AES Attains Third Investment Grade Credit Rating and Reaffirms 2022 Adjusted EPS Guidance

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 quarter ended March 31, 2022.  The Company is not able to provide a corresponding GAAP equivalent or reconciliation for its Adjusted EPS guidance without unreasonable effort.

THE AES CORPORATION
Condensed Consolidated Statements of Operations (Unaudited)

Three Months Ended March 31,

2022

2021

(in millions, except per share amounts)

Revenue:

  Regulated

$                       835

$                       707

  Non-Regulated

2,017

1,928

    Total revenue

2,852

2,635

Cost of Sales:

  Regulated

(705)

(582)

  Non-Regulated

(1,617)

(1,389)

    Total cost of sales

(2,322)

(1,971)

  Operating margin

530

664

  General and administrative expenses

(52)

(46)

  Interest expense

(258)

(190)

  Interest income

75

68

  Loss on extinguishment of debt

(6)

(1)

  Other expense

(12)

(16)

  Other income

6

43

  Gain (loss) on disposal and sale of business interests

1

(5)

  Asset impairment expense

(1)

(473)

  Foreign currency transaction losses

(19)

(35)

  INCOME FROM CONTINUING OPERATIONS BEFORE TAXES AND EQUITY IN EARNINGS OF AFFILIATES

264

9

  Income tax expense

(60)

(8)

  Net equity in losses of affiliates

(33)

(30)

  NET INCOME (LOSS)

171

  Less: Net income attributable to noncontrolling interests and redeemable stock of subsidiaries

(56)

(119)

  NET INCOME (LOSS) ATTRIBUTABLE TO THE AES CORPORATION

$                       115

$                     (148)

BASIC EARNINGS PER SHARE:

  NET INCOME (LOSS) ATTRIBUTABLE TO THE AES CORPORATION COMMON STOCKHOLDERS

$                     0.17

$                    (0.22)

DILUTED EARNINGS PER SHARE:

  NET INCOME (LOSS) ATTRIBUTABLE TO THE AES CORPORATION COMMON STOCKHOLDERS

$                     0.16

$                    (0.22)

DILUTED SHARES OUTSTANDING

711

666

THE AES CORPORATION
Strategic Business Unit (SBU) Information
(Unaudited)

Three Months Ended March 31,

(in millions)

2022

2021

  REVENUE

    US and Utilities SBU

$               1,117

$                  949

    South America SBU

810

884

    MCAC SBU

566

535

    Eurasia SBU

368

270

    Corporate and Other

23

24

    Eliminations

(32)

(27)

    Total Revenue

$               2,852

$               2,635

THE AES CORPORATION
Condensed Consolidated Balance Sheets (Unaudited)

March 31, 2022

December 31,
2021

(in millions, except share

and per share data)

ASSETS

  CURRENT ASSETS

    Cash and cash equivalents

$                           1,056

$                               943

    Restricted cash

334

304

    Short-term investments

440

232

    Accounts receivable, net of allowance for doubtful accounts of $5 and $5, respectively

1,523

1,418

    Inventory

688

604

    Prepaid expenses

91

142

    Other current assets

1,110

897

    Current held-for-sale assets

900

816

      Total current assets

6,142

5,356

NONCURRENT ASSETS

  Property, Plant and Equipment:

    Land

443

426

    Electric generation, distribution assets and other

26,112

25,552

    Accumulated depreciation

(8,734)

(8,486)

    Construction in progress

2,632

2,414

      Property, plant and equipment, net

20,453

19,906

  Other Assets:

    Investments in and advances to affiliates

1,081

1,080

    Debt service reserves and other deposits

172

237

    Goodwill

1,182

1,177

    Other intangible assets, net of accumulated amortization of $411 and $385, respectively

