Enel Chile SA

NYSE:ENIC

Earnings Call Transcript 2023-Q1

[Operator]

Good afternoon, ladies and gentlemen, and welcome to Enel Chile's First Quarter 2023 Results Conference Call. My name is Carmen, and I will be your operator for today.

[Operator Instructions] Please be advised that today's conference is being recorded.

During this conference, we may make statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements reflect only our current expectations and not guarantees of future performance and involve risks and uncertainties.

Actual results may differ materially from those anticipated in the forward-looking statements as a result of various factors. These factors are described in Enel Chile's press release reporting its first quarter 2023 results; the presentation accompanying this conference call; and Enel Chile's annual report on Form 20-F, included under risk factors. You may access our first quarter 2023 results press release and presentation on our website at www.enel.cl and our 20-F on the SEC's website, www.sec.gov.

Readers are cautioned not to place undue reliance on those forward-looking statements, which speak only as of their dates. Enel Chile undertakes no obligation to update these forward-looking statements or disclose any development as a result of which these forward-looking statements become inaccurate, except as required by law.

I would now like to turn the presentation over to Ms. Isabela Klemes, Head of Investor Relations of Enel Chile. Please proceed.

[Isabela Klemes, executive]

Thanks, Carmen. Buenos días. Good morning, and welcome to Enel Chile 2023 First Quarter Results Presentation. Thanks to all for joining us today. Joining me this morning, our CFO, Giuseppe Turchiarelli.

Our presentation and related financial information are available on our website, www.enel.cl in the Investors section and also in our app investors. In addition, a replay of the call will be soon available.

At the end of this presentation, there will be an opportunity to ask questions via form or webcast chat through the link, ask a question. Media participants are connected only in listening mode. In the following slides, Giuseppe will open the presentation with our key highlights, later passing by market, regulatory outlook and business and economic and financial performance.

Thank you all for your attention. And now let me hand over the call to Giuseppe. Giuseppe, please?

[Giuseppe Turchiarelli, executive]

Thank you, Isabela. Good morning, and thanks for joining us. Let me now start with Slide 2, giving a highlight of our portfolio management effort seeking the improvement of our resilient flexibility and decarbonization path.

During this quarter, our renewable growth accounted for almost 0.1 terawatt hours of additional production, mostly related to the Renaico II project. That is now fully connected and ready to start the test required for receiving the COD expected at the beginning of the second half of this year. Let me highlight that Campos del Sol II has received the COD communication in January 2023. And during this week, also Valle del Sol received its COD by the Chilean system operator.

On gas, we continue our optimization actions, allowing us to offset the impact of higher spot prices that still pressure the system.

On electrification, with our subsidiary, Enel X, we are [indiscernible] the national energy efficiency law, supporting our clients implement it.

In terms of market context, I would like to highlight that the First Decree related to the stabilization mechanism 2, or Tax 2, was released April, an important step towards the recovery of the cash receivable from the gencos.

Also, the good news is that we shall have full availability of natural gas from Argentina, including the supply in the winter time and LNG through our contract with Shell.

Finally, on the solution business, the extra Expert Panel related to the distribution tariff review process was published this week. I will mention a few words on this during my presentation.

On the performance of our business, the first quarter started with a significant improvement in terms of EBITDA, reaching 1.5x versus last year that, coupled with a debt optimization, has resulted in a very comfortable indebtedness figure, putting us in a better shape to continue addressing the challenges and taking advantage of the opportunity we see ahead.

On April 26, the Annual Shareholder General Meeting approved the final dividend of 2022 fiscal year with approximately amount of COP 5.1 trillion per share to be paid during May 2023.

Finally, it is worth mentioning that our 2022 corporate report are already available on our website, aligning with the best practice at the international level related to the timing of the publishing and frameworks that were included under our transparency commitment.

Let's now move to Slide 3. The year begins with improvement in renewable production, achieving plus 0.5 terawatt hour or 17% higher than last year, mainly coming from hydrology and solar. During the first quarter 2023, we connected an additional 72 megawatts related to our wind farm, Renaico II, getting a 76% CO2 emission pre-capacity and reaching the full production 2 days ago. The renewable growth production contributed with 0.1 terawatt hour of additional generation.

