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 (4Q) and Full Year 2017. Results were announced on February 22, 2018.
Operations: OMA operates 13 airports in central and northern Mexico, including major hubs in Monterrey, Culiacán, and Chihuahua. The company also manages hotel services (NH Collection Terminal 2, Hilton Garden Inn) and industrial logistics (OMA Carga).
Key Financial Metrics
Fourth Quarter 2017
- Passenger Traffic: 5.0 million (+1.8% YoY).
- Total Revenues: Ps. 1,888 million (+18.9% YoY), including Ps. 408 million in construction revenues.
- Aeronautical Revenues: Ps. 1,090 million (+3.4% YoY).
- Non-Aeronautical Revenues: Ps. 390 million (+8.0% YoY).
- Adjusted EBITDA: Ps. 999 million (+13.6% YoY); Margin of 67.5% (record high).
- Operating Income: Ps. 830 million (+13.8% YoY).
- Net Income: Ps. 625 million (+9.5% YoY).
- Earnings Per Share (EPS): Ps. 1.58 (+9.5% YoY); EPS per ADS: US$ 0.64 (+14.7% YoY).
- Capital Expenditures (Capex): Ps. 590 million (including MDP and strategic investments).
Full Year 2017
- Passenger Traffic: 19.7 million (+4.8% YoY).
- Total Revenues (Aeronautical + Non-Aeronautical): Ps. 5,803 million (+11.5% YoY).
- Adjusted EBITDA: Ps. 3,829 million (+15.2% YoY); Margin of 66.0% (record high).
- Operating Income: +16.4% YoY.
- Net Income: Ps. 2,137 million (+13.9% YoY).
- EPS: Ps. 5.40; EPS per ADS: US$ 2.19.
- Return on Capital: 29.6%.
- Cash Flow from Operations: Ps. 2,925 million (+22.8% YoY).
- Net Debt: Ps. 2,300 million (Total Debt: Ps. 4,633 million).
- Net Debt to Adjusted EBITDA Ratio: 0.60x.
Material Changes vs. Prior Period
- Traffic Growth: Despite a deceleration in Mexico's overall traffic growth, OMA achieved 1.8% growth in 4Q17 and 4.8% for the full year. Monterrey (+6.0%) and Culiacán (+9.7%) were the primary growth drivers, while Reynosa (-26.8%) and Torreón (-11.4%) saw significant declines due to route reductions on Mexico City flights.
- Revenue Mix: Non-aeronautical revenues grew faster (8.0%) than aeronautical revenues (3.4%) in 4Q17, driven by commercial activities (car rental +28.5%, restaurants +21.7%) and hotel services.
- Cost Control: Operating costs excluding construction and maintenance provisions decreased 7.3% in 4Q17 due to strict controls and the cessation of certain licensing fees. However, total operating expenses rose 23.3% due to high construction costs and maintenance provisions.
- Profitability: Adjusted EBITDA margins reached record levels in both the quarter (67.5%) and full year (66.0%), outpacing revenue growth.
Guidance, Outlook, Risks, and Unusual Items
Management Commentary and Outlook
Management highlighted a strategy of continuous commercial improvement, resulting in a 98.5% commercial space occupancy rate in 4Q17. The company remains committed to infrastructure development via Master Development Programs (MDP) and strategic investments to improve service quality across its 13 airports.
Risks and Contingencies
- Legal Proceedings: OMA terminated an advertising leasing agreement effective December 3, 2017, and initiated legal proceedings to recover funds owed by the former provider.
- Regulatory Environment: Aeronautical revenues are subject to a maximum rate system regulated by the Ministry of Communications and Transportation (SCT).
- Liability: OMA may face joint liability with airlines regarding damages from checked baggage screening if willful misconduct is proven.
- Forward-Looking Statements: The filing includes standard disclaimers regarding risks that could cause actual results to differ from projections, referencing the "Risk Factors" section of the most recent Form 20-F.
Investor Verification Checklist
- Construction Revenue Impact: Verify the reconciliation of Adjusted EBITDA to Net Income, noting that construction revenues (Ps. 408 million in 4Q17) are non-cash and do not affect operating income or net income.
- Debt Composition: Confirm that 97% of total debt is denominated in Mexican pesos, limiting direct USD exposure but exposing the company to local currency fluctuations.
- Route Volatility: Monitor traffic trends at Reynosa and Torreón, which experienced double-digit declines, to assess the impact of route closures on future growth.
- Legal Recovery: Track the status of the legal proceedings regarding the rescinded advertising contract to determine potential recoveries.
- Cash Position: Note the decrease in cash and cash equivalents of Ps. 601 million during 2017, driven by high Capex and dividend payments.