Transportadora De Gas Sa Ord B Q2 2025 Earnings Report

Transportadora De Gas Sa Ord B EPS Results

• Actual EPS: N/A
• Consensus EPS: $0.37
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Transportadora De Gas Sa Ord B Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $382.51 billion
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Transportadora De Gas Sa Ord B Announcement Details

• Quarter: Q2 2025
• Date: 8/4/2025
• Time: Before Market Opens
• Conference Call Date: Wednesday, August 6, 2025
• Conference Call Time: 10:00AM ET

Transportadora de Gas del Sur S.A. engages in transportation of natural gas, and production and commercialization of natural gas liquids in Argentina and internationally. The company operates through four segments: Natural Gas Transportation Services; Liquids Production and Commercialization; Midstream; and Telecommunications. The Natural Gas Transportation segment transports natural gas through pipeline system to distribution companies, power plants, and industrial customers. It provides operation and maintenance services for the natural gas transportation facilities. The Liquids Production and Commercialization segment produces and commercializes natural gas liquids, such as ethane, liquid petroleum gas, natural gasoline, propane, and butane. This segment offers certain related services comprising reception, storage, and dispatch of the liquids. The Midstream segment provides natural gas conditioning services; treatment, removal of impurities and natural gas compression, including the collection and transport of natural gas; and inspection and maintenance of pipelines and compressor plants services. In addition, this segment offers steam generation for electricity production and management services for expansion works and steam generation for the production of electricity. The Telecommunications segment offers data transmission services through a network of digital terrestrial radio relay. It serves residential, commercial, industrial, and electric power generation end users. The company was incorporated in 1992 and is headquartered in Buenos Aires, Argentina. Transportadora de Gas del Sur S.A. is a subsidiary of Compañía de Inversiones de Energía S.A.

Transportadora De Gas Sa Ord B Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: TGS secured monthly tariff inflation adjustments for its natural gas transportation business, replacing semiannual updates and helping revenues better track economic indices.
• Positive Sentiment: The company is the sole bidder on the 14 million cubic meters per day Perito Moreno pipeline expansion tender, with award expected October 13 and commissioning of the incremental capacity by April 2027.
• Negative Sentiment: Second quarter net income fell to ARS 40.3 billion from ARS 119.7 billion a year ago, driven by a ARS 76 billion drop in financial results due to lower yields on peso-denominated investments.
• Negative Sentiment: EBITDA for the liquids segment plunged over 50% to EUR 25.3 billion, impacted by EUR 16.6 billion in flood-related expenses and reduced plant operations until early May, with insurance recovery still pending.
• Positive Sentiment: Midstream and other services EBITDA rose to nearly EUR 52 billion from EUR 41.5 billion a year ago, driven by higher natural gas volumes transported and conditioned in Vaca Muerta.

Presentation

[Carlos Almagro, Head - IR & Capital Markets at Transportadora de Gas del Sur S.A.]

Good morning, everyone. I'm Carlos Salmado, Head of Investor Relations. I would like to welcome everyone to TGS Second Quarter twenty twenty five Earnings Video Conference. TGS issued its earnings release yesterday. If you did not receive a copy of the release, please contact us embargoesore.

[Carlos Almagro, Head - IR & Capital Markets at Transportadora de Gas del Sur S.A.]

Tche dot com. Ar. Before we begin the call, I would like to inform you that this event is being recorded and all participants are in listen only mode. Following the company's remarks, we will host a Q and A session. All questions will need to be submitted in writing through the Q and A chat box.

[Carlos Almagro, Head - IR & Capital Markets at Transportadora de Gas del Sur S.A.]

I would also like to remind you that forward looking statements made during today's video conference do not account for future economic circumstances, industry conditions or company performance and financial results. These statements are subject to a number of risks and uncertainties. All figures included herein were prepared in accordance with International Accounting Reporting Standards, IFRS, and are stated in constant Argentine pesos as of 06/30/2025, unless otherwise noted. Joining us today from TGS in Buenos Aires is Alejandro Basso, Chief Financial Officer. I will turn the video conference over to Mr. Basso. Alejandro, please begin.

[Alejandro Basso, CFO & Director - Administration, Finance & Services at Transportadora de Gas del Sur S.A.]

Thank you, Carlos. Good morning, everyone, and thank you for joining us today to discuss TGS' twenty five second quarter earnings and highlights. To begin the call today, I will start by sharing some of the most recent news about the company. In terms of our natural gas transportation business, following the completion of the five year tariff revision with initial tariff charts beginning in May 2025, the Secretary of Energy modified the frequency of tariff inflation adjustments. In response to the Energasys request, the rate will be now adjusted every month instead of every six months.

