Q1 2020 Earnings Call
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Took them to the vibe and Conference Center. The next available. Comfort specialist will be with you momentarily.
I have your first and last name.
and name of your company
Okay, and which kind of vehicle are you calling in for?
He offered and passenger traffic has declined accordingly from March 1st through March 15th, passenger traffic declined 2% and for the remainder of the month, it declined 61% compared to the same period in 2019 the routes that in in first quarter of 2006. The greatest impact on total passing traffic due to the restrictions of frequencies or suspension of lights are Monterey on this Mexico City Guadalajara and Cancun routes culiacan on it's the one Iraq and that apulco on its Mexico City route overall solid results in January and February were clipped by the traffic light and Marge as a result of adjusted ebitda decreased 2.4% in the quarter and adjusted ebitda. Margin reach 72.2% largely due to the decrease in aeronautical revenues, which were partially authors.
That's by an increase in on aeronautical revenues.
The commercial front we implemented 21 initiatives in the quarter including car rental retailers and restaurants among others.
Commercials Revenue grew 8.9% and the occupancy rate for commercial space in our terminals was 97% at the end of the quarter.
Diversification activities delivered a revenue decrease of 4.8% driven primarily by lower revenues from hotel Services during the first quarter of 2018 the occupancy rate of our terminal to NH collection hotel and Hilton Garden Inn in Monterey Airport. Well, 11.6 and 15.4 percentage points lower respective life than in the comparable period of 2019 Edition in on April 6th. We temporarily suspended services at the Hilton Garden Inn through at least April 30th due to loss occupancy.
Total investment in the quarter including mdp Investments major maintenance and strategic Investments worth 220 million pesos or major projects underway include all expansion and remodeling of Monterey Airport Terminal A expansion of terminal C in Monterey expansion and remodeling of the Tampico terminal building modernization. See what the naval terminal building new Passenger Terminal building in teknosa and work on runways taxiways and Aviation Platforms in several airports.
I would not like to turn the call over to the roof of parents who will discuss our financial highlights for the quarter.
Thank you. Riccardo. Good morning. Everyone. I will briefly review our financial results and then we will open the call for your questions turn into almost first-quarter Financial results. I don't know if you can revenues decreased 3.6% driven by the 4.9% decrease in passengers. I don't know if you got revenue per passenger Rose 1.3% in the quarter ton. I don't know if you can revenues increased 3.4% with commercial revenues making the largest contribution to growth.
Don't like revenue for passenger increased 8.7% in the quarter.
Commercial revenues increased 8.9% The best-performing categories were restaurants car rentals and restaurants grew 23.1% due to the office space is rented in Monterey and coolican airports as well as higher revenues derived from openings in previous quarter's car rental revenues Rose 15.1% as a result of the new contracts that have begun operations over the last quarter's
VIP lounges grew 38.6% you primarily to the growth in the number of customers served during January and February.
As a result commercial revenues per passenger increased 14.5% to 46.7 pesos as compared to the same quarter of last year.
They reciprocation activities decrease 4.8%
mostly driven by Social Services total aeronautical and astronautical revenues reach 1.7 billion pesos construction Revenue decreased by 6.0% This is a non-cash item that is required under applicable Accounting Standards. It is equal to construction cost of improvements to concessions assets. So it has no impact on your life.
the cost of airport services in DNA expense increased 0.6%
during this quarter payroll increase 6.7% mainly due to annual salary adjustments. This increase was upset by a lower cost in basic Services as a consequence of lower cost of electricity.
The first quarter adjusted TV. Decreased 2.4% to 1.2 billion pesos and adjusted ebitda. Margin was 72.2% down 40 basis points off during the quarter. Our financing income was 289 million pesos. We report it an exchange gain of 344 million maybe as a result of our position denominated in US Dollars, which at the end of March 2020 amount is 280.0 million.
Primarily me indoors primarily as a result of the aforementioned Consolidated income increased 27.6% to nine hundred and seventy million pieces.
