Nine Months 2020 Enel Chile SA Earnings Call
[music].
Good day, ladies and gentlemen, and welcome to the Inno 299, and 2020 results conference call.
My name is Tina and I will be your operator for today at.
At this time all participants are in a listen only mode.
After the speaker's presentation, there will be a question and answer session to ask a question be other telephone you would need to press star one please.
Please be advised that todays conference is being recorded.
During this conference call. We May add we may make statements that constitute forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.
Such forward looking statements reflect only our current expectation or not guarantee of future performance and involve risks and uncertainties.
Actual results may differ material materially from those anticipated in the forward looking statements I think result of various factors. These.
These factors are described in you know, Chile, a press release reporting and nine M. 2020 results if.
The presentation accompanying todays conference call and Emil Chile annual report on form 20-F, including under risk factors.
You may access our nine M. 2020 results press release and presentation on our website at Www Dot NL that C. L. In our 20-F on the Fccs website.
You W. W Dot FCC that Gov.
Readers are cautioned not to place under reliance on those forward looking statements, which speak only as our dates.
Neil Chile undertakes no obligations to update those forward looking statements or to disclose any developments as a result of which for looking statements become inaccurate, except as required by law.
I would now like to turn the presentation presentation over to Ms. Ellen Isabella claim is head of Investor Relations have a neo Chile. Please proceed.
Good morning, ladies and gentlemen, and welcome to announce Jean good warranty solvent for any results presentation things you will all join hands today I hope you find using her family's doing well and they healthy I am not going I mean, that's something that's really our personalization and.
Related financial information are available on our website www dot and now don't yeah.
The Investor section a replay of this well we won't be available there will be an opportunity to ask questions. After the presentation by Upsilon Oh. My addition, who know me I've kind of question. Joining me today are you follow my Lucky and our CFO will give that people are getting.
Oh, we won't be in the presentation with the main highlights and you meet with an update on the global situation that we are facing how's it going when he is actively working with Boeing internally and we will present. Some they ended the fusion offer strategy then just happy to walk you through our financial results and how.
Our operational but for.
Let me remind you that media participants that connected only only nimble as always our team will continue to be available to provide you with any state information, we need with respect to the good information in this presentation. Thank you all for your presence and let me.
Hand over now to follow along.
Thank you it's a bad luck good morning to you.
Let's start by managers they are going to look like.
The first quarter, our monkey goals continue to be under Bush.
We've gone.
This bargain on Brexit if exchange.
Our operational resilience and computer support or drawing from.
Over the last couple of years virtually all our mothers and then treating more senior in developing new renewable broader Oscar.
Dr Lunar new year.
We recently announced the stuff those are actual real grew another four megawatt solar from Baird.
We are going to just go American book, I mean or buy your way.
Within the next day's news.
You more detail on the road.
I mean, the greenfield contamination and improving this week, leaving are useful but as you.
We can do that we encountered education and support our work is there I guess on the news and the piece of users.
Gross [laughter] during this quarter, we have developed a lot you are ready to go to petition idea, having got sterilization companies, who announced the development of our.
On the left who will be leaving to go over to real Madrid, who that is.
1200, Charles just <unk> been charging boys six launches on that.
Let me mention our he should be what we.
We have recently announced our specialty.
And the broker partners.
And now the same as you're born free so it's vital plan before agreement and Georgia production for food.
Right.
Good buy electricity generated by anyway.
Despite project, which would be one of the largest kind of Latin America, we'd be looking to Larry I'm not going to be honest the region, the south will be gone.
Let's move to page three.
We know that situation will go name who is not over yet.
We we like you are not sure of our company.
For at least performing during the second day cruises crisis, especially when it's trailing the deployment leisure wasn't up though.
So the 4% to our employees continue to work from home.
Linda compared to where you really seeing babies appropriately.
The ones that are of the field are working we live stream system users.
One other served ore blends and network are fully operational which ensure our services continued.
The results derived from the combination of technology for Caesars and our people work and suppliers DRONCO me.
Finally.
<unk> expenses, our compromise with our clients or in India. We have made available more options to access our company services.
And degrees the muscle digital payment platforms. I mean, you don't want to give our clients more flexibility durable.
Moving to slide four.
You can see our EPS for the ball.
Nick on the Coast Guard we.
We strongly believe that an acceleration or does it have an initial courses and the development project.
We didn't do country, you're going to be critical.
She said if you look on David maybe another way of looking at the forefront of the green economy in our current conflicts by.
