Good morning. Welcome to Grupo Energía Bogotá third quarter 2025 financial and operating results conference call. The results reports were published yesterday and are available on GEB's website for your reference. The conference will start with an overview of the quarter's results, the main events in the economic and industry environment of the countries where GEB operates, followed by the group's financial milestones. At the end of the presentation, a Q&A session will follow. On the bottom right of your screens, you'll find a question and answer section for you to write your questions at any time, or you can raise your hand if you'd like to ask your questions live. Our conference call speakers will be the CEO, Juan Ricardo Ortega, the CFO, Jorge Tabares, and the Financing and Investor Relations Manager, Karen Guzmán.
Good morning, everyone. Thank you for joining us for our third quarter 2025 earnings call. Our results reflect operational stability with consolidated revenues of COP 2 trillion, a change of -2%, quarterly adjusted EBITDA of COP 900 billion, and a net income of COP 825 billion. These results have to be taken into the context of market non-operational factors. For example, the Colombian peso appreciation against the U.S. dollar, the impact of ARGO's dividend decrease made in third quarter 2024, and one in particular, which is the CREG Regulatory Commission delay in the transmission tolls and rates filings. The provisions for accounts payables of Air-e, the electricity distribution company in the Colombian Caribbean coast that hasn't paid since its intervention in early January.
With regard to this last issue, we reached an agreement among the Minister of Finance and Public Credit, the Minister of Mines and Energy, and the Superintendent of Public Services that will guarantee the payment of all these accounts payables before the end of the year. In the meantime, we have applied the provision just for precautionary reasons. As of the end of September, adjusted EBITDA reached COP 4.3 trillion, showing a year-over-year growth of 2%, reflecting the resilience and strength of our operations across strategic geographies and segments. In Peru, the Gas Distribution segment grew 6.6% year- to- date, while in Colombia, the Energy Generation and Distribution segments were benefited by very favorable results on behalf of Enel Colombia, recovering significantly from the challenges they faced in 2024 because of a very low hydrology.
Reflecting investors' confidence in the group's strategy and results, we advanced the financing of the 2023 and 2027 investment plan, with GEB's return to international capital markets through a $500 million bond issuance over 10 years, which saw an oversubscription of 4.4x by the 130 global investors. This transaction not only reaffirmed market confidence in the group's strength, but also enables us to decisively move forward with the key initiatives in the energy transition. In September, we also presented our shared prosperity strategy progress to the district controller during an official visit to the energy transmission projects in Guatemala, operated by Trecsa and Conecta.
In those meetings, we reaffirmed our commitment to fiscal transparency. We highlighted the proper use of public resources, the quality of our investments, our monitoring mechanisms, and the very positive impact of these projects in strengthening Guatemala's electrical system, its economy, and its peoples. Moving on to the relevant facts by our different business segments. I will present highlights beginning by Colombia. Here, Enel consolidated a sustainable recovery in its operations, driven by very favorable hydrological factors and consolidated a net income that reached COP 2.6 trillion. It grew by 14%. The company is steadily progressing towards operational phase of the Guayepo III and Atlantic solar generation projects, positioning itself as the absolute leader in solar generation in Colombia, with over 1 GW of power installed.
Additionally, Enel Colombia had to recognize an extraordinary effect of COP 91 billion in favor of the Special Administrative Unit for Public Services of the City of Bogota, UAESP. This is in compliance with the Resolution 463 of 2025. There's been a negotiation regarding the calculations of that resolution, and there is significant progress regarding a new calculus that will allow for the reversal of this provision associated with the litigation between UAESP and Enel. We hope to get that result before the end of November by the government authorities that are overseeing the negotiation. Regarding the Natural Gas Transportation segment, in August, the CREG published its rates and tolls for gas transmission for TGI. However, technical validations identified inconsistencies, particularly in the demand volumes used for the tariff calculations. The data for the years 2022, 2023, 2024, even 2025, were significantly overestimated.
