Grupo Aeroportuario del Pacífico, S.A.B. de C.V. (PAC) Q4 2022 Earnings Report, Transcript and Summary

Good day, everyone, and welcome to our Conference Call Fourth Quarter 2022. At this time, all participants are in a listen-only mode. Later you will have the opportunity to ask questions during the question-and-answer session. [Operator Instructions] Please note this call may be recorded and I will be standing by should you need any assistance. It is now my pleasure to turn the conference over to CEO, Raul Revuelta. Please go ahead.

Thank you. Good morning everybody. And thank you for joining us today during 2022. I’m happy to report that GAP hit previous records on all firms, making this year the magnificent one in our trajectory. Total revenues were up by 57% compared to 2019, supported by continued passenger traffic growth and a strong commercial revenue increase. Throughout the year, we transported almost 57 million passengers, a 60.4% increase over 2019. With this figure, GAP was position has the largest airport operator in Mexico for the third consecutive year, representing approximately 31% of the total market. This performance was mainly driven by the growth of the Tijuana, Los Cabos and Puerto Vallarta airports, which was outstanding. Likewise, Guadalajara finally seen returned to 2019 levels. In Jamaica, passenger traffic also showed strong signs of recovery compared to 2019. If you recall, passenger traffic numbers were deeply impacted by the COVID-related government imposed travel restrictions, which were very severe and delay the recovery in that country. We continue to work closely with airlines, seeking to secure additional routes and frequencies. During the first quarter, GAP added 12 new international routes and four domestic routes. On February 15th, the airline Aeromar announced the suspension of operations for financial reasons and their difficulty in closing the agreements to operate in the long-term under viable conditions. Aeromar operated only in the airport of Guadalajara, Puerto Vallarta, and Aguascalientes without specific routes, representing 0.23% of total passenger traffic at our Mexican airports. Moving on to our revenue performance, excluding IFRS 12, during 2022 we reached revenue of MXN22.5 billion. Aeronautical revenues increased by almost 65% versus 2019 rather than merely by passengers traffic growth, as well as increased maximum tariff inflation. On the other hand, commercial revenue increased by almost 30% compared to 2019. This was due to the additional commercial spaces in Montego Bay, Los Cabos and Guadalajara in addition to the renegotiation of pass due contracts, under better conditions for GAP compared to the previous graph. Additionally, readiness from food and beverage and retail stores accounted for the most undergrowth. With respect to business line operated directly by Los Cabos, they increased by 35%, due to the higher revenues for passengers and community stores. However, this was offset by weak advertising revenues, which were initially impacted at the beginning of the pandemic; it had a struggle to regain pre-COVID 2019 revenue. In 2022, it was MXN16.1 billion, which was a result of various factors, including an outstanding factors causing recovery, tariff increased a higher commercial spending purpose. This was partially offset by the higher cost of service, mainly related to the opening of the new terminal processor building Tijuana, the new commercial status in the Los Cabos [ph] Airport, as well as the new VIP lounges. Personal expense arose due to the increase of headcount mainly related to the larger number of operations. The effect of inflation and minimum wage also impacted maintenance, janitorial and security costs. Despite the challenge in 2022, we were able to successfully reach the highest EBITDA margin in the history of GAAP. Net comprehensive income increased by MXN 2.2 billion compared to 2021 or 38 -- 34%. This increase was below the net income increase of 52%. It was originated by the currency translation effect resulting from devaluation of Jamaican airports then eliminated in US dollars, due to the 6% appreciation of the pesos. On the other hand, the effective tax rate increased from 23% in 2021 to 25% in 2022. It was the reverse mainly from the effect of high inflation over the net financial liability position, which increases the taxable income for -- of 2022. On the balance sheet front, cash and cash equivalents is just MXN 12.4 billion at the end of the year, and that was a total of MXN 34.3 billion. Thus according to these we continued on our healthy leverage level at a net debt EBITDA ratio of 1.4 times. Moving on to the CapEx. The construction of the second one will continue as well Vallarta [ph] Airport in addition to the construction of a new commercial mixed use building, that includes a help with 180 rooms, corporate office and commercial spaces. We expect that this building will be completed at the end of 2023. And we look forward to sharing those updates with you in the future communications. In Tijuana, the construction of the first phase of the terminal processor building concluded initiating operations in May of 2022. This new building completed a renewal of the potential success of this airport as it will achieve several objectives. For one, it will raise the airport capacity to work on additional flights, routes and frequencies. It will also really expand our ability to better serve international markets by complementing the right functionality of the cross-border bridge. Additionally, we are expecting to reopen all routes from China at the end of this year. Los Cabos will continue expansion of the international terminal building that will last about 20,000 square meters. In Puerto Vallarta, we began the construction of the second terminal building oriented to the net zero energy concept. Now according to our guidance for 2023, we expect sustainable passengers growth across our network of airports. This is based on our view of airline flight frequency and seats offerings. Despite high passengers scrubber [ph] level at the beginning of the year, we believe this will adjust throughout the year to deal and expect six to eight increase compared to the last year. This correlated with an increase in revenue in both our aeronautic and aeronautical. Aeronautical revenues are expected to increase from 12% to 14% due to passenger traffic increase and inflation, which have already been passed percent in January. Then aeronautical revenue are expected to grow from 13%to 15% considering passengers traffic growth, inflation and the development of additional business plan, such as the offering of seven community stores, and one additional VIP launch, as well as changing existing contracts. On the EBITDA margin side, we expect a 70% margin close or less 1%, which was mainly due to the opening of up new operational areas that will require more janitorial security and maintaining services. In addition to the – recent minimum wage increase in Mexico, as well as the new changes in the labor rule. The CapEx, we expect to deploy is MXN10.2 billion which is 75% related to CapEx committed, and 25% related to Commercial Investments. Aside from the committed CapEx in Mexico for this year, which amounts to MXN4.5 billion, we are also taking into account the purchase of land for future expansion in Guadalajara. This will be for about MXN1.2 billion, as well as around MXN1 billion for CapEx that was deployed in 2022. But will we paid until 2023. We also include about MXN1 billion in the various investments in Jamaica. CapEx has been limited after result of our waiver agreement with alternatives until we complete our renovation of the capital development program. However, some investment must be made and cannot wait any longer. On the commercial side, this includes the last phase of the construction of a mixed use building wellhead as well as the station of the parking lot and the opening of additional business lines that are operated exactly by us. With this, I would like to thank for all of your attention. We are now ready to take your questions. Operator, please open the lines for questions.

