Corporacion America Airports SA (CAAP) 2026 Q2 法說會逐字稿

Hello, everyone. Thank you for joining us, and welcome to Corporacion America Airports' second quarter 2026 earnings conference call. (Operator Instructions)

I will now hand the conference over to 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 statements. 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.

Please note that throughout this call, all references to revenues, cost, adjusted EBITDA and margin will refer to figures excluding IFRIC 12. Also, all comparisons discussed are year-over-year unless otherwise noted.

I will now turn the call over to our CEO, Martin Eurnekian.

Thank you, Inaki, and good morning to everyone joining us today. Our second quarter adjusted EBITDA ex IFRIC 12 was down 4.5%, primarily driven by our Cargo business in Argentina, lower seat capacity in the domestic market in Argentina and non-recurring costs and expenses in Uruguay. Our Cargo business in Argentina was primarily affected by an extraordinary bad year-over-year comparison base. Labor disruptions at customs in April 2025 resulted in longer cargo storage periods and consequently, exceptionally high storage revenues. Seat capacity in Argentina was largely affected by Flybondi's significantly reduced operating fleet and higher fuel prices.

Non-recurring costs and expenses in Uruguay, including costs associated with the implementation of the new ILS system as well as maintenance and other expenses also weighted on adjusted EBITDA during the quarter. Despite these headwinds, our business remains strong and the diversification and quality of our portfolio continue to support our overall performance with four of our six segments delivering double-digit EBITDA growth. We observed healthy international demand and passenger growth across most of our markets in the second quarter.

We also continued to deliver strong revenue performance. Growth in both our Aeronautical and Commercial businesses enabled revenues to increase faster than passenger volumes. We were particularly pleased with the continued improvement in the revenue per passenger throughout the portfolio, including Argentina.

Our financial position remains strong, supported by healthy liquidity, continued cash generation and low leverage. This gives us the capacity to invest in our existing operations, pursue our acquisition strategy and return capital to shareholders while preserving financial flexibility.

In that context, our Board approved a cash dividend distribution for 2026. This represents an important milestone in our capital allocation strategy, and I would like to discuss the dividend and its underlying principles in greater detail in my closing remarks. I would also like to highlight that our first half revenue and EBITDA remained ahead of the prior year period.

With that, let me turn to the traffic trends across our markets. Moving on to traffic on slide 4. Approximately 21 million passengers traveled through our airports during the quarter, leaving total traffic broadly stable year-over-year. International traffic remained positive, increasing nearly 6% with double-digit growth in Armenia and positive contributions across the board, including Argentina. Domestic traffic declined approximately 8%, primarily due to lower seat capacity in Argentina. Excluding Argentina, total passenger traffic increased across all of our markets.

Looking at the main markets. In Argentina, international traffic was up 4%, supported by strong seat capacity growth during April and May, while overall passenger traffic declined approximately 6% as growth in international travel was more than offset by weaker domestic volumes. In fact, Argentina recorded the strongest increase in international seat capacity among South American markets during the first half of the year, driven by several airlines announcing new routes and additional frequencies.

Domestic traffic declined close to 12%, mainly reflecting lower airline capacity, while underlying demand remained resilient. Seat offer was largely affected by Flybondi's significantly reduced operating fleet and higher fuel prices. July traffic showed a sequential improvement from June with domestic traffic declining 10% and international traffic growing 5% year-over-year.

In Italy, traffic increased just over 5%, driven mainly by international passengers, which represented more than 80% of total traffic and grew 6.4%. Both Pisa and Florence Airports contributed positively with domestic traffic also modestly higher. This positive trend continued into July with international passenger traffic increasing by more than 6%, while domestic traffic remained relatively stable.

In Brazil, traffic increased approximately 4%, reflecting continued year-over-year growth. Domestic traffic was slightly lower but this was more than offset by a 14% increase in transit passengers. Brasilia continued to benefit from its position as an important connecting hub within Brazil's domestic network.

