Enel Chile SA

NYSE:ENIC

Earnings Call Analysis

Enel Chile's Positive Growth and Optimized Assets

Enel Chile is on a strong path with 400 megawatts of new renewable energy capacity started this year, driving decarbonization efforts. A concluded deal, totaling $156 million from the sale of four non-core solar power plants, is enhancing their leverage and funding CapEx. Hydro production soared by 28% due to favorable weather conditions, contributing to a 38% increase in production, reaching 8.1 terawatt hours. Financially, the company is robust with EBITDA up by 60% to $783 million. Their renewable capacity mix is now 6.7 gigawatts, 77% of total installed capacity, after adding nearly 0.4 gigawatts this quarter. The disposal of subsidiary Arcadia is expected to net around $106 million in income and reduce debt by $150 million, without affecting 2023's cash flow. The company continues to optimize gas trading, eyeing a contribution margin of approximately $270 million by year-end.

Portfolio Expansion and Financial Recovery

During the year, the company initiated approximately 400 megawatts of new renewable energy capacity, enhancing their focus on decarbonization and optimizing their energy mix. This expansion was marked by the substantial sale of non-core solar plants, which provided $156 million aimed at deleveraging and CapEx requirements. This fiscal prudence helped achieve a significant 28% increase in hydro production due to favorable seasonal conditions, reflecting an operational improvement. Additionally, the company connected 0.4 gigawatts of net capacity during a 9-month period, particularly highlighting the Manzano solar power plant and Renaico II wind farm.

Strong Financial Position and Profitable Hydrology

The company's financial resilience is shown by an impressive 60% increase in EBITDA to $783 million, and an FX recovery of $790 million from the previous year, driven primarily by the favorable hydrology and steady growth in the distribution business. A proactive approach to portfolio management, including the sale of the subsidiary Arcadia, not only reinforced their asset value with a positive impact on net income of about $106 million but also improved their net debt by roughly $150 million.

Optimizing Operations and Service Quality

A noteworthy improvement in the SAIDI index, a measure of electric service reliability, along with stable energy loss figures from the previous year, indicate efficiency strides in operations. The company eagerly anticipates the conclusion of the distribution tariff process, which will refine its service rates and further enhance operational quality heading into 2024.

Commitment to Sustainable Growth

Emphasizing sustainability, the company fortified their commitment to an electrified and decarbonized future by incorporating over 2,200 electric buses into Santiago’s public transportation system. In conjunction with an 18% growth in public lighting contracts, these strides firmly position the company as a leader in the clean energy transition.

Upward Financial Trajectory

The company saw a remarkable 87% surge in net income to $336 million by September 2023, mainly attributable to a more efficient generation mix and distribution business outcomes. The fruition of the sale of Arcadia and the robust performance fueled confidence in achieving the upper range of the 2023 EBITDA guidance.

Leverage and Liquidity: A Steady Hold

Addressing leverage, the company reported a gross debt increase to $4.9 billion, largely due to tax obligations and working capital needs. Nevertheless, this is considered a temporary spike as they anticipate improved cash generation and a net debt to EBITDA ratio below 3x by the end of 2023. The company maintains a substantial portion of its debt at a fixed rate, underscoring their prudent financial management in a volatile market.

Future Prospects and Strategic Planning

The upcoming Investor Day, scheduled for the end of November, will unveil the strategic plan for 2024-2026, setting the stage for continued growth and innovation in alignment with the energy transition's expanding horizons.

Earnings Call Transcript 2023-Q3

[Operator]

Good morning, ladies and gentlemen, and welcome to Enel Chile 9 Months and Third Quarter 2020 Results Conference Call. My name is Victor, and I will be your operator for today. [Operator Instructions]. Please be advised that today's conference is being recorded.

During this conference call, 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 are 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 9 months and third 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 9 months and third quarter 2023 results press release and presentation on our website 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 to 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 Mrs. Isabela Klemes, Head of Investor Relations of Enel Chile. Please proceed.

[Isabela Klemes, executive]

[Foreign Language] Good afternoon, and welcome to Enel Chile's Third Quarter and 9 Months 2023 Results Presentation. Thank you all for joining us today. Joining me this morning is our CFO, Giuseppe Turchiarelli. Our presentation and related financial information are available on our website, www.enel.cl in the Investor Relations section and as well in our app investors. .

