Central Puerto SA (CEPU) 2025 Q3 法說會逐字稿

Good morning, ladies and gentlemen. Welcome to Central Puerto's third quarter of 2025 earnings conference call. A slide presentation is accompanying today's webcast and will be also available on the investor section of the company's website central puerto.com/En/investors. All participants will be in listen-only mode during the presentation. After that, there will be an opportunity 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 central puerto.com.

In addition, our play of today's call will be available in upcoming days by accessing the webcast link at the same section of the Central Perto's website. Our host today will be Mr. Fernando Bonnet, Central Puerto CEO, Mr. Enrique Tellico, the company CFO, Mrs. Maria Laura Feller, head of investor relations, and Mr. Alejandro Diaz Lopez, head of corporate finance. Maria Laura, please go ahead.

Thank you very much. Good morning and welcome. We are joining you today with our management team from Buenos Aires to report on the results of the third quarter of year 2025 and then answer any question you may have.

During the third quarter, a Chastia BDA reached $101.1 million up 64% quarter on quarter, and 8% increase year on year. Revenues totalled $233.9 million up 30% quarter on quarter, mainly reflecting higher contract sales from renewables and thermal fuel costs pass through. And up 26% year on year, mostly reflecting additional revenues in this quarter from fuel costs by through and also Central Costanera successfully resuming activities after the maintenance works.

Total generation was 4,539 gigawatt hours, 4% up from second quarter 2025, but 20% down year on year, mostly due to the low hydrology at Piedra ligula.

From a financial standpoint, our net lever ratio remains very healthy at 0.5 times a cha the EBITDA, underscoring our strong balance sheet and financial flexibility.

Also good news for our grade rating. Moody's has initiated the grade assessment with a A A +, a fixed SER upgrading our rating to AA from minus.

Third quarter 2025 at capital expenditures amounted to $76.1 million which includes the acquisition of Cachet Solar Farm at $48.5 million. Final works for the closing of the Bria Dia Lopez combined cycle and San Carlos Solar Farm, which are very near COD, as well as maintenance Capex.

Moving to a key development for the quarter in August, our company successfully participated in Alma Hea battery energy storage systems bidding process.

We were awarded both projects we submitted, which collectively represent 205 megawatt hours of new best capacity. The projects are scheduled to be fully operational by mid-2027.

A significant four quarter outlook, the Energy Secretariat released Resolution 400 in October. This resolution marks a pivotal step in the liberalization of the powered market and creates a strong business outlook for our company.

Going now to page 4 for the early summary.

Our HST ETA came in strong at $101.1 million reflecting the effective fuel cost path through to revenues and solid operational performance in both our renewable portfolio and at Central Cotan era.

In this quarter our revenue mix was 53% spot and 47% contracted with 63% of total revenues denominated in dollars.

Renewal generation revenues increased by 24% this quarter, supported by a 21% rise in generation volumes quarter on quarter.

This strong performance was driven by our wind farms and the contribution from the newly acquired Caveach solar plant.

On the thermal side, contracted revenues benefited from additional fuel costs pass through at Terminal 6.

Thermal revenues also rose in both the spot and contract markets reflecting the positive impact of Central Costanera which successfully completed maintenance works in the second quarter as well as fuel cost Paro effects.

Now turning to page 5 let's look at our generation availability performance.

Total generation for the quarter was 4,539 gigawatt hours composed of thermal, hydro, and renewable resources. Volumes were up 4% quarter on quarter.

Thermal generation represented the largest share, followed by hydro and rivers.

Thermal and renewal volumes grew while hydro volumes increased due to low hydrology in the Coma guan region.

Availability rates for all our thermal units remain strong at 88% with combined cycles rate at a very competitive level of 96%.

We continue executing our growth strategy.

Ryhope combined cycle and San Carlos Solar farm are very near Ciruli.

In August, we acquired the 80-megawatt Karate solar farm and also, we secured two projects totalling 205 megawatts and 15-year contracts.

Central Porto complex will have 150 megawatts of lithium battery storage, and the undertaker will be the distribution company Eleanor.

Central Castanea complex will have 55 megawatts and the up taker will be ecru.

