corporación américa airports s.a. second quarter 2019 ... · ex-ifric12 adjusted ebitda fell 6. %...
TRANSCRIPT
Corporación América Airports S.A.Second Quarter 2019 Earnings Call Presentation
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
• Passenger traffic up 3.8% YoY reaching 19.8 million passengers in 2Q19
• Revenues, Ex-IFRIC12, declined 7% YoY mainly reflecting difficult macro in Argentina, softer traffic in
Brazil and FX translation impact from Argentine Peso, as well as Euro and Brazilian Real depreciation
• Comparable Adj. EBITDA, Ex-IFRIC12, decreased 9% YoY, with margin flat at 37%
• Progress on strategic initiatives
• CAPEX of US$108 million to enhance airport infrastructure, mainly in Argentina, Armenia and Ecuador
• Inauguration of the new terminal at Ezeiza Airport expected by September 2019
Executing against strategic roadmap despite continued
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 one-time $2.2 million gain in Italy from the positive outcome of a claim against the Ministry of Transport
NY008MZK / 938652_1.wor
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ARGENTINAARGENTINAARGENTINAARGENTINAARGENTINAARGENTINAARGENTINAARGENTINAARGENTINAARGENTINAARGENTINAARGENTINAARGENTINAARGENTINAARGENTINAARGENTINAARGENTINAARGENTINAARGENTINAARGENTINAARGENTINAARGENTINAARGENTINAARGENTINAARGENTINAARGENTINAARGENTINAARGENTINAARGENTINAARGENTINAARGENTINAARGENTINAARGENTINAARGENTINAARGENTINAARGENTINAARGENTINAARGENTINAARGENTINAARGENTINAARGENTINAARGENTINAARGENTINAARGENTINAARGENTINAARGENTINAARGENTINAARGENTINAARGENTINA
Traffic growth of 3.8% driven by domestic passenger growth in Argentina, impacted by declines in Brazil & Uruguay; good performance in Armenia and Peru
2 Airports(1)
Passengers +2.1%
Cargo -6.2%
Movements +1.3%
ECUADOR
PERU
37 Airports
Passengers +12.3%
Cargo -3.3%
Movements +0.1%
ARGENTINA
5 Airports(2)
Passengers +4.5%
Cargo -1.9%
Movements -1.1%
ITALY
2 Airports
Passengers +0.0%
Cargo +13.2%
Movements +1.8%
BRAZIL
2 Airports
Passengers -9.8%
Cargo +52.0%
Movements -18.9%
ARMENIA
2 Airports
Passengers +8.9%
Cargo +9.5%
Movements +0.2%
URUGUAY
2 Airports
Passengers -2.1%
Cargo +0.8%
Movements -8.5%
Corporación América Airports
52 Airports
Passengers +3.8%
Cargo +6.6%
Movements -4.0%
50%
5%
4%
12%
3%
22%
4%
% of total passengers for 2Q19
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
Comparable revenues Ex-IFRIC12 fell 7.2% YoY in the quarter:
Aeronautical down 3.7% YoY impacted by: i) Argentina due to mix-shift from international to domestic traffic and
currency depreciation, and ii) Brazil mainly due to decline in traffic and currency depreciation. Revenue growth in Ecuador
driven by international traffic
Commercial declined 11.7%, growth in Armenia and Italy more than offset by Argentina and Brazil. Currency translation
in Brazil more than offset 4% local currency growth from higher cargo volume and VIP lounge revenues among others
Revenues reflect lower international travel demand in Argentina, traffic decline in Brazil and FX depreciation in Argentina, Brazil and Italy
2Q182Q19 ex IAS 29
IAS 292Q19 as reported
% Var as reported
% Var ex IAS 29
Aeronautical Revenue 185.6 178.7 6.7 185.4 -0.1% -3.7%
Non-aeronautical Revenue 211.4 216.8 10.4 227.2 7.4% 2.5%
Commercial revenue 138.1 121.9 4.9 126.7 -8.2% -11.7%
Construction service revenue (1) 72.7 94.4 5.5 99.9 37.5% 29.9%
Other revenue 0.7 0.5 0.0 0.5 -28.4% -28.4%
Total Consolidated Revenue 397.1 395.4 17.1 412.6 3.9% -0.4%
Total Revenue excluding Construction Service revenue (2) 324.4 301.0 11.6 312.6 -3.6% -7.2%
In US$ million
1 Construction Service revenue equals the construction or upgrade costs plus a reasonable margin.
2 Excludes Construction Service revenue.
62%
10%
7%
7%
6%
8%
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.
