CPA - Copa Holdings Reports Net Profit of $74.3 million and EPS of $1.75 for the First Quarter of 2020

May, 06 2020 04:30 PM Copa Holdings S.A. Class A

PANAMA CITY, May 6, 2020 /PRNewswire/ -- Copa Holdings, S.A. (NYSE: CPA), today announced financial results for the first quarter of 2020 (1Q20). 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 2019 (1Q19).

OPERATING AND FINANCIAL HIGHLIGHTS

Due to air travel restrictions implemented in response to the Covid-19 outbreak, the Company was forced to temporarily suspend all commercial flights on March 22^nd, 2020. The Company currently expects to re-start a scaled-down operation on June 1^st, 2020, although this date could be delayed as a result of further travel restrictions.
For 1Q20, Copa Holdings reported net profit of US$74.3 million or earnings per share (EPS) of US$1.75, as compared to net profit of US$89.4 million or earnings per share of US$2.11 in 1Q19.
Operating profit for 1Q20 came in at US$98.7 million, representing a 12.6% decrease from operating profit of US$112.9 million in 1Q19. Operating margin for 1Q20 came in at 16.6%, compared to an operating margin of 16.8% in 1Q19.
For 1Q20, consolidated passenger traffic decreased 16.3% on a 14.4% capacity reduction. As a result, consolidated load factor for the quarter decreased 1.9 percentage points to 81.5%.
Total revenues for 1Q20 decreased 11.4% to US$595.5 million. Yield per passenger mile increased 5.8% to 12.8 cents and RASM came in at 10.8 cents, or 5.8% higher than 1Q19.
Operating cost per available seat mile (CASM) increased 3.8%, from 8.7 cents in 1Q19 to 9.0 cents in 1Q20. CASM excluding fuel costs increased 8.0% from 6.1 cents in 1Q19 to 6.6 cents in 1Q20, mainly as a result of flight cancellations in March due to the Covid-19 outbreak and, later in the month, the unexpected grounding of the Company´s fleet, resulting in a significant year over year capacity reduction.
During 1Q20 the Company drew US$145 million from its available short-term lines of credit.
Cash, short-term and long-term investments ended the quarter at US$ 1.13 billion, representing approximately 43% of the last twelve months' revenues.
Copa Holdings ended the quarter with a consolidated fleet of 102 aircraft – 6 Boeing 737MAX9s, 68 Boeing 737-800s, 14 Boeing 737-700s, and 14 Embraer-190s.

Subsequent Events

Given the uncertainty related to the Covid-19 crisis, including the effect on future air travel demand, on April 26, 2020 our Board of Directors postponed dividend payments for the remaining quarters of 2020.
Throughout the month of April, the Company obtained unsecured, committed credit facilities with three local banks, for an aggregate amount of US$150 million dollars. These facilities remain unutilized.
On April 30, 2020, the Company further bolstered its cash position by successfully closing a US$350 million convertible senior notes offering, maturing in 2025.

Consolidated Financial & Operating Highlights
1Q20
1Q19
Variance vs. 1Q19
4Q19
Variance vs. 4Q19
Revenue Passengers Carried ('000)
2,118
2,588
-18.2%
2,633
-19.5%
RPMs (mm)
4,473
5,345
-16.3%
5,244
-14.7%
ASMs (mm)
5,491
6,415
-14.4%
6,149
-10.7%
Load Factor
81.5%
83.3%
-1.9 p.p.
85.3%
-3.8 p.p.
Yield
12.8
12.1
5.8%
12.5
2.4%
PRASM (US$ Cents)
10.5
10.1
3.5%
10.7
-2.2%
RASM (US$ Cents)
10.8
10.5
3.5%
11.1
-2.2%
CASM (US$ Cents)
9.0
8.7
3.8%
10.8
-16.2%
Adjusted CASM (US$ Cents) ⁽¹⁾
9.0
8.7
3.8%
9.3
-3.2%
CASM Excl. Fuel (US$ Cents)
6.6
6.1
8.0%
8.0
-18.2%
Adjusted CASM Excl. Fuel (US$ cents) ⁽¹⁾
6.6
6.1
8.0%
6.6
-0.1%
Fuel Gallons Consumed (Millions)
70.0
81.2
-13.8%
78.9
-11.3%
Avg. Price Per Fuel Gallon (US$ Dollars)
1.95
2.09
-6.7%
2.16
-9.9%
Average Length of Haul (Miles)
2,112
2,065
2.3%
1,992
6.0%
Average Stage Length (Miles)
1,308
1,299
0.7%
1,279
2.2%
Departures
28,286
33,329
-15.1%
32,441
-12.8%
Block Hours
93,568
110,089
-15.0%
105,620
-11.4%
Average Aircraft Utilization (Hours)
10.1
11.6
-13.5%
11.3
-10.4%
Operating Revenues (US$ mm)
595.5
672.2
-11.4%
681.9
-12.7%
Operating Profit (US$ mm)
98.7
112.9
-12.6%
17.8
n/m
Adjusted Operating Profit (US$ mm) ⁽¹⁾
98.7
112.9
-12.6%
107.1
-7.9%
Operating Margin
16.6%
16.8%
-0.2 p.p.
2.6%
14.0 p.p.
Adjusted Operating Margin ⁽¹⁾
16.6%
16.8%
-0.2 p.p.
15.7%
0.9 p.p.
Net Profit (US$ mm)
74.3
89.4
-16.9%
2.7
n/m
Adjusted Net Profit (US$ mm) ⁽¹⁾
74.3
89.4
-16.9%
92.1
-19.3%
EPS - Basic and Diluted (US$)
1.75
2.11
-17.0%
0.06
n/m
Adjusted EPS - Basic and Diluted (US$) ⁽¹⁾
1.75
2.11
-17.0%
2.17
-19.4%
# of Shares - Basic and Diluted ('000)
42,501
42,478
0.1%
42,487
0.0%

