Core Insights - The AES Corporation has faced significant challenges in 2023 and 2024, with its shares dropping over 30% since reaching $20 last September, while the sector overall gained approximately 10% during the same period [1] Company Performance - AES shares have underperformed the sector, indicating potential issues within the company or its market positioning [1] Market Context - The broader sector experienced a gain of about 10%, contrasting sharply with AES's decline, suggesting that the company's struggles are not reflective of the overall market conditions [1]

Core Insights - AES Corporation is a global energy company focused on sustainable energy solutions and has a strong presence in renewable energy projects [1] Financial Performance - In Q3 2025, AES reported revenue of $3.35 billion, a 1.9% increase from the previous year, surpassing the Zacks Consensus Estimate of $3.29 billion, resulting in a positive surprise of 1.85% [2] - The company's EPS of $0.75 fell short of the expected $0.78, reflecting a negative surprise of 3.85% [2] - Net income for Q3 2025 was $517 million, significantly up from $215 million in Q3 2024 [3] - Net income attributable to AES Corporation rose to $639 million compared to $504 million in Q3 2024 [3] - Adjusted EBITDA reached $830 million, up from $698 million in Q3 2024, while adjusted EPS increased to $0.75 from $0.71 in the previous year [3] Future Growth Potential - AES is on track to add 3.2 gigawatts (GW) of new projects in operation by the end of 2025, with 2.9 GW already completed this year [4] - The company has signed or been awarded new long-term Power Purchase Agreements (PPAs) for 2.2 GW of renewables, including 1.6 GW with data centers [4] - The current PPA backlog stands at 11.1 GW, with 5 GW under construction, indicating strong future growth potential [4] Financial Metrics - AES's price-to-earnings (P/E) ratio is approximately 9.73, indicating the market's valuation of its earnings [5] - The company's price-to-sales ratio is about 0.82, and the enterprise value to sales ratio is 3.22 [5] - The debt-to-equity ratio is notably high at 8.99, indicating a significant reliance on debt financing [5] - The current ratio is 0.82, suggesting potential challenges in covering short-term liabilities [5]

Core Insights - The AES Corporation's third-quarter 2025 adjusted earnings of 75 cents per share missed the Zacks Consensus Estimate of 78 cents by 3.9%, but improved 5.6% from 71 cents in the year-ago quarter [1] - Total revenues for the company reached $3.35 billion, reflecting a year-over-year increase of 1.9% and surpassing the Zacks Consensus Estimate of $3.29 billion by 1.9% [2][8] - The company reaffirmed its 2025 earnings guidance, expecting adjusted earnings in the range of $2.10-$2.26 per share, with a consensus estimate of $2.17 [6][8] Financial Performance - The total cost of sales in Q3 2025 was $2.62 billion, up 1.9% year over year [3] - Operating income totaled $735 million, an increase of 1.8% from $722 million in the same period last year [3] - Interest expenses decreased to $348 million, down 8.2% from $379 million in the prior-year quarter [3] Financial Condition - As of September 30, 2025, cash and cash equivalents stood at $1.76 billion, up from $1.52 billion as of December 31, 2024 [4] - Non-recourse debt increased to $21.66 billion from $20.63 billion as of December 31, 2024 [4] - Net cash flow from operating activities for the first nine months of 2025 was $2.82 billion, compared to $1.66 billion in the same period of 2024 [4] Capital Expenditure - Total capital expenditure for the first nine months of 2025 was $4.39 billion, down from $5.67 billion recorded a year ago [5] Growth Outlook - AES reaffirmed its average annual earnings growth target in the range of 7-9% through 2027 [6][8]

Financial Data and Key Metrics Changes - Adjusted EBITDA for Q3 2025 was $830 million, up from $698 million in the previous year, driven by growth from new renewables projects and rate-based investments in U.S. Utilities [19] - Adjusted EPS increased to $0.75 per share compared to $0.71 in the prior year, influenced by similar drivers as adjusted EBITDA [22] - The company has realized the majority of the $150 million in cost savings for the year and is on track to achieve a $300 million annual run rate in 2026 [20][26] Business Line Data and Key Metrics Changes - Renewables EBITDA saw a 46% increase year to date, primarily due to the organic growth of new projects and the maturation of U.S. Renewables businesses [6][30] - The U.S. Utilities segment is focused on maintaining affordability while addressing