Central Puerto S.A. (CEPU) Q4 2025 Earnings Call Transcript

Good morning, ladies and gentlemen. Welcome to Central Puerto's fourth quarter of 2025 earnings conference call. A slide presentation is accompanying today's webcast and will be also available on the Investors section of the company's website, www.centralpuerto.com.in.investors. All participants will be in a 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 www.centralpuerto.com. In addition, a replay of today's call will be available in upcoming days by accessing the webcast link at the same section of the Central Puerto's website. Our host today will be Mr. Fernando Bonet, Central Puerto CEO, Mr. Henrique Terranio, the company CFO, Mrs. Maria Laura Feller, Head of Investor Relations, and Mr. Alejandro Díaz López, Head of Corporate Finance.

Maria Laura, please go ahead. good morning everyone and thank you for joining us we will walk you through central puertos for quarter and full year 2025 results discuss key operational and market developments and then open the library for questions before we begin please note that my remarks may include forward-looking statements and references to non-ifrs measures such as hstbta these statements are subject to risks and uncertainties and actual results may differ materially definitions and reconciliations are available in our 4Q25 earnings presentation and financial statements. Revenues for 2025 reached $782.8 million, up 17% year-over-year. 4Q25 revenues were $172.8 million, decreasing 26% quarter-on-quarter and increasing 3% year-on-year. 2025 HSTBTA was $337.2 million dollars, an increase of 17% year-over-year. And for Q25 HSTBTA was $84.7 million, down 16% quarter-on-quarter and up 30% year-on-year. Total generation for the year was 18.6 TWh, down 14% year-over-year, largely reflecting historically low hydrology at Piedra de la Hira. And also in 2025 we undertook no recurring maintenance works in Central Costanera Combined Cycles and Luján de Cusco for Generation Assets. Regarding business performance, 2025 marked a pivotal year of consistent growth and market normalization. The company strengthened its strategic position and reinforced its power generation asset portfolio for long-term value creation. Throughout 2025, Argentina's wholesale power market advanced over normalization. Since November 1st, Resolution 400 has supported U.S. dollars, denominated spot prices, and recognized the margin over variable costs. In December 2025, 97% of our revenues were denominated in U.S. dollars, and we also progressed in the new thermal term market, standing around 11% of total volumes in the contracted market, with approximately 900 megawatt hour delivered to industrial customers during November and December. Our capex plan in 2025 included fully executed projects over the year, and additional projects that allow us to look forward and continue delivering growth. In 2025, our total capex was $202.4 million, consisting of concluding with 2024 projects, such as the closing of the Brigadier Lopez Combine Cycle, that achieved commercial operation during 1Q26 and we concluded also the San Carlos Solar Farm project, our first solar greenfield project. The asset reached commercial operation in November 2025, adding 15 megawatts of renewable capacity to our portfolio. Together with Cafachate, our two 2025 solar projects doubled our installed solar capacity and increased our total renewable portfolio by 20%. Also in 2025 we extended the Piedra El Aguila concession. The company was awarded the concession under the Komawa hydroelectric complex privatization process extending the operation the operating term of the Piedra El Aguila hydroelectric facility through 2055. Winning bid offer was 245 million dollars paid in January 2026. The company is also focused on the battery energy storage system projects looking forward to add 205 megawatts of new technology in 2027 our growth plan is backbone by our financial strength flexibility and low leverage ratio in December 2025 net leverage ratio was 0.3 times annual HCABTA with which position as well to add new financial depth to finance PLLI La Concession Extension in the fee payment and the battery energy storage system projects. 2025 revenues stood at 782.6 million dollars 17 percent above 2024 revenues despite the 14 percent decrease in generation volumes. Spot revenues growth in 2025 reflect additional revenues from the realignment of the spot price over the year and the resolution 400 since November 2025. Also, we see the effect of the self-procured fuel oil with the associated cost path-through in revenues. Offsets came from lower water inflows from Piedra El Aguila and the maintenance works in Central Costanera combined cycles. PVA sales growth include new MAT contracts in November and December 2025, including also cost of fuels incorporated in the energy component. Renewable revenues increased by 3% as wind farm volumes increased 5% due to higher wind resources and the full contribution from Cafashate Solar Plant since the end of August 2025. Full year 2025 EBTA reached $337.2 million, a 17% increase year-on-year. Primarily, driven by revenue growth and the market normalization and higher margins from self-procured fuels, which added approximately $8 million. In 2025, total generation reached 18.6 TWh, representing 14% decrease compared to 2024. Central Costanera's generation volumes decreased by 15% year-over-year, primarily due to maintenance work in both Mitsubishi and Siemens' combined cycles during 2025. Second, Piedra de la Aguila generated 38% less than in 2024, mainly due to historically low water inflows affecting hydro production. Finally, Lujan de Cusho was 24% lower year-on-year, largely explained by maintenance works in the cogeneration asset in the fourth quarter. Moving to insert capacity, our portfolio reached 6,938 MWh in 2025, representing an increase of 234 MWh compared to 2024. The increase was driven by several developments. The Real Lopez Combine cycle was completed, and the San Carlos solar projects added 15 megawatts of solar capacity. Together with Cafajate Solar Farm, acquired in August 2025, these two solar projects contributed by 20% of the renewable capacity additions during the year. Regarding market position, Central Puerto maintained its market leadership, reaching 14% market share of total solid iteration. Finally, looking at operational performance, our thermal field continued to show solid availability levels. In 2025, total thermal availability reached 77%, while combined cycles availability stood Another 89% reflected strong operational reliability. During 2025, three thermal and renewable projects were completed, combining green-free developments and M&A transactions, further expanding our generation portfolio. First, the Cafashate Solar Farm, which was acquired through an M&A transaction, is already in operation. Second, we finalized the Gradier-Lopez Combined Cycle Project, which is also already in operation since January 2026. Third, the San Carlos Solar Farm also entered in operations in November 2025. In addition, we were awarded two battery energy storage system projects, which were granted in August 2025. These projects are currently under development and are expected to begin operations during the first half of 2027. Finally, an important milestone regarding the Vira del Aguila hydroelectric plant was that Tendral Puerto successfully secured a third-year concession extension for the plant through the privatization tender process. The concession fee payment was successfully completed in January 2026, marking another key step in strengthening our long-term asset base. In 2005, the Argentine Powered System reached a new record for the demand with a peak of 30,257 MW on February 10, 2005. Renewable generation rose 16.5% year over year and supplied about 19% of total demand, including hydro renewals, representing roughly 39% of the total annual energy mix. Thermal fuel consumption declined 2.6% year-over-year, with gas oil down 53% and fuel oil 60% partially upset by 1.2% increase in natural gas and 5.2% increase in coal. As of December 31, outstanding financial debt was $337.8 million, and the tiller last ratio stood at 0.3 times HFTAB. On December 19th, we signed a $300 million syndicate AB loan with IFC with an average life of five years to fund Piedra El Aguila concession fee and Central Puerto's best project. Also, our outstanding Fonimbebem receivable credit was $118 million as of year-end. Overall, 2025 was a year of solid growth and continued progress as the market normalized. During the year, the company kept expanding and strengthening its generation portfolio to support long-term development. Looking ahead, we will focus on three priorities, discipline contracting, commercialization, operational excellence, and advancing our growth agenda.

