Pacific Airport Group (GAP) - Q3 2019 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 third quarter ended September 30, 2019. The company operates 12 airports in Mexico's Pacific region and holds a majority stake in Montego Bay International Airport in Jamaica. On October 10, 2019, GAP took control of the Norman Manley International Airport in Kingston, Jamaica.
Key Financial Metrics (3Q19 vs. 3Q18)
| Metric | 3Q18 (Ps. Millions) | 3Q19 (Ps. Millions) | Change |
|---|---|---|---|
| Total Revenues | 3,532.4 | 4,315.4 | +22.2% |
| Operating Income | 1,779.6 | 2,002.3 | +12.5% |
| EBITDA | 2,172.0 | 2,442.0 | +12.4% |
| Net Income | 1,324.9 | 1,362.7 | +2.9% |
| Comprehensive Income | 975.8 | 1,455.9 | +49.2% |
| Cash from Operations | 1,876.6 | 2,388.6 | +27.3% |
| Cash and Equivalents (End of Period) | 7,141.6 | 9,118.6 | +27.7% |
Margins (3Q19): Operating margin was 46.4% (56.9% excluding IFRIC 12). EBITDA margin was 56.6% (69.5% excluding IFRIC 12).
Material Changes and Operational Highlights
- Revenue Growth: Total revenue increased by Ps. 783.0 million. Aeronautical services grew 9.5%, while non-aeronautical services grew 20.1%. Revenues from improvements to concession assets (IFRIC 12) doubled (+100.8%) due to increased committed investments in Mexico.
- Traffic Growth: Total terminal passengers increased by 7.3% (803.3 thousand passengers). Domestic traffic rose 7.4% and international traffic rose 7.0%. Notable growth occurred at Tijuana (+14.4%), Guanajuato (+17.7%), and Morelia (+29.7%).
- Cost Structure: Total operating costs rose 32.0%, driven largely by the accounting recognition of concession asset improvements (IFRIC 12). Excluding IFRIC 12, cost of services grew only 7.4%.
- Financial Results: Net income growth was modest (+2.9%) due to higher interest expenses (+33.7%) from new debt issuances and higher income taxes. However, Comprehensive Income surged 49.2% primarily due to a favorable currency translation effect of Ps. 441.9 million.
- Liquidity: Cash and cash equivalents increased by Ps. 1,977.0 million year-over-year. Total liabilities increased by Ps. 3,853.4 million, primarily due to Ps. 3.0 billion in new long-term bond certificates.
Outlook, Risks, and Unusual Items
- New Acquisition: GAP began operations at Norman Manley International Airport (Kingston, Jamaica) in October 2019. The company paid US$ 7.1 million initially and will pay an annual concession fee of 62% of total aeronautical and commercial revenues.
- IFRIC 12 Impact: The filing emphasizes that IFRIC 12 revenues and costs do not have a cash impact. Margins calculated including these items are not comparable to standard operating metrics; management provides adjusted margins excluding IFRIC 12 for better analysis.
- Debt and Interest: Interest expenses increased significantly due to the issuance of long-term bond certificates (Certificados Bursátiles) and bank debt totaling Ps. 3,476.3 million, alongside rising interest rates.
- Forward-Looking Statements: The filing includes standard disclaimers regarding risks such as economic conditions, industry trends, and currency fluctuations that could cause actual results to differ from expectations.
Investor Verification Checklist
- IFRIC 12 Adjustments: Verify the distinction between reported EBITDA/Operating Income and the "excluding IFRIC 12" figures to assess true operational cash performance.
- Currency Translation: Confirm the impact of the Mexican Peso vs. U.S. Dollar exchange rate on Comprehensive Income, which drove a 49.2% increase despite flat Net Income.
- Debt Servicing: Review the impact of the new Ps. 3.0 billion bond issuance on future interest coverage ratios and cash flow availability.
- Jamaica Expansion: Assess the financial integration and initial performance of the newly acquired Norman Manley International Airport.
- Traffic Mix: Analyze the sustainability of high growth rates at secondary airports (e.g., Morelia, Guanajuato) versus mature hubs like Guadalajara.