AES - Earnings call 3 2023 | The AES Corporation

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Operator

Good morning, and thank you for joining the AES Corporation Third Quarter 2023 Financial Review Call. My name is Kate, and I will be the moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. I would now like to turn the call over to your host, Susan Harcourt, Vice President of Investor Relations.

You may proceed.

Susan Pasley Harcourt

operator. you, Thank welcome call. and third 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 Ricardo Gluski Weilert

joining Good financial And quarter XXXX for call. thank third you review our morning, everyone.

In the for August. some from and call second addition remainder will third that quarter of investors we discussing to address quarter I heard have our concerns year, outlook our since the in

Specifically, rates. my sources to focus exposure strategic areas: our and our X interest financial on updates, and funding remarks today will

Beginning to on in we of strong guidance I Slide expect report to now be EPS year range full adjusted and $X.XX the financial results top pleased to $X.XX. that be to our X. half of continue our am

also all metrics. of reaffirming are We our financial short- long-term and

attributes very more billion, and $X in share I'm with adjusted was will $X.XX. these pleased with For tax the results, EBITDA shortly. quarter, third per was which detail adjusted address earnings Steve

X. Slide to Turning

center the energy, the levelized base for markets to of a operate. companies of rates, with from to renewables, primary across all strong rapidly business. customer or lowest particularly have rising even with demand almost continue continue interest for technology we of contracts Notably, where renewables see cost LCOE, We expanding data long-term large our

the X.X X.X number So quarter gigawatts awarded second New recently including include new we projects August. does call gigawatts This in far new have year, PPAs, of were we since not this in gigawatts signed X.X our York. of

contracts large to could remain the at confident weeks, Given this coming ability long-term least our that X new in finalized be sign year. that several we we gigawatts of PPAs have in

new developed is any agreement, pipeline costs. we already or allows signed, Included construction. DTA, transfer structure the AES have in commencement the solar to create at our ever of XXX a equity advanced This megawatts first to development our that value from contracts investment transfer point the plus storage the of us to of of without beyond utility,

X. to turning Slide backlog our on Now

gigawatts. come secured already And or contracts XX% projects backlog signed long-term through is we over X necessary all Of construction. or Furthermore, for of the of Our now these online backlog, gigawatts projects. is equipment expect and gigawatts we already with XXXX. to than XX.X under this X.X more total XX% have

Slide to Moving X.

construction Our already expected the megawatts to XX% come continues completion. year, to program make this achieved of mechanical excellent having with online progress

reflects to in projects a incorporate doubling we have the to gigawatts we have figure this year. the last year-end increased service target made progress a more X.X gigawatts renewable result, X.X from As compared to year. placed This construction our than of

we turning conditions, to sources Now our market like directly X. current have In address funding would of plan. Slide I of to the long-term that light in

sale billion billion and through only to least 'XX of 'XX our now at accretive accelerating and total to our proceeds asset least $X.X significantly will Instead, at we equity to we $X have sight expect then, line issue value proceeds believe XXXX, if shareholders. and until asset XXXX. at in and sales of sale least our We be is issuing not will it even equity any asset we are

already have of that Panama sell-downs proceeds financing With needs the September, in the we of Dominican and businesses we terms. at Republic our year for the all attractive from secured announced external our the in

our buckets exit general U.S. of renewable businesses. sell-downs coal certain are: businesses, noncore plan projects, of the that partial energy exit, of asset including sales are and new part technologies The monetization of

plan businesses in as our in to bring needs. have to at partners some future past also the We of done reduce equity we

signed While specific until discussions we have transactions many we never disclose in interested agreement, positive with active actually we are sales and counterparties.

last our turning before The to to exposure X. is to Slide address to want interest Steve call over Turning topic the rates. I

to profile impact have flows Approximately we from always cash the rates. of a course which of that XX% the minimizes is is debt normal is or are either underlying in the of interest As utility our the to included higher any to debt majority parent. that, debt rates of proactively And AES project of revenues. level the matched business, matched the that nonrecourse profile debt our project supporting. the vast customer

higher PPAs new or costs in is All rates to and fixed interest we've long-term have either of before, the our and we at hedged been able debt Corp as on stated pass signed. we

these metrics. credit We would value we like CFO, our Finally, want highlight our the ensure metrics. turn call into With we our to growth consideration relevant and to component that which that a risk credit take an make, I consistently we commitment take overall we of to maintaining our to To that, approach important disciplined end, to Coughlin. management Steve proposition. over our as every in investment-grade see ratings, maintain to business I decision

Stephen Coughlin

interest you, exposure Andres, guidance, results, our plans how financial our Today, will minimize market morning, flexing rates. conditions good third adapt our to how discuss Thank and to XXXX current and I quarter are our we to everyone. we

results financial strong $X on million guidance. higher contributions on purchase our year a a and quarter with EBITDA costs included SBU, Turning was power Ohio at of track billion recovery at year, the prior tax just over to primarily attributes achieve driven by our . These pleased by last the partially had the by offset full drivers at quarter $XX $XXX our versus the the IV AS renewables third we million versus In I'm Tax year that absence a as are to this share million the $XX settlement to significant XX. share year. fully part Slide Adjusted with U.S. renewables quarter, improved of beginning our for we earned year's of fourth which higher transaction ESP margins, in of line online attributes were LNG were quarter. and projects results Fluence. coming expectations earned of our projects renewable last ago.

