Q1 2021 Grupo Aeroportuario del Pacifico SAB de CV Earnings Call
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On hold we do appreciate your patience and please continue to standby.
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Yeah.
Good morning, and welcome to GAAP first quarter 2021 conference call all.
All lines have been placed on mute to prevent any background noise.
After their 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 over to <unk> Investor Relations team. Please go ahead.
Thank you and welcome to the Grupo airports, where do you live because first quarter 2021 conference call.
Presenting for the company today, we welcome Mr. Raul Revuelta, Gap's, Chief Executive Officer and.
Mr Sauers.
The Chief Financial Officer.
Please be advised the forward looking statements may be made during this call B C.
Do not account for future economic circumstances industry conditions, the company's future performance or financial results.
As such statements are made based on several assumptions and factors that could change, causing actual results to materially differ from current expectations.
For a complete note on forward looking statements. Please refer to the quarterly the quarterly report issued Wednesday.
Please note that unless stated otherwise all comparisons in this call will be versus GAAP results for the comparable period of 2020.
At this point I'd like to turn the call over to Mr. Revuelta for his opening remarks. Please go ahead.
Thank you good morning, everyone and welcome to GAAP first quarter. She tells from 'twenty One conference call.
In two day school, we briefly reviewing operational financial for use for the first quarter of 2021 prior to taking your questions.
Got it from Shoals for ammonia impact by the pandemic, However del in Perkins for niche in the landscape that I will discuss.
Through the first three months of 'twenty 'twenty. One you did for you are continuing to recover your store fleet without 37 per cent declines year over year or up 38 per cent decline versus 2019.
Keep in mind at March 31, 'twenty 'twenty, the Mexican government she's been all non essential 12 or for two full months, therefore dominion circled the button bundled and it will not be fully reflect all until the second quarter of 2021.
There were a couple of trends we show the first quarter 'twenty, one was driven mainly by stronger domestic sweatshirts actually simple. Therefore, if b quanta extremely nice recovery folding agreed up 9% through the first quarter of 2021 person gets third quarter of 2019.
However, in the case of what I'll call that the recovery was a slower pace with a 36 per cent decrease versus the first quarter of 2019.
I'm concerned every day, we believe that the recovery of water is a key element to win goes back to 2019 few juice.
Well do you think the rush of bus passengers traffic continued to be impacted by the U S imposed travel restrictions were.
We're implementing the 20th fee for the generous.
There were also a bunch of Chihuahua, Mexico on car you got imposed by the governments of Canada, and United Kingdom, He doesn't need the air.
For to reduce the spread of coffee.
Looking ahead. However, we expect a continued recovery of domestic traffic.
We're so optimistic coming from Russia recovery.
We see declining COVID-19 cases, together with irrational vaccination rates, even simple thing to mention the deferred revenue will be a good indicator on the recovery you hope to achieve.
And thirst for delicious destinations, but also of the metropolitan airports such as well.
It is important to me, it's jumped up a lot of your Fernando Mexico, What's the thing on dogs did he does he should've eight on 28, you played in the near future respected.
You know the issue Jetblue just at the start of operations Scaffolds day Schomer I reported during the first quarter of 2022 with the opening of Los Angeles, Our JFK in New York routes.
Also our spirits Airlines will start operations with Osaka, just talked about your company.
In the kitchen rollout each day.
So now the route of Bahia Las Vegas Morelia for.
Maybe talk on more ADR Portland.
Did you say a good sign of daily market, and even social Sino us a faster than expected book over.
Well, we don't think for nausea per four months I would like to high net GAAP I really do want to maintain a strong balance sheet and the courage to Trish.
Which was really the last two months data for next year.
Hold true obese krish.
Gotcha Gotcha.
Inquiries by 34 per cent or three 7 billion pesos versus the first quarter of 2020.
Reaching a total of $14 seven b a pace during the first quarter of 2021 will generate positive cash flow for operating activities of $1 8 billion pits.
As a reminder, where we're starting from a weird for Joseph our own share. So much first for this year.
So today's who self report just 24 million shares for a total of 531 million per well.
Up front.
Total debt reached 24.
For <unk> 5 billion pesos maturity during the first quarter of 2021 were $119 million, which we're working on for a lot of these shows 30 strips monster in.
