Enel Américas S.A. (ENELAM) Earnings Call Transcript & Summary

Good day, ladies and gentlemen, and welcome to Enel Américas' 2025 Results and 2026-2028 Strategic Plan Presentation. My name is Carmen, and I will be your operator for today. [Operator Instructions] Please note, 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 plans, trends affecting Enel Américas' financial condition or results of operations, including market trends in the electricity sector in Chile, the countries where the company operates or elsewhere, supervision and regulation of the electricity sector in Chile, the countries where the company operates or elsewhere and the future effects 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 regulations in Chile, the countries where the company operates 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 this date. Enel Américas undertakes no obligation to release publicly the results of any revisions of 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, Carmen. Good morning, ladies and gentlemen, and welcome to Enel Américas' 2025 Results and 2026-2028 Strategic Plan Conference Call. I'm Jorge Velis, Head of Investor Relations. We will begin this presentation with our full year 2025 results. Our CEO, Giuseppe Turchiarelli, will present the highlights of the period, along with the operational performance. Then our CFO, Rafael de la Haza, will analyze the economic and financial results of the period. After we conclude our results presentation, we will present our strategic plan for the 2026-2028 period. Giuseppe will focus on the market context and the strategy of our company, and then Rafael will be presenting the main financial figures and financial management. Giuseppe will then conclude the presentation with our targets and closing remarks. 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 the corporate e-mail ir.enelamé[email protected]. Please remember that only analysts and investors can ask questions in this session. Now let me hand over the call to Giuseppe, who will start by outlining the main highlights of the period in Slide #4.

Thank you, Jorge. During 2025, we made investments of $2.3 billion, which is an increase of 11% compared to 2024. Most of our CapEx was allocated to Grids, where we are working to improve the quality and resilience of our operation, looking to improve the services for our customers and become a better preferred company to face the extreme weather events that are becoming more frequent in the region. In defense, grid CapEx increased by 30% compared to the previous year. In generation, we had an increase of 4% in renewable energy production, mainly explained by Colombia, where we increased our renewable generation by 23%, thanks to better hydro condition in the country. This was partially offset by lower production in Argentina and the effect of curtailment in Brazil. In addition to this, we are glad to report the incorporation of 0.3 gigawatts of new solar capacity with the project Guayepo III in Colombia which yesterday obtained the commercial operation date. This plant will deliver clean energy to more than 800,000 people. EBITDA in 2025 reached $4.3 billion, which is 14% higher than the previous year. This is mainly explained by better results in generation in Colombia due to better hydro conditions and in Grids in Argentina due to tariff review, which started to be applied as of May 2025. Finally, in terms of net income, we reached $1 billion in 2025. If you exclude the impact of Peruvian deal effect in 2024, net income increased by 30% versus previous year. Let's now analyze Grids operational highlights in Slide 5. Electricity distributed reached 108.6 terawatt hour in 2025, an increase of 2% compared to the previous year. This is explained by higher sales in Brazil, Argentina and Colombia. Regarding number of customers, we had an increase of 344,000 in the last 12 months, reaching 23 million customers. Smart meters increased by 66%, reaching almost 2.3 million in this period due to our deployment plan in Sao Paulo. Net RAB and net RAB per customer increased 11% and 7%, respectively, isolating the impact of the currency devaluation. This reflects the significant investment we are making in our bid. In terms of quality indicators, SAIDI improved in Enel Rio, Enel Ceará and Enel Colombia, while in Enel Sao Paulo, this KPI slightly increased due to the extreme climate events experienced during this period. In Edesur, the 2025 performance is driven by the deterioration of the grid affected by extreme temperatures. SAIFI improved in Enel Colombia and Enel Rio, while Edesur, Enel Sao Paulo and Enel Ceara increased due to extreme climate events and transmission line failure in the case of Ceara. We continue focusing on improving this indicator and despite some increases in 2025, we remain fully compliant with the regulatory limit in Brazil and Colombia. Finally, for what concern the energy losses, Edesur has been affected by higher commercial losses as a consequence of tariff review implemented in May 2025. In relation to the Brazilian company, losses particularly increased in high-risk area, while in Enel Colombia remained substantially in line with the previous year. Let's continue with generation operational highlights on Slide 6. Installed capacity increased to 13.1 gigawatts due to the incorporation of Guayepo III, whose cost has been already obtained, as mentioned before. From our total capacity, 98% is renewable. We are currently working on additional 0.3 gigawatt capacity on Atlantic solar project located in Colombia. In the following slides, we will focus on additional renewable capacity for the coming year. During 2025, we increased our production by 2% on a consolidated basis, reaching 41.6 terawatt hour. This is mainly explained by higher production in Colombia, thanks to better water availability compared to 2024. On the other hand, we had lower production in Brazil, where the impact of curtailment more than offset higher renewable generation coming from new capacity that entered during 2024. The sector is working together with the regulator and authorities to find the solution to this problem. Hydro production also decreased in Brazil due to lower water availability compared to the previous year. Please see our energy balance in the Slide #7. Our energy sales increased by 1% as a consequence of higher energy sales in Colombia, partially compensated by Argentina. Sales to unregulated customers remains broadly in line, mainly due to higher sales in Brazil and decrease in Colombia. On a country basis, we can see that Brazil remained flat with lower generation compensated by higher energy purchases. Colombia had an increase in energy sales due to better generation and Argentina had lower sales to lower generation and Central America had lower sales to lower energy purchase. Now Rafael will comment on financial results of the period in the coming slides.

