Business Context and Reporting Period
Company: Grupo Aeroportuario del Sureste, S.A.B. de C.V. (ASUR)
Filing Type: Form 6-K (Report of Foreign Private Issuer)
Reporting Period: Second Quarter (ended June 30, 2019) and Six Months ended June 30, 2019
Operations: ASUR operates 16 airports across Mexico, Puerto Rico (Aerostar), and Colombia (Airplan). The company reported results for the three and six months ended June 30, 2019, compared to the same periods in 2018.
Key Financial Metrics
| Metric | 2Q 2019 | 2Q 2018 | YoY Change |
|---|---|---|---|
| Total Revenue | Ps. 4,069.4 million | Ps. 3,887.4 million | +4.7% |
| EBITDA | Ps. 2,745.0 million | Ps. 2,359.8 million | +16.3% |
| Adjusted EBITDA (Excl. one-time items) | Ps. 2,582.4 million | Ps. 2,359.8 million | +9.4% |
| Net Income | Ps. 1,523.5 million | Ps. 1,098.4 million | +38.7% |
| Majority Net Income | Ps. 1,426.7 million | Ps. 1,086.3 million | +31.3% |
| Earnings Per Share (EPS) | Ps. 4.76 | Ps. 3.62 | +31.3% |
| EBITDA Margin | 67.5% | 60.7% | +675 bps |
| Operating Margin | 55.2% | 46.2% | +900 bps |
| Cash & Equivalents | Ps. 4,851.3 million | Ps. 3,688.9 million | +31.5% |
| Net Debt | Ps. 9,295.3 million | Ps. 12,907.5 million | -28.0% |
| Net Debt / LTM EBITDA | 0.9x | 1.5x | -38.5% |
| Capital Expenditures (Capex) | Ps. 170.8 million | Ps. 407.2 million | -58.0% |
Material Changes vs. Prior Period
- Passenger Traffic Growth: Total traffic increased 6.9% YoY to 14.0 million passengers.
- Mexico: +4.7% (driven by Cancun Airport).
- Puerto Rico: +6.1% (recovery from Hurricane Maria).
- Colombia: +14.9% (driven by Rionegro Airport).
- Revenue Composition: Total revenue rose 4.7%, driven by a 7.3% increase in aeronautical services and a 7.2% increase in non-aeronautical services. This was partially offset by a 41.4% decline in construction revenues due to lower capital investments in Colombia and Puerto Rico.
- Profitability: Operating profit surged 25.1% to Ps. 2,247.9 million. EBITDA increased 16.3%, though this includes a one-time Ps. 162.6 million insurance claim recovery in Puerto Rico related to Hurricane Maria. Excluding this item, EBITDA growth was 9.4%.
- Cost Management: Consolidated operating costs and expenses declined 5.1% YoY. Excluding construction costs, operating expenses increased only 0.6%. Colombia saw a significant 19.7% decline in depreciation and amortization due to a change in methodology to a straight-line basis.
- Liquidity and Debt: Net debt decreased significantly by 28.0% to Ps. 9.3 billion, improving the Net Debt to LTM EBITDA ratio to 0.9x. The company paid a cash dividend of Ps. 10.0 per share (totaling Ps. 3.0 billion).
Guidance, Outlook, and Risks
- Management Commentary: Management highlighted strong traffic growth across all regions, particularly in Colombia and Puerto Rico. The company emphasized its strong cash position and reduced leverage.
- Unusual Items:
- Insurance Recovery: A one-time Ps. 162.6 million gain in Puerto Rico from Hurricane Maria insurance claims boosted 2Q19 results.
- Accounting Changes: Colombia's depreciation and amortization declined due to a shift from percentage-of-completion to straight-line amortization starting January 2019.
- Construction Revenues: Significant decline in construction revenues (Ps. 121.9 million in 2Q19 vs. Ps. 207.9 million in 2Q18) due to lower capex, impacting total revenue growth but not EBITDA in Mexico/Puerto Rico (per IFRIC 12).
- Risks and Contingencies:
- Regulatory: Operations are subject to tariff regulations by the Mexican Ministry of Communications and Transportation and the Colombian Special Administrative Unit of Civil Aeronautics.
- Foreign Exchange: The company has debt denominated in USD and Colombian Pesos, exposing it to currency fluctuations. A 1.3% appreciation of the Mexican peso in 2Q19 resulted in a smaller FX gain compared to 2Q18.
- Forward-Looking Statements: The filing includes standard disclaimers that actual results may differ from expectations due to various risks.
Investor Verification Checklist
- Adjusted EBITDA: Verify the impact of the Ps. 162.6 million one-time insurance recovery on Puerto Rico's profitability to understand organic growth.
- Construction Revenue Impact: Confirm how the decline in construction revenues (due to lower capex) affects future revenue recognition and margin calculations under IFRIC 12.
- Colombia Amortization: Review the long-term impact of the change in amortization methodology in Colombia on future depreciation expenses.
- Debt Profile: Analyze the currency composition of debt (49.6% USD, 22.1% COP, 28.3% MXN) and interest rate exposure (floating rates in Colombia and Mexico).
- Dividend Sustainability: Assess the ability to maintain the Ps. 10.0 per share dividend given the Ps. 3.0 billion payout and current cash flow generation.