Q3 2020 Central Puerto SA Earnings Call
Good morning, and welcome to the Central part, though conference call. Following the results announcement for the quarter ended September Thirtyth 2020.
All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.
After todays presentation, there will be an opportunity to ask questions. Please.
Please note this event is being recorded.
If you do not have a copy of the press release please refer.
Most of the Investor support section on the company's corporate website at Www Dot Central Florida Dot Com a replay of today's call may be accessed through the website webcast in the investor support section of the central Puerto Corporate website. Please.
Before we proceed please be aware that all financial figures.
Years were prepared in accordance with the IRS and our stated in Argentinian pesos unless otherwise noted.
And it's worth noting that the financial statements for the quarter ended on September Thirtyth 2020 include the effect of the inflation adjustment Accordingly, the financial figures mentioned during the call.
Including the data from previous periods and the gross comparisons have been stated in terms of Argentine pesos of the end of the reporting period.
Also please note that certain statements made by the company. During this conference call are forward looking statements and we refer you to the forward looking statements sections of our earnings release and recent.
Recent filings with the SEC Central Puerto assumes no obligation to update forward looking statements, except as required under applicable securities laws.
To follow the discussion better please download the webcast presentation available on the company's website. Please be aware that some of the numbers mentioned during the call may be rounded.
In order to simplify the discussion.
On the call today from Central Plateau, It's Jorge Roberts, Chief Executive Officer, Fernando Burnett, Chief Operating Officer, Milagros Gandhi financial manager until last struggling on Investor Relations Officer, I will now turn the call over to Jorge and all that.
Mr. Robert you may begin.
Thank you very much good morning Wes.
I would like to begin study corn I don't I've seen in a minimum and so forth or comment on the progress of our expansion projects, so nice to break even or something or what.
I don't know what percent of the recent financings.
Huh.
<unk> finally, we answer any questions that you may have.
Yes, you know decreased 19, [laughter] did almost all the war.
In among other consequence distinctly energy demand in Argentina have worked very hard and we have seen some legal recovery. Thanks.
Harsha flexibly station of the current time.
As you can see on page three Alec.
Electricity demand decreased just 2.2% during the third quarter doesn't 20 as compared to the same period of 2019 as referenced during the second quarter 2020 electricity demand decreased five point.
5% as compared to the same period prior year.
We believe that these grant make on Sunday date into future quarters. Nothing. This EPS you may recall it is worth noting that the decrease has amassed horse money back into.
The income of generation companies.
The case of renewable energy.
You want me to stay here on effect it seems they have decent crush priority. So they can sell older [laughter].
The danger rate indication, Tom I used to have a high proportion of their income associated to fix problem room renovation, which is not related to the energy production at the moment.
Finally when.
Man decreases do you does that stop shrinking that person to lead the older inefficient ones, which are and when they're ready to do stand there yeah, Boston framework as compared to the U.S. accretion. Once we did have how you remuneration two contracts I also know west power purchase agreement.
Our HPA list only now to page four.
As you may recall, the measures adopted to prevent the spread will be nothing buyers had any impact on us on the progress of our project under construction in November one wind farm and terming out six new cogeneration units regarding that.
Well one we are pleased to announce that as of today, we have when the uptick went to one when miles in operation and we expect to reach the commercial operation date or Cod for the complete project with this month.
Wamsi. She already is rich this plant will be running already India Quint.
Europe, UK and talking with Commission.
This will be the seven wind farms that we commission seems 2016, reaching a total installed capacity of 374 megawatt wind power during the quarter. We continue with the construction of the new terminals takes several Denso Corporation.
Hi, Pat.
For this month, we expect Quint chief partial commissioning of 284 megawatt gas turbine in an open socket configuration for operation with natural gas an important milestone for the project, which will allow us to sell energy under the spot market regulation.
Once they see already for the full project is achieved which is expected for us first half a dozen brand. The one the plan will be remunerated and in a 15 year PPA on the energy side and post to self esteem ptwop pipe, but uptake.
Under another 15 year comp.
Sure.
Going now to our key performance indicators for the quarter as you can see on page five energy generation. The park and was 3.9 Terawatt hour synthetic trustee Juan.
1% lower than the same period of 2019. This was to a large extends to that 21.
Drop the duration from our pivotal lung hydropower related to lower water availability and was partially upset by the duration from the new wind farms I guess the agenda.
But to mankind. This will leave us and the new hand, the call. Your course duration you won't see production during the third part of that and put it with.
We generated by the new World and the crucial collaboration unit, which is six ft capacity in third quarter 2019. The steam production had a decrease due to sketch should have of the automation, new atypical and the crucial and in order to allow the necessary cheap imports in this team pipeline.
For the connection of the Q determination plant, which started operations in October five 2018.
Therefore view this effect the output of the third quarter sales at 21, 3rd% to 1% higher than the two part 2018, reaching normal levels.
Regarding dividend.
