Corporacin Amrica Airports S.A. First Quarter 2019 Earnings Call - - PowerPoint PPT Presentation

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Corporación América Airports S.A. First Quarter 2019 Earnings Call Presentation

SLIDE 2

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

SLIDE 3

• Passenger traffic up 4% YoY reaching over 20 million passengers in 1Q19
• Comparable revenues, Ex-IFRC12, declined 8% YoY mainly reflecting difficult macro in Argentina

and FX translation impact from Argentine Peso, Euro and Brazilian Real depreciation

• Comparable Adj. EBITDA, Ex-IFRC12, decreased 8% YoY, with margin flat at 39%
• Progress on strategic initiatives
• CAPEX of US$64 million to enhance airport infrastructure, mainly in Argentina, Italy and Armenia
• Approval of the 2014-2029 Master Plan for Florence Airport by Ministry of Transportation
• Extended concession agreement of the Punta del Este Airport in Uruguay through 2033

Advancing on strategic initiatives while navigating challenging macro environment

• 1. All figures shown in this presentation are excluding IAS29, unless otherwise noted. For “As Reported” figures see the earnings report.
• 2. Comparable figures exclude: i) a $4.9 M one-time revenue in Italy of the CPI inflationary effect on airport fees recorded in other revenues in 1Q18, and ii) a one-time $0.8 M IPO

expense in 1Q18.

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 growth of 4% with slight pick-up in Argentina, impacted by declines in Peru & Uruguay; together with softer growth in Italy, Brazil and Armenia

2 Airports(1) Passengers +7.5% Cargo +12.6% Movements +14.7% ECUADOR PERU 37 Airports Passengers +7.0% Cargo

• 7.2%

Movements +2.2% ARGENTINA 5 Airports(2) Passengers

• 5.7%

Cargo +2.2% Movements -11.0% ITALY 2 Airports Passengers +1.6% Cargo +16.0% Movements +1.9% BRAZIL 2 Airports Passengers +0.1% Cargo +67.0% Movements

• 8.9%

ARMENIA 2 Airports Passengers +10.4% Cargo +2.4% Movements +8.4% URUGUAY 2 Airports Passengers

• 6.2%

Cargo

• 9.8%

Movements

• 14.7%

Corporación América Airports

52 Airports Passengers +4.0% Cargo +6.3% Movements -0.3%

54%

5% 4%

7%

3%

24% 3% % of total passengers for 1Q19

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

SLIDE 5

Net Revenue by type Net Revenue by geography

• Revenues face tougher comps due to $ 4.9 M one-time recognition in Italy of the CPI inflationary effect on fees in 1Q18
• Comparable revenues Ex-IFRIC12 fell 8.4% YoY in the quarter
• Aeronautical down 6.1% YoY impacted by: i) Argentina due to mix-shift from international to domestic traffic and

currency depreciation, and ii) Brazil mainly due to currency depreciation. Revenue growth in Ecuador and Uruguay.

• Commercial declined 13.9%, growth in Italy and Armenia more than offset by Argentina and Brazil. Currency translation

in Brazil more than offset 14% local currency growth from higher cargo volume and VIP lounge revenues

Revenues impacted by slower international travel demand in Argentina and FX depreciation in Argentina, Brazil and Italy

1Q18 1Q19 ex IAS 29 IAS 29 1Q19 as reported % Var as reported % Var ex IAS 29 Aeronautical Revenue 204.8 192.3

• 7.3

185.0

• 9.7%
• 6.1%

Non-aeronautical Revenue 186.1 183.0

• 7.4

175.6

• 5.7%
• 1.7%

Commercial revenue 137.2 118.2

• 3.8

114.3

• 16.7%
• 13.9%

Construction service revenue (1) 46.6 64.3

• 3.6

60.7 30.3% 37.9% Other revenue 2.3 0.5 0.0 0.5

• 78.0%
• 78.0%

Total Consolidated Revenue 390.9 375.2

• 14.7

360.6

• 7.8%
• 4.0%

Total Revenue excluding Construction Service revenue (2) 344.3 310.9

• 11.1

299.8

• 12.9%
• 9.7%

In US$ million 1 Construction Service revenue equals the construction or upgrade costs plus a reasonable margin. 2 Excludes Construction Service revenue.

