Good day ladies and gentlemen, and welcome to ASUR's Third Quarter 2022 Earnings Conference Call. My name is Elaine and I will be your operator. At this time, all participants are in a listen-only mode. We will conduct a question-and-answer session towards the end of today's conference. [Operator Instructions] As a reminder, today's call is being recorded. Now I'd like to turn the call over to Mr. Adolfo Castro, Chief Executive Officer, please go ahead, sir.

Thank you, Lynn and good morning everyone. Before we started the covering of the highlights from the quarter and then taking your questions, let me remind you that certain statements made during this call may constitute forward-looking statements, which are based on current management expectations and beliefs and are subject to several risk and uncertainties that could cause actual results to differ materially, including factors that may be beyond our company's control. As usual, additional details about our quarterly results can be found in our press release, which was issued yesterday after market closed and is available on our website Investor Relations section. We reported another solid quarter with record passenger traffic improved cost efficiencies and strong profitability. Starting with our review of travel demand, total traffic grows over 24% year-on-year and exceed third quarter's 2019 levels by nearly 23% reaching a record of 17 million passengers in the third quarter. Airports across our three geographies all contributed to the solid growth compared to pre-pandemic levels, third quarter 2019. Colombia maintained a stronger recovery of 37% with domestic travel expanding in the low 30s and international travel in the high 50s. We expected these strikes are threatening strong recovery to continue over the coming months boarded by structural shift in demand driven by new routes and airlines. Traffic in Mexico was up 22% against third quarter 2019 driven by both international and domestic passengers. With all the airports contributing to this growth in particular, international traffic growth accelerated to 30%. This is strong performance reflect high travel demand from all regions of this market, exceeding 2019 levels except Canadian demand, which has still remained at slightly over 65% of the last 12 months of 2019. Looking ahead, traffic from Canada is expected to resume its winter seasonal levels mainly November…

Thank you. [Operator Instructions] We will take our first question today from Rodolfo Ramos of Bradesco BBI. Please go ahead.

Good morning Adolfo. Thank you for taking my question. I have a couple. The first one is on your outlook for traffic. International has been clearly the leader here. And you know given your expectation of this pent up demand from Canada should be continued. It seems that that will continue to be the case, but just wanted to get your thoughts on the domestic side. Volaris reported earnings and it seems like they're having a little bit of trouble getting down with fares? No, it seems like there's a high level of elasticity demand for leisure destinations on the domestic side. So just wanted to get your thoughts on that side on the domestic traffic recovery how do you expect this to evolve in this winter season? And then I have a second question as well if I may?

Yes, Rodolfo hi, good morning, when in the case of domestic, basically in the case of Mexico, because you mentioned Volaris. It's very clear for me that usually it's above what we call business traffic - business traffic in our cases, capital series. I just mentioned the case of Merida that has been recovering very nice over the last couple of months, which is not the case of Veracruz and Villahermosa and Minatitlan. I do not expect them to recover until next year. So we will suffer in that sense, not been able to recover 2019 levels. But in the case of tourism, I'm very confident that we will be in the way that we have been for the last couple of months. It's important to mention, and if you see the reports, the passenger traffic reports. But to compare with passenger traffic in the case of Mexico, for total traffic in January 2022 versus September 2022. Normally, in the case of tourism, September is the lowest month of the year. Let's try to see seasonality in the previous years. And you will understand why I'm - saying this. So when you see the comparison between January and February, you will understand that we're still have some room to increase in the first part of next year.

Yes, thank you Adolfo. And secondly, on your MDP I mean, it's still early, not yet. It'll be concluded next year, but just wanted to get your thoughts if you've seen any changes on the process. And if you're still, you know, looking to incorporate the potential impact of over to Tulum airport potentially starting operations in 2024? Thanks.

Well the MDB once we close the quarter, we will go and work very hard to be able to deliver our proposal by the year end to the government. I don't see any changes in the process. And of course, what you're mentioning is it will be included in our proposal.

Thank you, Adolfo.

You're welcome.

Thank you. We move now to Alejandro Zamacona of Credit Suisse. Please go ahead. Apologies, we're moving to Filipe Nielsen of Citi. Please go ahead. Your line is open.

Right thanks so good morning or afternoon all. Thanks for taking my questions. I have two on my side. The first question would be what long-term opportunities? Do you see in terms of increasing commercial revenue per passenger in Colombia? I noticed that you've mentioned about Brazil contributing negatively? But I wanted to have a little more color on your initiatives on that. And the second question would be if you have any color on - new airport auctions and studies, opportunities for outside Mexico for new airports? Thank you.