increased demand, with a rate increase request that is less than the cumulative impact of inflation since the last adjustment [14][17] - The Energy Infrastructure segment's higher EBITDA reflects the acquisition of the remaining ownership in the Cochrane coal plant and the commencement of operations at the Gatun gas plant [24] Market Data and Key Metrics Changes - The company signed 2.2 gigawatts of new Power Purchase Agreements (PPAs) year to date and expects to sign an additional 1.8 gigawatts by year-end [5] - The U.S. backlog is 7.5 gigawatts, with an additional 4 gigawatts in the pipeline, all of which are safe harbored [11] - The company is experiencing strong demand across the sector, particularly from data centers, with a focus on time to power [10] Company Strategy and Development Direction - The company is committed to executing its plan and is well-positioned for growth into 2026, reaffirming its full-year 2025 guidance and long-term growth rates [4][30] - The strategy includes a focus on larger, more profitable projects, with an average project size increase of over 50% in the past five years [7][53] - The company is leveraging its safe harbor pipeline and robust domestic supply chain to meet growing energy demand [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving strategic and financial objectives, highlighting a clear line of sight to EBITDA growth through ongoing construction projects [30] - The company anticipates a strong step-up in growth rates over the next two years, with a long-term growth rate of 5% to 7% through 2027 [26][27] - Management noted that the energy infrastructure segment's drag from asset sales and coal retirements is expected to lessen, allowing for more robust overall growth [39] Other Important Information - The company has a capital allocation plan that includes returning over $500 million in dividends to shareholders while investing approximately $1.8 billion toward new growth [28] - The company has repaid approximately $400 million of subsidiary debt, maintaining a strong balance sheet consistent with its investment-grade credit ratings [29] Q&A Session Summary Question: Long-term growth outlook and asset sales impact - Management reaffirmed the 5% to 7% growth guidance through 2027, with the $400 million in EBITDA expected from projects coming online in 2027 and beyond [36][38] Question: Parent funding and balance sheet capacity - The focus is on strengthening the balance sheet and maintaining investment-grade ratings, with no plans to issue equity in the near term [42][44] Question: Demand acceleration and data center interest - Strong interest from data centers is noted, with a focus on larger, more profitable projects rather than just the number of gigawatts [51][53] Question: Energy storage demand and opportunities - Energy storage is critical for meeting growing demand, with strong demand expected for both behind-the-meter and grid services [56][57] Question: Utility opportunities and IRP update - Advanced negotiations are ongoing, with expectations to announce deals soon, focusing on building transmission and generation capacity [65][66] Question: Powered land opportunity details - The powered land solution involves co-locating data centers with existing power projects, providing a site for development along with an associated PPA [68][100]

Financial Data and Key Metrics Changes - Adjusted EBITDA for Q3 2025 was $830 million, up from $698 million in the previous year, driven by growth in renewables projects and rate-based investments in U.S. utilities [12][14] - Adjusted EPS increased to $0.75 per share from $0.71 year-over-year, influenced by similar drivers as adjusted EBITDA [12][14] Business Line Data and Key Metrics Changes - Renewables EBITDA saw a 46% increase year-to-date, primarily due to the addition of 3 gigawatts of new capacity and cost reductions [5][15] - The utilities segment reported higher adjusted pre-tax contributions driven by $1.3 billion in rate-based investments over the past year [16] Market Data and Key Metrics Changes - The U.S. backlog for renewables stands at 7.5 gigawatts, with an additional 4 gigawatts in the pipeline, all of which are safe harbored [7] - AES Indiana is positioned as one of the lowest-cost providers in Indiana and Ohio, with expectations to maintain this position post-rate case resolution [8] Company Strategy and Development Direction - The company aims to sign 4 gigawatts of new Power Purchase Agreements (PPAs) in 2025, with 2.2 gigawatts already signed and expectations for an additional 1.8 gigawatts [4] - The focus is on profitable growth with