Standing by. Welcome to the Enel Nine Months 2023 Results Conference Call. At this time, all participants are in listen-only mode. I would now like to hand the conference over to our speaker today, Monica Girardi, Head of Group Investor Relations. Please go ahead. Thank you, and good evening to all of the people connected. Welcome to the Nine Months 2023 results presentation, which will be hosted by Enel CFO, Stefano De Angelis. Following the presentation, we will have the usual Q&A session. We ask those connected to the webcast to send questions only via email at investor.relations@enel.com. Before we start, let me remind you that media is listening to both the presentation and the Q&A session. Thank you, and now let me hand over to Stefano. Thank you, Monica, and good evening to everyone. Let's start with the highlights of the period. During the nine months of 2023, the group recorded a strong and consistent operating and financial performance across all businesses. EBITDA is up high double digit compared to last year and reached EUR 16.4 billion on the back of a less volatile environment that restored the full industrial growth potential of the group. FFO grew EUR 5 billion in the third quarter, landing at EUR 10.6 billion, 9 x higher than one year ago, thanks to the EBITDA growth and the recovery of the dynamics that affected the working capital evolution last year. On the back of a strong underlying operating performance, we revised upwards ordinary EBITDA and net income targets. Finally, we confirm our financial de-leverage ambition with a pro forma net debt on EBITDA ratio to range between 2.4 and 2.5. Operating delivery came in quite strong as well. I'm now on page two with the main business KPIs. All our operating performance metrics continue to improve year-on-year. Production from renewable is up by 12 TWh, driven by recovery in hydro availability and 4 GW of new capacity added over the last 12 months. This brings emissions-free production at the end of September at 73% of the total, up by 12 percentage points year-on-year, confirming the strong growth already witnessed in the first half. Energy sold to B2C in the Italian and Spanish liberalized market grew by 5%, confirming the appeal of our commercial offering. Finally, RAB per grid customer reached around 650 EUR per client, up by 6% versus previous year. The investment that feed our asset base are analyzed in the next slide. The investment stood at EUR 9.4 billion and were allocated as follows: EUR 5.4 billion supported our integrated strategy, with renewables accounting for more than EUR 4 billion and customers' development for the rest. It is worth to highlight that CapEx in generation include around EUR 800 million of investments in BESS capacity in Italy, for which the remuneration is covered by the Capacity Market regulated mechanism. EUR 3.9 billion was spent in grids to expand and upgrade our networks, increasing the regulated asset base. From a geographical perspective, more than 60% was invested in Europe, with the lion's share spent in Italy, mainly in grids, followed by Spain, LATAM, and then the United States. The allocation is pointed to a strong focus on core geographies, where margins and cash generation are supported by visible regulatory frameworks, a less volatile environment, and continuing operation. Let's now move on page four with the main drivers of the EBITDA. Ordinary EBITDA marked a sound 29% growth year on year, net of more than EUR 600 million perimeter effect, mainly associated with the disposal of asset closed over the last twelve months. This result was driven by the integrated business, which increased by EUR 3.3 billion versus 2022, on the back of a normalizing environment, as I will detail in the, in the next slide. Networks that were up by around EUR 800 million year-on-year, thanks to regulatory updates in countries where frameworks allowed a pass-through of recent macro volatility. Finally, the Stewardship business model contributed for around EUR 100 million, as we sold in September our Enel Green Power 50% share in Australia. It is worth to highlight that on a year-on-year basis, the stewardship model weighed negatively for around EUR 200 million due to the gains associated with UFINET and Mooney transaction that was accrued in 2022. From a geographical perspective, it's worth highlighting that European countries were 70% of the total EBITDA of the period. I will now move to the results analysis by business, starting from the integrated one on page five. The integrated business is up 46% versus 2022, or more than EUR 3 billion year-over-year. Italy represents the bulk of this growth, with more than EUR 3.3 billion increase year-on-year, driven by a more balanced position between sales to B2C customers and generation, which benefited from renewable production and power price normalization. Iberia is negative for around EUR 200 million year-on-year, as the normalization of the retail business was offset by the negative evolution of the margin in the gas segment when compared to last year. The evolution of the integrated business in other countries was positive for around EUR 100 million, thanks to the strong performance in Latin America on the back of higher renewable production compared to last year, mainly in Chile, and the contribution of new installed capacity, both in the U.S. and in the LATAM. The Stewardship business model recorded a negative change year-on-year of around EUR 200 million, as I explained, also commenting the previous slide. Let's now move on page six, talking about the Grid EBITDA performance that stood at EUR 6.1 billion EBITDA, up by 15% versus