Corporacion America Airports Reports Second Quarter 2022 Results

Commercial revenues above pre-pandemic levels, with traffic at 75.5%

Adjusted EBITDA ex-IFRIC at 93.4% of 2Q19 levels; positive in all countries of operations

LUXEMBOURG–(BUSINESS WIRE)–Corporación América Airports S.A. (NYSE: CAAP), (“CAAP” or the “Company”) a leading private airport operator in the world reported today its unaudited, consolidated results for the three and six-month periods ended June 30, 2022. Financial results are expressed in millions of U.S. dollars and are prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (“IASB”).

Commencing 3Q18, the Company began reporting results of its Argentinean subsidiaries applying Hyperinflation Accounting, in accordance to IFRS rule IAS 29 (“IAS 29”), as detailed on Section “Hyperinflation Accounting in Argentina” on page 22.

Second Quarter 2022 Highlights

• Consolidated Revenues of $332.7 million, a 145.9% YoY increase, or 19.4% below 2Q19. Excluding the impact of IFRS rule IAS 29, revenues increased 149.3% YoY, to $334.8 million, reflecting increases of $105.9 million in Aeronautical revenues, $76.5 million in Commercial revenues, and $16.6 million in Construction service revenue. Revenues ex-IAS 29 reached 84.7% of pre-pandemic levels, up from 69.0% in the first quarter.
• Key operating metrics improved YoY:
  • Passenger traffic increased 177.0% YoY to 15.1 million, reaching 75.5% of 2Q19 levels.
  • Cargo volume increased 5.6% YoY to 87.9 thousand tons, to 83.3% of 2Q19 levels.
  • Aircraft movements totaled 181.2 thousand, an 89.1% YoY increase, at 87.6% of 2Q19 levels.
• Operating Income of $72.1 million up from an operating loss of $27.2 million in 2Q21, mainly reflecting the YoY recovery in passenger traffic.
• Adjusted EBITDA on an “As Reported” basis increased to $110.6 million, from $8.5 million in the year-ago period, improving to 93.3% of 2Q19 levels. Adjusted EBITDA margin expanded to 33.2% from 6.3% in 2Q21 and 28.7% in 2Q19.
• Ex-IAS 29, Adjusted EBITDA totaled $110.7 million, compared with $7.9 million in 2Q21 and $113.2 million in 2Q19. Adjusted EBITDA margin Ex-IFRIC12 increased to 36.2% from 6.0% in 2Q21, but decreased slightly from 37.4% in 2Q19.

CEO Message

Commenting on the results for the quarter Mr. Martín Eurnekian, CEO of Corporación América Airports, noted: “We delivered another strong quarter, achieving Adjusted EBITDA of $111 million underpinned by enhanced performance across operations, and up from $9 million in the second quarter of last year. Adjusted EBITDA margin ex-IFRIC12 expanded to 36% from 7% in 2Q21, reflecting the continued recovery in passenger traffic, robust commercial revenues above pre-pandemic levels, and a continued focus on cost management.”

“On the balance sheet front, the successful liability management transactions concluded last year, together with the significant increase in Adjusted EBITDA over the last quarters, allowed for a sharp reduction in our Net Debt to LTM Adjusted EBITDA ratio to 3.5x this quarter, down from 5.1x in the first quarter, while we face no major debt maturities until late 2024. Moreover, we are on track to continue reducing our Net Debt to LTM Adjusted EBITDA ratio.”

“Looking ahead, we anticipate passenger traffic across our airports to continue recovering driven by pent-up demand and the elimination of travel restrictions. In the near-term, our operations in Europe are expected to continue benefitting from a strong summer holiday travel season, although we are mindful of the overall macro and geopolitical context. With a long-term view on value creation, we remain focused on advancing the economic re-equilibrium processes in Brazil and Armenia, while selectively looking for additional value creation opportunities and progressing on our sustainability initiatives.”

Operating & Financial Highlights

(In millions of U.S. dollars, unless otherwise noted)

Note: Figures in historical dollars (excluding IAS29) are included for comparison purposes.

Operating & Financial Highlights

(In millions of U.S. dollars, unless otherwise noted)

Note: Figures in historical dollars (excluding IAS29) are included for comparison purposes.

2Q22 Operating Performance

Passenger Traffic

Total passenger traffic increased 177.0% YoY to 15.1 million reaching 75.5% of pre-pandemic levels, up from 65.5% in the previous quarter. Performance was supported by a continued recovery in travel demand following the gradual lifting of travel restrictions across all countries of operations. Notably, in 2Q22 Armenia surpassed pre-pandemic traffic levels by 5.7%, while Ecuador stood at 93.9% and Italy at 84.5%. Meanwhile, traffic in Argentina and Uruguay stood at 75.8% and 65.1% of 2Q19 levels, respectively, continuing the recovery trend. Finally, traffic in Brazil reached 76.4% of pre-pandemic levels, slightly below the 77.3% recorded in the past quarter. International traffic increased to 74.4% of pre-pandemic levels, up from the 52.4% in 1Q22, with domestic traffic reaching 78.8% of 2Q19 levels. Traffic in April, May and June improved sequentially, reaching 73.5%, 75.5% and 77.5% of traffic levels for the same months in 2019, respectively.

