Corporacion America Airports(CAAP) - 2020 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Passenger traffic decreased nearly 89% year-on-year due to the pandemic, but improved 5 times from the second quarter of 2020 [10] - Revenues excluding IFRIC 12 were down 76% year-on-year but improved 45% compared to the second quarter [11] - Adjusted EBITDA, excluding non-cash impairment, was a loss of $19 million, an improvement from a loss of $33 million in the prior quarter, but significantly below the $125 million adjusted EBITDA reported in the same quarter last year [11] - Total liquidity increased to $253 million from $230 million in the second quarter, supported by additional financing and cost reductions [12][25] Business Line Data and Key Metrics Changes - Operations in Argentina, Uruguay, Ecuador, and Armenia achieved operating cash breakeven levels in the quarter [8] - Cargo activity showed sustained recovery, with a year-on-year drop in cargo improving from a 56% drop in April [18] Market Data and Key Metrics Changes - Argentina was the most negatively impacted by strict travel bans, while Brazil showed constant improvement in passenger traffic since June [13][15] - Italy experienced improved traffic trends during the summer season, although new lockdowns were being established due to rising COVID cases [14] Company Strategy and Development Direction - The company has focused on cost reduction, achieving a 48% reduction in cash operating costs compared to the same period last year [8][19] - Ongoing negotiations with regulatory bodies and governments to obtain compensation for the impact of the crisis are a priority [9][21] - The company is adapting its airport network to meet new health and safety requirements to regain customer confidence [31][32] Management's Comments on Operating Environment and Future Outlook - Management maintains a cautious outlook for the near term, monitoring new outbreaks in Europe while expecting improved performance in Latin America during the summer holidays [34] - Long-term recovery is contingent on consumer confidence in health protocols, lifting of government restrictions, vaccine availability, and improved economic conditions [35] Other Important Information - The company successfully closed a $40 million linked local bond at a 0% interest rate with a two-year maturity in Argentina [26] - A EUR85 million loan was obtained from a pool of financial institutions with a six-year term and a two-year grace period [27] Q&A Session Summary Question: Expectations for Argentina airport extension and timeframe for force majeure discussions in Brazil - Management is engaged with regulators regarding compensation for the crisis and will inform the market once clear information is available [37] Question: Expectations regarding CapEx and tariffs in Argentina and local capital markets liquidity - Discussions with regulators are ongoing, with various parameters available to regain economic equilibrium [41] - Local market liquidity is volatile, but the company successfully accessed the market with a $40 million note in August [43] Question: Persistence of cost rationalization and updates on syndicated bank loans - Cost efficiencies gained during the pandemic are expected to last, but the extent is uncertain due to operational adjustments [47] - The company is working with the Central Bank regarding syndicated loans and does not foresee issues with upcoming payments [51]