Welcome to ENGIE Chile's first quarter results conference call. Today, all participants will be in a listen-only mode. Should you need assistance during today's call, please signal for a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. At that time, to ask a question, you may press star, then one on your telephone keypad. If you would like to withdraw your question at that time, please press star, then two. Please note that today's event is being rE-CLrded. I would now like to turn the conference over to Eduardo Milligan, CFO, ENGIE Chile. Please go ahead.
Investor Relations Officer and Bernardita Infante, Financial Advisor, and we are pleased to present ENGIE Chile's first quarter results for 2025. Let's start, and, as described on page 2, we have organized this updated presentation into two sections. In the first part, we will briefly go through the first quarter of 2025 performance and results. In part two, we will provide an updated vision of the medium-term outlook for E-CL. We can start directly on page 3, where we share the main highlights for 2024 and the first quarter of 2025. First, the company continues the trend of strong results in the first quarter of this year.
The guidance provided with the year-end 2024 results is maintained and expected to be in the high end of the range that we provided two months ago. SE-CLnd, after more than three years, we are resuming dividend payments. So yesterday, the shareholders approved a dividend distribution equivalent to 30% of 2024 net profits, after absorbing accumulated losses resulting from the heavy impairments of assets due to the energy transition that we implemented in the last years. Third, the successful implementation of the securitization program for PEC and MPC in 2024, with a final monetization on April 3 of this year, has improved liquidity and triggered new investments while keeping ECL's leverage under control. Fourth, we confirm the total exit of coal-fired generation between the end of 2025 and mid-2026, and we are working to achieve such goal.
Fifth, as we will confirm with the projects under construction, we continue to accelerate the development of batteries, which will be key to support our 24/7 downstream PPAs. And sixth, we start to see the ramp-up on volumes coming from the new renewables, such as Kallpa, former Lomas de Taltal, and also BESS Tamaya , which together with the upstream PPAs, are reducing E-CL's share position and exposure to market volatility. Then on page 4, we can see the current progress on the execution plan for renewables. As of today, we have already implemented 1.3 GW, including the addition of both Kallpa and BESS Tamaya , which obtained their formal COD during the first quarter of this year. Then, BESS Capricornio , on the other hand, is already injecting to the grid. We expect its COD during the sE-CLnd quarter of this year.
Importantly, these projects were developed on time and on budget. Now, please, let's continue on page 5, where we show that the trend is continuing to be confirmed. Our EBITDA during this first quarter reached $160 million, which is in line with the high end of the EBITDA guidance we provided when we presented our full year 2024 results. At the same time, we invested $169 million in CapEx, and our net debt EBITDA of the last 12 months continued its downward trend, reaching now 3.6 x. This is also explained on next page 6, where we show the 15% increase in EBITDA compared to the same quarter of previous year, and the $78 million net result, mainly due to our strong operational performance during this quarter.
Moving forward, page seven explains in detail the evolution of ECL's energy margin. This chart shows the total energy sales of the first quarter of 2025, which reached 3.3 TWh, and how these energy sales were supplied with our portfolio. So the energy margin was only slightly higher, going from $52 in the first quarter of 2024 to $53/MWh in the first quarter of 2025. The higher volumes that were sold in this quarter explain the 15% increase in EBITDA, thanks to renewable generation and lower fuel prices, which on average allow ECL to keep its average supply cost under control. So now I will leave you with Alison, who will present the detailed evolution of ECL financials and our capital structure.
Thank you, Eduardo. Good morning, everyone. I will briefly comment on the chart on Slide 8. First quarter, EBITDA increased by $22 million compared to the first quarter of last year and reached $160 million. The main reasons for the EBITDA improvement were the increase in physical sales to distribution companies as a result of a natural demand growth, and an increase in our pro rata share of the regulated supply, higher gas sales to third parties, including exports to Argentina and sales to local companies. Lower fuel costs, both for use in our own generation and for fuel sales to third parties. The overhaul carried out in the first quarter to our Unit Sixteen combined cycle plant is one of the reasons for the increase in fuel sales to third parties.
These positive factors were partly offset by the higher marginal energy costs on the spot market, and the average price of our energy purchases increased by almost $7/MWh, compared to the first quarter of last year, mainly due to lower hydraulic generation in the system, lower availability of thermal plants, and the February massive blackout in Chile. All this explains the 15% increase in EBITDA to $160 million, and the right path to meet the high end of, or even exceed our EBITDA guidance for 2025.
On Slide 9, we show how the increase in EBITDA helped by the foreign exchange gains, lower depreciation explained by past impairments, and decrease in the net interest expense, resulting from an increase in capitalized interest, explain the $32 million increase in net income, which climbed to $78 million in the first quarter. In Slide 10, we see that our debt decreased by $8 million to $1.93 billion. On the one hand, we reported strong cash generation, which allowed us to finance capital expenditures of $161 million, plus interest, taxes, and insurance premiums.
