Good day, ladies and gentlemen, and welcome to ASUR's Third Quarter 2021 Results Conference Call. My name is Ally, and I will be your operator. At this time, all participants are in listen-only mode. We will conduct a question-and-answer session toward the end of today’s conference. As a reminder, today's call is being recorded. I'd now like to turn the call over to Mr. Adolfo Castro, Chief Executive Officer. Please go ahead.

Thank you, Ally, and good morning, everyone. Thank you for joining our conference call to discuss ASUR's third quarter 2021 financial and operating results. I hope that you and your loved ones remain healthy and safe. Additional details about our quarterly results can be found in our press release, which was issued yesterday after market close and is available on our website in the Investor Relations section. Let me remind you that certain statements made during this call may constitute forward-looking statements, which are based on current management's expectations and beliefs, and are subject to a number of risks and uncertainties that could cause actual results to differ materially, including factors that may be beyond our Company's control, including the impact from COVID-19. Please refer to the filings with the Securities and Exchange Commission and the Mexican Stock Exchange. Passenger traffic continued to improve across the board, reaching a total of nearly 14 million passengers in the third quarter, which was only 1.4% below the pre-pandemic levels of the third quarter of 2019. Again, Puerto Rico posted the strongest recovery, beating third quarter '19 levels by over 16%. Domestic traffic was up 22%, more than compensating for weaker international travel, which was down in the high-20s. Mexico delivered the best performance in terms of international traffic on the back of a successful vaccination process in the U.S., nearly reaching pre-pandemic levels of the third quarter of '19. Our eight smaller airports in Mexico posted a recovery in high-20s while traffic in Cancun was just 2% below the third quarter '19 levels. At the same time, domestic traffic in Mexico and Colombia continued to recover during the quarter. Compared to the pre-pandemic levels of the third quarter '19, domestic traffic in Mexico was only down by 9%, improving from the 12% drop posted last quarter. Note that Cancun Airport reached the domestic traffic levels of the third quarter '19. In Colombia, domestic traffic was only 4% below third quarter '19 levels. Compared to the previous quarter, there was a 30% decline against the second quarter of 2019. On a monthly basis, traffic continued to gradually recover throughout the quarter with the total traffic beating third quarter '19 levels by 3%, driven by Puerto Rico and Colombia, which were both above pre-pandemic levels, while Mexico was slightly down by 1% as domestic traffic lagged behind international recovery. Looking ahead at the travel trends, the ongoing vaccination rollout in the U.S. with 57% of the population fully vaccinated and 62% with at least one dose should contribute to a continued recovery of the international traffic in our Mexican operations, leading to a better outlook for the winter travel season. We also expect Mexico domestic traffic to continue its gradual recovery as the vaccination rollout and the economy recover. These factors are further supported by the gradual advance of vaccination campaigns and the lifting of travel restrictions across various countries. However, we expect that business travel will take more time to recover, resulting in slower recoveries at airports like Mérida, Veracruz, and Villahermosa in Mexico, which are more than 20% below 2019 levels during the quarter. We also remain cautiously optimistic about the global trend, and therefore, expect total traffic to reach the 12-month record that we set in February 2020 during the second quarter of 2022. Moving on to ASUR's financial performance. Our strong balance sheet enables us to ramp up operations to meet demand as travel conditions continue to gradually recover. We closed another quarter with a solid financial position. Cash and cash equivalents reached Ps.11 billion, more than doubling December 2020 levels at all three of our countries operations contributed to higher cash position with increases of over Ps.8 billion in Mexico, Ps.2 billion in Puerto Rico, and slightly over Ps.0.5 billion in Colombia. Total financial debt at the quarter end was Ps.14.1 billion, up just 1% from the year-end 2020 levels. Net debt to last 12 months EBITDA was 0.4 times at the close of the quarter, while the interest coverage ratio improved to 6.9 times from 5 times in the prior quarter. We also maintained a healthy maturity profile. Note that on October 19th, we refinanced our loan with BVA at Cancun