previous year. In Europe, this EBITDA reached around EUR 4.4 billion. In detail, in Italy, the performance was supported by higher tariff, mainly associated with RAB growth and indexation to the CPI. In Spain, EBITDA grew by EUR 200 million, thanks to update of distribution remuneration for 2017-2019 period, which generated a negative impact in 2022. Finally, as part of this growth, we accounted for the recognition of the higher cost recorded last year in Romania to cover network losses. Excluding this item, Romania Grids proved almost flat year-on-year. Talking about Latin America, the contribution of the growth was around EUR 100 million, backed by the positive impact from tariff adjustment in Rio, Ceará, and São Paulo, and higher volumes distributed that more than compensated the negative perimeter effect. On a like-for-like basis, the growth of the EBITDA in LATAM would have been around EUR 370 million. Let's now move on to slide eight, where we have the analysis of the results with the related to the earnings. The ordinary group net income came in at EUR 5 billion, increasing more than 65% versus last year, driven by the strong EBITDA performance already commented. D&A are almost flat versus 2022, as a consequence of higher amortization and higher level of investment, offset by lower level of bad debt provision due to better credit collection and also lower level of turnover. Net financial charges increased by around EUR 600 million, mainly due to the worsening of interest rates environment, which affected a 25% unhedged portion of our debt. Income taxes increased due to the taxable income expansion, boosted by the operating result, while the tax rate proved to be almost stable. Finally, the minorities were driven by the rebalanced geographical mix. I move to the cash flow now on slide number nine. Funds from operations stood at EUR 10.7 billion, showing a sound EUR 9.5 billion increase versus September of last year, thanks to the improvement in working capital dynamics, which are now progressing towards a normalized trend. Cash flow produced in the period is more than doubling the average of the last four years and represent a record high in absolute terms. Worth to highlight that working capital is in line with the historical evolution and recovered EUR 7 billion versus previous years. In the fourth quarter, we expect this normalization trend to be confirmed. Looking at the moving parts in the third quarter, cash out for taxes was EUR 0.3 billion. As discussed in previous call, just keep in mind that in the first six months of 2023, there were the impact of the lump sum payment of the solidarity contribution in Italy tax, the solidarity contribution tax in Italy, for around EUR 600 million. While financial charges paid in Q3 stood at EUR 0.9 billion, also in line with the third quarter of last year. I'm now moving on to page 10, with the net debt evolution. The net debt at the end of September came in at EUR 63.3 billion. Over the period, as discussed before, funds from operation contributed positively to the net debt evolution for EUR 10.6 billion. Net CapEx amounted to around EUR 9 billion, that is split in EUR 9.4 billion gross investment deployed, reduced by the grants contribution over the period. This resulted in FFO after CapEx positive for EUR 1.5 billion. Total dividends amounted to EUR 5.1 billion, as in July, Enel S.p.A. paid the final dividend installment for this year. Active portfolio management landed at EUR 700 million, as the bulk of the deals announced so far have yet to be cashed in. I want to stress here that taking into account the EUR 2.6 billion already cashed in from the deals closing after September 2023, the cash generation for both organic and non-organic activities cover almost in full both CapEx and dividend. This is an equilibrium that we aim to maintain structurally going forward. Adding the expected cash in from deals signed and their respective agreed financial terms, the pro forma net debt would have stood at around EUR 57 billion, down around EUR 3 billion versus the full year 2022, despite a negative impact of EUR 1.2 billion deriving from non-cash items, such as foreign exchange dynamics and leasing accounting effects. Let's now go more in depth on page 11, on the execution of the M&A plan. As of today, we have closed or announced deals impacting positively our net financial position for around EUR 6.5 billion. Deals already closed account for EUR 2.8 billion, while around EUR 3.7 billion have been agreed and still to be cashed in, pending final, final regulatory approvals. I again underline that the EUR 2.8 billion is just partially reflected in the net financial position at 30 September 2023, because we cashed in EUR 2.6 billion after the closing of the nine months results, but before this conference call. So this is cash in our accounts. I'm referring to the EUR 2.8 billion, just to be clear. In the nine months, the EBITDA contribution associated with the asset disposed or to be disposed totaled around EUR 800 million, as you can see in the page, page 11. And now, finally, we move on, page 13, where we have the update of our full year guidance. As shown in this, in this slide, the new guidance range for ordinary EBITDA is set to be at EUR 21.5 billion-EUR 22.5 billion, while the net income target moved to EUR 6.4 billion-EUR 6.7 billion. These upgraded targets are a function of a stronger operating performance in Italy, where the retail margin improved sensibly and a higher contribution of the networks division. Having in mind, our Capital Market Day in two weeks, in slide 11, you could see the impact of the nine months