Empresa Distribuidora Y Comercializadora Norte S.A. (Edenor) American Depositary Shares

Good morning. On behalf of Edenor, we would like to thank everybody for participating in this conference call to discuss the results of fiscal year 2024 and the fourth quarter ending December 21st, 2024, that will release on Friday, March 7th. We will also highlight important present developments and advances in our efforts to strengthen our positions as an energy leader. If you would like to receive our earnings release or presentations, You can download them easily from the investor relations section of our website located at www.fnr.com or contact our investor relations team to request the documents. This event is being recorded. After the company's remarks are completed, there will be a question and answer session for which you may submit questions through the webcast chat. Important. Before proceeding, let me mention that forward-looking statements are based on the belief and assumption of FEDENOR's management and on information currently available to the company. They involve risks, uncertainties, and assumptions because they relate to future events and therefore depend on circumstances that may or may not occur in the future. Investors should understand that general economic conditions, industry conditions, and other operating factors could also affect the future result of FEDENOR and would cause results to differ materially from those expressed in such forwarding form. Now, let me pass the call to Germán Raftel, our CFO, who will guide us through the presentation.

Thank you, Solange. Good morning and welcome to everybody. Your presence here is very important to us and we hope to provide you with a good understanding of Adenauer performance during the fiscal year 2024. Highlight relevant events. Before moving to the discussion of our financial performance during the fourth quarter and the full 2024 numbers, I would like to take a few minutes to highlight some very relevant and positive recent developments as shown in slide 5 that have occurred. Results for the fourth quarter and the full year 2024 reflected the impact of a transitory tariff increase and operations and financial improvements. EBITDA for the full year resulted in a profit of 207.3 billion pesos, which reflects a sharp improvement in operating results as a result of the tariff increases, starting with a significant adjustment that was received in February and which was followed with an average monthly adjustments of 4% since August of this year. Sorry, of last year. The five-year tariff review process that will define tariffs for 2025 to 2029 is well advanced. This should further enhance our financial performance and increase our opportunities for growth. The public hearing took place on February 27, and the final tariff scheme is expected to be announced by March 31 of this year, according to the regulatory schedule. On October 25, 2024, we issued an international $184 million equivalent in Class VII notes with a final maturity of six years, with an amortization starting in year four, resulting in a five-year average life and a 975 coupons. This follows the issuance of $224 million equivalent in other notes in prior quarters of 2024. We are pleased with our return to international markets in 2024 and ended the year with a substantial improvement in our debt profile. This has been reflected in our credit ratings, which have continued to improve, which will be discussed in more detail later. We are fully committed to maintenance and further strengthen our credit ratings. Events at the company and in Argentina are moving forward in a favorable fashion. We expect this to lead to further improvement in our financial results and long-term output. This will also enable us to continue our strong investment program and further improve our service quality. Regulatory framework. The national government continues to move forward on regulatory front to normalize tariffs and to deregulate the energy sector. The five-year tariff review process for 2025-2029 is actively moving forward, as mentioned, and in the final steps of completion. In the framework of the 2025-2029 the entire review process, the ENRE set forth the criteria to be followed on the schedule of tasks and work planned to be carried out by the ENRE and NNO. On January 7, 2025, by means of an ENRE resolution number 6, 2025, the last schedule was approved, person to which, one, the distribution company must submit the final report on January 27, 2025. Second, the ENRE would call a public hearing on January 28th of 2025. Third, the public hearing would be held on February 27th of 2025. And fourth, ENDL will make its calculations and must present the new five-year tariff charts. As of today, the company has submitted all the required reports, including the projected demand and asset base, the investment plan, the operating expenses, the efficiency factor, the path through mechanisms of energy and power prices, and the bad adjustment. And the final report with the proposed tariff, together with a report prepared by FIEL, Fundación de Estudios Económicos Latinoamericanos, with the objections to the rate of sorry, the objections to the WACC, the rate of return previously set by the ENBRE, which was appealed by EDENO. It is important to highlight that our final report and proposal was prepared considering ENBRE solution 4 of 25, which set a real post-tax WACC of 6.22%, reducing the 10.31% initially proposed by ENBRE. which has assumed that the country risk premium for the calculation should be 500 basis points. The NORD appealed these values, also presenting an analysis conducted by FIEL using 2025 market data. This analysis supports that the WAC should be higher, reaching 8.3%. 