Corporación América Airports S.A. (NYSE:CAAP) Q2 2019 Earnings Conference Call Transcript

Aug 23, 2019 • 09:00 am ET

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Corporación América Airports S.A. (NYSE:CAAP) Q2 2019 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good morning, and welcome to the Corporacion America Airports Second Quarter 2019 Earnings Call. A slide presentation accompanies today's webcast and is available in the Investors section of Corporacion America Airports Investor Relations website at http://investors.corporacionamericaairports.com. [Operator Instructions] As a reminder, this call is being recorded.

And at this time, I'd now like to turn the conference over to Gimena Albanesi of Investor Relations. Please go ahead.

Executive
Gimena Albanesi

Thank you, good morning, everyone, and thank you for joining us today. Speaking during today's call will be Martin Eurnekian, our Chief Executive Officer; and Raul Francos, our Chief Financial Officer. Also with us today is Jorge Arruda, Finance and M&A Manager. All will be available for the Q&A session.

Before we proceed, I would like to make the following safe harbor statement. Today's call will contain forward-looking statements, and I refer you to the forward-looking statements section of our earnings release and recent filings with the SEC. We assume no obligation to update or revise any forward-looking statements to reflect new or changed events or circumstances. Note that for comparison purposes and a better understanding of the underlying performance, in our presentation today, we will be discussing results, excluding hyperinflation accounting in Argentina, which became effective July 2018. Additional information in connection with the application of rule IAS 29 can be found in our earnings report.

Now let me turn the call over to our CEO, Martin Eurnekian.

Executive
Martin Francisco Antranik Eurnekian

Thank you, Gimena. Hello, everyone, and thank you for joining us today. It's a pleasure to welcome you to Corporacion America Airports second quarter 2019 earnings conference call. I will begin our presentation today with an overview of the highlights of the quarter, and then Raul will take you through our financial results, afterwards I will provide an update on our key business segments and our view for the remainder of the year. We will then open the call to your questions.

Starting now with an overview of our performance on Slide 3. We are operating in a challenging environment, particularly in Argentina, our largest market, and to a lesser extent in Brazil. Operations in Argentina remain impacted by weak macro and currency depreciation. In turn, we saw a continued mix shift towards more affordable domestic traffic, weaker commercial revenues, and the negative FX translation impact on local currency revenues.

While we also experienced softer traffic in Brazil, results from Brazil and Italy were also affected by currency depreciation. Close to 20 million passengers travel through our airport network in the quarter, up nearly 4% year-on-year as we continue to add more routes and airlines. Domestic traffic increased 9%, while international traffic was down in the low-single digits.

Comparable adjusted EBITDA, excluding inflation accounting and a one-time item that Raul will discuss shortly, declined 9% year-on-year, with the margin Ex-IFRIC remaining flat at 37%. Better margins this quarter in Italy and Uruguay were more than offset by margin contraction in Argentina, Ecuador and Armenia.

Despite these near-term headwinds, we continue to make the necessary investments