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

Good day, ladies and gentlemen, and welcome to ASUR's first quarter 2025 results conference call. My name is Daryl, 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 would like to ask a question, please press star, then 1. If you want to withdraw your question at any time, please press star, then 2. If you're using a speakerphone, please lift the handset before making a selection. As a reminder, today's call is being recorded. Now, I'd like to turn this call over to Mr. Adolfo Castro, Chief Executive Officer. Please go ahead, sir.

Thank you, Larry, 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 risk and uncertainties that would cause active results to differ materially, including factors that may be beyond our company's control. Additional details about our first quarter 2025 result can be found in our press release, which was issued yesterday after market close and is available on our website in the investor 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 expressing Mexican pesos unless specified otherwise. During the quarter, we welcomed a total of 18.6 million passengers across our three countries of operations, largely flat compared to the same period last year. Continued growth in Puerto Rico and Colombia offset the softer performance in Mexico. Looking more closely at the traffic results by country, Puerto Rico was the best performing market, maintaining a strong positive trend of nearly 11%, with international traffic expanding in the high teens and domestic traffic in the low double digits. While traffic remained resilient, we continued to expect normalization after benefiting from Frontier Airlines' expansion of operations last year. Colombia was the next best performing market, As anticipated, traffic in Colombia began not to normalize to more sustainable levels of 2023, rising just over 6% driven growth in international traffic in the mid-teens and domestic traffic in the low single digits. In Mexico, traffic comparisons were impacted by Easter shift, which occurred in March in 2024. In turn, traffic climbed nearly 5% during the quarter, reflecting a high while the trend in domestic markets improved, declined just below 1%. Cancun, our largest airport, continued to tell the effects of Tulum Airport. Overall, traffic in Mexico continued to experience year-on-year declines from almost all regions during the quarter. Specifically, traffic from Europe decreased 0.8%, from the U.S. 10.5%, and from South America by 2.8%. while traffic from Canada remained unchanged. Domestic traffic remained affected by continued capacity limitation at Mexico City Airport since early 2024, with respect to be lifted in the second half of the year, together with the ongoing traffic with the engine restriction. Additionally, Cancun's airport is experiencing a modest impact from the initial ramp up of operations of the new to the map for context, 2.9 million passengers during this entire year, compared to the 1.2 million last year and over 30 million travelers that passed through Cancun in 2024, or 8 million in this quarter alone. Looking ahead, we anticipate traffic in Mexico will begin to stabilize next year, as the impact of grappling with the engine issue fades and Plum Airport completes its initial ramp-up phase. As I have mentioned in the past, beyond that, we expect passenger volumes at both Cancun and Tulum to expand in line with the growth dynamics specific to each region. Currently, the global macro situation is fluid and unpredictable. However, fabric disruptions, particularly related to the U.S. and the impact of travel to Mexico, have proven to be short-lived. Now, as we move to review our financial performance, recall that all reference to revenue and cost figures exclude construction. Total revenues were up 14% year-on-year to 8.2 billion pesos, supported by solid increases across all operations. Mexico represented 73% of total revenues, posted a high single-toe, a single-digit top-line increase Aeronautical revenues were up 9%, with aeronautical revenues rising 10%, reflecting a strong commercial revenue per passenger. Puerto Rico contributed 15% of the total revenues and continued to deliver steady growth in the high 20s, driven by both aeronautical and non-aeronautical revenues, further supported by exchange rate benefits from weaker vessels. Colombia accounted for 12% of total revenues, Road was driven by both aeronautical and non-aeronautical revenues, which benefited from a continued recovery in domestic and international traffic, and the opening of 26 new commercial spaces over the past 12 months also benefited from the weaker test. Advancing our strategy to expand commercial offerings, we opened 40 new commercial spaces over the last 12 months. This included 11 in Mexico, 3 in Puerto Rico, and 26 in Colombia. As a result, total commercial revenues grew in the high single digits, with Puerto Rico posting an early 23% increase, and Colombia delivering a strong year-over-year, a growth of 38%. In Mexico, commercial revenues saw a low single-digit increase, marking a positive shift from the previous trend. Commercial revenues per passenger reached nearly 147 pesos in the quarter, reflecting a strong year-on-year in the high teens, robust growth across all three regions supporting this performance. In Puerto Rico