Grupo Aeroportuario del Pacífico, S.A.B. de C.V. ($GAPB)

Good morning, everyone, and welcome to GAP's First Quarter 2026 Conference Call. [Operator Instructions] 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 First Quarter 2026 Conference Call. Prior to introducing GAP's management team, I'd like to take a few moments to mention the forward-looking statements as described in the financial disclosure statements. Please be advised that any looking statements made today may not account for future economic circumstances, industry conditions, the company's future 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 a complete note on forward-looking statements, please refer to the quarterly report issued on Monday. Thank you for your attention. Our speakers today from GAP are Mr. Raul Dewelta, Chief Executive Officer; and Mr. Saul Larrea, Chief Financial Officer. At this time, I'll turn the call over to Mr. Pawel ta for his opening remarks.

Thank you, Maria. Good morning, everyone, and thank you for joining us today. Aceto report that GAP delivered a solid start to the year-end results, as I discussed, the company operational and financial highlights for the first quarter. . Despite a challenging traffic environment, our performance remains strong, supported by the resilience of our nasal revenues as well as the continued growth of the new Aerologic business, which helped to offset the more complex traffic environment. Let me begin by discussing passenger strike. Total passenger traffic across GAP 14 airports decreased by 4.5% in the first quarter compared to the same period of 2025. This decrease reflects various factors that impacted the Mexican as well as the Jamaican operations. In the Jamaican operations, we continue to face headwinds from the hurricane Melisa, despite this, the recovery of hotel capacity has been better than expected along the main grid tourist corridor. It is important to note that while as today, passenger volumes have not yet reached preterm levels. Trends indicate that we will regain this level by the fourth quarter of this year. Topline in Mexico were largely driven by temporary disruptions, such as the security incident in Jalisco during the last week of February. This event negatively affected the perception of safety and key leisure destinations in Mexico, such as Puerto Vallarta and Skou, thereby softening demand of these airports. These dynamics estimate to the typical high season month of March affecting the spring break traffic and cash in demand to decline. Tijuana was also impact given its strong reliance on a cross-border cranes as roughly 75% of CV users are U.S.-based passengers accessing domestic flights to Mexican tourist destination. Additionally, global macroeconomic volatility impact operations this included geopolitical tension and to train fuel prices, which pressured airlines operation costs prompting a realigning of capacity to maintain efficiency as well as the possibility of economic downturn. Now moving on to the revenues. Total revenues increased by 2.8% compared to the first quarter of 2025. Aeronautical revenues for the group grew by 3.9%, but in Mexico, increase was 9.3%, primarily driven by the implementation of maximum tariff for the 2025-2029 regulatory period in Mexico, which are linked to the highest level of CapEx -- the CapEx investments in the history of the company. Narolotical revenues increased by 6.1%, supported by strong performance in our Mexican operations, reaching 10.7% and particularly in business operated directly backup. This includes the bundle warehouse business, which represents around 21% of total naronaltical revenues. This performance underscores the resilience of our business model and the continued success of our increasingly diversified revenue base. Cost of service increased by 6.5% compared to the same period last year, mainly due to the higher personnel cost, increased security and maintenance expenses and expansion of operational risk. We were hard to offset this pressure by maintaining rigorous cost control throughout the organization. As a result, EBITDA increased by 6.4%, reaching MXN 6 billion with an EBITDA margin of 68.3%, reflecting both revenue growth, operational efficiency. This despite the reduction of additional concession fee in Montego airport due to the decrease in passenger traffic and revenues which is a temporary effect. Regarding our financial position, GAP maintains a strong liquidity position with cash and cash equivalents of MXN 23.2 billion during the first quarter. mainly due to the store on issuance of MXN 10.7 billion on March 31. Poses we allocated towards our strategic acquisition of 25% of CVS as well as capital expenses. Furthermore, during the quarter, we refinanced existing debt, optimizing our balance sheet and strengthening our overall financial flexibility. In terms of CapEx, we continue to advance our investment program under the current master development plan. Deployment will require MXN 1.8 billion, focusing on enhancing capacity as well as the passenger experience across all our airports. I would like to briefly update you on our strategy initiatives. As you know, in December 2025, our shareholders approved the business combination related to the CBX as well as internalization of the technical system services. This transaction is still in the process of being formalized. Once completed, if we it will be consolidated in our financial statements, and we expect the conclusion of this process to take place during the second quarter of this year. We believe this initiative will strengthen our long-term growth platform specifically by promoting our market cross-border passenger profile as well as unlocking additional commercial opportunities. As we move into the rest of the year, we remain mindful of the macroeconomic environment and short-term traffic volatility. Despite this, we believe structural demand remains strong, supported by the solid fundamentals of our market. We remain confident that our diversified asset portfolio, a strong financial position and disciplined execution strategy position gap well to navigate near-term challenges while continuing to generate long-term shareholder base. Later today, we will hold our ordinary shareholders' meeting and which we will propose a dividend payment MXN 20.8 per outstanding share during the following 12 months, among other rates. Thank you again for your time. Operator, please open the line for questions.

