Q3 2019 Earnings Call

Good morning, and welcome to gaps third quarter 2019 conference call. All lines have been placed on mute to prevent any background noise. After the presentation. We will open the floor for questions and at that time instructions will be given if you would like to ask a question. It is now my pleasure to turn the call remedy of I don't know <unk> Vice corporate Communications. Please go ahead.

Thank you and welcome to the middle part of what the idea that especially because third quarter Twain 18 conference call today from the company, we have missed stuff out of what it does gaps chief Executive officer, and Mr., if that would be a that chief financial officer. Please be advised that forward looking statements may be made during this conference call East you're not account for future economic circumstances industry conditions.

The company's future performance or financial results as such statements made are based on several assumptions and factors that could change, causing actual results to materially differ from the current expectations for a complete note on forward looking statements. Please refer to the quarterly report issued previously.

Please note that unless stated otherwise all comparisons in this call will be made first is gaps results for the comparable period of 2018.

At this point I'd like to turn call over to Mr. I would've thought for his opening remarks. Please begin sir.

Thank you Maria Thank you everyone.

Took the time for joining us here today.

Well he helped her team I want to spread much artificial for drinkers in GAAP today I will briefly review their peripheral performer. So that's a result for the third quarter two doesn't like dealer growth you're taking your question.

During this quarter GAAP drop quarter over 11 million passengers well work or dealer airports.

Well, what was about 7.3% degrees, which along with the solid results. We experienced during the first couple of did you.

So the target to reach I worry about it on loan growth objectives.

Let's start with all look I'm trying to grow contribution from some of our major.

The quarter, just thinking what's the best performing in third party show floppies, well, we by 14%.

During the third world.

Really prepared by the consolidation of the South California markets will allow you found there wasn't expects it will be better.

You can do for like there were 240000 feet southern during the quarter of the discussion represented an increase of 62% for <unk>.

Just 2% for life.

I wonder if spreads, reaching 32% marketshare surplus alert drop.

It's represent about 30% growth compared to a third party parts of it.

Our second or third so couple of Buzzers wrote one order book, which really exposed for restaurant weaken domestic goodbye.

People are either rose to the border TFT why don't you acquired up quite it's worked a larger go to work through work through domestic passenger growth.

Well I totally agree I was set up 22000 passengers effect.

It does not talking rubenfeld, it's really about 5% for deployment.

One of her experience up <unk> percent, the coffee growth during the third quarter.

There are so topic was in many countries were greeted by 11% doing the passport.

How is number of additional directional traveler count for the difficult.

For work actually what.

Would you weren't themselves a combined 31000 extra passengers.

Yes, well you're to their software companies I've used by Americans are lined up right.

This will report also saw the old English or what how did this quarter, which wasnt water cut off to some coupled with our buyback.

Well, it's a major airports, Los Cabos love the weighted with the most well during the quarter.

We are seeing are still nothing for disease. This condition about Mexico doctors would domestic topic was 43% during the third party.

Which was.

Due to the people who wasn't the author was from quarter there must be Joe.

Well, that's another show up very close to Mexico see anybody that's it.

The water will summarize.

The Russell softened titles like 2% during the course, which was mainly due to that 77 bucks.

Also talked about yeah, sorry continues to hold the same property because that's how the skills. We have strong domestic well I just love into Russia, Turkey.

Which was mainly due to the 77 Bucks effect would suggest.

During the third acquired the Mexico's you would conclude that most of you show preferences are so focused on took extra passenger.

Happy.

Recyclers holder thinks are not stuff like that.

If there was a specific or like well I'm just gonna be was to lead the way I'll start with soak up the do it too there's about your raise your mix.

Hi, Scott when people they talk to of course, I think we see that don't know passengers for decline.

Many of you do they mature.

Good old Boise roots of pellets are same bucks effect would submit some we've.

Nevertheless, they know tropic role, but that's about 6% degree.

Let's move on but not a result because letters.

Well again experienced an outstanding performance.

Great. So well have a 59 billion pesos or 40%, whereas the third quarter.

There was told me that folks are probably not only about <unk> revenues per passenger.

Watch movies nuclear weapons commercial there, yes expenses, well do I kinda.

Well I don't know what's going into <unk>.

Let's take a look okay. Because you did the strongest performance include.

Put them over us rose by over 41 million pesos or 49% during the third quarter 2019.

Yes, that's probably before but it wasn't what we view this quarter what occurred ports, what's the what's experience the opening of new they're starting to pick up a rights offering during the first how did you.

Additionally, the commercial offering to be quite a weather.

He's not complete I totally agree.

Commercial over you also can you show pretty something doesn't need your or what have you have to support the way up there.