Thank you, Giuseppe. [Foreign Language] CapEx in 2025 reached USD 2.3 billion, an increase of 11% compared to the previous year. This is explained by a significant increase in grid business, which grew by 30% year-on-year with a special focus in Brazil, where CapEx increased by 36%. This is in line with our strategy of sourcing grids, aiming to improve quality for our customers and become a more resilient company considering the climate events that are affecting our region. EBITDA this year reached $4.3 billion, an increase of 14% compared to 2024. This better result is mainly explained by better results in generation business in Colombia due to better hydro conditions this year and better results in grids in Argentina, Brazil and Colombia. Excluding FX impact, EBITDA would have reached USD 4.4 billion, in line with the guidance we gave on our last strategic plan. Net income reached $1 billion in this period, which is 30% higher than the previous year. If we exclude the impact of the sale of Peruvian assets in 2024. This improvement is mainly due to better EBITDA and better financial results explained by an active financial management and FX effect on balance sheet items. Net income did not reach the guidance of our latest strategic plan, but ahead of this presentation, we will have a slide focus on this. Now on Slide #10, we will see EBITDA evolution and breakdown. Starting from $3.7 billion of EBITDA of 2024, we see that generation business has an increase of $0.3 billion, mainly explained by Colombia due to better hydrology. Grids business improved by $0.4 billion due to better results in Argentina, Brazil and Colombia, explained by better positive tariff adjustments and higher demand and customer business and others remained flat compared to 2024. With this, we get to an EBITDA of $4.4 billion, which represents an increase of 18%. FX had a negative impact of $0.1 billion, resulting in a reported EBITDA for 2025 of $4.3 billion. From our reported EBITDA, 52% came from Brazil, 37% from Colombia and 5% from Argentina, 5% from Central America and 1% from Piura, our generation business in Peru, which is as of the last quarter, this company, Enel Generación Piura was not considered asset held for sale. In terms of business line, Grids represents 60% of our EBITDA, generation 37% and customers contribute with 2%. As already mentioned, EBITDA was in line with the guidance given on our last strategic plan. However, net income despite the significant growth of 2025, more than 30% was below our guidance. On the coming slide, we will analyze the impact that explain this. Starting with $0.7 billion of net income in 2024, we can see that net income increased up to $1 billion in 2025, explained by higher EBITDA and better financial results, partially offset by higher taxes and higher minority interest due to the increased results in Colombia. The net income guidance presented in our 2025-2027 strategic plan forecasted $1.4 billion. Starting from the $1 billion net income reported for 2025, the variance versus our guidance is fully explained by several assumptions that did not materialize. First, deviations in macroeconomic assumptions and tariff adjustment assumptions in Argentina had a negative impact of $0.1 billion. In addition, results in Brazil were affected by higher curtailment and by currently nonrecognition of the PIS/COFINS effect in Brazil together amounting to $0.2 billion. Considering all these impacts, we get to the $1.4 billion indicated in our guidance. Regarding shareholder remuneration, the increase in net income from our operations, along with the effects from the share buyback executed in 2025 helped boost EPS growth by 36% compared to the previous year. Let me now analyze the debt of our company in the following slide. Gross debt amounted to $6.8 billion, an increase of 30% compared to December 2024, explained by higher debt in Brazil, Argentina and FX impact in Colombia and Brazil. Net debt reached USD 4.8 billion, an increase of 126% compared to the end of 2024. This includes positive free cash flow of $0.3 billion, net dividends paid for $1.1 billion, the payment of the share buyback program for $0.5 billion and extraordinary operations for $0.9 billion, mainly related to the tax payment in Peru due to the asset sales of 2024 and a payment related to the pension fund in Sao Paulo. FX had a negative impact of $0.5 billion. In terms of currency and country, we see that Brazil remains the largest contributor, while the debt at the holding level represents 9% of the total debt. Finally, regarding the cost of debt, we can see an increase for this period going from 10.3% to 11.4%, explained by higher interest rates in Brazil. This concludes the full year 2025 results part of this presentation. And as Jorge mentioned before, in the coming slides, we will present our strategic plan for the period 2026-2028. Please remember that Q&A will be held at the end of this presentation. Let's now move ahead on the slide to the Slide #14, where Mr. Giuseppe, our CEO, will start with the main market context and strategy going forward.

