Q1 2024 Grupo Aeroportuario del Sureste SAB de C V Earnings Call
Good day, ladies and gentlemen, and welcome to insurers first quarter 'twenty 'twenty four results conference call. My name is Sherry and I will be your operator at this time all participants are in a listen only mode. We will conduct a question and answer session towards the end of todays conference. If he would like to ask a question. Please.
Press Star followed by one if you want to withdraw your question at any time. Please press star followed by two if you are using speaker phone. Please lift the handset before making a selection as a reminder, today's call is being recorded now I would like to turn the call over to Mr. Adolfo Castro.
Chief Executive Officer. Please go ahead Sir.
Thank you Jerry.
Morning, everyone before I begin discussing our results. Let me remind you that certain statements made during the call may constitute forward looking statements, which are basically.
Patients are beliefs.
Just a real risk and uncertainties that.
That could cause actual results to differ materially.
Factors that may be beyond our company's control.
As usual additional details about our quarterly results can be found in our press release.
Which was issued yesterday after market close and he's available on our website.
Relations section.
Following my presentation I will be available for Q&A.
Moving on to the review of the sorts of operational and financial performance for the quarter.
Sure.
As usual all comparison these costs will be year on year, unless I specify otherwise.
We show that were tied to passenger traffic in the quarter 18 6 million travelers.
4% year on year.
This good performance was mainly driven by increases of 4% in Mexico, 12% in the vehicle, which more than offset the low single digit decline in Colombia.
Reaching Puerto Rico gained the student.
The region with the strongest growth.
Traffic.
Nearly 12% driven by a double digit pace.
This is both domestic and international traffic.
Traffic in Mexico was up nearly 4%.
I think the beach.
Clothing dimension.
Passengers, driven mainly by traffic to and from the United States and Canada.
More than offset a low single digit declines in domestic travel.
In addition to the impact from the initial effects of attracting attitude problem, we have experienced in the last quarters.
Traffic was also affected by a reduction in air traffic movements at the Mexico City Airport.
Starting January this.
This year.
Recall these airport accounted for 45% of us domestic traffic.
In 2023.
Okay.
Negatively impacting domestic traffic this year.
Lastly, in Colombia traffic has started to recover with year on year decline smoke debate.
Down only 2% in the quarter.
Driven by easier comps and domestic traffic following the suspension of two local airlines in February of last year and accounted for 20% of all Japanese Columbia pretty great.
19% increasingly international travel.
We expect a recovery in traffic in Colombia to continue through the remainder of the year and so have yadkin diamond continues to recover some of the most routes.
Which march already posting a 9% probing the contrasting Colombia.
Now turning to the P&L and somebody might be.
All references to revenue and cost of construction cost of revenues.
Total revenues increased.
14% to just over 7 million passengers in the first quarter.
Mexico, Colombia speed stood out with growth in the mid teens.
Political delivered low single digit revenue growth impacted by a stronger person.
By mid double digit traffic growth.
Mexico, which accounted for 76% of the revenues posted a 16% decrease in stop loss.
These musk was mainly explained by growth and a month ago Savi just seem to be torn piece was known that or not because they were gonna see PS low single piece.
Revenues in Puerto Rico, which accounted for 14% of the total increased nearly 2%, 10% clothing, none other than optical revenues was partially upset by a 5% reduction in that realm.
Reflecting the strong vessel.
Lastly, Colombia, which represented 10% of the revenues booked at a mid teen increase in top line, reflecting a good performance in both I don't know if he doesn't.
Our revenue, which benefited from international traffic growth and the strong Columbia Vista.
Executing our strategy of expanding our commercial offering over the past 12 months, we opened 17, new commercial spaces, Mexico, Puerto.
Puerto Rico, Colombia.
Commercial revenues were up nearly 5% likely of both passenger traffic growth mainly driven by increases.
10% in Mexico.
Rico, Colombia posted increases of 10% and 14% respectively.
