Hello, and welcome to today's AES Corporation Q4 2021 Financial Review. My name is Bailey, and I will be the moderator for today's call. I would now like to pass the conference over to Ahmed Pasha, Global Treasurer and Vice President of Investor Relations. Ahmed, please go ahead.

Thank you, operator. Good morning, and welcome to our fourth quarter and full year 2021 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 during the call. There are many factors that may cause future results to differ materially from these statements, which are discussed 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 Gluski, 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. Andres?

Good morning, everyone, and thank you for joining our fourth quarter and full year 2021 financial review call. Today, I will cover our full year results and discuss our strategy and areas of focus for this year. Before discussing our 2021 results and future plans, I want to state that we do not see any significant impact on our portfolio from the outbreak of hostility in Ukraine. Nonetheless, our thoughts and prayers go out to the Ukrainian people and government, and we hope for a speedy return to peace. Now turning our focus back to our business. Today marks an important and exciting milestone for AES with the announcement of our intention to fully exit coal by year-end 2025. This accelerated goal is a result of our success in growing our renewables portfolio. Our backlog gives us the confidence to take this step. As a leader in the global energy transition, we are committed to the goals of the Paris Agreement in achieving a net-zero economy. We will work with our stakeholders to ensure a smooth transition while meeting our regulatory obligations. Our exit from coal will be modestly dilutive, but we feel comfortable with our growth trajectory. Accordingly, we are reaffirming our annualized growth target of 7% to 9% in earnings and cash flow through 2025. Now moving on to our 2021 results and accomplishments. First, I am pleased to report our financial results, including adjusted earnings per share of $1.52, which was in line with our expectations. Our 2021 parent free cash flow of $839 million exceeded our expected range of $775 million to $825 million. Second, we signed contracts for 5 gigawatts of new renewable projects, significantly above our target of 3 to 4 gigawatts that we set last year. In fact, according to Bloomberg New Energy Finance, AES signed more renewable deals with corporate customers in 2021 than anyone else in the world. Included in these deals were two groundbreaking arrangements to provide renewable energy on an hour-by-hour basis, 24 hours a day, 7 days a week signed with Google and Microsoft. Third, Fluence successfully completed their IPO in November and has no foreseeable need for external funding to achieve their strategic and financial objectives. Furthermore, Fluence has made progress towards mitigating the supply chain challenges they have faced, which I shall discuss shortly. Finally, safety is our most important value. I am very proud to report that our safety performance in 2021 was the best in our 40-year history, with no major incidents recorded among roughly 25,000 AES people, contractors, and construction workers. Today, I will be discussing two things: first, executing today; and second, investing for the future. Beginning with executing today on Slide 4. Even as we are transitioning to a carbon-free future, we are laser-focused on delivering on our commitments. Our business model has proven itself to be resilient and enables us to deliver predictable results. For example, 85% of our adjusted PTC is from long-term contracted generation and utilities, and 88% is in U.S. dollars, with the remaining 12% split between euros and various Latin American currencies. Similarly, we are largely insulated from macroeconomic headwinds, such as rising inflation and interest rates. As shown on Slide 5, 83% of our revenue is from businesses that have indexation clauses or are hedged to limit the impact of inflation. At the same time, almost 90% of our interest rate exposure is fixed or hedged, protecting us from the impact of rising interest rates. Next, turning to Slide 6. In January, we completed a tender to acquire the publicly-traded shares of AES Andes, bringing our ownership from 67% to 99% today. This was motivated by our conviction in the underlying strength of the business, which is highly contracted, predominantly in U.S. dollars, and transitioning to low-carbon generation. This transaction is immediately earnings and cash flow accretive. Moving to Slide 7. We now have a backlog of 9.2 gigawatts, including the 5 gigawatts we signed in 2021. About three-quarters of the 5 gigawatts is in the U.S., with the vast majority signed with commercial and industrial customers and to grow the rate base at our AES Indiana utility. We have secured supply arrangements for the bulk of our current backlog. In 2021, we successfully added 2.1 gigawatts to our portfolio without any material delays or cost overrun. This execution demonstrates the robust nature of our supply chain and the strength of our relationships with our suppliers. For example, we secured Samsung battery for many of our new energy storage facilities to alleviate some of the supply chain challenges faced by Fluence. Being able to switch to different battery suppliers shows the inherent flexibility of their Gen 6 product. As we look towards our 2.3 gigawatts of new