Diversified Business Mix Supports and Advances
Portfolio Transformation
Strategic Highlights Through 2027
- Expect to triple renewables capacity by adding 25 to 30 GW of
solar, wind and energy storage
- Investing to deliver 10% annual rate base growth at US
utilities
- Strengthening position as a leader in new energy technologies,
including green hydrogen
Financial Highlights Through 2027
- Initiating Adjusted EPS1 annualized growth target of
6% to 8% through 2027, from a base of 2023 guidance of $1.65 to $1.75
-
- Reaffirming Adjusted EPS1 annualized growth target
of 7% to 9% through 2025, from a base of 2020
- Initiating 2023 Adjusted EBITDA2 guidance of
$2,600 to $2,900 million
- Initiating Adjusted EBITDA2 annualized growth target
of 3% to 5% overall, and 17% to 20% excluding the Energy
Infrastructure SBU, through 2027 from a base of 2023 guidance
- Maintaining 4% to 6% annual dividend growth guidance, subject
to Board approval
ARLINGTON, Va., May 8, 2023
/PRNewswire/ -- The AES Corporation (NYSE: AES) today outlined its
long-term strategy for growth, including substantial growth in
renewables and US utilities, and fully exiting coal by year-end
20253.
"AES is uniquely positioned to create value for our shareholders
in the once in a lifetime energy transition we are currently living
through," said Andrés Gluski, AES President and Chief Executive
Officer. "Through 2027, we expect to nearly triple our
renewables capacity by adding 25 to 30 GW of solar, wind and energy
storage to our portfolio, while simultaneously delivering annual
rate base growth of 10% at our US utilities. Our diversified
portfolio will support and enable this growth as we advance our
transformation by fully exiting coal by year-end 2025."
"With our new Strategic Business Units, we have aligned our
management and operations of our businesses to execute on our
long-term strategy, and this structure now better reflects the
focused company that AES is today," said Steve Coughlin, AES Executive Vice President and
Chief Financial Officer. "We expect to deliver on our
strategic and financial objectives, including strong growth in
Adjusted EPS4 and Adjusted EBITDA5, while
continuing to yield an attractive dividend for our
shareholders."
Guidance and Expectations4,5
The Company is initiating an annualized growth target for
Adjusted Earnings Per Share (Adjusted EPS)4 of 6% to 8%
through 2027, from a base of its reaffirmed 2023 guidance of
$1.65 to $1.75. Growth is expected to be primarily
driven by contributions from new renewables expected to come online
and investments in the rate base at the Company's Utilities
Strategic Business Unit (SBU). This growth is expected to be
partially offset by lower contributions from the Energy
Infrastructure SBU as the Company intends to exit coal by year-end
2025, asset sales, and higher Parent interest.
The Company is reaffirming its annualized growth target for
Adjusted EPS4 of 7% to 9% annualized growth
target4 through 2025, from a base year of 2020.
The Company is including Adjusted EBITDA5 as a
financial metric to add clarity, including:
- Exclusion of tax attributes;
- Less influence from timing of new project commissionings;
- Closer alignment of underlying business performance and
operating cash generation; and
- Use in valuing contracted renewables portfolios.
The Company is initiating 2023 Adjusted EBITDA5
guidance of $2,600 to $2,900 million. Growth in 2023 is expected
to be primarily driven by contributions from new renewables
projects coming online, as well as prior-year one-time expenses at
the Company's US utilities. This growth is expected to be
partially offset by lower margins from the Company's LNG business,
due to normalization of LNG prices and the roll-off of a gas supply
contract, and lower coal margins.
Annualized growth in Adjusted EBITDA5 is expected to
be 3% to 5% through 2027, from a base of 2023 guidance. This growth
is expected to be primarily driven by contributions from new
renewables expected to come online and investments in the rate base
at the Company's Utilities SBU, partially offset by asset sales and
lower contributions from the Energy Infrastructure SBU.
Excluding the Company's Energy Infrastructure SBU, annualized
growth in Adjusted EBITDA5 is expected to be 17% to 20%
through 2027, from a base of 2023 guidance.