Let me start by framing the long-term context for the electricity sector in Latin America. Over the next 25 years, electricity demand in the region is expected to grow significantly, driven by economic development, electrification of end user and the expansion of digital infrastructure. Electricity consumption in Latin America will increase from around 1,270 terawatt hours in 2030 to more than 3,100 terawatt hours by 2050. This implies an average annual growth rate of about 4.6%, meaning the regional electricity demand will more than double within 2 decades. This rapid growth put additional pressure on transmission and distribution network. Always more sector and activities increase their electricity consumption such as transport, heating and industry. In such situation, the grid become the critical enabler for the entire energy transmission. On the investment side, we see the same trend. Annual energy investments in the region are projected to rise sharply from roughly $105 billion per year in the period 2025-2030 to around $360 billion per year after 2040. The composition of those investments shift meaningfully towards grid, while around 42% of the investment in the near term are directed to renewables, but in 2040 and 2050 period, almost 2/3 of the total investments are expected to be allocated into grid. This reflects a structural reality without stronger, more flexible and more digital grid, renewable expansion simply cannot scale up fast enough nor can system stability be maintained. In short, Latin America is entering a phase of high and sustained growth in both demand and capital expenditure and grid becomes the backbone of the regional energy transformation. Let's see our main macro assumptions considered in our plan in the coming slide. In our main markets, Argentina, Brazil and Colombia, the macroeconomic environment over the plan period remain constructive, supported by declining inflation and a stable or gradually easing interest rate. In Argentina, we see a significant reduction of inflation from 2025 through 2028. This creates the foundation for a more normalized economic environment, while currency continues its gradual adjustment. In Brazil, the outlook is marked by both stability and improvement. Inflation continues to reduce, while interest rates follow a downward trend. This provides a supportive backdrop for investment and recovery in domestic demand. Finally, in Colombia, the macroeconomic environment continued to undergo adjustment. In the short term, inflation remained above target and monetary policy continued to be restrictive with rate remaining high during 2026. However, the country retains solid macroeconomic fundamentals, providing a stable framework for our operation during the plan period. Now let's see our strategy, starting from the key highlights in Slide 16. Over the next 3 years, our strategy continue to be focused on the 3 key priorities: growth, productivity and risk return optimization. First, growth. We are maintaining a business-specific approach, focusing on country with constructive regulatory framework. This includes boosting investment in grid and advancing in high-value greenfield renewable projects. At the same time, we are preserving balance sheet flexibility to support future growth. Second, productivity. We are optimizing capital allocation, prioritizing investments that strengthen our strategic positioning, particularly in Brazil and Colombia with a main focus on grid. In parallel, we are intensifying our efforts to enhance productivity and operational performance. This means improving internal processes to increase efficiency and improving our execution capabilities across the organization. Third, risk and return. We will preserve a low-risk profile by concentrating on assets and investment that offer visible and predictable returns, reinforcing our commitment to financial discipline. These actions contribute to reduce business volatility and increase earnings predictability, further strengthening our EPS profile. Let's now focus on CapEx allocation. For the 2026-2028 period, our CapEx plan amounts to $7.9 billion, representing a 5% increase compared to the previous plan. The allocation reflects a disciplined approach focused on securing profitability while supporting sustainable growth. From a geographical perspective, approximately 2/3 of the plan is concentrated in Brazil, which remains our largest and more strategic market. Argentina, Colombia and Central America accounts for the remaining part, ensuring a balanced regional footprint. Looking at the business line, the strategic priority is clear. Grid represents 86% of the total CapEx, aiming to increase the network resilience, support quality of services and position us to lead the energy transition. The remaining 14% is allocated to integrated business, keeping our selective approach based on the renewable projects with the best returns. Overall, the plan reinforce profitability, predictability and long-term duration. Let's now focus on grid investment in the next slide. During the plan period, we expect to invest $6.8 billion in Grids, representing 8% increase versus the previous plan, reflecting the key role of Grids business, as already mentioned. The vast majority is concentrated in Brazil, where we are increasing our CapEx by 7% in U.S. dollar, which represents 11% in local currency. Specifically, we are focused in