Good morning, and welcome to GAP's conference call. All lines have been placed on mute to prevent any background noise. After the presentation, we will open the floor for questions, and at that time, instructions will be given if you would like to ask a question. It is now my pleasure to turn the call over to GAP's Investor Relations team. Please go ahead.

Thank you, and welcome to Grupo Aeroportuario del Pacífico’s Third Quarter 2024 Conference Call. Presenting from the company today, we welcome Mr. Raul Revuelta, GAP's Chief Executive Officer; and Mr. Saul Villarreal, Chief Financial Officer. Please be advised that forward-looking statements may be made during this conference call. These do not account for future economic circumstances, industry conditions, the company's future performance or financial results. As such statements made are based on several assumptions and factors that could cause actual results to materially differ from the current expectations. For a complete note on forward-looking statements, please refer to the quarterly report. At this point, I would like to turn the call over to Mr. Revuelta for his opening remarks. Please begin, sir.

Thank you Maria. Good morning, and thank you for joining us today. I am proud to share with you how we have been able to navigate the complex market environment while positioning GAP for sustainable growth through diversification and strategy. Before discussing the quarterly results, let me start today's call with a recap of recent developments. First, the approval of the 2025-2029 Master Development Plan for the 12 Mexican airports under maximum tariff, which occurred under the new tariff regulation. Some key highlights of the new MDP include a total CapEx commitment for the five years of MXN43.2 billion, measured in pesos as of December 2022. That will be adjusted for the National Producer Price Index construction sector upon execution. Something important to remember is that in that amount, we have already made advanced payments of approximately MXN5.5 billion during 2023 and 2024. This has been approved by the authority and is recognized during the new MDP mainly for Guadalajara land reserves. Of this five years CapEx, almost 40% will be invested in terminal buildings. By the end of the quinquennium, we'll have an additional 54% in square meters, meaning more capacity and space throughout our 12 airports, in addition to 37% of additional security checkpoints and 26% of additional airport facilities. Importantly, 87% of total committed investments will be at our airports. Key projects include the construction of a second terminal in Guadalajara, additional aprons, taxiways, new vehicle access, and the purchase of land reserves for future development. At the Tijuana airport, the development of a terminal facility for domestic departing passengers, aprons, and the purchase of land. In Los Cabos, we will be expanding the apron and the international terminal building. Additionally, we expect to finalize the second terminal building in Puerto Vallarta by the end of 2026. These investments support GAP's new growth phase in the upcoming years. Regarding maximum tariff determination, please note that the new methodology for calculating the discount rate is now based on the weighted average cost of capital compared to the previous method, which was based on the cost of equity. The new tariff will be gradually implemented over the following 15 months. Moving on to this quarter's performance, our operational resilience and the strength of our commercial strategy are key drivers for our long-term success. During this quarter, we faced several industry-wide challenges. Most notably, the 5.7% decline in passenger traffic during this quarter was driven by ongoing inspections of the Pratt & Whitney engines, which began in late 2023 and are expected to continue throughout 2025. Despite these headwinds, financial results have remained strong, largely due to dynamic commercial revenue growth, which I believe is central to GAP's future. Even with this setback, we have continued to expand our strength in our network. During the third quarter, we opened two international routes, including the Guadalajara to Toronto route and resumed the operation of the Tijuana to Beijing route, while closing one domestic route. This brings the total number of routes added to our network this year to 16, which is aligned with our air development strategies. Allow me to highlight our commercial revenue, which was a standout success. During the third quarter, we experienced an exceptional 39% increase in non-aeronautical revenues driven mainly by the strategic expansion across our airport network and business acquisitions. This is the result of GAP's ongoing deliberate and strategic effort to maximize commercial revenues wherever we see potential. The cargo facility consolidation contributed MXN354 million to non-aeronautical revenue and is a testament to the foresight of our strategy. Additionally, we have seen remarkable growth in car rentals, retail, food, and beverage, with new partnerships and expansions yielding significant returns. For instance, our car rental business and VIP lounges, particularly in Guadalajara and Los Cabos, have performed exceptionally well. The second VIP lounge in Guadalajara, which opened this quarter, has already helped meet growing demand at that airport. Non-aeronautical revenues per passenger grew, reaching MXN120 during the first nine months, demonstrating how we are not only serving more passengers but serving them better by offering a more enhanced and valuable experience at every opportunity despite lower overall traffic numbers. While commercial revenues have been a clear highlight, aeronautical revenue declined by 3.8%. This was partly due to lower passenger traffic and the fact that we have only reached around 94% of the maximum tariff. Nonetheless, our overall revenue increased by 6%, reflecting the strength of our business in terms of revenue diversification. On the expenses side, operational expenses increased by 21%, largely due to the consolidation of the cargo and fiscal facility, service costs, employee-related expenses, and inflationary pressures. Without the new cargo business, the cost of service would increase by only 8.8%. We will continue to effectively control the cost of service wherever possible, ensuring that our growth is sustainable even amid elevated costs. Our EBITDA margin, excluding IFRIC-12 effect, remains at a solid 67%, which is a slight decline compared to last year but reflects the importance of our strategic investments in infrastructure and services. In terms of financial position, we maintain a healthy balance sheet with cash and cash equivalents totaling MXN15.8 billion at the end of September 2024. We have also continued our CapEx investments with approximately MXN5.2 billion allocated to infrastructure projects. Our recent refinancing of credit facilities and the issuance of long-term bond certificates ensure that we remain well-capitalized to pursue further growth opportunities and leverage our committed capital investments. Currently, we have a net debt-to-EBITDA ratio of 1.8 times for the trailing 12 months, thereby complying with all our debt covenants. In closing, this quarter has demonstrated that the future of airport management is no longer just about managing flights; it is increasingly about building diversified operating and commercial ecosystems that generate sustained growth and profitability. GAP is leading that transformation. I am very confident that our strategy will continue to deliver value for all our stakeholders. Thank you for your time. Now I open the floor for your questions.

