Good morning, ladies and gentlemen, and welcome to Central Puerto's Fourth Quarter 2023 Earnings Webcast. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, 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 www.centralpuerto.com. In addition, a replay of today's call may be accessed by accessing the webcast link at the same section of Central Puerto's website.

Before we proceed, please be aware that all financial figures were prepared in accordance with IFRS and were converted from Argentine pesos to U.S. dollars for comparison purposes only. The exchange rate used to convert Argentine pesos to U.S. dollars was the reference exchange rate reported by the Central Bank for U.S.

dollars for the end of each period. The information presented in U.S. dollars is for the convenience of the reader only, and you should not consider these translations to be representations that the Argentine peso amounts actually represent these U.S. dollars amounts or could be converted into U.S. dollars at the rates indicated.

Finally, it is worth noting that the financial statements for the fourth quarter ended December 31, 2023 include the effects of the inflation adjustment.

Also, please take into consideration that certain statements made by the company during this conference call and answer to your questions may include forward-looking statements, which are subject to risks and uncertainties that could cause actual results to be materially different from the expectation contemplated by industry remarks.

Thus, we refer you to the forward-looking statements section of our earnings release and recent filings with the SEC. Central Puerto assumes no obligation to update forward-looking statements, except as required under applicable securities laws.

To follow the discussion better, please download the webcast presentation available on the company's website. Please be aware that some of the numbers mentioned during the call may be rounded to simplify the discussion.

On the call today from Central Puerto is Fernando Bonnet, Chief Executive Officer; Enrique Terraneo, Chief Financial Officer; and Pablo Calderone, Corporate Finance and Investor Relations Manager. And now I will turn the call over to Pablo Calderone. Pablo, you may begin..

Thank you very much, and good morning to you all. We are joining you today with our management team from Buenos Aires, Argentina, to comment on our results for the full year 2023 and the fourth quarter of 2023.

Taking a moment of your attention to review today's agenda, I would like to begin the presentation by addressing shortly the main figures of the year 2023 and the fourth quarter of 2023, followed by a quick update of the regulatory framework and an overview of the Argentine energy sector, and then move on to analyze the evolution of our operational and financial results.

Finally, at the end of the presentation, we will be happy to address any question that you may have. Before going into a more exhaustive analysis of the evolution of our financial and operational results, let me briefly review the main figures of the Central Puerto Group for the year 2023 and the fourth quarter 2023.

As you may know, with the acquisition of Central Costanera performed at the beginning of the year, the one is also solar farm on October 2023, the group's installed capacity has jumped by 49% year-over-year to 7.2 gigawatts of internal capacity.

Furthermore, energy generation amounted to almost 21 terawatts per hour in 2023 and 5.2 terawatts per hour in the quarter, increasing by 19% and 10%, respectively, with regards to the same period of last year.

Thus, during 2023, the Central Puerto Group has become the largest private energy generation company in Argentina, both in terms of its capacity and energy generation completing a diversified portfolio of assets across all power generation technologies.

With regards to our financial results, it should be noted that the sharp devaluation that occurred at the end of 2023 caused the depreciation of the local currency to be much higher than the inflation of the period.

Given Central Puerto's accounting methodology, all items in pesos might be adjusted for inflation to the year-end currency, while the company reports it results in dollars by converting them at the end of period official exchange rate.

Thus, casting a non-cash impact that affects the comparability of our financial results and being more significant in the analysis of the 4Q 2023 figures.

In that connection, revenue for the year amounted to $537 million decreasing 5% compared to 2022 and $298 million in the quarter, contracting 19% compared to the same periods of the previous year, while adjusted EBITDA reached $277 million showing a 35% decrease versus 2022 and $45 million in the quarter, being 34% lower to the last quarter of 2022.

Net income was positive in $193 million and $155.8 million in 2023 and fourth quarter 2023, respectively, affected by onetime effects that impacted positively in the last quarter of the year, and we will see in detail in the later presentation.

Finally, after a satisfactory year in terms of our management of our debt profile and dividend distribution, net debt as of December 31 amounted to $244 million showcasing a net debt leverage ratio of only 1x. Now moving to the most recent regulatory updates, it is worth mentioning the follow-up resolution worth mentioning the following resolutions.