In addition, a replay of the call will be soon available. At the end of the presentation, we will be an opportunity to ask questions via phone or webcast chat. Through the link as a question. Media participants are connected only in listen only mode.

In the following slide, Giuseppe will open the presentation with our key highlights of the period then go through our portfolio management actions and market context updates and finally give us a view of the business economic and financial performance. Thank you for your attention.

And now let me hand over to Giuseppe. Giuseppe?

[Giuseppe Turchiarelli, executive]

Thank you, Isabela. Good afternoon, and thanks for joining us. Let's start our presentation with our main highlights on Slide 2. I would like to start with our portfolio management highlights. .

During the year, we started around 400 megawatts of new renewable energy capacity, contributing to our long-term ambition of the decarbonization and optimization of our portfolio. We are pleased to announce that the current transaction was concluded last October, 24, you can see totaled $156 million that shall be used also for deleveraging and CapEx needs of our business.

Let me remind you that the operation involves the failing of 4 nonstrategic solar powered plants amounting to 416 megahertz. We will give you more color in the next slide.

This year, we had a very positive raining season in the count, the rain year in the last few years. This is reflected in a 28 percentage increase in our hydro production versus last year. For what concerns the massive content on the distribution business, the final technical report of the DAC 2020 to 2024, has been already established. The process is not yet concluded, but I will give you more color on this later.

Regarding the chartering of Page 2. In August 2023, we received the first trend of IDB issue related to ENEL [indiscernible] financing Chile and Enel Green Power Chile of around $330 million.

During October, we were able to connect an additional $17 million, and we expect to receive an additional $32 million by the end of this year. Again, about the bank, I would like to mention that the government signed an agreement with the Congress based on which a draft bill should be presented during November to address [indiscernible] tesorelevant process. typically, a solution related to a potential new price stabilization method.

Also in November, the government committed itself to presenting another draft bill to discuss topics such as the transmission planning process, storage adoption and renewable support.

In incentives, our EBITDA rose reaching $783 million or 60% higher compared to last year's adjusted year. And our FX increased by $790 million versus last year's figures, showing an important recovery. We will have a deep dive into the economics and financials later.

Now let's move to Slide 3. Let's now look at how we are consolidating our renewable leadership and optimizing our generation performance. During the last year, we have focused most of our effort on developing a diversified renewable mix, in line with our decarbonization strategy. And we are reaching the [indiscernible] current status developed products here in the north or in the center south region. In this 9-month period, we connected almost 0.4 gigawatts of additional net capacity, of which 0.3 gigawatts were adjusted in the last quarter.

Among the projects already commenced in this period, I would like to call attention to Manzano and 99 megawatts solar power plant located very close to the consumption load. In the center of Chile in our wind farm in the top. Renaico II in La Cabana, which allows us to connect 72 and 106 megawatts of wind capacity into the national system.

Therefore, our renewable capacity contain creasing this period, we have reached 6. 7 gigawatts out of 8. 8 gigawatts of renewables installed capacity, representing 77% of the total. In terms of cost, we have received the operational commercial certificate for 1.2 gigawatts in 2023 for projects like Renaico II, Campos del Sol [indiscernible] 1 to by losses for Momita, please see the annex.

As a part of our unlocking go force on optimizing our portfolio, reinforcing the value of our assets, important mention was achieved a few days ago. We completed the sale of our subsidiary, Arcadia transaction that was announced in July and was foreseen in our 2023-2025 strategy plan.

All the conditions established for this kind of transaction was finally fulfilled, including the approval from the Chilean [indiscernible] citrus authority fiscally and tea. In line with the agreement, the buyer paid a total amount of $156 million. We expect to record a positive impact in our net income of around $106 million and our net debt of around $150 million in the last quarter 2023. Regarding the latter, I would like to point out that the staff corresponding to the sale of Arcadia that totaled around $61 million will be paid in April 2024. And therefore, it will not affect the 2023 cash flow.

This pound will give us more room to execute our CapEx plan and strengthen our financial position. Now on the next slide, let's look at some updates on the hydrological situation and optimization activities.

