Grupo Aeroportuario del Pacifico Announces Results for the Second Quarter of 2024

GUADALAJARA, Mexico, July 22, 2024 (GLOBE NEWSWIRE) — Grupo Aeroportuario del Pacífico, S.A.B. de C.V. (NYSE: PAC; BMV: GAP) (“the Company” or “GAP”) reports its consolidated results for the second quarter ended June 30, 2024 (2Q24). Figures are unaudited and prepared following International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).

Summary of Results 2Q24 vs. 2Q23

• The sum of aeronautical and non-aeronautical services revenues decreased by Ps. 212.9 million, or 3.3%. Total revenues decreased by Ps. 1,100.6 million, or 13.2%.
• Cost of services increased by Ps. 179.3 million, or 17.3%.
• Income from operations decreased by Ps. 444.8 million, or 11.2%.
• EBITDA decreased by Ps. 378.7 million, or 8.3%, a decrease from Ps. 4,576.8 million in 2Q23 to Ps. 4,198.1 million in 2Q24. EBITDA margin (excluding the effects of IFRIC-12) went from 70.4% in 2Q23 to 66.8% in 2Q24.
• Comprehensive income increased by Ps. 841.9 million, or 41.0%, from an income of Ps. 2,052.0 million in 2Q23 to an income of Ps. 2,893.9 million in 2Q24.

Company’s Financial Position:

During 2Q24, there was a decrease in the Company’s income from operations compared to 2Q23, mainly due to the decrease in aeronautical revenues derived from the decline in passenger traffic, as a result of preventive reviews of Pratt & Whitney A320neo and A321neo engines, that started in the third quarter of 2023, offset by an increase in non-aeronautical revenues of 10.6%, compared to the same period in 2023. The Company reports a financial position of cash and cash equivalents as of June 30, 2024, of Ps. 12,584.9 million. During 2Q24, the Company drawdown a credit line with BBVA México, S.A., for Ps. 875.0 million for the acquisition of 51.5% of the shares representing the capital stock of the company Guadalajara World Trade Center, S.A. of C.V. (GWTC). In addition, refinanced two credit facilities with Citibanamex for a total of Ps. 2,500.0 million.

Passenger Traffic
During 2Q24, total passengers at the Company’s 14 airports decreased by 621.6 thousand passengers, a decrease of 3.9%, compared to 2Q23.

During 2Q23, the following new routes were opened:

Revenues (2Q24 vs. 2Q23)

• Aeronautical services revenues decreased by Ps. 378.7 million, or 7.7%.
• Non-aeronautical services revenues increased by Ps. 165.8 million, or 10.6%.
• Revenues from improvements to concession assets decreased by Ps. 887.6 million, or 47.6%.
• Total revenues decreased by Ps. 1,100.6 million, or 13.2%.

• The change in aeronautical services revenues was primarily due to the following factors:
  1. Revenues at our Mexican airports decreased by Ps. 380.8 million or 9.0% compared to 2Q23, mainly due to the 4.1% decrease in passenger traffic.
  2. Revenues from Jamaican airports increased by Ps. 2.1 million, or 0.3%, compared to 2Q23. This was mainly due to the increase in revenues in U.S. dollars by US$0.3 million, or 24.6%, offset by the appreciation of the peso versus the U.S. dollar by 2.9%, compared to 2Q23, which went from an average exchange rate of Ps. 17.7225 in 2Q23 to Ps. 17.2106 in 2Q24. Passenger traffic decreased by 2.1%.
• The change in non-aeronautical services revenues was primarily driven by the following factors:
  1. Revenues at our Mexican airports increased by Ps. 168.7 million, or 12.9%, compared to 2Q23. Revenues from businesses operated by third parties increased by Ps. 103.4 million, or 12.5%, mainly due to the opening of new commercial spaces, and the renegotiation of contract conditions. The business lines that grew the most were car rentals, food and beverages, and leasing of space, all of which increased by Ps. 98.5 million, or 23.1%, offset by a combined decrease of Ps. 3.9 million in duty-free stores. Revenues from businesses operated directly by us increased by Ps. 65.9 million, or 15.2%.
  2. Revenues from the Jamaican airports decreased by Ps. 2.9 million, or 1.2%, compared to 2Q23. Revenues in U.S. dollars decreased by US$ 0.3 million, or 2.0%. The peso appreciated versus the U.S. dollar by 2.9%, compared to 2Q23.

