Iberdrola Sa S/Adr

Buenos dias, señoras y señores. Good morning, ladies and gentlemen. First of all, we would like to offer a warm welcome to all of you who have joined us today for our 2025 first quarter results presentations. As usual, we will follow the traditional format given in our events. We are going to begin with an overview of the results and the main developments during the period given by the top executive team that usually is with us, Mr. Ignacio Galán, Executive Chairman, Mr. Armando Martínez, CEO, and finally, Mr. Pepe Sainz, CFO. Following this, we'll move on to the Q&A session. I would also like to highlight that we are only going to take questions submitted via the web, so please ask your question only through our webpage www.iberdrola.com. Finally, we expect that our event will not last more than 60 minutes. If any questions remain unanswered, we at IR are, as always, fully at your disposal. Hoping that this presentation will be useful and informative for all of you, now, without further ado, I would like to give the floor to Mr. Ignacio Galán. Thank you very much again. Please, Mr. Galán.

Thank you, Ignacio. Good morning, everyone, and thank you very much for joining to this call. I would like to start thinking and recognizing the excellent work of more than 2,000 professionals of Iberdrola, which have already restored electricity in Spain after the blackouts suffered two days ago. At all times, our generation plants were available to operate under the instruction of the system operator Red Electrica. Also, our distribution networks were also connecting and restoring the service progressively as the system operator, who is responsible for the operation, asked us to do it. Moving to results, in the first quarter of 2025, net profit reached 2,004 million euros, 26% up year-on-year, excluding the capital gains from last year's investment of thermal generation. And reported EBITDA was 4,643 million, also 12% up in like-to-like terms. mainly driven by strong operating performance in networks, we represent 52% of EBITDA through March, and higher generation volumes for new assets in operation in the US, Iberia, and the rest of the world, partially offset by the normalization of margin in the United Kingdom, especially in Iberia, resulting 70% decrease in EBITDA in Spain. Investments were up by 14%, hitting a new record of 2,720 million euros in just one quarter, and 17,300 million euros in the last 12 months. Thanks to 30% increase in the US and UK over the quarter, which together represent two-thirds of our total investment. By businesses, network investment were up 18%, mainly driven by 30% increase in the UK, both in transmission and distribution. Renewable investment rose by 7%, with offshore wind up 50% due to projects under construction in the US and UK and Germany, all of which will be operational in 2025 and 2026. In addition, we received the final approval from UK Competition and Market Authority for the integration of electricity in the West has been fully consolidated in our account since March. As a result, our regulated asset base in UK is now reached 15.5 billion euros more than Dublin in just five years. Thanks to the contribution of new investment, cash flow increased by 11% with respect to the first quarter of 2024 to 3,502 million euros, leading to financial ratios that are fully consistent with our triple B plus rating. As mentioned, EBITDA reached 4,643 million euros, 12% up, with almost 50% coming from the US and UK, mainly due to the strong growth in our network assets base in both regions, offsetting the decreased Spain results. As a consequence, networks contributed more than 50% of total EBITDA, almost 10 points above the average of the last five years. EBITDA in these businesses also includes a positive impact to the recognition of past costs in the US. Production and customers operating results reflect 2,600 installs over the last 12 months, of which 660 come from offshore wind. An increased production in the US, Iberia, France, Germany and Australia, offsetting the normalization margins in the UK and Iberia. Finally, we continue closing new PPAs with Tier 1 customers with more than 4 TWh per annum signed in the last 12 months, reaching a total portfolio of around 40 TWh per annum to be supplied per annum in the following years. The record investment figures achieved in this first quarter, more than 2.7 billion euros, are mainly due to our strong expansion in networks with 1,432 million invested through March. up 18% over Q1 2024 and more than 50% above the average of the last five years. Mainly driven by the US and UK, we represent more than two-thirds of the total after doubling investment levels over the past five years. This increase will accelerate in the coming quarters, given the huge investment commitments in both countries. In the UK, we are progressing with OJEN in the approval process Rio T3, which is expected to support an unprecedented expansion of transmission infrastructure between 1026 and 2031. And we foresee a similar trend in distribution. Recently, OJEN approved 200 million euros in additional investment for Scottish power distribution licenses, including electricity in the West. In the United States, network investment increased by 