Copa Holdings Reports Net Income of US$74.4 Million and EPS of US$1.68 for the Second Quarter of 2013

Excluding special items, adjusted net income came in at $85.0 million, or EPS of $1.92 per share

07 Aug, 2013, 17:51 ET from Copa Holdings, S.A.

PANAMA CITY, Aug. 7, 2013 /PRNewswire/ -- Copa Holdings, S.A. (NYSE: CPA), today announced financial results for the second quarter of 2013 (2Q13). 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 2012 (2Q12).

OPERATING AND FINANCIAL HIGHLIGHTS

  • Copa Holdings reported net income of US$74.4 million for 2Q13, or diluted earnings per share (EPS) of US$1.68.  Excluding special items, Copa Holdings would have reported an adjusted net income of $85.0 million, or $1.92 per share, a 45.3% increase over adjusted net income of US$58.5 million and US$1.32 per share for 2Q12.
  • Operating income for 2Q13 came in at US$97.7 million, a 34.5% increase over operating income of US$72.6 million in 2Q12.  Operating margin for the period came in at 16.5%, compared to 14.1% in 2Q12, as a result of lower unit costs. 
  • Total revenues increased 14.8% to US$592.0 million.  Yield per passenger mile decreased 4.6% to 16.4 cents and operating revenue per available seat mile (RASM) decreased 2.5% to 12.8 cents.  However, adjusting for a 7.3% increase in length of haul, yields decreased 1.2% and RASM increased 1.0%.
  • For 2Q13, passenger traffic (RPMs) grew 20.4% on a 17.7% capacity expansion.  Consolidated load factor came in at 75.3%, or 1.7 percentage points above 2Q12.
  • Operating cost per available seat mile (CASM) decreased 5.2%, from 11.3 cents in 2Q12 to 10.7 cents in 2Q13.  CASM, excluding fuel costs, decreased 2.6% to 6.7 cents.
  • Cash, short term and long term investments ended 2Q13 at US$848.7 million, representing 35.0% of the last twelve months' revenues. 
  • During the second quarter, Copa Airlines took delivery of one Boeing 737-800 aircraft.  As a result, Copa Holdings ended the quarter with a consolidated fleet of 86 aircraft. 
  • For 2Q13, Copa Holdings reported consolidated on-time performance of 89.3% and a flight-completion factor of 99.7%, maintaining its position among the best in the industry.

SUBSEQUENT EVENTS

  • On July 17, 2013, Copa Airlines announced it will begin nonstop service four times a week from Panama to Tampa, Fla., on December 16, 2013.  Tampa will be Copa Airlines' ninth U.S. destination and its 66th destination overall. 
  • On August 7, 2013, the Board of Directors of Copa Holdings resolved to change the Company's dividend policy to increase the annual distribution to an amount equal to 40% of the prior years' annual consolidated net income. In addition, dividends going forward will be distributed in equal quarterly installments during the months of March, June, September and December, subject to board approval each quarter.  On August 7, 2013, the Board of Directors also approved dividend payments payable at the end of both 3Q13 and 4Q13, in amounts equal to 10% of the consolidated net income of 2012.  

 

Consolidated Financial & Operating Highlights

2Q13

2Q12

% Change 

1Q13

% Change 

Revenue Passengers Carried ('000)

1,861

1,658

12.2%

1,899

-2.0%

RPMs (mm) 

3,475

2,886

20.4%

3,529

-1.5%

ASMs (mm) 

4,618

3,923

17.7%

4,590

0.6%

Load Factor 

75.3%

73.5%

1.7 p.p.

76.9%

-1.6 p.p.

Yield

16.4

17.2

-4.6%

17.6

-6.9%

PRASM (US$ Cents) 

12.3

12.6

-2.3%

13.5

-8.9%

RASM (US$ Cents) 

12.8

13.1

-2.5%

14.0

-8.2%

CASM (US$ Cents) 

10.7

11.3

-5.2%

10.9

-1.5%

CASM Excl. Fuel (US$ Cents) 

6.7

6.9

-2.6%

6.5

3.3%

Breakeven Load Factor (1)

61.6%

63.0%

-1.4 p.p.