• Revenues from improvements to concession assets ¹
  Revenues from improvements to concession assets (IFRIC-12) decreased by Ps. 887.6 million, or 47.6%, compared to 2Q23. The change was composed of:

1. Improvements to concession assets at the Company’s Mexican airports, which decreased by Ps. 932.0 million, or 51.1%, following investments under the Master Development Program for the 2020-2024 period.
2. Improvements to concession assets at the Company’s Jamaican airports, which increased Ps. 44.3 million, or 111.5%.

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¹ Revenues from improvements to concession assets are recognized in accordance with International Financial Reporting Interpretation Committee 12 “Service Concession Arrangements” (IFRIC 12). However, this recognition does not have a cash impact or impact on the Company’s operating results. Amounts included as a result of the recognition of IFRIC 12 are related to construction of infrastructure in each quarter to which the Company has committed. This is in accordance with the Company’s Master Development Programs in Mexico and Capital Development Programs in Jamaica. All margins and ratios calculated using “Total Revenues” include revenues from improvements to concession assets (IFRIC 12), and, consequently, such margins and ratios may not be comparable to other ratios and margins, such as EBITDA margin, operating margin or other similar ratios that are calculated based on those results of the Company that do have a cash impact.

Total operating costs decreased by Ps. 655.8 million, or 14.9%, compared to 2Q23, mainly due to the decrease in the cost of improvements to concession assets (IFRIC-12) by Ps. 887.6 million. This was offset by an increase in the cost of services of Ps. 179.3 million, or 17.3%, a Ps. 66.2 million, or 10.7% increase in depreciation and amortization, and a combined increase of Ps. 3.0 million, or 3.0%, in concession taxes and technical assistance fees (excluding the cost of improvements to concession assets (IFRIC-12), operating costs increased Ps. 231.9 million, or 9.1%).

This decrease in total operating costs was primarily due to the following factors:

Mexican airports:

• Operating costs decreased by Ps. 727.7 million, or 19.8%, compared to 2Q23, primarily due to a decrease in the cost of improvements to the concession assets (IFRIC-12) by Ps. 932.0 million, or 51.1%, offset by an increase in the cost of services by Ps. 143.0 million, or 16.4%, an increase in depreciation and amortization by Ps. 73.1 million, or 14.8%, and a combined increase in technical assistance fees and concession taxes by Ps. 4.3 million, or 0.1% (excluding the cost of improvements to the concession assets (IFRIC-12), operating costs increased by Ps. 204.3 million or 11.0%).

The change in the cost of services at our Mexican airports during 2Q24 was mainly due to:

• Employee costs increased Ps. 52.0 million, or 13.5%, compared to 2Q23, mainly due to the hiring of 244 additional personnel during 2023 and 1H24, as well as the adjustments in salaries and cost related to changes in Labor Law.
• Other operating expenses increased by Ps. 39.1 million, or 34.3%, compared to 2Q23, mainly due to a combined increase in services, professional fees, and travel expenses by Ps. 33.9 million.
• Safety, security, and insurance increased by Ps. 27.4 million, or 22.0%, compared to 2Q23, mainly due to the increase in the security headcount, minimum wages, and changes in Labor Law, as well as the opening of new operational areas.
• Utilities increased by Ps. 7.9 million, or 9.4%.

Jamaican Airport:

• Operating costs increased by Ps. 71.9 million, or 9.9%, compared to 2Q23, mainly due to a Ps. 44.3 million, or 111.5%, increase in the cost of improvements to concession assets (IFRIC-12), an increase in the cost of services by Ps. 36.3 million, or 22.1%, and an increase in the concession taxes by Ps. 1.2 million, or 0.3%.

Operating income margin went from 47.3% in 2Q23 to 48.4% in 2Q24. Excluding the effects of IFRIC-12, the operating income margin went from 60.9% in 2Q23 to 55.9% in 2Q24. Income from operations decreased by Ps. 444.8 million, or 11.2%, compared to 2Q23.

EBITDA margin went from 54.7% in 2Q23 to 57.8% in 2Q24. Excluding the effects of IFRIC-12, EBITDA margin went from 70.4% in 2Q23 to 66.8% in 2Q24. The nominal value of EBITDA decreased by Ps. 378.7 million, or 8.3%, compared to 2Q23.

