Good day, ladies and gentlemen, and welcome to Enel Américas' Fourth Quarter 2024 Results Conference Call. My name is Gigi, and I'll be your operator for today. At this time, all participants are in a listen-only mode. 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 plans, Enel Américas cost reduction plans, trends affecting Enel Américas financial condition or results of their operations, 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, are not 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 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 would now like to turn the presentation over to Mr. Jorge Velis, Enel Américas' Head of Investor Relations. Please proceed.
Thank you, Gigi. Good afternoon, ladies and gentlemen, and welcome to our fourth quarter 2024 results presentation. I'm Jorge Velis, Head of Investor Relations of Enel Américas. In the coming slides, our CEO, Aurelio Bustilho, and our CFO, Rafael de la Haza, will be presenting the main figures of this period. Let me remind you that this presentation will follow the slides that have already been uploaded in 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 Aurelio, who will start by outlining the main highlights of 2024.
Thank you, Jorge. During 2024, we had a relevant 16% increase in investments in grids, in line with our strategy of having a more resilient network and improving service quality for our customers. As we announced it in our Investor Day last November, this will be the main focus of our company in the coming years. In generation, we added 0.8 GW of new capacity in 2024, and our investments have led to an increase in solar and wind generation by 23%. EBITDA in 2024 reached $3.7 billion, in line compared to 2023. Despite the complex scenarios in terms of FX, hydrology in Colombia, and curtailments in Brazil, we were able to have a good performance and offset a difficult situation, as we will see in the next slide.
This year, we reached a record net income, which will allow us to pay close to $0.8 billion of dividends to our shareholders, increasing our dividend per share by three times. Before going to details of our operation and financial performance of last period, I would like to have a general view on the scenario that we faced in 2024. 2024 was a complex year. We faced a difficult hydro scenario in Colombia that had significant impact in our results. With hydrology below the historical average in April, July, and August, where it was at historical lows. During October and November, we faced a limitation in our hydro production due to the shortage risk, leading us to increase our purchase in the spot markets at very high clearing prices. We also continued to see extreme weather events in Brazil that led to blackouts.
However, our company has improved in client reconnection, response, and communications. A continuous improvement, faster and more effective reaction. Curtailment in Brazil has another challenge in 2024, with around a 3% loss of our wind and solar generation due to to this situation. Most of it in the third and the fourth quarter generation impact of less $90 million. In addition to this, currencies in the region suffered important devaluation in the fourth quarter, especially in Brazil. The impact in our 2024 results was around $100 million at EBITDA level. We successfully completed our asset disposal plan in Peru. The proceeds from these sales allowed us to optimize our financial situation and put the company in a very comfortable and flexible position to face the coming challenges and opportunities that we see ahead.
Now, let's analyze our investments of the period in the coming slide. During the fourth quarter, our CapEx decreased by 16% compared to the same period of last year, reaching $577 million. This is mainly explained by lower CapEx in generation due to the completion of renewable projects and a slowdown in developing new generation projects. Pretty much in line with what we announced in our strategic plan about being more selective in our investments in renewables. However, it is important to highlight that investments in grids, distribution business, increased by 37%, reaching $0.4 billion. 55% of the total investments were devoted to Brazil and 31% to Colombia. Argentina represents 13% of the total, reflecting the increasing relevance of this country in our company.
In terms of business line, 65% of total CapEx was devoted to grids and 29% to renewables. Growth CapEx in grids totaled $90 million, a 65% increase reflected across all our concession areas. Let's now analyze grids operational highlights in slide six. Electricity distributed reached 27.1 TWh in the fourth quarter, which represents an increase of 0.3% compared to the same period last year, explained by higher sales in Brazil, partially compensated by lower sales in Argentina and Colombia. Regarding number of customers, we had an increase of around 414,000 in the last 12 months, reaching 22.6 million customers. Smart meters increased by almost two times, reaching 1.4 million in this period, mainly due to the deployment in São Paulo.
