Empresa Distribuidora y Comercializadora Norte SA

NYSE:EDN

Earnings Call Transcript 2022-Q1

[Operator]

Good morning, ladies and gentlemen, and thank you for joining. At this time, we will like to welcome everyone to Edenor 's First Quarter 2022 Earnings Conference Call. We would like to inform you that this event is being recorded, and all participants will be in listen-only mode during the presentation. After the company's remarks are completed, there will be a question-and-answer section through the webcast chat. Before proceeding, let me mention that forward-looking statements are based on the belief and assumptions of Edenor's management on an information currently available to the companies.

They involve risks, uncertainties, and assumptions because they relate to future events and therefore depend on circumstances that may or may not occur in the future. Investors should understand the general economic conditions, industry conditions, and other operating factors could also affect the future result of Edenor and could cause results to differ materially from those expressed in such forward-looking statements. Now, I'll turn the conference to Mr. Germán Ranftl, CFO of Edenor. Thank you.

[German Ranftl, Chief Financial Officer]

Good morning everyone, and thank you for joining. Welcome to Edenor earnings webcast for the first quarter of 2022. I truly hope that you and your family are safe and healthy. As you know, you can always call any member of our team for more details in the results of the period, or any doubts you may have. We first will be focused on the highlights. Edenor continues to guarantee the electric distribution services to all its 3.2 million customers, which represents a population of approximately 11 million people.

Our mission is to provide a socially responsible electricity distribution service, leading the energy transition that contributes to improving people's quality of life, business, and community developments, as well as that our of employees and shareholders and [Indiscernible] holders. We are committed to our community, which is why we have adopted the best environmental, social, and governance practices. Edenor was able to improve its quality services, as well as better management of its resources.

The key indicators SAIDI and SAIFI represent the duration and frequency of financial cuts for the last three months showing an improvement of 13% and 11% compared with the same indicators as of March 2021. Revenues from sales were 7% lower than the first quarter of 2021 in real terms. Mainly due to inflation differences and the Tariff that has been frozen for this period. Edenor announced the results on May 10, of the offered to exchange class number nine, [Indiscernible] obligations with 73.25% acceptance. We would like to thank to all the holders who have participated. Public hearing on April 18th, 2022, the [Indiscernible] executive branch convened public hearings to be held on May 10, 11, and 12, with the aim of dealing with the following issues.

New seasonal references prices of the seasonal prices of electricity energy, enforced as of June first 2022. Implementation of segmentation in the granting of the energy prices, subsidies by the National Government to users of natural gas and electricity services for all -- for the years, 2022 and 2023. In this hearings, there is no additional value-added tax for the distribution electricity companies. Debt restructuring. The result of offer of the exchange class 9 newer showed obligations issues by the company with maturity on October 25, 2022 for new negotiable obligations class number one was 73.25% acceptances.

Restructuring accordingly to a total of $52,706,268 corresponding to exchange offers filed under option A for $43,793,950. And redemption offer orders file, and our option B, for 30,470,118. Additionally, interest was been paid for the first -- from the last payment dated, and including the settlement date, totally $329,573. The depth structure of negotiable obligations of the company based on the exchange offer received would be composed of following. Remaining shares, remaining obligation, and negotiable obligations, class number 9, $26,231,000. New obligations under the new N1 52600 -- 700 -- 6258 totaling the 98570.

Ratings. Credit rating agencies, Fitch, Moody's and Standard and Poor's updated [Indiscernible] rating as -- regarding the debt. Standard and Poor's has skipped the actual rating of RA CCC + changing to a positive outlook. Fitch has been included as rating agency with a minus with a negative outlook. Fitch has also concluded that this new bonds class number one, are aligned with the four principles components of social bonds principle of the ICM BMA, authorized incorporation of these new issues to the CBS bonds panel. First quarter results. The gross margin corresponding to the first quarter of 2022 was ARS$12,452 million, which represents a fall of 3% compared to the same period of the previous year.

