AES CORP
For the period ended Sep 30, 2024. Filed Oct 31, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Oct 31, 2024
AES$14.87-0.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-01.
0000874761-24-000054
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSExecutive SummaryReview of Consolidated Results of OperationsSBU Performance AnalysisKey Trends and UncertaintiesCapital Resources and LiquidityCritical Accounting Policies and EstimatesCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-10-31.
0000874761-24-000070
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSExecutive SummaryReview of Consolidated Results of OperationsSBU Performance AnalysisKey Trends and UncertaintiesCapital Resources and LiquidityCritical Accounting Policies and EstimatesThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 395 previous paragraphs and 398 current paragraphs.
194 unchanged; 136 reworded; 54 added; 50 removed; 15 previous and 14 current paragraphs rearranged.
Tables are not compared: 14 previous and 12 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (54)
Current report
Compared with last year, third quarter net income decreased $81 million, from $291 million to $210 million. This decrease is the result of lower impairments and lower unrealized foreign currency losses in the current year, and higher contributions from renewables projects placed in service; partially offset by lower contributions from the Energy Infrastructure SBU.
Current report
Adjusted EBITDA, a non-GAAP measure, decreased $298 million, from $990 million to $692 million, driven by lower margins at the Energy Infrastructure SBU primarily due to the end of commercial operations at Warrior Run and prior year margin at the hedged merchant Southland facilities that are contracted primarily for capacity in the current year, and record-breaking drought conditions in South America at the Renewables SBU. This was partially offset by higher revenues from new projects at the Renewables SBU.
Current report
◦Signed or was awarded 1.3 GW of long-term PPAs for new renewables, for a total of 3.5 GW in year-to-date 2024; and
Current report
•Since the Company's second quarter 2024 earnings call in August 2024, the Company signed agreements with data center customers for an additional 900 MW of new load growth at AES Ohio, for a total of 2.1 GW in year-to-date 2024.
Current report
•In 2023 and year-to-date 2024, the Company has announced or closed nearly three-quarters of its $3.5 billion asset sale proceeds target through 2027.
Current report
◦In September 2024, the Company agreed to sell a 30% indirect interest in AES Ohio to CDPQ for approximately $546 million.
Current report
◦On October 31, 2024, the Company closed the sale of its 47.3% equity interest in AES Brasil for approximately $630 million, including sale and hedge proceeds.
Current report
•$238 million at Energy Infrastructure driven by the end of commercial operations at Warrior Run in the second quarter of 2024, lower regulated contract sales and prices, and the impact of the depreciation of the Argentine peso.
Current report
•$149 million at Energy Infrastructure mainly driven by the end of commercial operations at Warrior Run in the second quarter of 2024, higher energy margin from our hedged merchant Southland facilities in the prior year that are contracted primarily for capacity in the current year, lower thermal dispatch, and higher outages; partially offset by favorable LNG transactions and lower fixed costs; and
Current report
These unfavorable impacts were partially offset by an increase of $5 million at Utilities mainly driven by an increase in transmission and rider revenues, higher retail rates as a result of the 2024 Base Rate Order, and higher
Current report
demand due to the impact of weather; partially offset by the prior year deferral of power purchase costs associated with the approval of ESP 4, and higher fixed costs.
Current report
Nine Months Ended September 30, 2024
Current report
Consolidated Operating Margin — Operating margin decreased $116 million, or 6%, for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, driven by:
Current report
•$94 million at Energy Infrastructure mainly driven by higher outages, higher energy margin from our hedged merchant Southland facilities in the prior year that are contracted primarily for capacity in the current year,
Current report
impact of the selldown of Amman East and IPP4 in Jordan, and lower thermal dispatch; partially offset by higher revenues due to a PPA termination agreement and lower fixed costs.
Current report
These unfavorable impacts were partially offset by an increase of $90 million at Utilities mainly driven by increases in transmission and rider revenues due to higher TDSIC, ECCRA and DIR, higher demand due to favorable weather, and higher retail rates as a result of the 2024 Base Rate Order; partially offset by the prior year deferral of power purchase costs associated with the approval of ESP 4, and higher fixed costs.
Current report
General and administrative expenses decreased $7 million, or 11%, to $57 million for the three months ended September 30, 2024, compared to $64 million for the three months ended September 30, 2023, primarily due to higher capitalization of business development costs, partially offset by higher people costs.
Current report
Interest income decreased $86 million, or 22%, to $312 million for the nine months ended September 30, 2024, compared to $398 million for the nine months ended September 30, 2023, primarily due to the drivers above.
Current report
Other income increased $52 million to $64 million for the three months ended September 30, 2024, compared to $12 million for the three months ended September 30, 2023, mainly due to gains on remeasurement of contingent consideration at AES Clean Energy and an indexation adjustment of Stabilization Fund receivables at AES Andes.
Current report
Asset impairment expense decreased $79 million to $79 million for the three months ended September 30, 2024, compared to $158 million for the three months ended September 30, 2023. This decrease was due to prior year impairments of $77 million and $59 million at TEG and TEP, respectively, in Mexico due to a reduction in expected cash flows after expiration of the current PPAs, and a $14 million impairment at Amman East and IPP4 in Jordan due to the delay in closing the sale transaction. This was partially offset by current quarter impairments of $60 million and $11 million at AES Brasil and Mong Duong, respectively, due to subsequent impairment analyses after meeting held-for-sale criteria.
Current report
•Better hydrology resulting in higher generation in Panama.
Current report
•Better hydrology resulting in higher generation in Panama.
