OMAB - Earnings call transcript Q4 2021 | Grupo Aeroportuario del Centro Norte, S.A.B. de C.V.

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Operator

Greetings, and welcome to the Grupo Aeroportuario del Centro Norte OMA Fourth Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note that this conference is being recorded. I will now turn the conference over to our host, Emmanuel Camacho, Investor Relations Officer. you. Thank

begin. may You

Luis Emmanuel Camacho Thierry

certain morning, which that call. that to may to Ricardo could which impact Participating and Pérez to beliefs the may reminded opening of CFO, Good of the number XXXX his discussion based our and materially, Dueñas; fourth on earnings Ruffo today that be control, Please a conference today including beyond remarks. call for are differ forward-looking be subject Pliego. made factors actual our everyone. you. include during cause of and OMA’s course will expectations statements, results COVID-XX. over Welcome constitute to uncertainties now quarter and Dueñas statements are risks the Ricardo I Thank our management CEO, current turn

Ricardo Dueñas Espriu

Thank everyone. Good appreciate us joining morning, who today. you, Emmanuel. We

am by deliver notably, passenger traffic I Let performance. the me results that quarter, pleased begin for our to saying strong

business generation in Our our quarter this revenue highlighting then full our ability will have to call. worth on cost results. full expand of I across move highlights, our first to units in results I and XXXX disciplines XXXX main describe on resulted remarkable year our will all

each airports different markets destinations. levels. year prevailing we below worldwide. a expectations, billion, compared related XXXX have delivered XX% results XXXX, am Ps.X our benefit consistent challenges adjusted EBITDA quarter, the our recovery of as VFR to X% results in I to of as annual and at In mostly proud OMA’s adjusted strong record-high Our reflect XXXX, a our regional financial stood own XXXX financial our traffic as of unprecedented ability leisure million from despite outperforming EBITDA our grew with domestic all well XX margin only XXXX in below still outstanding XX.X%. and passenger operational and year, In funds. Notwithstanding was XX% to

levels. business destination XXXX our Mexico of for to X% you to improved a route example, give the me in second Monterrey XXXX XX% To and and to XXXX For same went example, It Cancún highlight first versus in is quarters that route Ciudad routes. quarter already was to to above observed our XX% XXXX, half we Monterrey an in Mexico by the important a quarter fourth Juárez above Chihuahua from of are in XXXX, City levels. XXXX routes minus minus

number versus lot increase On airports the front, of performed our commercial to well. higher XXXX. served us our XX% by revenues a revenues in A passengers parking

benefited revenue the of In improved of tenants commercial year. growing tenants performance we from our sales with versus spaces, terms share from previous XX%

structure. ahead on capital financial and to represent lot a performance cumulative XX%. coupled our significant December our skies dividend and objective January amount to of Ps.X.X December with of yield distributions our optimizing XXXX, Importantly, January and which a in aligned are approximately clear make distributions over XXXX The billion

contributors. third terms, main fourth total the absolute and our during which traffic million X.X performance. was reached to Turning In were Culiacán Mazatlán, X% our above Monterrey, passenger quarter quarter quarter, the

fourth that the of airports at The recovery passenger XX%. passenger XXXX, traffic quarter have Juárez, to compared Ciudad full As Reynosa. and was Mazatlán traffic stood

Ciudad route; Cancún in Mexico fourth of Juárez and were XXXX its volume are of the City the on quarter performance traffic Villahermosa greatest during Mazatlán and In [ph] its on those route Tijuana Monterrey its route. experienced terms versus on quarter growth the terms route;

the by at beginning our January due positive passenger Finally, of variant the uncertainty to the cases and in decelerated rise year. Omicron in level recovery XXXX, traffic caused

week. improved continue this same in of recite. X versus and to after traffic We to XXXX the as expect passenger year following the of February traffic XXth week XX% has during weeks rebound passenger has levels year, to increased percentage From terms contagion

to of fourth to XXXX different our quarter cost billion quarter operating versus the business a to allowed operational Ps.X.X traffic on units increased coupled of fourth with XX%. us margin X% Adjusted expansion Turning strong our results, our of discipline during passenger with performance our deliver revenue the results. quarter EBITDA

