Copa Holdings Reports Net Income of $103.8 million and EPS of $2.45 for the Third Quarter of 2017
OPERATING AND FINANCIAL HIGHLIGHTS
Copa Holdings reported net income ofUS$103.8 million for 3Q17 or earnings per share (EPS) ofUS$2.45 , compared to net income ofUS$74.0 million or earnings per share ofUS$1.75 in 3Q16.- Excluding special items, the Company would have reported an adjusted net income of
US$100.8 million , or adjusted EPS ofUS$2.38 , compared to an adjusted net income ofUS$55.3 million or adjusted EPS ofUS$1.30 in 3Q16. Special items include a non-cash gain ofUS$2.9 million in 3Q17 andUS$19.2 million in 3Q16 related to the mark-to-market of fuel hedge contracts. - Operating income for 3Q17 came in at
US$119.1 million , representing a 56% increase over operating income ofUS$76.4 million in 3Q16, as a result of 13% additional capacity, a 2.4% increase in unit revenue per available seat mile (RASM), and a 3.2% decrease in unit costs. Operating margin for 3Q17 came in at 18.1%, compared to an operating margin of 13.4% in 3Q16. - Total revenues for 3Q17 increased 15.6% to
US$657.2 million . Yield per passenger mile increased 1.3% to12.0 cents and RASM came in at10.6 cents , 2.4% above 3Q16. - For 3Q17, consolidated passenger traffic grew 14.9% while consolidated capacity grew 13.0%. As a result, consolidated load factor for the quarter increased 1.5 percentage points to 85.7%.
- Operating cost per available seat mile (CASM) decreased 3.2%, from
8.9 cents in 3Q16 to8.6 cents in 3Q17. CASM excluding fuel costs decreased 1.2%, from 6.4 in 3Q16 to6.3 cents 3Q17. - Cash, short-term and long-term investments ended 3Q17 at
US$971.5 million , representing 40% of the last twelve months' revenues. Copa Airlines faced several operational challenges during the quarter, including severe weather, natural disasters and other external factors that affected the company´s financial results for the quarter and the operation of its hub inPanama City. These events caused many flight cancelations and delays; as a result, the airline´s Completion Factor and On-Time Performance came in lower than usual, at 98.5% and 82.9%, respectively.
Subsequent Events
Copa Holdings will pay its fourth quarter dividend ofUS$0.75 per share, onDecember 15, 2017 , on all outstanding Class A and Class B shares, to stockholders of record as ofNovember 30, 2017 .
Consolidated Financial |
3Q17 |
3Q16 |
Variance vs. 3Q16 |
2Q17 |
Variance vs. 2Q17 |
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Revenue Passengers Carried ('000) |
2,518 |
2,231 |
12.9% |
2,262 |
11.3% |
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RPMs (mm) |
5,330 |
4,637 |
14.9% |
4,766 |
11.8% |
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ASMs (mm) |
6,221 |
5,506 |
13.0% |
5,796 |
7.3% |
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Load Factor |
85.7% |
84.2% |
1.5 p.p. |
82.2% |
3.4 p.p. |
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Yield |
12.0 |
11.9 |
1.3% |
11.8 |
2.1% |
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PRASM (US$ Cents) |
10.3 |
10.0 |
3.1% |
9.7 |
6.4% |
|||||
RASM (US$ Cents) |
10.6 |
10.3 |
2.4% |
10.0 |
5.9% |
|||||
CASM (US$ Cents) |
8.6 |
8.9 |
-3.2% |
8.5 |
1.2% |
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CASM Excl. Fuel (US$ Cents) |
6.3 |
6.4 |
-1.2% |
6.3 |
0.3% |
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Fuel Gallons Consumed (Millions) |
80.0 |
70.9 |
12.8% |
74.1 |
7.9% |
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Avg. Price Per Fuel Gallon (US$ Dollars) |
1.82 |
1.98 |
-8.0% |
1.77 |
3.3% |
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Average Length of Haul (Miles) |
2,117 |
2,079 |
1.8% |
2,107 |
0.5% |
|||||
Average Stage Length (Miles) |
1,300 |
1,192 |
9.1% |
1,259 |
3.2% |
|||||
Departures |
32,593 |
30,737 |
6.0% |
31,092 |
4.8% |
|||||
|
108,930 |
97,077 |
12.2% |
102,435 |
6.3% |
|||||
Average Aircraft Utilization (Hours) |
11.7 |
10.5 |
11.7% |
11.2 |
4.6% |
|||||
Operating Revenues (US$ mm) |
657.2 |
568.3 |
15.6% |
578.1 |
13.7% |
|||||
Operating Income (US$ mm) |
119.1 |
76.4 |
55.9% |
83.0 |
43.6% |
|||||
Operating Margin |
18.1% |
13.4% |
4.7 p.p. |
14.4% |
3.7 p.p. |
|||||
Net Income (US$ mm) |
103.8 |
74.0 |
40.2% |
63.0 |
64.8% |
|||||
Adjusted Net Income (US$ mm) (1) |
100.8 |
55.3 |
82.4% |
62.8 |
60.6% |
|||||
EPS - Basic and Diluted (US$) |
2.45 |
1.75 |
40.0% |
1.49 |
64.7% |
|||||
Adjusted EPS - Basic and Diluted (US$) (1) |
