Grupo Aeroportuario del Centro Norte S.A.B. de C.V.

Welcome to the Grupo Aeroportuero del Centro Norte OMA second quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I'll now turn the conference over to your host, Emmanuel Camacho. You may begin.

Thank you, Jamali, and hello, everyone. Welcome to almost second quarter to 2023, our next conference call. Participating today are CEO Ricardo Duenas and CFO Rufo Perez-Piego. We'll be reminded that certain statements made during the course of our discussion today may constitute forward-looking statements, which are based on current management expectations and beliefs and are subject to a number of breaks and uncertainties that could cause actual results to differ materially, including factors that may be beyond our control. And with that, I will turn the call over to Ricardo Reyes for his opening remarks.

Thank you, Manuel. Hello, everyone, and thank you for joining us today. This morning, I will briefly comment on several events and milestones occurred during the quarter. Then I will review our operational performance and financial results. And finally, we will be pleased to answer your questions. Today, I am pleased to announce that last Tuesday, we released our 2022 sustainability report. This report is a testament to our commitment to transparency, accountability, and our unwavering dedication to environmental, social, and governance principles. We are proud of the progress we have made in our sustainability journey, and we're committed to driving positive change in the years to come. The 2022 Sustainability Report is built upon global reporting initiative and the Sustainability Accounting Standards Board frameworks. This framework has guided us in creating a comprehensive and accurate portrayal of our sustainable practices and progress over the years. One of the essential aspects of this report is the re-evaluation of materiality, where we conducted a thorough analysis to identify the most critical issues that affect our stakeholders and our business. We have identified and addressed 15 material topics that reflect the core sustainability challenge and opportunities we face as an organization. By focusing on these areas, we can drive meaningful change and create a positive impact to our stakeholders. Some significant achievements showcased in the 2022 sustainability report include the substantial reduction in our carbon footprint during last year. Last year, 95% of our energy consumption was sourced from renewables, resulting in a 48% reduction in our total scope one and two carbon emission versus 2021. Additionally, we have made remarkable strides in reducing our water consumption. We managed to reduce water usage by 17% in 2022, despite a 29% increase in passenger traffic as compared to 2021. As we embrace sustainability, we recognize that this is an ongoing commitment to responsible business practices. We understand that there is still much work to be done, and we remain committed in our determination to promote sustainability sustainable mobility. In addition, alongside the release of our 2022 sustainability report, we also published our green bond progress report pursuant to ALMA's green bond framework. This report provides information about allocation of proceeds and the impact of projects financed with the one billion peso green bond issued in 2021. As of January 31st, 2023, we have contracted 719 million pesos in eligible green projects. These initiatives, which include our solar panels are already in operation, are projected to reduce over 15,000 megawatt hour in energy consumption annually. And our two new water treatment plants in San Luis Potosi and Chihuahua airports will allow us to treat an additional 24,000 cubic meters of water per year. I invite you all to explore this report in detail. Both documents provide comprehensive insights into our sustainable practices, achievements, and ongoing initiatives. We welcome the opportunity to engage in meaningful discussions with all of you about our sustainability efforts. Moving on to recent CAPEX development, as part of our efforts to enhance the services and capacity of the Monterey Airport, on June 20, 2023, we started operations of the Wing 1 building. which is part of the airport's expansion and remodeling project. This new wing serves passengers traveling through Terminal C, has an area of 5.6 thousand square meters, seven boarding gates, and an annual capacity of 1.4 million passengers. As we continue developing the Monterey Airport, we look forward to welcoming more passengers to experience the enhanced facilities and services offered by our expanded airport. Regarding growth of our industrial park in Monterey, during the quarter, we started the construction of two new industrial warehouses of 14,000 square meters and 10,000 square meters, respectively. These warehouses are expected to start generating revenues in the second quarter of next year. In addition, since the end of 2022, we have been engaged in the construction of two additional warehouses. Once these four warehouses are fully operational, total leased area will grow by 56% to 116,000 square meters, representing 83% of the total leasable space in the industrial park. As another highlight of the quarter, in Terminal 2 NH Collection Hotel at the Mexico City Airport, we successfully finished the remodeling. All 287 rooms underwent a full transformation, along with public areas and the restaurant of the hotel. creating an enhanced experience for our guests, which should translate into solid occupancy factor in subsequent years. Finally, in line with our strategy to improve passenger experience in our airports, we have successfully opened another OMA premium lounge in Tampico Airport. With this addition, we now directly operate a total of 10 lounges in eight of our airports. In addition, we are in the process to start operations of new lounges in our Durango, Reynosa, and Cihuatanejo airports. Turning to our main second quarter 2023 results, OMA delivered solid financial and operating results in the second quarter of this year. Adjusted EBITDA grew 25% in the quarter to 2.3 billion pesos, and adjusted EBITDA margin reached 78.6%, setting a new record high, largely as a result of the increase in both aeronautical and non-aeronautical revenues and our successful cost control strategy. In the second quarter, OMA's passenger traffic reached 6.6 million, an increase of 13% versus the second quarter of last year. During the quarter, our Monterey Airport delivered an outstanding passenger traffic performance, contributing with 544,000 additional passengers in the second quarter of 23 versus second quarter of last year, equivalent to 73% of OMA's total passenger growth in the quarter. The top five destinations driving the airport's growth in the quarter were Toluca, Cancun, Querétaro, Felipe Ángeles, and Houston, which collectively accounted for half of the airport's overall growth. Besides Monterey, the airport of Ciudad Juarez, Acapulco, and Mazatlán also contributed most to passenger growth. And the routes from this airport were the strongest traffic growth compared to the second quarter of last year, where the Ciudad Juarez to Guadalajara and Cancun routes. Acapulco to Felipe Angeles and Guadalajara routes, and Mazatlán to Mexico City and Tijuana routes. On aggregate, these six routes added 130,000 additional passengers, equal to 17% of OMA's total passenger increase in the quarter. Primarily as a result of the strong passenger traffic performance, our aeronautical revenues grew by 26% in the quarter to 2.3 billion pesos. On the commercial front, Revenues increased 23% compared to the second quarter of last year, driven by parking, car rentals, restaurants, and VIP lounges. Occupancy rates for commercial space stood at 94.3% at the end of the quarter. Diversification revenues increased 5%. Our hotel services contributed most to this growth. In the second quarter of 2023, occupancy rate at our Terminal 2 NH collection hotel increased 420 basis points, to 84.7%, reflecting the successful completion of a remodeling project, while the Hilton Garden Inn had an occupancy rate of 76.2%, 90 basis points higher. On the capital expenditure front, total investments in the quarter, including MDP investments, major maintenance, and strategic investments, were 184 million pesos. During the quarter, some of the most relevant projects we are working on are the expansion and remodeling of the Monterey Airport Terminal A building, as well as Ciudad Juarez, Culiacan, and Durango Terminal buildings. The reconfiguration of the Massaplan Terminal building, major rehabilitations and reconfiguration of platforms and taxiways in several airports, and construction of four industrial warehouses. I would now like to turn the call over to Rufo Perez Pliego, who will discuss our financial highlights for the quarter.