Welcome to today's event, where we have the pleasure to present MPC Energy Solutions. To help us through today's presentation, we are joined by CFO and Interim CEO Stefan Meichsner. Today, the Q1 report. Had a look at it this morning. It looks pretty solid. Martins, are we really coming up on your projects level? And cost cutting also seems to have done something. You are sure you will go into that more. You are very much encouraged to ask questions in the box down below during the presentation. To start with, we will take the main part of the presentation and the Q&A in the end. For now, I will hand the call over to you, Stefan.
Michael, thank you so very much. Good morning to everyone joining us here today. I'm very proud to report that indeed, like Michael said, it was a very good first quarter to us. In many aspects, it was the best quarter that we've ever had. Among the key highlights and key metrics is certainly that for the very first time in our company's history, we reported positive consolidated group operating profits. This is a big milestone for us. It's also not really a surprise. It is merely, let's say, the result of all the hard work that we put into the past 18 months, where we focused on improving the performance of our projects. We cut overhead costs. We removed legacy obligations from our balance sheet. We did a lot to make this happen. Naturally, we don't want to stop here.
It's supposed to continue on like this in the coming quarters. Before I dive into some of the details for the first quarter, I'd just like to emphasize again what we're trying to do this year. Basically, what are the headlines I want you to read about our company during 2025? The top priority, firstly, is, of course, we want to connect our project San Patricio, which is a 66 MWp PV plant in Guatemala, to the grid on time. By on time, I mean we want to deliver first power in July of this year. Construction is going extremely well. We are still on budget. We aim for the mechanical completion of the works in the coming four to five weeks. With the testing and commissioning, we should be ready to inject electricity into the power grid in July.
This is clearly a top priority for us and something that we want to accomplish. So far, it's looking very good. Secondly, we also want to generate positive project cash flows, free cash flows for the group, in turn or in part driven by the improved project performance and the related operating profit and margins we see there. We also want to reduce costs further. We've implemented additional cost reduction measures in Q1, which will become visible throughout the year. We will remain very selective on what we spend our money on when it comes to new developments. Lastly, we want to further increase our free cash position, in part driven by the cost reductions that we do, but in particular by divesting certain projects and by also starting to collect more cash from the operating assets that we have.
These are the three big objectives that we have. The overreaching goal while we are doing this is that we want to start returning cash to shareholders. We are now in the fifth year since our IPO. We've done a lot of work. There was a lot of good stuff. There was some bad stuff. Overall, I think we're now in a position where we can start, where we can let our investors participate in the future success through the stock appreciation, but also by actively distributing cash to shareholders. This is why we want to achieve these sub-objectives so that 2025 is the year when we will start returning money to shareholders.
Now, looking at the Q1 results, I think the main message here is that we see improvements across all key metrics that we track, whether it's energy output, revenue, operating profit, operating margins. Year- over- year, we have seen improvements. That is despite the fact that we actually currently operate fewer projects than we did in 2024 in the comparable period. As some of you may recall, we sold our project in Puerto Rico in last December. If you look at the like-for-like comparison, the increases are even more substantial. We have implemented further cost reduction measures, including headcount reductions in January of this year. In part, that is already reflected in the Q1 results, as you will see. The true visibility of these measures will become visible in Q2, Q3, and subsequent quarters.
As I also mentioned, the construction in Guatemala is progressing very well, on time, in budget. Currently, there is no reason why we shouldn't deliver first power in July. The divestment progress that we are seeing in Colombia is also taking shape. It's taking a long time. Everything's taking a long time in this part of the world when it comes to certain transactions. We have signed an agreement in Q1 to sell one of our development projects. The remaining purchase or sales price, I should say, for that will be paid next week. That process is closed in the short run. On selling our operating projects, we have a bit of a different picture. One of it is progressing very well. We have accepted an offer. We're now working on the transaction documents. We hope that we can close that transaction in the coming months.
We do not know how much time it will truly take because at the end of the day, there are also government authorities involved. You have to make certain filings. You get certain approvals. It is nothing that we control ourselves. Nonetheless, the target remains or the objective remains to sell our remaining assets in Colombia in the, let's say, next six months. Currently, we are on track to make that happen. These are the summary of the highlights. Looking a little bit deeper, as I mentioned, across the board, improvements. Energy output is up. Revenue is up. Project EBITDA and the corresponding margin is up significantly. This, for me, is really the key metric. If you look at the EBITDA margin, we nearly improved by 10% points year- over- year. The output of the plants is better.
