While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use tried-and-true metrics and fundamental analysis to find companie ...

Results Presentation > LATAM AIRLINES Third Quarter 2024 LTM LISTED NYSE III MINHHHHH E WHINNIHUWAHI E WA WARD November 7, 2024 Disclaimer Neither the United States Securities and Exchange Commission ("SEC") nor the Chilean Comisión para el Mercado Financiero (the "CMF") nor any securities commission of any other U.S. or non-U.S. jurisdiction has reviewed, approved or disapproved of this Presentation, or determined that this Presentation is truthful or complete. No representations or warranties, express or ...

Financial Data and Key Metrics - LATAM Airlines Group reported adjusted EBITDAR of $828 million with a 25.2% margin in Q3 2024 [11] - Net income for the quarter totaled $301 million, bringing year-to-date net income to $705 million, a 41.3% increase year-over-year [11] - The company generated $157 million in cash flow in Q3 2024, with adjusted operating cash flow totaling $655 million [27] - LATAM's liquidity position stood at $6.3 billion, with a leverage ratio of 1.7 times [12][30] - Adjusted passenger CASK ex-fuel decreased by 8.5% year-over-year to $0.04, contributing to improved margins [23][25] Business Line Performance - Passenger revenues increased by over 6%, driven by strong performance in international operations [22] - Cargo revenues grew by 15% year-over-year to $381 million, marking the second consecutive quarter of improvement [22] - LATAM transported 21.1 million passengers in Q3 2024, a 7.1% increase compared to the same period last year [9] - The company maintained a high load factor despite a 51% increase in capacity [9] Market Performance - LATAM's capacity grew by 15% in Q3 2024, with strong demand across all markets [19] - The company saw a 13% increase in passengers transported over the last 12 months, reaching 80.6 million passengers [18] - Overcapacity in Colombia showed signs of moderation, suggesting a gradual rebalancing in the market [21] Strategic Direction and Industry Competition - LATAM continues to focus on operational excellence, network strength, customer focus, sustainability, and financial discipline [8] - The company has a strong capital structure, with $3.6 billion in liquidity and no significant debt maturities until 2028 [29][32] - LATAM's recent refinancing efforts reduced the average cost of debt to 8%, with savings of approximately $118 million in interest payments for 2025 [31][36] Management Commentary on Operating Environment and Future Outlook - Management expects demand to remain stable in the short term, leading to positive top-line results and continuous cost delivery [15] - The company updated its 2024 guidance, targeting adjusted EBITDAR of over $3 billion, reflecting strong growth, cost control, and margin improvements [37] - LATAM's resilience to business cyclicality and exchange rate volatility was highlighted as a key strength [14] Other Important Information - LATAM successfully renegotiated its revolving credit facilities, increasing total revolving facility lines to $1.55 billion, fully committed until 2029 [28] - The company refinanced $1.4 billion of debt at an interest rate of 7.875%, significantly lower than its Chapter 11 exit financing rate [31] - LATAM's credit rating was upgraded by Standard & Poor's to BB- with a positive outlook and by Moody's to Ba2 with a stable outlook [36] Q&A Session Summary Question: Why does LATAM not report earnings per ADS? - LATAM focuses on EBITDAR and EBIT margins due to volatility in non-operating areas like tax credits and FX impacts [41] - The company plans to start reporting EPS in the future to reflect the benefits of its strong capital structure [44] Question: Impact of US election on LATAM's operations - LATAM does not anticipate significant operational impacts from the new US administration, given its dollar-denominated revenues and historical resilience to currency volatility [46][48] - The company's cargo business could benefit from potential near-shoring trends [49] Question: Yield decline and capital allocation - Yield decline was influenced by currency depreciation and a faster-growing international segment, but RASK in domestic Brazil increased in local currency [52][53] - LATAM is considering shareholder returns, including dividends or buybacks, as part of its capital allocation strategy [54][55] Question: International segment performance and fuel hedges - Over 60% of LATAM's international capacity is wide-body, with strong demand and high load factors [63][65] - The company uses asymmetrical collars for fuel hedging, focusing on the next 12 months and maintaining a consistent policy [66] Question: FX depreciation in Brazil and yield protection - LATAM has seen strong demand in domestic Brazil, with RASK increasing in local currency despite capacity growth [68] - The company's dollar-based revenues provide some insulation against currency volatility [70] Question: Q4 margin expectations - LATAM expects a slight deceleration in margins in Q4, consistent with historical trends, but remains confident in meeting its full-year guidance [73]