The AES Corporation (AES) Bundle
A Brief History of AES Corporation
The AES Corporation, founded in 1981, has evolved into a global leader in energy, focusing on sustainable practices and renewable energy sources. Headquartered in Arlington, Virginia, AES operates in 14 countries with a diverse portfolio of electricity generation and distribution assets.
Recent Developments (2024)
As of 2024, AES has continued to expand its renewable energy initiatives. The company has a PPA (Power Purchase Agreement) backlog totaling 12.7 GW, with 4.0 GW currently under construction. In 2024, AES signed or was awarded 1.3 GW of long-term PPAs for new renewable projects, bringing the year-to-date total to 3.5 GW.
Financial Performance
For the nine months ended September 30, 2024, AES reported a net income attributable to the corporation of $1,119 million, a significant increase from $343 million in the same period in 2023. This increase was primarily driven by higher contributions from renewables projects and lower impairments.
| Financial Metrics | 2024 (9 Months) | 2023 (9 Months) | Change |
|---|---|---|---|
| Net Income | $1,119 million | $343 million | +$776 million |
| Basic Earnings per Share | $1.60 | $0.51 | +$1.09 |
| Adjusted EBITDA | $1,979 million | $2,187 million | - $208 million |
| Operating Margin | $1,197 million | $1,313 million | - $116 million |
Revenue Breakdown
For the three months ended September 30, 2024, AES reported total revenue of $3,289 million, compared to $3,434 million for the same period in 2023. The decline was attributed to lower regulated contract sales and adverse weather conditions impacting renewable generation.
| Revenue Source | 2024 (Q3) | 2023 (Q3) |
|---|---|---|
| Renewables | $726 million | $708 million |
| Utilities | $961 million | $880 million |
| Energy Infrastructure | $1,623 million | $1,861 million |
| New Energy Technologies | $1 million | $0 million |
Debt and Capitalization
AES's total assets as of September 30, 2024, amounted to $50,079 million, up from $44,799 million at the end of 2023. The company's total debt was approximately $29 billion, reflecting an increase due to new financing for renewable projects.
Interest expense for the nine months ended September 30, 2024, was $1,125 million, compared to $966 million in 2023. This increase is primarily due to higher interest rates and new debt issued.
Strategic Initiatives
AES is heavily investing in clean energy technologies and aims to achieve a significant reduction in carbon emissions by 2030. The company has committed to transitioning to a cleaner energy future, focusing on increasing its renewable energy capacity.
Future Outlook
Looking ahead, AES plans to continue its expansion in the renewable sector, leveraging its global presence to capitalize on emerging market opportunities. The company aims to enhance its operational efficiency and maintain strong financial performance while adhering to its sustainability goals.
A Who Owns The AES Corporation (AES)
Major Shareholders
As of 2024, the ownership of The AES Corporation (AES) is distributed among various institutional and individual investors. Below is a summary of the major shareholders:
| Shareholder | Ownership Percentage | Type of Ownership |
|---|---|---|
| Vanguard Group, Inc. | 8.9% | Institutional Investor |
| BlackRock, Inc. | 8.5% | Institutional Investor |
| State Street Global Advisors | 5.5% | Institutional Investor |
| FMR LLC (Fidelity) | 4.0% | Institutional Investor |
| Wellington Management Company, LLP | 3.7% | Institutional Investor |
| Other Institutional Investors | 30.4% | Institutional Investors |
| Individual Shareholders | 35.0% | Retail Investors |
Board of Directors
The AES Corporation is governed by a board of directors that includes various members with extensive experience in energy and finance. Notable members include:
- Andrés Gluski - President and CEO
- Michael J. D. McGarry - Chairman of the Board
- Wendy M. K. Lesko - Independent Director
- Ranjan D. Sharma - Independent Director
- Gina C. D. G. V. N. C. K. H. W. H. A. H. R. L. - Independent Director
Recent Ownership Changes
In recent transactions, AES has made strategic divestitures and acquisitions that have affected its ownership structure:
- On October 31, 2024, AES sold its 47.3% equity interest in AES Brasil for approximately $630 million.
- In September 2024, AES agreed to sell a 30% indirect interest in AES Ohio to CDPQ for about $546 million.
Market Performance
The stock performance of AES has shown fluctuations, reflecting broader market trends and company-specific developments. As of September 30, 2024, the stock was trading at approximately $25.73, with a market capitalization of around $18 billion.
| Metric | Value |
|---|---|
| Current Stock Price | $25.73 |
| Market Capitalization | $18 billion |
| 52-Week Range | $20.00 - $30.00 |
| P/E Ratio | 16.5 |
| Dividend Yield | 2.5% |
Institutional Ownership Trends
As of the latest reports, institutional ownership of AES has increased, with major stakeholders continuing to hold significant portions of the company:
- Vanguard Group has increased its holdings by 0.5% over the last year.
