AES - Earnings call transcript Q1 2022

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning. Thank you for attending today's AES First Quarter 2022 Financial Review Call. My name is Amber, and I will be your moderator for today's call. [Operator Instructions] I now have the pleasure of handing the conference over to our host, Susan Harcourt, Vice President of Investor Relations with AES. Susan, please go ahead.

Susan Harcourt

operator. you, Thank welcome call. and first XXXX quarter Good to review financial morning, our

presentation. Our information making from along related be Reconciliations our and materially may recent press presentation and release, between to results and these financial non-GAAP are factors discussed aes.com. differ we cause future There website Today, with found are filed will statements. be XX-Q financial most forward-looking many which that at on our are can on GAAP website our with the statements, measures in XX-K the SEC. available

our Joining our and me to this other management morning are Officer; will Financial that, Executive Andres senior Coughlin, over Gluski, turn Steve With of call our President team. Andres. Officer; and members Chief Chief I the

Andres Gluski

and Moody's. our have Good review to thank XXXX financial very joining for I we report that you rating quarter for call. investment-grade first am happy an morning, attained everyone,

investment-grade important XXXX to X% agencies, business. rated annualized of XXXX. major work also by transform X our We X% of growth a and worth through reflects our reaffirming for are and We're milestone now decade all an guidance our is to which company,

Slide profile. outlook continues and solar U.S. for market strategic I for the of with into even including drivers and Commerce's panel Department influence, its renewable our demonstrate the face Today, the program XXXX investigation Next will construction more detail, our Beginning sector. and utility, signed construction in in our year the discuss and XXXX of PPAs on our imports, growth, of X. model resilience program earnings the seasonality the business of volatility. AES Our energy our our cover to diverse will of our Steve predictability expectations remainder the including

projects. of are completion on timely ensuring We laser-focused

XXX Commerce Asian ability an from new advantage. more megawatts of execute over expect on gigawatts solar renewables, As than X of preliminary X the panels no key investigation year, than collectively delays March, our this we industry. around This In the the a Department in U.S. expected commitments launched complete as make determination U.S. into competitive approximately imports Department uncertainty a of August. solar Southeast The including in see late our of of XX% we solar by a of project on to to levels countries, source the and Commerce market. to to U.S. later tariff case imports has resulting for which is across The drop supply led

in wind XXX all of of However, due projects megawatts chain we and our to are for projects. are projects to X/X not energy are anticipate the megawatts in international of I'd be in delays and the supply XXX the to any U.S. our note strategy, U.S. and panels do our already those storage. completed XXXX country, in that XXXX remaining the also renewable

the future of to growth, Slide beginning drivers on diverse Moving X.

products Our on allow basis. provide customers to our work with to strategy is bilateral us differentiated a that

than a As of renewable anyone including with else of energy, contracts gigawatts result, we customers for the PPAs year, more signed C&I last a in world. total X

of weighted For the between sign PPA the XX-XX roughly We in do U.S. a and more to gigawatts markets. full under the XXXX, expect X.X U.S. towards contracts with second renewables continue year. to the X.X we of split be expect to year international long-term to signings half

for energy demand and climate such our or XX/X issues for very to gigawatts. gigawatts, structured offering. delays sector, far the especially and awarded to been see products, we have just the for renewable we bringing current as U.S. backlog Despite legislation, X.X such in signed discussed, chain supply we So continue year, this our as XX.X strong low-carbon headwinds

X announced as earlier structured products. this seen key for have fact, you we week, may our In agreements

into Amazon, Microsoft their with which agreement AWS' partnership renewable with our where of operations centers; in our we renewable load energy data the third California, at second, will expansion centers. market including under megawatts data California, to and the to their the supply will match we First, XXX energy of provide

goals. both With helping these companies agreements, achieve are their we ambitious sustainability

As market. you pipeline deliver our our among the to us projects build need Slide competitive is X, in robust renewables second XX of our can gigawatts on believe with largest the continue on see and backlog we we on This position provides the U.S. developers. development to pipeline

and utility well one of earnings Now the X. platforms, U.S. Slide our annual businesses These flow of In growth to the the the turning key growth to a in X% investment of provides while affordable lowest increasing keeping entire beginning on our advancing to which state as as overall X% residential to our represent markets, cash contributors in regulated from earnings have our rates for objective customers. for U.S. rates both XX%. proportion runway the we and

to to transitioning mechanisms. the modernize XXXX, generation. we Moving network will which and to through rate recover investing In billion, incentives approved Indiana, and already from we distribution transmission we're Slide $X.X greener will be Through X. benefiting

next existing Smart the our Additionally, to Indiana's mix. which is In fuel AES this on are resource we in rate-based generation investments we're rate investment formula Ohio, our by transmission network. an Grid same transform through finalize integrated plan mechanism. further implementing program, expect to time, the capitalizing At recovered us fall, we allowing

strengthen oral case to pending this a to the a Later network. rate have and our outcome, we will favorable this presenting AES before in be commission month, also the We bolster the Ohio's investments Commission make Public arguments Utilities Ohio. ability to directly case, needed will distribution further of new

Turning billion growth XXXX, These end rate to of growth translate to utilities. XXXX, base to invest investments expect which X% utilities. to average U.S. Through $X the at U.S. through our annual projections high we for modernize is Slide X. of

rate earnings We these the the core with in grow to line expect from businesses base.

