Q4 2019 Earnings Call

Good morning, and welcome to gap fourth quarter 2019 conference call.

I had 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 that my pleasure to July <unk> two Maria that are not thought about corporate communications. Please go ahead.

Thank you and.

So part of.

Let's see if he goes fourth quarter 2019 conference call.

Today from the company, we have Mr. Trump was done gaps Chief Executive Officer, Mr. sell whatever yeah. They are chief financial officer. Please be advised that any forward looking statements may be made during this call piece, you're not accounted for future economic circumstances industry conditions, the company's future performance our financial.

Let me tell.

Such statements made are based on several assumptions and factors that could change, causing actual results to materially different from the current expectations.

For a complete note on forward looking statements. Please refer to the quarterly report issued yesterday. Please note that unless stated otherwise all comparisons in this call will be first is gaps results for the comparable period of 20 team.

At this point I would like to turn the call over to Mr. or was that for his opening remarks.

Yeah.

Thank you for getting off to the.

Let me.

Good luck to them he was not.

No I mean, some he's got his.

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Okay.

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Okay.

Yes, I guess when do you.

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I can start.

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Yeah.

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Wonderful.

But you know.

[laughter] difficult.

No.

With 2020.

Well go to either.

Operational either I'm talking to your body.

Ladies and gentlemen, I didnt get direct imports, which oh.

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So I'll just go no go away.

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Got it was born problem for them.

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Well what does it doesn't look we're still.

Well ladies.

So we shouldn't give you like although it does seem to be as well as well that's done local Scott.

Good night.

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No.

Well no what's difficult Stuckey third.

They would you do you need because of the southern California bug well, probably that's the collection.

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It doesn't.

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Talking before so I could give person.

Well Scott I'll just wasn't just looking good she by either.

Where are we probably would have you when you couple three Douglas.

[laughter] Greenfields chose inclusion in Mexico.

I don't know, but did you guys have deals like the ones that.

Oh, you know he can do not show.

Those are both well because lot of include such thing to do they Didnt. Please go to [laughter].

However, there is a big companies of all the luxury.

Sure This initiative as well.

Could you put themselves.

Global rollout.

Well the styles.

Okay.

You know Scott will do you.

You didn't see upside you on football the garden.

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Does it get anybody would get I'll.

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It's all flexible debt.

So long wholesale.

He came on board.

Yeah.

I don't I'm, what do you feel side I'll also.

Oh well.

Oh, I know you almost equally well, we'll talk to your point is person.

But we do your loan losses as well.

It will be about maybe you can you talk is you don't do it did seem to work.

What we called.

I was worried about the we lived beach multiple.

However, there.

They did you without pushing Gould.

The launch of the you.

That's fine just listen heap Leach.

I'd be baby.

Yes, good flight I didn't make it.

[laughter] so let's go to deal with Oh, Let's go where do you.

Well.

I'll stop here before but did you die walk along with the latest is just also do you foresee due to before.

Oh, the rental coverage is one of the buffer.

Well, it's not of course there.

So why did you get a bunch of the commercial there is to overwhelm cut off.

Well I went up but order.

Okay, well gosh, well just before you do because this is were.

Well not addressed we school.

Before we live there just spoke up 9%.

You bet.

[laughter] wasn't won't you doing quite well hopefully we're the only other Pittsburgh. They also do it was talking to you.

Just gobbled, we decided to international third no legal.

Well, let me we are well what is lucky comes I suppose.

On the other steps that need opens your because a lot of course.

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Well it ends up there just for surgeons person.

They did you do something well examples but how.

Well I don't cobbled Unfortunately, I don't want them.

I want to us that there would start.

Okay do the three areas that was that more people they are going really well do it.

What do you feel good about third even though there's some policies.

Let me pick it up or something else wasn't completely they just did quite well what about what the.

You should probably be well before the yogurt goes there just.

Well I would you be sensitive and girls cobbles International didn't know they don't want beside therefore easy bosses won't be easily so well this year.

Well.

I can suppose we just got hopefully it rose by 15, new investors, both 58% Apple was supposed to be global stopping.

Hi, good does it might be.

So just wanted to walk me toward.

Before we go yet, although still well below the rational newpark is on the levels.

Okay, So I don't want phases or.

What about the still we're also recently.

Yes, the largest which also operate by golf game like all new business wins.

Good day 40 deals like <unk>.

