Q4 2012 Gas Natural SDG SA Earnings Conference Call
Feb 19, 2013 AM CET
GAS.MC - Gas Natural SDG SA
Q4 2012 Gas Natural SDG SA Earnings Conference Call
Feb 19, 2013 / 09:00AM GMT
==============================
Corporate Participants
==============================
* Luis Calvo
Gas Natural Fenosa SA - Head of IR
* Rafael Villaseca
Gas Natural Fenosa SA - CEO
* Carlos Alvarez
Gas Natural Fenosa SA - Financial Director
==============================
Conference Call Participants
==============================
* Jose Martin-Vivas
Mirabaud Securities - Analyst
* Gonzalo Sanchez
BPI - Analyst
* Javier Garrido
JPMorgan - Analyst
* Alejandro Vigil
Cygnus Asset Management - Analyst
* Antonio Cruz-Guzman
Banesto Bolsa - Analyst
* Pablo Cuadrado
BofA Merrill Lynch - Analyst
* Javier Suarez
Nomura - Analyst
* Jorge Alonso
Societe Generale - Analyst
* Carolina Dores
Morgan Stanley - Analyst
* Michael Ridley
Mizuho - Analyst
==============================
Presentation
------------------------------
Luis Calvo, Gas Natural Fenosa SA - Head of IR [1]
------------------------------
(Interpreted). Good morning and welcome to the results presentation for 2012.
The presentation will be given by our CEO, Mr. Rafael Villaseca, together with the Financial Director, Mr. Alvarez, and the Director for Strategy and Development, Antonio Basolas. After the presentation, we will have time for questions and answers, and beginning with the people in the room and then with people who followed us on the phone or on the Internet.
And I will now pass the floor to our CEO, Mr. Rafael Villaseca.
------------------------------
Rafael Villaseca, Gas Natural Fenosa SA - CEO [2]
------------------------------
(Interpreted). Good morning, those of you here physically in the room, those of you listening on the phone or on the Internet.
As usual, we're going to have this presentation based on this agenda. We're going to talk about highlights first. Then we're going to talk about our capital structure. Then we'll talk about growth of international operations. We will analyze the consolidated accumulated results of the year. Then we'll refer to each of the businesses, lines of business of our Company, and then we will conclude and have questions and answers.
If we begin with the highlights, we have to say with a great deal of satisfaction that we have complied with our targets in the strategic plan for 2010 to 2012. We had established a target of an EBITDA of more than EUR5b by 2012, and we've had an EBITDA of EUR5.080b, which is a growth of 9.4% over the previous EBITDA. Our net income aim was about EUR1,500m, and we've got -- we've achieved EUR1,441m. So that's 8.8% more than the previous year.
Our net debt target was, as of December 31, '12, of about EUR16b and it was -- has been EUR16b, which means a reduction of 7.5% in terms of the debt that we had the previous year. And the net debt over EBITDA ratio, we wanted to achieve a target of about 3 and it's 3.1.
So all I can say is that we're very, very happy to have complied with all our strategic targets. We thought they were realistic and we worked in a very complex, very tough environment, macro, micro-economically, very complicated. And we're very happy to present these results, which we are now going to analyze with greater detail.
We have to also say that the Board has approved the distribution of a dividend for -- a total dividend for 2012 of EUR895m, which means an increase of 8.7% as regards the dividend in the previous year, a payout of 62% and a yield of 6.6% as regards the closure of the previous year. All this will be paid in cash. We won't have the scrip dividend system this year.
Also important in the highlights, we have to underline the very good performance on the stock market. If we look at IBEX and other -- and EUROSTOXX Utilities indicators. If you look at the previous year, we went up by 3.35%, which is in contrast with the drop in 4.66% of IBEX and 8.32% (sic - see slide 7, "8.82%") of EUROSTOXX. And this can be seen -- yesterday, after the closure yesterday, we can see that our Company has had a very big growth, important, significant growth. This also happened in 2011, it happens again in 2012 and we're going to see whether we can do it in 2013.
I would like to also comment some of the most recent events as regards our activities in several areas, all of them important. The first is as regards the financial structure. We have to say that in 2013, as you know, and I want to underline this, we have issued EUR800m in two bonds issuances. The first one was EUR600m, 10-year EUR600m issuance, and the second one was CHF250m six-year issuance. Both were done in very competitive conditions and with a high level of demand, which reflects clearly the interest that there is on the market for our paper.
And over 2013 -- in the first quarter of 2013, we've securitized EUR140m of tariff deficit. This is for the securitization of the tariff deficit.
And as we said recently, we've sold our part share in the two electrical distributors we have in Nicaragua for $58m. And we've, after negotiating quite long -- for quite a long time, acquired 10% of the gas line there -- the Medgaz, sorry, gas line, pipeline. And that allows us to participate in the infrastructure of the gas line between Algeria and Spain and also access a contract of gas for 10%. That is an additional 0.8 bcms for 18 years that strengthens and diversifies the portfolio of gas contracts.
Very importantly too, I have to talk about regulation measures that have been introduced since the end of the previous year until the beginning of this year. At the beginning of the year, the fiscal measures aimed at tackling the electricity tariff deficit finally were approved. They're in force since January 1; the nuclear tax, the green tax, the hydraulic tax, etc. All these measures have been started -- introduced and they're in operation. They were introduced -- they were evaluated at about EUR3b was the total package, and EUR450m which would be an estimate of the cost of the auctions of CO2, which this year will disappear completely, as you know; free rights disappear.
The impact for the Company is -- well, of all these fiscal tax measures, the impact is about EUR340m, but we must describe the following exception. All these tax measures naturally apply to variable and direct costs in a system which is marginal in terms of costs. So it can be translated into the final or end price. But it's also true that the commercial situation and the idiosyncrasies of the market, which is sometimes full of interventionist measures which prevent it from working as flexibly and quickly as a liberalized market should, makes it difficult to know when finally we're going to be able to translate that into costs, into final costs.
We believe that this will be a process that will move forward of its own accord, but it's difficult to know how it will actually end and what the costs will be and how they will be applied to the final price. These are variable direct costs and, as I say, they can be applied to the final bill the consumer -- what the consumer pays.
Now, we must also say that on February 1 the Royal Decree 2/2013 was approved. Sorry, before that, the 29/2012 Royal Decree of the end of last year, there were other terms that are really important that led to a situation where deficits are not limited for 2012 and '13, and opening up the possibility of securitizing the excess over the 1,500m the previous year and what might be generated this year. Also, limited -- the premiums for special regime installations were limited beyond certain installations that were already in operation.