On September 6, 2023, the Secretariat of Energy issued Resolution number 750 of 2023, which updated remuneration prices for energy generation and power capacity for units not committed in a power purchase agreement or PPA, increasing the remuneration values by 23% since September 2023.

Furthermore, on November 2, the Secretariat of Energy issued Resolution 869, which updated remuneration prices for the same units by 28% since November 2023. Finally and more recently, in February 2024, the Secretary of Energy issued Resolution number 9 updating remuneration by 74% since February 2024.

It should be noted that combined cycles that operate in the spot market are not committed in the PPA and are moderated with a special regime introduced by means of Resolution 50 2023 issued in February of that year. Under this scheme, the power capacity of these generation units is partially paid in U.S.

dollars, while the energy generation is fully dollarized. Finally, with regards the Terconf bidding process, although the company was awarded with project for 516 megawatts of power capacity at its unit Central Costanera, as of today, the contract has not been signed and the process is under review of the new administration.

Now, let's use the next two slides to analyze the evolution of the Argentine energy market during this quarter. As we can see in Slide 6, the country's instant generation capacity increased by 2% or 847 megawatts, reaching 43.8 gigawatts, compared to 42.9 gigawatts in the last quarter 2022.

This increase in capacity was mainly due to the incorporation of 396 new megawatts of wind technology and 280 new megawatts of solar photovoltaic projects. Biogas and biomass slightly increased during the quarter, adding 6 megawatts and 3 megawatts respectively.

Finally, thermal capacity sources recorded a net increase of 162 megawatts as a combination of an addition of 735 megawatts of new combined cycles under the commissioning of 537 megawatts and 36 megawatts in gas turbines and diesel engines, respectively.

Regarding energy generation in the last quarter of the year, this dropped 4% to 34.8 terawatts hour compared to 35.1 terawatts in the last quarter of 2022, in line with the 4% decrease in energy demand.

The lower demand of the period was mainly covered with more generation of nuclear, hydro and renewable sources resulting in a lower thermal requirement.

The increase in nuclear power generation was mainly explained by the Atucha II power plant, which was unavailable during the last quarter of 2022 due to the maintenance program that lasts until mid-2023. In addition, the Embalse power plant also supplied significant more generation during the last quarter of 2023 vis-a-vis the last quarter of 2022.

The increase in hydro generation is a phenomenon that started by mid-2023 due to higher rainfall in comparison to the year 2022, a year that was particularly affected by a severe drop. As a result, Limay and Collon Cura hydro plants have been generating significantly more in 2023 vis-a-vis 2022.

And speaking specifically of the last quarter of this year, the Uruguay river recorded an increase of 4 84% in its flow rate, while the Neuquen and Limay rivers rose their flows rates by 49% and 37% year-over-year, respectively.

Focusing now on demand, as you can see, electricity consumption decreased 4% during the last quarter of the year compared to the last quarter of 2022. It was essentially driven by a 5% decline in residential consumption on the back of middle temperatures during the period, especially in December when consumption fell by 10% with respect to 2022.

With regards to industrial demand, this contracted by 5% as a consequence of a lower economic activity in the period. It is worth noting that local demand was covered with local energy generation, substantially decreasing imports by 97%.

Going now to our key performance indicators for the quarter on Slide 8, we can see that energy generated by Central Puerto rose by 10% to 5.2 terawatt hours compared to 4.7 terawatt hours in Q4 2022.

It should be noted that this increase includes the incorporation of 856 gigawatts hour generated by Central Costanera, which was acquired in February 2023 as well as the 73 gigawatts hour produced by Guanizuil II a solar farm acquired last October, which were not part of the good half of the fourth quarter of 2022.

In the fourth quarter of 2023, the increase in hydro energy generation from Piedra del Aguila was once again noteworthy reaching 1.7 terawatt hour and a standing 21% above the last quarter of 2022 levels.

As a direct result, all the increasing from the flows of Limay and Collon Cura rivers 37% and 13%, respectively, compared to the fourth quarter of 2022. While river flows were still affected by the draft that impacted the country in 2022.

