Ladies and gentlemen, thank you for standing by. I'd like to welcome you to Grupo Energía Bogotá's First Quarter 2025 Results Conference Call on the 14th of May, 2025. At this time, all participant lines are in listen-only mode. The format of the call will be a presentation by the management team, followed by a question and answer session. Without further ado, I would now like to pass the line to Mr. Juan Ricardo Ortega, the CEO. Please go ahead, sir.
Good morning, everyone. Thank you for joining us. During this first quarter, we recorded positive results that reflect the group's sound operational performance. We generated COP 2 trillion in revenue and COP 2.3 trillion in adjusted EBITDA, and a controlled net income of COP 0.9 trillion. The adjusted EBITDA for the first quarter reflects year-over-year growth across most of our operating segments, except for TGI, our transport gas company in Colombia. Its performance has continued to be impacted by the delays in the approval of the tariff framework by a resolution of CREG, the regulatory agency. Additionally, dividends declared by our affiliate companies increased by 14.3% compared to the first quarter in 2024, driven by stronger results from Enel Colombia and ISA Peru during 2024. We executed $110 million in organic CapEx, mainly driven by increased execution of transmission projects in Colombia.
We accounted for 64% of total CapEx during the quarter and grew by $21 million versus first quarter 2024. I would also like to highlight the strong performance of our shareholders, who represented 94.7% of our share capital at the General Shareholder Meeting held in March. During the meeting, among others, it was approved the distribution of COP 2.2 trillion in dividend, and it was approved the equivalent of COP 238 per share with a yield of 9.8%. Lastly, following the change in the rating outlook of the District of Bogotá, Fitch Ratings affirmed GEB's and TGI's long-term credit investment credit rating, while revising our outlook from stable to negative based on the conditions Colombia is facing. Some milestones that we've accomplished during last year's, most significantly in Colombia.
We want to highlight the progress of over 56% of the Colectora project, reaching, by the end of April, the installation of 468 towers along the Cuestecita - La Loma segment, which will be completed by September, if things continue to evolve as we've been doing so far. We've actually built four immense towers of over 135 m tall because of environmental requirements. Most towers are usually between 50 m and 60 m tall. We are four left to go, which are the main milestones for us to be able to finish the first segment of the Colectora- Cuestecita segment. This will enable the development of key projects in the south of La Guajira, which are going to be vital for Colombia electricity supply in the near future. The Cuestecita substation, we hope to be energized by September, as I just said.
Additionally, Enlaza obtained the land exclusion authorization for the upper Bogotá River basin for the construction of the north substation, which is vital for the provision of electricity in the north and west of the city of Bogotá. This provides the technical feasibility, and we hope to have the license as soon as possible. Enel Colombia delivered solid results for the quarter, reporting an EBITDA of COP 2 trillion, 14% increase compared to the same period in 2024, and a net income of COP 969 billion, up to 22.4% year-over-year. As we explained last year, the month of April last year was incredibly dry, which clearly impacted Enel results, as opposed to this year where we are in pretty good shape.
The company also reaffirmed its commitment for the country. It continues to invest COP 508 billion during the quarter and advancing on the construction of the Guayepo III and Atlántico solar parks, making Enel the largest generation in solar energy in Colombia. These results are particularly relevant in the context where several distribution companies are facing financial difficulties due to delays in the government subsidy disbursements and also delays in IDES, an intervening distribution company in the Caribbean coast. The debt they haven't paid is over COP 2.9 trillion. What is relevant is Enel, although being 19% of the market, just has a COP 139 billion debt, just 6%, which is a minor debt compared to all other companies that are exposed to this nascent risk. Regarding the natural gas segment, the UPME published the complementary document to the 2023–2038 Natural Gas Supply Technical Study .
Colombia gas supply must change because the Piedemonte has not been able to produce all the gas it used to, so it will need to import it from the Caribbean coast. This includes key measures to address the gas deficit and a focus on the development of new transport infrastructure for market integration. The document outlines the development of 13 additional projects to mobilize up to 400 million cubic feet per day, including capacity expansions, changes in flow directions, and the connection to the national transport systems. This is a significant growth opportunity for TGI based on this new infrastructure. In Peru, the Minister of Economy and Finance has indicated that the 10-year extension of Cálidda concessions is part of a broader package that will be presented on the 28th of July as part of the celebration of Peru's independence.