EPS was versus Slide last year. Turning $X.XX to XX. Adjusted $X.XX

online the fewer driven EBITDA, over higher slides, the adjusted lower tax XX. adjusted In credit business placed quarter saw the in on few service of recognition tax a from Slide EBITDA this result attributes beginning year more well saw of in as expense the with adjusted into units by cover higher last as SBU, higher new or to of our months XX next the well detail renewables higher addition drivers a Colombia. quarter This offset margins strategic I'll In projects in interest parent performance as SBUs rate. higher brought new as tax this we as ago. contributions was by primarily a partially projects versus we

business projects. financing but not with construction, to new just Our make progress, of also the continues strong

more for $X.X tax brought continue market. already transfer year, also We billion tax credit market greatly tax for have as to This financing. attributes see market participants The result option credits. a that in many is of expanding raised has a the to tax capital robust the we

recognized enhances and in flexibility. cash transfers our credit funding Importantly, tax operating financial flow, get free which further

Going a projects megawatts XXX increasingly in use as tax will of monetize tax forward, transfers including XXXX. we credits credit to means for nearly

XX. included was last as to driven ESP adjusted power higher PTC our have program now prior to in recognized by a SBU, settlement, as on the of At of part an expense like Utilities I'd the take purchase year's recovery AES of quarter year. growth utility at of IV third continued our Ohio which progress moment discuss the the been costs Slide

for August, Security we a new AES Electric received us includes $XXX which at of commission In of investments return million to modernization Ohio grid ESP XX% equity, at X, on or the timely allowing improve approval quality of further service. recovery Plan, our

rate are of programs. our already or the plan under grow XX% our we rate XX% utilities formula XXXX FERC to XXXX. investments through rate either U.S. As of a approved annual a at combined reminder, planned through average bases

on we work as investment on the increase across programs utilities, and to we are XX% X modernize over plan executing track are in our year-over-year this by to and system with our We invest capital expenditures reliability.

Ohio of both As residential Indiana we previously continue states. utilities our in and to utilities discussed, lowest in all the charge electric rates

our recognized SBU Warrior results, margins year by transaction LNG and year, higher third EBITDA quarter onetime energy of Lower our from the plant. reflects primarily Turning monetization with PPA our on prior Slide Argentina the at offset revenues partially adjusted prior infrastructure back the XX. Run in in coal expenses significant to

strong reflects year-over-year at improvement our continued fiscal demonstrate their at in own be have growth, adjusted fourth close in Fluence. Fluence SBU expectation Finally, fourth breakeven margins indicated quarter Technologies results the higher be year. Energy their EBITDA EBITDA and This quarter and to XXXX improved results. pipeline has would they adjusted new our to to reflected continued of improving

half X.X means I'm now expect our of This EPS Slide to the parent execution cash and million $X.XX reflects our to of range to our XX. Turning guidance we performance $X renewables of target very adjusted of of least we team XXXX exceed excellent gigawatts megawatts. both our by range the expect to XXX at whose billion. pleased construction $XXX $X.XX free to achieve that top strong to year construction flow this that highlight

Now XX. to Slide

bring $XXX to the should we with $XXX year expect million at $X.X online estimate we of to tax exceed in year We billion EBITDA of the Investor are adjusted midpoint full of guidance tax $X.X XXXX, expect our to attributes reaffirming Day. additional billion, U.S. expect The attributes to attributes the EBITDA billion. projects this $X.X we of million allow range us provided billion $X.X to to realize tax including adjusted XXXX we

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

total in and we of asset million the $XXX billion million $X.X including $X discretionary million approximately completed debt parent sales reflect $XXX free Sources of issuance flow, of $XXX billion to parent cash QX. cash,

a to down capital our Dominican parent LNG secured sources minority interest have Panama, of sell our external the of XXXX. and we level in and for agreement the the business in Republic gas With entirety

plans accordingly. our Slide will Turning May, Day near-term conditions financial and its Since Investor long-term in and have changed, AES market flex XX. to

profile our will our credit renewables funding ahead, portfolio primarily advancing simplification continue on strong U.S. our ratings growth metric Looking our to hitting and U.S. investment grade and and financial utilities in we decarbonization targets, growth and prioritize goals.