As a result, the company filed a reconsideration request with the regulatory authority. Constructive progress has been made with the Ministry of Mines and Energy and CREG in analyzing the arguments presented and the significant overestimation of the demand that was applied for the calculation of the rates and tolls. There is the willingness to review the key elements of the resolution to ensure the appropriate and sustainable tariff signal, particularly at this moment, where Colombia needs significant investments, given the change of the origin of the gas supply in the country. To ensure cost efficiency and expedient supply, TGI has a structured regasification solution in northern Colombia, specifically in La Guajira, with an estimated direct investment between COP 100 million and COP 150 million, more likely to be COP 100 million, and a capacity of 300 million cu ft per day.
This asset is expected to begin operations in 2027, the year in which Colombia is projected to import over 25% of its current gas consumption. This is an estimate of the market operator forecast that estimates over 250 million cu ft per day will be needed in order to satisfy the industrial demand in the interior of Colombia. In this context, having a second regasification infrastructure becomes absolutely urgent and vital to ensure supply reliability, and particularly, supply stability for the national industry. There is still time to act. TGI reaffirms its commitment to enabling this strategic alternative for the country. I highlight the support expressed by the Minister of Mines and Energy and the backing of the system users, Ecopetrol willingness to find a constructive solution.
We hope to sign within the next weeks an agreement for Ecopetrol's project connection to the TGI infrastructure in Ayacucho and TGI's connection to Chuchupa's pipe owned by Hocol, [Non-English content] Ecopetrol, that would guarantee that these projects would be viable. The project is progressing. This will consolidate the demand and represent a concrete response to the country's unprecedented energy challenges, and is aligned with the energy security and sustainability goals that the sector has. Moving on to Peru. The Ministry of Mines and Energy announced in September that Cálidda had addressed all regulatory observations and is in the final phase of approving the expanded concession contract. We expect the concession extension to be finalized before year's end, with a positive impact on Peruvian communities that have been requesting gas services for over a decade.
Moody's ratings improved Cálidda's rating outlook from negative to stable, highlighting the company's successful ability management. Key factors were the $500 million A/B loan signed with CAF, Bank of America, Bank of China, and SMBC Group, which allowed for extended debt maturities and reduced refinancing risk. This transaction strengthened the company's credit profile and financial position, reflecting a prudent and effective balance sheet management strategy. In Brazil, ARGO carried out a public issuance of non-convertible simple debentures totaling BRL 1.7 billion, approximately $320 million, distributed across three series with maturity between five and 10 years. The transaction received an over-subscription of 1.3x , reflecting strong confidence from the local market. The company declared dividends for BRL 731 million payable in October, equivalent to approximately COP 528 billion, reflecting the operational and financial strength of its asset and additional cash for GEB.
This transaction occurred after the reporting period and is therefore not reflected in the September financial statements. In Guatemala, in July 2025, the Guateeste Substation was inaugurated. The completion of this project marks another milestone on the PET-01-2009 project, generating a canon of $1.4 million annually for the next 15 years. I would also like to highlight the first private placement by our subsidiary, Trecsa, for $110 million over 10 years. This transaction included participation from PGIM, Inc, and funds and accounts managed by Global Infrastructure Partners, a subsidiary of BlackRock. The transaction is guaranteed by GEB, and the proceeds were used to refinance Trecsa's debt. I now turn the floor over to Jorge Tabares, Chief Financial Officer, to present the financial performance for the quarter. Go ahead, Jorge.
Thank you, Juan Ricardo. Good morning, everyone. It is a pleasure to present the group's results for the third quarter of 2025. In an operating environment marked by a quarterly average appreciation of 2% of the Colombian peso against the U.S. dollar, and amid extraordinary events still in the process of resolution, such as provisions related to Air-e, the group reaffirms its resilience and strategic diversification across businesses and geographies. Operating revenues decreased by 2%, explained by COP 16 billion due to the currency conversion effect, as well as lower revenues in the Natural Gas Distribution segment, driven by reduced volumes billed to the energy generation and industrial section by Cálidda.
