OMAB

Business Context and Reporting Period

Company: Central North Airport Group (Grupo Aeroportuario del Centro Norte, S.A.B. de C.V.), trading as OMA (NASDAQ: OMAB; BMV: OMA).

Reporting Period: Fourth Quarter 2012 (4Q12) and Full Year 2012. The filing was submitted on February 22, 2013.

Operations: OMA operates 13 international airports in central and northern Mexico, including major hubs in Monterrey, Culiacán, and Chihuahua, plus commercial operations and a hotel (NH T2) at Mexico City International Airport.

Key Financial Metrics

Fourth Quarter 2012 Results

• Total Revenues: Ps. 873 million (up 12.8% YoY).
• Aeronautical & Non-Aeronautical Revenues: Ps. 742 million (up 7.4% YoY).
• Adjusted EBITDA: Ps. 382 million (up 11.8% YoY); Margin of 51.5%.
• Operating Income: Ps. 292 million (up 13.9% YoY); Margin of 33.5%.
• Consolidated Net Income: Ps. 257 million (up 10.9% YoY).
• Earnings Per Share (EPS): Ps. 0.64 (US$0.40 per ADS).
• Capital Expenditures: Ps. 168 million.

Full Year 2012 Results

• Aeronautical & Non-Aeronautical Revenues: Up 14.7% YoY.
• Passenger Traffic: Up 7.0% YoY.
• Adjusted EBITDA: Ps. 1,511 million (up 20.9% YoY); Margin of 53.6%.
• Consolidated Net Income: Ps. 819 million (up 33.0% YoY).
• Return on Equity: 12.8%.
• Operating Cash Flow: Ps. 1,163 million (up from Ps. 607 million in 2011).
• Net Debt to Adjusted EBITDA: 0.6x.

Liquidity and Debt

• Cash and Cash Equivalents (Dec 31, 2012): Ps. 1,152 million.
• Short-term Bank Debt: Ps. 550 million.
• Long-term Debt: Ps. 1,543 million (includes Ps. 1,300 million in 5-year Notes).
• Dividends (2012): Ps. 198 million plus Ps. 500 million capital reimbursement.

Material Changes vs. Prior Period

• Revenue Mix: Non-aeronautical revenues grew 20.7% in 4Q12, outpacing aeronautical growth of 3.3%. Non-aeronautical revenue now represents 26.7% of the combined total, up from 18.7% at IPO in 2006.
• Traffic Growth: Total passenger traffic rose 6.8% in 4Q12. Domestic traffic grew 7.6%, while international traffic grew 2.2%. Significant growth occurred in Monterrey (+10.1%) and Reynosa (+40.9%), offset by declines in Mazatlán (-4.0%) and Zacatecas (-6.9%).
• Cost Structure: Total costs and expenses increased 12.2% to Ps. 580 million, driven by depreciation (up 12.1%) and costs related to new checked baggage screening equipment.
• Cargo: Air cargo volumes decreased 5.7% due to the exit of freight consolidators, though cargo revenues increased 21% due to business re-composition.

Outlook, Risks, and Management Commentary

Management Commentary

Management highlighted solid results driven by growth across all three business lines. The company successfully expanded commercial offerings, achieving a 95% occupancy rate for commercial space. The implementation of checked baggage screening equipment is expected to recover costs through regulated rate increases and service charges.

Subsequent Events and Guidance

• Rate Adjustments: The Ministry of Communications and Transportation (SCT) authorized a 1.7% average increase in maximum rates to recover maintenance costs for baggage screening equipment.
• Monterrey MDP: Authorities authorized substituting land acquisition costs for runway construction investments in the Master Development Plan (MDP), totaling Ps. 386.6 million over 2013-2015.
• Liquidity Management: In January 2013, OMA drew Ps. 300 million on a revolving credit line for working capital and repaid Ps. 95 million of another credit line.

Risks and Contingencies

• Regulatory Risk: Aeronautical revenues are subject to a maximum rate system regulated by the SCT; recovery of specific investments (e.g., land for a second runway) is subject to ongoing discussions with authorities.
• Operational Risk: Traffic volatility at specific airports (e.g., Mazatlán, Zacatecas) and dependence on specific airline routes.
• Forward-Looking Statements: The filing includes standard disclaimers regarding risks that could cause actual results to differ from projections.

Investor Verification Checklist

• Verify the sustainability of the 20.7% growth in non-aeronautical revenues, specifically the contribution from the new baggage screening fees and NH T2 hotel performance.
• Monitor the regulatory approval process for the recovery of land acquisition costs at the Monterrey airport, as this impacts future capital expenditure planning.
• Assess the impact of the 5.7% decline in cargo volumes on long-term revenue diversification strategies.
• Review the debt maturity profile, noting the Ps. 1,300 million in 5-year Notes and the reliance on revolving credit facilities for working capital.
• Confirm the trajectory of passenger traffic recovery in underperforming airports like Mazatlán and Zacatecas.