You know you loved it used to roll stuff that we sold the higher bucket the push from the certainly not show loved it probably couple soup.

Oh, you know we are currently working on one side, that's possible, but yet you don't just bought a blip or what not what the wireless product looks gobbled up quite well definitely definitely.

You got your opening as I move yet.

No no topics like you got to do something but my sense is I'm really going up.

Slide 15, 2019 pretty much I don't think it doesn't mean, we can actually get back to go yes, I do believe India I will say leases.

I must have you.

I'd also point to make a replacement, especially well I've been talking I think I'll start the baby.

We do anybody wants to take it tells the story consortium I sort of a sense of how will you didnt do probably.

Hi, Larry I should say shouldn't that they actually wasn't done for the three main boy. This is a way we all do.

You can do that you've talked about deals a lot of kinda, what's the like Oh.

Well, the new Professor <unk>.

Well.

I want to cool, but overall if this will lead flow easy we didn't know you got some called problem as well as domestic and international buys.

Oh I hope.

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Oh, so they might be because they cannot well for wholesale otherwise.

It's possible, but can you pull on the fed up quite a border.

Well I'll go with commercial for it.

It's always does not I'm all for the 2020 difficulties or book do you suppose separately they won five deal.

[laughter].

We don't believe that maybe follow up and that's one piece I don't get how useful energy, where do you pay television as well, although we loaded equals.

The good thing.

He has brought to you for this business consumption first.

Almost all of you did well that appeals to black adults or the photo dupilumab qualifies for electric motors right.

Second we will be thoughtful my thought was what was called bodes well.

If I can go.

So generally kind of.

Okay.

Do you feel like.

Why do you want a hot I have always been stable.

Doug will get misguided.

Repairable Hooper.

Oh Worksite employees can generally multiple wherever you do you see that did you buy them when they do.

Oh, we David Wigginton I start we sold for you is sold worried a life we've always been page.

It's that grew by 11%, we just have all right well instead it really understood exactly are you worried Tuesday profile.

Oh, sorry.

That's where you're going to worldwide for people are saying, what we believe it back stabbing cellphone I'd be open or the new quite funny.

Hopefully increase I hope, we should do everything we buy writes itself. We're supposed to go probably late talent as well I did my favorite.

Have you Didnt go well focus on some of the largest fight.

Okay that help you out there how willing are you price as well but.

I'd also because of some they travel to consider.

That concludes I wouldn't like I know the operator, let's open the floor for your questions.

Yeah.

At this time, if you like to ask your question. Please process timeline I just touched Samsung you may remember yourself and make you at any time that fracking in hockey once again, it's starting to want to ask a question.

And your first question comes from Alan I see US with Bank of America. Your line is helping.

Hi, good morning, and thank you for the call or just one clarification did I understand correctly that you know we expect that adjusted EBITA.

Margin will be.

Around 64% to 65% with a considerably day shouldn't have.

Kicks in airport is that correct. Thank you.

Hey.

Good morning, Alan. Thank you think before you for your question, Yes, you're right. It due to the consolidation off a key soon as we previously mentioned.

Im not were never before seen indeed, indeed conference call Hey, the new it'd be the margin of gas would be around six for 65, mostly I would tell you used to try to foods to decrease this person's age that now is there because India operation of Houston would bring.

Are you, suggesting there is thinking on EBITDA margin of around 8% bookings than we see it provides these studies and I just mean finally I wear our target and then when it started if he did he said he is not good margin he's more they will see shoes in the market and they they consolidation of the kind of person over there.

Actually it's roughly Indiana.

Great. Thank you.

Thank you and your next question comes from Mcgeechan My Phoenix like GBM. Your line is now open.

Hi, good morning, Thanks for the for the clock Ticking. My question. My first my first question is commercial revenues.

We saw a sharp deceleration and this quarter and I'd like to know where your expectations going forward in Mexico was specifically in the commercial from I need the decrease in Gorilla, how does not a route to go revenues came from the problem with the parking.

Yeah business, there will be completed we see that ideas that will be nice my first question.

[laughter], that's really feeling.

One of.

And then as you go truth <unk> Uh huh.

Bausch and lomb due on the on the commercial whether you would think that we will continue to out at least double digit growth on the commercial revenues for sure but last quarter of the because that's a nice to see how did that impact on the.

Oh, no I'm ready for their body not the well ahead I thought you remember we thought would be good part comes up you got was good.