attractive returns, emphasizing fewer but larger projects in renewables [32] Management's Comments on Operating Environment and Future Outlook - Management remains confident in achieving the full-year 2025 guidance and long-term growth rates, reaffirming a 5-7% growth rate for adjusted EBITDA through 2027 [18][22] - The company is well-positioned to meet the growing demand for reliable, low-cost power due to its advanced pipeline of development projects and strong domestic supply chain [7][24] Other Important Information - The company has achieved significant cost savings, realizing the majority of a $150 million target for the year and aiming for a $300 million annual run rate by 2026 [12][17] - A partial settlement agreement was filed in Indiana, reducing the original revenue increase request by 53% [9][68] Q&A Session Summary Question: Long-term growth guidance and asset sales impact - Management reaffirmed the 5%-7% long-term growth guidance, indicating that the $400 million in EBITDA expected beyond 2027 comes from projects already in the backlog [27][28] Question: Parent funding and balance sheet capacity - The focus is on strengthening the balance sheet and maintaining investment-grade ratings, with no plans to issue equity through 2027 [32] Question: Demand acceleration in data centers - There is strong interest from data centers, with a focus on larger, more profitable projects rather than just the number of gigawatts [37][39] Question: Utility opportunities and IRP update - Advanced negotiations are ongoing for potential deals in Indiana, with expectations to announce agreements soon [45][46] Question: Powered land opportunity - The powered land solution involves co-locating data centers with renewable projects, providing a unique value proposition [48][75] Question: Renewables segment growth expectations - The renewables segment is expected to grow significantly, with adjustments made for prior year comparisons [78]

Financial Performance - Q3 2025 Adjusted EBITDA reached $830 million, driven by new renewables projects, US utilities rate base investment, and cost savings[16] - Q3 2025 Adjusted EPS increased to $075, influenced by Adjusted EBITDA drivers and a lower adjusted tax rate[16] - Year-to-Date 2025 Renewables SBU Adjusted EBITDA increased by 46%, primarily due to 3 GW of new projects and higher returns[19] - The company reaffirms its 2025 Adjusted EBITDA guidance, projecting between $2650 million and $2850 million[78] - The company reaffirms Adjusted EPS guidance for 2025, estimating between $210 and $226[79] Strategic Objectives - The company is on track to sign at least 4 GW of PPAs in full year 2025, with 22 GW already signed or awarded year-to-date, including 16 GW with data center customers[16] - The company is on track to add 32 GW of new projects in full year 2025, having completed construction of 29 GW year-to-date[16] - The backlog of projects under signed PPAs has reached 111 GW[16] - The company anticipates an average annual Adjusted EBITDA growth of 5% to 7% through 2027[81] Capital Allocation - The company projects discretionary cash sources and uses between $2615 million and $2815 million[85]

Core Insights - AES reported $3.35 billion in revenue for Q3 2025, a year-over-year increase of 1.9% [1] - The EPS for the same period was $0.75, compared to $0.71 a year ago, but fell short of the consensus estimate of $0.78 by 3.85% [1] - The revenue exceeded the Zacks Consensus Estimate of $3.29 billion, resulting in a surprise of +1.85% [1] Revenue Breakdown - Renewables SBU generated $817 million, surpassing the estimated $733.43 million, reflecting a year-over-year increase of +12.5% [4] - Energy Infrastructure SBU reported $1.48 billion, below the average estimate of $1.55 billion, indicating a year-over-year decline of -8.6% [4] - Utilities SBU achieved $1.11 billion, exceeding the average estimate of $1.01 billion, with a year-over-year increase of +15% [4] Stock Performance - AES shares have returned -4.6% over the past month, contrasting with the Zacks S&P 500 composite's +2.1% change [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

