Grupo Aeroportuario del Pacifico Announces Results for the First Quarter of 2020
GUADALAJARA, Mexico, April 29, 2020 (GLOBE NEWSWIRE) -- Grupo Aeroportuario del Pacífico, S.A.B. de C.V. (NYSE: PAC; BMV: GAP) (“the Company” or “GAP”) reported its consolidated results for the first quarter ended March 31, 2020. Figures are unaudited and have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).
Events related to the Coronavirus (COVID-19) outbreak:
In December 2019, a novel strain
of COVID-19 was reported to have surfaced in Wuhan, Hubei Province, China.
Between January and February of 2020, this disease spread to other
countries. On March 11, 2020, the World Health Organization (WHO) declared
the COVID-19 outbreak a pandemic, which resulted in the gradual
cancellation of international flights from Canada, the United States and
Europe, and was reflected in the significant decline in passenger traffic
in both Mexico and Jamaica.
As a result of the pandemic, governments around the world have taken
preventative measures in order to mitigate the spread. In terms of the
operation of our airports in Mexico, the government has not issued any
travel restrictions. However, Phase 1 of the pandemic was declared during
the second week of March and Phase 3 was declared during the third week of
April, where the government emphatically recommended that only essential
activity take place and that people should avoid leaving their homes
whenever possible. This has resulted in the cancellation of a large volume
of domestic and international flights. With respect to the operation of the
airports in Jamaica, the government suspended all incoming international
flights, for a period of 14 days beginning on March 25, 2020, except for
cargo and merchandise transport; only commercial flights are permitted to
depart. These measures have been extended until May 30, 2020 in Mexico and
until May 31,2020 in Jamaica.
The abovementioned has considerably reduced air travel demand and availability, resulting in a deceleration of passenger traffic. In turn, this has generated a significantly adverse effect on the Company’s operations and revenue.
Company Actions:
- The
Company has implemented a cost control plan for its service costs,
throughout all 14 airports, running the operation at minimal levels without
lowering passenger service quality, in accordance with the current demand.
Unused operating areas have been closed, such as documentation modules,
passenger revision lines, waiting areas, boarding gates, baggage claim
areas, among others.
- Non-mandatory capital investments will be
delayed and/or cancelled for the time being. The Company is reviewing with
the authorities the deferral of investments that were included in the
Master Development Program and were scheduled to take place this year. The
change in the demand has lowered the growth capacity needs in the airports,
therefore, the investments are expected to decrease.
- Shareholder dividend distributions and
payments, as well as capital reductions, that had taken place in prior
years were postponed as a measure of protecting the Company’s cash flow.
This will be the case until we understand the financial impact this traffic
reduction represents, and we have more clarity as to when the operation
will normalize.
- As a support
measure during this health emergency, the Company will offer discounts for
some of its airport and commercial services to the airlines and tenants.
Additionally, throughout our network of airports, the Company will grant
payment deferrals to some of its clients and tenants in order to help them
preserve liquidity and reinitiate financial activity as fast as possible
upon the elimination of all mobility restrictions.
- In order to protect the health of our employees and the operating capacity of our airports, GAP has implemented certain activities, such as: (i) compliance with health recommendations from the Mexican Ministry of Health regarding the proper disinfection of common areas and aircraft boarding equipment; (ii) implementation of distancing parameters in passenger documentation and boarding areas; (iii) support to the authorities offering them working areas, infrastructure and supplies to conduct passenger revisions; (iv) home office connectivity for all administrative and corporate personnel; and the (v) creation of operating personnel groups so that we may minimize the number of personnel at the airports, while also having backup teams in the event of any emergency with main teams.
Impact of COVID-19 on the Company’s Financial Position:
While the Company is reporting a solid financial position for the first quarter of 2020, it also has the option of using bank credit lines in order to finance working capital needs. Additionally, it has the ability to issue long-term bond certificates (Certificados Bursátiles) to finance capital investments. Cash and Equivalents at March 31, 2020 stand at Ps. 10,973.9 million, and at Ps. 12,211.8 million as of April 23, 2020. Nevertheless, the Company cannot assure the impact that the pandemic as well as local and global economic conditions may have on the availability and conditions of financing and, therefore, there is no assurance as to the Company's ability to access financing nor on the financing terms.
Per 1Q20 results, the Company complies with all bank loan debt covenants: Net Debt/EBITDA 0.73x (>3.0x), Debt Service 3.09x (>1.1x), Total Equity Ps. 22,599.6 million (> Ps. 10,000.0 million).
The Company carried out an analysis to value the risk of its portfolio with the airlines and commercial clients, in terms of liquidity. As such, in 1Q20 GAP recognizes a provision of Ps. 46.0 million in its operating costs as a reserve for doubtful accounts.
In accordance with annual estimates for 2020, the Company expects the recovery of deferred asset tax on the Statement of Financial Position, even though the results are lower than those of 2019.
While the Company expects a negative impact to its operation and its financial results due to the COVID-19 pandemic, it does not foresee a risk to the overall continuity of the business. The Company has carried out a preliminary analysis of the financial results in the short, medium and long term, and has not identified any significant asset deterioration. Nevertheless, the demand trend may decrease more than expected and the pandemic impact could magnify, so the Company will maintain constant analysis and monitoring. As of today, GAP does not expect interruptions to the business and has the ability to continue as a going concern and do not foresight the cancellation of its operations at any of the airports.
The Company is unable to predict with certainty the impact that the COVID-19 outbreak will have for the rest of the year in its business, its clients, suppliers and employees, as well as on international air travel, or to what degree it may impact air travel demand in the regions in which the Company operates. Continuous travel restrictions, as well as general population fears with respect to air travel, could have a materially adverse effect on our business and on our operating results. The Company will continue informing the market regarding relevant updates to our operations, as well as to measures that are being adopted in order to preserve liquidity and the continuity of the business. The global and domestic impact of the pandemic will depend on its duration and its impact on the economy and air traffic.
Summary of Results 1Q20 vs. 1Q19
- The sum of aeronautical
and non-aeronautical services revenues increased by
Ps. 613.0 million, or 17.4%. Total revenues increased by Ps.
1,289.7 million, or 35.1%.
- Cost of services
increased by Ps. 140.9 million, or 23.7%.
