Grupo Aeroportuario del Sureste SAB de CV
BMV:ASURB
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
391.05
608.86
|
| Price Target |
|
We'll email you a reminder when the closing price reaches MXN.
Choose the stock you wish to monitor with a price alert.
This alert will be permanently deleted.
Grupo Aeroportuario del Sureste SAB de CV
You don't have any saved screeners yet
Good day, ladies and gentlemen, and welcome to ASUR's First Quarter 2022 Results Conference Call. My name is Orlando, and I will be your operator. [Operator Instructions] As a reminder, today's call is being recorded.
Now I'd like to turn the call over to Mr. Adolfo Castro, Chief Executive Officer. Please go ahead, sir.
Thank you, Orlando, and good morning, everyone. I hoped you enjoyed the recent holidays with your family and friends, and you're looking forward for more such occasions now that pandemic appears to be ending. Additional details about the quarterly results can be found in our press release, which was issued yesterday after market close and is available on our website in the Investor Relations section.
Let me remind you that certain statements made in the call may constitute forward-looking statements, which are based on current management's expectations and beliefs, and are subject to a number of risks and uncertainties that could cause actual results to differ materially, including factors that may be beyond our company's control, including the impact from COVID-19.
Starting with the annual ASUR's shareholders' meeting, 2 dividends were approved last week in addition to an ordinary cash dividend of MXN 9.03 per share. We are also paying holders of ASUR's Series B and BB shares an extraordinary dividend of MXN 6. Both dividends will be paid in a single installment on or after June 1 this year. This represents MXN 4.5 billion payment.
Before we move on a review of our results, let me also note that we recently published our 20-F report and the 2021 sustainability report. Through the COVID-19 pandemic, we used the time as an opportunity to reflect and determine where we could best improve ASUR's ESG performance for the benefit of the company and all of our shareholders. We decided that most significant group level targets and objectives that should be implemented in the short and medium term are as follows: establish a Board level Sustainability Committee; setting a target for emission reductions and energy efficiency, including the installation on both on-site and off-site solar power generation; supplement our water consumption with systems that capture and use rainwater; promote greater diversity on our workforce and the company's Board; ensure equal compensation between genders.
It's important to note that all of these objectives were presented and approved by ASUR's Board and to help ensure that incentives are aligned with the ESG goals and commitments, 5% to 15% of the annual performance bonus of the executive officers who have ESG responsibilities is based on them meeting their ESG targets. Our long-term objectives include achieving carbon neutrality by 2030, with 95% of energy sourced from clean renewable sources.
Notable improvements to ASUR's governance includes the overboarding. These are just a few meaningful ESG improvements we are making. I invite you to visit our sustainability report to learn about many others.
Now moving on to a review of our operational and financial results together with some color on travel demand during the quarter. Starting with passenger traffic, total traffic was up over 70% year-on-year and surpassed first quarter '19 levels by nearly 9%, reaching close to 15 million passengers driven by growth across the 3 geographies. While the Omicron variant mainly impacted travel to Mexico, Puerto Rico and the slow pace of recovery in January, we saw better performance starting in the second half of February.
Again, this quarter, Colombia posted the strongest recovery, exceeding first quarter '19 traffic by 30%, with similar growth rates for domestic and international travel. Puerto Rico also performed well, with traffic up nearly 4% against first quarter '19, mainly driven by a 7% increase in domestic traffic while international traffic continue to improve gradually, reaching 78% of the first quarter '19 levels. Traffic in Mexico first quarter '19, beating the levels by slightly over 3%, driven by similar growth rates in both international traffic and domestic traffic. Domestic traffic at Cancun Airport increased nearly 10%, while international traffic was up mid-single digits, supported by the harsh winter season in the North America and continued recovery in the European passenger traffic, particularly in the second half of the quarter as concerns of Omicron declined.
As anticipated, we are also seeing a recovery in European passengers, although somewhat dampened by the Omicron variant. However, it remains to be seen how the war in Ukraine will impact Europe's economy and the rest of the world. Although the rate at which Mexico's economy recovers is unknown at this time, we expect domestic traffic to continue its gradual recovery. The lifting of other countries' travel restrictions and their own economic recovery are also expected to benefit our Mexican airports.