On a per passenger basis commercial revenue increased 2% year on year to nearly 125 basis.
This performance was mainly driven by growth in the high <unk>.
Teams in Colombia, again, reflecting a strong FX, which more than offset low single digits in Mexico, and Puerto Rico.
Consolidated expenses increased nearly 14%.
In line with revenue growth in the quarter. This was mainly driven by Mexico, which reported the higher concession fees due to increased by 80% astonished by the Mexican government and 20% increase in England.
Wages will be effective January the first.
Partially upset by the 50% reduction Daniels is doing.
Consolidated ETP.
13% year on year.
All right.
$5 1 billion pencils in the quarter, what is the adjusted EBITDA margin, which excludes construction was $81 four compared with $71 nine in the year ago quarter.
All regions contributed to EBITDA growth, Mexico remains the main driver.
EBITDA increased 18%.
Followed by Colombia, with an increase of nearly 11% and flip them.
Over 1%.
Moving on to the balance sheet, we closed the quarter with a strong cash and cash equivalents decision nearly 17 billion pesos.
After only 1% from the same quarter last year.
It declined 4% for the year.
Pretty good to me.
Reflecting the acquisition of the Mexico, and Colombia peso I'm.
I'm the payments to principal amounts of bolt on new Mexico.
The leverage ratio was negative two three times.
Tomorrow April 34, Janacek holding meaning its detail.
We have to propose the distribution of our no generic cash dividend of 10.
Pencils or 1920 seats.
Sure David E and then they sort of like cash dividend.
Per share payable in June.
Lastly, last week, we published our 23.
The nobility reports.
The board and as a collateral.
And encourage you to read them all of which can be found in our website.
Wrapping up this quarter at 10 24 delivered solid results, even as we face young causing issues with I've been with the engine and the capacity of adoption that Mexico City Airport.
Our performance reflects increased traffic through our airports along with improved passenger experience we aren't totally agree.
These trends bode well for the remaining of the year.
We are committed to imports.
Things are chasing the passenger experience through investments in capacity and our commercial offerings importantly, our financial position is healthy and our capital allocation priorities are balanced between investing for growth and returning cash to shareholders.
You said in my prepared remarks, Sherri teams open the floor for questions.
Thank you again to the audience. It is star then one for questions and again. Please make sure. Your mute function is turned off or the handset it's picked up before pressing the corresponding digits.
Our first question is from Alejandro Fox with Italian Please proceed.
Yeah.
Hey, Yes, Hello, everyone. Thank you for nickel and in the states for the questions and congratulations on the results two quick questions from my end, especially some on Mexico.
I was surprised to see administrative costs and cost of service increasing to 10%.
Walk us through some of the initiatives that explained the company's taken deep it.
Cost control that you guys are hiring that's the first one and then the second one is very quickly on the Ghana and there was no mention their beliefs about the current situation with the government of the Dominican Republic wanted to know if you can give us a brief update of where we are or any color is appreciated. Thank you.
Thank you Alejandro.
So of course control the most important thing was the reduction of that 50%.
The strategic Kim Dong a fee.
Hum.
That is basically offsetting.
I'm, saying that they increasingly positioned people so the water in terms of.
All the costs of course as you are mentioning I mean should it go straight to presenting these guys could be mainly win.
So we haven't done it in terms of interest cost.
And.
They have a negative effect was a 20% increase in minimum wage that affects basically see gucci opinion.
No that's what I can say for the moment and it gives them a Dominican Republic, we do not see any updates or the lack of peak once the decree issued by the associate General counsel.
I mean, the previous decree issued by the previous precedents that.
That is true.
Construction of the airport.
We have to think that that would be good to see you're saying those are.
Ongoing and once we know something for them then we will let you know.
Okay. Thank you.
You're welcome.
Our next question is from rent also Ramos with Bradesco P. B I. Please proceed.
