Solaria Energía y Medio Ambiente

Good afternoon, everyone, and welcome to Solaria 2025 first quarter result webcast. My name is David Gangon, the head of IR of Solaria. I am joined today by Arturo Diaz Tejero Larrañaga, our chief executive officer. During this call, we will discuss our business outlook and make forward-looking statements. These comments are based on our prediction and expectation as of today. Following this presentation, we will begin with an overview of the results and the main development during this period given by our CEO, Arturo. Following this, we'll move on to the Q&A session. And I will also highlight that you have to submit all your questions via the web. So thank you very much again. And I will now hand over the word to Arturo.

Thank you, David, and thank you to everyone joining this conference call. Like always, I will move extremely fast around the presentation and then we will go to the Q&A session and start. Time for action. I think that we present a very strong set of results, increasing revenues, EBITDA, net profit, investments. We increase our net profits in more than 100%, same in EBITDA numbers. And I think that these numbers are affected by the transaction of generia that has affected our first quarter results presentation. It was new that we announced in our 2024 annual report presentation. And, of course, it's something that we include now in the first queue of this year. We continue constructing more than 1.4 gigawatts of construction and that should be connected for the end of this year, partially for the end and other during this year. And probably we will add additional construction of additional gigawatts during this year. Approximately 2 gigawatts of additional developments that will start with construction during this year. And of course, like important message, we reaffirm our 2025 guideline EBITDA for 2025. 245, 255. We will talk later about our guidelines of EBITDA for 2025, 2026, 2027. Of course, important points of this presentation, we can talk about what we have done or we can talk about... what we are going to do, and I think it's more important what we are going to do in the next quarters and in the next years. And we are going to talk about the points that we are going to develop, the business points, the business strategy that we are going to develop during the next quarters and next years. First, you know hybridization, as you know. Solaria is probably the leader from solar energy generation in the Iberia region. And we want to extend to wind. and to batteries. All of our connection points today are collecting, ready to build permitting process for wind parks and for batteries. I'm extremely proud to say that probably we are the first player from volume of batteries capacity in Europe and especially in Iberia region. Today our Our portfolio is impressive with more than 20 gigawatts per hour of portfolio. And we are going to start not with the permitting process. We are going to start with the installation process during 2025. As you know, because we have announced in a press release a few weeks ago, We have acquired batteries that will be installed during the third quarter of 2025 and during the fourth quarter of 2025 What does it mean? Probably from volume of batteries point of view in Iberia region in 2025-2026 we will have an enormous volume of batteries functioning including in our portfolio of generation. It's something that will extend our solar hours functioning, our solar generation capacity, because we are going to extend our generation capacity more hours per day. And we will optimize all the tariffs, all the merchant prices that we are receiving. This is extremely important because I think that batteries for the future are critical, especially in Iberia, but not only in Iberia, in all European regions. And it has sense to develop our capacity and it has sense to use our grid and substation capacities because, as you know, during the last year we have invested a lot of money in our own grid and in our own substation and electrical infrastructures. And now it's ready for being used in the consumption points for batteries and for new generation associated with wind. This is critical because it's something that we are going to show to the market during next quarter and next year. CMD. It's important, the second point that I think that we will repeat during next presentations and during all of our press release is the data center capacity. As you know, Solaria, we are betting strongly for the growth of data centers in Iberia and in Europe region. We think that we will have enormous consumption of electricity from this data center business. And we have got great success around consumption points that, as you know, it's necessary for connecting data centers. In Spain and in Iberia region today, we have 1.2 gigawatts of consumption points for data centers. Our data center business area is extremely active, talking with key players. and closing deals. In September, probably, first, second week, we are going to announce Investor Day for talking about contracts and situation of our data center business. And it's something that is going to be key for us the next years. Data center strategic plan. And it's something that will give to us cash, value, and really good customers for the long term. Of course, other points that are critical, PPA. We have reported a small PPA of 15 MW. It's timing for signing PPAs. I think that is a good signal for the market. It's an extremely good signal for the market because... If you secure a good price of electricity, obviously you are securing good project IRR levels. And we have an incredible pipeline of new PPA customers. And probably in the short term, we are going to report new deals with really good and exciting conditions. And I think that is an important part, like always, of our strategy. And we are going to continue signing PPAs. Generia, of course, it was announced in the annual results presentation and it's a new business. We explained in February. For us, Solaria is a business of business. Generation business is making us the opportunity to grow around other business linked to generation. Real estate business, not only real estate, data center business, batteries business. It's like, in our view, when you are the owner of the grid, you are the owner of the electrical infrastructure of the substation, of the generation, you open the door to new business that could be extremely attractive with really good levels of efficiency. IRR and real estate is one of them. It's not the only one. As I have mentioned, data centers, batteries or other new business that we are going to show during next quarters will be linked completely with our generation business. Of course, numbers. Of course, I have mentioned we're growing all the numbers this quarter and probably this will be the worst quarter of the year from numbers point of view. I have a strong visibility today of the first half results and I can say that we are going to present to the market excellent results associated with the first half results and probably my comment today I think that it is reasonable to announce that we maintain our guideline for 2025 especially but probably with the first half result presentation we will need to give an update to the market in our guidelines, you know, because I think that we should increase our targets of EBITDA for 2025, 2026, 2027, 2027, you