Thanks a lot. Good afternoon, everyone, and welcome to Terna's first quarter 2026 results presentation.

The call will be hosted by our CFO, Francesco Beccali, and following the presentation, we will have the Q&A session. We kindly ask you to send any questions you might have to our email address: [email protected].

I leave the floor to Francesco. Please.

Thank you, Stefano, and good afternoon, everyone. Let me start by sharing with you the key highlights of the first quarter of 2026.

Regarding infrastructure, in Q1 2026, 10 projects aimed at developing the national transmission grid were authorized by the Ministry of the Environment and Energy Security and the relevant regional authorities for a total value of approximately €167 million. This confirms our ability to streamline internal processes and our constructive collaboration with the authorities, enabling shorter approval timelines.

In terms of execution, let me remind you that, in early January '26, the installation of the first submarine cable of the Tyrrhenian Link's Western Branch between Sicily and Sardinia was completed, reaching a record depth of 2,150 meters below the sea level. In addition, in April, we completed the installation of the Eastern section of the Tyrrhenian Link, making the conclusion of submarine works between Campania and Sicily.

Finally, in line with the strategic refocusing outlined in the update of our 2024-2028 Industrial Plan, in February, we signed a binding agreement for the sale of 100% of Terna Peru as part of the enhancement of our power transmission assets in South America. The transaction is valued at approximately $15 million, with closing expected by the third quarter of 2026.

Coming to finance and confirming once again the group's strong commitment to a business model that reinforces sustainability as a strategic lever for value creation, in January, we issued an €850 million hybrid green bond, achieving a record-low subordination premium for a corporate hybrid instrument in Europe below 60 basis points. In addition, in March, Terna signed an ESG-linked credit facility agreement for a total amount of €100 million.

The facility has a 5-year maturity with an interest rate also linked to Terna's performance against specific environmental, social, and governance indicators. On the ESG side, our continuous commitment to sustainability is also recognized externally by different institutional bodies.

In the first quarter of 2026, Terna achieved the Top 1% distinction, the highest possible recognition in the Sustainability Yearbook 2026 of S&P Global, based on the results of the 2025 Corporate Sustainability Assessment, where Terna ranked first worldwide. In the same period, Standard Ethics, a leading international non-financial rating agency, confirmed Terna's EE+ corporate rating, corresponding to a very strong assessment, positioning the group in the top sustainable range and among the leaders in the utilities sector.

We have also recently learned that MSCI has upgraded Terna's ESG rating to AAA, the highest possible level, thereby placing the company among the leaders in the utilities sector. Moreover, Terna was confirmed in the main ESG indices in which it is already included: the STOXX Global ESG Leaders Index, where the group has been listed since 2011, the Euronext Sustainable Index, and the MIB ESG Index, Italy's blue-chip index dedicated to best practices in environmental, social, and governance matters.

Let me now briefly touch on the evolution of the Italian electricity system. Since the beginning of the year, we have already seen encouraging progress.

Starting with renewables, more than 1.6 GW of new capacity have been installed over the last 3 months. Overall connection requests remain broadly stable, but, more importantly, projects that have been secured preliminary connection solutions rose to about 84 GW from 79 GW at the end of December.

The ready-to-build pipeline also edged up to around 12 GW versus about 11 GW at the end of last year. Turning to storage, around 1 GWh of new capacity was installed in the first quarter of the year.

In addition, with Decree No. 95 of 27 of March 2026, the Italian Ministry of Environment and Energy Security approved Terna's proposals for a new MACSE auction for 2029 delivery.

Approval of the auction volume, up to 16 GWh, is expected shortly, and the auction is likely to take place by year-end. As for the storage pipeline, overall connection requests remain broadly in line with December levels at around 300 GW, while projects that have obtained preliminary authorization increased to around 63 GW, up from 56 GW at the end of December.

Ready-to-build projects also increased, reaching around 8 GW compared to 6.8 GW in December. Let's now turn to the overview of the electricity demand evolution, moving to the next slide.

As you can appreciate from this chart, in the first quarter of 2026, national electricity demand continued to confirm the upward trend observed since last September, reaching around 80 TWh, up 3% year-on-year. During the period, renewable sources covered about 36% of total demand, improving versus last year, when the share was approximately 34%.

National net electricity production amounted to around 68 TWh, up 4.1% year-on-year, and with renewables covering roughly 42% of domestic production from around 41% in the first quarter of 2025. The growth in renewable electricity generation was mainly driven by photovoltaic and wind, which increased their production by 19.2% and 26.3% respectively.

Given that data center deployments are expected to be a key long-term driver of electricity demand, let me briefly update you on data center connection requests. As of end-March, data center connection requests totaled around 83 GW, up by approximately 13 GW compared with end-2025, confirming that Italy is increasingly perceived by investors as a reliable platform for energy-intensive digital infrastructures.

