AES(US:AES)2023-11-01 16:00Financial Performance - Third quarter net income decreased by $155 million, from $446 million to $291 million, primarily due to lower contributions from LNG transactions [153]. - Adjusted EBITDA increased by $59 million, from $931 million to $990 million, driven by higher contributions at the Utilities SBU and favorable weather conditions [154]. - Adjusted EPS decreased by $0.03, from $0.63 to $0.60, mainly due to lower contributions from the Energy Infrastructure SBU and higher Parent Company interest [158]. - Total revenue for the third quarter was $3,434 million, a decrease of $193 million or 5% compared to $3,627 million in the prior year [167]. - Consolidated revenue decreased by $193 million, or 5%, for the three months ended September 30, 2023, compared to the same period in 2022, with a notable increase of $176 million in Renewables due to higher spot sales and new business operations [172]. - Net income attributable to The AES Corporation decreased by $190 million, or 45%, to $231 million for the three months ended September 30, 2023, compared to $421 million for the same period in 2022 [211]. - Adjusted EBITDA for the three months ended September 30, 2023, was $990 million, compared to $931 million for the same period in 2022, reflecting an increase of 6.3% [220]. - Adjusted EPS for Q3 2023 was $0.60, a decrease from $0.63 in Q3 2022, while the nine-month Adjusted EPS was $1.03 compared to $1.18 in the same period last year [232]. Revenue Segments - The Renewables SBU revenue increased by 33% to $708 million, while the Energy Infrastructure SBU revenue decreased by 12% to $1,861 million [167]. - Higher earnings from the Renewables SBU were attributed to favorable weather conditions and new businesses operating in the portfolio [214]. - Operating Margin for the Renewables SBU increased by $34 million (18%) in Q3 2023, driven by better hydrology and new business operations, with a nine-month increase of $41 million (11%) [234][237]. - Adjusted EBITDA for the Renewables SBU rose by $72 million (37%) in Q3 2023, and by $81 million (17%) for the nine months ended September 30, 2023 [235][238]. - Operating Margin for the Utilities SBU increased by $81 million in Q3 2023, with a nine-month increase of $71 million (25%) due to deferral of power purchase costs and higher demand [241][243]. - Adjusted EBITDA for the Utilities SBU increased by $79 million (58%) in Q3 2023, and by $70 million (15%) for the nine months ended September 30, 2023 [242][244]. - Operating Margin for the Energy Infrastructure SBU decreased by $84 million (-14%) in Q3 2023, and by $91 million (-8%) for the nine months, primarily due to lower contract energy sales and higher costs [245][247]. - Adjusted EBITDA for the Energy Infrastructure SBU decreased by $100 million (-16%) in Q3 2023, and by $188 million (-14%) for the nine months [246][248]. Cash Flow and Investments - Net cash provided by operating activities increased by 43% to $1,122 million compared to $784 million in the prior year [167]. - Net cash provided by operating activities increased by $660 million to $2.309 billion for the nine months ended September 30, 2023, compared to $1.649 billion in 2022 [329]. - Net cash used in investing activities rose by $1.8 billion to $(5.673) billion for the nine months ended September 30, 2023, compared to $(3.825) billion in 2022 [333]. - Capital expenditures increased by $2.6 billion, driven primarily by U.S. renewable projects [337]. - Net cash provided by financing activities increased by $877 million to $3.740 billion for the nine months ended September 30, 2023, compared to $2.863 billion in 2022 [339]. Debt and Liquidity - As of September 30, 2023, the company had unrestricted cash and cash equivalents of $1.8 billion, with $51 million held at the Parent Company [315]. - The company has $21.6 billion in non-recourse debt and $5.6 billion in recourse debt outstanding [315]. - The company expects to repay current maturities of non-recourse debt and recourse debt from net cash provided by operating activities or through refinancing [316]. - The company has $700 million in recourse debt maturing within the next twelve months, with $607 million guaranteed by the Parent Company [316]. - Approximately $27.5 billion of total gross debt outstanding as of September 30, 2023, includes $7.2 billion bearing interest at variable rates not subject to hedging [318]. - The company has provided approximately $2.4 billion in financial and performance-related guarantees to support its businesses [319]. Operational Challenges and Future Outlook - The company anticipates challenges from volatile foreign currencies and commodities, but expects improved operating performance and growth from new businesses to mitigate these impacts [253]. - The company plans to exit the majority of its coal facilities by the end of 2025 and all by the end of 2027, subject to necessary approvals [280]. - The company is currently evaluating alternative uses for the Warrior Run coal-fired power plant after the PPA termination, with total proceeds of $357 million expected through January 2030 [284]. - The overall economic climate in Argentina poses risks of significant devaluation of the Argentine peso, which could adversely affect the company's operations [293]. - The company continues to monitor macroeconomic and political changes that could adversely impact its business operations [264]. Regulatory and Compliance Issues - The company is subject to potential future costs related to compliance with the CSAPR, which may require purchasing additional emissions allowances [299]. - The company faces uncertainties regarding the impact of proposed environmental regulations, including the MATS and potential future greenhouse gas emissions regulations [300]. - The implementation of the Inflation Reduction Act is expected to require substantial guidance from the U.S. Department of Treasury, leading to uncertainty in its provisions [267]. - The Uyghur Forced Labor Prevention Act may block certain suppliers from importing solar cells and panels, but the company has managed this issue without significant impact [258].