Earnings Release 3M January 1, 2018 to March 31, 2018

Transcription

1 Earnings Release January 1, to March 31, May 15,

2 Figures in this Earnings Release are expressed in millions of Argentine Pesos (AR$), except when noted otherwise. Highlights Clisa s consolidated sales for the first three months of ( ) totaled AR$ 4,938 million, an AR$ 1,560 million, or 46.2%, increase as compared to the same period in. Adjusted EBITDA was AR$ 813 million, an AR$ 251 million, or 44.5% increase as compared to ( ). Legal Proceedings On May 8,, the National Criminal and Correctional Federal Court No. 7 issued a decision in Case No. 1614/2016 in process before the Secretary No. 13 of said court, through which it has been resolved, amongst other issues, the prosecution of the President of our subsidiary Benito Roggio e Hijos S.A. ( BRH ), and the seizure of his assets and those of BRH in the amount of AR$ 574 million. The company is working to replace or limit of the seizure of BRH s assets dictated by the aforementioned decision. On May 11,, the aforementioned resolution was appealed. The Management understands that the actions of the Company and those of its representatives in the contract under investigation have been carried out in full compliance with applicable laws and regulations, and considers that the foregoing will be confirmed in the course of the judicial proceedings. For further information please contact: Adalberto Campana Mariano Peterlin Chief Financial Officer Banking & Investor Relations Phone: Phone: inversores@clisa.com.ar inversores@clisa.com.ar 2

3 1. Results from Consolidated Operations Mar.18 Mar.17 Sales 4,938 3, % 18,316 12, % Gross Profit 1,542 1, % 5,859 4, % Gross Margin 31.2% 34.6% 32.0% 34.9% Operating Income % 1,981 1, % Operating Income Margin 11.6% 13.2% 10.8% 12.1% Adjusted EBITDA % 2,620 1, % Adjusted EBITDA Margin 16.5% 16.7% 14.3% 15.4% Clisa s consolidated sales totaled AR$ 4,938 million, an AR$ 1,560 million, or 46.2%, increase as compared to the same period in. This increase was primarily due to an increase in sales in the Construction segment by AR$ 837 million, in the Waste Management segment by AR$ 613 million, in the Water Supply segment by AR$ 105 million and in the Transportation segment by AR$ 14 million. Adjusted EBITDA was AR$ 813 million, an AR$ 251 million, or 44.5% increase as compared to, mainly driven by a AR$ 107 million increase in the Construction segment, a AR$ 72 million increase in Waste Management and a AR$ 60 million hike in Water Supply. Adjusted EBITDA margin decreased to 16.5% for from 16.7% in the same period in. Sales Breakdown Adjusted EBITDA Breakdown Total Sales: AR$ 4,938 million Total Adj EBITDA: AR$ 813 million Water Supply; $ 394; 8% Other Activities & Holding; $ -3; 0% Transportation; $ 67; 8% Other Activities & Holding; $ -8; -1% Transportation; $ 516; 11% Waste Management; $ 1,996; 40% Construction and Toll Road; $ 2,034; 41% Water Supply; $ 100 ; 12% Construction and Toll Road; $ 248 ; 30% Waste Management ; $ 407 ; 49% 3

