Copa Holdings Reports Financial Results for the Fourth Quarter of 2019

Feb 12, 2020
Reported net profit came in at $2.7 million, or EPS $0.06. Excluding Special Items, adjusted net profit came in at $92.1 million, or Adjusted EPS of $2.17

PANAMA CITY, Feb. 12, 2020 /PRNewswire/ -- Copa Holdings, S.A. (NYSE: CPA), today announced financial results for the fourth quarter of 2019 (4Q19) and full year 2019. 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 2018 (4Q18).

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 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 a net profit of US$2.7 million for 4Q19 or earnings per share (EPS) of US$0.06, as compared to a net loss of US$155.8 million or loss per share of US$3.67 in 4Q18. Excluding Special Items, which for 4Q19 included a non-cash fleet impairment charge of US$89.3 million, and for 4Q18 included a non-cash fleet impairment charge of US$188.6 million and a non-cash US$11.4 million-dollar foreign currency translation loss (Special Items), the Company would have reported a net profit of US$92.1 million, or adjusted EPS of US$2.17 in 4Q19, compared to an adjusted net profit of US$44.1 million or adjusted EPS of US$1.04 in 4Q18.
  • For full year 2019, net profit came in at US$247 million or EPS of US$5.81, compared to a net profit of US$88.1 million or earnings per share of US$2.07 for full year 2018. Excluding Special Items, which for 2019 included a non-cash fleet impairment charge of US$89.3 million, and for 2018 included a non-cash fleet impairment charge of US$188.6 million and a non-cash US$11.4 million-dollar foreign currency translation loss, Copa Holdings would have reported an adjusted net profit of US$336.3 million or EPS of US$7.92 in 2019, compared to an adjusted net profit of US$276.7 million or adjusted EPS of US$6.52 in 2018.
  • In 4Q19, the Company had an operating profit of US$17.8 million, compared to an operating loss of US$126.4 million in 4Q18. Excluding Special Items, namely the fleet impairment charges in 4Q19 and 4Q18, The Company would have reported an Operating profit of US$107.1 million in 4Q19, compared to an operating profit of US$62.2 million in 4Q18. Excluding Special Items, operating margin for 4Q19 would have come in at 15.7%, compared to 9.5% in 4Q18.
  • For full year 2019, the Company reported operating profit of US$346.2 million. Excluding Special Items, the Company would have reported an operating profit of US$435.5 million, representing an increase of 25.1% over adjusted operating profit of US$348.1 million for full year 2018, mostly due to stronger unit revenues and lower jet fuel prices. Excluding Special Items, operating margin for full year 2019 would have come in at 16.1%.
  • Total revenues for 4Q19 increased 3.9% to US$681.9 million, despite a 4.6% capacity contraction. Yield per passenger mile increased 6.0% to 12.5 cents, and load factors improved 2.5 percentage points year over year to 85.3%. Revenue per available seat mile (RASM) came in at 11.1 cents, or 8.9% higher than 4Q18.
  • For full year 2019, consolidated load factor was 84.8%, 1.4 percentage points higher than 2018 on a 2.7% capacity reduction.
  • Operating cost per available seat mile (CASM), excluding Special Items (Adjusted CASM) increased 1.4%, from 9.2 cents in 4Q18 to 9.3 cents in 4Q19. Adjusted CASM excluding fuel costs increased 6.4% from 6.2 cents in 4Q18 to 6.6 cents in 4Q19, mainly as a result of lower capacity, as well as expenses, associated to the Boeing MAX fleet grounding.
  • Cash, short-term and long-term investments ended 2019 at US$985.5 million, representing 36% of the last twelve months' revenues.
  • Copa Holdings ended the year with a consolidated fleet of 102 aircraft – 6 Boeing 737MAX9s, 68 Boeing 737-800s, 14 Boeing 737-700s, and 14 Embraer 190s.
  • As was previously reported, during the fourth quarter the Company announced its intention to sell its remaining 14 Embraer 190s over the next two years duly classifying these assets as available for sale. As such, a US$89.3 million impairment charge was booked in 4Q19.
  • For 2019, Copa Airlines ended the year with a consolidated on-time performance of 91.9% and a flight-completion factor of 99.8%, maintaining its position among the best in the industry.

