2020 Strategic Accomplishments

• Signed 3 GW of new PPAs for renewables and energy storage, bringing backlog to 6.9 GW
• Fluence maintained its global lead in the energy storage market by signing 785 MW in 2020, bringing total delivered or awarded to 2.4 GW
• Attained a second investment grade rating
• Announced the retirement or sale of 4.5 GW of coal generation, which is now 25% of total generation on a proforma basis

2020 Financial Highlights

• Diluted EPS of $0.06, compared to $0.45 in 2019
• Adjusted EPS of $1.44, compared to $1.36 in 2019 and 2020 guidance of $1.32 to $1.42

Financial Position and Outlook

• Initiating 2021 guidance for Adjusted EPS of $1.50 to $1.58
• Holding a Virtual Investor Day on March 3, 2021 to review strategy and longer-term financial outlook

The AES Corporation (NYSE: AES) today reported financial results for the year ended December 31, 2020.

"We had a strong year in 2020, meeting or exceeding all of our strategic and financial objectives," said Andrés Gluski, AES President and Chief Executive Officer.  "We made great progress in our transition toward a low-carbon future and consolidated our position as market leader in new and innovative technologies, renewables, and cloud-based customer and efficiency solutions.  That we were able to accelerate our growth, and deliver on our original financial guidance in the midst of a global pandemic, is a testament to the quality and dedication of our people and the resilience of our business model."

"We are very pleased with our performance during 2020, including attaining a second investment grade rating and reducing our generation from coal to 25% on a proforma basis.  We signed 3 GW of renewables under long-term contracts, bringing our backlog to 6.9 GW expected to come on-line through 2023.  We also significantly outperformed the S&P Utilities Index and the S&P 500 Index, with a total shareholder return of 22%," said Gustavo Pimenta, AES Executive Vice President and Chief Financial Officer.  "In 2021, we expect to deliver Adjusted EPS of $1.50 to $1.58, in line with our expectation of 7% to 9% average annual growth.  We look forward to discussing our longer-term outlook with you at our Virtual Investor Day next week."

Key Full Year 2020 Financial Results

Full year 2020 Diluted Earnings Per Share from Continuing Operations (Diluted EPS) was $0.06, a decrease of $0.39 compared to full year 2019.  Full year 2020 results reflect: an impact of $0.76 from higher net charges related to impairments and early retirement of debt; a gain of $0.20 from the early termination of a contract in Chile; and $0.17 of higher contributions primarily from the commencement of new businesses, higher contributions from the South America Strategic Business Unit (SBU), and lower income tax expense.

Full year 2020 Adjusted Earnings Per Share (Adjusted EPS, a non-GAAP financial measure) was $1.44, an increase of $0.08, primarily reflecting contributions from new businesses, including renewables and the Southland repowering, improved performance at the South America SBU, cost savings and deleveraging initiatives, as well as a lower adjusted tax rate.  These positive drivers were partially offset by lower demand at utilities as a result of the COVID-19 pandemic.

Detailed Strategic Highlights

AES is leading the industry's transition to clean energy by investing in sustainable growth and innovative solutions.  The Company is taking advantage of favorable trends in clean power generation, transmission and distribution, and LNG infrastructure to deliver superior results.

Through its presence in key growth markets, AES is well-positioned to benefit from the global transition toward a more sustainable power generation mix.

• In 2020, the Company completed construction of 2,318 MW of new projects, including:
  • 1,299 MW Southland Repowering in Southern California;
  • 240 MW Highlander solar facility in Virginia;
  • 200 MW Prevailing Winds wind facility in South Dakota;
  • 100 MW Vientos Bonaerenses wind facility in Argentina;
  • 100 MW Vientos Neuquinos wind facility in Argentina;
  • 100 MW Southland Energy - Alamitos Energy storage facility in California;
  • 100 MW East Line Solar facility in Arizona;
  • 80 MW Andes 2a solar facility in Chile;
  • 56 MW of solar and solar plus storage in the US at AES Distributed Energy;
  • 28 MW Na Pua Makani wind facility in Hawaii;
  • 10 MW Alfalfal Virtual Reservoir energy storage facility in Chile;
  • 4 MW Opico solar facility in El Salvador; and
  • 1 MW Brazil Community Solar facility in Brazil.

• In 2020, the Company signed 3,017 MW of renewables and energy storage under long-term Power Purchase Agreements (PPA):
  • 1,180 MW of energy storage, solar and solar plus storage in the US and El Salvador;
  • 1,171 MW of wind and solar at AES Gener in Chile and Colombia;
  • 346 MW of wind at AES Brasil;
  • 211 MW of wind and solar in Panama and the Dominican Republic; and
  • 109 MW of wind in Mexico.

• The Company's backlog of 6,909 MW of renewables now includes:
  • 1,850 MW under construction and expected on-line through 2022; and
  • 5,059 MW signed under long-term PPAs.

• The Company has reduced its coal-fired generation to 25% of total generation volume (proforma for asset sales and retirements announced in 2020) and is on track to further reduce its coal-fired generation to less than 10% by year-end 2030.

The Company is developing and deploying innovative solutions such as battery-based energy storage, digital customer interfaces and energy management.

