ASUR Reports 4Q23 Financial Results

Rhea-AI Summary

Grupo Aeroportuario del Sureste, S.A.B. de C.V. (ASR) reported a 1.1% YoY increase in total passenger traffic for 4Q23, with revenue declining by 5.5%. The company's EBITDA dropped by 5.8%, and adjusted EBITDA margin decreased to 67.7% from 75.3% in 4Q22. Despite revenue declines, excluding construction revenue, revenue increased by 4.8% compared to 4Q22. Cash and equivalents stood at Ps.15,691.8 million at year-end.

Positive

• 1.1% YoY increase in total passenger traffic for 4Q23.
• Revenue declined by 5.5% year-over-year to Ps.6,876.9 million.
• Consolidated EBITDA declined by 5.8% YoY to Ps.4,171.4 million.
• Adjusted EBITDA margin decreased to 67.7% from 75.3% in 4Q22.
• Excluding construction revenue, revenue increased by 4.8% compared to 4Q22.
• Cash and equivalents at year-end amounted to Ps.15,691.8 million.

Negative

• Negative revenue trend with a 5.5% decline.
• Decrease in EBITDA by 5.8% year-over-year.
• Adjusted EBITDA margin dropped from 75.3% to 67.7%.
• Net Debt to EBITDA LTM ratio negative at -0.2x.

Insights

Market Research Analyst

The reported 1.1% year-over-year increase in total passenger traffic for Grupo Aeroportuario del Sureste (ASUR) in 4Q23 is a modest indicator of recovery in the aviation sector. This metric is crucial as it directly correlates with revenue potential from both aeronautical and non-aeronautical sources. The growth in Mexico and Puerto Rico, with a particularly strong 12.5% increase in Puerto Rico, suggests a rebound in tourism and business travel in these regions. Conversely, the 12.9% decline in Colombia highlights regional disparities, likely attributable to specific market dynamics such as the suspension of operations by local airlines.

Furthermore, the 5.5% decline in revenue juxtaposed with an increase in passenger traffic indicates a possible yield dilution or a change in revenue composition. This could suggest that despite more passengers, each passenger may be generating less revenue, which could be due to a variety of factors such as changes in service offerings, pricing strategies, or a shift in passenger demographics.

The reported 19.1% increase in cash and cash equivalents provides the company with a robust liquidity position to navigate short-term uncertainties or invest in capital expenditures. However, the significant 52% reduction in Capex could imply a strategic decision to conserve cash or a completion of a major investment cycle, which would be worth monitoring for future implications on growth and service enhancements.

Financial Analyst

The EBITDA decline of 5.8% year-over-year, despite a slight increase in passenger traffic, raises concerns about cost management and profitability. The Adjusted EBITDA margin decline from 75.3% in 4Q22 to 67.7% in 4Q23 suggests that the company's operating efficiency may have decreased. It is important to consider whether this margin contraction is due to temporary factors or indicative of a longer-term trend that could affect profitability.

Additionally, the negative Net Debt to EBITDA LTM ratio of -0.2x is an unusual but positive financial position, reflecting that the company has more cash on hand than debt. This could provide financial flexibility, but it also raises questions about the company's capital allocation strategy and whether it is effectively deploying its resources to generate returns.

An examination of the commercial revenue per passenger increase of 6.6% is a positive sign, particularly in the context of the total revenue decline. This suggests that the company's commercial activities, such as retail and parking, are performing well and could be a strategic focus area to offset aeronautical revenue pressures.

Economist

The reported financials of ASUR provide a snapshot of the regional economic activity and the health of the aviation sector in Latin America. The increase in passenger traffic in Mexico and Puerto Rico can be seen as a positive economic indicator, suggesting increased consumer confidence and spending power. In contrast, the decline in Colombia may reflect economic headwinds or market-specific challenges.

