(AES, 3.Aug.2023) — The AES Corporation (NYSE: AES) reported financial results for the quarter ended June 30, 2023.

Highlights:

Reaffirms 2023 Guidance and Annualized Growth Rate Targets for All Metrics

Strategic Accomplishments

• Signed new long-term contracts for 2.2 GW of renewables in year-to-date 2023
• On track to complete construction of 3.4 GW of renewables in 2023, with 786 MW completed in year-to-date 2023
• Filed a new rate case and for regulatory approval to build the largest energy storage facility in the state at AES Indiana
• Continued progress toward exiting coal by year-end 2025¹ with the retirement of 415 MW at Petersburg Unit 2 in Indiana, announcement of the expected retirement of the 276 MW Norgener plant in Chile in 2025, and termination of the PPA for the 205 MW Warrior Run plant in Maryland

Q2 2023 Financial Highlights

• Q2 2023 Diluted EPS of ($0.06), compared to ($0.27) in Q2 2022
• Q2 2023 Adjusted EPS² of $0.21, compared to $0.34 in Q2 2022
• Q2 2023 Net Income of ($19)mn, compared to ($136)mn in Q2 2022
• Q2 2023 Adjusted EBITDA with Tax Attributes^3,4 of $607mn, compared to $722mn in Q2 2022
  • Q2 2023 Adjusted EBITDA³ of $569mn, compared to $686mn in Q2 2022

Financial Position and Outlook

• Reaffirming 2023 guidance for Adjusted EPS² of $1.65 to $1.75 and annualized growth target² of 7% to 9% through 2025, off a base year of 2020
• Reaffirming 2023 guidance for Adjusted EBITDA³ of $2,600 to $2,900 million and annualized growth target³ of 17% to 20% excluding the Energy Infrastructure SBU through 2027, off a base of 2023 guidance

ARLINGTON, Va., Aug. 3, 2023 /PRNewswire/ —  

“We are making excellent progress on our strategic priorities: tripling our installed renewables capacity by 2027; growing our US utilities’ rate base by more than 10% annually; and exiting coal by year-end 2025,” said Andrés Gluski, AES President and Chief Executive Officer.  “So far this year, we have signed long-term contracts for 2.2 GW of new renewables and increased our backlog of signed PPAs to a record level of 13.2 GW.  At the same time, our construction program is going very well, with 786 MW of renewable projects completed year-to-date.  We remain on track to commission a total of 3.4 GW this year, including 2.1 GW in the US.”

“We are pleased with our financial results to-date, and see ourselves as well-positioned to execute on all of our priorities in the second half of the year,” said Stephen Coughlin, AES Executive Vice President and Chief Financial Officer.  “Our quarterly results are fully in line with our expectations, including the seasonality in our earnings that we outlined earlier this year, and today we are reaffirming our 2023 guidance and long-term annualized growth rate targets for all metrics.”

Q2 2023 Financial Results

Second quarter 2023 Net Income was ($19)mn, an increase of $117mn compared to second quarter 2022.  This increase is the result of favorable contributions at the Utilities, Renewables, and New Energy Technologies Strategic Business Units (SBU), partially offset by lower contributions at the Energy Infrastructure SBU.

Second quarter 2023 Adjusted EBITDA⁵ (a non-GAAP financial measure) was $569mn, a decrease of $117mn compared to second quarter 2022, primarily reflecting higher cost of sales and lower thermal dispatch substituted with renewable sources at the Energy Infrastructure SBU.  These negative drivers were partially offset by lower losses from affiliates at the New Energy Technologies SBU mainly attributable to improved margins on a new product line, favorable weather conditions impacting demand and increased rider revenues at the Utilities SBU, and new businesses and favorable wind and hydrological conditions at the Renewables SBU.

During the second quarter of 2023, the company realized Tax Attributes⁶ of $38mn, an increase of $2mn compared to second quarter 2022.

Second quarter 2023 Diluted Earnings Per Share from Continuing Operations (Diluted EPS) was ($0.06), an increase of $0.21 compared to second quarter 2022, primarily reflecting lower long-lived asset impairments in the current year, partially offset by the recognition of unrealized losses due to the termination of a PPA and higher cost of sales at the Energy Infrastructure SBU.

Second quarter 2023 Adjusted Earnings Per Share⁷ (Adjusted EPS, a non-GAAP financial measure) was $0.21, a decrease of ($0.13), compared to second quarter 2022, mainly driven by lower contributions from the Energy Infrastructure SBU.