Robert Julian increased funding to be if that's okay or 39% require throughout this year, how large do you use their parts of went up a lot more.

Yeah well.

To bring to bear the brunt scoper errors in order to thing, they're both beneficial contractor was far different chasing the passenger experience.

Revenues from the middle market stores operated directly by.

Increasing by six didn't move up as Oh, 60% is was mainly due to the 2019 growth.

So you forgot peripheral either business topping one you are starting to quantify prevent the message is that well see you are wanting more union.

Yes, the launch copper is exactly by GAAP increased by 13 real pets are going to 2%.

During the third dark where do you.

The number of user growth as a result go higher markets better Christian.

Especially if they're not sure launch of little Scoble shirt.

Additionally, we're currently working the other is there an expansion of the VIP lounge.

I don't airports have went up what though one of the Carla let's call it quite.

Regarding the topic just to highlight a few of the relevant works, including the new Master plan for anybody to anybody for.

That's exactly right when we bought into the started doing work for the culture, I Refurbishments Oh lower airports.

This year with respect to begin to the same frozen hoping you told me I'll believe worked to like a one off airport.

Well, if you run way they work hard.

Additionally, we I got bidding process for <unk> I look we show off equipment.

So cool.

A quick review of the if I'm not sure results.

The third quarter EBITDA grew by 12%, reaching 2.4 billion pesos.

Talking about use of 69.5 person, it's good that that's pretty close.

We experienced an increase of 7% and the cost of service, where it will get up 12% higher but then it goes to.

12% increase and other operating expense.

My opinion brings us well every soak up there rather than they should work their cycle bridge from others.

Well I never business center for the chicken that's area.

<unk>.

I think you know medium Sotheby's that are commissioning services mechanical equipment services I bondholders.

Well, they're operating expenses came from the sale goes for the two new VIP loads and Southern company. This is towards that open and that's sort of work.

You do we said, though gulfport goes toward the original there we've got enough yet which work if that's your goals nicely. So hope that took a profit cobalt wouldn't it.

But with more of the good news I want to mentioned that's part of southern said.

The book for all I need to show pretty sharp because remember the international airport in Kingstone Jamaica.

That's a result, well before wouldn't they were really felt were very good I have about 2019 guy that switching gold imputes, if all the week fixation.

No go between 7% to 9%.

I don't know to go revenue between 11% to 13%.

No no no pico rather than your cell phone banking grew 21 person.

Total revenues from 13% to 15%.

I think that road between 11 to 13 birds eye.

Maybe the emerging I'm going to 67% to 60 that person and I still don't completely wrong bump and grind beauty okay.

Yeah, no guidance reflects our expectations for the King celebration.

I, just don't jump [laughter] picture for the Mexican operations.

These mucositis your Brook, I say that strip this distribution to undertake that well see shows in Jamaica that the strength of development that global both directional.

Thank you for your attention we will now be pleased to take your questions operator.

Thank you and at this time, if you like to ask a question. Please press the star in one on your chest. Some phone you may move yourself from the Q at anytime they pressing the punky once again that star and want to ask your question.

And your first question comes from <unk> I'm, not going out with credit Suisse. Your line is helping.

And our own solar thank you for the goal and just a I guess obligated grisham during some of them to be.

Do you know a do you have an update in terms of your bas-reliefs the expectations.

The timing of the female announcements.

[noise] hi handle all good morning.

Thank you for your question.

We are working and in would be video for de Levered to have the final determination.

We are very pleased we see these negotiations the process.

We'll do a friend who has been respected so we should be a baby policies you in the process. So we believe that he had moved money flows as we step.

Probably IDN and the middle of November .

We will be having a good news are now we maintain eyewear eyewear.

I would guidance it was big to the studies is that this is around it between 3% to 5% increase is is why do we have so far but we we are getting back into Clos in the crossing fees.

Okay. So it's a 3% to 5% in real terms rights.

That's correct right.

Okay. I mean terms, it's got baked in I mean, you already announced <unk> around 23 billion if he's got it steel that's been patients.

We are still in the same you just said I'm also.

Got it calls.

I run the same numbers.

Okay.

Thank you.

Welcome.

Your next question comes from Rubin Lopez Santander Your line is helping.

Hi, Good morning, things critical and I, just a follow up on the I'm getting to Pete.

It's a funny, but does it persists.

So I don't see especially the must at the beginning well have you started to found any items were yeah. You had signed some more complications to deal with where they regulate that's my first one think.

Thank you room perjured, good question and I will say that the general terms hold the process how do you really.

I mean, there's normally on reflecting all the they met the old Youre, well aware religion sees them.

So I really don't see any different from many other Masterplan review.

Everybody remembers that does the hop on July 31 of December to have to final decision of valves about supply as well.