Natural gas conventional optimization has boosted our portfolio results and supported additional margin, contributing around $100 million this quarter. This was one opportunistic sale negotiating during the last quarter of 2022, taking advantage of the price foreseen at the time. We could cope with this situation thanks to our solid LNG supply position, which includes our long-term LNG contract with Shell and the Argentinean gas supply that especially delivered during the first quarter of this year.

Regarding this last point, I would like to mention that we will receive firm Argentinean gas supply during the winter period starting on May 1, 2023. This additional supply was not contemplated in our strategic plan figures, representing an additional option to cope with the current high spot price during the first half 2023.

On Page 4, let's review our initiatives and performance on distribution and from analyzed segments important towards electrification. Electrification is right out to tackle climate change, a fundamental buildup of our integrated strategy. Therefore, let me highlight some indicators and projects executed starting with distribution.

The number of clients and distributed energy in our concession area continues to grow. With them, additional challenges, but also opportunities can arise.

On the quality, looking at the last 12 months' indicator, we see a small increase of around 5 million in the sale mainly related to favorable weather conditions during the last 12 months, 2022 [yield]. If you look at the March year-to-date figures, see an important improvement for this initiator of around 20%.

On losses, we continue to focus our attention on this indicator that has grown mainly due to the economic situation of our clients. We continue to evaluate alternatives to support with several payment instruments and package to cut the increase of this indicator.

I would like to remind that Chile is a [indiscernible] in the region, also in terms of digital payments as we see it in digitalization.

No, on Enel X, we continue to develop different initiatives and promote several partnerships to boost the decarbonization of our clients' energy consumption. Let me go through some examples of this period.

We signed an agreement with a financial institute acting as a business partner to provide different financing alternatives for our customers, mainly for [ portal on site ] and electromobility projects focused on B2B payment. We continue to increase our portfolio in B2B, providing several efficient projects with an important hotel chain in Chile to replace their conventional oil and gas heating system with the electric heat pumps.

We continue to boost our partnership with the mining industry. In this period, we have developed a new business with mining fleet operators that will allow us to incorporate 49 e-buses for the transport of mining personnel.

To conclude, we were awarded [indiscernible] with the implementation of 5 charging depots for the Transantiago 5 project. The depot consider 70 charges and that's energy provided by us.

Now let's go to take a look at the main market update on Slide 5. The stabilization mechanism continue to be an important element in the gencos cash flow. In this slide, let's take a better look the PEC 2 process, also known as consumer protection mechanism.

At the end of this quarter, we had accumulated around $508 million relating to this [ issuance ]. The important and most expected news arrived 2 weeks ago, once the Decree July 22 that referred to the accounts receivable accrued during the first half of 2022 was published, allowing gencos to start the process to recover the credit through a factoring mechanism that will be guaranteed by the Chilean treasury. The processes perceive that the gencos receive the data from the [indiscernible] and will provide the system operator the information related to their receivable follow which means that a finance to issue the payments of when to be factorized. This process shall be made on monthly basis, will add a stock guarantee and do not require a new decree for going ahead with the mission of payment documents.

The second decree is expected to be issued in the following months related to the second half 2022 period in order to reduce the gap between the tariff and the contract price normalizing in the process.

Regarding the distribution tariff review, we have an important update. The expert panel process was concluded 2 days ago. We are still evaluating the expert report in more detail, but what we could anticipate is that we have seen positive outcomes as the panel recognized some of our claims. Now the regulator shall evaluate this document and apply its main argument into the [ BAT ] regulatory process, define the regulatory [ form ] and publish its finance report. We are expecting this regulatory final report to be published by the end of June 2023, what indicates that the new distribution type will be released by the end of this year.

I will start the financial analysis on Slide 6, introducing a summary of our main results for the period. In the first quarter of 2022, the EBITDA was adjusted by the impairment made to the Coal Stock of the peer which amounted to $21 million. This adjustment had an effect on the bottom line of $14 million. We did not apply any adjustment for the first quarter of 2023. As I had already anticipated, at the beginning of my presentation, all earnings indicated represented an important improvement versus first quarter 2022 figures.