Core Insights - AES reported quarterly earnings of $0.75 per share, missing the Zacks Consensus Estimate of $0.78 per share, but showing an increase from $0.71 per share a year ago, resulting in an earnings surprise of -3.85% [1] - The company posted revenues of $3.35 billion for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 1.85% and showing a year-over-year increase from $3.29 billion [2] - AES shares have increased by approximately 5.8% since the beginning of the year, underperforming compared to the S&P 500's gain of 16.5% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.67 on revenues of $3.59 billion, and for the current fiscal year, it is $2.17 on revenues of $12.79 billion [7] - The estimate revisions trend for AES was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] Industry Context - The Utility - Electric Power industry, to which AES belongs, is currently ranked in the top 23% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Performance - Q3 2025 Net Income was $517 million, an increase of 140% compared to $215 million in Q3 2024[4] - Adjusted EBITDA for Q3 2025 was $830 million, up 19.0% from $698 million in Q3 2024[6] - Adjusted EPS for Q3 2025 was $0.75, an increase of 5.6% compared to $0.71 in Q3 2024[7] - Total revenue for Q3 2025 was $3,351 million, a slight increase of 1.9% compared to $3,289 million in Q3 2024[23] - Net income attributable to The AES Corporation increased to $639 million in Q3 2025, compared to $504 million in Q3 2024, reflecting a growth of 26.7%[23] - Basic earnings per share for continuing operations rose to $0.94 in Q3 2025, compared to $0.72 in Q3 2024, an increase of 30.6%[23] - Adjusted EBITDA with Tax Attributes for Q3 2025 was $1,256 million, an increase from $1,174 million in Q3 2024, representing a 7% growth[33] Revenue Breakdown - Non-Regulated revenue decreased to $2,269 million in Q3 2025 from $2,352 million in Q3 2024, representing a decline of 3.5%[23] - Regulated revenue increased to $1,082 million in Q3 2025, up 15.4% from $937 million in Q3 2024[23] - The Renewables Strategic Business Unit (SBU) reported revenue of $817 million in Q3 2025, up 8.4% from $754 million in Q3 2024[25] - The Energy Infrastructure SBU revenue decreased to $1,483 million in Q3 2025 from $1,614 million in Q3 2024, a decline of 8.1%[25] Project Development - The company has a backlog of 11.1 GW of signed Power Purchase Agreements (PPAs), including 5 GW under construction[10] - Year-to-date, the company completed 2.9 GW of new projects and is on track to add a total of 3.2 GW by year-end 2025[4] - The company signed or was awarded new long-term PPAs for 2.2 GW of renewables year-to-date, including 1.6 GW with data centers[4] Guidance and Future Expectations - The company reaffirmed its 2025 guidance for Adjusted EBITDA of $2,650 to $2,850 million, with a growth target of 5% to 7% through 2027[9] - The company expects 2025 Adjusted EBITDA with Tax Attributes to be between $3,950 and $4,350 million[11] - The company is on track with its $1.4 billion capex plan for 2025 at its US utilities[5] Cash Flow and Liquidity - Total cash provided by operating activities for the nine months ended September 30, 2025, was $2,818 million, compared to $1,664 million for the same period in 2024, marking a 69% increase[29] - Cash and cash equivalents rose to $1,758 million as of September 30, 2025, up from $1,524 million at the end of 2024, an increase of 15.3%[27] - Cash, cash equivalents, and restricted cash at the end of Q3 2025 totaled $2,549 million, slightly down from $2,559 million at the end of Q3 2024[29] Liabilities and Assets - Total current liabilities increased to $9,434 million as of September 30, 2025, compared to $8,571 million at the end of 2024, reflecting a rise of 10.1%[27] - The total assets of The AES Corporation increased to $50,783 million as of September 30, 2025, compared to $47,406 million at the end of 2024, marking a growth of 5.0%[27] Subsidiary Distributions and Parent Company - Total subsidiary distributions to Parent for the four quarters ended September 30, 2025, amounted to $2,200 million, a 23.5% increase from $1,633 million in the previous year[42] - For the quarter ended September 30, 2025, subsidiary distributions to Parent were $423 million, a decrease of 40.8% compared to $715 million in the same quarter of the previous year[42] - The Parent Company's liquidity at September 30, 2025, was $1,650 million, down from $2,047 million at December 31, 2024, representing a decline of 19.4%[42] - Returns of capital distributions to Parent for the quarter ended September 30, 2025, were $200 million, a substantial increase from $28 million in the same quarter of the previous year[42] - The company emphasizes that subsidiary distributions are crucial for funding debt service and other cash needs, highlighting the reliance on subsidiary performance[42]

