Good day, and welcome to the OMA First Quarter 2017 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 First Quarter 2017 Earnings Conference Call. Joining me this morning are Emmanuel Camacho, Paul Rivero and Laury Franco from the IR team; and our Chief Accounting Officer, Jesús Villagómez. This morning, I will review our operational performance and financial results, and give an update on the execution of our Master Development Program. Then, we will be pleased to answer your questions. OMA delivered another strong performance in the first quarter of 2017. The sum of aeronautical and non-aeronautical revenues rose 22%. Adjusted EBITDA increased 24% and net income rose 13%. Our cash flow generation was excellent, and we ended the quarter with MXN 3.2 billion in cash. In addition, we have already contracted 35% of the work of 2017 under the Master Development Program, most of which is for passenger terminal expansion. And our performance has been consistent. OMA has delivered 29 consecutive quarters of growth in aeronautical and non-aeronautical revenues and 23 quarters of adjusted EBITDA growth. Passenger traffic grew 8.8% in the quarter to 4.5 million passengers. 10 of our 15 airports grew passenger traffic. Passenger traffic is also consistent with increased traffic 24 quarters in a row. The growth in the first quarter mostly reflects increasing load factors. Seven airlines increased passenger volumes in Q1, with the largest contribution to growth from VivaAerobus, Volaris and Aeroméxico. We did see routes cancellation in the quarter as anticipated in our last conference call. TAR closed 14 routes that did not meet their operational objectives, while opening three new ones. Aeroméxico Connect also closed nine routes as they upgrade their fleets from Embraer 145 to Embraer 190. While these actions reduced the total route count, it's important to note that these closures reduced the supply of available seats by only 1.2%, and they were offset…

[Operator Instructions] We'll take our first question from Josh Milberg with Morgan Stanley.

I had a question on the non aeronautical side. We saw that Monterrey's traffic growth was in line with your overall performance, but that the non aero per passenger growth for Monterrey was significantly below the consolidated level. Could you just comment on what drove that? And also, if you wouldn't mind just repeating your comment on what was behind the decline in advertising revenue in the period and also maybe indicate what would be a sort of normalized level for the coming quarters?

Thank you, Josh. Sure. I'm going to start with the last part of the question, to repeat the effect in the advertising row. We signed a new advertising contract in 1Q '16, and we received an upfront payment from the new provider and a final payment from the previous provider, in total, MXN7.6 million. So we have that amount as an excess in the quarter. That is the difference in the quarter. And we expect the revenues in advertising going forward are normalized during the year. The new contract in advertising has better economic condition for us. We gain more minimum payments, so at the end, we will have more revenues in advertising versus the last provider, or with the last provider. And in terms of Monterrey, the non aeronautical revenues per passenger, it's an indicator. It's difficult to control it. As passenger traffic is growing, not 100% of our total contracts of non aeronautical revenues are linked to the passenger. So in Monterrey, we have more contracts than the rest of the airports. And it's more difficult to control that indicator. In case of Monterrey, particularly in terminal B, we have some space available that we are negotiating some projects with Chili's and another one that will come in the next quarter. But at the end, we are positive in the commercial activity. We are expecting growth in high single-digit growth. I don't know if I answered your question.

No, I think you did. I mean, could it be the case that the decline in the advertising hit Monterrey disproportionately, and therefore, that may explain its underperformance relative to the other airports? I was just wondering if there was maybe something specific that went on at Monterrey that maybe was behind the kind of divergence between Monterrey and the other airports. But I think you addressed that.

Our next question will come from Pablo Zaldivar with GBM.

Just quickly, my first one is kind of a follow-up on the previous question regarding non-aeronautical revenue. If we see it on a consolidated basis, excluding diversification activity, we saw a low single-digit expansion. And you mentioned that you're looking for a high single-digit expansion for the year. Is that also excluding the diversification activity? Or would that be including those type of activities?

