The Aes Corporation · NYSE:AES
The Aes — Q2 2023 Earnings Presentation
57 slides from The Aes's earnings presentation, Aug 4, 2023
Slide 1: The AES Corporation Second Quarter 2023 Financial Review
The AES Corporation Second Quarter 2023 Financial Review August 4, 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 Priorities
CONTAINS FORWARD-LOOKING STATEMENTS Financial Results & Strategic Priorities Financial Results à Q2 2023 Adjusted EBITDA1 with Tax Attributes2 of $607 million • Adjusted EBITDA1 of $569 million and Tax Attributes2 of $38 million à Q2 2023 Adjusted EPS1 of $0.21 Strategic Priorities à Triple installe
Slide 4: AES is Among the Fastest Growing Renewables Companies
CONTAINS FORWARD-LOOKING STATEMENTS AES is Among the Fastest Growing Renewables Companies Capacity in GW 2.1 2.2 0.1 PPAs Signed as of May 8, 20231 PPAs Signed Since May 8, 2023 Total PPAs Signed in YTD 2023 #1 Seller Globally of Clean Energy to Corporations Through PPAs in 2021 and 20222 1. Exclude
Slide 5: Customer Relationships Driving Strategic Acquisitions
CONTAINS FORWARD-LOOKING STATEMENTS Customer Relationships Driving Strategic Acquisitions 185 MW Delta (Wind) 2 GW Bellefield1 (Solar + Storage) Mississippi California à First utility-scale wind project in Mississippi à Largest solar-plus-storage project in the US 1. 1 GW of solar and 1 GW of energy
Slide 6: Backlog of 13.2 GW is Largest in AES' History
CONTAINS FORWARD-LOOKING STATEMENTS Backlog of 13.2 GW is Largest in AES’ History Capacity in GW 41% Under Construction Signed PPAs, Not Yet 59% Under Construction Majority of Backlog Expected to Come Online Over the Next Three Years 6
Slide 7: In Q2 2023, We Completed Landmark Projects
CONTAINS FORWARD-LOOKING STATEMENTS In Q2 2023, We Completed Landmark Projects 238 MW Chevelon Butte Phase 1 (Wind) 292 MW1 Andes 2b (Solar + Storage) Arizona Chile à One of the first projects to qualify for the 10% à Includes 5B prefabricated solar panels Energy Community Tax Credit Bonus à Largest
Slide 8: On Track to Complete 3.4 GW of New Projects in 2023
CONTAINS FORWARD-LOOKING STATEMENTS On Track to Complete 3.4 GW of New Projects in 2023, Including 0.8 GW YTD Capacity in GW 5.4 GW Currently Under Construction 46% Expected 2023 CODs1,2 Expected 2024-2025 CODs1 54% 1. Commercial Operations Date. 8 2. Excludes 786 MW completed in 1H 2023 and the com
Slide 9: AES is Among the Fastest Growing US Utilities
CONTAINS FORWARD-LOOKING STATEMENTS AES is Among the Fastest Growing US Utilities Recent Developments in Our Utility Growth Plan à Expect Commission approval for new Electric à Filed new rate case in June Security Plan (ESP4) by end of August • First rate case since 2018 à New distribution rates eff
Slide 10: Continued Progress on the Transformation of Our Portfolio
CONTAINS FORWARD-LOOKING STATEMENTS Continued Progress on the Transformation of Our Portfolio Capacity in GW Intend to Exit Coal by Year-End 20251, While Tripling Renewables Capacity Coal Exit Milestones in Q2 2023 à Retired 415 MW Petersburg Unit 2 in 46% Indiana 79% à Announced retirement of 276 M
Slide 11: Application of New Technologies is a Significant Competitive Advantage
CONTAINS FORWARD-LOOKING STATEMENTS Application of New Technologies is a Significant Competitive Advantage à Utilizing embedded artificial intelligence, including generative AI, across our operations • Wind production forecasting • Vegetation management at utilities • Identification of isolated sola
Slide 12: Q2 2023 Financial Review
