Empresa Distribuidora Y Comercializadora Norte S.A. (Edenor) Q2 2026 Earnings Call Transcript

Quartr
Provided by Quartr
August 11, 2026

Key Takeaways

  • Positive Sentiment: Tariff normalization continued to support results: Second-quarter revenue rose 10% year over year in real terms to ARS 918 billion, while VAD increased 20% through June versus 17% inflation. Excluding the prior-year ARS 225 billion CAMMESA settlement gain, first-half EBITDA increased 94% year over year.
  • Positive Sentiment: Cost controls and operating improvements strengthened profitability. First-half operating expenses fell 8%, supported by lower salary, pension, materials, and regulatory penalty costs, while the second-quarter collectability rate remained high at 96.27%.
  • Positive Sentiment: Continued capital investment improved service quality, with second-quarter SAIDI and SAIFI reaching record-low levels of 5.6 and 2.7, respectively. Energy losses remained elevated at 15.82%, though management said market-discipline initiatives and AI-supported inspections are helping address irregular connections.
  • Neutral Sentiment: Edenor’s bid to acquire YPF’s 70% stake in MetroGAS was accepted, potentially creating a combined utility platform serving approximately 5.8 million electricity and gas customers. Closing remains subject to regulatory approvals and a 20-year concession extension, with a mandatory tender offer for minority shareholders expected after completion; the company has raised debt to fund the transaction.
AI Generated. May Contain Errors.
Earnings Conference Call
Empresa Distribuidora Y Comercializadora Norte S.A. (Edenor) Q2 2026
00:00 / 00:00

There are 3 speakers on the call.

Operator

Good morning and welcome. This is Lucila Ramallo, Investor Relations Deputy Manager at Edenor. On behalf of Edenor, we would like to thank everybody for participating in this conference call to discuss the results of the second quarter that ended on June 30, 2026. We will also have an important recent development and advances in our effort to strengthen our positions as an energy leader. If you would like to receive our earnings release or presentation, you can download them easily from the Investor Relations sections of our website located at www.edenor.com or contact our Investor Relations team to request the documents. This event is being recorded. After the company remarks are completed, there will be a question and answer section, for which you may submit questions through the WebEx chat.

Operator

Before proceeding, let me mention that forward-looking statements are based on the beliefs and assumptions of Edenor management and on information currently available to the company. They involve risks, uncertainties, and assumptions because they are related to future events and therefore depend on circumstances may or may not occur in the future. Investors should understand that general economic conditions, industry conditions, and other operating factors could also affect the future results of Edenor and could cause results to differ materially from those expressed in such forward-looking statements. Now, let me pass the call to Germán Ranftl, our CFO, who will guide us through the presentation.

Speaker 1

Thank you, Lucila. Good morning and welcome to everyone. Your presence here is very important to us, and we hope to provide you with a good understanding of Edenor performance during the second quarter of 2026. Highlights. Regulatory framework. Before moving to the discussion of the details of our financial performance during the second quarter of 2026, I would like to take a few minutes to highlight that Edenor has demonstrated a major improvement in results over the last several years, led by a restoration of a healthy regulatory environment and a substantially improved economic situation in Argentina. These factors, combined with our focus on continuous operational improvements and modernization, have positioned the company well to take advantage of highly productive growth opportunities in Argentina. We have now completed a full year since the approval and implementation of the five-year tariff review for the period 2025-2030, including monthly automatic adjustments.

Speaker 1

In April of 2026, the five-year tariff review for 2025 and 2030 was approved, which includes automatic adjustments based on a formula for the value-added distribution amount, weighted 33% by consumer prices index and 67% by wholesale price index, plus an additional 0.42% monthly adjustment above inflation in real terms. In May of 2025, we normalized our debt with CAMMESA. Since April of 2024, we have been paying full 100% of the current monthly invoices for energy purchase from CAMMESA, and we are fully complying with the payments under our existing plans with CAMMESA that call for monthly payments over 60 and 69 remaining installments. In October of 2025, Edenor submitted the regulatory asset claim for the difference in tariff adjustments between 2019 and 2023, as calculated by independent third parties.