We on with number levers these keep track objectives. adjust to that of a us will have

share and shareholders our to not on First, will a equity current we price and share to at value until not issue accretive or per is clear, basis. be levels near it

XXXX XXXX to accelerating the asset time $X we in are our of and to sale has any achieve we $X least billion to sale XXXX. least the frame plan at such, issue until to $XXX and period. With $X.X XXXX asset and for not been reduced increasing equity anticipated will to million this through change, As guidance target billion proceeds our billion our XXXX, amount at

have that flexibility the transferability broader renewables of growth. our free fund credit option tax tax we the Second, capacity base monetize cash now the of with a value market creates increasing participants flow U.S. and to added projects to also while

required. in to the of while as Third, our and businesses as XXXX not majority to of our businesses of transmission will support have exit progressed needed our beyond the markets, intend be remaining the a intend deployments assets temporarily transition our We still coal end by all few we renewable exit XXXX. of coal as to quickly still energy coal

However, these continued continued through support yield to financial reliability. few delay plants This electricity would to from the assets of select a we flexibility during the period. this XXXX have contributions exit delay

plan. in to valuations a have we dilution $X XXXX earnings what processes attractive the the needs can cash in our issuances. portion We and billion in sale program. as we remaining feel with planned incorporated expect and already will sales For this held had confident with and discussions been for XXXX, We of target asset that to capital parent these fund yield large our years beyond that minimal asset competitive debt entirely assets anticipate we achieve

growth sales investments objectives to Our to our decarbonize utilities. U.S. is simplify our program portfolio renewables and designed and while our core meet in strategic funding

in Finally, XX, turning rates. to increases hedged are Slide future against largely we interest

our long-term the entirely refinancing our and X-year a parent hedge exposure to at is over company, window. risk debt Looking we fixed

debt when rate and a consolidated expected nearest were of XXXX the Approximately XXXX of at in debt at issuance Our to the insulating maturities parent. tenor X%. XX% project rate we movements. from is hedged PPA full the and is or typically nonrecourse future our subsidiary for previously future sign We project approximately prehedge returns our level a

rather debt project our amortizing of higher structure The leverage. to than support allow maturities the bullet project

we leverage underlying businesses, outstanding metrics. balances the approximately investment-grade debt $X the to our As us proportionally ratios of of average had flow to grow, will billion hedges enabling third credit and the end of of long-term our cash an increase At rate quarter, at maintain steady X.X%. interest rate we

impact the have interest refinancings rates future XXXX U.S. shift in a $X.XX our under debt, basis floating and at issuances, of point we exposure $X.XX EPS and Looking and rates of exposure interest from XXXX. in in of XXX to $X.XX rate on

XXXX. achieving natural as debt our rate U.S. the floating we provides is primarily in strategic rates. year-end, objectives made PPAs outside financial for against In where approach we've Unhedged indexation on our excellent summary, a located inflation and progress hedge rising

to and from sight excellent Andres. future market investment-grade line continuing to achieving maintaining we will financial our that, growth financial commitments. needs, balance sheet strong, the funding is to back are over conditions. market value With to create flexing I'll call to credit position our With Our turn prioritize adapt current and we metrics of while our

Andres Ricardo Gluski Weilert

Thank you, Steve.

regarding to Before sector that concerns A you general. would other briefly few the I we have some from renewable Q&A, moving to the heard in future like of address of

accelerating. global and real For likely warming very starters, unfortunately, is,

volatile short-term are corporations seen carbon during unlikely of wildfires all-time Northern this . Completely regardless will rainfall, vulnerable areas due extremely from their the have pulling losses such of over goals X walk We companies suffering Hemisphere. summer affect unprecedented insurance all after that in and it record reduction for rhetoric. record demand change. all was abruptly This reality energy in more public. the climate temperatures waves, years out any markets political actors, new is, as certain general in of which material away past of especially reflected to heat apolitical therefore, major unscientific It and in the

that the is AES opinion, value resilient my have create space, In among than renewable now from lucrative we all energy because the is Given for important companies ongoing more is years been it most developers. to than and differentiate happening ever to in opportunities. on placed transition focusing and shareholder nobody better the

New We largest York suppliers the are most PJM. markets energy among U.S., of and attractive in renewable the the in California,

Already, supplier biggest the An that demand differentiator to backlog power refabricated match reliability agreements, implementing purchase innovative storage, in and among benefit This will scale finally, our reputation one particularly for important few energy to U.S. are half very the corporations of grid developers the the especially projects to is data efficiency more and I or had for growing of has of that renewable in maintaining accelerate supply solar, and the cemented premium represent visualization. efforts will most construction due centers disruptions. of generative our We developing growth energy. our segments. in and have backlog increases our robotics also is renewable and renewable market lucrative its material energy the world by only not data AI-enabled such cost shareholders, renewable is sector, hourly And grid in software chain abandon believe centers. these to as in AI new most customers. has major for lead AES the AES technologies to company their energy

for the X largest to in drivers future be participation green of Energy. is XXXX, the hubs the in the post most advanced positioned our production in growth chosen country, project of Department AES significant in Regarding with the leader large in by hydrogen best Texas,

standards technology, and most have and they that offtakers relationships, matching. to will continue real hourly now transition. and unstoppable scale Our the expect the customer we energy record during has additionality, regionality proven people, exacting profitably and AES grow and track meet Today, the green renewables projects the of sites, hydrogen to the supplier

emphasize I aim of once While truly the share. for shareholder or want not the immense. number market our is to to value, megawatts our market total products and is services maximize more that addressable

basis. a be call per shareholders like that, returns always up to best to open our I for for share risk-adjusted will priority on questions. With Our the the ensure would