projects coming online in 2022, two-thirds of which is in the U.S., we do not expect any significant delays or supply chain disruptions. We remain confident in our ability to complete our projects under construction on time and on budget. Moving to our second theme, investing for the future on Slide 8. Our actions today ensure that we will be able to take full advantage of the unprecedented transformation of our sector. One clear example is the 5 gigawatts of new PPAs that we signed last year, an increase of 65% from 2020. For the full year '22, we expect to sign 4.5 to 5.5 gigawatts of new renewables under long-term contracts. We are seeing strong demand for renewables. And so far this year, we have already signed more than 600 megawatts of new contracts. We expect our portfolio of operating renewable assets to more than double from approximately 13 gigawatts to 26 gigawatts by 2026. Despite any current headwinds for our sector, such as delays in legislation and supply chain issues, we see very strong demand for low-carbon energy, especially for tailored products, such as our 24/7 renewable offering. That is why we have been investing in growing our pipeline of future projects to ensure that we're able to meet our customers' growing demand for AES services. As you can see on Slide 9, we now have a development pipeline of 59 gigawatts, which we believe is the second largest among U.S. renewable developers. Our pipeline includes almost 10 gigawatts in the U.S. that are ready to bid. This robust pipeline provides us with the projects we need to deliver on our backlog and to continue to build on our competitive position in the U.S. As a result, we're accelerating our goal of increasing the proportion of earnings coming from our U.S. businesses to 50% by two years from 2025 to 2023. We are also investing for the future by growing the rate base at our U.S. utilities by 9% annually while delivering safe, reliable, and affordable services to our customers. As you can see on Slide 10, AES Indiana is executing on the approved plan to retire two coal units, which we will replace with nearly 500 megawatts of new renewable generation. We have already started our next integrated resource plan process, which could include additional retirement or fuel conversions for the remaining 1 gigawatt of coal generation. At AES Ohio, we're executing on our smart grid and transmission investment programs approved in 2021. AES Ohio is also in the midst of a distribution rate case and recently completed the hearing. AES Ohio's base distribution rates have been the lowest in the state for the past five years. In fact, as of the end of 2021, AES Ohio's rates were 16% lower than the next lowest utility in the state and even with the requested rate increase would remain the lowest. Turning to Slide 11. Another way we're investing for the future is by developing and incubating new products and businesses' platforms through AES Next. Our investment in AES Next helps our core businesses be more innovative and competitive and drive value for our customers and shareholders. Turning to Slide 12. The most mature initiative under AES Next today is Fluence, the leading energy storage technology company. In 2021, Fluence completed their IPO with $1 billion in capital raised to invest in developing their products and supply chain as well as their digital platform. As of December 31, Fluence had 4.2 gigawatts of energy storage products deployed and contracted and a signed backlog of $1.9 billion. Additionally, Fluence’s digital platform, Fluence IQ, now has 6 gigawatts contracted, of which more than 80% is with third-party customers. Over the past several months, Fluence has been dealing with short-term challenges stemming from COVID-related supply chain issues. Their management team has taken proactive actions to address these challenges, including diversifying battery suppliers, signing and shipping agreements and building out their in-house supply chain team. Overall, demand for energy storage remains robust, and Fluence is well-positioned as a market leader. We see significant opportunity for them to continue to grow and remain confident that they will execute on their long-term plan, which will deliver value to their shareholders. AES Next is also working to develop and incubate other technologies that help accelerate the deployment of renewables, as shown on Slide 13. One example is our investment in 5B, which has a prefabricated solar solution called MAVERICK, that is hurricane wind-resistant and allows projects to be built in a third of the time and on half as much land. This innovative product is currently being rolled out in Australia, Chile, the Dominican Republic, India, Panama, and the U.S. Turning to Slide 14. We're one of a small number of companies in our sector with targets that are fully aligned with the Paris Agreement according to the Transition Pathway Initiative. We already have a goal to have net-zero emissions from electricity by 2040. As I mentioned earlier, we're excited to announce our intent to exit coal completely by the end of 2025, subject to receiving necessary approvals. We expect to achieve this objective through a combination of retirement, fuel conversions, and asset sales. In summary, we have consolidated our position as a leader of innovation in the industry and accelerated the decarbonization of our portfolio while delivering attractive returns to our shareholders. With that, I now turn the call over to our CFO, Steve Coughlin.