Another measure is the Royal Decree 2/2013, approved by the Spanish Parliament, passed by Parliament on February 1, and there are two main measures in this decree. The first is to change the updating index of all the regulated activities. It's not just the CPI, the CPI without certain products being included. It's a correct and adjusted CPI, which means that we'll go from 3% updating to 0, which will be the practical result of this.
Also, there's an elimination of the option to opt, whenever you wanted to, for the special regime generation and to choose between regulated tariff and market price.
And there's been two other measures that must be considered. The first one is that there's a Ministerial Order which assigns, as from 2014, 100% of extrapeninsular costs to the state budget. So that means that in 2013 that won't be assigned -- those amounts won't be assigned -- won't be carried by the electric system. And also, the government has announced that it proposes an approval of EUR2.2b line of credit to fund the mainland tariff deficit.
This leads us to believe that in 2013 the tariff deficit will be under control, quite surely will be well balanced and will not increase. The deficit in our system won't increase.
One must also say, and this was yesterday, that the order that updates the obligation of companies to buy and burn national coal to produce electric energy, that order was approved yesterday. And that will change the cost situation too, and we're analyzing this to see what the impact will be on our position as regards this. This new order, which is another example of interventionism in liberalized markets, which is unfortunate in our opinion, and we'll have to see what the effect is.
I must insist that these measures are going to balance out the electric system this year, and we are on the road to recognizing these problems and to look for solutions. The Ministry has said several times, and we hope, that the necessary measures are implemented this year to do away with this problem. And we really are happy that important measures are being taken to deal with these problems.
If we go into our financial, our capital structure, we have to say that we're also very satisfied with the effort that we've done to reduce our debt, which we reduced by EUR10b in the period between 2009 and 2012. The result of the operation of buying Union Fenosa, obviously that increased our debt, and that's gone down by EUR10b.
In 2012, we reduced our debt by EUR1.3b without any extraordinary items having been resorted too. At the end of 2012, our net debt was EUR15.9b, and it would have been EUR1b less had we collected the tariff deficit that hasn't been securitized or collected yet. So we've got a net debt/EBITDA ratio of 3.1, and which would be 2.9 once we get the tariff deficit amounts that we're owed.
Complying with our commitments has allowed us to now have a good amount of capital available. We've done this over time, you know. And we've done it using different measures, by selling assets, we increased capital, refinanced debt, and all this has been done in a very complicated environment.
We have to say that since 2009 we've issued EUR11b in bonds in different operations and markets, and that's been done in spite of the very bad environment that the market is in. And we think that that is due to our sound business model, which is based on a generation of positive cash flow that we want to continue to have in order to continue to do things properly in the near future.
And in this respect, allow me to tell you that we've been successful in these debt issuances. In 2012, we contributed with three new issuances, EUR2b and COP130m, and two issuances more in January 2013 for EUR600m and CHF250m. That has allowed us to increase the average life of debt by five years, or up to five years, in very good conditions. The issuances in euros that have been done, the average period is seven years and the average coupon is 4.8%.
As regards the securitization of tariff deficit, which is a problem that we believe is now on the way to being solved thanks to FADE and to the decisions of the Ministry, by limiting the increase of these things. What we have to underline here is that we had EUR1.2b at the beginning of the year and we've got EUR1.065b at the end of the year. That EUR1.065b is part of the EUR7.7b which in total the electric system in Spain owed electric companies as a result of the tariff deficit amounts.
The Royal Decree 29/2012 allows for the excess. In 2012, there was a wide excess and it'll be carried out by FADE. And we therefore believe that the problem is on its way to being solved and we hope that it will be completely sorted out soon.
As regards the profile of our debt, we are always conservative when we look at this problem of refinancing. And it's always led us to extend our period of growth and give ourselves enough space to refinance our activities. The expiry dates -- we're talking about a net debt of EUR16b and a gross debt of EUR20.4b. So our needs -- financial needs are practically covered until the year 2014, and we're beginning to work to solve our problems in 2015.
And all this we think we are doing with a quite efficient structure -- financial structure, because the risk profile is very well-balanced. At the top left you see that 80% of our debt is fixed and that 20% is floating. Our debt in 2012, our average in-debt level was 4.8%. 86% is in euros, 7% is in dollars and another 7% is in other different, Spanish American mainly, currencies.
We have a significant amount of debt on the capital markets. And 67% is financed on the capital markets, and that would go up to 72% if we had securitized or discounted the amount that corresponds to the tariff deficit that we are owed.
In addition to all this, and in line with our policy for many years, we have and we've tried to have an ample liquidity available, EUR9.6b at the end of last year, which was an amount which by itself could cover 24 months of our financial needs. This liquidity of less than EUR10b is broken down into EUR4,400m; in committed lines of credit and then the rest in uncommitted lines of credit. And then we've got EUR3.7b -- we've got additional capital market capabilities of about EUR3.7b in both euro and Latin American programs, Mexico, Argentina, Panama, complemented by recent COP500b program.
So the liquidity enhanced in the first quarter of 2013 -- was enhanced by EUR1b after bond issues, tariff deficit securitizations and disposals. So I think it's clear that we have an ample liquidity and that will continue to be our objective.
Let's look at our growth of international operations, which are the key to our results because our results in Spain don't show a good -- show the effect of regulation -- the impact of regulation and also the impact of the economic situation.
In 2012, the international activity accounted for 43% of our EBITDA, and these international activities went up -- accounted for EUR2.19b. Of that EBITDA, 58% corresponds to Spanish America, 32% to international gas market activity, infrastructures and wholesale market, and then regulated activities in Europe and the rest of the world account for, respectively, 5% each.
But as interesting as this breakdown is this other breakdown, where we see -- we must underline that the EBITDA that's been contributed by our international operations grew last year by almost 23%, and that's the key of our results. We are therefore growing healthily in our international operations, and especially in activities that are described here as -- well, that include wholesale gas sales mainly on international markets. However, our activities in Latin America continue to maintain a robust and sustained growth, with figures that are close to 9%. And I think that this is a good example of the soundness of our business model.
If we look at gas, international gas sales, there's 21% growth in this year in international gas sales, 12% in Europe and 24% outside of Europe, growth which is quite important and places us as one of the most important players in the international liquid gas market business.
And we reached almost 90,000 gigawatts per hour in foreign sales. 30% of the gas that Gas Natural Fenosa deals with goes to international markets. In spite of the bad moment of European markets, to have a commercial strategy on European markets that is significant we have our own commercial facilities in France, the Benelux, Germany. That allows us 32 terawatts an hour yearly in Europe.
