Q3 2024 Grupo Aeroportuario del Pacífico SAB de CV Earnings Call
Speaker Change: [music].
Good morning.
And welcome to Gap's Conference call.
Speaker Change: All lines have been placed on mute to prevent any background noise.
Speaker Change: After the presentation, we will open the floor for questions and at that at that time instructions will be given if you would like to ask a question.
Speaker Change: It is now my pleasure to turn the call over to <unk> Investor Relations team. Please go ahead.
Speaker Change: Thank you and welcome to the final portfolio, a little fussy, because third quarter 2020 core conference call presenting from the company today, We welcome Mr. Walter <unk>, Chief Executive Officer, and Mr. <unk> that would be a bell chief financial officer. Please be advised that forward looking statements may be made during this call.
Speaker Change: Since call. These do not account for future economic circumstances industry conditions, the company's future performance or financial results as such statements made are based on several assumptions and factors that could cause actual results to materially differ from the current expectations for a complete note on forward looking statements. Please.
Speaker Change: Refer to the quarterly report at this point I'd like to turn the call over to Mr. <unk> for wells that for his opening remarks. Please begin sir.
Speaker Change: Yeah.
Speaker Change: Thank you Brian.
Mr. <unk>: Good morning, and thank you for joining us today.
Speaker Change: I'm proud to share with you how we have been able to navigate a complex market environment, while plus you said that you got.
Mr. <unk>: <unk> for sustainable growth via a diversification on Australia.
Mr. <unk>: Before discussing the quarterly results, let me start today's call with a recap of recent developments first what the approval of the 20 to 30 529 months.
Mr. <unk>: Our development plan for the Mexican airports on their maximum time, which of course under the new tariff regulation.
Mr. <unk>: Some key highlights of the new MTP include.
Mr. <unk>: Total capex commitment for the five years old $43 2 billion pesos measured in pesos as of December of 2022 that will be adjusted for the national producer price index construction sector.
Mr. <unk>: Do you put an executive to execute here.
Mr. <unk>: Something important to remember that we have already made advanced payments of approximately $5 5 billion peso during 2023 and 2024.
Mr. <unk>: This has been approved by the authority and a recognized during the new MTB.
Mr. <unk>: Mary for a while to hire a lot of reserves.
Mr. <unk>: Of these five years' Capex, almost 40% will be invested in terminal buildings. Therefore by the end of the continuum.
We have an additional 54 for sand in square meters, meaning more capacity and space throughout our 12 purpose besides 37% of additional security checkpoints.
Mr. <unk>: 96% of additional aprons.
Mr. <unk>: You broke up 87% of total committed investment will be in four of our airports.
Mr. <unk>: Key projects included.
Mr. <unk>: Meanwhile, the construction of a second third meal additional April that's the ways new ways proactive on the purchase of land reserves for future development.
Mr. <unk>: Weatherford.
Mr. <unk>: A third mill facility for domestic departing passengers.
Mr. <unk>: And the purchase of land.
Mr. <unk>: Besides English Carlos this Pasha the expressions of April at the International Terminal building.
Mr. <unk>: You're not even sure. It is important to remember that we expect to finalize the second and third building in Port Arthur.
By the end of 2026.
Mr. <unk>: These investments are intended to support gaps new growth phase for the upcoming juice.
Mr. <unk>: Regarding Mexico tariff determination. Please note that the new methodology for calculating discourage nowadays with the weighted average cost of capital compared to the previously when it was based on the cost of equity.
Mr. <unk>: And then regarding the new tariff will be gradually implemented in the following 15 months.
What made up the required performance as you can see our operational resilience and the strength of our commercial strategy are key drivers for our long term success.
During this quarter with.
Mr. <unk>: We faced several industry wide challenge most notably their five seven decline in passengers traveling during this quarter was driven by the ongoing expansion of the breath and with the engines, which began in July.
Mr. <unk>: Late 2023 and are expected to continue throughout 2025.
Mr. <unk>: Despite these headwinds financial results have remained strong and this was largely due to the dynamic commercial revenue growth, which I believe is central to <unk> future.