CONTAINS FORWARD-LOOKING STATEMENTS Q2 2023 Financial Review à Q2 2023 results à 2023 Parent capital allocation à 2023 guidance 12
Slide 13: Q2 2023 Financial Results
CONTAINS FORWARD-LOOKING STATEMENTS Q2 2023 Financial Results $ in Millions Adjusted EBITDA with Tax Attributes1 Ò Lower Adjusted EBITDA with Tax -$115 Attributes1 driven primarily by • Lower margins at AES Andes; and $722 • Higher costs at Renewables SBU due to an accelerated growth plan $36 $607 Ò
Slide 14: Q2 2023 Adjusted EPS Decreased $0.13
CONTAINS FORWARD-LOOKING STATEMENTS Q2 2023 Adjusted EPS1 Decreased $0.13 $0.34 $0.21 ($0.11) ($0.02) − Lower margins at AES Andes − Higher costs at Renewables SBU + Higher availability at select thermal units Q2 2022 SBUs/Corporate Parent Interest Q2 2023 1. A non-GAAP financial measure. See Append
Slide 15: Q2 2023 Financial Results: Renewables
CONTAINS FORWARD-LOOKING STATEMENTS Q2 2023 Financial Results: Renewables $ in Millions Adjusted EBITDA with Tax Attributes1 Ò Higher Adjusted EBITDA1 with Tax Attributes driven primarily by: +$6 • Higher wind generation; and • Contributions from new projects Ò Partially offset by: $198 $204 • Highe
Slide 16: Q2 2023 Financial Results: Utilities
CONTAINS FORWARD-LOOKING STATEMENTS Q2 2023 Financial Results: Utilities $ in Millions Adjusted PTC1 Ò Higher Adjusted PTC1 driven primarily by lower maintenance expenses +$5 Ò Partially offset by higher interest $21 expense due to new debt transactions $16 Q2 2022 Q2 2023 1. A non-GAAP financial me
Slide 17: Q2 2023 Financial Results: Energy Infrastructure
CONTAINS FORWARD-LOOKING STATEMENTS Q2 2023 Financial Results: Energy Infrastructure $ in Millions Adjusted EBITDA1 Ò Lower Adjusted EBITDA1 driven -$97 primarily by lower margins at AES Andes $379 Ò Partially offset by higher availability at select thermal units $282 Q2 2022 Q2 2023 1. A non-GAAP f
Slide 18: Q2 2023 Financial Results: New Energy Technologies
CONTAINS FORWARD-LOOKING STATEMENTS Q2 2023 Financial Results: New Energy Technologies $ in Millions Adjusted EBITDA1 Ò Higher Adjusted EBITDA1 driven primarily by improved results at Fluence ($13) ($26) +$13 Q2 2022 Q2 2023 1. A non-GAAP financial measure. See Appendix for definition and reconcilia
Slide 19: 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 $112 $2,900 $28 ($108) ($213) + New − Lower LNG renewables sales + Prior year + Prior year one-time one-time expenses at expenses US utilities 2022 Actual YTD 2023 vs
Slide 20: Reaffirming 2023 Adjusted EPS Guidance
CONTAINS FORWARD-LOOKING STATEMENTS Reaffirming 2023 Adjusted EPS1 Guidance $ in Millions $1.65- $0.24 $1.75 $1.67 ($0.03) ($0.06) ($0.12) + New 2022: 25% renewables 2023: 26%-28% + Prior year one- time expenses − Lower LNG sales 2022 Actual YTD 2023 vs. SBUs/Corporate Parent Interest Tax 2023 Guida
Slide 21: 2023 Parent Capital Allocation Plan
CONTAINS FORWARD-LOOKING STATEMENTS 2023 Parent Capital Allocation Plan $ 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 $899 $950- $1,000 $1,747- $24 $1,997 Beginning Parent FCF
Slide 22: Key Takeaways
CONTAINS FORWARD-LOOKING STATEMENTS Key Takeaways à Reaffirming 2023 guidance for all metrics and targeted annualized growth rates through 2027 à We continue to make substantial progress on our strategic priorities, including: • Tripling our installed renewables capacity by 2027 • Increasing the rat
Slide 23: Appendix