63% 7% 8% 9% 7% 6% Argentina Italia Brazil Uruguay Ecuador Armenia

• 1. All figures shown in this presentation are excluding IAS29, unless otherwise noted. For “As Reported” figures see the earnings report.

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195 182 46 64 44 39 1.2 0.8

1Q18 1Q19 Cost of services Ex Construction Construction Costs SG&A Other expenses

• Operating Costs & Expenses Ex-IFRIC12 down 8%

YoY to $222 M

• Cost of services decreased 7% YoY to $182 M, mainly due to

declines in:

 Maintenance expenses in Argentina benefitting from FX

depreciation

 Concession fees in Argentina reflecting lower revenues and in

Brazil due to FX depreciation and the change in the passenger curve by which the concession fee is calculated



Salaries benefitting from AR Peso, Real and Euro depreciation

• SG&A down 11% YoY to $39 M in 1Q19, mainly due to:

 Lower sales taxes and labor costs in Argentina  Partially offset by higher bad debts:  In Argentina from commercial tenants  In Brazil from a Brazilian carrier  1Q18 included a one-time of $0.8 million in IPO expenses

286

Consolidated Operating Costs and Expenses

1%

US$ Million

Lower cost dilution due to a decline in sales. Main cost line items benefitted from currency depreciation in key markets

286

• 1. All figures shown in this presentation are excluding IAS29, unless otherwise noted. For “As Reported” figures see the earnings report.

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137 122

1Q18 1Q19

Adjusted EBITDA & Margin

US$ Million

39.0% 39.6%

• Adj. EBITDA Mg

Ex-IFRIC12

• Adjusted EBITDA fell 11% YoY to $122 M
• Comparable Adj. EBITDA fell 8% YoY to $122

M, while Adj. EBITDA Mg Ex-IFRIC12 remained stable at 39%

 Solid margin improvement in Argentina and

Italy

 More than offset softer margin in Brazil and

Uruguay

Adjusted EBITDA impacted by currency depreciation. Comparable Adjusted EBITDA margin flat YoY

• 1. All figures shown in this presentation are excluding IAS29, unless otherwise noted. For “As Reported” figures see the earnings report.
• 2. Comparable figures exclude: i) a $4.9 M one-time revenue in Italy of the CPI inflationary effect on airport fees recorded in other revenues in 1Q18, and ii) a one-time $0.8 M IPO

expense in 1Q18.

SLIDE 8

2.7x 2.0x 2.0x 2.1x 2.0x 2.0x

December 2017 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19

177 170 469 820 1 year or less 1 -2 years 2 - 5 years Over 5 years

59% 26% 15%

US dollars Reales Euro

40% 60%

Bank and financial borrowings Notes

Healthy balance sheet and sound debt profile

Debt Maturity Profile Leverage Ratios

(Mar 31, 2019; US$mm)(2)

Financial Debt Overview Debt Breakdown

US$1.1bn(1)

(Mar 31, 2019)

Source: Company information.

1. As of March 31 2019, the Company had a cash balance of US$255M. 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.

Strong cash position of $255 million. Debt held at subsidiary level.

4.0x 5.3x

Net Debt/EBITDA Adjusted EBITDA/Interest Expense

Currency Mix

(Mar 31, 2019)

US$1.1bn(1)

6.0x 3.8x 5.8x 5.3x

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Argentina: revenues impacted by difficult macro dynamics, while margin expanded to 48%

• Domestic traffic up 16% supported by opening of new routes by low-

cost carriers, while international passengers fell 6% YoY

• Revenue ex-IAS 29 and ex-IFRIC12 declined 14% mainly impacted by:

 Overall slower international travel demand and mix-shift to domestic

traffic

 Lower commercial revenues driven by a decline in duty free sales  Drop in cargo revenues due to mix shift from imports  FX translation impact local currency revenues from the sharp AR$

depreciation

• Ex-IAS 29 Adjusted Segment EBITDA fell 10% YoY, with Ex-IFRIC

margin expanding 197 bps to 48% mainly due to:  FX depreciation on labor costs and maintenance expenses  A reduction in SG&A