Thank you, Andres, and good morning, everyone. Today, I will cover the following key topics: our financial performance during 2021, our parent capital allocation, and our 2022 guidance and expectations through 2025. As Andres mentioned, our results for 2021 show our continued progress in leading the energy transition while achieving our financial goals. We delivered strong financial results even while absorbing the previously discussed impact from the share count adjustment related to the equity units issued last year. Overall, the strong growth of our core energy business, which includes generation and utilities, gives us confidence that we will continue to achieve our earnings and cash flow target. Turning to Slide 16. The full year 2021 adjusted EPS was $1.52, $0.08 higher than 2020. The 2020 adjusted EPS of $1.44 included $0.03 of dilution from AES Next, implying that our core business generated adjusted EPS of $1.47. In 2021, our core business grew by $0.21 to $1.68, primarily as a result of higher contributions from new renewables businesses, improved operations at both U.S. generation and MCAC, and lower parent interest. Our 2021 results of $1.52 include the $0.07 impact due to a higher share count as a result of the accounting adjustment for the equity unit and the dilution from AES Next where we are investing in expanding our high-growth technology businesses. The impact from AES Next was $0.03 higher than our prior expectation due to the nonrecurring COVID-related supply chain issues at Fluence. Going forward, we plan to manage the AES Next portfolio such that these businesses will yield a neutral to positive contribution to AES' earnings by 2024. Turning to Slide 17. Adjusted pretax contribution or PTC was $1.4 billion for the year, an increase of $171 million and 14% growth over 2020. I'll cover our results in more detail over the next four slides, beginning with the U.S. and Utilities SBU on Slide 18. Our increased investments in the U.S. show PTC growth of $155 million, a 31% increase over 2020. As of year-end 2021, the U.S. represented 41% of our adjusted PTC, up from 34% in 2020. About half of this growth was driven by new businesses at AES Clean Energy that came online in 2021. The rest of the increase was from our legacy Southland units, which remained a key contributor to the stability of the California grid during the peak summer season and delivered solid growth from increased dispatch and attractive market prices. We continue to see the potential for some of our legacy Southland units to support the energy transition in California for several years to come. Lower PTC at our South America SBU was primarily driven by regulatory adjustments and recovery of expenses from customers that were recorded in 2020. Hydrology was not a major driver as we benefited from the increased diversity of our generation portfolio and favorable hydrological conditions in Colombia offset drier conditions in Brazil. Higher PTC at our MCAC SBU reflects higher LNG sales in both Panama and the Dominican Republic as we benefited from higher contract levels at our LNG terminals. We now have roughly 80% of our LNG capacity contracted, leaving approximately $20 million to $30 million of potential annual upside to our longer-term expectations. Finally, in Eurasia, higher PTC was primarily driven by higher contributions from Bulgaria due to improved operating performance at Maritza and increased revenue at our wind farm, which benefited from favorable market prices. Now let's turn to the review of how we allocated our capital in 2021 on Slide 22. Beginning on the left-hand side, sources reflect $2.3 billion of total discretionary cash. I'm pleased to report that this includes parent free cash flow of $839 million, which exceeded the top end of our guidance expectations. The remaining sources are largely in line with our prior disclosures except for the $295 million in temporary drawings under our revolver, which we utilized to fund our accelerating growth in clean energy. Moving to the uses on the right-hand side. We allocated $450 million of our discretionary cash to our dividend. We invested nearly $1.8 billion in our subsidiaries, of which approximately two-thirds was in the U.S. As Andres mentioned, we expect the relative share of our allocation for the U.S. to continue to grow. I'm glad to report that we now expect to reach our goal of 50% of our earnings coming from the U.S. in 2023, two years earlier than our previous target in 2025. Now turning to our credit profile on Slide 23. As a result of the successful execution of our strategy over the last few years, our balance sheet continues to be in a much stronger position. We significantly reduced debt while growing our parent free cash flow. At the end of 2021, our parent free cash flow to net debt ratio was approximately 23%, which is well above the 20% threshold required for an investment-grade rating. We expect this ratio to continue to improve over time, putting us in BBB territory by 2025. We are in active discussions with Moody's and remain optimistic that we will be upgraded this year. Turning to our guidance and expectations beginning on Slide 24. We are reaffirming our annualized growth target of 7% to 9% in both adjusted EPS and parent free cash flow through 2025 off a base year of 2020. Today, we are initiating guidance for 2022 adjusted EPS of $1.55 to $1.65. Key drivers of our expected growth include the approximate $0.09 benefit from our higher ownership of AES Andes, which we increased to 99%, as Andres mentioned earlier. This transaction is immediately significantly accretive on both an earnings and cash flow basis. Our 2022 adjusted EPS will also benefit from continued growth in renewables and higher contributions from existing operations, adding $0.10. This growth is expected to be partially offset by $0.11 of impacts from the higher adjusted tax rate, a full year of a higher share count due to the accounting adjustment for the equity units issued in 2021, and assumed dilution from planned asset sales. Our target for this year has increased to reflect our efforts to further decarbonize and fully exit coal by the end of 2025. I would also note that we previously expected the pending distribution rate case at DPL to be resolved earlier in the year. However, we now expect resolution later this year and, therefore, have assumed only a small contribution in 2022. Turning to Slide 25. Parent free cash flow for 2022 is expected to be $860 million to $910 million, in line with our annualized growth target of 7% to 9%. Now turning to our 2022 parent capital allocation plan on Slide 26. Beginning with approximately $1.5 billion of sources on the left-hand side, in addition to parent free cash flow, we expect to generate $500 million to $700 million in asset sale proceeds. Roughly half of this is from already announced sales in Vietnam and Jordan, and the remaining portion is expected to come from additional asset sales that have not yet been announced. Recycling of capital is an integral part of our capital allocation framework. As we have done in the past, we will deploy asset sale proceeds to achieve our strategic objectives and maximize shareholder value. Now to the uses on the right-hand side. We expect to allocate $494 million to our shareholder dividend, which reflects our announced 5% increase. We are also projecting investments of roughly $1 billion in our subsidiaries for growth, of which about three-quarters will be allocated to the U.S. for renewables and utilities. Finally, turning to our four-year capital allocation plan through 2025 beginning on Slide 27. Our financial strategy is centered around maintaining a strong investment-grade rated balance sheet while investing in our growth to achieve our strategic and financial objectives. Our total growth investments for 2022 through 2025 have increased to $3.8 billion. We expect to continue to increase our dividend 4% to 6% annually, in line with our prior guidance. As you can see on Slide 28, we plan to fund this $6 billion with 60% parent free cash flow and the remaining 40% will be from asset sale proceeds and future parent debt issuances. Relative to our prior plan, you may notice that we have increased asset sale proceeds by $500 million and future parent debt by $300 million, which will be utilized to fund our future growth and repay drawings on our revolver that funded the higher growth from 2021. In summary, we accelerated AES growth in 2021 and executed on our financial and strategic commitments. Going forward, we will continue to deliver on our strategy, including executing on asset sales to decarbonize and exit coal, maintaining the strength of our balance sheet, and allocating capital to maximize per share value for our shareholders.