Current report
Net income attributable to The AES Corporation increased $271 million to $502 million for the three months ended September 30, 2024, compared to $231 million for the three months ended September 30, 2023. This increase was primarily due to:
Current report
•Lower contributions from the Energy Infrastructure SBU primarily due to the end of commercial operations at Warrior Run in the second quarter of 2024 and higher energy margin from our hedged merchant Southland facilities in the prior year that are contracted primarily for capacity in the current year;
Current report
•Lower margins at the Renewables SBU driven by record-breaking drought conditions and partial outage due to a flooding incident in Colombia; and
Current report
•Higher interest expense mainly from new debt at the Renewables and Utilities SBUs.
Current report
Net income attributable to The AES Corporation increased $776 million to $1,119 million for the nine months ended September 30, 2024, compared to $343 million for the nine months ended September 30, 2023. This increase was primarily due to:
Current report
•Lower margins at the Renewables SBU driven by record-breaking drought conditions and partial outage due to a flooding incident in Colombia;
Current report
(1)Amount primarily relates to net unrealized derivative gains at the Energy Infrastructure SBU of $50 million, or $0.07 per share, and unrealized gains on commodity derivatives at AES Clean Energy of $17 million, or $0.02 per share, partially offset by unrealized losses on foreign currency derivatives at Corporate of $17 million, or $0.02 per share.
Current report
(8)Amount primarily relates to asset impairments at TEG and TEP of $76 million and $58 million, respectively, or $0.19 per share.
Current report
(12)Amount primarily relates to income tax benefits associated with the asset impairments at TEG and TEP of $34 million, or $0.05 per share and income tax benefits associated with unrealized foreign currency losses at AES Andes of $6 million, or $0.01 per share.
Current report
Operating Margin for the three months ended September 30, 2024 decreased $43 million. This decrease was primarily driven by record-breaking drought conditions in Colombia. Additionally, a partial outage in Colombia during July 2024, which resulted from a flooding incident at the Chivor plant in the prior month, drier hydrology in Brazil and the depreciation of the Brazilian real further impacted operating margin. These adverse effects were partially offset by higher margins due to better hydrology in Panama, new businesses operating in our portfolio, higher contracted energy sales, and unrealized derivative gains.
Current report
Operating Margin for the three months ended September 30, 2024 increased $5 million, driven primarily by the increase in transmission and rider revenues due to higher ECCRA and DIR, higher retail rates as a result of the 2024 Base Rate Order, and higher demand due to the impact of weather. These increases are partially offset by the prior year deferral of power purchase costs associated with the approval of ESP 4, and higher fixed costs.
Current report
Adjusted EBITDA for the three months ended September 30, 2024 increased $7 million, primarily due to the drivers above, adjusted for NCI and depreciation.
Current report
Adjusted EBITDA with Tax Attributes increased $8 million, mainly driven by the drivers above.
Current report
Operating Margin for the nine months ended September 30, 2024 increased $90 million, mainly driven by an increase in transmission and rider revenues due to higher TDSIC, ECCRA and DIR; higher demand due to the impact of weather and higher retail rates as a result of the 2024 Base Rate Order. These increases are partially offset by the prior year deferral of power purchase costs associated with the approval of ESP 4, and higher fixed costs.
Current report
Adjusted EBITDA for the nine months ended September 30, 2024 increased $93 million, primarily due to the drivers above, adjusted for NCI and depreciation.
Current report
Operating Margin for the three months ended September 30, 2024 decreased $149 million, driven primarily by lower revenues due to end of commercial operations of Warrior Run, higher energy margin from our hedged merchant Southland facilities in the prior year that are contracted primarily for capacity in the current year, lower thermal dispatch substituted with renewable sources, and impact of the selldown of Amman East and IPP4 in Jordan. These losses were partially offset by favorable LNG transactions.
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Removed paragraphs (50)
Previous report
36 | The AES Corporation | June 30, 2024 Form 10-Q
Previous report
Compared with last year, second quarter net loss increased $20 million, from $19 million to $39 million. This increase is the result of losses at commencement of sales-type leases at the Renewables SBU, partially offset by favorable contributions at the Utilities and Energy Infrastructure SBUs and higher contributions from renewables projects placed in service in the current year.
Previous report
•The Company has now signed 8.1 GW of agreements directly with technology customers, including through transmission and distribution, renewables PPAs, and retail supply. Since the Company's first quarter 2024 earnings call in May 2024, the Company signed 2.2 GW of agreements, including:
Previous report
◦1.2 GW of new data center load at U.S. utilities, which should benefit rate base growth, but is not included in the Company’s PPA backlog;
Previous report
◦15-year PPAs for 727 MW of wind and solar to serve data center growth in Texas; and
Previous report
◦A 310 MW retail supply agreement to support data centers throughout Ohio, which is not included in the Company’s PPA backlog.
Previous report
◦Signed 1 GW of long-term contracts for new renewables, including the acquisition of a 170 MW solar-plus-storage development project that will be added to AES Indiana’s rate base.
Previous report
Consolidated Operating Margin — Operating margin increased $55 million, or 11%, for the three months ended
Previous report
•$70 million at Utilities mainly driven by higher demand due to favorable weather, increases in transmission and rider revenues due to higher TDSIC, ECCRA and DIR, and higher rates as a result of the 2024 Base Rate Order; and
Previous report
•$26 million at Energy Infrastructure mainly driven by higher revenues due to a PPA termination agreement; partially offset by unrealized derivative losses as part of our commercial hedging strategy, higher outages, and impact of the selldown of Amman East and IPP4 in Jordan.