In the first week of B, we expect to issue another tranche of debt bonds for the Mexican market for 3 billion pesos, we like to wish you a 50 per cent.
And that makes for them up the value of a long fixed rate depending on market demand.
We'll just we'll be using these pursuits for Capex are whipping on Sunday July 2021.
If you keep working to mention Doug that's a b on Moody's boat right beside the triplet average weighted local scale due to the children, who sold some ratios that the company has.
Moving onto the P&L.
The revenue decrease by 30 football strength, driven by overall lower traffic true GAAP spreads work, even though the increasing maximum value for.
Yes, it would be up to it was not reached in this quarter. We expect he will do which by the end of 2021 day.
This was mainly due to the international passenger traffic decrease of 46, 9% Walter even while our credit for what you have done for Sculpsure book, We've got passenger.
Just trying to get to the Jewish illness.
The company still got the ROTC Betsy makes your work on the Jewish population will help with international traffic in the coming quarters.
And we see more activity from these parts from this profile. We believe we will be closer to the top of the maximum tariff.
Commercial revenue decreased by 37% most of the impact was from the timeshare from duty free operations. However, you know for do you think he buys consumer spending a day at Busch Gardens B lunch is a mobile phone application deposits just got used to order food.
Hi, Steve.
For the plane gets is improve the overall experience b convenient for the convenience.
Got it.
We do share the construction of a new commercial conflicts.
Airports, which will include a new hotel corporate Gafisa and commercial spaces, we are expecting that this call comp, which will be ready at the beginning of 'twenty 'twenty true as the new business lines in commercial weighted.
Regarding cost reductions, we achieved 9% lower operating costs compared to the first quarter of 2021.
Driven by a 10% decline maintenance, 15% decline in utility expenses as a result of green energy generation for solar projects that are known for.
Our Mexican airports as well.
From the Montego Bay Airport.
As a result of value circle Maki swept could use increased passenger traffic is growing commercial revenues and AOI.
Our cost control policies.
Well its one 8 billion pesos for the quarter, we are marching up 65 per cent.
Moving on to the Capex to the inquiry Capex, if your capital expenditures for our book 700 feet.
Holger and Cherokee million pets, this position us well in order to comply with the challenging Master development program that we have to place.
We're sorry for the second one where you get while having a book we continue with the construction of the processor billing day quanta with more than 60 per cent execute.
Oh, the sponsored scovell sternwheel beauty.
To last for years, we do where we at the end of 2021.
To conclude I want to make sure that our Oregon.
Ordinary shareholders' meeting took place early this week on all the proposals that were successfully approved.
<unk> was 37, 2%.
For the ordinary shareholders' meeting and 92 per cent for the extraordinary shareholders' meeting.
Now I ask the operator to please open the floor for your questions.
At this time, if you would like to ask a question. Please press the star and one on your Touchtone phone.
We draw your question at any time B pricing the pound King once again to ask a question. Please press the star and one on your Touchtone phone.
Well for Q.
And we will take our first question from Alejandro <unk> with Credit Suisse. Please go ahead.
Thank you.
Thank you for the call and thank you for taking my questions and I felt the two questions for Charlie the first one is from the drastic would cover it.
Can you can you remind us what was the traffic.
Over a period of that assumption.
In the last MVP I I guess for.
Their competitors.
So you're three years give or take.
I just want to confirm what was the traffic recovery for you and from the recent that that that we have seen you regarding traffic.
We will leave that theres, some upside polices and value.
I mean, so for sure for recovery.
Okay.
Thank you.
Firstly Samsung was we originally expect for for the recovery. We saw that we will have the same amount of passengers that we used to have in 2019.
For B for the 'twenty 'twenty for for the end of this week.
Five years.
Good day with all day news.
The great news so far this channel fleets from the Mexicana.
<unk> companies and also the new openings for the new announcements of opera news that we are seeing in the last months, we are expecting to have a recovery really more in the 'twenty 'twenty true it is.
It's important to mention that it wouldn't be parents of each of the airports I would say for instance that we are seeing that for instance, the quanta could have either first of all where airports that we will have a fully recovery of traffic.
You bet it could happen.