[Operator Instructions] Our first question over the telephone comes from Trade Framos of Bradesco BBI.

Thank you Rahul all and team to -- my question is on the aeronautical part of the business because it's a 2-parter here. After this tariff implementation, can you let us know what your current maximum tariff compliances and how should we think about it towards year-end? And secondly, on the traffic outlook that you have, -- there's a host of domestic global factors at play negatively impacting demand for travel -- just can you frame it a little bit in terms of your 2% to 6% guidance? I mean, how you think about it? And when do you think we could see a more meaningful recovery there?

Thank you, Ralph. First, we're lighter with maximum tariff. We are between 92% and 93% of the fulfillment. -- we're still having to implement additional air passenger fee changes on the -- for the summer in 2 of our airports. Balata and [indiscernible] -- so we're still on the track of what we say originally will be really close to 95% for the end of the year. For sure, in all what is related with maximum tariff we need to be in account the actual rate that at the end of the day, an important part of that, of the revenues are denominated in dollars for the case of passenger to. The other part related to traffic. I would say that today is difficult to real what will happen on the traffic in terms of the Iran world and the fuel prices, it will say that it's difficult to have today a more view of what could happen in coming months and how base could be the decrease or the possible decrease of the adjustment on offer of seats in the market. But the other part that I lease are still seeing is a summer that will come a desaturation with some additional fits. What we are expecting that on the past years during some this kind of geopolitical crises, the U.S. passing years trend to fly more over the neighbor in the area of the neighborhoods could be abort rather than go to Europe or other kind of more long-haul travel. So what we are expecting in some way, some additional feed for the summer in those markets. But in general terms, for the moment, we keep without variance, what we saw on the pretty first moment as our guidance for the year. We think that some of the temporary effect that because the security could bring in terms of decrease of passengers will be completely behind for the summer. And also, we are seeing better than we expect a recovery of the of Montego Bay hotel capacity. But for sure, for the second quarter, we will review, if that is the case, our guidance for the traffic.

Next, we'll move on to Alan Macias of Bank of America.

Just a question on the CVX NTA transaction. What is pending for it to be completed? And I guess, should we expect it to be consolidated in May or in June -- thank you.

For being consolidating the result during May. So yes, we are just in the middle of that. But yes, that would be our target. .

Next, we have Gilead Moments of JPMorgan. .

Yes. Two questions. The first 1 on the commercial front. First of all, congrats on the strong results during the first quarter of the year. . Just wondering what is behind the very strong cargo performance if there's any in particular to GWC or something else? And if we can assume these numbers as sustainable going forward, And the second question is on the capital allocation. So now following the upcoming conclusion of the Saba transaction and I understand the trucks and CCO was put on hold as well. If there's anything else that you'll be evaluating on the inorganic side of growth opportunities . .

I mean related to the results and specifics of the bonded warehouse business. It is important to have in mind that this business is mainly moved by the cargo -- and in the case of Guadalajara and all the central area of Mexico, we are seeing a really important more than 20% increase of cargo of high value on the area. . Related mainly by electronics, Fox.com, for instance, has a really big movement of Gualajara for additional plant. So what we are seeing for the last year is after the annulment of specific tariffs for China and for some different countries of Asia, we see like a shift on production on some electronic parts from Asia to Gualajara area mainly. So we are seeing this really important increase in volumes of cargo per ton only volumes, both high value of the cargo for this bonded warehouse business you need to take an account that revenue comes for a mix of volume and value of the cargo that you are moving. So what we are seeing is that at the end of the day, all this change of tariffs bring some or shift some of the production from Asia to the Central Mexico and mainly to Jalisco.