4 1.1 Waste Management Mar.18 Mar.17 Urban waste management % 3,377 2, % Landfill operations % 3,116 2, % Industrial services % % Waste valorization % % Sales 1,996 1, % 7,468 5, % Gross Profit % 2,459 1, % Gross Margin 31.1% 37.4% 32.9% 37.4% Operating Income % 1, % Operating Income Margin 13.6% 20.1% 15.2% 17.3% Adjusted EBITDA % 1,479 1, % Adjusted EBITDA Margin 20.4% 24.2% 19.8% 21.3% Sales of our Waste Management segment increased by AR$ 613 million, or 44.3%, to AR$ 1,996 million in, from AR$ 1,383 million during the corresponding period in, mainly due to the effect of price adjustment originated in costs inflation and new contracts, as follows: o Landfill operations increased by AR$ 259 million, due to an increase in revenues from Norte III landfill operation and the start of the construction of a landfill site in Villa Carlos Paz; partially offset by the finalization of the dumpsite clean-up project in Mar del Plata; o Urban waste management sales grew AR$ 247 million mainly due to an increase in the City of Buenos Aires and San Isidro contracts as well as to the start of the contract entered into by Metro Ambiental S.A. for the provision of cleaning services and the eradication of dumpsites in the Matanza-Riachuelo basin; o Sales for industrial services provided by Taym and Envairo rose by AR$ 59 million, mainly as a result of higher activity in Uruguay and the depreciation of the Argentine peso against the Uruguayan peso, which increased sales in peso terms; o Sales in waste valorization increased by AR$ 48 million, mainly due to an increase in Central Buen Ayre s sales in peso terms, as a result of increasing energy generation and the depreciation of the Argentine peso against US dollar; as well as to the adjustment in the MBT plant revenues originated in costs inflation. Adjusted EBITDA in our Waste Management segment increased by AR$ 72 million to AR$ 407 million in, principally because of an increase in urban waste management. Adjusted EBITDA margin decreased to 20.4% in from 24.2% in, mainly as a result of the finalization of the project in Mar del Plata and an increase in the activity level of waste disposition services in Norte III 4

5 landfill, since the price structure of the contract reduces margins as the amount of waste treated increases. Key Indicators Mar.18 Mar.17 Landfill operations (million of tons disposed) % % Waste disposal in landfills reached 1.7 million tons during, 11.6% more than, mainly because of (i) an increase in the general economic activity, and (ii) the temporal closure of a treatment plant for construction debris in the City of Buenos Aires. 5

6 1.2 Construction Mar.18 Mar.17 Benito Roggio e Hijos S.A. 1, % 5,319 2, % Haug S.A % 1,014 1, % Benito Roggio e Hijos S.A. (Paraguay) Sehos S.A % % Benito Roggio Panamá S.A % % Total Sales 2,034 1, % 6,926 4, % Gross Profit % 1,543 1, % Gross Margin 22.6% 23.0% 22.3% 23.9% Operating Income % % Operating Income Margin 9.2% 8.8% 7.9% 9.3% Adjusted EBITDA % % Adjusted EBITDA Margin 12.2% 11.7% 10.5% 12.0% Sales in our Construction segment increased by AR$ 837 million, or 70.0%, to AR$ 2,034 million in, as compared to the same period in, mainly due to: o a AR$ 651 million increase in BRH and a AR$ 27 million increase in Sehos, primarily due the start of new projects; o the consolidation of BRH Paraguay figures since FY (*), in the amount of AR$ 194 million; o partially offset by a AR$ 39 million decrease in BRH Panamá, as a result of the completion of works under execution. Adjusted EBITDA in our Construction activities increased by AR$ 107 million to AR$ 248 million in. Adjusted EBITDA margin increased to 12.2% in from 11.7% in, mainly as a result of the consolidation of BRH Paraguay s EBITDA since FY (*), with an EBITDA Margin higher than average. (*) Acquisition of an additional 60% stake in Benito Roggio e Hijos S.A. (Paraguay) On March 6,, BRH concluded an agreement with Roggio S.A., Clisa s main shareholder, for the acquisition of an additional 60% ownership interest in Benito Roggio e Hijos S.A., a corporation organized under the laws of Paraguay ( BRH Paraguay ). The purchase price was AR$ 240 million, in line with the fair market value of BRH Paraguay s equity. As a consequence of this acquisition, BRH became the controlling shareholder of BRH Paraguay (80%). Since this agreement is effective as of December 28,, BRH Paraguay s sales and costs, have been consolidated on a line by line basis in Clisa s financial statements since FY. 6

