ENIC

Enel Chile S.A. Financial Summary (Form 6-K)

Business Context and Reporting Period

This filing covers the consolidated financial results of Enel Chile S.A. for the nine-month period ended September 30, 2024, and the third quarter (Q3) of 2024. The company operates in Chile through two primary segments: Generation (hydro, thermal, solar, wind, geothermal, and storage) and Distribution & Networks. The reporting period reflects the impact of new Chilean tariff stabilization laws (Law No. 21,667) and continued investment in renewable energy capacity.

Key Financial Metrics

Material Changes vs. Prior Period

• Profitability Surge: Net income attributable to shareholders increased 51.7% year-over-year (YoY) to Ch$ 418,092 million for the nine-month period. Q3 net income rose 3.3% to Ch$ 167,267 million.
• Revenue Growth: Consolidated operating revenues grew 12.3% YoY to Ch$ 3,567,606 million. Q3 revenues surged 21.2% to Ch$ 1,255,254 million, driven by higher energy sales in both Generation and Distribution segments.
• EBITDA Expansion: Consolidated EBITDA increased 46.3% YoY to Ch$ 941,558 million. The Generation segment drove this with a 51.0% increase in EBITDA, while Distribution & Networks EBITDA declined 6.3% due to higher energy purchase costs.
• Financial Result Deterioration: The financial result worsened significantly, moving from a Ch$ 48,993 million expense in 2023 to Ch$ 105,976 million in 2024. This was primarily due to Ch$ 35,014 million in negative exchange rate differences and higher financial expenses.
• Cost Dynamics: Procurement and services costs rose 3.2% cumulatively but jumped 23.7% in Q3. Generation costs fell 13.7% cumulatively due to lower fuel consumption, while Distribution costs rose 39.0% due to higher energy purchase prices.

Outlook, Risks, and Management Commentary

• Regulatory Environment: The filing details the impact of Law No. 21,667, enacted in April 2024, which allows regulated tariffs to gradually increase to reflect real costs and ends the accumulation of debt for generators under previous stabilization mechanisms. A new fund of US$ 5.5 billion (with US$ 3.7 billion state-guaranteed) was established to repay accumulated debt.
• Capital Expenditures: The company added 249 MW of net capacity in the first nine months of 2024, including the Don Humberto photovoltaic plant and battery storage systems. Total payments for additions to fixed assets were Ch$ 552,095 million.
• Divestiture: Enel Chile sold its 99.99% stake in Arcadia Generación Solar S.A. in October 2023 for approximately US$ 556 million, which impacted comparative figures for depreciation and consolidation.
• Risks: Key risks include regulatory changes affecting tariffs, hydrological conditions impacting hydroelectric generation, and exposure to foreign exchange and interest rate fluctuations. The company maintains hedging policies for currency (US$ 231 million in swaps, US$ 368 million in forwards) and interest rates (US$ 286 million in swaps).
• Cash Flow: Net cash flow was negative Ch$ 91,632 million for the period, an improvement of Ch$ 492,985 million compared to the prior year, driven by strong operating cash flows of Ch$ 676,268 million.

Investor Verification Checklist

• Regulatory Recovery: Verify the timeline and certainty of recovering the US$ 1.8 billion+ in accounts receivable accumulated under previous tariff stabilization laws (PEC and MPC) via the new mechanisms in Law No. 21,667.
• Exchange Rate Exposure: Assess the impact of the Chilean Peso volatility on the Ch$ 105,976 million financial expense, particularly regarding trade payables and receivables indexed to the US dollar.
• Distribution Margin Pressure: Monitor the Distribution & Networks segment's ability to pass through higher energy purchase costs to customers, given the 48.0% drop in Q3 EBITDA for this segment.
• Debt Structure: Review the composition of the US$ 4,765 million gross debt, noting the shift in fixed vs. floating rates (76% fixed as of Sep 2024) and upcoming maturities.
• Hydrological Dependency: Evaluate the sensitivity of the Generation segment's results to hydrological conditions, as hydroelectric power represents a significant portion of the 77% renewable mix.