Q4 2022 Corporacion America Airports SA Earnings Call

Thank you for your patience, everyone. The Corporacion America airports Q4, 2022 earnings conference call will begin shortly.

During the presentation, you'll have the opportunity to ask a question by pressing star followed by one on your telephone keypad.

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Good morning, and welcome to the Corporacion America airports fourth quarter 2022 earnings Conference call.

A slide presentation accompanies today's webcast and is available in the investors section of the Corporacion America airports 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 to turn the call over to Patricio and Yoki NOLA head of Investor Relations Patricio. Please go ahead. Thank you good morning, everyone and thank you for joining us today.

Speaking during today's call, we'd be Martino, Nick Young our Chief Executive Officer and.

Our Chief Financial Officer.

Before we proceed I would like to make the following safe Harbor statement.

This 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 U S. D C.

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 .

Got it.

Thank you yeah.

Hello, everyone and welcome to our fourth quarter and full year earnings.

Earnings quarter.

First I will provide a quick summary.

Financial highlights presented on slide three.

And then provide a brief update on the industry trends.

PBT.

I will then hand, the call over to Jorge to discuss the fourth quarter and annual financial results.

To begin we are pleased to have ended the year with a strong quarter delivering sustained and continued growth in revenues and adjusted EBITDA.

This research underscores the recovering demand for travel globally and the good performance of our Kansas operation in particular.

Oh, sorry revenues excluding <unk>.

We're up 10, 6% against fourth quarter of 2018.

Supported by strong growth in commercial revenues and continued recovery in passenger traffic.

This along with our ongoing focus on cost control allowed us to report an adjusted EBITDA of $123 million in the quarter.

Reaching 27% against the comparable figure in.

The fourth quarter of 'twenty, ending with passenger traffic in 30 days.

At 88% of pre pandemic levels.

During the quarter, we obtained $13 6 million not asking an economic re equilibrium compensation in Brazil in connection with the impact of the COVID-19 pandemic during 2022.

Compensation, we're still delay as a credit towards the payment of the fixed concession fee due to uncertainty.

And what else the economic breakeven compensation of $25 $5 million and $32 2 million of them notice received in 2021 and.

2020, respectively.

On a full year basis, we delivered revenues.

One $2 billion and an adjusted EBITDA of $457 million. Most importantly, with positive contributions from all countries of operations.

We ended the year with a healthy balance sheet with our net debt to adjusted EBITDA further improving to two four times down from seven one times at the end of December 'twenty can do work.

And by the significant recovery in adjusted EBITDA, while we were able to one day stable debt levels.

This healthy position provide us with the flexibility to continue selectively expanding our airport vote accordingly.

We are proud that the recent passenger survey conducted by ACI World recognizing the best airports for customer experience worldwide. Our International Airport in Ecuador was awarded the best airports within the two to 5 million passenger range.

The airport with the most dedicated staff and the most enjoyable and cleanest airports in Latin America, and they got it yet.

This recognition is a testament to our commitment to providing exceptional service and ensuring a seamless.

What are the drivers that pass through our airports.

As shown on the left chart on slide four.

We are encouraged by the continued recovery in travel demand with passenger traffic in the fourth quarter, reaching 88% or four quarter of 2018 levels compared with the 82% in the third quarter.

We are also seeing this trend continue in the first two months of the year, reaching nearly 90% we've been moving levers.

Overall, a total of 66 million passengers traveling across our airports during the year, reaching 78% of 2019 levels and up to eight 4% year on year.

Let's go briefly on a country by country basis.

We continue to deliver a strong performance.

The rest of your life and increase face frequencies contributed to a third consecutive quarter, beating pre pandemic traffic level.

Leading to the recovery with passenger traffic up 37% above fourth quarter of 2019. This rebound continued into February when traffic was up 91% versus February 2019.

In Ecuador passenger traffic was nearly at pre pandemic levels supported by a higher number of frequencies in both domestic and international drive it.

Strong traffic with the U S Europe , and Panama continues to support the international performance, which continued into February .

<unk> was up 1% compared to February 2019.

Argentina continued the base to full recovery at slightly over 92% of pre pandemic levels from 80% in the prior quarter.

This was driven by a good performance in most domestic and international traffic.

Domestic traffic, which accounts for 70% of the total traffic is almost fully recover reaching nearly 98% of pre COVID-19 levels, while international traffic improved to 82% of fourth quarter of 2018 dropping.

