Q3 2022 Corporacion America Airports SA Earnings Call

Good morning, and welcome to the Corporacion America apples third quarter 'twenty to 'twenty, two and these conference calls.

Speaker 2: Thank you.

Speaker 3: Good morning and welcome to the Corporación America Airport's third quarter 2022 earnings conference call. A slide presentation accompanies today's webcast and is available in the investor section of the Corporación America Airport's 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.

A slide presentation accompanies today's webcast is available in the investors section of the Corporacion America airports website. As a reminder, all participants will be in listen only mode.

The opportunity to ask questions at the end of the presentation.

At this time I would like to turn the presentation over to Patrizio and Lucky NOLA head of Investor Relations.

Speaker 3: At this time, I would like to turn the presentation over to Patricio Enaki-Esnaula, Head of Investor Relations. Patricio, please go ahead. Thank you. Good morning everyone and thank you for joining us today. Speaking during todayís call will be Martíne OíCian, our Chief Executive Officer and Jorge Ruda, our Chief Financial Officer. Before we proceed, I would like to make the following safe harbor statement. Todayís calló

But you do please go ahead.

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

Speaking during today's call would be Martino, our chief Executive Officer, and Jorge Arruda, 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 statement section of our earnings release and recent filings with the FCC.

Speaker 3: We 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.

Flick, new or changed events or circumstances now, let me turn the call over to our CEO might opinion now and again.

Speaker 3: We assume no obligation to update or revise any forward-looking statements to reflect new or changed events or circumstances.

Thank you Jackie Hello, everyone and welcome to our third quarter 2022 earnings call.

Speaker 3: Now, let me turn the call over to our CEO , Martin Yornakian. Thank you, Iñaki. Hello, everyone, and welcome to our third quarter 2022 earnings call. We reported a robust quarter with sustained growth in top and bottom line, both beating pre-COVID levels. Thank you, Martin. Thank you, Iñaki. Thank you, Martin. Thank you, Martin. Thank you, Martin. Thank you, Martin. Thank you, Martin. Thank you, Martin. Thank you, Martin. Thank you, Martin.

We reported a robust quarter with sustained growth in top and bottom line, both beating pre COVID-19 levels.

Total revenues were up in the low double digits against third quarter 2019 supported by continued recovery in traffic and strong growth in commercial revenue.

Speaker 4: Total revenues were up in the low double digits against third quarter 2019, supported by a continuous recovery in traffic and strong growth in commercial revenues. Along with our ongoing focus on cost control, allowed us to report an adjusted EBITDA of over $130 million with positive contributions from all countries of operations. Notably, the adjusted EBITDA margin, thanks to IFC12, was also above pre-COVID levels.

Along with our ongoing focus on cost control allowed us to.

Reported and adjusted even over 130 million voters.

Positive contributions from all countries of operations.

Notably the adjusted EBITDA margin ex I picked what was unusual about pre COVID-19 levels expanding to 38% this quarter up from 32% in the third quarter of 2019 and no one in the third quarter last year for the first nine months of the year adjusted EBITDA.

Speaker 4: expanding to 38% this quarter, up from 32% in the third quarter of 2019, and low 20s in the third quarter last year. For the first nine months of the year, adjusted EBITDA already amounted to $339 million. On the balance sheet front, our leverage ratio continued to trend down with net debt to adjusted EBITDA below three times, reflecting relatively stable net debt levels combined with significant recovery in adjusted EBITDA. Let me also highlight that last August , we also redeemed the remaining...

Amounted to $339 million on the balance sheet front our net.

EBITDAX ratio continue to trend down with net debt to adjusted EBITDA below three times.

Collecting relatively stable net debt levels combined with a significant recovery in adjusted EBITDA.

Let me also highlight that last August we also redeemed the remaining outstanding amount related to the preferred shares.

We're an amount close to $40 million as a reminder, these ended up for mandatory capex in Argentina.

Speaker 4: Outstanding amounts related to the preferred shares in AA2000 were an amount close to $40 million. As a reminder, this is the graphic from Manatolé capex in Argentina. Finally, as part of our development and missions, we were named preferred bidders to run Abuja and Kano airports in Nigeria this month. We are now in talks with government officials about the terms of the concession agreements and we will update you on this matter as we make progress.

