Earnings Call: Q1 2026

May 11, 2026

Summary

Q1 EBITDA rose 127% to ARS 191 billion, while revenue was flat in real terms and net profit reached ARS 118 billion. Management guided to $170 million-$180 million of FY CapEx and $300 million-$320 million of FY EBITDA, citing two one-time Q1 benefits.

Good morning and welcome. This is Lucila Camacho, Investor Relations Executive Manager at Edenor. On behalf of Edenor, we would like to thank everybody for participating in this conference call to discuss the results of the first quarter 2026. We will also have an important recent development and advantage in our effort to strengthen our position as an energy leader. If you would like to receive our earnings release or presentation, you can download them easily from the Investor Relations section of our website located at www.edenor.com, or contact our Investor Relations team to request the documents. This event is being recorded. After the conference remarks are completed, there will be a question and answer session for which you may submit questions through the WebEx chat. Before proceeding, let me mention that forward-looking statements are based on the beliefs and assumptions of Edenor management and on the information currently available to the company. They involve risks and uncertainties and assumptions because they are related to future events and therefore depends on circumstances that may or may not occur in the future. Investors should understand that general economic condition, industry condition, and other operating factors could also affect the future results of Edenor and could cause results to differ materially from those expressed in such forward-looking statements. Now, let me pass the call to Germán Ranftl, our CFO, who will guide us through the presentation. Thank you, Lucila. Good morning and welcome to everyone. Your presence here is very important to us, and we hope to provide you with a good understanding of Edenor performance during the first quarter of 2026. Agenda: highlights and regulatory framework. Before moving to discussion of details of our financial performance during the first quarter of 2026, I would like to take a few minutes to highlight that Edenor has demonstrated a major improvement in results over the last several years, led by a restoration of healthy regulatory environment and a substantial improvement economic situation in Argentina. These factors, combined with our focus on continuous operational improvement and modernization, have positioned the company well to take advantage of a highly attractive growth opportunity in Argentina. We have now completed our full year since the approval of the implementation of the five-year tariff, including monthly automatic adjustments. By the end of April 2025, the five-year tariff review process for 2025 and 2030 period was approved, which included an automatic adjustment based on a formula for the value-added distribution, weighted 33% by a consumer price index and 67% by the wholesale price index, plus an additional of 0.42% above inflation in real terms. On May 21 of 2025, we normalized our debt with CAMMESA. We are, since April 2024, paying 100% of the current monthly invoices for energy purchases from CAMMESA and are fully complying with payments under our existing payment plan with CAMMESA that call for monthly payments over 64 and 62 remaining installments. In October 2025, Edenor submitted the regulatory asset claim for differences in tariff adjustments between 2019 and 2023, as calculated by independent third parties. The Secretary of Energy has been analyzing the company's complaints. In May 2026, a new law is being discussed in Congress regarding this specific claim. During 2025, the VAD increased a total of 37% against a 32% raise in the consumer price index and a 41% devaluation of the peso against the US dollar. The average monthly tariff adjustment since August of 2024 through year 2025 was 3.1%. In December of 2025, the regulatory entity authorized the company to modify the frequency of meter readings from bi-monthly to monthly. The regulations aims to provide users with a clearer and more transparent and more timeline signal regarding their energy consumption. The impact was reflected in the first quarter of 2026. The accumulated monthly adjustment VAD of 9% versus an inflation rate of 9% is the first quarter 2026 numbers. In April, the VAD adjusted was 2.04%, and in May, 4.1%, including the E factor. In addition, as we mentioned above, the government also submitted a bill to the Argentine Congress proposing a framework to regularize our regulatory assets for past differences tariffs of 2019 to 2023. We believe that this event has positioned the company to be more dynamic with more favorable financial results going forward. This will enable us to continue our strong investment growth and further improve our services. In May 2026, the government appointed the new authorities for the New Gas and Electricity Regulatory Agency (ENRGE), each of whom has strong background and broad experience in the energy field. The normalization of tariffs has been clearly reflected in improvement in Edenor's financial performance, with 127% raise in EBITDA for the first three months of 2026. The collectibility rate has consistently remained high, being 95.68% in the first quarter of this year. Financial results, revenues. Revenues in the first quarter of 2026 were ARS 847 billion, which was flat in real terms versus the prior year, which was due to benefit of higher tariffs and subsidies reduction, offset by a slight decline in volume and a lower energy purchase cost, which are direct pass-through to consumers. The quarter reflects the positive impact of the monthly measuring of energy consumption. Electricity sales evolution. The number of customers in the quarter rose to 3.4 million, up 1.4% versus the prior year. This raise was mainly due to an increase in residential and medium-sized commercial clients. The raise was helped by market disciplinary measures, including the installation of 2,765 energy meters in the first quarter of 2026, which are designated to convert informal, unreported connections into fully transparent connections in electricity distribution system. Energy sales for the first quarter were down 1.6% year-to-year to 5,853 gigawatt hours, mainly driven by the impact of lower demand from residential customers due to lower temperatures during the summer and for the effect of the economic and