Well, in terms of capitalization, as you know, we are looking for some opportunities over time. So far, we don't have nothing more important even than CDX conclusion and integration to the consolidated financial statements. So for now, we don't have any other projects or major projects we will let now to the market as soon as we have something on the table. The 2 [indiscernible] was canceled by the government. So we will not continue on that anymore. And so far, we don't have any other relevant projects.

Yes. But complementing the aware of Saul. For sure, we have an important focus on the development of new business in our airports. I will say, we are working in 2 different projects for hotels in airports of Mexico of our airports in our net so for sure, the big focus on continuing working on the efficiency of the margins in all of our directly operated by us business. So -- for sure, we will continue to see and review different kind of opportunities to M&A. But also, we have like a big focus on how to increase the efficiency of our directly operated by our business.

From Itai Banco, we have Pablo Ricalde.

I have 1 question on the cost side. So we saw depreciation expense remained flattish year-over-year. So I just want to understand why despite all the CapEx you made last year, depreciation remained stable year-over-year .

Well, this is Saul this is all well, basically, we are aligned -- we don't have any other major projects capitalized and depreciated. Also, as you may know, we have more than 25 years of concession. So the major projects that were capitalized and were depreciated during the last years were interrupted due to the turn of the depreciation period that the net effect of the offset of the of increase in depreciation, net of those assets that were already 100% depreciated.

Next, we have Gabriel Himelfarb of Scotiabank. .

Two quick questions. First, are you seeing any meaningful capacity movements from airlines, mainly domestic or perhaps low-cost U.S. airlines given the rise of fuel prices and perhaps the -- what happened in the past month? And my second question is about the CBX. I think it was financed 25% in pesos. Why was the logic of being financing pesos rather than in U.S. dollars?

First, from inside of the seat capacity of airlines, I mean it is important to separate the two possible effects. The first 1 at with the concerns, I would say that we are not seeing any kind of a structural change on the set capacity on that area. . But related on the fuel cost on what would be the possible reaction or capacity movement of airlines. For sure, it's something that's still on table in some way -- for the moment, we are seeing some decrease in capacity on at least not so relevant today, but we are seeing the cut of some services for instance announced the cut of some services in Guadalajara. We are seeing some decrease on services on Tijuana also in Cancun. So I would say that early to have a perfect view of what could happen on this level of close to $110 per barrel of oil. I would say that if you see for a year time, the price on 2022, it was just close at the same level, and we don't see on that moment, decrease on on capacity, while still happening in the openings of different routes. For instance, Volaris announced the new routes to toast you want to have Scatec, rate San Luis. So we still see additional capacity. But for sure, it's the moment of decrease of capacity unit cost of the fuel still on the table. We need to, in some way, understand how long could take to in some way normalize the price of the fuel. And on the other hand, how the -- how important would be the resilience of the demand for the pass through of the price of this pick on fuel into the ticket delever yes, I mean, I believe for the moment, we are not seeing an important decrease in capacity. I would say that we are still seeing an increase due to the fact of new routes.

Related to your second question, we decided to take advantage of the level of the exchange rate, assuming no we are in lower levels in the exchange rate. The appreciation of the peso is explained in Fabry. So the idea is to take a long-term debt and trying to finance these assets in Mexican pesos, that above some volatility in our balance sheet in the long term view. As you may know, the effects of this exchange rate will be affecting our P&L. So in this way, we have a little bit higher interest rates but we have certainty about our long-term view balance sheet.

From Barclays, we have Pablo Bondi.

It's Raul Ale, good -- just 1 question. In terms of traffic expectations for next year. I know we're very early -- but have you had any contact or new information of Viva Volaris? Any color on that of or how the potential merge will share the domestic travel and especially on the routes they overlap any in there or something that you would like to share?

Thank you, Pablo. Yes, I would say in terms of the merger or the new win for airline or a Molas. For the moment, we are not seeing any particular change -- we are still, I mean, tough talked with them and having I think communication as session with a armies will they talk about there would be 2 for companies. And for the moment, they are not talking about the overlapping. But once across to Mexico, have a specific view about the protection. We will have more color about how to be this transaction in some way authorized. But at least with the communication that we have -- we are having with it, we're at the end, at least for the moment, they are not mistake anything related with overlapping and they are just talking about the operation of the two different companies who still are cities today.

We'll move on to Andrea here of heme.

Guys. Thanks for the call and converting we noticed that accounts payable increased sharply to around MXN 2 billion in the cash flow statement. Could you please elaborate on what is driving this increase?