EBITDA and net income present improvement versus last year indicator as part of our already mentioned portfolio management action. Let me highlight also the performance of our FFO in this quarter with an important recovery versus last year's figures that I will explain later.

Let's review our CapEx on Slide 7. Our first Q 2023 total CapEx reached $127 million, 61% related to the renewable development. In terms of [ taxonomy ], 82% of total CapEx was linked to the SDG goals mainly related to our renewable growth, which is coherent with our sustainable strategy.

Net CapEx totaled $70 million, 15% higher than the previous year. The customer's CapEx was deployed mainly to announce our agreed focus on quality and digitization to continue improving our customer experience. Other investments reached $42 million and were mainly focused on several maintenance and repair activities to guarantee the continuity and resilience of our operation. On that regard, an important portion of our CapEx was mainly focused on the maintenance of our natural gas thermal facilities.

Development CapEx reached $68 million, representing a decrease of 44% versus last year's figures in line with the remaining portfolio under construction. The 2023, CapEx shown to be committed to confirming our strategy of growing in the central part of the country and in the south between province as we detailed during our Capital Market Day last year.

Looking at the renewable development CapEx, we can see this year an important contribution of our CapEx to win technology, considering Renaico II and La Cabaña.

On solar, we can see CapEx contribution to the project already fully connected in new development in the central zone as El Manzano.

Let's move on to Slide 8, where we have the summary of the first quarter EBITDA breakdown accounting for $343 million. Considering the change in the company consolidation perimeter as a consequence of the sales of Enel Transmisión Chile in December last year, we have restated our EBITDA for first Q 2022 for comparison purposes. Therefore, Enel Chile EBITDA would have increased 78%, mainly explained by the following: $90 million from higher PPA sales in the first Q 2023, primarily due to higher average PPA price mainly related to contract indexation; higher capacity payment revenue due to the new power plant on [indiscernible] and commissioned during the second half 2023 to an increase in capacity remuneration; improved hydrology contributed $14 million on our margin; $11 million contribution from renewable growth related to new capacity added; and finally, gas optimization activity that generated an additional $147 million margin, mainly due to sustain of gas as a consequence of a higher natural gas availability and LNG during the period.

The above-mentioned effects were partially offset by: $91 million increase in variable costs, mainly related to higher thermal generation costs due to the commodity prices, partially offset by an agreement with one of our PPA supplier; and lower regasification costs in the period.

The remaining variation of our EBITDA comes from plus $2 million due to the agreed remuneration [ and demand ], mainly explained by $2 million on net gas indexation, the recovery of the demand in the period within [ 3 ], 6% in the first Q 2023 compared to first Q 2022, reaching pre-pandemic level, offset by negative effects coming from [ variable ] losses in the period; higher OpEx, mainly in generation business by $12 million associated with the new renewable capacity and inflation.

Let's move to Slide 9 to take a look at our financial KPI. Net electricity generation reached 5.1 terawatt hour as of March 2023, 2% lower than the level recorded in the first quarter of 2022. This was mostly due to lower [ current ] generation mainly related to the disconnection of Bocamina 2 power plant September 2022, which was largely offset by highest hydro generation and solar during the current year. The latter includes, of course, the contribution of the new renewable projects.

Our energy sales totaled 7.8 terawatt hours during the first quarter of 2023, equivalent to a 3% decrease compared to March 2022. This was mostly explained by lower sales to free customer, which was partially offset by improvement in the sales to regulated customers. As a result, in terms of energy balance, the amount of energy purchases in the spot market was basically in line with the last year figures, particularly the composition between non solar and solar part.

Now on Slide 10, let's go through the main drivers of our group net income. Net income for the first quarter this year increased 95% to $173 million, mainly resulting from greater EBITDA for $118 million explained in the previous slide; an $18 million improvement on the financial results, mainly due to higher financial income in the period, mainly explained by greater return on short-term fixed income investments related to the higher cash availability and interest rates; lower financial costs due to a fastening of account receivable executed in 2022.

