Grupo Aeroportuario del Pacifico Announces Results for the First Quarter of 2023

GUADALAJARA, Mexico, April 17, 2023 (GLOBE NEWSWIRE) — Grupo Aeroportuario del Pacífico, S.A.B. de C.V. (NYSE: PAC; BMV: GAP) (“the Company” or “GAP”) reports its consolidated results for the first quarter ended March 31, 2023 (1Q23). Figures are unaudited and prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).

Summary of Results 1Q23 vs. 1Q22

• The sum of aeronautical and non-aeronautical services revenues increased by Ps. 1,477.4 million, or 29.4%. Total revenues increased by Ps. 2,327.3 million, or 38.7%.
• Cost of services increased by Ps. 213.1 million, or 28.3%.
• Income from operations increased by Ps. 934.2 million, or 29.7%.
• EBITDA increased by Ps. 987.7 million, or 26.6%, an increase from Ps. 3,708.4 million in 1Q22 to Ps. 4,696.1 million in 1Q23. EBITDA margin (excluding the effects of IFRIC-12) went from 73.8% in 1Q22 to 72.3% in 1Q23.
• Comprehensive income decreased by Ps. 91.1 million, or 4.1%, from an income of Ps. 2,240.9 million in 1Q22 to an income of Ps. 2,149.9 million in 1Q23.

Company’s Financial Position:

During 1Q23, results were significantly better than 1Q22, with an increase of 29.4% in aeronautical and non-aeronautical revenues. The Company generated positive EBITDA of Ps. 4,696.1 million, an increase of 26.6% compared to 1Q22.

In 1Q23, the generation of positive net cash flow from operating activities continued for Ps. 4,045.7 million. The Company reported a financial position of cash and cash equivalents as of March 31, 2023, of Ps. 18,890.8 million. In 1Q23, the Company drawdown Ps. 1,000.0 million from a credit facility and issued long-term bond certificates worth Ps.5,400 million. The proceeds will be used to capital investments in the Mexican airports and to pay the bond certificate “GAP 20-2” maturing on June 22, 2023.

Passenger Traffic

During 1Q23, total passengers at the Company’s 14 airports increased by 3,011.5 thousand passengers, an increase of 23.9%, compared to 1Q22.

During 1Q23, the following new routes were opened:

Domestic:

Note: Frequencies can vary without prior notice.

International:

Note: Frequencies can vary without prior notice.

Domestic Terminal Passengers – 14 airports (in thousands):

*Cross Border Xpress (CBX) users are classified as international passengers.

International Terminal Passengers – 14 airports (in thousands):

*CBX users are classified as international passengers.

Total Terminal Passengers – 14 airports (in thousands):

*CBX users are classified as international passengers.

CBX Users (in thousands):

Consolidated Results for the First Quarter of 2023 (in thousands of pesos):

– Net income and comprehensive income per share for 1Q23 were calculated based on 505,277,464 shares outstanding as of March 31, 2023 and for 1Q22 were calculated based on 510,520,111 shares outstanding as of March 31, 2022. U.S. dollar figures presented were converted from pesos to U.S. dollars at a rate of Ps. 18.0250 per U.S. dollar (the noon buying rate on March 31, 2023, as published by the U.S. Federal Reserve Board).

– For purposes of the consolidation of our Jamaican airports, the average three-month exchange rate of Ps. 18.7020 per U.S. dollar for the three months ended March 31, 2023 was used.        

Revenues (1Q23 vs. 1Q22)

• Aeronautical services revenues increased by Ps. 1,174.4 million, or 30.5%.
• Non-aeronautical services revenues increased by Ps. 303.0 million, or 25.9%.
• Revenues from improvements to concession assets increased by Ps. 849.9 million, or 85.8%.
• Total revenues increased by Ps. 2,327.3 million, or 38.7%.

• The change in aeronautical services revenues was primarily due to the following factors:
  1. Revenues at our Mexican airports increased by Ps. 994.1 million or 30.2% compared to 1Q22, mainly due to the 21.6% increase in passenger traffic and the adjustment in maximum rates because of inflation.
  2. Revenues from Jamaican airports increased by Ps. 180.3 million, or 32.0%, compared to 1Q22. This was mainly due to the 45.9% increase in passenger traffic. During 1Q23, there was an 8.9% appreciation of the peso versus the U.S. dollar, compared to 1Q22, which went from an average exchange rate of Ps. 20.5229 in 1Q22 to Ps. 18.7020 in 1Q23, which represented a decrease in revenues in pesos.

