Q2 2020 Corporacion America Airports SA Earnings Call
Good morning, well sort of second quarter earnings release, an investor call [laughter] go to put US here in America airports I personally participants would bring in listen only mode should you need assistance. Please I know the conference.
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So what <unk> no I Wouldnt see Investor Relations manager. Please go ahead.
Thank you good morning, everyone I think people doing yesterday.
Digging beneath the based global you must be don't make young our chief Executive Officer.
Well, if there were just laying around some cost for keep they know to lucky Sir. Please go together in a finer spend the money.
Well I would be available for the Q in these states.
Before we proceed I can make the maybe part of the Safe Harbor statement.
Today's call weakened thing for wants to be they mean and everything they fall under the same fiction and me for me and leasing babies, we'd be happy.
Yes, you know obligations. The I'd be told me by same is believed to be made me, we've given you would change events or circumstances.
No [laughter], both somebody's in Boise, and what are they haven't done be lucky and the main before making a bit basis. Today, we would be definitely got the <unk> typing fish in the Gulf between Argentina, which became effective in July anything.
I'd be Tony for me <unk> became the number one I used to any nine new phones, you know anything important.
No nothing I'm not going over to work do you must be known again.
Thank you can mean, a hello, everyone and welcome to todays call I Hope you are your family size healthy and see.
This has been the Doctor squad <unk>, you know what history.
In the travel industry worldwide.
Passenger traffic declined two unprecedented low level is impacted by travel restrictions to conveying the outbreak Colby. Thanks.
Together with the sharp drop <unk> overall demand.
We have been obviously executing on this that did you plan established mitigate the bulk of this had the crisis and made significant progress when all four key objectives.
First we established measures to secure the health and wellbeing I'm go East Boston, just an independent sake, we brought to close across our network.
Second we exceeded our cost reduction goals and lower Oh, gosh operating costs by 50%.
On your.
Fortunately these efforts allows us to significantly reduce our opinion gosh right.
Teaching breakeven levels, no Gina and your one.
Sure.
We refinanced a significant portion.
Principal and interest payments and we remain focused on further strengthening our financial question.
I wouldn't be skus that more and more dangerous.
Finally, we obtained the start of the concession fee payments investing an equally and certain Gorman supporting doesn't do you know I need to color.
Abortion.
Our operating expenses.
We continue working we blew up the bodies and governments across all concessions to obtain compensation for the bulk of these crisis.
No gardening.
A brief overview of our second quarter results Bussinger, dropping Lama did 98% year on year impacted by the Golden they'd been pandemic.
This highly significant embark on our top line revenues X. I could blow down 83% year on year during the quarter.
Despite our cost reduction and you said Weve reported an adjusted EBITDA loss of $33 million, which compares to adjusted EBITDA or 130 million doors in the same quarter last year.
We made capital investments or 33 million in the second quarter, which included a carry over from the first quarter and certain mandatory topics note that seems a bit we have suspended noninvasive topics to be certain price.
We closed the quarter Weve gosh, I think we went over $180 million.
50 million in D. views and then the Boston scored a total liquids people season over 230 million.
We continue to work on protecting and enhancing our liquidity.
More details in terms of our second quarter when do you don't do research.
Phone you know earnings report on the activity of this presentation.
On slide four you can see the status of each of our operations. Following the drought restrictions that were established by garments across all kinds of operations to contain the spread of two leidos.
The situation is what I garments worldwide adjust dramas bonds based on the evolution of the study, but its duration.
No Dentino Bothers me being remained close and commercial operations have not yet this year.
We are airports only operating goggle reflect the Asian, and some especially flights.
You need that he commercial operations restarted the first week of June would best predictions would traveler coming from certain countries currently but the early third Blakey, serving 12 domestic and 49 international destinations.
Uruguay restaurant that or rather the first week of July we clearly serving to international destinations as well as some.
Especially flights, although borders remain close to nonetheless in accordance with certain exemptions.
In Brazil, all income important or travelers were month from in but in the country from March 30.
However, she is the end of July this restriction was removed.
Commercial ablations never stopped although operating at significant lower levels, then doesn't get ideas, we have observed an improvement in bussinger topic since June.
For the four lanes auto body shaping up let's see I board, serving 34 domestic destinations while international travel is scheduled to start in September.
Yep.
Dixons on the in three or four nurse were lifted last week, well door, but I will be bond with the exception or repatriation and especially the site.
I know you commercial basis, you nickel or restarted during the first week of June although certain requirements apply an activity remains subdued.
Overall.
I will remain very weak across the board with traffic showing very slight increases as we show on the following slide.
On the left side.
Page five.
We show, but eliminate passenger traffic between April and July.
Total traffic he below in April showing a Betty.
But we called <unk> in June and July improving slightly although prior months.
Well the commercial operations have the open you need to lead the Uruguay, Argentina is it still operating under Jemaah repatriation and especially sites.
In the suit, although travelers remains weak we haven't seen a slight sequential improvement over the past two months.
On the right side of the of the slide.
You can see the most recent monthly Gotta go trends.