The Company's 2023 guidance is based on foreign currency and
commodity forward curves as of March 31,
2023.
Non-GAAP Financial Measures
See Non-GAAP Measures for definitions of Adjusted Earnings Per
Share, Adjusted Pre-Tax Contribution, and Adjusted EBITDA, as well
as reconciliations to the most comparable GAAP financial
measures.
Webcast Information
AES will hold an Investor Day on Monday,
May 8, 2023 at 9:00 a.m. Eastern
Time (ET) in New York City. At the event, AES
Management will deliver prepared remarks and host a question and
answer session with analysts and investors. Interested
parties may access the live webcast and presentation materials at
www.aes.com by selecting "Investors" and then "Upcoming Events"
prior to the start of the event. A replay will be available
shortly after the conclusion of the event at www.aes.com by
selecting "Investors" and then "Presentations and Webcasts."
About AES
The AES Corporation (NYSE: AES) is a Fortune 500 global power
company accelerating the future of energy. Together with our
many stakeholders, we're improving lives by delivering the greener,
smarter energy solutions the world needs. Our diverse
workforce is committed to continuous innovation and operational
excellence, while partnering with our customers on their strategic
energy transitions and continuing to meet their energy needs
today. For more information, visit www.aes.com.
Safe Harbor Disclosure
This news release contains forward-looking statements within the
meaning of the Securities Act of 1933 and of the Securities
Exchange Act of 1934. Such forward-looking statements include, but
are not limited to, those related to future earnings, growth and
financial and operating performance. Forward-looking statements are
not intended to be a guarantee of future results, but instead
constitute AES' current expectations based on reasonable
assumptions. Forecasted financial information is based on certain
material assumptions. These assumptions include, but are not
limited to, our expectations regarding accurate projections of
future interest rates, commodity price and foreign currency
pricing, continued normal levels of operating performance and
electricity volume at our distribution companies and operational
performance at our generation businesses consistent with historical
levels, as well as the execution of PPAs, conversion of our backlog
and growth investments at normalized investment levels, rates of
return consistent with prior experience and the COVID-19
pandemic.
Actual results could differ materially from those projected in
our forward-looking statements due to risks, uncertainties and
other factors. Important factors that could affect actual results
are discussed in AES' filings with the Securities and Exchange
Commission (the "SEC"), including, but not limited to, the risks
discussed under Item 1A: "Risk Factors" and Item 7: "Management's
Discussion & Analysis" in AES' 2022 Annual Report on Form 10-K
and in subsequent reports filed with the SEC. Readers are
encouraged to read AES' filings to learn more about the risk
factors associated with AES' business. AES undertakes no obligation
to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except where
required by law.
Any Stockholder who desires a copy of the Company's 2022 Annual
Report on Form 10-K filed March 1,
2023 with the SEC may obtain a copy (excluding the exhibits
thereto) without charge by addressing a request to the Office of
the Corporate Secretary, The AES Corporation, 4300 Wilson
Boulevard, Arlington, Virginia
22203. Exhibits also may be requested, but a charge equal to the
reproduction cost thereof will be made. A copy of the Annual Report
on Form 10-K may be obtained by visiting the Company's website at
www.aes.com.
Website Disclosure
AES uses its website, including its quarterly updates, as
channels of distribution of Company information. The
information AES posts through these channels may be deemed
material. Accordingly, investors should monitor our website,
in addition to following AES' press releases, quarterly SEC filings
and public conference calls and webcasts. In addition, you
may automatically receive e-mail alerts and other information about
AES when you enroll your e-mail address by visiting the "Subscribe
to Alerts" page of AES' Investors website. The contents of
AES' website, including its quarterly updates, are not, however,
incorporated by reference into this release.
1 Adjusted EPS is a non-GAAP financial measure.
See attached "Non-GAAP Measures" for definition of Adjusted EPS and
a description of the adjustments to reconcile Adjusted EPS to
Diluted EPS for the year ended December
31, 2022. The Company is not able to provide a
corresponding GAAP equivalent or reconciliation for its Adjusted
EPS guidance without unreasonable effort.
