The Aes Corporation · NYSE:AES
The Aes — Q3 2023 Earnings Presentation
57 slides from The Aes's earnings presentation, Nov 3, 2023
Slide 1: The AES Corporation Third Quarter 2023 Financial Review
The AES Corporation Third Quarter 2023 Financial Review November 3, 2023
Slide 2: Safe Harbor Disclosure
CONTAINS FORWARD-LOOKING STATEMENTS Safe Harbor Disclosure Certain statements in the following presentation regarding AES’ business operations may constitute “forward-looking statements.” Such forward-looking statements include, but are not limited to, those related to future earnings, growth and fi
Slide 3: Financial Results & Strategic Highlights
CONTAINS FORWARD-LOOKING STATEMENTS Financial Results & Strategic Highlights Financial Results à Reaffirming guidance for all metrics • Expect 2023 Adjusted EPS1 to be in top half of range of $1.65 to $1.75 à Q3 2023 Adjusted EBITDA1 with Tax Attributes2 of $1.0 billion • Adjusted EBITDA1 of $990 mi
Slide 4: Continued Strong Demand for Renewables with Long-Term Contracts
CONTAINS FORWARD-LOOKING STATEMENTS Continued Strong Demand for Renewables with Long- Term Contracts PPAs Signed, Capacity in GW à Large pending PPA signings in YTG 2023 or 2024 include3: 1.3 ≥5.0 • 1.2 GW NYSERDA (awarded) • 1.0 GW Bellefield 2 1.5 • 1.4 GW Green Hydrogen JV with Air Products 2.2 A
Slide 5: Backlog of 13.1 GW with Signed Long-Term Contracts
CONTAINS FORWARD-LOOKING STATEMENTS Backlog of 13.1 GW with Signed Long-Term Contracts Capacity in GW 2023-2025 Beyond 2025 73% 27% Expected CODs1 Expected CODs1 44% of Backlog Currently Under Construction 1. Commercial Operations Date. 5
Slide 6: Increasing FY 2023 Construction Completion Target to 3.5 GW
CONTAINS FORWARD-LOOKING STATEMENTS Increasing FY 2023 Construction Completion Target to 3.5 GW Capacity in GW 3.5 1.4 2022 GW Placed in 2023 Target GW Placed Service 1 in Service 2 93% of 2023 MW Already Achieved Mechanical Completion; More Than Doubling Renewables MW Placed in Service vs. 2022 1.
Slide 7: Accelerating & Increasing Asset Sale Plan
CONTAINS FORWARD-LOOKING STATEMENTS Accelerating & Increasing Asset Sale Plan à Secured all external funding needs for Asset Sale Proceeds Targets, $ in Millions 2023 à Potential asset sales include: $1,000 ≥$3,500 • Coal exits $2,000 • Sell-downs of US renewables • Partial monetizations of technolo
Slide 8: Focus on Non-Recourse Debt & Investment Grade Ratings
CONTAINS FORWARD-LOOKING STATEMENTS Focus on Non-Recourse Debt & Investment Grade Ratings Supports Low-Risk Corporate Profile Agency Rating Recourse Debt 20% BBB- 80% Baa3 BBB- Non-Recourse Debt Committed to Maintaining Investment Grade Ratings 8
Slide 9: Q3 2023 Financial Review
CONTAINS FORWARD-LOOKING STATEMENTS Q3 2023 Financial Review à Q3 2023 results à 2023 guidance à Financial plan flexibility à Limited exposure to interest rates 9
Slide 10: Q3 2023 Financial Results
CONTAINS FORWARD-LOOKING STATEMENTS Q3 2023 Financial Results $ in Millions Adjusted EBITDA1 with Tax Attributes2 Ò Higher Adjusted EBITDA1 with Tax +$17 Attributes2 driven primarily by • Higher contributions from Renewables SBU $1,008 $991 • 2023 recovery of AES Ohio purchased $18 power costs recog
Slide 11: Q3 2023 Adjusted EPS Decreased $0.03
