AES CORP
For the period ended Jun 30, 2024. Filed Aug 1, 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.
Jun 30, 2024 · Filed Aug 1, 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 2024-03-31; filed 2024-05-02.
0000874761-24-000038
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 2024-06-30; 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 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 319 previous paragraphs and 395 current paragraphs.
160 unchanged; 118 reworded; 98 added; 32 removed; 9 previous and 19 current paragraphs rearranged.
Tables are not compared: 13 previous and 14 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 (98)
Current 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.
Current report
Adjusted EBITDA, a non-GAAP measure, increased $83 million, from $569 million to $652 million, mainly driven by higher contributions at the Utilities SBU, higher revenues under a PPA termination agreement at the Energy Infrastructure SBU, and higher revenues from new projects at the Renewables SBU; partially offset by higher outages at the Energy Infrastructure SBU, and outages in Colombia at the Renewables SBU.
Current report
$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 report
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 report
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 report
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 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:
Current 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;
Current report
◦15-year PPAs for 727 MW of wind and solar to serve data center growth in Texas; and
Current report
◦A 310 MW retail supply agreement to support data centers throughout Ohio, which is not included in the Company’s PPA backlog.
Current 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.
Current report
This unfavorable impact was partially offset by increases of:
Current report
•$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 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
Current report
•$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 report
Six Months Ended June 30, 2024
Current report
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 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
Current 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.
Current report
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 report
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 report
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 report
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 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.
Current report
Loss on extinguishment of debt
Current report
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 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.
Current report
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 report
Gain (loss) on disposal and sale of business interests
Current report
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 report
Foreign currency transaction gains (losses)
Current report
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 report
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 report
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 report
See Note 16—Asset Impairment Expense included in Item 1.—Financial Statements of this Form 10-Q for details of the Norgener asset impairment and Note 18—Held-for-Sale and Dispositions for further information on AES Brasil.
Current report
Net equity in earnings (losses) of affiliates
Current report
•Selldowns of business interests resulting in larger shares of income attributable to minority shareholders at the Energy Infrastructure SBU.
Current report
Net income attributable to noncontrolling interests and redeemable stock of subsidiaries decreased $436 million to a $378 million loss for the six months ended June 30, 2024, compared to income of $58 million for the six months ended June 30, 2023. This decrease was primarily due to:
Showing the first 40 of 98 passages. Open the source sections for the rest.
Removed paragraphs (32)
Previous report
30 | The AES Corporation | March 31, 2024 Form 10-Q
Previous report
•Since the Company's fourth quarter 2023 earnings call in February 2024, the Company signed 1.2 GW of long-term contracts for new renewables.
Previous report
•Including the 1 GW of Bellefield 2 signed in the first quarter of 2024, the Company has signed long-term PPAs for 5.9 GW of renewables to serve data center and technology customers in the U.S. and South America since 2018.
Previous report
•AES Indiana received approval from the IURC to implement new customer rates beginning in mid-May 2024. AES Indiana will continue to be among the lowest residential rates of any investor-owned utility in Indiana.
Previous report
34 | The AES Corporation | March 31, 2024 Form 10-Q
Previous report
35 | The AES Corporation | March 31, 2024 Form 10-Q
Previous report
and derivative gains as part of our commercial hedging strategy; partially offset by lower LNG transactions, higher contract generation costs, and higher outages;
Previous report
Foreign currency transaction losses
Previous report
•Lower earnings due to worse hydrology, lower wind generation and increased costs associated with the growth of our business at the Renewables SBU; and
Previous report
•Prior year impairment at Jordan at the Energy Infrastructure SBU.
Previous report
Net income attributable to The AES Corporation increased $281 million to $432 million for the three months ended March 31, 2024, compared to $151 million for the three months ended March 31, 2023. This increase was primarily due to:
Previous report
•Lower income tax expense;
Previous report
•Lower unrealized foreign currency losses at the Energy Infrastructure SBU.
Previous report
•Lower LNG transactions, higher contract generation cost, and outages at the Energy Infrastructure SBU.