We really also reduced costs on project level, which is paying off. We are now seeing that we can operate at margin levels that I would consider normal or standard, absolutely achievable for the industry that we are in. If you then look at what the increases and the improvements look like, if you remove the impact of the plant that we sold in December, which it had on last year's numbers, I think the like-for-like comparison is even more respectable. Overall, really, Q1, an outstanding quarter for us from a mere operational performance. This was mostly driven, as it has in previous quarters, by the results that we are seeing out of Mexico and El Salvador. These two projects are currently doing the heavy lifting. In Colombia, we also saw improvements. The market simply remains much more challenging.
On the one side, we have security concerns in several areas of that country. We need to spend more money on keeping our staff on site and also the site itself safe. The spot market is still, I would say, distorted, which affects our energy trading that we have to do to service our PPAs. At the same time, we've turned a small trading profit compared to last year. That's what most of the margin improvement for our project comes from. Colombia is still a little bit of an, let's say, outlier. This is also why we believe the assets will do much better in the hands of local investors. That's what we're working on. I think certain problems can only be solved by a certain type of investor and not by us as a European company invested in Colombia.
Another key metric here, I already mentioned that overhead costs are supposed to come down further. They already did in the first quarter by 5%. This is, of course, not the level that we want to see overall. We're targeting much higher reductions, even though we already reduced costs last year by 30% compared to 2023. We're aiming for additional reductions this year. We reduced our headcount. Of course, that means we had to make certain severance payments, et cetera. That's why in Q1, you don't see the full effect yet. Come Q2 and the subsequent quarters, you will see that overhead costs will come down again compared to 2024. Finally, another key metric here is the free cash position. At the end of March, we were looking at $3.3 million.
This picture is a little bit incomplete because from certain sales of projects that we've already done, like in Puerto Rico and Colombia, we are still expecting parts of the sales prices from these sales. The total is around $1.6 million, which we will collect next week and then also throughout the year. If you add that expected cash here, then the actual number is actually a little bit higher. If I then look at the lower cost base that we now have, if I look at not having any additional project commitments and capital commitments, it is very clear that we are very, very solidly financed at the moment. Whatever money is coming in now from additional project divestments, we have the room. We have the liberty to distribute that to shareholders. The consolidated numbers tell the same story. Revenues are up. Profits are up.
Margins are up. There is really no surprise here. Overall, the positive consolidated group EBIT we showed in Q1, this is something we want to repeat, not just for the second and third quarter, but actually for the entire year. At the moment, I do not see why we should not be able to do it and improve it further as 2025 progresses. The story of our balance sheet is also very much unchanged. We have still a relatively high equity ratio compared to our peers. We have sufficient cash also on a consolidated basis. Actually, the earnings per share this year, this first quarter, were basically zero. I think the bottom line was that we lost around $1,500 net loss on a total group basis.
Also, clearly, if you look at the total result for 2024, this is a significant uptick that we want to maintain. I would say overall, the Q1 results are very, very good. We want to continue to perform as we have in the past three months so that 2025 can actually become a record year for our company. Which brings me to the question, what will happen in 2025? What is the outlook? Before I get into some of the numbers, just a brief update on the construction progress in Guatemala. Here you see some impressions on the left side. The solar plant itself, the module installation is roughly 80% complete. The module tracker installation is complete. The teams are working hard on the drainage system and the cabling to get everything ready for testing and commissioning.
Of course, there it will become very relevant to coordinate well with the substation operator. You see the substation here on the bottom right. It is already mechanically completed. They, of course, also have to do testing and commissioning. They have to get the communication equipment and protocols ready. The alignment between the two test phases is ultimately what will drive the ultimate point in time when we can connect. At this point, at this moment, it is projected to be July of this year. I have said this in the past, and I cannot repeat myself often enough, I think. The project alone, which we own 100% in and which we will keep 100% in for the moment, itself will generate over $8 million in revenues at an 80% EBITDA margin.
The positive impact this will have on the total group figures without us having to add additional employees or increase overhead in any shape or form cannot be understated. It will be very, very positive. Which is why some might question, why are we not seeing that impact in your projections for 2025? I think you're seeing it if you look a little bit at the details. In our projection, our current guidance for the year, we're not considering any contribution from the Colombian projects, even though, of course, they are having an impact. We're taking a conservative approach. We're saying, no, we're just looking at the project Mexico, El Salvador, and what Guatemala will deliver in the six months of operation that we will see from it this year.
