Q1 2022 Enel Americas SA Earnings Call
Good day, ladies and gentlemen, and welcome to Enel Americas first quarter 2022 results Conference call. My name is Gigi and I'll be your operator for today 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 during.
The session you will need to press star one on your telephone. Please be advised that today's conference is being recorded if you require any further assistance. Please press star zero.
During this conference call, we may make statements that constitute forward looking statements within the meaning of the private Securities Litigation Reform Act of 1095. These statements could include statements regarding the intent belief or current expectations of Enel Americas and its management with respect to among other things.
And then Americas business plans, and then Americas cost reduction plans trends affecting enel Americas financial condition or results of operations, including market trends in the electricity sector in Chile or elsewhere.
Provision and regulation of the electricity sector in Chile, or elsewhere, and the future effect of any changes in the laws and regulations applicable to enel 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 a decline in the equity capital Mark.
<unk> of the United States, or Chile, and increase in the market rates of interest in the United States or elsewhere adverse decisions by government regulators in Chile or elsewhere and other factors described in Enel Americas annual report on form 20-F, including under risk factors you may access our 20-F.
On the SEC's web site Www Dot SEC Doc Gov readers are cautioned not to place undue reliance on those forward looking statements, which speak only as of their dates.
And then 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 Rosa and now America head of Investor Relations. Please proceed.
Thank you very much.
Good morning, ladies and gentlemen.
We can deal with the first quarter expectation and Katie Anderson presentation.
Hey.
Mr relationship.
Maybe could you give loans totaled CFO .
Would it be to the same theme Tonight furious over this period.
Let me remind you that this presentation, we followed his life.
Do you have more weighted to the company.
Companies will change.
Following the presentation.
Do you have in Asia.
The new data that questions can be Nathan from the telephone lines.
All right.
We just got it by aligning the many highlights of the PDP to slide number three.
Rafael.
And with the body during.
During the first quarter of LPTA, we had.
Solid results in our businesses.
<unk> Americas boosted our performance in generation basis.
Network business, we saw an important increase in demand in Argentina, Colombia and Peru.
EBITDA increased by 48% during that period.
DJ contribution of UK Americas, and better results in network business Rajeev explained by higher there as well.
Income grew by 100% compared to first quarter of <unk> due.
<unk> data operation.
Sure results.
Regarding ESG.
Glad to announce that we recently published our first integrated annual report sustainability report informed Duane D F for the fiscal year to ADP.
Which are available on our website finally doing dispute we added 36 megawatts of renewable capacity.
Thank you this vintage Chi.
<unk> farm in Brazil.
Last year began commercial operation during April at the same time, we continue working on another two points.
One seven gigawatts for 2700 megawatts of capacity under construction.
Leads to the following slide you see the main macro indicators.
As shown on the left table dealing with currency.
Currencies in Argentina, Colombia, Costa Rica.
Appreciated against U S dollars, while reviewing what the mile I appreciate it in terms of inflation, we can see that compared with first quarter Dana if anyone inflation rate increases in all the countries, except for one day model, reaching a significant level in line with the situation that is correctly.
<unk> seen across the world.
Having electricity distributed during this quarter, we saw an important rule in Argentina, Colombia, and Peru, while with you slightly decreased due to lower economic activity and lower temperature, especially in some volume finally in terms of collection, we have we can see.
We are in a better position in all the countries, except for Brazil, which slightly decreased it goes up but thats, we have an increase of 92% mainly due to deals and upgrading more than one year by declines in Brazil related to the pandemic now let's have a look at the next slide.
Slide five during the first quarter of this year, our capex increased by 91% compared to the same period of last year, reaching 563 million U S dollars.
This is mainly explained by the consolidation of LPG to the Americas and higher investments in network business in Brazil.
So the total amount of 76% was invested in Brazil, reflecting the relevance that <unk> has for our future growth in terms of business, 6% to 9%, we are devoted to networks and 84% to renewable generation.
Looking at our growth Capex, we see that.
In a significant manner during the period, mainly due to the development of new renewal Neolocal generation plants, and our air Force too.
To optimize our networks.
Let's now analyze our operating highlights on slide six in generation business our installed capacity.
<unk>.
16, gigawatts, including the 36 megawatts of new capacity operating duty described with that we will see the daily becoming blind from the state took approximately six to nine percentage renewable.
Net production from the first quarter reaches.
The $13, one terawatt hour, an increase of 35% compared to the same period of last year, mainly explained by the contribution of all could you be in aircrafts from our total production, 70% is emission fleet, a significant improvement compared to the 59% of the same period of last year.
And then just sales increased by 34% duty dispute, reaching $19, mainly explained by the consolidation of the Japan, Americas and a demand to recover in the region.
In slide seven we will focus on <unk> Americas.
With 36 megawatts of new renewable capacity already mentions we reach at 4700 megawatts or four seven gigawatts of capacity coming from Egypt Americas from week 17, 7% in Brazil in terms of technology two three gigawatt.
<unk> or <unk> thousand 300 megawatts of wind capacity and one <unk> 1600 megawatt solar and 800 megawatts hydro.
We have $2 seven gigawatts of capacity under construction, mainly located in Brazil and Colombia.
One seven Gigawatts are <unk> and one gigawatt.
Solar pushing duty Duane.
Around six Gigawatts will begin operations why it one nine gigawatt will enter into any delivery and two gigawatts of Duane you're going for.
Capex in each of the Americas during the first quarter was 1 billion U S dollars, mainly allocated in Brazil regarding our pipeline. We also see that in 59 Gigawatts from week 31 Gigawatts.
Early stage.
Five gigawatts are in mature stage. In addition to these we have around once you got lots of battery.
Energy storage system, and we are also considering two seven gigawatts of budgets.
Under construction are no reservations that type of focus on the new projects on slide eight.
As mentioned before during the first quarter, we concluded a stage of myeloma project in Colombia.
This is a 36 megawatt solar project located in the region of season.
This is the first stage of the project that the move to utilize 187 megawatts.
In addition to these during the month of April our proved effective as Vin. This June .
Begin commercial operation.
Judy.
On April <unk>.
This is a 99 megawatts, we project located Ethernet, Google, Brazil, and disciplined it's fully completed.
Finally, let me announce that we recently filed the strict ban.
Margaret.
At 31 megawatt solar project located in the region of progress with Panama.
Let's continue to networks operation highlights on slide nine.
Electric distribution.
Reaches 30, 32, Terawatt hour in the first quarter, which represents an increase of <unk>, 5% compared to the same period last year.
This is explained by an important recovery in demand in Argentina, Colombia, and Peru, partially offset by a slight decrease in Brazil.
Regarding number of customers, we had an increase of about 570000.
Our competitor in the last 12 months, which is more on reaching more than $26 3 million.
<unk> is among all distribution companies in terms of quality indicators saidi.
Which is the duration and far eastern reaches the frequency of failures.