Speaker 1

Following up on this, the government submitted a draft bill to the Argentine Congress proposing a framework to regularize our regulatory assets for the past differences in tariffs from 2019 to 2023 period. During 2025, the value-added amount increased a total of 37% against 32% raise in the consumer prices index and the 41% devaluation of the peso against the U.S. dollar. The average monthly tariff adjustment since 2024, August through year-end 2025, was 3.1%. In December of 2025, the ENRE authorized the company to modify the frequency of meter readings from bi-monthly to monthly. The regulation aims to provide users with a clearer, more transparent, and more timely signal regarding their energy consumption. The impact was reflected in the first quarter of this year.

Speaker 1

For the second quarter of 2026, the accumulated monthly adjustments to the value-added distribution amount were 20% versus an inflation rate of 17%, and in July, the VAD adjustment was 2.95%, and in August was 1.78%. We believe that these events have positioned the company to be more dynamic, with more favorable financing results going forward. This will also enable us to continue our strong investment program and further improve our service level and service quality. In May of 2026, the government appointed the new authorities for the new gas and electricity regulatory agency, each of whom has strong background and broad experience in the energy field. The normalization of the tariff has translated into significant improvements in Edenor's financial performance.

Speaker 1

Excluding the one-off gain recognized of ARS 224 billion in June 2025 related to the CAMMESA settlement, EBITDA increased by 94% year-over-year during the first six months of 2026. The collectability rate has consistently remained high, being 96.27% in the second quarter. Financial results, revenues. Revenues in the second quarter of 2026 were ARS 918 billion, which is up 10% year-over-year in real terms versus the prior year, helped by higher tariffs and reduction in subsidies. Energy sales evolution. Edenor's total number of customers in the quarter rose to 3.41 million clients, up to 1.3% versus the prior year. This rise was due to an increase in the number of residential, medium-sized, and small-sized commercial clients, industrial, and metering system.

Speaker 1

The rise was helped by market discipline measures, including the installation of 4,863 energy meters in the second quarter of 2026, which are designed to convert informal, unreported connections into fully transparent connections in electricity distribution system. Energy sales for the quarter were 1.9% year-over-year to 5,676 GWh, driven by the impact of demand from residential customers due to lower temperature and demand from medium-sized commercial clients. Distribution margin. For the second quarter of 2026, our distribution margin rose 1% year-over-year to ARS 335 billion. And for the first six months, the accumulated distribution margin was ARS 748 billion, 7% more versus six months of 2025, due to the increase in the tariffs and the reduction in subsidies in the energy cost, which has averaged 3% per month. EBITDA.

Speaker 1

Looking at EBITDA, during the first 6 months of 2026, EBITDA totaled ARS 314 billion compared to ARS 386 billion in the same period of 2025. The decline was because of the one-time gain of ARS 225 billion that was recognized in the second quarter of 2025 that was related to the settlement agreement with CAMMESA for outstanding balances. Excluding this non-current effect, EBITDA would have increased 94% year-to-year. The improvement in EBITDA during the first 6 months of 2026, excluding the CAMMESA settlement effect, was primarily driven by stronger revenues as a result of the five-year tariff review, including the 320% initial adjustment in February of 2024, plus additional monthly tariff adjustments since then that have an average of 3%.

Speaker 1

The accumulated VAD increase in 2025 was 37% versus inflation of 32%, and from January to June 2026 period, the VAD rose more than 20%, in line with 17% inflation. Higher energy purchase cost, reflecting in the reduction in government subsidies. ARS 27 billion were recognized in June of 2026 for pending receivables from the national government under a mutual agreement based on the cost of energy consumed in lower income neighborhoods during 2024 and 2025. I would like to highlight our ongoing efforts to manage costs, where we saw important progress, which made an important contribution to the rise in EBITDA. Operating expenses for the first 6 months decreased by 8%, reaching a total of ARS 603 billion. Cost management contributed to the positive results with a focus on streamlining operations and technology.