[Alejandro Basso, CFO & Director - Administration, Finance & Services at Transportadora de Gas del Sur S.A.]

As such, the Energas will be adjusting the transportation tariffs every month considering the wholesale price and consumer price indexes monthly variations in equal proportions. As you remember, on March 7, we had a severe storm that flooded the Serie Complex. Given the outstanding efforts made by our employees and suppliers, we managed to have the processing plant normally operated operating since early May. In terms of the private initiative submitted to the government back in June 2024 to expand the transportation capacity of the Perito Moleno pipeline by 14,000,000 of permits per day, Enarsa launched a tender offer in May. On July 28, we presented our bid with no other bidder.

[Alejandro Basso, CFO & Director - Administration, Finance & Services at Transportadora de Gas del Sur S.A.]

The project is scheduled to be awarded on October 13, and it involves the construction of three compressor plants as well as the expansion of the Tratacion compressor plant, totaling an additional 90,000 horsepower. In case we are awarded the project, we must commission the incremental capacity by April 2027, while operating and maintaining the Britom Menno pipeline for a fifteen year period. We will also be entitled to commercialize the incremental capacity for the same period, after which the facilities will revert to Enarsa. As you heard a couple of weeks ago, we are proud to announce that the National Executive Power has finally issued the Decree No. Four ninety five of the year 2025 and has officially extended our license for another twenty years from 2027 to 02/1947.

[Alejandro Basso, CFO & Director - Administration, Finance & Services at Transportadora de Gas del Sur S.A.]

Finally, and before we review the details of the quarter on May 28, the Board of Directors approved a dividend payment of ARS 200,000,000,000, which was equivalent to approximately ARS 170,000,000 and was paid on June 11. Moving to Slide four. I will briefly highlight the key financial results for the 2025. Please keep in mind that all figures presented for this quarter and comparisons made with the previous quarters are expressed in constant Argentine pesos as of 06/30/2025, following the provisions established by the IFRS for financial reporting in hyperinflationary economies. As seen in the slide, we reported a total net income of BRL 40,300,000,000.0 during the 2025 compared to BRL 119,700,000,000.0 reported in the same quarter of 2024.

[Alejandro Basso, CFO & Director - Administration, Finance & Services at Transportadora de Gas del Sur S.A.]

This decline was mostly explained by a negative variation of 76,000,000,000 in financial results, mainly resulting from significant lower yields on the peso denominated investments. Additionally, EBITDA decreased EUR 32,000,000,000 for the natural gas transportation segment and another EUR 27,000,000,000 for the liquids segment, both of which were partially offset by a EUR 10,000,000,000 EBITDA increase in the midstream business segment. Moving on to Slide five. EBITDA for natural gas transportation business in the 2025 totaled 85,600,000,000, which compares to EUR 118,200,000,000.0 recorded in the 2024. The EBITDA reduction of EUR 32,000,000,000 in the regulated business segment was mainly due to the transitional tariff adjustment from August 2024 to March 2025 and inflation adjustment in June 25, which resulted in a total of twenty five percent and 23,700,000,000.0 revenues increase were insufficient to offset the 40% annual inflation, which generated a EUR 49,000,000,000 revenue reduction.

[Alejandro Basso, CFO & Director - Administration, Finance & Services at Transportadora de Gas del Sur S.A.]

In addition, operating expenses and PP and E maintenance costs rose by EUR 7,700,000,000.0 and EUR 1,900,000,000.0, respectively. On Slide six, you can see that the EBITDA for the liquids business decreased by more than 50% to EUR 25,300,000,000.0 during the second quarter of twenty twenty five compared to EUR 52,600,000,000.0 reported in the same quarter of 2024. Most of the EBITDA decline was explained by the EUR 16,600,000,000.0 extraordinary expenses incurred as a result of the flood occurred on March 7 and which should be recovered from the insurance company. Monetary effects further reduced EBITDA by 11,300,000,000.0. In addition, and following the climate event, the processing plant was not in operation until mid April and then gradually began operating until reaching normal capacity on May 7.

[Alejandro Basso, CFO & Director - Administration, Finance & Services at Transportadora de Gas del Sur S.A.]