Okay, Filipe hi good morning. As I mentioned in the initial remarks, we face a 24% Colombian peso devaluation versus Mexican peso. So, if you include these variables in the results of Colombia, you will understand why the growing Colombia apparently was very small, but could see that in Colombian pesos, it was very strong. In terms of initiatives, you can see in the report, what we have done in the case of Colombia over the last year, year and a half. And you will find out that we have made a lot of initiatives in the case of Colombia. So we are happy over those. We are seeing some result of course the devaluation of the Colombian peso had an impact severe impact in the case of the report. In terms of new opportunities outside Mexico I don't see any significant in front of me today.

Great, thank you.

You're welcome.

Thank you. I now move to Gabriel Himelfarb of Scotiabank. Please go ahead.

Hi, good morning, thanks for the call. Just a quick question, could you give us a bit of color about the maximum tariff? About how much are you what percentage are you this year? And do you think that under the current inflation conditions, it could impact or have some effect on the master development on the next master development plans? Thank you.

In the case of the maximum rate of course, you can follow the trade fees in quarterly report [technical difficulty]. You can see the waited power connecting rates for the quarter. And if you follow me, you will find out that there was an increase in the quarter. But of course, with the high inflation situation we are now I can estimate that we're not going to be able to reach the, 99.8 max compliance as we usually do. We have made a catch up from last year that it will not be enough to cover the kinds of mission that we are seeing now. And I don't see any impact of that during the next MDP.

Okay, thank you.

Thank you. We now move our next question to [Anton Morton Carter of GBM]. Please go ahead.

Hi, Adolfo hi, guys. Thank you for taking my question and congrats on your results, I have just, I mean, you guys had a really strong cash flow generation I think it should continue like that going forward? Just reach really high cash balance. But still, you raise some debt in Puerto Rico. And I was wondering if you could and your Puerto Rican concessions. I was wondering if you could share some color on that. Do you have any plans or any CapEx commitments in the near term?

Hi, good morning Anton, thank you for your words. You're right. We are very strong in terms of cash flow as we said in the report its 14 something billion. Next year CapEx program for the case of Mexico is not so important in the case of Puerto Rico could be more than what we had this year. And we will have to think about what are we going to do during the end of the year and then to propose something to the Board of Directors and then individual and family on what are we going to do with this cash position?

Okay I mean is this capital allocation strategy maybe more tilted - to look into this trivet or making a short-term dividend or are you guys looking into potential acquisitions or something?

We're always looking for potential acquisitions and as I said before, I do not have any significant in front of me for now.

Okay, and if I may, just a quick one at this point more benefits from the Alfa law as the one you have this quarter?

I cannot understand your question alfa law what's that?

No the alfa the cost reimbursements.

Okay. There should be a small fees in front of course - we will have to make the application and see if that is approved or not.

Okay pretty clear. Thank you.

Thank you.

Thank you. [Operator Instructions] We will now take a question from Andressa Varotto of UBS. Please go ahead.

Hi, Adolfo good morning. Congratulations on the result. I have two questions from my end. The first one is on the category one. I know that ASUR is not directly impacted by that. But if you could give us a color on what you've been seeing around Mexico's work to recover the category one silos would be great. And my second question is your expectations on international traffic trends. If you believe that the pent up demand is over for now, and we could see some international traffic consolidation from now onwards, these are my two questions? Thank you.

Thank you, Andressa for your words. In case of category one, the less affected and I would say almost no effect, because our export continuation exports and basically the square tourist come to Cancun in international paradise, knocking at domestic airline. The fees [indiscernible] where we basically express that 0.5% of our total traffic was travelling in a Mexican airline to the U.S. so that was in 2020. So I don't see major impact, in our case, become this working to try to recover category one, there was a change in the head of aeronautical offices a week ago. And what they have expressed is that the objective of these new person is to recover category one in the in the short-term. So my expectation is that we will be we as a country, we will be able to recuperate that, up to the first half of next year. In the case of international traffic trends, everything is working well. All the regions have recovered 2019 levels with the exception of Canada that I just mentioned in my initial remarks. As I've said, today, over the last 12 months, Canada still 65% of 2019 levels, and expecting them to come back to the country, because they were affected last winter season. Normally, they travel from November to April. So last week, like winter season they were affected by own growth. And I hope that this year, there will be no more effects of COVID situation. So that's why I'm still very positive of the situation. The maximum amount of Canadians we have seen in the past is 2.7 million. So then you can make the math of how many of those we are away from 2019 levels.