EBITDA of announced disposal, while in the annexes, you can find all the building blocks to calculate the clean baseline for setting the group's like-for-like performance into 2024. On the back of this strong and improved operating performance, we can confirm a net debt EBITDA ratio at 2.4, 2.5, calculated on a pro forma basis, taking into account the deals closed that have still to be cashed in, the deals announced still to be closed, and the ones that are in advanced phase of negotiation. We will update you on the disposal plan and associated impacts in just two weeks, so please bear with us. Let's now share some conclusion. The strong set of results achieved in the first nine months of the year are a clear evidence of the focus in our management as on delivery, improvements, and execution. A solid cash flow generation is, to us, a founding brick of a resilient company that aims at creating value for shareholders and more in general, for all of its stakeholders. Ongoing progresses on disposal are set to simplify the group's asset base, supporting our goals of returns, maximization, reduction of risk, efficiency, and accountability. Thank you for your attention, and let's now move to the Q&A section. Thank you, Stefano. I'll be your voice, as always. Thank you for all of the questions submitted. In light of the upcoming Capital Market Day. We will be taking only questions on the content of the presentation we just shared with you. We received a number of regulatory and political questions that, I do apologize, but will be answered in a couple of weeks. So let's start with the set of questions that pertain the guidance. 2023 upgrade guidance on EBITDA and net income. Can you walk us through the moving parts to reach full year targets? Well, considering the performance accrued in the first nine months, as shown in the... As you can see in the slide, considering the performance accrued in the first nine months and the quarterly progression, we expect an EBITDA in the last quarter of, let's say, at least EUR 5 billion, with a clear upside potential, as there are some moving parts which are clearly supportive to the results. First, the integrated business that we continue to see having a positive performance, both in the renewables and retail. The grids performance is solid, consistent, and visible, so we do not expect any change in the trend that we have accounted and recognized in the first three quarters. Finally, in the stewardship business unit, let's say, let's call it this way, we will account for the base of positive impact of the Greece deal already closed, announced, closed, cashed, and so on. On the other side, coming from this positive trend, we have to keep in mind that there are also some points that may play out differently. For example, hydro and regulatory or fiscal intervention from governments. We know that we are still working through a very volatile environment with some political and macro issues still very relevant and pending, so it's in our duty to take also into account these variables setting our guidance. Okay. Next, is still on the guidance. In the last quarter of 2022, you generated around EUR 7 billion of EBITDA. Why this year you expect only 5-6? What are the main moving parts? Yeah, again, I think part of the answer was already answered. I think that we have also to consider that last year, in the fourth quarter, there were significant, let me say, one-off accrued results related to stewardships and so on. So I think that now we have to... A better view, a better forecast, looking at the resilient and consistent performance of the 2023 quarters. So starting from, again, this EUR 5 billion minimum performance expected, I think that comparing to the last quarter of 2022 is not the proper way of having a direction of what we can expect for the full year 2023. We have a number of questions around the Net Debt for full year. Why you are not sharing the level of Net Debt for full year? What is the Net Debt EBITDA target for full year on actual non-pro forma basis? What are the transaction? I'm packing all of them expected to be completed by year-end. Why what what do you expect- A lot ... Net Debt to be by year-end? So lots of question around the Net Debt. So I completely understand the question. So, let's say, to be very direct, if I had to project the net financial position without having a EUR 12 billion disposal plan targeted last year, it would be very easy to have a very simple, and, let me say, current approach compared to the EBITDA net income. Having, let me say, significant moving parts related to the disposal plan, as you have seen, there are deals that we have closed four months ago that we do not see any critical elements today for being cashed in, but we cannot say that it will be cashed by the 31 December, because it's depending from the final stage of a regulatory approval, and that depends from the authority in Latin America. Again, there are deals that we are, in these days, still negotiating, so we have decided to share with you the most updated figure in terms of both reported and like for like pro forma net debt expectation, taking into account all the last updated negotiation impacts related to the M&A in two weeks. So, as I said before, please bear with us. This is to give you a more updated figure, not to have some figure that we don't want to share. We want to share the best figures, and I think that in two weeks, having also the CEO with us, will be the proper moment to share the last figures, the best estimate available. I would one small follow-up on the guidance of EBITDA, which is just coming through. How much of