Pampa Energia(PAM) - 2022 Q1 - Quarterly Report

Financial Statements Consolidated Condensed Interim Statement of Comprehensive Income For Q1 2022, the company reported a significant increase in profitability, with revenue growing 53.7% year-over-year to $44,011 million Argentine Pesos, and net profit surging to $10,454 million Argentine Pesos from $3,694 million, with basic and diluted earnings per share increasing to $7.46 from $2.17 Q1 2022 vs Q1 2021 Performance (in millions of Argentine Pesos) | Metric | Q1 2022 | Q1 2021 | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | 44,011 | 28,635 | +53.7% | | Gross Profit | 17,624 | 12,282 | +43.5% | | Operating Income | 14,345 | 9,766 | +46.9% | | Profit of the period | 10,454 | 3,694 | +183.0% | | Total comprehensive income | 30,226 | 19,550 | +54.6% | - The prior year's results (Q1 2021) included a profit of $525 million from discontinued operations (Edenor), which was not present in Q1 2022[16] Earnings Per Share (EPS) | EPS Type | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Basic and diluted EPS from continuing operations | $7.46 | $2.17 | | Total basic and diluted EPS | $7.46 | $2.17 | Consolidated Condensed Interim Statement of Financial Position As of March 31, 2022, total assets increased to $450,789 million Argentine Pesos (a 13.6% rise), total equity grew by 16.3% to $214,024 million Argentine Pesos, and total liabilities increased by 11.4% to $236,765 million Argentine Pesos Key Balance Sheet Items (in millions of Argentine Pesos) | Account | March 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Total Assets | 450,789 | 396,653 | | Non-Current Assets | 318,212 | 281,011 | | Current Assets | 132,577 | 115,642 | | Total Liabilities | 236,765 | 212,613 | | Non-Current Liabilities | 194,139 | 177,506 | | Current Liabilities | 42,626 | 35,107 | | Total Equity | 214,024 | 184,040 | - Key drivers for the asset increase include growth in Property, Plant and Equipment (up $16,550 million), Investments in joint ventures and associates (up $12,720 million), and Financial assets at fair value (up $5,405 million)[21] - The increase in liabilities was primarily driven by a rise in non-current borrowings, which grew by $13,818 million during the quarter[23] Consolidated Condensed Interim Statement of Changes in Equity Total equity increased to $214,024 million Argentine Pesos as of March 31, 2022, driven by $10,454 million Argentine Pesos in net profit and $19,772 million Argentine Pesos in other comprehensive income, partially offset by own share acquisitions Equity Movement in Q1 2022 (in millions of Argentine Pesos) | Description | Amount | | :--- | :--- | | Equity at Dec 31, 2021 | 184,040 | | Profit for the period | 10,454 | | Other comprehensive income | 19,772 | | Acquisition of own shares | (183) | | Stock compensation plans | (59) | | Equity at March 31, 2022 | 214,024 | Consolidated Condensed Interim Statement of Cash Flows For Q1 2022, net cash from operating activities was $12,642 million Argentine Pesos, investing activities used $8,007 million Argentine Pesos, and financing activities used $2,129 million Argentine Pesos, resulting in a net increase in cash of $2,506 million Argentine Pesos Cash Flow Summary Q1 2022 vs Q1 2021 (in millions of Argentine Pesos) | Cash Flow Activity | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Net Cash from Operating Activities | 12,642 | 15,507 | | Net Cash used in Investing Activities | (8,007) | (6,232) | | Net Cash used in Financing Activities | (2,129) | (9,105) | | Increase in Cash and Cash Equivalents | 2,506 | 170 | - Investing activities were dominated by payments for property, plant, and equipment amounting to $7,848 million[30] - Financing activities included proceeds from borrowings of $2,564 million, offset by interest payments of $4,327 million and acquisition of own shares for $183 million[30] Notes to the Financial Statements Note 1: General Information Pampa Energía is a fully integrated Argentine power company with significant operations across electricity and gas value chains, including generation, oil and gas, petrochemicals, and holding segments - The company has an installed electricity generation capacity of 4,970 MW, representing approximately 12% of Argentina's total capacity, with an additional 361 MW under expansion[33] - In the oil and gas segment, production for Q1 2022 reached 9 million m3/day of natural gas and 5.1 barrels/day of oil equivalent[34] - The petrochemicals segment holds a dominant domestic market share of 86% to 99% in styrene, synthetic rubber, and polystyrene[35] - Through its holding segment, the company has joint control of Transener (86% market share in high-voltage transmission) and TGS (major gas transportation network)[36] Note 2: Regulatory Framework The company's operations were impacted by Q1 2022 regulatory updates, including a significant increase in spot generation remuneration, tariff adjustments for transmission businesses, and continued restrictions on foreign exchange market access - SE Resolution No. 238/22 mandated a cumulative 43% increase in spot generation remuneration from June 2022[38] - ENRE approved substantial tariff increases for Transener (67%) and Transba (69%) effective February 1, 2022, following motions for reconsideration[44] - The Central Bank (BCRA) extended restrictions on accessing the Foreign Exchange Market (MLC) for foreign debt payments and imports until December 31, 2022[45][46] Note 5: Group Structure This note details the company's interests in subsidiaries, associates, and