UPDATE: Corporacion America Airports S.A. (CAAP) Reports Q3 Revenues Beat

(Updated - November 22, 2019 6:02 AM EST)

Corporación América Airports S.A. (NYSE: CAAP) reported Q3 EPS of ($0.15), $0.32 worse than the analyst estimate of $0.17. Revenue for the quarter came in at $417.1 million versus the consensus estimate of $342.4 million.

Third Quarter 2019 Highlights

• Consolidated revenues of $417.1 million, up 19.9% YoY. Excluding the impact of IFRS rule IAS 29, revenues increased 12.6% to $438.0, mainly due to higher construction service revenue in Argentina reflecting higher capex in the period.
• Performance of key operating metrics:
  • Passenger traffic up 1.4% YoY to 22.5 million
  • Cargo volume increased 4.1% to 98.6 thousand tons
  • Aircraft movements declined 2.3% to 225.7 thousand
• Operating Income declined 29.0% YoY, to $61.8 from $87.0, mainly impacted by a bad debt provision of $23.1 in Argentina and the impact of IAS 29. The operating margin contracted to 14.8% from 25.0% in 3Q18
• Adjusted EBITDA was $99.9 million, down 18.5% YoY, with Adjusted EBITDA margin Ex-IFRIC12 contracting 812 bps to 32.3%. Excluding, the bad debt provision recorded in Argentina, Adjusted EBITDA would have been $125.2 million
• Ex-IAS 29, Adjusted EBITDA declined 25.5% YoY, to $102.1 million, and Adjusted EBITDA margin Ex-IFRIC12 contracted 898 bps to 31.7%. Excluding, the bad debt provision recorded in Argentina, the Adjusted EBITDA margin Ex-IFRIC12 would have been 38.9%

CEO Message

Commenting on third quarter 2019 results, Mr. Martín Eurnekian, CEO of Corporación América Airports, noted: “We continue to navigate unfavorable market conditions, particularly in Argentina, our largest market, and to a lesser extent in Brazil, which impacted our performance in this quarter. Over 22 million passengers travelled through our 52 airports in 3Q19, up over 1% year-on-year, reflecting 4% and 3% growth in domestic and international traffic, respectively, partially offset by a double-digit decline in transit passengers. Traffic at our Brazilian airports continued to be impacted by the cessation of operations of Avianca Brasil.

In Argentina, we continue to experience a mix shift towards more affordable domestic traffic and weaker commercial revenues. Profitability in this market was also impacted by a $23.1 million bad debt provision recorded this quarter related to past due commercial revenues and aircraft fees accumulated for over a year from a local airline.

Despite these challenges, and excluding this bad debt charge, comparable Adjusted EBITDA margin Ex-IFRIC12 was at 39%.

Looking ahead, while we face complex macroeconomic dynamics and low visibility in Argentina, we continue advancing on our investment program to capture additional growth when the economy picks up. In Brazil, we remain focused on adding new domestic and international routes to gradually restore Avianca Brasil’s former capacity at Brasilia Airport. In Italy, we expect to deliver positive traffic growth this year and have begun works at Pisa Airport as we continue to monitor the evolution of Alitalia and the development of Brexit.

In sum, while in the near term we continue to face several headwinds, principally in Argentina and Brazil, we have a successful track record of operating in Argentina for over two decades in different macro cycles. Our resilient business model with over 80% of revenues generated in US dollars is further supported by a solid balance sheet. This provides flexibility as we move ahead in the execution of our investment projects to further expand and modernize our airport network to meet growing demand when the macro environment improves.”

For earnings history and earnings-related data on Corporación América Airports S.A. (CAAP) click here.

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