Q3 2021 Grupo Aeroportuario del Pacifico SAB de CV Earnings Call
Okay.
Good morning, and welcome to cap the third quarter 2021 conference call planes have been placed on mute to prevent any background noise. After the presentation. We will open the floor for questions and at that time instructions will be given if you would like to ask a question.
Now my pleasure to turn the call over to <unk> Investor Relations team. Please go ahead.
Thank you and welcome to the Blue part of portfolio in the past typically third quarter 2021 conference call presenting from the company today, we have Mr holder, Woolfell, Chief Executive Officer and Mr. So yeah.
Chief Financial Officer.
Please be advised that forward looking statements may be made during this call. These do not account for future economic circumstances industry conditions, the company's future performance or financial results.
Such statements made are based on several assumptions and factors that could change, causing actual results to materially differ from current expectations for.
For a complete note on forward looking statements. Please refer to the quarterly report issued Wednesday.
Due to the pandemic that took place in 'twenty 'twenty, comparing 2021 results to 'twenty 'twenty results would reflect an extraordinary increase that is not inaccurate indication of real growth as a result, the company will be comparing third quarter 2021 results versus the third quarter 2019 and stuff.
This will provide a better understanding of the financial and operating performance trends for GAAP and thus are more realistic indicators. Thank you at this point I will turn the call over to Mr. Stone for his opening remarks. Please go ahead Sir.
Thank you Mike good morning to everyone and thank you for joining us today.
Did the bulge here on a half job has successfully navigated one of the most challenging moments to talk about our industry.
I'm very proud to say that we were we emerged a stronger company coming out of the pandemic that we were going into it.
This quarter reflect more than just a recovery.
It also demonstrates a stroke for four months.
Oh precedent periods.
During the third quarter traffic rich nearly 12 million passengers, which is more than twice the level reached in 2020, and only 1% lower passengers profit compared to the third quarter of 29.
We are pleased with the significant recovery of our airports in Mexico, especially throughout our leisure destinations.
Do you ever go to reflect a rubber score.
Industry circumstances.
They'll stunning result, well so triple up to the Jewish suction national rollout that positively impacted our economy, our travel trends.
We ended up just consumer sentiment on pent up demand were met with encouraged view regarding the lifting of these restrictions so mark.
For example in September.
Oh troubled prestige for international trucks.
Additionally, the U S government recently reopened love burgers for fully vaccinated private but you didnt in the first week of November which got.
Good news for the quarter.
Well in Jamaica activity continues to temporary or is that due to the travel restrictions imposed by the Dutch government.
We are confident that passenger traffic for the last quarter whatever effect the strong overall recovery.
This is Kelly with Pi, an upturn from the Canadian market for the winter season.
When it comes to when people away. Unfortunately.
With the reopening of routes from Toronto.
Drug to Montego Bay.
<unk> Coover, Toronto, Montreal, Ottawa, Jeff.
Did you Wanna workforce is another boost in passenger traffic was the C V extra sulfur for non Americas trucker.
Moving on to the revenue performance.
Our fruit.
Even in.
And Chris around 24% compared to 2019, reaching four 3 billion pesos in the third quarter of 2021.
I Love to go revenues improved by 29% driven mainly by the recovery passengers' traffic can do turquoise as well Chris.
She's much I'm, sorry approval for the 'twenty 'twenty 'twenty 'twenty four periods.
On the commercial side will.
We'll continue supporting our tenants offering discuss over the minimum rent fields in accordance with the buses as profit decrease at each airport compared to 2019 passengers truck.
This is for any given month.
It's not a revenue shares does studied passengers profit recovery How's the soldiers profit growth on some of their first compared to the 29th.
This williston, the commercial revenues, Bruce or 10% during the third quarter.
Food and beverage revenue for your stores are goes for most of the groups.
Was offset by the lower revenues for other tortured VIP launch.
In the case of advertising.
First of all as important change in the industry. The companies have been adjusting their marketing strategies due to due to the pandemic.
