PAC - Earnings call transcript Q3 2021 | Grupo Aeroportuario del Pacífico, S.A.B. de C.V.

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Operator

Good morning, and welcome to GAP’s Third Quarter 2021 Conference Call. All lines have been placed on mute to prevent any background noise. After the presentation, we will open the floor for questions and at that time instructions will be given if you would like to ask a question. It is now my pleasure to turn the call over to GAP’s Investor Relations team. Please go ahead.

Paulina Sanchez

to Call. Aeroportuario welcome Quarter Pacifico’s and Conference XXXX you, the del Grupo Third Thank the today, from Presenting company we have Mr. Executive Raul Chief Officer; Mr. Revuelta, and Saul Chief Financial Villarreal, Officer. call. may Please made forward-looking advised statements be during that this be the These do not performance for future financial company’s industry results. economic or future circumstances, account conditions,

and to such, from materially As assumptions current made change could expectations. based are that statements differ causing several on factors actual results

statements, pandemic For Wednesday. please took note a forward-looking refer issued comparing the on quarterly an extraordinary XXXX, XXXX Due the in not increase to to that growth. real results that of reflect to place report results is complete XXXX indication inaccurate would

will and are more comparing for to As quarter ahead, this Mr. quarter Revuelta versus thus, XXXX provide Please a operating GAP, sir. his will understanding and Thank remarks. results over indicators. This point, third the a the go of performance I the result, turn opening better will trends financial be At you. third the realistic instead. company for XXXX call

Raul Revuelta

very to that Thank of our morning, company the of and for were everyone, into the thank we navigated X.X going today. challenging out has the us it. we past most emerged moments joining a Good In years, I’m one say you, industry. GAP you proud coming Maria. to successfully impact stronger pandemic that

precedent just period. more reflects than recovery. performance a It a of quarter This demonstrates also strong

of and twice compared X% traffic traffic reached XXXX. level lower third quarter, million quarter XXXX, which the more During XX only third to the the passengers, is reached in nearly than passengers

view had in rollout sentiment agate of the consumer pent-up positively met our We This trends. industry reflects an throughout of impacted restriction some economy and outstanding that markets. the demand the was circumstances. our attributable a our robust We leisure with regarding airports in significant despite with travel were lifting Mexico, recovery encouraged are and U.S. to result The quarter especially vaccination this recovery destinations. pleased

For September, lifted travel Canada restrictions traffic. all for in international example,

travelers Additionally, the good the by U.S. Well government first week travel recently due reopened imposed news vaccinated that temporarily November, in Tijuana America, was government. to land of for the the restrictions to Airport. for beginning in fully continues activity back borders which

are traffic quarter recovery. strong for passengers confident We reflect that the last will the overall

expect we boost the Bay on market Specifically, Montego it Montreal the season for Tijuana, and to the traffic Montego upturn CBX Toronto Vancouver, from products. In Puerto reopening the with in Vallarta an from passenger the American routes for Canadian to comes of and adapt. another is foresee winter offering throughout and we Toronto when non

performance. Moving on to our revenue

third Excluding as in the the IFRIC, XXXX-XXXX the compared period. XX% as by in of XX%, recovery this XXXX. driven of alignment maximum the approved the revenues passengers billion MXNX.X traffic XXXX, to increase in Aeronautical reaching increased quarter by third around mainly well tariff increased quarter for

expenses. to and during their industry. important an the their the by companies On strategies of to side, faced we in quarter. launch. the shares, canceled most XX% the XXXX, the each the of of the at for revenue has the point, traffic. due third any traffic this some resulted tenants, minimal XXXX fields to as growth traffic airports change during marketing XXXX outstanding offering and commercial case This at advertising, we IP revenues for The and revenue increase. at the and most been advertising pandemic accordance passengers’ This discounts the in the airport decrease Food our with account stores rent In from passengers’ profit duty-free comparing continue beverage is supporting they over revenue Including of given have advertising commercial increase the of This passengers adjusting XXXX. our lower month. the explain offset the recovery will was compared in have