Operator

with Instructions] The question line be Stanley. from Arcaro the Morgan will first [Operator of David

David Arcaro

in seeing contract what there was still could challenges, out portfolio. wondering what terms you if I there your of signings? of that about are update contract the you weakness? cetera. on given et within PPA is strong opportunity So higher terms development Or in have in could with financing elaborate conversations renewables market like talk set in for originations pockets the an trends the There the you're demand. backdrop, . Are if prices renewable your been slowdown there concerns customer around ample customers? of Wondering the

Unknown Executive

is strong seeing demand our we're very from target customers. What

said, markets seen it's as -- we So I we have you're a to And in. important very weakening. think not what it's distinguish operating

New California like in very center especially strong data the And demand. demand business. is companies corporations, and there's from the very markets tech PJM, So strong from York, there

not So we have slowing seen a down.

WEC talking firm. for et lot seeing cetera, you're more But those projects. about markets, we're very public demand for we're a if our target in target seeing customers Now, utilities, for competition the and auctions our

David Arcaro

maybe Great. question sale That's outlook That's the a here. encouraging. then asset on helpful. And

How what seeing developing the projects? of favorable the kind what you're and pricing? what you Are targeting billion in market project X you You're of is terms acquire terms line guess, yields versus at. of that I those over next projects there the years, there demand $X And sight gives accelerating -- in offtakers seeing you sales? there? are to of Are

Andres Ricardo Gluski Weilert

Okay.

So X the parts of that's sort of I think question.

selling or for down sales of the past doing So as are have specific we the a been out a businesses decade. selling lot asset

perform to well. Our very businesses continue

not with and see equal participation. not also created these for also greater positions because interest again, all that markets. in favorable businesses these it's for in we great there people is existing includes we our are have seeing And businesses We're that interest partner us. very -- to So partners

those years. the So X things are over needs decrease next X, which equity the

think see So important we're both. that's to very balancing I that

sell-down regarding of the on to question can the renewable think pass you that. I update give I'll projects, he an over so Steve,

Stephen Coughlin

Andres we -- his of part our Yes, number ways well. We that's in going of sales, comments, through a achieve it. as there's walked

long With these down will low risk, sell we And come are the flows. typically sell-downs, projects the very renewable after cash duration online.

XX is very duration contract average these fuel Our Obviously, in of assets. types variable cost, O&M variable little years. no

very and expectations with where assets. not yes, -- but very of attractive rates up of they're profile returns So come come in so low lockstep because have have somewhat, the base risk these

equity So AES' with continue talked those to yield lift past, we've what in the in returns sell-downs a commensurate David. about

Operator

The of Durgesh be question will ISI. the from line Evercore with next Chopra

Durgesh Chopra

team. good time. for morning, giving Hey, Thanks me

to Just a quick want housekeeping with off question here. start

late Just the potentially talked factored $X.XX EPS being your Is 'XX. from still upside that projects Steve, from guidance that moved into now? Or is we upside? into 'XX raised that EPS about, an

Stephen Coughlin

Yes.

a so of this X.X. year, guide X.X over so it, megawatts So XXX we least at portion Durgesh, to the to did

of year in of is new So $X.XX And the equipment everything increase upside that on have does mechanical will the this we come good next is a been final online at We're year-end very to line that capacity. That this number. just half has That as in all not built is the thing means of of included. which that in first of and and of year. systems point out. the be XX% we completion a so feel portion synchronization achieved confident sight clear very just

Durgesh Chopra

Got it.

frame a Andres, us of highlighting from going versus sheet. next there's of credit what talked with going maintaining expectation Could of then metrics the a into flow Okay. downgrade these expectation to importance sort and of the you Steve, And balance you be and sort And That's report maybe, your XXXX. your was both then for sales is year credit cash here just a for thresholds? FFO What your asset your is there agency about debt weakening strong rating obviously, metrics then because clear. drop.

Stephen Coughlin

Yes.

year that the balances as would of So out in some we the higher do I year. the credit one fluctuate point have is metrics during thing construction the middle

year, We higher also our manage revolver construction have and timing end as balances, come paying then revolver used a the the and corporate subsidiaries. towards down the distributions on our to from we level have corporate of projects online

that The other high-growth keep thing is are we in mode. a to in mind

time, So value and construction have yielding in we not well. also debt at point do credit And that's it's that's finance to yet all used tax any nonrecourse. the as

that agencies. the no, about we're once We quick all rating So meeting very feel there's exceeding thresholds. with contact -- regular good paydowns debt come the in very these we But exceeding online. feel projects not just but on

keep The in our is is mind amortizing. other that leverage to thing

debt PPA of most So our project amortizing the is level over period.

