Grenergy Renovables, S.A. (GRE) Earnings Call Transcript

Okay. I think all of us are going. Sorry for the delay because we had some troubles connecting the [ home ] application. So good morning, and welcome to Grenergy Renovables First half 2026 Results Presentation. I am Ruben Gomez, Head of Investor Relations. And the presentation is going to be led by David Ruiz, our Chairman and CEO; Daniel Lozana, our Chief of Strategy and Capital Markets; and Maria Rodriguez, Director of the Sustainability Department. They are going to take you through our business, financial and sustainability review. At the end of the presentation, as always, there will be a conization for sell-side analysts. Please, David, the floor is yours.

Thank you, Ruben, and I'm very sorry for the delay. I will try to compress my part, so we'll leave more time for the Q&A Okay. Moving to slide -- second slide, financial highlights, things being a pretty strong set of results for first half with all the metrics growing double digit I think it's being our best half year-to-date. The CapEx close -- was close to EUR 300 million, expected to decrease significantly in the second half. I think we will be getting and receiving most of the batteries and storage for our large tenant a [ Mongolian Monteagle ] projects on our first hybrid and stand-alone projects in Spain. Net debt EBITDA reduced to 4.6x compared to 8.1% in the previous quarter. mainly due to Gabriela closing. As you know, we both -- which has both effects in EBITDA and debt deconsolidation. Okay. Moving to the business highlights. I I really want to emphasize here the fact that Grenergy -- we can see that Grenergy is a very predictable company I believe we are executing on all fronts, what we call our 3 pillars: product finance, M&A, energy and basically based on what we outlined in the business plan we presented in May last May. Energy Management, what we show here, we will get into more detail in the presentation, where we achieved in the first half some of these new PPAs already announced in Q1 2026. But plenty of new things happened in the second quarter, mainly our largest 1-terawatt night PPA closed in Chile for Elena, but also a very remarkable hybrid DTA, 350 for Gabriela Phase 5 of is of Atacama. These 2 PPAs are some of the largest we've ever closed. Our first hydro PP in the U.S. I mean, new tolling agreements 4 for for Greenbox under negotiation. Moving to financing, well new financing closed for Abide from EUR 100 million in Spain. It's a very remarkable deal. The first of this type in Spain. And business is usually still I think we're closing on large deal every port. And this time, we closed the project financing for [ Monte Agila in Petasys ], I think it's very impressive what we -- our team -- financing team is achieving. We are basically closing 1 large deal in Chile every quarter. And in M&A, very active on the buy side. We'll get into more detail. There's plenty of new staff entering in this quarter. We acquired the rights to build nearly 300 megawatts in a hybrid plant in is [ Calandra, in Andacia ] and 100 megawatts more to our portfolio of [ green box ] in Spain and on the sell side, as you know, we have concluded the closing of Gabriela, and we are expecting to deliver also our Colombian assets very soon. Operational highlights, I think, outstanding execution with 1.5 gigawatts and close to 8 gigawatt hours built in just 18 months. We are rapidly progressing in Greenbox with 10 gigawatt hours of pipeline, either under construction backlog or advanced stage. And later, we will see in detail how quickly we advance in Spain, Romania and Poland, and we are advancing in our greenfield in the 6 markets where we are. And we are looking for opportunities in the secondary market as well in some of these markets. Great news in sustainability and our new impact strategy. And I think I leave this to later will explained by Maria. Okay. Just very quickly, platform overview. Main message here, the pylon has reduced as contracted from the previous 12 gigawatts to now 11 gigawatts of solar and from 72 gigawatt hours of putting together the hybrid and the stand-alone storage to 63. This is, well, following a review, we are applying a more selective approach. So we want to prioritize those projects that are completely investable, bankable, highest quality and especially with the right executed timing. We have stressed many times a portal is the time to market. So in many cases, we prefer sourcing opportunities through the secondary market where we have greater certainty of delivery. And well, we are demonstrating this with the recently acquired 1 gigawatt in Spain and Chile. And rapid progress anyway in BESS, our portfolio, considering plants in operation and under construction; has jumped from 2.2 to 2.3 and especially from 4.5 gigawatt hours [ invest ] to 8.5. That's considering the commissioning of Elena, which you know is a large just asset today, yes. Moving to -- well, I will -- I think I will [ adapt ] this. I can get in more detail in the Q&A. It's very clear we are -- we have transitioned from a pure stand-alone PV developer to develop nearly exclusively hybrid projects in all the jurisdictions, right? And I think it's a very remarkable transformation in just a couple of years. Moving to [ Oasis ] platforms moving to Chile, I think we're very proud of what we're achieving in Chile. Our greenfield projects are progressing at a very good pace. We have strengthened our platform through the acquisition of [ new ] projects, as you know. And we continue to close increasingly important PPAs, secure financing, new financing deals every quarter, and we are rotating assets whenever necessary. So all in all, the conditions are excellent. The new administration in Chile, it is very supportive whenever we need it. They are helping us accelerate in permits, fast tracking, concessions when we need it and what we had the honor of inaugurating Elena, which is our most significant project to date and the most important page we have undertaken in the country in the presence of the [ ring ] of cash, [ Presidio ] Republic and several ministers, right? Specific milestones to voices at the Gabriela, we closed -- well, we achieved effective transfer of Gabriela, as we mentioned. We have a secure PPAs to all phases extend Phase I and [ sistema ] that's very remarkable. And well, as I mentioned earlier, we closed -- I think is very advanced the financial close of [ AcroVal ], which we hope to announce in the next couple of weeks. And we will initiate the mandate for financing Elena in