Atlantica Sustainable Infrastructure plc

hello all and welcome to atlantica's third quarter 2023 financial results conference call just a reminder that this call is being webcast live on the internet and a replay of this call will be available on atlantica's corporate website atlantica will be making forward-looking statements during this call which are based on current expectations and assumptions and are subject to risks and uncertainties actual results could differ materially from our forward-looking statements If any of our key assumptions are incorrect or because of other factors, including the risk factors section of the accompanying presentation and in our latest reports and filings with the Securities and Exchange Commission, all of which can be found on our website. Atlantica does not undertake any duty to update any forward-looking statements. Joining us for today's conference call are Atlantica's CEO, Santiago Siege, and CFO, Francisco Martinez-Davis. As usual, at the end of the conference call, we will open the lines for the Q&A session. I'll now pass you over to Mr. Siege. Please go ahead.

Thank you very much. Good morning. Thank you everybody for joining us for our third quarter 2023 call. Before we get into this quarter's results and performance, please allow me to share with you a few remarks. about the renewable energy market and how Atlantica is positioned to take advantage of the opportunities we see in front of us. In first place, we continue seeing a high growth market for renewable energy in the US and in most of the markets where we operate. Demand for renewable energy continues to be strong, both from utilities and from corporates. Regulators, governments, Financing entities continue being supportive. The transition in our energy sector is a reality. We can obviously debate if it will happen as quickly as what some people expected or expect, but it is obvious that at this point in time, solar PV, wind, storage are low-cost, clean, proven solutions in most geographies. As a result, we believe that the market will continue growing regardless of the cost of financing, regardless of the cost of oil or gas, regardless of whether a certain project or a certain technology happens or doesn't happen in a certain location. And again, this is simply because PV wind storage allow to offer cheap low-cost clean electricity. The transition is therefore happening and we need to invest as a sector trillions of dollars over decades using many different technologies to make it happen. The opportunity is therefore here and will continue being there in the future. Within that context of a large growing market, The next question is whether players, companies, will be able to create value in that market. Or in other words, whether pricing for new projects, pricing for new PPAs, pricing for new assets are reflecting a higher cost of capital. Our short answer, based on our experience working in different states and countries, is a clear yes. Based on what we are seeing at this point in time, we are being able, we believe, to incorporate the higher cost of capital in our new investments. In fact, we believe that the current environment represents an opportunity for players with critical mass like us. Two years ago, smaller recently created developers were able to drop prices, sign PPAs, and hope to purchase and finance a project. Today, those players are having difficulties to do that or simply cannot do that. These days, you need a balance sheet, you need experience, you need a proven track record, and we have that. Together with a number of other players, obviously, but we have that. And we believe that we know how to compete with these other larger players much better than how to compete with the smaller developers two years ago. In fact, as an example, a few quarters ago, we talked about a storage project co-located within our geothermal plant in California. At the time, we spoke about different ways of obtaining revenues from that new project. Today, we are announcing that we have signed two tolling agreements, two PPAs, with an investment-grade utility in California for that project and for another similar project. And with those two PPAs, we will be obtaining a higher return than what we expected at the time and fully contracted. I believe that this It's only a couple of examples, but we are trying to show you that at this point in time, we see a constructive market in front of us. As a result of what I'm saying, at this point in time, we see opportunities to invest at attractive returns in our project development pipeline and in projects and assets that might be coming to the market. We will obviously be cautious and allocate capital to opportunities that make sense, and we will consider all investment options while maintaining balance sheet flexibility. As you know, our financing model is and has always been very simple and prudent. We do not use and we have never used complex financing structures. We do not have any partnerships with preferred distribution rights or complex convertible structures. A vast majority of our debt is plain vanilla project debt with fixed interests or hedged. And each project, as you know, progressively repays its debt and makes distributions to the holding company after having repaid that project debt. As a result, our cash available for distribution is clearly after project debt repayment. Francisco will later talk about this in more detail. Finally, allow me to remind everybody about the fact that Atlantica has what we believe is a well-contracted, diversified portfolio of assets in operation. Almost all our revenues are contracted or regulated, and our assets have on average 13 years of contract life in front of them. And something important, We believe that we have a lower exposure to the natural resources, to the solar and wind resource than many of our peers, since more or less 50% of our revenues correspond to availability-based contracts. With that, I will turn over the call to Francisco, who will take us through our financial results.

Thank you, Santiago, and good morning to everyone. Please turn to slide number four, where I will present our key financials for the first nine months of 2023. Revenue in EBITDA remains stable at $858.6 million and $627.3 million, respectively. Regarding cash available for distribution, we generated $184.2 million in the first nine months of 2023, a 2.9% year-over-year growth, or 0.6%. percent on a comparable basis. On the following slide, number five, you can see a performance by geography and business sector. In North America, revenue increased by 4.6 percent to $338.7 million in the first nine months of 2023 compared to the same period of last year, mostly due to higher production in our solar assets in the U.S. with higher availability in Solana. The increase in adjusted EBITDA was lower, 1%, mainly due to lower production from our wind assets, where we had a lower wind resource during the first nine months of the year. In South America, revenue increased by 14.5% compared with the first nine months of 2022, up to $140.3 million. And EBITDA increased 17.9% to 112.1 million. The increase was mainly due to assets which recently entered operation, inflation indexation mechanisms in our contracts, and a small gain corresponding to the sale of our equity interest in our development company to a partner in the first quarter. In the MAIA region, revenue in adjusted EBITDA decreased by 7.9% and 8.3% respectively. This was mostly due to lower revenues that are solar assets in Spain, despite higher production during the period, mainly due to lower electricity prices compared with the same period last year. As you're aware of, these assets are regulated and we're entitled to receive a predefined rate of return. that fluctuation in market prices do not affect the value of the asset. Production also decreased in CACHU due to a scheduled major turbine overhaul, which took longer than expected, and a subsequent unscheduled outage. Looking below at the results by business sector, we can see similar effects. Let's now please return to slide number six, where I'll review our operational performance. Electricity produced by renewable assets reach 4,383 gigawatt hours in the first nine months of 2023, an increase of 6% versus the same period of 2022, mainly due to the increase in our solar assets in the U.S. and Spain, as well as the contribution from recently consolidated assets and those that have in operation recently. Looking at our availability-based contracts, in our efficient natural gas and heat segment, availability decreased, mostly due to schedule maintenance stops during the period, which did not impact revenue. Our water assets and transmission lines continue to achieve very high availability levels for the first nine months of 2023. Moving to slide number seven, we can see that during the last months and given the current conditions in the capital markets, we have proactively managed our investments. And now we have investment commitments in 2023 in the range of $100 to $120 million and $150 to $180 million in 2024. As you can see, we have moved certain investments from 23 to 24. Additionally, together with our partners, we're in the process of divesting our 30% stake in Monterrey, the natural gas asset we owned in the north of Mexico. If the transaction closed, the net proceeds of Atlantica would be in the range of $46 to $53 million. We continue to have ample liquidity to finance the growth, with $48 million in cash at the corporate level and $393.1 million available under a revolving credit facility, which totaled $441.1 million of corporate liquidity. I will now turn the call back to Santiago.