Welcome to the OMA Third Quarter 2016 Earnings Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Vicsaly Torres, Chief Financial Officer. Please go ahead.

Good morning. Welcome to OMA's Third Quarter 2016 Earnings Conference Call. Joining me this morning is the IR team made up by Emmanuel Camacho, Manuel de Leon and Laury Franco, as well as our Chief Accounting Officer, Jesús Villagómez. OMA had another strong performance in the third quarter, continuing the strong growth on profitability path we have been on for the past five years and we set a new record for adjusted EBITDA generation and adjusted EBITDA margin. I will quickly review our operational performance and financial results, discuss the change in the composition of our strategic investor SETA and say a few words of our investor day in November. Then we will be pleased to answer your questions. Turning to our third quarter operational performance, we continue to demonstrate the strong momentum in all areas of the business. Passenger traffic grew 12% in the quarter to 1.5 million led by domestic traffic growth. 11 of our 13 airports grew passenger traffic. Passenger traffic has grown for 22nd quarters in a row. The growth reflects the expansion of the airlines, new route openings, additional frequencies and increasing load factors. During the quarter seven of the 16 main special airlines in our airports increased passenger volumes with the largest contribution to growth from the VivaAerobus, Volaris, Aeromexico and TAR, 12 new routes opened in the quarter, 10 domestic and two international. Of course, two domestic and one international route closed for the first nine months of the year, we had 28 route opening, which six out of two or four Monterrey. Volaris has opened 12 routes, TAR added 10, VivaAerobus three, Aeromexico two and Sunwing added one seasonal route. We believe that we could continue to see additional new routes open in the fourth quarter based on indications we have received…

[Operator Instructions]. We will go first to Pablo Barroso with Credit Suisse.

I have two questions regarding diversification business. The first one is now that the second park, Industrial Park is operating. Could you give us more color in terms of revenues and EBITDA margin for the last quarter and next year? And my second question is regarding Monterrey, Hilton Garden Inn hotel, we saw a decrease in the occupancy rate for the quarter compared to the first half of the year. What should we expect for the last quarter and for the next year? Thank you.

Yes, about the Industrial Park at the Monterrey Industrial Park, the full warehouse was put into service and it started generating revenues in May, a generating MXN1 million in second quarter 2016. The second warehouses was completed this July and has begun contributing to results in the third quarter. Both warehouses generated MXN1.4 million in the third quarter. Construction work has begun on the third and fourth set of warehouses, and we are in the listing process for both of them. Their construction is schedule to be completed at the end of 2016 and early 2017 respectively. About that two concept that we have already, one of our, the first warehouse that we leased is a contract for three years and four months and the value of the contract -- the total value of the contract for all the periods is around $1.2 million. And the second one is a contract for a period of three years and 3.5 years. And the total value of the contract is a little bit more than $700,000 in the total value of the contract. As I mentioned, we are finishing the construction of the two more warehouses, and we are in the process to commercialize them. In terms of an EBITDA margins for these business is specifically a -- in our estimation is that, when the business get on maturity, the EBITDA margins will be around 45% to 50%. That is our estimation 45%, 50% that is our estimation.

Okay. Just a quick follow-up, typically, when should we expect turnaround in the EBITDA, that's right now your publishing negative numbers.

Yes, exactly when we estimate we are going to be in the breakdown in your question.

No, like right now you are posting a negative numbers in the EBITDA. Should we expect positive numbers for the fourth quarter or should they continue on negative ground.

It's possible that in -- we continue in this year in the negative number. But in 2017, being in positive numbers

Okay, great. Should I repeat Monterrey [indiscernible] question?

Yes, that would be your second question as to the performance of the Hilton Garden Inn Hotel. We are confident that we can continue to increase our revenues in the hotel. Now that it has reached maturity levels in occupancy and tariff. Our next step are they optimization of the tariff and their sustainability of our occupancy levels and we have done in the NH Hotel in Mexico City. In terms of margins, they, Hilton revenue in Monterrey, now is in a positive number. In a cumulated basis is around 35%.