Airport, extending its maturity by seven years with principal payments now starting in 2023. This brought down our principal payments stepped to 0.4% of total debt for the fourth quarter at the year-end and 3.5% next year. Note that on October 1st, we paid an ordinary net cash dividend of Ps.8.21 per share that was approved at our Annual Shareholders Meeting of 2020, totaling Ps.2.5 billion. Accounts receivables in turn dropped 18% sequentially, mainly driven by declines of 58% in Puerto Rico, 3% in Mexico, and 10% in Colombia. Revenues ex construction rose 154% to Ps.4.5 billion year-on-year. Importantly, we achieved an 11% increase in revenues over pre-pandemic levels in the third quarter of '19 with non-aeronautical services increasing by 17% and aeronautical services nearly 8%. Mexico accounted for 67% of the total ex-construction revenues in the quarter while Puerto Rico and Colombia represented 22% and 11%, respectively. On a sequential basis, revenues ex-construction increased by 11%. Commercial revenues increased year-over-year across our operations, over 210% in Mexico, 133% in Puerto Rico, and nearly 190% in Colombia. On a per passenger basis, commercial revenues remained distorted by the reduction in passenger traffic, reaching nearly Ps.118 compared with the pre-pandemic level of Ps.99 posted in the third quarter of '19. Operating expenses, ex-construction costs increased 31% year-over-year, reflecting mainly higher activity in Mexico. By contrast, consolidated costs were down mid-single digits when compared with third quarter '19 levels, even despite the 11% increase in revenues during the period. In Mexico, costs ex-construction increased 43% year-on-year, mainly due to higher technical assistance and concession fees, driven by increased revenues and EBITDA along with higher cost of services. Compared to third quarter '19, operating costs and expenses ex-construction rose 7%, below the 10% increase in revenues ex-construction. Costs in Puerto Rico rose nearly 10% year-on-year, but declined 27% when compared with the third quarter '19. During the quarter, the airport in Puerto Rico reported Ps.165 million in expenses from the plant under the CARES Act compared with reimbursement of expenses of Ps.113 million in the same quarter last year. Lastly, expenses in Colombia increased 33% year-on-year, largely reflecting higher concession fees related to the recovery in traffic levels. Consolidated EBITDA increased Ps.2.2 billion this quarter, up from Ps.755 million in the third quarter 2020, reflecting the current recovery in travel demand as vaccination programs advanced worldwide and travel bans are lifted. Compared to third quarter '19 pre-pandemic levels, EBITDA was up 18%. All countries of operation reported EBITDA gains in the quarter, with Mexico contributing Ps.2.1 billion, Puerto Rico over Ps.0.5 billion, and Colombia Ps.273 million. In percentage terms, EBITDA in the quarter compared with third quarter '19 levels increased by 14% in Mexico, 15% in Puerto Rico, and 1% in Colombia. Adjusted EBITDA margin, excluding IFRIC 12, increased to 68% in the third quarter, up from 65% in the prior quarter and 64% in the third quarter '19. Adjusted EBITDA margin reached 72% in Mexico, 59% in Puerto Rico, and 57% in Colombia. With regard to CapEx, we invested just over Ps.600 million during the quarter, the majority of which was invested in Mexico, while 46% was invested in Puerto Rico and nearly Ps.2 million in Colombia. Year-to-date, we have invested a total of Ps.1.5 billion. Note that we expect to spend more CapEx during the fourth quarter as we meet our committed investments of Ps.3.5 billion for the year in Mexico. In Mexico, we remain on schedule with the expansion of the terminal building in Mérida. The second phase of the project is expected to open during the fourth quarter, and the construction of the parallel taxiway for the second runway at Cancun Airport is also expected to open during the fourth quarter. We are expanding the first phase of the Terminal 4 expansion, while in Puerto Rico, we are undertaking major maintenance repairs to runways and taxiways. Before moving to the Q&A portion of the call, a recap of my third-quarter review: We maintained a solid balance sheet that enabled us to ramp up ASUR’s operations consistently with the recoveries in each of the markets. We also remain confident in our ability to effectively leverage ASUR's attractive airport network to continue rebuilding our passenger base longer-term, given the encouraging growth trends that we see across all our markets. Because the pandemic remains unpredictable and continues to affect travel demand, we are continuing to manage our cash and variable costs cautiously. This concludes my remarks for today's call. Ally, please open the line for questions.

