Q4 2020 Atlantica Sustainable Infrastructure PLC Earnings Call
Welcome to your conference. Please continue just on by your conference will begin shortly.
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Welcome to atlantica cause full year, 'twenty 'twenty financial results conference call.
On today's a sustainable infrastructure company that owns a diverse portfolio of contracted renewable energy power generation electric transmission and water assets in North and South America and in certain markets in EMEA.
Just to remind you that this call is being webcast live on the Internet and a replay of this call will be available on Atlantic Coast corporate website.
Atlantica will be making forward looking statements. During this call based on current expectations on assumptions, which are subject to risks and uncertainties.
Actual results could differ materially from our forward looking statements if any of our key assumptions are incorrect or because of that the factors discussed in today's earnings presentation or because of other factors discussed, including the risk factors section of the accompanying presentation on our latest I'm in our latest reports and <unk>.
Filings with the Securities and Exchange Commission, all of which can be found on our website.
Lunch cause does not undertake any duty to update any forward looking statements.
Joining us for today's conference cool or Atlantica, CEO, Santiago, <unk> and CFO Francisco Martinez Davis as usual at the end of the conference call will be open the lines for the Q&A session I went out pass over to Mr. <unk>. Please go ahead Sir.
Thank you very much and good morning.
Thank you for joining.
US today for our two person on 'twenty conference call I will start with a few key messages. We have closed 2000 on 'twenty one.
We've a very strong performance across our fleet on.
And a five 5%.
Got the growth versus the year before.
In terms of growth and 2020, we closed over $300 million.
And equity investments.
But more importantly for 2021, we have already agreed approximately $280 million.
New equity investments, including the acquisition of three new renewable energy assets.
With this we are initiating our two question on 'twenty, one garvey target guidance in the range of $220 million to $240 million and we are setting midterm.
<unk> per share.
Growth target in the range of 5% to 8%.
And finally, we have received and the last couple of months top ESG ratings from three different raping and disease.
I will now turn the call over to Francisco, who will take us through financial results.
Yeah.
Thank you Santiago and good morning.
Please turn to slide number five where I will present, our key financials for full year 'twenty 'twenty.
Revenue in 'twenty, and 'twenty reach 1000, 13 million stable versus the previous here and adjusted EBITDA, including unconsolidated affiliates decreased by three 1% to $796 million.
Regarding <unk>, we generated 201 million and.
And the full year, 'twenty and 'twenty, an increase of close to 6% year over year.
In addition to our cash available for distribution.
And full year, 'twenty, and 'twenty, we generated $260 million and one off cash.
On the three project debt refinancings.
Please now turn to slide number six where you can see that in 'twenty and 'twenty, we had had a very very strong cash.
Cash generation.
<unk> P was 201 million, but the cash generated by the assets and reality with $461 million.
And atlantica most of our project debt is amortized over the life on the P. P. A.
461 million is therefore, the cash generated by our portfolio of assets before project debt principal repayments.
And none of that amount, we have used over 260 million to repay project debt principal.
Let's now please turn to slide number seven.
We will review our performance by sector and geography.
And North America revenue remained stable at $331 million.
And in 'twenty and 'twenty.
The decrease in EBITDA was mainly driven or driven by higher operating expenses at our solar assets and the region.
And South America revenue and EBITDA increased by seven and 4% respectively. Thanks to the continued solid performance of our assets.
And with higher production from our wind assets and high availability level and transmission lines.
And also due to the contribution from recently acquired assets.
Revenue and EBITDA and the EMEA region.
Slightly.
Looking below at the results by business sector, we can see similar effects.
And renewable energy revenue and EBIT decreased due to the RIN sales previously mentioned.
And efficient natural gas revenue and EBITDA decreased mainly due to a onetime adjustment with no cash impact recorded and ICT and 2019.
Our transmission lines continue to show very good availability level, which.
Together with acquisitions and explain the increase in revenue and EBITDA.
And finally, and our water sector revenue and EBITDA increase.
Thanks to the contribution from our third water Desalinization plant that we started to consolidate and the second quarter of 'twenty and 'twenty.
Moving on to the following slide number eight <unk>.
And this provides an overview on the key operational metrics of our assets.
Electricity produced by our renewable assets reached 3244 gigawatt hours and 2020.
The increase versus 2019.
Looking at our availability based contracts.
Once again.
Tea continues to show solid performance.
And finally and transmission lines and water and water. The two other sectors, where our revenue is based on availability and we've continued to achieve high availability levels somewhere around 100%.
Let's now move to slide nine to walk you through our cash flow for full year 'twenty and 'twenty.
Our operating cash flow and for 'twenty, and 'twenty reached $438 million.
Showing close to a 21% increase versus 2019.
Mostly thanks to an improvement and variations and working capital.
