AES GENER 3Q-2017 EARNINGS CALL November 2, 2017 Disclaimer This - - PowerPoint PPT Presentation
AES GENER 3Q-2017 EARNINGS CALL November 2, 2017 Disclaimer This - - PowerPoint PPT Presentation
AES GENER 3Q-2017 EARNINGS CALL November 2, 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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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
Third Quarter 2017 Earnings Call Highlights Financial Review Key Takeaways Q&A
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HIGHLIGHTS
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Highlights
Third Quarter of 2017
Last-Twelve-Months EBITDA of $769 mn. YTD, $562 mn, -2% decrease over 2016 We continue to be the largest energy producer in Chile Cochrane plant of 550 MW fully operational since October 2016 Nueva Renca continues contributing margin through profit sharing agreements Successfully completed scheduled major maintenance in Unit 2 of Ventanas Accrual of Green Taxes since January 2017, including those to be recovered
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Highlights
Third Quarter of 2017
2017 distribution companies auction in Chile held in October for 2,200 GWh/y Argentina Regulatory Improvements in the Energy sector Dividend distribution Year-to-Date of $205 mn, of $261 mn declared for 2017 On track with debt prepayment program to strengthen credit profile Selected for Dow Jones Sustainability Index Chile for third year in a row Alto Maipo: making progress in on-going negotiations
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Highlights
Third Quarter of 2017
The Company continues developing integrated energy solutions to capture the migration of
customers from regulated segment to the unregulated regime, by securing PPAs with commercial & industrial customers
Executed PPAs for over 1,000 GWh per year, including Guacolda Tenor of 4 years for customers with a consumption between 0.5 and 5 MW Focused on maintaining a long term partnership with the customers
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Highlights (cont’d)
Largest Energy Producer in Chile
AES Gener 24% AES Gener 48%
SIC SING ~41.3 TWh ~14.0 TWh
AES Gener 30%
SIC + SING
~55.3 TWh
AES Gener maintains leading position as largest energy producer in Chile providing 30% of
gross generation during the first nine months of 2017
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Highlights (cont’d)
Alto Maipo
Construction Update
Overall project progress of 58% Total tunnel progress of ~ 44%
32.7 kms out of 73.7 kms
Construction continues with more than 4,000
employees
Alto Maipo continues self-performing in Volcan and
Yeso areas and completed more than 1 kilometer of tunneling works, showing significant improvements
On-going negotiations with financing parties and
potential contractors
Project Layout
2 1
Project Location Metropolitan Region
1 2
Alfalfal II. 264MW Unit Las Lajas. 267MW Unit Tunnel
L1 VL-4 VL-8 VA-1 VA-2 VA-4 V5 V1
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Highlights (cont’d)
Alto Maipo
Restructuring Update
Potential solution should consider: Lump-Sum, Fixed Price Contract Guaranteed Completion Date Strong incentives for early project completion Most of potential equity contributions back-ended Lenders to contribute to the solution Making progress towards having in-principle
agreement with lenders and potential contractor before year end
Focused on maintaining investment grade rating
Project Works
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FINANCIAL REVIEW
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Consolidated Financials
EBITDA BY MARKET Third Quarter YTD
Key Financials (US$ mn) 2017 2016
- Var. (%)
2017 2016
- Var. (%)
Operating Revenues
615 623
- 1%
1,771 1,722 3%
Gross Profit
135 191
- 29%
426 463
- 8%
EBITDA
182 227
- 20%
562 571
- 2%
EBITDA Margin
30% 36% 32% 33%
Net Income
26 81
- 68%
114 190
- 40%
Third Quarter
24% 37% 40% 28% 32% 32% 4% 3%
2017 182 2016 227
32% 45% 40% 30% 25% 22%
2016 571
3%
2017 562
3% SADI SING SIN SIC
Year to Date
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EBITDA Bridge
182 227 41 9
SIC 2016 2017 SIN
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SADI
2
SING
EBITDA Decreased 20%, US$45 mn Third Quarter EBITDA Decreased 2%, US$9 mn
