Good afternoon, everyone. Thank you for taking the time to participate to our first quarter results call.

Today, as usual, the presentation will be driven and commented by our CEO, Renato Mazzoncini, and the CFO, Luca Moroni. I immediately leave the floor to Renato for the first comments.

Okay, thanks, Marco. Good afternoon, everyone.

Thanks for being here with us. Let's say it was not a trivial quarter, considering the geopolitical situation, but we are happy with the results.

And so, I start from Slide number 2. As usual, we would like to begin by highlighting the achievements we have reached in this quarter.

In particular, it is a quarter that confirms our commitment to the pillars of our strategic plan with a renewed focus on our organization, we see, and an expansion of our regulated activities perimeter. The news in these slides is the new business unit circular economy.

What I remember is the integration of our waste cycle, distributing, and water. It aims to fully leverage the existing integration advantages among these three businesses that are in our pillar circular economy.

And so, this organizational change, I remember that distributing and water before was inside the smart infrastructure business unit. This new organization now perfectly aligns our managerial decision-making process with our two strategic pillars, circular economy and energy transition, respectively.

So, going more in-depth in our two pillars, starting from the energy transition, our integrated business units of generation and supply are both growing in a balanced and the risk manner to secure visible results, all over the plan horizon. So in particular, some highlights of this quarter, we were awarded 4.6 gigawatts in the capacity market for 27 deliveries.

So with an increased premium, but providing additional visibility to our targets of EBITDA. And looking how our green energy platform is gradually gaining scale with an overall PPA contracts for around 800 gigawatt hours, either by or since signed.

That means that we are really working to become a platform also for other players in generation, renewable generation, with our supply and customer base. On the same side, let me underline that we reached more or less 100,000 subscriptions in our PPAs mass market.

You remember our offer, we launched more or less one year ago and is working very well. Our target, I remember, is to arrive more than 2 terawatt hours of energy with this kind of PPAs mass market.

Looking how our business unit smart infrastructure, of course, the big news is the consolidation of the electricity network in Lombardy, in particular in the province of Milan totally acquired from Enel. But we are also growing, making progress in the mobility infrastructure, in particular in this quarter, we signed an agreement with Metro Italia for the installation of 150 charging points.

But, in particular, we received the approval from the municipality of Milan to install around 1,500 charging points in the center of Milan. Our so-said city plug, so low charging point that is our formula to increase the mobility in the center town.

Returning to our business unit, new business unit, circular economy, we want to highlight that we were awarded a new authorization to convert two biogas plants to biomethane. You remember our portfolio AgriPower, in which we are working more and more to convert these plants from biogas to biomethane.

And the start-up of a new water treatment plant in Calvisano, in the province of Brescia, is a plant that works for more or less 12,000 inhabitants. And, in addition, we've also completed the acquisition from Edison of a Sesto San Giovanni cogeneration plant with an installed capacity of 110 megawatts.

That, in our strategy, can be very interesting, not only because it's connected with the district heating in Sesto San Giovanni, which is, let's say, the main strategical rationale for why we bought this plant, but also because, if you imagine the development in data center in the region, but in particular in Milan, there are not so many plants able to give base load energy with a night power in the center of a city like this one. So, can be a future development of integration between supply and data center.

I also remind you that, overall, we are now managing a company with 31% of EBITDA generated from regulated activities, growing from ‘26-’25 in Q1-24, thanks to both organic investment, so the huge investment, in particular, in electrical distribution in our historical asset in the last year, and due to the acquisition of the new company Duereti. Last, but not least, we are maintaining a firm commitment to sustainability, and one evidence is that we were the first issuer of an EU green bond compliant with the EU regulation, and achieved an NZR3 score in Moody's net zero assessment.

So, looking at slides, Slide number 3. In this slide, you can see our number.

The consolidation of a new company, Duereti, and the increase in energy prices, energy and gas, led to a growth in revenues of about 16%. And the reported EBITDA slightly decreased to 703 million euros, but is completely aligned or better than our forecast in our industrial plan presented two years ago.

