MPC Energy Solutions N.V. (MPCES) Earnings Call Transcript & Summary

Yes. Good morning, everybody. My name is Ulf Hollander, and I'm Chairman of the Board of MPC Energy Solutions. And with that, I would like to open our Annual General Meeting with a particular welcome to all shareholders, to my fellow colleagues on the Supervisory Board as well as to the members of senior management. Before hitting the agenda, I would like to address a number of formalities. Firstly, this meeting will be held virtually and in English. Second, the AGM will be streamed as a live event and the recording will be made available on our website after the meeting. All shareholders that were registered as such on April 11, '25, were invited to the AGM and were able to cast their votes. Votes were already cast by voting form prior to the AGM, and the results will be formally announced during this meeting. Mrs. Heike Hulle was appointed Secretary of this meeting and has been asked to take the minutes of this meeting. I would like to point out that all shareholders have been able to ask questions prior to the AGM and will also be allowed to ask questions during this meeting. To ask questions during the meeting, participants are kindly asked to use the chat function embedded in the MS Teams live stream. And with that, we can move over to the second agenda item, and I hand over to the management team, Stefan Meichsner, to give a brief report on 2024 and the outlook for 2025.

Ulf, thank you very much, and a warm welcome to everyone joining us here today. 2024 was very much a transitional year for MPC Energy Solutions. We were able to improve our operational results. We were able to lower costs, and we were able to remove some legacy obligations from our balance sheet. Everything was done to create a solid basis for the year 2025 as is evidenced by the strong first quarter results that we published last week. So all the effort of the team, all the hard work is starting to really pay off, and I want to send sincere thanks to everyone involved in this effort. We had a few highlights in 2024, among them, a significant increase across all the key metrics that we track, like energy output, revenue, operating profit and also an improvement in the operating margin. This was in part driven by significant overhead cost reductions of 30% year-over-year, so compared to 2023. We realigned our core focus on core markets by divesting certain noncore assets, especially in Puerto Rico and in part already in Colombia. And of course, one of the main highlights for the year and also a highlight for 2025 is our largest project to date, a 66-megawatt peak solar PV plant in Guatemala, San Patricio. Construction started in February of last year, and we are very close to completing the project from a construction perspective with testing and commissioning starting soon. And as my colleague, Fernando Zuniga, will tell you later, we expect first power to be delivered in July of this year, in line with our previous forecasts. Briefly looking at the numbers, what I just described is basically reflected here. We increased our revenues. We increased our operating profits, lowered costs. And were it not for the significant impairments that we took in connection with some discontinued projects, some project sales and also some legacy obligation, the financial year would have looked at the bottom line much better, but we decided to take these impairment charges to make sure that we can start 2025 on a solid basis. Looking at the balance sheet, the structure is similar to previous years. It is naturally dominated by the fixed assets that we invest in. We had a consolidated cash position of over EUR 12 million at the end of the year and continue to see a strong equity position of over 41% equity ratio. And we have no corporate debt. All the debt that we carry on the balance sheet is project related and is nonrecourse in the respective project entities. The energy output for last year was a new record for us, 116.1 gigawatt hours were produced overall, and we ended the year with a free cash position, something that we track and monitor very carefully of EUR 4.2 million, an increase compared to previous quarters during the year, which was mainly driven by the sale of a project in Puerto Rico and the money that we collected at the end of 2024. And with that, I end the brief review of 2024 and hand over to my colleague, Fernando Zuniga, for an update on our construction efforts and an outlook for the year 2025. Over to you, Fernando.

