ASUR 1Q13 Passenger Traffic Up 8.53% YOY

MEXICO CITY, April 22, 2013 /PRNewswire/ -- Grupo Aeroportuario del Sureste, S.A.B. de C.V. (NYSE: ASR; BMV: ASUR), (ASUR) the first privatized airport group in Mexico and operator of Cancun Airport and eight other airports in southeast Mexico, as well as a 50% JV partner in Aerostar Airport Holdings, LLC, operator of the Luis Munoz Marin International Airport in San Juan, Puerto Rico, today announced results for the three-month period ended March 31, 2013.

1Q13 Highlights¹:

• EBITDA² increased by 10.73% to Ps.917.32 million
• Total passenger traffic was up 8.53%
• Total revenues increased by 6.88%, as increases of 7.22% in aeronautical revenues and 7.75% in non-aeronautical revenues, more than offset the 0.10% decline in construction services revenues
• Commercial revenues per passenger declined by 0.54% to Ps.74.24
• Operating profit increased by 11.61%
• EBITDA margin increased to 66.74% from 64.42% in 1Q12

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1.    Unless otherwise stated, all financial figures discussed in this announcement are unaudited, prepared in accordance with International Financial Reporting Standards (IFRS) and represent comparisons between the three-month period ended March 31, 2013, and the equivalent three-month period ended March 31, 2012. Results are expressed in nominal pesos. Tables state figures in thousands of pesos, unless otherwise noted. Passenger figures exclude transit and general aviation passengers. 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 = Ps.12.3612.

2.    EBITDA means net income before: provision for taxes, deferred taxes, profit sharing, non-ordinary items, 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 of our performance 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.

Passenger Traffic

For the first quarter of 2013, total passenger traffic increased year-over-year by 8.53%. Domestic passenger traffic rose by 10.33% while international passenger traffic increased by 7.54%.

The 10.33% growth in domestic passenger traffic was driven by increases at Cancun, Veracruz, Oaxaca, Villahermosa, Cozumel and Minatitlan. The 7.54% growth in international passenger traffic resulted mainly from an increase of 7.73% in international traffic at the Cancun airport.

Table I: Domestic Passengers (in thousands)

Note:   Passenger figures exclude transit and general aviation passengers.

II: International Passengers (in thousands)

Note:   Passenger figures exclude transit and general aviation passengers.

Table III: Total Passengers (in thousands)

Note:   Passenger figures exclude transit and general aviation passengers.

Consolidated Results for 1Q13

In July 2012, the Puerto Rico Ports Authority granted Aerostar, ASUR's joint venture with Highstar Capital IV and its affiliated funds, a 40-year concession to operate the Luis Munoz Marin International Airport of Puerto Rico ("SJU") under the United States FAA's Airport Privatization Pilot Program. On February 27, 2013, the transaction was consummated and Aerostar began operating the SJU Airport. During 1Q13, our Cancun airport subsidiary made a US$118 million capital contribution to Aerostar corresponding to its 50% equity contribution. As a result, in 1Q13 ASUR began accounting for its ownership stake in Aerostar through the equity method, in accordance with IFRS.

Total revenues for 1Q13 increased year-over-year by 6.88% to Ps.1,374.51 million. This was mainly due to increases of:

• 7.22% in revenues from aeronautical services, principally as a result of the 8.53% rise in passenger traffic; and
• 7.75% in revenues from non-aeronautical services, reflecting the 7.67% increase in commercial revenues detailed below.

These increases more than offset the 0.10% decline in revenues from construction services as a result of lower capital expenditures and other investments in concessioned assets during the period.

ASUR classifies commercial revenues as those derived from the following activities: duty-free stores, car rentals, retail operations, banking and currency exchange services, advertising, teleservices, non-permanent ground transportation, food and beverage, and parking lot fees.

