Good day, and thank you for standing by. Welcome to the Enel Q1 2024 Results Conference Call. At this time, all participants are in listen-only mode. And now, I would like to hand the conference over to our first speaker today, Monica Girardi. Please go ahead. Thank you. Good evening to all of the people connected. Welcome to our Q1 2024 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 let me now hand over to the CFO. Thank you, Monica, and good evening, everybody. Let's start with the highlights of the period. The year kicked off with a strong performance, with EBITDA up double digit compared to last year and reaching EUR 6.1 billion, while net income increased by a sound 45%. These remarkable results were driven by a solid delivery across all businesses and geographies, as I will detail later in my presentation. FFO is robust and accounts for EUR 4.4 billion, with an EBITDA conversion at around 70%, supporting the positive evolution of credit metrics already observed in the second half of last year. The execution of our efficiency program is well on track, thanks to the no-freeze approach we set, preserving the value of the distinctive assets of the group, while firmly address any initiatives not in line with our core business and priorities. At the end of March, we reduced the addressable cost baseline by EUR 300 million compared to the 2022 baseline. The solid operating performance, the strong FFO conversion, and the progress made on efficiency provide ample visibility on the evolution of the year and support on the 2024 targets. Let's now dive into the operating delivery. I'm now on page three with the main business KPIs. Let me just highlight some of the most remarkable KPIs achieved. The continued effort on grids extension and performances is visible, with rev per customer increasing by around EUR 30. Renewables production is up by almost 4 terawatt-hours, thanks to the improved hydrology in Italy and Chile, and the continued path towards energy transition, with renewable capacity increasing 4 gigawatt compared to the Q1 of last year. As a consequence, emissions-free production accounted for more than 80% of the total, remarkably up versus the 70% of 2022... 2023, sorry, while renewables production on total increased by 12 percentage points. This progression on industrial performance resulted also in a positive impact on our customer segment, as in 2024, we have been able to cover an increasing share of sales to B2C customers, with the opportunity to improve our competitive position through the offer of an affordable cost of electricity to our customer and a more effective use of our industrial resources. The operating delivery translated into a strong growth in EBITDA, and I'm now moving to page four. Ordinary EBITDA is up by 12% or more than 20% versus previous year, excluding the impact of the asset we disposed last year. The operating growth resulted from a positive performance on the grids on the back of constructive regulatory updates and the strong results of the integrated business, thanks to the dynamics that I will comment later. I want to highlight that from a geographical perspective, European countries represented the bulk of the growth, with EBITDA in these regions up by 26% versus previous year. I will now move to the results analysis, starting from the networks. Grids EBITDA increased by a sound 11%, net of asset disposed in 2023. Italy benefited from the mentioned constructive regulatory updates, both on inflation and WACC, and the projected increased CapEx allocation. Spain recorded a slight increase year-on-year, led by the positive impact of previous year settlements associated with quality premium. In Latin America, the performance was mainly driven by the tariff adjustment in Argentina, only partially offset by the impact of inflation in the cost side. Worth to highlight that the EUR 2.1 billion of EBITDA for the period include also EUR 60 million associated with the Peruvian grid under disposal. Let's now continue with the evolution of the integrated business, and I'm on page six. The integrated business is strongly up year-on-year, increasing around EUR 900 million, excluding the perimeter effect of the asset disposed in 2023. Renewables contributed the most, thanks to: the mentioned improved hydrology, mainly in Italy and Latin America, the growth from new capacity added along 2023, the removal of the clawback measure in Italy, and the positive impact compared to last year of hydro short positioning. Finally, again, in Italy, the progressive reduction in the mix of sales of the 2021 share. Another relevant topic is represented by the decrease of the thermal generation, associated with the lower production from coal and gas plants as a consequence of the recovery of hydro and the end of the mandatory requirements on coal production in Italy. The customer segment increased by almost EUR 400 million, thanks to an improved marginality of the free market segment in Europe, mostly concentrated in Italy, where it's worth to mention that, the customer bill repricing in 2023 only started