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Edited Transcript of ASURB.MX earnings conference call or presentation 26-Feb-19 3:00pm GMT

Q4 2018 Grupo Aeroportuario del Sureste SAB de CV Earnings Call

Mexico Mar 1, 2019 (Thomson StreetEvents) -- Edited Transcript of Grupo Aeroportuario del Sureste SAB de CV earnings conference call or presentation Tuesday, February 26, 2019 at 3:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Adolfo Castro Rivas

Grupo Aeroportuario del Sureste, S. A. B. de C. V. - CEO and Chief Financial & Strategic Planning Officer

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Conference Call Participants

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* Alan Macias

BofA Merrill Lynch, Research Division - Analyst

* Alejandro Zamacona Urquiza

Crédit Suisse AG, Research Division - Research Analyst

* Andrés Nieto

Signum Research - Research Analyst

* Joshua Milberg

Morgan Stanley, Research Division - Equity Analyst

* Mauricio Arellano Sampson

HSBC, Research Division - Analyst

* Natalia Zamora Madrazo

GBM Grupo Bursátil Mexicano, S.A. de C.V. Casa de Bolsa, Research Division - Equity Research Analyst

* Rogério Araújo

UBS Investment Bank, Research Division - Director and Equity Research Analyst

* Ruben López Romero

Santander Investment Securities Inc., Research Division - Research Analyst

* Stephen Trent

Citigroup Inc, Research Division - Director

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Presentation

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Operator [1]

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Good day, ladies and gentlemen, and welcome to ASUR's Fourth Quarter and Full Year 2018 Results Call. My name is Greg, and I'll be your operator. (Operator Instructions) And as a reminder, today's call is being recorded.

And now for opening remarks and introductions, I'd like to turn the call over to Mr. Adolfo Castro, Chief Executive Officer. Please go ahead, sir.

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Adolfo Castro Rivas, Grupo Aeroportuario del Sureste, S. A. B. de C. V. - CEO and Chief Financial & Strategic Planning Officer [2]

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Thank you, Greg, and good morning, everyone. Thank you for joining us on our conference call to discuss ASUR's fourth quarter results and full year's results.

Before I begin, please note that certain statements made during the course of our discussion today may constitute forward-looking statements, which are based on current management's expectations and beliefs, and are subject to a number of risks and uncertainties that could cause actual results to differ materially, including factors that may be beyond our company's control. For an explanation of these risks, please refer to our filings with the Securities and Exchange Commission and the Mexican Stock Exchange.

Starting with our traffic performance. I am pleased to report that [travelers] growth in passenger traffic continued in Mexico, which rose 7.5% year-on-year during the fourth quarter, while there was a strong traffic growth in Puerto Rico and Colombia, topped 30% and 28%, respectively, benefiting from easier comps. Note that over the past 12 months, passenger traffic in Colombia was 10.7 million compared with 10.5 million annual passenger traffic prior to the pilot strike.

In total, we moved 13.1 million passengers, representing nearly 15% increase in total traffic over the fourth quarter 2017. In 2018, we served 52 million passengers across our 16 airports. Recorded nearly 8% increase to 8.1 million passengers in Mexico continued to be driven mostly by our airport in Cancun, where domestic and international traffic grew slightly over 14% and 3%, respectively, reflecting similar growth levels at our country level. The majority of ASUR's airports contribute to this growth. The share of traffic to and from the United States, Canada and Mexico decreased slightly from (sic) [to] 86.3% from 86.9% a year ago. However, the share of traffic to and from the United States declined year-over-year by 230 basis points to 26.6% in the quarter, and we expect the U.S. traffic to remain weak through the year.

In Puerto Rico, both domestic and international traffic continued to recover strongly from the impact of the Hurricane Maria back in September 2017, rising 30% and 35%, respectively. In total, ASUR's passenger traffic increased just over 30% in this area.