2 Adjusted EBITDA is a non-GAAP financial metric.
See attached "Non-GAAP Measures" for definition of Adjusted EBITDA
and a description of the adjustments to reconcile Adjusted EBITDA
to Net Income for the year ended December
31, 2022. The Company is not able to provide a
corresponding GAAP equivalent or reconciliation for its Adjusted
EBITDA guidance without unreasonable effort.
3 Through asset sales, fuel conversions and retirements,
while maintaining reliability and affordability, and subject to
necessary approvals.
4 Adjusted EPS is a non-GAAP financial measure.
See attached "Non-GAAP Measures" for definition of Adjusted EPS and
a description of the adjustments to reconcile Adjusted EPS to
Diluted EPS for the quarter ended March
31, 2023. The Company is not able to provide a
corresponding GAAP equivalent or reconciliation for its Adjusted
EPS guidance without unreasonable effort.
5 Adjusted EBITDA is a non-GAAP financial metric.
See attached "Non-GAAP Measures" for definition of Adjusted EBITDA
and a description of the adjustments to reconcile Adjusted EBITDA
to Net Income for the year ended December
31, 2022. The Company is not able to provide a
corresponding GAAP equivalent or reconciliation for its Adjusted
EBITDA guidance without unreasonable effort.
THE AES CORPORATION
NON-GAAP
FINANCIAL
MEASURES
(Unaudited)
RECONCILIATION OF
ADJUSTED EBITDA, ADJUSTED PTC AND ADJUSTED EPS
EBITDA is defined as earnings before interest income and
expense, taxes, depreciation and amortization. Adjusted EBITDA is
defined as EBITDA excluding the impact of NCI and interest, taxes,
depreciation and amortization of our equity affiliates, and adding
back interest income recognized under service concession
arrangements; excluding gains or losses of both consolidated
entities and entities accounted for under the equity method due to
(a) unrealized gains or losses related to derivative transactions
and equity securities; (b) unrealized foreign currency gains or
losses; (c) gains, losses, benefits and costs associated with
dispositions and acquisitions of business interests, including
early plant closures, and gains and losses recognized at
commencement of sales-type leases; (d) losses due to impairments;
(e) gains, losses and costs due to the early retirement of debt;
and (f) net gains at Angamos, one of our businesses in the Energy
Infrastructure SBU, associated with the early contract terminations
with Minera Escondida and Minera
Spence.
The GAAP measure most comparable to EBITDA and Adjusted EBITDA
is net income. We believe that EBITDA and Adjusted EBITDA better
reflect the underlying business performance of the Company.
Adjusted EBITDA is the most relevant measure considered in the
Company's internal evaluation of the financial performance of its
segments. Factors in this determination include the
variability due to unrealized gains or losses related to derivative
transactions or equity securities remeasurement, unrealized foreign
currency gains or losses, losses due to impairments, strategic
decisions to dispose of or acquire business interests or retire
debt, the non-recurring nature of the impact of the early contract
terminations at Angamos, and the variability of allocations of
earnings to tax equity investors, which affect results in a given
period or periods. In addition, each of these metrics represent the
business performance of the Company before the application of
statutory income tax rates and tax adjustments, including the
effects of tax planning, corresponding to the various jurisdictions
in which the Company operates. EBITDA and Adjusted EBITDA should
not be construed as alternatives to net income, which is determined
in accordance with GAAP.
