Copa Holdings Reports Net Income of $100.8 million and EPS of $2.38 for the Fourth Quarter of 2017

|PR Newswire|About: CPA
PR Newswire

PANAMA CITY, Feb. 21, 2018 /PRNewswire/ -- Copa Holdings, S.A. (CPA) (NYSE: CPA), today announced financial results for the fourth quarter of 2017 (4Q17) and full year 2017. 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 2016 (4Q16).

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 net income of US$100.8 million for 4Q17 or earnings per share (EPS) of US$2.38, as compared to net income of US$90.5 million or earnings per share of US$2.14 in 4Q16. Excluding special items, which for 4Q17 include a non-cash gain of US$0.5 million associated with the mark-to-market of fuel hedge contracts, the Company would have reported a net income of US$100.3 million, or adjusted EPS of US$2.36, compared to an adjusted net income of US$54.7 million or adjusted EPS of US$1.29 in 4Q16.
  • For full year 2017, net income reached US$370.0 million or EPS of US$8.72, compared to a net income of US$334.5 million or earnings per share of US$7.90 for full year 2016. Excluding special items, which for 2017 include a non-cash gain of US$2.8 million associated with the mark-to-market of fuel hedge contracts, Copa Holdings would have reported an adjusted net income of US$367.2 million or EPS of US$8.66, compared to an adjusted net income of US$201.4 million or adjusted EPS of US$4.75 for full year 2016.
  • Operating income for 4Q17 came in at US$120.4 million, representing a 70% increase over operating income of US$70.6 million in 4Q16, as a result of a 2.9% increase in unit revenue per available seat mile (RASM), and a 4.2% decrease in unit costs. Operating margin for 4Q17 came in at 17.8%, compared to an operating margin of 11.7% in 4Q16.
  • For full year 2017, the Company reported operating income of US$440.1 million, representing an increase of 59% over operating income of US$276.1 million for full year 2016. Operating margin for full year 2017 came in at 17.4%, compared to an operating margin of 12.4% in 2016.
  • Total revenues for 4Q17 increased 12.4% to US$675.6 million. Yield per passenger mile increased 1.2% to 12.9 cents and RASM came in at 11.1 cents, or 2.9% above 4Q16.
  • For 4Q17, consolidated passenger traffic grew 11.3% while consolidated capacity grew 9.2%. As a result, consolidated load factor for the quarter increased 1.6 percentage points to 83.2%. For full year 2017, consolidated load factor was also 83.2%, 2.8 percentage points higher than 2016 on 8.8% capacity growth.
  • Operating cost per available seat mile (CASM) decreased 4.2%, from 9.5 cents in 4Q16 to 9.1 cents in 4Q17. CASM excluding fuel costs decreased 6.7% from 6.9 cents in 4Q16 to 6.5 cents in 4Q17, mainly as a result of a non-cash adjustment in our aircraft useful life assumptions, which significantly increased the depreciation expense in 4Q16.
  • Cash, short-term and long-term investments ended 2017 slightly over US$1.0 billion, representing 40% of the last twelve months' revenues.
  • Copa Holdings ended the year with a consolidated fleet of 100 aircraft – 66 Boeing 737-800s, 14 Boeing 737-700s, and 20 Embraer-190s.
  • For 2017, Copa Airlines ended the year with a consolidated on-time performance of 86.7% and a flight-completion factor of 99.4%, maintaining its position among the best in the industry.

Subsequent Events  

  • In January 2018, the company took delivery of one Boeing 737-800, increasing the consolidated fleet to 101 aircraft.
  • Also in January 2018, the company was recognized by FlightStats – for the fifth consecutive year – as the most on-time airline in Latin America, and by OAG as the 4th most on-time airline in the world.
  • On February 1, 2018, the company announced three new destinations starting in July: Salvador and Fortaleza, our 8th and 9th destinations in Brazil, and Bridgetown, Barbados, our 16th destination in the Caribbean.
  • On February 21, 2018, the Board of Directors of Copa Holdings approved a 2018 quarterly dividend payment of 87 cents per share. Dividends will be distributed during the months of March, June, September and December. The first quarterly dividend of 87 cents per share will be paid on March 15 to shareholders on record as of March 5, 2018.