58.7%

2.9 p.p.

Fuel Gallons Consumed (Millions) 

60.0

52.1

15.0%

60.1

-0.2%

Avg. Price Per Fuel Gallon (US$ Dollars)

3.08

3.32

-7.3%

3.34

-7.8%

Average Length of Haul (Miles)

1,868

1,740

7.3%

1,859

0.5%

Average Stage Length (Miles)

1,126

1,063

6.0%

1,123

0.2%

Departures

29,357

27,005

8.7%

29,428

-0.2%

Block Hours

84,985

74,678

13.8%

84,490

0.6%

Average Aircraft Utilization (Hours)

10.9

10.6

3.1%

11.3

-3.5%

Operating Revenues (US$ mm) 

592.0

515.8

14.8%

641.3

-7.7%

Operating Income (US$ mm)

97.7

72.6

34.5%

142.6

-31.5%

Operating Margin 

16.5%

14.1%

2.4 p.p.

22.2%

-5.7 p.p.

Net Income (US$ mm)

74.4

32.0

132.6%

113.8

-34.6%

Adjusted Net Income (US$ mm) (1)

85.0

58.5

45.3%

124.4

-31.6%

EPS - Basic and Diluted (US$)

1.68

0.72

132.4%

2.56

-34.6%

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

1.92

1.32

45.2%

2.80

-31.6%

# of Shares - Basic and Diluted ('000) 

44,387

44,354

0.1%

44,387

0.0%

(1)Breakeven Load Factor, Adjusted Net Income and Adjusted EPS for 2Q13, 2Q12, and 1Q13 exclude non-cash charges/gains associated with the mark-to-market of fuel hedges.   Additionally, for 1Q13 excludes a US$13.9 million charge related to the devaluation of the Venezuelan currency. Note: Attached to this press release is a reconciliation of non-IFRS financial measures to the comparable IFRS measures.

FULL 2Q13 EARNINGS RELEASE AVAILABLE FOR DOWNLOAD AT: http://investor.shareholder.com/copa/results.cfm

2Q13 EARNINGS RESULTS CONFERENCE CALL AND WEBCAST

Date:

August 8, 2013

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

Copa Holdings is a leading Latin American provider of passenger and cargo services.  The Company, through its operating subsidiaries, provides service to 65 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 87 aircraft: 61 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

%

2Q13

2Q12

Change

1Q13

Change

Operating Revenues

Passenger Revenue

568,960

495,029

14.9%

620,488

-8.3%

Cargo, mail and other

23,038

20,814

10.7%

20,793

10.8%

Total Operating Revenue

591,998

515,843

14.8%

641,282

-7.7%

Operating Expenses

Aircraft fuel

184,767

173,289

6.6%

200,773

-8.0%

Salaries and benefits

66,105

61,123

8.2%

66,728

-0.9%

Passenger servicing

60,389

50,943

18.5%

60,316

0.1%

Commissions

24,279

21,272

14.1%

24,260

0.1%

Reservations and sales

24,763

20,586

20.3%

21,449

15.5%

Maintenance, material and repairs

22,807

23,954

-4.8%

22,284

2.3%

Depreciation

26,866

21,214

26.6%

24,806

8.3%

Flight operations

30,028

24,991

20.2%

29,479

1.9%

Aircraft rentals

22,124

17,191

28.7%

19,952

10.9%

Landing fees and other rentals

12,789

10,931

17.0%

12,195

4.9%

Other

19,393

17,730

9.4%

16,412

18.2%

Total Operating Expense

494,309

443,224

11.5%

498,655

-0.9%

Operating Income

97,689

72,619

34.5%

142,626

-31.5%

Non-operating Income (Expense):

Interest expense

(7,560)

(8,583)

-11.9%

(7,660)

-1.3%

Interest capitalized

0

0

nm

0

nm

Interest income

2,841

2,741

3.6%

2,706

5.0%

Other, net

(10,616)

(30,982)

-65.7%

(9,195)

15.5%

Total Non-Operating Income/(Expense)

(15,336)

(36,824)

n/a

(14,150)

8.4%

Income before Income Taxes

82,354

35,796

130.1%

128,476

-35.9%

Provision for Income Taxes

7,912

3,790

108.8%

14,646

-46.0%

Net Income

74,441

32,006

132.6%

113,830

-34.6%

EPS - Basic and Diluted

1.68

0.72

132.4%

2.56

-34.6%

Shares - Basic and Diluted

44,387,279

44,353,845

0.1%

44,387,148

0.0%

 

Copa Holdings, S.A.