⁽¹⁾Adjusted CASM, Adjusted CASM Excl. Fuel, Adjusted Operating Profit, Adjusted Net Profit, Adjusted Operating Margin and Adjusted EPS for 4Q19, exclude non-cash charges associated with the Embraer 190 Fleet impairment.

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

FULL 1Q20 EARNINGS RELEASE AVAILABLE FOR DOWNLOAD AT:
https://copa.gcs-web.com/financial-information/quarterly-results

1Q20 EARNINGS RESULTS CONFERENCE CALL AND WEBCAST

Date:

May 7, 2020

Time:

11:00 AM US ET (10:00 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 a modern fleet consisting of 102 aircraft: 6 Boeing 737MAX9s, 82 Boeing 737NG aircraft 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.

CPA-G

Copa Holdings, S.A.










Income Statement - IFRS










(US$ Thousands)























Unaudited

Unaudited

%

Unaudited

%


1Q20

1Q19

Change

4Q19

Change
Operating Revenues










Passenger revenue

574,650

648,790

-11.4%

657,940

-12.7%
Cargo and mail revenue

13,017

15,316

-15.0%

16,033

-18.8%
Other operating revenue

7,785

8,063

-3.4%

7,955

-2.1%
Total Operating Revenue

595,453

672,169

-11.4%

681,927

-12.7%











Operating Expenses










Fuel

136,954

170,163

-19.5%

171,314

-20.1%
Wages, salaries, benefits and other employees' expenses

110,289

113,662

-3.0%

115,036

-4.1%
Passenger servicing

21,890

25,571

-14.4%

24,798

-11.7%
Airport facilities and handling charges

40,365

45,362

-11.0%

44,877

-10.1%
Sales and distribution

42,011

53,133

-20.9%

53,222

-21.1%
Maintenance, materials and repairs

27,144

28,047

-3.2%

37,648

-27.9%
Depreciation and amortization

66,375

68,187

-2.7%

70,469

-5.8%
Flight operations

23,731

25,875

-8.3%

24,908

-4.7%
Other operating and administrative expenses

28,008

29,297

-4.4%

32,506

-13.8%
Fleet Impairment







89,344

n/m
Total Operating Expense

496,766

559,296

-11.2%

664,123

-25.2%











Operating Profit

98,687

112,873

-12.6%

17,804

n/m











Non-operating Income (Expense):










Finance cost

(11,085)

(14,010)

-20.9%

(17,154)

-35.4%
Finance income

6,320

5,954

6.2%

6,289

0.5%
Gain (loss) on foreign currency fluctuations

(10,950)

(5,960)

83.7%

2,406

n/m
Other non-operating income (expense)

(11)

(825)

-98.6%

(989)

-98.9%
Total Non-Operating Income/(Expense)

(15,726)

(14,841)

n/m

(9,448)

66.5%











Profit before taxes

82,961

98,032

-15.4%

8,356

n/m











Income tax expense

8,687

8,600

1.0%

5,629

54.3%











Net Profit

74,273

89,431

-16.9%

2,728

n/m






















EPS - Basic and Diluted

1.75

2.11

-17.0%

0.06

n/m
Shares - Basic and Diluted

42,501,338

42,477,761

0.1%

42,486,717

0.0%

Copa Holdings, S. A. and subsidiaries


Consolidated statement of financial position


(US$ Thousands)
March
December

2020
2019

(Unaudited)

ASSETS





Current Assets


Cash and cash equivalents
339,926
158,733
Short-term investments
672,721
692,403
Total cash, cash equivalents and short-term investments
1,012,646
851,136



