Central Puerto S.A. Form 6-K Summary
Business Context and Reporting Period
Company: Central Puerto S.A. (NYSE: CEPU)
Reporting Period: Fourth Quarter (4Q) and Full Year ended December 31, 2019.
Filing Date: March 10, 2020.
Accounting Standard: Financial statements are adjusted for inflation in accordance with IAS 29, stated in terms of the measuring unit current at the end of the reporting period. Consequently, figures are not directly comparable to previously published statements without adjustment.
Key Financial Metrics
| Metric (Million Ps.) | 4Q 2019 | 4Q 2018 | 2019 Full Year | 2018 Full Year |
|---|---|---|---|---|
| Revenues | 11,384 | 7,471 | 35,961 | 21,945 |
| Cost of Sales | (6,212) | (3,237) | (18,957) | (9,979) |
| Gross Profit | 5,173 | 4,234 | 17,004 | 11,966 |
| Operating Income | 2,589 | 2,093 | 28,049 | 46,913 |
| Adjusted EBITDA | 4,274 | 2,947 | 31,440 | 49,209 |
| Net Income (Consolidated) | 1,330 | (604) | 8,661 | 26,437 |
| Net Income per Share (Ps.) | 0.63 | (0.72) | 5.85 | 17.91 |
| Net Debt Position (Million Ps.) | (29,522) as of Dec 31, 2019 |
Liquidity: Cash and cash equivalents totaled Ps. 1.5 billion as of December 31, 2019. Net cash provided by operating activities for 2019 was Ps. 11,974 million.
Material Changes vs. Prior Period
- Revenue Growth: 4Q2019 revenues increased 52% year-over-year, driven by higher energy generation (18% increase), improved thermal unit availability (92% vs. 89%), and exchange rate appreciation (60% increase in average rate vs. 54% inflation). Full-year 2019 revenues rose 64%.
- Profitability: 4Q2019 Net Income turned positive (Ps. 1,330 million) from a loss in 4Q2018. However, Full Year 2019 Net Income decreased 67% compared to 2018, primarily due to the absence of a one-time Ps. 16,948 million gain from the CVO Commercial Operation Approval in 2018.
- Adjusted EBITDA: 4Q2019 Adjusted EBITDA increased 45% to Ps. 4,274 million. Full-year Adjusted EBITDA decreased 36% to Ps. 31,440 million; excluding the 2018 CVO one-time gain, the decrease would have been 3%.
- Operating Metrics: Total installed capacity increased 12% to 4,273 MW. Energy generation rose 18% in 4Q2019 and 2% for the full year. Thermal availability remained robust at 92% (4Q) and 93% (Full Year), exceeding the market average of 82%.
Outlook, Risks, and Management Commentary
- Expansion Progress: Successfully commenced operations of the Luján de Cuyo cogeneration unit (95 MW) and Manque wind farm (38 MW). La Genoveva I wind farm received full financing (US$ 76 million) with a contracted COD of May 21, 2020.
- Regulatory Changes: On February 27, 2020, Resolution 31/2020 replaced the tariff scheme for "Energía Base" units. Prices are now set in Argentine pesos with monthly adjustments based on inflation indices (60% IPC, 40% IPIM). Initial power prices for thermal units were reduced ~16% and hydro ~45% (in peso terms), partially mitigated by a new remuneration for generation during peak demand hours.
- Risks:
- Currency & Inflation: Results are heavily influenced by the Argentine peso exchange rate and inflation adjustments under IAS 29.
- Regulatory: New tariff regulations (Res. 31/2020) reduce fixed power prices, though management estimates peak demand remuneration may offset ~30% of these reductions.
- Project Delays: Management noted that the COVID-19 outbreak may affect equipment delivery and construction timelines for the La Genoveva I project.
- Impairment: A Ps. 3,357 million non-cash impairment charge was recorded in 4Q2019 due to higher discount rates and new regulatory pricing.
- Dividends: A cash dividend of Ps. 0.71 per share (approx. US$ 0.12 per ADR) was distributed in December 2019.
Investor Verification Checklist
- IAS 29 Adjustments: Verify the impact of inflation adjustments on comparability with prior periods and the specific exchange rates used for conversion.
- Regulatory Impact: Assess the long-term financial impact of Resolution 31/2020 on "Energía Base" revenue streams versus the new peak demand remuneration.
- Debt Service: Review the consolidated net debt position of Ps. 29.5 billion and the ability to service interest on USD-denominated loans amidst currency volatility.
- Project Timelines: Monitor the construction progress of La Genoveva I and potential delays attributed to the global pandemic.
- Non-GAAP Reconciliation: Review the reconciliation of Adjusted EBITDA to Net Income, specifically noting the exclusion of the 2018 CVO one-time gain when analyzing year-over-year trends.