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The AES Corporation Third Quarter 2024 Financial Review November 1, 2024 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 financial and operating performance. Forward-looking statements are not intended to be a guarantee of future results, but instead constitute ...

Company and Industry Key Points 1. **Company Overview**: AES Corporation (NYSE:AES) held its third quarter 2024 earnings call on November 1, 2024. The call featured company executives discussing financial results, business performance, and future outlook. [doc id='1'] 2. **Financial Results**: AES reported adjusted EBITDA of approximately $1.2 billion and adjusted EPS of $0.71 for the third quarter, in line with expectations. The company is on track to meet its 2024 financial objectives. [doc id='7'] 3. **Renewables Business**: AES' renewables business has seen robust growth, with 1.3 gigawatts of new PPAs added to the backlog since the second quarter. The company is well on track to meet its target of signing 14 to 17 gigawatts of new PPAs from 2023 to 2025. [doc id='9'] 4. **Construction Progress**: AES has completed construction of 1.2 gigawatts of new projects since the second quarter, representing nearly 80% of the 3.6 gigawatts expected to be completed this year. [doc id='11] 5. **U.S. Utilities**: AES' U.S. utilities, AES Indiana and AES Ohio, are among the fastest-growing utilities in the country, with projected double-digit rate base growth through 2027. [doc id='17'] 6. **Data Center Growth**: AES is seeing additional investment opportunities from data center growth in its service areas, with agreements for 2.1 gigawatts of new data center load growth at AES Ohio. [doc id='20] 7. **Asset Sales**: AES has signed or closed agreements for more than three-quarters of its $3.5 billion asset sale proceeds target through 2027. [doc id='23'] 8. **2024 Guidance**: AES reaffirmed its 2024 adjusted EBITDA guidance range of $3.6 billion to $4 billion and adjusted EPS guidance of $1.87 to $1.97. [doc id='31] 9. **2025 Outlook**: AES expects strong growth in its renewables and utility segments in 2025, driven by factors such as the completion of new projects and the continued execution of its decarbonization strategy. [doc id='37] Additional Important Points 1. **Extreme Weather**: AES experienced significant impacts from extreme weather events in Colombia and other regions, which negatively impacted its financial results. [doc id='8'] 2. **Tax Credits**: AES has been successful in maximizing tax value opportunities, which has reduced its capital requirements and increased returns. [doc id='48'] 3. **Hydrogen Project**: AES is developing a 1.5 gigawatts of renewables for potential use in hydrogen production. [doc id='54'] 4. **Credit Rating**: AES is engaged in constructive conversations with Moody's regarding its credit rating. [doc id='56] 5. **Asset Sales**: AES' asset sales program has been successful in improving its credit profile and reducing its exposure to certain risks. [doc id='61'] 6. **Renewables Growth**: AES expects significant growth in its renewables segment in 2025, driven by factors such as the completion of new projects and the continued execution of its decarbonization strategy. [doc id='70]

The AES Corporation's (AES) third-quarter 2024 adjusted earnings of 71 cents per share beat the Zacks Consensus Estimate of 60 cents by 18.3%. The bottom line also improved 18.3% from 60 cents per share in the year-ago quarter. The year-over-year improvement in adjusted earnings can be attributed to a lower adjusted tax rate and higher contributions from the renewable projects placed in service in 2024. The company generated GAAP earnings of 72 cents per share compared with 32 cents in the third quarter of ...

AES (AES) came out with quarterly earnings of $0.71 per share, beating the Zacks Consensus Estimate of $0.60 per share. This compares to earnings of $0.60 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 18.33%. A quarter ago, it was expected that this power company would post earnings of $0.36 per share when it actually produced earnings of $0.38, delivering a surprise of 5.56%.Over the last four quarters, the company has surp ...

