Core Points - The AES Corporation announced the pricing of $800 million aggregate principal amount of its 5.800% senior notes due 2032 [1] - The closing of the offering is expected to occur on March 20, 2025, subject to customary closing conditions [1] Use of Proceeds - The net proceeds from the offering will be used to fund the purchase of its 3.300% Senior Notes due 2025 in a tender offer and to pay related fees and expenses [2] - Any remaining net proceeds after the tender offer will be used to retire outstanding indebtedness and for general corporate purposes [2] Underwriters - Citigroup Global Markets Inc., BNP Paribas Securities Corp., BofA Securities, Inc., MUFG Securities Americas Inc., and Santander US Capital Markets LLC are acting as joint book-running managers for the offering [3] Company Overview - The AES Corporation is a Fortune 500 global energy company focused on delivering greener and smarter energy solutions [5] - The company emphasizes continuous innovation and operational excellence while partnering with customers on strategic energy transitions [5]

Core Viewpoint - The AES Corporation plans to offer senior notes in a registered public offering to fund the purchase of its existing 3.300% Senior Notes due 2025 and to manage its outstanding debt [1][2]. Group 1: Offering Details - AES intends to use the net proceeds from the offering primarily for a tender offer to purchase its 2025 Notes and to cover related fees and expenses [2]. - Any remaining proceeds after the tender offer will be used to retire outstanding indebtedness and for general corporate purposes [2]. Group 2: Management and Underwriters - Citigroup Global Markets Inc., BNP Paribas Securities Corp., BofA Securities, MUFG Securities Americas Inc., and Santander US Capital Markets LLC are acting as joint book-running managers for the offering [3]. Group 3: Company Overview - The AES Corporation is a Fortune 500 global energy company focused on delivering innovative and sustainable energy solutions [5].

ARLINGTON, Va., March 12, 2025 /PRNewswire/ -- The AES Corporation (NYSE: AES) ("AES" or the "Company") announced today the commencement of a tender offer to purchase (the "Tender Offer") for cash, subject to certain terms and conditions, any and all of its outstanding 3.300% Senior Notes due 2025 (the "Securities").The Tender Offer is being made pursuant to the Company's Offer to Purchase, dated March 12, 2025 (the "Offer to Purchase") and the related notice of guaranteed delivery (the "Notice of Guarantee ...

Group 1 - The article highlights AES Corporation (NYSE: AES) as a stock that is currently undervalued and presents a compelling investment opportunity [2] - The last coverage of AES Corporation was in December 2020 when the stock was trading at $21, indicating a historical perspective on its valuation [2] - The focus is on defensive stocks with a medium- to long-term investment horizon, suggesting a strategy aimed at stability and income generation [2] Group 2 - The article emphasizes the importance of conducting due diligence and forming independent conclusions before making investment decisions [4][5] - It clarifies that the article is for informational purposes and does not constitute financial advice, reinforcing the need for personal research [4][5] - The disclosure indicates a beneficial long position in AES shares, suggesting confidence in the stock's future performance [3]

[**Explanatory Note: Financial Restatement**](index=6&type=section&id=Explanatory%20Note) The company is restating Q2 and Q3 2024 financial statements due to an error in AES Brasil's fair value estimation, resulting in overstatement of impairment expense and a material internal control weakness [**Restatement Background and Overview**](index=6&type=section&id=Restatement%20Background%20and%20Overview) The restatement corrects an overstatement of impairment expense for AES Brasil in Q2 and Q3 2024, caused by incomplete fair value data, revealing a material internal control weakness - The restatement corrects an overstatement of impairment expense for AES Brasil in Q2 and Q3 2024, which was caused by using incomplete data in the fair value estimation after the asset was classified as held-for-sale[16](index=16&type=chunk) - As a result of this error, management identified a material weakness in internal control over financial reporting as of December 31, 2024 The weakness was a failure to design effective controls for reviewing the complex, non-routine disposition of AES Brasil[17](index=17&type=chunk)[21](index=21&type=chunk) - The company will not amend its previously filed Form 10-Q reports for the affected periods; investors should rely on the restated financial information presented in this Form 10-K[18](index=18&type=chunk) [**Part I**](index=7&type=section&id=Part%20I) [**Item 1. Business**](index=8&type=section&id=ITEM%201.