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Copa Holdings Reports Financial Results for the Fourth Quarter of 2018

Excluding special items, adjusted net profit came in at $44.0 million, or Adjusted EPS of $1.04


News provided by

Copa Holdings, S.A.

Feb 13, 2019, 18:00 ET

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PANAMA CITY, Feb. 13, 2019 /PRNewswire/ -- Copa Holdings, S.A. (NYSE: CPA), today announced financial results for the fourth quarter of 2018 (4Q18) and full year 2018. 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 the financial tables section of this earnings release. Unless otherwise stated, all comparisons with prior periods refer to the fourth quarter of 2017 (4Q17).

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 a net loss of US$156.0 million for 4Q18 or a loss per share of US$3.67, as compared to net profit of US$101.4 million or earnings per share of US$2.39 in 4Q17. Excluding special items, which for 4Q18 include a previously announced one-time, non-cash fleet impairment charge of US$188.6 million, and a noncash US$11.4 million-dollar loss associated with foreign currency translational effect which was booked as a gain in the 2017 restated financial results, the Company would have reported a net profit of US$44.0 million, or adjusted EPS of US$1.04, compared to an adjusted net profit of US$89.5 million or adjusted EPS of US$2.11 in 4Q17.
  • For full year 2018, net profit came in at US$88.1 million or EPS of US$2.07, compared to a net profit of US$364.0 million or earnings per share of US$8.58 for full year 2017. Excluding special items, which for 2018 include a one-time, non-cash fleet impairment charge of US$188.6 million, Copa Holdings would have reported an adjusted net profit of US$276.7 million or EPS of US$6.52, compared to an adjusted net profit of US$349.9 million or adjusted EPS of US$8.25 for full year 2017.
  • In 4Q18, the Company had an operating loss of US$129.7 million. Excluding special items, which for 4Q18 include a one-time, non-cash fleet impairment charge of US$188.6 million, the Company would have reported an Operating profit of US$58.9 million, compared to an operating profit of US$110.8 million in 4Q17. The adjusted operating margin for 4Q18 came in at 9.0%, compared to 16.4% in 4Q17.
  • For full year 2018, the Company reported operating profit of US$145.0 million. Excluding special items, which for 2018 include a one-time, non-cash fleet impairment charge of US$188.6 million, the Company would have reported an operating profit of US$333.7 million, representing a decrease of 21.3% over operating profit of US$424.0 million for full year 2017, mostly due to softer yields, and higher jet fuel prices. Excluding special items, operating margin for full year 2018 came in at 12.5%.
  • Total revenues for 4Q18 decreased 2.7% to US$656.1 million. Yield per passenger mile decreased 7.7% to 11.8 cents, mostly due to currency weakness in Brazil and Argentina. RASM came in at 10.2 cents, or 7.7% below 4Q17.
  • For 4Q18, consolidated passenger traffic grew 4.9% while consolidated capacity grew 5.5%. As a result, consolidated load factor for the quarter decreased 0.4 percentage points to 82.8%. For full year 2018, consolidated load factor was 83.4%, 0.2 percentage points higher than 2017 on a 7.9% capacity growth.
  • Operating cost per available seat mile, excluding special items (Adjusted CASM) increased 0.5%, from 9.2 cents in 4Q17 to 9.3 cents in 4Q18. Adjusted CASM excluding fuel costs decreased 5.8% from 6.6 cents in 4Q17 to 6.2 cents in 4Q18, mainly as a result of fewer expenses related to maintenance, depreciation and wages, salaries and benefits, partly offset by higher airport facilities and handling charges, as well as flight operation expenses.
  • Cash, short-term and long-term investments ended 2018 at US$858.4 million, representing 32% of the last twelve months' revenues.
  • Copa Holdings ended the year with a consolidated fleet of 105 aircraft – 4 Boeing 737MAX9s, 68 Boeing 737-800s, 14 Boeing 737-700s, and 19 Embraer 190s.
  • For 2018, Copa Airlines ended the year with a consolidated on-time performance of 89.7% and a flight-completion factor of 99.8%, distinguishing itself as the most on-time airline in the world.