Press Release Investor Contact: Susan Harcourt 703-682-1204, susan.harcourt@aes.com Media Contact: Amy Ackerman 703-682-6399, amy.ackerman@aes.com AES Reports Third Quarter Financial Results; Completes 1.2 GW of Construction and Adds 2.2 GW of Renewables PPAs and Data Center Load Growth at US Utilities Reaffirms 2024 Guidance and Long-Term Growth Rates Strategic Accomplishments • Signed or awarded 2.2 GW of new contracts, including long-term renewables PPAs and data center load growth at US utilities ◦ 1.3 ...

Reaffirms 2024 Guidance and Long-Term Growth RatesStrategic Accomplishments Signed or awarded 2.2 GW of new contracts, including long-term renewables PPAs and data center load growth at US utilities 1.3 GW of renewables under long-term PPAs 900 MW of new data center load growth at AES Ohio Completed the construction of 1.2 GW; on track to add a total of 3.6 GW of new projects to operations in full year 2024 Announced or closed nearly three-quarters of $3.5 billion asset sale proceeds target through 2027 ...

[PART I: FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%3A%20FINANCIAL%20INFORMATION) [Financial Statements (Unaudited)](index=3&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS%20(UNAUDITED)) Unaudited condensed consolidated financial statements as of September 30, 2024, detail balance sheets, operations, and cash flows with explanatory notes [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of September 30, 2024, total assets and liabilities increased, driven by property, plant, and equipment and debt, while total equity also grew Condensed Consolidated Balance Sheet Highlights (in millions) | Account | Sep 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | **Total Current Assets** | $10,526 | $6,649 | | **Total Assets** | **$50,079** | **$44,799** | | **Total Current Liabilities** | $12,375 | $9,731 | | **Total Liabilities** | $42,440 | $38,814 | | **Total Equity** | **$7,639** | **$5,985** | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Net income attributable to the corporation significantly increased in Q3 and YTD 2024, resulting in higher diluted EPS despite slightly lower total revenue Key Performance Indicators (in millions, except per share data) | Metric | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenue** | $3,289 | $3,434 | $9,316 | $9,700 | | **Operating Margin** | $722 | $918 | $1,894 | $2,010 | | **Net Income Attributable to AES** | $502 | $231 | $1,119 | $343 | | **Diluted EPS Attributable to AES** | $0.71 | $0.32 | $1.57 | $0.48 | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations decreased, while cash used in investing activities increased, and financing activities provided more cash due to new debt Cash Flow Summary for Nine Months Ended Sep 30 (in millions) | Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $1,664 | $2,309 | | Net cash used in investing activities | $(6,089) | $(5,673) | | Net cash provided by financing activities | $5,187 | $3,740 | | **Total increase in cash** | **$569** | **$248** | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail accounting policies, tax credit transfers, asset impairments, debt financing, SBU performance, and assets held for sale - Under the Inflation Reduction Act (IRA), the company executed agreements to transfer **$351 million** in Investment Tax Credits (ITCs) to third parties during the first nine months of 2024, with AES's share being **$173 million**, recorded as an income tax benefit[13](index=13&type=chunk) - The company recognized pre-tax asset impairment expenses of **$355 million** in the first nine months of 2024, primarily related to the held-for-sale classification of AES Brasil (**$277 million**) and Mong Duong (**$54 million**)[74](index=74&type=chunk)[75](index=75&type=chunk)[112](index=112&type=chunk) - In February 2024, the company's Equity Units converted into **40.5 million shares** of common stock, settling the 2024 Purchase Contracts and canceling the Series A Preferred Stock[58](index=58&type=chunk) - As of September 30, 2024, AES Brasil and Mong Duong are classified as held-for-sale, with the sale of AES Brasil completed on October 31, 2024, for approximately **$590 million**[78](index=78&type=chunk)[85](index=85&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=37&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses financial results, including decreased Q3 net income and Adjusted EBITDA, strategic clean energy focus, asset sales, key trends, and liquidity [Executive Summary](index=37&type=section&id=Executive%20Summary) Q3 2024 saw a