As noted in prior calls, business travel is expected to lag the recovery in leisure. Therefore, we expect traffic at our Mérida, Veracruz, Minatitlan and Villahermosa airports, which were an average of 18% below 2019 traffic levels this quarter, to recover at a slower pace. In short, we remain cautiously optimistic about global travel demand and travel is not hindered by a fourth wave or higher jet fuel prices or other forms of inflation. We expect total passenger traffic to reach 2019 levels by the second quarter this year.
Looking at our balance sheet, we maintain a strong capital structure and a healthy debt maturity profile. We ended the quarter with cash and cash equivalents of MXN 9.7 billion, nearly 14% above December '21 levels. Mexico and Colombia contributed with MXN 1.7 billion and MXN 328 million in cash, while Puerto Rico reported an MXN 824 million decline in its cash position.
Net debt to last 12 months EBITDA was 0.3x at the close of the quarter. The interest cover ratio at 1.2x. Also, only 3.4% of the principal debt payments are due later this year. Accounts receivables were up 22% year-on-year, an increase of over 100% in Mexico reflects increased business traffic activity, and partially offset by declines of around 90% and 10% in Puerto Rico and Colombia.
Moving now to the P&L, starting with our top line. Revenues ex construction increased 90% year-on-year, reaching MXN 5.2 billion in the first quarter and were up 31% when compared to first quarter 2019, driven by growth in aeronautical and non-aeronautical revenues. We saw improved performance across geographies, with Mexico accounting 71% of the total ex construction revenues in the quarter; Puerto Rico, 17%; and Colombia, 12%.
Commercial revenues increased 92% year-over-year driven mainly by the 87% recovery impact of the traffic with increases of 108% in Mexico, 53% in Puerto Rico and nearly 83% in Colombia. Commercial revenues per passenger reached MXN 121 in the first quarter, above the MXN 108 reported in the first quarter '21 and MXN 105 in first quarter '19. By geography, commercial revenues were in the range of MXN 146 to MXN 149 in Mexico and Puerto Rico, and MXN 41 in Colombia.
We also saw an improvement in traffic mix this quarter, with the share of higher-spending Europeans back to levels observed in 2019 and with the continued growth in the U.S. tourists. The share of domestic traffic returned to 2019 levels, while the major difference is that the number of Canadian travelers, which is still far below pre-pandemic levels.
Operating expenses ex construction were up 30% year-over-year and just 5% higher when we compare with first quarter 2019 levels. This was significantly below the 91% and 31% increase in revenues ex construction when compared with first quarter '21 and first quarter 2019.
In Mexico, ex construction increased 37% year-on-year, mainly due to the higher technical assistance and concession fees, resulting from higher revenues and EBITDA, along with the higher cost of services. Higher cost of sales from directly operating stores are also contributing to the increasing cost as many passengers are buying meals to go at our convenience stores instead of going to the restaurants. Compared to first quarter '19, operating cost and expenses ex construction were up 26%, with revenues ex construction up 33%.
In Puerto Rico, costs were up 21%. The quarter benefited from a MXN 9.5 million high reimbursement of expenses on the Coronavirus Response and Relief Supplemental Appropriations Act, when compared to the recovery in expenses under the CARES Act in the same quarter last year. When compared to the first quarter '19, comparable costs were down 20%, while revenues increased 20%.
Finally, expenses in Colombia increased 23% year-on-year, mainly driven by higher concession fees from higher travel activity. Compared to first quarter '19, revenues were up 29% while cost declined 9%, both ex construction.
With regards to profitability, consolidated EBITDA was up 130% to MXN 3.7 billion, with increases across countries' operations. Mexico posted a 149% increase in EBITDA reaching MXN 2.8 billion, while EBITDA increased 41% to MXN 502 million in Puerto Rico and 229% to MXN 323 million in Colombia.
Compared to the first quarter '19, EBITDA increased 38% with increases of 38% in Mexico, 19% in Puerto Rico and 95% in Colombia driven by strength in the traffic growth, increased commercial revenue per passenger, higher tariffs and operational leverage.
