corporación américa airports s.a. second quarter 2019 ... · ex-ifric12 adjusted ebitda fell 6. %...

Corporación América Airports S.A.Second Quarter 2019 Earnings Call Presentation

Statements relating to our future plans, projections, events or prospects are forward-looking statements within the meaning of the

Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements that are not historical facts and

can be identified by terms such as “believes,” “continue,” “could,” “potential,” “remain,” “will,” “would” or similar expressions and the

negatives of those terms. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may

cause our actual results, performance or achievements to be materially different from any future results, performance or

achievements expressed or implied by the forward-looking statements. Many factors could cause our actual activities or results to

differ materially from the activities and results anticipated in forward-looking statements, including, but not limited to: delays or

unexpected casualties related to construction under our investment plan and master plans, our ability to generate or obtain the

requisite capital to fully develop and operate our airports, general economic, political, demographic and business conditions in the

geographic markets we serve, decreases in passenger traffic, changes in the fees we may charge under our concession

agreements, inflation, depreciation and devaluation of the AR$, EUR, BRL, UYU, AMD or the PEN against the U.S. dollar, the early

termination, revocation or failure to renew or extend any of our concession agreements, the right of the Argentine Government to

buy out the AA2000 Concession Agreement, changes in our investment commitments or our ability to meet our obligations

thereunder, existing and future governmental regulations, natural disaster-related losses which may not be fully insurable, terrorism

in the international markets we serve, epidemics, pandemics and other public health crises and changes in interest rates or foreign

exchange rates. The Company encourages you to review the ‘Cautionary Statement’ and the ‘Risk Factor’ sections of our

Registration Statement on Form F-1 filed with the SEC for additional information concerning factors that could cause those

differences.

Disclaimer and forward looking statement

• Passenger traffic up 3.8% YoY reaching 19.8 million passengers in 2Q19

• Revenues, Ex-IFRIC12, declined 7% YoY mainly reflecting difficult macro in Argentina, softer traffic in

Brazil and FX translation impact from Argentine Peso, as well as Euro and Brazilian Real depreciation

• Comparable Adj. EBITDA, Ex-IFRIC12, decreased 9% YoY, with margin flat at 37%

• Progress on strategic initiatives

• CAPEX of US$108 million to enhance airport infrastructure, mainly in Argentina, Armenia and Ecuador

• Inauguration of the new terminal at Ezeiza Airport expected by September 2019

Executing against strategic roadmap despite continued

challenging macro environment

1. All figures shown in this presentation are excluding IAS29, unless otherwise noted. For “As Reported” figures see the earnings report.

2. Comparable figures exclude: i) a one-time $2.2 million gain in Italy from the positive outcome of a claim against the Ministry of Transport

NY008MZK / 938652_1.wor

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Traffic growth of 3.8% driven by domestic passenger growth in Argentina, impacted by declines in Brazil & Uruguay; good performance in Armenia and Peru

2 Airports(1)

Passengers +2.1%

Cargo -6.2%

Movements +1.3%

ECUADOR

PERU

37 Airports

Passengers +12.3%

Cargo -3.3%

Movements +0.1%

ARGENTINA

5 Airports(2)

Passengers +4.5%

Cargo -1.9%

Movements -1.1%

ITALY

2 Airports

Passengers +0.0%

Cargo +13.2%

Movements +1.8%

BRAZIL

2 Airports

Passengers -9.8%

Cargo +52.0%

Movements -18.9%

ARMENIA

2 Airports

Passengers +8.9%

Cargo +9.5%

Movements +0.2%

URUGUAY

2 Airports

Passengers -2.1%

Cargo +0.8%

Movements -8.5%

Corporación América Airports

52 Airports

Passengers +3.8%

Cargo +6.6%

Movements -4.0%

50%

5%

4%

12%

3%

22%

4%

% of total passengers for 2Q19

1)CAAP owns 99.9% of ECOGAL which operates the Galapagos Airport, but due to terms of the concession agreement the ECOGAL’s results are accounted for by the equity method. However, 100% of ECOGAL’s passenger traffic and aircraft movements are included in this table.