• The change in non-aeronautical services revenues was primarily driven by the following factors:
  1. Revenues at our Mexican airports increased by Ps. 251.3 million, or 26.0%, compared to 1Q22. Revenues from businesses operated by third parties increased by Ps. 131.1 million, or 20.0%, mainly due to the passenger traffic recovery, the opening of new commercial spaces, and the renegotiation of contracts conditions. The business lines that grew the most were food and beverages, retail, leasing of spaces, car rentals, duty-free stores, and ground transportation, all of which increased by Ps. 128.9 million, or 23.9%. Revenues from businesses operated directly by us increased by Ps. 115.1 million, or 42.7%, while the recovery of costs increased by Ps. 5.1 million, or 12.3%.
  2. Revenues from the Jamaican airports increased by Ps. 51.7 million, or 26.0%, compared to 1Q22. The business lines that grew the most were duty-free stores, retail, food and beverages, and leasing of spaces, all of which increased by Ps. 48.6 million, or 28.8%. Revenues in U.S. dollars increased by US$ 3.6 million, or 36.9%.

Figures expressed in thousands of Mexican pesos.

• Revenues from improvements to concession assets1

  Revenues from improvements to concession assets (IFRIC-12) increased by Ps. 849.9 million, or 85.8%, compared to 1Q22. The change was composed of:

1. Improvements to concession assets at the Company’s Mexican airports, which increased by Ps. 866.8 million, or 90.7%, due to increased investments under the Master Development Program for 2020-2024 period.
2. Improvements to concession assets at the Company’s Jamaican airports, which decreased Ps. 16.9 million, or 48.5%.

_____________________________

¹ Revenues from improvements to concession assets are recognized in accordance with International Financial Reporting Interpretation Committee 12 “Service Concession Arrangements” (IFRIC 12). However, this recognition does not have a cash impact or 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. This is in accordance with the Company’s Master Development Programs in Mexico and Capital Development Programs 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. 1,393.1 million, or 48.6%, compared to 1Q22, mainly due to the increase from costs of improvements to concession assets (IFRIC-12) by Ps. 849.9 million, or 85.8%, as well as an increase of Ps. 213.1 million, or 28.3%, in the cost of services, a combined increase of Ps. 257.7 million or 44.9%, in concession taxes and technical assistance fees, and a Ps. 53.5 million, or 9.5%, increase in depreciation and amortization (excluding the cost of improvements to concession assets (IFRIC-12), operating costs increased Ps. 543.2 million, or 28.9%).

This increase in total operating costs was primarily due to the following factors:
  
Mexican airports:

• Operating costs increased by Ps. 1,256.6 million, or 53.8%, compared to 1Q22, primarily due to a Ps. 866.8 million, or 90.7%, increase in the cost of improvements to the concession assets (IFRIC-12), Ps. 223.8 million, or 39.3%, increase in the cost of services, a combined Ps. 105.4 million, or 27.9%, increase in technical assistance fees and concession taxes, and a Ps. 51.7 million, or 11.8%, increase in depreciation and amortization (excluding the cost of improvements to the concession assets (IFRIC-12), operating costs increased by Ps. 389.8 million or 28.2%).

The change in the cost of services at our Mexican airports during 1Q23 was mainly due to:

• Employee costs increased Ps. 110.3 million, or 46.5%, compared to 1Q22, mainly due to the hiring of 327 additional personnel during 2022 and during the 1Q23, as well as the adjustments in salaries and cost related to changes in Labor Law.
• Other operating expenses increased Ps. 42.7 million, or 45.2%, compared to 1Q22, mainly due to a combined increase of Ps. 34.5 million in the cost of goods and services for our VIP lounges and convenience stores, due to the increase in sales of these business lines, the increase in FBO services, professional fees, allowance for credit losses and travel expenses.
• Safety, security, and insurance costs increased Ps. 36.8 million, or 39.9%, compared to 1Q22, mainly due to an increase in the number of security staff and the opening of additional operational areas.
• Maintenance costs increased by Ps. 17.3 million, or 17.9%, compared to 1Q22, mainly due the expansion of the terminal and airfield.

