Grupo Aeroportuario del Sureste (NYSE:ASR) Q3 2025 Earnings Call October 23, 2025 10:00 AM ET Speaker0Good day, ladies and gentlemen, and welcome to the Absorb Third Quarter twenty twenty five Results Conference Call. My name is Latanya, and I'll be your operator. At this time, all participants are in a listen only mode. We will conduct a question and answer session towards the end of today's conference. As a reminder, today's call is being recorded.Now I'd like to turn the call over to Mr. Adolfo Castro, C ...

Financial Data and Key Metrics Changes - Total passenger traffic across GAP's 14 airports increased by 2.5% compared to the same period of 2024, reaching 15.8 million passengers in the quarter [6] - Total revenues increased by 17.4% versus Q3 2024, driven by strong performance in both aeronautical and non-aeronautical businesses [7] - EBITDA grew by 12.8%, reaching ARS 5.1 billion, with an EBITDA margin of 64.3% excluding IFRIC 12 [11] - Cash and cash equivalents stood at ARS 11.7 billion as of September 30, 2025 [12] Business Line Data and Key Metrics Changes - Aeronautical revenue grew by 18.3%, reflecting the new maximum tariff adjustments [8] - Revenue from business operated directly by GAP rose by 30.1%, mainly due to the consolidation of cargo and warehouse operations [8] - Revenues from third-party operators increased by 4.7%, supported by new commercial spaces and renegotiated contracts [9] Market Data and Key Metrics Changes - Passenger traffic decline was attributed to immigration-related challenges and a more restrictive perception under the current U.S. Administration [6] - Domestic demand showed sustained recovery, helping to offset declines in international travel [7] Company Strategy and Development Direction - The company remains focused on connectivity and diversifying its network, with plans to launch eight new international routes to Canada [7] - Strategic expansion opportunities include ongoing processes related to TORX and CAICO's tender, as well as potential acquisition of Motiva Airports [14] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding macroeconomic uncertainty and exchange rate volatility, while highlighting the benefits from a diversified portfolio of airports [13] - The company anticipates continued growth in both aeronautical and non-aeronautical revenues, maintaining its leadership position in the region [13] Other Important Information - The company paid a second and final dividend installment of ARS 8.42 per outstanding share during the quarter [12] - Significant investments of approximately ARS 10 billion were made in major infrastructure projects under the master development program [12] Q&A Session Summary Question: Can you talk about the traffic dynamics currently experienced? - Management noted a deceleration in VFR markets but expressed optimism about recovery in the coming years due to fixed capacity announcements by airlines [19][21] Question: How far off are we from seeing top-line revenue growth stabilize? - Management indicated that double-digit growth is expected to continue in directly operated businesses, with new commercial areas contributing to revenue growth [23][24] Question: Can you provide details on the expected cost levels for the coming quarters? - Management confirmed that the current cost levels are expected to persist due to increased facilities and headcount [29] Question: What is the expected effect of the next year's World Cup on traffic figures? - Management anticipates a positive impact on traffic, particularly in Guadalajara, but noted that the exact effects depend on the lottery of national teams [62] Question: Can you elaborate on the tariff increases expected for 2026? - Management confirmed that multiple tariff increases are planned for 2026, with expectations of reaching 93% to 97% fulfillment of the maximum tariff by the end of the year [40][42]

Core Insights - Vienna Airport has surpassed pre-crisis passenger numbers from 2019, achieving over 31.7 million passengers in 2024, with expectations for further growth in 2025 [3]. Company Overview - Vienna Airport is primarily focused on its operations in Vienna, distinguishing itself from globally operating airline groups like Fraport [4]. Industry Context - The aviation industry faced significant challenges during COVID-19, with passenger numbers dropping by 70% to 80%. However, many European airports have recovered, with some still operating at 15% below pre-COVID levels [3].

