Business Context and Reporting Period
Company: Southeast Airport Group (Grupo Aeroportuario del Sureste, S.A.B. de C.V.)
Filing Type: Form 6-K (Report of Foreign Private Issuer)
Reporting Period: Third quarter and nine months ended September 30, 2015
Business Overview: ASUR operates nine airports in southeast Mexico (including Cancún) and holds a 50% joint venture interest in Aerostar Airport Holdings, LLC, which operates the Luis Muñoz Marín International Airport in San Juan, Puerto Rico.
Key Financial Metrics
Third Quarter 2015 (3Q15)
- Total Revenues: Ps. 2,172.41 million (Increase of 47.79% YoY)
- EBITDA: Ps. 1,143.22 million (Increase of 29.93% YoY)
- EBITDA Margin: 52.62% (Decreased from 59.86% in 3Q14)
- Operating Profit: Ps. 1,025.60 million (Increase of 33.91% YoY)
- Net Income: Ps. 705.74 million (Increase of 21.39% YoY)
- Earnings Per Share (EPS): Ps. 2.3525 (US$1.3916 per ADS)
- Passenger Traffic: 6.63 million total (Increase of 15.19% YoY)
- Commercial Revenue per Passenger: Ps. 82.79 (Increase of 15.89% YoY)
Nine Months 2015 (9M15)
- Total Revenues: Ps. 6,089.44 million (Increase of 45.20% YoY)
- EBITDA: Ps. 3,415.70 million (Increase of 26.29% YoY)
- EBITDA Margin: 56.09% (Decreased from 64.49% in 9M14)
- Net Income: Ps. 2,182.90 million (Increase of 23.29% YoY)
- Earnings Per Share (EPS): Ps. 7.2763 (US$4.3042 per ADS)
- Passenger Traffic: 19.81 million total (Increase of 13.93% YoY)
Liquidity and Balance Sheet (as of Sept 30, 2015)
- Cash and Cash Equivalents: Ps. 3,494.58 million (Increase of 22.39% from Dec 31, 2014)
- Total Bank Debt: Ps. 3,621.32 million (including accrued interest)
- Shareholders' Equity: Ps. 19,649.90 million
- Total Liabilities: Ps. 5,703.41 million
Material Changes vs. Prior Period
- Revenue Composition: The significant revenue increase was driven by a 227.77% surge in construction services revenues (3Q15) and 441.36% (9M15) due to higher capital expenditures recognized under IFRIC 12. Aeronautical revenues grew 20.19% (3Q15) and non-aeronautical revenues grew 32.34% (3Q15).
- Margin Compression: Operating and EBITDA margins declined in both periods. Operating margin fell to 47.21% in 3Q15 (from 52.10%) and 50.35% in 9M15 (from 56.39%). This was caused by operating expenses rising faster than revenues, largely due to the accounting treatment of construction costs which increased expenses without impacting EBITDA.
- Foreign Exchange Impact: ASUR recorded a Ps. 85.7 million foreign exchange loss in 3Q15 and Ps. 151.34 million in 9M15 due to the depreciation of the Mexican peso against the U.S. dollar on its net liability position.
- Passenger Growth: International traffic at Cancún grew 17.53% in 3Q15, driving total international traffic growth of 16.54%. Domestic traffic grew 13.89% across all airports.
Outlook, Risks, and Unusual Items
- Debt Restructuring: In July 2015, ASUR amended its US$215.0 million bank loans (BBVA Bancomer and Bank of America) for Cancún Airport, extending maturity to 2022. An additional US$85.0 million credit facility was secured but not yet drawn as of the quarter end.
- Joint Venture Performance: The San Juan (SJU) airport joint venture saw traffic increase 1.48% in 3Q15 and 1.09% in 9M15. ASUR recognized a Ps. 10.15 million gain from equity in Aerostar's income for 3Q15.
- Regulatory Environment: Regulated revenues accounted for approximately 56% of total income in 9M15. Tariffs are set by the Mexican Ministry of Communications and Transportation.
- Capital Expenditures: Investments totaled Ps. 658.54 million in 3Q15 and Ps. 1,201.67 million in 9M15 to modernize airports.
- Forward-Looking Statements: The filing notes that future expectations are subject to risks and actual developments may differ significantly.
Investor Verification Checklist
- Verify the impact of IFRIC 12 accounting on reported revenue and expense figures, specifically regarding construction services.
- Monitor the Mexican peso exchange rate volatility and its effect on foreign currency-denominated debt and Aerostar's translation gains/losses.
- Confirm the drawdown status of the additional US$85.0 million credit facility secured for Cancún Airport.
- Review the sustainability of commercial revenue per passenger growth (Ps. 82.79) against potential saturation or competitive pressures.
- Assess the regulatory risk regarding future tariff adjustments by the Mexican Ministry of Communications and Transportation.