the guidance increase is due to the improvements of business, while which part is for keeping the disposals for longer? ... the, it refers to the, the EBITDA- Increasing the EBITDA guidance. No, just a small part. Honestly, as I said before, if you look at the disposal, you have into your accounts the impact of Romania, and we have put the Romania EBITDA impact in the presentation. Regarding Ceará, this was not. It's what is important, this was not shared with the market, and this is not a compliant last year. But clearly, the impact of the disposal plan announced last year and the related EBITDA impact was not all happening starting from the 1st of January 2023. So, for example, Ceará was exiting the group EBITDA that was part of the EBITDA guidance just in the last part of 2023. The same, for example, for other assets that are now part of a delay in terms of cash in. So, what is important is that you have to consider that giving a close answer is not a huge portion of the EBITDA that is moving our guidance related to the undisposed assets. Because, the timetable in terms of EBITDA impact of the disposed assets included in the 2022 guidance was just a little part, because in that moment was took into account that this business would have exit from the perimeter just in the final part of the year. I don't know if it is clear, but Monica can, Follow up later. Follow up. What is the expected level... I come back to simpler, probably, questions. Yeah. What is the expected level of CapEx for 2023? It will be, let me say, something around EUR 13 billion, EUR 13 billion. Don't ask me about the impact of the disposed asset. No, there is nothing about that. It's negligible. It's negligible. Can you elaborate on financial expenses for the nine months and the projected trajectory to year-end? But now, as you have probably seen, in this quarter, we are now at the same level of the third quarter of 2022. What does it mean? That we have reached, let me say, the new normality in terms of cost of capital, meaning that we do not expect an increase, so now we expect to have clearly having the same level of gross debt and net debt, and the same level of variable and fixed part of debt, we may expect a stabilization, looking at the full year 2022 of the cost for. 2023. 2022? 2022. Sorry, 2023. I think we answer all of the questions regarding the guidance, if I'm not wrong, otherwise, we come back later. I move into a set of questions pertaining to the business. Can you provide an update on hydro levels across the group, and how they compare with your plan assumptions? Can hydro be an upside versus plan? But then, don't go into much details. Let's say that the hydro level now seems to be a very positive news. But let me say, if you look at the last three years, we are now, let me say, stabilizing at, let me say, again, at normal level of hydro. So, this is part of what we are calling a normalization of the profit rising from renewables and also from when we refer to the customer base. Italian EBITDA. What is the expected EBITDA for full year? For the renewables, do you see the possibility of a return of the Clawback mechanism? Oh, very good question. As you have seen, that we have 300 million of EBITDA accounted, let me say, reported for the nine months. This clearly show a strong recovery when we compare to the first half where we were affected by the clawback. Clearly, in the nine months, that was accounted for almost EUR 400 million in the nine months, 100% related to the first part of the year. In this moment, not having a regulation that ask us for accounting or booking for the clawback, this is not included in our results. As I was saying before, our full-year guidance takes into account a proper, let me say, protection from any potential impact arising from changes in the political and taxation framework all around the world, not just in Italy. An analyst is chasing another question on guidance, which I was leaving outside the list. Can you elaborate on why the EBITDA guidance upgrade is EUR 1 billion, while the net income guidance is upgraded by only EUR 300 million? But it depends on the mix of the business, not just having into account the historical performance. Clearly, I understand your question, that if you make the proportion, you will have an impact of EUR 300 million, that is 30%. That is, let me say, something below our historical performance, so we may expect to have something positive, take into account that this is the result post minorities. So you have also to take account into minorities, and then you have to take into account the different level of probability that we are associating, for example, the political scenario and the decision that can be related. By the way, let me say, if you look at the ratio, and Monica can help me because it's part of the story of the industry, the ratio, I think, that in the past was in the range of 30%-40%, so we are not so far from the historical average. Average. Okay, I think that the... Where I was? Retail. So a number of question about retail, increasing competition, how churn rate and bad debt progressing, which level you forecast, for year-end, for both? Now, first of all, keep in mind that the churn clearly related to the situation that we have arising from the commodity price and what happened in the retail price, the churn in Europe, all across Europe, have a negative impact for the industry. Don't forget that in Italy and in Spain, our performance is, in terms of churn, best in class, so we have an impact. Our impact was the impact of an industry, is not a company-specific issue. Our plan, again, without anticipating