Mhp Se Q1 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Anton Anikst - Knighthead Capital - Analyst : Good afternoon, guys. Thanks for hosting the call. Couple of kind of obvious questions. In years' past, you've endeavor to give us a little bit of a high-level guidance for the year, not just in terms of utilization capacity and your capacity utilization, but also high-level EBITDA CapEx ideally broken out between Ukraine, Perutnina. If you're in a position to share your outlook today, that will be extremely helpful. I know that the situation is extremely fluid, still. And then number two, maybe either Anastasiya or Vik, if you can tell us a little bit about the change in cash since the end of March. I would have thought the redemption of the last of the bonds in early May should have been liquidity neutral events, since you drew down on the IFI facilities to clean up the bonds, so maybe the $90 million drop in cash from -- in the March to early June, if you could bridge that for us, that would be very helpful, Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 04, 2024 / 12:00PM, MHPCq.L - Q1 2024 Mhp Se Earnings Call

Question: Anton Anikst - Knighthead Capital - Analyst : That's helpful. Thanks.

Question: Stella Cridge - Barclays Capital - Analyst : Hey, there. Afternoon, everybody, and many thanks for all of the update. I wondering if I could ask about some of these changes that were introduced by the National Bank of Ukraine at beginning of May regarding access to FX for different purposes. I was wondering if you expected those changes to have any kind of positive effect for MHP or just how you view the potential impact of those changes, that would be great.

Question: Stella Cridge - Barclays Capital - Analyst : Do you have any subsequent discussions that have happened since these changes were announced with big companies like yourself with regards to, you know, future payments that you need to make?

Question: Stella Cridge - Barclays Capital - Analyst : Many thanks for the comments. That's great. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 04, 2024 / 12:00PM, MHPCq.L - Q1 2024 Mhp Se Earnings Call

Question: Vidhi Veera - Goldman Sachs Asset Management - Analyst : Hi. Congrats on the results. I just had like two questions. One was on the volume trends. So this quarter, we saw a decline, a meaningful decline in volume in both domestic as well as export markets. So just trying to understand what's driving this. Is it operational constraints or are you finding that the prices are not attractive? If you could give how that color and how that has progressed. And second one is on the $130 million cash which is outside of Ukraine, how much of that is at the European facility? And from what I remember, that cannot be used, right, to service the coupons? Thank you.

Question: Vidhi Veera - Goldman Sachs Asset Management - Analyst : And one more from my side, if I may, on the EBRD maturity profile, when does that start? I believe that there was an amortization plan, right?

Question: Vidhi Veera - Goldman Sachs Asset Management - Analyst : Well, thank you.

Question: Erica Ivy - MetLife - Analyst : Good afternoon. Thank you for taking my question. I was just wondering, have you started to think about the refinancing of the 2026 bonds. And given that you are more ties and with the more ties the IFI facilities, that would create some headroom. So possibly, would you use the IFI facilities to refinance also the '26 bonds?

Question: Erica Ivy - MetLife - Analyst : And sorry if I push a little bit more, could you possibly as well around the tender offer basically similar process to what you've done for the 2024 bond?

Question: Erica Ivy - MetLife - Analyst : Thank you.

Question: Dmitry Ivanov - Jefferies - Analyst : Hello, can you hear me?

Question: Dmitry Ivanov - Jefferies - Analyst : Yes, thank you very much, Anastasiya, Viktoria, for the presentation. I have three quick questions, if I may. The first one, if it's possible, just to give us more color on the available facilities that are available for MHP to draw down. So, of course, it includes $80 million CapEx facility from the IFI. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 04, 2024 / 12:00PM, MHPCq.L - Q1 2024 Mhp Se Earnings Call But could you kind of give us a number of what is available in terms of the financing your working capital needs and et cetera as of the latest available date, if possible? So it's like my first question.

Question: Dmitry Ivanov - Jefferies - Analyst : (multiple speakers) remember the total number available?

Question: Dmitry Ivanov - Jefferies - Analyst : 200. And what's -- is it like available like for one year? Like for two years? Like what's like availability period for this?

