Summary of Edenor Q3 2022 Earnings Call

1Key Financial Results and Metrics

Revenues: Decreased by 11% in real terms compared to Q3 2021, primarily due to the lack of Value Added Distribution (VAD) adjustments.

Gross Margin: Fell to ARS 14,730 million, a 34% decline year-over-year.

EBITDA: Reported a loss of ARS 2,703 million, attributed to reduced revenues and increased operating costs.

Net Loss: Increased to ARS 20,615 million, up 130% from the previous year, with net results showing a loss of ARS 6,082 million, a 450% increase year-over-year.

Energy Sales Volume: Increased by 3.2%, reaching 5,979 gigawatts.

Customer Base: Grew by 1.5%, totaling over 3.2 million customers.

2Strategic Updates and Business Highlights

Edenor continues to provide electricity distribution services to 3.2 million customers, impacting approximately 11 million people.

The company has improved its service quality, with key indicators SAIDI and SAIFI showing historical improvements of 19% and 13%, respectively.

Successfully completed a debt exchange for Class 9 negotiable obligations, with 77.35% bondholder support, improving credit ratings from Moody's and S&P.

3Forward Guidance and Outlook

The company is awaiting the approval of the 2023 budget law, which may lead to an internal tariff review within 90 days post-approval.

Future tariff adjustments and methodologies remain uncertain and will depend on regulatory discussions following the budget approval.

4Bad News, Challenges, or Points of Concern

The lack of adequate tariff adjustments since 2019 has significantly impacted revenue and profitability.

Increased financial charges due to debt obligations with CAMMESA and the deferral of payments are straining financial results.

The company faces ongoing economic challenges in Argentina, including high inflation (222% since 2019) and regulatory uncertainties.

5Notable Q&A Insights

Management indicated that the internal tariff review process will commence after the 2023 budget is approved, but specifics on methodology remain unclear.

Regarding the debt with CAMMESA, a six-month grace period followed by 96 months of payment installments was discussed, pending legislative approval.

The segmentation of tariffs for wealthier consumers has been implemented but does not directly affect Edenor's value-added distribution, as it primarily serves as a pass-through mechanism for government subsidies. Overall, while Edenor has maintained service quality and improved certain operational metrics, significant financial losses and regulatory uncertainties pose ongoing challenges for the company.