CONTAINS FORWARD-LOOKING STATEMENTS Q3 2023 Adjusted EPS1 Decreased $0.03 $0.04 $0.63 $0.60 ($0.02) ($0.05) + 2023 recovery of − New debt issuance Q3 2022: 21% AES Ohio in May Q3 2023: 28% purchased power costs recognized in 2022 − Significant LNG transaction margins in the prior year Q3 2022 SBUs/C
Slide 12: Q3 2023 Financial Results: Renewables
CONTAINS FORWARD-LOOKING STATEMENTS Q3 2023 Financial Results: Renewables $ in Millions Adjusted EBITDA1 with Tax Attributes2 Ò Higher Adjusted EBITDA1 with Tax Attributes2 driven primarily by: +$30 • Contributions from new projects; and $285 • Higher margins in Colombia $255 $18 Ò Partially offset
Slide 13: Q3 2023 Financial Results: Utilities
CONTAINS FORWARD-LOOKING STATEMENTS Q3 2023 Financial Results: Utilities $ in Millions Adjusted PTC1 Ò Higher Adjusted PTC1 driven primarily by the 2023 recovery of AES Ohio purchased power costs as +$86 a part of ESP42 settlement, that were $101 recognized in 2022 $15 Q3 2022 Q3 2023 1. A non-GAAP
Slide 14: Progress on Utility Growth Program
CONTAINS FORWARD-LOOKING STATEMENTS Progress on Utility Growth Program à In August, received Commission approval at AES Ohio for new Electric Security Plan (ESP4) à Expect to grow combined rate bases of US utilities at a 10% average annual rate through 2027, as we invest to improve quality of servic
Slide 15: Q3 2023 Financial Results: Energy Infrastructure
CONTAINS FORWARD-LOOKING STATEMENTS Q3 2023 Financial Results: Energy Infrastructure $ in Millions Adjusted EBITDA1 Ò Lower Adjusted EBITDA1 driven -$100 primarily by significant LNG transaction margins in the prior year $620 Ò Partially offset by: • Prior year one-time expenses in $520 Argentina; a
Slide 16: Q3 2023 Financial Results: New Energy Technologies
CONTAINS FORWARD-LOOKING STATEMENTS Q3 2023 Financial Results: New Energy Technologies $ in Millions Adjusted EBITDA1 Ò Higher Adjusted EBITDA1 driven primarily by improved results at Fluence ($22) ($27) +$5 Q3 2022 Q3 2023 1. A non-GAAP financial measure. See Appendix for definition and reconciliat
Slide 17: Expect to be in the Top Half of 2023 Adjusted EPS Guidance
CONTAINS FORWARD-LOOKING STATEMENTS Expect to be in the Top Half of 2023 Adjusted EPS1 Guidance $ in Millions $1.65- $0.20 $0.01 $1.75 $1.67 ($0.01) ($0.15) + New − New debt issuance 2022: 25% renewables in May 2023: 26%-27% 2022 Actual YTD 2023 vs. SBUs/Corporate Parent Interest Tax 2023 Guidance Y
Slide 18: Reaffirming 2023 Adjusted EBITDA Guidance
CONTAINS FORWARD-LOOKING STATEMENTS Reaffirming 2023 Adjusted EBITDA1 Guidance $ in Millions $3,100- $500- $3,460 $560 $2,600- $2,931 $2,900 ($51) ($38) ($92) − Lower − Lower LNG margins in sales Colombia + New renewables 2022 Actual YTD 2023 vs. Renewables/ Other SBUs/Corp 2023 Adjusted Tax Attribu
Slide 19: 2023 Parent Capital Allocation Plan
CONTAINS FORWARD-LOOKING STATEMENTS 2023 Parent Capital Allocation Plan: Expect to be in Top Half of Parent Free Cash Flow1 Range $ in Millions Discretionary Cash – Sources Discretionary Cash – Uses ($2,273-$2,523) ($2,273-$2,523) $2,273- $10 Ending Cash $400- $2,523 Shareholder $600 Dividend3 $516
Slide 20: Financial Plan Flexibility Eliminates Need for Equity Issuance Until 2026