Total cash from operating activities declined 33% to 375 million pesos at the end of the quarter of 2020 mainly as a consequence of an increase in taxes paid as compared to one q19 and the results are from net income of the F X Games since the f x game is a non-cash item.
This concludes our prepared remarks then please open the call for questions.
Thank you, please press star eight or to pick up the handset.
Our first question is more slow down to call and our first question is on the non-aeronautical revenue. So considering the 92% decline for the first three weeks of April. What have you seen the commercial business? Like have you seen any delinquency? Wait or delays Rent Em. I'm I will second question is on the maximum Paris. So for 2020. Could we still expect that? The terrorists could be close to the maximum per thank you. Thank you for both Christmas.
Thank you. Andrew beginning with your second question. Yes, we believe we're going to be very close to the to the maximum Paris for the years back regarding the first one and non-aeronautical revenues as the close of March 30th. We haven't seen any difference on delinquencies as as you recall. The birth of the non Aero tenants contracts are are divided in in a minimum guarantee price and a variable whatever is higher approximately walk around out of the total around 65% of their revenue comes from the minimum and 35% comes from the variable the variable payments. We don't know how the linkage would look ugh going forward.
Okay. Thank you for calling.
Thank you. Our next question comes from the line of Louis with compass. Please proceed with your question. Thank you. Have a good morning guys a couple of questions on my side. The first one is regarding internet is with seen lessors starting to repossess a big chunk of their Fleet. If you can remind us your exposure to a job in terms of passengers, but also in terms of accounts receivable and whether you have enough collateral and how we would play out if they were to default in terms of your full potential recovery, so that's my first question.
Thank you for your question or exposure to engine is not material and the similar to the exposure we had in previous months. As you know, Interjet is around 15% of the capacity of Alma. We don't know what will happen. But in in a situation such as the one you're describing would believe that that the man could be taken by choice of the competitors. Yes, and yes, if I think that as you canceled our exposure is not that we are adequately guarantee on Thursday.
Okay, great. And then also on the you know, clearly you mentioned that you've been talking to some of your airlines that your tenants to see what sort of relieved they may need. So could you comment on that? You know what sort of concessions are you giving to Airline? Is it deferrals or is it actually discount? And then for how long and where are you and those sort of negotiation on the thanks for your question on the air side. We granted I'm not 100% discount on Airport service fees during April and May for regular passenger operations. The discount is subject to payment compliance from the lines and excludes excludes passenger charges the two of the exclusive to a to a payment as for the other tenants we have offered birth.
the referrals on some of their payments
Okay, and and then the last question on on the in general terms, when we think about your cost structure you mentioned that most of your costs are paid off. I was wondering if this situation remains, you know long, you know lower for longer what sort of measures can you take to lower your fixed costs? Which phone cost are you actually looking at? It could be lower down the road if if necessary.
Sure on on our cost structure. There are two components that are variables which are the the tax consistent payments which cures the amounts to 35% of our airport revenues and also the Technical Systems fee which cannot distance around 3% of of our faith meaning portion of our costs are primarily semi-fixed cost in the in the short-term. We have taken measures. Obviously, we gotta mention the call like a temporary closures of certain areas in terminals, which reduce electricity consumption. There is no need to have a larger staff of cleaning services, uh servicing that area Etc. So so those are the the steps that we have taken to reduce our costs. However, most of our DNA birth
And the cost of services items are as I mentioned semi-fixed in the short run given that you have to operate the airport for the result of an authorized hours of operations. You have to maintain uh, operational areas with adequate safety standards Etc. So may need to extend that the effect on operations is permanent. We may think of an adjustment in some of our cost structure but I'm thinking of some recovery over the next few months. It will be difficult to adjust temporarily our cost basis because it would be more expensive too.
I would cost initially then having back to normality our operations. Once the Kobe spend emack is is over.
Okay. Thank you very much and stay healthy guys. Thank you.