Financial Performance - Third quarter net income increased by $302 million, from $215 million to $517 million, primarily due to higher income tax benefits and margins from new projects in the Renewables SBU [217]. - Adjusted EBITDA rose by $132 million, from $698 million to $830 million, driven by contributions from new projects in the Renewables SBU and increased rider revenues in the Utilities SBU [218]. - For the nine months ended September 30, 2025, net income decreased by $352 million, from $646 million to $294 million, mainly due to lower earnings from the Energy Infrastructure SBU and the sale of AES Brasil [222]. - Total revenue for the third quarter of 2025 was $3,351 million, a 2% increase from $3,289 million in 2024 [237]. - The Utilities SBU revenue increased by 15% in Q3 2025, reaching $1,105 million compared to $961 million in Q3 2024 [237]. - Adjusted EPS for the nine months ended September 30, 2025, decreased by $0.07, from $1.60 to $1.53, primarily due to lower realized tax attributes at the Renewables SBU [226]. - The Renewables SBU operating margin increased by 13% in Q3 2025, reaching $213 million compared to $189 million in Q3 2024 [237]. - Net cash provided by operating activities increased by 32% in Q3 2025, totaling $1,297 million compared to $985 million in Q3 2024 [237]. - Consolidated revenue increased by $62 million, or 2%, for the three months ended September 30, 2025, compared to the same period in 2024, driven by higher transmission and distribution revenues [244]. - Operating margin increased by $13 million, or 2%, for the three months ended September 30, 2025, compared to the same period in 2024, despite a decrease in the Energy Infrastructure segment [246]. - For the nine months ended September 30, 2025, consolidated revenue decreased by $184 million, or 2%, primarily due to lower revenues from the Energy Infrastructure segment [249]. - The operating margin decreased by $265 million, or 14%, for the nine months ended September 30, 2025, compared to the same period in 2024, largely due to lower generation and prior year revenues from the AES Andes portfolio [253]. Expenses and Income - General and administrative expenses decreased by $11 million, or 19%, to $46 million for the three months ended September 30, 2025, reflecting cost reductions from the company's restructuring program [257]. - Interest expense decreased by $31 million, or 8%, to $348 million for the three months ended September 30, 2025, primarily due to the sale of AES Brasil [259]. - Other income decreased by $45 million, or 70%, to $19 million for the three months ended September 30, 2025, mainly due to a decrease in gains on remeasurement of contingent consideration [265]. - The gain on disposal and sale of business interests increased by $27 million, or 63%, to $70 million for the nine months ended September 30, 2025, primarily due to a gain on the selldown of Dominican Republic Renewables [271]. - Asset impairment expense decreased by $43 million, or 58%, to $31 million for the three months ended September 30, 2025, compared to the same period in 2024, due to prior year impairments [273]. - Asset impairment expense decreased by $232 million to a $74 million asset impairment reversal for the nine months ended September 30, 2025, compared to a $158 million expense for the same period in 2024 [274]. - The company recognized net foreign currency transaction losses of $57 million for the nine months ended September 30, 2025, primarily due to unrealized losses from the depreciation of the Argentine peso [277]. - Income tax benefit was $226 million for the three months ended September 30, 2025, compared to an income tax expense of $103 million for the same period in 2024, resulting in effective tax rates of (69)% and 31% respectively [282]. - Net income attributable to The AES Corporation increased by $135 million, or 27%, to $639 million for the three months ended September 30, 2025, compared to $504 million for the same period in 2024 [292]. - Net loss attributable to noncontrolling interests and redeemable stock of subsidiaries decreased by $270 million, or 48%, to $296 million for the nine months ended September 30, 2025, compared to $566 million for the same period in 2024 [291]. - Net equity in losses of affiliates increased by $34 million to $55 million for the nine months ended September 30, 2025, compared to $21 million for the same period in 2024, primarily driven by lower earnings from sPower [287]. - Other non-operating expense was $42 million for the nine months ended September 30, 2025, due to a $32 million impact from Uplight and a $10 million other-than-temporary impairment of convertible notes for 5B [281]. - Net loss from disposal of discontinued businesses was $37 million for the nine months ended September 30, 2025, compared to $7 million for the same period in 2024 [288]. - The