AES GENER 2Q 2017 EARNINGS CALL. August 8 th, 2017

Size: px

Start display at page:

Download "AES GENER 2Q 2017 EARNINGS CALL. August 8 th, 2017"

Bathsheba Sullivan
6 years ago
Views:

1 AES GENER 2Q 2017 EARNINGS CALL August 8 th, 2017

2 Disclaimer This presentation is not an offer for sale of securities. This material has been prepared solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities and should not be treated as giving investment advice. No representation or warranty, either express or implied, is provided in relation to the accuracy, completeness or reliability of the information contained herein. Any opinions expressed in this material are subject to change without notice and neither the Company nor any other person is under obligation to update or keep current the information contained herein. The information contained herein does not purport to be complete and is subject to qualifications and assumptions, and neither the Company nor any agent can give any representations as to the accuracy thereof. The Company and its respective affiliates, agents, directors, partners and employees accept no liability whatsoever for any loss or damage of any kind arising out of the use of all or any part of this material. This presentation may contain statements that are forward-looking subject to risk and uncertainties and factors, which are based on current expectations and projections about future events and trends that may affect the Company s business. Investors are cautioned that any such forward looking statements are not guarantees of future performance. Several factors may adversely affect the estimates and assumptions on which these forward-looking statements are based, many of which are beyond our control. The successful execution and commencement of operation of the investment projects that we are developing or constructing depends on numerous external factors, including (i) delays in obtaining regulatory approvals, including environmental permits; (ii) court rulings against governmental approvals already granted, such as environmental permits; (iii) shortages or increases in the price of equipment reflected through change orders, materials or labor; (iv) the failure of contractors to complete or commission the facilities or auxiliary facilities by the agreed-upon date; (v) opposition by local and/or international political, environmental and ethnic groups; (vi) strikes; (vii) adverse changes in the political and regulatory environment in Chile; (viii) adverse weather conditions (ix) poor geological conditions; and (x) natural disasters, accidents or other unforeseen events. This presentation may not be reproduced in any manner whatsoever. Any reproduction of this document in whole or in part is unauthorized. Failure to comply with this directive may result in a violation of the Securities Act or the applicable laws of other jurisdiction. The information contained should not be relied upon by any person. Furthermore, you should consult with own legal, regulatory, tax, business, investment, financial and accounting advisers to the extent that you deem it necessary, and make your own investment, hedging and trading decision based upon your own judgment and advice from such advisers as you deem necessary and not upon any view expressed in this material. The Company is an issuer in Chile of securities registered with the Superintendencia de Valores y Seguros, the Chilean Superintendency of Securities and Insurance, or SVS. Shares of our common stock are traded on the Bolsa de Comercio de Santiago Bolsa de Valores, or the Santiago Stock Exchange, the Bolsa Electrónica de Chile Bolsa de Valores, or Electronic Stock Exchange, and the Bolsa de Corredores Bolsa de Valores, or the Valparaiso Stock Exchange, which we jointly refer to as the Chilean Stock Exchanges, under the symbol AESGENER. Accordingly, we are currently required to file quarterly and annual reports in Spanish and issue hechos esenciales o relevantes (notices of essential or material events) to the SVS, and provide copies of such reports and notices to the Chilean Stock Exchanges. All such reports are available at and 2

3 Agenda Second Quarter 2017 Earnings Call Highlights Financial Review Key Takeaways Q&A 3

4 HIGHLIGHTS 4

5 Highlights Second Quarter of 2017 Highest LTM EBITDA of all time: US$ 813 mn Year-to-Date EBITDA of US$ 380 mn, +10% increase over 2016 Second quarter EBITDA of 191 mn, +2% higher than 2016 Cochrane Project fully operational and contracted since October 2016 Nueva Renca continues contributing margin through the tolling agreements. Secured renewal for 2018 Continued enhancing Investment Grade Credit Profile by repaying Corporate Debt US$ 132 mn prepaid since December 2016 In April, the Company declared dividends of US$ 261 mn payable in 2017, equal to 100% of Net Income in US$ 146 mn distributed in May

6 Highlights (cont d) Second Quarter of 2017 Efficient generation fully contracted with no relevant maturities until 2022 Chile PPA Portfolio Guacolda re-contracted ~1,200 GWh with industrial customers, with 3-7 year tenors Looking forward to present competitive bids in the upcoming regulated action (October 2017) Mining 64% Contract avg. life: 11 years Industrial 9% Discos 27% We continue developing distributed energy solutions 4 contracts signed with new industrial customers 6

7 Highlights (cont d) Largest Energy Producer in Chile AES Gener maintains leading position as largest energy producer in Chile providing 30% of gross generation during the first half of 2017 SIC ~27.5 TWh AES Gener 24% SIC + SING SING ~36.5 TWh AES Gener 30% ~9.0 TWh AES Gener 48% 7

8 Highlights (cont d) Successful growth strategy Successful completion of 2,386 MW across 11 projects over the past 10 years Strong cash flow generation supported by operational projects and long-term PPAs Alto Maipo is the last project remaining in our second phase of expansion Gener contributions to date reached US$ 536 mn with US$ 83 mn left to be contributed Installed Capacity Strong EBITDA Growth +70% +146% 5, , Q-2017 LTM 8