- Operating income increased by Ps. 263.5 million, or
12.7%.
- EBITDA increased by Ps. 323.9
million, or 13.0%. EBITDA margin (excluding the effects of IFRIC
12) decreased from 70.8% in 1Q19 to 68.2% in 1Q20.
- Net income and comprehensive income increased by Ps. 1,861.7 million, or 142.8%, mainly due to the currency translation effect, as well as the cash flow reserve. Net income increased by Ps. 410.5 million, or 29.4%.
Passenger Traffic
During 1Q20, total terminal passengers at the Company’s 14 airports decreased by 161.9 thousand passengers, or 1.4%, compared to 1Q19. Over the same period, domestic passenger traffic increased by 676.4 thousand passengers, or 10.9%, while international passenger traffic decreased by 1,193.1 thousand passengers, or 21% in the 12 Mexican airports and Montego Bay.
In the traffic tables below, we have reflected the users of the Cross-Border Xpress (CBX) under the international passenger numbers for the Tijuana airport.
During 1Q20, there were no new route openings.
Domestic Terminal Passengers – 13 airports (in thousands):
| Airport | 1Q19 | 1Q20 | Change | |
| Guadalajara | 2,420.4 | 2,336.5 | (3.5 | %) |
| Tijuana * | 1,361.2 | 1,420.1 | 4.3 | % |
| Los Cabos | 394.7 | 402.7 | 2.0 | % |
| Puerto Vallarta | 351.8 | 367.8 | 4.6 | % |
| Montego Bay | 1.8 | 1.0 | (47.0 | %) |
| Guanajuato | 462.0 | 424.6 | (8.1 | %) |
| Hermosillo | 385.0 | 396.1 | 2.9 | % |
| Mexicali | 266.0 | 277.0 | 4.1 | % |
| Morelia | 110.2 | 125.8 | 14.1 | % |
| La Paz | 210.1 | 213.5 | 1.7 | % |
| Aguascalientes | 142.9 | 137.6 | (3.7 | %) |
| Los Mochis | 83.8 | 86.8 | 3.6 | % |
| Manzanillo | 23.9 | 23.2 | (2.8 | %) |
| Total | 6,213.6 | 6,212.6 | (0.0 | %) |
*CBX
users are classified as international passengers
International Terminal Passengers – 13 airports (in thousands):
| Airport | 1Q19 | 1Q20 | Change | |
| Guadalajara | 988.1 | 957.8 | (3.1 | %) |
| Tijuana * | 658.1 | 684.3 | 4.0 | % |
| Los Cabos | 1,056.2 | 947.1 | (10.3 | %) |
| Puerto Vallarta | 1,257.0 | 1,086.3 | (13.6 | %) |
| Montego Bay | 1,336.1 | 1,132.9 | (15.2 | %) |
| Guanajuato | 171.3 | 148.2 | (13.5 | %) |
| Hermosillo | 17.1 | 18.8 | 9.8 | % |
| Mexicali | 1.4 | 1.2 | (16.1 | %) |
| Morelia | 101.3 | 99.6 | (1.6 | %) |
| La Paz | 3.6 | 3.3 | (7.0 | %) |
| Aguascalientes | 44.5 | 48.4 | 8.8 | % |
| Los Mochis | 1.6 | 1.3 | (23.1 | %) |
| Manzanillo | 37.2 | 28.5 | (23.4 | %) |
| Total | 5,673.6 | 5,157.7 | (9.1 | %) |
*CBX
users are classified as international passengers
Total Terminal Passengers – 13 airports (in thousands):
| Airport | 1Q19 | 1Q20 | Change | |
| Guadalajara | 3,408.5 | 3,294.4 | (3.3 | %) |
| Tijuana * | 2,019.3 | 2,104.4 | 4.2 | % |
| Los Cabos | 1,450.9 | 1,349.8 | (7.0 | %) |
| Puerto Vallarta | 1,608.7 | 1,454.1 | (9.6 | %) |
| Montego Bay | 1,337.9 | 1,133.9 | (15.3 | %) |
| Guanajuato | 633.3 | 572.9 | (9.5 | %) |
| Hermosillo | 402.1 | 414.9 | 3.2 | % |
| Mexicali | 267.4 | 278.2 | 4.0 | % |
| Morelia | 211.5 | 225.4 | 6.6 | % |
| La Paz | 213.6 | 216.9 | 1.5 | % |
| Aguascalientes | 187.5 | 186.0 | (0.8 | %) |
| Los Mochis | 85.4 | 88.0 | 3.1 | % |
| Manzanillo | 61.0 | 51.7 | (15.3 | %) |
| Total | 11,887.2 | 11,370.4 | (4.3 | %) |
*CBX
users are classified as international passengers
CBX Users (in thousands):
| Airport | 1Q19 | 1Q20 | Change | |
| Tijuana | 647.3 | 677.3 | 4.6 | % |
Kingston
Airport (in thousands):
| Passengers | 1Q19 | 1Q20 | Change |
| Domestic | N/A | 1.3 | N/A |
| Internacional | N/A | 353.5 | N/A |
| Total | N/A | 354.8 | N/A |
Total Passengers – 14 airports (in thousands):
| Passengers | 1Q19 | 1Q20 | Change | |
| Domestic | 6,213.6 | 6,213.9 | 0.0 | % |
| Internacional | 5,673.6 | 5,511.2 | (2.9 | %) |
| Total | 11,887.2 | 11,725.2 | (1.4 | %) |
Consolidated Results for the First Quarter of 2020 (in thousands of pesos):
| 1Q19 | 1Q20 | Change | ||||
| Revenues | ||||||
| Aeronautical services | 2,631,325 | 3,123,782 | 18.7 | % | ||
| Non-aeronautical services | 901,324 | 1,021,842 | 13.4 | % | ||
| Improvements to concession assets (IFRIC 12) | 146,487 | 823,215 | 462.0 | % | ||
| Total revenues | 3,679,136 | 4,968,839 | 35.1 | % | ||
| Operating costs | ||||||
| Costs of services: | 595,639 | 736,558 | 23.7 | % | ||
| Employee costs | 194,323 | 247,206 | 27.2 | % | ||
| Maintenance | 112,440 | 114,403 | 1.7 | % | ||
| Safety, security & insurance | 102,131 | 125,326 | 22.7 | % | ||
| Utilities | 72,769 | 91,627 | 25.9 | % | ||
| Other operating expenses | 113,976 | 157,996 | 38.6 | % | ||
| Technical assistance fees | 115,574 | 132,265 | 14.4 | % | ||
| Concession taxes | 325,267 | 443,706 | 36.4 | % | ||
| Depreciation and amortization | 421,601 | 482,057 | 14.3 | % | ||
| Cost of improvements to concession assets (IFRIC 12) | 146,487 | 823,215 | 462.0 | % | ||
| Other income | (3,908 | ) | 9,080 | (332.3 | %) | |
| Total operating costs | 1,600,660 | 2,626,881 | 64.1 | % | ||
| Income from operations | 2,078,476 | 2,341,958 | 12.7 | % | ||
| Financial Result | (82,605 | ) | (15,094 | ) | (81.7 | %) |
