The AES Corporation (AES) 1 Nov 24 2024 Q3 Earnings call transcript

AES Corporation, a leading global power company, recently held its third quarter 2024 financial review call, providing insights into its performance, growth initiatives, and strategic outlook. The call was led by Susan Pasley Harcourt, Vice President of Investor Relations, with key executives Andres Ricardo Gluski Weilert, President and CEO, and Stephen Coughlin, CFO, sharing updates on the company's financial health and growth strategies.

Robust Performance and Growth in Renewables and U.S. Utilities

The company reported a generally in-line third quarter performance, with adjusted EBITDA with tax attributes at $1.2 million, adjusted EBITDA at $692 million, and adjusted EPS at $0.71. Despite some challenges in the form of extreme weather events and lower margins in the energy infrastructure segment, AES is on track to meet its 2024 financial objectives, including its expectation to be in the top half of its ranges for adjusted EBITDA with tax attributes and adjusted EPS.

One of the standout areas for AES is its renewables business, which has seen significant growth, with 3.5 gigawatts of new PPAs signed or awarded since the beginning of last year. The company is well on track to meet its target of signing 14 to 17 gigawatts of new PPAs from 2023 to 2025. AES has also made strategic moves to prioritize profitable PPAs and has seen success in securing high-return renewables PPAs with corporate customers.

Construction and Supply Chain Management

AES has completed construction of 2.8 gigawatts of new projects, representing nearly 8% of its expected 3.6 gigawatts for the year. The company's focus on on-time execution and supply chain management has been a key competitive advantage, with 100% of its solar panels for projects coming online this year already on site, and 84% in country for next year. This strategic approach to supply chain management and construction has enabled AES to maintain its growth momentum and capitalize on market opportunities.

Transformation and Asset Sales

AES has also made significant strides in its asset sale program, with 30% of AES Ohio sold to CDPQ, a longtime partner in AES Indiana. This transaction strengthens AES's relationship with CDPQ and supports growth at AES Ohio, with CDPQ acting as a funding partner for increasing investments to support reliability and economic development. Additionally, AES has now closed the sale of its equity interest in AES Brazil, further simplifying its portfolio and eliminating Brazilian weather, interest rate, and currency risks.

Looking Ahead

AES remains optimistic about its future, with a reaffirmed expected growth rate through 2027. The company is well-positioned to capitalize on the growing demand for renewable energy, particularly in the U.S. market, where it has seen significant growth in data center load and utility investments. AES is also making strategic investments in its U.S. utilities, with AES Indiana and AES Ohio being among the fastest-growing utilities in the U.S., expected to see double-digit rate base growth through 2027.

In conclusion, AES Corporation's third quarter 2024 financial review call provided a comprehensive overview of its financial performance, growth initiatives, and strategic outlook. The company's focus on renewables, construction management, and asset sales, along with its strategic partnerships and investments, positions it well for continued growth and success in the evolving energy landscape.