ASUR 3Q16 Passenger Traffic Up 8.58% YOY

MEXICO CITY, Oct. 18, 2016 /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 Cancún Airport and eight other airports in southeast Mexico, as well as a 50% JV partner in Aerostar Airport Holdings, LLC, operator of the Luis Muñoz Marín International Airport in San Juan, Puerto Rico, today announced results for the three- and nine-month periods ended September 30, 2016.

3Q16 Highlights¹:

• EBITDA² increased by 19.85% to Ps.1,370.16 million
• Total passenger traffic was up 8.58%
• Total revenues increased by 8.44%, reflecting increases of 15.78% in aeronautical revenues and 23.65% in non-aeronautical revenues, partially offset by the 22.12% decline in construction services revenues
• Commercial revenues per passenger increased by 14.21% to Ps.94.57
• Operating profit increased by 20.46%
• EBITDA margin was 58.16% compared with 52.62% in 3Q15
• Adjusted EBITDA margin³, excluding the effect of IFRIC12, was 71.09% compared with 70.47% in 3Q15

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- and nine-month periods ended September 30, 2016, and the equivalent three- and nine-month periods ended September 30, 2015.  Results are expressed in 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.19.3776.
2. 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.
3. Adjusted EBITDA Margin excludes the effect of IFRIC12 with respect to the construction or improvements to concessioned assets, as explained in page 5 of this report. Adjusted EBITDA Margin is calculated by dividing EBITDA by total revenues less construction services revenues.  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.

Passenger Traffic

3Q16 total passenger traffic increased year-over-year by 8.58%, reflecting growth of 10.23% in domestic passenger traffic and 6.92% in international passenger traffic.

The 10.23% increase in domestic passenger traffic was driven by the majority of ASUR's airports, with the exception of Minatitlán and Villahermosa where traffic declined by 12.79% and 1.36%, respectively.

The 6.92% growth in international passenger traffic resulted primarily from an increase of 7.50% in traffic at the Cancún airport.

Total passenger traffic for 9M16 increased by 7.63%, reflecting growth of 9.49% in domestic passenger traffic driven by the majority of ASUR's airports, with the exception of Minatitlán and Villahermosa, which declined 7.62% and 4.07%, respectively. The 6.18% increase in international passenger traffic resulted primarily from a 6.77% increase at the Cancún airport.

Note: Passenger figures exclude transit and general aviation passengers.                            

Note: Passenger figures exclude transit and general aviation passengers.

Note: Passenger figures exclude transit and general aviation passengers.

Consolidated Results for 3Q16

Total revenues for 3Q16 rose 8.44% year-over-year to Ps.2,355.76 million, mainly due to increases of:

• 15.78% in revenues from aeronautical services, mainly as a result of the 8.58% increase in passenger traffic; and
• 23.65% in revenues from non-aeronautical services, principally reflecting the 24.11% increase in commercial revenues detailed below.

These increases were partially offset by the 22.12% decline in revenues from construction services that resulted from 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 operations, and parking lot fees.

Commercial revenues rose 24.11% year-over-year in 3Q16, principally due to an 8.58% increase in total passenger traffic. There were increases in revenues from the following activities:

• 25.56% in retail operations;
• 35.87% in food and beverage operations;
• 18.38% in duty free;
• 37.53% in other revenue;
• 22.38% in car rental revenues;
• 19.14% in banking and currency exchange services;
• 10.32% in parking lot fees;
• 18.37% in ground transportation;
• 4.21% in advertising; and
• 44.34% in teleservices.

* Only includes new stores opened during the period and excludes remodelings or contract renewals.

Note: For purposes of this table, approximately 45,400 and 54,400 transit and general aviation passengers are included in 3Q15 and 3Q16, respectively.

(1)  Represents ASUR's operation of convenience stores in airports.

Construction revenues and expenses: 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. During 3Q16, ASUR recognized Ps.428.52 million in revenues from "Construction Revenues," a year-on-year decline of 22.12%, due to lower capital expenditures and fewer investments in concessioned assets. 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, as the increase in revenues that relates to Construction Revenues does not result in a corresponding increase in EBITDA.

As a result, 3Q16 EBITDA Margin was 58.16% compared with 52.62% in 3Q15. Adjusted EBITDA Margin, however, which excludes the effect of IFRIC 12 with respect to the construction or improvements to concessioned assets, was 71.09% in 3Q16 compared with 70.47% in 3Q15.

Total operating costs and expenses for 3Q16 declined 2.31% year-over-year. The 22.12% decline in construction costs resulting from lower capital expenditures and fewer investments in concessioned assets during the period more than offset the following cost increases:

• 16.37% in cost of services, mainly due to the Terminal 3 expansion and the higher cost of sales from convenience stores directly operated by ASUR;
• 20.15% in the technical assistance fee paid to ITA, resulting from the increase in EBITDA for the quarter (a factor in the calculation of the fee);
• 16.77% in concession fees paid to the Mexican government, mainly due to an increase in regulated revenues (a factor in the calculation of the fee);
• 14.55% in depreciation and amortization, resulting mainly from capitalized investments; and
• 10.17% in administrative expenses, principally reflecting higher professional fees.