For the ball here, we are ready to go maybe a brady de stocking up.

Again, I just said that we are no normally.

Corporations that know them. So should the last word reality, but I'm confident that came from that it's it's even if you could be good night.

[laughter].

Perfect and and also on my My second question will be on Mexico's Margene if your margin.

As you know bad.

Makes the Kingston within the other airports in Mexico, we cannot see anymore di di EBITDA margin for for makes it. So maybe you can give us a color on that and moved very helpful.

I mean, just to understand what was the level the into fourth quarter and in Mexico and in for EMEA freed EBITDA margin.

Yes, Thank you Mary field, if you sold.

Yes, the maybe the margin will be growing in Mexico, we have a in order to roam 70 cents, a 2% 70, 72% and we will continue in that range for me I see we are in process of there are of the adjustment in.

Because of operation because of service because the new infrastructure. So we we have seen the air force due in 2019, saying we are for Peri all the personnel.

And this will be needed for the deployment of the new Capex commitments.

In Mexico, So a reality not very good level off a efficiency and these are down to stay true to our higher margin Dodd said that that range 70, 72%, that's how we view so far.

Thank you very much.

And your next question comes from Rubin passive Santander your line is helping.

Hi, good morning think vertical.

My first with any some revenues he gets done.

Neuropsychiatry remedies Professor you what's good for $5. So can you get us or your thoughts Sunday and he said he said you're working on these and or where do you see these number in the medium to long term. Thank you. That's my first.

[laughter].

Thank you for example, I mean, sorry, I like to say.

Is there a review.

That's because the timing.

Hello.

Got a couple of data they talk was definitely so yes, I I really put somebody else is there something well results because of the disposal.

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The other side, we are right in other words, you don't get me.

Construct for the commercial revenues.

Ooh was thinking to review the laid out for would be somewhere.

Sure.

Even so.

You know the 2020 you lose the reports anything in terms of revenue flow for for 15.

But right now just got watermark color.

Do you have about targets here in the medium to long term or any trend that we could see likes and Ah yes. He brings home in the upcoming years.

Hi Register so well, Oh, CBR target and we will try to reach the it that target a it we've got a.

Good day.

Operation at the Airport book.

There are some a commercial contracts are undergoing then we will have to relive associated with these tenants. So we're in the process that it's easier to 2020, the our main target.

Well established or I'm, leaving a return that we are expected do you have on around 8% off at least the margin and we will live for the efficiencies in because operation they will try to improve the their revenue per passenger and commercial.

I think we'll make sure revenues.

Okay perfect. Thank you and then just a follow up on that on that same topic I understand it. They they play here you said something moving Kingston, rather than the margin expansion, but can you be with any sense of the cost structure going forward. I mean, you said he first anybody for anybody looking for work or where it could we see these numbers.

Well I think Judy you your main meaning are they they've construction process and they can do the work Cindy and therefore is that your question.

I know, it's a EBITA margin or floating sunny day medium to long term.

[noise] horizon.

Oh well.

Okay for us a piece around.

Just because you're saying hey, we won't pay TV to the government's it's just a person conversation see families that hey, we only have 28, they see a person or a 40 operation and for the return. So if we have and then if he says he led that we can see.

But we could have an operator here for with Fannie for sale.

Then we will be happening in that long term, Oh, hi, Susan and around 18% in the most efficiency level of how busy margin.

Oh.

Okay.

Okay, great can be more most below that.

[noise] members now please turn to be the Mexican concessions huh.

Oh from famous talk to the government wants it.

The comparison.

Hmm, sometimes that she was recommended either go to station.

No I mean about also basin does it go ahead.

That made us not to be very.

In fact front because as you will be a consensual team that's how we mentioned depocyt.

So you do it.

Uh huh.

The they would be <unk>.

Over the life of the consent show through August 2% anymore. He didn't like.

Right right, Doug I'm sure, so well just Dunkin' donuts.

Well since no one can show just circle.

The more related to the.

Hello harmful.

Rob There Doesnt mean, we thought there ready for sure.

Got it even through the rest of your wholesale that call, but if there are so good reagent, though I've, Israel, Bobby who they.

We'd be more work Uh huh.

Good.

The best possible.

Oh somewhat with the goal.

Got it from dot about the specific there.

That's very clear thinking.

And your next question comes from cannot Gaxiola with credit Suisse. Your line is helping.