Subsequent Events  

  • In January 2020, the company was recognized by FlightStats – for the seventh consecutive year – as the most on-time airline in Latin America, and by OAG as the second most on-time airline in the world.
  • On February 12, 2020, the Board of Directors of Copa Holdings approved a 2020 quarterly dividend payment of 80 cents per share. Dividends will be distributed during the months of March, June, September and December. The first quarterly dividend of 80 cents per share will be paid on March 13 to shareholders on record as of February 28, 2020.
  • As part of the world-wide grounding of the Boeing MAX fleet, the Company has removed all Boeing MAX operations from its schedule until the end of August of 2020.

 

 

Consolidated Financial
& Operating Highlights

4Q19

4Q18*

Variance
vs. 4Q18*

3Q19

Variance
vs. 3Q19

FY19

FY18*

Variance
vs. FY18*

Revenue Passengers Carried ('000)

2,633

2,554

3.1%

2,703

-2.6%

10,474

10,069

4.0%

RPMs (mm) 

5,244

5,335

-1.7%

5,466

-4.1%

21,303

21,529

-1.0%

ASMs (mm) 

6,149

6,445

-4.6%

6,383

-3.7%

25,113

25,817

-2.7%

Load Factor 

85.3%

82.8%

2.5 p.p.

85.6%

-0.4 p.p.

84.8%

83.4%

1.4 p.p.

Yield

12.5

11.8

6.0%

12.5

0.1%

12.3

12.0

2.0%

PRASM (US$ Cents) 

10.7

9.8

9.2%

10.7

-0.3%

10.4

10.0

3.8%

RASM (US$ Cents) 

11.1

10.2

8.9%

11.1

0.0%

10.8

10.4

3.9%

CASM (US$ Cents) 

10.8

12.1

-11.0%

9.0

19.8%

9.4

9.8

3.6%

Adjusted CASM (US$ Cents) (1)

9.3

9.2

1.4%

9.0

3.7%

9.0

9.0

-0.3%

CASM Excl. Fuel (US$ Cents) 

8.0

9.1

-11.9%

6.2

28.6%

6.6

6.8

2.3%

Adjusted CASM Excl. Fuel (US$ Cents) (1)

6.6

6.2

6.4%

6.2

5.3%

6.3

6.1

-3.6%

Fuel Gallons Consumed (Millions) 

78.9

82.1

-3.9%

82.0

-3.7%

321.4

328.1

2.0%

Avg. Price Per Fuel Gallon (US$ Dollars)

2.16

2.38

-9.2%

2.16

0.1%

2.16

2.32

7.2%

Average Length of Haul (Miles)

1,992

2,089

-4.6%

2,022

-1.5%

2,034

2,138

-4.9%

Average Stage Length (Miles)

1,279

1,299

-1.5%

1,295

-1.2%

1,288

1,321

-2.5%

Departures

32,441

33,541

-3.3%

33,373

-2.8%

131,819

132,498

-0.5%

Block Hours

105,620

111,315

-5.1%

109,614

-3.6%

431,749

444,851

-2.9%

Average Aircraft Utilization (Hours)

11.3

11.7

-3.6%

11.5

-2.1%

45.8

12.0

281.8%

Operating Revenues (US$ mm) 

681.9

656.1

3.9%

708.2

-3.7%

2,707.4

2,677.6

1.1%

Operating Profit (US$ mm)

17.8

-126.4

n/m  

132.9

-86.6%

346.2

159.5

117.1%

Adjusted Operating Profit (US$ mm) (1)

107.1

62.2

72.1%

132.9

-19.4%

435.5

348.1

25.1%

Operating Margin 

2.6%

-19.3%

21.9 p.p.

18.8%

-16.2 p.p.

12.8%

6.0%

6.8 p.p.

Adjusted Operating Margin (1)

15.7%

9.5%

6.2 p.p.

18.8%

-3.0 p.p.

16.1%

13.0%

3.1 p.p.