Accounts receivable, net
49,708
129,634
Accounts receivable from related parties
1,488
147
Expendable parts and supplies, net
74,454
69,100
Prepaid expenses
41,382
49,034
Prepaid income tax
1,286
1,181
Other current assets
14,056
14,206

182,374
263,301
Assets held for sale
119,299
120,006



TOTAL CURRENT ASSETS
1,314,320
1,234,442



Long-term investments
114,277
134,347
Long-term accounts receivable
2,364
2,139
Long-term prepaid expenses
15,018
17,743
Property and equipment, net
2,522,205
2,532,402
Right of use assets
284,552
290,843
Intangible, net
107,047
108,116
Net pension asset
665
249
Deferred tax assets
17,050
19,216
Other Non-Current Assets
16,027
17,881
TOTAL NON-CURRENT ASSETS
3,079,207
3,122,935



TOTAL ASSETS
4,393,526
4,357,377



Current maturities of long-term debt
261,219
117,238
Current portion of lease liability
97,908
97,732
Accounts payable
126,941
119,332
Accounts payable to related parties
2,574
14,086
Air traffic liability
411,912
497,374
Frequent flyer deferred revenue
84,165
80,325
Taxes and interest payable
33,061
51,611
Employee benefits obligations
36,121
55,373
Income tax payable
13,530
9,683
Other Current Liabilities
95
83
TOTAL CURRENT LIABILITIES
1,067,526
1,042,836



Long-term debt
907,960
938,182
Lease Liability
199,534
206,832
Other long - term liabilities
197,469
191,221
Deferred tax Liabilities
44,379
43,397
TOTAL NON-CURRENT LIABILITIES
1,349,343
1,379,633



TOTAL LIABILITIES
2,416,869
2,422,469



EQUITY


Issued Capital


Class A -33,860,663 issued and 31,399,270 outstanding
21,184
21,142
Class B common stock - 10,938,125
7,466
7,466
Additional Paid-In Capital
87,540
86,135
Treasury Stock
(136,388)
(136,388)
Retained Earnings
1,931,214
1,718,179
Net profit
74,273
247,002
Other comprehensive loss
(8,632)
(8,628)



TOTAL EQUITY
1,976,658
1,934,908



TOTAL EQUITY LIABILITIES
4,393,526
4,357,377

Copa Holdings, S. A. and subsidiaries

Consolidated Statement of Cash Flows

For the three months ended March 31,

(In US$ thousands)

2020

2019

2018

(Unaudited)

Cash flow from operating activities

106,340

144,061

171,810

Cash flow from investing activities

19,795

(3,591)

(74,198)

Cash flow from financing activities

55,058

(84,361)

(139,820)

Net increase (decrease) in cash and cash equivalents

181,193

56,109

(42,208)

Cash and cash equivalents at January 1

158,732

156,158

238,792

Cash and cash equivalents at March 31

$ 339,925

$ 212,267

$ 196,584

Short-term investments

672,721

556,127

650,110

Long-term investments

114,277

128,992

155,313

Total cash and cash equivalents and investments at March 31

$ 1,126,923

$ 897,386

$ 1,002,007

Copa Holdings, S.A.

NON-IFRS FINANCIAL MEASURE RECONCILIATION

This press release includes the following non IFRS financial measures: Adjusted Operating 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

1Q20

1Q19

4Q19







Operating Profit as Reported

$ 98,687

$ 112,873

$ 17,804
Special Items (adjustments):






Fleet Impairment





$ 89,344
Adjusted Operating Profit

$ 98,687

$ 112,873

$ 107,148







Net profit as Reported

$ 74,273

$ 89,431

$ 2,728
Special Items (adjustments):






Fleet Impairment





$ 89,344
Adjusted Net Profit

$ 74,273

$ 89,431

$ 92,071







Shares used for Computation (in thousands)






Basic and Diluted

42,501

42,478

42,487







Adjusted earnings per share - Basic and Diluted

$ 1.75

$ 2.11

$ 2.17





















Reconciliation of Adjusted Operating Costs per ASM






Excluding Fuel (Adjusted CASM Excl. Fuel)

1Q20

1Q19

4Q19







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

9.0

8.7

10.8
Fleet Impairment per ASM (in US$ Cents)





(1.5)
Aircraft fuel per ASM (in US$ Cents)

(2.5)

(2.7)

(2.8)
Adjusted Operating Costs per ASM excluding fuel (in US$ Cents)

6.6

6.1

6.6

SOURCE Copa Holdings, S.A.

Company Name:	Copa Holdings S.A. Class A
Stock Symbol:	CPA
Market:	NYSE
Website:	copaair.com

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