Earnings Release
Copa Holdings Reports Net Income of $102.3 million and EPS of $2.41 for the First Quarter of 2017
Copa Holdings, S.A. (CPA), today announced financial results for the first quarter of 2017 (1Q17). 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 first quarter of 2016 (1Q16).
OPERATING AND FINANCIAL HIGHLIGHTS
• Copa Holdings reported net income of US$102.3 million for 1Q17 or earnings per share (EPS) of US$2.41, compared to net income of US$115.5 million or earnings per share of US$2.74 in 1Q16.
• Excluding special items, the Company would have reported an adjusted net income of US$103.2 million, or adjusted EPS of US$2.43, compared to an adjusted net income of US$69.9 million or adjusted EPS of US$1.66 in 1Q16. Special items for 1Q16 include a non-cash gain of US$27.4 million associated with the mark-to-market of fuel hedge contracts, and a US$18.1 million gain related to foreign currency fluctuations.
• Operating income for 1Q17 came in at US$117.5 million, representing a 24.4% increase over operating income of US$94.5 million in 1Q16, as a result of 4.3% additional capacity, and a 6.0% increase in unit revenue per available seat mile (RASM), partly offset by a 3.3% increase in unit costs. Operating margin for 1Q17 came in at 19.1%, compared to an operating margin of 16.9% in 1Q16.
• Total revenues for 1Q17 increased 10.6% to US$616.7 million. Yield per passenger mile increased 0.9% to 12.7 cents and RASM came in at 10.6 cents, or 6.0% above 1Q16.
• For 1Q17, consolidated passenger traffic grew 9.9% while consolidated capacity grew 4.3%. As a result, consolidated load factor for the quarter increased 4.1 percentage points to 81.5%.
• Operating cost per available seat mile (CASM) increased 3.3%, from 8.3 cents in 1Q16 to 8.6 cents in 1Q17. CASM excluding fuel costs increased 1.6% from 6.1 cents in 1Q16 to 6.2 cents in 1Q17.
• Cash, short-term and long-term investments ended 1Q17 at US$841.3 million, representing 37% of the last twelve months’ revenues.
• Copa Holdings took delivery of two B737-800s, ending the quarter with consolidated fleet of 101 aircraft - 66 Boeing 737-800s, 14 Boeing 737-700s, and 21 Embraer-190s.
• Copa Airlines reported consolidated on-time performance of 89.1% and a flight-completion factor of 99.9% for 1Q17, maintaining its position among the best in the industry.
Subsequent Events
• In April, Copa Airlines announced a new flight to Denver, Colorado, starting in December 2017.
• Copa Holdings announced it will host its Annual Investor Day on June 1, 2017, at the New York Stock Exchange.
• Copa Holdings will pay its second quarter dividend of US$0.51 per share on June 15, 2017, on all outstanding Class A and Class B shares, to stockholders of record as of May 31, 2017.
Consolidated Financial
1Q17
1Q16
Variance
4Q16
Variance
& Operating Highlights
vs. 1Q16
vs. 4Q16
Revenue Passengers Carried (’000)
2,264
2,120
6.8%
2,148
5.4%
RPMs (mm)
4,732
4,307
9.9%
4,568
3.6%
ASMs (mm)
5,808
5,566
4.3%
5,597
3.8%
Load Factor
81.5%
77.4%
4.1 p.p.
81.6%
-0.1 p.p.
Yield
12.7
12.6
0.9%
12.8
-0.6%
PRASM (US$ Cents)
10.4
9.7
6.3%
10.4
-0.8%
RASM (US$ Cents)
10.6
10.0
6.0%
10.7
-1.2%
CASM (US$ Cents)
8.6
8.3
3.3%
9.5
-9.3%
CASM Excl. Fuel (US$ Cents)
6.2
6.1
1.6%
6.9
-10.0%
Fuel Gallons Consumed (Millions)
74.2
71.7
3.5%
72.4
2.6%
Avg. Price Per Fuel Gallon (US$ Dollars)
1.84
1.68
9.0%
1.96
-6.1%
Average Length of Haul (Miles)
2,090
2,031
2.9%
2,127
-1.7%
Average Stage Length (Miles)
1,274
1,222
4.3%
1,244
2.4%
Departures
31,095
31,549 -1.4%
30,499 2.0%
Block Hours
101,495
97,659 3.9%
98,150 3.4%
Average Aircraft Utilization (Hours)
11.3
10.7
5.1%
10.8
4.6%
Operating Revenues (US$ mm)
616.7
557.5
10.6%
601.3
2.6%
Operating Income (US$ mm)
117.5
94.5
24.4%
70.6
66.4%
Operating Margin
19.1%
16.9%
2.1 p.p.
