(AES, 6.Nov.2020) — The AES Corporation reported financial results for the quarter ended 30 September 2020.
“I am pleased to announce that we have already achieved two of our top three priorities for 2020 by attaining a second investment grade rating and reducing our coal generation to 29%. With our year-to-date performance, we are on track to accomplish our third priority of delivering our guidance,” said Andrés Gluski, AES President and Chief Executive Officer. “By leveraging our Green Blend and Extend strategy and our development pipeline, we added 556 MW of renewables, bringing our year-to-date total to 2.1 GW and our backlog to 6.8 GW. At the same time, Fluence continues to maintain its global leadership position in the energy storage market, with 2.4 GW delivered or awarded and its recent acquisition of AMS, the leading provider of AI-enabled bidding software for utility-scale storage and generation assets.”
“We are very excited by the recent upgrade to investment grade from S&P, which again highlights the material transformation of our portfolio and balance sheet over the last several years,” said Gustavo Pimenta, AES Executive Vice President and Chief Financial Officer. “Furthermore, the 35% sell-down of the Southland repowering demonstrates the significant intrinsic value of our assets. This year, we have announced asset sale proceeds of $650mn, above our $550mn target. We will recycle this capital by investing in renewables and innovative solutions to further transform our portfolio and deliver superior returns to our shareholders.”
— Attained a second investment grade rating from S&P in November 2020
— Retiring 1.2 GW of coal in the US and Chile, bringing coal generation to 29% of total generation on a proforma basis
— Signed or awarded 556 MW of new renewables and energy storage, including 410 MW of Green Blend and Extend, for a total of 2.1 GW in year-to-date 2020
— Total backlog of renewables awarded, under signed PPAs or under construction of 6.8 GW
— Fluence maintained its global lead in the energy storage market by signing 690 MW in year-to-date 2020, bringing its total delivered or awarded to 2.4 GW
— Signed an agreement to sell a 35% interest in the Southland repowering for $424 million, bringing year-to-date asset sale proceeds to $650 million
Q3 2020 Financial Highlights
— Diluted EPS of ($0.50), compared to $0.32 in Q3 2019, primarily reflecting expenses associated with dispositions and impairments
— Adjusted EPS1 of $0.42, compared to $0.48 in Q3 2019
Financial Position and Outlook
— Reaffirming 2020 Adjusted EPS1 guidance range of $1.32 to $1.42 and now expecting to be at the top end of this range
— Reaffirming 7% to 9% average annual growth target through 2022
— Remain committed to growing dividend by 4% to 6% annually, subject to Board approval
Key Q3 2020 Financial Results
Third quarter 2020 Diluted Earnings Per Share from Continuing Operations (Diluted EPS) was ($0.50), a decrease of $0.82 compared to third quarter 2019, primarily reflecting higher impairments and losses on sales in 2020 of $1.13, as well as lower contributions from the Mexico, Central America and the Caribbean (MCAC) Strategic Business Unit (SBU). These impacts were partially offset by a lower income tax expense and higher margins from the South America SBU, largely due to net gains from early contract terminations at Angamos.
Third quarter 2020 Adjusted Earnings Per Share1 (Adjusted EPS, a non-GAAP financial measure) was $0.42, a decrease of $0.06 compared to third quarter 2019, primarily reflecting cumulative outage-related insurance recovery of $0.05 collected in the third quarter of 2019 at the MCAC SBU.
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 1,754 MW of new projects, including:
– 1,299 MW Southland Repowering project in Southern California;
– 100 MW Vientos Bonaerenses wind facility in Argentina;
– 100 MW Vientos Neuquinos wind facility in Argentina;
– 80 MW Andes 2a solar facility in Chile;
– 75 MW Pleinmont 1 solar facility in Virginia;
– 57 MW of solar and solar plus storage in the US at AES Distributed Energy;
– 28 MW Na Pua Makani wind facility in Hawaii;
– 10 MW Alfalfal Virtual Reservoir energy storage facility in Chile; and
– 5 MW Opico solar facility in El Salvador.
— In year-to-date 2020, the Company was awarded or signed 2,093 MW of renewables and energy storage under long-term Power Purchase Agreements (PPA):
– 1,173 MW of wind and solar at AES Gener in Chile and Colombia;
– 542 MW of energy storage, solar and solar plus storage in the US;
– 187 MW of wind at AES Tiete in Brazil;
– 109 MW of wind in Mexico; and
– 82 MW of wind and solar in Panama and the Dominican Republic.
— The Company’s backlog of 6,806 MW of renewables now includes:
– 2,168 MW under construction and expected on-line through 2022; and
– 4,638 MW signed under long-term PPAs or awarded.
— The Company has reduced its coal-fired generation to 29% of total generation volume (proforma for asset sales and retirements announced in 2020) and is on track to further reduce its coal-fired generation to less than 10% by year-end 2030.
In November 2020, the Company announced the retirement of 1,158 MW of coal-fired generation, which will decrease the Company’s generation from coal by 5 percentage points, to approximately 29% of its total generation.
– 630 MW Petersburg Units 1 and 2 in Indiana (expected to be retired in 2021 and 2023);
– 322 MW Ventanas Units 1 and 2 in Chile (expected to be retired in 2022 and 2024); and
– 206 MW AES Hawaii (expected to be retired in 2022).
Innovative Solutions: The Company is developing and deploying innovative solutions such as battery-based energy storage, digital customer interfaces and energy management.
— Fluence, the Company’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.
– In year-to-date 2020, Fluence signed 690 MW of new contracts, bringing its total delivered or awarded to 2.4 GW.
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.
Guidance and Expectations
The Company is reaffirming its 2020 Adjusted EPS guidance of $1.32 to $1.42 and expects to be in the top end of this range. The Company is also reaffirming its 7% to 9% average annual growth rate target through 2022, from a base year of 2018.