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 EPS1 annualized growth target of 7% to 9% through 2025, from a base of 2020
- Initiating 2023 Adjusted EBITDA2 guidance of $2,600 to $2,900 million
- 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
The AES Corporation (NYSE: AES) today (May 8) outlined its long-term strategy for growth, including substantial growth in renewables and US utilities, and fully exiting coal by year-end 20253.
"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."
"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."
Guidance and Expectations4,5
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 EPS4 of 7% to 9% annualized growth target4 through 2025, from a base year of 2020.
The Company is including Adjusted EBITDA5 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 EBITDA5 guidance of $2,600 to $2,900 million. 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 EBITDA5 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 EBITDA5 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 March 31, 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.
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 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, rates of return consistent with prior experience and the COVID-19 pandemic.
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' 2022 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, except where required by law.
Any Stockholder who desires a copy of the Company's 2022 Annual Report on Form 10-K filed March 1, 2023 with the SEC may obtain a copy (excluding the exhibits thereto) 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 Annual Report on 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.
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 December 31, 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 December 31, 2022. The Company is not able to provide a corresponding GAAP equivalent or reconciliation for its Adjusted EBITDA guidance without unreasonable effort.