|
|
Year Ended December
31, 2022
|
Reconciliation of
Adjusted EBITDA (in millions)
|
|
Net
income
|
|
$
(505)
|
Income tax
expense
|
|
265
|
Interest
expense
|
|
1,117
|
Interest
income
|
|
(389)
|
Depreciation and
amortization
|
|
1,053
|
EBITDA
|
|
1,541
|
Less: Adjustment for
noncontrolling interests and redeemable stock of subsidiaries
(1)
|
|
(704)
|
Less: Income tax
expense (benefit), interest expense (income) and depreciation and
amortization from equity affiliates
|
|
126
|
Interest income
recognized under service concession arrangements
|
|
77
|
Unrealized derivative
and equity securities losses
|
|
131
|
Unrealized foreign
currency losses
|
|
42
|
Disposition/acquisition losses
|
|
40
|
Impairment
losses
|
|
1,658
|
Loss on extinguishment
of debt
|
|
20
|
Adjusted
EBITDA
|
|
$
2,931
|
Renewables
SBU
|
|
$
605
|
Utilities
SBU
|
|
612
|
Energy Infrastructure
SBU
|
|
1,836
|
New Energy Technologies
SBU
|
|
(116)
|
Corporate
|
|
(6)
|
Adjusted
EBITDA
|
|
$
2,931
|
(1)
The allocation of earnings to tax equity investors from both
consolidated entities and equity affiliates is removed from
Adjusted EBITDA .
|
|
|
Year Ended December
31, 2023
|
2023 Adjusted EBITDA
Modeling Ranges as of 5/8/23
|
|
Renewables
SBU
|
|
$ 660-730
|
Utilities
SBU
|
|
600-670
|
Energy Infrastructure
SBU
|
|
1,450-1,620
|
New Energy Technologies
SBU / Corporate
|
|
(110)-(120)
|
Adjusted
EBITDA
|
|
$
2,600-2,900
|
Adjusted PTC is defined as pre-tax income from continuing
operations attributable to The AES Corporation excluding gains or
losses of the consolidated entity due to (a) unrealized gains
or losses related to derivative transactions and equity securities;
(b) unrealized foreign currency gains or losses;
(c) gains, losses, benefits and costs associated with
dispositions and acquisitions of business interests, including
early plant closures, and gains and losses recognized at
commencement of sales-type leases; (d) losses due to
impairments; (e) gains, losses, and costs due to the early
retirement of debt; and (f) net gains at Angamos, one of our
businesses in the Energy Infrastructure SBU, associated with the
early contract terminations with Minera Escondida and Minera Spence. Adjusted PTC also includes
net equity in earnings of affiliates on an after-tax basis adjusted
for the same gains or losses excluded from consolidated
entities.
Adjusted EPS is defined as diluted earnings per share from
continuing operations excluding gains or losses of both
consolidated entities and entities accounted for under the equity
method due to (a) unrealized gains or losses related to
derivative transactions and equity securities; (b) unrealized
foreign currency gains or losses; (c) gains, losses, benefits
and costs associated with dispositions and acquisitions of business
interests, including early plant closures, and the tax impact from
the repatriation of sales proceeds, and gains and losses recognized
at commencement of sales-type leases; (d) losses due to
impairments; (e) gains, losses and costs due to the early
retirement of debt; (f) net gains at Angamos, one of our businesses
in the Energy Infrastructure SBU, associated with the early
contract terminations with Minera Escondida and Minera Spence; and
(g) tax benefit or expense related to the enactment effects of 2017
U.S. tax law reform and related regulations and any subsequent
period adjustments related to enactment effects, including the 2021
tax benefit on reversal of uncertain tax positions effectively
settled upon the closure of the Company's U.S. tax return exam.
The GAAP measure most comparable to Adjusted PTC is income from
continuing operations attributable to AES. The GAAP measure most
comparable to Adjusted EPS is diluted earnings per share from
continuing operations. We believe that Adjusted PTC and Adjusted
EPS better reflect the underlying business performance of the
Company and are considered in the Company's internal evaluation of
financial performance. Factors in this determination include
the variability due to unrealized gains or losses related to
derivative transactions or equity securities remeasurement,
unrealized foreign currency gains or losses, losses due to
impairments, strategic decisions to dispose of or acquire business
interests or retire debt, and the non-recurring nature of the
impact of the early contract terminations at Angamos, which affect
results in a given period or periods. In addition, for Adjusted
PTC, earnings before tax represents the business performance of the
Company before the application of statutory income tax rates and
tax adjustments, including the effects of tax planning,
corresponding to the various jurisdictions in which the Company
operates. Adjusted PTC and Adjusted EPS should not be construed as
alternatives to income from continuing operations attributable to
AES and diluted earnings per share from continuing operations,
which are determined in accordance with GAAP.