decrease in net income and Adjusted EBITDA, primarily due to lower Energy Infrastructure SBU contributions, while diluted and Adjusted EPS increased Q3 2024 vs Q3 2023 Performance | Metric | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Net Income | $210M | $291M | | Diluted EPS (Continuing Ops) | $0.72 | $0.32 | | Adjusted EBITDA (Non-GAAP) | $692M | $990M | | Adjusted EPS (Non-GAAP) | $0.71 | $0.60 | YTD 2024 vs YTD 2023 Performance | Metric | YTD 2024 | YTD 2023 | | :--- | :--- | :--- | | Net Income | $449M | $461M | | Diluted EPS (Continuing Ops) | $1.58 | $0.48 | | Adjusted EBITDA (Non-GAAP) | $1,979M | $2,187M | | Adjusted EPS (Non-GAAP) | $1.60 | $1.03 | [Review of Consolidated Results of Operations](index=41&type=section&id=Review%20of%20Consolidated%20Results%20of%20Operations) Consolidated revenue and operating margin decreased in Q3 and YTD 2024, primarily due to Energy Infrastructure and Renewables SBUs, with increased interest expense - Q3 revenue decreased by **$145 million**, driven by a **$238 million** decline in the Energy Infrastructure SBU, partially offset by an **$81 million** increase in the Utilities SBU[100](index=100&type=chunk) - Q3 operating margin decreased by **$196 million**, with Energy Infrastructure dropping **$149 million** and Renewables dropping **$43 million** due to drought in Colombia[101](index=101&type=chunk) - YTD interest expense increased by **$159 million** (**16%**) to **$1.125 billion**, primarily due to new debt issued at the Renewables and Utilities SBUs and higher rates at the Parent Company[106](index=106&type=chunk) - YTD asset impairment expense was **$355 million**, a slight increase from **$352 million** in the prior year, driven by AES Brasil and Mong Duong impairments in 2024[112](index=112&type=chunk) [SBU Performance Analysis](index=48&type=section&id=SBU%20Performance%20Analysis) SBU performance varied, with Renewables decreasing, Utilities growing, Energy Infrastructure declining significantly, and New Energy Technologies improving Adjusted EBITDA Adjusted EBITDA by SBU (in millions) | SBU | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 | | :--- | :--- | :--- | :--- | :--- | | Renewables | $199 | $267 | $443 | $557 | | Utilities | $223 | $216 | $619 | $526 | | Energy Infrastructure | $299 | $520 | $969 | $1,165 | | New Energy Technologies | $(7) | $(22) | $(38) | $(61) | - Renewables SBU's YTD Adjusted EBITDA decreased by **$114 million** due to drought and higher fixed costs, but Adjusted EBITDA with Tax Attributes increased by **$695 million** from **$878 million** in realized U.S. tax attributes[134](index=134&type=chunk) - Utilities SBU's YTD Adjusted EBITDA increased by **$93 million**, driven by higher rider revenues and new rates from the 2024 Base Rate Order[135](index=135&type=chunk) - Energy Infrastructure SBU's YTD Adjusted EBITDA decreased by **$196 million**, mainly due to lower margins at Southland merchant facilities and higher outages[138](index=138&type=chunk) [Key Trends and Uncertainties](index=55&type=section&id=Key%20Trends%20and%20Uncertainties) Key trends and uncertainties include solar panel supply chain disruptions, hydrological risks, IRA tax credit benefits, macroeconomic challenges, and decarbonization strategy - The company has secured all necessary solar panels for projects coming online **through 2026** and is advancing efforts to secure domestically manufactured modules for **2026-2028**[143](index=143&type=chunk) - The company expects to realize a significant portion of its 2024 earnings from tax attributes in the fourth quarter, having already recognized **$895 million** in the first nine months of 2024 under the IRA[147](index=147&type=chunk) - AES intends to exit the substantial majority of its remaining coal facilities by **year-end 2025** and all coal facilities by **year-end 2027**, subject to approvals[154](index=154&type=chunk) - Regulatory proceedings are ongoing for AES Indiana and AES Ohio, with key decisions expected by **late 2024 or early 2025**[157](index=157&type=chunk)[158](index=158&type=chunk)[159](index=159&type=chunk) [Capital Resources and Liquidity](index=64&type=section&id=Capital%20Resources%20and%20Liquidity) As of September 30, 2024, the company's liquidity position, including cash and debt, is detailed, with management believing it is adequate for the foreseeable future Parent Company Liquidity (in millions) | Component | Sep 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Parent Co. Cash & Equivalents | $6 | $33 | | Available Borrowings | $335 | $1,376 | | **Total Parent Company Liquidity** | **$341** | **$1,409** | - Primary cash uses in the first nine months of 2024 were capital expenditures (**$5.7 billion**), debt repayments (**$7.4 billion**), and supplier financing repayments (**$1.4 billion**)[176](index=176&type=chunk) - Primary cash sources were new debt borrowings (**$11.8 billion**), operating activities (**$1.7 billion**), and sales to noncontrolling interests (**$0.9 billion**)[176](index=176&type=chunk) - As of September 30, 2024, five subsidiaries had non-recourse debt in technical or payment default totaling **$330 million**, which did not trigger cross-defaults at the Parent Company level[192](index=192&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=71&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company is exposed to market risks from commodity prices, interest rates, and foreign currency exchange rates, which are managed through derivatives and other hedging strategies - The company's primary market risk exposures are to the prices of **electricity, natural gas, coal, environmental credits, interest rates, and foreign currency exchange rates**[194](index=194&type=chunk) - A **10%** increase in commodity prices is projected to have a minimal impact on pre-tax earnings: **<$10M** gain for power, **<$5M** loss for gas, and **<$5M** gain for coal[195](index=195&type=chunk) - The company has material unhedged forward-looking earnings risk from the **Argentine peso**, with a **10%** USD appreciation having a minor net positive impact on cash distributions from Euro and Colombian peso exposed subsidiaries[198](index=198&type=chunk) - A one-time **100-basis-point** increase in interest rates would result in less than a **$5 million** increase in interest expense for the remainder of 2024 across all currency-denominated debt[199](index=199&type=chunk) [Controls and Procedures](index=74&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded that the company's disclosure controls and procedures were effective as of September 30, 2024, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were **effective** as of September 30, 2024[200](index=200&type=chunk) - **No material changes** occurred during the quarter that have affected the company's internal control over financial reporting[201](index=201&type=chunk) [PART II: OTHER INFORMATION](index=75&type=section&id=PART%20II%3A%20OTHER%20INFORMATION) [Legal Proceedings](index=75&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company is involved in various legal proceedings, including arbitration, contamination lawsuits, and disputes related to coal combustion residuals and contracts across multiple countries - A lawsuit in the Dominican Republic seeks over **$900 million** in damages related to CCRs, dismissed by a lower court but appealed by claimants[203](index=203&type=chunk) - Another lawsuit in the Dominican Republic seeks over **$600 million** in damages related to CCRs from 2003-2004[204](index=204&type=chunk) - In Mexico, AES Mérida III is enforcing a favorable arbitration award against CFE, which had sought approximately **$680 million** in damages, with CFE's nullification attempt denied and under higher court review[204](index=204&type=chunk) [Risk Factors](index=78&type=section&id=ITEM%201A.%20RISK%20FACTORS) There have been no material changes to the risk factors previously disclosed in the company's 2023 Form 10-K - **No material changes** to the risk factors disclosed in Item 1A of the 2023 Form 10-K have occurred[206](index=206&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=79&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) The company did not repurchase any shares of its common stock during Q3 2024, with **$264 million** remaining available under the repurchase program - **No shares were repurchased** during the third quarter of 2024[207](index=207&type=chunk) - As of September 30, 2024, **$264 million** remains available under the company's common stock repurchase program[207](index=207&type=chunk)[209](index=209&type=chunk)

The market expects AES (AES) to deliver flat earnings compared to the year-ago quarter on higher revenues when it reports results for the quarter ended September 2024. This widely-known consensus outlook is important in assessing the company's earnings picture, but a powerful factor that might influence its near-term stock price is how the actual results compare to these estimates. The earnings report, which is expected to be released on October 31, 2024, might help the stock move higher if these key number ...