1,585

1,450

    Deferred income taxes

385

409

    Other noncurrent assets, net of allowance of $23 and $23, respectively

2,489

2,188

    Noncurrent held-for-sale assets

1,159

1,160

      Total other assets

8,053

7,701

  TOTAL ASSETS

$                        34,648

$                        32,963

LIABILITIES AND EQUITY

  CURRENT LIABILITIES

    Accounts payable

$                           1,288

$                           1,153

    Accrued interest

199

182

    Accrued non-income taxes

294

266

    Accrued and other liabilities

1,140

1,205

    Non-recourse debt, including $657 and $302, respectively, related to variable interest entities

2,254

1,367

    Current held-for-sale liabilities

578

559

      Total current liabilities

5,753

4,732

NONCURRENT LIABILITIES

    Recourse debt

3,982

3,729

    Non-recourse debt, including $1,909 and $2,223, respectively, related to variable interest entities

14,016

13,603

    Deferred income taxes

1,035

977

    Other noncurrent liabilities

3,275

3,358

    Noncurrent held-for-sale liabilities

739

740

      Total noncurrent liabilities

23,047

22,407

Commitments and Contingencies

Redeemable stock of subsidiaries

1,134

1,257

EQUITY

THE AES CORPORATION STOCKHOLDERS' EQUITY

    Preferred stock (without par value, 50,000,000 shares authorized; 1,043,500 issued and outstanding at March 31, 2022 and December 31, 2021, respectively)

838

838

    Common stock ($0.01 par value, 1,200,000,000 shares authorized; 818,735,314 issued and 667,859,645 outstanding at March 31, 2022 and 818,717,043 issued and 666,793,625 outstanding at December 31, 2021)

8

8

    Additional paid-in capital

6,903

7,106

    Accumulated deficit

(974)

(1,089)

    Accumulated other comprehensive loss

(1,899)

(2,220)

    Treasury stock, at cost (150,875,669 and 151,923,418 shares at March 31, 2022 and December 31, 2021, respectively)

(1,832)

(1,845)

      Total AES Corporation stockholders' equity

3,044

2,798

NONCONTROLLING INTERESTS

1,670

1,769

      Total equity

4,714

4,567

TOTAL LIABILITIES AND EQUITY

$                        34,648

$                        32,963

THE AES CORPORATION
Condensed Consolidated Statements of Cash Flows
(Unaudited)

Three Months Ended March 31,

2022

2021

(in millions)

OPERATING ACTIVITIES:

  Net income (loss)

$                    171

$                     (29)

  Adjustments to net income (loss):

    Depreciation and amortization

270

275

    Loss (gain) on disposal and sale of business interests

(1)

5

    Impairment expense

1

473

    Deferred income taxes

(7)

21

    Loss on extinguishment of debt

6

1

    Loss (gain) on sale and disposal of assets

4

(20)

    Loss of affiliates, net of dividends

33

36

    Emissions allowance expense

118

58

    Other

50

19

  Changes in operating assets and liabilities:

    (Increase) decrease in accounts receivable

(77)

(79)

    (Increase) decrease in inventory

(44)

14

    (Increase) decrease in prepaid expenses and other current assets

59

22

    (Increase) decrease in other assets

(10)

31

    Increase (decrease) in accounts payable and other current liabilities

(124)

(337)

    Increase (decrease) in income tax payables, net and other tax payables

7

(92)

    Increase (decrease) in deferred income

10

(142)

    Increase (decrease) in other liabilities

(9)

(3)

  Net cash provided by operating activities

457

253

INVESTING ACTIVITIES:

  Capital expenditures

(766)

(432)

  Sale of short-term investments

197

257

  Purchase of short-term investments

(345)

(130)

  Contributions and loans to equity affiliates

(93)

(64)

  Purchase of emissions allowances

(136)

(31)

  Other investing

(10)

13

  Net cash used in investing activities

(1,153)

(387)

FINANCING ACTIVITIES:

  Borrowings under the revolving credit facilities

1,193

792

  Repayments under the revolving credit facilities

(715)

(793)