Finally, renewable energy generation increased by 12% in 4Q '23 vis-a-vis 4Q '22 being fully explained by the 73 gigawatt hour generated by the Guanizuil II A solar plant, which was partially offset by a 5% contraction in wind generation as a result of lower wind resource during the period.

As previously stated, higher availability of hydro and nuclear generation and as well as the lower energy demand during the period prompted lower thermal dispatch.

However, as you can see, Central Puerto thermal availability remains high when compared to market average, reflecting our high quality standards and operation policies as well as equipment efficiency.

Now, zooming in our revenue analysis, as you can see on Slide 9, this amounted to $98 million in the quarter as compared to $121 million in the same period of 2022.

It should be noted that the gap between inflation and the valuation in the period has negatively affected the 4Q '23 figures at a non-cash level due to the company's accounting methodology and the conversion into dollars using the end of period official exchange rate, making the comparison with the previous year more complex to analyze.

Thus, having in mind this effect, the variation in revenues result from a combination of a $2 million sales contribution for the forestry companies that were acquired in December '22 and in May 2023, 11% or $11.6 million decrease in sales under contract, which totaled $42.7 million in the quarter compared to $54.3 million in the last quarter of 2022 mainly as explained by the previously mentioned effect between inflation and currency devaluation and to a lesser extent to a lower generation from our wind farms on the back of lower wind results.

All these being partially offset by the consolidation of the Guanizuil II A solar farm, which contributed with revenues of $2.7 million.

Then a 19% or $11.3 million contraction in spot legacy sales, which amounted to $48.1 million in the last quarter of 2023 compared to $59.4 million a year ago, driven by a combination of the consolidation of Central Costanera figures, which contributed with sales of $13.4 million and higher energy dispatch from Piedra del Aguila hydro plant.

All these being fully offset by the fact between inflation and currency devaluation that was mentioned before and a lower remuneration in dollars, capital with lower generation from thermal units on the back of the lower demand of the period and the higher availability of hydro and renewable resources.

Finally, a 15% or $0.7 million decrease in steam sales, which totaled $3.8 million in the quarter compared to $4.5 million in the last quarter 2022 despite a 25% increase in volumes being fully explained this by the non-cash effect between inflation and currency devaluation.

Moving now to Slide 10, for a better understanding of the evolution of our adjusted EBITDA, during the fourth quarter of 2023, the group adjusted EBITDA amounted to $45.2 million including result of the Central Costanera and the Forestry companies.

Thus, on a consolidated basis, the adjusted EBITDA of the quarter recorded a contraction of 34% compared to the $68.1 million in the fourth quarter 2022.

When analyzing the adjusted EBITDA variations, we can observe that this is mainly explained by the first, the previously mentioned drop in revenues and 13% of $5.8 million reduction in cost of sale as played basically by the previous mentioned effect between inflation and currency devaluation, the reclassification of consumption of certain materials and spare parts allocated to the maintenance works allowed on the cogeneration units of Lujan de Cuyo, both were partially offset by higher employee compensation, energy purchases and material consumption and spare parts due to the acquisitions.

Then a $4.8 million increase in other operating results excluding interest and FX differences from the FONI program receivables and the valuation in fair value of biological assets from our Forestry segment. This was mainly due to legal and other acquisition related expenses.

Finally, a 9% or $1.1 million increase in SG&A excluding depreciations and amortizations due to an increase in compensation to increase related to acquisitions and taxes on bank account transactions.

Moving on to the next slide, consolidated net income for the quarter amounted to $155.8 million increasing by almost 10x on a year-over-year basis despite of the lower adjusted EBITDA of the period, the net income was positively impacted by a $144 million increase related to non-cash effects being the most notorious the recovery of impairment of property, plant, equipment and intangible assets of $54.4 million as opposed to the negative charge of $79.2 million recorded in the last quarter '22 and the $5 million increase in the fair value of our biological assets.

Then higher positive foreign exchange differences and interest related to the foreign receivables for $72 million and a $21 million increase due to the gain recorded as a result of the valuation at fair value of the companies that were acquired during the period for almost $90 million in comparison with the also positive gain that was recorded in the fourth quarter of 2022 of around $69 million.