56 562 571 78
2017 SIN
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SADI
1
SING SIC 2016
Year-to-Date
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SIC Market
YTD EBITDA Decreased by US$ 78 mn
Scheduled major maintenance activities resulting in higher spot purchases Accrual of green taxes in 2017 for PPAs with Regulated Customers Lower margin from Nueva Renca profit sharing agreements
41 25 62 87 43 84
3Q Var 2Q Var 1Q Var
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2016
256 85
- 30%
2017
178 73 2Q 1Q 3Q
Regulated Customers 61% Unregulated Customers 37% Spot Sales 2%
US$660 mn
EBITDA Variation (YTD) Electricity Revenue Breakdown (YTD)
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SING Market
YTD EBITDA Increased by US$ 56 mn
Full year of Cochrane and Andes Solar operations Accrual of Green taxes in 2017 not yet passed-through to customers Lower contract sales and higher coal prices in Norgener
Unregulated Customers 79% Spot Sales 21%
EBITDA Variation (YTD)
US$576 mn 30 81 51 73 64
2017
+33% 225 71
3Q Var
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2Q Var 1Q Var
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2016
169 54 2Q 1Q 3Q
Electricity Revenue Breakdown (YTD)
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YTD EBITDA Increased by US$ 14 mn
Increase in contract sales as a result of higher volume and price Decrease in energy purchases as a result of lower volume and price Lower spot sales as a result of higher contracted volume and drop in spot prices
Contract Sales 83% Spot Sales 17%
EBITDA Variation (YTD)
US$240 mn 15 41 28 43 42 +11% 142
2017
128 73 13 58
2016 1Q Var 3Q Var 2Q Var
1 1Q 2Q 3Q
SIN Market
Electricity Revenue Breakdown (YTD)
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SADI Market
YTD EBITDA Decreased by US$ 1 mn
Higher energy prices in the Spot Market (Resolution 19/2017) Higher prices and volume with Energia Plus customers offset by higher fuel and transmission costs Lower generation due to scheduled maintenance activities
Contract Sales 59% Spot Sales 41%
EBITDA Variation (YTD)
US$97 mn 5 2 4 2 8 6
2Q Var 1Q Var
1
2016
18 7
- 5%
2017
17 5
3Q Var
1Q 2Q 3Q
Electricity Revenue Breakdown (YTD)
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Net Income
YTD, Attributable to AES Gener (US$ mn)
69 114 135 190
15 21 31
Net Income Before One- Time Impacts
3Q-2017 YTD 6 7 10 11 9 3Q-2016 YTD
EBITDA Variation
Depreciation (*)
Higher Interest Expense (*)
Non- controlling Interest
2016 Angamos Tender
(*) Higher depreciation and higher interest expense are related to new assets placed into operation
Income Tax FX
Water Rights WriteOff
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Cash Flow and Liquidity
113 175 368 Sep-17
392
FX Variation
2
Financing CF Investment CF Operating CF
Dec-16
470
Cash and Cash Equivalents US$392 mn Undrawn Committed Facilities US$251 mn
US$643 mn
LIQUIDITY AS OF SEPTEMBER 30, 2017
YTD (US$ mn)
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61% 39%
Non Recourse Debt Recourse Debt
Total Debt as of September 30, 2017 $3,971 mn
AES Gener Debt Profile
$3,971
- Average Cost: 5.5%
- Average Life: 14 years
- Net Debt/EBITDA: 4.7x (2.6x excluding non recourse debt)
- 97% denominated in USD
- 93% at fixed interest rate
46 157 175 153 558 161 173 188 571 1,789 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026/2073
AMORTIZATION SCHEDULE (US$ mn)
Non Recourse Debt Recourse Debt
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KEY TAKEAWAYS
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Key Takeaways
STRONG EBITDA GENERATION
3Q-2017 LTM EBITDA of US$ 769 mn Cochrane fully operational since October 2016
ALTO MAIPO
We remain committed and disciplined to overcome the project’s challenges Protecting AES Gener’s investment grade rating
LEADER IN POWER GENERATION IN CHILE
AES Gener contributed 30% of the total energy generated in Chile during the first nine months of 2017
DIVERSIFIED PORTFOLIO TO MITIGATE RISKS
Diversified by geography, technology, customers and fuel sources Long term dollarized PPAs with creditworthy offtakers Securing PPAs with commercial and industrial customers
STRONG CAPITAL STRUCTURE
Strong Liquidity Extended debt maturity profile Competitive financing cost and at fixed rate