Last, 2025 was a pivotal year for Central Puerto, marked by Piedra el Aguila concession extension by 30 years more, portfolio expansion, market normalization, and strategic progress across our assets. We entered 2026 from a position of strength with robust liquidity and resilient business model. Thank you for your continued confidence in Central Puerto. So, please let's stay connected and now we will 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 raise hand. If your question has already been answered, you can leave the queue by clicking on put hand down. Our first question comes from Martin Aronset with Balance. You can open your microphone.

Hi, thank you for the presentation I'm taking my questions I have three I would like to run them one by one if that's okay First, I was wondering if you could give us some color on why the decrease in the quarter over quarter BTA given that the market liberalization should have been at least positive for or not am I exposed to the spot market?

Hi, Mardin. Thank you for your question and your interest in Central Puerto. The main topic affected the 4Q 2025 is that we have a strong maintenance in our Central Puerto combined cycle and Mendoza combined cycles, the two of our biggest combined cycles. and because of that, we don't catch in those units the benefits of the new regulation scheme. But it's only regarding to that. The rest of the equipment was okay, and the new regulation is in place. So, we expect that we'll be recovered in the first quarter to 2025, 26, sorry.

Okay, thanks. And sorry for this follow-up, because probably you already disclosed this, expect, but are those plans already working again?

Yes, yes, yes, they start working at the end of December and the other one early January, so we don't expect additional maintenance for those units until 2027, 2028.

Okay, thanks. Then, regarding one of your main focus for 2026, I was wondering how much of the pharma capacity that was under the legacy scheme do you think can compete for energy PPAs? How much of that do you already have contracted? And how do you see the market or sign it, the rest of the energy that you have? I don't know if you are seeing much interest, I don't know if you have discussed this with distribution companies, if you expect probably a stronger interest for industrial consumers as we approach the winter where you have higher seasonal prices.