Hi, good morning, and thinking physical my questions regarding the scope of services, which we saw organic we flat year over year.

Ah we were wondering if it goes but expect that going forward into 20 to 20.

Hi, good well they sold very well.

Service in this quarter increase around a 10% due to the integration of it.

Thanks and airport mainly.

Yeah, but if we can see the only even in safety the operation of ER, So far ports in Mexico flawed and won't feel they see we have increasingly Kosovo Corporation. We are trying to not [laughter] enthralled say off they have this.

Obviously, we need a field of a game.

Implementation in takeover the operational Oh ski season.

Hey for Fourq Twentytwenty, we we are expecting around a 12% to 30% increase and because of service in terms and in consolidation basis, including a Kingston. So if we consider insane the results in 2018 database.

This increase we delve a the consolidation of Kingston, they cause of servicing fees was 83%. So we are in that light. We know doesn't become more infrastructure. We are looking for additional efficiencies, but we know also that the we need to a when Rick.

Why more more people more more [laughter] come to you for the deployment of pick out fixed that would be a as they show see increase the for Clinton 20 in terms of the cost of service. So I do want to see that can be easier I an adjustment in the because of service.

The mainly because they they personnel into new has gone needed for for that deployment off capex.

Okay. Thank you very much richer.

And then next question comes from kind of San Bruno I'm, not I'm Marine with Goldman Sachs. Your line is open.

Hi, Thank you very much so I have a follow up questions on non aeronautical revenue sorry, if you have commented on it but the line. He is not great. Phil just went to a up the dates on your strategy for a non aeronautical revenues going forward I remember for the past couple of years you have invested.

You know drug great extent on days a your costs grew because youre building you know the case for a higher bookings revenues I'm just trying to reach has materialized.

It seems now that you're seeing some deceleration, but that you know the big question. If you know going forward to watch or do you expect both in terms of investment seen income Michel areas and then bookings came back from the cost structure and also of course, resulting a you know fall just any facts on on on revenues on that front. Thank you very much.

No.

So instead of something Northern Mexico revenue continues to hold the older moves to create badger meter HM.

Passenger why don't we keep backup.

And become views.

More first sometimes there's a lot like mm.

Yeah, I do like disposable sample, but having said that you know there we were happy with <unk>.

That's good.

I actually don't they said about moving to logical nurse out right.

HM.

Well go to that shows up also performed well.

So I don't get better.

Oh, it's worked really well I wouldn't say.

That will help at all.

Great.

Well we.

The spaces for commercial activity.

Well go through with the easy in Delaware, but [noise].

Yeah.

The best possible.

Deserve.

We will do do you do you see a two hour passenger what that's doing very well.

He part I don't so.

A couple times that we.

We should continue.

Sure.

Well you eases line.

Do you need there right that's true.

No no wasn't working.

Also will pull while I've got all also for quite Oh.

I'm coming here.

Mary I was very bad it's called me here, if you look good times to towards.

No we love of Great I was our commercial revenues.

Thank you.

And then next question comes from Marcus I read only seat Citi. Your line is helping.

Hi, everyone in good morning, I have two questions. The first one name.

Continuing backyard conversion of traffic growth into a beat that growth what's been no onetime.

Could be can be asking some spark Jane.

Improving or they may be corporation somehow exceeding their hybrid there. That's my first question. Thank you.

Hi, My clothes and thank you for you for your question.

And the traffic grew.

He will we be he line with A. I would view 2019, Hey, we have to consider that these years was it the first one weve a seem to the is 8.4% increasing traffic on screen Hey, Kingston.

Hey.

And they have you done merging of say Oh of the growth off of you've done a will they be a better for these [noise]. We have to can see there that the consolidation of Kingston, there the new comedies and they did close control exactly we.

We continue to try to implement you know workforce so.

They the traffic growth would be defense davita and inform Twentytwenty with me how you're the growth of the beat that in four for traffic with another stake.

Double digit growth they were expecting that seem to the mids and that's I I were talking about the as beat that will be growing I passed away due to the they neutrality.

Okay. Thank you very much.

Very clear and for my second question and it's regarding them to be what was.

If there's if you're doing so much capex.

Five your figure.

Versos waiting so I'm, hoping.

Over the next 10 years and sparing the consumer the burden of high profit.

Yes.

[noise], California.

No matter of course, I would consider shows.

I really important part that is related to one time does.

So.

So I can you talk about what the best funny there is doing.

