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Corporacion America Airports Announces 4Q20 and Fiscal Year 2020 Results

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Corporación América Airports S.A. (NYSE: CAAP), (“CAAP” or the “Company”) the largest private sector airport operator based on the number of airports under management reported today its unaudited, consolidated results for the three-month and twelve-month periods ended December 31, 2020. Financial results are expressed in millions of U.S. dollars and are prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (“IASB”).

Commencing 3Q18, the Company began reporting results of its Argentinean subsidiaries applying Hyperinflation Accounting, in accordance to IFRS rule IAS 29 (“IAS 29”), as detailed on Section “Hyperinflation Accounting in Argentina”.

Fourth Quarter 2020 Highlights

  • Consolidated Revenues of $129.4 million, a decline of 66.0% YoY. Excluding the impact of IFRS rule IAS 29, revenues declined 64.4%, or $241.6 million, to $133.3 million, mainly reflecting decreases of a $134.5 million in Aeronautical revenues, a $53.4 million in Commercial revenues driven by the impact of the COVID-19 pandemic, as well as in construction service revenue in Argentina reflecting lower capex in the period.
  • Key operating metrics declined YoY impacted by Covid-19, but improved sequentially:
    • Passenger traffic was 5.1 million, a 75.6% YoY decline, but increased over 2x from 2.6 million in 3Q20
    • Cargo volume decreased 37.1% YoY to 72.1 thousand tons, but improved 36.4% from 52.9 thousand tons in 3Q20
    • Aircraft movements reached 85.8 thousand, a 59.7% YoY decline, but improved 42.8% from 60.1 thousand in 3Q20
  • Operating Income was $5.3 million, declining 57.1%, or $ 7.1 million, compared to $12.4 million in 4Q19, mainly reflecting the impact of the Covid-19 pandemic on revenues, partially offset by a $36.6 million economic compensation granted by the Brazilian government, together with a $12.0 million government grant obtained in Italy. Moreover, in 4Q19 operating income was impacted by an impairment loss of $42.8 million in Brazil.
  • Adjusted EBITDA on an “As Reported” basis was $44.6 million, a 12.0% decline compared $50.7 million in 4Q19. Ex-IAS29, Adjusted EBITDA was $44.2 million, a 9.0% decline from $48.6 million recorded in 4Q19.
  • When also excluding the reversal on impairments in 4Q20 and the impairment loss in 4Q19, Adjusted EBITDA improved to $43.2 million in 4Q20, from a loss of $19.0 million in 3Q20, but was below Adjusted EBITDA of $91.4 million reported in 4Q19. Adjusted EBITDA margin Ex-IFRIC12 increased to 42.7% from 31.4% in 4Q19, mainly reflecting the impact of the economic compensations obtained in Brazil and Italy for a total of $46.7 million.
  • On November 30, 2020, CAAP’s Argentine subsidiary AA2000 signed an agreement to extend the AA2000 concession for a ten-year period from 2028 to 2038, later ratified on December 17, 2020 under Presidential Decree No. 1009/2020.
  • On November 6, 2020, the company’s Italian subsidiary announced it obtained an 85 million Euro bank loan from a pool of financial institutions, with a 6-year term and a 2-year grace period, guaranteed by the Italian public export credit insurance agency.

Subsequent Events

  • On January 13, 2021, CAAP announced that under Resolution No. 4/2021 of the Official Gazette, the Organismo Regulador del Sistema Nacional de Aeropuertos (“ORSNA”) established an increase in the international passenger fee for travelers departing from AA2000 airports of US$6 to US$57, in line with the provisions of the Technical Conditions for the Extension which are part of the 10-year concession extension approved on December 17, 2020.
  • In February 2021, Aerolíneas Argentinas S.A. sent a proposal to pay outstanding amounts owed to CAAP’s subsidiary AA2000 until March 31, 2020 (AR$120.6 million and US$36.5 million).
  • In February 2021, AA2000 renegotiated the principal payment under the syndicated bank loan maturing in February 2021 for a total amount of $13.3 million, and deferred said amount to be repaid under a new schedule between March 2022 and February 2023.
  • On March 15, 2021, Aeroparque Airport, in Argentina, was reopened, 7 months after it was closed on August 1st, 2020, to carry out renovation and expansion works in the runway and the international arrivals and departures halls of the terminal building. All works were covered with funds held in AA2000’s Development Trusts, with no impact on that subsidiary’s cashflows.

Fiscal Year 2020 Highlights

  • Consolidated revenues were to $607.4 million, a YoY decline of 61.0%, or $951.2 million. Ex-IAS 29, revenues decreased 60.7% YoY due to lower income from operations across all segments, mainly attributed to the impact of the COVID-19 pandemic.
  • Performance of key operating metrics:
    • Passenger traffic down 70.0% YoY to 25.2 million
    • Cargo volume declined 39.8% to 255.6 thousand tons
    • Aircraft movements decreased 58.9% to 352.9 thousand
  • Operating loss in 2020 was $163.7 million, down from operating income of $223.6 million in 2019, mainly driven by the impact of the COVID-19 pandemic. Operating margin contracted to negative 27.0% from 14.3% in 2019
  • Adjusted EBITDA was $13.6 million, down 96.4% YoY, while the Adjusted EBITDA margin Ex-IFRIC12 contracted to 2.5% from 31.3% in 2019.
  • Ex-IAS 29, Adjusted EBITDA declined 96.0% YoY, to $15.5 million, and Adjusted EBITDA margin Ex-IFRIC12 contracted to 2.9%. On a comparable basis, excluding the impairment and goodwill write offs in 4Q20, 3Q20, 1Q20 and 4Q19 in Brazil, the $23.1 million bad debt charge recorded in Argentina in 3Q19 and the $2.2 million one-time benefit in Italy, Adjusted EBITDA would have declined to $77.8 million in 2020 from $449.4 million in 2019. Adjusted EBITDA margin ex-IFRIC would have contracted 2,092 bps to 15.6% from 36.6% in 2019.

