Q3 2019 Earnings Call
Welcome to Atlantic a third quarter 2019 financial results Conference call Atlantic is a sustainable infrastructure company owns a diverse safari portfolio of contracted renewable energy power generation electric transmission I'm water assets in northern.
South America, and that's a market in a meal. Just a reminder, that this call is being webcast slides on the internet and a replay of this call will be available at the Atlantic <unk> corporate website Atlantica, we'll be making forward looking statements. During this call based on current expectations I'm, just solutions, which are subject to risks and.
Uncertainties actual results could differ materially football forward looking statements if any of all key assumptions are incorrect or because of the factors discussed in todays earnings presentation. All the comments made during this conference call in the risk factor section of the company presentation on our latest reports and filings.
With the Securities and Exchange Commission, each of which can be found on our website atlantica yield does not undertake any duty to update any forward looking statements joining us for today's conference call is at lunch 'cause CEO Santiago Seage and see if they Francisco Martinez database.
Usually at the end of the conference call. We will open the lines for the Q in a session I will now pass you over to Mr. seat Pisa go ahead.
Thank you very much good morning, Thank you for joining our third quarter 2019 conference call.
Went to start in page three with a key messages.
We continue to show when a strong performance in the third quarter of 2019.
Yes, I got the that increased by 7% year over year to approximately $46 million.
Further adjusted to be D.A., including unconsolidated affiliates for the first nine months all the year also increased on a like for like bases.
Finally, our board of directors plus declared a quarterly dividend.
The one.
Centsper share representing an increase of 14% compared with the third quarter all last year.
Additionally, we have closed that we've usually announced investment accretion all H D N expansion.
On slide five.
We can see that their revenues in the first nine months of 2% online being reached $798 million.
5% decrease versus the same period of 2018.
Primarily due to currency translation effects on a constant currency basis revenues were in line with the same period of 2018.
If we take a look at further adjusted maybe be a moving unconsolidated affiliates, we can see that decreased by 8%, reaching 600 on $58 million decrease was due again to currency translation effects on to a onetime noncash gain recorded.
In 2018 in the second quarter of 2018.
If we exclude those effects on a like for like Macy's RMB eight for the first nine months over the year increased by 1%.
Finally got the generated in the first nine months show for the year increased by 6%.
A year over year, reaching a bit more than $140 million on truck meet our guidance for the year.
If we move to the next page number six we see that overall our portfolio process that lever a good performance in the first three quarters of 2019.
In North America, it'd be that degrees.
And.
Compared with the same period last year do you.
And.
Solar.
Lower solar radiation among other factors.
In South America, both revenues and EBITDA increased thanks to the continued solid solid performance over the assets on the contribution from the new assets a player.
In the case, all the media revenue decreased mainly due to the same currency translation effect.
I would maybe be a increased it by a 3% on a like for like bases in Spain Robot show was significantly higher.
Yeah, Thanks to higher solar radiation on solid operating performance, while they've got to plan that got your solar plants continue delivering a strong operating performance.
If we look below.
The results by sector, we see very similar.
Trends will energy with revenue decreasing due to the currency translation.
And the due to the extraordinary item in 2000, they are they being that I mentioned before indication of natural gas or Mexican assets come Juniors.
Showing very solid performance why you know transmission lines revenues increased by a 7% I, maybe D.A. increased by an 8% mainly thanks to the contribution from new assets and finally.
Our water segment keeps showing very strong EBITDA levels, we fell 5% growth year over year.
If we move to page seven.
We can take a look up the key operational metrics or we see there that the electricity produced by a renewable energy assets reached.
2700 deal what hours in the first nine months, a 6% increase compared with the same period last year overall, our renewable energy assets and delivered a strong operating performance.
If we look at the availability based contracts ACB, the Mexican asset as I mentioned before keeps showing.
Im sorry performance Depress me your life and water to other sectors, where our revenues are based on availability, we continue to see hi.
I believe it the levels on the strong performance.
I will now turn the call over to Francisco, who will take us through the financial figures.
Thanks.
Thank you wouldn't be a rule and good morning tool.
Let's move onto slide eight to walk you through or cash flow for the third quarter in there for the.
Nine months of 2019.