Thank you, Steve. As you can see, we're not only delivering on our commitments but accelerating our transformation. Our near-term actions will enable us to achieve our three goals for creating additional shareholder value: first, attaining an investment-grade rating from Moody's in 2022; second, increasing the proportion of earnings from the U.S. to 50% by 2023; and third, exiting coal generation by the end of 2025. With that, I'd like to open up the call to questions.

Our first question today comes from Angie Storozynski from Seaport. Angie, please go ahead. Your line is now open.

So my first question, and I see your disclosures on sensitivities, but I'm just wondering if you could describe the impact of the higher power price environment that we're seeing pretty much everywhere in the world on your both existing assets and growth prospects. I mean any sort of increased economic dispatch and the appeal of renewables and how those are embedded in your '22 guidance and long-term growth.

Angie, thank you. Basically, as you know, we're highly contracted. But what we're seeing in terms of higher prices for oil-based generation in many of our markets that favors us because we're much more hydro renewables and even coal. In places like where we have a big plant in Europe and Bulgaria, our plant is now very much cheaper than the other generations in the country. So we're seeing improved prospects for a lot of our generation because we are not a big generator using international price gas. Most of our gas units are running on Henry Hub or almost all. So we're basically competing against those very high prices. So even though we're highly contracted, there's always some margin, so that's positive. It's also positive on the renewable front and on the innovative front because I think people are seeing that renewables in an environment where gas prices can be more volatile is favorable. So in the net-net, overall, it's positive for us in the short run and certainly even more so in the long run because, as I said, we're highly contracted.