In all countries, except for Argentina, while energy losses increase in Argentina, Brazil, Colombia, and is likely to increase into it.
And it's like Dan.
We will see analytics and retail businesses.
In analytics business.
We had a very solid growth in Cherokee situations multiple back bandits in maintenance and repair conflicts wild.
<unk> ligand and credit cards also improve it.
Every front that we have an analytics improvement better disliked it.
We've described that from last year with revenue with the <unk> business the number of deliveries.
<unk> increased by 19% reaching 4877.
The energy sold amounted to $5 seven better box, our EV squad, which means a 14% increase compared to the same period up going to digital.
<unk> keeping.
For us and our focus on customers and electrification.
Peanuts on our strategic goals and doors, the net zero target.
Let's now have a look.
Our ESG highlights in the coming slides.
As we mentioned.
In the beginning of the call we published our first integrated annual report and this includes the financial and Nonfinancial information book into any one period.
And we also published our 2021 sustainable report both repo.
We do see a deep Gi and sizes, if vendors and they are available in our website in the investor Our Investor portal. We also publish at our forum.
<unk> 20th at the Ambler for April .
In compliance with the U S regulation.
The reports.
Reflect how sustainability is fully integrated into our business model as our risk management and value creation driver also just financing. It also demonstrate the company's efforts to phase III transition, mainly in the <unk> organization and electrification in the region and comply with the groups.
<unk> commitment to the Paris agreement now I will comment about the financial results for the beta in the coming slides.
EBITDA in the first quarter, reaching 1000 166 million U S dollars 47, 7% higher than the same period of last year. This is mainly explained by the consolidation of <unk> Americas and better results in that.
Business, mainly in Brazil expanded by higher guidance.
If we exclude the impact of 64 megawatts coming from the currency devaluation and 160.
<unk> really on the U S dollar from Egypt, the Americas, we get to an EBITDA of 1100 $14 million in U S dollars while.
Which is 41% higher than the EBITDA, our first quarter last year. This shows us the contribution of the consolidation obviously of the Americas.
Ralph Upsizing reinforcing that the merger was a very positive.
Thanks for putting in Americas.
Net income in the first quarter increased by 100% explained by better operational results and better financial results, mainly due to FX impacts.
<unk> from operations and disputed reached minus $43 million west doors, while net debt increased by 6%, reaching seven 4 billion with US we will analyze in detail cash flow and Thats later in this presentation.
And it's likely we'll.
We see it would be valuable solution and breakdown.
Starting from $789 million of.
EBITDA in the first quarter 'twenty, one we see that all our businesses have positive operational results during the booth thermal generation improved by 21 million.
Dollars.
While renewals increased by $200 million, mainly to the contribution of <unk>, which as you remember it was.
$160 million.
<unk> networks increased by just under $94 million, mainly due to adjust advantage in Brazil, while we.
<unk> analytics grew by $45 million and $12 million respectively.
Devaluation, either APAC had a negative impact.
Of.
$60 million, reaching final EBITDA of 1160 $6 million, 48% round figures higher than the same period of last year.
On a country basis, we see that the main contributors contributor for consolidated EBITDA was Brazil, with 51%, while Colombia represent 31% through 40% central I meant that 2% that hasn't seen a 2%.
Have a focus on generation networks business in slide 14 in slide 15.
EBITDA in generation business increased by 55% mainly explained by the contribution of that to be Americas, reaching $513 million with BP.
$160 million gain from <unk>.
In all countries we saw.
Nick on the board at EBITDA level, especially Brazil, which grew by 2% and 40%.
Due to it to be Americas consolidation and better hydro conditions.
Increased by 35%, Argentina, 22% in Colombia, 10%. This was partially offset by currency devaluation, which had.
Negative impact of $34 million, Colombia was the main contribution of total EBITDA with 39% followed by Brazil, with 32 and 319%.
<unk> networks business in the next slides.
Networks business increased by 39% compared to the first flat with last year, reaching $666 million.
Brazil, we have an increase of 61% at EBITDA level.
Mainly explained by higher tariffs due to the tariff adjustments made last year.
In Colombia, we have an increase of 16% due to tariff adjustments and higher demand, while EBITDA grew by 4% magnitude.
Higher demand.
This was partially offset by a negative EBITDA in Argentina due to the first lien debt of situations that we are facing Brazil represents 6% to 7% of <unk>, followed by Colombia, and Peru with 24, 9% respectively.
Our lives our cash flow in slide 16.
Starting from an EBITDA of 1160 $6 million, we see that.
Net working capital amounted to minus $978 million a significant increase in comparison to say Peter about <unk>. This is mainly explained by an increase in the investments <unk> made in view mirror collection in Brazil, and the impact of bad debt that we should recover during the rest of the year.
<unk> doing the same.
Amounted to $159 million wide net financial expenses amounted to minus nearly 72 million U S dollars with this.
Funds from operations amounted to minus $43 million in the first quarter opportunity to retool after investment for $563 million, including 0.1 billion coming from the GPM adequate.
Free cash flow of minus 610, 6 million U S dollars.
Let me now analyze the depth of our company in the next slide.
Slide 17.
As you can see amounted to $9 2 billion, an increase of 35% compared to December 2021.
This increase is mainly explained by higher gasoline in Brazil, and <unk> due to higher investments and FX.
Net debt, which is $7 4 billion U S dollars while.
We can see the FICO score of $606 million net investments net dividends paid for $87 million financial receivables for $181 million.
The ordinary operation for $7 million and FX impact of $641 million.
In terms of currency and country, we see that view remains as the largest contribute contributor while the debt at.
At the holding level represents 15% of the.
Finally regarding the cost of debt, we can see I mean bleeds for dispute going from six 1% in <unk>.
Eight 6%, mainly explained by higher interest rates and high inflation in Brazil, and Colombia, Let me emphasize here that we have on the effects just translation effects of 641 million U S dollars.
It doesn't impact then.
The financial statement, the income statement and it goes to the shareholders property module.
And our liquidity amounts.
$2 1 billion U S dollars, which 76% for exposures to cash and cash equivalents and 284% of article Nathan lines. The average maturity of our debt is three two years.
Fourth weighted to ensure we have maturities for $2 2 billion U S dollars.
And most of our debt maturity.
After 2024.
Solid liquidity position allows us to support our growth strategy.
We conclude this presentation with some closing remarks.
During the first quarter. After we need 30 June we saw solid operational result accrual across all businesses.
Along with the solid contribution of each of the Americas allowed us to have any bought with improvement at EBITDA and net income level, while we maintain a solid financial position that supports our supports our growth strategy growth strategy, we continue with the hour.
ESG focus and we are positioning our company as one of the best ESG players in Latin America.
Finally, we are strong delivering into acuity, the new capacity coming from nonconventional renewable source in line with our stresses totally in line with the merchant project that we completed last year.
Lansing in our renewable increase capacity.
These are awesome.
For a complete the explanation very clear no.
Let's move to a Q&A session. Later please proceed.
