Q3 2019 Earnings Call
Good morning, and welcome to the E.S. Corporation third quarter 2019 Financial Review Conference call.
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I would now like to turn the conference over to Ahmed Pasha, Vice President of Investor Relations. Please go ahead.
Thank you Andrea good morning, and welcome to our fourth quarter third quarter 2019 financially the vehicle.
Police presentation in the electric financial information are available on our website <unk>.
Today, we will be making forward looking statements during the cold.
There are many factors that may cause future results to differ materially from these statements piece it for two or if he filings for a discussion of these factors.
Joining me this morning, I'll just go ski our president and Chief Executive Officer, just I want them into our Chief Financial Officer, and other senior members of my management team.
I will turn the call over 200 Andreas.
Good morning, everyone and thank you for joining our third quarter 2019 financial review call.
Today, I will walk through the highlights of the quarter, how we are delivering on our commitment and successfully executing on our strategy.
Well, it's Tom will then follow with a detailed description of our third quarter and year to date financial results.
Our adjusted earnings per share well, the third quarter was 48 cents.
Which is 37% higher than our results for the same quarter last year.
On our prior call, we mentioned that much of our growth would be in the second half a year and our strong third quarter results are in line with our expectations.
We're on track to deliver on our 20 819, adjusted EPS guidance with the midpoint of $1.34 and our parent free cash flow target with the midpoint of $725 million.
And we're confident in our ability to deliver 7% to 9% average annual growth through 2022.
I'm pleased to report there were making good progress on the strategy, we laid out on our previous calls.
Allow me to walk you through step by step.
First turning to slide four let us talk about our progress towards becoming investment grade.
As you may have seen in this mornings press release, we received an investment grade rating for the first time, yes its history.
I'm very pleased to have achieved this milestone reflects a multiyear transformation strategy to make our business simpler and more predictable.
We not only significantly strengthen our balance sheet, but we have also materially reduced our exposure to risks such as hydrology foreign currencies commodities.
Moving to slide five and our growth in renewables.
This quarter, we side over 900 megawatts of new renewable power purchase agreements, bringing our year to date total to 1.9 Gigawatts.
We're fully confident that we will consistently delivered to the three gigawatts new renewable capacity every year.
As of today, our backlog of projects is six gigawatts.
Half of which are under construction and have have signed P. ice.
As anticipated about half of these projects are in the U.S.
Hi for international.
We see ourselves as uniquely positioned in the renewable space to take advantage of synergies and economies of scale well also benefiting from sufficient geographical diversity.
Looking at just from an other prospective on slide six.
Approximately 80% of our six gigawatt backlog of 4.8 Gigawatts is renewables.
But between hydro solar wind and energy storage.
We expect the majority of our backlog to be online by the end of 2022.
Now onto specific large projects on slide seven.
We can see that the 1.3 gigawatt Southland Repowering projects is virtually complete.
And we are currently in the final commissioning stage.
We're on track to begin commercial operations in early 2020.
Turning to slide eight.
Yes, and there is also making good progress on the Alto Maipo hydroelectric project.
The project is 82% complete including 37 miles of tunneling and both cabins caverns for the powerhouse.
Less than four miles of tunneling remain to finish phase one.
Our yearend 2020.
At which time the construction of all 531 megawatts of capacity will be completed.
In parallel they're progressing well on the tumbling, a phase two which will provide additional water to the project.
Let's now discuss the advances, we're making on our LNG strategy and turn to slide nine.
Last month, we received approval from the government of Vietnam to develop and build a 2.2 gigawatt combined cycle gas turbine project along side. Our previously approved 480 terribly to you LNG Regasification and storage terminal.
This complex will have a 20 year U.S. dollar denominated contracts with no commodity exposure.
We expect to chief financial close in 2021 and commercial operations in 2024.
We see the expansion of our LNG infrastructure business is complementary to our renewables growth strategy by offering a clean predictable and low cost fuel the provides capacity and flexibility to the system.
We are focusing our LNG business on three markets, the Caribbean Central America, and Southeast Asia.
In all of these markets there is rapidly growing demand for natural gas to supply new generation entered displays higher cost diesel fuel oil.
