Central Puerto (NYSE:CEPU) released first-quarter financial results and hosted an earnings call on Wednesday. Read the complete transcript below.

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The full earnings call is available at https://mzgroup.zoom.us/webinar/register/WN_puLLD8GHTK2ItDuUjTS7sw#/registration

Summary

Central Puerto S.A. reported a strong first quarter of 2026 with adjusted EBITDA reaching $120.0 million, marking a 41.6% increase quarter-on-quarter and 33.4% year-on-year.

Revenues rose to $248.6 million, driven by higher contracted and spot revenues, and the contribution of new generation assets like Brigadier Lopez combined cycle and solar farms.

The company changed its functional currency to US dollars starting January 1, 2026, affecting financial reporting.

Strategic initiatives include a 30-year concession renewal for the Piedra del Aguila hydro asset and progress on the BESS project, with 60% of site works completed.

Central Puerto holds the number one market share in MATP for contracted capacity segments and plans to shift more spot market sales to contracted PPAs in 2026.

The company acquired 100% of Patagonia Energy S.A.E., aiming to develop oil-focused blocks in the Vaca Muerta region.

Future outlook is positive, with expectations of continued operational excellence, financial performance, and market normalization providing further revenue upside.

Full Transcript

OPERATOR (Operator)

Good morning, ladies and gentlemen. Welcome to Central Puerto's first quarter of 2026 earnings conference call. A slide presentation is accompanying today's webcast and will also be available on the Investors section of the company's website, www.centralpuerto.com. All participants will be in a listen-only mode during the presentation. After that, there will be an opportunity to ask questions. Please note this event is being recorded. If you do not have a copy of the press release, please refer to the Investor Relations Support section on the Company's corporate website.

In addition, a replay of today's call will be available in upcoming days by accessing the webcast link at the same section of the Central Puerto's website. Our host today will be Mr. Fernando Boone, Central Puerto CEO; Mr. Enrique Terraneo, the company's CFO; Mrs. Maria Laura Feller, Head of Investor Relations; and Mr. Alejandro Diaz Lopez, Head of Corporate Finance. Maria Laura, please go ahead.

Maria Laura Feller, Head of Investor Relations

Thank you very much. Good morning and welcome everyone. We are joining you today from Buenos Aires with our management team to report on the results of the first quarter of 2026 and to answer any questions you may have. Before we begin, I would like to remind everyone that today's presentation, as referenced on slide 2, contains forward-looking statements and non-IFRS financial measures including adjusted EBITDA. These statements are based on management's current expectations and are subject to risks and uncertainty.

Please refer to the full disclaimer in our slide deck and on our website for further information. The Company has changed its functional currency from Argentine Pesos to US dollars effective January 1, 2026, applicable to 1Q26. Financial figures for previous quarters are presented in US dollars converted from Argentine Pesos using the reference exchange rate reported by the Argentine Central Bank at the end of each period. With that, let us move to the highlights of the quarter.

Turning to Slide 3. The first quarter 2026 was a strong quarter for Central Puerto, characterized by outstanding commercial execution and continued progress in market normalization following Resolution 425. Let me walk you through our key metrics. Adjusted EBITDA reached $120.0 million, representing a 41.6% increase quarter on quarter versus $84.7 million in 4Q25 and 33.4% year on year growth versus $89.9 million in 1Q25. This result reflects the full benefit of new generation assets, commercial contracting gains, and the normalization of the wholesale electricity market.

Revenues totaled $248.6 million, up 43.8% quarter on quarter versus 4Q25 and up 26.7% year on year versus 1Q25, driven by higher contracted and spot revenues. The contribution of Brigadier Lopez combined cycle and the new solar farms added in 2025. Total generation for the quarter was 5,420 GWh, a 54.2% increase quarter on quarter largely reflected by the operation of Solar and Amani, the restoration of Central Costanera combined cycle units, and the addition of new installed capacity.

