Q1 2024 Atlantica Sustainable Infrastructure PLC Earnings Call
Hello, everyone. The Atlantis first quarter 'twenty 'twenty four financial results conference call will begin shortly if he would like to ask a question. Please press star followed by one on the telephone keypad. Thank you for your patience.
[music].
Operator: Hello everyone, the Atlantica's first quarter training... To ask a question, please press star followed by... Just a reminder that this call is being webcast live on the internet and a replay of the call will be available on Atlantica. The forecasts are based on current expectations and assumptions and are subject to change. If any of our key assumptions are incorrect or because of other factors, including the risk, [inaudible] All of which can be found on our website www.globalonenessproject.org, LANDCA does not undertake to join us for today.
Welcome to Atlantica, <unk> first quarter 2020, full financial results conference call.
Just a reminder, that this call is being webcast live on the Internet and a replay of this call will be available on atlantica corporate website.
Atlantica will be making forward looking statements. During this call, which are based on current expectations and assumptions and are subject to risks and uncertainties.
Actual results could differ materially from our forward looking statements.
Any of our key assumptions are incorrect or because of other factors, including the risk factors section of the accompanying presentation and in our latest report and filings with the Securities and Exchange Commission.
All of which can be found on our website.
<unk> does not undertake any duty to update any forward looking statements.
Joining us for today's conference call.
Cause CEO, Santiago, <unk> and CFO Francisco Martinez Davis as usual at the end of this conference call. We will open the lines for the Q&A session.
Operator: Santiago. 2015. To open the line. I will now pass you over to Mr. Siege. Please, sir.
Speaker Change: I will now pass you over to Mrs. <unk>. Please go ahead.
Santiago Seage Medela: Good morning, and thank you very much for joining us for our first quarter 2024 conference call. I will start with a few high-level messages.
Santiago: Good morning, Thank you very much for joining us for our first quarter 2024 conference call.
Speaker Change: We'll start with a few high level messages.
Santiago Seage Medela: As you have seen in the first quarter and compared versus the same period last year, revenue remained stable while adjusted EBITDA decreased by 0.9 percent, excluding the effect of the unscheduled outage that we discussed last quarter. Operating cash flow increased by 57% year over year to close to $66 million. In terms of growth and new projects, we recently signed a 15-year PPA for a new 100-megawatt solar plus storage project in California, and we completed, among other projects, the acquisition of two operating wind assets in the UK. I will now turn the call over to Francisco, who will take us through our financial results.
Speaker Change: As you have seen in the first quarter compared versus the same period last year revenue remained stable, while adjusted EBITDA decreased by 9% excluding the effect of the on the scheduled outage that we discussed last quarter.
Speaker Change: Operating cash flow increased by a 57% year over year up to close to $66 million.
Speaker Change: In terms of growth on new projects, we recently signed a 15 year PPA for a new 100 megawatt solar plus storage project in California.
Speaker Change: And we completed among other.
Speaker Change: Projects, we completed the acquisition of two operating wind assets in the UK.
Speaker Change: I will now turn the call to Francisco, who will take us through our financial results.
Francisco Martinez: Thank you, Santiago, and good morning to everyone. Please turn to slide number four, where I will present our key financials for the first quarter of 2024. Revenue remains stable at $242.9 million compared with $242.5 million in the first quarter of 2023. However, the increase in revenue from our assets in North America was offset by the outage at Kachu that we mentioned last quarter. As a reminder, the plant restarted operations in mid-February, and the damage and business interruption are covered by our insurance policy after a 60-day deductible.
Francisco: Thank you Santiago and good morning to everyone.
Francisco Martinez: Adjusted EBITDA was $164.2 million, representing a 0.9% decrease compared with the same period last year, excluding the impact of the outage at Kachu. Regarding cash available for distribution, we generated $50.9 million in the first quarter of 2024. On the following slide, number five, you can see our performance by geography and business sector. In North America, revenue increased 18% to $86.2 million in the first quarter of 2024 compared to the same period last year, and EBITDA increased 6% to $55 million.
Francisco: Please turn to slide number four where I will present, our key financials for the first quarter 'twenty 'twenty four.
Francisco: Revenue remains stable at $242 9 million compared with $242 5 million in the first quarter of 2023.
Francisco: The increase in revenue in our assets in North America was offset by the outage.
Francisco: But we mentioned last quarter.
As a reminder, the plant restarted operations in mid February and the damage and business interruption is covered by insurance.
Francisco: Our insurance policy.
Francisco: 60 day deductible.
Francisco: Adjusted EBITDA was $164 2 million, representing a <unk> nine.
Francisco: 9% decrease compared with the same period last year.
Francisco: And the impact of the outage had got you.
Francisco: Regarding cash available for distribution, we generated $59 million in the first quarter of 'twenty 'twenty four.
Francisco: On the following slide number five you can see our performance by geography and business sector.
Francisco: In North America revenue increased 18% to $86 2 million in the first quarter of 2024 compared to the same period of last year, and EBITDA increased 6% to $55 million.
Francisco Martinez: Production increased for our solar assets in the U.S. In South America, both revenue and EBITDA increased 2% compared with the first three months of 2023, up to $44.7 million and $34.6 million, respectively, mainly due to inflation and the indexation mechanism in most of our countries. In the Maya region, revenue decreased 11% to $112 million versus the same period of 2023, mostly due to the unscheduled outage at Kach. Looking below at the results by business sectors, we can see similar effects.
Francisco: Production increased in our solar assets in the U S.
Francisco: In South America.
Francisco: Both revenue and EBITDA increased 2% compared with the first three months of 2023.
Francisco: Up to $44 7 million and 34, $34 6 million, respectively, mainly due to inflation and the indexation mechanism and most of our contracts.
Francisco: In the EMEA region revenue decreased 11% to $112 million versus the same period of 2023, mostly due to the unscheduled outage at got you.