Yes, just want to follow-up, if I may. For next year should we expect occupancy rate to be like this quarter at 70% or should we expect it to be like 75% to 80%.

We think, the range in terms of occupancy rate for these hotels will be between 70% - 75%. We are not thinking that this would help to reach more than 80% as NH hotel in some quarters reach. And the reason is because in Monterrey -- is a there are -- lead to pre-command and it's very specific, they compensate between the -- week between Monday and Friday, it's very high but in weekends, it's very low.

We will take our next question from Mauricio Martinez with GBM.

I know that you just comment on CapEx, but just to confirm so is it correct to expect that the remaining CapEx out of the MXN1.3 billion that you committed on the MDP should be deployed in the fourth quarter or it will be also for the first quarter of the next year?

This year is a very high year in terms of CapEx, the commitment itself very high more than MXN1.4 billion for the whole year. In terms of contracted work for the year, we had a 73% accounting to the schedule. The higher cash flow from investment activities will be seen in the fourth quarter ended in 2017. As I mentioned in my remarks, as this year is the first year of the five year period, we had start the clarification in the contracted process for all the projects. So in terms of cash flow, if your question about the cash flow, it's possible that in the fourth quarter, you will see an acceleration in the payment for the contract, for the product [ph] that have already contracted. And the works now are starting. And we are going to continue to see a payment during 2017.

[Operator Instructions]. We will take our next question from Stephen Trent with Citi.

Just one or two for me, the first is on SETA itself I know that, SETA had the sale, does this mean that OMA's relationship with Aeroportuario's [ph] completely cut off, is there still any relationship, via technical assistance agreement? And as a related question, if OMA decides to look at overseas airports, is it possible that, you could still partner with ADP?

We said that, we will continue to provide services to us in accordance with the technology transfer and technical assistance agreement. And ADP will continue to provide some services to OMA through SETA, it's important to clarify that the obligation to give clinical assistant -- the obligation for SETA because the tenant cost contract is between SETA and OMA. SETA is through their investors before ICA and ADP's provide technical assistance. Now the technical assistance will be provide to our contracts for services with ADP and also for its investors that is ICA. So the relation will remain the same and actually the Member of the Director, that was appointed by SETA and that person is coming from ADP will continue in the work at least for the next shareholders meeting, next year.

Great, very helpful. Thank you, Vicsaly and that, in the related to that question, just curious, if OMA decides to look at overseas airport opportunities, if it's possible that you partner with ADP and also looking at the domestic airports space, any view on the Mexican government's plans to auction new airports, does that seem like an opportunity or a risk for you guys or does it, is it not really important?

We are very active to look for opportunities in terms of per concession, and now as always we will see ADP as a partner and it's possible in the next future we can work with them to look for opportunities in terms of concession.

And any color or comment on the Mexican government's plans to privatize more airports?

At this moment, no. We don't have any new news, but we are waiting for something and if something is coming up, we are going to analyze and we are going to be there, I'm sure.

We will take our next question from Rogerio Araujo with UBS.

I have two questions. The first is on the average tariff, that increased by 18%. So my question is regarding the breaking now from this expansion, how much can be expanded by the Mexico peso depreciation. And also, if the revenue kept effect in Mexican peso and if it has to be adjusted downwards in fourth quarter or not? So this is my first question. Thank you.

Just to clarify, your question is about the increases in tariff that we did in the second quarter, and how much we can increase more the tariff next year or I don't--

Actually, how much of your aeronautical [ph] revenues is charged in US dollars? And also you have a capital on the revenue, right, on the tariff, every year. So my question is this get better in Mexico Peso or it also considered part of the revenue in US dollars?

Let me try to explain, the net effect in our exchange rate result is practically nil, because our international passenger charges which are denominated in dollar at the average of the last 30 days, offset variation generated by our debt in dollar, which as of September 30 represented 5% of our total debt. Regarding the second, our regulated revenues in 2016 due to the increase in maximum rate, a depreciation of the peso could benefit us in the sense that we could be closer to 100% of the amount we are entitled to earn under the maximum rate regulation system. As you're telling such as passenger charges or airport services fees not increased as much as we need to earn a 100% of regulated revenues, the depreciation of the peso could help us get closer. If R&D in this quarter, -- this year basically over the nine month of the year, we had a benefit for the depreciation of the peso in our regulated revenues.