The ability to be so flexible to generate our own gas and our commercial activity have all allowed us to open up markets, not just in Spanish America but also in Asia, in such a way that the growth of gas sales outside of Europe has reached 24%.
And all this, I'm not going to go into too many details, but this is a model that covers the chain that goes from procurement, through the gas pipelines or liquid natural gas, the transport of all this using ships or pipelines and then placing the product in the adequate places. And we must underline that we're interested in final physical markets, not trading so much, apart from exceptional cases. We want to deal with physical markets and establish medium- and long-term commercial relations with markets.
So the diversity of our system, the way that we use gas pipes and liquid natural gas, the character of our contracts and the range of prices we have is allowing us to cover this complex market very well. And all that together with the electric generation assets and the gas assets allow us to develop a gas/electricity -- joint gas/electricity strategy which for several years now has revealed itself to be very successful.
One must add now that we have recently acquired 10% of the shares of the company that exploits the Medgaz pipeline and a contract for 10%, 0.8 bcms a year, and that's an 18-year contract. So this will reinforce the portfolio of contracts and agreements in our Company and allow us to be present in this significant infrastructure of gas supply from Spain.
In terms of international liquid natural gas business, allow me to insist and tell you that our situation allows us to make use of the opportunities that the market gives us. We are present in the Atlantic and Pacific basins, practically on a 50/50 basis. This together with logistic and commercial organization to follow the markets very strictly allows us to develop operations that we think are good, by not getting involved in take-or-pay operations that are not attractive, and optimize this exposure to most profitable markets.
Now, how are we going to act? Undoubtedly, natural gas and therefore liquid natural gas we are sure is going to continue to be the main fuel for -- or one of the main or basic -- maybe the basic fuel for the energy development of the world, and we are sure, we are convinced, that our presence in this market will be undoubtedly rewarded.
We have to see what will happen with the producing countries, not just the conventional ones but the ones that are developing shale gas. You know about our presence there. See what happens in other places, what's going to happen with the plants to treat and process the liquid gas and take the gas to the markets that need it, what's going to happen with the variation in demand, not just in Europe -- we hope it recovers -- but also in Asia and Spanish America and, as I've said, in Europe and even Turkey.
We follow with great interest the progress of Egypt, with our plant in Damietta. We have an 80% share in that plant. Our Group has a 40% share in that plant. The political -- social situation in Egypt has led to a situation where this plant has been out of supply for a couple of months, and we hope that this will be solved soon and they can start up again soon.
All together, for the immediate future, we believe that the margins for LNG are going to remain the same. They've gone up slightly recently, maybe because -- might be a temporary thing, but for the year maybe they -- we hope that they will stay the same or maybe go up a little bit. And in terms of volume, we also expect stabilization, with maybe a little drop due to the situation in Egypt.
We will continue to try to arrive at mid-term agreements to place our gas, like we've done in India, like we've done in Japan. And also, in the Atlantic Basin we've just signed a 2 bcm contract in Puerto Rico and we're going to continue to work along those lines. And in terms of supplying, we've got the Medgaz contract too, in addition to the Cheniere contract.
If we go to Spanish America, the EBITDA's been EUR1.267b, and here you see the distribution. EUR640m go -- this is distribution, EUR366m, and 21% other sources of generation. Gas is predominant, as you see.
If we go by countries, you see that the country that most contributes is Colombia, followed by Brazil, EUR310m, though we have to underline that the situation of the Brazilian currency has penalized the results there this past -- this year. So we've got a sound profile, and every quarter we continue to be positive and well-balanced.
If we look at each different business, our distribution gas activities still have a high potential of growth. We've exceeded the 6m points of supply, with an increase of almost 4% in the number of connection points. And we've got to underline the growth in Mexico and Colombia.
As regards the sales of gas, they've gone up by 10% and they exceed 210,000 gigawatts an hour. So the EBITDA grew by 3% and reached EUR640m.
As regards electric distribution, apart from comparing with Guatemala and including Nicaragua, which as you know we've taken out our investment there, but the business is continuing to do well. Electric sales go up by 7% and the supply points have gone up by 4% and they exceed 3.7m. The key is the increased demand.
EBITDA grows by 20%. However, we must remember that the previous year it was penalized by the special tax in Colombia that we told you about, so the comparison is not consistent. But in any event, growth is clear and positive.
As regards generation activities in South America, our business is 100% regulated in South America, basically PPA contracts. The increase of EBITDA has been 6.2% (sic - see slide 28, "6.5%") and it's reached EUR261m. Production increased by almost 4%, and that has made up for the less -- the lower degree of activity of the two span plant, but all the other plants had a positive performance of almost 6%. Two new projects are in development and are very important that we finish this year, the wind park of Bii Hioxo in Mexico and the hydro plant in Torito, Costa Rica, the 50 megawatt hydro plant.
If we go into the financials, I won't give you too many details here about the P&L account for 2012, just tell you that our net sales went up by 18%. The EBITDA, as we've said, went up by 9.4% and the result after taxes 8.8%. If we had adjusted for -- after tax for the disinvestments and the extraordinary income of both years, this figure would be 28.8%.
If we talk about the make-up of our EBITDA, the breakdown of EBITDA that's grown by 9.4%, we have to say that distribution business in Europe has gone down. The reason is the drop in electric distribution, and this is in Spain. The measures that at the end of March last year were introduced reduced -- notably reduced remuneration of electric distribution and its results. And then we'll tell you how we've reacted in the face of that very, very severe drop in electric distribution in Spain.
Gas has had stable behavior and maintenance increased. The gas business registered an increase because of the international activities I mentioned, and Latin America on the whole grew by 8%, which is quite significant.
So the final figure is 9.4% increase for EBITDA. And if we take into account divestitures, the figure would be 11%.
Now, if we now turn to investments, you will see that they were lower by 3.5%. 66% (sic - see slide 32, "76%") were regulated. But let me highlight that the electrical distribution in Europe, investments in this distribution went down by 20% and investments in generation in Spain went down by 20%.
As a result, the first of the -- as a result of the regulatory measures and of the situation of the market, our investment in both areas, especially in distribution, have gone down and will keep going down in line with OpEx, in order to compensate for the severe regulatory adjustments we've been subjected to. In spite of the fact that if you compare the retribution or the remuneration of the Spanish market vis-a-vis other markets, per customer, per kilometers of lines, per kilowatt hour sold, our efficiency ratios are undoubtedly one of the best in Europe.
Now, if we go on to operations and if we start by electrical distribution, if we speak about our Company, you can see, as you know, that demand in Europe has been flat, although in Spain the electrical demand fell by 2%; well, 1.7%. The Royal Decree I mentioned in the month of March had an impact of EUR110m on our books and it led to a reduction of 10% in EBITDA.