and Colombia, commercial revenue per passengers, commercial revenues increased in the high 20s, driven by a federal exchange rate in Mexico and in Puerto Rico and the contribution of new commercial openings in Colombia. Mexico also delivered solid growth in the low single digits, reaching 169 pesos per passenger, supported in part by currency effects. In terms of cost, total expenses were up 18% year-on-year. In Mexico, cost increased 10%, primarily reflecting the crisis in concession fees made by the Mexican government. Higher administrative fees effective charity first of this year. In both, Puerto Rico and Colombia cost were up 30% with increasing Puerto Rico and Colombia reflecting the depreciation of Mexican peso against the U.S. dollar and the Colombian peso. As a result, consolidated EBITDA rose 12% year-on-year to 5.7 billion pesos in the quarter, while adjusted EBITDA margin, which excludes construction, stood at 1.4% a year ago. The decrease was attributable to the slight margin decrease in each country due to higher operating costs. Notably, Puerto Rico and Colombia posted double-digit EVDA growth of 24% and 30% respectively, while Mexico saw an 8% increase in EVDA despite the lower passenger traffic. Our balance sheet remains strong with nearly cash and cash equivalents. Of 35% year-on-year, a net debt of EBITDA ratio of negative 0.5 times. During the quarter, we invested 645 million pesos in capital expenditures. Then we deployed toward modernization and expansion effort in our Mexican efforts. Main projects during the quarter included the reconstruction and expansion of Terminal 1 at Cancun Airport, as well as the expansion of Terminal in Oaxaca Airport. In Puerto Rico, runway pavements and rehabilitation was completed, and we're currently working on taxiway hotel. Recall that all construction activities are taking place outside the operational areas to ensure no disruption to airport operations. As mentioned during our prior earning call, we continue to anticipate rather increasing capex as we move forward with several strategic infrastructure projects this year. Among the most significant is the reconstruction and expansion of Terminal 1 at Cancun Airport, which is slated for completion in 2026. Terminal 4 at Cancun remains on track for completion by 2028. Additionally, once Terminal 1 is operational, we expect to implement key upgrades at Terminal 2 to ease existing capacity pressures, particularly in non-aeronautical areas. This is also designed to streamline traffic flows, particularly from South America, unlocking additional commercial revenue potential. our ongoing commitment to delivering value to shareholders. In light of our solid financial performance, subject to approval at two days and our general meeting, the Board of Directors proposed a total cash dividend from accumulated return earnings and shareback act reserve to be paid in three time tranches. The first tranche includes an initial ordinary net cash dividend of 50 pesos per share, payable in May 2025, followed by two extraordinary net cash dividends of 15 each, available in September and November 2025. Before opening to a Q&A, note that last week we published our 2024 Sustainability Report, the 20th Report, and the Circular Unique, and encourage you to read them, all of which can be found on our website. Let me take a brief moment to provide an update on our sustainability efforts. I am pleased to share that 2024 marked a year of meaningful progress. We took several key steps toward achieving our ESG goals, building on our long-term vision. We expanded our flagship social investment program training in a sustainable tourism, 59% more than the previous year. On the climate front, following our 2023 commitment to this science-based targets initiative, we completed our first scope three emissions inventory in Mexico. This milestone helped us better understand the broader impact of our value change as we move forward to net zero emissions. Biodiversity preservation remains a top priority. In 2024, we began building long-term alliances with global organizations to protect emblematic species and restore natural ecosystems in the southeast of Mexico. Lastly, from a governance perspective, we are proposing the appointment of a new female board at our upcoming to 36%, while 57% of the board will be independent. In closing, our first quarter 2025 performance reflects the strength of our diversified portfolio, our resilient operational performance, disciplined execution, and our continuous focus on efficiency. Despite navigating industry challenges such as patent with the engine, the capacity we 3.5 billion. All else equal, we expect the solid remainder of 2025 as we continue investing in infrastructure, elevating the passenger experience and delivering sustainable growth. At the same time, we are cognizant of the potential macrochallenge on a global basis that we are monitoring closely. That concludes my prepared remarks. Please open the floor for questions.

Thank you. Again, to the audience, it is star then 1 for questions. And again, please make sure your mute function is turned off or the handset is picked up before pressing the corresponding digits. One moment, please, while we poll for your questions. Our first questions come from the line of Rodolfo Ramos with Verdesco BBI. Please proceed with your questions.