Francisco: Looking below at the results by business sector, we can see similar effects.
Francisco Martinez: Let's now please turn to slide number six, where we will review our operational performance. Electricity produced by renewable assets reached 1,063 gigawatt hours in the first three months of 2024, a decrease of 11 percent versus the same period of 2023, mainly due to a decrease in lower solar radiation in Spain. On the other hand, production in our solar assets in the U.S. increased by 16 percent thanks to better performance at Solana.
Francisco: Let's now please turn to slide number six we will review our operational performance.
Francisco: Electricity produced by our renewable assets reached 1063 gigawatt hours in the first three months of 'twenty 'twenty four.
Kris of 11% versus the same period of 2023, mainly due to a decrease link to lower solar radiation in Spain.
Francisco: On the other hand production in our solar assets.
Francisco: The U S increased by 16%, thanks to better performance as Solana.
Francisco Martinez: Looking at our availability-based contracts, our efficient natural gas and heat segment, as well as our water assets and transmission lines, continue to achieve very high availability levels in the first quarter of 2024. On the next slide, number seven, we will take a look at our cash flow. In the first quarter of 2024, operating cash flow reached $65.6 million, an increase of 57% compared to the same period last year, mostly thanks to an improvement in changes in working capital.
Francisco: Looking at our availability based contracts are efficient natural gas and heat segment as well as our water assets and transmission lines continued to achieve very high availability levels in the first quarter 'twenty 'twenty four.
Francisco: On the next slide number seven we will take a look at our cash flow.
Francisco: In the first quarter of 2020 for operating cash flow reached $65 6 million, an increase of 57% compared to the same period last year, mostly thanks to an improvement in changes in working capital.
Francisco Martinez: Net cash use and investing activities in the first quarter of 2024 include $84.4 million of investments, corresponding to the acquisition of two operating wind assets in the United Kingdom and approximately $22 million in investment in assets under construction development. I will now turn the call back over to Santiago. Thank you.
Francisco: Net net net.
Francisco: Net cash used in investing activities in the first quarter of 2024 <unk>.
Francisco: $84 4 million of investments corresponding to the acquisition.
Francisco: To.
Francisco: Operating wind assets in the United Kingdom, and approximately $22 million and investment in assets under construction development.
Francisco: I will now turn the call back over to Santiago.
Santiago Seage Medela: Thank you, Francisco. During this first quarter of 2024, we have continued to make progress in our growth strategy, which, as you know, is focused on developing and building new contracted projects while complementing that with acquisitions whenever returns are attractive enough. Following that strategy, we have signed a 15-year PPA with an investment grade off-taker for a new 100-megawatt PV plus storage project in Southern California. The project is located fairly close to several of our large assets in operation in California and Arizona and to three projects we are building or close to starting building in the area. As you can see, we continue to build volume in the southwest, an area where we have critical mass and where we can achieve synergy. We expect this project to reach the ready-to-build stage later this year.
Santiago: Thank you Francisco.
Santiago: In this first quarter of 2024, we have continued to make progress.
Santiago: In our growth strategy that as you know is focused on developing and building new contracted projects, while complementing that with acquisitions whenever returns are attractive enough.
Santiago: Following that the strategy, we have signed a 15 year PPA with an investment grade off taker for a new 100 megawatt PV plus storage project in Southern California. The project is located.
Santiago: Early close to several of our large assets in operation in California, and Arizona.
Santiago: Three projects, we are building or close to start building.
Santiago: In the area.
Santiago: As you can see we continue to build volume in the southwest an area, where we have critical mass and where we can achieve synergies.
Santiago: We expect this project to beach ready to build stage later this year.
Santiago Seage Medela: In addition, during the quarter, we acquired our first two wind assets in the UK. As we have mentioned, the assets are regulated and have no project debt as of today. The price of the investment represented a 6.6 times EV to EBITDA multiple, and this investment should allow us to use the net operating losses carry forwards that we have in the UK, achieving what we believe is an attractive after-tax return on the investment.
Santiago: In addition, during the quarter, we have acquired our first two wind assets in the UK US we have mentioned.
Santiago: The assets are regulated and have no project debt as of today.
Oh, the investment represented six six times EV to EBITDA multiple on this investment should allow us to use the net operating losses carryforwards that we have in the UK reaching.
Santiago: We believe is an attractive after tax return for the investment.
Santiago Seage Medela: If we look at other geographies, I will make a comment about a project in Chile as an example of how repowering existing renewable energy assets with storage can add value. The Chilean PV3 plant signed a 10-year BPA, including the battery storage expansion currently under construction. Chile is one of those markets where storage clearly allows higher returns through higher PPA prices. As you know, more or less 40% of our pipeline is in storage.
If we look at other geographies I will make a comment about our project in Chile as an example of how repowering existing renewable energy assets with storage can that value.
Santiago: The Chile, PV III plant signed a 10 year PPA.
Santiago: Including the battery storage expansion currently under construction.
Santiago: Chile is one of those markets, where the storage clearly allow us to capture higher returns through higher PPA pricing.
Santiago: As you know more or less a 40% of our pipeline.
Santiago: He is in storage.
Santiago Seage Medela: And that is simply because we continue to see an increasing opportunity for storage, in several of our key markets, both storage in combination with existing or new renewable energy assets or Esfambalon. As you know, Chile PV3 is a PV asset in operation where we are building a battery repowering or expansion.
Santiago: And that is simply because we continue to see an increasing opportunity for storage.
Santiago: In several of our key markets, both storage in combination with existing or new renewable energy assets.
Santiago: Or standalone.
Santiago: As you know Chile PV three is a PV assets in operation, where we are building a battery.
Santiago: Repowering or expansion.