Okay. So my follow-up question to this is, is there any chance of you surpassing this 100%?

No, at this moment, no -- as I mentioned in my remarks our estimation for the end of the year is that we are going to get between 93%, 94% in average of that maximum tariffs in average in all of our airports.

Okay, makes sense. Thanks a lot. My second question is regarding commercial revenues. This OMA have added projects, new projects in site such as the hotels and the real estate businesses or in other words would we continue to see commercial revenues increasing in OMA through new businesses or now it's going to be more like organic growth going forward? Thank you.

Well, we will see, definitely we will see a very strong performance in the diversification activities. We have very positive expectation in terms of OMA Carga. Obviously continue to have good results with our hotels. But in terms of the commercial activities, for some projects, expansion projects or remodulation in some periods of the year, next year and in the following years, we will see some negative effect in some concepts. But, finally when we end the remodulation and the expansion we will see a positive effect, a big positive effect, because we could increase our commercial area inside the terminal. So, it's difficult to say something a specific now, how much could affect the different projects included in the Master Development Plan, but at the same time, we are working a lot intense to improve the commercial offer and to negotiate better economic condition in our current contract to have a good result in the commercial activities. We currently operate other business opportunities, in terms of hotel, individual price and other efforts related business as part of the diversification strategy. So far the most important projects to develop are the Hilton Garden Inn and Industrial Park in Monterrey, at this moment.

We will go next to [indiscernible] with Scotia Bank.

Just a follow-up question on CapEx, how much of the committed CapEx for this year has been executed so far and how much do you expect to spend in Q4.

The commitments for this year is MXN1.4 billion. We have started the new Acapulco terminal building and we also started the construction of the new Reynosa terminal building and the new terminal building in San Luis Potosi and I think in this fourth quarter, we are going to start the work in the terminal of Chihuahua airport. So in terms us -- I'd tried to answer to Mauricio, in terms of cash -- cash flow, it's probably in this year the outcome could be less than MXN1.4 billion because the price started sliding and while the projects are in the process in take some advances. We are going to have to pay those works. In our standard estimation, it's probably as a cash flow the outcome could be around MXN500 million in the whole year and in 2017 we will see an acceleration in this, in this cash flow.

We will go next to Ulises Argote with Santander.

Real quick, just year-to-date passenger traffic growth stands close to 14%. Do you see any up sight to your guidance on the sense, and also do you have any indication for 2017 traffic that you could share with us? Thanks.

Yes, as you mentioned, in September, the traffic performance was very strong, above 15%. In accumulated basis, the variation has been 10.3%, so we are in the high level of our range that we gave you in second quarter, in our update -- when we updated our guidance. We are not going to update this guidance, we think we are going to be in that range between 10% traffic growths. For 2017, we have not given guidance, but it's probably could be between 6% and 7%. It's our estimation that is a number that we have in our projection model. I hope it help you. Just to brief on this, at this moment, for nine months in the year, we have had 26 new routes. And also we for this fourth quarter, we have five routes confirmed, so this is a very positive news to have a positive expectation for 2017.

And we will take our next question from Marco Montanez with Vector.

Regarding the major maintenance provision, we saw almost 19% decrease in these concept. What could be expected in the short-term and medium-term in this line? That will be very helpful. Thank you.

We may see some variation within the quarters as a result of the planning and the execution of a major maintenance works, which generate variation in our liability related to major maintenance. However, as in previous years, we recorded similar level in our major maintenance provision charge to results for the period of around the MXN220 million.

That concludes our question-and-answer session for today. I'd like to turn the conference back to Vicsaly Torres for any additional or closing remarks.

On behalf of OMA, I want to thank all of you again for your participation in this call. Manuel de Leon and I always available to answer your questions, and we hope to see you soon at our offices in Monterrey. Thank you and have a good day.

This does conclude today's conference. We thank you for your participation. You may now disconnect.