I would like to highlight that this year, we have benefited from the very favorable hydrological conditions. Hydro production has been higher both in 2022 both the Q3 and 9 months period. As of September, we recorded 38% of additional ad production, reaching 8.1 terawatt hour. Considering this scenario, we expect to close the year with around 11.9 terawatt hour, 2.6 terawatt hour more than expected. As a result of the significant increase in rainfall, the agrological situation in all our reservoirs is positive, especially in the south of the country.

Rainfall exceeded the hydrological level of the last 10 years and [indiscernible] a fund rating the average level of hydrological rate of the last 60 years were status. In addition, as you can see on the image, the same on this slide, no cover in the month is better than last year in Maule and La Cabana are.

Regarding our gas optimization activity and trading action. We continue gaining a comfortable gas availability, thanks to the long-term LNG agreement, which are in the contract time adjusting supply. Since October 1, new firm agreement with Argentinian gas supply for up to 4 million cubic meters per day started to operate until the end of the April 2024. And inorder to optimize our CPT financial costs.

Thanks to the Argentinian gas in the center zone, we continue coming out LNG swap to the [indiscernible] northern zone -- gas not available. In this 9-month period, we divested several gas shipments to the north totaling around 12 Terra-Btu.

In addition, we continue executing on several trading activities in localized industrial and mining customers and with foreign market. In connection with [indiscernible] Elena, we have the same of 2 ships in the Q4 as we did in the Q1 this year. The total expected contribution margin for all this gas saving will be around $270 million approximately for the full year 2023.

Now on Page 5, let's review our performance and new initiatives in distribution and Enel.

[indiscernible] highlight some indicators related to the distribution. In our [indiscernible], the number of customers and distributed energy continue to grow that for new for opportunity and challenges putting per ride. On quality and efficiency, looking at the last 12 months, we see a significant improvement in the SAIDI index of around $12 million. And the energy losses have remained flat versus the same period last year.

Before moving to next, on the distribution side of review, the final technical report of the BHP 2020-2024, has already been published. With ramp-up already considered the several CAGR rate by the distributor during the extra finance stage. However, we are still waiting for [indiscernible] breakdown by type of [indiscernible], which should be published by the end of this year. After that, we have a new stage of the process that ranks above the check.[indiscernible] , the industry in [indiscernible] rentability will be reviewed. After all this process, we would rise, we will add the time distribution for release. Considering all the steps, I mentioned, we expect to have the process concluded during 2024.

For VOY [indiscernible] the 2024, 2028 distribution tariff process, the VAD process has already started. And the components of the aggrevated value of the distribution of the 2024-2028 and services cost of these new regulatory period has been already defined. The process is still ongoing. So next year, we shall have more update on the next step.

Regarding Enel X, we have some interesting milestone focus on the electrification and the carbonization of our client energy consumption reached in the period. Let me go through some examples. First, we have incorporated 2,200 e-buses into the back, into the Santiago fleet or 36% higher than previous year figures, mainly through 358 new e-buses of [indiscernible] to support public transportation and through the agreement and Chinese to deliver another 240 e-buses. Second, regarding public lighting, the minister grew by 18%, mainly as a consequence of new contracts signed with [indiscernible]. To conclude we continue working to increase the number of public and private charging points for electric vehicles and to be awarded with more lighting projects throughout the count increase in this way, the electrification of the market.

Now let me talk you through the financial performance of our business on Slide 6. I will begin summarizing our main results for the period to better evaluate our company earnings performance will present the 2022 period as a pro forma that includes 2 main adds on. First, EBITDA has been adjusted by the impairment of coal company totaling $63 million in the 9-month period of 2022 and $1 million in the third quarter of 2022. These adjustments affect the bottom line of $43 million in 9 million and $0.4 million in the third quarter 2022. The second adjustment and the most relevant one is related to the sale of Enel Transmision in December 2012. We excluded from our analysis, the EBITDA of Enel Transmision which amounted to $77 million in 9 month period and $24 million in the third quarter 2022.

These adjustments expected at the bottom line by $46 million and $15 million in the 9-month period in the Q3 respectively.

Now on the FFO. The 2022 figures are adjusted also by the Enel Transmision perimeter in terms of cash by $18 million in the 9 months period and by $16 million in the third quarter. The 2023 figures also excluded $310 million paid in tax due to the capital gains obtained from the Enel Transmision sales. Considering these let see how it affects the indicator in the FFO platform.

