Corporacin Amrica Airports S.A. Third Quarter 2018 Earnings Call - - PowerPoint PPT Presentation
Corporacin Amrica Airports S.A. Third Quarter 2018 Earnings Call - - PowerPoint PPT Presentation
Corporacin Amrica Airports S.A. Third 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
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
- r 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$, EUR, BRL, UYU, AMD or the PEN against the U.S. dollar, the early termination, revocation or failure to renew or extend any of our concession agreements, the right of the Argentine Government to buy out the AA2000 Concession Agreement, changes in our investment commitments or our ability to meet our obligations thereunder, existing and future governmental regulations, natural disaster-related losses which may not be fully insurable, terrorism in the international markets we serve, epidemics, pandemics and other public health crises and changes in interest rates or foreign exchange rates. The Company encourages you to review the ‘Cautionary Statement’ and the ‘Risk Factor’ sections of our Registration Statement on Form F-1 filed with the SEC for additional information concerning factors that could cause those differences.
Disclaimer and forward looking statement
- Passenger traffic +5.8% YoY reaching 22.1 million passengers in 3Q18
- As reported consolidated results impacted by adoption of Hyperinflation Accounting in Argentina (IAS 29)
- Revenues Ex-IAS 29 fell 7.7 % YoY mainly as a result of lower international travel demand and mix-shift to
domestic in Argentina, along with FX translation impact in Brazil and on share of local currency revenues in Argentina
- Adjusted EBITDA Ex-IAS 29 up 8.8% with Ex- IFRIC margin expansion of 469 bps; core markets Argentina,
Brazil and Italy continued to deliver strong margin expansion
- Invested US$ 51.3 million to enhance airport infrastructure mainly in Argentina and Italy
Strong Adjusted EBITDA margin expansion despite difficult macro backdrop in Argentina and FX depreciation in Argentina and Brazil
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Slower traffic growth of 5.8% impacted by Argentina & Brazil; solid performance across majority of other countries of operations
2 Airports(1) Passengers +10.4% Cargo +20.0% Movements +3.1% ECUADOR PERU 37 Airports Passengers +5.9% Cargo
- 5.4%
Movements +3.9% ARGENTINA 5 Airports(2) Passengers +10.3% Cargo -10.8% Movements +13.6% ITALY 2 Airports Passengers +3.2% Cargo +9.2% Movements +0.2% BRAZIL 2 Airports Passengers +5.2% Cargo +27.6% Movements
- 2.6%
ARMENIA 2 Airports Passengers +13.8% Cargo
- 16.7%
Movements +14.7% URUGUAY 2 Airports Passengers
- 4.8%
Cargo
- 5.3%
Movements +0.4%
Corporación América Airports
52 Airports Passengers +5.8% Cargo +1.2% Movements +2.6%
48%
5% 4%
12%
2%
24% 4% % of total passengers for 3Q18
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
Net Revenue by type Net Revenue by geography (Ex- IAS 29)
▪
Ex IAS 29 and Ex-IFRIC Revenues fell 3.8% YoY
▪
Total Revenues Ex-IAS 29 fell 7.7% YoY in the quarter
▪
Aeronautical fell 4.4% YoY impacted by: i) Argentina due to mix-shift from international to domestic traffic and currency depreciation ii) Brazil mainly due to currency depreciation, iii) Italy due to the deduction of marketing support expenses previously recorded in SG&A. Revenue growth in Uruguay, Ecuador and Armenia.
▪
Commercial declined 3.0%, growth in Italy and Armenia more than offset by Argentina and Brazil
Revenue growth impacted by slower travel demand in Argentina and currency depreciation in both Argentina and Brazil
3Q17 3Q18 ex IAS 29 IAS 29 3Q18 as reported % Var as reported % Var ex IAS 29 Aeronautical Revenue 205.1 196.0
- 19.0
177.1
- 13.7%
- 4.4%
Non-aeronautical Revenue 216.0 192.8
- 21.9
170.9
- 20.9%
- 10.7%
Commercial revenue 142.9 138.6
- 13.9
124.7
- 12.7%
- 3.0%
Construction service revenue (1) 72.7 53.6
- 8.0
45.6
- 37.3%
- 26.3%
Other revenue 0.5 0.6 0.0 0.6 30.8% 30.8% Total Consolidated Revenue 421.1 388.9
- 40.9
348.0
- 17.4%
- 7.7%
Total Revenue excluding Construction Service revenue (2) 348.4 335.3
- 32.9
302.4
- 13.2%
- 3.8%
In US$ million 1 Construction Service revenue equals the construction or upgrade costs plus a reasonable margin. 2 Excludes Construction Service revenue.