Mr. <unk>: Even with the setback we have continued to expand our strength our network for example, during the third quarter.
Mr. <unk>: We opened two new international routes, including the Guadalajara to Toronto with a rich and deep ratio went up to begin with plus one domestic would bring.
Mr. <unk>: Bringing the total number of words added to our network this year 2016.
Mr. <unk>: Therefore, I am delighted with our <unk> development scrubbing.
Mr. <unk>: Allow me to highlight our commercial revenue, which were a standout success.
Mr. <unk>: In the third quarter, we experienced an exceptional 39% increase in non aeronautical revenues driven mainly by the strategic expansion across our airport network business acquisition.
Mr. <unk>: This is a result of gaps ongoing delivery on our strategic effort to maximize commercial revenues wherever we see potential.
Mr. <unk>: The cutoff is got facility consolidations contributed to 354 million basis deny or inductive or revenue and is a testament to the first phase of our strategy.
Mr. <unk>: Additionally, we have seen a remarkable growth in terms of car rentals retail food and beverages, where new partnerships or expansions.
Mr. <unk>: Significant returns for you this time, our car rental business and VIP lounges, particularly in one country.
Mr. <unk>: Half per sub for Permian exceptionally well.
Mr. <unk>: And the second VIP lounge in Guadalajara, which often justly squares has already help meet the growing demand at that airport.
Speaker Change: No no no I think our revenues per passing is grew reaching 120.
Speaker Change: During the first nine months, demonstrating how we are not only selling more passengers per sentiment getting better.
Speaker Change: Turning them on an enhanced and more violent experience at every opportunity despite lower overall traffic numbers.
Speaker Change: And while commercial revenues.
Speaker Change: Third highlight although that's a revenue reclined by three 8%. This was primarily due to the lower passengers traffic of the fact that we are only reach around 94% of the maximum tariff.
Speaker Change: Nonetheless, our overall revenue increased by 6%.
Speaker Change: Again, reflecting the strength of our business in terms of revenue source diversification.
Speaker Change: On the central site operational expenses increased by 21% largely due to the consolidation of the cargo facility in service costs employee related expenses.
Argued ratios.
Speaker Change: Without the new casual business the cost of service will increase by eight 8%.
Speaker Change: However, we will continue to effectively control the cost of service wherever possible.
Speaker Change: Thus, ensuring that our growth is sustainable even an elevated cost.
Speaker Change: Our EBITDA margin, excluding Africa 12 effects remained at a solid 67%, which is a slight decline compared to last year, both reflect the importance of our strategic investment in infrastructure.
Speaker Change: In terms of financial position, we maintain a healthy balance sheet with cash on cash equivalent install it totally by $15 8 billion pesos at the end of September of 2024.
Speaker Change: We have also continued our capex investment with the approximate $5 2 billion pesos allocated to infrastructure brings.
Speaker Change: Our recent refinancing of great facilities, and the insurance of long term bonds scientific case ensures that we remain well capitalized to pursue further growth opportunities as well to liberate our committed capital investments.
Speaker Change: Currently we have a net debt to EBITDA ratio of one eight times for the trailing 12 months, thereby complying with all our debt covenants.
Speaker Change: In closing this quarter has demonstrated that the future of airport management is no longer just about managing slides. It is increasingly about building diversify operating and commercial ecosystems that generate sustained growth and profitability.
Speaker Change: GAAP is leading that transformation and I have every confidence that our strategy will continue to deliver value for all of our stakeholders.
Speaker Change: Thank you for your time and now I open the floor for your questions.
Speaker Change: Yes.
Speaker Change: At this time, we will open the question and answer session.
Speaker Change: If you would like to ask a question. Please press star and one on your telephone keypad and you will be placed into the queue. In the order received you may remove yourself from the queue at any time by pressing pound N. One.
Speaker Change: Once again to ask a question. Please press star and one on your phone now.
Speaker Change: And our first question comes from Fernando Recchia of BTG Pactual your.
Speaker Change: Your line is open.