And, let's say, net to extraordinary effects deriving from the hydroelectric production during 2024, that is the single elements more disruptive between one year and the other, the EBITDA grew by 1%. The net profit before ordinary transaction, for example, excluding special items, for example, in the first quarter of the current year, 5 million euros referring to the price adjustment relating to the acquisition of the stake in Tecnoai.

Tecnoai is the company in Crotone, where is the Western energy plant for industrial waste in Crotone. So, amounts to 257 million euros, registering a 13% decrease compared to the first quarter of the previous year.

And once again, if we look at the extraordinary effect deriving from the hydro production, I remember that last year was 1.1 terawatt hour, more than the average level of the last five years. The decrease in net profit before ordinary transaction is 5%.

The net profit, including special items, reached an amount of 252 million euros. And the focus on financial discipline continues, allowing us to maintain a solid financial ratio, thanks to an operating cash flow that guaranteed coverage of CapEx for a period and a decrease in the net financial position in the ratio between the net financial position and EBITDA to 2.4 compared with 2.5 of 2024.

So, a little bit better compared to what we closed last December, the big acquisition of Duereti. In Slide number 4, the CapEx, you see the organic CapEx in this quarter amounted to 300 million, up to 32% compared with the same period of 2024.

Developing a CapEx, that for us is, let's say, the result of our 10 years in the industrial plan amounted to 174 million euro, mainly aimed at strengthening and improving the efficiency of networks. Because if you look on the right side, you can see that 123 million is in this month's construction, mainly in electrical grid to support the carbonization, the development of photovoltaic plants, increasing the flexibility of generation plants.

That means, for example, the new plant in Monfalcone, the recovery of materials and energy, and the digitalization of the group. So, I leave the floor to Luca to go more in detail with the single business unit.

Thank you, Renato. Good afternoon, everyone.

We are quite happy about the result of the first quarter, a few reasons at the base of our satisfaction. The fact that we continue to manage a differentiated portfolio of businesses, which give us a reliancy, a resiliency in terms of trend of growth for the EBITDA.

As you know, we knew very well about what to expect from generation, taking into consideration the normalization of production in hydro. And this is what happened and what we expected to have.

But as you see in the Slide 5, we have nice news on the other business, in particular smart infrastructure, taking into consideration the opportunity coming from the consolidation of the new company, Duereti, and the positive result of the circular economy. But also the supply business gave us some positive trend and it confirmed the consistency of the business.

Taking into consideration the fact that we have lost the marginality of the safeguarded market and we offset with the positive effect of the marginality in the retail business. Switching on the Slide 6, we have here analysis coming from the different pillar of the generation and trade business.

As I said, renewable business has been affected by hydro production. We counted the effect out of the total amount of 1 terawatt hour of the entire year of 2024, which need to take into account for a sort of restatement of the result of this year.

31 negative inflexibility, which is completely related to an effect that we had last year quarter, considering the amount of devaluation of the gas stock, which has not been there anymore. We can see and appreciate the fact that, as we always say, the different technology we manage give us the opportunity to compensate the less production in hydro with a huge result in terms of volumes of the thermal production.

66% more than last year, which completely offset the minus 18 in production of hydro. Slide 7, the market business, as I said and anticipated, there has been a very positive result in retail business, in the retail segment, both in power market and in gas market.

We also invest, and this is the increase of costs, invest in the new point of sales, physical point of sales, which give us the opportunity to increase customer in a more resilient way. The customer base increased by 3%, and the free market customer increased by 5% compared to last year.

We had a positive result on the electricity sales, which are 6.55% more last year, whilst the gas sales decreased by 6% to 1.1 billion of cubic meter. Slide 8, we have the result of the circular economy business unit.

As Renato introduced, this is the new business unit in which we count not only the waste management business, but also district heating and water cycle. Waste was positive considering the collection, which suffered a little bit from the result of the tender we gained in Milan, on which we elaborated a recovery plan for the incoming years.

But we continue to have a very positive result in treatment business, also taking into consideration the new plant in trade, so it takes place in this year. District heating, very positive with lead by the high volumes sold, plus 6% with an increase of EBITDA of 7 million.