I'm I'm I'm not seen anything different than the older older reveals that the path.

No Squalamine all outerwear.

Are you find masterplan methodology, so everything I will say that raws, it's mostly I mean I really.

Technique way really follow indeed, I work on says Charlie.

Hey, congrats.

Okay perfect. Thank you and this it companies on a commercially released a these new that Jeremy Knutsen expansions you have any number that you could share we felt it themselves contribution of newcomer Charlie <unk>.

Thank you.

So what is there something new master plan, so or or they the areas that that already on on on operations.

In general there and you must be plan and then.

I did begin I'd do you know the year in them investor relation they.

Every day it got they you mentioned that does your commentary as to what degree groups to 14% <unk> Oh, So any update on there how much of these I percentish already you celebrating a how much will we see in the fourth Q.

Perfect.

First a talking about the FERC you also said that we are just.

A couple of weeks, who opening a new commercial air younger Scotland Airport expansion.

This is already on an operational but where we are joe's.

Just a couple of weeks to begin operation up a new commercial area that includes.

Dale and put them Debra.

Oh, so we have I mean, it's more exposed shows that our.

I just to begin operations or not what's Clint is tied more to the airport. That's also includes commercial.

Shows area.

He did a lot spark of what I heard expansion already begun to branch out on the Q.

So is there. So is your I will say that we do with expansion of.

Or the printing operation Oculus got was more or less guardians give.

We will be done with all they do so you know platform for where did you.

Is there something new Master plan.

As we talk we mentioned on different code.

Who have completely Brian Yu.

Jeremy No Oh, well Uh huh.

Well thought out though.

Because bunch on Oh, My God rule.

Really important expansion up for a professor center on what.

And this for it turns out.

I will say.

Big opportunities for Debello other shock Americas area to the fact that does he should all the square meters that we want to hop there we love those two to put in place I'm really worked at all for the third <unk>.

On the commercial.

Really Peter Thank you.

And your next question comes from address Everardo with you'd be ask your line is open.

Hi, Thank you very much nine taking my question.

To follow up on the previous MDP questions.

He's I'd like to know how our negotiations going regarding the I, but when I was hoping yep Yep day that you were expecting it to be around 13%. So this would like to know about that.

Take a topic. Thank you very much.

Hey, Thank you and I sat.

Thank you so much for your question, Yes, we are very in line with a whereas petition and above a certain person we announce in GAAP date, we continue with that I mentioned before we are in the final stage of that negotiation.

So far it we are in Dod drenched so.

Yeah, that's why we're expecting that to the 5% of starting to increase so everything is as we said.

Thank you very much.

And your next question comes from Marco Sato with Citi. Your line is now open.

Hi, I would've thought would not thank you for for the call and taking my question I have three of them. The first one wouldn't be.

Hi, everyone.

Burst tightening around the world and that's right.

Did you give us any color on what are you thinking about maintaining or even in.

Uh huh.

That's my first question. Thank you.

Marcos sorry, it does sound is not very good can you. Please repeat your question.

Sure I can you hear me now.

Yes, much better.

Okay, and with Airpatrol generic or starts declining around the world and interest rates in medical but seems the other way down.

You have any color on what is the case for GAAP on Monday anymore, even Grayson good night.

[noise] well.

Is there to do views are about they interest rates. The first is.

It does support that we can see their forward as Atari's diary review and its implied in the discount rate the IR I'll say, it or not because revenues so in that sense.

If you done in that way, we believe that could be the I've just been eyewear IR in any case, we are expecting that dirt in person in other hand, it due to the level of Capex that we got into plans that we have for that for the new got because that will be hundred percent leverage during the following five years.

We are expecting a higher returns or better returns it because that that that users. They would it be law, where our target. Obviously, we will cost as I was lower as possible the interest rate not only dozens but also in enjoys dollars.

Okay. Thank you very much work for what about color. My second question is.

What is your expectation regarding the long term connected in Mexico City.

[noise] I mean college, hi, Mark if I was said that there's some other things happening right now.

Mexican American.

Let's let's begin with wood.

I mean threats convene a it's happening.

First would be let alone I'm wondering.

Constructing there their main.

Well after you outside of Mexico future.

Well not be teas, mainly based on quite a while Uh huh.

The the can somebody but it was.

Really important operational month delay, but also we got really robust growth I'm wondering what kind of gotten googles. So.

They seem to understand what what was going to happen going down.

The Cummins years left go C D L three employees.

What happened with the opening of 7000 see Oh, they use so oh, Oh, the Luca Airport.

Yep.

I see no we are following the news.

It looks like sometimes the sea ice.

The way to the construction.

ER, we also know that in their plans for why into two to.

