Enel (BIT:ENEI) Chile (ENIC) has announced a significant increase in financial performance for the first nine months of 2024, with earnings before interest, taxes, depreciation, and amortization (EBITDA) soaring to $1 billion—a 46% rise from the previous year. Net income also showed a robust increase, jumping 62% to $446 million. These results were largely attributed to favorable hydrological conditions that boosted hydro generation by 20% and a strong generation mix.
Key Takeaways
- Enel Chile's EBITDA increased by 46% to $1 billion in the first nine months of 2024.
- Net income rose by 62% to $446 million, driven by improved hydrology and generation mix.
- Hydro generation grew by 20% year-over-year, with the company expecting to end the year with 13 terawatt-hours of production.
- The Los Condores hydropower plant is nearing completion and is expected to contribute 150-200 gigawatt-hours annually.
- Enel Chile executed a $630 million factoring deal related to regulatory receivables.
- The company is engaged in discussions regarding electricity subsidies and potential green tax increases.
- A new strategic plan focusing on renewable energy will be unveiled on November 21st.
- Financial guidance remains strong, with EBITDA expected at the upper end of the $1.3-1.5 billion range and a net debt to EBITDA ratio below 3 times.
Company Outlook
- Enel Chile's new strategic plan for 2025-2027 will be presented on November 21st, emphasizing the company's commitment to renewable energy.
- The distribution segment has faced challenges due to extreme weather events, potentially influencing future regulatory discussions.
- The company's financial guidance is confirmed, with expectations to hit the upper end of the EBITDA forecast and maintain a net debt to EBITDA ratio below 3.
Bearish Highlights
- Challenges in the distribution segment were noted, which were compounded by extreme weather conditions in August.
Bullish Highlights
- The company's focus on renewable energy is strong, with 77% of its 8.7 gigawatts of total installed capacity being renewable.
- The near completion of the Los Condores hydropower plant is a positive development for the company's generation portfolio.
Misses
- No specific misses were reported in the earnings call summary.
Q&A highlights
- CEO Giuseppe Turcierelli highlighted the impact of better hydrology and new technology on improving margins.
- Turcierelli confirmed expectations to close the year with around 13 terawatt-hours of hydro production.
- Long-term hydro generation estimates remain around 10-11 terawatt-hours per year according to Turcierelli.
Enel Chile's impressive financial results reflect the company's ability to capitalize on favorable hydrological conditions and its strategic focus on renewable energy. With the anticipated completion of the Los Condores plant and the upcoming strategic plan announcement, the company appears to be positioning itself for continued growth in the renewable sector. The factoring of regulatory receivables and active engagement in policy discussions demonstrate Enel Chile's proactive approach to managing its regulatory environment and financial stability. As the year closes, investors and stakeholders will be watching the company's progress, especially in relation to its guidance and strategic objectives for the coming years.
Full transcript - Enel Chile SA ADR (ENIC) Q3 2024:
Carmen, Conference Call Operator: Good afternoon, ladies and gentlemen, and welcome to Enel Chile 9 Months and Third Quarter 2024 Results Conference Call. My name is Carmen, and I will be your host for today. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Please be advised that today's conference is being recorded.
During this conference call, we may make statements that constitute forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward looking statements reflect only our current expectations, are not guarantees of future performance and involve risks and uncertainties. Actual results may differ materially from those anticipated in the forward looking statements as a result of various factors. These factors are described in Enel Chile's press release reporting its 9 months and third quarter 2024 results, the presentation accompanying this conference call and Enel Chile's annual report on Form 20 F included on the risk factors. You may access our 9 months and Q3 2024 results press release and presentation on our website, www.enl.cl, and our 20 F on the SEC's website, www.sec.gov.
Readers are cautioned not to place undue reliance on those forward looking statements, which speak only as of their dates. Enel Chile undertakes no obligation to update these forward looking statements or to disclose any development as a result of which these forward looking statements become inaccurate, except as required by law. I would now like to turn the presentation over to Ms. Isabella Clemens, Head of Investor Relations of Enel Chile. Please proceed.
Isabella Clemens, Head of Investor Relations, Enel Chile: Good afternoon, and welcome to Enel Chile 2024 3rd Quarter 9 Months Results Presentation. Thanks to all joining us today. My name is Isabella Clemens. I'm the Head of Investor Relations. Joining me today are CEO, Giuseppe Turcierelli and our new CFO, Simone Conticelli.
Simone is a nuclear physics and holds an MBA from Louis University of France. He joined the Nel Group in 2006, working in the administration, finance and control of Enel SPA. From 2018 to 2022, he was in Chile as the CFO of Enel Genelacion Chile. Before becoming CFO of Enel Chile, he killed the position of CFO at Slovenske Eletrean, another company within Enel Group. Our presentation and related financial information are available on our website, www.nl.cl, in the Investors section and our app Investors.