the second phase of Elena. Moving to [ Central Oasis ]. I think most important news here, it's -- well, we have 2 new projects, [ Pelican and Parral ]. This is something we announced in the previous presentation. We have closed new PPAs for [ Mont agile ] and tangent. In this case, using [ G Power ] as offtake. And we have announced in the first quarter that the finance of [ Tantan ] second quarter of [ Montage ]. We are now working in a new final close for [ Pelikan ], which is Phase 5, which is also already contracted. And construction [ Penotamango, Blanton ], we expect to be in full operation as now hybrid plants before the year -- the end of the year. The battery is already on site. And [ Monte Ali ] is advancing very well, and batteries will arrive in December. Moving to [ Iberian Oasis ]. in May, we announced a target of 1 gigawatt. We expect this platform will grow even further. And so far, we have already secured. We have [ coders ] project already under construction. That was an existing project. And last quarter, we announced the purchase of a greenfield projects called [ mandal ] 100. Now we are announcing a new project of nearly EUR 300 million, which we have purchased also in [ Maria ] with excellent conditions with COD in 2028. And we have close to -- slightly more than 400 megawatts under advanced negotiations. So might announce these deals as early as November in the next presentation. And there, we will be in our -- in the target we announced in May of 1 gigawatt. And again, we will -- we believe we consider there is a great opportunity here to even -- grow even further in this platform. Important milestones. Well, we have mandated [ Escudero ] with 3 banks, and we might announce the fence close for [ Escudero ], also very soon. I think even before our next update in November. And we are now thinking in -- we are not advancing in PPAs for the new projects we are buying. We expect a large mandate for the financial or the remain of the platforms might be our largest mandate to date, close to 800 megawatts in hybrid projects in Spain with COD in 2028. In construction [ Escudero ] batteries, are expected to arrive Spain in January, and we are expecting connection in Q2 next year. Quick update on [ green box ]. It's becoming one of the largest stand-alone [ best ] platforms in Europe, right, which we currently have close to 30 gigawatt hours under development. And we are advancing very fast with 10 gigawatt hours already under construction or in advanced stage, either backlog or on BESS development. Fresh news here, projects in Poland and Romania have been advanced to backlog, as we will see later in more details. It means that we might start construction as early as beginning of next year, first projects in Europe outside Spain. So it will be a very important milestone for us. Moving to do its first project hybrid -- sorry, stand-alone production in Spain. The first one, we obtained project finance before summer and has a financial tolling, and batteries are expected to arrive before the year and expected to be in operation in Q1 next year. And again, we believe this will be the first one of many projects for Greenbox in Spain. Romania and Poland, I think it's good news because for the first time, we're moving projects to backlog in Europe outside Spain. So again, it's a very important milestone for the company, and we are getting ready for it. And well, the first product in Romania would be a break of 204 megawatts 4 hours, slightly bigger than [ Oviedo ], just to give you a perspective. And our first project in Poland, there will be many more coming up. And well, the key message here is is now that the execution now is not visible just in Spain, but also in Romania and Poland. And every quarter, we will keep adding new countries, and we will be updating our execution milestones. And just to conclude this [ part ] participation, our 3 pillars: energy management, record volumes signed in the last 18 months, as you can see on the slide, 2.1 terawatt hours contracted, 4.2 gigawatt hours of capacity with different parties of of offtakes, 24/7, purely solar, hybrid night PPAs, tolling agreements, auctions. So I think they are great is great news that we are securing different alternatives of take in the different jurisdictions where we operate. And we do not stop here. We are currently negotiating close to a terawatt hours and more than 5 gigawatt hours in most of the markets where we operate. Financing, I think I have already stressed how proud we are of the -- this is a slide we are showing just what we have achieved in the first half of the year, more than USD 600 million in finance rates from top international banks. I think [indiscernible] will be our next deal coming up in the next weeks and will add more than USD 400 million extra. So altogether, we will have closed more than USD 1 billion in project finance, just or [ LCs ] platforms in Chile only in 1 year. In Spain, again, [ Oviedo ] was the first financing for a stand-alone asset in the country. and we believe it is a very important milestone and the first of many. On Corporate Finance, we have also, as you know, last -- in the first quarter, we issued EUR 170 million green notes. And we have renewed our green notes program with a maximum cap of EUR 200 million and also our revolving facility led by [ PPA ] of a maximum amount of EUR 105 million. Finally, to conclude M&A. On the sales side, Gabriela, I think Daniel will give you more info. Well, finally, the ratio has been 1.7 instead of the 1.8 we announced. I think we will talk about the late commissioning of some large plants done in Chile. It's taken us slightly longer than expected commissioning of large systemic PV and [ best ]. And I think this is also a deal with the interactions we have with the TSO in the market. We are improving every year, but we have lost 2, 3 months on average in Gabriela and Elena according to our -- compared to our expectations. Colombian assets expected to be delivered before the year. And the asset rotation target has been achieved around 30% Remember, we announced 800 million in proceeds between 2026 and 2028. Buy side, very active. We have acquired recently in the year, in the first half of the year 1 gigawatts, 300 megawatts in Chile, 700 megawatts in Spain, and that's including a new project for [ green box ] and new projects for [indiscernible] hybrid hybrid projects. So the assets here, we will continue -- we are continuing there to be very active on both the buy side and the sell side opportunities. So I hand it over to Daniel Lozano.

