Q1 2021 Corporacion America Airports SA Earnings Call
[music].
Good morning, and well go to what brought US here on the American airports.
First quarter 'twenty 'twenty, 1 earnings conference call a slide presentation accompanies today's webcast and is available in the investors section of Corporacion America airports Investor Relations website.
As a reminder, all participants will be in listen only mode there'll be an opportunity to ask questions at the end of the presentation. At this time of we'd like to call turn the call over to Minerva Nasty of Investor Relations go ahead.
Thank you good morning, everyone and thank you for doing the yesterday.
Speaking during today's call will be part of Piedmont, Mckeon, Chief Executive Officer, Unfortunately, young our Chief Financial Officer.
Both will be up for.
For the Q&A session.
Before we proceed I would like to make as part of the Safe Harbor statement debates.
Today's call will contain forward looking statements and then the 30th with forward looking statements section for where it needs to be from recent filings with the SEC yesterday.
We assume no obligation to update to revise any forward looking statements to reflect the new York changed events of circumstances.
No that's the bulk of bison purposes and for other than the funding of the under Labour for months presentation today, we would be discussing with folks.
Moving type of inflation accounting, you know, Jim Vena, which became effective in July 2018.
I think human information in connection with the application of food and the need for the 9 can be found you know and the people.
Now, let me turn the call over to our CEO of Piedmont Mccann.
Thank you for a minute Hello, everyone and welcome to today's call.
It's been over a year since the beginning of the for many.
I'm very proud of the way the company managed unprecedented cases.
During the quarter, we began to navigate the second wave of <unk> some of all the countries a little bit agents.
Which reflected in passenger block of dynamics.
However.
We encourage with the most of the trends you're seeing in the U S and some countries in Europe. What are the vaccine rollout is more of a bench.
Right.
And that's how you should think the skull, while we have already started to see some of the supposed to be plenty of operations, yeah, maybe pushing the cycle of the challenges we've seen kind of head of markets.
The significant.
Moving on.
We felt that the 62% year on year.
I need the passenger traffic for the quarter.
A total of nearly 7 million Boston just in the.
First quarter 'twenty 'twenty 1.
Most of its state of the.
Breath of the deep endemic levels.
Quite a bit in the first quarter pinpointing of anything.
This mainly reflects the bug.
The the unique of the second wave in Latin America.
We saw good intelligence predictions of more of the month that negatively impact the topic.
<unk>.
So I see the Michigan pick up in debt.
Despite the challenges faced by the for many optimistic we'd be advised the IC.
In the face of boxing agent in Uruguay, and equally what vaccinations index you are starting to pick up.
The next behind with the do we expect to start seeing a catch up later in the U S.
More about the teams become more regularly.
Jamie door of financial results all of them.
Blaine ex I think Blake was down 57% you didn't hear in the.
The growth due to slightly over 110 million minutes okay.
Sure.
First of all they've done the 19 beverage.
Despite the impact of the pandemic in telling the mine our sustained focus on cost controls and dash consideration.
That would have to achieve a positive comparison of adjusted EBITDA of $14 million in the first quarter from the that'd be 1 excuse me, excluding 1 time of peace.
1 thing of margin of flow per cent.
This is an 18 million of actually improvement from the previous quarter, when excluding the government compensation something in Brazil, and Italy at year end.
The slopes in the first quarter blip on the 1 we're also but I think the competitive losses.
The effective cleaning the bus boosted in the second instead of all.
Of last year, respectively.
We are confident in the goal.
1 of our business and we continue working towards reaching repo men adjusted EBITDA levels, while at the same time building, a leaner and stronger company, maybe allow us to really get the profitable growth once the money we've done.
Finally, 1 of them the successful thinking of extensions, Argentina, and the full economic you don't put Huntington Beach.
We are actively seeking to restore value by also pursuing economic Covid could you remember in the other.
Nations.
I will discuss these multi day shut.
More of these days when the first quarter results can be found on our earnings reports filed yesterday and the <unk>.
Each of these presentations both of which are available on our website.
Please turn to slide 4.
As you can see on the stage the yellow boxes the big.
Countries like the commercial operations are subject to tell the restrictions.
This is the case for most of the operations with the exception of Ecuador, and Armenia, we generally of locomotion aberrations.
Now you can do that.
Welcome to the Delphi posted significant.
Significant sequentially the quality during the summer season at.
This was even despite that maybe some of the government the neck or they might not entry for.
For old Boy this until late in the first in light of the new.
The COVID-19 the strength.
Given the spike in Covid cases towards the.
End of March the Golar, and then also into new jurisdictions of too.
