Copa Holdings Reports Net Income of $191.8 million and EPS of $4.55 for the Fourth Quarter of 2023

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Feb 07, 2024, 17:12 ET

Excluding special items, adjusted net income came in at $188.4 million, or Adjusted EPS of $4.47

PANAMA CITY, Panama, Feb. 7, 2024 /PRNewswire/ -- Copa Holdings, S.A. (NYSE: CPA), today announced financial results for the fourth quarter of 2023 (4Q23) and the full year of 2023. 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 2022 (4Q22).

OPERATING AND FINANCIAL HIGHLIGHTS

Copa Holdings reported a net profit of US$191.8 million for 4Q23 or US$4.55 per share. Excluding special items comprised of a net gain of US$3.4 million related to the value of financial investments, the Company would have reported a net profit of US$188.4 million or US$4.47 per share.
For the full year 2023, the Company reported a net profit of US$518.2 million or US$12.89 per share. Excluding special items, comprised of a net loss related to the Company's convertible notes as well as changes in the value of financial investments totaling US$156.9 million, Copa Holdings would have reported an adjusted net profit of US$675.1 million or US$16.79 per share, compared to an adjusted net profit of US$335.4 million or earnings per share of US$8.26 in 2022.
Copa Holdings reported an operating profit of US$218.9 million and a 23.9% operating margin for the quarter.
For the full year 2023, the Company reported an operating profit of US$811.8 million and an operating margin of 23.5%, compared to an adjusted operating profit of US$450.4 million and an operating margin of 15.2% in 2022.
Passenger traffic for 4Q23, measured in terms of revenue passenger miles (RPMs), increased by 11.1% compared to 4Q22 in line with capacity which, measured in available seat miles (ASMs), increased by 11.0%. As a result, the load factor for the quarter increased by 0.1 percentage points to 86.7% compared to 4Q22.
Total revenues for 4Q23 increased 3.0% to US$916.9 million mainly driven by higher capacity, while yields decreased by 7.1% to 14.0 cents. Consequently, revenue per available seat mile (RASM) decreased by 7.3% as compared to 4Q22 to 12.7 cents.
Operating cost per available seat mile (CASM) decreased 6.3% from 10.3 cents in 4Q22 to 9.7 cents in 4Q23, mainly driven by a decrease of 12.7% in the price of jet fuel per gallon and lower sales and distribution costs. CASM excluding fuel (Ex-fuel CASM) decreased by 1.6% in the quarter to 6.0 cents, when compared to 4Q22.
The Company ended the quarter with approximately US$1.2 billion in cash, short-term and long-term investments, which represent 34% of the last twelve months' revenues.
The Company closed the quarter with total debt, including lease liabilities, of US$1.7 billion, while our Adjusted Net Debt to EBITDA ratio ended at 0.5 times.
During the quarter, the Company took delivery of three Boeing 737 MAX 9 aircraft, ending the year with a consolidated fleet of 106 aircraft – 67 Boeing 737-800s, 29 Boeing 737 MAX 9s, 9 Boeing 737-700s, and 1 Boeing 737-800 freighter.
Copa Airlines had an on-time performance for the quarter of 83.8% and a flight completion factor of 99.8%.

Subsequent Events

In January, Copa Airlines was recognized by Cirium for the ninth time as the most on-time airline in Latin America in 2023. Copa Airlines' on-time performance of 89.5% for the year was the highest of any carrier in the Americas.
Following the Airworthiness Directive issued by the United States Federal Aviation Administration (FAA) on January 6, the Company suspended operations of twenty-one 737 MAX9 aircraft. From January 6 to January 29, a total of 1788 flights were canceled. After undergoing the technical inspections required by the regulators, all of these aircraft have returned to Copa Airlines' flight schedule.
On February 7, 2024, the Board of Directors of Copa Holdings approved a 2024 quarterly dividend payment of US$1.61 per share. Dividends will be distributed during March, June, September, and December. The first quarterly dividend of US$1.61 per share will be paid on March 15, 2024, to shareholders on record as of February 29, 2024.

