Copa Holdings Reports Net Income of US$64.1 Million and EPS of US$1.46 for the Second Quarter of 2015

Excluding special items, adjusted net income came in at $41.0 million, or EPS of $0.93

Aug 12, 2015, 17:00 ET from Copa Holdings, S.A.

PANAMA CITY, Aug. 12, 2015 /PRNewswire/ -- Copa Holdings, S.A. (NYSE: CPA), today announced financial results for the second quarter of 2015 (2Q15). 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 second quarter of 2014 (2Q14).

OPERATING AND FINANCIAL HIGHLIGHTS

  • Copa Holdings reported net income of US$64.1 million for 2Q15, or diluted earnings per share (EPS) of US$1.46. Excluding special items, Copa Holdings would have reported an adjusted net income of $41.0 million, or $0.93 per share, a 64.7% decrease over adjusted net income of US$115.9 million and US$2.61 per share for 2Q14.    
  • Operating income for 2Q15 came in at US$49.2 million, a 62.5% decrease over operating income of US$131.2 million in 2Q14. Operating margin for the period came in at 9.1%, compared to 19.5% in 2Q14, as a result of lower unit revenues partially offset by lower unit costs.     
  • Total revenues decreased 20.1% to US$538.4 million. Yield per passenger mile decreased 20.4% to 13.2 cents and operating revenue per available seat mile (RASM) decreased 24.4% to 10.0 cents.    
  • For 2Q15, passenger traffic (RPMs) decreased 0.2% on a 5.8% capacity expansion. As a result, consolidated load factor came in at 72.9%, or 4.3 percentage points below 2Q14.    
  • Operating cost per available seat mile (CASM) decreased 14.7%, from 10.7 cents in 2Q14 to 9.1 cents in 2Q15, mainly due to lower jet fuel costs. CASM excluding fuel decreased 6.3% to 6.2 cents mainly due to lower sales related expenses and lower overhead expenses.    
  • Cash, short-term and long-term investments ended 2Q15 at US$1.15 billion, representing 46% of the last twelve months' revenues. Of this amount, 39%, or US$452.2 million, is in Venezuela pending repatriation due to government currency controls.      
  • During the second quarter, Copa Airlines took delivery of two Boeing 737-800 aircraft, and returned a leased Boeing 737-700. Furthermore, the Company subleased one of its Boeing 737-700s to United Airlines. As a result, Copa Holdings ended the quarter with a consolidated fleet of 98 aircraft.                               
  • For 2Q15, Copa Holdings reported consolidated on-time performance of 90.4% and a flight-completion factor of 99.7%, maintaining its position among the best in the industry.

SUBSEQUENT EVENTS

  • During July 2015, Copa Holdings subleased one more of its Boeing 737-700s to United Airlines.    
  • Copa Holdings will pay its third quarter dividend of US$0.84 per share on September 15, 2015, on all outstanding Class A and Class B shares, to stockholders of record as of August 31, 2015.  

Consolidated Financial & Operating Highlights

2Q15

2Q14

% Change

1Q15

% Change

Revenue Passengers Carried ('000)

1,868

1,890

-1.2%

1,965

-4.9%

RPMs (mm)

3,909

3,916

-0.2%

4,143

-5.6%

ASMs (mm)

5,359

5,067

5.8%

5,433

-1.4%

Load Factor

72.9%

77.3%

-4.3 p.p.

76.3%

-3.3 p.p.

Yield

13.2

16.6

-20.4%

14.8

-10.6%

PRASM (US$ Cents)

9.7

12.8

-24.9%

11.3

-14.5%

RASM (US$ Cents)

10.0

13.3

-24.4%

11.6

-13.6%

CASM (US$ Cents)

9.1

10.7

-14.7%

9.3

-1.7%

CASM Excl. Fuel (US$ Cents)

6.2

6.6

-6.3%

6.3

-1.7%

Breakeven Load Factor (1)

65.6%

60.8%

4.8 p.p.

60.0%

5.6 p.p.

Fuel Gallons Consumed (Millions)

67.9

65.9

3.1%

69.6

-2.5%

Avg. Price Per Fuel Gallon (US$ Dollars)

2.30

3.13

-26.5%

2.31

-0.6%

Average Length of Haul (Miles)

2,093

2,072

1.0%

2,109

-0.8%

Average Stage Length (Miles)

1,243

1,210

2.7%

1,247

-0.4%

Departures

30,078

29,726

1.2%

30,603

-1.7%

Block Hours

95,694

92,115

3.9%

97,530

-1.9%

Average Aircraft Utilization (Hours)

10.8

11.0

-1.5%

11.1

-2.3%

Operating Revenues (US$ mm)

538.4

673.6

-20.1%

631.8

-14.8%

Operating Income (US$ mm)

49.2

131.2

-62.5%

127.3

-61.4%

Operating Margin

9.1%

19.5%

-10.3 p.p.