2)CAAP owns 50.0% of AAP and accounts its results by the equity method. However, 100% of AAP’s passenger traffic and aircraft movements are included in this table

Net Revenue by type Net Revenue by geography

Comparable revenues Ex-IFRIC12 fell 7.2% YoY in the quarter:

Aeronautical down 3.7% YoY impacted by: i) Argentina due to mix-shift from international to domestic traffic and

currency depreciation, and ii) Brazil mainly due to decline in traffic and currency depreciation. Revenue growth in Ecuador

driven by international traffic

Commercial declined 11.7%, growth in Armenia and Italy more than offset by Argentina and Brazil. Currency translation

in Brazil more than offset 4% local currency growth from higher cargo volume and VIP lounge revenues among others

Revenues reflect lower international travel demand in Argentina, traffic decline in Brazil and FX depreciation in Argentina, Brazil and Italy

2Q182Q19 ex IAS 29

IAS 292Q19 as reported

% Var as reported

% Var ex IAS 29

Aeronautical Revenue 185.6 178.7 6.7 185.4 -0.1% -3.7%

Non-aeronautical Revenue 211.4 216.8 10.4 227.2 7.4% 2.5%

Commercial revenue 138.1 121.9 4.9 126.7 -8.2% -11.7%

Construction service revenue (1) 72.7 94.4 5.5 99.9 37.5% 29.9%

Other revenue 0.7 0.5 0.0 0.5 -28.4% -28.4%

Total Consolidated Revenue 397.1 395.4 17.1 412.6 3.9% -0.4%

Total Revenue excluding Construction Service revenue (2) 324.4 301.0 11.6 312.6 -3.6% -7.2%

In US$ million

1 Construction Service revenue equals the construction or upgrade costs plus a reasonable margin.

2 Excludes Construction Service revenue.

62%

10%

7%

7%

6%

8%

Argentina Italia Brazil Uruguay Ecuador Armenia


191 182

72 94

4436

0.5 0.1

2Q18 2Q19

Cost of services Ex Construction Construction Costs

SG&A Other expenses

Operating Costs & Expenses Ex-IFRIC12 down 7% YoY

to $218 M

Cost of services decreased 5% YoY to $182 M, mainly due to

declines in:

Maintenance expenses in Argentina and Brazil benefitting from FX

depreciation and in Ecuador and Uruguay from easier comps

Concession fees in Argentina reflecting lower revenues and in Brazil

due to FX depreciation and the change in the passenger curve by

which the concession fee is calculated, partially offset by the 5%

increase agreed July 18 in Ecuador

Salaries benefitted from AR Peso, Real and Euro depreciation

Cost of services also benefitted from a $2.2 M one-time gain in Italy from

a positive outcome of a legal claim

SG&A down 18% YoY to $36 M in 2Q19, mainly due to:

Lower sales taxes and labor costs in Argentina

Lower professional fees at holding levels

Partially offset by higher bad debts in Argentina and Brazil from

commercial tenants

312

Consolidated Operating Costs and Expenses

1%

US$ Million

Operating costs and expenses follow decline in sales. Cost structure continued to benefit from currency depreciation in key markets

308


121113

2Q18 2Q19

Adjusted EBITDA & Margin

US$ Million

37.4%37.2%Adj. EBITDA MgEx-IFRIC12

Adjusted EBITDA fell 6.6% YoY to $113 M

Comparable Adj. EBITDA fell 9% YoY to $110 M,

while Adj. EBITDA Mg Ex-IFRIC12 remained

stable at 37%

Solid margin improvement in Italy and Brazil

Offset softer margin in Argentina

Adjusted EBITDA down 6.6% impacted by Argentina while comparable Adjusted EBITDA margin remained flat YoY at 37%


2. Comparable figures exclude: i) a one-time $2.2 million gain in Italy from the positive outcome of a claim against the Ministry of Transport

211 176

469

810

1 year or less 1 -2 years 2 - 5 years Over 5 years

2.7x

2.0x 2.1x 2.0x 2.0x 2.2x

December 2017 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19

58%27%

15%

US dollars

Reales

Euro

42%

58%

Bank and financialborrowings

Notes

Healthy balance sheet and sound debt profile

Debt Maturity ProfileLeverage Ratios(Jun 30, 2019; US$mm)(2)

Financial Debt Overview

Debt Breakdown

US$1.1bn(1)

(Jun 30, 2019)

Source: Company information.

1. As of June 30 2019, the Company had a cash balance of US$222M.

2. The amounts disclosed in the table are undiscounted cash flows of principal and estimated interest. Variable interest rate cash flows have been estimated using variable interest rates applicable

at the end of the reporting period.

• Strong cash position of $222 million. Debt held at subsidiary level.