Traffic in July remained solid, up 8% year-over-year. Passenger traffic in Uruguay increased 2% despite the calendar shift of the Easter holidays, supported by additional connectivity, including Azul's new service between Montevideo and Belo Horizonte. In July, traffic increased by 3% compared to the same month last year. Armenia reported the strongest traffic growth of our -- in our portfolio, up 13%. This strong performance was achieved despite flight cancellations and regional airspace restrictions related to the conflict in the Middle East.

Strong demand from all other regions together with the Wizz Air base launch at Zvartnots late last year more than offset the disruptions caused by the conflict in the Middle East. This positive momentum continued into July with traffic growing 17% year-over-year. In Ecuador, traffic increased approximately 2% despite continued security concerns.

International traffic grew more than 8%, supported by strong demand on routes to the United States, new services from Avianca, JetBlue, and LATAM and additional frequencies from American Airlines. Domestic traffic remains softer as elevated airfares continue to constrain demand. In July, traffic declined 1% year-over-year as strong international traffic growth was more than offset by a decline in domestic traffic. In summary, international demand remained healthy and broad-based during the quarter, helping to mitigate the concentrated pressure on domestic traffic in Argentina.

Moving on to Cargo on slide 5. Cargo revenues declined primarily driven by Argentina. Such decline was caused by an extraordinary bad year-over-year comparison base. As I explained earlier, labor disruptions and customs in the second quarter of last year extended cargo dwell times and resulted in exceptionally high storage revenues. In addition, normalized customs operations and more efficient clearance processes this year reduce dwell times and consequently, storage revenues. Various initiatives are already being implemented to enhance profitability in our cargo business in Argentina.

Let me now turn over to Jorge, who will review our financial results. Please, go ahead.

Thank you, Martin, and good day, everyone. Starting with the top line on slide 6. Total revenues, excluding IFRIC 12, grew 8% year-over-year, once again outpacing traffic figures. Armenia and Brazil delivered another quarter of double-digit growth. Consolidated revenue per passenger rose nearly 9% to $22.9 from $21 in the same quarter last year, reflecting stronger commercial performance with increases across every country, including Argentina. Aeronautical revenues increased 4%, supported by broad-based growth across the portfolio.

Brazil, Italy, Armenia, Uruguay and Ecuador delivered strong results, more than offsetting a decline in Argentina. Tariff increases in Brazil, Uruguay and Ecuador provided further support. In Argentina, the increase in aeronautical revenues from higher international traffic was more than offset by lower domestic traffic and lower domestic passenger fees in US dollar terms following the depreciation of the Argentine peso during the period.

Commercial revenues were up 13%, well ahead of traffic performance, driven by growth across all countries of operation, except Argentina. Performance was led by a fuel-related revenues in Armenia, together with broad-based growth in passenger treatment revenue streams, including VIP lounges, space rentals, food and beverage and duty free. In Argentina, lower cargo, parking and duty-free revenues more than offset growth across all other commercial revenue streams.

Turning to slide 7. Total cost and expenses, excluding IFRIC 12, increased 16% year-over-year, primarily driven by higher fuel costs in Armenia, non-recurring costs and expenses in Uruguay and the re-appreciation of local currency in Argentina and Uruguay against the US dollars.

In Armenia, fuel cost increased, reflecting both higher costs and volumes associated with the growth of fuel-related revenues. Excluding the fuel business, total cost and expenses increased 9%. In Argentina, cost and expenses increased only 6% despite a material increase in amortization, representing a contained increase given the prevailing macro environment.

Moving on to profitability on slide 8. Adjusted EBITDA, excluding IFRIC 12 was $160 million, down 4.5% with the decline concentrated in Argentina and Uruguay. Every other country of operation delivered double-digit growth.

Starting with Argentina, adjusted EBITDA declined 21% with the margin contracting 6.2 percentage points, primarily reflecting lower domestic passenger traffic and the extraordinary bad comparison base for cargo revenues I mentioned earlier. Italy posted a 19% increase or 11% when excluding construction service at Toscana Aeroporti. And margin expanding 3.1 percentage points on passenger growth and higher duty free and VIP lounge revenues.