front, This the commercial and revenue the revenues [ph]. second On XX% observed increased mainly business XXXX, travelers in stays higher Ciudad penetration long fourth of the dynamism Juárez Monterrey, quarter in we to versus and doubled compared Parking XXXX. the observed higher levels in Chihuahua. reaffirms

steady Occupancy space a the revenue the growth. third XX%. In of was addition, the in Diversification contributed terminals path. increased advertising XX% reflecting of restaurants, and commercial end our most XX% in quarter, retail also quarter rate at recovery the for to compared

services this to Our mostly hotel on OMA growth. Carga contributed

ground the was XX.X%, the Hotel Carga XX.X%. X Monterrey Inn Terminal Garden tonnage XX%, XX% and performance quarter Collection another of XXXX, import airport the revenues. in rate Revenues of occupancy drove revenue quarter while increase versus outstanding XXXX. our with in an was a NH OMA at increasing fourth of from handling During Hilton handled had of cargo resulting increase Hotel quarterly of the custody fourth at

quarter the maintenance investments, Ps.XXX expenditure On front, investments in and MDP investments strategic total were including capital the major million.

X,XXX major We A, and Airport meters. remodeling continue the of we Monterrey expect side expanded in to spring of an Terminal the with expansion area square land about open a

our and detail that, for in building; with terminal our Pérez to over airports. expansion major platform turn related financial the of over the XX terminal the investments Zihuatanejo modernization reconfiguration remodeling the solar terminal And remodeling we’re building; projects: green airport; the terminal Additionally, at highlights following Ruffo Tampico will Juárez reconfiguration panels now of of call the to of building; working quarter. Monterrey and I the more the the Mazatlán expansion on Ciudad on the building; of Pliego

Ruffo Pérez Pliego

Good results I will then briefly our we call open for Ricardo. financial everyone. will the morning, you, review Thank questions. your

expense materials EBITDA airport our end than financial traffic. all and revenues Parking XX% was due retail with revenues the increased XX% fourth to relative the G&A in billion as XX% to in Monterrey, OMA’s an service to items result revenues and as mainly highlighting Mexico expenditures reached last passenger payroll quarter fourth cost labor contributor. OMA’s expense, line to XX% increased in in due G&A regulation growth in revenues Diversification Juárez a sharing. the that revenue only and mainly the largest respectively, revenues our and increased retail XXXX, to Commercial XX%. the electricity, investments. Ciudad granted XXXX. quarter XX%. worth MDP X% of The driven of airport of highest of increased higher changes the parking, overall the XX% and advertising. XX%, and it’s revenues higher is XXXX XXX% XX% of penetration Ps.X.X higher well and result which higher billion, of due from of last the XX% year. XQ being a were the activities year, Turning non-aeronautical fourth Construction and increased XX%, and and of expense airports. relative to by result increased as quarter that previous revenues aeronautical our services adjusted was were advertising airports. Total a categories activity margin grew of increased Nonetheless, Ps.X.X as versus with restaurants, XX% adjusted during of quarter cost the increased in and quarter increase fourth EBITDA increased during revenues in discounts quarters, Non-aero results, Restaurants, in quarter aeronautical Chihuahua increased commercial XX% the growth and

exchange Our XXXX. financing Ps.XX expense compared an FX was loss which benefited XQ largely to was million, from gain an as in

billion strong. position was consolidated net quarter at billion. income a fourth remains cash and end the in stood activities financial to the Ps.X As Ps.X.X of Cash Ps.X amounted OMA’s billion. at from operating result, generated the quarter

which loans Ps.X.X Ps.X.X of we During amounted a short-term quarter, Total paid debt includes billion the dividend. Ps.X billion. to billion,

debt call at X.X of stood at to the our please adjusted for questions. quarter. open remarks. net Our concludes the EBITDA times the end prepared Operator, This ratio

Operator

we conducting question. Thank with a question-and-answer this state first question your will you. session. be Instructions] Our Alejandro Zamacona comes [Operator Suisse. Please time, from Credit At