| Share of loss of associates | (4 | ) | 86 | 2250.0 | % | |
| Income before income taxes | 1,995,867 | 2,326,950 | 16.6 | % | ||
| Income taxes | (598,319 | ) | (518,887 | ) | (13.3 | %) |
| Net income | 1,397,549 | 1,808,063 | 29.4 | % | ||
| Currency translation effect | (93,951 | ) | 1,417,364 | (1608.6 | %) | |
| Cash flow hedges, net of income tax | - | (60,108 | ) | 100.0 | % | |
| Remeasurements of employee benefit – net income tax | (147 | ) | (147 | ) | 0.2 | % |
| Comprehensive income | 1,303,451 | 3,165,172 | 142.8 | % | ||
| Non-controlling interest | (25,166 | ) | (193,754 | ) | (669.9 | %) |
| Comprehensive income attributable to controlling interest | 1,278,285 | 2,971,419 | 132.5 | % | ||
| 1Q19 | 1Q20 | Change | ||||
| EBITDA | 2,500,078 | 2,824,015 | 13.0 | % | ||
| Comprehensive income | 1,303,451 | 3,165,172 | 142.8 | % | ||
| Comprehensive income per share (pesos) | 2.3234 | 5.6420 | 142.8 | % | ||
| Comprehensive income per ADS (US dollars) | 0.9909 | 2.4062 | 142.8 | % | ||
| Operating income margin | 56.5 | % | 47.1 | % | (16.6 | %) |
| Operating income margin (excluding IFRIC 12) | 58.8 | % | 56.5 | % | (4.0 | %) |
| EBITDA margin | 68.0 | % | 56.8 | % | (16.4 | %) |
| EBITDA margin (excluding IFRIC 12) | 70.8 | % | 68.2 | % | (3.7 | %) |
| Costs of services and improvements / total revenues | 20.2 | % | 31.4 | % | 55.6 | % |
| Cost of services / total revenues (excluding IFRIC 12) | 16.9 | % | 17.8 | % | 5.4 | % |
- Net
income and comprehensive income per share were calculated based on
561,000,000 outstanding shares. U.S. dollar figures presented were
converted from pesos to U.S. dollars at a rate of Ps. 23.4480 per U.S.
dollar (the noon buying rate on March 31, 2020, as published by the U.S.
Federal Reserve Board).
- For purposes of the consolidation of the
Montego Bay airport and the Kingston airport, the average monthly exchange
rate of Ps. 19.8551 per U.S. dollar for the three months ended March 31,
2020 was used.
Revenues (1Q20 vs. 1Q19)
- Aeronautical services revenues increased by Ps. 492.5 million, or 18.7%
- Non-aeronautical services revenues increased by Ps. 120.5 million, or 13.4%
- Revenues from improvements to concession assets increased by Ps. 676.7 million, or 462.0%
- Total revenues increased by Ps. 1,289.7 million, or 35.1%
- Aeronautical services
revenues include:
- Revenues from the Mexican
airports increased by Ps. 334.1 million, or 15.2%, compared to
1Q19, generated mainly by an increase of Ps. 315.4 million or 16.4% in
revenues from higher passenger charges per the higher passenger fees
approved under the 2020-2024 Master Development Program, and higher
inflation for the period. This effect was offset by a 3.0% decrease in
passenger traffic, as well as an increase of revenues from aircraft landing
and aircraft parking charges of Ps. 16.7 million. Inflation applicable to
the passenger charges for 1Q20 rose by 3.8%.
- Revenues from the Montego Bay
airport increased by Ps. 17.6 million, or 4.0%, compared to 1Q19.
This was mainly due to a 3.3% depreciation of the Mexican peso against the
U.S. dollar, from an average exchange rate of Ps. 19.2199 in 1Q19 to an
average exchange rate of Ps. 19.8551 in 1Q20, as well as the increase in
passenger fees as approved under the 2020-2024 Master Development
Program.
- The consolidation
of aeronautical revenues from the Kingston airport
contributed Ps. 140.8 million to revenues.
- Revenues from the Mexican
airports increased by Ps. 334.1 million, or 15.2%, compared to
1Q19, generated mainly by an increase of Ps. 315.4 million or 16.4% in
revenues from higher passenger charges per the higher passenger fees
approved under the 2020-2024 Master Development Program, and higher
inflation for the period. This effect was offset by a 3.0% decrease in
passenger traffic, as well as an increase of revenues from aircraft landing
and aircraft parking charges of Ps. 16.7 million. Inflation applicable to
the passenger charges for 1Q20 rose by 3.8%.
- Non-aeronautical services revenues include:
- The Mexican airports
contributed an increase of Ps. 74.5 million, or 9.9%, compared to 1Q19,
mainly driven by an increase of Ps. 65.6 million in revenues from
businesses operated by third parties. This was mainly due to the increase
in revenues from car rentals, food and beverage operations, commercial
spaces and duty-free stores, which jointly increased by Ps. 60.6
million.
Revenues from businesses operated directly by the Company increased by Ps. 19.4 million, or 34.4%, mainly due to an increase in revenues from VIP lounges and convenience stores, which was offset by a decline in revenues from car parking for Ps. 11.2 million or 13.6% due to local protestors blocking of the car parking in the Guadalajara airport starting in November 2019 and ending in the second week of February 2020. - Revenues from the
Montego Bay airport in 1Q20 decreased by Ps. 6.1 million,
or 3.8% compared to 1Q19, mainly due to the partial closure of commercial
business operations due to the remodeling of the terminal building.