In Uruguay passenger traffic, which is mainly international also continued to recover reaching 83% of fourth quarter of 2018 levels up from 68% in the prior quarter.

But I think it reached 86% of pre pandemic levels.

Fairly stable compared to the prior quarter, which benefitted from the summer season.

In February traffic in Italy reached 90% of February 2019 levels.

Some of the performance in Brazil reflects lower traffic from government officials during the change in Brasilia.

That means patients compounded by higher F S, which impacted overall.

In February but I'll begin by serial reached 82% of February 2018 levels.

Moving on to slide five.

During the fourth quarter kind of activity reached nearly 81% of pre pandemic levels with no dose contributions from dividend regions of India.

Like whether in Uruguay, what are the main contributors to go activity, which together accounted for almost 85% of total volume in the quarter.

In Argentina cargo volumes have been suffering from a deteriorating macroeconomic environment as reflected by a lower level of imports.

By contract Gigo volume in Italy, and Armenia exceeded pre pandemic levels, indicating a strong recovery in those regions.

Well kind of go volume in Uruguay and Ecuador.

97% and 93% of pre pandemic levels respectively.

Overall, we are encouraged by these positive trends in the cargo industry and remain committed to supporting our customers as we continue to navigate the ongoing macro challenges.

I will now hand off the quarter Kim will review our financial results. Please Jorge go ahead.

Thank you Martina and good day, everyone, starting with our top line on slide six total revenue ex <unk> continued to deliver strong growth, surpassing pre pandemic levels by 11%.

Fourth quarter, 'twenty, 'twenty, two and by 2% for the full year of 2022, reaching one $2 billion.

Optical revenues increased 17, 9% year on year, mainly driven by <unk>.

Peanut recovery in passenger traffic across geographies, reaching over 95% of fourth quarter 2019 levels. Armenian remains one of our key drivers of growth with.

Revenues increased double digits year on year and also against fourth quarter 2019.

We are very pleased with the performance of our door and be strong recovery in Argentina, mainly driven by domestic traffic.

Commercial revenues was 44% year on year, and 30% above peak levels, we benefited from tariff adjustment in our cargo business and the solid performance in duty free revenues in Argentina, and higher fuel related revenue.

As a reflection of these strong results our revenue per passenger increased by 26%.

14, $1 fourth quarter 2019 to $17 $8 this quarter.

For the full year 2022, our revenue per passenger increased by 30%, reaching 87 August .

Now turning to our cost structure on slide seven total cost and expenses for the quarter increased 45%.

Yeah.

You expect the continued recovering business activity, but still below our revenue growth.

Compared to 2019, and excluding the impairment charge recorded in the fourth quarter 2019.

<unk> expense for the quarter decreased by 8% mainly.

Mainly explained by higher fuel cost Armenian due to the strong increase in fuel sales in the quarter and to a lesser extent higher coming from Argentina.

Local inflation lethal schemes, you're currently above depreciation.

Excuse me to cost total cost and expenses ex <unk>.

<unk> increased zero point, who spent against fourth quarter 2009.

Now turning to profitability on slide eight we didn't either an adjusted EBITDA of $122 million in the quarter.

32% year on year, and 27% when compared to fourth quarter 2019, we suggested EBITDA margin, reaching 37% Oh geography.

Due to this group performance for the full year adjusted EBITDA totaled $467 million from 149 million.

'twenty, one compared to pre pandemic levels of 2019, adjusted EBITDA was up 7%.

No.

Davidson purposes, 2019 figures for the quarter and the year exclude impairment charges recorded in the fourth quarter 2019.

Turning to slide nine.

Ended the year with a total liquidity position of $462 million relatively stable.

Prior to the year and 2021 despite the fact that June 2022 we fully redeemed the preferred shares converted into OSM, which totaled 174 million bloggers and encountered as a credit towards.

The $406 million topics.

We also made significant progress smaller carpet storms in Argentina, and Uruguay for some respective extension.

Yes.

Moving on to our debt maturity profile on slide 10.

Back at the end of the year was approximately one and a half billion bloggers, while our net debt stood at 1.1 blockers and we ended the year with a strong balance sheet and healthy debt profile with no significant maturities until 2024, our net leverage ratio improved to four times from seven one times.

In December 2021.