Thank you, David. I hope you can hear me. You cannot team here, I don't know what's happening with the sum. But okay, let's move to financial review. First of all, in key operating financial data in Slide 21, it is worth mentioning that, well, there are some very nice KPIs in operating data. In the last 12 months, we have added 4.1 gigawatt hour of gross capacity in storage. And we have still 5 gigawatt hour under construction that compares, for instance, with 200 megawatts in total capacity installed in Spain. So you will see total production moving up as more projects are connected. [indiscernible] to add a lot of production, especially in Q4. Realized price also are moving up because also as we are selling at night, that means higher prices. Then financial Latam, maybe I explained it in the next slide, in Slide 22. Revenue and EBITDA, both were nicely impacted by the capital gain of the [ Gabriela ] deal we closed and impacted in Q2 at least 120 million of capital gain impacted in that quarter, even though there will be more capital gains up to $150 million in the next period and that created a posted revenue and EBITDA, 55% year-on-year. Energy EBITDA and revenues moving up. As I said, [ Elena ] will be an important contributor in Q4. Retail division that is [ Grower ] as more contracts are coming online in this revenue to continue to increase. You see that revenue increased to EUR 43.9 million and EBITDA to EUR 1.5 million. Then next slide, CapEx. Well, the total CapEx has been EUR 275 million, mainly concentrated in [ Central Oasis ]. We are connecting and we are working in the connection of the hybrid asset [ Tamang, Plant, Monteagle ], many of them that will be connected. In Q4. CapEx is expected to increase significantly in the second semester '26, at least that will add another EUR 600 million to this figure before the year-end. It's not CapEx, but it's related that there is a small impairment of EUR 10 million that you can see in depreciation in the P&L. As you know, we are checking our pipeline and projects time to time to see the permits are going through, the returns are where we are expecting. And well, it's not really material, but there was an impact of EUR 10 million. Of course, we are building a huge pipeline, as David explained, and the net profit of that pipeline that we are expecting to in coming years to more than offset, of course, to provide a huge net profit to offset this small depreciation. Then moving to cash flow, Slide 24. Very solid cash position at the end of the period, EUR 272.7 million, starting from beginning of the year cash position of EUR 305.4 million. So even though we have invested huge, EUR 275 million, cash position remains solid. Still, you see -- as you can see in the net working capital, there is an impact of EUR 110 million, mainly for the proceeds that of the [ Gabriela ] deal that has already impacted in Q3. Also worth mentioning that the bond and commercial paper mainly that green bond that we issued in Q1 of EUR 170 million in the local fixed income market, well, partially, we are using it to reduce short-term financial debt like a confirming letter of credit to extend the maturity of our liabilities. Then moving to next slide, leverage. So total leverage stayed at 4.6x. If you are considering the effect on Gabriela deal that has occurred in or the other assets like Colombia that will affect within the future, the pro forma leverage will remain at 3.8x and the corporate leverage will be even below 1x. So alwyas is one of the reasons, especially because of the proceeds we have received that [indiscernible] well, we have very nice market update in May, we have continued to deliver strong execution across all the business, as David explained in PPA, in M&A, in financing, where we don't believe our share price will reflect the company fundamentals. So we have included in the business plan that we presented in May, EUR 100 million for share buyback. And that's why we are launching a EUR 50 million share buyback, taking the opportunity to create value for shareholders while demonstrating our confidence in the business. So well, I'm going to leave the floor to Maria for sustainability and the impact strategy we are now having.

