AES Reaffirms 7% to 9% Annualized Growth Target Through 2025; Now Expects to Sign 5 GW of Renewables Under Long-Term Contracts in 2021

by in Finance

PVTIME – The AES Corporation (NYSE: AES) released its annualized growth target through 2025.

Strategic Accomplishments

  • Signed 4 GW of new PPAs for renewable energy projects in year-to-date 2021, increasing the backlog to 9.2 GW
  • Based on year-to-date 2021 progress, increasing full year 2021 target to sign renewables under long-term PPAs to 5 GW, from 4 GW
  • Received approval from the California State Water Resource Control Board for a two-year extension through 2023 for the operation of the 876 MW Southland Redondo Beach facility
  • Fluence completed its Initial Public Offering and began trading on October 28, 2021

Q3 2021 Financial Highlights

  • Diluted EPS of $0.48, compared to ($0.50) in Q3 2020
  • Adjusted EPS1 of $0.50, compared to $0.42 in Q3 2020

Financial Position and Outlook

  • Reaffirming 2021 Adjusted EPS1 guidance range of $1.50 to $1.58; now expecting low end of the range due to a non-cash adjustment related to equity units issued in March 2021, as a result of an updated interpretation of accounting literature
  • Reaffirming 7% to 9% annualized growth target through 2025, off a base year of 2020

The AES Corporation (NYSE: AES) today reported financial results for the quarter ended September 30, 2021.

“We continue to capitalize on our leadership position in the transformation of the electricity sector.  With our progress year-to-date, we now expect to add 5 GW of renewables to our backlog this year, representing a 25% increase from our prior target and 66% more than in 2020.  Our backlog is now the highest in our history at 9.2 GW, with 60% in the United States,” said Andrés Gluski, AES President and Chief Executive Officer.  “At the same time, our positive momentum continues at our AES Next technology businesses, including the public listing of Fluence, a leading pure-play energy storage technology provider and expanding our partnership with Google through the Nest Renew product.”

“Our year-to-date financial performance reflects the strength of our underlying business.  We remain on track to achieve our 2021 cash flow and credit goals while making good progress in advancing the growth of AES Clean Energy and our technology businesses,” said Stephen Coughlin, AES Executive Vice President and Chief Financial Officer.  “Based on our current outlook, we are confident in our 7% to 9% annualized growth target through 2025.”

Key Q3 2021 Financial Results

Third quarter 2021 Diluted Earnings Per Share from Continuing Operations (Diluted EPS) was $0.48, an increase of $0.98 compared to third quarter 2020, primarily reflecting higher impairments and losses on sale of businesses in 2020, and higher contributions from renewables growth and the Southland portfolio in the United States.  These positive drivers were partially offset by higher income tax expense and lower margins from the Company’s South America Strategic Business Unit (SBU).

Third quarter 2021 Adjusted Earnings Per Share1 (Adjusted EPS, a non-GAAP financial measure) was $0.50, an increase of $0.08 compared to third quarter 2020, primarily reflecting higher contributions from renewables growth and the Southland portfolio in the United States, as well as lower Parent Company interest expense.  These positive drivers were partially offset by lower contributions from the Company’s South America SBU. 

Detailed Strategic Overview

AES is leading the industry’s transition to clean energy by investing in clean power growth and innovative technology businesses. The Company is well-positioned to benefit from very favorable trends in clean power generation, distribution, and supporting technologies.

  • Year-to-date 2021, the Company completed construction or the acquisition of 643 MW of renewables and energy storage, primarily including:
    • 344 MW of solar and solar plus storage in the US at AES Clean Energy;
    • 159 MW Mandacaru and Salinas wind facility in Brazil;
    • 59 MW San Fernando solar facility in Colombia; and
    • 50 MW Bayasol solar facility in the Dominican Republic.
  • Since the Company’s second quarter 2021 earnings call in August, the Company has signed 1,088 MW of renewables and energy storage under long-term Power Purchase Agreements (PPA), primarily including 1,076 MW of solar, energy storage and wind at AES Clean Energy in the US.
  • Year-to-date 2021, the Company signed or agreed to acquire 4,000 MW of renewables and energy storage under long-term PPAs, bringing the Company’s backlog to 9,213 MW expected to be completed through 2024, including:
    • 2,645 MW under construction; and
    • 6,568 MW of renewables signed under long-term PPAs.
  • Fluence, the Company’s energy storage joint venture, completed its Initial Public Offering (IPO) in November 2021 (NASDAQ: FLNC). Following the IPO, the Company’s ownership interest in Fluence is approximately 34%.

Guidance and Expectations

The Company is reaffirming its 2021 Adjusted EPS1 guidance of $1.50 to $1.58, but now expects to be at the low end of the range reflecting a $0.07 per share non-cash adjustment to include approximately 40 million shares underlying the purchase contract component of the equity units issued in March 2021 in the Company’s EPS calculations.  This adjustment follows an updated interpretation of the accounting for the equity units.  Prior guidance, which was based on market practice and supported by accounting literature and the Company’s external auditors, assumed these additional shares would be included only upon settlement of the equity units in 2024; therefore, the Company is reaffirming its 7% to 9% annualized growth rate target through 2025, from a base year of 2020.

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