In addition, a replay of the call will soon be available. At the end of this presentation, there will be an opportunity to ask questions via phone or webcast chat through the link Ask a Question. Media participants are connected only in listening mode. In the following slides, Giuseppe will start the presentation with our key highlights of the period. He will then cover updates on our portfolio and regulatory context.
Finally, Simone provides an overview of our business economic and financial performance. Thank you all. And now let me hand over the call to Giuseppe.
Giuseppe Turcierelli, CEO, Enel Chile: Thank you, Isabella. Good afternoon, and thanks for joining us. Let's start the presentation with our main highlights of the period on Slide 2. During the 1st 9 months, our hydro portfolio performance was very robust, with hydro generation increasing by 20% compared to last year. This improvement was due to higher reservoir levels at the beginning of the year, influenced by the El Nino phenomenon observing the previous year and a solid rainy season this year.
This resulted in an efficient generation portfolio mix for the period. We are pleased to announce that the Los Condores project is nearing completion. After several years of construction, the project has reached the pre commissioning set. We expect Los Condores to be connected to the grid by the end of the year. As everyone knows, an extreme climate event severally impact the central and southern parts of the country, including our concession area in the metropolitan region.
Further in the presentation, I will give you more detail to you regarding the enforceable and irresistible climate issue, events that affected our distribution segment. On the regulatory side, we have some important news to share. The factoring related to the PAC-three receivable was successfully executed last week. We have carried out the factoring totaling $630,000,000 The P and P decree for the 2nd semester was published on October 5, which will result in a lower PEC accumulation for the year end. And the draft bill for the electricity subsidy for vulnerable customer is still under discussion.
Today, the Energy Commission is renewed to evaluate government proposal. I will give you more color to these topics during the presentation. Regarding profitability, I'm glad to announce that our EBITDA and net income results were better than last year figures, fully confirming our guidance for the year. We achieved a positive FFO, even though during the 1st 9 months of this year, we recovered only a small portion of receivable related to the fact. As I mentioned before, much of the recovery of the PEG III receivable was made through the factoring executed last week.
So we will see them in the presentation of the full year results. And finally, for the 2024 9 months results, we present a strong and sound level of liquidity. I will provide more details on this later. Now let's look at some updates on the hydrological situation on Slide 3. In addition to the positive hydrological condition during 2023 that allow us to have greater water availability this year, higher than expected rainfall recorded during 2024 has allowed us to increase our hydro production, exceeding 20% in the same period of 2023.
Therefore, during the 1st 9 months of 2024, we have accumulated 1.6 terawatt hour of additional hydro generation compared to last year. The hydrolysis situation in our reservoir is also very positive year to date compared to the last year figures, particularly in the South. In fact, with the water accumulated in our reservoir today, we have sufficient availability to supply our energy demand until the end of this year, even with the possibility of La Nina phenomena in November December. It is worth mentioning that there's no melting season has already started. Unfortunately, there has been rainfall and a rapid increase in the temperature in the south, generating increases in the affluent flows of the river.
In fact, we had to carry out these charges in Peguentes power plants a few days ago and on October 24 in the Ralco and the Pangaea power plants as well. Of course, this manual were coordinated and previously informed to the competent authority and the communities. Based on this fact, we have updated our hydro generation estimate to approximately 13 terawatt hours for 2024 and 3.3 terawatt hours for the 4th quarter, of which we have already produced 1.3 terawatt hour. Let's move to the next slide to review how we continue improving our portfolio on generation assets. We continue consolidating our renewable capacity through a diverse portfolio of projects distributed across various country region.
This year, we increased our exposure to battery energy storage, the best system. In recent months, we received authorization from the National Electricity Coordinator to begin conversion operation of 101 Megawatts associated with the 2 projects, El Manzano Base located in the metropolitan region of Santiago and La Cabana Base located in the south of Chile. Considering this latest authorization from the coordinator in 2024, we initiated the commercial operation of a portfolio equivalent to 5 11 Megawatts 1735 Megawatts since 2023. In this 9 month period, we reached a total net installed capacity of 8.7 gigawatts, of which 6.8 gigawatts are renewable, representing 77% of the total. As good news, the Los Condores hydropower plant had significant update in this period.
We have concluded the filling of the tunnels and started the pre commissioning test. We expect to be connected by the end of the year. Now on the next slide, we will review the performance of our generation KPIs. Net electricity generation totaled 18.6 terawatt hour as of September 2024, exceeding by 6% the production during the 1st 9 months of 2024, mainly due to higher hydro and renewable generation, resulting from the improved hydrology this year and the operation of new projects. During the Q3 of 2024, net generation decreased 8% to 6.5 terawatt hour, mainly due to better hydroelectricity recorded during the same period of 2023 and lower thermal dispatch during the Q3 2024, partially offset by greater wheel generation.