Thank you, Daniel, and good morning to everyone. So you may remember how in our last presentation in May, we shared that we are evolving our sustainability strategy into a more impact-driven approach. So today, we wanted to show you how we are already turning that strategy into action. We've recently launched 2 flagship initiatives that I'd like to share with you today as they reflect our commitment to creating lasting value for both people and nature. So on the social side, we have established a partnership with Chile Ministry of Energy, formalized through an MOU that we very recently signing to launch the pilot phase of [ Luc Antofagasta ], which is an electrification project for vulnerable of [indiscernible] households in the region. The pilot will include both a region-wide diagnostic and technical assessment alongside an initial 20 household pilot and will provide in this way, the foundation for future scale. On the environmental side, we are supporting the restoration of native forest in [indiscernible] National Park following the 2026 wildfires. And this restoration is taking place within a globally recognized key biodiversity area on top of being a protected area in a national park and includes the planting of 12 native species, 5 of them endemic to Chile and supported by a 3-year biodiversity monitoring program to measure long-term outcomes. It will also help restore potential habitat for threatened [ founders ] species and alternative species of conservation importance. So these initiatives mark just the first steps in delivering our renewal impact strategy, but this is only the beginning. Behind the scenes, we are developing other initiatives that will continue to strengthen our relationship with local communities and further increase our positive impact for people in nature. Thank you very much. Okay.

Thank you very much, Maria. We are now moving to the Q&A session. [Operator Instructions] So okay. First question comes from UBS Anna Web, please go ahead.

Yes. Hopefully, you can hear me okay had a few trouble connecting. But yes, one question for me on the Iberian Oasis, which seems to be moving pretty quickly. And I wanted to understand, it seems the strategy here is to buy the ready-to-build projects, which obviously makes sense given the dynamics in Spain. Just wondering, how that affects your CapEx? Like how the market is for those projects, whether there's a lot of availability and you're able to get those very cheaply or how that affects the CapEx guidance you've given for the [ soda ] and BESS projects? And how that might affect your outlook for the IRRs? I think you gave some some guidance around the double-digit IRRs. I guess that's taking into account having to buy these ready-to-build projects, but just trying to understand the market there and if that has any impact on your expected costs.