On the other hand, income taxes and minority increased by $41 million and $9 million, respectively, mostly owing to higher EBITDA results on the company.

Moving to FFO on Slide 11. During this first quarter, FFO reached $99 million, which reflects a $150 million improvement in the period, resulting from $343 million coming from EBITDA driven by better hydrology, higher renewables contribution and gas trading activities; cumulative stabilization mechanism effect in our receivable for $135 million, reducing the cash conversion of the period.

Let me point out that this situation shall improve during the next month since the tariff between July 23 to the period was published this month and having the recovery of part of this receivable. According to the mechanics of the process approved, we expect to recover an important part of the balance accumulated during this year by the end of 2023.

Working capital reached a negative balance of $54 million as a consequence of energy and CapEx rebound from 23 to last month, partially offset by positive cash in from commodity hedging, factoring transactions [indiscernible] from the sales of Santa Rosa building.

Income tax reached $23 million, mainly related to the better results in generation business. And financial expenses reached $32 million, in line with the last year's figures.

Now let's take a look at our deleveraging strategy on Page 12. Our gross debt decreased around $0.3 billion to $4.4 billion as of March 2023 when compared to December 2022. This decrease is due to the prepayment of all disbursements of Enel Chile committed credit line with Enel Finance International for $290 million. This prepayment was made in January 2023.

In addition, we improved the average of our debt maturity to 6.4 years, and we also increased the fixed rate portion to 89% as of March 2023 from 84% as of December 2022. The average cost of our debt reached 4.6% at the end of first quarter 2023, a little bit higher than December figures due to the new profile of our debt to prepayment of some bridge short-term instruments in current market situation.

In terms of liquidity, we have a comfortable position to cope with possible headwinds in the debt market related to the overall economic situation and support coming debt maturities. These include, of course, cash and cash equivalent of $0.8 billion and committed credit line available for $0.6 billion as of December, but as of March 2023. Large amount of the current liquidity shall be committed to tax payments and other net working capital needs in the current month.

Now before going to the closing remarks, let's review some of our ESG best practice in terms of reporting on Page 13. Let me mention to you that our 2022 integrated report was published at the end of March 2023, taking into the consideration the best practices at the local international level. This report includes the financial and nonfinancial information for the 2023/'22 periods. Also, the 2022 sustainability report is already valid on our website. Both reports are aligned with TCFD, GRI and SASB standards and are available on our website in the investor section together with the 2022 sustainability report, which have a deep dive on ESG matters. The records reflect how sustainability is fully integrated in our business model as the risk management and value creation [ other ].

Also, we would like to invite you to view the new interactive version of the integrated report, giving a different view for different stakeholders. Please feel free to send us your feedback to our Investor Relation teams.

Now I will point out some closing remarks on Slide 14. We have been able to deliver a more than solid operating assumption based on that in the past quarter. These are the results of our action on lost value that represented a turnaround story for our assets.

We are on the right path, pursuing the opportunity through the decarbonization of our markets and the electrification of [indiscernible].

Our integrated and sustainable business model, putting our clients in the center, that give us confidence that Enel Chile is more than prepared to operate in a volatile environment.

We had the opportunity to tackle several actions necessary to recover our company's financial position faster than expected. We believe Enel Chile is now in a better shape to continue addressing the challenges and taking advantage of the opportunity we see ahead.

Let me now hand over to Isabela.

[Isabela Klemes, executive]

Thank you, Giuseppe. Thank you all with us today. Now let's begin then our Q&A session. We will receive questions via chat and also via phone and who is those connected here to the webcast. Okay? The Q&A section is open. Operator, please, you may start.

[Operator]

Thank you. [Operator Instructions] And our first question comes from the line of Alessandro De Vito with Mediobanca. Please proceed.

[Javier Suarez Hernandez, analyst]

This is Javier Suarez from Mediobanca. Can I go on with questions?

[Operator]

Go ahead.