Capital expenditure for the quarter amounted to $301.0 million, including the $225.0 million transfer of Piedra del Aguila shares following the concession award renewal and $66.0 million in BESS construction and maintenance works. Our net financial leverage ratio stands at 1.06 times with net financial debt of $390.8 million against the last 12 months adjusted EBITDA of $367.2 million. The fund investment credit outstanding balance is $105.8 million.

On the credit rating front, we received an upgrade to GPA from Moody's Argentina. From a strategic perspective, the concession renewal of Piedra del Aguila for 30 years to January 2056 is a landmark achievement securing a flagship hydro asset under a new long-term framework. Additionally, our BESS project at the Central Puerto facility is advancing well with 60% of site works completed, 32 concrete pads finished, and phase one of the 132 kV BTR work done.

Market normalization continues under Resolution 425 and Central Puerto has achieved a leading commercial position in the newly established term market. More on that on the next slide. Moving to Slide 4, in the first quarter of 2026, Central Puerto achieved a decisive commercial breakthrough under the new market framework established by Resolution 425. Our contracting performance in the newly established term market we could highlight Central Puerto held the number one market share in MATP.

The contracted capacity segments for thermal and hydro. In MAT, the contracted energy segment for thermal and hydro, Central Puerto held the number two market share. Overall, 44% of our 1Q26 revenues were generated from contracted sales, demonstrating our ability to quickly capitalize on market opportunities. Turning to Slide 5 for the earnings summary, first quarter 2026 adjusted EBITDA came in at $120.0 million with an adjusted EBITDA margin reflecting efficient operations and a better revenue mix.

The 41.7% quarter on quarter increase was driven by higher spot revenues from market normalization and the resolution 425, the contribution of the Brigadier Lopez combined cycle which achieved its COD in January 2026 with an additional gas turbine clause in the CCGT configuration having 140 megawatts, full quarter contributions from my 2025 Solar Acquisitions Cafayate and San Carlos, and the solid performance of our wind farms. On the revenue side, the 44% quarter on quarter increase to $248.6 million reflected contracted revenues growing from new PPA sales from Brigadier Lopez, active participation in MAT Contracting, and contributions from Piedra del Aguila. Spot revenues improved due to market normalization, restored volumes at Central Costanera following its 4Q25 maintenance, and $8 million from self-procured natural gas. On a year on year basis, the 33.5% EBITDA growth and 27% revenue growth underscore the structural improvement in our earnings profile. Moving to slide 6 for a review of our generation and availability performance, total generation for the quarter was 5,420 GWh, up 54% quarter on quarter.

This significant jump was primarily driven by the maintenance works of Central Costanera's Mitsubishi and Siemens combined cycle units which had been under maintenance during 4Q25, the addition of Brigadier Lopez combined cycle which contributed incremental generation since its COD in January 2026, adding 229 megawatts to our installed capacity on a quarter on quarter basis. In the first quarter, Central Puerto acquired 100% of the shares of Patagonia Energy S.A.E. or P.E.S.A. for a total consideration of $50 million. P.E.S.A holds a 10-year conventional exploitation license for the Aguada del Chivato and Aguada de Bocare blocks in Neuquén province valid through May 2031. The investment thesis is compelling for several reasons. The blocks cover over 27,000 oil-focused acres in the northern area of the Vaca Muerta Plain, an area adjacent to blocks that have already de-risked the black oil window of this world-class formation.

Low entry cost per acre and a limited exploratory phase plan with an existing oil treatment plant facility of 1,900 barrels per day already in operation. Solid geological evidence of unconventional hydrocarbon potential in target landing zones assessed by qualified geologists based on existing conventional drilling data under a successful development scenario, this is a potential REJ related investment opportunity of up to $600 million. To unlock the potential value of these assets, we are currently advancing a de-risking plan backed by international and conventional play experts.