In the 9 months period and the third quarter of 2023. We see a relevant improvement in the EBITDA in net income versus 2022. This is mainly explained by a more efficient generation mix, especially during the last quarter due to the improvement in the hydrological situation and better distribution performance. We will see more details in the following slides. Regarding the FFO, the 2023 figures show a relevant improvement impacted mainly by the EBITDA of this period and [indiscernible] by expect to first an execution for around $330 million. We will see more details later.

Let's review the progress on CapEx on the Slide 7. Our 9 months 2023 so far CapEx reached $537 million. 74% of our total CapEx deployment was related to renewable and 94% of the total CapEx was to the SDG goal. Customer CapEx totaled $64 million, 18% higher than the previous year, mainly associated with the new customer connection.

Our investment reached $102 million, 13% lower than previous year, mainly due to lower maintenance activity in incubational plant and distribution. These factor were partially offset by new renewable plants in operation and the maintenance program in Ralco.

Development CapEx reached $381 million, representing a decrease of 34% versus last year figures in line with the remaining renewable portfolio under construction. Let's move now to Slide 8, where we had a summary of the third quarter EBITDA breakdown accounting for $391 million.

First of all, let me remind you, again, the changes in the company's consolidation perimeter, mainly due to the sales of Enel Transmision Chile in December last year. We have included a fund of our EBITDA for the Q3 2022 for [indiscernible] companies. Third quarter 2023 EBITDA is $162 million higher than the 2022 performance, mainly explained by the following.

A positive effect in on renewable contribution of $149 million to our margin, mainly associated with the improved hydrology in the fall. And the positive effect of $132 million of variable costs, mainly by a lower withdrawal sports brand in the quarter and the consequence of better hydrology in the period. Therefore, the effect was partially offset by a lower gas optimization activity, which decreased by $109 million, mainly related to the lower gas managing prices and lower gas trading volume of 3.3 terra-Btu, which is equivalent to 1 cargo of LNG approximately when compared to the same quarter last year. $36 million of lower PPA sales in the Q3 2020, primarily due to lower average PPA price, mainly related to the valuation of Chilean Pesos versus U.S. dollar in both free regulated market and also lower commodity indexation in regulatory line.

The remaining variation of our EBITDA come from plus $16 million due to decreased remuneration related to the indexation, client required services, lower [indiscernible] and compensation, partially offset by lower demand. Better effect in OpEx and other costs mainly by the financial hedging in the quarter and higher effect in Enel X due to the recognition of a Transantiago 3.

Let's move to Slide 9, where we had the summary of the 9-month EBITDA breakdown accounting of $783 million. As we did in the third quarter, we are excluding the 2023 EBITDA of Enel Transmision for comparison and for a better understanding of the Q3 results.

Enel Energy [indiscernible] finding increase by 60% or $293 million, mainly explained by the higher contribution of hydro and renewable of $172 million, mainly related to the improved hydrology volume. $98 million from higher PPA sales 9 months 2023, primarily due to $37 million of higher average PPA price, mainly related to the nestation. $38 million, mainly due to the higher capacity payments revenue, primarily due to two factors. First, delay in the cost of some massive renewable projects, which increased the payment for all deposits in operation; and second, the new power plants connected and commissioned during the last quarter of 2020 and within 2023. Compared to the effect of $17 million in variable loss, mainly related to $162 million related to a lower cost price in the period due to a better hydrology since June 2023, mainly during the nonsolar and one-off effect of the agreement with one of our PVA supply, partially offset by lower thermal generation margin, which amounted to $134 million.

Mainly rising to the lower payment synergy. The remaining variation of our EBITDA comes from plus $24 million to create the remuneration related to this indexation. Lower [indiscernible] fines and compensation and higher demand. The above mentioned effect was partially offset by higher OpEx and other mainly international business by $30 million associated with the new renewable capacity inflecting inflation across all the renewables.

Let's move now to Slide 10 to take a look at our traditional KPIs. Net electricity generation totaled 17.6 terawatt hour as of September, 2023. 6% higher than the levels recorded in the first 9 months period of 2022, mainly due to higher hydro and solar generation this year reflecting better hydrology and the addition of new projects expected.