Consolidated Financial & Operating Highlights	4Q23	4Q22	Variance vs. 4Q22	3Q23	Variance vs. 3Q23	FY23	FY22	Variance vs. FY22
Revenue Passengers Carried (000s)	3,310	2,813	17.7 %	3,272	1.2 %	12,442	10,334	20.4 %
Revenue Passengers OnBoard (000s)	4,930	4,262	15.7 %	4,873	1.2 %	18,566	15,724	18.1 %
RPMs (millions)	6,263	5,639	11.1 %	6,239	0.4 %	24,052	20,779	15.7 %
ASMs (millions)	7,228	6,509	11.0 %	7,109	1.7 %	27,700	24,430	13.4 %
Load Factor	86.7 %	86.6 %	0.1 p.p.	87.8 %	-1.1 p.p.	86.8 %	85.1 %	1.8 p.p.
Yield (US$ Cents)	14.0	15.1	-7.1 %	13.4	5.1 %	13.8	13.6	1.6 %
PRASM (US$ Cents)	12.2	13.1	-7.1 %	11.7	3.8 %	12.0	11.6	3.7 %
RASM (US$ Cents)	12.7	13.7	-7.3 %	12.2	3.9 %	12.5	12.1	3.0 %
CASM (US$ Cents)	9.7	10.3	-6.3 %	9.3	3.6 %	9.6	10.3	-7.1 %
CASM Excl. Fuel (US$ Cents)	6.0	6.1	-1.6 %	5.8	3.9 %	6.0	6.0	-0.3 %
Fuel Gallons Consumed (millions)	85.6	77.7	10.2 %	83.9	2.1 %	327.6	291.4	12.4 %
Avg. Price Per Fuel Gallon (US$)	3.07	3.52	-12.7 %	3.00	2.6 %	3.02	3.60	-16.0 %
Average Length of Haul (miles)	1,892	2,005	-5.6 %	1,907	-0.8 %	1,933	2,011	-3.9 %
Average Stage Length (miles)	1,229	1,266	-2.9 %	1,238	-0.8 %	1,251	1,275	-1.9 %
Departures	36,207	32,112	12.8 %	35,468	2.1 %	137,044	120,155	14.1 %
Block Hours	115,118	104,822	9.8 %	112,114	2.7 %	438,913	390,639	12.4 %
Average Aircraft Utilization (hours)	11.9	11.8	1.3 %	11.9	0.0 %	11.9	11.3	5.0 %
Operating Revenues (US$ millions)	916.9	890.6	3.0 %	867.7	5.7 %	3,461.1	2,965.0	16.7 %
Operating Profit (Loss) (US$ millions)	218.9	219.7	-0.4 %	205.0	6.8 %	811.8	450.4	80.2 %
Operating Margin	23.9 %	24.7 %	-0.8 p.p.	23.6 %	0.2 p.p.	23.5 %	15.2 %	8.3 p.p.
Net Profit (Loss) (US$ millions)	191.8	88.3	117.2 %	187.4	2.4 %	518.2	348.1	48.9 %
Adjusted Net Profit (Loss) (US$ millions) ⁽¹⁾	188.4	177.7	6.0 %	174.4	8.0 %	675.1	335.4	101.3 %
Basic EPS (US$)	4.55	2.23	103.9 %	4.72	-3.5 %	12.89	8.58	50.3 %
Adjusted Basic EPS (US$) ⁽¹⁾	4.47	4.49	-0.5 %	4.39	1.8 %	16.79	8.26	103.2 %
Shares for calculation of Basic EPS (000s)	42,150	39,554	6.6 %	39,730	6.1 %	40,201	40,582	-0.9 %

(1) Excludes Special Items. This earnings release includes a reconciliation of non-IFRS financial measures to the comparable IFRS measures.

FULL 4Q23 EARNINGS RELEASE AVAILABLE FOR DOWNLOAD AT:

https://copa.gcs-web.com/financial-information/quarterly-results

4Q23 EARNINGS RESULTS CONFERENCE CALL AND WEBCAST

Date:	February 8, 2024
Time:	11:00 AM US ET (11:00 AM Local Time)
Join by phone:	https://register.vevent.com/register/BI4cf2c550166242c38d9f247f0fa590a7
Webcast (listen-only):	https://copa.gcs-web.com/events-and-presentations
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 countries in North, Central, and South America and the Caribbean. For more information visit: www.copaair.com.