Passenger Traffic in Argentina increased 3.6x YoY and improved to 75.8% of pre-pandemic levels, up from the 63.6% posted in the prior quarter. International passenger traffic, which continued to benefit from the full re-opening of borders on November 1, 2021 and the lifting of travel requirements, increased 5.9x YoY in 2Q22 and reached 60.7% of 2Q19 traffic levels, up from 42.6% in 1Q22, showing a continued sequential improvement. Domestic passenger traffic, which accounted for 72% of total traffic in the quarter, increased 3.2x YoY to 83.0% of 2Q19 levels, up from 75.9% posted in 1Q22. Effective April 7, 2022, Covid tests are no longer required, and travelers must complete an affidavit form.

In Italy, passenger traffic increased 5.1x YoY and improved to 84.5% of pre-pandemic levels, up from 56.5% in 1Q22, with continued recovery at both, Florence and Pisa airports. Domestic and international traffic increased by 1.7x and 8.4x YoY, respectively, and stood at 91.7% and 82.7% of 2Q19 levels. Traffic in June benefited from the start of the summer season and from the full lifting of travel restrictions effective June 1, 2022.

In Brazil, total passenger traffic rose 62.3% YoY, reaching 76.4% of 2Q19 pre-pandemic levels, slightly below the 77.3% posted in the prior quarter. Domestic passenger traffic was up 94.7% YoY and reached nearly 90% of 2Q19 levels, while transit passengers increased 2.6% YoY to 54.8% of 2Q19 traffic. Traffic in the quarter was impacted by weaker travel demand as a result of rising fuel prices adding pressure on airfares.

In Uruguay, where traffic is largely international, passenger traffic increased 5.3x YoY, reaching 65.1% of 2Q19 levels, up from 50.3% recorded in 1Q22, reflecting an ongoing recovery after the re-opening of borders on November 1, 2021, and the gradual relaxation of travel requirements.

In Armenia, where traffic is 100% international, passenger traffic improved 56.6% YoY, exceeding pre-pandemic levels by 5.7% for the first time since the inception of the pandemic. During the quarter, the government announced the lifting of all Covid-related entry requirements for all travelers, effective May 1, 2022.

In Ecuador, total passenger traffic grew 1.1x YoY, to 93.9% of 2Q19 levels, up from the 78.9% in 1Q22. Both, domestic and international passenger traffic continued to improve reaching 91.3% and 96.9% of pre-pandemic levels, respectively. International passenger traffic remained supported by routes to Europe, the US and Panama operating at higher levels than 2019, while domestic passenger traffic was impacted by some flight cancelations in June due to protests and social unrest.

Cargo Volume

Cargo volume increased 5.6% YoY in 2Q22, to 83.3% of pre-pandemic levels of 2Q19, with strong contributions from Argentina, Brazil and Uruguay, which together accounted for more than 80% of total volume in the quarter. Notably, cargo volume in Uruguay and Italy was above 2Q19 levels, while in Argentina it was above 85% of pre-pandemic levels.

Aircraft Movements

Total aircraft movements increased 89.1% YoY in 2Q22 and reached 87.6% of 2Q19 levels, up from 73.5% in the first quarter. Above 90% of aircraft movements in the quarter came from Argentina (51%), Brazil (18%), Italy (11%) and Ecuador (11%), which reached 87.3%, 89.0%, 90.6% and 100.2% of pre-pandemic levels, respectively. Notably, aircraft movements in Armenia surpassed 2Q19 levels by 35%.

Tables with detailed passenger traffic, cargo volume and aircraft movement information for each airport can be found on page 35 of this report.

Operational Statistics: Passenger Traffic, Cargo Volume and Aircraft Movements

Review of Consolidated Results

Results for ECOGAL, which operates the Galapagos Airport in Ecuador, are accounted for under the equity method. In December 2021, CAAP signed an agreement to transfer its 50% ownership interest in Aeropuertos Andinos del Perú S.A. to Andino Investment Holding S.A. and, consequently, stopped operating the five airports that were under concession.

Commencing 3Q18, the Company began reporting results of its Argentinean subsidiaries applying Hyperinflation Accounting, in accordance to IFRS rule IAS 29, as detailed on Section “Hyperinflation Accounting in Argentina” on page 22.