Thank you for next question comes from the line of Mauricio Martinez GBM. Please proceed with your question. Hi, good morning. Good cars on Route 4. Thanks for taking my question. My commission comes on front of the next MVP and the current negotiation that you should go under right now and more specifically on on how the environment and will it will leave back to your truck project projections going for war and they and the Investments that you have guided in previously in Palm quarters, how how these impact the the investment the total investment for next five years.
Thank you for your question Mauricio. We are as you know, the the projections for the MVP negotiation are based on a 15 15 year projection. So we're off we're we're looking at the long-term and not have known the not only short term projections. We we keep our our estimate of capex of around 5:15 to 15 billion pesos.
Go ahead and let me show you you had another question and well, yeah and in a second question comes up the on the on the cost on the cost front office. We we we saw this quarter that you now now we see an increase in payroll expenses. So I'm wondering if this is for Thursday and extraordinary or impact in in during this quarter or if we should expect this increments in in the next quarter's.
Some of the adjustments primarily regarding payroll were based on recent contractual relations that took effect at the latter part of 2019. So so so that's impact will continue for the next few quarters on the other coast items. We should see a decline in in electricity both because of consumption coming down as a result of of the temporary measures that we have taken and also because we are getting a higher share of our availability under our PTA as opposed to to the public utility. So so we have a benefit of of lower price on the lot,
So the remaining line items we probably would see some inflationary adjustments or the next purchase as well.
Thank you. Very clear. Thanks. Thank you. Our next question comes in the line of Ruben Lopez with Santander. Please proceed with your question about hi guys. Good morning. And thanks for the call. My question is you needed to to cost as well. If you can give us any color of I don't know what percentage of areas have been closing Terminals. And where that percentage is a good proxy for maybe cost reductions of cost of services to you. Thank you. Sure. We are some of our airports that have few scheduled commercial operations under the the current scenario and the caliber that's the airlines have provided for the following weeks on those airports. We have shut down certain areas of of the terminal and get the operating with minimum wage.
More or less we have around 27% of our area of our German.
Those area under the temporary closure across the board in various of our airports and that equates to around age forty thousand square meters.
Thank you. And would you prefer to what could we expect in terms of reduction of cost in that sense? I mean if you're reducing we are closing temporarily 27% of the terminal would that same number would be used to to a reduction for focus of services. Would it be half of it? I don't know any color on that would be really helpful. So I think that the main impact will be felt in electricity and and and utilities as well as in our security and contracted Services probably because of security and and and cleaning so so we would see it's not going to be a linear reduction to to the percentage. I mentioned this going to be dead but much less than that in terms of our class. But but those are going to be the if we major line items impacted by these temporary measures that we have taken.
Thank you.
Thank you. Our next question comes from the line of Oliver Leyland private investor. Please proceed with your question.
Hi. Yeah, thanks for the opportunity. My question is going back to the mdp. My understanding is that under certain conditions. Depending on a specific fallen in GDP? I think a 5% or above the terms of the typically the 10th can be readjusted. Can you just clarify what exactly those kind of the mechanics behind that adjustment are and when that happens?
Yeah, thank you Oliver. You're correct. That's that's where the terms of the concession any fall believe below 5% that affects traffic. You can really suck tires in our case. This is a year in which we're we're beginning the process. So that's not something that we it will have a direct impact on on our side, because we already in that process as as we as we're speaking.
Okay, so there's no retroactive adjustment for 2020.
No.
Okay. Thanks.
Thank you. Our next question comes from the line of a Silverado with UBS. Please proceed with your question.
Hi, thank you for taking my question. So I will follow-up question on the negotiation for this year. So my question is your long-term check that expectation has changed and if so, this should be an actual terrorists and by how much thank you.
Well, in in in in the case of of of the end of unionization mentioned we maintain a 14 to 15 billion estimate of of capex for the next five years despite there is obviously the the effect of Kobe's to be held in 2020 and the uncertain recovery in the in the following months as kind of mentioned. The MVP is based on the 15-year projection not only for capex but also for for passengers, so so any impact in terrorists would have to incorporate the long-term expectation a change in long-term expectations in the passenger Factor as opposed to the previous Vector that we may have been using so I think that this time is dead.