%20BUSINESS) AES is a global energy company accelerating the transition to cleaner energy by partnering with large corporations, focusing on renewables and data center growth - The company's strategy focuses on providing renewable energy to large corporate customers, particularly data centers in the U.S., which are projected to increase electricity demand by up to **60 GW** by 2030[33](index=33&type=chunk) - In 2024, AES signed long-term contracts for **4.4 GW** of renewables, increasing its project backlog to **11.9 GW** Bloomberg New Energy Finance has consistently ranked AES as a top global seller of renewable power to corporations[34](index=34&type=chunk) - The company is organized into four SBUs: Renewables, Utilities, Energy Infrastructure, and New Energy Technologies Adjusted EBITDA is the primary measure of operating performance for these segments[72](index=72&type=chunk)[74](index=74&type=chunk) 2024 Strategic Highlights | Highlight | Detail | | :--- | :--- | | **New Contracts** | Awarded or signed 6.8 GW of new contracts, including 4.4 GW of renewables PPAs and 2.1 GW of data center growth at AES Ohio. | | **Clean Energy Ranking** | Ranked 1 provider of clean energy to corporations globally by BloombergNEF for the third consecutive year. | | **Project Completions** | Completed 3.0 GW of renewables and a 670 MW gas plant in Panama. | | **Project Backlog** | Backlog of projects with signed contracts reached 11.9 GW (4.9 GW under construction, 7.0 GW with signed PPAs). | | **Asset Sales** | Announced or closed nearly 75% of its $3.5 billion asset sale target, including the sale of a 30% interest in AES Ohio and its 47.3% interest in AES Brasil. | | **Coal Exit** | Retired 481 MW of coal generation, totaling 13.4 GW of coal exits announced or closed since 2017. | [**Business Model Overview**](index=10&type=section&id=Business%20Model%20Overview) AES's business model encompasses Generation, Utilities, and Development/Construction, focusing on long-term contracts, regulated tariffs, and renewable project development - The generation portfolio totals **32,109 MW** Performance is driven by electricity sales agreements (long-term PPAs and short-term sales), plant reliability, fuel costs, and fixed-cost management[39](index=39&type=chunk)[40](index=40&type=chunk) - The generation fleet's fuel mix by capacity is **50%** renewables, **32%** natural gas, **16%** coal, and **2%** pet coke/oil[54](index=54&type=chunk)[55](index=55&type=chunk)[56](index=56&type=chunk) - The utilities business serves **2.7 million** customers across the U.S. and El Salvador Performance is driven by regulated rates of return, tariffs, and service reliability[60](index=60&type=chunk)[62](index=62&type=chunk) - Development and construction activities are prioritized in key growth markets like the U.S. and Chile, focusing on renewables The company often secures long-term contracts and non-recourse project debt before starting construction[69](index=69&type=chunk)[70](index=70&type=chunk) [**Renewables SBU**](index=16&type=section&id=Renewables%20SBU) The Renewables SBU operates 13.2 GW of assets and has a 3.7 GW backlog, capitalizing on data center demand and monetizing U.S. tax credits - The Renewables SBU has **13,229 MW** of operating capacity across nine countries, with an additional **3,955 MW** under construction[79](index=79&type=chunk)[83](index=83&type=chunk) - AES Clean Energy, the U.S. renewables platform, has an **8,927 MW** operating capacity, **3,306 MW** under construction, and a **7.3 GW** project backlog It is a leader in serving large corporate customers[84](index=84&type=chunk) - In 2024, AES recognized **$1.3 billion** from monetizing U.S. renewables tax attributes through tax equity partnerships and transferability provisions of the Inflation Reduction Act (IRA)[86](index=86&type=chunk) - In October 2024, AES sold its **47.3%** interest in AES Brasil, a **5.2 GW** renewable energy generator[112](index=112&type=chunk)[43](index=43&type=chunk) [**Utilities SBU**](index=25&type=section&id=Utilities%20SBU) The Utilities SBU serves 2.7 million customers, targeting 10% annual rate base growth in its U.S. utilities through grid modernization and data center load investments - The Utilities SBU serves **2.7 million** customers, with **1.07 million** in the U.S. (AES Indiana and AES Ohio) and **1.62 million** in El Salvador[60](index=60&type=chunk)[116](index=116&type=chunk) - AES Indiana received approval for a base rate increase of **$71 million** annually and plans to spend **$2.8 billion** on capital projects from 2025-2027, including converting its remaining Petersburg coal units to natural gas[128](index=128&type=chunk)[137](index=137&type=chunk)[136](index=136&type=chunk) - AES Ohio is operating under its Electric Security Plan (ESP 4), which allows for timely recovery of distribution investments It filed a new distribution rate case in November 2024 requesting a **$235 million** revenue increase[152](index=152&type=chunk)[154](index=154&type=chunk) - In September 2024, AES agreed to sell a **30%** indirect equity interest in AES Ohio to CDPQ for approximately **$546 million** to support its growth plans[140](index=140&type=chunk)[43](index=43&type=chunk) [**Energy Infrastructure SBU**](index=33&type=section&id=Energy%20Infrastructure%20SBU) The Energy Infrastructure SBU manages 15.2 GW of operating capacity, providing energy security with gas and LNG assets while systematically exiting coal generation - The SBU has **15,176 MW** of operating capacity, primarily from gas, coal, and pet coke, with an additional **492 MW** under construction[163](index=163&type=chunk)[164](index=164&type=chunk) - AES Chile is pursuing a "Green Blend" strategy to reduce carbon intensity and has retired several coal units, with plans to exit remaining coal operations In January 2025, it closed the sale of its Ventanas coal