We remain committed to maintaining a disciplined and balanced financial approach and that will allow us to continue to unlock future logins from all of our stakeholders.

I will now hand back the call to Martin who will discuss all of them.

For the reminder of the year and provide closing remarks.

Thank you Clark now to wrap up please turn to slide 12.

We are expecting passenger traffic to continue the recovery trend and May see the return of <unk> levels in some additional countries of operations.

We remain vigilant with macroeconomic forces pressure in consumer spending and the geopolitical environment is evident widening.

Nevertheless, given our healthy balance sheet, we will continue to analyze investment opportunities to drive and sustain long term growth.

With respect to our consistency in Argentina, and Uruguay, we are.

On track with our Capex obligations pursuant to the extension agreements previously announced.

We also have new infrastructure expansion projects underway in EMEA in Italy.

We're currently in discussions with respect to government officials.

In Brazil, we recently entered into agreements to develop two new lack scale.

The project at the rescue to airport, adding to the three projects that were previously announced.

Additionally on January 18.

That United when does that one year.

Government entity has given clearance for the government to carry out the tender process for the national effort and the auction date has been set for may 19th this year.

Subject to the successful completion of the new tender process, we expect to receive an indemnification payment in the fourth quarter of this year.

As previously mentioned in October last year, we were appointed as the preferred bidder, who operate abuja and kind of airports in Nigeria, and we're progressing our discussions and negotiations with NHL therapies to finalize the terms of the concession agreements.

In conclusion, we are very proud of our recent achievements passenger recovery and financial performance.

I would also like to take this opportunity to thank all of our employees for their hard work during another challenging year.

This ends our prepared remarks, we are ready to take your questions. Operator. Please open the line for questions.

Thank you Martin if anyone would like to ask a question. Please press star followed by one on your telephone keypad now.

If you change your mind, Please press star followed by two.

When preparing to ask your question. Please ensure your phone is on mute locally.

We will now have a short pause, while we wait for questions to queue.

We have a question from Stephen Trent from Citi.

Please go ahead.

Yeah.

Good morning, gentlemen, and thanks very much for taking my question, just one or two for me.

The first is if you could.

Refresh my memory regarding Oh, what is the traffic flow impact in Armenia.

Resulting from the war in Eastern Europe .

Do you have a fair bit of traffic.

Kind of diverted their and.

Versus what had been the case before the war started there. Thank you.

Hi, Steve It's George here, how are you.

Hey, George I'm good thank you.

Thanks again for your question, so look if I understood correctly your question.

Thank you.

Youre seeing like the significant increasing traffic et cetera.

That we are experiencing Armenia and the.

The primary reason is.

Traffic that otherwise you know prior to the war wore flying directly into or out of Russia.

Into Europe and in Armenia from a geographical perspective is is one of the best locations for you too.

Travel into Russia auto for Russia.

Yeah.

Connecting somewhere.

It is true that.

There has been a lot of.

Asian into into a media and I think some of that will is there to stay.

But we.

We have continued to see very strong demand for foot traffic.

Okay.

Okay I appreciate it.

And just thanks George George.

And just one more for me.

When I think about your potential expansion into new markets, you mentioned, Nigeria, which I appreciate and I recall you had also had this agreement with an investment wing.

You can write offs of UAE I believe.

How should we think about.

Hum.

On a longer term basis, what geographies you might be targeting.

You know as I.

Maybe.

The exact where I just mentioned perhaps.

Adjusted your plans for investments in Eastern Europe , and the Middle East would just love to get your color. Thank you.

Yep.

Thank you Steve So look the pillars of our decision to go into Nigeria are.

Generally speaking very conservative approach secondly.

Marginal deployment of Capex.

Equity.

Third strong downside protection embedded in the concession agreement and an overall very very conservative.

Approach.

In terms of every possible aspect like protections et cetera et cetera.

If you're a large country.

And.

You know the truth.

Truly undeveloped.

That we see some growth opportunities and hopefully, creating a base for <unk>.

For for further growth in the region.

Okay I appreciate it thank you very much.

We currently have no further questions. So I'll hand, it back over to Martine Hello, Nicky Ann.

Okay.

I would like to thank everybody for your interest you know, we're growing company and joining us today.

I wanted to remind you that our team remains available for everybody.

So I hope you have a good day ahead of you. Thank you very much.

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

Okay.

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