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Press release from PR Newswire

Copa Holdings Reports Net Income of US$113.9 Million for the Fourth Quarter of 2013

Wednesday, February 12, 2014

Copa Holdings Reports Net Income of US$113.9 Million for the Fourth Quarter of 2013

17:37 EST Wednesday, February 12, 2014

PANAMA CITY, Feb. 12, 2014 /PRNewswire/ -- Copa Holdings, S.A. (NYSE: CPA), today announced financial results for the fourth quarter of 2013 (4Q13) and full year 2013. The terms "Copa Holdings" or "the Company" refers 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 fourth quarter of 2012 (4Q12).

OPERATING AND FINANCIAL HIGHLIGHTS

  • Copa Holdings reported net income of US$113.9 million for 4Q13 or earnings per share (EPS) of US$2.57, as compared to net income of US$86.6 million or EPS of US$1.95 in 4Q12. Excluding special items, which for 4Q13 includes a non-cash impairment charge of US$31.2 million on Intangible Assets booked in 2005 related to the acquisition of AeroRepublica (now Copa Colombia) and a non-cash gain of US$2.6 million associated with the mark-to-market of fuel hedge contracts, Copa Holdings would have reported adjusted net income of US$142.5 million or adjusted EPS of US$3.21, compared to adjusted net income of US$89.3 million or adjusted EPS of US$2.01 in 4Q12. 
  • Net income for full year 2013 reached US$428.2 million or EPS of US$9.64, compared to US$326.5 million or EPS of US$7.35 for full year 2012. Excluding special items, which for 2013 includes a non-cash impairment charge of US$31.2 million on Intangible Assets booked in 2005 related to the acquisition of AeroRepublica (now Copa Colombia), a US$13.9 million loss related to the Venezuelan devaluation of February 2013, and a non-cash gain of US$5.2 million associated with the mark-to-market of fuel hedge contracts, Copa Holdings would have reported an adjusted net income of US$468.1 million or EPS of US$10.54, compared to adjusted net income of US$336.1 or adjusted EPS of US$7.57 for full year 2012.
  • Operating income for 4Q13 came in at US$130.7 million, representing a 25% increase over operating income of US$104.3 million in 4Q12, mainly as a result of a 6.2% increase in unit operating revenue per available seat mile (RASM) and a 6.5% drop in the all-in price of jet fuel.  As a result, operating margin for 4Q13 came in at 18.7%, or 1.3 percentage points higher than 4Q12. Excluding special items, operating income would have been US$161.8 million, which would have represented an operating margin of 23.2%, or 5.8 percentage points higher than 4Q12.    
  • The Company reported operating income of US$518.5 million for full year 2013, representing an increase of 28.8% over operating income of US$402.5 million in 2012.  Operating margin for full year 2013 came in at 19.9%, as compared to an operating margin of 17.9% in 2012. However, excluding the intangible impairment charge of US$31.2 million recorded in 4Q13, the adjusted operating margin for 2013 would have been 21.1%.
  • Total revenues for 4Q13 increased 16.3% to US$697.8 million. Yield per passenger mile increased 5.8% to 18.1 cents and RASM came in at 14.3 cents, or 6.2% above 4Q12.  On a quarter-over-quarter basis, both yields and RASM increased over our third quarter high season, rising 4.9% and 3.1%, respectively. 
  • For 4Q13 consolidated passenger traffic grew 10.7%, led by international traffic growth which expanded a robust 12.2%.  At the same time, consolidated capacity grew 9.5%, led by a 10.9% increase in international capacity.  As a result, consolidated load factor for the quarter increased 0.8 percentage points to 76.5%.  For full year 2013, consolidated load factor came in at 76.7%, up 1.2 percentage points from 2012, on 14.4% capacity growth. 
  • Operating cost per available seat mile (CASM) increased 4.5%, from 11.1 cents in 4Q12 to 11.7 cents in 4Q13 as a result of the non-cash intangible impairment charge partly offset by a decrease in the all-in price of jet fuel. However, CASM excluding special items decreased 1.2% to 11.0 cents. CASM excluding fuel cost and special items increased 2.1% from 6.8 cents in 4Q12 to 6.9 cents in 4Q13, as a result of higher distribution unit costs related to the higher revenues, and aircraft rentals, which were partly offset mainly by lower maintenance costs and other rentals.
  • Cash, short term and long term investments ended 2013 at US$1,169.4 million, representing 45% of the last twelve months' revenues. 
  • During the fourth quarter, Copa Airlines took delivery of one Boeing 737-800 aircraft.  As a result, Copa Holdings ended the year with a consolidated fleet of 90 aircraft, composed of 18 Boeing 737-700s, 46 Boeing 737-800s and 26 Embraer-190s.
  • For 2013, Copa Holdings reported international on-time performance of 88.6%, 80.8% for domestic and 87.7% overall, as well as a flight-completion factor of 99.6%, maintaining its position among the best in the industry.