Difficult to to incorporate in in in such short notice the permanent impact of Kobe's this is something that we are working on with our traffic advisors. And once we have a clearer view of how covid-19 situation would impact the long-term traffic projection. We may be in a better position to to to provide some some feedback.
Okay. Thank you very much.
Thank you. Our next question comes from the line of Alex with hfe. Please proceed with your question.
Thanks for this and and and good morning. I my question is is is regarding you know, who in Mexico is going to be responsible. What are the time frame and one of the the guidelines that's we're going to see for a probable. We open or reopening on the airports is is it the local authorities took the monetary authorities that are are going to and and I know that the are the airports are not closed for say there's there's still some traffic there, but I just wanted to know if they're used to have a very to be any sort of reopening. Are there Milestones to 4 that should be followed who gives those milestones and for you as long as you were as you are at looking at, you know lower volumes. Is there any chance that you you you consider reducing wage?
Personnel were services in a more permanent plate. Thank you.
Thank you. Alex asked to your right the airports are not are an essential activities or they're currently open regarding a non-essential activites. It's up to the sanitary authorities. We're not aware that there are there are any hard written milestones in order to talk to to come up with a decision? It will be up to their to their criteria and regarding a personal expenses so far. We have we have decided to keep our personnel as it is for the time being.
Okay, do you expect any you know anything we can have in terms of Milestones or you know what we can expect and sort of reopen. It's it's basically we took uh, do we watch for the airlines? Just signal this do you do what are you guys when you do your planning your budgeting? How do you guys you know took all that? Well, we we we as we mentioned in in in in the preliminary remarks of the call, there was a degree that was back on March 31st, initially suspending activities by through April Thirty few days ago. The the group was amended to modify the suspension up to May 30th. So so we are for planning purposes assuming that April May would be a very similar month to month.
In terms of of Passenger and operations and then thereafter we have yet to receive the schedules of Airlines off with their plans operations for the second quarter. We are under the assumption that the suspension of non-essential activities would be lifted off by the end of May and then we'll have a gradual recovery, they're after but that recovery in terms of passengers for for the airports would be very much depending on how Airlines run up their capacity again, number one and number two on the travel on the willingness to travel by by passengers wage at this time is it's very difficult to to estimate.
And and and and sorry to keep asking a bunch. Okay, but just final question for me. Are you in contact with less source for for them to park their planes and I'm assuming you're not charging any parking for for the plans in your airports for the airlines right or the lessors reaching out when they're getting some of this aircraft Spectra just stay in airports or or just not a discussion being held at this point. We we have not received calls from the source for such type of arrangement with some of the airlines that operate in in our reports. The major ones right now. The aircraft parking is I don't need service and as we mentioned earlier we decided that during the month of April and May we would exempt airlines that are dead.
In compliance in your payment terms with us for the part for the aircraft. So I don't know the services and an aircraft parking is one of those are both services.
Thank you.
Thank you. Our next question comes from one of Gabriel's. Please proceed with your question.
Hi, good morning. Thanks for the call to quick question concerning about accounts receivables. Have you seen the recent increase? Could you give us a bit of money if you was coming from the carrier, and if you have the the proportion that might be it could be from Interjet. Thanks.
Sure, we we don't have the the the details on our receivables at this time at the end of March off around 92% of our total accounts receivable where I don't know what vehicle related and the remaining month was non-business related, but we don't have the the details as of today.
Okay. Thank you.
Thank you. Our next question comes from the line of Steven share with today and proceed with your question. Good morning gentlemen, and thanks for taking my question. I hoping that you and your family. Okay, just a couple of quick ones for me. I think the first can you see or are you hearing anything in the Box language of the government? Uh that might be leading them to think differently about developing Santa Lucia Airport.
Hi Steven, I mean the the government I think the government has been very clear that the Santa Lucia airport is going is going ahead as of right now.