These extensions will provide access to expected gas energy in several regions in the Andean region of Peru. This will significantly impact local and national economy. This is going to be over 2,500 km of distribution networks, connecting 150,000 households, with a projected investment of $432 million. While in Brazil, Brookfield has initiated the sale of Mantiqueira Transmissora, which includes 1,204 km of lines. It's a concession that is going to be valid up to 2046. This is the key opportunity for growth in transmission in Brazil. This is what we are currently evaluating. Jorge will continue with the details of the financial results for this quarter. Thank you so much for attending the call.
Thank you, Juan Ricardo, and good morning, everyone. The first quarter of 2025, operational revenues grew by 4.4%, driven by positive results in distribution, segment, and energy transmission. Natural gas distribution revenues increased by 9.1% year-over-year, driven by currency conversion into Colombian pesos and the positive performance from Cálidda. This, due to the higher average distribution tariff, increased volumes, and better performance in the non-banking financing business. In energy transmission, revenues grew by 9.8%, mainly in Colombia, due to the indexation to the PPI and the effect of exchange rate fluctuations on the revenues from auction assets, which are remunerated in U.S. dollars. Similarly, in Guatemala, revenues increased due to the commissioning of transmission lines and substations. On the other hand, revenues in the natural gas transportation segment declined by 5.6% due to lower contracted capacity, which impacted fixed and variable charges.
Additionally, there were lower maintenance-related revenues compared to the first quarter of 2024 due to a contingency at a producing field last year. Operational costs for the quarter increased by 8% compared to Q1 2024, mainly due to higher costs in the natural gas business. In the gas distribution segment, costs increased by 8.2% due to currency conversion. In functional currency, they remain relatively stable compared to Q1 2024. This was partially offset by lower costs at Contugas due to a decrease in residential connections between Q1 2025 and Q1 2024, following the end of the Peruvian government gas bond program, as well as the completion of FISE projects in September 2024, which is expected to restart around June 2025. In the gas transportation segment, the 11.9% increase was driven by higher maintenance costs due to increased replacement gas consumption and pipeline integrity activities.
It also reflects higher professional service costs linked to greater execution of engineering tasks, environmental assessments, and also salary increases. In electricity transmission, costs increased mainly in Colombia due to higher depreciation. Administrative and operating expenses, the 13.2% increase compared to Q1 2024, was mainly due to gas distribution, mainly at Cálidda, due to higher expenses in billing collections, network maintenance associated with the growth in the customer base that reached 2 million clients in 1Q 2025. In gas transportation, the increase is explained mainly by higher provisions for non-applicability of the WACC updated by CREG. Quarterly operating margins by segment, calculated as revenues minus costs and expenses, reflect the slower revenue growth, primarily due to the performance of TGI compared to the cost and expenses execution during the quarter. Next, please. The operating profit for the quarter decreased by 4% compared to the first quarter of 2024.
The main variations explaining the net profit for the quarter are as follows: Financial expense decreased by 16% compared to the same period in 2024, mainly due to prepayments made by TGI on the club deal and reduction in interest rates. Increase in revenue of COP 140 billion from exchange rate difference due to a 5% appreciation of the Colombian pesos against the U.S. dollars during the quarter, compared to 1% depreciation in Q1 2024, affecting GEB's foreign currency-denominated debt. The equity method increased significantly year-over-year due to better results recorded by Enel Colombia, Argo, and ISA Peru. The income tax increased by 42% year-over-year due to the deferred tax in GEB, driven by the appreciation of the exchange rate at the end of Q1 2025 and its effects on foreign currency-denominated debt. The controlled net profit for the quarter amounted to COP 945 billion. Next, please.
The equity method in Q1 2025 amounted to COP 681 billion, growing by 16.4% compared to 2024. This variation is primarily driven by three companies, Enel Colombia, Argo, and ISA Peru. Enel Colombia's, due to better results from lower purchases and the normalization of energy prices on the spot market, as well as lower impairment from Windpeshi. Argo, due to higher equity method income from AGX and remuneration from the Argo I contract. ISA Peru due to higher operating income and the recovery of maintenance provisions. Total capital expenditures executed in Q1 2025 amounted to $110 million equivalent. Colombian transmission business represented 65%, primarily allocated to Colectora, Sogamoso and Refuerzo Suroccidental projects, followed by 21% in the gas distribution segment in Cálidda. Our updated CapEx projection for the next five years amounts to $1.3 billion.