Okay. Just one follow-up. How about the LNG business? Is there any near-term or longer-term impact?

Well, we're contracted now in Panama and the Dominican Republic. Basically, it had Henry Hub, Henry Hub plus, of course. So it's favorable to us in that prospect. Now when those contracts burn off in a couple of years, then we have to see when the recontracting levels will be. Hopefully, there will be more supply of gas at that point in time.

Okay. And just one other question. So you show the impact - the drag on earnings from asset sales. If you could comment a little bit, does that include any of those accelerated coal plant shutdowns or sales? Again, I'm just trying to reconcile the earnings impact with the transactions already announced.

Go, Steve.

Yes. Angie, this is Steve. So yes, I mean, we are - consistent with the announcement to exit coal, we are increasing our total asset sale plan to $1 billion and then have increased the sales target this year to $500 million to $700 million. So yes, it does reflect in part the announcement that we made today. We had prior announcements in the past about Vietnam and Jordan. So that's a portion of it. But the additional portion reflects the updated strategy to accelerate our exit.

Just to be clear, it's fully reflected. So some of it has been included in the past. It reflects 100% of the additional.

Okay. And my last question on Ohio, a delay in the resolution of your rate case. Is there - I mean, is there something that we should be concerned about? Or is this just that the process takes longer?

Sure. Angie, this is Ahmed. I think no, I don't think there's - it's a process because previously, we were hoping to settle. Now we are going through - because we could not reach this settlement, although the staff had recommended a reasonable increase in response to our request. One of the intervenors OCC subsequently argued that the rate freeze should remain intact. Now we are going through the litigation process. But we think our request is fair and driven by the costs which are out of our control, and frankly, primarily to deliver the more reliable and economic power to our customers. So we think we will get through this by mid this year with the approval from the commission. Net-net, our rates are the lowest in the state and will remain lowest with this requested increase. So we feel pretty good that the commission will approve our request by mid- to late '22.

So in summary, it's just a timing issue.

Yes.

Yes. It's the timing. In fact, the PUCO staff did support an increase as part of the process already.

Yes, they did recommend.

The next question today comes from Rich Sunderland from JPMorgan. Rich, please go ahead. Your line is now open.

Maybe starting on 2022 guidance. Could you walk from the outlook a year ago at the Investor Day to now in terms of AES Next, the rate case, and other factors separate from the equity units issue you called out in terms of changes from the 7% to 9% growth rate versus the growth embedded in the current guidance?

Yes. Sure. This is Steve. So really, the two primary drivers - a couple. So our growth is faster. So we've accelerated our renewables growth. Now that's been offset by the additional share count, of course, which we talked about last year. Now again, we took advantage of the value opportunity with Andes. So we've largely offset the share price - share count dilution with our acquisition of the additional shares in Andes. So really, what's been changed on a net basis is more on the asset sale program, which we just talked about and how we are accelerating our decarbonization and our exit of coal. The other real driver is the - is what we also just talked about, which is the DPL rates, which we previously assumed would be in effect early this year and now are assuming late this year. So those are really the two primary drivers. There is an uptick in the tax rate from the past. At this point, we're guiding to 26% to 28% on the tax rate. So that's a piece of the story as well.

Understood. So then just kind of walking forward in terms of regaining the 7% to 9% trajectory in the second half of the plan, I guess you called out the rate cases and timing factor. Could you just speak a little bit more to how you see the growth coming to kind of regain the 7% to 9% earnings trajectory?

Sure. This is Andres. I'll give a sort of high level. Look, we have a backlog of 9.2 gigawatts of projects. This year, we'll be commissioning 2.3 gigawatts. So obviously, in a steady state, these two have to be about equal. What you're going to have is a real pickup in commissionings '23, '24 going forward. We feel very confident about that because those are already signed projects. We already have the sites, and it's a question of executing on building them. The other one is that we expect AES Next, as Steve mentioned, is going to be neutral to positive by 2024. So that's a driver as well. So the drivers are our growth, which is part of our backlog, and then we're also talking about the other things you mentioned, DPL rate case in IPL. Again, when we build all the wind and rate base that as well, you have the smart grid and DPL. So our growth projections are based on things that we have in the bag.

