Grupo Aeroportuario del Centro Norte Q1 2025 Earnings Report

Grupo Aeroportuario del Centro Norte EPS Results

• Actual EPS: $1.30
• Consensus EPS: $1.28
• Beat/Miss: Beat by +$0.02
• One Year Ago EPS: N/A

Grupo Aeroportuario del Centro Norte Revenue Results

• Actual Revenue: $174.65 million
• Expected Revenue: $3.58 billion
• Beat/Miss: Missed by -$3.41 billion
• YoY Revenue Growth: N/A

Grupo Aeroportuario del Centro Norte Announcement Details

• Quarter: Q1 2025
• Date: 4/29/2025
• Time: Before Market Opens
• Conference Call Date: Tuesday, April 29, 2025
• Conference Call Time: 10:00AM ET

Grupo Aeroportuario del Centro Norte (NASDAQ:OMAB), S.A.B. de C.V., commonly known as OMA, is a Mexican airport infrastructure and services company. Through long-term concessions granted by the Mexican government, it develops, operates and maintains airports, providing passenger and aircraft services as well as managing the commercial activities associated with its terminals.

OMA operates 13 airports in central and northern Mexico. Its network includes airports serving Monterrey, Acapulco, Mazatlán, Zihuatanejo, Chihuahua, Ciudad Juárez, Culiacán, Durango, Reynosa, San Luis Potosí, Tampico, Torreón and Zacatecas. These facilities support domestic and international passenger travel, air cargo and regional economic activity.

The company generates revenue from aeronautical services, including passenger processing, aircraft landing and airport-use services, as well as from commercial operations such as retail, food and beverage, parking, advertising and other terminal-based activities. OMA was established as part of Mexico’s airport privatization program in the late 1990s and is listed on the Mexican Stock Exchange and Nasdaq under the symbol OMAB.

Grupo Aeroportuario del Centro Norte Q1 2025 Earnings Call Transcript

Key Takeaways

• Passenger traffic totaled 6.4 million in Q1, up 9.1% year-over-year with 8% domestic and 15.1% international growth driven largely by Monterrey and 16 new routes (5 international).
• Aeronautical revenues rose 13.8% with revenue per passenger up 4.3%, while commercial revenues grew double-digits driving a 16% increase in adjusted EBITDA to MXN 2.4 billion and a margin of 74.9%.
• Diversification revenues jumped 22%, led by OMA Cargo and a 56.4% increase in industrial services as new and expanded warehouses in the industrial park become operational.
• Shareholders approved a MXN 4.5 billion cash dividend at the 2025 Annual Meeting, reflecting the company’s commitment to returning cash as free cash flow grows.
• Operating costs climbed, with cost of services and G&A up 10.2% (payroll +9.9%, contracted services +8.8%) and construction revenues fell 60% on lower MDP investment execution.

Presentation

[Operator]

Ladies and gentlemen, greetings and welcome to the Grupo Aeroportuario del Centro Norte OMA first quarter 2025 earnings conference call. At this time, all participants are in the listen-only mode. A brief question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star and zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Emmanuel Camacho, Investor Relations Officer. Please go ahead, sir.

[Emmanuel Camacho, Head of Investor Relations at Grupo Aeroportuario del Centro Norte]

Thank you, Enrico. Hello, everyone. Welcome to OMA's first quarter 2025 earnings conference call. We're delighted to have you join us today as we discuss our company's performance and financial results for the past quarter. Joining us today are our CEO, Ricardo Dueñas, and CFO, Ruffo Pérez Pliego. Please be reminded that certain statements made during the course of our discussion today may constitute forward-looking statements, which are based on current management expectations and beliefs and are subject to a number of risks and uncertainties that could cause actual results to differ materially, including factors that may be beyond our control. Now I'll turn the call over to Ricardo Dueñas for his opening remarks.