A good example of how we're benefiting from this growing demand is the Dominican Republic.
As shown on slide 10, this quarter, we finalized a joint venture with other local generators.
As a result of this JV, we will build a second LNG storage tank expanding our capacity the Dominican Republic, like 80% or an additional 50 terribly to use.
We have already signed or an advanced negotiations for 30 terribly to you. All this additional capacity under long term U.S. dollar denominated contracts.
This expansion will require minimal investment for me yes.
We expect the break ground in the first quarter 2020 with completion in late 2022.
As we had previously mentioned our LNG business is easily scalable, which allows us to increase our margin while requiring relatively little investment for me yes.
Well, we are delivering on our commitments and our guidance parents.
We're also making investments to maintain our leadership in new technologies, which will contribute to our earnings growth in future years.
We're currently the global market leader in energy storage and the market leader for cloud based energy efficiency solutions in the U.S.
Turning to slide 11.
Today, we're announcing a strategic alliance with Google to collaborate on innovation across our business line.
We will be working together to find new solutions to accelerate the adoption of renewables and energy storage.
And to improve the experience <unk>.
What customers.
Yes will collaborate with Google cloud on energy management and opportunities to develop own and operate projects in targeted markets in the U.S. and Latin America that have the potential to help.
Meet its clean energy objectives.
In addition to providing the potential for additional revenues freight yes. This aligns well both of US on the front line of innovation in the industry, allowing us to further reduce costs optimize operations and meet changing customer expectations.
On slide 12, we can see that our strategic investment in the leading U.S. cloud based digital solutions provider in our sector.
It is progressing well.
This is a business that is growing rapidly from a base of $100 million in annual revenue.
It is cash and margin positive.
And we'll provide brought insights into customer behavior and energy efficiency.
Our energy storage business fluids continues to be the global market leader.
Influence, our 50 50 joint venture with Siemens.
We are able to capture the accelerated growth in demand for this technology.
As you can see on slide 13 in the first three quarters of 2019 alone.
Fluids won contracts for 806 megawatts.
The third quarter of 2018.
Well its has tripled its backlog, which now stands at a record high a more than one gigawatt with a combined value roughly 1 billion.
Fluent is cash in variable margin positive.
And you mean to expand its capabilities in order to meet the scale requirements of the business.
Our leading position in energy storage is providing us with a competitive advantage in other aspects of our business.
We're seeing that nearly half of all solar projects in the U.S. include a storage component.
Based on our scale.
And more than 10 years of experience in integrating energy storage.
We're very well position to capitalize on this growth opportunity.
Now I'll turn the call overdue style.
To discuss our financial results and capital allocation in more detail.
Thank God address today overall financial results outlook for 2019 and capital location.
Overall, we're very encouraged about performance to date I remain confident in our ability to deliver another strategic and financial objectives.
As shown on slide 15 in the third quarter adjusted the P.S. was 48 cents.
Primarily reflecting contributions from new businesses, including they ask alone and renewables in the U.S. and the lower tax rate.
The timing of outages net of related insurance recovery also had a positive impact on results in our M.C.C. region.
The third quarter of 2018, a freak lightning strike caused major damage and I'll address plant in the Dominican Republic, forcing it offline.
With that roughly four cents impact.
In Panama, our checking all of that has been an extended then outage for most of this year why we have insurance chipset large portion of this outages. The timing of recognition is not always evenly distributed throughout the year.
When our second quarter, Oh, we indicated that we expect a recovery in the second half related should this outages and in fact, the majority of this occurred in the third quarter.
This was about five cents, which effectively catches us up for the first half a year.
As seen on slide 16 on a year to date basis, then that impact of losses versus insurance recovery is just slightly negative at a one cents.
Importantly, our under this facility is fully online and our check another plant is on track to come back online in early two any to any.
Turning to slide 17, adjusted pretax contribution our PTC was $426 million for the quarter.
An increase of $99 million, 30%.
Our results in more detail over the next four slides beginning on slide 18.
The U.S. entity. This SBQ increase it do you see reflects contributions from new renewable projects as well as the resolution of regulated rate gauges last year.
These impacts were partially offset by the exit of 360 megawatts of coal fired generation generation at shady point.