While Colombia domestic traffic was up 31% compared to last year's quarter when our leading airline made capacity adjustments, international traffic continued to expand robustly, increasing nearly 13%. Our total passenger traffic in Colombia rose almost 28%. For 2019, we continue to expect domestic growth levels to normalize before the pilot strike that occurred in September 2017.

I will now discuss ASUR's fourth quarter financial results. As a reminder, we began to fully consolidate our Puerto Rico operations in June 2017 and our Colombia operations in October 19 of that year. Consolidated revenues, excluding construction, increased over 18% last year's quarter to MXN 3.6 billion, driven by increases of 15% in Mexico, 13% in Puerto Rico and over 52% in Colombia.

Aeronautical revenues posted a solid growth of almost 18% year-on-year. Mexico contributed just over 2/3 of the MXN 2.2 billion in aeronautical revenues, while Puerto Rico and Colombia accounted for 18% and 15%, respectively.

Commercial revenues. The focus of our growth plan rose nearly 20% over last year to MXN 1.3 billion, largely due to nearly 15% increase in total passenger traffic. Mexico accounted for almost 3/4 of this revenue, and nearly 16% increase in commercial revenue in Mexico came mostly from the opening of Terminal 4 at Cancun Airport in the same quarter in 2017.

Commercial revenues in Puerto Rico and Colombia grew at faster rates, rising approximately 23% and 57%, respectively. In Puerto Rico, in addition to the recovery related to the hurricane, the increase in commercial revenues was due to the opening of 8 new commercial spaces last year. Also last year, we opened 32 new commercial spaces at our airports in Colombia, which contribute to the strong increase in commercial revenue there, in addition to the higher traffic levels I discussed earlier.

On a per passenger basis, commercial revenues were relatively flat at MXN 96 per passenger. Although in Mexico, commercial revenues per passenger rose nearly 8% to MXN 112. At Terminal 4 in Cancun, we have been working to better understand passenger needs so we can calibrate our commercial activities there in order to optimize passenger revenues. At Terminal 2, where the passenger mix has shift, we continue working with the concessionaires to adjust the service offering. We're in the process of changing the concepts for some units that are not performing optimally following the shift. We expect to finalize implementation of these changes over the next 3 quarters.

Commercial revenues per passenger in Puerto Rico decreased 6% to MXN 122, but we consider these as robust levels. Our commercial sales on the island are still benefiting from the reconstruction efforts. We delivered growth across most commercial values categories, particularly ground transportation and car rentals.

In Colombia, commercial revenues per passenger remained relatively flat year-on-year at MXN 35. At Rionegro Airport, Colombia's second largest, we have not been able to establish duty-free due to the licensing, construction and legal permits by the concessionaire. We expect these to happen during the first quarter 2019.

Moving on profitability for the fourth quarter. Consolidated EBITDA increased 27% to MXN 2.5 billion. Contributing to the increase were Mexico rose over 16%; a strong recovery in Puerto Rico, where the EBITDA increased 78% on lower cost related to the hurricane; and 44% increase in Colombia on higher passenger traffic and commercial revenues. To date, adjusted EBITDA margin, which excludes the effects of IFRIC 12, expanded to 68.3% from 63.6% in the prior year's quarter.

Regionally, adjusted EBITDA margin in Mexico increased 98 basis points to 73%, mainly driven by the [mid-teen] increases in aeronautical and commercial revenues, which more than offset the impact of higher administrative expenses, together with increasing technical systems and concession fees resulted from improved performance.

In Puerto Rico, adjusted EBITDA margin expanded to 84% from 53% in the fourth quarter 2017. This was mainly due to the 35% decline in cost of services, which resulted from a onetime reduction in maintenance provision by MXN 99 million and a onetime MXN 135 million insurance claim recovery in connection with Hurricane Maria during fourth quarter 2018.

