2019 Results Conference Call May 23, 2019
Disclaimer This earnings presentation contains forward-looking statements that are based on our current expectations, assumptions, estimates and projections about us and our industry. These forward- looking statements can be identified by words or phrases such as “anticipate,” “forecast”, “believe,” “continue,” “estimate,” “expect,” “intend,” “is/are likely to,” “may,” “plan,” “should,” “would,” or other similar expression s. The forward-looking statements included in this presentation relate to, among others: (i) our business prospects and future results of operations; (ii) the implementation of our combined cycle expansion project; (iii) the implementation of our financing strategy and the cost and availability of such financing; (iv) the competitive nature of the industries in which we operate; (v) future demand and supply for energy and natural gas; (vi) the relative value of the Argentine Peso compared to other currencies; (vii) weather and other natural phenomena; (viii) the performance of the South American and world economies; and (ix) developments in, or changes to, the laws, regulations and governmental policies governing our business, including environmental laws and regulations. These forward-looking statements involve various risks and uncertainties. Although we believe that our expectations expressed in these forward looking statements are reasonable, our expectations may turn out to be incorrect. Our actual results could be materially different from our expectations. In light of the risks and uncertainties described above, the estimates and forward-looking statements discussed in this release might not occur, and our future results and our performance may differ materially from those expressed in these forward-looking statements due to, inclusive, but not limited to, the factors mentioned above. Because of these uncertainties, you should not make any investment decision based on these estimates and forward-looking statements. The forward-looking statements made in this earnings release relate only to events or information as of the date on which the statements are made in this report. We undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date on which the statements are made or to reflect the occurrence of unanticipated events. This presentation does not constitute or form any part of any offer or invitation or inducement to sell or issue, or any solicitation of any offer to purchase or subscribe for, any senior notes or other securities of the Company.
MSU Energy - 2018 Highlights State of the Art Power Generation Portfolio Solid operational performance amongst the top performers of Resolution 21 Expansion project fully funded and advancing according to schedule Additional Gas Turbine in commercial operation at General Rojo and Villa Maria Plants. Current aggregate capacity reached 550MW. Barker COD schedule for late May (50MW) Phase II, the conversion to combined cycle on target for first quarter of 2020; steam pipe rack completed, cooling tower assembly in progress, boilers are being mounted and steam turbine foundations are near completion. By first quarter of 2020, our aggregate capacity will reach 750MW and 100% of our capacity will operate under combined cycle and be fully contracted under long term dollar denominated take-or-pay contracts Effective January 1 st 2019, the three Entities were merged into MSU Energy, key to simplify operation and gain efficiencies 3
Solid operational performance Commercial Availability Availability factor, our key performance driver, has reached 100% in 1Q19 Average Availability Factor since COD General Rojo Plant (COD June 2017) 99.8% Barker Plant (COD December 2017) 99.8% Villa Maria Plant (COD January 2018) 93.5% Lower than expected dispatch levels are explained by: (i) lower than expected energy demand as a result of the economic slow-down; (ii) below average temperatures; and (iii) new scheme for gas cost allocation which affects General Rojo and Villa Maria Plants Average Dispatch 1Q19 Average Availability= 100% 1Q19 = 15% 1Q18 = 23% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Availability Factor 38% 30% 29% 18% 18% 19% 10% 9% Jan-19 Feb-19 Mar-19 Apr-19 General Rojo Barker Villa María 1Q19 Average dispatch 1Q18 Average dispatch 4