Speaker Change: Yeah.
Fernando Recchia: Hello. Thank you for taking my question two questions on our side of it first.
Fernando Recchia: Regarding the initial remarks that you mentioned that the new current expected should be gradually implemented could.
Fernando Recchia: Could you provide more details on these when do you expect feature fully.
Fernando Recchia: Implemented tariffs and holiday.
Fernando Recchia: God implementation.
Fernando Recchia: Satcom.
Fernando Recchia: Could you please.
Fernando Recchia: And then on your traffic expectations for next year, how are you seeing.
Fernando Recchia: You can read the issue that you think Q3 will be the deep <unk>.
Fernando Recchia: How do you see impacting.
Fernando Recchia: For next year, that's it from my side. Thank you.
Speaker Change: Thank you Fernanda.
Speaker Change: In terms of a specific target, we see that we will drop their already implemented the changes.
Speaker Change: At the end of the day in terms of the airports low we could change our specific each six months. So our plan would be to change one and January one time in July.
Speaker Change: Timing the next January.
Speaker Change: As you can see our fulfillment, Ontario this year.
Around 90, 95% when we act.
Inflation.
Speaker Change: And the new the growth in terminals in real terms of the of the new tariff within that.
Speaker Change: Added to the market to pass through all of your car.
Speaker Change: In a gradually way in all of these on during 2025, mainly.
Speaker Change: The second part related of what we are expecting in terms of traffic.
Speaker Change: I will say that we are working really closely with them to really closely.
Speaker Change: With airlines to understand.
Speaker Change: Paul.
Speaker Change: Some new deliveries from the coming back of some of the claims that were around a five well before the Brooklyn with needs.
Speaker Change: In <unk> with the information that we have today, we think that the.
Speaker Change: The next year.
Speaker Change: With a growth close to 5%.
Speaker Change: Again, we right now working with all of its lost on for to understand how how will be the growth coming here, but.
Speaker Change: We did that backlog, we have already with you within that could be a 5% increase.
Okay.
Speaker Change: Good luck.
Speaker Change: Two questions.
Speaker Change: Thank you so just to clarify the 25% will be fully implemented.
Speaker Change: January 2026 is that what you said.
Speaker Change: Okay.
Speaker Change: Hi, Fernando.
Speaker Change: So.
Fernando Recchia: That designation to be fully implemented in 2026, yes.
Fernando Recchia: Okay.
Fernando Recchia: Okay. Thank you.
Fernando Recchia: Yeah.
Speaker Change: Thank you our next question comes from.
Speaker Change: Alan Macias of Bank of America.
Speaker Change: Your line is open.
Speaker Change: Hi, good morning, and thank you for the well.
Speaker Change: On the call.
Alan Macias: Just two questions the first.
Speaker Change: When do you expect the engine recall problem to be ended.
Speaker Change: Should this be doing third quarter is that a.
Speaker Change: A good assumption.
Speaker Change: And the second question is on the new cargo business do you expect.
Speaker Change: Similar revenue levels as the one observed in third quarter. Thank you.
Speaker Change: Okay.
Thank you I'd love to hear your thoughts.
Speaker Change: Regarding the <unk> recall.
Speaker Change: <unk>.
Speaker Change: Why not all but some of the public information that for example, what is made public before that big complete effect of the of the rounding the grounded planes will be on the Silva of 'twenty 'twenty six.
Speaker Change: But for sure we ask.
Speaker Change: Pectineus on this summer of 2025.
Speaker Change: We will begin to see an increase of first park.
Speaker Change: The coming back of some of the plane not of the food players that were around it but an important amount of planes that will be again flame circle.
Speaker Change: Some new deliveries that will allow you to lever <unk>, even out of Mexico will add to their to their fleet.
Speaker Change: And third for sure we will have.
Speaker Change: Uh huh.
Speaker Change: Good.
Speaker Change: A comparison or a more you see comps when we see the summer of 2025 versus the summer of 2024, So yeah Thursday, I will say that for the summer of 2025, we will be here to see.
