AES Corp Q4 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Nick Campanella - Barclays - Analyst : So just on the cost savings, morning, so you have $150 million rapping to $300 million over time, I heard you, Steve, say that these are run rates, so I assume that these are ongoing and not one time in nature. Just I recognize you had about $52 million in the bridge for renewables. So is the bulk of this coming from the parent? Is it -- does it happen naturally as you sell down more on the energy infrastructure business? And maybe you can kind of just expand on your confidence level and achieving these reductions and where you see a bulk of these happening in the portfolio.

Question: Nick Campanella - Barclays - Analyst : And then you know just on the comments you're cutting cap back but you're still hitting the growth target of 5% to 7% long-term EBITDA, so you previously talked about a 12% to 15% IRR on renewables. What's the IRR of these higher quality projects that you're now targeting and is the cost cuts just are the cost cuts just making up for the rest of that delta, just tying out to the long-term guidance?

Question: David Arcaro - Morgan Stanley - Analyst : Let's see, looking at that, it seems like you're pulling back somewhat on the renewable CapEx in the forecast, wondering from a high level kind of strategic perspective, AndrTs, do you see this as a kind of a pause in, I guess in the renewables growth or just a bit of a pull back in making those investments into the renewables business just given the current environment that. And over time would you expect to re-assess and potentially reaccelerate, to the extent financing becomes easier the backdrop, becomes more favorable?

Question: David Arcaro - Morgan Stanley - Analyst : And then I guess looking at the overall profile of the businesses and your asset sales target now, I guess you're -- seems like you're increasing the asset sales target overall, but you're keeping coal in the plan for a bit longer than originally planned. Could you maybe talk about what the profile is of the assets that that you might be looking at in the asset sales target now what could be represented in there?

Question: Durgesh Chopra - Evercore ISI - Analyst : Just I wanted to double click on cost savings $300 million annual target, it's pretty substantial when I look at your EBITDA number, roughly 10%. Maybe just can you give us some examples ff what cost reductions are these personnel reductions or these process improvements just so we can get a little bit more comfort around your target level of cost reduction, please?

Question: Durgesh Chopra - Evercore ISI - Analyst : And I can sense the the confidence you have in executing on these cost reductions. Okay, thank you. And then my final question, Steve, just maybe can you help us with where you landed on FX or debt basis and referring to sort of on a Moody's adjusted basis for 2024 relative to your credit downgrade thresholds.

Question: Julien Dumoulin-Smith - Jefferies - Analyst : Maybe just to follow up on that last one, just while we're on the subject, can you just elaborate? I mean, to what extent have you gotten in front of Moody's with this plan and just if you could elaborate a little bit on how you're thinking through '27 on that evolution of those metrics and that's sufficing given the backdrop of Moody's here.

Question: Julien Dumoulin-Smith - Jefferies - Analyst : Maybe just to keep going with that a little bit further. Just given the reduction of $1.3 billion here just on balance, are you actually selling down stakes and more renewables in order to reduce that need for contributions, or is the aggregate level of renewable investment per year slowing down here? I just want to make sure we're clear. You've talked about backlog and executing it, but I just want to understand like how you think about like renewables per year install evolving through the period now given the update as well as what level of contribution from coal, not what assets, but just what level of cash or EBITDA, however you want to talk about it from coal, are you anticipating, in '26 and '27 beyond now as well.

Question: Julien Dumoulin-Smith - Jefferies - Analyst : Bottom line though, you're seeing a down you're seeing a leveling off in renewable the cadence just the per annum just to come back to that backlog comment. I'm just trying to understand at the end of the day like how you see.

Question: Michael Sullivan - Wolfe Research - Analyst : I think, Ricardo, you're giving it on a capacity basis, any chance we can get that on the EBITDA basis? Just trying to think about, I think when you had the analyst day, you said coal was like a $750 million roll off, what does that look like now through '27?

Question: Michael Sullivan - Wolfe Research - Analyst : And then on just interest rates, I think you have a couple of parent maturities coming up, should we think of those as de-risks from a sensitivity standpoint or what are you embedding there in terms of refis or anything like that?

Question: Michael Sullivan - Wolfe Research - Analyst : And then last one, I definitely can appreciate the the sort of rampant things here. The 5% to 7% EBITDA CAGR, can you get in that range in 2026 off of '23 or we really looking to '27 to really get in there?

Question: Will Grainger - Mizuho - Analyst : I understand, you reduced CapEx here but just want to understand a little bit more what's the flexibility to thinking about maybe reducing it even more and investing in your stock here just given where you're trading, any color on that cost of capital would be super helpful.

Question: Will Grainger - Mizuho - Analyst : And then maybe just one final one from me. Understand you're doing a lot of work with technology customers, manufacturing customers, and just on the items at the FERC and what we're seeing also in Texas, does that impact your ability to contract long-term renewables either through co-location or virtual PPAs and any color on that?