Regarding this VPLS BMR extension filing we remain on track for unexpected rolling in the first half of 2020 and continued you feel confident about the merits of arcades.
In Indiana, <unk> plan to more than eyes, its electric grid, which calls for $1.2 billion of tea in the investment over seven years, we go to hearing on November 14th.
Cost would be recovered through an 80% tracker mechanism between rate cases, and they F <unk> investment would be roughly $200 million.
If approved the and it would be a key component of mid single digit rate based growth would have discussed it in the past.
A final ruling in the case is expected by early two any training.
And our South America, SBQ higher PTC was largely driven by improving margins and Oh, the and lower interest in Chile, as well as higher pricing in Colombia.
I'd like to take a moment now to discuss recent developments in that being seen.
As you know I didn't see not recently elected Alberta friend and this is the new president as expected.
Oh. This is of the incoming government are yet to be the fine, but we do not expect a meaningful impact on our outlook.
Especially given the quality of our assets and the material improvement we have achieved in a S is portfolio over the last several years.
I now cost controls are in place and who face restrictions incentives dividend out if I didn't Tina.
As a result of our diversified portfolio, you'll be able to mitigate the impact and continued to deliver strong cash flow growth to our shareholders.
Turning back to our quarterly results.
The discussion earlier hybrid D.C.N.R.M.C.C.S. view reflects the outages in the Dominican Republic in Panama net of related insurance recovery as well as the commencement of operations at a ask alone.
Finally in Eurasia, low results, primarily reflect a onetime transmission charge and lower capacity doing testing and commissioning at OPGC Chu.
Now just like when it you just summarize our performance in the first three quarters of the year, we earned adjusted EPS over a dollar and two cents versus 80 cents.
88 cents last year.
And the fourth quarter, we expect the higher quarterly tax rate versus the 24% we saw last year and any back from the outage at our worry about facility in the in the U.S.
On a full year basis for 2019, we feel very confident reaffirming our adjusted EPS guidance of $1.30 <unk> dollar 38.
Further based on our achievements to date and current outlook. We are also reaffirming our 7% to 9% average annual growth through 2022.
Consistent with prior practice, we will provide specific guidance for 22 any on our fourth quarter call.
Turning to 2019 parent capital location on July 23.
Began to left hand side sources reflect a $1.3 billion off toward a discretionary cash which is largely consistent with our last call. Additionally, we're able to take advantage of available debt capacity at a one of our subsidiaries Sharpspring $200 million you return of capital to the parent.
The majority of our discretionary cash continues to come from the roughly $725 million of parent free cash flow and $350 million of asset sale proceeds.
Asset sales include Northern Ireland, and the S power sell down.
Both of which have closed I was always Jordan, which is expected to close by year end.
Now to the use on the right hand side.
Putting the five per cent dividend income increase we announced ended in December would be returning $361 million to shareholders.
Relocated $450 million to parent debt pay down versus our prior target of $150 million for this year, just celebrate our credit improvement in reinforce our commitment to achieve investment grade ratings. As a result, we expect that you end the year at 3.5 times parent leverage and 22 per.
I felt to that comfortably within the investment grade thresholds or four times and 20% respectively.
To that end as Andres mentioned, we were very pleased to see positive actions by the rating agencies, including an investment grade rating from Fitch.
We're also investing $450 million you know so visitors, leaving about $50 million of unallocated cash.
Finally, moving to our capital location for such a thousand 19 through 2022, beginning on slide 24.
We expect the though portfolio to generate $4.2 billion in discretionary cash, which is again consistent with our last call plus. The addition of $200 million in return of capital I just mentioned.
More than three quarters of our discretionary cash is expected to be generated from parents free cash flow. The remaining 800 million daughters comes from asset sale proceeds about half of which has been announced or closed it this year.
Turning to the use of this discretionary cash on slide 25, roughly 40% of this cash will be allocated to shareholder dividends looking forward subject to anybody who by the board, we expect a dividend to grow 4% to 6% year you line with industry average.
We have completed 450 million dollar of parent that's pre payment. This year. This is an increase versus our prior target of $300 million.
We're also expecting to use $1.9 billion to invest in our backlog New project <unk>.