The investments are in the energy transmission segment, which will be allocated in Colombia for the Colectora, Sogamoso Norte, Chivor II Norte, and Refuerzo Suroccidental projects. The projected CapEx for the gas distribution business is led by our Peruvian subsidiary, Cálidda, in line with its current investment plan. Turning to the next page. The adjusted EBITDA for Q1 2024 totaled COP 2.3 trillion, reflecting a 7.7% increase compared to Q1 2024, explained by the increase in declared dividends from associated companies, representing a 14.3% rise, driven by stronger results from Enel Colombia and ISA Peru during 2024. The graph on the left shows the contribution by segment, with the transmission business in Colombia leading, followed by generation and gas distribution.
The graph on the right displays the controlled EBITDA for the quarter, with 85% of it coming from three companies, TGI 42%, Cálidda 25%, and the transmission business with a 17% participation. Regarding adjusted EBITDA by segment, the energy transmission business stands out mainly due to higher dividends from ISA Peru, and the 12% increase in the natural gas distribution segment reflects Cálidda's revenue growth across all business lines. I'll hand over the floor to Karen, who will speak about the company's debt portfolio.
Thank you, Jorge. As of the end of the first quarter of 2025, the group's consolidated debt amounted to $4.7 billion equivalent, with a comparable distribution between Grupo Energía Bogotá and its subsidiaries. Of this total, 34% is at a fixed rate, while the remaining is indexed to SOFR, IBR, and CPI. In terms of currency, 66% of the debt is denominated in U.S. dollars, followed by a 31% in Colombian pesos. Regarding leverage indicators, the net debt/EBITDA ratio stood at 3.5x , and the EBITDA to financial expenses ratio was 4.9 x. The leverage level remained stable compared to the first quarter 2024 and shows improvement to the year-end 2024 figure, driven by a 5% appreciation of the Colombian peso against the U.S. dollar during the first quarter of the year.
Now, we would like to highlight some key developments during the quarter, aligned with the group's ongoing strategy to optimize its debt profile and reduce financial costs. At the GEB level, the financial superintendents authorized the registration and public offering of local bonds under the issuance and placement program of GEB for a total amount of up to COP 2.5 trillion . On March 21, TGI amended its club deal agreement, renegotiating the applicable interest rates and reducing the margin over the three-month IBR by 55 basic points. On March 25, Contugas leveraged its strong cash position to make a voluntary prepayment of $15 million on the syndicated loan guaranteed by the group. Finally, our Guatemalan subsidiary, TRECSA, refinanced $45 million maturing this year through a bridge loan agreement with the participation of Natixis and Bladex. Next, Jorge Andrés Tabares will share the main ESG developments from the quarter.
The ESG front during Q1 2024 has been significant. On the environmental front, we verified over 16.9 million tonnes of CO2 equivalent under the ISO 14064. TGI renew ISO 50001 certification for 15 sites, and earn a new certification in La Guajira. We also sign agreements to install 31 biogas systems and recover 115,000 tonnes of waste. Socially, we advance with purpose. In the Colectora- Cuestecitas project, we agreed on 362 initiatives with 219 indigenous communities, benefiting over 12,000 people. In corporate governance, we completed the evaluation of our board of directors with outstanding results. These results reflect our strength, commitment, and long-term vision. Finally, I would like to summarize the quarter highlights. We're making solid progress in executing our growth strategy, supported by operational excellence that allow us to optimize every resource and capital discipline that ensures that every peso is aligned with our long-term objectives.
These quarter results reaffirm what we have been building, a robust portfolio diversification that not only mitigates risks, but also maximize our ability to generate sustainable value. The strong EBITDA generation, which combined with improved financial leverage, it strengthens our investment capacity, ensuring the group continues to grow strategically and capitalize on market opportunities. Finally, we advance our sustainability commitments through the implementation of sustainable energy solutions, circular economy initiatives, and social investments, while aligning with high local and international standards. Thank you again for your interest, I will move now to the Q&A session.
Thank you very much. We will now move to the Q&A part of this call. If you'd like to ask a question, please press star two on your phone and wait for the prompt. That is star two on the phone. If you're dialed in by the web, you can type your question in the box provided or request to ask a voice question. We'll just wait a few moments for the questions to come in. Our first question is from Juan José Muñoz from BTG. Your line is now open. Please go ahead.