joint ventures, including discontinued operations from the 2021 Edenor sale, and an impairment loss recognized on the investment in Refinor - The results of Edenor's operations for Q1 2021 are disclosed under 'Discontinued operations' following the transfer of control on June 30, 2021[58] - The company recognized a pre-tax impairment loss of $1,242 million Argentine Pesos (US$11 million) on its 28.5% stake in Refinor, following an offer to sell the stake at a price below its book value[67] - The closing to combined cycle project at CTB is progressing, with an estimated total investment of US$233 million and commercial commissioning expected in Q4 2022[71] - On May 6, 2022, the company transferred its rights and obligations in its Venezuelan mixed companies to Integra Petróleo y Gas S.A., with consideration contingent on future payments received by the assignee[73] Note 7: Segment Information In Q1 2022, the Generation segment was the largest contributor to operating income, followed by Oil and Gas, with all segments reporting positive operating income and improved profitability compared to Q1 2021 Segment Performance Q1 2022 (in millions of US$) | Segment | Revenue | Gross Profit | Operating Income | | :--- | :--- | :--- | :--- | | Generation | 166 | 82 | 97 | | Oil and Gas | 113 | 65 | 29 | | Petrochemicals | 126 | 10 | 5 | | Holding and others | 7 | 7 | 2 | | Total Consolidated | 412 | 164 | 133 | Segment Operating Income Comparison (in millions of US$) | Segment | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Generation | 97 | 91 | | Oil and Gas | 29 | 0 | | Petrochemicals | 5 | 17 | | Holding and others | 2 | 1 | Note 8 & 9: Revenue and Cost of Sales Total revenue for Q1 2022 increased 53.7% to $44,011 million Argentine Pesos, driven by strong segment performance, while cost of sales rose 61.4% to $26,387 million Argentine Pesos due to higher purchases and depreciation Revenue by Segment (in millions of Argentine Pesos) | Segment | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Generation | 17,753 | 14,370 | | Oil and Gas | 12,045 | 4,478 | | Petrochemicals | 13,494 | 9,196 | | Holding and others | 719 | 591 | | Total Revenue | 44,011 | 28,635 | Key Components of Cost of Sales (in millions of Argentine Pesos) | Component | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Purchases of inventories, energy and gas | 14,455 | 8,407 | | Depreciation of property, plant and equipment | 5,007 | 3,683 | | Canons and royalties | 1,921 | 1,119 | | Salaries and social security charges | 1,917 | 1,100 | | Total Cost of Sales | 26,387 | 16,353 | Note 11: Non-Financial Assets and Liabilities As of March 31, 2022, net property, plant, and equipment stood at $186,940 million Argentine Pesos, net deferred tax assets increased to $15,477 million Argentine Pesos, and total provisions for contingencies and environmental remediation reached $16,221 million Argentine Pesos - The company recorded increases of $7,878 million in property, plant, and equipment during Q1 2022, primarily in 'Work in progress' and 'Wells'[102] - Net deferred tax assets increased from $8,675 million to $15,477 million during the quarter, mainly due to changes related to PP&E and tax loss carryforwards[106] - Total provisions (current and non-current) increased from $15,004 million to $16,221 million, with the largest component being for contingencies ($11,800 million)[109][110] Note 12: Financial Assets and Liabilities As of March 31, 2022, total borrowings stood at $161,194 million Argentine Pesos, with the company issuing its first green bond for $3,107 million Argentine Pesos in January 2022 to finance the PEPE III wind farm expansion - On January 18, 2022, the company issued $3,107 million in Class 8 Corporate Bonds, its first green bond, to finance the expansion of the PEPE III wind farm[126][127] Borrowings Breakdown (in millions of Argentine Pesos) | Type | March 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Non-Current Borrowings | 153,448 | 139,630 | | Current Borrowings | 7,746 | 8,165 | | Total Borrowings | 161,194 | 147,795 | - Current trade receivables increased to $30,125 million, with significant balances from CAMMESA ($13,111 million), oil and gas sales ($8,061 million), and petrochemistry sales ($6,379 million)[116] Note 13: Equity Components As of March 31, 2022, share capital was $1,386 million Argentine Pesos, with the company suspending its share repurchase program after acquiring 0.1 million ADRs for US$1.8 million, and basic and diluted earnings per share were $7.46 - The Board suspended the share repurchase Program 11 on March 10, 2022, after acquiring 0.1 million ADRs for US$1.8 million during the quarter[135][136] Earnings Per Share Calculation Q1 2022 | Item | Amount | | :--- | :--- | | Earning attributable to equity holders (million ARS) | $10,304 | | Weighted average outstanding shares (million shares) | 1,382 | | Basic and diluted earnings per share (ARS) | $7.46 | Note 20: Subsequent Events Subsequent to Q1 2022, the General Shareholders' Meeting approved the allocation of the 2021 fiscal year profit, primarily to the voluntary reserve, and resolved to reduce capital stock by cancelling 2.8 million shares - On April 27, 2022, the Shareholders' Meeting approved the allocation of the $27,097 million profit from fiscal year 2021, with $31,907 million being allocated to the voluntary reserve after other adjustments[160] - The shareholders also approved a capital stock reduction through the cancellation of 2.8 million shares, which is pending registration[160]