Previous report
(1)Amount primarily relates to net unrealized derivative gains at the Energy Infrastructure SBU of $68 million, or $0.10 per share.
Previous report
(2)Amount primarily relates to unrealized derivative gains at the Energy Infrastructure SBU of $48 million, or $0.07 per share.
Previous report
Operating Margin for the three months ended March 31, 2024 decreased $35 million, driven primarily by worse hydrology, lower wind generation, higher energy purchase prices, and higher fixed costs and depreciation related to new projects. This decrease was partially offset by unrealized derivative gains.
Previous report
Operating Margin for the three months ended March 31, 2024 increased $29 million, driven primarily by higher revenues due to a PPA termination agreement and gains resulting mainly from derivatives as part of our commercial hedging strategy. These increases were partially offset by lower LNG transactions, higher contract generation cost, and higher outages.
Previous report
We have contracted and secured our expected requirements for solar panels for U.S. projects targeted to achieve commercial operations in 2024.
Previous report
Argentina — The recent election of President Javier Milei on December 10, 2023, marks a pivotal moment in Argentina's economic landscape. The entering administration issued Decree No. 55/23, signaling a commitment to total economic deregulation. This decree declares a state of emergency in the power sector, tariff revisions for electric power and natural gas transport and distribution, and a broader proposal for sector-wide reform.
Previous report
On April 12, 2022, a mediation team was appointed to prepare the plan to resolve the PREPA Title III case and related proceedings. A disclosure statement hearing was held on April 28, 2023. The mediation was extended through August 4, 2023. On November 14, 2023, the Judge presiding over the case approved the supplemental disclosure statement for PREPA’s Fourth Modified Third Amended Title III Plan of Adjustment. The
Previous report
confirmation trial ended on March 18, 2024, with the Judge’s decision pending.
Previous report
In 2023, AES Puerto Rico took certain measures to address identified liquidity challenges. On July 6, 2023, PREPA agreed to the release of funds in the escrow account guaranteeing AES Puerto Rico’s obligations under the Power Purchase and Operating Agreement (“PPOA”) in order to provide additional liquidity for the business. During the fourth quarter of 2023, a restructuring support agreement was executed by AES Puerto Rico and its noteholders and a PPOA amendment was approved by PREPA. Under this new agreement, PREPA’s bankruptcy under Title III does not result in a technical default for AES Puerto Rico, and therefore its non-recourse debt of $161 million is classified as long-term. The restructuring closed on March 5, 2024. See Note 8—Debt included in Item 1.—Financial Statements of this Form 10-Q for further information.
Previous report
Mexico Migration— The interconnection agreements for TEG and TEP under the self-supply energy regime in Mexico were due to expire in April 2024. Consequently, TEG and TEP are required to migrate into the new energy regime established by the Electricity Industry Law of 2021 (“LIE”) and to execute new interconnection agreements prior to the expiration of the current interconnection agreements. In February and September 2022, respectively, TEG and TEP made formal requests to the Mexican Comision Reguladora de Energia (“CRE”) to update the projects’ permits and allow them to migrate into the LIE (“Migration Requests”). On March 26, 2024, CRE granted the migration permits for TEG and TEP. On March 27, 2024, TEG and TEP filed their request with El Centro Nacional de Control de Energía (CENACE) for the execution of the new interconnection agreements, and on April 18, 2024, the agreements were executed.
Previous report
AES Southland's current plan is to comply with the SWRCB OTC Policy by shutting down and permanently retiring all existing generating units at AES Alamitos, AES Huntington Beach, and AES Redondo Beach that utilize OTC by the compliance dates included in the OTC Policy.
Previous report
(3)Environmental expenditures generally include expenditures to comply with environmental laws and regulations, expenditures for safety programs and other expenditures to ensure a facility continues to operate in an environmentally responsible manner.
Previous report
•The $275 million impact from the Parent Company revolver is primarily due to higher net repayments in the prior period.