XX update an Slide for to AES on Turning Next.

developing new through We and AES incubating are and platforms business products Next.

be to for our more businesses help and innovative next shareholders. AES and customers in drive value and competitive investments Our our

Fast on that year, innovative list. this earlier most one company and of that named included is be the publicly-traded XX AES companies large the proud Company only to energy the world in are We

most mature Turning initiative storage is as backlog had to $X.X energy of deployed a of billion. XX. which December Slide of AES Next and XX, signed Fluence, today products contracted X.X under gigawatts The and

platform, is digital recently Fluence and a Fluence's acquired of Nispera, contracted Additionally, third-party IQ, gigawatts more management, now XX% has customers. under or than XX combined which with

supply team supply demand has address new improve building remains a robust, out team to global suppliers very is market the with Fluence past storage margins shipping the well steps Their grow as manufacturing. pathway several their continues stemming signing see these progress. capitalized challenges and Overall, months, for diversifying We and for regionalizing energy management short-term dealing positioned Over transition related has issues. battery COVID-XX and to taken their Fluence leader. to agreements, from energy a them proactive including and mostly chain challenges, grow chain their as in-house been to

turning to Slide XX. the on Finally, our strategic sector, outlook for beginning

low low to transformation with X% goal energy companies flow leader and annualized in unprecedented working earnings delivering Today, to carbon underway utilities while through is our providing be Our solutions and an shift carbon is there XXXX. of of to sector of the cash power. governments, sources X% to growth

over renewable energy. REXXX, of the public to corporations looking commitment of For example, at group a XXX% the large XXX who just committed have

XXX immense XXXX. our hours terawatt We annual to once our double demand this of ensure Facing energy we’re to advantage taking than sector. more expect almost a generation renewable continued in of by information opportunity, competitive this to steps in our

installed portfolio by as capacity our end own see XX, of transformation is this can we X on Slide to in renewables reflected you XXXX. As of than represent our more quarters expect the

we During from from XX Stephen our With gigawatts that now the coal XX call to go CFO, gigawatts business our over X to same approximately zero. and our gigawatts from time I to expect renewables to triple period, that, nearly Coughlin. will capacity turn to

Steve Coughlin

balance our very that good thorough XXXX and morning, I'm and quarter our results attract highlighted, to businesses grade. will year's to effort Today, investors to recently benefits upgraded as validates conclusion further and AES further pleased our we and investment share new guidance. XX, reduce XXXX and I yield Moody's our across to Slide Andres, completed you, cash everyone. strengthen as AES. sheet of This consolidated grow discuss flow long and Andres and debt allocation business review capital risk Beginning on our parent Thank a our will first

we continue lead our long-term company, will sector our the U.S. to rated investment-grade growing base an asset renewable portfolio. while contracted As and utility generation

PTC of from is and XX to adjusted Turning long-term Today, our XX% of and generation contracted utilities. business Slide our the model. resiliency

factors had PTC programs portfolio We $X macroeconomic of interest pass-through rates or impact inflation, volatility million less are foreign exposure. first of majority the that insulated our current affecting benefiting quarter. our from adjusted with commodity fuel vast in hedging contractual macroeconomic indexation, from on these and limit Combined, prices, our currencies, the than largely an the

positive as some our these from For the prices full macroeconomic and higher markets. of year, in we currently a net contribution a power factors gas of higher natural prices result expect

Now year. for turning EPS the $X.XX quarter beginning Slide versus Adjusted to results was financial the our XX. quarter, on for last $X.XX

business we our the first anticipated by contributions Our of grew had quarter were segments core $X.XX already negative XXXX. over XXXX several in drivers guidance. by offset These positive

from in First, Fluence Next, chain fourth higher XXXX. losses COVID-related at quarter resulting supply of primarily AES at the issues

report results we Fluence's on a quarter reminder, a X As lag.

our and December disclosed AES' quarter So included February was year full relate on their to last call. the Fluence results end, which guidance in in

Second, share result the our count the accounting units. higher as we of for adjustment a equity made

the effective quarterly over hedges quarter finally, overall prior nonrecurring to than timing. interest the year, tax gains for higher skewed full quarter our on which rate expectation rate And due recorded last a Third, year year comparison.

Mexico. new XX. higher by our PTC was South unit, Energy higher lower increased discussed. the availability was of strategic at PTC, over with for Slide SBU our which coming sale of drivers Tablo to our and contracted in of units AES Andy's $XX partially higher Dominican slides. in mostly cover was from plan. Southland, Caribbean, spend the revenue the Adjusted the performance the the pretax our lower X just America primarily in the by and generation in growth XXXX MCAC earnings to consistent SBU, contributions Clean SBUs U.S. Colombia. more Lower at accelerated I million AES higher than or or or million strategic due ownership primarily by America business reflects and in In driven Turning online offset business I'll or Republic XXXX, PTC $XXX driven detail and facilities was Mexico, Central contribution, next renewables from Higher SBU an and utility at the at PTC our quarter,

PTC in commodity by driven and price Mandan prices increases. our at in Bulgaria, Finally, at our plant revenue facility power reflects Eurasia, higher in Vietnam higher higher wind

XX. Now to Slide

$X.XX. are We achieve to on our guidance XXXX year adjusted of full range track to EPS $X.XX

heavily more in the QX, with is profile our the half of earnings second X/X weighted towards earnings quarterly occurring QX typical Our and about of year.