Previous report
These favorable impacts were partially offset by decreases of:
Previous report
•$14 million at Corporate and Other primarily driven by higher people, IT, and other costs.
Previous report
Six Months Ended June 30, 2024
Previous report
•$85 million at Utilities mainly driven by higher demand due to favorable weather, increases in transmission and rider revenues due to higher TDSIC, ECCRA and DIR, and higher retail rates as a result of the 2024 Base Rate Order; and
Previous report
•$55 million at Energy Infrastructure mainly driven by higher revenues due to a PPA termination agreement; partially offset by higher outages, lower LNG transactions, unrealized derivative losses, and impact of the selldown of Amman East and IPP4 in Jordan.
Previous report
General and administrative expenses decreased $6 million, or 8%, to $66 million for the three months ended June 30, 2024, compared to $72 million for the three months ended June 30, 2023, primarily due to lower people costs and professional fees, partially offset by increased business development activity.
Previous report
Interest income decreased $61 million, or 24%, to $193 million for the six months ended June 30, 2024, compared to $254 million for the six months ended June 30, 2023, primarily due to the drivers above.
Previous report
Other income increased $7 million to $21 million for the three months ended June 30, 2024, compared to $14 million for the three months ended June 30, 2023, with no material drivers.
Previous report
Asset impairment expense increased $82 million to $276 million for the six months ended June 30, 2024, compared to $194 million for the six months ended June 30, 2023. This increase was primarily the result of a $217 million impairment at AES Brasil upon meeting held-for-sale criteria and a $43 million impairment at Mong Duong due to the carrying value exceeding the expected sales proceeds. This was partially offset by prior year impairments of $137 million at Norgener, $29 million at Amman East and IPP4 in Jordan, and $18 million at AES Renewable Holdings, due to the drivers discussed above.
Previous report
Income tax benefit (expense)
Previous report
Net equity in losses of affiliates decreased $17 million to $12 million for the six months ended June 30, 2024, compared to $29 million for the six months ended June 30, 2023, primarily due to the drivers above.
Previous report
•Held-for-sale impairment at Brazil.
Previous report
These decreases were partially offset by:
Previous report
These decreases were partially offset by:
Previous report
Net income attributable to The AES Corporation increased $224 million to $185 million for the three months ended June 30, 2024, compared to a net loss of $39 million for the three months ended June 30, 2023. This increase was primarily due to:
Previous report
•Higher earnings from the Energy Infrastructure SBU due to the PPA termination agreement at Warrior Run;
Previous report
These increases were partially offset by:
Previous report
Net income attributable to The AES Corporation increased $505 million to $617 million for the six months ended June 30, 2024, compared to $112 million for the six months ended June 30, 2023. This increase was primarily due to:
Previous report
•Higher earnings from the Energy Infrastructure SBU due to the PPA termination agreement at Warrior Run;
Previous report
•Gain on dilution of our interest in Uplight.
Previous report
These increases were partially offset by:
Previous report
•Lower LNG transactions and higher outages at the Energy Infrastructure SBU;
Previous report
The Company reported diluted earnings per share of $0.27 for the three months ended June 30, 2024. For purposes of measuring earnings per share under U.S. GAAP, income available to AES common stockholders is reduced by increases in the carrying amount of redeemable stock of subsidiaries to redemption value, and increased by decreases in the carrying amount to the extent they represent recoveries of amounts previously reflected in the computation of earnings per share. While the adjustment for the second quarter increased earnings per share, it did not impact Net income on the Condensed Consolidated Statement of Operations. For purposes of computing Adjusted EPS, the Company excluded the adjustment to redemption value from the numerator. The table below reconciles the income available to AES common stockholders used in GAAP diluted earnings per share to the income from continuing operations used in calculating the non-GAAP measure of Adjusted EPS.
Previous report
The Company reported a loss from continuing operations of $0.06 for the three months ended June 30, 2023. For purposes of measuring diluted loss per share under GAAP, common stock equivalents were excluded from weighted average shares as their inclusion would be anti-dilutive. However, for purposes of computing Adjusted
Previous report
EPS, the Company has included the impact of dilutive common stock equivalents. The tables below reconcile the weighted average shares used in GAAP diluted loss per share to the weighted average shares used in calculating the non-GAAP measure of Adjusted EPS.
Previous report
(4)Amount primarily relates to unrealized derivative gains at the Energy Infrastructure SBU of $87 million, or $0.12 per share, partially offset by the recognition of unrealized losses due to the termination of a PPA of $72 million, or $0.10 per share.
Previous report
Operating Margin for the three months ended June 30, 2024 decreased $27 million, driven primarily by higher outages at Colombia due to a flooding incident at the Chivor plant, partially offset by better hydrology at Panama and unrealized derivative gains.
Previous report
Operating Margin for the three months ended June 30, 2024 increased $70 million, mainly driven by higher demand due to the impact of weather; increases in transmission and rider revenues due to higher TDSIC, ECCRA and DIR; and higher retail rates as a result of the 2024 Base Rate Order.
Previous report
Adjusted EBITDA for the three months ended June 30, 2024 increased $66 million, primarily due to the drivers above, adjusted for NCI and depreciation.
Previous report
Operating Margin for the six months ended June 30, 2024 increased $85 million, mainly driven by higher demand due to the impact of weather; increases in transmission and rider revenues due to higher TDSIC, ECCRA and DIR; and higher retail rates as a result of the 2024 Base Rate Order.