Speaker 1

The savings are related to our OPEX review plan initiated in 2025, including the development and retirement plan aimed at promoting talent renewals and workforce optimization, which results in a 2% reduction in salaries expenses and a 37% decrease in pension plan costs. Material consumption declined 39% due to inventory management optimization. ENRE penalties were down a substantial 24%, driven by changes in evaluation mechanisms as defined by the regulatory entity and improved service indicators. Net financial results. In the second quarter, the net financial expenses declined 28% to ARS 106 billion, due primarily to a reduced impact of interest expenses on the debt with CAMMESA and the reduction of our debt obligation according to the signed agreement. This more than offset the higher interest expense on a new debt outstanding. Net results.

Speaker 1

The second quarter saw a profit of ARS 31 billion, down 75% versus the second quarter of 2025, which was due to the comparison against the second quarter of 2025 profits of ARS 224 billion, which includes the gain from the settlement agreement with CAMMESA. Adjusting for this, the underlying operating trends were positive because of the positive impact of tariff adjustments and cost reductions. CapEx. We invested ARS 92 billion in the second quarter of 2026, with accumulated CapEx for the 6 months of 2026 was ARS 167 billion. Our investment spending reflects our firm commitment to improve service quality, which is reflected in the significant improvement in our main operating indicators.

Speaker 1

During 2024 and 2025, investments were above historical average level in order to complete the construction of new substations and continue the enhancement of telecontrol and telesupervision, as well as the installed smart meters for all the large customers. We highlight our key projects that are underway, including the new substation in Moreno and the expansion of the Bancalari substation. We are also planning additional projects for 2026, including replacing the Newberry substation with the new facility and the interconnection to Colegiales substation in June of this year. We also continue to work to transform our network into a smart network by installing increasing number of remote control points, telesupervision points, as well as smart meters. These allow us to quickly resolve problems that arise in the network remotely, which we do by isolating any part of the system experience a service problem, and then reestablishing service.

Speaker 1

Excuse me, the Colegiales substation will be connected during August of this year, not June of this year. The operating indicators. Now let's look at a few of the key operating indicators. Energy losses. Our energy losses for the second quarter of 2026 were 15.82%. Reducing energy losses is a top priority, and our multidisciplinary teams are working constantly to find innovation ways to combat energy losses. These efforts are complemented by our market discipline initiatives that are aimed at curbing inefficiencies and irregularities. Also, analytical tools powered by artificial intelligence have improved inspection efficiency, and our market discipline actions continue to detect and rectify irregular connections. It is important to remember that of the 15.82% total losses, a full 9.56% are losses recognized by our regulatory entity in our tariff. Quality of service.

Speaker 1

As mentioned earlier, our investment plan is continuing to contribute to improvements in our service quality by reducing the duration and frequency of outages, which have been on a downward path since 2017. These levels are and have been comfortably exceeding the levels required by the regulatory entity. For the second quarter, the SAIDI and SAIFI service quality indicators show continued strong performance at 5.6 hours and 2.7 hours average outages per client at a record low level, and down 48% and 34%, respectively, compared to the levels of 2021 a year. This recovery in service is mainly due to the strong and consistent levels of investment that the company has made over the last nine years. Investments have been focused on implementing improvements in operational processes and the adoption of technology applied to the operations and management of the network.

Speaker 1

The high and medium-term network can be operated remotely on 100%. Financial debt. As of the end of June, total senior notes plus loan outstanding was $1.159 billion, with a net debt of June 30th of $303 million. A key position over the last few years, which continue in 2026, has been improved in our debt ratings in recent years as a result of the improvement in our risk profile due to important changes in the regulatory framework. On June 26th of 2026, Standard & Poor's upgraded the company's issuer credit ratings, national scale issued rating, and global medium-term notes program rating from raAA+ to raAA-, while revising the outlook from positive to stable. On August 7 of 2026, Fix Local raised the long-term rating from A+ to AA- with a positive outlook. Also, on August 7 of 2026, Moody's upgraded company's national scale rating from AA- to A+.

