Grupo Aeroportuario del Pacifico Announces Results for the First Quarter of 2022

GUADALAJARA, Mexico, April 25, 2022 (GLOBE NEWSWIRE) — Grupo Aeroportuario del Pacífico, S.A.B. de C.V. (NYSE: PAC; BMV: GAP) (“the Company” or “GAP”) reported its consolidated results for the first quarter ended March 31, 2022 (1Q22) (tables are presented at the end of this report comparing passenger traffic and consolidated results for 2022 and 2019, in order to illustrate the recovery of these metrics and their trend). Figures are unaudited and have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).

COVID-19 Impact

During the first quarter ended March 31, 2022, passenger traffic increased 69.9% as compared to the same period of 2021 and increased 5.8% as compared to 2019, demonstrating a positive trend. This increase, which is due to the recovery of the tourism and business segments, which caused first quarter results for 2022 to exceed 2019 and 2021. This increase resulted in net cash flows that exceeded the previous quarters.

Company measures during 1Q22:

• The Company continued supporting commercial clients during the quarter by granting discounts on guaranteed minimum rents in accordance with the percentage decrease in passenger traffic at each airport as compared to 1Q19; however, for the most part, the discount was not applied because revenue sharing percentages surpassed rents. With regards to support for the airlines, the Company continued its incentive program in accordance with the reactivation of routes and frequencies that existed prior to the pandemic.

• Cost of services have been increasing, due to the positive trend in passenger traffic during 1Q22 we have gradually increased certain costs such as maintenance, security, personnel, cleaning services and others, as relates to the quality and experience of our passengers, however, these increases have lagged significantly behind traffic growth due to cost controls that we have continued to the extent possible.

Company’s Financial Position:

During 1Q22, results were significantly better as compared to 1Q21. The Company generated positive EBITDA of Ps. 3,708.4 million, an increase of 111.0% as compared to 1Q21 as a result of a 65.3% increase in total revenues and an increase in cost of services of only 15.4%.

In 1Q22, operating activities continued generating positive cash flow of Ps. 2,168.7 million. The Company reported a financial position of cash and cash equivalents as of March 31, 2022, of Ps. 16,899.9 million (14.7% higher than the balance as of March 31, 2021). During 1Q22, the Company issued Ps. 5,000.0 million in long-term debt securities to finance the committed investments for our Mexican airports and to make the Ps. 1,500.0 million maturity payment on our “GAP-17” debt securities. Additionally, Ps. 499.5 million in share repurchases were made during 1Q22.

In 1Q22, the Company performed an assessment of the portfolio risk of our airlines and commercial clients in terms of liquidity. Because of this assessment and due to the growth and recovery of our main airlines and commercial clients, it was determined that no reserve provision for expected credit losses was necessary for this quarter.

During 1Q22, the Company continued evaluating the possible adverse impacts of the pandemic on its financial condition and operating results. The Company also reviewed key indicators and impairment tests of significant long-term assets, expected credit losses and recovery of assets due to deferred taxes. In this evaluation, the Company reviewed financial results for the short, medium, and long term, concluding that a significant deterioration of the Company’s assets is not expected. As such, the Company does not foresee a business interruption or closing operations at any of its airports. However, the Company cannot ensure that the negative effect of the pandemic will continue decreasing in the coming quarter, nor can it ensure that local and global economic conditions will improve. The Company can not predict the availability of financing, or what general credit conditions will be.

The Company will continue to monitor the pandemic effects on the results of operations and will continue informing the market in a timely manner regarding future material updates on airport operations and the measures adopted for preserving liquidity and ensuring business continuity.

