Earnings Transcript for CEPU - Q1 Fiscal Year 2023

Operator: Good morning, and welcome to the Central Puerto Conference Call following the results announcement for the First Quarter ended on March 31, 2023. All participants will be in listen-only mode. [Operator Instructions] Please note, this event is being recorded. If you do not have a copy of the press release, please refer to the Investor Support section on the company's corporate website at www.centralpuerto.com. A replay of today's call may be accessed by accessing the website in the Investor Support section of the Central Puerto corporate website. Before we proceed, please be aware that all financial figures were prepared in accordance with IFRS and are stated in Argentinian pesos, unless otherwise noted. During the call, including the data from previous periods and the growth comparisons, have been stated in terms of Argentine pesos of the end of the reporting period. Also, please note that certain statements made by the company during this conference call are forward-looking statements, and we refer you to the forward-looking statements section of our earnings release and recent filings with the SEC. Central Puerto assumes no obligation to update forward-looking statements, except as required under applicable securities laws. To follow the discussion better, please download the webcast presentation available on the company's website. Please be aware that some of the numbers mentioned during the call may be rounded to simplify the discussion. On the call today from Central Puerto is Fernando Bonnet, Chief Executive Officer; and Enrique Terraneo, Chief Financial Officer; and Federico Bozhori, Financial Controller. And now, I will turn the call over to Federico Bozhori. Mr. Bozhori, you may begin.

Federico Bozhori: Thank you very much. Good morning. We are joining you today with our management team from [indiscernible] Argentina to report on the results of the first quarter of 2023 and then answer any questions you may have. I will like to begin today's call by analyzing the recent events, the industry in general, and finally the operating figures of the first quarter and the most recent financial news and results. I would like to mention the following updates regarding Central Puerto. On December 12 of 2022 through resolution 826/2022, the Secretariat of Energy authorizes generators a tariff increase of 25% in February of the 2023, and 28% in August of the 2023 to spot energy. On February 7, 2023, through resolution 59/ 2023, the Secretariat of Energy authorizes generators that have combined cycle units to other to the agreement on availability of power and improvement of efficiency with the aim of encouraging the necessary investments of major and minor maintenance of the machines. Through this agreement, the other in generators undertake to achieve at least 85% availability of average monthly power in exchange for a new power and generation price. In the case of power, an amount of $2,000 per megawatt month is established plus the sum in pesos corresponding to 85% and 65% of the power by established in resolution 826/2022 for the periods of spring, autumn, and summer, winter respectively. Additionally, the price for generated energy is set at $3.5 per megawatt in the case of using gas and at $6.1 per megawatt for alternative fuel like this, new investments and acquisitions. In-line with our growth strategy, focused on new opportunities in the energy sector and other business in which Argentina shows strong competitive advantages, we perform the following transactions

Operator: [Operator Instructions] Your first question for today is coming from Martin Arancet at Balanz Capital.

Martin Arancet: Hi. Well, thank you for the presentation and for the materials as always. I have four questions. I would like to run them on one, if that's okay. My first question is about Evasa acquisition. I was wondering how much did you pay for the company if you did came with cash or debt also if it was a [hard dollar] [ph] payment [abroad] [ph]?

Fernando Bonnet: Okay. Thank you for your questions. In terms of the payment of Evasa acquisition we cannot provide that information because we signed a confidential agreement with the seller. So, we are not allowed to comment on the pricing. And in terms of payment, we pay [abroad] [ph], yes.

Martin Arancet: Okay. Thank you. And a follow-up, maybe what EBITDA do you estimate for these new forest?

Fernando Bonnet: Well, in terms of EBITDA, the – more or less the idea or the decision that we take was the same that they were implementing, the Evasa were implementing is to conserve the forest and to increase the quantity of [indiscernible] that we plan. So, we are not – we are not selling the trees right now. We expect a better convenient exchange rate and a better convenient price. So, we are using the cash flow to increase the [hectares plant] [ph]. So, we are not having the cash EBITDA that we have received from these. Also, [indiscernible] is not relevant for Puerto right now, for this year, at least. We expect start cutting the trees in next year’s coming and increase EBITDA in those moments, but right now it's almost not relevant for Puerto, these two acquisition brings.

Martin Arancet: Okay. Then any updates that you can share with regarding the Brigadier Lopez expansion? And also, if you could give us an expected CapEx for 2023 and 2024?

Fernando Bonnet: Okay. In terms of Brigadier Lopez, we are working with EPC construction right now in terms of reaching a contract with them. We expect to have this contract signed, I think, in 2 months from now, and we expect to have the plant working in the combined cycle at the end of 2024. In terms of CapEx, we don't have the number yet about the Brigadier Lopez expansion, but will be around $130 million something.

Martin Arancet: My last question then is about the new resolution 59. I was wondering what power plants did you add to that? And how much additional EBITDA do you expect from this resolution?

Fernando Bonnet: Okay. In terms of the plants, we signed the contracts for the combined cycle of Buenos Aires, the combined cycle of Mendosa, the combined cycle of Costanera and Mitsubishi, and the combined cycle of the Siemens one, the small one, which is in Costanera also. And we expect – depending on the evolution of the dollars, of course, and the evolution of the rest of the regulation, you know that the portion that we set in dollars is not the whole remuneration, it's a portion. It's $2,000 per megawatt. The rest will come, will keep coming from – were still coming from the spot prices that the Secretariat established, but if we can have an increase, trying to reach the inflation and the [Technical Difficulty] dollar is not yet – not get lower than inflation in the future, we expect an increase of around $13 million between $13 million and $15 million in the 12-month period of new EBITDA coming from this new regulation.

Martin Arancet: Very clear. Thank you.

Fernando Bonnet: You’re welcome.

Operator: [Operator Instructions] This concludes our question-and-answer session. I would like to turn the conference over to Mr. Bonnet for closing remarks.

Fernando Bonnet: Thank you to everyone for your interest in Central Puerto. We encourage you to call us for any information that you may need. Have a great day.

Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.