Our energy sales totaled 25.3 terawatt hours as of September 2024, 9% higher than the level recorded in the 1st 9 months last year, resulting from higher sales to both regulated customers and free customers. Our commitment with our clients were fulfilled with a higher portion of our renewable generation, which also led us to lower energy purchases in the spot market. During the Q3 of 2024, physical energy sales grew by 8% to 8.4 terawatt hour, mainly due to higher sales to regulated accounts from customers. In terms of our bans, during the 1st 9 months of the year, we increased our purchases from 3rd parties by 2 terawatt hours as part of our continued effort to diversify and optimize our energy sources. Now I would like to take a few minutes to talk about the extraordinary weather events of the last August.
I would like to present this slide to discuss the extreme weather events that impacted the country and not just our concession area, which impact was higher than the earthquake occurred in 20 20. On August 1 and 2, the metropolitan region of Santiago was severely hit by an extraordinary and unpredictable storm with wind of up to 124 kilometers per hour, significantly exceeding the forecast and warnings issued by authority and technical experts. This storm caused the fall of more than 2,000 trees, over 1,000 utility poles and large branches, which destroyed part of our electricity distribution network, causing widespread power outages. The damage is comparable only to death caused by the airport, as Craig already mentioned. NN (NASDAQ:NNBR) Digital Socion Chile deployed all available resourcing going much farther than required by Chilean analytical legislation and it adopted extraordinary special measure to restore power to its customers as quick as possible.
Reaching this amount of fuel was only possible as part of Eleni Group. We have requested support and received more than 100 technician experts in this type of event coming from different parts of Latin America and Europe. Furthermore, it is worth noting that for this weather event, we spare no expense to recover and normalize the power supply, which makes possible. This is reflected in the number of field crews, 383 crew at the peak of the event versus 108 considered in the reference model company of the current tariff. Establishing the system was extremely difficult, And we have already submitted to the local regulator and the course there is the stability and unpredictability of this event.
Therefore, we clearly see a 4th major climatic event, the severity of which exceeded all the possible measures to be adopted under the Xilena Electric legislation. It will appear clear to all the different stakeholder in Chile once the pertinent data will be disseminated. As Enel, we have been working on proposing different kinds of regulatory model to make the regulatory and physical system more resilient to future weather events. We clearly understand that it's urgent to modernize and digitalize the Chilean analytical distribution system. Now I would like to talk about some regulatory framework milestone in the next slide.
As you may recall, during last call, we indicated that in January this year, the Minister of Energy presented the bill related to the energy stabilization mechanism, which departs of continuing the fact mechanism in mitigating the project itself increase for parent customers. At the same time, they also aim to improve the client protection mechanism known as the MPC mechanism to allow gradual repayment and accumulated debt to the generator and establish a transitory subsidy for the most vulnerable clients. This new law was discussed and approved by the Chinean Congress in April and came into force at the end of April. Following this, the first half and the second half E and P decrease were published and the regulated tariff was updated. After the publication of the second half decree, all clients, including that with the consumption of less than 3 50 kilowatt hour, which are basically also also are paying the regulated PPA real price.
The consequence of this is that no further debt will be accumulated during the tariff stabilization, an outcome that has not been achieved since 2019. This shift marks a critical step towards financial stability, reflecting significant change in managing tariff related obligation. After the issuance of the sovereign guarantee decree as well as the complementary set of rules and the regulation to the new law, the factoring was executed. We were able to factor $630,000,000 last October 2024. As of September 2024, we had an account receivable related to the fact already net of factoring and including readjustment and interest of around $1,100,000,000 approximately.
So taking into the new factoring realized in October, we are expecting to the end of the year with accruals in the range of $500,000,000 up to $550,000,000 Let me go to the right side of the slide, where we will recall the main topic related to the proposed law the government is introducing to increase the subsidies, which currently cover 1,200,000 families to reach approximately 4,900,000 families, representing the 40% of most vulnerable families in China. Now Congress is discussing with the executive authorities, potentially increasing this benefit to increase the number of the family supported by these subsidies. Currently, the Energy and Mining Committee of the Senate is deliberating on the matter, which including general terms, doubling the green tax emission from the current $5 per ton of CO2 emitted. For reference last year, we paid around $15,000,000 related to it. Allocating the additional DST revenue that the treasury is collecting due to the increase in the tariff, doubling the fines imposed by regulator and allocating them to support the subsidy fund applying new charges to the small and medium distributed energy units known as
Simone Conticelli, CFO, Enel Chile: PNGDs.
Giuseppe Turcierelli, CEO, Enel Chile: As Enel, we support the government effort to find alternative to assist the most vulnerable families in the country, especially in light of potential economic challenges. However, we have observed that over the years, government solution have often disrupted the market. The same company that have been impacted by various regulatory measures since 2019 are once again being called Apple (NASDAQ:AAPL) to support these subsidies mechanisms. To maintain Chile reputation as a quality marketplace, it is crucial that such measures are reconsidered. Otherwise, we risk severally impacting long term investment, competitiveness and the health of energy sector.
Among the proposal, measure, we believe that allocating the additional VAT revenue is the most viable and sustainable option. To conclude, regarding distribution of BID 2024, 2028, there have been no significant development since our last call. Our perspective on the next step. In the process is detailed in the annex of our presentation. Now I will hand over to our CFO, Simone Conticelli.
