Solaria Energia Y Mdo Amb

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.

No limitations of time is something that daily we are going to acquire shares. No limitation of time and no limitation of quantity until 10%.

Next question coming from Arthur is how will the shares buyback plan be funded, please? And second question is, is Solaria going to lower its future Spanish solar capacity addition to fund it?

It is not linked with our Spanish solar capacity or our operations. It is a specific credit line associated with the acquisition of shares. It is not linked with our Spanish solar capacity or our operations.

Next question is coming from Rafael Bonardel from Banco Sabadell. If we can comment on blackout in Spain and if at some point this event could affect the deployment of renewable in the short and medium term. And I'll send more questions regarding the timing of the buyback program, but I think that Arturo already answered. So the first question is any impact from the blackout for the renewable in the future?

Not significant impact, honestly. I think that a lot of news, noises, and people talking about renewables and nuclear and other things, but not significant impact from numbers point of view. And the mix, if you see the mix during May, was incredible, the percentage of renewables. And it's something that will continue.

Next question comes from Philippe Aubartion from Odo. Our merchant revenue are reaching 25% in the first quarter. Are we considering to reach 20% at the end of the year?

I think that 20 sounds reasonable. As I have mentioned, probably we will report soon important PPA contracts. And 20% of merchants sounds reasonable for us. But 25% it's good. But 20% sounds better probably. for the end of this year. But in this company, things change extremely fast. We have under negotiation today an enormous number of PPBAs, different PPBAs with different players. And that could be reported in the short term. And it's something that could change suddenly the face of the company talking about merchant fixed price exposure.

Next question comes from Eduardo Gonzalez from Grupo Santander. First question is, can we provide a bit more detail regarding the achieved price in the first quarter of 2025? It seems a bit low considering that capture price by solar was around 65 euros megawatt hour, and our merchant exposure is approximately 35%.

is the result of the mix of fixed price associated with PPA and merchant prices. Approximately, we have today around 20-something percent of merchant, approximately, and 75-76% of fixed prices. The combination gave to us the price of 59 or something like this. And it's a combination. During the first quarter, we had a lot of PPAs functioning and our merchant exposure was less than 35%.

Next question is coming from Enrico Bartoli from Mediobanca. EBITDA guidance. EBITDA guidance of 245, 255. If we can elaborate a little bit regarding this guidance and regarding the expected evolution of energy revenue. over the next years? And do we expect any contribution from Genedia or other business in this EBITDA for this year? And last, battery storage. What is going to be the business model for this .5 gigawatt hour of battery storage?

Honestly, I prefer to surprise yourself. My comment was extremely clear. I have said we are going to shore the EGBIDDA guideline 240-255. It's clear. My comment is clear. In the first half results presentation you will see the numbers that as I have explained will be exceptional. And probably we will give new guideline of EBITDA for 2025. That is not the critical point. 2026 and 2027. That for me is more important. 2026 and 2027. And obviously, we have a lot of activities and new business today around the table. And I'm not mentioning all the new business that we are opening, but I have mentioned the most important business for the medium and long term. And you will see the contribution. Of course, and what is going to be the business model for the battery, for the battery storage? For me, the battery is clear. The battery is something that optimizes your price of electricity. Government changed the rules in Spain. If you install in the past batteries, it's like you had some barriers in order to enter in the system. It was eliminated. In the regulation, today's timing for batteries, massive batteries in Spain and not only in Spain, in different countries of Europe, we have ready-to-build permitting process in all of our generation assets. It has sensed today with the actual situation of price of electricity to include batteries. and as I have mentioned, we are going to install the first battery in Spain probably in September August-September will be installed, it is an easy installation and in September we will start operating batteries in Spain and in October, November and December we are going to receive additional batteries equipment And during 2026, you know, is the correct timing for starting with the batteries process. And we will be in the tender process of the Spanish government, not tender, in the subsidies program of the Spanish government. And we will see if we get successful, you know.

Next question is coming from Victor Pedro from GBC Gaesco. Can we explain if something has changed in battery regulation in Spain for us to decide to accelerate installation? Is there any news on regulation or just the power price drop by solar asset in Spain?

