Central Puerto S.A. Q1 FY2026 Earnings Call

Good morning, ladies and gentlemen. Welcome to Central Puerto's First Quarter of 2026 Earnings Conference Call. A slide presentation is accompanying today's webcast and will also be available on the Investors section of the company's website, www.centralpuerto.com/en/investors. 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 Central Puerto's website. Our host today will be Mr. Fernando Bonnet, Central Puerto's CEO; Mr. Enrique Terraneo, the company's 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, everyone. We are joining you today from Buenos Aires with our management team to report on the results of the first quarter of 2026 and to answer any questions you may have. Before we begin, I would like to remind everyone that today's presentation, as referenced on Slide 2, contains forward-looking statements and non-IFRS financial measures, including adjusted EBITDA. These statements are based on management's current expectations and are subject to risks and uncertainty. Please refer to the full disclaimer in our slide deck and on our website for further information. The company has changed its functional currency from Argentine pesos to U.S. dollars effective January 1, 2026, so applicable to 1Q '26 financial figures. For previous quarters, figures are presented in U.S. dollars converted from Argentine pesos using the reference exchange rate reported by the Argentine Central Bank at the end of each period.

With that, let us move to the highlights of the quarter. Turning to Slide 3. The first quarter 2026 was a strong quarter for Central Puerto, characterized by outstanding commercial execution and continued progress in market normalization following Resolution 400/25. Let me walk you through our key metrics. Adjusted EBITDA reached $120.0 million, representing a 41.6% increase quarter-on-quarter versus $84.7 million in 4Q '25 and 33.4% year-on-year growth versus $89.9 million in 1Q '25. This result reflects the full benefit of new generation assets, commercial contracting gains and the normalization of the wholesale electricity market. Revenues totaled $248.6 million, up 43.8% quarter-on-quarter versus 4Q '25 and up 26.7% year-on-year versus 1Q '25, driven by higher contracted and spot revenues. The contribution of Brigadier Lopez combined cycle and the new solar farms added in 2025. Total generation for the quarter was 5,420 GWh, a 54.2% increase quarter-on-quarter, largely reflected by Oxion, Bisolar and Emani, the restoration of Central Costanera combined cycle units and the addition of new installed capacity. Capital expenditure for the quarter amounted to USD 311.0 million, including the USD 245.0 million transfer of Piedra del Aguila shares following the concession award renewal and USD 66.0 million in BESS construction and maintenance works. Our net financial leverage ratio stands at 1.06x with net financial debt of $390.8 million against the last 12 months adjusted EBITDA of $367.2 million. FONINVEMEM credit outstanding balance is $105.8 million. On the credit rating front, we received an upgrade to AAA from Moody's Argentina. From a strategic perspective, the concession renewal of Piedra del Aguila for 30 years to January 2056 is a landmark achievement, securing a flagship hydro asset under a new long-term framework. Additionally, our BESS project at the Central Puerto facility is advancing well with 60% of site works completed, 32 concrete pads finished, and Phase 1 of the 132 kV yard work done. Market normalization continues under Resolution 400/25, and Central Puerto has achieved a leading commercial position in the newly established term market. More on that on the next slide. Moving to Slide 4. In the first quarter of 2026, Central Puerto achieved a decisive commercial breakthrough under the new market framework established by Resolution 400/25. Our contracting performance in the newly established term market is notable. Central Puerto held #1 market share in MAT-P, the contracted capacity segment for thermal and hydro process. In MAT-E, the contracted energy segment for thermal and hydro, Central Puerto held the #2 market share. Overall, 44% of our 1Q '26 revenues were generated from contracted sales, demonstrating our ability to quickly capitalize on market opportunities. Turning to Slide 5 for the earnings summary. First quarter 2026, adjusted EBITDA came in at USD 120.0 million with an adjusted EBITDA margin reflecting efficient operations and a better revenue mix. The 41.7% quarter-on-quarter increase was driven by higher spot revenues from market normalization under Resolution 400/2025. The contribution of the Brigadier Lopez combined cycle, which achieved its COD in January 2026 with an additional gas turbine closing the combined-cycle configuration, added 140 megawatts. Full quarter contributions from the 2025 solar acquisitions, Cafayate and San Carlos, and the solid performance of our wind farms supported results. On the revenue side, the 44% quarter-on-quarter increase to $248.6 million reflected contracted revenues growing from new PPA sales from Brigadier Lopez, active participation in MAT contracting and contributions from Piedra del Aguila. Spot revenues improved due to market normalization, restored volumes at Central Costanera following its 4Q '25 maintenance and $8 million from self-procured natural gas. On a year-on-year basis, the 33.5% EBITDA growth and 27% revenue growth caused the structural improvement in our earnings profile. Moving to Slide 6 for a review of our generation and availability performance. Total generation for the quarter was 5,420 GWh, up 54% quarter-on-quarter. This significant jump was primarily driven by the completion of maintenance works at Central Costanera Mitsubishi and Siemens combined-cycle units, which had been under maintenance during 4Q '25. The addition of Brigadier Lopez combined cycle contributed incremental generation since its COD in January 2026, adding approximately 229 megawatts to our installed capacity on a quarter-on-quarter basis. In the first quarter, Central Puerto acquired 100% of the shares of Patagonia Energy S.A., or PESA, for a total consideration of $50 million. PESA holds a 10-year conventional exploitation license for the Aguada del Chivato & Aguada de Bocarey blocks in Neuquen province, valid through May 2031. The investment thesis is compelling for several reasons. The blocks cover over 27,000 oil-focused acres in the northern area of the Vaca Muerta play, an area adjacent to blocks that have already de-risked the black oil window of this world-class formation, low entry cost per acre and a limited exploratory phase plan with an existing oil treatment plant facility of 1,900 barrels per day already in operation. Solid geological evidence of unconventional hydrocarbon potential in target landing zones has been assessed by qualified geologists based on existing conventional drilling data. Under a successful development scenario, this is a potential near-term investment opportunity of up to $600 million to unlock the potential value of these assets. We are currently advancing a de-risking plan backed by international unconventional play experts. Our balance sheet remains solid, though the quarter was capital intensive due to the Piedra del Aguila concession transaction. Total outstanding financial debt stands at $539.2 million against cash and financial current assets of $148.4 million, resulting in a net financial debt of $390 million. Against our last 12 months adjusted EBITDA of $367.2 million, this yields a net leverage ratio of 1.06x. First quarter 2026 marks a pivotal inflection point for Central Puerto. Our results reflect sustained revenue, margin and EBITDA growth, driven by strong commercial execution, operational excellence and the contribution of the new power generation assets incorporated through our capital plan over the past two years. Our 2026 outlook is constructive. We expect continued operational excellence and financial performance with BESS projects progressing towards their mid-2027 commercial ready date, ongoing market normalization providing further revenue upside and incremental contracting opportunities with large users and distribution companies materializing as the market matures. We remain firmly committed to delivering long-term value for our shareholders, and we are excited about the opportunities ahead for Central Puerto. Thank you very much for your interest and confidence in Central Puerto. Operator, please open the line for questions.