plant[167](index=167&type=chunk)[170](index=170&type=chunk)[171](index=171&type=chunk) - AES Southland's gas-fired generation in California operates under long-term Resource Adequacy Purchase Agreements (RAPAs) with Southern California Edison through **2040**[182](index=182&type=chunk)[183](index=183&type=chunk) - The company agreed to sell its **51%** interest in the Mong Duong 2 coal plant in Vietnam, with the sale expected to close by early **2026**[189](index=189&type=chunk) [**New Energy Technologies SBU**](index=40&type=section&id=New%20Energy%20Technologies%20SBU) The New Energy Technologies SBU incubates and invests in innovative energy solutions, including significant interests in Fluence and Uplight, and advancing AI-powered solar technologies - This SBU includes investments in third-party platforms and internally developed initiatives like Fluence, Uplight, 5B, and Maximo[210](index=210&type=chunk) - AES holds a **28.5%** economic interest in Fluence (Nasdaq: FLNC), a leading global provider of energy storage products and services[214](index=214&type=chunk) - AES holds a **24.6%** ownership interest in Uplight, a software and services provider for electric and gas utilities[218](index=218&type=chunk) - The company has a strategic investment in 5B, a solar technology innovator whose prefabricated design enables faster solar project installation[221](index=221&type=chunk) [**Environmental and Land-Use Regulations**](index=45&type=section&id=Environmental%20and%20Land-Use%20Regulations) The company faces extensive U.S. and international environmental regulations, including those for GHG emissions and Coal Combustion Residuals, posing significant compliance costs and risks - The company faces risks from numerous environmental laws concerning air emissions (SOx, NOx, GHG, mercury), water discharges, and waste management (including Coal Combustion Residuals - CCR), which could result in significant capital expenditures[263](index=263&type=chunk) - In the U.S., the EPA's final rule regulating GHGs from existing power plants (under CAA Section 111(d)) could have a material impact, with compliance standards to be established through State Plans[277](index=277&type=chunk) - The EPA's rule on Coal Combustion Residuals (CCR) establishes national criteria for disposal and could have a material impact on business, financial condition, and results of operations, with potential for litigation and remediation costs[290](index=290&type=chunk)[292](index=292&type=chunk) - In Chile, regulations require a portion of energy supply to come from non-conventional renewable sources, and a green tax is imposed on CO2 emissions, impacting costs[295](index=295&type=chunk)[296](index=296&type=chunk) [**Human Capital Management**](index=54&type=section&id=Human%20Capital%20Management) As of December 31, 2024, AES employed approximately 9,100 full-time employees, emphasizing safety, talent development, and pay-for-performance compensation, with a significant portion under collective bargaining agreements - As of December 31, 2024, the company had approximately **9,100** full-time employees[313](index=313&type=chunk) - Approximately **30%** of U.S. employees and **50%** of non-U.S. employees are covered by collective bargaining agreements[314](index=314&type=chunk) - In 2024, the company's Lost Time Incident (LTI) Rate was **0.094** for employees, **0.069** for operational contractors, and **0.037** for construction contractors, with no work-related fatalities[317](index=317&type=chunk) [**Item 1A. Risk Factors**](index=57&type=section&id=ITEM%201A.%20RISK%20FACTORS) The company faces diverse operational, regulatory, legal, and financial risks, including high debt, international instability, and a material weakness in internal controls over financial reporting - Operational risks include equipment failure, disruptions in fuel supply, and catastrophic events Battery storage operations also carry risks associated with lithium-ion batteries[333](index=333&type=chunk)[337](index=337&type=chunk) - Renewable energy growth is dependent on favorable government policies and incentives, such as the U.S. Inflation Reduction Act, which are subject to change Tariffs on imported solar panels and equipment also pose a risk[340](index=340&type=chunk)[341](index=341&type=chunk) - The company is exposed to significant risks from its international operations in developing countries, including political instability, currency fluctuations, and difficulties in enforcing contracts[350](index=350&type=chunk) - As of December 31, 2024, the company had approximately **$29 billion** of consolidated debt This high leverage makes it vulnerable to adverse economic conditions and limits financial flexibility[415](index=415&type=chunk) - A material weakness in internal control over financial reporting was identified related to the disposition of AES Brasil, which could impact investor confidence[426](index=426&type=chunk) [**Item 1C. Cybersecurity**](index=75&type=section&id=ITEM%201C.