Welcome to the Empower Q1 2026 earnings call. Following the formal presentation, there will be a question and answer session. During Q&A, participants will be able to ask both text and live audio questions. To ask a text question, select the messaging icon, type your question in the box towards the top of the screen and press the Send button. To ask a live audio question, press the Request to speak button at the top of the broadcast window.
The broadcast will be replaced by the audio questions interface. Press Join Queue, and if prompted, select Allow in the pop-up to grant access to your microphone. You will be placed in the queue where you will be able to listen to the meeting proceedings while you wait for your turn to speak. I will introduce each caller by name and ask you to go ahead.
Thank you. I will now hand over to Chander for the formal presentation.
Good afternoon, everyone, and thank you for joining Empower's earnings call. Today we'll review our performance for the Q1 of 2026, covering our financial results, key developments, and our outlook for the period ahead. I am Chander Teckchandani, Director of Finance at Empower, and it's a pleasure to have you with us. Next. Joining me on today's call are Mr. Ramesh Ramadurai, our Chief Financial Officer, and Mr. Edgar Qureshi, our Chief Commercial Officer.
Next. Before we begin, please note that certain statements made during this call may be forward-looking in nature. These statements reflect our current expectations and are subject to risks and uncertainties. For further details, please refer to the slide in our presentation materials. With that, I'll now hand over to our CFO, Mr. Ramesh Ramadurai.
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Thank you, Chander, and good afternoon. Our Q1 performance reflects both the resilience of the UAE economy and our role in enabling sustainable urban growth. As the energy transition accelerates, district cooling is increasingly recognized as a key enabler of decarbonization. Empower remains the clear market leader with the world's largest portfolio, supported by over 20 years of proven execution and serving more than 159,000 customers.
We generate strong and consistent cash flows underpinned by long-term concession agreements and predictable revenue streams. We also have strong growth visibility, supported by 3.2 million refrigeration tons of site capacity, with 1.98 million refrigeration tons contracted and 1.69 million refrigeration tons already connected. With a strong dividend profile and an experienced management team, we are well-placed to deliver long-term value while supporting Dubai's low carbon transition.
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Turning to Q1 results, our performance highlights the resilience of our business model. Despite some market uncertainty driven by geopolitical developments in the region during March, we still delivered strong performance across all key metrics. Revenue increased 16.8% year-on-year to AED 631 million. EBITDA grew 21.1% to AED 358 million, supported by higher capacity additions, improved operational efficiencies and increased use of TSE, which continues to have a positive impact on our operating costs.
Net profit before tax rose 44% to AED 229 million, outpacing revenue growth and reflecting improved margins. Our balance sheet remains robust, with net debt to EBITDA at 1.7x, highlighting our disciplined approach to capital management. These results demonstrate our ability to deliver consistent growth while maintaining strong financial discipline.
With that, I'll hand over to Edgar for the macroeconomic outlook.
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Good afternoon. I'm Edgar, Empower's Chief Commercial Officer. The Q1 of 2026 underscored the strength of the UAE's financial landscape. We saw capital markets reach record levels in February, driven by high liquidity and investor confidence. Despite a softening in late March, the DFM general index and ADX delivered notable growth earlier in the quarter of 12% and 7.6% respectively. The fundamental outlook for the UAE still remains strong.
According to the Central Bank of the UAE, GDP growth is projected at 5.6% for both 2025 and 2026. This is a balanced expansion, with the non-hydrocarbon sector expected to grow by over 5%, creating a very fertile environment for infrastructure demand.
For capital-intensive businesses like ours, numerous factors in the CBUAE report are particularly encouraging. Firstly, we welcome the inflation stability, which is projected at a manageable 1.8% to 2% throughout 2027, providing us with excellent cost visibility for our long-term projects. Secondly, we continue to witness monetary tailwinds.
The 50 percent basis point rate cut to 3.65% late last year has been maintained through Q1, significantly improving financing conditions for large-scale energy and cooling infrastructure. In short, the macro environment continues to provide a very favorable backdrop for our expansion and operational efficiency.