As a result, the liquids volume sales decreased by 39,000 metric tons from 250,000 metric tons sold in the 2024 to 211,000 metric tons in the twenty five second quarter, impacting our EBITDA in nearly EUR 10,000,000,000. Another factor, which affected EBITDA in EUR 6,300,000,000.0 was the impact of the natural gas price, which increased from EUR $2.9 to $3.3 per million of ETU. These negative effects were partially offset by higher butane prices in the domestic market following the deregulation of the butane price under the Prorama Hougar starting January 25, which allow us to sell at export parity price. In addition, in terms of our ethane sale contract, this quarter, we had a higher annual take or pay compensation amounting to 3,500,000,000.0. Turning to Slide seven.

[Alejandro Basso, CFO & Director - Administration, Finance & Services at Transportadora de Gas del Sur S.A.]

EBITDA from midstream and other services rose to nearly EUR 52,000,000,000 compared to EUR 41,500,000,000.0 in the 2024. This increase was mainly driven by higher sales derived from the incremental build volume of natural gas transported and condition in Vaca Muerta totaling EUR 19,000,000,000. Transporting natural gas build volume rose from an average of 25,000,000 of permits per day in the '4 to 30,000,000 of kilometers per day during this quarter. The natural gas conditioning volume also increased from an average of 16,000,000 cubic meters per day to 27,000,000 cubic meters per day. This effect was partially offset by a EUR 6,200,000,000.0 in higher operating expenses and EUR 3,500,000,000.0 negative monetary effect as inflation outpaced the foreign exchange rate increase.

[Alejandro Basso, CFO & Director - Administration, Finance & Services at Transportadora de Gas del Sur S.A.]

As seen on Slide eight, we recorded a negative variation in the financial results amounting to 76,000,000,000. This was mainly due to a EUR 16,000,000,000 decline in income from financial assets given the much lower yields of the domestic financial investments. Additionally, we recorded a higher foreign exchange loss of EUR 15,700,000,000.0 in the 2025, following the Central Bank's decision to float the USD exchange rate, the dollar exchange rate in April in early April. This led to a 12% increase in the 2025 period compared to 6% in the same 2024 under the previous regime of 2% monthly crawl impact. These negative effects were partially offset by the 4,200,000,000.0 lower inflation exposure loss.

[Alejandro Basso, CFO & Director - Administration, Finance & Services at Transportadora de Gas del Sur S.A.]

Finally, turning to the cash flow on Slide nine. Our cash position in real terms decreased by 33% or $339,000,000,000 during the 2025 to ARS $676,000,000,000, equivalent to approximately EUR $565,000,000 at the official exchange rates. EBITDA generation during the second quarter amounted to almost EUR 163,000,000,000, of which 53% was generated by the regulated transportation business and 47% by the non regulated businesses. CapEx for the period amounted to 55,000,000,000. Working capital increased by EUR 19,000,000,000, and we paid dividends amounting EUR $2.00 3,000,000,000 and income tax payments of EUR 197,000,000,000.

[Alejandro Basso, CFO & Director - Administration, Finance & Services at Transportadora de Gas del Sur S.A.]

This concludes our presentation. I will now turn it over to Carlos, who will open the floor up Thank you.

[Carlos Almagro, Head - IR & Capital Markets at Transportadora de Gas del Sur S.A.]

Thank you, Patricandro. The floor is now open for questions. If you have question, please send them through our Zoom chat. We will read and answer the questions in the in the order in which they are received. Please make sure to state your name and company so we can introduce you to the audience.

[Carlos Almagro, Head - IR & Capital Markets at Transportadora de Gas del Sur S.A.]

Should any participant need assistance, please send us a message in the chat box. Please hold while we poll for the questions. Well, the the first question is from Florencia Masjourga with MetLife. If we can conf he she asked if we can confirm impairment for the second q related to the climate event.

[Alejandro Basso, CFO & Director - Administration, Finance & Services at Transportadora de Gas del Sur S.A.]

Hi, Florencia. How are you doing? As we said in the call, the the impact on the quarter was 16,600,000,000.0, okay? Extraordinary expenses incurred in the flow by the flow.

[Carlos Almagro, Head - IR & Capital Markets at Transportadora de Gas del Sur S.A.]

Second question from Julian Casa. How are you? From Latin Securities. If we can share any update on or timeline regarding the NCL project.

[Alejandro Basso, CFO & Director - Administration, Finance & Services at Transportadora de Gas del Sur S.A.]

Okay. We are currently evaluating the cost and waiting for certain bits related assembling cost of the plants that are involved in that project. We are expecting to have results by the September.