CONTAINS FORWARD-LOOKING STATEMENTS Financial Plan Flexibility Eliminates Need for Equity Issuance Until at Least 2026 Multiple Paths to Achieve Accelerated & Increased Asset Sale Proceeds Target; New and/or Expanded Partnerships to Reduce AES Equity Requirement Transferability Creates Additional Fl
Slide 21: Limited Exposure to Rising Interest Rates
CONTAINS FORWARD-LOOKING STATEMENTS Limited Exposure to Rising Interest Rates Recourse Debt à All long-term debt is at fixed rates à Hedging program for expected refinancings over next five years Non-Recourse Debt à Pre-hedge future project debt issuances at time of PPA signing à Project debt is typ
Slide 22: Conclusion
CONTAINS FORWARD-LOOKING STATEMENTS Conclusion à Resilient business model with scale and proven track record à Flexible funding plan includes no planned equity issuances prior to 2026 à Prioritizing risk-adjusted returns for shareholders 22
Slide 23: Appendix
CONTAINS FORWARD-LOOKING STATEMENTS Appendix Parent Only Cash Flow & Liquidity Slides 24-26 Recourse & Non-Recourse Debt Slides 27-32 Q3 & YTD Adjusted EPS1 Roll-Up Slide 33 YTD Financial Results Slides 34-39 Listed Subsidiaries & Public Filers Slides 40-41 AES Modeling Disclosures Slides 42-45 2023
Slide 24: Parent Sources and Uses of Liquidity
CONTAINS FORWARD-LOOKING STATEMENTS Parent Sources and Uses of Liquidity Q3 YTD $ in Millions 2022 2023 2022 2023 Sources Total Subsidiary Distributions1 $69 $311 $545 $872 Proceeds from Asset Sales, Net - $78 - $176 Financing Proceeds, Net $197 - $197 $890 Increased/(Decreased) Credit Facility Comm
Slide 25: Q3 & YTD 2023 Subsidiary Distributions
CONTAINS FORWARD-LOOKING STATEMENTS Q3 & YTD 2023 Subsidiary Distributions1 $ in Millions Subsidiary Distributions1 by SBU Q3 2023 YTD Renewables $42 $125 Utilities $25 $75 Energy Infrastructure $242 $627 New Energy Technologies - - Corporate2 $2 $45 Total $311 $872 Top Subsidiary Distributions1 by
Slide 26: Reconciliation of Subsidiary Distributions and Parent Company Liquidity
CONTAINS FORWARD-LOOKING STATEMENTS Reconciliation of Subsidiary Distributions1 and Parent Company Liquidity1 $ in Millions Quarter Ended September 30, June 30, March 31, December 31, 2023 2023 2023 2022 Total Subsidiary Distributions1 to Parent & QHCs2 $311 $205 $356 $753 Total Return of Capital Di
Slide 27: Recourse Debt Summary
CONTAINS FORWARD-LOOKING STATEMENTS Recourse Debt Summary $ in Millions, Except Percentages; as of September 30, 2023 Principal Ratings SBU Balance Interest Rate Maturity Moody’s/S&P/Fitch Senior Variable Rate Term Loan Corporate $200 Term SOFR + 9/30/24 N/A 1.125% AES Clean Energy Senior Variable R
Slide 28: Most Recourse Debt Maturities in 2025 and Beyond
CONTAINS FORWARD-LOOKING STATEMENTS Most Recourse Debt1 Maturities in 2025 and Beyond $ in Millions, as of September 30, 2023 Recourse Debt $3,400 Weighted Average All-in Cost 3.63% Weighted Average Maturity 4.0 years Percentage Fixed or Hedged 86% $900 $500 Percentage in Functional Currency 100% $2
Slide 29: Q3 2023 Non-Recourse Debt Schedule
Q3 2023 Non-Recourse Debt1 Schedule As of September 30, 2023, $ in Millions, Except Percentages Debt Maturity and Amortization Schedule September 30, September 2023 30, 2023 Ownership 2028 and Total Balance SBU/Business Country/State Total 2023 2024 2025 2026 2027 Percentage Thereafter (Ownership- B
