CPA
$134.87
Copa Holdings S.A.
($2.81)
(2.04%)
Earnings Details
3rd Quarter September 2017
Wednesday, November 08, 2017 4:45:00 PM
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Summary

Copa Holdings S.A. (CPA) Recent Earnings

Copa Holdings S.A. (CPA) reported 3rd Quarter September 2017 earnings of $2.38 per share on revenue of $657.2 million. The consensus earnings estimate was $2.16 per share. Revenue grew 15.5% on a year-over-year basis.

Copa Holdings SA is a provider of airline passenger and cargo service through its two operating subsidiaries, Copa Airlines and Copa Colombia.

Results
Reported Earnings
$2.38
Earnings Whisper
-
Consensus Estimate
$2.16
Reported Revenue
$657.2 Mil
Revenue Estimate
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Copa Holdings Reports Net Income of $103.8 million and EPS of $2.45 for the Third Quarter of 2017

Copa Holdings, S.A. (CPA), today announced financial results for the third quarter of 2017 (3Q17). 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 third quarter of 2016 (3Q16).

OPERATING AND FINANCIAL HIGHLIGHTS

Copa Holdings reported net income of US$103.8 million for 3Q17 or earnings per share (EPS) of US$2.45, compared to net income of US$74.0 million or earnings per share of US$1.75 in 3Q16.

Excluding special items, the Company would have reported an adjusted net income of US$100.8 million, or adjusted EPS of US$2.38, compared to an adjusted net income of US$55.3 million or adjusted EPS of US$1.30 in 3Q16. Special items include a non-cash gain of US$2.9 million in 3Q17 and US$19.2 million in 3Q16 related to the mark-to-market of fuel hedge contracts.

Operating income for 3Q17 came in at US$119.1 million, representing a 56% increase over operating income of US$76.4 million in 3Q16, as a result of 13% additional capacity, a 2.4% increase in unit revenue per available seat mile (RASM), and a 3.2% decrease in unit costs. Operating margin for 3Q17 came in at 18.1%, compared to an operating margin of 13.4% in 3Q16.

Total revenues for 3Q17 increased 15.6% to US$657.2 million. Yield per passenger mile increased 1.3% to 12.0 cents and RASM came in at 10.6 cents, 2.4% above 3Q16.

For 3Q17, consolidated passenger traffic grew 14.9% while consolidated capacity grew 13.0%. As a result, consolidated load factor for the quarter increased 1.5 percentage points to 85.7%.

Operating cost per available seat mile (CASM) decreased 3.2%, from 8.9 cents in 3Q16 to 8.6 cents in 3Q17. CASM excluding fuel costs decreased 1.2%, from 6.4 in 3Q16 to 6.3 cents 3Q17.

Cash, short-term and long-term investments ended 3Q17 at US$971.5 million, representing 40% of the last twelve months’ revenues.

Copa Airlines faced several operational challenges during the quarter, including severe weather, natural disasters and other external factors that affected the company’s financial results for the quarter and the operation of its hub in Panama City. These events caused many flight cancelations and delays; as a result, the airline’s Completion Factor and On-Time Performance came in lower than usual, at 98.5% and 82.9%, respectively.

Subsequent Events

Copa Holdings will pay its fourth quarter dividend of US$0.75 per share, on December 15, 2017, on all outstanding Class A and Class B shares, to stockholders of record as of November 30, 2017.

