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Copa Holdings Reports Net Income of $102.3 million…

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Copa Holdings Reports Net Income of $102.3 million and EPS of $2.41 for the First Quarter of 2017

PANAMA CITY, Panama, May 10, 2017 /PRNewswire/ — Copa Holdings, S.A. (NYSE: 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 & Operating Highlights

1Q17

1Q16

Variance vs. 1Q16

4Q16

Variance 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

Date:

May 11, 2017

   

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)

   

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 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

                     

Copa Holdings, S.A.

                   

Income Statement – IFRS

                   

(US$ Thousands)

                   
                     
   

Unaudited

 

Unaudited

 

%

 

Unaudited

 

%

   

1Q17

 

1Q16*

 

Change

 

4Q16*

 

Change

Operating Revenues

                   

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%

                     

Operating Expenses

                   

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.

Copa Holdings, S. A.

   

Balance Sheet – IFRS

   

(US$ Thousands)

March 31

December 31

 

2017

2016

 

(Unaudited)

(Unaudited)

     

ASSETS

   
     

Current Assets

   

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 Liabilities:

   

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

     

EQUITY

   

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

Net Income

102,385

334,544

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,

           

(In US$ thousands)

             
                 

2017

 

2016

 

2015

                 

(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

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