Central Puerto S.A.

Good morning ladies and gentlemen. Welcome to Central Porto's first quarter of 2025 earnings conference call. A slide presentation is accompanying today's webcast and will also be available on the investor section of the company's website www.centralporto.com slash en slash investors. All participants will be in a listen-only mode during the presentation. After that, there will be an opportunity for you to ask questions. Please note this event is being recorded. If you do not have a copy of the press release, please refer to the Investor Relations Support section on the company's corporate website at www.centralporto.com. In addition, a replay of today's call will be available in upcoming days by accessing the webcast link at the same section of the Central Puerto's website. Before we proceed, please be aware that all financial figures were prepared in accordance with IFRS and were converted from Argentine pesos to US dollars, for comparison purposes only. The exchange rate used to convert Argentine pesos to US dollars was the reference exchange rate reported by the Central Bank for US dollars for the end of each period. The information presented in US dollars is for the convenience of the reader only and you should not consider these translations to be representations that the Argentine pesos amount actually represents this US dollars amount, or could be converted into US dollars at the rate indicated. Finally, it is worth noting that the financial statements for the first quarter ended on March 31, 2025, include the effects of the inflammation adjustment. Also, please take into consideration that certain statements made by the company during this conference call and answer to your questions may include forward-looking statements which are subject to risks and uncertainties that could cause actual results to be materially different from the expectations contemplated by industry remarks. Thus, we refer you to the forward-looking statement sections of our earnings release and recent filings with the SEC. Central Puerto assumes no obligation to update forward-looking statements except as required under applicable securities laws. To follow the discussion better, please download the webcast presentation available on the company's website. Please be aware that some of the numbers mentioned during the call may be rounded to simplify the discussion. On the call today from Central Puerto is Fernando Bonet, Chief Executive Officer, Enrique Tejano, Chief Financial Officer, and Alejandro Diaz López, Head of Corporate Finance and Investor Relations Officer. And now I will turn the call over to Alejandro Diaz López. Please, Alejandro, you may begin.

Thank you very much and good morning everybody. Thank you for joining us today on a new session of earnings presentation, where we are going to discuss our financial results for the first quarter of 2025. As usually, I will begin the presentation by addressing shortly the main figures of the quarter, followed by a quick update of the regulatory framework and relevant news. Then I will show an overview of the Argentine electricity industry moving afterwards to our operational and financial results. Finally, at the end of the presentation, we will be happy to address any question you may have. Before going into a more exhaustive analysis of our financial and operational results, let me briefly review Central Puerto's main figures for the first quarter of 2025. The group's installed capacity remains at 6,703 MW and energy generation amounted to 5.7 TWh during the first quarter of 2025, increasing 4% year over year. regarding our financial results it should be noted that due to central puerto's accounting methodology all items in pesos must be adjusted for inflation to the end of the quarter local currency while the company reports it results in dollars by converting them at the end of the period official exchange rate i mean the so-called central bank a three 1,500 exchange rate. This causes a non-cash impact that affects positively or negatively as appropriate our financial metrics and affects the comparability. Revenues for the first quarter of 2025 amounted to $196 million, increasing 31% year over year compared to the first quarter of 2024. while adjusted EBITDA rose 8% year-over-year for the first quarter of 2025 to $90 million. Net income for the first three months of 2025 was positive in $80 million, raising 150% year-over-year. Finally, net debt as of March 31st of 2025 amounted to $132 million, keeping almost constant vis-à-vis December of 2024, showcasing a net debt ratio to adjusted VTA of about 0.5 times. Now let's move to the most recent regulatory updates and news. During the first quarter of 2025, spot prices have been adjusted once a month, 4% in January and February and 1.5% in March. As of the date of this conference call, for April and May, we have a cumulative increase of 3.5%. Regarding our investment project currently in execution, Brigadier López keeps its status. It is on schedule, moving at a good pace. Important milestones have been accomplished with regards to water intake, electromechanical works and the installation of the heat recovery steam generator. about san carlos let me tell you that after solving out some issues the project is back on track spectic cod for brigadier lopez is the end of 2025 while for san carlos is the end of the third quarter of 2025. as you may recall In our last call, we commented our most recent acquisition in the mining sector. We increased our equity stake in our silver from 4% to 9.9% as a result of a new share subscription