Enel Américas S.A. Q1 2023 Earnings Call
Speaker 1: We concluded the sale of thermal generation assets in Argentina and recently announced the sale of distribution assets in Peru. The remaining sale processes announced on our strategic plan are well on track. Let me highlight that few days ago.
Speaker 1: the merger between annual generation Peru and EGP Peru was approved. Let's move to the following slide to see the main macro indicators. As shown on the left table during this quarter, currencies in Argentina, Colombia and Guatemala devaluated against US dollars.
Speaker 1: Peru and Brazil were basically flat while Costa Rica appreciated. In terms of inflation, we can see that during this quarter, inflation rate increases in Argentina, Colombia, Peru and Guatemala, while it decreased in Brazil, Costa Rica and Panama, following similar trends to the recent
Speaker 1: Q4 in 2022. Regarding electricity distributed, during the first three months we saw an important increase in Argentina, Peru and Brazil. And a slight increase in Colombia, we'll see this in more detail later on in the part of distribution.
Speaker 1: During the first quarter of this year, our Catholics increased by 11% compared to the same period of last year, reaching $622 million, despite that we did not have any photolegence and gameplay as in alternative.
Speaker 1: If we exclude those two companies from the numbers of last year, CapEx would have increased by 38%.
Speaker 1: This is mainly explained by higher investments in energy in the area of renewables in Brazil and in Sao Paulo and in El Ceará.
Speaker 1: From the total amount, 68% were invested in Brazil, while in terms of business, 55% were devoted to Greece and 38% to renewables. Gross capacitor reaches 281 million.
Speaker 1: US dollars and was mainly devoted to renewables with 78%. Let's now analyze our operating highlights on next slide.
Speaker 1: In generation business, during the first quarter of 2022, we added close to 90 megawatts of new renewable capacity in Brazil and Colombia.
Speaker 1: With the sale of CosaNero, we now have 14 gigawatts of installed capacity, of which 82% is renewable.
Speaker 1: If we do not consider that food in Argentina, which has already been sold, the annual capacity represents 88% of our total capacity.
Speaker 1: Net production in the first quarter reached 13.2 terabyte hour, an increase of 1 percent compared to the same period of last year, explained by higher generation Brazil, Colombia, in Peru, partially offset by Argentina.
Speaker 1: From our total production, 79% is emission-free, at significant growth compared to the 70% of the same period last year.
Speaker 1: Energy sales decreased by 14% during this quarter, reaching 19.6 terabyte hours, mainly due to lower trading activity in Brazil and lower sales in Costa Anera as we consolidated that company only for around one and a half months in 2033.
Speaker 1: On slide seven, we'll focus on our development of renewable capacity.
Speaker 1: During this quarter, we invested $0.2 billion in renewable energy, mainly located in Brazil and Colombia.
Speaker 1: We are currently working on additional 2.2 gigawatts of capacity under construction, also located mainly in Brazil and Colombia. Both 9 gigawatts are wind projects and 1.3 gigawatts are solar projects.
Speaker 1: During 2033, around 1.2 gigahertz will be in operations, while 1 gigahertz will enter into integrated form.
Speaker 1: Regarding power pipeline, we are considering 59 gigawatts of potential new capacity.
Speaker 1: From this amount, 32 GW are in early stage and 25 GW are in mature stage. In addition to this, we have around 1 GW of battery energy storage system and we are also considering the 2.2 GW of projects under construction already mentioned.
Speaker 1: Let's continue with the original highlights on slide three.
Speaker 1: Electricity distributed reached a 28.3 out of our powers in the first quarter, which represented increase of 5% compared to the same period last year in homogeneous permeability, interpretive, represented by higher sales in all awards tradition comp?headed.
Speaker 1: especially in Argentina due to higher temperatures.
Speaker 1: Regarding number of customers without conceiving the customers of Enel Goias last year,
Speaker 1: We have an increase of around 420,000 in the last 12 months, reaching 33.4 million customers.
Speaker 1: more than two times reaching 341,000 in this quarter, mainly due to the deployment in São Paulo. In terms of quality indicators, both Saífi and Saífi improved as an average, which is explained by better performance in Colombia and Brazil.