Santiago Seage Medela: Regarding the sale of our stake in Monterrey, it recently closed, and we expect proceeds of more or less $43 million, subject to..., to a number of things you see there. And additionally, there is an earn-out mechanism that could result in additional profits in the future. And a final point before we move to Q&A. We are aware of market and media speculation around Atlantica, and following past practice, we will not make any comments regarding that. With that, we conclude today's presentation. Thanks for joining us. We will now open the line for questions. Operator, we are ready for Q&A whenever you want.
Santiago: Regarding the sale of our stake in Monterey. It recently closed and we expect proceeds of more or less $43 million subject to.
Santiago: To a number of things you see there.
Santiago: And Additionally, there is an earn out mechanism that could result in additional proceeds in the future.
Speaker Change: On a final point before we move to Q&A.
Speaker Change: We are aware of market on media speculation around atlantica.
Speaker Change: Following past practice, we will not make any comments regarding that.
Speaker Change: With this we conclude today's presentation. Thanks for joining US we will now open the line for questions. Operator, we are ready for Q&A whenever you want.
Operator: Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad. If you would like to remove your question, please press star followed by two. When preparing to ask your question, please ensure your phone is unmuted locally. And our first question goes to Rupert Murrah of National Bank. Reply, please go ahead, your line is open.
Speaker Change: Thank you if you would like to ask a question. Please press star followed by one on your telephone keypad. If you would like to remove your question. Please press star followed by.
Speaker Change: On the pad to ask your question previous your phones on mute your line.
Speaker Change: And our first question Seb pet <unk> of National Bank. Please.
Seb: Please go ahead your line is open.
Rupert M. Merer: Hi. Thank you. Good morning.
Seb: Hi, Thank you good morning, Thanks for taking the question.
Rupert M. Merer: Thanks for taking the question. I respect that you can't talk about your own strategic review process, but I'm wondering if maybe you could talk about the M&A market. You are active in the M&A market. Are you seeing any improvements there? Does the market look healthy? Do you see a number of competitive buyers in the market today? And is that dynamic changing? Has it changed at all over the last few months? It seems like there is a little bit of increasing optimism in the U.S. market.
Seb: So I respect that you can talk about your own strategic review process, but I'm wondering if maybe you can talk about the M&A market you are active in the M&A market.
Seb: Are you seeing any improvements there does the market look healthy do you see a number of.
Seb: Competitive buyers in the market today.
Seb: And is that dynamic changing hasnt changed at all over the last few months it seems like there.
Seb: There's a little bit of an increasing optimism in the U S market in particular.
Santiago Seage Medela: Okay, thanks for the question, Rupert. So, I'm going to talk about the M&A market we see ourselves, meaning projects, let's say, of average size. And as you can see, we are finding opportunities where we believe that we can achieve reasonable or good returns. An example would be the acquisition in the UK. We do believe, in general, that at least in the part of the market we see, which again is the mid-part of a market in many cases operating assets, what we do see is that probably a year, a year and a half ago, it was difficult to match sellers' and buyers' expectations.
Speaker Change: Okay. Thanks for the question Robert.
Speaker Change: So I'm going to talk about the M&A market, we see ourselves meaning.
Speaker Change: The projects, let's say off.
Speaker Change: On average size.
Speaker Change: And as you can see ourselves what we are finding opportunities, where we believe that we can achieve.
Speaker Change: Reasonable or good returns, an example would be the acquisition in the UK.
Speaker Change: We do believe in general that at least in the part of the market we see.
Speaker Change: Again is that meet.
Speaker Change: The size.
Part of the market in many cases operating assets what.
Speaker Change: What do we do see is that probably a year and you're going to have a go it was difficult.
Speaker Change: Too much sellers and buyers expectations.
Santiago Seage Medela: And in the last few quarters, what we are seeing is that, probably, the success rate is higher. And in our case, we closed this acquisition in the UK. We closed the divestiture of the Monterey project. So we do believe, if you were referring to that, that the M&A market we see is probably more active, and we are seeing a higher success rate than a year or a year and a half ago.
Speaker Change: And in the last few quarters, what we're seeing is that probably the success rate is.
Speaker Change: Higher and in our case, we closed this acquisition in the UK.
Speaker Change: We closed the divestiture in other.
Speaker Change: Monterrey projects. So we do believe if you.
Speaker Change: We're referring to that that the money market we see.
Speaker Change: Probably more active.
Speaker Change: We are seeing a higher success rate than a year or year and a half ago.
Rupert M. Merer: Now, in the U.S. market, the optimism is partly related to the potential for falling rates, but we're also seeing a lot of optimism around the data center market and speculation that could drive the interest for attractive offtakes in some of the markets you're involved with. Are you in touch with this market in any way, or are you seeing potential for offtakes for data centers? And if so, can you comment on that? Say how much of the market you think could be, or the growth potential could be driven by that market, and what the return potential looks like.
Speaker Change: In the U S market. The optimism is partly related to potential for falling rates, but also we're seeing a lot of optimism around the data center market.
Speaker Change: And speculation that could drive interest for attractive off takes in some of the markets involved.
Speaker Change: Involved with or are you in touch with this market in any way or are you seeing potential for off takes for data centers and if so can you comment on.
Speaker Change: How much of the market do you think could be or the growth potential could be driven by that market and what the return potential looks like.
Santiago Seage Medela: Yes, in general, I'm talking about the US market; we do believe that at this point in time, you can close off-take agreements at reasonable prices. We do see opportunity all across, not only in data centers, where, probably, over the last few months, lots of people have been writing about that opportunity, but I would take a step backwards. And our point of view is that there's an opportunity, in general, in the market. We do see utilities signing PPAs, and we have signed PPAs with them.
Speaker Change: Yes in general I'm talking about the U S market, we do believe that.
Speaker Change: At this point in time.
Speaker Change: You can close.
Speaker Change: Offtake agreements.
Speaker Change: Reasonable prices.
