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01/11 04:43
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
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.
Adjusted EBITDA $101.1 million, up 64% quarter-on-quarter and 8% year-on-year. The increase was due to effective fuel cost pass-through to revenues and solid operational performance in both renewable portfolio and Central Costanera.
Revenues $233.9 million, up 30% quarter-on-quarter and 26% year-on-year. The increase was mainly due to higher contract sales from renewables and thermal, additional revenues from fuel cost pass-through, and Central Costanera resuming activities after maintenance works.
Total Generation 4,539 gigawatt hours, up 4% quarter-on-quarter but down 20% year-on-year. The year-on-year decrease was due to lower hydrology at Piedra del Aguila.
Capital Expenditures $76.1 million, which includes $48.5 million for the acquisition of Cafayate solar farm, final works for Brigadier Lopez combined cycle and San Carlos Solar farm, and maintenance CapEx.
Net Leverage Ratio 0.5x adjusted EBITDA, indicating a strong balance sheet and financial flexibility.
Renewable Generation Revenues Increased by 24% quarter-on-quarter, supported by a 21% rise in generation volumes driven by wind farms and the newly acquired Cafayate solar plant.
Thermal Revenues Increased in both spot and contract markets due to additional fuel cost pass-through at Terminal 6 and the positive impact of Central Costanera completing maintenance works.
Total Financial Debt $452 million, with cash and cash equivalents at $292 million, resulting in net debt of $159.9 million.
Adjusted EBITDA: Reached $101.1 million, up 64% quarter-on-quarter and 8% year-on-year.
Revenues: Totaled $233.9 million, up 30% quarter-on-quarter, driven by higher contract sales from renewables and thermal.
Renewable Generation Revenues: Increased by 24% this quarter, supported by a 21% rise in generation volumes quarter-on-quarter.
Cafayate Solar Farm Acquisition: Acquired for $48.5 million, adding 80 megawatts of installed capacity.
Energy Secretariat Resolution 400/25: Marks a pivotal step in liberalizing the power market, creating a strong business outlook. Spot revenues now denominated in dollars, mitigating currency and inflation risk.
Battery Energy Storage System Projects: Awarded two projects totaling 205 megawatt hours, scheduled to be operational by mid-2027.
Total Generation: 4,539 gigawatt hours, up 4% quarter-on-quarter but down 20% year-on-year due to lower hydrology.
Thermal Generation Availability: Maintained strong availability rates at 88%, with combined cycles at 96%.
Market Liberalization: Thermal generators gained flexibility to trade capacity and energy in the new Thermal Term Market.
Growth Pipeline: Includes Brigadier Lopez combined cycle and San Carlos Solar Farm nearing COD, and the acquisition of Cafayate Solar Farm.
Lower hydrology at Piedra del Aguila: This resulted in a 20% year-on-year decrease in total generation, impacting operational performance.
Fuel management transition: Generators will be fully responsible for fuel management starting in 2029, which could pose operational and financial challenges.
Currency and inflation risk: Although mitigated by dollar-denominated revenues, these risks remain significant in the Argentine market.
Debt obligations: The company issued a new corporate bond and repaid maturing debt, which could strain financial resources if not managed effectively.
Market liberalization transition: The new framework introduces complexities in trading capacity and energy, requiring strategic adjustments.
Hydro volume decrease: Lower hydro volumes due to environmental factors could continue to impact generation capacity.
Battery Energy Storage System Projects: Central Puerto was awarded two projects under the AlmaGBA Battery Energy Storage Systems tender, adding 205 megawatt hours of new capacity. These projects are scheduled to be fully operational by mid-2027.
Energy Market Liberalization: The Energy Secretariat's Resolution 400/25, effective November 1, 2025, introduces a new framework for Argentina's wholesale electricity market. This includes spot revenues denominated in dollars, a margin on top of variable production costs, and increased flexibility for thermal generators to trade capacity and energy. The resolution is expected to support long-term value creation and mitigate currency and inflation risks.
Renewable Energy Growth: The acquisition of the Cafayate Solar Farm added 80 megawatts of installed capacity. Additional growth is expected from the Brigadier Lopez combined cycle and San Carlos Solar Farm, both nearing COD.
Future Capital Expenditures: Estimated capital expenditure for the two battery energy storage projects is between $130 million and $140 million.
Fuel Management Transition: During the transition period until December 2028, CAMMESA will supply contracted capacity under Plan Gas. From 2029, generators will assume full responsibility for fuel management.
Positive Outlook for 2026: The company anticipates significant growth momentum driven by market liberalization and ongoing strategic projects, reinforcing a positive outlook for 2026 and beyond.
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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