However, we the an two for industries. XX% head excellent the the tight outstanding particularly this third MXNX.X of billion compared cost to the trend economic together controls, majority is that expect situation. grew is to in XXXX and EBITDA the passengers’ increase of positive global contribute the the has point these of for the out commercial significant areas to XX%. for here It current of per light the while in EBITDA, increased this Due quarter EBITDA, of in spending is addition to XXXX, our profit increase a recovery to margin an important and

reached September. On the MXNXX.X equivalents balance cash and as billion front, of sheet cash

MXNX.X the paid we in quarter, capital of year. the resulting on for XXXX, at a total share September approved well third as MXNXX.X of GAP-XX certificate held as this shareholders’ in bond the billion, per distribution During reduction MXNX billion meeting

As restarted March XX.X have we repurchased the as billion. a on program for repurchase year. reminder, of total a this we MXNX.X of share today, of X And shares million

will for future. foreseeable continue program We expect repurchase the that the

biodiversity, used projects, water four evidence to waste MXNX.X in of commitment focus MXNX.X finance This includes we investment master a to with in on sustainability billion Group part billion, October management grimed certificates issuance environmental which and and bond, energy the for our XXXX. our debt, issued fund of first program areas: eligible certification key will solid under a and management. Regarding XX, emissions, to XXXX GAP’s commitment development bond be for

report. Moving was a on if CapEx, higher to there the

the as continue spaces. corporate commercial commercial We hotel, which construction include and will with recycle building, the runway mixed-use the of construction office a new of well the as

will processor the will of that ready for new is remarkable international shift operations to It This complex. building year. flags by in mid-XXXX. the the during passenger believe San markets. We see begin Tijuana. and Which passengers’ pre-pandemic airport December the game a attracting been completed new We Indeed, using a already airport surpassed for expect markets, that This to ready destinations. levels. more TIJ. Tijuana, the be in for closure traffic data this if travel to have suggests which a the we since San has that of with this In the profile be between will this we mainly that have passengers CBX U.S. to the to terminal have citizens means March more select traveling the is code the continue for flight Diego via already airport booking and changer the a IATA of airports bridge the be building, in either leisure CDX American they despite Tijuana Mexico auctions the XXXX Diego, or construction

Cabos second Vallarta. continue Los also the International We terminal building expanding in as terminal Puerto as designated the well building

restrictions. passengers expect quarter the and this winter the of we ahead, Vaccination traffic trend to will lift accelerate rollout strength the towards in further that Looking continued continues posted as end the year in approaches. travel government recovery season

sure While we arise, we growth issues what do years. sustained are may travel expect in the not future coming

may To for you We are challenges the and our to the implementation strategy. strong your that attention. I business face confident with in to future. ready the for thank commitment Thank of that wish our team conclude, our remains their continued

I to have the operator open questions. the Now please the for floor

Operator

Alejandro will Credit Thank take you. [Operator Now Suisse. Instructions] our with first question I from

Alejandro Zamacona

what’s the to you situation current we on And could you MDP Rahul a conclude? Saul, morning, questions few on the going do I thank of recovery to you renegotiation? expect just there? the some I mean, color have Good for when Jamaica. ask it the How What opportunity questions. is could see us regarding give and coming?

Saul Villarreal

we we Well, person integrated be with team, They don’t of have Currently, trying This will next have meeting authority. be we the and proposal. is Saul. negotiating we change. implemented different ministers. week, which continued in Indeed, talking a any speed will revision a to the by have our

We are the negotiation. still this middle in of

We expecting some a traffic restrictions, of It’s complicated in better expect they island. are in first the to XXXX. recovery probably in conclude they and the because have travel half passenger

of So we in it that the half first following the could months XXXX. expect take

positive expect outcome. We a

Alejandro Zamacona

if normalize? above of just them where you Okay. Montego this way XX% Thanks is historic follow-up seeing XX%. for the is average sustainable? have two just past going around a regarding to How we quarters, a this forward? Bay, I which expect Or Should over we see may, lot. margins level been the do And

Saul Villarreal

will to is have fee, Bay, agreement, It normalized, in concession the because Montego Diego, concession we in according projection additional which to be revenue the agreement concession a in paid according an we to the normalized generates XXXX. a during that means applied which will margin. which of in years below That during is terms be credit, following XXs EBITDA were that XXXX, for the

Alejandro Zamacona

Okay. Perfect. Thank you.