Previous report
•The $125 million impact from sales to noncontrolling interests is primarily due to proceeds received at AES Clean Energy from the sales of ownership in project companies to tax equity investors, and the sale of Mesamávida under the Chile Renovables renewables partnership with GIP.
Reworded paragraphs (118)
Previous wording
Adjusted EBITDA with Tax Attributes, a non-GAAP measure, increased $222 million, from $641 million to $863 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 $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.
Previous wording
Compared with last year, first quarter diluted earnings per share from continuing operations increased $0.39,
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Compared with last year, second quarter diluted earnings per share from continuing operations increased
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Adjusted EPS, a non-GAAP measure, increased $0.28 from $0.22 to $0.50, mainly driven by a lower adjusted tax rate and higher contributions from renewables projects placed in service in the current year.
Current 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.
Previous wording
Compared with last year, first quarter net income increased $89 million, from $189 million to $278 million. This increase is the result of favorable contributions at the Utilities and New Energy Technologies SBUs, partially offset by lower contributions from the Renewables and Energy Infrastructure SBUs.
Current 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.
Previous wording
Adjusted EBITDA, a non-GAAP measure, increased $7 million, from $628 million to $635 million, mainly driven by higher revenues under a PPA termination agreement at the Energy Infrastructure SBU, higher contributions at the Utilities SBU, and lower losses from affiliates at the New Energy Technologies SBU; partially offset by lower LNG transactions, higher contract generation cost, and outages at the Energy Infrastructure SBU, and worse hydrology and lower wind generation at the Renewables SBU.
Current 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.
Previous wording
•As of the end of the first quarter of 2024, the Company’s backlog, which consists of projects with signed contracts, but which are not yet operational, is 12.7 GW, including 5.8 GW under construction.
Current 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:
Previous wording
•Since the Company's fourth quarter 2023 earnings call in February 2024, the Company completed the construction or acquisition of 593 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 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.
Previous wording
Consolidated Revenue — Revenue decreased $154 million, or 5%, for the three months ended March 31, 2024, compared to the three months ended March 31, 2023, driven by:
Current 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:
Previous wording
•$98 million at Utilities mainly driven by lower Fuel Adjustment Charge rider revenue and lower wholesale revenue due to lower rates; partially offset by higher TDSIC rider and transmission revenues, and higher demand due to favorable weather; and
Current 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.
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•$29 million at Energy Infrastructure mainly driven by higher revenues due to a PPA termination agreement
Current wording
•$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 wording
These favorable impacts were partially offset by a decrease of $35 million at Renewables mainly driven by worse hydrology, lower wind generation, higher energy purchase prices, and higher fixed costs and depreciation related to new projects; partially offset by unrealized derivative gains.
Current wording
These favorable impacts were partially offset by decreases of:
Previous wording
•$14 million at Corporate and Other primarily driven by higher charge-outs of IT and other costs to the businesses and higher premiums earned by the AES self-insurance company.
Current wording
•$14 million at Corporate and Other primarily driven by higher people, IT, and other costs.
Previous wording
•$110 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 lower generation due to higher outages; partially offset by higher revenues due to a PPA termination agreement and realized and unrealized derivative gains;
Current 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;
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•$74 million at New Energy Technologies mainly driven by the sale of the Fallbrook project in the prior year.
Current wording
•$75 million at New Energy Technologies mainly driven by the sale of the Fallbrook project in March 2023; and
Previous wording
•$15 million at Utilities mainly driven by higher demand due to favorable weather, and an increase in transmission and distribution revenues; partially offset by higher fixed costs and depreciation; and
Current 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.
Previous wording
These unfavorable impacts were partially offset by an increase of $124 million at Renewables mainly driven by higher spot sales prices, new projects placed in service, unrealized commodity derivative gains, and the impact of the appreciation of the Colombian peso; partially offset by the impact of the depreciation of the Argentine peso.
Current 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.
Previous wording
Consolidated Operating Margin — Operating margin increased $25 million, or 4%, for the three months ended March 31, 2024, compared to the three months ended March 31, 2023, driven by:
Current 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:
Previous wording
General and administrative expenses increased $20 million, or 36%, to $75 million for the three months ended March 31, 2024, compared to $55 million for the three months ended March 31, 2023, primarily due to increased business development activity and higher people costs and professional fees.
