Good morning, welcome to GAP's conference call. The lines have been placed on mute to prevent any background noise. After the speaker's presentation, we will open the floor for questions, and at that time, instructions will be given if you would like to ask any question. It is now my pleasure to turn the call over to GAP's Investor Relations team. Please go ahead. Thank you. Welcome to the Grupo Aeroportuario del Pacífico's first quarter 2023 conference call. Presenting from the company today, we welcome Mr. Raúl Revuelta, GAP's Chief Executive Officer, and Mr. Saúl 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. Statements made are based on several assumptions and factors that could change, causing actual results to materially differ from the current expectations. For a complete note on forward-looking statements, please refer to the quarterly report that was issued previously. At this point, I would like to turn the call over to Mr. Revuelta for his opening remarks. Please go ahead, sir. Thank you, Maria. Hello, everyone, and welcome. This year has started off strong, and we delivered a great performance across key operational and financial metrics. The number of passengers this quarter was almost 16 million passengers, an increase of nearly 24% compared to 2022. Supporting this passenger traffic growth was the solid demand experienced at the Montego Bay, Guadalajara, and Puerto Vallarta airports, as well as a greater number of routes and frequencies across our network. Note that for a comparison purpose, when we look at January and February of 2022, the impact of the Omicron variant did affect passenger traffic, which was not the case in 2023. As a result, our aeronautical revenues increased by 31%, driven by a passengers traffic recovery throughout GAP's network, as well as the maximum tariff increases, which fulfill almost 99% of the maximum tariff in our Mexican airports. It is important to note that the benefit of the Mexican airport consolidation is not fully reflected here because of the effect of appreciation of Mexican pesos of 9% over U.S. dollar, which impact the increase in revenues. Jamaican airports represented 15% total increase in aeronautical revenues. Non-aeronautical revenues rose by 26%. Most of the increase came from food and beverage, retail operations, leasing of space, and duty free. As we have mentioned in the previous calls, we renegotiated the terms of several contracts, which resulted in financial conditions that were more positive for the company. The only business line that continues to lag is advertising, with a -24% versus 2019. Compared to 2022, it increased 74%. There are several strategies that we are working on to reach and surpass 2019 revenue, including the further development of digital advertising, using the ad hoc airport spaces to enhance brand experience, as well as the use of marketing showrooms. We, as we mentioned before, the appreciation of Mexican peso is affecting the non-aeronautical revenues in the contracts that are denominated in U.S. dollars. EBITDA reached MXN 4.7 billion for the quarter, with an EBITDA margin of around 72%. This was the result of the outstanding passenger traffic recovery, higher tariffs, and solid commercial rents that were partially offset by the 28% increase in cost of service. We have worked hard to maintain our cost control policy, but we are facing the changes in the labor law that not only affect the overall cost for salaries, but also the contracts that involves personnel, such as janitorial, security, and maintenance. We expect some higher costs further down the line in accordance with the air side terminal expansion, in addition to the inflationary effects. In financial performance, cash and cash equivalents increased by almost 12%, reaching a total of MXN 18.9 billion. The debt figure reached MXN 40.4 billion in the first quarter due to the drawdown of MXN 6.4 billion. This included a credit facility from Citibanamex of MXN 1 billion, as well as the issuance of another two tranches of labelled debt bonds in the Mexican market, for a total of MXN 5.4 billion. The proceeds will be allocated toward mandatory CapEx for this year. A portion will be used to pay the bond maturing in June of MXN 200 million. These were our third and fourth labelled bonds that are sustainability-linked bonds, evidence of our commitment to sustainability and specifically directed towards reducing carbon emissions. We look forward to further updating this market on our ESG initiatives and continue integrating this philosophy into our operation and infrastructure projects. In accordance with these figures, we continue to maintain healthy leverage level, reaching a net debt to EBITDA ratio of 1.3 times for the trailing 12 months, thus complying with all our debt covenants. CapEx continued to be carried out in accordance with the committed Master Development Program, as well as the commercial investments. The deployment has been and will be our biggest challenge in the five-year period. Because of the size of the investment and cost increase due to a higher inflation. We have made the highest investment for a single quarter since the beginning of our concession, reaching a total of MXN 2.9 billion. Moving on to another topic, I want to mention that our ordinary and extraordinary shareholder meeting took place last week, where a dividend