7 Backlog As of March 31,, BRH s total backlog amounted to AR$ 13,668 million, a 2.4% increase over December. Figures include BRH s construction subsidiaries, affiliates and joint ventures, at BRH s portion of revenue in this entities where applicable. This increase is mainly consequence of (i) a new road project in Paraguay and 3 projects related to Tank & Metallic structures in Peru; (ii) partially offset by the execution of outstanding works. Projects in Argentina represent 75% out of the total backlog. Road projects continued to be the leading sector, representing 46% share of total backlog. Additionally, BRH and its subsidiaries have also presented competitive proposals for several projects that have not yet been awarded or for which contracts have not yet been entered into. These works amount to estimated revenues of AR$ 2,120 million. Projects in execution as of March 31, represent 93% of the total backlog. Backlog by country Mar Dec Argentina 10,305 10,883 Paraguay 1,727 1,046 Chile 1,119 1,153 Peru Brazil Panama 1 1 Total 13,668 13,348 Backlog by sector Mar Dec Road 6,336 6,339 Rail Road 2,765 2,754 Tanks & Metallic Structures 1,612 1,395 Hydraulic 1,359 1,467 Water Treatment Maintenance Engineering Others Total 13,668 13,348 7

8 1.3 Transportation Mar.18 Mar.17 Transportation % 2,341 1, % Railcar repair & maintenance % % Technical assistance & other revenues % % Sales % 2,536 1, % Gross Profit % % Gross Margin 42.1% 38.8% 38.1% 40.5% Operating Income % % Operating Income Margin 10.8% 8.7% 6.7% 11.0% Adjusted EBITDA % % Adjusted EBITDA Margin 12.9% 11.2% 8.5% 13.0% Sales in our Transportation segment increased by AR$ 13 million, or 2.7%, to AR$ 516 million during, mainly as a result of an increase in revenues for transportation services performed by Metrovias due to an increase in passengers, as well as for supervision of works performed by SBASE; partially offset by a decrease in repair and maintenance services for railway rolling stock activity performed by Benito Roggio Ferroindustrial S.A. ( BRf ). Adjusted EBITDA in our Transportation segment increased by AR$ 11 million to AR$ 67 million in, mainly due to an increase in Metrovias, partially offset by a reduction in BRf, due to higher costs in line with inflation. Adjusted EBITDA margin increased to 12.9% in from 11.2% in, mainly as a result of the increase in passengers, as well as for an increase in revenues for supervision of works performed by SBASE, partially offset by a decline in margins in railcar maintenance and repair services. Key Indicators Mar.18 Mar.17 Subway (million paying passengers) 73,9 63,3 17% 329,6 307,6 7% Urquiza Railway (million paying passengers) 6,5 4,6 40% 24,4 20,4 20% Total 80,3 67,9 18% 354,0 328,0 8% Metrovias carried 80.3 million paying passengers during, an 18% increase as compared to. The increase in subway passengers was mainly due to (i) the fact that Constitucion St. in Line C was closed for works during the first two months of and (ii) to an improvement in fleet availability in Line H. Meanwhile, the increase in the Urquiza Line is mainly a result of partial closures in the neighboring San Martin Line due to the construction of an elevated rail line. 8

9 1.4 Water Supply Services Mar.18 Mar.17 Sales % 1, % Gross Profit % % Gross Margin 61.7% 63.1% 64.1% 60.9% Operating Income % % Operating Income Margin 16.8% 10.3% 13.5% 3.6% Adjusted EBITDA % % Adjusted EBITDA Margin 25.3% 13.6% 18.2% 7.3% Sales of our Water Supply Services segment increased by AR$ 105 million, or 36.4%, to AR$ 394 million for. This increase was primarily due to (i) tariff increases granted by the concession grantor to recognize costs increases due to inflation, in accordance with the concession contract and (ii) an updating of the company s revenue base as a result of a cadastral survey. It must be noted that tariff increases approved in (11.2% effective January ) consider cost increases occurred between January and July. Adjusted EBITDA in our Water Supply segment increased AR$ 61 million to AR$ 100 million in. Adjusted EBITDA margin increased from 13.6% to 25.3%, mainly due to the increase in the revenue base and to the fact that fees for the cadastral survey were mainly accrued during. Key Indicators Mar 31 Mar 31 Dec Dec 31 Clients (in thousands) 514,4 508,4 1,2% 512,5 507,7 0,9% Supply Network (in thousands of km) 4,1 4,1 1,2% 4,1 4,1 1,3% Aguas Cordobesas had thousand clients as of March 31,, a 1.2% increase as compared to March 31,. Supply network also grew 1.2% in the same period. 9

