4Q20 Passenger traffic and cargo improve sequentially but remain significantly impacted by Covid-19
LUXEMBOURG--(BUSINESS WIRE)-- Corporación América Airports S.A. (NYSE: CAAP), (“CAAP” or the “Company”) the largest private sector airport operator based on the number of airports under management reported today its unaudited, consolidated results for the three-month and twelve-month periods ended December 31, 2020. Financial results are expressed in millions of U.S. dollars and are prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (“IASB”).
Commencing 3Q18, the Company began reporting results of its Argentinean subsidiaries applying Hyperinflation Accounting, in accordance to IFRS rule IAS 29 (“IAS 29”), as detailed on Section“Hyperinflation Accounting in Argentina”.
Fourth Quarter 2020 Highlights
Subsequent Events
Fiscal Year 2020 Highlights
CEO Message
“Last year was undoubtedly the most challenging year ever faced by the travel industry worldwide. Since the start of the pandemic, we have demonstrated our capacity and flexibility to rapidly respond to the new environment and changing market conditions. I wish to thank our teams for their dedication and commitment to rapidly establishing and executing our strategic plan to protect the Company’s financial position, all while continuing to ensure the highest health and safety standards for our passengers and employees.
Through taking decisive actions, including successfully exceeding our cost reduction goals and keeping a focus on economic compensation, we achieved positive comparable Adjusted EBITDA1 of US$ 78 million in the full year, despite experiencing a 70% decline in passenger traffic in 2020 as a result of the severe impact of the pandemic on travel demand.” noted Mr. Martín Eurnekian, CEO of Corporación América Airports.
“We also made significant strides in reprofiling and strengthening our balance sheet through successfully refinancing a significant part of our principal and interest payments in key countries, while increasing our liquidity position through new financings.
Another key element of our strategic plan has been the successful negotiations with regulatory bodies and governments across our concessions to obtain economic compensation for the impact of this health crisis. Most importantly, the 10-year extension of the AA2000 concession in Argentina obtained in the fourth quarter, along with an increase in international tariffs was a significant milestone for our Company, reinforcing this subsidiary’s long-term sustainability. In Brazil, another of our key markets, during the quarter we obtained an economic compensation for the impact of the pandemic in 2020.
Looking ahead, we remain fully focused on further executing against the strategic action plan put in place at the start of the crisis: protecting liquidity, keeping a strong focus on cost controls and, advancing negotiations to obtain long-term re-equilibrium of our concessions while refinancing bank debt in Argentina.
In terms of travel demand, the gradual sequential monthly recovery trend that started last June continued into early this year. However, during the first quarter 2021, passenger traffic trends have been choppy reflecting lower demand in Brazil given concerns regarding the new strain of the virus and a spike in cases. Travel restrictions in Europe also impacted demand in most countries of operations. As the northern hemisphere continues to make headway with the vaccination programs, we expect this to lead to some improvement in traffic towards the second half of the year. In the medium term, while visibility in Latin America remains low, higher availability of vaccines and the lifting of government travel restrictions over time are anticipated to help drive better passenger dynamics.”
1. | Comparable Adjusted EBITDA excludes non-cash impairment losses in Brazil in both years and a bad debt charge in Argentina in 2019. |
Operating & Financial Highlights (In millions of U.S. dollars, unless otherwise noted) | |||||||
| 4Q20 as reported | 4Q19 as reported | % Var as reported | IAS 29 4Q20 | 4Q20 ex IAS 29 | 4Q19 ex IAS 29 | % Var ex IAS 29 |
Passenger Traffic (Million Passengers) (1)(2) | 5.1 | 20.9 | -75.6% |
| 5.1 | 20.9 | -75.6% |
Revenue | 129.4 | 380.1 | -66.0% | -3.9 | 133.3 | 374.9 | -64.4% |
Aeronautical Revenues | 35.9 | 173.7 | -79.3% | -0.5 | 36.3 | 170.8 | -78.7% |
Non-Aeronautical Revenues | 93.5 | 206.4 | -54.7% | -3.5 | 96.9 | 204.1 | -52.5% |