Net Profit (US$ mm)

2.7

-155.8

n/m

104.0

-97.4%

247.0

88.1

180.4%

Adjusted Net Profit (US$ mm) (1)

92.1

44.1

108.6%

104.0

-11.5%

336.3

276.7

21.6%

EPS - Basic and Diluted (US$)

0.06

-3.67

n/m

2.45

-97.4%

5.81

2.07

180.3%

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

2.17

1.04

108.5%

2.45

-11.5%

7.92

6.52

21.6%

# of Shares - Basic and Diluted ('000) 

42,487

42,468

0.0%

42,487

0.0%

42,483

42,456

0.1%

 

(1)Adjusted CASM Excl. Fuel, Adjusted Operating Profit, Adjusted Net Profit, Adjusted Operating Margin and Adjusted EPS for 4Q19, 4Q18, 3Q19, 2019 and 2018 exclude non-cash charges/gains associated with the Embraer 190 Fleet impairment and a currency translation effects.

 

*  Restated for the retrospective adoption of IFRS 16

 

 

Note:  Attached to this press release is a reconciliation of non-IFRS financial measures to the comparable IFRS measures.

FULL 4Q19 AND FULL YEAR 2019 EARNINGS RELEASE AVAILABLE FOR DOWNLOAD AT:

https://copa.gcs-web.com/financial-information/quarterly-results

4Q19 AND FULL YEAR 2019 EARNINGS RESULTS CONFERENCE CALL AND WEBCAST

Date:

February 13, 2020

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:

https://copa.gcs-web.com/events-and-presentations

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 80 destinations in 33 countries in North, Central and South America and the Caribbean with one of the youngest and most modern fleets in the industry, consisting of 102 aircraft: 6 Boeing 737MAX9s, 82 Boeing 737NGs and 14 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.

Copa Holdings, S.A.

                               

Income Statement - IFRS

                               

(US$ Thousands)

                               
                                 
   

Unaudited

 

Unaudited

 

%

 

Unaudited

 

%

         

%

   

4Q19

 

4Q18*

 

Change

 

3Q19

 

Change

 

FY 2019

 

FY 2018*

 

Change

Operating Revenues

                               

Passenger revenue

 

657,940

 

631,762

 

4.1%

 

685,337

 

-4.0%

 

2,612,605

 

2,587,389

 

1.0%

Cargo and mail revenue

 

16,033

 

16,224

 

-1.2%

 

14,647

 

9.5%

 

62,460

 

62,483

 

0.0%

Other operating revenue

 

7,955

 

8,077

 

-1.5%

 

8,226

 

-3.3%

 

32,343

 

27,755

 

16.5%

Total Operating Revenue

 

681,927

 

656,063

 

3.9%

 

708,210

 

-3.7%

 

2,707,409

 

2,677,627

 

1.1%

                                 

Operating Expenses

                               

Fuel

 

171,314

 

196,230

 

-12.7%

 

177,603

 

-3.5%

 

696,249

 

765,781

 

-9.1%

Wages, salaries, benefits and other employees' expenses

 

115,036

 

114,394

 

0.6%

 

113,398

 

1.4%

 

450,438

 

443,287

 

1.6%

Passenger servicing

 

24,798

 

26,284

 

-5.7%

 

26,204

 

-5.4%

 

102,103

 

104,346

 

-2.1%

Airport facilities and handling charges

 

44,877

 

48,514

 

-7.5%

 

47,022

 

-4.6%

 

181,959

 

186,422

 

-2.4%

Sales and distribution

 

53,222

 

51,787

 

2.8%

 

52,980

 

0.5%

 

210,623

 

210,158

 

0.2%

Maintenance, materials and repairs

 

37,648

 

27,486

 

37.0%

 

30,632

 

22.9%

 

127,562

 

110,710

 

15.2%

Depreciation and amortization

 

70,469

 

66,478

 

6.0%

 

72,876

 

-3.3%

 

282,081

 

276,563

 

2.0%

Flight operations

 

24,908

 

27,922

 

-10.8%

 

26,572

 

-6.3%

 

102,806

 

108,437

 

-5.2%

Other operating and administrative expenses

 

32,506

 

34,719

 

-6.4%

 

28,047

 

15.9%

 

118,090

 

123,835

 

-4.6%

Fleet Impairment

 

89,344

 

188,624

 

-52.6%

 

-

 

n/m

 

89,344

 

188,624

 

-52.6%

Total Operating Expense

 

664,123

 

782,439

 

-15.1%

 

575,334

 

15.4%

 

2,361,255

 

2,518,163

 

-6.2%

                                 

Operating Profit

 

17,804

 

(126,376)

 

n/m

 

132,876

 

-86.6%

 

346,154

 

159,464

 