The exchange rates used for converting financial figures could also have an impact on the reported revenue and earnings in Mexican pesos. Currency fluctuations can significantly affect multinational companies like ASUR and these effects should be considered when evaluating the company's financial performance.

Finally, the discrepancy between the growth in passenger numbers and the decline in revenue might also be reflective of broader economic trends, such as pricing pressures in the aviation industry or shifts in consumer behavior post-pandemic. Understanding these trends is essential for forecasting the company's future performance and the overall economic outlook of the regions in which it operates.

Total passenger traffic in 4Q23 increased 1.1% YoY

MEXICO CITY, Feb. 26, 2024 /PRNewswire/ -- Grupo Aeroportuario del Sureste, S.A.B. de C.V. (NYSE: ASR; BMV: ASUR) (ASUR), a leading international airport group with operations in Mexico, the U.S., and Colombia, today announced results for the three- and twelve-month month periods ended December 31, 2023.

4Q23 Highlights¹

• Total passenger traffic increased 1.1% year-over-year. By country of operations, 4Q23 passenger traffic showed the following YoY variations:
  • Mexico: increased by 4.1%, reflecting increases of 3.4% in domestic traffic and 4.8% in international traffic.
  • Puerto Rico (Aerostar): increased by 12.5%, resulting from increases of 10.7% and 31.0% in domestic and international traffic, respectively.
  • Colombia (Airplan): decreased 12.9%, reflecting a 16.2% decrease in domestic traffic mainly driven by the suspension of operations of Viva Air and Ultra Air in 1Q23 and a 2.3% increase in international traffic.
• Revenues declined 5.5% year-over-year to Ps.6,876.9 million. Excluding construction revenue, revenue increased 4.8% compared to 4Q22.
• Consolidated commercial revenue per passenger at Ps.119.0 million.
• Consolidated EBITDA declined 5.8% year-over-year to Ps.4,171.4 million.
• Adjusted EBITDA margin (excluding the effect of IFRIC 12) at 67.7% from 75.3% in 4Q22.
• Excluding other non-recurring income in 4Q22, EBITDA increased 1.1% YoY and Adjusted EBITDA margin declined 2.5 percentage points versus the 7.6 percentage point reported decrease.
• Cash and equivalents at year-end of Ps.15,691.8 million with Net Debt to EBITDA LTM ratio negative 0.2x.

Table 1: Financial & Operational Highlights 1
	Fourth Quarter		% Chg
	2022	2023
Financial Highlights
Total Revenue	7,273,564	6,876,941	(5.5)
Mexico	5,503,745	5,113,019	(7.1)
San Juan	1,094,690	1,065,015	(2.7)
Colombia	675,129	698,907	3.5
Commercial Revenues per PAX	111.6	119.0	6.6
Mexico	136.7	142.1	4.0
San Juan	146.5	133.7	(8.8)
Colombia	34.9	44.0	26.1
EBITDA	4,427,089	4,171,453	(5.8)
Net Income	2,749,751	2,617,143	(4.8)
Majority Net Income	2,561,220	2,537,108	(0.9)
Earnings per Share (in pesos)	8.5374	8.4570	(0.9)
Earnings per ADS (in US$)	5.0460	4.9985	(0.9)
Capex	1,474,864	707,723	(52.0)
Cash & Cash Equivalents	13,174,991	15,691,846	19.1
Net Debt	2,029,770	(3,467,076)	n/a
Net Debt/ LTM EBITDA	0.1	(0.2)	n/a
Operational Highlights
Passenger Traffic
Mexico	10,552,042	10,986,641	4.1
San Juan	2,595,997	2,920,579	12.5
Colombia	4,457,929	3,884,480	(12.9)