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Reworded paragraphs (136)
Previous wording
Adjusted EBITDA with Tax Attributes, a non-GAAP measure, increased $236 million, from $607 million to $843 million primarily due to higher realized tax attributes driven by more renewables projects placed in service, and the drivers above.
Current wording
Adjusted EBITDA with Tax Attributes, a non-GAAP measure, increased $160 million, from $1,008 million to $1,168 million primarily due to higher realized tax attributes driven by more renewables projects placed in service, partially offset by the drivers above.
Previous wording
$0.33, from a loss of $0.06 to earnings of $0.27. This increase is mainly driven by higher contributions from renewables projects placed in service in the current year, prior year unrealized foreign currency losses at the Energy Infrastructure SBU, and higher margins at the Utilities and Energy Infrastructure SBUs; partially offset by losses at commencement of sales-type leases at the Renewables SBU.
Current wording
Compared with last year, third quarter diluted earnings per share from continuing operations increased $0.40, from $0.32 to $0.72. This increase is mainly driven by higher contributions from renewables projects placed in service in the current year, lower long-lived asset impairments in the current year, and prior year unrealized foreign currency losses at the Energy Infrastructure SBU. This was partially offset by lower earnings at the Energy Infrastructure SBU due to end of commercial operations at Warrior Run.
Previous wording
Adjusted EPS, a non-GAAP measure, increased $0.17 from $0.21 to $0.38, mainly driven by a lower adjusted tax rate, higher contributions from the Utilities SBU, and higher contributions from renewables projects placed in service in the current year.
Current wording
Adjusted EPS, a non-GAAP measure, increased $0.11 from $0.60 to $0.71, mainly driven by a lower adjusted tax rate and higher contributions from renewables projects placed in service in the current year, partially offset by lower contributions from the Energy Infrastructure SBU.
Previous wording
Compared with last year, net income for the six months ended June 30, 2024 increased $69 million, from $170 million to $239 million. This increase is the result of favorable contributions at the Utilities, Energy Infrastructure, and New Energy Technologies SBUs and higher contributions from renewables projects placed in service in the current year; partially offset by losses at commencement of sales-type leases at the Renewables SBU.
Current wording
Compared with last year, net income for the nine months ended September 30, 2024 decreased $12 million, from $461 million to $449 million. This decrease is the result of higher interest expense and losses at commencement of sales-type leases at the Renewables SBU; partially offset by favorable contributions at the Utilities and New Energy Technologies SBUs, lower unrealized foreign currency losses in the current year, and higher contributions from renewables projects placed in service in the current year.
Previous wording
Adjusted EBITDA, a non-GAAP measure, increased $90 million, from $1,197 million to $1,287 million, mainly driven by higher contributions at the Utilities SBU, higher revenues under a PPA termination agreement at the Energy Infrastructure SBU, higher revenues from new projects at the Renewables SBU, and lower losses from affiliates at the New Energy Technologies SBU; partially offset by higher outages at the Energy Infrastructure SBU, and higher fixed costs and outages in Colombia at the Renewables SBU.
Current wording
Adjusted EBITDA, a non-GAAP measure, decreased $208 million, from $2,187 million to $1,979 million, mainly driven by lower margins at the Energy Infrastructure SBU due to prior year margin at the hedged merchant Southland facilities that are contracted primarily for capacity in the current year and higher outages, and record-breaking drought conditions and outages in Colombia at the Renewables SBU; partially offset by higher contributions at the Utilities SBU, higher revenues from new projects at the Renewables SBU, and lower losses from affiliates at the New Energy Technologies SBU.
Previous wording
Adjusted EBITDA with Tax Attributes, a non-GAAP measure, increased $458 million, from $1,248 million to $1,706 million, primarily due to higher realized tax attributes driven by more renewables projects placed in service, and the drivers above.
Current wording
Adjusted EBITDA with Tax Attributes, a non-GAAP measure, increased $618 million, from $2,256 million to $2,874 million, primarily due to higher realized tax attributes driven by more renewables projects placed in service, partially offset by the drivers above.
Previous wording
Compared with last year, diluted earnings per share from continuing operations for the six months ended June 30, 2024 increased $0.71, from $0.16 to $0.87. This increase is mainly driven by higher contributions from renewables projects placed in service in the current year, prior year unrealized foreign currency losses at the Energy Infrastructure SBU, higher margins at the Energy Infrastructure and Utilities SBUs, and lower income tax expense; partially offset by losses at commencement of sales-type leases at the Renewables SBU.
Current wording
Compared with last year, diluted earnings per share from continuing operations for the nine months ended September 30, 2024 increased $1.10, from $0.48 to $1.58. This increase is mainly driven by higher contributions from renewables projects placed in service in the current year, prior year unrealized foreign currency losses at the Energy Infrastructure SBU, lower long-lived asset impairments in the current year, and lower income tax expense. This was partially offset by lower margins due to outages, the end of commercial operations at Warrior Run, higher interest expense, and losses at commencement of sales-type leases at the Renewables SBU.
Previous wording
Adjusted EPS, a non-GAAP measure, increased $0.46 from $0.43 to $0.89, mainly driven by a lower adjusted tax rate, higher contributions from renewables projects placed in service in the current year, and higher contributions from the Utilities SBU.
Current wording
Adjusted EPS, a non-GAAP measure, increased $0.57 from $1.03 to $1.60, mainly driven by a lower adjusted tax rate, higher contributions from renewables projects placed in service in the current year, and higher contributions from the Utilities SBU; partially offset by lower contributions from the Energy Infrastructure SBU.
