Corporacin Amrica Airports S.A. Second Quarter 2018 Earnings Call - - PowerPoint PPT Presentation

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Corporacin Amrica Airports S.A. Second Quarter 2018 Earnings Call - - PowerPoint PPT Presentation

Corporacin Amrica Airports S.A. Second Quarter 2018 Earnings Call Presentation Disclaimer and forward looking statement Statements relating to our future plans, projections, events or prospects are forward-looking statements within the


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Corporación América Airports S.A. Second Quarter 2018 Earnings Call Presentation

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Statements relating to our future plans, projections, events or prospects are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements that are not historical facts and can be identified by terms such as “believes,” “continue,” “could,” “potential,” “remain,” “will,” “would” or similar expressions and the negatives of those terms. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Many factors could cause our actual activities or results to differ materially from the activities and results anticipated in forward-looking statements, including, but not limited to: delays or unexpected casualties related to construction under our investment plan and master plans, our ability to generate or obtain the requisite capital to fully develop and operate our airports, general economic, political, demographic and business conditions in the geographic markets we serve, decreases in passenger traffic, changes in the fees we may charge under our concession agreements, inflation, depreciation and devaluation of the AR$, EUR, BRL, UYU, AMD or the PEN against the U.S. dollar, the early termination, revocation or failure to renew or extend any of our concession agreements, the right of the Argentine Government to buy out the AA2000 Concession Agreement, changes in our investment commitments or our ability to meet our obligations thereunder, existing and future governmental regulations, natural disaster-related losses which may not be fully insurable, terrorism in the international markets we serve, epidemics, pandemics and other public health crises and changes in interest rates or foreign exchange rates. The Company encourages you to review the ‘Cautionary Statement’ and the ‘Risk Factor’ sections of our Registration Statement on Form F-1 filed with the SEC for additional information concerning factors that could cause those differences.

Disclaimer and forward looking statement

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  • Revenues up 3.5 % YoY mainly reflecting slower travel demand and mix shift to domestic in

Argentina, along with impact of FX translation in Brazil and on share of local currency revenues in Argentina

  • Passenger traffic +7.4% YoY reaching to 19.2 million passengers
  • Adjusted EBITDA up 12.9% with Ex- IFRIC margin expansion of 364 bps; strong margin

expansion in core markets Argentina, Brazil and Italy

  • Invested US$ 78.3 million to enhance airport infrastructure in Argentina, Brazil and Italy
  • Entered into agreements with Investment Corporation of Dubai (“ICD”) in July 2018
  • Sold 25% of wholly owned subsidiary Corporación America Italia S.p.A. to ICD
  • Entered into a Memorandum of Understanding with ICD to jointly pursue new opportunities in the airport

sector in Italy, Eastern Europe (exc. Russia) and the Middle East.

CAAP delivers solid performance despite difficult macro conditions in Argentina, and currency depreciation in Argentina and Brazil