Adjusted EBITDA margin ex IFRIC 12 reached 71% this year and over the 59% posted in the first quarter '21 and the 68% achieved in the first quarter '19. By country of operations, compared to the first quarter of '19, adjusted EBITDA margin expanded 219 basis points in Mexico to nearly 76% and by 18 percentage points to 62% in Puerto Rico, while Colombia saw a 30 basis points contraction to slightly over 57%.
In terms of CapEx, we invested a total of MXN 316 million in the quarter, mainly in Mexico, to a lesser extent in Puerto Rico and Colombia. Let me provide an update of the key projects.
The expansion of the terminal building in Mérida remains on schedule, with the third phase of the project that we expect to complete by the year-end. At Cancun Airport, we are working on the first phase of the terminal for expansion. That is scheduled to be completed by the year-end. This phase entails adding 2 boarding gates on the international front. And finally, in Mexico, the terminal expansion at Tapachula should be completed during the second quarter. In Puerto Rico, we continue with major maintenance repairs to runways and taxiways and the remodeling of Terminal D.
This concludes my remarks of the first quarter results. Orlando, please open the lines for questions.
[Operator Instructions] And we'll take our first question from Alan Macias with Bank of America.
Just one question on EBITDA, adjusted EBITDA margin. Do you see these levels as sustainable going forward? And if I may, just another question on the new Mexico City airport. Are you seeing more activities seeking new routes to ASUR's airports?
Well, in terms of EBITDA margin, we don't like to talk about margins because costs and revenues are independent. If we believe that the recovery process is in progress and we will have more passengers going forward with the same base cost as we have for last year, of course, margins will expand. It is clear for everybody that inflation is going up. Mexico is no exception. The inflation here is really strong. And of course, we will have to adjust some of our costs going forward.
In terms of the new Mexico City, as of today, we have 3 routes with that airport. That is the case of Villahermosa, Mérida and Cancun. Mérida and Cancun are working really well in terms of load factor, which is not the case of Villahermosa. Apart from these, I do not expect any other in the short term.
And our next question will come from Alejandro Zamacona with Credit Suisse.
Quick question, looking at the capacity plan by airlines, it seems that for this year, there is still a pent-up demand from international market for Cancun, mostly from U.S. and Canada. But I was wondering how airlines or leisure travelers, at least you have been seeing how they are reacting to the safety issues that we have recently seen in Cancun.
Well, so far, we have seen a very strong demand from the U.S. and Europe. In the case of Canadians, as I said before, I believe we lost them for this major season, and I believe they are going to be back to the first quarter -- to the '19 levels up to the next winter season, which will be November, April this year, next year. That is the only region that is still outstanding. In terms of the others, we are seeing very strong demand.
Okay. But overall, you haven't seen any backdrop from capacity plan amid these safety issues, right?
You just have to see the numbers.
Okay. And then on the MDP negotiation, I know it's kind of early, but do you have any expected timing for the outcome, mostly assuming that the last negotiation in 2018 was finished 6 months earlier? And also in the MDP, if you have any preliminary expectations for the regulated return, assuming that the, I mean, assuming the recent increase in rates?
Well, as you know, it's too early to tell anything about this. We are in the process to constructing the proposal that we will deliver to the government at the end of this year, so negotiation will be in progress next year.
Up next, we will hear from Francisco Suarez with Scotiabank.
Two questions on your balance sheet. One, what triggered the increase in restricted cash in the quarter? It was considerably high. And secondly, on your accounts receivables, any write-offs on account receivables that have been implemented in the quarter or that you might expect or perhaps the other way around, I mean, potential reversal to provisions?
Okay. The restricted cash increased significantly or significantly means $50 million of these were some guarantees that have to be in place for the bonds of Puerto Rico since 2013. But these guarantees now are supported by the company so that is why you saw that increase of around $50 million. In terms of the account receivables, we are not concerned about that. The only problem I have mentioned several times is the case of Interjet. They're going to pay us around MXN 73 million, which all of this has been discussed.