Simone Conticelli, CFO, Enel Chile: Many thanks, Giuseppe, and good afternoon, everybody. First of all, I would like to tell you that it's a pleasure for me to join MH Chile. And now let's move to economic and financial performance. During this 9 month period and the Q3 of fiscal 2024, our results continue to demonstrate a solid economic and financial performance. Let me begin with a quick summary of the main figures, which I will detail in the following slides.
Both 9 months 2024 and Q3 2024 EBITDA and net income recorded important improvement when compared to last year's indicator. This is mainly explained by a more efficient generation mix, thanks to better hydrological situation, coupled with an increase in our energy sales and better pricing. Regarding the FFO, the 9 month 2024 figure show a slight reduction versus last year, particularly in the Q3, mainly explained by a temporary negative effect from tax factoring operations and higher tax payments in 2024, primarily related to our Kaya transaction in October 2018. This trend is expected to be reversed during the last quarter of this year. Now on the next slide, let's review the progress on CapEx.
Our total CapEx reached $406,000,000 during the 1st 9 months, 15% lower than last year, considering the conclusion of several removal and storage projects over the year 2023 and beginning of 2024. 62% of the total CapEx amounting to $263,000,000 was related mainly to renewables and storage CapEx deployment and 22% equivalent to $92,000,000 was related to the lease. Asset Management CapEx reached $133,000,000 which represents 33% of our total CapEx. It increased by around 50% compared to the last year's figures. The reason for this increase can be found both in the generation and distribution business.
In the generation business, this increase of $29,000,000 is mostly related to maintenance activities in the Atacama CCGT power plant and in solar and wind assets. In the distribution business, the increase approx $16,000,000 is due to climate events, emergencies and maintenance related to fall in the low and medium voltage lines. Talking about development CapEx, they reached $227,000,000 a decrease of 32% compared to the last year figure, mainly due to the conclusion of renewable and best projects. And now let's move to the next slide where we have a summary of the Q2 EBITDA breakdown. In Q3 2024, our EBITDA was $405,000,000 which is $63,000,000 higher than the same period in 2023.
Referring to generation business, we had an increase of $68,000,000 thanks to a significant contribution from ETA sales. This is mainly due to higher volume, especially in regulated markets, as mentioned by Josef, and pricing effect mainly related to contract index session. Going to gas trading, we had a $11,000,000 margin increase coming from additional trading activities in Q3 2020 2, particularly the sale of LNG Cargo to Europe. Returning to Greece, the margin is higher by $5,000,000 mainly due to the increase of remuneration linked publication of the BRT 2024 regulatory report. This margin was totally offset by the extreme weather events including the force majeure events of August 1 and 2 that affected our distribution segment.
This generated $16,000,000 of additional OpEx and other expenses, mainly related to an increase in through dispatch, cost center facilities and generators, rent and operation. Let's move now on the next slide to review the main impact on EBITDA during the 9 months period. Our EBITDA reached $1,000,000,000 an increase of $300,000,000 representing a 46% improvement compared to the last year. I will start explaining the positive aspects. First, we had a great contribution of $250,000,000 in PPA sales, mainly related to higher volumes, particularly in the regulators market and PPA pricing in the 3 markets, mainly due to the index session, in line with the FX explained previously in the quarter.
2nd, industrial industrial sourcing had a positive impact of $123,000,000 This is mainly explained by lower variable production cost due to lower thermal generation because of the remarkable hydrology of the business. There is a positive contribution of $70,000,000 related to commercial success, mainly affected by lower prices associated with purchases in the spot market. This effect was partially offset by higher purchases from third parties and the impact of PPA renegotiation that benefited us in 2023. Then we have another positive effect of $23,000,000 from grid margin. This is mainly due to the grid remuneration linked to the publication on VAT 202024 by regulatory risk reporting.
As we have seen in the quarterly analysis, this positive effect was offset by the impact of less than weather events. The aforementioned positive effects were partially offset by a negative impact of $150,000,000 associated with the notable gas trading activities carryout during the 1st 9 months of 2023, amounting to approximately TRY 29,000,000 and a negative net debt of $15,000,000 mainly due to higher OpEx associated with new renewable projects, recognition of Trans Santiago business in Ipasses in 2023 for Enel X, negative impact of inflection across all the businesses. Let's move on to the next slide where we will review the net income evolution. Net income evolution. Our 9 month 2024 net income amounted to $446,000,000 62% higher than the last year figure, mainly explained by the EBITDA improvement.
