Q2 2020 Atlantica Sustainable Infrastructure PLC Earnings Call
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Two at lunch Trust second quarter Twitched trend.
This conference call.
Expandable infrastructure company.
Hi, Paul.
She's renewable energy.
Generation electric transmission.
In North and South America.
So.
Just a reminder, coal is being webcast life on the Internet and a replay of this.
At the Atlantic corporate website.
Well be making forward looking statements during this call.
Current expectations and assumptions, which are subject to risks and uncertainties.
Actual results could differ materially.
Let's see if any of our key assumptions.
Well because of other factors discussed in todays presentation.
Well because of other factors discussed.
This section of the accompanying presentation.
They just reports and filings with the Securities and Exchange Commission.
Each of which can be found on our website.
Lunch get does not undertake any duty to update any forward looking statements.
Joining us for today's conference call.
And you can see us.
Yes.
Yes, I see skin Muddiness Davis.
At the end of the conference calls.
Lines for the Kuni session.
I'll now pass you over to Mr. Siege. Please go ahead.
Thank you very much.
Good morning.
Everyone.
Thanks for joining our second quarter two question on 20 conference call.
Starting on page screen.
First place.
We want to share with you.
Lumpy gosh, not experienced any material impact from gold with 19 myself today.
We obviously continue to want it or the situation very closely and we continue.
Adopting our safety measures I mean generally our operations to the specific situation in each of our assets on our locations at some safety remains obviously our top priority.
Having said that regarding our first half a penny that's up or four months are gabi see increased by 3% year over year up to $97.3 million.
When we compare that with the first half of two caution on my deep.
Finally, it these very important from our point of view to mention that on top of that GAAP need. We have also generated approximately $143 million off one oh.
Gosh in the second quarter, Oh for 2000 on 20 through a non recourse repeat dosing.
These gosh will allow us to finance growth without increasing corporate that something that we believe he is very important.
I just would they be D.A., including unconsolidated affiliates for the first half of two personal 20 decreased by 7% most do you.
Lower solar radiation in EMEA.
Hey, the younger scheduled outage in got you are plant in South Africa that we discussed it in the previous quarter on the foreign exchange differences.
Our board of directors have declared a quarterly dividend of 42 cents, but this one cent British year uncorked or more than anything.
The last quarter.
And finally.
We continue making what we believe he is very good progress on our accrete these growth initiatives.
Until the end of July.
We have raised adult aloft $489 million to fund new growth. These include the $143 million Cross section I previously mentioned.
Older non recourse project creeping and things that we have closed during the month of July us well last corporate debt.
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We therefore have nearly $500 million available for girls.
Well last several hundred million dollars more available under our revolving credit facility.
All of these we've held in Green coffee, though.
On reducing significantly the amount of corporate debt. Thanks to these three non recourse refinancings that.
I don't see school, we get into later.
In that context.
And we have exercised the option to acquire or.
Partners.
I said, we'd be interested in children.
On the finally, we have also closed the acquisition of the previously announced 55 megawatt solar plant.
You Chile.
Through the renewable energy platform that we announced earlier this year.
With that we remain very optimistic regarding growth prospects on now we have the funds it required to do so I'll be able to.
With that I will turn the goal over to Francisco, who will cover the rest of the presentation.
Thank you if somebody I will good morning to all.
Please turn to slide number five where I will present, our key financials for the first half.
Revenues in the first half was 20 point, they reached 400 and fit and 66 million.
7.7% decrease versus the same period in 2019.
An adjusted EBITDA, including unconsolidated affiliates decreased.
By 7.4% to 380 million.
The decrease.
It's mostly mostly due to lower solar resource in EMEA and lower production cut true caused by then it's scheduled outage that we discussed the previous quarter.
Regarding Kathy we generated 97 million and the first six months of 2020 I.
An increase of 3% year over year.
In addition to our captive generation in the first half a point the 20, we generated 143 million a one off cash through a green.
Jack debt refinancing that we closed in the second quarter.
This will allow us to finance growth without increasing corporate.
Let's now please turn to slide number to fix to review for both by sector and geography.
In North America, or EBITDA decreased by 3% compared to the first half of 2019.
This decrease is mainly due to a decrease in revenues in our official natural gas segment, primarily caused by a onetime noncash accounting adjustment I may CP in that first quarter of 2019.
In our solar assets in North America revenue and adjusted EBITDA increased by 3% the 1% respectively.
In South America, both revenue and EBITDA increased by 9% and 4% respectively. Thanks to the continued solid performance or asset.
With higher production from a wind assets and a high availability levels and transmission line.
And also due to their contribution a recently acquired assets 80 and expansion two and a new PV plant in Chile.
The revenue and EBITDA decreased in the me at a region was mainly due to lower production in Spain and control.
Due to lower solar radiation and to the and honest scheduled outage.
I didn't catch all.
Foreign exchange to from this also explain part a decrease.
Looking below the results by business sector, we can see similar effects.