As a reminder to ask a question I wanted to press star one on your telephone.
Your question press the pound key place that bottleneck compile the Q&A roster.
Our first question comes from the line of Javier Suarez from Mediobanca. Your line is now open.
Hi, good morning.
Thank you for taking my question.
Two.
The first one is on the significant.
By working capital and deterioration in working capital.
Can you help us to understand that we can put that by country.
When do you expect that to be fully pay up so I think that you didn't do a presentation you mentioned that you took.
Be progressively be episodic, but by the end of 2000 and I'm trying to do which is the best case.
<unk>.
Close to $1 billion working capital absorption during the first quarter 2000, and I'm thinking in.
And the second question is on the balance of the record of the company net debt to EBITDA of the company is now close to one seven times is that compromising their capacity to deploy capital on renewable energy in the region.
If we can in a slightly different.
What do you see the optimal level of net debt to EBITDA for a company like Enel America. Thank you.
Okay.
Thank you so much out there for your for your question.
Regarding net working capital Javier.
We have.
<unk>.
As you can see those lines the impact of total net debt net working capital of $917 million right.
<unk> reach.
This impact.
It comes from.
Payments.
Capex in infrastructure and networks, especially from the November and December right.
This amounts to 400 million U S. Dollars, then we have an impact.
As we explained in Florida, especially for collection of 140 million regarding.
The $150 million from that vaccine distribution. Okay. Then we have.
In generation.
<unk>.
The impact of.
600 million.
U S dollars in generation, especially for the debates regarding the projects that we will as you complete equipment that will enter into operation. This year. So we paid the DC towards abatement process the duty.
Squadron.
And last but not least we made.
A securitization in our generation assets.
Related to cut your way to build asset of 200, Meg sorry, 200 million U S dollars.
Which is.
We.
We did a securitization.
With with the financial <unk>.
Due to that attended the risk.
An interesting operates so that we'll do it progressively better in the end of last year and we'll do it progressively it was up 200.
U S dollars with receivable will lower risk, which costs were not more than $10 million in two months.
But of course, when we have to be impacted to the chief financial institution it affects our hour.
Networking capital from this field if you if I can be compounded beats the $200 million from generation, we'll do it.
More frequently not only by the end of the period of the year, but but.
I mean in.
At least in the half a six months basis.
On the volume that we say we sell <unk>.
The Capex and distribution.
Of course, we are.
Analyzing the.
And to be bought.
Modest strictly with this capex in order to not increase.
Our debt and to maintain our debt level.
And of course, the part of renewables assets that we paid for it depends on the.
The profitability.
The projects right remember that this year, we are estimating to enter with the economic impact, Florida, Florida, new capacity of $600 million of EBITDA, which means that we are focusing to the <unk>.
For for this year, but again.
And then I can jump.
The next question because I think it may come.
It refers to the same issue.
How is the level of debt.
That's the company.
Thanks.
It can be feasible.
Now we have one seven times.
We are focusing.
Not to jump over of course, you have to blend it up two five times net debt to EBITDA.
But we are our focus is to remain between this between two and two five below the $2 five right mark related to the two times.
To achieve these of course, we will be more much more selective with.
The Capex right.
Balancing between distribution and renewables.
Of course, the resource is unlimited so we need to we need to be selected.
And selective investments in order to not not transpose visa at this level I mean, this networking returning to the networking capital level.
Our our our our focus.
Our focus here of course is to it shouldn't be.
Reduced this negative impact in my opinion to more close to $500 million of duty.
Due to the rest of the of the period.
As you can see that lots of effort that the company would be testing products in order to optimize working capital and we will do it in a pro breath taking away.
But in the first quarter, we didn't see this impact although reflected during the during the year.
Recall that this level of around $500 million.
If we consider with.
These extra ordinary capex payments during the first quarter right.
Okay. Many thanks.
Youre welcome.
Thank you as a reminder to ask a question you will need to press star one on your telephone.
Your question. Our next question comes from Anthony <unk>.
J P. Morgan your line is now open.
Thank you good afternoon, Andrew and I.
I have two questions. The first one is about an hour ago.
So this falls into warrants and it's never been a market next week about.
Enel Americas potentially starting to gel.
So the question would it be ethical brings into the bookings.
What would be the rationale.
But it wouldn't be the use of the proceeds.
The case is.
The company is looking for new acquisitions or.
Focusing more on renewables or just managing.
The levers all Americans, especially a handle.
Oklahoma pension plans next year.
And the second question would be on the renewable capex, so I'd like to hear a little bit about.
If you are seeing pressure on topics for wind and solar.
We know there is a lot of inflation in Brazil, and also worldwide with the war and the commodity prices. So the question would be.
This increase in packaging in alone or.
The overhaul.
Does this change your capex spend for the year and for the coming years. Thank you wanted it.
Thank you so much.
Regarding regarding cut.
Capex renewable just to.
The two to make referenced off the question made by Dominion.
The renewable capex.
And even for the for the next two years I mean, we have committed project. So.
And we have obese.
Capex.
<unk>.
The prices.
Already contracted I mean theres no.
Major.
I mean issues regarding the Capex that we have committed in regards to inflation and so on of course, you have we have it.
But like everybody, but less than.
Lower impact considering that we have a huge procurement effects during the during the during this year.
But for 2022 for example.
Livable.
One point.
<unk> 3 billion U S dollars.
This $1 $3 billion.
We will maintain this capex for this year and expect them to have expected to have of course.
<unk>.
This 600 million U S dollar I mean, adding more $200 million U S. Dollar total $2 million to $400 million that we have them.
In the previous years.
If you ask me I rarely will maintain the nine three.
Really on $3 $2 billion per year of Capex.
Of course, we run our lives will be.
More selective on these.
In order to of course.
The profitability the returns and also the cost per megawatt startup. We are following these we're seeing increasing increases in capex per megawatts are up 30%.
But in any case, especially for this year.
We do not see any big issues for this year.
But for the following one.
We will analyze in more cap rate.
Screening before considering our debt to maintain.
Discipline in our debt level regarding annual going out so does that mean.
The company that they purchase.
In 2017, though it Saturday.
We saw lots of I.
I mean.
Needles or.
We do not have anything formally decided regarding these.
Although we always.
Third desktop we have this in our strategy.
The possibility to rotate our assets with agents I mean.
That's no secret its colm here.
If we see there is an opportunity to realize.
To realize or to change your investment not only in distribution, but anyway.
And any any reason that we see the possibility to maximize our the value of the company of course, we are aware of but having said that there is no fees. So there is nothing formally.
Decided in this front of <unk>.
Yes.
Let me remind you that we are we are performing very well the company.
With the reducing.
Very very.
Actively.
While at the.
Quite a bit.
Failures in the company improved.
Improving efficiencies and so on the company is in a good track.
A good asset we transform at these assets.
And there is no it doesn't.
