Copa Holdings Reports Net Income of US$6.2 Million and EPS of US$0.14 for the Third Quarter of 2015

Nov 12, 2015

Copa Holdings Reports Net Income of US$6.2 Million and EPS of US$0.14 for the Third Quarter of 2015 47.3 KB

PANAMA CITY, Nov. 12, 2015 /PRNewswire/ -- Copa Holdings, S.A. (NYSE: CPA), today announced financial results for the third quarter of 2015 (3Q15). The terms "Copa Holdings" or "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 financial tables section of this earnings release. Unless otherwise stated, all comparisons with prior periods refer to the third quarter of 2014 (3Q14).

OPERATING AND FINANCIAL HIGHLIGHTS

Copa Holdings reported net income of US$6.2 million for 3Q15, or diluted earnings per share (EPS) of US$0.14. Excluding special items, Copa Holdings would have reported an adjusted net income of $37.4 million, or $0.85 per share, a 62.5% decrease from adjusted net income of US$99.8 million and US$2.25 per share for 3Q14.
Operating income for 3Q15 came in at US$50.6 million, a 54.5% decrease from operating income of US$111.1 million in 3Q14. Operating margin for the period came in at 9.2% or 7.5 percentage points below 3Q14, as a result of lower unit revenues.
Total revenues decreased 17.5% to US$547.2 million. Yield per passenger mile decreased 20.1% to 12.7 cents and operating revenue per available seat mile (RASM) decreased 19.1% to 10.1 cents.
For 3Q15, passenger traffic (RPMs) grew 1.8% on a 1.9% capacity expansion. As a result, consolidated load factor came in at 76.3%, or 0.1 percentage points below 3Q14.
Operating cost per available seat mile (CASM) declined 11.8% to 9.2 cents. CASM, excluding fuel, increased 0.3% to 6.4 cents.
Cash, short term and long term investments ended 3Q15 at US$1.08 billion, representing 45% of the last twelve months' revenues. Of this amount, 39% is in Venezuela pending repatriation due to government currency controls.
During the third quarter, as part of the Company's share repurchase program, Copa Holdings entered into a US$100 million accelerated share repurchase program (ASR).
During the third quarter, Copa Airlines took delivery of two Boeing 737-800 aircraft. As a result, Copa Holdings ended the quarter with a consolidated fleet of 99 aircraft.
For 3Q15, Copa Holdings reported consolidated on-time performance of 89.8% and a flight-completion factor of 99.8%, maintaining its position among the best in the industry.

SUBSEQUENT EVENTS

4Q15 Dividend Payment - Copa Holdings will pay its fourth quarter dividend of US$0.84 per share on December 15, 2015, on all outstanding Class A and Class B shares, to stockholders of record as of November 30, 2015.



Consolidated Financial & Operating Highlights	3Q15	3Q14	% Change	2Q15	% Change
Revenue Passengers Carried ('000)	1,987	1,937	2.6%	1,868	6.4%
RPMs (mm)	4,116	4,043	1.8%	3,933	4.6%
ASMs (mm)	5,397	5,296	1.9%	5,359	0.7%
Load Factor	76.3%	76.3%	-0.1 p.p.	73.4%	2.9 p.p.
Yield	12.7	15.9	-20.1%	13.2	-3.9%
PRASM (US$ Cents)	9.7	12.2	-20.2%	9.7	0.5%
RASM (US$ Cents)	10.1	12.5	-19.1%	10.0	0.9%
CASM (US$ Cents)	9.2	10.4	-11.8%	9.1	0.8%
CASM Excl. Fuel (US$ Cents)	6.4	6.4	0.3%	6.2	3.5%
Breakeven Load Factor ⁽¹⁾	69.8%	62.2%	7.6 p.p.	66.0%	3.8 p.p.
Fuel Gallons Consumed (Millions)	69.2	68.2	1.5%	67.9	1.9%
Avg. Price Per Fuel Gallon (US$ Dollars)	2.16	3.12	-30.8%	2.30	-6.1%
Average Length of Haul (Miles)	2,071	2,088	-0.8%	2,105	-1.6%
Average Stage Length (Miles)	1,233	1,236	-0.2%	1,243	-0.8%
Departures	30,619	30,325	1.0%	30,094	1.7%
Block Hours	97,053	95,819	1.3%	95,694	1.4%
Average Aircraft Utilization (Hours)	10.8	11.0	-1.8%	10.8	-0.4%
Operating Revenues (US$ mm)	547.2	663.7	-17.5%	538.4	1.7%
Operating Income (US$ mm)	50.6	111.1	-54.5%	49.2	2.8%
Operating Margin	9.2%	16.7%	-7.5 p.p.	9.1%	0.1 p.p.
Net Income (US$ mm)	6.2	66.0	-90.6%	64.1	-90.3%
Adjusted Net Income (US$ mm) ⁽¹⁾	37.4	99.8	-62.5%	41.0	-8.7%
EPS - Basic and Diluted (US$)	0.14	1.49	-90.5%	1.46	-90.3%
Adjusted EPS - Basic and Diluted (US$) ⁽¹⁾	0.85	2.25	-62.2%	0.93	-8.7%
# of Shares - Basic and Diluted ('000)	44,030	44,404	-0.8%	44,038	0.0%