Estimated capital expenditure is between $130 and $140 million for both projects combined.

On October 21st and already effective since November 1st, the Energy Secretariat issued the new framework to reform the Argentine's wholesale electricity market.

The core objective of Resolution 400 is to liberalize such markets through a progressive transition.

The new spot revenues incorporate a margin on top of variable production costs, supporting long-term value creation for generators.

Also, there is a significant shift for revenues in the spot now denominated in dollars, mitigating currency and inflation risk.

Thermal generators gained significant flexibility, allowing them to trade capacity and energy in the new thermal t market.

We can sell up to 20% of our production to large users and the remaining up to 100% to distribution companies or the spot market.

Spot market energy remuneration will capture marginal rent on top of the variable cost of producing the energy, and capacity payment in the spot market is now $12 per megawatt of capacity per month and is weighted by a factor based on fuel requirement and fuel management approach.

Also it is added a reliability reserve.

During a fuel management transition period until plan gas contracts naturally expire, Camesa continues as a supplier of the contracted capacity of plant gas, which ends December 2028. From 2029, generators will be fully responsible for their own fuel management.

For renewables, existing renewal contracts will be enforceable until natural expiration. Then generators will trade in the matter.

Our total financial debt at quarter end stood at $452 million. Cash and cash equivalents totalled $292 million resulting in net debt of $159.9 million.

Net leverage ratio stood very healthy at 0.5 times a Chas ETA.

In October we issued a new corporate bond raising $89 million in capital and also repaid $90 million of maturing debt including the repayment of our Class B corporate bond and the legacy debt associated with the Guanylyl solar farm.

Total install capacity in Argentina of September 2025 was approximately 43,887 megawatts.

Energy generation during the third quarter was 34,342 gigawatt hours while domestic demand reached 35,255 gigawatt hours.

Going now to page 10 for key takeaways.

325 a chaitya BTA of $101.1 million and 3Q25 last 12 months a chattier BTA of $317.5 million reflects solid operations and a starting point in this new market environment.

Central Porto was awarded both projects submitted under the Alma Hevea battery Energy Storage System tender. This means we added.

205 megawatts of new capacity. These strategic projects notably boost our growth path and provide additional operational capabilities needed in the future of power generation.

Our growth pipeline is delivering results with the acquisition of Kadasha Solar Farm, which added 80 megawatts of install capacity to our portfolio since August 2025.

Additional growth will be provided by ongoing projects. The Brigade Lope combined cycle crossing and the San Carlo solar farm very near Codi.

Central Porto's business outlook has gained significant growth momentum driven by the Energy Secretariat's Resolution 400. This resolution formalizes the market liberalization road map, representing a pivotal step toward strengthening long-term value creation for us. This context reinforces our positive outlook for 2026 and our long-term company vision.

Thank you for your time and your confidence in Central Porto. Operator, please open the line for questions.

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 hand down.

The first question comes from Mr.

Martin Adam Sedge with Balance Capital. Please, Mr. Martin, go ahead.

Hi, can you hear me?

Thanks.

Hi, Martin.

Hi.

Thank you.

Thank you for the presentation and for taking my questions, I have 22 topics that I would like to discuss. I will run them one by one if that's okay. First, regarding the market liberalization, I was wondering if you could provide any guidance on how much do you expect this to improve your results, over the next 2 years. Also, if you're considering any improvement, to your loyaly fleet given this, enhance in.

In revenues and how likely do you think it will be to contract that 20% with large users? Thanks.

Hi Martin, thank you for your interest and your questions. Well, I'm going to the first one, the impact of the new deregulation of the sector, in terms of cash, we are seeing that's depend on the dispatch on the use consumer fuels, but we can expect around between 20 and 25% of increasing our BDDA.

It could be, as I mentioned, would be 2025 depending on the dispatch of the units and the fuel consumption.

Talking about the other improvements that the regulation brings that are important, also as important as the pricing as Maria says mentioned is It's very important for us to have the denominations of these new prices in dollars set, so we cannot need to wait until the government resolution by month for price increase, which was the case in the past. So, for us it's very important to keep the remuneration at least attached to dollars updated.