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SLIDE 4

URUGUAY URUGUAY URUGUAY URUGUAY URUGUAY URUGUAY URUGUAY URUGUAY URUGUAY URUGUAY URUGUAY URUGUAY URUGUAY URUGUAY URUGUAY URUGUAY URUGUAY URUGUAY URUGUAY URUGUAY URUGUAY URUGUAY URUGUAY URUGUAY URUGUAY URUGUAY URUGUAY URUGUAY URUGUAY URUGUAY URUGUAY URUGUAY URUGUAY URUGUAY URUGUAY URUGUAY URUGUAY URUGUAY URUGUAY URUGUAY URUGUAY URUGUAY URUGUAY URUGUAY URUGUAY URUGUAY URUGUAY URUGUAY URUGUAY ARMENIA ARMENIA ARMENIA ARMENIA ARMENIA ARMENIA ARMENIA ARMENIA ARMENIA ARMENIA ARMENIA ARMENIA ARMENIA ARMENIA ARMENIA ARMENIA ARMENIA ARMENIA ARMENIA ARMENIA ARMENIA ARMENIA ARMENIA ARMENIA ARMENIA ARMENIA ARMENIA ARMENIA ARMENIA ARMENIA ARMENIA ARMENIA ARMENIA ARMENIA ARMENIA ARMENIA ARMENIA ARMENIA ARMENIA ARMENIA ARMENIA ARMENIA ARMENIA ARMENIA ARMENIA ARMENIA ARMENIA ARMENIA ARMENIA PERU PERU PERU PERU PERU PERU PERU PERU PERU PERU PERU PERU PERU PERU PERU PERU PERU PERU PERU PERU PERU PERU PERU PERU PERU PERU PERU PERU PERU PERU PERU PERU PERU PERU PERU PERU PERU PERU PERU PERU PERU PERU PERU PERU PERU PERU PERU PERU PERU ECUADOR ECUADOR ECUADOR ECUADOR ECUADOR ECUADOR ECUADOR ECUADOR ECUADOR ECUADOR ECUADOR ECUADOR ECUADOR ECUADOR ECUADOR ECUADOR ECUADOR ECUADOR ECUADOR ECUADOR ECUADOR ECUADOR ECUADOR ECUADOR ECUADOR ECUADOR ECUADOR ECUADOR ECUADOR ECUADOR ECUADOR ECUADOR ECUADOR ECUADOR ECUADOR ECUADOR ECUADOR ECUADOR ECUADOR ECUADOR ECUADOR ECUADOR ECUADOR ECUADOR ECUADOR ECUADOR ECUADOR ECUADOR ECUADOR ITALY ITALY ITALY ITALY ITALY ITALY ITALY ITALY ITALY ITALY ITALY ITALY ITALY ITALY ITALY ITALY ITALY ITALY ITALY ITALY ITALY ITALY ITALY ITALY ITALY ITALY ITALY ITALY ITALY ITALY ITALY ITALY ITALY ITALY ITALY ITALY ITALY ITALY ITALY ITALY ITALY ITALY ITALY ITALY ITALY ITALY ITALY ITALY ITALY BRAZIL BRAZIL BRAZIL BRAZIL BRAZIL BRAZIL BRAZIL BRAZIL BRAZIL BRAZIL BRAZIL BRAZIL BRAZIL BRAZIL BRAZIL BRAZIL BRAZIL BRAZIL BRAZIL BRAZIL BRAZIL BRAZIL BRAZIL BRAZIL BRAZIL BRAZIL BRAZIL BRAZIL BRAZIL BRAZIL BRAZIL BRAZIL BRAZIL BRAZIL BRAZIL BRAZIL BRAZIL BRAZIL BRAZIL BRAZIL BRAZIL BRAZIL BRAZIL BRAZIL BRAZIL BRAZIL BRAZIL BRAZIL BRAZIL ARGENTINA ARGENTINA ARGENTINA ARGENTINA ARGENTINA ARGENTINA ARGENTINA ARGENTINA ARGENTINA ARGENTINA ARGENTINA ARGENTINA ARGENTINA ARGENTINA ARGENTINA ARGENTINA ARGENTINA ARGENTINA ARGENTINA ARGENTINA ARGENTINA ARGENTINA ARGENTINA ARGENTINA ARGENTINA ARGENTINA ARGENTINA ARGENTINA ARGENTINA ARGENTINA ARGENTINA ARGENTINA ARGENTINA ARGENTINA ARGENTINA ARGENTINA ARGENTINA ARGENTINA ARGENTINA ARGENTINA ARGENTINA ARGENTINA ARGENTINA ARGENTINA ARGENTINA ARGENTINA ARGENTINA ARGENTINA ARGENTINA

Traffic up 7.4% mainly driven by Argentina and Brazil, along with solid performance across majority of countries of operations

2 Airports(1) Passengers +10.1% Cargo +38.7% Movements +2.0% ECUADOR PERU 37 Airports Passengers +6.5% Cargo +11.6% Movements +7.3% ARGENTINA 5 Airports(2) Passengers +17.3% Cargo +1.7% Movements +17.1% ITALY 2 Airports Passengers +3.3% Cargo 14.0% Movements

  • 1.7%

BRAZIL 2 Airports Passengers +9.4% Cargo +18.3% Movements 4.9% ARMENIA 2 Airports Passengers +11.0% Cargo

  • 27.8%

Movements +11.9% URUGUAY 2 Airports Passengers

  • 0.9%

Cargo

  • 9.5%

Movements

  • 1.9%

Corporación América Airports

52 Airports Passengers +7.4% Cargo +10.4% Movements +5.4%

46%

6% 4%

12%

3%

25% 4% % of total passengers for 1Q18

1)CAAP owns 99.9% of ECOGAL which operates the Galapagos Airport, but due to terms of the concession agreement the ECOGAL’s results are accounted for by the equity method. However, 100% of ECOGAL’s passenger traffic and aircraft movements are included in this table. 2)CAAP owns 50.0% of AAP and accounts its results by the equity method. However, 100% of AAP’s passenger traffic and aircraft movements are included in this table

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183 186 135 138 65 73

0.5 0.7

2Q17 2Q18

Aeronautical Commercial Construction Service Other

Net Revenue by type

In US$ million

243 247 42 42 31 30 26 27 20 22 22 28 0.8 0.9 2Q17 2Q18

Argentina Italy Brazil Uruguay Ecuador Armenia Unallocated

Net Revenue by geography

In US$ million

397 384

+1.5% +2.1%

  • Revenues Ex-IFRIC12 up 1.8.% YoY in the quarter
  • Total Revenues increased 3.5% in US dollar terms
  • Aeronautical up 1.5% YoY as growth in Argentina, Italy and Armenia was partially offset by $4.5 million in marketing

support expenses deducted from Aeronautical revenues in this quarter, while recorded in SG&A in 2Q17. Brazil impacted by currency depreciation