11.7%
7.3 p.p.
Net Income (US$ mm)
102.3
115.5
-11.4%
90.5
13.0%
Adjusted Net Income (US$ mm) (1)
103.2
69.9
47.6%
54.7
88.6%
EPS - Basic and Diluted (US$)
2.41
2.74
-11.8%
2.14
13.0%
Adjusted EPS - Basic and Diluted (US$) (1) 2.43
1.66
46.9%
1.29
88.6%
# of Shares - Basic and Diluted (’000)
42,396
42,191 0.5%
42,383 0.0%
(1) Adjusted Net Income and Adjusted EPS for 1Q17, 1Q16 and 4Q16 exclude non-cash charges/gains associated with the mark-to-market of fuel hedges and 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 1Q17 EARNINGS RELEASE AVAILABLE FOR DOWNLOAD AT: http://investor.shareholder.com/copa/results.cfm
1Q17 EARNINGS RESULTS CONFERENCE CALL AND WEBCAST
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)
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 74 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: (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
Unaudited
Unaudited
%
Unaudited
%
1Q17
1Q16*
Change
4Q16*
Change
Passenger revenue
601,478
542,499
10.9%
584,250
2.9%
Cargo and mail revenue
12,856
12,511
2.8%
14,063
-8.6%
Other operating revenue
2,389
2,450
-2.5%
2,995
-20.2%
Total Operating Revenue
616,722
557,460
10.6%
601,308
2.6%
Fuel
136,343
120,803
12.9%
142,087
-4.0%
Wages, salaries, benefits and other employees’ expenses
100,817
93,155
8.2%
97,454
3.5%
Passenger servicing
23,074
19,256
19.8%
25,320
-8.9%
Airport facilities and handling charges
40,966
37,105
10.4%
41,616
-1.6%
Sales and distribution
49,841
49,458
0.8%
50,626
-1.6%
Maintenance, materials and repairs
25,596
28,871
-11.3%
34,452
-25.7%
Depreciation and amortization
39,832
34,388
15.8%
54,572
-27.0%
Flight operations
24,031
21,874
9.9%
22,394
7.3%
Aircraft rentals and other rentals
34,231
35,131
-2.6%
33,728
1.5%
Cargo and courier expenses
1,464
1,225
19.5%
1,764
-17.0%
Other operating and administrative expenses
23,001
21,708
6.0%
26,679
-13.8%
Total Operating Expense
499,197
462,974
7.8%
530,692
-5.9%
Operating Profit
117,526
94,486
24.4%
70,616
66.4%
Non-operating Income (Expense):
Finance cost
(8,921)
(9,301)
-4.1%
(8,894)
0.3%
Finance income
3,446
2,777
24.1%
3,479
-1.0%
Gain (loss) on foreign currency fluctuations
2,652
12,312
-78.5%
9,738
-72.8%
Net change in fair value of derivatives
(860)
27,432
-103.1%
24,341
-103.5%
Other non-operating (income) expense
(558)
(780)
-28.5%
(365)
52.8%
Total Non-Operating Income/(Expense)
(4,241)
32,440
-113.1%
28,299
-115.0%
Profit before taxes
113,284
126,926
-10.7%
98,916
14.5%
Income tax expense
10,971
11,474
-4.4%
8,371
31.1%
Net Profit
102,314
115,452
-11.4%
90,544
13.0%
EPS - Basic and Diluted
2.41
2.74
-11.8%
2.14
13.0%
Shares - Basic and Diluted
42,395,784
42,191,326
0.5%
42,382,757
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.