No we shouldn't issue related to formal process related this asset rotation is embedded in our strategy since we presented our strategic plan.
Okay. Thanks, a lot Andrew.
Welcome.
Okay.
Thank you. Our next question comes from the line of Andrew Mccarthy from credit core capital. Your line is now open.
Good afternoon.
Good afternoon to everyone on the call.
After the presentation.
My question too.
Let's see.
The distribution business.
No.
The other thing to model.
Just months.
Uh huh.
Let's see.
You had a sort of a $450 million.
Uh huh.
This business in the quarter, just wondering going forward sort of how you're thinking about how that how that should evolve the revenues.
Regulatory changes.
Second hotel.
Like I've mentioned.
Adjustments upward et cetera, so any color you can provide us there to help us.
To calibrate and understand how about how about a couple of months that business should be going forward.
And then the second question is.
Just if you could give an update.
Where you are with them.
Restructuring.
The Sao Paulo, just understand where you are in the conversation.
We're expecting for this year about firm.
Is it from my side. Thanks.
Alright.
Thank you Andrew.
Another key to see what can be the performance of distribution.
In Brazil, you should analyze.
Two things.
How did we adjustments will follow.
For this year.
Of course, we are.
It is up.
It's very close to the equation right. So.
So if we have higher inflation, so we have a higher.
Such estimates so that's why we had.
That adjustment.
Neil.
And.
A yield higher than 10%.
Now in the neighborhood have almost.
5% of the adjustment.
The defensive because a PCA.
BCA and said how do we have <unk>, but I mean, it's.
It's an increase.
It's a huge increase in terms of bite, but uhm.
With that we'd like inflation with.
The debt.
Contracts.
Yes.
Other issue is to analyze is the development of the distributed energy right.
In the short term and there is more related to the temperature again related.
And then related to two economic activity right.
We are not seeing.
Huge economic activity, but we had seen most are big impact in terms of.
Temperature, so the temperature in the quarter.
With the lower the temperature in the.
Slightly lower.
First quarter of last year, but they end up at the end of the day the tariff adjustment that would have been in this case the wheel mostly REO.
And of course, the full tariff adjustment that were having some paolo for let's see.
For YOD and setup.
Supported by increasing in the ultra described compared to the previous one so I mean.
Despite its effect will be probably will be higher.
<unk>.
Of course, the only other hand.
<unk> put more pressure in the collection issues because people will have a higher tariff.
I mean, this balance of quantity embedded at the end of the day.
If you have a higher view.
Defense.
Trend is to increase collection. That's why we are improving the good thing is that right now we have mechanisms to two two for the clients to pay in installments more ultimate size, it and we do not have restrictions.
<unk> to the pandemic. So we can also good discipline in the market disconnect and offer offer.
Installment payments I mean, the perspective for distribution in these in these environment short term.
I mean for 2022 it's good.
From the economic side.
But.
We need to take care of that that's in.
In relation to be so.
Another another important issue that I didn't mention is that the hydrology.
Remember that we are now in a very good hydrological issue, which.
Provide us a better working capital since we are being we are.
We see more.
More.
Money in our aesthetic.
Dennis.
The energy that we purchased it seems to have a good.
Hydrology.
And remember that in this first.
Blackbird, we didn't have received it yet.
Similar to the corporate accounts no the hydrological accounts, which for US is 100 and.
And.
$100 million U S dollars more or less.
And its equivalent in April in April So you will not see decently in the first quarter I mean.
These factors.
For economic.
Demand.
And Brian we have adjustments are key.
It seems that their group.
In the financial side, the collection will be prescient would.
We'd be Brexit by high attach the thing effects.
And these hydrological issue will be better than last year, because last year remember that we have.
Our clients have seen hydrological issues so.
The perspective.
The perspective is good but a patient with collection right sorry for it to be long in this in this issue regarding the pension fund.
Additional pumps today would have.
Remember that we have our best it is in Reais, okay. The desk.
But translated into us dollars the current.
Just for you to have an idea more farm from funding that I did with dollars.
We have $1 3 billion plus Opex I mean, the liabilities are higher than the assets in the plan.
We announced that depth.
Move the sponsorship of the spring.
This will.
We will bring us to a situation that will transform this depth that today is not.
Let's say fully control it because.
<unk> contributed.
Defined.
Benefit defined benefit you cannot control.
The interest.
The discount rates and also the mortality table, so well done strong leading to fix it.
And the impact we are estimating to be the first quarter of 'twenty to 'twenty three so I mean will transform.
For the.
The rating agencies are exactly the same with us pharma.
That is the best that's not fix it.
Ah patients that's I mean.
For what.
Right now but.
Our.
Our pension and pension debt to a financial decks.
And then we have a fix it.
I think that the amendment that we have when we show the leverage the total leverage.
Consider the pension fund considering the pension fund is.
One nine times okay.
Great really helpful. Thanks from alternative.
Thank you Andrew.
Thank you. Our question comes from the line of Peter <unk> from Bank of America. Your line is now open.
Hello Radio and Rafael Thank you for the call and taking my question in your appendix on regulatory issues. You mentioned the recent publishing of the roadmap for offshore wind projects by Colombia's Ministry of mines, and energy could you share a bit more detail on the scope of the Columbia offshore win opportunity for <unk> Americas, perhaps realm.
To your gross pipeline and how do you think about timing for these types of projects in Colombia.
Okay.
I don't know if I understood correctly, yes, we we presented.
The roadmap of our <unk>.
And its completion in each country, Brazil was the last one but I understood from your question you asked about offshore renewables.
Yes in Colombia.
Pacifically.
Okay.
We are not focused into offshore renewables right now right.
For us in Latin America, especially in Latin America, we see lots of opportunities lots of potential and shore, which is cheaper than the offshore solution. So I mean of course, we analyze all the technologies. We also analyzing also the startup issues and especially in Colombia, we are.
We have seen.
Yes, we saw we saw some.
Transportation of the stations and so on but we see lots of potential application.
In the country.
In short I mean in the country for wind.
And solar so.
We presented.
Solar projects right now.
We put <unk> in the first quarter.
The first part of the split.
In La Romana, and Bridget will reach.
180 megawatts I mean.
We are focusing.
I mean, we have three.
Our priority right now I mean for the next at least the next.
Three to five years isn't sure and in Colombia also on.
So offshore.
Of course, it depends on cost it depends on the to be reached in this kind of project in that region solar and we have $1 two.
Medium bore.
For the megawatts installed power to sell capacity I mean.
It's.
And we've been very very competitive on visa and solar for example is we are reaching 700.
So theres no.
There is no needs are.
Not me its not the word, but I mean, it's more feasible and more profitable the inshore.
Renewables capacity right now right.
Great very clear thank you.
Youre welcome.
Thank you.
Tom I am showing no further questions I would like to turn the call back over to the company for any closing remarks.
Well. Thank you very much already thank you.
We conclude the results conference call.
Let me remind you that this investor relation team as you slow the Mesa liable for any health any question any clarification.