Revenue excluding construction service | 101.0 | 295.4 | -65.8% | -0.9 | 101.8 | 289.6 | -64.8% |
Operating Income / (Loss) | 5.3 | 12.4 | -57.1% | -15.1 | 20.4 | 26.4 | -22.6% |
Operating Margin | 4.1% | 3.3% | 81 bps | - | 15.3% | 7.0% | 833 bps |
Net (Loss) / Income Attributable to Owners of the Parent | -38.8 | -37.3 | 4.1% | 14.5 | -53.3 | -48.5 | 10.0% |
EPS (US$) | -0.24 | -0.23 | 5.5% | 0.09 | -0.33 | -0.30 | 11.1% |
Adjusted EBITDA | 44.6 | 50.7 | -12.0% | 0.4 | 44.2 | 48.6 | -9.0% |
Adjusted EBITDA Margin | 34.5% | 13.3% | 2,120 bps | - | 33.2% | 13.0% | 2,017 bps |
Adjusted EBITDA Margin excluding Construction Service | 44.5% | 16.9% | 2,755 bps | - | 43.7% | 16.6% | 2,706 bps |
Net Debt to LTM Adjusted EBITDA | 78.27x | 2.66x | n.m. | - | - | - | - |
Net Debt to LTM Adjusted EBITDA excl. impairment on intangible assets (3) | 14.02x | 2.28x | n.m. | - | - | - | - |
Note: Figures in historical dollars (excluding IAS29) are included for comparison purposes. | |
1) | Note that preliminary passenger traffic figures for Ezeiza Airport, in Argentina, for 2019 as well as January 2020 were adjusted to include additional inbound passengers not accounted for in the initial count, for an average of approximately 5% of total passenger traffic at Ezeiza Airport and 1% of total traffic at CAAP, during that period. Importantly, inbound traffic does not affect revenues, as tariffs are applicable on departure passengers. |
2) | Starting November 2019, the Company has reclassified its passenger traffic figures for Brasilia Airport between international, domestic and transit retroactively since June 2018 to return to the count methodology utilized until May 2018. Notwithstanding, total traffic figures remain unchanged. |
3) | LTM Adjusted EBITDA excluding impairments of intangible assets |
Operating & Financial Highlights FY 2020 (In millions of U.S. dollars, unless otherwise noted) | |||||||
| 2020 as reported | 2019 as reported | % Var as reported | IAS 29 2020 | 2020 ex IAS 29 | 2019 ex IAS 29 | % Var ex IAS 29 |
Passenger Traffic (Million Passengers) (1)(2) | 25.2 | 84.2 | -70.0% |
| 25.2 | 84.2 | -70.0% |
Revenue | 607.4 | 1558.6 | -61.0% | -15.5 | 622.8 | 1583.9 | -60.7% |
Aeronautical Revenues | 220.0 | 724.0 | -69.6% | -4.5 | 224.5 | 734.1 | -69.4% |
Non-Aeronautical Revenues | 387.4 | 834.6 | -53.6% | -11.0 | 398.3 | 849.9 | -53.1% |
Revenue excluding construction service | 481.6 | 1,208.4 | -60.1% | -7.4 | 488.9 | 1,222.9 | -60.0% |
Operating Income | -163.7 | 223.6 | -173.2% | -76.8 | -86.9 | 285.0 | -130.5% |
Operating Margin | -27.0% | 14.3% | -4,125 bps | - | -14.0% | 18.0% | -3,196 bps |
Net (Loss) / Income Attributable to Owners of the Parent | -253.1 | 9.1 | -2,880.8% | 9.9 | -262.9 | 3.1 | -8,581.6% |
EPS (US$) | -1.58 | 0.06 | -2,735.6% | 0.06 | -1.64 | 0.02 | -8,315.4% |
Adjusted EBITDA | 13.6 | 380.7 | -96.4% | -1.9 | 15.5 | 385.7 | -96.0% |
Adjusted EBITDA Margin | 2.2% | 24.4% | -2,216 bps | - | 2.5% | 24.4% | -2,191 bps |
Adjusted EBITDA Margin excluding Construction Service | 2.5% | 31.3% | -2,876 bps | - | 2.9% | 31.4% | -2,850 bps |
Note: Figures in historical dollars (excluding IAS29) are included for comparison purposes. | |
1) | See Footnote 1 in previous table. |
2) | Preliminary data on 1,256 in January and 195 in February 2020 at Brasilia Airport, due to delays in the submission of information by third parties. Moreover, starting November 2019 the Company has reclassified its passenger traffic figures for Brasilia Airport between international, domestic and transit retroactively since June 2018 to return to the count methodology utilized until May 2018. Notwithstanding, total traffic figures remain unchanged. |
Update on Action Plan to Mitigate Impact of COVID-19
Governmental Flight Restrictions
The COVID-19 virus outbreak has generated a disruption in the global economy, and in particular, the aviation industry resulting in drastic reductions in passenger traffic. During March 2020, several governments around the world, implemented measures to contain the spread, including the closing of borders and prohibition of travel, domestic lockdowns and quarantine measures. While governments across the Company’s countries of operations have been relaxing some of these flight restrictions in recent months, the overall situation remains volatile, as governments worldwide adjust travel bans or implement requirements to enter or leave their countries, including quarantines or negative Covid-19 PCR tests, based on the evolution of the sanitary situation.
