Pacific Airport Group (GAP) - Q1 2023 Financial Summary
Business Context and Reporting Period
This Form 6-K filing reports the unaudited consolidated results for Grupo Aeroportuario del Pacífico, S.A.B. de C.V. (GAP) for the first quarter ended March 31, 2023 (1Q23). The company operates 12 airports in Mexico's Pacific region and two international airports in Jamaica (Montego Bay and Kingston). Financial figures are presented in Mexican Pesos (Ps.) and prepared in accordance with International Financial Reporting Standards (IFRS).
Key Financial Metrics
| Metric | 1Q23 | 1Q22 | Change |
|---|---|---|---|
| Total Revenues | Ps. 8,339.9 million | Ps. 6,012.6 million | +38.7% |
| EBITDA | Ps. 4,696.1 million | Ps. 3,708.4 million | +26.6% |
| Net Income | Ps. 2,565.2 million | Ps. 2,327.5 million | +10.2% |
| Comprehensive Income | Ps. 2,149.9 million | Ps. 2,241.0 million | -4.1% |
| Operating Cash Flow | Ps. 4,045.7 million | Ps. 2,168.7 million | +86.6% |
| Cash and Equivalents (End of Period) | Ps. 18,890.9 million | Ps. 16,899.9 million | +11.8% |
| EBITDA Margin (excl. IFRIC-12) | 72.3% | 73.8% | -1.5 pts |
Material Changes vs. Prior Period
- Revenue Growth: Total revenues increased by Ps. 2,327.3 million. Aeronautical services grew 30.5% and non-aeronautical services grew 25.9%. A significant portion of revenue growth (85.8% increase) is attributed to "Improvements to concession assets" (IFRIC-12), which is a non-cash accounting recognition of infrastructure investments.
- Traffic Recovery: Total passenger traffic increased 23.9% to 15.59 million passengers. International traffic grew 27.8%, while domestic traffic grew 20.8%. Jamaican airports saw a 45.6% increase in total passengers.
- Cost Structure: Total operating costs rose 48.6%, driven largely by the non-cash IFRIC-12 costs. Excluding IFRIC-12, operating costs increased 28.9%. Employee costs rose 37.6% due to hiring and labor law adjustments.
- Financial Results: While Net Income increased, Comprehensive Income decreased 4.1% due to a Ps. 254.4 million reduction in foreign currency translation effects and a Ps. 74.6 million decrease in cash flow hedges, largely driven by the appreciation of the Mexican Peso against the US Dollar.
- Debt Activity: The company issued long-term bond certificates worth Ps. 5,400 million and drew down Ps. 1,000 million from credit facilities to fund capital investments and refinance maturing debt.
Outlook, Risks, and Management Commentary
- Capital Investment: Proceeds from new debt issuance are designated for capital investments in Mexican airports under the Master Development Program (2020-2024) and to pay off the "GAP 20-2" bond maturing in June 2023.
- Regulatory Risk: On March 28, 2023, the Mexican President presented a legislative initiative to Congress that could provide additional grounds for the government to revoke concessions and accelerate private property expropriation. The impact of this potential legislation on operations remains uncertain.
- Currency Impact: The 8.9% appreciation of the Peso versus the US Dollar in 1Q23 negatively impacted revenue translation from Jamaican operations and contributed to foreign exchange losses.
- Operational Expansion: Several new international routes were opened in 1Q23, including connections from Puerto Vallarta to Abbotsford and Indianapolis, and from Montego Bay to St. Louis, Denver, and Chicago.
Investor Verification Checklist
- IFRIC-12 Impact: Verify the distinction between cash-generating revenue and non-cash "Improvements to concession assets" revenue, which significantly inflates total revenue and operating cost figures.
- Currency Sensitivity: Assess the exposure to USD/MXN exchange rate fluctuations, particularly regarding Jamaican airport revenues and debt servicing.
- Regulatory Environment: Monitor the progress of the Mexican legislative initiative regarding concession revocation and expropriation risks.
- Debt Maturity: Confirm the successful repayment of the "GAP 20-2" bond maturing June 22, 2023, using the proceeds from the new bond issuance.
- Margin Sustainability: Analyze EBITDA margins excluding IFRIC-12 effects to gauge true operational profitability trends.