This point during the 2020 2021 they have canceled most of their advertising expenses.
However, we expect a significant decrease for 2022.
The economic trend is positive for the majority of the industry.
Due to the excellent passages profit recovery are the greatest spending for shattered the commercial area.
In addition to tight cost controls distressed together contribute for Triple 1 billion pesos to the EBITDA, a decrease of 27% compared to the third quarter of 29.
These include the.
Margins of 71%.
It is important to point out here that this is not a study David.
Equally the light of the current global situation.
On the balance sheet front cash on cash equity volumes reached $10 7 billion pesos as of September.
During the third quarter, we paid the GAAP 16 bond certificate for 1.50 basis as well as 4 billion pieces of capital reduction approve it at the shareholders meeting held on some tender 2021.
Resulting in a total disrepair shortfall 11, six bushels per share in this year.
As a reminder, where we are.
Started the share repurchase program on March 1st of this year.
As of today, we have repurchased 11 3 million shares for a total of $2 5 billion business.
We expect that the repurchase program will continue for the foreseeable future.
Regarding depth.
Over 50.
Sure.
5 billion peso seen bulk justification to funding bedroom committed under the Master development program for 2021 and part of 2022.
This is Sean Igloos golf first Grupo certificates for 145 Bcf basis, which will be used to finance grid eligible projects.
Have you been in sort of our convenience to sustainability with a focus in our four key environmental area.
Andrew you have emissions biodiversity solely waste management and while there is modest.
Okay.
Moving on to the Capex, either while the Hunter FERC.
We continue with the construction of the second runway as well as the construction of the new commercial mixed use building, which will include a hotel corporate doses on commercial spaces.
We expect that these will be ready for during mid 2020.
If you Wanna, we continue with the construction of the terminal processor building, which will be completed and ready to begin operation in December of this year.
We believe that these new building will be a game changer for gear for by attracting more floods for international markets.
Indeed, we already have a new article D J.
This means that if a passengers booking a flight to San Diego.
Oh just to sell it either.
They were part of that is weather.
The C V X complex.
Is there a remarkable to see the shift of buses profiling.
Which despite the closer of CBS since March 2020.
So really the surplus PREPA debit passengers' traffic labor.
These data suggest that more American citizens. However have been just in the reach further problems between the Mexico and the U S markets, mainly struggling to leisure destinations.
We also continue expanding the Scottish International terminal building as well. This is David the second terminal building in Portugal, yet.
Looking ahead, we expect that to continue recover dredging passengers' traffic posted in this quarter, we will further strength towards the end of the year as the winter season approaches.
That's the initial rollout of feather it in government continues to lift problem for Ctrip.
Well, we are not sure what future issues may got right.
We do expect Sustainment traveled road through the coming years.
We are confident that our business remains strong I'm ready for the challenges that they face in the future too.
To conclude I wish to thank our team for their continued commitment with the implementation of our strategy.
Thank you for your attention.
Yeah.
Operator, please open the floor for questions.
Thank you at this time, if you would like to ask a question. Please press. The Star then one on your Touchtone telling you.
You may withdraw your question at any time by pressing the pound key.
Once again to ask a question. Please press the star and one on your Touchtone phone.
And we'll take our first question from Daniel <unk> with Credit Suisse. Please go ahead. Your line is open.
Good morning.
Thank you for the opportunity to ask questions.
I just have a few questions regarding income Micah.
Could you give us some color on what's going on there.
The recovery coming.
What is the current situation of the negotiation and when could we expect to conclude.
Okay.
Hi, David this is well.
Continue talking with the authorities there.
They implemented a negotiating team which will be integrated by different.
Ministers.
Indeed, we have.
Meeting in person next week.
We try into speed.
<unk> of our proposal.
Currently we don't have any any change we are still in middle of this negotiation.
We expect to conclude Pearl Lee in the first half.
Out of 2022.
It's complicated because they they have.
We saw some travel restrictions and they are expecting a better recovery in passenger traffic in the island. So we expect that it could take.
