Atlantica Sustainable Infrastructure plc Q1 2023 Earnings Call
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Atlantica does not undertake any duty to update any forward looking statements.
Joining us for today's conference call Atlantica, CEO Santiago <unk> seats.
In CSA.
Francisco Martinez Davis.
As usual at the end of this conference call. We will open the lines for Q&A session I will now pass you over to Mr. <unk>.
Please go ahead.
Thank you very much.
Thank you for joining for our first quarter 2023 conference call.
I will start with a couple of messages.
For Francisco takes us through our results in the first quarter revenue and adjusted EBITDA increased by one point.
5% and 4% respectively on a comparable basis, while cash available for distribution increased by four 6%.
Over a year on a comparable.
Yes.
Okay. Thank you Santiago, please turn to slide number four and good morning to everyone.
And slide number four I will present, our key financials for the first quarter of 2023.
<unk> revenue reached $242 5 million, which represents a one 5% growth on a comparable basis, excluding the effect of foreign exchange.
Adjusted EBITDA amounted to $172 2 million, representing an increase of 4% on a comparable basis.
Regarding cash available for distribution, we generated $61 million in the first quarter of 2023, an increase of $12 one year over year.
Includes $4 1 million from the sale or part of our equity interest in our development company in Colombia to a partner.
Without this impact KFC would have increased by four 6% year over year.
On the following slide number five you can see our performance by geography and business sector.
In North America revenue decreased by 2% to $72 8 million in the first quarter of 2023 compared to the same period of last year.
The decrease was mainly due to lower solar resource in Arizona and in California in the quarter.
In South America revenue increased by 14% compared to the first three months of 2022 up to $43 7 million and EBITDA increased 16% to $33 8 million.
This increase was mainly due to newly consolidated assets.
Asset, which we have recently entered operation and inflation indexation mechanisms in our contracts.
On a constant currency basis, adjusted EBITDA in the EMEA region increased by 10% to $88 million compared to the first quarter of 2022 days.
<unk>, mostly due to higher production and inflation indexation that catch you.
And also lower operating expenses in our solar assets in Spain.
Looking below at the results by business sector.
We can see similar effects.
Let's now please turn to slide number six where we will review our operational performance.
Electricity produced by our renewable assets reached 1.2 gigawatt hours in the first three months of 2023, an increase of 9% versus the same period of 2022.
Mainly due to the increase in production in our solar assets in Spain with <unk>.
<unk> aviation was very good in the period and to the contribution from the recently consolidated assets and those that have entered an operation recently.
Looking at our availability based contracts.
And our efficient natural gas and heat segment availability decrease mainly due to that.
Scheduled major overhaul, which did not impact revenue.
In our water assets and its transformation lines continued to achieve very high availability levels in the first quarter of 2023.
On the next slide number seven we would like to review our net debt position.
Net debt as of March 31, 2023.
By a $4 1 billion a slight increase since March 31st 2022.
In addition, we closed the quarter with net corporate debt of $968 million with this our net corporate debt to cap the pre corporate debt service ratio stood at three three times.
With this I conclude today's presentation. Thank you for joining us.
We are now open we will now open the line for questions.
Operator, we are ready for Q&A.
Thank you if you would like to ask a question. Please press star followed by one on your telephone keypad.
Any reason you would like to move that question. Please press star followed by two again to take ask a question. Please press star followed by one.
To remind you if you are using a speaker phone. Please remember to pick up your handset for asking your question and please to ensure that you have unmeet to directly.
Our first question today comes from the line of <unk> Youre Minsky from Seaport. Please go ahead. Your line is now open.
Thank you.
Good morning, So maybe first if we could start with Dr Strategic review.
Your majority shareholder.
A bit more.
That flexibility on their balance sheets. So I just wonder now that they didn't acquire Kentucky power. So im wondering if that is impacting your strategic review will also.
Given the.
Some expansion in credit spreads.
How do you even think about what the goal of the review is.
Good morning, Andy So.
Regarding your question, obviously I cannot comment on.
One of our shareholders.
The only thing I can say there I can make reference to to the announcement, we made about this to be revealed.
Which is ongoing.
The fact that Algonquin.
<unk> expressly supported or supports that process and I cannot speculate much more than that as you understand.
Understood. So now.
So.
So under the current status quo basically so.
You're basically still trying to acquire third party assets. I mean is there has there been any any change in the.
And the competitive landscape given the higher cost of financing are you seeing more.
Openness from sellers to adjust their expectations for the valuations of the assets given the higher cost of capital.
As you know our growth of our growth strategy has two components one is.
In development and construction.
And where we continue to take you through.
Our plan on executing on the pipeline that we shared with you.
In our 2022 results presentation. The second part of our growth strategy is about acquisition assess as you mentioned.
There what we see.
A very active market it is true market where.
Sellers and buyers expectations and given the changes that macro changes that have been happening in the last few quarters.
Not always meet.
Nevertheless, in Brazil, we see a very active market.
Lots of <unk>.
Owners.
And willing to be selling assets.
Sure.
A question of time that.
Sellers and buyers and that meeting there have been some transactions closing there have been others that have been delayed but we continue believing that there will be opportunities and actually the microenvironment might help in that regard.
Okay and lastly.
The financing of such acquisitions.
Just talk about.
<unk>.
If you would have to.
Issue, either equity or bonds to finance any such acquisitions I guess it depends on the size, but any flexibility you have with additions of project level debt any sort of refinancing of existing debt in order to help yourself from a cash perspective again, just looking for some signs of SAB.
Financing flexibility in this environment.
And San Francisco. Thank you for your question.
You saw in the presentation, our leverage ratio went down on the quarter.
We continue to have ample room.
To finance acquisitions, and the fact that we will have to see at that particular time, what's the best.
