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

Good day, ladies and gentlemen, and welcome to Assert's fourth quarter 2024 results conference call. My name is Melissa, and I'll be your operator. At this time, all participants are in a listen-only mode. We will conduct a question and answer session toward the end of today's conference. If you'd like to ask a question, please press star 1. If you'd like to withdraw your question at any time, please press star 2. If you're using a speakerphone, please lift the handset before making your selection. As a reminder, today's call is being recorded. And now, I'd like to turn the call over to Mr. Adolfo Castro, Chief Executive Officer. Please go ahead, sir.

Thank you, Melissa, and good morning, everyone. Before I begin discussing our results, let me remind you that certain statements made during the call today 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 adverse results to different material, including factors that we envision our companies control. Additional details about our quarterly and full 2024 year results can be found in our press release, which was issued yesterday after market closed. and it's available on our website in the Best of Relations section. Following my presentation, I will be available for Q&A. As usual, all comparisons discussed on this call will be year-on-year, and figures are expressed in Mexican pesos, unless specified otherwise. Let me start with a review of Azure's operational performance for the quarter. Passenger traffic was basically flat year-over-year, down 0.3% at 17.7 million passengers. This broke our full year to close 71 million passengers traveling to our airports in 2024. Sustained growth in Colombia and Puerto Rico largely offset weaker passenger traffic in Mexico. Taking a deeper look at our geography, Colombia remained our strongest performance market, with passenger traffic increasing in the new teams year-on-year, supported by the federal outcomes following the suspension of two local carriers in early 2023. Travel demand remained solid, with international traffic off 29%, and domestic traffic rising 7% as Avianca and LATAM Airlines continue to restell moods lost last year. Looking ahead, we expect traffic trends to be normalized in the first quarter of the year towards the more sustainable levels of 2023. Puerto Rico was the next best market and senior to past quarters, maintaining its positive trend with total traffic up nearly 10%. supported by strong growth in international traffic, up 29%, while domestic traffic was up 70%. We expect traffic in this market will normalize after benefiting from increasing operations by frontier airlines a year ago. Lastly, performance in Mexico remains soft as anticipated, declining 8% year-on-year. with both international and domestic traffic down in the high single digits. Moving next to more details on the performance, international traffic continues to experience year-on-year declines from all regions during the quarter. Specifically, traffic from Europe decreased 6.4%, from Canada 0.6%, from the U.S. 8.8%, and from South America by 11.1%. With respect to domestic traffic, the ongoing traffic and living engine restrictions, together with the air traffic capacity constraints at Mexico City Airport, in fact, since early 2024, are constraining traffic flows. In addition, Cancun Airport is being slightly impacted by the initial ramp-up phase of new Tulum Airport. Tulum Airport captured around 1.2 million passengers from Cancun last year, and is expected to capture another 1.7 million this year, compared to the 30.4 million passengers that traveled to Cancun Airport last year. Looking ahead, we expect to normalize in 2026 as Pratt & Whitney effect is reduced and Tulum initial ramp-up concludes. From that point, we anticipate passenger traffic at Cancun Airport and Tulum Airport to grow at a pace consistent with each region dynamics. Now, as we turn to the P&L, recall that all reference to revenue and cost figures are excluding construction. Total revenues for the quarter increased 19% year-on-year to 7.4 billion pesos, reflecting strong performance across all three regions. Colombia once again lead growth, posting a 30% increase in top-line revenue, supported by raising passenger traffic. Mexico and Puerto Rico also delivered solid results with revenue growth in the low teens. Mexico, which accounted for 72% of total revenues, posted a mid-team increase in top-line performance. Growth was primarily driven by a low 20% increase in analytical revenues following the recent tariff adjustments, while non-analytical revenues rose in the low single digits. Puerto Rico represented 15% of total revenues and delivered high 20% growth, supported by a strong increase in both aeronautical and non-aeronautical revenues, further boosted by the foreign exchange benefit from the weaker