20.1%

-11.0 p.p.

Net Income (US$ mm)

64.1

118.2

-45.8%

113.1

-43.3%

Adjusted Net Income (US$ mm) (1)

41.0

115.9

-64.7%

106.0

-61.4%

EPS - Basic and Diluted (US$)

1.46

2.66

-45.3%

2.57

-43.3%

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

0.93

2.61

-64.4%

2.41

-61.3%

# of Shares - Basic and Diluted ('000)

44,038

44,409

-0.8%

44,077

-0.1%

(1) Breakeven Load Factor, Adjusted Net Income and Adjusted EPS for 2Q15, 2Q14, and 1Q15 exclude non-cash charges/gains associated with the mark-to-market of fuel hedges, and also exclude charges/gains related to the Venezuelan currency.

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

FULL 2Q15 EARNINGS RELEASE AVAILABLE FOR DOWNLOAD AT: http://investor.shareholder.com/copa/results.cfm

2Q15 EARNINGS RESULTS CONFERENCE CALL AND WEBCAST

Date:

August 13, 2015

Time:

11:00 AM US ET (10:00 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 30 countries in North, Central and South America and the Caribbean with one of the youngest and most modern fleets in the industry, consisting of 97 aircraft: 71 Boeing 737NG aircraft and 26 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.

CPA-G 

Copa Holdings, S.A.

Income Statement - IFRS

(US$ Thousands)

Unaudited

Unaudited

%

Unaudited

%

2Q15

2Q14

Change

1Q15

Change

Operating Revenues

Passenger Revenue

517,508

651,081

-20.5%

613,510

-15.6%

Cargo, mail and other

20,846

22,480

-7.3%

18,323

13.8%

Total Operating Revenue

538,354

673,560

-20.1%

631,833

-14.8%

Operating Expenses

Aircraft fuel

155,908

205,942

-24.3%

160,791

-3.0%

Salaries and benefits

69,204

69,584

-0.5%

78,022

-11.3%

Passenger servicing

63,315

65,533

-3.4%

66,142

-4.3%

Commissions

20,383

24,467

-16.7%

25,988

-21.6%

Reservations and sales

22,033

23,978

-8.1%

21,500

2.5%

Maintenance, material and repairs

27,999

29,301

-4.4%

25,709

8.9%

Depreciation

33,855

27,744

22.0%

31,464

7.6%

Flight operations

32,605

32,547

0.2%

33,346

-2.2%

Aircraft rentals

30,034

28,534

5.3%

30,245

-0.7%

Landing fees and other rentals

14,889

13,250

12.4%

13,748

8.3%

Other

18,973

21,490

-11.7%

17,601

7.8%

Total Operating Expense

489,197

542,369

-9.8%

504,555

-3.0%

Operating Income

49,157

131,192

-62.5%

127,279

-61.4%

Non-operating Income (Expense):

Interest expense

(8,372)

(6,876)

21.8%

(7,590)

10.3%

Interest income

5,789

3,586

61.5%

6,275

-7.7%

Other, net

24,657

4,107

n/m

2,083

n/m

Total Non-Operating Income/(Expense)

22,074

817

n/m

768

n/m

Income before Income Taxes

71,231

132,008

-46.0%

128,047

-44.4%

Provision for Income Taxes

7,134

13,836

-48.4%

14,926

-52.2%

Net Income

64,097

118,172

-45.8%

113,121

-43.3%

EPS - Basic and Diluted

1.46

2.66

-45.3%

2.57

-43.3%

Shares - Basic and Diluted

44,037,684

44,408,515

-0.8%

44,077,111

-0.1%

     

Copa Holdings, S.A.

