Grupo Aeroportuario Del Pacifico, S.A. B. de C.V.

Good morning, and welcome to GAP's conference call. All lines have been placed on mute to prevent any background noise. After the presentation, we will open the floor for questions, and at that time, instructions will be given if you would like to ask a question. It is now my pleasure to turn the conference over to GAP's investor relations team. Please go ahead.

Thank you, and welcome to the first quarter 2024 conference call for Grupo Aeroportuario del Pacífico. Presenting from the company today, we welcome Mr. Raul Revuelta, CAF Chief Executive Officer, and Mr. Saúl Villarreal, Chief Financial Officer. Please be advised that forward-looking statements may be made during this conference call. These do not account for future economic circumstances, industry conditions, the company's future performance, or financial results. As such, statements made are based on several assumptions and factors that could cause actual results to materially differ from the current expectations. For a complete note on forward-looking statements, please refer to the quarterly report issued earlier this week. At this point, I'd like to turn the call over to Mr. Revuelta for his opening remarks. Please begin, sir.

Thank you, and good morning. As always, it is a pleasure to be reviewing another query with you. We appreciate your taking the time to join us today. I'm going to briefly review operational and financial figures before taking your questions. During this quarter, the total number of passengers reached nearly 16 million, which was almost flat compared to the first Q2023. As many of you are aware, we have experienced a slight deceleration in passenger traffic since the fourth quarter of 2020 due to the preventive inspections of the Pratt & Whitney engines. These inspections will continue throughout 2024. As of today, Volaris, the airline that handles most of our passenger traffic, has the highest number of grounded aircraft. As 2024 progresses, we will continue to monitor the availability of seats and passenger traffic trends in order to keep the market updated of any changes. Despite the slowdown of the domestic market, the international market has been growing in double digits. As we look ahead to the rest of the year, we will expand our market beyond the U.S. and Canada with the new routes to Europe and Asia. As of today, we expect to initiate at least 11 new international routes during 2024, nine of them to North America and two of them to Europe, which includes Frankfurt to Los Cabos and back to Puerto Vallarta. Moving on to financial performance, On the top line, total revenue remained almost flat compared to the first Q23. Aeronautical revenues decreased by 1.3%, mainly due to this cost to passenger charges that are in place at nine of the 12 airports in Mexico. As a result, we reached 97% of the maximum tariffs approved, while in the first quarter of 23, it was 99% of the maximum tariffs. Despite this, Northern Articles revenue continued strong, achieving a 15.2% increase to reach 1.7 billion pesos. For the first time in the history of the company, we have reached 109 pesos per passenger. As we have previously discussed, we renovated several of the tenant contracts, which resulted in more than positive financial conditions for the company. The main revenue generated for commercial revenues was the additional capacity at the airport with expansion in terms of square meters. This includes the new terrace with a huge food and beverage area in Guadalajara, which is surrounded by a top restaurant and offers stunning view of the runway. Those of you who attended the Gap Day had the opportunity to walk through this new area. There are several other strategies of the commercial side that are being worked in addition to large sale areas. This includes new business lines such as the mixed-use building, which can also be found in the Guadalajara Airport, with the opening of a new hotel in March of 2044. On the expensive side, this increases by 10.3% compared to the first Q23. While we remain focused on the maintaining of street cost control, the current changes in labor load affect all major coastlines. The salary costs have been greatly impacted as well as other major personnel contracts such as cleaning, security, and maintenance. Down the line, we do a step higher cost that correlates with the airside and terminal expansion in addition to an inflationary effect. Regarding the concession fee in Mexico, which is the amount that concession holders such as GAP must pay for the use of federal airports, you may remember that in January these fees increased from 5 to 9%. In accordance with the new rules for tariff regulation, the payment made over those included in the last tariff review will be added to the reference value during the next review of the maximum tariff. However, this only applies for the regulated revenues. In language D, The 4% difference paid over the analytical revenue in the first quarter of 24 was recognized as an intangible asset under the YES 38 and will begin its amortization in January 2025 and will continue until the end of the concession period. The amount recognized as an intangible asset in the airport concession during the first quarter of 24 was 175.5 million pesos On the other hand, the 4% additional payment over the non-revenue was recognized as an expense. As a result, EBITDA reached 4.6 billion pesos with an EBITDA margin of 69.8%. This differed from our guidance released in January, mainly due to the recognition of the intangible assets I just mentioned. On the debt front, total debt reached 4.5%. billion pesos in the first quarter of 24. In March, we issued another two tranches of label debt bonds of the Mexican market for a total of 3 billion pesos. The proceeds were used to pay down the GAS-19 bond matured in March for the same issue amount. These were on the fifth and sixth label funds that are sustainability linked and direct towards reducing carbon emissions. Thus further demonstration our commitment to enhancing sustainability and at the company. We look forward to continue to update the market of these initiatives and we will continue integrating this philosophy into our operations and infrastructure projects. Following with these figures, we continue to maintain healthy leverage levels, reaching a net debt to EBITDA ratio of 1.7 times for a trailing 12 months. Thus complete with all our debt Moving on to the CAPEX during the query, CAPEX has to be capital expense to reaching approximately 1.4 billion pesos. This position is well to comply with the challenging master development program that is in place. Before I conclude, I want to mention that our ordinary and extraordinary shareholders meeting will take place tomorrow, and we will be proposing a capital reduction of 13.86 pesos per outstanding share. I would like to express my gratitude to all who attended our Gap Day at Guadalajara Airport on April 10th. It was a great event where we were able to tour the newly expanded commercial and passenger area, the airport fire station, and even stay at the new Hilton Garden Inn Hotel that is just steps away from the main entrance of the airport. I hope that all who were able to join us left with a sense of all the hard work and commitment we have for our market and for the growth of our company. With that, I would like to open the floor for questions.