Grupo Aeroportuario del Centro Norte, S.A.B. de C.V. Q4 FY2024 earnings call

Management Statement and Operational Highlights

• 2024 Highlights: 2024 faced challenges from aircraft engine issues and Mexico City Airport restrictions, but airlines shifted to strengthening international networks. Strong commercial performance with restaurant revenues up 22%, VIP lounge up 51%, and parking up 33 million pesos. OMA Cargo, hotel services, and industrial park delivered solid results.
• Q4 Performance: Passenger traffic up 4.6%, aeronautical revenues up 11%, non-aeronautical revenues up 22%. Commercial revenue per passenger in Q4 was Ps.60.4, a 13.9% increase y-o-y. All 13 OMA airports obtained Level 3 Optimization Certification.

Segment Performance

• Passenger Traffic: In the fourth quarter of 2024, total passenger traffic in OMA's 13 airports grew by 4.6% to 7.1 million. Domestic traffic increased by 1.5%, while international passenger traffic saw a significant 26.4% growth. For the full year 2024, domestic traffic declined by 3.5% but international traffic increased by 15% compared to 2023.
• Revenues: Aeronautical revenues grew by 2% and non-aeronautical revenues by 17% versus 2023. Commercial revenues per passenger reached a record high of 60 pesos in 2024, a 17% increase relative to 2023. OMA Cargo grew by 22% in 2024. Hotel services saw nearly 20% revenue growth, and industrial service revenue grew by 61% in 2024.
• Financials: The adjusted EBITDA for 2024 was Ps.9.1 billion with a margin of 74.3%. In the fourth quarter of 2024, adjusted EBITDA was Ps.2.4 billion with a margin of 73.8%.

Guidance

• Traffic Outlook: Expect mid-single digit growth year-over-year in 2025. Monterrey network to continue developing as a connecting hub.
• MDP and CapEx: MDP plan to be presented by the end of June, with CapEx plan based on technical considerations. Expect mid-70s EBITDA margin going forward without assuming tariff increase post MDP.

Risks

• Concession Tax: Increase from 5% to 9% affected concession tax, with surplus to be recovered through tariffs starting 2026.
• Interest Rate Impact: Major maintenance provision is sensitive to interest rate variations, leading to non-cash effects.
• Industrial Park Bad Debt: Ps.9.7 million bad debt expense due to a non-performing tenant in the Monterrey Industrial Park.

Question and Answer

Q: Talk about your traffic outlook for this year and efforts to develop Monterrey’s route network.

A: For 2025, expecting mid-single digit growth year-over-year. Monterrey is positioned as a connecting hub with room to continue developing routes, as many routes opened in the second half of 2024 are still maturing.

Q: Any views on timing for the MDP announcement and cost control?

A: MDP plan will be officially presented by the end of June, with CapEx plan based on technical considerations. Cost control efforts are in place despite inflationary pressures on external services and purchases.

Q: Break down the mid-single-digit traffic growth for 2025 between domestic and international and update on Monterrey airport military to commercial conversion.

A: International traffic from the U.S. is expected to continue being a key driver. There is no official project for converting the military airport to commercial activity, and the probability of it being a competing hub is low.

Q: Explain the increase in interest expense.

A: The major maintenance provision is sensitive to interest rate variations. A downward adjustment in the interest rate used to value the provision led to a non-cash effect during the quarter.

Q: What is the strategy behind the Ps.600 million short-term loan?

A: The short-term loan was used to strengthen working capital towards the end of last year and early this year, and is expected to be refinanced with long-term debt mid-year.