Q2 2021 Grupo Aeroportuario del Centro Norte SAB de CV Earnings Call
[music].
Greetings and welcome to the Grupo Airport Wario del Centro Norte de second quarter 2021 earnings Conference call.
At this time all participants are in a listen only mode.
A brief question and answer session will follow the formal presentation.
And once you require operator assistance during the conference. Please press star zero on your telephone keypad.
As a reminder, this conference is being recorded.
It is now my pleasure to introduce your host and then we'll Camacho Investor Relations officer. Thank you Sir you may begin.
Thank you Christina good morning, everyone.
And thank you for standing by.
Welcome to Walmart's second quarter 2021, and this number.
On the California, almost chief Executive Officer.
Diego Chief Financial Officer will join you on this morning, and we really saw almost second quarters I'll continue on.
Okay.
Maybe you can remind us.
And of course of our discussion today.
And they constitute forward looking statements because based on risk management and efficiency.
And that's subject to a number of patients.
Actual results.
What do you think this update you.
And she's been doing.
But that comes on.
I will now turn on the globe.
And then.
Thank you and Manhattan and.
And good morning, everyone and thank you for joining us today, I hope and all of you and your families are safe and healthy.
This morning, we will review the evolution of our business as well on our second quarter performance.
During the quarter, our total passenger traffic continued to show clear signs of recovery with a sequential increase of 50% compared to the first.
Quarter of this year.
This performance was mainly the result is higher and more really levels throughout the country and acquainted with yet I'm a logical traffic alert system.
And the airports that contributed the most of our passenger traffic recovery in volume terms, where mass atlan, which delivered growth as compared to the second quarter of 2019.
And the Wrangler and also have you had and Mexico.
Additionally, vaccination rollout programs in Mexico, and the United States allow for gradual increase levels of passengers during the quarter.
Particularly on the international side, which stood at 98.5 of the international passengers and second.
Quarter of 2019.
The international passenger recovery is primarily driven by destinations such as Houston, San Antonio and Dallas.
And July the level of COVID-19 cases has begun to increase again as well as epidemiological alert levels and the country.
Currently.
Of the 9 states. We're on behalf of operations once state is and red status, 3 and orange and yellow and 1 and green.
We are confident that our passenger traffic will continue to evolve positively in the following months as the pace of vaccination rollout and Mexico and the U S makes progress and economic.
<unk> activity continues to improve.
It is worth highlighting that in Q2.2 and.
And 2021, 3 new routes opened Monterrey, Mcmullen Monterey had an engine and so that's why to split the way out effect and 7 origin destination routes that were suspended we start operations.
For the third quarter of 2021, we have confirmed the opening of 13 origin destination routes and most of which are brand new.
Finally at the end of June a total of 131 origin destination and less worried and operation compared to 140 at the end of.
And for 2020, and 183 routes and operation at the end of December 2019.
Turning to our second quarter operational results.
Total passenger traffic reached $4.5 million and the quarter, which decreased 24% as compared to the second quarter from 2000.
19.
In volume terms lovaza experienced the greatest traffic growth during the quarter were Monterrey on its Mexico city and canceling booths.
And on the Tijuana Route Chihuahua on its Mexico City route and Monterrey on its Houston route.
Adjusted EBITDA reached $1.3 billion packages.
On December with a margin of 74, 7%.
This is the result of traffic and revenue recovery as well as our strict cost control efforts throughout all areas of the company.
On the commercial front revenues increased 88% compared to the second quarter of 2020.
And the fourth largest increase on parking restaurants car rentals and retail.
Occupancy rates for commercial space and our terminals was 85% on the end of the quarter.
Diversification revenues increased 114%, mainly due to higher revenues from hotel services and on Mackay Jr.
And the second quarter of 2021 occupancy rate or terminal NH collection Hotel was 56%, while the Hilton Garden Inn Hotel at the Monterrey Airport had an occupancy rate of 46% during the quarter.
OMA cargo delivered another outstanding performance.
During the quarter with and increasing tonnage handled of 102% <unk>.
Bolting and revenue increase of 69% versus the second quarter of 2 and 2020.
Revenues from air and ground import cargo will be increasing revenues.
Total investments and the quarter, including MVP investment.
<unk> major maintenance and strategic investments were 482 million pixels and.
Additionally, some of our major projects underway include the expansion and remodeling of the Monterrey Airport terminals AMC.
Platform reconfiguration of the Monterrey Airport.
Expansion and remodeling of.
<unk> net equal terminal building.
Expansion and remodeling of the sea that's quite a terminal building.
Modernization of the Tijuana, sorry of the see what the net with terminal building and green and investments related to solar panels, and our 13 airports.
Finally on July 7 aerodrome infrastructure and.
And the affiliate of <unk> Holdings.
Holdings conclude a tender offer process through which <unk> acquired 62 million and series B shares and warmer equal to 15, 4% of almost capital stock.
As a result.
<unk> holdings indirectly owns 31% of almost capital.
I would now like to turn the call over to Rupert, but our sales who will discuss our financial highlights for the quarter.
Thank you Ricardo and good morning, everyone and revisit review our financial results and then we'll open the call for you on lessons.
Turning to almost simple parts and financial results.
I don't know its program and ECP.
700 and soon.
80% relative to PQ23, and by the coupon on the 80% increase and passengers from 1 iron ore revenues from these 1 on.
110% with commercial readiness and having the largest contribution.
<unk> revenues increased to 80.