The daily internationals of arriving passengers.
You shouldn't flights from the UK, Chile, and Mexico worry about them.
Passenger traffic in Italy declined sequentially, reflecting travel restrictions really established by the government in Q4 can be done day in the.
She learns airports between February and April will allow the execution of runway works.
Well the commercial installations remain open the fiction.
The supply for bad debt is coming from.
All that drives of the.
Certain countries.
The Green coffee, making box board is expected to be in the amendment soon.
They have higher mobility within the European Union.
And you're right the record.
The main snow board of US remain closed non Washington for of niche with certain exemptions from requirements apply abernethy.
In the C..1 of them. The good performance in January that we go where the button to Duffy.
The center in February.
February reaching the low towards the end of March reflecting a spike in COVID-19 cases throughout the country.
But I think.
Of note in April might be sort of really showing signs of recovery of this 1.
That anybody's situation in groups.
The problem, there's not the restricted while the main requirement for non listen the Flonase and the Mackenzie you said they got to the PCI debt.
Yeah.
The ammonia plant continues to improve sequentially seems they blow of restrictions for what they make it less of them.
More recently, but off of your social benefiting from the opening of the Russian 1 of those for the niche.
Finally, the traffic was relatively unchanged sequentially.
But I noticed the makes sense to domestic and 1 international subs.
Subject to send them the garments up on the river.
On page 5 we show preliminary monthly passenger traffic and cargo planes.
I played the underground.
Yeah, Let me continue the.
The recovery brand experiences Nathan the 'twenty aided by the summer season in Latin America.
But the in February we began to experience the impact of the second probably than the way the pro.
We actually of constructions and Kathy.
Well I think in March and April was down 71, and 76% respectively.
Compared to the respective sleep I'm gonna make month of blunting of anything.
We expect to see improvement starting may as Covid cases, the globe.
From the explanation of the bumps across.
All of the markets.
Although performance in cargo operations and I'll share.
Joan someone at the maybe since the beginning of the year it remains strong.
Importantly revenue from our gigabit immunized the newer.
Hi, Liana.
The broadening of mitigating lower income from buttons of but I think in those 2 countries.
Turning to slide 6.
Over the years.
Passenger traffic across all the people airports.
<unk> consistently until we hit a low of 25 million in Boston just doesn't become the impacted by the COVID-19 pandemic as shown in the jobs on the left.
As you can see on the right just the the godaddy has been mainly driven by domestic traffic by gondola.
And of Duffy.
How is the more impacted by higher sickness and probably bands.
Now turning to slide 7.
Did he used to report the bonus the did you get into each of cost control and got the rationalization continuing to show good results.
From the first quarter 'twenty 'twenty, 1 mark the.
The fourth consecutive quarter, posting some significant cost savings ranging between the mid forties due the no.
Actually cash operating cost declined this quarter by 43 per cent year on year.
We went into the saving of 60 million Maus, reaching a total of 80 million none of that's from the quarter.
You don't know, which excludes concession fees and construction costs.
<unk> savings. This quarter include 16 million of nursing Saturday the reduction of 13 million barrels from both maintenance cost and SG&A when all of the expenses declined by 27 million barrels of course.
Depreciation in the main markets also contributed to the savings.
We remain committed to keeping the.
The Indian Boston tranche of me.
The new glasses.
We would expect to see some increases in labor maintenance and all of the operating costs at the desk.
Our static nikolas overtime and government support the guidance.
Please turn to slide 8.
We also remain fully focused on advancing the process of obtaining.
The reason for concession agreements across our operations.
Starting with Argentina.
As provided under the 10 year extension agreement of all the 80000 competition from last December.
For much between the international passenger east, where the affected the increase by 11%.
7 bottles.
Rusty Youre working on 2 fronts.
First following the $36 million what are the economic compensation obtained last December for the impact of COVID-19, whenever breast C D and the.
The airports Golar in 'twenty 'twenty.
Our next debt.
The sooner the fight our request for the long term, we like when the room for rest of the deal.
Second in relation with the return of 1 of the Balco and fishing.
The government, who carry out the anticipated the tender.
In the fourth quarter of them, we don't do them.
Thereafter, we expect the ratio and the day concession and received the corresponding indemnification payments during the first of all of them began to do.
I think whatever the negotiations to obtain the compensation for the way it can airports concession are moving along the.
Well the advanced at this stage.
We're also keeping I believe the discussions with the government of Norway, and the opinion of concession agreement to be the anemia in boots of contractual and then the rate of return of 20% in U S dollars.
Finally in Italy, following the successful 10 million Euro zone, and the 2 year extension.
