Grupo Aeroportuario del Sureste [ASR] Conference call transcript for 2023 q1
2023-04-25 19:08:06
Fiscal: 2023 q1
Operator: Good day, ladies and gentlemen, and welcome to ASUR's First Quarter 2023 Results Conference Call. My name is Paul, and I'll 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 today's conference. [Operator Instructions] As a reminder, today's call is being recorded. Now I'd like to turn this call over to Mr. Adolfo Castro, Chief Executive Officer. Please go ahead, sir.
Adolfo Castro: Thank you, Paul, and good morning, everyone. Before I begin discussing our results, let me remind you that certain statements made during this call may constitute forward-looking statements, which are based on management's expectations and beliefs and are subject to several risks and uncertainties that could cause actual results to differ materially, including 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 is available on our website Investor Relations Sector. Following my presentation, I will be available for Q&A. Before getting into a discussion of the quarterly financial results, I want to note that our latest sustainability report is available on our website, and we invite you to read all it. Last year, during the first quarter conference call, we laid out the 7 key strategic objectives for the company to implement in the short term and medium term. Two notable advances made last year towards achieving these goals include, the formation of the Sustainability Committee. This committee has 3 members and will support the Board of Directors in making decisions focused on environmental, social and governance matters and incorporate them into the company's long-term strategy. Furthermore, the company will support organization in integrated sustainability and corporate social responsibility at the highest level of the corporate governance in the company. The committee held its first meeting earlier this year. We also made progress with respect to reducing greenhouse gas emissions in 2022. We've begun [indiscernible] at the airports of Cancun [indiscernible] will generate 900,000 kilowatt hours annually in each airport. We are already seeing benefits with the reduction in green gas in-house emissions. One of our objectives for the next year is to expand this project to other efforts in the group. As we continue to make progress to get closer to achieving our goals, we will provide you updates at the appropriate target. Now moving to a review of our operational and financial results together with some color on travel demand during the quarter. Note that all comparisons are year-over-year unless otherwise noted. We are pleased to report record high passenger traffic revenues and EBDA in the first quarter of the year, but we are more cautious for the remaining of the year, given the easy comps from Omicron during the first 2 months of 2022 and the negative effect of the operational suspension of 2 Colombian airlines during the quarter. We delivered sustained growth in the number of passengers traveling to our airports, up 19% and reaching a record of nearly $18 million. Mexico post the fastest growth with total passenger traffic up 23%, reflecting increases across all of our airports. Domestic travel was up in the high 20s with traffic at [indiscernible] above pre-pandemic levels, while we expect that accrues to fully recover this year. In turn, international traffic was up in the high teens, mainly driven by steady demand from the United States and Europe and an uptick in Canada, which recovered pre-pandemic levels during the first quarter. With these all regions that we operate within, have recovered 12 months pre-pandemic levels. Puerto Rico followed with traffic up 22% with domestic traffic up in high teens and internationally, up by nearly 50%. Lastly, total passenger traffic in Colombia increased 9% with domestic traffic slowing to the middle single digits and international passengers to the high traders. As anticipated, this lower growth reflects in the fees in VAT from 5% to 19%, which is impacting traffic trends and the suspension of operations of Viva Colombia at the end of February and [indiscernible] during March. These airlines represented 17.4% and 1.9% of 2022 passenger traffic in Colombia, respectively. On a consolidated basis, the share of domestic traffic over total traffic is stood at 59.3% of total traffic compared with 60.1% in the first quarter 2022. Now moving to the P&L. As a reminder, all reference to revenues and costs exclude construction revenues. Before beginning with our key financial figures, revenues increased 22%, reaching all-time high of 6.3 billion pesos. This robust performance is attributed to the solid growth in both our logical and non-aeronautical revenues across our 3 geographic regions. Mexico represented 75% of total revenues, while Puerto Rico accounted for 15% and Colombia contributed 10%. Commercial revenues continued to show an upward trend, increasing by 22% overall, with Mexico up 23%; Puerto Rico, 18%; and Colombia, 13%. On a per passenger basis, commercial revenues increased to 123 pesos from nearly 121 pesos in the year-ago quarter. By region, commercial revenues per passenger were in the range of 145 to 147 in Mexico and Puerto Rico. Of note, these figures include the effect of the stock Mexican peso, which appreciated 10.36% and 36.23% versus the U.S. dollar and the Colombian peso since the end of the first quarter last year through the first quarter of this year. Commercial revenues per passenger in Colombia were up in the low single digit in Mexican pesos, impacted by the currency depreciation that increased 37.8% in local currency, reflecting the opening of 29 commercial spaces over the past 12 months. Moving to costs. Total comparable operating expenses were up 12% below the 22% revenue