Impact of COVID-19 on CAAP’s Passenger Traffic and Cargo activity
The Company’s operations have been severely impacted by the prolonged flight restrictions in most countries of operations as well as flight bans in many other countries worldwide. Total passenger traffic in October 2020 declined 80.8% year-on-year, showing a slight recovery in November and December, with declines of 77.1% and 68.8%, respectively, although passenger traffic more than doubled in the quarter when compared to 3Q20. During 4Q20, commercial flights were operated across all CAAP’s countries, although still restricted by government bans to locals and foreigners, and certain requirements applied. Cargo activity was also impacted, with cargo volume declining 40.2% year-on-year in October 2020, 40.9% in November and slightly improving to a drop of 39.8% YoY in December.
Implementation of Mitigation Initiatives Focused on Preserving Financial Position
The crisis committee, composed of the Company’s CEO and operating CEOs of each subsidiary, continues to assess operations, with the goal of enhancing the sustainability of the Company’s business. CAAP continued to make progress on its action plan focused on:
As a result of these combined measures, the Company achieved a 46% YoY reduction in cash operating costs and expenses in the quarter, following YoY reductions of 48% and 51% in 3Q20 and 2Q20, respectively, beating its 43% reduction target in all quarters. Note this excludes concession fees and construction costs.
Financial position and liquidity: As cash preservation is a critical focus, the Company has taken the following measures:
As a result of the strong cost reduction and cash preservation initiatives, CAAP significantly reduced operating cash burn, reaching cash break-even levels in Argentina and Uruguay beginning 2Q20, and in Ecuador and Armenia since 3Q20. In addition, during 4Q20 CAAP achieved positive operating cash flow across most countries of operations.
To obtain the full text of this earnings release and the earnings presentation, please click on the following link: http://investors.corporacionamericaairports.com/Results-Center
4Q20 EARNINGS CONFERENCE CALL
When: | 9:00 a.m. Eastern time, March 31, 2021 |
Who: | Mr. Martín Eurnekian, Chief Executive Officer |
| Mr. Raúl Francos, Chief Financial Officer |
| Ms. Gimena Albanesi, Investor Relations Manager |
Dial-in: | 1-888-347-6492 (U.S. domestic); 1-412-317-5258 (international) |
Webcast: | |
Replay: | Participants can access the replay through April 7, 2021 by dialing: |
| 1-877-344-7529 (U.S. domestic) and 1-412-317-0088 (international). Replay ID: 10153418. |
Use of Non-IFRS Financial Measures
This announcement includes certain references to Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted EBITDA excluding Construction Service and Adjusted EBITDA Margin excluding Construction service, as well as Net Debt:
Adjusted EBITDA is defined as income for the period before financial income, financial loss, income tax expense, depreciation and amortization.
Adjusted EBITDA Margin is calculated by dividing Adjusted EBITDA by total revenues.
Adjusted EBITDA excluding Construction Service (“Adjusted EBITDA ex-IFRIC”) is defined as income for the period before construction services revenue and cost, financial income, financial loss, income tax expense, depreciation and amortization.
Adjusted EBITDA Margin excluding Construction Service (“Adjusted EBITDA Margin ex-IFRIC12”) excludes the effect of IFRIC 12 with respect to the construction or improvements to assets under the concession and is calculated by dividing Adjusted EBITDA excluding Construction Service revenue and cost, by total revenues less Construction service revenue.
Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted EBITDA excluding Construction Service and Adjusted EBITDA Margin excluding Construction Service are not measures recognized under IFRS and should not be considered as an alternative to, or more meaningful than, consolidated net income for the year as determined in accordance with IFRS or as indicators of our operating performance from continuing operations. Accordingly, readers are cautioned not to place undue reliance on this information and should note that these measures as calculated by the Company, may differ materially from similarly titled measures reported by other companies. We believe that the presentation of Adjusted EBITDA and Adjusted EBITDA excluding Construction Service enhances an investor’s understanding of our performance and are useful for investors to assess our operating performance by excluding certain items that we believe are not representative of our core business. In addition, Adjusted EBITDA and Adjusted EBITDA excluding Construction Service are useful because they allow us to more effectively evaluate our operating performance and compare the results of our operations from period to period without regard to our financing methods, capital structure or income taxes and construction services (when applicable).
