The AES Corporation

Hello everyone and a warm welcome to the AES Corporation Q2 2024 Financial Review Call. My name is Emily and I'll be coordinating your call today. After the presentation, you will have the opportunity to ask any questions, which you can do so by pressing start, followed by the number one on your telephone keypads. I will now hand over to our host, Vice President of Investor Relations, Susan Harcourt to begin.

Susan, please go ahead. Thank you, Operator. Good morning and welcome to our second quarter 2024 financial review call. Our press release, presentation, and related financial information are available on our website at aes.com. Today, we will be making forward-looking statements. There are many factors that may cause future results to differ materially from these statements, which are disclosed in our most recent 10-K and 10-Q filed with the SEC. Reconciliations between GAAP and non-GAAP financial measures can be found on our website along with the presentation. Joining me this morning are Andres Skluski, our President and Chief Executive Officer, Steve Coughlin, our Chief Financial Officer, and other senior members of our management team. With that, I will turn the call over to Andres.

Good morning, everyone, and thank you for joining our second quarter 2024 financial review call. We are very pleased with our financial performance so far this year. Today, I will discuss our results, the significant advancements we have made with large technology customers, and the work we are doing to incorporate generative AI in our portfolio to develop new competitive advantages. Beginning on slide three with our second quarter results, we had a strong second quarter that was in line with our expectations. With adjusted EBITDA with tax attributes of $843 million, adjusted EBITDA of 652 million, and adjusted EPS of 38 cents. We're on track to meet our 2024 financial objective, and we now expect to be in the top half of our ranges for adjusted EBITDA with tax attributes and adjusted EPS. We're also reaffirming our remaining 2024 guidance metrics and growth rates through 2027. Steve Coughlin, our CFO, will give more detail on our financial performance and outlook. I'm also pleased to report that since our last call in May, we have signed 2.5 gigawatts of new agreements in total, including 2.2 gigawatts with hyperscalers across our utilities and renewable businesses. This includes 1.2 gigawatts of new data center load growth across AS Ohio and AS Indiana. a PPA to provide 727 megawatts of new renewables in Texas, and a 310 megawatt retail supply agreement in Ohio. With these arrangements, we are expanding our work with the major data center providers to new areas of business. Turning now to data center growth at our U.S. utilities on slide four. Since our last call, we have signed agreements to support 1.2 gigawatts of new load across AS Ohio and AS Indiana expected to come online in phases beginning in 2026. Additionally, we're in advanced negotiations across several sites to support another three gigawatts of new load. These agreements are transformative for both utilities with the potential to increase the peak load at both AS Ohio and AS Indiana by more than 50%. As a result, AS Ohio's rate base will consist predominantly of FERC regulated transmission assets receiving timely recovery through a formula rate. For AS Indiana, this growth creates the potential for significant investment in transmission as well as additional build out of new generation assets. These opportunities will even further increase our industry leading U.S. utility rate based growth plans. Our service territories are particularly well positioned to serve data centers and other large loads with available interconnection, lower rates and land prices, access to water resources and local incentives. Turning to slide five and the generation build out at AES Indiana. We continue to make progress in upgrading and transforming our generation fleet as we shut down or convert our coal units to gas and build our renewables fleet. I am pleased to announce that we have signed a deal to acquire 170 megawatt solar plus storage development project that AES Indiana will construct and own. The project will require approximately $350 million of CapEx with an expected completion date in late 2027. Once approved by the Indiana Utility Regulatory Commission, This will be the sixth project supporting AES Indiana's recent generation growth. Now turning to our renewables business on slide six. Since our last call in May, we have further expanded our partnership with Google, signing a 15-year PPA for 727 megawatts in Texas to power its data center growth. The agreement includes a combination of wind and solar to further Google's 24-7 carbon-free energy goals. These projects are expected to come online in 2026 and 2027. We also recently signed a retail supply agreement with Google for 310 megawatts to support their Ohio data centers. This agreement demonstrates the strong trust and collaboration between our companies, which began with our original 2021 partnership to provide 24-7 renewable power in Virginia. we see further opportunities to add renewables to support Google's data center growth in Ohio. Turning to slide seven, with these major announcements today on our collaborations with hyperscalers, we have now signed a total of 8.1 gigawatts directly with technology companies, which is clearly a leading market position. As you can see on slide eight, Our backlog of projects under signed long-term contracts now stands at 12.6 gigawatts. Our focus remains on maximizing the quality of megawatts over the quantity, which means delivering high-quality projects with higher returns and long-duration PPAs. We have never felt better about our key customer relationships and the long-term market dynamics that are supporting growth and value creation in our portfolio. Turning to slide nine. The demand for power that is coming from the rise in generative AI and data centers represents a significant structural change in the power sector, and no one is better positioned than AES for sustained growth from this opportunity. Regardless of election or policy outcomes, we are confident in our ability to continue signing renewable PPAs with mid-teen IRRs. Our corporate customers value our unique record of bringing projects online on time over the past five years. Furthermore, looking at the interconnection cues, time to power, and price certainty, we see renewables as the only source of new power that can meet most of the demand over the next decade. AES has a longstanding and deep relationship with hyperscaler customers. This includes our ability to co-create new offerings and structure innovative clean energy solutions such as hybrid PPAs, shape products, and 24-7 renewables. As you can see on slide 10, of the 3.6 gigawatts that we expect to bring online this year, we have already completed the construction of 1.6 gigawatts and expect the remainder to be weighted towards the third quarter. I should note that for the projects coming online this year, we have all of the major equipment already on site and almost all for 2025. Additionally, we expect a significant portion of our solar panels to be domestically produced beginning in 2026. All of the above, combined with having panels on site for 2025 projects, greatly mitigates our exposure to any potential new tariffs. Our diversified and resilient supply chain has been and will continue to be best in class. Finally, turning to slide 11. Not only is generative AI shaping the customer landscape, but it is also transforming how we work internally, providing new opportunities for efficiencies, customer service, and innovation that will give us new competitive advantages. As you may have seen, in June, we announced a partnership with AI Fund to accelerate AI-driven energy solutions. Founded by AI leader Andrew Ng, AI Fund is a venture studio that works with entrepreneurs to rapidly build companies. We are collaborating with AI Fund on co-building companies that leverage AI to address bottlenecks and improve efficiencies in the energy transition in areas such as developing and operating renewables and asset management. At the same time, we continue to leverage AI across our portfolio with our culture of innovation and continuous improvement. We are increasingly using proprietary tools across a wide range of our business operations, enabling our people to work faster and smarter. For example, our renewables team has built sophisticated tools that utilize generative AI to accurately predict the speed at which projects will move through interconnection queues, helping us more efficiently coordinate the various simultaneous development processes. As you can see on slide 12, earlier this week, we launched the world's first AI-powered solar installation robot, Maximo, which uses state-of-the-art AI and robotics to complement our construction crews in the installation of solar modules. Maximo enables faster construction times and reduces overall project costs. It can work three shifts, even in the worst weather conditions, with a more inclusive workforce. Not only does it reduce time to power, which is highly valued by our customers, but it will boost overall project returns. We plan to ramp up our use of Maximo in 2025 and are already utilizing it to construct a portion of our two gigawatt Bellfield project in California, which is the largest solar plus storage project in the US and is contracted to serve Amazon. With that, I would now like to turn the call over to our CFO, Steve Coughlin.