Absolutely. [Operator Instructions] So we'll take our first question from Guilherme Mendes with JPMorgan. Please go ahead.

Good morning, Raul, Saul. Thanks for taking my questions. Two questions actually. The first one is regarding the potential upgrade to get one of maximization interests you just want to hear your thoughts on the potential time of it? And the second question is regarding the Jamaica contract for balance, what expectations also in terms of timing? Thank you.

Hi, Guilherme, this is Raul. In terms of the category, I will say that the federal government has a schedule for recovery of the category in the first half of this year. We really don't have additional information on that. I believe what the authorities saying and is working in they say original schedule of May of this year for the recovery of the – of the category. But we don't have I mean, further information on that, we are more or our personal view is that, this could happen more in the third to fourth quarter of the year. But I mean, we need to have more information, or at least in our position, in our guidance, for instance, we are not considering at least for the numbers that we released in our guidance the recovery of the category.

Regarding -- hi, Guilherme, this is Saul. Regarding your second question, we are working with the Jamaican government in order to trying to reach an agreement we already sent a proposal and they are a in the process of reviewing with their advisors and they are going to send to the cabinet proposal then we will have another deep conversation regarding to this and probably our best estimate is it could may to have the conclusion of the process.

Very clear. Thank you both. So, maybe one quick follow-up on the rebalancing Jamaica, should we expect a reduction on CapEx or an increase on tariffs? What are likely be potential outcome of the rebalance? Thank you.

Well, it is a mix. We cannot release too much about this, but our target is to balance the cash flows of every concession from MBJ and from Kingston. So, it is a balance, a good price and good CapEx -- Capex and OpEx. So, it’s a full review of the model.

Super clear. Thank you.

Thank you.

And will move next with Rodolfo Ramos with Bradesco BBI. Please go ahead.

