AES CORP

Review of Consolidated Results of Operations (Unaudited)

Components of Revenue, Cost of Sales, and Operating Margin —Revenue includes revenue earned from the sale of energy from our utilities and the production and sale of energy from our generation plants, which are classified as regulated and non-regulated, respectively, on the Condensed Consolidated Statements of Operations. Revenue also includes the gains or losses on derivatives associated with the sale of electricity.

Cost of sales includes costs incurred directly by the businesses in the ordinary course of business. Examples

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include electricity and fuel purchases, operations and maintenance costs, depreciation and amortization expenses, bad debt expense and recoveries, and general administrative and support costs (including employee-related costs directly associated with the operations of the business). Cost of sales also includes the gains or losses on derivatives associated with the purchase of electricity or fuel.

Operating margin is defined as revenue less cost of sales.

Consolidated Revenue and Operating Margin

Three Months Ended March 31, 2025

Revenue

Consolidated Revenue — Revenue decreased $159 million, or 5%, for the three months ended March 31, 2025, compared to the three months ended March 31, 2024, driven by:

•$289 million at Energy Infrastructure driven by $239 million of prior year revenue related to the AES Andes portfolio, which is reported in the Renewables SBU beginning in 2025 following the sale and expiration of certain coal-related assets and contracts; $96 million of prior year revenues from the monetization of the Warrior Run coal plant PPA, $91 million due to prior year unrealized and realized derivative gains, and $23 million due to the impact of the selldown of Amman East and IPP4 in Jordan; partially offset by $82 million higher CO 2 purchases passed through due to higher production, $32 million higher gas prices and transportation costs passed through to the offtaker, and $30 million higher generation due to dispatch and tariff adjustment in Argentina.

This unfavorable impact was partially offset by increases of:

•$136 million at Utilities mainly driven by a $111 million increase in transmission, distribution, and rider revenues mainly due to higher rates, and $34 million due to higher net retail demand mainly driven by favorable weather; partially offset by $20 million of lower Fuel Adjustment Charge rider revenue; and

•$23 million at Renewables mainly driven by a $203 million increase due to the results of AES Andes moving to Renewables in 2025 as described above, net of a current year decrease in regulated contract sales, and $50 million due to new projects in service; partially offset by $170 million impact from the sale of AES Brasil and $50 million net lower spot sales and prices, mainly at Colombia.

Operating Margin

Consolidated Operating Margin — Operating margin decreased $178 million, or 29%, for the three months

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ended March 31, 2025, compared to the three months ended March 31, 2024, driven by:

•$205 million at Energy Infrastructure mainly driven by $96 million higher prior year revenues from the monetization of the Warrior Run coal plant PPA, $71 million due to prior year unrealized derivative gains as part of our commercial hedging strategy, $22 million of prior year operating margin related to the AES Andes portfolio, which is reported in the Renewables SBU beginning in 2025 following the sale and expiration of certain coal-related assets and contracts, and $17 million of one-time costs due to restructuring; and

•$20 million at Corporate, Other and Eliminations mainly driven by higher people and IT costs, including allocation of costs to the businesses.

These unfavorable impacts were partially offset by increases of:

•$35 million at Utilities primarily driven by $43 million due to higher retail rates as a result of the 2024 Base Rate Order, including the impact of certain riders now included in the base rate, $20 million due to higher demand primarily from the impact of weather, and a $13 million increase in transmission and rider revenues; partially offset by a $13 million increase in depreciation expense from additional assets placed in service, an $8 million decrease due to the impact of planned outages, $8 million higher expected credit losses, and $7 million higher property taxes; and

•$10 million at Renewables mainly driven by a $36 million increase related to higher generation in Panama as a result of better hydrological conditions, $35 million positive impact from new businesses, and $22 million impact of the results of AES Andes moving to Renewables in 2025, as described above. These positive impacts were partially offset by a $36 million increase in fixed costs primarily related to an accelerated growth plan, a $32 million impact from the sale of AES Brasil, and $16 million of one-time costs due to restructuring.

See Item 2.—Management’s Discussion and Analysis of Financial Condition and Results of Operations—SBU Performance Analysis of this Form 10-Q for additional discussion and analysis of operating results for each SBU.

Consolidated Results of Operations — Other

General and administrative expenses

General and administrative expenses increased $2 million, or 3%, to $77 million for the three months ended March 31, 2025, compared to $75 million for the three months ended March 31, 2024, mainly due to $8 million of one-time restructuring costs, partially offset by $3 million lower professional fees and $2 million lower other people costs.

Interest expense

Interest expense decreased $15 million, or 4%, to $342 million for the three months ended March 31, 2025, compared to $357 million for the three months ended March 31, 2024. This decrease is primarily due to a $61 million impact from the sale of AES Brasil in October 2024; partially offset by increased borrowings at the Renewables SBU and lower capitalized interest.

Interest capitalized during development and construction decreased $41 million to $116 million for the three months ended March 31, 2025, compared to $157 million for the three months ended March 31, 2024, primarily due to fewer projects in development at the Renewables SBU.

Interest income

Interest income decreased $36 million, or 34%, to $69 million for the three months ended March 31, 2025, compared to $105 million for the three months ended March 31, 2024, primarily due to a $24 million decrease at the Energy Infrastructure SBU primarily due to lower short-term investments at lower rates, and a $13 million impact from the sale of AES Brasil in October 2024.

