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

Ladies and gentlemen, greetings and welcome to the Grupo Aeroportuario del Centro Norte Omaha first quarter 2025 earnings conference call. At this time, all participants are in the listen only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star and zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Emmanuel Camacho, investor relations officer. Please go ahead,

sir. Thank you, Osiko. Hello everyone. Welcome to OMA's first quarter 2025 earnings conference call. We're delighted to have you join us today as we discuss our company's performance and financial results for the past quarter. Joining us today are our CEO Ricardo Reina and CFO Grupo Perez-Piego. If you're reminded that certain statements that's made during the course of our discussion today may constitute forward-looking statements which are based on career management expectations and beliefs in our subject to a number of risks and uncertainties that could cause actual results to differ materially, including factors that may be beyond our control. And now I'll turn the call over to Ricardo Reina for his opening remarks.

Thank you, Emmanuel. Good morning, everyone. We appreciate your presence on this call today. This morning, Grupo and I will review our quarterly operational and financial results and then we will be pleased to answer your questions. In the first quarter of this year, OHA's passenger traffic totaled 6.4 million passengers, a .1% increase year over year. This increase was mainly attributable to an increase in seat capacity of .4% during the quarter. On the domestic front, passenger traffic grew by 8%, driven primarily by the Monterrey Airport, which saw increases on routes to Querétaro, the metropolitan area of Mexico City, including the Mexico City, Aifa, and Toluca airports, Hermosillo, Ciudad Juárez, Guadalajara, and Culiacán. These routes collectively added over 285,000 passengers during the quarter, representing 72% of the total domestic passenger growth. International passenger traffic increased 15.1%. This growth was also driven by the Monterrey Airport, with passenger traffic increases on routes to San Antonio, Chicago, Los Angeles, Orlando, San Francisco, Oakland, Miami, Austin, and Denver. These routes collectively added over 132,000 passengers during the quarter, accounting for 94% of the total international passenger increase in the first quarter. During the first quarter, we launched 16 new routes, five of which were international. In terms of airline participation, Viva de Agus represented 49% of our total traffic during the quarter, with an 11% increase in terminal passenger numbers compared to the first quarter of 2024, while Volaris, which accounted for 22% of our total traffic, recorded a 20% passenger increase during the quarter. Moving on to Nomads for quarter financial highlights. Aeronautical revenues increased 13.8%, with aeronautical revenue per passenger rising .3% in the quarter. Commercial revenues had a strong double-digit growth, with commercial revenue per passenger growing 13% to 66 pesos, as compared to the first quarter of 2024, driven by VIP lounges, restaurants, and retail. VIP lounges benefit from higher access rates and a larger number of users, as well as the effect of the previously open lounges. The restaurant and retail line items benefited from the consolidation of new business units open across our airports during the past quarters. Occupancy rate of commercial space stood at 96% at the end of the quarter. On the diversification front, revenues increased 22%. Oma Cargo contributed most to this growth, mainly as a result of an increase in revenue related to air cargo operations in Monterey. Revenue from industrial services increased .4% year over year, reaching 42 million pesos, primarily driven by a higher number of square meters leased in our industrial park. During the quarter, we completed construction of a warehouse measuring about 9,200 square meters, as well as 2,400 square meters expansion of an existing facility. Additionally, we are currently building a 5,000 square meters warehouse, which we expect to complete in the second quarter of this year. Oma's first quarter adjusted EBITDA increased by 16% to 2.4 billion pesos and an adjusted EBITDA margin of 74.9%. On the capital expenditure front, total investments in the quarter, including MDP investment, major maintenance, and strategic investments, were 502 million pesos. Lastly, I want to mention that last Friday we held our 2025 annual shareholders meeting, where shareholders voted on several matters, including the declaration and payment of a 4.5 billion peso cash dividend. I would now like to turn the call over to Rufo Perez-Pierro, who will discuss our financial highlights for the quarter.