It shows that Guatemala will compensate for everything that we've already sold or not considered in the forecast. At the same time, profits, both in absolute and margin terms, will be much higher because Guatemala is just trading or expected to trade at a much higher operating margin than what we've ever seen from Puerto Rico and Colombia. We will revise this guidance as we go forward. After the second quarter, we will certainly see an updated guidance. I would expect that the guidance is a bit more positive than what we already show here. For now, we remain conservative. We still need to get the construction done. We are really on track. Overall, aside from the first quarter, I think 2025 is looking very good. I am very positive that we can deliver on these projections and maybe even beat them going forward.
Actually, Michael, that was it when it comes to my third remark. Happy to take any questions you or the audience might have.
Yeah, maybe you already actually answered it. Will you return capital to shareholder when, if the Colombian projects are sold?
Yes. How much depends on two things. We know what the final purchase price will be. There's still a question on the FX rate, but that is neglected. Yes, once the money comes back, we want to turn around and distribute cash more or less immediately. We have to go through some of the motions, like taking certain resolutions, making sure that we comply with Dutch law, Norwegian law, et cetera. It will happen in 2025.
I know you can't tell it, but any thoughts?
Share buybacks, dividends, what makes most sense with the current share price or maybe the liquidity in the share?
My personal view, also after having consulted with our legal advisors, is that I think share buybacks, they require approval from the general meeting. They need to be exercised in a certain way. I am not super fond of going through that process right now. Paying dividends on profits is only possible if you show a profit, which we did not do in the past. I think the most likely way is that we will tap into the legal equity reserve that we have, out of which we can make distributions. We do not have to ask shareholders for approval. We can just decide to do so. For most of the shareholders, this should also be tax neutral. I think this is the way that we will choose.
If we want to cash money out of the company, we will distribute it out of the legal reserves and making sure that we retain enough money to pay our bills and to make sure we can meet obligations in the future.
You mentioned $1.6 million for one of the Colombian projects. I know you can't put a figure on it. You're still negotiating. Can we get some kind of a sense of a feeling about the total value of the Colombian projects? Just give a wide range. I don't mind. Just to get a ballpark on what they might be worth if you're successful selling all the Colombian projects.
Yeah. Just to be accurate, the $1.6 million is only in part associated to Colombia, to the development project there that we already sold. There is also some money still pending from Puerto Rico.
In the $1.6 million, I did not consider anything from our other Colombian projects. If I take those, the book value of both projects at the end of 2024 was combined around $17 million. That is what we are aiming to get. Whether we will ultimately get there depends on a lot of factors. I would also not expect a significant discount to that number. Depending on how operations go this year and how long it takes us to complete the sales, I want us to get close to that number because we believe the book value is a fair value representation. We really do not see why we should sell for significantly less.
You already maybe gave a little hint. Have you negotiated on selling any of the development projects that you do not want to develop yourself? How many projects do you actually have on your books?
Development projects probably meant.
We scaled down development activities significantly, of course. We now sold the one project that we had left in Colombia. As I said, that sale has been agreed on. We've already collected part of the sales price. The rest will be paid in the coming days. There are only two other active developments in our group. The combined capacity of these two is around 90 MW. One of them is in El Salvador. One is in Guatemala. It doesn't take us a lot of money to continue developing these projects slowly. We have land and the interconnection secured in El Salvador. We are working on a power purchase agreement for the one in Guatemala. Again, this requires very, very limited spending. If we progress the development, they could be ready to build in 2026.
At this time, I don't think that we would build these projects ourselves. We would sell them. We have not agreed to sell to anyone.
What will the run rate and cost overhead be from Q2 and onwards? If you can give us some kind of a ballpark, you said you had some one-time cost also in around those $900,000. A ballpark, what we should expect. I know it can swing between quarters, but just a ballpark.
No, that's fine. I mean, the overall overhead this year, in the best case scenario, I want to lower them by around $1 million compared to last year. Last year, we had $3.6 million. This year, we are aiming for $2.6 million.
If you reduce it by the $900,000 we had in Q1, I think you're getting at around $600,000 per quarter that we want to spend on overhead going forward.
Do you expect to do more farm downs in 2025 on the remaining projects?