Speaker 1: in Argentina, we saw deterioration of our quality indicators due to the extreme temperateness during the summer, while in Toulouse we saw an increase in size explained by changes in calculation criteria compared to last year.
Speaker 1: Finally, in terms of energy losses, it improved within Brazil and Peru, remained flat in Colón and slightly decreased in Argentina.
Speaker 1: In the coming slides, I will show a summary of the status revision process concluded in the following clip.
Speaker 1: In March, Anel published the final report of the Enel Rio styrofoil vision process, which concluded with a tariff increase of 3.28% as an average to our final customs.
Speaker 1: Net rub was set of 8.9 billion, and regulatory losses slightly increased compared to the previous one.
Speaker 1: However, there is still work to do in order to better organize the real situation of energy losses in our profession area.
Speaker 1: Regarding NSLA, the process concluded with an average tariff increase of 3.06% and net rub of 7.2 billion RIs. The new types are applied as of April 22.
Speaker 1: We are comfortable with both processes.
Speaker 1: as they are in line with our business expectations.
Speaker 1: Finally, regarding the Enes, on-par with the other processes, it's moving ahead as expected and we should have the final data report due in early July .
Speaker 1: On slide 10, we'll see NLX and retail differences.
Speaker 2: Thank you.
Speaker 3: And the legs.
Speaker 1: In NLX we had a solid role in all our businesses, especially charging points, electric business and maintenance in the bear contracts.
Speaker 1: Regarding detail, the number of deliberate points increased by 8%, reaching more than 5.2 thousand points.
Speaker 1: And the energy sold amounted to 6.5 terawatt hours in the first quarter, which means 11% increase compared to the same period of last year.
Speaker 1: On the following slide, we will discuss our ongoing corporate simplification.
Speaker 1: During the last few months, we concluded the sale processes of our thermal generation assets in Argentina, Costa Nera, and Duxu. In addition to this, we recently announced the sale of energy distribution Peru.
Speaker 1: This transaction was signed for an equity value of 2.9 billion US dollars.
Speaker 1: for our 83.2% ownership, which implies an EV of $4 billion and an EV EBITDA ratio of almost $4 billion.
Speaker 1: which implies an EV of $4 billion and an EV EBITDA ratio of almost 15 times.
Speaker 1: This operation still has to be approved by the Peruvian Market First authorities and by Chinese outbound direct investment authorities.
Speaker 1: Expected impact of net income level is US$1.65 billion after tax.
Speaker 1: Now, we will continue moving forward in the remaining disposal process already announced on our strategic plan, which are Edesur and El Chocón in Argentina and the Sierra in Brazil and generation assets included.
Speaker 1: Now, I will highlight our efforts in best practice and certification in page 12.
Speaker 1: First, let me mention that our 2022 Integrated Report was published at the end of March 2023, 2 months before our annual shareholders meeting.
Speaker 1: take into consideration the best practices at local and international levels, including the financial and non-financial information for the 2022 period that we presented. Our 2022 sustainability report is also available on our website.
Speaker 1: which offers a deep dive on ESG matters. Both reports are aligned with the CFD, GRI and SAS standards and are available on our website in the investors sector.
Speaker 1: on ESG methods. Both reports are aligned with the CFD, GRI and SAS standards and are available on our website in the investors sector section.
Speaker 1: Also, we would like to invite you to visit the new interactive version of the integrated report given different views for different stakeholders. Please feel free to send us your feedback through our invest and best relations teams. Tell Americans participated in the Blue Dot Network.
Speaker 4: hands that hold.
Speaker 1: in the Americas, together with other companies worldwide, was part of the first pilot and among the first to complete it. The company participated in this pilot with its Lagoda's Ventus wind farm in Brazil.
Speaker 1: This plant was selected both for its size and for the numerous sustainability activities it has cared about in recent years.
Speaker 1: Blue Knock Network certification will serve as a globally recognized symbol of market-driven transparency, Paris Agreement alignment, and financially, socially, and environmentally sustainable infrastructure projects.
Speaker 1: Finally, our company was recognized by a third part of its compliance on tax sustainability matters related to four key GRI indicators ranking first among its peers.
Speaker 1: Now, I will comment on the financial results of the periods in the coming slides.