- The consolidation of the Kingston airport contributed Ps. 52.1 million to non-aeronautical revenue.
- The Mexican airports
contributed an increase of Ps. 74.5 million, or 9.9%, compared to 1Q19,
mainly driven by an increase of Ps. 65.6 million in revenues from
businesses operated by third parties. This was mainly due to the increase
in revenues from car rentals, food and beverage operations, commercial
spaces and duty-free stores, which jointly increased by Ps. 60.6
million.
| 1Q19 | 1Q20 | Change | ||
| Businesses operated by third parties: | ||||
| Duty-free operations | 131,050 | 152,027 | 16.0 | % |
| Food and beverage operations | 112,396 | 144,746 | 28.8 | % |
| Retail operations | 91,826 | 106,421 | 15.9 | % |
| Car rentals | 92,173 | 110,376 | 19.7 | % |
| Leasing of space | 62,502 | 55,710 | (10.9 | %) |
| Time shares operations | 52,827 | 52,458 | (0.7 | %) |
| Ground transportation | 37,001 | 38,260 | 3.4 | % |
| Communications and financial services | 21,088 | 31,108 | 47.5 | % |
| Other commercial revenues | 16,255 | 25,516 | 57.0 | % |
| Total | 617,119 | 716,622 | 16.1 | % |
| Businesses operated directly by us: | ||||
| Car parking | 85,584 | 78,105 | (8.7 | %) |
| VIP lounges | 63,612 | 81,286 | 27.8 | % |
| Advertising | 34,927 | 33,934 | (2.8 | %) |
| Convenience stores | 34,115 | 50,270 | 47.4 | % |
| Total | 218,237 | 243,595 | 11.6 | % |
| Recovery of costs | 65,968 | 61,624 | (6.6 | %) |
| Total Non-aeronautical Revenues | 901,324 | 1,021,842 | 13.4 | % |
Figures expressed in thousands of Mexican pesos.
- Revenues from improvements to
concession assets1
Revenues from improvements to concession assets (IFRIC 12) increased by Ps. 676.7 million, or 462.0%, compared to 1Q19, mainly in the airports in Mexico, given that 2020 marks the beginning of the 2020-2024 Master Development Program for Ps. 701.8 million and represented the most significant committed investment amounts to date. This increase was offset by the decline in improvements to concession assets at the Montego Bay airport of Ps. 25.1 million, or 61.1%.
___________________________________
[1] Revenues from improvements to concession assets are recognized
in accordance with International Financial Reporting Interpretation
Committee 12 “Service Concession Arrangements” (IFRIC 12), but this
recognition does not have a cash impact or an impact on the Company’s
operating results. Amounts included as a result of the recognition of IFRIC
12 are related to construction of infrastructure in each quarter to which
the Company has committed in accordance with the Company’s Master
Development Programs in Mexico and Capital Development Program in Jamaica.
All margins and ratios calculated using “Total Revenues” include
revenues from improvements to concession assets (IFRIC 12), and,
consequently, such margins and ratios may not be comparable to other ratios
and margins, such as EBITDA margin, operating margin or other similar
ratios that are calculated based on those results of the Company that do
have a cash impact.
Total operating costs increased by Ps. 1,026.2 million, or 64.1%, compared to 1Q19. Excluding the cost of improvements to the concession assets (IFRIC-12) and costs for the Kingston airport, operating costs increased Ps. 144.6 million, or 9.9%.
Mexican Airports:
- Operating
costs increased by Ps. 825.7 million, or 70.5%, compared
to 1Q19, mainly due to an increase in the cost of improvements to the
concession assets (IFRIC 12) for Ps. 701.8 million, cost of services for
Ps. 48.6 million, technical assistance fees and concession fee of Ps. 36.6
million, or 12.5%, jointly, and depreciation and amortization of Ps. 37.4
million, or 11.5%.
The increase in the cost of services was mainly due to:
- Employee costs increased by Ps. 29.2 million, or 17.9%, compared to 1Q19, mainly due to salary increases that took place in 2Q19, as well as an increase of 6.8% in head count.
- Other operating expenses increased by Ps. 16.5 million, or 16.3%, compared to 1Q19, mainly due to cost of sales in the VIP lounges and convenience stores, professional service fees, and advertising for Ps. 15.1 million, or 13.9%.
- Cost of services increased by Ps. 5.4 million, or 11.0%, due to the expansion in square meters, of the terminal buildings as well as the increase in electricity costs during 2020.
- These increases were offset by a decrease in maintenance expenses of Ps. 7.6 million, or 8.0%, compared to 1Q19.
Montego Bay Airport:
- Operating costs decreased by Ps. 10.1 million, or 2.8%, compared to 1Q19, mainly due to a decrease in improvements to concession assets (IFRIC 12) of Ps. 25.1 million, higher concession fee of Ps. 15.7 million, which were offset by an increase in depreciation and amortization of Ps. 20.7 million, or 21.6%, and cost of services of Ps. 11.5 million. Operating costs in U.S. dollars declined by US$ 1.1 million, however, this figure was offset by the depreciation of the peso versus the dollar of 3.3.%.
Kingston Airport:
- The consolidation of the Kingston airport resulted in an increase in expenses of Ps. 204.9 million in 1Q20, mainly due to the concession fee of Ps. 114.3 million, other operating costs of Ps. 27.9 million, employee costs of Ps. 20.9 million, security and insurance costs of Ps. 16.2 million, utility costs of Ps. 13.1 million, and maintenance expenses of Ps. 10.4 million.
Operating margin for 1Q20 decreased by 940 basis points, from 56.5% in 1Q19 to 47.1% in 1Q20. Excluding the effects of IFRIC 12, operating margin decreased by 230 basis points, from 58.8% in 1Q19 to 56.5% in 1Q20. Operating income increased by Ps. 263.5 million, or 12.7%, compared to 1Q19.
EBITDA margin decreased by 1,120 basis points from 68.0% in 1Q19 to 56.8% in 1Q20. Excluding the effects of IFRIC 12, EBITDA margin decreased by 260 basis points from 70.8% in 1Q19 to 68.2% in 1Q20. The nominal value of EBITDA increased by Ps. 323.9 million, or 13.0%, compared to 1Q19.