(US$ Thousands)
March 31
December 31
Cash and cash equivalents
269,896
331,687
Restricted cash and cash equivalents
-
-
Short-term investments
570,497
483,002
Total cash, cash equivalents and short-term investments 840,393
814,689
Accounts receivable, net
138,228
113,408
Accounts receivable from related parties
35
499
Expendable parts and supplies, net
78,053
74,502
Prepaid expenses
66,931
58,370
Other current assets
7,206
7,650
TOTAL CURRENT ASSETS
1,130,846
1,069,118
Long-term investments
954
953
Long-term accounts receivable
2,503
1,957
Long-term prepaid expenses
25,111
26,398
Property and equipment, net
2,658,867
2,623,682
Intangible, net
70,705
69,502
Net pension asset
9,211
8,826
Deferred tax assets
17,862
18,339
Other Non-Current Assets
31,716
27,064
TOTAL NON-CURRENT ASSETS
2,816,929
2,776,721
TOTAL ASSETS
3,947,775
3,845,839
LIABILITIES AND SHAREHOLDER’S EQUITY
Current maturities of long-term debt
166,549
222,718
Accounts payable
87,600
104,590
Accounts payable to related parties
9,143
8,680
Air traffic liability
435,827
395,580
Frequent flyer deferred revenue
35,386
35,368
Taxes and interest payable
71,216
68,483
Employee benefits obligations
33,360
41,707
Income tax payable
6,585
1,401
Other Current Liabilities
5,279
4,385
TOTAL CURRENT LIABILITIES
850,945
882,912
Long-term debt
1,007,866
961,414
Other long - term liabilities
121,883
114,268
Deferred tax Liabilities
41,467
44,974
TOTAL NON-CURRENT LIABILITIES
1,171,216
1,120,656
TOTAL LIABILITIES
2,022,161
2,003,568
Class A - 33,765,298 issued and 31,177,904 outstanding
20,951
20,988
Class B - 10,938,125 shares issued and outstanding
7,466
7,466
Additional Paid-In Capital
67,582
64,986
Treasury Stock
(136,388)
(136,388)
Retained Earnings
1,865,477
1,552,547
Other Comprehensive Income
(1,859)
(1,872)
TOTAL EQUITY
1,925,614
1,842,271
TOTAL EQUITY LIABILITIES
3,947,775
3,845,839
Copa Holdings, S. A. and subsidiaries
Consolidated Statement of Cash Flows
For the three months ended March 31,
(Unaudited)
(Unaudited)
(Unaudited)
Cash flow from operating activities
132,752
118,934
83,361
Cash flow used in investing activities
(74,800)
(42,044)
(16,479)
Cash flow used in financing activities
(119,743)
(71,652)
(67,916)
Net (decrease) increase
in cash and cash equivalents
(61,791)
5,238
(1,034)
Cash and cash equivalents at January 1
331,687
204,715
221,443
Cash and cash equivalents at March 31
$
269,896
$
209,953
$
220,409
Short-term investments
570,497
457,505
332,000
Long-term investments *
954
864
558,290
Restricted cash and cash equivalents **
-
55,611
48,872
Total cash and cash equivalents and investments at March 31
$
841,347
$
723,933
$
1,159,571
* Long term investments include $452.4 million at March 2015 of cash in Venezuela.
** Restricted cash corresponds to 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
1Q17
1Q16
4Q16
Net profit as Reported
$102,314
$115,452
$90,544
Special Items (adjustments):
Gain (loss) on foreign currency fluctuations
18,134
11,501
Net change in fair value of derivatives
(860)
27,432
24,341
Adjusted Net Income
$103,174
$69,886
$54,702
Shares used for Computation (in thousands)
Basic and Diluted
42,396
42,191
42,383
Adjusted earnings per share - Basic and Diluted
2.43
1.66
1.29
Reconciliation of Operating Costs per ASM
Excluding Fuel and Special Items
1Q17
1Q16
4Q16
Operating Costs per ASM as Reported
8.6
8.3
9.5
Aircraft fuel per ASM
(2.3)
(2.2)
(2.5)
Operating Costs per ASM excluding fuel
6.2
6.1
6.9
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/copa-holdings-reports-net-income-of-1023-million-and-eps-of-241-for-the-first-quarter-of-2017-300455471.html
SOURCE Copa Holdings, S.A.
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