Finally, I spoke about development. The missions, we were named prepare to run a buda and Dino airports in Nigeria. This month.

We are now in talks with the government officials about the terms of the concession agreements and we will update you on this matter as we make progress.

As shown on slide four passenger traffic continued to post a sustained recovery.

Speaker 4: As shown on slide four, passenger traffic continues to pose a sustained recovery trend with over 18 million passengers flying to our airports in the third quarter. Traffic reached 82% of third quarter of 2019 levels, up from 76% in the second quarter, reflecting a solid demand and the removal of travel restrictions. We also saw an improved performance month over month throughout the quarter with this momentum continuing into October when traffic nearly reached 90% of pre-pandemic levels. Armenia continues to lead the recovery with traffic 16% above pre-pandemic levels.

With over 18 million button, you're flying through our airports in the third quarter.

But I think reached 82% of third quarter of 2019.

11.

Up from 76% in the second quarter, reflecting solid demand and the removal of travel restrictions.

We also saw an improved performance month over month throughout the quarter with this momentum continue into October when traffic really.

90% of pre pandemic levels.

Media continues to lead the recovery with traffic.

10% above pre pandemic Midland just rerun continue into October when traffic was up 26%.

We remain vigilant about the geopolitical environment in the region.

Speaker 4: This rebound continued into October when traffic was up 26%.

Speaker 4: rebound continued into October when traffic was up 26%. We remain vigilant about the geopolitical environment in the region.

We also saw a good performance niccolo supported by dropping from the U S Europe , and Panama with higher frequency for international and domestic flights.

Speaker 4: We also saw a good performance in Ecuador, supported by traffic from the US, Europe and Panama, with higher frequencies for international and domestic flights.

Passenger traffic.

The Nogales by 3% and benefited from the airports closure during three weekend of September 19.

Speaker 4: Passenger traffic beat prepandemic levels by 3% and benefited from the airport's closure during three weekends of September 2019.

<unk> performance continued into October when traffic was up 8% compared to over 1 billion.

Speaker 4: This trend performance continued into October when traffic was up 8% compared to October 2019.

In Italy traffic posted a robust sequential improvement driven by the summer season, reaching 18, 9% third quarter I'm going to then be never and convenient recovery observed in the prior quarter.

Speaker 4: In Italy, traffic posted a robust sequential improvement driven by the summer season reaching 89% of third quarter of 2019 levels and continued the recovery observed in the prior quarter.

But I think industrial increased to 91% of third quarter couldn't get anything.

Up from 76% in the prior quarter and.

Speaker 4: Traffic in Brazil increased to 91% of third quarter of 2019, up from 76% in the prior quarter and we expect this momentum to continue to the remainder of the year.

And we expect this momentum to continue through the remainder of the year.

Argentina, and Uruguay continue the gradual recovery trend with passenger traffic, reaching 80% and 68% of third quarter wasn't didn't 11th respectively.

Speaker 4: Argentina and Uruguay continued the gradual recovery trend with passenger traffic reaching 80% and 68% of third quarter of 2019 levels respectively.

As a reminder borders we're fully reopened at the start of November last year, while in Argentina, All Kobe and been regulations were really the only towards the end of August this year.

Speaker 4: As a reminder, borders were fully reopened at the start of November last year, while in Argentina all COVID-19 entry regulations were fully listed only towards the end of August this year.

Turning to slide five we also continued to see a sustained recovery in cargo, which increased to 82% of third quarter.

Speaker 4: Turning to slide 5, we also continue to see a sustained recovery in cargo which increased to 82% of third quarter of 2019 volumes. Uruguay, Armenia and Italy were particularly strong, beating third quarter of 2019 levels, while Argentina hosted a sequential improvement with cargo volumes reaching 83% of pre-pandemic levels.

What are you doing.

Armenia, and Italy were particularly strong beating third quarter didn't delever, while Argentina posted a sequential improvement with cargo volumes, reaching 83% of pre pandemic levels.

Notably Gotta go revenue increased 43% again third quarter, Coincidentally also reflecting that if revisions implemented last year.

Speaker 4: Notably, cargo revenues increased 43% against third quarter of 2019, also reflecting the value provisions implemented last year.

I will now hand off the call to quote okay.

Who will review our financial results. This.

Please go ahead.

Speaker 4: I will now hand off the call to Jorge.