CEO Message

“Last year was undoubtedly the most challenging year ever faced by the travel industry worldwide. Since the start of the pandemic, we have demonstrated our capacity and flexibility to rapidly respond to the new environment and changing market conditions. I wish to thank our teams for their dedication and commitment to rapidly establishing and executing our strategic plan to protect the Company’s financial position, all while continuing to ensure the highest health and safety standards for our passengers and employees.

Through taking decisive actions, including successfully exceeding our cost reduction goals and keeping a focus on economic compensation, we achieved positive comparable Adjusted EBITDA1 of US$ 78 million in the full year, despite experiencing a 70% decline in passenger traffic in 2020 as a result of the severe impact of the pandemic on travel demand.” noted Mr. Martín Eurnekian, CEO of Corporación América Airports.

“We also made significant strides in reprofiling and strengthening our balance sheet through successfully refinancing a significant part of our principal and interest payments in key countries, while increasing our liquidity position through new financings.

Another key element of our strategic plan has been the successful negotiations with regulatory bodies and governments across our concessions to obtain economic compensation for the impact of this health crisis. Most importantly, the 10-year extension of the AA2000 concession in Argentina obtained in the fourth quarter, along with an increase in international tariffs was a significant milestone for our Company, reinforcing this subsidiary’s long-term sustainability. In Brazil, another of our key markets, during the quarter we obtained an economic compensation for the impact of the pandemic in 2020.

Looking ahead, we remain fully focused on further executing against the strategic action plan put in place at the start of the crisis: protecting liquidity, keeping a strong focus on cost controls and, advancing negotiations to obtain long-term re-equilibrium of our concessions while refinancing bank debt in Argentina.

In terms of travel demand, the gradual sequential monthly recovery trend that started last June continued into early this year. However, during the first quarter 2021, passenger traffic trends have been choppy reflecting lower demand in Brazil given concerns regarding the new strain of the virus and a spike in cases. Travel restrictions in Europe also impacted demand in most countries of operations. As the northern hemisphere continues to make headway with the vaccination programs, we expect this to lead to some improvement in traffic towards the second half of the year. In the medium term, while visibility in Latin America remains low, higher availability of vaccines and the lifting of government travel restrictions over time are anticipated to help drive better passenger dynamics.”

1.

Comparable Adjusted EBITDA excludes non-cash impairment losses in Brazil in both years and a bad debt charge in Argentina in 2019.

Operating & Financial Highlights
(In millions of U.S. dollars, unless otherwise noted)

 

4Q20 as
reported

4Q19 as
reported

% Var as
reported

IAS 29
4Q20

4Q20 ex
IAS 29

4Q19 ex
IAS 29

% Var ex
IAS 29

Passenger Traffic (Million Passengers) (1)(2)

5.1

20.9

-75.6%

 

5.1

20.9

-75.6%

Revenue

129.4

380.1

-66.0%

-3.9

133.3

374.9

-64.4%

Aeronautical Revenues

35.9

173.7

-79.3%

-0.5

36.3

170.8

-78.7%

Non-Aeronautical Revenues

93.5

206.4

-54.7%

-3.5

96.9

204.1

-52.5%

Revenue excluding construction service

101.0

295.4

-65.8%

-0.9

101.8

289.6

-64.8%

Operating Income / (Loss)

5.3

12.4

-57.1%

-15.1

20.4

26.4

-22.6%

Operating Margin

4.1%

3.3%

81 bps

-

15.3%

7.0%

833 bps

Net (Loss) / Income Attributable to Owners of the Parent

-38.8

-37.3

4.1%

14.5

-53.3

-48.5

10.0%

EPS (US$)

-0.24

-0.23

5.5%

0.09

-0.33

-0.30

11.1%

Adjusted EBITDA

44.6

50.7

-12.0%

0.4

44.2

48.6

-9.0%

Adjusted EBITDA Margin

34.5%

13.3%

2,120 bps

-

33.2%

13.0%

2,017 bps

Adjusted EBITDA Margin excluding Construction Service

44.5%

16.9%

2,755 bps

-

43.7%

16.6%

2,706 bps

Net Debt to LTM Adjusted EBITDA

78.27x

2.66x

n.m.

-

-

-

-

Net Debt to LTM Adjusted EBITDA excl. impairment on intangible assets (3)

14.02x

2.28x

n.m.

-

-

-

-

Note: Figures in historical dollars (excluding IAS29) are included for comparison purposes.

1)

Note that preliminary passenger traffic figures for Ezeiza Airport, in Argentina, for 2019 as well as January 2020 were adjusted to include additional inbound passengers not accounted for in the initial count, for an average of approximately 5% of total passenger traffic at Ezeiza Airport and 1% of total traffic at CAAP, during that period. Importantly, inbound traffic does not affect revenues, as tariffs are applicable on departure passengers.

2)

Starting November 2019, the Company has reclassified its passenger traffic figures for Brasilia Airport between international, domestic and transit retroactively since June 2018 to return to the count methodology utilized until May 2018. Notwithstanding, total traffic figures remain unchanged.

3)

LTM Adjusted EBITDA excluding impairments of intangible assets

 

Operating & Financial Highlights FY 2020

(In millions of U.S. dollars, unless otherwise noted)

 

2020 as
reported

2019 as
reported

% Var as
reported

IAS 29
2020

2020 ex
IAS 29

2019 ex
IAS 29

% Var ex
IAS 29

Passenger Traffic (Million Passengers) (1)(2)

25.2

84.2

-70.0%

 

25.2

84.2

-70.0%

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