AES Delivers on All 2022 Financial and Strategic Objectives; Reaffirms 7% to 9% Annualized Growth Target Through 2025
Strategic Accomplishments
Signed 5.2 GW of PPAs for new renewable energy projects in 2022, including 1.9 GW since the Company's third quarter earnings call in November, increasing backlog to 12.2 GW
Completed the construction or acquisition of operating projects totaling 1.9 GW in 2022, including 1 GW of new renewables in the United States
Announced partnership with Air Products to develop, build, own and operate the largest green hydrogen production facility in the United States
2022 Financial Highlights
Diluted EPS of ($0.82), compared to ($0.62) in 2021
Adjusted EPS1 of $1.67, compared to $1.52 in 2021 and 2022 guidance of $1.55 to $1.65
Financial Position and Outlook
Targeting signing a total of 14 to 17 GW of new long-term renewables PPAs through 2025
Expecting to complete 3.4 GW of new renewable energy projects in 2023, including 2.1 GW in the United States
Initiating 2023 guidance for Adjusted EPS1 of $1.65 to $1.75, which includes the financial impact of 0.6 GW of new US renewable projects coming online in 2024, instead of 2023
Reaffirming 7% to 9% annualized growth target1 through 2025, off a base year of 2020
ARLINGTON, Va., Feb. 27, 2023 /PRNewswire/ -- The AES Corporation (NYSE: AES) today reported financial results for the year ended December 31, 2022.
"2022 was another record year for AES, one in which we delivered on all of our financial and strategic objectives. We continue to see massive growth in our renewables business, and in 2022, we signed more PPAs for solar, wind and energy storage than ever before in our history," said Andrés Gluski, AES President and Chief Executive Officer. "Our unique capabilities in developing tailored energy solutions, such as our work with major data center companies to provide around-the-clock clean energy, enabled us to partner with Air Products to announce our plans for the largest green hydrogen production facilities in the United States."
"I am extremely pleased with our financial and strategic performance in 2022," said Stephen Coughlin, AES Executive Vice President and Chief Financial Officer. "While our 2023 guidance range is below our long-term growth rate, it does not include up to $0.10 of potential upside from 600 MW of new 2023 projects in the US that are currently expected to slip to 2024, but which we are still working to complete this year. If this upside is not realized in 2023, this timing change will benefit our 2024 results. We remain fully confident in our 7% to 9% long-term growth rate target1 through 2025."
Key Full Year 2022 Financial Results
Full year 2022 Diluted Earnings Per Share from Continuing Operations (Diluted EPS) was ($0.82), a decrease of $0.20 compared to full year 2021, primarily reflecting the gains on remeasurement of interest in sPower's development platform and the Fluence capital raise in 2021, lower contributions from the Company's US & Utilities Strategic Business Unit (SBU), higher Parent Company interest expense, and lower capitalized interest at construction projects in Chile. This was partially offset by the loss in 2021 on deconsolidation of Alto Maipo and higher margins from the Company's Mexico, Central America and the Caribbean (MCAC) SBU due to favorable LNG transactions.
Full year 2022 Adjusted Earnings Per Share1 (Adjusted EPS, a non-GAAP financial measure) was $1.67, an increase of $0.15 compared to full year 2021, primarily reflecting higher margins from the Company's MCAC SBU, as well as higher margins and the Company's higher ownership in AES Andes. This was partially offset by outages and several one-time expenses at the Company's US & Utilities and South America SBUs, higher losses from Fluence, and higher Parent Company interest expense.
Strategic Accomplishments
In 2022, the Company signed 5,153 MW of renewables and energy storage under long-term Power Purchase Agreements (PPA), including 2,553 MW of solar, wind and energy storage in the United States.
In 2022, the Company completed the construction or acquisition of operating projects totaling 1,943 MW of wind, solar and energy storage in the United States, Brazil, the Dominican Republic, Chile and Colombia.
The Company's backlog, which includes projects with signed contracts, but which are not yet operational, is now 12,179 MW, including 5,453 MW under construction.
The Company announced a partnership with Air Products to develop, build, own and operate the largest green hydrogen production facility in the United States
Guidance and Expectations1
The Company is reaffirming its 7% to 9% annualized growth rate target1 through 2025, from a base year of 2020.