%20CYBERSECURITY) AES maintains a comprehensive cybersecurity risk management program, overseen by the CISO and Board, integrating NIST frameworks and robust incident response protocols - The company's cybersecurity program is led by a Chief Information Security Officer (CISO) who reports to the General Counsel and briefs the Board of Directors on cyber risks, typically on a semi-annual basis[430](index=430&type=chunk)[432](index=432&type=chunk) - The cybersecurity risk management program is integrated into the overall enterprise risk process and is informed by established frameworks such as NIST[433](index=433&type=chunk)[436](index=436&type=chunk) - An Incident Response Team and protocol are in place, and the company regularly practices incident response through executive tabletop exercises and provides awareness training to employees[435](index=435&type=chunk)[437](index=437&type=chunk) [**Item 3. Legal Proceedings**](index=75&type=section&id=ITEM%203.%20LEGAL%20PROCEEDINGS) The company is involved in various legal proceedings, including arbitrations in India and Mexico, environmental compliance issues in the U.S., and significant damages claims in the Dominican Republic - In India, GRIDCO is challenging an arbitration award that rejected its claim for approximately **$189 million** plus penalties and interest related to a comfort letter for the CESCO investment[442](index=442&type=chunk) - AES faces two separate lawsuits in the Dominican Republic from claimants seeking a combined total of over **$1.3 billion** in damages for alleged personal injuries and deaths related to Coal Combustion Residuals (CCRs) from 2003-2004[446](index=446&type=chunk)[447](index=447&type=chunk) - In Mexico, an arbitration tribunal rejected CFE's claims for approximately **$680 million** against AES Mérida III and awarded AES Mérida net damages on its counterclaims The award is currently in enforcement and challenge proceedings in Mexican courts[449](index=449&type=chunk) - In Chile, the competition agency (FNE) opened an investigation in May 2024 into AES Andes regarding coal prices and blends, based on a confidential complaint alleging abuse of a dominant position[453](index=453&type=chunk) [**Part II**](index=79&type=section&id=Part%20II) [**Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities**](index=79&type=section&id=ITEM%205.%20MARKET%20FOR%20REGISTRANT'S%20COMMON%20EQUITY,%20RELATED%20STOCKHOLDER%20MATTERS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) AES common stock trades on the NYSE, with a remaining **$264 million** stock repurchase program and consistent quarterly cash dividends since 2012 - No repurchases of common stock were made in 2024, 2023, or 2022 As of December 31, 2024, **$264 million** remained available under the stock repurchase program[457](index=457&type=chunk) Quarterly Cash Dividend per Share | Commencing Q4 | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | **Cash dividend** | $0.17595 | $0.1725 | $0.1659 | - As of March 6, 2025, there were approximately **3,301** record holders of the company's common stock[461](index=461&type=chunk) [**Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations**](index=81&type=section&id=ITEM%207.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) In 2024, net income increased significantly due to lower impairments and asset sales, while Adjusted EBITDA decreased, though Adjusted EBITDA with Tax Attributes grew, reflecting U.S. renewables growth Key Financial Results (2024 vs. 2023) | Metric | 2024 | 2023 | Change | Key Drivers | | :--- | :--- | :--- | :--- | :--- | | **Net Income** | $802M | ($182M) | +$984M | Lower impairments, gain on sale of AES Brasil, favorable Utilities SBU results. | | **Adjusted EBITDA** | $2,639M | $2,828M | -$189M | Drought/outages in Colombia, lower margins at Energy Infrastructure SBU. | | **Adjusted EBITDA with Tax Attributes** | $3,952M | $3,439M | +$513M | Higher realized tax attributes from new U.S. renewables projects. | | **Diluted EPS** | $2.37 | $0.34 | +$2.03 | Lower impairments, gain on sale of AES Brasil, lower tax expense. | | **Adjusted EPS** | $2.14 | $1.76 | +$0.38 | Higher contributions from new renewables, lower adjusted tax rate, higher Utilities SBU contributions. | - Total revenue decreased by **3%** to **$12.3 billion**, and operating margin decreased by **8%** to **$2.3 billion** in 2024 compared to 2023[472](index=472&type=chunk)[477](index=477&type=chunk)[479](index=479&type=chunk) [**Review of Consolidated Results of Operations**](index=82&type=section&id=Review%20of%20Consolidated%20Results%20of%20Operations) In 2024, total revenue and operating margin decreased, primarily due to the Energy Infrastructure and Renewables SBUs, partially offset by strong Utilities performance and reduced impairment expense - Operating margin decreased by **$190 million**, driven by a **$145 million** decline at the Energy Infrastructure SBU (due to lower Southland margins and asset sales) and a **$133 million** decline at the Renewables SBU (due to drought/outages in Colombia) This was partly offset by a **$110 million** increase at the Utilities SBU[479](index=479&type=chunk)[480](index=480&type=chunk)[481](index=481&type=chunk) - Asset impairment expense decreased by **$693 million** to **$374 million** in 2024, compared to **$1.1 billion** in 2023 The prior year included large impairments at Warrior Run, New York Wind, and Norgener (Chile)[496](index=496&type=chunk) - A gain on disposal of business interests of **$351 million** was recognized in 2024, primarily from the **$312 million** gain on the sale of AES Brasil, compared to a **$134 million** gain in 2023 which included the sale of Fluence shares[493](index=493&type=chunk) - The company recognized net foreign currency transaction gains of **$31 million** in 2024, a significant