191 182
72 94
4436
0.5 0.1
2Q18 2Q19
Cost of services Ex Construction Construction Costs
SG&A Other expenses
Operating Costs & Expenses Ex-IFRIC12 down 7% YoY
to $218 M
Cost of services decreased 5% YoY to $182 M, mainly due to
declines in:
Maintenance expenses in Argentina and Brazil benefitting from FX
depreciation and in Ecuador and Uruguay from easier comps
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, partially offset by the 5%
increase agreed July 18 in Ecuador
Salaries benefitted from AR Peso, Real and Euro depreciation
Cost of services also benefitted from a $2.2 M one-time gain in Italy from
a positive outcome of a legal claim
SG&A down 18% YoY to $36 M in 2Q19, mainly due to:
Lower sales taxes and labor costs in Argentina
Lower professional fees at holding levels
Partially offset by higher bad debts in Argentina and Brazil from
commercial tenants
312
Consolidated Operating Costs and Expenses
1%
US$ Million
Operating costs and expenses follow decline in sales. Cost structure continued to benefit from currency depreciation in key markets
308
1. All figures shown in this presentation are excluding IAS29, unless otherwise noted. For “As Reported” figures see the earnings report.
121113
2Q18 2Q19
Adjusted EBITDA & Margin
US$ Million
37.4%37.2%Adj. EBITDA MgEx-IFRIC12
Adjusted EBITDA fell 6.6% YoY to $113 M
Comparable Adj. EBITDA fell 9% YoY to $110 M,
while Adj. EBITDA Mg Ex-IFRIC12 remained
stable at 37%
Solid margin improvement in Italy and Brazil
Offset softer margin in Argentina
Adjusted EBITDA down 6.6% impacted by Argentina while comparable Adjusted EBITDA margin remained flat YoY at 37%
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 one-time $2.2 million gain in Italy from the positive outcome of a claim against the Ministry of Transport
211 176
469
810
1 year or less 1 -2 years 2 - 5 years Over 5 years
2.7x
2.0x 2.1x 2.0x 2.0x 2.2x
December 2017 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19
58%27%
15%
US dollars
Reales
Euro
42%
58%
Bank and financialborrowings
Notes
Healthy balance sheet and sound debt profile
Debt Maturity ProfileLeverage Ratios(Jun 30, 2019; US$mm)(2)
Financial Debt Overview
Debt Breakdown
US$1.1bn(1)
(Jun 30, 2019)
Source: Company information.
1. As of June 30 2019, the Company had a cash balance of US$222M.
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 $222 million. Debt held at subsidiary level.
• US$ 120 million credit facility entered by AA2000 on August 9 to fund capex program
5.3x
Net Debt/EBITDA Adjusted EBITDA/Interest Expense
Currency Mix
(Jun 30, 2019)
US$1.1bn(1)
6.0x 3.8x 5.8x 5.3x 5.2x
Argentina: revenues remained impacted by difficult macro dynamics, while Adjusted EBITDA margin was down 80 bps YoY at 43%
Domestic traffic up 22% YoY fueled by opening of new routes by low-cost
carriers and higher promotional activity. International passengers fell 6%
YoY
Revenue ex-IAS 29 and ex-IFRIC12 declined 14% mainly impacted by:
Overall slower international travel demand and mix-shift to domestic traffic
Lower commercial revenues driven by a decline in duty free sales and lower
cargo activity
FX translation impact local currency revenues from the sharp AR$
depreciation
Ex-IAS 29 Adjusted Segment EBITDA fell 15% YoY, with Ex-IFRIC 12
margin contracting 80 bps to 43% mainly due to:
Lower cost dilution from labor and maintenance expenses
Partially offset by the impact of currency depreciation on AR$ denominated
costs and a reduction in SG&A
Capex accelerated to $87 million in 2Q19 mainly for the new terminals at
Ezeiza, Jujuy and Iguazu airports, expansion of Aeroparque Airport, and in
