Grupo Aeroportuario del Sureste, S. A. B. de C. V.

Please stand by. We are about to begin. Good day, ladies and gentlemen, and welcome to ASUR's third quarter 2021 results conference call. My name is Allie, and I will be your operator. At this time, all participants are in listen-only mode. We will conduct a question and answer session towards the end of today's conference. If you would like to ask a question, please press star followed by one. You want to withdraw your question at any time by pressing star followed by two. If you are using a speakerphone, please lift your handset before making a selection. As a reminder, today's call is being recorded. I'd now like to turn the call over to Mr. Adolfo Castro, Chief Executive Officer. Please go ahead.

Thank you, Ali. And good morning, everyone. Thank you for joining our conference call to this course, ASUS Third Quarter 2021 Financial Operating Results. I hope that you and your loved ones remain healthy and safely. Additional details about our quarterly results can be found in our press release, which was issued yesterday after market closed, and it's available on our website in the investor relations section. Let me remind you that certain statements made during this call may constitute forward-looking statements which are based on current management expectations and beliefs and are subject to a number of risks and uncertainties that could cause active results to different materials, including factors that may be beyond our company's control, including the impact from COVID-19. Please refer to the filings with the Securities and Exchange Commission and the Mexican Bolsa. Passenger traffic continued to improve across the board, reaching a total of nearly 14 million passengers in the third quarter, which was only 1.4% below the pre-pandemic levels of third quarter 2019. Again, Puerto Rico posted the strongest recovery, beating third quarter 19 levels by over 16%. Domestic traffic was up 22%, more than compensating for weaker international travel, which was down in the high 20s. Mexico delivered the best performance in terms of international traffic on the back of successful vaccination process in the U.S., nearly reaching pre-pandemic levels of 3.19. Our eighth-smaller airport in Mexico posted a recovery in high 20s, while traffic in Cancun was just 2% below 3.19 levels. At the same time, domestic traffic in Mexico and Colombia continued to recover during the quarter. Compared to the pre-pandemic levels of third quarter 19, domestic traffic in Mexico was only down by 9%, improving from the 12% drop of the last quarter. Note that Cancun Airport reached the domestic traffic levels of third quarter 19. In Colombia, domestic traffic was only 4% below third quarter 19 levels. Compared to the previous quarter, 30% decline against second quarter 2019. On a monthly basis, traffic continued to gradually recover throughout the quarter with a total traffic of bidding Third quarter 19 levels by 3%, driven by Puerto Rico and Colombia, which were both above pre-pandemic levels, while Mexico was slightly down by 1% as domestic traffic lagged behind international recovery. Looking ahead at the travel trends, the ongoing vaccination rollout in the U.S. with 57% of the population fully vaccinated and 62% with at least one dose, should contribute to a continued recovery of international traffic in our Mexican operations, a better outlook for the winter travel season. We also expect Mexico's domestic traffic to continue its gradual recovery as the vaccination roll and the COVID recovers. These further supported by the gradual advance of vaccination campaigns and the lifting of travel restrictions across various countries. However, we expect that business travel will take more time to recover, resulting in slower recovers at airports like Merida, Veracruz, and Villahermosa in Mexico, which are more than 20% below 2019 during the quarter. We also remain cautiously optimistic about the global trend and therefore expect total traffic to reach the 12-month record that we set in February 2020 during the second quarter of 2022. Moving on the ASUR's financial performance, our strong balance sheet enables to ramp up operations to meet demand as travel conditions continue to gradually recover. We closed another quarter with a solid financial position. Cash and cash equivalents reached 11 billion pesos, more than doubling December 2020 levels. All three of our countries' operations contributed to higher cash positions, with increases of over 8 billion in Mexico, 2 billion pesos in Puerto Rico, and slightly over half a million pesos in Colombia. Total financial debt of the quarter ends at 14.1 billion, up just 1% from the year end 2020 levels. Net debt to last 12 months EBDA was 0.4 times at the close of the quarter, while the interest cover ratio improved to 6.9 times from five times in the prior quarter. We also maintain a healthy maturity profile. Note that on October 19th, we refined our loan with BVA at Cancun Airport, extending its maturity by seven years, with principal payments now starting in 2023. This brought down our