And <unk> and renewable energy radio net revenue and EBITDA decreased due to the refund previously mentioned.
Then a fish in natural gas.
Our Mexican assets continued to show solid performance.
The decrease in revenues and a bit thought that you see here is due to onetime noncash accounting adjustment recorded in the first quarter of 2019.
Previously mentioned.
Our transmission lines continued to show extremely good availability level.
And that explain thing.
Increase and readiness and a bit together with acquisition.
And finally.
Our water segment and <unk>.
Revenues and EBITDA increased by 31, and 15% respectively due to the contribution from the NAV that water deficit desalinization plant, we've started to consolidate in the second quarter <unk> point be point B.
If we look now at the following slide number seven we can review the Ti operation old matrix over assets.
Electricity produced by a renewable assets reach 1482 gigawatt hours in the first half 20 point B.
Looking at our availability based contract again, if he keeps showing solid performance.
And finally in transmission lines and water the daughter sector, where revenues are based on availability, we continued to achieve high availability levels over around 100%.
Let's move on to slide eight to walk you through our cash flow for the second quarter and for the first half a point the point B.
Our operating cash flow for the first half a point the Plenti reached 148 million.
Remaining stable compared to the same period 2019.
Lower EBITDA was offset by a less negative variation of working capital and lower interest paid.
If we looked at the second quarter, we can see how operating cash flow increase with respect to the same quarter over the previous here.
Result, although.
Two effects.
Financing cash flow for the first half for the year with positive by approximately 72 million.
And correspondent primarily to the net effect of the issuance of the non recourse Green project financed.
And to the use of our revolving credit facility.
Partially offset by the dividends paid to our shareholders and non controlling interest.
And to that scheduled repayments of principle of our project Finance agreement.
All in all the net cash the net change in consolidated cash for the first half a point B 20 was an increase of approximately $237 million.
On the next slide number nine.
We would like to reveal.
Our net debt position.
We closed the first half a 2020 with a net corporate data 558 million.
Which represents a reduction of approximately 100 million compared to the closing 2019.
With that.
Our net corporate debt to cap the pre corporate debt covenant ratio stood at 2.3 times.
On the other had not project that after June 30 2020.
What 4490 8 million who has increased.
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Moving on to slide 11 [noise].
Since the beginning appointing plenti, we'd have successfully close no financing for total proceeds so 489 million.
Which are expected to finance growth.
Wish I had we have shared with you on the path that we had refinancing opportunities in our portfolio and then till the end of July we have so [laughter] successfully materialize somebody those opportunities.
And the first quarter, we should a non recourse green project financed with 143, one off cash generation.
In July we closed the second non recourse.
Project that financing O'malley energy, one I want to follow out some sort of Spain.
We're adding I lutron should that from an institutional investor achieving a net recap of approximately $43 million and.
Finally in July we also closed a third nonrecourse project that refinancing and Ellios.
One of our solar assets in Spain.
Proceeds were used to repay the previous bank project debt Encapso legacy interest rate swaps.
We're achieving an improvement in cost and tender.
Interest is now 1.9% compared to approximately 4.2% in previous that previously and maturity has been extended from 20.37 to 2037 and.
More importantly, we have also achieved and that recap of approximately 30 million.
In total we have been able to generate $216 million of nonrecourse project that financings and refinancings, which will allow us to finance growth without increasing our corporate debt.
In second place in July 20.8, we entered into two corporate that issue I look for a dollar amount of approximately 273 million.
We signed a senior unsecured financing.
For approximately 158 million with a seven year maturity.
In addition, we issued 115 million Green exchangeable notes, including the Green shoe with a five year maturity leveraging once again, our solid E G credentials.
The notes were issued in compliance with the 2018 Greenbaum principles and had a second party opinion deliver bustle staying Olympics.
Weighted average cost of the new financings and refinancings closed pinpointing plenty.
And at 3.9.
As you can see.
489 million.
Ben raised in spite that Corbett 19 market conditions.
Well there were not good position due for NAV accretive growth opportunities.
You know, we have exercise our option to buy outs, so long enough tax equity investor.
We expect to close that transaction in August.
In addition in the second quarter, we closed the acquisition of cheap to live TV, one that 55 megawatt solar asset to the renewable energy platform created in Chile.
And finally.
We continue to actively pursue growth opportunities and are targeted geographies.
On the next slide you can see that our board of directors has approved a quarterly dividend of 42 cents per share for the second quarter, what 2020 or a $1.68 annualized.
This is up one cents increase per quarter.
With this I will conclude todays presentation.
Thank you for your attention.
We will now open the lines for questions.
Operator, we're ready for Q1 day.
Thank you, ladies and gentlemen, she would like to ask your question. Please press star one on your telephone keypad.
Once again starting.
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Your first question.
Dylan Smith.
Please go ahead.
Hi, good morning, cheap. Thank you very much for the time.
Doing well.
I wanted to go on Q on a.
Good morning.
Quick question.