Hi, team, thank you for the opportunity to ask just two question from my side. The first one is related to the adjusted EBITDA guidance that you provided for Q 2024, if you still have this EBITDA guidance of COP 5.4 trillion-COP 5.5 trillion for this year after one, two results. That's my first one. The second one is related to the potential M&A in Brazil. How much financial flexibility or headroom under your current debt structure do you have to support a material M&A transaction in Brazil? Thank you.
[inaudible]
Juan José, can you hear me?
Yeah.
Yeah. We can.
Okay. Thank you for the question. Regarding the guidance, despite being a very solid quarter, we prefer not to move it at this point. We will continue to monitor the key value drivers during the next quarter and update at the end of the second Q. We have some space above our budget. It's premature based on just three months of a very good performance to move the guidance. In relation to Brazil acquisition, we feel quite comfortable. We ended up the quarter at around 3.5x, as we show. If we end up moving above the 4x long-term cap, we could be able to delever relatively shortly after that. On the leverage side, that's the answer. On the banking capacity, we hear from many banks that they're willing to put the money for us to fund the transaction. Next question.
Okay. Thank you very much. Juan, do you have any follow-up questions?
Not for the time being.
Okay. Thank you. Thank you. Our next question is from Sheila from Profuturo. Your line is now open. Please go ahead.
Okay. Hi, everyone. Yes. I have two questions about Cálidda in Peru. First, I want to know if the new law approved by the Congress about natural gas massification, if this law have a positive and negative impact for Cálidda. My other question is about the proposal of the extent, the coverage here of distribution natural gas in Peru for new regions. If this approval is okay, how is the CapEx or your tentative CapEx for it? Can you hear me?
Yes, we can hear you.
Hi, Sheila.
Okay.
In terms of the massification law, we may be talking about equalizing the prices for low consumption.
I think we believe it's not going to have a significant impact because it represents very low volumes. It doesn't really generate a significant impact. In terms of the new regions, the potential CapEx that we will be committing is about $430 million. It's a number that we're still refining and negotiating with the government in terms of the scope on how much. The current number is about 150,000 new connections that we could be deploying. The final number is subject to final adjustments based on the negotiations with the government.
The good news, as Juan Ricardo mentioned, is that there is a very firm commitment, and we see it in the dynamic and the intensity of the interactions with the government, that by July, we could be able to agree final terms on the investment from our side, the new coverage, and the corresponding extension of the concession.
Okay. All right.
Good.
Okay. Thank you.
Thank you very much. Just a reminder, if you'd like to ask a question, please press star two on the phone, and if you're dialed in by the web, you can type your question in the box provided or request to ask a voice question. We'll give a few more moments for any new questions to come in. Okay. Our next question is from Sebastián Gallego from Ashmore. Your line is now open. Please go ahead.
Hello. Good morning. Can you hear me?
Yes, we can. Please go ahead.
Perfect. Thank you. Thank you, GEB team, for the call. I have several questions today. The first one, if we could elaborate a bit more on TGI's performance and the expectations for the year. This was one of the few major companies of the group that performed with annual declines in revenue, EBITDA, and overall key items. I'm just wondering, what are your thoughts for the remainder of this year? What could be the outcome of the tariff revision? If you can just expand on whether TGI's dividend distribution capacity could be harmed for next year. Second question is related to OpEx. Despite the good results during the quarter, we saw that OpEx grew well beyond revenues and EBITDA, and this was across the board in most of the segments. I'm just wondering if this trend could continue ahead.
What measures are the companies taking to bring this SG&A down? That would be helpful. Third, just a follow-up on the M&A question previously asked. If you can please elaborate on the outlook in Brazil, given the current rate environment, and how a potential valuation transaction could change compared to what you did a couple of years ago in the most recent transaction in Brazil. That would be useful if you can comment on how you're thinking about valuation for those assets. Thank you so much.
Okay. Thank you, Sebastián. On TGI performance, the solutions and we are the correct [audio distortion]
Jorge, your line is a little bit choppy. Perhaps, would it be possible if you reconnect?
Okay. Can you hear me now?
Now I can hear you better.
Better?
Now it's better, yes.
Okay. Okay, great.
Okay. Thank you.
Apologies. Was the TGI answer heard okay?
Yeah. I could hear it.
