Q1 2021 Enel Americas SA Earnings Call
Good day, ladies and gentlemen, and welcome to Anil Americas first quarter 'twenty 'twenty. One results conference call. My name is Ilene and I will be your operator for today at this time all participants are in a listen only mode.
Later, we will conduct a question and answer session and instructions will follow at that time, if anyone should require assistance. During the conference. We Express Star then zero on your Touchtone telephone.
Our easiest conference call, we may make statements that constitute forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995. These statements could include statements regarding the intent belief or current expectations of annual Americas and its Jim.
Management Wedbush, Thanks to among other things.
Americas business, Glenn and I'll Americas cost reduction plans trends affecting internet Enel Americas financial condition or results of operations, including market trends in the electricity sector in Chile or elsewhere.
Supervision and regulation of the electricity sector in Chile, or elsewhere, and the future effect of any changes in the laws and regulations applicable to Anil Americas or its affiliates.
Such forward looking statements reflect only our current expectations are not guarantees of future performance and involve risks and uncertainties.
Actual results may differ materially from those anticipated in the forward looking statements as a result of various factors. These factors include is decline in the equity capital markets of the United States or Chile.
An increase in the market rates of interest in the United States or elsewhere adverse decisions by government regulators in chiller or as elsewhere.
And other factors described in Enel Americas annual report on the form 20-F, including under risk factors.
You may access our 20-F on the S. E T website Www S E T golf.
There's are cautioned not to place undue reliance on those forward looking statements, which speaks only as of their day Enel Americas undertakes no obligation to update these forward looking statements or to disclose any development as a result of which these forward looking statements become inaccurate.
I would now like to turn the presentation over to Mr. Rafael de La Hudson and all Americas head of Investor Relations. Please proceed.
Thank you Janine will talk to me, maybe some day came on board.
The lunch break until the first 2021 results presentation.
And the last one people free Investor relations of the company in front of Americas.
The covenant light she really wants video, we see our CFO will be presenting the main figures from these periods first quarter proposed google's on 'twenty one net.
We remind you that this presentation will fully of light heavy noteworthy of low weighted to the company's website.
And in the presentation, we will have the usual Q&A.
I'm pleased to be named data about these questions can be made only from the telephone lines now.
Now let me handle what are they called.
Start by outlining the main highlights of the BDO.
My bedroom.
And he's already.
Thank you Rafael good afternoon with the body.
The first quarter of 'twenty, one we have seen a recovery there and still turning to sales and distribution business in Brazil.
I'd like to remind you that on the first quarter 'twenty 'twenty only March was impacted by COVID-19 why I'm. The first guaco it's.
It's affected the food Walker at the same time was that we haven't seen that Adam adjustments have been positive photos and it really started.
Started by six points zero to four simple average in March.
And then Scott I increase at eight points to 95% on average a few basic goals.
Just effective April onwards in kids on Seattle It.
In terms of EBITDA, we had bad debt.
Share of doing well.
Oh boy.
Seven.
But most of these decrease is explained by currency devaluation without considering FX effect, our EBITDA decreased by three 3% mainly explained by lower results in the generation business. We also want to highlight that our consolidated revenues were in line with last year.
Positive sign of recovery from the effects of COVID-19 or.
Our results at the same time, we were able to move our that's helpful. Mainly due to low word networking capital and lower financial expenses.
As you all know last week, we had our annual shareholders meeting and we are glad to see debt are moving debt.
We are moving ahead in terms of gender equality as two women were appointed as director is off the campaign during.
During the period we.
We had a net great one hour credit rates are from feller rate, which consider debt the merger with debt.
The Americas.
Is a credit positive.
And we will strengthen our business profile the risk of our operations and give us higher growth capacity.
And did things the merger who could buy our shareholders meeting in December was finally completed on the first and the tender offer concluded on April 13th, leaving our controller shareholders. We've done the two 3% on the ship now.
We are looking forward to low the challenges and opportunities that will have a meeting space.
Starting the consolidation of the Americas from the what the June 2nd quarter is going to do anymore.
Let's move to the following slide to see the evolution of currencies demand and collection.