And the other big improvement and is related to your question is that we can sell our part of our production to in private terms to private takers, as you mentioned, it's 20% for big users, big consumers, but we have no limitation to sell it in the percentage to sell it to distribution companies. So in terms of this 20%, we are start selling the situation right now is the big consumers are very contract.

The biggest ones are very contract with renewables.

So, we are trying to find the ones that are not constructed contracted and the smaller, going down to small ones, the good and goodies, but for that is, we have been selling since the regulation was issued.

But to be completely H1st with you, the market right now is trying to understand how the price is going to move with these new regulations, how CA is going to set the prices and the Secretary of Energy is going to set the prices for the spot basis of the market, and For the goodies that are still in the in the distribution companies that that right now the price is still setting by resolutions and the scheme of every quarter setting by Secretary of Energy and.

But we are very confident that we, whenever these are more or less clear by the demand is going to start to contract because the prices of the sport during winter times will be much more higher than now, and because of that they're going to prefer to cap that increase on wintertime and set contract with generators. So we are very confident that During this year, we're going to reach that 20% and we expect more with the distribution companies. Distribution companies needs also to set with each regulator, each Province regulator and a national regulator in the case of North Aur said how they're going to make the pass through of these contracts or new contract that the distribution companies will establish with the generator. So, everything is under and is moving and but we are confident that this new market.

But, as the regulation mentioned it, going to start and we have a good pace to contract our production during this year.

Right, just a couple of follow-up questions. First, you mentioned 20 to $25 million of additional BDA per year. I was wondering if that's not considering the 20% that you could sell to big users, and.

If so.

So sorry, Martin, it's not $20 million it's 20% increase. Oh.

20 to 25%. Okay, great.

So it's more than around 70 to $80 million.

Great, thanks, and that's without the 20%. So if you are successful in selling that 20% to industrials, we could see, further improvement, right? Yes, okay, great. And then, and I shall follow-up question regarding you mentioned distribution companies, probably it's too soon, but do you foresee a new auction for distribution companies next year or so or in the near future?

You are talking about the capacity auction or or batteries.

An auction to sell the other 80%. I mean if I am correctly.

Yeah, this will be each by each distribution company process. It's not a centralized like a batteries or like a capacity capacity contract. It's any distribution company can do go for this regulation established that Camesha is going to provide.

Around between 70 and 75% of the of the distribution company's demand and the rest could be contracted by distribution companies itself direct with generators. So we are seeing some distribution companies asking for quotations and start the conversation for this 2020 or 25% of these of their demand, but it's not centralized will be each by each by distribution companies.

And they will be a negotiation directly between generators and distribution companies.

Okay, thank you for clarifying. So

Yes.

So, we could spread also beyond the 20% some distribution companies probably in 2026, 2027, contracting additional energy, yeah.

Well, great, thanks. Then my, the second topic that I would like to discuss was regarding the recent hydro auction.

I don't know if you could provide any colour, on that, probably the targeted assets and the expected timeline for awarding these assets.

Yes, as we participate with Central Puerto and Costner.

We expect that have more news in next coming weeks. The first, the CEA are evaluating. CAA Secretary of Energy are evaluating the capacity and the documentation, and the bidders provide and then I think we between, as I mentioned, next week on the other one, we will have a clear view of the competition, or the ones are available to compete and then for sure in previous to.

To middle of December, we will have the final results.

Okay.

Thank you very much. Very clear. That's all on my side.

Thank you.

Thank you for your interest.

Thank you. Our next question comes from Mr. Matteos Tosti's with C.

Please go ahead.

Hi, and thanks for taking my question.

Congratulations on the result. My question is on capital allocation. I mean, we have been seeing a lot of re-rating of Argentinian assets over the last couple of weeks. So in that context, are you evaluating, Maybe some portfolio recycling with some of your assets in forestry, perhaps in in mining already, or would you rather wait for a longer cycle to engage on that front, especially considering now there may be some more projects looking interesting as investment opportunities, and yes, my second question would be.

Conceptually speaking, where do you see the stabilizing for the term market price, right, which today is about $60 per megawatt hour, but you will get an ever growing.

A supply of power there.