2.38 |
1.30 |
82.2% |
1.48 |
60.5% |
|||||
# of Shares - Basic and Diluted ('000) |
42,430 |
42,374 |
0.1% |
42,419 |
0.0% |
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(1) Adjusted Net Income and Adjusted EPS for 3Q17, 3Q16 and 2Q17 exclude non-cash charges/gains associated with the mark-to-market of fuel hedges and 3Q16 also excludes the impact of the Venezuelan currency devaluations. |
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Note: Attached to this press release is a reconciliation of non-IFRS financial measures to the comparable IFRS measures. |
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FULL 3Q17 EARNINGS RELEASE AVAILABLE FOR DOWNLOAD AT: http://investor.shareholder.com/copa/results.cfm
3Q17 EARNINGS RESULTS CONFERENCE CALL AND WEBCAST
Date: |
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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: |
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About
CONTACT:
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
CPA-G
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Income Statement - IFRS | ||||||||||||||||||
(US$ Thousands) | ||||||||||||||||||
Unaudited |
Unaudited |
% |
Unaudited |
% | ||||||||||||||
3Q17 |
3Q16* |
Change |
2Q17 |
Change | ||||||||||||||
Operating Revenues |
||||||||||||||||||
Passenger revenue |
641,244 |
550,524 |
16.5% |
561,696 |
14.2% | |||||||||||||
Cargo and mail revenue |
13,600 |
13,390 |
1.6% |
13,994 |
-2.8% | |||||||||||||
Other operating revenue |
2,325 |
4,372 |
-46.8% |
2,398 |
-3.0% | |||||||||||||
Total Operating Revenue |
657,169 |
568,286 |
15.6% |
578,087 |
13.7% | |||||||||||||
Operating Expenses |
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Fuel |
145,968 |
140,567 |
3.8% |
130,878 |
11.5% | |||||||||||||
Wages, salaries, benefits and other employees' expenses |
103,775 |
92,039 |
12.8% |
99,603 |
4.2% | |||||||||||||
Passenger servicing |
27,008 |
21,998 |
22.8% |
22,883 |
18.0% | |||||||||||||
Airport facilities and handling charges |
45,222 |
40,705 |
11.1% |
42,614 |
6.1% | |||||||||||||
Sales and distribution |
50,157 |
47,813 |
4.9% |
48,942 |
2.5% | |||||||||||||
Maintenance, materials and repairs |
39,777 |
32,514 |
22.3% |
27,404 |
45.2% | |||||||||||||
Depreciation and amortization |
41,847 |
35,525 |
17.8% |
40,572 |
3.1% | |||||||||||||
Flight operations |
26,535 |
23,190 |
14.4% |
25,999 |
2.1% | |||||||||||||
Aircraft rentals and other rentals |
33,382 |
34,454 |
-3.1% |
33,614 |
-0.7% | |||||||||||||
Cargo and courier expenses |
1,801 |
1,565 |
15.0% |
1,892 |
-4.8% | |||||||||||||
Other operating and administrative expenses |
22,569 |
21,494 |
5.0% |
20,727 |
8.9% | |||||||||||||
Total Operating Expense |
538,041 |
491,865 |
9.4% |
495,127 |
8.7% | |||||||||||||
Operating Profit |
119,128 |
76,421 |
55.9% |
82,960 |
43.6% | |||||||||||||
Non-operating Income (Expense): |
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Finance cost |
(8,639) |
(9,682) |
-10.8% |
(8,938) |
-3.3% | |||||||||||||
Finance income |
4,801 |
3,505 |
36.9% |
4,249 |
13.0% | |||||||||||||
Gain (loss) on foreign currency fluctuations |
593 |
(352) |
n/m |
(2,858) |
-120.7% | |||||||||||||
Net change in fair value of derivatives |
2,946 |
19,225 |
-84.7% |
175 |
n/m | |||||||||||||
Other non-operating (income) expense |
(616) |
(2,445) |
-74.8% |
(190) |
224.7% | |||||||||||||
Total Non-Operating Income/(Expense) |
(916) |
10,251 |
-108.9% |
(7,561) |
-87.9% | |||||||||||||
Profit before taxes |
118,212 |
86,672 |
36.4% |
75,399 |
56.8% | |||||||||||||
Income tax expense |
14,416 |
12,654 |
13.9% |
12,401 |
16.2% | |||||||||||||
Net Profit |
103,796 |
74,018 |
40.2% |
62,997 |
64.8% | |||||||||||||
EPS - Basic and Diluted |
2.45 |
1.75 |
40.0% |
1.49 |
64.7% | |||||||||||||
Shares - Basic and Diluted |
42,429,841 |
42,374,430 |
0.1% |
42,419,150 |
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. |
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Balance Sheet - IFRS |
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(US$ Thousands) |
|
|
2017 |
2016 | |
(Unaudited) |
Audited | |
ASSETS |
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Current Assets |
||
Cash and cash equivalents |
249,593 |
331,687 |
Restricted cash and cash equivalents |
- |
- |
Short-term investments |
565,994 |
483,002 |
Total cash, cash equivalents and short-term investments |
815,587 |
814,689 |
Accounts receivable, net |
141,173 |
113,408 |
Accounts receivable from related parties |
