Good day, ladies and gentlemen, and welcome to Enel Américas' third quarter and nine months 2025 results conference call. My name is Carmen, and I will be your operator for today. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To participate, you will need to press star one one on your telephone. You will then hear a message advising your hand is raised. To withdraw your question, simply press star one one again. Please note that this conference is being recorded. This presentation contains statements that could constitute forward-looking statements.
These statements appear in a number of places in this presentation and include statements regarding the intent, belief, or current expectations of Enel Américas and its management with respect to, among other things, Enel Américas business plan, Enel Américas cost reduction plans, trends affecting Enel Américas financial condition or results of operation, including market trends in the electricity sector in Chile or elsewhere, supervision and regulation of the electricity sector in Chile or elsewhere, and the future effect of any changes in the laws and regulations applicable to Enel Américas or its subsidiaries. Such forward-looking statements reflect only our current expectations and no guarantees of future performance and involve risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of various factors.
These factors include a decline in the equity capital markets, an increase in the market rates of interest in the United States or elsewhere, adverse decisions by government regulators in Chile or elsewhere, and other factors described in the Enel Américas integrated annual report. Readers are cautioned not to place undue reliance on those forward-looking statements, which state only as of their dates. Enel Américas undertakes no obligation to release publicly the result of any revisions to these forward-looking statements, except as required by law. I will now turn the presentation over to Mr. Jorge Velis, Enel Américas, Head of Investor Relations. Please proceed.
Thank you, Carmen. Good afternoon, ladies and gentlemen, and welcome to our third quarter 2025 results presentation. I'm Jorge Velis, Head of Investor Relations of Enel Américas. In the coming slides, our CEO, Giuseppe Turchiarelli, and our CFO, Rafael de la Haza, will be presenting the main figures for this period. Let me remind you that this presentation will follow the slides that have already been uploaded on the company's website. Following the presentation, we will have the Q&A session. If you want to make a question, please send it through the webcast or write us to our corporate email, ir.enelamericas@enel.com. Now, let me hand over the call to Giuseppe, who will start by outlining the main highlights of the period in slide number three.
Thank you, Jorge. First of all, I would like to highlight that our share buyback program, announced a couple of months ago, successfully concluded on September 26th. In the coming slides, we will review the main details of this operation. Moving to the results of this quarter, we had an important increase in investments of 29% when we exclude the effect of the currency devaluation. These investments are mainly focused on digitalization of our grid and improving network resilience. In generation, we are glad to report the completion of the electrical construction phase of Guayepo III Solar Plant in Colombia, the technical stage required for energy production. This 257 MW facility will deliver clean energy to more than 800, expected to be in during the first quarter of 2026.
The cost of EBITDA in this quarter reached $1.03 billion, which is 10% higher than the same period of last year, with a limited impact from currency devaluation. This is mainly explained by better results in generation in Colombia, as well as increase in Brazil and Colombia. Before going into the details of operation and financial performance of the period, I would like to present a brief summary of our share buyback program in slide four. On August twenty-eighth, in an extraordinary shareholder meeting, our shareholder approved the share buyback program for up to 4% of the total share of the company, with a purchase price of CLP 105.2 per share, implying a 15% premium over the last 20 days average share price before its announcement.
The purposes of this operation was to increase shareholder remuneration while optimizing our capital structure. The subscription period concluded on September 26th, with an oversubscription of almost 2.8 times. This implies a pro rata of 35.8% and a total disbursement of $0.47 billion. We are glad that this operation was very successful and well received by our shareholders, as it was a good opportunity for those shareholders who wanted to sell, and represent an important value creation for those who decided to stay in the company. Now, in the coming slides, let's see the main regulatory news from the period. Regarding the concession renewal process in Brazil, for Enel São Paulo, the process is currently suspended due to a ruling of São Paulo Federal Civil Court that mandated to suspend the renewal process until an audit over climate events occurred in 2023.
In 2024, it concluded. We are going to appeal against this decision, considering that the regulator has already said that the company is in compliance with all technical requirements specified in the concession contract. On the other hand, Enel Rio and Enel Ceará are moving ahead in the process. In the case of Enel Rio, we have a positive recommendation from ANEEL, and we are waiting for the final decision of the Minister of Mines and Energy. In the case of Ceará, after the approval of the results plan presented to the minister, we are waiting for ANEEL recommendation. Also in Brazil, the Supreme Federal Court ruled that the compensation to customers related to their overcharged PIS/COFINS taxes due to the inclusion of ICMS in the calculation, was limited to the same year, meaning that all compensation above 10 years have prescribed.