principal payments debt to 0.4% total debt for the fourth quarter at the year end and 3.5% next year. Note that October 1st, we paid an ordinary net cash dividend of 8.21 pesos per share that have been approved at our annual shareholders meeting of 2020, or a total of 2.5 billion pesos. Account receivables in turn dropped 18% sequentially, mainly driven by declines of 58% in Puerto Rico, 3% in Mexico, and 10% in Colombia. Revenues ex-construction rose 154% to 4.5 billion pesos year-on-year. Importantly, we achieved an 11% increase in revenues over pre-pandemic levels in third quarter 19, with non-aeronautical services of 17% and aeronautical services nearly 8%. Mexico accounted for 67 percent of the total ex-construction revenues in the quarter, while Puerto Rico and Colombia represented 22 and 11 percent respectively. On a sequential basis, revenues ex-construction increased 11 percent. Commercial revenues increased year-over-year across our operations. over 210% in Mexico, 133% in Puerto Rico, and nearly 190% in Colombia. On a per passenger basis, commercial revenues remain distorted by the reduction in passenger traffic, reaching nearly 118 pesos compared with the pre-pandemic level of 99 posted in the third quarter of 19. Operating expenses, ex-construction costs increased 31% year-over-year, reflecting mainly hierarchies in Mexico. By contrast, consolidated costs were down mid-single digits when compared with third quarter 19 levels, even despite the 11% increase in revenues during the period. In Mexico, cost of construction increased 43% year-on-year, mainly due to the higher technical assistance and concession fees driven by higher revenues and EBDA, along with a higher cost of services. Compared to third quarter 2019 operating costs and expenses, ex-construction rose 7%, below the 10% increase in revenues ex-constructions. Costing Puerto Rico rose nearly 10% year-on-year, but declined 27% when compared with third quarter 19. During the quarter, the efforts of Puerto Rico reimbursed 165 million pesos in expenses from the grant under the CARES Act, compared with the reimbursement of expenses of 113 million in the same quarter last year. Lastly, expenses in Colombia increased 33% year-over-year, largely reflecting higher concession fees related to the recovery in traffic levels. Consolidated EVDA increased 2.2 billion pesos this quarter, up from 755 million in the February 2020. reflecting the travel recovery in travel demand as vaccination programs advance worldwide and travel bans are lifted. Compared to third quarter 19 pre-pandemic levels, EVDA was up 18%. All countries of operation reported EVDA gains in the quarter. with Mexico contributing 2.1 billion, Puerto Rico over half a billion pesos, and Colombia 273 million pesos. In percentage terms, EFDA in the quarter compared with third quarter 19 levels increased by 14% in Mexico, 15% in Puerto Rico, and 1% in Colombia. Adjusted dividend margin, including IFRIC-12, increased to 68% in the third quarter, up from 65% in the prior quarter, and 64% in the third quarter 19. Adjusted dividend margin reached 72% in Mexico, 59% in Puerto Rico, and 57% in Colombia. With regard to CAPEX, we invested just over 600 million pesos in the quarter, the majority of which was invested in Mexico, while 46% were invested in Puerto Rico and nearly 2 million in Colombia. Year-to-date, we have invested a total of 1.5 billion pesos. Note that we expect to spend more capital in the fourth quarter as we met our committed investments of 3.5 billion pesos for the year in Mexico. In Mexico, we remain on schedule with expansion of the terminal building in Merida. The second phase of the project is expected to open during the fourth quarter, and the construction of the parallel taxiway of the second runway at Cancun Airport also expected to open during the fourth quarter. And we are starting the first phase of the Terminal 4 expansion. While in Puerto Rico, we are undertaking major maintenance repairs to runways and taxiways. Before moving to the Q&A portion of the call, a recap of my third quarter review. We maintained a solid balance sheet, enabled us to ramp up ASUS operations consistently with the recoveries in each of the markets. We also remained confident in our ability attractive airport network to continue rebuilding our passenger base longer term, even the encouraging growth trends that we see across all our markets. And because of the pandemic remains unpredictable and continues to affect travel demand, we continue currently managing our cash and viable costs. This concludes my remarks for today's poll. Ali, please open the line for questions.

Thank you again to the audience. It is star one to ask a question. Please make sure mute function is turned off or your handset is picked up before pressing the corresponding digits. We ask that you ask one question and one follow up question and then you may reenter the queue if you have any additional questions. Again, it is star one if you would like to ask a question. And we'll go ahead and take our first question from Willerme Mendez from JP Morgan. Please go ahead.