He and the investments at IPO and the partial funding of our via an LNG project was completed Oliver projects will contribute to our growth through 2022 and beyond.
The remaining $300 million over unallocated cash will be use it in accordance with our capital allocation framework to achieve our financial objectives.
With that I'll turn the call back over 200.
Thanks, good though.
Before we open the call to your questions. Please allow me to summarize our key points.
Our strong third quarter results demonstrate our successful execution.
And we remain on track to meet our 2019 guidance and longer term expectations.
We are uniquely positioned to drive long term shareholder value through.
Strengthening our balance sheet and credit ratings.
Reducing our carbon intensity.
Following our backlog of attractive renewable opportunities.
And rapidly expanding our LNG infrastructure business.
We're taking steps to consolidate our position as a technology leader.
[noise] through technology, such as energy storage and cloud based energy solutions, and most recently, creating a strategic alliance with Google.
We believe that our strategy and execution position us well to offer double digit total returns to our shareholders.
Operator, we're now ready to take questions.
We will now begin the question answer session.
You asked a question you May press Star then one on your telephone keypad.
If you are using a speakerphone please pick up your handset before pressing the keys.
If at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then too.
At this time, we will pause momentarily to assemble our roster.
[laughter].
And our first question comes from Julien Dumoulin Smith of Bank of America. Please go ahead.
Hi, good morning team congratulations to you all.
Thank you Julien.
Absolutely. So I am perhaps can you elaborate a little bit a in the context of the the quarterly earnings here, how much was coming directly from renewables and and perhaps to take that a step further how do you think about the cadence of renewable contributions from here on out obviously, we're starting to see it pick up how do you think about that rolling into the four to six sure I know not to get ahead of 20, but how do you.
Think about that even year over year here.
Hi drilling will start with so in the <unk>, particularly in the quarter. Most of the growth is and then MCC region as I as I mentioned in my in my remarks, so so the U.S.
On the renewable space, probably we have a sense center two cents in the quarter no more than that.
And so that's that's probably what it should be seen a on the on annual basis, maybe four cents to five cents growth because we are deploying.
Around $300 million globally I'm most of that in the U.S.. So that's what you'd be seen a going forward.
And then perhaps more importantly here in the near term you talked about some new LNG opportunities the JV effort.
Also from what I understand you have some excess mark marketing volumes, if you will in Panama going into 2020, given the IMO regulations. How do you think about the timing to monetize some of those remaining volumes and also the earnings profile of your latest expansion on LNG, perhaps you can address it.
Our holistically and LNG.
Sure.
This is underway. So I think we've done exactly what we had been a sort of saying that we could do in the Dominican Republic. So basically we filled up our.
You know 70, a terribly do you think there so basically it's at full capacity.
Signing this joint venture with other local generators, we need additional capacity.
So we're going to build the second tank with 50 terabit to use capacity and about 30 terribly to use is that it is either agreed to or in the process of pets signing agreements for so that's already quite you know taking up a.
60% of the new capacity of the tank.
So this in the Dominican Republic, I think we have really follow through on what we said was possible in the case of Panama, We haven't Ada 80 terribly to you a tank.
Right now that's at most about 30% or used a and so there's considerable capacity to.
What other generators are on gas.
And so you know Panama does have other natural gas projects. It also has a lot of a diesel platts not too far from our plant. So you're really it's it's a question of how fast we can connect.
It also has the capacity for re export just like we have in the Dominican Republic and also for CNG.
In in terms of trucks and local local industry.
So I think the point is that in the Dominican Republic, you know, we do have capacity now or once we complete the stake.
For another 20 terabytes to use and we continued to have about 50 terribly to use in Panama, a that are available and so it's going to be a combination of as we did in the Dominican Republic local demand you know additional power plant, it's going to be up additional industries and transportation and you know I think growing.
Overtime is that the Reexport no. So we are exporting natural gas from the Dominican Republic to for example, Diana Barbados.
80, and there are other possibilities as well and obviously the central American region has possibilities as well for the export of natural gas.
But not ready to quantify or earnings contribution to earnings growth in that segment.
Okay, we think that though the potential is maybe five to four centsfive 2022.