adapting our company to be better prepared to extreme weather events and improving quality to our customers. Colombia and Argentina represent 14% and 12%, respectively, in line with our previous plan. Our regulated asset base is expected to grow from $12.7 billion in 2025 to $15.5 billion in 2028, an increase of 22%, reflecting our ongoing efforts to accelerate network digitalization resilience and infrastructure renewal. Key drivers include improvement in grid quality, increased investment to support faster modernization, recognizing our asset base and focus on markets with transparent and constructive regulatory framework that strengthen return visibility. This plan reinforce the long-term value and stability of our grid. In the next slide, we will see how our main operational and quality KPI will evolve along the same period. Our investment in Grids are translating into measurable improvement across all key operational indicators. First, we see steady growth in the customer base, increasing 5% between 2025 and 2028. At the same time, we will increase significantly the number of smart meters, reaching 7 million by 2028, representing 30% of our customer base. Energy distributed grew by 9% in the period, reflecting both demand expansion and evolving customer base. On the quality side, we observed consistent improvement across all concessions. Energy losses declined materially, proving the impact of targeted investment and effective grid management. Credit quality also improved. SAIDI and SAIFI indicator all across all markets. This is a key goal for distribution company, and we will do all our efforts to reach the improvement committed. Overall, the trend confirm that our modernization and digitalization initiatives are delivering tangible and customer-oriented results. Let's move ahead to integrated business in Slide 20. In integrated business, our investment approach remains selective and focused on opportunities with strong risk adjustment returns. Of the 2026-2028 period, we plan to invest $1.1 billion from which more than 90% corresponds to generation and the remaining is related to customer and free market activities. This amount is in line with the previous plan and update our capacity addition for 2027 with the inclusion of new renewable capacity. We expect to add 0.4 gigawatts of new solar capacity in Colombia between 2026 and 2027. And at the same time, we will add 0.1 gigawatts of solar capacity in Guatemala during 2027. With this, we are incorporating 0.5 gigawatts of new capacity in our markets. This new capacity is in addition to the 0.3 gigawatt of Guayepo III, which started operation this month, as already mentioned. Our net installed capacity evolution reflects the incorporation of this new project, continuing the transition toward a cleaner matrix. This new capacity will partially offset the nonrenewable of hydro plant El Chocon in Argentina and the coal phaseout expected for the final part of the plan period. In the next slide, we will explain how generation will evolve in terms of energy balance. Looking ahead, our commercial strategy is focused on selling our own energy production, keeping our spot market exposure around 10% across all scenarios. This disciplined approach allows us to significantly reduce volatility and ensure a more predictable revenue stream. In both Brazil and Colombia, the chart shows that we will progressively recontract volume to bring contracted level back towards approximately 90%, consistent with our long-term strategy of maintaining stable and visible cash flow. By limiting spot exposure and aligning sales strictly to our physical generation capability, we reinforced the resilience of our portfolio and reduced the risk associated with the short-term market inflation. This positions us to sustain a balanced energy mix, improving the quality of our margin and supporting the company's long-term value creation. Let's see now a summary of the main regulatory challenge we will have in the near future in Slide 22. The regulatory environment across our 3 main markets continue to evolve, in particular, for what concerns Argentina, the ongoing implementation of the 2025 tariff review provides clear visibility on revenues and quality parameters. At the same time, the expected liberalization of the electricity market could create a new opportunity for our business. In this sense, we should see during this year a gradual implementation of measures that aim at moving from the current [indiscernible] a more market-based model, reflecting real generation cost [indiscernible] in bilateral contracting. In Brazil, regulation remains a central area of attention. Concession renewals are progressing with early renewal process moving ahead in Enel Rio and Enel Ceara while Enel Sao Paulo process remain on hold. On other relevant topics, tariff cycle reviews are scheduled between 2027 and 2028 for our company and good payment mitigation measure will be a relevant trigger for the financial stability of the system. In Colombia, the recent approval of the 5% cap on spot sales for hydro generation will be a relevant focus on attention along with the distribution tariff review process, which we expect to be implemented in the first half of 2027. Overall, the landscape demands close monitoring, but also provide a clear path for the value creation. In the coming slide, Rafael will focus on financial figures of our plan.