In the Natural Gas Transportation business, TGI's revenues contracted by 5% due to lower capacity contracting by EPM and Vanti, as well as a reduction in the variable component in a quarter without dispatch to the thermal plants, as observed in 2024. Additionally, lack of definition of the tariffs file, which was expected to come into effect in the second half of this year, has limited the projected revenue dynamics. In contrast, revenues from the Electric Energy Transmission and Distribution segments recorded a combined year-over-year growth of 6%, driven by the commissioning of private projects in Colombia, such as Membrillal last quarter, which were not present in 2024. In Guatemala, by the commercial commission and activation of new transmission lines and substations, generating income through tariffs and tolls.
In Peru, the higher volume of energy distributed to regulated low-voltage customers and the intensive use of our networks by third parties also contributed positively to the revenue growth. Operating costs increased by 4% year-over-year. The currency conversion effect accounted for COP 14 billion. In the Electric Energy Transmission segment, there was an increase in contributions, maintenance, and personal services. In Natural Gas Transportation, maintenance, and higher consumption of replacement gas led to the variation. Whereas in Natural Gas Distribution, the 3% reduction was mainly due to the conversion effect and lower gas transportation services. The 129% increase observed in the Electric Energy Distribution segment corresponds to an accounting effect related to Dunas's service costs, which were adjusted in 3Q of 2024 and then normalized in 4Q of the same year.
Excluding this effect, distribution costs will have increased by COP 15 billion, or 21% year-over-year, with a conversion effect of COP 5 billion, including the COP 15 billion. The 28% increase in administrative expenses is attributable to several factors. The Natural Gas Distribution segment, Cálidda, reported a 15% increase in consolidated expenses due to a large customer base now exceeding 2 million users, and an expanded distribution network, which grew by almost 900 km compared to the previous year. Electric Energy Transmission segment, a provision of COP 35 billion was recorded for the Air-e receivables for the July-September quarter, totaling COP 129 billion in 2025. The normalized variation in administrative expenses, excluding the Air-e provision, will reflect a 16% year-over-year increase. In the corporate segment, the 37% increase is mainly due to two extraordinary factors.
Personal expenses, which in September of 2024 included COP 9 billion of amortized employee credit costs that were reversed, causing this quarter to reflect an increase in that item. Industry and commerce tax: in July of 2025, Vanti anticipated its dividend payment, resulting in a higher industry and commerce tax of COP 8 billion, showing a temporary effect. Normalizing the effects in the corporate segment, the variation will be 6%. Operational margins across segments declined this quarter compared to the previous year, with the Electric Energy Transmission segment showing the most significant impact on operating results. Isolating the Air-e effect, the segment's margin will have decreased by 1 percentage point. Additionally, excluding the accounting adjustment in the Electric Energy Distribution segment, the normalized margin in that segment would have been 9.5%- . Operating income for the quarter reached COP 576 billion, down 23% compared to 3Q 2024. Performance across key items is detailed below.
Financial income grew 20% driven by higher quarterly returns on term deposits. Financial expenses rose 4%, mainly due to the interest expense related to new treasury and long-term credit acquisitions, COP 834 billion. Our foreign exchange gains benefited from a 4% appreciation of the currency against the U.S. dollar in 3Q 2025. Regarding the equity method, Enel Colombia and Promigas, net contributions due to improved results, notably [analysis] strong performance of certain additional COP 33 billion provision related to the UAESP dispute. Finally, income tax decreased 23% year-over-year, mainly due to higher deferred tax stemming from exchange rate differences on debt following a 4% quarterly appreciation in the closing TRM against the U.S. dollar. Controlled net income for the quarter amounted to COP 778 billion. Next, please.
The equity method was COP 575 billion for the quarter, remaining stable year-over-year, mainly due to mixed results from non-controlled entities. Enel Colombia posted double-digit profit growth through September, even after the update for the UAESP payment of an additional COP 33 billion this quarter. Promigas also show a + 31% year-over-year variation in equity method due to improved results. Another significant variation occurred in Brazil due to the five-year tariff adjustment in SPEs Argo V, VI, and VII, resulting in lower revenues for these concessions. Let's now move to the next, please. As of September, total CapEx executed amounted to $383 million. The Colombian transmission business accounted for 66% of the total, increasing 50% compared to the 3Q 2024. This is mainly due to the Colectora, Sogamoso, and Southwestern Reinforcement projects. Cálidda followed with 17% execution in the Natural Gas Distribution segment.
