AES GENER 2Q 2017 EARNINGS CALL August 8 th , 2017 Disclaimer - - PowerPoint PPT Presentation

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AES GENER 2Q 2017 EARNINGS CALL August 8 th , 2017 Disclaimer - - PowerPoint PPT Presentation

AES GENER 2Q 2017 EARNINGS CALL August 8 th , 2017 Disclaimer This presentation is not an offer for sale of securities. This material has been prepared solely for informational purposes and is not to be construed as a solicitation or an


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August 8th, 2017

AES GENER 2Q 2017 EARNINGS CALL

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Disclaimer

This presentation is not an offer for sale of securities. This material has been prepared solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities and should not be treated as giving investment advice. No representation or warranty, either express or implied, is provided in relation to the accuracy, completeness or reliability of the information contained herein. Any opinions expressed in this material are subject to change without notice and neither the Company nor any other person is under obligation to update or keep current the information contained

  • herein. The information contained herein does not purport to be complete and is subject to qualifications and assumptions, and neither the Company nor

any agent can give any representations as to the accuracy thereof. The Company and its respective affiliates, agents, directors, partners and employees accept no liability whatsoever for any loss or damage of any kind arising out of the use of all or any part of this material.

This presentation may contain statements that are forward-looking subject to risk and uncertainties and factors, which are based on current expectations and projections about future events and trends that may affect the Company’s business. Investors are cautioned that any such forward looking statements are not guarantees of future performance. Several factors may adversely affect the estimates and assumptions on which these forward-looking statements are based, many of which are beyond our control. The successful execution and commencement of operation of the investment projects that we are developing or constructing depends on numerous external factors, including (i) delays in obtaining regulatory approvals, including environmental permits; (ii) court rulings against governmental approvals already granted, such as environmental permits; (iii) shortages or increases in the price of equipment reflected through change orders, materials or labor; (iv) the failure of contractors to complete or commission the facilities or auxiliary facilities by the agreed-upon date; (v) opposition by local and/or international political, environmental and ethnic groups; (vi) strikes; (vii) adverse changes in the political and regulatory environment in Chile; (viii) adverse weather conditions (ix) poor geological conditions; and (x) natural disasters, accidents or other unforeseen events.

This presentation may not be reproduced in any manner whatsoever. Any reproduction of this document in whole or in part is unauthorized. Failure to comply with this directive may result in a violation of the Securities Act or the applicable laws of other jurisdiction.

The information contained should not be relied upon by any person. Furthermore, you should consult with own legal, regulatory, tax, business, investment, financial and accounting advisers to the extent that you deem it necessary, and make your own investment, hedging and trading decision based upon your

  • wn judgment and advice from such advisers as you deem necessary and not upon any view expressed in this material.

The Company is an issuer in Chile of securities registered with the Superintendencia de Valores y Seguros, the Chilean Superintendency of Securities and Insurance, or “SVS.” Shares of our common stock are traded on the Bolsa de Comercio de Santiago—Bolsa de Valores, or the Santiago Stock Exchange, the Bolsa Electrónica de Chile—Bolsa de Valores, or Electronic Stock Exchange, and the Bolsa de Corredores—Bolsa de Valores, or the Valparaiso Stock Exchange, which we jointly refer to as the “Chilean Stock Exchanges,” under the symbol “AESGENER.” Accordingly, we are currently required to file quarterly and annual reports in Spanish and issue hechos esenciales o relevantes (notices of essential or material events) to the SVS, and provide copies of such reports and notices to the Chilean Stock Exchanges. All such reports are available at www.svs.cl and www.aesgener.com.