payment of MXN 14.84 per outstanding share was approved. At the meeting, the creation of a sustainability committee was also approved, which put us in the right track to fulfill our Strategic Sustainability Plan 2030. Regarding the ratification or designation of the persons that will serve as independent members of the company board of directors designated by the CIBR. As well as the designation of the independent member of the Nomination and Compensation Committee, both points were withdrawn as mentioned shareholders meeting. In order to have a new ordinary shareholder meeting that will be held on May 22, that was announced yesterday. Moving on, in the 1st quarter of 2023, we discuss an initiative presented to the Mexican Congress to reform various federal laws enacted by the Mexican president. This will provide, among other, additional capacity for the Mexican government to revoke concessions and permits. It also provides a mechanism to speed up private property expropriations by the state. It is not clear whether the Congress will pass this bill, and if it passes, the impact it will have on the Mexican economy and the company operations. This could violate fundamental rights established in the Constitution and international treaties, such as the right to equality, the warranty of nowhere to activity of the law, and the freedom of trade. We will keep the eye on the bill and informing any relevant update to our shareholders. To conclude, back in March, we carried out a very successful GAP Day at the New York Stock Exchange. I want to give a special thanks to all the analysts and investors that attended, as well as to our team who put it together. It was a great opportunity for us to catch up with all our colleagues, and we aim to do the next one at one of our airport locations. At this point, t hat is for my remarks. I will ask the operator to please open the floor for your questions. At this time, if you would like to ask a question, please press the star and one on your touchtone phone. You may withdraw your question by pressing the pound key. Once again, to ask a question, please press the star and one on your touchtone phone. I will take our first question from Rodolfo Ramos with Bradesco BBI. Please go ahead. Thank you for taking my question and good morning. Just a couple on my side. The first one is on traffic. I mean, you've had a strong start of the year, and you're running at a rate higher than you guided in your GAP Day. Just wanted to see, you know, how are you looking out for the rest of the year and what kind of upside risk you see, you know, also as the comparable basis starts getting tougher through the rest of the year. My second question was just on a follow-up on your comments on this reform. On two reforms that are actually being discussed. One is the one you mentioned. Just wanted to, just to make sure, I mean, by looking at the text, it seems that this wouldn't be. This will only apply to new concessions. Just wanted to confirm that as your view, and if you foresee, I mean, this is something that shouldn't impact on your, you know, on your next year's MDP negotiations. Just wanted to see if that could be the case. As a second part of this question is if you see this, the, you know, the air reform that was presented earlier, where the capital gains or the night premium was removed. Whether you see this actually coming through and, you know, Mexico regaining Category 1 as a result. Thank you. Thank you, Rodolfo. On the first question related with the traffic, yes, we are having a really strong beginning on the first quarter. It is important to take in account that the comparison basis will be tougher in the coming months. We are still being really positive in terms of additional fees that we're gonna see on the market. We are still seeing a number that will be a little bit below the double digit, but we still see growth, important growth in our airports. In terms of, again, the base of comparison, we have some airports, as Guadalajara, that are gonna have great. The first half of the year will be really a great performer. Just based on additional seats for sure, but also taking account the base of comparison. On the other hand, we have, for example, Tijuana, that we are seeing additional fees. We are seeing a robust demand. We're gonna begin to see tougher comparison base that will in some way begin to move the growth of that airport more to, I would say lower double digit rather than the higher double digit that we have seen in the past months or even years for the case of Tijuana. The other part that we must keep an eye on is if a recession will come in place in somewhere in Mexican economy, on the U.S. economy. Today, we don't have, I would say, complete data to understand if this is gonna happen or if it's gonna be a soft landing or how gonna be that. I mean, we need to really keep an eye on what could happen in the second half of the year. In terms of the reform, that was the bill that was presented by the Mexican President to the Congress. I will say that in terms of the Mexican law, the retroactivity of the law is not allowed. Saying in other words, in theory, if this change of the law will not apply to new concessions. It's important to know that the retroactivity of our law, you need to fight it with a judge. It's nothing that happens in automatically way. You need