Successful execution of debt refinancing and cost reduction measures to mitigate impact of 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 six-month periods ended June 30, 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”.
Second Quarter 2020 Highlights
Subsequent Events
CEO Message
“This has been the toughest quarter in our history, and in the travel industry worldwide. Passenger traffic declined to unprecedented low levels, impacted by travel restrictions to contain the outbreak of COVID-19, together with the sharp drop in overall air travel. We have taken immediate action to mitigate the impact of this health crisis and are consistently executing against an extensive action plan aimed at ensuring the wellbeing of employees and passengers, protecting liquidity and strengthening our financial position,” noted Mr. Martín Eurnekian, CEO of Corporación América Airports.
“Our swift cost reduction efforts allowed us to lower cash operating costs and expenses by 50% year-on-year this quarter1, surpassing our target. Importantly, through our cost reduction and cash preservation initiatives, we significantly reduced operating cash burn, reaching cash break-even levels in Argentina and Uruguay. We also successfully deferred a total of US$126 million principal and interest payments in connection with notes and loan facilities in Argentina and Uruguay, with very high investor participation. Subsequent to quarter-end we also secured a total of $40 million in new financings in Argentina and entered into an agreement with financial institutions to obtain an 85 million Euro loan in Italy. We are also progressing on our negotiations with regulatory bodies and governments to obtain government support in the context of this unparalleled crisis, and also keeping a medium-term view to request compensations of our concession agreements.
“Over the past months we have been working to develop and establish customized protocols to ensure maximum health standards across the Company. We believe this is crucial in moving towards reactivating the travel industry, sustaining the continuity of operations and regaining consumer confidence to travel by air. Today, all of our airports have been adapted to meet these new requirements and limit the risk of infection. I want to thank the whole company for the effort they are making to navigate this challenging global environment and move ahead in rebuilding travel.
“Looking ahead, we maintain a conservative outlook for the near-term. Visibility remains low with recovery subject to the wide-spread availability of medical treatments or vaccines, progressive lifting of government restrictions, sustained government assistance, regained consumer confidence to travel and overall improved economic conditions,” concluded Mr. Eurnekian.
1Cash total operating costs and expenses excluding concession fees and construction service cost.
Operating & Financial Highlights | ||||||||||||||
(In millions of U.S. dollars, unless otherwise noted) | ||||||||||||||
| 2Q20 as reported | 2Q19 as reported | % Var as reported | IAS 29 2Q20 | 2Q20 ex IAS 29 | 2Q19 ex IAS 29 | % Var ex IAS 29 | |||||||
Passenger Traffic (Million Passengers) (1)(2) | 0.4 | 20.0 | -97.8% | - | 0.4 | 20.0 | -97.8% | |||||||
Revenue | 81.7 | 412.6 | -80.2% | -1.8 | 83.5 | 395.5 | -78.9% | |||||||
Aeronautical Revenues | 8.0 | 185.4 | -95.7% | -0.2 | 8.2 | 178.7 | -95.4% | |||||||
Non-Aeronautical Revenues | 73.7 | 227.2 | -67.5% | -1.6 | 75.3 | 216.8 | -65.3% | |||||||
Revenue excluding construction service | 51.6 | 312.6 | -83.5% | -0.7 | 52.3 | 301.0 | -82.6% | |||||||
Operating (Loss) / Income | -76.1 | 76.5 | -199.5% | -18.3 | -57.8 | 87.7 | -165.9% | |||||||
Operating Margin | -93.1% | 18.5% | -11,167 bps | - | -69.2% | 0.22 | -9,138 bps | |||||||
Net (Loss) / Income Attributable to Owners of the Parent | -55.4 | 49.1 | -212.9% | -2.8 | -52.7 | 39.9 | -232.0% | |||||||
EPS (US$) | -0.35 | 0.31 | -211.7% | -0.02 | -0.33 | 0.25 | -231.6% | |||||||
Adjusted EBITDA | -33.0 | 118.5 | -127.8% | 0.3 | -33.2 | 113.1 | -129.4% | |||||||
Adjusted EBITDA Margin | -40.3% | 28.7% | -6,907 bps | - | -39.8% | 28.6% | -6,839 bps | |||||||
Adjusted EBITDA Margin excluding Construction Service | -64.5% | 37.7% | -10,222 bps | - | -64.1% | 37.4% | -10,152 bps | |||||||
Net Debt to LTM EBITDA | 5.27x | 2.12x | 31,528 |
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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.