Our newer capacity development of the new kind of energy services. We are writing at the same time compatibility Bryce.
During the year you created around the 3600, new jobs, you deeper zones overcome where our projects are in construction multi local hiring.
Over the next month.
We will see an increase into the model.
We see that in our cost structure of diamond ring, which might add additional temporary new jobs from the beginning one quick one to one.
Yes solution.
Cost of goods. So the conversion to a cleaner logistics, we are working on jobs come pre conversion programs.
Oh, I think border equation frame.
It's either let me remind you that we continue our engagement with the local communities to to promote shows that.
Okay, sure and dynamic where we are developing our new renewable projects by the execution of different source of programs to a broader and deeper and broader culture.
Although I find them.
The counters lockdown of impact that will increase demand, mainly economic sectors related to industrial using customers.
Sarah company ever use their operation.
Anyone retailers and to some extent shutdown date operation.
Which resulted in a significant decrease in demand.
Both generation and distribution business.
These effects started.
In March but between.
Went lower loading to lockdown and easing the grand opening of the regions. This doctor visit them.
Well the demand continues to be.
The most affected segment. These accounts despite the overall capital account managers, we expect to see some improvement in the next months considering the Gomez shopping business sector gather hoping it's going to be the Brazil, how those countries, where the flood performance being benefit by temperatures.
No our generation business, we did see an increase in our non regulated clients because the demand versus last year few years.
This is brian into either by our free market existing portfolio seasons.
For example, the mining companies and by the New BPAC grew by our company during the first nine months open to it.
On page six lets review our distribution business collection.
Our effort on digitalization continued for sure they continue to order business without compromising our clients employees and supplier sales.
Since the beginning to elsewhere, we have improve our customers experience by adding new digital channels.
The results we are one of distribution companies with more beat our option available.
The number of brilliant made it through digital channels continued to be impressive.
Compared to the present potential.
Essential ones.
77% in the third quarter of this year and 85% of the tender correlation was there for these charges.
By September 32 entities, we have executed a loss of 62000.
Thousand agreements.
With clients to moderate Reinstatements and mitigate the impact on our collection.
Although each one number a thousand words with these wins the most vulnerable licensees mass Twentytwenty and 12.6 thousand under basic service Bill approval of those right.
Which we had executed more than 1 million contracts with our clients. During this quarter. So that of course as a man and that includes the short term.
Our collection doing Twentytwenty reached 96% and the Max 2.4% respectively.
Good afternoon, ladies and the quarter fee goes back to historical levels around over 99%.
This is mainly due to the current economic and regulatory situation, we should be using it clients payment, obviously and suspended the cost option for bed failures.
Let's go to slide nine with a summary of our market may regulatory discussions.
Starting with distribution.
On the contingency process last fall was the sales in Congress has approved a new low no basic service due to benefits across the board looked like at doses of services.
Below EBIT defines the cluster of one of our clients that have the option to postpone request the payments will debut for 90 days from the approval on due to be repaid in for this over to Darby.
Over.
They don't think they look up in service of service could be allowed to the cluster of clients, including the core household sales.
Let me remind you that before the Blue is low we have already offered on the world or it is the same kind of agreement to our most of our clients today, we have almost a 13000 clients.
Philip This key under the basic service law 11000 pounds of our table.
If you let it go.
Some sales of presented a new approach.
Project to modify the day et cetera are low.
You know in order to extend the benefits until April 32 to one and be able to speaks installment for unpaid balances. The project is under discussion.
Speaking of distribution glassware and ended in June and.
Announced to the market that you called Fortinets grows as a shareholder meeting to execute all digital transition manager to comply with their own bonds. We make these nols as gio exclusivity.
Under these extraordinary meetings.
And the distribution shareholders will vote to approve the spring weather conditions into two properties one exclusively for distribution us.
Yes sure report of missions.
Finally on distribution with regards to the newer growth cycle. The government has already higher than its been reconciled to carry out studies.
Or the new regulatory reference model for the new distribution of oversight.
We will share more details on the Cogs during work in the next quarter.
That really is the first appraisal report by truck.
All right Hey, let's move on the main updates on generation.
On status of some additional mechanism. According to the cleaner report published this month.
Our daughter by the Chilean Energy Commission.
The total bonus accrual under the stabilization can you talk about $842 million for the entire year Mark for almost 22 range.
At the end of September and then she let Barbara totaled $320 million.
In this study the Sealy also publish a new estimate or Boston or the stability special makers for June 2021, using an average exchange rate of 800, Chilean pesos per $1 a.