various programs across other airports of the concession
Inauguration of a new fully sustainable terminal building at Comodoro
Rivadavia Airport
Completion of new terminal at Ezeiza expected by 3Q19
Operating & Financial Highlights (In millions of U.S. dollars, unless otherwise noted)
2Q18
2Q19
ex IAS
29
IAS
29
2Q19 as
reported
% Var as
reported
% Var ex
IAS 29
Passenger Traffic (in
millions)8.8 9.9 - 9.9 12.3% 12.3%
-Domestic 5.4 6.6 - 6.6 22.1% 22.1%
- International 3.2 3.0 - 3.0 -5.5% -5.5%
Cargo Volume 56.6 54.8 - 54.8 -3.3% -3.3%
Aircraft Movements 105.9 106.0 - 106.0 0.1% 0.1%
Total Revenue 246.7 243.1 17.1 260.2 5.5% -1.5%
Aeronautical Revenue 102.0 94.6 6.7 101.3 -0.7% -7.3%
Non-aeronautical revenue 144.7 148.5 10.4 158.9 9.8% 2.7%
Commercial revenue 79.2 62.0 4.9 66.8 -15.6% -21.7%
Construction service revenue 65.5 86.5 5.5 92.1 40.6% 32.1%
Revenue ex-Construction 181.2 156.5 11.6 168.1 -7.2% -13.6%
Adjusted Segment EBITDA 78.9 67.0 5.4 72.3 -8.4% -15.2%
Adjusted EBITDA Margin Ex-
IFRIC 1243.5% 42.7% - 43.0% -55 -80
CAPEX 65.8 86.8 5.5 92.3 40.2% 31.9%
Passenger traffic remained stable in 2Q19: 5.2% increase at Florence Airport
benefitting from easier comps was partially offset by 2.5% decline at Pisa Airport
Revenues ex-IFRIC12 were flat due to the impact of the depreciation of the Euro
Aeronautical revenues in local currency up 6% due to lower marketing support
expenses from lower traffic and the increase in the Passenger with Reduced
Mobility (PRM) fees
Commercial revenues up 4% (10% in local currency) driven by higher car rental
revenues at Pisa Airport and higher F&B revenues from the opening of new areas at
Pisa and Florence Airports
Adjusted Segment EBITDA up 30% to $14 million, benefitting from a $2.2 million
one-time gain from a legal claim
Excluding the one-time gain, Adjusted Segment EBITDA was up 9% and Ex-
IFRIC12 margin expanded 247 bps to 30%
Invested $5 M primarily on Master plan development in Florence Airport and new
equipment at Pisa Airport
On July 25, 2019 Toscana Aeroporti lodged an appeal with the Council of State
against the judgement by the Regional Administrative Court of Tuscany that
overturned the favorable Environmental Impact Assessment decree issued for
Florence Airport’s 2014-2029 Master Plan.
Operating & Financial Highlights (In millions of U.S. dollars, unless otherwise noted)
Italy: Strong Adjusted EBITDA margin expansion despite flat revenues
2Q19 2Q18 % Var
Passenger Traffic (million) 2.4 2.4 0.0%
-Domestic 0.5 0.5 -2.1%
-International 1.9 1.9 0.5%
Cargo 3.4 3.0 13.2%
Aircraft Movements 22.4 22.0 1.8%
Revenue 39.1 42.0 -7.0%
- Aeronautical 26.6 26.7 -0.2%
- Non-Aeronautical 12.5 15.3 -18.7%
Commercial revenue 9.9 9.5 3.7%
Construction service revenue 2.2 5.2 -57.9%
Other revenue 0.4 0.6 -34.2%
Revenue ex-Construction 36.9 36.8 0.2%
Adjusted EBITDA 13.9 10.7 29.6%
Adjusted EBITDA margin Ex-
IFRIC 1236.5% 28.0% 857
CAPEX 4.7 5.9 -21.2%
Brazil: Local currency revenue growth despite decline in traffic; Adjusted EBITDA expansion on the back of lower cost of services
Traffic declined almost 10% impacted by the cessation of operations
of Avianca Brazil. This more than offset traffic from new domestic and
international routes
Local currency revenues up 2% YoY, but down 6% as reported,
impacted by the BRL depreciation
Aeronautical revenues fell 7%, but were up 1% in local currency as the
increase in tariffs at Brasilia Airport more than offset traffic decline
Commercial revenues declined 5% as currency depreciation more than
offset increase in revenues from higher cargo volumes and new