in fourth the of new next We are contributions continue U.S. year expect well the go the earnings months, X demand more the the will in as this half and new further based of of primarily gigawatts including year coming X utility projects the we a higher quarters. Growth more year commissioning businesses, third from by on ownership ASMs. as in over in be our our from increased generation profile as solar backlog and of over seasonality accretion driven to second similar online the profiles, to grow projects in where

in as through We annual capital opportunities portfolio. we across additional utilities renewables growth growth expected as average investment X% target our our reaffirming of also X% expected U.S. and XXXX, the to see recycling global our our into well based on are

plan to Now our allocation parent XX. Slide on XXXX capital

parent $XXX $X.X and discretionary of cash Sources of to million total reflect million from billion million flow cash, free of sales. including proceeds approximately billion to $X.X asset $XXX $XXX

you On the side, planned our of use can right-hand capital. see

long-term base invest approximately half our and U.S. are in on including X/X return investments million in renewables of and year the equity contracts XX% our dividend, We growth to continued rate to to proportion in our focus summary, to on fund of businesses securing this goal expectations X% during of grid these announced our close we of growth for success utilities, XXXX. reflecting Nearly opportunities modernization. our the the earnings are with by In in the are investments fleet coupon our $XXX million to utilities of attractive these for plan capitalize XXXX growth. us a shareholders helping This About will increase to We subsidiaries renewables, U.S. this than consists of investments half we as units. the on our $X.X $XXX increasing XXXX. achieve December billion to year. U.S. and from in in our more going to nearly share common

Andres. with invested in growth have renewables $XXX investments In progress great increase already AES and this our year our on million approximately to so far ownership fact, made we primarily in

our With that, call We will back the AES further allocate in lead our in capital Andres. to and to anchor market sector, our renewable portfolio. U.S. strategy the continue I'll line to with over turn the decarbonize to

Andres Gluski

Thank you, In summary, to our continues Steve. perform business well. core

all investment-grade X We major from ratings have attained agencies.

are through XXXX. annualized We and growth guidance our XXXX reaffirming

solar to our of We XXXX continue ongoing the we construction on expect imports. Commerce deliver our to panel including time on with investigation projects, commission commitments, into which Department even

by With up I opportunity business our for call are questions. immense We to like our the open the and competitive to advantage. in energized maintaining committed growth for remain that, would

Operator

Goldman Sachs. [Operator comes Instructions] Our first with Insoo Kim question from

Insoo Kim

see 'XX on the the solar to schedule. that First and question time U.S. on the Good solar are investigation. projects on --

then have hit to you on contracted were delivered? the in embedded for more your to of that next growth around flexibility little Just other delays, been XXXX and be still just timing there could exposure, for you capacity clarity that, are of year? type how delays 'XX, could move we has need that, if And bit if to much what give items to do And expect any, amount that for that maybe to your growth. a related

Andres Gluski

commerce Let me a start background with case. on little the

and countries duties commerce an on manufacturer from Southeast circumventing that and are So panels countervailing of this sells from case imported existing is Asia antidumping and coming into X X solar cells panels allegations investigation U.S. China. by in

strong will are be a preliminary will allegations new legal that we for dismissed are before there tariffs. determination unfounded the conclusively to grounds to So that think commerce make August without signal the and market

Asian minor determining circumvention Southeast that considered One or occurred must be in requirements the that legal of the activity is for countries insignificant.

facilities have and activities operating panel appear their and to in manufacturing, cell not or do However, these suppliers so billions sophisticated solar insignificant. assembly dollars the processing technologically countries of invested in minor be that

occurs for and cell. the Additionally, cells that as solar conversion not previously in imports. creating of critical involves into determines this wafer these the the and a China step step Commerce ruled country of origin solar the itself countries in of

U.S. industry to to these think many For on that rely U.S. from can reasons, of Southeast plane XX% demand make to to the expedited solar impacts. only there's circumvention Currently, capacity their are Asia this be manufacturing note in commerce manufacture an here investigation, the they increase because we strong commerce also negatively this U.S. grounds industry a to there not about to supports finding the is to for from that order by It's due underground further This broad and decision cells harmful of by dismiss solar important circumvention determination. opposition investigation. appropriate supply U.S. need modules would impacted that including the manufacturers in

case. rapid continue to this resolution a we'll of advocate So

I And question, that was been going before solar demand this and of to be of our huge land, that we've this And to this to additional with do renewable pounds. had, developers, were shortages I'd interconnections. of everything, for for -- many years, supply arguing strategy. year shows say, commerce from will to what chain issue an coming your X commerce we specifically to now, recall to getting there management that think I've able you Now were wave

of this. So we've been not ahead

there's worst that a will and and a And be resolution determine convention or case. think there's there they take an best in if comes There's is of out what will anybody 'XX going of there to the tariff Now a is in industry, shape they determination the X. say what the in early us. to I we're again, be happen will if

Okay. Well, then deposits people point. can put cash that at

solar this a very think whole effect would I have in U.S. deleterious Now the for the industry

are with we much selling RFPs think better utilities corporates would I because people who flexibility be shape regulated. more primarily say we're than have more in to who

because And not say, I'd case the not look, negotiate I for our have worst waiting this know. 'XX and case, we're could But going the mean we clients, that, to them we We're of now, with this stop yet shipping final construction, to given terms don't So is signing backlogs continue advances. right determination. It the of depends the see. second potentially affect but it sort to of us. in and and the how comes half we'll rest. with

pudding we're eating. everything And of is proof this. in the doing the think So possible to the minimize I

U.S. few developers projects not of one have the we're to did think this solar postpone who cancel or year. I any

Insoo Kim

second case of -- the And color. case, part the are nonconstructive the but good for not just That's worst down delays maybe just the question if whole my and significant was more the maybe comes industry. a

it's have of or portfolio projects, achieve do storage much still levers diverse, your to global Just you or growth? ARPU flexibility pull different how to wind whether whatnot, that

Andres Gluski

a great that's Well, point.

