Good afternoon, everyone, and welcome to Engie Energía Chile's first quarter 2026 results conference call. If you need a copy of the press release issued on April 29, it is available on the company's website at www.engie.cl. Before we begin, I would like to remind you that this call is being recorded and that information discussed today may include forward-looking statements regarding the company's financial and operating performance. All projections are subject to risks and uncertainties, and actual results may differ materially. Please refer to the detailed note in the company's press release regarding forward-looking statements or contact Investor Relations Officer Marcela Muñoz. We would like to advise all participants that this call is dedicated to investors and market analysts, not for the press. We ask all journalists to contact Engie Energía Chile's PR department for details. I will now turn the call over to Mr. Vincent Sorel.
Please go ahead, sir.
Hello, everyone. Today I'm here with Juan Villavicencio, Chief Executive Officer, Alison Saffery, Head of Corporate Finance, Marcela Muñoz, Investor Relations Officers. We are pleased to present Engie Chile 2026 Q1 results. I leave you with Juan, who will describe our performance during the first quarter of 2026.
Good afternoon, everybody. On page two, we show we have organized this presentation into two sections. In the first part, I will briefly go through our first quarter 2026 performance, and then the second part, Vincent, will provide an updated vision of our financial result and guidance. We can start directly on page three, where we share the main highlights for this first quarters of 2026. First, I want to highlight our strong operating result, supported by a higher electricity margin. Our results show the resilience of our portfolio despite the volatility in international markets and challenging market conditions faced by the industry.
Some of the drivers of this excellent result were, on the one hand, we leveraged the high availability of our thermal fleet during this period, which provided us with stability to our generation portfolio, especially in non-solar hours, continuing to reduce our exposure to the spot market. On the regulated demand, we saw greater physical sales to regulated clients. This is strategically important because regulated contracts provide revenues, predictability, and long-term cash flow visibility. The strong operating performance helped by these factors rendered a solid start to the year with the guidance provided during our previous call confirmed for 2026. Another highlight of this quarter is that our BESS Tocopilla project, the first standalone battery project and the first of the eight renewable project we have under construction, achieved 100% energization last year and reached COD in February this year.
This was key to the result we've obtained. Finally, in our April 29th shareholders meeting, a dividend equivalent to 30% of 2025 net income was approved, and it will be paid in May 27 of 2026. In summary, a very strong first quarter across all dimension: operational, financial, and strategic. On page four, we give you a summary of all the project and activities we have deployed related to our thermal asset in Tocopilla and Mejillones. In Tocopilla, we continue advancing in giving new life of our coal-based former Unit 15, which was closed in 2022, converting it into a synchronous condenser that will provide ancillary services to the system. We also improved, extended the life, and increased the capacity by 25 MW of our gas fire combined cycle plant, Unit 16, to ensure flexibility in our generation and energy supply.
In Mejillones, on the other hand, we continue in the process of converting our IEM coal-fired plant to natural gas. IEM stopped its operations and plant in December 2025, it is still scheduled to finish its conversion and initiate operation with gas natural by the second half of 2026. As we already mentioned in our full year meeting, two of our remaining coal plants in Mejillones, CTM 1 and CTM 2, were decommissioned on December 21, 2025, while CTA and CTH were required by the authority to continue their operation until May 2027 in order to secure supply and services to the system until such date. CTM 1 and CTM 2 w ill be kept under preservation maintenance while the company decides if and how this asset could be used in the future.
The same will occur with CTA, CTH once disconnected in 2027. With this, 1.1 GW of coal capacity are already disconnected or under conversion as of December of 2025, and the remaining 0.4 GW will be disconnected by May of 2027. Our thermal asset in operation continue to show high availability and operational excellence, providing the generation to secure the 24/7 supply or PPA contract, and at the same time reducing our exposure to the spot market. This continued to be true during the first quarter of 2026, despite our IEM plant being closed during its conversion.
If we go to the page five, we show a graph of the complete generation portfolio transformation Engie has embarked on since 2019, when coal generation represented 61% of our generation capacity, while renewable represented only 3% of total generation capacity, which reached 2.2 GW at the end of that year. In December of 2025, we showed that our generation capacity had reached 2.9 GW, of which coal represented only 25% after the disconnection of CTM 1 and CTM 2. Natural gas represented another 25%, and renewable plus batteries represented 50%, a significant increase during this period. Today, as of March of 2026, our generation capacity increased to 3 GW, which now includes the 0.1 GW extra capacity of BESS Tocopilla.
