Pacific Airport Group (GAP) - 3Q23 Financial Summary
Business Context and Reporting Period
This Form 6-K filing reports the unaudited consolidated results for Grupo Aeroportuario del Pacífico, S.A.B. de C.V. (GAP) for the third quarter ended September 30, 2023 (3Q23). The company operates 12 airports in Mexico's Pacific region and two international airports in Jamaica (Montego Bay and Kingston). Financial figures are presented in Mexican Pesos (Ps.) in accordance with International Financial Reporting Standards (IFRS).
Key Financial Metrics (3Q23)
- Total Revenues: Ps. 7,392.9 million (up 9.5% vs. 3Q22).
- EBITDA: Ps. 4,269.9 million (up 4.5% vs. 3Q22).
- EBITDA Margin (excl. IFRIC-12): 67.5% (down from 70.7% in 3Q22).
- Net Income: Ps. 2,378.9 million (down 10.7% vs. 3Q22).
- Comprehensive Income: Ps. 2,551.4 million (down 4.0% vs. 3Q22).
- Operating Cash Flow: Ps. 4,115.9 million.
- Cash and Cash Equivalents: Ps. 14,454.1 million as of September 30, 2023.
- Passenger Traffic: 16.2 million total passengers (up 10.8% vs. 3Q22).
Material Changes vs. Prior Period
Revenue Growth: Total revenue increased by Ps. 640.9 million. Aeronautical services grew 8.2% and non-aeronautical services grew 14.0%. Revenue from improvements to concession assets (IFRIC-12) increased 9.4%.
Cost Pressures: Total operating costs rose 15.0%. Costs of services increased 20.6%, driven by higher employee costs (23.4% increase due to hiring and labor law changes) and other operating expenses (29.4% increase). Concession taxes rose 27.8%.
Profitability Impact: While operating income increased 4.4%, net income declined 10.7%. This was primarily due to a 139.4% increase in financial expenses (interest and FX losses) and a 19.7% increase in income taxes.
Currency Effects: The Mexican peso appreciated 15.7% against the U.S. dollar in 3Q23. This appreciation reduced the peso value of revenues and costs generated in Jamaica, though underlying USD revenues in Jamaica increased by 24.6%.
Guidance, Outlook, and Risks
Capital Expenditures and Debt: The company drew down two credit lines totaling US$70.0 million in 3Q23. Proceeds were used to acquire 100% of a real estate company at Tijuana airport (US$35.4 million) and for investment commitments at Montego Bay airport (US$30.0 million). Interest expenses increased significantly due to higher debt levels and rising interest rates.
Operational Expansion: Passenger traffic growth was supported by the opening of numerous new domestic routes in July and September 2023, primarily by Viva Aerobus and Volaris.
Risks and Contingencies:
- FX Volatility: Continued appreciation of the peso negatively impacts the peso-denominated reporting of Jamaican operations.
- Interest Rates: Rising global interest rates have increased the cost of debt servicing.
- IFRIC-12 Accounting: A significant portion of revenue and costs relates to "improvements to concession assets" (IFRIC-12), which are non-cash items. Margins excluding these items are lower than reported total margins.
Management Commentary: Management highlighted positive results despite currency headwinds, noting strong passenger recovery and commercial growth. No specific forward-looking financial guidance for the full year was provided in this text.
Investor Verification Checklist
- Verify the impact of the 15.7% peso appreciation on the valuation of Jamaican assets and future revenue projections.
- Confirm the sustainability of EBITDA margins excluding IFRIC-12 non-cash items, which dropped to 67.5%.
- Monitor the trajectory of interest expenses given the new US$70 million debt drawdown and rising rate environment.
- Assess the performance of new domestic routes opened in Q3 to ensure they contribute to long-term traffic growth.
- Review the specific details of the Tijuana real estate acquisition to understand its integration into the airport's commercial strategy.