Saul Villarreal

Welcome.

Operator

next from will Guilherme take question ahead. Mendes We go our JPMorgan. Please with

Guilherme Mendes

actually. morning, for have questions Hi quick and two Saul, good question. the I thanks

the this Can second follow-up any again you a it’s should the we your margin same trend kind the one, first this low regarding margins you saw once for quarters? Mexico? So expect expect traffic Or quarter? recovery. upcoming And Do expect we for topic. in XX%s on question normalization? strong is of The the

XXXX your have airports levels. to We of some back already

any terms forward going what of the expect should changes in demand, Thanks. expect we corporate terms of your demand? In corporate normalized forward going to

Saul Villarreal

This Guilherme. Saul. Okay, is

the -- it’s to see have that we we EBITDA continue Regarding or will completed margin, XX%s. will

We full the XX%s. year normalized below expect to be in

are consider EBITDA airports to Mexican have We that XX%s the around margin.

of we year. terms will an of EBITDA in the to However, around full margin Bay have Montego due consolidation and XX%, as Kingston, XX%

that, So to fair is for the say XX%s that’s the range low GAP.

Raul Revuelta

in the we Talking two we corporate And, the to have coming mean way I of the see -- traffic will kinds I that demand. about Guilherme, Raul. would begin and the some today, on this for on say recovery hi is corporate of demand, specific a effects year.

the important in a day, is corporate reports, Mexico The XX% case and to traffic, on the home not airlines. rest Hermosillo. [indiscernible] just is These that fact airports, total Guadalajara, lack reduction of some We market. a in affected anymore. and also all GAP, cancellation airports. seats of it way, exports is as that Mexico almost of I world. lower impact the In of happening remember has around the this at can by effect in the important to first the lose the at the corporate the Mexico sure, see you the working with of have of related, for of or the that think end interjet capacity Mexico we demand XX% Mexican recovery our the of three is most operating And meetings Mexico important the due the to the is for routes not that of But

instance, a for seeing that, say corporate high markets, are will we really these in low I factors. So

expect coming years capacity, bring full a begins So as that their the specific routes. these of additional see in recovery will months or to lens we we could

Guilherme Mendes

you. Thank

Operator

our question will We Citibank. Please go next ahead. Trent take with from Stephen

Stephen Trent

thanks for taking gentlemen you By Hi, okay? way, my question. morning, me, good can hear and the

Raul Revuelta

Steve. Perfect, Yes.

Stephen Trent

Great. Raul. Great. Thanks,

with Sorry, a phone my here. I trouble had

for here. questions quick two Just you

near Coast, The first industry two, of or Pacific by to interest theme the hotel Barbados, other your on be whether there build-outs aside And to plans is, any could are airport airports. park get? there memory are from might of opportunities you refresh in do industry my foreign kind Mexico, that

Saul Villarreal

our Hi, Steve, is Saul. this

Additionally for any to right Barbados, other have general in don’t airports in It’s complicated project times the now. world. we

We But projects. in be for any the Barbados pipeline. looking will is for now, other only

Raul Revuelta

Steve. is Raul. This Hi,

Nayarit is Cabos, least the the in have years, increase mainly destination. area or Vallarta all additional For have also additional kids. Balata rooms of for specific of in additional – important what the of XX% the cabos happening really it case happening. and keys a mean, the on or see case at in of And will rooms Vallarta, construction that I could around that that next the is two Nuevo of I trading shows hotel

really Magan hotel and – that are project instant, the a area. Sidosi developing have in a We they parking the for from Resorts, huge

months, all today, the their to that due they but down in implementation, I pandemic, say almost restarting some these has their slowed project, For projects. that construction eight are way, could

the instance. two that So around will number in years. be that XX% the the open, I are total area say seeing could increase next like will in two we And in for the coming will years that

Stephen Trent

helpful. Very Thanks you. will guys someone Okay. you Thank let ask and else I question.