Commercial revenues increased by 7.67% year-over-year during the quarter, principally due to the 8.53% increase in passenger traffic. There were increases in revenues in the following activities:

• 8.35% in duty-free stores;
• 10.86% in food and beverage;
• 4.60% in retail operations;
• 11.65% in other revenue;
• 7.80% in advertising;
• 7.98% in parking lot fees;
• 6.22% in car rentals;
• 13.30% in ground transportation;
• 6.83% in banking and currency exchange services; and
• 37.34% in teleservices.

Construction revenues and expenses. ASUR is required by IFRIC 12 to include in its income statement an income line reflecting the income from construction or improvements to concessioned assets made during the period. During 1Q13, ASUR recognized Ps.90.43 million in revenues from "Construction Services" because of lower committed improvements to its concessioned assets, which represented a 0.10% year-on-year decline. 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 Expenses have been included in ASUR's income statement as a result of the application of IFRIC 12, the decrease in Construction Revenues in 1Q13 did not result in a proportionate decrease in the EBITDA Margin, which is equal to EBITDA divided by total revenues.

Total operating costs and expenses for 1Q13 rose 0.69% year-over-year. This was primarily due to the following increases:

• 10.78% in the technical assistance fee paid to ITA, reflecting the increase in EBITDA for the quarter (a factor in the calculation of the fee);
• 8.66% in concession fees paid to the Mexican government, mainly due to an increase in regulated revenues (a factor in the calculation of the fee); and
• 4.22% in depreciation and amortization, resulting mainly from capitalized investments.

These increases were partially offset by the following declines: 

• 4.24% in costs of services, principally reflecting the reimbursement of fees paid to third parties in connection with ASUR's participation in the SJU privatization project;
• 0.10% in construction costs, reflecting lower committed improvements made to concessioned assets during the period and
• 0.08% in administrative expenses.

Excluding the reimbursement of fees and expenses in connection with the SJU privatization project, cost of services would have increased 4.75% mainly reflecting higher maintenance costs.

Operating margin for the quarter increased to 59.23% from 56.73% in 1Q12. This was mainly due to the 6.88% increase in revenues which more than offset the 0.69% increase in expenses during the period.

Comprehensive Financing Gain (Loss) for 1Q13 was a Ps.46.19 million gain, compared to a Ps.15.13 million loss in 1Q12, principally driven by a foreign exchange gain in 1Q13 resulting from US dollar-denominated debt and higher net interest income during the period.

During 1Q13, ASUR reported a foreign exchange gain of Ps.31.40 million which principally resulted from the 3.50% appreciation of the Mexican peso against the U.S. dollar during the period which resulted in a gain as a result of ASUR's  foreign currency net liability position.  ASUR's foreign currency net liability position increased in 1Q13 because of its incurrence of $215.0 million in US dollar-denominated debt in a loan from BBVA Bancomer and Merrill Lynch (US$107.5 million incurred with each bank).

Interest income increased by Ps.17.58 million year-on-year reflecting increased income from short-term investments resulting from the increase in net income during the period. Interest expense increased by Ps.5.47 million.

Comprehensive Financing Result (Cost)

Income (loss) from Equity Investment in Joint Venture. During 1Q13 our equity in the income of Aerostar, our joint venture with Highstar Capital IV and its affiliated funds, was a net loss of Ps.122.05 million principally due to Ps.113.8 million in one-off costs resulting from all expenses incurred during the more than two years in which ASUR was involved in the bidding process for the privatization of SJU airport, including market research, preparation of all bidding documentation, obtaining the Part 139 Certificate from the FAA, advisory, legal, consulting, and debt financing fees, as well as all other costs incurred until the first day of operations under Aerostar's management; together with an operational loss of Ps.8.25 million generated between February 28, 2013 until March 31, 2013.  In addition, ASUR recorded a Ps.47.02 million loss in stockholders' equity resulting from the translation effect of Aerostar's financial statements, in connection with the valuation of the capital stock derived from the appreciation of the peso against the U.S. dollar.

From February 28, 2013 to March 31, 2013, total passenger traffic at SJU airport was 782,924.