This was all being partially offset by a $69.8 million increase in net negative financial results, mainly driven by higher negative foreign exchange differences on financial liabilities, partially offset by better results from holding financial assets at fair value and better results on asset sheets.

Now going to Slide 12, we can see the evolution of our cash flow during the year 2023.

This way, operating cash flow was positive in $222 million due to an adjusted EBITDA generated in the period, a $52.5 million in collection of interest from client, including those related to funding program and almost $10 million in positive working capital variations, partially offset by a $65 million payment of income tax.

Net cash flow in financing activities was negative in $135 million as a result of $156 million in debt service amortization primarily related to the precalculation of the Brigadier Lopez plant and the principal maturities of Manque and Olivos dollar-linked bond and some overdraft cancellations, $41 million paid in interest and other financing costs and the $29 million paid in dividends during the quarter, being all partially offset by $103 million in financings obtained in the period, mainly from the issuance of the senior notes Series A for $47.2 million and Series B for $58 million.

Finally, investing activities amounted to $109 million during 2023, mainly explained by a $71 million expand for the acquisition of companies performed during the period, $26.5 million in net investment in short-term financial assets and $18 million in investment in PP&E.

Consequently, our cash position as of December 31st amounted to $16.7 million which is current investment in financial assets are included our total current liquidity amounts to $127.8 million.

To conclude with the presentation, in this slide, I would like to bring to you our debt maturity scale, but in particular, I would like to highlight the successful liability management carried out during October that considerably elevated our debt maturities for the year 2024.

In that connection, on October 17, the company issued its first international bond for a total amount of $50 million with a 2-year tenure, allowing us to partially prepay only 2 days later $49 million of the standing $55 million of the syndicated loan signed with Citibank, JPMorgan and Morgan Stanley, which after that was fully paid later on early January this year.

These not only permitted us to refinance short-term debt maturities, extended its life and reducing financial costs, but also help us to lift dividend payment restrictions that were imposed as covenants of the syndicated loan.

In light with the strategy, we made four dividend distributions between November 2023 and January 2024 for a total of $220 million. Finally, the year 2024 looks clear of major debt maturities, this amounting to only $59 million and being managed for the size of the company.

As you can see, the company has actively worked on this relief and to improve its balance sheet that despite EBITDA distribution, our net debt leverage ratio remains at a low of 1 time net debt EBITDA. With this, I would like to conclude the presentation. And now we invite you to ask any question to our team. Thank you for your attention..

Thank you. We will now begin our question-and-answer session. [Operator Instructions] Our first question is coming from Martin Arancet with Balanz Capital..

I have four questions and I would like to ask one by one today.

First, regarding Brigadier Lopez, have you closed the door with the contractor to start the project?.

Yes, we start the construction of the closing of the combined cycle of Brigadier Lopez during February this year. So we expect the finish of the closing of the Brigadier Lopez or after 2020 mark, so we expect the end of the 2025.

And the working is in progress, so we already set the initial payment to started, which is the contractor, the EPC constructor. And I think we're going to reach in time all the scale that we have been discussing with them because we take a lot of early discussion with them more than 16 months working in advance with them in order to analyze.

And as you know, we are obviously on open cycle right now, but all the equipment was purchased by NRS like five or six years ago. So we performed a huge work with Saga in advance to understand in which condition and equipment or reviewing all the engineering documents.

So we set a huge work in advance to be ready and to minimize the timing for the closing..

And how much CapEx do you expect to for that project?.

It's around $150 million including [BTA]..

Then my second question, we heard that CAMMESA payment dates are close to 120 days.

Have you been able to talk to CAMMESA regarding payments? Do you expect a soon improvement? And also could you comment on a possible indexation of less in relation to inflation so as to not depend on price hikes by our solutions?.

As you mentioned, the payments of CAMMESA are coming less frequent than in the past, especially after devaluation, the total amount of the whole building for the electricity sector goes high and the payment of the distribution company is coming in less amount, because they're going to receive also an increase.