CONTACT: Copa Holdings S.A.
Investor Relations:
Ph: 011 507 304-2774
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 several 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.
Consolidated statement of profit or loss
(US$ Thousands)
	Unaudited	Unaudited	%	Unaudited	%	Unaudited	Audited	%
	4Q23	4Q22	Change	3Q23	Change	FY23	FY22	Change
Operating Revenues
Passenger revenue	879,351	852,291	3.2 %	833,306	5.5 %	3,320,455	2,824,719	17.5 %
Cargo and mail revenue	26,534	27,095	-2.1 %	23,431	13.2 %	97,105	1,01,765	-4.6 %
Other operating revenue	11,049	11,226	-1.6 %	10,973	0.7 %	43,538	38,549	12.9 %
Total Operating Revenue	916,933	890,612	3.0 %	867,711	5.7 %	3,461,098	2,965,033	16.7 %

Operating Expenses
Fuel	264,166	273,901	-3.6 %	252,077	4.8 %	995,862	1,052,637	-5.4 %
Wages, salaries, benefits and other employees' expenses	119,669	105,019	14.0 %	108,416	10.4 %	436,526	380,385	14.8 %
Passenger servicing	24,148	19,518	23.7 %	23,147	4.3 %	89,146	70,080	27.2 %
Airport facilities and handling charges	59,010	49,734	18.7 %	58,243	1.3 %	2,21,878	1,92,584	15.2 %
Sales and distribution	55,111	61,498	-10.4 %	54,058	1.9 %	2,27,171	2,24,465	1.2 %
Maintenance, materials and repairs	31,276	28,875	8.3 %	29,528	5.9 %	1,32,531	1,04,114	27.3 %
Depreciation and amortization	79,815	70,251	13.6 %	78,359	1.9 %	3,05,668	2,67,704	14.2 %
Flight operations	27,987	25,667	9.0 %	29,476	-5.1 %	1,09,892	97,256	13.0 %
Other operating and administrative expenses	36,875	36,492	1.0 %	29,394	25.5 %	1,30,656	1,25,424	4.2 %
Total Operating Expense	698,058	670,954	4.0 %	662,697	5.3 %	2,649,331	2,514,648	5.4 %

Operating Profit/(Loss)	218,875	219,657	-0.4 %	205,014	6.8 %	811,767	450,384	80.2 %

Non-operating Income (Expense):
Finance cost	(20,408)	(23,388)	-12.7 %	(82,926)	-75.4 %	(1,58,216)	(87,631)	80.5 %
Finance income	14,289	7,413	92.8 %	15,108	-5.4 %	50,209	18,030	178.5 %
Gain (loss) on foreign currency fluctuations	(272)	(2,560)	-89.4 %	(1,566)	-82.6 %	3,076	(9,812)	-131.3 %
Net change in fair value of derivatives	-	(91,305)	-100.0 %	77,058	-100.0 %	(98,347)	17,189	-672.2 %
Other non-operating income (expense)	3,126	1,221	156.0 %	1,867	67.5 %	7,153	70	10065.6 %
Total Non-Operating Income/(Expense)	(3,264)	(1,08,619)	-97.0 %	9,540	-134.2 %	(196,126)	(62,155)	215.5 %

Profit before taxes	215,611	111,039	94.2 %	214,555	0.5 %	615,641	388,229	58.6 %

Income tax expense	(23,830)	(22,758)	4.7 %	(27,179)	-12.3 %	(97,456)	(40,176)	142.6 %

Net Profit/(Loss)	191,780	88,280	117.2 %	187,375	2.4 %	518,185	348,054	48.9 %

EPS
Basic	4.55	2.23	103.9 %	4.72	-3.5 %	12.89	8.58	50.3 %

Shares used for calculation:
Basic	42,149,854	39,554,071	6.6 %	39,730,180	6.1 %	40,200,947	40,581,616	-0.9 %

Copa Holdings, S. A. and subsidiaries
Consolidated statement of financial position
(US$ Thousands)
	December 2023	December 2022
ASSETS	(Unaudited)	(Audited)
Cash and cash equivalents	206,375	122,424
Short-term investments	708,809	812,323
Total cash, cash equivalents and short-term investments	915,184	934,747

Accounts receivable, net	156,720	135,415
Accounts receivable from related parties	2,527	2,168
Expendable parts and supplies, net	116,604	93,332
Prepaid expenses	44,635	52,322
Prepaid income tax	66	798
Other current assets	32,227	17,043
	352,779	301,078
TOTAL CURRENT ASSETS	1,267,963	1,235,825

Long-term investments	258,934	202,056
Long-term prepaid expenses	9,633	7,770
Property and equipment, net	3,239,078	2,883,524
Right of use assets	281,146	234,380
Intangible, net	87,986	78,555
Net defined benefit assets	5,346	504
Deferred tax assets	30,136	30,743
Other Non-Current Assets	17,048	17,005
TOTAL NON-CURRENT ASSETS	3,929,307	3,454,537