Our balance sheet remains solid though the quarter was capital intensive due to the Piedra del Aguila concession transaction. Total outstanding financial debt stands at $539.2 million against cash and financial current assets of $148.4 million resulting in a net financial debt of $319 million against our last 12 months adjusted EBITDA of $367.2 million. This yields a net leverage ratio of 1.06 times. First quarter 2026 marks a pivotal inflection point for Central Puerto.

Our results reflect sustained revenue margin and EBITDA growth driven by strong commercial execution, operational excellence, and the contribution of the new power generation assets incorporated through our capital plan over the past two years. Our 2026 outlook is constructive. We expect continued operational excellence and financial performance with BESS projects progressing toward their mid-2027 commercial present day, ongoing market normalization providing further revenue upside and incremental contracting opportunities.

Users and distribution companies materializing as the market matures. We remain firmly committed to delivering long-term value for our shareholders and we are excited about the opportunities ahead for Central Puerto. Thank you very much for your interest and confidence in Central Puerto. Operator, please open the line for questions.

OPERATOR (Operator)

Thank you very much for the presentation. We will now begin the Q and A section for investors and analysts. If you wish to ask a question, please click on Raise Hand. If your question has already been answered, you can leave the queue by clicking on Put Hand Down. Please hold while we poll for questions. Our first question comes from Matthias Cataruzi with Adcap.

Matthias Cataruzi, Adcap

Hi, good morning, how are you? I got three questions. First, in the first quarter we observed that post-maintenance generation rebound flowed primarily into the spot market rather than into contracted PPAs. With PPAs volumes growth as we are seeing, it would be more gradual, right? For 2026, could you share with us how the migrations towards more contracting and PPAs is progressing into 2026? And then I got another question on how do you expect self-procurement in fuels affecting CEPU going forward?

Do you expect to access gas transportation capacity through the Perito Moreno expansion or do you see a reliance on CAMMESA's plant gas going forward? And then I got a final question. Following the closing of the transaction with Patagonia Energy, could you walk us through the specific timeline for the two shale pilots? And have you been in conversations with other potential operating partners or does it involve a standalone development?

Fernando Boone, CEO

Okay, thank you. Thank you for your question. Going one by one, the first that you ask is related to the migration from the spot market to the contract market. We are, in fact, in the first quarter and right now advancing in that area. So for the first 20% that the regulation allows us to sell to the private consumers, we are fully contracted there right now. And so we are now keeping going in the other 80% that we can only sell to the distribution companies.

This is the regulation as it is right now. So we are trying to, or we are starting to move that 80% that we still sell to the spot market to negotiate it with distribution companies. And right now we are having a good advance with them and we expect to have more news about that in the next quarter. That is the first question. The second you mentioned, I think, is related to the gas transportation. In terms of gas transportation, we participated in the TGS auction.

It was an auction very competitive. So we received less than we asked. We received around 400,000 cubic meters and we asked for 1.6 million. So we are still trying to get in the next round of the TGS auction more gas transportation there. And we are talking with distribution companies also to have more transportation. In terms of the gas itself, we are working right now, we are still in the plant gas with CAMMESA, but we have advanced conversations with all gas producers to start buying our own gas.

So I think that in the next two months we will have news related to that. It's not easy because there is no producer except PAMPA that got out of plant gas PAMPA by using their own generation. So there is no private producer yet outside the plant gas. But we have advanced conversations with some of them and we expect news for the next two or three months in order to start buying the gas directly, not through CAMMESA. And in terms of alternative fuels like diesel oil, fuel oil, and LNG or import gas, we are working and we are right now buying our own fuel and gas.

We are having that set with CAMMESA. And the last one is the acquisition of PESA. We are, as Laura mentioned, working with a US company in order to develop the Mellon man phase for the two pilots, two or three wells that we are thinking of doing in order to confirm the resources there and work for the Sange with the province. But right now we don't have a fixed timing to comment. But we expect that this is going to happen perhaps last quarter of this year or the first of the next one because you need to bring all the drilling sets and that's daytime right now like four, between four and five months.

So that would be the timing, but it's not fully closed yet.