Bush additional traffic to total airport.

Yes, both.

Well you buy these you know forever. These shows phase four for digital is not in the Metropolitan area next week.

Well, it's really interesting on the part that I would like to cold EEZE Dod older airports.

Other big Cds Hope, Mexico, as could be well Uh huh.

See I mean, more and more direct connections.

I'm not asking to Mexico City Airport.

I mean, the performance of the current a meal Cadiz corn, but he'll area on the last things years.

His house in some ways love it.

Part of the potential of the area has been no traditional direct flights, who deeper a destination from well kinda.

Yeah. So what we are seeing or at least not were viewed to be will be I'm more.

Gross Mexico see the airport or miserable is done.

That's a fair ports on the coming years.

Other C.D. SAS could be well ahead of your question I wanted to conclude that we'll have more direct flies I'm more robust growth.

We when we compare with Mexico TV.

Oh.

That's great color. Thank you very much and just one last question I'm that someone else ascom any view on what sort of commercial revenue potential exists for the Kingstone airport related to Mont Bel Ray.

[noise], yes, Marcos they commercial revenue in Q soon is very interesting there there is a high.

I think she had opportunity to increase in.

Where are they the cooler and commercial revenue we were planning to make a.

Jude redesign of the of the commercial areas I think it's almost a new offers new branding different different. It started you see in order to increase the commercial revenue. So they obviously, we will have to normalize to take over what they did they control sorry, and they a and improve the up.

Version of the airport in the following years, obviously would be it will take a couple of years to mature and to put in place in that do think that food that that food brophy the little deals. These of this up.

I know so it's important to who did mention syndicate. So.

Getting some then the most important part of the Trophee, calling from international passengers correct. So that people the chance for the sales up did you freed. That's you know that is really really important and in general terms that he could they did it did give our behavior in terms of the commercial revenues our biggest support important does not.

So that's in your rather the domestic so.

Yes, I will say, we expect to have dramatically change the laid out if they are probably coming months.

But we also barlow needs to work on Stobie life the operational celebration.

Sure due to reduce the cost on these on these on these M. Dot as you remember in terms of the of the Oh, the way that maybe they go to social work.

We have a really important.

I see well if they reported for two to their revenue 62 person. So they did did they demand that's something because.

Well the most important key factors for the profitability of Kingstone probably.

Okay. Thank you very much and <unk> have a nice weaken thank you.

Your next question comes from feminine does not just with Bradesco. Your line is now open.

Hi, Hi, good morning on congratulations on that result.

And my question is on international traffic.

Despite the funny to increase to lot more to see this nation callous I'm well thought out into a thought declining traffic. So I was wondering if you could give us I'm going to be more color on what caused the decrease and if you have anything to do with violence and security Bank.

[noise]. Thank you Fernando.

I would say that that's the biggest but right now.

They will show Buffalo its own cobble, but you also our middle east to effect.

That's why you're related we solve the.

Let me start with female Scott, mostly because then they named for 7% almost 10% up it goes up.

Passengers.

You know southwest is also the biggest hoping I know that 737, Matt.

So we are having Uh huh.

An important effect that these affecting gobbles by that that he then.

I must equally.

For for the effect of the tenants or anything.

But also.

Yes, we have in Baghdad.

Hello.

Hi, substitution effect of the South, California would be quite due to the thought that said he said he CBS is capturing hobby art for I really love about.

Mark It down South, California, why don't they see it seems that we are seeing he thought we would be agree on that nobody else heats up Boston just quite up to the Mexican beaches quite up to toggle <unk> do I got stuff you did what to cool it about little even almost all day.

All the well the Mexican beaches.

Finally deal that has who we are beginning to see how lucky shore degrees on some of their routes for instance, the sand <unk> gravel yeah, what's important about yeah. So one of the things that Volkswagen through yet you Sam I switch from international passengers that came from.

At least from and be able to capital or something.

Uh huh.

Well I know our report does not stop domestic passenger because they're flying from quite a somebody got them from the quite up about.

For for.

Okay.

Excellent news I mean, we bought for from how all these one.

Well there.

To have both I mean deposit would have only counting passengers that worked off some beautiful.

I will become the if I got to step up in just two days from this was the dilution that he's on the way.

We will pop the double counting all watching your seemed quite know alright bye.

So that if spot also affecting both the biggest part comes mainly from from from southwest.

Perfect pretty clear thank you.

And as a reminder, it is starting to one to ask a question.

[noise] and at this time, we have no further questions from the audience I will now turn the call back to back to mistake I went down for any final remarks.

Thank you again for your attention I look forward to interacting with you in the near future how about without sort of.

[noise] and this concludes today's call. Thank you for your participation you may now disconnect.

[noise].