AES(AES) - 2025 Q2 - Quarterly Results

Executive Summary & Highlights AES reported a Q2 2025 Net Loss, but Adjusted EBITDA and EPS grew, driven by renewables and strategic PPA expansion, reaffirming 2025 guidance and long-term growth targets Q2 2025 Performance Overview AES reported a Net Loss for Q2 2025, a significant decrease from Net Income in Q2 2024, primarily due to day-one losses on sales-type leases and higher income tax expense. However, Adjusted EBITDA and Adjusted EPS showed growth, driven by strong performance in the Renewables SBU and a lower adjusted tax rate | Metric | Q2 2025 | Q2 2024 | Change (YoY) | | :----------------------------------- | :------ | :------ | :----------- | | Net Loss (GAAP) | ($150M) | $153M | ($303M) decrease | | Net Loss Attributable to AES (GAAP) | ($95M) | $276M | ($371M) decrease | | Diluted EPS (GAAP) | ($0.15) | $0.39 | ($0.54) decrease | | Adjusted EBITDA (Non-GAAP) | $681M | $658M | $23M increase (3.5%) | | Adjusted EBITDA with Tax Attributes (Non-GAAP) | $1,057M | $849M | $208M increase (24.5%) | | Adjusted EPS (Non-GAAP) | $0.51 | $0.38 | $0.13 increase (34.2%) | - Renewables SBU Adjusted EBITDA grew 56% compared to Q2 2024, driven by higher revenues from new projects placed in service[1][5][6] - The Net Loss was primarily due to higher day-one losses on sales-type leases at AES Clean Energy Development, higher income tax expense, and lower margins from the Energy Infrastructure SBU[6] Strategic Accomplishments Summary AES continued to expand its renewable energy portfolio, adding new projects and securing significant long-term power purchase agreements (PPAs), particularly with data center companies, while also advancing regulatory processes for its utility operations - On track to add 3.2 GW of new projects in operation in 2025, with 1.9 GW already completed[4][8] - Signed or awarded new long-term PPAs for 1.6 GW of solar and wind since Q1 results, all with data center companies, contributing to a total PPA backlog of 12 GW (including 5.2 GW under construction)[3][4][8] - AES Indiana filed a petition for regulatory rate review with the Indiana Utility Regulatory Commission (IURC), marking its first rate case using a forward-looking test year[4][14] Financial Position and Outlook Summary The company reaffirmed its 2025 guidance for Adjusted EBITDA and Adjusted EPS, along with long-term growth targets through 2027, demonstrating confidence in its diversified operating portfolio and project backlog | Metric | 2025 Guidance | Annualized Growth Target | | :----------------------------------- | :-------------------- | :----------------------- | | Adjusted EBITDA | $2,650M to $2,850M | 5% to 7% through 2027 (from 2023 base) | | Adjusted EBITDA with Tax Attributes | $3,950M to $4,350M | N/A | | Adjusted EPS | $2.10 to $2.26 | 7% to 9% through 2025 (from 2020 base) and through 2027 (from 2023 base) | - Growth in 2025 is expected to be driven by new renewables projects, rate base growth at US utilities, and normalized results in Colombia and Mexico[9] - The company expects to maintain its current quarterly dividend payment of $0.17595[10] Q2 2025 Financial Results Q2 2025 GAAP metrics showed a Net Loss and decreased EPS, while non-GAAP Adjusted EBITDA and EPS grew, driven by new renewables and tax adjustments GAAP Financial Metrics The company reported a Net Loss and a decrease in Diluted EPS for Q2 2025 compared to Q2 2024, primarily impacted by day-one losses on sales-type leases and higher income tax expense | Metric | Q2 2025 | Q2 2024 | Change (YoY) | | :----------------------------------- | :------ | :------ | :----------- | | Net Loss | ($150M) | $153M | ($303M) | | Net Loss Attributable to The AES Corporation | ($95M) | $276M | ($371M) | | Diluted EPS | ($0.15) | $0.39 | ($0.54) | | Income tax benefit (expense) | ($167M) | $35M | ($202M) | | Operating margin | $453M | $553M | ($100M) | - The decrease in Net Income was primarily due to higher day-one losses on sales-type leases at AES Clean Energy Development, higher income tax expense, and lower margins from the Energy Infrastructure Strategic Business Unit (SBU)[6] - The reclassification of Mong Duong from held-for-sale to held and used, and higher contributions from new renewables projects, partially offset the negative impacts[6] Non-GAAP Adjusted Financial Metrics Despite GAAP losses, non-GAAP adjusted metrics showed positive growth, with Adjusted EBITDA and Adjusted EPS increasing year-over-year, largely driven by new renewables projects and favorable tax adjustments | Metric | Q2 2025 | Q2 2024 | Change (YoY) | | :----------------------------------- | :------ | :------ | :----------- | | Adjusted EBITDA | $681M | $658M | $23M (3.5%) | | Adjusted EBITDA with Tax Attributes | $1,057M | $849M | $208M (24.5%) | | Adjusted EPS | $0.51 | $0.38 | $0.13 (34.2%) | - Adjusted EBITDA growth was primarily driven by higher