to be effective from the Q2 of last year. I will now dive into the evolution of, Global's business right in the next quarters of the year. I'm on page 7. We had a strong start, but it's important to highlight that quarterly results included around EUR 300 million, which cannot be considered, which have to be considered temporary, out of which EUR 200 million, as I mentioned before, is associated with the contribution of Peru that was not included in our full year guidance when we presented the 2023 baseline. In the next months, we expect grids to have a linear evolution along the quarters, supported by the existing regulatory frameworks. In the integrated business, we will contribute for around EUR 11 billion in the nine months, on the back of a growing asset base and improved marginality of the renewable generation compared to last year, on the back of an optimized and more integrated energy management. Retail segment is set in line with plan assumption that included a progressive, a sustainable normalization in EBITDA. And lastly, a reduced and expected EBITDA contribution from the thermal generation. The expected trends I mentioned are completely in line with actuals and with our bridge EBITDA explanation presented last November in the Capital Markets Day, when we were targeting and explaining the 2026 EBITDA guidance. I will now provide an update on the cost reduction program that is on page eight. The effort on cost reduction is visible across the board and is rolling out better than expected. In just nine months, we were able to address around EUR 300 million savings compared to 2022, covering 30% of the EUR 1 billion target shown in November. Half of the cost reduction has been recorded at holding level, where we have rationalized the G&A expenses. The other half is associated with projects across businesses and geographies, such as, to give an example, in the U.S., where we have implemented a restructuring program aimed at optimizing running and external costs in the region, not related to the renewable generation management. Moving now into the earnings evolution on slide 9. Ordinary group net income increased by almost 45% versus last year. D&A are almost in line versus last year, while financial expenses decreased by EUR 200 million year-on-year. In terms of mix, in the financial expenses, we have, comparing to last year's, the charges on debt, on gross debt, mostly in line, also because, we have reported, basically the same level of net financial position, in the last, in the last 12 months. In other financial expenses, we have booked a positive effect of hedges, that is a non-cash item, so we will see this later when we will address the FFO, that is expected to normalize over the quarter if we will move back to the scenario that we projected in our Capital Markets Day Industrial Plan. At the moment, the result is related to the present situation of the interest rate and FX curve. Income taxes increase mainly on better economic results. And finally, minorities reduced compared to previous years, thanks to the geographical mix that is more skewed towards Italy. Cash flow, that I have anticipated, is on the next slide. I already represent the EUR 4.4 billion, a result that is up by around EUR 800 million versus the Q1 of last year, confirming our focus on improving group's cash generation. Also, in this case, we will look at the moving part of the evolution in the Q1. Working capital was negative EUR 200 million, but improved EUR 500 million when comparing to last year on the back of the positive evolution of the underlying business, the reabsorption of the negative impact associated with government measures, and the positive cash CapEx seasonality. Cash out for taxes was EUR 0.2 billion, broadly stable versus previous year, while financial charges were affected by the booked increase in interest rate and... Sorry to make adjustment in the discussion, but last year, the 0.5 interest expenses in terms of cash, it's not linear, also because we had a one-off of EUR 100 million related to the Brazilian M&A program. Worth to highlight that, the results of 2024 was negatively impacted by the payment of the gas arbitration in Endesa that worth EUR 500 million. Excluding this extraordinary cash outflow, FFO would have reached almost EUR 5 billion. Let's now move on the net debt slide on page 11. Net debt came in at EUR 60.7 billion, included EUR 600 million of negative impact from currency movements, which have a non-cash nature. As I said before, negative impact on debt, partially positive impact on the P&L in terms of financial expenses, both non-cash. Over the period, CapEx was fully funded by the FFO, recording a sound positive difference that worth EUR 1.7 billion. Active portfolio management was positive for EUR 0.2 billion on the back of the closing of the US solar and geothermal deal that we closed at the beginning, the early beginning of the year. No impact is accounted in EBITDA and ordinary figures for this quarter related to this segment of operation. Dividends cash out amounted to EUR 2.4 billion, as