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 2022 (4Q22) and Full Year 2022. Results were announced on February 16, 2023.

Operations: OMA operates 13 international airports in nine states of central and northern Mexico, including major hubs in Monterrey, Ciudad Juárez, and Mazatlán, alongside hotel and industrial park services.

Key Financial Metrics

Revenue and Profitability (4Q22 vs 4Q21)

• Total Revenues: Ps. 3,666 million (up 36.8% YoY). This includes Ps. 1,106 million in construction revenues.
• Aeronautical Revenues: Ps. 1,956 million (up 26.0% YoY), driven by increased passenger traffic and tariff adjustments.
• Non-Aeronautical Revenues: Ps. 604 million (up 26.0% YoY), with commercial activities rising 34.6%.
• Adjusted EBITDA: Ps. 1,939 million (up 27.5% YoY).
• Adjusted EBITDA Margin: 75.8% (up from 74.9% in 4Q21).
• Operating Income: Ps. 1,749 million (up 37.1% YoY) with an operating margin of 47.7%.
• Consolidated Net Income: Ps. 1,135 million (up 11.8% YoY).
• Earnings Per Share (EPS): Ps. 2.93 (up 11.5% YoY).
• Earnings Per ADS: US$ 1.20 (up 17.2% YoY).

Balance Sheet and Liquidity (As of Dec 31, 2022)

• Cash and Cash Equivalents: Ps. 3,336 million (down 44.3% from Dec 31, 2021).
• Total Debt + Financial Leases: Ps. 10,393 million.
• Net Debt: Ps. 7,056 million.
• Leverage Ratio: Net Debt/Adjusted EBITDA of 1.0x (up from 0.38x in 2021).
• Dividends Paid (Full Year 2022): Ps. 6,616 million.

Operating Metrics (4Q22)

• Passenger Traffic: 6.47 million (up 20.7% vs 4Q21; up 8.7% vs 4Q19).
• Full Year 2022 Traffic: 23.22 million (up 28.8% vs 2021; 0.2% above 2019 levels).
• Capital Investments (MDP + Strategic): Ps. 1,244 million in 4Q22; Ps. 3,277 million for full year 2022.

Material Changes vs. Prior Period

• Revenue Growth: Total revenues surged 36.8% in 4Q22, primarily due to a 70.6% increase in construction revenues and strong recovery in aeronautical and non-aeronautical segments.
• Financing Costs: Financing expenses increased significantly to Ps. 205 million (from Ps. 30 million in 4Q21) due to higher indebtedness, increased interest rates, and an exchange loss compared to a gain in the prior year.
• Debt Structure: Long-term debt increased from Ps. 5.0 billion to Ps. 9.0 billion, reflecting new bond issuances (OMA22L and OMA22-2L) used to refinance short-term loans and fund CAPEX.
• Cost Management: While total operating costs rose 36.5%, the cost of services per passenger decreased by 1.1% in the quarter, indicating operational efficiency despite higher absolute costs.

Outlook, Risks, and Unusual Items

• Dividend Announcement: OMA declared a cash dividend of Ps. 1,450 million, payable on March 2, 2023.
• Strategic Investments: Ongoing projects include terminal expansions in Monterrey, Culiacán, and Durango, as well as the construction of OMA Premium Lounges across multiple airports.
• Ownership Change: In December 2022, Fintech Advisory Inc. completed the sale of 29.99% of OMA shares to a subsidiary of VINCI Airports.
• Risks: The filing notes standard forward-looking statement risks, including economic conditions, exchange rate fluctuations, and regulatory changes. Financing costs remain sensitive to interest rate movements and currency exchange.
• Unusual Items: The significant increase in financing expenses was driven by a shift from an exchange gain in 4Q21 to an exchange loss in 4Q22.

Investor Verification Checklist

• Verify the sustainability of the 75.8% Adjusted EBITDA margin given the high proportion of construction revenues (which do not generate cash flow) in total revenue.
• Monitor the impact of rising interest rates on the Ps. 10.4 billion total debt load, particularly the variable rate portions (TIIE + spread).
• Assess the cash burn rate relative to the Ps. 3.3 billion cash balance following the Ps. 6.6 billion dividend payout in 2022.
• Confirm the progress of Master Development Plan (MDP) projects, as construction revenue volatility depends on project execution rates.
• Review the integration and strategic alignment following the sale of a 29.99% stake to VINCI Airports.