The net financial result
decreased by Ps. 67.5 million, from a net expense of Ps.
82.6 million in 1Q19 to a net expense of Ps. 15.1 million in 1Q20. This
decrease was mainly the result of:
- Foreign exchange rate fluctuations, which
went from a Ps. 69.3 million gain in 1Q19 to Ps. 236.4 million in 1Q20,
mainly due to an 1.5% appreciation of the Mexican peso against the U.S.
dollar in 1Q19, compared to an depreciation of 24.8% at the end of 1Q20,
thereby generating an increase in the foreign exchange gain of Ps.
167.1 million. The currency translation effect represented a
higher gain of Ps. 1,511.3 million, compared to 1Q19 and is reflected in
the consolidated income.
- An increase in interest
expenses of Ps. 44.0 million compared to 1Q19, mainly due to
higher debt derived from the issuance of long-term bond certificates
(Certificados Bursátiles) and interest paid for hedging
instruments.
- Interest income declined by Ps. 55.6 million, or 37.1%, mainly due to the decline in the fair value of the hedging instruments and was offset by an increase in interest.
Comprehensive income increased by Ps. 1,861.7 million, or 142.8%, compared to 1Q19.
This increase was mainly the result of an exchange rate loss resulting from the foreign exchange conversion effects of Ps. 1,511.3 million. Net income increased by Ps. 410.5 million, or 29.4% in 1Q20.
Income taxes decreased by Ps. 79.4 million, or 13.3%, in 1Q20. This was a result of a higher incurred tax of Ps. 189.8 million, due to higher accumulated inflation, which went from 0.4% in 1Q19 to an inflation of 0.9% in 1Q20. This was offset by an increase in taxes incurred of Ps. 110.4 million.
Statement of Financial Position
Total assets as of March 31, 2020 increased by Ps. 3,576.4 million compared to March 31, 2019, primarily due to the following items: (i) improvements to concession assets of Ps. 1,714.6 million; (ii) accounts receivable for Ps. 600.4 million; (iii) an increase in deferred taxes of Ps. 391.7 million; (iv) airport concessions of Ps. 328.2 million; and (v) cash and equivalents of Ps. 317.3 million, among others.
Total liabilities as of March 31, 2020 increased by Ps. 2,817.4 million compared to the same period of 2019. This increase was primarily due to the following items: (i) bank loans of Ps. 1,070.0 million due to the 24.8% depreciation of the dollar in 1Q20; (ii) debt of Ps. 800.0 million; (iii) derivative financial instruments of Ps. 385.0 million; (iv) concession fees of Ps. 159.4 million; and (v) liabilities from deferred taxes of Ps. 135.1 million.
Recent Events
- On February 13, 2020 the
Company issued 30 million long-term bond certificates (Certificados
Bursátiles) in Mexico, at a nominal value of Ps. 100 each, for a
total value of Ps. 3.0 billion. These bond certificates are secured bonds
payable upon maturity and correspond to the “GAP 20” issuance, these
bond certificates are at a variable rate of TIIE-28 plus 17 basis points,
maturing on February 6, 2025. The amounts from this issuance will be
allocated towards the payment of the bond certificates under the ticker
symbol “GAP15” and towards financing capital investments in Mexico.
- On February 14, 2020, the Company made the maturity payment of
the “GAP15” issuance, equivalent to 22 million bond certificates for a
value of Ps. 2.2 billion.
- In April, the Company utilized a credit line from Scotiabank for Ps. 1.0 billion, at a 15-month rate of TIIE-28 plus 100 basis points and capital payment upon maturity and a structuring fee of 40 basis points. The proceeds will be used for corporate purposes.
Company Description
Grupo Aeroportuario del Pacífico, S.A.B. de C.V. (GAP) operates 12 airports throughout Mexico’s Pacific region, including the major cities of Guadalajara and Tijuana, the four tourist destinations of Puerto Vallarta, Los Cabos, La Paz and Manzanillo, and six other mid-sized cities: Hermosillo, Guanajuato, Morelia, Aguascalientes, Mexicali and Los Mochis. In February 2006, GAP’s shares were listed on the New York Stock Exchange under the ticker symbol “PAC” and on the Mexican Stock Exchange under the ticker symbol “GAP”. In April 2015, GAP acquired 100% of Desarrollo de Concesiones Aeroportuarias, S.L., which owns a majority stake in MBJ Airports Limited, a company operating Sangster International Airport in Montego Bay, Jamaica. In October 2018, GAP entered into a concession agreement for the operation of the Norman Manley International Airport in Kingston, Jamaica and took control of the operation in October 2019.
| This press release contains references to EBITDA, a
financial performance measure not recognized under IFRS and which does not
purport to be an alternative to IFRS measures of operating performance or
liquidity. We caution investors not to place undue reliance on non-GAAP
financial measures such as EBITDA, as these have limitations as analytical
tools and should be considered as a supplement to, not a substitute for,
the corresponding measures calculated in accordance with IFRS. This press release may contain forward-looking statements. These statements are statements that are not historical facts, and are based on management’s current view and estimates of future economic circumstances, industry conditions, company performance and financial results. The words “anticipates”, “believes”, “estimates”, “expects”, “plans” and similar expressions, as they relate to the company, are intended to identify forward-looking statements. Statements regarding the declaration or payment of dividends, the implementation of principal operating and financing strategies and capital expenditure plans, the direction of future operations and the factors or trends affecting financial condition, liquidity or results of operations are examples of forward-looking statements. Such statements reflect the current views of management and are subject to a number of risks and uncertainties. There is no guarantee that the expected events, trends or results will actually occur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations. |
In accordance with Section 806
of the Sarbanes-Oxley Act of 2002 and article 42 of the “Ley del Mercado
de Valores”, GAP has implemented a “whistleblower”
program, which allows complainants to anonymously and confidentially report
suspected activities that may involve criminal conduct or violations. The
telephone number in Mexico, facilitated by a third party that is in charge
of collecting these complaints, is 01 800 563 00 47. The web site is www.lineadedenuncia.com/gap.
GAP’s Audit Committee will be notified of all complaints for immediate
investigation.
