Transportadora de Gas del Sur S.A. Q4 FY2025 earnings call

In November 2024, the company successfully issued a new 500 million bond with a 10-year tenure at an 8% yield, with strong demand and oversubscription. Proceeds were used to fund capital expenditures related to the expansion of the Perito-Moleno pipeline and the regulated pipeline. Executed bank loan agreements totaling $67 million to finance imports for the project. Launched open seasons on February 9, 2025, and will receive bids for capacity on March 16. Regarding financial results, the total net income in the fourth quarter of 2025 was 124 billion pesos, lower than 170.5 billion pesos in the same quarter of 2024, mainly due to equipment impairment provision, negative financial results variation and decline in liquids EBITDA, partially offset by the strong performance of the mainstream business and increase in natural gas transportation EBITDA.

For the natural gas transportation business, EBITDA in the fourth quarter of 2025 totaled 109.8 billion pesos, slightly higher than nearly 107.1 billion pesos recorded in the same quarter of 2024. It was mainly due to the increase in transportation services and the reduction in operating expenses partially offsetting the impact of inflation losses. For the liquids segment, EBITDA decreased to 83.9 billion pesos in the fourth quarter of 2025 compared to 102 billion pesos in the same quarter of 2024, mainly due to the decline in export prices, increase in operating costs and insurance reimbursable expenses. However, the monetary effect, improvement in domestic market butane prices and increase in sales volume partially offset the negative impact. For Mistrim and other services, EBITDA rose by 36% to 60.7 billion pesos in the fourth quarter of 2025 compared to 44.5 billion pesos in the same quarter of 2024, mainly driven by the increase in natural gas transportation and conditioning volume and monetary effect, but partially offset by the increase in operating expenses. The financial results showed a negative variation of 17.9 billion pesos in the fourth quarter of 2025, mainly due to the increase in interest cost, decrease in income from financial assets and increase in inflation exposure loss. The cash position increased by 864 billion pesos in the fourth quarter of 2025 to 1,808 billion pesos, mainly due to the bond issued in November, EBITDA reached nearly 259 billion pesos, non-regulated business contributed 57%, CAPEX reached nearly 96 billion pesos, working capital increased by 76 billion pesos, paid 5.7 billion pesos in interest and 61.6 billion pesos in income taxes, obtained 150.3 billion pesos in short-term loans, and real returns from financial investments declined by 11.8 billion pesos.

Successfully issued a 500 million bond in November 2024 for project financing. Launched open seasons for capacity contracting on February 9, 2025, with bids expected on March 16 and remaining capacity bids after Enarsa's reallocation. Expected capital expenditures for the Perito Moreno expansion to be over $500 million in 2026 and put three new compressor stations into service by May 2027. Outlook for liquids prices in 2026 is similar to the previous year, and geopolitical conflicts may have a positive impact on natural gasoline prices.

Competition with YPF to extend NCL capabilities; tariff adjustment in natural gas transportation business affected by peso depreciation and inflation may lead to changes in dollar revenues; uncertainty in timing of insurance asset divestment; international liquid price fluctuations affected by geopolitical factors; financing and construction progress of Perito Moreno expansion project may be affected; capacity bidding results affected by Enarsa's reallocation of existing capacity.

Q: Give more color about the NCL project and FID expectation.

A: The project is negotiating terms with gas producers and is expected to reach FID before June 2025, and is working with YPF and other gas producers.

Q: How is the tariff evolving in the transportation business?

A: Tariff adjustments are moving smoothly, based on monthly inflation calculation of wholesale price index and CPI half and half, and dollar revenues may change with peso depreciation and inflation.

Q: When will the insurance divestment be collected?

A: An advance payment of nearly $10 million has been received, and it is expected to be fully recovered by June or July 2025, and the recovery amount may be higher than related expenses.

Q: Outlook for liquids prices in 2026 and geopolitical impact?

A: International NGL prices were weak last month, but the liquid business has a good margin overall. Outlook for liquids prices in 2026 is similar to the previous year, and geopolitical conflicts may have a positive impact on natural gasoline prices.

Q: Will there be dividend payment in 2026?

A: There is no potential dividend payment currently due to the progress of the NSHE project, and it depends on shareholders' decision.

Q: Reason for strong increase in cash and percentage of capital allocated to the expansion project?

A: Strong increase in cash is due to the bond issued in November, and the bulk of the $780 million capital for the Perito Moreno expansion project will be invested in 2026 and three new compressor stations will be put into service by May 2027.

Q: Does the current tariff adjustment fully preserve the real return?

A: Yes, and there is no regulatory error in real terms.

Q: Will participate in the dedicated pipeline for the Southern Energy LNG project?

A: No.

Q: Progress of Perito Moreno expansion construction and capital expenditure deployment in 2026 - 2027?

A: Progress is very good, with over $500 million capital expenditure in 2026 and the remainder in 2027.

Q: Estimation of capital related to old projects?

A: Estimated around 2.9 billion pesos as most bids for construction and equipment have been run.

Q: Timing of capacity biddings?

A: Bids for repaid capacity are expected on March 16, 2025, and remaining capacity bids may occur before May after Enarsa's reallocation.

Q: Technology mix and regions for Perito Moreno expansion?

A: Mainly for power plants and industries, with a significant part of capacity likely to go to the TGN zone via the Mercedes-Cardale pipeline.

Q: Proportion of project finance in the investment?

A: Difficult to say exactly, with part financed through bonds or new SPV balance sheets and part through bank import financing, and the second SPV is expected to have $1 billion project finance.

Q: Reason for decline in firm revenues presented after importation contract this quarter?

A: It is because interruptible services revenue increased, not because of revenue decline.