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

Ladies and gentlemen, this is the conference operator. Thank you for standing by. The call will begin in a few moments. Again, this is the conference operator. Thank you for standing by. The call will begin in a few moments. you Good morning and welcome to GAP's third quarter 2025 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 GAP's Third Quarter 2025 Conference Call. Prior to introducing GAAP's management team, I'd like to take a few moments to mention the forward-looking statements as described in the financial disclosure statements. Please be advised that any comments made today may not account for future economic circumstances, industry conditions, the company's future performance, or financial results. As such, any information discussed is based on several assumptions and factors that could change causing actual events to materially differ from current expectations. For the complete note on forward-looking statements, please refer to the quarterly report. Thank you for your attention. Our speakers today from GAAP are Mr. Raul Travuelta, Chief Executive Officer, and Mr. Saul Villarreal, Chief Financial Officer. At this time, I'll turn the call over to Mr. Travuelta for his opening remarks.

Thank you, Maria. Good morning, everyone, and thank you for joining us today. I am pleased to share with you the operational and financial highlights for the third quarter of 2025. Overall, and despite the passenger traffic slowdown in this quarter, this was another solid quarter for GAAP, marked by continued revenue growth and profitability, as well as important progress in terms of the company's investment program and financial strategy. Let me start with the passenger traffic. During the quarter, international passenger traffic declined. mainly due to the immigration-related challenge and a more restrictive perception under the current U.S. administration, which has affected the behavior of VFR and leisure passengers. In addition, the ongoing Bratton-Whitney engine issues continue to limit Volaris and VivaVerbo's seat capacity recovery, as carriers have indicated the expect to fully recover their fleet by 2027. Despite this challenge, Total passengers traffic across GAAP's 14 airports increased by 2.5% compared to the same period of 2024, reaching a total of 15.8 million passengers in the quarter. This growth was supported by new routes and additional frequencies, which helped offset the decline in international travel and reflect the sustained recovery in domestic demand. Looking ahead, Our strategy remains focused on connectivity and diversifying our network. During the four quarters, annual international routes to Canada will be launched, three from Guadalajara, three from Puerto Vallarta, and two from Montego Bay, which will enhance passenger traffic and support demand during the high winter seasons. Furthermore, for the first time in the history of Los Cabos, it will be connected directly to Panama. expanding our network into Central America and thereby extracting in GAAP position as a regional hub. Turning to total revenues, this increased by 17.4% versus third quarter 24, driven by the solid performance of both the aeronautical and non-aeronautical business. Aeronautical revenue grew by 18.3%, reflecting the new maximum tariff The original plan was to implement the increase approved in two phases, 15% in March of 2025 and the remainder during 2026. However, after reviewing traffic performance and load factor strength during this year, we moved forward with a second adjustment on an average of 7.5% starting September 1st. In aeronautical revenues, increased by 15.6 percent, both by the strong performance in both Mexico and Jamaica. Revenue from business operated directly by GAP rose by 30.1 percent, increased mainly due to the consolidation of the cargo and bundling warehouse business, which contributed 559 million pesos. Revenue from third-party operators increased by 4.7 percent, and include the opening of new commercial spaces and the renegotiation of contracts under better market conditions. It is worth noting that the strongest performing business lines were Food and Beverage, Retail, Duty Free, Grant Transportation, and Timeshares. Beyond the quarterly results, new aeronautical revenues continue to drive diversification and resilience in our business model. The expansion of commercial areas and the integration of the new services such as cargo operation, strengthens GAMP's long-term revenue base. Looking ahead, we expect to continue optimizing our commercial offering and leveraging passenger flow growth to enhance value creation across all the airports. Moving on to the cost, the cost of services increased by 14.1% compared to the same period last year. This increase reflects the impact of operation of jet bridges and airport buses. A task that was previously managed by third parties but must now be operated directly by GAP due to the change in regulations. Without this cost, cost of services would have increased by around 4.8%. Despite this increase, our focus on street cost discipline remains a priority. Our goal is to maximize operational efficiency and long-term sustainability. while ensuring that service quality and safety standards across our airports remain among the highest in the region. Turning now to profitability, EBITDA grew by 12.8%, reaching 5.1 billion pesos, with an EBITDA margin of 64.3%, excluding IFRIC troughs. Margin was lower than in 2024, reflecting mainly the impact of the change in concession fee for our Mexican airports from 5% to 9%, which was payable finance 2024, but reflected in our P&L in 2025. Regarding our financial position, we remain in strong liquidity position with 11.7 billion in cash and cash equivalents as on September 3rd. In the third quarter of 25, we paid the second and final dividend installment of 8.42 pesos per outstanding share which was approved at the Annual General Ordinary Shareholders Meeting. During the inquiry, we successfully issued two new bond certifications under our long-term program for a total amount of 8.5 billion pesos. The proceeds are used to finance approximately 7 billion pesos in capital investment and to repay 1.5 billion pesos bank loans with Santander. We also refinanced our US dollar 40 million credit line with Banamex, extending its maturity to 2030. Active management of our capital structure strength, the balance sheet, and provides us with the flexibility required to execute our long-term investment commitments and potential inorganic growth. In terms of CAPEX, during the first nine months of the year, we invest approximately 10 billion pesos. Most of these investments were related to the early stage of major infrastructure projects under the Master Development Program, including terminal expansions, area site improvement, among others. Looking ahead, we remain cautiously optimistic. Macroeconomic uncertainty and exchange rate volatility may create a short-term challenge. However, it is important to highlight that GAPS continues to benefit from a resilient domestic market, a diversified portfolio of airports, and a disciplined financial management. Furthermore, our strong financial position and continual growth in both aeronautical and non-aeronautical revenues allows GAPS to maintain its leadership position in the region and thus continue generating long-term value for our shareholders. Before closing, I would like to provide an update on our strategic expansion opportunities. The process related to Turks and Caicos tender remains ongoing. We submitted our bid last year, and while evolution continues, no resolution has been announced yet. We are still analyzing the potential acquisition of Motiva Airports, including the information available in Data Room, reviewing transaction details, and developing our financial model. As always, the market will be duly informed of any development and we will be, as always, continue to focus on value creation. Thank you again for your time, operator. Please open the line for questions.