we paid the interim dividend in January. I want to stress that we have already signed deals worth more than EUR 6 billion that are still pending to be closed. On this, we are confident that the bulk of those deals will be cashed in by the end of this semester. Take into account the contribution of these deals, the pro forma net debt would have stood at around EUR 54 billion, as already presented in the Capital Market Day and in the occasion of the full year 2023 results. And now, some closing remarks. The strong result that we achieved in Q1 are supported by a resilient business model across all the countries of presence. We are well on track to deliver on all of our business plan pillars, as we will continue to be selective on our capital allocation, maximizing returns and minimizing risks, discipline on costs, and focus on financial and environmental sustainability. Our disposal plan is progressing as planned, and we will be able to cash in the most of what announced, I repeat again, by the first semester. Finally, we confirm once again that the underlying evolution of the business is strongly supporting our planned targets, and this implies an upside potential to the shareholder remuneration in terms of dividend per share, totally in line with what anticipated at the Capital Market Day by our CEO. Thank you for your attention, and move to the Q&A session. Thank you, Stefano. We have our analysts sent us a sound list of question. We will try to be as efficient as we can, packing up the topics. So one of the most popular is about guidance. The numbers in the Q1s look to be particularly strong. Can you provide the building blocks to bridge, not only by GBL, but also by region? ... So, we have, remember that we have, declined, let me say, the nine months as EUR 11 billion as integrated business, and 6 billion as grids. So we are talking about EUR 70 billion of balance to full year EBITDA generation. When we look at the countries, as per your question, we have a similar distribution, but we have EUR 12 billion coming from Europe, and EUR 5 billion coming from the rest of the world. Of the EUR 12 billion coming from Europe, we expect two-thirds, approximately, coming from Italy, and really the rest coming from Iberia. When we look at Latin America, we see a resilient deployment of the business and of the EBITDA in Latin America, with some expected contribution coming from the activation of the renewable plants in Brazil. US adding up, let me say, some incremental growth compared to what we have already observed in the Q1. Second question is on the, contribution from assets under disposals to the 2024 EBITDA. Yeah, sorry, I have the microphone turned off. The bridge of the guidance, this is important to remark, that we provided in the presentation, is net of the announced disposal, and it's completely in line with the capital market day perimeter and targets. This is also because, and in accordance to accounting standards, the 2024 ordinary result, we report the EBITDA from asset disposed until the date of the closing. As of today, we have normalized the Peru results, in the Q1 for approximately EUR 0.2 billion. If we consider the expected closing date of the entire country, remember that we have generation and distribution as two separate deals, we expect—we may expect, we may guide EUR 300 million-EUR 350 million EBITDA on top of the Capital Markets Day guidance, meaning EUR 200 million that we have excluded in the bridge, plus EUR 100 billion, or the number that we will present on top of the bridge of the EUR 70 billion. The third question is on the cost baseline reduction. What is the projected level of savings to be achieved in 2024? And can you exceed the targeted reduction over the planned period? Now we, being OpEx, we have in some cases more visibility than we may have when there is other third parties involved. So I would say that today we have a very good level of visibility to reach for 2024 a EUR 600 million results. But it's a matter of fact that efficiency and cost effectiveness is a recurring and continued effort, so we will always try to do more. At the same time, at this stage, we will feel confident on the saving plan, and it's early, but not unfeasible, to increase the target regarding the current year and looking forward. So any update will come probably in November. The fourth question is about the FFO, and I would say generally, the underlying moving parts, including the working capital. Improved FFO conversion continues in the Q1 after the full year 2023. You guided for an expected 60%-65% conversion. Do you still see this as a reference level for the full year? Yes, for sure. Talk about FFO conversion is always difficult to have this discussion, explanation, along the year because there are impacts of seasonality affecting, especially the working capital and the tax settlements due date. We have managed, and continue to manage, our group operation, also trying to optimize and neutralize working capital and provisions swings. As an example, take into account what I mentioned before, that the