And up next, we'll hear from Guilherme Mendes with JPMorgan.
A follow-up question in terms of traffic. If you could provide a little more color in terms of what you expect in Puerto Rico and Colombia, having seen some different trends in these 2 regions. So if you could provide some additional information on what to expect going forward?
Yes, of course. In the case of Colombia, again, I'm really surprised with what we are seeing. Colombia has been extremely strong over the last 5 months. Of course, it's important to remember that Colombia was closed, the whole country was closed for aviation during 6 months. So I don't know if what we are seeing today is the effect of those 6 months that were closed, but for the moment, but we're happy to see the numbers and continues to be very strong even that some of this traffic is business traffic.
In the case of Puerto Rico, I have said that before, we should be expecting a normalization in the future. But of course, for the moment, we're happy to see that they are surpassing what we were expecting in terms of the first quarter 2019 levels. So going back to Puerto Rico, they should be growing between 1.5% to 2% a year. So by now, it should be 106, 107, and they are better than that.
Okay. Pretty clear. And just another follow-up question on your MDP. Based on your current MDP, just if you have already fully implemented the tariffs already in the first quarter of this year or should we expect additional increase over the coming quarters?
Well, with the average maximum tariff during the quarter was MXN 245, which is the lowest in the case of the Mexican airports. We have not been able to recover the 99.8% maximum tariff compliance yet. So we will expect to capture some of these in the coming quarters.
Our next question will come from Rodolfo Ramos with Bradesco BBI.
It's a follow-up on the MDP question. Just wanted to see whether you're expecting in this preliminary submission or this early in the process, are you expecting to incorporate the impact or potential impact of Tulum? I mean, we will really not know the full extent of the impact until probably after your MDP is concluded, but just wanted to see how are you expected to approach the potential impact for Tulum? And then I have a second question, if I may.
Okay. So we are constructing, again, our draft that has to be delivered by the year-end to the government. Of course, we are expecting the airport of Tulum to be concluded by the end of '23 as that's what the government has said. So some of the effect of these, of course, will have to be seen in the next MDP.
Okay. And just a follow-up on your ESG effort, and you mentioned that you have installed solar panels across several of your airports. I just wanted to see how does these recent moves on the energy sector could impact either the operationally or the profitability of these panels? I'm not sure if you hooked up to the CFE line and you have to buy back or how does that work?
Rodolfo, what we are telling you in our efforts and actually in the case of Cancun and Mérida will not have any impact on what you have seen in terms of the initiatives over the electricity law.
Okay. And just a last one, if I may, on traffic recovery. I mean, as we've gone out of the holiday season in Mexico, how are you seeing the more business-oriented routes behaving? I don't know if you can quantify that, perhaps what you -- anecdotically, what you think is perhaps more business-driven even at Cancun? Whether it's expos, conferences. I mean, as we come out of this more leisure-intensive season, how are you seeing the outlook for more business-oriented travel?
Well, the biggest traffic that we have in the company is basically related to the airports I mentioned. As you can see, during the quarter, those were 18% below first quarter 2019 levels. It's improving but the improvement is really low, so that is why I believe those are going to be able to recuperate the pre-pandemic levels up to the year-end of May next year. So it's better, but it's really low.
Next, we'll hear from Filipe Nielsen with Citibank.
I have a follow-up question about the concerns on traffic in Southern Mexico that was already asked before. But I wanted to understand better, how is the mix of travelers profile in this region, and if it has changed in this quarter? And how is it going, it's going to be looking forward?
Filipe, thank you for your question. If you want to see the passenger mix results, you can go to the 20-F report and you will see how it was for last year. In the case of the first quarter, in comparison of pre-pandemic levels, the only missing part is the case of Canadians. Apart from that, everything is working really well with, I would say, extraordinary growth from the case of the U.S. Probably going forward, once everything is open or we can say the pandemic is over, probably the U.S. will use some other places in the world and we will see a decrease in the case of this traffic. But so far, it has been very strong or still very strong, and that's why we believe that we will have a nice summer.
Great. But regarding the travelers profile, do you see more like families and family, children, going to those places or do you see any changes in the profile, like other kind of people, single people or other profiles going to those places?