⁽¹⁾Breakeven Load Factor, Adjusted Net Income and Adjusted EPS for 3Q15, 3Q14, and 2Q15 exclude non-cash charges/gains associated with the mark-to-market of fuel hedges and charges/gains related to the Venezuelan currency. . Additionally, 3Q15 exclude mark-to-market of share repurchase. Note: Attached to this press release is a reconciliation of non-IFRS financial measures to the comparable IFRS measures.

FULL 3Q15 EARNINGS RELEASE AVAILABLE FOR DOWNLOAD AT: http://investor.shareholder.com/copa/results.cfm

3Q15 EARNINGS RESULTS CONFERENCE CALL AND WEBCAST

Date:	November 13, 2015
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
	Jose 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: 76 Boeing 737NG aircraft and 25 EMBRAER-190s. For more information visit: www.copa.com.

CONTACT: Copa Holdings S.A.
Investor Relations:
Ph: (507) 304-2431
www.copaair.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	%
	3Q15	3Q14	Change	2Q15	Change
Operating Revenues
Passenger Revenue	523,531	643,719	-18.7%	517,508	1.2%
Cargo, mail and other	23,716	19,974	18.7%	20,846	13.8%
Total Operating Revenue	547,247	663,693	-17.5%	538,354	1.7%

Operating Expenses
Aircraft fuel	149,197	212,591	-29.8%	155,908	-4.3%
Salaries and benefits	71,902	74,016	-2.9%	69,204	3.9%
Passenger servicing	65,175	68,791	-5.3%	63,315	2.9%
Commissions	22,632	22,934	-1.3%	20,383	11.0%
Reservations and sales	19,636	22,122	-11.2%	22,033	-10.9%
Maintenance, material and repairs	25,946	24,186	7.3%	27,999	-7.3%
Depreciation	35,485	28,070	26.4%	33,855	4.8%
Flight operations	30,928	34,014	-9.1%	32,605	-5.1%
Aircraft rentals	30,409	28,083	8.3%	30,034	1.3%
Landing fees and other rentals	14,585	13,498	8.1%	14,889	-2.0%
Other	30,796	24,327	26.6%	18,973	62.3%
Total Operating Expense	496,691	552,633	-10.1%	489,197	1.5%

Operating Income	50,556	111,060	-54.5%	49,157	2.8%

Non-operating Income (Expense):
Interest expense	(8,271)	(7,603)	8.8%	(8,372)	-1.2%
Interest income	5,728	4,348	31.7%	5,789	-1.1%
Other, net	(37,600)	(36,157)	4.0%	24,657	n/m
Total Non-Operating Income/(Expense)	(40,143)	(39,412)	1.9%	22,074	n/m

Income before Income Taxes	10,413	71,648	-85.5%	71,231	-85.4%

Provision for Income Taxes	4,200	5,667	-25.9%	7,134	-41.1%

Net Income	6,213	65,980	-90.6%	64,097	-90.3%


EPS - Basic and Diluted	0.14	1.49	-90.5%	1.46	-90.3%
Shares - Basic and Diluted	44,030,111	44,403,578	-0.8%	44,037,684	0.0%


Copa Holdings, S.A.
Balance Sheet - IFRS
(US$ Thousands)	September 30,	December 31,
	2015	2014
	(Unaudited)	(Audited)
ASSETS
Current Assets:
Cash and cash equivalents	$ 121,540	$ 221,443
Restricted cash and cash equivalents	48,702	52,425
Short-term investments	484,242	492,735
Total cash, cash equivalents and short-term investments	654,483	766,603

Accounts receivable, net of allowance for doubtful accounts	123,096	121,258
Accounts receivable from related parties	1,826	892
Expendable parts and supplies, net of allowance for obsolescence	59,910	59,954
Prepaid expenses	52,565	56,793
Other current assets	81,243	5,949
Total Current Assets	973,124	1,011,449