It's risk and that the low So our business. it's leverage proportionately, will significant is maintain debt this the will a to it structure. not to flows only and us bullets grow a very nonrecourse ratio to cash proportionately allows subject of just grow

Durgesh Chopra

Okay.

have be the you'll just them, year, mean, that clear thresholds, feel versus place plan in Steve, but So into you right, XXXX. you exceed downgrade to though, your I next that with

Stephen Coughlin

Yes, in is priority of all top This a planning. absolutely. our metric

at maintaining credit investment So the top. is

the we as Investor we are our Day billion dilutive prioritizing are $X.X so considered amount, our $X well in cash asset both earnings, numbers. but minimally we at And hit look and a sales And billion strategy, assets credit. already had Keep to on in as mind, that significant

we negatively confident have. very I'm that credit will not we So that the impact with plans metrics our

Durgesh Chopra

-- you as mentioned on pass discussions? those I and parties interest Perfect. of Andres of $X.X could you want And active one to have lot a it sales, as number billion question, asset in you I just it. be assets that already more sort Got get on very is with discussions higher just I'll But to others. know last just but ask then just significant

Andres Ricardo Gluski Weilert

a least sell-down to our feel At would will partial sell plan say exit this lot of are from of point these, through billion coal. I 'XX, we again, but of at sell-down, we time, that in renewables, that $X.X end

not a for look of number. I'm of it. done this sales out asset the exceeded multiple achieved set time past, have you if point I'd also any that in a not or that we've it target we aware So and

So we sale those in confident feel very achieving numbers. asset

Operator

The will the Angie from with Seaport be next Storozynski question Global. of line

Agnieszka Storozynski

Okay.

mentioned that in I to mentioned sure sense about -- So dressing not you credit I trying transferability certain to were actually tax to -- by make metrics, solve a of driven a wanted credits. wanted window this first, just and but is economics. you for

when your renewables Day, I to So look U.S., then you financed and your the debt tax XX% Analyst in XX% back equity, XX% level project equity.

So trying to I credit still we're you and basically not moving that, among to just these is traditional sure that transferability. structures, make wanted and to structure just from explain monetize allowed in metrics accelerated the to equity depreciation, me credit tax -- -- boost levering that others which to projects the why we're again, by more

Stephen Coughlin

be and Yes. question. offer so for case. continues market credit always it's has that value No, broader Thanks The market transfers been the important participants. to a Angie, their the more reality Steve. set a of maximizing it to that broader AES -- tax is is the recognize --

different utilize corporates something depreciation accelerated I that we'll liquid a require think partner is because a It's that market, asset that's of value the monetize simpler benefit. credit so which not transferable or many do either able to more benefit depreciation the the both AES does but to transaction it's in be and accelerated tax also the you but still in to faster, not only a more coming execute, from important sectors.

appropriate But because a And and liquidity. assets. return done hybrids free important and market, simpler here. in cash primary component that investment is the up is it more in it's truly broader the be is my value there'll cash that that operating made an to think of point So a this do I gets transactions, it shows

Agnieszka Storozynski

Okay.

So already equity that's Analyst your structures, uplift that when the quantified you during treatment needs you considered Day. so FFO the that those under

Stephen Coughlin

say there's this The our done in participation think in returns operating XXX would that flow. upside Day, have related moving of transferability. I say terms the credits. transfer necessarily metrics So already creating But more I the is just Analyst in in is would cash faster, megawatts it's the to or so flow at of market I It's market something cash we use changing it's visibility, not shows up that anything. more point, more and

Agnieszka Storozynski

not it's the right? you're Again, the again, But increasing that leverage sticking solar -- beginning, Okay. change, financing I project. structure at that still you're with doesn't of ITCs. mentioned So

Okay.

Stephen Coughlin

not that No, so we -- efficiently only increasing I as to projects our looking track not that leverage our and we to credits tax any the possible. record, are expect we are given And at applied discount are credibility the as monetize would market credit based to will perhaps past, also then, the credit. the be in I credits quite small cash best relative the other said participants. is on And we the financial have return reiterate, Andy, as just to what choose option the from

be the in capacity ITC choosing solar, been whether makes very example, New for production-based where for to be tend to quite sense factors credits, most that's little it cases, in So us, small. England

is focused what's that question we So are yield return. on I that the doing motives, anyone that's in would but very their best the credit

Agnieszka Storozynski

power based electricity. on attractiveness the of then And you sources of other mentioned of cost levelized the versus secondly, renewables Okay. the

slightly newbuilds you for do have new the i.e., and actually the renewables to builds peak generation for hearing now assets. power around on PPA thermal for So exceeded versus not have clock are or is then But sources, everywhere, add it for prices, that -- prices the forward we wind. solar right? be pushback incremental that And

other about with locations distinction any understand offtakers other but for any and how tech the clients, I again, new renewables? So

Andres Ricardo Gluski Weilert

we're as about bit XX/X. I little it is operating, the with markets it again, is Well, located. is we're having at dispatchable different. mean, said, issue in the energy, we're where LCOE, a again, in talking The cheapest. I that markets the terms most that And the the renewables way look really of I

which it require to the a need will more I think even you complement batteries, power with So or But is renewals. play. regular state huge

is So I the single having more high real or that's solar certainly say that capability. radiation in every issue high in have you fact. mean, wind, But states XX/X just location. the can't the