The first quarter of the coming of the of the of the of the coming year.
So we're going to see various different of pace of recovery for sure. We have really we are optimistic about the recovery of well for.
Airports I see the Scarborough from major airports.
Because I believe on the coming months, we are seeing a great opportunity for Caf two passengers that use to me unless you're on.
Long hauls that brought in some way will feel more comfortable or safe to fly to for instance, goggles that used to really assure I share flight from South, California for instance.
On Thursday, we said that we are we are more optimistic about the pace of recovery.
We see that is a.
Some room for all sides of the original projections of the Master plans.
Okay. Thank you it was really clear and my second question.
It's from the domestic airlines.
So I mean in theory.
And what's the relevant their ninth book for GAAP, and some and some day.
But did the airline.
Expenses paid it now that they are intending to restart the operations.
Yearend.
Although they are starting up for my own jump there and they are impressive.
Have you had any discussions with them.
For the restart of operations between Gap's airports.
Okay.
I will pick up.
First just for for for everybody aimed at peak time of operations of a filter get that used to have is around 10 per cent of the of the total share of passengers from GAAP.
Really important to mention that all the routes that you have to get used to to operate where routes where more than one competitor a competitor off very social so Peter.
Yes.
Do they have Eddie Eddie.
Any exclusive for working in Gap's network that he can.
Women per country mentioned because at the end of the day the rest of day of the capacity of the rest of the of the company from Nike, Ralph I'll SCADA and subway.
At this stage that that Peter just lifting.
At work.
About B E.
Chapter 11, we I mean, we are still in communications with day Gateway day of late.
For a team of our filter get but I really don't have any day any additional information about a possible we started for for fall off operations.
Okay.
You very much for it.
Thank you Alex.
And we'll take our next question from Pablo <unk> with Barclays. Please go ahead.
Hello, guys good morning.
Thanks for taking my questions I have two quick questions on kind of a follow up to two one.
I was saying in your remarks my first.
<unk> is under my first question sorry is on the value could start to you that you have for this year.
Are you already planning to be very close to the maximum value for it what's the pace of decrease that we might see in the next couple of years.
This year for instance.
My second question is kind of a follow up to those questions on the Mexican Airlines.
We know the more loudly from that it makes you called they announce.
You may are increasing their it its fleet have you talked to these guys in terms of the potential opening of new routes or for increasing frequencies.
How has how has the conversation.
<unk> has been with with well not exactly I don't Mexico in the other day for you too cool to have more traffic in your network. Thank you.
Thank you. Thank you Pablo the first five related with the maximum tariff.
We.
That in and it gives you a quarter by quarter and some of them are gradually we will be closer to the fulfillment the day clinic.
That's helpful for you guys.
We expect that on the last quarter of the year as soon as the international traffic begins to have some more more clear recovery, we expect to be really close to the B E.
I believe 98 per cent of fulfillment on for the coming year will be hungry per se.
A.
So that the maximum tariff.
B Fortinet next day or the coming years, we expect that we're gonna be 100 per serve fulfillment.
So for the Mexico border.
It is for sure. We also are in really a.
Important contact with Dan talking with the planning Department and talking about it about the specifically these new planes.
Besides you know for a lot of these house.
Two of the most important during the days of operations in Guadalajara, and Tijuana airports.
He also for GAAP EPS this.
This year for some day the Ardmore also the almost day.
<unk> 50 per cent of all are aware of our participation there yourself off of Boston Yours.
B one.
One of the things that we are beginning to see for the case for instance for all that he did.
Did you already have differing financings for beginning operations in November.
I'm.
Cold B Morelia, Sacramento, Chihuahua for Seattle, Portland ore about here to Las Vegas. So at the end of the day, what we our feed use it.
Good day.
Well normally.
Recovery operations at the route that they're used to operate well until they get the b.
This percentage is still the seeds that they're just too hot for.
For sure Doug will B.
Really great opportunities to two two to begin operations of news so I will share that in general in general terms for.
For sure we are steadfast we could capture.
Part of this additional capacity.
You'd never airports.
Perfect Thanks, and just.
You haven't changed so like those additional passengers will be more leisure driven or be it fine driven just to get a sense of the potential conversion of revenue to increase there. Thank you.
