• Adjusted EBITDA: $2.64 billion in 2024, in the lower half of guidance due to weather-related events.
• Parent Free Cash Flow: $1.1 billion, at the midpoint of guidance.
• Adjusted EPS: $2.14, above guidance range.
• 2025 Guidance - Adjusted EBITDA: $2.65 billion to $2.85 billion.
• 2025 Guidance - Parent Free Cash Flow: $1.15 billion to $1.25 billion.
• 2025 Guidance - Adjusted EPS: $2.10 to $2.26.
• Renewables EBITDA Growth: Expected over 60% year-over-year growth in 2025.
• Capital Allocation: $1.9 billion invested in growth, primarily in renewables and utilities.
• Rate Base Growth: 20% growth in 2024 from $1.6 billion investment in utilities.
• Long-term Growth Target: 5% to 7% adjusted EBITDA growth through 2027.
• Dividend Commitment: Maintaining current dividend level with no expected growth during the plan period.

• Warning! GuruFocus has detected 8 Warning Signs with AES.

Release Date: February 28, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• The AES Corp (NYSE:AES) signed 4.4 gigawatts of new power purchase agreements for renewables in 2024, putting them on track to achieve their goal of signing 14 to 17 gigawatts through 2025.
• The company completed the construction or acquisition of 3 gigawatts of renewables and a 670 megawatt combined cycle gas plant in Panama, enhancing the utilization of their existing LNG terminal.
• The AES Corp (NYSE:AES) achieved a record adjusted EPS of $2.14 in 2024, which is materially above their guidance range.
• In 2025, the company expects over 60% year-over-year growth in their renewables EBITDA, driven by previous growth in their US renewables portfolio.
• The AES Corp (NYSE:AES) has taken steps to improve their financial position, including reducing parent investment in renewables and streamlining their organization, resulting in expected cost savings of $150 million in 2025, ramping up to over $300 million in 2026.

Negative Points

• The AES Corp (NYSE:AES) expressed disappointment with their stock price performance, citing policy uncertainties and funding constraints as investor concerns.
• Extreme weather-related events in Colombia and Brazil negatively impacted their 2024 adjusted EBITDA, which was in the lower half of their guidance range.
• The company is delaying the closure or sale of some coal plants due to increased demand, which may affect their commitment to a full exit from coal generation.
• The AES Corp (NYSE:AES) is facing a time lag between renewables development expenditures and growth in EBITDA, impacting their financials.
• The company has reduced their planned renewables investments by $1.3 billion through 2027, which may affect their long-term growth in gigawatts.

Q & A Highlights

Q: Can you elaborate on the $150 million to $300 million cost savings and where these reductions will occur? A: The cost savings are spread across the portfolio, including the renewables business. These are ongoing savings, not one-time, and we've already taken actions to achieve them. The savings will ramp up in line with the $150 million to $300 million target, maintaining a similar proportion across the business. (Steve Coughlin, CFO)

Q: How are you maintaining the 5% to 7% long-term EBITDA growth target despite cutting capital expenditures? A: We are focusing on high-quality projects with higher IRRs and reducing costs not directly associated with projects. This integrated approach allows us to focus on fewer, larger, and more profitable projects, ensuring financial growth despite fewer gigawatts being developed. (Andres Gluski, CEO)

Q: Is the reduction in renewable CapEx a pause in growth, and do you expect to reassess this strategy in the future? A: We are focusing on executing our 12 gigawatt pipeline, with 85% online by 2027. We are harvesting our existing pipeline rather than expanding it further. While we will build fewer gigawatts, we aim to maintain financial results. Demand remains strong, and we are commissioning significant new projects annually. (Andres Gluski, CEO)

Q: What is the profile of assets included in your asset sales target, and how does this relate to keeping coal assets longer? A: The asset sales target includes some coal exits and monetization of our technology portfolio. We have a conservative view on execution, and the plan relies less on asset sales than before. We are retaining some coal assets longer due to market demand, which supports our financial health. (Steve Coughlin, CFO)

Q: Can you provide more details on the $300 million cost reduction target and how it will be achieved? A: The cost reduction includes resizing our development program, focusing on fewer but larger projects, and reducing early-stage project costs. We have also reduced our workforce by 10%, eliminating management layers and streamlining the organization. These actions have already been implemented. (Ricardo Falu, COO)

For the complete transcript of the earnings call, please refer to the full earnings call transcript.