And the particular speak and largest variations where parking restaurants are rentals and retail.
And revenues increase price.
180%, mostly driven by higher passenger traffic.
Restaurants are rentals, and retail and increased 1.9 and 4%, 63% and 51%.
<unk>, you can lower levels of <unk> lenses to tenants and higher revenues from participation on sales.
Labour syndication activity increased a funnel and 14% mostly driven by the higher revenues from 2 hotels on almost every day.
Total loans I don't know score on loans I don't know on revenues.
And even the quarter wore.
1 billion and 750 million versus.
Construction revenue increased 50%. This is a non cash item that is required under applicable accounting standards and interest.
Close to the construction cost of improvements to come.
And the assets so it has no impact.
And on earnings.
The cost of airport services, and G&A expense increased 7% relative to Q 'twenty mutual a 42% growth and contracted services and a 3.8% increase in mind and minor maintenance on expenses.
This is a result of higher levels of passenger.
Traffic.
These increases were partially offset by savings in bad debt expense payroll expenses and materials and supplies.
Almost second quarter, adjusted EBITDA was 1000, and 600 million sensors and the adjusted EBITDA margin reached 70.
And 4.7%.
During the quarter, we recorded an increase and the major maintenance provision of 821%, reaching 851 million and Texas.
This reflects increased future major maintenance works under the new Master development program.
70 gross by the authorities last year.
And we're financing expense was a photo and 16 language and Texas and consolidated net income was 220 million doses.
With regards to our financial position.
That's generating from operating activities.
And last 1 quarter amounted to $1.1 billion vessels.
And total cash at the end of the quarter stood.
$4.2 billion doses.
We believe that our cash position and always cash generated from operations will allow us to meet all of our investments financing on.
And the second obligations for 2021.
Total debt amounted to 2.5 billion surplus and it's comprised of the 3 peso denominated bonds that we have.
And our net debt to adjusted EBITDA ratio stood at 2.3 times at the end of the quarter.
Yeah.
On operations our repurchase in months.
<unk>. Please open the call for questions.
Thank you we will now be conducting a question and answer session.
And he would like to ask a question. Please press star 1 on your telephone keypad.
A confirmation tone will indicate your lives and my question to you.
You May press star 2 and if he would like.
The room of your questions on the queue for.
And for participants using speaker equipment and may be necessary to pick up your handset before pressing the star keys, 1 moment, please while we poll for questions.
Thank you. Our first question comes from the line of Alan Macias with Bank of America. Please proceed with your question.
Okay.
Hi, good morning, and and thank you for the call just a question on on margin on adjusted EBITDA margin.
Is your expectation going forward and if you're seeing any.
Acceleration and and and.
And.
And costs or and cost pressures.
And maybe item and in particular and thank you.
Thank you Alan on for your question.
We have on during the quarter, we have kept a very strict control on cost. We have we think we believe most some of them are going to be.
And you're able to keep on going forward.
We expect.
For the full year to be slightly above 70%.
EBITDA EBITDA margin.
Does that complete your question.
Yes.
Yeah.
Our next question comes from the line of Jim Harmon Mendez with J P. Morgan. Please proceed with your question.
Hi, he kind of low ruefully Manuel Thanks for taking my question I have 2 questions actually the first 1 is a follow up on the traffic recovery you guys mentioned on the opening remarks.
Just.
Just wonder if you could provide more color on how do you see traffic will recover and when do you expect to be back to.
And to 19 levels and how do you see the risks related to the increased number of cases.
COVID-19, and in Mexico, and the second question is related to the commercial segment.
And what are your expectations.
In terms of revenues on a per passenger basis. Thank you.
Yeah.
We see it.
First question Ian.
We're expecting total tax this year too.
Around 70 million cash.
That would be.
About 20% below 2019 levels.
We are seeing.
A strong performance in the summer.
On the.
The increase in.
And.
Health and alert levels.
This is we.
You have mentioned interest cost and he used to be driven primarily by VFR and domestic leisure and travel.
However, we would expect towards the end of the year and pick up in corporate travel.
Driven by day improvement in economics.
Conditions at this time.
Which the 2 Hudson.
And 19 levels are.
Around early 2000 and penetrate.
Yes.
Okay.
And sorry, what was your question with molecule called moving.
Yeah.
Yeah.
And can you tell yourself houses and the risks regarding the increasing number of cases of Covid and Mexico, do see and impact on MAU third quarter, OMB and up year.
We're seeing increased alert levels from the health authorities. However, we do expect.
That's there will not be.
The strict confinement measures such as the ones that we saw last year. So we win.
Expect to continue to see increased mobility or the next.
A few a few months.
The vaccination program in Mexico is underway.
And it's picking up and so so we believe that that's.
The.
Improvements in.
The vaccination coverage will allow us to king will continue and having.
Traffic recovery for the next months and we do not foresee any such condition.
And just as the ones we experienced last year.
And also just to add to the point, we haven't seen any we went back and the numbers weekly and we haven't seen any effect. So far the trend that we had seen for the last few months remains so we haven't seen any evidence and the data that supports.
And the negative impact so far.
Okay perfect. Thank you guys and just a follow up on the commercial segment, how do you see readiness and on a per.
Passenger basis is already saw an increase now on the second quarter.
Commercial revenues.
We expect low too.
And we continue improving our most important line item and commercial revenues is.
Car parking.
And we already signed and in the second quarter.
Stronger performance than previous months from from car parking and we expect us and.