Understood. And just one more for me. The unannounced asset sales, the incremental portion versus the prior plan, is that solely related to the coal exit? Or is there anything else you're looking at maybe LNG or elsewhere?

Look, we tend not to talk about exact assets that we're going to sell. As you know, we've been always turning capital. We've made a major transformation of our portfolio. I can think back, we peaked at probably 22,000 megawatts of coal. We're down to 7. We have basically sales for three of those, so we're down to 4. So yes, part of it is selling those coal assets, but also the continual churn that we have. It might include other assets. We don't like to comment on them. But we will be hitting our 50% U.S., 50% renewables on an accelerated basis, and those sales help us achieve those goals.

The next question today comes from Insoo Kim from Goldman Sachs. Insoo, please go ahead. Your line is now open.

My first question, going back to that 9.2 gigawatts of backlog, it seems unchanged from the amount you've set out in the third quarter earnings. Just wondering if there's any read-through in the current inflationary environment, at least just for this year with any resistance or unwillingness for additional contracts to be signed for now.

That's a good question. No, we're not seeing that at all. We're seeing strong demand. I mean, of course, if the backlog remains constant. Yes, we commissioned quite a lot of projects between the third quarter and now. So already this year, we have 600 megawatts of new PPAs signed under AES Clean Energy. We're seeing strong demand, especially for our tailored projects. No, I don't think there's - what we're seeing in the market is, again, especially for differentiated products. There's a lot of demand. It's a matter of being able to have all the projects, let's say, in pipeline to be able to meet that demand, meet the structured product that they want. I would say that, yes, PPA prices are going up to reflect the increase in prices. But as you know, we've handled the supply constraints. First, I would say the importing of solar panels from China, PV panels from China, that we were able to first move out of China. Second, we're diversifying the source of our polysilicon away from China as well. So we're not seeing that as a constraint. As we said, we have an inventory of everything that we need to fulfill certainly this year's construction and also already assigned a lot of the backlog. So we feel we're in a good position.

I would also add on the number specifically. So as you've said, as Andres alluded to, there are subtractions coming from that backlog. So as we're completing construction, completing acquisitions, so it's about 1.5 gigawatts that we actually pulled out of the backlog because of completion. So net, there's significant additions going into.

Okay. That's both good color there. And maybe, Andres, just a broader question for you. I think three key points that you guys made on this call, the accelerated collection plan, the U.S. earnings being 50% earlier, and then the IG plan. Those are all definitely good strategies. But I guess when we think about the investor base and how over the past few years the structure of growing EPS and having consistent dividends, all of that to mirror kind of a utility-like structure, I think it served you well as you've consistently executed at least over the past few years. Just wondering that when you think about strategy and the cost benefit of the actions you're taking on the asset sales and whatnot, maybe having a near-term dilutive impact, I just wonder - just wondering your strategy on that going forward and whether that's worth taking the hit now versus trying to make a more consistent or a predictable growth profile.

Well, that's a great question. Look, we are laser-focused on delivering on our commitments. So we haven't changed our growth profile. Maybe to some extent, a little bit back-end loaded because of the dilution that we're putting in for earlier sales. However, I think this strategy has served us well. We've gone from 2,200 megawatts of coal to completely exit by the end of 2025. We think that's what a lot of new investors will like. We think we'll have the triple investment grade. We have a growing dividend. We are continually derisking as we get out. We are more concentrated in the U.S. and more concentrated on renewables. We think this will be a company that will attract new additional shareholders and continue to serve our existing shareholders as well.

Our next question today comes from Julien Dumoulin-Smith from Bank of America. Julien, please go ahead. Your line is now open.

Excellent. Perfect. So just a couple of follow-up items here, if I can. So when you talk about asset sales, but more specifically driving to a neutral to positive outcome for AES Next, I mean, how does one do that? Are further divestments and sell-downs of your stakes part of how you manage those earnings? Or is this really about managing it organically to make sure that whether it's Fluence or other pieces of the business, they ultimately all cohesively drive an inflection in earnings contribution here in that '24 timeframe? I just want to clarify that.