Qatar arbitration in the Q1 have a negative impact on working capital of EUR 500 million, because it was included into the EBITDA of 2023, but paid on January 2024. Another important point that is that in the Q1 of each year, and also in the Q3 of each year, the FFO on EBITDA benefits from the regarding reduced tax cash out-... So, summarizing, we expect to confirm full year 2024 to be absolutely in line with the historical best conversion rate, and as I already mentioned, above 60%. We stay on the same topic somehow. Looks like your target of cash flow neutrality is set to be reached. Can you anticipate an increase to the 2024 DPS up to 70% of earnings? The financial sustainability is, as you know, a staple of our plan, and we have, at the same time, anticipated a step up of dividend per share in case of cash flow neutrality. And this is just applying a 70% payout ratio to the guided group net income. So what I want to reaffirm is that we share a simple and predictable commitment on the shareholder return guidance. And during the capital market day, the CEO, the CEO clearly stated that the industrial plan sets of results implied an annual increase in dividend per share. And what I can tell you today, that we are progressing well on executing this plan. It's there is another question around the plan. Still comfortable with the 2026 guidance, any relevant moving parts versus plan targets? I would say no, no, meaning, any relevant, moving parts. So yes, we are comfortable. No, we don't see any major moving parts or discontinuities versus the plan. We, you know that we share a plan that have no M&A, no extraordinary operation, no extra disposal plan for what we have, already basically achieved. So we are diligently executing on the strategy, and I hope also from the external, the results are visible and appreciable. We have a couple of questions on our retail activities in Italy. Analyst asking, what's the associated churn of the Q1, and what are the main drivers that you project for the future? Prepare for a not a short answer. But, it's important to say that the churn trend and also the churn dynamics in the Q1, but it's not something that happened in this quarter, are impacted by the 2023 turmoil in the energy market tariffs, and energy bills continue to concern the consumer and small business customer base. The whole market suffers from an extraordinary client's proactivity in taking action to reduce the energy bills after the spikes in the first half of last year. The Italian authorities released reports, the ARERA, shows that the entire market experienced a spike of churn that, in accordance with the energy price trend, is expected, at the same time, to normalize along 2024. Having said this, we are not on the wait-and-see mode. We have set, as we announced, a new management team and organization for the global retail activities. We have presented, launched, and we are commercialized a completely new offer, and through a new sales channel strategy, we have introduced customer based management tools and proactive customer base repositioning actions. In some cases, this is also important, limited by the present regulation. And lastly, we have been awarded, as announced, a significant and valuable share of the regulated customer bid, or sorry, the consumer customer bid by ARERA last February. That will be effective from the first of July. Summarizing, you know, because I was going for maybe too long. Our commercial strategy on new customer addition is already playing out, and with the present market scenario, we are confident to set a normalized churn rate, and a positive customer base trend, by the year end. You probably partially already answered the next one, which is about the competition. If we are observing a competition which is becoming more aggressive, and how the offerings are evolving in Italy? Yes, as I said, the energy price spike in 2023 boosted competition because really it created a windows of opportunity in tariffs, and also taking benefits for the constraints that I mentioned before in proactive constraints and temporal lag in active customer base management. What is important is already now the retail market is set with offering that are at tariff pricing that imply fair margin and more rational competition. ... We move to another part of the, integrated margin. Q1 hydro conditions, really strong. How do you project them for the full year? Do you project a big increase in hydro? Yeah, the Q1, after a record low resources last year, we experienced a record high resources this year, starting from the end of the quarter. This is important to say because you saw a very huge spike in the comparison between 2024 and 2023, but this is related to the 2023 results. The very strong resources in hydro is something that starts to happen at the end of the quarter, and in April is still on, let me say. This happened also in South America, especially in Chile. This is not something that we have complete control, so we cannot take this as a fact that is an upside, definitive upside for the year. So we will update