Turning now to the main figures of the period, in the first 3 months of 2026, the group achieved satisfactory results across P&L lines. Indeed, group revenues and EBITDA rose by 10% and 7% respectively, equating to increase of €87 million and €46 million compared to the first 3 months of 2025.

We also reported a group net income of €277 million, broadly in line with the same period of last year despite higher IRAP taxation introduced by the Energy Decree for 2026 and 2027. Adjusting the first quarter 2025 figures for this effect, net income in the first quarter of 2026 would be up 4%.

Group capex amounted to €511 million, down 9% versus the first quarter of last year due to a different timing of investments. At the end of March 2026, net debt stood at €12.2 billion, approximately €800 million lower than the value registered in 2025 year-end of about 3 €13 billion, mainly as a consequence of the €850 million hybrid issuance accounted as equity.

For a deeper analysis of the first quarter figures, let's now turn to the next slide. Revenues posted a significant increase of around 10% in the first quarter, reaching €989 million.

Regulated activities grew by 5% to €795 million, while the most significant acceleration was driven by non-regulated activities, which rose by over 30% to €194 million. Let me now take a closer look at the evolution of revenues, turning to slide number 9.

Regulated revenues reached €795 million with an increase of 5% compared to the same period of last year. The growth was mainly driven by the higher RAB and the recognized depreciation from new assets entered on stream, a change in consolidation perimeter following the acquisition of part of Rome's high-voltage grid from Acea, closed in September 2025, and only partially offset by lower fasmonic component following the update of the notional capitalization rate for the 2026-2027 regulatory period.

No change in revenues, however, arises from the WACC, which remains unchanged at 5.5%, in line with the previous period. Non-regulated revenues reached €194 million, up 32% versus last year.

The Equipment segment grew by around 20%, supported by a strong market environment and higher order intake, with both Brugg Cables and Tamini Group as key contributors. The revenues for the Energy Services segment grew by €25 million, following also the acquisition of STE Energy in May 2025.

Now let's go through operating cost analysis. As you can see in this chart, total operating costs stood at around €291 million, 17% higher than last year.

In regulated activities, the cost base rose by 11%, mainly due to higher external and other costs. Labor was up by 4%, largely due to a higher average headcount.

This increase was mostly offset by higher capitalizations. Non-regulated opex dynamics were mainly impacted by higher service costs related to the development of activities in the Energy Services and Equipment segments, and higher raw material costs.

Let me now analyze EBITDA, moving to the next slide. Thanks to the acceleration in revenues, in the first quarter of 2026, group EBITDA reached €698 million, 7% higher than the previous year.

The increase was mainly attributable to regulated activities, which contributed for about €26 million more versus last year, showing an EBITDA of €652 million. Non-regulated activities EBITDA rose by approximately 80% to €46 million, plus €20 million versus last year.

The increase was led by the Equipment business, reflecting both stronger market revenues and margin expansion. Energy Services also reported very strong acceleration, mainly thanks to the consolidation of STE Energy from May 2025.

Let's now have a look to the lower part of the P&L, turning to the next slide. D&A amounted to €248 million.

The increase versus last year was mainly due to the impact of new assets coming on stream during the period. As a consequence, EBIT reached €450 million, up 4% versus the first quarter of last year.

Net financial expenses were €37 million, up €8 million versus last year, mainly reflecting a higher average debt level in the first quarter of 2026 versus 2025, along with higher interest rates on new financings compared to the average cost of existing debt. The cost of debt in the first quarter 2026 was around 2.7%.

Taxes stood at €125 million, €7 million higher versus last year, attributable to the higher profit before tax and to the temporary 2 percentage point increase in the IRAP tax rate for '26 and '27. Our tax rate was 31.1% versus 31 30.1% in the first quarter of 2025.

As a result, group net income reached €277 million, broadly in line with the same period of last year. Adjusting the first quarter of 2025 figures for higher IRAP tax introduced by the so-called Energy Decree, net income in the first quarter of 2026 would be up 4%.

Moving to capex analysis, in the first 3 months of 2026, total capex amounted to €511 million, down compared the same period of last year. Of this amount, approximately €463 million was invested in regulated activities.

Among the main projects of the period, it is worth mentioning the Tyrrhenian Link, the Chiaramonte Gulfi-Ciminna power line, the SA.CO.I.3, and the Adriatic Link. In addition, we should also consider the investments envisaged under our Defense Plan, which are essential to ensure grid resilience and security, including the installation of synchronous compensators, shunt reactors, and damping resistor systems.

As far as capex categories are concerned, development capex represented 57% of our total regulated capex. Defense capex stood at 10%, while asset renewal and efficiency was 33% of the total.

Non-regulated and other capex reached €49 million. This mainly included capitalized financial charges and other investments.