Financial results increased by Ps. 155.0 million, or 30.5%, from a net expense of Ps. 508.1 million in 2Q23 to a net expense of Ps. 663.1 million in 2Q24. This change was mainly the result of:

• Foreign exchange rate fluctuations, which went from a loss of Ps. 189.5 million in 2Q23 to an income of Ps. 80.9 million in 2Q24. This generated a foreign exchange gain of Ps. 270.4 million. This was mainly due to the appreciation of the peso. Currency translation effect gain increased Ps. 1,040.9 million, compared to 2Q23.
• Interest expenses increased by Ps. 258.5 million, or 32.0%, compared to 2Q23, mainly due to higher debt as a result of the issuance of long-term debt securities and the drawdown of credit lines, as well as the substantial increase in the interest rates.
• Interest income decreased by Ps. 166.9 million, or 36.2%, compared to 2Q23, mainly due to a decrease in the cash and cash equivalents average balance and the reference rates.

In 2Q24, comprehensive income increased by Ps. 841.9 million, or 41.0%, compared to 2Q23. Income before taxes decreased by Ps. 599.9 million, mainly due to the decrease in passenger traffic and partially offset by the revenues generated by the commercial strategy. This decrease generated a decrease in the tax income of Ps. 364.2 million. Net and comprehensive income increased mainly due to the increase of the effect of foreign currency translation by Ps. 1,040.9 million.

During 2Q24, net income decreased by Ps. 235.7 million, or 9.5%, compared to 2Q23. Taxes for the period decreased by Ps. 364.2 million, tax income decreased by Ps. 26.7 million and the benefit for deferred taxes increased by Ps. 337.5 million, mainly due to the application of fiscal losses for Ps. 347.3 million, offset by a decrease in the inflationary effects, that went from an inflation rate of 0.2% in 2Q23 to 0.1% in 2Q24.

Revenues (6M24 vs. 6M23)

• Aeronautical services revenues decreased by Ps. 445.3 million, or 4.5%.
• Non-aeronautical services revenues increased by Ps. 389.3 million, or 12.9%.
• Revenues from improvements to concession assets decreased by Ps. 889.5 million, or 24.0%.
• Total revenues decreased by Ps. 945.6 million, or 5.7%.

• The change in aeronautical services revenues was composed primarily of the following factors:
  1. Revenues at our Mexican airports decreased by Ps. 449.2 million, or 5.3%, compared to 6M23, mainly due to the 2.4% decrease in passenger traffic, as well as 95.5% compliance with the maximum tariffs.
  2. Revenues from Jamaican airports increased by Ps. 3.9 million, or 0.3%, compared to 6M23. This was mainly due to the 1.9% increase in passenger traffic but offset by an appreciation of the peso against the dollar compared to 6M23 of 10.2%, which went from an average exchange rate of Ps. 18.2123 in 6M23 to Ps. 17.1042 in 6M24, which represented a decrease in revenues in pesos.

• The change in non-aeronautical services revenues was composed primarily of the following factors :
  1. Revenues at our Mexican airports increased by Ps. 394.9 million, or 15.7%, compared to 6M23. Revenues from businesses operated by third parties increased by Ps. 226.4 million, or 14.0%. This was mainly due to the opening of new commercial spaces, and the renegotiation of existing contracts. The business lines that increased the most were car rentals, food and beverage, retail, and leasing of space, which jointly increased by Ps. 225.8 million, or 21.1%. Revenues from businesses operated directly by us increased by Ps. 168.4 million, or 20.5%, while the recovery of costs increased by Ps. 0.2 million, or 0.2%.
  2. Revenues from the Jamaican airports decreased by Ps. 5.7 million, or 1.1%, compared to 6M23, due to the peso appreciation. Revenues in U.S. dollars increased by US$1.4 million, or 5.2%.

• Revenues from improvements to concession assets²
  Revenues from improvements to concession assets (IFRIC12) decreased by Ps. 889.5 million, or 24.0%, compared to 6M23. The change was composed primarily of:

1. The Company’s Mexican airports, which decreased by Ps. 972.1 million, or 26.7%, following the investments under the Master Development Program for 2020-2024 period.
2. Improvements to concession assets at the Company’s Jamaican airports, which increased Ps. 82.5 million, or 143.0%.

Total operating costs decreased by Ps. 408.7 million, or 4.7%, compared to 6M23, mainly due to a Ps. 889.5 million, or 24.0% decrease in the cost of improvements to the concession assets (IFRIC-12). This was offset by an increase in the cost of services by Ps. 284.6 million, or 14.2%, a Ps. 111.1 million, or 9.0%, increase in depreciation and amortization, and a combined increase in concession taxes and technical assistance fees by Ps. 110.4 million, or 6.5% (excluding the cost of improvements to concession assets, operating costs increased Ps. 480.9 million, or 9.7%).