Speaker 1: A decline in the first quarter reached $945 million, 6% lower than the same period of last year. However, this reduction is fully explained by the fact that we did not consolidate an spun in the core of Honolulu andomp blown continuing Annie Joy McCallum in the
Speaker 1: If we exclude the defect and also include results in Peru and isolate the effect, we get to an adjusted gap of $1,222 million US dollars, an increase of 11.7% compared to the same period of last year.
Speaker 1: explained by better operational results in Brazil, Colombia and Peru. Optics decreased by 3.7%, mainly to due to current evaluation, and the disconsobibration of the negoeratin and photolysis. Net financial results decreased by around 90% due to higher financial expenses.
Speaker 1: funds from operations in this period reached $552 million while net debts decreased by 32% reaching $4.7 billion. We will analyze the detailed cash flow and debts later in this presentation.
Speaker 1: On slide 15, we see a bidet evolution and its breakdown. Starting from $1,006 million of a bidet of first quarter of 2022.
Speaker 1: We have to exclude 72 million US dollars coming from the Fotaleza and Enel Boyage in order to make it comparative to the first few of 2020.
Speaker 1: Then we see that we have positive operational results in thermal generation renewables and grief while an election repair decreases.
Speaker 1: With this, we get to an EBITDA of $1,038 million for the first Q2023, which is 11% higher than last year.
Speaker 1: Effects had a negative impact of $94 million, resulting in a reported EBITDA for this quarter of $945 million, 6% lower than reported EBITDA of same period of 2022.
Speaker 1: As mentioned at the beginning of this presentation, Peruvian assets are discontinued assets, meaning that its result is considered below EDTA level. If we consider EDTA coming from Peru, we get an EDTA of 100...
Speaker 1: $1,136 million, an increase of 11.7% compared to reported at the Dow or first Q2022.
Speaker 1: In terms of business line, Greece represents 50% in our EBITDA and renewables 38%.
Speaker 1: Thermal generation detailed and analytics contributed with 5%, 6% and 1% respectively.
Speaker 1: Let's focus on generation and breeds on the coming price. If you die in generation, population ? 2% rode over 2 Indaba penalties,
Speaker 1: in homogeneous terms. This means executing an effort for evidence to reaching $401 million.
Speaker 1: This result is mainly explained by higher results in Brazil due to growth in renewable generation and better results in Central America due to higher hydro generation in Panama.
Speaker 1: This was partially offset by lower EBITDA in Colombia due to effect evaluation, but excluding the effect evaluation, Colombia also saw an EBITDA expansion during this work. In this right side chart, you can see that Colombia was the main...
Speaker 1: This means that the business has increased by 4% compared to the first quarter of last year in homogeneous terms. This means, excluding any reuse, reaching $579 million.
Speaker 1: These better results is mainly explained by Brazil due to tariff adjustments that we had during 2022 and higher energy sales.
Speaker 1: From our total EBITDA in Greece, Brazil represents 78% and Colombia 32%. Argentina has a negative EBITDA contribution during the quarter.
Speaker 1: On slide 18, we'll focus on the cash flow of our company. Starting from an EBITDA of 945 million US dollars, we see that net net worth in capital amount to minus 269 million dollars.
Speaker 1: a significant improvement compared to last year, mainly explained by lower investment payments in Brazil, indemnification due to the end of the concession agreement of NLCM, and the recognition of financial accounts receivable from E-bust projects in Colombia.
Speaker 1: Tax paid during the period amounted to $86 million while net financial expenses amounted to minus $
Speaker 1: $38 million.
Speaker 1: With this, funds from operations amount to $552 million, a solid increase when compared to the negative FFO that we had last year in the same period.
Speaker 1: After investments for $539 million included $214 million of growth capital.
Speaker 1: We get to a freakish flow of minus $37 million, a significant improvement compared to last year. Let me now analyze the depth of our company in the coming slides.
Speaker 1: Gloss debts amounted to $7.1 billion, a decrease of 11% compared to December 2022, mainly explained by the debt consolidation of assets available for sale in 2022.