Option that we have the financing, but it looks like we have room on the leverage so.
It sounds like we.
We just need to see what the best financing strategy.
<unk>.
Okay. Thank you.
Thank you the next.
Question today comes from the line of Julien Dumoulin Smith from Bank of America. Please go ahead. Your line is now open.
Hey, good morning. Thank you very much just to follow up on the last question a little bit more directly would you expect to pursue acquisitions here during the pendency of the strategic review and if so to what extent would you think about achieving kind of the mid versus low single digit.
Dividend growth here I'm just curious on.
Activity during the pendency of that first off.
Good morning Julien.
Going to your question.
At this point in time.
Jim.
Our study again is about investing in development. It is also about acquisitions whenever we find the right opportunities when we announced the strategic review, we said explicitly that we would continue.
Developing our growth strategy, so our growth of Sotheby's not be influenced by by the review.
In any way.
And depending obviously on which investments we closed and we don't growth we might end up in a.
Let's say in a higher part of the range or a lower part of the range is still at the end of Q1, it's a bit too soon to be able to be very brisk Goose Creek Creek.
Regarding that.
These point in time.
We think that we are.
Delivering on working well on both sides of the grow the strategy development.
And acquisition opportunities.
Got it and the strategic review here are you looking at the kinds of assets that you're investing in or geography at all as part of that or this is just a question about selling assets or not.
So again I wouldn't like to speculate regarding indirectly. This is something that we are conducting them I want to be respectful of our process.
Our board I was wondering if it would impact the kind of acquisition debt.
If I can pivot back to Europe .
Obviously I'd love to hear if you have any repowering thought you asked at this point, but as you look at the European backdrop and the potential for continued data point through the mid part of this year on.
Various country action in response coordinated EU subsidy effort is there anything new across your portfolio that you might want to highlight as an opportunity on that front.
As you think about 10 to 11.
Yes, I think that in general we are facing an environment from a market point of view that has never been.
So what practically if I would say in the U S I'm not going to elaborate about by array.
In our case, we do have some repowering opportunities in the short term the midterm.
Clearly.
<unk> for that at this point in time is much greater than a year ago.
So Europe , we continuously and opportunities we do think that the European Union.
He's coming up with programs that should help in that regard.
Probably programs that are slower than what we saw in the U S. But eventually.
We believe that we are going to be able to capture opportunities last quarter. We talked briefly about the hydrogen small hydrogen project studies being supported by European program.
Going forward.
Could be more and we are working on a number of those opportunities whenever they become realities, we will be talking about them.
Got it alright fair enough sounds like it's still working its way through thank you guys.
Thank you. The next question today comes from the line of Eli Rodney from National Bank of Canada. Please go ahead. Your line is now open.
Good morning, everyone just filling in for <unk> here.
First if I could just touch on Spain.
Specifically, Spanish power prices and how they've evolved throughout the year so far.
You touched on how that's sort of evolved versus your expectations and where do you see the market heading for the rest of the year versus expectations.
So specifically in the Spain.
Power prices are a bit softer than what.
The market expected.
<unk>.
What the futures were saying at the end of last year on what the regulator respected in our case as you know our assets in Spain.
Regulated and therefore, the value or the IRR of the assets are not affected by or should not be affected by price fluctuations in the year. Obviously, there can be a short term impact. So your your cash your revenues can be a bit better or worse in the short term.
The origination pace Audi so something.
I would say overly worried about.
At this point in time.
Our expectation if you don't get the futures.
The market is that prices should be stronger in the second half, but again.
We are regulated.
Cases limited.
Okay, Great and just a quick one on in Chile.
In light of the recent news of <unk>.
<unk> financial close on 80 megawatts of solar there.
It looks like it's been a pretty good location pricing wise just wanted to see if there's any incremental color you can give on pricing expectations return expectations et cetera.
So.
The case of Chile. These are 80 megawatts that we talk publicly about.
Last quarter, if I recall properly.
At our currently under construction.
We will be subject to what sort of then regulation.
Chile, So these assets will be.
Regulated through through something that is locally called <unk>.
Therefore, we don't need to worry as much about market prices, we do think that the return will be.
Reasonable.
Yes.
Locally.
And again the good thing is that.
Even these regulation.
Which is basically taking into account market prices, but giving visibility over the midterm, we know what's the how.
How should we turn we're going to be making.
In the short term the midterm.
We saw really good returns.
Okay, great. So in line with comparable projects. Thanks, that's it for me.
Thank you.
Thank you.
The next question today comes from the line of Mark Jarvi from CIBC. Please go ahead. Your line is now open.
Yes. Good morning, I'm just wondering if you can comment on timelines for strategic review just in terms of how it's evolved since you initiated and when you might have some updates for the market.
So I cannot comment much.
Looking at timing on these processes these very difficult whatever I say might be totally off so.
We are working on that.
As I can probably say.
Fair enough and then just kind of.
I understood your comments Youre open to acquisitions alongside Greenfield development, what about on on select dispositions as a source of funding would you be open to selling some.
Select assets or parts of the portfolio, while you are still going through the strategic review.
Yes as we.
We said in the announcement, obviously review.
That's a life continuous another strategy.
The same while we do that so on top of our investments in our growth.
We always consider and we continue considering opportunities.
We believe that they create value and that they.
It can be accretive.
From a cash generation point of view obviously.
Okay. Thank you.
Thank you. Thank you.
As a reminder, if you would like to ask a question. Please press star followed by one on your telephone keypad.
There are no additional questions waiting at this time, so I'd like to pass the conference back over to the management team for any <unk>.
Closing remarks.
Thank you very much thanks, everybody for joining in.
Thank you thank you Peter.
This concludes today's conference call. Thank you all for your participation you may now disconnect your lines.
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