The under established new Tariff schemes which are effective as of March 1st, setting a bad increase of only 8%. EBITDA decreased ARS$110 million, our positive result of 1.329 million pesos in the first quarter of 2022, compared to a gain of 1.439 million pesos in the same period of the previous year. There are no adjustments to the EBITDA between the comparison periods. The volume of energy sales increased by 5%, reaching 5,470 GS. In the first quarter of 2022 against 512 GS for the same period of 2021.

Furthermore, and our customers base rose by 2.3% compared to the same period of the previous year, reaching more than 3.2 million of customers, mainly on accounts of the increase in residential customers on small commercials as a results of the market, discipline actions and the installation over the last year of more than 600,441 and integrated Energy Meters that went to me, the intended to regularize connections. Financial results experience a decrease reaching $900,846 million basis. In the first quarter of 2022. Again, the losses of $6,730 million basis in the first quarter of 2021.

The difference is mainly due to a higher interest accrued in the debt incurred by CAMMESA, which is of ARS $32,614 million. Net results decreased by ARS $1,800 million, recorded losses for ARS $2,818 million in first quarter of 2022, against a loss of ARS $1,018 million for the same period in 2021. In addition, there was a lower loss in the operating income, higher financial charges due to the deferral of the payment of obligations with the wholesale electricity market, and higher results for exposure to exchange in purchasing power. Capital expenditures. In the first quarter of 2022, Edenor's capital expenditures totaled ARS $2,684 million against ARS $3,920 million in the first quarter of 2021.

Investments for the period were as follows. ARS $487 million in new connections, ARS $696 million in grid enhancement, ARS $719 million in maintenance, ARS $23 million in the year requirements, ARS $93 million in communications and telecontrol, ARS $302 million in other investment projects. Services quality disturbance. Quality disturbance measured based on the duration and frequency of services all digit using SAIDI and SAIFI indicators. SAIDI refers to the duration of outrageous and measures the number of outrageous powers our user experience per year. And SAIFI represents the frequency of voltages and measures to number of times a user experience an outage during the year.

At the closing of the first quarter of 2022, SAIDI and SAIFI indicators for the last 3 months were 10.4 hours and 4.1-hour digit an average per client, per year. Evidencing 13% and 11% respectively improvement compared to the same periods of previous year, in turn these indicators are 13% and 24% lower than the targets finally required by the RTI for January 2022. This recovery services levels, is mainly due to the investment plan device by the company's since -- since 2014. The difference, improvements, implementation, and the operating processes on the adoption of technology applied to degree operations and management. Energy losses, in the first quarter of 2022, energy losses experience 13.8% decrease against 16% decrease for the same period of the previous year.

Costs associated with these losses increased 34%. These results in 780 millions improvement in real terms. They works with disciplinary teams to develop new solutions to energy losses continue, as well as a market discipline actions aiming to reduce them. Analytical and artificial Intelligence tools where you used to enhance the effectiveness in their own term of inspections. And beam actions continues with the objectives of detecting and normalizing in rheumatoid connections, fraud on energy fraud. In addition, during 2022 7,928 inspections of terrorists, one residential uses were conducted with 52% efficiency.

While at the same period of the previous year 413,000 inspections were conducted with 52% efficiency. Moreover, 6,445 integrated Energy Meters were installed during 2022. Regarding the recovery of energy besides organization of customers with Media Meters, clients and customers with conventional and meters was to put back to normal. Moreover, and new energy balance system was implemented, as well as a development of microbalances in private increases. In other cases a striking rate of recidivism in fraud has been observed. This concludes my review on Edenor, and I would like to thank you for the support shown by our investors and bondholders, and your interest in participating today. We are now open for questions through our chat.

[German Ranftl, Chief Financial Officer]

Okay. Thanks for joining this conference call. Please keep you and your family safe and healthy. Have a good day. Thank you everybody. Bye bye.