Grupo Aeroportuario del Centro Norte, S.A.B. de C.V. Q1 FY2025 earnings call

• Passenger traffic in first quarter totaled 6.4 million passengers, a 9.1% increase YOY. Domestic grew 8%, international 15.1%. Launched 16 new routes, 5 international. - Aeronautical revenues up 13.8%, commercial up 22.8%, diversification up 22%. Construction revenues down 60% due to lower MDP investment. - Cost of services and G&A expense up 10.2% YOY, major maintenance provision down. - Declared and paid Ps.4.5 billion cash dividend at 2025 Annual Shareholders Meeting.

Aeronautical revenues increased 13.8% with aeronautical revenue per passenger rising 4.3% in the quarter. Commercial revenues had strong double-digit growth, with commercial revenue per passenger growing 13% to Ps.66, driven by VIP lounges, restaurants, and retail, and occupancy rate of commercial space stood at 96% at the end of the quarter. Diversification revenues increased 22%, with OMA Carga contributing most to the growth and industrial services revenue increasing 56.4% year-over-year to Ps.42 million. OMA's first quarter adjusted EBITDA was Ps.2.4 billion with an adjusted EBITDA margin of 74.9%.

• Traffic expectation: Mid single digits growth, cautious due to macro landscape. - Dividend strategy: Continue to distribute cash via dividends as free cash flow increases. - Non-aero revenue outlook: Similar to first quarter in next quarters, with higher yield expected in 2026 from new spaces in Monterrey.

Factors beyond control that could affect actual results, including macroeconomic uncertainties, regulatory changes, etc.

Q: Hi, good morning and thank you for the call. Just a question on your expectations for traffic. Traffic in Monterrey has continued to be very strong. I understand there's more capacity, but how are you looking at demand? And how was April so far?

A: Hello, Alan, thank you for your question. Yes, first quarter traffic was looking good numbers April, Remember April, we're going to have the holidays, the holy week on April. We didn't have that one last year. So month-to-month the numbers are going to be good. We're still looking at the same expectation as we mentioned on the previous call, somewhere around the mid single digits. We are cautious for the rest of the year as we're monitoring the macro landscape and the international news coming there.

Q: Hi, thanks for taking my question. This is just a more broad question, but in case that your MDP has low CapEx requirements and you don't have major investment opportunities abroad, what do you think the right strategy for dividends will be for OMA going forward?

A: Hi, Pablo. So over the past few years we have try to distribute as much cash as possible to shareholders in the form of dividends. That strategy, I don't think it's going to change in the foreseeable future. So as we are able to generate higher free cash flow, that should be translated into higher dividend distributions.

Q: Yes, hello. Congrats on the results. I have two questions. The first one is on capital allocation. CCR, as you probably know, selling their assets -- some of their assets in Brazil. Would you be interested in those assets or part of those assets or all of them? It would be much appreciated if you could give any perspective on that. And my second question is on the traffic guidance. We're seeing that the low cost carriers have retrenched some of the capacity. Volaris, Viva. But still things are pointing to quite good capacity increases for you guys for the rest of the year, maybe double digits. So your guidance does surprise me a bit. Maybe could you elaborate how conservative you're being? And even if things kind of collapse in the second half of the year due to the macro environment wouldn't that, like set the stage better for you guys compared to the other airport operators? Because it would lower the base of like your traffic that you will be settling or negotiating in your next MDP?

A: I'll take the first. The first one, yes, we took a look at the CCR assets, but at the moment we decided not to participate on that process. For the second part, Ruffo. Yes, the capacity situation is somewhat volatile. There were some announcements made last week and some capacity cuts are being reflected starting May and June by some of the low cost carriers. Remember also that in fourth quarter of '24 several routes were open. So there will be a much higher base of comparison in the fourth quarter as well. So yes, it might be a bit conservative, but there are some uncertainties and we don't want to be overoptimistic on capacity growth at this time. And regarding your second half of your question on -- if this is going to benefit us in MDP negotiation that will occur towards the second half of the year, remember that the current formula looks at the tariff, sorry, at the traffic for the first five years and actually through 2040 in our case. So any minor changes in capacity in a certain year wouldn't move that much the needle when you are looking at the next 15 year traffic forecast. So I don't think it's going to be necessarily a huge positive to have a lower traffic expectation this year.

Q: Hi, thank you gentlemen for taking my question. My question is on non-aeronautical revenues per tax was strong this quarter, a jump from fourth quarter last year and also year-over-year from the first quarter. I'm wondering if you can see another jump for the following quarters or will be something more stable inflation index for looking forward for that line?

A: Yes, I think that the results in extra aero reflects the strategy that we have been implementing over the last couple of years, especially since VINCI acquisition. For the next quarters in terms of commercial revenue per passenger, we expect a similar outcome as to the first quarter and most likely in 2026 we'll see a higher yield as the new spaces in Monterrey starts to be opened.

Q: Hi, good morning. Congratulations on results. I have two questions. The first one is on the routes. I remember when your new partner came in VINCI, there were like all these plans of adding new routes, like long haul roots. Is that still on table or given all these macro concerns? That's on hold for now. And my second question on Industrial Park.

A: In terms of new routes opened, we have a constant dialogue with airlines. We are focusing both in building our international connectivity and the increase that you saw in the last few quarters, particularly from Monterrey Airport, point towards that strategy of building good connectivity out of Monterrey. But we also have two strong players in the local market and therefore we also focus on building greater regional connectivity.

Q: Thanks for taking my questions. Jay, dialing on for Stephen Trent. First thing I want to ask is, do you see any regulators pushing to adjusted TUA at Mexico City airport? And to the extent that you could talk about it, maybe could this have any tariff implications for OMA?

A: Well, the TUA for Mexico City airport is set in dollars and it increases by US CPI inflation. We have not heard that process or mechanics of adjustment is going to change. So I believe that's adjusted at the beginning of every year. So probably the adjustment already took place in January and we wouldn't expect increase TUAs in the Mexico City airport for the rest of the year. And my second question is how much do you interact with VINCI on strategic matters such as the MDP or any potential foreign investments? We have a very close communication with them. They're involved in the MDP, of course in non-aero, they have been very active, in CapEx execution as well. So it's a very close communication with them.