So, against this background, we have implemented a program to reduce OpEx and CapEx, in order to be able to react to this significant fall in income. The investments went down in Spain by 21%. However, as a result of the investments, against the backdrop of a policy geared at achieving high quality, we still enjoy high quality levels and the quality index went down by 21% and now it is only 33 minutes. So the improvement is of 21%. So we will follow this up very closely, in order to try and compensate for the severe regulatory adjustment.
Now, in terms of gas distribution, you can see that the fall in sales was of almost 3%, basically because of divestitures. As you know, in the Madrid area we're still expanding the distribution network because Spain is not a gasified country. We are far behind Europe. And I'm not talking about new buildings. We are talking about existing homes, and so we're working to take gas to existing homes. So supply points have risen by 2% and now the total is of about 5.1m (sic - see slide 35, "5.573m") supply points.
We also have a portfolio of non-connected homes that has increased. And the reason for this is that our gas price for heating is highly competitive, and so we can go to existing buildings in order to switch them to natural gas because of the low penetration of this fuel in our country. The business has contributed about EUR900m EBITDA, and so the figure of previous years has remained stable.
Now, in terms of the energy business in Spain, which is deregulated on the whole, of course it is subject to severe regulatory interventions, so the demand has been as follows. In terms of gas, the conventional demand, that is residential and industrial demand, has risen by about 6%, unlike electricity -- gas based electricity demand, which fell significantly, and so the overall figure was significant. So consumption of gas for electricity went down by 23%, but conventional demand didn't go down. It had a positive performance, both the residential and the industrial areas. In terms of the demand for electricity, for the third year in a row we had a fall of 1.4%.
Now, if we now speak about the electrical area, our business of sales has gone down. And this is because a reduction in the ordinary regime of 3.6% and an increase in the special regime, basically wind energy, of 14.2%. This year, as you know, higher volumes in coal plants is a result of two factors, the Royal Decree to support coal and the low price of import coal. And so there's been a fall in hydro production, because of the lower rainfall, and also a significant fall of production of combined cycles, influenced by the divestitures of Arrubal and Plana del Vent.
In our sales we upheld the policy to optimize our position, trying to optimize our margins and not our share, and this has had very positive results. In previous quarters, I mentioned that we were not going to uphold a policy of market share, but we were going to try and optimize our commercial policy, and this has given optimal results. And this together with the evolution of fuel price markets and the CO2 emission rise and the change in the production mix and the impact on generation costs have been such that EBITDA rose specifically because of our selling policy.
Now, in terms of the special regime, let me tell you that production rose by 14.2% because of a fall (sic -- see slide 38, "+20.9%") of 21% in wind energy and a reduction of 8.5% in mini hydro energy. Co-generation increased by almost 4%. And so EBITDA increased by 11%, reaching EUR155m. Now, we're still working and we're going to finish the work this year on Belesar II and Peares II in Galicia, and we're still also working on the wind farms in Australia and Mexico.
Now, if we now turn our attention to the gas markets, you can see our evolution this year. We have had sales in the Spanish market of plus 1.6%, which is in contrast with the reduction of the Spanish market, as I was saying. Overall, well, this figure was quite good. This has been possible thanks to an increase in industrial clients and sales to third parties of 3.4%, an increase in residential customers of almost 12% thanks to the weather changes, and then a reduction of gas devoted to electrical generation of 8.1%.
We still acted on our commercial activities very, very strongly. Most of our sales were focused on industrial sectors. And we also made an effort to reach a figure of 1.4 contracts per customer, and this is an increase of 4% and an increase in 5% in maintenance contracts. We're still focused on dual fuel policies and achieving a good commercial situation in a market where clearly we are the leaders and we still want to be leaders. I'm talking about the Spanish gas market.
As regards Union Fenosa Gas, EBITDA was EUR256m, and there was a reduction of 7.6% because of a higher cost of sourcing. The reason that can explain this best is the uncertainty in terms of supply from Egypt. In Egypt, the situation is precarious because of the vicissitudes of the country. We are negotiating with the people responsible for that, both at the political level and at the industrial level in Egypt, to try and address the problem so that all these difficulties can be solved. We're also acting internationally, thanks to supply from Oman, but the gas coming to Spain is now 2.2% lower. The lower levels from Egypt have been offset by other suppliers and by other purchases in international markets.
Now, if I go on to conclusions, I will repeat that we are highly satisfied. We delivered on our commitments for 2012. EBITDA grew by 9%; 11%, really, on a homogenous basis. And we managed to strengthen our financial structure in a very significant way, and bond markets have recognized this because -- and this is shown because we managed to access those markets in a favorable way. And this is reflected by an 8% increase in our dividend.
Now, in terms of the prospects for this year, we need to analyze the impact of the fiscal measures imposed by the government. Most of them are connected to a pass-through. But of course there's going to be some transfer time, and it's difficult to say how long this period is going to be and so how this is going to impact our cash position. But we'll have to be as fast as possible, but at the end of the day these are taxes that will have to be transferred to the consumers.
Also, the reduction in supply to Union Fenosa Gas because of the Egyptian crisis will still affect us, but we hope to solve the problem in the near future.
Then, there's been a good performance of the Latin American market, especially in gas distribution, and of international markets in LNG, and the margins have been quite good. We don't dare say, but we have to say that we're still expanding our activities in LNG in Asia and in the Americas, and our sourcing has improved thanks to the signature of the contract with Medgaz.
Now, if we still look at the current year, the cash structure or the financial structure has been reinforced by the issuance of bonds and securitization. And the business structure will also be stronger because of the conclusion of two projects, namely the [central] of Torito and that of Bii Hioxo. One of them is hydro and the other one is wind based.
We are decisively working on our program to increase the efficiency of our operations. We are highly satisfied. This has been one of the keys to the development of our strategic plan. We have reduced our OpEx as a result of the synergies that we have been able to identify. We are still going to walk down this path and we are convinced that if we -- that we can obtain wonderful advantages in this way.
In the second quarter of this year, we hope to be able to present to you, once our Board has approved it, our strategic plan for the next three years. The basic lines we expect to work on is the strengthening of efficiency, a retrenchment in operational costs and management of our assets.
The maintenance of financial discipline, which has been our motto in the last few years, is still going to be very important for us. And we will adapt our growth to areas and segments where the market shows growth and possibilities to have margins in the deregulated markets that justify an investment and effort. And we are going to work hard to keep creating growth platforms that allow us to capture business for the future in whatever geography may be relevant.