So we are seeing right now we have, in fact, unpaid around 1.5 transactions. If you consider the new one coming tomorrow, we'll have 2.5 transactions unpaid. For the things that we have been talking with the government, we don't have a clear view.

But they believe after the tariff increase for residential customers, industry and commercial having taken place from February. So the new tariff we started being collecting by distribution companies in April.

So the government believes that with these regularizations, the money will still start coming again, and they will start normalizing the payment. The thing is what's going to happen in March this month, I think is the one that we see some perhaps doubts about how many money will come from the government. We talked with them.

We expressed all the generators. As you know, the generators are worried about that and how they're going to move all the investments, all the payment that we need to make in terms of CapEx, in terms of, of course, salaries and operational costs, and we pass the worry to the government. They are working on that.

They believe that the distribution companies can pay or pay higher amounts that have been paying in the past, but we are not having any or any detail about that. So we cannot give you any detail about how they're going to be normalized. But for sure, they expect on April receiving all the payments from the distribution companies with the new tariff.

And then this will have, of course, keep me the subsidies because the government still have been subsidies or subsidizing the electricity for some segments of the consumption. But the real question mark is what's going to happen on March.

We believe that the government will need to put additional money on March to maintain the 60 days of delay and not increase that timing. In fact, we are using our lines, our grade lines in order to increase above that delay of CAMMESA. We are using our short-term lines with the banks to buffer that delays..

So you think that the system cannot wait until April to normalize payments? They need something now?.

Yes. We need in fact, we need something now. It's coming something coming last Tuesday. The government paid a portion of the November transaction and we ask for new money coming in next weeks, yes..

Next, my third question then is the governors of Neuquen and Rio Negro have claimed provincial rights on natural resources.

I don't know if you have any comments on the current situation of Piedra del Aguila and how that might move forward?.

Yes. We are working with the Secretary of Energy and NRSA, because they establish a finish or deadline or the finish of the concession and transfer of the asset to the secondary of energy and then to NRSA.

The delay this in April, but as we have been talking with them or it's not possible to finish all the work that we need to do in order to trespass and discuss all the things that we need to discuss with them to trespass the assets in a proper way.

So they are thinking to extend to make another extension, but it's not already established, but they are thinking on that. I don't know how many months, additional months they will give us, but the time is coming and it's not -- the work is not finished. So we expect another expansion. It's perhaps, I don't know a month, additional month..

The end of the concession seems like taking decision but the exact moment is not clear.

Is that right?.

Yes. The idea is the government maintain the same idea to pass or to put all the assets of the concessions in NRSA and then to make a new concession process after they have normalized or at least a little bit more normalized with the sector than with this transformation that they have been talking and these new rules established.

When they establish the new rules, they think that they will move forward in new concessions. But in the transition, they will have or they will keep the concessions asset in NRSA..

And then my final question then, what do you think is going to happen with the projects of the turn cost auction? Do you have any color on whether those PPAs are going to get signed?.

Yes. I have, I can give you some color.

It's not already clear, but if you think about the delays in getting the PPA signed, I think the government is analyzing in detail if they need all this capacity or not or if they don't have or they need all the capacity, how they can establish a new process or a new system to promote that capacity being installed.

So if you ask me, I think this process, I don't see the government awarding all that capacity. In fact, they want to grow in a scheme of private PPAs try to catalyze the PPAs between distribution companies, with users and generators, start to promote that.

So I don't see the whole capacity getting signed or getting moved in the way that the former government established. But at the end of the day, in some areas, the capacity is needed. So perhaps the government are evaluating how they can perhaps promote the installation of this capacity in the areas that are needed, but with a different scheme.

But it's something that I believe is not something that the government will be in contact with us yet..

So it's like probably the term auction is going to be canceled and probably a new auction with distribution companies, but that's not something that the government has said. It's just a thought. .

[Operator Instructions] As we have no further questions in queue at this time. I would like to turn the conference back over to Mr. Fernando Bonnet for any closing remarks..

Thank you 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..

Thank you, ladies and gentlemen. This does conclude today's call. You may disconnect at this time and have a wonderful day. We thank you for your participation..