Let me drive you through the additional assets for this 9 month figure. Returning to the depreciation amortization at BEST (NYSE:BEST), we have higher costs for $47,000,000 mainly resulting from higher depreciation in NFRI Power due to the new renewable capacity coming into operation and Chilean peso devaluation in the period. Higher bad debt accrual in Greece due to the rise in credit losses associated to the higher tariffs. Regarding financial results and equity investments, we recorded a $63,000,000 negative variation versus last year, mainly explained by positive exchange rate differences in 2023, higher financial expenses, mainly due to FX variation and lower financial income linked to lower average interest rate, partially offset by higher interest related to the tax receivables. Talking about income taxes, we have an increase of $42,000,000 mainly due to the weather results in the period.
This was partially offset by a lower cost related to the reconciliation of AKA assets and for sale in 2020. Focusing on the quarter, our net income increased by 3%. This is mainly explained by rising EBITDA contribution, lower tax expenses of $15,000,000 mainly due to lower cost for reclassification of Arkalia assets held for sale in 2023 and lower cost due to monetary correction. These positive effects were partially offset by, first, an increase in G and A and bad debt of $12,000,000 due to higher depreciation, mainly linked to operation of new renewable capacity in the IGC and an increase in bad debt, mainly due to a rise in credit losses associated to the higher tax. 2nd, higher financial expenses of $60,000,000 mainly due to positive exchange rate differences in 2023 and lower interest recognition related to PEC 2.0 in Q3 2024 versus Q3 2020.
And now let's move to the FXO analysis on the next slide. Let's review the composition of our FXR for the period and the main FX versus 2023. First, let me highlight that the 2023 FXR of 3 years have been adjusted by $310,000,000 due to tax paid on capital gains for the sale of Enel Transmission in 2020 RFFO in the 9 month period of 2024 reached $366,000,000 nearly in line with the same period of 2023. Excluding the 2024 tax payment for the sale of Arkady asset last year, our FFO, we have shown an improvement in versus last year. Year.
EBITDA in this 9 month period amounted to more than $1,000,000,000 showing a variation of $380,000,000 compared to the last year's figure. This is mainly due to higher PPA sales and positive performance in commercial and industrial sourcing as I previously explained. We have also already talked about the cumulative impact of the stabilization mechanism, which amounted to $313,000,000 This negative debt was partially offset by the execution of the IAB factoring related to PAX 2 and PAX 3, which amounted to $83,000,000 in the 9th month period. When we compare the total FX of FX, net of factoring for the 9 months of 2024 versus 2020 3, we see a decrease of $270,000,000 this year. However, this is only a temporary asset as we have already received an additional $630,000,000 in OpEx.
Working capital in the 9 month period showed a negative balance of $74,000,000 mostly due to CapEx payment related to 2023 renewables. Compared to the last year's figure, working capital impact on FX pro was positive for $84,000,000 mainly due to the higher accumulation of VAT tax credit in 2023. Income taxes negatively impacted our FFO by 160 $9,000,000 this period, primarily due to tax payment in the generation business in 2024 and taxes paid on the sale of Arcadia assets. Comparing income taxes paid in the 1st 9 months of 2020 24 to 2020 3, we see a negative effect of $163,000,000 This difference is mainly due to the tax payment of our Kallio operation in 2024, higher tax payment in generation business and lower recovery from previous periods. To conclude, financial expenses has a negative impact of $166,000,000 on the 9 month 2024 SSO, mainly due to the debt related expenses.
Once compared last year, our financial expenses decreased by $12,000,000 in the 1st 9 months of 2024 compared to 2023. This decrease may only due to the financial expenses related to peso Limon in 2020. Now let's take a look at our liquid and leverage position. Our gross debt increased by 8% to EUR 4,800,000,000 by the end of September 2024 compared to December 2020. This higher debt was mainly due to the effect of inflation effect and seasonality of generation business.
This increase in gross debt should reverse during the last quarter of 2024, considering the factory under the debt free mechanism, which took place on the last October 24, allowing us to pay an important amount in short term credit lines, taking advantage of our debt flexibility. The average terms of hard debt to maturity slightly decreased to 5.7 years by the end of September 2024 versus the 6.1 years seen in December 2023. And the portion at the fixed rate was 75% of total debt. The average cost of our debt reached 5.0 percent as of September 2023, slightly above the 4.9% recorded in December 2023, mainly due to the energy generation of the active bonds material in April 2024 for $400,000,000 at 4.25%. All in all, we can see a significant improvement in our leverage ratios.
In this attempt, our net debt to EBITDA ratio was 2.9%, demonstrating solid decrease versus last quarter figures. Regarding DBT, we are in a comfortable position to support our capital needs for the upcoming months and cope with the next year's maturity. Thank you all for your attention. And now I pass the floor to Giuseppe for the closing remarks.
Giuseppe Turcierelli, CEO, Enel Chile: Thank you, Simone. To conclude this presentation, I would like to give you the following closing remarks. Better hydrology and incorporating new technology such as optimization in hydro facilities and the development of battery in our portfolio have helped us to improve our margin. Also, our trading capabilities were also important in adjusting our sales portfolio, contributing to important margin in the period. As a result, we have delivered a more than solid operating and financial performance during the year.
