Business Context and Reporting Period
Company: Southeast Airport Group (ASUR / ASUR)
Filing Type: Form 6-K (Report of Foreign Private Issuer)
Reporting Period: First Quarter ended March 31, 2018
Operations: ASUR operates 16 airports across Mexico, the U.S. (Puerto Rico), and Colombia. The reporting period reflects the full consolidation of Aerostar (Puerto Rico) and Airplan (Colombia), which were previously accounted for using the equity method or partially consolidated.
Key Financial Metrics
| Metric | 1Q 2017 | 1Q 2018 | YoY Change |
|---|---|---|---|
| Total Revenue (MXN millions) | 2,476.7 | 3,916.6 | +58.1% |
| EBITDA (MXN millions) | 1,771.2 | 2,670.5 | +50.8% |
| Net Income (MXN millions) | 1,338.6 | 1,467.1 | +9.6% |
| Majority Net Income (MXN millions) | 1,338.6 | 1,454.6 | +8.7% |
| Earnings Per Share (MXN) | 4.46 | 4.85 | +8.7% |
| Earnings Per ADS (USD) | 2.44 | 2.65 | +8.7% |
| Cash & Equivalents (MXN millions) | 4,495.3 | 5,725.3 | +27.4% |
| Net Debt (MXN millions) | 10,035.0 | 11,288.3 | +12.5% |
| Net Debt / LTM EBITDA | 1.47x | 1.36x | -7.8% |
| EBITDA Margin | 71.5% | 68.2% | -330 bps |
| Commercial Rev. per Passenger (MXN) | 117.8 | 99.9 | -15.2% |
Material Changes vs. Prior Period
- Consolidation Impact: The significant revenue increase (58.1%) is primarily driven by the full line-by-line consolidation of Aerostar (Puerto Rico) and Airplan (Colombia), which were not fully consolidated in 1Q 2017.
- Passenger Traffic:
- Mexico: Increased 9.3% YoY (12.4% domestic, 7.3% international), driven by Cancun Airport.
- Puerto Rico: Declined 19.2% YoY due to the ongoing impact of Hurricane Maria (Sept 2017).
- Colombia: Declined 5.2% YoY; an 8.7% drop in domestic traffic offset a 19.9% rise in international traffic.
- Cost Structure: Operating costs rose 103.6% YoY, largely due to the consolidation of new subsidiaries and increased amortization/depreciation from IFRS 3 valuations of Aerostar and Airplan.
- Construction Revenues: Increased 192.8% to MXN 312.4 million, reflecting higher capital expenditures and IFRIC 12 accounting treatments for concession assets.
Outlook, Risks, and Management Commentary
- Hurricane Maria Recovery: Puerto Rico operations remain impacted. While capacity for normal management was regained by Dec 2017, traffic has not fully recovered. Insurance claims for infrastructure damage and lost income are being evaluated; a reasonable estimate is not yet available.
- Regulatory Environment:
- Mexico: Regulated revenues represent ~61% of Mexico income. Tariffs are reviewed annually.
- Colombia: New tax legislation (Decree 2235) resulted in a deferred income tax expense of MXN 105.2 million in 1Q 2018.
- Capital Expenditures: Total Capex for 1Q 2018 was MXN 599.2 million, a 617.5% increase YoY, focused on modernizing Mexican airports (Cancun Terminal 4), Puerto Rico (Federal Inspection Station), and Colombia (terminal expansions).
- Liquidity: The company maintains a strong liquidity position with MXN 5.7 billion in cash and a Net Debt to LTM EBITDA ratio of 1.36x.
Investor Verification Checklist
- Consolidation Adjustments: Verify the specific impact of IFRS 3 valuations on goodwill and intangible assets for Aerostar and Airplan, as these significantly affect depreciation and amortization expenses.
- Hurricane Maria Insurance: Monitor updates on the insurance claim status for Puerto Rico infrastructure damage and business interruption, noting the US$10 million deductible.
- Commercial Revenue Per Passenger: Investigate the 15.2% decline in consolidated commercial revenue per passenger, driven by the inclusion of lower-yield Colombia operations and the impact of Hurricane Maria in Puerto Rico.
- Colombia Tax Legislation: Assess the long-term impact of Decree 2235 on deferred tax liabilities and future profitability in Colombia.
- Debt Profile: Review the currency composition of debt (56.8% USD, 25.6% MXN, 17.6% COP) and exposure to exchange rate fluctuations.