• Invested $59 million in new terminals at Ezeiza, Comodoro Rivadavia

Jujuy and Iguazu airports, expansion of Aeroparque Airport, and in various programs across other airports of the concession

• Completion of new terminal at Ezeiza expected by 3Q19

Operating & Financial Highlights

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

1Q18 1Q19 ex IAS 29 IAS 29 1Q19 as reporte d % Var as reported % Var ex IAS 29 Passenger Traffic (in millions) 10.2 11.0

• 11.0

7.0% 7.0%

• Domestic

5.9 6.9

• 6.9

15.8% 15.8%

• International

3.9 3.7

• 3.7
• 6.0%
• 6.0%

Cargo Volume 60.4 56.1

• 56.1
• 7.2%
• 7.2%

Aircraft Movements 113.4 115.9

• 115.9

2.2% 2.2% Total Revenue 248.3 234.9

• 14.7

220.2

• 11.3%
• 5.4%
• Aeronautical Revenue

122.1 112.4

• 7.3

105.1

• 13.9%
• 7.9%

Non-aeronautical revenue 126.2 122.5

• 7.4

115.1

• 8.8%
• 2.9%

Commercial revenue 81.7 63.0

• 3.8

59.2

• 27.5%
• 22.8%

Construction service revenue 44.5 59.4

• 3.6

55.9 25.5% 33.5% Revenue ex-Construction 203.8 175.4

• 11.1

164.3

• 19.4%
• 13.9%

Adjusted Segment EBITDA 93.0 83.5

• 5.1

78.4

• 15.7%
• 10.2%

Adjusted EBITDA Margin Ex- IFRIC 45.6% 47.6% 47.7% 211 bps 197 bps CAPEX 44.5 59.4

• 3.5

55.9 25.5% 33.4%

SLIDE 10

• Passenger traffic up 2% mainly driven by international passengers
• Revenue ex-IFRIC12 down 17% YoY as 1Q18 benefited from a one-time

revenue recognition. On a comparable basis revenues, were flat due to the impact of the depreciation of the Euro

 Commercial revenues +3% driven by:

• Duty free revenues from the opening of new areas at Pisa Airport and

the new Duty free shops at Florence Airport

• Higher car rental revenues from new areas inaugurated in November

2018

• Adjusted Segment EBITDA down 67% million to $2 M, with Ex-IFRIC12

margin contracting to 6% impacted by the $4.9 million one-time revenue recognition in 1Q18

• Excluding this one time effect, Adjusted Segment EBITDA increased 25%

with Ex-IFRIC12 margin expanding 129 basis points to 6%

• Invested $3 M primarily on Master plan development in Florence Airport.

 Ministry of Transportation approved Master Development Plan for the

Florence Airport expansion plan. Construction at Pisa and at Florence airport expected to start in 4Q19

Operating & Financial Highlights

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

Italy: Comparable adjusted EBITDA margin expansion driven by passenger growth and commercial initiatives

1Q19 1Q18 % Var Passenger Traffic (million) 1.4 1.4 1.6%

• Domestic

0.4 0.4

• 2.3%
• International

1.0 1.0 3.1% Cargo 3.1 2.7 16.0% Aircraft Movements 14.2 13.9 1.9% Revenue 26.8 31.7

• 15.4%
• Aeronautical

16.9 20.5

• 17.5%
• Non-Aeronautical

9.9 11.2

• 11.6%

Commercial revenue

7.6 7.4 3.2%

Construction service revenue

1.8 1.5 17.2%

Other revenue

0.5 2.2

• 79.9%

Revenue ex-Construction 25.0 30.2

• 17.1%

Adjusted EBITDA 2.2 6.6

• 66.6%

Adjusted EBITDA margin Ex-IFRIC 6.3% 20.5%

• 1,428 bps

CAPEX 3.0 2.3 29.1%

SLIDE 11

Brazil: Local currency revenue growth; Adjusted EBITDA impacted by FX depreciation and bad charges, more than offsetting lower cost of services

• Traffic remained flat as new domestic and international routes was offset

by a reduction in less profitable routes at a leading Latin American airline and capacity adjustments at a Brazilian airline.

