Grupo Gicsa S.A.B. de C.V. (GICSAB) Earnings Call Transcript & Summary

Good day, everyone, and thank you for standing by. Welcome to GICSA's First Quarter 2022 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. It is now my pleasure to turn the call over to Rafael Borja of InspIR Group. Sir, you may begin.

Thank you, and good morning, everyone. I'm very pleased to welcome you to GICSA's First Quarter 2022 Earnings Conference Call. Joining us today from GICSA are Mr. Isaac Cababie, Deputy Executive Director; and Mr. Diodoro Batalla Palacios, Chief Financial Officer. They will be discussing the company's first quarter 2022 consolidated results per the press release distributed by the company yesterday. If you wish to be included in future distributions, please contact us at InspIR Group in New York at (212) 710-9686 to be added immediately. A special note to any members of the media who are joining us today. We would like to remind you that today's call is for investors and analysts only. Therefore, questions from the media will not be taken. If you're a member of the media and wish to direct any questions to the company, please contact the company directly after the call. Also, please note that during this call comments made by management may include forward-looking statements, which are subject to various conditions and uncertainties based on a variety of factors. These forward-looking statements may differ materially from actual results. Thus, we ask that you refer to the disclaimer located in the earnings release prior to making any investment decision. It is now my pleasure to turn the call over to Mr. Isaac Cababie, Deputy Executive Director of GICSA, who will begin his presentation. Mr. Cababie, please go ahead, sir.

Good morning, everyone, and welcome to our first quarter 2022 earnings call. I would like to begin today's review by providing an update of the measures we have taken to improve our balance sheet under the current circumstances and on the company's performance during the quarter before turning the call over to our CFO, Diodoro Batalla, who will discuss these financial measures under the business continuity plans we have been implementing. Diodoro will also cover some financial highlights, after which, we will be happy to answer any questions you may have. I am pleased to report this quarter saw a series of measures focused on preserving liquidity and reducing leverage while advancing the growth plan under our business strategy. In fact, we achieved significant milestones with our strategy to strengthen the company's long-term financial position and improve the balance sheet. On February 14 and March 23, at the Bondholders' Meeting, the restructuring of local bonds, GICSA 15, 16, 17, 18 and 19, were approved with the full support of our bondholders. Changes included extensions of maturity, changing the UDI to Mexican peso, modification to fixed interest rate and interest capitalization. Also, we strengthened the debt structure with the granting of collateral and sources of payment with the sales of nonstrategic assets. We greatly appreciate the efforts of all the teams involved in this process, as well as our bondholders, for the support and work that led to the successful milestone of our restructuring. We will keep on working to monetize the assets in order to repay the debt. Also, aligned with our strategy, on April 21 we completed the sale of Lomas Altas, a property intended for corporate office use, for approximately MXN 1.3 billion, which will be used to pay down debt to improve the company's financial profile. I would like to remark that we are still working on a wider strategy to efficientize our debt profile. Moving on to our operational results. During the quarter we had 14 million visitors to our properties, a year-over-year increase of 43% and which represents 87% of pre-pandemic levels. The adjusted occupancy rate during the first quarter was 84% in the stabilized portfolio and 79% if we include the properties under stabilization. On the commercial front, we signed 60 doors equivalent to 20,000 square meters, and 35 new doors were opened corresponding to 4,200 square meters. To conclude my remarks, we know that we still have many challenges ahead of us, but we have the experience and determination to continue reaching our internal objectives and generate value for our stakeholders. We are also aware that we must advance and bring to a successful conclusion our current strategy. To that end, we continue to analyze GICSA's debt structure in the context of the current operating environment and the monetization of nonstrategic assets to reposition our company for long-term success. Thank you for your attention. I will now turn the call over to Diodoro to discuss recent financial measures in more detail. Diodoro, please go ahead.

Thank you, Isaac, and good morning, everyone. Thank you for joining us today. We welcome the opportunity to talk to you, and hope you have been able to spend more time with your friends and families now that the pandemic is receding. Market conditions are still complex and dynamic, and we in GICSA are responding as fast as we can to reverse the impact that we had during the pandemic. Our first quarter consolidated NOI and proportional NOI were MXN 795 million and MXN 670 million, respectively, which represents a year-to-year increase of 5%. Consolidated EBITDA and proportional EBITDA were MXN 833 million and MXN 708 million, increases of 12% and 14% during the same period. As Isaac mentioned, consistent with our strategy to improve our debt profile and preserve our liquidity, we successfully completed the restructuring of the local bonds with the full support of the bondholders. As a result of that, in this quarter we are reclassifying in our balance sheet the assets that we agreed to grant as collateral and source of payment with a sales proceed for MXN 6.3 billion. They move from noncurrent assets to current assets. These assets are Paseo Coapa, Paseo Metepec, Esplanade Aguascalientes, La Isla Acapulco as well as the land we have in Cancun. On our P&L, we have three important nonrecurring impacts. The first one, as a result of delivering units to clients in the residential project, Cero5Cien, we recognized revenues for MXN 230 million and associated costs of MXN 123 million that resulted in an increase of MXN 107 million in net income. The second nonrecurring impact was a recognition of MXN 193 million of fair value adjustments to investment properties due to revaluation. And the third one was MXN 158 million positive effect in the foreign exchange gains. All of this gave us a positive net income compared to the negative net income that we reported in the first quarter of '21. This concludes my presentation. Thank you for -- again for your attention. And now let's open the call for questions.

[Operator Instructions] And we do have a question from Simón Fuenzalida with Asset Management.

I would like to ask if you can provide us the cash collection data for the operations.

Yes. Our cash collections rate is gradually improving as we advance in the recession of the pandemic. We measure it as a percentage of the invoicing. What we still need to improve is our invoicing level, because we need to improve our occupancy rates. So in summary, collections are coming better, but invoicing is still behind.

Can you provide us a percentage?

A percentage? Yes. Out of invoicing, collection is coming around 85%, 89% of the invoicing. And our invoicing compared to pre-pandemic levels is around 80%.

[Operator Instructions] And it does appear that we have no further questions at this time. I would like to turn the program back to Mr. Isaac Cababie for closing remarks.

Thank you, everyone, again for joining us today for our first quarter results conference call. We want to remind you that we are always open and available to answer any and all of your questions. So please don't hesitate to contact us if you have any after this call. On behalf of everyone at GICSA, we wish you a great day.

This does conclude today's program. Thank you for your participation. You may disconnect at any time.