Brasilia Airport delivered another strong quarter with adjusted EBITDA up 32% and the margin expanding 2.3 percentage points, driven by strong passenger growth together with higher VIP lounge, space rental and food and beverage revenues. This was further supported by the appreciation of the Brazilian real.

In Uruguay, adjusted EBITDA declined 16% and the margin contracted 8.4 percentage points, primarily reflecting costs associated with the implementation of the new ILS system ahead of the related revenue, which began only in August and the impact of non-recurring events I mentioned earlier. These were partially offset by passenger growth and stronger VIP lounge and duty-free revenues.

Armenia also delivered a strong quarter with adjusted EBITDA up 21%. As in recent quarters, margin contraction reflected the continued expansion of the fuel business, which structurally carries lower margin than core airport operations.

Ecuador delivered another solid quarter with adjusted EBITDA increasing 17% and margin expanding 2 percentage points supported by passenger growth and higher duty-free revenues.

Turning to slide 9. Strong cash flow generation allowed us to continue building our cash position, and we ended the quarter with total liquidity of $861 million, up 20% from $715 million at the close of 2025. Importantly, nearly all operating subsidiaries generated positive operating cash flow during the first half of the year.

The exceptions were Italy and Ecuador, where capital expenditure and concession-fee payments, respectively, weighted on free cash flow generation. Finally, cash used in financing activities primarily reflected $55 million in loan repayments, mainly in Argentina.

Moving on to the debt and maturity profile on slide 10. Total debt at the quarter end stood at $1.1 billion, while net debt declined to $381 million from $502 million at year-end 2025. Our net leverage ratio stood at 0.5 times, reflecting stable debt levels and continued cash generation.

I will now hand the call back to Martin, who will provide closing remarks and discuss our view for the remainder of the year.

Thank you, Jorge. On slide 12, I would like to leave you with a few key messages. Despite the headwinds mentioned earlier by both Jorge and myself, some related to bad year-over-year comparisons and others to non-recurring items, our business remains strong, and the diversification of our portfolio continues to support our overall performance. We are particularly pleased with the broad-based growth in international traffic. The increase in revenue per passenger across every country in which we operate, including Argentina and the double-digit EBITDA growth delivered by other four markets. Our robust liquidity and low leverage provide a strong foundation to continue focusing on our strategic objectives, pursue growth opportunity and return capital to shareholders while maintaining financial strength.

We also continue to make progress on our key strategic initiatives across the portfolio, including advancing the concession rebalancing process in Argentina, efforts to obtain final approval of the Florence Airport Master Plan, commercial expansion in Montevideo through a new VIP lounge and a larger duty-free area and actions to improve the profitability of our Cargo business in Argentina. In parallel, we continue to work on potential new concession opportunities across the Americas, Africa and the Middle East.

Turning to the second half, new routes, additional frequencies and growing inbound demand should support international traffic in Argentina. At the same time, limited domestic airline capacity, planned runway maintenance and additional challenging comparison base for cargo revenues may continue to affect the country's near-term results. However, we expect Flybondi's reduced operating capacity in Argentina to be gradually replaced by other airlines over time as we have observed in previous airline disruptions.

In Uruguay, the new instrument landing system began generating revenues in August. And together with the opening of the new VIP lounge, additional cargo initiatives and the healthy traffic trends are expected to support revenue growth.

Finally, as announced in today's earnings release, our Board approved cash dividends totaling $150 million payable this year, which is equivalent to approximately $0.91 per share. This approval was based primarily on the following key principles: Enhancing shareholder returns, maintaining our financial strength, preserving adequate cash balances at each operating company to support their strategic objectives and maintaining sufficient liquidity at CAAP to pursue further growth opportunities.

With that, we are ready to take your questions. Operator, please open the line for Q&A.

(Operator Instructions) Gui Mendes, JPMorgan.

My first question is on the contract renegotiations in Argentina and Italy, if you could provide an update on the latest discussions or an expectation in terms of timing for project conclusion.

And the second is a follow-up on the commercial passengers. It was a pretty strong performance, I think, on a per passenger basis. Just wondering if this level of revenues per passenger should be assumed to be recurring going forward?