Revenues

Consolidated Revenues increased 145.9% YoY to $332.7 million in 2Q22, or 152.0% YoY to $304.9 million, when excluding Construction Services and the impact of IAS 29, reflecting higher activity following the gradual lifting of travel restrictions. When compared to 2Q19 and also excluding IAS 29, Revenues excluding Construction Services grew by 1.3%, even with traffic at 75.5% of pre-pandemic levels, reflecting tariff increases and Commercial Revenues 24.5% above 2Q19 levels. Compared to 1Q22, revenues ex IFRIC 12 improved 24.7% sequentially, with strong performances in Italy (+105.3%), Armenia (+87.9%) and Argentina (+15.3%), reflecting higher passenger traffic following the gradual lifting of travel requirements.

The following table shows revenue performance by country. More detail on the performance of CAAP´s key countries of operations can be found on page 13.

Revenues by Segment (in US$ million)

Revenue Breakdown (in US$ million)

Revenue Breakdown (in US$ million)

Aeronautical Revenues accounted for 45.3% of total revenues and increased 230.0% YoY, to $150.8 million. When compared to 2Q19, aeronautical revenues excluding IAS 29 declined 15.3% to $151.3 million, as passenger traffic has not fully recovered, partially offset by tariff increases. During the quarter and excluding IAS 29, aeronautical revenue declined 14.3%, or $13.5 million, in Argentina, 19.1%, or $5.1 million, in Italy, and 29.7%, or $4.3 million, in Uruguay, compared to the same quarter of 2019. Moreover, aeronautical revenues declined 36.3%, or $4.7 million in Brazil, and 5.7%, or $1.0 million in Ecuador, while Armenia reported a 10.5% increase from pre-pandemic levels of 2Q19.

Non-Aeronautical Revenues accounted for 54.7% of total revenues and increased 103.0% YoY, to $181.8 million. When compared to 2Q19 and excluding the impact of IAS 29, non-aeronautical revenues declined 15.4%, or $33.3 million, to $183.5 million, driven by a decline of 68.4%, or $64.6 million, in Construction Service Revenue, mainly as a result of lower capex in Argentina. Notably, this was partially offset by an increase of 24.5%, or $29.9 million, in Commercial Revenues, principally driven by higher Cargo and Duty free revenues in Argentina, as well as higher Fueling services in Armenia.

Excluding both Construction Service Revenue and the impact of IAS 29, non-aeronautical revenues increased 25.5% against 2Q19, to $153.6 million.

Operating Costs and Expenses

During 2Q22, Operating Costs and Expenses, excluding Construction Service Cost, increased 57.5% YoY to $236.7 million, mainly driven by higher Concession fees and Salaries and Social Security Contributions, in line with higher activity, along with higher Cost of fuel in Armenia. When compared to 2Q19, Operating Costs and Expenses, excluding Construction Service Cost and IAS 29, increased 0.7% to $219.6 million, mainly due to higher Cost of fuel in Armenia tied to higher fuel sales and, to a lesser extent, higher Salaries and social security contributions, which were impacted by higher inflation rates than currency depreciation, in Argentina. On a comparable basis, excluding Cost of fuel, Operating Costs and Expenses excluding Construction Service Cost and IAS 29, would have declined 7.3% against pre-pandemic levels.

Cost of Services increased 71.0% YoY, to $234.9 million reflecting increased traffic and cargo activity. When compared to 2Q19 and excluding IAS29, Cost of Services declined 20.1%, to $220.4 million, mainly as a result of the following declines:

• 68.5%, or $64.3 million, in Construction Service Cost, reflecting lower capex,
• 14.4%, or $4.4 million, in Maintenance Expenses, mainly driven by the renegotiation of supplier agreements to adapt services to lower activity, coupled with FX depreciation against the US dollar, and
• 16.3%, or $3.9 million, in Amortization and depreciation.

This was partially offset by an increase of 162.8%, or $16.8 million, in Cost of fuel, primarily in Armenia.

Excluding Construction Service cost, Cost of Services increased 65.4% YoY, to $207.4 million. On a comparable basis against 2Q19 and excluding the impact of IAS29, Cost of Services increased 4.8%, or $8.7 million, to $190.9 million, mainly as a result of the aforementioned increase in Cost of fuel.

Selling, General and Administrative Expenses (“SG&A”) increased 22.2% YoY, to $28.6 million in 2Q22 on an ‘As reported’ basis. When compared to 2Q19 and excluding the impact of IAS 29, SG&A declined 21.8%, to $28.0 million, mainly as a result of a $10.1 million bad debt recovery in 2Q22 related to outstanding amounts owed by a national carrier, in Argentina.

Other Operating Expenses were $0.7 million in 2Q22, down 51.2% from $1.5 million recorded in 2Q21 and relatively in line with $0.

Contacts

Investor Relations Contact
Patricio Iñaki Esnaola
Email: patricio.esnaola@caairports.com
Phone: +5411 4899-6716

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