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Now turning to our own home market. Dubai continues to cement its status as a global leader in aviation, tourism, and real estate. Dubai International Airport recorded its busiest year ever in 2025, handling 95.2 million passengers. It remains the world's busiest airport for international traffic and is ranked number two globally for total passenger volume. This momentum carried into early 2026, with the city welcoming approximately 2 million overnight visitors in January alone, up 3% from the previous year.
Dubai's underlying economic resilience continues to further bolster our business environment. Dubai approved an AED 1 billion economic support package effective on the 1st of April, 2026. This initiative enhances liquidity across key sectors through measures like fee deferrals for hotels and streamlined residency processing, ensuring long-term stability for our commercial partners.
Equally, Dubai's real estate and urban planning also remains a primary demand driver. We witnessed an extraordinary start to the year with Q1 2026 real estate transactions hitting an all-time record of AED 252 billion, representing a 31% surge in value year-on-year. This growth is underpinned by the Dubai 2040 Urban Master Plan, which recently introduced a new health and safety strategy for workers' accommodations to ensure full regulatory compliance by 2033.
In summary, the sheer scale of Dubai's infrastructure growth and its ongoing commitment to a very high quality urban environment continues to provide a robust pipeline for our district cooling services. I will now hand over to Chander, who will provide a detailed breakdown of our financial performance for Q1 2026.
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Let's now take a closer look at our financial performance for the Q1 of 2026. Revenue for the quarter stood at AED 631 million, representing a 16.8% year-on-year increase. This performance reflects continued growth in our connected capacity base and stable demand for cooling services. Total connected load reached 1.69 million refrigeration tons, with contracted capacity at 1.98 million refrigeration tons, indicating ongoing expansion of our project pipeline.
On the profitability side, EBITDA reached AED 358 million, up 21% year-on-year, supported by operating leverage and cost discipline. From a cash flow perspective, we generated AED 402 million in operating cash flows and closed the quarter with healthy cash and cash equivalents. This provides strong liquidity to support ongoing capital investment and growth initiatives.
At the same time, we continue to benefit from optimized financing costs following refinancing actions and a favorable interest rate environment. As a result, net profit after tax grew by 44% to AED 208 million. Overall, the quarter reflects a steady progression in performance, demonstrating the resilience of our business model.
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Let me now highlight some key metrics. As expected, the Q1 reflects the early phase of seasonal demand, with consumption gradually building as we move towards the summer months. Consumption revenue accounted for 38% of total revenue, while demand charges contributed around 48%, providing stability and visibility to our revenue base.
EBITDA margins remain strong at 56.8%, supported by efficient plant operations and disciplined cost management. Overall, our financial position remains strong, allowing us to balance growth investments with a disciplined capital structure. With that, I'll now hand over to Mr. Ramesh, who will share further insights on our leverage position and dividend policy.
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Our capital structure remains supported by a disciplined approach to leverage and capital management.
Net debt stood at AED 2.93 billion, with net debt to EBITDA at 1.7x, remaining well below our target range of 3 to 4x and providing ample headroom to support future growth. Importantly, net cash increased during the quarter, demonstrating the strength and resilience of our business model. We have also optimized our financing profile with the AED 5.5 billion revolving credit facility, extending maturities to February 2028 while reducing financing costs. As a result, we maintain strong liquidity and flexibility to support continued growth.
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Delivering consistent shareholder returns remains a core priority. Since IPO, we have maintained a strong track record of dividend distributions, with AED 850 million paid annually in 2023 and 2024, representing payout ratios of 87% and 91% respectively. We have now adopted a progressive dividend policy committing to AED 875 million annually for 2025 and 2026.
In April 2026, we distributed AED 437.5 million as the final dividend for 2025. We maintain a strong dividend coverage ratio of around 1.47x, providing confidence in the sustainability of our payouts. Overall, we offer an attractive and sustainable dividend profile underpinned by predictable cash flows and strong growth visibility.