Subsequent Events

  • In January 2019, the company was recognized by FlightStats – for the sixth consecutive year – as the most on-time airline in Latin America, and by OAG as the most on-time airline in the world.
  • On February 13, 2019, the Board of Directors of Copa Holdings approved a 2019 quarterly dividend payment of 65 cents per share. Dividends will be distributed during the months of March, June, September and December. The first quarterly dividend of 65 cents per share will be paid on March 15 to shareholders on record as of February 28, 2019.
  • On January 17, 2019, the company announced Paramaribo, Suriname as its 81st destination, planned to start in July of 2019.
  • During the month of January 2019, the company took delivery of one Boeing 737 MAX9, originally scheduled for delivery in 2018, and completed the sale of one Embraer 190 to Azorra aviation.

Consolidated Financial
& Operating Highlights

4Q18

4Q17*

Variance vs. 4Q17

3Q18

Variance vs. 3Q18

FY 2018

FY 2017*

Variance vs. 2017

Revenue Passengers Carried ('000)

2,554

2,460

3.8%

2,591

-1.4%

10,069

9,504

5.9%

RPMs (mm) 

5,335

5,086

4.9%

5,587

-4.5%

21,529

19,914

8.1%

ASMs (mm) 

6,445

6,111

5.5%

6,629

-2.8%

25,817

23,936

7.9%

Load Factor 

82.8%

83.2%

-0.4 p.p.

84.3%

-1.5 p.p.

83.4%

83.2%

0.2 p.p.

Yield

11.8

12.8

-7.7%

11.6

1.9%

12.0

12.3

-2.1%

PRASM (US$ Cents) 

9.8

10.7

-8.2%

9.8

0.1%

10.0

10.2

-1.9%

RASM (US$ Cents) 

10.2

11.0

-7.7%

10.1

0.4%

10.4

10.5

-1.6%

CASM (US$ Cents) 

12.2

9.2

32.3%

9.0

35.1%

9.8

8.8

11.9%

Adjusted CASM (US$ Cents)

9.3

9.2

0.5%

9.0

2.7%

9.1

8.8

3.6%

CASM Excl. Fuel (US$ Cents) 

9.1

6.6

38.4%

6.0

53.5%

6.8

6.4

7.4%

Fuel Gallons Consumed (Millions) 

82.1

78.7

4.3%

84.2

-2.5%

328.1

307.0

6.9%

Avg. Price Per Fuel Gallon (US$ Dollars)

2.38

2.03

17.5%

2.40

-0.9%

2.32

1.87

24.6%

Average Length of Haul (Miles)

2,089

2,067

1.1%

2,156

-3.1%

2,138

2,095

2.0%

Average Stage Length (Miles)

1,299

1,292

0.5%

1,331

-2.4%

1,321

1,285

2.8%

Departures

33,541

32,183

4.2%

33,775

-0.7%

132,498

126,963

4.4%

Block Hours

111,315

106,750

4.3%

114,009

-2.4%

444,851

419,596

6.0%

Average Aircraft Utilization (Hours)

11.7

11.6

0.6%

12.3

-4.8%

12.0

11.5

4.7%

Operating Revenues (US$ mm) 

656.1

674.2

-2.7%

672.4

-2.4%

2,677.6

2,521.8

6.2%

Operating Profit (US$ mm)

-129.7

110.8

-217.0%

74.3

-274.6%

145.0

424.0

-65.8%

Adjusted Operating Profit (US$ mm) (1)

58.9

110.8

-46.9%

74.3

-20.7%

333.7

424.0

-21.3%

Operating Margin 

-19.8%

16.4%

-36.2 p.p.

11.0%

-30.8 p.p.