Speaker Change: We do see opportunity all across not only in data centers, we're probably.
Speaker Change: Over the last few months.
Speaker Change: <unk>.
Speaker Change: Lots of people have been writing.
Speaker Change: That opportunity, but I would take a step backwards.
Speaker Change: Our point of view is that there is an opportunity in general in the market. We do see utility signing Ppas and we have signed Ppas with them, we see community choice aggregators or similar off takers being very important.
Santiago Seage Medela: We see community choice aggregators or similar off-takers being very important in the market. We see strategic or industrial or corporate clients being very active in the market, which helps. We do see, obviously, the data center opportunity as well. But myself, I would not be able to answer your question of how large it will be.
Speaker Change: And in the market.
Speaker Change: We see we see as strategic or industrial.
Speaker Change: Or corporate clients.
Speaker Change: Been very active in the market, which helps we do see obviously.
Speaker Change: Data center opportunity as well.
Speaker Change: Myself I would not be able to answer your question of how large it will be I think that like with many things.
Santiago Seage Medela: I think that, like with many things, there's a little bit of hype at this point, time out there. I think that it is going to become a meaningful part of the market, no question, whether we are going to reach some other projections. Some people have been talking about, Time will tell.
Speaker Change: So a little bit of hype at this point in time out there I think that is going to become a meaningful part of our market. No question, whether we are going to reach some other projections. Some people have been talking about.
Santiago Seage Medela: We are active in all segments of the market, including that one. And as I mentioned before, with today's technology, being able to mix solar or different renewable energy generation technologies, plus storage and, if needed, other solutions, I think that we, and other companies in the industry, are able to provide solutions that are key. In order to be able to obtain clean power for a much longer period of time during the day than a few years ago, and that's important for data centers and for many other clients, as I mentioned before.
Speaker Change: Time will tell.
Speaker Change: We're active in those segments on the market or the market in Green Dot one.
Speaker Change: As I mentioned before.
Speaker Change: With today's technology being able to mix.
Speaker Change: As solar or different renewable energy generation technologies plus of storage.
Speaker Change: And if needed other solutions I think that we and other companies in the industry. We are able to provide solutions that are key in order to be able to to.
Speaker Change: Clean power.
Speaker Change: For a much longer period of time during the day done a few years ago.
Speaker Change: That's important for Datacenters and for many other clients as I mentioned before.
Rupert M. Merer: Very good. I'll leave it there. Thank you very much.
Speaker Change: Very good I'll leave it there thank you very much.
Speaker Change: Thank you.
Operator: Thank you. The next question goes to Nelson Ng of RBC Capital Markets. Nelson, please go ahead; you're doing your thing.
Speaker Change: Thank you. The next question does he Nelson <unk> of RBC capital markets. Nelson. Please go ahead. Your line is open.
Nelson Ng: Great, thanks everyone. My first question relates to the Monterey project. Do you see that as a one-off sale, or are you actively looking at other asset sales?
Nelson: Great. Thanks, everyone. My first question relates to.
Nelson: The Monterrey project.
Nelson: Do you see that as a one off sale or are you actively looking at other asset sales.
Santiago Seage Medela: So, I mean, as part of our strategy, as a rotation, be part of the things we will be doing, and we will be looking at different opportunities. Obviously, the numbers need to work, meaning we need to have a situation where we believe that a third party would be willing to pay more than what we believe is the value for us of the asset. But to your question, the answer would be yes, obviously. We are open to..., looking at other opportunities if the numbers work.
Nelson: So I.
Nelson: I mean as part of our strategy as a rotation.
Nelson: EV part of the things, we will be doing and we will be looking at different opportunities.
Nelson: Obviously, the numbers need to work, meaning we need to have a situation, where we believe that a third party would be.
Nelson: Willing to pay more than what.
Nelson: What we believe is the value for us of the asset but to your question the answer would be yes, obviously.
Nelson: We are open to two.
Looking at other opportunities if the numbers work.
Nelson Ng: Okay, great. And then just looking at California in terms of the new project, the new development, Imperial. Can you just give us a bit more color on the acquisition of that development? Competitive process? Are there? additional payments that you might need to make in the future based on milestone payments.
Speaker Change: Okay great.
Speaker Change: And then just looking at California in terms of the.
Speaker Change: New project, the new development Imperial.
Speaker Change: Can you just.
Speaker Change: Give us a bit more color on the acquisition of that development was it a.
Speaker Change: Competitive process are there.
Speaker Change: Additional payments that you might need to make in the future based on milestone payments.
Santiago Seage Medela: Yes, so this is a project under development, a very advanced development. And, as I mentioned before, we expect the project to be ready to build within this year. So it's a very advanced development that we purchased from Algonquin. Like most projects you acquire in an advanced development stage, there are milestones where we would be making payments following when those milestones are met. The good thing about the project is that, as I mentioned before, it is in our backyard, if you want.
Speaker Change: Yes. So this is a project.
Speaker Change: The development very advanced development.
Speaker Change: As I mentioned before we expect the project to be ready to build within this year. So.
Speaker Change: So it's a very advanced development that we purchased from Algonquin.
Speaker Change: Jim.
Speaker Change: Like in most projects you acquire in an advanced development stage.
Speaker Change: And there are milestones.
Speaker Change: Where we would be making payments.
Speaker Change: In.
Speaker Change: Following.
Speaker Change: When those milestones are met the good thing about the project is that as I mentioned before it is in our backyard.
Speaker Change: If you want and so we feel very comfortable.
Speaker Change: Thanks to the fact that we continue building critical mass.
Speaker Change: In the southwest.
Speaker Change: And.
Santiago Seage Medela: And so we feel very comfortable with a very good PPA that we signed recently, a bit after the acquisition. And it's one of those PPAs we like and with a very good offtaker. So we are fairly comfortable that this project will result in a good addition to our portfolio.