We received around $713,000,000 through various factoring activities related to the fact, the larger part of which came from the last week operation, which reached $630,000,000 The proceeds will primarily repay short term debt, strengthening our balance sheet. As I mentioned, taking this new factoring realized in October, we expect to end the year with accrual in a range of $500,000,000 up to $550,000,000 Finally, to conclude, we want to invite you to the event of November 21, where we present the new strategic plan for 2025, 2027 to the financial community. More information will be provided in the coming year. Let me now hand over to Isabelle.
Isabella Clemens, Head of Investor Relations, Enel Chile: Thank you, Giuseppe. Let's now begin with our Q and A session. We will receive questions via phone and chat in the webcast. The Q and A session is open. Carmen, please you may start.
Carmen, Conference Call Operator: Thank you so much. And it comes from the line of Javier Suarez with Mediobanca (OTC:MDIBY). Please proceed.
Javier Suarez, Analyst, Mediobanca: Hi, many thanks for the presentation and I have three questions. The first one is on the guidance. If you can elaborate on the latest guidance that you provided to the market in terms of EBITDA, net income and also net debt, we should consider this guidance confirm and the implications of the fact that the company is increasing their hydro guidance to 13 terawatt hour this year when previous guidance were 12 terawatts hour. So any light on existing guidance could be appreciated. 2nd question is on the recovery of our regulatory receivables under the stabilization mechanism.
So the question is, can you update us on your latest expectation for the timing for the recovery of the pending amount? I think that on the previous conference call, you mentioned something like $200,000,000 in 2025 and the remaining portion in 2026 and 2027. Is that guidance still a good one? And the final question is on the your latest expectations on the publication of the new distribution tariff. I think that you mentioned during the conference call that there is no significant update.
So if you can give us some latest thought on when the final report should be unveiled. Thank you.
Isabella Clemens, Head of Investor Relations, Enel Chile: Okay. Thank you, Javier, for your questions. I will hand over to Josete.
Giuseppe Turcierelli, CEO, Enel Chile: Yes. Okay. Let me say that for what concerns the guidance, as you probably remind, last year, we present a range of EBITDA between 1.3, 1.5, and we confirm it. Of course, we're going to be in the upper side of the range, but we are confirming our guidance. Same confirmation for us concern the net debt to EBITDA ratio.
We're going to be below 3 times. That is basically our target. We feel comfortable with this ratio. And for what's concerned hydro, as you see in the presentation, we are expecting to close the year with 13 approximately 13 terawatt hour of hydro production. Let me say that already in October, the production that we're going to have at the end of the year.
For what concern pack receivable, Simone? Well, okay, maybe just to find to analyze my part for what's concerned, 2024, 2028 tariff distribution tariff process, we don't have any kind of update. We expect to have some news at the beginning of the next year when the CNA the regulatory body will issue the feedback for the technical consult record. So we are waiting for this report. Timo?
Simone Conticelli, CFO, Enel Chile: Okay. Thanks for the question. Let's talk a little bit about spec. As you know, at the beginning of the year, the debt was quite high, EUR 750,000,000. And then this debt increased during the first three quarters.
Of course, each quarter, we accumulated something like EUR 100 $1,000,000 of new effect. And in the 1st 3 quarters, we received as a factor in process just more or less $80,000,000 And so at the end of September, the situation is that we have debt about $1,100,000,000 The important message that already just gave you is that in any case, the increase in status changed the situation. Starting from a few weeks ago with the PTP, the second half, we are not accumulating more or less any other back receivable. And so from now on, the back amount should decrease each month. Now as we have already commented that we received a cash in of $630,000,000 to the 24th October.
And given this cash in, at the end of the year, our position should be in a range among $500,000,000 and five $50,000,000 This amount should be cashed in mainly in the next 2 years. The larger amount more or less $200,000,000 in the 1st year, $25,000,000 and the most of the remaining in 2026. We expect just a small part to be cashed in 2027. And in particular, we are talking about the Spec one mechanism. As you know, this mechanism is considered that as part of the total debt will be cashed in to the target.
And so we have to wait for the end of the period that is 2027.
Isabella Clemens, Head of Investor Relations, Enel Chile: Thank you, Simone. Operator, do you have more questions online?
Carmen, Conference Call Operator: We do not have any other questions. Back to you for webcast.
Isabella Clemens, Head of Investor Relations, Enel Chile: Okay. Thank you. So Giuseppe and Simone, I will start with some questions that we have received from the analysts and investors connected. So the first one is coming from Francisco Paz from Santander (BME:SAN). Francisco is saying, thanks for the presentation.
The question is the following. We have observed a positive water availability during this year and the previous one, which has helped the company to reduce cost pressures and increase hydrogenation. Going forward and in the context of uncertainty for water availability in the long term, what do you assume is the reasonable estimate of hydrogeneration in the medium to long term for the company in annual terms?