[Carlos Almagro, Head - IR & Capital Markets at Transportadora de Gas del Sur S.A.]

Bruno Montanari from Morgan Stanley. His first question is regarding if the current level of EBITDA emissions is sustainable at current levels.

[Alejandro Basso, CFO & Director - Administration, Finance & Services at Transportadora de Gas del Sur S.A.]

Bruno. Well, this quarter, we have a very good EBITDA in the midstream services. Nevertheless, we expect that this business is continue growing in the future.

[Carlos Almagro, Head - IR & Capital Markets at Transportadora de Gas del Sur S.A.]

His second question is regarding the recovery, the full recovery of profitability in the shares segment.

[Alejandro Basso, CFO & Director - Administration, Finance & Services at Transportadora de Gas del Sur S.A.]

As we said, we we started full operations on May 7. So for for the for that for that on, from now from that moment on, we are we are having fully operational activity in the plant.

[Carlos Almagro, Head - IR & Capital Markets at Transportadora de Gas del Sur S.A.]

Ignacio from in Bertilion Bolsa. The first question is regarding the increase in the cost in cost in general. If we could share more details about what drove those changes during the first this quarter.

[Alejandro Basso, CFO & Director - Administration, Finance & Services at Transportadora de Gas del Sur S.A.]

Okay. You have to take into consideration that tariff revision, the full tariff revision started in April 1, okay? So in this quarter, we are spending what we estimated in the tariff operation process. It was different it's different what we have last year, where we are in under a transitional period regarding the transportation business.

[Carlos Almagro, Head - IR & Capital Markets at Transportadora de Gas del Sur S.A.]

The second question is regarding the insurance related related to the incident at Complrejo Sarri covering both damages and loss of income. Is there any has will receive any compensation, or what is the current status of the the insurance?

[Alejandro Basso, CFO & Director - Administration, Finance & Services at Transportadora de Gas del Sur S.A.]

Okay. The insurance people have been working in Serbia. They have reviewed the damages. Everything is okay up to now. We are expecting that they will come with their numbers maybe in two, three, four months.

[Alejandro Basso, CFO & Director - Administration, Finance & Services at Transportadora de Gas del Sur S.A.]

Nevertheless, we may have some advance of the recovery. As you may know, our insurance covered all expenses above $1,000,000 In the case of the loss of income or business interruption, our business interruption was just the seventeen months that we have as deductible in the insurance policy. So we are not expecting a lot of recovery in that regard.

[Carlos Almagro, Head - IR & Capital Markets at Transportadora de Gas del Sur S.A.]

One second. Hello, Matthias Catarusi from ADCOP Securities. His question regarding the outlook for the regulated transportation segment in the '25, considering the lagging tariff update, it will affect the EBITDA to go back to the first Q twenty five figures, or stay similar to second Q twenty five figures.

[Alejandro Basso, CFO & Director - Administration, Finance & Services at Transportadora de Gas del Sur S.A.]

Hi. But regarding the as I said, we are current we currently are having the monthly inflation adjustments. So regarding revenues, it will depend on the level of adjustment that you know is 50% IPC CPI and 50% wholesale price index as compared with the CPI that is the index used by the adjustment in financial statements. Regarding full EBITDA, as I said, the level of expenses is higher now that we are under the the tariff revision process. Okay?

[Carlos Almagro, Head - IR & Capital Markets at Transportadora de Gas del Sur S.A.]

It's a common question regarding the Perito Moreno pipeline tender. They are the only bidder when we use when we expect the contract to be awarded.

[Alejandro Basso, CFO & Director - Administration, Finance & Services at Transportadora de Gas del Sur S.A.]

As I said in the call, we are expecting the the the schedule date is October 13. Nevertheless, it could be earlier than that, or I I I don't see so, but maybe later than that. Okay? It's not a fixed date. But it as we are the only leaders, it should be easier to to to go quicker with the with the wording.

[Carlos Almagro, Head - IR & Capital Markets at Transportadora de Gas del Sur S.A.]

A more specific question regarding project. How are discussion with producing progressing? And there are any signals on the scale or potential timing of the financial investment decision?

[Alejandro Basso, CFO & Director - Administration, Finance & Services at Transportadora de Gas del Sur S.A.]

Well, I cannot anticipate any results from the discussion. We are working with the gas producers. We're working with the cost of the project. We are expecting maybe at the end of this year to to go ahead with the project.

[Carlos Almagro, Head - IR & Capital Markets at Transportadora de Gas del Sur S.A.]