Speaker Change: He has a very good PPA.
Speaker Change: We signed recently.
Speaker Change: After the acquisition.
Speaker Change: So one of those Ppas, we like.
Speaker Change: <unk>.
Speaker Change: We saw very good off taker, so we're fairly comfortable.
Speaker Change: This project will result in a good addition to our portfolio.
Nelson Ng: Okay, great. Just one more question on California. So, right now, you have the COSO-1 and COSO-2 battery storage. You have the... 150 megawatt overnight storage project that's also in California, and then now you have the Imperial project. So, can you just provide a bit of a timeline or color on the timeline and maybe any color on the total cost of these three projects?
Speaker Change: Okay, Great just one more question on California. So right now you have the coastal and coastal to battery storage.
Speaker Change: The.
Speaker Change: 150 megawatt overnight.
Speaker Change: Overnight storage project. That's also in California, and then now you have the Imperial project.
Speaker Change: So can you just provide a bit of.
Speaker Change: Timeline or color on the timeline and maybe.
Speaker Change: Any color on the total cost of these three projects.
Santiago Seage Medela: Yeah, so in terms of timing, the two COSO battery projects are under construction, and construction should be over by the end of this year, Q1 2025, and overnight and Imperial. In both cases, as you know, PPAs have been signed. They are very advanced and should be starting construction between the end of this year and early next year, and depending, you know, on a number of things. But it would take, construction would happen mostly in 2025 and 26. That's more or less the timing.
Speaker Change: Yes, so in terms of timing.
Speaker Change: The two caso battery projects are under construction.
Speaker Change: Construction should be over.
Speaker Change: By the end of this year Q1.
Speaker Change: 25.
Speaker Change: And overnight and imperial in both cases as you know ppas have been signed.
Speaker Change: We are.
Speaker Change: Very advanced.
Speaker Change: It should be starting construction.
Speaker Change: Tim.
Speaker Change: Between the end of this year early next year.
Speaker Change: And depending on.
Speaker Change: On a number of things but.
Speaker Change: It would take.
Speaker Change: Construction would happen, mostly in 2025 and 20.
Speaker Change: <unk> thousand six, but that's more or less the timing.
Speaker Change: In terms of total investment you have the numbers in our disclosure.
Nelson Ng: In terms of total investment, you have the numbers in our disclosure. I don't have them in front of me at this point in time, but if you want to follow up with investor relations, it's in the disclosure. Great.
Speaker Change: I don't have that in front of me at this point in time. So if you want to follow up with Investor relations, but it's in the disclosure.
Nelson Ng: Great, I'll look that up. And then, just finally, can you provide a bit more color on the funding plan? Obviously, capital recycling could be part of the solution, but any additional details on your funding plan? I guess one question is, will those three projects have project-level non-recourse debt.
Speaker Change: Okay, Great I'll look that up and then just finally.
Can you just provide a bit more color on the funding plan like obviously capital recycling could be part of the solution but.
Speaker Change: Any additional details on your funding plan.
Speaker Change: I guess one question is will those three projects.
Speaker Change: Project level nonrecourse debt.
Francisco Martinez: Yes, Nelson, this is Francisco. Good morning.
Speaker Change: Yes, Nelson this is francisco good morning.
Francisco Martinez: One of the good things, as you know, is that since we signed a very good EPA for this project and are contracted, that allows us to put leverage on them on a non-recourse basis at the project level. Capital recycling is another source of capital. We also have part of the CAFTI that we can generate in the future, and we also have some leverage capacity as a whole. So if you combine those four, those would be the sources of funding. Santiago mentioned, as I said, 20, 25 and 26 in some particular cases, 24 for the cost of batteries, but we plan to use those levers, Nelson.
Francisco: One of the good things as you know since we signed the very good PPA for this project and are contracted that allows us to put.
Francisco: Leverage on them on a nonrecourse basis at the project level.
Francisco: Capital recycling as another source of capital.
Francisco: We also have part of the county that will generate in the future and we also have some leverage capacity at our at our holding company. So if you combine those for those will be the.
Francisco: Sources of funding in some darrel mentioned it.
Francisco: <unk> 25, and 26 in some particular cases for for the closer of batteries, but we plan to use those levers Nelson.
Nelson Ng: Great, thanks; I'll leave it there.
Great: Great. Thanks, I'll leave it there.
Operator: Thank you. The next question goes to Angie Storzynski of Seaport. Angie, please go ahead. Your line is open.
Speaker Change: Thank you. The next question goes to you Andy Stern Kinski of Seaport Angie. Please go ahead. Your line is open.
Agnieszka Anna Storozynski: Good morning. I understand you don't want to talk about the strategic review, so maybe more generally about the M&A transactions we have seen over the last couple of months. You know, it does seem like there is quite a discrepancy in the multiples that are being paid for development. I have a question for both of you, and I'm just wondering, you know, we've heard of companies versus existing assets. I mean, we've heard of, you know, low teams in ADG, but those multiples for developers versus, you know, even sub-8 times for debt and loan renewable assets, and I'm just wondering why you think that is and how, if at all, it could apply to your valuation, which seems to more resemble that of a single asset.
Speaker Change: Good morning, So I understand you don't want to talk about the strategic review, so maybe I'm more.
Speaker Change: Generally about M&A transactions, we have seen over the last couple of months.
Speaker Change: It does seem like there is quite a discrepancy in multiples.
Speaker Change: Four.
Speaker Change: Development.
Speaker Change: Companies versus existing assets.
Speaker Change: Let me kind of low teens.
Speaker Change: <unk> and EDG EBITDA multiples for developers versus let's even sub eight times four standalone renewable assets and I'm just wondering.
Speaker Change: Why do you think that is and.
Speaker Change: How is that all I could apply to.
Speaker Change: Evaluation, which seeks to more resemble that of a single asset.