Small changes from technical point of view and regulation, because today if you include batteries or not is something that doesn't affect if you go to the market. Previously, it's like if you include batteries, you were in the worst position for entering in the market. It's something technical that has changed and we have talked with the Spanish government, especially with the regulation authorities in a lot of occasions and they have changed. And obviously power prices today are in a great situation to include batteries because you know, you are seeing all this. the difference between solar hours and night hours and you have big jump, big difference between 3 o'clock and 10 o'clock but I think that the technical changes that let us to install batteries and the situation of prices justify the installation of batteries today in Spain And the Spanish government program is something that obviously pushes us because 700 millions is a lot and probably we have a really good situation to be part of these 700 millions of euros and it's an important subsidy that gives to us better payback. The combination of all gives to us a sense to install today batteries. And from ready to build permitting process is not a big deal because we have on site. And about connection points for batteries is not a big deal because we have a lot of connection points. Consumer points, not connection. Consumer points for batteries is not critical, but obviously it requires time, effort, and time. At the same time, if you want to connect the batteries, you obviously need the infrastructure, the electrical infrastructure, the grid, the substation, and it was constructed during the last three, four years. All the way that we have done today justify that we can include in our generation assets, in our connection points, batteries or data centers, because they are going to use the grid, the substation, all the infrastructure that we have constructed.

Next question comes from Gonzalo Sanchez from UES. First question is, when do we expect to start the buyback? Second question is regarding the financing of this buyback and the solar investment. How we can finance both? Third, can we confirm the expected yield of the land business? It's still 8%. And last is, do we expect any asset sales during the rest of 2025? And if so, which type of assets?

About the expected day for starting with the buyback tomorrow. About that we are going to continue investing until the end of the year. As I have said, we have raised a specific line for the buyback charge program. And it's not linked with our operations or with our traditional investment capacity. about the yield is around obviously we have a base case but more than we are able to get better we don't have limitations of 8 or 7 or 6 or 9 we want to get all that we can be able and expect asset sales during 2025. A lot of things will happen during 2025. You will see a lot of news and press releases during the next weeks and during the next three months. I think that the company is going to change completely. Numbers will be affected positively. This is a good point. And I have explained during this conference call, this is the worst quarter of the year. The first quarter, in my view, and with the information that I managed, is the worst quarter from a numbers point of view.

Next questions are coming from Daniel Rodriguez from Vestinver and from Fenola Fuente from Alantra. If we can give a little bit more detail on the back twist strategy. Are we considering tolling agreement? What are the potential off-takers? Is the colocation with already asset in operation or stand-alone? Do we have PPAs regarding with all this battery strategy?

I think that today we are receiving a lot of calls and interest from funds, from energy groups that want to acquire a percentage of our battery company. We are studying joint ventures associated with them. We don't reject this possibility. We are talking with them because some of them want to operate the battery, others want to invest and to give the capex, and they want to pay for all the permitting process that we have on site because... As I have explained today, Solaris is the key player from ready-to-build permitting process for batteries, not only in Spain, globally, and ready to be installed tomorrow. And this is extremely important. And we have interest from two types of investors. One is players that want to operate. It's not a secret because international and European players, you know, Some of them because they have announced recently deals associated with batteries, not in Spain, out of Spain. And funds that want to co-invest with us, CAPEX, or that want to recognize the value of our permitting process. and to add equity to the company, to the company, to the batteries company. And we are studying all the options. And about standalone or connected or self-consumption, we are developing both. In some places, standalone. In some places, self-consumption. For us, self-consumption is extremely easy because we have... Today the infrastructure is ready, substations ready, grid ready, it is extremely easy to install directly the batteries, but standalone is a good option and we are getting connection points for standalone batteries in Spain, in Italy, in Germany, in all the places. It is a mix.

Next question coming from Jorge Alonso from Bernstein. Regarding DC, can we expect any completion of agreement with the data center operator this year? Or agreement are expected in the midterm? And second question is regarding the asset to be deployed in 2026. How advanced are these assets that have to be deployed and built in 2026?

About data centers, yes, you will see deals signed during 2025 and some surprises. Some surprises associated. But yes, deal in 2025. And as I have explained, September, Investor Day, data centers, previously, probably you will see deals. And during the investor day, you will see deals. After the investor day, you will see deals. But during 2025, yes. And midterm, it's a long-term strategy for us. It's nothing opportunistic associated with 2025. I think data center is a business that we think that will be developed during 2025, 2026, 2027, 2028. And we are going to stay with our customers in the midterm and in the long term supplying services to them. And megawatts 2026, we are going to, as I have explained, construction 2025, connection of 1.4. And during the next quarter, we will add additional capacity in Italy that will start construction of assets and even in Spain. And we will add in the next quarters.