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Our capacity outlook continues to reflect steady and consistent growth. Connected capacity increased from 992,000 refrigeration tons in 2017 to 1.66 million refrigeration tons in 2025, representing a CAGR of 6.6%. This momentum continued into Q1 2026, with connected capacity reaching 1.69 million refrigeration tons, including 34,000 added during the quarter.
For 2026, we expect total connected capacity to reach 1.76 million-1.77 million refrigeration tons, representing an additional 66,000-76,000 refrigeration tons of growth over the remainder of the year. This outlook is supported by sustained demand and our proven ability to execute within long-term concession frameworks. We also continue to build our pipeline.
During Q1, we secured a significant new project, City Walk by Meraas, adding 15,200 refrigeration tons and further enhancing our long-term growth profile.
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To conclude, we offer a clear and compelling investment proposition. We combine market leadership with disciplined growth underpinned by long-term concession agreements that deliver predictable and resilient cash flows. We are well positioned to benefit from continued economic growth in the UAE, particularly in Dubai, supported by strong visibility from our contracted pipeline.
In addition, we provide an attractive and sustainable dividend profile while playing a key role in supporting the UAE's Net Zero by 2050 ambitions. Overall, we represent a high-quality total return opportunity, combining growth, financial discipline, and long-term value creation. With that, I will hand back to Chander to moderate the Q&A session.
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Before we move into the Q&A, please note that the appendix section of the presentation includes additional details on financial statements, ESG initiatives, and market-related information. Thank you for your attention. We'll now open the floor for Q&A.
We will now proceed with the Q&A session. Just a reminder that participants can ask both text questions and live audio questions. To ask a text-based question, please select the messaging icon, type your question in the box towards the top of the screen, and press the Send button. If you wish to ask a live audio question, press the Request to Speak button at the top of the broadcast window. This will be replaced by the Audio Questions interface.
Press Join Queue, and if prompted, select Allow in the pop-up to grant access to your microphone. You will then be placed in the queue, where you will be able to listen to the meeting proceedings while you wait for your turn to speak. I will introduce each caller and ask you to go ahead, after which you will hear a beep indicating that your microphone is live.
The first question is, because of the regional conflict situation, do you expect delays in conversion of contracted capacities into connected capacities this year and the coming ones?
The 34,000 tons that we connected in the Q1 and the remaining 66,000-76,000 that we expect to connect during the rest of the year, these are buildings which are in their advanced stage of construction, and we do not expect any delays in connecting them as planned.
And again, probably for the first half of next year, we do not expect any major shift in terms of when we will be connecting because these are buildings which are in the final stages of their construction.
We may see if the situation continues, the conflict in the region, we may have some impact in the second half of 2027. As far as 2026 and first half of 2027, we don't see any impact of the connected load going forward.
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Yeah, we can hear you. Yes.
Yeah, my only question was, like, can you explain your exposure to tourism-related business and, you know, what's the traction in that side of the business right now, especially particularly in April and May, and just your idea on it?
See, we do have some disruption in the hospitality sector because of travel restrictions or slowdown in tourists into the country. We didn't see any impact in the Q1 because it was in the later part of March when probably the conflict escalated. We do see some impact in the Q2 . Hopefully, if the conflict resolves sooner, the impact may not be significant in our view.
Okay. Just, like, can you share what percentage of revenue or EBITDA comes from that part of the business?
From a revenue perspective, it is roughly 10% of the total revenue.
Okay. Thank you.
We have a next written query. What is the reason behind the trending decline in consumption % out of total revenues in Q1 2026 versus 2025 and 2024?
There are two aspects to it. One is, you can observe, the capacity growth has been quite significant in 2025 at 90,000 tons, and we expect to add another 110,000 in 2026. When capacity is added, the occupancy takes time to grow. That is one reason, where you have on one side additional capacity brings in additional demand, consumption or a capacity revenue. Again, there is a sort of a buildup on the occupancy levels, which gives an impression that the consumption revenue is trending down from a overall revenue perspective. In absolute terms, you can see that it is actually growing.
It is just a temporary phenomenon until occupancy levels reach an optimal level, and you will see the consumption revenue will start trending in line with the growth in revenue.