We are waiting for the final written ruling, which is expected by the end of 2025. According to our preliminary internal estimation, the impact on our books should be around $110 million EBITDA level, and around $180 million at the net income level. Finally, let me highlight two relevant reforms in Brazilian energy sector. First, the approved MP 1,300 that includes expanded tariff benefits for low-income families. Second, MP 1,304, which was approved today in the Mixed Commission, and moves to the Chamber of Deputies. It includes multiple topics in the recently published draft, such as market-related liberalization, curtailment, battery capacity auction, among others. These measures are expected to be voted by November 7.
Moving to Argentina, the auction for El Chocón and other hydro concession was postponed to November seventh, and we are currently analyzing the condition of auction eventual offer. Also in Argentina, a sector reform was recently approved in the form of Resolución 400/25, which aims to normalize the electricity sector and redefine the role of CAMMESA. Eventually, this could lead to the possibility of entering into bilateral energy contracts between generators and regulated and non-regulated customers. Finally, in Colombia, it was recently approved a reform that limits the spot phase of hydro generators to maximum 5%, which has a limited impact on our operation, given the fact that we have already a high percentage of our energy contracted. Regarding tariff review process, after publishing the main guidance of the process in July, no relevant news has been received.
Now, let's analyze our investment for the period in the coming slides. During the third quarter of this year, our CapEx increased by 20% compared to the same period of last year, reaching $542 million. This is mainly explained by higher CapEx in Grid business in Brazil. 62% of the total investments were devoted to Brazil and 29% to Colombia, while Argentina represents 8% of the total. In terms of business line, 81% of the total CapEx was allocated to Grid, and 18% to Generation. Regarding Grid CapEx, this quarter grew by 23%, and investment dedicated to network upgrades increased by 66% compared to the same period of last year. In cumulative terms, as of September 2025, we have invested $1.5 billion, with 76% devoted to Grid.
Let's now analyze grid operational highlights in slide seven . Electricity distributed reached 26.4 TWh in the third quarter, in line with the same period of last year. This is explained by higher sales in Colombia and Argentina, offset by lower sales in Brazil. Regarding number of customers, we had an increase of 392,000 in the last 12 months, reaching 22.9 million customers. Smart meters increased by 60%, reaching almost 2 million in this period due to our deployment plan in São Paulo. Net RAB and net RAB per customer increased 11% and 9% respectively, isolating the impact of currency devaluation. This reflects the significant investment that we are making in our network. In terms of quality indicator, we can see that SAIDI improved in all subsidiaries, except for São Paulo, mainly due to severe climate events during the last quarter.
SAIFI improved in Colombia and Enel Rio, while Edesur and Enel São Paulo, and Enel Ceará increased due to climate events and transmission line failure in the case of Terra. Finally, regarding energy losses, we improved in Enel Ceará and Enel São Paulo, and remained flat in Colombia, while Enel Rio and Edesur increased. Let's continue with generation operational highlights in slide eight. Installed capacity remained at 12.9 gigawatts, for which 98% is renewable. We are currently working on additional 0.5 gigawatts capacity on two solar power plants located in Colombia, Guayepo III and Atlántico. In Guayepo III, as already mentioned, we recently began the testing phase, and we successfully injected the first kWh into the system. We expect to begin operation during the first quarter of 2025.
Regarding energy balance, we can see that in this quarter, we decreased our sales by 7%, reaching 16.6 TWh. From this, 69% came from our own production, and 31% came from purchases to third parties. The sales decrease is explained by Brazil and Argentina. Now, Rafael will comment on the financial results of the period in the coming slides.
Thank you, Giuseppe. [Foreign Language] . Reported EBITDA this quarter reached $1,029 million, an increase of 10% compared to the third quarter of 2024. Excluding the positive limited effect from the currency variation this quarter, adjusted EBITDA increased by 9%. These results is mainly explained by better results in generation in Colombia due to wetter hydro conditions when compared to the previous year, of course, and higher tariffs in grids in Brazil and Colombia. Adjusted net income reached $220 million in this quarter, which is 24% lower than the third quarter of last year, mainly due to higher depreciation and financial expenses and lower results in Argentina related to hyperinflation.
Funds from operations reached $771 million, an improvement of 3% compared to the same period of 2024, and this is mainly explained by higher EBITDA in Brazil and Colombia. We are confident that with these results, we are well positioned to reach the guidance for this year in terms of EBITDA and in terms of net income presented in our 2025-2027 strategic plan. Mainly due to the operational results expected for the fourth quarter of this year, and the recognition of PIS/COFINS impact in Brazil, that should be registered in the next coming months . The guidance should be reached if we take into consideration the FX assumptions of our 2025-2027 plan. We confirm the guidance in both, I repeat, EBITDA and group net income for 2025.
