AES CORP Q2 FY2024 earnings call

• Second quarter results were strong, with adjusted EBITDA with tax attributes $843M, adjusted EBITDA $652M, and adjusted EPS $0.38. On track to meet 2024 financial objectives and be in top-half of ranges for adjusted EBITDA with tax attributes and adjusted EPS. • Signed 2.5 GW of new agreements since May, including 2.2 GW with hyperscalers across Utilities and Renewal businesses. • Datacenter growth in U.S. utilities: Signed 1.2 GW agreements with more in advanced negotiations, potentially increasing peak load by over 50% for AES Ohio and Indiana. • AES Indiana: Signed deal to acquire 170 MW solar plus storage project, $350M CapEx, expected completion late 2027. • Renewables business: Expanded partnership with Google, 15-year PPA for 727 MW in Texas and retail supply agreement for 310 MW in Ohio. • Backlog of projects under signed long-term contracts at 12.6 GW. • Generative AI integration: Partnership with AI Fund, use of proprietary tools, and launch of AI-powered solar installation robot Maximo.

Renewables SBU: Higher EBITDA with tax attributes from new projects but offset by a forced outage at Chivor hydroplant in Colombia. Utilities SBU: Higher adjusted PTC due to new rates, investments, and favorable weather. Energy infrastructure SBU: Higher revenues from accelerated monetization and higher margins in Chile, partially offset by lower margins in DR and sell-downs. New energy technologies SBU: Relatively flat EBITDA reflecting continued development of early stage businesses with partial offset from Fluence margin increases. Revenue contributions: Adjusted EBITDA with tax attributes was $843M, adjusted EBITDA $652M, adjusted EPS $0.38.

• Expect adjusted EBITDA with tax attributes to be in the top half of 2024 range ($3.6B - $4B). • Adjusted EPS expected in upper half of 2024 guidance range ($1.87 - $1.97). • Reaffirm remaining 2024 guidance metrics and growth rate to 2027. • Progress on asset sale program: Over $2.2B of asset sales since beginning of last year, nearly two-thirds of $3.5B target by 2027.

• Potential impact of policy changes on tax credits and contract negotiations. • Supply chain risks though mitigated by domestic supply agreements starting 2026. • Regulatory uncertainties affecting project execution and returns.

Q: Update on credit metrics and FFO to debt?

A: Credit metrics strong, expect year-end FFO to debt better than last year, threshold 20%.

Q: Impact of policy chatter on signing new contracts?

A: Not slowing down signing, clients concerned with time to power, not policy changes significantly.

Q: Utility load opportunity breakdown and capital allocation?

A: Too early for exact breakdown, significant upside to utility growth plans with acceleration in discussions.

Q: Megawatt quality over quantity and returns?

A: Focus on optimizing value from pipeline, mid-teen returns expected, optimizing among clients and opportunities.

Q: Credit rating prospects and geographical mix?

A: Credit metrics improving, likely mid-BBB rating in years, U.S. focus with opportunities for same clients outside U.S.

Q: Utility CapEx outlook and financing?

A: Details to be fleshed out in second-half, funding plan flexible with asset sales progress.

Q: Supply chain outlook for renewables?

A: Confident in domestic supply starting 2026, no material project delays in past five years.

Q: Renewable execution and EBITDA trends?

A: Upside in tax credits and margins offset by Columbia outage and Brazil wind resource, but overall growth and efficiency improvements.

Q: Utility growth load and generation supply?

A: Load growth over time, generation solution includes renewables and gas, no appetite for direct generation in Ohio currently.

Q: PJM capacity auction impact on pipeline?

A: No impact on plans, signals value of existing assets increasing.

Q: Low interest rates impact on projects?

A: Lower rates reduce cost of new infrastructure, benefit demand and sector, but locked in costs for signed PPAs.

Q: Hyperscalers and carbon footprint with coal-heavy grids?

A: Hyperscalers prefer renewables, use offsets/RECs, not happy with coal power as last alternative.

Q: Domestic content bonus for projects?

A: Projects meeting domestic content criteria, teams working on components, impact on returns case-by-case.

Q: Technology advantages for renewables projects?

A: Leadership in lithium-ion batteries, dynamic line rating, and use of AI-powered robot Maximo for faster project execution.