Income Taxes. Following the changes in Mexican tax law that took effect on January 1, 2008, which established a new flat rate business tax ("Impuesto Empresarial a Tasa Unica" or "IETU") and eliminated the asset tax, ASUR evaluates and reviews  its deferred assets and liabilities position as required by Mexican tax law.

Income taxes for 1Q13 increased by Ps.75.30 million, or 42.69% year-over-year, principally due to the following factors:

• A reversal of the IETU provision at some of ASUR's subsidiaries which resulted in a Ps.6.99 million gain;
• A Ps.61.76 million increase in the provision for income taxes, as a result of a higher taxable base resulting from the 11.61% increase in operating income;
• A Ps.14.63 million increase in deferred income taxes resulting from the Merida and Oaxaca airports causing income tax based on projections of temporal differences in the recordation of intangible assets.
• A Ps.3.83 million decrease in deferred IETU for the Merida and Oaxaca airports given that these subsidiaries are expected to pay income tax in the future.

Net income for 1Q13 declined by 9.55% to Ps.486.61 million from Ps.537.97 million in 1Q12. Earnings per common share for the quarter were Ps.1.6220, or earnings per ADS (EPADS) of US$1.3122 (one ADS represents ten series B common shares). This compares with earnings per share of Ps.1.7932, or EPADS of US$1.4507, for the same period last year.  

 

Tariff Regulation

The Mexican Ministry of Communications and Transportation regulates the majority of ASUR's activities by setting maximum rates, which represent the maximum possible revenues allowed per traffic unit at each airport.

ASUR's regulated revenues for 1Q13 were Ps.919.13 million, resulting in an annual average tariff per workload unit of Ps.161.84. ASUR's regulated revenues accounted for approximately 66.87% of total income for the period.

The Mexican Ministry of Communications and Transportation reviews compliance with the maximum rates on an annual basis at the close of each year.

Balance Sheet

On March 31, 2013, Airport Concessions represented 69.76% of the Company's total assets, with current assets representing 17.29% and other assets representing 12.95%.

Cash and cash equivalents on March 31, 2013 were Ps.2,660.94 million, a 17.46% increase from the Ps.2,265.43 million in cash and cash equivalents recorded on March 31, 2013.

Shareholders' equity at the close of 1Q13 was Ps.16,910.59 million and total liabilities were Ps.5,452.38 million, representing 75.62% and 24.38% of total assets, respectively. Deferred liabilities represented 34.64% of the Company's total liabilities. 

Total bank debt at March 31, 2013 was Ps.2,886.1 million, including Ps.9.9 million in accrued interest. During August and September of 2010, Cancun Airport entered into two three-year credit agreements of Ps.350 million and Ps.570 million with two banks. The terms of the agreements include a floating interest rate equal to the Tasa de Interes Interbancaria de Equilibrio (TIIE) plus 1.5% and quarterly principal payments. In addition, in September of 2011, Veracruz Airport entered into a three-year credit agreement of Ps.50 million. The terms include a floating interest rate equal to TIIE plus 0.75% and quarterly principal payments.

During the quarter, ASUR made aggregate principal payments of Ps.92.50 million in connection with the Ps.350 million, Ps.570 million and Ps.50 million three-year credit agreements.

In the fourth quarter of 2011, Cancun Airport obtained authorization for two new bank loans from Banamex and BBVA Bancomer of US$300 million and Ps.1,500 million, respectively.

On February 15, 2013, our Cancun airport subsidiary executed an agreement for bank loans of US$107.5 million from each of BBVA Bancomer and Merrill Lynch, for a total of U.S.$215.0 million. The loans have a five-year term, amortize in four semi-annual payments of 2.5% of the aggregate amount of the loans beginning on February 15, 2016 and a final payment of the aggregate principal amount of the loans outstanding on the maturity date, February 15, 2018. The loans are denominated in U.S. dollars and charge interest at a rate equal to three-month LIBOR plus 1.99%. Proceeds from the loans were used to finance ASUR's capital contribution and subordinated shareholder loan to Aerostar. These loans are guaranteed by Grupo Aerportuario del Sureste, S.A.B. de C.V.  In connection with these loans, BBVA Bancomer's authorization for bank loans as described above was drawn down by US$107.5 million.