5.4%

16.8%

-11.4 p.p.

Adjusted Operating Margin (1)

9.0%

16.4%

-7.5 p.p.

11.0%

-2.1 p.p.

12.5%

16.8%

-4.4 p.p.

Net Profit (US$ mm)

-156.0

101.4

-253.9%

57.7

-370.2%

88.1

364.0

-75.8%

Adjusted Net Profit (US$ mm) (1)

44.0

89.5

-50.8%

57.7

-23.8%

276.7

349.9

-20.9%

EPS - Basic and Diluted (US$)

-3.67

2.39

-253.8%

1.36

-370.2%

2.07

8.58

-75.8%

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

1.04

2.11

-50.9%

1.36

-23.8%

6.52

8.25

-21.0%

# of Shares - Basic and Diluted ('000) 

42,468

42,430

0.1%

42,469

0.0%

42,456

42,419

0.1%











(1)Adjusted CASM Excl. Fuel, Adjusted Operating Profit, Adjusted Net Profit, Adjusted Operating Margin and Adjusted EPS for 4Q18, 4Q17, 3Q18, 2018 and 2017 exclude non-cash charges/gains associated with the Embraer 190 Fleet impairment, the mark-to-market impact of fuel hedges and a currency translation adjustment.

*Restated for the retrospective adoption of IFRS15.

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

FULL 4Q18 EARNINGS RELEASE AVAILABLE FOR DOWNLOAD AT: http://investor.shareholder.com/copa/results.cfm

4Q18 EARNINGS RESULTS CONFERENCE CALL AND WEBCAST

Date:

February 14, 2019

Time:

11:00 NOON 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 81 destinations in 33 countries in North, Central and South America and the Caribbean with one of the youngest and most modern fleets in the industry, consisting of 105 aircraft: 5 Boeing 737MAX9s, 82 Boeing 737NGs and 18 EMBRAER 190s. For more information visit: www.copa.com. 

CONTACT: Copa Holdings S.A.
Investor Relations
Ph: 011 507 304-2774
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


%



4Q18


4Q17*


Change


3Q18


Change


2018


2017*


Change

Operating Revenues

















Passenger revenue


631,762


652,691


-3.2%


649,110


-2.7%


2,587,389


2,444,252


5.9%

Cargo and mail revenue


16,224


14,841


9.3%


15,919


1.9%


62,483


55,290


13.0%

Other operating revenue


8,077


6,665


21.2%


7,375


9.5%


27,755


22,245


24.8%

Total Operating Revenue


656,063


674,197


-2.7%


672,405


-2.4%


2,677,627


2,521,787


6.2%


















Operating Expenses

















Fuel


196,230


159,556


23.0%


203,121


-3.4%


765,781


572,746


33.7%

Wages, salaries, benefits and other employees' expenses


114,394


110,952


3.1%


109,814


4.2%


443,287


415,147


6.8%

Passenger servicing


26,284


26,481


-0.7%


26,487


-0.8%


104,346


99,447


4.9%

Airport facilities and handling charges


48,514


42,238


14.9%


47,415


2.3%


186,422


171,040


9.0%

Sales and distribution


51,787


51,452


0.7%


51,832


-0.1%


210,158


200,257


4.9%

Maintenance, materials and repairs


27,486


39,371


-30.2%


24,626


11.6%


111,677


132,148


-15.5%

Depreciation and amortization


39,831


42,896


-7.1%


44,435


-10.4%


169,436


167,324


1.3%

Flight operations


27,922


25,082


11.3%


27,434


1.8%


108,437


101,647


6.7%

Aircraft rentals and other rentals


33,130


33,313


-0.5%


33,105


0.1%


132,534


134,539


-1.5%

Cargo and courier expenses


3,843


2,218


73.2%


2,139


79.6%


10,074


7,375


36.6%

Other operating and administrative expenses


27,741


29,790


-6.9%


27,705


0.1%


101,812


96,087


6.0%

Fleet Impairment


188,624


-


n/m


-


n/m


188,624


-


n/m

Total Operating Expense


785,787


563,348


39.5%


598,113


31.4%


2,532,588


2,097,756


20.7%


















Operating Profit


(129,724)


