2018 Results Conference Call. March 27, 2019

Transcription

1 2018 Results Conference Call March 27, 2019

2 Disclaimer This earnings presentation contains forward-looking statements that are based on our current expectations, assumptions, estimates and projections about us and our industry. These forward-looking statements can be identified by words or phrases such as anticipate, forecast, believe, continue, estimate, expect, intend, is/are likely to, may, plan, should, would, or other similar expressions. The forward-looking statements included in this presentation relate to, among others: (i) our business prospects and future results of operations; (ii) the implementation of our combined cycle expansion project; (iii) the implementation of our financing strategy and the cost and availability of such financing; (iv) the competitive nature of the industries in which we operate; (v) future demand and supply for energy and natural gas; (vi) the relative value of the Argentine Peso compared to other currencies; (vii) weather and other natural phenomena; (viii) the performance of the South American and world economies; and (ix) developments in, or changes to, the laws, regulations and governmental policies governing our business, including environmental laws and regulations. These forward-looking statements involve various risks and uncertainties. Although we believe that our expectations expressed in these forward looking statements are reasonable, our expectations may turn out to be incorrect. Our actual results could be materially different from our expectations. In light of the risks and uncertainties described above, the estimates and forward-looking statements discussed in this release might not occur, and our future results and our performance may differ materially from those expressed in these forward-looking statements due to, inclusive, but not limited to, the factors mentioned above. Because of these uncertainties, you should not make any investment decision based on these estimates and forward-looking statements. The forward-looking statements made in this earnings release relate only to events or information as of the date on which the statements are made in this report. We undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date on which the statements are made or to reflect the occurrence of unanticipated events. This presentation does not constitute or form any part of any offer or invitation or inducement to sell or issue, or any solicitation of any offer to purchase or subscribe for, any senior notes or other securities of the Company.

3 MSU Energy Highlights State of the Art Power Generation Portfolio Solid operational performance amongst the top performers of Resolution 21 Expansion project fully funded and advancing according to schedule Phase I, the addition of a fourth gas turbine per site, going through hot commissioning and final checklist before commercial operation. Our installed capacity will increase to 600MW Phase II, the conversion to combined cycle on target for first quarter of 2020; works on the pilots and foundations of the cooling tower and steam turbine in progress By first quarter of 2020, our aggregate capacity will reach 750MW and 100% of our capacity will operate under combined cycle and be fully contracted under long term dollar denominated take or pay contracts Effective January 1 st 2019, the three Entities were merged into MSU Energy, key to simplify operation and gain efficiencies 3

4 Solid Operational Performance Commercial Availability Availability factor, key performance driver, has reached 100% in 4Q18 Average Availability Factor since COD General Rojo Plant (COD June 2017) 99.7% Barker Plant (COD December 2017) 99.8% Villa Maria Plant (COD January 2018) 91.8% Lower than expected dispatch levels are explained by: (i) lower than expected energy demand as a result of the economic slow-down; (ii) below average temperatures and (iii) new scheme for gas cost allocation which affects General Rojo and Villa Maria Plants 4Q18 Average = 100% 100% 100% 97% 100% 100% 97% 99% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Availability Factor 29% 30% 18% 48% 38% 54% 14% 25% 25% 19% 17% 12% 8% 8% 17% 18% Jan-18 Feb-18 Mar-18* Apr-18* May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dic-18 Jan-19 Feb-19 General Rojo Barker Villa María Average dispatch * Villa Maria was affected by mechanical event on GT#1. Issue was fixed in April, performing at 100% thereafter. 4

5 Stable and predictable dollar denominated revenues 2018 Monthly Sales Breakdown USD millions Sales USD millions Total Revenues in 4Q18 reached USD 27.3 million and USD million in fiscal year 2018 Fixed Capacity payments represent 93% of total revenues US dollar denominated contracts paid monthly at previous day fx rate Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec General Rojo Barker Villa Maria* * Villa María plant reached COD on January 25, During March, Villa Maria experience a mechanical failure on GT#1. This issue was resolved by GE at the end of April according to the construction guarantee. Quarterly Sales by Plant USD millions Total Revenues by Type Fixed Capacity payment Variable Payment Other revenues % Q18 2Q18 3Q18 4Q18 General Rojo Barker Villa Maria 1Q18 2Q18 3Q18 4Q

6 Efficient costs structure Costs USD millions Breakdown - USD mm 2018 % Labor cost % Maintenance % Professional fees % Taxes, rates and contributions 1.6 8% Cost / Revenues = 19% Labor cost explained by salaries, social contributions and benefits Maintenance expenses related to Contract Service Agreement with GE Professional fees mainly related to audit, tax, legal services, project advisory. In 4Q18, includes non-recurrent expenses related to corporate reorganization. Approximately 50% of cash costs are denominated in US dollar Insurance 1.2 6% Vehicles and Travel 0.7 4% Selling Expenses 0.6 3% Headcount - # as of December 31, 2018 Barker O&M #21 Office 0.6 3% Other 0.4 2% Total 20.1 General Rojo O&M #23 #104 Villa Maria O&M #21 G&A #39 Highly Efficient Operations Total MW per employee = 4.3 6