to ask for or litigate for that retroactivity. It's difficult going further in which could be the impact or not of these reforms because first has not discussed it yet. Second, the second really important information is that the ordinary period of the Congress will end in the last day of April, and the next period of the Congress gonna be on September. I will say that gonna be enough time to discuss with the congressman, to discuss and try to understand in a much better way this reform in the coming months. In my personal view, we have enough time to first understand and to second try to act in any point that in some way could affect the concession. It's difficult to understand and to know if this could have some or not impact in the next MDP negotiation. I will say that the first example of this possible impact gonna happen in the grupo ASUR negotiation are in the middle of the negotiation on this year. That is as is. Lastly, in the relation with the cabotage. Yes, yesterday it was removed in the last version on the change of the law of airports and civil aviation. For sure, it was something really important for get the Category 1, but it will be a part of it. The Mexican government had to implement different process related to this law. In our personal view, we continue to see that the Category 1 gonna happen in some moment between the 3rd and 4th quarter of the year around that. We don't see any kind of, I would say, additional services or additional routes even with the category, with the recovery of the Category 1 in the last half of the year, because the airlines need at least 6 months to plan and put the planes to, I would say, to get into a new market. We're gonna begin to see possible results in terms of additional seats or additional capacity put into the U.S. from the Mexican airlines on the 1st half of the coming year. Okay. Very clear. Thank you very much. Take our next question from Fernanda Recchia with BTG Pactual. Please go ahead. Hi, good morning, everyone, and thank you for taking my question. I have two on my side. The first one is actually a follow-up from the previous question regarding traffic trends. If I understood correctly, looking for coming Q, we still see supportive traffic trends which should actually lead you to surpass your guidance that you provide of increasing by 6% or 8% on a year-over-year basis. If we look at Q1, you already is on 6% for the year. Just wanted to understand what has been demand drivers of better than expected traffic? If there is any nearshoring trend that has been surpassing that has been bringing some positive news on traffic? Second, on Jamaica, I just wanted to hear an update regarding the rebalancing. How is the discussion, when do you expect to have a resolution? Thank you. Thank you, Fernanda. This is Raúl. Yes, we know as you remember, as our guidance is all were built from the number of seats that were published for airlines and the slots that we, in some way, were authorized by the airports at the moment that we put in place the guidance. For sure, in this moment, for this first quarter, we have, I would say some kind of easy comparisons in some airports, at Montego Bay. At Kingston, at even Guadalajara Airport. I would say that it's early to think and move our guidance. For sure, at the half of the year, we will recalculate all the numbers, see the trends on the number of additional slots, additional seats, the time of the delivery of fleet, then we could move forward with that information to in some way indicate that we will need to change our guidance. For the moment, we are still thinking that the guidance gonna be, I mean, or the total passengers number of the year, end of the year gonna be around that, between 6 or even 8. Between 6 to 8 on total passengers for the full year. Yes. Hi Fernanda, this is Saúl. Regarding the question with the rebalancing process in Jamaica, we are working with the team designated by the government, and we are planning to close by the end of June. It's the best estimation as we have mentioned before in some calls. Any kind of adjustment on the rebalancing results should have the approval from the cabinet. That's different than in Mexico, so it represents a huge effort to socialize and revise deeper the figures in order to have the approval from the cabinet. It could take a couple of months more. Just repeating a part that I don't add word to Fernanda. We have some kind of nearshoring effect today on the traffic. It's really early to understand that. What we are seeing in some of our airports, or around of our airports is a really high dynamic real estate on the industrial parks, in Guadalajara, in Bajio, in Aguascalientes, and in Tijuana. I would say that are the first signs of what could be the nearshoring effect on coming years. Again, it's really early to understand the size of the effect and if we are beginning to see some parts of that effect in some way in the passengers. Okay. Great. Thank you. Have a nice day. Operator, next question from Alberto Valerio with UBS. Please go ahead. Hi. Thank you for taking my question. I'd like to go deeper on MDP, Raúl. The past MDP, and if I remember, we always had the revision on MDP with positive tariffs. We never see tariffs, tariff drop. For this next round of MDP discussions, we have seen the press in Mexico pushing a little bit for tariffs, and now