Strategic Accomplishments

• As of today, the company’s backlog, which consists of projects with signed contracts, but which are not yet operational, is 13,170 MW, including 5,389 MW under construction. This is compared to a 11,932 MW backlog as of the company’s first quarter 2023 earnings call on May 5, 2023.
• In year-to-date 2023, the company completed 786 MW of wind, solar and energy storage and expects to complete a total of 3.4 GW by year-end 2023.
• AES Indiana filed its first rate case since 2018, and expects to receive regulatory approval by the middle of 2024. During the second quarter of 2023, AES Indiana filed for approval to build a 200 MW, or 800 MWh, energy storage facility at the site of the retiring Petersburg coal plant and expects to receive approval by the end of 2023. The facility is expected to come online by the end of 2024, at which point it will be the largest battery storage project in the Midwest.
• The company expects to receive approval for AES Ohio’s new Electric Security Plan (ESP4) by the end of August 2023, with new distribution rates effective immediately.
• During the second quarter of 2023, the company continued to make progress toward exiting coal by year-end 2025⁸:
  • Retirement of the 415 MW Petersburg Unit 2 in Indiana;
  • Announcement of the expected retirement of the 276 MW Norgener plant in Chile in 2025; and
  • Receipt of final regulatory approval, and subsequent deal closing, for the termination of the PPA for the 205 MW Warrior Run plant in Maryland.

Guidance and Expectations^9,10

The company is reaffirming its 2023 guidance for Adjusted EBITDA⁹ of $2,600 to $2,900mn, and its expectation for annualized growth in Adjusted EBITDA⁹ of 3% to 5% through 2027, from a base of its reaffirmed 2023 guidance. Excluding the Company’s Energy Infrastructure SBU, annualized growth in Adjusted EBITDA⁹ is expected to be 17% to 20% through 2027, from a base of 2023 guidance.

The Company is reaffirming its 2023 guidance for Adjusted EPS¹⁰ of $1.65 to $1.75. Growth in 2023 is expected to be primarily driven by new renewables expected to come online. 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, lower contract margins in Chile, and higher interest expense in Colombia. 

The company is reaffirming its annualized growth target for Adjusted EPS¹⁰ of 6% to 8% through 2027, from a base of its reaffirmed 2023 guidance of $1.65 to $1.75. The company is also reaffirming its annualized growth target for Adjusted EPS¹⁰ of 7% to 9% through 2025, from a base year of 2020. 

The company’s 2023 guidance is based on foreign currency and commodity forward curves as of 30 June 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.

Conference Call Information

AES will host a conference call on Friday, 4 August 2023 at 10:00 a.m. Eastern Time (ET).  Interested parties may listen to the teleconference by dialing 1-833-470-1428 at least ten minutes before the start of the call. International callers should dial +1-404-975-4839.  The Participant Access Code for this call is 636658.  Internet access to the conference call and presentation materials will be available on the AES website at www.aes.com by selecting “Investors” and then “Presentations and Webcasts.”

A webcast replay, as well as a replay in downloadable MP3 format, will be accessible at www.aes.com beginning shortly after the completion of the call.

1 Through asset sales, fuel conversions and retirements, while maintaining reliability and affordability, and subject to necessary approvals.
2  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 and six months ended June 30, 2023.  The Company is not able to provide a corresponding GAAP equivalent or reconciliation for its Adjusted EPS guidance without unreasonable effort.
3 Adjusted EBITDA is a non-GAAP financial measure.  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 quarter and six months ended June 30, 2023.  The Company is not able to provide a corresponding GAAP equivalent or reconciliation for its Adjusted EBITDA guidance without unreasonable effort.
4 Pre-tax effect of Production Tax Credits, Investment Tax Credits, and depreciation tax expense allocated to tax equity investors.
5 Adjusted EBITDA is a non-GAAP financial measure.  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 quarter and six months ended June 30, 2023.  The Company is not able to provide a corresponding GAAP equivalent or reconciliation for its Adjusted EBITDA guidance without unreasonable effort.
6 Pre-tax effect of Production Tax Credits, Investment Tax Credits, and depreciation tax expense allocated to tax equity investors.
7 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 and six months ended June 30, 2023.  The Company is not able to provide a corresponding GAAP equivalent or reconciliation for its Adjusted EPS guidance without unreasonable effort.
8 Through asset sales, fuel conversions and retirements, while maintaining reliability and affordability, and subject to necessary approvals.
9 Adjusted EBITDA is a non-GAAP financial measure.  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 quarter and six months ended June 30, 2023.  The Company is not able to provide a corresponding GAAP equivalent or reconciliation for its Adjusted EBITDA guidance without unreasonable effort.
10 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 and six months ended June 30, 2023.  The Company is not able to provide a corresponding GAAP equivalent or reconciliation for its Adjusted EPS guidance without unreasonable effort.

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