Matthias Cataruzi, Adcap

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

Fernando Boone, CEO

No. Yes. As I mentioned before, we expect to have to increase our PPAs, especially with distribution companies. That is the idea that we are looking for. As I mentioned, we are in the private PPAs with big industries. We are almost at 100% of our capacity right now, regulated capacity. But we have something to do related to distribution company. We can go up to that 20% when we start a negotiation with distribution company. So that is what we are looking for in the next quarters.

Matthias Cataruzi, Adcap

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

Fernando Boone, CEO

Yes, normally we are seeing yes, one year or no more than two years. Yes, this is for thermal, you know when you owe to renewables. That could be perhaps bigger than that. Three years, five years.

Matthias Cataruzi, Adcap

Okay, great. Thank you.

Fernando Boone, CEO

You're welcome.

OPERATOR (Operator)

Next question from Tomas Peruschin with Balance.

Tomas Peruschin, Balance

Hello, good morning, can you hear me?

Fernando Boone, CEO

Yes, Thomas.

Tomas Peruschin, Balance

Okay, congratulations on the result. First, I have three questions. I will go one by one if that's okay. Just a quick follow-on of the previous question. First, how much capacity do you consider can be payable contracted under energy PPAs with discos and industrial users? And how much have you effectively contracted to date and do you see feasible to close PPAs with discos this year?

Fernando Boone, CEO

You asked about capacity, not energy. So capacity. We are fully contracted right now. Our capacity is fully contracted. But previously I talked about energy. So I think during this year, yes, we can have. Of course, this is by one by one each disco have the process itself. But I expect to have a contract with discos or perhaps the first ones during this year. Yes.

Tomas Peruschin, Balance

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

Fernando Boone, CEO

Well, that's the question. It says. I think it's very big to discuss perhaps in a few minutes. But you need to consider that we more or less consume perhaps between 10 and 12 million cubic meters per day. But this doesn't mean that we need all this firm capacity because there is a lot of capacity in the pipelines except in the wintertime. So we want to have the capacity that we need for the contract that we have. And this is less, much more, less than the oil gas that we consume.

But as I mentioned in the TGS bidding process, we asked for 1.6 million and we received 400. So I think we want to at least cover that 1.6 million to have firm gas during winter, which is the period that is important to have it. But the rest of the year is not. The transportation is not a problem. So the problem is during perhaps 30, 45 days during winter. So in that moment is when we gonna need this additional firm capacity. But as mentioned, 1.62 million is what we expect to have.

Tomas Peruschin, Balance

Okay, and last one, regarding your recent acquisition in Vaca Muerta, do you have an estimated capex for the two or three wells that you are thinking to develop?

Fernando Boone, CEO

No, not yet. But it's normal. What we expect is the normal values that the industry have there is around 17 million per well.

Tomas Peruschin, Balance

Okay, thank you. Thank you very much.

Fernando Boone, CEO

Okay, you're welcome.

OPERATOR (Operator)

Next question from Teodora Nasheva with Sandglass Capital. You can open your microphone. I believe she's having some technical issues. We're gonna go ahead with our next question from Marcos Ceru with Alaria.

Marcos Ceru, Alaria

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

Fernando Boone, CEO

Okay, well, in terms of Vaca Muerta, first our plan is of course entering the area and try to develop the area that we acquire. That is our plan is an area of 27,000 acres. So that is a lot to do there. So this is the first time that we are gonna enter in oil and gas business. So we need to de-risk the area to start understanding the business. And this will take perhaps a couple of years. Of course, we're gonna look at opportunities if they appear.

But our fair focus is to develop this area and it's a nice area that could place a rig there. So we need to work for the rig also and to have the same. So this is our main focus right now to develop in Vaca Muerta and we're gonna see how it works. And if we could enlarge that. In terms of leverage, it will depend on the opportunities. We're going to still see opportunities in M&A in our sector, in the energy sector coming from privates or coming from government auctions.