Current wording
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 wording
Interest expense increased $27 million, or 8%, to $357 million for the three months ended March 31, 2024, compared to $330 million for the three months ended March 31, 2023. This increase is primarily due to a higher weighted average interest rate and debt balance at the Parent Company as well as new debt issued at the Utilities and Renewables SBUs; partially offset by an increase in capitalized interest.
Current 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.
Previous wording
Interest capitalized during development and construction increased $46 million to $157 million for the three months ended March 31, 2024, compared to $111 million for the three months ended March 31, 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 $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.
Previous wording
Interest income decreased $18 million, or 15%, to $105 million for the three months ended March 31, 2024, compared to $123 million for the three months ended March 31, 2023, primarily due to lower short-term investments at the Renewables and Energy Infrastructure SBUs.
Current 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.
Previous wording
Other income increased $25 million to $35 million for the three months ended March 31, 2024, compared to $10 million for the three months ended March 31, 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 $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.
Previous wording
Other expense increased $24 million to $38 million for the three months ended March 31, 2024, compared to $14 million for the three months ended March 31, 2023, primarily driven by legal expenses and other direct costs related to the troubled debt restructuring at Puerto Rico, and a valuation allowance on receivables classified as held-for-sale at Warrior Run.
Current 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.
Previous wording
Gain on disposal and sale of business interests
Current 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.
Previous wording
Gain on disposal and sale of business interests was $43 million for the three months ended March 31, 2024, 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 $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.
Previous wording
Asset impairment expense increased $26 million to $46 million for the three months ended March 31, 2024, compared to $20 million for the three months ended March 31, 2023. This increase was the result of a $37 million impairment at Mong Duong, due to the carrying value exceeding the expected sales proceeds, partially offset by impairments in the prior year of Amman East and IPP4 in Jordan due to the delay in closing the sale transaction.
Current wording
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 wording
(1)Includes gains of $18 million and losses of $8 million on foreign currency derivative contracts for the three months ended March 31, 2024 and 2023, respectively.
Current 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.
Previous wording
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 as well as unrealized losses on debt denominated in the Brazilian real.
Current 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.
Previous wording
The Company recognized net foreign currency transaction losses of $42 million for the three months ended March 31, 2023, primarily due to unrealized losses due to depreciating receivables denominated in 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 $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.
Previous wording
Income tax benefit was $16 million for the three months ended March 31, 2024, compared to $72 million of income tax expense for the three months ended March 31, 2023. The Company’s effective tax rates were (6)% and 27% for the three months ended March 31, 2024 and 2023, respectively. This net decrease in the effective tax rate was largely due to the current year benefits associated with a restructuring of a foreign holding company, as well as U.S. investment tax credits (“ITCs”).
Current wording
Income tax benefit was $51 million for the six months ended June 30, 2024, compared to $70 million of income tax expense for the six months ended June 30, 2023. The Company’s effective tax rates were (26)% and 26% for the six 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”), the AES Brasil held-for-sale reclassification, as well as the restructuring of a foreign holding company in the first quarter of 2024.
Previous wording
Net equity in losses of affiliates increased $11 million to $15 million for the three months ended March 31, 2024, compared to $4 million for the three months ended March 31, 2023. This increase was primarily driven by a decrease in earnings from Mesa La Paz, primarily due to the prior year termination of derivative positions due to a contract amendment.
Current wording
Net equity in earnings of affiliates increased $28 million to $3 million for the three months ended June 30, 2024, compared to losses of $25 million for the three months ended June 30, 2023. This increase was primarily driven by a decrease in losses from Fluence, mainly attributable to improved margins on a new product line, and higher earnings from sPower, primarily due to contributions from new projects that came online, partially offset by a decrease in earnings from Mesa La Paz, primarily due to the prior year termination of derivative positions due to a contract amendment.