Our operating cash flow for the first nine months of 2019, which 221.4 million compared to 338.3 million in the first nine months of 2018.
In the third quarter 2019, we generated an operating cash flow 172.3 million.
Similar to third quarter 2018.
Net cash used in investment activities in the first nine months for 2019 was 147.5 million in correspondent mostly to investment the new assets.
They should be seen in conjunction with a net cash used from financing activities.
It includes investments made by our partner.
Net cash invested in acquisition, so assets and or accretive investments than the first nine months of 2019 amounted to approximately 90 million.
Net cash used in financing activities in the first nine months with 2019 amounted to 148.6 million and that included the impact of the refinancing or part of our corporate.
That earlier this year all in all the net the net change in consolidated cash for the first nine month.
Oh for 2019 was an increase of 25.4 million.
On the next slide number nine.
We would like to review our net debt position.
Our consolidated net debt as of September Thirtyth 2019, it's approximately a 170 million lower than the than at the end of 2018.
We closed the first nine months of 2019, when net corporate debt of 612 or 13.2 million.
Actually higher than the net corporate debt as of December 31st to 2018.
This our net corporate rate or net corporate debt to cap the corporate debt service ratio stood at 2.7 times.
On the other half that project that I have sort of September 32019.
<unk> was 4360 2 million approximately 200 million lower than at the closing of left here.
I will now turn their called back to Santiago, who will provide an update on our growth strategy.
If we move to page 11, you will see that we have closed.
If we usually announced acquisition of ATM expansion too.
Total equity investment or for around $20 million as you may recall.
And these are our transmission line seen operation that receive revenues and denominated in us dollars based on availability like our other transmission lines.
We've said 2030 year.
Contract you'd be it.
Yeah. This is part of Ah.
Accretive investments, but we have announced you know we have been analysis on closing during the last a year.
If we move to the next page number 12, you will also see that's our board of directors has approved a quarterly dividend of 41 cents per share for the third quarter of 2019.
Or outdoor 64 cents, if we annualize that number.
If you then represents a 14% increase compared with the same quarter last year.
Represents a 3% increase versus the Q2.
2019 Division.
Thank you for your attention.
With that operator, we are ready to take questions.
Thank you, ladies and gentlemen, as a reminder, if you wish to ask questions. Please press Star then one on your television and wait for your name to be announced you wish to come to your question. Please press star Husky once again.
On one if you'd like to ask a question.
And your first question comes from the line of.
Julien Dumoulin Smith Bank of America. Please go ahead.
Hey, good morning, Tim.
Hi, good morning.
Hey, So just wanted to follow up on a couple of questions I suppose a just perhaps the obvious one here can you elaborate a little bit on where you stand on the strategic process and how you think about the merits here I know we've talked about this at various points, but I believe as best I understand that we've talked about a fourk resolution here.
On that process can you speak to that and perhaps what you're seeing out there in terms of read throughs from potentially pure transactions out there as well.
And how that might impact your decision making.
Sure. So us as you know you can imagine there's not much like gun comment regarding that this strategic review process is ongoing.
And us we mentioned from the beginning it's a process of out on the leasing a wide range of options.
And in that context, the transactions that have been happening the sector.
Obviously is something we the board we look at.
But beyond that you know there's not much we can announce at this point in time.
And.
Whenever that proceeds over we will be sharing weve everybody that we sold so all that TV.
Excellent sort of started and then take care when you say whenever that process is over.
Will you be affirming that publicly.
How do you think about that just from a resolution timeframe given I think what you've said about for Q.
So what we what they said in the past was that from my personal point of view.
The end of year would be a reasonable timing to update.
Regarding that process.
The.
Again, I personally think.
And within.
A similar timeframe.
We should update the market, whether that's a beginning of next year or with their results for the year, where we see because it's a process ongoing and therefore I I do not control the timing all four of approach a union.
Clearly understood and then to the extension, which were looking at continued dividend growth and obviously sort of dependent on strategic.
I will come in process, how do you think about.
Sustained dividend growth from here I know you guys have historic targets, obviously, you're trending very nicely year over year. How do you think about that more narrowly into 2020, when you think about both the Kathy.
Improvement trend and then your own pale targets over time, just setting expectations and the next year to come.