Net RAD and net RAD per customers increased by 22% and 20% respectively, isolating the impact of currency devaluation. This reflects the significant investments in our grids. In terms of quality indicators, we can see that SAIDI improved in all subsidiaries except from Enel Rio, mainly due to the intensity of weather events, especially in the first part of the year. Regarding SAIFI, we were able to improve in Colombia and São Paulo. Regarding energy losses, we improved in São Paulo and remained flat in Colombia, but increased in Rio and Ceará and Edesur, and this is mainly a consequence of higher temperatures registered in the fourth quarter. Let's continue with generation operational highlights. During 2024, we added 0.8 gigawatts, 800 megawatts of new renewable capacity through the projects Arinos and Pedra Pintada in Brazil and Guayepo in Colombia.
This implied an investment of $0.5 billion. With this, we reached 12.9 GW of installed capacity, from which 98% is renewable. We currently have 0.5 GW of capacity under construction, and these are solar projects located in Colombia, which will be finished between 2025 and 2026. Regarding our energy balance, we can see that on a cumulative basis, we saw a 1% increase in sales explained by Brazil, with 40.4 TWh coming from our own production and 25.4 TWh from purchases. On a country basis, Colombia saw a reduction in hydro generation as a consequence of the stressed hydro condition in the country during this year.
We were able to partially compensate this with our increased solar capacity, but it was necessary to increase energy purchase to comply with our contracts. In the case of Brazil, we would like to highlight the significant increase in renewable production, thanks to the new capacity that we have added during the year. You can see the detail for both countries' energy balances in the annex of our presentation. Now, Rafael will comment on the financial results of the period in the coming slide.
Thank you very much, Aurelio. EBITDA in 2024 reached $3.7 billion, in line with last year's EBITDA. This result is explained by better results in Argentina and Central America, offset by lower EBITDA in Colombia and Brazil due to currency devaluation in both countries, and a worse performance in generation in Colombia due to hydro conditions, as Aurelio mentioned before. On a quarterly basis, EBITDA reached $724 million, which is 15% lower than fourth quarter of last year, mainly due to lower results in generation in Colombia and currency depreciation in Brazil and Colombia. In terms of net income, during 2024, we reached $2.6 billion, including the positive impact of $1.7 billion coming from the sale of our Peruvian assets.
Isolating this effect, as you may see in the slide, we reached $0.9 billion in this period, basically in line with same period of last year. Our gross debt decreased by 35%, mainly due to liability management actions and currency devaluation. We will analyze in detail our debt later on. On slide number 10, we will see EBITDA evolution and the breakdown of it. Slide number 10, starting from $848 million of adjusted EBITDA in the fourth quarter of 2023, we see that generation came in line with last year, with new capacity in Brazil and higher generation in Central America, offsetting the challenging hydro conditions in Colombia, while grids improved mainly due to better results in Brazil. Finally, customers decreased in Brazil and Colombia.
All in, we get to an adjusted EBITDA of $852 million for the fourth quarter of 2024, in line with the same period of 2023. FX has a negative impact of $128 million due to currency devaluation in Brazil and Colombia during the quarter, resulting in a reported EBITDA for this quarter of $724 million. From our reported EBITDA, 69% came from Brazil, 25% from Colombia, and 7% from Central America. While in terms of business line, grids represents 61% of our total EBITDA, generation 30%, and customers contribute with 10%. As for our EBITDA breakdown on a cumulative basis, we move to slide number 11.
For, as you may see here in this chart, for 2024, we see that EBITDA grew by 3% in homogeneous perimeter and isolating FX impact. Generation decreased mainly due to hydro conditions in Colombia. Grids significantly increased due to better results in Brazil, Argentina, and Colombia, and customers came in line with the previous year. FX had a negative impact of $100 million, mostly coming from Brazil and partially offset by Colombia, reaching a reported EBITDA of $3,735 million, slightly higher when compared with the previous year, 2023. From this EBITDA, 59% comes from Brazil and 35% from Colombia. While in terms of business lines, grids contributes with 35% of the total and generation with 36%. Now we will focus on the cash flow of our company in slide number 12.