The Company is initiating 2023 guidance for Adjusted EPS1 of $1.65 to $1.75. Growth in 2023 is expected to be primarily driven by 3.4 GW of 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. This guidance also incorporates the impact of 0.6 GW of new renewables likely coming online in 2024, instead of 2023.
The Company's 2023 guidance is based on foreign currency and commodity forward curves as of December 31, 2022.
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 Monday, February 27, 2023 at 10:00 a.m. Eastern Time (ET). Interested parties may listen to the teleconference by dialing 1-844-200-6205 at least ten minutes before the start of the call. International callers should dial +1-929-526-1599. The Participant Access Code for this call is 637641. 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 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. |
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' 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 2021 Annual Report on Form 10-K filed February 28, 2022 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.
THE AES CORPORATION | |||||
Year Ended December 31, | |||||
2022 | 2021 | 2020 | |||
(in millions, except per share amounts) | |||||
Revenue: | |||||
Regulated | $ 3,538 | $ 2,868 | $ 2,661 | ||
Non-Regulated | 9,079 | 8,273 | 6,999 | ||
Total revenue | 12,617 | 11,141 | 9,660 | ||
Cost of Sales: | |||||
Regulated | (3,162) | (2,448) | (2,235) | ||
Non-Regulated | (6,907) | (5,982) | (4,732) | ||
Total cost of sales | (10,069) | (8,430) | (6,967) | ||
Operating margin | 2,548 | 2,711 | 2,693 | ||
General and administrative expenses | (207) | (166) | (165) | ||
Interest expense | (1,117) | (911) | (1,038) | ||
Interest income | 389 | 298 | 268 | ||
Loss on extinguishment of debt | (15) | (78) | (186) | ||
Other expense | (68) | (60) | (53) | ||
Other income | 102 | 410 | 75 | ||
Loss on disposal and sale of business interests | (9) | (1,683) | (95) | ||
Goodwill impairment expense | (777) | — | — | ||
Asset impairment expense | (763) | (1,575) | (864) | ||
Foreign currency transaction gains (losses) | (77) | (10) | 55 | ||
Other non-operating expense | (175) | — | (202) | ||
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE TAXES AND EQUITY IN | (169) | (1,064) | 488 | ||
Income tax benefit (expense) | (265) | 133 | (216) | ||
Net equity in losses of affiliates | (71) | (24) | (123) | ||
INCOME (LOSS) FROM CONTINUING OPERATIONS | (505) | (955) | 149 | ||
Gain from disposal of discontinued businesses, net of income tax expense of $0, $1, and $0, | — | 4 | 3 | ||
NET INCOME (LOSS) | (505) | (951) | 152 | ||
Less: Net loss (income) attributable to noncontrolling interests and redeemable stock of subsidiaries | (41) | 542 | (106) | ||
NET INCOME (LOSS) ATTRIBUTABLE TO THE AES CORPORATION | $ (546) | $ (409) | $ 46 | ||
AMOUNTS ATTRIBUTABLE TO THE AES CORPORATION COMMON STOCKHOLDERS: | |||||
Income (loss) from continuing operations, net of tax | $ (546) | $ (413) | $ 43 | ||
Income from discontinued operations, net of tax | — | 4 | 3 | ||
NET INCOME (LOSS) ATTRIBUTABLE TO THE AES CORPORATION | $ (546) | $ (409) | $ 46 | ||
BASIC EARNINGS PER SHARE: | |||||
Income (loss) from continuing operations attributable to The AES Corporation common stockholders, | $ (0.82) | $ (0.62) | $ 0.06 | ||
Income from discontinued operations attributable to The AES Corporation common stockholders, | — | 0.01 | 0.01 | ||
