Enel Chile S.A.

Good morning, ladies and gentlemen, and welcome to Enel Chile fourth quarter and full year 2022 results conference call. My name is Gigi, and I'll be your operator for today. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then receive an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. During this conference call, we may make statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements reflect only our current expectations are not guarantees of future performance, of risks and uncertainties. Actual results may differ materially from those anticipated in the forward-looking statements as a result of various factors. These factors are described in Enel Chile's press release reporting its fourth quarter and full year 2022 results. The presentation accompanying this conference call and Enel Chile's annual report on Form 20F included under risk factors. You may access the fourth quarter and full year 2022 results press release and presentation on our website, www.nl.cl, and our 20F on the SEC's website, www.sec.gov. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their date. Enel Chile undertakes no obligation to update these forward-looking statements or to disclose development as a result of which these forward-looking statements become inaccurate, except as required by law. I would now like to turn the presentation over to Mrs. Isabella Clemes, Head of Investor Relations of Enel Chile. Please proceed.

Hi, buenos dias, good morning, and welcome to Enel Chile's fourth quarter and full year 2022 results presentation. Thanks to you all joining me this morning, our CEO, Fabrizio Barderi, and our CFO, Giuseppe Turchiarelli. Our presentation and related financial information are available on our website, www.enel.cl, in the investor sections. and in our app investors. In addition, a replay of the call will be available soon. At the end of this presentation, there will be an opportunity to ask questions on our webcast chat. Through the link, ask a question. Media participants are connected only in listener mode. The following slides, Fabrice will open the presentation with our key highlights later passing by markets and portfolio management actions. And Giuseppe will continue with our business economic and financial performance. Thank you all for your attention. And now let me hand over to Fabricio.

