Business Context and Reporting Period
Company: Grupo Aeroportuario del Pacífico, S.A.B. de C.V. (Pacific Airport Group or GAP)
Filing Type: Form 6-K (Report of Foreign Private Issuer)
Reporting Period: Third Quarter (ended September 30, 2015) and Nine Months ended September 30, 2015.
Key Context: Results include the consolidation of Montego Bay Airport (MBJ) in Jamaica following the acquisition of Desarrollo de Concesiones Aeroportuarias, S.L. (DCA) effective January 1, 2015. Consequently, 2015 figures are not directly comparable to prior periods. The concession for Santiago Airport in Chile expired on September 30, 2015.
Key Financial Metrics (3Q15 vs. 3Q14)
| Metric | 3Q15 Value (Ps. Millions) | Change vs. 3Q14 |
|---|---|---|
| Total Revenues | Ps. 2,159.0 (implied) | +57.7% (+Ps. 790.0M) |
| Operating Income | Ps. 1,179.2 (implied) | +80.5% (+Ps. 525.2M) |
| EBITDA | Ps. 1,492.5 (implied) | +70.5% (+Ps. 617.5M) |
| Net Income | Ps. 999.6 (implied) | +86.6% (+Ps. 462.4M) |
| Operating Margin | 54.6% | +690 bps |
| EBITDA Margin (excl. IFRIC 12) | 78.2% | +1,040 bps |
Note: Figures are in nominal Mexican Pesos. IFRIC 12 revenues relate to infrastructure commitments and do not impact cash flow.
Material Changes and Drivers
- Revenue Growth: Driven primarily by the consolidation of Montego Bay Airport (MBJ) and organic growth in Mexican airports.
- Aeronautical Revenues: Increased 45.8% (Ps. 444.7M), with MBJ contributing Ps. 241.1M.
- Non-Aeronautical Revenues: Increased 53.8% (Ps. 172.6M), with MBJ contributing Ps. 92.4M.
- IFRIC 12 Revenues: Increased 221.8% (Ps. 172.6M) due to the start of the 2015-2019 Master Development Program.
- Passenger Traffic: Total terminal passengers in Mexican airports increased 14.1% (863.0k passengers). MBJ added 20.0k passengers. Key growth airports included Guanajuato (+28.1%), Puerto Vallarta (+17.7%), and Tijuana (+16.0%).
- One-Time Gains: A Ps. 161.9 million gain was recognized in "Other Income" due to the fair value determination of the DCA/MBJ acquisition assets.
- Cost Structure: Total operating costs rose 37.0% (Ps. 264.8M), largely due to MBJ consolidation (Ps. 203.1M). Mexican airport costs rose only 8.6%.
- Financial Expenses: Increased significantly from a Ps. 7.0M income in 3Q14 to a Ps. 408.7M expense in 3Q15. This was driven by a Ps. 275.4M foreign exchange loss on a US$191.0M loan used for the DCA acquisition and a Ps. 100.7M FX loss on fair value determination.
Outlook, Risks, and Recent Events
- Debt Refinancing: On September 25, 2015, GAP signed two loan agreements (US$95.5M each with Scotiabank and BBVA Bancomer) to refinance the bridge loan for the DCA acquisition. Funds are expected to be used in 2016; leverage is not expected to increase.
- Chile Concession: The Santiago Airport concession expired on September 30, 2015. Assets were returned without incident, though a one-year latent defect liability period remains. A recovery value of approx. US$3.5M is expected.
- Accounting Changes: New standards (IFRS 15, IFRS 9) will become effective in 2017 and 2018 respectively.
- Risks: Forward-looking statements are subject to risks including economic conditions, industry trends, and foreign exchange volatility (peso depreciation impacted financial results).
Investor Verification Checklist
- Comparability: Verify that 2015 results are adjusted for the inclusion of Montego Bay Airport (MBJ) when comparing to 2014 data.
- Non-Cash Items: Distinguish between cash-generating revenues and IFRIC 12 revenues (infrastructure commitments), which inflate margins but do not impact cash flow.
- FX Impact: Assess the sensitivity of financial results to peso depreciation, which caused significant foreign exchange losses on USD-denominated debt.
- One-Time Gains: Exclude the Ps. 161.9M fair value gain from DCA/MBJ when analyzing recurring profitability.
- Debt Profile: Confirm the status of the US$191.0M bridge loan refinancing and the impact of the new long-term loans on future interest expenses.