At this time, we will open the question and answer session. If you would like to ask a question, please press star and one on your telephone keypad. and you'll be placed into the queue in the order received. You may remove yourself from the queue at any time by pressing pound and one. Once again, to ask a question, please press star and one on your phone now. And we'll take our first question from Rodolfo Ramos of Bradesco BBL.

Thank you, Raul, Saul, Ale, for taking my question. I have a couple, if I may. Can you talk a little bit about the traffic dynamics that you're currently experiencing? I mean, international traffic continues to underperform, especially in the VFR routes. You mentioned all the immigration stands in the U.S., but yet when you see capacity deployment and the route development that, for example, Volaris is having, it's targeting those very routes, right? Do you see a more pronounced recovery towards the end of the year in the next few months, and how do you feel about your guidance for the year? So that would be my first question, and I have a second one, if I may.

Thank you, Roberto. This is Raul. I mean, in general, we are suffering from deacceleration of BFR markets, mainly. We are seeing... That was the acceleration, for sure, in the directly routes from some of our airports to the U.S., as could happen in the Guadalajara Chicago or the Guadalajara Sacramento, for instance, or Los Angeles, for instance, but also in the routes that go to Tijuana and to the CVS to the U.S. In both of these markets, BFR going directly to the U.S. and the BFR market going through Tijuana and to CDX to the US, we are seeing the acceleration that comes mainly for some kind of lack of information for the VFR market. Because if we think for a moment, all the passengers flying in a plane are or citizen or a green card holder, or they have all the papers to be totally legal. The decrease in deals on this market, in our view, will be some deals, I would say, that will be in place in the short term after the passengers, in some way, have a complete understand of the possible trends on the migrant policy of the U.S. administration. What we are seeing is, at least for the coming months, some decrease on these specific VFR markets, but we are seeing and we are optimistic about the coming years just when we review the capacity already announced by the different companies. Saying that, we are still optimistic that the recovery of the VFR market will happen in the coming year.

Thank you, Raúl. And just secondly, on the commercial side, the businesses that you operate are growing at a very rapid clip, which explains the strong performance that we saw in the non-analytical revenue per passenger. When you look at the, and maybe this is a broader question, but when you look at the different initiatives that you have in the pipeline, how far off are we from seeing this top-line revenue growth stabilizing and going more in line with, you know, the more traditional retail, food and beverage businesses?