Agnieszka Storozynski

the local then plants the this question expected. that of retirement But flexibility later renewables -- coming operate. of the correct? the online not It's of plants. coal is understand needs about coal in And cetera. the market on backdrop Is than some the Okay. I et your reliability last just more which the grids,

Andres Ricardo Gluski Weilert

exactly. No, Exactly.

it, to we've regulatory approval retire And plants. right. indicated, taking the You're need we always as coal

in XXXX. are and the planned build-out gone somewhat So is transmission seeing I okay? plants than of of the gigawatts from XX we're small is total But that through likely has general what So of X. renewables plants, markets us, add to these that we've would been this but not some to minority enough needed our the be slower

line of would have be in the about terms. that a minority to already And it of We that remaining is sight roughly X, X of of planned.

So just be walking we're their it's I'm seeing any off-line our couple from to question of away PPAs. decarbonization to of about plan plants difficult talking a -- where to there's that -- it's them expiry the a not -- going the prior take

Operator

next the JPMorgan. Sunderland Richard of line with be The from question will

Richard Sunderland

sort if yield year-end effort before high curious advanced or conversations the outline discussions Andres, you guess, 'XX can you on this if those of sale I'm level active that earlier are? could that 'XX, how spoke in any asset an announcements I And to on is front, at window? a

Andres Ricardo Gluski Weilert

year. would question. of announce a half It's over it's in again, firm. good very to Yes. think important a some And the things they're X-year period, that, expect again, next when we but I announcements tend first I would

year. expect cetera, the several are be assets. negotiations, So first I would ongoing. able the But something It's to of to say half next et in yes,

Richard Sunderland

about any in changed guess, May And and thinking to guess, Has X, it's thoughts then asset of those I in Day, of are particular, in at, out your the any relative ago? the actually lay those I noncore if potential Understood. Investor buckets on what's since businesses buckets months I'm Slide sales. thinking there terms you there looking the X where new back

Andres Ricardo Gluski Weilert

mostly and on will time. can't that I say What that is, But I'd -- we designated would make it's over yes, regard. that. say tuned, really as noncore I comment it in we have assets announcements stay

of of deepening some an the acceleration more of sell-downs. So a perhaps it's or

Richard Sunderland

try here. one you'll And helpful. side indulge from me That's I'll this if other

that $X.X billion partnerships, of means? opportunity. new total. you've $X get over laid any the partnerships, the New of with in sense out magnitude trying to this Obviously, flavor scope and billion the again, a in figure Just what for expanded the

Andres Ricardo Gluski Weilert

is see past. done what what say we've the in Well, I'd

So and big if we you we we energy, that when look time. evolved big relationship over a for at renewable made brought sPower a example, was acquisition move -- our partner and into new has first in

number right So which of now. we're very a in fields, are attractive

do to in see especially think So some growing privileged an . or additional But it's partners want fields. really partners time to I sitting in. for of we're our if new interesting want a lot to the come what a position,

Operator

Julien be line Bank question from America. of the next will The Dumoulin-Smith with of

Julien Dumoulin-Smith

here. All it [indiscernible] going First I'm right. take to here, [indiscernible]. $X.X question billion

'XX, that the You well, 'XX assets talk that targets through you about of coal exits asking the some I'm divestment of much i.e., in me, earlier plan to contemplated selective 'XX. and does contribution out hear To how in full these of I assets. the that, loss gave delay of

target. that get you're raising divestment asset I Now the

the be at going there's So in to assets end. fewer theory,

in of 'XX So a loss in just to of of an think how kind net you earnings the into' chunkiest multiple theory, that like be should 'XX. it assets think to by and want of you contribution if about the you hear to into the of bit I coal from 'XX are the little 'XX assets obviously, impact income you some or X, of effectively deferring delaying pushing versus But about some selling or out some sacrificing potentially 'XX. 'XX, from plan. you're lowest the the

Andres Ricardo Gluski Weilert

basically that couple of is the be say, would a What operating PPAs, it of end that flexibility, have beneficial. we say right you're plants, through I'd

In terms have of our we assets asset have sales, I mean, our earnings profiles. different --

So how our have that confident feel we a will say, in that we numbers. place would hit I plan we

we think, and working post Now efficiency our 'XX. be getting are a which I have there should for more some market. of a balance when don't the technologies, in talk partners have I much improvements, that. And in about quite would happening XXXX, you numbers, 'XX, lot frankly, we're lot expect, of on factors, growth projects post bringing there'll in of a into those between

I about all sectors because of 'XX our -- to again, about the technologies in forwards in I new up. position really feel new very net, right that some really think So look they're we blocks, the like have going a big and what confident you're a opening but pull are numbers, these that

there's want not that So off into going clear. 'XX. to to cliff be make pushed a were I that

in no we've As there's cliff the 'XX. in made clear past,

variables, we a manage a So have of of lot lot we levers. --

we making smooth So sure we're transition. a that have

a value of being we of that share is opportunities, maximizing So one sure of problem taking best and advantage that our is not that demand, the what in smart make There's real we levers we're pull. tremendous is to amount want combination it and of tremendous demand. per