Speaker 1

Financial debt. During July, we successfully executed two debt market transactions, the issuance of $213 million in Class 11 notes. In July, we reopened the Class 10 notes, bringing the total outstanding amount to $750 million. These transactions reinforce our diversified funding strategy and improve flexibility to pursue strategic growth opportunities, including the potential acquisition of 70% of MetroGAS, while we are also supporting our ongoing liability management strategy. on August 7 of 2026, we fully redeemed our Class 9 senior notes, bringing our pro forma total senior notes outstanding. As of August 10, to approximately $1.4 billion. As you know, and you can see, we maintain a very manageable debt maturity profile, with no maturities during the next year. New businesses. We want to share our vision for new businesses and how we are positioning the company for long-term expansion, diversification, and value creation.

Speaker 1

As a starting point, in 2024, the company amended its corporate purpose to provide greater flexibility and to actively capture opportunities arising from the energy transition and the broader electrification of the economy. This was a deliberated and strategic decision that opens the door to a much wider set of growth avenues. Our business development is anchored in three core drivers: capturing growth in the energy sector, expanding growth, both vertical and horizontal integration, and to continue moving towards complementary diversification. In terms of strategy, we intend to capitalize on a dynamic energy M&A landscape, leveraging the ongoing privatization program, which presents several competing opportunities across the energy value chain. We will also seek to drive synergies through integration with our core business while remaining alert to opportunities in complementary assets.

Speaker 1

In terms of scope, the sector we are targeting includes electric transportation and grid expansion, generation and storage, electric mobility, including oil and gas downstream, energy infrastructure, and natural gas distribution and commercialization. A broad and well-diversified set of verticals aligned with where we have the energy sector is heading. The bottom line is clear. This strategy is designed to deliver expansion, diversification, and value for both our investors and our clients. MetroGAS acquisition. Binding offers were submitted on July 23. Our bid was submitted together with Andina Energies PLC to acquire YPF's stake in MetroGAS, which represents 70% of the share capital with voting rights, together with a bid of 5% of the shares in MetroEnergía, a subsidiary of MetroGAS. Edenor is the one which will be acquiring 100% of the YPF participation on the sale. Citibank has been the financial advisor of the bidding process.

Speaker 1

Edenor offer has been accepted yesterday afternoon in the YPF board of directors, and the closing of the transaction is subject to the completion of certain precedent conditions, like the 20-year extension of the concession license until 2047 and other government approvals. We cannot assure or estimate when the closing and the transaction and the take of control will take place. We would not be operating the company until the change of control is completed, so the information available is limited to what is publicly available. Synergies and rationale. As we explained before, the company corporate purpose was amended to provide complementary diversification. We view this transaction as an opportunity to consolidate our position as a leading energy company in Argentina, combining its existing electricity distribution with MetroGAS' premier natural gas distribution network.

Speaker 1

By bringing together two of the largest utility companies servicing the Buenos Aires metropolitan area, with 5.8 million customers of electricity and natural gas, Edenor is uniquely positioned to unlock significant operations, commercial, and institutional synergies, including commercial operations and administration. We are strongly committed with a long-term view and vision of our business in the country, and we are committed to maintain and improve MetroGAS governance standards and quality of service according to Edenor's high-quality standards. We emphasize Edenor's deep institutional knowledge of Argentina regulatory environment and the operational demands of large-scale utility concessions. We recognize MetroGAS have a strong market position, extensive infrastructure, and a loyal customer base as a key asset that will underpin substantially growth, while the combination of both networks enables a comprehensive view of the household energy consumption across the AMBA and a platform for value-added services going forward.