And last but not least, water cycle, which gave us a plus 1. Last but not least, smart infrastructure, in which we have not only the very positive result of the first consolidation of the new company Duereti for more than 20 million, but also 10 million related to the like-for-like perimeter, given the effect of the regulated revenues, which is a very positive consideration taking into the aspect that we continue to invest in particular in the electrical distribution, and this is the result of our investments.

At page 10, our profit and loss, which start with 675 million EBITDA, 374 EBIT and 257 in terms of net income. The increase in terms of D&A is led by the effect of the investment of the last year.

Then we have risk position aligned with the same period of the last year. Some increase in the net financial expenses due to the fact that we issue the green bond at the beginning of the quarter in January, and the effect of the bridge loan in place for the financing of the new asset coming from Enel.

Then the taxes with the same tax rate of last year, 29%, and we arrive to the net result. In terms of cash flows, we are pretty satisfied, considering the fact that the change in networking capital is completely under control and the result of the seasonality of the period.

I want to remember to everybody that last year, due to the fact that we managed in a way to offset completely the extraordinary effect of the financial difficulties we managed in the previous year, we had the movement of some contracts back into the stock exchange platform, and we absorbed 500 million euro in terms of networking capital. So, nowadays, we are in line with the normal seasonality with the absorption of only 100 million euro.

So, the operative cash flow is 554, which lead us to self-funded completely the CapEx plan, leaving the opportunity to decrease our net financial position by 220 million. With a very nice cash conversion rate above 60%, which is higher than the one we set in the target of our business plan.

So, we are in the position to confirm completely and fully our guidance with an EBITDA, which is at the upper boundary of 2.2 billion, and the ordinary net income in the middle of 680 million euro and 700 million euro. I switch again to Renato for the last comment.

Thanks Luca, a little closer. Only to say, with a recap in the last slides, that once again, I want to underline that our business plan is working very well, even in a market context a little bit different, once again, than expected.

For the surge in political tension, of course, especially related to the fears of a tariff war. But in the context in which we are working, we are able to size opportunities arising from imbalances in the generation supply mix.

The fact that we have all the sources of energy, and so that we are developing both the production with renewable, then the flexibility with our hydro production, and the investment in the thermal plant with capacity market, brings an incredible flexible fleet, able to meet the demand during periods of weak wind availability, for example, and normalizing it. So, it is easy to see what happened with the wind, with the flow that arrives more in Germany from France than in Italy, and this is the reason for why, for example, our thermal plant works more than the quarter last year.

Then, we maintain a sizable supply customer base, leveraging our stronger brand awareness that is growing more and more. We reiterate our commitment to provide concrete solutions for our country in order to enable the achievement of the ‘25 EU targets in the treatment market, the target 2035.

You remember that we have to reduce no more than 10% of the landfill, and in this moment, our country is in a good position considering EU, but it's 20%, so we have to work more. Deploy CapEx in electricity network.

This is very important. In particular, we are very happy that Duereti started immediately with the high volume of CapEx, 34 million only in Duereti in the quarter, so high level of investment.

Also, in the new network starting from January, and increased financial flexibility that, for us, enable the management of both tailwinds and headwinds, so is another element very important. We confirm our CapEx plan with a structural resilient supply chain.

Also, the supply chain is very important with a CapExplan with 22 billion in the horizon of a plan, and also the supply chain is working well, and also the procurement cost risk is under control. So, thanks.

We can open to the Q&A session. And so, the floor is yours.

Hi, all, and thank you for the presentation. Three questions.

The first one is a question that has to do with the context. We have seen a significant blackout in one of the largest economies in the Eurozone recently.

So, I was interested in your view on the implication that this blackout has or the lesson to be learned from this blackout in the structure of the future European energy market and implications for the design of the future Italian electricity system as well. That would be the first question.

The second question is on the generation business. I could be interested in having details on your forward selling strategy for 2025 and 2026 in terms of volumes and prices and the level of contribution from the MSD market during the first quarter of the year.