Slide 30: Q3 2023 Non-Recourse Debt Schedule
Q3 2023 Non-Recourse Debt1 Schedule As of September 30, 2023, $ in Millions, Except Percentages Debt Maturity and Amortization Schedule September September 30, 2023 30, 2023 Ownership 2028 And Total Balance SBU/Business Country/State Total 2023 2024 2025 2026 2027 Percentage Thereafter (Ownership- B
Slide 31: $21.7 Billion of Non-Recourse Debt
CONTAINS FORWARD-LOOKING STATEMENTS $21.7 Billion of Non-Recourse Debt1 $ in Millions, as of September 30, 2023 Utilities Non-Recourse Debt $5,088 Weighted Average All-in Cost 5.75% 23% Weighted Average Maturity 8.1 years Percentage Fixed or Hedged 69%2 $16,632 77% Percentage in Functional Currency
Slide 32: Vast Majority of Interest Rate Exposure is Hedged
CONTAINS FORWARD-LOOKING STATEMENTS Vast Majority of Interest Rate Exposure is Hedged Through Swaps or Contractual Arrangements $ in Millions, as of September 30, 2023 Recourse Debt1 Non-Recourse Recourse Debt Debt $5,000 Weighted Average 3.63% 5.75% 19% All-in Cost Weighted Average 4.0 years 8.1 ye
Slide 33: Q3 & YTD Adjusted EPS Roll-Up
CONTAINS FORWARD-LOOKING STATEMENTS Q3 & YTD Adjusted EPS1 Roll-Up $ in Millions, Except Per Share Amounts Q3 2023 Q3 2022 Variance YTD 2023 YTD 2022 Variance Adjusted PTC1 Renewables $184 $180 $4 $322 $351 ($29) Utilities $101 $15 $86 $160 $100 $60 Energy Infrastructure $386 $445 ($59) $747 $820 ($
Slide 34: YTD 2023 Financial Results
CONTAINS FORWARD-LOOKING STATEMENTS YTD 2023 Financial Results $ in Millions Adjusted EBITDA1 with Tax Attributes2 Ò Lower Adjusted EBITDA1 with Tax Attributes2 driven primarily by: -$91 • Significant LNG transaction margins in the $2,347 $2,256 prior year; and $109 $69 • Lower margins at AES Andes
Slide 35: YTD 2023 Adjusted EPS Decreased $0.15
CONTAINS FORWARD-LOOKING STATEMENTS YTD 2023 Adjusted EPS1 Decreased $0.15 $1.18 ($0.06) $1.03 ($0.05) ($0.04) − Significant LNG − New debt issuance YTD 2022: 23% transactions in 2022 in May YTD 2023: 26% + 2023 recovery of AES Ohio purchased power costs recognized in 2022 + Improved results at Flue
Slide 36: YTD 2023 Financial Results: Renewables
CONTAINS FORWARD-LOOKING STATEMENTS YTD 2023 Financial Results: Renewables $ in Millions Adjusted EBITDA1 with Tax Attributes2 Ò Higher Adjusted EBITDA1 with Tax Attributes2 driven primarily by: +$41 • Contributions from new projects; and • Higher margins in Colombia $626 $585 Ò Partially offset by:
Slide 37: YTD 2023 Financial Results: Utilities
CONTAINS FORWARD-LOOKING STATEMENTS YTD 2023 Financial Results: Utilities $ in Millions Adjusted PTC1 Ò Higher Adjusted PTC1 driven +$60 primarily by the 2023 recovery of AES Ohio purchased power costs as a part of ESP42 settlement, that were $160 recognized in 2022 Ò Partially offset by higher inte
Slide 38: YTD 2023 Financial Results: Energy Infrastructure
CONTAINS FORWARD-LOOKING STATEMENTS YTD 2023 Financial Results: Energy Infrastructure $ in Millions Adjusted EBITDA1 Ò Lower Adjusted EBITDA1 driven primarily by: -$188 • Significant LNG transaction margins in the prior year; $1,353 • Lower margins at AES Andes; and • Retirement of Hawaii coal plant
Slide 39: YTD 2023 Financial Results: New Energy Technologies
