PAC

Pacific Airport Group (GAP) - Q1 2021 Financial Summary

Business Context and Reporting Period

This Form 6-K filing covers the consolidated unaudited results for Grupo Aeroportuario del Pacífico, S.A.B. de C.V. (GAP) for the first quarter ended March 31, 2021 (1Q21). The company operates 14 airports across Mexico and Jamaica. Results are significantly impacted by the ongoing COVID-19 pandemic, which caused a sharp decline in passenger traffic compared to the prior year. The company continues to implement cost control measures and support programs for airlines and commercial clients.

Key Financial Metrics

Debt and Liquidity: The company maintained a solid financial position with cash increasing by Ps. 3,754.5 million year-over-year. During 1Q21, GAP refinanced US$ 191.0 million in debt due in early 2021. Total liabilities increased by Ps. 4,604.9 million, primarily due to the issuance of Ps. 4,200.0 million in long-term bonds and Ps. 1,995.4 million in bank loans.

Material Changes vs. Prior Period

• Passenger Traffic: Total terminal passengers decreased by 36.8% to 7.4 million. International traffic fell 53.6%, while domestic traffic declined 21.9%. The Montego Bay airport saw the steepest decline at 73.1%.
• Revenue Composition: Aeronautical services revenue dropped 33.6%, and non-aeronautical revenue fell 37.8%. These declines were partially offset by a 12.9% increase in revenues from improvements to concession assets (IFRIC 12), which are non-cash accounting adjustments.
• Cost Management: Total operating costs decreased 9.3%. Concession taxes and technical assistance fees dropped 51.8% and 33.2% respectively, driven by lower revenue bases. However, costs of services decreased only 11.4% due to increased traffic-related expenses.
• Financial Results: The significant drop in comprehensive income (58.4%) was largely driven by a Ps. 1,355.6 million decrease in currency translation gains compared to 1Q20, alongside lower operating income.

Outlook, Risks, and Management Commentary

Outlook: Management states that the recovery of operations depends on the duration of the pandemic and containment measures in Mexico, Jamaica, and the U.S. The company anticipates that U.S. vaccination rates may aid a sooner recovery in international traffic, particularly at tourist destinations. No new route openings occurred in 1Q21.

Risks and Contingencies:

• Pandemic Uncertainty: The company cannot fully estimate the short, medium, or long-term impact of the pandemic on financial results.
• Credit Risk: An allowance for credit losses of Ps. 23.5 million was recognized in operating costs following a risk evaluation of receivables from airlines and commercial clients.
• Asset Impairment: The company reviewed impairment tests for significant long-term assets and concluded that a significant deterioration is not currently expected, though this remains subject to future conditions.

Share Repurchase: The company began repurchasing Series "B" shares on March 1, 2021. As of the report date, 2,439,196 shares were repurchased for a total of Ps. 531.3 million.

Investor Verification Checklist

• Verify the sustainability of the 34.2% increase in cash and cash equivalents given the 49.4% drop in operating cash flow.
• Monitor the impact of the Ps. 23.5 million credit loss allowance on future profitability and airline solvency.
• Assess the trajectory of international passenger recovery, specifically at Montego Bay and Puerto Vallarta, which saw declines exceeding 50%.
• Review the terms of the refinanced US$ 191.0 million debt and the new Ps. 4,200.0 million bond issuance to understand future interest obligations.
• Track the realization of the approved maximum tariff adjustments in Mexico, which management expects to reach by the end of 2021.