Grupo Aeroportuario del Pacifico, S.A.B. de C.V. Amer. Dep. Shares (each rep. 10 Ser. B shares) 2026 Q3 Earnings Call

Good morning, and welcome to GAP's third quarter 2026 conference call. At this time, all lines are placed on mute to prevent any background noise. After the presentation, we will open the floor for questions, and at that time, instructions will be given for you to ask a question. Now it's my pleasure to turn the call over to GAP's investor relations team. Please go ahead. Thank you, and welcome to GAP's third quarter 2026 conference call.

Prior to introducing the management team, I would like to take a few moments to mention the forward-looking statements as described in the financial report. Please be advised that any comments made today may not account for future economic circumstances, industry conditions, the company's performance, or financial results. As such, any information discussed is based on several assumptions and factors that could change, causing actual results to materially differ from current expectations. For the complete note on forward-looking statements, please refer to the quarterly release issued yesterday. Thank you for your attention. It is my pleasure to introduce our speakers from GAP, who will be discussing with you the operational and financial results for the third quarter of 2026. They are Mr. Raúl Revuelta, Chief Executive Officer, and Mr. Saúl Villarreal, Chief Financial Officer.

Mr. Revuelta, please proceed with your opening remarks.

Thank you, Maria. Good morning, everyone, and thank you for joining us today. I want to start with the fact that GAP delivered a solid financial performance in the third quarter of 2026. Despite persistent challenges across our airport network, demonstrating the valuable and increasing contribution of our diversified business model. Passenger traffic declined by 1.4% compared to the third quarter of 2025, which was a significant improvement versus the 5.6% decline experienced in the second quarter of 2026. At the same time, revenue, excluding construction services, increased by 13.2%. EBITDA grew by 19.2%, reaching MXN 6.1 billion, and the EBITDA margins expanded by 350 basis points to 67.8%. These results are the result of three distinct drivers. First, the consolidation of Cross Border Xpress. Second, the structural benefits from the internalizing of GAP Technical Assistance Services.

And thirdly, the growth in directly operated business, together with the gradual implementation of the approved maximum tariffs. Excluding CBX, revenues from aeronautical and non-aeronautical services increased by 3.4%, while EBITDA grew by approximately 8.3%. While these figures highlight the strength of our operating model, they also indicate that underlying passenger demand remains challenging. We are prioritizing working on the factors we can control, such as strengthening our airport network, while at the same time building complementary business that diversify earnings and expand our capacity to create long-term value. However, we are aware that international leisure traffic is recovering at an inconsistent pace due to several external factors. Let me begin with the passengers traffic. During the third quarter, GAP's 14 airports handled approximately 18.4 million passengers, representing a 1.4% decrease compared to the same period last year.

Although traffic stayed below 2025 levels, the third quarter decline is lower compared to the previous quarter. However, we do not view this stabilization as a sign of broader-based recovery across all our markets as of yet. Domestic traffic increased by 0.6%, while international traffic declined by 4.5%, primarily reflecting the continued weakness at certain leisure destinations throughout Mexico and Jamaica. Guadalajara, on the other hand, remains as a primary performance driver with an 8% passengers traffic increase, supported by growth in both domestic and international volume. It is worth noting that international passengers in Guadalajara grew by 13.1%, reflecting the resilience of the airport diversified passengers mix across visiting friends and relatives, business, and leisure segments. During the quarter, traffic in Tijuana declined slightly by 0.5%, while CBX users increased by 8.4%, reaching approximately 1 million passengers during this period.

Additionally, the CBX capture rate improved from 29.7% in the third quarter of 2025 to 32.4% in the third quarter of 2026. These results highlight the growing importance of cross-border connectivity and the strategic benefits of integration CBX into GAP's airport network. Puerto Vallarta, Los Cabos, however, continued to experience softer demand with passengers traffic decline by 11% and 6.8% respectively. International traffic at Puerto Vallarta remained weak, declined by 24.8%, primarily due to the security concerns following events in Jalisco in February. To counter this, we are actively collaborating with airlines, tourists, and stakeholders to promote connectivity and passenger demand in the region. Montego Bay continues to navigate the aftermath of Hurricane Melissa with a 23% decline in passengers traffic during the quarter. While hotel capacity and tourist activity is recovering, the normalization period remains tied to air hotels reopening and international airline connectivity.

Looking ahead, we remain cautious about how quickly traffic will recover. We anticipate that airlines capacity, passengers demand, and the restoration of tourist infrastructure will return at different speeds across our destinations. The traffic disruption caused by Hurricane Martha should ease as conditions normalize. However, airlines capacity limits and weak leisure demand may persist longer. We are addressing this challenge by working closely with airline partners and tourist stakeholders to strengthen existing routes, enhance connectivity, and support sustainable traffic growth. Turning now to our financial performance. Aeronautical services increased by 2.6% compared to the third quarter of 2025. At our Mexican airports, aeronautical revenue grew by 5.3%, primarily due to the gradual implementation of the maximum tariffs approved for the 2025-2029 regulatory period. This growth was partially offset by the 7.5% appreciation of the Mexican peso versus the US dollar, which negatively affect dollar-denominated international TUAs.