I will say that we have.
One of the things that we are a fee clearly is unimportant peak in terms of day of the leisure markets.
What we are seeing in Davos from.
Power coming from South, California did for US It was really really interesting.
So we have some.
New routes for those couple of airports told me for New York with Jetblue on with American Airlines also so we're seeing a really interesting.
Increase for Steffan just on relation for.
Also in the B markets for sure.
You know no additional increase of both things we live by day some lofty.
A fifth golf supports that the U S government.
We'll be we'll bring to day to the economy in some way.
One of the things that we are seeing on deposits is that.
As soon as the U S economic recovery, we will begin to see more b, a foreign markets coming back on for work to Mexico and go deeper in a destination for the half a day housing in the country. So I always said that.
What we are seeing today with some way more.
Possible lower pace of recovery is there routes that are more related to business are skewed.
Could be weighted Michiko hurdle for instance.
I mean, we are seeing for show recovery.
Got it.
If you far away from what used to be do their dues Thunder sites. So.
Yeah, because like we said that we would see are really important.
Recovery of passenger celestial market.
So by just that we need to expect at all for any of the technology a Canadian border.
At the end of the day talking about seasonality.
If we can tap to de winter six of them on a barbell.
Remember for talked about yard M T.
Legal day airports for.
Although the markets would be great.
For the kitchen range or for fear Firefly, that's a five day, we're scared with book.
I will embark on.
Recovery.
Also remember that the B, if our market, what's really what's really understand some way during the peak part of the I'll get by boutique so for sure we will see.
We booked a recovery book.
He will be fostering cared for.
Oh for certain types of what he's got to happen on a day nishu.
Perfect. Thank you very much.
Yeah.
We'll take our next question from Guillermo Mendez with Jpmorgan. Please go ahead.
So good morning, Thanks for taking my question I have two questions. The first one is regarding the potential rebalancing, Jamaica, a tesla right.
The updates regarding the timing and the potential outcome of that negotiation.
And the second one.
It's related to the discount programs that have been implementing to the commercial tenants and to the airlines.
Just wondering and to win these programs should last and what's the average level of discounts that have been implementing indicates FDA guidelines. Thank you.
Yeah.
Yeah right.
This is Hal.
Thank you for your questions.
Regarding the negotiation of rebalancing with the Jamaican government.
We are working day, she decided to.
We have a team.
To analyze our proposal there are two different proposals one for from for M. P. J and another for Kingston and the idea of these is the final outcome will be at the end of this year.
Because we will have to.
We have conversations with these <unk>.
And new comedy and is not a great day integrated so it could take around six months of conversations. So we will have to wait for that potential.
Oh I wear a request for some adjustment in Capex sum.
Revenue the timeline all day.
That conversation the concession PDF and some other adjustments in terms of expenses and we are not adjusting ties with we believe that day types are.
Just enough to recover the level of investment.
Robert.
Yeah.
And related to de risk zones policies I would say it first.
As we talked on the last conference call. We will continue our policy that incentivize true.
These guns.
Operating of new routes.
And under recovery of frequencies. So you will not be a general apply it of the general discounts on loans are the rates of awful either.
It is just related to the wire to their specific routes.
Our.
That will begin operations again, Oh, Douglas, bringing additional for a country suddenly it does that compare with the commercial revenues.
Will continue at least for this year, we did disclose as US as you know our Polish up the sconce, usually later saw satish.
Discount of the all day.
Renewable rents for the one.
When we compare the result of traffic of 2019, so decide something discount you said you for himself passengers between 'twenty than I did.
For the same month of 2019 versus de Saint months from 'twenty to 'twenty. One. So we are seeing in view for the airports and for sure day, the viable part of the rent and feel the same leaving so one of the themes that we are seeing these do you have all these codes will be B me says.
You.
Lead, Wisconsin real well.
Almost fully disappear on on on this year. So one of the things that we are seeing different airports is for the next one or some of the specific business lines will be at least C. U E sales going I read the same level.
Just to be before COVID-19.
He is going to happen in airports.
QUADRA for for example.
Very clear gentlemen, thank you for pretty answers.
Well move next with for a long for a mask with Bradesco B B I. Please go ahead.
