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$0.51 per share on June 15, 2017, on all outstanding Class A and Class B shares, to stockholders of record as of May 31, 2017.
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Consolidated Financial & Operating Highlights |
1Q17 |
1Q16 |
Variance vs. 1Q16 |
4Q16 |
Variance vs. 4Q16 |
|
Revenue Passengers Carried (‘000) |
2,264 |
2,120 |
6.8% |
2,148 |
5.4% |
|
RPMs (mm) |
4,732 |
4,307 |
9.9% |
4,568 |
3.6% |
|
ASMs (mm) |
5,808 |
5,566 |
4.3% |
5,597 |
3.8% |
|
Load Factor |
81.5% |
77.4% |
4.1 p.p. |
81.6% |
-0.1 p.p. |
|
Yield |
12.7 |
12.6 |
0.9% |
12.8 |
-0.6% |
|
PRASM (US$ 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. |
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FULL 1Q17 EARNINGS RELEASE AVAILABLE FOR DOWNLOAD AT: https://investor.shareholder.com/copa/results.cfm
1Q17 EARNINGS RESULTS CONFERENCE CALL AND WEBCAST
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Date: |
May 11, 2017 |
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Time: |
11:00 AM US ET (10:00 AM Local Time) |
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Conference telephone number: |
877-293-5456 (US Domestic Callers) |
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707-287-9357 (International Callers) |
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Webcast: |
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Speakers: |
Pedro Heilbron, Chief Executive Officer |
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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
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Copa Holdings, S.A. |
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Income Statement – IFRS |
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(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% |
|||||
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Airport facilities and handling charges |
40,966 |
37,105 |
10.4% |
41,616 |
-1.6% |
|||||
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Sales and distribution |
49,841 |
49,458 |
0.8% |
50,626 |
-1.6% |
|||||
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Maintenance, materials and repairs |
25,596 |
28,871 |
-11.3% |
34,452 |
-25.7% |
|||||
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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% |
|||||
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Aircraft rentals and other rentals |
34,231 |
35,131 |
-2.6% |
33,728 |
1.5% |
|||||
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Cargo and courier expenses |
1,464 |
1,225 |
19.5% |
1,764 |
-17.0% |
|||||
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Other operating and administrative expenses |
23,001 |
21,708 |
6.0% |
26,679 |
-13.8% |
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Total Operating Expense |
499,197 |
462,974 |
7.8% |
530,692 |
-5.9% |
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Operating Profit |
117,526 |
94,486 |
24.4% |
70,616 |
66.4% |
|||||
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Non-operating Income (Expense): |
||||||||||
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Finance cost |
(8,921) |
(9,301) |
-4.1% |
(8,894) |
0.3% |
|||||
|
Finance income |
3,446 |
2,777 |
24.1% |
3,479 |
-1.0% |
|||||
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Gain (loss) on foreign currency fluctuations |
2,652 |
12,312 |
-78.5% |
9,738 |
-72.8% |
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Net change in fair value of derivatives |
(860) |
27,432 |
-103.1% |
24,341 |
-103.5% |
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Other non-operating (income) expense |
(558) |
(780) |
-28.5% |
(365) |
52.8% |
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Total Non-Operating Income/(Expense) |
(4,241) |
32,440 |
-113.1% |
28,299 |
-115.0% |
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Profit before taxes |
113,284 |
126,926 |
-10.7% |
98,916 |
14.5% |
|||||
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Income tax expense |
10,971 |
11,474 |
-4.4% |
8,371 |
31.1% |
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Net Profit |
102,314 |
115,452 |
-11.4% |
90,544 |
13.0% |
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EPS – Basic and Diluted |
2.41 |
2.74 |
-11.8% |
2.14 |
13.0% |
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Shares – Basic and Diluted |
42,395,784 |
42,191,326 |
0.5% |
42,382,757 |
0.0% |
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* 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. |
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Copa Holdings, S. A. |
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Balance Sheet – IFRS |
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(US$ Thousands) |
March 31 |
December 31 |
|
2017 |
2016 |
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(Unaudited) |
(Unaudited) |
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ASSETS |
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Current Assets |
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Cash and cash equivalents |
269,896 |
331,687 |
|
Restricted cash and cash equivalents |
– |
– |
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Short-term investments |
570,497 |
483,002 |
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Total cash, cash equivalents and short-term investments |
840,393 |
814,689 |
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Accounts receivable, net |
138,228 |
113,408 |
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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 |
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TOTAL CURRENT ASSETS |
1,130,846 |
1,069,118 |
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Long-term investments |
954 |
953 |
|
Long-term accounts receivable |
2,503 |
1,957 |
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Long-term prepaid expenses |
25,111 |
26,398 |
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Property and equipment, net |
2,658,867 |
2,623,682 |
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Intangible, net |
70,705 |
69,502 |
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Net pension asset |
9,211 |
8,826 |
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Deferred tax assets |
17,862 |
18,339 |
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Other Non-Current Assets |
31,716 |