27% after taxes. It is worth noting that in the case of gas distribution within the ongoing five-year tariff review process, the WAC assumed by NRGAS was 7.64% also after taxes. This means that the electricity sector is being penalized with a lower return against a fundamental constitutional principle, equality before the law. Tariff proposals. The final proposal submitted to the regulatory includes an increase that for 80% of our clients represents an invoice of 29,544 pesos, an increase of 9,624 pesos, equivalent to the cost of three quarters of a dozen of croissants or an individual pizza. A daily average of 320 pesos, which is above about a third of a croissant. The total monthly amount is significantly lower when compared to the full or diesel tank of 58,000 pesos, one tank of diesel, or the cable TV and internet bill, which is close to 67,000 pesos, or a mobile phone service, which is close to 107 million pesos per month. This is lower than an average paid national wide for the same service at any of the current incomes levels like N1, N2, or N3. The public hearing already has taken place on February 27, and the final tariff scheme is expected to be announced on March 31 of 2025, according to the regulator's schedule. Once completed, this should help to further enhance confidence in the regulatory environment. You may find the public hearing recording in YouTube and related documents in the ENRE web page. It is important to remember that this process began with a 319.2% transitional tariff increase that was effective on February 16 of 2024, which has been followed by monthly increases to adjust for inflation that have an average of 4% since August 2024. These past increases have contributed to the large improvement in EBITDA on the operating margins that we have been seeing in 2024. The company has been paying its energy purchase cost to CAMESA since April. It has also been paying on schedule the rescheduled payments for the past debt with CAMESA. Additionally, it's negotiating a payment plan for the additional amounts due. In December 2024, the Candista Board of Directors approved a new payment plan that is currently subject to approval by the competent authorities. Finally, the national government is continuing its program to gradually reduce energy subsidies. In February of 2025, a plan was established that runs through December 2025 to reduce the percentage subsidies for low income level M2 and average income level M3 clients using the already established caps of 350 and 250 kilowatts per hour respectively, while fully eliminating subsidies, high income level of M1 customers. Now let's look at our financial results. Revenues, sales rose 97% year to year in the fourth quarter of 2024 in constant currency to 517.1 billion pesos, partially offset by a lower 1.6% in the fourth quarter of 2024. Lower volume, sorry. Sales growth was mainly due to the impact of the February 2024 tariff adjustment. 319% on the monthly adjustment that averaged 4% starting in August. The distribution margin rose 126% in the fourth quarter to 219.5 billion pesos that helped mainly by the tariff adjustments that were partially offset by lower sales volumes. Net earnings rose 23% year to year. Energy sales evolution. Eleanor's client base reached 3.34 million people, 1% growth versus the quarter of 2023, which was mainly due to an increase in residential and small and medium commercial clients. In the quarter, we installed a total of 6,386 energy meters that helped converting informal clients into full participants in the electricity distribution system. Sales volume in the fourth quarter of 2024 totaled to 5,175 gigawatts, which has down 1.6% versus the fourth quarter of 2023 because of the effect of the economy on demand in the commercial and industrial segment. Residential demand also declined 3.1% monthly due to variations in temperature in the fourth quarter of 2024 versus the previous year. Collectability remains at a healthy level of 95.32% in the fourth quarter, which continues a steady improvement in each quarter during the year. Distribution margin. The distribution margin for the full year rose 66% to 876.7 billion pesos. And for the fourth quarter, we saw a sharp 126% year-to-year rise to 219.5 billion pesos. These large increases are largely a result of the tariff increases mentioned, which were partially offset by the effect of a 3.4% decrease in sales and the high purchases energy costs due to the reduction in subsidy. EBITDA. For the fourth quarter, the EBITDA was 57.8 billion pesos, which was a sharp swing from the negative EBITDA of 63.5 billion pesos in the fourth quarter of 2023. This positive thing was due to higher earnings as a result of the tariff adjustments in February 2024, monthly discretionary adjustments that averaged 4% starting in August, And these two very positive factors were partially offset by the increase in energy purchase due to the reduction of subsidies for low-income and medium-income customers and fully eliminating subsidies for the high-income clients. Deferred taxes adjustment. It is worth mentioning that the year-ended financing results included an adjustment in deferred taxes of 276 billion pesos for the pay wheels. for the periods 2018 to 2024. Due to the company's improvement financial performance mainly due driven by recent tariff increases and more favorable outlooks for normalization, management conducted an internal review of several processes. During the preparation of the year-ended financial statements and inconsistently was identified as of December 31 of 2024 in the determination or of the deferred tax liabilities. Current tax law allows for property, plant, and equipment acquired after January 1st, 2018 to be adjusted for inflation when calculating depreciation deductions for income tax purposes. However, for the deferred tax liabilities calculation since 2018, the tax base for that property and equipment have been based on historical value, overstating the deferred tax liability, a highly technical accounting issue. To correct this, we adjusted the original tax value for the periods for 2018 to 2024. The impacted balances were retroactively restated as of December 31, 2023, and 2022. Full details are disclosed in Note 1 of the year-end financial statements for 2024. It is important to highlight that the auditors issued a clean opinion for the financial statements, without mentioning a lack of internal controls specifically related to the deferred tax liabilities calculation, which has been corrected. This adjustment has not effect on the company's cash flow, not effect on the debt covenants, and not effect on the tax payments. Net financial expenses. Financial results show a sharp reduction to the net expenses of 31.2 billion pesos, which was down from the net expenses of 192 million pesos in the fourth quarter of 2023. The improvement was principally a result of lower interest payments related to outstanding amounts owed to CAMILSA and reduced FX. Net result, the net income for the fourth quarter of 18.2 billion pesos compared to the earnings in the prior year period of 14.8 billion pesos. The difference was primarily driven by the improvement in operating results and lower financial expenses, which was offset by lower adjustments for inflation and a swing from positive taxes in fourth quarter of 2023 to a net tax accrued in