At this time we will open the question-and-answer session. And our first question comes from Fernanda Recchia of BTG Pactual. Your line is open.

Hello. Thank you for taking my question. I have two questions. First, you mentioned that the new tariff is expected to be gradually implemented. Could you provide more details on this? When do you expect it to be fully implemented, and what are the growth expectations? Second, could you comment on your traffic expectations for next year? How do you perceive the current issues, and do you think Q3 will be the peak? How do you see it impacting next year? That's all from my side. Thank you.

Thank you, Fernanda. This is Raul. In terms of specific timing, we see that we will gradually implement the changes. In terms of the Air Force load, we could change our specific tariff every six months. Our plan would be to change it once in January, again in July, and once the following January. Our fulfillment on tariff this year is around 95%, considering inflation. The growth in terminals in real terms with the new tariff will be a gradual pass-through over 2025 mainly. Regarding traffic expectations, we are working closely with the airlines to understand new deliveries and the return of some of the planes that were grounded due to the recall issues. Based on current data, we expect growth close to 5% for next year. We are reviewing the slots and will have a clearer picture for future years. We expect a 5% increase.

Thank you. So just to clarify, the 25% will be fully implemented only by January 2026? Is that what you're saying?

Hi, Fernanda, this is Saul. Yes, that's the intention, to be fully implemented by 2026.

Okay, thank you.

Thank you. Our next question comes from Alan Macias of Bank of America. Your line is open.

Hi, good morning and thank you for the call. Just two questions. The first, when do you expect the engine recall problem to end? Should this be during the third quarter? Is that a good assumption? And the second question is regarding the new cargo business. Do you expect similar revenue levels as those observed in the third quarter? Thank you.

Thank you, Alan. This is Raul. Regarding the engine recall, public information, for example from Volaris, indicated that the complete effect of the grounded planes will be resolved by December of 2026. However, we expect that by this summer of 2025, we will see some of the grounded planes returning to service, along with new deliveries by Volaris, VivaAerobus, and AeroMexico. We should have a favorable comparison with the summer of 2025 versus the summer of 2024. So generally, by summer 2025, we expect a significant expansion in passenger numbers.

Hi Alan, this is Saul. Regarding your second question, yes, we expect revenue levels to be similar to third quarter performance, possibly slightly better with an EBITDA margin close to 50%-55%. There are many opportunities to improve operation costs and continue increasing revenue levels. It was a good transaction that brings more value to the company.

Our next question comes from Juan Ponce from Bradesco BBI. Your line is open.

Hi Raul, Saul. Thank you for taking my question. I have a question on international traffic. Do you see any impact from the U.S. election? We have seen leisure destinations take a hit in recent months. Could you share your thoughts here? Thank you.

Thank you, Juan. We are seeing declines mainly in leisure destinations such as Cabos, Vallarta, and Montego Bay. In September, we observed a significant decrease in the number of seats across many routes. While this does impact our passenger growth directly, we believe that demand is still strong and yields remain healthy. We anticipate a recovery in seat availability during the winter months. At this point, it is difficult to determine if these trends are related to the U.S. election. What we can affirm is the recent increase in available seats for leisure destinations. Business or VFR traffic has not followed the same trend. For example, Guadalajara is growing in double digits in international markets, which is noteworthy for us.

Our next question comes from Jay Singh of Citi.

Hello, do you hear me?

Please go ahead.

Thanks for taking my questions. Do you guys hear me?

Yes.

Yes. So it's Jay dialing on for Stephen Trent. I guess the first question I have is regarding customs capacity. Do you see room for any other acquisitions anytime soon?

I would say that today, we are working on consolidating the business of cargo facilities and fiscal areas. We are examining how to optimize this business and enhance margins, while also reviewing opportunities related to logistics. This year, we will focus on bringing additional cost optimization to the new business. We are exploring other possibilities for future acquisitions, including the automotive market for Tijuana, Puerto Vallarta, and Cabo cargo opportunities. We are committed to bringing additional value to our investors and are keen to analyze new opportunities.

I appreciate the insights. Given the recent dip of the Mexican peso against the U.S. dollar, have you seen any changes in U.S. tourism or business travel? Or is it too early to tell?

I would say it is still too early to observe significant changes in trends due to the exchange rate shift. We've only been in this situation for three months, so we should wait a bit longer to gauge any real impact.

Okay, thanks for that. Have a great day.

Thank you.

And our next question comes from Isabela Salazar of GBM. Your line is open.

Hello. Thank you for taking my question. My question is regarding the GWTC platform. If I'm not mistaken, GWTC has margins of around 40%. Will their full incorporation generate synergies that could significantly impact GAP's margins? If so, what specific synergies should we expect to drive these changes? Thank you.

Hi, Isabela, this is Saul. Yes, the EBITDA margin for GWTC is around 55%. Last year, it was about 40%. This will improve due to our cost control efforts. Revenues will be significantly better this year, expected to be around 25% higher than last year. This quarter will be an adjustment year, but we have very positive expectations for 2026. Overall, it will represent a valuable transaction for GAP.

I have a quick clarification. Is that 25% increase for GAP or for GWTC specifically?

It's only for this cargo facility.

Okay. Perfect. Thank you.

You're welcome.

And it appears that we have no further questions at this time. I will now turn the program back to our presenters for closing remarks.

Thank you again, everyone, for joining us today for our third-quarter results conference. On behalf of GAP, we wish you a great day. Thank you.

Thank you. This does conclude GAP's conference call. Thank you for your participation. You may disconnect at any time.