Release Date: August 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Energy generation increased by 5% year-over-year, maintaining Central Puerto SA (CEPU, Financial)'s leading position in the private power generation sector.
- Revenues for Q2 2024 amounted to $168 million, a 15% increase compared to Q2 2023.
- Net debt reduced by $58 million, showcasing a net debt to adjusted EBITDA ratio of 0.9 times.
- Hydro energy generation from Piedra del Aguila increased by 94% year-over-year due to higher water flow levels.
- The company is actively pursuing new projects, including the San Carlos Solar Farm and Brigadier López combined cycle, both of which are on-schedule and on-budget.
Negative Points
- Adjusted EBITDA for Q2 2024 decreased by 27% year-over-year, amounting to $46 million.
- Net income for the period was $8 million, a 49% decrease year-over-year.
- The company faced a consolidated loss of approximately $22.5 million due to Resolution 58 concerning unpaid receivables with CAMMESA.
- Thermal generation decreased by 7% year-over-year due to lower dispatch of some units.
- Wind generation decreased by almost 8% due to a storm and maintenance works on some blades.
Q & A Highlights
Q: The government issued a resolution to auction some hydro plants, including Piedra del Aguila. What do you think about this privatization process, and are you interested in participating?
A: Fernando Roberto Bonnet, Chief Executive Officer: The government extended the transition period for Piedra del Aguila until December 2025. We are interested in participating in the new bidding process for another 30-year concession, but we need to see the details regarding remuneration and other conditions. Being the current operator gives us an advantage as we know the asset well.
Q: Can you tell us more about the transmission project to take energy to mining companies in the north of the country? Are you considering collaborating with YPF?
A: Fernando Roberto Bonnet, Chief Executive Officer: We are exploring the development of a transmission line to deliver renewable energy to mining companies in the north. This project is in the early stages, and we are collecting demand information. We are open to collaborating with YPF if they have similar plans.
Q: How would you recover the investment in the transmission line?
A: Fernando Roberto Bonnet, Chief Executive Officer: The regulation is not yet clear, but if we build the transmission line and have exclusivity to operate it, we would charge for both the transmission line and the renewable energy delivered through it. We see this as a combined business opportunity.
Q: What are your expectations for CapEx for the remainder of 2024 and 2025? Are you considering tapping the debt market anytime soon?
A: Fernando Roberto Bonnet, Chief Executive Officer: We are evaluating our CapEx needs and financing options, including the possibility of accessing the debt market, but no specific plans were disclosed during the call.
Q: Can you provide more details on the recent regulatory updates and their impact on your financials?
A: Alejandro Diaz Lopez, Corporate Finance & Investor Relations Coordinator: Recent resolutions, including Resolution 58 and Resolution 99, have impacted our financials. Resolution 58 resulted in a consolidated loss of approximately $22.5 million, but it did not affect our ordinary business operations. Resolution 99 increased remuneration prices for energy and power sold in the spot market by 25%, positively affecting our revenues.
Q: How did the devaluation and inflation dynamics affect your financial results?
A: Alejandro Diaz Lopez, Corporate Finance & Investor Relations Coordinator: The sharp devaluation in December 2023 and high inflation in Argentina created a non-cash impact on our financial metrics. Revenues for Q2 2024 increased by 15% year-over-year, but adjusted EBITDA decreased by 27%, and net income decreased by 49% due to these dynamics.
Q: What is the status of your ongoing investment projects, such as the San Carlos Solar Farm and Brigadier López combined cycle?
A: Alejandro Diaz Lopez, Corporate Finance & Investor Relations Coordinator: Both projects are on schedule and on budget. The San Carlos Solar Farm is expected to be completed by April 2025, and the Brigadier López combined cycle project is scheduled for completion by October 2025.
Q: Can you provide an overview of the Argentine energy market and its impact on your operations?
A: Alejandro Diaz Lopez, Corporate Finance & Investor Relations Coordinator: The country's installed capacity increased by 0.5% year-over-year, driven by new power facilities and capacity adjustments. Energy generation rose by 6%, mainly due to higher nuclear and hydro generation. Electricity demand increased by 2%, driven by residential consumption due to colder weather conditions.
Q: How did your energy generation mix change in Q2 2024 compared to Q2 2023?
A: Alejandro Diaz Lopez, Corporate Finance & Investor Relations Coordinator: Energy generation increased by 5% year-over-year. Hydro energy generation from Piedra del Aguila increased by 94%, while renewable energy generation increased by 5%. However, wind generation decreased by 8% due to a storm and maintenance works. Thermal generation decreased by 7% due to higher hydro and nuclear supply.
Q: What were the main drivers behind the changes in your revenue and adjusted EBITDA for Q2 2024?
A: Alejandro Diaz Lopez, Corporate Finance & Investor Relations Coordinator: Revenue increased by 15% year-over-year, driven by higher spot sales and sales under contract. Adjusted EBITDA decreased by 27% due to higher aggregate sales, a positive non-cash effect from currency devaluation and inflation, and a decrease in cost of sales and SG&A expenses.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