An EBITDA of $3.74 billion, we see that net working capital amounted to $0.11 billion, a significant improvement compared to last year, mainly explained by lower executed CapEx in Brazil due to the completion of the renewable projects. Taxes paid during the period amounted to $0.57 billion, lower compared with last year, while financial net expenses had an important decrease due to the liability management actions that we have implemented with the proceeds coming, as we mentioned before, from the sale of our Peruvian assets. With this, funds from operations amounted to $2.4 billion, an improvement nearly to $0.8 billion compared to the same period of the previous year.
After investments for $2.1 billion, as Aurelio mentioned before, we get to a free cash flow of $0.3 billion at the end of 2024. Now, let me analyze the debt of our company in the following slide, which is slide 13. Gross debt amounted to $5.2 billion, a decrease of 35% compared to December 2023, mainly explained by debt reduction in connection with the use of proceeds coming from the sale of our Peruvian assets, as well as currency devaluation in our main markets. While in this sense, we reduced our debt in Brazil by $2.1 billion, as you may see on the left side of this chart.
We also see a reduction in Colombia, mainly due to FX effect and in Enel Américas standalone, corresponding to a bridge loan that was paid after we received the funds from Peru. Net debt reached $2.1 billion, a decrease of 65% compared to the end of 2023. This includes, as I mentioned in the previous slide, free cash flow for $0.3 billion, net dividends paid for $0.5 billion, extraordinary operations for $4 billion, mainly related to the payment of the assets I mentioned at the sales in Peru, an FX effect for $0.6 billion. In terms of currency and country, we see that Brazil remains as the largest contributor, while the debt at the holding level represents only 11% of the total.
Just to remind you, this is a Yankee bond that we have that is going to expire in October 2026. Finally, regarding the cost of debt, we can see a decrease for this period, going from 12.2% to 10.3%, mainly explained by our liability actions in Brazil and lower interest rates in both Brazil and Colombia. On the next slide, Aurelio will present the main highlights of the regulatory scenario that we will see during the first half of 2025. We will be facing during 2025, concluding this presentation with some closing remarks.
Thank you, Rafael. 2025 is expected to be an important year in regulatory aspects in distribution business for our company. Beginning with Colombia, this year we are going to have tariff revision process for the commercialization company, and we expect to have more details about this process in the coming months. In Brazil, we are moving forward in the concession renewal process with the recent publication of the baseline concession renewal contract by Enel. During the next 30 days, companies have to formalize their intention to renew the concession, and 60 days after that, Enel gives its recommendation to the Minister of Energy, and they make their decision within 30 more days. Finally, in Argentina, after the recent public hearing, we expect that the tariff review process will yield a remuneration that reflects current market conditions and needs.
The current expected timeline is to have the final tariff scheme by the end of March, with these tariffs coming into effect at the start of the month of April. Let me conclude this presentation with some closing remarks on slide 15. We are increasing our investments in grids, as announced on our current strategic plan, focusing our efforts in having a more resilient network and improving quality for our customers. Despite a complex scenario, including currency devaluation and poor hydro conditions, among other difficulties, we were able to have a good performance, and EBITDA was in line with last year. Thanks to the completion of our disposal plan, we reached a record net income, which will allow us to pay a significant dividend to our shareholders, almost $800 million.
For 2025, we have important regulatory milestone coming up, and we are closely monitoring this process due to their importance in the coming years for the company. We'll have our shareholding meeting on April 30. As always, we'll be uploading the information regarding these events on our website. Please hold here.
Thank you, Aurelio. Thank you, Rafael. First question comes from Ricky Yu. Can you talk about the curtailment situation across your generation fleet? How did we start the year 2025, and how does the situation compare with 2024?
Thank you. What's the question?
Curtailment.