company reported lower contributions from renewables projects placed in service in the current year of $155 million, impacting overall net income [293]. - Higher margins from the Renewables SBU increased by $74 million, excluding one-time restructuring costs, primarily due to increased revenue from new projects [293]. Earnings and Adjusted Metrics - For the three months ended September 30, 2025, the company reported a net income of $517 million, compared to $215 million for the same period in 2024, representing a 141% increase [304]. - Adjusted EBITDA for the three months ended September 30, 2025, was $830 million, up from $698 million in 2024, reflecting an increase of 19% [304]. - Adjusted EBITDA with Tax Attributes for the three months ended September 30, 2025, reached $1,256 million, compared to $1,174 million in 2024, indicating a growth of 7% [304]. - The company reported diluted earnings per share (EPS) of $0.94 for the three months ended September 30, 2025, compared to $0.86 for the same period in 2024, marking a 9% increase [318]. - For the nine months ended September 30, 2025, net income was $294 million, a decrease from $646 million in 2024, reflecting a decline of 54% [304]. - Adjusted PTC for the three months ended September 30, 2025, was $475 million, down from $582 million in 2024, representing a decrease of 18% [311]. - The company incurred impairment losses of $61 million for the three months ended September 30, 2025, compared to $37 million in 2024, indicating an increase of 65% [311]. - Interest expense for the three months ended September 30, 2025, was $348 million, slightly down from $379 million in 2024, a decrease of 8% [304]. - The company recognized tax attributes of $426 million for the three months ended September 30, 2025, compared to $476 million in 2024, reflecting a decrease of 10% [304]. - The company’s Adjusted EBITDA for the nine months ended September 30, 2025, was $2,102 million, compared to $1,996 million in 2024, showing an increase of 5% [304]. - For the three months ended September 30, 2025, the company reported a Non-GAAP diluted earnings per share of $0.95, compared to $0.72 for the same period in 2024, representing a 32% increase [319]. - Adjusted EBITDA for the three months ended September 30, 2025 increased by $82 million, reaching $296 million, a 38% increase from $214 million in the same period of 2024 [322]. - Operating Margin for the nine months ended September 30, 2025 increased by $19 million, primarily driven by a $147 million positive impact from new businesses and a $42 million impact from AES Andes moving to Renewables [324]. - Adjusted EBITDA with Tax Attributes for the nine months ended September 30, 2025 increased by $255 million, totaling $1,612 million, compared to $1,357 million in 2024, a 19% increase [326]. - The company realized $421 million from tax attributes earned by its U.S. renewables business during the three months ended September 30, 2025, down from $475 million in the same period of 2024 [323]. - Adjusted PTC for the three months ended September 30, 2025 increased by $25 million to $98 million, a 34% increase compared to the same period in 2024 [330]. - Operating Margin for the three months ended September 30, 2025 increased by $32 million, mainly due to higher transmission and rider revenues [328]. - The company reported a $66 million negative impact from the sale of AES Brasil in 2024, affecting the overall performance in the Renewables SBU [321]. - The company experienced a $150 million negative impact related to the sale of AES Brasil during the nine months ended September 30, 2025 [324]. - The company reported a $47 million increase in Adjusted EBITDA for the nine months ended September 30, 2025, totaling $659 million, compared to $619 million in 2024, a 6% increase [327]. - Adjusted EBITDA for the nine months ended September 30, 2025 increased by $40 million, primarily due to various operational drivers, adjusted for NCI, depreciation, and restructuring costs [332]. - Adjusted EBITDA with Tax Attributes for the nine months ended September 30, 2025 increased by $96 million, driven by a $56 million increase in realized tax attributes related to the Pike County BESS project [332]. - Operating Margin for the nine months ended September 30, 2025 decreased by $344 million, influenced by prior year revenues from the monetization of the Warrior Run coal plant PPA and lower generation due to dispatch [336]. - Adjusted EBITDA for the three months ended September 30, 2025 increased by $11 million, mainly due to increased ownership of Cochrane and equity earnings from Gatun starting commercial