Exhibit A:
Operating results by airport (in thousands of
pesos):
| Airport | 1Q19 | 1Q20 | Change | |
| Guadalajara | ||||
| Aeronautical services | 691,981 | 805,407 | 16.4 | % |
| Non-aeronautical services | 219,039 | 219,189 | 0.1 | % |
| Improvements to concession assets (IFRIC 12) | 10,394 | 258,940 | 2391.2 | % |
| Total Revenues | 921,413 | 1,283,535 | 39.3 | % |
| Operating income | 590,200 | 679,135 | 15.1 | % |
| EBITDA | 674,804 | 770,159 | 14.1 | % |
| Tijuana | ||||
| Aeronautical services | 358,233 | 380,298 | 6.2 | % |
| Non-aeronautical services | 91,721 | 117,202 | 27.8 | % |
| Improvements to concession assets (IFRIC 12) | 5,586 | 143,260 | 2464.8 | % |
| Total Revenues | 455,540 | 640,760 | 40.7 | % |
| Operating income | 281,552 | 304,215 | 8.0 | % |
| EBITDA | 331,844 | 366,375 | 10.4 | % |
| Los Cabos | ||||
| Aeronautical services | 354,331 | 430,401 | 21.5 | % |
| Non-aeronautical services | 194,609 | 215,532 | 10.8 | % |
| Improvements to concession assets (IFRIC 12) | 61,775 | 162,350 | 162.8 | % |
| Total Revenues | 610,715 | 808,283 | 32.4 | % |
| Operating income | 377,509 | 451,222 | 19.5 | % |
| EBITDA | 433,950 | 516,548 | 19.0 | % |
| Puerto Vallarta | ||||
| Aeronautical services | 381,185 | 454,549 | 19.2 | % |
| Non-aeronautical services | 129,102 | 141,526 | 9.6 | % |
| Improvements to concession assets (IFRIC 12) | 2,972 | 113,707 | 3725.5 | % |
| Total Revenues | 513,259 | 709,782 | 38.3 | % |
| Operating income | 365,248 | 437,021 | 19.7 | % |
| EBITDA | 403,735 | 477,683 | 18.3 | % |
| Montego Bay | ||||
| Aeronautical services | 438,927 | 456,561 | 4.0 | % |
| Non-aeronautical services | 151,788 | 145,653 | (4.0 | %) |
| Improvements to concession assets (IFRIC 12) | 41,050 | 15,987 | (61.1 | %) |
| Total Revenues | 631,765 | 618,202 | (2.1 | %) |
| Operating income | 208,032 | 203,512 | (2.2 | %) |
| EBITDA | 303,906 | 320,116 | 5.3 | % |
Exhibit A: Operating results by airport
(in thousands of pesos): (continued)
| Airport | 1Q19 | 1Q20 | Change | |
| Guanajuato | ||||
| Aeronautical services | 131,424 | 141,747 | 7.9 | % |
| Non-aeronautical services | 39,221 | 46,977 | 19.8 | % |
| Improvements to concession assets (IFRIC 12) | 817 | 32,469 | 3875.8 | % |
| Total Revenues | 171,462 | 221,193 | 29.0 | % |
| Operating income | 113,807 | 122,887 | 8.0 | % |
| EBITDA | 131,011 | 140,270 | 7.1 | % |
| Hermosillo | ||||
| Aeronautical services | 73,480 | 82,969 | 12.9 | % |
| Non-aeronautical services | 21,335 | 24,291 | 13.9 | % |
| Improvements to concession assets (IFRIC 12) | 832 | 4,347 | 422.5 | % |
| Total Revenues | 95,647 | 111,607 | 16.7 | % |
| Operating income | 37,295 | 47,684 | 27.9 | % |
| EBITDA | 56,267 | 66,701 | 18.5 | % |
| Others (1) | ||||
| Aeronautical services | 201,765 | 371,849 | 84.3 | % |
| Non-aeronautical services | 54,510 | 111,471 | 104.5 | % |
| Improvements to concession assets (IFRIC 12) | 23,061 | 92,155 | 299.6 | % |
| Total Revenues | 279,335 | 575,476 | 106.0 | % |
| Operating income | 73,361 | 80,573 | 9.8 | % |
| EBITDA | 121,706 | 139,389 | 14.5 | % |
| Total | ||||
| Aeronautical services | 2,631,325 | 3,123,782 | 18.7 | % |
| Non-aeronautical services | 901,324 | 1,021,842 | 13.4 | % |
| Improvements to concession assets (IFRIC 12) | 146,487 | 823,215 | 462.0 | % |
| Total Revenues | 3,679,135 | 4,968,839 | 35.1 | % |
| Operating income | 2,047,004 | 2,326,250 | 13.6 | % |
| EBITDA | 2,457,221 | 2,797,241 | 13.8 | % |
(1) Others include the operating results of the Aguascalientes, La Paz, Los Mochis, Manzanillo, Mexicali, Morelia and Kingston airports.