Speaker 1: Isolating this effect, gross debt would have increased 3%. The net debt reached $4.7 billion, which considered free cash flow of minus $37 million, extraordinary operations and financial receivables for $1.5 billion related to the sale of Goyas and Costa Rica.
Speaker 1: Net debt dis-consolidation of 913 million US dollars.
Speaker 1: especially from Peru, and it affects for minus 165 million dollars. In terms of currency and country, we see that Brazil remains as the largest contributor.
Speaker 1: while the debt at holding level represents 11% of the total.
Finally, regarding the cost of deaths, we can see an increase in for this period range from 9.8% to 12.6%, mainly explained by higher interest rates in Brazil.
of that, we can see an increase in for this period, which from 9.8% to 12.6% may be explained by high interest rates in the queue and in the long run.
Now in July 20, our liquidity amounts to $3.7 billion from which 66% correspond to cash equivalents and 34% to committed credit lines.
The average maturity of our debt is 3.5 years. For 2022, we have maturities for $1.1 billion, and most of our debt matures after 2035. Let me highlight that.
We continue having a solid credit profile reflected in current rating and outlook with three international rating agencies. Boots, S&P, and Fitch commented in April that the disposal of our Peruvian assets will not result in a change in our current rating.
This solid liquidity position allows us to comfortably support our growth strategy for the coming years.
On the next slide, I will conclude this presentation with some closing remarks.
During the first quarter of 1983, we saw solid operation results.
across all businesses with a relevant increase in energy demand. We had a solid fund from operations renovation.
during the spirit solid cash flow generation despite we are executing a significant amount of capital.
We are strongly delivering and executing new capacity coming from renewable sources in line with our strategy.
Finally, we continue working in our corporate simplification, concluding sale process of non-structured assets and moving ahead on coming disposals. Thank you very much, Abrego. Very clear. Now I call to the operator for the Q&A session. forces for During the session. Do you have questions?
Thank you so much. And ladies and gentlemen, as a reminder, if you have a question over the phone line, simply press star 1 1 to get in the queue.
that is star 11 to remove yourself as well. One moment while we compile the Q&A roster.
Again, that is star 11 if you have a question.
Our first question comes from the line of Francisco Paz with Santander. Please go ahead. No sound at this point.
Hi, already, Joraf. Thanks for the presentation. I just have a question regarding the announcement of the sale of the distribution assets in Peru. How do you see the risk of this agreement not being approved by the – in the COVID and the Chinese authorities? Or the process taking longer than expected, this in the context that the noise that was generated in the past.
independent authorities, they always do a very good job analyzing the situation. We don't think we will have any problems with this. We are confident and we are surely confident that the process will be done.
move in a very transparent way and very diligent way and observing of course all the regulation and all the antitrust regulation in Peru and we are confident that we move ahead in a very solid and robust way.
And if I can make a second question regarding Colombia. We saw this year an attempt from part of the president, Gustavo Petro, to cross the drive in the electric sector. Do you see any risk of another reform for the sector, specifically for the generators?
In Latin America, we see that all the framework, the regulatory framework, the institutional, the checks and balances that we have in the region works.
And this is also for Colombia.
In our opinion, Colombia has one of the best regulations and one of the best institutions. And also the checks and balances, I mean the Congress, the Justice, it's not only the executive power. So we are confident that we will have a balanced situation for the coming months.
So we don't see until now many different scenarios regarding the new government. We are confident in the Congress and also in the legal institutions, as I said.
that Colombia will maintain.
It's very high level. It's not the best regulation that we have in the region. So, we don't see major issues. Of course, some adjustments, but not much usual in our opinion.
Perfect. Thanks a lot for the answer. Thank you. Again, if you have a question, simply press star 1-1 to get in the queue.
I'm not showing any further questions in the queue. I will turn the call back to Rafael De La Asa for any final remarks.
any further questions in the queue I will turn the call back to Rafael De Raza for any final remarks.
Yes, let's wait a couple of minutes to see if we can get more questions. We have a couple of minutes, and we will go through.
Understood. And again, ladies and gentlemen, that will be Star 1-1 to get in the queue.
Well.
Thank you very much. There are no more questions. We conclude the conference call.
As usual, a laser reminder of investors' relations will be available for any doubt that you may have on the first quarter results.