Corporación América Airports Announces 1Q19 Results

Corporación América Airports S.A. (NYSE: CAAP), ("CAAP" or the "Company") the largest private sector airport operator based on the number of airports under management and the tenth largest private sector airport operator worldwide based on passenger traffic, reported today its unaudited, consolidated results for the three- month period ended March 31, 2019. Financial results are expressed in millions of U.S. dollars and are prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" ("IAS 34") as issued by the International Accounting Standards Board.

Commencing 3Q18, the Company began reporting results of its Argentinean subsidiaries applying Hyperinflation Accounting, in accordance to IFRS rule IAS 29 ("IAS 29"), as detailed on Section "Hyperinflation Accounting in Argentina" on page 18.

First Quarter 2019 Highlights

• Consolidated revenues of $360.6 million, down 7.8% YoY. Excluding the impact of IFRS rule IAS 29, revenues declined 4.0% YoY mainly due to lower travel demand in Argentina reflecting difficult macro conditions and FX fluctuation in Argentina, Brazil and Italy, partially offset by revenue growth in Ecuador and Armenia
• Growth across key operating metrics:
  • Passenger traffic up 4.0% YoY to 20.4 million
  • Cargo volume increased 6.3% to 104.8 thousand tons
  • Aircraft movements declined 0.3% to 212.7 thousand
• Operating Income declined 29.9% YoY, mainly impacted by IAS 29, and the operating margin contracted to 21.3% from 28.0% in 1Q18
• Adjusted EBITDA was $116.9 million, down 14.5% YoY, with Adjusted EBITDA margin Ex-IFRIC12 contracting 86 bps to 38.7%
• Ex-IAS 29, Adjusted EBITDA declined 10.8% YoY and Adjusted EBITDA margin Ex-IFRIC12 contracted 61 bps to 39.0%

CEO Message

Commenting on first quarter 2019 results, Mr. Martín Eurnekian, CEO of Corporación América Airports, noted: "Our first quarter results were impacted by the difficult macro conditions in Argentina, our largest market and to a lesser extent a slowdown in Brazil and Uruguay. Passenger traffic growth decelerated which together with significant currency depreciation in Argentina and, to a lower degree, in Brazil and Italy, resulted in lower revenue growth. In Argentina, soft consumer demand and sharp FX fluctuation continued to drive mix-shift to domestic destinations and lower commercial revenues, particularly when compared to a record quarter a year ago. In Italy, our commercial initiatives continue to bear fruit driving sustained growth in local currency revenues, while Brazil reported a mid-single digit increase in local currency revenues. As a result, comparable Adjusted EBITDA Ex-IAS29, excluding one-time items in 1Q18 and construction service margin, declined 8.3% YoY, while the margin remained stable at 39% during the period, reflecting better comparable margins in Argentina and Italy.

As the year progresses, our business is expected to track generally in line with overall macro trends. Argentina, our key market, is facing a more difficult macro environment which, together with the added volatility from this being a Presidential election year, suggests a more subdued economic recovery towards year-end. This is expected to weigh on passenger traffic trends and slow revenue growth. In Brazil, traffic will remain impacted by airline capacity adjustments and recent reductions in GDP growth forecasts for the current year. While we face several headwinds across key markets, we maintain a solid balance sheet that supports our focus on advancing on our strategy and key capital investment projects, particularly in Argentina and Italy. Noteworthy, last April the Italian Ministry of Transportation approved the 2014-2029 Master Plan for Florence's Amerigo Vespucci Airport and we also extended the concession agreement of the Punta del Este Airport in Uruguay for a fourteen-year period from 2019 through 2033."

To obtain the full text of this earnings release and the 1Q19 earnings presentation, please click on the following link: http://investors.corporacionamericaairports.com/Results-Center

Use of Non-IFRS Financial Measures

This announcement includes certain references to Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted EBITDA excluding Construction Service and Adjusted EBITDA Margin excluding Construction service, as well as Net Debt:

Adjusted EBITDA is defined as income for the period before financial income, financial loss, income tax expense, depreciation and amortization.

Adjusted EBITDA Margin is calculated by dividing Adjusted EBITDA by total revenues.

Adjusted EBITDA excluding Construction Service ("Adjusted EBITDA ex-IFRIC") is defined as income for the period before construction services revenue and cost, financial income, financial loss, income tax expense, depreciation and amortization.

Adjusted EBITDA Margin excluding Construction Service ("Adjusted EBITDA Margin ex-IFRIC12") excludes the effect of IFRIC 12 with respect to the construction or improvements to concessioned assets and is calculated by dividing Adjusted EBITDA excluding Construction Service revenue and cost, by total revenues less Construction service revenue.

Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted EBITDA excluding Construction Service and Adjusted EBITDA Margin excluding Construction Service are not measures recognized under IFRS and should not be considered as an alternative to, or more meaningful than, consolidated net income for the year as determined in accordance with IFRS or as indicators of our operating performance from continuing operations. Accordingly, readers are cautioned not to place undue reliance on this information and should note that these measures as calculated by the Company, may differ materially from similarly titled measures reported by other companies. We believe that the presentation of Adjusted EBITDA and Adjusted EBITDA excluding Construction Service enhances an investor's understanding of our performance and are useful for investors to assess our operating performance by excluding certain items that we believe are not representative of our core business. In addition, Adjusted EBITDA and Adjusted EBITDA excluding Construction Service are useful because they allow us to more effectively evaluate our operating performance and compare the results of our operations from period to period without regard to our financing methods, capital structure or income taxes and construction services (when applicable).

Net debt is calculated by deducting "Cash and cash equivalents" from total financial debt.

Figures ex-IAS 29 result from dividing nominal Argentine pesos for the Argentine Segment, by the average foreign exchange rate of the Argentine Peso against the US Dollar in the period. Percentage variations ex-IAS 29 figures compare results as presented in the prior year quarter before IAS 29 came into effect, against ex-IAS 29 results for this quarter as described above. For comparison purposes the impact of adopting IAS 29 in Aeropuertos Argentina 2000, the Company's largest subsidiary in Argentina, is presented separately in each of the applicable sections of this earnings release, in a column denominated "IAS 29". The impact from "Hyperinflation Accounting in Argentina" is described in more detail page 18 of this report.

Definitions and Concepts

Commercial Revenues: CAAP derives commercial revenue principally from fees resulting from warehouse usage (which includes cargo storage, stowage and warehouse services and related international cargo services), services and retail stores, duty free shops, car parking facilities, catering, hangar services, food and beverage services, retail stores, including royalties collected from retailers' revenue, and rent of space, advertising, fuel, airport counters, VIP lounges and fees collected from other miscellaneous sources, such as telecommunications, car rentals and passenger services.

Construction Service revenue and cost: Investments related to improvements and upgrades to be performed in connection with concession agreements are treated under the intangible asset model established by IFRIC 12. As a result, all expenditures associated with investments required by the concession agreements are treated as revenue generating activities given that they ultimately provide future benefits, and subsequent improvements and upgrades made to the concession are recognized as intangible assets based on the principles of IFRIC 12. The revenue and expense are recognized as profit or loss when the expenditures are performed. The cost for such additions and improvements to concession assets is based on actual costs incurred by CAAP in the execution of the additions or improvements, considering the investment requirements in the concession agreements. Through bidding processes, the Company contracts third parties to carry out such construction or improvement services. The amount of revenues for these services is equal to the amount of costs incurred plus a reasonable margin, which is estimated at an average of 3.0% to 5.0%.