That was a good question, Rolf. I mean, at the end of the day, we are seeing this double-digit growth in almost all our businesses. business line directly operated by GAP. I mean, we are really proud about all the efforts our commercial area is doing to maximize the revenue, to, I mean, play with the prices of the products and the tariffs, and for sure to manage the cost of these services. What we are seeing on the coming years is that Some of these business lines will continue in a higher pace of the rest of the commercial business due to the fact that, for instance, there's new commercial areas that we deploy in the coming two or three years as soon as we open a new terminal business, some terminal areas. So for instance, as soon as we open the Puerto Vallarta new terminal building, we will see a jump on some of these specific business lines, but also as soon as we open the rest of the expansion of our terminal buildings in the coming years. In a general term, I would say that we will begin or we will continue to see interesting rates of space of growing in the on the directly operated business BICAP because we are seeing that we will continue expanding this business line on different airports and in different areas. I mean, let's for instance think for a second that our FBOs, today we are just running Los Cabos and three months ago we begin with La Paz. But for the next, I would say 20 months, we will see the first directly operated by GAP in Puerto Vallarta. The same will happen, for instance, with the hotels. We have a plan for a different development of hotels in the coming five years. It will give us other additional possibilities there. But in general terms, I don't know if I would say that the business directly operated by us, it will, at least in the coming three to four years, we will grow in a faster pace than the other business operated by third parties.

Very interesting. Thank you, Raul.

And our next question comes from Guillermo Mendez of JP Morgan.

Good morning, Raul. Thanks for taking my question. The first one is a follow-up on cost. Raul, you mentioned in the beginning about this additional cost throughout the quarter. Just wondering if the level of cost and expenses that we saw in the third quarter can be assumed for the coming quarters, which according to our calculations would probably put you on the lower end of your guidance in terms of EBITDA margin for the year. Just wondering if the rationale makes sense. And the second one, it's on the MDP maximum tariffs. If you can share at what level you are as of the end of third quarter. And if the base case of increasing prices in early 26 and potential at some time in the second half of 26, it is still the base case at this point. Thank you.

Hi, Guilherme. This is Saúl. Well, related to the cost, we believe that it will be, in average, the level of cost that we will see in the following quarters is very important to understand that in the way we increase the facilities in the airports, we increase the headcount, security, cleaning, et cetera. So it is part of the business. We will see this level in the following words. In terms of maximum tariff, first of all, talking about the EBITDA margins, as you remember, we present a guidance at the beginning of the year, and we are still in our guidance related with the margins. The other part related with the maximum tariff, Let's remember that in 1st of March, we have a 15% increase on passenger fees for all of our domestic and international passengers. On September 1st, we increased an additional 7.5% of increase. For the coming year, we are thinking that on early February of coming year, we will increase again our tariffs. It will be important to have in mind that for 2026, we want to have in place the effect of three different moments of tariffs. January and February, for instance, we have the effect of the 15% and the 7% increase. From March to September, we have the effect. of the increase of the 7.5% of the tariffs. And during almost all the year, from February to December, we will have in place the increase of the additional tariffs that we'll put in place in the coming year. So in terms of tariffs, for the coming year, we will expect a much better fulfillment of the maximum tariffs. And for sure, it will depend, for instance, what happened with the inflation, the price inflation, and the second, what happened with the dollar and the change rate. So in general terms, I would say that we are still passing through all the changes on the path in the field to have the better possible fulfillment of maximum tariff. And we will see a coming year that will be, I would say that we will have an important increase on that specific line of business. And just to compliment you in answering your question, Guillermo, related to the margin, we will be very close to the gate as we release it.

Okay, that's clear. Thank you both, appreciate it.

And our next question comes from Jen Spies of Morgan Stanley. Hello.

Thank you for taking my question. Just on the Motiva airport assets, I know it probably is limited what you can comment, but still, Like hypothetically, are you planning to go for all of the assets or maybe do a partnership with some of the other potential bidders like IANA? And if you're going alone for all the assets, would you be raising equity or mainly finance it via debt? Thank you.

I mean, we are still right now working on the different options. I will tell you that today we are not fully deciding which will be the way that we will find our bidding for this opportunity. We are hoping for partnership or for going along on this stage. But what is important is that we are working, as always, in a really disciplined way to review the numbers, thinking what's going to be accurate for our company. And for sure, in the case that we continue with this opportunity, we are thinking that all the money will come from leverage. So, I mean, I would say that these are our Our main task today on this specific opportunity of Motiva. We are still working, and we are open for different ways of participating. That means alone or with some kind of partnership, and all the money will come from leverage.

Perfect. All right. Thank you.