Eyes, we were -- we have a significant increase in the effective cash position. because the issuance bond March 31 that was for the proceeds will be used for the acquisition of 25% of CDX, which will be in cash and additionally for CapEx committed into the MTP. So that's basically why we have this significant increase. It was $10.7 billion more in cash that we reduced for the sale of CX and NBP committee.

And we'll move on to Alberto Valerio of UBS.

Thank you age first 1 follow-up on CapEx, how should we be modeling the CapEx during the year is Seasonally, we started a little bit weaker and then increase the CapEx during the year. How should we expect that -- and the second 1 about the jet fuel, anything that's concerning you guys, we know that pipeline not mistake not hedged. I know that it's not a usual year. but how you see the supply of feed for Mexico during 2026, with this current price of oil price. Thank you very much. .

We'll let us with the to Related with the sits in Mexico, I mean, for sure, as you said, the hedging differ liens have different levels of hedging. But I would say the important thing to see what going to happen is the resilience and the specific demand for the pass-through of the tariffs of the cost of this fuel into the airfare. So that would be the first part. And second is going to be the kilometers that that specific route could bring. So let me put it this way. I will say that in the first stage, we're going to see some kind of more or additional decrease on seats on some specific routes that have more kilometers when you talk about, for instance, domestic market. This is why we are expecting seeing some kind of effect on Tijuana, for instance, where there are shorter slide has like 2 hours and half the average time in the plane for Tijuana fly is more line with 3 hours. On these kind of routes where the demand is not enough resilience for get all the full impact of the fuel cost, we're going to see some decrease of passengers. But on the other hand, there are some specific routes that have like led the 2 hours of flying at Cubi Los Angeles to cabo, 2 hours and half Cargotor Balata usages, for instance. -- or all the short -- really short routes out could be Mexico to Gualajara, Mexico to Balata Mexico Picabo that will be interesting on the mix that of demand that we expect to be resilient on the increase of airports. And in some way, short flights or share kilometer short in terms of kilometer light. So the mix of ballparks and the expected of additional laser passengers not flying long haul from the U.S. and flying or switching to Mexico beaches. All these effects together, egresses that our original guidance was still in place for the year. But for sure, it is difficult today to have like the complete crystal ball of what would happen in terms of the fuel. But if in general terms, the conditions on the price of the barrel is still

We could say that we are still seeing the same level of guidance for the end of this year..

Erosion related to your third question. The CapEx will be deployed in the following months, as you may know, the economic cycle in terms of CapEx is more concentrated in the last quarter of the year. in the first months, we are in the process of the reading process of all these projects. So we are in the middle of that. So we will be more intensive in terms of deployment during the following months.

[Operator Instructions] And we'll proceed with the phone questions. Next, we have Adam Fuentes of Santander.

Recently, we have seen some pressure in terms of traffic in Tijuana. I wonder if you can give us more color about what's at going forward? And maybe the main dynamics behind this expectation. Thanks .

I mean in terms of Tijuana, what we are seeing Aramis -- for sure, we have like a mix of different things happening over there. The first related that we are still what lack of capacity related of the patent with engines in qual and mainly from Bolivar still being there we think that for the summer, we will begin to see more of this plan line. That is first part. And second, what is related what we felt that is going to be completed temporarily that was related with all these security matters after the mental capture operation that in some way going to be, I mean, on the past and we will, in some way, recover fully for that effect on the summer. Again, in terms of what we are seeing for Tijuana is that on the summer, we will see a more important revenue and recovery of traffic. -- related for first additional feeds coming back to the airport. And second, I would say, a softer base of comparison versus last year. But in general terms, I would say that we're still optimistic that Tijuana at the end of the year, going to have a positive result or it will grow in terms of passengers.

There are no further questions at this time. I'll turn the call back over to Mr. Raul Reeta for closing remarks.

Thank you once again for joining us today. Before concluding, I would like to invite you all to join us on May 13 for GAP Day 2026. The event we study and at the CBS facilities and will continue at equal International Airport and will include a series of strategic management presentations, followed by a guided tour for our airports and the CVX facilities. . We believe this is an excellent opportunity to learn more about our strategy, operations and long-term growth outlook. Progressive station and further details, please reach out to our Investor Relations team. Thank you, and we look forward to seeing you there. Have a great day.

Thank you. This concludes GAP's conference call for today. Thank you for your participation, and you may disconnect. Goodbye.