And the third and final question is on the supply business has been stable during the first quarter of the year. You can give us a little bit more of color on the dynamics behind this stable performance and what we should expect in the next quarters to come.

Thank you.

Okay. Good afternoon.

Talking about the blackout in Spain, you know, it is not so easy to discuss about this topic also because official news from the TSO from Spain have not already arrived. So, I can only say that our analysis in this moment is that to have a resilient system is key, is completely key to have the TSO and all the TSO that works well.

And in particular, that knows very well all the generation plants that you have in the country. And only to remember to all in this moment in Italy, we have more or less 1.5 million of generation plant considering, for example, all the roof solar plant.

So, the reason for why sometimes or let's say every day there are some customers that says that the DSO or the TSO, depending on the size of the plant, takes too much time, weeks, months to connect the plant to the grid. Is the proof of that in Italy, we are working well to be sure to know everything about every single plant because it is the only way to be sure to match completely the demand and the generation.

And so, I think that is not a topic of renewable to understand, is a topic of how you manage the renewable. Last Sunday, I was in our hydro plant in Grosio in Valtellina.

You remember it because you visited. And to understand how is millimetric the management, our guys received the dispatch from Terna to reduce in one of the plant the generation from 200 kilowatt.

So, let's say nothing to 100. So, it is only to understand that is really millimetric the management, but is absolutely fundamental because, for example, in Sunday, in which the demand was limited, let's say, till 6 in the afternoon, our hydro plant was stopped.

Because there was the generation from sun. So, I think that in Italy, we are working well.

The investment in electrical grid are huge, both in Terna and in our DSO. You saw what it did in the last four years with triple CapEx in grid compared with 2020.

And so, the way is simply to be able to well manage the total plant. Then, there is also a problem of alternative generation or generation in direct current.

And in this case, once again, you have to compensate the generation with the synchronous compensator. And in Italy, we installed the 27.

You remember that A2A for Terna in Brindisi installed a couple of machine able not to produce energy, but to maintain the frequency that the grid has. And in Italy, we installed 27 of these machine exactly to be able to compensate the development of the production in direct current.

So, surely the lesson learned is that the world is not easy. But comparing what we did in Italy compared with Spain seems that we are in a better position.

And so, there are not activities in emergency that we decided to do after the blackout in Spain, to be clear. Talking about generation MSD, I leave the floor to Luca.

Yeah. Hi, Javier.

As we already discussed in the past about our hedging level, we can confirm that for this year, we are fully hedged, taking into consideration our internal policy. That means to exceed 70%, we are still in the area of 75 at 120, so fully hedged for the remaining part of the year.

Looking at 2026, 30% of the hedging levels in terms of volumes at 114, which is above the level of the energy scenario we set in the business plan for 2026. MSD has been positive in the first quarter compared to the target level in line with last year, which was for the entire year 85.

So, we are targeting something in the region between 85 to 90, taking into consideration the, let's say, 2-3 million more we get in the first quarter.

And answering to the supply, the supply is stable, as you have seen. The dynamics, the most interesting dynamics are B2B, that is working very well, so the marginality in B2B and the growth in absolute value.

Consider that our forecast for this year is more or less 20-25 terawatt hours. So, consider that in Italy, the total consumption of the industry is 110 or less, so 20% of the total like market share is not bad.

And from the other side, as I underlined during the presentation, is working well also the 10-year contract, the PPAs. Our churn is slightly worse than our budget, but many points better than the average level indicated by ARERA from all the suppliers.

So, in this case, it's working well. And our physical shop that we opened, you remember during the presentation in our industrial plan, we are investing a lot in shops, physical shops.

Of course, the cost to acquire grows a little bit, but the result is really interesting. So, these are the two main dynamics.

Many thanks.

Good afternoon. Thank you for taking my questions, two or three.

The first one is an update on your expectations for hydro power production for 2025. We are still in line with what you guided a couple of months ago.

And what are the latest news in April and May in terms of hydroelectric production? The second one is on hydroelectric concessions.