This also strengthen the lower tenant dispatch mostly related to the disconnection of Bocamina to September 2022. During the third quarter 2023, net generation grew 11% percentage to 7%, mainly due to higher hydro and solar generation.

Our energy sales totaled 23.2 terawatt hour our end of September 2023, maintaining the levels recorded as of September 2022. It is worth mentioning that our commitment with our clients were fulfilled with a higher portion of our renewable generation, which also leads lower energy pace, especially in the spot market, mainly on solar hour.

During the third Q 2023, physical sales increased by 0.4 to 7.8 terawatt hour mainly due to the higher sales [indiscernible]. To [indiscernible] color ascension to the fact that we end up net sellers in the spot market during the third quarter 2023 mainly associated with a much better-than-expected hydro profitability.

Now on Slide 11, let's go through the main drivers of our [indiscernible] group team. Our net income increased 87% to $336 million as of September 2023 when compared to September 2022. Mainly resulting from a greater EBITDA of $293 million, as I explained previously, this 9 months period, we had a higher depreciation and amortization of $12 million, mainly as a result of our new renewable projects in operation, which is compensated by lower depreciation in Enel Transmision, mainly a consequence of new investment in power plants that increased the average useful life of the process plant and achievement. A higher amortization of intangible assets in Enel Distribucion, partially compensated by lower bad debt, mainly related to the client that recovered due to several [indiscernible] commentation.

Regarding financial results and making investments, we had a higher result than the previous year by $23 million. This is explained by lower financial costs associated with lower [indiscernible] executed in the period versus 2022, mainly due to the PEC 1 in income related to the PEC II better contribution of noncontrolled assets.

[indiscernible] income tax that increased by $143 million. This is mainly explained by higher earning before tax results, monetary adjustments and provision related to the classification of the investment in Arcadia and [indiscernible].

In this quarter of 2023, net income increased 85% to $197 million primarily explained by higher EBITDA as we said in the previous slide, higher depreciation and amortization of $11 million is mainly explained by the [indiscernible] business due to the new renewable energy projects in operation. Higher financial results and equity investment of $24 million. This is explained by two positive aspects. First, we had higher financial income in the third quarter mainly explained by the greater interest income related to the implementation of the tariff stabilization made in PEC II. Second, we had lower factoring cost in [indiscernible] to the previous quarter. This was partially offset much higher than [indiscernible], higher in contracts that increased by $53 million. This is mainly explained by the higher earnings before tax resulting in monetary adjustments and provisions related to the classification of the investment in Arcadia as for sale.

Moving into the FFO on the next slide. Let's review in detail our FFO for this period. As I mentioned before, in 2023, the pro forma as a profit excludes $310 million paid in taxes due to the capital gains obtained from the Enel Transmision sale, therefore, after these adjustments, FFO to $428 million, reflecting an improvement of $790 million when compared to last year pro forma fee.

The main effects that explain our FFO in this period are the following: $783 million coming from EBITDA driven by the strong hydrology contribution and better results in the distribution business; $37 million negative impact from the cumulation [indiscernible] mechanic effect in our receivables, reducing the cash conversion of this year, this situation has been improved by the impact of the first tranche of the IDB factory issuance which amounted to $329 million.

As I have already mentioned, we have already received additional $17 million and the second tranche during October, and we are expecting to receive additional $35 million dollar until the end of this year. Working capital reached a negative balance of $190 million as a consequence of the [indiscernible] EBA payment VAT payments related to the stabilization mechanism account. [indiscernible] In base payments partially offset by cash management actions from the sales of Santa Rosa Building.

Working capital improvement once compared to the last year's figure mainly come from the cities of Santa Rosa and other managed realization. In contracts to reached $17 million, mainly related to the payment tax payments in generation business in the 9 months 2023, offset by the tax recovery from the previous period for both generation and distribution business contribution.

Once compared to the income tax paid in 2023 versus last year, the main difference comes from the tax recovery from previous periods obtained during this year.

To conclude, regarding financial expense, we reached $220 million. This is explained mainly due to the debt contract related to the interest rate of the gross debt for 4.9% that reflects also the new interest associated to [indiscernible] derive. Once we compare the 2023 financial expense with the last year's figures, we see an increase also explained by the higher average interest rate on the gross debt and a monthly payment related to the revolving credit facility as they reach the increment cost effect to delay.

