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Enel Chile(ENIC) - 2024 Q2 - Earnings Call Transcript
ENICEnel Chile(ENIC)2024-07-26 01:00

Financial Data and Key Metrics - The company expects to recover 450millionto450 million to 600 million from the factoring process in the second half of the year, with total receivables currently at 1billion[4][6]−Netincomeincreasedby2.2xcomparedtothepreviousyear,reaching1 billion [4][6] - Net income increased by 2.2x compared to the previous year, reaching 267 million, driven by strong EBITDA performance [32] - EBITDA for Q2 2024 reached 301million,a6.4xincreasecomparedtoQ22023[46]−FFOimprovedby301 million, a 6.4x increase compared to Q2 2023 [46] - FFO improved by 27 million in 2024 versus 2023, reaching 52millioninthefirsthalfof2024[30][44]−Grossdebtincreasedby852 million in the first half of 2024 [30][44] - Gross debt increased by 8% to 4.8 billion by June 2024, primarily due to higher working capital and CapEx needs [52] Business Line Data and Key Metrics - The distribution segment saw a tariff increase of 5% for the 2020-2024 regulatory period, contributing 15milliontothecompany′sperformance[10][28]−Thegenerationsegmentachieved12.1terawatthoursofnetelectricitygenerationinthefirsthalfof2024,a1515 million to the company's performance [10][28] - The generation segment achieved 12.1 terawatt hours of net electricity generation in the first half of 2024, a 15% increase compared to the same period in 2023 [68] - The company added 250 megawatts of new renewable energy capacity and BESS projects, supporting its decarbonization goals [89] - Hydro generation estimates for 2024 were updated to approximately 12 terawatt hours due to favorable hydrological conditions [53] Market Data and Key Metrics - The company expects a 5% tariff increase for the next regulatory period (2024-2028), with the final decree expected to be published in Q4 2024 [34][60] - Clients consuming less than 350 kilowatt hours will see a 16% tariff increase, while those consuming more than 350 kilowatt hours will face a 33% increase due to higher generation costs [10][134] - The company is awaiting the sovereign guarantee decree to enable the factoring process for PEC receivables, expected in Q3 2024 [40][90] Company Strategy and Industry Competition - The company is focusing on increasing renewable energy capacity and incorporating more batteries into its portfolio to improve flexibility and decarbonization [66][89] - The company is negotiating with customers to fulfill the 33 terawatt hours sales target for 2024-2026, with all contracts already in place [27] - The company is confident in its 2024 guidance, supported by solid operating and financial performance in the first half of the year [95][100] Management Commentary on Operating Environment and Future Outlook - Management highlighted the positive hydrological conditions and efficient generation mix as key drivers of strong performance in 2024 [74][53] - The company expects to recover the remaining PEC receivables by 2027, with 550 million to 650millionexpectedtobefactoredbytheendof2024[41][117]−Managementconfirmedthe2024guidance,withhydrooutputprojectionsnowpointingtowards12terawatthours,upfromtheinitialassumptionof10terawatthours[96][100]OtherImportantInformation−Thecompanyisworkingonimprovingclientprotectionmechanismsandestablishingtransitorysubsidiesforvulnerableclients[57][59]−Thecompanyhasasolidliquidityposition,with650 million expected to be factored by the end of 2024 [41][117] - Management confirmed the 2024 guidance, with hydro output projections now pointing towards 12 terawatt hours, up from the initial assumption of 10 terawatt hours [96][100] Other Important Information - The company is working on improving client protection mechanisms and establishing transitory subsidies for vulnerable clients [57][59] - The company has a solid liquidity position, with 750 million in available committed credit lines and 305 million in cash and cash equivalents [92] - The company is awaiting regulatory updates on ancillary services for battery projects, which could provide additional revenue streams by the end of 2024 [130] Q&A Session Summary Question: PEC Mechanism and Receivables Recovery - The company has 1 billion in PEC receivables, including 150millionininterest,andexpectstofactorize150 million in interest, and expects to factorize 550 million to 650millionbytheendof2024,withtheremainingamounttoberecoveredby2027[99][117][139]Question:TariffUpdatesandImpactonFinancials−The5650 million by the end of 2024, with the remaining amount to be recovered by 2027 [99][117][139] Question: Tariff Updates and Impact on Financials - The 5% tariff increase for the 2020-2024 regulatory period contributed 15 million to the company's performance, with 7millionrelatedtopreviousyearadjustments[127][124]Question:GuidanceandHydroOutput−Thecompanyconfirmedits2024guidance,withhydrooutputprojectionsnowat12terawatthours,upfromtheinitial10terawatthoursassumption[96][100]Question:DistributionSegmentandTariffAdjustments−Thedistributionsegmentsawa7 million related to previous year adjustments [127][124] Question: Guidance and Hydro Output - The company confirmed its 2024 guidance, with hydro output projections now at 12 terawatt hours, up from the initial 10 terawatt hours assumption [96][100] Question: Distribution Segment and Tariff Adjustments - The distribution segment saw a 15 million impact from the tariff adjustment, with half of it related to previous year adjustments [28][127] Question: Battery Projects and Revenue Streams - Battery projects like El Manzano and La Cabaña are expected to generate revenue from capacity payments and energy shifts, with potential additional revenue from ancillary services pending regulatory updates [130] Question: Medium to Long-Term Contracted Portfolio - The company is confident in its medium to long-term contracted portfolio and is actively negotiating new PPAs to fulfill its sales targets [141]