First how are you thinking but given growth to this point you know I know past tense, we've talked about strategic pivot you all are they executed across a lot of the strategic questions that have been out there for a while how you think that reset expectations on different growth I know it seems like there's a little bit of inflection here with a little bit of a slower moment on.
Dividend growth in recent quarters, how do you think about that reacceleration trajectory and perhaps related to that what are your latest thoughts on use of cash from all the proceeds that you recently entered into as well he can't.
And how that fits into the mix.
So it's talking with your second question.
They use off well because we have raised some Cisco has gone through us. He has explained our intention is to use it for growth.
Starting we've said this all on the option and that we have exercised it but continuing with other opportunities. We're working on so we do respect in the next few quarters to be able to deeply capitala greet deeply hopefully taking advantage of the carbon.
Sheet waiting in the markets, where we might be one they'll sit parties and more active.
Others, who might have been more affected by by the government the environment. So the way we're looking at the future East deploying capital a good deeply girls and obviously your first question regarding Bbs growth we be influenced by these are as felt the girls and what the specific.
Sessions, we can close by that you as you have seen any we have increased our dividend again this quarter. So I think that we are showing.
Our objective is to show consistent growth and indeed, the them for sure that's what.
If I can actually more specifically do you intend to provide a new dividend growth CAGR and any specific point and then related to the first one on growth.
What geography, or what asset class are you looking out today, principally that still more American smokers.
Is there any more precision you can put to that as you think about putting.
The best in this larger capital base now.
Yeah, we are spending our time, mostly in the same geographies, where we are very similar geographies to the ones, where we are I mean very similar sectors. So we're spending a lot of timing the Americas and on we're spending a little staying in the sectors, where we are bessent already.
That's where most of our opportunities should materialize in them. So when you or how do we plan to eat meat them guidance, our intention would be too that at some point in time.
Maybe the end of year or with the.
2020 results presentation ones as well the goal, which situation is having more theory, if you want.
Super quick last question, obviously operational challenges a bit of late again can you just talked about normalized Kathy levels relative to where you are now on your existing portfolios. They say run rate just in light of the operational disclosure if you Scott.
It seems like that might be temporary.
So I mean to resolve run rate got the probably the numbers you are seeing now.
We have been targeting are more or less I run the run rate.
You can help on that said doing nothing that there will do not bid wars. This I'm kind of China more or less so there's somebody you can the portfolio obviously, but.
Portfolio starts to mature there are some opportunities to do better in a couple of the assets.
And that's why.
We we see the future should be we see me to are you got the integration and some growth coming from the assets and leveraging for example, the fact that we have escalation factors you many of our horizon.
So this is a lot of issues on the storage system.
You're confident or are temporary here.
Not a repair.
I mean, we believe that Oh, we have these close to it will affect us this would generation.
During 2000 and went into the Sun 21.
In the us it should be generating gabi, Nevertheless, and on and then we should go back to higher levels.
Thanks for the time.
About.
Thanks to usually a thank you.
And your next question comes from David <unk> from Raymond James. Please go ahead.
Thanks, Good morning, everyone.
And my first question here just on on P.T. I was wondering if there's any comments you can provide our updates on a when you expect to close that investment going forward.
Thanks, David So and it's a question where it's difficult to eat you a very specific answer is there a contract signed but there are conditions that the still have to be met I mean, the current context, a it's difficult to equal inclusive regarding when our expectation would be.
The next few months those conditions should be met but Oh, we have disclosed we cannot make.
We're going to be sure about that we cannot you're going to be sure you conditions would be met so it's a little bit of a question Mark on these point in time.
While waiting for for those conditions tool to be met and.
Hopefully to be able to close the transaction.
Okay. That's fair enough. Thank you and then just switching over to the solar resource in EMEA are you able to comment on how it's trended so far going into Q3.
And better. So July has been has been a better month button wouldn't be showing the in the first half.
Okay, great. Thank you and then maybe just a little bit of a broader question wondering if you've had any a recent.
Discussions with the new management team that Algonquin and I know they've got a new management team you've got some new board members.
Have as the nature of those of the opportunities you're looking at their changed at all or is it still kind of status quo in terms of.
Co investment opportunities with them.
I mean, our relationship obviously is very few and.
We use.
The increase management team, including.
The new CEO.
Who sell director or our company so the religion <unk>.
Very very fluid.
I I would say that there's nothing new do we bar there on their mission continues to be in the same when we continue looking at the same a kind of opportunities, obviously and the new she'll what they've gone greenhouse being there for for a few weeks officially at least so I think that we also need to be buying and see if you know.
Going to change anything that relationship but at this point in time.
We continue working the same way that's.
Where we are and we expect to be able to do things together going forward obviously.
Okay Fair enough. Thank you and that's all I had.
Thank you David.
Once again, if you'd like to ask a question.
And your telephone keypad.
And Weve no further questions.
Okay. So.
On our side, thank you very much.
Thanks for attending every Bobby.
Great. Thanks, a lot we can close to life. Thank you operator.
Thank you. Thank you.
You may now disconnect.
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