Great, that's perfect. Thank you Adolfo, have a good day.

You're welcome.

Thank you. We now move our next question to Alejandro Zamacona of Credit Suisse. Please go ahead.

Thank you. Hi, everybody thank you for the call. Sorry if these questions have been already asked I got disconnected. But I was just wondering if you can share some thoughts on the cost of servicing Puerto Rico, we saw a significant increase. And we were wondering if this increase was related to European Fiano? And what could we expect going forward?

All right Alejandro yes, you're right we're seeing some increases in the cost of services of Puerto Rico. And I said during the initial remarks, one of the most important elements here was the cost of energy. We had also on top of that an effect because of Fiona because the energy was out from the green and we have to operate with emergency energy for some days almost a week and that of course has an effect on the cost of services. And in general I would say yes, we are seeing some effects of the inflationary equation we are leaving now and in the whole world?

Okay, so, but if it's fair to assume that you have non-recurring expenses during this quarter? We later do it in P&L. Only what can we expect for growth going forward?

Well, that will depend on the cost of energy I don't see that the cost of energy will decrease in the short-term. So in that sense, even that we had a one-time effect because of Fiona. In general terms, I would say that we will see more or less the same numbers in the prompt.

I can't believe it. Thank you, Adolfo. Then my second question, if I may, on the MDP. I mean, I know it's quite early yet, but do we have any color on the CapEx but we are planning to commute for the next five years period?

We're in the process and we do not have final figures yet. The only thing that I can say to you is that the most important expansion project will have to cure in the case of economic.

Okay, thank you Adolfo.

You're welcome.

Thank you. We move to Guilherme Mendes of JPMorgan. Please go ahead.

Adolfo, good morning I have two follow up questions. The first one in terms of traffic I mean looking beyond 2023 so more of a long-term perspective. Do you expect traffic especially in Mexico, to be back to the historical levels we saw over the past 10/15 years. And the second question is regarding margins. So follow up question from the previous one. So thinking these additional pressure on energy costs, etc. It's hard to some of the margins remain below the 70% margins going forward? Thanks.

Hi good morning. Well, I will recommend you to forecast the revenue, because, you know, separate or independent way. I do not recommend you to forecast with margins. But of course, if revenues while the passenger traffic grows and your revenue grows I'm confident that that will grow more than what the cost side will do?

Okay, got it and in terms of the traffic in the longer term?

Well, if you see what has occurred in the past, and there's some charts, you'll have a lot of figures traffic for the last 22 years at least. And if you see the line being before an event, let's say September 11, before it can build my - the swine flu close financial crisis in the U.S. and now could be the timing has been that after the event is more or less the same as it was before. So now you can see the adjustments that we have seen in the case of Puerto Rico that we have anticipated. We are start seeing the adjustments in the case of Mexico and Colombia the only one that is still very steep, let's say almost vertical. And that's why I said in the initial remarks feel confident that we will see some months before we start seeing the judgment.

Okay, so pretty clear. Thanks have a good day.

You too.

Thank you. [Operator Instructions] We have a follow-up question from Andressa Varotto of UBS. Please go ahead.

Hi, Adolfo thank you for taking my follow-up question just very quickly on the commercial revenue side. We talk on signs that numerous not revenue precise is stabilizing. Do you see this current level as a normalized level going forward? Thank you.

Yes, we saw some adjustments if we see that in terms of people adjustment in the covenant and the case of parking lot. Apart from what I just mentioned, because of Colombia, because of the 34% devaluation of the Colombia peso versus the Mexican peso. These two activities were affected during the quarter. If you remember, we were calling these, COVID behavior. And now apparently what we're seeing is the change in trends. We will have to wait next quarter to see if that is the definitive or it will continue as it was before.

Great, thank you.

You're welcome.

Thank you. That concludes the question-and-answer portion of today's conference call. I would like to turn it back over to Mr. Adolfo Castro for additional or closing remarks.

Thank you, Lynn. And thank you, all of you again for participating in our third quarter results conference calls on behalf of ASUR. We wish you a good day. Goodbye.

Thank you ladies and gentlemen that will conclude today's conference call. Thank you for your participation. You may now disconnect.