Consolidated Financial & Operating Highlights

4Q13

Variance vs. 4Q12

Variance vs. 3Q13

FY 2013

Variance vs. 2012

Revenue Passengers Carried ('000)

2,013

6.0%

0.3%

7,779

8.9%

RPMs (mm) 

3,725

10.7%

-2.1%

14,533

16.3%

ASMs (mm) 

4,870

9.5%

-0.1%

18,950

14.4%

Load Factor 

76.5%

0.8 p.p.

-1.6 p.p.

76.7%

1.2 p.p.

Yield

18.1

5.8%

4.9%

17.3

0.2%

PRASM (US$ Cents) 

13.8

6.9%

2.8%

13.3

1.8%

RASM (US$ Cents) 

14.3

6.2%

3.1%

13.8

1.4%

CASM (US$ Cents) 

11.6

4.5%

7.1%

11.0

-1.1%

Adjusted CASM (US$ Cents) (1)

11.0

-1.2%

1.2%

10.9

-2.5%

CASM Excl. Fuel (US$ Cents) 

7.6

11.6%

10.9%

6.9

1.9%

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

6.9

2.1%

1.5%

6.7

-0.5%

Breakeven Load Factor (2)

57.3%

-4.3 p.p.

-4.1 p.p.

59.7%

-1.6 p.p.

Fuel Gallons Consumed (Millions) 

63.9

9.4%

0.5%

247.5

12.8%

Avg. Price Per Fuel Gallon (US$ Dollars)

3.12

-6.5%

0.1%

3.16

-4.3%

Average Length of Haul (Miles)

1,850

4.4%

-2.4%

1,868

6.7%

Average Stage Length (Miles)

1,151

5.7%

-0.7%

1,140

6.0%

Departures

30,266

2.4%

0.5%

119,177

5.9%

Block Hours

89,783

8.0%

0.2%

348,882

11.3%

Average Aircraft Utilization (Hours)

10.9

-0.9%

-2.7%

11.1

1.2%

Operating Revenues (US$ mm) 

697.8

16.3%

3.0%

2,608.3

16.0%

Operating Income (US$ mm)

130.7

25.3%

-11.4%

518.5

28.8%

Adjusted Operating Income (US$ mm) (1)

161.8

55.2%

9.7%

549.6

36.5%

Operating Margin 

18.7%

1.3 p.p.

-3.0 p.p.

19.9%

2.0 p.p.

Adjusted Operating Margin (1)

23.2%

5.8 p.p.

1.4 p.p.

21.1%

3.2 p.p.

Net Income (US$ mm)

113.9

31.5%

-9.6%

428.2

31.2%

Adjusted Net Income (US$ mm) (2)

142.5

59.6%

22.7%

468.1

39.3%

EPS - Basic and Diluted (US$)

2.57

31.6%

-9.5%

9.64

31.1%

Adjusted EPS - Basic and Diluted (US$) (2)

3.21

59.7%

22.7%

10.54

39.2%

# of Shares - Basic and Diluted ('000) 

44,379

-0.1%

0.0%

44,424

0.1%

 

(1) Adjusted CASM, Adjusted Operating Income, Adjusted Operating Margin for 4Q13 and 2013 exclude non-cash impairment charge on Intangible Assets booked in 2005 related to the acquisition of AeroRepublica (now Copa Colombia). (2) Breakeven Load Factor, Adjusted Net Income and Adjusted EPS for 4Q13, 4Q12, 3Q13, 2013 and 2012 exclude non-cash impairment charge on Intangible Assets booked in 2005 related to the acquisition of AeroRepublica (now Copa Colombia), non-cash charges/gains associated with the mark-to-market of fuel hedges, and the impact of the Venezuelan currency devaluation.