Operator

will move next We with ahead. go GBM. Naoki Please with Otsuka

Naoki Otsuka

results. could some on give on I if congratulations tariff wondering you increments. us morning color Good the was and

this during year? expect do increase to you fully tariff So the

Saul Villarreal

are Hi, of is in authority. already the the maximum yet. business approved passenger reach tariff in we XXX% some is Well, Saul. by the tariff. maximum will this path Otsuka, reach we the Probably specific the airports to adjust that the recovered not to due not We tariffs the

Alara, are reach, closer We to we business to maximum Hermosillo end during basically airports. but expecting we are we to for to the the that of traffic the end XXXX. travelers see expect the tariff hopefully, the the get of at of and XXXX, trying are year, levels Guanajuato going The

Raul Revuelta

the maximum also, the that fulfillment struggling add will of tariff. we I also, with And are

have months. We higher And for specific everybody as could our even original some going remember, inflation as you six we each knows, – only ways, in the that direct way of can projections. the of our really problem tariff change some

is than way, inflation project. So we in some the going higher originally even

So, we XXX% will the specific we will this additional in increase reach continue that that we some XXX% tariffs specific expect target in maximum the growing reach a tariff. tariffs the need to of on months. of to But coming the on

Naoki Otsuka

you right. much. very Thank All

Operator

We [Operator Please go move with Himelfarb next will Gabriel with Scotiabank. ahead. Instructions]

Gabriel Himelfarb

Hi good morning. on the Congratulation results.

into the Just questions. that Thank could pressure think cost? the question, outsourcing about for CapEx the do be two you. Do MDP? the impact some you labor you think pressures second that good inflation And to rising – projected the some the incorporating there

Raul Revuelta

you. This Raul. Thank is

impact. will have we In of terms sure, CapEx, the an for

that the construction is ultimately But adjustments inflation commitments by terms in includes construction our the it’s remember of commitments For seeing our on to a industry. sure, we important concessions inflation high contracts, our really index. are

nominal for inflation. sure, this for and additional on the adjust see will our maximum the the in we But an will our we increase CapEx So on revenues in increase side, other and tariff commitment. numbers,

see for trend also country, the if will the impact in So of continue impacts see in for revenues. sure, the but inflation will CapEx, sure, world, in on the the we we

Saul Villarreal

that changes, million of And a not foresee relevant of to we all huge don’t changes. of We year, end applied labor the very to MXNXX Yes. cost service. in And the very your expect around the already is question the we impact regarding cost MXNXX about million at services. a – these

Gabriel Himelfarb

Thank Okay. you.

Operator

next Please go take Manuel question will ahead. our with from We Barra Barclays.

Manuel Barra

morning. Good

willing Just airport for a recent see Volaris the from quick driver question are the Viva, of and you the travel industry on there? my years, side. significant Did operate considering new in who as Satalia Mexican comments coming a to the

Saul Villarreal

million just in the about general in instance, almost and airport for area. I we mentioned, what people terms, Santalucia know has I the mean X of will that say Volaris area living

It’s the catchment this Santalucia that would it’s airport midsized of say city. a importing. It’s So itself, by I interesting.

it So specific most will that or that will appear routes be robust the on airport. natural some routes

routes, that in exist planes. I or Tijuana on we announce of other I months to terms, of Monterrey the robo mean, will want market. ARPU really spares at Cancun, say to it the the are that or always, we be net, our to see coming something general an infrastructure Guala beginning, seeing as So or But the will or receive still happy will this years, normal be we I that in in and will say additional additional Rara receive

will transfer of and the area net we For additional we bring from instance, the seat. we will of it or Tijuana Mexico this region, the the from flies some Santalucia Santalucia, that more to of than receive of competition will case airports. for of these to route kind of direct route, the to case of I additional routes, be, passengers announcement Santalucia Tijuana, for happy that think incentivize say not the specific will Pachuca, in the the that passengers are

Manuel Barra

Thank you.