Our expectation for 2027, considering the renewable and BES project currently under construction, as well as the conversion of IEM and retirement of the remaining coal plants, is to reach a total installed capacity of approximately 3.6 GW, of which 71% will be renewable and batteries, and the remaining 29% will be natural gas. On page six, we can see that we continue to show additional progress in the execution plan of our renewable capacity under construction. As of today, we already have 1.5 GW of renewable installed capacity, including the recent addition of BESS Tocopilla. Our first standalone batteries, which was built in the same site where coal units 12 and 13 used to operate, and which added 119 MW of capacity to our portfolio in February of 2026.
Additionally, during the first quarter of 2026, BESS Los Loros and BESS Arica reached 100% energization. All this project continued to be developed on time and on budget. As such, during the first quarter of 2026, we generated 522 GW hour with our renewable assets. Next, on slide seven, we show the seven renewable and battery project still under construction, which are deployed over five different region of Chile, including the already mentioned BESS Arica and BESS Los Loros, which reached already 100% energization. Additionally, our other five project under construction started their energization during this period, most of which should reach COD by the second half of 2026, while the two wind project are expected to reach COD in the first half of 2027.
Notably, this project include our first greenfield project in Metropolitan region, PV and BESS Libélula, as well as the first wind project built in the Ñuble region in the south of Chile, Wind Chequenes. We expect this project to continue adding megawatt hour of generation as they progress with their energization. On slide eight, we give an overview of our existing transmission network, which is an integral part of our energy transition and growth strategy. We seek to continue strengthening our transmission network, currently made up of over 2,600 km of transmission lines, more than 30% of which correspond to national and zonal regulated transmission asset. We own and operate 28 transmission switch station and 12 generation switch station. Finally, we hold a 50% ownership share in the 600 km long transmission line TEN.
As we accelerate the growth of our renewable generation portfolio and intent to provide integrated energy services to our customers. The strength and reliability of the transmission system become critical. On page nine, we show a little more about the transition process undergone by our Tocopilla site, a core pillar of our transmission and value creation where, as we mentioned before, the Tocopilla project reached COD during the first quarter of 2026. Also, the site is undergoing a transformation process with the conversion of Unit 15 to a synchronous condenser, which will provide ancillary services to the system. While the expansion and life extension of Unit 16 or combined cycle plant will continue providing resilience to our portfolio. Together with all that, we are extending the life of Engie Chile in Tocopilla itself by bringing social, environmental, and security of supply benefit to the region.
The work we are doing is also providing grid flexibility and reliability to support our PPA contract and reduce our exposure to the spot market. Now I will leave you with Vincent, who will provide the detailed evolution of Engie Chile's financial and capital structure, as well as the guidance for 2026.
Thank you, Juan. Hello, everyone. I am now pleased to present the financial performance for the first quarter of 2026. As you can see on slide 11, we present our key financial highlights for the first quarter. EBITDA reached CLP 216 million, up 35% year-on-year, reflecting strong operating performance, lower marginal cost, higher electricity margin, and increase in our own generation due to high availability of our generation portfolio. Net income amounted to $118 million, representing a 52% increase versus the same period last year. This improvement was mainly supported by stronger EBITDA, partially offset by higher depreciation and tax effect. Finally, net financial debt stood at $2.4 billion, while the net debt-to-12-month EBITDA ratio improved to 3.2x as of March 2026.
This reflects both strong EBITDA generation and disciplined financial management, even as we continue executing our investment plan. On slide 12, let me provide more detail on the drivers behind our EBITDA performance in the first quarter. EBITDA increased by $56 million from $160 million last quarter in 2025 to $216 million for the first quarter of 2026. The main driver was a $45 million increase in electricity margin, supported by a more balanced generation position that reduced energy purchase. Higher own generation and lower spot purchase explain most of this improvement, as reflected in lower contracted and spot energy purchase volumes. In addition, EBITDA benefited from stronger PPA revenues and positive contribution from transmission business. Higher savings reflected in performance also contributed by $4 million to this EBITDA increase.
These gains were partially offset by notably lower revenue from gas sales. You will note that one-off had only a slightly positive effect on EBITDA evolution. Overall, this chart shows that a stronger and more balanced operating profile was the key factor behind EBITDA growth in 2026, confirming the benefits of our portfolio transformation and reduced exposure to spot market volatility. On slide 13, you can see how the improvement in operating performance translated into bottom line growth. Net income increased by $40 million from $78 million in the first quarter of 2025 to $118 million in the same period of this year. The main positive driver was a strong increase in EBITDA, partially offset by higher depreciation and amortization and higher income tax, mainly non-cash.