Thank you. Good morning. Thanks for taking my question. I have a couple as well. The first one is on the cost side. When we look at the cost of services that you report in the fourth quarter, I mean, it tends to be a heavy on the OpEx side. But just if you can elaborate, you mentioned some of the pressures that you're facing in your initial comments Raul, but if you can expand a little bit more on what you're expecting for cost of services, especially as you open these new areas in 2023? And the second one is on the dividend payment. If you can just take us a little bit through your thinking, I mean, I know that this is going to be later disclosed, but just how you think of the dividend, especially considering the CapEx commitments that you have going on this year. And if you can remind us what your -- what would be the lowest cash balance that you'd be comfortable with, just to put that dividend in perspective and frame it? Thank you.

Thank you, Rodolfo. This is Raul. I will begin with the part of the cost of service. For sure, in all the infrastructure when we deploy additional square meters, we need to have some additional maintenance security costs for instance. The case of Tijuana was our biggest [indiscernible] that we already open that for sure impact the result. But we’re also having during 2023 important increases some additional square meters for -- in the case of Cabos and in the case of Vallarta airport also. So, for sure it is always we need to think that the cost will arrive first that the revenue in some way, all the maximization of the use of the infrastructure what's going to happen as soon as we begin to have a bigger increase on the time or additional partners. So, I would say that the first impact in some way during the next couple of years, we’re going to see an increase on the economies of scale in our terminals. But always, when we are in the middle of this kind of the expansion plan, we're going to have increasing costs in terms of the opening new square meters. The other parts that will be really, I mean, important to follow in the – at least in this year and we didn’t see it on the budget is, wages related with the salaries, because we have the review of what a minimum wage, there was an impact. But also as you remember, 13 months ago, we have also the impact of the outsourcing reform law. And then we are having some -- we will see some other additional impacts for this, 2023. That is, again the review of the minimum wage, but also the review on the holidays, that going to happen an impact related with the need of additional headcount for cover all that that additional holidays that is there, because the employees we’ll going to have to take on from these years. And I'm looking forward in terms of -- it is the same law for additional -- the labor -- labor law changes have been impacting all the -- all our costs in online. Additionally, the impact of inflation not only in Mexico, but also in Jamaica. So we have stress in the cost of services, in general. So it's important to consider that. Additionally, I will mention that a regarding Montego Bay, we have the impact of the additional concession fee. It is additional costs. If we look at the comps with 2021, we'll see an additional costs or an additional increase in the concession fees that, it comes from Jamaica is very significant. So, we had an increase of 54% in 2022. So, I think, as I have mentioned, the effects of labor law, but also the effects of concession fees. And related to the dividend payment. I mean, in a couple of days, we would have really -- will release the number, but as you know, as a company, we want to always make the best possible effort for a bigger deal that is possible in terms of what is the fiscal -- have an optimal use of the fiscal resources. So, I will say that, that we’ll continue the same in the same length, but the fact the number is going to be released in a couple of weeks.

Thank you. And just a follow up, if I may, on -- you mentioned that you had increased prices in January. What would you expect your maximum tariff compliance to be this year, with that price increase?

It will be from -- I mean, for sure, depends on inflation. And also we are having some additional pressure from the stronger peso. As you know, as you remember, all international tour is related to dollar. But, yes, in term, as we are expecting to leave around 98 -- 97% to 98% of fulfillment on the on the tariffs on this year. For sure, it depends on inflation and the dollar change essentially.

Thank you.

We’ll take our next question from Alberto Valerio with UBS. Please, go ahead.

Thank you for taking my questions, Saul, Raul. And congrats for the year, amazing year in 2022. Just a follow up, because if you could give a little bit more, why do you have larger [indiscernible] expense for the next -- second part of the year, and for another year. Another point that [indiscernible] on database, we see a little bit --

Alberto, that sounds -- it not sounds really a good sound, if you could repeat the question please. There is lot of noise on the line.

Okay. Sorry for that. Okay. It's better now?

Yes.

Yes. So, on the other operating expenses for the Mexican I thought variations, if you could give a little bit of more color, besides the weak demands in convenience stores that we had a little bit increase for the fourth quarter? If you could provide a little bit more color on design work through the preview of the year. The second one is about Jamaica, as well. I think you mentioned that, you increase in Jamaica and Montego Bay. And if there is something else that increased costs in Jamaica? And lastly, on the financial results, besides the interest rates, they are some …

Alberto?

