Corporacion America Airports SA (CAAP) 2022 Q1 法說會逐字稿

Good morning, and welcome to the Corporación América Airports' First Quarter 2020 Earnings Conference Call.

A slide presentation accompanies today's webcast and is available in the Investors section of the Corporación América Airports' Investor Relations website. (Operator Instructions) At this time, I would like to turn the call over to Patricio Inaki Esnaola, Head of Investor Relations. Please go ahead.

Thank you. Good morning, everyone, and thank you for joining us today. Speaking during today's call will be Martin Eurnekian, our Chief Executive Officer; and Jorge Arruda, our Chief Financial Officer.

Before we proceed, I would like to make the following safe harbor statement. Today's call will contain forward-looking statements, and I refer you to the forward-looking statements section of our earnings release and recent filings with the SEC. We assume no obligation to update or revise any forward-looking statements to reflect new or changed events or circumstances. Now let me turn the call over to our CEO, Martin Eurnekian.

Thank you, Inaki. Hello, everyone, and welcome to our first quarter 2022 earnings call. We started the year on a strong footing, delivering an improved performance across key operational and financial metrics.

Jorge will go over our financial results in a few minutes, but let me point out some of the key highlights for the quarter. First, adjusted EBITDA increased to $89 million, up from $7 million in the first quarter of last year. Importantly, this good performance was supported by improvements across all of our countries of operations. Adjusted EBITDA margin ex IFRIC reached 36.3%, up from mid-single-digit margin in the same quarter of last year when we were in the midst of the pandemic.

We also saw a strong recovery in revenues ex IFRIC, which reached 82% of pre-pandemic levels despite the impact of Omicron on travel demand in the first 2 months of the quarter. Tariff adjustments in some segments and the leaner cost structure. This came along with strong growth in commercial revenues, which exceeded first quarter 2019 levels by high single digits.

On the balance sheet front, during the quarter, we secured local financing to meet CapEx obligations in Argentina. And end of the quarter, we had a significantly stronger debt maturity profile. Lastly, in February, the Board of Directors of AA2000 resolved to redeem all outstanding preferred shares for a total redemption value of ARS 17.2 billion, equivalent to around $155.2 million. A total of ARS 11.1 billion or approximately $100 million were paid in April, with the balance to be paid before December 31, 2024, with the possibility of partial payments.

Now taking a deeper dive in the traffic trends on Slide 4. As you can see on the left-hand chart, a total of 13.5 million passengers traveled across our airport network in the quarter, reaching 65% of pre-pandemic levels. Note that the impact of the Omicron variant was limited to January and February.

Solid pent-up demand and the lifting of travel restrictions continue to support the recovery in traffic and increases in routes and frequencies across our territories. For example, Armenia continues to lead the recovery with passenger traffic at nearly 99% of the first quarter of 2019 levels, with January and February, slightly above pre-COVID traffic. Weekly frequencies are up over 160% this summer versus 2021, while 7 new airlines are launching operations to serve higher demand.

Remember, traffic in Armenia is 100% international. While we are seeing increased activity in Armenia, we'll remain vigilant regarding the development in Ukraine. In Italy, traffic for the quarter reflects the short-lived impact of Omicron primarily in January, but recovered to 68% of pre-pandemic levels in March and 78% in April. We are expecting the strong summer seasons with destinations and airlines at 93% and 98% of pre-pandemic levels, respectively, nearly back on the activity experienced in the summer of 2019.

In Brazil, traffic reached 77% pre-pandemic levels with a rebound in March after some flight cancellations at some airlines due to COVID cases within their crews in January and February. Argentina and Uruguay stood at 64% and 50% of pre-pandemic traffic levels, respectively, during the quarter.

In Argentina, the positive trend continued and traffic in April reached 75% of the levels of the same month in 2019. Know that Uruguay is already operating at 63% of pre-COVID levels in April with weekly frequencies up 14% versus the first quarter of 2019. Ecuador continues the steady recovery, reaching 79% of pre-pandemic traffic and is already at 95% in April with routes to the U.S., Panama and Europe remaining above 2019 levels.

Now turning to Slide 5. Cargo operations posted a sustained recovery across all territories, reaching nearly 80% of first quarter of 2019 volumes. In particular, Italy, Uruguay and Armenia posted a strong performance with cargo volumes reaching 2019 levels. Argentina, Brazil and Ecuador, which together accounted for more than 80% of total volume, continued to post strong contributions.