There's another query. Can you please break down the revenue growth into pricing and volume?
The tariff structure has remained the same. There is no pricing impact. All the changes you are seeing is purely from volume growth.
Next query is 2026 connected capacity guidance imply a slowdown versus the pace in Q1 2025? Are you being conservative or are you seeing signs of a slowdown?
The guidance we have given is 100- 110,000 tons. When we gave this guidance at the end of 2025, we did say that if there is going to be an acceleration on the real estate side, we might even exceed the numbers. This is a realistic number that we definitely intend to achieve. If at all, there can be a slight upside to it depending on the pace at which developments happen in various projects.
Next is, where has the TSE mix reached, and is there more room for improvement? How was TSE mix in Q1 26 versus Q4 25?
You know, as I indicated again in the last call, we were expecting the TSE availability to reach pre-flood levels in 2024, by the Q1 of 2026. We did reach pre-2024 levels as of Q1 , 2026. I think that is one of the reasons you can see an impact in our margins. Before the floods in 2024, we were at around 15% of our water usage was through TSE. We have reached that level as of Q1 . It is in the range of 15%-18% of our total water consumption for the Q1 . We have added more plant rooms and capacities, and we have also enhanced our TSE infrastructure.
We expect this number to grow as we move forward through 2026 and 2027. The rains in 2026 in the Q1 of 2026, had no impact on the availability of TSE and we received the quantum that we anticipated.
Next query is, any plans to expand outside Dubai market considering significant cash buffers? Also the breakdown of the revenues, chilled water and pre-insulated pipes?
Planning to grow outside Dubai again is a continuous process. We continuously look for opportunities within UAE, which is outside Dubai, as well as in the region, especially the Saudi market. It is an ongoing process. We will come with our feedback if we move, if we have any update to provide. From a split up of breakdown of revenue between district cooling services and pre-insulated pipes. Pre-insulated pipes is AED 12 million out of AED 631 million total revenue for Q1 2026.
Next query is what is the status of TSE recovery? Is there any update on pass-through of the DEWA charges?
I presume you are asking about the share of TSE in the total water consumption. As I indicated earlier, it is in the range of 15%-18% for Q1 2026, and we expect that to grow even further with more infrastructure that we are creating to receive TSE. From a pass-through perspective, we are continuing to have conversation with the Dubai Supreme Council of Energy.
However, probably because of the current geopolitical situation, there might be a delay in getting a favorable response from them. However, we continue to keep the conversation going, and as and when we get a positive feedback, we will report back to the market.
Next query is many observers were expecting volumes to contract year-on-year, given the economic and social impact of the regional situation on Dubai in March, including lower tourism. How do you explain 3% year-on-year increase in EFLH, which resulted in higher consumption?
The full impact of tourism is not reflected in Q1 2026 because the geopolitical event started beginning of March, it escalated through the 3rd and 4th week of March. It didn't have any effect in the Q1 . For EFLH expansion, the average ambient temperature has been higher by 2% in all the three months of this quarter compared to Q1 of 2025. In addition to that, EFLH expansion also happens in line with the occupancy growth as well for properties which were connected in 2025.
Next query is what is the reason behind decline in utility cost as a percentage of revenue in Q one 2026 versus 2025? Were there any one-offs? Are you revising your 46, 47 EBITDA margin guidance for the year after the strong Q one 2026 reading?
Decline in utilities cost is because of two reasons. One is improvement in our operating efficiency, and definitely availability of TSE has also contributed to a lower utilities cost. Yes, considering that we have improved our margins in the Q1 of 2026, our guidance for the rest of the year is marginally revised from 46%-47% to 47%-48%.
Next query is what was the logic behind change in ownership structure where the DEWA increased shareholding? Can we expect a secondary issuance of shares?
The change in shareholding was part of a strategic decision made at the Government of Dubai level to consolidate all energy-related businesses in the Emirates under DEWA. Dubai Holding is expected to focus on real estate businesses. We don't see any impact of change in shareholding in our business. You can observe that we have recently signed a concession agreement with Dubai Holding for their City Walk Meraas project.
