Manila Electric Co. · PSE:MER
Manila Electric — 9M 2021 Earnings Presentation
38 slides from Manila Electric's earnings presentation, Oct 25, 2021
Slide 1: Nine Months Ended September 30, 2021 Financial and Operating Results
NINE MONTHS ENDED SEPTEMBER 30, 2021 FINANCIAL AND OPERATING RESULTS October 25, 2021 1
Slide 2: Financial Results
NINE MONTHS ENDED SEPTEMBER 30, 2021 FINANCIAL RESULTS October 25, 2021 2
Slide 3: September 2021 YTD Financial Highlights
September 2021 YTD Financial Highlights in PhP, Mn NET INCOME and EBITDA REVENUES EXPENSES CASH and BORROWINGS CCNI Gross Revenues Purchased Power Cost Cash & Cash Investments 18,062 231,717 163,639 102,766 ▲ 15% ▲ 11% ▲ 5% ▲ 27% 15,727 previous year 208,788 previous year 156,122 previous year 81,10
Slide 4: September 2021 YTD Revenues
September 2021 YTD Revenues in PhP, Mn Gross Revenues Electric Revenues 231,717 225,404 47,390 10,169 208,788 20% 203,014 5% Energy Fee ▲ 11% ▲ 11% 167,845 72% Generation, 167,845 Transmission, & 157,735 74% other pass-through 78% 45,279 47,390 Distribution 10,169 4% 22% 21% 6,313 4% 9M 2020 9M 2021
Slide 5: Cost and Expenses, Capital Expenditures
September 2021 YTD Cost and Expenses, Capital Expenditures in PhP, Mn Costs and Expenses Capital Expenditures 207,577 18,520 195,416 163,639 79% ▲ 70% ▲ 6% 10,920 22,705 11% 8,642 4% 5,361 3% 783 0.4% 6,447 3% 9M 2020 9M 2021 Purchased Operating Depreciation & Coal & Power Others 9M 2020 9M 2021 Pow
Slide 6: Net Income and EBITDA
September 2021 YTD Net Income and EBITDA in PhP, Mn Core and Reported Net Income Core and Reported EBITDA 18,062 34,793 16,522 33,853 15,727 ▲ 43% ▲ 72% ▲ 15% 6,663 11,506 ▲ 47% 11,014 Q3 5,139 6,573 24,332 11,252 19,698 Q3 8,964 4,408 11,266 11,055 Q2 4,864 6,286 8,303 5,615 Q2 6,960 4,225 6,300 Q1
Slide 7: Power Generation CCNI
September 2021 YTD Power Generation CCNI in PhP, Mn Paci ic Light Power Shareholding 1,295 Effective Interest 30% ▲ Newly-acquired stake 165% from Petronas 663 42% 488 28% Original stake ▲ 414% 272 • On July 1, 2021, MGen acquired 129 0 0 an additional 30% interest in -79 Paci icLight 2020 2021 2020
Slide 8: Subsidiaries CCNI Contribution and Performance
September 2021 YTD Subsidiaries CCNI Contribution and Performance PhP 77M PhP 221M PhP 162M • Added 76 new billers, • 6,931 km of iber optic cable • Awarded Medium Voltage bringing total to 433 Electromechanical Works and • Established “Red Fiber” in 83 Transmission Line Project that • Bayad App rec
Slide 9: Credit and Debt Profile
September 2021 YTD Credit and Debt Pro ile in PhP, Mn Total Debt Breakdown 9M 2021 9M 2020 90,507 Cash & Cash Investments 102,766 81,108 ▲ 122% 40,764 Parent DU 45% Gross Debt 90,507 40,765 40,765 49,743 Subsidiaries 55% Net Debt 46,887 9,068 9M 2020 9M 2021 Gross Debt to EBITDA 2.01 1.55 Debt Repay
Slide 10: Earnings per Share
September 2021 YTD Earnings per Share in PhP per share Core and Reported Earnings per Share 16.025 ▲ 15% 14.658 13.954 ▲ 47% 9.983 9M 2020 9M 2021 9M 2020 9M 2021 Core Earnings per Share Reported Earnings per Share 10
Slide 11: MER S&P Credit Rating
MER S&P Credit Rating BBB- BBB- BBB- Stable Stable Stable BB+ BB+ BB+ Stable Positive BB BB Stable BB- Stable B+ B+ B+ Stable Stable B Positive B- B- B- Negative Stable On October 21, S&P af irmed its BBB- credit rating on Meralco, CCC with a stable outlook CC Aug 1999 Oct 2002 Nov 2002 Mar 2003 May
Slide 12: Operating Results
NINE MONTHS ENDED SEPTEMBER 30, 2021 OPERATING RESULTS October 25, 2021 12
Slide 13: Operational Highlights
September 2021 YTD Operational Highlights BUSINESS DRIVERS SERVICE PERFORMANCE ELECTRICITY RATE per kWh Energy Sales System Loss Average Retail Rate 34,398 GWh 5.64% PhP 8.08 ▲ 6% vs. 2020 ▼ 0.54%PT, 12-MMA ▲ 1%, vs. 2020 Customer Count SAIFI 7.351 M 1.154 times ▲ 4% vs. 2020 ▲ 3% vs. 2020 Net Syste
Slide 14: Consolidated Energy Sales in GWh
September 2021 YTD Consolidated Energy Sales in GWh Grew 6% vs. 2020 driven by recovery to pre-pandemic level in Industrial, ramp up in Commercial, and sustained growth in Residential 35,003 34,398 ▲6% vs. 2020 32,539 32,921 31,402 10,267 10,263 Industrial 30% 8,827 30% 27% 13,713 11,063 11,281 Comm