pesos. Colombia, contributing 12% of the total revenues, recorded a robust 31% increase in top line revenue. This growth was fueled by strong performance in both non-aeronautical segments. With revenues rising in the low 30s, both segments benefited from continuous recovery in the domestic and international traffic. Colombia, as part of the strategy, To expand commercial offerings, we opened 45 new commercial spaces over the last 12 months. This included 12 locations in Mexico, 5 in Puerto Rico, and 28 in Colombia. As a result, total commercial revenues grew in the high single digits. with Puerto Rico posting a 26% increase. Colombia is delivering a strong year-over-year growth of 31%. In Mexico, commercial revenues show a low single-digit increase, marking a positive shift from the previous trend. On a per-passenger basis, commercial revenues grew in the high single digits year-over-year, reaching 130 pesos in the quarter, the solid performance was supported by the growth across all three markets. In Puerto Rico and Colombia, commercial revenues per passenger rose in the mid-teens, with Puerto Rico benefiting from a stronger U.S. dollar and Colombia from new offerings. Mexico also posted solid growth in the low single digits to 158 pesos per passenger, also benefiting from the FX impact. On the cost front, total expenses increased 13% year-on-year. In Mexico, costs were up 12%, gradually reflecting the 80% increase in the concession fees mandated by the Mexican government and a 20% in minimum wages, mainly affecting cleaning and security services, both effective since January the first last year. These impacts were partially offset by a 50% reduction in terms of assistance fees. In Puerto Rico, cost increased in the high teens, driven mainly by the depreciation of the Mexican peso against the U.S. dollar, while Colombia cost rose, just 7% benefiting from the reversals in the provision for maintenance and conservation, which helped to mitigate overall cost pressures. Consolidated EVDA was up 23% year-on-year to over 5 billion pesos in the quarter, while the adjusted EVDA margin, which excludes construction, improved 200 basis points to 69.7%. Driven by solid profitability across the three regions, Colombia reported the strongest performance with EVDA up 61%, pulled by Puerto Rico with a 39% increase, while Mexico posted an increase of 70% in UDA. Our balance sheet remains robust, closing the quarter with cash and cash equivalent of $1 billion, with a debt to last 12 months at just UDA remaining at the negative of 0.3 times. During the quarter, capital expenditure accelerated, reaching $2.5 billion and accounting for half of the full year of total $4.4 billion in 2024. Main projects during the quarter included the reconstruction and expansion of Terminal 1 at Cancun Airport, as well as the expansion of Terminal Oaxaca Airport. In Puerto Rico, expansion was at Terminal D, and runway remodeling remained on track. As a reminder, all the construction activities will take place outside the operational areas to ensure no disruption to airport operations. We expect investments to gradually ramp up capex through this year as we advance in the key infrastructure projects. Those projects include the construction and expansion of Telangana-Trencun Airport, with estimated completion in 2026, while Terminal 4 is scheduled for completion by 2028. Terminal 2 is expected to see operational improvements once Terminal 1 is completed, helping to alleviate bottlenecks on the non-aeronautical side of the business. This enhancement will also optimize the processing of traffic to and from South America further supporting revenue generation opportunities. Wrapping up, we closed 2024 with another strong quarter, a solid full-year performance despite the navigating industry challenges such as prep and winning engine issues and capacity reductions in Mexico City. Net majority income for the year rose 33% year-on-year to $13.6 billion. supported by a resilient operation of performance and a disciplined execution. Our results also benefited from a $2 billion foreign exchange gain, driven by the depreciation of the Mexican peso against the U.S. dollar, compared to the FX gain, nearly of $840 million in 2023. We remain focused on strengthening our airport network through strategic infrastructure investments that enhance the passenger experience, expand commercial opportunities, support long-term traffic growth, and create value for shareholders. We achieved substantial progress on our strategic objectives and have a solid foundation in place, which positions us for continued success in 2025 and beyond. And since my presentation remarks, Melissa, please open the floor for questions.

Thank you. Again, ladies and gentlemen, 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 the line of Rodolfo Ramos with Varesco VBI. Please proceed with your questions.