Hello, Gui. Martin here. Thank you for your questions. I'll start on Argentina, and then pass it on to Jorge for the rest of your question.

Regarding negotiation in Argentina, we -- the rebalancing in Argentina, as we have said before, we keep working with the regulator to move ahead on the rebalancing of the economic equilibrium of the concession. Many of you probably have seen a leak in the press regarding that negotiation. It should be taken as a leak. And I would only say that it indicates that we are working and moving ahead. But once we have something that is binding, we will come to you with the relevant information. As of today, none of that is actually valid or binding. So hopefully, soon enough, we'll come back with relevant and binding news regarding the Argentina contract. So thank you, and I'll pass it on to Jorge for the rest of the -- your question.

Hi, Guilherme, thank you very much for your question and for all the report. So in connection with Toscana Aeroporti, the process is moving ahead as well. We continue to work with the relevant government authorities, in particular with the Ministry of Infrastructure and the regulator, ANAC, that expect -- that we expect that they will issue a statement in the very near future declaring this strategic project. It's part of the process. Thereafter, there's going to be a so-called Conferencia de Servicio. So in summary, as of today, we continue to make progress, and there are no red flags. And again, we will continue to keep the market fully updated on concrete developments.

In connection with your second question, in our commercial revenues, the quarter posted very solid commercial revenues while the headline number is about 14%. If we exclude cargo in Argentina, which has an extremely bad comparison, commercial revenues actually increased 26%, so well ahead of passengers. This is driven by many reasons across the board.

But what I would like to highlight is perhaps the VIP lounge business continued to perform very well, duty-free in most of the markets, parking, rental space, for instance, in Brazil was phenomenal. So generally speaking, commercial revenues had a very good performance.

And going ahead, we have projects in different countries that will continue to support the number. For instance, there's going to be a totally new VIP lounge in Montevideo Airport, an expansion of the duty-free business in Montevideo. And moreover, when we do a double click in our numbers for the second quarter, for instance, again, if we exclude cargo in Argentina and certain non-recurring expenses that we had in Uruguay, our EBITDA would have grown 5% instead of the drop of 4.5%. Revenues in Argentina, for instance, has grown 13% without cargo.

Cost and expenses without amortization have, in Argentina, grew only 3.5%, 3.4% more precisely. So again, the headline number may not be the best one, but when we do a double click, we see very strong numbers in many business lines and therefore, makes us very comfortable that the portfolio is performing very well.

[Zhao Lin Sigar], Jefferies.

This is [Zhao Lin] on behalf of Alejandro Demichelis with Jefferies. I have one question, please. So how do you see the evolution of domestic traffic in Argentina through the end of 2026, please.

Hi, Zhao. This is Jorge again. Thank you for your question and for the reports as well. So domestic traffic was primarily affected by the reduction in the fleet of Flybondi, which we believe that sooner or later, are going to be replaced by other players in the market. As we've actually seen already, I mean, in July, for instance, both Aerolineas Argentinas and JetSMART had its second-best month in history in Argentina on domestic market.

Flybondi is planned to increase in the next few months from 16 aircraft to 19 aircraft. And as I briefly mentioned, we've seen that over and over again in other markets like PLUNA in Uruguay, Avianca in Brazil, among a few other cases that in a matter of several months, this offer, if I can put it like that, is replaced because it's not a matter of demand, it's a matter of offer. It's a seat offer, seat capacity. So obviously, this will take some time, a couple of months. But over the short to medium term, we are positive.

Pablo Ricalde, Itau.

I have two questions. The first one on the dividend you just announced, how should we think of dividends going forward? And should we think about like maybe this is a more normalized level, or this is more on the extraordinary side given how strong your balance sheet look?

And the other one is if you have quantified the effect of the closure or the runway like maintenance in Ezeiza and Aeroparque in the third quarter results.

Thank you for your questions. So in connection with dividends, our decision-making process to propose and ultimately approve this dividend was a balance of a couple of points, primarily shareholders return, providing the proper return to shareholders, maintaining financial strength of our group and its subsidiaries. And by that, I mean, no impact in covenants, no impact in existing credit ratings among other things.