Comparisons also benefited from a MXN 22 million extraordinary expense in fourth quarter of 2017 as a result of the hurricane. Excluding these extraordinary items in both quarters, adjusted EBITDA margin in Puerto Rico would have decreased to 51.7% in fourth quarter 2018 from 57.2% in fourth quarter 2017, mainly because of the MXN 29 million increase in the concession fees starting 2018.

Finally, adjusted margin in Colombia declined almost 18% from the 37% in the same quarter of 2017, impacted mainly due to the higher cost of services. This includes an important increase in the provision for future replacement of fixed assets for IFRIC 12 by MXN 199 million, higher cost from new areas opened at Rionegro and Minatitlán airports and concession fees related to increasing revenues.

ASUR's majority net income for the fourth quarter 2018 declined nearly 36% to (sic) [or] MXN 804 million versus MXN 2.3 billion in the prior year's quarter, when we recorded a MXN 1.4 billion valuation gain resulting from our investment in Aerostar.

Turning to ASUR's balance sheet. We finished the year with a net debt of (sic) to last 12 months EBITDA ratio of 1.1x, down sequentially from 1.2x at the end of September. Of the MXN 267 million in capital investments that we made during the fourth quarter, MXN 120 million were invested in modernizing ASUR's airports in Mexico under the Master Development Plan. Most of these funds were for the completion of Terminal 4 in Cancun.

Another MXN 126 million was invested on the reconstructing LMM Airport in Puerto Rico, in addition to continued maintenance, reconstruction of the taxiway and completion of a cargo building, where MXN 21 million was invested in Colombia to complete mandatory CapEx related to our cargo area at Rionegro airport. Overall, 2018 CapEx totaled MXN 1.6 billion.

This concludes my prepared remarks. Greg, please, open the call for questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) First, from Morgan Stanley, we have Josh Milberg.

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Joshua Milberg, Morgan Stanley, Research Division - Equity Analyst [2]

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Two questions on my side. The first one is just on the profitability of your Colombia operation. Both backing out the effect of the MXN 200 million maintenance provision that you highlighted and also another MXN 45 million related to the decline in the provision for uncollectible accounts, we ended up coming up with a 52% recurring EBITDA margin for the operation. And I just wanted to ask you if that 52% level is reasonably representative of what could be seen as a normalized profitability level of the operation now that traffic in the country has bounced back?

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Adolfo Castro Rivas, Grupo Aeroportuario del Sureste, S. A. B. de C. V. - CEO and Chief Financial & Strategic Planning Officer [3]

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Josh. Well, basically, in the case of Colombia, as you have mentioned, we are getting normal operations now, once we have recorded the result of IFRIC 12, which was extremely important for last year's results. The other thing that I will point out is that we, of course, expect commercial revenues per passenger to start increasing. If the traffic continues with the same kind of growth we're seeing over the last couple of months, of course, as you are mentioning, we will have a better EBITDA margin.

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Joshua Milberg, Morgan Stanley, Research Division - Equity Analyst [4]

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That's great, Adolfo. And did it make sense, as we did in our calculations, to treat the MXN 45 million uncollectible provision as something that's nonrecurring?

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Adolfo Castro Rivas, Grupo Aeroportuario del Sureste, S. A. B. de C. V. - CEO and Chief Financial & Strategic Planning Officer [5]

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Yes. That is a nonrecurring thing, yes.

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Joshua Milberg, Morgan Stanley, Research Division - Equity Analyst [6]

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Can you explain a little bit further what happened with that amount? What was behind the reduction?

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Adolfo Castro Rivas, Grupo Aeroportuario del Sureste, S. A. B. de C. V. - CEO and Chief Financial & Strategic Planning Officer [7]

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Yes, of course. This was coming from a trial that we had against the construction company there in Colombia. And finally, we obtained a positive ruling against this construction company, and that is why we canceled the provision we made in the past.