You may need in this coming week.
Good evening.
This concludes today's conference call. Thank you for participating you may now disconnect.
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Good day, ladies and gentlemen, and welcome to Enel Americas first quarter 2022 results Conference call. My name is Susan and I'll be your operator for today 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. During the session you will need to press star one on your telephone please.
Be advised that today's conference is being recorded of Uruguayan any further assistance. Please press star zero.
During this conference call, we may make statements that constitute forward looking statements within the meaning of the private Securities Litigation Reform Act of 995.
Statements could include statements regarding the intent belief or current expectations of Enel Americas and its management with respect to among other things and then Americas business plans, and then Americas cost reduction plans trends affecting 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 enel 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 a decline in the equity capital markets of the United States or Chile, and increase in the market rates of interest in the United States or elsewhere adverse decisions by government regulators in Chile or else.
<unk> and other factors described in the annual report on form 20-F.
And under risk factors.
You may access our 20-F on the SEC's web site Www dot.
Dot Gov.
<unk> are cautioned not to place undue reliance on those forward looking statements, which speak only as of their day.
Hello Medical undertakes no obligation to update these forward looking statements.
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 Rosa and now America head of Investor Relations. Please proceed.
Thank you very much AEG with afternoon, ladies and gentlemen, and welcome to our first quarter 2022 and.
Our results presentation.
The loss from Investor Relations.
And the company has lights, our CFO Oliver steel will be presenting the main figures of this period.
Let me remind you that this presentation will follow the slides that have been already have low working towards into the company as well.
Following the presentation, we will have the usual Q&A session.
Please remember that questions can be made only for the telephone line.
Let me hand over the call to Dahlia, who will be followed by aligning the main highlights of the period in the slide number three.
Thank you Rafael without putting was about it.
During the first quarter of this year, we had a solid result in our businesses.
The Americas boosted our performance in generation business.
A network business, we saw an important increase in demand in Argentina, Colombia and Peru.
EBITDA increased by 48% during the period, mainly due to the contribution of that UK Americas and better results in network business in Brazil explained by higher tariffs, while net income grew by 100% compared to first quarter of 2021 due to better operational and financial results.
Regarding ESG, we are glad to announce that we recently published our first integrated annual report sustainability report and form 20-F.
For the fiscal year of 282 in Q1, which are available on our website. Finally doing dispute we added 36 megawatts of renewable capacity.
While this vintage two wind farm in Brazil built last year began commercial operation during April at the same time, we continue working on another two points.
Two seven gigawatts or <unk> thousand 700 megawatts of capacity under construction.
Move to the following these live to see the main macro indicators.
And so on the less stable during this period.
As in Argentina, Colombia, Costa Rica, Peru, depreciate against U S dollars, while reviewing what the mile I appreciated in terms of inflation, we can see that compared with first quarter, but then if anyone inflation rate increases in all the countries, except for rental model, reaching a significant leg.
In line with the situation that is currently being seen across the world.
Regarding electricity distributed during this quarter, we saw an important growth in Argentina, Colombia, and Peru, while Brazil slightly decreased due to lower economic activity and lower temperature, especially in some volatile <unk>.
In terms of collection, we have we can see that we are in a better position in all the countries, except for Brazil, which slightly decreasing it brings up a bad debts. We have an increase of 93% mainly due to builds an update and more than one year by the clients in Brazil related to the funding.
Now, let's have a look at the next slide.
Slide five during the first quarter of this year, our capex increased by 91% compared to the same period of last year, reaching 563 million U S. Dollars. This is mainly explained by the consolidation of <unk> Americas and higher investments in network business in Brazil for the total amount.
6% was invested in Brazil, reflecting the relevance that these cancer has for our future growth in terms of business, 6% to 9% we are devoted to networks and 24% to renewable generation looking at our growth Capex, we see that it grew.
In a significant manner during the period, mainly due to the development of new renewal knowable generation plants and our efforts to.
To optimize our networks.
Let's now analyze our operating highlights on slide six in generation business, our installed capacity reached 16.
<unk> 16, gigawatts, including the 36 megawatts of new capacity operating duty described with that we will see the daily becoming blind from this total capacity of 6% to 9% renewable.
Net production in the first quarter reshape.
I mean, one terawatt hour, an increase of 35% compared to the same period of last year, mainly explained by the contribution of UPN aircrafts from our total production, 70% is emission fleet.
<unk> got improvement compared to the 59% of the same period of last year.
And then just say has increased by 34% duty dispute, reaching $19, mainly explained by the consolidation of the Japan, Americas and a demand recovery in the region.
On slide seven we'll focus on PGP Americas.
With 36 megawatts of new renewable capacity of recognitions, we reach at 4700 megawatts or four seven gigawatts of capacity coming from AGP Americas from week, 77% are in Brazil in terms of technology two three gigawatts.
<unk> or <unk> thousand 300 megawatts wind capacity and one six gigawatts for 1600 megawatt solar and 800 megawatts.
I do.
We have two seven gigawatts of capacity under construction, mainly located in Brazil, and Colombia, one seven gigawatts of wind projects and one gigawatt solar pushing due to any religion around six gigawatts will begin operations why a one.
Nine gigawatt will enter into any territory and two gigawatts of do anything meaningful.
Capex in each of the Americas during the first quarter was <unk> 1 billion in U S dollars, mainly allocated in Brazil regarding our pipeline. We are considering 59 gigawatts from week 31 Gigawatts.
In early stage and gained five gigawatts are in mature stage. In addition to these we have around one gigabits of batteries.
<unk> just started the system.
We are also considering two seven gigawatts of budgets.
Under construction are reservations.
Our focus on the new projects on slide eight.
As mentioned before during the first quarter, we concluded a stage of <unk> project in Colombia.
This is a 36 megawatt solar project located in the region of season.
This is the first stage of a project that will utilize 187 megawatts. In addition to these during the month of April our proved effective as ventas to those.
Began commercial operation.
In April .
This is a 99 megawatts we project located in Pernambuco, Brazil, and this display is fully completed finally, let me announce that we recently installed the fixed Daniels of Madrid.
31 megawatt solar project located in the region of Progresso Panama.
Let's continue to networks operation highlights on slide nine.
Electric distribution.
Which of the 30 32 Terawatt hour in the first quarter, which represents an increase of <unk>, 5% compared to the same period last year.
This is explained by an important recovery in demand in Argentina, Colombia, and Peru, partially offset by a slight decrease in Brazil.
Regarding number of customers, we had an increase of around 570000.
I'll compare it in the last 12 months, which is more on reaching more than $26 3 million differences among all distribution companies in terms of our quality indicators saidi.
Which is the duration inside eastern reaches the frequency of failures.
In all countries, except for Argentina, while energy losses decreased in Argentina, Brazil, Colombia, and is likely to increase and improve.
And it's like them.
We will see analytics and retail businesses.
In analytics business.