7 Financial performance in line with full year forecasts EBITDA as of December 31, 2018 USD millions Combined EBITDA during 4Q18 reached USD20.7 million, 28% lower than 3Q18. This is explained by: 3Q18 includes a USD 4.1 million gain in General Rojo, related to Other Income in connection to GE s compensation for late COD (liquidated damages) 91.4 Dispatch levels on General Rojo and Villa Maria Plants affected by new scheme for gas cost allocation One time non-recurrent expenses related to the merge of the three OpCos and labor costs adjustments to mitigate inflation 1Q18 2Q18 3Q18 4Q Combined EBITDA as of December 31, 2018 stands at USD 91.4 million, in line with forecasts Net Income as of December 31, 2018 USD million Q18 2Q18 3Q18 4Q Combined Net Income during 4Q18 reached USD 8.1 million, USD 9.6 million higher than 3Q18, mainly explained by the appreciation of the Argentine peso during the quarter Combined Net Loss is explained by Depreciation & Amortization of USD 13 million, Financial Losses of USD 83.7 million Financial Losses are explained by Net Interest Expenses of USD 43.8 million and non-cash Foreign Exchange losses of USD 39.6 million, driven by the negative effect of the devaluation of the Argentine peso over our VAT tax credits Financial Expenses breakdown USD mm as of December 31, 2018 Interest expense (43.8) Foreign exchange loss (39.6) Others (0.4) Total Financial expenses (83.7) 7

8 Cash Flow & Balance Sheet highlights Operating Cash Flow * - USD millions Operating Cash Flow for 4Q18 reached USD 29.6 million and accumulates USD million for fiscal year As of December 2018, VAT credit amounts USD 46 million. These credits are progressively reimbursed through monthly billing which explains why our Operating Cash Flow is higher than EBITDA 1Q18 2Q18 3Q18 4Q * Excludes VAT taxes related to capex and debt service Debt Profile - USD millions Net Debt as of December 2018 stands at USD 731 million, consisting of: USD 600 million International Bond USD 250 million Private Placement Note Debt Breakdown USD mm as of December 31, 2018 Debt amortization profile is well aligned with the incremental combined cycle cash flows Steep deleveraging curve as of Net leverage stabilizing below 3.5x by 2021 Private Placement Note International Bond Senior secured notes * (830) Accrued bond interests (20) Total Financial Debt (850) Cash 119 Net Financial Debt (731) * Net of capitalized issuance expenses

9 Combined-Cycle project advancing according to schedule Completed works Pending works NTP EPC signed with AESA March 8, 2018 General Rojo plant COD Fourth Gas Turbine (GT) Late March/April 2019 March 2019 Villa Maria and Barker plants COD Fourth Gas Turbine (GT) April 2019 General Rojo plant COD (Combined-cycle) 1 month prior to Cammesa s commitment date February 2020 Barker & Villa Maria plants COD (Combined-cycle) 2 months prior to Cammesa s commitment date March March Engineering 2018 Soil movements Foundations GT & HRSG Fourth GT and gas compressor mounted on each site Power Train Assembly & BOP Switchyard expansion 132kv Pre-commissioning & Commissioning COD Fourth GT Assembly cooling tower Assembly boilers Steam turbine assembly USD 230 million invested as of March 2019 BOP installation Pre-commissioning & Commissioning COD CC 9

10 Strategic expansion and conversion to combined-cycle Construction Update GT#4 Cold commissioning completed. Hot commissioning on-going First fire successfully completed in General Rojo and Villa Maria. Scheduled for late March in Barker plant Auxiliaries Assembly of filter house completed. Works on pumps and other equipment Piping Tie-Ins completed, testing and flushing activities in progress Main transformer mounted, fire wall completed Water tanks assembly works near completion. Painting in progress Switchyard Gantries erected. Calibration of equipment and testing. PHASE II initiated Foundations of cooling tower and steam turbine in progress. Pipe rack assembly in progress. 10

11 General Rojo power plant layout Combined-Cycle expansion Expansion project Existing simple cycle assets Power Island: 1 x GE LM6000 PC SPRINT Raw and demi water tank expansion Switchyard expansion 4 x HRSG Gas compressor expansion Cooling tower Power Island: Steam Turbine 11

12 Conversion to Combined-Cycle Work in progress 4th Gas Turbine Mounted at Each Site 12

13 Conversion to Combined-Cycle Work in progress Boiler Foundations Completed Gas Compressor Mounted Switchyard Expansion Works (ongoing) 13

14 Conversion to Combined-Cycle Work in progress Filter House Assembly Main Transformer Mounted Raw and Demi Water Tanks Erected Switchyard: Gantries, Profiles and Insulators Assembly 14

15 Conversion to Combined-Cycle Work in progress Pipe Rack Extension in Progress Power Control Module (PCM) Assembly Cooling Tower and Steam Turbine Foundations near completion 15