The updated five-year CapEx projection stands at $1.6 billion, led by investments in the Electric Energy Transmission segment. In Colombia, funds will be allocated to the Colectora, Southwestern Reinforcement, North Sogamoso, and Chivor II-Norte projects, with investment projected from 2027 onwards for UPME options. In the Natural Gas Transportation segment, TGI included the major maintenance plan scheduled for 2025- 2028. Next, please. Adjusted EBITDA for the quarter was COP 900 billion, down 26% compared to the same period in 2024. This decline is mainly explained by a non-recurring effect in 3Q 2024 related to ARGO's dividend decree of COP 213 billion. Seasonal factors and the aforementioned COP appreciations against the U.S. dollar. All EBITDA for the quarter was generated by controlled entities. The chart on the right highlights the contribution of three companies to EBITDA. TGI with 45%, Cálidda with 25%, and the Colombia transmission business with 15%.
Despite the quarterly decline, our cumulative figures reflect resilience. Adjusted EBITDA as of September 9 months reached COP 4.3 trillion with a positive annual variation of 2%. Likewise, adjusted EBITDA for the last 12 months rose 3% year-over-year, totaling COP 5.1 trillion. Now I hand it over to Karen to talk about the debt.
During the third quarter of 2025, the group's consolidated debt amounted to $5 billion, evenly split between Grupo Energía Bogotá and its subsidiaries. 34% of this debt is indexed to fixed rates, while the remaining 66% is tied to benchmarks such as SOFR, IBR, and Colombian CPI. In terms of currency, 64% of the debt is denominated in U.S. dollars, followed by 32% in Colombian pesos. The group's levered ratio, measured as net debt over EBITDA, improved from 3.6x in the third quarter of 2024 to 3.5x at the end of the third quarter of 2025. This evolution reflects healthy growth in accumulated EBITDA over the last 12 months, close to 3%, which outpaced the year-over-year increase in net debt of 0.6%.
Similarly, the debt coverage ratio, calculated as EBITDA over financial expenses, improved from 4.72x in the third quarter of 2024 to 4.95x at the end of the third quarter of 2025, demonstrating the group's enhanced capacity to meet its financial obligations and efficient debt profile management. Additionally, this quarter, we optimized our debt profile by anticipating short-term maturities and securing capital under competitive conditions to meet funding needs for the remainder of the year and our investment plan through 2027. Key highlights for the quarter include GEB signed a loan agreement with BBVA for COP 500 billion, with a three-year term, bullet amortization, and an interest rate of IBR + 2.30%, to partially finance the company's CapEx. Additionally, the company prepaid COP 50 billion of an existing short-term loan with Bancolombia, reducing the outstanding balance to COP 150 billion, maturing in December this year.
TGI, supported by a strong cash position, prepaid COP 50 billion of its existing club deal, bringing the new outstanding balance to COP 771 billion. Cálidda entered into an A/B loan agreement with CAF for up to $500 million, with a five-year term, bullet amortization, and an interest rate of SOFR + 1.65%, to refinance existing debt and partially fund the company's CapEx. As of the end of September, $395 million had been disbursed to prepay the syndicated loan of $350 million, maturing in December 2026. Trecsa executed the group's first private placement under the 4(a)(2) format for $110 million over 10 years, guaranteed by GEB, with bullet amortization and a coupon rate of 6.58%, aimed at refinancing the company's existing obligations. Now, I hand over the floor to Jorge to continue with the ESG topics.
Thank you, Karen. Regarding the management of sustainability matters within GEB and its subsidiaries, I'm pleased to share that GEB achieved its highest score to date, 84 points, in the S&P Global Corporate Sustainability Assessment, positioning the group as a leader in the Americas and fourth globally in the gas utilities ranking. Additionally, in September 25, Forbes Colombia recognized the group and TGI among the 50 leading companies in s ustainability in Colombia for 2025. On the social front, we continue to implement initiatives that contribute to a just energy transition and the prosperity of communities within our areas of influence. With TGI, we highlight the connection of 471 households to natural gas in the municipality of Miraflores in Boyacá. As of September, TGI has reached 1,700 of the 3,000 planned connections for 2025.