Thank you, Anna. I think it's -- well, everything is in line with what we announced in May of our CapEx of EUR 3.7 billion. And I think roughly 45% of that amount will go to Europe in 2 main growth divisions [ pipe, green box ] on 1 side, hybrid plants on the other. We are -- well, I don't want to say we're purchasing this place for nothing, but the value per megawatt is close to zero because in many ways, we're talking about projects of -- owned by developers. They have some commitments with bonds. In some cases, they have invested in some stations. But for the drastic change in conditions for PV projects, they don't want to keep going on. So the trade-off here has been we are normally just find the projects, changing the bonds. And in some cases, we are under some conditions on CPEs. We are paying them back part of the CapEx they already make. So integrated opportunity for us. It's a good way also a good opportunity for them because they're exiting in some cases, even the country. So -- and for us, when we buy the project, we immediately start the permitting for the hybridization, which take like 8, 9 months now. So once this is concluded, which might happen in Q2 next year, we may be ready to execute the projects. And those projects mostly need to be connected at the end of 2028. So there is nothing -- if there is an upgrade in the ARR, I think we are getting the projects for a slightly lower -- very low CapEx, but even lower than we initially expected. So it's a good opportunity. There are not many projects available because some projects are available, but with COD 2030, which is too late for us at this point or some projects that have no demand. It means you cannot every day then -- I mean you can hybrid the projects, but you cannot charge the batteries from the grid. So we cannot operate in many markets and the numbers don't work that well. So there are not many projects we're trying to get as many as we can. I think we're very close of achieving our gigawatt target, If we can find something else, and we can increase that target, that might be an opportunity, but we will keep you updated.

Okay. Next question from Henry Tarr, Berenberg.

The first one was just on the asset rotation program. So Gabriela is obviously complete now. What's sort of left in that program? And does the acquisitions that you're making sort of increase the need to sell on the other side? So I guess that's the first question. And then the second, could you talk a little bit more about the tolling agreements or potential tolling agreements that you're looking for BESS? How is that market? I guess we haven't seen that many of those agreements signed? And what is it that you -- how are you looking to sort of structure them? Is it a fixed price or a spread or -- any sort of incremental comment around that would be great.

Thank you, Henry. And quick quick answer on your two questions, yes. On asset rotations, nothing -- everything is according to plan. I mean, when we announced 1 gigawatt target for Spain, we knew we only had 200 megawatts, which was [indiscernible]. And we had to -- well, we also have a note plan, but that's harder to [ hybrid ]. So we have to find 800 extra projects from all the developers. And not any project is eligible. We need to find projects that actually have demand so we can charge the batteries from the grid, right? So that's even more challenging. We are halfway there, yes. And -- but nothing changes, right? I mean we don't need to do some extra rotation. It's everything according to plan. As I answered Anna before, we are even and getting those projects for lower CapEx than we initially expected. The Gabriela and Colombia, we are 30% in the target of EUR 800 million. We keep exploring asset rotations in several jurisdictions. And whenever there is something new, we will let you know. Tolling agreements, every tolling agreement is different from each other, right? I -- so far, the two agreements we closed in Spain, one was for our [ Avedo plant ] and the other one was for [indiscernible], they're pretty similar. They are day ahead. We are hedging that they have through a financial product for 12 years, right? It's just the day ahead. The rest of the products, I mean, we operate in frequency regulation, secondary or the markets or tension market, the new tension market or technical restrictions. There are so many markets, that's an upside for us. So we operate the -- and we optimize. That's why we are getting on the capabilities for energy management and for optimizing our fleet of batteries. And we are securing the main product, which is the day ahead for 12 years, right? Other tolling agreements, we are negotiating in markets like Germany and you know the [ Maxi ] in Italy or in Poland to complement or the U.K. to complement the capacity payments we already have; there will be more complete -- compressing other markets, not just a day ahead. So it might give the uptake the rest of the market. So that's basically. But the main message here is that every tolling agreement or every offtake agreement for a battery in each market is slightly different, right? It's not -- they follow different patterns market by market.

Okay. Next question from Ignacio Domenic, JB Capital. Please go ahead. Ignacio, you have to say that you want to mute. Okay. we also have another question in the meantime with Mediobanca, Beatrice Gianola.