The only change we have seen is less older people, and that has resulted from COVID-19 concerns.
Our next question will come from Juan Macedo with GBM.
Congrats on the results. My question is regarding the new commercial spaces you opened in Puerto Rico and Colombia. Do you expect to maintain the pace of these expansions? And do you have an estimate of the impact it could have in commercial revenues?
Well, thank you for your words. In the case of Colombia, if you remember when we got the shares of this company back in 2017, we set that between 3 to 4 years to really explore the full potential. Of course, the pandemia was in the middle of this, and I have to say what you're seeing in the report that we didn't lose the time of the pandemia. So we took advantage of these, and we made a very good negotiations in the case of Colombia, that is why you are seeing a lot of new spaces that. There are some that are still pending that are coming. Probably by the year-end, we will be able to say that we have done what we expected originally in our plan back in 2017. In the case of Puerto Rico, it's business as usual, nothing relevant to say.
Next, we will hear from Gabriel Himelfarb with Scotiabank.
Congrats on the results. Just a quick question. I have been reading and hearing through social media and several newspapers that the islands in Quintana Roo is increasing strongly. Well, I heard that in the, more close to the Bacalar region and Chetumal is highly unsecured. Even there are some communities that they drop off their colleagues. So can you give us a bit of color of what you have been hearing, what you have seen in the Quintana Roo state, specifically about how can it impact the traffic, the general traffic or the full international traffic?
Well, of course, what we're seeing is not what we like to see. But what I have to say is that the government, the state government and also the federal government have improved a lot on this. And then so most of the people who have done something wrong over the last couple of months have been caught, so it has improved in terms of what or the reaction the state government and the federal government. So far, in terms of numbers, we, of course, we've not been able to find what is the real impact on our traffic. But so far, the numbers are doing well.
Okay. And just a quick follow-up question. You said that maximum tariff were about 99.8% and the remaining is expected to come in the quarter, that's right?
No. What I said is that we were not able to reach the 99.8% maximum tariff compliance that we have before. So what I'm saying is we are going to catch up in the coming quarters. The maximum rate for the quarter was MXN 245. If you compare that with what we had in the first quarter after then, before then the extraordinary maximum tariff process was around MXN 220. So there has been improvement. So we have not reached yet the 99.8% or the 17% increase that we got last year.
And next, we'll hear from Lucila Gomez with Compass Group.
I have 2 questions. My first question would be, what was the normalized traffic? Should we expect to see a ramp-up in cost, meaning, is it sustainable to continue with current control costs although it is necessary to increase them eventually?
Well. As I said, yes, we will have to beat some of our costs due to the inflation that we are seeing in Mexico and the rest of the world. So in terms of the amount, of course, yes, you will see some increase in the future.
Okay. And my second question would be considering sales, in terms of sales, are you currently -- now that they're improving, are you currently giving any incentives or discounts to stores and restaurants? Or are there not anymore?
I was not able to hear your question well. Did you...
Right, yes, it's right here. And thinking in sales on the non-aeronautical side, are you currently giving, for example, discounts to stores and restaurants on the airport? Or are -- do you don't have anymore?
No, we are not providing any discount to them due to the way that we collect. So normally, we collect the minimum -- the higher between a minimum or depending per passenger or a percentage on sales, so that's why we do not have to give discounts to them.
So in that sense, if there is no passengers, that will be 0. And also, that is why we didn't have to renegotiate all of these contracts, so we are not providing any discount to them.
Okay. Up next, we'll take a question from Javier Gayol with GBM.
Congrats on the results. I'm sorry if this question has been asked and answered, but I joined a little late. I just wanted to understand regarding the airlines. And how are you seeing them react to the tariff increase? Is there any backlash from them? Have you seen them reluctant to open new routes? I just want to understand what's the, how does the picture look for the airlines given the recent hike in tariffs even though, as I understand, it's amongst the lowest of the groups. But just to get your sense on that would be very helpful.