  Issuance of recourse debt

—

7

  Repayments of recourse debt

(29)

(7)

  Issuance of non-recourse debt

1,710

307

  Repayments of non-recourse debt

(788)

(320)

  Payments for financing fees

(27)

(5)

  Distributions to noncontrolling interests

(47)

(17)

  Acquisitions of noncontrolling interests

(535)

(13)

  Contributions from noncontrolling interests

8

94

  Sales to noncontrolling interests

48

1

  Issuance of preferred shares in subsidiaries

60

—

  Issuance of preferred stock

—

1,017

  Dividends paid on AES common stock

(105)

(100)

  Payments for financed capital expenditures

(4)

(1)

  Other financing

49

31

  Net cash provided by financing activities

818

993

  Effect of exchange rate changes on cash, cash equivalents and restricted cash

20

(22)

  Increase in cash, cash equivalents and restricted cash of held-for-sale businesses

(64)

(58)

  Total increase in cash, cash equivalents and restricted cash

78

779

  Cash, cash equivalents and restricted cash, beginning

1,484

1,827

  Cash, cash equivalents and restricted cash, ending

$               1,562

$               2,606

SUPPLEMENTAL DISCLOSURES:

  Cash payments for interest, net of amounts capitalized

$                    185

$                    167

  Cash payments for income taxes, net of refunds

46

50

SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:

  Dividends declared but not yet paid

105

101

  Non-cash consideration transferred for the Clean Energy transaction

—

119

Three Months Ended
March 31, 2022

Three Months Ended
March 31, 2021

Net of NCI
⁽¹⁾

Per Share
(Diluted)
Net of NCI ⁽¹⁾

Net of NCI
⁽¹⁾

Per Share
(Diluted)
Net of NCI ⁽¹⁾

(in millions, except per share amounts)

Income (loss) from continuing operations, net of tax, attributable to AES and Diluted EPS

$       115

$      0.16

$      (148)

$     (0.22)

Add: Income tax expense (benefit) from continuing operations attributable to AES

50

(36)

Pre-tax contribution

$       165

$      (184)

Adjustments

Unrealized derivative and equity securities losses

$         41

$      0.06

(2)

$         69

$      0.10

(3)

Unrealized foreign currency losses (gains)

(19)

(0.02)

(4)

6

0.01

Disposition/acquisition losses (gains)

9

0.01

(15)

(0.02)

(5)

Impairment losses

1

—

475

0.71

(6)

Loss on extinguishment of debt

10

0.01

6

0.01

Net gains from early contract terminations at Angamos

—

—

(110)

(0.16)

(7)

Less: Net income tax benefit

(0.01)

(0.15)

(8)

Adjusted PTC and Adjusted EPS

$       207

$      0.21

$       247

$      0.28

⁽¹⁾

NCI is defined as Noncontrolling Interests.

⁽²⁾

Amount primarily relates to unrealized commodity derivative losses at New York Wind of $20 million, or $0.03 per share, and unrealized foreign currency derivative losses in Brazil of $20 million, or $0.03 per share.

⁽³⁾

Amount primarily relates to unrealized derivative losses in Argentina mainly associated with foreign currency derivatives on government receivables of $38 million, or $0.06 per share, and net unrealized derivative losses on power and commodities swaps at Southland of $33 million, or $0.05 per share.

⁽⁴⁾

Amount primarily relates to unrealized FX gains in Brazil of $22 million, or $0.03 per share, mainly associated with debt denominated in Brazilian reais.

⁽⁵⁾

Amount primarily relates to gain on remeasurement of our equity interest in sPower to acquisition-date fair value of $36 million, or $0.05 per share, partially offset by day-one loss recognized at commencement of a sales-type lease at AES Renewable Holdings of $13 million, or $0.02 per share.

⁽⁶⁾

Amount primarily relates to asset impairment at Puerto Rico of $475 million, or $0.71 per share.