Noteworthy, total cargo revenues surpassed first quarter of 2019 levels by nearly 19%, reflecting tariff adjustments implemented during the last year. I will now hand off the call to Jorge which will review our financial results. Please, Jorge, go ahead.

Thank you, Martin, and good day, everyone. Starting with our top line on Slide 6. Total revenues ex IFRIC 12 continued to show a strong recovery reaching 82% of pre-pandemic levels in the first quarter of 2022. Aeronautical revenues increased almost 180% year-on-year mainly driven by higher passenger traffic and increased tariffs in some segments.

Notably in Armenia, aeronautical revenues in the first quarter 2022 were above 2019 levels. We are very encouraged by the performance of our commercial revenues during this quarter, which surpassed pre-pandemic levels by almost 10% and were up 84% year-on-year. This was mainly driven by tariff adjustments in our cargo business and solid performance in fuel-related revenues as well as in food and beverage and duty-free revenues. Reflecting our efforts to continue increasing our top line, revenue per passenger expanded to $18.1 this quarter, up from $14.6 in the first quarter 2019.

Now turning to our cost structure on Slide 7. Our ongoing focus on cost control is allowing us to maintain a linear and more efficient operation. In first quarter 2022, total cost and operating expenses ex IFRIC increased 41% year-on-year, reflecting higher business activity, but this increase was well below the 121% revenue growth. When compared to 2019, operating costs and expenses ex IFRIC for the quarter declined by 14%.

Now moving down the P&L on Slide 8. We achieved adjusted EBITDA of $89 million, up from $7 million recorded in the same quarter last year, and only 24% below pre-pandemic levels. Importantly, we saw adjusted EBITDA improvements across all countries of operations, recovering at a faster pace than passenger traffic. We achieved significant margin expansion driven by top line growth and cost efficiencies.

In first quarter 2022, adjusted EBITDA margin ex IFRIC12, expanded to 36.3% and from 5.7% in the first quarter 2021, while we see room for continued expansion when compared to the nearly 39% margin posted in the first quarter 2019.

Turning to Slide 9. We ended the quarter with a total liquidity position of $646 million, up from $451 million at the end of 2021. Importantly, we delivered 6 consecutive quarters of positive operating cash flow across most of our segments and remain operating cash flow positive across most countries of operations.

Moving on to our debt and maturity profile on Slide 10. Total debt at the end of the quarter was $1.6 billion, while our net debt stood at $1.2 billion. Although still above historical levels, the net debt to last 12 months adjusted EBITDA ratio showed a significant improvement this quarter declining to 5.1x from 7.1x at the end of 2021. Also note that all our subsidiaries remain in compliance with the debt covenants, and remember that CAAP itself has no direct indebtedness. The successful liability management initiatives that we carry out in the 2020, 2021 period have allowed us to significantly improve our debt profile. More recently, the issuance of $174 million in local notes in Argentina last February secured funding to comply with CapEx obligations at AA2000.

I will now hand back the call to Martin, who will present our closing remarks on Slide 12.

Thank you, Jorge. To wrap up our remarks, please turn to Slide 12. Looking ahead, we expect pent-up demand to continue to drive the recovery in passenger traffic across our airport network throughout the year. In the near term, all variables are pointing to a very strong summer season in Europe, while we remain vigilant regarding the global geopolitical environment and any potential impacts this could have on traffic trends in our business. Today, we face the future with a recovered and sustainable balance sheet following the liability management transactions and the economic re-equilibrium precesses of the past 2 years together with the additional financing obtained the last February in Argentina. We will continue to maintain our financial discipline and value creation mindset.

Finally, we remain fully committed to finalizing the economic re-equilibrium process in Brazil and Armenia to fully restore the equity value of our business while advancing our plans to selectively develop additional value creation opportunities. With this, I would like to thank you for your attention. We are now ready to answer your questions. Operator, please open the line for questions.

(Operator Instructions)

We have no questions. I'll now hand back to Martin Eurnekian for closing remarks.

Well, I'd like to thank everybody for joining us today. The team remains available to answer any questions you may have. Please enjoy the rest of the day. Thank you very much.

Today's call has now concluded. I'd like to thank you for your participation. You may now disconnect your lines.