Good morning, Thank you for doing phone and someone for for taking my question.
Two questions. My first one is on on your perspectives for trafficking.
You mentioned.
The strong perspectives for for traffic and do you find out in the VFR market much more dynamic seven southern California, and also your leisure destinations with switch I am sorry.
Don't zone don't perform much better ones that explanation improves.
What are you seeing in Guadalajara, and what are you expecting kind of.
Considering it.
It's a tougher airports to.
To put it into a bucket as far as leisure or business et cetera. So what do you see the drivers there. That's my first question.
Perfect Yeah, Theres, a rolling so I would say that was kind of as you say have really are.
What that mix of nature B, if ours on business.
Sure.
In some ways it b a first for your son's their routes to South, California, Los Angeles, Sacramento, Oakland, We are seeing a continued recovery on GAAP.
So should you be really relate it of how the Dakota meals Cali, California.
It's it's performing.
That's the way we are really confident that.
It will recover in some way.
G fast.
The second part I will say that while the how long is the second biggest airport in theory.
<unk> in Mexico.
We are seeing an important recovery also also from they shoot for all people around for a lot had going for anything to conclude or to God was one of the things that we saw on the last box is that.
I didn't have the day that some Mexican make that just congratulations for you for ethane in the U S.
As you will made literature on the Mexican beaches, so we see that interesting recovery well.
Their routes to Cancun, Los Cabos B for instance, I would say that the Paris two day Ardmore.
I will share that we are pretty clear on how fast would be the recovery is there we've got ardmore related with business.
We're talking about well outside of Mexico route or day, why that kind of Monterrey route but in other way the other.
We can show positive you'd see that because as you know Mexico city.
The policy for the reopening of a false office.
Corporate office already happened. So we are really reviewing closely how good have you the performance of their route. After these announcements in the Mexico CV that it would be along with two to the day.
Going back to the office. So I will say that he is going to be the first part of Oh for a more clear it rental growth.
What's going to happen with the business routes.
Our net.
And just a follow up on that.
Much as Monterrey and Mexico.
Mexico City, I don't know what kind of traffic.
Hey, do you have that number.
Yes, yes. It is there more in general terms as we said before the pandemic. These two words you used to have between two of them less than 18 70 per cent of the total domestic passengers, but there's no matter house change drama piece for you.
After the COVID-19, we are seeing more and more seats too.
True to leisure destination for domestic leisure destinations for incentive would you Don just to have from the airport. So I did on the day I don't see that.
We got a CR, we reconfigured restaurant of the of the of the of the market. That's clearly group B in some way.
This year I believe.
We incentivize first got the by the U S economy to the B five safeguard for the leisure destination.
Destination for domestic leisure destinations that b.
Population or a rottweiler hard I will go to Q2 due to vacations from Mexican beaches.
But I mean that the b target to understand how going to be easy to do business the business market.
Thank you and my second question was on on the potential impact that you can see from the outsourcing deal.
I mean, you might have some of the parts of your of your labor that qualify a specialized I mean I don't know what what has been your exercise or the impact in net.
Could teach them from day, one on higher labor costs.
For me.
Hi, Robert This is all well we have done some analysis about this.
Potential effect.
It is in U S a.
As a rule.
About the net profit sharing for the employees.
The amount that could be affecting eyewear resources around 60 78 million pesos.
In the position for now Arnold.
Analyze this.
It's not it's not very relevant and we in terms of hardware.
Hum about outerwear.
It would be done.
This year will be around less than 1%. So it's important to have in mind at.
Hum.
A higher effect in another companies bad without echo into the structure, we already have one impact significantly.
Yeah.
Thank you.
We'll take our next question from Stephen Trent with Citigroup. Please go ahead.
Yes, hi, Thank you for taking my question, it's actually Brian Roberts on for Steve.
Just a quick one here on growth planning into the recovery.
Aside from the airport there in Barbados are you considering any other acquisitions.
And any thoughts on specific regions, perhaps that look most attractive. Thank you.
Okay.
Thank you Ryan.
We don't have any opportunity right now that we are reviewing all that to say we are expecting about what's happening with Bai bubbles book for sure I think that in the coming.