Thank you, Pablo. Yes. In 2017, commercial revenues are limited because the occupancy rate in the commercial areas is above 95%. And even when we have initiatives to develop during the year, we will be until 2018, when expansion and new terminal projects will be finished, when we will have an important revenues growth. Another factor, as I mentioned, was the advertising situation. We don't consider this a onetime effect of the upfront and final payment of the provider. Advertising, we will run 12% and commercial revenues will be 14.1% in first quarter 2017. Our commercial initiatives in 2017 will focus on some new restaurants in Monterrey, three in particular, and improvements in economic condition in the restaurant of the group. Continues towards initiatives, some passenger services initiatives. So in different commercial [indiscernible], we have different projects. Excluding diversification projects, the expectation of commercial revenue growth for 2017 is high single digits.

And just another quick question. When should we expect the next expansion of Monterrey's parking lot to be completed? And what do you think could be the impact from that?

Okay. In terms of tariff, we need to review in -- review if we can increase tariff. But in terms of project, to expansion, last year, we expand our long term parking lot in Monterrey, and also we will have another project in Monterrey to expand the capacity this year and will be completed later this year or at the beginning of next year. And this is very important for us, because specifically in Monterrey, we have a lot of competition in terms of parking lots. Very close to the airport and increasing our capacity is very good, because now also our capacity in parking lots is very high. So we need more spaces and improve our services in the parking, providing more options to pay for our passengers through apps, mobile apps or prepayment cards. So we are improving these services and also increasing our capacity.

We'll take our next question from Rogério Araújo with UBS. Rogério Araújo: I had one question regarding aeronautical revenues. We saw an increase per passenger of virtually 15%. So my question is how much of this is related to the tariff review cycle in 2015 and the remaining tariff increase that OMA could do during 2017? And also, regarding aeronautical revenues from international passengers, is this supposed to normalize in upcoming quarters? In other words, the maximum tariff is established in Mexican peso or in U.S. dollars, because if it's in Mexican peso, maybe you have to decrease the collection of fares in U.S. dollars in the upcoming quarters. Does it make sense? That's it.

Starting with the aeronautical revenues. Our last increases in tariffs were in April 2016. So we have a positive effect for that increases. The next increases in tariff will -- took place this April. So the increases that we did this April has no effect in the first quarter, but the increases that we did in April 2016 has an effect in the first quarter 2017. And that, specifically -- the benefit you've seen in all the concept of regulated revenues, passenger charges, domestic and international, and aeronautical services, because we increase both passenger charges and all the specific tariffs of our airport services. In case of international passenger charges, we -- the FX rate has an effect, a positive effect because it's -- the comparison is year-over-year. In the first quarter 2016, the FX rate was lower than the exchange rate in the first quarter 2017. Just to give you an idea, in March 31, 2016, FX rate was MXN 17.30 per dollar. And in March 2017, it was around MXN 19 per dollar. So it's around MXN 1.70 difference, and that is a benefit in international passenger charge, because this tariff is denominated in dollar, but we generate the invoice to the airline in pesos based on the average of the prior 30 days. Rogério Araújo: Yes. Just to be clear, you have a maximum regulated fare for international flights, right?

No. We have a maximum tariff in total for all the aeronautical services. Rogério Araújo: And this is in peso, right? This is not in U.S. dollars? This is in Mexican peso?

Yes, it's in Mexican pesos, exactly. And we had a high increase in maximum tariffs last year. We are below 100% of the maximum tariff in all of our airports. So a higher FX rate is a benefit for us, because all the revenues coming from that effect, we accumulated revenues because we are under our maximum tariff. Rogério Araújo: Okay. Yes, it makes sense. And the adjustment in April 2017, is it going to be inflation? Or it can adjust above inflation?

For the rest of the year, we will see the benefit of an increase in the specific tariffs, aiming at increases the compliance level to 95%, 96% maximum tariff. And their specific percentage per concept, let me tell you, is 6% in aeronautical services and around 4% in passenger charges, 4%. And aeronautical services, 6%, in average.