Thank you, Ricardo, and good morning, everyone. I will briefly walk you through our financial results of the quarter, and then we'll open the call for your questions. Aeronautical revenues increased .8% relative to the first quarter of 2024, driven primarily by higher aeronautical yields, as well as increase in both domestic and international passenger traffic. Non-aerorevenues increased by 20.9%. Commercial revenues increased 22.8%, and the nine items with the highest rolls were VIP lounges, restaurants, and retail. VIP lounges rose 80%, mainly due to an increase in rates and high number of users, as well as the opening and the consolidation of the Cihuatanejo lounge, which started operations last year. Restaurants increased 32.8%, driven by greater customer penetration and the opening or replacement of outlets in previous quarters in airports such as Monterrey, Ciudad Juarez, and Llandon. Retail increased .9% as a result of the contribution of new spaces opened or replacements of existing spaces in previous quarters, as well as the higher penetration, primarily in airports like Juarez, Monterrey, Torreón, and Culiacán. Diversification activities increased 22%, mainly due to high revenues from Oma Carga and the industrial park. Total aeronautical and non-aeronautical revenues grew .6% to 3.1 billion pesos in the quarter. Construction revenues amounted to 403 million pesos in the first quarter, a decrease of 60% as a result of lower MDP investment execution. The cost of services and DNA expense increased .2% year over year, primarily due to a 42% rise in other cost and expenses. Payroll increased by .9% while contracted services grew 8.8%, mainly due to higher costs for security and cleaning services following contract renewals in private quarters. Concession tax increased 16% to 259 million in line with the increase in revenues. Major maintenance provision was 53.4 million pesos as compared to 71.3 million pesos in the first quarter of 2014. As Ricardo mentioned, Oma's first quarter adjusted dividend was 2.4 billion pesos and adjusted dividend margin reached 74.9%. Our financing expense reached 312 million pesos, an increase of 13% mainly due to a lower interest income as a result of lower average cash balance during the quarter as compared to the same period of the last year. Consolidated net income reached 1.3 billion pesos, which showed an increase of .7% versus the first quarter of 2014. Turning to our cash position. Cash generated from operating activities in the first quarter amounted to 1.9 billion pesos and cash at the end of the quarter stood at 2.3 billion pesos. At the end of the quarter, total debt amounted to 11.3 billion pesos. We maintained a strong balance sheet ending the quarter with a net debt to adjust the debita ratio of one time. This concludes our prepared remarks. Sikho, please open the call for questions.

Thank you. Ladies and gentlemen, we will now be conducting a question and answer session. If you would like to ask a question, please press star and 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Ladies and gentlemen, we will wait for a moment while we poll for questions. The first question comes from Alan Macias with Bank of America. Please go ahead.

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? Thank you.

Hello, Alan. Thank you for your question. Yes, first quarter traffic was looking good numbers. 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.

Thank you. Thank you. The next question comes from the line of Pablo Montsiver with Barclays. Please go ahead.

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 going forward? Thank you.

Hi, Pablo. So over the past few years, we have tried 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. Thank

you.

Thank you. The next question comes from Jen Spies with Morgan Stanley. Please go ahead.

Yes. Hello. Congrats on the results. I have two questions. The first one is on capital allocation. CCER is, as you probably know, selling 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 are seeing that the low-cost carriers have retrenched some of their 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. Could you elaborate on 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 set the stage better for you guys compared to the other airport operators because it would lower the base of your traffic that you will be settling or negotiating in your next MDP? Thank you.

I'll take the first one. Yes, we took a look at the CCER assets, but at the moment we decided not to participate on that process. And for the second part, beautiful.

Yes, the seat 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 the fourth quarter of 2024, 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 over-optimistic on capacity growth at this time. And regarding the 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 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.

Okay, perfect. So it probably helps in the negotiations, but only marginally. Perfect. I appreciate the clarity. Thank you. Thank you.

Thank you. The next question comes from Alberto Ballorio with UBS. Please go ahead.

Hi. Thank you, gentlemen, for taking my question. My question is on neuronal medical revenues P-TEX. It was strong this quarter, a jump from fourth quarter last year and also the over-year from first quarter. I'm wondering if you can see another jump for the following quarters or will it be something more stable in the inflation index for looking forward for that line? Thank you.

Yeah, I think that the results in extraero reflects the strategy that we have been implementing over the last couple of years, especially since VINC acquisition. For the next quarters, in terms of commercial revenue per PACS, 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 Monterey start to be open.

Perfect. Those spaces will be open before World Cup, isn't it?

Yes,

correct. Perfect. Thank you very much, gentlemen.

Thank you. The next question comes from Pablo Recalde with ETOW. Please go ahead.

Hi. Good morning, Amartin. Congratulations on that. I have two questions. The first one is in the groups. I remember when your new partner came in, VINC, and all these plans of adding you, it's like long hauled. Is that still on the table or given all these macro concerns, that's on hold for now? Am I going to question some of that? Pablo, can you start again? Sorry to interrupt you,

Pablo. Maybe the question, use your handset,

please. I don't know if you can hear me now.

Yes, we can hear you. Yes, so please go ahead.

So, my first question is on the new routes. I remember when VINC came in, there was like all these plans of adding new routes, like long haul routes. Is that still on the table or that's on hold for now?

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 Monterey Airport, pointed towards that strategy of building good connectivity out of Monterey. But we also have very strong players in the local market and therefore we also focus on building greater regional connectivity.

Okay, thanks.

Thank you. The next question comes from the line of Jay Singh with Citibank. Please go ahead.

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

Sorry, the question again, the regulator pushing TUA again?

To adjust the airport use fees at Mexico City Airport?

Well, the TUA for Mexico City Airport is $13. It increases by US CPI inflation. We have not heard that that process or the kinds of adjustment is not changed. 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 to us in the Mexico City Airport for the rest of the year.

Okay, got it. 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-ERROR. They have been very active in CAPEX execution as well. So, it's a very close communication with them.

Got it. Thanks so much, gentlemen.

Thank you. As there are no further questions, I would now like to hand the conference over to Ricardo to MS, CEO, for closing comments.

We would like to thank everyone for participating in today's call. We appreciate your insightful questions, engagement, and continued support. Rufo, Emmanuel, and I are always available should you have any further questions or require additional information. Thank you once again and have a great day.

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.