Following months in the first half of 2022.
We expect a positive outcome.
Okay. Thanks, a lot.
If I may just a follow up.
Regarding one takeaway, where we have been seeing margins over 60% for the past two quarters, which is.
We have all been at historic average around 50% how do you see this going forward should we expect them to normalize or is this level.
Hannibal.
It will be normalized Diego because according to the concession agreement in in Monterrey, We have an additional concession fee.
<unk> is paid according to.
Our revenue projection in the in the concession agreement in which during 2020, we were below that generates a credit which is supply during 2021 that means that for the following years will be normalized to the fifties in terms of EBITDA margin.
<unk>.
Okay.
Okay perfect. Thank you.
You're welcome.
We will take our next question from Guillermo Mendez with J P. Morgan. Please go ahead.
Hi.
Good morning, and thanks for taking my question I have two questions actually the first one it's a follow up on this margin topic.
Do you expect a similar trend.
In Mexico, we saw once again drove margins.
For the quarter.
Do you expect any kind of normalization I should expect this.
Low <unk> percent for the upcoming quarters and the second question is regarding your traffic recovery.
Similar story airports already back to 19 levels in terms of the corporate.
Demand what should we expect going forward do you expect any changes going forward in terms of your normalized corporate demand. Thanks.
Okay <unk> this is our.
Regarding the EBITDA margins is complicated to see that we will continue or will have a seventies.
Expect to be normalized in the full year below seventies, we'd have to consider that Mexican airports are around the seventies EBITDA margins. However, due to the consolidation of <unk> and Kingston, we will have.
Yeah.
Round 68, 69, as an EBITDA margin in terms of.
Full year so.
Low seventy's it is fair to say that that's the range for GAAP.
Yeah. Jeremy This is Robert is talking about the traffic on the specific of the corporate demand.
Said that we will be.
To begin to see a recovery for the coming year too.
Today, we have <unk>.
So in some way of effects of the corporate demand.
The first is related for sure for all the homework in some way the cancellation of meetings on exports that is happening not just in Mexico around the world in the case of gap, we have DSA in part that impact on domestic Burton corporate growth.
Mexico.
Mexico, Bahia or Mexico.
These three airports us as you can see that <unk> has a lower recoveries that the rest of our airports.
Okay.
Of the corporate.
Demand traffic.
That also is affected by a lack of capacity in Mexico.
At the end of the day it is important to remember that with the inter Jeff.
Reduction of debt.
The reduction of seats due to the fact of the Ethernet is not operating in anymore.
We lose almost.
<unk>, 27% to 30% of the total.
Mexican market.
So I will say that for you suddenly do use corporate markets. We are seeing a really high load factors. So we could expect that in the coming months or years.
Yes.
Airlines begins to bring additional capacity, we will see a full recovery of these specific routes.
Okay. Thank you.
Yeah.
We will take our next question from Stephen Trent with Citibank. Please go ahead.
Hi, good morning, gentlemen, and thanks for taking my question.
By the way can you hear me okay.
Yes perfect.
Great Great. Thanks, real sorry, I had trouble with my phone here.
Yes.
Two quick questions for you here.
The first is could you refresh my memory.
On whether there are plans by the hotel industry or kind of theme park industry to.
Do build outs.
In Mexico specific coast.
Now your airports.
And two.
Aside from Barbados are there any other foreign airport opportunities that might be of interest to get thank you.
Yeah.
Yeah.
Hi, Steve This is al.
Hey, Ralph.
Additionally, two of our betas, we don't have any any other it project right. Now you know is this complicate times for airports in general in the World. The we will be looking for any other projects, but for now I'll leave our beta is in the pipeline.
And.
Steve This is for the case of what is happening mainly by yet.
Carlos I can see that the construction of additional keys or additional hotel rooms is happening.
The Trevi goggles.
Does that in the next two years.
It will have around 12, 4% additional key E. G roofs for on that just because you've divested Asia.
Okay. So if I got that all the areas not yet it or no I got that.