117.1%

                                 

Non-operating Income (Expense):

                               

Finance cost

 

(17,154)

 

(12,791)

 

34.1%

 

(12,696)

 

35.1%

 

(57,432)

 

(50,826)

 

13.0%

Finance income

 

6,289

 

6,115

 

2.9%

 

6,121

 

2.7%

 

24,405

 

23,628

 

3.3%

Gain (loss) on foreign currency fluctuations

 

2,406

 

(18,210)

 

n/m

 

(9,641)

 

n/m

 

(15,408)

 

(9,398)

 

63.9%

Other non-operating income (expense)

 

(989)

 

(496)

 

99.5%

 

(350)

 

182.4%

 

(4,279)

 

(239)

 

1687.8%

Total Non-Operating Income/(Expense)

 

(9,448)

 

(25,383)

 

-62.8%

 

(16,567)

 

-43.0%

 

(52,715)

 

(36,835)

 

43.1%

                                 

Profit before taxes

 

8,356

 

(151,759)

 

n/m

 

116,309

 

-92.8%

 

293,439

 

122,629

 

139.3%

                                 

Income tax expense

 

5,629

 

4,087

 

37.7%

 

12,332

 

-54.4%

 

46,437

 

34,553

 

34.4%

                                 

Net Profit

 

2,728

 

(155,846)

 

n/m

 

103,978

 

-97.4%

 

247,002

 

88,075

 

180.4%

                                 
                                 

EPS - Basic and Diluted

 

0.06

 

-3.67

 

-101.7%

 

2.45

 

-97.4%

 

5.81

 

2.07

 

180.3%

Shares - Basic and Diluted

 

42,486,717

 

42,468,402

 

0.0%

 

42,487,355

 

0.0%

 

42,483,048

 

42,456,032

 

0.1%

                                 

 *  Restated for retrospective adoption of IFRS 16 

                               
                                 

 

 

Consolidated Statement of Cash Flows

           

For the twelve months ended December 31

           

(In US$ thousands)

               
                   

2019

 

2018

 

2017

                   

(Unaudited)

 

(Unaudited)

 

(Unaudited)

Cash flow from operating activities 

 

782,979

 

497,153

 

798,194

Cash flow used in investing activities 

 

(235,071)

 

(149,596)

 

(578,159)

Cash flow used in financing activities 

 

(545,334)

 

(430,191)

 

(312,930)

Net increase (decrease) in cash and cash equivalents 

 

2,574

 

(82,634)

 

(92,895)

Cash and cash equivalents at January 1

 

156,158

 

238,792

 

331,687

Cash and cash equivalents at December 31

 

$               158,732

 

$               156,158

 

$               238,792

                             

Short-term investments 

   

692,403

 

566,200

 

705,108

Long-term investments 

   

134,347

 

138,846

 

65,953

Total cash and cash equivalents and investments at December 31

 

$               985,482

 

$               861,204

 

$            1,009,853

                             

 

 

Copa Holdings, S. A. and subsidiaries 

   

Consolidated statement of financial position 

   

(US$ Thousands)

December

December 31

 

2019

2018

 

 (Unaudited) 

 (Restated) * 

 ASSETS 

   
     

 Current Assets 

   

Cash and cash equivalents

158,732

156,158

Short-term investments

692,403

566,200

Total cash, cash equivalents and short-term investments

851,135

722,358

     

Accounts receivable, net

129,634

115,831

Accounts receivable from related parties

147

223

Expendable parts and supplies, net

69,100

86,530

Prepaid expenses

38,953

70,237

Prepaid income tax

1,181

10,357

Other current assets

14,206

14,056

 

253,221

297,234

Assets held for sale 

120,006

40,330

     

TOTAL CURRENT ASSETS

1,224,362

1,059,922

     

Long-term investments

134,347

138,846

Long-term accounts receivable

2,139

1,177

Long-term prepaid expenses

17,743

25,637

Property and equipment, net

2,532,402

2,698,131

Right of use assets

290,843

361,993

Intangible, net

108,116

101,168

Net pension asset

248

5,091

Deferred tax assets

19,216

16,041

Other Non-Current Assets

17,881

33,899

TOTAL NON-CURRENT ASSETS

3,122,934

3,381,983

     

TOTAL ASSETS

4,347,296

4,441,905

     