I wonder whether there are updates in terms of extensions, both in Lombardy and in the other regions. And the last one, in terms of networking capital, what do you expect for the rest of the year in terms of if we're going to see an absorption or a generation compared to whatever we reached at the end of March?

Thank you.

Okay, for the first question, Francesco, our hydro production this year is expected to come back to exactly to the average level of the last 10 years. That is 4 -- 4.1.

And also if you look at the situation ‘22, 2.7, ‘23, 3.7, ‘24, 5.1, the average level is once again 4. So in this moment, we have the evidence that we are able to maintain our budget.

But every time is built considering this average level. The snow is not amazing, but not bad.

That means 30% less than last year, but more or less in their average level considering the previous years. And it's raining every week.

So the level of our mass is not good. The extension you are talking about grid or concession of the hydro plants?

I was referring to hydro concessions. But electricity distribution is also interesting, so...

Exactly. Exactly.

Hydro plant, surely you read the Minister Foti that in the last weeks more times communicated about the deal with EU for extracting from PNR commitment in hydro concession tenders. And we are fully confident that this will be the end of the film.

Also because at government level, all understood that reassigning to the actual incumbent is the more sure way to increase the CapEx immediately. Not waiting 29th of the end of the concession, but starting tomorrow.

Because if we want really to not only to maintain, but to increase a little bit of hydro production, that is key to face the challenge of PNIEC. We can't stay quiet for three or four years awaiting tenders and so on.

And there are 15 billion euros on the table of CapEx that we are able to move. So I think that really this extension will be a reality during this summer, let's say.

About profit capital Luca?

Networking capital, the trend we are going to expect is positive. So we are expecting at the end of the year, the normalization of our networking capital and also some positive effect coming from the XEA, which is the body which give us the money for the collection of those customers belonging to safeguarded market.

So we are pretty comfortable to have a positive performance during all this year and in particular at the end of the year.

Thank you.

Good afternoon. Thank you for taking my questions.

This one is more on the strategy and on the acquisitions. So considering your debt on EBITDA level on a rolling basis, only 2.4 times, so I think there is room to re-leverage.

So, first of all, what is the maximum target? And then secondly, what are you interested in buying in which sectors?

Or if there is also room to increase the organic CapEx? And the second question is on market supply.

The classical question is if you are seeing an increased competition in the energy supply or in your outlook for 2025-2026, some competitive pressure could start to arise from mid or smaller players like before the energy crisis. If you are feeling this or not.

Thank you.

Okay, Emanuele. Well, talking about acquisition, I mean, hey, you know that it is impossible to answer to your question.

Because when some opportunities, some train will pass, we, of course, we are able to look and surely to stay in a correct, let's say, situation. Also, if I underline that the variation between a net financial position and the EBITDA, you know, is one of the elements, the other is the FFO also in the debt, and so we have to maintain both.

Only to say that we have flexibility, but we are in this moment in a situation, in a perfect situation, like financial position. But surely I imagine that in the future, not in the grid, of course, but in the generation, some consolidation can be necessary because the market is very disaggregated and every time seems not so efficient, let's say.

Talking about the market supply competition, the dynamics more interesting in this moment is that the fixed contracts come back. So we stayed for a couple of years only with variable contract.

That was the son of the incredible situation of the price in ‘22, ‘23. Now, more or less 60%, 60%, 70% of the new contracts with householders are once again fixed for one year or two years.

That protects the customers and works for us. And also the fact that the ten years contract, both in [indiscernible] energy then in NEN [ph], are working well is the proof that people, customers, want to stay protected.

And can be also a change of paradigm, if you think of the fact that people sign contract for ten years is exactly what the renewable can do. So a complete change of paradigm that works.

Competition. Yes, there is some competition, not for the little players.

That is not a topic, but for players like Poste Italiane, Octopus or some new player that are working on the market. But let's say is normal, a normal competitive arena.

So if we look our churn, our capacity to acquire customers and so on, there is not a disruption or something strange compared with the last years. And so we expected also for ‘25, ‘26, a situation more or less stable.