in the next quarter, but it's not 100% manageable from our side because it depends from natural resources variability. We received a question on financial expenses while the presentation was ongoing, so I think you already answered to this one, but just to make sure- Let me make sure. ... the message was clear. Financial expenses are low versus expectations. Is this underpinning a bit versus your estimate for the full year? No, it's important to- To repeat that again. To repeat, and to also to guide you to look at the cash financial expenses, because, the answer depends, if you focus on the cash, financial expenses impact, meaning the FFO or the P&L impact, meaning a targeted, net income. The P&L financial expenses, as I said, were impacted by the mark to market on currency and interest rates hedges. The reversion of this accounting effect, as I said, will depend, on the curves along 2024. In the FFO, we have a more organic figure, so looking at cash financial expenses, we don't see any remarkable deviation from, the trajectory underlying our guidance for the full year. I think we actually completed all of the questions related to the Q1 and the business. Maybe just the last one. An analyst is asking: What kind of exposure to the fiscal credit for the Superbonus do you have in case of government retroactively apply extension from the credit from four to ten years? We have. We managed these topics last year. We have a very limited exposure on this, both on the financial and on the economic side. So it's not a relevant topics in our future projection and expectation. Okay. As always, we manage discontinuities each quarter, so it's not something that worry us today, considering what is the question. Okay. Okay, we move to a little bit of various topics, a bit unrelated to the numbers. The first one is, if we can share any news about the grids re-regulation in Spain. Yes, in Spain, if we say about evolution, evolution, will, let me say, start from December of 2024, if we look at the agenda of the Spanish regulator. As you have heard, and as everybody's discussing there, there is a very strong priority, and this may be anticipated. That is the definition of the regulatory rate of return for the next cycle that starts from 2026 to... and will be applied until 2031. As there is a clear common need in the industry for a fair and reasonable return on capital, and this have to come through a change of the existing rule scheme of calculation. But it's something that, again, is a real common need in the industry. In addition, we expect a new framework to address another very relevant topic that is the upgrades in capacity, quality, and resiliency of the networks that support the future energy transition. In one word, the scheme that we have discussed, and that we are applying, in Italy. The preliminary discussion, because we are in this stage today, are positive, but it's really early to make any assessment and economic consideration at this stage. We have a couple of question related to the SLBs. People are asking if you we can share a bit of framework of what happened in 2023, and what's the financial impact associated with the step-up in the coupon? But, first of all, it's important to remind that the Scope 1 emission achieved by the Enel group in 2023 was well below the level in 2022. Not enough to meet the target set for last year. As you probably know, I expect that you know, the miss was completely due to non-predictable exogenous factor, where a very relevant weight came from the ARERA coal maximization decree. Now, that was the one that in Italy, power utilities were required until September last year, so for Q3 of the year, to maximize the coal-based power generation in order to save gas and contribute to the energy system security. We were already aware of this trend when we were projecting our industrial plan, so it's 100% included in our projection, the step-up related to 2023 target. At the same time, I want to stress that we want to continue to play a leading role in the decarbonization. This is absolutely clear, but we will grant, at the same time, many... Let's hope that this will not happen again, if we consider the global impact of the Russian-Ukrainian political crisis, but we have to grant also our mandate to secure the energy system in countries where we operate. Okay, I think the last part of your answer is already covering the next question, which was on the environmental strategy of Enel, going forward. We can move on to the next, which is on the Brazilian grids, and in particular, on São Paulo, if you can share how the situation is evolving. Yeah. As you probably heard, the situation is now recovering. Clearly, it was also a media crisis. Remember that this was related to emergencies registered in November last year for the extreme weather condition in both São Paulo and Rio de Janeiro. If we look at the results in the Q1 2024, these are completely in line with expectation, both for financial results and industrial performances. At the same time, we have all operation and organizational efforts devoted