Travel continues.
Okay.
The benefit from from those lines.
Line items and.
And in the case of restaurants and retail tenant.
Our rentals.
We did.
Cash general discounts.
Were implemented in the second half of last year.
And we gradually phased those discounts out during the second quarter of this year. So we wouldn't expect a less impact from those discounts going forward and that would help us.
Got yourself from from the fixed rent portion on.
And also.
Passengers continue to increase we should also share pick up in the participation on sales.
We get from most of our commercial contracts and so we should expect EBITDA went up.
Celebration in commercial revenues over the second half.
Okay.
I think you guys have a great day.
Thank you.
Our next question comes from the line of Javier Gale with GBM. Please proceed with your question.
Oh, I haven't got along from Cornell mantra.
Thank you for taking my questions.
No.
My first question would be related to to the capital structure of the company.
As you mentioned.
Currently even with the.
The press numbers and do you have it upfront and we see a.
A very comfortable net debt to EBITDA ratio.
And if management are comfortable at this dose.
But our or would you be seeking.
Additional debt from the balance sheet and on the short term AR that'll be my first question.
Okay.
Thank you Carey on for your question, Yes, and as you mentioned that the our debt levels are at a very comfortable position.
And then as you know.
At 4.4000, and 500 billion, Brooklyn, and 5 billion pesos so far.
We plan to remain there are there is we believe theres room to improvement, but we will be analyzing and as time moves on.
And also.
In the second half of the year.
And she should affect.
The D V does it does.
Uh huh.
And the data to the board of directors.
And kind of when and.
And how did you bid and will be 8.
As you remember that moving amount up to 2 billion vessels.
So at some point in late Q on Q, we should see also that distribution.
Being a day.
And so that would increase slightly.
Net debt to EBITDA guidance.
And that's that's very helpful. Thank you guys and my second question is and so a follow up regarding.
The commercial revenue part of the business.
And.
And I was wondering.
Are you guys are doing any.
And the new.
And he was trying to do is important and and the commercial front to improve those red zone that revenue mix from from commercial revenues at the airports.
And is this something that we should expect from the capital deployment into the into the airports and you guys mentioned and see what the net income people on and so on this.
This is part of our strategy to increase the commercial front of the business.
Yes, it is part of the strategy.
There will be new.
We're footage commercial space for example into some people terminal level do you think it.
It will be about to open a cooler kind and what is the new airport and monitor able will expect and the short term new square footage. So shall we expect more commercial space. There. So far we have on 85% occupancy rate we believe.
By the end of the year will be above 90% occupancy. We hope we also have been a more aggressive and negotiating our contracts with the discounts that we mentioned earlier.
There was a trade off and it seems we decreased.
Those discounts were accompanied by it and increasing in and the percent of.
And as a revenue share that we have so yes, we continue working on strategies as well as new.
And we're continuing evaluating from a diversification and commercial activities.
Oh, Thank you and thank you very much part of color.
Our next question.
Comes from the line of Alejandro is on the corner with Credit Suisse. Please proceed with your question.
Hi, everyone and thank you for the call and just a follow up question from them every day.
Margins, so we know what it but for these corporate you reach a north things.
Margin.
Margin.
And I'm curious to hear your thoughts around.
To what extent and we can continue to see a margin expansion where work and we see.
Normalized margin expansion I know that you already mentioned.
And you expect on a full year margin for 'twenty 1.7.
And 70%.
But going more on the medium term.
Be a margin debt.
We can see a normalized margin on them.
And then also these margin expansion, maybe boosted on not only like the eventual trucks recovery on further.
And potential increase in airports is booked.
From my father and cost control. Thank you.
Okay.
Hi.
And so.
And certainly the structure, we had posted a very it's from numbers in terms of profitability.
And I.
I think and that's Halloween barges, and we'll see a slight decline relative to <unk>.
And in terms of margin.
There are some contracts that we negotiated during the COVID-19.
Our prices are that will be up for renewal.
And.
And a few months or so so we will not expect to see.
Such discharged from those contracts.
On pieces for example, and lingo or security and and so we'll see some pressure on on those type of Oh.
Of course.
And.
And then church.
We would not expect to see further margin expansion and.
On the mid term relative to these levels and we are seeing at this time.
Okay, and you think you were hopeful and then and.
And I mean, just the.
Another question.
Yeah on on the Miami and maintenance costs since the beginning of Covid and we haven't seen it.
And he can decreases.
So is it fair to expect.
Got choked and the upcoming quarters.
After doing.
And if I can remember required I guess okay.
Maintenance.
During COVID-19.
Yes, I think we as passengers are on.
And on airports and facilities have a greater utilization.
And we would be seeing.
The increased maintenance.
Expenses.
Last year from wherever you were able to close and certain areas of terminals and.
And in that way with us.
Their usage or from our equipment, but now and that's basically all terminals are.
And for their schedule and teaching and Ravi is.
We are or should see a pick up in and minor maintenance expense over the next quarters.
This quarter relative to last year, you already saw and.
And increase in mine from them.
Below that she loves and 19 levels.
On the all the necessary flashes will.
Trends to watch the 2019 levels.
Okay. Thank.
Thank you so much.
And our next question comes from the line of Gabe.
And how hard with Scotiabank. Please proceed with your question.
Hi, Thanks for the call just 2 quick questions first.
First on above the routes that were closed can you give us a bit of a color.
Vote closed or why why work flow.
And the thing.
