Business Context and Reporting Period
Company: Grupo Aeroportuario del Centro Norte, S.A.B. de C.V. (OMA)
Filing Type: Form 6-K (Report of Foreign Private Issuer)
Reporting Period: Fourth Quarter 2013 (ended December 31, 2013) and Full Year 2013
Filing Date: February 25, 2014
OMA operates 13 international airports in central and northern Mexico, including major hubs in Monterrey, Acapulco, and Mazatlán, as well as a hotel in Mexico City's Terminal 2. The company reported unaudited consolidated results for the fourth quarter and full year 2013.
Key Financial Metrics
Fourth Quarter 2013 Results
- Total Revenues: Ps. 935 million (Increase of 2.0% YoY)
- Aeronautical Revenues: Ps. 569 million (Increase of 4.6% YoY)
- Non-Aeronautical Revenues: Ps. 257 million (Increase of 9.8% YoY)
- Adjusted EBITDA: Ps. 424 million (Increase of 10.4% YoY)
- Adjusted EBITDA Margin: 53.9% (Increase of 210 basis points)
- Operating Income: Ps. 234 million (Decrease of 20.6% YoY)
- Net Income: Ps. 465 million (Increase of 99.0% YoY)
- Earnings Per Share (EPS): Ps. 1.16 (US$0.71 per ADS)
- Passenger Traffic: 3.4 million (Increase of 6.9% YoY)
- Capital Expenditures (MDP + Strategic): Ps. 237 million
Full Year 2013 Results
- Total Revenues: Ps. 3,066 million (Sum of aeronautical Ps. 2,269m and non-aeronautical Ps. 797m; 8.7% increase)
- Adjusted EBITDA: Ps. 1,674 million (Increase of 10.8% YoY)
- Adjusted EBITDA Margin: 54.6%
- Net Income: Ps. 1,134 million (Increase of 38.5% YoY)
- Full Year EPS: Ps. 2.83 (US$1.73 per ADS)
- Return on Equity: 17.9%
- Operating Cash Flow: Ps. 1,021 million (Decrease from Ps. 1,260 million in 2012)
- Cash and Cash Equivalents (Dec 31, 2013): Ps. 1,534 million
- Net Debt to Adjusted EBITDA Ratio: 0.94x
Material Changes vs. Prior Period
- Revenue Growth Drivers: Non-aeronautical revenue growth was driven by checked baggage screening (+149.3% for full year), the NH Terminal 2 hotel (+11.4%), OMA Carga (+37.5%), and car rentals (+22.2%). Aeronautical revenue growth was supported by traffic increases and rate adjustments.
- Cost Increases: Cost of services and G&A increased 10.1% for the full year, primarily due to payroll increases, minor maintenance, and subcontracted services. In Q4, the major maintenance provision increased 241.3% due to updated estimates for asset wear and tear.
- Profitability Divergence: While Adjusted EBITDA grew 10.4% in Q4, Operating Income fell 20.6% due to the significant increase in the major maintenance provision. Net Income surged 99.0% in Q4, largely due to a tax credit resulting from the repeal of the single-rate corporate tax (IETU) and a gain from an insurance claim for baggage screening equipment damaged by Hurricane Manuel.
- Traffic Trends: Domestic passenger traffic grew 8.0% in Q4, while international traffic remained unchanged. Flight operations decreased 2.7% overall.
Guidance, Outlook, and Risks
2014 Outlook
- Passenger Traffic: Expected to increase 4% to 6%.
- Revenue Growth: Sum of aeronautical and non-aeronautical revenues expected to increase 8% to 10%.
- Adjusted EBITDA Margin: Expected range of 51% to 53%.
- Investments: MDP investments expected between Ps. 600 million and Ps. 750 million; strategic investments expected between Ps. 250 million and Ps. 450 million.
Risks and Contingencies
- Forward-Looking Uncertainties: Results depend on airline expansion plans, ticket prices, commercial project evolution, and economic conditions including oil prices.
- 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.
- Foreign Exchange: The company noted exchange losses impacting financing expenses.
Investor Verification Checklist
- Verify the sustainability of the 99% net income increase in Q4, which was heavily influenced by a one-time tax credit and an insurance claim gain.
- Confirm the impact of the 241% increase in the major maintenance provision on future operating income and cash flow requirements.
- Monitor the 23rd consecutive quarter of growth in non-aeronautical revenue per passenger to assess diversification success.
- Review the net debt to Adjusted EBITDA ratio of 0.94x to evaluate leverage levels relative to industry peers.
- Track the execution of the 2014 Master Development Plan (MDP) investments against the Ps. 600-750 million guidance range.