Excluding construction costs, operating costs and expenses rose 15.96% to Ps.691.81 million.

Operating margin for the quarter was 52.44% compared with 47.21% in 3Q15, resulting from the 8.44% increase in revenues along with the 2.31% reduction in expenses.

Adjusted operating margin, which excludes the effect of IFRIC 12 with respect to the construction or improvements to concessioned assets, and is calculated as operating profit divided by total revenues less construction services revenues, was 64.10% in 3Q16 compared with 63.22% in 3Q15.

Comprehensive Financing Gain (Loss) for 3Q16 was a Ps.14.25 million loss, compared to a Ps.74.32 million loss in 3Q15. Interest expenses rose by Ps.7.43 million during the period, mainly due to the increase in interest rates. Interest income increased by Ps.10.92 million.

Furthermore, ASUR reported a foreign exchange loss of Ps.29.07 million in 3Q16, reflecting a 2.74% quarterly average depreciation of the Mexican peso against the U.S. dollar on ASUR's lower foreign currency net liability position. This compared to a Ps.85.66 million loss in 3Q15 resulting from the 7.77% quarterly average Mexican peso depreciation during that period.

In addition, in 3Q16, ASUR recognized a Ps.110.64 million gain in stockholders' equity resulting from the translation effect of Aerostar's financial statements (which are denominated in U.S. dollars), relating to the valuation of the stockholders' equity derived from the 2.74% depreciation of the peso against the U.S. dollar, between the close of 3Q16 and the close of 2Q16.

Income (Loss) from Equity Investment in Joint Venture.

During 3Q16, our equity in the income of Aerostar, our joint venture with Highstar Capital IV and its affiliated funds, was a net gain of Ps.29.14 million. In addition, ASUR recorded a Ps.110.64 million gain in stockholders' equity resulting from the translation effect of Aerostar's financial statements (which are denominated in U.S. dollars), relating to the valuation of the shareholders' equity derived from the 2.74% depreciation of the peso against the U.S. dollar, between the close of 2Q16 and the close of 3Q16. In 3Q15, ASUR reported a net gain of Ps.10.15 million from our equity in the income of Aerostar and a Ps.139.97 million gain in stockholders' equity resulting from the translation effect of Aerostar's financial statements relating to the valuation of the shareholders' equity derived from the depreciation of the peso against the U.S. dollar.

During 3Q16, total passenger traffic at SJU airport increased 2.27% to 2,268,840 from 2,218,457 in 3Q15.

Income Taxes for 3Q16 increased by Ps.77.87 million year-over-year, principally due to the following factors:

• A Ps.101.85 million increase in the provision for income taxes, reflecting a higher taxable income base at the Veracruz and Cancun airports, as well as at Cancun Airport Services; and taxable income at Huatulco airport.
• A Ps.22.80 million decline in deferred income taxes largely reflecting the recognition of the effects of the 1.16% increase in inflation during 3Q16 on the fiscal tax balance.

Net income for 3Q16 increased by 29.91% to Ps.916.80 million, up from Ps.705.74 million in 3Q15. Earnings per common share for the quarter were Ps.3.0560 and earnings per ADS (EPADS) were US$1.5771 (one ADS represents ten series B common shares). This compares with earnings per share of Ps.2.3525 and EPADS of US$1.2140 for the same period last year. The higher net income principally reflects the 8.58% increase in passenger traffic. During 3Q16, ASUR reported a Ps.29.14 million gain corresponding to its participation in Aerostar, the joint venture to operate SJU airport, compared to a gain of Ps.10.15 million in 3Q15.

Note:  U.S. dollar figures are calculated at the exchange rate of US$1 = Ps.19.3776.

1. Adjusted Operating Margin excludes the effect of IFRIC12 with respect to the construction or improvements to concessioned assets, and is equal to operating profit divided by total revenues less construction services revenues.
2. Adjusted EBITDA Margin excludes the effect of IFRIC12 with respect to the construction or improvements to concessioned assets, and is calculated by dividing EBITDA by total revenues less construction services revenues.

Consolidated Results for 9M16

Total revenues for 9M16 increased year-over-year by 9.65% to Ps.6,676.90  million, mainly due to the following increases:

• 14.42% in revenues from aeronautical services as a result of the 7.63% increase in passenger traffic during the period; and  
• 25.57% in revenues from non-aeronautical services, mainly due to the 26.80% increase in commercial revenues detailed below.

These increases were partially offset by the 24.82% decline in construction services due to lower capital investments made during the period.

Commercial revenues for 9M16 rose by 26.80% year-over-year, principally due to revenue increases in the following areas: 

• 28.02% in retail operations;
• 23.03% in duty-free stores;
• 28.37% in food and beverage operations;
• 44.28% in car rentals;
• 44.77% in other income;
• 23.28% in banking and currency exchange services; 
• 10.73% in parking lot fees;
• 13.67% in ground transportation services;
• 3.60% in advertising; and
• 25.05% in teleservices.