Giuseppe Turcierelli, CEO, Enel Chile: Well, let me say that we are really happy to have this Trier with a very good hydrological condition. We do not consider this year as a proxy for the following year. So we used to project in terms of hydro condition the last 10, 11 year average. So in general, we are soon to have around 10 terawatt hours per year. This is our estimation as soon as we're going to see a different kind of path in terms of hydrology, we are going to change our estimation.
But as of today, we are we keep our estimation around 10, 11 terabyte hours per year. Okay.
Isabella Clemens, Head of Investor Relations, Enel Chile: Thank you, Giuseppe. So we have some questions now from Andrew MacCarney from La Reng Vial. So the first question is also related to the hydro generation, but I think we have covered now the question. So the second one relating to the PEG, the PEG 3. So when do you expect to sell more PEG 3 receivables and how much do you expect it to receive?
Simone Conticelli, CFO, Enel Chile: So I think that we have not answered also to your previous question, but I will focus on the specific question. Thank you. We are keep on selling the spec debt, going with the new decrease that we need. And we are expecting to have cash for around $200,000,000 or something more, dollars 1,000,000 by the end of 2025. This is the first block of the effect that we are going to cash in.
Isabella Clemens, Head of Investor Relations, Enel Chile: Okay. Thank you, Simone. So we have another question from Andrew that's also their investors analysts have sent to us. So do you see more gas commercialization opportunities for the Q1?
Giuseppe Turcierelli, CEO, Enel Chile: Well, at this moment, we don't expect any additional sales of cargo for the rest of the year. Clearly, we are always looking at any opportunity to increase our profitability. But as of today, we don't have any in front of us, any sales of cargo in front of us.
Isabella Clemens, Head of Investor Relations, Enel Chile: Okay. Thank you. So the last question from Andrew is, do you expect the distribution business to return to normalized operating profit in the Q4 of this year? Or should there be more negative impacts from fines or compensation to clients for services interruption that occur in 2024?
Giuseppe Turcierelli, CEO, Enel Chile: For what's concerned, the distribution business, of course, we are still evaluating all that period that we need in order to put the our grid to the original status. We are waiting also and discussing for what's concerned the possible fines or compensation, and we're going to give you more detail during our Investor Day.
Isabella Clemens, Head of Investor Relations, Enel Chile: Okay. Thank you. We have some questions from Ignacio Sabele from Itau. So the question is also very similar to the ones that we have already answered. But just to focus on the PEG 2, and also how much we expect the receivable accumulation regarding the PEG 3 going forward, Simone?
And just to rephrase as we have several questions on this.
Simone Conticelli, CFO, Enel Chile: Yes. As we have commented in this morning, the 2 segments of customer, with the consumption below 350 and with the consumption higher of 650 are started to pay basic debt sales price to cover the cost of the system and then also a component that is needed to recover the new step. So from now on, we expect no significant increase or accumulation of that.
Isabella Clemens, Head of Investor Relations, Enel Chile: Okay. So a question from now coming from Martin Arenset from balance. Also on PEG, but he is asking more details about the usage of the funds from the PEG III that we received in early October.
Simone Conticelli, CFO, Enel Chile: Okay. Thank you for the question. As you have commented, the 24th October, we received a payment of more or less BRL 6.30 billion. This cash in was received by Enel Percio Chile. And Enel Percio Chile used the money to reduce the debt position in the short term.
And part of the money was invested also in the short term at the market interest rate. Clear, we keep on looking ahead to have further opportunity to optimize also the long term debt. And on the other side, you know that
Carmen, Conference Call Operator: financial
Simone Conticelli, CFO, Enel Chile: stability is one of our core goals for our strategy wise. Of course, we can leverage on that to grab eventual opportunities that can pop up in the market. And so this increase of our financial stability is a very positive effect that can enable us to do more things in the future.
Isabella Clemens, Head of Investor Relations, Enel Chile: Okay. Thank you, Simone. So we have one more from Martin. He's asking, if I'm not mistaken, the government is preparing a technical report to evaluate if a non distribution has taken the proper steps to return service to clients after the extreme weather event conditions. Could you give us any color on the time line of this report, your expectations and also your options if it has a negative outcome?
Giuseppe Turcierelli, CEO, Enel Chile: Okay. So let me first mention the fact that the process of revoking the concession has not yet started. The Minister of Energy G, that's the sector, is preparing a technical report on ML distribution concession. According to the authority, this study should take between 6 18 months. And once it's going to be ready, it will be delivered to the President of the Republic for review and only the President of the Republic of Chile through a decree and start the process.
So we are waiting for the record that should be issued by the SEC. In order to understand whether this technical body see any possibility of or any suggestion in order to revoke or to suggest the revoking of the concession. Just to be clear, the law, the current law excludes any possible revocation of the concession in case of force majeure. This is the reason because we believe that any record from the second should give this kind of suggestion because it is clear from the situation that has been occurred in August that the force majeure is clearly part of the bank, let me say. And what we're going to do in case of negative outcome?
Well, clearly, we're going to start with all the legal action locally and international. So we're going to start really depending our interest in terms of concession.