110,849


n/m


74,292


n/m


145,039


424,031


-65.8%


















Non-operating Income (Expense):

















Finance cost


(9,151)


(8,725)


4.9%


(8,954)


2.2%


(35,850)


(35,223)


1.8%

Finance income


6,115


5,443


12.3%


6,228


-1.8%


23,628


17,939


31.7%

Gain (loss) on foreign currency fluctuations


(18,687)


5,687


n/m


(2,571)


n/m


(9,952)


6,145


n/m

Net change in fair value of derivatives


-


539


n/m


-


n/m


0


2,801


n/m

Other non-operating income (expense)


(496)


(917)


-45.9%


40


n/m


(239)


(2,337)


-89.8%

Total Non-Operating Income/(Expense)


(22,219)


2,028


n/m


(5,257)


n/m


(22,413)


(10,676)


109.9%


















Profit before taxes


(151,944)


112,876


n/m


69,035


n/m


122,626


413,354


-70.3%


















Income tax expense


4,063


11,522


-64.7%


11,298


-64.0%


34,530


49,310


-30.0%


















Net Profit


(156,007)


101,354


n/m


57,737


n/m


88,096


364,044


-75.8%



































EPS - Basic and Diluted


-3.67


2.39


-253.8%


1.36


-370.2%


2.07


8.58


-75.8%

Shares - Basic and Diluted


42,468,402


42,429,821


0.1%


42,469,122


0.0%


42,456,032


42,418,773


0.1%


















 *  Restated for the retrospective adoption of IFRS 15 

Copa Holdings, S. A. and subsidiaries 







Consolidated Statement of Cash Flows







For the twelve months ended December 31, 







(In US$ thousands)

















2018


2017


2016










(Unaudited)


(Unaudited)


(Unaudited)

Cash flow from operating activities 


341,531


690,020


555,506

Cash flow used in investing activities 


(103,037)


(578,159)


(179,909)

Cash flow used in financing activities 


(323,937)


(204,756)


(248,625)

Net (decrease) increase in cash and cash equivalents 


(85,443)


(92,895)


126,972

Cash and cash equivalents at January 1


238,792


331,687


204,715

Cash and cash equivalents at December 31


$               153,349


$               238,792


$               331,687















Short-term investments 


566,200


705,108


483,002

Long-term investments 


138,846


65,953


953

Total cash and cash equivalents and investments at December 31

$               858,395


$            1,009,853


$               815,642

Copa Holdings, S. A. and subsidiaries 



Balance Sheet - IFRS



(US$ Thousands)

December 31

December 31


2018

2017


 (Unaudited) 

 (Restated) * 




 ASSETS 






 Current Assets 



Cash and cash equivalents

153,349

238,792

Restricted cash and cash equivalents

-

-

Short-term investments

566,200

705,108

Total cash, cash equivalents and short-term investments

719,549

943,900




Accounts receivable, net

117,570

115,323

Accounts receivable from related parties

223

318

Expendable parts and supplies, net

86,530

81,825

Prepaid expenses

74,384

45,421

Prepaid income tax

10,357

-

Other current assets

54,386

11,701


343,450

254,588




TOTAL CURRENT ASSETS

1,062,999

1,198,488




Long-term investments

138,846

65,953

Long-term accounts receivable

2,247

2,444

Long-term prepaid expenses

25,637

26,130

Property and equipment, net

2,701,322

2,617,407

Intangible, net

101,168

81,115

Net pension asset

5,091

3,185

Deferred tax assets

16,041

19,099

Other Non-Current Assets

33,899

31,140

TOTAL NON-CURRENT ASSETS

3,024,251

2,846,473




TOTAL ASSETS

4,087,250

4,044,961




 LIABILITIES AND EQUITY 






 Current Liabilities: 