Julien Dumoulin-Smith

I PPAs sense. the Again, the issues, are select get been clarify, right? that's are If or think It makes one to Look, expiring that's regulatory other? catch And or -- though, the that otherwise framing you're the it. all, the just way No. I those right? a assets, nice it? the ones

Andres Ricardo Gluski Weilert

I correct. that's that to assets regulatory going 'XX. contract that under that get looking Well, to and mean may it's be approval -- have -- difficult assets more still those retire be in some to we it's

Julien Dumoulin-Smith

them fit of out, indeed, a right. too you There's right? you to Yes, that Right. would guess, that to stand if want that will, [indiscernible]. couple I be don't specific seem

Andres Ricardo Gluski Weilert

[indiscernible] follow-up. Yes.

Julien Dumoulin-Smith

go it. can to trying quickly. pivot Yes, specific here here. be Quickly, I'm for real sorry, I I'm less if

Stephen Coughlin

say, the I was ways just and a sales. going both to we're retirements of exiting number there's

X have this, announced of exits So half and that. coal. we gigawatts We've of looking at already of the

not small assets whole roughly And talking selectively considered. Even about of talking that portion be amount. a X.X% that we're you're that are about these So will remaining.

Andres Ricardo Gluski Weilert

it's said, the I part that's a remaining. of as Yes. tree small

Julien Dumoulin-Smith

Yes.

Okay.

to box through more And how put just you here just I subject, a you how think more. the I about a offer can just little Sorry, that wanted in squarely. bit to monetization, sensitive Fluence a this, hit to little about that plan. it's a try partial whatever the bit know here do you clarify that to think about

large, the technologies about whatever talk on offer? you here bit to next sell-downs not beginning bucket, new You can year specific

Andres Ricardo Gluski Weilert

we've That's We -- of an said what why we new over of It's leader, We the haven't is accelerator create are much call But said premium I technologies. monetize together. markets. we mean positions. that for we think, already. the we're applications in I as Fluence. a can't lot not They will us. really help the that just time, we

We investments technologies have those well. And as other very have new progressed well.

can't any further companies on have not we other we But I'm provide that. color really Fluence. -- So besides

Julien Dumoulin-Smith

the the marks I little there, as time know mean, technologies? important in a in other confident feel you that's And well. previous I bit of been it's but

Andres Ricardo Gluski Weilert

mean have -- I and of maturity. course, of And are create Schneider other part well Sure. and is, up proceeding incorporating offerings think, product create outside ones then offerings. they whether I there lot of of But they you of light, a But becoming us. efficiency have will of energy ones earlier more are which we Electric's value different that in levels stages. for what

a of So of promise. of ones lot farms the certainly, robotics, the one with is has solar building more think, I exciting

AI X lot for we're next-day demand a longer years a lot doing I us. out operations the on on Fluence using at that. a engines, its lot also farms AI using -- -- energy use operationally much, wind mean of bidding There's there's We're our more. predictions term much weather. with today, a sort it I for of and we of but look would expect you If there, from is

companies and with part grid ISOs We have their think and the of manage will collaborated visualization, which things some technology parcel catastrophes. and I become on dispatches reaction et build-outs to how natural cetera, like of

we royalties sales technology And we the have companies we of of with a because the co-created do the receive from would part them them.

we'll will have able think And efficiencies from are are right in time greater and savings be market we'll conditions our applying these to things are them. So able to not these cost the some monetize that time all numbers, significant over cases, increasingly we right. in be but when at I

Julien Dumoulin-Smith

Yes, absolutely.

Sorry. And just clarification, setting quick more expectations ahead. a

origination on have You done guys lot the new a front.

X You this outset, flagged I it the gigawatt think. at number,

price further backlog cadence clearly acquisitions that tackle to to expect give you of a also of steady commentary of points. Again, expectations, origination? with -- kind of Just done of bifurcate these of just and -- as mesh been I you've the does opportunity expectations. number want How we to backlog your And acquisitions here, here some have a an set a. announcements set should that directly too. b, and higher about

Andres Ricardo Gluski Weilert

what we're we assets making -- the we're different Look, we of value -- is have creating you the doing think I think -- to about when you most have.

with we sell we the our that did greatest project, pipeline, that, we build DTA, -- in creation sale will, So if because the felt a we first don't project where of value. you the but of actually the was development

of So may pipeline. sometimes best from be we our doing because pipeline, this use the that's that

cost for development As especially project. said in And it's well, development energy. customer thing past, premium you because acquire -- the why? I a a when who to to Well, that you late-stage project, create we development the some probably have is that needs have most -- attractive do have when us invest projects to to

your know is of rate pipeline. conversion And what don't so you the

have conversion in you basically if rate is you one your late client. something have if that's So stage the

good very a risk-adjusted of rate it's return. So

our doing Others the the buying case they're things. of So the those of of repowering. developed are else. have that by utilities, we're In pipeline. be going projects We're going to been somebody be from one all selling to one one

So our to we'll the use create all shareholder at means of disposal value.

way think way create it's correctly, I to is final don't So -- greenfield pipeline, is think value. this the to just through about delivery the best

clients' it's best what the and clients -- projects and you the I having thinking needs are. is right markets right satisfy in important really really the how the right about think the most can

one that buyer's attractive it market a mentioned for can seeing quite of frankly, most is So the that is projects, late-stage and it what I off-line. is we're But being just It talk all we about acquiring now. businesses equal, things us.