the fourth quarter of 2024. CAPEX. For the full year of 2024, Eleanor's capital expenditures were 389.2 billion pesos, which was up to 45% from 2023. Our investment program spending allocation is made to fulfill our commitment to meet rising demand, further improve service quality, and reduce non-technical losses. Now let's look at the operating indicators. Energy losses. Energy losses for the full year were 15.2%, which was modestly from 14.1% in 2023. Reducing energy losses is a top priority and our multidisciplinary teams are working constantly to find innovation ways to combat energy losses. These efforts are complemented by our market discipline initiatives that are aimed to curbing inefficiencies and irregularities. Also, analytical tools powered by artificial intelligence have improved inspections efficiencies, and our market discipline actions continue to detect and rectify irregular connections. It is important to remember that the 15.2% total losses, a full 9.64%, are losses recognized by the regulatory entity in our target. Quality of service. As mentioned earlier, our investment plan is continue to contribute improvements in service quality by reducing the duration and frequency of outages, which have been on a downward path since 2017. These levels are and have constantly comfortably exceeded the levels required by the regulator. At the end of the fourth quarter of 2024, the SAIRI and SAIFI indicators shows 8.7 hours of duration of outages and 3.5 average outages per client, respectively. The evolution of the indicators in this quarter was impacted by forced service interruptions and scalable outages. The increase in schedule outages is because of important maintenance tasks and important projects that we carry out in many municipalities, impacting on the current values of outages and durations, aimed to improve the quality of services for our company. The investment plan is focused on implementing improvements in the operational process with the adoption of advanced technologies to better and more efficiently operate and manage the network. Financial debt. In October 2024, we completed an international issuance of $184 million, of which $135 million was new money, with the remaining $49 million of an exchange of Class I shares. No, sorry. This issuance market The company successfully returned to the international markets after more than 12 years and followed successful replacement in prior quarters at attractive rates. This was possible because of Enors' improved credit profile. The company is proactively working to extend its debt profile to 2030 and improve its short-term liquidity position, which are important variables for a credit perspective. indebtedness. With the improvement in our risk profile due to important changes on the regulatory front and improvement in the macro outlook of Argentina, the rating agencies that cover us at global scale and national scale each recently made positive moves related to their ratings at a global scale. Just recently, the 6th of February of 2025, Standard & Poor's global ratings raised the rating of the company local currency and foreign currency debt from CCC to CCC+, with a stable outlook. Moody's rating upgraded the company's rating from CAA3 to CAA1, with a stable outlook on January 14 of this year. Teach upgraded the company's foreign currency and local currency IDRs to CCC+, from CCC. Furthermore, on November 22, 2024, Fitch upgraded the company's bonds to B-, one notch above the FCIDRs. At the national scale, Standard & Poor's global ratings on February 10, 2025, raised the institutional rating and the notes program rating of the companies to BB+, from B. representing an improvement of four notches with respect to its previous rating. Likewise, it maintaining its positive outlook. Moody's Local Argentina, on October 1st, 2024, upgraded the company's long-term issuance rating in both local and foreign currency to A from BBB-, maintaining a stable outlook. We view these changes as a very positive signal. Maturity scale. This is the maturity scale of the financial debt as of 31 of 2024, with $417 million in total debt. Our maturities are well spaced over the coming years, with only $55 million scheduled for 2025. Last week, we paid $26 million of this $55 million that are due in 2025. Closing remarks. To close, I would like to reiterate several key points. We are an industry leader in Argentina with a leading 20% market share in electricity distribution company. We highlight our commitment to continue to improve our service quality levels. We are in the final stage of a five-year target review process which should result in a material improvement in EBITDA and net income. as well as enable us to maintain and invest program for further improve the quality of service as we continue to transform our grid with technology and innovation. We remain focused on future transformational growth opportunities as we take advantage of opportunities to benefit from the energy transition in our distribution business and potential growth opportunities in other segments of non-regulated business, such as energy generation, storage, and critical minerals. A subsidiary was created to perform such activities. So far, there are not projects to be shared with you. With this, now we would like to open the call for questions. To ask the questions, please send a written message to IR Eleanor through the question and answer menu. Identify yourself and stating that you have a question. We thank you very much for your support and your engagement as shareholder and bondholder.

Thank you for the call and congratulations on the good results. Can you please speak more about your CAPEX plans for 2025 and beyond?

Hello. The CAPEX plan for 2025 and 2029 proposed in the five-year channel review was 1,027 billion pesos in December 2023 currency. considering a demand growth rate of 2.2% based on the demand studies that was submitted. Respect to quality services, our goal is to continue to improve our quality service, which has steadily improved since the five-year tariff review in 2017, with our indicators CIDI and CIFI below the regulatory requirements. Our 2024 CAPEX was, as I said before, 389.7 billion pesos, 45% higher than 2023. Since 2013, our annual CAPEX average was 221 million pesos. Sorry, dollars, 221 million dollars. Okay, thank you everybody for your participation in our quarterly conference. Please do not hesitate to contact our Investor Relations Department and further inquiries you may have. Good morning for everybody and have a nice day.