1 Unless otherwise stated, all financial figures discussed in this press release are unaudited, prepared in accordance with International Financial Reporting Standards (IFRS), and represent comparisons between the three- and twelve-month periods ended December 31, 2023, and the equivalent three- and twelve-month periods ended December 31, 2022. All figures in this report are expressed in Mexican pesos, unless otherwise noted. Tables state figures in thousands of Mexican pesos, unless otherwise noted. Passenger figures for Mexico and Colombia exclude transit and general aviation passengers, unless otherwise noted. Commercial revenues include revenues from non-permanent ground transportation and parking lots. All U.S. dollar figures are calculated at the exchange rate of US$1.00 = Mexican Ps. 16.9190 (source: Diario Oficial de la Federación de México), while Colombian peso figures are calculated at the exchange rate of COP.227.9200 = Mexican Ps.1.00 (source: Investing). Definitions for EBITDA, Adjusted EBITDA Margin, Majority Net Income can be found on page 18 of this report.

4Q23 Earnings Call

Date & Time: Tuesday, February 27, 2024, at 10:00 AM US ET; 9:00 AM Mexico City time

Dial-in: 1-877-407-4018 (Toll-Free) and 1-201-689-8471 (International)

Access Code: 13744137

Replay: Tuesday, February 27, 2024, at 2:00 PM US ET, ending at 11:59 PM US ET on Tuesday, March 5, 2024. Dial-in: 1-844-512-2921 (Toll-Free); 1-412-317-6671 (International). Access Code: 13744137

For a full version of ASUR's Fourth Quarter 2023 Earnings Release, please visit: https://www.asur.com.mx/informacion-financiera-page-0

Definitions

Concession Services Agreements (IFRIC 12 interpretation). In Mexico and Puerto Rico, ASUR is required by IFRIC 12 to include in its income statement an income line, "Construction Revenues," reflecting the revenue from construction or improvements to concessioned assets made during the relevant period. The same amount is recognized under the expense line "Construction Costs" because ASUR hires third parties to provide construction services. Because equal amounts of Construction Revenues and Construction Costs have been included in ASUR's income statement as a result of the application of IFRIC 12, the amount of Construction Revenues does not have an impact on EBITDA, but it does have an impact on EBITDA Margin. In Colombia, "Construction Revenues" include the recognition of the revenue to which the concessionaire is entitled for carrying out the infrastructure works in the development of the concession, while "Construction Costs" represents the actual costs incurred in the execution of such additions or improvements to the concessioned assets. 

Majority Net Income reflects ASUR's equity interests in each of its subsidiaries and therefore excludes the 40% interest in Aerostar that is owned by other shareholders. Other than Aerostar, ASUR owns (directly or indirectly) 100% of its subsidiaries.

EBITDA means net income before provision for taxes, deferred taxes, profit sharing, non-ordinary items, participation in the results of associates, comprehensive financing cost, and depreciation and amortization. EBITDA should not be considered as an alternative to net income, as an indicator of our operating performance or as an alternative to cash flow as an indicator of liquidity. Our management believes that EBITDA provides a useful measure that is widely used by investors and analysts to evaluate our performance and compare it with other companies. EBITDA is not defined under U.S. GAAP or IFRS and may be calculated differently by different companies.

Adjusted EBITDA Margin is calculated by dividing EBITDA by total revenues excluding construction services revenues for Mexico, Puerto Rico, and Colombia and excludes the effect of IFRIC 12 with respect to the construction or improvements to concessioned assets. ASUR is required by IFRIC 12 to include in its income statement an income line reflecting the revenue from construction or improvements to concessioned assets made during the relevant period. The same amount is recognized under the expense line "Construction Costs" because ASUR hires third parties to provide construction services. In Mexico and Puerto Rico, because equal amounts of Construction Revenues and Construction Costs have been included in ASUR's income statement as a result of the application of IFRIC 12, the amount of Construction Revenues does not have an impact on EBITDA, but it does have an impact on EBITDA Margin, as the increase in revenues that relates to Construction Revenues does not result in a corresponding increase in EBITDA. In Colombia, construction revenues do have an impact on EBITDA, as construction revenues include a reasonable margin over the actual cost of construction. Like EBITDA Margin, Adjusted EBITDA Margin should not be considered as an indicator of our operating performance or as an alternative to cash flow as an indicator of liquidity and is not defined under U.S. GAAP or IFRS and may be calculated differently by different companies.