Julien Dumoulin-Smith

taking appreciate very Yes. here. right. I Great. Thank the really much No. it. for you All time

Andres Ricardo Gluski Weilert

Thank you, Julien.

Operator

Michael Sullivan question final Research. be Wolfe the call with today's from The line for will of

Unknown Analyst

pricing alluded to I targets you current wanted sense then And the to we -- if or it have much confirm on been a just down? just in just maybe changed? to little also change projects a any start like levered bit, new environment with LCOEs or up but there's can of returns how PPA your

Andres Ricardo Gluski Weilert

sort Steve. take getting we we'd type we the part core the Look, I in the I'll scale. and I'll high-teen project first of from are If would because second -- or getting returns. of us returns. markets of to of than that level. projects, that portfolio mezzanine be consistently returns financing, is type anybody the financing Okay. that's the the our that. pass low-teen And higher don't at of of include have I'll sort think we're

scale sufficient have supply with of the had And management. have we record We best I think, to chain anybody. compete

model, moved U.S. So has use treasuries, CAPM updated risk-free changed, obviously. think I a which up, for we and is what they have

effect. So that's calculate that when we into present comes our net really value

look we So these net value . the what's present projects. at do from

Battery are prices that would are rates, by what solar for So way, is higher the on new on coming the pass outside prices clients we pass of And down been cost, we've say interest And to I higher down. able projects U.S. do are cost. corporate receding. XX%,

lows. are solar panels near And all-time

the net value. using put present in discount have maintained margins. our rates projects are pursuing So higher yes, worthwhile if together, our to we we And all that see

And from now stress right the market on no that side. so seeing we're

and the the the returns States question wanted Now talk second projects the you we're particular to in about was here seeing.

Stephen Coughlin

Yes.

X past in coming to battery this We've are range. seen particular, been say, would off batteries seeing come down. We've prices and products, commodities the the seen going also, years, year. where we're while our over corporate leveled have that doing in And reductions I pricing end significant are reductions to generally into starting X module the higher they've and return significant of in we important, clients, increasing, back the structured with down. solar States actually it's So pricing PPA in

the starting see down, also levelized activity to forward. going which we're demand So come is supporting and costs back the

chain kind and difficulties inflation we're technologies the the using. to the past curve think in of of I of impacts we're the declining the So key in back supply past a

Andres Ricardo Gluski Weilert

we're community this know additional our been we terms project requirements. is also that XX%, -- largest that, first achieving that call which we the we Michael, hasn't on But something wind the content the domestic maybe Arizona. -- energy they project had Yes. are project Javelin of got wind first, wind asked in farms, a in was

expect and in domestic we're discussions Fluence be to will of from starting content domestic for one solar. solar. and that discussions also -- sufficient batteries the receive from We casings. then We start to first its next year, its for And having were

that. So what additionality. communities we we have see is achieving upside from see domestic energy content also the already we been And

you, remind I'll communities energy at So today. pipeline least plus XX% is in of our as is

upside. all that So be would

IRA seeing So signed. from we projects, of of especially in the are the the those that are terms already upsides returns some of

Julien Dumoulin-Smith

Okay. One quick last one.

-- final it on the [indiscernible] and be whether Just to the in like order. just here rate settlement from can give any intervenor you the thoughts looks initial testimony case or what path

Stephen Coughlin

Yes.

X put too. our is have residential case over And Indiana things context, of So This the in of kind just rates in lowest comments, any utility. as in first my we rate I to years. mentioned in

of we're for a good IRP there. lot We a year had last have starting place. So where our also that's from we the support growth very

case our need plan first interveners, heard. growth and IRP. about any good feel supported we involved So there it's in our the the this, that's been the what lowest X multiple they asked and be position But course, process to with And of very stakeholders like are we for, rates given years. through again, rate

to would into of this rates and in resolved effect point, So all timing, new of I year at next for thereafter. say, be to this middle terms come

Operator

will session, Susan to the turn That remarks. over for and final Q&A back call I concludes today's

Susan Pasley Harcourt

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

will IR a forward the seeing follow-up the questions answer this have to you you any month. at and available day. always, financial to many Thank As We of may be EEI you, look team later conference have. nice

Operator

call. conference Thank your you today's may concludes your That now and disconnect for lines. you participation, all

The AES Corporation (AES) 3 Nov 232023 Q3 Earnings call transcript