reversal from the **$359 million** loss in 2023, which was driven by the depreciation of the Argentine peso[498](index=498&type=chunk)[499](index=499&type=chunk) [**SBU Performance Analysis**](index=87&type=section&id=SBU%20Performance%20Analysis) Segment performance in 2024 showed strong Utilities SBU growth, a decline in Renewables SBU operational EBITDA offset by tax attributes, and a decrease in Energy Infrastructure SBU EBITDA Adjusted EBITDA by SBU (in millions) | SBU | 2024 | 2023 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | **Renewables** | $552 | $652 | ($100) | -15% | | **Utilities** | $792 | $678 | $114 | 17% | | **Energy Infrastructure** | $1,366 | $1,540 | ($174) | -11% | | **New Energy Technologies** | ($38) | ($62) | $24 | 39% | - The Renewables SBU's Adjusted EBITDA with Tax Attributes increased by **$600 million** to **$1.85 billion**, driven by **$1.29 billion** in tax attributes from U.S. projects, offsetting the decline in operational Adjusted EBITDA[530](index=530&type=chunk)[532](index=532&type=chunk) - The Utilities SBU's performance was driven by higher transmission/rider revenues, higher retail rates from the 2024 Base Rate Order at AES Indiana, and higher demand from favorable weather[534](index=534&type=chunk) - The Energy Infrastructure SBU's decline was mainly due to higher prior-year margins at its Southland merchant facilities, the impact of asset sales in Jordan, higher outages, and the shutdown of the Warrior Run plant[536](index=536&type=chunk) [**Key Trends and Uncertainties**](index=94&type=section&id=Key%20Trends%20and%20Uncertainties) AES navigates trade restrictions, hydrological risks, and macroeconomic volatility, while benefiting from the IRA and progressing its strategic coal exit - **Trade & Supply Chain:** The company is managing risks from U.S. tariffs and trade investigations on solar and battery components from Southeast Asia and China It has secured panels and batteries for its 2025-2026 U.S. project backlog[542](index=542&type=chunk)[548](index=548&type=chunk) - **Inflation Reduction Act (IRA):** The IRA is a key driver for U.S. renewables growth In 2024, AES realized **$1,313 million** in earnings from Tax Attributes, primarily from the Renewables SBU, and expects this to increase in **2025**[557](index=557&type=chunk)[560](index=560&type=chunk) - **Decarbonization:** AES intends to exit the substantial majority of its 2022-owned coal facilities by the end of **2025**, with remaining exits expected to continue beyond **2027**[577](index=577&type=chunk) - **Regulatory Risk:** The European Commission's DG Comp is reviewing AES Maritza's PPA in Bulgaria for compliance with State Aid rules, which could have a material adverse effect if resolved unfavorably[583](index=583&type=chunk)[585](index=585&type=chunk) [**Capital Resources and Liquidity**](index=99&type=section&id=Capital%20Resources%20and%20Liquidity) As of December 31, 2024, AES had **$1.5 billion** in unrestricted cash and **$28.4 billion** in total debt, with primary cash uses for capital expenditures and debt repayments, while managing interest rate risk Debt Summary (as of Dec 31, 2024) | Debt Type | Amount (billions) | | :--- | :--- | | Non-Recourse Debt | $22.7 | | Recourse Debt | $5.7 | | **Total Debt** | **$28.4** | Parent Company Liquidity (in millions) | Component | Dec 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Parent Co. Cash & Equivalents | $265 | $33 | | Available Borrowings under Credit Facilities | $1,782 | $1,376 | | **Total Parent Company Liquidity** | **$2,047** | **$1,409** | - Net cash from operating activities was **$2.8 billion** Capital expenditures were the largest cash use at **$7.4 billion**, primarily for growth projects[605](index=605&type=chunk)[608](index=608&type=chunk) - As of Dec 31, 2024, subsidiaries had **$540 million** of debt in default (primarily technical, except for AES Puerto Rico), but this did not trigger cross-defaults under the Parent Company's recourse debt[898](index=898&type=chunk) [**Critical Accounting Policies and Estimates**](index=109&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) The company's financial statements rely on critical accounting policies and estimates requiring significant judgment, particularly for income taxes, impairment testing, fair value measurements, and consolidation - **Income Taxes:** Significant judgment is required for tax reserves, valuation allowances on deferred tax assets, and assessing the impact of varying tax laws across numerous jurisdictions[638](index=638&type=chunk)[641](index=641&type=chunk) - **Impairments:** Evaluating goodwill and long-lived assets for impairment involves considerable judgment in determining if an impairment indicator exists and in estimating fair value, typically using discounted cash flow models with sensitive assumptions[645](index=645&type=chunk)[646](index=646&type=chunk) - **Fair Value:** Determining the fair value of financial instruments (derivatives) and nonfinancial assets (in acquisitions/impairments) relies on models with inputs that can be unobservable (Level 3), requiring management to make significant estimates[651](index=651&type=chunk)[653](index=653&type=chunk)[655](index=655&type=chunk) - **Consolidation:** Judgment is required to determine whether an entity is a Variable Interest Entity (VIE) and if AES is the primary beneficiary, or for voting interest entities, whether non-controlling rights are substantive, which dictates the consolidation conclusion[663](index=663&type=chunk)[664](index=664&type=chunk)[665](index=665&type=chunk) [**Item 7A. Quantitative and Qualitative Disclosures About Market Risk**](index=113&type=section&id=ITEM%207A.