391 |
499 |
Expendable parts and supplies, net |
78,952 |
74,502 |
Prepaid expenses |
40,540 |
58,370 |
Other current assets |
8,487 |
7,650 |
TOTAL CURRENT ASSETS |
1,085,130 |
1,069,118 |
Long-term investments |
155,953 |
953 |
Long-term accounts receivable |
2,267 |
1,957 |
Long-term prepaid expenses |
29,102 |
26,398 |
Property and equipment, net |
2,780,271 |
2,623,682 |
Intangible, net |
77,275 |
69,502 |
Net pension asset |
4,495 |
8,826 |
Deferred tax assets |
17,225 |
18,339 |
Other Non-Current Assets |
31,592 |
27,064 |
TOTAL NON-CURRENT ASSETS |
3,098,180 |
2,776,721 |
TOTAL ASSETS |
4,183,310 |
3,845,839 |
LIABILITIES AND EQUITY |
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Current Liabilities: |
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Current maturities of long-term debt |
261,167 |
222,718 |
Accounts payable |
109,732 |
104,590 |
Accounts payable to related parties |
11,432 |
8,680 |
Air traffic liability |
469,478 |
395,580 |
Frequent flyer deferred revenue |
42,977 |
35,368 |
Taxes and interest payable |
93,337 |
68,483 |
Employee benefits obligations |
42,991 |
41,707 |
Income tax payable |
2,845 |
1,401 |
Other Current Liabilities |
2,045 |
4,385 |
TOTAL CURRENT LIABILITIES |
1,036,004 |
882,912 |
Long-term debt |
918,642 |
961,414 |
Other long - term liabilities |
132,529 |
114,268 |
Deferred tax Liabilities |
53,493 |
44,974 |
TOTAL NON-CURRENT LIABILITIES |
1,104,664 |
1,120,656 |
TOTAL LIABILITIES |
2,140,668 |
2,003,568 |
EQUITY |
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Class A - 33,778,404 issued and 31,185,641 outstanding |
21,030 |
20,988 |
Class B - 10,938,125 shares issued and outstanding |
7,466 |
7,466 |
|
71,123 |
64,986 |
Treasury Stock |
(136,388) |
(136,388) |
Retained Earnings |
1,812,092 |
1,552,547 |
Net Income |
269,178 |
334,544 |
Other Comprehensive Income |
(1,859) |
(1,872) |
TOTAL EQUITY |
2,042,642 |
1,842,271 |
TOTAL LIABILITIES AND EQUITY |
4,183,310 |
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. |
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Consolidated Statement of Cash Flows |
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For the nine months ended |
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(In US$ thousands) |
||||||||||||||
2017 |
2016 |
2015 | ||||||||||||
(Unaudited) |
(Unaudited) |
(Unaudited) | ||||||||||||
Cash flow from operating activities |
522,527 |
384,822 |
236,743 | |||||||||||
Cash flow used in investing activities |
(344,088) |
(170,057) |
(39,658) | |||||||||||
Cash flow used in financing activities |
(260,533) |
(197,677) |
(282,982) | |||||||||||
Net (decrease) increase in cash and cash equivalents |
(82,094) |
17,088 |
(85,897) | |||||||||||
Cash and cash equivalents at |
331,687 |
204,715 |
207,437 | |||||||||||
Cash and cash equivalents at |
$ 249,593 |
$ 221,803 |
$ 121,540 | |||||||||||
Short-term investments |
565,994 |
540,502 |
484,242 | |||||||||||
Long-term investments * |
155,953 |
954 |
428,259 | |||||||||||
Restricted cash and cash equivalents ** |
- |
10,128 |
48,702 | |||||||||||
Total cash and cash equivalents and investments at |
$ 971,540 |
$ 773,387 |
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* Long-term investments include | ||||||||||||||
** Restricted cash corresponds 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 Adjusted Net Income |
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and Adjusted EPS |
3Q17 |
3Q16 |
2Q17 | ||||
Net profit as Reported |
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Special Items (adjustments): |
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Gain (loss) due to devaluation of Venezuelan Bolivar |
(484) |
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Net change in fair value of derivatives |
2,946 |
19,225 |
175 | ||||
Adjusted Net Income |
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Shares used for Computation (in thousands) |
|||||||
Basic and Diluted |
42,430 |
42,374 |
42,419 | ||||
Adjusted earnings per share - Basic and Diluted |
2.38 |
1.30 |
1.48 | ||||
Reconciliation of Operating Costs per ASM |
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Excluding Fuel (CASM Excl. Fuel) |
3Q17 |
3Q16 |
2Q17 | ||||
Operating Costs per ASM as Reported |
8.6 |
8.9 |
8.5 | ||||
Aircraft fuel per ASM |
(2.3) |
(2.6) |
(2.3) | ||||
Operating Costs per ASM excluding fuel |
6.3 |
6.4 |
6.3 | ||||
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