Now, let's take a look at our liquidity and leverage position. Our gross debt increased around $0.3 billion to $4.9 billion as of September 2023, compared to December 2022. This increase was primarily related to the tax payment related to the Enel Transmision sale in April 2023 and other net working capital needs. It should be noted that the debt increase is a temporal effect as we receive the proceeds from sales of Arcadia assets on October 24.

Also, our cash generation will likely improve in line with our operational performance, a lower CapEx requirement. And we expect a net debt to EBITDA of below 3x [indiscernible] of 2023. The average of our debt maturity reached 5.7 years end of September 2023, maintaining the last portion of -- at a fixed rate with 77% total debt.

The EBIT cost of our debt to [indiscernible] reach 4.9% higher than December figures, mostly owing to the new profile of our test, the financial market condition, the prepayment of some bridge shock [indiscernible].

Now the closer mark on page 14. The 9-month results showed a solid operating part. The element that we had now capitalized better than expected hydrology in the full natural gas availability during this year, boosted our results, giving us more confidence to achieve the upper range of our 2023 EBITDA guidance, as mentioned during the last call. As planned, we successfully concluded the [indiscernible] Carerra transaction last October 24th. The proceeds of this transaction and the continued improvement of our financial position allow us to leverage our strong position in the energy transition context and exclude the opportunity that will materialize.

Finally, we would like to invest you to our Investor Day which will take place by the end of November. On which we will present our strategic plan update for the period 2024-2026. Given the most updated strategic and financial figures for our [indiscernible] fines and.

Let me now hand over to Isabela.

[Isabela Klemes, executive]

Thank you very much, Giuseppe. And now we will open the Q&A section. So you can ask questions through the chat or through the audio. .

Victor, could you please open the line for the next question that we have?

[Operator]

[Operator Instructions] Our first question come from the line of Javier Suarez from Mediobanca.

[Javier Suarez Hernandez, analyst]

2 or 3 questions. The first one is on the -- one of the latest comments on the net debt to EBITDA by the end of the year, that should be around 3x. And you are mentioning also that you will dedicate the closing of the Arcadia deal to reduce that. So the question is, how do you see at the optimal level of net debt to EBITDA for a company like Enel Chile, is that 3x the level that you see as sustainable or optimal for a company like yours in current environment? That would be the first question.

The second question is related to your statement on the proposal by the government in November on a measure to -- for the development of transmission assets storage facilities and new renewable energy asset. You can say with us your latest expectations based on latest conversation with the administration although may came out from that proposal.

And then the third question is just a clarification again. On the cash flow statement, we have seen a very good contribution from the factoring process, the first trend, if you can help us to understand in your net debt-to-EBITDA guidance at 3x. What you are expecting to collect from that factoring exercise?

[Isabela Klemes, executive]

Thank you, Javier, for the question. Now I'll hand over to Giuseppe.

[Giuseppe Turchiarelli, executive]

Okay. Well, for what concern the net debt-to-EBITDA level, we believe that being below 3x is the comfortable level for the company. Clearly, it gives us the opportunity to possible investment in the future. But in general, our target is to be below 3x between 2.5% and 2.9%.

So what concerns the proposal made by the government and the commitment that the government take versus the [indiscernible] convert. Well, let me say that it is clear that the fund of PEC II is going to be used entirely by the end of this year. So basically, now the point is the how to handle the increase of [indiscernible] according to the situation that we see today. And the government postponed the submission of the trust that was supposed to be at the end of October and postponed during this month in November. We believe that, at least the proposal could be in line with our expectation in the meaning that we hope that everything is going in a positive way.

So it's going to be a new trial for the company. Now we're going to see how the Congress will receive the feedback and how the Congress will -- could change the proposal of the government. But so far, we don't have any other detailed information about at this point. We are confident, but we don't have yet anything as of that.

For what concern the factor of PEC II, we started to factorize the PEC II in the tranche was at the end of August. As I said, we already made a second part in October about $17 million. And we believe whether another part -- it is around $40 million at the end of December 2023. We think if everything is going well to have another tranche in February 2024, that is going to be the last one before the new decree that's going to be issued. What I mean is that in order to go ahead with the factoring of the PEC, we need to have a new decree or we need a new law that is going to be -- that is going to end the situation in a different way. So we are waiting the proposal from the government. But at this time, we are confident about the following flow at least till February next year.