It's a very good question. Let's say this. Once we've sold Colombia, what will remain is Mexico, El Salvador, and Guatemala. That's the core portfolio. That's a little bit over 100 MW in install capacity. For me and my mandate, and the mandate, I think, is to create shareholder value. The question is, is it worth more to the shareholders if we keep operating the assets? Or should we sell them? I think that always depends on what's the offer. When I continue operating the projects, I know what I'm going to get. The projections are fairly easy to do.
I still have certain risks. I have technological risks. I have default risk of the off-taker. I have certain interest rate risks in some of the projects. I am perfectly comfortable with it. This is our business. If somebody, an interested party, calls me and says, we're interested in the project, I will listen because there comes a point when you have to admit selling now is probably the better deal compared to continuing operations and keeping on that risk. That said, I think asset rotation is a normal part of a business. If the offer and the price is good enough and we believe it's in the best interest of the shareholders, we will sell a project. No project, whether it's Guatemala, El Salvador, Mexico, or whatever, is excepted from that. This is a general rule that we follow.
The top priority now is Colombia. I'm not ruling out that we will divest more projects if the price is right.
Perfect. Yeah. I think in the past, you talked a little bit about the Guatemala, maybe to take a 50/50. I guess you have already answered it. If someone comes with a better offer than the risk you and the return you need to take, then it's that. There's a question. Are the Q1 margin levels on the El Salvador plan sustainable going forward? I think you always indicated for me that you should be around 80% in a solar project, in a good solar project. I think you hit 87% here. Is there something?
The funny thing is I asked our team the exact same question. I said, did we forget to recognize any costs here? They said, no, no, no.
This is in line with our budget. This is what we can expect. I think it's quite extraordinary. It's in part driven by the fact that energy prices, to which we trade at a discount to certain reference tariffs in the market. I think these prices are just relatively high. I think 87% is quite exceptional. Even if it's in line with our budget, I would not consider this something that I'm comfortable promising for every single quarter. It's really good. We want it to be that way. It feels a little bit out of the ordinary to me also. We'll see. After Q2, we will know more. I might be more comfortable promising this for the future.
I have a question. Let me just jump a little bit too. It's me jumping now.
It's not that I'm going crazy. In those, what we might say, 2025 budget plan or something like that, when have you included the Guatemala project from? Because I guess it being built finished, it's being ready technical, doesn't always guarantee that in those months you also start selling. A little bit on a fine idea. I always think you alluded to me that can you wait a little bit, Michael, come back next time and then ask me because then we know better. Can you indicate when you have taken the projects with you?
We have considered roughly six months, a little bit less than six months of production. Basically, let's say middle of July. If it is delayed further out, which I don't think it will, but let's say it is, that, of course, would normally impact the projection.
Then we come back to Colombia, which we have not included. By the middle of the year, Colombia might still be there. That would compensate for any delay that we see in Guatemala. That is why we are making a very conservative forecast. Even if Guatemala does not connect in July, but only in August, that month of missing revenue and profits will be overcompensated by us still having the Colombian assets, which to date have contributed positively and will continue to do so until they are sold. I think that is really not an issue at the time.
Of course, cash flow-wise, you can always calculate the risk.
Are you seeing any deals in the regions where you are, Guatemala, the places where you want to be that you see prices on a gigawatt or on, you might say, project a bit that gives you confidence in the values you have in your book? It's always nice to see things trade in a region. I don't know whether you can share some with us, but a little bit about your thoughts, whether you are seeing actually some deals being done in the regions where you are.
Oh, yeah. I mean, we've recently seen a large deal in Colombia where I think a Scandinavian investor divested almost 700 MW portfolio. We have a good indication of what is being paid for that. We are seeing it in the own offers that we receive. That's not really a surprise.
In all the other countries, there is deal activity. We have received, let's say, proposals in the past for our project in El Salvador, Guatemala. It is very clear that if you just look at a per megawatt valuation, development fee only. I am not talking about construction equity or whatever. We are talking comparatively close to six digits, so almost $100,000 per megawatt on a ready-to-build development project in Guatemala and El Salvador and Panama, for example. We have a good view on this, I believe. I think, especially for the project in Guatemala, for the project in El Salvador, if we were to sell it, we should collect a substantial upside to the book value that we have. This is a different story than what we are seeing in Colombia, for example. I cannot pinpoint to an exact transaction.
I'm very comfortable that if you look at our financial statements, you see that there is an equity value of around $50 million. I think that is a fair value for what the projects are worth.
Check. Yeah. I think that was the last question. Thank you for you, Stefan, for taking us through your results and answering questions. Thank you for the audience listening in.
Any time. Thank you.