Speaker Change: Thank you.
Santiago Seage Medela: Thank you, Angie. I'm not familiar enough with the situations you described and the reasons for the different valuations you were mentioning. Obviously, in our sector, interest rates play a significant role, but I wouldn't be able to elaborate a lot on the examples you mentioned. Obviously, we are aware of the transactions in the sector, but we typically do not spend too much time trying to understand valuations.
Speaker Change: Thank you Andy.
Speaker Change: I'm not familiar enough with the situations you described.
Speaker Change: <unk>.
Speaker Change: The reason for the different valuations you you were mentioning.
Speaker Change: Obviously in our sector interest rates play a significant role.
Speaker Change: But I wouldn't be able to elaborate a lot regarding the the examples you have mentioned obviously, we are aware all the transactions in the sector, but we would typically do not to spend too much time trying to understand valuations.
Agnieszka Anna Storozynski: Okay, but how about the fact that you managed to buy these wind assets in the UK at such low multiples? You sort of alluded to that, that those are middle-of-the-market types of deals that might be coming at attractive multiples, but overall, just wondering if that is indicative of the value of your existing assets, given that you can buy assets at such low multiples.
Speaker Change: Okay, but how about the fact that you manage devices wind assets in the UK that touched on multiples.
Speaker Change: I mean is it.
Speaker Change: You sort of alluded to that that dose.
Speaker Change: Middle of the market types of deals that might be coming at attractive multiples.
Speaker Change: Just wondering if that.
Speaker Change: Uh huh.
Speaker Change: Indicative of basically the value of the existing assets given that you can buy assets attached on multiples.
Santiago Seage Medela: Yeah, so specifically in that case, or, in general, in what I called before the..., middle part of the market, I would say that competition is lower than in the market you were describing before. So in certain situations, we are able to find opportunities at multiples that we believe are attractive for us. I wouldn't try to draw too many conclusions.
Speaker Change: Yes, so specifically in that case or in general in what I called before the.
Speaker Change: Middle parts of the market I would say that competition is lower than in the market you were describing before so in certain situations, we are able to find opportunities.
Speaker Change: The multiples that we believe are attractive for us I wouldn't try to draw too many conclusions.
Agnieszka Anna Storozynski: I mean, the market for purchasing a $65 million asset is very different from some of the examples you are describing. And obviously, in order to find a situation like that, in our case, we had to look at many situations. In the UK, because of the fact that we have NOLs locally, we have been looking for opportunities to invest for a long time. And until now, we have not found a situation with numbers attractive enough. So I wouldn't say that it's easy to find a $60 million asset in the UK at the multiple we shared with you. In our case, we had to turn around many, many stones.
Speaker Change: The market of.
Speaker Change: Purchasing a 65 million dollar asset.
Speaker Change: <unk> is very different from some of the examples you are you are describing.
Speaker Change: In.
Speaker Change: Obviously in order to find a situation like that.
Speaker Change: In our case, we had to look at many situations actually in the UK because of the fact that we have.
Speaker Change: Nols locally we have been looking for opportunities to invest for a long time until now we have not found a situation with numbers subtractive enough. So I wouldn't say that it's easy to find a $60 million of assets in the UK.
Speaker Change: Multiple.
Speaker Change: We share that with you in our case, we have to turn around many many stones.
Santiago Seage Medela: Okay, and then changing topics a little bit, so the wind assets you guys bought in the U.S., those were expiring PPAs. I mean, sort of opportunistic timing here, given that we have this run-up in forward power prices in the U.S., Texas, in particular. I just wonder if that's been impacting your decisions about repowering, maybe keeping some of these assets in merchant for longer to capture this, you know, improving power market fundamental.
Speaker Change: Okay, and then switching topics a little bit.
Speaker Change: The wind assets you guys bought in the U S. Those are expiring ppas.
Speaker Change: I mean sort of.
Speaker Change: Just the timing here given that we have this run up in forward power prices.
Speaker Change: In the U S. Texas in particular, I, just wonder if thats been.
Speaker Change: Impacting your decisions about Repowering, maybe keeping some of these assets merchants for longer to capture this.
Speaker Change: Yes.
Speaker Change: Improving.
Speaker Change: Power market fundamentals.
Santiago Seage Medela: Yes. So, yes, as you know, specifically the asset in Texas, at this point in time, it's a merchant. And part of the reason for keeping it merchant is that we thought, and we think that we can benefit from, let's say, more positive dynamics in the market. This doesn't mean that we will want to have assets merchant forever, but short term or tactically or opportunistically, we are happy with that exposure in those assets, which are a very small percentage of our portfolio.
Speaker Change: Yes, so yes.
Speaker Change: As you know specifically the asset in Texas.
Speaker Change: We at this point in time.
Speaker Change: Martin.
Speaker Change: Part of the reason for keeping need merchant fees.
Speaker Change: Because we thought and we think that we can benefit from let's say more positive dynamics in the market doesn't mean that we want to have assets merits and forever.
Speaker Change: But short term or tactically or opportunistically, and we are happy with that exposure.
Speaker Change: In those assets, which are a very small percentage of our portfolio at some point in time, we will be we will be.
Santiago Seage Medela: At some point in time, we will be, we expect, repowering, and reinvesting in those assets. But again, depending on how the market evolves, one repowering or another might make more sense. It's not only repowering with wind; you also have opportunities to repower with storage. So, we are trying to maintain that merchant exposure until we have a strong point of view regarding which repowering is the best. And again, we have a partner in these projects. So, it takes two to tango, and we need to make sure that we tango whenever we are both ready, and we have a strong point of view regarding pricing dynamics.
Speaker Change: We expect.
Speaker Change: We powering re.
Speaker Change: Reinvesting in those assets.
Speaker Change: But again, depending on how the market evolves.
Speaker Change: Repowering or another might make more sense.