• US$ 120 million credit facility entered by AA2000 on August 9 to fund capex program

5.3x

Net Debt/EBITDA Adjusted EBITDA/Interest Expense

Currency Mix

(Jun 30, 2019)

US$1.1bn(1)

6.0x 3.8x 5.8x 5.3x 5.2x

Argentina: revenues remained impacted by difficult macro dynamics, while Adjusted EBITDA margin was down 80 bps YoY at 43%

Domestic traffic up 22% YoY fueled by opening of new routes by low-cost

carriers and higher promotional activity. International passengers fell 6%

YoY

Revenue ex-IAS 29 and ex-IFRIC12 declined 14% mainly impacted by:

Overall slower international travel demand and mix-shift to domestic traffic

Lower commercial revenues driven by a decline in duty free sales and lower

cargo activity

FX translation impact local currency revenues from the sharp AR$

depreciation

Ex-IAS 29 Adjusted Segment EBITDA fell 15% YoY, with Ex-IFRIC 12

margin contracting 80 bps to 43% mainly due to:

Lower cost dilution from labor and maintenance expenses

Partially offset by the impact of currency depreciation on AR$ denominated

costs and a reduction in SG&A

Capex accelerated to $87 million in 2Q19 mainly for the new terminals at

Ezeiza, Jujuy and Iguazu airports, expansion of Aeroparque Airport, and in

various programs across other airports of the concession

Inauguration of a new fully sustainable terminal building at Comodoro

Rivadavia Airport

Completion of new terminal at Ezeiza expected by 3Q19

Operating & Financial Highlights (In millions of U.S. dollars, unless otherwise noted)

2Q18

2Q19

ex IAS

29

IAS

29

2Q19 as

reported

% Var as

reported

% Var ex

IAS 29

Passenger Traffic (in

millions)8.8 9.9 - 9.9 12.3% 12.3%

-Domestic 5.4 6.6 - 6.6 22.1% 22.1%

- International 3.2 3.0 - 3.0 -5.5% -5.5%

Cargo Volume 56.6 54.8 - 54.8 -3.3% -3.3%

Aircraft Movements 105.9 106.0 - 106.0 0.1% 0.1%

Total Revenue 246.7 243.1 17.1 260.2 5.5% -1.5%

Aeronautical Revenue 102.0 94.6 6.7 101.3 -0.7% -7.3%

Non-aeronautical revenue 144.7 148.5 10.4 158.9 9.8% 2.7%

Commercial revenue 79.2 62.0 4.9 66.8 -15.6% -21.7%

Construction service revenue 65.5 86.5 5.5 92.1 40.6% 32.1%

Revenue ex-Construction 181.2 156.5 11.6 168.1 -7.2% -13.6%

Adjusted Segment EBITDA 78.9 67.0 5.4 72.3 -8.4% -15.2%

Adjusted EBITDA Margin Ex-

IFRIC 1243.5% 42.7% - 43.0% -55 -80

CAPEX 65.8 86.8 5.5 92.3 40.2% 31.9%

Passenger traffic remained stable in 2Q19: 5.2% increase at Florence Airport

benefitting from easier comps was partially offset by 2.5% decline at Pisa Airport

Revenues ex-IFRIC12 were flat due to the impact of the depreciation of the Euro

Aeronautical revenues in local currency up 6% due to lower marketing support

expenses from lower traffic and the increase in the Passenger with Reduced

Mobility (PRM) fees

Commercial revenues up 4% (10% in local currency) driven by higher car rental

revenues at Pisa Airport and higher F&B revenues from the opening of new areas at

Pisa and Florence Airports

Adjusted Segment EBITDA up 30% to $14 million, benefitting from a $2.2 million

one-time gain from a legal claim

Excluding the one-time gain, Adjusted Segment EBITDA was up 9% and Ex-

IFRIC12 margin expanded 247 bps to 30%

Invested $5 M primarily on Master plan development in Florence Airport and new

equipment at Pisa Airport

On July 25, 2019 Toscana Aeroporti lodged an appeal with the Council of State

against the judgement by the Regional Administrative Court of Tuscany that

overturned the favorable Environmental Impact Assessment decree issued for

Florence Airport’s 2014-2029 Master Plan.


Italy: Strong Adjusted EBITDA margin expansion despite flat revenues

2Q19 2Q18 % Var

Passenger Traffic (million) 2.4 2.4 0.0%

-Domestic 0.5 0.5 -2.1%

-International 1.9 1.9 0.5%

Cargo 3.4 3.0 13.2%

Aircraft Movements 22.4 22.0 1.8%

Revenue 39.1 42.0 -7.0%

- Aeronautical 26.6 26.7 -0.2%

- Non-Aeronautical 12.5 15.3 -18.7%

Commercial revenue 9.9 9.5 3.7%

Construction service revenue 2.2 5.2 -57.9%

Other revenue 0.4 0.6 -34.2%

Revenue ex-Construction 36.9 36.8 0.2%

Adjusted EBITDA 13.9 10.7 29.6%

Adjusted EBITDA margin Ex-

IFRIC 1236.5% 28.0% 857

CAPEX 4.7 5.9 -21.2%

Brazil: Local currency revenue growth despite decline in traffic; Adjusted EBITDA expansion on the back of lower cost of services

