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: Third quarter (3Q) and nine months (9M) ended September 30, 2016.
Business Overview: ASUR operates nine airports in southeast Mexico (including Cancún, Mérida, and Cozumel) and holds a 50% joint venture stake in Aerostar Airport Holdings, LLC, which operates the Luis Muñoz Marín International Airport in San Juan, Puerto Rico.
Key Financial Metrics (3Q16)
| Metric | 3Q16 Value | 3Q15 Value | YoY Change |
|---|---|---|---|
| Total Revenues | Ps. 2,355.76 million | Ps. 2,172.41 million | +8.44% |
| EBITDA | Ps. 1,370.16 million | Ps. 1,143.22 million | +19.85% |
| Operating Profit | Ps. 1,235.43 million | Ps. 1,025.60 million | +20.46% |
| Net Income | Ps. 916.80 million | Ps. 705.74 million | +29.91% |
| Earnings Per Share (EPS) | Ps. 3.0560 | Ps. 2.3525 | +29.91% |
| Earnings Per ADS (US$) | $1.5771 | $1.2140 | +29.91% |
| EBITDA Margin | 58.16% | 52.62% | +5.54 pts |
| Operating Margin | 52.44% | 47.21% | +5.23 pts |
Liquidity and Balance Sheet (as of Sept 30, 2016):
- Cash and Cash Equivalents: Ps. 3,521.38 million (up 68.96% from Dec 31, 2015).
- Total Bank Debt: Ps. 4,160.44 million (includes Ps. 5.74 million accrued interest).
- Stockholders' Equity: Ps. 21,687.15 million.
- Capital Expenditures (3Q16): Ps. 410.05 million.
Material Changes vs. Prior Period
Revenue Drivers:
- Passenger Traffic: Total traffic increased 8.58% YoY in 3Q16 (Domestic +10.23%, International +6.92%). Growth was led by Cancún (+9.16% total) and Mérida (+18.76% total), while Minatitlán and Villahermosa saw declines.
- Aeronautical Revenues: Increased 15.78% due to higher traffic.
- Non-Aeronautical Revenues: Increased 23.65%, driven by a 24.11% rise in commercial revenues. Commercial revenue per passenger rose 14.21% to Ps. 94.57.
- Construction Revenues: Declined 22.12% to Ps. 428.52 million due to lower capital expenditures on concessioned assets. This decline is offset by an equal reduction in construction costs under IFRIC 12 accounting rules.
Expense Dynamics:
- Total operating costs and expenses declined 2.31% YoY, primarily due to the drop in construction costs.
- Excluding construction costs, operating expenses rose 15.96% due to higher service costs (Terminal 3 expansion), technical assistance fees, and concession fees.
- Foreign exchange losses improved significantly to Ps. 29.07 million (vs. Ps. 85.66 million loss in 3Q15) due to a lower net liability position and reduced peso depreciation impact.
Outlook, Risks, and Management Commentary
Management Commentary:
- Management highlights strong growth in commercial revenues per passenger and the successful expansion of retail and food/beverage offerings (e.g., new Starbucks, duty-free, and retail stores).
- Adjusted EBITDA margin (excluding IFRIC 12 construction effects) improved to 71.09% from 70.47% in 3Q15.
- The joint venture in Puerto Rico (Aerostar) contributed a net gain of Ps. 29.14 million in 3Q16, with traffic at SJU airport up 2.27%.
Risks and Contingencies:
- Regulatory Risk: The Mexican Ministry of Communications and Transportation sets maximum rates for regulated revenues, which accounted for 58.68% of total income (excluding construction) in 9M16.
- Currency Risk: The company has significant exposure to the Mexican peso vs. U.S. dollar. While 3Q16 saw a reduced loss, the company holds U.S. dollar-denominated debt (US$215 million for the Cancún subsidiary) and translates Aerostar's financials from USD.
- Forward-Looking Statements: The filing notes that future expectations are subject to risks and actual developments could differ significantly.
Investor Verification Checklist
- Construction Accounting Impact: Verify the impact of IFRIC 12 on reported margins; the filing notes that construction revenues/costs inflate revenue totals without affecting EBITDA, making "Adjusted" metrics critical for comparison.
- Debt Maturity Profile: Confirm the amortization schedule for the US$215 million Cancún subsidiary loans, which mature in 2022 and begin semi-annual amortization in 2018.
- Regulatory Tariff Reviews: Monitor the annual review by the Mexican Ministry of Communications and Transportation, as regulated revenues represent the majority of income.
- Passenger Mix: Analyze the divergence between domestic growth (+10.23%) and international growth (+6.92%) to assess reliance on specific markets like Cancún.
- Currency Hedging: Review the company's specific hedging strategies given the significant foreign exchange losses reported in prior periods and the USD-denominated debt.