Thank you, Giuseppe. The strategy and capital allocation analysis translates into a significant EBITDA growth. For 2028, we expect an EBITDA between $5.1 billion and $5.3 billion, which represents an increase of 22% compared to 2025. Brazil remains the largest contributor with around 53% of the total, supported by sustained grid investments in a constructive regulatory framework. Colombia contributes with 35% with the remainder coming from Argentina, Central America and Peru. This geographic mix underscores our focus on scale markets where regulatory visibility and growth opportunities are strongest. By business line, EBITDA comes mainly from grid with 61%, while integrated business contributes with 39%. Compared to the previous plan, the mix is basically in line, reflecting the focus in grid and a selective approach in generation business. Key drivers for our EBITDA growth are the following: Positive regulatory updates and significant investments boost our performance in grids; new renewable capacity contributing with additional EBITDA in generation; financial flexibility that supports our ambitious CapEx plan while preserving returns. Overall, we expect a larger, more predictable and higher quality EBITDA base by 2028. Let's now focus on grids in Slide #25. Our strategy continues to prioritize high-quality regulated growth supported by targeted investments. For 2026-2028, we plan to invest $6.8 billion in grids, an 8% increase versus the previous plan. The allocation is well balanced, 42% directed to network upgrades included in [indiscernible] resilience, digitalization and climate-related investments, 34% to ordinary maintenance and 42% to new customer connections. These investments directly support EBITDA expansion. Greece EBITDA is expected to grow from $2.6 billion in 2025 to $3.2 billion, $3.3 billion by 2028, representing an increase of about 25%. Growth is driven by tariff updates, [indiscernible] expansion, improved by cost efficiency and demand growth across Argentina, Brazil and Colombia. Key performance indicators also [indiscernible] meaningfully while CapEx for grid customers rises 66% to USD 103 while RAB per customer increases from $553 to USD 641 by 2028. The blended regulated return for the period remains solid, averaging around 11.5% with attractive returns in each country; 10% in Argentina, 11.8% (sic) [ 11.7% ] in Brazil and 12.1% in Colombia. At the same time, we are considering that our EBITDA can cover up to 3x the growth investments of the period. This reflects robustness of our regulatory environment and reinforces the attractiveness of our portfolio business. Moving to generation in Slide #26. Our investments are in line with the previous plan. We are considering USD 1 billion of CapEx for the year 2026-2028. The mix is well balanced with 56% directed to new capacity and 44% to maintenance, ensuring both system reliability and long-term competitiveness. EBITDA in generation is expected to increase from $1.6 billion in 2025 to $1.9 billion to $2.0 billion by 2028, representing around 18% growth. This improvement is driven by stronger operational performance, including improved hydrology in Colombia as the one that we saw in 2025, portfolio optimization and incremental contributions from new renewable capacity. Key KPIs also show a positive trend. EBITDA per megawatt hour increases from USD 25 to USD 39 per megawatt hour, while OpEx per megawatt improved from USD 25,000 to USD 22,000 per megawatt, reflecting better efficiency and a more optimized asset base. The business maintains a solid 300 basis points spread between IRR and WACC for new projects supported by disciplined capital allocation and a strong pipeline with returns equivalent to 10x EBITDA to development CapEx. Overall, generation continues to deliver efficient value accretive growth. We will now focus on financial management for the period, starting with a view of funds from operations and debt. Over the plan horizon, our cash generation fully supports both investments and shareholder remuneration. Total funds from operations for 2026-2028 period reaches USD 9.91 billion with 55% in Brazilian reals, 39% in Colombian peso and 7% in Argentinian peso, ensuring a well-balanced currency profile that matches our debt profile. Net debt remains stable and well under control, increasing only 2% from USD 4.8 billion in 2025 to $4.9 billion in 2028. This limited change reflects strong FFO and disciplined dividend policy that remains at 30%. Gross debt goes from $6.8 billion in 2025 to $6.4 billion in 2028, driven by lower holding leverage and a stable funding mix across our geographies. Brazil and Colombia remain the largest contributors. Debt KPIs continue to strengthen with net debt/EBITDA improving from 1.1x to 0.9x and cost of debt goes down from 11.4% to 9.5%, supported by a liability management and a healthier macro environment. Let's analyze our liquidity position in Slide #29. Our liquidity position remains solid and comfortably covers upcoming debt maturities. As of year-end 2025, we hold $3.2 billion in available liquidity with 64% in cash and 36% in committed credit lines. This balance structure ensures immediate flexibility while maintaining access to diversified funding sources. Looking at our maturity profile, total scheduled repayments for the plan period amount to USD 3.7 billion with a well distributed time line, $2.1 billion in 2026, followed by $0.8 billion in both 2027 and 2028. Beyond 2028, maturities totalize $3.1 billion, reflecting a long-dated and manageable debt structure of Enel Americas in consolidated terms. These figures highlight a strong liquidity position to cover short-term maturities with no refinancing pressure in the near term. The combination of a stable gross debt, adequate cash reserves and committed credit lines provides resilience and supports our CapEx plan while maintaining financial discipline along the [indiscernible]. Now Giuseppe will conclude this presentation with a view of our main targets and some closing remarks.