Group 1 - The Ganzhou Ruijin Airport is set to commence its first flight on September 28, marking a significant transportation project supported by the State Council to revitalize the former Central Soviet Area [1][2] - The first flight will connect Beijing and Ruijin, with additional flights from Shanghai, enhancing air travel options for local residents and contributing to the economic development of the region [1][2] - The airport was designed to accommodate a passenger throughput of 550,000 and a cargo throughput of 2,000 tons by 2030, and it is classified as a 4C-level civil airport [2] Group 2 - The airport will gradually open routes to major cities such as Beijing, Shanghai, and Guangzhou, as well as key tourist destinations like Zunyi and Yan'an, benefiting a population of 6.8 million in the surrounding areas [2]

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Financial Data and Key Metrics Changes - Aeronautical revenues increased by 17% year-over-year, driven by higher yields and increased passenger traffic [15][19] - Non-aeronautical revenues grew by 16%, with commercial revenues rising by 20% [15][19] - Adjusted EBITDA increased by 19% to MXN 2.6 billion, with an adjusted EBITDA margin of 74.6% [13][19] Business Line Data and Key Metrics Changes - Passenger traffic totaled 7.2 million, an 11% increase year-over-year, with domestic traffic growing by 10% and international traffic by 19% [11][12] - Commercial revenue per passenger increased by 8% to 62 pesos, with strong growth in restaurants (41.1%), parking (12.7%), VIP lounges (34.6%), and retail (27.4%) [13][17] - Diversification revenues increased by 11%, primarily from industrial services [13][19] Market Data and Key Metrics Changes - The occupancy rate for commercial space stood at 96% at the end of the quarter [13] - Viva Aerobus represented 51% of total traffic, with a 14% increase in terminal passenger numbers, while Volaris accounted for 24% of total traffic with a 31% increase [12] Company Strategy and Development Direction - The company is negotiating the 2630 Master Development Program, with a total committed investment similar to previous programs, focusing on enhancing efficiency and optimizing operations [8][9] - Approximately 49% of the investment will be allocated to Monterrey Airport, with key projects including terminal expansions and technology upgrades [10][56] Management Comments on Operating Environment and Future Outlook - Management anticipates mid to high single-digit traffic growth for the remainder of the year, influenced by reduced airline capacity and tougher comparisons to the previous year [26] - Strong economic performance in Monterrey is driving traffic growth, attributed to industrial activity and high occupancy in the industrial park [28] Other Important Information - The company completed a MXN 2.75 billion issuance in long-term notes, with proceeds used for loan repayments and committed investments [8] - Total debt at the end of the quarter amounted to MXN 13.6 billion, with a net debt to adjusted EBITDA ratio of one time [21] Q&A Session Summary Question: Confirmation on MDP CapEx levels - Management confirmed that the CapEx will be at a similar level in real terms, not per passenger [23] Question: Traffic outlook for the second half of the year - Management expects mid to high single-digit traffic growth, with some reduction anticipated due to airline capacity cuts [26] Question: Drivers of traffic performance - Traffic growth is attributed to strong economic performance in Monterrey and new routes [27][28] Question: Network development expectations for Monterrey Airport - New openings are expected in the domestic market, but growth may not accelerate significantly due to capacity cuts [33] Question: Tariff expectations for MVP - Management indicated that they do not foresee decreases in tariffs, with expected growth in low single digits [40] Question: Growth in commercial revenue per passenger - Management expects continued growth driven by contract renegotiations and new outlet openings [45] Question: Potential investments in Brazil - The company is not formally involved in the process of acquiring airport assets in Brazil but is always looking for opportunities [51] Question: Contribution of Monterrey to non-commercial revenues - Specific numbers were not available, but management will follow up [55] Question: Focus of new investments in Monterrey - Investments will focus on expanding platform capacity and improving operational efficiency [56] Question: Upside risk on passenger growth due to U.S. DOT actions - Management does not expect major impacts from recent U.S. DOT actions but will monitor the situation [63] Question: Dividend policy in light of expected CapEx - The company plans to maintain a similar dividend policy, distributing between 85% to 95% of net income [67]