Balance Sheet - IFRS

(US$ Thousands)

June 30,

December 31,

2015

2014

 (Unaudited)

 (Audited)

ASSETS

Current Assets:

Cash and cash equivalents

$      190,328

$        221,443

Restricted cash and cash equivalents

27,260

Short-term investments

410,000

545,160

Total cash, cash equivalents and short-term investments

627,588

766,603

Accounts receivable, net of allowance for doubtful accounts

116,659

121,258

Accounts receivable from related parties

2,168

892

Expendable parts and supplies, net of allowance for obsolescence

59,303

59,954

Prepaid expenses

69,152

56,793

Other current assets

7,763

5,949

Total Current Assets

882,633

1,011,449

Long-term investments

526,132

396,802

Property and Equipment:

Owned property and equipment:

Flight equipment

2,884,315

2,725,407

Other equipment

106,437

89,257

2,990,752

2,814,664

Less: Accumulated depreciation

(687,532)

(630,503)

2,303,219

2,184,161

Purchase deposits for flight equipment

272,441

321,175

Total Property and Equipment

2,575,660

2,505,336

Other Assets:

Net pension asset

20,291

13,784

Goodwill

19,243

20,380

Intangible asset

43,552

36,915

Deferred tax Assets

24,412

17,235

Other assets

79,464

88,973

Total Other Assets

186,962

177,287

Total Assets

$   4,171,388

$     4,090,874

LIABILITIES AND SHAREHOLDER'S EQUITY

Current Liabilities:

Current maturities of long-term debt

$      201,741

$        187,646

Accounts payable

90,616

125,412

Accounts payable to related parties

10,042

6,749

Air traffic liability

385,564

408,012

Taxes and interest payable

63,662

58,554

Accrued expenses payable

66,124

85,847

Other current liabilities

79,662

109,277

Total Current Liabilities

897,411

981,497

Non-Current Liabilities:

Long-term debt

988,841

928,964

Post employment benefits liability

15,932

11,262

Other long-term liabilities

67,867

57,747

Deferred tax liabilities

44,020

36,296

Total Non-Current Liabilities

1,116,661

1,034,269

Total Liabilities

2,014,072

2,015,766

Shareholders' Equity:

Class A - 33,456,095 issued and  32,977,353 outstanding

20,924

20,859

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

7,466

7,466

Additional paid in capital

55,360

53,486

Treasury Stock

(36,274)

(18,426)

Retained earnings

2,114,547

2,011,485

Accumulated other comprehensive income (loss)

(4,706)

238

Total Shareholders' Equity

2,157,316

2,075,108

Total Liabilities and Shareholders' Equity

$   4,171,388

$     4,090,874

    

Copa Holdings, S. A. and subsidiaries

Consolidated Statement of Cash Flows

For the six months ended June 30,

(In US$ thousands)

2015

2014

2013

(Unaudited)

(Unaudited)

(Unaudited)

Cash flow from operating activities

194,620

273,835

383,779

Cash flow from (used) in investing activities

(197,718)

(91,020)

30,570

Cash flow used in financing activities

(28,017)

(149,822)

(163,058)

Net increase (decrease) in cash and cash equivalents

(31,115)

32,993

251,291

Cash and cash equivalents at December 31

221,443

139,110

76,094

Cash and cash equivalents at June 30 *

$               190,328

$               172,103

$               327,385

Short-term investments **

410,000

723,808

479,676

Long-term investments ***

526,132

253,875

41,591

Restricted cash and cash equivalents ****

27,260

52,425

-

Total cash and cash equivalents and investments at June 30

$            1,153,720

$            1,202,211

$               848,652

    * At June 2015 and 2014, cash and cash equivalents include $17 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 $264 million of cash in Venezuela at June 2014. 

*** Long term - investments include $435 million and $253 million at June 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

2Q15

2Q14

1Q15

Net income as Reported

$64,097

$118,172

$113,121

Special Items (adjustments):

     Unrealized (gain) loss on fuel hedging instruments

(23,409)

(4,105)

(7,115)

     (Loss) gain due to devaluation of Venezuelan Bolivar

(294)

(1,874)

36

Adjusted Net Income

$40,982

$115,941

$105,970

Shares used for Computation (in thousands)

     Basic and Diluted

44,038

44,409

44,077

Adjusted earnings per share - Basic and Diluted

0.93

2.61

2.40

Reconciliation Operating Costs per ASM

Excluding Fuel and Special Items

1Q15

1Q14

4Q14

Operating Costs per ASM as Reported

9.1

10.7

9.3

Aircraft fuel per ASM

(2.9)

(4.1)

(3.0)

Operating Costs per ASM excluding fuel

6.2

6.6

6.3

 

SOURCE Copa Holdings, S.A.



RELATED LINKS

http://www.copa.com