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² Revenues from improvements to concession assets are recognized in accordance with International Financial Reporting Interpretation Committee 12 “Service Concession Arrangements” (IFRIC 12), but this recognition does not have a cash impact or an impact on the Company’s operating results. Amounts included as a result of the recognition of IFRIC 12 are related to construction of infrastructure in each quarter to which the Company has committed in accordance with the Company’s Master Development Programs in Mexico and Capital Development Program in Jamaica. All margins and ratios calculated using “Total Revenues” include revenues from improvements to concession assets (IFRIC 12), and, consequently, such margins and ratios may not be comparable to other ratios and margins, such as EBITDA margin, operating margin or other similar ratios that are calculated based on those results of the Company that do have a cash impact.

This increase in total operating costs was composed primarily of the following factors:

Mexican Airports:

• Operating costs decreased by Ps. 591.8 million, or 8.1%, compared to 6M23, primarily due to a Ps. 972.1 million, or 26.7%, decrease in the cost of improvements to the concession assets (IFRIC-12). This was offset by a Ps. 231.7 million, or 13.9% increase in the cost of services, a combined Ps. 127.1 million, or 12.9%, increase in depreciation and amortization, and a combined Ps. 45.7 million, or 4.7%, increase in technical assistance fees and concession taxes, (excluding the cost of improvements to the concession assets, operating costs increased by Ps. 380.2 million or 10.5%).

The change in the cost of services during 6M24 was mainly due to:

• Employee costs increased Ps. 112.7 million, or 15.4%, compared to 6M23, mainly due to the adjustments in salaries and changes in Labor Law.
• Other operating expenses increased by Ps. 56.6 million, or 20.2%, compared to 6M23, mainly due to a combined increase in services, professional fees, and travel expenses by Ps. 49.5 million.
• Safety, security, and insurance costs increased Ps. 31.1 million, or 12.3%, compared to 6M23, mainly due to an increase in the number of security staff, an increase in minimum wages, changes in Labor Law, and the opening of additional operational areas.
• Maintenance increased by Ps. 19.7 million, or 7.9%, compared to 6M23.

Jamaican Airports:

• Operating costs increased by Ps. 183.2 million, or 13.1%, compared to 6M23, mainly due to a Ps. 82.5 million, or 143.0%, increase in the cost of improvements to concession assets (IFRIC-12), a Ps. 64.7 million, or 8.7%, increase in concession taxes, Ps. 53.3 million, or 15.8% increase in the cost of services, and a combined increase of Ps. 15.9 million or 6.3% in depreciation and amortization.

Operating margin went from 48.1% in 6M23 to 47.6% in 6M24. Excluding the effects of IFRIC-12, the operating margin went from 61.8% in 6M23 to 57.9% in 6M24. Operating income decreased Ps. 536.9 million, or 6.7%, compared to 6M23.

EBITDA margin went from 55.5% in 6M23 to 56.2% in 6M24. Excluding the effects of IFRIC-12, EBITDA margin went from 71.4% in 6M23 to 68.4% in 6M24. The nominal value of EBITDA decreased Ps. 425.8 million, or 4.6%, compared to 6M23.

Financial cost increased by Ps. 74.5 million, or 6.3%, from a net expense of Ps. 1,182.5 million in 6M23 to a net expense of Ps. 1,257.0 million in 6M24. This change was mainly the result of:

• Foreign exchange rate fluctuations, which went from a loss of Ps. 356.5 million in 6M23 to an income of Ps.109.9 million in 6M24. This generated an increase in the foreign exchange gain of Ps. 466.4 million, due to the peso appreciation. Currency translation effect gain increased Ps. 1,182.4 million, compared to 6M23.
• Interest expenses increased by Ps. 338.9 million, or 21.1%, compared to 6M23, mainly due to the increase in debt due to the issuance of bond certificates and the contracting of bank loans.
• Interest income decreased by Ps. 201.9 million, or 26.4%, compared to 6M23, mainly due to a decrease in the cash and cash equivalent average balance and the increase in the reference interest rates.

In 6M24, comprehensive income increased by Ps. 856.1 million, or 20.4%, compared to 6M23. Income before taxes decreased by Ps. 611.4 million, mainly due to the decrease in traffic, offset by the increase in non-aeronautical revenues resulting from the commercial strategy. Income taxes decreased by Ps. 281.2 million. However, net and comprehensive income increased mainly due to the increase of the effect of foreign currency translation in Ps. 1,182.4 million.