The coming months or even years moving to have some from Vishal P. R. A T about the reason that we would like to continue exploring is related mainly on the Caribbean and Central America, mainly.
Okay.
And moving them off next quarter from dresser for Roto with UBS. Please go ahead.
Hi, Thank you for taking my question I just have a few questions on the MVP investment as well.
How is.
The construction on the heck of a boundary for the Ohio when should they be ready.
Hum and houses this coupled with your expectation of checking recovery.
And also each day will be amended to invest in channel to commercial spaces and it could be.
Well thank you all.
Commercial revenue per Pax to meet you in the future.
Thank you.
Hey.
And two.
In terms of the of the wrong word for sickle Robert how are we just began the day, they're working for the O. Two day work on that area to develop the second runway, we expect to have whether these fees. These b.
For Q2 for 2023.
I mean I say.
It's really hard to construction because.
You just outside of the of the B of the.
One way of why the higher per so we'd have just cause more window itself operations for the construction, but we will not be ready for opening dumping for throughput from 'twenty to 'twenty three.
Regarding day.
Regarding.
Commercial.
Bad News I would say that we will skew working into new business lines.
Net.
Increased salary wages it will be for instance, the case of the hotels in the evening.
Yeah.
Right now while I cut out.
But also in the future we expect to the railroad hopefully quanta.
Also we are working.
Two two to increase our.
The cargo facilities business.
We are completely or in this moment, we are reviewing which would I believe at the model of operations for the mainly what we clearly see a great opportunity and B why the higher book to get some some additional revenues that will come from Olga V Chanel card growth.
Yeah happy to right now with the airport mainly.
Impulse buy B e-commerce.
So.
And the last part related to the day, we did.
With the traffic.
For sure.
Any forecast today is in some ways difficult due to the fact that everything seems some way changing really really fast.
If we if we or Turkey is.
Everything is still the same.
In the same way there is no some kind of at least for now.
The share prices of Lockdowns, all these kind of things.
What we are expecting to use that day.
The drop feet from 'twenty to 'twenty, one will grow between 27% on tier two per cent. It means.
We could be the subtlety around the carrying fast.
33, and 35 million passengers I would said that well.
We have Ah Ah.
The part that we are not completely clear what's going to happen in terms of b of the O B b.
The operations from Canada to Jamaica from kind of that you're.
If everything goes as good.
I mean, the loss acquirer of the gear, we can catch the winter season, we see that these numbers could go it could be also bears.
Okay.
Yeah.
Great. Thank you very much.
Sure.
And once again, if you would like to ask a question. Please press the star and one you touched on selling we will move next with Yankee.
Peter with GBM. Please go ahead.
Hi, Thank you for the Coke, but all my questions have been already answered.
Perfect.
Thank you Jackie.
Well now move to the webcast questions. Melanie. Please go ahead.
Thank you Nikki.
We have a question for cell can you just comment on <unk>.
Clarify the number of shares repurchase to date.
Hi, yes.
We have for purchase price.
Round, two 4 million shares.
Doing this until this report.
Excellent.
So I believe we have a question from the webcast.
Yes. Thank you.
Not only are these questions from Han from say from Bradesco <unk>.
First one is about the appeal.
I already past the the government about outsourcing and in sourcing.
We already answered that question and the second question is what do you think the impact on GAAP operating expenses will be in it.
I'll share already called you talk about your outlook on the recovery of passenger traffic in Jalisco.
Do you want answered.
Yeah he wasn't related.
What we are seeing one of her airport.
Uh huh.
We see we already talked about we saw a robust recovery M B bfr's.
And our nature and we are expecting what happened with the with their business.
The market.
But the general from Science, we are seeing now.
An important recovery from the beginning of the summer for sure in the last quarter with the winter season, we will see much better numbers.
Yeah.
Yeah.
They are excellent now.
Yeah.
And there appear to be no further questions over the phone at this time.
I'd like to turn the call over to Mr. Herbert for any closing remarks.
Thank you everyone again for joining us today in our first quarter results conference.
We want to remind you that we are always something that we're drives where any and all of your question.
On behalf of GAAP, we wish you a great day for you.
This does conclude today's conference. Thank you for your participation and you may disconnect at any time.
Okay.
Yeah.
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Okay.
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