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) AES is exposed to market risks from commodity prices, foreign exchange rates, and interest rates, which are managed through hedging programs, showing minimal projected impact on pre-tax earnings - The company's primary market risks are commodity prices (electricity, gas, coal), foreign currency exchange rates, and interest rates[671](index=671&type=chunk) - **Commodity Risk:** As of Dec 31, 2024, a **10%** increase in commodity prices is projected to result in a pre-tax earnings gain of less than **$5 million** for power, a gain of less than **$5 million** for gas, and a loss of less than **$5 million** for coal[675](index=675&type=chunk) - **Foreign Exchange Risk:** The company has material exposure to the Argentine, Chilean, and Colombian pesos A **10%** USD appreciation against these currencies could result in a loss of less than **$5 million** for each on 2025 forecasted cash distributions[681](index=681&type=chunk)[683](index=683&type=chunk) - **Interest Rate Risk:** A one-time 100-basis-point increase in interest rates is projected to have an impact of less than **$15 million** on 2025 pre-tax earnings for its variable rate debt portfolio[686](index=686&type=chunk) [**Item 8. Financial Statements and Supplementary Data**](index=116&type=section&id=ITEM%208.%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA) This section presents the audited consolidated financial statements for 2024, including balance sheets, income statements, and cash flows, with detailed notes on accounting policies, segment information, and the significant restatement of 2024 quarterly results - The auditor, Ernst & Young LLP, issued an unqualified opinion on the consolidated financial statements but an adverse opinion on the company's internal control over financial reporting as of December 31, 2024, due to a material weakness[690](index=690&type=chunk)[1122](index=1122&type=chunk) Consolidated Balance Sheet Highlights (in millions) | Account | Dec 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total Assets | $47,406 | $44,799 | | Total Liabilities | $38,764 | $37,350 | | Total AES Stockholders' Equity | $3,644 | $2,488 | | Total Equity | $7,704 | $5,985 | Consolidated Statement of Operations Highlights (in millions) | Account | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | Total Revenue | $12,278 | $12,668 | $12,617 | | Operating Margin | $2,314 | $2,504 | $2,548 | | Income (Loss) from Continuing Operations | $809 | ($189) | ($505) | | Net Income (Loss) Attributable to AES | $1,679 | $249 | ($546) | [**Note 23. Asset Impairment Expense**](index=182&type=section&id=Note%2023.%20Asset%20Impairment%20Expense) The company recognized **$374 million** in asset impairment expense in 2024, a significant decrease from **$1.1 billion** in 2023, with major impairments related to Ventanas, renewables development, AES Brasil, and Mong Duong Asset Impairment Expense by Asset (in millions) | Asset | 2024 | 2023 | | :--- | :--- | :--- | | Ventanas | $125 | $— | | AES Clean Energy Development Projects | $95 | $151 | | AES Brasil | $80 | $— | | Mong Duong | $62 | $167 | | Warrior Run | $— | $198 | | New York Wind | $— | $186 | | Norgener | $— | $137 | | TEG / TEP | $— | $136 | | **Total** | **$374** | **$1,067** | [**Note 25. Held-for-Sale and Dispositions**](index=187&type=section&id=Note%2025.%20Held-for-Sale%20and%20Dispositions) As of year-end 2024, Ventanas, Dominican Republic Renewables, and Mong Duong were classified as held-for-sale, while major 2024 dispositions included the sales of AES Brasil and Jordan plants - In October 2024, the company sold its **47.3%** interest in AES Brasil for **$586 million**, recognizing a **$312 million** pre-tax gain[1052](index=1052&type=chunk) - In March 2024, the company sold a **26%** interest in its Jordan plants (Amman East and IPP4), receiving net cash of **$45 million** and recognizing a **$10 million** pre-tax loss The remaining **10%** interest is now accounted for as an equity method investment[1053](index=1053&type=chunk) - Assets classified as held-for-sale at year-end include the Ventanas plant (Chile), a **50%** interest in Dominican Republic Renewables, and a **51%** interest in the Mong Duong plant (Vietnam)[1048](index=1048&type=chunk)[1049](index=1049&type=chunk)[1050](index=1050&type=chunk) [**Note 26. Acquisitions**](index=189&type=section&id=Note%2026.%20Acquisitions) In 2024, AES made strategic acquisitions to bolster its renewables portfolio, including Atacama Solar, the Felix green hydrogen project, and the Madison solar project, supporting growth in key markets - In December 2024, acquired **100%** of Atacama Solar SpA in Chile for **$105 million**, adding **150 MW** of operating solar and a development pipeline[1055](index=1055&type=chunk) - Acquired the Madison solar project and Birdseye development pipeline for **$20 million**, resulting in a **$20 million** bargain purchase gain due to the project qualifying for an increased Investment Tax Credit (ITC)[1059](index=1059&type=chunk)[1060](index=1060&type=chunk) - In 2023, acquired the Bellefield projects (**2 GW** solar + BESS) for consideration of approximately **$358 million**, including cash, contingent payments, and deferred payments[1067](index=1067&type=chunk)[1068](index=1068&type=chunk) [**Note 30. Restatement (Unaudited)**](index=195&type=section&id=Note%2030.