We had a very solid growth in Cherokee situations multiple back bandits in maintenance and repair conflicts wild.
<unk> ligand and credit cards also improve it.
Every front that we have an analytics improvement despite that.
We've described that from last year regarding retail business the number of deliveries.
<unk> increased by 19% reaching 4877.
The energy sold amounted to $5 seven Terawatts hour. He described it which means a 40% increase compared to the same period up going to take you up.
<unk> businesses keeping.
For us and our focus on customers and electrification.
Peanuts on our strategic goals and toward the net zero target.
Let's now have a look.
Our ESG highlights in the coming slides.
As we mentioned.
In the beginning of the call we published our first integrated annual report and this report includes the financial and Nonfinancial information pertaining to any one period.
And we also publish it upgraded to anyone's sustainable report both repo.
Lineup with the Cfd Gi and sized spenders and they are available in our website in the investor Our Investor portal. We also publish at our forum.
<unk> <unk> at the end of April .
In compliance with the U S regulation.
The reports.
Reflect how sustainability is fully integrated into our business model as our risk management and value creation driver also transparency. It also demonstrate the company's effort to phase III transition, mainly in the <unk> organization and electrification in the region and comply with the groups.
<unk> commitment to the Paris agreement now I will comment about the financial results for the period in the coming slides.
Okay.
EBITDA in the first quarter, reaching 1160 $6 million 47, 7% higher than the same period of last year. This is mainly explained by the consolidation of <unk> Americas and better results in network business.
Mainly in Brazil expanded by higher guidance.
If we exclude the impact of 64 megawatts coming from the currency devaluation and 160.
16, Neely on the U S dollar for immediately Americas, we get to an EBITDA of 1100 $14 million in U S dollars while.
Which is 41% higher than the EBITDA, our first quarter last year. This shows us the contribution of the consolidation of the GP Americas.
We've upsizing reinforcing that the merger was a very positive.
Franz for Fortinet Americas grew.
Net income in the first quarter increased by 100% explained by better operational results and better financial results, mainly due to FX impacts.
Funds from operation and disputed reached minus $43 million west doors.
That's increased by 6%, reaching seven four.
<unk>, we will analyze in detail cash flow and Thats later in this presentation.
And it's likely we'll see EBITDA evolution and breakdown.
Starting from $789 million of.
EBITDA in the first quarter enough data to anyone we see that all our businesses have positive operational results during the period thermal generation improved by $21 million, while renewables, a greeted by $200 million mainly to the contribution of <unk>.
Which as you remember it was.
$160 million.
Networks increased by $294 million, mainly due to adjust that benefits in Brazil, while retail analytics grew by $45 million and $12 million, respectively currency devaluation.
APAC had a negative impact.
<unk>.
$60 million, reaching final EBITDA of 1160 $6 million, 48% round figures higher than the same period of last year.
On a country basis, we see that the main contributors contributor for consolidated EBITDA was Brazil, with 51%, while Colombia represent 31% through 40% central I meant that 2% that hasn't seen a 2%.
Our focus on generation networks business Slide 14 in slide 15.
EBITDA in generation business increased by 55% mainly explained by the contribution of that to be Americas, reaching $513 million with BP.
$160 million gain from Egypt, the Americas.
In all countries we saw.
Nick on the board at EBITDA level, especially Brazil, which grew by 240% mainly due to either be Americas consolidation and better hydro conditions through increased by 35%, Argentina and 22% in Colombia, 10%. This was partially offset by currency.
Devaluation, which had.
Negative impact of $34 million, Colombia was the main contribution of total EBITDA with 39% followed by Brazil, with 32, and Peru, 19%, let's see networks business in the next slides.
<unk> networks business improved by 39% compared to first flat with last year, reaching $666 million.
With you we have an increase of 61% at the EBITDA level.
Mainly explained by higher tariffs.
Adjustments made last year.
In Colombia, we have an increase of 16% due to tariff adjustments and.
Higher demand, while EBITDA grew by 4% in magnitude.
Higher demand this was partially offset by a negative EBITDA in Argentina due to the frozen dead of situations that we are facing Brazil represents 6% to 7% of <unk>.
Followed by Colombia, and Peru, with 34, 9%, respectively, let's analyze our cash flow in slide 16.
Starting from an EBITDA of 1160 $6 million, we see that.
Net working capital amounted to minus $978 million, a significant increase as compared to the same peters of lithium is it mainly explained by an increase in investments payments made in theater lower collection in Brazil, and the impact of bad debt that we should recover during the rest of the year.
Taxes paid during the same period amounted to $159 million why isn't that financial expenses amounted to minus nearly 72 million U S dollars.
That's.
<unk> funds from operations amounted to minus $43 million in the first quarter opportunity to achieve after.
<unk> $563 million, including 0.1 billion coming from the GPM adequate way.
Cash flow of minus 610, 6 million U S dollars.
Let me now analyze the depth of our company in the next slides.
Slide 17, just that as you can see amounted to $9 2 billion, an increase of 25% compared to December 2021.
This increase is mainly explained by high adapting in Brazil, and <unk> due to higher investments and FX.
Net debt, which is $7 4 billion U S dollars while.
We still see this free cash flow of $606 million net.
Net investment net dividends paid $487 million financial receivables for $181 million extraordinary operation for $7 million and FX impact of $641 million.
In terms of currency and country, we see that review remains as the largest contribute contributor while the debt at.
At the holding level represents 15% of the.
Finally regarding the cost of debt, we can see an increase for a dispute going from six 1%.
Eight 6%, mainly explained by higher interest rates and high inflation in Brazil, and Colombia, Let me emphasize here that we have on the effects just translation effects of 641 million U S dollars.
It doesn't impact then.
The financial statement, the income statement and it goes to the shareholders happy module.
In our liquidity amounts.
<unk>, two 1 billion U S dollars, which 76% for exposures to cash and cash equivalents and 284% of our committed credit lines. The average maturity of our debt is three two years.
For 2022 would have maturities.
$2 2 billion U S dollars.
And most of our debt maturities.
After 2024.
The solid liquidity position allows us to support our growth strategy. Let me conclude this presentation with some closing remarks.
During the first quarter after we need <unk> June we saw solid operational result accrual across all businesses.
Yes.
Along with the solid contribution of each of the Americas allowed us to have an important improvement at EBITDA and net income level, while we maintain a solid financial position that supports our supports our growth strategy growth strategy, we continue with our ESG.
And we are positioning our company as one of the best ESG players in Latin America.
Finally, we are strong delivering into Q2, the new capacity coming from nonconventional renewable source in line with our stresses totally in line with the merchant project that we completed last year and advancing in our renewable increase capacity.
These are awesome.
Earlier for this complete the explanation.
Now, let's move to the Q&A session. Operator. Please proceed.
As a reminder to ask a question will need to press star one on your telephone.
Your question please.
With that bottleneck compile the Q&A roster.
Our first question comes from the line of Javier Suarez from Mediobanca. Your line is now open.