And we'll go ahead and take our first question from Guilherme Mendes from JP Morgan. Please go ahead.

Hi, Adolfo. Good morning. And thanks for taking the question. I had two questions, actually. The first one is in terms of traffic recovery. You mentioned that you do expect traffic to be back to peak levels by the second quarter of 2022. Just wondering what we should expect after that. So, considering that traffic should be back by mid-next year to '19 levels, what to expect for the second half of next year? Should we expect normalization in growth or still some kind of pent-up demand? And the second question is regarding the MDP tariffs. If you could share how much has already been implemented in terms of your recent renewal situation?

Okay. Hi. Good morning. Thank you for your questions. First, in terms of the traffic for next year, what I have said is that we should be reaching the peak of the last 12 months' passenger traffic that we reached in February 2020 by the second quarter next year. After that, if everything goes back to normal, so that the pandemic disappears and everything is back, we should be seeing the normalized growth in each one of the regions where we are working. In terms of the MDP tariffs, what I have said in the second quarter's earnings call is that we will not be able to reach the 99.8% maximum tariff compliance that we have reached over the last 20 years, due to the maximum tariff increase that was approved at the beginning of April this year. The maximum tariff is something that is measured once a year. So, once the fourth quarter is over, we will be able to measure how much we're going to reach. But, of course, as I have said, we are not going to reach 100% this year. We're going to be very far away from that and we should expect to reach the 99.8% that we normally reach during that year.

We'll go ahead and take our next question from Maroki Asuka from GBM.

Could you give us some color or some detail regarding the refinancing of your debt with Santander?

Yes, of course. The refinancing was made on a three-year period. So, you can see in the report that we have nothing to pay next year, and we will start paying on the natural basis to Santander during ‘23 and ‘24.

Okay. Just a follow-up question. We saw that you increased the rate by 25 basis points on that credit. Could you give us some color on that?

So, as you can see in the report, you can see the rate; the spread over TA is 1.5.

And we'll go ahead and take our next question from Alejandro Zamacona from Credit Suisse.

Just a follow-up question on the airport tariff increase. So, when we look at revenues per workload unit on a sequential basis, we didn't notice any airport fees increases in this third quarter. We understand that the fees increase negotiated in April are kicking in July. So, can you just confirm if you have already implemented, at least partially, some of that 17% increase in real terms in the Mexican airports?

Yes. Alejandro, the 17% you are mentioning is the weighted average. So, each one of the airports has its own particular increase. You can see that in the report. It's very clear that if this approval came in April, we lost the first three months of the year in terms of the possibility of increasing the rates. Then, it takes us between three to four months to increase the rate. It was not possible to reach the 99.8% maximum tariff compliance this year. Otherwise, the increase that we applied had to be extremely high. So, we're going to be very far from the 99.8%, and we expect to reach that ultimately.

When we consider the fourth quarter of '21, we should anticipate a sequential increase in revenue per workload unit.

Yes, that's right. And of course, I said before, the maximum rate is something that is measured on an annual basis. So, in reality, today, we cannot say how much we're going to reach or how much we are reaching.

And we'll move on to our next questioner from Stephen Trent from Citi. Please go ahead.

I recall, last month, there was some news that the AMLO administration wanted to build a second airport in Mérida, and I heard you say something about Mérida Airport, and I missed it. But, I wasn't sure if this is anything you can substantiate or if it's just kind of random news?