Consolidated Financial
3Q17
3Q16
Variance vs. 3Q16
2Q17
Variance vs. 2Q17
& Operating Highlights
Revenue Passengers Carried (’000)
2,518
2,231
12.9%
2,262
11.3%
RPMs (mm)
5,330
4,637
14.9%
4,766
11.8%
ASMs (mm)
6,221
5,506
13.0%
5,796
7.3%
Load Factor
85.7%
84.2%
1.5 p.p.
82.2%
3.4 p.p.
Yield
12.0
11.9
1.3%
11.8
2.1%
PRASM (US$ Cents)
10.3
10.0
3.1%
9.7
6.4%
RASM (US$ Cents)
10.6
10.3
2.4%
10.0
5.9%
CASM (US$ Cents)
8.6
8.9
-3.2%
8.5
1.2%
CASM Excl. Fuel (US$ Cents)
6.3
6.4
-1.2%
6.3
0.3%
Fuel Gallons Consumed (Millions)
80.0
70.9
12.8%
74.1
7.9%
Avg. Price Per Fuel Gallon (US$ Dollars)
1.82
1.98
-8.0%
1.77
3.3%
Average Length of Haul (Miles)
2,117
2,079
1.8%
2,107
0.5%
Average Stage Length (Miles)
1,300
1,192
9.1%
1,259
3.2%
Departures
32,593
30,737
6.0%
31,092
4.8%
Block Hours
108,930
97,077
12.2%
102,435
6.3%
Average Aircraft Utilization (Hours)
11.7
10.5
11.7%
11.2
4.6%
Operating Revenues (US$ mm)
657.2
568.3
15.6%
578.1
13.7%
Operating Income (US$ mm)
119.1
76.4
55.9%
83.0
43.6%
Operating Margin
18.1%
13.4%
4.7 p.p.
14.4%
3.7 p.p.
Net Income (US$ mm)
103.8
74.0
40.2%
63.0
64.8%
Adjusted Net Income (US$ mm) (1)
100.8
55.3
82.4%
62.8
60.6%
EPS - Basic and Diluted (US$)
2.45
1.75
40.0%
1.49
64.7%
Adjusted EPS - Basic and Diluted (US$) (1) 2.38
1.30
82.2%
1.48
60.5%
# of Shares - Basic and Diluted (’000)
42,430
42,374
0.1%
42,419
0.0%
(1) Adjusted Net Income and Adjusted EPS for 3Q17, 3Q16 and 2Q17 exclude non-cash charges/gains associated with the mark-to-market of fuel hedges and 3Q16 also excludes the impact of the Venezuelan currency devaluations.
Note:
Attached to this press release is a reconciliation of non-IFRS financial measures to the comparable IFRS measures.

FULL 3Q17 EARNINGS RELEASE AVAILABLE FOR DOWNLOAD AT: http://investor.shareholder.com/copa/results.cfm

3Q17 EARNINGS RESULTS CONFERENCE CALL AND WEBCAST

Date:
Nov 9, 2017
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)
Speakers:
Pedro Heilbron, Chief Executive Officer
Jos? 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 75 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: 80 Boeing 737NG aircraft and 21 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 subject to change without prior notice