[Ricardo Dueñas, CEO at Grupo Aeroportuario del Centro Norte]

Thank you, Emmanuel. Good morning, everyone. We appreciate your presence on this call today. This morning, Ruffo and I will review our quarterly operational and financial results, and then we will be pleased to answer your questions. In the first quarter of this year, OMA's passenger traffic totaled 6.4 million passengers, a 9.1% increase year over year. This increase was mainly attributable to an increase in seat capacity of 13.4% during the quarter. On the domestic front, passenger traffic grew by 8%, driven primarily by the Monterrey Airport, which saw increases on routes to Querétaro, the metropolitan area of Mexico City, including the Mexico City, AIFA, and Toluca airports, Hermosillo, Ciudad Juárez, Guadalajara, and Culiacán. These routes collectively added over 285,000 passengers during the quarter, representing 72% of the total domestic passenger growth. International passenger traffic increased 15.1%.

[Ricardo Dueñas, CEO at Grupo Aeroportuario del Centro Norte]

This growth was also driven by the Monterrey Airport, with passenger traffic increases on routes to San Antonio, Chicago, Los Angeles, Orlando, San Francisco, Oakland, Miami, Austin, and Denver. These routes collectively added over 132,000 passengers during the quarter, accounting for 94% of the total international passenger increase in the first quarter. During the first quarter, we launched 16 new routes, five of which were international. In terms of airline participation, Viva Aerobus represented 49% of our total traffic during the quarter, with an 11% increase in terminal passenger numbers compared to the first quarter of 2024, while Volaris, which accounted for 22% of our total traffic, recorded a 20% passenger increase during the quarter. Moving on to OMA's third quarter financial highlights. Aeronautical revenues increased 13.8%, with aeronautical revenue per passenger rising 4.3% in the quarter.

[Ricardo Dueñas, CEO at Grupo Aeroportuario del Centro Norte]

Commercial revenues had a strong double-digit growth, with commercial revenue per passenger growing 13% to MXN 66 as compared to the first quarter of 2024, driven by VIP lounges, restaurants, and retail. VIP lounges benefit from higher access rates and a larger number of users, as well as the effect of the previously opened lounges. The restaurant and retail line items benefited from the consolidation of new business units opened across our airports during the past quarters. Occupants' rate of commercial space stood at 96% at the end of the quarter. On the diversification front, revenues increased 22%. OMA Carga contributed most to this growth, mainly as a result of an increase in revenue related to air cargo operations in Monterrey. Revenue from industrial services increased 56.4% year over year, reaching MXN 42 million, primarily driven by a higher number of square meters leased in our industrial park.

[Ricardo Dueñas, CEO at Grupo Aeroportuario del Centro Norte]

During the quarter, we completed construction of a warehouse measuring about 9,200 sq m, as well as a 2,400 sq m expansion of an existing facility. Additionally, we are currently building a 5,000 sq m warehouse, which we expect to complete in the second quarter of this year. OMA's first quarter adjusted EBITDA increased by 16% to MXN 2.4 billion and an adjusted EBITDA margin of 74.9%. On the capital expenditure front, total investments in the quarter, including MDP investment, major maintenance, and strategic investments, were MXN 502 million. Lastly, I want to mention that last Friday we held our 2025 annual shareholders meeting, where shareholders voted on several matters, including the declaration and payment of a MXN 4.5 billion cash dividend. I would now like to turn the call over to Ruffo Pérez Pliego, who will discuss our financial highlights for the quarter.

[Ruffo Pérez Pliego, CFO at Grupo Aeroportuario del Centro Norte]

Thank you, Ricardo, and good morning, everyone. I will briefly walk you through our financial results of the quarter, and then we'll open the call for your questions. Aeronautical revenues increased 13.8% relative to the first quarter of 2024, driven primarily by higher aeronautical yields, as well as the increase in both domestic and international passenger traffic. Non-aero revenues increased by 20.9%. Commercial revenues increased 22.8%, and the line items with the highest growth were VIP lounges, restaurants, and retail. VIP lounges rose 80%, mainly due to increasing rates and higher number of users, as well as the opening and the consolidation of the Ciudad Obregón lounge, which started operations last year. Restaurants increased 32.8%, driven by greater customer penetration and the opening or replacement of outlets in previous quarters in airports such as Monterrey, Ciudad Juárez, and Durango.