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Agenda

Second Quarter 2017 Earnings Call  Highlights  Financial Review  Key Takeaways  Q&A

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HIGHLIGHTS

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Highlights

Second Quarter of 2017

 Highest LTM EBITDA of all time: US$ 813 mn

 Year-to-Date EBITDA of US$ 380 mn, +10% increase over 2016  Second quarter EBITDA of 191 mn, +2% higher than 2016

 Cochrane Project fully operational and contracted since October 2016  Nueva Renca continues contributing margin through the tolling agreements. Secured renewal

for 2018

 Continued enhancing Investment Grade Credit Profile by repaying Corporate Debt

 US$ 132 mn prepaid since December 2016

 In April, the Company declared dividends of US$ 261 mn payable in 2017, equal to 100% of

Net Income in 2016. US$ 146 mn distributed in May 2017

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Highlights (cont’d)

Second Quarter of 2017

Discos 27% Mining 64% Industrial 9%

Contract

  • avg. life:

11 years

Chile PPA Portfolio

 Efficient generation fully contracted with no relevant

maturities until 2022

 Guacolda

re-contracted ~1,200 GWh with industrial customers, with 3-7 year tenors

 Looking forward to present competitive bids in the upcoming

regulated action (October 2017)  We continue developing distributed energy solutions

 4 contracts signed with new industrial customers

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Highlights (cont’d)

Largest Energy Producer in Chile

AES Gener 24% AES Gener 48%

SIC SING ~27.5 TWh ~9.0 TWh

AES Gener 30%

SIC + SING

~36.5 TWh

 AES Gener maintains leading position as largest energy producer in Chile providing 30% of

gross generation during the first half of 2017

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Highlights (cont’d)

Successful growth strategy

 Successful completion of 2,386 MW across 11 projects over the past 10 years  Strong cash flow generation supported by operational projects and long-term PPAs  Alto Maipo is the last project remaining in our second phase of expansion

 Gener contributions to date reached US$ 536 mn with US$ 83 mn left to be contributed

Installed Capacity Strong EBITDA Growth +70%

3,427 5,813 2006 2017 330 813 2006 2Q-2017 LTM

+146%

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Highlights (cont’d)

Alto Maipo Recent Events

 Overall Progress ~54.5%. Tunneling progress ~39% (28.1 of 71.8 kms)  CNM failed to fulfill its obligations under the tunneling contract and as a

result, Alto Maipo terminated the contract for CNM’s default

 Alto Maipo drew on LCs for US$ 73 mn posted by CNM following the

contract termination

 Alto Maipo and CNM entered in arbitration process. The tribunal should be

fully established in 1-2 months

 Alto Maipo took over the construction works previously assigned to CNM in

  • rder to continue progressing with the construction

 Seeking replacement contractor to take over CNM’s portion of works  Alto Maipo project finance debt is in technical default due to CNM contract

termination

La Engorda intake

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Highlights (cont’d)

Alto Maipo Recent Events

 In discussion with non-recourse lenders and other construction contractors

to asses the viability of the project

 Important milestone was achieved, completing the soil tunnel  AES Gener released a Material Fact stating the current situation  Rating Agencies (Fitch and Moody’s) changed their outlook Agency Rating Outlook

BBB- Negative Watch Baa3 Negative BBB- Stable

Tunneling works Soil tunnel completion

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FINANCIAL REVIEW

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Consolidated Financials

EBITDA BY MARKET YTD Second Quarter

Key Financials (US$ mn) 2017 2016

  • Var. (%)

2017 2016

  • Var. (%)

Operating Revenues 1,156 1,099 5% 599 544 10% Gross Profit 291 272 7% 145 150

  • 4%

EBITDA 380 345 10% 191 187 2% EBITDA Margin 33% 31% 32% 34% Net Income 88 108

  • 19%

41 67

  • 38%

36% 50% 40% 31% 22% 16%

2016 345

3%

2017 380

2%

Year to date Second Quarter

33% 47% 42% 28% 23% 23% 2% 2%

2017 191 2016 187

SADI SING SIN SIC

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EBITDA Bridge

29 24 191

SIN 2017 SING

1

SADI

2

2016 SIC

187

EBITDA Increased 2%, US$4 mn Second Quarter EBITDA Increased 10%, US$36 mn

46 29 36

SADI

3

SING SIC 2016

344

2017

380

SIN

Year-to-Date

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SIC Market

YTD EBITDA Decreased by US$ 36 mn

 Lower efficient generation and higher coal costs due to indexation lag  Accrual of green taxes in 2017  Lower margin from Nueva Renca