NET INCOME (LOSS) ATTRIBUTABLE TO THE AES CORPORATION COMMON STOCKHOLDERS | $ (0.82) | $ (0.61) | $ 0.07 | ||
DILUTED EARNINGS PER SHARE: | |||||
Income (loss) from continuing operations attributable to The AES Corporation common stockholders, | $ (0.82) | $ (0.62) | $ 0.06 | ||
Income from discontinued operations attributable to The AES Corporation common stockholders, | — | 0.01 | 0.01 | ||
NET INCOME (LOSS) ATTRIBUTABLE TO THE AES CORPORATION COMMON STOCKHOLDERS | $ (0.82) | $ (0.61) | $ 0.07 | ||
THE AES CORPORATION | ||||
Three Months Ended December 31, | ||||
2022 | 2021 | |||
(in millions, except per share amounts) | ||||
Revenue: | ||||
Regulated | $ 925 | $ 721 | ||
Non-Regulated | 2,135 | 2,049 | ||
Total revenue | 3,060 | 2,770 | ||
Cost of Sales: | ||||
Regulated | (827) | (642) | ||
Non-Regulated | (1,670) | (1,569) | ||
Total cost of sales | (2,497) | (2,211) | ||
Operating margin | 563 | 559 | ||
General and administrative expenses | (58) | (36) | ||
Interest expense | (304) | (242) | ||
Interest income | 119 | 86 | ||
Loss on extinguishment of debt | (7) | (37) | ||
Other expense | (17) | (28) | ||
Other income | 22 | 136 | ||
Loss on disposal and sale of business interests | (9) | (1,764) | ||
Goodwill impairment expense | (777) | — | ||
Asset impairment expense | (230) | (201) | ||
Foreign currency transaction losses | (17) | (2) | ||
Other non-operating expense | (175) | — | ||
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE TAXES AND EQUITY IN | (890) | (1,529) | ||
Income tax benefit (expense) | (79) | 208 | ||
Net equity in losses of affiliates | (17) | (9) | ||
NET INCOME (LOSS) | (986) | (1,330) | ||
Less: Net loss (income) attributable to noncontrolling interests and redeemable stock of | 83 | 698 | ||
NET INCOME (LOSS) ATTRIBUTABLE TO THE AES CORPORATION | $ (903) | $ (632) | ||
AMOUNTS ATTRIBUTABLE TO THE AES CORPORATION COMMON STOCKHOLDERS: | ||||
BASIC EARNINGS PER SHARE: | ||||
NET INCOME (LOSS) ATTRIBUTABLE TO THE AES CORPORATION COMMON | $ (1.35) | $ (0.95) | ||
DILUTED EARNINGS PER SHARE: | ||||
NET INCOME (LOSS) ATTRIBUTABLE TO THE AES CORPORATION COMMON | $ (1.35) | $ (0.95) | ||
DILUTED SHARES OUTSTANDING | 668 | 667 | ||
THE AES CORPORATION | |||||||
Strategic Business Unit (SBU) Information | |||||||
(Unaudited) | |||||||
Three Months Ended | Year Ended | ||||||
(in millions) | 2022 | 2021 | 2022 | 2021 | |||
REVENUE | |||||||
US and Utilities SBU | $ 1,193 | $ 1,087 | $ 5,013 | $ 4,335 | |||
South America SBU | 923 | 797 | 3,539 | 3,541 | |||
MCAC SBU | 676 | 573 | 2,868 | 2,157 | |||
Eurasia SBU | 270 | 319 | 1,217 | 1,123 | |||
Corporate and Other | 36 | 34 | 119 | 116 | |||
Eliminations | (38) | (40) | (139) | (131) | |||
Total Revenue | $ 3,060 | $ 2,770 | $ 12,617 | $ 11,141 | |||
THE AES CORPORATION | |||
December 31, 2022 | December 31, 2021 | ||
(in millions, except share and per share data) | |||
ASSETS | |||
CURRENT ASSETS | |||
Cash and cash equivalents | $ 1,374 | $ 943 | |
Restricted cash | 536 | 304 | |
Short-term investments | 730 | 232 | |
Accounts receivable, net of allowance for doubtful accounts of $5 and $5, respectively | 1,799 | 1,418 | |
Inventory | 1,055 | 604 | |
Prepaid expenses | 98 | 142 | |
Other current assets, net of CECL allowance of $2 and $0, respectively | 1,533 | 897 | |
Current held-for-sale assets | 518 | 816 | |
Total current assets | 7,643 | 5,356 | |