Thank you.
Yeah.
Two questions on my side.
And I bet on your comment about the headwinds that you're seeing in Mexico city with the with the slot reductions there I mean, how how viable do you think it is for any banking listen even to look at which we have seen picking up to absorb them and develop some of the traffic.
I personally I haven't had a good experience flying in and out of Philly bathrooms, but but we'd like to get your thoughts on how these are these metropolitan airports might help you out there.
And my second question on Capex.
Okay indication Mexico City airports.
Our staff during the initial remarks that once the restriction capacity. So there wasn't a reduction.
From 52 to 43.
Traffic movements per hour, that's a 17% decrease in terms of capacity.
Basically the reduction has been a blanket domestic carriers not internationally.
And I can say for the quarter, Mexico City airports has lost more or less compared with last year almost immediate passengers.
Santa Lucia I would say that the.
Not all of the passengers that are not able to fly from Mexico city due to the lack of operations.
Are willing to go up in Santa Lucia I mean that says they are introducing a lot of passengers in terms of the loopnet to Luca basically the same as it was last year or two.
We've got R&D has been intact in terms of no more frequently it's really no more operations probably from the government.
And thank you and my second question was on.
On your Capex program.
Embark on this historic Capex program do you expect any disruptions to your commercial revenues per passenger as you roll out some of these projects what could be the impact and in between if any.
I don't see any disruption in terms of the commercial revenues because of the construction all because of expansions.
And in terms of the Capex basically today, we are preparing to projects in order to make the bidding process.
That contractor.
So that's why you are seeing a very.
Small amount here in the first quarter.
But I don't see any disruption and the two of the three main.
We will.
Are those related to $10 four.
The expansion.
Okay.
<unk> expansion.
Okay tell me anything more hunter and all of them are outside the operating area. So we will be able to construct without affecting the operation of it.
Alright, Thank you rod.
Yes.
Our next question is from Kelly Mendez with J P. Morgan. Please proceed.
Good morning, and thanks for taking my question first question is regarding the MVP tariffs a recall on the last conference call you mentioned them all.
Starting D M D P tariff increase in April.
I was wondering if you were able to do so and Hollywood tried killing this price increase.
And the second question. If you could please comment about the outlook and especially I think about the breakdown between international passengers and domestic thank you.
Yeah.
Okay. Its indications the MVP as you know.
There wasn't a chunk right.
They come in through the end of last year. It was December 13, when we disclose that.
We immediately started double our internal procedures to adjust.
Great.
The rates are in problems.
And those are going to be adjusted as from the first of April this year. So the first one it does not affect any increasing dives into cars.
So far in <unk>.
Terms of the traffic outlook well you know.
The Pratt and Whitney situation or the restriction of Mexico City.
In fact in a significant way to domestic traffic probably.
Yeah.
You can see that a small decrease by the year in the domestic traffic and we are hoping.
To be supported by the international traffic as it has been for the first quarter basically with the U S and Canada of course.
Challenge at the moment, it's gonna be the summer because of kind of what those weren't traveling summer show beyond.
The only engine or the youngest support she's got to come from the U S.
Speaker Change: Okay. That's clear thank you have a good day.
Our next question is from Alberto Valerio with UBS. Please proceed.
Speaker Change: Hi.
Alberto Valério: I think so.
Alberto Valério: That's my question.
But that should be more on the bottom line.
Alberto Valério:
Projections at all.
Also oh.
Actual results I would like to have.
Alberto Valério: Okay.
On slide <unk>.
Thank you.
Sorry, but your sound, it's really bad I cannot let me just starting your question but.
Dragon.
If you have any more.
Recurring event.
Right.
I cannot give you.
I believe.
It's more of a theater.
Any more current events and financial results.
Sorry, Eddie more events on our financial results.
Wow.
The exchange rate this it's gonna be extremely important for us.
You have seen some adjustment during the last two weeks.