Question: Dmitry Ivanov - Jefferies - Analyst : One year, I understand. Second question would be on CapEx. Again, like you already provided like numbers and the CapEx guidance, $300 million-plus. I think you also specified on the last call that it includes your M&A, potential M&A. I would kind of just try to understand this number, like $300 million-plus is quite material and significant number for the company if we look at the historical CapEx outflows. So is it fair to assume that this CapEx will go down, for example, next year when you -- when these projects that you mentioned completed? So basically like what kind of more sustainable level of CapEx for the business once the company completes this project?

Question: Dmitry Ivanov - Jefferies - Analyst : Yeah, understood. But looking at all in CapEx, including these projects, should we expect some reduction in CapEx spend next year? Like should like number be below $300 million all in?

Question: Dmitry Ivanov - Jefferies - Analyst : Thank you very much. And final question, apologies, you also mentioned it already. But regarding this new National Bank of Ukraine rules, right? So basically, you mentioned that the new rules do not bring any benefits to the business, right? So basically just correct my understanding, but if we read like official press release, I think like the National Bank of Ukraine allows Ukrainian corporates to service interest on the old external debt. So basically they're allowed to use onshore liquidity to service. But you mentioned that it didn't bring any benefit to the business. Just wanted to clarify if this was [restrictive] of this or new rules by the NBU, allowed the company to service a coupon and interest on the on the offshore debt.

Question: Dmitry Ivanov - Jefferies - Analyst : Thank you very much.

Question: Konstantin Chinarov - Aptior Capital LLP - Analyst : Hi guys. Thanks for taking my questions. Firstly, could you please remind us how much debt you have in Perutnina facility right now and what is the maturity of that debt? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 04, 2024 / 12:00PM, MHPCq.L - Q1 2024 Mhp Se Earnings Call

Question: Konstantin Chinarov - Aptior Capital LLP - Analyst : So $130 million and then $80 million of cash on the balance sheet there?

Question: Konstantin Chinarov - Aptior Capital LLP - Analyst : And what's the maturity of that debt and is it the bank debt or some kind of other facility?

Question: Konstantin Chinarov - Aptior Capital LLP - Analyst : For three years from now, okay (multiple speakers) Got it. And then excuse me, maybe I missed the point, but could you please again clarify, CapEx guidance of $300 million to $350 million looks very high compared to historicals. And you know, obviously, you mentioned that maintenance CapEx is $100 million. So on top of a $100 million, $200 million to $250 million, that's expansion CapEx and if you could clarify what you're planning to build and any color on that would be helpful.

Question: Konstantin Chinarov - Aptior Capital LLP - Analyst : Got it. Got it. And so when I think about sort of your guidance of $400 million EBITDA, $300 million to $350 million CapEx, historically, cash tax was let's say $10 million and leases were $15 million. So that leaves relatively limited cash flow to service indebtedness and cash interest is likely to be $150 million. So how to think about that in terms of in terms of liquidity of the business? Maybe you expect to release of working capital or if you could sort of explain you're thinking about liquidity of the company for the rest of the year? And any color on the working capital would be helpful. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 04, 2024 / 12:00PM, MHPCq.L - Q1 2024 Mhp Se Earnings Call

Question: Konstantin Chinarov - Aptior Capital LLP - Analyst : Got it. Got it. So $200 million and that's the minimum level to run the business from your perspective?

Question: Konstantin Chinarov - Aptior Capital LLP - Analyst : Got it. All right. All the best. Thank you.

Question: Stella Cridge - Barclays Capital - Analyst : Hi, there. Many thanks for taking the follow up. If you don't mind, I also just want to ask on the amortization payments of the IFIs and just what your base case is. Is it that you would plan to pay those out of the Ukrainian cash balances because you have the carve out? Or is there any option with the IFIs to, say, roll over the final maturity or extend that a little bit? Just want to get a sense of what the base case on your cycle.

Question: Stella Cridge - Barclays Capital - Analyst : Okay. That's great.