If only you U.S. gigawatts, XX.X of think of our is about solar. backlog X/X

rest wind the either is or international So other technology. or

So portfolio. it again, think are what at we -- a diverse happen, I well, will that

so But in make of this again, strong A honestly, legal let's honestly. prior up we to to it. sense, doesn't front standing that we case, say, nobody they ground similar was will miss up was because it very didn't a make And have lot try dismissed it elsewhere. case they're think of

insignificant Now or quite manufacturer. countries you X not And is value-add added think Southeast U.S. small grounds the frankly. this laughable have material, I of being almost Asian in the

just players. the an What seeking, such small think, dramatic on is effect I from had U.S. it it's rent is So a is few industry.

a about potential supply Now shortages And first also concerned we X of in again, COVID that fortunately, you'll recall effects for with even appeared that talked chain. years. very been about XXXX, we've February on

us. technologies diverse terms out, and in there's of terms don't as And geographies. again, we tuned. also I in you So better of anybody in point than stay shape think are

Insoo Kim

question makes the different The That sense. XX, Okay. or always sensitivity Us. My helpful. slide or commodities whatnot, to currencies second Slide moving quickly. it’s

update Just the there.

like that remain other stuff prices with commodity assumptions. to just these for net whatnot. looking power see various changes, do or no prices changes, stands at could that a Can this Henry your assumes How the year If impact at of no sensitivity it point the the balance $X do being with environment? through it’s you commodity meaningful gas as Hub price like price almost walk other today? year-to-go think or EPS be whether seems with I XXXX, and power the now, elevated for just right more it but you $X there prices of

Steve Coughlin

Yes, it’s Steve.

just reminder, a those in isolation. that So page, are sensitivities as

So when doesn’t you we which in sensitivity, most to increase, price include see the it’s would expect any – power gas actually price not corresponding happen cases.

rest we’re the we in we’ll very I do have the particular, my positive in comments. of and So portfolio with in In I to well for MCAC. of then on expect our It the net the on other business balance, would wind prices well. this our which done in and is thing market some XXX, And does environment, exposure very point said have really LNG has Bulgaria, there, side power done I well, year. it’s excess as very

that’s time. long-term So gas been some we contracted have for contracted

to take some of LNG business. we’ll worked gas the we’re in upsides benefit our there advantage through fact, to working – high continue price So have of are that some work to opportunities through and

there upside there’s think well. I So as

another the upside we QX hedging see success. Southland another program, has been

year. expect success of energy year upside was last We this margin more $X.XX

good in world. of around quite our we’re are inflation contracts indexed Most balance, on shape. So actually the

cost the pricing contracts our like U.S. was we’ve and of PPA. in are into locked – renewable upfront, cost that our baked in XX%. are where think overall that it’s not really I Those the

shape And has actually, So environment. in we’re lot. AES quite this good really, transformed in a

Andres Gluski

on renewables. history competing mostly mostly fossil because with too, this say, we’re we it’s fuels one. have And hydro, fuel, right would I side with pass-through. a on mean, where I of the we’re with either

together recognize in at can’t impacting of and stepping an with or the we’re the is sequestration, energy. we’ve on decarbonizing And whether Bulgaria they to So – case and biofuels MOU alternatives, different gas the they working I project, the biggest just Bulgaria, signed really where of the the of and PPA. up it carbon capture Again, this what’s it we’re winner Bulgaria think Maritza us government any I would is also whether be – say of looking because same where negatively. validity happened time, investments – conversion at really in

Operator

from comes Richard JPMorgan. question with next Our Sunderland

Richard Sunderland

solar Is it around energy in? procurement much wanted the maybe to you on beyond And obligations touch or timing so around come there contractual a you earnings a XXXX earnings as the there outlook any more. those Could really the to little risks the elsewhere Are need that to just the speak delays? more just of with contracts? bit fulfill bit just little

Andres Gluski

any, No, Yes. of I'm aware not frankly. quite

there think be it would would destruction. contracts no, think our not a I would but disruption panel them. wouldn't the to in contracts. be occur, to obviously But But some that don't scenario, hold having -- likely in if fulfilling of delay be the of have most demand It I not market. the we a energy because commissioning suffering to were we cases not LDs think would again, supply it solar -- major us if is that's we

Richard Sunderland

a capacity, helpful. Amazon just reflected deals, overall the clear little appetite Very these guess thinking there? around in front, it. bit new to the on could about then you I recent projects the signings? are speak And to or then structured of be announcements Got those the And XXXX

Andres Gluski

Yes.

But can I are seeing in XXXX projects. we would demand what structured First, say able some for we is more year, been most to of do until these about of we this And release projects. talking tremendous project. weren't the But the prior our was client a have that to names ready. reflected we're

have I the projects right to in is issue real ready. think market the the

coming. like what -- is it's much repeat shows we like is I So think buying. But it More stay very a tuned.