Speaker Change: A more important time expansion on the number of passengers yes.
Speaker Change: Hi, Allen this is Tony.
Speaker Change: They're going to your second question, Yes, we do expect.
Speaker Change: And that same level of revenues, indeed, probably will be a little bit better.
Speaker Change: The EBITDA margin close to 50%, 55%. So there are a lot of opportunities to improve cost of operation and to continue improving the level of revenues and then it was a good.
Speaker Change: Transaction that provides.
Speaker Change: More value to the company.
Yeah.
Speaker Change: Thank you.
Speaker Change: Our next question comes from Juan Ponce from Bradesco <unk>.
Speaker Change: Your line is open.
Speaker Change: And I will tell you. Thank you for taking my question.
Juan Ponce: A question on international traffic.
Juan Ponce: Do you guys see any impacts from the U S election, I mean, we have seen the leisure destinations take.
Juan Ponce: Take a hit in recent months I mean, just to try to understand what is the main driver here is it is it the capacity is it demand.
Juan Ponce: And just thoughts here would be it would be great. Thank you.
Juan Ponce: Oh.
Speaker Change: Thank you Brian.
Speaker Change: We are seeing mainly measure.
You're investing that shows a catalyst, but yet when do you all right.
Speaker Change: So Scott.
Speaker Change: For US also for other airports in the region.
Speaker Change: Can I ask on corn and other inputs.
Speaker Change: The color you bet.
Speaker Change: That's M Limber show, an important increase of number of seats.
Speaker Change: For sure.
Speaker Change: That impact us directly on the on the on the growth of passengers. So you can see for instance, the fed acquirer of $23 24, a loss Carnival. The Montego Bay Airport till I got that three of them decrease 11%.
Speaker Change: What mainly we so it's timing.
Speaker Change: Importantly, we have seen some specific routes.
Speaker Change: A.
Speaker Change: On the on the offer of seats.
Speaker Change: We think or at least for the moment, we're seeing that demand is still there the <unk> super healthy so we've seen that in the coming months.
Speaker Change: For the winter.
Speaker Change: We'll begin to see the coming back of boats.
Speaker Change: Let's see.
I would say that for the moment is.
Speaker Change: I will say solve most impulse people.
Speaker Change: This time it does come from some kind of impact it.
Speaker Change: Related.
Speaker Change: The U S election.
Speaker Change: But what do you see from that what is a fact is that in the last months, we have seen and importantly can be some fleets on leisure destinations mainly.
Speaker Change: We are not seeing the same trend.
Speaker Change: On traffic related with business or <unk> for obesity prints and relative as you can see for instance, while the house is growing in the double digit.
Speaker Change: What is really really important when we talk about it.
Interosseous markets.
Speaker Change: Thus for gaps where he understands international market.
Speaker Change: It is the highest web.
Speaker Change: So is really relevant to see a double digit growth in that and that specific market.
Speaker Change: Yeah.
Speaker Change: Our next question comes from chasing of Citi.
Speaker Change: Okay.
Speaker Change: Yes, Hello can you hear me.
Please go ahead.
Thanks for taking my question do you guys hear me.
Speaker Change: Yes.
Speaker Change: Oh, yeah, so Jay dialing on for Stephen Trent.
Speaker Change: For taking my question I guess the first one I have is youre looking at the customer's capacity. That's required do you guys see that theres room for any other acquisitions anytime soon.
Speaker Change: And then I will say that.
Speaker Change: Today, we are working with consolidation of all these business business of cutting off a few of these fiscal.
Speaker Change: Please color yes.
Speaker Change: Let me begin with all of that.
Speaker Change: We are working on how we constantly do these business we are working on how to.
Speaker Change: I would say.
Speaker Change: Increase the margin from working on the cost but in the other hand, we are also beginning to.
Speaker Change: We view all of our deferred and opportunities related with the same kind of business.
Speaker Change: The best way to understand he is moving on.
Speaker Change: The cargo facility.
Speaker Change: Business.
Speaker Change: Latest do you have that gap has like a platform to.
Speaker Change: Increase or to generate new business.