Current maturities of long-term debt

307,371

298,462

Accounts payable

129,462

116,554

Accounts payable to related parties

15,464

12,880

Air traffic liability

471,676

477,168

Frequent flyer deferred revenue

30,342

17,197

Taxes and interest payable

44,749

70,077

Accrued expenses payable 

42,890

60,321

Income tax payable

-

3,700

Other Current Liabilities

604

1,156

TOTAL CURRENT LIABILITIES

1,042,558

1,057,515




Long-term debt

979,877

876,119

Frequent flyer deferred revenue

37,472

33,115

Other long - term liabilities

137,724

130,621

Deferred tax Liabilities

48,940

52,465

TOTAL NON-CURRENT LIABILITIES

1,204,013

1,092,320




TOTAL LIABILITIES

2,246,571

2,149,835




 EQUITY 



Issued Capital



Class A -33,816,276issued and 31,257,686 outstanding

21,087

21,038

Class B common stock - 10,938,125

7,466

7,466

Additional Paid-In Capital

80,041

72,945

Treasury Stock

(136,388)

(136,388)

Retained Earnings

1,784,605

1,564,295

Net Income

88,095

369,658

Other Comprehensive Income

(4,227)

(3,888)

TOTAL EQUITY

1,840,679

1,895,126




TOTAL LIABILITIES AND EQUITY

4,087,250

4,044,961




*  Restated for the retrospective adoption of IFRS 15



 Copa Holdings, S.A.

NON-IFRS FINANCIAL MEASURE RECONCILIATION

This press release includes the following non IFRS financial measures: Adjusted CASM Excluding Fuel, CASM Excluding Fuel, Adjusted Operating Profit, Adjusted Net Profit 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 Profit and Net Profit. The following is a reconciliation of these non-IFRS financial measures to the comparable IFRS measures:

Reconciliation of Adjusted Operating Profit











Adjusted Net Profit and Adjusted EPS


4Q18


4Q17*


3Q18


FY18


FY17*












Operating Profit as Reported


$      (129,724)


$        110,849


$          74,292


$        145,039


$        424,031

Special Items (adjustments):











Fleet Impairment


$        188,624






$        188,624














Adjusted Operating Profit


$          58,900


$        110,849


$          74,292


$        333,663


$        424,031












Net profit as Reported


$       (156,007)


$        101,354


$          57,737


$          88,096


$        364,044

Special Items (adjustments):











Fleet Impairment


$        188,624






$        188,624



Loss on foreign currency fluctuations


$          11,364


$        (11,364)






$        (11,364)

Net change in fair value of derivatives


$                    -


$             (539)


$                    -




$          (2,801)












Adjusted Net Profit


$          43,981


$          89,451


$          57,737


$        276,720


$       349,879












Shares used for Computation (in thousands)











     Basic and Diluted


42,468


42,430


42,469


42,456


42,419












Adjusted earnings per share - Basic and Diluted


$              1.04


$ 2.11


$             1.36


$             6.52


$            8.25


































Reconciliation of Adjusted Operating Costs per ASM











Excluding Fuel (CASM Excl. Fuel)


4Q18


4Q17*


3Q18


FY18


FY17*












Operating Costs per ASM as Reported (in US$ Cents)


12.2


9.2


9.0


9.8


8.8

Fleet Impairment per ASM (in US$ Cents)


2.9






0.8



Aircraft fuel per ASM  (in US$ Cents)


3.0


(2.6)


(3.1)


3.0


(2.4)

Adjusted Operating Costs per ASM excluding fuel  (in US$ Cents)


6.2


6.6


6.0


6.1


6.4












 *  Restated for the retrospective adoption of IFRS 15 

SOURCE Copa Holdings, S.A.

Related Links

http://www.copa.com

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