It's about macro and rate do you think this year youre going on you you will be able to reach back from them grades from here was on a wait till next year. Thanks.
Thank you for every day and for your question and I'll start right into your second part are we expect to and this year with our compliance with the maximum.
From a rate of around 95% and we expect by the beginning of next year to reach 100% maximum rate recovery, we mentioned.
And since last year that we plan on a year a pass through for the full rate to materialize.
And as for your first.
And yes, there were many routes that were closed.
A lot of them were related to inter yet, which as you know disappeared and I aeromexico was well that has been consolidating most of their traffic and the Mexico City Airport. So the strategy. The net aeromexico and following has been to recover some of the slots that are entered yet.
And open and Mexico City airports, where they have been consolidating their efforts there, but if we move on and our conversations with them, we expect to recover the regional traffic that we had with them.
Okay. Thank you.
Yeah.
Our next question comes from the line.
And Naoki at Cisco and G. B M. Please proceed with your question.
Good morning, Thank you for that call.
My question is on international traffic because it is already on the mix levels each day.
He is being related setbacks intrusive to the U S or what do you believe to be the driver and disrupt.
And let your your ear correct and I'll get it hasn't been very vaccine related some of the the new the new routes that we opened for example, where the the Mack Cali and route and that day.
So that is we believe a vaccine route but also theres, a harley and Gen, 1 and San Antonio Houston and some.
And we think they will remain on during the quarter. We had a peak for example at some point and 1.1 who were almost 20% above pre pandemic levels. So far we almost for the quarter were flat.
We expect international traffic to be solid for the rest of the year.
Not all of it and vaccines.
Some of that debt some of it is and some wood we believe it will remain.
Okay. Thank you very much.
Our next question comes from the line of Pablo months and he asks with Barclays. Please proceed with your question.
And really scaling from follow up of a previous questions on the commercial revenues.
Traffic is 23% on a on a pre pandemic level, but can you just explain to US how are you seeing eh commercial spending per passenger on the ground have you seen a change in pattern because so from lower corporate travel.
Or have you seen just people spending less.
And Karl.
How are things.
Behaving and Monterrey Airport, mainly.
Yeah.
Okay.
So in the case of Monterrey Airport and equally.
And.
Why is it performance volume performance, we have had.
And in line items is that recovery has been.
And last few months at least in the case and wasn't weighted primarily being driven by maybe available.
<unk> is.
No.
And explore the main and the only user of terminal C.
And whereas in terminal, a and terminal B for airlines, such as Mexico on an occasional wireless and Internet and Houston, 2 operating terminal a and those terminals have not recovered to the levels that the terminal she.
Has.
It has recovered.
And in terms of.
Square footage of our commercial spaces, and you'll see that 1 with the least amount of space.
So are we in and efforts to balance out our performance throughout the terminals.
And we started in July to move certain operations of Veeva idols from terminal Chi into terminal 8.
And we think that given the greater commercial exposures at those passengers will have and terminal a and we allow us to have a better performance of commercial.
In the in the Monterrey Airport.
And also we moved certain operations of item on for example from terminal 8 and terminal B, whereas where I had on Mexico and go to operate on.
And that's and efforts to improve the that's traffic in.
And that terminal.
We are making efforts to have it and more balanced traffic and our Monterrey terminal and this should help our performance in commercial revenue per Pax in Monterrey and.
Also we have experienced in the previous.
Revenues.
Some vacancies.
And in the quarter, we had some and some 400 on southern Union square meters being located we do expect it to be.
Bottom out and this in the second.
And second quarter and in terms of occupancy so we should see improvements and occupancies.
And that's a.
1 on quarters and that will also help us improve the.
Commercial revenue per Pax, if we didn't actually generating.
Yeah.
Does that complete your question.
And from for our side, yes.
Our next question comes from the line and then dress on Morocco with UBS. Please proceed with your question.
Hi.
Good morning, and thank you for question and my question Oh, My comfort zone on the coastal and Lagomorph.
Hollywood.
And then well I hope I'm, sorry, the revenue ramp up from that like when do you like bank debt.
And on my line.
And though.
And then it's done.
The member and the kind of Crown and.
And also.
Talk about sits and that's something the company has come from.
Thank you Catherine and all.
And I am sorry on the time zone.
I'm, sorry, and kind of we didn't get your could you. Please repeat the question the lineup isn't great.
Oh, Okay, sorry from my question. Please on Douglas to keep your eyes and more so on the wholesale side because when do you see on the monetization of the business and.
And also if you have a are there and you said from theory increase yard Dennis if I keep telling them and yes, that's it.
Thank you.
Diversification, guesswork and cleaning and evaluating new a new project for the hotels are they the NH hotel that we have and the Mexico.
Also on what happened and recovering faster than the Hilton debt, mainly due by the composition of our of the customers most of the MH our crew members of airlines.
So that has been recovering faster and the profile of a hailstorm on AR.
Customer are mostly business driven.
The city of honors Ah tourists that haven't recovered as fast.
It's hard to say on a number when we expect it will normalize and we believe.
We believe they will normalize somewhere by mid next mad or 3 quarter fourth quarter of next year.
Thank you.
Thank you we have no further questions at this time and I would now like to turn the floor back over to management for closing comments.
I want to thank all of you again for participating in this call and go.
Hilton and whether and I.
And are always available to answer your questions and we hope to see you soon thank you and have a good day.