Luca guarantee so for significant devaluation against U S dollars during this quarter, except for Colombian peso.
It'll be greeted 43%, while Brazilian reais and.
In Peruvian solve dropped by 23 per cent and needs per census practice regarding electricity distributed.
And to see a recovery in Brazil, which increases by 1%.
And Argentina degrees of bike seats consent, while Colombia, and Peru likely to decrease by one per se.
In terms of collection, we had any Portland with COVID-19.
10.21 percentage points.
A slower recovery in Colombia, with the one point to one person data points on the other hand refuge likely decreased by 0.77 percentage points in Argentina dropped by four nine percentage points low let's have a look on our investments for the beauty in the next slide.
During the first three months of these.
Our capex decreased by two 7% compared to the same period.
Two last two.
Of last year.
Reaching 291 billion West Coast. This includes a negative impact coming from currency devaluation.
Minus $52 million without these effects capex would have decreased by 15%.
Joey.
Our strong commitment with the accounts with speed, which we are present.
Our investments were mainly devoted to maintenance capex.
In distribution business looking to improve service quality.
From a geographical point of view 50, corporate simple investments in these quarters were made on our Subsea Jersey Bridge, you from which most spark came from distribution business. Finally, it's worth to highlight that almost 95 per cent for Capex is that the E. S. D G related confirmed.
<unk> focused in ESG now, let's analyze our operating highlights on the following slides.
In generation business, our installed capacity remains the same as last year at 11.3.
<unk>.
From which 55% in title.
Net production in the first quarter, reaching nine seven terawatt hours.
A reduction of 9% compared to the same period of last year explained by lower generation in Brazil, Argentina, and Colombia are generation sales decreased by 4% in the quarter, reaching 14, two terawatt hours explained by reductions in Argentina, Brazil, and Colombia, mostly affected by lower demand.
Depending.
Now, let's analyze our network business.
Slide six.
Theresa did distribute the region there.
Theory, 0.1 Terawatt hours.
The same level as this year as in the same period last year.
Regarding number of customers, who had an organic increase of around 360000, mainly explained by an increase in its on Baltimore and everybody else.
Good day and set in Colombia.
In terms of quality indicators Si E and Daiichi.
Or the maintenance flagged in.
In all the countries, except for Sayiid, Brazil, mainly due to weather conditions in some phone.
On the other hand, and non gene lawsuits decrease would be the full Congress as a consequence of the economic situation in the region.
Due to COVID-19.
On next slide we will see Enel X and retail businesses.
In our legacy business, we had a solid growth and charging points foldable bikes Daniels and bone Goodbye.
While the credit card business stayed in line with last year. This performance shows the strength designate relative on software and our legs in there and that's a transition in Latin America.
The other hand micro insurance decreased by 39% as a consequence of degrees in door to door campaigns due to the COVID-19 pandemic.
Regarding retail business the number of delivery points increased by 38%, reaching 3963 and the energy sold amounted to five terawatt hours, which means 26 per cent decrease.
Let's now have a look at our ESG highlights and become two lives.
Following our Falcon sales contributed with the United Nations sustainability development goals.
We have been supporting our community with different projects, which in total have a positive impact more than six 7 million people.
The recently completed merger with BGP Americas puts our company in an excellent position to lead and installation.
<unk> contributed to reducing our future editions, which is.
Our focus in our strategy.
It's also perceive it as a positive step for credit agents agencies.
Which is reflected in the aggregated gift, giving by fallow weighted some weeks ago.
Finally as mentioned before we believe an important step in terms of gender equality.
We now have two women as part of a broader corporate actions voted by our shareholders and Norwegian recent the general shareholders' meeting.
Now, let me comment about the financial results for the period starting from slide number.
Nine.
EBITDA reached Richard the $741 million, 12.7% lower than the same period last year.
This is mainly explained by the negative impact of currency devaluation in the four countries, where we operate especially in Brazil and to a lower result in generation business due to lower sales in Brazil, and Argentina without considering FX effect EBITDA would have decreased by $3 three per se.
Group net income decreased by 11, 8% reached $183 million, which is mainly explained by the lower EBITDA above mentioned, partially offset by a verified nisha results, we don't consider that negative impact from FX net income.
