4q20 results presentation - themediagroup
TRANSCRIPT
4Q20 RESULTS PRESENTATION
2
The statements contained in this report regarding the business outlook of ISA CTEEP (“ISA CTEEP”, “CTEEP”, “Company”), the projectionsand their growth potential are based on mere forecasts and were based on management's expectations in regarding the Company's future.These expectations are highly dependent on changes in the market, in the general economic performance of the country, the sector andinternational markets, and are subject to change.
The financial information was prepared in accordance with CVM (Brazilian Securities and Exchange) rules and CPCs, and it is in compliancewith international accounting standards (IFRS) issued by the International Accounting Standard Board (IASB). The Regulatory Result ispresented in accordance with accounting practices adopted in Brazil. The purpose of disclosing the Regulatory Result is merely to collaborateto understand ISA CTEEP's business. Sums may differ due to rounding. The Regulatory result is audited only at the end of each fiscal year bythe independent auditors.
Disclaimer
• CONEXÃO JAGUAR: support for the conservation of more than 76 thousand hectares of preserved areas of Serra do Amolar - Pantanal
• COVID: ~BRL5 million donated to fight the pandemic
• Social investment of ~BRL14 million
3
• 4Q20 Regulatory Result: Net Revenue of BRL839 million, Adjusted EBITDA of BRL723 million, with a margin of 79% and NetIncome of BRL374 million
• 2020 Regulatory Result: Net Revenue of BRL3,9 billion, Adjusted EBITDA of BRL2,7 billion, with a margin of 86% and NetIncome of BRL2 billion
• Retrofitting projects with associated RAP: investment of BRL231 million in 2020 (+74% vs 2019)
• Greenfield projects: investment of BRL1.1 billion in 2020 (+ 69% vs 2019)
• Acquisition of Piratininga Bandeirantes Energy Transmission for BRL1.6 billion, with an additional RAP of BRL172 million
• Distribution of BRL1.67 billion related to 2020 results: 83% payout on regulatory net income and 9% dividend yield
• Earnings distribution in the amount of BRL531 million announced in 2021
HighlightsEven in such atypical year with so many challenges, record results were achieved, based on operational excellence and financial management
• Startup of 2 projects in 2020 (Itaquerê and Tibagi)
• Winning bid for lot 7 (IE Riacho Grande) at the December 2020 auction
• Aguapeí: startup in January 2021
Financial
Growth
Earnings
ESG
Greenfield Projects
4
Growth strategy with sustainable value generationStrong cash generation allows progress in growth strategy
Retrofitting Projects
Greenfield
M&A
Capex BRL million
289385
771
4Q19 4Q20 2019 2020
1,305
+33%
+69%
Growth StrategyInvestment with sustainable value creation
5¹ Retrofittings consist of providing additional transmission service through new facilities and investments to ensure adequate service provision.
RETROFITTING PROJECTS
• Investment of over BRL1.5 billion already authorized by ANEEL for the execution of 277 projects by ISA CTEEP in the next years
• BRL231 million invested in 2020 (+74% vs 2019)
• ~BRL300 million to be invested in 2021
• Sector long-term plan indicates investment need of ~BRL60 billions until 2030
GREENFIELDS
• BRL1.1 billion invested in 2020 (+69% vs 2019)
• Dec/2020 Auction: winning bid for the second largest lot
(IE Riacho Grande)
• 63 km of transmission lines and 800 MVA of
transformation capacity
• Estimated ANEEL capex of BRL1,141 million and
construction term of 60 months
• From 4 to 5 projects to startup in 2021
• Over BRL1 billion to be invested in 2021
• Sector long-term plan indicates investments needs of
~BRL30 billions until 2030
Investments that contribute to the expansion and security of Brazil's electricity transmission system
Greenfield growth
6
IE AimorésANEEL Deadline: feb/22Real Profit¹
IE ItaúnasANEEL Deadline: feb/22Presumed Profit
IE IvaíANEEL Deadline: aug/22Real Profit¹
Três LagoasANEEL Deadline: jun/23Presumed Profit
Triângulo MineiroANEEL Deadline: dec/24Presumed Profit
In p
rogre
ss
Projects on time and on budget
¹ Sudene tax benefitLI: Installation license | Land: Properties released | Project: Evolution of all activities related to the project until its energization
98%100%
LI
86%
Land Project
100% 100%
LI Land
86%
Project LI
100% 100%66%
Land Project
100%
LandLI
87%
Project
64%
IE ParaguaçuANEEL Deadline: feb/22Real Profit¹
24%
ProjectLand
100%
LI