Operating & Financial Highlights | ||||||||||||||
(In millions of U.S. dollars, unless otherwise noted) | ||||||||||||||
| 6M20 as reported | 6M19 as reported | % Var as reported | IAS 29 6M20 | 6M20 ex IAS 29 | 6M19 ex IAS 29 | % Var ex IAS 29 | |||||||
Passenger Traffic (Million Passengers) (1)(2) | 17.6 | 40.6 | -56.7% | - | 17.6 | 40.6 | -56.7% | |||||||
Revenue | 378.9 | 798.8 | -52.6% | -11.3 | 390.1 | 771.1 | -49.4% | |||||||
Aeronautical Revenues | 159.8 | 382.7 | -58.2% | -4.7 | 164.6 | 371.1 | -55.7% | |||||||
Non-Aeronautical Revenues | 219.0 | 416.2 | -47.4% | -6.5 | 225.6 | 400.0 | -43.6% | |||||||
Revenue excluding construction service | 303.7 | 631.6 | -51.9% | -7.8 | 311.5 | 612.1 | -49.1% | |||||||
Operating Income | -45.6 | 159.9 | -128.5% | -42.3 | -3.3 | 182.0 | -101.8% | |||||||
Operating Margin | -12.0% | 20.0% | -3,205 bps | - | -0.8% | 23.6% | -2,444 bps | |||||||
Net (Loss) / Income Attributable to Owners of the Parent | -70.5 | 84.2 | -183.8% | -6.2 | -64.3 | 73.6 | -187.4% | |||||||
EPS (US$) | -0.44 | 0.53 | -183.8% | -0.04 | -0.40 | 0.46 | -187.4% | |||||||
Adjusted EBITDA | 46.1 | 244.5 | -81.2% | -2.3 | 48.4 | 235.0 | -79.4% | |||||||
Adjusted EBITDA Margin | 12.2% | 30.6% | -1,845 bps | - | 12.4% | 30.5% | -1,808 bps | |||||||
Adjusted EBITDA Margin excluding Construction Service | 14.9% | 38.4% | -2,350 bps | - | 15.2% | 38.2% | -2,292 bps | |||||||
Net Debt to LTM EBITDA | 5.27x | 2.12x | 31,528 | - | - | - | - |
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 recent 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, including Latin American governments, implemented drastic measures to contain the spread, including the closing of borders and prohibition of travel, domestic lockdowns and quarantine measures. While the governments and transportation authorities across the Company’s countries of operations also issued flight restrictions, the overall situation is volatile, as governments worldwide adjust travel bans 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 introduction of the flight restrictions mentioned above as well as flight bans in many other countries worldwide. Total passenger traffic in April 2020 declined 98.3% year-on-year, showing a slight recovery in June and July, with declines of 96.9% and 92.9%, respectively. While commercial flights are operating in Italy, Brazil, Ecuador and Uruguay, Argentina and Armenia are still operating under a regime of repatriation and special flights. Cargo activity was also impacted, with cargo volume declining 56.2% year-on-year in April 2020 and 59.4% in May, although June and July showed a very slight improvement declining 53% year-on-year
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 51% year-on-year reduction in cash operating costs and expenses in the quarter, beating its 43% reduction target. Note this excludes concession fees and construction costs.
The Company also continues to aggressively manage its working capital by negotiating with its suppliers the extension of payment terms and reducing its capex program.
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 managed to significantly reduce operating cash burn, reaching cash break-even levels in Argentina and Uruguay.
Restart of operations
As restrictions begin to be gradually lifted and activity resumes, the Company has implemented customized protocols across its airports to ensure maximum health and safety for passengers and employees. A dedicated team worked together with the aviation industry and regulators, to develop and establish customized protocols to ensure the maximum health standards across the Company’s airport network, which were also monitored approved by infectious diseases experts. In the airports where commercial operations resumed, these protocols were approved by the respective regulatory agencies and health authorities. These include sanitization and social distance measures, screening and biocontrol procedures for all passengers travelling through our airports, as well as leveraging digital solutions.
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
2Q20 EARNINGS CONFERENCE CALL
When: | 9:00 a.m. Eastern time, August 21, 2020
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Who: | Mr. Martín Eurnekian, Chief Executive Officer
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| Mr. Raúl Francos, Chief Financial Officer
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| Ms. Gimena Albanesi, Investor Relations Manager
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Dial-in: |
| 1-888-347-6492 (U.S. domestic); 1-412-317-5258 (international)
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Webcast | |||
Replay: |
| Participants can access the replay through August 28, 2020 by dialing: | |
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| 1-877-344-7529 (U.S. domestic) and 1-412-317-0088 (international). Replay ID: 10147294.
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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 concessioned assets 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 26 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.