Would have decreased by one eight per cent.
Funds from operation per Boe.
In the field, which is 186.
Nearly $1 an increase of 46 six per cent compared to the same period of last year, while net debt decreased by 2%, reaching $4 5 billion U S. Dollars, we will analyze the free cash flow and debt later in this presentation on the company's life will.
See EBITDA evolution index breakdown.
Starting from $848 million of EBITDA on force of the first quarter of between we'd see debt like driver represents the main explanation for the EBITDA reduction with degrees of $38 million.
Thermal generation and networks businesses, it's likely degrees, while retail and then the lax showed a better results, reaching a total EBITDA, excluding FX impact of eight to 824 million bonds, which is 3% compared to the first quarter 'twenty day currency devaluation.
<unk> had a negative impact of $7 million to $9 million considered this plus the other impacts we get to our final EBITDA of $741 million per cent lowered in the same period of last year.
On a country basis, we see that the main contributor for the consolidated EBITDA was Colombia.
43%, while Brazil would presume.
36% grew 18% in Argentina.
Mm mm 3%.
Let's have a focus on generation and networks businesses on the slides.
Kevin.
Well it.
EBITDA in generation business decreased by 16%, mainly explained by lower results in Argentina and Brazil.
In Argentina, we had lower generation, mainly in Costa Anita.
As a consequence of lower demand.
We were also affected by lower prices and higher costs due to inflation.
In the case off with.
We had a lower hydro generation and lower energy sales, mainly in country weighted Rhode Island Opex also increased with indications of Brazil.
Devaluation has a negative impact of $25 million.
As shown on the prior sharp, Colombia contributed with more than 50% of generation EBITDA.
Let's see networks business in the next slide.
It would be by networks business dropped by 80 per cent. However, most of this decrease is explained by the currency devaluation, which had a negative impact of $60 million net op effects, Brazil, Colombia, and Peru improvement, there EBITDA compared to the past year.
We are glad to see a recovery in terms of demand in Brazil, mainly Brazil, real envoy assets, which increased compared to the first quarter in 2020.
Vision as we mentioned before tariff adjustments in annual really net and setup and.
Implied an increase on our California.
As mentioned before.
Yeah.
We'll also low.
Yeah.
Hello.
I earlier on.
Please go below.
Okay. Thank you so much.
Sorry for the interruptions in the auction well I am explained in slide 12.
Again, we are glad to see a recovery in terms of the mainly Brazil, mainly volume going to us, which increased compared to the first quarter 'twenty Duane.
In addition, as we mentioned before tariffs adjustments in Rio and I know Sarah imply debt an increase in our tariffs as mentioned before EBITDA and networks business came mainly from Brazil, and Colombia, with 53 and 32% respectively.
Contributed with a 14% in Argentina, 1%, let's analyze our cash flow in the next slides.
<unk> or funds from operations amounted to $186 million on the period, starting from an EBITDA of $741 million.
And this result includes a negative net working capital in the period.
So in an amount of $362 million 27 percentage lower than the same beautiful Alaska, yes. The improvement in net working capital was due to lower bad debt provisions and lower payments, including the beauty Tech.
Pay the doing the bureau amounted to 185 million barrels, while net financial expenses amounted to minus <unk>.
$7 million.
After investments for 'twenty.
$291 million as indicated in previous slides, we get a free cash flow of minus $105 million. Let me now analyze the debt of our company in the slide 14.
Gross debt amounted to almost $5 7 billion, an increase of four 3% compared to December 20, Duane.
The effects are.
<unk> accounts for a debt reduction of more than two 4 billion bonds due to the fact that debt most of our debt east in local local accounts.
This was partially offset by debt increased mainly in Enel <unk> Enel goias in Rio and MLR Americas are holding.
Looking at our net debt starting with a four point of $4 billion of.
Last year, we have the mine was $105 million of free cash flow as mentioned in the previous slides.
Net dividend Spaisman paid amounted to $124 million and active financial receivables for minus $16 million.
And the effects of FX effect of four minus 123 million and total net debt reached $4 5 million billion U S dollars, an increase of $92 million in terms of guarantee in country, we see debt, Brazil remains as the largest contributor.