Chile, example, and project for we've now So with projects a we clients. microcells, in in did done PJM. big We

there. with data X can big a big. demand them. we we're question contracts is think projects The of very center bring if It's how the fast So large And clients, we the online. have of you of

Steve Coughlin

done customer, would some we've Yes. And flexibility Richard, other markets. this have to the I We've Microsoft, in Google we add, Chile. just done pivot to

And some so We're to we've And I time, there's something wanted about what to but Amazon the announcement we've built able announce. more significantly. up talk come. that's pipeline, large playing because the demand supply industrial from and part they're in going to need know coming load. we're aggregating the where to pipeline pipeline This is in customers the been is we us their for that to commercial forward our

Andres Gluski

Yes.

I -- think land interconnection a wave ready. part of that quite California, a little it's now. that an started good point and And ago. we really is important rights we years ahead in bit and of X this this see pipeline We acquiring got about

the demand a bringing It's of is online. projects the So question there. all

of these clock or Now versions are XX/X the realize round that renewables.

question So not new netted energy. megawatts, only of to hourly on a the basis, renewable build it's having availability it's guaranteed an all

Richard Sunderland

real up And to contracting on the follow wanted sort of very I backdrop. color. helpful just quick That's

the little talked You into DSC U.S. obviously, of overshadowing risk signings, the a bit more these. weighted about all

in you it you more helpful of to then can little start there. point would seeing a give terms bit you're discussions information So color finalizing. what Any on be get more just to active, us but

Andres Gluski

right. Yes,

You can characterize right. this,

flexibility in contracts speed and you regulated having that We factor in a to and have have more I'd greater it clients because clarity would some discussions, than, be with make are clients. what cash deposits say, are is there say and August, and

more again, this it's see basically would be U.S. slow let's us to it would think cars, down. what renewables just going But make So I in expensive. the And more happens.

of manufacturing, sector. in It's the best are shape, And what factor. we need? if need do you want So a cheap vital you clean the onshore energy. in think, again, I You anybody and

will be outside much effects its greater AES. So of

Steve Coughlin

Yes. And XX% contracts would were bilateral PPAs, year, so done negotiations. add, commercial bilateral the industrial just last in I of the

frustrating, all a since to are that suspect I have it's open, and commitments and and move aware on, are moving is we're through path very that that. not with We're much their there. relationship, details and they're piece to customers want made it's continue we're can very the good And we of issue. this thing. that customers the forward But working we a work the in So find strong with get this bilateral and going forward decarbonization, these to think going to to to vocal very we're

Andres Gluski

and I And of look, add what need But a certainty need onshoring. in you favor line. would is time you we're all

know -- need move you but to supply also applied to chain supply more And chain, have you're be the in down supply tariffs you to to down far time to way. they're going will And what So further need going what the go, you the how the say chain. the go.

from And so for from buying coming example, to Southeast of going we're the Germany. solar the most is panels right now, be most of Actually, -- Asia. polysilicon

not it's from coming So even China.

add. I X% think this basically significant firm in may the So this don't is of case. rent-seeking number delivering supply it's by a X in firm of in I small U.S. -- the or And actually

really agree whole is the it to quite So situation.

Operator

from Our Evercore. Chopra next question Durgesh with comes

Durgesh Chopra

guidance? what as going was are Fluence it Steve, that in of house. XXXX you your us that embedded just maybe to -- is Steve, you the EPS guidance, this one for And articulated to you, I then in sort modeling remind Andrés areas in of ask prepared of can obviously, relates in his COVID-XX that what in have up kind challenges as flexibility Fluence business? to you had with continues the make do remarks. other some of throughout year, that If kind the

Steve Coughlin

Yes.

their 'XX, in Fluence report first had for October fiscal my thanks I the runs to Look, them X which, September, So for and remarks, lag. fiscal we question. their quarter, quarter our year as difficult a had a to on

just quarter hitting this December reported we're in now they that So what is reporting.

when we updated My I what anticipated much week. numbers. public But company, in I for their We've absorbed releasing comfortable and largely earnings expectations that's reported about here. what it. already say forecast a can They're I that Fluence for our are first say -- feel more. tied I we So I and an they'll very here. be already that's we quarter, Fluence. Fluence had that our say is can't latest Unfortunately, gave next on the given have can hands guidance,

So issues lot they've talked about. had they've of look, that a

I they're those. through think working

quite supply, are regionalizing already shiny their them of they've battery diversifying they're new Some shipping through contracts, their temporary nature, worked and around in the both world. manufacturing

has So to demand I we're they've to of these some work They're as entire the time through confident. think some -- The strong. to strong. there. very going The be it's take But long very market term challenges. still is is said continued

with some forecast, in cetera. I it's have perfect of guidance, knocking guidance here not supply off kind we the our think batteries, et had storm issues and But coming together they of range. our it's the chain us shipping, latest

Andres Gluski

would company I well what add of is seeing see that the battery And is outside in you're increase China. demand. and strong supply What capitalized is

by North So the Poland. batteries government battery just for in has U.S. manufacturer the saw they an have in the incentives agreement Point Volt production U.S. with that you would announcement for of

access what think batteries to I the be which to you're going see main will is been So has constraint, to start addressed.

seeing Now by going year, be online. you start next come capacity it's immediate, not to but more

Durgesh Chopra

very comprehensive. That's it. Got

target. started gig X.X versus going of gig of back backlog the roughly you I to additions, the year the strong, right? terms just In mean to X X.X over

plan, hit think on, around expect end? as me light what's correct sort that term, wrong, that think about you do we that we commentary to EPS to a there XXXX in the if in low of back? 'XX of I'm long confident -- this Do thinking go X the solar year. in light I XXXX, you're maybe to current Is what's the investigation, is you're like XXXX, that growth predicated -- going Or delays. I of X the X% the year? gigawatts X% as so mean the the sort to think but Sounds of in about hit potential you Like,

Andres Gluski

PPAs? commissioning So you Are new you're signing projects? talking about about talking of

Durgesh Chopra

The new the Andrés, PPAs, target.