It also have a really important increase of Keith we have really focused on a huge project.
From.
The Biogen resorts.
Our developing a <unk>.
The Hotel park team in.
That area.
For almost eight months started that projecting some way is low down their implementation their construction due to the pandemic, but <unk> said that today they are.
We are starting all these all these projects so <unk> coming to two years that that will open for your staff.
The total numbers that we are seeing that will increase in the area will be around 10% in the next two years.
Okay. Yeah. That's helpful. Thanks, guys and I will let someone else ask a question. Thank you.
Thank you Steve.
Well move next with now Oaky Otsuka with G. E. M. Please go ahead.
Good morning, Congratulations on your results I was wondering if you could give us some color on the traffic.
<unk>.
So do you expect to fully increase.
This year.
Hi, Keith this is sold.
Yeah.
We are in the path too.
<unk> reached the maximum Todd if approved by the authority.
<unk> already adjusted the specific tariffs in some of our airports.
Due to that business.
Passengers is not recover yet.
And for all we will not reach the hunt.
And of the maximum tariff we are trying to get closer to the maximum tariff.
But we are expecting to see.
The business travelers during the during the end of the year basically for wireless data.
So in animal CEO airports.
The fully traffic.
We expect.
Going to reach the hopefully.
At the end of 2020 due the level the levels of 2009.
19.
And also I will add that.
Also we are strongly with the fulfillment of the maximum tariff.
Without further directly.
Problem of some way of the inflation.
Some ways.
So it really <unk> higher than our original projections and as you can remember everybody knows we only could change our specific targets each six months. So in some way the inflation is going.
Higher that we already know the.
The project, so we will need some additional increase on the specific targets to reach the 104.
Percent of of our maximum tariff, but we expect that we will continue that in India do you see growing in a specific time to reach the.
Target of the 100% in the coming months.
Yeah.
Alright, Thank you very much.
Okay.
And once again, if you would like to ask a question. Please press the star and one on your Touchtone. Following we will move next to Gabriel <unk> with Scotiabank. Please go ahead.
Hi, good morning, congratulations on the results.
It's a good question.
You think that a rising inflation to impact the predicted haptics for the MVP and the second question do.
Do you think that some of the.
Pressures there could be some pressure about the neighbor incorporating they'll start things into the cup. Thank you.
Great. Thank you this is Brad.
In terms of the of the Capex for sure we will have an impact.
For sure we are seeing a really high inflation on the on the on the construction industry, but it is important to remember that our commitments in terms of our concessions contracts.
It's ultimately our commitments in goods.
Adjustments by the <unk>.
Construction.
The.
In place Shaun index, so for sure we will see.
Our numbers.
An increase of the Capex an increase on the commitment but in the other side, we will we will adjust our maximum target you find out where a revenues.
For DSC Vishal Inflations, so for sure we will see impact if the if the grant of inflation continue in the country.
For sure we will see impact on the Capex, but also in the revenues.
Yes, and regarding your question about labor changes, we already apply all these.
A lot of changes and we don't expect.
Really a huge impact to the cost of service.
We foresee.
<unk>.
$40 million to $50 million vessels at the end of the year that is not very relevant to that cost of services.
Okay.
Okay.
We will take our next question from Mike <unk> with Barclays. Please go ahead.
Good morning.
Just a quick question on my side did you see the new airport.
He can drive it for the Mexican probably into three in the coming years.
We can comment from <unk>, who are willing to operator.
Hi, Dan.
In General terms I would have said, yes, and youll see about <unk> <unk> for instance, <unk> mention a.
We note that the area of <unk> Airport has almost 4 million pass a formula people leave you in the area. So the catchment of the Santa Lucia Airport by itself.
I will say that is interesting is it postbank meets ICD. So it will be not thrilled that southwest specific routes for the most.
Robust.
<unk> will appear on data so I will say at the beginning we are we are seeing that out of the cargos.
A routes it would be normal that in the coming months or years, we will see something on while ahead, our monterrey or other of the of the robo spares that is steel or access to an hour.