Martina and good day, everyone, starting with our top line on slide six total revenues actually speak well showed a very strong performance. This quarter. So parsing pre pandemic levels for the first time aeronautical revenues increased nearly 130% year on year, mainly driven by continued recovery in passing.

Speaker 4: who will review our financial results.

Speaker 4: Please, Jorge, go ahead.

Speaker 3: Thank you, Martin, and good day everyone. Starting with our top line on slide six, total revenues exit 312 showed a very strong performance this quarter, surpassing pre-pandemic levels for the first time. Aeronautical revenues increased nearly 130% year on year, mainly driven by continued recovery in passenger traffic across geographies, reaching 93% of three quarters 2019 levels. Media continued to make a strong contribution to this growth, with aeronautical revenues up.

As your traffic across geographies, reaching 93% of three quarters 2019 levels.

<unk> continued to make a strong contribution to this growth with aeronautical revenue was up in the mid teens from pre pandemic levels, along with Ecuador, which also reported a low single digit increase against third quarter 2019, commercial readiness continues to be the major contributor to <unk>.

Our total revenue grew up 90% year on year and 42% of ball 2019 levels. This was mainly driven by a higher cargo Archie and duty free revenues in Argentina, and higher fuelling service in Armenia as a reflection of these strong.

Results our revenue per passenger increased by 30% from $14 six Dongers, Inc. Third quarter 2019 to $18 $6 this quarter.

Now turning to our cost structure on slide seven total operating costs and expenses increased 56% year on year, mainly reflecting the strong pickup in business activity.

However, this increase was significantly below the 106% revenue growth compared to 2019 operating costs and expenses for the quarter increased by 4%. This is mainly explained by higher fuel costs in Armenia to today strongly increasing fuel sales in the quarter.

And to a lesser extent by higher salaries in Argentina is the local inflation rate was significantly above currency depreciation. However, this was partially offset by lower SG&A expenses third quarter 2019 was impacted by a 23 million bad debt charge in Argentina.

Now turning to profitability on slide eight we delivered an adjusted EBITDA of $131 million up from $14 million in the same quarter last year, notably electricity be tough suit rash deepened the lake levels by $31 million.

Again this quarter strong commercial revenue growth combined with heart and Union cost shortchange driving deceleration of hard just would it be a recovery with positive figures and across our geographies. We achieved significant margin expansion year on year to nearly 38% this quarter compared to third quarter 2000.

And in 19 levels and excluding the $23 million bad debt charge.

And EBITDA margin ex <unk> was only one two percentage points below this was mainly explained by the changing revenue mix due to the significant growth.

<unk> business, which has a lower margin.

Turning to slide nine we ended the quarter with a total liquidity position of $417 million compared to 448 million at the end of June 2022.

Martine mentioned during the quarter, we consummated the final early redemption on forward.

Preferred shares in 2000 and as a reminder, the total amount of $174 million paid for the redemption of the shares is deducted from our $406 million Capex program of our ending 2000 call session.

Moving on to our debt maturity profile on slide 10.

Total debt at the end of the quarter was $1 $5 billion.

Our net debt stood at $1 $1 billion driven by strong performance so far to start doing in the last quarters. Our net debt leverage ratio showed further significant improvement this quarter declining two six times from three five times in the prior quarter.

Fortunately our strong financial results enabled us to continue funding our Capex program, we have previously announced while maintaining a stable net debt levels. We remain committed to keeping a strong balance sheet and healthy that profile that will allow us to take advantage of future growth opportunities.

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

Now.

Now to wrap up let's turn to slide.

Looking ahead, we expect sustained growth in passenger volumes across our airports in.

In the short term.

<unk> already experienced increased demand from the start of the summer and South America.

We expect these to benefit our performance, while we remain cautious about the overall macroeconomic and geopolitical environment.

We are also working on several fronts as we speak.

People drive value creation.

First we remain focused on building new routes to some of our partners across our network network.

Second this month, we received because I mean compensation for acquisition in Brazil, and remain focused on advancing with economy, we believe in a Brexit.

In Armenia.

Finally, I reiterate.

That the key element of our growth strategy.

Let me expand on airport concession and we remain focused on pursuing attractive value creation opportunities for our company.

Before we conclude I would like to share that last week.

Had a town hall meeting with our main leaders and key managers.