[Javier Suarez Hernandez, analyst]

And therefore, to be 100% clear, in your guidance for net debt-to-EBITDA, it is included a total collection from factoring just south of $400 million. Is that correct? in 2023.

[Giuseppe Turchiarelli, executive]

Yes, yes.

[Operator]

[Operator Instructions] one moment for any further questions. And I'm not showing any further questions in the queue.

I'd like to turn the call back over to Isabela Klemes for any additional questions via chat.

[Isabela Klemes, executive]

Thank you, Victor. Yes, we have some additional questions. The first one is that the question that [indiscernible] rate into our shock. One of our investors are asking analysts how much is the earnings per share and when we pay the dividend related to the 9 months 2023.

[Giuseppe Turchiarelli, executive]

Well, we are going to have, as already approved in the shareholder assembly. An interim dividend in January. That is going to be 15% of the September '23 results. And the Board of Director is going to be approved and proposed to the shareholder meeting the final dividend payout. In dividend, what I can tell you is that I can confirm the 50% dividend payout that we proposed in the Capital Market Day last year.

[Isabela Klemes, executive]

Thank you, Giuseppe. We have one more question. The question is also related to PAC III, okay? A question from Andrew McCare from Fred Corp. .

Can you provide us with some color on what you think will happen with respect to PAC III mechanist. Will this require financial strong companies like Enel Chile? Giuseppe, now back to you.

[Giuseppe Turchiarelli, executive]

Yes. I mean, what I can do is that what basically has been published in the newspaper. So basically to find a way in order on one side to increase the side without big impact on the customer. But in the same time, to guarantee the recovery of the debt that all the [indiscernible] banks has been accommodated into now. .

There is also another point that has been mentioned in the proposal that is the subsidies to assert on kind of capital. So basically the capital with lower level of income. So we believe that part of this debt is going to be subsidized through this mechanism. But again, we don't have more information than it was in the newspaper.

[Isabela Klemes, executive]

Thank you, Giuseppe. We have one more question. The other question that we just received also related to Los Condores project that was done by [indiscernible]Dave, I will read the questions. Okay, hi, thank you for the presentation. I have 2 questions. The first one, has there been any problems in Los Condores projects like the ones we have seen in [indiscernible] projects? What is the total expected cost of Los Condores projects? This is the first question. Then the second one is, is there any specific plan from the revenue from the sale of Arcadia?

[Giuseppe Turchiarelli, executive]

Okay. So what concerns the total cost of Los Condores, mean we don't have any update what we have already declared in the past. So we have going to have around $1.2 billion. We had -- we [indiscernible] some delay because of the raining season in July that, of course, as already mentioned last time in the last call, we could mean some small delay in terms of [indiscernible], but I mean, no major impact on the cost.

But what's concerned there and proceeds coming from the fetal Arcadia, as I said, we are going on one side repay some loan -- bank loan and some revolving credit facility on the other side, we're going to use the proceeds in order to finance our capital -- Net working capital.

[Isabela Klemes, executive]

Thank you, Giuseppe. And we have -- I think is the final one that we just received here is relating the purchases that we are doing with other generators, okay? So question is coming from our Martin. Sorry, I don't know how to pronounce your surname Martin, Martin. But the purchase from other generation line is connected to long-term contracts with other[indiscernible] . Can you give us a sense of duration and size?

[Giuseppe Turchiarelli, executive]

Well, a couple of years ago, we started to sign some PPA in mind in order to diversify our sourcing. So now this energy part is becoming materializing.

In terms of contract. We are talking about around 3 terawatts hour per on construct. And for what concerned the timing, I would say that it is 10 years -- in average, 10 years tenure. Of course there is several kind of PPA. We have also 15-year tenure contract, but in between 10 years and 15 years.

[Isabela Klemes, executive]

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

[Operator]

We have no further questions in the queue.

[Isabela Klemes, executive]

Okay. So I would like to thank you all for your attention today in our call. and conclude our results conference call. Also to remind you that our Investor Day is going to be held on November 27. It would be a hybrid event, so we will soon receive the invitation. Okay? Thank you very much. Have a great week. .

[Operator]

And this concludes today's conference call. Thank you for participating. You may now disconnect. Everyone, have a great day.