Previous wording
•The Company’s PPA backlog, which consists of projects with signed contracts, but which are not yet operational, is 12.6 GW, including 5.1 GW under construction. Since the Company’s first quarter 2024 earnings call in May 2024, the Company:
Current wording
•The Company’s PPA backlog, which consists of projects with signed contracts, but which are not yet operational, is 12.7 GW, including 4.0 GW under construction. Since the Company's second quarter 2024 earnings call in August 2024, the Company:
Previous wording
◦Completed the construction or acquisition of 976 MW of wind, solar, and energy storage and expects to add a total of 3.6 GW to its operating portfolio by year-end 2024.
Current wording
◦Completed the construction of 1.2 GW of solar, energy storage, wind and gas, and expects to add a total of 3.6 GW to its operating portfolio by year-end 2024.
Previous wording
Consolidated Revenue — Revenue decreased $85 million, or 3%, for the three months ended June 30, 2024, compared to the three months ended June 30, 2023, driven by:
Current wording
Consolidated Revenue — Revenue decreased $145 million, or 4%, for the three months ended September 30, 2024, compared to the three months ended September 30, 2023, driven by:
Previous wording
•$54 million at Utilities mainly driven by lower Fuel Adjustment Charge rider revenue; partially offset by an increase in transmission and distribution revenues due to higher rates, and higher demand due to favorable weather.
Current wording
•$81 million at Utilities mainly driven by an increase in transmission and distribution revenues due to higher rates as a result of the 2024 Base Rate Order and higher demand due to favorable weather; and
Previous wording
•$55 million at Renewables mainly driven by new projects in service, the impact of the appreciation of the Colombian peso, and the impact of better hydrology; partially offset by the impact of outages; and
Current wording
•$18 million at Renewables mainly driven by new projects in service, and the impact of better hydrology in Panama; partially offset by the impact of record-breaking drought conditions and outages in Colombia and the depreciation of the Brazilian real.
Previous wording
Consolidated Operating Margin — Operating margin increased $80 million, or 7%, for the six months ended June 30, 2024, compared to the six months ended June 30, 2023, driven by:
Current wording
Consolidated Operating Margin — Operating margin decreased $196 million, or 21%, for the three months ended September 30, 2024, compared to the three months ended September 30, 2023, driven by:
Previous wording
•$27 million at Renewables mainly driven by outages due to a flooding incident in Colombia; partially offset by higher generation due to better hydrology in Panama and unrealized derivative gains; and
Current wording
•$43 million at Renewables mainly driven by outages due to a flooding incident and record-breaking drought conditions in Colombia, as well as the depreciation of the Brazilian real; partially offset by higher generation due to better hydrology in Panama, new businesses operating in our portfolio, and unrealized derivative gains.
Previous wording
Consolidated Revenue — Revenue decreased $239 million, or 4%, for the six months ended June 30, 2024, compared to the six months ended June 30, 2023, driven by:
Current wording
Consolidated Revenue — Revenue decreased $384 million, or 4%, for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, driven by:
Previous wording
•$295 million at Energy Infrastructure primarily driven by lower regulated contract sales and prices, lower CO 2 purchases passed through due to lower production, the impact of the depreciation of the Argentine peso, unrealized derivative losses, and lower generation due to higher outages; partially offset by higher revenues due to a PPA termination agreement;
Current wording
•$533 million at Energy Infrastructure primarily driven by lower regulated contract sales and prices, lower CO 2 purchases passed through due to lower production, the impact of the depreciation of the Argentine peso, higher revenues from our hedged merchant Southland facilities in the prior year that are contracted primarily for capacity in the current year, and lower generation due to higher outages; partially offset by higher revenues due to a PPA termination agreement; and
Previous wording
•$75 million at New Energy Technologies mainly driven by the sale of the Fallbrook project in March 2023; and
Current wording
•$74 million at New Energy Technologies mainly driven by the sale of the Fallbrook project in March 2023.
Previous wording
These unfavorable impacts were partially offset by an increase of $179 million at Renewables mainly driven by new projects in service, higher spot prices, and the appreciation of the Colombian peso; partially offset by higher outages.
Current wording
•$197 million at Renewables mainly driven by new projects in service, unrealized derivative gains, and the appreciation of the Colombian peso; partially offset by higher outages and record-breaking drought conditions in Colombia, and the depreciation of the Brazilian real; and
Previous wording
•$44 million at Utilities mainly driven by an increase in transmission and distribution revenues due to higher rates and higher demand due to favorable weather; partially offset by lower Fuel Adjustment Charge rider revenue.
Current wording
•$27 million at Utilities mainly driven by an increase in transmission and distribution revenues due to higher rates, and higher demand due to favorable weather; partially offset by lower Fuel Adjustment Charge rider revenue.
Previous wording
These favorable impacts were partially offset by a decrease of $62 million at Renewables driven by higher fixed costs, worse hydrology and lower wind and solar availability, and outages due to a flooding incident in Colombia; partially offset by unrealized derivative gains.
Current wording
•$105 million at Renewables driven by higher fixed costs, lower wind and solar availability, and record-breaking drought conditions and outage due to a flooding incident in Colombia; partially offset by unrealized derivative gains; and
Previous wording
General and administrative expenses increased $14 million, or 11%, to $141 million for the six months ended June 30, 2024, compared to $127 million for the six months ended June 30, 2023, primarily due to increased business development activity, partially offset by lower people costs and professional fees.
Current wording
General and administrative expenses increased $7 million, or 4%, to $198 million for the nine months ended September 30, 2024, compared to $191 million for the nine months ended September 30, 2023, primarily due to increased business development activity and higher people costs.