Long-term investments	428,259	396,802

Property and Equipment:
Owned property and equipment:
Flight equipment	2,955,926	2,725,407
Other equipment	98,021	89,257
	3,053,947	2,814,664
Less: Accumulated depreciation	(720,511)	(630,503)
	2,333,436	2,184,161
Purchase deposits for flight equipment	276,504	321,175
Total Property and Equipment	2,609,941	2,505,336

Other Assets:
Net pension asset	21,341	13,784
Goodwill	19,243	20,380
Intangible asset	45,335	36,915
Deferred tax Assets	22,594	17,235
Other assets	72,097	88,973
Total Other Assets	180,611	177,287
Total Assets	$ 4,191,935	$ 4,090,874


LIABILITIES AND SHAREHOLDER'S EQUITY
Current Liabilities:
Current maturities of long-term debt	$ 258,990	$ 187,646
Accounts payable	105,555	125,412
Accounts payable to related parties	10,712	6,749
Air traffic liability	352,283	408,012
Taxes and interest payable	59,809	58,554
Accrued expenses payable	63,432	85,847
Other current liabilities	105,901	109,277
Total Current Liabilities	956,682	981,497

Non-Current Liabilities:
Long-term debt	997,657	928,964
Post employment benefits liability	16,588	11,262
Other long-term liabilities	66,006	57,747
Deferred tax liabilities	45,940	36,296
Total Non-Current Liabilities	1,126,192	1,034,269

Total Liabilities	2,082,874	2,015,766

Shareholders' Equity:
Class A - 33,456,095 issued and 32,477,353 outstanding	20,924	20,859
Class B - 10,938,125 shares issued and outstanding	7,466	7,466
Additional paid in capital	56,390	53,486
Treasury Stock	(58,080)	(18,426)
Retained earnings	2,083,801	2,011,485
Accumulated other comprehensive income (loss)	(1,439)	238
Total Shareholders' Equity	2,109,061	2,075,108
Total Liabilities and Shareholders' Equity	$ 4,191,935	$ 4,090,874

Copa Holdings, S. A. and subsidiaries

Consolidated Statement of Cash Flows

For the nine months ended September 30,

(In US$ thousands)

2015

2014

2013

(Unaudited)

Cash flow from operating activities

236,743

148,334

563,727

Cash flow used in investing activities

(223,658)

(165,328)

(26,314)

Cash flow (used) from in financing activities

(98,982)

64,622

(138,325)

Net (decrease) increase in cash and cash equivalents

(85,897)

47,628

399,088

Cash and cash equivalents at December 31

207,437

139,110

76,094

Cash and cash equivalents at September 30 *

$ 121,540

$ 186,738

$ 475,182

Short-term investments **

484,242

698,945

499,047

Long-term investments ***

428,259

240,097

46,590

Restricted cash and cash equivalents ****

48,702

Total cash and cash equivalents and investments at September 30

$ 1,082,743

$ 1,125,780

$ 1,020,819

* At September 2015 and 2014, cash and cash equivalents include $11 million and $7 million, respectively, of cash in Venezuela which the Company expects to use over the next quarter as part of the normal operations in that country.

** Short term - investments include $265 million of cash in Venezuela at September 2014.

*** Long term - investments include $427 million and $239 million at September 2015 and 2014 of cash in Venezuela, respectively.

**** Restricted cash correspond to a margin calls to secure derivative financial instruments transactions.

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 Net Income
Excluding Special Items	3Q15	3Q14	2Q15

Net income as Reported	$6,213	$65,980	$64,097

Special Items (adjustments):
Unrealized (gain) loss on fuel hedging instruments	26,800	28,293	(23,409)
(Loss) gain due to devaluation of Venezuelan Bolivar	(2,100)	(5,516)	(294)
Unrealized (gain) loss on shares repurchase	2,296
Adjusted Net Income	$37,408	$99,789	$40,982

Shares used for Computation (in thousands)
Basic and Diluted	44,030	44,404	44,038

Adjusted earnings per share - Basic and Diluted	0.85	2.25	0.93

Reconciliation Operating Costs per ASM
Excluding Fuel and Special Items	3Q15	3Q14	2Q15

Operating Costs per ASM as Reported	9.2	10.4	9.1
Aircraft fuel per ASM	(2.8)	(4.0)	(2.9)
Operating Costs per ASM excluding fuel	6.4	6.4	6.2

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/copa-holdings-reports-net-income-of-us62-million-and-eps-of-us014-for-the-third-quarter-of-2015-300178068.html

SOURCE Copa Holdings, S.A.

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News Release Details

Copa Holdings Reports Net Income of US$6.2 Million and EPS of US$0.14 for the Third Quarter of 2015