In addition, and 'twenty plenty, we paid approximately 267 million before the acquisition of <unk>.
The tax equity invest tax equity and Kristen So Lana.
From an accounting perspective, this amount is classified a financing and cash flow.
Financing cash flow and 'twenty 'twenty also including the net proceeds from the debt refinancings and corporate debt financings on a schedule project debt repayment of approximately $260 million.
Dividend payment and so about 192.
And $162 million and proceeds from the underwritten public offering closed in December 'twenty, and 'twenty, all and all the net change and consolidated cash and 'twenty 'twenty was an increase of 295 million approximately.
On the next slide 10, we would like to review our net debt position.
We closed 2020 with net corporate debt of 659 million similar to that over the previous year.
With this on net corporate debt to cap the pre corporate debt service ratio stood at three times.
Thanks to the corporate and project debt.
Refinancings closed during the first nine months of 'twenty and 'twenty, we had been able to extend our maturities and so today, we do not have any significant corporate debt maturity until 'twenty and 'twenty five.
Our average corporate debt maturity stood at approximately five one years as of December 31st plenty plenty.
In addition, we have $415 million avail.
Available from our revolving credit facility.
Which together with our corporate cash on hand of $335 million represents a total liquidity of more than $750 million available to fanatics and other investments.
Net project debt as of December 31st plenty plenty.
And with 4000 $704 million.
I will now turn the call back over to Santiago.
Thank you very much Francisco.
Page 11 and 12.
Wanted to see that we have continue doing our homework regarding ESG.
We have improved our.
Key health and safety Kpis, we have avoided five 4 million tonnes of Cotwo, and we have continued improving and implementing and.
Best practices around corporate governance and <unk>.
And we shall activities.
Additionally, you will see that we have recently received the top ratings from three different ESG rating entities, including in February and sustain Olympics, who has rated US again for the second consecutive year as the top company globally in ESG risk rating.
Within both the renewable power on the utilities segments and extraordinary achievement.
CDP.
Given us and a minus rating among the leaders in our industry and <unk>.
Finally in January Atlantica has been included in the global 100, more sustainable companies index by corporate Knights ranking 12 globally and.
And second within global power generation.
Moving on.
To talk about 2021.
You can see on page 14 that last year, we closed over $300 million.
In acquisitions and investments.
And more importantly on page 15.
We have already agreed investments for around $280 million for these new year day.
These investments include the acquisition of coastal <unk>.
Renewable energy assets and California.
Category District heating assets, we announced a few months ago.
And our first solar plant.
In Colombia, we also expect to.
And to invest in other assets, including Chile.
<unk> two.
Which is our second investment through a renewable energy platform.
Locally.
Regarding coastal.
And you can see that is a 135 megawatt.
Facility and California actually it is the third largest geothermal plant in the U S and provides base load renewable energy to the California. ISO. This we believe is extremely important during the last 10 years renewable energy has been about providing.
But.
Intermittent power.
Now the challenge is to provide renewable energy solutions that can provide that.
His load or close to Baseload and.
So is part of that solution and <unk>.
Eight such as California, which targets as we all know zero emissions, and which has already or enjoys already.
Hi.
Penetration of intermittent solar power. Therefore, these assets these baseload renewable energy assets.
We believe.
Very high long term value.
And the state that does not want emissions and needs to turn on.
On the light 24 hours per day.
Additionally, the asset has three ppas signed with three investment grade off takers.
With on average.
19 years.
Contract life.
The asset is located in southern California fairly close to our existing solar assets in California and Arizona.
And on operations and maintenance is on will continue being done in house.
And with existing team.
Total investment is expected to be approximately $170 million on closing is expected in the first half of this year.
Yeah.
Talking about the other main acquisitions already agreed from 2021.
And in October last year, as previously announced we reached an agreement to acquire Calgary district heating and.
And I said and operation with 20 years of average weighted contracted life.
Additionally.
And we recently reached an agreement with Algonquin to acquire a 20 megawatt solar assets in Colombia with a 15 year PPA in place closing is expected to take place after the asset reaches commercial operation expected by mid 2021.
Recently Atlantica agreed to co invest with Algonquin in two additional solar plants and Colombia currently under development.
And finally in 2021, we have closed our second investment.
Through the renewable energy platform, we created and Chile.
These new assets is a 40 megawatt solar plant with partially contracted revenues.
As a result of EPS.
We are very optimistic regarding growth prospects in 2021.
Moving on to page 18, we can see that atlantica has been able to grow with CV and per share significantly in the last few years and on page 19, with the new investments announced.
We expect to continue doing so in 2021, even though not all the investments I mentioned, we'll obviously have a full year effect in 2021, our targets for the year.
And in terms of EBITDA and.