Okay, and we really haven't sent any any signal that they're doing other ways.
Okay, appreciate it. And the second question kind of a follow-up to Falcon. I know that the airports were in the central business, but could give us some sense as to approximately what percentage of your employees are on the ground and what percentage are working remote for example, and how long that might impair, you know with the editor bucks if you have the data.
I mean we don't have the exact numbers. Do you rent or what? I what I can tell you is our main headquarters. Most of most most people are doing home office off and in our airports. Obviously, there's a lot of people on the ground to keep basic operations running the exact number I will have to get back to you cuz I don't have it at hand.
Month of March th in our own business what stock compared to the same amount off the last year in April it actually has started to come down but much more moderately than than than with respect to traffic. But I I think Carlo would have a different Dynamics in the sense that when non-essential activites are the suspension for non-essential activites are listed often should see a pickup initial pick up in in cargo tonnage to replenish the supply lines that are now, uh stopped off so we would expect a better performance of cargo relative to our passenger levels for for the year.
Okay, appreciate the color and thanks for the time driving.
Thank you. Next question comes from line of Louise Compass. Please receive your question. Hi guys, just two two follow-ups one is you mentioned, you know, some of the initiatives you're doing to help the airlines in terms of aeronautical tires. I'm assuming that does not include the two so I was wondering if at some point you would consider lowering or discounting the to us or the airlines can pass that on to customers and incentivised demand or that something you know off the table at the moment would be my first question and then the second question, you know, is there traffic comes back what we're seeing in places like Europe is some of the airlines potentially are having to avoid offering a little seemed and that's obviously implications in terms of their low factors and potentially the only way to compensate for that would be much higher courage that eventually we'll hit off.
Turn demand. What's your view on that? Would Mexico eventually Implement that and is there any other way to offset that a potential negative implication for the error? Thank you.
Thank you Louise free. I think for your first question as of today any discounts in in into our off the table, we have just used the airport services, It's it's off the table and for the second one we've heard when you just mention for International Airlines in Europe, especially we haven't heard any local carriers making such announcements the one you described. I think we will wait and see.
Okay, great. Then could you remind us what percentage of your vehicle revenues are actually 2 and 1/2?
I don't know if I were a total revenues around 9 close to 90% is 12:00 related and around 10% off. I don't know the car services.
Okay.
Thank you very much.
Thank you. Next question comes from line of dice some question. The first one is off. If you can say that how is today the US dollar cash position of the end of the of the quarter second one. If you have the number of wage does that I assume you are going to control after the shareholders meetings. And the last one we say MVP and the current situation is any change in your contacts on a plan that you are talking with the government?
Sure with respect to the cash position. It's it's the same we have not changed. So so right now it's around eighty point zero million dollars in the case of the number of shares outstanding. We have three point seven million in treasury that we have reports over the course of the last year and that would be canceled. The authorized number of service right now is $393 million shares. So so we would end up at around three hundred and ninety million shares after the cancellation in the shareholders assembly and your final question regarding the dog e p most of the topics, even though it is suspended right now because construction is not considered an essential activity most of the cabins Committed Pig.
For the last year of our program that ends in 2020 was already contracted. So so and we do not foresee reservations office of motor size or or trying to renegotiate that with with authority. So we would comply with the committed Investments under the current empty problem.
And for the negotiation that will begin at the you are talking about this with this with the government something change for the the MVP for the next five years or continue to be the same for now, we're maintaining our estimate of between 14 to 15 million and as the year progresses and we sit down with the government and and Thursday. Understanding of copies long-term impact that number may change, but for now, we are maintaining that estimate
Okay. Thank you so much. Thank you.
Thank you. This concludes Q&A session. I would like to turn the floor back to management for closing, I want to thank you all for your participation in this call back at you and I are always available to answer questions, and we hope to see you soon. Thank you and have a good day.
Thank you.
Ladies and gentlemen, Wednesday teleconference disconnect you on this time. Thank you for your participation.