Corporacion America Airports SA Q1 FY2025 earnings call

Management Statement and Operational Highlights

• Passenger Traffic: Strong start to the year with growth in Argentina, Italy, Uruguay. Argentina reached record traffic levels in January, Carrasco airport in Uruguay had a record high in January. International traffic up nearly 13%, domestic up 4% (close to 8% excluding Natal).
• Financials: Solid performance with adjusted EBITDA at $156 million, solid cash generation, low leverage. Leverage remained low, supporting strategic growth agenda.
• Expansions/Projects: Active in pursuing opportunities across geographies. In Argentina, negotiating concession revision; Italy's Florence master plan had positive environmental review; Armenia moving forward with $425 million CapEx; proposals in Montenegro and Angola; Carrasco named best airport in Latin America; Brasilia recognized for punctuality and satisfaction; Guayaquil Airport received five-star rating.

Segment Performance

• Passenger Traffic: Total passenger traffic grew 7% year-over-year to over 20.4 million, excluding the Natal Airport concession (exited in Feb 2024). Excluding Natal, growth was over 9%. Argentina had record traffic in January, Carrasco airport in Uruguay had a record high in January. International traffic increased nearly 13%, domestic traffic rose 4% (close to 8% excluding Natal).
• Revenues: Rose 6% year-over-year; on an ex-IAS29 basis, increased nearly 12%. Revenue per passenger was $20.5, up 3.9% excluding IAS29.
• Adjusted EBITDA: Came in at $156 million. Excluding IAS29, it was up 4%, and the margin stood at 38.2%. Impacted by inflation in Argentina where Peso-denominated operating costs rose faster than valuation.
• Cargo: Volumes up 9% year-over-year. Cargo revenues declined 7% year-over-year; on an ex-IAS29 basis, slightly up. Argentina, Brazil, and Armenia accounted for nearly 80% of total cargo volume in the quarter.

Guidance

• Traffic: Anticipates positive traffic trends to continue in Argentina supported by strong demand and new operations; expects strong summer season in Italy and Armenia.
• Expansions: Remains active in pursuing opportunities across multiple geographies, analyzing several projects.

Risks

• Inflation: Inflationary pressures in Argentina where Peso-denominated operating costs rose significantly faster than valuation impacted EBITDA.
• Regulatory Delays: Uncertainty in government processes, e.g., concession review in Argentina, could impact project timelines.

Question and Answer

Q: Could you provide more information regarding the Montenegro proposal and Angola revised plan, and outlook for Argentina traffic?

A: Montenegro has 2 airports (3 million passengers) with mid-teens IRR; Angola in second phase, revised proposal in progress. Argentina traffic outlook is healthy with strong demand and new operations recently announced.

Q: Could you give more color on cost controls and Argentina concession review?

A: Cost increase ex-amortization is 13%; Argentina concession review process ongoing, potential impact on speed but not the aim of the process.

Q: Any update on M&A, especially regarding Motiva airports and Middle East investments?

A: M&A process is confidential; active in evaluating opportunities, including Middle East.

Q: Update on expansions in Italy?

A: Italy expansion process moving ahead, environmental approval expected by third quarter, with no major delays observed so far.