Our next question comes from Gabriel Himmelfar of Bank of Nova Scotia.

Hi, good morning. Just a quick follow-up question. Can you repeat the tariff increase that are expected for 2026 and if you are already or when you expect to reach about the 100% maximum tariff? Thank you.

For the coming years, we are still working on which one of the increases. I mean, it's on the way because we need to work on another procedure with the FAC, with the federal agency. So we are just on that, but we are expecting that it will happen on February. The other part is with all the change that we are expecting for 2026 will be, I mean, depending for sure in inflation and exchange rates, we're going to be around between 93% to 97% of fulfillment of the tariff, I mean, at the end of the 26. And that are mainly the main points in terms of tariffs.

So it's 95% at the end of 2026, right, what you're expecting?

In the range of that number.

Okay. Thank you.

As a reminder, if you would like to ask a question, please press star and 1 on your phone now. And our next question comes from Jorge Vargas of GBM.

Hi, good morning. Thank you for taking my questions. Regarding the potential acquisition of Motiva's airport portfolio in Brazil, could you share any color on the expected timeline along with the estimated investment size and the main strategic rationale behind your interest? And additionally, could you provide some context on how Brazil's concession structure works and how it differs from the Mexican model? Thank you.

Okay, I mean, for sure the rationale is diversification among our main business at the airports. As you know, the airport singles to opportunity are currently, there are small ones per year around the world. So for sure, as airport operators, always would be interesting for us to analyze any of these opportunities. a group of airports that have different concessions, different countries, and different, I would say, frameworks of concession frameworks. Just going in a really quick way, we have four groups of airports in Brazil, each one of them with different routes of concession. Also, it is in the package, Quito Airport, also San Jose-Costa Rica Airport, and Curacao Airport. What we are seeing in all of this for GAAP is we will have a potential opportunity to increase the value of those companies through two different ways. The first related with commercial revenues, applying our well-known model of increase the commercial revenues. And the second, it was related with the discipline of the cost. We think both of these will be an interesting area to explore, to bring all the experience of God onto this earth. But again, we are really in a, I would say, final analyzing of this opportunity. Today, we don't have a complete view if we will participate in the last part of this billing process. So we are continuing our analysis. Related with the timeline, it would say that this is, I would say, a structure and a project that the timeline is rolling directly by Motiva. We are expecting that on the mid of November could happen the presentation of the final numbers. But again, it will depend completely on the seller because if we see this process has on the path had different moments and changes of the timeline, at least for the case of GAP. We are seeing that for the mid of November, we will make our final decision related with this transaction.

Thank you.

Thank you. As a reminder, you can also ask questions through the webcast. Please, if you are on the webcast, go ahead and submit your questions now. And we have a question from Edson Marguer from Sumacab.

Yes, good morning. Thank you for taking my questions. I have two of them. I was wondering if you can give us more color about these new routes from Los Cabos. Even looking forward, there is a possibility that other airlines can connect between Los Cabos or maybe Puerto Vallarta to Central America or the ports of, or even South America? Could you give us, I don't know if it's possible to give us the name of the airline who operated Los Cabos to Panama. And the second question is providing to the cargo and abundant warehouse. I was wondering if you have similar initiatives or initiatives related to new buildings or even with the master development plan looking ahead similar to the food and beverage and new terminal buildings and so on because it seems that cargo and bonded warehouse sits on a good growth pace for the following quarters. Thank you.

Thank you. In the case of the roots of cabos, I mean, it's important. It's really interesting to see for the first time a direct operation in South America. As you probably know, all the Parabajo is a great opportunity to capture all the traffic going beyond and then connect to the rest of South America and Central America. So I think it's a great opportunity for cabos. At the end of the day, it's opening a completely new market and a completely new way of opportunities around that. For the case of Puerto Vallarta, for the last, I would say, almost at least nine years, Puerto Vallarta is connected directly to Panama with the COPPA. We have, I mean, after the COVID, we have a close of the services, and we're coming back with a number of frequencies just in some seasons. But I don't know today what we know about the direct connections with Panama is that the hub of Panama opens the opportunity for a broader market related with all the jobs in South America. So in general terms, I think that the efforts are worth the opportunity for Cabos. to reach that completely new market to that destination. Hi, Edson. This is Saul related with your second question. The Cargo Builder Card Warehouse is not a business regulated under the Master Development Program. So it is nothing to do with our new terminal for passengers. But we are interested to replicate this business in other reports. if it's possible and occurring in Vietnam in the opportunity of market in those sectors. So it is a great business. It was a great decision. We will be following some opportunities in the future in other efforts.