On the other hand, our cash balance decreased by $151 million, which we used to repay the $136 million balance of the 144A bonds maturing on January 29, plus $21 million principal installment of the IFC and DEG loan. On Slide 11, we show a summary of the cash flows resulting from the past stabilization laws. Since the PEC law was first implemented at the end of 2019, the company accumulated accounts receivable for approximately $1 billion, which represented sales revenues that could not be collected in due course. Thanks to the three PEC monetization programs implemented by IDB and Goldman Sachs, we could sell these accounts receivables. This contributed to alleviate the heavy financial pressure in terms of leverage and liquidity, and the funding compression to finance investments required for the energy transition.
In the case of PEC One, we sold accounts receivable at a discount, which represented interest expense of $79 million, reported between 2021 and 2023. In the case of PEC Two and PEC Three, the company received interest to compensate for the delayed collections. On April 3, 2025, we completed the final sale of the PEC Three program. We received $112.4 million in cash, including $3.7 million in interest income, which will increase our resources to fund our ambitious CapEx program for the year. Including this final sale, that is not shown in the slide, we collected a total of $759 million under PEC Two and PEC Three since August 2023, including interest income of $25 million. Now, let's move to Slide 12.
Our triple B stable outlook ratings have been confirmed by both Fitch and Standard & Poor's. Net financial debt reached $1.9 billion at the end of March, with a net debt to last 12 months EBITDA down to 3.6x . We have made progress in our debt profile, on our debt profile objectives. First, to reduce net debt to EBITDA through EBITDA rE-CLvery. SE-CLnd, to fund the construction of our renewable generation and BESS storage projects, whose objectives are to reduce our costs, our exposure to spot markets, and the curtailment of an annual intermittency associated to renewables. And third, to extend the maturity profile of our debt.
On the bottom part of the slide, you can see the maturity schedule of our debt as of the end of March, which shows a reduction in the refinancing risk and 5.4% average coupon rate of our debt. At the end of March 2025, the average remaining life of our debt was five years. Finally, we jump to Slide 47, the upper part of the slide shows that over the 12-month period ending March 2025, E-CL's stock price climbed 25% above the peer average of the Chilean stock market in general. The news is that we paid dividends, which we had not distributed since 2021. Pursuant to our dividend policy of distributing at least 30% of the net income after resolving accumulated losses, our shareholders approved the payment of $54 million dividend on May 28, 2025.
Now I'll leave you with Eduardo, who will brief us on the investment plans and guidance for the year.
Thank you, Alison. So let's go back to page 14, in which we will start with the sE-CLnd part of this presentation and present the medium-term outlook for ECL. If we move directly to page 15, we can see that we are presenting an updated development plan of renewables and BESS projects to be executed between 2025 and 2027. And as mentioned during our full year 2024 call, these are the concrete projects shown on page 23, that have continued their construction during the first quarter and will be delivered in the next two years. So these new projects will add around 1.2 GW of additional capacity between renewables and BESS to the portfolio, and will allow ECL to be fully balanced from both business and risk perspectives.
To implement these additional projects, E-CL will need to deploy approximately $1.4 billion in the next two-three years. Then page 16 shows a consolidated snapshot of the investment plan, mainly concentrated in renewables and, with a total investment of $1.4 billion, that, as I mentioned before, will be deployed between 2025 and 2027. Additionally, we will invest in the conversion of IEM, as well as additional transmission projects mentioned earlier. Please, let's continue now on page 17. As a result of the investment plan we just explained, E-CL's average supply cost should continue decreasing, and this positive effect should be captured by a positive evolution in E-CL's EBITDA, while keeping E-CL's leverage under control during the intensive CapEx phase that we have ahead.
This is why the net debt to EBITDA ratio is expected to remain at levels similar to those shown in 2024, during this period. This was confirmed during the first quarter, with the addition to our portfolio of and BESS Tamaya , and with a strong EBITDA generation, and lower net debt to EBITDA, reaching this time, 2.6 x. Now, moving to page 18, in summary, as a consequence of the updated investment plan, we are pleased to confirm that we are right on track to deliver the transformation plan that we announced some years ago.
By 2027, we will be fully balanced, developing 2.5 gigawatts of renewables and batteries, disconnecting 1.2 gigawatts of coal power plants, converting the IEM coal power plant to natural gas, and also adding 0.4 gigawatts of gas capacity to our portfolio. The positive impact of these new projects can be seen on page 19, where we present the yearly average position of the portfolio. So by 2027, E-CL will reach a full balance, considering the new investments and the end of the regulated PPA that we have in the north region of the country. This also means that E-CL is now ready to resume its commercial activity to sign new PPAs and trigger additional investments in the future.
Finally, we can confirm our guidance provided for 2025 during our full year 2024 results call, which is presented on page 20. In 2025, we plan to invest approximately $900 million, and as shown with the EBITDA generation of the first quarter, we expect our EBITDA to be in the high end of the range that was presented, keeping the net debt to EBITDA ratio on or below 4x. As usual, there are some upsides and downsides related to the variables described on the left side of this page, and the exposure to spot prices is not as relevant as in previous years, meaning lower upsides and also downsides linked to the spot price volatility. Now, I would like to end this presentation saying goodbye to all.