Ladies and gentlemen, this does conclude today's teleconference. You may disconnect. Your lines at this time. Thank you from your participation and have a wonderful day.
[music].
Greetings and welcome to the Grupo Airport Wario del Centro Norte de second quarter 2021 earnings Conference call.
At this time all participants are in a listen only mode.
A brief question and answer session will follow the formal presentation.
And once you require operator assistance during the conference. Please press star zero on.
On your telephone keypad.
As a reminder, this conference is being recorded.
It is now my pleasure to introduce your host and then we'll Camacho Investor Relations officer. Thank you Sir you may begin.
Thank you Christine and good morning, everyone and people.
And welcome to AUM and second quarter 2021.
The California, how much EBITDA.
And he is officer.
Vehicle Chief Financial Officer will join me on on this morning, and we really saw almost second quarter zone.
Yes.
And maybe remind us on certain things.
And of course of our discussion today may constitute forward looking statements, which are based on grid management.
Vicious and belief and that.
Subject to a number of reasons.
Actual results could be coming on here.
Including factors that may be.
And Joel which include the impact from COVID-19.
I will now turn on the globe when it got on Windows.
Thank you and Manhattan, and good morning, everyone and thank you for joining us today I hope that all of you on your fan.
It is safe and healthy.
This morning, we will review the evolution of our business as well on our second quarter performance.
During the quarter, our total passenger traffic continued to show clear signs of recovery with a sequential increase of 50% compared to the first quarter of this year.
And this performance was mainly the result.
Families from our reality levels throughout the country and acquainted with yeti and I'm, a logical traffic alert system.
The airports that contributed the most of our passenger traffic recovery in volume terms, where mass Atlanta, which delivered growth as compared to the second quarter of 2019, Durango, Reno, Nevada, and Mexico and Korea.
Additionally, vaccination relative programs in Mexico, and the United States allow for gradual increase levels of passengers during the quarter, particularly on the international side, which stood at 98.5 of the international passengers in second quarter of 2019.
The international passengers.
Recovery is primarily driven by destinations such as Houston, San Antonio and Dallas.
And July the level of COVID-19 cases has begun to increase again as well as epidemiological alert levels and the country.
Currently of the 9 states, we're on Manhattan operations once.
And it's in Red status, 3 and Orange and yellow and won and green.
We are confident that our passenger traffic will continue to evolve positively in the following months as the pace of vaccination, Walmart and Mexico and the U S makes progress and economic activity continues to improve.
It is worthwhile.
Highlighting that in Q2.2.
2021, 3 new routes opened Monterrey, Mcmullen, Monterey Harlingen, and see Thats why does the way you had FX and 7 origin destination routes that were suspended we start operations.
For the third quarter of 2021.
We have confirmed the opening of 13 origin destination route most of which are brand new.
Finally at the end of June a total of 131 origin destination and less worried and operation compared to 140 at the end of December 2020, and 183 routes and.
And operation at the end of December 2019.
Turning to our second quarter operational results.
Passenger traffic reached $4.5 million and the quarter, which decreased 24% as compared to the second quarter of 2019.
And volume terms the <unk> expense.
And the greatest traffic growth during the quarter were Monterrey on its Mexico City, and canceling booths Houlihan and on the Tijuana Route Chihuahua on its Mexico City route and Monterey on its Houston route.
Adjusted EBITDA reached $1.3 billion, Texas, and the quarter with a margin of 74, 7%.
And this is the result of traffic and revenue recovery as well as our strict cost control efforts throughout all areas of the company.
On the commercial front revenues increased 88% compared to the second quarter of 2020 with largest increase on parking restaurants car rentals and retail.
Occupancy rates for commercial space and our terminals was 85% at the end of the quarter.
Diversification revenues increased 114%, mainly due to higher revenues from hotel services and on Mackay Jr.
During the second quarter of 2021 occupancy rate or terminal.
Collection Hotel was 56%.
While the Hilton Garden Inn hotel at the Monterrey Airport had an occupancy rate of 46% during the quarter.
OMA cargo delivered another outstanding performance during the quarter with and increasing tonnage handled on a 102% result.
<unk> and revenue increase of 69% versus the second quarter of 2 and 2020.
Revenues from air and ground import cargo will be increasing revenues.
Total investments and the quarter, including MVP investments major maintenance and strategic investments were 482 million.
<unk> and <unk>.
Actually some of our major projects underway include the expansion and remodeling of the Monterrey Airport terminals AMC.
Platform reconfiguration of the Monterrey Airport.
Expansion and remodeling of the Tampico terminal building.
Expansion and remodeling of this you've got quite a terminal built.
Building modernization of the day 1 of them sorry.
And obviously, what the net with terminal building and green investments related to solar panels, and our 13 airports.
Finally on July 7 aerodrome infrastructure, and an affiliate of <unk> Holdings conclude a tender offer process through which <unk> acquired 60.
And 2 million series, B shares and warmer equal to 15, 4% of almost capital stock.
As a result, Fintech holdings indirectly owns 31% of almost capital stock.
I would now like to turn the call over to Rupert but of sales who will discuss our financial highlights.
Quarter.
Thank you Ricardo and good morning, everyone I will briefly review our financial results and then we'll open the call for your questions.
Turning to Armours second parts and financial results.
I remember the revenues increased 700 and some.
Okay.
And relative to peak 20 day by day, she's going on and 80% increase and passenger traffic 1 Idaho revenues increased 1 on 110% with commercial revenues, having the largest contribution.
