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Copa Holdings Reports Financial Results for the Fourth Quarter of 2019

·17 min read

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
Cision

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SOURCE Copa Holdings, S.A.