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AES outlines long-term strategy for growth in renewables & US utilities, while executing on intent to exit coal by year-end 2025

The AES (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.

“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.

Webcast Information

AES will hold an Investor Day on Monday, May 8, 2023 at 9:00 a.m. Eastern Time (ET) in New York City.  At the event, AES Management will deliver prepared remarks and host a question and answer session with analysts and investors.  Interested parties may access the live webcast and presentation materials at www.aes.com by selecting “Investors” and then “Upcoming Events” prior to the start of the event.  A replay will be available shortly after the conclusion of the event at www.aes.com by selecting “Investors” and then “Presentations and Webcasts.”

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