Preserving an adequate cash balance at each of the operating companies to pursue their strategic objectives. So for instance, in Armenia, we are about to start a major CapEx program as we previously announced, together with the extension of the concession agreement there. And obviously, the company will require some additional or increased working capital facility. So as we want to preserve that financial strength at the OpCo level as well.

And finally, keep an adequate liquidity in CAAP to pursue its new business activities. So we've been very, very active pursuing new business. So obviously, we want to keep firepower to make that possible. So we will take those things into consideration -- we took those things into consideration to define the amount and the actual payment. And we will take those things into consideration in the future whenever deciding whether or not to pay a dividend.

Regarding maintenance of the runways in Aeroparque and Ezeiza, which are planned for about two days. In Aeroparque and just more than 15 days in Ezeiza. There will be an impact some of the traffic from Ezeiza will migrate to Aeroparque, some will be kept in Ezeiza, some will not happen. But this is planned. This is obviously absolutely required for the security. And we -- on a consolidated basis, we do not see a major impact in our numbers.

Daniel Rojas, Bank of America.

I just wanted to drill down on Armenia. We saw July traffic figures that they were very good. Armenia was up 17%. I just wanted to get some color from you on what's happening with Iran -- the conflict in the Middle East, and what we should look for in terms of potential traffic growth in the next few months? Anything you can give us.

I'm sorry, your first question was traffic in Armenia. Your second question was?

What to expect in the second half of the year in terms of (inaudible) traffic and with everything that's happening.

Okay. Good. Thank you. So yes, Armenia has been performing extremely well. And you probably saw July figures of 17%. We are very pleased with these numbers. This is primarily driven by healthy traffic with Europe. New routes, generally speaking, in particular with Wizz airline, and obviously, the establishment of the base of Wizz airlines in Yerevan. This more than offset the impact of traffic to Middle East, which was -- which accounts for about 20%-plus of the traffic of the overall traffic and was impacted for obvious reasons.

But again, more than offset by this -- the traffic with Europe on legacy carriers and Wizz that are creating traffic. I mean they establish a base, they establish several new routes, targeting primarily diaspora, but obviously, the whole market.

So we -- for now, we continue to see a healthy trend in Armenia. And generally speaking, we will also see a healthy trend in the rest of our portfolio. In Uruguay, particularly that the quarter was not great, but we see better trends going forward. And in Argentina, we continue to see growth on the international and the domestic, as I mentioned earlier, for the next few months is going to continue to be impacted by domestic seat offer -- seat capacity. Obviously, the runway maintenance of Ezeiza will have an impact in October to November, but again, not materially in the context of our portfolio.

(Operator Instructions) With no further questions, we have reached the end of the Q&A session.

Forgive me, I see Gui Mendes is asking a follow-up question from JPMorgan.

Martin, you mentioned about opportunities in the Americas, Africa and the Middle East. If you don't mind exploring which are those -- which are these opportunities in which stage each of them are currently?

Thank you for your question, Guilherme. As we usually do, we do not talk about opportunities when they are not mature enough. You obviously heard years back, on Nigeria once we were named the winner of the bid. Same thing with Angola. We were named -- were awarded winners of the bid, and we announced it. We are pursuing several new opportunities in the region in Africa, also Middle East. There is a public tender that was announced for Hurghada Airport, where we were also publicly announced as one of the shortlisted bidders alongside a local partner for, again, Hurghada Airport in Egypt.

And same thing for different opportunities we're looking in the Middle East and the Americas. Ideally, we would come to the market when those processes become public or when our participation becomes public as we are pursuing many different initiatives that have very different stages of maturity.

We have now reached the end of the Q&A session. I will now turn the call back to Martin for closing remarks.

I want to thank everybody for taking your time to participate today. I wish you a very nice week and remind you that our team is always available for any further questions or information regarding our company. Have a great day.

This concludes today's call. Thank you for attending. You may now disconnect.