Q2 2022 Corporacion America Airports SA Earnings Call

Thank you for your patience. This afternoon's call will begin shortly please spend the launch.

[music].

Good morning, and welcome to the coal price Young America airports second quarter of 2022 earnings Conference call. A slide presentation accompanies today's webcast and is available in the investors section of a cool place Young America airports Investor Relations website. As a reminder, all participants will be in listen only mode. There will be an opportunity to ask questions at the end of the presentation.

At this time I would like the tactical over to Patricia and Yoki Snyder head of Investor Relations. Please go ahead.

Thank you good morning, everyone and thank you for joining us today.

Speaking during today's call will be Mark do you know what Mccann, our Chief Executive Officer and of course that all of our Chief Financial Officer.

Before we proceed I would like to make the following safe Harbor statement today's call will contain forward looking statements and I refer you to the forward looking statements section of our earnings release and recent filings with the SEC.

We assume no obligation to update or revise any forward looking statements to reflect new or changed events or circumstances.

Now, let me turn the call over to our CEO My opinion nowhere in again.

Thank you Hello, everyone and welcome to our second quarter.

Earnings call.

We reported another strong quarter as passenger traffic continued its recovery trend.

Adjusted EBITDA increased.

$111 million driven by sustained improvement across our operations.

And from $9 million in the same quarter last year.

Adjusted EBITDA margin ex <unk>.

That's recovered.

Six 2%.

The mid single digit margin in the second quarter.

Yes.

Robust commercial revenues stand out this quarter.

Refund them exactly by 20%.

And Jorge will discuss these in more detail.

We have also made significant strides in enhancing our leverage.

Net debt.

EBITDA ratio declining sharply on track to continue being down.

Now looking at traffic trends on slide four.

Pent up demand and lifting travel restrictions continue to support the positive I think we covered.

We did pull down from $16 1 million passengers traveling across our airports during the quarter and reaching 76% of.

Second quarter, it wouldn't be anything levels.

This momentum continued into July .

Nearly 80% of pre pandemic levels.

Armenia, which only operates in international travel.

Again, let the rebound.

You're bussing second quite uplifting.

That was about 6% in the quarter accelerating.

Were sent in July .

No. That's all government related requirements were lifted estimate.

Despite the increased activity, we continue to remain vigilant when did you what did you guys situation in the region.

But I think in Italy was up by more than five times year on year to nearly 85% of second quarter. It wouldn't be anything levels benefiting from the start of the summer season, and the lifting of travel restrictions, which was in effect that's June .

I mean performance continued into July , which I think over 90% pre pandemic levels.

We expect a strong summer season.

In rescue traffic stood at 76% second quarter appointed anything.

That was slightly below the 77% posted in the fourth quarter as rising fuel prices under pressure on Advair.

Growth picked up in July to 85%.

With Nellix.

I didn't see that in your white increased to 76% and 65% obstacles.

The nellix respectively.

During the second quarter.

But I think convenient their recovery plan.

But I.

Argentina is benefiting from the elimination of Kobe requirements to entry into the country.

Which was in effect in early April .

Hey, good luck posted steady growth in the quarter, reaching 94% of pre pandemic levels, while domestic flights were impacted by cancellations in June due to social unrest routes to Europe , and the U S and Panama continued to post a solid performance we didn't the nationals.

At 97% over the second quarter.

Yes.

But I think actually they need they didn't do that 96% people on them together.

Moving on to the next night cargo operations continued to recover reaching close to 84% of second quarter volumes.

Noteworthy this quarter out of the performances of Italy, and Uruguay, which boosted cargo volumes exceeding pre pandemic levels, while Argentina reached 86% of the second quarter couldn't be done.

Now, let me turn to quite a few who will review our financial results.

Okay go ahead.

Thank you Martine and good day everyone.

On slide six we delivered a robust top line performance again this quarter with revenue ex <unk> 12, we achieved 98% of second quarter 2019 levels.

I will now call revenues more than tripled year on year supported by traffic growth across all geographies, reaching 81%.

Briefly in the next few years.

Armenia again delivered a strong performance with aeronautical revenues or 10% from second quarter 2019 levels commercial revenues were up 19, 9% year on year for Buffy second quarter 2019 by 20%.

This was mainly driven by higher cargo and duty free recognizes nursing Tina together with higher fueling services in their media.

Cargo revenues in Argentina, benefiting from the tariff adjustments introduced in 2020 and more recently in April this year.

These trends combined contributed to the increase in revenue per passengers to $22. This quarter up from $15 $6 in the second quarter of 2019.

Now turning to our cost structure on slide seven.

Total operating costs and expenses ex <unk> 12.

<unk> increased 57% year on year, reflecting the strong recovery in our business.

Note. However that this increase was significantly below the 149% revenue growth.

Also when compared to 2019 operating costs and expenses ex <unk> 12 for the quarter declined by 2%.

In most of the cost line items more than compensated the higher coastal in Armenia, Jupiter strongly increasing through sales in the quarter into a lesser extent higher salaries in Argentina as local inflation rate.

That's above the currency depreciation.

Excluding the cost of fuel in connection with few sales in their media.

Which are passed through to our clients operating costs were down 9% against pre pandemic levels.