Our first question comes from Matias Cattaruzzi with AdCap.

I got three questions. First, in the first quarter, we observed that the post-maintenance generation rebound flowed primarily into the spot market rather than into contracted PPAs. With PPA volumes growth as we are seeing, it would be more gradual, right, for 2026. Could you share with us how the migrations towards more contracting and PPAs are progressing into 2026? And then I have another question on how do you expect self-procurement in fuels affecting Central Puerto going forward? Do you expect to access gas transportation capacity through the Perito Moreno expansion? Or do you see a reliance on CAMMESA's Plan Gas going forward? And then my final question. Following the closing of the transaction with Patagonia Energy, could you walk us through the specific timeline for the two shale pilots? And have you been in conversations with other potential operating partners? Or does it involve a stand-alone development?

Okay. Thank you for your question. Going one by one. The first that you asked is related to the migration from the spot market to the contracted market. We are, in fact, in the first quarter and right now advancing that area. For the first 20% that the regulation allows us to sell to private consumers, we are fully contracted there right now. And so we are now continuing to move on the other 80% that we can only sell to distribution companies—this is how the regulation is currently structured. We are starting to move that 80% that we still sell to the spot market by negotiating with distribution companies. Right now, we are making good progress with them, and we expect to have more news about that next quarter. That addresses the first question. The second you mentioned, I think, is related to gas transportation. In terms of gas transportation, we participated in a TGS auction. It was a very competitive auction. We received less than we asked for—around 400,000 cubic meters per day and we had asked for 1.6 million cubic meters per day. So we are still trying to get capacity in the next round of the TGS auction for gas transportation. We are also talking with distribution companies to secure more transportation. In terms of the gas itself, right now we are still in the Plan Gas with CAMMESA, but we have advanced conversations with all gas producers to start buying our own gas. I think that in the next two months, we will have news related to that. It's not easy because there is no producer except Pampa that has exited Plan Gas by using their own generation. So there is no private producer yet outside Plan Gas, but we have advanced conversations with some of them, and we expect news in the next two to three months in order to start buying gas directly, not through CAMMESA. In terms of alternative fuels like diesel oil, fuel oil and LNG or imported gas, we are working on those options and we are already buying some of our own fuel and gas where appropriate; we are coordinating this with CAMMESA. And the last one is the acquisition of PESA. As Laura mentioned, we are working with a U.S. company to develop the exploration and development phase for the two pilots—two or three wells that we are planning to drill to confirm the resources there and to progress with the license with the province. But right now, we don't have a fixed timing to comment. We expect that this is going to happen perhaps late this year or in the first quarter of next year because you need to bring all the drilling sets and that takes time, typically four to five months for mobilization and drilling. So that could be the timing, but it's not fully closed yet.

Great. I have a follow-up on generation volumes going forward in 2026. Do you expect PPA contracted volumes to continue growing during 2026 or to stay steady as you've shown in the first quarter? And what will happen with the spot market generation as well?