On the other hand, you may also have an increasing demand from distributors for those PPAs. So where do you see that stabilizing over the short-term? Those will be my two questions.

Thank you.

Okay, thank you.

In going to the first one, we are not evaluating right now a reallocation of our assets or selling. We think that they have a lot room to increase price and so because of that we are waiting for a longer period of growth and we are also evaluating the possibility of if we improve the value by some developments around those assets so it's not, right now we are not looking for reallocate that assets or sell it.

In terms of the second one, talking about prices, we are seeing some in the short-term for sure we are seeing some reduction around those $60 with perhaps moving between.

57, 55, 56, in the short-term, when this new offer come to the market, but in the long run, we are not seeing a huge reduction on that, on those values because you will have to increase the capacity of Argentina and the prices for new capacity are going up. The, all the data centres boom and the demand of Middle East are rocketing the prices of the, of the GDs and the, on the, and the delivery time. So perhaps we see some reduction at the beginning in order to stabilize that market, new mat.

But in the long run we are seeing prices around 60.

Thank you very much. That was very helpful. If I may add a quick one, now that thermal projects should have, I mean, with the new rules, should have better rates of return, very likely, what would you say are the key projects in the thermal side of the business that Central Puerto is looking into?

Well, this new regulation, it's not, is, I think it's not enough yet to bring new projects from zero, from scratch. It's not easy to set a big command cycle, I don't know 800 megawatts and sell it to the market, we are not there yet.

As I mentioned, the price will be much more than 50 something, so I think the new projects coming will be perhaps at the beginning of the next year, some.

Actions that the government are planning to set in terms of capacity.

Small open cycles and machines working as a speaker.

I think this is what we are seeing coming with centralized options but not huge, combined cycles selling to privates. We think we are new. I mentioned new ones. We are not there yet.

Okay, thank you.

Our next question comes from text.

Hi, this is Ezekiel Harari from ADC Group of Financiera.

In the release, we saw that the install capacity of San Carlos, Caffeate, and Brigadier Lopez is already available. Could you provide some colour on how much of the capacity we will actually be operating or contributing to generation there in Fort Q? And what we could expect in terms of revenues or margin uplift, both from this additional capacity and from the recent steps toward electricity market deregulation.

Okay, thank you.

Thank you for your question. In terms of new capacity entrance, San Carlos and Brigado Lopez, as you mentioned, are right now entering, San Carlos is entering, I think this week or the next or the beginning of the next one. So, the impact in our revenues for the fourth quarter will be like half of November and full December in respect of Ria de Lopez, which is the closing of combined cycle. We are expecting the COD. We are right now in the commission, in the end of the commissioning phase, but we need to make a lot of tests to be online and to be producing energy and to be.

Receiving the payment. So, in the case of Ria de Lopez, we expect the middle of December, perhaps 2020 something of December. So, the impact on our revenues in the of will be not significant.

But talking about full year basis, we expect, around in terms of Ria de Lopez around an additional ABTDA of 60 to $65 million and San Carlos around 33 and $5 million more.

Fully, full year basis.

I don't know if I forget, a question or one part.

Thank you. Our next question comes from Ludovic Kazu with Autonomy Capital. Please go ahead.

Hi, do you hear me?

Yes, clear.

Yes, good morning and congratulations for the results. My question was about the Capex.

Which level of Capex do you expect for next year?

Okay, thank you for your question.

In terms of topics, we are We are finishing, as I mentioned, Brian Lopez and San Carlos, so we are not expecting big Capex for that part.

The Capex that we are entering on right now and will be continuing in the next year is the best projects that we get awarded in last quarter, and this will be around 130 to $140 million for both projects, the central Porto and Costanera projects.

Sorry, just for 2026.

Yes, we expect the completion of those projects in 2026, yes.

Okay, and just thinking could we expect an extra dividend distribution for the end of this year?

Well, that's depends on, and the results of the hydro auction.

That will depend on that. Okay.

Thanks a lot.

Thank you.

Thank you.

This concludes our Q&A session. I would like to turn the conference back over to Mr. Fernando Bonnet for any closing remarks.

To everyone for your interest in Central Puerto, we encourage you to call us for any information that you may need. Have a great day.

Bye-bye.