to improve technical and commercial KPIs, reinforce the resilience of the grids, strengthen the industrial capability with internal and external resources. In parallel, we are also working on the corporate and institutional relations area, and specific institution and communication plans have been launched to reinforce and give also evidence of the commitment of Enel Group in Brazil, and especially in the grids operations. Completely different topic. Analysts are asking about the AGM agenda. We saw that Enel will present to the AGM the renewal of the share buyback program. What are the conditions to activate it? Well, first of all, it's important to remind that the share buyback program is the renewal of an existing and absolutely appropriate instruments to deal with different objectives that are declined in the proposal, and there is no exception compared to the previous ones. If some conditions occur, specific activation of the share buyback program will be submitted to the board of director and communicated to the market before execution. We move to a set of questions, Stefano, on M&A. The first one is on the Peruvian disposals. If you can share an update on the timing of the closing. Yes, as I said before, in the presentation, we have two different deal. We knew, or we learned, in my case, that the distribution being a regulated it's a strongly regulated asset, so that was the deal that was signed before will be closed before the end of the quarter. It's important, we do not make specific update in the presentation, but all the authorization were granted in Peru, so the update is all the authorization are granted in Peru. We are now waiting the process, the final process, in China. The buyer is a Chinese company, so they have their process there. And so we expect in some weeks, let's say by June, for sure, to have the deal finally closed. Generation that have been signed later will be closed earlier. I think it's a matter of days. Okay, the next one is on the UK. Press speculates on a potential acquisition of grids in the UK. Can you share any comment? What's the underlying thinking here, and can we expect other non-organic repositioning? But as also the CEO, we do not comment on express speculation, as I could say, a code of conduct, you know, because... We will never do it, by the way, because this behavior is set to maximize the effectiveness of our position in any potential deal, relevant or relevant. We came from a very tough disposal plan, where we have, on the other side, a counterpart that we're absolutely aware of our intention to sell. So for sure, we will not disclose any comments, clearly stay in the mandatory requirements, if something happen, one day, so. Okay, the next is on the battery storage. We continue on the deal closing topic. If we expect the battery storage deal in Italy still to be finalized by the first half of this year? I think this will be, maybe the fastest track, M&A project, of the program. So again, it's... I think that in June, finally, we will change, part of the presentation and the speech because we will have, let me say, finalize the most of the 2023, and also announce in 2024 M&A program. So again, to be clear, it will be it is completely in line, and we expect to close, as announced by the end of June or maybe sooner. If I'm not mistaken, we are landing to the last one. And the last one is about the sale of grid assets in Italy. If we decided upon the accounting of the capital gain, if it's gonna be in the ordinary figure, and if we are envisaging the payment of an extraordinary dividend. I think that the question may be answered reminding that this deal, not declined, as for clear reason, was included in our M&A updated plan communicated in November. You remember that there was asset swap, generally. And it's not a decision that we make on our account, the operation. It's, let me say, the accounting standard also respecting what was the historical application of criteria and methodologies. What is really important to state that the deal was considered for the structure that we were discussing in November when we preserved the plan, and we have finalized the signing date to be reported as a reported capital gain, and nothing had changed compared to this. To the structure of the operation, something have to change in the structure operation. It's not a decision. The decision may change. I don't think that it will change. There is no discussion that drive us to change that. But what is important is not that we decide one day. In the plan, we have no extraordinary relevant topics. That is, we may have EUR 1, some million because we sell some pipeline in US, but I don't consider this extraordinary. This is part of ordinary course of the business. Okay, so I think we have completed the list of questions that were sent by our analysts. So with this question, we can end the call. The Investor Relations Department, as always, is available for any follow-up call from now on. Next stop, July, with the first half results. Thank you, everybody. Thank you. Thank you. Have a good one.