At the same time, a decrease in net interest expense added to a positive foreign exchange effect also supported net income during the quarter as compared to the same period last year. The decrease in net financial expense is mainly explained by CLP 7 million increase in capitalized interest, but also by lower interest rate. Tax expense increased by CLP 15 million. On slide 14, we show our investment program continued to be funded through internal cash generation. Despite a high level of capital expenditure in the quarter, net debt decreased by $97 million. This reflect strong cash from operation, which more than covered all of the CapEx deployed during the period. In addition, the company received CLP 18 million in dividends from TEN during the quarter. Slide 15 highlights the strength of our financial structure.
Engie Chile continues to maintain investment-grade rating at both on the international and local scale, reflecting a solid credit profile and disciplined financial management. Notably, confirming this solid end-risk profile, [Fitch ratings] just announced the upgrade in its rating in national scale from AA- to AA Stable. As of March 2026, net debt stood at approximately CLP 2.3 billion, while the net debt to 12-month EBITDA ratio improved to 3.2, excluding IFRS 16 lease. At the same time, the company increased its cash position and continued reducing its average interest paid, which stood at around 5.1%. The debt maturity schedule also remains well spread over time, with no material short-term refinancing pressure. Overall, this slide confirms that Engie Chile is preserving a strong and flexible balance sheet while continuing to execute its growth plan.
In January, we continued taking action by extending the maturity of a $50 million loan with BancoEstado by almost three years, as well as lowering its interest rate. We were also able to reduce the total amount and the interest rate of our long-term loan with IFC and DEG. Additionally, during the first quarter, we made a second draw of $200 million from our CAF loan closed in 2025. There is still $100 million outstanding to be drawn within the next five months. These initiatives contribute to further improve our debtor profile, lower the average cost of debt going forward, as well as strengthening our liquidity. Slide 16 shows the evolution of our capital expenditure program, with a clear shift toward renewable and battery storage.
In 2025, as you remember, total CapEx reached over $1 billion, of which the vast majority was allocated to renewable generation and BESS projects. For 2026, estimated CapEx ranges between $640 million and $710 million. This reflects the continued execution of project currently under construction, particularly in storage and renewables, while maintaining selective investment in thermal asset and transmission, but also recurring maintenance. This CapEx profile is fully aligned with our strategy, accelerating profitable growth in renewable and storage while supporting system flexibility and maintaining the reliability of our broader asset base. They are expected to reduce our exposure to the spot market and, thanks to the deployment of batteries, also mitigate intermittency and curtailment risk associated with renewable generation.
In parallel, we continue to invest in our thermal fleet as well in transmission projects that are necessary to support and optimize our overall portfolio. Finally, on slide 17, we confirm our 2026 guidance. After our first strong quarter, the company remains on track to deliver an EBITDA in the range of CLP 690 million- CLP 760 million. While CapEx, as mentioned, is expected to range between CLP 640 million and CLP 710 million. At the same time, we expect net debt to EBITDA to remain below 3.5, excluding IFRS 16 leases. The first quarter result, EBITDA of CLP 216 million, net income of CLP 118 million, CapEx of CLP 196 million, and net debt to EBITDA of 3.2 support our confidence in meeting this target.
While capital expenditure will remain high, this represents a decrease compared to the record level of 2025 and will reduce our financing needs. Overall, this slide reflects a strong start of the year and reinforce our confidence in the outlook for 2026. Thank you for your attention, and we are now open to any question you may have.
Thank you. The floor is now open for questions. If you would like to ask a question live, please click the Raise Hand button and submit your question in the Q&A chat box, along with your name and the company you represent. We will review the submitted question and call on selected participants to ask their questions live. Once your question has been answered, you may lower your hand by clicking the Put Hand Down. Questions will be taken in the order they are received. Please hold while we poll for questions. Our first question comes from Andrew McCarthy. You can open your microphone.
Yeah. Hello. Can you hear me?
Yes.
Perfectly.
Fantastic. Yeah. Thanks very much for the presentation. I've got three questions. The first one is, you know, given the company's power generation fleet, how are you feeling about your ability to compete in forthcoming PPA auctions, to be held, in particular by sort of larger mining companies? My second question is, just wanted to check, CTA has been out of operation for the last few days, according to what we've been seeing on the Coordinator website. Just wondering if that's gonna be maybe a sort of a longer term outage, and what impact that could have on your guidance for 2026. Finally, just wanted to check with you what's your sort of initial take on the government's Reconstruction Bill, especially with respect to tax changes?
Are you seeing any potential one-time effects on, you know, net income for this year, perhaps related to deferred tax assets or liabilities? That's it from me. Thanks.