64%
LandLI
20% 21%
Project
In p
rogre
ss
Opportunity of sustainable value creation with excellence in project execution
IE BiguaçuANEEL Deadline: sep/23Presumed Profit
MinuanoANEEL Deadline: dec/24Presumed Profit
50%
LI
63%
Land
52%
Project ProjectLI
16%Land
23%
IE Itapura LorenaANEEL Deadline: sept/22Presumed Profit
100%
LI
85%
Land
100%
Project
In p
rogre
ss
Riacho GrandeANEEL Deadline: dec/25Presumed Profit
LI Land Project
In p
rogre
ss
In p
rogre
ss
Greenfield growthProjects started up with average capex efficiency of 36% and 11 months of anticipation vs ANEEL deadline
7
Investment with sustainable value creation
ProjectsCapex
(BRL million)ANEEL capex¹
(BRL million)Efficiency
(%)Anticipation
(months)Revenue²
(BRL million)Start up
Itapura Bauru
63 126 -50% -18 12 3Q19
Itaquerê 250 398 -40% -11 52 3Q20
Tibagi 118 135 -12% -8 21 4Q20
Aguapeí 360 602 -43% -6 60 1Q21
Average -36% -11
¹ ANEEL capex on the auction date² 2020/2021 RAP cycle
M&APBTE acquisition to be completed in 1Q21
8
Investment with sustainable value generation
PBTE• Strategically located asset with low risk and high profitability
• ~30km of underground transmission line (15km double circuit)
• 30-year concession (until Nov/46)
• BRL172 million RAP (2020/21 cycle)
• Expected EBITDA margin above 97%
• Capital Structure: ~20% equity / ~80% debt
• Equity Value: BRL1.6 billion
• Net debt: BRL292 million
• All consents have already been obtained (ANEEL, CADE and creditors)
Financial Results
9
Results driven by the application of the tariff reset and by cost discipline
Note: Result in regulatory accounting
• Excluding the impact of the retroactive effect on PA (RTP and RBSE), net revenue growth is of 8.8% in the year
• Operational Efficiency: better operational indicators
• IENS of 5.4 x 10-6 in 2020 (vs 8.0 x 10-6 in 2019)
• PV applied was 1.26% of basic network and border RAP in 2020 (vs 1.70% in 2019)
• Cost discipline: PMSO/RAP at 15% in 2020
• IFRS results: accounting practices revision to comply with CVM Official Letter 04/2020
• +BRL674 million in the 2020 result mainly due to the application of construction margin (no cash impact)
Strong results allow growth strategy with sustainable value creation to be shared
Net RevenueBRL million
Adjusted EBITDABRL million
Adjusted Margin
82% 79% 80% 86%PMSO/RAP 20% 22% 21% 15%
595 723
4Q19 4Q20 2019 2020
2,716
2,214
+22%
+23%
730 839
4Q19 4Q20 2019 2020
3,891
2,775
+15%
+40%
Financial Results
10
Financial discipline seeks to neutralize the impact of inflation on the cost and expense structure
Note: Result in regulatory accounting
Evolution of costs below year inflation
¹ Considers PMSO + contingencies, without depreciation
4Q204Q19 2019 2020
550
170150
565
+13%
-3%
4Q19 4Q20 2019
133
2020
194
583 588
+46%
+1%
PMSO (ex-non recurrent)BRL million
O&M Costs and Expenses¹BRL million
Debt
11
Solid debt position with competitive cost of debt
Note: Result in regulatory accounting¹ Net debt considers ISA CTEEP cash and wholly owned subsidiary
Investment Grade by Fitch: AAA (bra)
• Funding of BRL1.6 billion through the 9th issue of debentures in 4Q20
• Debt lengthening: 93% in the long-term in 2020 vs 67% in 2019
• Average term of 6.9 years in Dec/20 vs 4 years in 2019
• Average cost of debt: 7.6% p.a. on 12/31/2020
• Net Debt / Adjusted EBITDA of 0.9x
• ISA CTEEP cash equivalents in Dec/20: BRL2.1 billion
• Funding of BRL672.5 million with the 10th issue of debentures in 1Q21
• Green bonds (debentures in the Brazilian market)1.07733%
Gross debtBRL million
Net debt¹BRL million
2020
313
2019
4,170
3,244
4,482
1,077
2,166
+38%
Short-term
Long-term
20202019
2,547 2,233
-12%
Return to shareholdersMinimum payout of 75% of regulatory net income (cash generation proxy), limited to the leverage of 3x Net Debt/EBITDA
12
Cash generation allows sustainable growth and earnings distribution
2020 Dividends
• BRL1.67 billion in dividends regarding 2020 results
• Payout of 83% (over regulatory net income)
• Dividend yield of 9%
2021 Dividends
• BRL531 million already announced in 2021 with payment in May
Why invest in ISA CTEEP
13
Maximize value generation to share with stakeholders
Growth strategy with sustainable value generation to be shared with stakeholders
Operational Excellenceand Efficiency
Existing assetsmanagement
Retrofittings
Sustainability
GrowthGreenfield and M&A
New businesses
Strong cashgeneration allows growth with dividend distribution