CONTAINS FORWARD-LOOKING STATEMENTS Appendix Parent Only Cash Flow & Liquidity Slides 24-26 Recourse & Non-Recourse Debt Slides 27-32 Q2 & 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 Q2 YTD $ in Millions 2022 2023 2022 2023 Sources Total Subsidiary Distributions1 $311 $205 $476 $561 Proceeds from Asset Sales, Net - - - $98 Financing Proceeds, Net - $890 - $890 Increased/(Decreased) Credit Facility Commitmen
Slide 25: Q2 & YTD 2023 Subsidiary Distributions
CONTAINS FORWARD-LOOKING STATEMENTS Q2 & YTD 2023 Subsidiary Distributions1 $ in Millions Subsidiary Distributions1 by SBU Q2 2023 YTD Renewables $49 $83 Utilities $28 $50 Energy Infrastructure $88 $385 New Energy Technologies - - Corporate2 $40 $43 Total $205 $561 Top Subsidiary Distributions1 by B
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 June 30, March 31, December 31, September 30, 2023 2023 2022 2022 Total Subsidiary Distributions1 to Parent & QHCs2 $205 $356 $753 $69 Total Return of Capital Dis
Slide 27: Recourse Debt Summary
CONTAINS FORWARD-LOOKING STATEMENTS Recourse Debt Summary $ in Millions, Except Percentages; as of June 30, 2023 SBU Principal Interest Rate Maturity Ratings Balance 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 Rate Te
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 June 30, 2023 Recourse Debt $3,400 Weighted Average All-in Cost 3.69% Weighted Average Maturity 4.4 years Percentage Fixed or Hedged 86% $900 $500 Percentage in Functional Currency 100% 200 202
Slide 29: Q2 2023 Non-Recourse Debt Schedule
Q2 2023 Non-Recourse Debt1 Schedule As of June 30, 2023, $ in Millions, Except Percentages Debt Maturity Schedule June 30, 2023 June 30, Total Balance Ownership 2023 Total 2028 and SBU/Business Country/State 2023 2024 2025 2026 2027 (Ownership- Percentage Balance Thereafter Adjusted) Renewables AES
Slide 30: Q2 2023 Non-Recourse Debt Schedule
Q2 2023 Non-Recourse Debt1 Schedule As of June 30, 2023, $ in Millions, Except Percentages Debt Maturity Schedule June 30, 2023 June 30, Total Balance Ownership 2023 Total 2028 And SBU/Business Country/State 2023 2024 2025 2026 2027 (Ownership- Percentage Balance Thereafter Adjusted) Energy Infrastr
Slide 31: $21.1 Billion of Non-Recourse Debt
CONTAINS FORWARD-LOOKING STATEMENTS $21.1 Billion of Non-Recourse Debt1 $ in Millions, as of June 30, 2023 Utilities Non-Recourse Debt $5,093 Weighted Average All-in Cost 5.61% 24% Weighted Average Maturity 8.6 years Percentage Fixed or Hedged 69% $15,960 76% Percentage in Functional Currency ~100%
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 June 30, 2023 Recourse Debt1 Non-Recourse Recourse Debt Debt $5,000 Weighted Average 3.69% 5.61% All-in Cost 19% Weighted Average 4.4 years 8.6 years M
Slide 33: Q2 & YTD Adjusted EPS Roll-Up
CONTAINS FORWARD-LOOKING STATEMENTS Q2 & YTD Adjusted EPS1 Roll-Up $ in Millions, Except Per Share Amounts Q2 2023 Q2 2022 Variance YTD 2023 YTD 2022 Variance Adjusted PTC1 Renewables $106 $126 ($20) $138 $171 ($33) Utilities $21 $16 $5 $59 $85 ($26) Energy Infrastructure $150 $203 ($53) $361 $375 (
Slide 34: YTD 2023 Financial Results
CONTAINS FORWARD-LOOKING STATEMENTS YTD 2023 Financial Results $ in Millions Adjusted EBITDA with Tax Attributes1 Ò Lower Adjusted EBITDA1 driven primarily by: -$108 • Lower margins at AES Andes • Unfavorable weather at AES Indiana and $1,356 AES Ohio; and $49 $1,248 • Retirement of Hawaii coal plan
Slide 35: YTD 2023 Adjusted EPS Decreased $0.12
CONTAINS FORWARD-LOOKING STATEMENTS YTD 2023 Adjusted EPS1 Decreased $0.12 $0.55 $0.01 $0.43 ($0.11) ($0.02) YTD 2022: 24% − Lower margins at AES YTD 2023: 22% Andes − Unfavorable weather at AES Indiana and AES Ohio − Retirement of Hawaii coal plant + Favorable LNG transactions + Higher availability
