Corporación América Airports S.A. Q1 FY2026 earnings call

Overall Quarter Performance

• Q1 2026 delivered a strong start to the year, with broad-based growth across the portfolio driven by international passenger demand. Total passenger traffic grew 7% year-over-year to nearly 22 million passengers, with international traffic growing nearly 14% and double-digit growth in Argentina, Italy, and Ecuador.
• Top-line revenue grew 19% year-over-year, nearly three times faster than passenger traffic growth, driving revenue per passenger up 11% to $22.70. Adjusted EBITDA grew 26% to $196 million, with margin expanding 2.3 percentage points, as cost growth of 13% remained well below revenue growth.
• Net debt declined to $419 million from $452 million at end-2025, with a net leverage ratio of 0.5x and total liquidity of $772 million, creating strong balance sheet flexibility.

Geographic Operational Highlights

• Argentina: Total traffic grew ~6%, with international traffic up 19% driven by summer and carnival demand; domestic traffic was slightly lower due to temporary airline fleet constraints and a one-day nationwide February strike. Key leisure destinations posted solid performance.
• Brazil: Total traffic grew 12%, with domestic traffic up nearly 6%, transit passengers up over 20%, and positive contributions from international traffic. Brasilia continues to perform well as a major domestic hub.
• Italy: Total traffic grew just over 7%, with international traffic (80% of total traffic) up more than 10% from Florence and Pisa; domestic traffic was modestly lower due to reduced activity in Florence and adverse weather-related disruptions.
• Uruguay: Total traffic grew nearly 4%, supported by the summer season and new/resumed routes from GOL, Azul, and Argentina carriers.
• Armenia: Total traffic grew 8.5%, supported by expanded routes and the new Wizz Air base launched in late 2025. March saw limited disruption from Middle East conflict-related aerospace restrictions, with a smaller impact than initially expected.
• Ecuador: Total traffic grew 7%, with international traffic up more than 10% driven by higher US frequencies; domestic demand remains constrained by high airfares amid ongoing security concerns.

Strategic Milestones

• Extended the Armenia airport concession by 35 years to 2067, approved a new $425 million investment program to expand infrastructure and develop Zvartnots as a regional hub.
• Completed the Galapagos concession extension and economic rebalancing in Ecuador to strengthen the company's presence in the country.
• Advanced concession development processes for awarded airports in Baghdad (Iraq) and Luanda (Angola), and continues to selectively evaluate new tender and M&A growth opportunities.
• Focused on ongoing infrastructure upgrades and commercial initiatives across existing operations to improve connectivity, passenger experience, and revenue per passenger.

By geographic operating segment:

1. Argentina: Total revenues grew 16% year-over-year, contributing the largest share of overall revenue growth; aeronautical revenues were up 18% from 19% international passenger growth. Adjusted EBITDA increased 28% year-over-year, with margin expanding 4.1 percentage points. Total costs grew just 9%, significantly below revenue growth, driven by cost discipline.
2. Armenia: Total revenues grew 31% year-over-year. Adjusted EBITDA increased 34% year-over-year; margin contracted due to the lower-margin fuel business contribution.
3. Brazil: Total revenues grew 39% year-over-year, with double-digit aeronautical revenue growth supported by tariff increases and solid traffic. Adjusted EBITDA increased 44% year-over-year, with margin expanding 3.7 percentage points.
4. Italy: Total revenues grew 10+% year-over-year, with 80% of traffic coming from international passengers (which grew over 10%). Adjusted EBITDA increased 4% (10% when excluding construction services at Toscana Aeroporti Costruzioni).
5. Uruguay: Total revenues grew in double digits, supported by tariff increases and summer season demand. Adjusted EBITDA increased 16% year-over-year, with margin remaining broadly stable as higher costs and currency appreciation offset strong passenger trends.
6. Ecuador: Total revenues grew in double digits, supported by tariff increases and solid traffic. Adjusted EBITDA increased 16% year-over-year, with margin expanding 1.8 percentage points, supported by higher duty-free revenues.

By revenue category: Aeronautical revenues increased 17% year-over-year, driven by Argentina and broad-based growth across all segments, with tariff increases in Brazil, Uruguay, and Ecuador contributing additional growth. Commercial revenues increased 21% year-over-year, with double-digit growth in every market, supported by higher fuel, cargo, and consistent growth across VIP lounges, food & beverage, duty-free, and parking. Cargo revenues grew 16% year-over-year overall, led by contributions from Argentina and Uruguay.

Management did not provide explicit quantitative full-year guidance in this call, but stated the following forward-looking outlooks:

• Demand trends remain strong across the portfolio, particularly for international travel, which continues to act as the primary growth driver.
• Management expects concession renegotiation progress in Italy to result in all required authorizations by the end of 2026, allowing construction to begin.
• Argentina concession renegotiations have reached agreed key terms after concluding technical discussions, and are awaiting a required national government decree to finalize the process.
• The company is actively evaluating a small pipeline of new concession opportunities expected to be completed within the next 6 to 12 months, all requiring only marginal equity contributions while adding strategic and financial value to the portfolio.
• Management is developing a formal dividend policy to enhance shareholder returns, and will share details with the market in the near term after internal and board review, while maintaining flexibility for operational investments and growth initiatives.

• Geopolitical instability in the Middle East creates potential risk for flight disruptions and traffic impacts; March 2026 saw limited impact on Armenia traffic that was smaller than initially anticipated, but the company will continue monitoring developments for spillover effects on global airline capacity and regional traffic.
• Argentina faces persistent inflation and peso depreciation pressure, which creates upward pressure on local currency-denominated operating costs, though the company has managed these pressures via cost discipline to date.
• High global fuel prices and resulting high airfares create potential downside risk to passenger demand, though management has not observed any material impact on demand across the portfolio as of Q1 2026.
• Ecuador faces ongoing security concerns that may impact travel demand, and domestic demand is already constrained by high airfares.
• Capacity constraints and operational disruptions (such as labor strikes, adverse weather, and temporary airline fleet constraints) can create near-term headwinds to domestic traffic in core markets including Argentina and Italy.
• Concession renegotiations in Argentina and Italy require government approvals that carry timing uncertainty, even as negotiations progress positively.

Q: Has the recent increase in fuel prices and resulting high airfares caused any change in demand across the company's portfolio? Can management also share details on the planned dividend policy, including what payout ratio investors should expect?

A: Management has not observed any material impact of higher fuel prices on demand across the portfolio as of Q1. Most airlines are hedged against oil price changes for multiple months, and the only related disruption was a temporary decline in Armenia-Middle East traffic that was fully offset by growth in other markets for Armenia. The company is accumulating cash from strong operating performance, and is currently working with the board and executive team to finalize a dividend framework, with details to be released to the market in the near term.

Q: What is the current status of concession renegotiations in Argentina and Italy? What is the outlook for new growth opportunities and capital allocation for upcoming airport auctions?

A: Technical negotiations for the Argentina concession renegotiation are complete, and all key terms have been agreed. The process now requires a national government decree, which involves multiple public administration bodies, with updates to be provided as the process moves forward. For Italy, progress is incremental but moving in the right direction, with all required authorizations expected by the end of 2026 to allow construction to start. The Baghdad (Iraq) and Luanda (Angola) concessions awarded previously are progressing, and only require marginal equity contributions. A small pipeline of additional opportunities is being evaluated for the next 6-12 months, all requiring minimal equity while adding strategic value to the portfolio.