And that it has to do with international traffic in our case as you have seen for the first quarter, you've seen the clothing I won't because revenues for the first quarter and that's probably what's the practical you, but fantastic clubs.
With the difference between the $6 eight from $6 2 million passengers tends to be connecting passengers in the first quarter.
So the change like this it's crucial.
That's yes.
Yeah.
Our next question is from Anton Moor in Qatar with GBM. Please proceed.
Hi.
Thank you. Thank you for the color and congrats on the results I have two quick questions.
One is related to trade receivables, just wondering what that dynamic song and I've seen this quarter and why did that increase so much.
I'm. The second one is regarding capital allocation, our understanding even when accounting for the high Capex commitments for this year and anal cell phones, you don't bring your mouse live events.
The net cash position seems to to continue to be set to continue to increase during the year.
Can we expect one additional announcement on T V.
Oh thought about on that front. Thank you.
Okay indications trade at trade receivables slick water and you can see a very nice adjustments or the claims in that case.
Cool.
To do with the <unk>.
The accumulation of the results of the trial, we have there.
Alberto Valério: And then 2% of the flu.
Fuel fluids.
In terms of Mexico that has to do with their normal operation and the same in the case of Colombia in terms of capital and the location.
We ended the quarter with 17 million pets. This TV what are proposed for the shuffle.
Alberto Valério: Shareholders' meeting.
Will it be roughly speaking 6667.
So then we have to see the capex.
But as I said during the initial remarks, we're trying to be.
B on one side.
Alberto Valério: Very supportive on the growth is as you know we have at 29 billion. This was capex for the next five years, but on the other side, we are paying these extraordinary events.
Alberto Valério: Which is.
Alberto Valério: Well it was the same as it was last year.
Thank you.
Okay.
Our next question is from one Marseille, though with GBM. Please proceed.
Hi, there thanks for the color and congrats on the results.
My first question would be a follow up on a previous question regarding tariffs.
You mentioned that the first quarter there there wasn't an adjustment for the new Microsoft as well.
Do you mean by did that there was only a partial adjustment or was there none at all.
There were not just limits on the first quarter.
Alright, that's very clear. Thank you and just an additional question you mentioned that on the first of April you would do this adjustment is as far as the 100% of the maximum tariff or at what level would we should we expect this adjustment well of course isn't the new Congress will have.
To be less than.
The Max.
And then again, a critical point will be the situation of the exchange rate.
So in many areas.
Nearly 50% of the traffic is international and you don't stay in England.
Yeah.
Alright, that's very clear thank you.
Youre welcome.
Our next question is from Fernanda nature with B T. J. Please proceed.
Hi, Thank you and also then congrats on the results that you all have a question on our side, but as far as the regarding traffic outlook you provided to.
For Mexico, but could you comment a little bit more on what I thought he call in Colombia.
You spoke on your initial remarks, Columbate starches scan normalization, how should we expect the traffic for the year and then I thought he called the low down on the double digit growth phase that they do.
We are posting.
And my second question is on commercial revenues are as you mentioned, our initial remarks, it reaching close to 125 on a consolidated basis.
Should we expect that these indicators show to move along the year, but he likes but does is they play more coffee in Mexico to increase a bit by exploration.
Yeah.
Well in the case of the traffic for Puerto Rico and Colombia.
B.
In my opinion and normalize.
Normalized.
Yeah, one nothing has to do with the bankruptcy of the tournament's February last year. So.
In that sense, we feel that there's water.
Negative 2%.
We see on a monthly basis, we saw an increase of 9% for the month of March.
Sure I hope what I'm expecting is is to continue throughout the end of the year and then we are able to recuperate.
We had losses from these two airlines in the case of Puerto Rico than normalization goes exactly the opposite.
Because last year, we had a very nice increase volume from tier one into the island.
That's why we show a very high.
Traffic last year.
Oh, 20, which is not normal.
