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01/11 04:42
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call presents several challenges: a significant decline in energy generation, regulatory uncertainties, and revenue reduction. The Q&A session highlights concerns about project timelines and lack of insurance compensation for maintenance costs. Despite a solid financial position and increased net income year-over-year, these negatives outweigh the positives. The market cap suggests a stronger reaction to these issues, leading to a predicted stock price movement in the negative range (-2% to -8%).
Adjusted EBITDA $61.4 million, reflecting a 32% decrease compared to $89.9 million in the previous quarter and a 35% decrease compared to the second quarter of 2024. The decrease was mainly due to the seasonality of capacity charges and maintenance works in the Costanera and Central Puerto plants, which impacted revenues and increased operational expenses.
Last 12 months Adjusted EBITDA $309.9 million, which is 8% above the full year 2024. This increase reflects the overall operational performance over the last year.
FONINVEMEM debt collection $17.2 million in the second quarter of 2025.
Total generation volumes 4,372 gigawatt hours, a 24% decrease compared to the first quarter and a 12% decline year-over-year. The decrease was primarily due to scheduled upgrades and maintenance of the Central Costanera Mitsubishi combined cycle and the steam turbine 6 from Central Puerto complex.
Revenues $179.6 million, a decrease of 8% compared to the previous quarter and an increase of 7% compared to the same quarter of the previous year. The decrease from the previous quarter was due to seasonality of spot capacity charges and lower volumes, partially offset by additional self-managed fuel procurement.
Capital expenditures $102.4 million in the semester, mainly allocated to the 155 megawatts of installed capacity being built. This includes 140 megawatts from the Brigadier Lopez combined cycle and 15 megawatts from the San Carlos solar project.
Net leverage ratio 0.56x the last 12-month adjusted EBITDA, reflecting a solid financial position.
Outstanding financial debt $409 million as of June 13, 2025.
Cash, cash equivalents, and current financial assets $235 million as of June 13, 2025.
Brigadier Lopez Combined Cycle: Adding 140 megawatts to current capacity, bringing total to 421 megawatts. Expected commercial operation in Q4 2025. Total investment: $185 million.
San Carlos Solar Project: Delivering 15 megawatts of installed capacity. Estimated CapEx: $18 million. Expected operational before year-end.
Alamitos Wind Project: Planned for 130 megawatts with potential expansion to 150 megawatts. Estimated investment: $130-$150 million. Construction to begin Q1 2026.
Battery Storage Tender Process: Submitted bids for 150 megawatts through Central Puerto and 55 megawatts through Central Costanera. Final definitions expected by end of August.
Hydro Concession Extensions: New conditions released by National Executive Branch. Under analysis for potential extensions.
Operational Efficiency: Maintenance works on Central Costanera Mitsubishi combined cycle and upgrade of steam turbine 6 impacted generation volumes but reflect high operational standards.
Energy Generation: Total generation volumes: 4,372 GWh, a 24% decrease QoQ and 12% YoY due to maintenance and upgrades.
Growth Strategy: Active focus on growth opportunities with projects adding around 300 megawatts of installed capacity, including Brigadier Lopez, San Carlos, and Alamitos projects.
Regulatory Adjustments: Spot prices in pesos adjusted monthly for inflation. Ongoing electricity market reform expected to expand self-managed fuel procurement under Resolution 21.
Adjusted EBITDA decrease: Adjusted EBITDA decreased by 32% quarter-over-quarter, primarily due to seasonality of capacity charges and maintenance works in the Costanera and Central Puerto plants, leading to lower revenues and additional operational expenses.
Power generation decline: Total generation volumes decreased by 24% compared to the previous quarter and 12% year-on-year, mainly due to scheduled maintenance and upgrades at key facilities, impacting revenue generation.
Regulatory uncertainties: The National Executive Branch issued Decree 476 with new terms for hydro concessions, requiring payment for adhesion agreements and creating uncertainty around concession extensions.
Hydroelectric power challenges: Hydroelectric power generation is being impacted by low water levels, affecting the overall energy supply.
Revenue reduction: Spot revenues were impacted by seasonal capacity charges and lower volumes sold, leading to a quarter-over-quarter revenue reduction of $19.2 million.
Economic and currency risks: Revenues in U.S. dollars are subject to non-cash impacts due to financial statements being reported in Argentine pesos and converted to U.S. dollars, creating potential volatility.
Project execution risks: Ongoing projects like Brigadier Lopez, San Carlos solar project, and Alamitos wind farm face risks related to timely completion, cost overruns, and technology procurement.
Revenue and Market Trends: The company expects additional government disclosure to the ongoing electricity market reform, including economic incentives to expand self-managed procurement of fuels as allowed under Resolution 21. Spot peso-denominated prices are expected to maintain parity with inflation and exchange rate variation.
Project Completion and Capacity Expansion: The Brigadier Lopez combined cycle project is expected to add 140 megawatts of capacity and be operational in Q4 2025. The San Carlos solar project will add 15 megawatts of capacity and is also expected to be operational by year-end. The Alamitos wind project, planned for 130 megawatts with potential expansion to 150 megawatts, is scheduled to begin construction in Q1 2026.
Battery Storage and Hydro Concessions: The company is participating in the battery storage tender process, submitting bids for 150 megawatts through Central Puerto and 55 megawatts through Central Costanera. Final definitions for the Alamitos wind project are expected by the end of August. Hydro concession extensions are under analysis following new conditions released by the National Executive Branch.
The selected topic was not discussed during the call.
The earnings call revealed strong financial performance with a 64% QoQ increase in adjusted EBITDA and a 30% increase in revenue. Positive market liberalization impacts are expected, with a potential 20%-25% EBITDA increase. Despite lower hydro volumes, renewable and thermal revenues grew significantly. The Q&A highlighted optimistic guidance and strategic capacity expansions. However, management's vague responses on certain topics might cause slight concern. Considering the company's market cap, these positive developments are likely to result in a stock price increase of 2% to 8% over the next two weeks.
The earnings call presents several challenges: a significant decline in energy generation, regulatory uncertainties, and revenue reduction. The Q&A session highlights concerns about project timelines and lack of insurance compensation for maintenance costs. Despite a solid financial position and increased net income year-over-year, these negatives outweigh the positives. The market cap suggests a stronger reaction to these issues, leading to a predicted stock price movement in the negative range (-2% to -8%).
The earnings call summary shows strong financial performance with significant revenue and net income growth, alongside a stable net debt position. The strategic investments and partnerships suggest positive future prospects. Despite some regulatory and project execution risks, the optimistic guidance and ongoing projects like the wind farm development indicate growth potential. The Q&A section highlights interest in future auctions and ongoing strategic initiatives, albeit with some uncertainties. Given the company's market cap, the overall sentiment leans towards a positive stock price movement in the short term.
The company's strong financial performance, including a 150% increase in net income and a 31% increase in revenue, is a significant positive indicator. While there are regulatory and supply chain risks, the company's liquidity and low net debt ratio provide a buffer. The Q&A highlighted some uncertainties but did not reveal major negative surprises. Given the company's market cap and the positive financials, a positive stock price movement of 2% to 8% is expected over the next two weeks.
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