[Javier Suarez Hernandez, analyst]

It's Javier at Mediobanca. I have 3 questions. The first one is on the cash flow statement in Slide #11. We have seen some cash flow absorption coming from the stabilization mechanism at $135 million. You can help us to understand the level of that capital cash flow absorption by the year-end. I think that during your presentation, you had mentioned that most of that capital cash flow absorption should be reabsorbed by the year-end. Is that a fair assumption to make?

And second question is also on that slide on the working capital absorption. There has been $54 million, and the [ strength ] on that is some cash management actions. If you can clarify to what that is referring to.

And then the third question, it's a question that has to do with the CapEx. I have noticed that -- that is in Slide #7, that CapEx on -- in the first quarter is down minus 24% and minus 44% when it comes to renewable development. You can help to understand this decrease in the first quarter and what you are expecting through the year?

And the very final question is on the Slide #5. I think that is on the revision for the distribution tariff. You mentioned some improvement in the document through the expert panel process. You can -- you could be a little bit more specific on what has been improved through that revision what you are expecting? And what do you consider that being good news?

[Isabela Klemes, executive]

Thank you, Javier, for your questions. Giuseppe?

[Giuseppe Turchiarelli, executive]

Yes. Well, maybe we can start with the last one, the expert panel report that has been issued. We are still analyzing the record. But as I said, seems pretty good in the times that the expert has recognized some of our claims. So we believe that we're going to have a better situation as soon as the decree -- the third decree will be released. Now the process didn't finish. There is another important step that is going to be in June, end of June, when the new report will be issued. And in this report will be clarified the formula based on which the target will be calculated. So as soon as we are going to have this kind of report, we can estimate the impact that we see in our distribution business.

For what concerns the CapEx that you see a reduction this weakened this trimester. In comparison with the last year, this is just the effect of, first of all, having part of our project at the end of their construction life, while last year, they were basically at the beginning of -- in the middle -- so basically, we are finalizing some projects.

And on the other hand, as we already anticipated in our Capital Market Day, we are reducing our CapEx effort for this year, [ focalizing ] the technology and the location in the center and south of the country and especially in the wind and [ base ]. So there is a refocus on our CapEx effort.

For what concern the cash flow, we are -- in the first trimester, we accounted $135 million in terms of receivables coming from the stabilization mechanism. If I think -- if I project my estimation for the full year, the amount is going to be around $400 million. But in the same time, as I said, according to this mechanism, we should have a recovery as soon as the state guarantee will be issued and the factoring, and we can put in place the factoring process.

For what concern the other question about the working capital, the minus $54 million, basically, the management action are what I already said. Basically, we have a [ cushion ] coming from the hedging activities. And so basically, we are around $103 million coming from the regeneration of our hedging, but we have also some additional transaction that is referring to the sale of Santa Rosa building that was around $44 million -- $34 million, sorry. So these are basically the main impact coming that explain the difference between the working capital that we have this year versus the last year balances.

[Javier Suarez Hernandez, analyst]

Maybe a follow-up. Just to understand correctly what you say is that on that Slide 11, that $135 million should become $400 million by the year-end without taking into consideration the factoring, the possibility of factoring activity there. And if that factoring happens, that amount should be substantially reduced. Is that a correct -- a fair statement?

[Isabela Klemes, executive]

Thank you, Javier. Giuseppe, regarding the stabilization mechanism?

[Giuseppe Turchiarelli, executive]

Yes. As I said, at the end of the year, we're going to have -- we are going to accumulate other $400 million roughly. But of course, we are going to recover an important part of the existing one as well as the mechanism will start.

[Javier Suarez Hernandez, analyst]

And can you share with us your expectation of that, the percentage of those $400 million that you expect to recover by the year-end?

[Giuseppe Turchiarelli, executive]

Not the full amount, but an important part, I would say around 70%, 80% of the amount is going to be recovered by the end of the year.

[Operator]

[Operator Instructions] And our next question comes from the line of [ Martin Aransett ] with [ Balance ].

[Unknown Analyst]

Well, first of all, thank you for the materials and for taking my questions. I have 2 questions. First, probably as a follow-up of a recent question. How much are you expecting to collect of already accumulated back to receivables? And when do you think that you will be able to do that?