agreement. Continuing with news and regulatory updates, as you may know, the Secretary of Energy aims to deregulate the industry and normalize the wholesale market. We discussed in our last conference call the well-known Resolution 21 issued last January and the so-called Lineamientos de Gamesa. As a result of Resolution 21, we see some interesting and possible opportunities in the management of alternative fuels, as well as with natural gas, though more marginal in this later case, given the existence of the plant gas. We have been strongly working on this and of course we will continue doing so. With respect to delineamientos de CAMESA and the potential new regulatory framework, the Secretary of Energy continues working on this subject. We also anticipated in our last presentation the storage auction. On April 22, CAMESA issued a note amending some terms and conditions, including the submission and awarding dates. As we mentioned previously, we are carefully analyzing this project since we are interested in participating in this process. The last concluding remark concerning the industry, the hydro tender process. By means of presidential decree number 263, a new extension for the process was set, 15 days. As we publicly commented in several opportunities, we will carefully analyze the terms and conditions of this process since we are interested in operating hydro assets. Moving now to Central Puerto's corporate news and updates, let me summarize some recent corporate reorganizations. On January the 1st, the merger of Vientos La Genoveva 2 and Manque Los Olivos and CPR Energy Solutions, being Vientos La Genoveva 2 the absorbing company. Then, on March the 31st, the Board of Directors approved our organization, subject to approval by a shareholders meeting, and the Argentine Securities and Exchange Commission, whereby Central Puerto will absorb CPR Renovables assets and liabilities, and also Central Puerto will spin off part of the assets to be absorbed by Ecogas Inversiones. Finally, on March 31st, the Board of Directors of Empresas Verdes Argentina, Forestal Argentina, Estancia Celina and Las Misiones approved a corporate organization whereby, subject to approval by the shareholders' meetings of the involved companies, EVASA will absorb the assets and liabilities of all of the above-mentioned companies. now let's skip to the argentine electricity market picture for this quarter that will be shown on slide eight and nine by the end of the first quarter of 2025 the country's installed capacity reached 43 554 megawatts which means a decrease of one percent or 319 MW compared to the 43,873 MW recorded as of March 34, 2024. The variation results from the installation of new power facilities, a reduction in install capacity and adjustment and re-powering to power plants already in operations. The contraction of 319 MW is decomposed as follows. A reduction of 1,195 MW in hydraulic sources a reduction of 224 megawatts in thermal sources being all partially offset by the addition of 637 megawatts of wind farms of these 23 megawatts were installed during the first quarter of 2025 Then the addition of 423 megawatts of solar plants, where 205 megawatts were installed during the first quarter of 2025. The addition of 37 megawatts of biomass facilities all during the first quarter of 2025. And the addition of 4 megawatts of biogas power plants. It is worth to highlight that the decline of 1,195 MW in hydro installed capacity is basically explained by our assessment of Chacireta's power availability between Argentina and Paraguay. Since August of 2024, 50% of Chacireta's installed capacity is allocated to Argentina, whereas it used to be approximately 88% before then. Electricity generation shrank 1% during the quarter on a year-over-year basis. The contraction was driven by nuclear and hydro generation. Nuclear generation decreased basically by the two-year maintenance shutdown of Atucha 1, which started in November of 2024. Hydrogeneration shrank due to a combination of factors. First, the aforementioned change in the allocation of Chesiretas installed capacity and energy generation upon Paraguay's claim, and a reduction of river flows. Renewable and thermal generation rose 10% and 9% respectively. The growth in thermal generation led to a rise of 9% in natural gas consumption. alternative fuels consumption was significantly lower. Focusing now on the demand, as you can see, electricity demand rose 1% during the first three months of 2025, vis-a-vis at the same period of 2024. There was slight contraction in residential consumption that was totally offset by commercial and major demand. Big industrial user consumption rose during the whole quarter, reflecting stronger economic activity levels. It was especially remarkable for mining, trade and services, automotive and food and beverage. Finally, the electricity trade balance resulted in a net import situation during the whole quarter, with a peak in February. We now go to slide 10, to our key operating indicators for the quarter. We can see that electricity generated by Central Puerto rose 4% to 5,731 GWh compared to 5,520 GWh during the first quarter of 2024. Hydro energy generation from Piedra del Aguila dropped 2% reaching 793 GWh from 807 GWh in the first quarter of 2024. This decline was primarily due to a reduction in river flows, 27% in the Cochoncura River and 25% in the Limay River, this resulting in lower availability of water for generation. Wind generation rose 3% reaching 373 GWh during the first quarter of 2025 compared to 358 GWh during the same period of 2024. This increment was mainly due to higher