Speaker 1

Edenor brings to this transaction its extensive experience operating large-scale electricity distribution network under the Argentina regulatory framework, as well as an established institutional relationship with regulators, government authorities, and key stakeholders in the energy sector, including its operational experience and deep knowledge of the AMBA market. Final remarks. We remain highly optimistic about our future. Edenor is in a solid position, benefiting from recent changes that have strengthened its financial profile and positioning the company for an extended period of positive performance. We believe we are prepared to show strong growth in the coming years. Long term, we are well prepared for the coming energy transitions, new technologies, increasing efficiencies, and environmental considerations. Edenor's long-term concession and strong market presence provide a stable foundation for sustainable growth and competitive advantage. We have a dominant market position.

Speaker 1

The company is the largest electricity distribution company in Argentina, operating under a long-term concession in the highest income and most densely populated areas of the country. Economic equilibrium was restored following the completion of the five-year tariff review, which will guide tariffs until 2030, including automatic monthly adjustments above inflation, which follow a significant tariff increase granted in February 2024, and monthly increases onwards, being of 37% in 2025 and 20% year-to-date through June of 2026. We also, as mentioned, were able to normalize current payments with CAMMESA since April of 2024, plus honoring all pending past obligations with CAMMESA in 72 and 75 installment payment plans. We have a strong commitment to excellence. Edenor has consistently prioritized and sustained a stable investment program over many years, which has contributed to a significant improvement in service quality.

Speaker 1

The company's investment program allows Edenor to maintain its leading position and to take advantage of opportunities offered by new technologies that will help us to further enhance growth opportunities. The company maintains a strong capital structure and conservative policies, supported by an almost 30% track record in international equity markets and established access to debt capital markets in the local market and in the international market. Edenor expects to take advantage of market opportunities in its distribution business, including the implementation of new technologies and improved efficiencies. We expect that once MetroGAS acquisition is completed, we will be able to consolidate and improve our position as an energy leader. We are led by a seasoned and highly experienced management team, which was able to deliver consistent improvements in the key operating indicators. Our improving financial results have improved the long-term outlook and provide more visibility for our debt ratings.

Speaker 1

Since September of 2024, the credit rating agencies have upgraded both the national and global ratings by an average of four and five notches. Our operating indicators continue to improve. Our working capital is now positive and has benefited from the improved revenues generation. In October of 2025, a regulatory asset claim was filed with the government for the past differences in tariff adjustments calculated by the independent third parties. The executive branch submitted a draft bill to Congress to propose a regulatory asset regularization framework. With this, we would like to open the call for you for questions. To ask questions, please send a written message to IR Edenor through the question and answer, identify yourself, and stating that you have a question. We thank you very much for your support and engagement as shareholders and bondholders.

Operator

Okay, thank you very much. We have some questions. Andres Jimeno from Balanz is asking, in case the Congress approves the bill of the regulatory assets, how do you expect the debt with CAMMESA will regularize? What assumptions are you working with?

Speaker 1

In case it is approved, we will be able to write off the debt with CAMMESA. In the Congress draft, the implementation also states that it is going to include the income tax effect of writing off this debt of CAMMESA. So it will improve our balance sheet, because the debt with CAMMESA will not be more in the records of the company.

Speaker 2

Just two additions. One of them is the debt to be written off eventually would be the face value of the debt.

Speaker 1

Exactly

Speaker 2

as opposed to what we have in our financial statements, which is a present value calculation.

Speaker 2

That's, the face value would be around $345 million equivalent. Second comment is that, remind that it would improve our cash flow as well, because the monthly servicing of that debt is around the equivalent of $6 million. That's it.

Operator

Okay. We have another question from Channel Call. Hello. Regarding the MetroGAS acquisition announced yesterday, Edenor remains jointly with Andina PLC. When is the transaction expected to be closed?

Speaker 2

Well, first, two answers to it. One of them, yeah. The bid was submitted jointly in our offer, jointly with Andina. That's correct. Although Edenor would be acquiring the full stake that would be sold by YPF. So in terms of shares control and cash flow as well, it would be owned by Edenor as such. Second, timing. Yesterday we signed the SPA. Then, as was mentioned, it's subject to some regulatory approval and the extension of the concession time framework. We expect this to occur before year-end, maybe towards around the third quarter of this year.