Net debt is calculated by deducting “Cash and cash equivalents” from total financial debt.
Figures ex-IAS 29 result from dividing nominal Argentine pesos for the Argentine Segment, by the average foreign exchange rate of the Argentine Peso against the US dollar in the period. Percentage variations ex-IAS 29 figures compare results as presented in the prior year quarter before IAS 29 came into effect, against ex-IAS 29 results for this quarter as described above. For comparison purposes the impact of adopting IAS 29 in Aeropuertos Argentina 2000, the Company’s largest subsidiary in Argentina, is presented separately in each of the applicable sections of this earnings release, in a column denominated “IAS 29”. The impact from “Hyperinflation Accounting in Argentina” is described in more detail page 29 of this report.
Definitions and Concepts
Commercial Revenues: CAAP derives commercial revenue principally from fees resulting from warehouse usage (which includes cargo storage, stowage and warehouse services and related international cargo services), services and retail stores, duty free shops, car parking facilities, catering, hangar services, food and beverage services, retail stores, including royalties collected from retailers’ revenue, and rent of space, advertising, fuel, airport counters, VIP lounges and fees collected from other miscellaneous sources, such as telecommunications, car rentals and passenger services.
Construction Service revenue and cost: Investments related to improvements and upgrades to be performed in connection with concession agreements are treated under the intangible asset model established by IFRIC 12. As a result, all expenditures associated with investments required by the concession agreements are treated as revenue generating activities given that they ultimately provide future benefits, and subsequent improvements and upgrades made to the concession are recognized as intangible assets based on the principles of IFRIC 12. The revenue and expense are recognized as profit or loss when the expenditures are performed. The cost for such additions and improvements to concession assets is based on actual costs incurred by CAAP in the execution of the additions or improvements, considering the investment requirements in the concession agreements. Through bidding processes, the Company contracts third parties to carry out such construction or improvement services. The amount of revenues for these services is equal to the amount of costs incurred plus a reasonable margin, which is estimated at an average of 3.0% to 5.0%.
About Corporación América Airports
Corporación América Airports acquires, develops and operates airport concessions. The Company is the largest private airport operator in the world based on the number of airports and the tenth largest based on passenger traffic. Currently, the Company operates 52 airports in 7 countries across Latin America and Europe (Argentina, Brazil, Uruguay, Peru, Ecuador, Armenia and Italy). In 2019, Corporación América Airports served 84.2 million passengers. The Company is listed on the New York Stock Exchange where it trades under the ticker “CAAP”. For more information, visit http://investors.corporacionamericaairports.com
Forward Looking Statements
Statements relating to our future plans, projections, events or prospects are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements that are not historical facts and can be identified by terms such as “believes,” “continue,” “could,” “potential,” “remain,” “will,” “would” or similar expressions and the negatives of those terms. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Many factors could cause our actual activities or results to differ materially from the activities and results anticipated in forward-looking statements, including, but not limited to: the COVID-19 impact, delays or unexpected casualties related to construction under our investment plan and master plans, our ability to generate or obtain the requisite capital to fully develop and operate our airports, general economic, political, demographic and business conditions in the geographic markets we serve, decreases in passenger traffic, changes in the fees we may charge under our concession agreements, inflation, depreciation and devaluation of the AR$, EUR, BRL, UYU, AMD or the PEN against the U.S. dollar, the early termination, revocation or failure to renew or extend any of our concession agreements, the right of the Argentine Government to buy out the AA2000 Concession Agreement, changes in our investment commitments or our ability to meet our obligations thereunder, existing and future governmental regulations, natural disaster-related losses which may not be fully insurable, terrorism in the international markets we serve, epidemics, pandemics and other public health crises and changes in interest rates or foreign exchange rates. The Company encourages you to review the ‘Cautionary Statement’ and the ‘Risk Factor’ sections of our annual report on Form 20-F for the year ended December 31, 2019 and any of CAAP’s other applicable filings with the Securities and Exchange Commission for additional information concerning factors that could cause those differences.
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Investor Relations ContactGimena Albanesi Investor Relations Manager Email: gimena.albanesi@caairports.com Phone: +5411 4852-6411
Source: Corporación América Airports S.A.