Exhibit B: Consolidated statement of
financial position as of March 31 (in thousands of
pesos):
| 2019 | 2020 | Change | % | |||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | 10,656,588 | 10,973,890 | 317,302 | 3.0 | % | |||
| Trade accounts receivable - net | 1,238,048 | 1,838,539 | 600,491 | 48.5 | % | |||
| Other current assets | 341,261 | 482,747 | 141,486 | 41.5 | % | |||
| Total current assets | 12,235,897 | 13,295,176 | 1,059,279 | 8.7 | % | |||
| Advanced payments to suppliers | 197,944 | 396,717 | 198,773 | 100.4 | % | |||
| Machinery, equipment and improvements to leased buildings - net | 1,889,346 | 1,923,125 | 33,779 | 1.8 | % | |||
| Improvements to concession assets - net | 11,091,576 | 12,806,135 | 1,714,559 | 15.5 | % | |||
| Airport concessions - net | 11,241,883 | 11,570,119 | 328,236 | 2.9 | % | |||
| Rights to use airport facilities - net | 911,948 | 855,249 | (56,699 | ) | (6.2 | %) | ||
| Deferred income taxes | 5,396,291 | 5,788,002 | 391,711 | 7.3 | % | |||
| Other non-current assets | 785,267 | 692,048 | (93,220 | ) | (11.9 | %) | ||
| Total assets | 43,750,152 | 47,326,570 | 3,576,418 | 8.2 | % | |||
| Liabilities | ||||||||
| Current liabilities | 2,148,750 | 2,522,435 | 373,684 | 17.4 | % | |||
| Long-term liabilities | 18,525,799 | 20,969,520 | 2,443,721 | 13.2 | % | |||
| Total liabilities | 20,674,550 | 23,491,955 | 2,817,405 | 13.6 | % | |||
| Stockholders' Equity | ||||||||
| Common stock | 7,777,576 | 6,185,082 | (1,592,494 | ) | (20.5 | %) | ||
| Legal reserve | 1,345,709 | 1,592,551 | 246,842 | 18.3 | % | |||
| Net income | 1,362,747 | 1,776,946 | 414,199 | 30.4 | % | |||
| Retained earnings | 9,552,070 | 9,940,034 | 387,964 | 4.1 | % | |||
| Reserve for share repurchase | 2,983,374 | 3,283,374 | 300,000 | 10.1 | % | |||
| Repurchased shares | (1,733,374 | ) | (1,733,374 | ) | - | 0.0 | % | |
| Foreign currency translation reserve | 691,305 | 1,780,720 | 1,089,415 | 157.6 | % | |||
| Remeasurements of employee benefit – Net | 7,864 | 6,459 | (1,405 | ) | (17.9 | %) | ||
| Cash flow hedges- Net | - | (232,202 | ) | (232,202 | ) | 100.0 | % | |
| Total controlling interest | 21,987,271 | 22,599,590 | 612,319 | 2.8 | % | |||
| Non-controlling interest | 1,088,330 | 1,235,024 | 146,694 | 13.5 | % | |||
| Total stockholder´s equity | 23,075,602 | 23,834,614 | 759,013 | 3.3 | % | |||
| Total liabilities and stockholders' equity | 43,750,152 | 47,326,570 | 3,576,418 | 8.2 | % | |||
The non-controlling interest corresponds to the 25.5% stake held in the Montego Bay airport by Vantage Airport Group Limited (“Vantage”).
Exhibit C: Consolidated statement of cash
flows (in thousands of pesos):
| 1Q19 | 1Q20 | Change | ||||
| Cash flows from operating activities: | ||||||
| Consolidated net income | 1,397,549 | 1,808,063 | 29.4 | % | ||
| Postemployment benefit costs | 4,858 | 4,618 | (4.9 | %) | ||
| Allowance expected credit loss | (19,915 | ) | 45,967 | (330.8 | %) | |
| Depreciation and amortization | 421,601 | 482,057 | 14.3 | % | ||
| Loss on sale of machinery, equipment and improvements to leased assets | 889 | (3,052 | ) | (443.3 | %) | |
| Interest expense | 236,347 | 314,181 | 32.9 | % | ||
| Share of (loss) profit of associate | 4 | (86 | ) | (2250.0 | %) | |
| Provisions | 1,620 | (2,230 | ) | (237.7 | %) | |
| Income tax expense | 598,319 | 518,887 | (13.3 | %) | ||
| Unrealized exchange gain (loss) | (51,288 | ) | 764,683 | (1591.0 | %) | |
| Net (gain) loss on derivative financial instruments | 10,695 | 28,442 | 165.9 | % | ||
| 2,600,678 | 3,961,530 | 52.3 | % | |||
| Changes in working capital: | ||||||
| (Increase) decrease in | ||||||
| Trade accounts receivable | 173,042 | (329,389 | ) | (290.4 | %) | |
| Recoverable tax on assets and other assets | (37,339 | ) | 159,593 | (527.4 | %) | |
| Increase (decrease) in | ||||||
| Concession taxes payable | 59,660 | 35,282 | (40.9 | %) | ||
| Accounts payable | (4,144 | ) | 222,349 | (5465.6 | %) | |
| Cash generated by operating activities | 2,791,897 | 4,049,365 | 45.0 | % | ||
| Income taxes paid | (523,398 | ) | (476,789 | ) | (8.9 | %) |
| Net cash flows provided by operating activities | 2,268,499 | 3,572,576 | 57.5 | % | ||
| Cash flows from investing activities: | ||||||
| Machinery, equipment and improvements to concession assets | (448,891 | ) | (638,038 | ) | 42.1 | % |
| Cash flows from sales of machinery and equipment | 375 | 165 | (56.0 | %) | ||
| Other investment activities | 1,592 | (14,384 | ) | (1003.5 | %) | |
| Net cash used by investment activities | (446,924 | ) | (652,257 | ) | 45.9 | % |
| Cash flows from financing activities: | ||||||
| Debt securities | 3,000,000 | 3,000,000 | 0.0 | % | ||
| Payment from Debt securities | - | (2,200,000 | ) | 100.0 | % | |
| Interest paid | (297,286 | ) | (351,298 | ) | 18.2 | % |
| Interest paid on lease | (1,317 | ) | (717 | ) | (45.6 | %) |
| Payments of obligations for leasing | (4,907 | ) | (3,652 | ) | (25.6 | %) |
| Net cash flows used in financing activities | 2,696,490 | 444,333 | (83.5 | %) | ||
| Effects of exchange rate changes on cash held | (12,934 | ) | 109,045 | (943.1 | %) | |
| Net increase in cash and cash equivalents | 4,505,131 | 3,473,697 | (22.9 | %) | ||
| Cash and cash equivalents at beginning of year | 6,151,457 | 7,500,193 | 21.9 | % | ||
| Cash and cash equivalents at the end of year | 10,656,588 | 10,973,890 | 3.0 | % | ||
Exhibit D: Consolidated statements of profit
or loss and other comprehensive income (in thousands of
pesos):
| 1Q19 | 1Q20 | Change | ||||