Yes. As I mentioned before, we expect to increase our PPAs, especially with distribution companies. That is the idea we are pursuing. We are already in private PPAs with large industrial customers and are almost at 100% of our regulated capacity for those private contracts. What remains is negotiating with distribution companies for additional energy PPAs. We can progressively increase the contracted share up to the regulatory 20% for private customers and more with distribution companies as agreements are reached. That is what we are looking for in the next quarters.

Great. And do you have a specific contract timeline for the new contracts—are they yearly contracts, two-year contracts?

Yes. Normally, for thermal generation we are seeing one-year contracts or not more than two years. For renewables, contract tenors can be longer—three years, five years—depending on the counterparty and technology.

Next question from Thomas Pericin with Balems.

Can you hear me? Congratulations on the results first. I have three questions. I will go one by one, if that's okay. Just a quick follow-on of the previous question. First, how much capacity do you consider can be contracted under energy PPAs with distribution companies and industrial users? And how much have you effectively contracted to date? And do you see it feasible to close PPAs with distribution companies this year?

You asked about capacity, not energy. In terms of capacity, we are fully contracted right now. Our capacity is contracted. Previously I was referring to energy volumes. I think during this year we can sign contracts with distribution companies; each distribution company has its own procurement process, but I expect to have the first contracts with distribution companies during this year.

Okay. The second one, regarding the TGS transport capacity, how much additional capacity do you still need to fully cover your fuel needs once planned gas expiries occur? And how challenging do you think this will be considering current bottlenecks in the system?

That's a big topic. You need to consider that we more or less consume between 10 million and 12 million cubic meters per day across the fleet. But this doesn't mean we need all this as firm transportation capacity because there is a lot of available capacity in the pipelines except during winter. What we want is the firm capacity required for the contracts we have, which is much less than total consumption but sufficient for periods of high demand. In the TGS bidding process, we asked for 1.6 million cubic meters per day and we received around 400,000 cubic meters per day. So we want at least to cover that 1.6 million level to have firm gas during winter, which is the critical period—perhaps 30 to 45 days in the winter—when additional firm capacity is needed. Outside that winter peak period, transportation is less of an issue.

Okay. And last one regarding your recent acquisition in Vaca Muerta. Do you have an estimated CapEx for the two or three wells you are thinking to develop?

Not yet finalized, but a normal industry expectation in that area is roughly $17 million per well.

Next question from Theodora Nasheba; she appears to be having technical issues. We will proceed to our next question from Marcus Seru with Alaya.

A few questions. Number one, could you explain more about the plans in Vaca Muerta? And second, leverage ratio guidance for December 2026?

In terms of Vaca Muerta, our plan is to enter the area and try to develop the blocks we acquired. It's 27,000 acres, so there is significant work to do. This is our first entry into oil and gas business, so we need to de-risk the area to start understanding the business; this will take a couple of years. We will look at other opportunities if they appear, but our first focus is to develop this acreage. We need to work on the exploratory wells and to obtain the necessary permits and provincial approvals. That is our main focus to develop in Vaca Muerta and then evaluate expansion opportunities. In terms of leverage, it will depend on opportunities. We expect potential M&A opportunities in the energy sector from private parties or government auctions. So the leverage ratio will depend on those opportunities and what we choose to execute. We are not expecting a gross leverage of 2.5x or that area; it will depend on the opportunities that appear and what we can pursue.

Our next question comes from an analyst on the line.

I hope you can hear me now. Just going back to the liberalization and the spot market. Can you mention again what is the realized price in legacy energy and capacity, and how you see going forward with PPAs? You mentioned the private ones, but I also saw there is something about CAMMESA potentially launching a small auction again—if you can elaborate?

There are several elements. In terms of prices, there is no single market price right now—each negotiation is specific to the counterparty, timing and technology (renewables, hydro, thermal). However, we are seeing contract prices that are higher than previous spot market prices, which is positive. In terms of new CAMMESA options, there is an auction in place for battery storage systems focused on the AMBA region around Buenos Aires; that auction is larger now and covers the whole country with around 700 megawatts of battery capacity, and we are preparing to participate. CAMMESA has also discussed possible capacity auctions for thermal capacity later in the year—perhaps the second half of this year—but specifics on megawatts and rules are not yet finalized by CAMMESA. Regarding whether a capacity auction is a step back from liberalization, I wouldn't characterize it that way. Globally, system regulators often run capacity auctions to ensure system adequacy years in advance, because capacity planning requires a system-level view that distribution companies and private buyers do not always provide. Capacity auctions are about ensuring the system has sufficient generation capacity over a multi-year horizon; energy contracting and PPAs with private buyers can still continue under the liberalized framework. Finally, on spot thermal dispatch prices, the variable dispatch price we receive depends on fuel and plant efficiency; as a reference point, it's around $40,000 per megawatt for gas-fired dispatch, though this varies with fuel and plant efficiency.

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

Okay. Thank you. Central Puerto is in a growing phase marked by the Piedra del Aguila concession extension, portfolio expansion, market normalization and diversification into strategic sectors. Thank you, everyone, for joining and for your interest in our company. This is all for this quarter. Have a great rest of the week and month. You may now disconnect.

Thank you. This concludes today's conference call. You may now disconnect.