I remember that in our industrial plan, we introduced a reduction of profitability of 3% every year. Exactly due to the competition, that means 30% in the horizon of a plan of reduction of marginality.

And so this is the situation.

So we could say these in line with your expectation already embedded in the business plan.

Yeah, absolutely. Absolutely.

No, really. What is the let's say the single best news for me is that our industrial plan also looking ‘21, considering that in the meantime, there was the COVID, the war, Russia, Ukraine and then Trump and so on.

But the industrial plan is working well. So our targets are really material, are working, the EBITDA is growing.

And in when, like in ‘24, we had some extraordinary income, we are able immediately to use this money to do more development and not, for example, to change our financial structure or increase dividends and so on. So we are fully committed in our industrial plan, in the CapEx, in the growth of the company.

Thank you. I'm very clear.

Hi, good afternoon, gentlemen. Thank you for taking my question for the presentation.

I have three. The first one is close related to what Javier was saying about the implication for the electricity market.

I was wondering, do you believe that the perception of base load generation of utilities and so on. So that kind of generation that is predictable will change in future compared to the acceptance of renewables.

I believe that renewables will be still there, but if this disruption may bring some news, some positive news on WT and CCGT and so on. The second question is related to gas and power prices.

I was looking at the data, looking at the gas storage levels that are actually close to 2021 and 2022 levels. So the replenishment activities of the stocks and the season that we are seeing in the summer is quite close and will be hard to fill or at least harsh.

I was wondering what are your expectations on short-term prices considering that we need to fill the storage by 90% and also considering what Europe is looking for with regards to the ban of the Russian gas and so on. So your consideration about that will be helpful for us.

Thank you. And the last question, a clarification on this malinfrastructure.

I was wondering if you are including there the extraordinary contribution from the resolution allowed OpEx in gas and also the positive impact accumulated from the deflators and the change in the regulation to the new index system. Thank you.

Coming back to Spain, to maintain the equilibrium between demand and generation, surely plants able to produce base load or with a high flexibility can be easier to manage. But once again, I underlined that it is absolutely possible to manage the renewable.

And from the other side, I remember that when we had in Italy the blackout in 2003, the contribution to our market due to the renewable was approximately zero. So only to say that the problem of equilibrium is a typical problem.

And if you look at all the most important economies in the world, more or less every two years, there is one blackout. So it's possible that happened.

And I think that is not correct to say that the problem are renewable. Surely a system with a high flexibility like in Italy, two very good examples are from one side capacity market.

So plants like our plant in Casano Dada, our gas peaker or the new plant in construction in Monfalcone are examples. Or of course, all the hydro production in Italy are examples of incredible flexibility and also speed to change the asset of the network if necessary.

On the other side, also the interoperability is key. You know that our companies like steel plant and not only has the contract for interoperability that sometimes is key.

And for example, interoperability, not only Spain, but also in Germany and in France was canceled last year, if I remember. I think that the fact that Terna decided, let's say, to spend some money more, but to maintain a high level of flexibility is the best way to maintain the resilience that we need.

So in this moment, I don't see a problem. And I think that all the strategy defined in the last years from Terna included in particular capacity market is working very well.

Talking about gas price.

Yeah, I think the floor in term of energy scenario in general, we remain consistent on what we always said regarding the levels of the prices. I don't think that the level of the storage will change the situation, considering also the regulation on the storage in Italy and in Europe, which is very clear.

So here any disruption from time to time considered by the market come from the additional volumes from Russia. But you know better than us that any additional volumes will arrive due to the sanction in place and the difficult situation of the discussion with that country.

Regarding the situation of the smart infrastructure, we have not included in the first quarter the adjustment, but we estimated them in a correct way. So we don't expect to have differences compared to the target we set in the budget and in the business plan.

So we are pretty comfortable with what already issued ARERA and the number being issued are in line with our expectations. So any difference is a major difference in the accounting for the incoming month.

Thank you.

If there are no more questions, then we will close here the call. If you have any additional requirements in terms of deep dive analysis or data, please contact the AR department.

Thank you, everyone. And good afternoon.

Thank you.