• Local currency revenues up 8% YoY, but down 7% as reported impacted

by the BRL depreciation  Aeronautical revenues fell 13%, but was up 2% in local currency due to

mix-shift from transit to higher margin domestic traffic and a 6% YoY increase in tariffs at Brasilia Airport starting August 2018.

 Commercial revenues declined 1.6% as currency depreciation more than

• ffset

increase in revenues from higher cargo volumes and new commercial agreements (+14% in local currency)

• Adjusted Segment EBITDA down 28% to $3 million with the margin down

to 10% mainly due to:

 Higher SG&A expenses as a result of

higher bad debt charges mainly from a Brazilian carrier

 Partially offset by lower concession fee charges Operating & Financial Highlights

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

1Q19 1Q18 % Var Passenger Traffic (million) 5.0 5.0 0.1%

• Domestic

2.9 2.9 1.9%

• International

0.1 0.2

• 10.3%

Cargo 23.5 14.1 67.0% Aircraft Movements 40.8 44.8

• 8.9%

Revenue 29.7 32.0

• 7.4%
• Aeronautical

14.6 16.7

• 12.8%
• Non-Aeronautical

15.1 15.3

• 1.6%

Commercial Revenue

15.1 15.3

• 1.6%

Adjusted EBITDA 3.0 4.2

• 27.6%

Adjusted EBITDA margin 10.2% 13.1%

• 286 bps

CAPEX 1.3 1.4

• 4.0%

SLIDE 12

• Passenger traffic fell 6% mainly impacted by the difficult macro

conditions in Argentina

• Revenue flat as higher aeronautical revenues was offset by the

decrease in commercial revenues  Aeronautical revenue up 5% supported by the introduction of the new

security fee

 Commercial revenues declined 10% mainly impacted by

• Lower Duty Free sales and parking revenues related to reduced

passenger traffic and lower demand, particularly by Argentine passengers; and

• Depreciation of the Uruguayan peso
• Adjusted Segment EBITDA fell 3% million to $19 M.
• Ex-IFRIC12 margin contracted 63 bps due to higher maintenance

expenses partially offset by lower payroll costs due to the depreciation

• f the Uruguayan peso and lower SG&A expenses
• Extended Punta del Este concession agreement for 14-years through

2033

Operating & Financial Highlights

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

Uruguay: Stable revenues despite decline in traffic, Adjusted EBITDA benefitted from currency depreciation

1Q19 1Q18 % Var Passenger Traffic (million) 0.6 0.7

• 6.2%
• Domestic

0.0 0.0

• 45.6%
• International

0.6 0.7

• 6.0%

Cargo 6.1 6.8

• 9.8%

Aircraft Movements 9.3 10.9

• 14.7%

Revenue 34.7 34.8

• 0.3%
• Aeronautical

20.3 19.4 4.7%

• Non-Aeronautical

14.4 15.4

• 6.6%

Commercial revenue

13.7 15.3

• 10.0%

Construction service revenue

0.7 0.1 375.6%

Other revenue

0.0 0.0

• 5.9%

Revenue ex-Construction 34.1 34.7

• 1.8%

Adjusted EBITDA 18.8 19.3

• 2.8%

Adjusted EBITDA margin Ex-IFRIC 55.1% 55.7%

• 63 bps

SLIDE 13

Looking into 2019: Despite near-term headwinds across key markets, solid balance sheet supports strategic initiatives that better position CAAP for long term growth

• Difficult

macro environment, reduction in GDP growth expectations and added uncertainty of Presidential elections in Argentina impacting passenger traffic trends in the country:  Suggests more subdued economic recovery towards year-

end

• In Brazil, capacity adjustments at two carriers and lower

GDP growth expectations expected to weight on results

• Continue to monitor developments at a national carrier in

Italy

• Remain focused on enhancing the passenger experience

and moving ahead with key capital investments

• Healthy

balance sheet supports anticipated long-term growth plans

• Well positioned to resume growth as the macro environment

improves

SLIDE 14

Questions and Answers

SLIDE 15

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