… financial results?

Yeah. Alberto, sorry to interrupt you, it sounds very, very bad, as barely understanding your questions. Can you please add your questions into our webcast? Please? Write down your question.

Yeah. Sure.

And we will take it. Please, sorry.

No problem. Thank you.

We will take our next question from Anton Mortenkotter from GBM. Please go ahead.

Hello guys. Congrats on your results. And thank you for taking my question. I just, I understand that you guys did a deployment of around 2 billion pesos for commercial projects during 2022. And do you expect to do something near that amount for 2023. Also, could you provide some upgrades, detailed breakdown of that deployment? I mean, how much has been expended for the mixed use facilities? How much for the parking and all of that? Thank you for that.

Hi Anton, this is Saul. Well, in 2022, we deploy around 1.5 billion pesos running commercial projects. For 2023, we are expecting to deploy around to 2.5 billion. So you are correct, we're very doing a huge investment in mixed used building. Guadalajara we are expanding the airport, there's the parking lot in the Guadalajara, airports. We are doing a huge expansion in Los Cabos airport in the all the commercial riders, you will see that the commercial revenue in 2024 with a better revenue for Cabos. We have been doing additional investments in commercial stores and VIP launches. In all our other a medium sized airports we have been doing some investment in terms of a compact lots in some commercial areas. But it's important also to mention is that in Montego Bay, we did a huge expansion of the all the commercial and retail area for this airport. That is very relevant for 2022 and for 2023 as we're planning to continue with the conclusion of a mixed use building in Guadalajara. It continuing with expansion of Guadalajara airport just to keep in mind that currently we have 2000 spaces in the parking lot in Guadalajara Hara at the end of 2023 we will have around 4.5000 spaces in this parking lot and at the end of 2026, we will have around 10,000 spaces. So, we are in the plan of expanding all the commercial areas. And you can see it in the commercial revenue that we are reporting. It's also important to mention that the payback of the commercial investment is around five to seven years, and we are trying to get at least the same return that we expect from the Aeronautical revenues, at least -- so we ask additional return in all the commercial projects. So, in general, all the investment that we are deploying is related with the commercial revenues is having an additional return than the aeronautical revenues.

Just to trying to break down the numbers a little bit. Would it be possible to get a rough amount of how much has been spent for the parking spaces, how much for the hotel and how much for the mixed-use facilities?

Yes. Well, in general numbers in very, very general numbers, regarding the mixed building is around MXN 1 billion. In the case of the expansion of Montego Bay in 2022, it was around US$40 million, because it was a huge future expansion. So the other is the beginning of the expansion of the parking lots and the commercial stores and the VIP launches. And for 2023, the main investment is to continue with -- and to finalize the mixed-use building, that will be around 100 million to conclude this building and also to continue with the expansion of the Parking lot to finalize the 4,500 spaces of the parking lot in Guadalajara. We are also doing and finalizing the investment of the investment and the expansion of the Los Cabos commercial spaces that will be around MXN 600 million.

Okay. And I understand that the mix building has roughly 30,000 square meters, right? The one where you already deploy MXN 1 billion and are expecting to deploy an additional MXN 800 million.

It will be around 50,000 square meters when you take in account the office building, the hotel building and special area in the middle of that. That will be that around 50,000 square meters told for the complete project.

Okay. Perfect. Thanks a lot.

Welcome.

We'll move next with Pablo Monsivais with Barclays. Please go ahead.

Hi. Thanks for taking my question. I have a quick question in terms of the traffic that you are forecasting for, I don't know, 2023, '24 and '25 for the medium term. How do you see your CapEx and your increased capacity being ready to serve that amount of partners that most likely you didn't expect at the time you negotiated your MDP? Should we start forecasting a higher CapEx for those years? What are you -- what is basically the balancing between additional capacity and additional traffic? Thank you.