Commercial readiness increased 88%.
And should be the largest variations where parking restaurants are rental.
And for Us and retail.
<unk> revenues increased.
180%, mostly driven by higher passenger project.
Once our rentals and retail and online.
And 4% and 63% from 61%, respectively due to lower levels of <unk> lenses to tenants and heightened revenues.
Rentals from participation on themselves.
Diversification and increased 814%, mostly driven by the higher revenues from 2 hotels and almost got on.
Both of them and I don't know store on long island on revenues and the quarter were.
And 1 billion instead of a.
And 50 million passengers.
And the new construction revenue increased 60%.
A non cash item that is required under applicable accounting standards and it is.
Close to the construction cost of improvements to concession assets. So it.
And has no impact on earnings.
Nicholas of airports and services and G&A.
<unk> expense increased 7% relative to Q 'twenty mutual a 42% growth and contracted services on the CV, 8% increased and mining minor maintenance expenses.
This is a result of higher levels of passenger traffic.
These increases were partially offset by savings in bad debt expense.
Payroll expenses and materials and supplies.
Almost second quarter adjusted EBITDA was 1800 net income.
And adjusted EBITDA margin reached 74, 7%.
During the quarter, we recorded an increase.
And the major maintenance provision of equivalent and 21%, reaching 861 million cases.
This reflects increased future major maintenance works under the New Master development program that was approved by the authorities last year.
And we're financing expense 1.
And 69 million tests and consolidated net income was 620 million tests.
With regards to our financial position.
Cash generated from operating activities and the second quarter amounted to $1.1 billion vessels and total cash at the end of the.
The quarter stood at.
$4.2 billion versus.
We believe that our cash position with cash generating generated from operations will allow us to meet all of our investments financing and operational obligations for 2021.
Total debt amounted to 2.5 billion.
And Texas and compete.
Of the 3 peso denominated bonds that we have.
And our net debt to adjusted EBITDA ratio stood at <unk> 3 times at the end of the quarter.
This concludes our prepared remarks, operator, please open the call for questions.
Thank you we will now be conducting a question and answer session.
If you would like to ask a question. Please press star 1 on your telephone keypad.
A confirmation tone will indicate your line is and the question queue.
You May press star 2 if he would like to remove your question from the queue for.
And for participants using speaker equipment, it may be necessary to pick up your handset before pressing.
And his darkies.
1 moment, please while we poll for questions.
Thank you. Our first question comes from the line of Alan Macias with Bank of America. Please proceed with your question.
Hi, good morning, and and thank you for the call.
A question on margin from.
Adjusted EBITDA margin.
Is your expectation going forward and.
If you're on a receive any.
Acceleration and and.
And costs or and cost pressures and maybe item and particularly thank you.
Thank you Alan for your question.
We have on during the quarter, we have kept a very strict control on cost. We have we think we believe most some of them are going to be moving.
Moving to able to keep on going forward.
We expect for the full year to be slightly.
Slightly above 70%.
Uh huh.
EBITDA EBITDA margin.
Does that complete your question.
Yes.
Yes, yes. Thank you.
Our next question comes from the line of Jim Harmon Mendez with J D.
Please proceed with your question.
Hi, he cut over to Manuel and thanks for taking my question I have 2 questions actually the first 1 is a follow up on the traffic recovery you guys mentioned on the opening remarks.
Just wonder if you could provide more color on how do you see practically Cobra and when do you expect to be back.
Morgan and 19 levels and how do to de risk related to the increased number of cases.
And of COVID-19, and in Mexico.
And the second question is related to the commercial segment are and.
What are your expectations in terms of revenues on a per passenger basis. Thank you.
Okay.
First question on the EM.
15th Goldman Sachs easier too.
Yeah around 17 million cash.
That would be about 26%.
Below 2019 levels.
Hey.
A strong performance in the summer Ah irrespective of the increase.
The increase in AR.
And it's helped alert level.
This as we have mentioned and this goes from here just to be driven primarily by VFR and domestic lease.
Our Seattle.
However, we would expect towards the end of the year and pick up in corporate travel.
Driven by day improvement in economics.
Conditions at this time and do you.
<unk> reached the 2019.
And 19 levels.
<unk>.
And.
And can easily.
Yes.
Mhm.
And I'm sorry, what was your question a little bit more scalable moving.
Yeah.
Yeah and in terms of the houses and the risks regarding the increasing number of cases of Covid and in Mexico do you see and.
And now third quarter on the and up year.
What we're seeing.
Kris and alert level from the health authorities. However, we do expect.
That's there will not be strict confinement measures such as the day, 1 that we saw last year. So.
And if you will.
And we expect to continue to see increased mobile and here over the next few.
A few months.
And the vaccination program in Mexico is underway and picking up and so.
So we believe that that's the.
And the.
Improvements in the vaccination.
Average will allow us to gain will continue and having.
Traffic recovery for the next months and we do not foresee any such conditions and just like the ones we experienced last year.
And also just to add to the point that we.
Haven't seen any we've and tracking the numbers, we see and we haven't seen any effect. So far the trend that we have seen for the last few months remains so we haven't seen any evidence and the data that supports any negative impacts so far.
Super. Thank you guys and just a follow up on the commercial segment, how do you see a readiness on a per passenger basis is already saw an increase now on the second quarter.
Commercial loans and each week.
Okay.
And improving our most important line item and commercial.
Okay.
And our parking.
Already signed and in the second quarter a.