growth in the quarter. Note that comparable costs exclude the effect of the 196 million pesos expense recovery in the first quarter 2022, resulting from the application of the Transat in Puerto Rico. Expenses in Mexico increased in the low 20s, below the 26% revenue growth. Higher costs were primarily due to personnel, energy and maintenance, along with increased technical assistance and concession fees in line with the higher EBDA. We have worked hard to maintain our cost control policy, but a 20% increase in the minimum wage had a negative impact on clean and security contracts. In Puerto Rico comparable costs were relatively stable as a reduction in the medium as we serve more than offset higher cost of services. Cost in Colombia was generally flat compared to a high single-digit increase in revenues. Solid passenger traffic growth, together with higher commercial revenues and increased operating leverage resulted in another quarter of [indiscernible] EBDA reaching 4.5 billion pesos, up 23% and adjusted EBDA margin of nearly 72%, up 90 basis points from the year-ago quarter. Again, this quarter, we deliver high profitability in our 3 regions of operation. Mexico posted a high increase in EBDA of 28% to 3.6 billion pesos. In Puerto Rico, EBITDA was up 4% to 520 million pesos, while Colombia EBDA rose 12% to over 415 million pesos. Adjusted EBDA margin improved 80 basis points in Mexico to nearly 77% and by 150 basis points in Colombia to just over 3%. In turn, Puerto Rico posted a 260 basis point decline in adjusted EBDA margin to nearly 55%. To recap, we delivered yet another strong quarter, characterized by a record break traffic and revenues. The combined effect of these achievements and our operating leverage led to an increase of 15% in net majority income reaching 2.5 billion pesos for the quarter. In terms of the balance sheet, we maintained a robust cash position of 50 billion pesos and a well-balanced debt profile. Accounts receivables were up 44%, mainly reflecting the high passenger traffic across our airport network as well as source in Puerto Rico from the recognition of other revenues disclosed in the fourth quarter 2022. We anticipate collecting these receivables within the first half of 2023. To a lesser extent, Viva Colombia and entire outstanding receivables were combined sum of 22 million pesos. Capital investment during the quarter were 143 million pesos, of which nearly 50% was allocated to Mexico, 47 to Puerto Rico and 6 million pesos were invested in Colombia. Before we move to the Q&A portion of the call, some brief closing remarks. We are pleased to have the start of the year with a strong note. Nevertheless, as we think about the remaining of 2023, the year-over-year comps will not be as we experienced in the first quarter, as I mentioned earlier, 2 of the Colombian airlines have recently suspended operations. Meanwhile, we will continue to look for ways to further improve our cost structure and drive margin improvement. Our balance sheet is healthy, and we will continue to invest to support future growth. Separately, on the news front, at the end of the quarter, the President of Mexico sent to the Mexican Congress appealed to reform 23 lots, the bill was to provide among other things, additional brands for the Mexican government to modify or to revoke license, authorizations and permits. And it's not clear whether the Congress will pass this bill and it represses the impact it may have on the Mexican economy and the company's operation. We believe this deal will be discussed by the Mexican Congress during the third quarter of this year. In conclusion, with a keen focus on providing value to our shareholders, our Board of Directors has proposed an ordinary net cash dividend of 9.93 pesos per share payable in May and an extraordinary net cash dividend of 10 pesos per share payable in November for each of the ordinary [indiscernible] shares, it is equivalent to a combined total of nearly 6 billion pesos in dividend payments. These other items will be voted by our shareholders at our annual general meeting held this Wednesday. This ends my presentation, please Paul open the floor for questions.
Operator: Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Thank you. Our first question is from Guilherme Mendes with JP Morgan. Please proceed with your question.
Operator: Thank you. Our next question is from Rodolfo Ramos with Bradesco BBI. Please proceed with your question.
Operator: Thank you. Our next question is from Alberto Valerio with UBS. Please proceed with your question.
Operator: Thank you. Our next question is from Juan Macedo with GBM.
Operator: Thank you. Our next question is from Bruno Amorim with Goldman Sachs. Please proceed with your question.
Operator: Our next question is from Philippe Nielsen with Citi. Please proceed with your question.
Operator: Thank you. Our next question is from Gabriel Himelfarb with Scotia Bank. Please proceed with your question.
Operator: Thank you. Our next question is from Francisco Suarez with Scotiabank. Please proceed with your question.
Operator: Our next question is from Alan Macias with Bank of America.
Operator: Thank you. Our next question is from Lucila Gomez with Compass Group. Please proceed with your question.
Operator: Our next question is from Fernanda Radia with APG. Please proceed with your question.
Operator: [Operator Instructions] Our next question is from Mauricio Butrago with AM Advisors. Please proceed with your questions.
Operator: This concludes our question-and-answer session for today's conference call. I would now like to turn the conference over to Mr. Castro for any closing remarks.
Adolfo Castro : Thank you, Paul, and thank you all of you, again, for participating in the first quarter results conference call. On behalf of us all, we wish you a good day.