Yes, so as you know, we always give guidance for the year with the year results presentation. So we will be providing guidance in late February .
And.
You know as well our midterm growth.
And we share that with the market sometime ago.
At this point diversification is to continue growing along those lines, but we we'd be able to be more specific for next year. As you are asking when we send to the to listen to them 19 results in February .
Right, it's starting to become more clear on this.
If I can and there's nothing to say that the linearity of that.
The long term growth target would differ from for the coming year correct.
There is.
Yes, there is nothing new on that front, if you want.
Okay fair enough excellent well. Thank you all team I appreciate it.
Thank you do it ends.
Thank you and your next question comes from the line of.
Matt from Citibank. Please go ahead.
Thanks, So much yeah. So if you don't find another one under strategic review in terms of alignment between your parent.
Glenn ownership and yourself or at least a partner how are you thinking about alignment of interests are there any differences of views or from your perspective are all all parties aligned towards the same going I guess.
So I mean from that point of view a are.
Collaboration with our largest shareholder Algonquin on partner has been ongoing for sometime as you know we have been probably talking to all the things we have been working with them and from that point of view.
Thing that we are a properly aligned.
You want.
Alright fair enough in terms of assets as part of the strategic review, we've we've heard about South Africa and further concerns there is there any impact in your mind around.
What that process is going through in terms of Nationalisation, maybe in what that means in terms of your asset fair.
So I don't think they're not nationalisation is something we have ever heard.
Talking about the asset in South Africa has been performing very well generating cash very nicely.
And from my point of view, we are we're very happy.
The with over four months operationally and financially of the assets.
You know where there is we will consider anything different on the owning the assets on the long term, we will see we win a.
Consider any options us as you can imagine but.
No we are very happy with.
Yes.
Got your fair enough and just one quick clarification from a California perspective.
Obviously.
That said that situation continues to evolve from your perspective, you just wait and see how that plays out and hopefully have.
The company exit bankruptcy by next year or is there any anything else from from your perspective proactively to that can be done.
So and obviously, it's approach as we don't control and globally. Each of you would happily from we'll have our different point of view our point of view is that the probabilities.
That a process, reaching grew solution next year or height.
It would we will come control is what we announced a few months ago, meaning that in 2019 on two of US on the 20, we would be able to compensate delays in distributions from the Mojave assets you only one we have in California.
If those delays happen and that's where we are so hopefully we'll be we sold by 2020.
Ideally by June .
But in any case, we have taken the actions necessary to compensate potential delays this year next year.
Gotcha. Thanks, so much guys look forward to catching up I D. R.
Thanks, a lot.
Thank you, ladies and gentlemen, as a reminder, if you'd like to ask a question. Please press star one on your telephone keypad. Your next question comes from T. Akinfeev from Raymond James. Please go ahead.
Hi, guys. Thanks for taking my call combat for a distributor.
Just on your funding plan do you ever still well below your corporate level leverage targets can you talk about how much more leverage you'd be willing to take.
Based on any asset sales.
Good morning that says Francisco.
As you rightly pointed out I mean, what we have a lower leverage or do you see on the on that slide that where the 2.7 times on the leverage we have.
Additional capabilities or two to two love to get additional debt on the on the balance sheet, we increased the revolver the 425.
So I mean, there's certainly room to do future acquisitions. The other kind of show we have on hand, the additional leverage that we we have and also.
The percentage of cash that we keep out of the capacity that we generate but Ah Ah that said, we have expressed and Lee said that we have a target of Ah keeping the corporate leverage around three times.
Some internal targets, it's not on the covenants, but as I said, we're below that number right now.
Right and so you don't see yourself going above that at all on like some of the peers huh.
I think as I've said this number is not a set in stone deserves an internal targets that we have.
So as I've said, we do a habit cash on hand, we havent.
We're comfortable at the at the three times right now.
Okay, great. Thanks for the carry on that that's awesome.
Thank you, ladies and gentlemen, I was reminded if you'd like to ask your question. Please press star unwanted.
There are currently no further questions Sir please continue.
Okay. Thank you very much to everybody for for attending.
Thank you that does conclude our conference for today. Thanks for participating you may all disconnect.