Well, we have not seen any, let's say, comment or criticism from them. We are the cheapest by far. In the case of Mexico, you can see that with the maximum rate of GAP and OMA and also with what we have to pay for the case of Mexico City. So we have the cheapest airports in Mexico, and I would say with high quality. So in that sense, we have not seen any comment or rejection coming from the airlines.
Great, Adolfo. And regarding new routes coming up, what are you seeing? Is the security level still an issue for Mexico or is that something that airlines are not looking into?
Well, as I said, we don't like to see what we are seeing. We only think that it's a positive thing is that the state government and the federal government are reacting very fast on the recent events, and I hope that this will diminish the situation in the case of the southeast region.
And up next, we'll have a question from Pablo Monsivais with Barclays.
Just want to have more information on your take on how inflation will be reflecting more strongly on cost? I see there is some lag to the current inflation to what we have seen in your numbers. So can you please explain to us how is the lag working and when should we see this higher costs going forward?
Okay. Well, let me go to the case of personnel in the case of ASUR. So once the pandemic was here, we put the brakes on all the expenses. In the case of personnel, we stopped salary increases, canceled bonus, not filling vacancies, et cetera. So that has been adjusted as from this quarter, so some increases in salaries were there. We paid some bonus from the results of last year. And we start filling some vacancies. So that's why I'm saying inflation effect will have to be seen in the coming quarters.
Okay. But in, for example, in the contract that you have with security personnel and maintenance, should we expect the inflation to hit this year or next year? How do you see that hit?
Well. That's adjusted every, when the contract is finished. Normally, they adjust with inflation. So it is not just, it is not one contract for the whole company or for the 9 airports in Mexico or in Puerto Rico and Colombia, so it's happening as we speak.
All right. Up next, we'll hear from Alan Macias with Bank of America.
Just 2 follow-up questions or 2 more questions. On Mexico's aviation safety rating, can you give us any insight into the efforts Mexico is having to recover Category 1, and if you see any timing for this recovery? And the second question would be on the people, the technical people that review and approve the master development plan. Have there been any changes in the people that do the actual technical review and approval?
Well, Alan, to be honest, I don't have any insights in terms of the Category 1. I have probably the same kind of information that you have, which is the newspaper. Well, the Mexican government is saying that they will recover this in the second half. Volaris has announced a new flight or that they're willing to have a new flight from AIFA to L.A., and that will not occur if they do not recover the Category 1. So that's what I can say to you. I don't have any insight. In terms of the people that review all of these, I would say, more or less it's the same as we had before. So no major changes we have seen on this.
And up next, we'll take a question from Giovanni Bisogno with Santander.
Congrats on the results and 2 quick questions, if I may. The first one, could you give us any color of what the government of Quintana Roo is doing putting control about the security of Cancun? And the second question is about the traffic. We saw a couple of weeks ago that they note that Cancun is now on the top 10 busiest airport considered by international passengers. But now that the COVID restriction are very flexible around the world, should we expect accelerating traffic, especially coming from the U.S. from now on?
In terms of the security, they are improving a lot the C5, which is the center, the security center in Cancun, has made a lot of investments, and they have a lot of cameras all around the area. And that has helped a lot on the reaction of these recent events. In terms of that Cancun was the 10th largest airport in the world last year, that was because some of the efforts were affected or more affected by COVID-19. We will not remain the 10th largest airport in the world this year. That's for sure.
And now we'll take a question from Fernanda Recchia with BTG.
Adolfo, congrats on the results. Just quickly here on my side. We saw that you quoted with a real comfortable leverage during this Q, so I was wondering if you could comment on the intention to diversify your revenues outside the regions you already operate? So we have Barbados airport auction this year, could you comment on your potential participation on this auction or any other auction?
No. We do not have any significant to tell about auctions. I mean, we are not participating in any today.
[Operator Instructions] And that concludes the question-and-answer portion of today's conference call. I would like to turn it back over to Mr. Castro for closing remarks.
Thank you, Orlando, and thank you, everybody, for participating in our first quarter results conference call. On behalf of ASUR, we wish you a good day. Goodbye.
Ladies and gentlemen, that concludes ASUR's First Quarter 2022 Results Conference Call. We would like to thank you again for your participation. You may now disconnect.