Weighted with logistics. So on this year, we will work really really hard to tell.
Speaker Change: Proactive, bringing somebody assume additional optimization of the cost of the new business book.
Speaker Change: Also we are working through the next movement through that acquisition trying to we knew you know.
Speaker Change: Definitely all cargo terminal facilities on some of our airports.
Speaker Change: I will say that we are reviewing for the moment some opportunity that could come from Bahia operating expenses related with the outcome of the market.
Speaker Change: Also we are reviewing some guy.
Speaker Change: Sky have opportunities for quanta.
Speaker Change: Even.
Speaker Change: For the case of a portfolio and Cabos.
Speaker Change: Pacific market.
Related.
Speaker Change: Yeah.
Speaker Change:
Speaker Change: Specific category related to hotels. So we are working on that I would say that we are.
Speaker Change: Reviewing all the possible new business.
Speaker Change: Has everybody to be in the <unk> gap.
Speaker Change: Our discipline will be to bring these show them value.
Speaker Change: To bring a creative value.
Speaker Change: <unk> for our investors.
Speaker Change: We are just from that that the way we have now the chance to have a near complete journey.
Speaker Change: With all the experts related some cargo so.
Speaker Change: Rather we will have we will bring new opportunities to the table to analyze.
Speaker Change: Yeah I appreciate the thoughts and I guess my final question is and considering the.
Speaker Change: Mexican peso against the U S. Dollar have you seen any changes in U S originated tourism or even business travel or is that a little bit early to say.
Speaker Change: I would say that this is really soon to begin to see some kind of.
Speaker Change: Really a change in the trend related work for the for the exchange rate because I mean.
Speaker Change: We have the.
Speaker Change: Three months, we will begin to see some changes of the exchange rate so maybe.
Speaker Change: We should wait a little a little more you'll see some kind of feedback.
Speaker Change: Okay. Thanks, a lot have a great day.
Speaker Change: Thank you.
Speaker Change: And once again, if you would like to ask a question. Please press star and one on your Touchtone keypad.
And our next question comes from Isabella Salazar of GBM.
Speaker Change: Your line is open.
Isabella Salazar: Hello, and thank you for taking my question.
Isabella Salazar: My question is regarding the G. W. P C.
Speaker Change: Hi, Brian.
If im not mistaken.
Speaker Change: But you can see has margins of around 40%.
Speaker Change: And I wanted to know if now that it's fully incorporated it will generate synergies that could significantly impact.
Got my James and if so what specific synergies, we're shooting to Jive with changes. Thank you.
Yes.
Speaker Change: Hi, This is Lisa so yeah the margin in terms of G dilute Tc.
Speaker Change: He is.
Speaker Change: Around 50, 55% last year 2023 was around 40% is part of the process.
Speaker Change: <unk> shown that we will have implemented cost control.
Speaker Change: Well, we already mentioned and the idea is to improve not only the that side of their cost of operation, but also the revenues the revenues.
Speaker Change: For this year will be the very important much better than in previous year.
Speaker Change: Around 25% more than previous year. So it will be I do C U E.
Speaker Change: At the end of this.
Speaker Change: Last quarter, but we have made it look positive.
Speaker Change: Although the 2026, so it would be with the person that I created.
Speaker Change: Instruction program.
Speaker Change: I have a quick.
Just a clarification that when in fact increased.
Speaker Change: The increase is it exactly Reg G. W. P C.
Speaker Change: Oh.
Speaker Change: It just worked here is only for this for these cargo facility.
Speaker Change: Okay. Thank you.
Welcome.
Speaker Change: Yeah.
Speaker Change: And it appears that we have no further questions at this time I will now turn the program back to our presenters for closing remarks.
Speaker Change: Yeah.
Speaker Change: Thank you again, everyone for joining yesterday, our third quarter results conference on Gatsby Health, We wish you a great day. Thank you.
Speaker Change: Thank you this does conclude gaps conference call.
Speaker Change: You for your participation you may disconnect at any time.
Speaker Change: The host has ended this call goodbye.