Slide 15: DU Energy Sales Profile and Drivers
September 2021 YTD DU Energy Sales Pro ile and Drivers 2019 Actual 2020 Actual 2021 Actual GWh RESIDENTIAL ▲ 2%, YTD GWh COMMERCIAL ▲ 2%, YTD GWh INDUSTRIAL ▲ 16%, YTD 2,000 2,000 2,000 1,500 1,500 1,500 1,000 1,000 1,000 500 500 500 0 0 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
Slide 16: Consolidated Customer Count
September 2021 YTD Consolidated Customer Count in M Increase in customer base driven by record-high PCA and sustained OSA energization, exceeding 2019 and 2020 levels Project-covered Applications (PCA) 7.351 2020 2021 7.055 0.011 Industrial 651 670 670 0.011 576 580 583 0.552 8% Commercial 474 522 0
Slide 17: Customer Update: New Bill Format
Customer Update New Bill format effective October 2021 • All 7.4M customers to receive new bill starting this month • Highly positive customer feedback “OK can i just say that I'm totally digging the new format of my Meralco bill? So much easier on the eyes and even came with explainers about how to
Slide 18: Consolidated NSI in GWh
September 2021 YTD Consolidated NSI in GWh Higher vs. 2020 due to recovery of Industrial and Commercial segments Power Fuel Sources Mix Special Solar 1% Contracts 1% 2% Liquid Fuel 36,150 7% WESM 34,533 16% Other RES 26% Multi-fuel ▲ 5% 23% New PSA 37% Natural Gas 53% IPP/ Old PSA 34% Coal 2020 2021
Slide 19: Peak Demand in MW
September 2021 YTD Peak Demand in MW Meralco and Luzon peaks higher vs. 2020 due to easing community quarantine restrictions Luzon Meralco 11,640 11,103 ▲ 5% 7,614 7,808 ▲ 3% March 10, 2020 May 27, 2021 March 9, 2020 May 28, 2021 19
Slide 20: System Loss in %, 12-MMA
September 2021 YTD System Loss in %, 12-MMA Signi icant improvement (0.54% points) vs. 2020 due to system loss management initiatives and sales mix skewing to C&I 6.5% SYSTEM LOSS CAP starting January 2021 6.44 6.14 2020-2021 6.08 6.03 6.10 6.19 6.18 5.96 5.97 5.96 5.88 5.83 5.72 5.64 2019-2020 5.66
Slide 21: S-Factor Performance and Guaranteed Service Levels
September 2021 YTD S-Factor Performance and Guaranteed Service Levels (GSL) Continued to deliver well within performance ceilings SAIFI times SAIDI CAIDI in minutes Rewards < 6.98 in minutes Rewards < 144.40 Network ▲ 3% ▼ 5% ▼ 8% • % Probability of Voltage Violation at 0.12 (within rewards level of
Slide 22: Networks CapEx
September 2021 YTD Networks CapEx in PhP, B 57% of full year CapEx utilized driven by spend across all project types PhP 19.08B CapEx Budget 7.31 New Connections Pole Relocation Program BUILD, BUILD, BUILD DPWH ROAD WIDENING 56% 47% 4.42 1,170 933 RELOCATED RETIRED PhP 10.92B 4.83 Asset Renewals POL
Slide 23: Networks Project Update: FPIP Substation Expansion
Networks Project Update Expansion of FPIP 115-34.5 kV Substation, Bank 3 • Commissioned on July 19, 2021 • CAPEX iling of PhP 206.54M in RY2020 • Implemented to: - Address projected critical loading of FPIP Banks 1 and 2 due to anticipated new and additional load applications - Reduce technical syst
Slide 24: Networks Project Update: San Mateo Substation
Networks Project Update Development of San Mateo 115-34.5 kV Substation • Commissioned on August 27, 2021 • CAPEX iling of PhP 475.8M in RY2017 • Implemented to: - Relieve critically-loaded Parang Bank 1 and minimize line exposure of Parang 412YL - Provide operational switching lexibility - Reduce t
Slide 25: Networks Project Update: BGC-Ortigas Road Link Relocation
Networks Project Update BGC-Ortigas Center Road Link Relocation Projects • Kalayaan Bridge: a 1.37-km, 4-lane bridge across Pasig River connecting Bonifacio Global City and Pasig City - Partially opened on June 12, 2021 and inaugurated on September 30, 2021 • Completed subtransmission line, overhead
Slide 26: Networks Project Update: Isla de Provisor
Networks Project Update Isla de Provisor 10-year Development of Sustainable Electric/Non-Electric Facility • 5th Regulatory Period (RP5) - Years 1 to 5 - Indoor-type insulated switchgear substation, RY2024 ‣ Conversion of 66-year old Tegen substation to SF6 insulated switchgear for reliability impro