Operator

There is another question regarding the mandatory tender offer from Balanz, from Andres Jimeno, regarding MetroGAS. Could you provide more color on how the OPA or OPA from the minority shares will take place? There is another related question from Allaria on the same way. It is saying, regarding CNV regulations, will the acquisition of MetroGAS, if approved, trigger the mandatory tender offer for the remaining 30% stake in MetroGAS? Will the offer price for determined on the higher between the bid price and the 180-day average trading price? Secondly, adjusting for the fourth quarter, please ask the definition and then go to the next question.

Speaker 1

Yes. It is going to be an OPA process, of course, but that will be implemented after the transaction is closed. 30 days after the transaction is closed, we will start the OPA process. In terms of the procedure, how it will calculate it, yes, exactly, it will be the average of 180 days and the price that we have paid. That is going to be the

Operator

Yes. According to the rules.

Speaker 1

According to the rules of-

Speaker 2

Regulations of the local SEC called CNV, OPA is tender, just in case. We are going to follow the regulations that will be in place at that point, and the current ones are subject to some interpretation.

Operator

Julia also is asking, from Allaria, is asking, adjusting for the post-quarter and bond issuance and the payment of MetroGAS, what would be the pro forma net financial debt look like? We can tell how it is-

Speaker 1

As of today.

Operator

As of today.

Speaker 1

As of today, as we said in the presentation, I think it is in page 21, total debt that we have with notes is $1.4 billion, and total debt, including the bank loans, is $1.6 billion, and net debt of the company is going to be $447 million.

Speaker 2

Just bear in mind also that our EBITDA for the year not necessarily would be the linear extrapolation from what we had the first half of the year, but it is going to be, we expect, higher than the previous year, taking out the one-time CAMMESA effect.

Operator

Yes. Another important thing is that once we have the acquisition completed, if that happens, we will consolidate, because of accounting rules, and we are having the controlling stake, the numbers of Metro. So our EBITDA will be different.

Speaker 2

Yeah. Metro, as of such, bear in mind, last year had an EBITDA of $175 million equivalent. This year should be higher, as explained. Metro, as of such, has a net indebtedness of close around zero.

Speaker 1

Yes. It's positive. $45 million positive.

Operator

The first six months of EBITDA for MetroGAS that was reported last week was $100 million.

Speaker 1

For six months period of 2026. That's public information.

Operator

Yes. All the information we're talking about from MetroGAS is public.

Speaker 1

Is public.

Operator

Andres Jimeno, there is a final question from Dimitrios, from Brevan Howard, is asking, what is your refinance strategy and our priorities?

Speaker 2

For the financial strategy, we think we've raised the money to execute the MetroGAS transaction. We expect that to be closed, but we're still pending regulatory and other approvals. The other things that are under consideration are relatively minor, and we will, in the next several months, essentially, be working with what we have on our plate nowadays, which was mentioned in the presentation, the scopes there. But it won't be requiring significant amounts of liquidity other than the MetroGAS transaction. We have a relatively good profile in our indebtedness.

Speaker 2

After this, there are almost no maturities next year, and, well, there will be a rollover to some extent in 2028, but we'll improve EBITDA profile within MetroGAS, when and if we get there, given the fact that we think we can optimize their numbers and their cash flow going forward to create some shareholders' value regarding that transaction. It's basically within those lines.

Speaker 1

Yeah, we have a very good maturity profile of the debt, as you can see in the presentation, and in the chart there. We do foresee more than paying what is due this year, and then refinancing the rest of the debt in the local and in the international market in both.

Operator

But we don't have any maturity for next year.

Speaker 1

No, we haven't.

Operator

That is important. I don't have more questions. I can give you a couple of minutes if there are more.

Operator

Thank you. There are no more questions. Thank you for participating in our quarterly conference call, and please do not hesitate to contact our team of investor relations department for any further inquiries you may have. Good morning to all of you, and have a nice day.

Powered by Quartr