Summary of Results 1Q22 vs. 1Q21 (and 1Q19 for purposes of illustrating the recovery trend):

• The sum of aeronautical and non-aeronautical services revenues increased by Ps. 2,313.4 million, or 85.4% (Ps. 1,489.5 million, or 42.2%, as compared to 1Q19). Total revenues increased by Ps. 2,374.6 million, or 65.3% (Ps. 2,333.5 million, or 63.4%, as compared to 1Q19).
• Cost of services increased by Ps. 100.8 million, or 15.4% (as compared to 1Q19, cost of services increased Ps. 157.9 million, or 26.5%).
• Income from operations increased by Ps. 1,889.4 million, or 150.6% (Ps. 1,065.4 million, or 51.3%, as compared to 1Q19).
• EBITDA increased by Ps. 1,951.2 million, or 111.0% (Ps. 1,208.3 million, or 48.3%, as compared to 1Q19), going from Ps. 1,757.2 million in 1Q21 to Ps. 3,708.4 million in 1Q22. EBITDA margin (excluding the effects of IFRIC 12) increased from 64.9% in 1Q21 to 73.8% in 1Q22 (EBITDA margin (excluding the effects of IFRIC 12) was 70.8% in 1Q19).
• Net comprehensive income increased Ps. 923.8 million, or 70.1% (as compared to 1Q19, it increased               Ps. 937.5 million, or 71.9%), from income of Ps. 1,317.2 million in 1Q21 to income of Ps. 2,241.0 million in 1Q22.

Passenger Traffic

During 1Q22, total passengers at the Company’s 14 airports increased by 5,175.3 thousand passengers, an increase of 69.9%, compared to 1Q21 (as compared to 1Q19, total passengers increased by 694.2 thousand passengers, or 5.8%).

During 1Q22, the following new routes were opened:

Domestic:

Consolidated Results for the First Quarter of 2022 (in thousands of pesos):

^{– Net income and comprehensive income per share for 1Q22 were calculated based on 510,520,111 shares outstanding as of March 31, 2022 and for 1Q21 were calculated based on 524,038,200 shares outstanding as of March 31, 2021. U.S. dollar figures presented were converted from pesos to U.S. dollars at a rate of Ps. 19.9110 per U.S. dollar (the noon buying rate on March 31, 2022, as published by the U.S. Federal Reserve Board).
– For purposes of the consolidation of the Jamaican airports, the average three-month exchange rate of Ps. 20.5229 per U.S. dollar for the three months ended March 31, 2022 was used.}

Revenues (1Q22 vs. 1Q21)

• Aeronautical services revenues increased by Ps. 1,781.5 million, or 85.9%.
• Non-aeronautical services revenues increased by Ps. 531.9 million, or 83.6%.
• Revenues from improvements to concession assets increased by Ps. 61.2 million, or 6.6%.
• Total revenues increased by Ps. 2,374.6 million, or 65.3%.

• The change in aeronautical services revenues was composed primarily of the following factors:
  1. Revenues at our Mexican airports increased by Ps. 1,435.2 million or 77.4% compared to 1Q21, mainly due to the 63.0% increase in passenger traffic and the adjustment in maximum rates as a result of inflation.
  2. Revenues from the Montego Bay airport increased by Ps. 251.4 million, or 185.6%, compared to 1Q21. This was mainly due to the 204.5% increase in passenger traffic. During 1Q22, there was a 1.0% depreciation of the peso versus the U.S. dollar, which went from an average exchange rate of Ps. 20.3190 in 1Q21 to Ps. 20.5229 in 1Q22.
  3. Revenues from the Kingston airport increased by Ps. 94.8 million, or 115.4% compared to 1Q21, mainly due to a 132.4% increase in passenger traffic.
• The change in non-aeronautical services revenues was composed primarily of the following factors:
  1. Revenues at our Mexican airports increased by Ps. 436.6 million, or 82.1%, compared to 1Q21. Revenues from businesses operated by third parties increased by Ps. 291.8 million or 79.9%. This was mainly due to the recovery of passenger traffic that resulted in revenue sharing percentages that surpassed minimum guaranteed rents. The business lines that increased the most were food and beverage, retail tenants, duty-free stores, car rentals, time shares and ground transportation, which jointly increased by Ps. 262.7 million, or 91.2%. Revenues from businesses operated directly by the Company increased by Ps. 135.8 million, or 101.3%, while the recovery of costs increased by Ps. 9.0 million, or 28.2%.
  2. Revenues from the Montego Bay airport increased by Ps. 76.7 million, or 99.3%, compared to 1Q21. Revenues in U.S. dollars increased US$ 3.7 million, or 97.3%.
  3. Revenues from the Kingston airport increased by Ps. 18.6 million, or 68.2%, compared to 1Q21. Revenues in U.S. dollars increased US$ 0.9 million, or 66.6%.