OK. Thank you so much.

Well, we have some questions from the webcast. There is two from Rafael Simonetti from UBS. One of them was already explained, so the only one that we have. It is, aeronautical tariff declines quarter over quarter. Could you elaborate on the main drivers behind this decrease?

Hi, Rafael. This is Saul. Yes, it was due to the component in the mix of passenger traffic we have in our airports. International traffic declined, and those airports have the highest passenger charges. Therefore, this affects directly to the revenue and also the exchange rate. which the peso appreciated in this quarter around 4.6%. Therefore, the revenue per passenger declined slightly.

Thank you. We have another question from Daniela Guzman from Ashmore. The question is, what is the expected effect of next year World Cup in traffic figures?

It's hard to know because at the moment, we have different scenarios related with what could be the impact on the World Cup in specifically Guadalajara and some different . We are thinking that for sure Guadalajara with the four games will have a positive effect Tijuana that will be through the CBS will be connected to some of the games in South California. In Southern California, we're seeing also that we could have some positive effect. Today, it's really difficult to understand how big could be the effects of that and will depend of the lottery related with the different selections that will be on Guadalajara for the World Cup. So at the beginning of coming year, it will be this lottery of national teams, and we will know which going to be the matches that will happen in Guadalajara. And in that moment, we could have a more clear way to portray some scenarios of possible increase on traffic. I mean, the numbers that, for instance, the FIFA and the government have announced is that could be from the case of Guadalajara something that goes from 300,000 to half a million passengers that could come to the city. But it's really, for the moment, it's unclear until we know which national teams will be allocated in one half.

Well, thank you, Raúl. We have another one in the webcast from Enrique Sojo from Fundamenta. He's asking, could you provide even further details on the commercial areas which will come online in the next few years. And do you have any longer-term vision for what level of non-aeronautical revenue per path may reach?

Okay. I mean, as you remember, we have a topic on that. We will be, for 2029, our terminal buildings as GAP in Mexico will increase around 55% in terms of the square meters. So for sure we will have a great opportunity to deploy additional commercial offer on those new terminal buildings and expansion of terminal buildings. The biggest one will come from three different airports. I mean, four different airports will have opportunity for commercial business in terms of really interesting numbers. The first one is the terminal two of Guadalajara that will be open for the beginning of 2029. The next one is Puerto Vallarta that will be a second terminal building that will open for January of the first quarter of 2027. The third one is the expansion of the Tijuana Airport that will be ready for the operation in 2028. And the last one is the expansion of the Terminal 2 building of Los Cabos that will be on operation for 2017, mainly. In that time, we will have a great amount of opportunities to expand commercial buildings. So yeah, for the end of the year, the master plan, we will have this, like the big number, this expansion that will give 55% of increase in square meters in our terminal building. And in that way, we will have that reflection on opportunities for increase our commercial spaces in our terminals.

And we have a question from Alan Macias of Bank of America.

Hi. Good morning, and thank you for the call. Just a question on international traffic. If you can just go through the four main airports, and especially Puerto Vallarta has been quite weak year to date. Just if you can go through the negative impacts for international traffic. Thank you.

I would say that in the first nine months, we are seeing a decrease in passengers, mainly on international for Puerto Vallarta. The good news there is that we are seeing a much better winter. We are reviewing the number of seats coming from mainly Canadian markets and some other or U.S. routes that are coming back with additional seats for the winter season on this year that will give us a much better first quarter of the coming year in Puerto Vallarta. But on the first nine months, what we are seeing is a decrease of passengers, mainly due to a decrease of capacity for American Airlines, mainly in the case of Puerto Vallarta. with some other effect coming from Spirit. But in general terms, what we've seen in Vallarta is a decrease in passengers, as you say, of 5% on this year on international market. But we are optimistic about the coming year because we are seeing the coming back of some of these seats on this winter season. The additional I will say increase on passengers from Canadian capacity were also great news for Puerto Vallarta Airport.

Thank you.

And it appears that we have no further questions at this time. I will now turn the program back to our presenters for closing remarks.

Thank you once again for joining us today. Please contact our investor relations team with any additional questions you may have. Have a great day, and thank you for your attention.

Thank you. This does conclude GAAP's conference call. Thank you for your participation. You may disconnect at any time.