57% 12% 8% 7% 6% 10% Argentina Italia Brazil Uruguay Ecuador Armenia
200 190 72 53 49 41 0,6 1
3Q17 3Q18 Cost of services Ex Construction Construction Costs SG&A Other expenses
▪
Total operating costs and expenses, ex-IAS 29 and ex-IFRIC12 declined 7.4% YoY to $231.1M ▪ Cost of services fell 5.1% YoY to $189.6M reflecting:
✓ Decrease in salaries benefitting from FX depreciation in
Argentina and Brazil
✓ Lower concession fees in Argentina and Brazil. ✓ Partially offset by higher cost of fuel in Armenia ▪
SG&A fell 17.5% YoY to $40.6M in 3Q18 mainly due to:
✓ Marketing support expenses in Italy, now reported
under Aeronautical Revenues
✓ Lower sales taxes in Argentina due to the decrease in
revenues
✓ A decrease in salaries benefitting from FX depreciation
in Argentina
284
Ex- IAS 29 Consolidated Operating Costs and Expenses
US$ Million
Strong cost dilution driven mainly from currency depreciation…
322
126 137
3Q17 3Q18
Ex-IAS 29 Adjusted EBITDA & Margin
US$ Million
40.7% 36.0%
- Adj. EBITDA Mg
Ex-IFRIC12
▪
Ex- IAS 29, Adjusted EBITDA up 8.8% YoY
✓ Driven by higher profitability across all countries ✓ Ex-IFRIC12,
Consolidated Adjusted EBITDA margin expansion of 469 bps, with strong margin expansion in core markets Argentina, Brazil and Italy
▪
Despite solid operating results, bottom line was affected by:
✓ Higher net financial losses mainly due to higher non-cash
foreign exchange expenses in Argentina arising from its US dollar denominated debt
✓ Partially offset by lower income tax expenses
… continues to support Adjusted EBITDA growth and strong margin expansion in the quarter; FX impacted the bottom line
2,7x 2,0x 2,0x 2,1x
December 2017 March 2018 June 2018 September 2018
59% 25% 16% US dollars Reales Euro 40% 60%
Bank and financial borrowings Notes
Healthy balance sheet and sound debt profile
Debt Maturity Profile Leverage Ratios
(Sep 30, 2018; US$mm)(2)
Financial Debt Overview
Debt Breakdown US$1.2bn(1)
(Sep 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
- perations and debt
4.0x 5.3x
Net Debt/EBITDA Adjusted EBITDA/Interest Expense
Currency Mix
(Sep 30, 2018)
US$1.2bn(1)
6.0x
164 140 482 881 1 year or less 1 -2 years 2 - 5 years Over 5 years
5.8x
Argentina: Strong Adjusted EBITDA margin expansion, topline impacted by challenging macro dynamics
▪ Results in Argentina impacted by the adoption of the Hyperinflation
accounting (IAS 29)
▪ Revenue ex-IAS 29 and ex-IFRIC declined 8.3% despite +5.9% passenger
traffic growth and higher aircraft movements, mainly impacted by:
✓ Overall slower international travel demand and mix-shift to domestic traffic ✓ FX translation impact on domestic traffic and share of local currency
commercial revenue from the sharp AR$ depreciation
✓ A mix shift from imports to exports in cargo activity due to macro conditions
▪ Ex-IAS 29 Adjusted Segment EBITDA relatively flat at $79.0M. Ex-IFRIC
margin up 398 bps to 44.7% benefitting from cost dilution
▪ Invested $46.8 million in new terminals at Ezeiza and Comodoro
Rivadavia airports, and remodeling of Iguazu and Mar del Plata airports
▪ Completion of new terminal al Ezeiza expected to by mid-year 2019 ▪ Advancing capex execution to absorb future passenger growth ▪ El Palomar airport approved to operate international routes to
neighbor countries Uruguay, Chile and Paraguay by year-end
▪
Operating & Financial Highlights
(In millions of U.S. dollars, unless otherwise noted)
3Q17 3Q18 ex IAS 29 IAS 29 3Q18 as reported % Var as reported % Var ex IAS 29 Passenger Traffic (in millions) 10.0
- 10.5
5.9%
- Cargo Volume
55.4
- 52.4
- 5.4%
- Aircraft Movements
111.0
- 115.4
3.9%
- Total Revenue
262.2 223.5
- 40.9
182.6
- 30.4%
- 14.8%
- Aeronautical Revenue
107.6 102.4
- 19.0
83.4
- 22.5%
- 4.9% -
Non-aeronautical revenue 154.6 121.1
- 21.9
99.2
- 35.8%
- 21.7%
Commercial revenue 85.1 74.3
- 13.9
60.4
- 29.1%
- 12.7%
Construction service revenue 69.5 46.8
- 8.0
38.8
- 44.1%
- 32.6%
Revenue ex-Construction 192.7 176.7
- 32.9
143.8
- 25.4%