June and July.
So a very slight improvement declining 53% year on year compared with the 56% dropped experience in April.
Briefly turn to slide six.
We continue to make significant progress on the action plan established at the start of the prices.
Beginning with expenses the execution of our cost reduction plan allows us.
To achieve a 51% year on year reduction in cash operating costs and expenses.
Beating our goal of achieving afford to keep it per cent reduction this quarter.
No this excludes.
The second piece and construction costs.
While we expect to continue benefiting from these efficiencies in the coming quarters. We also expect to see some increases in certain cost lines, such as maintenance and paid with a slow start reopening our airports and Gorman support programs yeah gradually decline.
As you can see on slide seven.
We are advancing on the renegotiation of concession fees, we'd regulatory bodies into obtain gorman support in the context of this unprecedented crises.
During the quarter, we're hoping to be fair or be semiannual feed Bhavan in Britain and easily.
And this and this goes where previous earning call it.
Conversation.
With the regulators in Uruguay and they remain ongoing.
Since our last call.
We also being a gordon gotten to easily for a total of 20 million euros, who we spread over a two year period.
You know dentino the gourmand granted the extension of Peter I system to cover a portion of May June and July salary, representing a monkey really approximately $1 billion.
The government good eventually further extend [laughter] goals.
Keeping a long term view, we also made progress in connection with their view of their react when you come up the concession agreements across our operations remember we have different types of transition frameworks.
Starting with concessions with guaranteed returns, which includes Argentina, Italy or media.
In Italy, we operate at do as good concession.
Subsequent to quarter end, the regulator granted a two year extension to all airport concessions in the country.
You know dentino and our menu, we operate and their single view schemes.
What a certain return shall be achieved over the life of the concession.
In terms of our concession conducting but you've got an equal or contemplate force not your closers.
Looking Guy we filed a formal request with the resi lender, who later in connection with the economic recovery from over the four dressy knit and that type of concessions, Nick where we had already filed a request will bring an economic compensation under the wacky concession.
Finally in Uruguay, we started the process to request the compensation to mitigate Uri koby 19th.
I had mentioned in the past, we I didn't mean ito stages of these processes.
Which required.
Going through and beneath the regulatory China's we've continued to provide updates as they become available.
Turning to slide eight.
During the quarter, we also executed on our strategy go strengthening our that we'll fight.
I discussed in the prior call. It during the second quarter of talented R&D, we successfully deferred totaled over $176 million, a principal and interest payments in connection with our nodes and loan facilities in Argentina Uruguay.
Importantly.
This refinancing was that you were very high levels of participations from over one point guards ranging between 80, 693%.
Let's begin to work there and we also secured additional financing either.
And we had been on the negotiation of a new facility.
Nothing we I didn't hear on August Twentyth.
We successfully closed 40 million dollar linked local born at that you real person industry.
With the two year, Missouri.
Nick uniquely.
Gordo financial institutions approved an 85 million Euro don't.
Sure.
Despite the Italian public expert state insurance agency.
With a six year term and the two year Grace period.
More detail on different sections, we've shown on this slide in our earnings report.
No moving onto our balance sheet and we'd be on slide nine.
We ended the second worked with 100 million nursing definitely we went in and $50 million internationally views and bend the cost.
Resulting in total liquidity position of 230 million compared to 271 million.
So the end of the first quarter of 220.
Absolutely.
Total debt declined by $20 million sequentially to one 2.1 billion the end of the quarter.
I see remain there.
All of our debt he says.
Subsidiary level.
Net debt to last 12 months adjusted EBITDA ratio increased to 5.3 times from 2.9 times in the first quarter.
Reflecting the negative impact of Goldman being on book WBB.
As mentioned in our previous earnings call, we successfully renegotiated our dead maintenance go in under our that has.
Our subsidiaries in Argentina, and you're right both unbeaten November 10, two bundy one.
In addition last July we also being the waiver of our did maintenance go in seen their media.
Finally, our subsea you need any issue in advanced negotiations with bondholders to obtain a we were worried that leverage ratio going in in connection with its 60 million Euro notes due 2000 deepened before.
As a result of our strong cost reduction and gas personalization initiatives.
We significantly reduce our operating cash burn, reaching cash breakeven levels in Argentina and your away.
Please turn to slide 10.
I say noted earlier ensuring.
The maximum hasn't safety of our of our passengers and then go east East of the out most important for us.
With this in mine over the bus months, we have been working with the ambition industry regulators.
That's just the Ses experts to the Red Oak and establish customize brought to go through ensured a maximum has done that's across our company.
This includes Sunny day station in social listen Smashers.
Screening and bio concurred procedures for road passengers traveling through our airports I swear leveraging digital solutions.
We believe this is crucial moving towards reactivating the travel industry.
Sustaining the continuity of operations and regaining custom consumer confidence to travel by air.
They all of our airports have been adapted to me this new requirements and limited the risk of infection.
In airports, where we are ready operating commercial right.
This broker books have been approved by their respective regulatory agencies and has the authority.