we see also government with this movement of this reform view that is in the congress at this moment. How do you think the next MDP could be, the negotiation? The past one surprised us for the large amount of CapEx. Do you think you can see the same amount of CapEx or even higher for the next one? Can we also see tariff increase for the next MDP revision, the next rounds? The last one, for Omar or Arturo, this is year with the current government. For next year, that should take the discussion with the current government or the next one? Thank you. Thank you, Alberto. I mean, talking about the Master Development Plans renegotiation, I would say that first, in terms of the CapEx, we have, if you review our last Master Development Plans, you will see that the number of the CapEx per passenger is almost, I would say, in the same level. I mean, you just need to abstract some one-time CapEx as could be the second runway of Guadalajara Airport. In general terms, we're going to see a Master Plan that's going to be without investment in the same line of investment per passenger that we have seen the cost. For sure, the total number we're going to see an increase on CapEx in absolute numbers because I mean, just doing quick numbers. On the last negotiation, we begin with 48 million passengers. If everything continues in the same trends, we're gonna be around the 60 million passengers for the case of Mexico at the end of the 5-year period. Just that increase measure the need to deploy additional CapEx for maintain the quality service of the service and all the needs in terms of qualities of service that are included in the concession. We're gonna see a master plan that will be higher in CapEx than the one that is running right now. In terms of tariffs, I would say that is today is difficult and it's early to talk about that. As we mentioned in our GAP Day management presentation, we are more in the flat to minus 5% decrease on tariffs. Again, surely we need to understand which gonna be the discount rate, how gonna be the market, how gonna close the number of passengers and how we move the forecast for the coming year. I mean, it's early, but we think that the negotiation gonna be around that, from flat to -5%. For the timing, all the years always happen the same. First, ASUR, that is happening right now, then OMA, and after that, OMA. For the case of GAP, we will officially present the master plan to the authority in June of 2024. That will be with this administration. We're gonna have, I would say, the time really short or really tight to close the negotiation because in all the years, what normally happens is that the negotiation runs from June, when you make your first filing to the authority, until the end of December. You almost take like 6 months. On the next year, the change on the government gonna happen on September 30, at the end of September. We're gonna have enough time, but really tight times trying to close the Master Plan with this cover. Saying that, it is important to note that the Master Plans have been negotiated with all the different governments. Central, left, right, and all have respect with completely respect the model and the discussion. The model, the methodology and framework and the discussion has been completely technical discussion. For the moment, we are still seeing that that gonna be the way. With this government or with the new government, the technical guys, we think that will continue in the Ministry of Communications and Transportation. At least with the information that we have, we are not foreseeing any major changes in the way and methodology that the government has used in the past for the set of the master plans. Fantastic. Very clear. Muchas gracias. Thank you very much. We'll take our next question from Filipe Nielsen with Citi. Please go ahead. Hi, guys. Good morning or afternoon, and thanks for taking my questions. I have a few questions on the side. The first one would be what are you seeing in terms of hotel and resorts operation, expansion in your regions, like the regions that you operate? How do you see the level of activity in terms of hotels and resorts expanding? The second one would be if you see any opportunities for establishing industrial parks at or near your concessions in Bajío or elsewhere, given more intense manufacturing activities. Thank you. Hi, hi, Filipe. Well, what we have seen close to our operations in our report is clear that the economy in Mexico. Improving in due to the nearshoring, due to the automotive industry, due to the different activity in Guadalajara related with what we call Silicon Valley because the number of companies related with this activity. We are very positive in that side. We believe that we think that the business passengers will continue growing. We haven't recovered the level we have had in Guadalajara. We believe that in general, the activity will be expanding in the following years. Obviously, the nature will be impulsing and boosting the passenger traffic. It is important to mention that the nature and the increase of industrial parks activity is growing in 5 of our 12 airports in Mexico, which is very important. This is Raúl Revuelta. Let me complement the answer of Sa ú l. I think that it's really important, and more for all our investors and analysts outside Mexico, to perfectly understand that the growth