  • Commercial rose 2.1% driven by Italy, Armenia and Brazil

Revenue growth impacted by slower travel demand in Argentina and currency depreciation in both Argentina and Brazil…

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194 191 65 72 47 44 2.5 0.5

2Q17 2Q18 Cost of services Ex Construction Construction Costs SG&A Other expenses

  • Total
  • perating

costs and expenses, ex-IFRIC12 declined 3.3% YoY to $235.4M

  • Cost of services, ex-IFIRC12 fell 1.1% YoY to $191.4M

reflecting:

 A

decrease in salaries caused by the currency depreciation in Argentina and Brazil, partially offset by the appreciation of the Euro against the US dollar in Italy

 This was partially offset by higher cost of fuel in Armenia

  • SG&A fell 8.1% YoY to $43.5M in 2Q18 mainly due to:

 Marketing

support expenses in Italy that are now reported under “aeronautical revenues”

 Lower taxes in Argentina due to a regulatory reduction in

banking transaction taxes

308

Consolidated Operating Costs and Expenses

US$ Million

… while operating costs and expenses benefit from currency depreciation…

308

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107 121

2Q17 2Q18

Adjusted EBITDA & Margin Ex-IFRIC12

US$ Million

37.2% 33.5%

  • Adj. EBITDA Mg

Ex-IFRIC12

  • Comparable Ex-IFRIC Adjusted EBITDA up 12.8% YoY

 Growth mainly driven by solid performance across

all countries with margin expansion in core markets Argentina, Brazil and Italy

  • Despite strong operating results, bottom line was

affected by:

 94.2 million increase in net financial loss mainly due

to higher non-cash foreign exchange expenses in Argentina arising from its US dollar denominated debt and higher financial losses in Brazil

  • Partially offset by a tax gain of $20.1 million vs a loss
  • f $8.8 million in 2Q17

… driving Adjusted EBITDA growth and strong margin expansion in the quarter, FX impacted bottom line

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2.1x 2.7x 2.0x 2.0x

December 2016 December 2017 March 2018 June 2018

Strong balance sheet and sound debt profile offer financial flexibility

Debt Maturity Profile Leverage Ratios

(Jun 30, 2018; US$mm)(2)

Financial Debt Overview

Debt Breakdown US$1.2bn(1)

(Jun 30, 2018)

Source: Company information.

1. As of June 30, 2018, the Company had a cash balance of US$220.1M. 2. The amounts disclosed in the table are undiscounted cash flows of principal and estimated interest. Variable interest rate cash flows have been estimated using variable interest rates applicable at the end of the reporting period.

  • Debt held at subsidiary level. Subsidiaries with financial flexibility to finance their expansion programs through cash flow

from operations and debt

3.6x 4.0x 5.3x

Net Debt/EBITDA Adjusted EBITDA/Interest Expense

Currency Mix

(Jun 30, 2018)

US$1.2bn(1)

6.0x

145 139 499 922 1 year or less 1 to 2 years 2 to 5 years Over 5 years 40.8% 58.9% 0.2% 0.0% Bank and financial borrowings Notes Other Loans with related parties 16% 26% 58% 0% Euro Reales US Dollar Argentine peso

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Argentina: Strong Adjusted EBITDA margin expansion despite challenging macro conditions in the quarter

  • Revenue ex-IFRIC relatively flat despite +6.5% passenger traffic

growth, mainly impacted by:

 Overall slower travel demand and mix-shift to domestic traffic  FX translation impact on domestic traffic and share of local currency

commercial revenue from the sharp AR$ depreciation

  • Ex- IFRIC revenue growth in local currency up almost 50% YoY
  • Adjusted Segment EBITDA up 12.3% to $78.9M with ex-IFRIC

margin up 500 bps to 43.5% benefitting from cost dilution from AR$ depreciation

  • Invested $65.8 million mainly for new terminals at the Ezeiza and

Comodoro Rivadavia airports and the terminal expansion at Aeroparque airport

  • In July, the government eliminated the price floor for domestic

flights to drive higher traffic in line with its Airplane Revolution plan

  • Advancing in the development of the Capex program for the next

years to satisfy the expected increase in passenger traffic Operating & Financial Highlights

(In millions of U.S. dollars, unless otherwise noted)

2Q18 2Q17 % Var Passenger Traffic (million) 8.8 8.3 6.5% Cargo 56.6 50.8 11.6% Aircraft Movements 105.9 98.7 7.3% Revenue 246.7 242.6 1.7%