And adjusted EBITDA, including non consolidated affiliates to be and the range between eight and 20 on a $60 million and in terms of coffee our target is to be and the range between 220 and $240 million.
Yeah.
If we talk and now beyond 2021, you can see on.
On page 21.
We do see significant potential.
Potential in terms of growth.
Accretive investments in the regions and sectors, where we operate.
Given that pipeline of opportunities, we now target potential investments equity investments of approximately $300 million.
Per year.
Combining three sources in first place organic growth.
Which can be delivered through the optimization of the existing portfolio through escalation factors of many of our assets on through the expansion of some of the existing assets. The supplies, mostly two transmission lines, but we also expect to have opportunities in the midterm to expand on Repower and some of our ROE.
And we will energy assets.
And the second place, we expect to grow by investing mostly with partners, including Ags in assets under development and construction.
And thirdly, we expect to continue growing through a third party acquisitions and some cases these will be small.
<unk> net.
Say profit dairy opportunities on the other cases, it will be through larger transactions like the one we have announced to date.
Our target therefore, and as I mentioned before is to invest around $300 million.
Every year, although in 2021, we obviously target more than that.
Yeah.
Moving to.
To page 22.
We can see that based on the previously mentioned opportunities we are setting and.
Mid term.
Kathy.
Growth in terms of.
<unk> per share growth targets in the range of 5% to 8%.
With that we conclude today's presentation, we will now open the lines for questions. Operator, whenever you want we are ready for Q&A.
Thank you, ladies and gentlemen, if you wish to ask a question. Please press star and one on your telephone and wait for your name to be announced should you wish to come to your request. Please press the husky.
And so star and one to ask a question.
You have a question from the line of Julien Dumoulin Smith of Bank of America. Please ask your question.
Hi, good morning, Thanks for the time and the opportunity and congratulations on the update.
If I if I may.
Santiago you talk about 2021, and it sounds like you've largely identify the targets for 'twenty, one, but where are you and identifying targets for 'twenty, two and 23 as you talk about especially you organic opportunities right those that sit within your portfolio, how well defined all of those at this point and time if you can.
Add some details as to how far down the line you are on on on that visibility.
Sure Thanks, Julian and good morning.
Jim.
Regarding 2021, as you said, we and.
We are announcing today that.
And the $300 million target I talked about are we we are.
Close to getting there obviously for 2000 on 'twenty one our target now is to go beyond the 300 and regarding visibility on 2000, and 'twenty, two and 23 opportunities and.
As we show and the presentation at this point and time, we have a fairly high visibility regarding where growth is going to come from.
And in terms of organic growth, including escalation, including.
And some expansion opportunities.
We believe we are going to be having and including some of the other opportunities with partners. Obviously regarding acquisition from third parties, we always work with our pipeline and today its too soon to be very conclusive regarding debt bucket and within growth, but in general we feel reasonably optimistic and we think that.
And the visibility we have is probably as high as we have ever had.
Yeah.
Got it and if I can ask you to elaborate I mean, obviously you've got these three buckets. When you think about where you have visibility ready I mean like not to try to pin you down too much but organic growth I mean, clearly you've got visibility there for the next few years, you would think the development with partners and presumably and you can see.
To that a little bit more and it doesn't that already gets you within the range over the next three years I don't Wanna be two leading forward in terms of where where you sit within this five to eight because you've called it out but the the third party acquisitions seem to be and drive you within the range rather than getting to the range.
Does that makes sense and I just.
You can elaborate on the first two buckets in terms of the line of sight and clarity to at least deliver that at the low end and I suppose is the way to say that.
Yes, so what we are doing today Julien we are setting a target in terms of growth or investment of $300 million.
That's our target not two to 300.
Okay.
And talking about that 300 target and.
And you at all.
Right. So we obviously have more visibility regarding the first two buckets versus the third one the first two buckets represent.
More or less two thirds of the total so we will have basically those two thirds and regarding.
And updates on those two buckets my expectation and Julian will be that over the next few quarters, we are going to be able to give you more granularity regarding some of the specific investments that we are going to be making there. Obviously, we are at the beginning of 2021. So today, we wanted to focus on visibility on.
And I'm 21, and in the next quarterly and the year, we expect to be able to show you with some more granularity there beyond some of the opportunities like Columbia and why do we have already been talking about.
Okay, all right I'll leave it there. Thank you seem very much congrats.
Thanks, Neal and good Julien.
Thank you just as a reminder, it start on one should you wish to ask a question.
There are no more questions coming through on the line Sir.
Okay and then thank you very much everybody for joining and joining us and operator, we can leave it here. Thank you.
Okay.
Thank you that does conclude our conference for today. Thank you all for participating you may all disconnect.
Okay.
Okay.
Yeah.
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Moving on.
And then.
Thank you.
Okay.
Yes.
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