Enel Chile S.A. Q2 FY2024 earnings call

Management Statement and Operational Highlights

• Hydro Performance: Hydro portfolio performed outstandingly with higher reservoir levels due to El Niño and strong weather events, leading to a 72% increase in hydro production in Q2 2024. Accumulated hydro generation in the first half of 2024 was 2.1 terawatt hours.
• Renewable Additions: Added approximately 250 MW of new renewable energy capacity and BESS projects. Received commercial operation date for ~410 MW since January 2023, totaling 1.6 GW.
• Regulatory Updates: Chilean Congress approved the stabilization mechanism type III, with the distribution tariff 2024 effective and review for 2028 underway. The PEC III law was published, awaiting sovereign guarantee decree for factoring process.
• Profitability: Solid EBITDA and net income in the first half, positive FFO despite tax receivables, with expectation to recover portion in second half.
• CapEx: Total CapEx $290M in first half, 66% for renewable and storage, 22% for distribution, 58% for development.

Segment Performance

• Generation: Net electricity generation totaled 12.1 terawatt hours as of June 2024, exceeding the first half of 2023 by 15% due to higher hydro and renewable generation. Energy sales reached 17 terawatt hours in June 2024, 10% higher than the previous year, driven by higher sales to regulated and frequent clients.
• Distribution: Clients in distributed energy in the concession area grew by 2% and 3% compared to the previous year. The segment was affected by critical weather events impacting quality indicators like SAIDI and SAIFI.

Guidance

• Confirmed 2024 guidance remains within the previously stated range.
• Expect to recover portion of tax receivables in the second half.
• Anticipate factoring of PEC receivables in the second half, expecting $450M-$600M recovered by end of 2024.

Risks

• Regulatory Uncertainties: Potential changes in subsidies for vulnerable families and uncertainties in the regulatory framework.
• Weather Impact: Extreme weather events affecting electricity supply quality indicators like SAIDI, SAIFI, and losses.
• Exchange Rate Fluctuations: Impact on PEC receivables recovery due to exchange rate movements.

Question and Answer

• Q: On the PEC mechanism, how much can be monetized this year? A: Giuseppe Turchiarelli stated around $450M-$600M expected to be monetized in the second half via factoring.
• Q: Follow-up on receivables monetization this year? A: Isabela Klemes and Giuseppe Turchiarelli reiterated expectation of around $450M-$600M monetized in the second half.
• Q: Impact of Santiago electrical service issues on distribution Opex and CapEx? A: Giuseppe Turchiarelli mentioned extreme weather events in May affected quality, with ~$10M in costs, discussing with BESS on managing the situation.
• Q: Remuneration mix for El Manzano and La Cabaña batteries? A: Giuseppe Turchiarelli explained revenues from capacity payments, energy shift; ancillary services pending regulation update by end of 2024.