Balance Sheet - IFRS

(US$ Thousands)

June 30,

December 31,

2013

2012

 (Unaudited) 

 (Audited) 

ASSETS

Current Assets:

Cash and cash equivalents

$       327,385

$          76,094

Short-term investments

479,676

575,009

Total cash, cash equivalents and short-term investments

807,061

651,103

Accounts receivable, net of allowance for doubtful accounts

169,115

135,207

Accounts receivable from related parties

2,054

1,129

Expendable parts and supplies, net of allowance for obsolescence

49,111

50,603

Prepaid expenses

63,502

63,120

Other current assets

12,472

16,328

Total Current Assets

1,103,315

917,490

Long-term investments

41,591

69,445

Property and Equipment:

Owned property and equipment:

Flight equipment

2,448,950

2,405,346

Other equipment

70,953

66,330

2,519,903

2,471,676

Less: Accumulated depreciation

(480,853)

(432,589)

2,039,050

2,039,087

Purchase deposits for flight equipment

284,238

245,544

Total Property and Equipment

2,323,288

2,284,631

Other Assets:

Net pension asset

10,974

10,009

Goodwill

25,277

27,575

Intangible asset

57,748

59,382

Other assets

111,643

110,968

Total Other Assets

205,642

207,934

Total Assets

$    3,673,836

$     3,479,500

LIABILITIES AND SHAREHOLDER'S EQUITY

Current Liabilities:

Current maturities of long-term debt

$       131,474

$        136,268

Accounts payable

102,209

104,975

Accounts payable to related parties

14,232

20,255

Air traffic liability

442,172

382,807

Taxes and interest payable

98,519

85,436

Accrued expenses payable

59,279

48,047

Other current liabilities

11,883

10,902

Total Current Liabilities

859,768

788,690

Non-Current Liabilities:

Long-term debt

999,549

1,069,836

Post employment benefits liability

6,293

6,340

Other long-term liabilities

46,910

43,726

Deferred tax liabilities

36,803

34,364

Total Non-Current Liabilities

1,089,555

1,154,266

Total Liabilities

1,949,323

1,942,956

Shareholders' Equity:

Class A - 33,408,928 shares issued and outstanding

22,626

22,591

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

7,466

7,466

Additional paid in capital

44,442

40,660

Retained earnings

1,646,529

1,458,258

Accumulated other comprehensive income (loss)

3,450

7,569

Total Shareholders' Equity

1,724,513

1,536,544

Total Liabilities and Shareholders' Equity

$    3,673,836

$     3,479,500

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

2Q13

2Q12

1Q13

Net income as Reported

$74,441

$32,006

$113,830

Special Items (adjustments):

     Unrealized (gain) loss on fuel hedging instruments 

10,582

26,510

(3,376)

     Loss due to devaluation of Venezuelan Bolivar

13,927

Adjusted Net Income

$85,023

$58,515

$124,381

Shares used for Computation (in thousands)

     Basic and Diluted

44,387

44,354

44,387

Adjusted earnings per share - Basic and Diluted

1.92

1.32

2.80

Reconciliation Operating Costs per ASM

Excluding Fuel and Special Items

2Q13

2Q12

1Q13

Operating Costs per ASM as Reported

10.7

11.3

10.9

Aircraft fuel per ASM

(4.0)

(4.4)

(4.4)

Operating Costs per ASM excluding fuel 

6.7

6.9

6.5

SOURCE Copa Holdings, S.A.



RELATED LINKS

http://www.copaair.com