Alejandro Zamacona

amid confirm A incorporated thank my that Ruffo, aeronautical Thank you. for being when higher – And tariffs, which for in would negotiation, expect we was understand Hi, the implemented since what Ricardo, are already you what have you. you since question you that MDP XXXX on the for And taking then Yeah. Thank partially just I the charged? Emmanuel, margins? they fares questions. XXXX? can quick so,

Ricardo Dueñas Espriu

Yes, thank Alejandro. you, Thank you.

executed we the everyone month. approving them in the in inflation in it XX% that couple as year thing, maximum that them of real year year. on be it said how we what yes, did we implemented were January, for at much slightly this remembers, last in And We same to was it this around would we be going and by was XX%. start This February, So weeks above the We one the tariffs. being X really increase increase were XX%, we for will would a reaching will a ago depend and for tariffs, we’ll increase executed tranches.

Alejandro Zamacona

that but margins what cost? that what same X year remember this the assuming be Okay, be would I offset tariffs after can type And could reaching here? conference in – higher mean you you. sustained, that Ricardo, in for by the the in Or call, that so these in saw expect – higher last XX% margins tariffs, a around those am catch-up last missing mentioned could you these we line, the we for thank what open quarters? that margins Are

Ricardo Dueñas Espriu

No. XX% we’ve forward. that that believe We going sustainable is mentioned

Operator

you. Thank

Our next question. from JPMorgan. Please with question state comes your Guilherme Mendes

Guilherme Mendes

question. and for questions. Hey, Ricardo, my Thanks I taking Emmanuel. X Ruffo have

of by early calls on first XXXX terms to one is about mentioned The last the traffic. back XXXX. being recall figures in I you

your if impacted the if by Just dividend how think your wanted in leverage And numbers? Thanks. we case, second means? should terms allocation, policy consider check low your capital to of going the question expectations double that’s especially Omicron forward still

Ricardo Dueñas Espriu

XXXX expect you, below Guilherme. for X% we traffic X% this be Thank Yes, levels to passenger from to year.

expect quarter of ordinary dividend be that above as And that Ps.X we’ve same year this However, billion maintain the past. expect to the XXXX. to we maintained the on of for our dividend we traffic – passenger in dividend quarter by third the

Guilherme Mendes

Thanks. it. Got

Operator

your GBM. Javier state next question Gayol Our Please from comes question. with

Javier Gayol

that made was Hi, thanks the the questions. in my and XXXX you net capital have? given of you Emmanuel, wondering previous that your optimize to structure I and one to the comfortable capital to of follow-up remarks any or taking the your question regarding feel changes It’s seeking that the you a in Could you’re of And with and say, closing Ricardo, for mentioned net debt debt level which terms EBITDA, company. Ruffo, allocation, be during you with? to other bylaws, let’s might leverage

Ruffo Pérez Pliego

Javier. Sure. is This Ruffo. Hi,

billion January. XXXX paid in the reflects of So dividend of that was Ps.X.X the numbers year-end the that middle

end the ordinary EBITDA. would of this expectation Ricardo base mentioned. to the around X.X case net billion the would June, I’m time Ps.X that maintaining in of as summer, our X in addition So around adjusted same debt-to-EBITDA, by times we We up year, proudly around dividend end at estimate of speaking

Javier Gayol

Okay.

this what you looking you’re – seeking basically happened to increasing or what into mentioned incorporating that right? over debt XXXX, means billion for just is has basically Ps.X.X not the that the So company,

Ruffo Pérez Pliego

correct. is That

it think continue financial I to insights, of I going use harder acquisition leverage. depends think to of be any without leverage on increase to proceeds it’s

Javier Gayol

congratulations that Thank the and you. report, Thank year. you great very much for on

Ruffo Pérez Pliego

Thank you.