Andres Gluski

PPAs. The

Look, first Okay. we gigawatts. quarter, in the X.X did

So we the on for year. X.X to are our gigawatts target X.X for

towards The quarter they're if this we're is goals. And come the mentioned, things solar it the our weighted very case, from until some -- second But example, No? sustainability the a to will I and seeing more demand this As signing because wait of strong no. to REXXX, answer this of will be trajectory? U.S. their knock Do growth off the to in products. due conclusion. anything, the And the think might Commerce resolution our going not move because year will to this in I will for next. PPAs X that for heavily around render of people us -- half

So they're going this. go to forward with

I Yes, I think of Kind we'll But that it. of cause that. of catch-up. think I -- delays confident we're have feel in So signing PPAs. saying a some that

is not that's But might been make little bit than would we've hand which things they a built. the it ideal. otherwise, be lumpier So

Durgesh Chopra

targets? It near may like lumpiness sounds our trajectory some But long have the you long-term of feel all confident intact; Understood. in term. hitting you in term the

Andres Gluski

Exactly, exactly.

Operator

Dumoulin-Smith comes next with Our from of question Julien Bank America.

Julien Dumoulin-Smith

more more So on a talk we if around, guidance. we Can things as is quantify directionally, some last absorb looks these other a range we within range. I trying your the mean, the can quantify if little and your but slides? the impacts, to mean bit you I to of your affluent about to that a directionally, can. And these in longer-dated for true could or little that correct? is what a Obviously, potentially of does commodity I from within you your Bulgaria, sensitivities want that then be related to of again, to be -- commodity instance. at try affirm and/or higher it? I -- bit it to solar just sort guys bit versus positive exit it get quantify bit be your And based that of it want expedite it these flying or commodities extent in in $X.XX sensitivities the talked that terms mean appetite to are try about to earlier. which what little little and still implied north what's

Steve Coughlin

Julien. Sure.

seeing and you're So the through you're right. and looking I there's page I on as upside the here, described. mean, that commodities actually

wind this gas gas Maritza long-term In we're Central really the have environment. well in there, seeing been PPA plant, in under contract, Bulgaria, our we as but high, So we in the our commodities Caribbean, in upside as in and LNG the the well which Bulgaria, have government the of in contracts plus is people in significant upside before America the prices money well both of term businesses near where business, plant. power have for that the the set the value are that is the

we So flexibility how in we some have we dual customers or plants capability. manage our have cargoes, that fuel have

to for fuels we're redirecting and Europe, swapping in into example, able partners. our with to so And liquid perhaps cargoes work

of portfolio. it tend about, our a diversification a talk is but important important really in one we part lot portfolio, don't our this of to this environment, that is So

at both exactly or natural long-term will are of with given correct. So as relies well $X.XX and we upside done venture in position prices as point. our and But to on transactions say that that this in wouldn't the take I contracts. discrete directionally, advantage in have of But LNG. some see that you to yes, upside whether do will it's we power do gas, our

Andres Gluski

Yes. the in past, questioned And legal been look, say, PPA -- say before the of talking the state about Bulgaria, the was Commission. before what had anticompetitive -- is, case really would I sort European the

we're what past the that that. extent, confirmation to PPA. -- is So This of some getting we're seeing is a

and why attractive Maritza the uses coal. asset So doing built reason its a built very contract it of through the was to of what actually independent it's gas. Russian asset. it's Bulgaria is -- it was and attractive very it was local make a beyond, That's period end

So prices. not affected by international it's

money the it's So in much for clients. our very

the wean, coal. today at from to more the other months was, say, than ago. we've storage and energy So asset also just alternatives look Bulgarian say, government to valuable agreed it much And running Maritza help away on is X

the say I'd winner But this in that. to situation this from tuned stay has horrible So Europe. been big

Julien Dumoulin-Smith

to there any And Fair if Is -- to to earlier quantify all. confidence next I of this quantum on costs, et origination here? going solar do -- comments mean, just is you're to your year, just when quantum you risk clear try I to risk? I quantify cetera. any any then it. specifically, crystal around qualitative there. sure make it Just ranges try CVD higher Got impact of way Any these of we're want of sounds and just 'XX. on again, the risks, I want around enough. into so as AD reaffirming origination the versus some the any

Andres Gluski

are of final I off Look, say number tariff. following. what negotiate we Yes. PPAs about the to continuing would there's the additional This of the has because uncertainty signing is Look, with pushed our clients. a

to of item these remaining complete sort that's So the PPAs.

and -- will it enough on provide depend August should. will effect its clarity Now

an later. have cash typically, But how be, much move should put would up those deposits, the to be would indication in though you You tariff of that how much of have and down drastically. even sort it might finalized

we with that. think we work could So

me, have whether global However, factories the issue continue these in I to a mean, of the issue in to suppliers solar run Do Southeast supply is biggest decrease -- panels. the Asia. you

a that's So bit of little the more issue.

will to some a the rest So possible able of assured suppliers everything doing be be to to to that try there certainty using we're lot they things to there. are our be to global of of But that footprint and sort give running. continue able