Thank you, Pablo. This is Raul. I will say let me begin with which areas of the airport we need to increase capacity for the coming years. The first step I will talk about why it included on this master plan and what will be included on the coming master plan. In this master plan, we have the second runway of Guadalajara that will need to be open at the end of this year, 2023. And we are beginning the construction of the new terminal building on Guadalajara. But that's going to be completed on 2026, that is -- that’s going to be partially part of the new master plan. That is for the case of Guadalajara. So, for the case of Guadalajara, talking about the new master plan, it will include to complete the new terminal building of the airport -- the second terminal building of the airport and also will include some a major maintenance of this first runway that is -- for the moment of the construction of second runway, we have some -- we need to do some deep maintenance of the first runway as soon as we begin the new master. Let me jump to the Tijuana. In the current case of Tijuana, in this master plan, we will conclude the last part of the new terminal building that’s going to conclude that is mainly the facilities for the baggage claiming on the international side. And that -- with that we will conclude this master plan. For the coming year, it's clear that the increase of passengers on Tijuana and the potential we feel that terminals would make us deploy an important increase on capacity in terms of terminal building for sure. Right now, we are running the specific amount of additional square meters and additional gates that we will need for the coming year that will say that for sure, in the case of Tijuana, we will need to deploy an important increase on terms of capacities as of our terminal building. Jumping to Los Cabos. In Los Cabos, on this master plan, we are concluding an important expansion of the Terminal 2 that is international terminal building for that airport. And with that, I will say that we will conclude the increase of capacity of these master plans. For sure in the coming master plan, we will need to deploy a completely brand-new terminal building for the domestic passenger. So, we are working on that project, but in terms of capacity, we know that we need to add capacity for the domestic passengers in the case of cash. We are laddering for the case of Puerto Vallarta, we will on this master plan, we will conclude the new terminal building facility, Terminal 2 in Puerto Vallarta that will give us a lot of additional capacity for that airport. For the next master plan, we will have some -- the general or deep refurbishment of the Terminal 1 on Puerto Vallarta where we'll not add additional capacity, will be more general refurbishment of the terminal building. For the case of the rest of the airports, I will say that in this master plan that will conclude in 2024, we generally didn't add capacity for the rest of the airports in Mexico. So, the natural thing on the coming master plan is that the rest of airport without capacity in terms of terminal business. But we could take in terms of a CapEx for the next master plan would be in the same level of CapEx per passenger that we will have in the -- I mean in the last -- in the last master plans. So, we will continue to align the [indiscernible] the investment or CapEx per passenger. And I will say that is the best way -- the best way to understand how much money we're seeing on the last master plan. But also we are finalizing the couple of months. We're going to be on our new master plan we are running all the studies of capacity and forecasting. So I will say that today we don't have completely clear what’s going to be the number of -- although there was a rough number that we will have on the negotiation with the authorities. But in general terms talking about what we saw in terms of capacities we -- I already mentioned which are -- which are going to be our biggest increases that will be our biggest increases on capacity on coming years. So I mean in general what we are seeing for the for the Master Plan

Okay. Thank you.

[Operator Instructions] We will move next with Gabriel Himelfarb with Scotiabank. Please go ahead

Hi, thanks for the call. Just a quick question. Basically we're seeing a strong increase in international traffic on Los Cabos and Puerto Vallarta and also in Tijuana and Guadalajara can you give us a bit of color of how much or could be driven by Canadian traffic that is incorporating international traffic. Thanks. A – Raul Revuelta: Thank you, Gabriel. This is Raul. Yes, as you say, I mean it's -- there's a big increase on the capacity of Canadian traffic because as you remember on -- one year ago in 2022 in some way we lose the winter season on by Vallarta Cabos Montego Bay airport mainly. So in this year we are seeing a full recovery of the capacity or number of seats for the Canadian market. So for sure that is helping us to have a much better increase of passenger seen in those airports, but what is also important to know is that in 2022 also different US carriers add capacity cargoes in Vallarta airports. And in some way, we saw that that could be a change -- in some ways that we will not completely -- clear that going to be sustainable in the time. Because at that moment, we remember 2022 we were taking that a lot of capacity from the long haul from US airlines was in some way work until, and some were diverted to older Mexican leisure destinations. So one of the big question that we have for this 2023 was, all that additional capacity, continue or not? And the great news is that the answer is, for instance, for this winter season, from January to March, we're seeing that the number of seats of the US carriers also are increasing, so well in some way that the great news for the leisure Mexican destination is that the capacity is doing great, the yields are doing great. And the load factors are doing great. So in general terms, we think that the leisure destinations are Cabos and Vallarta are in great moment for continue their growth for this year.