 

Consolidated Financial
& Operating Highlights

4Q17

4Q16

Variance vs. 4Q16

3Q17

Variance vs. 3Q17

FY 2017

FY 2016

Variance vs. 2016

Revenue Passengers Carried ('000)

2,460

2,199

11.9%

2,518

-2.3%

9,504

8,560

11.0%

RPMs (mm) 

5,086

4,568

11.3%

5,330

-4.6%

19,914

17,690

12.6%

ASMs (mm) 

6,111

5,597

9.2%

6,221

-1.8%

23,936

22,004

8.8%

Load Factor 

83.2%

81.6%

1.6 p.p.

85.7%

-2.4 p.p.

83.2%

80.4%

2.8 p.p.

Yield

12.9

12.8

1.2%

12.0

7.5%

12.4

12.2

1.5%

PRASM (US$ Cents) 

10.8

10.4

3.2%

10.3

4.5%

10.3

9.8

5.0%

RASM (US$ Cents) 

11.1

10.7

2.9%

10.6

4.7%

10.6

10.1

4.6%

CASM (US$ Cents) 

9.1

9.5

-4.2%

8.6

5.0%

8.7

8.8

-1.4%

CASM Excl. Fuel (US$ Cents) 

6.5

6.9

-6.7%

6.3

2.7%

6.3

6.4

-1.7%

Fuel Gallons Consumed (Millions) 

78.7

72.4

8.8%

80.0

-1.6%

307.0

284.3

8.0%

Avg. Price Per Fuel Gallon (US$ Dollars)

2.03

1.96

3.5%

1.82

11.0%

1.87

1.86

0.5%

Average Length of Haul (Miles)

2,067

2,078

-0.5%

2,117

-2.3%

2,095

2,067

1.4%

Average Stage Length (Miles)

1,292

1,244

3.9%

1,300

-0.6%

1,282

1,213

5.7%

Departures

32,183

30,499

5.5%

32,593

-1.3%

126,963

123,098

3.1%

Block Hours

106,750

98,150

8.8%

108,930

-2.0%

419,610

388,058

8.1%

Average Aircraft Utilization (Hours)

11.6

10.8

7.7%

11.7

-1.2%

11.4

10.6

7.9%

Operating Revenues (US$ mm) 

675.6

601.3

12.4%

657.2

2.8%

2,527.6

2,221.8

13.8%

Operating Income (US$ mm)

120.4

70.6

70.4%

119.1

1.1%

440.1

276.1

59.4%

Operating Margin 

17.8%

11.7%

6.1 p.p.

18.1%

-0.3 p.p.

17.4%

12.4%

5.0 p.p.

Net Income (US$ mm)

100.8

90.5

11.4%

103.8

-2.8%

370.0

334.5

10.6%

Adjusted Net Income (US$ mm) (1)

100.3

54.7

83.4%

100.8

-0.5%

367.2

201.4

82.4%

EPS - Basic and Diluted (US$)

2.38

2.14

11.3%

2.45

-2.8%

8.72

7.90

10.4%

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

2.36

1.29

83.2%

2.38

-0.5%

8.66

4.75

82.1%

# of Shares - Basic and Diluted ('000) 

42,430

42,383

0.1%

42,430

0.0%

42,419

42,358

0.1%

(1) Adjusted Net Income and Adjusted EPS for 4Q17, 4Q16, 3Q17, 2017 and 2016 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 4Q17 EARNINGS RELEASE AVAILABLE FOR DOWNLOAD AT: http://investor.shareholder.com/copa/results.cfm

4Q17 EARNINGS RESULTS CONFERENCE CALL AND WEBCAST

Date:

Feb 22, 2018



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)



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 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: 81 Boeing 737NG aircraft and 20 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