While the BBVA Bancomer and Merrill Lynch facility is outstanding, ASUR and its subsidiaries are not permitted to make any fundamental change to its corporate structure, or create any liens upon any of its property or sell any assets that exceed more than 10% of ASUR's consolidated total assets.

Additionally, the credit facility requires that ASUR and its subsidiaries maintain a consolidated leverage ratio equal to or less than 3.50:1.00 and a consolidated interest coverage ratio equal to or less than 3.00:1.00 as of the last day of each fiscal quarter. If ASUR fails to comply with these covenants, this facility restricts its ability to pay dividends to its shareholders. Additionally, failure to comply with these covenants would result in all amounts owed under the facility to become due and payable immediately. As of the date of this report, ASUR was in compliance with those covenants.

ASUR's subsidiary Cancun Airport and its joint venture partner Highstar Capital IV and its affiliated funds pledged their share ownership in Aerostar as collateral for US$350 million in senior secured notes issued by, and a $60 million credit facility obtained by Aerostar.

Capital Expenditures

During 1Q13, ASUR made investments of Ps.90.98 million as part of ASUR's ongoing plan to modernize its airports pursuant to its master development plans.

Relevant Events

ASUR Announces that Aerostar Obtains Part 139 Operating Certificate from FAA and Makes Initial Payment of $615 Million to PRPA

On February 27, 2013, ASUR announced that Aerostar Airport Holdings, LLC ("Aerostar") won approval by the Federal Aviation Administration ("FAA") to lease and operate the San Juan Luis Munoz Marin ("SJU") International Airport as a public-private partnership. Aerostar is a joint venture of Highstar Capital and ASUR.

Aerostar made an upfront $615 million leasehold fee, with the goal of improving aviation services and the passenger experience while creating crucial jobs for Puerto Rico. Aerostar has begun transitioning the operation of SJU, together with the Puerto Rico Ports Authority, through a process that will last several months.

IFRS Adoption

In compliance with regulations established by the Mexican National Banking and Securities Commission (CNBV), as of January 1, 2012 the Company has adopted International Financial Reporting Standards (IFRS) as the accounting standards to prepare its financial statements.

Furthermore, and in compliance with INIF 19 "Changes derived from the adoption of IFRS," the most significant accumulated changes in net shareholders' equity as of January 1, 2011 are included in the table below:

The following table presents the principal effects of IFRS on Shareholders' Equity as of December 31, 2012, and March 31, 2013:

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See notes at the end of the financial tables.

The following table presents the principal effects of IFRS on the Income
Statement for the three-month periods ended on March 31, 2012 and 2013.

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See notes at the end of the financial tables.

Analyst Coverage
Actinver Casa de Bolsa, Barclays, BBVA Bancomer, Bofa Merril Lynch, Citi Investment Research, Credit Suisse, Grupo Bursatil Mexicano, Grupo Financiero Interacciones, Grupo Financiero Monex, Intercam Casa de Bolsa, Itau BBA, INVEX, JP Morgan, Morgan Stanley, Morningstar, Santander Investment, Scotia Capital, UBS Casa de Bolsa, Vector.

Note: ASUR is covered by the aforementioned analysts. Please note that any opinions, estimates or forecasts regarding 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.

About ASUR:
Grupo Aeroportuario del Sureste, S.A.B. de C.V. (ASUR) is a Mexican airport operator with concessions to operate, maintain and develop the airports of Cancun, Merida, Cozumel, Villahermosa, Oaxaca, Veracruz, Huatulco, Tapachula and Minatitlan in the southeast of Mexico, as well as a 50% JV partner in Aerostar Airport Holdings, LLC, operator of the Luis Munoz Marin International Airport of Puerto Rico. The Company is listed both on the NYSE in the U.S., where it trades under the symbol ASR, and on the Mexican Bolsa, where it trades under the symbol ASUR. One ADS represents ten (10) series B shares.

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. 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.