Stronger performance than previous months from from car parking and we expect us and.
Travel continues to grow due to benefit from from those line items and and the case.
Revenue restaurant and retail tenant and.
Our rental.
We did.
And the tab general discounts.
And were implemented in the second half of last year and we gradually.
Discounts out during the second quarter of this year.
Although we would expect.
Less impact from those.
And so going forward and that would help us.
Debt.
And both yourselves from from the fixed rent portion and.
And also as passengers continue to increase we should also share pick up in the participation on sales.
But we get from most of our commercial.
And so we should expect EBITDA.
Acceleration in commercial revenues over the second half.
Okay perfect. Thank you guys have a great day.
Thank you.
Yeah.
Our.
Our next question comes from the line of Javier Gale with GBM. Please proceed with your question.
Oh, Hi, and I haven't got on from Farnham on Earth.
Thank you for taking my questions.
My first question would be related to the capital structure of the company, we see as you mentioned.
Sales.
Correct.
The press numbers and do you have an upfront.
A very comfortable and that Deb whoever and a ratio.
And its management are comfortable with this position or would you be seeking.
Additional debt to the balance sheet.
On the short term AR that'll be my first question.
And thank you Javier for your question, Yes, and as you mentioned that the our debt levels are at a very comfortable position as you know at 4.4000, and 500 billion 4 and 5 billion pesos. So.
Far where we plan to remain there.
We believe that there's room for improvement, but we will be analyzing and as time moves on.
And also in the second half of the year, we should expect.
And the dividends and plus.
Located to the board of directors the decision on when.
And how do they give you and will be paid.
As you remember that's an amount of up to 2 billion vessels. So so at some point in late <unk> or <unk>, we should see also that distribution.
Being made.
And so that'll be decreased slightly.
Net debt to EBITDA levels.
And that's that's very helpful. Thank you guys and my second question is and it's a follow up regarding the commercial revenue part of our business and.
And I was wondering are.
And you guys are doing and.
And the new.
And your strategy is important and and the commercial front to improve those that revenue mix from from commercial revenues at the airports and.
And is this something that we should expect from the capital deployment into the and to the airports and you guys mentioned.
And I mean, and see what they're calling on people and and so on.
This is part of our strategy to increase the commercial front of the business.
Yes.
As part of our strategy.
And there will be new square footage commercial space for his counsel and as some people try and Mount Bellevue.
You're about to open.
And Kulicke and what is the new airport and monitor able will expect and the short term on new square footage. So shall we expect more commercial and stay there. So far we haven't and 85% occupancy rate. We believe by the end of the year will be above 90% occupancy. We hope we also have been a more aggressive.
And negotiating our contracts with the discounts that we mentioned earlier.
And there was a trade off and it seems we decreased those discounts were accompanied by an increasing in and the percent of revenue share that we have so yes, we continue working on strategies as well as new.
We're continuing evaluating from a diversification and commercial activities.
Oh, Thank you and thank you very much part of color.
[noise].
Our next question comes from the line and Alejandro is on the corner with Credit Suisse. Please proceed with your question.
Hi, everyone and thank you for the call and just a follow up question on EBITDA.
Margins. So we know what a debt for these corporate you reached a north times.
High margin.
So I'm curious to hear your thoughts around to what extent and we can continue.
To see on margin expansion, we're work and we see a normalized margin expansion I know that you already mentioned.
And you expect on a full year margin for 'twenty, 1 above 70%, but going more on the medium term.
Beyond our margin and our weekend.
We can see on normalized margin on them.
And then also these margin expansion, maybe boosted on not only about the eventual recovery on.
And further potential increase and airports esports.
From a farther and cost control and thank you.
Hi.
And so certainly this quarter, we posted a very from numbers in terms of profitability.
I think and this minority partners will see a slight decline relative to <unk> in terms of margin.
And there are some contracts that we negotiated during the COVID-19.
A crisis.
That will be up for renewal.
And the next few months or so so we will not and expect to see.
Such discharged from those contracts.
Third.
Barclays for assembling lingo or security.
So we will see some pressure on on those type of Oh.
And such.
We would not expect to see further margin expansion and.
The net.
Term relative to these levels that we are seeing at this time.
Yeah.
Okay. Thank you and then and if I may just a question.
Yeah on the on the Miami and maintain and cost since the beginning.
Kobe and we haven't seen a.
Significant decreases so is it fair to expect and I got choked and the upcoming quarters.
After doing the minimum required I guess and.
Maintenance and.
During COVID-19.
Uh huh.
Yes, I think we as passengers.
On airports facilities have a greater utilization.
We will be seeing the increased maintenance.
Expenses.
Last year from Army, we're able to.
Searching and areas of terminals and.
And in that way with us.
And the usage of some equipment, but now and that's basically all terminals are fully opens up or their schedule and teaching and Rockies.
We are or should see a pickup in 19.
Clothing and expense.
Over the next 2 quarters I mean.
Each block from relative to last year, you already saw and.
And increase in maintenance.
Still below that she loves and 19 levels.
Probably over and that.
She watches will.
And then and my sense is to watch the 2019 levels.
Okay.
And so much.
And our next question comes from the line of Gabriel how hard with Scotiabank. Please proceed with your question.
And.
Hi, Thanks for the call I'm just.
2 quick questions.
First on above the routes that were closed because you gave us a bit of color, which roads were closed or why why work flow.