industrial demands. Distribution margin. For the first quarter of 2026, our distribution margin rose 13% to ARS 387 billion, mainly due to the increase in tariffs, which have average of 3% per month, as we said before. EBITDA. Looking at EBITDA for the first quarter of 2026, EBITDA rose 127% to ARS 191 billion, an improvement from the ARS 84 billion registered in the first quarter of 2026. The main improvement was due to a strong revenue as a result of the five-year tariff review, including a 320% increase, initially adjusted in February of 2024, plus additional monthly tariff adjustments since then in an average of 3%. The accumulated VAD increase in 2026 was 37% versus inflation of 32%, and for the January-March 2026 period, the VAD rose 9% and inflation was 9%. Energy purchase costs in the first quarter declined 9% due to a lower demand from residential customers due to offset low temperatures during the summer, lower economic activity at industrial times, and an adjustment in energy purchase price that were lower than inflation. I would like to take a few minutes to highlight our ongoing efforts to manage costs, where we saw important progress, which made an important contribution to our raise in EBITDA. Operating expenses for the first quarter of 2026 decreased by 9%, reaching a total of ARS 282 billion. Cost management contributed to the positive results with a focus on streamlining operations and technology. The savings are related to our OPEX review plan initiated in 2025, including the redevelopment and retirement plan aimed at proportioning talent renewal and workforce optimization, which will result in a 5% reduction in salaries expenses and a 37% decrease in pension cost plans. Union consumption declined 22% due to inventory management optimization and third-party services costs were down 14%. Interest penalties were down substantially 45%, driven by the change in evaluation mechanisms as defined by the regulator and improved service indicators. Finally, in March of 2026, we recognized pending receivables from the national government for a total of ARS 20 billion. This is a mutual agreement, Acuerdo Marco, based on the cost of energy consumed in the lower income neighborhoods in 2024 and 2025. Net financial results. In the first quarter, the net financial expenses declined 23% to ARS 71 billion due to primarily a reduction of the impact of interest expenses on the debt with CAMMESA and the realization of debt obligations according to this agreement signed with CAMMESA last year. The first quarter saw a profit of ARS 118 billion, up 147% versus the first quarter of 2025, led by the positive impact of the tariff adjustments and the increase in RECPAM and lower operating expenses. CapEx. We invested ARS 70 billion in the first three months of the year. Our investment spending reflects our firm commitment to improve service quality, which is reflected in significant improvements in our main operating indicators. We highlight our key projects that are underway, including the new substation in Moreno and the expansion of the Puncararé substation. We are also planning additional projects for 2026, including replacement of Newbridge substation with the new facilities and the interconnection of the Colegiales substation in June of this year. We also continue to work to transform our network into a smart network by installing increasing numbers of remote control points. There is a provision point as well as smart meters. These allow us to quickly resolve problems that arise in the network remotely, which is where we do isolation of any part of the system, experience a service problem, and establish service very quickly. Operating indicators. Now let's take a look of a few of the key operating indicators. Energy losses. Our energy losses for the first three months were 15.3%, down from 15.7% at the end of December of 2025. Reducing energy losses is a top priority for us. Our multidisciplinary teams are working constantly to find innovation ways to combat energy losses. These efforts are complemented by our market discipline initiatives that are aimed at curbing inefficiencies and irregularities. Also, analytical tools powered by artificial intelligence have improved inspection efficiencies, and our market discipline actions continue to detect and rectify irregular connections. It is important to remember that the 15.3% total losses, a full of 9.62%, are losses recognized by the regulatory entity in our tariffs. The first 3 months of 2026, energy losses were 15.3%. Quality of service. As mentioned earlier, our investment plan is continuing to contribute the improvement in service quality by reducing the duration and frequency of outages, which have been a downward path since 2017. These levels are and have been comfortably exceeding the levels required by the regulatory entity. For the first quarter, the SAIDI and SAIFI service quality indicators show continued strong performance at 6.1 hours and 2.9 average outages per client, at record low levels and down 78% and 67% respectively, compared to the 2017 levels. This recovery in service is mainly due to the strong, consistent level of investment that the company has been doing for the last 9 years. The investment have been focused on implementing improvements in operational process and the adoption of technology applied to the operations and management of the network. Financial debt. In February, the company reopened a senior note, Class 7, for an amount of $90 million. This brought the total outstanding senior notes 7 to $475 million. In March, the company prepared the senior notes Class 8 for $80 million plus interest. As of the end of March, the total senior notes plus loans outstanding was $832 million, with a net debt at March 31 of 2026. Total net debt is $463 million. A key positive over the last few years, which continues in 2026, has been improved in our ratings in recent years as a result of the improvement in our risk profile due to important changes in the regulatory framework. On March of 2026, FIX SCR upgraded the long-term issuers rate from A to A+, and the short-term issuers rate from A1 to A1+. Financial debt recent developments. Last month, in April of 2026, we raised $550 million in a senior note, Class 10, with offers of nearly $1.2 billion and completed a cash tender of $175 million in senior notes Class 7. The tender reduced the outstanding senior notes Class 7 to $300 million. Use of proceed was applied for the