Stable and predictable dollar denominated revenues Revenues 1Q19 vs. 1Q18 – USD millions Total Revenues in 1Q19 reached USD 26.9 million, 18% higher year- over-year + 18% 26.9 Revenue growth was driven by the full ramp up of the Villa Maria 22.8 Plant: i. Villa Maria Plant achieved COD on January 25,2018 ii. Villa Maria Plant had an availability factor of 48% in March of 2018 due to a commissioning driven malfunction in one gas turbine Fixed Capacity payments represent 94% of total revenues 1Q18 1Q19 2019 Revenues Breakdown – USD millions By Month/Plant By Type 9.1 8.9 8.9 Fixed Capacity Payment 94% 1Q19 Jan 19 Feb 19 Mar 19 Other Variable Revenues Payment General Rojo Barker Villa Maria 2% 4% 5
Efficient costs structure Costs 1Q19 vs. 1Q18 – USD millions 20% decrease in year-over-year costs was driven by: Devaluation of the ARS peso i. Lower variable cost due to less dispatched energy; ii. (20%) iii. Partially offset by higher maintenance expenses related to the 4.3 CSA for Barker and Villa Maria Plants which initiated during 2Q18 3.4 1Q19 Cost / Revenues = 13% Labor cost explained by salaries, social contributions and benefits Maintenance expenses related to Contract Service Agreement with GE Professional fees mainly related to audit, tax, legal services, project advisory. 1Q18 1Q19 Approximately 50% of cash costs are denominated in US dollar 1Q19 Costs Breakdown Headcount - # as of March 31, 2019 Highly Efficient Operations Selling Others Vehicles and Expenses 2% Travel Total MW per Office 2% 1% employee = 4.3 Barker O&M 3% #20 Insurance 6% Professional Villa Maria General Rojo fees O&M O&M 6% #21 Labor Cost #22 Taxes, rates and 38% #104 contributions 8% G&A #41 Maintenance 34% 6
Financial performance in line with full year forecasts EBITDA 1Q19 vs. 1Q18 – USD millions EBITDA during 1Q19 reached USD23.7 million, 28% higher year- + 28% over-year. This increase is mainly explained by: Ramp up of the Villa Maria Plant which did not operate 23.7 i. fully during 1Q18 18.5 ii. Lower costs 1Q18 1Q19 Net Income 1Q19 vs. 1Q18 – USD million Net Income during 1Q19 reached USD 2.3 million, 5.2 million higher compared to 1Q18 Depreciation & Amortization during 1Q19 reached USD 3.0 million, USD 1.2 million lower than 1Q18 Financial Losses during 1Q19 reached USD 17.7 million, in line 2.3 with 1Q18. Financial Losses for are explained by Net Interest Expenses of USD 11.0 million and non-cash Foreign Exchange losses of USD 6.7 million, driven by the negative effect of the devaluation of the Argentine peso over our VAT tax credits -2.9 Financial Expenses breakdown | USD mm 1Q18 1Q19 Net Interest expense (13.4) (11.0) 1Q18 1Q19 Foreign exchange loss (4.4) (6.7) Total Financial expenses (17.9) (17.7) 7
Cash Flow & Balance Sheet highlights Adjusted Operating Cash Flow (1) - USD millions + 33% 22.9 Adjusted Operating Cash Flow (1) for 1Q19 reached USD 22.9 million, 17.2 33% higher year-over-year As of March 2019, VAT credit amounts USD 40.8 million. These credits are progressively reimbursed through monthly billing 1Q18 1Q19 (2) (1) Adjusted Operating Cash Flow is defined as Net Cash Flow Provided by Operating Activities net of Tax Receivables related to investments in PP&E (Line item “Increase in tax receivables due to recoverable taxes paid for property, plant and equipment”). (2) 1Q18 Operating Cash Flow, line item “Trade Account Payable” excludes non cash capex. Net Debt - USD millions Net Debt as of March 2018 stands at USD 778.7 million, consisting of: Debt amortization profile is well aligned with the incremental combined cycle cash flows • USD 600 million International Bond Steep deleveraging curve as of 2020. Net leverage stabilizing below 3.5x • USD 250 million Private Placement Note by 2021 Debt Amortization Debt Breakdown | USD mm as of March 31, 2019 Private Placement Note International Bond Senior secured notes* (830.6) Accrued bond interests* (11.6) 600 Total Financial Debt (842.2) Cash 63.5 Net Financial Debt (778.7) 91 91 68 * Net of capitalized issuance expenses 2019 2020 2021 2022 2023 2024 2025 8
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