of the Mexican GDP is really or completely different between regions. On the center of the country, where we have Bajio, Guanajuato or Jalisco, the place where is Guadalajara, we have more than 25 years or 30 years that the GDP has been almost the double growth, a double growth versus the national growth on the GDP. We are seeing on this area, and in Tijuana for sure, a great expansion in terms of industrial parks, real estate, additional new foreign investments that come mainly from the nearshoring. We really continue really positive on that. We think it's happening. One of the key factors to in some way have a better understanding of what's gonna happen in coming years and what are the trends, is to continually seeing what is happening in terms of state GDP and the creation of new employments in the different regions. For instance, Jalisco, the state where is Guadalajara Airport, was on this first quarter or in the last half of the year of 2022, it was the number 1 state in terms of creation of new employment. I think that the dynamic of the economy in Mexico is changing really fast, but it's changing in a really different pace depending the areas of the country. In terms of the second question, if we have any opportunity to establish industrial parks new to the concessions, I think that we will continue to see different opportunities. As always, we will analyze the opportunities. One of the key parts to understand always this company is that we are really, we have a great discipline to only invest in opportunities that be accretive for the value of the company. I will say that yes, we have reviewed different opportunities in some of our airports for thinking some kind of additional development of real estate and industrial parks. Always it will pass through this review of how accretive of value could be for the company. To conclude, yes, we will review different opportunities. Again, we will keep our discipline of investment to only bring opportunities that create value to our company. Great. Thank you very much. Super clear. We'll take our next question from Anton Mortenkotter with GPM. Please go ahead. Hello, guys. Thank you for taking my question, and congrats on your results. I was just wondering if you could provide a breakdown on the MXN 3 billion capital deployment you did during the quarter, and if you could share if your expectations on your investments on the commercial front are the same as you shared recently, or if it's anything that is moving on that path? Thank you, Antoine. This is Raúl. I mean, in terms of the CapEx deployed during the quarter, let me begin with which are the main buildings or infrastructure that we are developing right now. We have the second runway of Guadalajara that is happening and is continuous their development and gonna be ready for operation at the end of the year. Also we are right now building the second terminal of Vallarta. That is also a really big and important investment for the company in size and for sure in the impact on CapEx. The third big project that happened on the quarter is related with the land acquisition for the future reserves of the Guadalajara Airport. Yes, in that regard, I think we have invested around MXN 1.4 billion in Guadalajara for land, and we are investing mainly in Puerto Vallarta for the new terminal and the second runway in Guadalajara. These are the main projects. Indeed, in this quarter we reached the highest level of investment historically in the company with almost MXN 3 billion in 1 quarter. The most important thing is that the land reserve that we are we already acquired, which is very important for future growth in the Guadalajara Airport. Anton, regarding your second question, we couldn't hear very well. Can you repeat it, please? just to understand if the unfolding of your investments, I mean, your expectations on the deliveries of your commercial and diversification activities has changed or is anything just going as expected? No, Anton. We continue the same line. We are developing additional commercial areas in Guadalajara, with our food and beverage area that is gonna be get into operations at the end of the summer of this year. Also in terms of size, we just finished the increase of commercial areas in Los Cabos Airport. Also for sure we are developing the hotel in Guadalajara that will be ready for operation on the first quarter of 2024. In general terms, we continue in the same line of the non-aeronautical revenues, trying to bring additional square meters with better conditions and better experience for our passengers. That gonna be the best way to increase our non-aeronautical revenue. For sure we are working really, really hard to be more efficient as possible in the lines that are directly operated by GAP as the convenience stores or the VIP lounges or the parking lots. In general terms, I would say that we continue in the same line of the development of the commercial, the non-aeronautical revenues in our airports, mainly in the same business line. As I say, we always gonna try to review different opportunities, different experience for our passengers. If the return is the correct one, it's gonna be the kind of business line that we will bring to the company. That's pretty clear. I mean, if I may, just a quick another question. Just with the increase in tariffs you did during the quarter, what