TOTAL ASSETS	5,197,270	4,690,362

LIABILITIES
Loans and borrowings	2,22,430	1,42,484
Current portion of lease liability	68,304	80,084
Accounts payable	182,303	166,660
Accounts payable to related parties	1,228	1,004
Air traffic liability	605,900	651,805
Frequent flyer deferred revenue	126,677	111,526
Taxes Payable	44,210	43,878
Accrued expenses payable	64,940	44,913
Income tax payable	26,956	6,276
Other Current Liabilities	1,403	1,175
TOTAL CURRENT LIABILITIES	1,344,351	1,249,805

Loans and borrowings long-term	1,240,261	1,301,819
Lease Liability	215,353	158,289
Derivative financial instruments	-	251,150
Deferred tax Liabilities	36,594	16,571
Other long - term liabilities	234,474	220,618
TOTAL NON-CURRENT LIABILITIES	1,726,682	1,948,447

TOTAL LIABILITIES	3,071,033	3,198,252

EQUITY
Class A - 34,075,142 issued and 31,090,299 outstanding	21,367	21,327
Class B - 10,938,125	7,466	7,466
Additional Paid-In Capital	210,936	103,465
Treasury Stock	(204,130)	(344,541)
Retained Earnings	1,581,739	1,367,784
Net profit	518,185	348,054
Other comprehensive loss	(9,326)	(11,445)

TOTAL EQUITY	2,126,237	1,492,110
TOTAL EQUITY LIABILITIES	5,197,270	4,690,362

Copa Holdings, S. A. and subsidiaries

Consolidated Statement of Cash Flows

For the twelve months ended December 31,

(In US$ thousands)

2023

2022

2021

(Unaudited)

(Audited)

Cash flow from operating activities

1,020,974

740,948

462,612

Cash flow (used in) investing activities

(542,995)

(555,911)

(459,135)

Cash flow (used in) from financing activities

(394,028)

(273,694)

88,539

Net increase (decrease) in cash and cash equivalents

83,951

(88,657)

92,016

Cash and cash equivalents at January 1

122,424

211,081

119,065

Cash and cash equivalents at December 31

$ 206,375

$ 122,424

$ 211,081

Short-term investments

708,809

812,323

806,340

Long-term investments

258,934

202,056

199,670

Total cash and cash equivalents and investments at December 31

$ 1,174,118

$ 1,136,803

$ 1,217,091

Copa Holdings, S.A.

NON-IFRS FINANCIAL MEASURE RECONCILIATION

This press release includes the following non-IFRS financial measures: Adjusted Net Profit, Adjusted Basic EPS, and Operating CASM Excluding Fuel. 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 Net Profit	4Q23	4Q22	3Q23	FY23	FY22

Net Profit as Reported	$ 191,780	$ 88,280	$ 187,375	$ 518,185	$ 348,054
Interest expense related to the settlement of the convertible notes	$ -	$ -	$ 64,894	$ 64,894	$ -
Net change in fair value of derivatives	$ -	$ 91,305	$ (77,058)	$ 98,347	$ (17,189)
Net change in fair value of financial investments	$ (3,372)	$ (1,924)	$ (810)	$ (6,349)	$ 4,516
Adjusted Net Profit	$ 188,409	$ 177,661	$ 174,400	$ 675,077	$ 335,381

Reconciliation of Adjusted Basic EPS	4Q23	4Q22	3Q23	FY23	FY22

Adjusted Net Profit	$ 188,409	$ 177,661	$ 174,400	$ 675,077	$ 335,381
Shares used for calculation of Basic EPS	42,150	39,554	39,730	40,201	40,582
Adjusted Basic Earnings per share (Adjusted Basic EPS)	$ 4.47	$ 4.49	$ 4.39	$ 16.79	$ 8.26

Reconciliation of Operating Costs per ASM
Excluding Fuel (CASM Excl. Fuel)	4Q23	4Q22	3Q23	FY23	FY22

Operating Costs per ASM as Reported (in US$ Cents)	9.7	10.3	9.3	9.6	10.3
Aircraft Fuel Cost per ASM (in US$ Cents)	3.7	4.2	3.5	3.6	2.8
Operating Costs per ASM excluding fuel (in US$ Cents)	6.0	6.1	5.8	6.0	7.2