I have finished my presentation and I am looking forward to your questions. So we will start by questions from the floor here, so I'd like to ask participants to raise their hands and identify themselves before asking their questions. Thank you.
==============================
Questions and Answers
------------------------------
Jose Martin-Vivas, Mirabaud Securities - Analyst [1]
------------------------------
(Interpreted). Hello. Good morning. I'm Jose. I come from Mirabaud Securities. I have several questions. The first one has to do with regulation. I know that in previous quarters we have spoken about regulation of the gas distribution business, but now when you see other people having trouble you should get ready to have trouble yourself. I would like to know your opinion about the new policies of the Secretary of State for Energy and his idea to converge all regulated activities. And I wanted to know whether you had a conversation with the new Secretary of State and what your take on the new electrical reform is. Mr. Villaseca yesterday, in the presentation of awards at the Club of Energy, he spoke about a comprehensive reform. I would like him to elaborate on this comment.
Now, the second question has to do with the margin of the wholesale and the retail market, because there's been a spectacular growth this year, 55% of the EBITDA per megawatt hour sold, and you said that you thought that these margins could be stable. So, I would like you to add some more information, because the growth this year has been spectacular so I would like to know whether you think this is sustainable.
Now, thirdly, in terms of the electrical generation business, there's been a good -- the figures seem to be quite good. Do you think that we might have touched rock bottom in 2012 in this business, taking into account that the rainfall was quite average?
And now, in terms of the regulatory reviews, if I'm not mistaken, these reviews are going to be taking place this year in Mexico and Colombia. Conversations have been targeting these countries. And in terms of the debt and the dividend, there's been a good reduction in debt and good control of working capital. I want to ask you whether you believe that your management of working capital will still be positive in 2013 and whether you think that you can remove or do away with the scrip dividend policy for good.
------------------------------
Rafael Villaseca, Gas Natural Fenosa SA - CEO [2]
------------------------------
(Interpreted). Now, it's a long list of questions. Now, in terms of gas distribution, well, I can't really tell what the Ministry's going to do, as any regulated business. They could do whatever they like. But in 2013 the gas system didn't have -- practically, they didn't have a deficit, only EUR13m -- 12. So in 2012, EUR17m, so there's no real big problem.
Now, in terms of the remuneration of gas distribution, it has not got to do with the profitability of investment. You don't -- the remuneration of distribution is linked to obtaining customers and getting customers to consume. So it's anti-deficit, really, because Gas Natural is not going to invest if we're not going to get more customers to buy gas, because otherwise we won't get any money. And if customers do buy gas, then the deficit shrinks. So, in principle, that's another reason why we should be more optimistic than when we consider the electrical sector.
Now, the country is not gasified. Our percentage is 20-something, when the European average is 50%, so the country needs significant investment for gas distribution. We are convinced that whatever policy the government may implement, they will have these considerations into account.
Now, in terms of our contact, of course we agreed with the new Secretary and we are very highly satisfied to the effort that he has made. This is a very difficult juncture. We believe that the new measures may be appropriate to address the current problems. The Minister said that the current electrical sector had to change. And we are sure that the new Secretary of State will do what it takes to resolve this problem, but I insist that with the last measures they have already shown a good attitude.
Now, I said in my presentation that we should shy away from taking new measures every three or four months, since we don't seem to be well managing to tame this deficit beast. But of course the new measures of the government are in the right direction, and of course the problems that we are facing are related with the high levels of subsidies that are gravitating around the Spanish electrical sector last year. Subsidies were of more than EUR11b.
So this should be contemplated, as well as any other questions, so as to create an environment where we can go back to investing as soon as demand starts recovering and demand starts requiring investment, smart grids, etc., etc. All of these things will be necessary, will of course need support investments for renewable energies, etc. All of this will require a very rigorous approach and we show that we are on the right track.
Now, as regards to gas margins, the -- to talk about a global -- well, there's really three global markets, the United States, Europe and Asia. And the truth is that we -- it's very difficult to have a crystal ball here for the long term, because when you forecast you normally make mistakes, but this year we don't anticipate significant changes. In the first quarter, we've had a sudden increase -- a sudden improvement in our margins, but of course this may be due to short-term trends.
Now, in terms of the weather, the electrical generation problem has hit rock bottom, we don't think it has. The government still has to take steps and we need to witness recovery of the demand. So probably this year will also be a difficult year, like we had last year, and it will require very minute and careful management. Things will become more stable late -- probably in the near future, when back-up policies for subsidized energy clarifies, and we also have to see how the different fiscal measures impact the market. This is going to be a transition year, but in the good direction towards a better situation.
Now, with respect to Latin America, Colombia and Brazil are the two markets where there will be price reviews this year. In Brazil we already started. Colombia will start briefly. And this is quite normal. These are countries where the rules of the game are clear, and we are convinced that things will be resolved with normalcy.
Working capital has been one of our obsessions, and it will still be. The things like efficiency and capital fortitude are our hobby horses, and they will still be. Our Director General knows that this is something that he needs to be very careful about.
And in terms of the scrip dividend, there was never a clear policy. It was just that the Board of Directors, by analyzing the situation may decide whether it wishes to offer shareholders that possibility. We never had a scrip dividend policy and we don't have a policy to avoid scrip dividends either.
------------------------------
Luis Calvo, Gas Natural Fenosa SA - Head of IR [3]
------------------------------
(Interpreted). The next question, please.
------------------------------
Gonzalo Sanchez, BPI - Analyst [4]
------------------------------
(Interpreted). Hello. Gonzalo Sanchez from [JPE]. I have three questions, regarding gas margins for 2013 and 2014, '15, '16, when the new contract capacity will [engineer] something to the market. I wanted to ask you whether this new capacity will be additional to the supply capacity contracted by the Company and how this may impact margins. I guess Cheniere gas is cheaper than the gas supplied by the Company at present, and how this may impact customer contracts, whether there's going to be any adjustments or whether margins will improve in this regard.
Now, in terms of the debt, looking at the plan for 2010/'12/'14 that you had, the plan had a debt target that was lower than EBITDA, which we have reached with the securitization of the tariff deficit. So what's the outlook for 2014? I'm sure that we will have more information about this in the second quarter, but what's your outlook in this respect?
And looking at the good evolution of debt and cash generation, I'd like to know whether you are thinking of making acquisitions. There's been talk about privatizations in Brazil, Turkey, so I'd like to know the opinion you have about this.
