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

Please be advised that today's conference is being recorded and will be available on the company's Investor Relations website. 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 meant for investors and analysts only. Therefore, questions from the media will not be taken. If you are a member of the media and wish to direct any questions to the company, please contact the company directly after today's call. Before we get started, let me remind you that information discussed on today's call may include forward-looking statements regarding the company's future financial performance and prospects, which are subject to risks and uncertainties. Actual results may differ materially, and the company cautions not to place undue reliance on these forward-looking statements. GICSA undertakes no obligation to publicly update or revise any forward-looking statements, whether because of new information, future events or otherwise. It is now my pleasure to turn the call over to Mr. Batalla, Chief Financial Officer of GICSA, who will lead today's presentation. Diodoro, please go ahead.

Thank you, operator, and good morning to everyone. Thank you for joining our 2023 Fourth Quarter Earnings Conference Call. I hope you all are doing well. And throughout last year, our primary focus remain implementing our CORR strategy, which means collect, operate, renew and rent, resulting in some improvement in our main operating indicators. However, it is important to remark that external economic and financial conditions as well and unforeseen events are still having influence in our ability to accomplish our financial goals. In October, Hurricane Otis impacted the close of Acapulco’, Guerrero, affecting 80% of the city's infrastructure, including our shopping centers La Isla Acapulco. The damage to both property and our customers has directly impacted our revenue, and this trend is expected to continue over the next 3 to 5 years, until the region's economy recovers and the thousands of residential units, which are our natural customers for the mall, and for buildings. Now turning to our main operating metrics. The quarterly visitors traffic maintains growth trend, increasing 12% compared to the same period of 2022. As a result, during 2023, the number of visitors totaled [ 81.3 million ], exceeding the 2022 mark by [ 80% ]. Additionally, during the quarter, 92 leasing spaces equivalent to 28,000 square meter started operation and 60 new lease agreements were signed, in line with our CORR strategy. We closed the year with an 87% occupancy rate in our portfolio. On the other hand, these operating metrics were not reflected in the financial results. That is because our price did not rise proportionally. As our average rent price per square meter reduced 2% compared to the fourth quarter 2022 and our lease spread was negative 1.5%. Consolidated and proportional NOI for the quarter was MXN 814 million and MXN 675 million, respectively, representing a year-over-year growth of 13% for the quarter. For all 2023, NOI reached [ MXN 3.4 billion ] and [ MXN 2.8 billion ], respectively, with increases of 11% year-over-year. Consolidated and proportional EBITDA reached MXN 569 million and MXN 430 million this year, increasing 27% and 30% when compared to the fourth quarter 2022. However, considering all 2023, EBITDA reached [ MXN 3 billion ] and [ MXN 2.4 billion ], respectively, increasing only 8% and 7%, respectively, year-over-year. Looking ahead, 2024, our focus will continue to strengthen our operational and financial position through a diversified portfolio, high [ occupancy ] rates, long-term relationship with our tenants, the completion of our ongoing projects and reduction of our debt levels. We are clear that by walking this path, we will build a resilient and profitable company on the long term. This concludes my presentation. Let's open the call for questions. Operator, please go ahead.

[Operator Instructions] Our first question comes from Carlos Alcaraz of Apalache Análisis.

And congratulations for the results. I have just only one question. Is regarding the shopping center in Acapulco. Could you give us some color about the revenues it represents for the company?

Let me -- in terms of the percentage of the revenues, it's not that relevant. It is about -- for the whole company. It is about MXN [indiscernible] million of NOI of the whole -- for the whole year, which really affect us in this Acapulco mall is that, it was their main income that we have to face the debt leverage for the Cebures in GICSA 17, GICSA 19 and GICSA 15. That's why now we are capitalizing for -- starting 2025, we will need to start paying, and we were counting on that income in order to set that debt. So we might have some issues to comply with that, the [ extra risk] that we have to face for those [ Cebures ].

Okay. Okay. I understand. And another follow-up question. How have you progressed with the insurance companies or the insurance collection...

Again say -- how are we with the insurance company in order to collect the money is that your question.

Yes. Yes, it's about the progress in this process.

Okay. We are in the -- at this point, we are in the point of staying and making all the check with the company -- the amount of the damage that we have. We finish our calculations and all the estimations for the reconstruction. And we presented the numbers to the insurance company. And they are evaluating in order to tell us exactly how much is going to be the money that they're going to give us [regularly] in the -- later its to be -- it is going well, we still do not have the final number.

Okay. Okay. Okay. I understand. I say again, and congratulations for the results in this challenging year.

Thank you very much.

Our next question comes from Francisco Chávez of BBVA.

The question is regarding the operating expenses in this 4Q of last year, we saw a relevant increase in the corporate expenses. What can we expect for the coming quarters? Are -- is it fair to assume that this is a one-off and that corporate expenses will eventually decline.

Yes. Let me -- we have an increase in the fourth quarter of expenses, mainly because of the opening of the Riviera Maya project, and then we started to operate that project. So we start to incur in expenses for that project. So some of the expenses will remain as we will increase the income of that project. We also have the expenses.

[Operator Instructions] With no questions in queue, the question and answer session concluded. Thank you, everyone, again, for joining us today at our earnings conference call. As a reminder, GICSA Investor Relations team are always available to functionally address any and all of your questions. So please do not hesitate to contact us if you have any further inquiry after today's call. On behalf of GICSA, we wish you a great day. Thank you all for being in today's conference call. Now you may disconnect.