Jamaican Airport:

• Operating costs increased by Ps. 136.6 million, or 25.7%, compared to 1Q22, mainly due to a Ps. 152.3 million, or 77.9%, increase in concession taxes, offset by the decrease in the cost of improvements to concession assets (IFRIC-12) by Ps.16.9 million, or 48.5% and the decrease in cost of services by Ps. 9.7 million, or 5.8%.

Operating income margin went from 52.3% in 1Q22 to 48.9% in 1Q23. Excluding the effects of IFRIC-12, operating income margin went from 62.6% in 1Q22 to 62.7% in 1Q23. Income from operations increased by Ps. 934.2 million, or 29.7%, compared to 1Q22.

EBITDA margin went from 61.7% in 1Q22 to 56.3% in 1Q23. Excluding the effects of IFRIC-12, EBITDA margin went from 73.8% in 1Q22 to 72.3% in 1Q23. The nominal value of EBITDA increased by Ps. 987.7 million, or 26.6%, compared to 1Q22.

Financial result increased by Ps. 401.4 million, or 147.0%, from a net expense of Ps. 272.9 million in 1Q22 to a net expense of Ps. 674.3 million in 1Q23. This change was mainly the result of:

• Foreign exchange rate fluctuations, which went from an income of Ps. 52.7 million in 1Q22 to a loss of Ps. 166.9 million in 1Q23. This generated a foreign exchange loss of Ps. 219.7 million. This was mainly due to the appreciation of the peso. Currency translation effect income decreased Ps. 254.4 million, compared to 1Q22.
• Interest expenses increased by Ps. 336.9 million, or 71.2%, compared to 1Q22, mainly due to higher debt as a result of the issuance of long-term debt securities and the drawdown of credit lines, as well as the increase in interest rates.
• Interest income increased by Ps. 155.4 million, or 105.1%, compared to 1Q22, mainly due to an increase in the reference interest rates.

In 1Q23, comprehensive income decreased by Ps. 91.1 million, or 4.1%, compared to 1Q22. Income before taxes increased by Ps. 532.8 million, mainly due to the increase in traffic, the increase in maximum rates due to inflation and the commercial strategy. This growth generated an increase in income taxes of Ps. 295.1 million. However, net and comprehensive income decreased mainly due to the decrease of the effect of foreign currency translation in Ps. 254.4 million, and a decrease in cash flow hedges for Ps. 74.6 million.

During 1Q23, net income increased by Ps. 237.8 million, or 10.2%, compared to 1Q22. Income taxes increased by Ps. 219.0 million and the benefit for deferred taxes decreased by Ps. 76.1 million, mainly due to a decrease in the inflation rate, from 2.4% in 1Q22 to 1.7% in 1Q23.

Statement of Financial Position

Total assets as of March 31, 2023 increased by Ps. 9,649.3 million compared to March 31, 2022, primarily due to the following items: (i) a Ps. 5,965.3 million increase in net improvements to concession assets; and (ii) a Ps. 2,053.9 million combined increase in net machinery, equipment and leasehold improvements, and advances to suppliers, iii) a Ps. 1,991.0 million increase in cash and cash equivalents. This increase was partially offset by a decrease of Ps. 521.2 million in other current assets, among others.
        
Total liabilities as of March 31, 2023 increased by Ps. 9,841.5 million compared to March 31, 2022. This increase was primarily due to the following items: (i) issuance of Ps. 5,857.6 million (net) in long-term debt securities, (ii) Ps. 4,000.0 million in bank loans, and (iii) Ps. 204.6 million in income taxes payable. This increase was partially offset by decrease of: (i) Ps. 133.0 million in deferred taxes, among others.

Recent events

On March 28, 2023, the Mexican President presented to Congress an initiative to reform various federal laws. The bill provides, among others, additional grounds for the Mexican government to revoke concessions and permits. It also provides a mechanism to speed up private property expropriation by the state. It is unclear whether Congress will pass this bill and, if passed, the impact it could have on the Mexican economy and the Company’s operations.

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 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):

(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):

Exhibit C: Consolidated statement of cash flows (in thousands of pesos):

Exhibit D: Consolidated statements of profit or loss and other comprehensive income (in thousands of pesos):

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):

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 December 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 to be prepared in accordance with IFRS, as issued by the IASB.

Exhibit F: Other operating data:

WLU = Workload units represent passenger traffic plus cargo units (1 cargo unit = 100 kilograms of cargo).