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

Good day, ladies and gentlemen, and welcome to Assure's first quarter 2024 results conference call. My name is Sherry and I will be your operator. At this time, all participants are in a 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. If you want to withdraw your question at any time, please press star followed by two. If you're using speakerphone, Please lift the handset before making a selection. As a reminder, today's call is being recorded. Now I would like to turn the call over to Mr. Adolfo Castro, Chief Executive Officer. Please go ahead, sir.

Thank you, Sherry. And good morning, everyone. Before I begin discussing our results, 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 several risks and uncertainties that could cause actual results to differ materially, including factors that may be beyond our company's control. As usual, additional details about our quarterly results can be found in our press release, which was issued yesterday after market closed and is available on our website in the Vector Relations section. Following my presentation, I will be available for Q&A. Moving on to the review of Azul's operational and financial performance for the quarter. As usual, all comparison discussed will be year-on-year unless specified otherwise. We saw record high passenger traffic in the quarter at 18.6 million travelers, up 4% year-on-year. This good performance was mainly driven by increases of 4% in Mexico, 12% in Puerto Rico, which more than offset the low single-digit decline in Colombia. By region, Puerto Rico again stood at the region with the strongest traffic growth, with traffic up nearly 12% driven by a double-digit increase in both domestic and international traffic. Traffic in Mexico was up nearly 4% as high single-digit growth in international and passengers driven mainly by traffic to and from the United States and Canada. More than offset the loss in the decline in domestic travel. In addition to the impact from the initial effects of the traffic engine problem we have experienced in the last quarters, domestic traffic was also affected by the reduction in air traffic movements at Mexico City Airport starting January the 8th this year. Recall this airport accounted for 45% of ASUS domestic traffic in 2023, and we expect this to continue negatively impacting domestic traffic this year. Lastly, in Colombia, traffic had started to recover with year-on-year declines motivated, down only 2% in the quarter, driven by easier comes in domestic traffic following the suspension of two local airlines in February of last year, that accounted 20% of all traffic in Colombia in 2022, and 19% increase in international travel. We expect the recovery in traffic in Colombia to continue through the remaining of the year, as Avianca and LATAM continue to recover some of the lost routes, which march already posting a 9% growth in total traffic in Colombia. Now turning to the P&L, as a reminder, All reference to revenues and costs exclude construction and cost of revenues. Total revenues increased 14% to just over 7 billion pesos in the first quarter. Mexico and Colombia stood out with growth in the mid-teens, while Puerto Rico delivered low single-digit revenue growth impacted by stronger pesos despite the double-digit traffic growth. Mexico, which accounted for 76% of total revenues, posted a 16% increase in its stock line. This was mainly explained by growth in aeronautical services in the mid-20s, while non-aeronautical revenues increased low single visit. Revenues in Puerto Rico, which accounted for 14% of the total, increased nearly 2% at 10% growth in non-aeronautical revenues, was partially offset by a 5% reduction in aeronautical revenues, reflecting the strong peso. Lastly, Colombia, which represented 10% of the revenues, posted a mid-teen increase in top line, reflecting a good performance in both aeronautical and non-aeronautical revenues, which benefited from the international traffic growth and the strong Colombian peso. Executing our strategy of expanding our commercial offering over the past 12 months, we opened 17 new commercial spaces in Mexico, 6 in Puerto Rico, 22 in Colombia. Commercial revenues were up nearly 5%, slightly above passenger traffic growth, mainly driven by increases of 10% in Mexico, while Puerto Rico and Colombia posted increases of 10% and 14% respectively. On a per passenger basis, commercial revenues increased 2% year-on-year to nearly 125 pesos. This performance was mainly driven by growth in the high teams in Colombia, again, reflecting a strong FX, which more than offset low single digits in Mexico and Puerto Rico. On the cost front, Consolidated expenses increased nearly by 14%, generally in line with revenue growth in the quarter. This was mainly driven by Mexico, which reported a higher concession fee due to increases by 80% established by the Mexican government and 20% increase in minimum wages, both effective during the first. Partially upset by the 50% reduction in terminal assistance fee. Consolidated EVDA increased 13% year-on-year to 5.1 billion pesos in the quarter, while the adjusted dividend margin, which excludes construction, was 71.4% compared with a 71.9% in the year-over-quarter. All regions contributed to EVDA growth. Mexico remains the main driver of profitability, with EVDA increasing 15%. followed by Colombia with an increase of nearly 11%, and Puerto Rico just over 1%. Moving on to the balance sheet, we closed the quarter with a strong cash and cash equivalent position of nearly 17 billion pesos, up 21% from the same quarter last year. Total debt declined 4% from the year end 2023, reflecting the position of the Mexican and Colombian pesos and the payment of principal amounts of outstanding debt in Mexico. In turn, the leverage ratio was negative 0.3 times. Tomorrow, April 24th, the annual shareholders' meeting is being held, for which we have proposed the distribution of an ordinary cash dividend of 10 pesos for 1926. The shared table in May and an Extraordinary Cash Dividend of $10 per share, payable this June. Lastly, last week we published our 2023 Sustainability Report, the 12-year report, and the Circular Unite, and encourage you to read them, all of which can be found on our website. Wrapping up, first quarter 2024 delivered solid results, even as we faced the ongoing issues with the Kraft and Whitney engines and the capacity reduction of Mexico City Airport. Our new performance reflects increased traffic through our airports along with improved passenger experience we are delivering. These trends bode well for the remaining of the year. We are committed to support our growth potential and enhancing the passenger experience through the investment in capacity in our commercial offerings. Importantly, our financial position is healthy and our capital and patient priorities are balanced between investing for growth and returning cash to shareholders. We send my prepared remarks. Sherry, please open the floor for questions.

Thank you. Again, to the audience, it is star then one for questions. And again, please make sure your mute function is turned off or the handset is picked up before pressing the corresponding digits. Our first question is from Alejandro Fox with Atalu. Please proceed.