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Joshua Milberg, Morgan Stanley, Research Division - Equity Analyst [8]

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Okay, understood. And then, Adolfo, my second question just relates to international traffic, which was a little light in January. Just hoping you could comment on what was behind the weakness at the start of the year. And maybe what we could reasonably expect for growth, international traffic growth in Mexico for this year? And related to that, last quarter, I've asked you about the seaweed situation, and you had expressed the view that, that wasn't something that was significantly affecting demand. And if you could just comment if you still are of the view that, that is not sort of a relevant factor. And maybe just touch on what is the status of the seaweed situation today.

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Adolfo Castro Rivas, Grupo Aeroportuario del Sureste, S. A. B. de C. V. - CEO and Chief Financial & Strategic Planning Officer [9]

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Okay. Too many questions in one. But basically, the reduction we have seen in passenger traffic in the region of Mexico and the case of Cancun Airport for the first month of the year are the results of a decline in basically the U.S. traffic, as I mentioned during my remarks. Remember that the first quarter, for us, is the most important. The first quarter represents 26% of the traffic in Mexico. Now the fourth quarter is around 24%. So it's a little bit more important. Of course, we will have to see what will occur in the first quarter because the passenger traffic to and from the United States basically is declining. I will not say that this is just because of seaweeds. This is declining in the whole country of Mexico. I would say, with the numbers I have, traffic to and from the United States to Mexico declining around 5.6%, and you can see negative figures also in the other 2 destinations in comparison with Cancun. So it is not just because of the seaweeds, as I mentioned to you before. It is because of different reasons. What to expect for the future? I do not think -- I do not believe that these trends will change. So that is why I am saying in my initial remarks that I believe traffic to and from the United States will remain weak for the year.

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Operator [10]

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And moving on, from Credit Suisse, we have Alejandro Zamacona.

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Alejandro Zamacona Urquiza, Crédit Suisse AG, Research Division - Research Analyst [11]

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Just a follow-up question on Josh's question about the international traffic. So at this time, does your traffic expectations for Cancun have changed in the long term? That's my first question.

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Adolfo Castro Rivas, Grupo Aeroportuario del Sureste, S. A. B. de C. V. - CEO and Chief Financial & Strategic Planning Officer [12]

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Well, Alejandro, traffic to and from the United States is extremely important. As I mentioned during the fourth quarter, that decrease is 230 basis points to 26.6%. What to see about the future is the other regions, so it means Latin America, Colombia -- Latin America, Canada and Europe does not grow, or the growth is not enough to recuperate the traffic -- or the decline in traffic to and from the United States. Of course, we will see a negative number for the year in the case of international traffic. Of course, as you have seen lately, also domestic traffic has been growing really nice, so the other region can compensate the decline in the U.S. traffic. That's more or less what I can say. Of course, in the long term, I believe the U.S. behavior will not be forever.

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Alejandro Zamacona Urquiza, Crédit Suisse AG, Research Division - Research Analyst [13]

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Okay. And my second question is about the COFECE investigation that the company disclosed in the third quarter. So I don't know if you can provide any updates on this investigation.

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Adolfo Castro Rivas, Grupo Aeroportuario del Sureste, S. A. B. de C. V. - CEO and Chief Financial & Strategic Planning Officer [14]

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There's no update yet, Alejandro. They have to follow their own procedures. I believe that we will see the results of these during the second quarter this year.

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Operator [15]

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And next up, we have Natalia Zamora with Grupo Bursátil Mexicano.

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Natalia Zamora Madrazo, GBM Grupo Bursátil Mexicano, S.A. de C.V. Casa de Bolsa, Research Division - Equity Research Analyst [16]

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Just a short question on my side. Could you provide us with some color on what we could expect for the cost of service in Colombia and Puerto Rico, going forward?

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Adolfo Castro Rivas, Grupo Aeroportuario del Sureste, S. A. B. de C. V. - CEO and Chief Financial & Strategic Planning Officer [17]

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You said construction services?