Next question is coming from Daniel Rodriguez from West Invert. Why is electricity output down by 8.4% with stable capacity? has output been impacted by curtailment?

Curtailment is not affecting ourselves because as you know curtailment is especially affecting areas of the south and southwest of Spain and we don't have too much capacity in Andalucía, zero And the Extremadura, not too much. And our problem was radiation more than curtailments. Curtailment is not significant, the effect of curtailments at least in our assets.

Next question is coming from Philippe from Odo. Looking at our stock price and projection, we are discussing in terms of DC, reneria, storage, agglutination, solar PV. What is your fair value for Solalia based on your current knowledge?

I have a value in my mind, but I'm not going to say. But obviously it's not the actual value. I think that we start with this program of shards by back because this has sense. Personally, I have been in a long blackout because I have received a lot of proposals for the acquisition of the company. And honestly, I think that it's time for the acquisition of shards myself. I could acquire massively shares in the future. And my view is that today the value of the company is not reflecting the real value of the company, the stock value. But we will see in the future with all the news, all the numbers and the results, if the stock market recognizes or not. I am worried, obviously, but in my mind, if they don't recognize, I will acquire shares. And I don't care too much. If you see value, you acquire shares. And in the long term, always the stock market recognizes value.

Next question is coming from Alberto D'Antonio from BNP Paribas. Can we provide some detail on batteries? What type of batteries are you planning to install? Two or four hours? First question, a second question regarding the 80,000 MWh CAPEX guidance for battery. It relates only for the battery pack or it also includes the installation cost. Can we provide some guidance on these two aspects of CAPEX and 204 hours?

4 hours cycle batteries and 80,000 euros per mWh is the capex and includes all the battery pack and in your experience is 60% I'm not going to contract yourself in Solaria, sorry because it's expensive, you are expensive the capex of Solaria is this and we are going to execute like always with this capex

Last question from Alberto Antonio from BNP Paribas. What are our key assumptions that we are taking into account for this five years payback period? Are we including subsidies? We are assuming capacity payment and CIA services.

Yes, capacity payments and auxiliary service, but not significant because I think, honestly, even the government approves something is not going to be significant because it's a tender process and probably people are not going to pay too much. And not subsidies because subsidies are a question mark. Who knows? We will see because, as I have mentioned, a Spanish program is there and we will try to allocate an important part of our... of our program, but we will see. We have subsidies on site. I have mentioned one of them, but we have some subsidies. Obviously, this subsidy was included, but small amount, few millions of euros, not bad, but few millions of euros. And about other issues that we have included, nothing more significant.

We have the same question coming from Alberto Antonio and from Fernando La Fuente from Alantra. Are we going to cancel the shares? What is the purpose of this buyback? How can we keep these shares?

In my view, it is a cheap price. It justifies the massive acquisition of shares and this buyback program. And what we are going to do, you will receive explanations in the next quarters. But today, my vision is to acquire shares because it has sense from a price point of view and situation point of view.

Maybe if I may ask the last question of this call from Timo from Backlays. Where do we expect leverage? Net depth EBITDA over the next two or three years given the buy-back program and meaningful capacity addition in the short term?

We will see the number of EBITDA for 2025. Honestly, I think that I have mentioned during this conference call in a lot of occasions that my vision about the EBITDA for 2025 and we will see the generation of cash of next operations that we are closing or that we have closed and we will announce. But I think that the leverage is not going to be a significant issue inside Solaria for the end of this year. I think that the situation of our business is in good shape, in a really good situation. And our leverage, or if you want, our net debt EBITDA ratio will be reduced significantly for the end of this year.

So thank you very much for joining today.

Thank you very much. As I have explained, this is the first quarter results. We have present late. The good point is that we have a strong visibility of first half results presentation. And I have advanced a lot of things about the first half results presentation. It's an exciting time. Tough time for renewals. Good time for Solaria. We will see in the next quarters. It's exciting. And in the short term, we will present first half result presentation and we will give more information. Unfortunately, because we have present during the first queue, in only a few weeks, we are going to present the first half. And let me keep some information in my pocket first. until first half, with more surprises for the first half result presentation. It's timing for the first quarter, and time, the sentence of David that he loves, time for action. It's time for action, and in the next weeks, a lot of action is coming. We will see. Thank you very much.