Revenues from improvements to concession assets¹
Revenues from improvements to concession assets (IFRIC12) increased by Ps. 61.2 million, or 6.6%, compared to 1Q21. The change was composed primarily of:

1. The Company’s Mexican airports, which increased by Ps. 46.1 million, or 5.1%, as a result of the adjustment in committed investments in the Master Development Program for the 2020-2024 period.
2. Improvements to concession assets at the Montego Bay airport increased Ps. 15.1 million, or 76.7%. During 1Q22, no improvements to concession assets were made at the Kingston airport.

Total operating costs increased by Ps. 485.2 million, or 20.4%, compared to 1Q21, mainly due to a Ps. 271.7 million, or 89.9%, increase in concession taxes and technical assistance fees, a Ps.100.8 million, or 15.4%, increase in cost of services, and a Ps. 61.2 million, or 6.6%, increase in the cost of improvements to the concession assets (IFRIC12), (excluding the cost of improvements to concession assets, operating costs increased Ps. 424.0 million, or 29.2%).

This increase in total operating costs was composed primarily of the following factors:
  
Mexican Airports:

• Operating costs increased by Ps. 341.4 million, or 17.1%, compared to 1Q21, primarily due to a combined Ps. 171.4 million, or 82.8%, increase in technical assistance fees and concession taxes, a Ps. 65.1 million, or 12.9%, increase in cost of services, a Ps. 59.7 million, or 20.7%, increase in depreciation and amortization, and a Ps. 46.1 million, or 5.1%, increase in the cost of improvements to the concession assets (IFRIC-12), (excluding the cost of improvements to the concession assets (IFRIC-12), operating costs increased by Ps. 295.3 million or 29.2%).

The change in the cost of services during 1Q22 was mainly due to:

• Employee costs increased Ps. 39.4 million, or 20.0%, compared to 1Q21, mainly due to the hiring of additional personnel as required for airport operations due to the recovery of passenger traffic, as well as the changes in the Labor Law in Mexico.
• Maintenance costs increased by Ps. 19.2 million, or 25.0%, compared to 1Q21.
• Safety, security and insurance costs increased Ps. 5.5 million, or 6.3%, compared to 1Q21, mainly due to an increase in the number of security staff as compared to 1Q21 when the partial closure of some operating areas reduced the need for personnel.

Montego Bay Airport:

• Operating costs increased by Ps. 58.9 million, or 22.4%, compared to 1Q21, mainly due to a Ps. 30.7 million, or 106.4%, increase in concession taxes, a Ps. 20.7 million, or 22.3%, increase in the cost of services, a                       Ps. 15.1 million, or 76.7%, increase in the cost of improvements to concession assets (IFRIC-12), and a Ps. 1.9 million, or 1.6%, increase in depreciation and amortization, which was offset by the increase in other income by Ps. 9.4 million.

Kingston Airport:

• Operating costs increased by Ps. 84.8 million, or 68.2%, compared to 1Q21, mainly due to a Ps. 69.6 million, or 105.1%, increase in concession taxes, and a Ps. 15.0 million, or 27.2%, increase in the cost of services.

Operating margin went from 34.5% in 1Q21 to 52.3% in 1Q22. Excluding the effects of IFRIC-12, operating margin went from 46.3% in 1Q21 to 62.6% in 1Q22. Operating income increased Ps. 1,889.4 million, or 150.6%, compared to 1Q21.