contributions from the Renewables SBU due to new projects and prior year outages in Colombia, partially offset by the sale of AES Brasil and the sell-down of AES Ohio[6] - Adjusted EBITDA with Tax Attributes saw a significant increase due to higher realized tax attributes from more projects placed in service and higher income from tax credit transfers[6] Strategic Accomplishments AES advanced project development, completing new projects and expanding its PPA backlog for data centers, while AES Indiana initiated a regulatory rate review Project Development and Backlog AES made substantial progress in project development, completing a significant portion of its planned new projects for 2025 and expanding its PPA backlog, with a notable focus on serving data center demand - The company's backlog of projects with signed contracts but not yet operational stands at 12 GW, including 5.2 GW currently under construction[3][8] - Completed construction of 1.2 GW of energy storage and solar, including the 1 GW Bellefield 1 solar-plus-storage facility, contributing to 1.9 GW year-to-date and on track for a total of 3.2 GW by year-end 2025[4][8] - Signed or was awarded new long-term PPAs for 1.6 GW of renewables since May 2025, all with data center companies, bringing the year-to-date total to 2 GW[3][4][14] Regulatory Filings AES Indiana initiated a regulatory rate review process, aiming for a more efficient and cost-effective electricity service for its customers - In June, AES Indiana filed a petition for regulatory rate review with the Indiana Utility Regulatory Commission (IURC)[4][14] - This is AES Indiana's first rate case using a forward-looking test year, intended to enable a more efficient investment program to best serve customers[9][14] Guidance and Expectations AES reaffirmed 2025 financial guidance and long-term growth targets for Adjusted EBITDA and EPS through 2027, while maintaining its current quarterly dividend 2025 Guidance Reaffirmation AES reaffirmed its financial guidance for 2025 across key non-GAAP metrics, anticipating growth from new renewable projects and utility rate base expansion, despite some offsetting factors | Metric | 2025 Guidance | | :----------------------------------- | :-------------------- | | Adjusted EBITDA | $2,650M to $2,850M | | Adjusted EBITDA with Tax Attributes | $3,950M to $4,350M | | Adjusted EPS | $2.10 to $2.26 | - Expected growth drivers for 2025 include contributions from new renewables projects, rate base growth at US utilities, and normalized results in Colombia and Mexico[9] - Growth will be partially offset by revenues from the monetization of the Warrior Run coal plant PPA in 2024, asset sales, higher Parent interest, and a higher adjusted tax rate[9] Long-Term Growth Targets The company reiterated its long-term annualized growth targets for both Adjusted EBITDA and Adjusted EPS through 2027, signaling confidence in sustained performance | Metric | Annualized Growth Target | | :----------------------------------- | :----------------------- | | Adjusted EBITDA | 5% to 7% through 2027 (from 2023 guidance base) | | Adjusted EPS | 7% to 9% through 2025 (from 2020 base) and through 2027 (from 2023 guidance base) | Dividend Policy AES plans to maintain its current quarterly dividend payment - The Company expects to maintain its current quarterly dividend payment of $0.17595 going forward[10] Non-GAAP Financial Measures This section defines non-GAAP financial measures like Adjusted EBITDA and EPS, and provides detailed reconciliations from GAAP Net Income (Loss) to these adjusted metrics Definitions and Rationale This section provides detailed definitions for non-GAAP financial measures such as Adjusted EBITDA, Adjusted EBITDA with Tax Attributes, Adjusted PTC, and Adjusted EPS, explaining their components and the rationale for their use in assessing the company's underlying business performance - Adjusted EBITDA is defined as EBITDA adjusted for various non-recurring or non-operational items, including unrealized gains/losses, disposition/acquisition impacts, impairments, and restructuring costs[29] - Adjusted EBITDA with Tax Attributes further includes the pre-tax effect of Production Tax Credits (PTCs), Investment Tax Credits (ITCs), and depreciation tax deductions allocated to tax equity investors, as well as tax benefits from retained or transferred tax credits[29] - Adjusted EPS is defined as diluted earnings per share from continuing operations, excluding similar non-operational gains or losses as Adjusted EBITDA, to better reflect core business performance[33] Reconciliation of Adjusted EBITDA and Adjusted EBITDA with Tax Attributes The reconciliation table details the adjustments made to GAAP Net Income (Loss) to arrive at Adjusted EBITDA and Adjusted EBITDA with Tax Attributes for both the three and six months ended June 30, 2025 and 2024 | Metric | Q2 2025 (3 Months) | Q2 