Inability of our terminal units than third quarter 2023, each 89% as compared to 94% during the third quarter 2018. It was mainly because of the failure of to make US former of Siemens branded combined cycle of two and Hoosier plant core in April.
12 cents, and 20, which returned to salvage onto nice 60 in 2020 and to a lesser extent to smaller advancing some of the steam turbines uptick portal Andrew Canaccord. Your plants still indicate remains higher than market average availability for tenant units.
Which was 84% according to data from chemists and now I will turn the call over to Fernando who will comment on the financial highlights things you heard I will refer to some of recent financial news for the company and then comment on the results of the third quarter of 2020.
As you can see on page six another city one hour. So see there you see demand NCB the Salinas issue.
Green loans in the local security market for the equivalent of 50 million us dollars, replacing outstanding bridge loans with Syntel booked on the placement currencies.
Darling seriously as one.
Integrated in Argentine pesos for sale.
$35 million with the maturity of three years and a serious in Argentine pesos with the maturity of one year for the equivalent of 15 million US dollars. The Asian was recognized by FICO.
Writing an affiliate of Fitch rating with their Green bond rating BB one.
And the bonds were included in the panel of social Green and sustainable bonds at Warner sales security market being.
Being the first one to be included in this panel with Asia.
Hi, Peter.
This is an important milestone for the company and their entire security market and we look.
Forward to continue with the development of these kind of investment alternatives for which we expect a growth in demand.
Going now to the results for the quarter.
As you can see on page seven our revenues were 9.1 billion as compared to 10.6 billion. During the third quarter of 2018. This decrease was driven by the discontinuation of the fuel for chases operations that we did during 2000 and team due to the new rule.
Asia that centralize the fuel poured chases for old generators incoming sir.
He is a sales represent a 1.7 billion variation during the quarter compared to the same period of the prior year.
Excluding this effect revenues were $8.9 billion.
Compared to 8.7 billion in the war in the third quarter of 2019 is.
This increase was mainly driven by an increase in sales under contract, which amounted to 4.3 billion. During the third quarter of 2020 as compared to 3.5 billion in the same.
Same period of the previous year, mainly due to the new handy cutia pushing duration unit, which is celebrations on October 2019, and the wind farms like as the Senate to lack innoviva to monkey analysts will use which it's our operation During June September December.
2019, and February 2020, respectively.
And to an increase in the team sales that during the quarter.
Lets out three Candrea 30 million from the new 200, kosher cogeneration plant compared to 98 million.
In the third quarter of 2019. This increase was partially offset by the decrease in sales and the key I've asked the frame work of 1 billion, mainly driven by a decrease in prices established by the resolution said he won in force since February one.
2020, and the suspension of the amount monthly price adjustment plus.
Plus easier of such a solution instructed by the inertia in energy Secretary and on April eight 2020.
The gross profit was 5.5 billion during the third quarter.
2020, as compared to 6.3 billion in the same period of 2019. This was due to a variation in revenues mentioned before and was partially offset by a 13% reduction in cost of sales that totaled three point C 3.6 billion.
Compared to 4.4 billion pesos in the same period of 2019 the decrease in the cost of sale was primarily driven by.
56.
Per cent decrease in the purchase of fuel and related concepts due to a continuation of this operation.
According to the new regulations.
Given the current scenario no tariffs assessment for units and give us a framework. The company made a strong review in order to maintain non fuel related cost of production as low as possible.
As a consequence administrative and selling expenses were.
Reduce in.
26% in real terms, serving more than 208 million during the third quarter of 2020 as compared to the same period of 2019.
Gross profit margin totaled 60% during the quarter.
Compared to 59% in the same period of 2019.
Going to page eight we can see the changes in our EBITDA, which was around selling point 7 billion in the third quarter of 2020 compared to 19.3 billion in the third.
Quarter of 2019.
In addition to the variation in gross profit mentioned before this was due to a reduction of 11.3 billion in other operating results, mainly due to a reduction in foreign exchange deferring gain.
Mainly related to a dollar denominated.
Foreign trade receivables that generate 1 billion gain during the third quarter of 2020 compared to 8.5 billion. During the third quarter of 2018, when the Argentine peso Register a depreciation of 36% mainly related to the outcome.
One of the primary elections in 2019.
And at 4.8 million in one time.
In interest register in the third quarter of 2019 associated with.
2013 to 2016, guys that run rate.
Your cancellation.
Going to page nine the consolidated net income was two.
2.3 billion pesos compared to 4.8 billion in the same period of 2019. In addition to the factors mentioned before the net income was negatively affected by lower.
Financial income, which decreased 270 million due to a lower foreign exchange different financial assets denominated in U.S dollar parcel compensated by higher mark to market gain and EPS.
Possibly impacted by lower financial expenses.
Over that decreased 8.8 billion in the third quarter of 2020 as compared to the same period of 2019, mainly due to a lower financial exchange different loans, most of which are denominated in us dollars.
Additionally, the results our net monetary position was.