9 Highlights (cont d) Alto Maipo Recent Events Overall Progress ~54.5%. Tunneling progress ~39% (28.1 of 71.8 kms) CNM failed to fulfill its obligations under the tunneling contract and as a result, Alto Maipo terminated the contract for CNM s default Alto Maipo drew on LCs for US$ 73 mn posted by CNM following the contract termination Alto Maipo and CNM entered in arbitration process. The tribunal should be fully established in 1-2 months La Engorda intake Alto Maipo took over the construction works previously assigned to CNM in order to continue progressing with the construction Seeking replacement contractor to take over CNM s portion of works Alto Maipo project finance debt is in technical default due to CNM contract termination 9

AES Gener released a Material Fact stating the current situation Rating Agencies (Fitch and Moody s) changed

10 Highlights (cont d) Alto Maipo Recent Events In discussion with non-recourse lenders and other construction contractors to asses the viability of the project Important milestone was achieved, completing the soil tunnel AES Gener released a Material Fact stating the current situation Rating Agencies (Fitch and Moody s) changed their outlook Tunneling works Agency Rating Outlook BBB- Negative Watch Baa3 BBB- Negative Stable Soil tunnel completion 10

11 FINANCIAL REVIEW 11

12 Consolidated Financials YTD Second Quarter Key Financials (US$ mn) Var. (%) Var. (%) Operating Revenues 1,156 1,099 5% % Gross Profit % % EBITDA % % EBITDA Margin 33% 31% 32% 34% Net Income % % EBITDA BY MARKET Year to date Second Quarter % 40% 22% 2% % 42% 23% 2% % 31% 16% 3% % 28% 23% 2% 187 SIC SING SIN SADI 12

13 EBITDA Bridge Second Quarter Year-to-Date EBITDA Increased 2%, US$4 mn EBITDA Increased 10%, US$36 mn SIC SING SADI SIN SIC SING SADI SIN

14 SIC Market YTD EBITDA Decreased by US$ 36 mn Lower efficient generation and higher coal costs due to indexation lag Accrual of green taxes in 2017 Lower margin from Nueva Renca EBITDA Variation (YTD) Electricity Revenue Breakdown (YTD) % Spot Sales 3% US$440 mn Regulated Customers 62% Q Var 2Q Var Unregulated Customers 35% 2Q 1Q 14

15 SING Market YTD EBITDA Increased by US$ 46 mn Cochrane and Andes Solar started operations Accrual of Green taxes in 2017 Lower margin in old Norgener contracts EBITDA Variation (YTD) Electricity Revenue Breakdown (YTD) +43% Spot Sales 23% US$382 mn Unregulated Customers 77% Q Var 2Q Var Q 1Q 15

16 SIN Market YTD EBITDA Increased by US$ 29 mn Higher contract sales Lower costs in energy purchases Lower spot sales EBITDA Variation (YTD) Electricity Revenue Breakdown (YTD) +52% Spot Sales 19% US$145 mn Contract Sales 81% Q Var 2Q Var Q 1Q 16

17 SADI Market YTD EBITDA Decreased by US$ 3 mn Higher fuel and transmission costs Lower generation due to maintenance activities Higher energy prices and higher volume of contract sales EBITDA Variation (YTD) Electricity Revenue Breakdown (YTD) % Spot Sales 41% US$62 mn Contract Sales 59% Q Var 2Q Var Q 1Q 17

18 Net Income YTD, Attributable to AES Gener (US$ mn) EBITDA Variation Depreciation (*) 69 Higher Interest Expense (*) Non-controlling Interest Others H-2016 (*) Both depreciation and higher interest expense are related to new assets 1H

19 Cash Flow and Liquidity YTD (US$ mn) LIQUIDITY AS OF JUNE 30, 2017 Undrawn Committed Facilities US$240 mn US$596 mn Cash and Cash Equivalents US$356 mn Dec-16 Operating CF Investment CF Financing CF FX Variation Jun-17 19

20 Financial Debt Total debt outstanding as of June 30, 2017, US$ 3,966 mn Average Cost: 5.5% Average Life: 14 years Net Debt/EBITDA: 4.4x (2.4x excluding non recourse debt) 98% denominated in USD 93% at fixed interest rate 61% US$3.97 bn 39% Non Recourse Debt Recourse Debt AMORTIZATION SCHEDULE (US$ mn) Non Recourse Debt Recourse Debt 1, /2073 Note: Amortization Schedule does not include potential acceleration of Alto Maipo s debt 20

21 KEY TAKEAWAYS 21

22 Key Takeaways HIGHEST EBITDA OF ALL TIME 2Q-2017 LTM EBITDA of US$ 813 mn Cochrane fully operational since October 2016 ALTO MAIPO Exploring all options to address construction challenges. Expect resolution before year-end LEADER IN POWER GENERATION IN CHILE AES Gener contributed 30% of the total energy generated in Chile during the first quarter of 2017 DIVERSIFIED PORTFOLIO TO MITIGATE RISKS Diversified by geography, technology, customers and fuel sources Long term dollarized PPAs with creditworthy offtakers STRONG CAPITAL STRUCTURE Committed to investment grade rating Strong Liquidity Extended debt maturity profile Competitive financing cost and at fixed rate 22

4Q-2017 Earnings Call

4Q-2017 Earnings Call AES Gener February 27th, 2018 Disclaimer This presentation is not an offer for sale of securities. This material has been prepared solely for informational purposes and is not to