CONTAINS FORWARD-LOOKING STATEMENTS YTD 2023 Financial Results: New Energy Technologies $ in Millions Adjusted EBITDA1 Ò Higher Adjusted EBITDA1 driven primarily by improved results at Fluence ($61) ($88) +$27 YTD 2022 YTD 2023 1. A non-GAAP financial measure. See “definitions”. 39
Slide 40: Q3 Adjusted PTC: Reconciliation to Public Financials of Listed Subsidiaries
CONTAINS FORWARD-LOOKING STATEMENTS Q3 Adjusted PTC1: Reconciliation to Public Financials of Listed Subsidiaries & Public Filers AES SBU/Reporting Country Utilities/US AES Company IPL DPL $ in Millions Q3 2023 Q3 2022 Q3 2023 Q3 2022 US GAAP Reconciliation AES Business Unit Adjusted Earnings1,2 $25
Slide 41: Q3 Adjusted EBITDA: Reconciliation to Public Financials of Listed Subsidiaries
CONTAINS FORWARD-LOOKING STATEMENTS Q3 Adjusted EBITDA1: Reconciliation to Public Financials of Listed Subsidiaries & Public Filers AES SBU/Reporting Country Renewables & Energy Infrastructure/Chile Renewables/Brazil AES Company AES Andes 2 AES Brasil2 $ in Millions Q3 2023 Q3 2022 Q3 2023 Q3 2022 U
Slide 42: Q3 2023 Modeling Disclosures
CONTAINS FORWARD-LOOKING STATEMENTS Q3 2023 Modeling Disclosures $ in Millions Interest Expense Interest Income Depreciation & Amortization Adjusted PTC 1 Consolidated Attributable Ownership- Consolidated Attributable Ownership- Consolidated Attributable Ownership- to NCI Adjusted to NCI Adjusted to
Slide 43: Q3 2023 Modeling Disclosures
CONTAINS FORWARD-LOOKING STATEMENTS Q3 2023 Modeling Disclosures $ in Millions Total Debt as of September 30, 2023 2027 Forecasted Total Debt Ownership- Ownership- Consolidated Attributable to NCI Consolidated Attributable to NCI Adjusted Adjusted Renewables*,1 $8,197 ($2,093) $6,104 $16,200-$17,800
Slide 44: Q3 2023 Modeling Disclosures
CONTAINS FORWARD-LOOKING STATEMENTS Q3 2023 Modeling Disclosures $ in Millions Cash & Cash Equivalents, Restricted Cash, Short-Term Investments, Debt Service Reserves & Other Deposits Consolidated Attributable to NCI Ownership-Adjusted Renewables $1,311 ($454) $857 Utilities1 $104 ($10) $94 DPL $49
Slide 45: AES Modeling Disclosures
CONTAINS FORWARD-LOOKING STATEMENTS AES Modeling Disclosures $ in Millions 2023 Subsidiary Distributions (a) $1,350-$1,400 Cash Interest (b) ($175) Corporate Overhead ($115) Parent-Funded SBU Overhead ($100) Business Development/Taxes ($10) Cash for Development, General & Administrative and Tax (c)
Slide 46: 2023 SBU Modeling Ranges
CONTAINS FORWARD-LOOKING STATEMENTS 2023 SBU Modeling Ranges $ in Millions 2023 Adjusted EBITDA1 2022 Adjusted Modeling Ranges as of Drivers of Growth Versus 2022 EBITDA1 5/8/23 + New projects Renewables $605 $660-$730 − Sell-downs + Prior year one-time expenses at US utilities Utilities $612 $600-$
Slide 47: Year-to-Go 2023 Guidance Estimated Sensitivities
CONTAINS FORWARD-LOOKING STATEMENTS Year-to-Go 2023 Guidance Estimated Sensitivities YTG 2023 10% appreciation of USD against following currencies is forecasted to have the following Adjusted EPS impacts: Average Rate Sensitivity 1 Argentine Peso (ARS) 391.03 Less than ($0.005) Brazilian Real (BRL)
Slide 48: Limited Exposure to Fluctuations in Foreign Currency
CONTAINS FORWARD-LOOKING STATEMENTS Limited Exposure to Fluctuations in Foreign Currency 2023-2026 Cumulative Exposure Annualized Impact1 of 10% USD Appreciation on Composition by Currency Adjusted PTC2,3 After Hedging Non-USD Currencies $ in Millions Argentine Peso (ARS) ($8.0) Euro (EUR) ($5.0) US