Yes. No, that is organic. We expect the business to turn around. A lot of what have occurred this year is one-time related to COVID, both on the supply chain, and that, of course, includes shipping as well. We expect the business to turn around. As they said on their call, they expect to be at a gross margin run rate by the fourth quarter. We will hold them accountable for that through the board, and we continue to innovate together. So both the big companies are Fluence and Uplight, and we expect them both to execute on their plans, and that is inorganic. Again, what we're mentioning is that we always have many levers to pull. So what we're saying is by 2024, this will be positive or neutral at worst and hopefully positive.

Yes. I would just add, Julien, if you think about the state of these businesses, they're investing in their product development and in their market expansion, the Digital IQ for Fluence, for example. So you'd expect them to be bottom line losses at this point of their life cycle. As Andres said, they have a plan to get back to the gross margin targets by the fourth quarter. With the added volume, as that grows and the top line has been very successful, as the volume and the margin grows, then the bottom line of that business will overcome its R&D and G&A costs and get to a positive place.

Got it. And if I can come back to one of the underlying points. Obviously, you have a long-term earnings trajectory and growth in '22 is a little bit slower than that trajectory would otherwise indicate. So if you will, there's got to be a pickup at some point here. You've talked about some of the timing-related issues specifically in '22. How do you think about that sort of inflection in that catch-up period? Is there a bigger step-up in, say, '23 or '24? Just curious about the sort of the profile against that average CAGR number you threw out there?

Of course, we can't guide to '23, '24 specifically. But obviously, if you look at the number of PPAs we have signed, which will come online in '23, '24, that's the big driver behind that. If you also look at the rate cases we have in the utilities in the U.S., that's a big driver of that as well. So that's a pickup. I mean, realize that for '22, we're also making up for the change in how it is accounting, the accounting issue that we had for the share count. So actually, we are more than delivering on what we had set out, say, two years ago. So we're making up a $0.09 hit for this year based solely on how you account for the number of shares.

Yes. And I think in addition to that, the opportunity to take advantage of the value in AES Andes and increasing the shares, that was significantly earnings and cash accretive immediately and will continue to be. So that's a big help to us, too.

In fact, if I may, and again, I know you don't want to provide longer-term guidance, but given what you just said a moment ago and you offset some of the '22 impacts that are somewhat technical here. To what extent could we expect an extension or acceleration, if you will, implicitly, given what your success is on renewables, the ability to drive that cash up against your 7% to 9% in the later years? And what that means for sort of an exit rate trajectory subsequent to - in '25 and beyond? Do you get what I'm saying? If the plan is that sort of way, what does that mean about the longer term?

Well, again, we're very optimistic about the longer term. We feel we're in the right place in the market. We have differentiated products. We are growing very fast in renewables. We're in the right markets. We have upside potential from projects like in green hydrogen. We have a number of projects that we're progressing there. I think something that will give us additional juice is the pass of the climate plus plan, which will clarify what are the various subsidies or, if you want, tax percentages, tax - ITC, PTC, et cetera. Once that's clarified, that could give us upside. Also, as Steve mentioned in his speech, there's a greater use of our facilities in Southern California, longer - and extension of them, which looks technically possible. So there certainly are upsides from that. What we're doing is saying, based on the situation that we're in today, this is our plan.

The only thing I would add, Julien, this is Ahmed, is that back in March last year at our Investor Day, we had already assumed significant dilution because we said our goal is to go below 10% coal by '25. Our growth rate already had embedded at that time decent dilution. We showed that roughly $0.30 at that time. Now we are saying we are down to 0. I think we - and the factors that we've discussed today, the positive things that go in our favor, like increased share in AES Andes, accelerated growth in renewables, things like that will help us offset that. We don't expect any hockey stick, if you wish, type profile if that's - that was your question.

And the share count change was baked in, Julien, to '24 and '25. So that's relative to the near-term guidance that's having a disproportionate effect on '22 and '23. As of '24, those shares were assumed to be converted anyway, so they're already baked in.

The next question today comes from Durgesh Chopra from Evercore ISI. Durgesh, please go ahead. Your line is now open.

I want to go back to the renewal backlog. I think Steve, you said, I mean, the projects that were completed and taken out and then a few new adds. But there's a fair bit of gas in that 9.2 gigawatt number. Can you elaborate on what - those are gas-fired plants? Or are those LNG projects? What does that comprise of?

Yes. So we do have - we have the project that we acquired in Panama in those numbers, the Gatun project is included. Otherwise, it's renewables.