------------------------------
Rafael Villaseca, Gas Natural Fenosa SA - CEO [5]
------------------------------
(Interpreted). Okay. Now, in terms of margin, we are convinced that natural gas will be a key fuel in the next few years. I do not dare make forecasts, because even in more predictable markets, such as the oil market, you know that the situation is very uncertain, but gas is still going to remain a key fuel in the next few years. And I can't see any reason why the prices may fall, but it's very difficult to anticipate what may fall. For supply it's quite easy because it's not going to be very significant changes. We would know them anyway. In 2016 and 2017, with the first liquefaction trains in the United States, things may change. But of course, this is just going to be 10 bcms.
Now, in terms of demand, we've got to see what happens with nuclear policies of countries such as Japan and Germany and the development of countries such as China, India and Indonesia, because this will determine any tensions that may exist. The tensions will be more, in our opinion, upward than downward, but this of course has a very strong speculative component.
Now, the Cheniere contract at the current prices will be of course below the prices in Europe and in the Far East, but we'll see what happens when the moment comes. This is a new source of sourcing in highly advantageous conditions. Of course, this supply is independent of customers and so we are free to sell this to whoever we may decide.
Now, in terms of the debt, we had a strategic plan, and we of course included some aspirations so that we could have a longer-term perspective. And we feel comfortable with the situation. We are going to analyze it in the new strategic plan. And when we submit the strategic plan, we will be able to tell you in detail what our policy will be in terms of debt, and at present we are not considering any takeovers.
------------------------------
Gonzalo Sanchez, BPI - Analyst [6]
------------------------------
(Interpreted). Thank you.
------------------------------
Luis Calvo, Gas Natural Fenosa SA - Head of IR [7]
------------------------------
(Interpreted). Thank you. Any further questions from the floor here? Yes, go ahead, please.
------------------------------
Javier Garrido, JPMorgan - Analyst [8]
------------------------------
(Interpreted). Good morning. Javier Garrido, JPMorgan. I have three questions. The first question is about the results of the third quarter. You didn't give any guidance for 2013, but you did say that you would do your best to reach the same results in 2012. Do you think this is still possible, that's the level of the Group?
And then, specifically in terms of two businesses, generation and sales in Spain, regardless of whether there may be a pass-through or not, what really counts is the price at which you sell your product to your clients. Is this price going to be stable with respect to that of 2012, or it'll be slightly higher? What can you say about this?
Now, in terms of selling gas globally, you already gave us an idea about margins, but in terms of volumes I think I understood that you said in your presentation that you were expecting stability in terms of volumes, regardless of Union Fenosa gas. So I wanted to know, the contract with Medgaz, when do you think you will be able to absorb those volumes and when are we going to start seeing the growth associated to those volumes? Is it going to be in 2013 or is it going to be later?
------------------------------
Rafael Villaseca, Gas Natural Fenosa SA - CEO [9]
------------------------------
(Interpreted). Well, you know we don't provide any guidance, so I'm not going to anticipate what may happen. There's nothing new under the sun. We are not going to anticipate anything. We are not going to anticipate this year's budget. You may obtain further reference when you -- when we provide information about the strategic plan.
But in terms of generation and sales, in terms of the price of energy throughout the year, it would be logical to expect an increase in prices of electricity because of fiscal policies. Many taxes have been introduced and so inevitably this will have an impact upon prices paid by the final customer. The electrical pool has gone up a little already. And as far as final customers are concerned, they are going to inevitably feel this because we cannot internalize all of these costs. It would be completely impossible.
Now, in terms of selling of gas, we already had increases in volume of 0.8%, so they are already part of our supply portfolio and we're going to use them to operate on the market. And this is going to be all at our disposal.
------------------------------
Carlos Alvarez, Gas Natural Fenosa SA - Financial Director [10]
------------------------------
(Interpreted). As regards the second part of the question, we've got about 15 teras contracted for this year.
------------------------------
Luis Calvo, Gas Natural Fenosa SA - Head of IR [11]
------------------------------
(Interpreted). Any more questions in the room? Alejandro.
------------------------------
Alejandro Vigil, Cygnus Asset Management - Analyst [12]
------------------------------
(Interpreted). Hello. Good morning. Alejandro Vigil from Cygnus Asset Management. This has to do with one of the questions before as regards conversations with the Secretary for State for Energy. He has inherited a system of new taxes for generation that are affecting the pool and the marginal system and increasing prices in Spain. Do you think that they have any intention of changing that model, to do away with the deficit and look for other alternatives, or do you think that that tax model will be continued with?
------------------------------
Rafael Villaseca, Gas Natural Fenosa SA - CEO [13]
------------------------------
(Interpreted). Well, I don't think that that law that came into force on January 1 will be changed. Not that I know, no.
------------------------------
Luis Calvo, Gas Natural Fenosa SA - Head of IR [14]
------------------------------
(Interpreted). Any more questions in the room?
------------------------------
Antonio Cruz-Guzman, Banesto Bolsa - Analyst [15]
------------------------------
(Interpreted). Good morning. I'm from Banca Bolsa. Three quick questions. The first one has to do with the preferential options. There are no bonds that are going to expire this year. What are you going to do with that amount of money? Are you going to --?
The second thing is the CapEx for 2013. We've closed 2012 with EUR1.4b. The strategic plan, I think, looked at EUR1.6b. Are you going to go back to EUR1.6b for the aim, or is it going to be EUR1.4b?
And then, as regards regulation, your opinion about coal, national coal, which -- acquisition prices have been improved. They don't include surplus costs because of tax.
------------------------------
Rafael Villaseca, Gas Natural Fenosa SA - CEO [16]
------------------------------
(Interpreted). Well, as regards preferential options, it might be -- the interest is going to be paid normally we've been paying, in contrast with other situations in Spain. We continue to pay and we haven't made any decision as to what we're going to do. We haven't made any decision.
------------------------------
Carlos Alvarez, Gas Natural Fenosa SA - Financial Director [17]
------------------------------
(Interpreted). Regarding the CapEx, we think that we're probably, in 2013, going to be nearer the figure that we have had in the past two years, EUR1.4b, something like that. That would be more or less the figure. I think that the trend will be to increase our investments. 2014/'15, maybe we'll have more investments. And also, the cash flow that we are able to generate each year, our ratio as regards the EBITDA goes down, that will also give us flexibility to address some of the projects that we're looking at in generation, etc. So those investment figures will probably be higher in 2014 and '15.
------------------------------
Rafael Villaseca, Gas Natural Fenosa SA - CEO [18]
------------------------------
(Interpreted). As regards national coal, we said yesterday we're looking at this ministerial order. We're not pleased with it. The generation market is a liberalized market, so we're not at all pleased with having to be obliged to buy and burn coal. We're not pleased at all. We're looking at the exact content, to see how this will affect us and what we can do, but we're not pleased. We know that it's a temporary measure in principle until the end of next year, but we think it is another measure which interferes with the market and it's a strange situation. We're not a regulated situation and we're not liberalized either, and this introduces uncertainty, complexity, and we don't like it at all.