Slide 49: PPAs Signed in YTD 2023
CONTAINS FORWARD-LOOKING STATEMENTS PPAs Signed in YTD 2023 AES Equity PPA Length Project Location Technology Gross MW Expected COD1 Interest (Years) AES Dominicana Dominican Republic Solar 170 85% 1H-2H 2024 15 AES Andes Chile Solar 146 99% In Operation2 17 Bellefield Phase 1 (AES Clean Solar 500 U
Slide 50: Reconciliation of Q3 Adjusted PTC and Adjusted EPS
CONTAINS FORWARD-LOOKING STATEMENTS Reconciliation of Q3 Adjusted PTC and Adjusted EPS1 Q3 2023 Q3 2022 Per Share (Diluted) Net Per Share (Diluted) Net Net of NCI2 Net of NCI2 $ in Millions, Except Per Share Amounts of NCI2 of NCI2 Income from Continuing Operations, Net of Tax, Attributable to AES a
Slide 51: Reconciliation of YTD Adjusted PTC and Adjusted EPS
CONTAINS FORWARD-LOOKING STATEMENTS Reconciliation of YTD Adjusted PTC and Adjusted EPS1 YTD 2023 YTD 2022 Per Share (Diluted) Net Per Share (Diluted) Net Net of NCI2 Net of NCI2 $ in Millions, Except Per Share Amounts of NCI2 of NCI2 Income from Continuing Operations, Net of Tax, Attributable to AE
Slide 52: Reconciliation of Q3 Adjusted EBITDA
CONTAINS FORWARD-LOOKING STATEMENTS Reconciliation of Q3 Adjusted EBITDA1 $ in Millions Q3 2023 Q3 2022 Net Income (Loss) $291 $446 Income Tax Expense (Benefit) $109 $145 Interest Expense $326 $276 Interest Income ($144) ($100) Depreciation and Amortization $286 $266 EBITDA $868 $1,033 1 Less: Adjus
Slide 53: Reconciliation of YTD Adjusted EBITDA
CONTAINS FORWARD-LOOKING STATEMENTS Reconciliation of YTD Adjusted EBITDA1 $ in Millions YTD 2023 YTD 2022 Net Income (Loss)` $461 $481 Income Tax Expense (Benefit) $179 $186 Interest Expense $966 $813 Interest Income ($398) ($270) Depreciation and Amortization $836 $800 EBITDA $2,044 $2,010 1 Less:
Slide 54: Reconciliation of 2020 Adjusted PTC and Adjusted EPS
CONTAINS FORWARD-LOOKING STATEMENTS Reconciliation of 2020 Adjusted PTC1 and Adjusted EPS1 FY 2020 $ in Millions, Except Per Share Amounts Net of NCI2 Per Share (Diluted) Net of NCI2 Income (Loss) from Continuing Operations, Net of Tax, Attributable to AES and Diluted EPS $43 $0.06 Add: Income Tax E
Slide 55: Reconciliation of Parent Free Cash Flow
CONTAINS FORWARD-LOOKING STATEMENTS Reconciliation of Parent Free Cash Flow1 $ in Millions 2022 2021 2020 Net Cash Provided by Operating Activities at the Parent Company2 $434 $570 $434 Subsidiary Distributions to QHCs Excluded from Schedule 13 $257 $47 $198 Subsidiary Distributions Classified in In
Slide 56: Assumptions
CONTAINS FORWARD-LOOKING STATEMENTS Assumptions Forecasted financial information is based on certain material assumptions. Such assumptions include, but are not limited to: (a) no unforeseen external events such as wars, depressions, or economic or political disruptions occur; (b) businesses continu
Slide 57: Definitions
CONTAINS FORWARD-LOOKING STATEMENTS Definitions Adjusted EBITDA, a non-GAAP measure, is defined by the Company as earnings before interest income and expense, taxes, depreciation and amortization, adjusted for the impact of NCI, interest, taxes, depreciation and amortization of our equity affiliates