Just to state, we own 25% of the gas project in Panama. We own higher percentages of the renewables.

Okay. And maybe I could just follow up with Ahmed on that. And then just can you talk about sort of how should we think about the financial impacts, if any, of the community energy acquisition? I mean, in terms of financing costs and things like that on 2022 guidance and future earnings projections?

Yes. The community - look, we've grown our AES Clean Energy very quickly. We've merged our sPower with Distributed Energy, and then we've also acquired Community Energy. Now Community Energy comes with a pipeline of 10 gigawatts and 70 seasoned professionals. So it was very important at this time of rapid growth to have, first, the people and second, the pipeline. That's going to help our growth. Now in terms of their projects, when those will be offered to our customers and come online, they didn't - no backlog is coming from Community Energy. But certainly, we think that we can get better financing terms and better costs for equipment and improve execution.

The next question today comes from Stephen Byrd from Morgan Stanley. Stephen, please go ahead. Your line is now open.

I wanted to first just talk about Chile and just wondered if you could expand a bit on the dialogue you've had with the Chilean government in terms of helping the nation decarbonize and pursuing green ammonia. Just a little bit more color on the nature of that dialogue.

Sure. Well, let's see, we know the new President, Boric, through the Council of Americas. We know about him. I would say that it's very much aligned with our plans because he wants to continue to decarbonize the mining sector. That would fit in well with our project to supply the mining sector with hydrogen fuel for their large machinery. Also, it fits in very well with our planned shutdowns of our coal plants and the replacement for them with our pipeline of renewables. I think we're very much aligned with that plan. He wants to increase and accelerate the carbon tax. We don't see - our contracts have pass-throughs for the higher carbon tax in most cases. Our renewables would benefit from it. There was a tremendous opportunity at AES Andes, and we're rolling a lot of new technology out in Chile in terms of batteries, in terms of the MAVERICK product for 5B. We believe we have the most efficient solar farm in the world. It's close to 38% in Chile. So we have a lot of good things happening in Chile, which weren't reflected in the market price. Our plans are very much aligned with what they want to achieve.

Very good. And then just another topic I've been getting some questions on is just El Salvador and the state of the economy. I guess I've been seeing that there's been fairly good economic growth in El Salvador. It's an important country for you. There is some concern though about the linkage with Bitcoin and just sort of the overall growth and stability potential there. I wonder if you could just expand a little bit on what you're seeing in El Salvador and sort of the outlook there for your business.

Look, our business in El Salvador has been very stable. The dollar is the currency of the country. So Bitcoin is not going to replace it. Certainly, with the volatility that Bitcoin has, it's not feasible. They did do one financing in Bitcoin that I'm aware of. I don't see a change there. The biggest export of El Salvador is people, especially if you live in the D.C. area. So it's remittances that drive the economy. The thing to watch in El Salvador is we always have to be on top of collections. Those are doing very well. I know there's some noise, there's some political noise, and there have been some announcements like Bitcoin, but we don't see anything that would substantially affect our business.

The next question today comes from Gregg Orrill from UBS. Gregg, please go ahead. Your line is now open.

I'm sorry if you covered this, but what was the last 10% that relates to the exit of coal by '25? What steps would get you there?

Yes. So that was our previously stated goal. We're just above 20%, around 20% this year. Our previously stated goal was to get below 10% by 2025. That is through a combination of asset sales, retirements, fuel conversion. What we've talked about today is really just a full exit by the end of 2025. That's really the difference there.

Can you be any more specific plant-wise?

Gregg, what I'd put it this way is, again, in the big - if you look over time, I mean, we've gone from 22 to 7. We've already signed about - of that 7, about half of it is already basically sold. We have to just close the sales. You're left with a number of plants. There's a combination of replacements, let's say, for renewables. There are fuel conversions where we can start running those plants on gas. In those few cases where that does not work, then there's obviously the possibility of asset sales. Just like we've been doing, we're just accelerating that and saying, look, rather than have 10% linger on for a couple of years, let's just go ahead and bite the bullet and say we're out of coal by the end of '25.

There are no additional questions registered at this time. So I'll hand the call back over to Ahmed Pasha for closing remarks. Ahmed, please go ahead.

Thanks, everyone, for joining us on today's call. As always, the IR team will be available to answer any questions you may have. Thank you, and have a great day.

This concludes today's conference call. You may now disconnect your lines.