[Ruffo Pérez Pliego, CFO at Grupo Aeroportuario del Centro Norte]

Retail increased 50.9% as a result of the contribution of new spaces opened or replacements of existing spaces in previous quarters, as well as the higher penetration, primarily in airports like Ciudad Juárez, Monterrey, Torreón, and Culiacán. Diversification activities increased 22%, mainly due to high revenues from OMA Carga and the industrial park. Total aeronautical and non-aeronautical revenues grew 15.6% to MXN 3.1 billion in the quarter. Construction revenues amounted to MXN 403 million in the first quarter, a decrease of 60% as a result of lower MVP investment execution. The cost of services and G&A expense increased 10.2% year over year, primarily due to a 42% rise in other costs and expenses. Payroll increased by 9.9%, while contracted services grew 8.8%, mainly due to higher costs for security and cleaning services following contract renewals in prior quarters.

[Ruffo Pérez Pliego, CFO at Grupo Aeroportuario del Centro Norte]

Concession tax increased 16% to MXN 259 million, in line with the increase in revenues. Major maintenance provision was MXN 53.4 million as compared to MXN 71.3 million in the first quarter of 2024. As Ricardo mentioned, OMA's first quarter adjusted EBITDA was MXN 2.4 billion, and adjusted EBITDA margin reached 74.9%. Our financing expense reached MXN 312 million, an increase of 13%, mainly due to a lower interest income as a result of lower average cash balance during the quarter as compared to the same period of the last year. Consolidated net income reached MXN 1.3 billion, which showed an increase of 19.7% versus the first quarter of 2024. Turning to our cash position, cash generated from operating activities in the first quarter amounted to MXN 1.9 billion, and cash at the end of the quarter stood at MXN 2.3 billion.

[Ruffo Pérez Pliego, CFO at Grupo Aeroportuario del Centro Norte]

At the end of the quarter, total debt amounted to MXN 11.3 billion. We maintained a strong balance sheet, ending the quarter with a net debt to adjusted EBITDA ratio of one time. This concludes our prepared remarks. CECO, please open the call for questions.

[Operator]

Thank you. Ladies and gentlemen, we will now be conducting a question-and-answer session. If you would like to ask a question, please press star and one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Ladies and gentlemen, we will wait for a moment while we poll for questions. The first question comes from Alan Macías with Bank of America.

[Operator]

Please go ahead.

[Alan Macías, Equity Research Analyst at Bank of America]

Hi, good morning, and thank you for the call. Just a question on your expectations for traffic. Traffic in Monterrey has continued to be very strong. I understand there's more capacity, but how are you looking at demand, and how was April so far? Thank you.

[Ricardo Dueñas, CEO at Grupo Aeroportuario del Centro Norte]

Hello, Alan. Thank you for your question. Yes, first quarter traffic was looking good numbers. April, remember, April, we're going to have the holidays, the Holy Week on April. We didn't have that one last year, so on a month-to-month, the numbers are going to be good. We're still looking at the same expectation as we mentioned on the previous call, somewhere around the mid-single digits. We are cautious for the rest of the year as we're monitoring the macro landscape and the international news coming there.

[Operator]

Thank you. Thank you. The next question comes from the line of Pablo Monsivais with Barclays. Please go ahead.

[Pablo Monsivais, Equity Research Analyst at Barclays]

Hi, thanks for taking my question. This is just a more broad question, but in case that your MVP has low CapEx requirements and you don't have major investment opportunities abroad, what do you think the right strategy for dividends will be for OMA going forward? Thank you.

[Ruffo Pérez Pliego, CFO at Grupo Aeroportuario del Centro Norte]

Hi, Pablo. Over the past few years, we have tried to distribute as much cash as possible to shareholders in the form of dividends. That strategy, I do not think it is going to change in the foreseeable future. As we are able to generate higher free cash flow, that should be translated into higher dividend distributions.