Well, in terms of our capacity, we can contract, as you know, the 20% of our combined cycles that are the spot legacy scheme that is around 2 gigawatts the whole combined cycle so is the 20% of that with the with the private customers with big industries and then and this and we are doing around that 20 yet during January February and March, we're going to cover that capacity, contract it. For to exceed that, we need to go to, as you mentioned, we need to go to the distribution companies and that is coming slower, the distribution companies need to discuss with the regulators, each regulator, because it's not only federal, it has local regulators in each provinces. And this is coming slowly because they need to discuss and receive a pass-through possibility in order to make the pass-through to the demand. So, by now, we are not doing a lot of transactions with distribution companies. Right now, we are, of course, in discussions. We are having advances, but we are not closing big deals yet. We expect that it could happen, start happening during this year.

Okay, right. So, do you think that to sign contracts with distribution companies, you probably will require, I don't know, some backup from CAMES or something like that, like it happened with the battery project?

No, no, no, no, no. Of course, we're going to make our credit analysis and we're going to pick the distribution companies that we think that they are suitable to giving credit, but we don't request additional CAMESA backup. Talking about, as I mentioned, legacy energy selling, because this is month and month and we can cut the provision if they doesn't pay. But talking about other projects like new generation or perhaps a teleconf, this is different, this will be different.

Okay, thanks. And my last question then, regarding the other main focus that you will have for I was wondering where do you see growth opportunities coming this year and probably also the next year because it seems that there is not enough incentives yet to add thermal capacity. Now with the thermal capacity competing also for PPAs with renewables, we have seen lower turners in new PPAs and slightly lower prices so I don't know if adding more better is now the best idea and there has been a lot of comments regarding probably new renewal capacity for mining oil and gas but it doesn't appear to have materialized yet so I was wondering where do you see the growth opportunities coming in the near term?

Okay well first of all we have right now an auction in place for new battery storage system for the other provinces than Buenos Aires that was the that we get awarded last year so So, we are looking at spots over the interior in different provinces, Santa Fe, Mendoza, Corriente, Córdoba. There are opportunities there. This new auction is in place and will have the due date in May this year. So this is an opportunity of expansion that we're going to look at. But, as you mentioned, in terms of renewables, right now it's getting difficult to get new PPAs with existing demand, so we are looking for new demand. Now, the existing one, as you mentioned, mining companies are one of them, oil and gas companies are all the possibilities, companies that need perhaps gain efficiency in their processes like introducing steam, perhaps we can work on the cogenerations there, and looking forward for perhaps in the middle of this year or perhaps in the third quarter of an auction for new capacity that need to be set for cover some areas, specific areas, like specifically Buenos Aires area. And I see there are opportunities. Not, as you mentioned, not trying to catch existing demand with renewable because, as you mentioned, it's been challenging right now because the thermal are entering in the market and are stressing prices. Also, the hydros are entering the market and put some pressure there also. But I see opportunities, as I mentioned, in storage system capacity, in new demand coming from new players in the market like mining companies. and a possibility in capacity, new thermal capacity coming in some auction during this year.

Okay, great. So, this formal auction that you mentioned, something similar to the term come off that it got canceled?

Well, it's not completely established by the government yet, but we have tokens with them that could be something similar, but with different perhaps approach to the demand.

So, something like receiving a payment for capacity from CAMESA, but it's something that are under discussion right now okay thank you very clear please hold while we poll for questions we are gonna go now for the question with Lucas Lombardo with Dax Lucas you can open your microphone sorry hi team thanks for

share all the the results and I want to know the percentage of a new term a contract that will include in the income from for the company okay I think you are referring to how much of the 20% that we can sell to to private consumers we reach that is the question yes yes we expecting during March to cover all those 20%.

Okay, thank you.

Please hold while we poll for questions. Our next question comes from Matthias Cataruzzi with AdCap.

Hi, how are you? Good morning, everyone. I wanted to ask first about the outlook for 2026 and the how do you see volumes coming for next year, especially hydro volumes and then how do you expect the PPA versus spot mix to be in next year regarding the new regulation you expect PPAs to grow more in generation Thank you.