operations [335]. - Adjusted EBITDA for the nine months ended September 30, 2025 decreased by $140 million, primarily due to various operational challenges, adjusted for NCI and restructuring costs [337]. - Adjusted EBITDA for the nine months ended September 30, 2025 decreased by $7 million, mainly due to higher net losses at Fluence, partially offset by reduced general and administrative expenses [341]. Regulatory and Market Environment - The U.S. maintains a global safeguard tariff of 14% on solar cells and modules, which is expected to expire in February 2026 [345]. - The U.S. has imposed Section 301 tariffs on certain Chinese-made lithium-ion batteries, currently set at 7.5% and increasing to 25% effective January 1, 2026 [347]. - AES has contracted and imported all necessary solar panels for U.S. solar projects scheduled to become operational in 2025, with most panels manufactured in the U.S. [356]. - AES has contracted all battery needs for U.S. energy storage projects scheduled for completion in 2025, with almost all batteries sourced from U.S. or Korean suppliers [359]. - In 2024, the company realized $1,313 million in earnings from Tax Attributes, with $1,293 million from the Renewables SBU and $20 million from the Utilities SBU [377]. - For the nine months ended September 30, 2025, the company recognized $988 million in Tax Attributes, expecting an increase in earnings from Tax Attributes in 2025 aligned with growth in the U.S. renewables business [377]. - The 2025 Act significantly revised U.S. renewable energy tax credits, allowing wind and solar projects starting construction within 12 months of enactment to qualify for 100% of the credit without a 2027 deadline [370]. - The company anticipates that the majority of its renewables project backlog will continue to qualify for the Investment Tax Credit (ITC) and Production Tax Credit (PTC) despite potential additional burdens from the 2025 Act [374]. - The 2025 Act amended the Global Intangible Low Taxed Income (GILTI) provision, which may subject a portion of the company's foreign earnings to current U.S. taxation starting January 1, 2026 [380]. - The company expects to exit the substantial majority of its coal facilities owned in 2022 by year-end 2025, continuing efforts to reduce carbon intensity through long-term contracted renewables [398]. - The enactment of the 2025 Act requires substantial guidance from the U.S. Department of Treasury, which may materially impact the company's results of operations [378]. Strategic Initiatives and Operations - The company is actively managing a hedging program to mitigate the impact of rising interest rates on future debt refinancings and new projects under development [386]. - The Central Bank of Argentina initiated a new economic program supported by a $20 billion agreement with the International Monetary Fund, with $15 billion available in 2025 [390]. - The company believes the carrying amount of its long-lived assets in Puerto Rico, valued at $920 million, is recoverable as of September 30, 2025 [397]. - AES Ohio's distribution rate case includes an increase in annual distribution revenue requirement of $168 million, based on a capital structure of 53.87% equity and 46.13% long-term debt [407][408]. - AES Indiana's settlement agreement proposes an increase in revenue of $90.7 million, with a return on common equity of 9.75% and a cost of long-term debt of 5.34% on a rate base of approximately $5.5 billion [411]. - As of September 30, 2025, the carrying value of AES Maritza's long-lived assets is $336 million, with potential risks related to the PPA discussions and compliance with EU State Aid rules [405]. - AES Ohio withdrew its Smart Grid Phase 2 Application on May 23, 2025, due to financial uncertainty from new legislation, allowing flexibility in timing and scope of future investments [406]. - The Ohio legislature passed H.B. 15, allowing electric utilities to file three-year forecasted base distribution rate cases, which could materially impact AES Ohio's financial results [409]. - AES Ohio recorded a net deferral of $8.4 million for previously recognized costs related to the recovery of expenditures during Q3 2025 [408]. - AES Indiana expects to receive an order from the IURC during Q2 2026 regarding its rate case filing [411]. - AES Maritza's PPA remains in place, but there is uncertainty regarding its future due to ongoing reviews and potential discussions with DG Comp [404][405]. - Regulatory changes and decarbonization initiatives may require material capital expenditures and impact the estimated useful life of coal facilities [401][402].