Thank you, Isabella. Good morning and thanks for joining us. Let me now start with the highlights of the period on slide three. 2022 was a very complex year. but it also was the year in which we had the opportunity to tackle several actions necessary to recover our company's financial position faster than expected. Today, I will give an in-depth look into that and how Enerchile is shaped to continue addressing the challenges and taking advantage of the opportunities we see ahead. We are very pleased to announce that the 2022 year was a turnaround in our story. mainly through the asset rotation activities, such as the sale of our transmission assets, and portfolio management through the renegotiation of our energy contract with Shell, and last but not least, our gas trading and optimization activities. All these actions, plus the recovery in our business performance, allowed us to significantly outperform the everyday and net income targets for 2022 announced at the 2021 Investor Day. Moreover, we have exceeded the net income projection presented in November during our last investor day. These results were achieved despite a very challenging market context. Spot prices were continued to be under pressure given the commodity scenario and the bottlenecks in the national transmission system. Nevertheless, improved hydrology and several optimization alternatives of setting this situation. Hydrogeneration increased by two terawatt hours compared to 2021. Regarding our decarbonization path, we added around 0.8 gig of additional renewable capacity into our portfolio during the year. Also in December 2022, we started the commercial operation of our green hydrogen pilot project in southern Chile. As a result, Of all our actions and strategies, we have continued to be a benchmark as one of the region's best ESG performers. In fact, we became the first coal-free electricity generation company in Chile after the disconnection of a new Esboganena power plant facility last September. Before moving on, another significant milestone was the company's past deleveraging, reducing its net debt to VBA ratio by around 60%. As a result, we improved our liquidity to support our strategy for the 2023-2025 period. In April 2023, we are holding the annual shareholders general where we are going to propose a final dividend of 5.1 pesos per share, totaling 5.4 pesos per share for the 2022 fiscal year. Now, let us move to slide four to review our main KPIs of 2022 versus our guidance. Even though 2022 was a complex and challenging year for the energy sector, we faced it and put ourselves in a much more comfortable position thanks to several optimization actions, which we will discuss in more detail in the following slides. First, we added 0.8 gigawatts of renewable capacity, reaching 76% of our total generation matrix by the end of last year. Therefore, we accomplished the renewable percentage in our portfolio KPI and report our commitment to the energy transition. In addition, regarding earning targets, the best business performance, coupled with the conclusion of several optimization and unlocking value initiatives during 2022, enabled us to increase our ABDA and net income. Notably, in both indicators, we exceeded the upper range of our guidance announced during 2021 Invest4Day, making possible a significant recovery of the company's financial situation. as we already anticipated in November. In fact, the net income figures for 2022 were even higher than the last projection we shared in November. In the following slides, we will give some more details about our initiative and how it was translated into this outstanding performance improvement. On slide six, let's briefly talk about the market situation, how we have developed our recovery plan. Last year, we carried out a recovery plan by developing several actions to face the challenging scenario that puts the whole energy sector under pressure, namely the increase in commodity prices, transmission constraints, and critical hydrology conditions at the beginning of the year. All in all, during 2022, our short-term optimization initiatives contributed $276 million as detailed in the slide. Hydrology recovery during 2022 and an accurate gas strategy have boosted our portfolio results and supported additional margins from international trading and gas swap to the north of Chile, contributing almost $190 million in 2022. On natural gas, let me confirm that we are also adopting a solid gas policy for 2023. In addition, in 2022, we connected 0.8 gigawatts of new renewable installed capacity. All our renewables growth contributed with a 1.2 terawatt hour of additional generation with a positive impact in the year of $37 million. On slide seven, we will review the development of our renewable projects during the last year. We continue to promote and support the energy transition in Chile, strengthening our portfolio mix and access flexibility. During the last few years, we have significantly increased our renewable capacity through a diversified pipeline, allowing us to consolidate our position. During 2022, 0.5 gigawatts of capacity received a commercial operation date, the cost from authorities. We continue to improve folio and currently have around 0.7 gigawatts of projects in construction in the county. Here we have some updates. We have started the construction of our first solar project in the central region, actually in the metropolitan area of Santiago. There will be a hybrid project with a bed connection. The project Manzano represents the first step in updating our growth strategy, which we announced during our last day. Now, let's move to slide eight to talk about two actions that have successfully unlocked our access value last year. According to our integrated approach strategy presented at our last investor day, we have carried out several actions. including those intended to strengthen our balance sheet metrics by sustainable growth, unlocking the value of our assets and consequently being better for future opportunities. The most relevant case was the execution of the sale of NL Transmission Chile last December, a non-core asset for our company that hasn't been adequately valued inside of our portfolio. The proceeds of the sale of this asset at the very interesting market multiples who are used to optimize our debt levels, as Giuseppe will show you later. In addition, we have also concluded an important level to extract the value of our LNG long-term agreement, taking advantage of high commodity prices momentum. This initiative, which totalled $520 million, allowed us to monetize this contrast value and reduce our exposure to potential natural gas sources. All these actions are aligned with our value proposition, a commitment to our shareholders. We will continue reviewing our assets, looking to see if it is blocked or not, and if it is exploded. On page 9, let's review our initiatives and performance on the distribution segment, also an important pillar of our integrated strategy. Electrification is vital to take on climate change. a fundamental pillar of our integrated strategy. During the last few years, we have focused all our efforts on enhancing our reach and improving the quality and digitalization of our network. All these efforts have allowed us to improve our main indicators, particularly the losses and quality indicators. Additionally, as you can see, we have developed a different initiative and promoted several partnerships to boost the decarbonization of our clients' energy consumption. Let me go through some examples of the period. Regarding the B2C segment, we were awarded a tender for replacing 2,600 wood stoves with additional units in December. CODELCO will finance this project as a mechanism to offset emissions. On the B2G segment, we closed the deal with the Municipality of San Joaquin to provide energy solutions at three sports facilities. These projects included PV plants, LED lighting, and water heating through heat pumps. Finally, in the B2B segment, we closed an important contract for 14 years with an agri-industry to develop a 1.15 megawatt peak photovoltaic plant. This is the largest project up to date for EnerVac. On page 10, I will conclude my section giving some evidence of our Creating Value for All approach. Our commitment and effort to the energy transition began to pay off years ago, and now the market recognizes us as one of the best ESG performers in the region. Our capex reached 92% CSG-related and over 89% aligned with the EU's autonomy. This confirms that our strategy embeds sustainability. Also, sustainability finance represents almost a quarter of our total debt input. This is still plenty of room to improve this indicator, but it is something that will take some time. A considerable amount of our investment is SDG-related, and now an important piece of our tax is also SDG-related. A significant milestone was the completion of the cold phase-out process. Now, the red share has risen to 76% of the total, six basis points higher than in 2021, and also we reduced by almost 20% our CO2 emissions intensity, achieving 118 grams of CO2 equivalent per kilowatt hour. In December, the company was recognized once again by being confirmed in the first place in the three categories of the Dow Jones Sustainability Index after having obtained a score of 88. The categories were emerging markets, integrated markets of the Pacific Alliance. Energy was also confirmed in the Feeds for Good Emerging Index and Good Latin America Market Syndrome. The carbon disclosure project highlighted for the second time the company's leadership in mitigating the risk and reducing greenhouse gas emissions. This time, the company improved its rating from B to A-. Bloomberg Gender Equality Index 2023 confirmed Chile for a second consecutive year. measuring publicly traded companies diversity and inclusion performance this result reflects the company's commitment to diversity and inclusion thanks to implementing actions and programs that have closed gender gaps in the energy sector and progress in sustainable development energy received the highest award given by alas 20 the company grand prix the latter is the most important category a company can aspire to in-house ventures. It is awarded the only one company in Latin America delivering leadership, consistency, and excellence in the public disclosure of information of its investor relations and sustainable development practices.