August, has continue on weak, projects. this that be by to should let if ensure So so those be states work panels clarity we'll it you amazing all dismissed, that XXXX sooner actually should that to far. or gotten the we tuned, and get it's time it's we hope there and because some be there's know, some we'll complete But to by to then the stay to with is case or clarity and suppliers August but the

Julien Dumoulin-Smith

All and right, it. lockup origination it's an seems one your impact, And of of trailing strategic the still enough. just right. Fair you the obviously, perspective results? then late. a regardless It Got [indiscernible]. the efforts, expired it's et cetera, last Fluence, to from sales

Andres Gluski

medium run the will let's launch it's hit -- suppliers about get new optimistic Fluence it were shutdowns difficult I'm it. of issues, as shortage these China. And say -- term some a you had product caused very when well. battery market long Yes, in because the COVID face to by in There or in a the that

look, And market talk for it these about plus were is create there firm. good. tremendous shipping is face. had us issues things. a that they well-capitalized product for solar But energy it's helped Digital to us, They'll storage. well. So expanding has The storage, energy a really

require Our on and XX/X plus version bill there's a hydrogen green of will If storage. a that gets energy around climate of the lot passed, clarity story. relies energy

relationship. for strategic is we And grow it come. to yes, hope to So together a years

Operator

Seaport. with Our next question comes Storozynski from Agnieszka

Agnieszka Storozynski

time this be to question price the So We line your new everywhere plant of in environment, world. gas in about the basically seem is coal my first retirements.

be change there to of some companies assets. made many line, operations continued money time heard yet haven't these We but the is on of

customers as question, one. when that a more longer second little PPAs, So is the that's signed mentioned they you then renewable dated, power guess, why see And I driver. the decarbonization so far, the bit main reasons C&I

are probably expecting much price heard as of renewables, wave for prices about C&I inflation this and higher But demand the and yet from economic the doesn't haven't help. second in years we environment We come? power customers it's are you probably equipment to

Andres Gluski

one, on reach by first XXXX. Yes, to Look, our the those goal first we have are great questions.

trying to them these shut a times assets down are at question of most sell it's So that or appropriate.

Ministry or a Energy. with local the So the lot talking system shutdowns, of it's the operator

top see many prime being On don't the what's valuable now. being you're I more plants of happening those are by So Maritza right, certain sales, these in locations, example. affected the of again,

of goal doesn't these But may some in be must all rid terms run availability of by of of And gas. plants delayed somewhat our of shutdowns XXXX. getting they natural because change coal it

of of before slightly solar from going abandon them I'm of it commerce just asked turbines or The is fossil are is because not decarbonization to second fuels, people them, much batteries They're be of renewables about talking goals. due question the gas glad committed or wind aren't their of less to to whether panels what's increase But is side, the that what to than price really everything all higher the commodity happening because in coal, the the let's cost side. on much, of say, diesel. prices mineral companies in it increase you the or case because

the from energy of that more the in It's it the cases, even are the renewables I construction. matter ever. how say degree, in just can all of cheaper cheapest is cost So than is much almost increase renewables a with today actually, energy. And competitive

lights why that you we going whether people XX/X. of as what this ion-based X to there's to assets, journey capacity. storage. your further energy go, with the blend choices. or on sort combine of energy energy in demand it's issue Green decarbonization, energy, to be really And coal storage, And is strong say lithium let's legacy did to Green for or that's the renewables. or run and is integra keep say, it start. I'd Chile, extend such on gas they So the not and main have How One continue That's be

you this? me, really, the you'll enough question a batteries sooner. So able to retire then of be get And supply. to Can it's become to batteries fossil available, more meet that plants

that's, main thing. I'd say, So the

on But the than right. competitive more are crisis. cost ever you're before than renewables So equation, this

Agnieszka Storozynski

that as as in, locking high see XXXX, in example, Yes, far power like means thing grasp they large purchase just that I'm to fully I XX%. in hopeful XX%, amazing is guys. because don't growth are there come customers it for for no that just one industrial you that comfortable prices and XXXX renewables I pretty that, is commercial mean could $XX as to is PJM that when for

Andres Gluski

of sector, delayed it's There these you by be more that it's are shortages. do growth. And a this -- canceled, projects the due is cases, maybe projects can projects. some -- of different kinds deliver have those they in been there in there or to supply confidence going not mean, of to just I because have lot us

it. It be for that they're certainty. So might be that going might

very us, we're on we our what differentiates been have that delivering is feel and we of So projects. conscious

Operator

comes Orrill with Gregg question UBS. from next Our

Gregg Orrill

you grade. comment could I Anything you highlight was investment what on if to to Moody's wanted there? wondering got

Andres Gluski

just what this -- has pass But has did this to would a because been been Look, add, work. Steve I'll he the most I this decade. of over

are in of XX%, you I almost we're guess, our strong. to almost, terms if the indicators exposure I what, hedged. fact if So I dollars, in at XX% look at of statistics think, that you contracted XX% very mean, look any all our the commodities,

it So time, but our cash pass flow has been really strong long a Steve. off to I'll for

Steve Coughlin

someone I of bring very Thanks, you was Andrés, Moody's achievement. for thanks We're Gregg. hoping the and question, up. the would proud

So third of X. look, is the of this

really do solidifies for my it. ago. set I credit claim investment-grade as to can't long really so a job X our And so status time too that it fully in only I for the much out team I've -- something months, been AES, can't

it team. goes to John that really So and the

nonrecourse And so debt looking at businesses, our our subs. look, and Moody's the consolidated flow approach debt, where takes a the including different all they're all from our cash

looked review very our So really deep a at also did businesses. and risk the they they overall profile of

growth -- dollar-denominated, strengthening the So -- actually quarters territory been structure, contracts, been straight long-term that mix, it's our combination Moody's for in our and utilities and balance X well flow of in of our business the cash we've our in our commercial Moody's and so into territory. -- a the so sheet, increases

this it is felt and proud very that about this -- of I think was was good becoming look transformation. really validation that really at AES we're So it our And we just obvious of that something point and deserved, really, another transformation.

said, they review. thorough a I As did really

Andres Gluski

Moody's methodology that said Steve is what different. highlight would I And Yes.

recourse takes not the account So only nonrecourse debt, but it into the debt.