commercial agreements (+3.5% in local currency)
Adjusted Segment EBITDA up 18% to $3 million with the margin
expanding 220 bps to 11% mainly due to:
A decline in cost of services from lower concession fee charges
Partially offset by deleverage in SG&A expenses as a result of higher
bad debt charges mainly from a Brazilian carrier
Operating & Financial Highlights (In millions of U.S. dollars, unless otherwise noted)
2Q19 2Q18 % Var
Passenger Traffic (million) 4.3 4.7 -9.8%
-Domestic 2.6 2.9 -10.4%
-International 0.1 0.1 12.2%
Cargo 23.9 15.7 52.0%
Aircraft Movements 37.6 46.4 -18.9%
Revenue 28.4 30.3 -6.2%
- Aeronautical 12.8 13.8 -7.3%
- Non-Aeronautical 15.6 16.5 -5.4%
Commercial Revenue 15.6 16.5 -5.4%
Adjusted EBITDA 3.0 2.6 18.0%
Adjusted EBITDA margin 10.7% 8.5% 220
CAPEX 0.8 1.9 -59.9%
Passenger traffic fell 2% mainly impacted by the cancellation of a daily route to
Bogota and difficult macro conditions in Argentina, partially offset by easier
comps from Easter and winter holidays shift
Revenue flat as lower commercial revenues offset higher aeronautical revenues
Aeronautical revenue up 2% due to the increase in international traffic from higher-
margin routes and increase in the passenger use fee, that more than offset the
decline in traffic
Commercial revenues declined 2% 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
• Partially offset by higher VIP lounge revenues from new agreements in the
quarter
Adjusted Segment EBITDA up 2% million to $12 M
Ex-IFRIC12 margin expanded 91 bps due to lower maintenance expenses,
partially offset by higher payroll costs from the impact of the new variable
compensation policy and higher SG&A expenses. Cost structure also benefitted
from the depreciation of the Uruguayan peso
Implementation of solar energy generation system also contributed to savings in
energy fees
Operating & Financial Highlights (In millions of U.S. dollars, unless otherwise noted)
Uruguay: Adjusted EBITDA expansion despite decline in traffic and flat topline growth
2Q19 2Q18 % Var
Passenger Traffic (million) 0.5 0.5 -2.1%
-Domestic 0.0 0.0 -16.3%
-International 0.5 0.5 -1.8%
Cargo 6.8 6.8 0.8%
Aircraft Movements 6.5 7.1 -8.5%
Revenue 27.1 27.0 0.2%
- Aeronautical 14.6 14.3 2.1%
- Non-Aeronautical 12.4 12.7 -2.0%
Commercial revenue 12.2 12.5 -2.0%
Construction service revenue 0.2 0.2 -4.5%
Other revenue 0.0 0.0 9.6%
Revenue ex-Construction 26.9 26.8 0.2%
Adjusted EBITDA 12.1 11.9 2.2%
Adjusted EBITDA margin Ex-
IFRIC 1245.2% 44.3% 91
Looking at the remainder or the year: Despite near-term headwinds across key markets, solid balance sheet supports strategic initiatives that better position CAAP for long-term growth
Difficult environment in Argentina, with weak macro conditions
and heightened volatility around the presidential elections,
adding another layer of uncertainty to the second half of the
year
Resilient business model with nearly 80% of revenues
generated in US$
In Brazil, lower GDP growth expectations and the cessation of
operations of Avianca Brasil continue to weight on results.
Expect capacity at Brasilia to be gradually restored starting by
year-end
In Italy, expecting good travel summer season while continue to
monitor the evolution of Alitalia and the development of Brexit
Remain focused on enhancing the passenger experience and
moving ahead with key capital investments
Solid balance sheet provides flexibility to support long-term
investment plans that will better position the Company for
growth, as volatility in Argentina recedes and the macro
environment improves
Questions and Answers