87 63 24 12

2017 2016 1Q Var 2Q Var

171 84

  • 21%

135 72 2Q 1Q

Regulated Customers 62% Unregulated Customers 35% Spot Sales 3%

US$440 mn

EBITDA Variation (YTD) Electricity Revenue Breakdown (YTD)

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SING Market

YTD EBITDA Increased by US$ 46 mn

 Cochrane and Andes Solar started operations  Accrual of Green taxes in 2017  Lower margin in old Norgener contracts

17 29 51 80 +43%

2017

152 72

2Q Var 1Q Var 2016

106 55 1Q 2Q

Unregulated Customers 77% Spot Sales 23%

EBITDA Variation (YTD) Electricity Revenue Breakdown (YTD)

US$382 mn

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SIN Market

YTD EBITDA Increased by US$ 29 mn

 Higher contract sales  Lower costs in energy purchases  Lower spot sales

13 41 42

1Q Var

28

2016

55 84 43

2017

+52%

2Q Var

1 2Q 1Q

Contract Sales 81% Spot Sales 19%

EBITDA Variation (YTD) Electricity Revenue Breakdown (YTD)

US$145 mn

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SADI Market

YTD EBITDA Decreased by US$ 3 mn

 Higher fuel and transmission costs  Lower generation due to maintenance activities  Higher energy prices and higher volume of contract sales

6 4 1 2

  • 27%

2017

8 4

2Q Var 1Q Var 2016

11 5 1Q 2Q

Contract Sales 59% Spot Sales 41%

EBITDA Variation (YTD) Electricity Revenue Breakdown (YTD)

US$62 mn

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Net Income

YTD, Attributable to AES Gener (US$ mn)

69

24 21 8 35 1H-2017

108

2

88

1H-2016

EBITDA Variation Depreciation (*) Higher Interest Expense (*) Non-controlling Interest Others

(*) Both depreciation and higher interest expense are related to new assets

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Cash Flow and Liquidity

93 174 379

Investment CF

Dec-16

470

Operating CF

Jun-17 2

356

FX Variation Financing CF

Cash and Cash Equivalents US$356 mn Undrawn Committed Facilities US$240 mn

US$596 mn

LIQUIDITY AS OF JUNE 30, 2017

YTD (US$ mn)

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Financial Debt

Total debt outstanding as of June 30, 2017, US$ 3,966 mn

  • Average Cost: 5.5%
  • Average Life: 14 years
  • Net Debt/EBITDA: 4.4x (2.4x excluding non recourse debt)
  • 98% denominated in USD
  • 93% at fixed interest rate

61% 39%

Non Recourse Debt Recourse Debt

US$3.97 bn

47 157 174 153 558 161 173 187 571 1,786 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026/2073

AMORTIZATION SCHEDULE (US$ mn)

Non Recourse Debt Recourse Debt Note: Amortization Schedule does not include potential acceleration of Alto Maipo’s debt

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KEY TAKEAWAYS

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Key Takeaways

 HIGHEST EBITDA OF ALL TIME

 2Q-2017 LTM EBITDA of US$ 813 mn  Cochrane fully operational since October 2016

 ALTO MAIPO

 Exploring all options to address construction challenges. Expect resolution before year-end

 LEADER IN POWER GENERATION IN CHILE

 AES Gener contributed 30% of the total energy generated in Chile during the first quarter of 2017

 DIVERSIFIED PORTFOLIO TO MITIGATE RISKS

 Diversified by geography, technology, customers and fuel sources  Long term dollarized PPAs with creditworthy offtakers

 STRONG CAPITAL STRUCTURE

 Committed to investment grade rating  Strong Liquidity  Extended debt maturity profile  Competitive financing cost and at fixed rate