While the debt at holding level represents 20% despite an increasing during these periods.
Finally regarding the cost of debt, we can see an increase for disputed going from four 9% to $5. One per cent, mainly explained by a growing trend in the indices are associated with the variable rates of debt in Brazil. This is partially offset by.
Data rate conditions in the refinancing of debt in Brazil, Colombia, and holding now.
Now on the following slides, let's see some indicators in connection with immersion with AGP Americas.
On slide 15, we can see debt after the integration of <unk> It would be bought Americas assets into into our company.
Our installed capacity increase it or will increase in all of them from April wound warrants by 33% moving from the previous 11, three gigawatts to 15 Gigawatts.
Our capacity now is combined and by 47% of hydro 11% of win 9%, both solar and thermal represents only.
33.
I'm, sorry, three an important reduction compared to the 45 represented before the merger.
In addition, we have three one gigawatts of capacity, which is currently under construction.
On the following slide we will see a pro forma of our results considering Egypt be Americas assets for the first quarter again, just a just a florida pro forma.
It was just a net.
Diction of PGP Americas assets were two six terawatt hours, which represent 21 21 per cent of the production of Enel Americas, considering the new capacity, we would have reached 12 three.
Terawatts hour in the periods.
Regarding sales Egypt, the Americas would have contributed with nine Terawatts hour.
21% of the energy sold right in Americas with these we would have reached total sales of 18.1 terawatt hours.
At 22% increase compared to the first quarter up during the day.
Maybe Dallas AGP Americas in the first quarter was $95 million, meaning that we would have reached <unk> 836 million Boes as total EBITDA in the first quarter instead of 741.
Our net debt.
To the EBITDA ratio would have remained the same as net debt of AGP Americas is currently very low.
Finally in terms of Capex, considering the past it was often you'd be Americas for $187 million. We would have reached a total capex capex of $478 million from week, 42% correspond to renewable generation.
To conclude this presentation with some closing remarks.
We think the difficult times debt, we have debt we are facing we are.
Easily working to mitigate any potential impact and doing our best to help our communities in the places that we operate.
This quarter, we saw a recovery in terms of demand in Brazil, and solid results in network business.
Despite this difficult environment, we have been able to improve our cash flow in a significant way, while reducing our gross debt.
Finally, we are beginning a new phase for our company.
After the completion of the merger with BGP Americas, we are confident that these will bring benefits to our shareholders.
Please Rafael.
Yes, well thank you for the explanation very clear.
I know it bugs they go to low but April for the Q&A session, bringing total please proceed.
At this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad again that is star then the number one on your telephone keypad low ball.
For just a moment to compile the Q&A roster.
Yeah.
Yeah.
Yeah.
We have our first question coming from the line of how he asked a lot is with Mediobanca. Your line is open.
Hi, good morning.
Thank you for the for the presentation I have three quick questions. The first one someday if it for improvement, but we have seen during the first quarter. So if you can elaborate for that debris sales for the improvement in the ethical EBIT net working capital drain during the first quarter any debt is sustainable.
By the year end. So the question is related to the impact that the improvement in net working capital and free cash flow generated during the day first quarter that would be the first question. The second question is on its like number three now.
Talking about our collection, we have seen.
Some significant recovery in Pedro on on it is like a slight worsening in Brazil. So you can help us to understand the reasons behind that improvement in video and worsening in packaging.
And then the third question is on the on the energy losses on dislike them, but fixed debt has been quite of a significant.
Deterioration in any heat at last year's level in all geographies. So you can help us to understand dynamics here, what we may expect as managerial decision to improve the situation anything.
Thank you Javier Thank you for your questions well, let me tell you that the S. S. Food we have the following impacts let me set a debt.
The first one is not recruitment right one on Duane Duane D. We are both gone payments from for suppliers from 2019, two more bit more a postponement of payments.
From 2019 to 20, Duane D. So EBITDA.
Part of this improvement is because on 'twenty 'twenty was a very effective let's say with the with the payments from 2019, especially for further capex debt.
Debt do we made that we executed in the end in the last quarter of 2019 right.
