income

50,556

111,060

-54.5%

49,157

2.8%

Non-operating Income (Expense):

Interest expense

(8,271)

(7,603)

8.8%

(8,372)

-1.2%

Interest income

5,728

4,348

31.7%

5,789

-1.1%

Other, net

(37,600)

(36,157)

4.0%

24,657

n/m

Total Non-Operating Income/(Expense)

(40,143)

(39,412)

1.9%

22,074

n/m

Income before Income Taxes

10,413

71,648

-85.5%

71,231

-85.4%

Provision for Income Taxes

4,200

5,667

-25.9%

7,134

-41.1%

Net Income

6,213

65,980

-90.6%

64,097

-90.3%

EPS - Basic and Diluted

0.14

1.49

-90.5%

1.46

-90.3%

Shares - Basic and Diluted

44,030,111

44,403,578

-0.8%

44,037,684

0.0%

 

Copa Holdings, S.A.

Balance Sheet - IFRS

(US$ Thousands)

September 30,

December 31,

2015

2014

 (Unaudited) 

 (Audited) 

ASSETS

Current Assets:

Cash and cash equivalents

$          121,540

$        221,443

Restricted cash and cash equivalents

48,702

52,425

Short-term investments

484,242

492,735

Total cash, cash equivalents and short-term investments

654,483

766,603

Accounts receivable, net of allowance for doubtful accounts

123,096

121,258

Accounts receivable from related parties

1,826

892

Expendable parts and supplies, net of allowance for obsolescence

59,910

59,954

Prepaid expenses

52,565

56,793

Other current assets

81,243

5,949

Total Current Assets

973,124

1,011,449

Long-term investments

428,259

396,802

Property and Equipment:

Owned property and equipment:

Flight equipment

2,955,926

2,725,407

Other equipment

98,021

89,257

3,053,947

2,814,664

Less: Accumulated depreciation

(720,511)

(630,503)

2,333,436

2,184,161

Purchase deposits for flight equipment

276,504

321,175

Total Property and Equipment

2,609,941

2,505,336

Other Assets:

Net pension asset

21,341

13,784

Goodwill

19,243

20,380

Intangible asset

45,335

36,915

Deferred tax Assets

22,594

17,235

Other assets

72,097

88,973

Total Other Assets

180,611

177,287

Total Assets

$       4,191,935

$     4,090,874

LIABILITIES AND SHAREHOLDER'S EQUITY

Current Liabilities:

Current maturities of long-term debt

$          258,990

$        187,646

Accounts payable

105,555

125,412

Accounts payable to related parties

10,712

6,749

Air traffic liability

352,283

408,012

Taxes and interest payable

59,809

58,554

Accrued expenses payable

63,432

85,847

Other current liabilities

105,901

109,277

Total Current Liabilities

956,682

981,497

Non-Current Liabilities:

Long-term debt

997,657

928,964

Post employment benefits liability

16,588

11,262

Other long-term liabilities

66,006

57,747

Deferred tax liabilities

45,940

36,296

Total Non-Current Liabilities

1,126,192

1,034,269

Total Liabilities

2,082,874

2,015,766

Shareholders' Equity:

Class A - 33,456,095 issued and  32,477,353 outstanding

20,924

20,859

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

7,466

7,466

Additional paid in capital

56,390

53,486

Treasury Stock

(58,080)

(18,426)

Retained earnings

2,083,801

2,011,485

Accumulated other comprehensive income (loss)

(1,439)

238

Total Shareholders' Equity

2,109,061

2,075,108

Total Liabilities and Shareholders' Equity

$       4,191,935

$     4,090,874

Copa Holdings, S. A. and subsidiaries 

Consolidated Statement of Cash Flows

For the nine months ended September 30, 

(In US$ thousands)

2015

2014

2013

(Unaudited)

(Unaudited)

(Unaudited)

Cash flow from operating activities 

236,743

148,334

563,727

Cash flow used in investing activities 

(223,658)

(165,328)

(26,314)

Cash flow (used) from in financing activities 

(98,982)

64,622

(138,325)

Net (decrease) increase  in cash and cash equivalents 

(85,897)

47,628

399,088

Cash and cash equivalents at December 31

207,437

139,110

76,094

Cash and cash equivalents at September 30 *

$    121,540

$    186,738

$    475,182

Short-term investments **

484,242

698,945

499,047

Long-term investments ***

428,259

240,097

46,590

Restricted cash and cash equivalents ****

48,702

-

-

Total cash and cash equivalents and investments at September 30

$ 1,082,743

$ 1,125,780

$ 1,020,819

    * At September 2015 and 2014, cash and cash equivalents include $11 million and $7 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 $265 million of cash in Venezuela at September 2014.  

*** Long term - investments include $427 million and $239 million at September 2015 and 2014 of cash in Venezuela, respectively.  

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

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

3Q15

3Q14

2Q15

Net income as Reported

$6,213

$65,980

$64,097

Special Items (adjustments):

     Unrealized (gain) loss on fuel hedging instruments 

26,800

28,293

(23,409)

     (Loss) gain due to devaluation of Venezuelan Bolivar

(2,100)

(5,516)

(294)

Unrealized (gain) loss on shares repurchase 

2,296

Adjusted Net Income

$37,408

$99,789

$40,982

Shares used for Computation (in thousands)

     Basic and Diluted

44,030

44,404

44,038

Adjusted earnings per share - Basic and Diluted

0.85

2.25

0.93

Reconciliation Operating Costs per ASM

Excluding Fuel and Special Items

3Q15

3Q14

2Q15

Operating Costs per ASM as Reported

9.2

10.4

9.1

Aircraft fuel per ASM

(2.8)

(4.0)

(2.9)

Operating Costs per ASM excluding fuel 

6.4

6.4

6.2

SOURCE Copa Holdings, S.A.



RELATED LINKS

http://www.copa.com