OMAB

Business Context and Reporting Period

Company: Grupo Aeroportuario del Centro Norte, S.A.B. de C.V. (OMA)

Filing Type: Form 6-K (Report of Foreign Private Issuer)

Reporting Period: Fourth Quarter and Full Year 2016 (Unaudited)

Date of Filing: February 28, 2017

OMA operates 13 airports in central and northern Mexico, including major hubs in Monterrey, Culiacán, Chihuahua, and Ciudad Juárez. The company also manages diversification activities such as logistics (OMA Carga), hotel services, and industrial parks.

Key Financial Metrics

Fourth Quarter 2016 Results

• Total Revenues: Ps. 1,569 million (including Ps. 154 million in construction revenues).
• Aeronautical Revenues: Ps. 1,054 million (+30.6% YoY).
• Non-Aeronautical Revenues: Ps. 361 million (+17.3% YoY).
• Adjusted EBITDA: Ps. 879 million (+35.2% YoY); Margin of 62.2%.
• Operating Income: Ps. 730 million (+19.9% YoY); Margin of 46.5%.
• Net Income: Ps. 569 million (+43.7% YoY).
• Earnings Per Share (EPS): Ps. 1.44 (US$ 0.56 per ADS).
• Passenger Traffic: 4.9 million (+12.5% YoY).
• Capital Expenditures (MDP & Strategic): Ps. 277 million.

Full Year 2016 Results

• Total Revenues: Ps. 5,205 million (+25.6% YoY).
• Adjusted EBITDA: Ps. 3,323 million (+35.7% YoY); Margin of 63.8%.
• Net Income: Ps. 1,877 million (+51.7% YoY).
• EPS: Ps. 4.76 (US$ 1.84 per ADS).
• Passenger Traffic: 18.8 million (+10.9% YoY).
• Return on Equity: 28.0%.
• Operating Cash Flow: Ps. 2,113 million (+2.1% YoY).

Balance Sheet and Liquidity (as of Dec 31, 2016)

• Total Debt: Ps. 4,694 million (96% in Mexican Pesos, 4% in USD).
• Net Debt: Ps. 1,688 million.
• Net Debt to Adjusted EBITDA Ratio: 0.51x.
• Cash and Cash Equivalents: Ps. 3,006 million.
• Derivatives Exposure: None.

Material Changes vs. Prior Period

• Revenue Growth: Driven by a 12.5% increase in passenger traffic and tariff adjustments implemented in Q2 2016. Aeronautical revenue per passenger rose 16.1% to Ps. 214.2.
• Profitability Expansion: Adjusted EBITDA margin improved by 378 basis points in Q4 due to revenue growth outpacing cost increases. Operating costs rose 40.2% primarily due to a Ps. 82 million major maintenance provision charge (vs. a credit in Q4 2015) and construction costs.
• Operational Expansion: 13 new routes opened in Q4 (9 domestic, 4 international). Domestic traffic grew 13.9%, while international traffic declined 3.8%.
• Financing Income: Shifted from an expense in Q4 2015 to net income of Ps. 42 million in Q4 2016, largely due to increased interest income from updating the major maintenance provision discount rate.

Outlook, Risks, and Unusual Items

Management Commentary and Outlook

Management highlighted strong operational discipline and successful diversification. The company maintains a commitment to the Master Development Program (MDP) with all 2016 works contracted. Future growth is expected from new infrastructure projects and route expansions.

Material and Subsequent Events

• New Infrastructure: Construction began on new terminal buildings at Reynosa (Ps. 302 million investment) and Chihuahua (Ps. 308 million investment). San Luis Potosí terminal expansion (Ps. 400 million) also commenced.
• OMA Carga Expansion: A new 1,650 m² in-bond warehouse at Monterrey airport began operations in February 2017, doubling logistics capacity.
• Dividends: A cash dividend of Ps. 1,372 million (net of share repurchases) was paid in Q2 2016.

Risks and Contingencies

• Regulatory Risk: Aeronautical revenues are subject to a maximum rate system regulated by the Ministry of Communications and Transportation (SCT).
• Legal Liability: OMA may face joint liability with airlines regarding damages to checked baggage if willful misconduct is proven, though primary liability rests with the airline.
• Forward-Looking Statements: Actual results may differ due to risks including economic conditions, regulatory changes, and operational disruptions.

Investor Verification Checklist

• Debt Composition: Verify the 96% peso-denominated debt structure and its sensitivity to exchange rate fluctuations.
• Construction Accounting: Confirm understanding that construction revenues (Ps. 154 million in Q4) are non-cash and equal to costs, generating no profit.
• Maintenance Provision: Review the Ps. 82 million charge in Q4 2016 related to the National Producer Price Index (INPP) updates and its impact on future cash outflows.
• Route Performance: Monitor the divergence between domestic traffic growth (+13.9%) and international traffic decline (-3.8%) and its impact on future revenue mix.
• Capital Allocation: Assess the execution of the Ps. 1,352 million MDP commitment for 2016 and the funding of subsequent expansion projects in Reynosa, Chihuahua, and San Luis Potosí.