All the strategic initiatives and investment decisions we have presented throughout the [indiscernible] converge into the financial outlook shown on this slide. This target reflects the combined impact of our focus on regulated growth, disciplined CapEx allocation, operational efficiency and a stronger and more predictable portfolio. Starting with EBITDA, we expect a solid increase from $4.3 billion in 2025 to $4.8 billion to $5 billion in 2026 and reaching $5.1 billion, $5.3 billion by 2028. This represents a 7% CAGR between 2025 and 2028, driven mainly by the expansion of our grid and improved performance in generation. Net income grew even faster, increasing from $1 billion in 2025 to $1.1 billion to $1.3 billion in 2026 and $1.2 billion to $1.4 billion in 2028, reflecting 11% increase in terms of CAGR. Aligned with this growth, the EPS is set to rise gradually, consistent with our dividend policy of distributing 30% of the net income over the plan period. These results illustrate the financial strength and predictability that our strategic plan is designed to deliver. Let me conclude with some closing remarks in Slide 32. Our goal with this strategic plan is clear. We are targeting a stronger and more predictable value-creating company. All the initiatives we have presented work together to deliver sustainable long-term performance. We are allocating capital where returns are most visible, placing grid at the center of our strategy, supported by constructive regulatory environment and a growing regulated asset base. In generation, we remain selective, adding high-quality renewable projects that improve efficiency and profitability. Financially, we maintain a resilient structure with stable net debt, strong liquidity and improving credit metrics. This underpins our capacity to fund growth while continuing to remunerate our shareholders. This plan position us to deliver consistent results while contributing significantly to energy transition in our key markets. Last but not least, I remind you that our shareholder meeting will be held on April 30. Now I will pass the floor to Jorge for the Q&A section.