Well, I have not heard anything from the President on that respect. I have heard from the Governor of the state mentioning that they are trying to see if the airport can be relocated. But, that doesn't mean that we will not be the operator in the case of that happening. In the case of someone constructing the facilities, we will be operating that airport.

Okay. Perfect. Thanks, Adolfo. And just really quickly, in terms of what you see in potential future traffic flow, is there any kind of sense from your side whether a commercial airport in Santa Lucía and Mexico City would align at least with regards to long-term traffic flow expectations?

This project is extremely important for us and for the entire system because a large portion of the domestic traffic in the country either arrives at or departs from the metropolitan area. Currently, the Mexico City Airport is not congested due to the pandemic, as it has excess capacity. However, we expect traffic to increase in the future. The significance of this project lies in the additional capacity it will provide for the metropolitan area, allowing us to accommodate the expected inflow of traffic to our airports.

And we'll move on to our next question from Rodolfo Ramos from Bredesco. Please go ahead.

Thank you. Good morning, Adolfo. And congrats on the results. I was just wondering if you can elaborate on your outlook for your operating expenses. We saw some good control this quarter. And we're still below the 2019 levels, despite some inflationary pressures that you've seen. But as traffic continues to recover, where do you see operating expenses normalizing?

Rodolfo, hi. Good morning. Thank you for your question. Well, basically, as you mentioned, inflation in this country is really high, as it is in some others. We have been putting the brakes on the cost side since the second quarter of 2020, and we are doing as much as we can to control these costs, as you can see from some of the results. Of course, the expectation is that once everything is normalized, the cost side should go back to the 2019 levels. However, inflation is going to be a crucial element in that as well. But yes, it's true, we are doing well in terms of managing the cost side of the Company.

Thank you. And if I may, a follow-up here on traffic. You mentioned that you do expect traffic to recover to the peak levels by the second quarter of next year. Just wondering if you have any visibility, based on what we've seen so far in October, as to how markets that have been largely absent from this recovery, like Canada or Europe, are coming back? If you could provide any insights into bookings or color you can share about how you expect these segments to contribute to traffic this winter season?

Absolutely. That is why I was saying in the initial remarks that we're expecting a better outlook for the winter. Yes, we have some requests from the airlines. However, this request does not mean that they will be heavily utilized, as they can cancel the slots at the last minute, which they have done during the pandemic levels. But, we lost service from Canada during the high season around the third week of January this year. So, we are expecting them to come back, and if the winter is strong in North America, it will be a good season for us. This is also the case for Europe. In the case of Europe, you can probably see the news. We are seeing some recoveries. Just to give you an example, yesterday, we had the first flight from Vienna. This flight was canceled 14 years ago, and now they're returning to Cancun. So, yes, we are also seeing a recovery from Europe.

We'll move on to our next question from Pablo Monsiváis from Barclays. Please go ahead.

I have two. The first one is, provided that traffic recovers at some point in 2022 and that you are charging the full tariff, what are the main concerns for you regarding what to do on that front? I mean, are you going to keep looking for other places to invest or to improve your commercial platform in Colombia and Puerto Rico? What are your thoughts here? Thank you.

Well, of course, the first concern is that we do not have another rebound of the virus, as I am concerned about the potential for a fourth wave during the winter. If we say that the pandemic is over and we are, let's say, at the third quarter next year, then of course we will go back to normal, and we will be looking for some attractive opportunities for the shareholders. We will be in a continuous effort to increase and improve our commercial operations, as we have done. We have taken some opportunities in the case of Colombia, as you have seen. We have also managed to replace some empty spaces in our airports and to add new facilities, as you have also seen in the report.

Okay. And a second question here, regarding the strong recovery in Cancun: thinking about the Canadians and Europeans coming into Cancun in the fourth quarter and first quarter of next year, what do you think is the main constraint for Cancun to continue growing? I mean, is room capacity enough to withstand a 10% traffic growth for the next two to three years? What are your thoughts?