[Operator Instructions] We'll take our next question from Lucía Támez with Signum Research. Lucía Támez: Well, up until now, I understand revenues from industrial park are just less than 1% from non-aeronautical business, and while I understand those revenues come from two industrial premises and now you have two more. So do you expect those new industrial premises to contribute with a similar percentage in the upcoming quarters? And also, you have -- do you have like a fixed income from your clients in those industrial premises? Or are those going to increase regarding their operation?

Thank you, Lucía. Yes, we already have two contracts in the industrial park, and we have two new warehouses to be leased. We are in the promoting and commercialization process for these two new warehouses. We have different clients in different places. We have provided our proposals, and they are analyzing -- analyze them, these proposals. So our expectation is to get some new contracts in the following quarters and generating -- and increase the revenue generation for this business. In terms of the -- if they rent, it's fixed or variable, it's fixed. It's a contract. In case that the contract that we already have is -- we have a contract for -- in one, for three years and four months, and the second one, three years and six months, is a fixed rent per month. And it's denominated in dollar. Lucía Támez: Okay. So just quickly, the 3 million that you received this quarter, would that be the same 3 million you will receive from those two industrial premises? And you don't know, of course, until you have your new clients, the revenues you're going to receive from the new ones, right?

Exactly.

We'll go next to Magdalena Santana with Citi.

I have three questions. The first one is, what impact have you seen on your business over the last few months regarding some U.S. based manufacturers deciding against expanding their Mexican operators? Or has there been any activity from Asia or other manufacturers that have set this off? The second one is if you have any broad view on what the airport terminal utilization looks like now versus five years ago? The last one is related to the industrial parks. What potential do you see to these industrial parks in other airports aside from Monterrey? I think that time ago, you mentioned that Chihuahua could be a good one.

Thank you, Magdalena. Could you repeat your first question, because I don't understand it very well?

Sure. What impacts have you seen on your business over the last few months regarding some U.S. based manufacturers deciding against expanding their Mexican operators? Has there been any activity from Asia or other manufacturers that have set this off?

Okay. I understand. In terms of traffic, we have not seen a significant effect, and we cannot assure that this situation could affect or not the traffic. But one example is, for example, San Luis. San Luis Potosí, as you know, is one of the most important cities in terms of car manufacturers, and we have seen a very low growth in terms of traffic. So it's difficult to notice or to measure we have had some effect for the manufacturer deceleration or acceleration in the following months because we don't have that sentiment very clear. As we are located in industrial important cities, the dynamic of this industry, it's more located in these cities. So it's, in our point of view, the negative effect is lower in our airports than in other cities. Regarding industrial park, yes, we mentioned in our last conference call that we are analyzing different location for different project, not only for industrial parks, specifically in this business, yes, we have or we see potential to develop an industrial park in Chihuahua. Chihuahua is growing a lot in terms of industrial activity, in aerospace industry. So it make sense to have one industrial park there. But we are in negotiation with our current partner in the industrial park of Monterrey, analyzing the project and reviewing the business plan, et cetera. And it could be a project in the medium term. And I am going to your second question-- I'm sorry? Is about the utilization level. I can tell you that terminal buildings have increased utilization versus five year ago, although some of them are operating close to full capacity now, for example, Reynosa or Terminal C in Monterrey. We are increasing and optimizing capacity in this five year period of the Master Development Plan to be able to serve more passengers according to expectations, without constraint. In runway capacity, we don't have constraints at this moment. And to give you an idea in terms of the increasing of capacity that we are adding in this five year period, our current capacity in terminals is around 19 million passengers per year in total in our 13 airports. When the current Master Development Plan ends in 2020, the capacity expectation is around 25 million passengers per year.

It appears there are no further questions at this time. Ms. Torres, I'd like to turn the conference back to you for any additional or closing remarks.

On behalf of OMA, I want to thank all of you, again, for your participation in this call. Emmanuel, Paul, Laury and I are 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 concludes today's call. Thank you for your participation. You may now disconnect.