Now moving down to the P&L on slide eight we believe adjusted EBITDA of $111 million from $9 million recorded in the same quarter last year, and only 7% below preclinical levels.

As we've mentioned in previous quarters, adjusted EBITDA continues to recover at a faster pace than passenger traffic on the back of strong commercial revenue growth and healthy cost structure.

We achieved positive adjusted EBITDA in all our territories with margin expansion year on year, when compared to second quarter 2019 levels. Adjusted EBITA margin ex <unk> 12 was only one five percentage points below.

This was mainly explained by the change in revenue mix due to the significant growth of our fueling business, which has a lower margin.

Turning to slide nine we ended the quarter with total liquidity position of $448 million compared to $646 million at the end of March 2022.

During this quarter, we redeemed a portion of the preferred shares equivalent to $100 million, which are deducted from our capex obligations under the 2000 concession agreement.

Moving onshore debt and maturity profile on slide 10.

Total debt at the end of the quarter was $1 $5 billion, while our net debt stood at $1 $2 billion. The net debt to last 12 months adjusted EBITDA ratio continue to trend down showing a decline to three five times from five one times at the close of the prior.

At quarter end approaching historical levels.

He is the result of the adjusted EBITDA recovery and our successful liability management initiatives, which have allowed us to maintain stable net debt levels. These initiatives allowed us to significantly improve our debt profile with no major debt maturities until late 2024.

I will now hand back the call to Marty who will present, our closing remarks on slide 12.

You called him.

Please turn to slide one.

Looking ahead, we expect pent up demand and the elimination of restrictions to continue supporting the recovery in passenger traffic trends across our airports during the year.

In the near term, we expect to continue benefiting from tight summer holiday travel in Europe .

Main ingredient on yogurt and macro and geopolitical situation.

Sure.

We remain focused and advancing on two key value creation, even if it would be first.

Good evening processes investing in Armenia, and secondly in the selection of value creation investment opportunities.

What are you doing.

We are well positioned to continue to experience back in getting growth and positive trends in commercial revenues.

Continue.

What's the breakdown.

We remain fully committed on providing our passengers with a superior experience across our PPD airports, while further integrating sustainability into our operations and infrastructure.

We look forward to updating you on it.

We're assisting that we gave you you should be upcoming.

Coming sustainability report to be published over the coming weeks.

With this I would like to thank you for your attention.

No ready to your questions.

Sir please open the lines for questions.

Oh of course.

As a reminder, if you'd like to ask a question today that star followed by one on your telephone keypad now from the parents asked a question. Please ensure your headsets fully plugged in and on mute locally.

What I wanted to ask a question.

The first question today comes from fleet Nielsen from Citi. Please go ahead.

Okay.

Hi, everyone, a good morning or afternoon.

So thanks for taking my question. So I have two questions on my side.

First I would like to to ask if you'll have any or any additional color on the big asset sale.

That went into the cash flow statement. This this water.

If you can give any details on that and the second one is regarding your interest in our new for our New Airport project. So.

There there are oh here that that our Barbados opportunity chia opportunities Barbara Barbato, some opportunities are with the Dubai investment funds.

We also had some biddings the new airport biddings in Brazil yesterday, and we noticed that the you guys weren't there so oh I'd like to to see if you have any.

Additional colors regarding new projects going forward. Thank you.

Yes.

Yeah.

Okay.

Hello, and thank you for your call.

Where you are for your questions up in here.

Regarding your second question, Oh about new projects.

We always say, we keep very actively in the market and we keep looking for opportunities to bring in accretive projects to our portfolio.

So you probably see us.

Very often in an indifferent basis. Many many of these bids have significant delays through because of the pandemic.

But we have a very active.

Looking at different opportunities in different geographies.

So yes, we will have interest in.

It also always looking for potential partnerships for the success of those projects so that.

That is the mood of the company and where we are now.

Although our focus is is on improving.

The operations.

We have a in the recovery of the pandemic and in all of our what I Count score operations said, we're almost stopped and now regarding really fast.

You don't do quote get for your first question.

Hi, This is George thanks.

Thanks for your question.

I'm not 100% sure I understood. Your question because I mean, we haven't actually sold assets that we have but maybe your question is related to the <unk>.

The utilization of cash and the main one off items that occurred in the quarter.

Or are the redemption of the preferred shares in Argentina.

Which you know we redeemed a significant amount there is still pending amount, but we reduced approximately $100 million in preferred shares.

In Argentina.

So far.

And secondly, we pay.

<unk> and prepaid.

Our syndicated loan facility in Armenia.

Yeah.

Great that was great color. Thank you guys.

Nothing further in the queue at present Pleasant reminder, thought star followed by one to ask a question today.

Great.

But a reminder, star followed by one to enter the queue for a question.

That's we have no further questions I'll hand, it back to Martin <unk> for any closing remarks.

I just wanted to thank everybody for joining us today.

Remember that our team remains available for any questions that you might have in the future and please enjoy the rest of your day Bye bye.

This concludes today's call. Thank you very much for your attendance you may now disconnect your lines.

Uh huh.

Uh huh.

[music].

Okay.

Yeah.

Okay.

[music].