10 2. Consolidated Results Mar.18 Mar.17 Operating Income % 1,981 1, % Financial income % % Interest income Income generated by assets for changes in FX rate Other financial income Financial expenses -1, % -3,456-2, % Interest expense ,415-1,474 Expenses generated by liabilities for changes in FX rate , Other financial expenses Net gain / (loss) in associates % Goodwill impairment % Income tax % % Net (loss)/ income for the period , % Financial income Financial income amounted to AR$ 125 million in, an AR$ 68 million or 118.2% increase as compared to, primarily due to: (i) (ii) an increase in interest income due to greater cash equivalent investments in average during in Construction and Transportation, as well as the recognition of interest accrued for delays in payments of certain receivables in Waste Management; and an increase in income generated by assets for changes in FX rate, due to higher peso depreciation against the U.S. dollar during. Financial expenses Financial expenses increased by AR$ 755 million, or 242.2%, to AR$ 1,066 million during, from AR$ 312 million in the same period in, mainly explained by: (i) (ii) a AR$ 621 million increase in expenses generated by liabilities for changes in FX rate, since the peso depreciated 8.0% against the U.S. dollar during, as compared to a 3.1% appreciation during ; and a AR$ 132 million increase in interest expenses mainly due to an increase in debt arising from factoring transactions with recourse due to higher nominal value of the invoices discounted, because of inflation and increased activity. 10

11 Net gain / (loss) in associates Net gain in associates was AR$ 27 million for, as compared to a net loss of AR$ 6 million in the same period during. This change was primarily due to an increase in the results contributed by CV1 Concesionaria Vial S.A and the consortiums in which BRH participates. Income Tax Income tax expense increased AR$ 10 million to AR$ 73 million for, from AR$ 63 million in the same period during, mainly due to higher income tax expense in Construction and Water Supply, partially offset by a decrease in Waste Management. Net loss / (income) for the period While Operating Income increased 27.8% between and, Net Loss reached AR$ 415 million in, as compared to a net gain of AR$ 123 million in, mainly explained by the increase in expenses generated for changes in FX rate. Foreign currency exchange differences, net, which amounted to a AR$ 475 million loss in, have a relevant impact on results. 11

12 3. Financial indebtedness Net Debt Breakdown and Evolution Dec-16 Mar-17 Dec-17 Mar-18 Debt in foreign currency 3,951 4,820 6,355 6,729 Other Debt in Argentine Pesos 1,564 1,090 1,827 1,975 Financial Debt 5,515 5,910 8,182 8,704 Cash & Cash Equivalents ,178-1,480 Debt arising from factoring transactions with recourse ,133-1,270 Net Financial Debt 4,237 4,406 5,871 5,954 Total Debt was AR$ 8,704 million as of March 31,, an AR$ 522 million, or 6.4% increase, as compared to December 31,, mainly due to: i. An AR$ 374 million increase in debt denominated in foreign currency mainly as a result of a 8 % depreciation of the peso against the U.S. dollar during, which increased our U.S. dollar debt in peso terms; ii. an AR$ 148 million increase in debt denominated in local currency principally because of an increase in debt arising from factoring transactions with recourse due to higher nominal value of the invoices discounted, because of inflation and increased activity. 77% of total debt as of March 31, was denominated in foreign currency, mainly US dollars. Debt as of March 31, consisted mainly of corporate bonds (74%) and factoring (15%). Cash and cash equivalents totaled AR$ 1,480 million as of March 31,. This figure does not include restricted cash for AR$ 246 million. 12