On slide eleven, we will see this quarter's EBITDA evolution and breakdown. Starting from $939 million of EBITDA in the third quarter of 2024, we see that generation had an increase of $64 million, mainly explained by Colombia due to better hydro conditions, as already mentioned. Grid's improvement by $18 million, mainly due to better results in Brazil and Colombia due to the tariff indexation. Customers and business and others slightly improved. With this, we get to an EBITDA of $1,024 million for the third quarter of 2025, which is 9% higher than the same period of 2024. FX has a positive impact of $5 million, resulting in a reported EBITDA for this quarter of $1,029 million.
From our reported EBITDA, 53% came from Brazil, 42% from Colombia, and 5% from Central America. In terms of business line, grids represents 56% of the total, generation 42%, and customers contributes with 2%. Let's analyze cumulative EBITDA breakdown in slide 12. For the first nine months of the year, we see that in generation and grids, we have significant increases. Generation increased by $147 million, mainly due to better hydro conditions in Colombia. While grids grew by $163 million, including $99 million from debt regularization with CAMMESA in Argentina. Customers business decreased mainly due to lower results in Colombia, while in others, we are considering operations from Peru, which amounted to $10 million.
With this, we get to an EBITDA of $3,329 million, which is 11% higher than the same period of 2024. FX had a negative impact of $223 million, resulting in a reported EBITDA for nine months of the year of $3,106 million, an increase of 3% compared to the same period of the previous year. From our reported EBITDA, 50% came from Brazil, 40% from Colombia, 5% from Argentina, and 5% from Central America. When we move to the business line, the contribution of every business line, grid represents 59% of the total, generation 39%, and customers contribute 3.2%. Now we will focus on the cash flow of our company on slide 13.
Starting from an EBITDA of $3,106 million, we see that net working capital amounted to $603 million, higher than the same period of last year. This is mainly explained by a deterioration in CVA in Brazil related to higher energy prices. As we mentioned it earlier, this is a pass-through of energy costs and will be recovered in the next tariff adjustment. Taxes paid during the period amounted to $308 million, a lower amount when compared to the previous year, due to lower taxes paid in Colombia, mainly explained by lower taxable results in 2024 compared to 2023.
Net financial expenses also decreased, reaching $363 million, and this is mainly explained by lower average debt during the first nine months of this year compared to the same period of 2024. With this, funds from operations amounted to $1,833 million. After investments for $1,467 million, we get to a free cash flow of $346 million, significantly higher when compared to the same period of last year. Let's now analyze the debt of our company in the following slide number twelve, sorry. Gross debt amounted to $6.2 billion, an increase of 17% compared to December 2024, mainly explained by FX impact and higher debt in Brazil.
Net debt reached CLP 4.3 billion, an increase of 103% compared to the end of 2024. This includes positive free cash flow of CLP 0.3 billion, net dividends paid for CLP 0.9 billion, extraordinary operations for $1 billion, mainly related to the tax payment in Peru due to the capital gain connected to the sales of our assets in 2024, and the payment of the second installment of the pension fund in São Paulo for around $270 million. FX had a negative impact of $0.7 billion. In terms of currency and country, we see that Brazil remains as the largest contributor, while the debt at the holding level represents 10% of the total.
Finally, regarding the cost of debt, we can see an increase for this period, going from 10.3% to 11.3%, explained by higher interest rates, as Rafael explained, by higher interest rates in Brazil. On the next slide, Giuseppe will conclude this presentation with some closing remarks.
Thank you, Rafael. We successfully concluded our share buyback program for 4% of the total share of the company, which implies the deployment of $470 million. We continue focusing our investment in grid, aiming to improve service quality for our customers. EBITDA improved, mainly due to better results in generation in Colombia and growth in Brazil and Colombia. We continue improving our FFO, mainly due to higher EBITDA and lower financial expense and tax paid. Finally, we would like to announce that our Investor Day will be held on the first quarter of 2023.
Thank you, Giuseppe. Thank you, Rafa. Thank you, everybody, for your attention. Now, we will begin the Q&A session. First question comes from Andrew McCarthy. Three questions. First, can you provide more color or detail about the current status of the concession renewal process for each of three subsidiaries in Brazil? Can you give an update on how authorities and the industry are trying to tackle the containment problem in generation in Brazil? And the third one, following the congressional election result in Argentina, how are you thinking about your capital allocation plans for distribution and generation in that country?