- 8.3%
Adjusted Segment EBITDA 78.6 79.0
- 14.5
64.6
- 17.8%
0.6% Adjusted EBITDA Margin Ex-IFRIC 40.7% 44.7% 43.9% 44.9% 417 398 CAPEX 71.2 46.8
- 8.0
38.8
- 45.6%
- 34.3%
Brazil: Slowdown in passenger growth and strong Adjusted EBITDA margin expansion
▪ Passenger traffic up 5.2% driven by Brasilia Airport (88.4% of Brazil traffic),
slowdown mainly due to pre-election uncertainty environment
▪ Growth supported by addition of domestic routes and more frequencies to
existing destinations over the last twelve months
▪ Revenues declined 11.3% YoY impacted by the BRL depreciation
✓ Aeronautical revenues fell 15.3% despite solid passenger growth (+5.7% in local
currency)
✓ Commercial revenues fell 7.1% as new commercial initiatives were offset by
currency depreciation (+16.4% in local currency)
▪ Adjusted Segment EBITDA up 75.2% to $6.3 million. Strong margin
expansion of 1041 bps to 21.1% mainly due to lower concession fees (change in passenger curve) and a decline in SG&A expenses as a result of a bad debt recovery
▪ Capex of $2.6 million for project engineering and the construction of
runway safety areas at Brasilia Airport
2Q18 2Q17 % Var Passenger Traffic (million) 5.3 5.0 5.2% Cargo 17.4 13.6 27.6% Aircraft Movements 47.1 48.4
- 2.6%
Revenue 29.7 33.5
- 11.3%
- Aeronautical
14.6 17.2
- 15.3%
- Non-Aeronautical
15.1 16.3
- 7.1%
Commercial Revenue
15.1 16.3
- 7.1%
Adjusted EBITDA 6.3 3.6 75.2% Adjusted EBITDA margin 21.1% 10.7% 1041 bps CAPEX 2.6 4.2
- 38.5%
Operating & Financial Highlights
(In millions of U.S. dollars, unless otherwise noted)
▪ Passenger traffic up 3.2% mainly driven by international passengers ▪ Revenue ex-IFRIC12 fell 8.1% YoY impacted by $4.9 million in marketing
support expenses deducted from aeronautical revenues (reported in SG&A in 3Q17). On a comparable basis revenues were up 6% YoY
▪ Commercial revenues +9.1% driven by:
✓ The recently redesigned VIP lounge, new retail stores and new space of Duty
free shops at Florence Airport,
✓ An increase in minimum fees and parking tariffs at Florence Airport
▪ Adjusted Segment EBITDA up 5.3% million to $15.8 million
✓ Ex-IFRIC12 margin expanded 466 basis points reflecting lower SG&A expenses
due to higher operating leverage
▪
Invested $5.0 million primarily on terminal expansion at Pisa Airport and Master plan projects at Florence Airport
▪
Remain on track with investment program, construction at both airports expected to start in 1Q19
2Q18 2Q17 % Var Passenger Traffic (million) 2.7 2.6 3.2% Cargo 2.7 2.5 9.2% Aircraft Movements 24.7 24.7 0.2% Revenue 46.7 48.6
- 4.0%
- Aeronautical
30.2 35.0
- 13.7%
- Non-Aeronautical
16.5 13.6 21.0%
Commercial revenue
11.5 10.5 9.1%
Construction service revenue
4.4 2.6 67.2%
Other revenue
0.6 0.4 29.2% Revenue ex-Construction 42.3 46.0
- 8.1%
Adjusted EBITDA 15.8 15.0 5.3% Adjusted EBITDA margin Ex-IFRIC 36.7% 32.0% 466 bps CAPEX 5.0 3.8 32.4%
Operating & Financial Highlights
(In millions of U.S. dollars, unless otherwise noted)
Italy: Strong adjusted EBITDA margin expansion driven by passenger growth and commercial initiatives
Looking ahead
▪ Weaker traffic trends in Argentina anticipated to continue in the
remainder of 2018 and to deepen in the first half of 2019, slowly recovering in the second half of the year
✓ Stronger mix-shift to more affordable domestic destinations ✓ Gradual pick-up in inbound international traffic as travelling to
Argentina becomes more affordable on the back of the weak peso
▪
By contrast, traffic growth in Brazil anticipated to pick-up towards year- end 2018, particularly international traffic. Anticipated continued solid traffic trends in majority of other markets
▪ Argentina Adjusted EBITDA margin benefits from currency depreciation
as a significant portion of revenues are tied to the US$, while operating costs are denominated in pesos. Lower cost dilution expected as inflation catches up with FX devaluation
▪ New routes 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