The first quarter, you said, the 12% increase which is reducing from these plays that we saw last year. The 2023, increasing Puerto Rico was 18% no.
So the normalization would be doors.
The second quarter.
To see a more normal growth in indications both of them.
In terms of commercial revenue.
I have to say that today, we're still struggling.
In the case of Mexico.
Two things one has to do with exchange rate of course.
And the other one housekeeping with the lack of expansion so they.
Commercial revenues from a patient perspective will continue to suffer.
The situation is so great.
Who's busy.
Cool.
Until we are able to expand the area that should a pure at the end of 2005.
Okay. Thank you very much.
Hum.
Our next question is from Jay <unk> with Citi. Please proceed.
Hey, Thanks for taking my question, so Jay dialing in from Stephen Trent's team. The first question I wanted to ask what is it only in January you reduced the technical assistance fees or do you sort of do it in a subsequent quarter.
That's cool.
You've said in January one.
Where you reduce the technical assistance fee.
The payroll assistance reduction.
That's from the first the gentleman here and it will be fine for the next five years.
Okay. Thanks, and my next question is that I know you already spoke a bit about Mexico City Airport area, but do you have any further comments on competition from Tulu.
One of them because the more we know roughly speaking the numbers that have been published by the government.
On the.
40040, 1040 2000 for the months of December January and February.
More than 3 million because of Cancun.
Oh, Thanks, a lot.
Our next question is from Joe out free, though with Goldman Sachs. Please proceed.
I don't know if it wouldn't wining. Thanks for taking my questions I have two quick follow ups.
The first one is on the Barrick side right. So if you could please help us reconcile.
What drove the increase quarter on quarter.
Passenger revenues in the first quarter, we saw a sharp increase as you mentioned you.
You did not adjust for the MVP until April. So this is not the driver. So maybe was these are function of reducing the discounts you guys offered.
The fourth quarter last year, or maybe something else. If you could just help us reconcile that would be great.
My second follow up is on.
Cancun Airport could you. Please just remind us what would be the.
Expected capacity would be once the expansion is completed thank you very much.
But in the case of the times.
You've mentioned one of the one of the effects if we compare that as from the fourth quarter was the first part of this year well first of all you didn't I just did.
During the first quarter. So we are tracking exactly the same as we were in the fourth quarter last year, when you put that very clear.
Of course as you have mentioned.
Months of November and December we have two D. A davidson.
These kind of in the passenger fleet, both international and domestic.
But the other effect and I mean, that's what I have mentioned and show. The large is the proportion of domestic and international for this quarter.
Can see good differential between $6 8 million in the national six to last year.
The national traffic based more due to the additional space, we have to provide them for customs and immigration and that is why you're probably seeing that increase but in terms of the pattern.
<unk> products, there was no increase for the quarter.
You've been sort of the basket.
And what we are going to pieces as I had mentioned, we're going to reconstruct and expand attending on one.
So no one should be more or less 84 million passengers.
Alberto Valério: On a yearly basis.
Of course the capacity.
Has to do with the level of service indicates opinion for you in the process to expand fourth issue with Golden gate that would be more or less a 30 something million. In addition, and funny, though would be.
And of that five year period, we've been at.
And on that page.
Page 10.
Aircrafts stands.
All she can do for.
And that should be more or less slides 6 million additional passengers yeah.
On a yearly basis.
Super clear thank you very much.
Youre welcome.
Alberto Valério: Our next question is from Pablo and free Gold card with Santander. Please proceed.
Alberto Valério: Hum.
Maybe a follow up on Mexico.
But what it means.
But international.
Contribution within passengers, how should we think and that's lunch himself.
Did you increase that you have or your.
And do you like returns.
In terms of international traffic well first of all maximum rates are state of the Mexican peso.
So the effect.
The international versus domestic entity, we reach close to the 100.
No difference.
The point is.
During the quarter compared with last year.
International anymore.
Sure.