13 Debt Maturity Profile (as of March 31, ) (*) TOTAL % Amortizing Debt % Leasing % Overdraft % Corporate Bonds ,706 6,403 74% Factoring 1, ,270 15% Total 2, ,723 8, % Maturity - % 27% 6% 1% 0% 66% 100% (*) Total financial and bank debt figures as per Clisa s financial statements. Debt includes accrued interest and when applicable, as in the case of the Clisa Notes, is recorded at fair value, net of transaction costs. 6,000 5,500 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, Debt Maturity (in AR$ millions)(as of March 31, ) Amortizing Debt Leasing Overdraft Corporate Bonds Factoring 13

14 4. Consolidated Financial Statements Balance Sheet March 31, December 31, Property, pl a nt a nd equi pment 6, ,581.9 Intangi bl e As s ets Goodwi l l Investments in associates Deferred tax a s s ets Other recei va bl es Trade receivables Total non-current assets 8, ,554.7 Other recei va bl es 2, ,577.8 Inventori es Tra de recei va bl es 6, ,302.6 Other i nves tments Cash and cash equivalents 1, ,404.6 Total current assets 11, ,106.1 TOTAL ASSETS 20, ,660.9 Attributable to the owners of the parent Non-control l i ng i nteres ts TOTAL EQUITY Bank and financial debts 6, ,772.5 Provi s i ons for contingenci es Deferred tax liability Other liabilities 1, ,824.7 Trade payables Total non-current liabilities 9, ,749.2 Bank and financial debts 2, ,409.5 Provi s i ons for contingenci es Other liabilities 4, ,977.1 Tra de pa ya bl es 3, ,795.5 Total current liabilities 9, ,237.9 TOTAL LIABILITIES 19, ,987.1 Total liabilities and equity 20, ,

15 Income Statement Mar.18 Mar.17 Sales 4, , % 18, , % Cost of Sales (3,396.1) (2,210.5) 54% (12,457.2) (7,996.8) 56% Gross Profit 1, , % 5, , % Administrative expenses (627.3) (438.1) 43% (2,392.7) (1,705.5) 40% Selling and other operating expenses (348.0) (291.1) 20% (1,523.0) (1,018.9) 49% Other operating income and expenses, net % 38.0 (70.8) - Operating income % 1, , % Financial income % % Financial expenses (1,066.2) (394.7) 170% (3,372.7) (2,286.4) 48% Net (loss) / gain in associates 27.0 (6.4) % Goodwill impairment - (0.9) - (2.7) (3.7) -25% Income (loss) before tax (342.1) (1,009.4) (406.2) 148% Income tax (73.0) (63.2) 16% (393.8) (62.2) 533% Net (loss) for the period/year (415.1) (1,403.2) (468.5) 200% Net (loss) for the period/year attributable to: Owners of the parent (479.0) (1,535.5) (560.6) 174% Non-controlling interests % % (415.1) (1,403.2) (468.5) 200% Operating income % 1, , % Depreciation and amortization % % Adjusted EBITDA % 2, , % 15