Yeah and in the M.C. I see I mean, this is not counting of course, but where we could be doing in Vietnam. So you know this is we have and its is Vietnam project it would be another no.
300, plus million of equity going into the project and you know we expected returns on that as well. So as you can see that would be a a big.
Contributor to our earnings growth post post you know 2020.
For.
Right. The 45 cents. His office today is in terms of incremental growth through 22.
That's correct that's the opportunity. So you know in the past we're talking about five cents you know what we basically filled up some of that in the Dominican Republic. So the additional tank puts us back in another sort of four to five cents about of potential upside.
Excellent. Thank you.
Thank you.
Our next question comes from Greg Gordon of Evercore ISI. Please go ahead.
Thanks, Good morning, a great great Great took a couple of questions I think you just answered.
Partly answered one of them you up $200 million allocated in your I'm on slide 25 to Vietnam LNG in CTG T. investment, but I was going to ask whether that's the total expected investment because the I guess it comes online and 24 and you said you actually just said it would be three to 400 million is that right.
That's Gustavo here, Greg that's right. So that is in 2022, so we probably going to reach financial closing Cheney trend you on spend half of the equity 2022, which is this 200 that we've seen that in the chart and then trying to 23 will draw additional <unk> hundred $50 million to complement the investment.
Yeah, I know you haven't disclosed contract terms, but you would expect to target like a mid teens levered equity return on projects with this risk profile is that fair that's about right yeah.
Okay.
And and can you can you contemplate can you.
Give us a sense of what a strategic alliance like like the one you've announced with Google means in terms of your competitive advantage signing.
You know commercial agreements with them and how that translates into you know confidence in the big growth profile. It.
Renewables business, it's just hard to you know not to be cynical, but it's hard to <unk> to separate you know, what's a PR announcement versus what I was tangible backlog applications.
Yes, well you know a Greg as you know that we've been I think certainly.
Not people to sort of changed any object [laughter]. A you know we really go to the fundamentals what does this mean now this is a preliminary announcement.
It has many components to it.
And we will be providing color as you know things develop and things materialize.
But realize you know first that we are sort of uniquely position to help Google made its 24, seven renewable zero carbon energy across the globe. So you know where we're uniquely positioned to do that.
We recently won a bit in Chile or about 125.
Megawatts to do exactly that so this is that was the first stage you know concrete they will be others. We believe it's and as I said it'll be in targeted U.S. and Latin American markets.
Second is to realize that figure is the fastest growing sector of corporate demand is web services.
So I believe Google has announced about six gigawatts of need across the globe. So this is you know it's a big target it's growing.
This is the fastest growing corporate sector.
What they want us renewable energy around the clock, we are uniquely well positioned to deliver that.
So again, there will be well.
I'll follow ons <unk> to the Chile deal, we believe and and you know stay tune to that.
In addition, Theres you know some elements of energy management in these locations for US you know using our portfolio to.
I'll provide you know carbon free round the clock.
Energy then there is also I would say on the.
On our platform you know the opportunity to optimize and continue to deliver costs cost reductions. So you know we've been doing spending years quite frankly cleaning up data.
Because again you are a lot of buzzwords that people throw out AI and machine learning well, it's only as good as the data you have so you know we've been cleaning up the laborious and.
No very hard task of having the right data in place. So we believe by combining our two capabilities you know we've been a leader in new applications in our sector.
You know will give us your really.
A boost to the cost saving initiatives. We have mentioned it will also give us a boost in terms of delivering on you know we're continually changing customer expectations.
So are they expect this alliance you know to make you know very concrete announcements into the future. So this is not just sort of a feel good PR announcement and it really is that a the two of US combined Oh, yeah. We're leaders in certain areas you know such as energy storage, you know energy efficiency solutions.
Yes, so I I think it makes a whole lot of census is.
Plus two week six and Oh.
This is really all of this would be basically upside to what we have in their numbers.
And we're gonna get dedicate.
No.
People and resources to make sure. This is something very concrete in terms of you know when it would really make an impact on our earnings that's that's probably.
I'd say two or three years out a at a minimum because you know this is really sort of setting the groundwork D. Because even if you win new.