Okay, thank you. And just an addition question, do you think this capacity start to normalize by next year?

I mean, it's difficult to have all the view of what's going to happen in next year, but I will say that what is interesting that is happening in Cabos and in Vallarta is that today there’s a really big amount of additional rooms, rooms, hotel rooms, hotel rooms under construction in those areas. So, I will say that for instance, in the case of Vallarta, the date of 2024 the opening of the new complex of the Mayan Grupo Avante [ph] the [indiscernible] Cabos and Vallarta will bring a really big amount of additional hotel rooms to the region, and for sure, we are expecting that at least the market could react for that additional offer of rooms, bringing additional seats to the market. In both airports we are seeing that expansion of rooms in Cabos and in Vallarta. So we are – we feel optimistic about the growth on the offer of seats on those markets for the coming years.

Okay, thank you very much.

[Operator Instructions] A – Unidentified Company Representative: Thank you. We have already received a question from Alberto Valaria [ph] from US. And he's asking, can you provide additional details on what drove the increase of the other operating expenses win?

Alberto, this is this is a very important point because in this slide we include because of the related with the operation of our convenience stores, our VIP lounges in FBO terminal. Indeed, it’s important to mention that it is increased because these business lines are increasing. So it implies in rough numbers MXN 100 million increase means that we have around MXN250 million of commercial revenues – additional commercial earnest about this business – business lines. Additionally, we have a little peak of Aramark, a net accounts that we couldn't collect during 2022. We were expecting since 2022, the bankruptcy from Aramark. So we reserve the accounts from Aramark, so it is integration of this decline A – Unidentified Company Representative: And the other one is, can you just provide additional color on the operating expenses increase in MBJ? What were the main expenses of increases beside the concession fee that you have already mentioned?

Well, the cost of operating was almost in line that we expected. Basically, it had an increase based on inflation around 8% U.S. inflation. But more significant increase was the additional concession fee. If you recall, according to our transaction model in MBJ has closed that mentioned that in the moment that the real revenues is above of a certain trigger of revenue. We have to pay 45% of the excess of that trigger to the authority. So that's why in the previous year, 2020, 2021, we had a credit. So once we recover the past year traffic in 2022, we decreased that credit, and we had to make a provision of this additional concession fee that will be paid during 2023. But it's basically the main increase. A – Unidentified Company Representative: Yeah. And the other one is, is there anything that impacted the financial expenses line besides higher interest on debt?

Well, no. The main effect, obviously, is the level of debt, as you know, as part of our strategy is to leverage 100% our CapEx the commercial and committed CapEx, so that's the main reason and obviously, the interest rates that we have seen in the last year. So that's the main effect. A – Unidentified Company Representative: Thank you. We have now two questions from Bruno Amorim from Goldman Sachs. How do you expect for currently high 10 year bond yields to impact cost of capital for MVP purposes. Should this drive higher tariff or else held constant?

For the case of this let me – everybody -- it is important to remember that at the moment that we were negotiating the last master plan, it was in the market all the noise about the cancellation of the New Mexico City Airport. So in that moment, the yields of the long-term debt of the Mexican government was really in the same level of yields that we are seeing today. So we really don't see any kind of additional pressure for an increase of the level of yields that in some way could affect the discount rate for the next review. I will say, in that moment, we have a really specific moment of a lot of noise related for the cancellations in Mexico -- the New Mexico City Airport, and in some ways are the level of the different curves are mainly in the same I would say area. So I really don't see that bigger increase in forward looking for the discount rate. A – Unidentified Company Representative: Okay. Thank you, Raul. Also, Bruno asked in the prior MVP cycles in general for gap and other operators, strong traffic lead to higher CapEx levels allowing for higher tariff in real terms. Do you see any reason why this time the 2024 MDP tariff could eventually follow?