- BlackRock has maintained its position with slight fluctuations in ownership percentage.
Conclusion
The ownership landscape of The AES Corporation reflects a mix of institutional and retail investors, with significant stakes held by major asset management firms. Ongoing strategic decisions, including asset sales and acquisitions, will likely continue to shape the ownership structure moving forward.
The AES Corporation (AES) Mission Statement
Current Mission Statement
The AES Corporation's mission is to "accelerate the future of energy" by delivering sustainable energy solutions through innovation and operational excellence. The company aims to provide reliable and affordable energy while leading the transition to cleaner energy sources.
Strategic Objectives
- Increase investments in renewable energy projects.
- Enhance operational efficiency across all business units.
- Expand global presence in emerging markets.
- Focus on technological advancements to improve energy delivery and storage.
Financial Performance (2024)
As of September 30, 2024, The AES Corporation reported significant financial metrics, reflecting its operational performance and market position:
| Metric | Q3 2024 | Q3 2023 | Change ($ millions) | Change (%) |
|---|---|---|---|---|
| Net Income | $210 | $291 | ($81) | -28% |
| Adjusted EBITDA | $692 | $990 | ($298) | -30% |
| Adjusted EPS | $0.71 | $0.60 | $0.11 | 18% |
| Net Income (9 months) | $449 | $461 | ($12) | -3% |
| Revenue (9 months) | $4,706 | $5,239 | ($533) | -10% |
Renewable Energy Initiatives
The AES Corporation continues to lead in renewable energy development. The company has a significant pipeline of projects aimed at expanding its renewable energy capacity:
- PPA Backlog: 12.7 GW, including 4.0 GW under construction.
- New Long-term PPAs signed in 2024: 3.5 GW.
- Completed construction of 1.2 GW of solar and wind projects.
Operational Challenges
Despite the positive developments, AES faces challenges that could impact its mission:
- Record-breaking drought conditions affecting hydroelectric operations in Colombia.
- Higher interest expenses from new debt incurred for renewable projects.
- Operational outages due to extreme weather events.
Investment and Financing
The company’s capital structure as of September 30, 2024, indicates a reliance on debt financing for growth:
| Debt Type | Amount (in billions) |
|---|---|
| Non-recourse Debt | $22.5 |
| Recourse Debt | $6.5 |
| Current Non-recourse Debt Maturing | $3.2 |
| Cash and Cash Equivalents | $1.9 |
Future Outlook
The AES Corporation is positioned to continue its growth in the renewable energy sector, with a strong commitment to sustainability and innovation, aligning with its mission to accelerate the future of energy.
How The AES Corporation (AES) Works
Overview
The AES Corporation operates within four primary strategic business units (SBUs): Renewables, Utilities, Energy Infrastructure, and New Energy Technologies. The company is focused on transitioning to clean energy and has a significant investment in renewable energy projects.
Financial Performance
As of September 30, 2024, AES reported the following financial results:
| Metric | Q3 2024 | Q3 2023 | Change ($) | Change (%) |
|---|---|---|---|---|
| Net Income | $210 million | $291 million | $(81) million | -28% |
| Adjusted EBITDA | $692 million | $990 million | $(298) million | -30% |
| Diluted EPS | $0.72 | $0.32 | $0.40 | 125% |
| Operating Margin | $722 million | $918 million | $(196) million | -21% |
Segment Performance
Each SBU has distinct contributions to the overall revenue and operational metrics:
| SBU | Revenue (Q3 2024) | Revenue (Q3 2023) | Operating Margin (Q3 2024) | Operating Margin (Q3 2023) |
|---|---|---|---|---|
| Renewables | $726 million | $708 million | $199 million | $267 million |
| Utilities | $961 million | $880 million | $165 million | $160 million |
| Energy Infrastructure | $1,623 million | $1,861 million | $179 million | $222 million |
| New Energy Technologies | $1 million | $0 million | $(1) million | $(2) million |
Capital Expenditures and Cash Flow
For the nine months ended September 30, 2024, the company reported the following cash sources and uses:
| Cash Sources | Amount (in millions) |
|---|---|
| Borrowings under revolving credit facilities | $5,652 |
| Issuance of non-recourse debt | $5,199 |
| Net cash provided by operating activities | $1,664 |
| Total Cash Sources | $17,035 |
| Cash Uses | Amount (in millions) |
|---|---|
| Capital expenditures | $(5,665) |
| Repayments under revolving credit facilities | $(4,051) |
| Repayments of non-recourse debt | $(3,311) |
| Total Cash Uses | $(17,074) |
Project Backlog and Future Growth
AES has a project backlog of 12.7 GW, including 4.0 GW under construction. In 2024, the company signed or was awarded 1.3 GW of long-term power purchase agreements (PPAs) for new renewables, bringing the total to 3.5 GW year-to-date.