According to the two these estimates on June 20 to 22, and the balance would reach one.
Thousand $169 million.
During this quarter clear Gorman presented the more details on markets gradually opening.
On the document presented the energy Commission on this chambre some messaging were stable.
All clients shall be able to to the supplier and that markedly better there should be done by geographical growth rates.
Hey, Greg adoption boots shall be realized by four expenses, including take or pay contracts.
Surely through new agents shall be created the traders and information patients.
Other than that we believe that our opening get.
Although market both.
Our natural evolution of the sector.
End of the energy transition and therefore, an important step for the accounts that need to be designed properly implemented in a clear family man.
I expect to have more updates for.
Our next call.
Now, let me recall some key elements of our discovery transition process on chart 10.
We had a strong commitment to the fight against climate change and have carry out different initiatives in line with this commitment.
The lottery full disconnection of our coal power plants is part of this plan.
On that.
We have two more closer to the Cisco National Bocamina, one and 128 megawatt coal power plants as.
As I mentioned before our course facility the commission will be finalized without accessing today.
To the energy strategic reserve.
With these achievements will become the first electric company to phase out our quarterly by constricted to refill reminders, our sustainable strategy, just transition policy and promoting the seaport economy perspective to contribute to develop the areas where the units are located.
On page 11, let's see what we've done on our discoveries EPS was strategy. This quarter. We have reached 1.3 gigawatts over any more capacity under construction.
And 0.7 Ngls rail to start construction in the following months.
In addition to this year.
We had approximately 3.7 gigawatts or renewable capacity in different phases of development and other opportunities in markets that represent optionality for the future to continue derisking, our generation portfolio from commodities and hydrology.
I will give you more color on our future portfolio on our Investor Day plan on.
For early December.
Now, let's focus on page 12 wells on.
On the two new projects the mouse during this quarter.
As part of our strategy to Derisk, our net energy metrics we.
We have started the construction over 204 megawatt the makeup of those type product.
Okay didn't progress the region.
The solar plant is due to be completed by 2021.
The plan, we use the cutting edge of technology that allows greater efficiency in capturing solar radiation.
Once operational it will produce around five 589 gigawatt hour Korea Aborting. The addition of the.
500.
9000 points of sale two into the atmosphere.
On October two.
Our subsidiary and increased our chiller amounts to plan to execute the first project for the nitrogen production in Chile, together with our prospective partners.
Dan this mining and energy costs.
Great and then that should be up all in gas company Siemens energy impulsion.
We will install a pilot plant for greenlight urgent production distortion will be located in the south of the country. The regional buyer, yes non internationally for.
It's we importation.
Our part in this partnership will be together with diamond supply clean energy through a wind farm to the left paralyzed the fourth agreements Gordon production was.
The downstream activities and exploitation of the Greenfield order will be in charge, although many factors.
Despite the project, which is subject to the local authorities approvals and the conclusion of the financing structure is expected to be operational by continuing to respond.
Despite the volume will be the first our guidance to produce could never origin, each year and potentially one of the largest nattymac.
Now on page 13, let's take an outlook on the other project as the construction.
Today, we have under construction 1.3, gigawatts of solar capacity that will be completed between 2020 to 200 Twentys.
We have different project different stage of construction.
Still north of Chile.
Several of our young continues to continuous expansion with 28 megawatts of additional capacity, we completed on 2021 consolidating as the only Joe second plant operator in South America.
Today, we are developing an ambition growth plan that we consolidate our position as the main renewable player contributing to the fight against the climate change and supporting the economy recovers.
In this vis vis those who some of the recession process might be reviewed to cope with the contribution on the deposits agreements and the climate change goals.
On slide 14 with reference to our generation business, we are presenting the coolest at the rainfall for the most significant revenue basis.
The real data era.
As you can see on the right side of right will of course look at recovering dry for in the second half for June and July.
Reaching normal levels in most of our basis. Nevertheless during growth season rainfall degrees, notably the coach.
On the other hand, there was an improvement in the level of snow accumulated in the mountains seems rains during June and July were accompanied by a colder condition when Scott will compare to 2018 figures at the lower altitude.
Therefore, there can you let us know levels are I guess then those of several active as we can see in daily in the image on the slide left side.
Considering the current conditions, we expect the hydro generation or the second semester, plus 22 range between 5.8 and six Terawatt hour Approx.
We expect the probabilities of acceptance of 70% for commencing season between October and December.