%20Restatement%20(Unaudited)) This note details the restatement of unaudited quarterly financial information for Q2 and Q3 2024, correcting an overstatement of impairment expense for AES Brasil due to incomplete fair value data - The restatement corrects an overstatement of impairment expense for the AES Brasil disposal group The error was due to using incomplete data to estimate fair value after the asset was classified as held-for-sale[1095](index=1095&type=chunk) Impact of Restatement on Net Income (in millions) | Period | Previously Reported Net Income | Adjustment | Restated Net Income | | :--- | :--- | :--- | :--- | | **Three Months Ended June 30, 2024** | ($39) | $192 | $153 | | **Six Months Ended June 30, 2024** | $239 | $192 | $431 | | **Three Months Ended Sept 30, 2024** | $210 | $5 | $215 | | **Nine Months Ended Sept 30, 2024** | $449 | $197 | $646 | - The restatement had no impact on cash flow statements as the impairment expense is a non-cash item[1098](index=1098&type=chunk) [**Item 9A. Controls and Procedures**](index=202&type=section&id=ITEM%209A.%20CONTROLS%20AND%20PROCEDURES) Management concluded disclosure controls were ineffective as of December 31, 2024, due to a material weakness in internal control over financial reporting related to the AES Brasil disposition, with a remediation plan underway - The CEO and CFO concluded that disclosure controls and procedures were not effective as of December 31, 2024, due to a material weakness in internal control over financial reporting[1114](index=1114&type=chunk) - The material weakness identified was the failure to design effective controls over the review of the disposition of AES Brasil, a complex non-routine transaction, which resulted in the use of incomplete data for the impairment calculation[1115](index=1115&type=chunk)[1123](index=1123&type=chunk) - A remediation plan is being implemented, which includes updating policies for impairment analysis and held-for-sale accounting, and providing training to personnel The plan is expected to be completed by June 30, 2025[1116](index=1116&type=chunk)[1117](index=1117&type=chunk) - The independent auditor, Ernst & Young LLP, issued an adverse opinion on the company's internal control over financial reporting as of December 31, 2024, because of the identified material weakness[1122](index=1122&type=chunk) [**Part III**](index=207&type=section&id=Part%20III) [**Items 10-14: Governance, Compensation, and Auditor Information**](index=207&type=section&id=Items%2010-14) This section incorporates by reference information from the 2025 Proxy Statement, covering directors, executive officers, corporate governance, executive compensation, security ownership, related party transactions, and principal accountant fees - Information regarding directors, executive officers, corporate governance, executive compensation, security ownership, related transactions, and auditor fees is incorporated by reference from the forthcoming 2025 Proxy Statement[1134](index=1134&type=chunk)[1135](index=1135&type=chunk)[1136](index=1136&type=chunk)[1140](index=1140&type=chunk)[1141](index=1141&type=chunk) Securities Authorized for Issuance under Equity Compensation Plans (as of Dec 31, 2024) | Plan Category | Securities to be Issued Upon Exercise (a) | Weighted-Average Exercise Price (b) | Securities Remaining for Future Issuance (c) | | :--- | :--- | :--- | :--- | | **Equity compensation plans approved by security holders** | 5,788,469 | $12.50 | 9,254,667 | | **Total** | **5,788,469** | **$12.50** | **9,254,667** |

The AES Corporation (AES) focuses on increasing its renewable energy generation by adding solar, wind and battery energy storage on a regular basis to meet its long-term clean energy goals. It has also been expanding its footprint in the liquefied natural gas (LNG) market.However, this Zacks Rank #3 (Hold) company faces risks like a decline in wholesale prices.Tailwinds Favoring AES Like other utility providers, AES has been expanding its renewable generation portfolio to gain from the growing clean energy ...

Great investments are even better and more fruitful when you can buy them at a discount.Lots of investors enjoy keeping an eye on the market in general, and their portfolio in particular, standing ready to make a move whenever one is merited. Other people, however, have neither the time nor the inclination to monitor and manage their stocks. This crowd just wants to set it and forget it for years on end.If you're part of this latter group, then there's good news: You have options. If you want to invest diff ...

The AES Corporation’s (AES) fourth-quarter 2024 adjusted earnings of 54 cents per share beat the Zacks Consensus Estimate of 34 cents by 58.8%. However, the bottom line declined 26% from 73 cents per share in the year-ago quarter.Find the latest EPS estimates and surprises on Zacks Earnings Calendar.The company generated GAAP earnings of 79 cents per share against the GAAP loss of 15 cents per share in the fourth quarter of 2023.AES reported 2024 adjusted earnings of $2.14 per share, which were higher than ...