level of your maximum tariff did you reach? Almost 99.6%. Really close to the 100%. Perfect. Thank you guys a lot. Thank you. Once again, it is star and one for your questions. While we wait, we will take the webcast questions. I will turn the call over to management. Thank you, Nikki. We have two questions. The first one is from Roddy Seymour from Brown Advisory. This first one is there an update on the FAA timeline to review their rating downgrade for Mexico? As we said, we continue seeing that, it's gonna be between the third and fourth quarter of this year, the upgrade. We will begin to see impact on additional routes to our airports from the Mexican Airlines in the first half of the coming year. Thank you, Raúl. The next one. Where could non-aeronautical revenues per passenger reach in the next five years? Good question, because I mean, for sure we will try to expand as possible the ratio, but will for sure depend on how big or how the amount of additional square meters that we could bring to the table in the next negotiation. For sure we will have the effect of the new Puerto Vallarta terminal building. That's gonna be a great opportunity to reform all the experience in terms of commercial activities in the airport. I mean, the best way to understand that we have a great opportunity to expand that is when you compare the ratio of Los Cabos Airport and Puerto Vallarta Airport, you will have that we have a big gap to in some way to improve Puerto Vallarta Airport commercial revenues, it will come from terminal 2. Also, the additional square meters from Guadalajara, the hotel, the new hangars, the new food and beverage area, will give us a big boost on commercial revenues. Again, it's gonna be a key factors to perfectly understand how gonna be the increase on the square meters for the next period of 5 years. I mean, as a roughly number, we gonna be between MXN 110-MXN 120. I mean, there's a lot of variables to see what gonna be the next 5 years. It will be some number in that area. Thank you, Raúl. Then the last one that we have in the webcast is from Mauricio Buitrago from AM Advisors. Can you please repeat your guidance on EBITDA and CapEx for this year, please? Hi, Mauricio. Well, the EBITDA will be growing in the range of 10%-12% comparing to 2022, and the EBITDA margin will be close to the 70%. In terms of CapEx, our target is to reach MXN 10.2 billion at the end of the year. Thank you. I believe that we can pass again the call to Nikki. Thank you. We are showing one more question over the phone. Comes from Guilherme Mendes with JPMorgan. Please go ahead. Morning, Raúl. Thanks for taking my question. A quick follow-up on the cost front. You mentioned about some pressure on costs going forward. I think about your EBITDA margin guidance that you just mentioned, about 70% compared to the 72% that you posted in the first quarter. What kind of inflation pressure or kind of cost pressures do we see going forward? That's something we should already see on the second quarter or more towards the second half of the year? Thank you. Hi, Guilherme. Well, there are several factors. We talk about the in terms of salaries, that we will have additional headcount in 2023. We have also have to consider the changing law in terms of additional vacations or holidays for the employees. We have to consider the impact in the social contributions regarding the employees. That's the general effect in salaries, which affects also in terms of security, in terms of clearance, in terms of maintenance. In general terms, the change on law will be affecting the. Because you are right. There is something regarding the inflation, but we have also to consider the effect that we will have 100% operation, the new terminal in Tijuana. We opened it last year in May, but was operating full by the last quarter of the year. For 2023, we will have the full operation. That implies additional costs. As we have mentioned before, every time we expand the terminal, we expand the air side, we have to consider the new maintenance. In general terms, that's the reason that it will be affecting the EBITDA margin. We have to consider the effect of MBJ in terms of the concession fees. We have a credit line regarding the additional concession fee that was applied in 2022. For 2023 will be, there is no credit line, so we will have to pay full the additional concession fee. Those are the main effects. Obviously, we have different effects in each airport, but in general, that's the main reason. Super clear. Thank you very much. Have a good day. Thank you. We have a last question on the webcast from Ariana Catalán from Santander. Raúl, when do you expect to deliver the second terminal in Puerto Vallarta? Hi, Ariana. We expect that we will get in, we'll be ready for operations in December of 2024. Any effect, for instance, in commercial revenues is gonna be in 2025 because, I mean, the idea is that we'll operate just the last weeks of December. Thank you, Raúl. There is no any additional questions, so we will go forward for the final remarks. Thank you everyone again for joining us today. It's our first quarter results conference. The team remains available to answer any question that you may have. Please enjoy the rest of the day. Thank you very much. This does conclude today's program. Thank you for your participation. You may disconnect at any time.