Meanwhile, Enlaza , through its Colectora project has positively impacted over 24,000 people in La Guajira through initiatives related to productive projects, culture, education, and water access. On the environmental front, we underscore the progress made by our companies in waste management and the consumption of energy from renewable sources. Additionally, 16 TGI facilities have been certified in energy efficiency under ISO 50001. At Grupo Energía Bogotá, sustainability guides our strategy, supports the energy transition, and ensures value creation for our stakeholders. Summarizing the quarterly results, the key takeaways are: We successfully navigated non-operational and seasonal pressures this quarter, thanks to portfolio diversification. We continue to consistently reflect strong performance in the equity method, with Enel making a significant contribution, enabling us to reach a quarterly net income of COP 825 billion, a result that reflects a structurally positive performance.
Our five-year investment plan focuses on strategic transmission and natural gas projects in Colombia and Peru, which will strengthen the group's operational robustness and support our sustainable growth potential in the region. This quarter, we continue to demonstrate proactive debt management through operations in GEB, TGI, Cálidda, Trecsa, and Brazil, which will continue to support our strategic objectives. Our sustainability strategy will continue to grow stronger, generating shared value for each stakeholder of the group. Thanks again for your interest. Now I open the floor for a Q&A session.
Thank you very much. We'll now move to the Q&A part of the call. If you'd like to ask a question, please press star two on your phone. That is star two, if you're connected from the phone. If you're connected from the web, you can send a text question or request to ask a voice question. We'll wait a few moments for the questions to come in. Just a reminder, it's star two if you're connected from the phone. If you're connected from the web, you can send a text or a voice question. We'll give it a few more moments. Okay. We have a question from Sebastian from Ashmore.
Hello, thank you for the call. Do you have new plans and/or more ambitious targets to reduce admin expenses?
I can take it. Can you hear me?
Yes, I can hear you.
Sure, Sebastian. The figures that we publish here are impacted by non-recurrent events and by the appreciation of the currency. When we translate the U.S. dollar operations into Colombian pesos, then it shows a growth. We continue to be disciplined to control costs across the board, and that strategy has not changed. These numbers are a little bit biased because of the non-recurrent items that we have explained in detail in the presentation. In addition to what we have done, is exploring more ways to leverage on technology. Not just artificial intelligence, but also equipment, using more extensively drones. We are, for example, in the cutting the trees that are near the lines, both at the transmission business and at Enel. We're using a laser technology that allows for a more safer way and faster way to execute that operation.
We have incorporated some pilots that will allow us to reduce costs on that front also. That's mainly what we have been focusing on, I'm optimistic that once things normalize, we'll see a more stable cost performance than what we are showing in this quarter.
Thank you very much. We have a follow-up from Sebastian from Ashmore as well. Can you elaborate on Argo dividends and whether this came above expectations? What does it mean for the 2026 dividends at the GEB level?
In addition to what we are showing in the EBITDA here for the nine months, we have also received COP 523,000 million, COP 528,000 million from Argo in the fourth quarter. That's in anticipation of a possible dividend withholding tax that will be imposed in Brazil. That was not expected. Clearly, it's going to bump up our EBITDA this year. We're in the process of agreeing with Redeia what the dividend policy could be for the following years, and how that money could be received by the shareholders in the likely case of that withholding to dividends, if it is approved by the Brazilian Congress. We're in the process of normalizing. Clearly, we advanced some dividends that we were expecting the next year.
Thank you. Sebastian has another question. Could you please provide an update on M&A activity and also the plans to fund this potential acquisition?
We continue looking at the two main targets, Transmission Brasil, the assets that are sold by Brookfield, and the Sempra asset distribution, gas distribution in Mexico. In both cases, we continue talks with the sellers. I'm not going to assign any probability to those, we are very interested and very actively working on both transactions. I think at least one of them could materialize. We are pre-funded for next year. We have a very solid position in cash, as of today, given the dividend that I just mentioned from Argo, but also the bond that we raised to basically either pre-fund the activities for next year or eventually fund a potential acquisition.
