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

Good day ladies and gentlemen and welcome to Assure's second quarter 2025 results conference call. My name is Christine 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 1. If you want to withdraw your question at any time, please press star 2. If you are using a speaker phone, 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, Christine, 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 word management expectations and beliefs and are subject to certain risks and uncertainties. that would cause active results to differ materially, including factors that may be beyond our company's control. Additional details about our second quarter 2025 results can be found in our press release, which was issued yesterday after market close and is available on our website in the Best of Relations section. Following my presentation, I will be available for Q&A. As usual, all comparison discussed on this call will be year-on-year figures and are expressed in Mexican pesos unless specified otherwise. During the second quarter, we served 17.7 million passengers across all airports we operated, with traffic remaining largely flat year-on-year. Once again, that performance in Colombia and Puerto Rico offset suddenness in Mexico. Puerto Rico was the best performing market this quarter, boasting 3% growth in passenger traffic, supported by domestic traffic and sustained strength in international traffic. In Colombia, traffic was up 1% with international travel up 2% and domestic contracting a low single digit. Lastly, Mexico reported a decline of nearly 2% in total traffic with an increase of 1.2% in domestic, offset by a decrease by 4.5 in international travel. International travel in Mexico continued to experience year-on-year declines from all regions during the quarter. Passenger volumes from Europe were down 4.7%, from the U.S., 5.3%, South America, 2.7%, and Canada, 1.6%. A minimum fault portion of this decline, approximately 38%, is attributable to the ramp-up of the new airport in Tulum, which continues to draw some passenger flow previously concentrated in Cancun. Beyond this shift, we believe the broader softness in the threshold traffic reflects broader market dynamics, including a more cautious demand, environmental across several sources of market. While the underlying drivers vary, some of these pressures are also evident in other international markets as well. Looking ahead, we expect traffic in Mexico to gradually stabilize over the course of next year, as the effects of the engine-related aircraft problems appear to have bottomed out and Tulum Airport reaches more normalized level of operations. With respect to the potential U.S. Department of Transportation restrictions on Mexican carriers, ASURS does not expect a material impact on our operations from these measures, as our exposure to the affected airlines is minimal. To put this in context, Aeromexico accounted for just 0.3% of total passengers traveling between our airports and the U.S. while Viva, Airbus, and Volaris together represented approximately 1.3%. As I noted in prior calls, we see long-term growth potential for both Cancun and Tulum, each driven by the specific demand dynamics of their respective catchment value. While the product market environment remains uncertainty, History has shown that travel-related disruptions, particularly those tied to U.S. and Mexico demand, tend to be temporary in nature. Now, turning to a review of our financial performance, recall that all reference to revenue and cost figures constitute construction. Total revenues increased 5% year-on-year to 7.4 billion pesos, reflecting top-line growth across operations. particularly in Puerto Rico and Colombia. Mexico, which accounted for 72% of total revenues, posted a low single-digit increase of 0.7% with relatively growth in aeronautical and non-aeronautical revenues. Puerto Rico contributed 17.7% of the total revenues with top-line growth in the high teens, This compared to growth in the high 20s in the prior quarter that was supported by the foreign exchange rate benefit resulting from a weaker PESO. Colombia, which accounted for 12% of the total revenues, posted a 15.4% top line growth, this accelerating from growth in the low 30s achieved in prior quarters. This was driven by both aeronautical and continued recovery in domestic traffic and international traffic, and the opening of 35 new commercial spaces over the past 12 months, partially offset by a strong Mexican peso. As part of our ongoing strategy to enhance our commercial offerings, we opened 47 new commercial spaces over the last 12 months. As I said, 35 in Colombia, 7 in Mexico, 5 in Puerto This expansion supported high single-digit growth in total commercial revenues driven by strong performance in Colombia and Puerto Rico and a modest increase in Mexico. For the passenger basis, commercial revenue reached nearly 140 pesos in the quarter, representing mid-single-digit year-on-year growth with contributions from all three regions. Colombia lead with a 22% increase followed by 3% gain in Puerto Rico, despite less favorable exchange rates. In Mexico, commercial revenue per passenger rose nearly 3% to 159 pesos, even as passenger traffic softened. Moving on to cost, total expenses increased nearly 10% year-on-year. This is elevating from the 18% growth we saw in Paraguay. In Mexico, costs rose 7%, primarily reflecting the 12% increase in minimum wage effective at the start of the year. In both Puerto Rico and Colombia, costs increased in low teens, benefiting from depreciation of the Mexican peso against the U.S. dollar and the Colombian peso. As a result, consolidated UDA rose reaching 5 million pesos in the quarter. Notably, Puerto Rico and Colombia boasted a double-digit EVDA growth of 20% and 15% respectively, while Mexico saw a 1.6% decrease in EVDA in line with the passenger traffic, the negative impact of the strong peso, and the higher cost I just explained. The adjusted DBA margin, which excludes construction revenue, stood at nearly 68% compared with the 69% in the same quarter last year. The slight margin contraction was mainly attributable to 170 basis points declined in Mexico, while Colombia boasted a more 20 basis point decrease. Puerto Rico and the other half delivered 120% margin improvement in adjusted DBA margin. Our bottom line this quarter was negative impact by a foreign exchange loss of 200 million pesos, driven by the appreciation of the Mexican peso against the U.S. dollar. This compares to a foreign exchange gain of 942 million in the same quarter last year, which reflected the opposite effect driven by the appreciation of the peso during that period. Moving on to our balance sheet, We maintain a strong cash position, closing the quarter with nearly 20 billion pesos in cash and cash equivalents, up 30% year-on-year. Net debt to FDA ratio increases slightly to 0.1 types, reflecting the drawdown of a loan facility in Mexico for 9.5 billion pesos in the quarter. Turning to capital allocation, In May, we pay a 50 pesos per share cash dividend, funded from account of accumulated return earnings. In addition, we will be paying 209 dividends of 15 pesos per share each in September and another one in November. Capital expenditures in the quarter total 1.4 billion pesos, with most of this investment directed towards modernization and expansion projects at our network level. This includes the ongoing work of the reconstruction and expansion of Terminal 1 at Rincón Airport and the terminal expansion in Oaxaca. In Puerto Rico, we're currently advancing in the construction of taxiway hotels. All construction activities continue to take place outside operational areas to ensure no disruption to airport operations. Lastly, on the governance, During the quarter, Mrs. Isabel Prieto was appointed to our board of directors as an independent member. Following the resignation of Mr. Ricardo Guajardo-Tosche, with this, 57% of our board is comprised of independent directors and female representation has increased to 36%. We thank Mr. Guajardo-Tosche Mrs. Prieto brings a wealth experience in both public and private sector, beginning her career in financial services. To close, our second quarter performance underscores the resilience of our diversified portfolio and our sustained efficiency improvements. We continue investing in infrastructure. long-term growth. We also remain attentive to evolving global macroeconomic conditions and believe our healthy financial position will help to mitigate potential risk. This concludes my prepared remarks. Christine, please open the floor for questions.

Thank you. We will now begin the question and answer session. To ask a question, dial in by phone and press star then 1 on your telephone keypad. Please ensure the mute function is turned off, and if you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, press star then two. At this time, we will pause momentarily to assemble our roster. Thank you. Our first question comes from the line of Jens Fees with Morgan Stanley. Please proceed with your question.