cancellation of $175 million in senior notes Class 7, plus $26.7 million for a portion of senior notes Class 3 and 5. This enabled us to achieve a $200 million reduction in net debt. Financial debt position. This brought our total senior notes outstanding pro forma to US$1 billion. As you can see here, we have a very manageable maturity schedule with no maturities for the next years. New businesses. We want to share with you our vision of new businesses and how we are positioning the company for a long-term expansion, diversification, and value creation. As a starting point, in 2024, the company amended its corporate bylaws for the purpose to provide greater flexibility and to actively capture opportunities arising from the energy transition and the broader electrification of the economy. This was a deliberate and strategic decision that opens the door to a much wider set of growth avenues. Our business development is anchored in two core drivers: capturing growth in the energy sector and expanding through both vertical and horizontal integration. In terms of strategy, we intend to capitalize on a dynamic energy M&A landscape, leveraging an ongoing privatization program which presents several competing opportunities across the energy value chain. We will also seek to drive synergies through integration with our core business while remaining alert to opportunities in the complementary assets. In terms of scope, the sector we are targeting including electric transportation and grid expansion, generation and storage, electric mobility, including oil and gas downstream, energy infrastructure, and natural gas distribution and commercialization. A broad and well-diversified set of verticals and aligned with the energy sector it is in. The bottom line is clear. This strategy is designed to deliver expansion, diversification, and value for both our investors and our consumers. Final remarks. We remain highly optimistic about our future. Results have benefited significantly from tariff normalization. We have now complemented a full year since the approval of the implementation of the five-year tariff review, with an EBITDA raising a sharp of 127% year-to-year in the first quarter, ARS 291 million. The overall improvement has underpinned an improvement in debt ratings and working capital. It has also enabled us to continue our investment program with positive results in all our main key operating indicators. With the regularization of our debt with CAMMESA, all outstanding balances are now included in payment plans to be paid over 64 and 72 remaining installments. This week, as we said, the national government also submitted a draft of a law to the Argentine Congress to provide a framework to regularize the regulatory asset claim for the difference of tariff adjustments since 2019 and 2023. Our diversified financial strategy has also enabled us to have consistent access to local and international capital markets. Finally, I would like to mention that we remain committed to looking for other opportunities to take advantage of our enormous changes taking place in Argentina and in the global energy market. This was reflected in our change in 2024 in our strategy to provide increasing flexibility and capture opportunities related to energy transition and electrification of the economy. With this, now we would like to open to call to your questions. To ask a question, please send a written message to IR Edenor through the question and answers menu. Identify yourself, and stating that you have a question. We thank you very much for your support and your engagement as shareholders and also as bond holders. Andres, from Balanz is asking, could you please provide more color on the project of the executive branch sent to the Argentine Congress regarding the regulatory base? What estimates are you working with? Well, we know that in October of last year, we presented a claim of the regulatory asset base, and the government has sent last week, to Argentine Congress to pass a law regarding this consideration. Now this is in the process of the Energy Commission, analyzing the project of the law, and then we go to deputies and then to senators. It will take probably one month or more than a month to come to an agreement with that from the government side. Another question from Andres from Balanz is, how much should we expect for CapEx to be during 2026? Okay. Investment in the first quarter was ARS 70 billion, approximately $49 million. For 2026, we anticipate CapEx will be in the range of $170 million-$180 million. This is somewhat lower than 2025 spending, which was higher for specific reasons, particularly the certain market conditions in 2024 and 2025. We expect our CapEx program will be very robust and solid, with projects spending in the current project range. This should enable us to continue to expand the network, and in coming years, to take advantage of our growing market and continue to adapt it for new technologies. First of all, there is another question from Julia. First of all, congratulations on the strong set of results delivered this quarter. Regarding the operation performance, aside from the ARS 20 billion non-recurring gain related to the Acuerdo Marco, were there any other one-time benefits impacting the margin expansion? Furthermore, are there other relevant drivers you would highlight any further information to help isolate the running run rate and better understand the margin's sustainability for the rest of the year, would be greatly appreciated. Thank you. Thank you for the congratulations. We are very proud that we have very good results for this quarter. I am completely according to what you said, the ARS 20 billion effect of Acuerdo Marco is one one-time effect. There is another effect, that is the monthly metering instead of bi-monthly metering, has also increased the revenue base of this quarter, and it is also a one-time effect. We are expecting for EBITDA, according to what the rating agencies have established. The rating agencies are thinking that our EBITDA for the full year is going to be close to $300 million-$320 million. That will be the run rate that we suggest you to consider when you do your projections. If there are no more questions, thank you very much for participating in our quarterly conference call, and please do not hesitate to contact us or our investor relations department for any further inquiries you may have. Good morning to everybody, and have a nice week.