Curtailment. Thank you for the question. Yes, curtailment is a reality as we are facing, especially in the last years. I think it's a mix of issues that affect the curtailment. Just to give the, you know, the how it's being originated. I mean, it needs investments in transmission. It needs to have more, let's say, information regarding the intermittent generation in this system in Brazil. I suppose you are mentioning, yes, we are referring to Brazil. With all the increase that we had in especially in distributed generation, it's not easy to predict or to have a factual information regarding the quantity of generation that it's been entering the system.
Improving the transmission lines, the transmission transfers from the energy. Improving the integration of generation, the concentrated generation of renewables, and also start to measure it more effectively to distribute the generation. With the improvements that the government is pushing for a new capacity, especially capacity for the hours that we need more capacity in the system. I'm referring to the auction that the government is preparing for new capacity. Generation thermal capacity, some hydro capacity, solar and some batteries. I think with all these this process will improve the problems that generation that's generating the curtailment, right?
It's not fast. It's not something that will be in the following day, but it will be improving. We expect that will improve in the coming months, the coming years. But of course when the systems do not have a good condition, especially in Brazil that we depends on hydro generation, for example, and we do not have water, we do not have rain, this situation tends to be more difficult to create more difficulties in terms of operation, in terms of reliability, so the curtailment increase. I'm just saying all of this to tell you that if we have improvements in these fronts in the
Especially in hydro, we do not have an unfavorable hydro condition in the season and which we cannot predict right now, so if we have improvements in terms of new transmission line, if we have improvements in new capacity, that will take time to be implemented. But especially hydro condition, maybe we'll suffer with this problems more than or equal to that we had in the previous year. For last year, as I was explaining, the effects in our results was $90 million. I know that other companies were affected more. In our case, it was $90 million, 3% of our generation.
I mean, we can support this. We have a huge portfolio but, of course we do not agree with that we suffer with this situation. I mean, we are analyzing the possibilities. In terms of system, we have an issue here that, as a system we need to solve. I mean, not we Enel, but as a part of the system, Brazilian system, operator, regulator, transmission, agents, we need to solve. I repeat some companies, it affects more than our companies.
Of course, since we are a huge operator in terms of generation, in terms of renewables, we have some exposure. We are also being very proactive in terms of contracts. We have a huge portfolio, more than 6 GW of capacity combining hydro, solar, and wind. Also with a huge front in terms of commercialization, in terms of trading, energy trading, we are able to compensate this, or to reduce or to mitigate a little bit more of this effect. Exposed, yes, we are.
Thank you, Aurelio. Now a question from Rodrigo Mora. Related to hydro conditions in Colombia, could you give us some color about the actual situation and the perspective for 2025?
Yes. Well, it's difficult to predict right now. As we know, right now the reservoir, they are in a good condition, but with the high temperatures they are at, especially in Brazil, but also in Colombia, we need to see the end of this of the current season to have a more clear view of the hydro condition of the year. Right now, what I have to tell you is that we are in a, let's say, in a more balanced situation, not with the extreme dry that we had in the past, but in a more balanced situation.
It's too early to predict how it will evolve during the year, since we see that this hydro condition in the past used to be more predictive after the end of December, for example. Now we see that during the same year we have different situations. What we need to have here is flexibility, proactivity, and the condition to contract and especially leave part of our energy not contract in order to mitigate the adverse situations. This is a change also for the new times, the new way that we need to face hydrology in our geography.
Thank you.
Thank you, Rodrigo.
Thank you, Aurelio Bustilho. Alessandro Vichi is sending four questions.
First, is the company considering further corporate simplification actions? Number two, is the company confirming 2025 guidance unveiled at the last business plan in November? Number three, do you see any risk of revocation of distribution concessions due to service interruptions? Finally, can you also share the underlying drivers that led results to be below the latest guidance?
Okay. Well, Rafa, if you
Yes.
Thank you for the question. If you don't mind, I can answer.
Yeah.
You answer the second question, right? The guidance. The last one, no?
Okay.