27,064 |
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TOTAL NON-CURRENT ASSETS |
2,816,929 |
2,776,721 |
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TOTAL ASSETS |
3,947,775 |
3,845,839 |
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LIABILITIES AND SHAREHOLDER’S EQUITY |
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Current Liabilities: |
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Current maturities of long-term debt |
166,549 |
222,718 |
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Accounts payable |
87,600 |
104,590 |
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Accounts payable to related parties |
9,143 |
8,680 |
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Air traffic liability |
435,827 |
395,580 |
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Frequent flyer deferred revenue |
35,386 |
35,368 |
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Taxes and interest payable |
71,216 |
68,483 |
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Employee benefits obligations |
33,360 |
41,707 |
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Income tax payable |
6,585 |
1,401 |
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Other Current Liabilities |
5,279 |
4,385 |
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TOTAL CURRENT LIABILITIES |
850,945 |
882,912 |
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Long-term debt |
1,007,866 |
961,414 |
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Other long – term liabilities |
121,883 |
114,268 |
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Deferred tax Liabilities |
41,467 |
44,974 |
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TOTAL NON-CURRENT LIABILITIES |
1,171,216 |
1,120,656 |
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TOTAL LIABILITIES |
2,022,161 |
2,003,568 |
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EQUITY |
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Class A – 33,765,298 issued and 31,177,904 outstanding |
20,951 |
20,988 |
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Class B – 10,938,125 shares issued and outstanding |
7,466 |
7,466 |
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Additional Paid-In Capital |
67,582 |
64,986 |
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Treasury Stock |
(136,388) |
(136,388) |
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Retained Earnings |
1,865,477 |
1,552,547 |
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Net Income |
102,385 |
334,544 |
|
Other Comprehensive Income |
(1,859) |
(1,872) |
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TOTAL EQUITY |
1,925,614 |
1,842,271 |
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TOTAL EQUITY LIABILITIES |
3,947,775 |
3,845,839 |
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Copa Holdings, S. A. and subsidiaries |
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Consolidated Statement of Cash Flows |
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For the three months ended March 31, |
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(In US$ thousands) |
|||||||||||||
|
2017 |
2016 |
2015 |
|||||||||||
|
(Unaudited) |
(Unaudited) |
(Unaudited) |
|||||||||||
|
Cash flow from operating activities |
132,752 |
118,934 |
83,361 |
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Cash flow used in investing activities |
(74,800) |
(42,044) |
(16,479) |
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Cash flow used in financing activities |
(119,743) |
(71,652) |
(67,916) |
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Net (decrease) increase in cash and cash equivalents |
(61,791) |
5,238 |
(1,034) |
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Cash and cash equivalents at January 1 |
331,687 |
204,715 |
221,443 |
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Cash and cash equivalents at March 31 |
$ 269,896 |
$ 209,953 |
$ 220,409 |
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Short-term investments |
570,497 |
457,505 |
332,000 |
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Long-term investments * |
954 |
864 |
558,290 |
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Restricted cash and cash equivalents ** |
– |
55,611 |
48,872 |
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Total cash and cash equivalents and investments at March 31 |
$ 841,347 |
$ 723,933 |
$ 1,159,571 |
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* Long term investments include $452.4 million at March 2015 of cash in Venezuela. |
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** Restricted cash corresponds to margin calls to secure derivative financial instruments transactions. |
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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:
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Reconciliation of Adjusted Net Income |
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|
and Adjusted EPS |
1Q17 |
1Q16 |
4Q16 |
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|
Net profit as Reported |
$102,314 |
$115,452 |
$90,544 |
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Special Items (adjustments): |
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|
Gain (loss) on foreign currency fluctuations |
18,134 |
11,501 |
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|
Net change in fair value of derivatives |
(860) |
27,432 |
24,341 |
|||
|
Adjusted Net Income |
$103,174 |
$69,886 |
$54,702 |
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Shares used for Computation (in thousands) |
||||||
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Basic and Diluted |
42,396 |
42,191 |
42,383 |
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Adjusted earnings per share – Basic and Diluted |
2.43 |
1.66 |
1.29 |
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Reconciliation of Operating Costs per ASM |
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Excluding Fuel and Special Items |
1Q17 |
1Q16 |
4Q16 |
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Operating Costs per ASM as Reported |
8.6 |
8.3 |
9.5 |
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Aircraft fuel per ASM |
(2.3) |
(2.2) |
(2.5) |
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Operating Costs per ASM excluding fuel |
6.2 |
6.1 |
6.9 |
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