%



4Q17


4Q16*


Change


3Q17


Change


2017

2016*


Change

Operating Revenues
















Passenger revenue


658,001


584,250


12.6%


641,244


2.6%


2,462,419

2,155,167


14.3%

Cargo and mail revenue


14,841


14,063


5.5%


13,600


9.1%


55,290

53,989


2.4%

Other operating revenue


2,735


2,995


-8.7%


2,325


17.7%


9,847

12,697


-22.4%

Total Operating Revenue


675,578


601,308


12.4%


657,169


2.8%


2,527,556

2,221,852


13.8%

















Operating Expenses
















Fuel


159,556


142,087


12.3%


145,968


9.3%


572,746

528,996


8.3%

Wages, salaries, benefits and other employees' expenses


110,952


97,454


13.9%


103,775


6.9%


415,147

370,190


12.1%

Passenger servicing


26,481


25,320


4.6%


27,008


-2.0%


99,447

86,329


15.2%

Airport facilities and handling charges


42,238


41,616


1.5%


45,222


-6.6%


171,040

159,772


7.1%

Sales and distribution


51,474


50,626


1.7%


50,157


2.6%


200,413

193,984


3.3%

Maintenance, materials and repairs


31,932


34,452


-7.3%


39,777


-19.7%


124,709

121,781


2.4%

Depreciation and amortization


42,151


54,548


-22.7%


41,847


0.7%


164,345

159,277


3.2%

Flight operations


25,082


22,394


12.0%


26,535


-5.5%


101,647

88,188


15.3%

Aircraft rentals and other rentals


33,313


33,728


-1.2%


33,382


-0.2%


134,539

138,885


-3.1%

Cargo and courier expenses


2,218


1,764


25.8%


1,801


23.2%


7,375

6,099


20.9%

Other operating and administrative expenses


29,790


26,679


11.7%


22,569


32.0%


96,087

92,215


4.2%

Total Operating Expense


555,186


530,668


4.6%


538,041


3.2%


2,087,494

1,945,716


7.3%

















Operating Profit


120,392


70,640


70.4%


119,128


1.1%


440,062

276,136


59.4%

















Non-operating Income (Expense):
















Finance cost


(8,725)


(8,894)


-1.9%


(8,639)


1.0%


(35,223)

(37,023)


-4.9%

Finance income


5,443


3,479


56.5%


4,801


13.4%


17,939

13,000


38.0%

Gain (loss) on foreign currency fluctuations


(5,676)


9,738


-158.3%


593


n/m


(5,218)

13,042


-140.0%

Net change in fair value of derivatives


539


24,341


-97.8%


2,946


-81.7%


2,801

111,642


-97.5%

Other non-operating income (expense)


(917)


(389)


136.0%


(616)


48.9%


(2,337)

(3,982)


-41.3%

Total Non-Operating Income/(Expense)


(9,335)


28,276


-133.0%


(916)


919.2%


(22,039)

96,679


-122.8%

















Profit before taxes


111,057


98,915


12.3%


118,212


-6.1%


418,023

372,815


12.1%

















Income tax expense


10,212


8,371


22.0%


14,416


-29.2%


48,000

38,271


25.4%

















Net Profit


100,844


90,544


11.4%


103,796


-2.8%


370,022

334,544


10.6%

































EPS - Basic and Diluted


2.38


2.14


11.3%


2.45


-2.8%


8.72

7.90


10.4%

Shares - Basic and Diluted


42,429,821


42,382,757


0.1%


42,429,841


0.0%


42,418,773

42,358,091


0.1%

* 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)

December 31

December 31


2017

2016


 (Unaudited) 