Okay. Let's start with São Paulo, in São Paulo. As I said during the presentation, the process is temporarily suspended because of the ruling of São Paulo Federal Civil Court. Until when? Until the audit over the slimate events that occurred in 2023, 2024 is concluded. At Enel, we are currently defining our legal strategy regarding the recent ruling that suspended the renewal process. We reaffirm our full compliance with all legal and regulatory requirements for concession renewal and maintain the minimum quality standard were met during the 2023, 2024 event. As a matter of fact, ANEEL already confirmed that we respect all the PPI required by the regulation. We will continue to follow the necessary procedure while waiting for the next step in the process.
Again, we reiterate our commitment to keeping the market informed of any material development regarding the extension of the concession. For what concerns Enel Rio, that is the most advanced process. As I said before , we have already received a positive recommendation from the ANEEL. Basically we are just waiting for a feedback from the Minister of Mines and Energy. Talking about Enel Ceará, let me recap a little bit the status. In March 2025, Enel Ceará filed a formal request with ANEEL for the early renewal of its concession. Due to a non-compliance with the quality criteria, in the same month , the company filed a redress plan with the Minister of Economy in compliance with the decree. In October, we received a formal approval of this plan.
Basically right now the process is currently underway at ANEEL, waiting for the recommendation. For what concerns the curtailment I mentioned during my presentation that in the Medida Provisória 1304/2025 that has been right now a couple of hours ago approved by the Mixed Commission in the parliament in Brazil. One of the items that has been approved is related to the curtailment. Now, curtailment that of course require several adjustments. The Medida Provisória includes a compensation from the past until the moment in which the measure is gonna be approved. Of course it requires an additional regulation for the future.
Clearly, we are at the first step of the approval, so we need to see how the Medida Provisória will be approved in the second part of the approval after the approval of the Chamber of Deputies and the Senate. For what concerns the election in Argentina, we are pretty fine with the results of the election because it means that all the reform and the political measure is going to have a certain level of stability and improving the country. Of course, we are looking at the country as a potential increase and let's see how the tender of hydroelectric power plant is gonna be.
Thank you, Giuseppe. We have one more question about the company guidance. Is the company confirming the guidance given in our latest Investor Day?
This question comes from Javier Suárez from Bank of America, right?
Correct.
Hi, Javier. Good afternoon for you. Yes, Javier, we are confirming our guidance for 2025, as we mentioned before during the presentation. As expected, we continue to see some FX volatility for sure across our markets, but we have not identified at this stage any particular events that will lead us to review the targets we communicated for this year, in both terms of EBITDA and in terms of group net income. Our performance year-to-date remains aligned to our expectations and we are confident in our ability to deliver on the guidance. For sure, we are closely monitoring macro regulatory developments, but I repeat, at this stage there is no indication that it will lead us to justify a change in our outlook for 2025.
For sure, as I mentioned before, we are expecting to register the potential positive impact of PIS and COFINS by the end of the year. This would have an impact of around, according to our estimates, internal estimates, of around $115 million in terms of EBITDA and around $180 million in terms of net income.
Thank you, Rafa. It seems we don't have any more questions. We conclude the results conference call. Let me remind you that. Sorry, one more question is entering from Fernán González from BTG Pactual. What are your thoughts about the spot sales cap in Colombia? Is this already a reality? The impact on a dry year can be significant. Are there any measures that you could adopt to mitigate the risk under such scenario?
Okay. Let me say that, this measure, as I said, during the presentation, that the new regulation, the direct power must sell, at least the generation firm energy obligations through the firm contract, so through the PPA. Only 5% san be sold to the spot market. Now, for what concerns our company, it's not a big deal because, for example, this year we have around 95% of the total energy contracted. We have a similar profile in the following year. So for what concerns ourselves, it shouldn't be an issue, this law. Now, clearly it depends on if it's gonna be a dry season or wet season, but, it's difficult to understand right now how much would be the situation. How to mitigate?
For what concerns ourselves, of course, we have several other plans that can be covered, the commitment with the PPA for what concerns the solar power plant. As I said before, one of these new plans is gonna be in operation, starting from the first quarter. This is the situation, at least for our side.
Thank you, Giuseppe. Well, as there are no more questions, we conclude the results conference call. Let me remind you that investor relations team is available for any doubt that you may have. Thanks for your attention.
Thank you.
Thank you.
This concludes our conference. Thank you for participating. You may now disconnect.