About ASUR
Grupo Aeroportuario del Sureste, S.A.B. de C.V. (ASUR) is a leading international airport operator with a portfolio of concessions to operate, maintain, and develop 16 airports in the Americas. These comprise nine airports in southeast Mexico, including Cancun Airport, the most important tourist destination in Mexico, the Caribbean, and Latin America, and six airports in northern Colombia, including José María Córdova International Airport (Rionegro), the second busiest airport in Colombia. ASUR is also a 60% JV partner in Aerostar Airport Holdings, LLC, operator of the Luis Muñoz Marín International Airport serving the capital of Puerto Rico, San Juan. San Juan's Airport is the island's primary gateway for international and mainland-US destinations and was the first and currently the only major airport in the US to have successfully completed a public–private partnership under the FAA Pilot Program. Headquartered in Mexico, ASUR is listed both on the Mexican Bolsa, where it trades under the symbol ASUR, and on the NYSE in the U.S., where it trades under the symbol ASR. One ADS represents ten (10) series B shares. For more information, visit www.asur.com.mx

Analyst Coverage
In accordance with Article 4.033.01 of the Mexican Stock Exchange Internal Rules, ASUR reports that the stock is covered by the following broker-dealers: Actinver, Banorte, Barclays, BBVA, Bradesco, BTG Pactual, Citi Global Markets, GBM Grupo Bursatil, Goldman Sachs, HSBC Securities, Insight Investment Research, Intercam, Itau BBA Securities, Jefferies, JP Morgan, Punto Research, Santander, Scotiabank, Signum Research, UBS Casa de Bolsa and Vector.

Please note that any opinions, estimates or forecasts with respect to the performance of ASUR issued by these analysts reflect their own views, and therefore do not represent the opinions, estimates or forecasts of ASUR or its management. Although ASUR may refer to or distribute such statements, this does not imply that ASUR agrees with or endorses any information, conclusions or recommendations included therein.

Forward Looking Statements 

Some of the statements contained in this press release discuss future expectations or state other forward-looking information. Those statements are subject to risks identified in this press release and in ASUR's filings with the SEC. Actual developments could differ significantly from those contemplated in these forward-looking statements. In particular, the impact of the COVID-19 pandemic on global economic conditions and the travel industry, as well as on the business and results of operations of the Company in particular, is expected to be material, and, as conditions are changing rapidly, is difficult to predict. The forward-looking information is based on various factors and was derived using numerous assumptions. Our forward-looking statements speak only as of the date they are made and, except as may be required by applicable law, we do not have an obligation to update or revise them, whether as a result of new information, future or otherwise.

View original content:https://www.prnewswire.com/news-releases/asur-reports-4q23-financial-results-302071619.html

SOURCE Grupo Aeroportuario del Sureste, S.A.B. de C.V.

FAQ

What was the percentage change in total passenger traffic for ASR in 4Q23?

ASR reported a 1.1% year-over-year increase in total passenger traffic for 4Q23.

How much did ASR's revenue decline by in 4Q23?

ASR's revenue declined by 5.5% year-over-year to Ps.6,876.9 million in 4Q23.

What was the percentage change in ASR's EBITDA for 4Q23?

ASR's EBITDA declined by 5.8% year-over-year to Ps.4,171.4 million in 4Q23.

What was ASR's adjusted EBITDA margin in 4Q23?

ASR's adjusted EBITDA margin decreased to 67.7% from 75.3% in 4Q22.

How did ASR's cash and equivalents position look like at year-end?

ASR had cash and equivalents of Ps.15,691.8 million at year-end.