EBITDA margin went from 48.3% in 1Q21 to 61.7% in 1Q22. Excluding the effects of IFRIC-12, EBITDA margin went from 64.9% in 1Q21 to 73.8% in 1Q22. The nominal value of EBITDA increased Ps. 1,951.2 million, or 111.0%, compared to 1Q21.

Financial cost increased by Ps. 193.6 million, or 244.2%, from a net expense of Ps. 79.3 million in 1Q21 to a net expense of Ps. 272.9 million in 1Q22. This change was mainly the result of:

• Foreign exchange rate fluctuations, which went from income of Ps. 219.6 million in 1Q21 to income of Ps. 52.7 million in 1Q22. This generated a decrease in the foreign exchange gain of Ps. 166.9 million. Currency translation effect income decreased Ps. 240.0 million, compared to 1Q21.
• Interest expenses increased by Ps. 87.8 million, or 22.7%, compared to 1Q21, mainly due to higher debt as a result of the issuance of long-term debt securities and increase in interest rates.
• Interest income increased by Ps. 61.0 million, or 70.1%, compared to 1Q21, mainly due to an increase in the reference interest rates.

In 1Q22, comprehensive income increased Ps. 923.8 million, or 70.1%, compared to 1Q21. This increase was mainly due to a Ps. 1,695.8 million increase in profit before taxes derived from the significant increase in passenger traffic. This increase was partially offset by an increase in income taxes of Ps. 405.9 million and a Ps. 240.0 million decrease in currency translation effect.

During 1Q22, net income increased by Ps. 1,289.9 million, or 124.3%, compared to 1Q21. Income taxes increased by Ps. 450.1 million and were partially offset by a Ps. 44.2 million increase in the benefit for deferred taxes, mainly due an increase in the inflation rate, from 2.3% in 1Q21 to 2.5% in 1Q22.

Statement of Financial Position

Total assets as of March 31, 2022 increased by Ps. 6,981.4 million as compared to March 31, 2021, primarily due to the following items: (i) a Ps. 2,685.7 million increase in improvements to concession assets; (ii) a Ps. 2,171.5 million increase in cash and cash equivalents; (iii) a Ps. 1,519.8 million increase in machinery, equipment and leasehold improvements and advances to suppliers; and (iv) a Ps. 518.4 million increase in accounts receivable from customers, among others.
        
Total liabilities as of March 31, 2022 increased by Ps. 8,643.1 million compared to March 31, 2021. This increase was primarily due to the following items: (i) issuance of Ps. 9,000.0 million in long-term debt securities; (ii) Ps. 1,049.9 million in accounts payable, iii) income taxes of Ps. 621.7 million and (iv) concession taxes of Ps. 111.5 million. This was partially offset by decreases of: (i) Ps. 2,323.8 million in bank loans and (ii) Ps. 410.8 million in derivative financial instruments, among others.

Recent Events

• On March 31, 2022, we made the Ps. 1,500.0 million maturity payment on our “GAP-17” debt securities (equal to 15 million long-term debt securities. The payment was made with proceeds obtained from the issuance of long-term debt securities on March 17, 2022.  

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 the 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):

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):

Exhibit E: Consolidated stockholders’ equity (in thousands of pesos):

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 being prepared in accordance with IFRS, as issued by the IASB.

Exhibit F: Other operating data (in thousands):

Passenger Traffic and Consolidated Results compared to the same periods of 2019:

Domestic Terminal Passengers – 14 airports (in thousands):

Consolidated Results and Other Data compared with 2019 (in thousands of pesos): 

^{[1] Revenues from improvements to concession assets are recognized in accordance with International Financial Reporting Interpretation Committee 12 “Service Concession Arrangements” (IFRIC 12), but this recognition does not have a cash impact or an 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 in accordance with the Company’s Master Development Programs in Mexico and Capital Development Program 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.}