generation from Achiras, La Castellana 1 and La Castellana 2 wind farms as a consequence of better operation performance. We should recall that during the same period of 2024, these facilities were either out of service or with reduced operation because of some maintenance works and failures. On the other hand, solar energy generation reached 78 GWh during the first quarter of 2025 compared to 82 GWh in the same period of 2024. basically as a result of some restriction in the node of injection and also weather conditions. Finally, thermal generation increased 5% during the first three months of 2025 compared to the same period of previous year. reaching 4,487 GWh from 4,272 GWh. The growth was mainly due to higher dispatch of some steam turbines in Puerto and Costanera sites and some steam and gas turbines in Lujan de Cuyo, as well as higher generation registered in the combined cycle of Santa Fe. To a lesser extent, a higher availability was recorded in the Buenos Aires combined cycle and a higher dispatch was registered for the Mitsubishi combined cycle, both located in the Costanera site. Now let's move to our revenues breakdown. As you can see on slide 11, this amounted to $196 million in the quarter, as compared to $150 million in the same period of 2024. The variation in revenues is a consequence mainly of a $36 million increase in spot market revenues driven by a cash effect on the gap between currency devaluation and spot remuneration increases, higher thermal generation, mainly in some turbines located in Lujan de Cuyo, Puerto and Costanera sites, and a non-cash effect on the gap between currency devaluation and inflation. Also, a $5 million increase in sales under contract, driven by higher energy sales of San Lorenzo cogeneration plant and higher wind generation of Achiras, La Castellana 1 and 2. Finally, it was also important a non-cash effect on the gap between currency devaluation and inflation. On slide 12, we can see the dynamic of our adjusted EBITDA. During the first quarter of 2025, the group's adjusted EBITDA amounted to $90 million, raising 8% or $6 million when compared to the first quarter of 2024. When analyzing the adjusted EBITDA, we can observe that the variation is mainly explained by the previously stated higher aggregate sales driven by spot sales and sales under contract, a $27 million increase in cost of sales explained basically by higher maintenance expenses and consumption of materials, Due to higher dispatch, higher operating costs, mostly related to the real appreciation of the Argentine peso and a non-cash effect on the gap between currency devaluation and inflation. SG&A rose $5 million, mainly by the real appreciation of the Argentine peso. Similar to production costs, SG&A were also negatively impacted by a non-cash effect on the gap between currency devaluation and inflation. Finally, there was a negative impact of $8 million in other operating results net, basically as a consequence of lower interest from clients due to lower Camisa delays and a negative non-cash effect on the gap between currency devaluation and inflation. Moving to the next slide, the consolidating net income. During the first quarter of 2025, Central Porto's net income amounted to a gain of $80 million. This is basically the result of the previously explained adjusted VDI dynamic and the net financial results. which were driven by lower foreign exchange differences on financial liabilities, lower interest on loans, higher share of the profit of associates, higher holding results on financial assets. These effects were partially offset by a non-cash effect, driven by lower FX difference due to lower FX variation, lower variation in biological asset and results driven by the change in the purchasing power of the currency. Lastly, on slide 14, we have the cash flow dynamic during the first three months of 2025. Net cash provided by operating activities was $44 million. This cash flow arises mainly from $106 million of net income for the period before income tax, properly adjusted to reconcile with net cash flows, $4 million in collection of interest from clients, and $3 million in insurance recovery. These cash flows were partially offset by $18 million in working capital variations and $1 million in income tax and other taxes payments. Then the net cash used by investing activities was $60 million. This amount is mainly explained by $44 million in acquisitions of property, plant and equipment and inventory, and $27 million in acquisition of other financial assets, being all partially offset by $11 million in dividends collections. Finally, we have the net cash provided by financing activities that was $6 million. This is basically the results of $8 million in long-term debt repayments, $6 million in interest and other long-term debt costs paid, being over-partial offset by $20 million in banks and investment accounts overdraft received net. Consequently, our cash position as of March 31st of 2025 amounted to $6 million. If financial assets are included, our total current liquidity amounts to $250 million. With this, I conclude the presentation. Now we invite you to ask any question to our team. thank you very much for your attention

Thank you very much for the presentation. We will now begin the Q&A section for investors and analysts. If you wish to ask a question, please press the button reaction and then click on raise hand. If your question has already been answered, you can leave the queue by clicking on put your hand down. Please hold while we poll for questions. Our first question comes from Martin Arancet with Balance Capital.