The AES Corporation Q1 FY2025 earnings call

• First quarter financial performance was in line with expectations, with adjusted EBITDA of $591 million and adjusted EPS of $0.27. Completed construction of 643 megawatts and signed or awarded 443 megawatts of new PPAs, bringing backlog to 11.7 gigawatts and achieving asset sale proceeds target. - Business model is resilient to uncertainties like tariffs, changes to the Inflation Reduction Act or potential recession, based on long-term contracted generation and growth in U.S. regulated utilities. - Renewables business expects to bring online approximately 3 gigawatts of new projects this year, with over 600 megawatts already completed. - Supply chain strategy protects from tariffs and inflation, with nearly all CapEx for 7 gigawatts in backlog scheduled to come online in U.S. between 2025-2027 protected. - Business is protected from U.S. renewable policy changes with Safe Harbor protections for nearly all U.S. backlog, and about two-thirds of EBITDA from long-term contracted generation is resilient to economic downturn. - U.S. utilities are undertaking the largest investment program in history, with approximately $1.4 billion to be invested across AES Indiana and AES Ohio this year, and signed agreements for 2.1 gigawatts of new data centers in AES Ohio's service territory.

Adjusted EBITDA in the first quarter was $591 million. The renewables SBU saw higher EBITDA, with approximately 45% year-over-year growth, and is on track to achieve full-year adjusted EBITDA of $890 million to $960 million. The utilities SBU had higher adjusted PTC due to tax attributes, new rates, etc. The energy infrastructure SBU had lower EBITDA mainly due to prior-year revenues from the accelerated monetization of the coal PPA at Warrior Run plant and Chile renewables moving to the renewables segment. The new energy technologies SBU had lower EBITDA due to lower contributions from Fluence in the first quarter.

• Reaffirmed 2025 adjusted EBITDA guidance of $2.65 billion to $2.85 billion and adjusted EPS guidance of $2.10 to $2.26. - Expect strong growth in renewables SBU and approximately 7% growth in utilities businesses despite sell-down of AES Ohio. - Achieved entire asset sale target for 2025, completed all financings needed to address 2025 debt maturities, and hedged 100% of benchmark interest rate exposure for all corporate financings through 2027.

• Tariff changes risk. - Changes to the Inflation Reduction Act risk. - Potential economic recession risk.

Q: Julien Dumoulin-Smith with Jefferies asked about the EBITDA impact of the insurance transaction and PPA signing cadence.

A: Steve Coughlin said the EBITDA impact is in the range of $25 million to $30 million, and PPA signings are of large projects with non-regular cadence.

Q: Nick Campanella with Barclays asked about Class B dividends and the strike price of the call option.

A: Steve Coughlin said the dividends are based on a five-year call date with conservative cash distributions, and the strike price is structured conservatively.

Q: David Arcaro with Morgan Stanley asked about retaining control of AGIC and renewable energy demand trends.

A: Andrés Gluski said they want to maintain control of AGIC as it's successful, and renewable energy demand is strong with no temporal shifts.

Q: Durgesh Chopra with Evercore asked about cash distributions from the insurance business and the hydrogen project.

A: Steve Coughlin said cash distributions are about 35%-40% of cash generated by the business, and the hydrogen project is still being pursued.

Q: Michael Sullivan with Wolfe Research asked about the long-term asset sale target and IRA.

A: Steve Coughlin said close to the 3.5 billion target and had views on IRA discussion.

Q: Richard Sunderland with JPMorgan asked about the impact of transferability on FFO and IRA draft.

A: Steve Coughlin said transferability has no substantial impact on FFO and had views on IRA draft.

Q: Anthony Crowdell with Mizuho asked about the impact of Ohio legislation on AES Ohio.

A: Ricardo Falú said the legislation is net positive for AES Ohio with constructive regulatory framework.