I can answer one and three. I mean.
Perfect.
Yeah.
From the-
Okay.
Okay. Perfect.
We are not analyzing simplification actions. I mean, our priority as we said in the presentation is to solve, especially to follow those main milestones in terms of regulation, right? We do not have to wait too long because we expect this to be, especially in Brazil, defined in the first semester of this year. In Argentina, also in the first semester, I mean, we do not have to wait longer to enter in this part. For now, there's no simplification actions moving far from our side, you know, from the company. Point three.
Let me tell you, the process of renewal concessions is being very transparent, is moving in the correct directions, considering our views, more aligned with the extreme events that we are facing our cities, in our regions, in the world in general. The concessions need more CapEx, more velocity in terms of CapEx recognition. It's fair also to consider, and in that way, they consider the customer satisfaction, which is very important. This is a very important change that it's aligned with the new times and we find it's fair and it is correct. Having said that, we do not have any discussion about revocation distribution concession.
We maintain our intention for the concession renewal. We maintain our CapEx that we presented in the last strategic plan to invest in this concession $4.6 billion that we announced, right? $4.5 billion-$4.6 billion announced for the next 2025, 2026, 2027 to invest in this concession. We do not see issues related to revocation. We reinforce our intention to renew the concession for the next 30 years. We are confident that conditions will reflect a fair economic remuneration and fair condition in order to absorb these investments. We do not see.
We are meeting the KPIs, the regulation KPIs in terms of quality that we have today. I repeated that we are still facing yesterday, for example, we had this huge tempest or huge flood in São Paulo, and we are the time to reconnect, to reconnect, we've been improving the communication, we've been improving. I mean, we are doing our job and continuous improving the quality and our time of reconnection and our timing to provide the advantage to the customers. Rafael, if you can
Thank you, Aurelio. I will go for the second question and fourth question. In relation to the second question, Alessandro, thank you very, very much for it. The answer is yes, we are confirming the 2025 guidance for Enel Américas. First of all, let me remind you the guidance that we have in terms of EBITDA, which is a range between $4.4 billion-$4.6 billion for 2025. And in terms of group net income, the guidance is $1.4billion-$1.6 billion. We are confirming this guidance, so the answer is yes. Of course, there is a KPI that we cannot control, that is the FX. This is something that we cannot manage. Let's see how it evolves along the year.
In any case, of course, Enel Américas is a company with the US dollar as a functional currency. Our operations are substantially local currency, so we could have a potential impact in terms of FX. We are very conservative as usual, and as I anticipated before, we prefer to announce, when we announce always the guidance to the market, we prefer to announce a guidance with a range for the year.$ 4.4 billion-$4.6 billion in terms of EBITDA, I'll repeat, just to potentially cover this kind of impacts like the FX effect that we may see during 2025. We are confirming for the moment the guidance, I repeat, but let's see how the currencies in the different countries are evolving during 2025.
In relation to the fourth question, can you also share the underlying drivers that led results below the latest guidance? Substantially, the difference is due to the FX impact, substantially due to the devaluation of the Brazilian reais during November and December 2024. The guidance that we announced for 2024, when we presented the strategic plan of the company in November last year, was $3.9 billion. The final number that we have announced today is $3.7 billion. Substantially, the difference between both numbers is the FX effect due to the currency performance in Brazil. There is also an impact in Colombia, but it's substantially Brazil, the highest impact in our numbers versus the guidance.
Thank you, Aurelio and Rafa. One final question from Rodrigo Mora. Could you give us some color about the tariff process in Codensa, Colombia, such as regulatory WACC?
Thank you, Rodrigo. Well, the process is starting, you know, it's still early, but we expect it to be defined in the first semester of this year. The main point here, well, the regulatory WACC, I don't know, Rafa, if you have it, what we consider in terms of WACC, you can.
Yes, we have it in the annexes of the.
You can mention.
Of the presentation.
It's pretty much in line with what we consider. There's no big issue. Can you, if possible-
Yes.
