AES Achieves Key Strategic Milestones and Reaffirms Guidance Through 2025

ARLINGTON, Va., Aug. 4, 2021 /PRNewswire/ --

Strategic Accomplishments

• Received regulatory approvals at US utilities, AES Indiana and AES Ohio, further enabling planned new investments of more than $2 billion to grow the rate base 9% annually through 2025
• Signed 1.8 GW of new PPAs for renewable energy projects, bringing total to 2.9 GW signed in year-to-date 2021 and increasing the backlog to 8.5 GW
• Accelerated decarbonization efforts at AES Andes with the voluntary retirement of an additional 1.1 GW of coal in Chile, to be replaced by 2.3 GW of contracted renewables
• Moody's changed the outlook on the Company's Ba1 credit rating to positive

Q2 2021 Financial Highlights

• Diluted EPS of $0.03, compared to $(0.13) in Q2 2020
• Adjusted EPS¹ of $0.31, compared to $0.25 in Q2 2020

Financial Position and Outlook

• Reaffirming 2021 Adjusted EPS¹ guidance range of $1.50 to $1.58
• Reaffirming 7% to 9% average annual growth target through 2025

The AES Corporation (NYSE: AES) today reported financial results for the quarter ended June 30, 2021.

"I am very pleased with our results for the first half of 2021," said Andrés Gluski, AES President and Chief Executive Officer.  "We are on track to hit all of our financial and growth metrics for the year.  Since our last earnings call in May, we signed 1.8 GW of renewables PPAs, more than 90% of which are in the US, for a total of 2.9 GW year-to-date, nearly double the amount we did in the same period last year.  This puts our total backlog of signed projects at 8.5 GW, an all-time high.  We see demand for renewables as very strong, especially for our structured around-the-clock carbon-free products.  At the same time, we continue to make good progress on our decarbonization targets by also accelerating the retirement of coal plants and growing our energy efficiency and cloud-based businesses."

"Our financial performance for the first half of the year, combined with a positive outlook for the remainder of the year and beyond, lead us to reaffirm our full year 2021 guidance and our 7% to 9% average annual growth target in earnings and free cash flow through 2025," said Gustavo Pimenta, AES Executive Vice President and Chief Financial Officer.  "We are also excited to see Moody's changing AES' outlook on our Ba1 rating to positive, further validating the continuous improvement in our credit profile."

Key Q2 2021 Financial Results

Second quarter 2021 Diluted Earnings Per Share from Continuing Operations (Diluted EPS) was $0.03, an increase of $0.16 compared to second quarter 2020, primarily reflecting higher operating performance at the Company's US & Utilities Strategic Business Unit (SBU), gains from dispositions and acquisitions, and gains from early contract terminations in Chile.  These positive drivers were partially offset by higher impairments, primarily at AES Andes in Chile, associated with the commitment to retire certain coal-fired plants.

Second quarter 2021 Adjusted Earnings Per Share¹ (Adjusted EPS, a non-GAAP financial measure) was $0.31, an increase of $0.06 compared to second quarter 2020, primarily reflecting contributions from new businesses, including renewables and the Southland repowering, higher demand at utilities, and Parent interest savings.  These positive drivers were partially offset by lower contributions from Chile and a higher adjusted tax rate. 

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.

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

• During the second quarter of 2021, the Company's US utilities, AES Indiana and AES Ohio, received regulatory approval further enabling the planned new investments of more than $2 billion, including:
• Transmission, Distribution, Storage Improvement Charge (TDSIC) plan update and the 195 MW Hardy Hills solar project at AES Indiana; and
• Smart Grid and FERC-regulated transmission rate at AES Ohio.
• In year-to-date 2021, the Company completed construction or the acquisition of 315 MW of renewables and energy storage, including:
• 159 MW Mandacaru and Salinas wind facility in Brazil;
• 75 MW of solar and solar plus energy storage in the US at AES Clean Energy;
• 50 MW Bayasol solar facility in the Dominican Republic;
• 21 MW of solar capacity in Panama; and
• 10 MW Cuscatlan solar facility in El Salvador.
• Since the Company's first quarter 2021 earnings call in May, the Company has signed 1,824 MW of renewables and energy storage under long-term Power Purchase Agreements (PPA), including:
• 757 MW of solar and energy storage at AES Clean Energy in the US;
• Agreeing to acquire 612 MW of operating wind assets with near-term repowering plans to help New York State meet its aggressive renewables targets;
• 295 MW of solar and energy storage at AES Indiana; and
• 160 MW of wind in Brazil.
• In year-to-date 2021, the Company signed or agreed to acquire 2,912 MW of renewables and energy storage under long-term PPAs, bringing the Company's backlog to 8,471 MW, including:
• 2,549 MW under construction and expected to come on-line through 2023; and
• 5,922 MW signed under long-term PPAs, including a 10-year agreement to supply Google's data centers in Virginia with 500 MW of 24/7 carbon-free energy.
• The Company is making substantial progress toward achieving its aggressive coal reduction targets, including reducing coal generation to below 10% by year-end 2025.
• In July 2021, AES Andes announced the retirement of 1.1 GW of coal-fired generation, bringing the Company's generation from coal to approximately 20% of total generation volume (proforma for announced asset sales and retirements).

Update on Fluence

AES with its partners, Siemens and Qatar Investment Authority (QIA), is considering strategic options for Fluence to raise additional capital to finance its continued growth, which may include a public offering of its common shares.

Guidance and Expectations¹

The Company is reaffirming its 2021 Adjusted EPS¹ guidance of $1.50 to $1.58 and its 7% to 9% average annual growth rate target through 2025, from a base year of 2020.

Non-GAAP Financial Measures

See Non-GAAP Measures for definitions of Adjusted Earnings Per Share and Adjusted Pre-Tax Contribution, as well as reconciliations to the most comparable GAAP financial measures.

Attachments

Condensed Consolidated Statements of Operations, Segment Information, Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Cash Flows, Non-GAAP Financial Measures and Parent Financial Information.

Conference Call Information

AES will host a conference call on Thursday, August 5, 2021 at 9:00 a.m. Eastern Daylight Time (EDT).  Interested parties may listen to the teleconference by dialing 1-888-317-6003 at least ten minutes before the start of the call. International callers should dial +1-412-317-6061.  The Conference ID for this call is 0382752.  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 "Upcoming events."

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.

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 the COVID-19 pandemic, 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 and rates of return consistent with prior experience.

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' 2020  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.

Any Stockholder who desires a copy of the Company's 2020 Annual Report on Form 10-K filed February 24, 2021 with the SEC may obtain a copy (excluding Exhibits) 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 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.

Disclosure Regarding Fluence

This news release does not constitute an offer to sell or the solicitation of an offer to buy an securities of Fluence or any of its affiliates.  Any offers, solicitations or offers to buy, or any sales of such securities will be made in accordance with the registration requirements of the Securities Act of 1933, as amended.

THE AES CORPORATION
NON-GAAP FINANCIAL MEASURES
(Unaudited)
RECONCILIATION OF ADJUSTED PRE-TAX CONTRIBUTION (PTC) AND ADJUSTED EPS

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 South America 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 South America 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.

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.

View original content to download multimedia:https://www.prnewswire.com/news-releases/aes-achieves-key-strategic-milestones-and-reaffirms-guidance-through-2025-301348829.html

SOURCE The AES Corporation