Corporacion America Airports SA Q3 FY2024 earnings call

Key Highlights

• Diverse geographic portfolio balanced results; Argentina's weaker results mitigated by other regions.
• Revenues down 4% y-o-y, revenue per passenger steady at $19. Adjusted EBITDA down mid-teens y-o-y.
• Recent trends: Argentina domestic tariffs up 124% effective Nov 1; AA2000 approved $80M dividend; CAP acquired additional stake in AA2000.
• Operational highlights: Construction of covered parking in Carrasco, expanded duty-free in Ezeiza, new real estate in City Airport; positive contributions from Uruguay, Brazil, Italy operations.

Total revenues, excluding IFRIC 12, decreased 4.2% year-on-year, aligning with lower passenger traffic. Revenue per passenger remained at $19. Aeronautical revenues were down 1.5% y-o-y, with a one-time tariff compensation in Italy last year offset by 22% growth in Uruguay. Commercial revenues fell 6.6% y-o-y due to lower cargo and duty-free in Argentina and fuel in Armenia, but were boosted by VIP lounges, parking, etc. Adjusted EBITDA declined mid-teens y-o-y, mainly due to Argentina's macro challenges. Passenger traffic totaled a 4% y-o-y decline, but excluding Natal (exited in Feb) was up 1.5%. International traffic in Argentina was up nearly 10%, Uruguay up 15%, Italy up 6%, Brazil up 6% excluding Natal. Cargo volumes grew 4.4% y-o-y, but cargo revenues dropped 12% y-o-y due to Argentina's reduced storage days for imported goods.

Forward-Looking

• Anticipate a more stable environment in Argentina for the remainder of the year.
• Florence Airport master plan approval expected by year-end.
• Argentina's domestic tariff increase supports local operations going forward.
• Strong cash flow and low net leverage provide flexibility for pursuing growth opportunities.

Risks

• Macroeconomic challenges in Argentina impacting domestic traffic and increasing operational costs.
• Duty-free sales affected by disparity in official and parallel FX rates last year, though current quarter's results reflect lower base.
• Cargo revenues declined 12% y-o-y due to reduced storage days for imported goods in Argentina.

Q: Martin, could you give indication of potential impact if Aerolineas Argentina is closed and update on Florence airport agreement and Argentina contract review?

A: Martin mentioned Aerolineas Argentina contributes ~6% to CAP revenues; resilience shown from past example. Florence airport master plan approval expected by year-end, construction to take 2-3 years. Argentina contract review is ongoing, waiting for regulator's results after government's economic equilibrium revision.

Q: Fernanda Rascia asked about traffic trends going forward, especially Argentina in 2025 and Uruguay/Brazil with Gol in Chapter 11. Also, tariff negotiation in Argentina.

A: Jorge Rula said positive dynamics in Uruguay, Brazil, Italy; Armenia may see growth with new routes. Argentina international traffic positive, domestic not; current domestic tariffs adjusted, no further expected adjustments.

Q: Jay Singh asked about opportunities to increase duration of concession assets.

A: Martin Ormican said working on CapEx proposal in Armenia to extend concession duration, negotiation ongoing; Argentina's concession duration depends on regulator's findings from economic equilibrium review.

Q: Marina Merchant asked about Argentina's figures being normalized and if international traffic in Argentina could offset negative results.

A: Jorge Rula said Argentina's recent figures more representative of normalized levels barring major disruptions; international traffic recovery has potential to offset domestic and commercial revenue challenges in medium term