16 Financial Statements 16

17 Financial Highlights Combined Income Statement In USD As of December 31, 2018 Rio Energy UGEN UENSA Total Net revenue 38,557,501 35,773,701 32,458, ,789,921 Cost of sales (9,102,853) (7,570,802) (10,324,576) (26,998,231) Gross profit 29,454,648 28,202,899 22,134,143 79,791,690 Marketing and administrative expenses (3,779,637) (1,479,053) (1,241,842) (6,500,532) Other income and expenses 4,155, ,067 4,740,179 Operating profit 29,830,123 26,723,846 21,477,368 78,031,337 Financial income and expenses net (26,253,433) (32,564,802) (24,925,798) (83,744,033) Income (loss) before income tax 3,576,690 (5,840,956) (3,448,430) (5,712,696) Loss (income) tax benefit (763,397) 914,570 83, ,190 Net Income (loss) for the period 2,813,293 (4,926,386) (3,365,413) (5,478,506) 17

18 Financial Highlights Combined Cash Flows In USD As of December 31, 2018 As of December 31, 2017 Operating activities Loss for the period/year (5,478,506) (4,106,109) Adjustments for: Income tax (234,190) (665,368) Depreciation of property, plant and equipment* 13,416,900 9,334,646 Foreign exchange loss 39,580,973 8,718,085 Accrued interest 43,783,151 3,253,743 Other financial results 379,909 - Other income and expenses (4,090,037) - Changes in operating assets and liabilities Increase in accounts receivables (15,241,145) (6,665,717) Decrease in other receivables 68, ,863 Decrease in tax receivables 15,849,341 3,233,992 Increase in trade accounts payable 11,573, ,862 Increase (Decrease) in taxes payable 28,812 (19,379) Increase (Decrease) in other liabilities 491,019 (2,157,604) Subtotal cash flows provided in operating activities 100,128,360 12,573,014 Tax payments for property, plant and equipment (38,228,769) (51,609,756) Payments of taxes related to loans (6,427,128) (8,979) Net cash flows provided in operating activities 55,472,463 (39,045,721) Changes in investment assets Interest income received 447, ,440 Payment of related financing expenses - (4,094,758) Loans granted (35,610,000) - Advanced to purchase property, plant and equipment (2,497,006) - Acquisition of spare parts (3,223,759) (531,840) Acquisition of property, plant and equipment (312,224,070) (251,265,865) Net cash flows used in investing activities (353,107,442) (255,604,023) Financing activities Senior Secured notes 850,000,000 - Interest senior secured notes (24,723,000) - Increase in loans 49,000, ,299,992 Payments of loans, interest and financing expenses (463,678,487) (6,654,095) Net cash flows provided by financing activities 410,598, ,645,897 Net increase in cash 112,963,534 3,996,153 Cash and cash equivalents at the beginning of period/year 6,363,169 2,367,016 Cash and cash equivalents at the end of period/year 119,326,703 6,363,169 Net increase in cash 112,963,534 3,996,153 * Depreciation method revised to unit of productions (please refer to note 3 of the Combined Financial Statement) 18

19 Financial Highlights Combined Balance Sheet In USD As of December 31, 2018 As of December 31, 2017 Assets Property, plant and equipment 649,176, ,803,133 Spare parts 5,095,599 1,871,840 Financial credits 37,875,796 - Tax receivables 17,868,398 23,773,387 Deferred tax assets 1,138, ,485 Other receivables 15,040,287 - Total non-current assets 726,195, ,352,845 Tax receivables 31,380,027 34,229,849 Other receivables 10,438,454 2,395,937 Accounts receivable 24,243,850 7,344,029 Cash and cash equivalents 119,326,703 6,363,169 Total current assets 185,389,034 50,332,984 Total assets 911,584, ,685,829 Shareholders equity Capital 27,301,097 27,301,097 Legal reserve 116,084 2,547 Other reserves 2,157, Accumulated loss (15,147,420) (7,398,167) Total equity 14,427,259 19,905,765 Liabilities Trade accounts payable 12,423,095 - Loans 829,667, ,972,479 Total non-current liabilities 842,091, ,972,479 Loans 20,116,174 67,324,669 Other liabilities 947, ,804 Taxes payable 81,701 52,889 Trade accounts payable 33,920, ,973,223 Total current liabilities 55,066, ,807,585 Total liabilities 897,157, ,780,064 Total liabilities and equity 911,584, ,685,829 19

20 Financial Highlights Combined EBITDA Reconciliation In USD As of December 31, 2018 Rio Energy UGEN UENSA* Total Comprehensive Income 2,813,293 (4,926,386) (3,365,413) (5,478,506) Financial income and expenses net 26,253,433 32,564,802 24,925,798 83,744,033 Income tax 763,397 (914,570) (83,017) (234,190) Depreciation and amortization 3,649,869 3,382,249 6,384,782 13,416,900 EBITDA 33,479,992 30,106,095 27,862,150 91,448,237 * UENSA, Villa Maria plant reached COD on January 25,

21 Contact information Investor Relations Cerrito nd floor I C1010AAZ I Buenos Aires ir@msuenergy.com