Candid media in the third quarter of 2020 compared to 1.1 billion in the third quarter of 2019.
Finally, the share of profit of Associates was 486 million no work during the third quarter of 2020 as compared to 2009.
Team, mainly due to lower assault from the operations natural gas distribution associates related to lack of studies adjustments for the gap for the natural gas distribution business in 2020.
Going to page 10, you can see I want to cash flow for the nine month period ended on September.
Three 2000 train.
Net cash provided by operating activities was 12.8 billion.
These include 4.6 billion in collection from Franny and Civeo installments.
The cash flow from operations was partially offset by 8.5 below.
But in Capex disbursement for the expansion promotions and 4.1 billion use in short term investments.
Additionally, on the financial side.
5.6, Bcf beyond where use for principal and interest that services, which was partially offset by three.
3.7 billion in new loans received during the period, mainly related to the Green bond interest mentioned before.
Thank you and now we invite you to ask any questions to our team.
We will now begin the question and answer session to ask a question.
Sales Press Star then one on your Touchtone phone.
If you are using a speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then two.
Our first question today comes from Frank Mcgann with Bank of America.
Thank you and good day two questions. If I could one I was just wondering if you could speak about the trends you're seeing in the third quarter in terms of.
Demand to spend, especially that's much demand, but but generally you know your your actual generation I'm, especially related to hydro and the hydro conditions and how youre seeing those.
For the for the fourth quarter.
And secondly, I was just wondering if you could comment on.
How the cash flow payments are in terms of timing coming from can Mesa currently.
Well I think right.
I think I want to mention is that am I understanding.
One of last year.
It's mainly grieve.
These decreases the compensated by a strong increase in terms of for eventual demand customers are consuming 10% above the level. They had last year and then what is.
Affected is industrial and commercial demand.
The same extent.
Regarding.
What we are seeing is a bereaved fleetrite all Uh huh.
In fact, we had that duration, which is 21% no the normal level for how.
Now for Hydro EPS.
Our hydro power plant.
David the situation is more.
In terms of demand we are seeing some progress on this kind of covering EPS.
With a fixed fee realization at the current time, but the speed that we had last year.
For sure we expect as say the changes I.
I mean, the governor introduce in terms of regulation now.
To help kind of flick.
All right I know.
That increase but the effect will still be there for for for a couple of months at least.
Oh, I don't know if not equal.
And now let me dig me on so that's it from one.
Yep.
In terms of Fame income you say is it is there.
They can you.
The increase or the government the tickets for your friend or if you're getting the budget or they stop to leasing.
So energy if the payment flows there.
We have a reduction in days AFFO.
The day, we are asked previously.
Recent budget week.
Around 44 days of delayed animal right.
Right now we are in 30 days of the late in the in payments over payments.
Sure of course, we are still have that 30 days related but we are better than.
One month or two months ago. So.
And the good trends there that want to maintain that.
That.
Not that increased that quanta.
Quantity of days of delay.
They are receiving it.
More money more flow and and I think with that we can still.
Continue with these delayed until the firm and convey the judgment that they they are saying.
In 2021.
Okay. Thank you very much.
And again, if you have a question. Please press Star then one.
Our next question comes from the tie us lessen that whereas Aaron.
Mira.
Hi, This is Mike Kozak from your partners.
Thank you for taking this question.
I have two in fact, the first one is.
Yeah, Hi coefficient do you expect to see seeks to be unopened cycle expected to have a a height.
He's got to factor and the second one is if you could give us more color on capital expenditures in the remaining you know this year and somebody's going to want thank you.
Well I wouldn't after the first two.
Yes, I will answer the first question.
Sure the operation in open sales picked up no dispatch the demand is who now because of the current scrap and.
Yeah the demand there.
<unk>.
<unk> offer we have on day on the renewable side. So we expect a very low batch at s.
No Frank mentioned, Boston and after a moderation of that.
You when it's our pace on availability not on these batch. So this you need operating and no I think we will contribute with a capacity to best men and Peter.
I mean, they did see how much like the comp.
She affected due to occur during the first half of next year.
At Fernando answer the second one.
Thanks, Okay in terms of Capex there the only reason.
Having already under construction I, certainly don't think sets for dimension there for them.
Yes.
The the last 2020.
Seven minutes left and got big and they remain important the GAAP EPS for the first board.
Oh two.
Well, it's big they wanted to be.
Yes.
In terms of their renewable.
All that in the last Uh huh.
Under GAAP.
My one which is there is something over the man.
The last quarter of this year, we have a 50.
No all ours I think.
Portion of that.
Around $6 million.
Okay.
Clearly, though.
Or for expansion on the they're not a while that we go in terms of mundane answer around.
15 million per year.
Thank you.
You're welcome.
This concludes our question and answer session I would like to turn the call back over to Mr. Roberts for any closing remark.
Okay. Thank you to everyone for your interest Central Park.
And Chris you Carlos for any information yet that you may not have had great.
Okay. Thank you.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.