CPA-G

Copa Holdings, S.A.
Income Statement - IFRS
(US$ Thousands)
Unaudited
Unaudited
%
Unaudited
%
3Q17
3Q16*
Change
2Q17
Change
Operating Revenues
Passenger revenue
641,244
550,524
16.5%
561,696
14.2%
Cargo and mail revenue
13,600
13,390
1.6%
13,994
-2.8%
Other operating revenue
2,325
4,372
-46.8%
2,398
-3.0%
Total Operating Revenue
657,169
568,286
15.6%
578,087
13.7%
Operating Expenses
Fuel
145,968
140,567
3.8%
130,878
11.5%
Wages, salaries, benefits and other employees’ expenses
103,775
92,039
12.8%
99,603
4.2%
Passenger servicing
27,008
21,998
22.8%
22,883
18.0%
Airport facilities and handling charges
45,222
40,705
11.1%
42,614
6.1%
Sales and distribution
50,157
47,813
4.9%
48,942
2.5%
Maintenance, materials and repairs
39,777
32,514
22.3%
27,404
45.2%
Depreciation and amortization
41,847
35,525
17.8%
40,572
3.1%
Flight operations
26,535
23,190
14.4%
25,999
2.1%
Aircraft rentals and other rentals
33,382
34,454
-3.1%
33,614
-0.7%
Cargo and courier expenses
1,801
1,565
15.0%
1,892
-4.8%
Other operating and administrative expenses
22,569
21,494
5.0%
20,727
8.9%
Total Operating Expense
538,041
491,865
9.4%
495,127
8.7%
Operating Profit
119,128
76,421
55.9%
82,960
43.6%
Non-operating Income (Expense):
Finance cost
(8,639)
(9,682)
-10.8%
(8,938)
-3.3%
Finance income
4,801
3,505
36.9%
4,249
13.0%
Gain (loss) on foreign currency fluctuations
593
(352)
n/m
(2,858)
-120.7%
Net change in fair value of derivatives
2,946
19,225
-84.7%
175
n/m
Other non-operating (income) expense
(616)
(2,445)
-74.8%
(190)
224.7%
Total Non-Operating Income/(Expense)
(916)
10,251
-108.9%
(7,561)
-87.9%
Profit before taxes
118,212
86,672
36.4%
75,399
56.8%
Income tax expense
14,416
12,654
13.9%
12,401
16.2%
Net Profit
103,796
74,018
40.2%
62,997
64.8%
EPS - Basic and Diluted
2.45
1.75
40.0%
1.49
64.7%
Shares - Basic and Diluted
42,429,841
42,374,430
0.1%
42,419,150
0.0%
* During 2017, the Company implemented a business, planning and financial consolidation system, which resulted in a new classification of the chart of accounts.
Prior periods have been reclassified for ease of comparison.
Copa Holdings, S. A. and subsidiaries
Balance Sheet - IFRS
(US$ Thousands)
September 30 December 31
2017
2016
(Unaudited)
Audited
ASSETS
Current Assets
Cash and cash equivalents
249,593
331,687
Restricted cash and cash equivalents
-
-
Short-term investments
565,994
483,002
Total cash, cash equivalents and short-term investments
815,587
814,689
Accounts receivable, net
141,173
113,408
Accounts receivable from related parties
391
499
Expendable parts and supplies, net
78,952
74,502
Prepaid expenses
40,540
58,370
Other current assets
8,487
7,650
TOTAL CURRENT ASSETS
1,085,130
1,069,118
Long-term investments
155,953
953
Long-term accounts receivable
2,267
1,957
Long-term prepaid expenses
29,102
26,398
Property and equipment, net
2,780,271
2,623,682
Intangible, net
77,275
69,502
Net pension asset
4,495
8,826
Deferred tax assets
17,225
18,339
Other Non-Current Assets
31,592
27,064
TOTAL NON-CURRENT ASSETS
3,098,180
2,776,721
TOTAL ASSETS
4,183,310
3,845,839
LIABILITIES AND EQUITY
Current Liabilities:
Current maturities of long-term debt
261,167
222,718
Accounts payable
109,732
104,590
Accounts payable to related parties
11,432
8,680
Air traffic liability
469,478
395,580
Frequent flyer deferred revenue
42,977
35,368
Taxes and interest payable
93,337
68,483
Employee benefits obligations
42,991
41,707
Income tax payable
2,845
1,401
Other Current Liabilities
2,045
4,385
TOTAL CURRENT LIABILITIES
1,036,004
882,912
Long-term debt
918,642
961,414
Other long - term liabilities
132,529
114,268
Deferred tax Liabilities
53,493
44,974
TOTAL NON-CURRENT LIABILITIES
1,104,664
1,120,656
TOTAL LIABILITIES
2,140,668
2,003,568
EQUITY
Issued Capital
Class A - 33,778,404 issued and 31,185,641 outstanding
21,030
20,988
Class B - 10,938,125 shares issued and outstanding
7,466
7,466
Additional Paid-In Capital
71,123
64,986
Treasury Stock
(136,388)
(136,388)
Retained Earnings
1,812,092
1,552,547
Net Income
269,178
334,544
Other Comprehensive Income
(1,859)
(1,872)
TOTAL EQUITY
2,042,642
1,842,271
TOTAL LIABILITIES AND EQUITY
4,183,310
3,845,839
* During 2017, the Company implemented a business, planning and financial consolidation system, which resulted in a new classification of the chart of accounts.
Prior periods have been reclassified for ease of comparison.
Copa Holdings, S. A. and subsidiaries
Consolidated Statement of Cash Flows
For the nine months ended September 30,
(In US$ thousands)
2017
2016
2015
(Unaudited)
(Unaudited)
(Unaudited)
Cash flow from operating activities
522,527
384,822
236,743
Cash flow used in investing activities
(344,088)
(170,057)
(39,658)
Cash flow used in financing activities
(260,533)
(197,677)
(282,982)
Net (decrease) increase in cash and cash equivalents
(82,094)
17,088
(85,897)
Cash and cash equivalents at January 1
331,687
204,715
207,437
Cash and cash equivalents at September 30
$
249,593
$
221,803
$
121,540
Short-term investments
565,994
540,502
484,242
Long-term investments *
155,953
954
428,259
Restricted cash and cash equivalents **
-
10,128
48,702
Total cash and cash equivalents and investments at September 30
$
971,540
$
773,387
$ 1,082,743
* Long-term investments include $427 million at September 2015 of cash in Venezuela.
** Restricted cash corresponds to a margin calls to secure derivative financial instruments transactions.

Copa Holdings, S.A.

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 Adjusted Net Income
and Adjusted EPS
3Q17
3Q16
2Q17
Net profit as Reported
$103,796
$74,018
$62,997
Special Items (adjustments):
Gain (loss) due to devaluation of Venezuelan Bolivar
(484)
Net change in fair value of derivatives
2,946
19,225
175
Adjusted Net Income
$100,850
$55,278
$62,822
Shares used for Computation (in thousands)
Basic and Diluted
42,430
42,374
42,419
Adjusted earnings per share - Basic and Diluted
2.38
1.30
1.48
Reconciliation of Operating Costs per ASM
Excluding Fuel (CASM Excl. Fuel)
3Q17
3Q16
2Q17
Operating Costs per ASM as Reported
8.6
8.9
8.5
Aircraft fuel per ASM
(2.3)
(2.6)
(2.3)
Operating Costs per ASM excluding fuel
6.3
6.4
6.3

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SOURCE Copa Holdings, S.A.

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