Well, when we're referring to a 10% increase, you need to consider that this is over 2019 levels. I can say that there are some hotel construction projects currently underway, and they should be opening very soon. Additional capacity is being added to the region, also in terms of Airbnb and similar options. So, today, to be honest, I'm not concerned about capacity. Our main concern is to avoid a fourth wave, and we are also focused on controlling costs and increasing commercial revenues.

We'll take our next question from Gabriel Himelfarb from Scotiabank. Please go ahead.

Hi, Adolfo. Congratulations on the results. I have a quick question. We believe inflation is increasing and there are some supply chain constraints, particularly with rising material costs like steel. Do you think this might affect your planned investment in your MDP, or could some of the planned investments end up costing more than expected? Thanks.

Well, yes, of course. You're absolutely right. The increase in the construction side is really tough here, and we are also experiencing distribution problems with some materials. We are facing these challenges as we speak. Of course, that will have an impact on our CapEx. However, we have to comply with what we have committed to meeting in Mexico, as I have said previously; we should comply with the Ps.3.5 billion for this year. Next year, it is a lower commitment and should be around Ps.1.7 billion to Ps.1.8 billion. The toughest part is now, and we have to work really hard this quarter, the fourth quarter, to meet those commitments.

And we'll move on to our next question from Andressa Varotto from UBS. Please go ahead.

My question is on the commercial revenue side. We have seen very good commercial revenue expansion in this quarter in operations. So, I just wanted to know what is behind that? And what can we expect going forward? Can you say that commercial revenues are normalized already?

Well, as I mentioned in my remarks, I still believe that commercial revenues during the quarter are still affected by the lack of passengers, so there are fewer passengers than normal. That's the first factor. The second aspect I would call pandemic behavior, which is that car rental is higher than expected, while food and beverage is lower than expected. People are more inclined to grab and go from convenience stores rather than eat in restaurants. So that explains why convenience store revenues are increasing. I believe that in the future, this will normalize, and we will not see permanent effects from the pandemic on consumer behavior. Additionally, it's important to note that the current passenger mix is not the same as before. Proportionately speaking, we have more domestic passengers from Europe and more from the U.S., so that will also influence our commercial revenues in the future, once the passenger mix adjusts as it was before.

And we'll go ahead and move on to our next question from Rodolfo Ramos from Bredesco. Please go ahead.

Just a follow-up on the CARES Act. Do you expect any additional payments, or what is the remaining amount, or what should we expect in the next quarter or so?

Yes. Rodolfo, in the case of the CARES Act, the first grant that was provided by the U.S. government is over now. We're expecting the second and third programs. Yes, we can expect more funding in the coming months.

So, no detail on the amounts?

No, I prefer not to disclose the amounts because we are not sure about those yet.

And we will take our next question from Stephen Trent from Citi. Please go ahead.

Hi, Adolfo. Thanks for taking my follow-up. I apologize if I missed what you said before. We noticed your receivables days look pretty strong. How should we think about the trend going forward as you continue negotiating with some of your host airlines that are experiencing financial difficulties?

Hi, Steve. Well, they have improved during the quarter, basically due to the position the airlines have due to the recovery process. As I have mentioned in the reports, we're still working well with all the airlines. The only problem we had in the past was concerning Interjet, which has been accounted for in our reserves. Going forward, I do not expect any major problems or issues with the airlines. Therefore, we should see similar numbers to the pre-pandemic levels in terms of receivables, of course, relative to the company's operations.

And that actually concludes the question-and-answer session for today's conference. I would now like to turn the call back over to Mr. Castro for closing remarks.

Thank you, Ally, and thank you again for participating in our third-quarter results conference. On behalf of ASUR, we wish you a good day, and please stay safe. Goodbye.

Ladies and gentlemen, that concludes ASUR's third-quarter 2021 results conference call. We would like to thank you again for your participation. You may now disconnect.