Globally.

The opportunity to reinforce and reiterate our ambition to grow our business.

And value for our shareholders customers and all stakeholders based on our purpose of connecting the world and in the evening.

And sustainable way.

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

We are now ready to take your questions.

Operator, please open the lines for questions.

Thank you.

I would like to ask a question. Please press star followed by one telephone keypad. If for any reason you back for a minute that question. Please press star followed by two again to ask a question. Please press star followed by one year.

And you if you are using a speaker phone. Please remember to pick up your handset before you ask a question.

The first question today comes from the line of Alejandro Demichelis from analysis acuity. Please go ahead. Your line is now open.

Yes, good morning, gentlemen, and thank you very much for taking my questions. Two questions. If I may please first one <unk>.

Maybe you can give us an indication of how you see international traffic and availability of all seats for the.

The upcoming summer season in Argentina.

The first question and then the second question is.

Could you give us some kind of feel on how you see the evolution of the noncommercial grabbing news for the group because when when when we look at the third quarter numbers. If we stopped the truck. The fuel revenues then your non commercial revenues seem to be lower down.

The ones, who had the last couple of quarters. So so so trying to understand how that should be evolving.

Yeah.

Yeah.

Okay.

Can I, please ensure that nobody is muted.

Hello. This is George Thanks for your question.

You may have seen that we've reported.

October numbers.

Recently, and you may have seen that we continue to see.

The recovery across the board and in Argentina in particular, which was your question.

Hum.

Obviously the recovery in the past several months has been strong.

Given the starting point post pandemic was super low levels.

We expect continued recovery at the lower or slower pace, but a continued recovery.

Across the board, obviously, the challenge well always be availability of aircrafts.

And and confidence by the airlines that the recovery will continue but so far we're currently that's you're speaking.

We foresee a continued recovery.

Regarding your second question I just wanted to clarify you were talking about noncore.

Aeronautical revenues or commercial revenues.

I'm talking about no no never have to go yes.

Non aeronautical yeah, no again, I think we saw a significant improvement.

In duty free in parking.

Cross the board and in Argentina in particular, and most notably.

Ending fueling fueling has a much lower.

Margin.

But nevertheless, the volume is significant and we have saw a significant increase in Armenia, because of the environment and the dynamics of the traffic over there.

In particular with Russia.

And and and and more specifically the reason.

Is that there is more aircrafts are flying to to Russia, and therefore, they need to re feeling more in Armenia.

Flying to our media I'm, sorry, and the need to review they need more fuel in Armenia, then they needed before with larger aircrafts.

Yeah.

Okay.

If you could please follow up on the first question on international traffic.

Yes.

Because we.

We have seen and heard that.

All lines are anticipating their retirement of long haul flights for example read the Airways. So so so maybe you could I don't know if you do have some kind of visibility if you are seeing some.

More of this movement from the airlines.

Yeah, we are seeing I mean, we have access to two are several months ahead.

Throughout our system.

In terms of flight availability and availability for flight.

Slide four tickets to be to be purchased and again, we see a continued recovery.

Okay. That's good thank you.

Okay, I'm not ready I mean, if you if you like to know about very specific flights et cetera, we can.

Have a one on one.

We can give you.

More information about what it is available but I think the answer to your question is where do we we do see continued recovery.

Okay. Thank you.

Thank you.

As a reminder, if you would like to ask a question on todays call. Please press star followed by one on your telephone keypad.

Speaker 2: Thank you. As a reminder, if you would like to ask a question on today's call, please press star followed by 1 on your telephone keypad. There were no further questions registered at this time, so I'd like to pass the conference back over to Martino and Ekian. For any closing remarks, please go ahead. I'd like to thank everybody for joining us today and remind you that the team remains available for any questions or follow-up questions that you may have. Please enjoy the rest of your days. Thank you very much. This concludes today's conference call. Thank you all for your participation. You may now disconnect your lines. Thank you.

There are no further questions registered at this time, so I'd like to pass the conference back over to Mark <unk> for any closing remarks. Please go ahead.

I'd like to thank everybody for joining us today.

And remind you that the team remains available.

For any questions or follow up questions that you may have.

Please enjoy the rest of your day, thank you very much.

This concludes today's conference call. Thank you for your participation you may now disconnect your lines.

[music].

Okay.

[music].