 

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

 

FULL 4Q13 EARNINGS RELEASE AVAILABLE FOR DOWNLOAD AT: http://investor.shareholder.com/copa/results.cfm

4Q13 EARNINGS RESULTS CONFERENCE CALL AND WEBCAST

Date:

February 13, 2014

Time:

10:00 AM US ET (10:00 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 66 destinations in 29 countries in North, Central and South America and the Caribbean with one of the youngest and most modern fleets in the industry, consisting of 90 aircraft: 64 Boeing 737NG aircraft and 26 EMBRAER-190s.

CONTACT: Copa Holdings S.A.Investor Relations: Ph: (507) 304-2431www.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

%

Unaudited

Audited

%

4Q13

4Q12

Change

3Q13

Change

2013

2012

Change

Operating Revenues

Passenger Revenue

674,209

575,731

17.1%

655,991

2.8%

2,519,649

2,163,136

16.5%

Cargo, mail and other

23,562

24,109

-2.3%

21,288

10.7%

88,682

86,252

2.8%

Total Operating Revenue

697,771

599,839

16.3%

677,279

3.0%

2,608,331

2,249,388

16.0%

Operating Expenses

Aircraft fuel

199,388

194,754

2.4%

198,163

0.6%

783,092

725,763

7.9%

Salaries and benefits

73,382

65,782

11.6%

69,941

4.9%

276,156

247,405

11.6%

Passenger servicing

64,986

59,788

8.7%

64,913

0.1%

250,604

217,137

15.4%

Commissions

27,428

22,382

22.5%

27,717

-1.0%

103,685

89,378

16.0%

Reservations and sales

26,013

22,112

17.6%

27,588

-5.7%

99,812

84,992

17.4%

Maintenance, material and repairs

22,866

24,311

-5.9%

25,035

-8.7%

92,993

92,166

0.9%

Depreciation

27,082

24,446

10.8%

26,576

1.9%

105,331

89,217

18.1%

Flight operations

31,451

27,747

13.3%

30,829

2.0%

121,786

104,993

16.0%

Aircraft rentals

24,617

19,472

26.4%

23,540

4.6%

90,233

72,468

24.5%

Landing fees and other rentals

12,813

12,266

4.5%

12,607

1.6%

50,405

46,233

9.0%

Other

25,907

22,510

15.1%

22,878

13.2%

84,589

77,101

9.7%

Intangible Impairment

31,162

0

n/m

0

n/m

31,162

0

n/m

Total Operating Expense

567,097

495,570

14.4%

529,787

7.0%

2,089,848

1,846,852

13.2%

Operating Income

130,675

104,269

25.3%

147,492

-11.4%

518,483

402,535

28.8%

Non-operating Income (Expense):

Interest expense

(7,447)

(8,130)

-8.4%

(7,513)

-0.9%

(30,180)

(32,795)

-8.0%

Interest income

3,963

3,427

15.6%

3,127

26.7%

12,636

11,689

8.1%

Other, net

(4,081)

(2,721)

50.0%

10,700

-138.1%

(13,192)

(15,086)

-12.6%

Total Non-Operating Income/(Expense)

(7,565)

(7,424)

n/a

6,314

-219.8%

(30,736)

(36,192)

n/a

Income before Income Taxes

123,110

96,845

27.1%

153,807

-20.0%

487,747

366,343

33.1%

Provision for Income Taxes

9,189

10,222

-10.1%

27,798

-66.9%

59,546

39,867

49.4%

Net Income

113,921

86,623

31.5%

126,008

-9.6%

428,200

326,476

31.2%

EPS - Basic and Diluted

2.57

1.95

31.6%

2.84

-9.6%

9.64

7.35

31.1%

Shares - Basic and Diluted

44,379,289

44,409,211

-0.1%

44,379,507

0.0%

44,423,845

44,400,224

0.1%

  

Copa Holdings, S.A.