Previous wording
Net equity in losses of affiliates
Current wording
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 wording
Net income attributable to noncontrolling interests and redeemable stock of subsidiaries decreased $192 million to a $154 million loss for the three months ended March 31, 2024, compared to income of $38 million for the three months ended March 31, 2023. This decrease was primarily due to:
Current wording
Net income attributable to noncontrolling interests and redeemable stock of subsidiaries decreased $244 million to a $224 million loss for the three months ended June 30, 2024, compared to income of $20 million for the three months ended June 30, 2023. This decrease was primarily due to:
Previous wording
•Higher allocation of losses to tax equity investors on renewables projects placed in service;
Current wording
•Higher allocation of losses to tax equity investors on renewables projects placed in service and;
Previous wording
•Held-for-sale impairment at Mong Duong.
Current wording
•Held-for-sale impairment at Brazil.
Previous wording
•Higher long-lived asset impairments in the current year; and
Current wording
•Lower long-lived asset impairments in the current year.
Previous wording
from $0.21 to $0.60. This increase is mainly driven by lower income tax expense, higher contributions from renewables projects placed in service in the current year, and a gain on dilution of our interest in Uplight; partially offset by higher asset impairments in the current year.
Current wording
•Higher contributions from renewables projects placed in service in the current year;
Previous wording
•Gain on dilution of our interest in Uplight; and
Current wording
•Gain on dilution of our interest in Uplight.
Previous wording
In addition to the revenue and cost of sales reflected in Operating Margin, Adjusted EBITDA includes the other components of our Consolidated Statement of Operations, such asgeneral and administrative expenses in Corporate and Other as well as business development costs, other expense andother income, realized foreign currency transaction gains and losses, andnet equity in earnings of affiliates.
Current wording
In addition to the revenue and cost of sales reflected in Operating Margin, Adjusted EBITDA includes the other components of our Consolidated Statement of Operations, such asgeneral and administrative expenses in Corporate and Other as well as business development costs, other expense andother income, realized foreign currency transaction gains and losses, andnet equity in earnings (losses) of affiliates.
Previous wording
the underlying business performance of the Company. Adjusted EBITDA is the most relevant measure considered in the Company’s internal evaluation of the financial performance of its segments. Factors in this determination include the variability due to unrealized gains or losses pertaining to derivative transactions, equity securities, or financial assets and liabilities remeasurement, unrealized foreign currency gains or losses, losses due to impairments, strategic decisions to dispose of or acquire business interests or retire debt, and the variability of allocations of earnings to tax equity investors, which affect results in a given period or periods. In addition, each of these metrics represents the business performance of the Company before the application of statutory income tax rates and tax 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 wording
The GAAP measure most comparable to EBITDA, Adjusted EBITDA, and Adjusted EBITDA with Tax Attributes is Net income. We believe that EBITDA, Adjusted EBITDA, and Adjusted EBITDA with Tax Attributes better reflect the underlying business performance of the Company. Adjusted EBITDA is the most relevant measure considered in the Company’s internal evaluation of the financial performance of its segments. Factors in this determination include the variability due to unrealized gains or losses pertaining to derivative transactions, equity securities, or financial assets and liabilities remeasurement, unrealized foreign currency gains or losses, losses due to impairments, strategic decisions to dispose of or acquire business interests or retire debt, and the variability of allocations of earnings to tax equity investors, which affect results in a given period or periods. In addition, each of these metrics represents the business performance of the Company before the application of statutory income tax rates and tax 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.
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Rearranged current paragraphs (19)
Current report — wording carried from 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.