During 6M24, net income decreased by Ps. 330.2 million, or 6.5%, compared to 6M23. Taxes for the period decreased by Ps. 281.2 million, income taxes increased by Ps. 33.7 million, and the benefit for deferred taxes increased by Ps. 314.8 million, mainly due to the application of fiscal losses by Ps. 347.3 million, offset by the decrease in the inflation rate, from 1.5% in 6M23 to 1.4% in 6M24.

Statement of Financial Position

Total assets as of June 30, 2024 increased by Ps. 6,685.6 million compared to June 30, 2023, primarily due to the following items: (i) a Ps. 6,241.8 million increase in net improvements to concession assets; (ii) a Ps. 730.9 million increase in deferred taxes, (iii) a Ps. 621.4 million increase in net machinery, equipment, and leasehold improvements, (iv) a Ps. 408.0 million increase in other current assets, (v) a Ps. 174.0 million increase in account receivables. This was offset by a decrease in cash and cash equivalents by Ps. 2,336.1 million.

Total liabilities as of June 30, 2024, increased by Ps. 4,317.3 million compared to June 30, 2023. This increase was primarily due to the following items: (i) Ps. 2,338.9 million in bank loans, (ii) Ps. 1,449.7 million in dividends to be paid, and (iii) Ps. 435.6 million increase in income taxes.

Recent events

GWTC Acquisition

On June 11, 2024, GAP acquired 51.5% of the shares representing the capital stock of the company Guadalajara World Trade Center, S.A. de C.V. (“GWTC”), for a total amount of Ps. 875.5 million.

GWTC is a group consisting of seven companies that specialize in handling, storage, and custody services for international cargo. These services are provided in facilities classified as free trade zone (recinto fiscal) at Guadalajara Airport and Puebla Airport. This acquisition was closed on June 20, 2024, with the payment of the aforementioned amount.

GWTC will be consolidated as of July 1^st of this year, the date on which control of the entity was assumed.

Revised Guidance

In accordance with the results as of June 30, 2024, as well as traffic growth expectations, the Company updates the growth guidance for the year 2024:

Company Description

Grupo Aeroportuario del Pacífico, S.A.B. de C.V. (GAP) operates 12 airports throughout Mexico’s Pacific region, including the major cities of Guadalajara and Tijuana, the four tourist destinations of Puerto Vallarta, Los Cabos, La Paz and Manzanillo, and six other mid-sized cities: Hermosillo, Guanajuato, Morelia, Aguascalientes, Mexicali and Los Mochis. In February 2006, GAP’s shares were listed on the New York Stock Exchange under the ticker symbol “PAC” and on the Mexican Stock Exchange under the ticker symbol “GAP”. In April 2015, GAP acquired 100% of Desarrollo de Concesiones Aeroportuarias, S.L., which owns a majority stake in MBJ Airports Limited, a company operating Sangster International Airport in Montego Bay, Jamaica. In October 2018, GAP entered into a concession agreement for the operation of Norman Manley International Airport in Kingston, Jamaica, and took control of the operation in October 2019.

In accordance with Section 806 of the Sarbanes-Oxley Act of 2002 and Article 42 of the “Ley del Mercado de Valores”, GAP has implemented a “whistleblower” program, which allows complainants to anonymously and confidentially report suspected activities that involve criminal conduct or violations. The telephone number in Mexico, facilitated by a third party responsible for collecting these complaints, is 800 04 ETICA (38422) or WhatsApp +52 55 6538 5504. The website is www.lineadedenunciagap.com or by email at denuncia@lineadedenunciagap.com. GAP’s Audit Committee will be notified of all complaints for immediate investigation.

As a part of the adoption of IFRS, the effects of inflation on common stock recognized under Mexican Financial Reporting Standards (MFRS) through December 31, 2007, were reclassified as retained earnings because accumulated inflation recognized under MFRS is not considered hyperinflationary according to IFRS. For Mexican legal and tax purposes, Grupo Aeroportuario del Pacífico, S.A.B. de C.V., as an individual entity, will continue preparing separate financial information under MFRS. Therefore, for any transaction between the Company and its shareholders related to stockholders’ equity, the Company must take into consideration the accounting balances prepared under MFRS as an individual entity and determine the tax impact under tax laws applicable in Mexico, which requires the use of MFRS. For purposes of reporting to stock exchanges, the consolidated financial statements will continue to be prepared following IFRS, as issued by the IASB.

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