Previous wording
Interest expense increased $79 million, or 25%, to $389 million for the three months ended June 30, 2024, compared to $310 million for the three months ended June 30, 2023. This increase is primarily due to new debt issued at the Renewables and Utilities SBUs, and a higher weighted average interest rate and debt balance at the Parent Company; partially offset by an increase in capitalized interest.
Current wording
Interest expense increased $53 million, or 16%, to $379 million for the three months ended September 30, 2024, compared to $326 million for the three months ended September 30, 2023. This increase is primarily due to new debt issued at the Renewables and Utilities SBUs, and a higher weighted average interest rate and debt balance at the Parent Company; partially offset by an increase in capitalized interest.
Previous wording
Interest expense increased $106 million, or 17%, to $746 million for the six months ended June 30, 2024, compared to $640 million for the six months ended June 30, 2023. This increase is primarily due to the drivers above.
Current wording
Interest expense increased $159 million, or 16%, to $1,125 million for the nine months ended September 30, 2024, compared to $966 million for the nine months ended September 30, 2023. This increase is primarily due to the drivers above.
Previous wording
Interest capitalized during development and construction increased $34 million to $170 million for the three months ended June 30, 2024, compared to $136 million for the three months ended June 30, 2023, primarily due to more projects in development at the Renewables SBU and higher interest rates.
Current wording
Interest capitalized during development and construction increased $15 million to $164 million for the three months ended September 30, 2024, compared to $149 million for the three months ended September 30, 2023, primarily due to more projects in development at the Renewables SBU, higher debt balances, and higher interest rates.
Previous wording
Interest capitalized during development and construction increased $80 million to $327 million for the six months ended June 30, 2024, compared to $247 million for the six months ended June 30, 2023, primarily due to the drivers above.
Current wording
Interest capitalized during development and construction increased $95 million to $491 million for the nine months ended September 30, 2024, compared to $396 million for the nine months ended September 30, 2023, primarily due to the drivers above.
Previous wording
Interest income decreased $43 million, or 33%, to $88 million for the three months ended June 30, 2024, compared to $131 million for the three months ended June 30, 2023, primarily due to lower short-term investments at the Energy Infrastructure and Renewables SBUs.
Current wording
Interest income decreased $25 million, or 17%, to $119 million for the three months ended September 30, 2024, compared to $144 million for the three months ended September 30, 2023, primarily due to lower short-term investments at the Energy Infrastructure and Renewables SBUs, partially offset by interest recognized on the Stabilization Fund receivables in Chile.
Previous wording
Loss on extinguishment of debt was $9 million and $10 million for the three and six months ended June 30, 2024, respectively, primarily due to a prepayment at AES Andes. See Note 8—Debt included in Item 1.—Financial Statements of this Form 10-Q for further information.
Current wording
Loss on extinguishment of debt was $11 million for the nine months ended September 30, 2024 primarily due to a prepayment at AES Andes. See Note 8—Debt included in Item 1.—Financial Statements of this Form 10-Q for further information.
Previous wording
Other income increased $32 million to $56 million for the six months ended June 30, 2024, compared to $24 million for the six months ended June 30, 2023, mainly due to gains on remeasurement of contingent consideration at AES Clean Energy, a gain on commencement of a sales-type lease on land, and insurance proceeds primarily associated with property damage at AES Andes.
Current wording
Other income increased $84 million to $120 million for the nine months ended September 30, 2024, compared to $36 million for the nine months ended September 30, 2023, mainly due to gains on remeasurement of contingent consideration at AES Clean Energy, an indexation adjustment of Stabilization Fund receivables at AES Andes, a gain on commencement of a sales-type lease on land, and insurance proceeds primarily associated with property damage at AES Andes.
Previous wording
Other expense increased $72 million to $84 million for the three months ended June 30, 2024, compared to $12 million for the three months ended June 30, 2023, primarily driven by losses on commencement of sales-type leases at AES Renewable Holdings.
Current wording
Other expense increased $19 million to $31 million for the three months ended September 30, 2024, compared to $12 million for the three months ended September 30, 2023, primarily driven by losses on remeasurement of contingent consideration at AES Clean Energy.
Previous wording
Other expense increased $96 million to $122 million for the six months ended June 30, 2024, compared to $26 million for the six months ended June 30, 2023, primarily driven by losses on commencement of sales-type leases at AES Renewable Holdings, legal expenses and other direct costs related to the troubled debt restructuring at Puerto Rico, and a valuation allowance on receivables previously classified as held-for-sale at Warrior Run.
Current wording
Other expense increased $115 million to $153 million for the nine months ended September 30, 2024, compared to $38 million for the nine months ended September 30, 2023, primarily driven by losses on commencement of sales-type leases at AES Renewable Holdings, legal expenses and other direct costs related to the troubled debt restructuring at Puerto Rico, and losses on remeasurement of contingent consideration at AES Clean Energy.
Previous wording
Gain on disposal and sale of business interests was $1 million for the three months ended June 30, 2024, compared to a loss of $4 million for the three months ended June 30, 2023, with no material drivers.
Current wording
Loss on disposal and sale of business interests was $1 million for the three months ended September 30, 2024, with no material drivers.
Previous wording
Gain on disposal and sale of business interests was $44 million for the six months ended June 30, 2024, compared to a loss of $4 million for six months ended June 30, 2023, driven by the gain on dilution of AES’ ownership interest in Uplight as a result of the AutoGrid acquisition, partially offset by the loss on the selldown of Amman East and IPP4 in Jordan, which is now accounted for as an equity method investment. See Note 7—Investments in and Advances to Affiliates and Note 18—Held-for-Sale and Dispositionsfor further information.