Thank you, Stefan, and good morning to all. I will start with an update for the construction progress on San Patricio in Guatemala. As my colleague already expressed, we are on track and on budget, and we are estimated that by the end of this month, we will be reaching mechanical completion, and we are expecting to inject electricity to the grid by July of this year. The installation of models, we are about 80% advanced as well as for the tractors. And we are currently working also on the connection to the system and the drainage system. As a reminder, we have been invested $8.5 million in equity, and the loan has been provided by the local commercial bank under a project finance loan. And the total amount has been already disbursed from the debt service. What are we expecting? Also, we are in parallel working on the sales process of the operational and development projects in Colombia. The project identification of potential buyers is in place. Discussions with potential buyers is also undergoing. And also regarding the projections for 2025, we do not consider any contribution to the energy output from the projects in Colombia as the investment is planned. And we are also starting -- we also are going to consider the upcoming start of operations for the Guatemala project, which will have a significant impact in our overall financial results. With this, we will have the core portfolio in Guatemala, El Salvador and Mexico, and we expect to generate significantly higher operating margins compared to previous years. Now I will hand again back to Ulf to go for the voting results. Thank you.

Thank you very much, Fernando and Stefan for the update. Very much appreciated. We turn over to agenda item #3. As mentioned, no questions were submitted by the shareholders prior to the AGM. Could I kindly ask all participating shareholders if there are any questions that you would like to address today?

I am monitoring the feed. So far, no questions have been submitted. Maybe we'll give it a few more seconds to see if any comes up.

I think if there are no more questions, Stefan, we should proceed. We move on to agenda item #4, and I would like to present the voting results. The holders of 5,026,363 shares have exercised their voting rights directly or via their nominees. The votes represent 22.6% of total share capital, and they were all accepted by me. Please allow me to present the results in detail. Resolution #1, the adoption of the financial statement for '24. It was proposed by me that the annual report and the consolidated financial statements be approved. The annual report and the financial statements for the financial year 2024 were published on April 24 this year. The consolidated total assets of the company amounted to USD 123.6 million. The equity position was at $50.2 million, representing an equity ratio of 41%. The consolidated cash position amounted to USD 12.4 million. MPC Energy Solutions recorded consolidated revenues of USD 11.6 million and EBITDA of USD 3.8 million and a consolidated net loss of USD 17.4 million. The auditor, Ernst & Young Accountants B.V. has issued an unqualified opinion for the annual report and the financial statements for 2024. With votes in favor of 5,026,363, the resolution is passed. Resolution #2, the discharge of the Management Board for the financial year '24. It was proposed that the discharge of liability be granted to all members of the financial year 2024. Stefan Meichsner, Managing Director and Chief Financial Officer; and Fernando Zuniga, Managing Director of Latin America, appointed in the course of '24 on August 20th, were the only members of the Management Board during the financial year 2024. The resolution is passed with again 5,026,363 votes in favor. Resolution #3 is the discharge of the Supervisory Board for the financial year '24. It was proposed that the members of the Supervisory Board being discharged for the financial year 2024. Mr. Ulf Hollander, Dr. John Benjamin Schroeder, who left the Supervisory Board on August 20th; Dr. Philipp Lauenstein, who joined the Supervisory Board on the same day; Mr. Kjell Roland; Mrs. Kathryn Baker; Mrs. Ellen Hanetho were the only members of the Supervisory Board during the financial year 2024. The resolution is passed with again 5,026,363 votes in favor. The appointment of the auditor for the financial year 2025. It was proposed to reelect Ernst & Young Accountants B.V. in Zwolle for another 1-year term as auditors. Ernst & Young were the auditors and have been the auditors for the financial year 2021, '22, '23 and '24 and are familiar with the company's setup, the structures, the financial history and the budgets. The company and Ernst & Young have agreed on a competitive fee structure for the audit process of the company's annual report and the consolidated financial statements for the financial year '25. And again, the resolution was passed with 5,026,363 votes in favor. With that, I would like to turn to any other business. There are no additional matters that we will have to attend to. And with that, I would like to conclude the meeting, thank the management for their efforts in 2024 as well as the efforts of the team. It's not been an easy year, a very challenging environment. And I guess not much has changed for 2025. So good luck. I would like to thank the shareholders and my fellow Board members for staying with us, sticking to the company and for their continued support, and wish you all well for 2025. Thank you very much.