NONCURRENT ASSETS | |||
Property, Plant and Equipment: | |||
Land | 470 | 426 | |
Electric generation, distribution assets and other | 26,599 | 25,552 | |
Accumulated depreciation | (8,651) | (8,486) | |
Construction in progress | 4,621 | 2,414 | |
Property, plant and equipment, net | 23,039 | 19,906 | |
Other Assets: | |||
Investments in and advances to affiliates | 952 | 1,080 | |
Debt service reserves and other deposits | 177 | 237 | |
Goodwill | 362 | 1,177 | |
Other intangible assets, net of accumulated amortization of $434 and $385, respectively | 1,841 | 1,450 | |
Deferred income taxes | 319 | 409 | |
Loan receivable, net of allowance of $26 | 1,051 | — | |
Other noncurrent assets, net of allowance of $51 and $23, respectively | 2,979 | 2,188 | |
Noncurrent held-for-sale assets | — | 1,160 | |
Total other assets | 7,681 | 7,701 | |
TOTAL ASSETS | $ 38,363 | $ 32,963 | |
LIABILITIES AND EQUITY | |||
CURRENT LIABILITIES | |||
Accounts payable | $ 1,730 | $ 1,153 | |
Accrued interest | 249 | 182 | |
Accrued non-income taxes | 249 | 266 | |
Accrued and other liabilities | 2,151 | 1,205 | |
Non-recourse debt, including $416 and $302, respectively, related to variable | 1,758 | 1,367 | |
Current held-for-sale liabilities | 354 | 559 | |
Total current liabilities | 6,491 | 4,732 | |
NONCURRENT LIABILITIES | |||
Recourse debt | 3,894 | 3,729 | |
Non-recourse debt, including $2,295 and $2,223, respectively, related to variable | 17,846 | 13,603 | |
Deferred income taxes | 1,139 | 977 | |
Other noncurrent liabilities | 3,168 | 3,358 | |
Noncurrent held-for-sale liabilities | — | 740 | |
Total noncurrent liabilities | 26,047 | 22,407 | |
Redeemable stock of subsidiaries | 1,321 | 1,257 | |
EQUITY | |||
THE AES CORPORATION STOCKHOLDERS' EQUITY | |||
Preferred stock (without par value, 50,000,000 shares authorized; 1,043,050 issued and | 838 | 838 | |
Common stock ($0.01 par value, 1,200,000,000 shares authorized; 818,790,001 issued | 8 | 8 | |
Additional paid-in capital | 6,688 | 7,106 | |
Accumulated deficit | (1,635) | (1,089) | |
Accumulated other comprehensive loss | (1,640) | (2,220) | |
Treasury stock, at cost (150,046,537 and 151,923,418 shares at December 31, 2022 | (1,822) | (1,845) | |
Total AES Corporation stockholders' equity | 2,437 | 2,798 | |
NONCONTROLLING INTERESTS | 2,067 | 1,769 | |
Total equity | 4,504 | 4,567 | |
TOTAL LIABILITIES AND EQUITY | $ 38,363 | $ 32,963 | |
THE AES CORPORATION | |||||||
Three Months Ended | Year Ended | ||||||
2022 | 2021 | 2022 | 2021 | ||||
OPERATING ACTIVITIES: | (in millions) | (in millions) | |||||
Net income (loss) | $ (986) | $ (1,330) | $ (505) | $ (951) | |||
Adjustments to net income (loss): | |||||||
Depreciation and amortization | 253 | 261 | 1,053 | 1,056 | |||
Loss on disposal and sale of business interests | 9 | 1,764 | 9 | 1,683 | |||
Impairment expense | 1,182 | 201 | 1,715 | 1,575 | |||
Deferred income taxes | 4 | (329) | 4 | (406) | |||
Reversals of contingencies | (1) | (10) | (1) | (10) | |||
Loss on extinguishment of debt | 7 | 37 | 15 | 78 | |||
Gain on remeasurement to acquisition date fair value | (5) | (34) | (5) | (254) | |||
Loss of affiliates, net of dividends | 33 | 8 | 111 | 36 | |||
Emissions allowance expense | 106 | 128 | 425 | 337 | |||
Other | 147 | (25) | 183 | 120 | |||
Changes in operating assets and liabilities: | |||||||
(Increase) decrease in accounts receivable | (123) | ||||||