Financial Data and Key Metrics Changes - Aeronautical revenues increased by 17% year-over-year, driven by higher yields and increased passenger traffic [12][15] - Non-aeronautical revenues grew by 16%, with commercial revenues rising by 20% [15][19] - Adjusted EBITDA increased by 19% to MXN 2.6 billion, with an adjusted EBITDA margin of 74.6% [13][19] - Consolidated net income reached MXN 1.3 billion, reflecting a 3.8% increase compared to the same quarter last year [20] Business Line Data and Key Metrics Changes - Passenger traffic totaled 7.2 million, an 11% increase year-over-year, with domestic traffic growing by 10% and international traffic by 19% [11][12] - Commercial revenue per passenger increased by 8% to 62 pesos, driven by strong performance in restaurants, parking, VIP lounges, and retail [13][15] - The occupancy rate for commercial space stood at 96% at the end of the quarter [13] Market Data and Key Metrics Changes - Monterrey Airport was a significant driver of growth, contributing to 65% of total domestic passenger growth and 66% of international passenger traffic increase [11][12] - Viva Aerobus represented 51% of total traffic, with a 14% increase in terminal passenger numbers, while Volaris accounted for 24% of traffic with a 31% increase [12] Company Strategy and Development Direction - The company is focused on a master development program aimed at enhancing efficiency and optimizing operations, with a significant portion of investment allocated to Monterrey Airport [8][10] - The investment proposal emphasizes capacity optimization and improving passenger experience, with a low single-digit increase in maximum tariffs expected [10][19] Management Comments on Operating Environment and Future Outlook - Management anticipates mid to high single-digit traffic growth for the remainder of the year, despite some capacity reductions announced by airlines [26] - Strong economic performance in the Monterrey region is attributed to industrial activity, which is expected to continue driving traffic growth [29] Other Important Information - The company completed a MXN 2.75 billion issuance in long-term notes, with proceeds used for loan repayments and committed investments [7] - Changes in senior management were announced, with a new COO and CCO set to join the company [5][6] Q&A Session Summary Question: Confirmation on MDP CapEx levels - Management confirmed that the CapEx levels are similar in real terms to previous programs [24][25] Question: Traffic outlook for the second half of the year - Management expects mid to high single-digit traffic growth, with some reduction anticipated due to airline capacity cuts [26] Question: Drivers of traffic performance - Traffic growth is attributed to strong economic performance and industrial activity in Monterrey [28][29] Question: Network development expectations for Monterrey Airport - New domestic routes are expected, but growth may be tempered by capacity cuts [34] Question: Tariff expectations for MVP - Management indicated that tariff increases are expected to be in the low single digits, with no decreases anticipated [41] Question: Growth in commercial revenue per passenger - Management highlighted ongoing initiatives to enhance commercial revenues through contract renegotiations and new outlet openings [44][45] Question: Potential investments in Brazil - The company is not formally involved in the process of acquiring airport assets in Brazil but is always looking for opportunities [49] Question: Contribution of Monterrey to non-commercial revenues - Specific numbers were not provided, but management will follow up on this inquiry [52] Question: Focus of new investments in Monterrey - Investments will focus on expanding platform capacity and improving operational efficiency [54][55] Question: Impact of U.S. DOT actions on passenger growth - Management does not expect major impacts from recent U.S. DOT actions but will monitor the situation closely [60] Question: Dividend policy outlook - The company plans to maintain a similar dividend distribution policy, with potential increases as EBITDA and net income grow [64]

Financial Data and Key Metrics Changes - Total revenues increased by 5% year on year to 7,400,000,000 pesos, reflecting growth across operations, particularly in Puerto Rico and Colombia [7][8] - Consolidated EBITDA rose slightly by 2% year on year, reaching 5,000,000 pesos, with Puerto Rico and Colombia posting double-digit growth [12] - The adjusted EBITDA margin, excluding construction revenue, stood at nearly 68%, down from 69% in the same quarter last year [12] Business Line Data and Key Metrics Changes - Mexico, accounting for 72% of total revenues, posted a low single-digit increase of 0.7% in revenues, with growth in both aeronautical and non-aeronautical revenues [8] - Puerto Rico contributed 17.7% of total revenues with high teens growth, while Colombia, accounting for 12% of total revenues, posted 15.4% growth [8][9] - Commercial revenue per passenger reached nearly 140 pesos, representing mid-single-digit year-on-year growth, with Colombia leading at a 22% increase [10] Market Data and Key Metrics Changes - Passenger traffic remained largely flat year on year at 17,700,000, with Puerto Rico showing 3% growth, while Mexico reported a decline of nearly 2% [4][5] - International travel in Mexico saw declines from all regions, with Europe down 4.7%, the US down 5.3%, and South America down 2.7% [5] - A significant portion of the decline in international traffic, approximately 38%, is attributed to the new airport in Tulum [5] Company Strategy and Development Direction - The company continues to invest in infrastructure and expand commercial offerings, having opened 47 new commercial spaces over the last twelve months [9] - The strategy includes modernization and expansion projects at Mexican airports, with ongoing work at Lincoln Airport and taxiway hotels in Puerto Rico [15] - The company remains focused on long-term growth potential despite current market uncertainties [6][16] Management's Comments on Operating Environment and Future Outlook - Management expects traffic in Mexico to gradually stabilize over the next year as operational issues related to aircraft are resolved [6] - The company does not anticipate a material impact from potential US Department of Transportation restrictions on Mexican carriers [6] - Management expressed confidence that travel-related disruptions are typically temporary and that the company is well-positioned to mitigate risks [16] Other Important Information - The company closed the quarter with nearly 20,000,000,000 pesos in cash and cash equivalents, up 30% year on year [13] - A foreign exchange loss of 1,200,000,000 pesos negatively impacted the bottom line, contrasting with a gain of 942,000,000 pesos in the same quarter last year [13] Q&A Session Summary Question: What drove the sequential decline in non-air revenues? - Management indicated that exchange rates played a significant role, along with a slight difference in passenger mix and issues at Terminal 2 [20][22] Question: What impact could lifted capacity restrictions in Mexico City have? - Management noted that an increase in operations at Mexico City Airport could benefit overall passenger traffic, but expressed doubts about significant changes occurring soon [21][24] Question: What is the current traffic situation at Tulum Airport? - Most traffic at Tulum is still primarily commercial flights from the US, with some domestic traffic [27][30] Question: What is the outlook for traffic growth in the second half of the year? - Management expects some normalization in traffic, with potential single-digit growth anticipated compared to the second half of 2024 [34][36] Question: What is the rationale behind the new debt? - The new debt is related to tax expenses at Cancun Airport, ensuring sufficient cash for future dividend payments [60][61] Question: What are the dynamics of international traffic in Puerto Rico and Colombia? - Growth in Puerto Rico is driven by events and concerts, while Colombia's growth is primarily linked to travel from the US [84]

