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 call over to GAP's investor relations team. Please go ahead.

Thank you and welcome to Grupo Aeroportuario del Pacifico's third quarter 2024 conference call. Presenting from the company today, we welcome Mr. Raul Revuelta, GAAP's chief executive officer, and Mr. Saul 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. At this point, I'd like to turn the call over to Mr. Revuelta for his opening remarks. Please begin, sir.

Thank you, Maria. Good morning, and thank you for joining us today. I'm proud to share with you how we have been able to navigate the complex market environment while closing the gap for sustainable growth via diversification and strategy. Before discussing the quarterly results, let me start today's call with a recap of recent developments. First, with the approval of the 2025-2029 Master Development Plan for the 12 Mexican airports under maximum time, which occur under the new tariff regulation. Some key highlights of the new MDP include a total capex commitment for the five years of 43.2 billion pesos, measuring pesos as of December of 2022, that will be adjusted for the national producer price index construction sector. DuPont execution. Something important to remember is that in that amount, we have already made advanced payments of approximately 5.5 billion pesos during 2023 and 2024. This has been approved by the authority and are recognized during the new MDP, mainly for Guadalajara land reserves. Of these five years' capex, almost 40% will be invested in terminal buildings. Therefore, by the end of the quinquennium, will have an additional 54% in square meters, meaning more capacity and space throughout our 12 airports, besides 37% of additional security checkpoints and 26% of additional airports. Importantly, 87% of total committed investment will be in four of our airports. Key projects included. In Guadalajara, the construction of a second terminal, additional aprons, taxiways, new vehicle access, and the purchase of land reserves for future development. At the Tijuana Airport, the development of a terminal facility for domestic departing passengers, aprons, and the purchase of land. Besides that, in Los Cabos, the expansion of the apron and the international terminal building. In addition, it is important to remember that we expect to finalize the second term of building in Puerto Vallarta by the end of 2026. These investments are intended to support GAP's new growth phase for the upcoming years. Regarding maximum tariff determination, please note that the new methodology for calculating the score rate is now based on weighted average cost of capital compared to the previous when it was based on the cost of equity. In this regard, the new tariff will be gradually implemented in the following 15 months. Moving on to this quarter performance, as you can see, our operational resilience at the strength of our commercial strategy are key drivers for our long-term success. During this quarter, we faced several industry-wide challenges, most notably the 5.7 decline in passenger traffic during this quarter. was driven by the ongoing expansions of the craft and with the engines, which began in the late 2023 and are expected to continue throughout 2025. Despite these headwinds, financial results have remained strong, and this was largely due to the dynamic commercial revenue growth, which I believe is central to GAAP's future. Even with this setback, we have continued to expand our strength, our network. For example, during this third quarter, we opened two international routes, including the Guadalajara to Toronto route, and resuming the operation of the Tijuana to Beijing route, plus one domestic route, bringing the total number of routes added to our network this year to 16. These therefore are in the line with our air development strategies. Allow me to highlight our commercial revenue, which were a standout success. During the third quarter, We experienced an exceptional 39% increase in non-aeronautical revenues, driven mainly by the strategic expansion across our airport network and business acquisitions. This is the result of GAAP's ongoing deliberate and strategic effort to maximize commercial revenues wherever we see potential. The Carbon Fiscal Facility consolidation contributed to $354 million to non-aeronautical revenue and is a testament to the foresight of our strategy. Additionally, we have seen remarkable growth in terms of car rentals, retail, food and barriers, where new partnerships and expansions have yielded significant returns. For instance, our car rental business and VIP lounges, particularly in Guadalajara and Los Carlos, have performed exceptionally well. And the second VIP lounge in Guadalajara, which opened just this quarter, has already helped meet rolling demand at that airport. Non-aeronautical revenues per passengers grew, reaching 120 pesos during the first nine months, demonstrating how we are not only serving more passengers, but serving them better. by offering them an enhanced and more valuable experience at every opportunity despite lower overall traffic numbers. And while commercial revenues have been a clear highlight, our other revenue reclined by 3.8%. This was partly due to the lower passenger traffic and the fact that we are only rich around 94% of the maximum tariffs. Nonetheless, our overall revenue increased by 6%, Again, reflecting the strength of our business in terms of revenue source diversification. On the expenses side, operational expenses increased by 21%, largely due to the consolidation of the cargo and fiscal facility in service costs, employee-related expenses, and inflationary pressures. Without the new cargo business, the cost of service will increase by 8.8%. However, we will continue to effectively control the cost of service wherever possible, thus ensuring that our growth is sustainable at even an elevated cost. Our EBITDA margins, excluding Africa 12 effect, remain at a solid 67%, which is a slight decline compared to last year, but reflects the importance of our strategic investment in infrastructure and service. In terms of financial position, we maintain a healthy balance sheet with cash and cash equivalents totaled by 15.8 billion pesos at the end of September of 2024. We have also continued our CAPEX investments with approximately 5.2 billion pesos allocated to infrastructure projects. Our recent refinancing of credit facilities and the issuance of long-term bond certificates ensures that we remain well capitalized to pursue further growth opportunities, as well to leverage our committed capital investments. Currently, we have a net debt-to-editor ratio of 1.8 times for the trailing 12 months, thereby complying with all our debt covenants. In closing, this query has demonstrated that the future of airport management is no longer just about managing flights It is increasingly about building diversified operating and commercial ecosystems that generate sustained growth and profitability. GAP is leading that transformation, and I have very confidence that our strategy will continue to deliver value for all our stakeholders. Thank you for your time, and now I open the floor for your questions.