Power purchase agreements you know you have to build on these are required to seasonality. So just to put that in contracts I think it's very important but it's not going to having a an immediate impact on us.
Great last question for you on on the fluids, JV, obviously, making good progress.
It doesn't sound like right now it's actually.
Creating any concrete economic value in terms of cash distributions earnings contributions D. S Corp.
But you know when do we get to a tipping point, where it's either a.
Potentially a significant cash flow earnings contributor or is there another way that we monetize this value for shareholders like could this be a standalone you know sort of public market IPO at some point if it really gets to critical mass I mean, what are the different ways now that you're really making headway.
Selling the product globally that you can monetize that value for shareholders.
Well, yes, you know you hit the I think the nail on the head it's really how do we monetize that value. This is not you know they regulated asset that's a marginal contributor you would have to think about it differently. So you know we've created a market leader in a market that is growing at 100% per year, that's going to have the major impact on the future of our sector.
So again, it's not a sort of a marginal investment you have to think about all the value we're creating by this as we mentioned you know we are not.
It is cash in very large and positive, but you know that money is going into the business to prepare it for really scaling up I mean, it grew 100% last year. So you have to scale. It up so I think it's creating a lot of value for our shareholders directly in the business and some point it will probably makes sense to really have a marker out there.
So you guys can go a feeling for what it's worth because you know we think we've created a lot of value in the business. There are various ways to do that but I think a marker would be very good to to be able to you know it into what's its value within the A.S. up.
Portfolio, but I have no doubt that this is going to be a major part of our business going forwards.
And I mean, our sector going forward.
And do realize that so it is giving us a competitive advantage and winning renewable <unk>.
Because we know a as much as anybody about how to integrate energy storage.
And some very exciting developments coming in the Appfluent spaces. So stay tuned in terms of products and in terms of a new ideas. So for example, one to one in Chile, we're making the world's first virtual reservoir or you can take a run of the river hydro, which is less LOHAS a and really.
Instead of having to dispatch the energy.
You know 24, seven you can quite frankly, not dispatch it when energy prices are low mostly due to solar.
And inject that energy when prices are much higher so there's a lot of innovation going on it's very exciting.
Hi, guys. Thank you very much have a great I see it either.
Our next question comes from 'cause Christopher tonnage of JP Morgan. Please go ahead.
Hi, Good morning, I, just wanted to go through the quarter, a little bit here in 2019 as a whole.
In terms of kind of nonrecurring items, so 48 cents for for the third quarter. Adjusted EPS is it fair that the five cents of insurance proceeds there are nonrecurring and with them I guess plants back online and Panama now anything else to think about for the fourth quarter.
Or continuing into 2020 in relationship to that.
Hey, Chris will stop here.
No not really I think if they the five cents is recurring because it's a catch up from the first half. So you may recall in the second Oh second quarter always mentioned that our first half was a slightly weaker versus our expectations due to those outages and we expect it to equal over a large portion of that that impact in the in Q3 Q4.
And that's what's happened. So it's you think it's really a catch up from the first half you should read this as a first half a figure a and not as long as a onetime so.
That's that's that's why do these.
Okay, and then I think you said kind of net of the insurance it would still be a penny negative for you for the Panama outage at least so that's why that kind of your your 2020 number.
Or that would be kind of no residual effects going into 2020 that net net 19 number would be almost not impacted that's correct. That's correct.
Okay.
And any other kind of nonrecurring items, helping or hurting a threeq you and in terms of having a meaningful effect.
Not really I think dealt with the one that I pointed out in my in my in my remarks was tax.
It's relatively within the range on a year to date bases, but you may recall last year, we had a unusually low tax rate. So that is one thing for us a that'll probably won't be.
Happening that Q4, this year, but a part of that nothing no no onetime ish.
Okay, and then just I guess, a little bit longer term when we look at what's occurred so far this year. After you introduced you're kind of new long term plan are rolled forward. Your long term plan back in February .
You've reached investment grade, maybe a little bit faster than the plan interest rates have been kind of going in in your favor and everyone's favor. Some LNG success, certainly has materialized, maybe partly offset by the Ohio DMR situation I'm just wondering.