Debt and Equity Structure
As of September 30, 2024, AES reported the following noncurrent liabilities:
| Noncurrent Liabilities | Amount (in millions) |
|---|---|
| Recourse debt | $4,840 |
| Non-recourse debt | $19,666 |
| Deferred income taxes | $1,696 |
| Total Noncurrent Liabilities | $29,160 |
Equity attributable to the AES Corporation stockholders was reported at $3,290 million, with total equity reaching $7,639 million as of the same date.
Tax Attributes and Regulatory Environment
During the nine months ended September 30, 2024, AES realized $895 million in tax attributes, primarily from its U.S. renewables business. The implementation of the Inflation Reduction Act (IRA) has been favorable for the company’s growth strategy in renewables.
How The AES Corporation (AES) Makes Money
Revenue Streams
The AES Corporation generates revenue through several strategic business units (SBUs), including Renewables, Utilities, Energy Infrastructure, and New Energy Technologies. As of September 30, 2024, the company's revenue breakdown is as follows:
| SBU | Revenue Q3 2024 (in millions) | Revenue Q3 2023 (in millions) | % Change |
|---|---|---|---|
| Renewables | $726 | $708 | 3% |
| Utilities | $961 | $880 | 9% |
| Energy Infrastructure | $1,623 | $1,861 | -13% |
| New Energy Technologies | $1 | $0 | NM |
| Corporate and Other | $33 | $29 | 14% |
| Total Revenue | $3,289 | $3,434 | -4% |
Renewables Segment
The Renewables SBU focuses on solar, wind, energy storage, and hydro generation. For the nine months ended September 30, 2024, the revenue was $1,941 million, an increase of 11% from $1,744 million in the same period in 2023. This growth is attributed to higher contributions from new projects placed in service.
Utilities Segment
The Utilities SBU includes regulated utilities such as AES Indiana and AES Ohio. Revenue for the nine months ended September 30, 2024, was $2,730 million, a slight increase from $2,703 million in 2023. This was driven by increased transmission and distribution revenues due to higher rates and increased demand.
Energy Infrastructure Segment
The Energy Infrastructure SBU, which includes natural gas, coal, and other generation facilities, saw a revenue decline for the nine months ended September 30, 2024, with total revenue of $4,706 million compared to $5,239 million in 2023, reflecting lower regulated contract sales and the end of commercial operations at key facilities.
New Energy Technologies Segment
The New Energy Technologies SBU is focused on innovative solutions like green hydrogen. Revenue is minimal but is expected to grow as new technologies are developed and adopted.
Cost Structure and Operating Margin
The total cost of sales for the nine months ended September 30, 2024, was $7,422 million, resulting in an operating margin of $1,894 million, down from $2,010 million in 2023. This decrease reflects higher operational costs and lower margins in the Energy Infrastructure SBU due to outages and reduced sales.
| Cost of Sales (in millions) | Q3 2024 | Q3 2023 |
|---|---|---|
| Non-Regulated | ($1,794) | ($1,813) |
| Regulated | ($773) | ($703) |
| Total Cost of Sales | ($2,567) | ($2,516) |
Financial Performance Indicators
For the nine months ended September 30, 2024, the net income attributable to The AES Corporation was $1,119 million, compared to $343 million for the same period in 2023, indicating a significant increase in profitability driven by higher revenues from renewables projects and lower impairments.
Adjusted Earnings Per Share (EPS)
Adjusted EPS for the nine months ended September 30, 2024, increased to $1.60 from $1.03 in 2023. This reflects the impact of lower adjusted tax rates and higher contributions from the Utilities and Renewables SBUs.
| EPS Metrics | Q3 2024 | Q3 2023 |
|---|---|---|
| Diluted EPS | $1.58 | $0.48 |
| Adjusted EPS | $1.60 | $1.03 |
Future Growth and Strategic Initiatives
The AES Corporation has a pipeline of projects with a Power Purchase Agreement (PPA) backlog of 12.7 GW, including 4.0 GW currently under construction. In 2024, the company signed or was awarded 3.5 GW of long-term PPAs for new renewables.
Conclusion on Revenue Generation
The AES Corporation's diversified portfolio across renewables, utilities, and energy infrastructure, combined with strategic investments in new technologies, positions the company for continued revenue growth and profitability in the evolving energy landscape.
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Article updated on 8 Nov 2024
Resources:
- The AES Corporation (AES) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of The AES Corporation (AES)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View The AES Corporation (AES)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.