So this is this is this effect is more or less.
30 per cent of the of the of the improvement in terms of our first half full duty this duty dispute.
But the positive thing is debt this improved momentum that we have in collection.
Seems to move in a very good way, especially in Colombia, and in Peru, and also in Brazil, spiked that sort of a little bit lower in Brazil, but it seems that the recoveries is consistent.
Let me tell you debt, especially in some some regions like.
Real and and in Argentina, we are not allowed yet to disconnect our clients that didn't base. So our our vision is that since the situation is ease of becoming and we are we are estimating becoming more let's say normal no.
In terms of of the pandemic. We are we are able to recovery and accelerates the collection.
Recovery and a third of the issue is the lower payments in terms of our financial expenses. So.
This.
These three things the collection is the one that needs to be COVID-19 occurred we want and we are confident that we'll be moving these way for the next quarter.
Payments in terms of our suppliers of course it tomorrow.
Nishu for the first quarter, the Duane Duane and in the financial costs. We are actively working in the in the liability management.
In order to improve the situation okay.
In terms of collection jumping in chewy or your second question debt more or less what I explained it to you.
Argentina, basically Argentina in real not only distribution, but real and a real since we have so we have more restrictions did not disconnected people and debt to an update.
We are of course operating in giving firstly facilitating payments and so on.
Installments in order to recover but we are not fully deployed with our full potential in terms of our market discipline, yes, but.
But again are in Colombia, and Peru, we add up but we are recovering and this is more or less compensated and these are these effects and the other distribution in Brazil that we already book I'd like some volatile for example.
In terms of losses.
Disease.
An important unimportant the issue regarding.
The pandemic debt, where you observe that in the in the market.
We are.
Regarding the is especially regarding the normalization, what what we call a we have a.
All of our systems to detect.
The commercial commercial.
Losses right.
But we.
We are not fully operating in these in these in these especially in these in our distribution due to the coffee the restrictions.
We know we know exactly where it is happening.
But again since we did not the operation is low my lives. It will recover these with the with our our operations and are in and in a normal lives and good discipline in the market like we did in the in the past, but most of our debt.
Well the main concern is of course, Argentina.
Right. This is the highest.
The increase.
But it's related to the impossibility to do normalization of the of the losses.
The other the other distribution companies again, a Brazil that is a little bit higher.
But it's it's it's a concentrated in Rio and in some in some box in a in some follow but most of them in Rio due to the restrictions for the pandemic, so which means that that.
As soon as we can we can operating normally operated will will be cohort. These are these losses.
Okay. Many thanks and good evening.
Youre welcome.
We have our next question coming from the line of Andrew Mccarthy with clarity Corp. Your line is open.
Many thanks I'm good afternoon, Aurelio Rafael Thanks, very much for the coal.
First question I remember from the last quarterly call. We had you know.
A question on the debt the EBIT dollar outlook for this year or not.
I think there earlier you were talking about maybe a range of four to $4 $2 billion, depending on the day when when the E. G. P. Americas deal. Finally closed I was just wondering if you could maybe you know in light of you know having advanced but further along the year now if you could give any sort of update on.
That's all.
And then and then in terms of my My second question, just going back to the you know the obviously the future of the business in Colombia in the D. C. You've got ongoing negotiations with the G E D.
Wondering if you could maybe provide any color or update.
How that's how that's going.
What do you have any idea of timing of when that should likely complete.
Yeah.
Thank you Andrew for your for your question.
Well, we are we maintain our these range of Oh for EBITDA that we that we told you we are towards the market and the lifestyle last quarter.
Of course, we need to see the evolution of currencies do we.
We are in this in the economic view our exposure to these to these effects, but again in terms of cash flow.
It is almost neutral because our debt is mostly in local currency, our capex, mostly 50%. These are yes.
E Zone, our services and local services and local growth, which means that in terms of cash flow. We will have a balance in terms of cash flow.
D well balance it but we maintained at this four to $4 2 billion.
A rough estimation.
In terms of offer these up for this year.
Let's see the how is the volume in terms of <unk> and <unk>.
Terms of Colombia.
Well Columbus facing a.