Core Insights - The upcoming 2025 summer transportation season is expected to be a peak production period for Hainan Airport Group, with Haikou and Sanya both entering the top 20 domestic aviation destinations in China for this period [1] Group 1: Flight and Passenger Forecasts - Hainan Airport Group forecasts a total of 54,000 flight takeoffs and landings across its three major airports during the summer season, with an expected passenger volume of 8.42 million and cargo throughput of 42,000 tons [1] - Haikou Meilan Airport is projected to handle 30,000 flight movements, over 4.59 million passengers, and more than 30,000 tons of cargo [2] - Sanya Phoenix Airport is expected to manage 23,000 flight movements, 3.73 million passengers, and over 10,000 tons of cargo [2] - Qionghai Boao Airport is anticipated to complete 744 flight movements and serve 100,000 passengers [2] Group 2: Service Enhancements for Travelers - Haikou Meilan Airport is focusing on summer travel characteristics and passenger needs, particularly targeting student groups and unaccompanied minors, to enhance the travel experience [2] - Sanya Phoenix Airport is increasing volunteer presence in terminals and establishing priority service counters for passengers close to departure times [2] - Qionghai Boao Airport is conducting comprehensive safety checks and maintenance on facilities and vehicles, while also forming a dedicated team to assist unaccompanied minors [2][4]

Investment Rating - The report assigns an "Overweight" rating to OMA, indicating that the stock's total return is expected to exceed the total return of the relevant country MSCI Index over the next 12-18 months [6][33]. Core Insights - OMA's total passenger traffic increased by 6.9% year-over-year (Y/Y) in May, outperforming competitors GAP (+2.9%) and ASUR (-3.0%) in Mexico. Quarter-to-date (QTD) traffic is up 12.7% [2][4]. - International traffic saw a significant increase of 19.5% Y/Y, while domestic traffic grew by 5.1% Y/Y. Notably, Monterrey traffic increased by 17.8% Y/Y [2][10]. - The expected traffic growth for 2Q25 is projected to be around 11% Y/Y, slightly above consensus estimates [3]. Summary by Sections Traffic Performance - In May 2025, Monterrey recorded 1,302,000 passengers, a 17.8% increase from May 2024, while other airports saw a decrease of 4.1% Y/Y [4]. - Total passenger traffic for OMA in May 2025 was 2,354,000, up from 2,202,000 in May 2024 [4]. Market Position - OMA's market capitalization is currently M$95,610 million, with a price target set at US$105.00, compared to a closing price of US$103.21 on June 5, 2025 [6][11]. Valuation Methodology - The price target is based on a discounted cash flow (DCF) valuation using an 8.5% weighted average cost of capital (WACC) and assumes all Mexican airport concessions expire in 2048 with no terminal value [11].