Operator

next comes you. your Bradesco. Please Thank Rodolfo Our Ramos question from with question. state

Rodolfo Ramos

my bit one. that resuming you’ve Good Monterrey that from the little is pre-pandemic was route And question. XX% a to follow-up below to morning, what January, saw question But the Mexico route. of My taking [ph] we just down a traffic color hear announced GAP want Monterrey, levels. XX% [indiscernible] encouraging and more get seen for also gentlemen. on I February, is already Thanks that it to

perhaps on I Guadalajara, Thank business this a follow-up wondering routes So any these like that how new tariffs Monterrey, routes? then legacy year, other I question. so can on just provide color And and you you seeing have you. far

Ricardo Dueñas Espriu

Rodolfo. Hi, Sure.

we towards we’re with months. we we’re see contagions improvements. maybe towards as we do for days there – looking are mean, January, markets, end coming crews, in February, see flight which of the and And been the signed we flights over year. starting the deceleration the weeks fairs travel – like they performance already the those of In is speaking subject business improved all to first of XX the routes, that have for and to So is from of And respect I and seeking that events, may as and saw are following to in-person so do to a conferences doing [ph] February, I some for of we Omicron generally that corporate I on mean, think variant, And much planned an attribute the months. that to – our were in indication trade which so. also towards we’re specially resulting pick-up [association] not summer able not cancellations summer that of had people on events. lack we events,

So to better much than we would expect saw routes a last performance have year. what busier we

Rodolfo Ramos

maximum Thank you. on a the And tariff just the question. tariffs follow-up on

you this So increase XX% year. mentioned implemented you in an

So if would what year? would look taking revenues how growth terms short, percentage reach much in How that could much be of to account, a at be short maybe mean, to maximum this tariff you this into to just on want it be? you I the see year, the upside as

Ruffo Pérez Pliego

end a you of the of around around the that Yeah, as up XX% X.X% we the know, ended last year, of up the much in that result tariff. obviously, was so for increase ended XX.X% implemented all at inflation February, which recovery unexpected maximum the for year. towards Despite XXXX, year, we of at

to aims that that of increase we for lot have nominal year. So the the plan

middle get XX% mentioned, to another implemented around to we mid-single-digits, think XXXX. charges. for February, received As the recovery inflation can Ricardo that I we increase in the in towards And that XX% of already extent passenger

Rodolfo Ramos

very Okay. much. Thank you

Operator

with next Please Our your state question. Barclays. Pablo from comes Monsivais question

Pablo Monsivais

taking question. thanks Hi, for my

some recover? per protocol? shouldn’t margin Just pre-COVID. for it. XX% we XXXX, revenue should the to commercial for fourth higher thinking slightly kind if a color XX% why this leverage you level this think this about assuming reason? appreciate corporate can expect So that expecting you traffic passenger of you also I’m giving are still thinking traffic, some follow-up cost Or is you. And example, still below quarter, there’s the margin do EBITDA passenger is in would there on you be in I level easier maybe unsustainable mentioned. be that passenger has provide wonder the Thank higher considering higher per operating some passenger And why the that

Ruffo Pérez Pliego

point would we Sure. be Thank north around slightly basis would Pablo. you, relative the which of to achieved improvement this XXXX. be to Yeah, for XX% expect margin in XXX margins year, overall a

So we do margin expansion. see some

maintenance. costs, our and terms as inflation energy, yes, base, labor some In experiencing such cost we’re in of of

expansion XXXX So above than given mean leverage. be I might be there would couple basis we points margin the operational some full more XXX the it think a slight year level. wouldn’t But of

Pablo Monsivais

thank you. Okay,

Operator

Citi] Please from question [ph]. [Philippe next Our comes Nelson with question. state your

Unidentified Analyst

for side. thanks I have my And everyone. on my Hello, X question. taking questions

what one is, for my first refresh little index the if interplay correlation, between do I’ll next tariffs. you any? following. airport memory look a If The the there’s can us an there’s be regarding and oil one prices And to if and would any

Ricardo Dueñas Espriu

that increase, based tariffs one index, to direct terms charge under oil correlation price producer So contractual airport between the the components. maximum oil in framework, a direct the excluding and of there’s national no tariffs our regulatory increase can the were prices, charge allowed on

prices. be maximum not oil So linked the target to increasing would

Unidentified Analyst

second year-over-year one expenditures hear maintenance the we also you maintenance competitors about why regarding have at pipeline see and to experience? decline a little expenditures especially like so you. a to is I’d customer when Okay, much the And increasing help of thank provision, the maintenance provision. talking

Ricardo Dueñas Espriu

Sure.

and of maintenance taxiways, provision Ps.XXX That Our in Ps.XXX replacement and major our a primarily as of MDP in involves XXXX around year XXXX maintenance, the of pavement for increase investments XX% period. for million amount full our surfaces greater actually runways reflects which to case, from to the works part million. committed

Unidentified Analyst

Thank Thank you very much. you.