Slide 27: Average Retail Rate in PhP per kWh
September 2021 YTD Average Retail Rate in PhP per kWh 1% higher due to higher generation, distribution, and FIT-Allowance charges • 4.9% increase in Generation: increase in fuel costs and higher WESM Average Rate charges 8.04 8.08 per Customer Segment • 10.1% decrease in Transmission: lower Ancillar
Slide 28: Regulatory Updates: Supreme Court Decision on RCOA
Regulatory Updates Supreme Court (SC) Decision on Retail Competition and Open Access (RCOA) • December 27, 2016: PCCI, San Beda Alabang, Ateneo, and Riverbanks iled a Petition for Certiorari, Prohibition, and Injunction with SC, docketed as G.R. No. 228588 - Questioned validity of DOE Circular No. D
Slide 29: Regulatory Updates: Competitive Selection Process
Regulatory Updates Competitive Selection Process (CSP) for 70MW covering contract period from Jan. 26, 2017 to Jan. 25, 2037 • September 24, 2021: DOE approved revised TOR and instructed MERALCO to update schedule of CSP activities and to submit for posting at DOE CSP E-based Portal • October 15, 20
Slide 30: One Meralco recognized with 9 Stevie Awards (1/2)
One Meralco recognized with 9 Stevie Awards 3 Gold Stevies in Annual Report, Publication, and PR Campaign Categories 1/2 GOLD GOLD GOLD Power On: MVP: The Man and His Art One for Trees: Helping Farmers Meralco’s 2020 Annual Report A Visual Inventory of Filipino Artistry Gracing Survive the Pandemic
Slide 31: One Meralco recognized with 9 Stevie Awards (2/2)
One Meralco recognized with 9 Stevie Awards 6 Silver and Bronze Stevies in Annual Report, PR Campaign, Brand Renovation, and Use of Social Media Categories 2/2 SILVER SILVER SILVER Live Life: Energizing off-grid Island and Powering-up Communities Meralco 2020 Sustainability Report Mountain Schools f
Slide 32: #PoweringTheGoodLife: Waste Management Competition
#PoweringTheGoodLife Meralco tops • Inter-company waste management competition organized Rank Company by Philippine Business for Social Progress (PBSP) • May 1 to September 15, 2021 1 • Proceeds to bene it 300 low-income families 2 Meralco donated 37,593 kg of recyclable waste 3 METAL PAPER PLASTIC
Slide 33: #PoweringTheGoodLife: New Sustainability Microsite
#PoweringTheGoodLife Launch of New Sustainability Microsite www.meralco.com.ph/sustainability • Digital presence highlighting Meralco’s commitment to sustainability • Went live on October 24: International Day of Climate Action • Key Sections 1. Sustainability at Meralco - Powering the Good Life - O
Slide 34: Power Generation Operating Results
NINE MONTHS ENDED SEPTEMBER 30, 2021 POWER GENERATION OPERATING RESULTS October 25, 2021 34
Slide 35: MGen's Full Acquisition of GBP and Functional Merger
Following MGen’s full acquisition of GBP on March 31, 2021, functional merger took e ect on September 16, 2021 • Streamlined workforce and use of single headquarters by early next year • Full integration to be completed in next 2 to 3 years following regulatory requirements 35 ff
Slide 36: Generation Capacity in MW
September 2021 YTD Generation Capacity in MW Coal TECH GROSS ATTRIBUTABLE 59% San Buenaventura Power Coal 500 255 Paci ic Light Power LNG 800 464 BulacanSol Solar 55 (ac) 33 (ac) TOTAL 1,355 752 2,446 MW GROSS CAPACITY TECH GROSS ATTRIBUTABLE 1,532 MW Cebu Energy Dev’t Corp. Coal 246 128 GROSS CAPAC
Slide 37: Ongoing Renewables Development
Power Generation Project Update Ongoing Renewables Development • Target of 1,500 MW renewable energy (RE) capacity in the next 5-7 years • 2021 Solar Projects: - 78 MWac in Baras, Rizal (ongoing construction) - 45 MWac in Cordon, Isabela - 19 MWac in Nueva Ecija - 50 MWac in Ilocos Norte • 2022 and
Slide 38: Nine Months Ended September 30, 2021 Financial and Operating Results
NINE MONTHS ENDED SEPTEMBER 30, 2021 FINANCIAL AND OPERATING RESULTS October 25, 2021
Manila Electric Company (Meralco) — 9M 2021 Earnings Presentation on 6ix