Today will be my last day as a CFO of ENGIE Chile, since I will be starting a new assignment in ENGIE Spain, and it's been a true pleasure collaborating with all of you. I would like to thank you for your trust and support in this last eight years, in which I think we have navigated together through a very interesting transformation plan for ENGIE Chile. I'm sure the company will achieve great success in the upcoming years. Now, more important, the company and the CFO role in ENGIE Chile will remain in very capable hands with Vincent Sorel, who is also here with me.
Vincent was a Finance VP for ENGIE Renewables Europe, and he will have the pleasure to be closely collaborating with all of you in the future and our investor relations team. Again, thank you, and thank you for your attention today, and we are now open to any questions that you may have.
Thank you. We will now begin the question and answer session. As a reminder, to ask a question, you may press star, then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then two. At this time, we will pause momentarily to assemble our roster. Today's first question will come from Juan Carlos Peterson with NG. Please go ahead.
Yeah, good morning, everyone. Can you hear me well?
Yes. Hello, Juan Carlos.
Hello. Well, first of all, all the best on your new challenges.
Thank you. Thank you very much.
Wish you all the best. Going back to the presentation, I have two questions, please, two or three questions. First of all, I don't know if it's possible for management to comment little bit about the potential settlement on the arbitrage that you are dealing with. SE-CLndly, can you give us a call or a sentiment of the return on capital that the initiatives on transmission the company is expecting to get, versus the return on capital on the core business related to generation, such as batteries or renewable sources? Lastly, just to be clear, the guidance of the EBITDA for 2025, can you please confirm that that does not include any potential settlement on the legal, on the litigation process you're dealing with? Thank you.
Sure. Thank you for those. It's a very good question. So in relation to the potential settlement or result of the legal process that we started some time ago, we do expect to have a final resolution during 2025. That's what I can comment right now. Once we have a final result, we will be able to clearly communicate this as part of, let's say, the normal process. And the guidance, of course, is not considering any outcome related to that process. So this is covering, I think, the first and the third question. For the sE-CLnd, we will come back with it. I think you mentioned this during the shareholders meeting. It's a very good point.
It's something that we can elaborate in the future. Of course, as you can imagine, a regulated business like our networks should have a lower return than the generation business, since the risks involved in both activities are different. And this is why we could expect a difference in both, let's say, returns. But let us come back in the next quarter with more clarity about the type of returns that we look without compromising, let's say, our strategy, because we will continue participating in the future in regulated options, in, and with the free clients in both type of businesses.
Thank you. If I may add something, Eduardo, as a rE-CLmmendation for management. I think that the AGM yesterday went very well, and all points well covered. What would be appreciated from investors, I think, is to have a more long-term vision from management about the end game. Right now, you are forecasting 2025 and 2026, which in the past was not necessarily there, so thank you for that. So now we have a guess or an idea about what the ranges are for the next two years, which is very good. But I think investors would appreciate to have a vision for, let's say, 2030 or 2035, in terms of revenue and EBITDA, where the company is targeting. That would be all from my side.
Again, Eduardo, thank you for everything. You have done a fantastic job as CFO of the company, and all the best on your new challenges in Spain.
Thank you, Juan Carlos. Well noted. The team will work on that, and we will see how we can cover that in the future. Thank you very much for your words.
Thank you.
Today's next question comes from Thomas Pritchin with Balen Capital. Please proceed.
Hi. Hello. You can hear me correctly?
Yes. Hello, Thomas.
Okay, so I have two questions. The first one is related to dividends. You mentioned a 30% payout of 2024 net, and $54 million payment was made in April. Do you expect final distribution of this year? Do you have a defined scheduling or target?
So if I understood correctly, your first question is related to the. So today, we are keeping a dividend policy of 30% required in the local market. So indeed, yesterday we approved the $54 million distribution, which will be materialized during May. And during the heavy, let's say, CapEx plan that we have ahead, we do expect to keep the current policy at least, I would say, in the upcoming two years.
Okay. And my sE-CLnd question is related to our portfolio transformation. What criteria do you use to determine where to close or rE-CLnvert coal-fired plants? And what IRR do you target for repowering or conversion projects?
Sure. So when we evaluate the conversion of a power plant like IEM, of course, there should be a positive business case. And that's why we are only converting IEM, while at the same time we are disconnecting several other coal power plants, because there is no positive business case for them, except for Unit Fifteen, which was awarded in last year in a new option to provide ancillary services to the system. And the returns that we are looking as usual, and as we mentioned probably before, should reach the minimum target criteria that we look, that it's probably around WACC plus two or above WACC plus two.
Okay, thank you very much.
You're very welcome.
As a reminder, if you do have a question, please press star, then one. At this time, there are no further questioners in the queue, and this does conclude our question and answer session. I would now like to turn the conference back over to Mr. Eduardo Milligan for any closing remarks.
Well, from our side, thank you very much for your attention, and looking forward to have a new discussion in the next quarter with the whole investor relations team. Thank you very much.
The conference is now concluded. Thank you for attending today's presentation, and you may now disconnect.