And my second question is that we see international coal and gas prices collapse in the past month, and my question is how long do you think that it will take for the system to run through the all more expensive inventory and for store prices to come down and reflect this lower cost of thermal fuels?

[Isabela Klemes, executive]

Thank you for your question. We will then ask Giuseppe to share please?

[Giuseppe Turchiarelli, executive]

Yes. Well, let me say that the recovery of the credit from the distribution according to the [ Fenechs ], and it should start in June, if all their step is going to be confirmed because as I said before, in order to start the recovery of the receivable, we need to get the guarantee from the state that is in the process. So we have already the first decree that is referring to the first half receivables in '22. In the [ instrument ] we are going to have the decrease, we can start with recollecting this part of our amount. And we are talking about -- around $140 million, $150 million. Now as soon as they and the guarantee is going to be issued, we don't need any more the decrease in order to factorize the receivable because the payment documents should be issued on a monthly basis according to the information that a distribution company will send to the operation company and the generation company, they will send to the system operators.

So as soon as the timing is going to be respected, we are going to -- we should recollect another approximately -- another $150 million in the second half of the year. So I can say the team general in total, we are going to recover around $300 million.

[Isabela Klemes, executive]

Thank you [ Martin ]. That's okay? Do you have any other questions?

[Unknown Analyst]

Yes. And my second question then was about spot prices. When do you think that we should see spot prices reflecting the lower cost of thermo fuels?

[Isabela Klemes, executive]

Okay. Thank you. Giuseppe?

[Giuseppe Turchiarelli, executive]

Yes. I mean the spot price, of course, is going to be influenced by the hydrology and clearly the commodity. So we should believe that in -- during the winter part, especially in the second part of the year, we should have a reduction in the spot price according to the hydrology effect, but also based on the commodity price that are going to be which effect is going to be correct by the spot price.

Now we have just to mention the fact that the price that we saw in the first quarter are coming especially by the fact that the system suffered some failure in coal facility and [ indiscernible] facility. The reason because we saw a very important increase in the spot price in the first quarter. But in general, the second half of the year, we should see a benefit in terms of reduction of spot prices.

[Operator]

[Operator Instructions] One moment for our next question, and it comes from the line of Henrique Peretti with JPMorgan.

[Henrique Peretti, analyst]

I have a question regarding the guidance. So congratulations on the results, $343 million in EBITDA in the first quarter. So the range first off in 2023…

[Isabela Klemes, executive]

Sorry. We're sorry to interrupt. Could you please just speak a little louder. You're far away from the line.

[Henrique Peretti, analyst]

Okay. Just give me a moment. I'll try to change. I'm on the speaker now.

[Isabela Klemes, executive]

Much better.

[Henrique Peretti, analyst]

The question is about the guidance. So the company reported $343 million in the first quarter. The guidance for the year is $1 billion to $1.2 billion. So it's between 25% and 1/3 of the guidance for the year already in the first quarter. So given that we still have the rainy period beginning and maybe the help of El Nino, do you believe this guidance could change upwards? Or are you still confirming the guidance for now?

[Isabela Klemes, executive]

Thank you. Giuseppe?

[Giuseppe Turchiarelli, executive]

Yes. I mean as of today, we confirm the guidance. Really, the first quarter was pretty good, but we prefer to stick with the guidance in order to see how [indiscernible] is going to be because you're right, since that El Nino's going to have some positive effect, but according to our consultant, the effect should be moderate. Better than our forecast, but in any case, not so good to celebrate, let me say this way. So as of today, we can confirm the guidance that we have.

[Isabela Klemes, executive]

Thank you, Giuseppe. Henrique, do you have any other questions?

[Henrique Peretti, analyst]

Wait. You don't confirm the guidance or you confirm?

[Giuseppe Turchiarelli, executive]

I can confirm. I confirm.

[Henrique Peretti, analyst]

Okay. Good.

[Giuseppe Turchiarelli, executive]

I confirm the guidance.

[Henrique Peretti, analyst]

Okay. Good.

[Isabela Klemes, executive]

Thank you, Henrique.

[Operator]

I'll pass it back to Isabela for any further questions on her side.