Speaker Change: It's not only repowering with wind you also have opportunities to repower with storage. So we are trying to.
Speaker Change: No.
Speaker Change: Monday and that merchant exposure until.
Speaker Change: We have a strong point of view regarding which Repowering is the best on again, we have a partner in these projects. So it takes two to tango, but we need to make sure that with tango whenever we are both ready.
Speaker Change: We have a strong point of view regarding pricing dynamics.
Speaker Change: Okay. Thank you.
Operator: Okay, thank you. Thank you. The next question goes to Mark Jarvi of CIBC Capital Markets. Mark, please go ahead. Your line is open. Yeah. Good morning, everyone.
Speaker Change: Thank you. The next question goes to Mark Jarvi CIBC capital markets. Mark. Please go ahead. Your line is open.
Mark Thomas Jarvi: Good morning everyone. Maybe Santiago just coming back to that funding question, what would be the explicit plan for 2024? Just draw on the credit facilities, or are there plans to actually issue corporate level debt?
Mark Thomas Jarvi: Yes, good morning, everyone. So maybe Santiago just coming back to that funding question won't be explicit plan for 2024 just draw on the.
Mark Thomas Jarvi: Credit facilities or is there plans to actually issue corporate level debt.
Santiago Seage Medela: We have in the market, Francisco, as you know, I mean, our leverage is particularly low. We have different funding options, and the one you mentioned is obviously one of the ones we're considering.
Mark Thomas Jarvi: We have at the market from Cisco as you know I mean, our leverage is particularly low.
Santiago: We believe as I said, we have different funding options. The one you mentioned is obviously one of the ones we're considering.
Mark Thomas Jarvi: That would be the credit facility or corporate debt.
Santiago: That would be the credit facility or corporate debt.
Francisco Martinez: Well, I mean, it would be a combination of both where we're running parallel tracks or putting project finance at the same time.
Santiago: Well I mean, it would be the combination of both where we're running parallel track of putting in project finance it at the same time.
Mark Thomas Jarvi: Understandable. And then last quarter talked about equity commitments of 175 to over 200 million. I'll be announcing some projects today. Were any of those contemplated in that projection? And then, I guess, where are you standing right now in terms of expected active deployment now?
Santiago: Understood and then last quarter, you talked about equity commitments of 175 to over $200 million.
Santiago: <unk> announced.
Santiago: Projects today.
Santiago: Were any of those contemplated in that projection and then I guess, where you stand right now in terms of expected after deployment now.
Santiago Seage Medela: So, one, the project in California we announced today, investment is mostly going to happen in 2025-2026, but it was taken into account in the numbers we shared with you. So, in general, I would say that there's no big change there regarding the numbers we shared with you a quarter ago, except for the UK projects. But in general, when we share projections with you, we try to take into account things that we believe are going to happen with a certain probability, so I would not expect a very significant change versus that.
Santiago: So.
Santiago: One.
Santiago: The price in California, we announced today the investment is mostly going to happen in 'twenty five 'twenty six but it was taken into account.
Santiago: The numbers, we shared with you. So in general I would say that there is no big change there.
Santiago: Regarding the numbers, we shared with you a quarter ago.
Santiago: Except for the UK projects.
Santiago: But in general when we show projections, we tried to take into account things that we believe are going to happen with a short term probability so I would not expect.
Santiago: Very significant change for versus that.
Santiago: Okay.
Mark Thomas Jarvi: And then, Santiago, you made the comment about having to turn over a lot of stones or kick a lot of stones to find good acquisitions out there. How would you frame the return opportunity on acquisitions versus development projects? And then maybe on the development side, are your project returns, yeah, are they holding, or do you feel like there's some pressure going to come if interest rates start to kind of lower?
Santiago: And then Santiago you made a comment about having to turn over a lot of stones or kicked a lot of stones to find good acquisitions out there how would you frame the return opportunity on acquisitions versus development projects.
Speaker Change: And then maybe on the development.
Speaker Change: Returns are they holding or do you feel like there's some pressure going to come if interest rates start to trend lower.
Santiago Seage Medela: In general, returns when you develop are higher. Or in other words, you need to look at many, many opportunities on the M&A side to end up having returns comparable to development. That's why I made that comment before at this point in time.
Santiago: In general returns when you develop or higher.
Santiago: Yes.
Santiago: Or in other words, you need to look at many many opportunities on the M&A side to end up having returns comparable to two development.
Santiago: That's why I made that comment.
Santiago: Before at this point in time.
Santiago Seage Medela: The returns we see on the development side continue being similar to what we have seen in the last few quarters. I would say that probably a year. A year and a half ago, returns improved in the market, and more or less, they have been holding there. I think that it will depend a lot on interest rates, whether we maintain these returns, we increase them further, or we see a bit of pressure. But for the last few quarters, what we have seen, I would say, is a rational market with reasonable returns.
Santiago: Returns we see.
Santiago: On the development side continue being similar to what we have been seen in the last few quarters I would say that probably a year.
Santiago: Year, and a half ago returns improved in the market.
Santiago: More or less they have being holding there.
Santiago: I think that it will depend a lot on interest rates.
Santiago: Whether we maintain these returns we increase further or we see a bit of pressure, but for the last few quarters, we have seen.
Santiago: I would say is a rational market with reasonable returns.
Mark Thomas Jarvi: And then your comment about having a hard time defining good accretive acquisitions. Is that just at the size that you're looking at, or do you think that goes across the range of small, medium, and large deals right now? We don't spend too much.
Santiago: And then your comment about having a <unk>.
Santiago: Time to finding good accretive acquisitions is that just at the size that youre looking at or do you think that goes across the range of small medium and large deals right now.