Isabella Clemens, Head of Investor Relations, Enel Chile: Okay. Thank you, Giuseppe. We received all the questions also from Rodrigo Mora, but we are the same on distribution and also on gas commercialization. So Tomas Gonzalez from Scotiabank (TSX:BNS). Some questions we have are the answer, but I go to the dividends.
And also you're asking regarding the dividend, do you plan to play an interim dividend before the year end? Any possibility to increase the payout in the future is mentioned because of the funds of the pack.
Simone Conticelli, CFO, Enel Chile: Okay. Talking about Enel Atson, the dividend policy of Enel Atson is to increase to the year, the dividend. In this moment, this cash in is in line with the possibility to stay in the policy. And in the very short term, so we'll reach in
Giuseppe Turcierelli, CEO, Enel Chile: the
Simone Conticelli, CFO, Enel Chile: future until the 70% of the dividend. And so this money are very good news. Of course, we'll permit to stay with our dividend policy. But in my opinion, and this is a matter for the Board of Directors and for the assembly of the owners of the company, but in my opinion, there will be not big changes regarding the dividend policy.
Isabella Clemens, Head of Investor Relations, Enel Chile: Okay. Thank you. So let me check here. We have other questions. Okay.
So we have one from Martin Pozo. So he's asking us, can you give more detail about the impact the company might have with the increase of the green taxes in case the new project law is approved. Can you give you more details on that, Simon?
Giuseppe Turcierelli, CEO, Enel Chile: Yes. Well, let me remind you that last year, we paid $15,000,000 in green taxes. And we have a very good mix in terms of plant fleet. Our CCGT is supplied with a very competitive gas contract. And the green tax at the end of the day represent a very low percentage of our thermal power plant.
We have several option in order to compensate these taxes. But at the end of the day, as I said before, we are the law is under discussion is at the beginning of the discussion actually. And the amount of the taxes are almost yes, very, very low.
Isabella Clemens, Head of Investor Relations, Enel Chile: Okay. Thank you, Giuseppe. So one more from Rodrigo Mora from Patria Moneda. He's asking about Los Condores project, okay? So he's asking if we could give more color about the status of testing of Los Congres and the energy generated expected to this plant.
So Giuseppe, if you can give more how we are in Los Condres and then Simoni, the generation of Los Condres?
Giuseppe Turcierelli, CEO, Enel Chile: Okay. Well, Los Condres project is in a very good shape right now because we already started the commissioning test. We are going ahead and we are pretty sure to have the first synchronization in the following months. For sure, before the end of the year, we expect we could have a very good surprise in the following weeks. But let me say just to be conservative by the end of the year.
Isabella Clemens, Head of Investor Relations, Enel Chile: Okay. Thank you. Simone, on the generation, please?
Simone Conticelli, CFO, Enel Chile: And talking about the generation of this new plant, we can give a range of production expected for the next year and should be among 150 and 200 gigawatt hour for 1 year.
Isabella Clemens, Head of Investor Relations, Enel Chile: Okay. Thank you. So we have one from Andres Barberi from MMBE. So the question is on Andres' this. Thank you for the presentation.
I have a question regarding the regulated sales. We observed a year over year increase of 50 gigawatts. Is this increase driven by higher demand in your current PPAs? Or is due to start of an irregular contract?
Giuseppe Turcierelli, CEO, Enel Chile: Well, basically, the increase in sales are connected to a new contract that start recently this year actually. And it was a regulated tender that we won in 2017. So it's a matter of perimeter. So we have a new PPA entering our portfolio.
Isabella Clemens, Head of Investor Relations, Enel Chile: Okay. Thank you, Giuseppe. So Carmen, operator, do we have any more questions online?
Carmen, Conference Call Operator: Yes, we do. We have a follow-up. One moment, please.
Isabella Clemens, Head of Investor Relations, Enel Chile: Okay. Thank you. From the
Carmen, Conference Call Operator: line of Javier Suarez with Mediobanca. Please proceed.
Javier Suarez, Analyst, Mediobanca: Thank you. I'm sorry for coming back again. It's on the guidance. You mentioned that the guidance for the EBITDA in 2024 is now seen at the upper end of the range, the previous range $1,300,000,000 to $1,500,000,000 If you can confirm that, if you can share with us also the guidance for the net income? Thank you.
Giuseppe Turcierelli, CEO, Enel Chile: Okay. I confirm you on that it's going to be at upper range, so around or closer to 1.3 rather than 1.3, so upper range. And for what's concerned, the net income similar situation, I mean, we are going to confirm the guidance at the upper range that we presented last year.
Isabella Clemens, Head of Investor Relations, Enel Chile: Okay. Thank you. If there is no more questions, I would like to conclude our conference call. The Investor Relations team is available to answer any questions you may have. Many thanks for your attention.
Have a great rest of the week and see you soon at our Investor Day. Thank you.
Carmen, Conference Call Operator: Thank you. And with that, we conclude today's conference. You may now disconnect.
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