Other income and expense

Other income decreased $28 million, or 80%, to $7 million for the three months ended March 31, 2025, compared to $35 million for the three months ended March 31, 2024, mainly due to a $10 million decrease in gains on remeasurement of contingent consideration at AES Clean Energy, and the prior year impacts of a $5 million gain on commencement of a sales-type lease on land, $5 million in insurance proceeds primarily related to property damage at AES Andes, and a $5 million gain on contract termination.

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Other expense increased $14 million, or 37%, to $52 million for the three months ended March 31, 2025, compared to $38 million for the three months ended March 31, 2024, mainly due to a $34 million increase in losses on remeasurement of contingent consideration primarily on projects acquired at AES Clean Energy and $9 million in losses on commencement of sales-type leases at AES Renewable Holdings; partially offset by a $19 million loss recognized in the prior year related to legal expenses and other direct costs associated with the troubled debt restructuring at AES Puerto Rico, and a $6 million valuation allowance recorded in the prior year on receivables classified as held-for-sale at Warrior Run.

See Note 15—Other Income and Expense included in Item 1.—Financial Statements of this Form 10-Q for further information.

Gain (loss) on disposal and sale of business interests

Loss on disposal and sale of business interests was $1 million for the three months ended March 31, 2025 compared to a gain of $43 million for three months ended March 31, 2024. This was primarily due to a $52 million gain in the prior year on dilution of AES’ ownership interest in Uplight as a result of the AutoGrid acquisition, partially offset by a $10 million loss in the prior year on the selldown of Amman East and IPP4 in Jordan, which are now accounted for as equity method investments.

See Note 7—Investments in and Advances to Affiliates and Note 18—Held-for-Sale and Dispositionsfor further information.

Asset impairment expense

Asset impairment expense increased $3 million, or 7%, to $49 million for the three months ended March 31, 2025, compared to $46 million for the three months ended March 31, 2024. This increase was due to higher impairment expense of $24 million at AES Clean Energy Development related to the write-off of capitalized development costs for projects that were determined to be no longer viable. This was partially offset by lower impairment expense of $20 million associated with the held-for-sale classification of Mong Duong.

See Note 16—Asset Impairment Expense included in Item 1.—Financial Statements of this Form 10-Q for further information.

Foreign currency transaction losses

(1)Includes losses of $3 million and gains of $18 million on foreign currency derivative contracts for the three months ended March 31, 2025 and 2024, respectively.

The Company recognized net foreign currency transaction losses of $10 million for the three months ended March 31, 2025, primarily driven by unrealized losses due to depreciation of the Chilean peso.

The Company recognized net foreign currency transaction losses of $8 million for the three months ended March 31, 2024, primarily driven by realized losses on receivables denominated in the Chilean peso.

Income tax benefit (expense)

Income tax expense was $17 million for the three months ended March 31, 2025, compared to income tax benefit of $16 million for the three months ended March 31, 2024. The Company’s effective tax rates were (77)% and (6)% for the three months ended March 31, 2025 and 2024, respectively. The current quarter effective tax rate was impacted by tax expense resulting from allocations of losses to tax equity investors on renewables projects, as well as the impacts associated with ITCs.

The prior year effective tax rate was benefited by the restructuring of a foreign holding company, as well as the impacts associated with ITCs. Further, the prior year effective tax rate was impacted by tax expense resulting from allocations of losses to tax equity investors on renewables projects.

Our effective tax rate reflects the tax effect of significant operations outside the U.S., which are generally taxed at rates different than the U.S. statutory rate of 21%. Furthermore, our foreign earnings may be subjected to incremental U.S. taxation under the GILTI rules and incremental foreign taxation under Pillar 2. A future proportionate change in the composition of income before income taxes from foreign and domestic tax jurisdictions

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could impact our periodic effective tax rate.

Net equity in losses of affiliates

Net equity in losses of affiliates increased $19 million to $34 million for the three months ended March 31, 2025, compared to $15 million for the three months ended March 31, 2024. This increase was primarily driven by lower earnings from sPower of $14 million, mainly due to lower earnings from renewables projects that came online; and a $9 million decrease in earnings from Fluence driven by a decrease in the volume of BESS products fulfilled due to timing of customer schedules, higher sales and marketing expenses, and foreign currency losses.

See Note 7—Investments in and Advances to Affiliates included in Item 1.—Financial Statements of this Form 10-Q for further information.

Net loss attributable to noncontrolling interests and redeemable stock of subsidiaries

Net loss attributable to noncontrolling interests and redeemable stock of subsidiaries decreased $35 million to $119 million for the three months ended March 31, 2025, compared to $154 million for the three months ended March 31, 2024. This decrease was primarily due to lower allocation of losses to tax equity investors on renewables projects placed in service of $35 million.

Net income attributable to The AES Corporation

Net income attributable to The AES Corporation decreased $386 million to $46 million for the three months ended March 31, 2025, compared to $432 million for the three months ended March 31, 2024. This decrease was primarily due to:

•Lower margins from the Energy Infrastructure SBU of $193 million, excluding one-time restructuring costs, primarily due to higher prior year revenues from the monetization of the Warrior Run coal plant PPA and prior year unrealized gains on power swaps;

•Prior year gain on dilution of our interest in Uplight of $52 million;

•One-time restructuring costs of $46 million;

•Higher interest expense and lower interest income in the current year of $36 million;

•Lower contributions from renewables projects placed in service in the current year of $35 million; and

•Higher net equity in losses of affiliates of $18 million, primarily related to lower earnings from renewables projects that came online at sPower.

These decreases were partially offset by higher margins from the Utilities SBU of $28 million, excluding one-time restructuring costs, primarily due to higher rates as a result of the 2024 Base Rate Order at AES Indiana and higher demand due to weather.