In comparison with the domestic and that's why we were able to see a better.
And then related revenue.
Jim.
Yeah.
Okay, so, but it would likely be older.
Oh.
But we saw a sharp Mexico full bonanza.
Have you ever year.
Sorry about that.
Almost 40% Michael.
Well in that sense again, if we see a domestic traffic decrease during the year.
That could be upset by international traffic.
That's a little helped of course from this perspective.
And that's why I was saying also the ex the FX exchange rate in Mexico.
It's just dollar will be extremely important for the year.
No.
Okay.
Alberto Valério: Our next question is from Gabriel.
With Scotiabank. Please proceed.
Okay.
And also congrats on the results just a quick follow up question.
Himself.
New investments.
Have you seen any new investments are perhaps outside Mexico, maybe on the U S.
The Caribbean.
<unk>.
For the moment, we do not have any any project in France.
Okay. Thank you congrats.
Congrats on the results.
Thanks.
Yes.
Our next question is from Arthur Silverado with E. P O capital. Please proceed.
Hi, Thank you I think for the offering congratulations for the results just a quick question on my side, you announced at the end of last year, the new MVP.
We will develop from 2024 onwards, just to know if you have any particular the adjustments to the value of our concession on session on the balance sheet regarding even though this particular change in the way that the MVP is calculated and if so is this recognizing the in the balance sheet.
Fourth quarter 2023 are in this but in the first quarter was about 24. Thank you.
That took them from the balance sheet are once we.
Construct the MVP.
We do not have any adjustment because of the approval was received last year.
Thank you very clear.
Speaker Change: You're welcome.
As a reminder, if he would like to ask a question. It is star button.
Followed by the number one our next question is from Francisco Suarez with Scotiabank. Please proceed.
He is all folks good morning, and thanks for the call and congrats on your results.
The question I have is suncor projects related with water security just to confirm the two airports that you were speaking about that are part of the MVP or Huatulco Oaxaca I guess is is that correct.
In terms of use of water.
Yes.
The securities they permits to all water related projects.
Well Fortunately MVP.
Yes, we can.
Some of the projects, even some airports related to water.
But of course, the most critical are.
One is that you have mentioned look back.
And what really cool.
I would say I don't want to say the lack of the waterflood.
You have done there are some restrictions in both and that's why we are working and don't.
As we speak.
I got it and I'm glad that we got and noticing that you have committed to on your science based targets two questions on that front, how far your ambition Mako IQ aiming to one five degrees or is it well below two degrees and secondly, do you see.
Think that a the current framework the regulation framework there they MTP might be supportive all to do bolt to put a best meant that are consistent with these targets.
Well of course, we are putting those and those should be consistent on this quarter. So let me go back again to the most important initiative we have.
Which was signed on December 20 <unk>.
Yes at the moment.
Presented as 100% of the energy, we were consuming and that contact wants to receive energy from solar sources.
The company that was in charge of this project.
As lumpy naval yet to deliver at the end of June.
The solar farm is ready or has been ready for the last two years.
And they have not been able to be connected due to government restrictions.
Yeah. So on that front, we're talking about roughly speaking 80 million.
Know what ours are.
Yeah, Lee that today could represent 80% of the N is do we have a weird consumer.
So that is the most critical thing because if they're not able to.
B connected we will have to find out how to solve the situation.
In the case of the Clinton MVP as you have mentioned.
There are some focus on energy, but the most important focus knowledge it sorts of water.
Got it thanks, Congrats again.
You're welcome.
That concludes the question and Porsche question and answer portion of today's call.
Like to turn the call back over to Mr. Castro for closing remarks.
Thank you Jerry and thank you all of you again for joining US today in this first quarter of 2024 conference call on behalf of restaurant leadership today and Goodbye now you may disconnect.
Okay.
Okay.
Yeah.
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Okay.
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Yeah.
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Okay.
Okay.
Great.
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