16 Cash Flow Statement Cash from operating activities Loss income for the period (415.1) Adjustments for: Depreciation and amortization Deferred income - - Income tax Net gain for sales of property, plant and equipment (0.7) (4.7) Net gain in associates (27.0) 6.4 Net carrying value of property, plant and equipment written off Net carrying value of intangible assets written off Other operating and financial income and expenses, net (88.0) Interest earned and payable, net Changes in operating assets and liabilities: Increase in inventories (71.5) (69.5) Increase in allowances and provisions for contingencies Decrease in investments (7.8) 1.9 Increase in operating receivables (211.9) (523.7) Increase in operating liabilities Net cash flow provided by operating activities 1, Payments and collection of interests, net (513.3) (283.8) Payments of income tax (34.2) (34.6) Net cash flow provided by (used in) operating activities (270.5) Cash from investing activities Purchases of property, plant and equipment (323.8) (216.2) Changes in intangible assets (46.4) (38.3) Purchases of non-controlling interests - - Changes in investments, net - - Proceeds on disposal of property, plant and equipment 63.9 (18.1) Dividends collected - - Cash from entities on which control was obtained during the year - - Net cash flow used in investing activities (301.4) (267.9) Cash from financing activities Changes in other financial receivables and liabilities (82.3) 16.1 Capital contributions from non-controlling interests Dividends paid (5.0) (0.8) Changes in Senior notes - 1,480.5 Changes in bank and financial debts, net (952.9) Net cash flow (used in) provided by financing activities Changes in cash before the effect of currency translation differences Effect of currency translation differences 16.8 (1.3) Increase (Decrease) in cash, net Cash and cash equivalents as of the beginning of the period 1, ,140.8 Cash and cash equivalents as of the end of period 1, ,

17 Notes and Disclaimer Financial Information The consolidated financial statements of Clisa and subsidiaries have been prepared in accordance with International Financial Reporting Standards ( IFRS ) issued by the International Accounting Standards Board (IASB). Presentation of Non-GAAP Information We report our financial results in accordance with IFRS. However, we have included in this Earnings Release certain financial measures and ratios that are not recognized financial measurements under IFRS or generally accepted accounting principles of the United States ( U.S. GAAP ), which we believe gives investors significant information related to our operational performance and our cash generation capability, facilitating comparisons among periods. Adjusted EBITDA, a measure used by management to evaluate ongoing performance, refers to net income (loss) plus financial results, net, plus/less income tax, plus depreciation and amortization, less/plus net gain (loss) in associates and plus goodwill impairment. The measurements of Adjusted EBITDA contained herein are not defined under IFRS or U.S. GAAP, are not measures of operating profit, operating performance or liquidity presented in accordance with IFRS or U.S. GAAP and are subject to important limitations. Adjusted EBITDA does not have a standardized meaning and may not be comparable to those used by other companies Rounding Certain figures included in this Earnings Release have been rounded for ease of presentation. Percentage figures have not been calculated in all cases based on such rounded figures but based on such amounts prior to rounding. For this reason, percentage amounts in this Earnings Release may vary from those obtained by performing the same calculations using the figures in Clisa s Audited Consolidated Financial Statements and Clisa s Unaudited Condensed Interim Consolidated Financial Statements. Certain other amounts that appear in this Earnings Release may not sum due to rounding. Exchange Rates Figures in this Earnings Release are expressed in millions of Argentine Pesos (AR$), unless otherwise specified. For your convenience, the following table sets forth the average and period-end exchange rates for the periods indicated, expressed in pesos per U.S. dollar and not adjusted for inflation. Mar.18 Mar.17 Average AR$/US$ exchange rate 19,97 15,59 17,83 15,18 End of Period AR$/US$ exchange rate 20,15 15,39 20,15 15,39 The average AR$/US$ exchange rate is the average selling exchange rates reported by Banco de la Nación Argentina on the last day of each month during the annual period. Forward looking Statements This Earnings Release may contain statements that constitute forward-looking statements. The words believe, could, may, estimate, continue, potential, anticipate, intend, expect, will, should and plan, among others, are intended to identify forward-looking statements. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions because they relate to future events and, therefore, depend on circumstances that may or may not occur in the future. Forwardlooking statements include, but are not limited to, statements regarding our officers intent, belief or current expectations with respect to, among other things, the use of proceeds of this offering, our financing plans, trends affecting our business, the impact of competition and future plans and strategies. Our future results may differ materially from those expressed in or suggested by these forward-looking statements. Many of the factors that will determine these results are beyond our ability to control or predict. Investors are cautioned not to put undue reliance on any forward-looking statements. Forward-looking statements speak only as of the date they were made and neither the managers nor we undertake to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. 17