Our market.
But I mean in.
In general terms.
<unk> that always.
Air permit we would not be really happy to receive additional infrastructure and to receive additional.
Play.
For instance for the case of Daiwa another announcement of this absolutely at the corner Road.
There are more than happy to do.
To receive these additional seats.
I will said that it will not be in the case of thesis specific routes.
Some kind of.
Okay.
Competition or transfer of passengers from Mexico to Tulsa.
We're seeing that day.
Direct route from that area of <unk>.
Incentivize still flies for the region and we will bring additional additional passengers to the net of airports.
Thank you.
Okay.
At this time, we will take the webcast questions I will now turn the call over to management.
Well, we have a few questions.
Anthony <unk> from Bradesco.
How are you just seeing traffic recovery in Guadalajara, and the business segment.
Thank you this is Robert.
We are seeing that.
The recovery of traffic on business segment will happen in the coming months.
In a much bigger way in the coming year, but for instance for the case of Nevada.
One of the most important.
I would say.
Demand of this of this business segment.
From the from the export the Exposition Center here the biggest one in Latin America.
We are expecting for some good news.
Foreseeing there the recovery of this market and I can say that for instance, the announcement of the first week of December that they feel the book.
Position the one of the biggest book as procedures as the work will be again.
Happening on this year.
On the first week of December this is the kind of good news that we need for foresees a borrower of the most robust recovery of the segment that is the first part and the second for sure.
As I say, we are seeing a more healthy load factors.
In the business segment routes Guadalajara.
It will be a matter of time.
I am to see additional seats.
<unk> coming from <unk>.
From deeper in Netherlands.
CFR is stronger recovery on these specific markets.
Thank you Ralph.
We have some questions from tableau Paloma from Metlife and the first one is can you tell us your plans about future dividends.
Share repurchase program and capital distributions.
Hi, Pablo this is Joel.
We will continue.
Making distributions to our shareholders according to <unk>.
The results are coming.
We expect a very good year for 2021 due to the passing of Dr recovery the commercial.
Revenues spend per head and everything all the decisions and strategies followed by day by day management. So we will continue as historically we have.
<unk>, we will continue with the same policy. So is not changes for the future. So you will see in the next in the next years the same trend.
Thanks, So the second one from Pablo regarding.
And regarding Capex, what can we expect for 2022 and 2020 treatment.
Hi, Bob This is how we'll answer.
Regarding capex we have.
A huge commitment with the with the government of credit to our Master development program.
And we will make some additional investment in terms of.
Commercial projects like the construction of the hotel and the <unk> complex.
Corporate offices and commercial areas in the World O'hara Airport. We are also planning to expand.
Parking lots for well ahead of the <unk> and some other airports. So we will continue.
With this expansion with these investments by the way we will continue liberating.
Liberating the 100% of the Capex, According to where last year's strategy.
And so we have that the MVP.
<unk> committed with the government plus all the commercial investment.
Thank you.
And the last one ultra from Panama could you give us some guidance about your net debt EBITDA ratio for 2021 and 2022.
Well.
Regarding days and in line with our previous comments.
The net debt EBITDA ratio for the end of 'twenty, one, including the recently.
Bone certificate issue.
This month, we are expecting around one six.
65 <unk>.
And for 2022, we expect to receive the approval for.
The new.
A.
Bump.
Issuance from from the Board Bob.
And we are not expecting to exceed the two times of net debt to EBITDA ratio for that year.
Okay.
Thank you.
This was the last question.
Yeah.
Anthony.
So sorry.
And it appears we have no further questions over the phone either I will now like to turn the program back to management for any closing remarks.
Thank you everyone again for joining us today in our third quarter results conference, we are presage reinforcing our company.
We look forward to providing updates on our business initiatives and they become available.
In the meantime, the teams remain available to answer any questions that you may have on behalf of gap, we wish you a great day.
And this does conclude today's program. Thank you for your participation and you may disconnect at any time.
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