And it's about macro on rate do you think this year youre going on you will be able to reach maximum rates are and he was on a wait till next.
Thanks.
Thank you for every day and for your question and I'll start right into your second part are we expect to and this year with our compliance.
Compliance with a maximum rate of around 95%.
And we expect by the beginning of next year to reach 100.
Yeah.
And at maximum rates, a recovery, we mentioned and.
And since last year that we plan on a year a pass through for the full rates to materialize.
And as for your first question, Yes, there were many routes that were closed.
On a lot of them were related to insert yet, which as you know disappeared.
First of all I Aeromexico was well that has been consolidating most of their traffic and the Mexico City Airport. So the stride and aeromexico and following has been to recover some of the slots that are entered yet left open and Mexico city airports, where they have been consolidating their airports there, but as we move on.
And in our conversations with them, we expect to recover the regional traffic that we had with them.
Okay. Thank you.
Our next question comes from the line of ne Okay at Cisco and T. B M. Please proceed with your question.
Good morning, and your protocol.
My question is on international traffic because it is already up from pandemic levels each day.
And as being related setbacks sensors simple.
Or what do you believe to be that's right Bert and destroyed.
You are correct and I'll get it has been very vaccine related some of the the new the new.
And we'll route that we opened for example, where the the Macau and route and debt.
So that is we believe a vaccine route but also there's a harley and Gen..1 our San Antonio Houston.
Some of them, we think they will remain during the quarter. We had a peak for example at some point and 1.1 who were.
Almost 20% above pre pandemic levels, so far we almost for the quarter were flat.
We expect international traffic to be solid for the rest of the year.
Not all of it and vaccine related some of it is and some wood we believe it will remain.
Okay. Thank you very much.
Our next question comes from the line of Pablo and months and he asks with Barclays. Please proceed with your question.
Hi, guys came from follow up of a previous questions on the commercial revenues and steel traffic just 23% on Oh no proof.
But can you just explain to US how are you seeing eh commercial spending per person and you're on the ground have you seen a change in pattern because so from lower corporate travel or have you seen just people spending less.
Yeah.
Howard.
Our things are behaving and Monterrey airport, mainly.
Yeah.
On.
So in the case of Monterrey Airport and this really explains.
Why the performance the volume.
And the performance, we have had and the different line items is that.
Recovery has been in the past few months at least and that there's a month and rate primarily being driven by maybe available.
B laterals is.
No.
The main and the only user of terminal C.
And whereas in terminal a and terminal b.
Airlines, such as and Mexico, or indicating what lies and inkjet and used to cooperate and terminal a.
Those terminals type and not recovered to the levels that the terminals. He has has recovered.
And in terms of our square footage.
Of our commercial spaces, and you'll see that 1 with the least amount of space.
And we and in airports to balance out our performance throughout the terminals and we started in July to move certain operations of Veeva idols from terminal cheat and.
<unk> 8.
And we think that given the greater commercial exposures at those passengers will have and journal a will allow us to have a better performance of commercial revenue.
In the and the Monterrey Airport and.
Also we moved certain operations.
I'm on for example from terminal H and terminal B, whereas we're out of Mexico and to operate on.
Also on and efforts to improve the catastrophic.
And that traffic in that terminal.
So we are making efforts to have it and more balanced traffic and.
And our Monterrey terminal and this should help our performance in commercial revenue per Pax in Monterrey.
So we had experienced in the previous months.
Vacancies.
Steel and the quarter, we had some and some 400 and Sydney.
And it is being vacated we do expect to bottom out and this.
And quieter in terms of occupancy so we should see improvements and occupancy.
In the next.
Following quarters and that will also help us.
And Bruce the.
And <unk>.
He is plenty for practices that can be generated.
Yeah.
Does that complete your question.
And from her side, yes.
Our next.
Question comes from the lineup and dresses marotta with UBS. Please proceed with your question.
Hi, good.
Good morning, and thank you for taking my question. It's on my pencil on the bottleneck.
And we'll go and Hollywood and well come up on private client revenues ramp up.
Commercial loans like language bank debt.
And in.
On the LIFO and the things.
And it's on the member and the cargo from them.
If you could also on.
And talk about Citron and something the company has.
Momentum to capture that and also on since I'm, sorry on the time zone.
And from what I understand we didn't get your could you. Please repeat the question like the lineup isn't great.
Oh, Okay, sorry from my question is on target to keep your eyes and more so on the wholesale side because 1.
And when do you see on the money.
Monetization on the Bemis and also if you have are there and you said from theory keeps increasing.
And frankly, if it keeps on giving you that debt.
Thank you.
Diversification and yes, we're continually evaluating new a new project for the hotels are they the NH hotel that we have and the Mexico City Airport has and recovering faster than the Hilton and that's mainly.
Due by the composition of our of the customers most of the MH our crew members of airlines.
And so that has been recovering factor the profile of our Hilton.
Customer are mostly business driven Hilton honors Ah.
Tourists that havent recovered.
And I like BARDA as fast.
It's hard to say and our number 1 we expect they will normalize and we believe.
We believe they will normalize somewhere by mid next the med or 3 quarter 4 quarter of next year.
Yeah.
Recovery income.
Thank you we have no further questions at this time and I would now like to turn the floor back over to management for closing comments.
I want to thank all of you again for participating in this call go from on Wednesday, and I are always available to answer your questions and we hope to see you.
Soon thank you and have a good day.
Ladies and gentlemen, and this does conclude today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation and have a wonderful day.