Current report — wording carried from elsewhere
Consolidated Operating Margin — Operating margin increased $55 million, or 11%, for the three months ended
Current report — wording carried from elsewhere
June 30, 2024, compared to the three months ended June 30, 2023, driven by:
Current report — wording carried from elsewhere
•Higher allocation of losses to tax equity investors on renewables projects placed in service; and
Current report — wording carried from elsewhere
These decreases were partially offset by:
Current report — wording carried from elsewhere
Net income (loss) attributable to The AES Corporation
Current report — wording carried from elsewhere
•Higher earnings from the Utilities SBU; and
Current report — wording carried from elsewhere
•Higher earnings from the Energy Infrastructure SBU due to the PPA termination agreement at Warrior Run;
Current report — wording carried from elsewhere
•Higher earnings from the Utilities SBU;
Current report — wording carried from elsewhere
These increases were partially offset by:
Current report — wording carried from elsewhere
The GAAP measure most comparable to Adjusted PTC is Income from continuing operations attributable to The AES Corporation. We believe that Adjusted PTC better reflects the underlying business performance of the Company and is a relevant measure considered in the Company’s internal evaluation of the financial performance of its segments. Factors in this determination include the variability due to unrealized gains or losses pertaining to
Current report — wording carried from elsewhere
Adjusted EBITDA for the six months ended June 30, 2024 decreased $46 million, primarily due to the drivers mentioned above, adjusted for NCI, unrealized derivatives, and depreciation.
Current report — wording carried from elsewhere
Adjusted EBITDA with Tax Attributes for the six months ended June 30, 2024 increased $306 million, primarily due to higher realized tax attributes driven by more renewables projects placed in service, partially offset by the decrease in Adjusted EBITDA. During the six months ended June 30, 2024 and 2023, we realized $403 million and $51 million, respectively, from tax attributes earned by our U.S. renewables business.
Current report — wording carried from 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.
Current report — wording carried from elsewhere
Adjusted PTC for the six months ended June 30, 2024 increased $65 million due to the drivers above, partially offset by higher depreciation expense and higher interest expense, primarily due to increased borrowings at IPALCO.
Current report — wording carried from 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,
Current report — wording carried from 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.
Current report — wording carried from elsewhere
Events or changes in circumstances that may necessitate recoverability tests and potential impairments of
Current report — wording carried from 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
Rearranged previous paragraphs (9)
Previous report — wording carried elsewhere
Net income attributable to The AES Corporation
Previous report — wording carried elsewhere
The GAAP measure most comparable to EBITDA, Adjusted EBITDA, and Adjusted EBITDA with Tax Attributes is Net income. We believe that EBITDA, Adjusted EBITDA, and Adjusted EBITDA with Tax Attributes better reflect
Previous report — wording carried elsewhere
our U.S. renewables business in line with the growth in that business. Based on construction schedules, a significant portion of these earnings will be realized in the fourth quarter.
Previous report — wording carried elsewhere
published a final rule to revoke its May 2020 finding and reaffirm its 2016 finding that it is appropriate and necessary to regulate these emissions. On April 24, 2023, the EPA published a proposed rule, the MATS Risk and Technology Review (RTR) Rule to lower certain emissions limits and revise certain other aspects of MATS. On April 25, 2024, the EPA released a pre-publication version of the final MATS RTR Rule. We are currently reviewing the final rule and it is too early to determine the potential impacts.
Previous report — wording carried elsewhere
stream that is not navigable is considered a WOTUS. On May 25, 2023, the U.S. Supreme Court rendered a decision (“Decision”) in the case of Sackett v. Environmental Protection Agency, addressing the definition of WOTUS with regards to the CWA. This decision provides a clear standard that substantially restricts the Agencies' ability to regulate certain types of wetlands and streams. Specifically, under this decision, wetlands that do not have a continuous surface connection with traditional interstate navigable water are not federally jurisdictional.
Previous report — wording carried elsewhere
capacity supplemented by multilaterals and local regional banks.
Previous report — wording carried elsewhere
proceed with a project or are unable to successfully complete a restructuring of the non-recourse debt, we may lose our investment in that subsidiary.
Previous report — wording carried elsewhere
•Maintenance expenditures increased $13 million, primarily due to higher transmission and distribution project investments at our Utilities SBU.
Previous report — wording carried elsewhere
Some of our subsidiaries are currently in default with respect to all or a portion of their outstanding indebtedness. The total non-recourse debt classified as current in the accompanying Condensed Consolidated Balance Sheets amounts to $4 billion. The portion of current debt related to such defaults was $174 million at March