Financial Data and Key Metrics Changes - In 2024, the company achieved adjusted EBITDA of $2.64 billion, down from $2.8 billion in 2023, primarily due to extreme weather events in South America [40] - Adjusted EPS for 2024 was $2.14, an increase from $1.76 in 2023, driven by higher tax attributes on new renewable projects and a lower adjusted tax rate [40][41] - Parent free cash flow was $1.1 billion, at the midpoint of guidance [11] Business Line Data and Key Metrics Changes - The renewables business saw lower adjusted EBITDA due to historic weather volatility in South America, with significant impacts from droughts and floods [43] - The utilities segment experienced higher adjusted PTC driven by rate-based investments and new rates at AES Indiana [44] - The energy infrastructure segment's adjusted EBITDA declined due to outages and lower margins, but the new 670-megawatt gas plant in Panama is expected to enhance cash flow [30][40] Market Data and Key Metrics Changes - The US added 49 gigawatts of new renewable capacity in 2024, with expectations for 63 gigawatts in 2025, primarily from solar and wind [18][19] - The company signed 4.4 gigawatts of new power purchase agreements (PPAs) in 2024, aiming for 14 to 17 gigawatts by 2025 [9] Company Strategy and Development Direction - The company is focusing on high-risk-adjusted return projects and improving organizational efficiency while maintaining its dividend [8] - A shift towards fewer but larger projects is expected to enhance profitability and reduce capital requirements [13][35] - The company aims to improve credit metrics and maintain investment-grade ratings while executing on its backlog of projects [33][70] Management's Comments on Operating Environment and Future Outlook - Management expressed disappointment with stock price performance but emphasized the resilience of the business model amid regulatory uncertainties [7] - The company anticipates over 60% year-over-year growth in renewables EBITDA in 2025, driven by new projects coming online [16] - Management highlighted strong demand from corporate clients, particularly in data centers, which is expected to continue driving growth [24][39] Other Important Information - The company plans to reduce parent investments in renewables by $1.3 billion through 2027, eliminating the need for new equity [35] - A restructuring program is expected to yield $150 million in cost savings in 2025, ramping up to over $300 million in 2026 [37][50] Q&A Session Summary Question: On cost savings and their sources - Management confirmed that the $150 million in cost savings, ramping to $300 million, are ongoing and not one-time, with confidence in achieving these reductions [78][80] Question: On renewable CapEx and growth strategy - Management clarified that the focus is on executing the existing pipeline rather than expanding it significantly, with a commitment to maintaining financial results despite reduced CapEx [87][88] Question: On asset sales and coal contributions - Management indicated that asset sales will include some coal exits and technology monetization, but the reliance on asset sales has decreased [92][93] Question: On cost reduction specifics - Management detailed that cost reductions include resizing the development program, cutting early-stage project costs, and a workforce reduction of about 10% [99][100] Question: On credit metrics and future expectations - Management provided insights on credit metrics, indicating a significant cushion above downgrade thresholds and expectations for improvement over time [104][106]

Financial Data and Key Metrics Changes - In 2024, the company achieved adjusted EBITDA of $2.64 billion, down from $2.8 billion in 2023, primarily due to extreme weather events in South America and asset sales [32][34] - Adjusted EPS for 2024 was $2.14, an increase from $1.76 in 2023, driven by tax benefits from new renewable projects and a lower adjusted tax rate [33][34] - Parent free cash flow was $1.1 billion, at the midpoint of guidance, reflecting a more than 10% increase from the prior year [37] Business Line Data and Key Metrics Changes - The Renewables SBU experienced lower adjusted EBITDA due to historic weather volatility in South America, with significant contributions from new projects in the U.S. partially offsetting losses [34][36] - The Utilities SBU saw higher adjusted PTC driven by rate-based investments and improved weather, but was partially offset by higher interest expenses [36] - The Energy Infrastructure SBU's lower adjusted EBITDA was attributed to outages and lower margins, while the New Energy Technologies SBU showed improved results [36] Market Data and Key Metrics Changes - The U.S. added 49 gigawatts of new renewable capacity in 2024, with renewables and battery storage representing 92% of those additions [15] - In 2025, the U.S. is expected to add 63 gigawatts, with 93% being solar, storage, and wind [16] - The company noted that renewables have the shortest time to power and greater price certainty, which is critical for meeting the growing demand for electricity [17] Company Strategy and Development Direction - The company is focusing on reducing investments in renewables to prioritize high-risk adjusted return projects and improve organizational efficiency [6][10] - The 2025 financial outlook indicates a significant growth in renewables EBITDA, with expectations of over 60% year-over-year growth [12][41] - The company is committed to maintaining its investment-grade credit rating and dividend while streamlining operations and reducing costs [26][50] Management's Comments on Operating Environment and Future Outlook - Management expressed disappointment with stock price performance but emphasized the resilience of the business model against regulatory changes [5][6] - The company is confident in achieving long-term growth targets of 5% to 7% adjusted EBITDA growth through 2027, supported by a strong backlog of projects [26][57] - Management highlighted the importance of renewables in meeting the increasing demand for electricity, particularly from technology customers [6][17] Other Important Information - The company signed 4.4 gigawatts of new power purchase agreements (PPAs) in 2024, aiming for 14 to 17 gigawatts by 2025 [7] - The sale of Brazilian assets was noted as a significant de-risking move, reducing exposure to various market risks [14] - The company plans to maintain a focus on larger, more profitable projects while reducing overall capital expenditures [27][63] Q&A Session Summary Question: On cost savings and their sources - The company confirmed that the $150 million in cost savings ramping to $300 million is ongoing and not one-time, with confidence in achieving these reductions [60][61] Question: On renewable CapEx and growth strategy - Management clarified that while CapEx is being cut, the focus remains on executing a strong pipeline, with a shift towards fewer but larger projects [71][73] Question: On asset sales and coal contributions - The company indicated that asset sales will include some coal exits and technology monetization, but the reliance on these sales has decreased [76][77] Question: On cost reduction specifics - The cost reduction program includes resizing the development team, cutting early-stage project costs, and a 10% workforce reduction [81][82] Question: On credit metrics and future outlook - Management discussed expectations for improving credit metrics, with a focus on increasing cash flow and EBITDA through operational efficiencies [86][95]