Current maturities of long-term debt

117,238

311,965

Current portion of lease liability

97,732

102,452

Accounts payable

109,252

124,962

Accounts payable to related parties

14,086

14,673

Air traffic liability

497,374

471,676

Frequent flyer deferred revenue

80,326

67,815

Taxes and interest payable

51,611

44,749

Employee benefits obligations

55,373

47,390

Income tax payable

9,683

-

Other Current Liabilities

83

604

TOTAL CURRENT LIABILITIES

1,032,758

1,186,287

     

Long-term debt

938,182

975,283

Lease Liability

206,832

273,231

Other long - term liabilities

191,221

161,571

Deferred tax Liabilities

43,397

48,940

TOTAL NON-CURRENT LIABILITIES

1,379,633

1,459,025

     

TOTAL LIABILITIES

2,412,391

2,645,312

     

 EQUITY 

   

 Issued Capital 

   

Class A -33,835,747 issued and 31,337,856  outstanding

21,142

21,087

Class B common stock - 10,938,125

7,466

7,466

Additional Paid-In Capital

86,135

80,041

Treasury Stock

(136,388)

(136,388)

Retained Earnings

1,718,176

1,828,615

Net profit 

247,002

-

Other comprehensive loss

(8,628)

(4,227)

     

TOTAL EQUITY

1,934,905

1,796,594

     

TOTAL EQUITY LIABILITIES

4,347,296

4,441,905

     
     

*Restated for the retrospective adoption of IFRS16.

   

 

Copa Holdings, S.A.

NON-IFRS FINANCIAL MEASURE RECONCILIATION

This press release includes the following non IFRS financial measures: Adjusted CASM Excluding Fuel, CASM Excluding Fuel, Adjusted Operating Profit, Adjusted Net Profit 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 Profit and Net Profit. The following is a reconciliation of these non-IFRS financial measures to the comparable IFRS measures:

Reconciliation of Adjusted Operating Profit,

                   

Adjusted Net Profit and Adjusted EPS

 

4Q19

 

4Q18*

 

3Q19

 

FY19

 

FY18*

                     

Operating Profit as Reported

 

$          17,804

 

$       (126,376)

 

$        132,876

 

$        346,154

 

$        159,464

Special Items (adjustments):

                   

Fleet Impairment

 

$          89,344

 

$        188,624

     

$          89,344

 

$        188,624

                     

Adjusted Operating Profit

 

$        107,148

 

$          62,248

 

$        132,876

 

$        435,497

 

$        348,088

                     

Net profit as Reported

 

$            2,728

 

$      (155,846)

 

$        103,978

 

$        247,002

 

$          88,075

Special Items (adjustments):

                   

Fleet Impairment

 

$          89,344

 

$        188,624

 

$                    -

 

$          89,344

 

$        188,624

Loss on foreign currency fluctuations

     

$          11,364

           
                     

Adjusted Net Profit

 

$          92,071

 

$          44,143

 

$        103,978

 

$        336,346

 

$        276,699

                     

Shares used for Computation (in thousands)

                   

     Basic and Diluted

 

42,487

 

42,468

 

42,487

 

42,483

 

42,456

                     

Adjusted earnings per share - Basic and Diluted

 

$              2.17

 

$              1.04

 

$              2.45

 

$              7.92

 

$              6.52

                     
                     
                     

Reconciliation of Adjusted Operating Costs per ASM

                   

Excluding Fuel (Adjusted CASM Excl. Fuel)

 

4Q19

 

4Q18*

 

3Q19

 

FY19

 

FY18*

                     

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

 

10.8

 

12.1

 

9.0

 

9.4

 

9.8

Fleet Impairment per ASM (in US$ Cents)

 

(1.5)

 

(2.9)

 

-

 

(0.3)

 

(0.7)

Aircraft fuel per ASM  (in US$ Cents)

 

(2.8)

 

(3.0)

 

(2.8)

 

(2.8)

 

(3.0)

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

 

6.6

 

6.2

 

6.2

 

6.3

 

6.1

                     

 *  Restated for retrospective adoption of IFRS 16 

 

 

Cision View original content:http://www.prnewswire.com/news-releases/copa-holdings-reports-financial-results-for-the-fourth-quarter-of-2019-301003973.html

SOURCE Copa Holdings, S.A.

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