Current wording
Gain on disposal and sale of business interests was $43 million for the nine months ended September 30, 2024, compared to a loss of $4 million for nine months ended September 30, 2023, driven by the gain on dilution of AES’ ownership interest in Uplight as a result of the AutoGrid acquisition, partially offset by the loss on the selldown of Amman East and IPP4 in Jordan, which is now accounted for as an equity method investment. See Note 7—Investments in and Advances to Affiliates and Note 18—Held-for-Sale and Dispositionsfor further information.
Previous wording
Asset impairment expense increased $56 million to $230 million for the three months ended June 30, 2024, compared to $174 million for the three months ended June 30, 2023. This increase was primarily the result of a $217 million impairment at AES Brasil upon meeting held-for-sale criteria. This was partially offset by prior year impairments of $137 million associated with the commitment to accelerate the retirement of the Norgener coal-fired plant in Chile, $18 million at five project companies at AES Renewable Holdings associated with the buyout of tax equity partners, and $15 million at Amman East and IPP4 in Jordan due to the delay in closing the sale transaction.
Current wording
Asset impairment expense increased $3 million to $355 million for the nine months ended September 30, 2024, compared to $352 million for the nine months ended September 30, 2023. This increase was primarily due to current year impairments of $277 million and $54 million at AES Brasil and Mong Duong, respectively, after meeting held-for-sale criteria. This was partially offset by prior year impairments of $77 million and $59 million at TEG and TEP, respectively, $137 million associated with the commitment to accelerate the retirement of the Norgener coal-fired plant in Chile, $43 million at Amman East and IPP4 in Jordan due to the delay in closing the sale transaction, and $18 million at five project companies at AES Renewable Holdings associated with the buyout of tax equity partners.
Previous wording
(1)Includes gains of $90 million and losses of $31 million on foreign currency derivative contracts for the three months ended June 30, 2024 and 2023, respectively, and gains of $109 million and losses of $39 million on foreign currency derivative contracts for the six months ended June 30, 2024 and 2023, respectively.
Current wording
(1)Includes losses of $15 million and gains of $15 million on foreign currency derivative contracts for the three months ended September 30, 2024 and 2023, respectively, and gains of $94 million and losses of $23 million on foreign currency derivative contracts for the nine months ended September 30, 2024 and 2023, respectively.
Previous wording
The Company recognized net foreign currency transaction gains of $38 million for the three months ended June 30, 2024, primarily driven by unrealized gains on swaps and options denominated in the Brazilian real.
Current wording
The Company recognized net foreign currency transaction losses of $28 million for the three months ended September 30, 2024, primarily driven by unrealized losses on swaps and options denominated in the Brazilian real and unrealized losses due to the depreciation of the Chilean peso.
Previous wording
The Company recognized net foreign currency transaction gains of $30 million for the six months ended June 30, 2024, primarily driven by unrealized gains on swaps and options denominated in the Brazilian real; partially offset by realized losses on receivables denominated in the Chilean peso.
Current wording
The Company recognized net foreign currency transaction gains of $2 million for the nine months ended September 30, 2024, primarily driven by unrealized gains on swaps and options denominated in the Brazilian real; partially offset by unrealized losses due to the depreciation of the Chilean peso.
Previous wording
The Company recognized net foreign currency transaction losses of $67 million for the three months ended June 30, 2023, primarily driven by the depreciation of the Argentine peso and unrealized losses related to an intercompany loan denominated in the Colombian peso.
Current wording
The Company recognized net foreign currency transaction losses of $100 million for the three months ended September 30, 2023, primarily driven by the depreciation of the Argentine peso and unrealized losses related to an intercompany loan denominated in the Colombian peso.
Previous wording
The Company recognized net foreign currency transaction losses of $109 million for the six months ended June 30, 2023, primarily driven by the depreciation of the Argentine peso and unrealized losses related to an intercompany loan denominated in the Colombian peso; partially offset by unrealized gains on debt in Brazil.
Current wording
The Company recognized net foreign currency transaction losses of $209 million for the nine months ended September 30, 2023, primarily driven by the depreciation of the Argentine peso and unrealized losses related to an intercompany loan denominated in the Colombian peso; partially offset by unrealized gains on debt in Brazil.
Previous wording
Income tax benefit was $35 million for the three months ended June 30, 2024, compared to $2 million for the three months ended June 30, 2023. The Company’s effective tax rates were 45% and (50)% for the three months ended June 30, 2024 and 2023, respectively. This net change in the effective tax rate was largely due to the current year benefits associated with U.S. investment tax credits (“ITCs”). Further, the effective tax rates were impacted by the AES Brasil held-for-sale reclassification in 2024 and the asset impairment of the Norgener coal-fired plant in Chile in 2023.
Current wording
Income tax expense decreased $6 million, or 6%, to $103 million for the three months ended September 30, 2024, compared to $109 million for the three months ended September 30, 2023. The Company’s effective tax rates were 31% and 26% for the three months ended September 30, 2024 and 2023, respectively. This increase in the effective tax rate was impacted by tax expense resulting from allocations of losses to tax equity investors on renewables projects. Partially offsetting these impacts was the current quarter benefit associated with ITCs.