Ricardo Dueñas Espriu

have provisions new year. just at the by XXXX, plan And to what quarter towards started authority end we clarify, of make approved of MDP fourth to last the in already Okay. the was

the reflective towards was new as that our last quarter approved the end provisions increasing of plan result a year. XXXX last the of So of

Unidentified Analyst

you Okay, for great. Thank the answer.

Operator

Thanks. from our Murguia [ph]. And [Edson next Go Samik] question with comes ahead, please.

Unidentified Analyst

you Thank for good questions. morning. my Hi, taking

if to provision comfortable Just is is may. division, get maintaining trying about X there the going number I you I feeling in specifically with. questions, to that if it a are maintenance understand just be didn’t

quite because explanation. the to it didn’t Just understand I get

[tier in that, companies and second the Europe, on mines] most probably, establish do you between or have and The international question in routes pipeline [ph] something other expect other it don’t similar that it maybe is, a are countries, quarter. or you related of I of full Monterrey Thank routes, the Canada onto you.

Ricardo Dueñas Espriu

on destinations existing like in have do that other question, this Coast. that have our sounds conversations At we our have Monterrey, we with mean, particularly the airports, it advanced last Pacific airlines the personal Aeroméxico, new leads to I So noisy. question, as increase leads fairs, mentioned not to usual And productivity only in the into also such airlines important the more with trade U.S. to service time, we events and international the Daedalus airports. – to our first [ph] and attend I But, with a your new Volaris was expand into we as bit connection respect constantly have airlines, and bring but

So repeat if it, you could please?

Unidentified Analyst

That provision. a Sure. follow-up the was maintenance

you trying XXXX, I provision I understand try from million on in So to are Ps.XXX average? comfortable, on of provisions So on to comfortable you around understand of to which are maintenance equates level will which average in was XXXX with? maintenance level average

Ricardo Dueñas Espriu

discount we indicator in discounted years. few the [ph] it’s we [pavement comfortable next good what in provisions few think is standard investments for following the our that in level given expected the worth make XXXX the commitment surfaces] probably It’s accounting rate. that need with, our for But at to a are MDP, next I certain years a

Unidentified Analyst

on Okay. the you. And That’s congratulations helpful. Thank amazing results.

Operator

Our Scotiabank. comes Himmelfarb your with Gabrielle from [Operator next you. question Please question. Thank state Instructions]

Gabriel Himelfarb

good call. Thanks the for morning. Hi,

to route you color you bypassing this new Canadian Thank of airports year travelers? quick destinations and think could creating airports, be Canada, about, us this City shifting Canada. from rather or coming Mexico it’s that you’ll you routes? question demand route question opens to open Monterrey generate new international Mexico new just the Do about other Do that bit And you. second Madrid. example, there’s for [agent for you a from openings you so the Monterrey Can model] from to from think start long-haul open XD do city will routes toward more route like, think, [ph] going more year about Just network give than believe a new like openings.

Ricardo Dueñas Espriu

Yes. Thank Gabriel. you. Hello,

we routes. will new the far X routes. brand So national are Yes, so those of those, Out for routes. new X destination origin are the first incorporate XX Out are XX, question, international. rest of and

going During the Canada. we’re half, first those to to are open international

we believe an room there’s improve second on yes, City. that alternative as So cannot metropolitan to behalf try to Canada. more intention question, it is in for become speak still saturation the of airlines, of but to we’re seeing area the to our we for definitely your And Mexico

hubs And with trying other the so, of out yes, conversation regional to that’s our having we’re make airports. airlines

Gabriel Himelfarb

Okay.

how many – Just to routes Canada?

Ricardo Dueñas Espriu

X – No.

as so today. new Sorry. It’s X routes of far

Gabriel Himelfarb

Okay. very Thank Thank you. you much.

Ricardo Dueñas Espriu

ones, U.S. So one Canada, are and out to of those Cuba. international to the X X to are

Gabriel Himelfarb

you. Thank Okay.