Kind of where the bigger maybe surprises versus your plan have occurred a if that your your long term plan that is.
Chris I I agree with everything except what you said about the DMR you know, we think that a continued to feel.
Good about a.
Successful resolution of the so you know we agree that we've had some upsides and I think a quite frankly, those things which are under control we consistently I think over delivered.
Or whether it's paying down debt or reducing costs, a growing the LNG business or growing renewable so.
That's true, but we really don't see the D. I wouldn't put the DMR as is.
No we continue to feel good about it and and you know remains on track.
Okay, So kind of rolling all that together it sounds like you feel like you're executing on your plan and really not getting ahead of yourselves at all in terms of some of the positive.
Well you know again, we are.
Executing on her plan and I think we've delivered.
Something ahead of schedule.
That is certainly true I mean, we had been talking about.
Getting or sort of the investment grade stats this year and but you know we we upfront did that we paid down more debt I think it's very important that.
You know, we said, we'd pay down $150 million recourse debt, we paid down.
450 million. So you know we have been over delivering.
Okay excellent thanks, very much artist. Thank you.
Our next question is from Ali Agha of Suntrust. Please go ahead.
Thank you good morning.
Wonderfully.
Good morning, Andreas a first question I recall I think it was maybe last quarter or two quarters back.
When you roll forward, you order up growth aspirations and you don't came up with the 7% to 9% growth rate.
<unk> 18 to 22.
At that time, you I'd also told us that get all the old growth rate, which was 17 to 28% to 10% that you would end up at the high end.
With that growth, but just wanted to confirm that that's difficult conviction as we sit here today.
Yeah, Eliglustat, where the short answer is yes, a little bit providing color on February but as I said in my in my remarks, we are reaffirming to seven to nine and to your question, Yes, that's our expectation.
Okay.
Second question, you know looking through your numbers a year to date.
What about 124 million off a distribution from Argentina to the parent.
Is that a good number I know that run rate for the annual Arjun died cash flow subsidiary distributions.
And.
How should we think about you know the capital controls that are currently in place or your prior experience, perhaps in dealing with the left us government.
In terms of what the cash flow applications and offsets it would be going forward.
Okay, Yes regarding Argentina, no. That's that's not a the run rate or what do we had.
Set in the pass as you know that we had a three years, where we did not distribute dollar dividends from Argentina.
And so there was a catch up than in recent years.
Now, having a portfolio like ours.
As as Gustava mentioned in his speech, we don't is expected to effective and though so in Argentina is one that a it's a little bit of up and down a we've been there in good times, we've been there in bad times, we've always made money.
It even though you know 2002, we made money in Argentina that that I think reflects the quality of our assets and the fact that they're very lowly levered. So oh. This is not the so the run rate with a current.
Exchange controls in place you know, we don't expect be paying a.
Material dividends out of Argentina.
Certainly next year.
But you know we've always.
No I think again operated well there we have put a big back office, there and so that's one way of quite frankly, if you all dollarizing is I.
Using or pass those in Argentina.
To.
Get services, which are worth dollars to us so.
So that helps offset some of them so well just to be clear in Argentina. We've always made money, we've always been capable of paying dividends or just we haven't always been able to buy a the dollar so.
You know, it's if you look historically the averages is more like you know 70 million or so and it's been like 5% to 6% of subsidiary distributions overtime. So you know and this is quite frankly, what I expect in Argentina, it's kind of up and downs, but it's it's a we've operated well there and yes.
You know I I expect this you know weve gotten sort of up and downs, but it's not something that's going to materially affect our forecast.
Okay, and then finally, a address other topic that you know in prior quarters, just to get more attention, but we're not hitting much about it but its a.
And Bulgaria can you just give us an update of anything that's going on that on the contract or what's your expectations are looking forward.
Sure.
Really we have nothing new to report on merits and that's why it wasn't part of our speech.
We continue to be paid on time.
The the plant is being dispatched and now we're entering the winter season, which becomes even more important.
They're up to date on their payments the Offtakers financial situation any K is strong.
The country is growing strong and it remains you know investment grade so those things continue and Ah you know regarding the.