nothing, will focus strongly into this new normality, meaning that we expect the competition in the retail market, not just for the regulatory changes, but for the dynamics that happened in the last two years. We require a stronger focus in retail activities, in consumer ability, in loyalty increase, in effective bundle strategies, and so on. So there was a negative impact. This negative impact was an industry negative impact. Our performance follow the industry. Our response will be part of the Capital Market Day strategy, and we'll be announcing in just two weeks. Could you provide an update on your expectations about power market liberalization in Italy? Yes, sir. Mm-hmm. Oh, I know, I know the answer. I'm quite tired. No, sorry, I'm just taking some time to recover my voice. No, you know, the Mercato Tutelato story that is several years. Just to remind, it, it's easy for us that are Italian, but along this, this year, 100% of the business segment is now liberalized. We have still this part of the consumer market that have to be liberalized. What we are expecting now is that, the liberalization will be in the agenda for the next two quarters, let me say. What we expect is that the continued regulated customer base will be something higher than was expected, in the past. The name is, in Italian, it's Salvaguardia. I don't know how to translate into English. It's a special- Safeguarded. Safeguarded. I don't know if it exists, regulatory speaking, in some other countries, but is the part of the customer base that will continue to be regulated. Our approach in terms of participation to these bids will not be the same of the business segment, because we intend to participate, we intend to have a, let me say, a safe and fair share of this market, also after the liberalization. But we expect this process to be confirmed along the next two quarters. Before moving to a set of question on financials, there is one on the electricity distributed in Italy, which is down 5.2% year-on-year, in Spain, up 1.9%. The question is, if these volumes changes have any impact on EBITDA? No, not because of the, let me say, the regulation. What is important is also to understand why there was this different behavior in Italy when compared to Spain. You know that in Spain, there was a strict control of the tariffs that do not happen in Italy. So the consumer response in Italy was to save the maximum they could in terms of energy consumption, while in Spain, this was... I wouldn't say that this not happened, but was less strong than in Italy. But again, coming to the straight question, there is no impact for the structure of the regulation. Okay, I think we have three question on more on the financial slash FFO. Net working capital, can you provide some details on current levels, working capital and expectation into year-end? ... No, as I said before, that the, we expect a normalization of the working capital. This is because what was the main topic that was, let me say, impacting the year 2022, 2023, change in net working capital that was regulatory driven, is now being completely reabsorbed. So we expect, let me say, the, let me say, the, the business normal effect. That means, let me say, a normalization of that spiking impact in terms of net working capital in our FFO. Okay. We have a couple of question on the financial strategy. Recently, there have been a number of press articles about the fact that the Sustainability-Linked Bonds with observation data at year-end could miss their targets of emission reduction. Could you provide some update? Let me say, generally speaking, talking about... And again, this will be part in two weeks of a deeper analysis presentation. In terms of, let me say, issue of bonds, we do not expect to have any change. I think that this was another question that we are now looking at received. There is no reason to change the way in which we are accessing the capital market, that for us is becoming a mainstream, but also for many issuer and investor. Regarding the emission, it's clear for everybody that what happened along 2022 - 2023 was an extraordinary situation. As everybody knows, we were part of a mandatory behavior in terms of energy production, in terms of coal, also inventories, so this clearly affected our emissions. We don't want to escape by any, let me say, financial impact in terms of bonds. What we will do, we will do the proper calculation, we will do the proper normalization, but if there is no waiver, we will not challenge, we will not fight the waivers if it is not possible. We do our duty to help the country, to work for the independence, and to sustain the energy market in that period. If this had an impact in terms of bond regulation, we will face this impact. We don't want to escape from this. But again, let us doing our work on making the proper calculation, but again, we will not escape from any discussion, open discussion about this topic. I think we cover most of the question we received, if not all of them. I just need to pass to you one question, which is probably ending swiftly the call, which is: May we ask whether the dividend policy will also be addressed, updated, guided at the CMD, please? Sorry? May I ask whether- No, no, sorry. ... the dividend? What, what? No, again. May I ask whether the dividend policy will also be addressed, updated, guided at the CMD? Will be for sure guided. Updated, who knows? Okay, I think this question is closing officially the call. For any unanswered question that I might have missed, we will follow up. Our team is, as always, at your disposal. Thank you so much. Thank you. Bye-bye. See you in two weeks.