In Jamaica, aeronautical revenues declined by 12.7%, reflecting lower passengers traffic and the negative translation effect resulting from the stronger Mexican peso. GAP's regulatory-related tariff framework contributes to the revenue resilience during periods of softer passengers traffic. However, it does not completely offset the impact from lower volumes or exchange rate movements. Non-aeronautical revenues increased by 37% compared to the third quarter of last year. These performance were largely supported by the consolidation of CBX, as well as the continued growth in the several business line operated directly by GAP. Excluding CBX, revenues from directly operated business increased by approximately 13.7%. Cargo operations and bonded warehouse business grew by 20.7%, reaching approximately MXN 674 million in quarterly revenues. This performance deserves particular attention because cargo and logistic represent an important growth platform beyond passenger-related activities. Advertising grew 18.2%, convenience stores 11.6%, and VIP lounges 5.6%.

The results show that our diversification strategy is producing measurable contribution. We see opportunity to expand our logistic services and our directly operated businesses subject to disciplined investment decisions and execution. Meanwhile, third-party business face a more challenging environment, particularly those categories exposed to the international tourism foreign exchange fluctuations. For example, duty-free revenues declined by 12.3%, reflecting the continued international passengers traffic weakness, especially at certain destinations. Despite a temporary setback, we anticipate that business lines will benefit from gradual recovery of international traffic. Let me now provide an update on our Cross Border Xpress. During the third quarter, CBX generated revenues of MXN 775 million with approximately one million passengers using the facility in both directions. Average revenue per passenger reaches $43 compared to the $42.80 during the second quarter of 2026. Therefore, CBX contributed to MXN 558 million to our consolidated EBITDA during the quarter.

Beyond its immediate financial contribution, CBX is an important cross-border mobility platform. User growth by 8.4%, despite a slight contraction in traffic at the Tijuana airport, driving the capture rate up from 29.7% in the third quarter in 2025 to 32.4% in the third quarter of 2026. These positive trends underscore clear opportunities to deepen customer penetration, advance commercial integration, optimize pricing strategies, and expand complimentary passenger services. This is still the earliest stage of CBX integration. As such, our priority is to convert these opportunities into sustainable earnings growth while maintaining the operational discipline and strong passenger experience that we value at GAP. Moving on to the operating cost and profitability. Excluding the effect of the IFRIC 12, total operating expenses increased by 3.8% compared to the third quarter of 2025. Cost of service increased by 12.6%, excluding the contribution from CBX operation.

Primarily driven by personnel, maintenance, and security expense across our airport network. Personnel expenses increased mainly due to additional operating staff, the integration of technical assistance employees, salary adjustment, and benefits. This increase, together with the consolidation of CBX, were partially offset by a significant reduction on technical assistance fee, following with the internalization of the services, as well as lower concession fees in Jamaica. The internalized technical assistance services represent a structural change in our cost base, allowing GAP to remain more of the value generated by its operations. As a result, consolidated EBITDA increased by 19.2%, reaching MXN 6.1 billion, while the EBITDA margin, excluding IFRIC 12, expands from 64.3% in the third quarter of 2025 to 67.8% in this quarter. At the net income level, the stronger operating performance was partially offset by higher financial expenses associated with our investment program and the CBX transaction.

This day, we continue to closely monitor our cost of debt, maintaining our financial flexibility and cash flows generation while executing our capital program. Regarding our investment program and financial position, we remain committed to executing the infrastructure projects, including our 2025-2029 master development programs in Mexico and the capital development programs in Jamaica, with a total expenditure of MXN 8.6 billion during the first nine months of 2026. Our current investment cycle represents the largest infrastructure expansion program undertaken by GAP's concession framework. The results are designed to increase airport capacity, increase operational efficiency, and support the long-term development of our network. Although traffic was below our initial 2026 expectation, our regulated infrastructure commitments address long-term capacity and service requirements. For discretionary growth projects, we continue to evaluate expected returns, execution risk, and capital needs before committing resources.

Expansion of the Guadalajara, Puerto Vallarta, and Tijuana airports, along with additional infrastructure improvements across our network, will position GAP to accommodate future growth while improving passenger experience and service quality. We expect that these expansion projects will generate continued commercial opportunity as new terminal capacity comes online over the next few years. Our focus remains on disciplined capital allocation, distinguishing between non-discretionary concession commitments and strategic growth opportunities. In this matter, we effectively balance our infrastructure demands, financial structures, and shareholder distributions. Regarding dividends, as approved at our annual shareholders meeting in April 2026, we intend to distribute a cash dividend of MXN 20.80 per share in a single installment. We are currently in the final stage of updating our outstanding share count within the bank. Once this process is complete, we will formally announce the payment date.