All of the concession that you've been going through 'twenty 1.
The first concession to benefit.
From the 500 million Euro from established by the Diamond the state budget law to support the backend airports.
This year.
Moving onto all of the debt and liquidity on slide zone.
We ended the quarter with 256 million of none of us in cash and equivalents and $71 million and pressure the rooms, and then the bastard for a total liquidity of $327 million at the end of March.
Earlier this week, we refinanced for the support Dominion Lewis.
But the payments in the Argentine aberrations.
Our net debt.
Last 12 months of adjusted EBITDA ratio remains above historical levels solely driven by the impact of the pandemic on adjusted EBITDA.
Net debt remains unchanged at 1 point of $1 billion.
As a reminder, we are not subject to the go ahead and the consolidated level.
Importantly, our financial discipline and sleep published from the cost controlling allowed us to the newer the second quarter was supposed to be what but he's been bashful across most of the lot of countries of operations.
Before that we will open the evening cash flow breakeven, the Argentina and Uruguay in the second quarter of can be blending the igloo.
Well you know the media is the third quarter of the MB bluntly.
Now to wrap up please.
At least I'm just like them.
The onset of the pandemic, we have made significant strides in the successful execution of our COVID-19 mitigation strategic plan and remain dedicated to continue the consistent execution of the plan which includes first.
Finalizing the economic with the legal process just the restore the value of our business second continuing to bristow of liquidity and strengthen our balance sheet.
And finally.
From the origin of the indicated to keeping the lean structure across our operations and maintaining the tight control of costs.
11 of our D V D progressive meet increases.
In terms of passenger volume dynamics, we observed a pick up in the African rescue Armenia and equity the primarily driven by of foster cluster of base. The rollout of the vaccination program and bad debt studied other conditions.
Tony.
Should also benefit.
From the rollout of the vaccination campaign warmer weather and lower restrictions during the summer season.
We expect overall the better trends of the vaccination campaign begins to pick up in Argentina, and travel restrictions are progressively lifted in the near multi Argentina and Uruguay.
None of them.
We are comparing people's desire to travel remains unchanged.
This together with strong pent up demand should continue to drive sustained rapid growth.
Finally, I wish to thank our teams for their hard work and commitment to executing all of a strategic plan to protect the company's financial position and ensure the highest standards of Paris and safety for our passengers and employees.
We will now begin the question and answer session.
Question You May Press Star then 1 on you touched on phone.
If youre using a speakerphone please pick up your handset before pressing the keys.
Your question. Please press Star then 2 at this time, we will pause momentarily to assemble our roster.
The first question is from Ian Zaffino from Oppenheimer go ahead.
Hi, Good morning, guys. This is mark on for Ian Thanks for taking our questions.
Jim.
I guess like on the request for the long term economic Creek or do we equilibrium for Brasilia can you give a sense of the on the process and the timeline. There. After you file when shall we expect a response and wait for the milestones should we be on the walk out for thank you.
Hi, Ian.
Hi, This is George how are you.
Hi, Good how are you George Hello.
Jeff just to make sure I understood. The question you were requesting in connection with Macau right.
The question Wason regards for grid tell of the the I guess like the timeline on.
For the milestones we should be looking out for as you filed the request for long term economic re equilibrium.
Okay brilliant so we expect to formally file.
The long term Ricky leave for Yum.
The request this week.
And we have been seen.
The actually the beginning of the year of really having very active discussions with the book later in particular in the with the government in general.
And it's going to be an ongoing discussion.
We.
Expect to have a general agreement with them around.
The amounts from the mechanics.
Debt trap by September October and finalize the process before year end. This is our objective.
There is not a timetable stepping stone.
But that's what the what where we are working towards growth.
In terms of our tagline.
We expect very need them to be honest because the teams a private discussion.
And we do not expect any press release, either by ourselves or the government in the meantime until the process.
It's much more advanced.
Okay, Great. That's very very helpful. And then just saw the if I may of second question, you've got the GAAP.
The other way.
Yes.
I'll now go ahead.
I'm, sorry, just to finalize the M.
And by the way I mean, there are a bunch of operators here in Brazil as you as you may know.
And you know all of them are basically in the same stage as we are 7 trial last week others.
Sorry about the file et cetera, and there is a lot of discussion directly with the later through the airports Association.
The very.
The intense topic at the moment.
In Brazil.
Okay got it. Thank you so much George.
I guess like just the follow up.
You guys continue to do very well on the cost control side.
Can you give us a sense of number 1 how much more cost can be taken now if you know we continue to see Covid volatilities are number 2.