So the year Twentytwenty would be similar to the 2018.
Let me remind you that generation with LNG is currently the network edge of energy the portfolio to cope with the drop as you will see in the following slides.
Still on generation, let me go through the past our main industry recognized.
The total net production for the nine month period decreased by.
By 12.1% amounting to 14 Terawatt hour.
In the period, 61% of our generation came from renewable sources.
The variance between nine months to Npls deer feeding us come from minus one terawatt hour.
Although the lower generation in our Idaho power plants, reflecting data already performance.
Michael's point alignment that our lower thermal production, mainly in our coal fire plants due to the closure or tele backup power plant in December 31st 2019, and the impact of lower system managing our costs.
In terms of our energy balances.
We remain at the spot buyer in the market with the purchase of 2.9 developed hour in nine months Twentytwenty.
Matt plus one Terawatt hour I guess, they're nine months 20, lumpiness due to load the org and managing our costs.
On the other trend our physical energy sales decreased 5.5% or one terawatt hour mainly explained by.
Minus 1.6, Terawatt hour of the lower demand from distribution companies, primarily related to the termination our recipes with data and the metal secured in 2006 auction and.
And the lower energy demand in connection to Lockdowns establish until August September in different cities over the coach.
Partially offset by plus 0.8, Terawatt hour or you get a free market sales as part of our strategy to capture new clients and then once that recently integrated to the three markets.
Finally, it's worth mentioning that during the third quarter Twentytwenty.
Our physical sales increases.
By 7.3% for the fourth quarter of a power when compared to the second quarter Twentytwenty, partially reflecting the gravel using for the lockdown started by the end of August.
Slide 16 on distribution.
They look down in our concession area in social hour is mostly.
Mostly explains the decrease in the energy distributed in the period well loved to compare to the last year's feeders.
And the performance of the energy losses that moved to 5.2%.
Our customer base continued to expand.
In this period, we have got an increase of 53000, new clients, reaching almost two in your plan.
Or the quality of our services.
Our interruption Index society performed very well when will it.
26 minutes best of it in that period, reflecting the investment than in our concession area. Despite logistic restrictions coming from the social unrest and lastly from the pandemic situation.
As of September constituencies, we have reached more than 2012 control equipment in our fleet.
Moving to slide 17 months.
And on NLX Ics and the visitation.
We are executing two important strategic agreements to continue to boost chiller to mobility during this quarter.
The first one.
Ward will be capital in.
In in which we have created SPV focus on massive three public transportation.
Which we put the stake of 20%.
This agreement.
And in Chile contributed with debt.
While five 435 Bucks on buses for consult the aggregate.
The second one was we show non in the country our Nx.
To us and elected NLX.
Let the charging station on the shell facilities. These.
These agreements.
Cans to cope with our gold was 1200 charging bonds in the country. Our company will be responsible authority 40 publisher mentors or charging unit, but also to the customer experience.
During the period of the.
We have also signed an agreement with important manufacturer brands, such as Mr. Newsome Volvo BMW.
To supply NLX integrators Super play.
April charging solution in both the domestic and public sphere.
Lets recall that during the first half of this year.
We secured new project on public liking it.
Good to upgrade the lighting infrastructure and other services.
Security and connection, bringing more efficiencies and favorable to the local communities.
Chemotherapies.
Finally, we continue to promoting efficiency increased technology for the mining industry to the reduced electric usage boxes combined with solar energy installer charging system.
I will now and over 2%.
The analysis of the results.
Thanks, Bob.
Let me start with a summary of our financial highlights we.
We should we go through the sales in the following slide.
Before it's still claim.
Let me explain which adjustment we maintain our fee was both for 2018 and 22 game.
For what concern 2019 men, we have adjusted EBITDA, excluding the DTA yearly termination effect.
And the net impact of impairments of book I know one thing.
For the 2025 years, we have adjusted EBITDA and net income at the effects coming from the anticipation of the closing of Bocamina, one medium chain, which detailed are described in the bottom that lies.
Now moving to the slide 20 I will.
Explain with more detail how would that mean, the best elements of our EBITDA and bottom line, excluding the Cobi SEC.
Net of Covidien impact that our adjusted EBITDA would have been slightly higher versus last year, reaching $866 million $58 million or higher.
The factor associated the power.
For the $9 million related to the reduction of the man impacting our sales and distribution and generation net of any passing the baton $9 million, mainly associated with a higher energy losses customer care and other opex needed to face the contingency and.