Okay, thank you. Just a reminder, if you'd like to ask a question, it's star two, if you're connected from the phone. If you're connected from the web, you can send a text or voice question. We'll give a few more moments for any further questions.
I see one. I do not know if it is one question, given GEB's strong 2025 results, what are the top strategic levers you plan to activate in 2026 to drive shareholder value and evolving energy and regulatory landscapes? Is that also a question? Can you see that on the?
Yes, I can see it.
Okay. I will address that. A lot of activity to evolving on the strategic side to drive more shareholder value. Clearly the extension of the concession of Cálidda, a change of government, but positive signals received from the new government. We expect to sign that in the next few months, if not weeks, and that is a key strategic lever for us. On TGI, in the presentation yesterday, the company showed a very detailed case of the dispute that we have with the regulatory commission regarding how they apply the existing regulation to define the tariffs. We believe that that is going to be successful and TGI finally is going to be able to charge the new tariffs under the existing regulatory framework. A huge lever there for us. Clearly, the regasification facility, we have the support from the Ministry of Mines and Energy.
The ANLA has affirmed that we can proceed, and that is clearly the faster way to get gas to the Colombian markets. That will protect our customers, will help them to pay moderate prices for the gas, but also will bring some new volumes to TGI. That is a key strategic lever for us in terms of value. The M&A activity that I just mentioned is also important. We continue seeing additional opportunities. In addition to that, just trying to normalize and get more efficient on Trecsa, Conecta, finalizing the project. Those are the key strategic levers that we are moving forward.
Thank you. We'll give it a few more moments for any further questions. We have a question from Simón Díaz López from Protección. Thank you for the presentation. I have one question regarding the negative effects of the accounts receivable from Air-e. Which alternatives is the company exploring to avoid or mitigate this matter that seems is going to take a significant amount of time to be resolved?
Yes, good question. Thank you, Simón. As Juan Ricardo referred to, although we don't have a significant share of the unpaid accounts by Air-e, we think it's important for the overall system in Colombia to be healthy and to have that situation resolved. We think an agreement is going to be announced in the next few weeks, perhaps a month, by which the government, with the support of the Ministry of Finance and Public Credit, Ministry of Mines and Energy, the Superintendencia de Servicios Públicos Domiciliarios. There is a preliminary agreement on how those accounts that are due will be paid, and it's likely to be a very positive solution for the overall system. Of course, for us, will allow to reverse the provisions we have made on a prudent basis, because this is a government debt that the Colombian government has always paid their debts.
I'm optimistic, and Juan Ricardo himself has been very engaged in trying to promote a constructive solution for everyone.
Thank you very much. We'll give it a few more moments for any further questions. Our next question is from Sebastian Becerra from [Inverlink]. Thanks for the presentation. I'd like to know your expectations of the company performance regarding the gas shortage for the following years in Colombia.
The regas facility solution is key. We think we can put it online in the first quarter of 2027. It's a relatively straightforward solution. We just expect to be able to sign with Hocol and Ecopetrol this agreement to be able to connect to their existing infrastructure that is not being fully utilized today. We have the environmental license to do that. Also, most importantly, the FSRU that will be used to bring the gas to the country. We have some offers for gas that will put the guys at a much lower price of what is being paid today. That's a project that should evolve here over the next couple of months to materialize.
Thank you very much. We'll give it a few more moments for any further questions. Okay, looks like we have no further questions. We would like to—
So—
—Sorry, Jorge. Please go ahead.
To wrap up, thank you very much. We aim to include a lot of detailed information because the quarter, as one of the questions, the admin cost appear to be high, but the explanations are there. If you want more information, happy to further expand on those. Just contact our IR team, we'll provide more information if needed. Thank you very much.
We'll now be closing all the lines. Thank you. The call in Spanish will begin at 9:15 A.M. Colombia time. Have a nice day.