|
Year Ended December
31, 2020
|
|
|
Net of NCI
(1)
|
|
Per Share (Diluted) Net
of NCI (1)
|
|
|
(in millions, except
per share amounts)
|
|
Income from
continuing operations, net of tax, attributable to AES and Diluted
EPS
|
$
43
|
|
$
0.06
|
|
Add: Income tax expense
from continuing operations attributable to AES
|
130
|
|
|
|
Pre-tax
contribution
|
$
173
|
|
|
|
Adjustments
|
|
|
|
|
Unrealized derivative
and equity securities losses (gains)
|
$
3
|
|
$
0.01
|
|
Unrealized foreign
currency losses (gains)
|
(10)
|
|
(0.01)
|
|
Disposition/acquisition
losses
|
112
|
|
0.17
|
(2)
|
Impairment
losses
|
928
|
|
1.39
|
(3)
|
Loss on extinguishment
of debt
|
223
|
|
0.33
|
(4)
|
Net gains from early
contract terminations at Angamos
|
(182)
|
|
(0.27)
|
(5)
|
U.S. Tax Law Reform
Impact
|
|
|
0.02
|
(6)
|
Less: Net income tax
benefit
|
|
|
(0.26)
|
(7)
|
Adjusted PTC and
Adjusted EPS
|
$
1,247
|
|
$
1.44
|
|
(1)
|
NCI is defined as
Noncontrolling Interests.
|
(2)
|
Amount primarily
relates to loss on sale of Uruguaiana of $85 million, or $0.13 per
share, loss on sale of the Kazakhstan HPPs of $30 million, or $0.05
per share, as a result of the final arbitration decision, and
advisor fees associated with the successful acquisition of
additional ownership interest in AES Brasil of $9 million, or $0.01
per share; partially offset by gain on sale of OPGC of $23 million,
or $0.03 per share.
|
(3)
|
Amount primarily
relates to asset impairments at Gener of $527 million, or $0.79 per
share, other-than-temporary impairment of OPGC of $201 million, or
$0.30 per share, impairments at our Guacolda and sPower equity
affiliates, impacting equity earnings by $85 million, or $0.13 per
share, and $57 million, or $0.09 per share, respectively;
impairment at Hawaii of $38 million, or $0.06 per share, and
impairment at Panama of $15 million, or $0.02 per share.
|
(4)
|
Amount primarily
relates to losses on early retirement of debt at the Parent Company
of $146 million, or $0.22 per share, DPL of $32 million, or $0.05
per share, Angamos of $17 million, or $0.02 per share, and Panama
of $11 million, or $0.02 per share.
|
(5)
|
Amounts relate to net
gains at Angamos associated with the early contract terminations
with Minera Escondida and Minera Spence of $110 million, or $0.16
per share, for the three months ended December 31, 2020, and $182
million, or $0.27 per share, for the twelve months ended December
31, 2020.
|
(6)
|
Amount represents
adjustment to tax law reform remeasurement due to incremental
deferred taxes related to DPL of $16 million, or $0.02 per
share.
|
(7)
|
Amount primarily
relates to income tax benefits associated with the impairments at
Gener and Guacolda of $164 million, or $0.25 per share, and income
tax benefits associated with losses on early retirement of debt at
the Parent Company of $31 million, or $0.05 per share; partially
offset by income tax expense related to net gains at Angamos
associated with the early contract terminations with Minera
Escondida and Minera Spence of $49 million, or $0.07 per
share.
|
Investor Contact: Susan Harcourt
703-682-1204
Media Contact: Amy Ackerman
703-682-6399
View original content to download
multimedia:https://www.prnewswire.com/news-releases/aes-outlines-long-term-strategy-for-growth-in-renewables--us-utilities-while-executing-on-intent-to-exit-coal-by-year-end-2025-301817821.html
SOURCE The AES Corporation