Hi, good morning.
Thank you for taking my question.
The first one is on the significant.
Absorption by working capital and deterioration in working capital.
Can you help us to understand that we can pull that by country.
When do you expect that to be fully absorbed.
I think that you had in your presentation, you mentioned that it should be progressively absorbed but by the end of 2010 people, which is the best that they can be episodic.
Close to $1 billion working capital absorption during the first quarter 2019.
And the second question, it's on the balance of the record of the company. The net debt to EBITDA of the company is now close to one seven times is that compromising their capacity to deploy capital on renewable energy in the region.
If we can in a slightly different.
What do you see the optimal level of net debt to EBITDA for a company like Enel America. Thank you.
Thank you so much for your for your question.
Regarding networking capital Javier.
We have.
<unk>.
As you can see the slides the impact of total net debt net working capital of $978 million right.
Of which.
This impact.
It comes from.
Payments.
That capex in infrastructure and networks, especially from the November and December right.
This amounts to 400 million U S dollars than we have.
The impact of as we explained in Florida, especially for collection of 140 million regarding.
The.
$150 million from the vaccine distribution okay.
Then we have.
In generation.
We have an impact of.
600 million.
U S dollars in generation, especially for the payments regarding the projects that we will as we complete requirements that will enter into operation. This year. So we paid the DC towards abatement process during this quarter.
Last but not least we made.
A securitization in our generation assets.
More related to cut your way to go at it of 200, Meg sorry, 200, Neely on U S dollars.
Which is.
Yeah.
Yes.
We did a securitization.
With with a financial answer.
Due to debt assumed as the risk towards the uninteresting operators that we'll do it progressively better between the end of last year, and we'll do it progressively it towards that 200.
In the U S dollars with receivable will lower risk, which costs were not more than $10 million in two months.
But of course, when we have to be impacted to the chief financial institution it affects our hour.
Our networking capital from this feel good if I can to be compounded beats the $200 million from generation will do it more frequently not only by the end of the of the period of the year, but it's still but I mean in that.
At least in a half a six months basis. It depends on the volume that we say is we sell.
From the Capex and distribution.
Of course, we are.
<unk> the.
And to be bought.
Modest strictly with this capex in order to not increase.
Our debt and to maintain our debt level.
And of course, the back of renewables assets that we paid for it depends on the.
Profitability in the <unk> of the projects right remember that this year, we are estimating to enter with the economic impact, Florida, Florida, new capacity of $600 million of EBITDA, which means that we are focusing to this yield especially for for this year, but again.
And then I can jump in.
Next question, because I think it may be it.
Got it.
It refers to the same niche and know how with the level of net debt that the company thinks it is.
It can be feasible right now we actually have one safran.
<unk>.
We are focusing hard not to jump over of course, we have this limit of two five times net debt to EBITDA.
But we are our focus has to be made between this between two and $2 five below the two five mark related to the two times.
To achieve these of course, we will be more much more selective with.
The Capex right.
Balance.
Balancing between distribution and.
Renewal of those.
Of course the rigs.
Royalties are limited so we need to we need to be selected.
And selective investments in others to not not transpose visa at this level I mean, this networking restarted keto networking.
Capital level.
Our our our our focus.
Bulk was here of course is to is can be.
Reduce these negative impact and maintaining it to more closer to $500 million doing the.
Due to the rest of the of the period.
We see lots of effort that the company would be testing products in order to optimize working capital and we will do it in a progressive way.
But in the first quarter, we didn't see this impact all reflected during the during the year.
Recall that this level of around $500 million.
If we consider that with these extra ordinary capex payments during the first quarter right.
Okay. Many thanks.
Okay.
Awesome.
Yeah.
Thank you as a reminder to ask a question you will need to press star one on your telephone.
Your question press the pound key.
Our next question comes from Anthony <unk>.
JP Morgan your line is now open.
Thank you good afternoon, Andrew and I.
I have two questions. The first one is about an hour ago.
So this falls into warrants and it's never been a market luxury for balances.
Enel Americas potentially deciding to sell.
So the question would it be ethical thing you can do to move from perpetual.
Rationale.
But it wouldn't be the use of the proceeds.
The case.
If the company is looking for new acquisitions or.
Focusing more on renewables or just managing.
The members and all American, especially a handoff.
Oklahoma producer plans next year and the second question would be on the renewable capex, so I'd like to hear a little bit about.
If you are seeing pressure on Capex for a reason for.
We know there is a lot of situations.
Also worldwide with the war and the commodity prices Marine So the question would be.
This increase in packaging, an alarm or and now the overhaul.
This change your capex spend for the year and for the coming years. Thank you.
Thank you so much.
Regarding regarding.
Capex renewable just too.
In order to to make referenced off the question made by.
The renewable capex.
And even for the for the next two years I mean, we have committed project. So.
And we have obese.
Capex.
With the prices.
Already contracted I mean theres no.
A major.
I mean issues regarding the Capex that we have committed in regard to replace them and so on of course you have.
We have impacted like everybody, but less than.
Lower impact considering that we have a huge procurement effects during the during the during this year.
But for 2022 for example.
Livable.
One point.
$1 3 billion in U S dollars.
This $1 $3 billion.
We will maintain this capex for this year and expect them to have expected to have of course.
<unk>.
This 600 million U S dollar I mean, adding more $200 million U S. Dollar total to 400 million.
All of that we have them in.
In the previous year.
If you ask me I rarely will maintain the nine.
The 3 billion $3 $2 billion per year of Capex.
Sure.
Of course, we run our lives.
Be more selective on these.
In order to of course.
The profitability the returns and also the cost per megawatt startup. We are following these we're seeing increasing increases in capex per megawatts are up 30%.
But in any case.
For this year.
We do not see any big issues for this year.
But for the following one.
We will analyze in more depth.
Screening before considering our debt to maintain our discipline in our.
That level regarding annual going out does that mean.
The company that they purchase.
In 2017, though it Saturday.
We saw lots of.
I mean.
Neil's R R.
We do not have anything formally decided regarding this.
Although we always.
Fab that we have this in our strategy.
The profitability to rotate out of the asset rotations.
Ah.
There's no secret coal here, if we see that there is an opportunity to realize.
To realize or to change your investment not only in distribution, but anyway in any any any reason that we see the possibility maximize our the value of the company of course, we are aware of it but having said that there is no fees. So there is nothing formally.
Decided in this front of.
Yes akshay.
Let me remind you that we are we are performing very well the company.
Reducing.
Very very effectively.
Let the.
The quite a bit.
Failures in the in the company.
Improving efficiencies and so on the company is in a good track.
Good asset we transform these assets in a good asset and there is no it doesn't.
No we shouldn't issue related to formal process related this asset rotation is embedded in our strategy seats.
We presented our strategic plan.
Okay. Thanks, a lot Andrew.
Welcome.
Okay.
Thank you. Our next question comes from the line of Andrew Mccarthy from credit core capital. Your line is now open.