10%, with 241 euros invested in transmission, mainly in the NCEC interconnection between Massachusetts and Canada. In this project, all foundations and poles have been already installed in the DC line, and we continue progressing the converter station and other facilities, expecting to have this infrastructure fully operational by the year end. Avant-garde distribution investments have reached close to 100 million euros, 80% in the state of New York, where all our companies are reaching and exceeding the headline return of equity set in their rate cases. In Brazil, the regulator has approved a new tariff review in Pernambuco for the next four years and an annual rate adjustment in Bahia Grande do Norte. That together will add at least 100 million euros operating result per annum, increasing energy EBITDA by 10% on the annual basis with this adjustment. In addition, the renewal process for distribution concession is progressing as expected. Our total regulated asset base reached €49 billion, reflecting the organic growth already mentioned and the consolidation of electricity in the West, which contributes €3.4 billion to our asset base and is expected to add around €450 million of the Vida per annum exceeding initial expectations. Following this excellent performance, Electricity North West recently received the Utility of the Year award by Utility Week and was ranked number one in the OJN Annual Performance Benchmark in all UK distribution companies, followed by the other two Scottish Power Licenses in Scotland, England and Wales, which were ranked second and third. Biographies, US and UK already contribute 60% of our regulated assets base, which is expected to exceed 51 billion euros by the year end. Investment in renewables increased by 7% up to 1,064 million euros, which two-thirds is in United Kingdom and United States. More than 50% of renewables investments were located to offshore wind, mainly in the cross-strands of Binger Wind in the U.S., which we will fully operationalize by year-end, East Anglia 2 and 3 in the U.K., and the rest in Bindacker in Germany. Offshore wind accounted by 20% of total investment, more than the U.S. and the U.K. And solid PV represents 21%, highly diversified between the U.S., Iberia, other countries in continental Europe and Australia. All these investments continue to progress as scheduled even in the current supply chain scenario thanks to our procurement strategy, based on local suppliers who represent 80% of our total purchase, and the anticipation of business needs through detailed planning processes securing all strategic contracts in advance. This strategy is also protecting us from current global trade dynamics. Currently, we expect no impact for a new tariff in our result, with a maximum increase of just $130 million in the group investment cost, or less than 1% of our total annual capital, clearly within our planned contingency levels. Related to 10% of our investment in our offshore wind and solar PV projects under construction in the U.S., Where we have clauses in our contract with suppliers, they will allow us to reduce this amount. We do also expect any impact in transmission and distribution investment as 99% of the U.S. purchases are local and these businesses are regulated. In our offshore wind, where 100% of the supply chain of Vinyard Wind 1 is already fully secured. Our strong increase in net worth investment and our selective approach to renewables is also driving a structural improvement in our cash generation profile and financial ratios. In renewables, we expected completion of major projects and the construction will reduce by 50% the working progress in this business over the next two years, from 8.6 billion euros today to between 4 and 5 billion by the end of 2026. In addition, these new assets will add around 100 million euros of EBITDA on an annual basis both in 2025 and 2026, for a total of 1.6 billion from 2027. mainly coming from the offshore wind project of Isaglia III in the UK, Vingia Green in the US, and Baltic Eagle and Windacker in Germany, which have already closed long-term PPAs of CFDs, providing significant stability to revenues and profits. All this will drive a substantial increase in our return on investment in these businesses and in our overall financial strength. That will continue improving thanks to our focus on networks, where we expect to invest more than 13 billion euros between 2025 and 2026. As 90% of this investment will have a positive impact on return and cash from year one, including 100% network investment in the UK and all investment related to Raycase in the US plus NCEC interconnection project beginning in 2026. Our strong operating performance and the acceleration of gas recovery has driven an 11% increase in funds for an operation to 3,502 million euros, allowing us to maintain our financial ratio in line with our plan and with our triple B plus rating after the cancellation of electricity in the West and the purchase of agreed minorities. with EFE over-adjusting the debt of 22.3%. In addition, our liquidity remains at 21 billion euros, enough to cover 19 months of financial needs. I will now hand over to our CFO, Pepe Saiz, who will present the group financial research in more detail. Thank you. Pepe.