Illegal state aid case in front of the European Commission, a you know our advisors continue to talk so we have no official case, yet and they continue to talk and Oh. So you know as we said before we have really nothing new to report, but yes, it's doing well.
Got it thank you.
Thank you only.
Okay.
Our next question comes from Charles Fishman of Morningstar. Please go ahead.
Morning on.
Chris on me Vietnam contract or Okay. The projects approved by Vietnam, and you said you're here.
In negotiations I guess for a long term.
Contracts with the contracts being with the government or were you referring to contracts with LNG.
In quarters or what contracts are those.
That's a good question basically look there there are two projects.
Both supporting each other so the first is the 480 Terra BT you.
Re gasification and storage terminal.
So to put that in context today, we have about a 150 terabit to use between Panama and the Dominican Republic, you know the additional 50 terribly to use I'll go up to about 200. So this is a very large project.
No I'm. This case, we have about 38% of the project.
And petrovietnam has the remainder.
So oh, we have a partner in this project.
So where will the gas go there's about a six gigawatts I believe yes fight turbines Vietnam that had been using offshore gas, which is running out.
So there will be immediately a demand for the LNG terminal.
In addition to our 2.2 gigawatt of combined cycle gas plants, which would be using that gas now in the second project on the combined cycle.
Oh, yes, Durbin plants are the 2.2, gigawatts, we own 100% of that.
So when we talk about contracts are different contracts here. So one would be of course the contract between the LNG terminal and the generators, including ourselves then there's the offtake of the energy and capacity coming from the 2.2 gigawatts of new generation and I realize.
We have a 1.3 gigawatt plant already in Vietnam among young to.
Which has done very well performing it's one of the best performers in a in the country. We built it on time on a budget has a long term dollar based contract it's been paying on time, so basically it would be like a repeat of Mong duong to only burning gas is tight.
The other contracts for example between the supply of gas to this is Sean.
So in my son, My chose the name of the a terminal.
Contracts have yet to be negotiated and obviously would be you know petrovietnam and ourselves negotiating with U.S. gas suppliers. So those have yet he negotiated but you know in general or the it's a you know very firm a commitment by like Austin and by the government to Vietnam to do this project and so I'd say the one thing that distinguishes.
Is it from say the projects in Panama, the Dominican Republic is that you. The demand is there. So it's not a question a building.
A terminal storage facility, where the anchor tenant plant you build is 30% of it in this case, it's going to be used use is gonna be much much faster getting to the 90% plus usage.
Helpful. Thank you that's all ahead thanks.
<unk>.
Our next question comes from Craig oral of you'd be yes. Please go ahead.
Yes. Thank you.
I was wondering if you could touch on the BHP contract.
Each p. buyout of Oh, a P.P.A. in Chile, and whether that was the driver for the return of capital increase that you reported in the quarter.
Okay. So there are two part the responding to the second absolutely no no nothing has occurred yet a this would take effect. The two years. So you know it hasn't affected our returns of a isn't there at all at this point.
The second was the you know BHP has a.
Yeah mandate from Corp, a to go green so they put out a.
A bid for six terawatt hours of a new energy.
And.
You know what came back was basically about maybe a bit more than half of it was existing hydro's in Chile other ones are renewables.
So this will replace our existing contract, though our contracts generally we make our money on the capacity payment energy is a pass through.
So for our contract they have to make as whole if they're not going to use our capacity.
So they had mentioned a number in their press release of like Oh value about $780 million. You know this has yet to be absolute <unk> exact number has yet to be negotiated we think it's sort of around 800 million, but this is yet to be negotiated.
<unk> planned is about 20% contracted.
And so this will be you know, it's a business decision by B.H.B.
And you know each I think shows the strength of our contracts in in the business and chilling.
Do you think that will impact your growth rate guidance.
No.
Not.
Okay. Thank you.
It's concludes our question and answer session I would like to turn the conference back over to Ahmed Pat Pasha Friday closing remarks.
We think everybody for joining us onto this call. He has always the I.R. team will be available to answer any follow up questions. You may have next week, we look forward to seeing seeing many of you at the E.I. conference in Orlando, Thanks, again and have anything.
Confidences now concluded. Thank you for attending today's presentation you may now disconnect.