Do I need to repeat the TGI? Okay, good. On the OpEx side, I was saying that we think that we will protect the margins and there are a few non-recurrent items. Of course, as we said, in Cálidda, there is an increased cost base as we have more customers than we are. We need to serve those customers. That also brings revenue from the gas demand from those customers. On Brazil, it's a competitive process, we cannot say much about the valuation. We say that we will approach the potential acquisitions with capital discipline, with a long-term view. We have all the learnings and all the outcome of the previous acquisition, which is from the same seller. We think that will give us much more confidence when we approach the valuation and the assessment of that business as we move along.
We still think that we can create value by adding these assets to the portfolio. The funding that we can get to that acquisition is fairly competitive. We could be talking about 6.5%, roughly speaking, about the cost of debt to fund that acquisition. It's just a matter of maintaining the discipline that we have had in the past in the acquisition. Much more details on valuation we cannot provide because it's a competitive process. Next question.
Thank you, Jorge. Can I follow up?
Sure, go ahead.
Just thank you.
Sure, go ahead, Sebastián.
Thank you, Jorge, for the answer. Just a little follow-up on the first and last question on TGI. If you could clarify whether that expectation will offset the provisioning that TGI has been doing over the course of recent quarters. I'm just wondering how is the net effect when you take into account that expectation of the COP 40 billion in additional revenues, but you're still provisioning due to the WACC issue with the regulators. Maybe on the Brazil topic, I'm just curious whether would you consider any type of equity issuance to fund this operation, or would this be an opportunity to raise capital, I don't know, even through an ADR, given this acquisition? If that is a possibility that you are considering.
Sure. When CREG issues the tariffs to be charged, those will include the new WACC, the 11.88%. That issue will be resolved at the same time when they issue the resolution for tariffs. That includes the valuation of the assets to be recognized, the cost of the [audio distortion].
Hi, Jorge. It's [choppy] now again. Yeah, we lost Jorge.
They can-
Can you reconnect please?
Okay. In the meantime, Sebastián, if you like, I can complement on Jorge's answer regarding the TGI WACC dispute. Once the tariff is implemented, there will be no more disputes regarding the WACC because the 11.88% of the WACC is going to be mandatory from now on. I hope that answers that question. Sorry again, could you just say that again, the second question that you asked about the M&A transaction? Apologies.
Yes.
I have my notes, but I can read it.
Yes, absolutely. Thank you, Karen. I was just wondering if the M&A transaction or potential M&A transaction in Brazil, GEB will consider any equity issuance to fund this operation, or are you just looking at debt funding for this transaction?
Okay. We are considering all options. For sure we will need certainty of funding. The most probably would be debt, just because of the certainty of funding, which cannot be certain when you do equity. We are considering all options.
Perfect. Thank you very much.
You're so welcome.
Thank you very much. Our next question is from Andrés Duarte from Corficolombiana. Do you have an estimate on the change in income from TGI after the tariff updates expected this quarter, maintaining current transported volumes? How do you expect to invest in the assets to be sold by Brookfield in Brazil? How would you fund those transactions?
Hi, Andrés. Thank you for your question. Regarding the first question as for TGI, like Jorge mentioned, it would be an impact of $40 billion per month. I think that's covered, regarding the M&A transaction, like we mentioned, the funding, we are considering all options, as for certainty of funds, the most favored one is debt. Sorry, could you state the other question of Andrés? Could you read it again?
How much do you expect to invest in the assets to be sold by Brookfield in Brazil? How would you fund those transactions?
Thank you. It should be a transaction between $500 million and $ 800 million approximately, we're still in the process of doing the current due diligence and everything related to the M&A acquisition. I hope that answered the question, Andrés. Feel free to text us if you need any further information.
Thank you very much. Just a reminder, if you'd like to ask a question, please press star two on your phone. That is star two on your phone. If you're dialed in by the web, you can also type your question in the box provided or request to ask a voice question. We will give a few more moments to see if any further questions will come in. We have a question from Macauley Smith from Ninety One. Your line is now open. Please go ahead. Hi, Macauley. Your line is now open. Perhaps you can send us a text question. We'll give a few more moments for any further questions.
Can you hear me?
Hi, Jorge. Yes, we can hear you.
Sorry about the lack of connection. I think Karen mentioned $ 40 million. It's COP 40,000 million per month on the TGI side, on the new resolution, the new tariffs.
Okay.
Pesos.
Thank you very much, Jorge. Looks like we have no further questions. We would like to thank you all for your presence today. As a reminder, the IR team at GEB is available at any time to resolve your questions. We hope you all have a nice day. We'll now be closing all the lines. Thank you