Balance Sheet - IFRS

(US$ Thousands)

December 31,

September 30,

December 31,

2013

2013

2012

 (Unaudited) 

 (Unaudited) 

 (Audited) 

Current Assets:

Cash and cash equivalents

$         139,240

$           475,181

$              76,094

Short-term investments

930,399

499,047

575,009

Total cash, cash equivalents and short-term investments

1,069,640

974,228

651,103

Accounts receivable, net of allowance for doubtful accounts

132,001

173,175

135,207

Accounts receivable from related parties

2,189

2,109

1,129

Expendable parts and supplies, net of allowance for obsolescence

56,814

56,314

50,603

Prepaid expenses

59,160

62,163

63,120

Other current assets

22,783

19,073

16,328

Total Current Assets

1,342,586

1,287,062

917,490

Long-term investments

99,770

46,590

69,445

Property and Equipment:

Owned property and equipment:

Flight equipment

2,477,830

2,462,278

2,405,346

Other equipment

73,487

71,570

66,330

2,551,317

2,533,848

2,471,676

Less: Accumulated depreciation

(530,347)

(505,147)

(432,589)

2,020,970

2,028,701

2,039,087

Purchase deposits for flight equipment

327,544

302,371

245,544

Total Property and Equipment

2,348,514

2,331,072

2,284,631

Other Assets:

Net pension asset

11,114

10,826

10,009

Goodwill

25,305

25,466

27,575

Intangible asset

28,214

57,767

59,382

Other assets

96,949

110,889

110,968

Total Other Assets

161,583

204,948

207,934

Total Assets

$      3,952,454

$        3,869,672

$         3,479,500

LIABILITIES AND SHAREHOLDER'S EQUITY

Current Liabilities:

Current maturities of long-term debt

$         156,460

$           140,114

$            136,268

Accounts payable

95,046

101,128

104,975

Accounts payable to related parties

14,460

15,380

20,255

Air traffic liability

578,439

549,721

382,807

Taxes and interest payable

113,517

121,647

85,436

Accrued expenses payable

74,963

65,993

48,047

Other current liabilities

8,133

7,835

10,902

Total Current Liabilities

1,041,019

1,001,818

788,690

Non-Current Liabilities:

Long-term debt

913,507

960,462

1,069,836

Post employment benefits liability

6,223

6,309

6,340

Other long-term liabilities

51,223

49,912

43,726

Deferred tax liabilities

38,743

32,274

34,364

Total Non-Current Liabilities

1,009,696

1,048,957

1,154,266

Total Liabilities

2,050,715

2,050,775

1,942,956

Shareholders' Equity:

Class A - 33,407,876 shares issued and outstanding

22,626

22,626

22,591

Class B - 10,938,125 shares issued and outstanding

7,466

7,466

7,466

Additional paid in capital

47,031

45,594

40,660

Retained earnings

1,821,243

1,739,740

1,458,258

Accumulated other comprehensive income (loss)

3,372

3,470

7,569

Total Shareholders' Equity

1,901,738

1,818,896

1,536,544

Total Liabilities and Shareholders' Equity

$      3,952,454

$        3,869,672

$         3,479,500

Copa Holdings, S.A.NON-IFRS FINANCIAL MEASURE RECONCILIATIONThis 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

4Q13

4Q12

3Q13

2013

2012

Net income as Reported

$113,921

$86,623

$126,008

$428,200

$326,476

Special Items (adjustments):

     Intangible Impairment

$31,162

$0

$0

$31,162

$0

     Unrealized (gain) loss on fuel hedging instruments 

-$2,553

$2,673

-$9,820

-$5,167

$9,577

     Venezuela Devaluation

$0

$0

$0

$13,927

$0

Adjusted Net Income

$142,530

$89,296

$116,188

$468,123

$336,053

Shares used for Computation (in thousands)

     Basic and Diluted

44,379

44,409

44,380

44,424

44,400

Adjusted earnings per share - Basic and Diluted

3.21

2.01

2.62

10.54

7.57

Reconciliation Operating Costs per ASM

Excluding Fuel and Special Items

4Q13

4Q12

3Q13

2013

2012

Operating Costs per ASM as Reported

11.6

11.1

10.9

11.0

11.1

Intangible Impairment

(0.6)

-

-

(0.2)

-

Aircraft fuel per ASM

(4.1)

(4.4)

(4.1)

(4.1)

(4.4)

Adjusted Operating Costs per ASM excluding fuel 

6.9

6.8

6.8

6.7

6.8

CPA-G

SOURCE Copa Holdings, S.A.

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