Business Context and Reporting Period
Company: Central North Airport Group (Grupo Aeroportuario del Centro Norte, S.A.B. de C.V., or OMA)
Filing Type: Form 6-K (Report of Foreign Private Issuer)
Reporting Period: Second Quarter 2021 (Ended June 30, 2021)
Release Date: July 27, 2021
Business Overview: OMA operates 13 international airports in nine states of central and northern Mexico, along with hotel and industrial services. The company is listed on the NASDAQ (OMAB) and the Mexican Stock Exchange (OMA).
Key Financial Metrics
| Metric | 2Q21 Value | 2Q20 Value | 2Q19 Value |
|---|---|---|---|
| Passenger Traffic | 4.5 million | 0.58 million (approx.) | 5.9 million (approx.) |
| Adjusted EBITDA | Ps. 1,308 million | Ps. 25 million | Ps. 1,440 million (approx.) |
| Adjusted EBITDA Margin | 74.7% | 7.3% | 73.9% |
| Operating Income | Ps. 1,037 million | Filing text does not provide a clear value | Filing text does not provide a clear value |
| Operating Margin | 47.5% | Filing text does not provide a clear value | Filing text does not provide a clear value |
| Net Income | Ps. 620 million | Filing text does not provide a clear value | Filing text does not provide a clear value |
| Earnings Per Share (EPS) | Ps. 1.59 | Filing text does not provide a clear value | Filing text does not provide a clear value |
| Earnings Per ADS | US$ 0.64 | Filing text does not provide a clear value | Filing text does not provide a clear value |
| Cash Flow from Operations | Ps. 1,118 million | Filing text does not provide a clear value | Filing text does not provide a clear value |
| Cash and Cash Equivalents (End of Period) | Ps. 4,191 million | Filing text does not provide a clear value | Filing text does not provide a clear value |
| Capital Investments (MDP + Strategic) | Ps. 482 million | Filing text does not provide a clear value | Filing text does not provide a clear value |
Material Changes vs. Prior Periods
- Traffic Recovery: Passenger traffic surged 679% compared to 2Q20 but remained 23.9% below 2Q19 levels. International traffic increased 17.8x vs. 2Q20 but was still 1.5% below 2Q19.
- Revenue Growth: Aeronautical revenues increased 778% and non-aeronautical revenues increased 107% compared to 2Q20, driven by higher passenger volumes and reduced discounts.
- Profitability: Adjusted EBITDA rebounded significantly to Ps. 1,308 million from Ps. 25 million in 2Q20, though it was 9.2% lower than the pre-pandemic 2Q19 level.
- Costs: Total operating costs and expenses increased 45.8% year-over-year, primarily due to higher contracted services and maintenance costs associated with traffic growth.
- Ownership Change: On July 7, 2021, an affiliate of Fintech Holdings Inc. acquired an additional 15.4% stake, bringing its indirect ownership to 30.1% of OMA's capital stock.
Outlook, Risks, and Management Commentary
- Operational Outlook: Management notes continued recovery in passenger traffic driven by higher mobility levels permitted by Mexico's epidemiological risk traffic light system. As of June 30, 2021, 131 origin-destination routes were in operation.
- Investment Activity: Capital investments totaled Ps. 482 million, including Ps. 431 million for improvements to concessioned assets under Master Development Plans (MDPs).
- Liquidity and Debt: Financing activities generated a cash inflow of Ps. 361 million due to the issuance of two new bonds (OMA 21V and OMA 21-2) totaling Ps. 3,500 million, net of the early redemption of a Ps. 3,000 million bond. The company reported no financial derivatives exposure.
- Risks: The filing highlights risks related to the ongoing COVID-19 pandemic, noting that traffic levels in April, May, and June were still 21-28% below 2019 levels. Forward-looking statements are subject to uncertainties including epidemiological conditions and airline route suspensions.
Key Facts for Investor Verification
- Revenue Quality: Verify the sustainability of the 74.7% Adjusted EBITDA margin as traffic normalizes and discount levels potentially increase.
- Debt Structure: Confirm the terms and interest rates of the newly issued bonds (OMA 21V and OMA 21-2) and the impact of the Ps. 3,500 million net issuance on future interest expenses.
- Ownership Concentration: Assess the implications of Fintech Holdings Inc. increasing its indirect stake to 30.1% on corporate governance and future strategic decisions.
- Construction Accounting: Note that construction revenues and costs are recognized at cost (no profit) under IFRIC 12, which inflates total revenue figures without impacting operating income or EBITDA.
- Currency Impact: Monitor the impact of Mexican peso appreciation against the U.S. dollar, which reduced the reported cash balance by Ps. 62 million in the quarter.