Thank you, Giuseppe. Thank you, Rafael. We will begin now the Q&A session. And the first question comes from [ Juan Felipe Becerra ]. A few days ago, the Colombian government; under the framework of a newly declared economic, social and ecological emergency; established a transitory 2% fiscal surcharge on gross energy sales of hydro and thermal generators in affected regions. How do you estimate the financial and operational impact of this contribution on your operations in Colombia?

Well, first of all, let me say that within the framework of the state of emergency, the decree 150 declared due to dramatic disaster. A total of 5 new decrees were issued on February 24. The decree that could affect our company is the Decree 173 that introduced a temporary wealth tax for the '26 fiscal year. And -- while the regulation establishes rate between 0.5% and 1.6% depending on the sector, based on our preliminary assessment, 0.5% rate should apply to our comp. So as of today, our preliminary estimations are that we could have an impact between $15 million and $20 million.

Thank you, Giuseppe. Next question from Andrew McCarthy. Can you provide more details on the initiatives that you will implement in Brazil to reduce losses and improve SAIDI and SAIFI indicators?

Well, actually, as you see from the presentation, we increased our CapEx plan by 11% in local currency. So we are focusing significantly in improving our resiliency, but also in providing better services to our customers. We have a very important plan in terms of smart meter deployment, reaching 7 million of smart meters at the end of 2028. So together with all the other activities that are focused on reinforcing the performance of our team on the ground, we believe that we are able to reach this very, very good performance by the end of 2026.

Thank you. Another question from Andrew McCarthy. In Brazil generation, why were the curtailment mitigation initiatives from authorities not sufficient to trigger more investments in this segment?

Well, the mitigations that we have as of today are enough to cover the restriction of the grid, but they are not covering the excess of capacity coming from the renewable generation. So basically, we are still in a situation in which we have an overcapacity that is affecting our and the remaining player production. And we believe that even if the curtailment is going to decrease in the following year, the level of the curtailment is going to be still high and are not so high that cannot cover our IR [indiscernible] in terms of profitability of the project. So as of today, we believe that there is no chance for additional capacity in renewable projects in Brazil. Different story in the following year, the transmission line is going to be finalized. So in this case, the situation will change, and we can start again to evaluate new projects in Brazil.

We have a couple of questions about the concession in Sao Paulo, basically to have an update on the concession renewal process and what could be our strategy going forward in case the concession is not renewed.

Well, let me say that the concession in Sao Paulo is governed by a solid legal and contractual framework that establishes clear procedure for all parties involved. The concession agreement includes rigorous administrative stages that prioritize service stability. And our current strategy is fully focused on operational excellence. As of today, analyzing compliance with regulatory performance indicator and we are evaluating the evolving situation regarding the recent regulatory proceeding, we are discussing with ANEEL and just a recent update during the session of February '26, the Board of ANEEL decided to grant a 30-day extension to allow for a deeper analysis of the company's technical defense and the overall administrative process. So we believe that we are complying with the regulatory requirements, and we're going to see how the situation will evolve.

Another question from [ Felipe Becerra ]. Regarding the investment in renewables, you mentioned not renewing the Chocon generation business in Argentina. Could you please elaborate on the process for exiting the assets and the time line expected? And regarding Colombia, you mentioned an extra 0.4 gigawatts capacity. Should we assume it is comprised of Atlantico solar plant and another project? Could you comment if new projects are being incorporated in Colombia?

Well, let me start with El Chocon. El Chocon has been -- Chocon process has been already made. At the beginning of January, the asset has been passed to the new concessionary. Most of the people working for El Chocon passed to the new owner. And basically, everything has been done in a smooth way without any kind of problem about this situation. So as of today, El Chocon doesn't -- not anymore part of our fleet. For what concern the renewable capacity. Looking at 2026, as I said yesterday, we keep the commercial operation date for Guayepo III. So right now, we're going to have a fully -- we have a fully -- Guayepo III is fully operating and for what concern Atlantico, the project that has been started under construction last year, we are going to have 256 megawatts of installed capacity in the following months.

Question from Alessandro Di Vito from Mediobanca. Three questions. First one is about Sao Paulo. I think we already covered the topic. Then a question about, could you provide more color on the 5% generation cap being discussed in Colombia, which could be the impact on which outcome do you expect? And another question, which is the optimal leverage ratio for a company like Enel Americas? And how do you plan to exploit potential balance sheet headroom?

Okay. So for what concerning Colombia, on October 16 of the last year, the Ministry of Mines and Energy officially published the Decree 1072, establishing public policy guidance aimed to reducing the regulatory market exposure to price volatility in the spot market. So basically, under this new regulation, the hydro plant must sell at least the generator firm energy obligation through firm contract -- at least 35% of their hourly generation through contract, limiting the spot market exposure to 5%. This rule exclude wind and solar plants and apply only to the hydro unit. The target of this decree is clearly to [indiscernible] and mitigate cost volatility. But for what concern Enel Colombia, the company support the object of greater price stability, but doesn't have a significant impact because most of our energy has been already contracted. So we don't have any kind of specific issue.