Slide 36: YTD 2023 Financial Results: Renewables
CONTAINS FORWARD-LOOKING STATEMENTS YTD 2023 Financial Results: Renewables $ in Millions Adjusted EBITDA with Tax Attributes1 Ò Higher Adjusted EBITDA1 driven primarily by: +$9 • Contributions from new projects; and • Higher wind generation $330 $341 Ò Partially offset by higher fixed costs $49 $51
Slide 37: YTD 2023 Financial Results: Utilities
CONTAINS FORWARD-LOOKING STATEMENTS YTD 2023 Financial Results: Utilities $ in Millions Adjusted PTC1 Ò Lower Adjusted PTC1 driven primarily -$26 by: • Unfavorable weather at AES Indiana and $85 AES Ohio; and • Higher interest expense Ò Partially offset by rate base growth $59 YTD 2022 YTD 2023 1. A
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: -$88 • Lower margins at AES Andes; and $733 • Retirement of Hawaii coal plant $645 Ò Partially offset by: • Favorable LNG transactions; a
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 ($39) ($61) +$22 YTD 2022 YTD 2023 1. A non-GAAP financial measure. See “definitions”. 39
Slide 40: Q2 Adjusted PTC: Reconciliation to Public Financials of Listed Subsidiaries
CONTAINS FORWARD-LOOKING STATEMENTS Q2 Adjusted PTC1: Reconciliation to Public Financials of Listed Subsidiaries & Public Filers AES SBU/Reporting Country Utilities/US AES Company IPL DPL $ in Millions Q2 2023 Q2 2022 Q2 2023 Q2 2022 US GAAP Reconciliation AES Business Unit Adjusted Earnings1,2 $5 (
Slide 41: Q2 Adjusted EBITDA: Reconciliation to Public Financials of Listed Subsidiaries
CONTAINS FORWARD-LOOKING STATEMENTS Q2 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 Q2 2023 Q2 2022 Q2 2023 Q2 2022 U
Slide 42: Q2 2023 Modeling Disclosures
CONTAINS FORWARD-LOOKING STATEMENTS Q2 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: Q2 2023 Modeling Disclosures
CONTAINS FORWARD-LOOKING STATEMENTS Q2 2023 Modeling Disclosures $ in Millions Total Debt as of June 30, 2023 2027 Forecasted Total Debt Consolidated Attributable to NCI Ownership-Adjusted Consolidated Attributable to NCI Ownership-Adjusted Renewables*,1 $7,382 ($1,939) $5,443 $16,200-$17,800 ($6,00
Slide 44: Q2 2023 Modeling Disclosures
CONTAINS FORWARD-LOOKING STATEMENTS Q2 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 $1,367 ($534) $832 Utilities1 $195 ($36) $159 DPL $45
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 Interest Rates1 100 bps increase in interest rates over 2023 is forecasted to have a change in Adjusted EPS of ($0.01) 10% appreciation of USD against following YTG 2023 currencies is forecasted to have the followin
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 Q2 Adjusted PTC and Adjusted EPS
CONTAINS FORWARD-LOOKING STATEMENTS Reconciliation of Q2 Adjusted PTC and Adjusted EPS1 Q2 2023 Q2 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 Q2 Adjusted EBITDA
CONTAINS FORWARD-LOOKING STATEMENTS Reconciliation of Q2 Adjusted EBITDA1 $ in Millions Q2 2023 Q2 2022 Net Income (Loss) ($19) ($136) Income Tax Expense (Benefit) ($2) ($19) Interest Expense $310 $279 Interest Income ($131) ($95) Depreciation and Amortization $277 $264 EBITDA $435 $293 1 Less: Adju
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)` $170 $35 Income Tax Expense (Benefit) $70 $41 Interest Expense $640 $537 Interest Income ($254) ($170) Depreciation and Amortization $550 $534 EBITDA $1,176 $977 1 Less: Adju
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