How many how much of these costs are permanent once operational Normalised, you know any sense any better sense you guys have now versus call. It like you're 6 for 8 months ago. Thank you.
Yes, that's a good question look we do expect some of the cost savings to become permanent if you will but arguably as.
Ex traffic pickup we saw.
Some of the cost of debt that we are currently not happening will.
I'll come back.
Without a doubt.
The multiple examples of 1 of them the security checkpoint, obviously, we have less the cubic checkpoint channels currently by the air traffic increases we will have to increase.
The number of security checkpoints to process passengers properly.
And that obviously will increase costs. So are we.
We do expect some.
Some of the statements true true remain a permanent it's difficult to say how much.
But we do expect some benefit of out of out of costs.
Going forward.
Okay, great. Thank you guys very much.
Okay do you the answer all your questions or if theres anything pending on my side.
Yeah.
No I think all we had all of the thank you guys.
Okay great.
Okay.
Our next question is from.
<unk> from Jefferies go ahead.
Hi, guys. Thanks for the call and the outlook just a quick 1 on liquidity we noted the.
$256 million in cash.
The 40 million dollar of refinancing of the short term bank debt at the Argentine subsidiary could you. Please give us some additional color on available liquidity anything in credit lines and progress on refinancing of the 2021.2022.
Maturities that you listed on page 8.
Hi, This is George again, thanks for your question.
We continue to have support from all of our lenders.
We have refinanced.
The principal amounts of the when people for the syndicated loan facility in Argentina as you already noted.
We also obtained kind of me then new long from a local banking of the why we refinanced.
And smaller working capital for <unk> in Brazil, we have been financing refinancing I'm, sorry, all of the short term debt and equity.
Coming into the share in Italy. So generally speaking we are we have been.
The having strong support from all of our lenders true to navigate through the pandemic.
And we see we are looking for our cash position of our hourly.
Credit you on a constant basis and taking the necessary action. Therefore.
We are confident that we're gonna be able.
You navigate the.
It's mostly throughout the pandemic the entry of traffic starts to come.
Come back in a stronger way.
Okay.
Perfect. Thanks very much.
Again, if you have a question. Please press Star then 1.
Thanks Julie.
Our next question is from of Rebecca Kiani from Citi.
Bank go ahead.
Hi, good morning, Thanks for taking my question.
Sure.
2 quick ones from my side Chris.
For the caller.
How the Argentine government providing.
Thank god for where and how to do.
Total airline.
The local market you gave some color.
On the.
On behalf of the airports.
And that is the point would be helpful.
And secondly.
In the markets with the air cargo has risen.
Meanwhile, the passenger volume at Bell.
Any view of widen.
Hasnt generally happens here for questions.
Organic.
Andrew.
I understand because of its better thank you.
Okay.
Thank you for your question this is about being here.
Regarding the garments.
Priorities as of today.
The junior priority of the government is to translate the the the pandemic.
Putting has asked the number 1 priority and that's what motivated oil of the 1 of the decisions made by the government regarding our industry.
And that's why we have so many restrictions as of today so.
In that sense I think the DD.
The second wave in Argentina is fast we will not see.
Strong reaction storage.
<unk>.
Incentivising the industry.
At least in the.
There's a clear path out of the health crisis, the debentures going on right now.
And we assume that that will happen within this year as the vaccination campaign takes off and more of vaccines out of Ireland for.
For Argentina.
Regarding cargo.
What I what I can tell you is.
Most of our airports have a mixture of.
For the Guy who aircrafts.
And why the squad belly cargo on passenger aircraft.
And that the second bodies is quite important in our operation.
So when the passenger aircraft.
Stopped flying.
Because of the restrictions.
Some guys will offer some of it I think.
What you do there.
And.
The good thing that happened is that.
The form of cargo type of.
Offer has increased and that's why we did not see the proportion of declining gargle to what happened in the passenger market. So.
I think that's why you see the net effect in into our cargo operations.
The numbers that we that we share.
So.
I think I think that's the effect that you should look for in an <unk>.
What is making the neck cargo operations that we have done we had during the buy and then again as of today.
They like the look and the fact that they need the drop in the same way as passenger numbers to you.
Okay. Thank you.
Thank you.
If you have a question. Please press Star then 1.
This concludes our question and non chair I would like to turn the.
Conference back over to Marty.
Ken for closing remarks.
Okay.
I'd like to thank everybody for joining us the way we really appreciate your interest in our company and we look forward to providing updates on our business initiatives as they become aware of it in the meantime, the team remains available to answer any questions that you may have thank you everybody.
Bye bye.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.