Well, thank you for the question regarding the limit for the level of intent with which we are comfortable. I would like to say that we are comfortable in a range between 2x, 2.5x net debt/EBITDA. This is something that allow us to be comfortable. We are below or close to 1x at the closing in 2025. But our -- let me say, our target is not to overcome 2x, 2.5x. We are comfortable in this range. So as you mentioned before, of course, we have a lot of room, let me say, to potentially increase the level of debt at the Enel Americas level. But it is important to underline that we have to attempt a relevant CapEx plan for the following 3 years. I remind you that we have announced a CapEx plan of close to USD 8 billion for the triennium. So we have to keep our financial discipline very strong. I repeat, we have room to increase the level of debt. But for the moment, we are comfortable in this situation.

Thank you. A question from Francisco Paz from Santander. Colombia's current government is trying to boost renewables growth in the country through auctions. Would the company be open to participate in these processes and increase investments in the country? Or is the company waiting for the presidential elections in order to increase or not investments in the country?

Colombia, let me say that -- at the end of January, Colombia has formally declared its interest in participating in the auction for the 2029-2030. We are currently conducting an assessment of the option of [indiscernible] condition and the risk/return profile. And we will continue monitoring the upcoming milestone and regulatory definition of the [indiscernible] and the CAGR, and we're going to give you additional updates in the following months.

Two other questions from Francisco Paz. Can we confirm that the company will continue to distribute 30% dividends or is considering an increase in dividend policy and after making a successful buyback program in 2025, is the company open to make another one in the near future?

Well, let me start saying that 30% is current dividend policy. Every year, the Board of Directors propose a dividend policy for the shareholder meeting. There is a possibility of increasing that percentage. But as of today, we have in the plan 30% dividend policy. So there could be an additional increase. But as of today, this is the projection. In terms of...

New share buyback...

New share buyback. As of today, we don't have anything on the table.

In line with that subject, [indiscernible] is asking, are you going to cancel the current shares in the balance sheet?

Well, it's the kind of decision that the Board of Directors will decide in March and you're going to know as soon as we define the agenda for the shareholder meeting.

Question from [indiscernible] Gonzalez. Regarding the tariff review of Colombia distribution business, how much do you expect the WACC will be reduced and which will be the annual impact in revenues because of that? Second question, tariff review in Argentina should be implemented this 2026 or is expected to be delayed even further? And three, how do you expect to refinance or roll over the $2.1 billion debt that mature this year?

In relation to the first question, [indiscernible], thank you very much. We consider that the WACC will remain flat in Colombia. So we do not expect a very relevant impact because we are targeting a flat WACC for the triennium, for the period 2026-2028. Okay. Regarding debt, what was the second question. Regarding debt.

Regarding debt, how do you expect to refinance or roll over the $2.1 billion debt that matures this year?

Yes, we have -- [indiscernible], just to remind you that this USD 2.1 billion is a consolidated level. One of the maturities that we have in 2026, which is one of the most relevant ones is the Yankee bond, the international bond that we have at the Enel Americas level, so at the holding level, it's around USD 600 million. So we are targeting for the moment to pay at the maturity this international bond. And we do not have any in mind any potential refinancing of this international bond. And regarding the rest of the debt, of course, regarding the rest of maturities, as we have seen in the presentation, in the slides, we have enough liquidity to attend those maturities during 2026.

Okay. Then the other question is about the tariff review in Argentina should be implemented this 2026.

Tariff review. Well, actually, the tariff review has been already implemented in May 2025. So it's going ahead, and this is a very good very good situation because the regulatory framework seems to be applied without any kind of issue. So great visibility for Argentina. For what concerning Colombia, we don't have too much information about the future for what concern the first half 2027. But as of today, we assume that the work is going to be in line with the current situation, with the current amount.

Well, as there are no more questions, we conclude this conference call. Let me remind you that the Investor Relations team is available for any doubt that you may have. Thanks for your attention, and have a nice day.

And this concludes our conference. Thank you for participating. You may now disconnect.