------------------------------
Luis Calvo, Gas Natural Fenosa SA - Head of IR [19]
------------------------------
(Interpreted). Pablo.
------------------------------
Pablo Cuadrado, BofA Merrill Lynch - Analyst [20]
------------------------------
(Interpreted). Hello. Good morning. Pablo Cuadrado from Merrill Lynch. Three quick questions. One regards provisions. That's increased as regards 2011. What will happen in 2013 with the provisioning?
And then, the cost of debt, we've seen the issuances at the beginning of the year, the level of liquidity. What's the cost of the debt that -- how is it going to improve as regards 2012?
And then, the final question, from the technical point of view, in the gas distribution business in Spain, changes at the beginning of the year regarding the level of updating of the revenues. Can you confirm whether, in the case of the distribution business, the multiplier of the inflation has gone to zero, or is the formula the same as last year?
------------------------------
Carlos Alvarez, Gas Natural Fenosa SA - Financial Director [21]
------------------------------
(Interpreted). Yes, it's been -- the updating of CPI has been zero, yes. It's not changed, the formula. The formula has equaled zero.
As regards provisions, well, there is an increase over the previous year. It has to do with Latin America, and some growth in Spain, but especially in Latin America and Nicaragua. But in general we want things to improve and we hope that there's no worsening. At least, let's hope that it doesn't worsen the situation.
And in terms of debt, if you look at the operations we're doing for liquidity and to lengthen the average life of debt, they're long-term operations. So the average general cost of all the operations that we've done is going to make the cost of debt more expensive. So if we've had 4.1 this year, it will probably be 4.5/4.3/4.4 would be the cost of the debt that we could have in 2013.
------------------------------
Luis Calvo, Gas Natural Fenosa SA - Head of IR [22]
------------------------------
(Interpreted). Good. any more questions in the room? Good, there are no more questions in the room, so we'll go to questions on the telephone, and we'll start with the questions in Spanish, please.
------------------------------
Operator [23]
------------------------------
(Interpreted). Good morning. We start now. (Operator Instructions). The first question from Javier Suarez at Nomura.
------------------------------
Javier Suarez, Nomura - Analyst [24]
------------------------------
(Interpreted). Hello. Good morning. Thank you very much for accepting my question. I've got two or three. The first one, as regards obviously cash flow generation's been mentioned often, these are more conceptual. What level of debt over EBITDA is the Company comfortable with? I think that the CFO has said that the CapEx might be increased by 2014/'15 as a result of the strong reduction in the Company's debt. What level of debt over EBITDA would the Company feel comfortable with and what level of payout would the Company feel comfortable with? It's now gone up to 62%. Does the Company feel comfortable with this?
The second question is about provisions. This year they've gone up to EUR235m. Could you give us the detail or the breakdown where those provisions have come from, how they've been distributed geographically? And what's your opinion about how they could evolve?
And the last question has to do with the February 13 order -- ministerial order. The Managing Director has referred to this. What could the Company do, or how could the Company react to this imposition?
------------------------------
Rafael Villaseca, Gas Natural Fenosa SA - CEO [25]
------------------------------
(Interpreted). I'll answer the third question. Well, we feel this also we've got to analyze it in detail, but we feel quite comfortable and we believe that the market too, with the debt policy. The multiplier is the EBITDA 3 times, with a payout of 60%/62%. But please, this is just no guidance at all. It's just an opinion that I'm giving you right now.
As regards the coal imposition, well, we're going to look at it, I insist. It was published yesterday. It's been looked at by the business department, and we're going to see what impact this will have and what we can do about it.
------------------------------
Carlos Alvarez, Gas Natural Fenosa SA - Financial Director [26]
------------------------------
(Interpreted). I think that I've said in my previous answer, I will repeat, the volume of provisions, more or less half correspond to Latin America and the rest is Spain. But when you talk about variations, it's been different. Latin American have grown about -- over 19%, but in Spain they've grown less. So clearly the increase of 19% has taken place in Latin America, not in Spain. And when I say Latin America, I'm talking about electric generation especially, both in Colombia and Nicaragua.
------------------------------
Luis Calvo, Gas Natural Fenosa SA - Head of IR [27]
------------------------------
(Interpreted). Good. A question --- next question.
------------------------------
Operator [28]
------------------------------
(Interpreted). Next question from Jorge Alonso from Societe Generale.
------------------------------
Jorge Alonso, Societe Generale - Analyst [29]
------------------------------
(Interpreted). Hello. Good morning. I've got a couple of questions. The first one has to do with the renegotiation of contracts. What contracts are being -- gas contracts are being renegotiated? What volumes of gas are we talking about? And when do you expect to have news about these negotiations and the results of these negotiations?
The other one has to do with Argentina and how, to what extent, gas is going to be sold to Argentina. Until when do you think the situation will last, this situation they have in their country, this good situation? Can this be an opportunity for you?
And also, the final question, as regards provisioning, these EUR235m, does any part of that include the problems in Egypt, or will you have to allot money to that just to cover the situation or will you have to add in order to cover for the deficiencies there in supply?
------------------------------
Rafael Villaseca, Gas Natural Fenosa SA - CEO [30]
------------------------------
(Interpreted). Well, gas contracts, well, it's the normal activity of the Company. Every year there are reviews of the contracts and we always have negotiations that are more or less complex, more or less long, which are within our everyday business. And in principle it's almost we open one, we close another. We're always in the same wheel, so to speak.
As regards Argentina, the amounts I think will be similar to those in the previous year. We believe that Argentina will continue to demand natural LNG over the next few years quite significantly because, as you know, it has needs in the winter there, important amounts. And until -- we don't know when or how until its internal abilities and -- until it exploits its own reserves, they will need gas there. And I think there will be at least three or four years during which there will be needs for gas in Argentina, for liquid natural gas.
------------------------------
Carlos Alvarez, Gas Natural Fenosa SA - Financial Director [31]
------------------------------
(Interpreted). In terms of provisions, we're talking about for bad debt. Bad debt, there's nothing that has to do with Union Fenosa Gas that is not -- it's not that we have bad debts. There's nothing that we've -- no provisioning or procurement -- provisions are being made for anything else at this time.
------------------------------
Luis Calvo, Gas Natural Fenosa SA - Head of IR [32]
------------------------------
(Interpreted). Good. We'll go to the next question.
------------------------------
Operator [33]
------------------------------
(Interpreted). The next question is by Carolina Flores (sic) from Morgan Stanley.