• Fluence, the Company's joint venture with Siemens, is the global leader in the fast-growing energy storage market, which is expected to increase by 15 to 20 GW annually.
  • In 2020, Fluence signed 785 MW of new contracts, bringing its total delivered or awarded to 2.4 GW.
  • In December 2020, the Qatar Investment Authority (QIA) agreed to invest $125 million in Fluence through a private placement transaction, valuing Fluence at more than $1 billion.

Guidance and Expectations¹

The Company is initiating 2021 guidance for Adjusted EPS of $1.50 to $1.58.  Growth in 2021 is expected to be primarily driven by: contributions from new businesses, including Southland Energy in California, which came on-line in mid-2020 and approximately 4 GW of backlog projects expected to be completed in 2021; benefits from cost savings and digital initiatives; and reduced Parent Company interest from refinancings in 2020.  The Company will review its strategy and longer-term financial outlook at its Virtual Investor Day on Wednesday, March 3, 2021.  

The Company's 2021 guidance is based on foreign currency and commodity forward curves as of December 31, 2020.

Non-GAAP Financial Measures

See Non-GAAP Measures for definitions of Adjusted Earnings Per Share and Adjusted Pre-Tax Contributions, 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 Thursday, February 25, 2021 at 9:00 a.m. Eastern Standard Time (EST).  Interested parties may listen to the teleconference by dialing 1-888-317-6003 at least ten minutes before the start of the call. International callers should dial +1-412-317-6061.  The Conference ID for this call is 2262772.  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.

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 the COVID-19 pandemic, 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 and rates of return consistent with prior experience.

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' 2020 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.

Any Stockholder who desires a copy of the Company's 2020 Annual Report on Form 10-K filed February 25, 2021 with the SEC may obtain a copy (excluding Exhibits) 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 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
NON-GAAP FINANCIAL MEASURES
(Unaudited)
RECONCILIATION OF ADJUSTED PRE-TAX CONTRIBUTION (PTC) AND ADJUSTED EPS
 

Adjusted PTC is defined as pre-tax income from continuing operations attributable to The AES Corporation excluding gains or losses of the consolidated entity due to (a) unrealized gains or losses related to derivative transactions and equity securities; (b) unrealized foreign currency gains or losses; (c) gains, losses, benefits and costs associated with dispositions and acquisitions of business interests, including early plant closures, and gains and losses recognized at commencement of sales-type leases; (d) losses due to impairments; (e) gains, losses and costs due to the early retirement of debt; (f) costs directly associated with a major restructuring program, including, but not limited to, workforce reduction efforts, relocations, and office consolidation; and (g) net gains at Angamos, one of our businesses in the South America SBU, associated with the early contract terminations with Minera Escondida and Minera Spence. Adjusted PTC also includes net equity in earnings of affiliates on an after-tax basis adjusted for the same gains or losses excluded from consolidated entities.

Adjusted EPS is defined as diluted earnings per share from continuing operations excluding gains or losses of both consolidated entities and entities accounted for under the equity method due to (a) unrealized gains or losses related to derivative transactions and equity securities; (b) unrealized foreign currency gains or losses; (c) gains, losses, benefits and costs associated with dispositions and acquisitions of business interests, including early plant closures, the tax impact from the repatriation of sales proceeds, and gains and losses recognized at commencement of sales-type leases; (d) losses due to impairments; (e) gains, losses and costs due to the early retirement of debt; (f) costs directly associated with a major restructuring program, including, but not limited to, workforce reduction efforts, relocations and office consolidation; (g) net gains at Angamos, one of our businesses in the South America SBU, associated with the early contract terminations with Minera Escondida and Minera Spence; and (h) tax benefit or expense related to the enactment effects of 2017 U.S. tax law reform and related regulations and any subsequent period adjustments related to enactment effects.

The GAAP measure most comparable to Adjusted PTC is income from continuing operations attributable to The AES Corporation. The GAAP measure most comparable to Adjusted EPS is diluted earnings per share from continuing operations. We believe that Adjusted PTC and Adjusted EPS better reflect the underlying business performance of the Company and are considered in the Company's internal evaluation of financial performance. Factors in this determination include the variability due to unrealized gains or losses related to derivative transactions or equity securities remeasurement, unrealized foreign currency gains or losses, losses due to impairments, strategic decisions to dispose of or acquire business interests, retire debt or implement restructuring initiatives, and the non-recurring nature of the impact of the early contract terminations at Angamos, which affect results in a given period or periods. In addition, for Adjusted PTC, earnings before tax represents the business performance of the Company before the application of statutory income tax rates and tax adjustments, including the effects of tax planning, corresponding to the various jurisdictions in which the Company operates. Adjusted PTC and Adjusted EPS should not be construed as alternatives to income from continuing operations attributable to The AES Corporation and diluted earnings per share from continuing operations, which are determined in accordance with GAAP.

For the year ended December 31, 2020, the Company changed the definitions of Adjusted Operating Margin, Adjusted PTC and Adjusted EPS to exclude net gains at Angamos, one of our businesses in the South America SBU, associated with the early contract terminations with Minera Escondida and Minera Spence. We believe the inclusion of the effects of this non-recurring transaction would result in a lack of comparability in our results of operations and would distort the metrics that our investors use to measure us.