ENIC

Enel Chile S.A. 2024 Financial Summary

Business Context and Reporting Period

This Form 6-K filing covers the consolidated financial results of Enel Chile S.A. for the period ended December 31, 2024. The company operates in Chile through Generation and Distribution & Networks segments. A pivotal event for the reporting period was the decision to change the functional currency of its main subsidiary, Enel Generacion Chile, from the Chilean Peso to the US Dollar effective January 1, 2025. This accounting change necessitated the discontinuation of specific cash flow hedging instruments, resulting in significant non-recurring financial impacts in 2024.

Key Financial Metrics

Note: Liquidity consists of US$ 385 million in cash and cash equivalents and US$ 690 million in undisbursed committed credit lines.

Material Changes vs. Prior Period

• Extraordinary Accounting Impact: The reported decline in Net Income (-77.1%) and EBITDA (-30.6%) is primarily driven by a Ch$ 620,164 million loss recognized in 2024 due to the discontinuation of hedging instruments linked to US Dollar revenue. This was required because Enel Generacion Chile changed its functional currency to the US Dollar.
• Adjusted Performance: Excluding the extraordinary currency hedge effect and the 2023 sale of Arcadia Generacion Solar, adjusted Net Income increased 22.4% to Ch$ 587,197 million, and adjusted EBITDA increased 29.1% to Ch$ 1,341,325 million.
• Segment Results:
  • Generation: Revenues fell 15.0% and EBITDA fell 27.1% year-over-year, heavily impacted by the hedge discontinuation and lower gas sales. Physical energy sales increased 9.5%.
  • Distribution & Networks: Revenues rose 8.6% due to higher physical sales, but EBITDA dropped 34.5% due to higher energy purchase costs and provisions related to weather events and consumer protection agreements (SERNAC).
• Financial Costs: Financial expenses increased to a Ch$ 155,210 million loss, driven by lower financial income from regulated customer receivables and exchange rate losses.

Outlook, Risks, and Management Commentary

• Functional Currency Change: Management confirms the shift to US Dollar functional currency for Enel Generacion Chile effective January 1, 2025, aligning with its revenue mix shifting toward unregulated customers.
• Regulatory Environment: The company is navigating Chile's Tariff Stabilization Laws (Laws 21,185, 21,472, and 21,667). These laws created receivables for generators to be recovered via future tariffs, with a new fund established to manage these balances. The US$ 1.8 billion limit for the transitional fund was reached in February 2024.
• Operational Milestones: In 2024, the company added 249 MW of renewable capacity (solar and storage) and synchronized the Los Cóndores hydroelectric plant (153 MW).
• Risks: Key risks include regulatory changes affecting tariffs, hydrological conditions impacting generation, and exposure to interest rate and commodity price fluctuations. The company maintains hedging policies to mitigate these risks.

Investor Verification Checklist

• Adjusted vs. Reported Metrics: Verify the company's "adjusted" EBITDA and Net Income figures, as reported GAAP results are distorted by the one-time Ch$ 620 billion hedge write-off.
• Regulatory Receivables: Monitor the recovery status of accounts receivable linked to the Tariff Stabilization Laws and the impact of Law 21,667 on future cash flows.
• Debt Structure: Review the composition of the US$ 3.9 billion debt, noting the recent amortization of Yankee Bonds and the average cost of debt rising slightly to 5.0%.
• Weather and Force Majeure: Assess the financial impact of the August 2024 weather events, which led to significant fines (Ch$ 18.8 billion) and repair costs in the Distribution segment.
• Asset Impairments: Note the Ch$ 34.2 billion impairment loss booked in Q4 2024 related to the Las Salinas power plant expansion project.