(AES, 8.May.2023) — The AES Corporation (NYSE: AES) outlined its long-term strategy for growth, including substantial growth in renewables and US utilities, and fully exiting coal by year-end 20253.
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 EPS (1) annualized growth target of 7% to 9% through 2025, from a base of 2020
— Initiating 2023 Adjusted EBITDA (2) guidance of $2,600mn to $2,900mn
— 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
“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,” Gluski said.
“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,” Coughlin said.
Guidance and Expectations (4,5)
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 EPS (4) of 7% to 9% annualized growth target (4) through 2025, from a base year of 2020.
The company is including Adjusted EBITDA (5) 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 EBITDA (5) guidance of $2,600mn to $2,900mn. 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 EBITDA (5) 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 EBITDA (5) 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 31 March 2023.
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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 31 December 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 31 December 2022. The company is not able to provide a corresponding GAAP equivalent or reconciliation for its Adjusted EBITDA guidance without unreasonable effort.