[Isabela Klemes, executive]

Thank you. So Giuseppe, we have some questions that we received from our chat here. The first one is coming from Fernan Gonzalez from BTG. So Fernan is asking if you could elaborate a little bit more on the impact of gas optimization strategy and how that strategy may continue to impact results in the rest of this year?

[Giuseppe Turchiarelli, executive]

Yes. Well, basically, our gas optimization is coming from the fact that we have a very good contract with Shell that guarantee a certain level of gas LNG, but also their availability of Argentinean gas. So considering this availability and considering the fact that our projects are going -- our renewable projects are going very well, so we have an excess of gas that last year, this is a very important point, we -- the margin that we are recording this trimester has been stalled last year when the price were higher than what we see today. So basically, thanks to our availability and the capability to manage the supply of gas, we were able to do this margin.

Last year, we sold this effect of gas for the first quarter. And we already sold part of our availability also in the fourth quarter. So we're going to have another positive effect in the last quarter this year.

Now if the question is for how long we are able to do this kind of marketing, clearly, it depends on the prices that we've seen in the international market and the availability of the gas. So for this year, we can confirm our guidance because we already secured the sales. Another story is for our course and 2024. So as of today, we are let me say celebrating our [ manager election ].

[Isabela Klemes, executive]

Thank you, Giuseppe. So we also have another question now coming from Alejandra Aranda from Itaú BBA. Okay. Alejandra is saying congratulations on the beat -- on the significant beat. With these results, you seem to be very comfortable to beat your year-end and guidance for today EBITDA. Can you give us some visibility on what to expect for gas optimization on second quarter? Did you sell any additional energy cargo so far in the second quarter? It's a little bit related to the first question.

[Giuseppe Turchiarelli, executive]

Yes, yes. As I said before, yes, we have already sold cargoes for the fourth quarter of this year, and we are going to have approximately 100 -- yes, in terms of margin, $100 million impact in our fourth quarter. So basically, the sales of gas has been already placed in the first quarter and in the fourth quarter. And again, the guidance, I mean, all this margin has been already included in our guidance. So we are just confirming the guidance because we already know that the margin has been secured.

[Isabela Klemes, executive]

Perfect. Thank you, Giuseppe. So now we have another question coming from Andrew McCarthy, CrediCorp, saying that I understand that the $508 million of receivables from the PEC 2 had been accumulated up to March '23, of which $135 million related to the first quarter of this year. Then there would be an additional $265 million of PEC 2 receivables expected up to the end of the year. So total receivables accumulated by the year-end would reach more or less $850 million in the period. Is my understanding correct? And if so, how much of that should be settled by the end of the year? Giuseppe, it's a lot of numbers, so you have to [indiscernible] your question.

[Giuseppe Turchiarelli, executive]

Yes. Let me recap for a second. Okay. So the accumulation of receivables coming from the PEC 2 in the first quarter are $135 million, as you see in the slide. But of course, PEC 2 are coming also from the last year, so the full amount as of 31 March 2023 is $508 million. So this $508 million includes this $13,500,000 1st Q 2023 and the remaining parts are coming from last year. Okay?

Now, if you think about what we are going to accumulate from the second quarter still the fourth quarter, always related to the PEC 2, we have -- we are estimating around $170 million. This is the kind of -- if you want, I can repeat. So $135 million is the amount related to the first quarter 2023. If you look at the number, the total number at the closing of the quarter, we are going to have $508 million that includes this $135 million. And for the rest of the year 2023, we should accrue $170 million roughly of receipts.

[Isabela Klemes, executive]

Thank you, Giuseppe, for the answer here. So we have another question now coming from Rodrigo Mora from Moneda. So he had some questions. The first one is that he would like to know the availability of natural gas or MG for the second quarter and the third quarter of this year.

The second question is that if you could explain the income in Enel Generación regarding a compensation coming from a supply generator for a PPA agreement purchase. Okay?

Also, there is other question, Giuseppe, from Rodrigo Mora that it was saying on the press we saw that Enel Chile is analyzing to sell part of its solar plant through Enel Green Power Chile. Could you please give him more details about it?