  • Aeronautical

102.0 99.4 2.6%

  • Non-Aeronautical

144.7 143.1 1.1%

Commercial Revenue

79.2 82.8

  • 4.3%

Construction Service Revenue

65.5 60.4 8.5% Revenue ex-Construction 181.2 182.2

  • 0.5%

Adjusted Segment EBITDA 78.9 70.3 12.3% Adjusted Segment EBITDA margin Ex- IFRIC 43.5% 38.5% 500 bps CAPEX 65.8 59.1 11.3%

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Brazil: Continued passenger growth and strong Adjusted EBITDA margin expansion

  • Passenger traffic up 9.4% driven by Brasilia Airport (89.4% of Brazil

traffic) reflecting slowly improving economic conditions

  • Growth supported by addition of international & domestic routes and

more frequencies to existing destinations over the last twelve months

  • Revenues declined 1.3% YoY impacted by the BRL depreciation

 Aeronautical revenues fell 10.8% despite solid passenger growth  Commercial revenues up 8.5% as new commercial initiatives more than

  • ffset currency depreciation
  • Local currency revenue growth of 10.5% YoY
  • Adjusted Segment EBITDA up $2.6 million. Strong margin expansion
  • f 845 bps to 8.5% mainly due to higher operating leverage
  • Capex of $1.9 million for project engineering and the construction of

runway safety areas at Brasilia Airport and the repair of the new glass façade at Natal

2Q18 2Q17 % Var Passenger Traffic (million) 4.9 4.4 9.4% Cargo 15.7 13.3 18.3% Aircraft Movements 46.4 44.3 4.9% Revenue 30.3 30.7

  • 1.3%
  • Aeronautical

13.8 15.5

  • 10.8%
  • Non-Aeronautical

16.5 15.2 8.5%

Commercial Revenue

16.5 15.2 8.5% Adjusted EBITDA 2.6 0.0 n.m. Adjusted EBITDA margin 8.5% 0.1% 845 bps CAPEX 1.9 2.1

  • 10.6%

Operating & Financial Highlights

(In millions of U.S. dollars, unless otherwise noted)

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SLIDE 11
  • Passenger

traffic up 3.3% mainly driven by international passengers

  • Revenue ex-IFRIC12 fell 3.2% YoY

impacted by $4.5 million in marketing support expenses which are deducted from aeronautical revenues (reported in SG&A in 2Q17). On a comparable basis revenues were up 11% YoY and over 2% in local currency

  • Commercial revenues +16.9% driven the recently redesigned VIP

lounge and new retail stores at Florence Airport, passenger traffic and the Euro appreciation against the US dollar

  • Adjusted Segment EBITDA up 17.7% million to $10.7 million

 Ex-IFRIC12 margin expanded 466 basis points reflecting lower

SG&A expenses due to higher operating leverage

  • Invested $5.9 million primarily on terminal reconfigurations for

higher capacity and Master plan projects in the Florence Airport

  • Remain on track with investment program, construction at both

airports expected to start in 4Q18

2Q18 2Q17 % Var Passenger Traffic (million) 2.4 2.3 3.3% Cargo 3.0 2.7 14.0% Aircraft Movements 22.0 22.4

  • 1.7%

Revenue 42.0 41.7 0.7%

  • Aeronautical

26.7 29.5

  • 9.5%
  • Non-Aeronautical

15.3 12.3 25.2%

Commercial revenue

9.5 8.1 16.9%

Construction service revenue

5.2 3.7 40.5%

Other revenue

0.6 0.4 50.8% Revenue ex-Construction 36.8 38.0

  • 3.2%

Adjusted EBITDA 10.7 9.1 17.7% Adjusted EBITDA margin Ex-IFRIC 28.0% 23.3% 466 bps CAPEX 5.9 5.6 6.2%

Operating & Financial Highlights

(In millions of U.S. dollars, unless otherwise noted)

Italy: Strong performance driven by passenger growth and commercial initiatives

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Looking into 2018

  • Remain

cautiously

  • ptimistic

anticipating

  • verall

healthy dynamics and continued growth across our markets

 Passenger traffic anticipated to grow at lower rates in

Argentina given slower overall travel demand and mix-shift from international to domestic given currency volatility

 International expected to pick-up over time driven by higher

inbound demand

  • Argentina Adjusted EBITDA margin benefits from currency

depreciation as a significant portion of our revenues are tied to the US$, while operating costs are denominated in pesos

  • New route development and attracting carriers a key priority
  • Maintain focus on further strengthening global platform for long-

term success

  • Solid balance sheet provides flexibility and supports growth

plans

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SLIDE 13

Questions and Answers

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IR Contact Gimena Albanesi Email: gimena.albanesi@caairports.com Phone: +5411 4852-6411