Let me underline that the year-on-year decrease mainly reflects a different timing of investments, with spending more concentrated in the second half of the year, as well as a higher comparison base in early 2025. Regarding net debt and cash flow analysis, let's now turn to the next slide.

At the end of March 2026, net debt stood at €12.2 billion, around €0.8 billion below the 2025 year-end level, reflecting our continued discipline in managing leverage. Cash flow generation was around €510 million, enabling us to fund almost all the capex spending during the quarter.

Let me also reiterate that our financial policy focuses on efficiency and on maintaining a solid, sustainable capital structure. In this context, net debt at the end of March includes the benefit of the €850 million hybrid green bond issued in January, accounted as equity.

Let's now make a deeper analysis of our debt profile, moving to slide 15. At the end of March 2026, the fixed-to-floating ratio on gross debt stood at around 75%, with an average debt duration of approximately 6 years.

In full alignment with the group's strategy, Terna aims to position itself as one of the leading players in the sustainable finance market, an approach that was further confirmed in the first quarter of 2026. As of March 2026, senior green bonds issued under our Euro Medium Term Notes programs amounted to €3.75 billion.

These are complemented by 3 perpetual subordinated green hybrid bond issuances for a total of €2.7 billion, including a third tranche issued in January 2026 of €850 million just mentioned. This latest transaction represents Terna's first perpetual subordinated hybrid non-convertible European green bond issued at a record-low subordination premium for a corporate hybrid instrument in Europe below 60 basis points.

In addition, Terna can rely on a solid ESG-linked loan structure, including ESG-linked term loans for a total of €2.6 billion, as well as 3 ESG-linked revolving credit facilities linked to sustainability performance indicators for approximately €4.3 billion. This is complemented by a €2 billion commercial paper program, providing further flexibility in shorter-term funding.

Before we move to the Q&A, let me briefly highlight that, in the current context of rising geopolitical tensions, the expansion of renewables is crucial to strengthening energy independence and helping stabilize electricity price levels. In the first quarter of 2026, the energy transition advanced further, with around 1.6 GW of new renewable capacity and 1 GWh of new storages added.

Key pipeline indicators also continued to improve, notably ready-to-build projects as well as ones that have already secured preliminary authorizations. Regarding targets, given the strong performance delivered in the first 3 months, we confirm the full 2026 guidance shared in March.

Thank you for your attention. We are now ready for the Q&A session.

Thanks, Francesco. Let's now open the Q&A session.

Okay. We grouped some questions by topic.

We can start with the first one. Can you quantify the contribution from output-based incentives in the first quarter?

In this quarter, there was no contribution coming from OBI. It will be recognized during the year when there will be the certainty in line with the accounting principles.

Okay. What is the level of output-based incentives you expect for the full year and for the next years?

As we already stated in March, for the current year, considering both dispatching and interzonal, and including the potential grants incentive, we expect to book over €200 million of incentives overall. For what concerns following years, let me remind you that, in the existing Industrial Plan update, guidances are based on OBI's assumption of about €900 million cumulated, 360 more or less of which are accounted in 2024.

Mostly of this amount, it refers to the existing output-based incentive framework, and only a residual part is related to the new Ross-integrale effect. The higher performance that we registered in 2025 should be considered on top of this cumulated amount, and not as an anticipation of incentives planned in following years.

For any consideration regarding future periods, though, including those beyond 2028, i.e. the end of the existing strategic plan, we believe it is appropriate to postpone any detailed discussion later on, when we could have greater visibility on the Ross-integrale incentive schemes, and we also expect to present the new industrial plan of the company.

Thank you. Now, could you provide more color on the contribution from fasmoni in this first quarter and for the rest of the year?

Fasmonic contribution in 2026 grid fee is equal to about €65 million. On the quarters, as all the components of the grid fee, the contribution is regularly split.

For this reason, the fasmoni impact in the first quarter is about €15 million. Now,

moving to regulation. What are your expectations for regulatory developments over the remainder of the year?

Do you expect more details on how the full Ross will work?

One of the forthcoming decisions expected from ARERA relates for sure to the potential next steps on the Ross regulation, which is aimed at further aligning the TSO's objectives with the overall interest of the whole system. The authority currently provides no information on when a consultation paper on the Ross incentive schemes will be presented.

Given that the application of the schemes under the existing resolution is also envisaged for 2026 and 2027 period, it is possible that ARERA may open a public consultation process later this year. Now

moving to WACC. What is the mark-to-market 2027 WACC based on forward?

Do you expect the regulator could change the basket of peers?

From a mark-to-market perspective for 2027, the current let me remind and restate that the current geopolitical situation and resulting volatility, both in energy and financial markets, as well as in macroeconomic conditions, suggest caution in extrapolating any short-term signals. We can express on potential outcomes only in the following month months.