know. I think that business is functioning correctly. We are getting really good results. We are going to announce really good news in the next weeks. And I think from Nambas' point of view, we have strong trust that we are going to shore our projection and our guidelines, right? Score sounds aggressive, but I love this kind of words. Probably we are going to score the numbers that we have presented previously. Of course, we continue investing money in all quarters, as you know. We continue constructing. We are going to increase this construction reading and we are going to add, as I have previously mentioned, we are going to add more gigawatts of capacity that should be constructed in the next years. Here we include the Iberia region, 1.4 gigawatts, that will be constructed during 2025. We have done approximately 50% of the construction works and during the third quarter and fourth quarter we are going to connect a lot of developments and we will finish like the leader probably in Iberia region from solar point of view, no? EBITDA guideline, you know, I have explained 245, 255. Today is the day for saying that we reiterate our 2025 EBITDA target. As I have mentioned in our investor day in September, probably we should give an update today. on EBITDA guideline for especially 2025, of course, 2026, 2027, you know, because data center business especially is functioning great and I think that is something that is going to give to us important numbers and important cash flow, you know. Of course, new PPA is a small PPA, but it's significant because Trafigura is a new player in the game. It's the first deal that they sign in Spain, and hopefully they will sign more. But it's important because it's a key player in the trading market. And we have raised at the same time a new financing agreement with Sabadell Bank for 175 megawatts associated or linked with our data center. It's one of the innovations. But I think that it's early to talk about this in the investor day for data center. We will explain because it's exciting. In data centers... We are signing contracts and the global business is extremely exciting for Solaria and for the future of Solaria. Data center is going to grow. Solaria probably is the key player in global in Europe. We have the best platform for growing data centers. We are the key player from electricity point of view, from supplier of electricity point of view. And we will report a lot of contracts associated with our data center business, but not today. Probably the first half is the correct timing for giving visibility to our data center business and the effect that we are going to see in the accounts and in the cash of the companies. Of course, wind portfolio and hybridization, wind, we think that it's timing for wind, it's good, all the solar that we have developed, but the combination with wind could be wonderful, and we are going to do, and here we include the case study of Garonia that includes wind, and not only wind, batteries and other combination. Today, I think that if you are the owner of infrastructure, substations, and you have the ready-to-build permitting process on site, it's like it's easy to add additional capacity that could complete the cycle, no? It's a perfect combination, solar, wind, batteries, and hopefully data center too, no? And it's perfect because you have consumption and you optimize the generation process, no? best portfolio batteries we have an enormous capacity that we have developed during last years and today we have in Iberia region enormous capacity but not only in Iberia, in Italy, in Germany and UK Our view is to make a global platform of batteries and to combine with our generation capacity. Always, when you have the grid, you have the substations, you have the infrastructure, it's easy to add additional capacity of consumption or generation. It's something that we are executing now. It's true that, as I have explained, we have announced the signature of a contract, more than 25 millions of euros. We are signing now additional 25 millions of euros, 50 millions of euros of capex in batteries that will be installed in 25 years. this year during this year that we'll be installing some of our generation assets we are receiving a grant from the national authorities in this case from Spain you know that today Spain or today during the last weeks Spain has announced a new line of 700 millions of euros for supporting the growth of batteries and we will be there and we will see the result but we will be there we are probably the most efficient from capex point of view player and we will use Of course, as I have mentioned, CAPEX, like always, for us is key, is the key point, because at the end of the day, this is an issue of money and project IRR. And we continue being the most efficient player in all of our activities. And we are looking, especially in this kind of business, for paybacks of less than five years, right? not including subsidies. If we include subsidies, obviously we could improve a lot this number, but today we have received some subsidies, but not massively. We will see the results of the program approved by the Spanish government. Data center, September. Probably we will report contracts until September associated with data center. This is a revolution in my view because it's an enormous customer for us because they are going to acquire massively electricity. We are not developing our business only in Spain. We are developing this business globally in Europe because we think that data center phenomenon is not based only in Spain. Spain is a great location, but it's something that will grow in Germany, in Italy, in United Kingdom, in France, in all the countries. And for us, he's the key customer from consumption point of view. It's impressive the consumption that they need to maintain. And we are going to be the key supplier of electricity infrastructures and PPAs. And we will report contracts and that will affect seriously our cash and our returns. We'll change completely the face of the company, and we will see. During September Investor Day, we will give more visibility, and as I have explained previously, probably we will report contracts associated with this business. Of course. About the Solaris decision, we have decided to acquire shares of the company, our own shares. I think it's the best investment today for the company. And we have decided to acquire 10% of the shares of the company. We will execute it. daily and without limitations on timing and our intention is to acquire more than 12 millions of shares in the next month. we see a great opportunity in the acquisition of our own charts, and it's timing for executing. And 10% is a good number, but I think that it's extremely reasonable, especially with the actual value of the charts. It's like, in my view, probably it could be the best business of the company. Yeah. And from today, we are going to start with the execution of this deal. Thank you, David. Thank you. And we will go to the Q&A session.

Okay. Thank you, Arturo. We will now open for Q&A session. And once again, thank you for your time. Just one minute, please. So, thank you very much. The first question comes from Arthur Sidbon from Morgan Stanley. Two questions. First, if we can provide more detail regarding the terms of the Shell Backpack Plan Announce, under which time or reason will we try to conduct it, and if we can renew it once it's over.