Grupo Aeroportuario del Centro Norte, S.A.B. de C.V. (OMA), reported strong financial and operational results for the third quarter of 2023 during its recent earnings call. Despite the damages to Acapulco Airport from Hurricane Otis, the airport remains operational, focusing on humanitarian operations and contributing a modest 3.4% to OMA's total revenues. The company also discussed regulatory changes, including a concession tax increase from 5% to 9%, to be recognized in future tariff negotiations.
Key takeaways from the call include:
- Despite Hurricane Otis' damage, Acapulco Airport remains operational and contributed 3.4% to OMA's total revenues in 2022.
- Regulatory changes include an increase in the concession tax from 5% to 9%, starting January 2024.
- OMA reported solid Q3 2023 results with adjusted EBITDA growing 33% to MXN2.5 billion, and a record passenger traffic of 7.4 million, a 19% increase year on year.
- OMA is deferring 1.2 billion of its MDP CapEx over 24 months, which will not compromise airport operations, quality, or safety standards.
- The company expects a 4% impact on margins next year due to the concession tax increase.
- OMA is evaluating the impact of changing the MDP rate of return calculation from return on equity to WACC but expects the impact to be relatively small given their low leverage.
OMA's Q3 2023 results showed a 33% growth in adjusted EBITDA to MXN2.5 billion, and aeronautical revenue grew by 31% to MXN2.5 billion. Non-aeronautical revenue also saw a 24% increase. These results were achieved despite the impact of Hurricane Otis on the Acapulco Airport, which contributed 3.6% of total passenger traffic and 3.4% of OMA's total revenues in 2022.
The company is deferring 1.2 billion of its MDP CapEx over 24 months, which represents 25% in 2024 and 13% in 2025 of the original CapEx commitment. OMA assured that these deferments would not compromise airport operations, quality, or safety standards.
OMA also discussed recent regulatory changes, including an increase in the concession tax from 5% to 9% starting January 2024. However, this increase will be recognized in future tariff negotiations. They expect a 4% impact on margins next year due to this concession tax increase, which will be considered in the reference value for the next MDP negotiation in 2026.
The company also addressed potential inflationary pressures, which could be offset by inflationary increases in tariffs. They also discussed the potential impact of the grounding of aircraft due to engine issues, but stated that it is too early to provide a forecast. However, they expect some small growth in the aero side of the business next year.
OMA executives also mentioned that they are evaluating the impact of changing the MDP rate of return calculation from return on equity to WACC, but expect the impact to be relatively small given their low leverage. They also stated that they remain open to opportunities outside of Mexico but do not have any concrete transactions in the pipeline.
OMA does not expect any further regulatory changes beyond the concession fee hike until the end of 2025. The increase in the cost of services this quarter was attributed to maintenance and utility expenses due to terminal expansions and increased passenger volume.
InvestingPro Insights
Based on real-time data from InvestingPro, Grupo Aeroportuario del Centro Norte, S.A.B. de C.V. (OMA) has a market capitalization of 2910M USD, indicating a substantial presence in the industry. The P/E Ratio, standing at 11.47, and the adjusted P/E Ratio for Q2 2023 at 10.81, suggest that the stock is trading at a low earnings multiple, making it potentially attractive for value investors. The company also boasts a substantial gross profit margin of 66.87% as of Q2 2023, reflecting its impressive operational efficiency.
Two particularly important InvestingPro Tips for OMA are its high earnings quality, with free cash flow exceeding net income, and its high return on invested capital. These factors, combined with consistently increasing earnings per share, suggest a strong financial position. Another factor to consider is that OMA pays a significant dividend to shareholders, making it an attractive option for income-focused investors.
For a comprehensive list of InvestingPro Tips, visit the OMAB InvestingPro page. It's worth noting that InvestingPro offers 22 additional tips for OMA, available with the InvestingPro subscription.
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