The the next question is from Santiago Herrera from Alaria. Our hello. What is your your first question is regarding the pass by via Blanca event. What was the total effect on cost for the maintenance tuning of the SARI Complex?

[Alejandro Basso, CFO & Director - Administration, Finance & Services at Transportadora de Gas del Sur S.A.]

Santiago, we are estimating a total cost of around 40, approximately $40,000,000 in the for all the the the expenses and also the the the impairments of of assets.

[Carlos Almagro, Head - IR & Capital Markets at Transportadora de Gas del Sur S.A.]

His second question regarding the ship of ship or pay contract compensation. What was the amount received for that con that concept?

[Alejandro Basso, CFO & Director - Administration, Finance & Services at Transportadora de Gas del Sur S.A.]

It it was $7,000,000.

[Carlos Almagro, Head - IR & Capital Markets at Transportadora de Gas del Sur S.A.]

Well, third question, which client caused the deterioration of account receivable for the regulated transportation segment?

[Alejandro Basso, CFO & Director - Administration, Finance & Services at Transportadora de Gas del Sur S.A.]

It was Albanese, the the marketer. Okay? So that's what we have to do to book the bad debt allowance. Nevertheless, we have recovered in cash 50% of that, which should be accounted for in the next two years because it's related to an anticipation of revenue that they have.

[Carlos Almagro, Head - IR & Capital Markets at Transportadora de Gas del Sur S.A.]

Next question is from Juan Palinascio Lopez from Puente. He's got him regarding the status of the Perito Pan Reno pipeline. When the date for the next for the project schedule was explained, it will be in October 13. Regarding the CapEx, well, we also say that it's around $500,000,000 Okay? In in the case of the the Perito Moreno pipeline expansion, then we have $200,000,000 in the final tranches.

[Carlos Almagro, Head - IR & Capital Markets at Transportadora de Gas del Sur S.A.]

Well, Matthew, the question regarding with the same question that we answered before. He his additional question is regarding we will exercise the incremental capacity option and what are the drivers to take the decisions.

[Alejandro Basso, CFO & Director - Administration, Finance & Services at Transportadora de Gas del Sur S.A.]

Regarding the the optional additional capacity, it will depend on the open system that we are going to run once we were we are awarded. Okay? So it will depend on that.

[Carlos Almagro, Head - IR & Capital Markets at Transportadora de Gas del Sur S.A.]

Well, another question for Florencia Masjourga from Life is what's our expectation on the new regulated EBITDA after tariff process done?

[Alejandro Basso, CFO & Director - Administration, Finance & Services at Transportadora de Gas del Sur S.A.]

Florencia, I think we're expecting $300,000,000 annually. It will obviously, it will depend on the on inflation and effects in Argentina.

[Carlos Almagro, Head - IR & Capital Markets at Transportadora de Gas del Sur S.A.]

You know, a question from Guido Visocero from Nalaria. How are you? How do we expect to finance the initiate initiative a project, the GPM pipeline awarded cash and debt percentage?

[Alejandro Basso, CFO & Director - Administration, Finance & Services at Transportadora de Gas del Sur S.A.]

We are expecting to finance the imports for that project that are around $70,000,000 And then beyond that, we are going to use our own cash. And nevertheless, we depend on if we are going to have other projects like the NGLS project, obviously. So in that case, we may decide to have additional financing for that for the private initiative project also.

[Carlos Almagro, Head - IR & Capital Markets at Transportadora de Gas del Sur S.A.]

The second question is regarding when we expect this project will start to generate cash flow considering the eighteen month levels.

[Alejandro Basso, CFO & Director - Administration, Finance & Services at Transportadora de Gas del Sur S.A.]

By April 27.

[Carlos Almagro, Head - IR & Capital Markets at Transportadora de Gas del Sur S.A.]

Well, there's no more questions. Thank you for attending the call. And this conclude the question and answer session. Now we will turn to Alejandro for final remarks.

[Alejandro Basso, CFO & Director - Administration, Finance & Services at Transportadora de Gas del Sur S.A.]

Well, thank you all for participating in TGS' TCom quarter twenty twenty five conference call. We look forward to speaking with you again when we release our twenty twenty five third quarter results.

Participants

Analysts

• Carlos Almagro, Head - IR & Capital Markets at Transportadora de Gas del Sur S.A.
• Alejandro Basso, CFO & Director - Administration, Finance & Services at Transportadora de Gas del Sur S.A.