Good morning. And welcome to the Corporación América Airports' Third Quarter 2022 Earnings Conference Call. A slide presentation accompanies today's webcast and is available in the Investors section of the Corporación América Airports’ Web site. As a reminder, all participants will be in listen-only mode.

There will be an opportunity to ask questions at the end of the presentation. At this time, I would like to turn the presentation over to Patricio Inaki Esnaola, Head of Investor Relations. Patricio, please go ahead..

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 Jorge Arruda, our Chief Financial Officer. 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.

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

Thank you, Inaki. Hello everyone, and welcome to our third quarter 2022 earnings call. We reported a robust quarter with sustained growth in top and bottom line, both beating recorded levels. Total revenues were up in the low double digits against third quarter 2019, supported by a continued recovery in traffic and strong growth in commercial revenue.

Along with our ongoing focused on cost control allowed us to report an adjusted EBITDA of over $130 million with positive contributions from all countries of operations.

Notably, the adjusted EBITDA margin ex-IFRIC12 was also above pre-COVID levels, expanding to 38% this quarter, up from 32% in the third quarter of 2019 and low 20s in the third quarter last year. For the first nine months of the year, adjusted EBITDA already amounted to $339 million.

On the balance sheet front, our leverage ratio continued to trend down with net debt to adjusted EBITDA below 3 times, reflecting relatively stable net debt levels combined with significant recovery in adjusted EBITDA.

Let me also highlight that last August we also redeemed the remaining outstanding amounts related to the preferred shares in AA2000 were in amount close to $40 million. As a reminder, this is deducted from mandatory CapEx in Argentina.

Finally, as part of our development ambitions, we were named prepare bidders to run Abuja and Kano airports in Nigeria this month. We are now in talks with government officials about the terms of the concession agreements and we will update you on this matter as we make progress.

As shown on Slide 4, passenger traffic continues to post a sustained recovery trend with over 18 million passengers flying through our airports in the third quarter. Traffic reached 82% of third quarter of 2019 levels, up from 76% in the second quarter, reflecting a solid demand and the removal of travel restrictions.

We also saw an improved performance month over month throughout the quarter with this momentum continuing into October when traffic nearly reached 90% of pre-pandemic levels. Armenia continues to be to lead the recovery with traffic 16% above the pre-pandemic levels. This revamp continued into October when traffic was up 26%.

We remain vigilant about the geopolitical environment in the region. We also saw a good performance in Ecuador, supported by traffic from the US, Europe and Panama with higher frequencies for international and domestic flights.

Passenger traffic [beat] pre-pandemic levels by 3% and benefited from the airport closure during three weekends of September 2019. This strong performance continued into October when traffic goes up 8% compared to October 2019.

In Italy, traffic posted a robust sequential improvement, driven by the summer season, reaching 89% of third quarter of 2019 levels and continued the recovery observed in the prior quarter.

Traffic in Brazil increased to 91% of third quarter 2019, up from 76% in the prior quarter, and we expect this momentum to continue through the remainder of the year. Argentina and Uruguay continued the gradual recovery trend with passenger traffic reaching 80% and 68% of third quarter of 2019 levels respectively.

As a reminder, borders were fully reopened at the start of November last year, while in Argentina, old COVID entry and regulations were fully lifted only towards the end of August this year. Turning to Slide 5, we also continued to see a sustained recovery in cargo, which increased to 82% of third quarter of 2019 volumes.

Uruguay, Armenia and Italy were particularly strong, beating third quarter of 2019 levels while Argentina posted a sequential improvement with cargo volumes reaching 83% of pre-pandemic levels. Notably, cargo revenues increased 43% against third quarter of 2019, also reflecting the revisions implemented last year.

I will now hand back the call to Jorge, who will review our financial results. Please Jorge, go ahead..

Thank you, Martin and good day, everyone. Starting with our top line on Slide 6, total revenues ex-IFRIC 12 showed a very strong performance this quarter, surpassing pre-pandemic levels for the first time.

Aeronautical revenues increased nearly 130% year-on-year, mainly driven by continued recovery in passenger traffic across geographies, reaching 93% of third quarters 2019 levels.

Armenia continued to make a strong contribution to this growth with aeronautical revenues up in the mid-teens from pre-pandemic levels along with Ecuador, which also reported a low single digit increase against third quarter 2019.

Commercial revenues continued to be the major contributor to our total revenue growth, up 90% year-on-year and 42% above 2019 levels. This was mainly driven by a higher cargo, parking and duty free revenues in Argentina and higher fueling service in Armenia.

As a reflection of these strong results, our revenue per passenger increased by 30% from $13.6 in third quarter 2019 to $18.6 this quarter. Now turning to our cost structure on Slide 7. Total operating costs and expenses increased 56% year-on-year, mainly reflecting the strong pickup in business activity.

However, this increase was significantly below the 106% revenue growth. Compared to 2019, operating costs and expenses for the quarter increased by 4%.

This is mainly explained by higher fuel costs in Armenia due to the strong increase in fuel sales in the quarter and to a lesser extent by higher salaries in Argentina, as the local inflation rate was significantly above currency depreciation.

However, this was partially offset by lower SG&A expenses as third quarter 2019 was impacted by a $23 million bad debt charge in Argentina. Now turning to profitability on Slide 8. We delivered an adjusted EBITDA of $131 million, up from $40 million in the same quarter last year. Notably, adjusted EBITDA surpassed the endemic levels by $31 million.