 Audited* 




 ASSETS 






 Current Assets 



Cash and cash equivalents

238,792

331,687

Restricted cash and cash equivalents

-

-

Short-term investments

705,108

483,002

Total cash, cash equivalents and short-term investments

943,900

814,689




Accounts receivable, net

115,323

113,408

Accounts receivable from related parties

318

499

Expendable parts and supplies, net

81,825

74,502

Prepaid expenses

45,421

58,370

Other current assets

11,701

7,650

TOTAL CURRENT ASSETS

1,198,488

1,069,118




Long-term investments

65,953

953

Long-term accounts receivable

2,444

1,957

Long-term prepaid expenses

26,130

26,398

Property and equipment, net

2,825,904

2,623,682

Intangible, net

81,115

69,502

Net pension asset

3,185

8,826

Deferred tax assets

18,571

18,339

Other Non-Current Assets

31,140

27,064

TOTAL NON-CURRENT ASSETS

3,054,442

2,776,721




TOTAL ASSETS

4,252,930

3,845,839




 LIABILITIES AND EQUITY 






 Current Liabilities: 



Current maturities of long-term debt

298,462

222,718

Accounts payable

125,613

104,590

Accounts payable to related parties

12,880

8,680

Air traffic liability

470,692

395,580

Frequent flyer deferred revenue

13,186

9,044

Taxes and interest payable

81,440

68,483

Employee benefits obligations

51,262

41,707

Income tax payable

3,700

1,401

Other Current Liabilities

1,156

4,385

TOTAL CURRENT LIABILITIES

1,058,391

856,588




Long-term debt

876,119

961,414

Frequent flyer deferred revenue long term

33,115

26,324

Other long - term liabilities

123,182

114,268

Deferred tax Liabilities

50,628

44,974

TOTAL NON-CURRENT LIABILITIES

1,083,044

1,146,980




TOTAL LIABILITIES

2,141,435

2,003,568




 EQUITY 



Issued Capital



Class A - 33,776,480 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

72,953

64,986

Treasury Stock

(136,388)

(136,388)

Retained Earnings

1,780,299

1,552,547

Net Income

370,023

334,544

Other Comprehensive Income

(3,888)

(1,872)

TOTAL EQUITY

2,111,495

1,842,271




TOTAL LIABILITIES AND EQUITY

4,252,930

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 twelve months ended December 31, 







(In US$ thousands)

















2017


2016


2015










(Unaudited)


(Audited)


(Audited)

Cash flow from operating activities 


727,333


594,590


316,863

Cash flow (used in) from investing activities 


(578,159)


(179,909)


32,384

Cash flow used in financing activities 


(204,757)


(248,625)


(357,466)

Net increase (decrease) in cash and cash equivalents 


(55,583)


166,056


(8,219)

Cash and cash equivalents at January 1


331,687


204,715


221,443

Cash and cash equivalents at December 31


$               238,792


$               331,687


$               204,715















Short-term investments 


705,108


483,002


416,005

Long-term investments 


65,953


953


861

Restricted cash and cash equivalents *


-


-


64,228

Total cash and cash equivalents and investments at December 31


$            1,009,853


$               815,642


$               685,809















* 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


4Q17


4Q16


3Q17


FY17


FY16












Net profit as Reported


$        100,844


$          90,544


$        103,796


$        370,022


$        334,544












Special Items (adjustments):











Gain due to devaluation of Venezuelan Bolivar




$        (11,501)






$        (21,543)

Net change in fair value of derivatives


$             (539)


$        (24,341)


$          (2,946)


$          (2,801)


$      (111,642)

Adjusted Net Income


$        100,305


$          54,702


$        100,850


$        367,222


$        201,359












Shares used for Computation (in thousands)











     Basic and Diluted


$          42,430


$          42,383


$          42,430


$          42,419


$          42,358












Adjusted earnings per share - Basic and Diluted


$              2.36


$              1.29


$              2.38


$              8.66


$              4.75












Reconciliation of Operating Costs per ASM











Excluding Fuel (CASM Excl. Fuel)


4Q17


4Q16


3Q17


FY17


FY16












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


9.1


9.5


8.6


8.7


8.8

Aircraft fuel per ASM  (in US$ Cents)


(2.6)


(2.5)


(2.3)


(2.4)


(2.4)

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


6.5


6.9


6.3


6.3


6.4

 

 

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SOURCE Copa Holdings, S.A.