[Pablo Monsivais, Equity Research Analyst at Barclays]

Thank you.

[Operator]

Thank you. The next question comes from Jens Spiess with Morgan Stanley. Please go ahead.

[Jens Spiess, VP Equity Research at Morgan Stanley]

Yes, hello. Congrats on the results. I have two questions. The first one is on capital allocation. CCR is, as you probably know, selling some of their assets in Brazil. Would you be interested in those assets or part of those assets or all of them? It would be much appreciated if you could give any perspective on that. My second question is on the traffic guidance. We're seeing that the low-cost carriers have retrenched some of their capacity, Volaris, Viva, but still, things are pointing to quite good capacity increases for you guys for the rest of the year, maybe double digits. Your guidance does surprise me a bit. Maybe could you elaborate how conservative you're being?

[Jens Spiess, VP Equity Research at Morgan Stanley]

Even if things kind of collapse in the second half of the year due to the macro environment, would not that set the stage better for you guys compared to the other airport operators? Because it would lower the base of your traffic that you will be settling or negotiating in your next MVP. Thank you.

[Ricardo Dueñas, CEO at Grupo Aeroportuario del Centro Norte]

I'll take the first one. Yes, we took a look at the CCR assets, but at the moment, we decided not to participate on that process. For the second part, we'll move.

[Ruffo Pérez Pliego, CFO at Grupo Aeroportuario del Centro Norte]

Yes, the seat capacity situation is somewhat volatile. There were some announcements made last week, and some capacity cuts are being reflected starting May and June by some of the low-cost carriers. Remember also that in the fourth quarter of 2024, several routes were open, so there will be a much higher base of comparison in the fourth quarter as well. It might be a bit conservative, but there are some uncertainties, and we do not want to be over-optimistic on capacity growth at this time. Regarding the second half of your question, if this is going to benefit us in MVP negotiation that will occur towards the second half of the year, remember that the current formula looks at the tariff, sorry, at the traffic for the first five years and actually through 2040 in our case.

[Ruffo Pérez Pliego, CFO at Grupo Aeroportuario del Centro Norte]

Any minor changes in capacity in a certain year would not move that much the needle when you are looking at the next 15-year traffic forecast. I do not think it is going to be necessarily a huge positive to have a lower traffic expectation this year.

[Jens Spiess, VP Equity Research at Morgan Stanley]

Okay, perfect. It probably helps in the negotiations, but only marginally. Perfect. I appreciate the clarity. Thank you.

[Operator]

Thank you. Thank you. The next question comes from Alberto Valerio with UBS. Please go ahead.

[Alberto Valerio, Analyst at UBS]

Hi, thank you, gentlemen, for taking my question. My question is on non-aeronautical revenues per pax. It was strong this quarter, a jump from fourth quarter last year and also year over year from the first quarter. I'm wondering if you can see another jump for the following quarters or it will be something more stable in the inflation index for looking forward for that line. Thank you.

[Ruffo Pérez Pliego, CFO at Grupo Aeroportuario del Centro Norte]

Yeah, I think that the results in extra aero reflect the strategy that we have been implementing over the last couple of years, especially since Vinci acquisition. For the next quarters, in terms of commercial revenue per pax, we expect a similar outcome as to the first quarter. Most likely in 2026, we'll see a higher yield as the new spaces in Monterrey start to be open.

[Alberto Valerio, Analyst at UBS]

Perfect. Those spaces will be open before World Cup, isn't it?

[Ricardo Dueñas, CEO at Grupo Aeroportuario del Centro Norte]

Yes, correct.

[Alberto Valerio, Analyst at UBS]

Perfect. Thank you very much, gentlemen.

[Operator]

Thank you. The next question comes from Pablo Ricalde with Itaú. Please go ahead.

[Pablo Ricalde, Analyst at Itaú]

Hi, good morning, OMA. Congratulations on that. I have two questions. The first one is on the routes. I remember when your new partner came in, Vinci, there were like all these plans of adding new routes, like local routes. Is that still on the table, or given all these macro concerns, that's on hold for now? My second question is on the industrial parks.