Turning to slide 11.
During this challenging times.
We have also been working diligently to supporting the communities we serve in the fight against Colby 19.
This includes working together with airlines and regulatory authorities across our operations subsidizing Carlo charges for site that is supplies and the nation's looks anybody might videos for lighting assistance in repatriation flights I swear that's supporting charitable organizations in the supply the food for wasn't other communities.
No to wrap up turn to slide 12.
We have begun.
Immediate actions since the start of this crisis and there are consistently executing against the extent they expensive action Glenn.
I just discussed.
I want to think the whole company for the of course, they are making to navigate these challenging environment and continued to have yet to achieve the goes we have established in the first quarter.
Looking ahead, we maintain our legal settlement the outlook for the near term visibility today remains low we'd be globally subject to the widespread availability of medical treatments or vaccines.
This is lifting of warm in the fictions sustain go arm and assistance regain consumer confidence to browse and overall improved economic conditions.
We're now ready to take questions. Operator, please open the line called questions.
We will now begin the question and answer session.
Ask a question you made press Star then one on your Touchtone phone if it goes into speakerphone. Please pick up your hands up before passing the key to withdraw. Your question. Please press Star then to at this time Weve Apparels momentarily to assemble our roster.
Yes.
Our first question is from in fact, they know from Oppenheimer. Please go ahead.
Hi, Good morning, guys. This is mark on free and thanks for taking your question. So it looks like you did a great job on the.
Ron achieving 51% cost reduction year over year. So just wanted to get a sense of are there any additional room to move cost from here and mitigate the cash for and then how much of the cost reduction would you think oh permanent going forward. Thank you.
Hello again, thank you for a question, which is a market on again.
Well.
We have we have worked very hard on on on cost reductions, but this was a permanent goal on subsidiaries and that constantly working to improve this it wouldn't be situation.
Many of them are implementing new schemes and metal other news to go through next year budgets to be able to go deeper into the cost cutting and also to make those guts permanent that's you said.
But it everything will depend on.
The situation going forward once we open we will probably have some more costs related to the reopening and at the same time you'd be reopenings snow.
That's not gum, we they're very fact ingredient passengers that the there might be some cost associated to that as well.
And also we would have to monitor the government assistance and we are receiving and use that changes we would have to adjust accordingly.
Thank you for your question Okay, great that's.
Great. That's very helpful. And then just a quick follow up.
Are there any update on negotiations for a de Argentinian concession I'm you know any effect on progress there what the government I'm looking very helpful. Thank you.
Well, that's a US you know a they do.
The construction framework, Argentina Pro lights are green lights for it and it got to make it really will be concessions. So of course, we're in discussions with the government and how to move ahead.
According to a everything that's going on.
But the conversations are progressing, but we would have to C and d. we have in your views on.
How this will be red oak and bookstore, you will be when that that he said seven clarity on the reopening of flights you had in Detroit.
Okay. That's fair. Thank you guys very much.
Again, if you have a question.
Press Star right a lot.
Our next question is from Chris.
Cherry Hill from Marathon asset management go ahead.
Yes, hi, good morning, Thanks for the call, let's take your questions.
So I just I just my only question I guess really now is just on the debt maturity profile. You, obviously have done a great job and pushing out maturities and amortization was again waivers.
Difficult I'm sure it's.
Made excellent progress on that.
But I'm just curious I mean, you still have the sort of 73 million in 2020 280 million in 21 to 52 and 22, just sort of how are you looking at the sort of nearer term, let's say in 2020 wrong is near term maturities are you still have you still have existing and sort of whats the plan for getting through those maturity.
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Hi, This is George.
Thank you very much for your question.
Pointed out.
We have done in my view, a very good job and extending the debt profile. How would you be exchange offers emerging Tina I know the why.
We are in the final process of extending a that profiling Armenia.
In Italy, we also extended short term that we overcame the approval to obtain a new loan 85, and we've been euros as Weve reported.
We forget in key from Saatchi, which is a.
Export agent Tina exported intrinsic ending.
In Italy, we obtain a extinction in Brazil from primarily MBS. When should you know has the land Sheryl Palmer, which holds the lunch or a foreigner indebtedness.
And we expect to further extend it so weve back and based on our current forecast.
We are in a comfortable position.
Pointed out that will.
Actually start being amortized and paid a late.
In the first half of the here and again with the can forecast we are in a comfortable position we have a cash balance.
As we reported and we think that that again gives us computer in a position that we are in a comfortable position.
Our two forward that in Argentina, and emotive why are held by local investors.
Instruments that are much.
And in case needed. So the combination of the extension the current forecast the cash balance and the.
Close relationship we have with the local I understood it wasn't a comfortable position.
Great. Thank you.
This concludes our question and answers fashion I would now like to turn the conference back over to my team and not can for closing remarks.
[noise] I'd like to thank everybody for joining us today really appreciate your interest in our company, we look forward to providing updates on our business initiatives as they become available.
In the meantime, the team remains available to answer any questions have you may have bankruptcy. Thank you everybody bye bye.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.