2024 (3 Months) | YTD 2025 (6 Months) | YTD 2024 (6 Months) | | :----------------------------------- | :----------------- | :----------------- | :------------------ | :------------------ | | Net income (loss) | ($150M) | $153M | ($223M) | $431M | | EBITDA | $653M | $734M | $1,207M | $1,566M | | Adjusted EBITDA | $681M | $658M | $1,272M | $1,298M | | Tax attributes | $376M | $191M | $562M | $419M | | Adjusted EBITDA with Tax Attributes | $1,057M | $849M | $1,834M | $1,717M | - Key adjustments for Q2 2025 included adding back income tax expense ($167M), interest expense ($352M), and depreciation, amortization, and accretion of AROs ($354M) to reach EBITDA[31] - Significant adjustments from EBITDA to Adjusted EBITDA for Q2 2025 included unrealized derivatives, equity securities, and financial assets and liabilities losses ($133M) and disposition/acquisition losses ($126M)[31] Reconciliation of Adjusted PTC and Adjusted EPS This section provides the reconciliation from GAAP income (loss) from continuing operations to Adjusted PTC and Adjusted EPS, detailing the specific adjustments made for non-operational items to provide a clearer view of core earnings | Metric | Q2 2025 (3 Months) | Q2 2024 (3 Months) | YTD 2025 (6 Months) | YTD 2024 (6 Months) | | :----------------------------------- | :----------------- | :----------------- | :------------------ | :------------------ | | Income (loss) from continuing operations, net of tax, attributable to AES | ($95M) | $276M | ($49M) | $708M | | Diluted EPS (GAAP) | ($0.13) | $0.39 | ($0.07) | $0.99 | | Adjusted PTC | $276M | $273M | $437M | $609M | | Adjusted EPS | $0.51 | $0.38 | $0.78 | $0.89 | - For Q2 2025, significant adjustments to pre-tax contribution included unrealized derivatives, equity securities, and financial assets and liabilities losses of $133 million (or $0.18 per share) and disposition/acquisition losses of $125 million (or $0.18 per share)[37] - Day-one losses on commencement of sales-type leases at AES Clean Energy Development ($149M) were a primary component of disposition/acquisition losses for Q2 2025[37][38] Attachments & Supplemental Information This section provides unaudited condensed consolidated financial statements, including operations, balance sheets, cash flows, SBU revenue, and Parent Company financial information Condensed Consolidated Statements of Operations This section presents the unaudited condensed consolidated statements of operations for the three and six months ended June 30, 2025 and 2024, detailing revenue, cost of sales, operating margin, and net income (loss) | Metric | Q2 2025 (3 Months) | Q2 2024 (3 Months) | YTD 2025 (6 Months) | YTD 2024 (6 Months) | | :----------------------------------- | :----------------- | :----------------- | :------------------ | :------------------ | | Total revenue | $2,855M | $2,942M | $5,781M | $6,027M | | Total cost of sales | ($2,402M) | ($2,389M) | ($4,887M) | ($4,855M) | | Operating margin | $453M | $553M | $894M | $1,172M | | NET INCOME (LOSS) | ($150M) | $153M | ($223M) | $431M | | DILUTED EARNINGS PER SHARE | ($0.15) | $0.39 | ($0.08) | $0.99 | - Non-Regulated revenue decreased from $2,070M in Q2 2024 to $1,922M in Q2 2025, while Regulated revenue increased from $872M to $933M[22] Strategic Business Unit (SBU) Information This section provides a breakdown of revenue by the company's Strategic Business Units (SBUs) for the three and six months ended June 30, 2025 and 2024 | SBU | Q2 2025 (3 Months) | Q2 2024 (3 Months) | YTD 2025 (6 Months) | YTD 2024 (6 Months) | | :------------------------ | :----------------- | :----------------- | :------------------ | :------------------ | | Renewables SBU | $644M | $619M | $1,310M | $1,262M | | Utilities SBU | $954M | $896M | $1,963M | $1,769M | | Energy Infrastructure SBU | $1,306M | $1,462M | $2,626M | $3,071M | | Total Revenue | $2,855M | $2,942M | $5,781M | $6,027M | - Renewables SBU revenue increased by $25M (4.0%) in Q2 2025 compared to Q2 2024, and Utilities SBU revenue increased by $58M (6.5%)[24] - Energy Infrastructure SBU revenue decreased by $156M (10.7%) in Q2 2025 compared to Q2 2024[24] Condensed Consolidated Balance Sheets This section provides the unaudited condensed consolidated balance sheets as of June 30, 2025, and December 31, 2024, detailing assets, liabilities, and equity | Metric | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :------------ | :---------------- | | Total current assets | $6,320M | $6,831M | | Total noncurrent assets | $42,222M | $40,575M | | TOTAL ASSETS | $48,542M | $47,406M | | Total current liabilities | $7,679M | $8,571M | | Total noncurrent liabilities | $31,001M | $30,193M | | Total equity | $7,683M | $7,704M | | TOTAL LIABILITIES, REDEEMABLE STOCK OF SUBSIDIARIES, AND EQUITY | $48,542M | $47,406M | - Property, plant and equipment, net, increased from $33,166M at December 31, 2024, to $34,727M at