[Ruffo Pérez Pliego, CFO at Grupo Aeroportuario del Centro Norte]

Can you start again?

[Ruffo Pérez Pliego, CFO at Grupo Aeroportuario del Centro Norte]

Sorry to interrupt you, Pablo. Maybe the question is, use your handset, please.

[Pablo Ricalde, Analyst at Itaú]

I don't know if you can hear me now.

[Ricardo Dueñas, CEO at Grupo Aeroportuario del Centro Norte]

Yeah, we can hear you.

[Operator]

Yes, please go ahead.

[Pablo Ricalde, Analyst at Itaú]

My first question is on the new routes. I remember when Vinci came in, there were all these plans of adding new routes, like local routes. Is that still on the table, or that's on hold for now?

[Ruffo Pérez Pliego, CFO at Grupo Aeroportuario del Centro Norte]

In terms of new routes opened, we have a constant dialogue with airlines. We are focusing both in building our international connectivity and the increase that you saw in the last few quarters, particularly from Monterrey Airport, point towards that strategy of building good connectivity out of Monterrey. We also have two strong players in the local market, and therefore, we also focus on building greater regional connectivity.

[Pablo Ricalde, Analyst at Itaú]

Okay, thanks.

[Operator]

Thank you. The next question comes from the line of Jason with Citibank. Please go ahead.

[Jason Rekate, Global Head of Corporate Banking at Citibank]

Thanks for taking my questions. Jay dialing on for Stephen Trent. First thing I want to ask is, do you see any regulators pushing to adjust the TUA at Mexico City Airport? To the extent that you could talk about it, maybe could this have any tariff implications for OMA?

[Ricardo Dueñas, CEO at Grupo Aeroportuario del Centro Norte]

Sorry, the question again? The regulator pushing to again?

[Jason Rekate, Global Head of Corporate Banking at Citibank]

To adjust the airport use fees at Mexico City Airport?

[Ruffo Pérez Pliego, CFO at Grupo Aeroportuario del Centro Norte]

The TUA for Mexico City Airport is set in dollars, and it increases by U.S. CPI inflation. We have not heard that that process or mechanics of adjustment is going to change. I believe that's adjusted at the beginning of every year. Probably the adjustment already took place in January, and we wouldn't expect an increase to us in the Mexico City Airport for the rest of the year.

[Jason Rekate, Global Head of Corporate Banking at Citibank]

Okay, got it. My second question is, how much do you interact with Vinci on strategic matters, such as the MVP or any potential foreign investments?

[Ricardo Dueñas, CEO at Grupo Aeroportuario del Centro Norte]

We have a very close communication with them. They're involved in the MVP, of course. In non-aero, they have been very active in CapEx execution as well. It is a very close communication with them.

[Jason Rekate, Global Head of Corporate Banking at Citibank]

Got it. Thanks so much, gentlemen.

[Operator]

Thank you. As there are no further questions, I would now like to hand the conference over to Ricardo Dueñas, CEO, for closing comments.

[Ricardo Dueñas, CEO at Grupo Aeroportuario del Centro Norte]

We would like to thank everyone for participating in today's call. We appreciate your insightful questions, engagement, and continued support. Ruffo, Emmanuel, and I are always available should you have any further questions or require additional information. Thank you once again, and have a great day.

[Operator]

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Participants

Executives

• Ricardo Dueñas, CEO
• Emmanuel Camacho, Head of Investor Relations
• Ruffo Pérez Pliego, CFO

Analysts

• Jason Rekate, Global Head of Corporate Banking at Citibank
• Pablo Monsivais, Equity Research Analyst at Barclays
• Pablo Ricalde, Analyst at Itaú
• Alan Macías, Equity Research Analyst at Bank of America
• Jens Spiess, VP Equity Research at Morgan Stanley
• Alberto Valerio, Analyst at UBS