Traffic declined almost 10% impacted by the cessation of operations

of Avianca Brazil. This more than offset traffic from new domestic and

international routes

Local currency revenues up 2% YoY, but down 6% as reported,

impacted by the BRL depreciation

Aeronautical revenues fell 7%, but were up 1% in local currency as the

increase in tariffs at Brasilia Airport more than offset traffic decline

Commercial revenues declined 5% as currency depreciation more than

offset increase in revenues from higher cargo volumes and new

commercial agreements (+3.5% in local currency)

Adjusted Segment EBITDA up 18% to $3 million with the margin

expanding 220 bps to 11% mainly due to:

A decline in cost of services from lower concession fee charges

Partially offset by deleverage in SG&A expenses as a result of higher

bad debt charges mainly from a Brazilian carrier


2Q19 2Q18 % Var

Passenger Traffic (million) 4.3 4.7 -9.8%

-Domestic 2.6 2.9 -10.4%

-International 0.1 0.1 12.2%

Cargo 23.9 15.7 52.0%

Aircraft Movements 37.6 46.4 -18.9%

Revenue 28.4 30.3 -6.2%

- Aeronautical 12.8 13.8 -7.3%


Commercial Revenue 15.6 16.5 -5.4%


Adjusted EBITDA margin 10.7% 8.5% 220

CAPEX 0.8 1.9 -59.9%

Passenger traffic fell 2% mainly impacted by the cancellation of a daily route to

Bogota and difficult macro conditions in Argentina, partially offset by easier

comps from Easter and winter holidays shift

Revenue flat as lower commercial revenues offset higher aeronautical revenues

Aeronautical revenue up 2% due to the increase in international traffic from higher-

margin routes and increase in the passenger use fee, that more than offset the

decline in traffic

Commercial revenues declined 2% mainly impacted by:

• Lower Duty Free sales and parking revenues related to reduced passenger

traffic and lower demand, particularly by Argentine passengers; and

depreciation of the Uruguayan peso

• Partially offset by higher VIP lounge revenues from new agreements in the

quarter

Adjusted Segment EBITDA up 2% million to $12 M

Ex-IFRIC12 margin expanded 91 bps due to lower maintenance expenses,

partially offset by higher payroll costs from the impact of the new variable

compensation policy and higher SG&A expenses. Cost structure also benefitted

from the depreciation of the Uruguayan peso

Implementation of solar energy generation system also contributed to savings in

energy fees


Uruguay: Adjusted EBITDA expansion despite decline in traffic and flat topline growth

2Q19 2Q18 % Var

Passenger Traffic (million) 0.5 0.5 -2.1%

-Domestic 0.0 0.0 -16.3%

-International 0.5 0.5 -1.8%

Cargo 6.8 6.8 0.8%

Aircraft Movements 6.5 7.1 -8.5%

Revenue 27.1 27.0 0.2%

- Aeronautical 14.6 14.3 2.1%


Commercial revenue 12.2 12.5 -2.0%

Construction service revenue 0.2 0.2 -4.5%

Other revenue 0.0 0.0 9.6%

Revenue ex-Construction 26.9 26.8 0.2%


Adjusted EBITDA margin Ex-

IFRIC 1245.2% 44.3% 91

Looking at the remainder or the year: Despite near-term headwinds across key markets, solid balance sheet supports strategic initiatives that better position CAAP for long-term growth

Difficult environment in Argentina, with weak macro conditions

and heightened volatility around the presidential elections,

adding another layer of uncertainty to the second half of the

year

Resilient business model with nearly 80% of revenues

generated in US$

In Brazil, lower GDP growth expectations and the cessation of

operations of Avianca Brasil continue to weight on results.

Expect capacity at Brasilia to be gradually restored starting by

year-end

In Italy, expecting good travel summer season while continue to

monitor the evolution of Alitalia and the development of Brexit

Remain focused on enhancing the passenger experience and

moving ahead with key capital investments

Solid balance sheet provides flexibility to support long-term

investment plans that will better position the Company for

growth, as volatility in Argentina recedes and the macro

environment improves

Questions and Answers

IR Contact

Gimena Albanesi

Email: [email protected] Phone: +5411 4852-6411

corporación américa airports s.a. second quarter 2019 ... · ex-ifric12 adjusted ebitda fell 6. %...

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