So case, of billion it's in $X.X our about I recourse? guess,

Steve Coughlin

Yes, yes.

Andres Gluski

$XX.X million nonrecourse. of

Steve Coughlin

organization. I recourse deeply Yes. exactly. said that's mean debt here. Yes, into the look request I whole different really on think I They the

Andres Gluski

have confidence investment-grade subs subs our of from all that in ourselves the coming most you and tells are this flow rating. cash So our that they

It did the year the line. a this to get across a great a So the but finish decade last making, it's fantastic in the in was confirmation. job team

Steve Coughlin

the out I I a for Yes. think some investors. would thing point it's line just bright other is And

X So having in. locked having this third all one,

investors attracted company likely think we'll the new see I some be to now.

Operator

from next Our Ryan question Levine Citi. with comes

Ryan Levine

projects you balance in looking and favorable and outcome your the view are third-party of new solar? Given more DOC sheet development, strength, solar in acquisitive be to

Andres Gluski

from, we people frankly. quite what do us, and away coming other that are us to clients seeing that are asking walked is projects can have we Look,

mostly states, now -- the interested XX/X. in that these So what we're

to open fit up be assets to does to has But it it into XX/X. does do -- opportunities. it really, to So where able combine deliver we're some trying

case, we of very, decarbonization feel that look just us here if wrong on actually of the the very the weak. direction. onshoring, the objectives moves again, think Commerce is think, Department I length the of legal you in of this that at of And furthermore, So case we --

So to it our that would meet is continue projects acquire clients' demands. opportunities help some yes, they I we if what put us to see

Ryan Levine

you for I earlier. the the Are guess one going color. appreciate win quarter? break then from to Bulgarian contribution And I the out follow-up

Steve Coughlin

full the quarter, cents year. it best be will it we the did We the talk a -- we about as for few that out year. full But probably not expect for break

Operator

Research. Our Peters next question Wolfe David comes from with

David Peters

the U.S. curious, and leveraging your remarks, Just that you should I you international. with think into are geographic heading diversity, term? are you sort expect delays to this backlog extent in U.S. uncertainty said some 'XX projects? guys prepared of to you expected Is year your near the this given the a you in be the the we can mix here U.S. And as in of pull year? in there maybe Andrés, roughly Or lever think XX-XX addition that

Andres Gluski

be already for mean, in these that signed Well, of will are 'XX, commissioning. terms projects I

a -- portfolio, Now correspondingly. we diverse can have and adjust we in yes, can terms signings, we of obviously,

So affect se. I it don't think would XXXX per

Again, that's sort resolution. with again, legacy. XX-XX hope, we of sort what the again, mix, of Now And the

Steve Coughlin

And with growth Yes. U.S. would is internationally our we're of so coming a customers, even in is we're in customers overseas. helping industrial centers increase. core case it's just I that. a markets what also Of doing X% in from similar And almost proportion rate some would utility them doing base then this of base in utilities that is add, achieve everything the rate data of commercial growth, our well, really, -- U.S. same the lot strategy powering the

expect a U.S. and in would long-term but cases, a still we'd a have it's if to similar dollar-denominated it many be So different contract, flag, contracts.

Andres Gluski

what point. we're emphasizing That's dollars. contracts I in is really mean a very important renewable abroad long-term

if from risk a So you're Microsoft Microsoft in Chile, different say, California. it supplying, in isn't really

will over and already dollars, is business in that grow. our again, only XX% So

David Peters

light of likelihood at in just and the attached extended that, of the next the Potentially extension have I'm year your storage and and Ablecon thoughts end getting recent this of an on delays being curious itself California, too. maybe OTC In just guys' 'XX. one. last just of discussed. units solar then your is that's most And

Steve Coughlin

ourselves very, we jinxing likely. Without it's think very

the environment they we've but we but -- XXXX. we think all to not it's extended that -- good our a several upside at once, these guidance, want an there long-term to there's following. have So that will And is do extensions through extended years get those into such very do plants chance

year, of year important, we an by portfolio a But some some bit be of is hedging capacity offset X the So maybe that it the very comes of that disruption to And This at the think from in as for a disruption. years time. is QX the energy opportunity may perspective that we've the both well a demand solar as current supply revenue peak done. chain.

So it's can it quite quite -- material. be

Operator

the conference I now Susan pass will to call. remarks. closing the of over portion Q&A today's Harcourt concludes back any That for

Susan Harcourt

We thank everybody for joining on today's call. us

available answer you, questions the a day. IR nice always, have. you be team Thank As to have any follow-up will may and

Operator

Thank AES That financial concludes today's for quarter call. conference you your participation. first review XXXX

disconnect now may your You lines.

The AES Corporation (AES) 6 May 222022 Q1 Earnings call transcript