Talking about volumes, specifically the hydrological year starts on May, so it's difficult today to say that we're going to see better inflows than the previous year. Of course, the previous year was a low year, so in our expectations are to be better than that, but to have a clear view, we need perhaps two more a month in order to see how the year comes. In terms of thermal capacity, thermal generation, we expect an increase because, as I mentioned before, two of our combined cycles were in maintenance during the whole month of December and the other one was maintenance of the whole month of September. So, we don't see those maintenance in 2016, in 2026, so we expect an increase of our thermal generation also. So, in terms of new PPAs coming, as I mentioned, we are trying to catch additional demand from distribution companies. This will unlock the possibility to sell the legacy energy above the 20% that we have already granted. So, we expect to have news on that this year. It's difficult to predict, as I mentioned before, it's difficult to predict the volume that we can reach there because the distribution companies are discussing with the regulators the feasibility of making that path through directly to the demand and the terms of that path through. So right now it's difficult to forecast the potential there, but we see potential. So, I think we can catch more than the 20% that we are already selling, and we can go over that going to distribution companies.

Great. And then, do you intend to participate in the upcoming tender for national batteries?

Yeah, we are looking at, yes. Yes, we are looking at, of course, it's different from the participation that we have last year because we are looking in places different from our facilities. The ones that we awarded last year we established inside our facilities, and it's convenient or very convenient for us. Right now, this new auction is all over the country, so we are looking places and the new reality in the battery storage system prices because the lithium goes up, the copper, all the materials, the batteries used, and the government established a price according to the last auction. So, we are looking at returns on that, places that are outside from our facilities or far from our facilities is not the same. So, we are looking at, but we need to do more work in order to understand if something suitable for us or not.

Great. Do you expect to participate in the upcoming privatizations by Enarsa assets?

Yes, we are looking at it. We don't have the mandate yet to move forward, but we are looking at it.

Great. And do you have any updates on the OpenAI SudEnergy project?

No, we have discussion with them after that we award that Piedra El Aguila, that was very important for them, that we have a huge hydro backup in us to give power to them. That was a great news for them. We discussed with them that, but we don't have a clear timing or any additional news coming from that place.

Great. And last, can you give us like an EBITDA bridge for upcoming years until 2028?

Well, I can give you some perhaps information regarding 2026. 2028 is, of course, we will expect to maintain that, but talking about increasing will be challenging regarding expansion, as I mentioned, of new PPAs and how we're going to do in terms of the new coming options. But talking about 2026, we have some certain things that can share with you and the rest of the listeners. One important thing or the biggest improvement that we are seeing for 2026 onwards is that the PPA, the Brigadier Lopez closing combined cycle PPA going to bring additional $60 million for our BTDA. The other improvement is, as we talked in the previous calls, the new regulation for spot market bring another between $70 and $80 million for our BTDA. Pierre El Aguila also have an improvement compared to the old regime that, compared to this new concession, will bring additional $15 million.

And if you perform the full year of the renewables that we acquired and built last year, this will add additionally eight and between eight and ten million dollars more so general terms will be an improvement of 150 160 million dollars great and I have two more questions one is if you expect distributing dividends in 2026 well yes And the second one would be more operational with the upcoming IP for the Perito Moreno pipeline expansion. Do you expect that your plants in the central area would get some more upside with lower costs due to lower gas prices because of the expansion of the gasoducto perito moreno?

In terms of dividend, that is something that we'll be discussing by the Board of Directors. Right now, we have no guidance regarding to that, specifically because, as I mentioned, we have different projects under our pipeline. We are performing some projects right now, so this is something that the Board will be discuss in the next coming month talking about the TGS pipeline we are we we don't see a reduction on prices because the gas prices are set right now by the the plant gas contracts that Jamesa and the government signed during the former administration and so we receive these prices or these prices are fixed until the end of 2028 when those contracts get to the end. So we don't see big reduction in prices until this planned gas goes to the end. In terms of the capacity or the transportation capacity of the DGS, we are analyzing the convenience or not to acquire that capacity. The problem is that going further in a big 10-hour contract is like 15. Of course, you can do less, but normally will be 15 years of contract, is not fully discussed. The regulations scheme in which we can recover these additional costs because these additional transportation will have an incremental cost related to one that we are paying now. so it's not clear for us yet the new regulation scheme that will be available or the regulation scheme that will be available to recover that incremental cost so right now we are we are looking at but we don't have a a decision yet great but wouldn't it be better

for gas prices in the winter? Wouldn't you need less liquids or gasoline or fuel oil?

Yeah, the problem is to get here to our terminals, you do not only need the TGS expansion, you will need distribution here. And the distribution in Buenos Aires area are very constrained. So, we don't see a fully elimination of diesel and LNG during winters for a while. Of course, there will be a reduction because the DGS will inject here and also have some volumes that could go to the north. But we'll see a reduction but not a full elimination of diesel and LNG.

Okay, thank you so much.

You're welcome.

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

Well, thank you for your interest in San Puesto. I will encourage you to ask any question to our team that you may have. Thank you very much and have a good day.

This concludes today's presentation. You may now disconnect and have a good day.