June 30, 2025[26] - Current held-for-sale assets significantly decreased from $862M to $31M, while noncurrent held-for-sale assets were eliminated[26] Condensed Consolidated Statements of Cash Flows This section presents the unaudited condensed consolidated statements of cash flows for the three and six months ended June 30, 2025 and 2024, outlining cash flows from operating, investing, and financing activities | Cash Flow Activity | Q2 2025 (3 Months) | Q2 2024 (3 Months) | YTD 2025 (6 Months) | YTD 2024 (6 Months) | | :----------------------------------- | :----------------- | :----------------- | :------------------ | :------------------ | | Net cash provided by operating activities | $976M | $392M | $1,521M | $679M | | Net cash used in investing activities | ($1,600M) | ($1,838M) | ($2,882M) | ($4,224M) | | Net cash provided by financing activities | $145M | $1,153M | $1,462M | $3,759M | | Total increase (decrease) in cash, cash equivalents and restricted cash | ($365M) | ($407M) | $162M | $158M | | Cash, cash equivalents and restricted cash, ending | $2,201M | $1,573M | $2,201M | $2,148M | - Net cash provided by operating activities significantly increased in Q2 2025 to $976M from $392M in Q2 2024[28] - Capital expenditures were ($1,332M) in Q2 2025, a decrease from ($1,685M) in Q2 2024[28] Parent Financial Information This section provides data on subsidiary distributions to the Parent Company and Parent Company liquidity, highlighting the cash flow from subsidiaries essential for the holding company's financial needs | Metric | Q2 2025 (Quarter Ended) | Q1 2025 (Quarter Ended) | Q4 2024 (Quarter Ended) | Q3 2024 (Quarter Ended) | | :----------------------------------- | :---------------------- | :---------------------- | :---------------------- | :---------------------- | | Subsidiary distributions to Parent & QHCs | $557M | $230M | $715M | $204M | | Returns of capital distributions to Parent & QHCs | $44M | $3M | $28M | $0M | | Total subsidiary distributions & returns of capital to Parent | $601M | $233M | $743M | $204M | | Cash at Parent & Cash at QHCs | $9M | $151M | $265M | $6M | | Availability under credit facilities | $2,185M | $1,526M | $1,782M | $335M | | Ending liquidity | $2,194M | $1,677M | $2,047M | $341M | - Total subsidiary distributions and returns of capital to Parent for the quarter ended June 30, 2025, were $601 million, a significant increase from the previous quarter[40] - Parent Company Liquidity, defined as cash at Parent and QHCs plus available borrowings under credit facilities, increased to $2,194 million at June 30, 2025, from $1,677 million at March 31, 2025[40] Corporate Information This section provides conference call details, an overview of AES, safe harbor disclosures for forward-looking statements, and website disclosure practices Conference Call Details Details for the upcoming conference call to discuss the Q2 2025 financial results, including access information and webcast availability - AES will host a conference call on Friday, August 1, 2025, at 10:00 a.m. Eastern Time (ET)[13] - Internet access to the conference call and presentation materials will be available on the AES website at www.aes.com under 'Investors' and 'Presentations and Webcasts', with a replay accessible shortly after the call[13][15] About The AES Corporation A brief overview of The AES Corporation as a global energy company focused on accelerating greener, smarter energy solutions - The AES Corporation (NYSE: AES) is a Fortune 500 global energy company dedicated to accelerating the future of energy by delivering greener, smarter energy solutions[16] - The company emphasizes continuous innovation, operational excellence, and partnering with customers on strategic energy transitions[16] Safe Harbor and Forward-Looking Statements This section provides a safe harbor disclosure regarding forward-looking statements, cautioning readers about inherent risks and uncertainties that could cause actual results to differ materially from projections - The news release contains forward-looking statements related to future earnings, growth, and financial/operating performance, which are not guarantees of future results but current expectations based on reasonable assumptions[17] - Actual results could differ materially due to risks, uncertainties, and other factors discussed in AES' filings with the SEC, including the 2024 Annual Report on Form 10-K[18] Website Disclosure AES utilizes its website as a primary channel for distributing company information, advising investors to monitor it alongside other official communications - AES uses its website, including quarterly updates, as channels of distribution for Company information, which may be deemed material[20] - Investors are encouraged to monitor the website, in addition to press releases, SEC filings, and public conference calls, and can subscribe to email alerts[20]