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

Good day, ladies and gentlemen, and welcome to ASSORT's third quarter 2023 results conference call. My name is Ryan, 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'd 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 are using a speakerphone, please lift the handset before making a selection. As a reminder, today's call is being recorded. I now turn the call over to Mr. Adolfo Castro, Chief Executive Officer. Please go ahead, sir.

Thank you, Ryan, 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 active 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 investor relations sector Following my presentation, I will be available for Q&A. Before getting into a discussion of the quarterly results, let me start today's call with a recap of the recent development in connection with the concession agreements of our Mexican operations as recently announced. On October the 4th, as you receive a notification from the Mexican Federal Civil Aviation Agency, that it has decided to amend with immediate effect the terms of the tariff-based regulation. These terms were laid out in Activity 7 of the concession agreements established in 1998 and then amended in 1999. On October 19, ASU received a notification from the Mexican Federal Civil Aviation Agency, which modified the document received on October the 4th. The full text of the amended Exhibit 7 was filed with the Mexican Bolsa and the Securities and Exchange Commission. On October 18, the lower house of the Mexican Congress approved the initiative to increase the concession fee from 5% to 9%, which is now under review by the Senate. We do not know when this may be approved and when the change in the case will be effective. ASUR is currently evaluating the changes implemented by the Mexican Federal Civil Aviation Agency and the potential impact that it may have on its business, including its financials. Now, moving on to ASUR's operating and financial performance for the quarter. Before starting, note that all comparisons are year-on-year unless otherwise noted. Starting with profits, On a consolidated basis, 17.6 million passengers traveled to our airports in the third quarter, a record high for a third quarter. We accomplished these even as the growth rate slowed to 3.4%. Additional traffic trends by country were mixed. As in the prior quarter, the suspension of two Colombian airlines earlier in the year Together with increasing the value of the taxes resulted in a construction of nearly 15% in total traffic in Colombia. By contrast, Puerto Rico again delivered the fastest growth of nearly 25% driven by solid performance in both domestic and international traffic. Lastly, traffic in Mexico was up close to 6%. driven by domestic traffic that offset a 0.6% decline in international traffic. It was primarily due to a slight year-over-year decrease in the passenger traffic to and from Europe, South America, offset by higher traffic from the U.S. and Canada. Moving into the P&L, as a reminder, all reference to revenue and cost excludes construction and cost revenues. Also note that Puerto Rico and Colombia figures reflect the strong Mexican peso, which appreciated over 13% and 2% versus the U.S. donor and the Colombian peso since the end of the third quarter of 2022 through the end of the third quarter of this year, respectively. With these, revenues increased over 3% to just over 6 billion pesos in the third quarter, mainly driven by growth in Aeronautical and non-Aeronautical revenues in Mexico, while Puerto Rico and Colombia posted declines of nearly 1% and 16% respectively. However, measuring local currencies, revenues increased 18.6% in Puerto Rico and 3.4% in Colombia. Overall, Mexico represented 73% of total revenues, while Puerto Rico and Colombia accounted for nearly 16% and 11% respectively. Commercial revenues were up 3% in line with passenger traffic growth, driven by increases of 2% in Mexico, 8% in Puerto Rico, partially upset by a 1% decline in Colombia. On a per-passenger basis, commercial revenues remained flat at $116.5, with Mexico and Puerto Rico contracting $236 and $139 per passenger, respectively. while Colombia posted a mid-term increase to 43 pesos. In local currency, Puerto Rico and Colombia posted increases in commercial revenue for passengers, approximately 2.5% and 27.3% respectively. These increases were partially driven by actions we have undertaken to further enhance our passenger traffic experience. This includes 66 new commercial spaces open across all our airport network during the last 12 months. Of these, 16% open in Mexico, 4 in Puerto Rico, and 4 seats in Colombia. Consolidated EVDA for the quarter increased year-over-year 3% to 4.2 billion pesos in Mexico, remaining the main contributor to profitability, posting a 3% increase to 3.3 billion pesos, followed by a recovery in Puerto Rico with EVDA up 8% to just over 500 million pesos. Performance in Colombia also improved with EVDA of 411 million pesos. Although this represented a decline of nearly 10%, it was better than the 20% decrease reported in the second quarter of 2023. In turn, consolidated adjusted India margin, which excludes construction, remained relatively flat to 69.6% year-over-year. A strong performance in Puerto Rico, which delivered a 400 basis points margin increase, offset declines of 90 and 300 basis points in Mexico and Colombia, respectively. In summary, we delivered another good quarter despite the strong peso. Good results in Mexico were further supported by a strong performance in Puerto Rico and improving profitability in Colombia, reflecting the suspension of operations of two Colombian airlines. earlier in the year and higher value-added taxes. We remain a strong and healthy balance sheet with cash and cash equivalents over 16.9 billion pesos and a healthy debt profile. Our strong financial position enables to return cash to shareholders in the form of billions. Specifically, in May, we paid an ordinary dividend that amounted of nearly $3 billion, and in November, we will be paying an extraordinary cash dividend of $10 per share, equivalent to approximately another $3 billion. Finally, capital expenditures in the quarter totaled $367 million. Of these, 64% was allocated to Mexico, 35% to Puerto Rico, and the remainder in Colombia. This ends my presentation. Brian, 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 comes from Juan Ponce with Bradesco BBI. Please go ahead.