Santiago Seage Medela: We don't spend too much time on large transactions, so I wouldn't be very useful in that part of the market. In the lower to mid-sized part of the market, it takes time again for the last few quarters. We have been able to see interesting opportunities, specifically the multiples we saw in the UK. That's not that easy to find. Okay, thanks for the time today.
Speaker Change: We don't spend too much time.
Speaker Change: On large transactions, so I wouldnt be very useful in that part of the market in the in the lower to mid size part of the market.
Speaker Change: It takes time.
Speaker Change: Again for the last few quarters.
Speaker Change: We have been able to see interesting opportunities.
Speaker Change: Specifically the multiples we saw in the UK, that's not that easy to find.
Speaker Change: Okay. Thanks for the time today.
Speaker Change: Thank you.
Mark Thomas Jarvi: Thank you, and as a reminder, if you would like to ask a question, please press star followed by one on your telephone keypad. And our next question goes to Dimple Gosei of Bank of America. Dimple, please go ahead; your line is open.
Speaker Change: Thank you and as a reminder, if you would like to ask a question. Please press star followed by one on your telephone keypad.
Speaker Change: And our next question guys hate them.
Speaker Change: Of Bank of America. Please go ahead your line is open.
Operator: Hi, thanks for taking the question, guys. A very quick one from me. Can you talk a little bit about the Spanish market, what you're seeing in terms of market prices, outlook, regulatory front, and then also on full-year guidance, are you comfortable with that? Do you reiterate guidance, and is everything in tact today? Yeah, so
Speaker Change: Hi, Thanks for taking the question guys a very quick one for me from me can you talk a little bit about the Spain market, what youre seeing in terms of market prices outlook regulatory front and then also on full year guidance are you comfortable with that.
Speaker Change: Do you reiterate guidance and.
Speaker Change: Is everything intact today.
Dimple Gosei: Yeah, so starting with your second part of a question, our practice is to talk about guidance when we want or need to change it. And so we are not saying anything because our practice is only to talk about it when we need to make some changes.
Speaker Change: Yes, so starting with your second part of your question our practice is to.
Speaker Change: Talk about the items when we.
Speaker Change: They won't need to change it.
Speaker Change: So we are not.
Speaker Change: And anything because our practices.
Speaker Change: Only to talk about it when we need to make some change.
Speaker Change: The first part of your question the marketing of Spain.
Santiago Seage Medela: The first part of the question, the market in Spain. We talked briefly in our disclosure about a PV project in Spain where the project is advanced, and we expect to invest in that project in the coming quarters. So we see at this point in time a market where pricing dynamics are, I would say, not as good as they were a couple of years ago, but we continue finding opportunities here and there, being very careful, and, like always, working with PPAs.
Speaker Change: We talked briefly in our disclosure.
Speaker Change: For example, about PV project in Spain.
Speaker Change: In.
Speaker Change: For the project has advanced on.
Speaker Change: We expect to.
Speaker Change: Invest in that project in the coming quarters. So we see at this point in time.
Speaker Change: A market where pricing dynamics are.
Speaker Change: I would say not as good as they were a couple of years ago.
Speaker Change: But.
Speaker Change: We continue finding.
Speaker Change: Opportunities here and they're being very careful.
Speaker Change: Like always working with Ppas so.
Santiago Seage Medela: So Spain is a market maybe closer to California, where you have a lot of PV installed. That means that, as we say in the sector, you have a very steep dock curve around midday. Power prices are very low there.
Speaker Change: These are market, maybe closer to California.
Speaker Change: Where you have a lot of PV installed that means that as.
Speaker Change: As we say in this sector you have.
Speaker Change: Various deep duck curve.
Santiago Seage Medela: And therefore, from our point of view, we are going to be using PPAs, and we are going to be using, in many cases, storage to try to leverage those opportunities as we do in California or as we do in northern Chile, which again is a similar market with high PPE penetration. So I don't see Spain as a huge growth opportunity. But we do expect to capture some opportunities going forward, especially when the storage market develops a bit more. From that point of view, Spain is a bit behind California, but many of the dynamics that we are seeing in California now, we believe we will see them in Southern Europe in the future.
Speaker Change: Around the midday power prices are very low there.
Speaker Change: And therefore from our point of view.
Speaker Change: We are going to be using ppas, and we're going to be using in many cases of storage.
Speaker Change: To try to leverage those opportunities as we do in California, or as we do in northern Chile, which again is a similar market with high PV penetration, So I don't see Spain, as a huge growth opportunity.
Speaker Change: But we do expect to capture some opportunities going forward, especially when the storage market develops a bit more from that point of view, Spain is a bit behind California.
Speaker Change: Many of the dynamics that we're seeing in California, now, we believe we will see them in southern Europe in the future.
Speaker Change: Thank you.
Speaker Change: Thank you.
Operator: Thank you, we have no further questions, and I'll hand it back to Santiago for any closing comments. Great.
Speaker Change: Thank you we have no further questions I'll now hand back to Santiago for any closing comments.
Santiago Seage Medela: Great. Thank you very much, everybody, for attending.
Santiago: Great. Thank you very much everybody for attending.
Santiago: Good morning.
Operator: Thank you, this now concludes today's call. Thank you all for joining; you may now disconnect your lines.
Speaker Change: Thank you. This now concludes today's call. Thank you for joining you may now disconnect your lines.
Operator: [music].
Operator: Okay.
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Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Okay.
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Santiago Seage Medela: Okay.
Operator: Yes.
Santiago Seage Medela: Okay.
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Santiago Seage Medela: Okay.
Operator: Okay.
Speaker Change: Thank you.
Operator: Okay.
Operator: Right.
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Speaker Change: Thank you.
Operator: Yes.
Operator: Yes.
Operator: Yes.
Operator: Alright.
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Santiago: Thank you David.
Operator: Okay.
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Speaker Change: Thank you.
Speaker Change: Thank you.
Speaker Change: Thank you.
Operator: Okay.
Operator: Okay.
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