------------------------------
Carolina Dores, Morgan Stanley - Analyst [34]
------------------------------
(Interpreted). Hello. Good morning. Thank you for accepting my question. I've got two. The first one is you sold distributors in Nicaragua that were active that didn't have a good performance, weren't performing well. Have you got any other assets planned that you might sell in 2013? Could you give us an idea of the size?
And the second thing is if you have looked at the increased opportunities for LNG in Brazil because of the risk of rationing in the country this year. Thank you.
------------------------------
Rafael Villaseca, Gas Natural Fenosa SA - CEO [35]
------------------------------
(Interpreted). As regards the first question, yes, we consider. If you bear in mind the offer, it was convenient for us to do this divestment in Nicaragua. There are -- we don't foresee any other divestments. It's true that our portfolio is always open to a better management, but not initially.
It's also true that in Latin America we've got new opportunities for liquid natural gas, one of them in Brazil, where we've done a series of operations already. And Mexico, possibly the market will open and so it will be opened at some time of the year. So we're very closely watching all these opportunities in order to maximize, in the area, in the region, our situation with contracts that can be profitable for us.
------------------------------
Luis Calvo, Gas Natural Fenosa SA - Head of IR [36]
------------------------------
(Interpreted). Are there any more questions on the phone? No more questions in Spanish. Let's go to the --
------------------------------
Operator [37]
------------------------------
The first question comes from Michael Ridley from Mizuho. Please go ahead, sir.
------------------------------
Michael Ridley, Mizuho - Analyst [38]
------------------------------
Yes. Good morning. Question may have been asked already, but I just wanted to check. You repeatedly talk about your pride in bringing net debt down to the EUR16b target that you've had really for four years now, but I'm aware of no target going forwards. Is it the case that you're not going to update the market until May, when you have a strategy presentation, on your leverage goal? Thank you very much.
------------------------------
Rafael Villaseca, Gas Natural Fenosa SA - CEO [39]
------------------------------
(Interpreted). We haven't defined any targets. I just have to say that we are satisfied with this debt level, and we will -- obviously the strategic plan, which will be presented next quarter, will give you more details.
------------------------------
Luis Calvo, Gas Natural Fenosa SA - Head of IR [40]
------------------------------
(Interpreted). There don't seem to be any more questions in English. Now let's go to -- we'll go to the questions done on the Internet, asked on the Internet. Practically all of them have been covered, so I'll go to the one that hasn't.
It's [Rittas Pithar] from Amba Research in India. Two questions. Whether we have the -- whether we are thinking of going into the hybrid market for our requirements of capital in the near future, if we've considered it an option.
------------------------------
Carlos Alvarez, Gas Natural Fenosa SA - Financial Director [41]
------------------------------
(Interpreted). Well, we don't say no to anything, but we're not contemplating anything now, right now.
------------------------------
Luis Calvo, Gas Natural Fenosa SA - Head of IR [42]
------------------------------
(Interpreted). And the second question refers to the currencies of our debt. What's your opinion about the fact that the currency regime might affect your debt and results in the future, since there are possibilities of having a currency war in the near future? How would the change in the value of the euro affect you?
------------------------------
Carlos Alvarez, Gas Natural Fenosa SA - Financial Director [43]
------------------------------
(Interpreted). Well our policy in general, initially, is conservative. We try to be in debt in accordance with our cash flow. For every activity that we develop, we develop our activities in euro or we get debt in euro and in Latin America, depending on the cash flows that we have in each country. So we always try to strike a balance between our cash flow and the currency that is applicable and the debt that we have. And that's what we're going to basically continue to do.
If we're talking about devaluation of the euro, break-up of the euro, exit from the euro, well, we'll have to see what happens. But I think at the time -- at this time the best thing the Company can do is to continue to do things like we've done them until now and establish a balance between cash flow and debt. And that's what we're going to continue to do.
Another matter might be the -- well, maybe opportunistically we might use other currencies like the Swiss franc, but that's an opportunistic -- those are opportunistic operations, one-off things. We might do this again, now and again, but at the end of the day what we generate is what we generate.
------------------------------
Luis Calvo, Gas Natural Fenosa SA - Head of IR [44]
------------------------------
(Interpreted). Good. Well, thank you very much. That's all. So we finish the question and answer session and I'll pass the floor to our CEO, Mr. Rafael Villaseca, for him to close the session.
------------------------------
Rafael Villaseca, Gas Natural Fenosa SA - CEO [45]
------------------------------
(Interpreted). Well, thank you very much to you all and we hope to see you or hear you again next quarter. Thank you.
------------------------------
Editor [46]
------------------------------
Portions of this transcript that are noted Interpreted were interpreted on the conference call by an Interpreter present on the live call. The interpreter was provided by the Company sponsoring this Event.
------------------------------
Definitions
------------------------------
PRELIMINARY TRANSCRIPT: "Preliminary Transcript" indicates that the
Transcript has been published in near real-time by an experienced
professional transcriber. While the Preliminary Transcript is highly
accurate, it has not been edited to ensure the entire transcription
represents a verbatim report of the call.
EDITED TRANSCRIPT: "Edited Transcript" indicates that a team of professional
editors have listened to the event a second time to confirm that the
content of the call has been transcribed accurately and in full.
------------------------------
Disclaimer
------------------------------
Thomson Reuters reserves the right to make changes to documents, content, or other
information on this web site without obligation to notify any person of
such changes.
In the conference calls upon which Event Transcripts are based, companies
may make projections or other forward-looking statements regarding a variety
of items. Such forward-looking statements are based upon current
expectations and involve risks and uncertainties. Actual results may differ
materially from those stated in any forward-looking statement based on a
number of important factors and risks, which are more specifically
identified in the companies' most recent SEC filings. Although the companies
may indicate and believe that the assumptions underlying the forward-looking
statements are reasonable, any of the assumptions could prove inaccurate or
incorrect and, therefore, there can be no assurance that the results
contemplated in the forward-looking statements will be realized.
THE INFORMATION CONTAINED IN EVENT TRANSCRIPTS IS A TEXTUAL REPRESENTATION
OF THE APPLICABLE COMPANY'S CONFERENCE CALL AND WHILE EFFORTS ARE MADE TO
PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS,
OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE CONFERENCE CALLS.
IN NO WAY DOES THOMSON REUTERS OR THE APPLICABLE COMPANY ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER
DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN
ANY EVENT TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S
CONFERENCE CALL ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE
MAKING ANY INVESTMENT OR OTHER DECISIONS.
------------------------------
Copyright 2018 Thomson Reuters. All Rights Reserved.
------------------------------