Thank you. Thank you, Andrew. I think these are all very good question and that underpin, I think, and that can illustrate the strength of our portfolio. On the first question, we strongly believe that ECL will be able to compete in the forthcoming PPA auction, and this will be performed with the support of our newer asset that we are being developing. However, of course, this will be competitive process, and there will be many, so we will see. On the second question on CTA. Well, CTA, we invested a lot in maintenance, preventive maintenance over the last year and you might remember that before the extension was announced, we put CTA, CTH offline.
CTA has been out of operation only for a few days, and we expect it. Thanks to this preventive program that we did in 2025, we expect CTA to be back online very soon, in the coming days. Last but not least, regarding the Reconstruction Bill. We welcome all initiative from the government to help Chile industry and economy to develop, and I think this is one of the very good sign. However, nothing is enacted yet and at this stage, we can only highlight that the potential change in the corporate income tax rate would have indeed an impact on deferred taxes non-cash. We are not yet in a position to quantify this, as greater clarity is needed regarding the final scope of the reform and its approval.
Our next question comes from Fernando Gonzalez. You can open your microphone.
Yeah. Hi, good afternoon. Just a couple of questions on gas. I would like to know if you have or will you use the price discount that was embedded in the compensation agreement with TotalEnergies this year? If you could also comment on the gas strategy that you will pursue for the coming years as the contract with Total expires this year. Will you try to renew that contract? Will you try to diversify with another supplier? It would be interesting to know that. My second question is on the regulated segment, if you can comment on the outlook that you see for regulated tariffs for the rest of the year, given the recent indexation that we already saw.
Thank you. Indeed, one of our long-term gas contract ended, I mean, will end this year. However, our projections show that less gas would be needed for asset due to the increase of BESS and hydros in the system. We are following up the situation. We are looking at potential purchases to complete our gas supply, but this will depend on the economics. On the second point, I mean, I cannot comment regulation, of course, our guidance is establish a stable regulation.
Our next question comes from Ruben Alvarado. You can open your microphone.
Hello. Good afternoon. Can you all hear me well?
Yes.
Yes.
Great. Thank you for taking my questions. I have three. I think one of them was partially answered, but I'll say it anyways. The first one is related to the regulated prices that came at 160 per megawatt hour during the quarter. I mean, we understand this was mainly attributed to the fuel price dynamics, particularly the Henry Hub prices. However, the average Henry Hub prices during 1Q 2026 were actually below both 4Q 2025 and 1Q 2025 average levels. Could you please provide some additional color on the drivers behind this increase in the regulated prices? The second one is regarding the $26 million insurance recovery related to CTM3 unit.
Could you provide more details on the nature of this recovery? Should we expect more additional recoveries going forward? The last one is also related the regulated auctions in the following years between 2026 and 2027. I think there are around 15 TW hour expected to be tender. If you could provide some more color on your strategy regarding these upcoming auctions. Thank you.
Thank you. I will start with the insurance. I think this is an older incident that we had around three years ago on one of our power plant. It was fully baked in the guidance because we were expecting the file to eventually close. I would say in March, we received the final agreement with the insurers about the amount that we disclosed. Is there anything else major coming in? No. I would say, this is good news because you should note that since more than two years we haven't had any significant incident on our fleet. This is a good result of our maintenance program that we discipline and strongly apply since 2023.
Regarding the prices, well, there are various mechanism of indexation, notably the Henry Hub, indeed, but not only. I would say that regulated tariff should indeed be impacted downwards due to the decrease of the Henry Hub prices. The indexation of the price have some delay and so this is effect that you should see in the next semester or maybe early 2027, depending on the contract. Regarding the auctions, I mean, Engie's first priority is to stabilize the portfolio, right? To avoid being unreasonably short in terms of power position as we have been in the past. In that respect, our intention is we are competitive.
We have the pipeline, but we will follow up incoming auction and we will participate, but we will not be able to win all of those, of course. This is will be supported by the new development of the asset. It's a process I would say that is going on in parallel.
Great. Thank you.
If there are no more question, maybe some, maybe it's time to close the call. I would say the Q1 has been very strong. On a side note, I think that you might note that EBITDA of the Q1 2026, in the context of a war, is higher than the total EBITDA for the full year 2022 that we had in the past. This is not a key point in itself, but I think it really highlight, illustrate, demonstrate the transformation of the portfolio, both from an exposure to the spot market, but also to the exposure on the fuel price and the international tension that we can have on the market.
We are very confident for 2026 as in the current state of geopolitics, and be ensured that all efforts of the company is to monitor the risk and to deliver 2026 objectives. With that, I wish you a very good weekend, and I hope to see you and talk to you for the next quarter. Bye-bye.
Thank you. This does conclude today's presentation. You may disconnect your line at this time and have a nice day.