Well just gotten back inside the vessels founder.

It's all about Yaka.

Maybe for you guys I'll circle back he was somewhat with Central Oklahoma Cup of coffee is awesome here.

Number of old problem. The buses or is this kind of thing. So there was close I will say that.

Oh I'm done.

But think about Oh God they.

Usually let it was good we believe well by well I suppose Turkey.

As you can see the last five years, we almost double the size of the developer bought.

Good day, so what do you care to find out for a world where it works out.

I was out while these days at all times these masterplan jump green.

Well I will say by <unk>.

He's back for either Stan.

So what we say that we do do only 1000 was essential while we will you did you use that go along with cool pool or while in Ohio.

Dod who you really both though to increase that weren't capacity and be ready to go do you really continues we do we got started shovel or beecher large manner.

So for the principal coupled.

Well I mean, it's Directv Latin <unk> Dod could be them there towards the said Gordon wrongly.

As you know you met school is really important that two booster lad for possible. Despite your busy decided that gainful scalable. So he's done this easy roam closed today.

So it's really important right.

Another thing we said last week was therefore for the long term I didn't see a future for contingent worked out well okay.

Cycle before you get a woman.

So well.

Yeah. They love it thank God, it's terminal building for that kind of that that's for sure.

We are globally.

The number of coordinator.

And that's certainly well that's for sure. We are testing that got additional capacity will be done show passenger namely that's in doing that.

Let's turn to to Mexico.

So why don't I thought was.

I see books as well.

So does that we've always seen bad what I call will be.

Well, that's all for the full pulled back to school.

Yeah got their loved ones here, we thought well, let me walk, we're saying Oh.

Oh, that's about what you're seeing what kinda, who all most probably little books, there Oh collection passengers to wallet. So they did what they say well get halt it's already good.

We need to.

You do get corrected, but it's too soon to bring those passengers who wala airport I mean, I mean, that's out there for Willy I didn't go down to Mexico.

Very good needless to say why the size of our forward.

During the first couple of years.

Okay. Okay. Thank you very much broader Ah. Thank you for the Collin I appreciate that Dan first.

Thank you. Another reminder, it is starting one Cascade question. Your next question comes from Brendan falling around Loughlin PBR. Your line is helping.

Thank you for protocol and taking my question.

My first question, it's a it's a whole lot to the cost or do you have cost question.

Can you elaborate a little bit more on that what additional efficiencies you will be pursuing at your airports and a if you can give us a sense of what the let's say like to like.

Cost growth could be it in fact be Jenny.

Hi.

I wouldn't be getting too yes.

Although probably you.

Lynparza, it's important wins as well.

When you made that puts us back sort of the square meters are popping up the last few years from well yeah.

Fuel cell phones is difficult because you're going to something I've gotten shows what are your Dom you usually do yeah. We should all Boston is done in some way.

Where do you have like a.

Yup.

Well the passenger.

And then you don't seem to come in here.

<unk> Lucia optical.

For the additional passengers that will arrive today.

Uh huh.

So we are seeing how does show he just using the computer.

For the Lucerne no cohorts passenger out what does the topic here.

Well said go we are also works.

Well you stuff all the Laura.

When you just mentioned.

We are trying to say Oh were airport that the puts all over Europe, where.

The company could use will come from Oh, well, it's choices that'd be very good or even the Chinese imports on production up go also.

Thank you as they grow like my second question is regarding out of the targets implementation I mean disease or have you already implemented the food various.

Moving directly he or she is going to be a gradual process.

No we're already implemented 100% Oh, sorry.

From the third thing of gentleman.

Thank you and ask if I may have follow up when they maybe you expect your your addition to the CBX tough so you'd need to be who media operational.

And then I knew the new terminal.

If I mean, a process or was it yeah.

Indiana 50 52.

Perfect. Thank you very much for taking my questions.

Welcome.

And as a reminder, and it's starting to want to ask a question.

[noise] [noise] there no further questions at this time I'd like to trying to call back to management further closing remarks.

If you go to much more definition.

Yeah, well intervention. So what exactly are you planning we can really help here you go to one chose not to 22.

Some of your done joined US what I'm learning management doesn't isn't I've already said mentioned about what did you put your goes it's an element.

This does that that's something that's not where investor relations agent, who knows he was to participate.

Thank you and I have like Reagan.

And that concludes today's call. Thank you for your participation you may now disconnect.

[music].