Thank you. Thank you, Chairman. Good morning to everybody. As the Chairman has said, the first quarter 2025 net income reached 2004 million and grew 26% once compared to the first quarter of 2024 adjusted net income, excluding the thermal generation asset divestment. As main change of the perimeter, let me highlight that the ENW is fully consolidated since March. FX evolution has had a minor effect on results, with the dollar and the pound growing 3.8% and 2.8%, and the Brazilian real being 13% lower. A 1% increase in revenues, mainly in the network business due to the U.S. recovery of past costs, combined with a 3% decrease in procurements, boosted gross margin by 5% to 7.2 billion euros. 1.7 billion thermal generation asset divestments in Q1 of 2024 positively impacted reported net operating expenses. Excluding it, first quarter 2025 net operating expenses decreased 10.4%, mainly due to the 176 million lower storm costs In the US, that is neutral at the EBITDA level, as it also lowers the gross margin. Net personal expenses decreased 0.4%, external services fell 9.8%, and other operating income grew 30% due to indemnities of past year costs. Excluding also the mentioned reconciliation impacts, and other minor net operating expenses improved 0.9%. Analyzing the results of the different businesses and starting by networks, it's a bid that grew 43% to 2,415 million euros, with better performance in the UK and in the US. In the UK, EBITDA increased 10.8% to £339 million, excluding £35 million positive net contribution from E&W, effective since March, and higher contribution in distribution thanks to higher RAP, and that more than compensates negative contribution from transmission due to the CAP allowance application. In the U.S., EBITDA reached $1,054 million with higher tariffs and better contribution from transmission, and positively impacted by the new decision from the New York regulator that allows to register regulatory assets regarding past costs, already accrued and registered on the U.S. GAAP. In Brazil, EBITDA increased 12.6% to 3,684 million reais, that in euros is a small fall, with higher inflation over a higher asset base and positive contribution from transmission and construction as construction of transmission lines progresses. In Spain, EBITDA fell 1% to 400 million euros. Our operating performance was in line with last year. In the first quarter, energy production and customer business EBITDA reached 2.2 billion euros compared to the 4.1 billion of last year that included the already mentioned 1.7 billion euros thermal divestment capital gain. Excluding it, as you can see in the slide, the first quarter and 25 EBITDA fell 9% compared to the adjusted first quarter of 24. The business reached 89% emission-free generation. In Iberia, EBITDA was 1,035 million euros, 15.3% down, with a slightly higher production, partially offsetting margin normalization, and 3% higher levels, levies, even despite 1.2% revenue tax termination. As of April, Iberdola had record hydro reserves, 9 terawatt-hours, which will help the performance of the group in 2025. In the UK EBITDA fell 17.2% to £426 million with lower wind resource both in onshore and offshore and lower prices partially compensated by lower windfall tax. In the US, EBITDA increased 35% to $286 million, with better wind and solar performance and also some timing effects helping EBITDA growth, despite the fact that in Q1 of 2024 was positively impacted by the Arctic blast storm, one-off of $37 million. In the rest of the world, EBITDA grew 25.3% to 229 million euros, with a 76% higher offshore production due to the gradual entry and operation of Sandbrück in France and Baltic Eagle in Germany, both of them offshore wind farms. In Brazil, EBITDA decreased 40% to 254 million reais, with lower thermal contribution from ThermoPay, our only GCGT in operation, compared to a strong 24 first quarter. Finally, in Mexico, EBITDA reached 144 million US dollars, 93% lower contribution compared to last year. That included the thermal asset capital gain, and only 17% excluding this capital gain, as the remaining business was favored also by some indemnities of past costs. Depreciation and amortization and provisions grew 2%, driven by a higher asset base in networks and new operating capacity in renewables, partially compensated by lower depreciation of around 30 million thanks to full year 24 adjustments and lower bad debt provisions in Spain and in the UK. EBIT reached 3.2 billion euros and grew 17% on unadjusted terms. Net financial results improved 16 million to 508 million euros thanks to non-debt related costs that improved 91 millions mainly linked to the FX derivatives that we usually close at the first part of the year due to our P&L hedges. This is more than offsets the debt-related costs that grew 75 million euros due to the higher average net debt, while interest-related costs have been compensated by the FX due to the depreciation, especially of the Brazilian real. Our reported credit metrics remain comfortable within ratios for BBBAA1 even after the ENW consolidation from March, mainly thanks to our cash flow generation with an 11% higher FFO of setting higher net debt, mainly linked to the mentioned 2.3 billion ENW consolidation and 0.8 billion FFO. called hybrid bond. As a consequence, our ratios remain strong, and we expect to remain in these levels by the year end. FFO adjusted net debt reached 22.3%, adjusted net debt to a bid that reached 3.5 times, and our adjusted leverage ratio was 47.3%. We are also expecting that, according to plan, debt will end the year around these levels. Net profit grew 26% to 2,004 million on an adjusted terms compared to 1.6 billion adjusted first quarter 24 net profit. Equity method includes 25 million corresponding to two months of contribution of EMW. while from March, as mentioned before, ENW contribution is already at the BIDDA level. In addition, financial results improved 3%, while our tax rate normalized to usual levels and minorities were lower as a consequence of the 18% avant-garde acquisition. Now, the Chairman will conclude the presentation. Thank you very much.