Lower activity.
Moving down the PML, we recorded a negative impact related to bad debt provision of $13 million driven by temporary expansion of the historical collection billion.
Therefore, mr. Colby that our adjusted net income.
Well that reached $377 million level.
Now, let's go to our Capex on slide 21.
In the third quarter training, our Capex reached 264 million dollar mainly due to the increase of the capex allocated for our development activities.
For our maintenance Capex totaled $216 million up 94% our to be assigned to the construction of our new renewable succeeding.
Consequently, our total capex for the nine month 22, any amounted to $586 million allocated as follows.
Customer capex totaled $29 million.
63.
Sales higher sales September 2018, with significant investments allocated to bid combination for new customers.
These investments, resulting from the increase in our client base, particularly in the first quarter and improving our commercial sales tend to guarantee a better interface with our clients.
As Paolo mentioned before the continued digitalization of our customer interface and internal commercial processes, we continue to be a key factor for our industry.
Asset management Capex reached $62 million in line with that 2018 figures.
Alphaville was allocated to our distribution activities, mainly focused on our low voltage line any repairs in some facility because of the social unrest damages.
The remaining pastor, who was allocated to our generation unit focusing on maintaining the availability level and investing in digitalization.
As of September 2020 development Capex reached $476 million.
At $324 million higher than 2013, driven by renewable projects include aligning with our Decarbonisation strategy.
Weve also allocated addition up $11 million.
The development of our distribution business to contain the digitalization of our network.
Now on slide 22, let's start with that third Q adjusted EBITDA breakdown as you can see the texture to maintaining adjusted EBITDA was impacted by $24 million by that amount net of energy pass through this mainly due to the COVID-19 look.
Down measures and litigation of clients.
Ross ideological conditions in the quarter affected our hydraulic innovation by zero point $2 billion or.
8 million dollar BP.
EPA masking effect does that include the impact of commodity CP, VI and the effects of EPA and spot price.
Totaled a positive aspects of $20 million.
Minus $11 million coming from and Alexa that was affected by leasing of 290 Bucks is accounting in 2017 and lower activity in the public lighting business.
Because of the higher the decision of local currency vessel sales dollar we book acting non cash item of $70 million associated with its alkylation of loans denominated in us dollars in our book.
As of our bank.
Functional currencies investors.
Negative impact of $4 million coming from energy losses, mainly explained by logistic restoration encap suspension.
Let's now move to accommodate the figures alighted on page 23.
Educating the drivers were isolated to nonrecurring effect related to the early termination of the agreement in 2018, and the previously mentioned costar impairments into any training.
Excluding these effects, our adjusted EBITDA reduced by 6% due to.
Lockdown majors that effect that the mountain metal patches of both generation and distribution businesses by $54 million, mainly related to the cobi demanding.
Lower hydro generation impacting our adjusted EPS design $48 million.
Sales of two LNG cargoes during first out 2019.
That wasn't executed this year due to the lower price of commodities in the international market with an impact of $22 million net.
Net commodity.
The negative impact of $9 million, mainly due to the unexpected volatility of commodity intending in the international market.
Because of a.
Higher depreciation of local currency vessel U.S. dollar removed non cash items of $87 million associated with the translation of loan denominated in us dollars levels.
All these effects were offset by the following high teens.
EPA masking positive aspect of $80 million timings on commodities CDAI and FX.
That is amortization of $23 million and.
Opex and along with the positive effect of $24 million, mainly due to the transmission lowest essential cost an insurance reimbursement pink into any.
In slide 24, we have at some of the best amounts of our generation businesses, including energy and EPS, John and American power.
I have already explained the minute variation in bidding that brought them in an accumulated fuze meeting the deals.
So my message here is to highlight that our generation adjusted EBITDA managing the size of.
All the before mentioned head win so staying in a high level, reaching 54% in the third Q2, any training and policy, but fans in the nine month period in line with the 2019 figures.
Now on the solution business analytics page 25.
The third quarter, 20%, EBITDA reached $44 million or 35% compared with the third through 2018, EBITDA mainly due to.
Like many uses dancing around from Seattle to leasing as Matt Lightening accrued in 2017.
Comment was mainly due to lower energy consumption in both the greatest Mtwom market client as a result of the low cost down measures applied by the government to contain the spreads have COVID-19.
And higher energy losses due to the casting logistical advantage.
On the accumulated figures EBITDA was lower by $42 million, mainly due to.
On NLX and negative impact of $3 million million due to the impact of rates.