Our relationship continues, and we will continue to work with Dubai Holding going forward. Regarding any further issuance of shares, I think this is a decision which is at the leadership level of the Government. If any update, we will brief, we'll come back to the market.
Next one is any color regarding the dividend policy expected beyond 2026?
Yeah. You know, we grew it from AED 850- AED 875 between 2023-2024 to 2025-2026. We expect to continue to reward our shareholders by increasing our dividend in line with growth in availability of free cash flow.
Next query is in 2025, there was one-off income from Dubai Municipality. Is there anything in Q1 2026?
No, no. We don't have any one-off item in Q1 2026 with reference to Dubai Municipality.
The next query is on revenue. Revenue growth significantly outpaced connected capacity growth, 16.8% versus 6.4%. Can you please help us understand the difference in the growth rates?
The demand capacity charge grew at 7% and our consumption revenue grew at 12%. That calls for higher revenue growth compared to capacity growth.
The next one is, are you impacted by any of the hotel closures, renovations announced in Dubai?
I think the hotel operators are using this opportunity to renovate because of the low occupancy level. We didn't have any impact of this in the Q1 . There will be a marginal impact in the Q2 if the conflict escalates and continues. If conflict is ended, we don't see a significant impact on our revenue. As we highlighted already, the share of hospitality revenue in the total revenue is 10% only.
Do you expect capital cost inflation this year as a result of regional disruptions? Would you be able to pass this inflation through higher fees?
We have been through similar situations in the past where it was a high inflationary sort of a situation. We have managed it over the last 22 years. We have managed to keep our tariff without any revision. Even during this difficult period, we expect to manage the cost part of it way better than others. Hopefully we may not need to revise our tariff for the time being.
Q1 2025 was a low base given that temperature levels were lower than usual. Should we expect same growth in the coming quarters as the comparison base grows?
The growth in Q1 26 was clearly because of the lower base as highlighted by you. If the temperature is higher compared to last year, we will have a higher consumption revenue moving forward, but we will not be able to say anything right now unless the weather really changes for the better.
Another query from the hospitality sector. Will you be able to recover the connected capacity charges during closure and low occupancy? Second part is what is the breakup between connected and consumption revenue in the 10% you mentioned coming from the hospitality sector?
We continue to bill them for the capacity charges. We don't see any challenges in recovering that amount. As far as the breakup between connected and consumption revenue, it is the ratio of 50/50. Consumption is 50, and capacity charges are 50%.
Next query is could the progress on construction of plants be impacted by logistics issue due to the current situation?
Yes, to some extent, it can impact if materials have to be procured from overseas. However, we have not seen any significant impact in the progress of any of our plant construction or network construction.
We have another query. What is the demand charge as a % of revenue in this quarter, and how has it trended over the last few quarters?
This information is available in the earnings presentation, page number 19. It is at 48% in Q1 2026. You may have to refer to our previous earnings presentation for the previous quarters to get a trend.
In Empower, strong revenue from insulated pipe sales in Q1 2026. Could you please share FY 2026 revenue guidance for this segment?
It is expected to be around, AED 50 million for 2026 full year.
In this breakdown, others grew from 7% last year to 14% this year. Can you please give us more color on what is included in the other segment and what led to the growth? Revenue contribution Q1 2026, demand 48%, consumption 38%, others 14%. Others 14% basically includes the new capacity connection that we have made, 33,500+, the temperature surcharge and the pipe sales.
The press release you refer to lower operational costs in Q1. The financial statements do not seem to show a decline in operating costs, but rather the opposite. Could you help us reconcile this? If you see the cost of sales, as a percentage, the cost of sales has declined, and as a percentage of revenue, G&A expenses have also declined.
That is the basis for us to say that operational costs in Q1 have declined compared to growth in revenues. There are a few queries which we have not answered. These have been answered earlier. These are repetitive in nature. We'll wait for a few seconds if any more queries are there. We'll conclude the call. We have no further queries. That concludes our call. Thank you for joining us today. If you have any follow-up queries or require additional information, please feel free to reach out to us. Thank you once again.