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Natalia Zamora Madrazo, GBM Grupo Bursátil Mexicano, S.A. de C.V. Casa de Bolsa, Research Division - Equity Research Analyst [18]

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Cost of service.

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Adolfo Castro Rivas, Grupo Aeroportuario del Sureste, S. A. B. de C. V. - CEO and Chief Financial & Strategic Planning Officer [19]

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Cost of service. Well, I do not expect major changes of the ones we we're seeing today, of course, excluding the nonrecurring items. Remember that in the case of Puerto Rico, last year, we had to report concession fees at a higher amount. And in the case of Colombia, the changes in terms of what we have to do to comply with Sarbanes-Oxley and many other things have been done. So I do not expect major changes there anymore. Of course, in the case of Puerto Rico, there were some additional costs in security that probably trigger during the second half of the year. So probably the amount in the full year comparison will be slightly higher. But apart from these, I do not see any major changes on the cost side in these regions.

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Operator [20]

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Next from Santander, we have Ruben Lopez.

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Ruben López Romero, Santander Investment Securities Inc., Research Division - Research Analyst [21]

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I have 2 questions. The first one is on cost in Mexico. We saw [deceleration] in cost of services in 4Q versus previous quarters. So where do these savings come from, and whether these levels are sustainable? That's my first one.

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Adolfo Castro Rivas, Grupo Aeroportuario del Sureste, S. A. B. de C. V. - CEO and Chief Financial & Strategic Planning Officer [22]

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Well, of course, you have to bear in mind the seasonality of these things. Some of these things have to do with the volume of passengers. But of course, some of these things have to do with the weather. So most of the refurbished or replacements of aprons and blah, blah, blah, occurred in a different season. I believe, once again, that the level of costs that we are seeing today, [one], before it has been completed and is in operation could be sustainable for the future.

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Ruben López Romero, Santander Investment Securities Inc., Research Division - Research Analyst [23]

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Okay, perfect. And the second one is on M&A. Are you interested in the tender offer in Brazilian airports? I mean, is this an attractive opportunity that you can consider? What are your thoughts?

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Adolfo Castro Rivas, Grupo Aeroportuario del Sureste, S. A. B. de C. V. - CEO and Chief Financial & Strategic Planning Officer [24]

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For the moment, we are not seeing that opportunity. Of course, we are seeing the documents and revealing if we're going to participate or not, but for the moment, I can say, we are not.

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Operator [25]

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The next question comes from Stephen Trent with Citi.

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Stephen Trent, Citigroup Inc, Research Division - Director [26]

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Two for you. The first is I was wondering if you could give us a little color on the Colombian ops as to why depreciation was a positive.

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Adolfo Castro Rivas, Grupo Aeroportuario del Sureste, S. A. B. de C. V. - CEO and Chief Financial & Strategic Planning Officer [27]

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Well, remember that last year, we consolidated Colombia from October 19. So there were basically effects from the investment we made there. And that is why we're seeing a depreciation in a positive situation.

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Stephen Trent, Citigroup Inc, Research Division - Director [28]

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Got it. And is this something that you think is done? Or do you think we could see a continued roll-off and a positive impact into 2019?

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Adolfo Castro Rivas, Grupo Aeroportuario del Sureste, S. A. B. de C. V. - CEO and Chief Financial & Strategic Planning Officer [29]

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No, I would say that is a onetime effect.

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Stephen Trent, Citigroup Inc, Research Division - Director [30]

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Great, great, great. And just very quick, last question, Adolfo. On the Mayan Train, if you could remind us as well maybe what is ASUR's thinking in terms of directly or indirectly participating in that project?