Operator

next comes question. from Our Bradesco BBI. with Ponce Please your question state Juan

Juan Ponce

I you but question. you. don’t just if taking EBITDA a Thank expecting wanted sure. Thank for bps, mean, know Hi. margin the expansion XXX my XXXX, heard make clarification to I regarding just I adjusted you’re

Ruffo Pérez Pliego

Sure. second. Give me one

we XXXX have margin. For full year XX.X%

that not So as would be expansion the we would expect more for than XXXX. yes, – probably

Juan Ponce

Okay. much. Thank you very

Operator

JPMorgan. state Guilherme Please with question next comes Our question. your from Mendes

Guilherme Mendes

question. for thanks follow-up the guys, Hey,

guys, make Airport. crew please of the terms In about sure you strategy, Barbados

being, current situations onto as what in the Just double Thanks. regions be Brazil? and check if guys wanted may to you auction in such interesting

Ricardo Dueñas Espriu

months, restarted. and this continue the America. respect the Caribbean, of for regions, placed Central given some it. case a of of interested But So to of In several with the airports, hasn’t we’re quite guidance it’s them them process And South certainly the would if in on at Barbados in of we to a on Brazil, process be has interested whereby very group been of few large, the some small. structure other be America, concessions, hold provided when time government Barbados and quite

decided have participate social to We processes. those not in

Guilherme Mendes

Okay, Thanks. clear. very

Operator

you. Thank

state question. next with Lazi Loian] [Federico your Our Please question from [ph]. comes De

Unidentified Analyst

the Hi. from Federico Loian. De Good for culture. question, Ruffo. A Lazi of Thank morning. couple you

one tariff; the question… when is terms? in in The real just first is XX% The mentioned you to terms second check increasing this nominal or

Ruffo Pérez Pliego

nominal terms. It’s

Unidentified Analyst

Perfect. terms. Nominal

Ruffo Pérez Pliego

– versus into terms the of Nominal tariffs XXXX.

Unidentified Analyst

level is line quarter to Perfect. go third And do XX%. commercial capacity enough of you I in when see against of even increase revenues, if this when the the you’re minus second have Perfect. almost the XQ continue you to year? of you or see Do your commercial – XXXX same one XXXX, revenues flat traffic’s to

Ruffo Pérez Pliego

commercial – end year, was it pandemic, we around occupancy the ratio year XX% last to of room or to well we of end Yeah, at around XX% XX%, XXXX the occupancy Probably our was expect we see improve to above this would before that. ratios. the for the expect end for

to passenger So we and revenue revenues. commercial I greater we mechanisms a sharing occupancy, have our with that provide improved tenants, think increase demand support the good

Ricardo Dueñas Espriu

taken And traffic also I and that commercial to hadn’t last seen result less seeing see, if due with couple I pandemic. the may up, some revenues same COVID what we’ve seeing years, been probably of measures the the you’re with of also reason in you’re the

the of these lounges. locations. contracts commercial process the measures, conducted increasing We VIP for in Some optimize the percentage cetera. operation we some of direct revenue, new of is, some et by took We competitive example

Unidentified Analyst

the last fourth that in learnt. in the you against revenues have grow? a [guys question have – the quarter. business do the the never and you I industrial know And you you to if This Okay. services, How fell been] of In third plan, room much in new may. is you quarter [ph] in

Ricardo Dueñas Espriu

So that third yeah, opposed quarter partial to rents additional as that for in fourth quarters case some was the quarter. the kick-in

capacity. after meters. of XX% probably around square being its at would be building And which that park construction We’re of currently the is done, currently around industrial other new one XX,XXX warehouse like

some of So couple in as the to room well next there’s still grow years.

Unidentified Analyst

so you Thank Okay. much.

Operator

to management further questions There you. for this the you. are call closing Thank no time. Thank at I’ll back remarks. turn

Ricardo Dueñas Espriu

Thank Ruffo, always in day. you and of and and questions this hope want to thank have I you good answer call. available you see Emmanuel are all a to again for soon. we to your I participating

Operator

conference. Thank a great concludes disconnect. Have you. today’s may parties This All day.

Grupo Aeroportuario del Centro Norte, S.A.B. de C.V. (OMAB) 23 Feb 222021 Q4 Earnings call transcript