Again, this quarter, strong commercial revenue growth combined with our linear cost structure is driving the acceleration of our adjusted EBITDA recovery with positive figures across our geographies. We achieved significant margin expansion year-on-year to nearly 38% this quarter compared to third quarter 2019 levels.

And excluding the $23 million bad debt charge, adjusted EBITDA margin ex-IFRIC was only 1.2 percentage points below. This was mainly explained by the changing revenue mix due to the significant growth of the fuel business, which has a lower margin. Turning to Slide 9.

We ended the quarter with a total liquidity position of $470 million compared to $448 million at the end of June 2022. As Martin mentioned, during the quarter, we consummated the final early redemption of our preferred shares in AA2000.

As a reminder, the total amount of $174 million paid for the redemption of these shares is deducted from our $406 million CapEx program of our AA2000 concession. Moving on to our debt and maturity profile on Slide 10. Total debt at the end of the quarter was $1.5 million, while our net debt stood at $1.1 billion.

Driven by strong performance of our adjusted EBITDA during the last quarter, our net debt leverage ratio showed further significant improvement this quarter, declining to 2.6 times from 3.5 times in the prior quarter.

Importantly, our strong financial results enable us to continue funding the CapEx program that we have previously announced while maintaining stable net debt levels. We remain committed to keeping a strong balance sheet and healthy debt profile that will allow us to take advantage of future growth opportunities.

I will now hand back the call to Martin who will present our closing remarks on Slide 12..

Thank you, Jorge. Now to wrap up, please turn to Slide 12. Looking ahead, we expect sustained growth in passenger volumes across our airports. In the short term, we have already experienced increased demand from the start of the summer in South America.

We expect this to benefit our performance, while we remain cautious about the overall macroeconomic and geopolitical environment. We are also working on several fronts as we seek to drive value creation. First, we remain focused on building new routes to serve our passengers across our airport network.

Second, this month, we received economic compensation for our concession in Brazil and remain focused on advancing with economic re-equilibrium process for our concession in Armenia.

Finally, I reiterate that the key element of our growth strategy is to selectively expand our airport concessions, and we remain focused on pursuing attractive value creation opportunities for our company.

Before we conclude, I would like to share that last week, we had a townhall meeting with our main leaders and key managers of our operations globally and took the opportunity to reinforce and reiterate our ambition to grow our business, creating value for our shareholders, employees, customers and all stakeholders based on our purpose of connecting the world in an easy, inclusive and sustainable way.

With this, I would like to thank you all for your attention. We are now ready to take your questions. Operator, please open the lines to questions..

[Operator Instructions] The first question today comes from the line of Alejandro Demichelis from Nau Securities..

Two questions, if I may, please. First one is maybe you can give us an indication of how you see international traffic and availability of seats for the upcoming summer season in Argentina. That's the first question.

And then the second question is, could you give us some kind of feel on how you see the evolution of the noncommercial revenues for the group? Because when we look at the third quarter numbers, if we subtract the fuel revenues, then your noncommercial revenues seem to be lower than, say, the ones we had the last couple of quarters.

So trying to understand how that should be evolving..

You may have seen that we reported October numbers recently. And you may have seen that we continue to see recovery across the board and in Argentina, in particular, which was your question. Obviously, the recovery in the past several months has been strong, given the starting point post pandemic was super low levels.

We expect continued recovery at a slower pace but continued recovery. Across the board, obviously, the challenge will always be availability of aircraft and confidence by the airlines that the recovery will continue. But so far or currently better speaking, we foresee a continued recovery. Regarding your second question, I just wanted to clarify.

You were talking about aeronautical revenues or commercial revenues?.

I'm talking about non-aeronautical, yes..

Non-aeronautical, yes. No, again, I think we saw a significant improvement in duty-free, in parking across the board and in Argentina, in particular and most notably, and in fueling.

Fueling has a much lower margin, but nevertheless, the volume is significant and we have saw a significant increase in Armenia because of the environment and the dynamics of the traffic over there, in particular, with Russia.

And more specifically, the reason is that more aircrafts are flying to Russia, and therefore, they need to refueling more in Armenia -- are flying to Armenia, and they need to refuel -- they need more fuel in Armenia than they needed before with larger aircraft..

And if you could please follow up on the first question on international traffic. The question is because we have seen and heard that some airlines are anticipating the return of long haul flights, for example, British Airways.

So maybe you could -- I don't know if you do have some kind of visibility if you're seeing some of -- more of these movements from the airlines..

We are seeing -- I mean, we have access to several months ahead throughout our system in terms of flight availability and availability for flight -- for tickets to be purchased. And again, we see a continued recovery..

Okay, thank you..

I'm not ready -- I mean, if you like to know about very specific flights, et cetera, we can have a one-on-one and we can give you more information about what it is available. But I think the answer to your question is that we do see continued recovery..

Thank you [Operator Instructions]. There are no further questions registered at this time. So I'd like to pass the conference back over to Martin Eurnekian for any closing remarks. Please go ahead..

I'd like to thank everybody for joining us today. And remind you that the team remains available for any questions or follow-up questions that you may have. Please enjoy the rest of your days. Thank you very much..

This concludes today's conference call. Thank you all for your participation. You may now disconnect your lines..