⁽⁷⁾

Amount relates to net gains at Angamos associated with the early contract terminations with Minera Escondida and Minera Spence of $110 million, or $0.16 per share.

⁽⁸⁾

Amount primarily relates to income tax benefits associated with the impairment at Puerto Rico of $119 million, or $0.18 per share, partially offset by income tax expense related to net gains at Angamos associated with the early contract terminations with Minera Escondida and Minera Spence of $28 million, or $0.04 per share.

The AES Corporation

Parent Financial Information

Parent only data: last four quarters

(in millions)

4 Quarters Ended

Total subsidiary distributions & returns of capital to Parent

March 31, 2022

December 31, 2021

September 30, 2021

June 30, 2021

Actual

Actual

Actual

Actual

Subsidiary distributions¹ to Parent & QHCs

$             1,084

$             1,396

$                 966

$            1,203

Returns of capital distributions to Parent & QHCs

1

2

(118)

45

Total subsidiary distributions & returns of capital to Parent

$             1,085

$             1,398

$                 848

$            1,248

Parent only data: quarterly

(in millions)

Quarter Ended

Total subsidiary distributions & returns of capital to Parent

March 31, 2022

December 31, 2021

September 30, 2021

June 30, 2021

Actual

Actual

Actual

Actual

Subsidiary distributions¹ to Parent & QHCs

$                165

$                477

$                 278

$               164

Returns of capital distributions to Parent & QHCs

—

1

—

—

Total subsidiary distributions & returns of capital to Parent

$                165

$                478

$                 278

$               164

(in millions)

Balance at

March 31, 2022

December 31, 2021

September 30, 2021

June 30, 2021

Parent Company Liquidity²

Actual

Actual

Actual

Actual

Cash at Parent & Cash at QHCs³

$                  17

$                  41

$                 338

$               373

Availability under credit facilities

621

837

1,175

941

Ending liquidity

$                638

$                878

$              1,513

$            1,314

⁽¹⁾

Subsidiary distributions received by Qualified Holding Companies ("QHCs") excluded from Schedule 1. Subsidiary Distributions should not be construed as an alternative to Consolidated Net Cash Provided by Operating Activities, which is determined in accordance with US GAAP. Subsidiary Distributions are important to the Parent Company because the Parent Company is a holding company that does not derive any significant direct revenues from its own activities but instead relies on its subsidiaries' business activities and the resultant distributions to fund the debt service, investment and other cash needs of the holding company. The reconciliation of the difference between the Subsidiary Distributions and Consolidated Net Cash Provided by Operating Activities consists of cash generated from operating activities that is retained at the subsidiaries for a variety of reasons which are both discretionary and non-discretionary in nature. These factors include, but are not limited to, retention of cash to fund capital expenditures at the subsidiary, cash retention associated with non-recourse debt covenant restrictions and related debt service requirements at the subsidiaries, retention of cash related to sufficiency of local GAAP statutory retained earnings at the subsidiaries, retention of cash for working capital needs at the subsidiaries, and other similar timing differences between when the cash is generated at the subsidiaries and when it reaches the Parent Company and related holding companies.

⁽²⁾

Parent Company Liquidity is defined as cash available to the Parent Company, including cash at qualified holding companies (QHCs), plus available borrowings under our existing credit facility. AES believes that unconsolidated Parent Company liquidity is important to the liquidity position of AES as a Parent Company because of the non-recourse nature of most of AES' indebtedness.

⁽³⁾

The cash held at QHCs represents cash sent to subsidiaries of the company domiciled outside of the US. Such subsidiaries have no contractual restrictions on their ability to send cash to AES, the Parent Company. Cash at those subsidiaries was used for investment and related activities outside of the US. These investments included equity investments and loans to other foreign subsidiaries as well as development and general costs and expenses incurred outside the US. Since the cash held by these QHCs is available to the Parent, AES uses the combined measure of subsidiary distributions to Parent and QHCs as a useful measure of cash available to the Parent to meet its international liquidity needs.