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Current report — wording carried from elsewhere
These unfavorable impacts were partially offset by increases of:
Current report — wording carried from elsewhere
Net equity in losses of affiliates decreased $5 million to $9 million for the three months ended September 30, 2024, compared to $14 million for the three months ended September 30, 2023. This decrease was primarily driven by higher earnings from sPower, primarily due to contributions from new projects that came online.
Current report — wording carried from elsewhere
decrease in earnings from Mesa La Paz, primarily due to the prior year termination of derivative positions due to a contract amendment.
Current report — wording carried from elsewhere
•Held-for-sale impairments at Brazil and Mong Duong.
Current report — wording carried from elsewhere
•Lower long-lived asset impairments in the current year; and
Current report — wording carried from elsewhere
adjustments, including the effects of tax planning, corresponding to the various jurisdictions in which the Company operates. Given its large number of businesses and overall complexity, the Company concluded that Adjusted EBITDA is a more transparent measure than Net income that better assists investors in determining which businesses have the greatest impact on the Company’s results.
Current report — wording carried from elsewhere
Adjusted EBITDA for the nine months ended September 30, 2024 increased $23 million, primarily due to a reduction in losses at Fluence as a result of higher margins on a new product line.
Current report — wording carried from elsewhere
determinations before the U.S. Court of International Trade (“CIT”), arguing that the determinations were not supported by substantial evidence or otherwise rendered in accordance with governing law.
Current report — wording carried from elsewhere
On July 8, 2024, the Argentine government enacted Law 27,742 or Ley Bases, translated in English as Law of Bases and Starting Points for the Freedom of the Argentine People. Ley Bases declares a public emergency in
Current report — wording carried from elsewhere
As a result of the bankruptcy filing, AES Ilumina’s non-recourse debt of $23 million continues to be in technical default and is classified as current as of September 30, 2024.
Current report — wording carried from elsewhere
Certain AES Southland OTC units were required to be retired to provide interconnection capacity and/or emissions credits prior to startup of new (air cooled) generating units, and the remaining AES OTC generating units in California have been or will be shut down and permanently retired by the applicable OTC Policy compliance dates
Current report — wording carried from elsewhere
of credit operate to guarantee performance relating to certain project development and construction activities and business operations. During the quarter ended September 30, 2024, the Company paid letter of credit fees ranging from 1% to 3% per annum on the outstanding amounts.
Current report — wording carried from elsewhere
of debt, capital expenditures, repayments of obligations under supplier financing arrangements, and purchases of short-term investments.
Current report — wording carried from elsewhere
The following discussion is included as a useful measure of the liquidity available to The AES Corporation, or the Parent Company, given the non-recourse nature of most of our indebtedness. Parent Company Liquidity, as outlined below, is a non-GAAP measure and should not be construed as an alternative to Cash and cash equivalents, which is determined in accordance with GAAP. Parent Company Liquidity may differ from similarly titled measures used by other companies. The principal sources of liquidity at the Parent Company level are dividends
Rearranged previous paragraphs (15)
Previous report — wording carried elsewhere
Compared with last year, second quarter diluted earnings per share from continuing operations increased
Previous report — wording carried elsewhere
•$185 million at Energy Infrastructure driven by lower regulated contract sales and prices, lower CO 2 purchases passed through due to lower production, the impact of the depreciation of the Argentine peso, and unrealized derivative losses; partially offset by higher revenues due to a PPA termination agreement.
Previous report — wording carried elsewhere
June 30, 2024, compared to the three months ended June 30, 2023, driven by:
Previous report — wording carried elsewhere
•Higher earnings from the Utilities SBU; and
Previous report — wording carried elsewhere
•Losses on commencement of sales-type leases at AES Renewable Holdings; and
Previous report — wording carried elsewhere
•Lower interest income in the current year.
Previous report — wording carried elsewhere
(1)Amount primarily relates to unrealized gains on foreign currency derivatives at Corporate of $34 million, or $0.05 per share, and unrealized gains on cross currency swaps in Brazil of $25 million, or $0.03 per share.
Previous report — wording carried elsewhere
(7)Amount primarily relates to day-one losses at commencement of sales-type leases at AES Renewable Holdings of $63 million, or $0.09 per share.
Previous report — wording carried elsewhere
(12)Amount primarily relates to losses incurred at AES Andes due to early retirement of debt of $16 million, or $0.02 per share.
Previous report — wording carried elsewhere
Adjusted EBITDA with Tax Attributes increased $102 million due to the drivers above, as well as $16 million of realized tax attributes related to the Hardy Hills solar project in the current year.
Previous report — wording carried elsewhere
During 2024 and beyond, we expect to face the following challenges at certain of our businesses. Management expects that improved operating performance at certain businesses, growth from new businesses, and global cost reduction initiatives may lessen or offset their impact. If these favorable effects do not occur, or if the challenges described below and elsewhere in this section impact us more significantly than we currently anticipate,
Previous report — wording carried elsewhere
This method recognizes the tax-credit value that is transferred to tax equity investors at the time of its creation, which for projects utilizing the investment tax credit begins in the quarter the project is placed in service. For projects utilizing the production tax credit, this value is recognized over 10 years as the facility produces energy.
Previous report — wording carried elsewhere
PPA continues to remain in place. However, there can be no assurance that, in the context of DG Comp’s preliminary review or any future PPA Discussions, the other parties will not seek a prompt termination of the PPA.
Previous report — wording carried elsewhere
Events or changes in circumstances that may necessitate recoverability tests and potential impairments of
Previous report — wording carried elsewhere
We rely mainly on long-term debt obligations to fund our construction activities. We have, to the extent available at acceptable terms, utilized non-recourse debt to fund a significant portion of the capital expenditures and