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Adolfo Castro Rivas, Grupo Aeroportuario del Sureste, S. A. B. de C. V. - CEO and Chief Financial & Strategic Planning Officer [31]

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Yes, of course. We have said to the government that we will construct the extension at the airport. Basically, what they have expressed is that the project will initiate at the airport of Cancun. So we are in the process to -- well, not we, but they're in the process to define what will be the final location or what will be the connecting point of the train at the airport's land, so to define what we will have to do to connect the passengers from the terminals we have there to the train station. And also what we are expecting from them is their traffic study to see what will be the size of this facility. This facility will be necessary for, let's say, 500 passengers or 300 passengers. So we're in the process to define what will be the size of this building, and that's what we intend to do in the case of the train for the Cancun airport.

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Operator [32]

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Next, we have Rogério Araújo with UBS.

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Rogério Araújo, UBS Investment Bank, Research Division - Director and Equity Research Analyst [33]

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I have a follow-up question regarding international passengers, mainly from U.S. Just confirming, so your expectation is a decrease in 2019 for international passengers from U.S., and also the consolidated international passengers. What about consolidated traffic? Should we expect it to increase? And can you -- do you have an expectation for that? That's my first question. I have a follow-up one after.

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Adolfo Castro Rivas, Grupo Aeroportuario del Sureste, S. A. B. de C. V. - CEO and Chief Financial & Strategic Planning Officer [34]

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Okay. Just to be clear, yes, I do expect the U.S. traffic to present negative figures for the full year. What I was saying is in terms of the total international traffic, if [we feel the other] regions do not compensate these, of course, we will see a negative effect, considering also that the U.S. traffic represent a larger proportion in comparison with the other regions. In terms of the consolidated intentional traffic, so that means you are including Puerto Rico and Colombia, it's clear to me that in the case of Puerto Rico, what we expect is the recuperation of the traffic we had before the Hurricane Maria by, let's say, August, September this year. So just to give you numbers in the case of Puerto Rico, traffic before Hurricane Maria in the last 12 months was 9.4 million passengers. Today, we are at 8.4 million. So that, of course, will represent a very positive effect in the consolidated. In the case of Colombia, what I'm seeing is now a more normalized traffic once we have been able to recover from the pilots strike. As I said during the initial remarks, before pilots strikes, Colombia was 10.6 million passengers. For the full year 2018, we have 10.7 million. So we have exceeded the pre-strike levels.

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Rogério Araújo, UBS Investment Bank, Research Division - Director and Equity Research Analyst [35]

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Sounds good. What about Mexico's consolidated traffic, including both international and domestic passengers? The expectation is that it increases overall? And do you have a kind of a level of expectation for that?

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Adolfo Castro Rivas, Grupo Aeroportuario del Sureste, S. A. B. de C. V. - CEO and Chief Financial & Strategic Planning Officer [36]

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Well, I do not have a number. But, of course, what I expect for the full year is a positive number.

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Rogério Araújo, UBS Investment Bank, Research Division - Director and Equity Research Analyst [37]

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Okay, sounds perfect. And my follow-up question is regarding commercial revenue per passenger in Mexico. My question is regarding U.S. passengers. Do they spend much more commercial revenue to airports? So if this mix deteriorates, can we expect a decrease in aeronautical revenue per passenger? Or maybe there is no increase versus previous expectations? So how can this impact the commercial revenue front?

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Adolfo Castro Rivas, Grupo Aeroportuario del Sureste, S. A. B. de C. V. - CEO and Chief Financial & Strategic Planning Officer [38]

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Well, of course, you are absolutely right in the sense to say that U.S. traffic is able to buy duty-free things, which domestic traffic is not. So if we, let's say, replace U.S. traffic with domestic traffic instead of the other regions compensating this traffic, we will have to run faster in order to maintain the objective we always have, which is to increase commercial revenue per passenger. But it's clear for us that if the passenger need changes as it has been for the last couple of months, it's harder for us to get the same commercial revenue per passenger.

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Operator [39]

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And next from Bank of America, we have Alan Macias.