You can mention. In any case, I think, well, this process, the main issue, Rodrigo, is related to the CapEx recognition and the process to evaluate the CapEx that we are to invest and what's the percentage of recognition. I mean, the first discussions, we've been improving the discussion. I mean, it will be pretty much in line in terms of what we plan to invest is what the regulator would recognize. It's still ongoing discussions, but this is something important.
As you know, in Colombia, it is a revenue cap methodology, so CapEx is recognized during the same year, the amortization during the same year that you are starting to invest. This is very important, and it's moving a good way. I give the floor to Rafa to mention the WACC.
I think that you described it very well, the situation. In terms of our WACC, Rodrigo, in Colombia, just to remind you, we have a 12.1% WACC pre-tax, so it's a very good WACC. Let's see how it evolves in the revision. For the moment, the one that we have for this year was 12.1%. You have all the details in the annexes, as Aurelio explained before, and also related to the model of the current tariff scheme. We are positive. We have positive signals about what is going to happen in regulatory terms also in Colombia.
Thank you. In the same line, Rodrigo also asks for the Edesur tariff process. What should be the regulatory bid there, and what is the CapEx committed by Edesur for 2025-2027?
Well, the CapEx, of course, the situation in Argentina is improving. You know, Rafael can give you the figures. In terms of what is still pending, let's say, in Argentina, we are recognizing, we improved the VAD. We improved the VAD, the VAD, which is the regulatory value for the distribution, recognizing the inflation that was, we are anticipating the inflation during the month, which is pretty much in line. I mean, this is not the tariff, the new tariff reset, but this is important because when you reach the tariff reset, anticipating these effects is very important. It's been anticipating the effect in Edesur. This is one very important point.
Of course, it is important to have the inflation recognized in the RAB of Argentina, which is something that we expected to be performed. In terms of CapEx, of course, the future CapEx, now we are estimating, as I remember, Rafael can give you the 700-
$200 million per year for the year 2025. In total, Rodrigo, as we announced during the strategic plan, for the period 2025-2027, is $770 million.
For the three-
For the three-year period.
Exactly. The regulatory EBITDA, Rafael, I don't know if you have this figure, but at the end of the day, if you see the plan, half.
It will depend on how the regulation evolves, you know. But of course, in terms of EBITDA, Argentina, as announced in the strategic plan of the company, will be in terms of growth a relevant contributor in terms of EBITDA for this period, for the distribution business. In 2024, the EBITDA at the Edesur level was $30 million for the distribution sector. We expect a relevant growth for the triennium 2025-2027, and it's gonna be one of the most relevant actors in terms of growth for this business line, you know.
I think, if I remember correctly, we have a chart in the strategic plan of the company in which you may see the growth of Argentina and also the contribution of Brazil in the distribution business for this period, being, I repeat, Argentina, in terms of growth, the most relevant actor for this period.
Yeah. Just to add some comments to this. It's very important that Argentina, for example, we are, as Rafael said, we are balancing the cash flow. We are maintaining the neutral cash flow. If we do not have better conditions, we will not invest. Simple like that. Will not anticipate money in the country. I mean, we do not have the process totally defined. We have, as Rafael explained it, estimating that that will rebalance the distribution in order to absorb the investment, you know, $700 million of EBITDA, almost $700 million of CapEx. This is the number. But of course, if we do not have condition, we will not put the $700 million on the table.
I mean, this is clear, no?
This is the CapEx announced.
Exactly. Profitability is our mantra. Cash flow is our mantra. That's why we are focusing efficiency, we are focusing in financial profitability in order to have a balanced free cash flow, positive free cash flow, I mean, to distribute the dividends. I mean, we'll not increase the debts in other way to speak. Okay? Thank you.
Thank you. Well, as there are no more questions, I conclude the results conference call. Let me remind you that the investor relations team is available for any doubt that you may have. Thanks for your attention.
Thank you.
This concludes today's conference call. Thank you for participating. You may now disconnect.