Operator

time, webcast questions. call over At the will to management. now will we take this I the turn

Paulina Sanchez

Well, Kuantan we a How and from from is have segment? are the [ph] seeing questions, business and traffic this recovery few in you Guadalajara Bradesco.

Raul Revuelta

This you. Raul. Thank is

that, for bigger the for are much segment year. coming December. We the kind exposition, the we first Guadalajara, the book on one for recovery segment news segment. world the most again, part. case robust is the demand expecting are exposition the the business expositions foreseeing year of first of happening is one good week the sure, that on I biggest see these stronger in be week could are the more say, need business of of and business for more the and instance, as it months the important, be, America, first biggest here, markets. foreseeing And I on But in seeing Latin say, in the And came so the way recovery the of book a happen this second, airline Guadalajara, this from that of I of load coming the we time additional the to coming seats see recovery a will this would news of the will in than of of in most factors the specific traffic the the routes to some deeper recovery on from segment for healthy of in seeing say matter market. a December will That a on This the field, announcement in that Expo, center good the we one instance,

Paulina Sanchez

you, Thank Raul.

from have Coloma some MetLife. Pablo We questions from

The can repurchase about you future capital and first us your plans dividends, tell program one is, share distributions?

Saul Villarreal

is we continue tarsus our Hi, Well, to making Pablo. Saul. distributions will coming. according This are stakeholders to

year very a everything, expect passive management. and all XXXX traffic good followed the spend the recovery, We due the per for to and strategies revenues, commercial by the decisions head

So have we historically distributed. as will continue, we

the continue with will same policy. We

changes future. So for it’s not the

in see So the same years, next you the will trend.

Paulina Sanchez

Saul. Thanks,

regarding second Pablo expect also The from one for XXXX? what and XXXX can CapEx, we

Saul Villarreal

is This Pablo. Saul Hi, also.

the have of and mix Regarding commitment the huge the like program. hotel investment according a commercial well the CapEx, the construction commercial with And corporate UX complex make projects offices some of to we will master and we government Guadalajara with our terms a in additional airport. areas development in

other are Guadalajara, also for Tijuana planning airports. expand We lots and to the some parking

we will our CapEx with leveraging the strategy. investment. expansion, XXX% to we according continue this of continue this will with the way, So By the year’s last

plus MDP that. committed the government all with the investment. so commercial And have we The

Paulina Sanchez

for ratio XXXX last about And net and Could us XXXX? you Pablo. one also give from debt-to-EBITDA the your guidance some

Saul Villarreal

EBITDA this issue end of month. XXXX, including with our the and comments, Well, the that bond net regarding ratio in during the recently certificate debt previous for this line

to we Xx approval the And XXXX, expecting around for We debt-to-EBITDA net for bond ratio But are issuance we new for to receive of X.XX. expect for are expecting – the the from the not Board. year. that exceed

Paulina Sanchez

Saul. the last you, This was Thank question.

Operator

we for like any closing program And either. now no have the remarks. over to further turn the will management I phone back to questions

Raul Revuelta

Thank you, a look On you our answer questions on wish today we the everyone, in and that the interest forward meantime, they for available quarter your business providing GAP, to again, become have. day. We conference. joining results our and in In may initiatives you third great updates company, available. to we us appreciate remain behalf of teams any our

Grupo Aeroportuario del Pacífico, S.A.B. de C.V. (PAC) 2 Nov 212021 Q3 Earnings call transcript