As part of the consultation process for this interim update or for the whole WACC period renewal, ARERA could revise the current basket of comparators in case recent trends in interest rates, spreads, or credit ratings may persist. The regulator has not provided any indication to date that such that such changes are being considered.

Now moving to the capex. Could you explain why first quarter '26 capex were down 9% compared to the same period of last year?

The lower capex performance in the first quarter 2026 versus first quarter of last year reflects a different timing profile, as we stated in the presentation, with investments more concentrated in the second half of the year, and also a base effect due to spending anticipated in the first quarter of 2025. This is mainly reflected in different relevant milestones in the SA.CO.I.3 project, for example, and in the synchronous compensators plan, all included in the Security Plan.

Nevertheless, let me be clear on the fact that we do confirm the full-year investment guidance.

Thank you. Could you comment on the 10-year projects authorized in the first quarter '26?

Are these in addition to the €17.7 billion capex plan? When are they expected?

Some of these projects are part of the 2024-2028 capex plan. Only a remaining part concerns projects after the business plan horizon.

Let me remind you that all these projects account for a total amount of €167 million.

Okay. Now, moving to the non-regulated activities growth.

Should we consider a growth trend in the remaining part of the year similar to the first quarter?

Stefano, in the first quarter, non-regulated activities recorded a very strong acceleration with EBITDA up by more than 80%. As we said, the increase was led both by the Equipment business, reflecting a very dynamic market, and the Energy Services, thanks to the consolidation of STE Energy.

However, this trend of growth could not be taken as a reference for the full-year results. From this perspective, we remind you that we expect a low-double-digit growth in non-regulated activities EBITDA in 2026.

Okay. Could you comment on how the current geopolitical situation may impact Terna capex and earnings plan?

Do you think the investment opportunities have improved following the Middle East conflict?

The current geopolitical situation in Middle East does not entail any direct impact on Terna. This is primarily due to our regulated nature, with a regulatory framework that provides strong visibility on returns and offers protection against inflation.

In addition, our investment plan is focused on domestic infrastructure, which significantly limits our exposure to international volatility in general. That said, we do acknowledge that geopolitical tensions could have some indirect effects, particularly on the cost of certain key materials and on supply chain dynamics.

For these reasons, we have already put in place mitigation measures aimed at safeguarding project timeline and preserving capital expenditure discipline. In conclusion, let me remind you that about 90% of our capex plan is covered by existing procurement contracts.

Looking at the broader system level, the current scenario further reinforces the strategic relevance of the energy transition and of the grid development. It highlights the need to accelerate progress towards energy independence.

In Italy today, this can only be achieved by focusing on renewables and grid investment.

Now, about IRAP taxation. Do you think there is a risk of an extension beyond 2027?

For what concerns IRAP, the decree foresees the application of additional 2% taxation only for 2026 and 2027, and this is the only financial impact on Terna accounts.

Where do you expect net debt to land by year-end?

Considering the hybrid issuance and based on the guidance provided on capex and net profit, we expect an increase of net debt at the end of 2026, which will be slightly below the one registered in '25.

Are you planning any further hybrid bond issuance in the next 12 months?

As always, let me state that our balance sheet is currently solid and does not require any increase in the outstanding hybrid component. At the same time, though, the company maintains a flexible and opportunistic approach aimed at evaluating potential market opportunities.

Considering the significant volumes of investment envisaged for 2026, do you see need of any action to better underpin your balance sheet solidity?

Let me be very clear on this point. Our financial position will remain solid also in 2026, also thanks to the hybrid issuance completed in January.

In this respect, let me also reiterate that our capex plan through 2028 is fully sustainable from a financial standpoint. This has also been clearly confirmed by the rating upgrades that we received in 2025 from both Standard & Poor's and Moody's, following a similar rating action that occurred to the Italian sovereign.

These decisions reaffirmed the strength of our capital structure over the business plan horizon without the need for additional financial instruments. That said, if it will be required as of today, the range of flexibility tools that we could consider includes, on the one hand, the remaining hybrid issuance capacity, as well as the possibility of securing additional public contributions to further strengthen the financial structure, and also evaluating options to monetize our non-regulated activities.

Now, we have a last question remaining. When could we expect Terna to publish an update of the business plan?

Is it realistic to expect it is already in 2H 2026?

According to our 2026 financial calendar, the new industrial plan is expected during the second half of the year. Any update on the date of the industrial plan presentation will be communicated to the market through an update of the financial calendar, also considering the renewal of the board that is going to be formalized in the next assembly on May the 12th.

Very well. Thank you, Francesco.

We completed our Q&A, we think that we addressed all the main topics, and as always, the Investor Relations team is available for any follow-up or additional questions you may have. Thank you for joining our presentation and have a great evening.

Thanks, everyone. Bye-bye.