Good afternoon.
And to everyone on the call.
So the presentation.
My question block soon.
Please.
Regarding the distribution business in Brazil.
The other thing to model.
Just months.
The pirates.
So lately.
You have a sort of a $450 million.
Uh huh.
And this business in the quarter, just wondering going forward sort of how you're thinking about how about how about Super Bowl revenues.
Regulatory changes that we should say.
Okay.
Like I've mentioned.
Adjustments upwards.
Color you could provide us there to help us.
To calibrate and understand how about how about a couple of things about business overall should we should be going forward.
And then the second question is.
Just if you could give an update on where you are with them.
Restructuring.
The Sao Paulo pension fund system stuff, where you are in conversations there and what you're expecting for this year about firm.
It from my side. Thanks.
Alright.
Thank you Andrew.
Another key to see what.
It will be the performance of distributions.
In Brazil, you shouldn't alive.
Two things.
How did we adjustments will follow.
For this year.
Of course, we are.
It is up.
It's very close to the equation right.
So if we have higher inflation, so we have a higher tariff.
Such estimates so that's why we had.
That adjustment.
Neil.
In the end.
You higher than 10%.
Now in the neighborhood have almost 85% of the adjustment.
The defensive because they reorient IPA and said how do we have <unk>, but I mean.
<unk>.
It's an increase.
It's a huge increase in terms of Magellan.
Connected with that with inflation with the with the debt.
Contracts.
And then the other issue is to analyze is the development of the distributed energy right.
In the short term and there is more related to the temperature again related.
If you then related to the economic activity right.
We are not seeing.
Huge economic activity, but we have seen most of the big impact in terms of.
Temperature, so the temperature in the quarter.
With the lower than the temperature in the.
Slightly lower.
First quarter of last year, but they end up at the end of the day the tariff adjustment that would have been in this case the wheel mostly REO.
And of course, the full tariff adjustment that were having some paolo for La Z.
Yeah, and Sarah supported the increase in the of this quarter compared to the previous slide So I mean.
This price effect will be there probably will be higher.
<unk>.
Of course, the only other hand.
It can put more pressure in the collection issues because people will have a higher base.
I mean, this balance of quantity embedded at the end of the day.
If you have a higher view.
Defense.
<unk> is to increase collection. That's why we are improving the good thing is that right now we have mechanisms to two two for the clients to pay in installments and more ultimate size. It and we do not have restrictions related to the pandemic. So we can also good discipline in the <unk>.
Market disconnect and offer offer.
Installment payments I mean the.
For distribution in these in these environment short term.
I mean <unk> it's good.
From the economic side.
But.
And we need to take care of that Thats in <unk>.
Agent to be so.
Another another important issue that I didn't mention is that the hydrology.
Remember that we are now in a very good hydrological issue, which.
Provide us a better working capital since we have been.
We see more and more.
Money in our aesthetic.
Our debt to pay the energy that we purchased since you have a good.
Hydrology.
And remember that in this first quarter.
We didn't have received it yet.
Similar to the corporate accounts no the hydrological accounts, which for US is 100 then.
<unk>.
$100 million U S dollars more or less.
And it worked.
And in April in April so, you'll not see decent in the first quarter I mean.
Distract us.
For economic dimmed.
Demand.
And Brian we adjustments are key.
And it seems that they are the group in the financial.
The collection will be prescient okay.
The Brexit by Hyatt that has the same effect.
And these hydrological issue will be better than last year, because I think I remember that we have.
Our clients have seen hydrological issues so.
The perspective.
The perspective is good.
Patient with collection right sorry for it to be long winded in this issue regarding the pension fund.
Today, we have.
Remember that we have our best it is in Reais, Okay, that's nice but translated into us dollars. The current.
Just for you to have an idea more farm from funding that I did with dollars.
We have $1 3 billion plus of debt I mean, the liabilities are higher than the assets in the plan and we announced that that will remove the sponsorship of the spring.
This will bring us to a situation that will transform this net debt today is not.
I mean, let's say fully control it because.
<unk> contributed.
Defined.
Benefit defined benefit you cannot control.
The interest.
The discount rates and also the mortality table, so well done strong leading to fix it.
And the impact we are estimating to be the first quarter of 280 283, So I mean will transform.
The rating agencies are exactly the same that we transform it at that.
That is our best that's not fix it.
Ah patients that's anymore.
I forgot.
Name right now but.
In Ah.
The potential in pets, and vets dual financial decks. So.
So just and then we have a fix it.
I think that the amendment that we have when we showed the leverage the total leverage.
Consider the pension fund considering the pension fund.
Is one nine times a day.
Great very helpful. Thanks for an alternative.
Thank you Lindsey.
Thank you. Our question comes from the line of Peter <unk> from Bank of America. Your line is now open.
Hello Radio and Rafael Thank you for the call and taking my question in your appendix on regulatory issues you mentioned.
Recent publishing of the roadmap for offshore wind projects by Colombia's Ministry of mines, and energy could you share a bit more detail on the scope of the Columbia offshore wind opportunity for <unk> Americas, perhaps relative to your gross pipeline and how do you think about timing for these types of projects in Colombia.
Yeah.
I don't know if I understood correctly, yes, we we presented.
The road map of our.
Conditions in each country, Brazil was the last one but I understood from your question you asked about offshore renewables.
Yes.
<unk>.
Specifically.
Okay.
We are not focus into offshore renewables right now right.
For us in Latin America, especially in Latin America, we see lots of opportunity lots of potential in shore, which is cheaper than the offshore solution. So I mean of course, we analyze all the technologies. We also analyzing also the startup issues and especially in Colombia.
We have seen yet we saw we saw some.
Transportation industry actions and so on but we see lots of potential application.
In the country.
In short I mean in the country for wind.
And solar so.
We presented.
Solar projects right now.
We put <unk> in the first quarter.
The first part of this burden.
In La Romana, and Bridget will reach.
180 megawatts I mean.
We are focusing.
I mean, we have three.
Our priority right now I mean for the next at least the next.
Three to five years isn't sure and in Colombia also huh.
So offshore is of.
Of course, it depends on cost it depends on the to be reached in this kind of Bridget in averages solar and wind we have $1 two.
Median.
For the megawatts installed.
Capacity I mean.
It's.
And we've been very very competitive on visa and solar for example is we are reaching $700.
So theres no.
Theres no needs or this.
Not meaning it's not the word but I mean it.
More feasible and more profitable with the insurer.
Renewables capacity right now.
Great very clear thank you.
Youre welcome.
Thank you at this time I'm showing no further questions I would like to turn the call back over to the company for any closing remarks.
Well, thank you very much <unk>.
We conclude the results conference call.
Portfolio, neither can I do that this investor relations team.
Slow and remains available for any at all for any questions or any clarification.
You may need and that is coming due.
Good evening.
This concludes today's conference call. Thank you for participating you may now disconnect.