A difficult, let's say some situations regard that there there are debt.
Tax reform and so on and and the debt.
That eventually a downgrade or some effect, but we are confident are we operating Colombia more than 20 years. We are confident that the country have the company has all of the fundamentals through two two best through these this situation and keep.
Keep a very good place for investments there to grow the solid the regulation are very solid solid due institution. So are we.
Our confidence in the country and that's why we added advancing you you said you mentioned the hour our discussions with the.
Group with vintage a day, but with that.
Which is that defense and a very good and positive and very constructive away.
And we hope.
As soon as possible, we can we can reach.
Lots of.
These deals going on.
As we explained it in the in our relevant facts.
The big emails per year.
But we are advancing a very good and positive.
Construction of our moods.
And we have confidence.
Debt.
As soon as possible, we will get them.
A very good agreement to the group with interest, but we're trying to enel Americas and to our shareholders.
And again.
The company.
Very important to us to keep on growing in this in this country, which is I have an important and a very good potential. Despite the visa situation. The country is facing right now, but we believe it is still that are locked in this in this country.
Hum.
Thanks very much earlier.
Just one follow up question, if I may just on the on the Capex.
You know, obviously with the with the pandemic.
I guess, it's not always easy to.
With all the you know the plant was supposed to get out of the network business and expanding the renewables business. Just wondering your day for them from the ground up you know what you're seeing there is there any sort of particular delays or are on that side that might be worth for masimo.
Okay.
Andrew.
No you are not seeing delays. So we are confident in our plan.
We have a vision that we have a very boosted our vision and our long term vision of the to be positioning in the index in the all of the value chain of these of these industry. That's why we made the merger. So we are we want to move forward with the renewable plan.
And also a modernization.
With our distribution grid, so we maintain our blends and and.
Of course, the day coffee, we have some are some are some restrictions in terms of our field operation, but we trained our teams and our we are very prepared to move forward because it's important to be successful in our vision of these success utility for.
The next year, so we maintain our our our projects on our our deadlines and our our guidance in terms of Capex.
Wonderful thanks, very much Eric.
Youre welcome.
I really I'm sorry, we have received final question from total magical internally with Scotiabank and she is having some problems with the connection of the gross series related to the Banco do Brasil.
We still do you see any liability cash coincidence that Fortunately 2021 will be the same study.
You can tackle lead ultra for this year.
Our distribution companies now to get to ensure a situation of holiday season competition in the country.
Yeah, good assets the last couple months.
Yeah.
Well.
First of all the contract will be you know that we got the financial point of COVID-19 and is it still pending the discussion for the economic recommendation of Quanta coffees right.
So the first one that we disburse it that we received in July more or less 500 million.
Dollars and in depth in that period, and we didn't have yet we didn't have yet the economic regular position up there. So we are discussing with the regulator. These issue and also we are discussing discussing because a it is a reality.
Our countries.
In Brazil.
In this case you know we are still facing a.
The situation of COVID-19 of the pandemic so are we at them.
Probably the the demand we are recovering.
But on the same hand these especially these are these are the situations to not be possible to disconnect guidance in increasing losses and increasing.
Affecting the collection. This is this is something that we are discussing with the regulator, but this is the same package of the economic recognition right.
That should have a final let's say a final figure of Rhino number and we are confident that at the end of the debt the regulator.
Being sensible to these of course.
Taking oh the debt.
Taking consideration the.
<unk> of the country, the country and and and.
The inflation effect and so on but as I told you the.
The readjustment Sarah are being are being done, but we see the readjustment of Rio for example of sat Act.
And and Yeah. We are addressing this this distribution distribution of coffee at a low.
Let's say.
Higher impact in the discussion of economic equilibrium.
Debt is moving forward.
Forward that with our with the regulator as.
It was the claimant before okay.
Okay perfect.
Hey.
Kratos I can't see any day of the screen and we do not have more questions Little day Fidelity is so hey, I conclude the results conference call.
On the thank you very much weighted won't eliminate it might be that the best ablation.
Really since gaining share liable for any though that you may have.
Thank you very much.
This concludes today's conference call. Thank you for participating you may now disconnect.
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