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Alan Macias, BofA Merrill Lynch, Research Division - Analyst [40]

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Just a follow-up question on the international traffic in Mexico. Here, we see other areas in the Caribbean, Jamaica and, of course, Puerto Rico growing in international traffic or, in the case of Puerto Rico, with the U.S. This has to do with recovery after the hurricane, but also are these destinations being more aggressive in terms of attracting tourists than Mexico is? And the second question is, if federal government does not have a priority in promoting Mexico out in the U.S., has the private sector tried anything to continue the promotion of the Mexican brand and, of course, of Cancun?

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Adolfo Castro Rivas, Grupo Aeroportuario del Sureste, S. A. B. de C. V. - CEO and Chief Financial & Strategic Planning Officer [41]

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Alan. So you are mentioning the other Caribbean destinations and you are mentioning also Puerto Rico. And of course, markets are not exactly the same in the case of the U.S. traffic. In the case of -- to give an example, in the case of Puerto Rico, the U.S. traffic basically comes from what we call [DFR], [digital print analysis]. So Puerto Ricans are living in the U.S. and go back see their families. So I will not use these numbers as part of the same market. In the case of the promotion you are mentioning, yes, a project has been canceled in the case of Mexico. And this promotion, as the comments has been expressed, will have to be done by the private sector. We are and we have been doing this for life, and we will continue to support and to make efforts on this respect. We have been in talks with hotel owners and tourist operators, and they will do the same.

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Operator [42]

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And next we have Mauricio Arellano with HSBC.

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Mauricio Arellano Sampson, HSBC, Research Division - Analyst [43]

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Following up with the last 2 questions, I was wondering if you could share with us your first impression on the federal government's tourism strategy and what that could mean for your different airports in Mexico.

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Adolfo Castro Rivas, Grupo Aeroportuario del Sureste, S. A. B. de C. V. - CEO and Chief Financial & Strategic Planning Officer [44]

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Well, of course, what we saw over the weekend in terms of the new strategy, I would say, an important portion of this strategy is or has to do with the domestic market. I would say market -- the internal market will have again to try to compensate some of the passengers that we are losing from the U.S. And I believe that is what they are seeing as well. So I agree, and in that sense or in that front, because we do not see that the U.S. traffic trend will be changing in the coming months.

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Operator [45]

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(Operator Instructions) All right, we have one more from Andrés Nieto with Signum Research.

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Andrés Nieto, Signum Research - Research Analyst [46]

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I have a quick question regarding the margins, because in this [part], we've seen a reduction in the net debt to 12-month EBITDA regarding the [reports of the] third quarter. And we've also seen a significant [increase] in the EBITDA margin for this quarter. So I don't know if it's just in the 2018 that we could achieve these levels? Will this become a normal level for these [previous concepts]?

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Adolfo Castro Rivas, Grupo Aeroportuario del Sureste, S. A. B. de C. V. - CEO and Chief Financial & Strategic Planning Officer [47]

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Andrés, well, basically margin is a result of revenues and costs, and most of our cost is basically fixed or an important proportion of that is fixed. So margin will depend on what will happen with the revenue side, and revenue side depends on what will happen with the passenger traffic. So as I said before, in the case of Puerto Rico, we expect a bad passenger traffic, of course, because of the recuperation of the Hurricane Maria. In the case of Colombia, I am expecting a positive traffic as well as in Mexico. So I believe that the margin will be better in comparison of how it was last year, considering these effects.

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Operator [48]

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(Operator Instructions) Okay. And with nothing further from the audience, I'd like to turn the floor back to Mr. Castro for any additional or closing remarks.

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Adolfo Castro Rivas, Grupo Aeroportuario del Sureste, S. A. B. de C. V. - CEO and Chief Financial & Strategic Planning Officer [49]

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Thank you, Greg. And thank you, again, everybody for joining us on our conference call results. On behalf of ASUR, we wish you a good day. Goodbye.

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Operator [50]

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Once again, ladies and gentlemen, that concludes our call for today. Thank you for joining. You may now disconnect.