So that's the leverage ratio going to depend on that opportunities that we can develop that opportunities. But we are not expecting gross 2.5 or that area two perfect times. But well, it will depend on the opportunities appearing and what we can get it or not.

OPERATOR (Operator)

Thank you. Our next question comes from Teodora Nasheva with Sandglass Capital. You can open your microphone.

Teodora Nasheva, Sandglass Capital

Hi, I hope you can hear me now. Yes, sorry. Yeah, Internet in London is crazy. So just taking back to like the liberalization and spot market. Can you maybe you mentioned but I couldn't hear you well, can you mention again what is the realized price in legacy energy and capacity how you see going forward with PPAs? You mentioned the private ones, but I also saw there's something about CAMMESA potentially launching a small auction. Again.

Fernando Boone, CEO

A lot of questions in one but going one by one in terms of prices. That's very. There is no clear market right now. So we see each. Each negotiation each by each. So depending on the timing, depending on if you are acquiring renewables, if you are acquiring hydro, if you're acquiring thermal. So it's. It's not. It's not easy to set a price for. For the whole market but for sure is. Are higher than the. Than the spot market prices. That's. That's a good.

A good news. But it's depending on as I mentioned the. The counterpart. If you are acquiring hydro or depending on the technology but are better we are seeing better prices. Much more better price than the spot market. In terms of new auctions or possible new options are coming or there are one auction in place which is the. The Almasadi auction is an auction for battery storage system in the. In the. In. In the old country. Not as the. The previous one that we win.

It was related to Amba area, to Buenos Aires area. This new option is for the whole country and these 700 megawatts of. Of capacity batteries capacity. And we are looking to participate there. We are developing projects to participate there. But CAMMESA are talking about new capacity auctions. But it's not still launched. They expect to launch some capacity auction thermal capacity auction for the second half of this year. But we don't have a precision about quantity of megawatts or.

Or a specific regulation scheme that's not completely say by CAMMESA yet.

Teodora Nasheva, Sandglass Capital

I understand. And isn't that CAMMESA launching another thermal auction? Isn't that a step back? The whole idea of this liberalization was to move away from the CAMMESA PPAs and now they're doing it again.

Fernando Boone, CEO

Well, more or less. Because all over the world the capacity option is launched by the system regulator. You know, it's not easy for distribution companies or privates to go for capacity, you know, because it depends on the growth of the demand, the whole system. So in Brazil, Brazil does the same, you know, and it's as a more free market. That was in Argentina, so. And Chile. And it's normal that the system regulator launched the capacity in advance, you know, trying to look forward to the whole system demand and try to cover that.

But it's not electricity, not energy, you know, it's capacity. So I didn't see it as a back because the electricity there she will still be contracted by private companies and distribution companies. But the capacity is different. So I only see that that capacity auction, no new PPAs related to energy. That is something that CAMMESA said that is not going back. But capacity, especially when you are trying to look the system for. For three, four, five, ten years in advance.

It's something that the system regulator have a better understanding about the needs of the system in terms of capacity.

Teodora Nasheva, Sandglass Capital

Okay, thank you. And just to clarify on thermal spot legacy, what is the realized price that you're getting at the moment because it's subject to this frac up?

Fernando Boone, CEO

Well, you say in a spot market. Yeah, well, it's a combination, you know, you have a capacity payments and you have a.

Teodora Nasheva, Sandglass Capital

No, I'm talking about dispatch.

Fernando Boone, CEO

You talk about dispatches. The price of the variable price that we receive is depending on what fuel we use. So to say something is around $40 per megawatt. Yes. With gas. With gas. 40 something dollars per megawatt. Sorry, not $1,000.

Teodora Nasheva, Sandglass Capital

Okay, understood, thank you.

Fernando Boone, CEO

It's depending on the efficiency of the equipment, depending on the fuel that you use, but it's something around that.

OPERATOR (Operator)

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

Fernando Boone, CEO

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

OPERATOR (Operator)

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

Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.