| Revenues | ||||||
| Aeronautical services | 2,631,325 | 3,123,782 | 18.7 | % | ||
| Non-aeronautical services | 901,324 | 1,021,842 | 13.4 | % | ||
| Improvements to concession assets (IFRIC 12) | 146,487 | 823,215 | 462.0 | % | ||
| Total revenues | 3,679,136 | 4,968,839 | 35.1 | % | ||
| Operating costs | ||||||
| Costs of services: | 595,639 | 736,558 | 23.7 | % | ||
| Employee costs | 194,323 | 247,206 | 27.2 | % | ||
| Maintenance | 112,440 | 114,403 | 1.7 | % | ||
| Safety, security & insurance | 102,131 | 125,326 | 22.7 | % | ||
| Utilities | 72,769 | 91,627 | 25.9 | % | ||
| Other operating expenses | 113,976 | 157,996 | 38.6 | % | ||
| Technical assistance fees | 115,574 | 132,265 | 14.4 | % | ||
| Concession taxes | 325,267 | 443,706 | 36.4 | % | ||
| Depreciation and amortization | 421,601 | 482,057 | 14.3 | % | ||
| Cost of improvements to concession assets (IFRIC 12) | 146,487 | 823,215 | 462.0 | % | ||
| Other income | (3,908 | ) | 9,080 | (332.3 | %) | |
| Total operating costs | 1,600,660 | 2,626,881 | 64.1 | % | ||
| Income from operations | 2,078,476 | 2,341,958 | 12.7 | % | ||
| Financial Result | (82,605 | ) | (15,094 | ) | (81.7 | %) |
| Share of loss of associates | (4 | ) | 86 | 2250.0 | % | |
| Income before income taxes | 1,995,867 | 2,326,950 | 16.6 | % | ||
| Income taxes | (598,319 | ) | (518,887 | ) | (13.3 | %) |
| Net income | 1,397,549 | 1,808,063 | 29.4 | % | ||
| Currency translation effect | (93,951 | ) | 1,417,364 | (1608.6 | %) | |
| Cash flow hedges, net of income tax | - | (60,108 | ) | 100.0 | % | |
| Remeasurements of employee benefit – net income tax | (147 | ) | (147 | ) | 0.2 | % |
| Comprehensive income | 1,303,451 | 3,165,172 | 142.8 | % | ||
| Non-controlling interest | (25,166 | ) | (193,754 | ) | (669.9 | %) |
| Comprehensive income attributable to controlling interest | 1,278,285 | 2,971,419 | 132.5 | % | ||
The
non-controlling interest corresponds to the 25.5% stake held in the Montego
Bay airport by Vantage Airport Group Limited (“Vantage”).
Exhibit E: Consolidated stockholders’ equity
(in thousands of pesos):
| Common Stock | Legal Reseve | Reserve for Share Repurchase | Repurchased Shares | Retained Earnings | Other comprehensive income | Total controlling interest | Non-controlling interest | Total Stockholders' Equity | ||||||
| Balance as of January 1, 2019 | 7,777,576 | 1,345,709 | 2,983,374 | (1,733,374 | ) | 9,552,070 | 783,628 | 20,708,986 | 1,063,164 | 21,772,150 | ||||
| Comprehensive income: | ||||||||||||||
| Net income | - | - | - | - | 1,362,747 | - | 1,362,747 | 34,803 | 1,397,550 | |||||
| Foreign currency translation reserve | - | - | - | - | - | (84,315 | ) | (84,315 | ) | (9,636 | ) | (93,951 | ) | |
| Remeasurements of employee benefit – Net | - | - | - | - | - | (147 | ) | (147 | ) | - | (147 | ) | ||
| Balance as of March 31, 2019 | 7,777,576 | 1,345,709 | 2,983,374 | (1,733,374 | ) | 10,914,817 | 699,165 | 21,987,271 | 1,088,330 | 23,075,602 | ||||
| Balance as of January 1, 2020 | 6,185,082 | 1,592,551 | 3,283,374 | (1,733,374 | ) | 9,940,035 | 360,504 | 19,628,172 | 1,041,271 | 20,669,443 | ||||
| Comprehensive income: | ||||||||||||||
| Net income | - | - | - | - | 1,776,946 | - | 1,776,946 | 31,117 | 1,808,063 | |||||
| Foreign currency translation reserve | - | - | - | - | - | 1,254,727 | 1,254,727 | 162,637 | 1,417,364 | |||||
| Remeasurements of employee benefit – Net | - | - | - | - | - | (147 | ) | (147 | ) | - | (147 | ) | ||
| Reserve for cash flow hedges – Net of income tax | - | - | - | - | - | (60,108 | ) | (60,108 | ) | - | (60,108 | ) | ||
| Balance as of March 31, 2020 | 6,185,082 | 1,592,551 | 3,283,374 | (1,733,374 | ) | 11,716,980 | 1,554,977 | 22,599,590 | 1,235,024 | 23,834,614 | ||||
For
presentation purposes, the 25.5% stake in Desarrollo de Concesiones
Aeroportuarias, S.L. (“DCA”) held by Vantage appears in the
Stockholders’ Equity of the Company as a non-controlling interest.
As a part of the adoption of IFRS, the effects of inflation on common stock recognized pursuant to Mexican Financial Reporting Standards (MFRS) through March 31, 2007 were reclassified as retained earnings because accumulated inflation recognized under MFRS is not considered hyperinflationary according to IFRS. For Mexican legal and tax purposes, Grupo Aeroportuario del Pacífico, S.A.B. de C.V., as an individual entity, will continue preparing separate financial information under MFRS. Therefore, for any transaction between the Company and its shareholders related to stockholders’ equity, the Company must take into consideration the accounting balances prepared under MFRS as an individual entity and determine the tax impact under tax laws applicable in Mexico, which requires the use of MFRS. For purposes of reporting to stock exchanges, the consolidated financial statements will continue being prepared in accordance with IFRS, as issued by the IASB.
Exhibit F: Other operating data:
| 1Q19 | 1Q20 | Change | ||
| Total passengers | 11,887.1 | 11,725.2 | (1.4 | %) |
| Total cargo volume (in WLUs) | 540.0 | 553.0 | 2.4 | % |
| Total WLUs | 12,426.9 | 12,278.2 | (1.2 | %) |
| Aeronautical & non aeronautical services per passenger (pesos) | 297.2 | 353.6 | 19.0 | % |
| Aeronautical services per WLU (pesos) | 211.7 | 254.4 | 20.2 | % |
| Non aeronautical services per passenger (pesos) | 75.8 | 87.1 | 14.9 | % |
| Cost of services per WLU (pesos) | 47.9 | 60.0 | 25.2 | % |
WLU = Workload units
represent passenger traffic plus cargo units (1 cargo unit = 100 kilograms
of cargo).