Then the other question, I can repeat later, we are just to put all the questions here. Then the last question is coming from distribution business. No? Rodrigo is asking that Enel Distribución is reporting EBITDA by around $25 million per quarter. And also, there is a CapEx that is higher than this. No? So my question is how long this situation will continue and how long the company could afford it?

Thank you, Rodrigo, for your questions. Giuseppe?

[Giuseppe Turchiarelli, executive]

Yes. Thank you, Rodrigo. Well, starting from the first one about the gas for the second and third quarter 2023. We have a strong LNG availability in [ E.ON ] and [ Sentinfero ]. We have already secured 2.45 million of metal tube per day of Argentinean gas. So May and June, we are covered on that. And of course, we are negotiating new Argentinean gas supply for the rest of the year. At the moment, we don't -- we cannot provide any kind of details.

For what concern the income associated to PPA we can buy, we had a PPA signed with our supplier. We have been asked to change some condition from the original deal. And basically, because of difficulties in these third parties and because of that, we have been compensated with -- we did changes in the condition of the contract. But what concerned the rumors about the sales of assets, you know that we always are looking at the opportunity to extra value from our assets, so this is nothing new in comparison with the past. And as soon as we are going to have some additional info, we are going to provide to the market.

[Isabela Klemes, executive]

And the last question, Giuseppe, one on distribution business, no, regarding the [indiscernible] CapEx.

[Giuseppe Turchiarelli, executive]

Distribution business, distribution business, of course, is always under analysis. We believe that the distribution has a lot of value to be tracked. The CapEx that we are spending are CapEx that's needed for the quality of the grid and for supply our customer needs. So clearly, the analysis of the financials are always under our monitoring. And we believe that the regulation of the distribution needs changes, and it is something that we are working and we are trying to [ pass the net ] on the regulator and today, we're all now interest. But as of today, we believe that the distribution business is still very, very valuable for our company.

[Isabela Klemes, executive]

Okay. Thank you, Giuseppe. So I'll just check. We have one more question, also a follow-up question from Andrew McCarthy that is related to his first question on the PEC stabilization. So he thanks for your clarification and we just wants to confirm. So $508 million plus $107 million, that's all approximately, $750 million, this $750 million for this year. No? So how much do you expect to be settled via factoring by the end of this year?

[Giuseppe Turchiarelli, executive]

We believe that around -- I mean the numbers are [ covered ]. So we should have an accumulated receivable for PEC 2 at the end of the year, around $750 million. We believe that in terms of factoring, we are going to recover more than $300 million. Now, I cannot give you a more precise number because it all depends on the timing of the document that will be issued according to the process, the payment document.

So we believe that $300 million is going to be the minimum amount of collecting through the factoring mechanism. In the next quarter call, we can give more detail and a better view of the remaining part of the year. But definitely, it's going to be more than $300 million.

[Isabela Klemes, executive]

Okay. Thank you, Giuseppe, for that. So we have another question coming from [ Ignacio Eraduri ]. So [ Ignacio ] is asking us. He would like to know about the liquidity of Enel Chile that was presented here. No? So the cash that we have presented in the slide regarding the Enel Chile if this cash includes or not the centralization cash agreement that Enel Chile has with Enel Generación, no, that's more or less $250 million. So this is his question, Giuseppe.

[Giuseppe Turchiarelli, executive]

Yes. Yes. Does it include because all our group and group work in this way. So basically, the concept of cash centralization apply to all our subsidiaries. So this clearly is a benefit for the subsidiary that can have a very flexible instrument to manage their cash needs.

[Isabela Klemes, executive]

Okay. Thank you, Giuseppe.

Just checking with the operator, if we have more questions here. From the chat, I don't have.

So thank you very much for your attention today. As always, our team, Investor Relations team will be available for any other further questions you may have. Please, as you mentioned, give us your feedback. We would appreciate it regarding the material that was recently published. We hope that all the information for this will help you in the evaluation of our company.

Thank you very much. Have a nice day.

[Operator]

And with that, ladies and gentlemen, we thank you again. This concludes today's conference, and you may now disconnect.