AES Corp. Reports 2Q:20 Financial Results

(AES, 6.Aug.2020) — The AES Corporation reported financial results for the quarter ended 30 June 2020.

Strategic Accomplishments

— During the second quarter, agreed to sell 2.0 GW of capacity, reducing generation from coal by 11 percentage points to 34% of total generation and expect to be below 30% by year-end 2020

— Signed or awarded 852 MW of new renewables and energy storage, for a total of 1.5 GW in year-to-date 2020

— Total backlog of renewables awarded, under signed PPAs or under construction of 6.2 GW

— Fluence maintained its global lead in the energy storage market with a total backlog of 1.6 GW as of the end of the second quarter

Q2 2020 Financial Highlights

— Overall market demand trends better than expected and collections remain in line with historic levels

— Maintained strong liquidity of $3.5 billion

— Diluted EPS of ($0.13), compared to $0.02 in Q2 2019

— Adjusted EPS1 of $0.25, compared to $0.26 in Q2 2019

Financial Position and Outlook

— As of June 30, 2020, the Company comfortably exceeded targeted investment grade ratios and is on track to attain a second investment grade rating by year-end 2020

— Reaffirming 2020 guidance and expectations, as well as 7% to 9% average annual growth target through 2022

— Remain committed to growing dividend by 4% to 6% annually, subject to Board approval

“Our strong quarterly results demonstrate the resiliency of our core business model of long-term contracted generation with credit-worthy offtakers,” said Andrés Gluski, AES President and Chief Executive Officer.  “Since our last call, we added 852 MW to our pipeline of renewable projects, increasing our backlog to 6.2 GW.  At the same time, we consolidated our global lead in energy storage through Fluence, which launched its sixth-generation product.  Finally, by growing renewables and signing agreements to sell 2.0 GW of coal-fired generation, we are well on our way toward reducing our total generation from coal to less than 30% by the end of this year.”

“Our solid financial performance in the second quarter highlights once more the quality and resilience of our existing business model. Collections have remained stable and our assets continued to play a critical role in the markets where we operate,” said Gustavo Pimenta, AES Executive Vice President and Chief Financial Officer. “Based on our year-to-date results and our outlook for the remainder of the year, we remain optimistic that we will attain a second investment grade rating before the end of this year, and we are reaffirming our 2020 guidance and expectations, as well as our 7% to 9% average annual growth through 2022.”

Key Q2 2020 Financial Results

Second quarter 2020 Diluted Earnings Per Share from Continuing Operations (Diluted EPS) was ($0.13), a decrease of $0.15 compared to second quarter 2019, primarily reflecting the $0.10 impact from higher impairments and losses on asset sales in 2020. Second quarter 2020 results also include the impact from lower contributions from the US and Utilities Strategic Business Unit (SBU), partially offset by higher contributions from the South America SBU.

Second quarter 2020 Adjusted Earnings Per Share1 (Adjusted EPS, a non-GAAP financial measure) was $0.25, a decrease of $0.01 compared to second quarter 2019, primarily reflecting the performance at the company’s SBUs, which also drove Diluted EPS.

Detailed Strategic Overview

AES is leading the industry’s transition to clean energy by investing in sustainable growth and innovative solutions. The company is taking advantage of favorable trends in clean power generation, transmission and distribution, and LNG infrastructure to deliver superior results.

Sustainable Growth: Through its presence in key growth markets, AES is well-positioned to benefit from the global transition toward a more sustainable power generation mix.

— In year-to-date 2020, the company completed construction of 1,437 MW of new projects, including:

– 1,299 MW Southland Repowering project in Southern California;

– 100 MW Vientos Bonaerenses wind facility in Argentina;

– 28 MW of solar and solar plus storage in the US at AES Distributed Energy; and

– 10 MW Alfalfal Virtual Reservoir energy storage facility in Chile.

— In year-to-date 2020, the company was awarded or signed 1,537 MW of renewables and energy storage under long-term Power Purchase Agreements (PPA):

– 589 MW of energy storage, solar and solar plus storage in the US;

– 581 MW of wind and solar at AES Gener in Chile and Colombia;

– 187 MW of wind at AES Tiete in Brazil;

– 109 MW of wind in Mexico; and

– 71 MW of wind and solar in Panama.

— The company’s backlog of 6,191 MW of renewables now includes:

– 2,092 MW under construction and expected on-line through 2021;

– 3,683 MW signed under long-term PPAs; and

– 416 MW awarded.

— The company is on track to reduce its coal-fired generation to below 30% of total generation volume by year-end 2020 (proforma for asset sales announced in 2020) and to less than 10% by year-end 2030.

– In the second quarter of 2020, the company signed agreements to sell three coal-fired plants (2,000 MW) in India and the Dominican Republic, which will decrease the company’s generation from coal by 11 percentage points, to approximately 34% of its total generation.

— In August 2020, the company acquired an additional 18.5% interest in AES Tiete in Brazil, bringing its total interest to 43%.

– This transaction will strengthen the company’s renewable portfolio and reinforces the substantial progress the company is making toward achieving its aggressive decarbonization targets.

Innovative Solutions: The company is developing and deploying innovative solutions such as battery-based energy storage, digital customer interfaces and energy management.

— Fluence, the vompany’s joint venture with Siemens, is the global leader in the fast growing energy storage market, which is expected to increase by 15 to 20 GW annually.

– Fluence has a total backlog to 1.6 GW.

— In July 2020, the company acquired a 25% stake in 5B, a prefabricated solar solution provider whose patented technology allows solar projects to be installed up to three times faster, while using half the land to achieve the same solar output.

Superior Results: By investing in sustainable growth and offering innovative solutions to customers, the company is transforming its business mix to deliver superior results.

— The company has a resilient and diversified portfolio of electric generation and utilities with credit-worthy offtakers and an average contract life of 14 years.

— As of June 30, 2020, the company had $3.5 billion of available liquidity. This includes $2.2 billion of cash and cash equivalents, restricted cash and short-term investments, as well as $1.3 billion available under committed credit lines.