I will say that it is important to remember that we are -- or the new maximum tariff cycle, the new negotiation, the maximum tariff will begin with a really bigger amount of work of June of passenger and cargo in the year base for the forecasting. So -- and a lot of some of our infrastructure or the bit of capacity already happened. I mean, we built the second runway on Guadalajara. We built some the new terminal of Vallarta. So the natural way to see what would happen with the tariff on the covenant on the coming maximum in the next master plan will be something more aligned to some kind of decrease or neutral result on the tariff. But I mean the most important thing is to note that the base of the calculus is the number of passengers where you begin the run in the forecasting. So what we're going to see in the coming years for all the airport groups is that the amount of passengers is much bigger than the one where we have when we run in 2019, the forecasting for the maximum tariff. So the correct view going to be something a little negative or around neutral for the result of tariff in real terms for the coming master plan.

Thanks, Raul. We have a couple of questions from the Pablo Coloma from MetLife. He is asking, can you give us color regarding your guidance for EBITDA margin for 2023 and the mid-term level you expect?

Yes, Pablo, it's -- that we released in our guidance is 70% of EBITDA margin, more plus 1%. So we believe that historically, the EBITDA margin of that is around 69%, 60%, 70%, like this year, in 2022, we have above of 71%. It was a great year. But what do we expect is to have around 70%. So historically, it has been below that. But in some way, we will have in the average of 70%.

Thank you, Saul. And then the second question from Pablo. He says that, can you give us some color on the impact that nearshoring is having in your operations? And what do you expect in the midterm?

Yes. I mean we think that we are just in the beginning of what the real potential that will bring for additional passengers to our airports about the nearshoring. We are really optimistic that we could see some results, important results on the case of the area of Maquilas automotive areas that could be Guanajuato as Caliente and Jalisco, or Guadalajara. We also are beginning to see a really positive impact or beginning of new sharing impact on the case of Tijuana and Mexicali airports around the cities, we are seeing a lot of increasing on the warehouse factories, maquila. At the moment, I could say that in Baja, California, we are seeing a really dynamic economy that in some way is moving related with the new showing. So in general terms, I would say that we are beginning to see some of the impact. It's not fully clear yet, but we are optimistic that on the coming years, we will begin to see more of that impact. For instance, [indiscernible] just has announced a really big amount of additional investments for the Caliente [ph] factory, what is a great news for the Caliente airport that is really related to business traffic, and it mainly comes from the automotive industry. So I will say that we are at the beginning of what could be a great but gradual impact on the passengers related with the new sharing. A – Unidentified Company Representative: Thank you, Raul. And then we have the last one from the webcast from [indiscernible] LLP. Could you please split out the CapEx in 2022 because it seems very high? Does the total amount change with the MDT, or how do you will receive a return on the extra CapEx. And what is end in the CapEx for 2022?

Well, the CapEx in 2022, as we mentioned, we deployed around MXN 8.4 billion. It was MXN 6.9 billion related with the mandatory CapEx in Mexico in Jamaica and MXN 1.5 billion in commercial investments. Related with your question that is very high, we have to consider that the commitment with the authorities is that is in 2017 numbers, the inflation related from 2017 up to 2022, it was around 45%. So it’s that -- we have had a huge pressure in terms of inflation in all the -- in our investments, the mandatory investment, not only in Mexico, but also in Jamaica. In the other hand, all the commercial investment that we expect is to have a return, a higher return than the investments related to aeronautical revenues or mandatory investment. So if we expect a return on extra CapEx, yes, we expect the return on extra CapEx and is a better return than established in the maximum tariffs. Connecting to your question, what is the CapEx for 2023? As we mentioned before, it's around MXN 10 billion is divided MXN 7.5 billion related with the mandatory CapEx with the MDP in Mexico and Jamaica and MXN 2.5 billion will be for commercial purposes. We already explained about the mid-years, the expansion of the parking lot, the expansion of the IP launches and the convenience stores. For different part, we have a huge investment and expansion in commercial terms.

Thank, Saul. This was the last question in the webcast, so operator.

Thank you. And we show no further questions over the phone. I would like to turn the call over to Raul Revuelta for any closing remarks.

Thank you. Thank you very much for your attention. Before I conclude, I would just want to mention that the GAP date 2023 will be held on March 16 in the New York Stock Exchange. We hope that you can join us for morning of management presentations and more information on future projects and outlooks. Please contact our Investor Relations team for more information. Have a great day.

And this does conclude today's program. Thank you for your participation. You may disconnect at any time.